Healthpeak Properties, Inc. (DOC) Q4 2007 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Fourth Quarter and Yearend 2007 HCP Earnings Conference Call. My name is Shiquana [ph], and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of this conference. [Operator Instructions]. I would now like to turn the presentation over to your host for today's conference call, Mr. Ed Henning, HCP's Executive Vice President and General Counsel. You may go ahead, sir.

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 belief 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 filing. 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 statement 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 measure as well as certain related disclosures in our supplemental information package in earnings release each of which has been furnished to the SEC today and is available on our website at www.hcpi.com I'll now turn the call over to our Chairman and CEO, Jay Flaherty. James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Thanks Ed, and good morning from the west coast. 2007 was the most successful year in HCP's 23-year history. Reported FFO growth of 18%, investments of 4.7 billion, dispositions of 1 billion, joint venture contributions of 1.7 billion, capital raised of 6.3 billion and a revenue quality mix of 94%. As importantly, 2007 brought to a close the multi-year repositioning of HCP's portfolio and a build-out of the company's product platform. I will comment further on each of these issues but let me now introduce Executive Vice President, Chief Financial Officer, Mark Wallace; and Executive Vice President, Chief Investment Officer, Paul Gallagher. Mark will review our 2007 results and Paul will detail the HCP portfolio. Mark?

Thanks Jay and good morning everyone. Our investment in Manor Care just before we closed the book from 2007, capped off an active and successful year for HCP. The corner stone was our $3 billion dollar acquisition of Slough Estates but notable as well was a growth of our investment management platform with assets under management now approaching $2 billion. These transactions along with other initiatives of our acquisition and asset management teams continue to both expand our business platforms and significantly reposition our portfolio. From a financial standpoint 2007 was equally successful. As Jay just mentioned our reported FFO increased 18%, our FFO before impairment in merger costs was up 13%. Our FFO payout ratio on a reported basis was 83% and 79% before merger and impairment charges. Let me turn now to our fourth quarter investments. Our $900 million investment in Manor Care pays interest at LIBOR plus 4% on the face amount of $1 billion. For GAAP purposes the discount is accreted to income resulting in an effective yield at close of LIBOR plus 660. Manor Care generated just over $3 million of interest income during the fourth quarter. The debt has a five-year term maturing at January 2013 subject to extension test in the fourth year. It is pre-payable in the first year subject to yield maintenance. Our investment is secured by an indirect pledge of equity ownership in Manor Care facilities and was subordinate to 3.6 billion of other debt; at closing, the loan to value arranged from 66% to 85%. During the fourth quarter, we also acquired three life science buildings which are all 100% leased for $46 million with a weighted average yield of approximately 7.1% and funded $59 million of development in other capital projects. We sold eight properties during the quarter for $27 million at a weighted average yield of 6% and recognized over $11 million in gains although such gains are not reflected in FFO. While the dislocation in the credit markets has certainly affected the cost of financing across the industry, we continue to have access to our traditional sources of capital and have made substantial progress de-leveraging our balance sheet. Capital market transactions during the fourth quarter included the issuance in October of 9 million common shares for $303 million in net proceeds and the issuance of 600 million of tenure 6.7% senior unsecured notes. These transactions and the earlier sale of 41 properties to Emeritus generated $1.4 billion of proceeds which we used to reduce our bridge loan to its current balance of $1.35 billion. At this reduced level, the final maturity of our bridge loan can now be extended to July 31, 2009. At yearend, our overall leverage ratio was 57%, down from 62% at the announcement of Slough. Our secured debt ratio was at 12%, our unsecured leverage ratio stands at 68% and our trailing fixed charge coverage for 2007 was just over two times. Floating rate debt represents 36% of our total debt at yearend. However, our Manor Care investment provides a natural hedge which effectively reduces our net floating rate exposure to about 24%. During the fourth quarter we also executed $900 million of forward starting swaps to hedge future anticipated debt issuance. Our debt maturities for 2008 are limited to $300 million of floating rate senior unsecured notes due in September and $95 million of mortgage debt amortization. As of the close of business yesterday, we had $878 million drawn on our $1.5 billion revolver net of unrestricted cash. Reported FFO per diluted share for the full year 2007 was $2.14. Excluding $22 million of merger related cost, FFO was $2.24. For the fourth quarter FFO per diluted share was $0.54 including $3.8 million or $0.01 per share of merger related charges. Merger costs for the quarter included $800,000 of G&A expense related to integration efforts and $3 million of interest expense related to bridge loan fee amortization. Same property NOI for 2007 was up 4.3% on a GAAP basis and 2% on an adjusted NOI basis. We have signed leases for all of the space at the former Élan campus in San Diego that was vacated during 2007 and adversely impacted last year's same property results. If you eliminate the effect of the single property, our overall adjusted NOI growth was 3%. Each of our other segments reported solid adjusted NOI performance. Skilled nursing came in at 4.2%, senior housing at 4.1% and medical office buildings at 3.2%. Keep in mind, our consolidated same property portfolio at yearend excludes assets acquired in our purchase of both Slough and CNL Retirement Properties and assets formally included in our GE joint venture. Therefore, the same property pool represented less than one-third of our total properties at year end. The assets we acquired from CNL and our former GE JV will be included in same-store results starting in the first quarter 2008 and will increase the same property pool to about two-thirds of our total investments. Regarding guidance for 2008, we expect reported FFO to range between $2.26 and $2.34 per diluted share. The midpoint of that range represents a growth rate of 7.5%. That growth is primarily driven by our Slough portfolio and the return on our investment for Manor Care, partially offset by anticipated asset dispositions to complete our de-leveraging plan. Our Life Science segment contribution to 2008 NOI comes from a combination of lease of activity, contractual escalators and occupancy gains as well as developments coming online. Let me provide a few of the key assumptions that underlie our 2008 guidance. Our guidance contemplates no acquisitions of real estate or debt investments and no contributions of asset into joint ventures. We expect to fund $100 million of development and expansion projects principally in our life science sector. Asset dispositions are expected to be between $700 million and $850 million. Gains for the full year reported for GAAP earnings on these dispositions should range between $200 million and $300 million. Our investment management platform should generate $600 million in fee income. Same property portfolio growth based on adjusted NOI is expected to range between 2.5% and 3.5%. General and administrative costs should range between $70 million and $80 million or roughly 6.5% of total revenues. Proceeds from anticipated capital market transactions during the year will be used to repay existing debt and merger cost for 2008 should be about $4 million or $0.02 per diluted share primarily the amortization of remaining bridge loan fees. Last, we have revised our financial disclosure for this quarter particularly the portfolio of section of our supplemental package. We appreciate your suggestions and hope you find the new information helpful. And with that I will now turn the call over to Paul.

