HEALTH CARE PROPERTY INVESTORS INC
S-3, 1999-12-06
REAL ESTATE INVESTMENT TRUSTS
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<PAGE>   1

    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 6, 1999

                                                     REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                    FORM S-3
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                            ------------------------

                      HEALTH CARE PROPERTY INVESTORS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                            ------------------------

<TABLE>
<S>                                              <C>
                    MARYLAND                                        33-0091377
        (STATE OR OTHER JURISDICTION OF                          (I.R.S. EMPLOYER
         INCORPORATION OR ORGANIZATION)                        IDENTIFICATION NO.)
</TABLE>

                        4675 MACARTHUR COURT, 9TH FLOOR
                        NEWPORT BEACH, CALIFORNIA 92660
                                 (949) 221-0600
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                   REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
                            ------------------------

                                KENNETH B. ROATH
                CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
                        4765 MACARTHUR COURT, 9TH FLOOR
                        NEWPORT BEACH, CALIFORNIA 92660
                                 (949) 221-0600
 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                             OF AGENT FOR SERVICE)

                                   COPIES TO:

<TABLE>
<S>                                              <C>
             JEFFREY T. PERO, ESQ.                            PAMELA B. KELLY, ESQ.
                LATHAM & WATKINS                                 LATHAM & WATKINS
       505 MONTGOMERY STREET, SUITE 1900                633 WEST FIFTH STREET, SUITE 4000
        SAN FRANCISCO, CALIFORNIA 94111                   LOS ANGELES, CALIFORNIA 90071
                 (415) 391-0600                                   (213) 485-1234
</TABLE>

                            ------------------------

    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this registration statement becomes effective.

    If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.  [ ]

    If any of the securities being registered on this From are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.  [X]

    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.  [ ]
- ------------

    If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]
- ------------

    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]

                        CALCULATION OF REGISTRATION FEE

<TABLE>
<S>                                  <C>                  <C>                  <C>                  <C>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
                                                           PROPOSED MAXIMUM     PROPOSED MAXIMUM
                                        AMOUNT TO BE      AGGREGATE PRICE PER  AGGREGATE OFFERING        AMOUNT OF
 TITLE OF SHARES TO BE REGISTERED        REGISTERED            SHARE(1)             PRICE(2)         REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------
Common Stock, par value $1.00 per
  share and related rights.........        89,452              $25.9375           $2,320,161.25           $612.52
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Based upon the average of the high and low prices of the shares of common
    stock reported on the New York Stock Exchange on December 1, 1999, pursuant
    to Rule 457(c) of the Securities Act.

(2) Estimated solely for the purpose of calculating the registration fee
    pursuant to Rule 457 of the Securities Act.
                            ------------------------

    THIS REGISTRATION STATEMENT RELATES TO THE POSSIBLE ISSUANCE OF 89,452
SHARES OF COMMON STOCK OF HEALTH CARE PROPERTY INVESTORS, INC. TO THE HOLDERS OF
UNITS REPRESENTING NON-MANAGING MEMBER INTERESTS IN HCPI INDIANA, LLC AND THEIR
POSSIBLE RESALE OF THE SHARES OF COMMON STOCK BY THE SELLING HOLDERS NAMED IN
THE REGISTRATION STATEMENT.

    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>   2

                 SUBJECT TO COMPLETION, DATED DECEMBER 6, 1999
                           -------------------------

PROSPECTUS

                      HEALTH CARE PROPERTY INVESTORS, INC.

                                 89,452 SHARES

                                  COMMON STOCK

                           -------------------------

     This prospectus relates to the possible issuance of up to 89,452 shares of
common stock, par value $1.00 per share, of Health Care Property Investors,
Inc., a Maryland corporation, from time to time, to the holders of non-managing
member units in HCPI Indiana, LLC and the possible resale of shares of our
common stock by these holders

     We will not receive any proceeds from the issuance of the shares of our
common stock to the selling holders except that we will acquire membership units
of HCPI Indiana, LLC currently held by the selling holders tendered in exchange
for shares of our common stock.

     Our shares of common stock are traded on the New York Stock Exchange under
the symbol "HCP." On December 1, 1999, the last reported sales price of our
common stock on the New York Stock Exchange was $25.625 per share.

                           -------------------------

     YOU SHOULD CONSIDER THE RISKS DISCUSSED IN "RISK FACTORS" BEGINNING ON PAGE
1 OF THIS PROSPECTUS BEFORE YOU INVEST IN OUR COMMON STOCK.

                           -------------------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

                           -------------------------

                The date of this prospectus is December   , 1999
<PAGE>   3

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Risk Factors................................................    1
Where You Can Find More Information.........................    5
Cautionary Statement Concerning Forward-Looking
  Statements................................................    7
The Company.................................................    9
Use of Proceeds.............................................   10
Description of Capital Stock................................   10
Relationship of the Parties.................................   32
Operating Agreement.........................................   33
Comparison of HCPI Indiana, LLC and HCPI....................   41
Provisions of Maryland Law and HCPI's Charter and Bylaws....   48
Material Federal Income Tax Consequences....................   55
Selling Holders.............................................   70
Plan of Distribution........................................   71
Legal Matters...............................................   72
Experts.....................................................   72
</TABLE>

     All references in this prospectus to "we," "us" or "our" mean Health Care
Property Investors, Inc., its majority-owned subsidiaries and other entities
controlled by Health Care Property Investors, Inc. except where is clear from
the context that the term means only the issuer, Health Care Property Investors,
Inc.

                                        i
<PAGE>   4

                                  RISK FACTORS

     Below are the risks that we believe are material to investors who purchase
or own our common stock. In addition to other information contained or
incorporated by reference in this prospectus, you should carefully consider the
following factors before acquiring the common stock offered by this prospectus.

HCPI MAY NOT REALIZE THE EXPECTED BENEFITS FROM THE MERGER, SUCH AS COST
SAVINGS, OPERATING EFFICIENCIES AND OTHER SYNERGIES DUE TO INCREASED DEMANDS ON
ITS MANAGEMENT'S RESOURCES

     On November 4, 1999, American Health Properties, Inc. merged with and into
HCPI with HCPI being the surviving company. HCPI entered into the merger with
the expectation that the merger will result in a number of benefits to the
combined company, including cost savings, operating efficiencies and other
synergies. HCPI did not retain any of AHP's senior executive officers following
the merger. Many management duties within HCPI are presently the responsibility
of a fixed number of executives and employees, and following the merger,
management of the combined company will be the responsibility of those same
executives and employees. Unforeseen difficulties in managing the larger
combined company, coupled with the increased demands on management's time, may
cause the disruption of, or a loss of momentum in, the activities of the
combined company's business which could adversely affect the business, financial
condition and operating results of HCPI. HCPI intends to hire additional
personnel, some of which may be current employees of AHP, to address the
increased demands on management's time. HCPI cannot assure you, however, that it
will be successful in attracting, hiring, assimilating or retaining additional
personnel in the future.

THE HEALTH CARE INDUSTRY IS HEAVILY REGULATED BY THE GOVERNMENT, WHICH MAY
ADVERSELY AFFECT HCPI'S RENTAL AND DEBT PAYMENT REVENUE

     The health care industry is heavily regulated by federal, state and local
laws. Government regulation of the health care industry will affect the combined
company because:

     - the financial ability of lessees and mortgage payors to make rent and
       debt payments to HCPI may be affected by government regulations such as
       licensure, certification for participation in government programs, and
       government reimbursement; and

     - additional rents received by the combined company will be, in some cases,
       based on its lessees' gross revenue from operations.

     The ability of a facility to generate revenue and profit, among other
attributes, will determine the underlying value of that facility to HCPI. As
health insurers and governmental agencies attempt to limit the cost of hospital
and other healthcare services and to reduce the utilization of health care
facilities, a reduction in future revenue or slower revenue growth may occur.

     Prospective Payment System. On July 1, 1998, the federal government began
to implement the congressionally mandated prospective payment system for
Medicare payments to long-term care facilities. Under the prospective payment
system, long-term care facilities are paid a case-mix adjusted federal per diem
rate for Medicare-covered services they provide. The per diem rate is calculated
to cover routine service costs,

                                        1
<PAGE>   5

ancillary costs and capital-related costs. The phased-in implementation of the
prospective payment system for long-term care facilities began with the first
cost-reporting period beginning on or after July 1, 1998. The prospective
payment system is expected to be substantially implemented by the end of 2001.

     Implementation of the prospective payment system will affect each long-term
care facility to a different degree depending upon the amount of revenue it
derives from Medicare patients.

     Long-term care facilities may need to restructure their operations to
accommodate the new Medicare prospective payment system reimbursement. Due in
part to the potential negative effect of the prospective payment system on the
financial condition of long-term care facilities, including the ability of
long-term care operators to make interest and principal payments on outstanding
borrowings, Standard & Poor's placed many long-term care facility companies on a
"credit watch" in November 1998. In early March 1999, Standard & Poor's lowered
the ratings of several long-term care facility companies because of the impact
of the prospective payment system, particularly those companies with substantial
debt. The companies included Vencor, Inc., Genesis Health Ventures, Integrated
Health Services, Inc., Sun Healthcare Group and Mariner Post-Acute Network,
Inc., all of which are currently lessees of HCPI.

     Fraud and Abuse. Various federal and state governments have considered or
passed laws and regulations that attempt to eliminate fraud and abuse of the
Medicare, Medicaid and other governmental payor programs by prohibiting, among
other things, payment arrangements that include compensation for patient
referrals. In addition, the Balanced Budget Act of 1997 strengthens the federal
anti-fraud and abuse laws to provide for stiffer penalties for fraud and abuse
violations. Violations of these laws may result in the imposition of criminal
and civil penalties, including possible exclusion from reimbursement programs.
Violations of these laws and regulations may jeopardize a lessee's ability to
operate a facility or to make rent and debt payments, potentially resulting in
an adverse effect on the financial condition and operating results of the
combined company. HCPI's lease arrangements with lessees may also be subject to
these fraud and abuse laws.

     Licensure Risks. Health care facilities generally must obtain licensure to
operate. Failure to obtain licensure or loss of licensure would prevent a
licensed facility from operating. These events could adversely affect the
facility operator's ability to make rent and debt payments. State and local laws
also may regulate expansion, including the addition of new beds or services or
acquisition of medical equipment, and occasionally the contraction of health
care facilities by requiring certificate of need or other similar approval
programs. In addition, health care facilities are subject to the Americans with
Disabilities Act and building and safety codes which govern access to and
physical design requirements and building standards for facilities.

     Environmental Matters. A wide variety of federal, state and local
environmental and occupational health and safety laws and regulations affect
healthcare facility operations. Under various federal, state and local
environmental laws, ordinances and regulations, an owner of real property or a
secured lender may be liable for the costs of removal or remediation of
hazardous or toxic substances at, under or disposed of in connection with such
property, as well as other potential costs relating to hazardous or toxic
substances (including government fines and damages for injuries to persons and
adjacent property). These laws often impose liability without regard to whether
the owner or secured lender knew of, or was responsible for, the presence or
disposal of hazardous or toxic substances

                                        2
<PAGE>   6

and may be imposed on the owner or secured lender in connection with the
activities of an operator of the property. The cost of any required remediation,
removal, fines or personal or property damages and the owner's or secured
lender's liability for these costs could exceed the value of the property, or
the assets of the owner or secured lender. In addition, the presence of
hazardous or toxic substances, or the failure to properly dispose of or
remediate these substances, may adversely affect HCPI's ability to sell or rent
a property or to borrow using a property as collateral which, in turn, would
reduce the combined company's revenue.

     Although the mortgage loans that HCPI has provided and leases covering
HCPI's properties require borrowers and lessees to indemnify HCPI for some
environmental liabilities, the scope of these obligations may be limited. We
cannot assure you that any borrower or lessee would be able to fulfill its
indemnification obligations to HCPI.

     Medicare and Medicaid Programs. Sources of revenue for lessees and mortgage
payors may include the federal Medicare program, state Medicaid programs,
private insurance carriers, health care service plans and health maintenance
organizations, among others. You should expect efforts to reduce costs by these
payors to continue, which may result in reduced or slower growth in
reimbursement for services provided by some of the combined company's lessees.
In addition, the failure of any of HCPI's lessees and mortgage payors to comply
with various laws and regulations could jeopardize their ability to continue
participating in the Medicare and Medicaid programs.

     Cost Control. The health care industry has continually faced challenges,
including increased government and private payor pressure on health care
providers to control costs, the migration of patients from acute care facilities
into extended care and home care settings, from nursing homes into assisted
living facilities and the vertical and horizontal consolidation of health care
providers. The pressure to control health care costs intensified during 1994 and
1995 as a result of the national health care reform debate and continued into
1997 as Congress attempted to slow the rate of growth of federal health care
expenditures as part of its effort to balance the federal budget. In addition to
the reforms enacted and considered by Congress from time to time, state
legislatures periodically consider various health care reform proposals. Changes
in the law, new interpretations of existing laws, and changes in payment
methodology may have a dramatic effect on the definition of permissible or
impermissible activities, the relative costs associated with doing business and
the amount of reimbursement by both government and other third-party payors.
These changes may be applied retroactively. The ultimate timing or effect of
legislative efforts cannot be predicted and may affect HCPI in adverse ways.

IF HCPI OR AHP FAILS TO QUALIFY AS A REAL ESTATE INVESTMENT TRUST UNDER THE
INTERNAL REVENUE CODE, THAT FAILURE COULD RESULT IN A SIGNIFICANT TAX LIABILITY
FOR THE COMBINED COMPANY

     HCPI believes that it has been organized and has operated in a manner which
would allow it to qualify as a real estate investment trust under the Internal
Revenue Code. HCPI believes AHP operated so as to qualify as a real estate
investment trust under the Internal Revenue Code through and including the
completion of the merger. It is possible, however, that either AHP or HCPI has
been organized or has operated in a manner which would not allow it to qualify
as a real estate investment trust. Qualification as a real estate investment
trust requires a company to satisfy numerous requirements (some on an annual and
others on a quarterly basis) established under highly technical and complex
Internal

                                        3
<PAGE>   7

Revenue Code provisions for which there are only limited judicial and
administrative interpretations and involves the determination of various factual
matters and circumstances not entirely within a company's control. If a company
fails to qualify as a real estate investment trust in any taxable year, it will
be subject to federal income tax, including any applicable alternative minimum
tax, on its taxable income at regular corporate rates. Unless that company is
entitled to relief under applicable statutory provisions, it would be
disqualified from treatment as a real estate investment trust for the four
taxable years following the year during which it lost qualification. The
combined company would be required to pay any tax arising due to a failure of
AHP or HCPI to qualify as a real estate investment trust prior to the merger,
and this tax could be material. In addition, a failure of AHP or HCPI to qualify
as a real estate investment trust prior to the merger could adversely affect the
combined company's ability to qualify as a real estate investment trust after
the merger.

