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Executives

Ed Henning – Executive Vice President and General Counsel

Jay Flaherty – Chairman and Chief Executive Officer

Paul Gallagher – Chief Investment Officer

Thomas M. Herzog – Executive Vice President and Chief Financial Officer

Analysts

Ross Nussbaum – UBS

Mark Biffert – Oppenheimer & Co.

Jerry Doctrow – Stifel Nicolaus & Company

Michelle Ko – Bank of America/Merrill Lynch

Michael Mueller – JP Morgan

David [Totti] - Citi

Jay Habermann – Goldman Sachs

Richard Anderson – BMO Capital Markets

Robert Mains – Morgan Keegan & Co.

Mark Biffert – Oppenheimer & Co.

Karin Ford – KeyBanc Capital Markets

HCP Inc. (HCP) Q3 2009 Earnings Call November 3, 2009 12:00 PM ET

Operator

Welcome to the third quarter 2009 HCP earnings conference call. (Operator Instructions) I would now like to turn the presentation over to your host for today's conference, Mr. Ed Henning, HCP's Executive Vice President and General Counsel. You may go ahead, sir.

Ed Henning

Thank you. Good afternoon and good morning. Some of the statements made during this conference call contain forward-looking statements. These statements are made as of today's date, reflect the company's good faith beliefs and best judgment based upon currently available information and are subject to risks, uncertainties and assumptions that are described from time-to-time in the company's press releases and SEC filings.

Forward-looking statements are not guarantees of future performance. Some of these statements may include projections of financial measures that may not be updated until the next earnings announcement or at all. Events prior to the company's next earnings announcement could render the forward-looking statements untrue and the company expressly disclaims any obligation to update earlier statements as a result of new information.

Additionally certain non-GAAP financial measures will be discussed during the course of this call. We have provided reconciliations of these measures to the most comparable GAAP measures, as well as certain related disclosures in our supplemental information package and earnings release, each of which has been furnished to the SEC today and is available on our Website at www.hcpi.com.

I will now turn the call over to our Chairman and CEO, Jay Flaherty.

Jay Flaherty

Thank you Ed. Welcome to HCP’s third quarter earnings call. Joining me on the call today are Executive Vice President and Chief Financial Officer, Thomas Herzog and Executive Vice President and Chief Investment Officer, Paul Gallagher.

Let’s start with a review of our third quarter results. Tom?

Thomas Herzog

Thank you Jay. There are several key items I will cover today. First, in Q3 reported FFO of $0.52 per share excluding impairments and litigation provisions and strong year-over-year quarterly same property performance of 3.3%.

Second, we recognized impairments and litigation provision which totaled $0.41 per share. Third, we issued $441 million of equity and further strengthened our balance sheet ending the quarter with $144 million of cash and a zero balance on our $1.5 billion revolver. Finally, our FFO guidance for the full year 2009 remains unchanged at $2.10 to $2.16 per share before impairments and litigation provisions.

Let me start with our third quarter results. For the third quarter we reported FFO of $0.52 per share excluding impairments and litigation provision. Inclusive of impairments and litigation provision of $0.05 and $0.36 per share respectively our FFO as defined by NAREIT for the quarter was $0.11 per share. Our same property portfolio continued to perform well producing a positive 3.3% year-over-year quarterly cash NOI growth during the third quarter versus the third quarter of 2008. Paul will review our performance by segment in a few minutes.

The third quarter results were impacted by several items not contemplated in our guidance including the following: First, in connection with our 2006 CNL purchase we acquired five land assets subject to direct finance leases with Ericson Retirement Communities. Two of these DFL’s were subsequently monetized and three remain in our portfolio today.

During the third quarter we reported impairments of $15 million or $0.05 per share related to two of the three remaining DFLs. These impairments were recorded in connection with Ericson’s October 2009 bankruptcy filing and reduced the carrying value of these DFLs to $19 million. A third Ericson DFL relates to a performing stabilized community and the lease payments are current.

Second, we accrued a litigation provision of $102 million or $0.36 per share in connection with a jury verdict reached in the Ventas litigation. We intend to appeal this judgment. Third, during the quarter we incurred $6 million of Ventas related litigation expense which exceeded our previous estimate by $3 million or $0.01 per share. 2009 Ventas related litigation expense totaled $13 million through the end of the third quarter. Lastly, we realized gains of $6 million or $0.02 per share related to sales of a portion of our HCA debt investment representing $111 million of face value.

Turning now to our balance sheet, in August we completed a $441 million equity offering by issuing 17.8 million shares of common stock at $24.75 per share. Net proceeds from this offering totaled $423 million of which $165 million was used to fund our Manor Care debt investment and $100 million to prepay a 2010 mortgage maturity. The remaining proceeds were used to repay the outstanding balance of our revolver and for general corporate purposes.

We ended the quarter with our financial leverage of 43% and third quarter fixed charge coverage at 2.6 times. We are comfortably within all covenants of our credit agreements. We continue to manage the company’s net floating rate exposure. During the third quarter we entered into two interest rate swap agreements representing an aggregate notional amount of $500 million to mature in 2011. These swaps offset the increase in net floating rate asset exposure but resulted from our Q3 HCR Manor Care investment and repayments of floating rate debt.

For the remainder of 2009 our debt maturities include only $23 million of mortgage obligations. Our 2010 debt maturities total $321 million which consists of $206 million of senior unsecured notes and $115 million of mortgage debt. This amount decreased to $183 million from the 2010 maturities reported at the end of the second quarter due to the $100 million prepayment discussed earlier and the extension of certain mortgage debt.

At the end of the third quarter we had unrestricted cash of $144 million and a $1.5 billion revolver which matures in August 2011 is completely undrawn. Before reviewing our full-year guidance I would like to speak briefly to our $85 million secured loan investment with an affiliate of Cirrus Group.

As disclosed in our second quarter 10-Q the borrower became delinquent during the second quarter. However, the value of the collateral and guarantees supporting the loan are currently believed to be sufficient to reasonably assume full recovery of the carrying value. We will continue to assess the status of this investment during the coming months.

Switching to full-year 2009 guidance, we continue to expect full year 2009 FFO of $2.10 to $2.16 per share before impairments and litigation provision. Additionally, our projected full year same property performance remains at 2.5-3%. I will now turn the call over to Paul. Paul?

Paul Gallagher

Thank you Tom. As we conclude the eighth quarter since the beginning of the economic downturn HCP’s overall portfolio metrics continue to perform well. In addition our senior housing operators are reporting increases in occupancy and revenue.