Thank you Mark. The past year has brought many changes to HCP's portfolio; the addition of the Slough Life Science portfolio and development pipeline, a $2 billion investment management platform, expansion of our mezzanine debt platform through our Manor Care investment, and significant capital recycling from assets sales. Our portfolio now has five distinct segments: Senior Housing, Life Science, Medical Office, Hospitals and Skilled Nursing. We have enhanced our supplemental reporting package by breaking up these segments with additional disclosures including lease explorations, leasing and releasing performance, property age and percent of pooled properties. We have broken out total property performance alongside same-store performance by segment on a sequential and year-over-year basis. This way you not only see same-store results, which Mark mentioned is less than a third of our portfolio, but you see how changes to the overall portfolio affect performance within each segment. Additionally, we modified the definition of cash flow coverage. The calculation previously was trailing 12 months EBITDA divided by annualized rent. We now divide EBITDA by trailing 12 months base rent and additional rent to more accurately reflect historical facility performance. Now let me take you to the five segments of our portfolio. Senior housing. HCP's senior housing consolidated portfolio consisted of 246 properties of which 68% of our total investment is located in mixed top 31 MSAs. The leases typically have an initial term of 15 years and 87% of our leases have renewal options. Our average remaining lease term is just under 11 years with less than 9% of the portfolios rents rolling over the next five years. Rents typically have annual escalators and generally reset the fare market upon execution of renewal options. Purchase options are less prevalent with only 24% of our properties subject to purchase options. The majority of these options are set at fare market value. We structure our leases to provide additional security with 85% of our senior housing properties pooled through master leases, polling agreements or cross guaranties. In addition, we often receive additional credit enhancement in the form of downstream guaranties from either the parent company or the principle of our operator, cash collateral in the form of security deposits or letters of credit or a combination of both. With regard to 2007 performance, HCP senior housing segment reported same-store cash NOI growth of 4.1% year-over-year. Senior housing occupancy remains stable at 90.8%. Despite concerns over the impact of the housing downturn, we have yet to see an impact to occupancy in our portfolio either by operator or location. With regard to our Sunrise assets, property level NOI year-over-year excluding one-time items grew at 5% and average occupancy increased to 160 basis points to 90.7%. Cash flow coverage of 0.93 times was impacted by expense growth in the portfolio over the prior year. We have been working with Sunrise on expense management and we began to see improvements in the trend in the latter half of 2007. Medical Office. Cash same-store performance for the year was up $3 million or 3.2% over 2006, driven by improvement in base rent which was $2.7 million higher. Increased operating expenses of $3.9 million were offset by expense recoveries of $2.9 million and recoveries of bad debt reserves of 1.3 million. 153 MOB leases were executed during the quarter totaling approximately 374,000 square feet, increasing the portfolios lease space to 91.1% at yearend, up from 90.9% at the end of the third quarter. Out of this total approximately 138,000 square feet related to previously vacant space and the remaining 236,000 square feet related to renewal of previously occupied space. The renewed leases brought our retention rate for the year to 78% within our normal range of 75% to 85%. MOB lease rollover for any 12-month period of time typically averages between 13% and 17% of the portfolio with average lease terms of four to five years. In addition to this core rollover approximately 2% to 4 % of the portfolio consists of holdover tenants who are month-to-month leases as renewals are being negotiated. Month-to-month leases totaled 407,000 square feet at yearend 2007 or 3% of the portfolio. And we expect to renew approximately 90% for these leases. The core lease exploration for 2008 is 17% and prospects are good with approximately 15% of the remaining 2.1 million square feet of explorations already leased or in build out. In addition to our normal expected retention, we have a pipeline of nearly 140,000 square feet of new lease under discussion. We had no MOB acquisitions for the quarter and sold one asset in San Diego to the anchor tenant for $8.6 million resulting in a gain of $3.5 million. We completed the Slough build out of 123,000 square foot MOB in Colorado Springs which is 75% pre-leased to Memorial Hospital, the number one hospital in the community with a 57% market share. Our pre-development pipeline includes 7 properties totaling approximately 641,000 square feet with a projected cost of $167 million. Skilled nursing reported solid same-store growth of 4.2% year-over-year driven by rent resets in two of our skilled nursing portfolios. Cash flow coverages and occupancies for the portfolio remain stable at 1.5 times and 86.1% respectively. Hospitals. Same-store growth in our hospital sector of 1.7% year-over-year was in line with expectations. Occupancies are stable and cash flow coverage for the total portfolio increased year-over-year to 2.4 times. Life Science. The Company's Life Science portfolio experienced strong operating results in the fourth quarter as tenant demand in HCP's core markets of South San Francisco and San Diego continued to produce leasing results that exceed our underwriting assumptions. During the fourth quarter, HCP completed approximately 423,000 square feet of leasing activity split 55% to 45% between San Diego and the Bay Area. Of this total 313,000 square feet related to new or renewal leases on previously occupied space that resulted in a mark-to-market increase of rents of nearly 40% over expiring leases, the remaining 110,000 square feet of leasing related to previously vacant space. These results have meaningfully reduced available space within our portfolio to approximately 396,000 square feet. As of 2007 yearend, the portfolio was 93% leased up from 90% at the end of the third quarter 2007. The Slough assets representing 5.2 million square feet were 91% leased up from 88% last quarter and 82% at acquisition announcement. Leasing prospects for 2008 remained robust with 45% of 2008 376,000 square feet of expirations already renewed or released. This combined with the pipeline of over 350,000 square feet of leases in negotiation should produce additional occupancy gains in income growth as rents are rolled to market. We expect to mark-to-market rental increases on 2008 expirations to range from 25% to 35%. On a same-store basis, the Life Science portfolio consisted of only 9 assets representing 739,000 square feet or approximately 12% of the portfolio. Income from these HCP legacy Life Science assets were down nearly 12... 28% year-over-year on a cash basis. As Mark previously mentioned, the decline was due to the reposition of the former Élan campus in San Diego, California. Reposition of this campus is complete and the same property portfolio was now 100% leased. It is worth noting that rent at the former Élan campus increased from $3.9 million per year to $6.9 million representing an increase of 77% over expiring rents. Excluding the Élan campus, same-store was up slightly on a cash basis for 2007 versus the previous year. The Company is committed; development pipeline is unchanged from last quarter, and totals 544,000 square feet in six buildings in our South San Francisco biotech cluster. As we discussed last quarter, these buildings represent new best-in-class Life Science space and are 86% pre-leased to investment REIT tenants, Amgen and Genentech. We expect to complete five of these pre-leased buildings totaling 466,000 square feet over the course of this year. Genentech will take approximately one-half of the space in the first half of 2008 and the remaining half will be delivered to Amgen in the fourth quarter of 2008. The future development and redevelopment pipeline represents an aggregate 3.3 million square feet of expansion opportunity in South San Francisco, Torrey Pines, Halway [ph] and Carlsbad. The changes we've made to the portfolio provide HCP with three distinct rent cash flow streams. Our senior housing portfolio along with hospitals and skilled nursing provide HCP with long-term, high quality private pay, low turnover, growing cash flows. The MOB portfolio has higher expirations, the higher retention ratios than traditional office, allowing HCP to roll 15% to 20% of the portfolio to market each year while maintaining occupancy. Finally, the Life Science portfolio leases are longer term with lower annual rollover but have significant near term growth potential. These three distinct rent cash flow streams are complementary and when