     In connection with the merger, Davis, Graham & Stubbs LLP rendered an
opinion to the effect that, based on the facts, representations and assumptions
stated therein, commencing with its taxable year ended December 31, 1987, AHP
was organized in conformity with the requirements for qualification and taxation
as a real estate investment trust under the Internal Revenue Code, and its
method of operation through the effective time of the merger enabled it to meet
the requirements for qualification and taxation as a real estate investment
trust under the Internal Revenue Code. The Davis, Graham & Stubbs LLP opinion
assumes, among other things, the accuracy of an opinion rendered by Sullivan &
Cromwell with respect to the characterization of AHP's psychiatric group
preferred stock and dividends thereon, which Sullivan & Cromwell opinion is
based on the facts, representations and assumptions stated therein. In addition,
Latham & Watkins has rendered an opinion with respect to HCPI's tax status as a
real estate investment trust, described below. An opinion of counsel is not
binding on the Internal Revenue Service or any court, and no ruling has been or
will be sought from the Internal Revenue Service as to AHP's or HCPI's
qualification as a real estate investment trust under the Internal Revenue Code.
Accordingly, there can be no assurance that the Internal Revenue Service will
not take a position contrary to one or more positions reflected in these
opinions or that these opinions will be upheld by the courts if challenged by
the Internal Revenue Service.

IF HCPI WERE TO LOSE ITS TAX STATUS AS A REAL ESTATE INVESTMENT TRUST IT WOULD
HAVE SIGNIFICANT ADVERSE CONSEQUENCES TO HCPI AND THE VALUE OF ITS STOCK

     If HCPI fails to qualify as a real estate investment trust, the following
will occur:

     - HCPI would not be allowed a deduction for distributions to stockholders
       in computing its taxable income and would be subject to federal income
       tax at regular corporate rates;

     - HCPI also could be subject to the federal alternative minimum tax and
       possibly increased state and local taxes; and

     - Unless HCPI is entitled to relief under statutory provisions, it could
       not elect to be subject to tax as a real estate investment trust for four
       taxable years following the year during which it was disqualified.

     As a result of all these factors, HCPI's failure to qualify as a real
estate investment trust could impair HCPI's ability to expand its business and
raise capital, could

                                        4
<PAGE>   8

substantially reduce the funds available for distribution to its stockholders
and could adversely affect the value of HCPI's capital stock.

     In addition, if HCPI fails to qualify as a real estate investment trust,
all distributions to stockholders would be subject to tax as ordinary income to
the extent of its current and accumulated earnings and profits, HCPI would not
be required to make distributions to stockholders and corporate distributees
could be eligible for the dividends received deduction.

     Although HCPI believes that it is organized and operates in a manner that
will allow it to qualify as a real estate investment trust, no assurance can be
given that HCPI will continue to be organized or be able to operate in a manner
so as to qualify or remain qualified as a real estate investment trust for tax
purposes.

     Latham & Watkins has rendered an opinion that, commencing with HCPI's
taxable year ended December 31, 1985, HCPI has been organized and has operated
in conformity with the requirements for qualification and taxation as a real
estate investment trust under the Internal Revenue Code and that HCPI's proposed
method of operation will enable it to continue to meet the requirements for
qualification and taxation as a real estate investment trust under the Internal
Revenue Code. See "Material Federal Income Tax Consequences -- Taxation of
Health Care Property Investors, Inc."

                      WHERE YOU CAN FIND MORE INFORMATION

     We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information that we have filed at the SEC's public reference rooms. Please call
the SEC at 1-800-SEC-0330 for information on the public reference rooms or visit
the following locations of the SEC:

<TABLE>
<S>                        <C>                        <C>
Public Reference Room      Northwest Regional Office  Midwest Regional Office
450 Fifth Street, N.W.     7 World Trade Center       Citicorp Center
Room 1024                  Suite 1300                 500 West Madison Street
Washington, D.C. 20549     New York, New York 10048   Suite 1400
                                                      Chicago, Illinois 60661
</TABLE>

     You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. Our SEC filings are also available to the
public from commercial document retrieval services and at the web site
maintained by the SEC at http://www.sec.gov.

     You may inspect information that we file with The New York Stock Exchange
at the offices of The New York Stock Exchange at 20 Broad Street, New York, New
York 10005.

     This prospectus is part of a registration statement we filed with the SEC.
As allowed by SEC rules, this prospectus does not contain all the information
you can find in the registration statement or the exhibits to the registration
statement. For further information, we refer you to the registration statement,
including its exhibits and schedules. Statements contained in this prospectus
about the provisions or contents of any contract, agreement or any other
document referred to are not necessarily complete. For each of these contracts,

                                        5
<PAGE>   9

agreements or documents filed as an exhibit to the registration statement, we
refer you to the actual exhibit for a more complete description of the matters
involved. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of those documents.

     The SEC allow us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. This prospectus
incorporates by reference the documents set forth below that we have previously
filed with the SEC. These documents contain important information about our
company and its finances.

<TABLE>
<CAPTION>
 HCPI'S SEC FILINGS (FILE NO. 1-8895)      DESCRIPTION OR PERIOD/AS OF DATE
 ------------------------------------      --------------------------------
<S>                                     <C>
Annual Report on Form 10-K              Year ended December 31, 1998
Current Report on Form 8-K dated        Discloses information relating to
January 7, 1999                         HCPI's property acquisitions from
                                        November 6, 1998 through December 23,
                                        1998
Amendment No. 1 to Current Report on    Discloses information relating to
Form 8-K/A dated January 7, 1999        HCPI's property acquisitions from
                                        November 6, 1998 through December 23,
                                        1998
Current Report on Form 8-K, dated May   Announces sale of common stock
3, 1999                                 pursuant to registration statement on
                                        Form S-3
Current Report on Form 8-K, dated       Discloses the entering into of the
August 4, 1999                          merger agreement and related matters
Current Report on Form 8-K, dated       Reports the completion of the merger
November 4, 1999                        between American Health Properties and
                                        HCPI
Amendment No. 1 to Current Report on    Reports the completion of the merger
Form 8-K/A, dated November 4, 1999      between American Health Properties and
                                        HCPI
Quarterly Reports on Form 10-Q          Quarters ended March 31, 1999, June
                                        30, 1999 and September 30, 1999
Registration Statement on Form 10,      Description of our common stock
dated May 7, 1995, including
amendments dated May 20, 1985, May 23,
1985 and July 17, 1990
</TABLE>

     We are also incorporating by reference additional documents that we may
file with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended, after the date of this prospectus and before
we stop offering the securities described in this prospectus. These documents
include periodic reports, such as annual reports on Form 10-K, quarterly reports
on Form 10-Q, and current reports on Form 8-K, as well as proxy statements.

     The information incorporated by reference is automatically considered to be
a part of the prospectus. Any statement contained in a document incorporated or
deemed to be incorporated by reference in this prospectus will be deemed
modified, superseded or replaced for purposes of this prospectus to the extent
that a statement contained in this prospectus or in any subsequently filed
document that also is or is deemed to be incorporated by reference in this
prospectus modifies, supersedes or replaces that

                                        6
<PAGE>   10

statement. Any statement so modified or replaced will not be considered, except
as so modified, superseded or replaced, to be a part of this prospectus.

     If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us or the SEC.
Documents incorporated by reference are available from us without charge,
excluding all exhibits unless we have specifically incorporated by reference an
exhibit in this prospectus. Stockholders may obtain documents incorporated by
reference in this prospectus by requesting them in writing or by telephone from
the appropriate party of the following address:

                               James G. Reynolds
              Executive Vice President and Chief Financial Officer
                      Health Care Property Investors, Inc.
                        4675 MacArthur Court, 9th Floor
                        Newport Beach, California 92660
                                (949) 221-0600.

                        CAUTIONARY STATEMENT CONCERNING
                           FORWARD-LOOKING STATEMENTS

     We have made forward-looking statements in this document that are subject
to risks and uncertainties. These statements may be made directly in this
document or may be "incorporated by reference" to other documents filed with the
SEC. Our forward looking statements in this prospectus or those documents
incorporated by reference include, among other things, statements regarding the
intent, belief or expectations of HCPI and can be identified by the use of words
such as "may," "will," "expect," "believe," "intend," "plan," "estimate,"
"should" and other comparable terms. For those statements, we claim the
protection of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995.

     You should understand that the following important factors, in addition to
those discussed elsewhere in this document and in the documents which are
incorporated by reference, could affect the future results of HCPI, and could
cause actual results or other outcomes to differ materially from those expressed
in our forward-looking statements:

     - legislative, regulatory, or other changes in the healthcare industry at
       the local, state or federal level which increase the costs of or
       otherwise affect the operations of our lessees;

     - changes in the reimbursement available to our lessees and mortgagors by
       governmental or private payors, including changes in Medicare and
       Medicaid payment levels and the availability and cost of third party
       insurance coverage, such as those extensive changes to the Medicare and
       Medicaid programs contained in the Balanced Budget Act of 1997 intended
       to reduce significantly the projected amount of increase in Medicare
       spending;

     - effects of the recently implemented prospective payment system, which is
       expected to decrease reimbursements to skilled nursing and other
       healthcare facilities and may have an adverse effect on the operator
       revenues at HCPI's rehabilitation and long-term acute care facilities;

                                        7
<PAGE>   11

     - competition for lessees and mortgagors, including with respect to new
       leases and mortgages and the renewal or rollover of existing leases;

     - competition for the acquisition and financing of health care facilities;

     - the ability of our lessees and mortgagors to operate our properties in a
       manner sufficient to maintain or increase revenues and to generate
       sufficient income to make rent and loan payments;

     - changes in national or regional economic conditions, including changes in
       interest rates and the availability and cost of capital to HCPI;

     - the availability of financing for HCPI's proposed acquisitions;

     - risks associated with multi-tenant medical office buildings, such as
       lower than expected occupancy levels, a downturn in market lease rates
       for medical office space or higher than expected costs associated with
       the maintenance and operation of such facilities;

     - potential liability under, and change in, environmental, zoning, tax and
       other laws; and

     - the general uncertainty inherent in the Year 2000 issue, particularly the
       uncertainty of the Year 2000 readiness of third parties who are material
       to our business or material to the businesses of our lessees or
       borrowers.

                                        8
<PAGE>   12

                                  THE COMPANY

     HCPI is the second oldest real estate investment trust specializing in
health care real estate. HCPI, which is a self-administered real estate
investment trust, owns long-term care facilities, congregate care and assisted
living facilities, acute care and rehabilitation hospitals, medical office
buildings and physician group practice clinics. As of September 30, 1999, HCPI's
gross investment in its properties, including partnership and limited liability
company interests and mortgage loans, was approximately $1.7 billion. HCPI has
425 facilities in 43 states as of December 1, 1999. On November 4, 1999,
American Health Properties, Inc. merged with and into HCPI with HCPI being the
surviving company.

     The market value of our common stock was approximately $1.3 billion as of
December 1, 1999. HCPI has paid regular quarterly dividends and has increased
the dividend paid on its common stock each quarter for the 56 consecutive
quarters since its initial public offering in May 1985. As a result, HCPI has
paid $644 million in dividends on its common stock since May 1985. According to
the 1999 edition of Moody's Handbook of Dividend Achievers, which includes
public companies that have increased annual dividends in each of the past 10
years, HCPI has had the highest percentage dividend growth over the past 10
years among real estate investment trusts. HCPI also believes that it has had an
excellent track record in attracting and retaining key employees. HCPI's five
executive officers have been with the company for 13 years on average.

     HCPI is the largest health care oriented real estate investment trust in
the nation, with a total market capitalization of approximately $2.7 billion
based on the closing price of our common stock, the outstanding principal amount
of indebtedness and the liquidation preferences of our preferred stock on
December 1, 1999. On December 1, 1999, HCPI had an interest in approximately 425
facilities, with over 21 million square feet of operating facilities. HCPI is
managed by the HCPI management group in place prior to the merger with AHP.

     Our executive offices are located at 4675 MacArthur Court, 9th Floor,
Newport Beach, California, 92660 and our telephone number is (949) 221-0600 or
(888) 604-1990.

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<PAGE>   13

                                USE OF PROCEEDS

     We are filing the registration statement of which this prospectus is a part
pursuant to our contractual obligation to the holders named in the section
entitled "Selling Holders." We will acquire non-managing member interests in
HCPI Indiana, LLC in exchange for any shares of common stock that we may issue
to the selling holders pursuant to this prospectus. We will not receive any
proceeds from the issuance of shares of common stock to the selling holders or
the resale of the shares by the selling holders other than the non-managing
member interests of HCPI Indiana, LLC. However, we will pay registration
expenses which we estimate to be approximately $59,613.

                          DESCRIPTION OF CAPITAL STOCK

GENERAL

     HCPI's authorized stock consists of 100,000,000 shares of common stock, par
value $1.00 per share, and 50,000,000 shares of preferred stock, par value $1.00
per share. The following description does not contain all the information that
might be important to you. Therefore you should read carefully the more detailed
provisions of our charter, bylaws and the Rights Agreement between HCPI and The
Bank of New York (successor to Chemical Trust Company of California), as rights
agent. The following summary does not give effect to provisions of statutory or
common law, the provisions of applicable law and our charter and the Rights
Agreement, copies of which are incorporated by reference as exhibits to the
registration statement of which this prospectus is a part.

COMMON STOCK

     As of December 1, 1999, there were 51,476,691 shares of common stock
outstanding. All shares of common stock participate equally in dividends payable
to holders of common stock, when and as authorized by our board and declared by
HCPI, and in net assets available for distribution to holders of common stock on
our liquidation, dissolution, or winding up. Each outstanding share of common
stock entitles the holder to one vote on all matters submitted to a vote of HCPI
stockholders. Holders of our common stock do not have cumulative voting rights
in the election of directors.

     All issued and outstanding shares of common stock are, and the common stock
offered under this prospectus will be upon issuance, validly issued, fully paid
and nonassessable. Holders of our common stock do not have preference,
conversion, exchange or preemptive rights. Our common stock is listed on the New
York Stock Exchange (NYSE Symbol: HCP).

     The transfer agent and registrar of our common stock is The Bank of New
York.