Now let me go to the details of the performance of the portfolio.

Senior housing. Occupancy for the current quarter in our same store senior housing platform is 85.7% representing a 90 basis point sequential decline over the prior quarter and a 250 basis points decline over the prior year. However, our most recent data indicates occupancies in our non-Sunrise portfolio have stabilized. All of our non-Sunrise operators are reporting margin improvement resulting from both modest rate increases and ongoing expense controls. As a result we saw sequential same property cash flow coverage increase from 1.13 times to 1.16 times. Current quarter same property performance for the entire senior housing platform declined 4.2% with the drag being our Sunrise portfolio. Our non-Sunrise portfolio had an improvement of 2.5% driven by normal rent steps. Our Sunrise portfolio had a decline of 18.4% driven by 2008 insurance credits, downward LIBOR trends and current quarter costs associated with the Eden Care transfer.

In June we announced the termination of Sunrise’s management contracts on our 15 Eden Care communities. On October 1 we sold one asset and leased the remaining 14 communities to three operators in our agency portfolio. The new lease terms were for 15 years and were structured with average rent increases of 9% on an annualized basis for the initial four years with more standard, fixed or CPI increases for the remainder of the term. This transition reduced our revenue concentration from Sunrise from 14% to 12%.

Eight of the Eden Care leases were transferred to Horizon Bay. In conjunction with the transfer, HCP and Horizon Bay have agreed to terms to modify the leases on 25 properties in our [ventures] joint venture where HCP owns 35% of the equity. HCP will provide short-term, modest rent deferral in return for a new, stronger guarantor. Horizon Bay remains one of our better performing operators with occupancy of 91.8% and margins in excess of 40%.

Hospitals. Same property cash flow coverage was up slightly to 4.46 times. Year-over-year same property cash NOI for the third quarter remained down 11.6% driven by the short-term rent relief at our Hogue Irvine Hospital. Hogue began to pay partial rent in August and is scheduled to begin paying full rent beginning in June 2010.

Skilled nursing. Our skilled nursing portfolio continues to perform well. Year-over-year cash NOI for the third quarter in our same store portfolio increased 3.7% driven by contractual rent increases with stable cash flow coverage of 1.59 times. HCR Manor Care reported improved second quarter trailing 12-month debt service coverage for the entire debt stack of 3.03 times, an increase of 49 basis points over the prior quarter. Their performance continues to benefit from stable occupancy, year-over-year rate increases and a favorable interest rate environment.

Medical office buildings. For the current quarter same property adjusted NOI was up 8.4% over third quarter 2008 which excludes a $164,000 lease termination fee at a facility in Texas. This growth was driven by continued success in our expense control initiatives and the ongoing impact of previously discussed operating support revenues.

Our revenue reduction initiatives resulted in a decrease in quarterly controllable operating expenses of $1.2 million when compared to the prior year. In addition, we have seen significant improvement in collections of rent with our outstanding AR being reduced by 33% or almost $2 million since the first of the year. MOB occupancy for the third quarter was 90.7%, unchanged from the end of the second quarter.

During the third quarter tenants representing 353,000 square feet took occupancy of which 227,000 square feet related to previously occupied space. Our year-to-date renewal activities have resulted in a retention rate of 79%. These renewals occurred at a 1.3% higher mark to market rents and included two sizeable renewals on leases that were previously above market. Absent the renewals on the above market leases the mark to market rent increase was 2.4%.

As of the end of the third quarter we have 690,000 square feet of scheduled expirations remaining for the balance of 2009 including 220,000 square feet of month-to-month leases. Our pipeline remains strong with 500,000 square feet of executed leases that have yet to commence and 510,000 square feet in active negotiations. During the quarter we sold two properties in West Virginia for $5.8 million resulting in a gain of $2.3 million.

Life science. The 2009 life science third quarter same store adjusted NOI was up 18.3% over Q3 2008 levels. These gains have been principally driven by normal rent increases, mark to market rent increases achieved in prior quarters, increased occupancy in the portfolio and the recognition of revenue due to the completion of tenant improvements on several buildings. Occupancy for the entire life science portfolio remains stable at 91.1% at the end of the third quarter.

For the quarter we completed 126,000 square feet of leasing of which 89,000 square feet related to previously occupied space that was renewed at an average rent increase of approximately 2%. Including leases from new tenants, we were able to address 91% of the expirations that occurred during the quarter with year-to-date retention of 88%. Our focus on retaining tenants has allowed us to preserve cash flow with no down time and minimal TI investment as our average tenant improvement cost on renewals is just $1.25 per square foot year-to-date.

Our life science portfolio has limited lease expiration profiles over the next two years. Lease expirations for the remained of 2009 total 127,000 square feet and represent only 0.4% of HCP’s annualized revenue. Looking into 2010 we have 280,000 square feet of expirations which represent only 0.8% of HCP’s annualized revenue. HCP continues to pursue a pipeline of leasing prospects in excess of 500,000 square feet for existing space. We continue to monitor institutional clients who have begun to seek space to accommodate expansion needs or relocate functions.

Our redevelopment and development remains unchanged with four projects 44% pre-leased totaling 568,000 square feet. As we have discussed in past calls, we continue to monitor the underlying credit and liquidity profile of our tenant base. The performance of our larger tenants is truly impressive with strong product pipelines producing double digit earnings growth for companies like Genentech, Amgen, [Ticada], Myriad Genetics and [NuVasive]. In addition, tenants like Exelixis, Portola and Ligan continue to advance lead compound via partnership agreements with companies like Sanofi Adventis, Merck, Novartis and GSK.

Finally, we have seen the public capital markets open up as tenants like [inaudible] complete follow-on equity offerings to meet funding needs related to their arthritis drug and M&A activity picked up as evidenced by the acquisition of our tenant [Proveolix] by [Arnex Pharmaceuticals].

From a liquidity standpoint the profile of our life science tenants continued to improve with tenants with less than 12 months of cash representing only 1% of HCP’s total rent. Our venture back companies raised $900 million in financing year-to-date with additional milestone payments of $2.9 billion from multiple sources including partnerships, public equity and venture capital.

With that review of the HCP portfolio I would like to turn it back to Jay.

Jay Flaherty

Thanks Paul. I will focus my comments on the performance of HCP’s portfolio and the unprecedented level of operator tenant activity within HCP’s portfolio. With the great recession seemingly at an end after eight quarters, HCP’s uniquely diversified investment portfolio has continued to generate outperformance.