layered together with our joint venture development mezzanine debt platforms help to further diversify HCP's growth opportunities. With that review of HCP's portfolio I would like to turn it over to Jay. James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Thanks, Paul. We are especially pleased with the continued strong momentum of our Life Science portfolio with 423,000 square feet of lease up and 40% mark-to-market increases in the quarter. I will now touch upon a handful of topics. HCP's business model, revenue quality mix, de-levering plan, current environment and conclude with a look ahead. HCP business model. In 2007, we reached critical mass with four product initiatives defined to be platforms of $1 billion or more that are expected to enhance returns for HCP's shareholders across our property segments. These are, one, development. As part of Slough Estates acquisition, HCP now enjoys a focused development and redevelopment platform representing 3.3 million square feet of laboratory, office opportunities in the land constraint, San Diego and San Francisco Bay area markets, two of the three largest life science clusters in the world. Our life science development is mostly build to suit in response to tenant demand. Two, DownREIT. Our February 2007 Medical City Dallas acquisition was structured as a DownREIT, the largest DownREIT transaction ever executed by HCP. We have now closed over $1 billion of transactions structured to include HCP equity as a meaningful component of the consideration to the seller. Three, Investment Management. In January 2007, we contributed 25 senior housing facilities operated by Horizon Bay into a newly formed joint venture with an institutional capital partner. HCP now has approximately $2 billion of assets under management in institutional joint ventures where HCP functions as the managing partner and minority investor of real estate portfolios in the medical office and senior housing sectors. By partnering with high quality institutional investors, our shareholders realize fee income and promoted interests in addition to the pro rata share of cash flows from our ownership. Four, mezzanine debt. HCP has a $1.3 billion mezzanine debt portfolio invested in the leading operators in the acute care hospital, specialty hospital and skilled nursing sectors. Mezzanine debt is a natural extension of our real estate equity underwriting expertise and generates attractive current returns albeit for shorter timeframes than our traditional equity investment activity. The substantial completion of HCP's multiyear repositioning results in a portfolio diversified across five property types, senior housing, life science, medical office, hospitals and skilled nursing. The investment structures are further diversified across five products; sale leaseback, joint ventures, development, DownREIT and mezzanine debt. Our 5X5 investment model, unique within the REIT industry, creates multiple FFO growth drivers and allows HCP to flexibly deploy and recycle shareholder's capital across a variety of operating environments. One of the significant competitive advantages created by our portfolio repositioning are the concentrations of relationships with the premier players in each of our five property types. These include for senior housing, Sunrise, Eriksson, Horizon Bay, Ages, and Bookdale; for medical office buildings, non profits such as Swedish Medical, Norton and Ascension in addition to HCA; for life science, Genentech, Amgen and Pfizer; for hospitals, HCA and HealthSouth; for skilled nursing, Manor Care and Trilogy. If you recall our previous comments of reworking our portfolio in the context of the retailing industry's, SKU concept, key to our portfolio repositioning was the objective of acquiring concentrations of newer higher barriers to entry healthcare real estate, operated or occupied by the leading players in 5 diverse sectors of the U.S. healthcare industry. As part of this rework we have consistently recycled non-core one-off properties especially real estate with exposure to state based Medicaid government reimbursement. Revenue quality mix. We have recently reviewed the underlying revenues for all the rental and interest income flowing into HCP. We grouped the source of these underlying revenue into either one, private pay and Medicare, or, two, state based Medicaid programs and excluded our life science and medical office sectors where there is virtually no Medicaid exposure. For the year ended December 31, 2007, 94% of revenues from HCP's facilities were derived from private pay and Medicare sources. For the facilities comprising the 6% Medicaid exposure, our coverage ratio was in excess of 1.5 times after management fees. Delevering plan. Our delevering plan has two elements: one, returning our credit metrics, especially our leverage ratio, to pre-Slough levels, and, two, terming out our floating rate debt. Our leverage ratio stood at 52% before we announced Slough and 62% after we announced Slough. By the middle of December two months ago, we had dropped our leverage ratio from 62% to 56% before taking it to its current level of 57% following our year-end Manor Care investment. We intend to reduce our leverage ratio to its pre-Slough levels by July 31st of this year through asset sales of $750 million. Of this volume we are in receipt of executed LOIs from interested parties for half of the $750 million and in active discussions for the remainder. With respect to terming out our short-term borrowings, we intend to wait for some level of normalcy to return to the credit markets prior to refinancing the balance. Current environment. Our five business segments are performing well. If you are to envision our performance scale on a continuum of not so good to the left and excellent to the right, I would place each of our five businesses on either side of the very good designation. Life sciences would be on the excellent side of very good and will be even skilled nursing would be right on the very good metric and hospitals and senior housing would be on the good side of very good. Given the slowdown in the U.S. economy, we are particularly pleased to have our portfolio repositioning behind us. The long duration reliable nature of our leases and the premier client relationships that we have added to our portfolio sets HCP up quite nicely in the current environment. We are particularly pleased with the significant reduction in our Medicaid exposure given the growing budget deficits we observe at state government levels. I have taken a half dozen or so calls since the start of the New Year from institutional investors looking to partner distressed healthcare situations with HCP. On education I point out, there's relatively little distress in healthcare, certainly nowhere near what is being felt in the other sectors of the economy. One need only to look at last week's HCA earnings announcement and the price performance of our toggle note investment in that company for confirmation. The bottom-line, people still need healthcare in a recession. Away from the strong underlying healthcare fundamentals, we have seen the current credit environment cause prospective joint venture partners to either retrieve to the sidelines for the time being or seek more opportunistic possibilities, particularly international strategies. As a result, we have elected to pull back the current joint venture marketing of our med cap MOB portfolio and substitute other asset dispositions as part of our delevering plan. Our med cap portfolio once again exceeded expectations in 2007, posting 100 basis point increase in occupancy and a 3.5%, same-store cash increase in NOI. With respect to acquisition activity, the turmoil in the credit market continues to lower volumes across the healthcare REIT space. We expect first quarter 2008 transaction activity for the sector to continue to moderate from 2007 fourth quarter levels. At HCP we are actively reviewing a number of opportunities. In this regard, the high quality concentrations in our exiting portfolio represent a significant competitive advantage for the company. A look ahead. To give the repositioned HCP Enterprise from context, our 5X5 business model has created multiple growth drivers projected to generate a 7.5% increase in reported FFO from our record 2007 results without the need to deploy any shareholder capital for acquisitions in 2008. If you were to set off to the side, the company's attractive mezzanine debt investments comprised of the number one industry leaders in the acute care hospital, specialty hospital and skilled nursing sectors. The remaining portfolio is long duration, inflation protected, reliable rent streams, in lab and medical office and private pay senior housing located in high barrier to entry markets, concentrated with the leading players in each of these sectors. In the space of a few short years, HCP's portfolio had been reshaped from a position of chasing the aging baby boomer demographic in the United States to a position of catching this demographic through the balance of the next decade. At this time we will be delighted to take your questions. Operator? Question And Answer