PREFERRED STOCK

     Under our charter, our board is authorized without further stockholder
action to establish and issue, from time to time, up to 50,000,000 shares of
preferred stock of HCPI, in one or more series, with such designations,
preferences, powers and relative participating, optional or other special
rights, and the qualifications, limitations or restrictions thereon, including,
but not limited to, dividend rights, dividend rate or rates,

                                       10
<PAGE>   14

conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions), the redemption price or prices, and the liquidation
preferences as shall be stated in the resolution providing for the issue of a
series of such stock, adopted, at any time or from time to time, by our board.
As of December 1, 1999, HCPI had outstanding 2,400,000 shares of 7 7/8% Series A
Cumulative Redeemable Preferred Stock with a liquidation preference of
$60,000,000, 5,385,000 shares of 8.70% Series B Cumulative Redeemable Preferred
Stock with a liquidation preference of $134,625,000 and 40,000 shares of 8.60%
Series C Cumulative Redeemable Preferred Stock with a per share liquidation
preference of $100,000,000. The material terms of our Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock are described below.

SERIES A PREFERRED STOCK

     Voting Rights. Holders of the series A preferred stock generally do not
have any voting rights, except in limited circumstances.

     If dividends on any shares of series A preferred stock are in arrears for
six or more quarterly periods, whether or not consecutive, the holders of series
A preferred stock (voting separately as a class with all other classes or series
of preferred stock upon which like voting rights have been conferred and are
exercisable, including the series B preferred stock and the series C preferred
stock) are entitled to vote for the election of a total of two additional
directors of HCPI at a special meeting called by the holders of record of at
least 25% of the series A preferred stock or the holders of any other class or
series of preferred stock so in arrears or at the next annual meeting of
stockholders. These voting rights continue at each subsequent annual meeting
until all dividends accumulated on such shares of series A preferred stock for
the past dividend periods and the dividend for the then current dividend period
shall have been fully paid or declared and set aside for payment. In such case,
the entire HCPI board is increased by two directors.

     So long as any shares of series A preferred stock remain outstanding, HCPI
shall not, without the consent or the affirmative vote of the holders of at
least two-thirds of the shares of series A preferred stock outstanding at the
time, given in person or by proxy, either in writing or at a meeting, with the
series A preferred stock voting separately as a class:

     - authorize, create or issue, or increase the authorized or issued amount
       of, any class or series of stock ranking prior to the series A preferred
       stock with respect to the payment of dividends, or the distribution of
       assets on liquidation, dissolution or winding up;

     - reclassify any authorized stock of HCPI into any such shares, or create,
       authorize or issue any obligation or security convertible into or
       evidencing the right to purchase any class or series of stock ranking
       prior to the series A preferred stock with respect to the payment of
       dividends, or the distribution of assets on liquidation, dissolution or
       winding up;

     - repeal, amend or otherwise change any of the provisions applicable to the
       series A preferred stock in any manner which materially and adversely
       affects the powers, preferences, voting power or other rights or
       privileges of the series A preferred stock. The articles supplementary
       relating to the series A preferred stock provide, however, that an
       increase in the amount of authorized preferred stock, the creation or
       issuance of other classes or series of preferred stock or any increase in
       the

                                       11
<PAGE>   15

       amount of authorized shares of series A preferred stock or of any other
       class or series of preferred stock, in each case ranking on a parity
       with, or junior to the series A preferred stock, will not be deemed to
       materially and adversely affect such rights, preferences, privileges or
       voting powers.

     The consent of the holders of series A preferred stock is not required for
the taking of any corporate action, including any merger or consolidation
involving HCPI or a sale of all or substantially all of the assets of HCPI,
regardless of the effect that such merger, consolidation or sale may have upon
the rights, preferences or voting power of the holders of the series A preferred
stock, except as expressly set forth in the articles supplementary relating to
the series A preferred stock.

     Rank. With respect to dividend rights and rights upon liquidation,
dissolution or winding up of HCPI, the series A preferred stock ranks:

     - senior to all classes or series of common stock of HCPI, and to all
       equity securities issued by HCPI ranking junior to the series A preferred
       stock with respect to dividend rights or rights upon liquidation,
       dissolution or winding up of HCPI;

     - on a parity with the series B preferred stock, series C preferred stock
       and with all equity securities issued by HCPI the terms of which
       specifically provide that such equity securities rank on a parity with
       the series A preferred stock with respect to dividend rights or rights
       upon liquidation, dissolution or winding up of HCPI; and

     - junior to all equity securities issued by HCPI the terms of which
       specifically provide that such equity securities rank senior to the
       series A preferred stock with respect to dividend rights or rights upon
       liquidation, dissolution or winding up of HCPI. See "-- Voting Rights"
       below.

     The term "equity securities" does not include convertible debt securities,
which rank senior to the series A preferred stock prior to conversion.

     Dividends. Holders of shares of the series A preferred stock are entitled
to receive, when, as, and if declared by our board out of funds of HCPI legally
available for the payment of dividends, cumulative preferential annual cash
dividends at the rate of 7 7/8% of the liquidation preference (equivalent to
$1.96875 per annum per share).

     Dividends on the series A preferred stock are cumulative from the date of
original issue and payable quarterly in arrears on or about the last day of each
March, June, September and December or, if not a business day, the next
succeeding business day.

     No dividends may be declared by our board or paid or set apart for payment
on the series A preferred stock if the terms of any agreement of HCPI, including
any agreement relating to its indebtedness, prohibits such a declaration,
payment or setting apart for payment or provides that such declaration, payment
or setting apart for payment would constitute a breach of or default under such
an agreement. Likewise, no dividends may be declared by our board or paid or set
apart for payment if such declaration or payment is restricted or prohibited by
law.

     Dividends on the series A preferred stock accrue, however, whether or not
HCPI has earnings, whether or not there are funds legally available for the
payment of such dividends and whether or not such dividends are declared.
Accrued but unpaid dividends on the series A preferred stock do not bear
interest and holders of the series A preferred stock are not entitled to any
dividends in excess of full cumulative dividends described above. Any

                                       12
<PAGE>   16

dividend payment made on the series A preferred stock is first credited against
the earliest accrued but unpaid dividend due that remains payable.

     No full dividends may be declared or paid or set apart for payment on any
class or series of preferred stock ranking, as to dividends, on a parity with or
junior to the series A preferred stock, other than a dividend in shares of any
class of stock ranking junior to the series A preferred stock as to dividends
and upon liquidation, for any period unless full cumulative dividends have been
or contemporaneously are declared and paid or declared and set apart for such
payment on the series A preferred stock for all past dividend periods and the
then current dividend period. When dividends are not paid in full, or full
payment is not so set apart, upon the series A preferred stock and the shares of
any other class or series of preferred stock ranking on a parity as to dividends
with the series A preferred stock -- including the series B preferred stock or
the series C preferred stock, all dividends declared upon the series A preferred
stock and any other class or series of preferred stock ranking on a parity as to
dividends with the series A preferred stock are declared pro rata so that the
amount of dividends declared per share of series A preferred stock and such
other class or series of preferred stock shall in all cases bear to each other
the same ratio that accrued dividends per share on the series A preferred stock
and such other class or series of preferred stock, which cannot include any
accrual in respect of unpaid dividends for prior dividend periods if such
preferred stock does not have a cumulative dividend, bear to each other.

     Except as provided in the preceding paragraph, unless full cumulative
dividends on the series A preferred stock have been or contemporaneously are
declared and paid or declared and set apart for payment for all past dividend
periods and the then current dividend period, then, other than the payment of
dividends in shares of our common stock or other shares of capital stock ranking
junior to the series A preferred stock as to dividends and upon liquidation:

     - no dividends may be declared or paid or set aside for payment upon our
       common stock, or any other capital stock of HCPI ranking junior to or on
       a parity with the series A preferred stock as to dividends or upon
       liquidation;

     - no other distribution may be declared or made upon our common stock, or
       any other capital stock of HCPI ranking junior to or on a parity with the
       series A preferred stock as to dividends or upon liquidation;

     - no shares of our common stock, or any other shares of capital stock of
       HCPI ranking junior to or on a parity with the series A preferred stock
       as to dividends or upon liquidation may be redeemed, purchased or
       otherwise acquired for any consideration by HCPI, except by conversion
       into or exchange for other capital stock of HCPI ranking junior to the
       series A preferred stock as to dividends and upon liquidation or for the
       purpose of preserving HCPI's qualification as a real estate investment
       trust. See "-- Restrictions on Ownership and Transfer."

     Liquidation Preferences. Upon any liquidation, dissolution or winding up of
the affairs of HCPI the holders of series A preferred stock are entitled to be
paid out of the assets of HCPI legally available for distribution to its
stockholders a liquidation preference of $25 per share, plus an amount equal to
any accrued and unpaid dividends to the date of payment, before any distribution
of assets is made to holders of our common stock or any other class or series of
capital stock of HCPI that ranks junior to the series A preferred stock as to
liquidation rights.

                                       13
<PAGE>   17

     In determining whether a distribution (other than upon voluntary or
involuntary liquidation) by dividend, redemption or other acquisition of shares
of stock of HCPI or otherwise is permitted under the Maryland General
Corporation Law, no effect is given to amounts that would be needed if HCPI
would be dissolved at the time of the distribution, to satisfy the preferential
rights upon distribution of holders of shares of stock of HCPI whose
preferential rights upon distribution are superior to those receiving the
distribution.

     Maturity; Redemption. The series A preferred stock has no stated maturity,
is not subject to any sinking fund or mandatory redemption and is not
convertible into any other securities of HCPI. The series A preferred stock is
not redeemable prior to September 30, 2002. HCPI is entitled, however, pursuant
to the articles supplementary relating to the series A preferred stock, to
purchase shares of the series A preferred stock in order to preserve its status
as a real estate investment trust for federal or state income tax purposes at
any time. Following September 30, 2002, HCPI may, at its option, redeem the
series A preferred stock at $25 per share ($60,000,000 in the aggregate), plus
accrued and unpaid dividends.

     Restrictions on Ownership and Transfer. See "-- Restrictions on Ownership
and Transfer Relating to HCPI Preferred Stock."

SERIES B PREFERRED STOCK

     Voting Rights. Holders of the series B preferred stock generally do not
have any voting rights, except in limited circumstances.

     If dividends on any shares of series B preferred stock are in arrears for
six or more quarterly periods, whether or not consecutive, the holders of series
B preferred stock (voting separately as a class with all other classes or series
of preferred stock upon which like voting rights have been conferred and are
exercisable, including the series A preferred stock and the series C preferred
stock) are entitled to vote for the election of a total of two additional
directors of HCPI at a special meeting called by the holders of record of at
least 25% of the series B preferred stock or the holders of any other class or
series of preferred stock so in arrears or at the next annual meeting of
stockholders. These voting rights continue at each subsequent annual meeting
until all dividends accumulated on such shares of series B preferred stock for
the past dividend periods and the dividend for the then current dividend period
shall have been fully paid or declared and set aside for payment. In such case,
the entire HCPI board is increased by two directors.

     So long as any shares of series B preferred stock remain outstanding, HCPI
shall not, without the consent or the affirmative vote of the holders of at
least two-thirds of the shares of series B preferred stock outstanding at the
time, given in person or by proxy, either in writing or at a meeting, with the
series B preferred stock voting separately as a class:

     - authorize, create or issue, or increase the authorized or issued amount
       of, any class or series of stock ranking prior to the series B preferred
       stock with respect to the payment of dividends, or the distribution of
       assets on liquidation, dissolution or winding up;

     - reclassify any authorized stock of HCPI into any such shares, or create,
       authorize or issue any obligation or security convertible into or
       evidencing the right to purchase any class or series of stock ranking
       prior to the series B preferred stock

                                       14
<PAGE>   18

       with respect to the payment of dividends, or the distribution of assets
       on liquidation, dissolution or winding up;

     - repeal, amend or otherwise change any of the provisions applicable to the
       series B preferred stock in any manner which materially and adversely
       affects the powers, preferences, voting power or other rights or
       privileges of the series B preferred stock. The articles supplementary
       relating to the series B preferred stock provide, however, that an
       increase in the amount of authorized preferred stock, the creation or
       issuance of other classes or series of preferred stock or any increase in
       the amount of authorized shares of series B preferred stock or of any
       other class or series of preferred stock, in each case ranking on a
       parity with, or junior to the series B preferred stock, will not be
       deemed to materially and adversely affect such rights, preferences,
       privileges or voting powers.

     The consent of the holders of series B preferred stock is not required for
the taking of any corporate action, including any merger or consolidation
involving HCPI or a sale of all or substantially all of the assets of HCPI,
regardless of the effect that such merger, consolidation or sale may have upon
the rights, preferences or voting power of the holders of the series B preferred
stock, except as expressly set forth in the articles supplementary relating to
the series B preferred stock.

     Rank. With respect to dividend rights and rights upon liquidation,
dissolution or winding up of HCPI, the series B preferred stock ranks:

     - senior to all classes or series of common stock of HCPI, and to all
       equity securities issued by HCPI ranking junior to the series B preferred
       stock with respect to dividend rights or rights upon liquidation,
       dissolution or winding up of HCPI;

     - on a parity with the series A preferred stock, series C preferred stock
       and with all equity securities issued by HCPI the terms of which
       specifically provide that such equity securities rank on a parity with
       the series B preferred stock with respect to dividend rights or rights
       upon liquidation, dissolution or winding up of HCPI; and

     - junior to all equity securities issued by HCPI the terms of which
       specifically provide that such equity securities rank senior to the
       series B preferred stock with respect to dividend rights or rights upon
       liquidation, dissolution or winding up of HCPI. See "--Voting Rights"
       below.

     The term "equity securities" does not include convertible debt securities,
which rank senior to the series B preferred stock prior to conversion.

     Dividends. Holders of the series B preferred stock are entitled to receive,
when, as, and if declared by our board, out of funds legally available for the
payment of dividends, cumulative preferential annual cash dividends at the rate
of 8.70% of the liquidation preference (equivalent to $2.175 per annum per
share).

     Dividends on the series B preferred stock are cumulative from the date of
original issue and payable quarterly in arrears on or about the last day of each
March, June, September and December or, if not a business day, the next
succeeding business day. Any dividend payable on the series B preferred stock,
including dividends payable for any partial dividend period, are computed on the
basis of a 360-day year consisting of twelve 30-day months.

                                       15
<PAGE>   19

     No dividends may be declared by our board or paid or set apart for payment
on the series B preferred stock if the terms of any agreement of HCPI, including
any agreement relating to its indebtedness, prohibits such a declaration,
payment or setting apart for payment or provides that such declaration, payment
or setting apart for payment would constitute a breach of or default under such
an agreement. Likewise, no dividends may be declared by our board or paid or set
apart for payment if such declaration or payment is restricted or prohibited by
law.