To be clear, we believe our portfolio is truly one of a kind and it is uniquely diversified in that; we are invested in five separate sub-sectors of healthcare. Acute care hospitals, skilled nursing, medical office buildings, life science and private pay senior housing. (B) These sub-sector investments are substantial in their own right. To underscore this point, if we waved a magic wand and broke HCP’s portfolio into five standalone publically traded REITs, four of the five entities would immediately be the market leaders in their sub-sectors and the fifth, life science, would be the second or third largest depending on the valuation metric used. Finally, HCP’s portfolio is unique in the concentrated positions it enjoys with best in class operator tenants in each of its five sub-sectors.

A discussion in last weeks’ UBS research note entitled “The Bite Might be Worse than the Bark” caught my attention. The author stated, “while the market appears to be expecting tough property level results, we can’t help but wonder whether seeing 3-10% year-over-year same property NOI declines will serve as a harsh reminder that we are in for a reasonably tough 2010.”

With this backdrop, HCP’s portfolio produced a positive 3.6% same property performance cash NOI result for the nine months ended September 30, 2009. In addition, and significantly, our first look roll up of 2010 budgets is quite encouraging. HCP’s consistently positive, same property performance results for the past several years support the recession resistant characterization of healthcare real estate and stand in stark contrast to the results from the four traditional food groups of commercial real estate during this economic downturn.

In yesterday’s Heard on the Beach commentary, Mike Kirby challenged REIT executives by asking the question, “Wouldn’t it be refreshing to hear a call devoted to thoughtful commentary about what the coming decade might have in store?”

Well, HCP’s FFO model does not go out a decade but the demand driver for our five property types certainly does. America’s aging baby boomer. In light of the relative outperformance of healthcare real estate during the great recession, I would challenge Mike and his peers, some of whom are on the call with us today, to compare the fundamental underlying demand and supply drivers for U.S. healthcare real estate over the next decade with what is apt to play out in the retail, office, multi-family and industrial sectors. As I have stated before, I would not trade our healthcare space or HCP’s platform within that healthcare space for any other real estate entity in the world.

Turning to operator tenant activity within HCP’s portfolio, the reopening of the capital markets coupled with the expected near-term passage of healthcare reform has set in motion an unprecedented volume of strategic and capital market activity that will likely result in healthcare deal volumes for the first six months of 2010 exceeding their aggregate levels for the 36 months ending December 31, 2009.

The fabled impact of this activity on HCP cuts across our entire portfolio and is likely to redefine our company in the period ahead. These opportunities will manifest themselves in several ways as market valuations of HCP owned investments increase in value. As an example our HCA title note investment has moved from a price of $78 at December 31, 2008 to a price of $107 in recent weeks, a 37% increase.

As our operator tenants seek to recapitalize their balance sheets, HCP consent rights and other deal protections will be monetized in the form of additional fee income and/or the improved structuring of our existing investments. In addition, it may be possible to recast current debt investments to more attractive components of the capital stack depending upon the risk/reward trade off for HCP shareholders.

Our HCR Manor Care investment may become a case in point. A Stifel Nicolaus research piece of little over a month ago handicapped potential end-game scenarios for our HCR Manor Care position. That analysis concluded with a concern that, and I am quoting directly from the research report, “under current REIT rules we do not believe HCP could take a controlling stake in the operating company.”

Now, what brother Doctrow did not know and could not have known at the time he authored his report was that HCR Manor Care had embarked upon a process that could involve a company reorganization through which the holding company, HCR Manor Care, bifurcates itself and creates a real estate investment trust. Subject to market conditions, a public offering of the new REIT would be completed by the end of the first quarter 2010. The IPO proceeds are expected to be used to reduce leverage. The comprehensive plan was posted on the State of West Virginia Healthcare website just last week.

For those of you that have participated in HCP’s earnings calls in the past two years you have consistently heard me speak in glowing terms about the operating results achieved by HCR Manor Care’s enduring business model. Their 30% plus growth in EBITDA speaks for itself and $562 million of trailing 12-month EBITDA is even better. This extraordinary cash flow generation reduced $700 million of term debt at OpCo to a net debt position of $65 million in less than two years. On top of this success, HCR Manor Care will now de-lever its practical balance sheet and have improved access to the capital markets.

Obviously this enhanced liquidity indirectly accrues to the benefit of HCP. To educate the street in its analysis of privately held HCR Manor Care, we have included additional disclosure on pages 21 and 22 of our third quarter supplemental schedules. On the eve of its 25th anniversary as a publically traded company, HCP sits in the strongest absolute and relative competitive position in its history. Our portfolio is performing well. Our near-term lease expirations are negligible. Our liquidity position is strong with $1.5 billion in line of credit availability at a cost of LIBOR plus 70 through August 2011. $300 million of cash balances and liquid marketable securities, minimal 2010 debt maturities and substantial access to the capital markets.

HCP’s management team is focused on a number of significant near-term opportunities and we look forward to sharing with this group the outcome of our decisions in the period ahead.

Operator, we would be pleased to entertain questions at this time.

Question and Answer Session

Operator

(Operator instructions) The first question comes from the line of Ross Nussbaum – UBS.

Ross Nussbaum – UBS

First, it looks like 17% of your MOB leases expire next year. Where do you see the mark to market on that space?

Paul Gallagher

We have consistently seen over the past couple of years mark to market increases anywhere from 2-5% and the 17% is pretty typical of the rollover we have in that space. We typically have 4-5 year leases on average and typically anywhere from 15-20% of the portfolio rolls each year.

Ross Nussbaum – UBS

Do you think it will still be positive next year?

Paul Gallagher

It is positive so far. We haven’t seen any push back yet on rental rates so we don’t anticipate it going down at this point in time.

Ross Nussbaum – UBS

It looks like on the interest income line it looks like $13 million of interest income on maturing loans receivable next year. Are you going to be extending those loans or are those getting repaid?

Thomas Herzog

$13 million of interest income maturing?

Ross Nussbaum – UBS

In the supplemental on page 11 if I am reading this right you have $13 million of hospital interest tied to loans maturing.

Thomas Herzog

Oh that is the Cirrus loan. So that does have a 2010 maturity. That is accurate.

Ross Nussbaum – UBS

Do you expect those to get paid off?

Paul Gallagher

We do. We look at the collateral position there and it is quite substantially in excess of the debt balance we have right now.