Thank you. [Operator Instructions]. Your first question comes from the line of Mark Biffert from Goldman Sachs. Please proceed.

Hey guys. First question Jay related to the assets that you guys plan to sell. What property types do you think you're going to pull from this... for those sales? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Mark, we will have four of our five properties segments represented, everything but life science, in that plan.

Okay. And of the tenants that are leasing that you have projected tenants for the life science portfolio in '08, what's your rating... are those clients and in terms of credit quality and overall quality of the tenant? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: It ranges, I think for some of the discussions that we're looking for example up in the Bay Area with some of our prospective development starts, those would be very significant life science entities. I think at the other end of the spectrum, you'd see the opportunity to bring in some small private companies. But I think it would definitely be weighted as the whole portfolio is weighted towards very substantial profitable life science players.

Okay. And question for Mark. In your interest and other income during the quarter, I know this took a big jump, what was in that $21 million that you show on your income statement?

The pharma [ph]... there's $3 million in interest and other income. There are $3 million in there for Manor Care with the primary increase.

Okay. That's it. Thanks guys.

Your next question comes from the line of Kevin Fischbeck with Lehman Brothers. Please proceed.

Great, thanks. Good morning. James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Good morning.

I had a couple of questions for you regarding Slough; previously you had broken out the leasing rates there between kind of the stabilized and the assets that were in lease up. Can you break that out again just please? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: The assets that are... assets that are in lease up?

Yes. James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: As far as run rates, what we expect to get?

Whatever, last quarter you had said that assets that were in lease-up that moved up to 57% occupied, whereas the stabilized assets that have are gone from 95 to 96? Do you have that... some more break out this quarter regarding [multiple speakers]?

I can get that broken out for you because I have not done that this quarter.

Okay. And then I think that last quarter you indicted that regarding Slough, you had no development starts plan for 2008. But due to the strength that you were seeing, you were thinking about revisiting that, any update there? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Yes, I think the update Kevin is that, we have moved into more active discussions with some prospective tenants for those properties. It is obviously incredibly strong demand particularly up in the life science, the South San Francisco Life Science quarter which you need look no further than the lease up performance we achieved again fourth quarter on top of the third quarter result. So we are pressing ahead as quickly as possible to the entitlement process and continuing those discussions and feel very good about that?

Okay. And I guess looking at the disclosure, it looked like one of the land parcels that you had, I guess, dropped out of land held for future development, the Torrey Pines Science Park is no longer there, can you say what's going on there?

What we have is, as we have reclassified some of that stuff as redevelopment as opposed to just land for... held for development. So that's kind of changed the characterization there.

Okay. So you still have it, and you still look -- James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Still have it, but it's more redevelopment as opposed to land.

Okay. And then the last question kind of follow-up to one of the earlier questions about the assets that you now looking to recycle. It sounds like you weren't necessarily planning on originally eventually divesting these, but the Medicaid delay pushed you in this direction. These assets that you are going to sell anyway or [multiple speakers] -- James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: These all represents the same profile of the $3 billion plus assets we've recycled over the last couple of years. They tend to be good performing economically viable assets but they tend to... you know again go into that retailing SKU concept be one off properties; it was a series of one-off operators represented in our portfolio. So as we increasingly tried to strategically move the company to concentrations of holding, it sets up nicely in that regard. So feel very good about that, we are far along in discussions and we will be able to provide with further update here on the next couple of months.