     Dividends on the series B preferred stock accrue, however, whether or not
HCPI has earnings, whether or not there are funds legally available for the
payment of such dividends and whether or not such dividends are declared.
Accrued but unpaid dividends on the series B preferred stock do not bear
interest and holders of the series B preferred stock are not entitled to any
dividends in excess of full cumulative dividends described above. Any dividend
payment made on the series B preferred stock is first credited against the
earliest accrued but unpaid dividend due that remains payable.

     No full dividends may be declared or paid or set apart for payment on any
class or series of preferred stock ranking, as to dividends, on a parity with or
junior to the series B preferred stock, other than a dividend in shares of any
class of stock ranking junior to the series B preferred stock as to dividends
and upon liquidation, for any period unless full cumulative dividends have been
or contemporaneously are declared and paid or declared and set apart for such
payment on the series B preferred stock for all past dividend periods and the
then current dividend period. When dividends are not paid in full (or full
payment is not so set apart) upon the series B preferred stock and the shares of
any other class or series of preferred stock ranking on a parity as to dividends
with the series B preferred stock -- including the series A preferred stock or
the series C preferred stock, all dividends declared upon the series B preferred
stock and any other class or series of preferred stock ranking on a parity as to
dividends with the series B preferred stock are declared pro rata so that the
amount of dividends declared per share of series B preferred stock and such
other class or series of preferred stock shall in all cases bear to each other
the same ratio that accrued dividends per share on the series B preferred stock
and such other class or series of preferred stock, which shall not include any
accrual in respect of unpaid dividends for prior dividend periods if such
preferred stock does not have a cumulative dividend, bear to each other.

     Except as provided in the preceding paragraph, unless full cumulative
dividends on the series B preferred stock have been or contemporaneously are
declared and paid or declared and set apart for payment for all past dividend
periods and the then current dividend period, then, other than the payment of
dividends in shares of our common stock or other shares of capital stock ranking
junior to the series B preferred stock as to dividends and upon liquidation:

     - no dividends may be declared or paid or set aside for payment upon our
       common stock, or any other capital stock of HCPI ranking junior to or on
       a parity with the series B preferred stock as to dividends or upon
       liquidation;

     - no other distribution may be declared or made upon our common stock, or
       any other capital stock of HCPI ranking junior to or on a parity with the
       series B preferred stock as to dividends or upon liquidation;

     - no shares of our common stock, or any other shares of capital stock of
       HCPI ranking junior to or on a parity with the series B preferred stock
       as to dividends or

                                       16
<PAGE>   20

       upon liquidation may be redeemed, purchased or otherwise acquired for any
       consideration by HCPI, except by conversion into or exchange for other
       capital stock of HCPI ranking junior to the series B preferred stock as
       to dividends and upon liquidation or for the purpose of preserving HCPI's
       qualification as a real estate investment trust. See " -- Restrictions on
       Ownership and Transfer."

     Liquidation Preferences. Upon any liquidation, dissolution or winding up of
the affairs of HCPI the holders of series B preferred stock are entitled to be
paid out of the assets of HCPI legally available for distribution to its
stockholders a liquidation preference of $25 per share, plus an amount equal to
any accrued and unpaid dividends to the date of payment, before any distribution
of assets is made to holders of our common stock or any other class or series of
capital stock of HCPI that ranks junior to the series B preferred stock as to
liquidation rights.

     In determining whether a distribution, other than upon voluntary or
involuntary liquidation, by dividend, redemption or other acquisition of shares
of stock of HCPI or otherwise is permitted under the Maryland General
Corporation Law, no effect is given to amounts that would be needed if HCPI
would be dissolved at the time of the distribution, to satisfy the preferential
rights upon distribution of holders of shares of stock of HCPI whose
preferential rights upon distribution are superior to those receiving the
distribution.

     Maturity; Redemption. The series B preferred stock has no stated maturity,
is not subject to any sinking fund or mandatory redemption and is not
convertible into any other securities of HCPI. The series B preferred stock is
not redeemable prior to September 30, 2003. HCPI is entitled, however, pursuant
to the articles supplementary relating to the series B preferred stock, to
purchase shares of the series B preferred stock in order to preserve its status
as a real estate investment trust for federal or state income tax purposes at
any time. Following September 30, 2003, HCPI may, at its option, redeem the
series B preferred stock at $25 per share ($134,625,000 in the aggregate), plus
accrued and unpaid dividends.

     Restrictions on Ownership and Transfer. See "-- Restrictions on Ownership
and Transfer Relating to HCPI Preferred Stock."

DEPOSITARY SHARES

     GENERAL

     At the effective time of the merger, HCPI assumed the obligations of AHP
under the Deposit Agreement dated October 27, 1997 (the "Deposit Agreement")
among AHP, ChaseMellon Shareholder Services, L.L.C., as depositary (the
"Depositary"), located at 300 South Hope Street, Los Angeles, California, 90071
and the holders from time to time of the depositary receipts issued by the
Depositary under the Deposit Agreement. Following the merger, HCPI deposited the
series C preferred stock with the Depositary and instructed the Depositary to
treat the shares of series C preferred stock as new deposited securities under
the Deposit Agreement. In accordance with the terms of the Deposit Agreement,
the existing depositary receipts, formerly evidencing AHP depositary shares
automatically evidence depositary shares which will evidence an ownership
interest in series C preferred stock.

     The following is a summary of material provisions of the Deposit Agreement.
This description does not purport to be complete and is qualified by reference
to the Deposit Agreement, the form of which has been incorporated by reference
into the registration

                                       17
<PAGE>   21

statement on Form S-3 of which this prospectus forms a part. See "Where You Can
Find More Information" on page 5.

     Each HCPI depositary share represents a one-one-hundredth interest in one
share of series C preferred stock. HCPI applied to list the series C preferred
stock on The New York Stock Exchange. The series C preferred stock will be
freely transferable under the Securities Act of 1933, as amended.

     Subject to the terms of the Deposit Agreement, each owner of a share of
depositary share is entitled through the Depositary, in proportion to the
one-one-hundredth interest in a share of series C preferred stock underlying
such depositary share, to all rights and preferences, and subject to all
restrictions, of a share of series C preferred stock (including dividend,
voting, redemption and liquidation rights).

     Since each share of series C preferred stock entitles the holder thereof to
one vote on matters on which the series C preferred stock is entitled to vote,
each depositary share, in effect, entitles the holder to one-one-hundredth of a
vote, rather than one full vote.

     Upon surrender of HCPI depositary receipts at the office of the Depositary
and upon payment of the charges provided in the Deposit Agreement and subject to
the terms of the Deposit Agreement, a holder of depositary shares is entitled to
have the Depositary deliver the whole shares of series C preferred stock
underlying the depositary shares evidenced by the surrendered HCPI depositary
receipts.

     DIVIDENDS AND OTHER DISTRIBUTIONS

     The Depositary will distribute all the dividends or other cash
distributions received in respect of the series C preferred stock to the record
holders of the depositary shares in proportion to the numbers of such depositary
shares owned by such holders on the relevant record date. Fractions will be
rounded down to the nearest whole cent.

     In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of the depositary
shares, unless the Depositary determines that it is not feasible to make the
distribution, in which case the Depositary may, with the approval of HCPI, sell
such property and distribute the net proceeds from such sale to such holders.

     The Deposit Agreement also contains provisions relating to the manner in
which any subscription or similar rights offered by HCPI to holders of the
series C preferred stock will be made available to holders of the depositary
shares.

     REDEMPTION OF DEPOSITARY SHARES

     If HCPI elects to redeem the series C preferred stock, the depositary
shares will be redeemed from the proceeds received by the Depositary resulting
from the redemption, in whole or in part, of the series C preferred stock held
by the Depositary. The Depositary will mail notice of redemption not less than
30 and not more than 90 days prior to the date fixed for redemption to the
record holders of the depositary shares to be redeemed at their respective
addresses appearing in the Depositary's books. The redemption price per
depositary share is $25.00 plus accumulated, accrued and unpaid dividends
thereon to the date fixed for redemption without interest. Whenever HCPI redeems
shares of series C preferred stock held by the Depositary, the Depositary will
redeem as of the same redemption date the number of depositary shares relating
to shares of series C preferred

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<PAGE>   22

stock so redeemed. If less than all of the depositary shares are to be redeemed,
the depositary shares to be redeemed will be selected by lot or pro rata as
determined by the Depositary.

     After the date fixed for redemption, the depositary shares called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the depositary shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which the
holders of such depositary shares were entitled upon such redemption upon
surrender to the Depositary of the HCPI depositary receipts evidencing such
depositary shares.

     VOTING THE SERIES C PREFERRED STOCK

     Upon receipt of notice of any meeting at which the holders of the series C
preferred stock are entitled to vote, the Depositary will mail the information
contained in the notice of meeting to the record holders of the depositary
shares. Each record holder of the depositary shares on the record date (which
will be the same date as the record date for the series C preferred stock) will
be entitled to instruct the Depositary as to the exercise of the voting rights
pertaining to the number of shares of series C preferred stock underlying such
holder's depositary shares. The Depositary will endeavor, insofar as
practicable, to vote the number of shares of series C preferred stock underlying
the depositary shares in accordance with such instructions, and HCPI has agreed
to take all action that is deemed necessary by the Depositary in order to enable
the Depositary to do so. The Depositary will refrain from voting shares of
series C preferred stock to the extent it does not receive specific instructions
from the holders of depositary shares relating to such series C preferred stock.

     AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT

     The form of HCPI depositary receipt evidencing the depositary shares and
any provision of the Deposit Agreement may at any time be amended by agreement
between HCPI and the Depositary. However, any amendment that materially and
adversely alters the rights of the existing holders of depositary shares will
not be effective unless such amendment has been approved by the record holders
of at least a majority of the depositary shares then outstanding. The Deposit
Agreement may be terminated by HCPI or the Depositary only if:

     - all outstanding depositary shares have been redeemed; or

     - there has been a final distribution in respect of the series C preferred
       stock in connection with any liquidation, dissolution or winding up of
       HCPI and such distribution has been distributed to the holders of the
       depositary shares.

     CHARGES OF DEPOSITARY

     HCPI will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. HCPI will pay charges
of the Depositary in connection with the initial deposit of the series C
preferred stock and any redemption of the series C preferred stock. Holders of
depositary shares will pay other transfer and other taxes and government charges
and such other charges as are expressly provided in the Deposit Agreement for
the accounts.

                                       19
<PAGE>   23

     MISCELLANEOUS

     The Depositary will forward to the holders of depositary shares all reports
and communications from HCPI that are delivered to the Depositary and that HCPI
is required to furnish to the holders of the series C preferred stock.

     Neither the Depositary nor HCPI is liable if it is prevented or delayed by
law or any circumstance beyond its control in performing its obligations under
the Deposit Agreement. Neither HCPI nor the Depositary is subject to any
liability under the Deposit Agreement to any holder of a depositary share, other
than for their gross negligence or willful misconduct, and they are not
obligated to prosecute or defend any legal proceeding in respect of any
depositary shares or series C preferred stock unless satisfactory indemnity is
furnished. They may rely upon written advice of counsel or accountants, or
information provided by persons presenting series C preferred stock for deposit,
holders of depositary shares or other persons believed to be competent and on
documents believed to be genuine.

     RESIGNATION AND REMOVAL OF DEPOSITARY

     The Depositary may resign at any time by delivering to HCPI notice of its
election to do so, and HCPI may at any time remove the Depositary, any such
resignation or removal to take effect upon the appointment of a successor
Depositary and its acceptance of such appointment. Such successor Depositary
must be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50,000,000.

     OTHER PROVISIONS; RESTRICTIONS ON TRANSFER

     For information regarding provisions of HCPI's charter and bylaws,
including restrictions on ownership which are applicable to the series C
preferred stock and the depositary shares, see "-- Restrictions on Ownership and
Transfer Relating to HCPI Preferred Stock."

SERIES C PREFERRED STOCK

     The following summary sets forth the material terms and provisions of the
series C preferred stock represented by the depositary shares, and is qualified
in its entirety by reference to the provisions of our charter. Unless the
context otherwise requires, all references to a holder of series C preferred
stock also refers to a holder of the depositary shares.

     GENERAL

     Subject to limitations prescribed by Maryland law and our charter, our
board is authorized to issue, from the authorized but unissued capital stock of
HCPI, preferred stock in such classes or series as our board may determine and
to establish from time to time the number of shares of preferred stock to be
included in any such series and to fix the designation and any preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of

                                       20
<PAGE>   24

redemption of the shares of each such series. Our Board has authorized HCPI to
designate and issue the series C preferred stock.

     When issued, the series C preferred stock will be validly issued, fully
paid and nonassessable. The holders of the series C preferred stock have no
preemptive rights with respect to any shares of the capital stock of HCPI or any
other securities of HCPI convertible into or carrying rights or options to
purchase any such shares. The series C preferred stock is not subject to any
sinking fund or other obligation of HCPI to redeem or retire the series C
preferred stock.

     The transfer agent, registrar and dividend disbursing agent for the series
C preferred stock is Bank of New York.

     Rank. With respect to dividend rights and rights upon liquidation,
dissolution or winding up of HCPI, the series C preferred stock ranks:

     - senior to all classes or series of common stock of HCPI, and to all other
       classes and series of equity securities issued by HCPI;

     - on a parity with the series A preferred stock, series B preferred stock
       and all equity securities issued by HCPI the terms of which specifically
       provide that such equity securities rank on a parity with the series C
       preferred stock with respect to dividend rights or rights upon
       liquidation, dissolution or winding up of HCPI; and

     - junior to all equity securities issued by HCPI ranking senior to the
       series C preferred stock with respect to dividend rights or rights upon
       liquidation, dissolution or winding up of HCPI.

     The term "equity securities" does not include convertible debt securities,
which rank senior to the series C preferred stock prior to conversion. The
series C preferred stock is subject to the creation of equity securities that
are both junior and on parity to the series C preferred stock with respect to
dividend rights or rights upon liquidation, dissolution or winding up of HCPI.

     DIVIDENDS

     Holders of the series C preferred stock are entitled to receive, when, as,
and if declared by our board, out of funds legally available for the payment of
dividends, cumulative preferential annual cash dividends of 8.60% of the
liquidation preference (equivalent to $2,500.00 per annum per share, or $25.00
per depositary share per annum).