Ross Nussbaum – UBS

I appreciate the extra disclosure on Manor Care. I just have a quick couple of clarifiers here. The $562 million of EBITDA is that EBITDA or EBITDAR?

Paul Gallagher

EBITDA but it is only facility based EBITDA. There is still the OpCo piece which we do not have disclosure on in the supplemental this morning.

Operator

The next question comes from the line of Mark Biffert – Oppenheimer & Co.

Mark Biffert – Oppenheimer & Co.

I was wondering if you could expand a little bit on Manor Care in terms of some of the scenarios you think now that they are going to be coming out as a real estate company. Would you look to convert some of that debt to equity? What is your first take? Would you prefer to get your debt paid off?

Jay Flaherty

Let me say a couple of things. First of all before we do anything we want to wait and see the ink dry on the healthcare reform legislation which we expect to have happen sometime between Thanksgiving and Christmas. It is obviously fluid but the bid asked is narrowing and we continue to expect the Baucus Bill working its way through the Finance Committee and the Senate is the best thing to be looking at in terms of what the legislation looks like. So that is healthcare reform. Stepping back to the investment itself, we have always maintained our worst case scenario on our Manor Care investment was a par payoff at maturity.

The inverse of that view is how we have always maintained we were quite comfortable with taking ownership of the underlying real estate. To quantify that scenario for you, if you were to simply take the current rent from the Propco Master lease and roll forward the contractual escalators tot eh January 2013 maturity date and assume a maturity default at the time, HCP would own the real estate at a 9.5% lease yield which would be a terrific result for HCP’s shareholders. As I have said in the past, I think that scenario is highly unlikely and it gets more unlikely with last month’s announcement by HCR Manor Care.

With the public filing, as to their intent to bifurcate the company and make the REIT election I would simply say the optionality of our investment alternatives has increased exponentially. I kind of probably will conclude with saying it is impossible to connect the dots right now as to the ultimate exit of our HCR Manor Care debt investment but I can say that when you have a combination of this company’s exceptional business model combined with the best in class management team of this year’s Ormond and [Gilliard and Cavanaugh] and the Blue Chip equity sponsor, Carlyle, who very significantly here is not focused on a quick exit but instead is interested in growing and adding value to this fundamental investment over the intermediate term, our expectation is that only good things will be happening going forward.

Mark Biffert – Oppenheimer & Co.

So is it Carlyle’s intent to do acquisitions and expand the Manor Care portfolio with opportunities in the market and that is part of the reason why they are going an equity raise as well?

Jay Flaherty

I think Carlyle understands that it has a world class management team and a world class operating model and as healthcare reform gets finalized that management team and that business model will thrive and looking at growing the value of your investment over not the short-term but the intermediate and longer-term really sets up a number of very interesting strategic moves that Carlyle can be positioned to take advantage of here. In my view this kind of starts to set the table to allow them to create a significant amount of incremental value for their investors.

Mark Biffert – Oppenheimer & Co.

When you look at the hospital meds piece that you sold, I am just wondering what drove your decision to sell that. Are you seeing the higher yielding opportunities where you can put that money?

Jay Flaherty

I think a couple of things. One, there has been a big move and there is obviously a lot of HCA IPO speculation that has kind of filtered into the market and I think that has probably impacted valuations of those bonds. Just from a pure real estate investment perspective when we saw the yields on those bonds, the market yields going to the mid to high 7’s our ability to monetize those and reinvest them just within the quarter in a piece of debt like what we call Manor Care II, our second Manor Care investment, had unlevered yields of 13% that is a wonderful pick up of spread investing for the benefit of HCP’s shareholders. So as we have historically looked at all the alternatives available to us both in terms of raising capital and investing capital. That particular opportunity was unusually attractive for our shareholders.

Mark Biffert – Oppenheimer & Co.

When you look at the unsecured debt markets we have seen spreads come in quite a bit. You have a little over $200 million coming due in 2010. I am just wondering what your thoughts are on issuing right now and holding that cash on balance sheet in case you have opportunities to do other acquisitions versus waiting until next year given the uncertainty that spreads might go back out or expand out again?

Jay Flaherty

We always separate the investment decision process from the fund raising process. If the $200 million was coming due today, which it is not, we are sitting on $300 million of cash and marketable securities so I think we will probably just take it out of petty cash and pay it off that way. We in fact during the quarter prepaid a $100 million mortgage that was due in the first half of 2010. That is why you have seen such a dramatic decline in the amount of debt maturities we now have for 2010. So we have effectively done what you have suggested. Quite frankly we are awash in liquidity right now so the last thing we are concerned with is liquidity.

It continues to be trying to optimize our existing portfolio and try to identify and close additional investment opportunities like the one we closed in quarter with the second investment in Manor Care.

Mark Biffert – Oppenheimer & Co.

Are you seeing other opportunities out there or is it pretty dry right now and you expect more opportunities in 2010?

Jay Flaherty

I would use the quote of that gifted real estate investor maverick to describe the current situation which I think his quote was it is a “target rich environment” right now.

Mark Biffert – Oppenheimer & Co.

Any specific sector you want to talk about?

Jay Flaherty

I will talk about any sector you want to talk about. What do you want to talk about?

Mark Biffert – Oppenheimer & Co.

Independent living, assisted living, skilled nursing, where are you seeing the opportunities? What are the cap rates. What are the size of the deals? Are they more portfolios versus individual assets?

Jay Flaherty

We typically wouldn’t look at individual assets. If I were to rank them by sector in terms of where we are apt to be most active to lease active I would probably group senior housing, skilled and life science at one end of the continuum. I would put hospitals at the other end of the continuum. That would be less likely to invest in hospitals, more likely to invest in senior housing, skilled and life science. I would probably put MOB somewhere in the middle. So that is how I would handicap that.

With respect to cap rates, the only data points since we have last gotten together there have been two in senior housing and one in MOB. I would prefer not to speculate on cap rates but I can give you those data points because they are announced deals. They haven’t closed. In senior housing there was two AL portfolios and the cap rates there were for the most part in the mid 8’s. There was one MOB portfolio and that was at an 8% cap rate. So rather than kind of speculate I would rather just stick to the facts. Those are the three transactions that occurred in the quarter.

Mark Biffert – Oppenheimer & Co.

On the Sunrise assets you gave to Horizon Bay how much is the short-term rent deferral going to impact your numbers in Q4? When do you see the escalators of the 9%? Is it a year out and then it bumps up 9% and then a year after at 9% like what happened with Emeritus?