Okay. Great, thanks.

Your next question comes from the line of Craig Melcher with Citigroup. Please proceed.

I'm here with Michael Berman as well. In terms of your capital plan, beyond the disposition, sounds like you were doing some forward starting swaps to mitigate what you expected to do in may be some other capital issuances? Can you give us more color on what you are expecting to do in the year and what's included in guidance? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: With respect to capital?

Yes. With respect to debt or equity issuance in the year. James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: No, we've ventured into forward swaps aggregating about $900 million to debt in the fourth quarter. So, the asset dispositions if you recall, complete the equity component of our delevering plan and then we will... that... whether that takes our existing metrics back to where they were pre-Slough and then the remaining piece will be to term out the floating rate debt. And as I said, we are going to... we really kind of become more of a investor in debt given the uncertainty in the markets during the last couple of months as opposed to issuer. So, we'll wait for some return to normalcy there before terming out the floating rate debt piece of the plan.

And would you look to the unsecured market, would that be the first place to go? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: We are fortunate, we are active either as investors or issuers or both in all the markets. Right now I would say the unsecured debt markets are probably least attractive to us. In terms of straight debt, I would say that the agency market with respect to our unencumbered senior housing assets are probably the most attractive and there is the other markets that we access are probably somewhere in between those two endpoints. But again we have got a number of possibilities here and as we've consistently done over the last several years, we will optimize that based on what's available.

And last question. What do you... what is that debt, what your floating rate debt will be as a percent of total debt by the end of 08 to all your plans [ph]? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Well, right now it's 36%. But as Mark indicated, I think you probably... if you offset that with the floating rate Manor Care investment, you're down to about 24%, and our plan would result in our floating rate debt exposure by the end of the year returning back to our kind of low double-digit kind of 10%, 12%, 13%, zone that would consistently manage the company. They have very, very modest floating rate debt exposure.

Actually, on a net basis, it'd be down to around 10%.

Thank you.

Your next question comes from the line of Jerry Doctrow with Stifel Nicolaus. Please proceed. Jerry Doctrow - Stifel Nicolaus & Company, Inc.: Hi, couple of things. I guess first just on kind of improvement, I think it was about $22 million this quarter, I bet your guidance had been about $15 million and just trying to understand... I know it might bounce around quarter-to-quarter but sort of what your sense as we go forward for TI? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Okay, you're right. It does bounce around quite a bit from quarter-to-quarter. Going into 2008 for the lease commissions, total capital improvements, I would say, best guess would be around $66 million. And probably starts off around $20 million in the first quarter and sort of declines over the quarters down to about $10 million in the fourth quarter. Jerry Doctrow - Stifel Nicolaus & Company, Inc.: Okay. All right, great. That's helpful. And a couple of questions related to kind of the mezz financing. Do we know at this point how it's going to be categorized whether it's held-for-sale or available, or held-to-maturity available for sale, trading security, and I'm just trying to understand again if there are fluctuations, evaluations, how those might flow through.

Okay, there won't be fluctuations in value. It's categorized as a loan as opposed to marketable debt security. Okay. And it will categorized as held-to-maturity. Jerry Doctrow - Stifel Nicolaus & Company, Inc.: Okay. And Jay just to come back to sort of market issues, you talked some about debt market in terms of you as an issuer but prospects for that being sold is that included in your asset sales or is that something else that is kind of on hold until the markets' going to stabilize? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: I'm sorry, Jerry. I didn't understand. Jerry Doctrow - Stifel Nicolaus & Company, Inc.: The mezzanine debt, is that part of one of your asset held for sale? Is that included in that category or again is the mezz debt something you like to hold now a little longer given the uncertainty in the credit market. James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: We are in a very fortunate position of having multiple levers to pull on and we will optimize that for the benefit of the sales [ph] over long term. So, we got lot of cards we can play and right now in particular if that unsecured debt market will probably be the least attractive on the mezzanine debt. We were very pleased to see very high quality organization that we are very close to come in and invest in the 35% to... 36% to 55% piece in the Manor Care capital stock which was in excess of $1 billion. So, company is performing, Manor Care is performing... at least performing at a record performance. And given the economy with that company's high component of labor expense as opposed to the overall expense profile for that company again sets up very nicely here. So, I think we have got an attractive investment there and that's certainly one of the things that we might take advantage of. Jerry Doctrow - Stifel Nicolaus & Company, Inc.: That might be sold or it could go either way. Is that basically what I'm -- James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Yes, that's right. Jerry Doctrow - Stifel Nicolaus & Company, Inc.: Okay. I think that fair enough [ph] for me, thanks.

Your next question comes from the line of Rob Mains with Morgan Keegan. Please proceed. Robert M. Mains - Morgan Keegan & Co., Inc.: Thanks, Hi. Couple of more questions, Mark, on the kind of fab type numbers. Straight line rents were down from last quarter if you take out the Emeritus chunk in Q3. Is the kind of the run-rate that you're looking for, for 08?

The run rate, it's closed for 2008. I'd say the run rate on straight line rent for the full year will be about $35 million. Robert M. Mains - Morgan Keegan & Co., Inc.: Okay. So little bit down from where we are now?

Yes, correct. Robert M. Mains - Morgan Keegan & Co., Inc.: And then also... I know this is kind of small number. The amortization of debt issuance cost again if you had adjusted for what... it was kind of one time last quarter. Just kind of help a lot, was there anything going on in the quarter that was sort of one time in nature in that line?

Yes your very astute question; because we paid the bridge earlier that we... earlier than we had originally anticipated when we did the forecast, there was some additional amortization of the bridge loan fees in the quarter and that was about $800,000. Robert M. Mains - Morgan Keegan & Co., Inc.: Okay. And that's all.

That's all. Other than that the quarter was pretty much in line with our previous guidance. Robert M. Mains - Morgan Keegan & Co., Inc.: Yes.