     Dividends on the series C preferred stock are cumulative from the last
payment date through which dividends have been paid on the shares of AHP series
B preferred stock in respect of which shares of series C preferred stock are
issued and are payable quarterly in arrears on or about the last calendar day of
March, June, September and December of each year and on November 30, 1999, or,
if not a business day, the next business day. Accordingly, the first dividend
was paid on November 30, 1999. Dividends are payable to holders of record as
they appear in the records of HCPI at the close of business on the applicable
record date, which is the 15th day of the calendar month in which the dividend
payment date falls or such other date designated as such by our board that is
not more than 50 nor less than 10 days prior to such dividend payment date.

     The amount of dividends payable per share for a full dividend period is
computed by dividing $2500.00 by four. Any dividend payable on the series C
preferred stock for other

                                       21
<PAGE>   25

than a full dividend period is computed on the basis of a 360-day year
consisting of twelve 30-day months. All dividends on the series C preferred
stock accrue day by day and are cumulative.

     No full dividends may be declared or paid or set apart for payment on any
class or series of preferred stock ranking, as to dividends, on a parity with or
junior to the series C preferred stock for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared and
set apart for such payment on the series C preferred stock for all past dividend
periods and the then current dividend period. When dividends are not paid in
full (or full payment is not so set apart) upon the series C preferred stock and
the shares of any other class or series of preferred stock ranking on a parity
as to dividends with the series C preferred stock (including the series A
preferred stock or the series B preferred stock), all dividends declared upon
the series C preferred stock and any other class or series of preferred stock
ranking on a parity as to dividends with the series C preferred stock are
declared pro rata so that the amount of dividends declared per share of series C
preferred stock and such other class or series of preferred stock shall in all
cases bear to each other the same ratio that accrued dividends per share on the
series C preferred stock and such other class or series of preferred stock
(which shall not include any accrual in respect of unpaid dividends for prior
dividend periods if such preferred stock does not have a cumulative dividend)
bear to each other.

     Unless full cumulative dividends on the series C preferred stock have been
or contemporaneously are declared and paid or declared and set apart for payment
for all past dividend periods and the then current dividend period, then, other
than the payment of dividends in shares of our common stock or other shares of
capital stock ranking junior to the series C preferred stock as to dividends and
upon liquidation or options or rights to acquire the same:

     - no cash dividend or other distribution may be declared or paid or set
       aside for payment upon our common stock, or any other capital stock of
       HCPI ranking junior to the series C preferred stock as to dividends or
       upon liquidation;

     - HCPI may not repurchase, redeem or otherwise acquire shares of our common
       stock, or any other shares of capital stock of HCPI ranking junior to or
       on a parity with the series C preferred stock as to dividends or upon
       liquidation, or pay or make any amount available for a sinking fund or
       redemption of such shares, except by conversion into or exchange for
       other capital stock of HCPI ranking junior to the series C preferred
       stock as to dividends and upon liquidation or for the purpose of
       preserving HCPI's qualification as a real estate investment trust. See
       "-- Restrictions on Ownership and Transfer." Notwithstanding the
       foregoing, HCPI will be permitted to make a pro rata offer to purchase or
       concurrently redeem all, or a pro rata portion, of the outstanding series
       C preferred stock and any other equity securities that rank on parity
       with the series C preferred stock with respect to dividend rights or
       rights upon liquidation, dissolution or winding up of HCPI.

     Accrued and unpaid dividends for any past dividend periods may be declared
and paid at any time and for such interim periods to holders of record on the
applicable record date. Any dividend payment made on the series C preferred
stock is first credited against the earliest accrued but unpaid dividend due
with respect to the series C preferred stock that remains payable.

                                       22
<PAGE>   26

     No dividends will be authorized by our board or paid or set aside for
payment if any agreement of HCPI prohibits such authorization, payment or
setting apart for payment or provides that such authorization, payment or
setting aside of payment would constitute a breach thereof or a default
thereunder, or if such authorization or payment is restricted or prohibited by
law. Dividends on series C preferred stock accrue whether or not HCPI has
earnings, whether or not there are funds legally available for the payment of
such dividends and whether or not such dividends are declared. No interest, or
sum of money in lieu of interest, is payable in respect of any dividend payment
or payments on the series C preferred stock that may be in arrears. Holders of
series C preferred stock are not entitled to any dividends, whether payable in
cash, property or shares of stock, in excess of the full cumulative dividends,
as described herein, on the series C preferred stock. If, for any taxable year,
HCPI elects to designate as "capital gain dividends" (as defined in Section 857
of the Internal Revenue Code any portion (the "Capital Gains Amount") of the
dividends (within the meaning of the Internal Revenue Code) paid or made
available for the year to holders of all classes of capital stock (the "Total
Dividends"), then the portion of the Capital Gains Amount that will be allocable
to holders of series C preferred stock will be in the same portion that the
Total Dividends paid or made available to the holders of series C preferred
stock for the year bears to the Total Dividends.

     LIQUIDATION RIGHTS

     Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs HCPI, the holders of series C preferred stock are entitled to
receive out of assets of HCPI legally available for distribution to stockholders
a liquidation preference of $2,500.00 per share of series C preferred stock
($25.00 per depositary share), plus an amount equal to any accrued and unpaid
dividends for prior dividend periods, before any distribution of assets is made
to holders of our common stock or any other class or series of capital stock of
HCPI that ranks junior to the series C preferred stock as to liquidation rights.

     Until the holders of series C preferred stock have been paid their
liquidation preference in full, no payment will be made to any holder of our
common stock or any other class or series of capital stock of HCPI that ranks
junior to the series C preferred stock as to liquidation rights upon the
liquidation, dissolution or winding up of HCPI. If upon any liquidation,
dissolution or winding up of HCPI, the assets of HCPI, or proceeds thereof,
distributable among the holders of the series C preferred stock are insufficient
to pay in full the amount payable upon liquidation with respect to the series C
preferred stock and any other class or series of capital stock of HCPI that
ranks on parity with the series C preferred stock as to liquidation rights, then
such assets, or the proceeds thereof, will be distributed among the holders of
series C preferred stock and any such parity shares ratably in accordance with
the respective amounts which would be payable on such series C preferred stock
and any such parity shares if all amounts payable thereon were paid in full.

     Neither a consolidation nor a merger of HCPI with another entity, a
statutory share exchange by HCPI or a sale, lease or transfer of all or
substantially all of HCPI's assets will be considered a liquidation, dissolution
or winding up, voluntary or involuntary, of HCPI.

     In determining whether a distribution (other than upon voluntary or
involuntary liquidation) by dividend, redemption or other acquisition of shares
of stock of HCPI or otherwise is permitted under the Maryland General
Corporation Law, no effect is given to

                                       23
<PAGE>   27

amounts that would be needed if HCPI would be dissolved at the time of the
distribution, to satisfy the preferential rights upon distribution of holders of
shares of stock of HCPI whose preferential rights upon distribution are superior
to those receiving the distribution.

     REDEMPTION

     The series C preferred stock is not redeemable by HCPI prior to October 27,
2002, other than a redemption by HCPI to preserve its status as a real estate
investment trust. On and after October 27, 2002, HCPI, at its option, upon
publication in a newspaper of general circulation in New York, New York at least
once a week for two successive weeks and written notice to the holders of series
C preferred stock, may redeem the series C preferred stock, in whole or in part,
at any time, for cash at a redemption price of $2,500.00 per share of series C
preferred stock ($25.00 per depositary share), plus accumulated, accrued and
unpaid dividends thereon to the date fixed for redemption, without interest.

     The redemption price of the series C preferred stock is payable solely out
of proceeds from the sale of other capital stock of HCPI, which may include our
common stock, series A preferred stock, series B preferred stock, depositary
shares, interests, participations or other ownership interests in HCPI however
designated, other than debt securities convertible into or exchangeable for
equity securities, and any rights, warrants or options to purchase any thereof.
If fewer than all of the outstanding series C preferred stock are to be
redeemed, the number of shares to be redeemed will be determined by HCPI and
such shares may be redeemed pro rata from the holders of record of such shares
in proportion to the number of such shares held by such holders, with
adjustments to avoid redemption of fractional shares, by lot or by any other
method determined by HCPI in its sole discretion to be equitable.

     Unless full cumulative dividends on all series C preferred stock and any
other capital stock of HCPI ranking on parity with the series C preferred stock
as to redemption rights have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment for
all past dividend periods and the then current dividend period, no series C
preferred stock or such parity shares may be redeemed or purchased by HCPI
except pursuant to a pro rata purchase or exchange offer made on the same terms
to holders of all outstanding series C preferred stock or such parity shares, as
the case may be. Notice of redemption will be mailed at least 30 days but not
more than 90 days before the redemption date by the registrar to each holder of
record of series C preferred stock to be redeemed at the address shown on the
stock transfer books of HCPI. Each notice will state:

     - the redemption date;

     - the number of series C preferred stock to be redeemed;

     - the redemption price per share;

     - the place or places where certificates for series C preferred stock are
       to be surrendered for payment of the redemption price; and

     - that dividends on the series C preferred stock will cease to accrue on
       such redemption date.

                                       24
<PAGE>   28

     If fewer than all series C preferred stock are to be redeemed, the notice
mailed to each such holder of series C preferred stock will also specify the
number of series C preferred stock to be redeemed from such holder. If notice of
redemption of any series C preferred stock has been given and if the funds
necessary for such redemption have been set aside by HCPI in trust for the
benefit of the holders of series C preferred stock so called for redemption,
then from and after the redemption date, dividends will cease to accrue on the
series C preferred stock, such series C preferred stock will no longer be deemed
outstanding and all rights of the holders of such shares will terminate, except
the right to receive the redemption price.

     The holders of depositary shares at the close of business on a record date
are entitled to receive the dividends payable with respect to the series C
preferred stock represented by such depositary shares on the corresponding
dividend payment date notwithstanding the redemption thereof between such record
date and the corresponding dividend payment date or HCPI's default in the
payment of the dividend due. Except as provided above, HCPI will make no payment
or allowance for unpaid dividends, whether or not in arrears, on series C
preferred stock that have been called for redemption.

     VOTING RIGHTS

     Except as indicated below, the holders of series C preferred stock have no
voting rights.

     Whenever dividends on any shares of series C preferred stock shall be in
arrears for six or more quarterly periods, whether or not consecutive, the
holders of such shares of series C preferred stock, voting separately as a class
with all other classes or series of preferred stock upon which like voting
rights have been conferred, including the series A preferred stock and series B
preferred stock, and are exercisable, will be entitled to vote for the election
of a total of two additional directors of HCPI at a special meeting called by
the holders of record of at least 25% of the series C preferred stock or the
holders of any other class or series of preferred stock so in arrears, unless
this request is received less than 90 days before the date fixed for the next
annual or special meeting of stockholders, or at the next annual meeting of
stockholders, and at each subsequent annual meeting until all dividends
accumulated on such shares of series C preferred stock shall have been paid in
full for four consecutive dividend periods, including the last preceding
dividend period. In such case, the entire board of directors of HCPI will be
increased by two directors. The term of office of all directors so elected will
terminate on the earlier of the next annual meeting of HCPI stockholders or the
termination of such voting rights.

     The approval of two-thirds of the outstanding series C preferred stock,
voting as a single class, is required in order to, either directly or indirectly
or through merger or consolidation with another company:

     - authorize, create or issue, or increase the authorized or issued amount
       of, any class or series of stock ranking prior to the series C preferred
       stock in rights and preferences;

     - approve an amendment to, or alter or repeal, our charter which would
       materially and adversely change the specific terms of the series C
       preferred stock; or

     - enter into a share exchange that affects the series C preferred stock, or
       consolidate HCPI with or merge HCPI with another entity, unless in each
       such case each share of series C preferred stock remains outstanding
       without a material adverse

                                       25
<PAGE>   29

       change to its terms and rights or is converted into or exchanged for
       preferred stock of the surviving entity having preferences, conversion
       and other rights, voting powers, restrictions, limitations as to
       dividends, qualifications and terms and conditions of redemption thereof
       identical to that of the series C preferred stock (except for changes
       that do not materially and adversely affect the holders of series C
       preferred stock).

     However, an amendment which increases the number of authorized shares of
any class or series of HCPI preferred stock or authorizes the creation or
issuance of other classes or series of HCPI preferred stock, in each case
ranking junior to or on a parity with the series C preferred stock with respect
to the payment of dividends and distribution of assets upon liquidation,
dissolution or winding up, or substitutes the surviving entity in a merger or
consolidation, reorganization or other business combination for HCPI, will not
be considered to be an adverse change requiring the vote of the holders of
series C preferred stock.

     Except as provided above the holders of series C preferred stock are not
entitled to vote on any merger or consolidation involving HCPI, on any share
exchange or on a sale of all or substantially all of the assets of HCPI.

     RETIREMENT

     Except as otherwise provided in our charter, all series C preferred stock
issued and reacquired by HCPI will be restored to the status of authorized but
unissued shares of preferred stock, without designation as to class or series.

     CONVERSION

     The series C preferred stock is not convertible into or exchangeable for
any other property or securities of HCPI at the option of the holder.

     RECORD HOLDERS

     HCPI and its transfer agent may deem and treat the record holder of any
depositary share as the true and lawful owner thereof for all purposes, and
neither HCPI nor its transfer agent shall be affected by any notice to the
contrary.

     RESTRICTIONS ON TRANSFER

     Subject to exceptions more fully described in the articles supplementary
relating to the series C preferred stock, no person or entity may own, or be
deemed to own by virtue of the applicable constructive ownership provisions of
the Internal Revenue Code, more than 9.8% (by number or value, whichever is more
restrictive) of the outstanding shares of capital stock of HCPI, inclusive of
series C preferred stock. These ownership restrictions are also applicable to
the depositary shares that represent an ownership interest in series C preferred
stock. See "-- Restrictions on Ownership and Transfer Relating to HCPI Preferred
Stock."

                                       26
<PAGE>   30

TRANSFER RESTRICTIONS AND REDEMPTIONS RELATING TO OUR COMMON STOCK

     Our charter contains restrictions on the ownership and transfer of voting
stock of HCPI which are intended to assist HCPI in complying with the
requirements to continue to qualify as a real estate investment trust. The
ownership limit relating to our common stock set forth in our charter provides
that, if our board shall, at any time and in good faith, be of the opinion that
direct or indirect beneficial ownership of more than 9.9% or more of the voting
shares of capital stock has or may become concentrated in the hands of one
beneficial owner, our board shall have the power (1) by lot or other means
deemed equitable by it to call for the purchase from any stockholder of HCPI a
number of voting shares sufficient, in the opinion of our board to maintain or
bring the direct or indirect ownership of voting shares of capital stock of such
beneficial owner to a level of no more than 9.9% of the outstanding voting
shares of HCPI's capital stock, and (2) to refuse to transfer or issue voting
shares of capital stock to any person whose acquisition of such voting shares
would, in the opinion of our board, result in the direct or indirect ownership
by that person of more than 9.9% of the outstanding voting shares of capital
stock of HCPI. Further, any transfer of shares, options, warrants, or other
securities convertible into voting shares that would create a beneficial owner
of more than 9.9% of the outstanding voting shares of HCPI will be deemed void
ab initio and the intended transferee will be deemed never to have had an
interest in those shares.