Jay Flaherty

I think you might be confusing two things here. One is the Eden Care II properties we transitioned from Sunrise to Horizon Bay and then separate was the tweaking of our existing investment with Horizon Bay which as you will recall is through a joint venture where we owned 35% of the equity in that venture and an institutional party owned 65%. I believe Paul’s comments on the restructuring deferral related solely to the joint venture but let me have Paul take you through the math on both.

Paul Gallagher

That is true. With respect to the transfer to Eden Care assets, the rent is effectively flat for the first year and then on average over the remaining four years it bumps up on average 9% and then it goes to either a fixed or CPI type increase. That is on the transition to assets from Eden Care. With respect to the rent deferral our portion of the rent deferral will be over a 2-year period and will be up to about $4.9 million of deferral potential.

Operator

The next question comes from the line of Jerry Doctrow – Stifel Nicolaus & Company.

Jerry Doctrow – Stifel Nicolaus & Company

I just wanted to circle back on a couple of things. You had mentioned in passing HCP’s rights and I guess I was trying to figure out if that was specifically referenced to Manor Care or if there were some other investments you have where you thought the level of transaction in healthcare might give you some opportunities.

Jay Flaherty

Oh now. I think what I said was the deal activity where I said I expect the deal activity in the first six months of 2010 to exceed the 36 months through the end of this year, that was specific to names that are in HCP’s portfolio. Let me go one step further. If we were to carve out the office side of the equation, the life science and medical office, those two pieces you are at about 60-65% of the company with the remaining sectors still hospital and senior housing.

Let me describe it this way. I can’t off the top of my head in the 60-65% piece of our portfolio think of one name that is not presently involved in either a strategic discussion or a go public discussion. So it is that pervasive. That comment of activity level was not a broad based healthcare comment. That related specifically to names in HCP’s portfolio.

Jerry Doctrow – Stifel Nicolaus & Company

The issue would be even on a base lease if somebody wants to buy somebody else the lease essentially has to get reopened and you have rights to potentially pick up…

Jay Flaherty

It is a variety of things. There is a lot of that. There is someone who wants to go public and there is some existing debt that has to be dealt with in the IPO proceeds and while it may be a very successful IPO maybe they are not sufficient enough to deal with all the debt. We can kind of slide up or slide down the capital stack and fill in a hole that way. We have got warrant positions, probably more so in the life science space, but with all this life science activity with the big pharmas and medium sized pharmas moving in and the biotechs. There is some of that. It really, like I said it cuts across our entire portfolio.

Jerry Doctrow – Stifel Nicolaus & Company

Back to Manor Care, specifically with what you were talking about and I haven’t read the West Virginia website I confess, one of the options would be obviously I think from your remarks would be for HCP to acquire all of Propco rather than to be paid off or converting what you have into leases. Is that sort of the right inference to what you were saying?

Jay Flaherty

I think the right inference is the fact with their election to bifurcate the company and create a REIT the options that we now have available to us are like I said, have expanded exponentially. How that shakes out and what happens out of healthcare reform, what is the timing of the IPO, whether there is a blend and extend discussion with the existing debt. It is just a complete gamut of things but at the end of the day if you have got top quality equity sponsor like Carlyle that has the ownership stake in a top quality business model like HCR Manor Care that is led by a top quality management team it is really kind of what is going to be the winning scenario here for HCP because nothing but good things are going to happen from this point going forward.

Operator

The next question comes from the line of Michelle Ko – Bank of America/Merrill Lynch.

Michelle Ko – Bank of America/Merrill Lynch

I was wondering if you could give us more details on the non-Sunrise occupancy piece. You had talked about that it had stabilized somewhat and I was just wondering if you could give us more color around that and what you are seeing so far in October?

Jay Flaherty

Well I think let me give you just a 30,000 foot view, last night or this morning we had three significant operators in our portfolio, Brookdale, Kendrick tenant all report better than expected results. As it relates, I think your question is more focused on senior housing. Brookdale had an unexpectedly positive result. So that is what you see going on big picture. In terms of the details in our portfolio, Paul?

Paul Gallagher

I think if you look at the folks that have reported so far they are reporting occupancy increases our numbers that we reported out were trailing 12 months as of the second quarter. So the comment about beginning to stabilize that is based on discussions and commentary with the various different operators based on what they will be releasing for the third quarter.

Michelle Ko – Bank of America/Merrill Lynch

I was wondering if you could tell me if you were to tap the unsecured debt market what rate do you think you could obtain for financing.

Jay Flaherty

What maturity would you like us to talk to you about this morning?

Michelle Ko – Bank of America/Merrill Lynch

5 and 10 year.

Jay Flaherty

The indications we have gotten recently have been in the mid to high 5’s for the five year and probably slightly above that for the 10-year adjusting for the Treasury reference.

Operator

The next question comes from the line of Michael Mueller – JP Morgan.

Michael Mueller – JP Morgan

First of all on the senior housing portfolio can you walk through the sequential revenue and NOI changes going from Q2 to Q3?

Thomas Herzog

Q2 to Q3?

Michael Mueller – JP Morgan

Yeah.

Thomas Herzog

What you referencing is the cash same property performance of a negative 6%? Is that right?

Michael Mueller – JP Morgan

I am looking at the GAAP NOI going from $78 million to $68 million and the cash going from $65 million to $61 on page 13.

Thomas Herzog

In looking at the sequential change you have a few different things. First of all the Eden II transition resulted in some projected working capital shortfalls and in the Sunrise portfolio that would have had a negative 8% impact just on the Sunrise portfolio itself but across all the senior housing it would have been a negative 2.7%. Another item would have been on a sequential basis the ME1 and ME3 portfolios had some cash that had been held back in Q1 for working capital purposes that was released in Q2 and of course that didn’t occur again in Q3. That would have had a negative 12% impact on Sunrise and across senior housing a negative 4%. So those are the two big drivers you would see in arriving at the negative 6% for senior housing.

Michael Mueller – JP Morgan

So if we are looking at that Q3 number that has been impacted by the changes you mentioned and thinking about a cleaner number, thinking Q4 and going forward, what happens to that $61 million number?

Thomas Herzog

It depends. We have a number of items. For instance, if we look to the year-to-date numbers which smoothes out some of that, year-to-date year-over-year you find the senior housing to be at a minus 2% all in but a minus 10% of that is due to Sunrise for the same reasons. So absent the Sunrise we would have had just under a 2% same property performance result year-to-date year-over-year results.