Absent... sort of absent little changes in fluctuation in rates. Robert M. Mains - Morgan Keegan & Co., Inc.: Right. Okay, then my only other question was, if I look at the same-store numbers, I know that you can get quarter-over-quarter fluctuations, but the growth that you had, you adjusted same-store NOI growth for the senior housing business was so low in the quarter and the absolute number was pretty low. Is there anything going on there because I am assuming from your comments that it's not a case of weakness in the markets which wouldn't really be reflective for you any way? It was 0.3% for that Q3 to Q4? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: That's pretty normal for third quarter to fourth quarter in that particular space because of the way the increases worked through the course of the year. Robert M. Mains - Morgan Keegan & Co., Inc.: When do you get the big bump? Is it Q1 typically? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Yes. Robert M. Mains - Morgan Keegan & Co., Inc.: Okay. All right, that's all I had. Thank you.

Your next question comes from the line Rich Anderson with BMO Capital Markets. Please proceed.

Thanks and a good morning to you guys. Just a question on the Life Science portfolio. I know you have Amgen as your top 10, and they are sort of locked in on their leases, but there are also counted on to fill future development. And given that they are in the process of cutting 14% of their workforce, do you have any issues at all in front of you in terms of them taking development space that they planned on that may not... they might not in the future?

No. No it's all contractual; it's all taken care of.

Okay. The pre-leased number of 86% for Life Science, isn't that the same number that it was when you came out of the box with acquisition? And I was wondering if you could comment on your leasing activity for those specific projects?

Yes we have got about 600,000 square feet of leases that have been signed. And what you are going to see is about half of that space will take occupancy in the first quarter, and then the remainder will be split between the second and third quarter. So you should start seeing occupancy gains at the end of the first quarter.

Okay. So but the 86% is the same number that it was, but we should start to see that start to flow off [ph]?

Yes it's... Richard its five properties that are contractually going to be delivered as Paul said and few of the... in the first half the year and the remainder in the second half of the year. So those... everything related to those projects is completely contract.

Okay. On the bridge, just to throw in my bridge question, can you... I mean just a sort of said expectation, would it be your guess at least that you will get through the first extension period on the bridge. Is that sort of where your mind is right now? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: No. I mean, right now we are sitting with our... our metrics are very, very solid. 57% leverage ratio, 12% secured debt ratio, fixed charge north of two times. We expect the asset sale to close before the one-year anniversary, the July 31st. In fact we expect over half of these asset sales to close on either side at the end of the first quarter. So a good chunk right at the end of the first quarter, right at the end of second quarter; that will check the box on our credit metrics. And then as I said, we'll be opportunistic on the terming out of the floating rate obligation at that point. At that point we'll have rebalanced the debt to equity ratios for the company, so there would be just an opportunity that... when we see attractive to term out the floating rate debt, recall that we've got a very attractive credit facility there that would be accelerated pay down of our bridge, now as the final maturity out till July 09 and we are currently borrowing on that facility at about 3.84%. So, we are in a very fortunate position and we'll wait for some normalcy to return to the credit markets.

Certainly well priced, that's for sure. But I mean we... as an expectation we should expect some, say... something shy of $1 billion of the bridge outstanding and then take advantage of the extensive six months extension and then we'll go from there and see where the credit markets go. Is that a fair way of looking at it? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Our plan is to have the leverage metrics of the company back in place to where they committed to be by July 31st, as well as remaining bridge paid off by July 31st. So we are working towards that metric, it's nice given the success we've had and paying down the bridge to have the flexibility to push that out, as much as 12 month so that's not our basic plan.

Understood. And then just shifting gears to couple of more quick ones here. You mentioned that the growth rate, I think you said 5.7% FFO growth with no acquisitions -- James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Actually I said 7.5%. 7.5% with no capital going out to acquisition and that includes the disposition activity.

Okay. So what is that mezz loan business contributing to that growth rate. If you just say look at the property level, is it 100 basis points to 7.5 is it less or is it more? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Well I mean you've got... the same-store, you got as Mark mentioned the two drivers 08 over 07 are the continued strength above expectations for life science and Manor Care, I don't Mark if you actually between those two drivers allocated what percent of the growth goes to one. If we have, we could certainly undertake to do that.

So, no. James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: All right that's a no.

Okay. And then lastly you mentioned that dispositions will come through on all the buckets with the exception of life sciences. Could you see senior... I am sorry, skilled nursing going to... I mean sans the mezz loan the skilled nursing portfolio going to zero?

Probably not to zero, probably not to zero recall ex our Manor Care investment it's already down to 2%, Rich.

Right.

Of our portfolio. I think, we have been very consistent on this, we haven't... the bugaboo we have on that space is not the space broadly defined, it's Medicaid exposure. So we brought that Panum portfolio now I am dating myself now, but that was almost four years ago. We love that portfolio and I think we loved about it was the Medicare and private pay mix there was second only to Manor Cares 73% that was is in kind of low 60. So that kind of stuff, we like that, we have recycled a lot of skilled that had the Medicaid exposure. But, we are not, it's sounds like, who is got a red X up against the skilled place, it's the Medicaid exposure that we are particularly focused on.

Understood. Okay. Thank you.

Your next question comes from the line of Michael Miller with J.P. Morgan, Please proceed.

Hi, couple of questions first of all looking at the Manor Care loan you mentioned about 3 million of income in the quarter from that. For the non-cash portion of that income if I am looking at page 8, the supplemental disclosure where which line is the non-cash position end. When you look at the, I guess you know the interest accretion FAS-141 etcetera.

Yes, it's in the interest accretion number.

Okay.

So for the full year 18.7 [ph] it's in that number.

Okay. James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: It's only about 400,000 for the quarter.

Okay, so that was a minor pick up. Looking at the de-leveraging... James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Michael, just on that point at closing of that loan, in terms of where LIBOR was then. The closing to spread was 660, I think, if I am off I am off it's a little bit not much, I think there is cash spend was about 500 of that 660, and the amount that was going to accretive in was about 150. So the vast majority of the cash interest now that will change a little bit as LIBOR changes, but directionally I thought I would give you some feeling for what's going on there.