     The purchase price for any voting shares of capital stock so redeemed will
be equal to the fair market value of the shares reflected in the closing sales
price for the shares, if then listed on a national securities exchange, or the
average of the closing sales prices for the shares if then listed on more than
one national securities exchange, or if the shares are not then listed on a
national securities exchange, the latest bid quotation for the shares if then
traded over-the-counter, on the last business day immediately preceding the day
on which notices of such acquisitions are sent by HCPI, or, if no such closing
sales prices or quotations are available, then the purchase price shall be equal
to the net asset value of such stock as determined by our board in accordance
with the provisions of applicable law. From and after the date fixed for
purchase by our board, the holder of any shares so called for purchase shall
cease to be entitled to distributions, voting rights and other benefits with
respect to such shares, except the right to payment of the purchase price for
the shares.

RESTRICTIONS ON OWNERSHIP AND TRANSFER RELATING TO PREFERRED STOCK

     Each of the articles supplementary relating to the series A preferred
stock, the series B preferred stock and the series C preferred stock contain
restrictions on the ownership and transfer of preferred stock which are intended
to assist HCPI in complying with the requirements to maintain its status as a
real estate investment trust. Subject to limited exceptions, no person or entity
may own, or be deemed to own by virtue of the applicable constructive ownership
provisions of the Internal Revenue Code, more than 9.9% (by number or value,
whichever is more restrictive) of the outstanding shares of series A preferred
stock or series B preferred stock or, with regard to the series C preferred
stock, 9.8% (by value or number of shares, whichever is more restrictive) of the
outstanding shares of capital stock of HCPI, inclusive of the series C preferred
stock. Our Board may, but in no event is required to, waive the applicable
ownership limit with respect to a particular stockholder if it determines that
such ownership will not jeopardize HCPI's status as a real estate investment
trust and our board otherwise decides such action would be in the best interest
of HCPI.

                                       27
<PAGE>   31

     The articles supplementary relating to each class of HCPI preferred stock
further prohibit:

     - any person from actually or constructively owning shares of stock of HCPI
       that would result in HCPI being "closely held" under Section 856(h) of
       the Internal Revenue Code or otherwise cause HCPI to fail to qualify as a
       real estate investment trust; and

     - any person from transferring shares of the applicable class of HCPI
       preferred stock of HCPI if such transfer would result in shares of stock
       of HCPI being beneficially owned by fewer than 100 persons (determined
       without reference to any rules of attribution).

     Any person who acquires or attempts or intends to acquire actual or
constructive ownership of shares of HCPI preferred stock that will or may
violate any of these restrictions on ownership and transfer is required to give
notice immediately to HCPI and provide HCPI with such other information as HCPI
may request in order to determine the effect of the transfer on HCPI's status as
a real estate investment trust. Under each of the articles supplementary
relating to the classes of HCPI preferred stock, if any purported transfer of
HCPI preferred stock or any other event would otherwise result in any person
violating the applicable ownership limit or such other limit as permitted by our
board, then any such purported transfer is void and of no force or effect with
respect to the purported transferee as to that number of shares of HCPI
preferred stock in excess of the ownership limit or such other limit, and the
transferee will acquire no right or interest in such excess shares. Any excess
shares described above are transferred automatically, by operation of law, to a
trust, the beneficiary of which is a qualified charitable organization selected
by HCPI. Such automatic transfer will be deemed to be effective as of the close
of business on the business day prior to the date of such violative transfer.
Within 20 days of receiving notice from HCPI of the transfer of shares to the
trust, the trustee of the trust is required to sell the excess shares to a
person or entity who could own the shares without violating the applicable
ownership limit, or such other limit as permitted by our board, and distribute
to the prohibited transferee an amount equal to the lesser of the price paid by
the prohibited transferee for the excess shares or the sales proceeds received
by the trust for the excess shares. In the case of any excess shares resulting
from any event other than a transfer, or from a transfer for no consideration
(such as a gift), the trustee are required to sell the excess shares to a
qualified person or entity and distribute to the prohibited owner an amount
equal to the lesser of the market price of the excess shares as of the date of
such event or the sales proceeds received by the trust for such excess shares.
In either case, any proceeds in excess of the amount distributable to the
prohibited transferee are distributed to the beneficiary of the trust. Prior to
a sale of any such excess shares by the trust, the trustee are entitled to
receive, in trust for the beneficiary, all dividends and other distributions
paid by HCPI with respect to such excess shares, and also are entitled to
exercise all voting rights with respect to such excess shares.

     Subject to Maryland law, effective as of the date that such shares have
been transferred to the trust, the trustee will have the authority, at the
trustee's sole discretion:

     - to rescind as void any vote cast by a prohibited transferee prior to the
       discovery by HCPI that the shares have been transferred to the trust;

     - to recast such vote in accordance with the desires of the trustee acting
       for the benefit of the beneficiary of the trust.

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<PAGE>   32

     However, if HCPI has already taken irreversible corporate action, then the
trustee will not have the authority to rescind and recast such vote. Any
dividend or other distribution paid to the prohibited transferee, prior to the
discovery by HCPI that such shares had been automatically transferred to a trust
as described above, are required to be repaid to the trustee upon demand for
distribution to the beneficiary of the trust. In the event that the transfer to
the trust as described above is not automatically effective, for any reason, to
prevent violation of the ownership limit or such other limit as permitted by our
board, then the articles supplementary each provide that the transfer of the
excess shares are void ab initio.

     In addition, shares of HCPI preferred stock of HCPI held in the trust shall
be deemed to have been offered for sale to HCPI, or its designee, at a price per
share equal to the lesser of:

     - the price per share in the transaction that resulted in such transfer to
       the trust or, in the case of a devise or gift, the market price at the
       time of such devise or gift, and

     - the market price on the date HCPI, or its designee, accepted the offer.
       HCPI will have the right to accept the offer until the trustee has sold
       the shares of stock held in the trust. Upon a sale to HCPI, the interest
       of the beneficiary in the shares sold will terminate and the trustee will
       distribute the net proceeds of the sale to the prohibited transferee.

     If any purported transfer of shares of HCPI preferred stock would cause
HCPI to be beneficially owned by fewer than 100 persons, such transfer will be
null and void ab initio in its entirety and the intended transferee will acquire
no rights to the stock.

     All certificates representing shares of HCPI preferred stock bear a legend
referring to the restrictions described above. The foregoing ownership
limitations could delay, defer or prevent a transaction or a change in control
of HCPI that might involve a premium price for HCPI preferred stock or otherwise
be in the best interest of HCPI stockholders.

     Each holder of HCPI preferred stock shall upon demand be required to
disclose to HCPI in writing such information as HCPI may request in order to
determine the effect, if any, of such stockholder's actual and constructive
ownership of HCPI preferred stock on HCPI's status as a real estate investment
trust and to ensure compliance with the applicable ownership limit or such other
limit as permitted by our board.

STOCKHOLDER RIGHTS PLAN

     On July 5, 1990, our board declared a dividend distribution of one common
stock purchase right (each, a "Right") for each outstanding share of our common
stock to stockholders of record at the close of business on July 30, 1990 and
with respect to each subsequently issued share. When exercisable, each Right
entitles the registered holder to purchase from HCPI one-half of a share of the
common stock at a price of $47.50 per share. The Rights are attached to all
outstanding shares of common stock, and no separate Rights certificates have
been distributed. Each share of common stock offered by this prospectus will
have upon issuance one Right attached. The Rights will become exercisable

                                       29
<PAGE>   33

and will detach from our common stock upon a "Distribution Date" which will
occur upon the earlier of:

     - the tenth day after the public announcement that any person or group has
       acquired beneficial ownership of 15% or more the outstanding our common
       stock, or

     - the tenth day after any person or group commences, or announces an
       intention to commence, a tender or exchange offer which, if consummated,
       would result in the beneficial ownership by a person or group of 30% or
       more of the outstanding our common stock.

     Following a Distribution Date and prior to the Expiration Date (as provided
in the Rights Agreement), HCPI will generally issue a Rights certificate with
each share of our common stock issued with respect to the exercise of stock
options or under an employee plan or arrangement or upon the exchange or
conversion of securities issued by HCPI or by a limited liability company of
which HCPI is the managing member.

     If a person or group acquires beneficial ownership of 15% or more of our
common stock (except pursuant to cash tender offers for all outstanding common
stock approved by our board) or if HCPI is the surviving corporation in a merger
and our common stock is not changed or exchanged, each Right other than Rights
owned by an Acquiring Person (as defined in the HCPI Rights Agreement) and its
affiliates and associates will entitle the holder to purchase, at the Right's
then current exercise price, that number of shares of our common stock having a
market value equal to twice the exercise price. Similarly, if HCPI merges or
consolidates with, or sells 50% or more of its assets or earning power to,
another person, each Right will then entitle the holder to purchase, at the
Right's then current exercise price, that number of shares of the stock of the
acquiring company which at the time of such transaction would have a market
value equal to twice the exercise price.

     If HCPI is acquired in a merger or other business combination transaction
or 50% or more of its consolidated assets or earning power are sold after a
person or group has become an Acquiring Person, proper provision will be made so
that each holder of a Right, other than an Acquiring Person and the affiliates
and associates of such Acquiring Person, whose Rights will have become void,
will thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, the number of shares of common stock of the
acquiring company which at the time of such transaction will have a market value
equal to twice the exercise price of the Right. In the event that any person or
group of affiliated or associated persons becomes an Acquiring Person, proper
provision will be made so that each holder of a Right, other than the Rights
beneficially owned by the Acquiring Person or the affiliates and associates of
such Acquiring Persons, which will thereafter be void, will thereafter have the
right to receive upon exercise that number of shares of our common stock having
a market value of two times the purchase price of the Right.

     At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
shares of our common stock, our board may exchange the Rights, other than any
Rights owned by such person or group and their respective affiliates and
associates which have become void, in whole or in part, for a number of shares
of our common stock having a value equal to the value of our common stock
issuable upon the exercise of the Rights over the purchase price.

                                       30
<PAGE>   34

     The Rights may be redeemed in whole, but not in part, at a price of $.005
per Right, subject to adjustment for stock splits and similar transactions by
our board at any time until ten days following the public announcement that a
person or group of affiliated or associated persons has acquired beneficial
ownership of 15% or more of the outstanding shares of our common stock. The
redemption of the Rights may be made effective at such time on such basis with
such conditions as our board, in its sole discretion, may establish, including
an extension of the period during which the Rights are redeemable or a
postponement of the Distribution Date. Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the redemption price. The Rights will
expire on July 30, 2000, unless such date is extended or the Rights are
exchanged or earlier redeemed.

BUSINESS COMBINATION PROVISIONS

     Our charter requires that, except in some circumstances, "business
combinations" between HCPI and a beneficial holder of 10% or more of HCPI's
outstanding voting stock (a "Related Person") be approved by the affirmative
vote of at least 90% of the outstanding voting shares of HCPI. A "business
combination" is defined in our charter as:

     - any merger or consolidation of HCPI with or into a Related Person;

     - any sale, lease, exchange, transfer or other disposition, including
       without limitation a mortgage or any other security device, of all or any
       "Substantial Part" (as defined below) of the assets of HCPI, including
       any voting securities of a subsidiary, to a Related Person;

     - any merger or consolidation of a Related Person with or into HCPI,

     - any sale, lease, exchange, transfer or other disposition of all or any
       Substantial Part of the assets of a Related Person to HCPI;

     - the issuance of any securities, other than by way of pro rata
       distribution to all stockholders, of HCPI to a Related Person; and

     - any agreement, contract or other arrangement providing for any of the
       transactions described in the definition of business combination.

     The term "Substantial Part" means more than 10% of the book value of the
total assets of HCPI as of the end of its most recent fiscal year ending prior
to the time the determination is being made.

     The Rights and the foregoing provisions may have the effect of discouraging
unilateral tender offers or other takeover proposals which stockholders might
deem to be in their interests or in which they might receive a substantial
premium. Our board's authority to issue and establish the terms of currently
authorized preferred stock, without stockholder approval, may also have the
effect of discouraging takeover attempts. See "Preferred Stock."

     The Rights and the foregoing provisions could also have the effect of
insulating current management against the possibility of removal and could, by
possibly reducing temporary fluctuations in market price caused by accumulations
of shares of our common stock, deprive stockholders of opportunities to sell at
a temporarily higher market price. Our board believes, however, that inclusion
of the business combination provisions in our

                                       31
<PAGE>   35

charter and the Rights may help assure fair treatment of HCPI stockholders and
preserve HCPI's assets.

                          RELATIONSHIP OF THE PARTIES

     On October 27, 1998, we formed HCPI Indiana, LLC and acquired the sole
managing member interest in HCPI Indiana, LLC. On December 4, 1998 we caused
HCPI Indiana, LLC to issue 781,213 managing member units to us in exchange for a
capital contribution of approximately $24.6 million. Also in connection with our
contribution, partnerships affiliated with Bremner & Wiley, Inc., a company
unaffiliated with HCPI Indiana, LLC or HCPI, made a capital contribution to HCPI
Indiana, LLC of real property and improvements with an equity value net of
assumed debt of $6.7 million. These partnerships were:

     - Medical Plaza Partners North, L.P.;

     - Medical Plaza Partners I, L.P.;

     - Medical Plaza Partners II, L.P.;

     - Eagle Highlands Associates I, L.P.;

     - Eagle Highlands Associates II, L.P.; and

     - Guion Development Partners.

     In exchange for these contributions, designated members of the partnerships
received approximately $3.9 million in cash and James D. Bremner, Michael F.
Wiley and James P. Revel, also as designated members of the partnerships,
received 89,452 non-managing member units. As result of these contributions,
these individuals became the only non-managing members of HCPI Indiana, LLC. On
November 15, 1999, Michael F. Wiley transferred his membership interest to The
Michael F. Wiley Revocable Trust dated April 4, 1979, as amended, and the trust
was admitted to HCPI Indiana, LLC as a non-managing member. HCPI Indiana, LLC
relied on the exemption provided by Section 4(2) of the Securities Act in
connection with the issuance and sale of the managing member and non-managing
member units.