Michael Mueller – JP Morgan

Switching gears, life science, I just want to clarify the 18-19% same store NOI growth. Is that being impacted by the development lease up at all?

Paul Gallagher

I mentioned a couple of different things. One it is normal rent steps that we have within the leases. Leased up the portfolio dramatically. We have gone from 80% to 91% and then we have had some of the TI’s completed on some of the development buildings where we are now recognizing that revenue.

Michael Mueller – JP Morgan

On a go forward basis if we are looking at projects that are on your development page that is not in there? Those are segregated correct?

Paul Gallagher

Correct. They are segregated.

Michael Mueller – JP Morgan

Did you mention the rate on the swaps?

Thomas Herzog

I didn’t but let me give those to you. We have the $250 million swap that has a pay rate and that is the one that is due in 2011. It has a pay rate of LIBOR plus 421 and a receive rate fixed at 595. Then we entered into the two subsequent swaps this past quarter and they have a pay rate of LIBOR plus a receive rate of 0.87 for the swaps that are due in February of 2011 at $250 million. The additional $250 million due in August 2011 is a pay rate of LIBOR and a receive rate of 1.24%.

Jay Flaherty

Tom you might for the audience just take a step back and look at the big picture in terms of what our net floating rate exposure was, what happened after the de-equity deal and with the swaps put back on what our exposure is right now.

Thomas Herzog

If you took our total floating rate assets, of course you are going to have all of the Manor Care assets that are all floating rate and net that against our current floating rate debt position. Subtract from that the impact of the swaps. We would be at a net floating rate asset exposure of just over $300 million and so if we had for instance a 1% upward change in LIBOR that would be equivalent to about $3 million or $0.01 on the positive.

On the downside of course as LIBOR at about 25 basis points there is not a lot of room to drop. We have match funded our portfolio in a way that we like but there is a little bit of upside in the way that we have it structured. Then the same thing applies on the Sunrise rents where we have some LIBOR base rents. There is some upside potential there. I think every 1% change in LIBOR increases NOI by about $800,000.

Operator

The next question comes from the line of David [Totti] – Citi.

David [Totti] - Citi

Can you talk about your thoughts around capital recycling in today’s environment given relatively stable asset prices? Why do you continue to go to the debt markets rather than recycle some of your mature assets? I understand there are dilutive consequences, just your thoughts on strategy about that would be welcomed.

Jay Flaherty

We are talking about HCP right?

David [Totti] - Citi

Yes.

Jay Flaherty

Because we did just the opposite of what you just said in the quarter. We didn’t go to the debt markets. We recycled a portion of our existing HCA bonds at a current yield in the high 7’s and effectively kind of took that basically if you look at it just on a quarter basis, which of course we don’t, that basically was the equity component that we used to invest in what the required equity investment was in Manor Care II at 13% and by doing so we picked up a little over 500 basis points which we think was a real good maneuver.

David [Totti] - Citi

Absolutely but you haven’t done it in scale yet so I am just sort of thinking about does it just not make sense relative to your platform to recycle capital in any sort of size?

Jay Flaherty

I think we have sold almost $3 billion of real estate. Again, I’m not sure if you are talking about healthcare but if you are talking about HCP specific I think we have actually recycled a little over $3 billion in real estate over the last 2.5 years which I believe exceeds the asset sales of the remaining entire healthcare REIT Industry. I would love to kind of educate you offline but we are in a significant proponent of capital recycling.

David [Totti] - Citi

Can you update us on any discussions you may be having within senior housing with Aegis and Capital there. Their coverage ratios look a bit low. I’m just wondering if there is any issue around performance thresholds there.

Jay Flaherty

No I think we have the benefit of master leases and the big picture is if you have seen of our five sectors senior housing has probably been most impacted by the great recession. As Paul mentioned you have seen overall coverage ratios increasing in the last quarter but that is less to do with occupancy and revenue growth and more to do with expense controls. I think I have said in a previous call that has been wonderful and we applaud our operating management teams. Where you continue to see occupancy declines at some point you reach a point where you can’t continue to cost cut your way to profitability. With respect to those two portfolios we are watching them like we are watching everybody else but we are pretty relaxed largely because of the benefit of the master lease as to where we are with those two situations.

Operator

The next question comes from the line of Jay Habermann – Goldman Sachs.

Jay Habermann – Goldman Sachs

You mentioned deal activity in obviously first half 2010 and clearly you are very busy and you are looking at lots of potential opportunities. Can you just give us a sense of your interest level of acting now versus waiting throughout the cycle? Would you anticipate in the healthcare reform you will see an elevated level of deal activity beyond the first half of 2010?

Jay Flaherty

Acting now, I think if you go back and look at the eight quarters of the great recession, Q4 2007 through Q3 2009 if you want to call the recession over which I guess by definition it is but as you have heard me talk previously I am not as upbeat with where we are heading here. If you look at those eight quarters we have been very active. We put out $1.5 billion of our shareholder’s capital. That was largely, with the exception of the completion of the development fundings in the Bay Area in our life science portfolio, that was largely in the depth stack of Manor Care.

I think coming out of this we are positioned given the opportunistic investment activity that we are very proud of having achieved in the last eight quarters we are nicely positioned to benefit as those investments are restructured. I think largely at this point certainly in healthcare opportunistic investing is more or less in the rearview mirror. Unless you have something that is unique within your portfolio where you may have some leverage, and I’m not talking about financial leverage I am talking about more contractual leverage, I think the opportunity as the markets have begun to normalize here is going to be less opportunistic and more of what I would say are market level deals.

Now the one exception to that and again this is all in the context of healthcare is that there is a dam getting ready to burst here with healthcare reform expected to be finalized. There have been a lot of folks that notwithstanding the capital markets closed have been on the sidelines, understandably so, until the final rules get written. I think you are going to have a one-time explosion here which I have suggested will occur in the first six months of 2010 of deal activity. We are obviously privy to a lot of it given a lot of it is going to impact or involve the folks that are in our portfolio. I think you are going to have a one-time kind of pop here in the first half and then after that healthcare reform will certainly starve the losers and reward the winners. As I have said winning here in post-healthcare reform environment you have to be efficient and I think the best gauge as to whether you are an efficient operator is your margin.