Okay. And then when you sit there and add up all the pieces the tenant improvements, the straight line etcetera. How do you guys feel about dividend coverage this year and just kind of how that is looking because I know you raised the dividend recently? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Yes, well I think our FFO payout ratio on... I think Mark give you the metrics on a pre-merger, pre-impairment is about 79% on an as reported, it's about 83%, I think its the mid point of our range, our FAD is about 96%, so I think we are very mindful of some of the changes that we have done in our business model. The impact and probably the accretion importance of FAD to our new model versus maybe what the importance of FAD was two or three years ago, because you didn't have much of difference between FAD and FFO. So that was the absolutely something that what we focused on in terms of dividend increase. But, I point out it's kind of been in the movie before, as you recall five years ago, the FFO payout ratio for the company was 101% and we grew the dividend all the way through as we have in every year, the company has been public, and as we intend to do going forward. So but we brought that 101, FFO payout ratio down to the 79 or 83 depending on which metric you want look at for projected for 08. But I think we are mindful of the fact that FAD is going to be more important given the medical office and life science components of our business model going forward.

Okay. And then just going to the de-leveraging I know you talked about capital market transactions, I think you watched through, what you were thinking in terms of the short term debt. Is equity a possibility at this point or do you think that's almost completely off the table because of the asset sales you have lined up?

I mean, we are focused these asset sales. The next couple of months we're focused, from a de-levering standpoint, on asset sales. If we saw something on the acquisition side of the house that was as compelling as either Slough or Manor Care, we might look at a number of other alternatives but for now as I mentioned in my comments, you still have a little bit of this phenomena as I have described on the last call. Its kind of two ships passing in the night in terms of compelling source of opportunities to deploy incremental shareholders capital for HCP. So, we think things slowdown for the whole healthcare REIT space in the fourth quarter. We think we are going to moderate a little bit more here. We are starting to see a thaw quite frankly. So, at some point there might be some opportunities here but near term we are in a position of looking at lot of things, nothing is what I would term on the acquisition side in the red zone right now, which is a little bit of a different phenomena that we have been in for the last couple of years where we always seem to be looking at a number of things that were actionable near term, looking at a number of things but I don't think anywhere to actionable near term as we continue to get some rebalancing of sellers and buyers perspective.

Okay.

That's how I would responded to that question.

Okay, great. Thank you.

Your next question comes form the line of Jim Sullivan with Green Street Advisors. Please proceed.

Thank you. First of all thanks for the additional information in the supplemental. The quantity is significant but the quality which is more important is terrific as well. James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Well, thanks for your suggestion.

Couple of questions. On Sunrise, if I heard correctly, the coverage actually dropped below one-times during the year and I think you've referenced some operating expense challenges that they had. Is there any evidence that the problems that Sunrise is having at the corporate level has caused them to take their eye off the operational ball? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Yes, actually coverage ratio has improved in FY07 versus FY06. And let me say this, they've had more than their fair share of distractions and it's amazing the confluence of events there. I would say that our portfolio, our Sunrise portfolio had a good performance in 2007. Nice gains and occupancies, nice NOI growth. We spend a lot of time with the Sunrise folks, as you might imagine. I would put those conversations in the kind of two areas of discussion. One is going property by property looking for opportunities to reinvest some additional capital to increase the value of a particular property. That's really more at the micro level. At the macro level, I would say that we have had a lot of discussions with the company about the growth rate in expenses relative to the growth rate in revenues. The growth rate in revenues is fantastic, kind of low double-digit sort of metric. But, we would like to see bigger chunk of that drops at bottom-line. We've had discussions ever since we acquired the portfolio. I would say that those discussions have gotten very constructive in the last quarter or two. And more importantly we've actually had some tangible results come out of that with respect to one or two expense categories. So, we're going very good about where that portfolio is and to answer your question, we have not seen any impact on the performance. I would point out, Jim that our portfolio is for the most part stabilized. So, we've got less moving parts going on in our portfolio than for example a portfolio that had repositioning going on or development or things like that. So, for the most part we have stabilized portfolio and as I've said we are pleased and looking forward to an even better result in FY08.

And what's your perspective on what might happen at the cooperate level? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Well, I don't think the outcomes have changed. I think they continue to be in a process. I think first, second, third priority is to get the financial statements recurring in file. We have the opportunity to visit with the new CFO a handful of times on the last couple of months and come away very impressed with him and his track record that at Mills and we are of a belief that they will meet their commitments and their deadlines. I think I've said to this group in the past, if you look at the property information we get for all of our senior housing operators. That's why we feel so confident about what's going to happen with respect to the financials at Sunrise. The quality and the timeliness of the property level accounting information we get from Sunrise is as good as anybody else in our senior housing portfolio. So, I think Rick is going to get that taken care at that point. The obvious two outcomes would be they continue as a very viable publicly traded entity, leader in a space that's got a tremendous demographic both in the states and outside the states or they may continue to consider a some sort of sale process.

That's helpful. And then switching gears to asset sales Paul, can you comment on cap rate trends in the four out of five business lines where you expect to sell some property?

Let me just take, because the cap rates are... I think the most important thing we are seeing is underlying businesses are performing across the board extremely well. I think as I commented on that sector by sector. So that's the best thing. And I think the folks that we have entered into these discussions with and have executed LOIs, all have committed and available capital. They've all done this before. There sort of the strategic players, so we are very confident about moving forward. I wouldn't expect to see much in the way of change. I think there has been I guess one transaction announced earlier this week in the senior housing space. I think that's about the only transaction that's occurred in last couple of months. But we feel very good about closing off this component of our development.