     As of December 1, 1999, HCPI Indiana, LLC has 870,665 units issued and
outstanding, which are held by the following:

     - 781,213 managing member units by HCPI;

     - 29,731 non-managing member units by James D. Bremner;

     - 31,539 non-managing member units by The Michael F. Wiley Revocable Trust
       dated April 4, 1979, as amended; and

     - 28,182 non-managing member units by James P. Revel.

     On December 4, 1999, the non-managing member units held by the selling
holders may be exchanged for our common stock or, at our option, for cash. At
the time of the selling holders' acquisition of the non-managing member units,
we agreed to provide registration rights with respect to the shares of common
stock for which the non-managing member units may be exchanged.

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<PAGE>   36

                              OPERATING AGREEMENT

     The following summary of the operating agreement for the HCPI Indiana, LLC,
including the descriptions of certain provisions set forth elsewhere in this
prospectus, is qualified in its entirety by reference to the operating agreement
of HCPI Indiana, LLC.

MANAGEMENT

     HCPI Indiana, LLC was organized as a Delaware limited liability company
under the Delaware Limited Liability Company Act and the terms of its operating
agreement, the Amended and Restated Limited Liability Company Agreement of HCPI
Indiana, LLC. Our company is the sole managing member of HCPI Indiana, LLC.
Generally, pursuant to the operating agreement, we have exclusive and complete
responsibility and discretion in the management and control of HCPI Indiana,
LLC, including, subject to the restrictions discussed below, the ability to
cause it to enter into major transactions such as acquisitions, dispositions,
financings, refinancings, and to manage and operate its properties. We may not
be removed as the managing member of HCPI Indiana, LLC, with or without cause,
unless we consent to being removed. Non-managing members of HCPI Indiana, LLC
have no authority to transact business for HCPI Indiana, LLC or participate in
its management activities, except in limited circumstances described below and
as required by any non-waivable provision of applicable law.

     As the managing member, we may not take any action in contravention of the
operating agreement, including:

     - taking any action that would make it impossible to carry out the ordinary
       business of HCPI Indiana, LLC;

     - owning or assigning any rights in specific property owned by HCPI
       Indiana, LLC, other than for an HCPI Indiana, LLC purpose;

     - taking any action that would cause a non-managing member to be subject to
       liability as a managing member, except those acts permitted by the
       operating agreement or by law; or

     - entering into any agreement that would have the effect of restricting a
       member of HCPI Indiana, LLC from exercising its right to exchange its
       units as provided in the operating agreement and discussed below under
       "Exchange Rights," unless such member gives its prior written consent to
       such action.

     The consent of the holders of a majority of the outstanding non-managing
member units held by non-managing members is required before we will be
permitted to take the following extraordinary actions involving HCPI Indiana,
LLC:

     - the amendment, modification or termination of the operating agreement
       other than to reflect the admission, substitution, termination or
       withdrawal of members or in connection with a permitted dissolution or
       termination of HCPI;

     - approving the transfer of all or a portion of the membership interest
       held by us, other than a transfer to HCPI Indiana, LLC;

     - the admission of any additional or substitute managing members in HCPI
       Indiana, LLC; or

                                       33
<PAGE>   37

     - causing HCPI Indiana, LLC to incur any additional debt, except that we
       may cause HCPI Indiana, LLC to incur additional debt other than to us or
       our affiliates, the repayment of which is secured by all or a portion of
       the property owned by HCPI Indiana, LLC so long as following the
       incurrence of such debt HCPI Indiana, LLC's outstanding debt does not
       exceed 70% of the appraised value of the property securing the repayment
       of the debt and HCPI Indiana, LLC's net income is sufficient to maintain
       a minimum debt coverage ratio.

     In addition to the above restrictions, we, as the managing member, may not
take the following actions unless we obtain the consent of any non-managing
member who would be adversely affected:

     - convert a non-managing member's interest in HCPI Indiana, LLC into a
       managing member interest, except in the event we, as the managing member
       acquire such interest;

     - modify the limited liability of a member;

     - alter the rights of a member to receive distributions or the allocation
       of income and loss to a member; or

     - alter the right of a member to exchange its non-managing member units for
       our common stock.

     As managing member, we may, however, amend the operating agreement without
non-managing member consent:

     - to reflect the issuance of additional membership interests in exchange
       for capital contributions of cash or property, or the admission,
       substitution, termination or withdrawal of members;

     - to reflect inconsequential changes, cure ambiguities and make other
       changes not inconsistent with law or the provisions of the operating
       agreement;

     - to satisfy any requirements, conditions or guidelines contained in any
       governmental order or required by law;

     - to reflect changes that are reasonably necessary for us to maintain our
       status as a real estate investment trust; and

     - to modify the manner in which capital accounts are computed.

     In addition, until such time as the initial non-managing members of HCPI
Indiana, LLC, own 17,890 non-managing member units or less, the consent of the
holders of a majority of the non-managing member units held by non-managing
members will be required to dissolve HCPI Indiana, LLC or to sell or transfer
any of HCPI Indiana, LLC's properties in a taxable transaction prior to December
22, 2008.

TRANSFERABILITY OF INTERESTS

     The operating agreement provides that a non-managing member may transfer
its non-managing member units only after first offering those non-managing
member units to

                                       34
<PAGE>   38

us or otherwise obtaining our consent. The operating agreement further imposes
the following restrictions on the transfer of the non-managing member units:

     - the person to whom any non-managing member units are transferred must
       assume all of the obligations of the transferor under the operating
       agreement;

     - we will have the right to receive an opinion of counsel that the proposed
       transfer may be effected without registration under the Securities Act
       and will not otherwise violate any federal or state securities laws or
       regulations;

     - we may prohibit any transfer otherwise permitted under the operating
       agreement if such transfer would require the filing of a registration
       statement under the Securities Act by HCPI Indiana, LLC or would
       otherwise violate any applicable federal or state securities laws or
       regulations;

     - no transfer may be made to any person if, in the opinion of legal counsel
       to HCPI Indiana, LLC, such transfer could result in HCPI Indiana, LLC
       being treated as an association taxable as a corporation or for state
       income or franchise tax purposes, or such transfer could adversely affect
       our ability to qualify as a real estate investment trust or subject us to
       additional taxes under Sections 857 or 4981 of the Internal Revenue Code;

     - no transfer may be made if such transfer is effected through an
       "established securities market" or a "secondary market" within the
       meaning of Section 7704 of the Internal Revenue Code;

     - no transfer may be made to a lender of HCPI Indiana, LLC or any person
       related to such a lender whose loan constitutes "nonrecourse liability"
       within the meaning of the Internal Revenue Code, without our consent as
       managing member;

     - transfers may be made only as of the first day of a fiscal quarter of
       HCPI Indiana, LLC, unless we otherwise consent; and

     - no transfer may be made (1) to any person or entity who lacks the legal
       right, power or capacity to own a membership interest; (2) in violation
       of applicable law; (3) if such transfer would, in the opinion of legal
       counsel to HCPI Indiana, LLC, cause an increased tax liability to any
       other member as a result of the termination of HCPI Indiana, LLC; (4) if
       such transfer would cause HCPI Indiana, LLC to become a reporting company
       under the Exchange Act; (5) if such transfer would cause HCPI Indiana,
       LLC to cease to be classified as a partnership or to be classified as a
       publicly traded partnership or treated as a corporation; or (6) if such
       transfer would cause HCPI Indiana, LLC to lose material tax benefits or
       become subject to regulations not currently applicable to it.

CAPITAL CONTRIBUTIONS

     The operating agreement provides that if HCPI Indiana, LLC requires
additional funds for its operation, we may fund those investments by making a
capital contribution to HCPI Indiana, LLC. In addition, we are required to make
additional capital contributions to the extent necessary to fund:

     - capital additions, tenant improvements and leasing commissions relating
       to HCPI Indiana, LLC's real properties;

                                       35
<PAGE>   39

     - to fund all capital expenditures that do not constitute capital additions
       and to fund tenant improvements and leasing commissions that exceed 7.5%
       of HCPI Indiana, LLC's net income, without taking account of depreciation
       and other noncash charges; and

     - to repay or prepay any mortgage debt of HCPI Indiana, LLC that we elect
       to repay or prepay, as managing member.

     If we fund a capital contribution, we have the right to receive additional
managing member units. In the event we receive additional managing member units
in return for additional capital contributions, our membership interest in HCPI
Indiana, LLC will be increased. Non-managing members of HCPI Indiana, LLC do not
have the right to make additional capital contributions to HCPI Indiana, LLC
unless permitted to do so by us in our discretion. Accordingly, the membership
interest of non-managing members in HCPI Indiana, LLC will be diluted to the
extent we receive an additional membership interest.

TAX MATTERS

     Pursuant to the operating agreement, we are the tax matters partner of HCPI
Indiana, LLC. The tax matters partner serves as HCPI Indiana, LLC's
representative in most tax matters. For example, as the tax matters partner, we
have the authority to file tax returns and make elections for HCPI Indiana, LLC,
conduct audits, file refund claims on behalf of HCPI Indiana, LLC and settle
adjustments. In addition, as the tax matters partner, we will receive notices
and other information from the Internal Revenue Service. The designation of HCPI
as the tax matters partner of HCPI Indiana, LLC is not directly relevant to our
tax status as a real estate investment trust.

OPERATIONS

     The sole purposes of HCPI Indiana, LLC are to manage, operate, maintain,
expand, redevelop, encumber or sell the real properties contributed to it by
affiliates of the selling holders, and any other properties acquired by it, and
to invest and ultimately distribute funds obtained from owning, operating or
disposing of such properties. The operating agreement provides, however, that
we, as managing member, may operate HCPI Indiana, LLC in a manner that will
enable us to satisfy the requirements for being classified as a real estate
investment trust and avoid any federal income tax liability. Under the operating
agreement, HCPI Indiana, LLC assumes and pays when due, or reimburses us for
payment of, all costs and expenses that we incur for the benefit of or relating
to its ownership and operation.

DISTRIBUTIONS

     Holders of non-managing member units are entitled to receive cumulative
preferential distributions from the date of issue payable on a quarterly basis.
The right of holders of non-managing member units to receive cumulative
preferential distributions means that, unless and until each of those quarterly
distributions are paid in full, HCPI Indiana, LLC cannot make any other
distributions to its members. These preferred distributions are an amount per
unit equal to the amount payable with respect to each share of our common stock
for the corresponding quarter (subject to adjustment in the event we pay a
dividend or distribution on our common stock in shares of our common stock,
split or subdivide our common stock or effect a reverse stock split or other
combination of our common stock

                                       36
<PAGE>   40

into a smaller number of shares). Following the payment of the preferred
distribution to holders of the non-managing member units, HCPI Indiana, LLC
distributes the remaining cash available for distribution to us.

     In the event of a taxable disposition of some of HCPI Indiana, LLC's real
property, we may elect to distribute all or a portion of the net proceeds of the
taxable disposition to the members. In this event, we must distribute these
proceeds as follows:

     - first, to holders of non-managing member units to pay any previously
       unpaid preferred distribution on the non-managing member units held by
       them;

     - second, to the holders of units in proportion to the number of units held
       by them in redemption of those units, as discussed below, until all
       non-managing member units have been redeemed; and

     - finally, the remaining balance to us.

     The distribution of the net proceeds from the taxable disposition or
refinancing of real property will constitute a redemption of the units held by
the members of HCPI Indiana, LLC. We will cause HCPI Indiana, LLC to reduce the
number of units outstanding at the time of such distributions, with the total
number of units to be reduced calculated by dividing the aggregate value of the
distributions by the average of the closing prices of our common stock on the
New York Stock Exchange for the 10 trading days ending on the third trading day
preceding the distribution. The reduction in units will be allocated between us
and the holders of non-managing member units in relative proportion to the
number of managing member units then outstanding as compared to the number of
non-managing member units then outstanding. We will then allocate the reduction
in the number of outstanding non-managing member units to each holder of
non-managing member units in proportion to their respective holdings.

     Upon the refinancing of a property or the incurrence of additional debt,
the repayment of which is secured by a property owned by HCPI Indiana, LLC, we
may elect to distribute all or a portion of the refinancing or other debt
proceeds to the members. In this event, we must distribute such proceeds:

     - first, to the holders of non-managing member units to pay any previously
       unpaid preferred distribution on the non-managing member units held by
       them; and

     - second, the remaining balance to us.

ALLOCATION OF INCOME AND LOSS

     The operating net income and net loss of HCPI Indiana, LLC is generally
allocated as follows:

     - first, net income is allocated to each non-managing member in an amount
       equal to any preferred distributions paid to such non-managing member,
       less any amount of net income previously allocated to such non-managing
       member on account of such preferred distributions; and

     - thereafter, all remaining operating net income and net loss is allocated
       to us.

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<PAGE>   41

     In the event HCPI Indiana, LLC sells or otherwise disposes of any of its
real properties, however, the net income or net loss attributable to such sale
or disposition is generally allocated as follows:

     - net loss attributable to the sale or other disposition is allocated to
       the holders of units in proportion to the number of units held by them;

     - net income is first allocated to each member proportionally to the extent
       that the cumulative amount of any net loss previously allocated to such
       member upon the sale or other distribution of a property exceeds the
       cumulative amount of net income previously allocated to a member upon the
       sale or other disposition of a property;

     - net income is then allocated to each member in an amount equal to the
       cumulative distributions received by such member in connection with
       preferential distributions received by that member, any debt or
       refinancing proceeds or any disposition of HCPI Indiana, LLC's real
       properties, less any amount of net income previously allocated to such
       member on account of such distribution; and

     - thereafter, to each member in proportion to the number of units held by
       them.

     Each of the allocation provisions described above is subject to special
allocations relating to depreciation deductions and to compliance with the
provisions of Sections 704(b) and 704(c) of the Internal Revenue Code and
related Treasury Regulations and in the event HCPI Indiana, LLC is liquidated
and its affairs are wound up.

TERM

     The operating agreement provides that HCPI Indiana, LLC will continue until
December 31, 2028 unless extended upon the mutual agreement of the members or
sooner dissolved by us in accordance with the provisions of the operating
agreement. HCPI Indiana, LLC also will dissolve if:

     - we withdraw as the managing member and the non-managing members holding a
       majority of the non-managing member units then outstanding do not appoint
       a substitute managing member and elect in writing to continue the
       business of HCPI Indiana, LLC within 90 days;

     - we elect to dissolve it in accordance with the provisions of the
       operating agreement;

     - it sells substantially all of its assets and properties;

     - it is dissolved by judicial order;

     - we become bankrupt, unless within 90 days the non-managing members
       holding a majority of the outstanding non-managing member units elect in
       writing to continue the business of HCPI Indiana, LLC and to the
       appointment of a substitute managing member; or

     - all of the non-managing member units held by non-managing members have
       been exchanged for cash or our common stock.