You are going to have to have critical mass and you should read that to mean market share, not necessarily nationally but within a regional geographic area. You are going to have to have quality outcomes. You can go into this with each of the sectors of healthcare and the deck chairs are going to get further reordered here and the winning economic models like an HCR Manor Care, but I don’t want to just be fixated on HCR Manor Care, certainly HCA and others would be in that discussion, they will benefit disproportionately because what will happen is to what extent they get their margins squeezed a little bit they are going to more than make up with top line volume increases because they are efficient, have critical mass and have quality outcomes. Those are the folks that we want to be partnered with going forward here.

Jay Habermann – Goldman Sachs

In terms of NOI and the outlook for 2010 it sounds like leasing activity remains pretty strong. Are you really anticipating something similar to 2009? Any major variables?

Jay Flaherty

I think you have a couple of things that are going to be working our way. You have the whole lease coming on and then you have the Aureus and a couple of things we are going to have the wind to our back in 2010 versus 2009. Absent those, MOBs which I think I have said previously is our most defensive sector. That looks to be steady as a rock. They just keep knocking out the results. We couldn’t be more pleased with the Nashville group.

Life science, that has proven to be a wonderful strategic move in the two years almost to the month after we have made it with the Slough acquisition. Then most of the rest of the stuff is triple net, with the exception of the Sunrise portfolio, everything else is triple net that has next to nothing in the way of lease expirations over the next several years but contractual escalators built in. So the amount of variability in the model increasingly is just isolated to just a handful of items.

Jay Habermann – Goldman Sachs

On Ventas, can you give us some sense of the legal costs going forward? Should we assume the quarterly rate is going to drop off substantially and any updated sense of timing for the appeal?

Jay Flaherty

I think Tom quantified for you the expenses for the nine months year-to-date in 2009 relating to that matter which I think was $13 million. Going forward the appeal process is not expected to be material. Depending on how this plays out in the courts it could be anywhere from a late 2010 to an early 2011 sort of resolution.

Operator

The next question comes from the line of Richard Anderson – BMO Capital Markets.

Richard Anderson – BMO Capital Markets

The amortization on the HCR investment is it still running at a $35-36 million annual rate? Is that the way we should be thinking about it?

Thomas Herzog

You take the $130 million discount on Manor Care II and you take the $100 million discount on Manor Care I and simply put them in an amortization schedule and amortize those using the effective interest method. It is going to vary as to where you are at in the timeline. I would just recommend setting up an amortization schedule and crunching those through that way.

Richard Anderson – BMO Capital Markets

So for this quarter should we assume if you have interest income of $39-40 million maybe $8.5 million or so of amortization? Is that close?

Thomas Herzog

If somebody could put a calculator to it real quick. I have the big numbers in front of me and the amortization schedule. It is about $60 million per year.

Richard Anderson – BMO Capital Markets

Just to make sure, the $6 million on the debt sale that is interest income is that correct?

Thomas Herzog

Yes.

Richard Anderson – BMO Capital Markets

The $6.2 million legal costs is in G&A?

Thomas Herzog

Correct.

Richard Anderson – BMO Capital Markets

On the HCR deal is this first of all, and pardon me for not knowing exactly how these things play themselves out, but were you a part of the process for this Propco, OpCo move? As you the bondholder did you have to sign off on it?

Jay Flaherty

Nothing has happened yet. They started…

Richard Anderson – BMO Capital Markets

Are you in the process I guess is what I’m saying.

Jay Flaherty

We have been having ongoing discussions with the shareholder.

Richard Anderson – BMO Capital Markets

Could you stop it?

Jay Flaherty

Could I stop it? I don’t know why I would want to do that. I want the company to do extremely well. I guess it is hard to do extremely better than it has already done since it has done so extremely well but we are their biggest champions and to the extent we can facilitate their continued success and have some of the trinkets of gold fall our way. I think that is a great result for HCP’s shareholders. We are huge supporters of the company’s business model, the company’s management team and the company’s shareholders.

Richard Anderson – BMO Capital Markets

Is your optimal outcome, I think this was kind of asked but I didn’t get the full answer, your optimal outcome to be an owner of the entire portfolio or is a viable option to be some sort of mix of debt and equity at the end of the day with HCR?

Jay Flaherty

We don’t really have an optimal outcome at this point. The one outcome I would just as soon not have to deal with is a 100% par payoff on January 2013. The scenario that I would love to have is we own the entire real estate portfolio at that 9.5 lease yield calculation I took you through. My sense is that neither of those two scenarios will occur. So therein lay the opportunities for us to partner with Carlyle and its management team and optimize something that works well for everybody.

Richard Anderson – BMO Capital Markets

In your view HCR is the tip of the iceberg?

Jay Flaherty

What do you mean tip of the iceberg?

Richard Anderson – BMO Capital Markets

In terms of sort of transactions of this ilk to find their way onto your table to take a look at?

Jay Flaherty

There is a number of either strategic discussions that are in the works and/or IPO transactions that are in the works that at this point are reasonably fully developed but everyone understandably so is waiting for the ink to dry on the healthcare reform legislation. That will be the…

Richard Anderson – BMO Capital Markets

What do you think are the losing asset classes if any in the healthcare real estate environment vis a vie healthcare reform?

Jay Flaherty

We are going to limit this discussion to healthcare real estate?

Richard Anderson – BMO Capital Markets

Well as you have been saying to other people, go wherever you want to go with it.

Jay Flaherty

I think the HMOs are going to get whacked maybe a little unfairly. They seem to be the whipping boy in Congress right now so I think that is probably a little unfortunate and probably a little over done. I think…

Richard Anderson – BMO Capital Markets

What about just your portfolio and your world of healthcare real estate? Do you see any specific property sector that could bear the brunt on the negative side or do you think everybody kind of benefits?

Jay Flaherty

I think everybody…I wouldn’t say everybody is going to benefit. In fact I would say it would be the exception if somebody benefited. Everybody is going to contribute to the alter here a little bit to the cost including by the way everybody on this call in terms of higher taxes but certainly in terms of the healthcare providers everybody is going to contribute to the collection here to fund the greater access of the uninsured population in this country here over the next couple of years.

What I am saying is the folks that are best in class operators because what they give up in margin they will more than recapture in terms of volume gains. Those are the folks you want to be aligned with. I guess the answer to your question is not so much a take on which particular healthcare real estate sector benefits from healthcare reform because…or the way you asked the question what is the loser. I don’t think there is a healthcare real estate sector that goes away because of healthcare reform. I do think there will be operators in each of the sectors that go away and there will be operators in each of those sectors that get disproportionately benefitted from healthcare reform.