And then finally with respect to Amgen I understand they have contractual obligation to pay rent, but to the extent they sub-lease significant amount of space, what level of concern do you have that that sub-lease activity might impact even though the balance of your existing portfolio or prospectively your ability to develop? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: I think we are very comfortable given that basis in South San Francisco, the birthplace of our technology and the current life science they can see up in after submarket is between 2% and 3%. If this space was down in Carlsbad where we own [ph] some land. I think that might potentially delay the development of that... of the land we've got down that community. But up in South San Francisco, Paul's given you a flavor for the mark-to-market rent increases. The tenant demand is continued to be very strong, so strong that we are pressing ahead as quickly as we can with respect to development opportunities there. And the sublease base for Amgen in light of the life science, we would not move that vacancy much at Amgen.

Thank you.

Your next question comes from the line of Dustin Pizzo with Banc of America. Please proceed.

Hey guys. Just a follow-up on some of the earlier question on the bridge, if you do in fact take advantage of the extension, is there any change in pricing, or does it stay at the current price? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Yes there is ...for each extension where we structured that we had a... we put an incentive into to pay that off. So we moved some of the front end fees to the extent so there is an incremental fee that is on the first extension and the second one I think its about 15 basis point for each one, or it 12...

About that. James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: About 15 basis points.

Okay. That's all I have, thanks. James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Yup.

[Operator Instructions]. You have a follow-up question from the line of Jerry Doctrow with Stifel Nicolaus. Please proceed. Jerry Doctrow - Stifel Nicolaus & Company, Inc.: I'll try to be quick it's going on. Just... one thing a little bit more color really on primarily just the senior housing occupancies because in the data that you put out and I recognized you know certainly same-store is a tiny portfolio, but you've got quarter-over-quarter sort of declines in occupancy. Its not much movement in sort of coverage. You talked about year-over-year occupancy gains sort of look a lot better you've got pick up NOI, I mean you made the point I don't know who this is exactly directed to. You made the point maybe Paul that you're seeing no impact housing market and that sort of thing. I just wondering if you could give us a little bit more color, I mean there is lot of discussion about Sunrise, but sort of separate from Sunrise, maybe in the IL anymore color we can get would be helpful? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: I think its on page 24 of the supplemental Jerry, if you look at not the same property portfolio for senior housing because as Paul and Mark indicated that actually such a small component, but the overall, the quarter... Jerry Doctrow - Stifel Nicolaus & Company, Inc.: Quarterly occupancy, you're off like 20 basis points year-over-year. You're up like 40 basis points? James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Yeah I wouldn't say that terribly significant. Now, we've continued to chat up our operators on a regular basis. And in fact I was on the phone with our largest operator down in Florida market, and their occupancies are holding just fine between 94% and 95.5% increases. They are getting a little bit push back on rate, but not withstanding that there is still been able to achieve some nice year-over-year rate growth. So that's Florida, Sunrise we've talked about.

And we've seen the overall portfolio 90%, being on either side of 90% is kind of a stabilized number. And it's going to fluctuate on either side of 90% at any given time. James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: And again the backdrop for all this which is like very, very good news for like the next couple of years is there continues to not be a meaningful amount of supply coming on. And I would quite frankly speculate that in light of what's going in the World I don't think that's going to change in terms of accelerating the development anytime soon. So I think...anecdotally the CEOs that run the portfolios that we own, that all parts, couple of weeks, we'll say that their business is slowing in terms of, they are moving away from some of those double-digit sort of year-over-year rate gross. But they are still getting 5%, 6%, 7% depending on the market, in terms of bumps and holding occupancy. So they feel, its not go, go time like it was maybe 18 months ago. But it's certainly a very, very solid business with the absence of much supply I think quite frankly from a healthcare REIT perspective. What happened, this is why at some point here this log jam will break on the ability to deploy capital business, a lot not short-term but intermediate things look like the positioning or breaking in favor the healthcare REIT. Operators are going to be little more challenge with respect to the capital versus kind of the environment they are in the '05, '06, '07 timeframe with multiples on their stock and ability to access the secured debt markets. And so I think, that's very good increasingly we are seeing the private equity shops which we have preponderance of them in our existing portfolio. Given the transaction we have done with HCA and Atria and Manor Care. And increasingly becoming the more and more about the profile the partner for HCP as suppose to a competitor. So you got to ride out this turmoil from the markets. But I think we get through this year and we are not predicting it's going to happen anytime soon, I think things intermediate terms start to break on a relative basis, back in favor of the healthcare REIT. So we are very, very excited about what we see in terms of the underlying fundamentals in our business, but also some more macro issues that advantage our company. Jerry Doctrow - Stifel Nicolaus & Company, Inc.: Okay. And would you consider getting involved in mezz with like something like a Sunrise, they ended up going private. If you... James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: In mezz again you think about our metrics. We've got five property types going across the picone [ph] they are going across from left to right and senior housing, medical office life science, hospitals, and skills. And we've got five major products that all have billion dollar platforms now. And one of those billion dollar platform is mezzanine debt, so everything is on the table. Let me just say, I think it's important to understand how this model is kind of work for us, take HCA we obviously got HCA extremely well when we did the Med Cap transaction back in '03 that represented in ownership stake in real-estate. So we had a number of leases were directly to HCA, so I checked the product sale lease back box, part of that transaction if you recall restructure is a Down-REIT so that was the second product. And part of it was in development properties, that's the third product. We continue to do development with HCA at medical office for last several years, and then did the mezz debt investment is part of their LBO. So we've been able to deploy a significant amount of our shareholders capital into that company HCA across all five of our product platforms, I think that's where, that's where this platform can really accrue our benefit, just in the current environment, we are continue to troll for new opportunities, I'd point out that two of our five product platforms. Our joint venture platforms, where we've got a couple of institutional investors that still have some remaining dry powder with respect to there commitments to us. And the Down-REIT platform... those two platforms require much in the way of capital going out the door from our shareholders. So we've got a lot of different ways, we can play, these different sectors and we are very fortunate to be in that position. Jerry Doctrow - Stifel Nicolaus & Company, Inc.: Okay. Thanks appreciate the time.

At this time there are no further questions. I'd now like to turn the call over to Jay Flaherty, Chairman and CEO for closing remarks. James F. ("Jay") Flaherty III - Chairman and Chief Executive Officer: Thanks for your continued interest in HCP. And we will talk to you soon. Take care.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect, and have a good day.