I will turn your question around and answer it that way.

Operator

The next question comes from the line of Robert Mains – Morgan Keegan & Co.

Robert Mains – Morgan Keegan & Co.

I’m not sure about that higher tax stuff here in upstate New York where we are all about wealth transfers.

Jay Flaherty

Unfortunately you ought to come out to California. Today we were greeted with the news that we have all now have the opportunity to effectively provide the State of California with an interest free loan in the form of an additional 10% withholding out of your paycheck which they assure us we will receive back next year. I fear that as goes California there goes the country in the next couple of years which underlies as you personally know having been on the losing end of some liters with me, my rather downbeat view of where things are going here in the next couple of years.

Robert Mains – Morgan Keegan & Co.

You gave a breakdown of the NOI growth in the senior housing with and without Sunrise. Do you have that for hospitals X Hogue?

Paul Gallagher

Without Hogue we would have been down just about 1%.

Robert Mains – Morgan Keegan & Co.

That is all triple net why would that be down?

Paul Gallagher

We had one hospital in Texas that we repositioned to a new operator and there were some concessions with respect to that lease.

Jay Flaherty

Don’t you have the participation because they don’t kick in until the fourth quarter.

Paul Gallagher

Not as much of an impact. The good news in the hospital space is it is now covered at 4.5 times. The bad news is it increasingly looks like a participating bond from an ATP shareholder perspective.

Robert Mains – Morgan Keegan & Co.

The Eden Care, there were 15. One got sold and eight transferred to Horizon Bay. The other six do you want to disclose which operators they went to in the portfolio or is that immaterial?

Paul Gallagher

It is not material. There were three folks that were part of the tenants we had with Sunrise. One was a group called HRA and the other was out of Atlanta.

Jay Flaherty

So as part of them restructuring remember we cleaned up all those entities between ourselves and Sunrise with the new deal just like we did with Aureas and Emeritus. As part of that they ended up getting a couple of properties themselves.

Robert Mains – Morgan Keegan & Co.

So they were originally the operator of the property just now they don’t have the middle man?

Jay Flaherty

The manager was always Sunrise. They were between Sunrise and us. If you remember all those convoluted structures we inherited when we acquired CNL and as part of this process as we move these portfolios like Aureas and like Eden Care we are cleaning that up so it is much more transparent to our shareholders in the form of more traditional triple net lease structures.

Operator

The next question comes from the line of Mark Biffert – Oppenheimer & Co.

Mark Biffert – Oppenheimer & Co.

On the remaining Ericson is there any kind of straight line rent adjustment that could be recorded in a future period for that at all?

Paul Gallagher

What happens with Ericson on the two we ended up taking impairments on is we project out the cash flows on those two assets based on the terms of the potential bankruptcy, the restructuring of the bankruptcy court, and then we discount those back at the implicit rate of those contracts. The original implicit rate. It brings it down then to a carrying amount based on the discounted cash flow. I know this gets a bit complicated.

So then what you do is you then recognize income based on the reduced book value with the original implicit rate in those leases. So it is not a straight line concept. It is simply a reduction in the book value and then we have income generated off the original interest rate in the contract times the new book value and it accretes forward to the anticipated cash flow that we will receive.

Operator

The next question comes from the line of Karin Ford – KeyBanc Capital Markets.

Karin Ford – KeyBanc Capital Markets

Can you tell us what HCP’s current IRR return requirements are on new investments?

Jay Flaherty

Which sector, which geography, which real estate type, where in the capital stack in terms of the components would you like us to respond to that question at?

Karin Ford – KeyBanc Capital Markets

I guess if you would parse it between debt investments and equity investments first and/or talk about your preferred sub-sectors like senior housing, skilled nursing and life science?

Jay Flaherty

I think in the skilled space we obviously put out a boatload of our shareholder’s capital. That has been increasingly senior in the capital stack where you have coverage ratios that are quite frankly unheard of in terms of the cushion there. Notwithstanding debt investments which in general ought to carry lower IRR returns and given the substantial coverage ratios you have seen those sort of IRRs range from 9 to 13 and that is assuming those investments are held to maturity and don’t find their way recast into more of an equity play. So that is how we would play skilled.

With respect to hospitals, we have really kind of backed away from hospitals. That has been a disproportionate amount of our disposition activity. We now have an owned real estate portfolio that as I mentioned a minute ago is covering at 4.5 times. We are not likely to deploy a lot more capital into equity ownership of acute care hospitals. That is just kind of a view we have. We would play as a [mez] debt investor and have played most notably in the HCA position where we have made a lot of money for our shareholders, albeit not just holding that debt investment but also trading that investment over the last 2-3 years. So we think we have a pretty good fix on what fair value is of that particular debt security. When it gets above that level we monetize some of it. When it gets noticeably below that level as we did post Lehman Brothers last fall we doubled down, if you will.

In senior housing, there was only a few transactions this quarter and they were in the mid 8’s. The MOB deal was kind of 8%. As you can tell, you really can’t generalize. You have to be very specific in looking at where you are in the capital stack, what the sector is, what the geography is, what some of the structural considerations we can bake into an investment would be which would include things like master lease and letters of credit and potentially some sort of equity call on the company.

Karin Ford – KeyBanc Capital Markets

Do you have an update or can you give us the timing on the litigation with Sunrise on the 64 assets?

Jay Flaherty

Those lawsuits were filed in both the Delaware and Virginia courts. The discovery process has begun. We expect to have the cases ready for trial in early 2010. So early next year. Specific trial dates haven’t been set but the Virginia court has set a schedule that requires the parties to be ready to try the case by mid February so that is about three months out. The Delaware court has set a schedule that requires the parties be ready for trial by October 2010.

With respect to the Virginia proceedings, Sunrise has already been in Virginia court to ask that the schedule be pushed back. HCP resisted the delay that Sunrise was seeking and the Virginia court has declined Sunrise’s request for further delay. So we anticipate continuing on track to get the Virginia case ready for trial in three months in February and we would also expect Sunrise to continue to try to avoid going to trial by seeking further extensions.

Operator

Ladies and gentlemen that concludes the Q&A session. I would now like to turn the call back over to your CEO, Jay Flaherty.

Jay Flaherty

Thanks everybody. We will see you soon. Take care.

Operator

Ladies and gentlemen that now concludes the presentation. Thank you for your participation. You may now disconnect. Have a great day and enjoy your week.

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Source: HCP Inc. Q3 2009 Earnings Call Transcript
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