                                       38
<PAGE>   42

INDEMNIFICATION

     The operating agreement provides that HCPI Indiana, LLC will indemnify us,
our officers and directors and those other persons that we may designate. Our
liability to HCPI Indiana, LLC and its members is limited for losses sustained,
liabilities incurred or benefits not derived as a result of good faith errors,
mistakes of fact or law, or acts or omissions. See "Provisions of Maryland Law
and the Company's Charter and Bylaws -- Limitation of Liability and
Indemnification."

EXCHANGE RIGHTS

     The non-managing member units will become exchangeable in whole or in part
on December 4, 2000.

     Accordingly, each non-managing member has the right to cause us to acquire
all or a portion of the non-managing member units held by it in exchange for, at
our election, cash or shares of our common stock. Upon exchange, the tendering
holder will receive either that number of exchange shares (the "Exchange
Shares") determined by multiplying the number of non-managing member units
tendered by an adjustment factor or, at our election an amount of cash equal to
the market value of such number of Exchange Shares. As of the date of this
prospectus, the adjustment factor is 1.0; however, the adjustment factor will be
adjusted to account for the economic effect of the payment of any dividends or
other distributions on our common stock in shares of common stock, any split or
subdivision in our outstanding common stock, and any reverse stock split or
other combination of our outstanding common stock into a smaller number of
shares. If we elect to deliver cash in lieu of all or any portion of the
Exchange Shares, the market value of those shares will be deemed to be the
average of the closing trading price of our common stock for the 10 trading days
ending on the third trading day immediately prior to the day on which the
tendering holder delivers a notice of exchange to us. Non-managing member units
that are acquired by us pursuant to the exercise of non-managing member's
exchange rights will be held by us as non-managing member units, with the same
rights and preferences of non-managing member units held by non-managing members
of HCPI Indiana, LLC.

     Our acquisition of the non-managing member units, whether they are acquired
for shares of common stock or cash, will be treated as a sale of the
non-managing member units to us for Federal income tax purposes. See "Material
Federal Income Tax Considerations -- Tax Consequences of the Exercise of
Exchange Rights."

     A tendering holder effecting an exchange of all or a portion of the
non-managing member units held by him must deliver to us a notice of exchange as
required by the operating agreement. A tendering holder shall have the right to
receive the Exchange Shares or cash, which is payable in connection with the
exchange, on the thirtieth day following our receipt of the notice of exchange.
All Exchange Shares delivered will be as duly authorized, validly issued, fully
paid and non-assessable shares, free of any pledge, lien, encumbrance or
restriction, other than those provided in our Articles of Restatement, our
bylaws, the Securities Act, relevant state securities or blue sky laws and any
applicable registration rights agreement with respect to the Exchange Shares
that the tendering holder has entered into. Notwithstanding any delay in
delivery, the tendering holder shall be deemed the owner of such shares and
vested with all rights of a stockholder as of the date on which the exchange
occurs, including the right to vote or consent, and the right to receive
dividends. Correspondingly, the tendering holder's right to receive
distributions with

                                       39
<PAGE>   43

respect to the tendered non-managing member units will cease as of the date on
which the exchange occurs.

     We will not be obligated to effect an exchange of tendered non-managing
member units if the issuance of Exchange Shares to the tendering holder would be
prohibited under the provisions of our Articles of Restatement, particularly
those which are intended to protect our qualification as an real estate
investment trust.

                                       40
<PAGE>   44

                    COMPARISON OF HCPI INDIANA, LLC AND HCPI

     Generally, the nature of an investment in our common stock is similar in
several respects to an investment in non-managing member units. However, there
are also differences between ownership of non-managing member units and
ownership of common stock, some of which may be material to investors.

     HCPI Indiana, LLC and HCPI are organized and incorporated in Delaware and
Maryland, respectively. Upon the exchange of non-managing member units for our
common stock, the rights of stockholders of HCPI will be governed by the
Maryland General Corporation Law and by our charter and bylaws.

     The information below highlights the material differences between HCPI
Indiana, LLC and us, relating to, among other things, form of organization,
management control, voting rights, compensation and fees, investor rights,
liquidity and federal income tax considerations. These comparisons are intended
to assist holders of non-managing member units in understanding the ways in
which their investment will be materially changed if they exchange their
non-managing member units for shares of our common stock.

     The following discussion is summary in nature and does not constitute a
complete discussion of these matters. The differences between the rights of HCPI
Indiana, LLC unitholders and HCPI stockholders may be determined in full by
reference to the Maryland General Corporation Law, the Delaware Limited
Liability Company Act, our charter and bylaws, the operating agreement of HCPI
Indiana, LLC, and the balance of this prospectus and the registration statement
of which this prospectus is a part.

<TABLE>
<CAPTION>
        HCPI INDIANA, LLC/ DELAWARE LAW                               HCPI/ MARYLAND LAW
<S>                                                    <C>
FORM OF ORGANIZATION AND ASSETS OWNED

HCPI Indiana, LLC is a Delaware limited                We are a Maryland corporation. We have elected
liability company. HCPI Indiana, LLC owns seven        to be taxed as a real estate investment trust
properties, each of which was contributed to           under the Internal Revenue Code, commencing with
it on December 4, 1998 by partnerships                 our taxable year ending December 31, 1985, and
affiliated with the selling holders.                   intend to maintain our qualification as a real
                                                       estate investment trust. As of December 1, 1999,
                                                       our gross investment in our properties,
                                                       including partnership and limited liability
                                                       company interests and mortgage loans, was
                                                       approximately $2.6 billion. As of December 1,
                                                       1999, our portfolio of 425 properties consisted
                                                       of:
                                                       - 173 long-term care facilities,
                                                       - 91 congregate care and assisted living
                                                         facilities,
                                                       - 22 acute care hospitals,
                                                       - Nine rehabilitation facilities,
                                                       - 82 medical office buildings,
                                                       - 46 physician group practice clinics and
                                                       - Two psychiatric care facilities.
PURPOSE

HCPI Indiana, LLC's purpose is to own, manage,         Under our charter, we may engage in the
operate, maintain, expand, rede-                       ownership of real property and any other
</TABLE>

                                       41
<PAGE>   45

<TABLE>
<CAPTION>
        HCPI INDIANA, LLC/ DELAWARE LAW                               HCPI/ MARYLAND LAW
<S>                                                    <C>
PURPOSE -- (CONTINUED)
velop, encumber or sell the properties owned by        lawful act or activity for which corporations
it and any other properties acquired by it in          may be organized under the Maryland law. Our
the future, and to invest and ultimately               qualification and taxation as a real estate
distribute the funds obtained from its business.       investment trust depends upon our ability to
                                                       meet the various qualification tests imposed
                                                       under the Internal Revenue Code relating to our
                                                       actual annual operating results, asset
                                                       diversification, distribution levels, and
                                                       diversity of stock ownership. See "Material
                                                       Federal Income Consequences -- Taxation of
                                                       Health Care Property Investors, Inc."
ADDITIONAL EQUITY

See "Operating Agreement -- Capital                    The board of directors may issue, in its
Contributions."                                        discretion, additional shares of common stock or
                                                       preferred stock. However, the total number of
                                                       shares issued cannot exceed the authorized
                                                       number of shares of stock described in our
                                                       charter.
BORROWING POLICIES

The operating agreement provides that HCPI             We are not restricted under its charter or
Indiana, LLC is not permitted to incur or              bylaws from incurring debt.
assume debt, including debt to us or our
affiliates, without first obtaining the consent
of the holders of a majority of the non-managing
member units held by non-managing members if
following the incurrence of such debt:
- - HCPI Indiana, LLC's outstanding debt would
  exceed 70% of the appraised value of the
  property securing the repayment of the debt;
  or
- - HCPI Indiana, LLC's net income would not be
  sufficient to maintain a minimum debt coverage
  ratio.
- - See "Operating Agreement -- Management."

MANAGEMENT CONTROL

All management powers over the business and            Our board of directors has exclusive control
affairs of HCPI Indiana, LLC are vested in us          over our business affairs subject only to the
as the managing member. No non-managing member         applicable provisions of the Maryland law and
has any right to participate in or exercise            the provisions in our charter and bylaws.
control or management power over the business
and affairs of HCPI Indiana, LLC, except for
actions which require the consent of the holders
of a majority of the non-managing member units
held by non-managing members. See "Operating
Agreement -- Management" and "-- Voting Rights."

DUTIES OF MANAGING MEMBERS AND DIRECTORS

Under Delaware law, we, as managing member of          Under Maryland law, the board of directors must
HCPI Indiana, LLC, are accountable to HCPI             perform their duties in good faith, in a manner
Indiana, LLC as a                                      that they reasonably believe to be in
</TABLE>

                                       42
<PAGE>   46

<TABLE>
<CAPTION>
        HCPI INDIANA, LLC/ DELAWARE LAW                               HCPI/ MARYLAND LAW
<S>                                                    <C>
DUTIES OF MANAGING MEMBERS AND DIRECTORS -- (CONTINUED)

fiduciary and, consequently, are required to           our best interests and with the care of an
exercise good faith and integrity in all of our        ordinarily prudent person in a like position
dealings with respect to HCPI Indiana, LLC's           under similar circumstances. Directors who act
affairs.                                               in such a manner generally will not be liable by
                                                       reason of being a director. Under Maryland law,
                                                       an act of a director is presumed to satisfy such
                                                       standards.
MANAGEMENT LIABILITY AND INDEMNIFICATION

HCPI Indiana, LLC has agreed to indemnify us,          Our charter contains a provision which
our director and officers and any other                eliminates the liability of directors and
persons we designate from and against all claims       officers to us and our stockholders to the
and expenses, judgments, and other amounts             fullest extent permitted by Maryland law.
incurred in connection with any actions relating       Neither the provisions of our charter nor
to the operation of HCPI Indiana, LLC in which         Maryland law limit the ability of us or our
these indemnitees are involved, unless:                shareholders to obtain other relief, such as
- - the act taken by an indemnitee was in bad            injunction or recision. Our bylaws provide for
  faith and was material to the action;                indemnification of directors and officers to the
- - an indemnitee received an improper personal          fullest extent permitted by Maryland law.
  benefit; or
- - in the case of any criminal proceeding, an
  indemnity had reasonable cause to believe the
  act was unlawful.
HCPI Indiana, LLC is obligated to reimburse the
reasonable expenses incurred by an indemnitee in
advance of the final disposition of the
proceeding if such indemnitee provides HCPI
Indiana, LLC with an affirmation of its good
faith belief that the standard of conduct
necessary for indemnification has been met and
an undertaking to repay the amount of the
reimbursed expenses if it is determined that
such standard was not met. No member of HCPI
Indiana, LLC, including HCPI, is obligated to
make capital contributions to enable HCPI
Indiana, LLC to fund these indemnification
obligations.

The operating agreement generally provides that
we will not incur liability to HCPI Indiana, LLC
or any non-managing member for losses sustained
or liabilities incurred as a result of errors in
judgment or of any act or omission if we acted
in good faith. In addition, we are not
responsible for any misconduct or negligence on
the part of our officers, directors or other
agents provided we appointed such agents in good
faith. We may consult with legal counsel,
accountants, appraisers, management consultants,
investment bankers and other consultants and
advisors, and any action we take or omit to take
in reliance upon their opinion, as to matters
which we reasonably believe to be within their
professional or expert competence, will be
conclusively presumed to have
</TABLE>

                                       43
<PAGE>   47

<TABLE>
<CAPTION>
        HCPI INDIANA, LLC/ DELAWARE LAW                               HCPI/ MARYLAND LAW
<S>                                                    <C>
MANAGEMENT LIABILITY AND INDEMNIFICATION -- (CONTINUED)

been done or omitted in good faith and in
accordance with their opinion.

ANTI-TAKEOVER PROVISIONS

Except in limited circumstances (See "-- Voting        Our charter, bylaws and agreements to which we
Rights" below), we have exclusive management           are a party contain a number of provisions that
power over the business and affairs of HCPI            may delay or discourage an unsolicited proposal
Indiana, LLC. Accordingly, we may hinder the           for the acquisition or the removal of incumbent
ability of HCPI Indiana, LLC to engage in a            management. These provisions include:
merger transaction or other business                   (1) a staggered Board of Directors;
combination. We may not be removed as managing         (2) authorized capital stock that may be issued
member by the other members with or without                as preferred stock in the discretion of the
cause. We must obtain the consent of the holders           board of directors, with voting or other
of a majority of the non-managing member units             rights superior to the common stock;
held by non-managing members prior to entering         (3) provisions designed to avoid concentration
into a merger transaction, and the terms of any            of share ownership in a manner that would
such transaction must preserve the rights of               jeopardize our status as a real estate
non-managing members to exchange their                     investment trust under the Internal Revenue
non-managing member units for our common stock.            Code;
These limitations may have the effect of               (4) super-majority vote for business
hindering the ability of HCPI Indiana, LLC to              combinations; and
enter into business combinations.                      (5) a stockholder rights plan.

A non-managing member may not transfer all or          See "Description of Capital Stock." Maryland law
any portion of its membership interest in HCPI         also contains provisions which could delay,
Indiana, LLC without first offering that               defer or prevent a change of control or other
membership interest to us or otherwise obtaining       transaction. See "Provisions of Maryland Law and
our consent. Accordingly, we may elect to              Health Care Property Investors, Inc.'s Charter
exercise our right of first refusal to prevent a       and Bylaws."
membership interest from being transferred to a
particular third party. Furthermore, upon the
transfer by a non-managing member of its
membership interest in HCPI Indiana, LLC, the
transferee may become a member of HCPI Indiana,
LLC only upon our approval, which we may give or
withhold in our sole and absolute discretion.
Until admitted to HCPI Indiana, LLC as a member,
transferee of a membership interest is not
entitled to vote on any matter submitted to the
members for their approval.

The ability of a non-managing member to transfer
its membership interest in HCPI Indiana, LLC may
be further hindered by other factors. See
"Operating Agreement -- Transferability of
Interests."

VOTING RIGHTS

Under the operating agreement, the non-managing        The Board of Directors is classified into three
members have voting rights only as to                  classes of directors whose terms are staggered.
specified matters including:                           At each annual meeting of the stockholders, the
- - dissolving HCPI Indiana, LLC or disposing of         stockholders elect the successors of the class
  all or substantially all of the properties,          of directors whose three-year term has expired.
  but in each case only so long as the initial
  non-managing members own at least 17,891             Maryland law requires that major corporate
  non-managing member                                  transactions, including most amendments to
</TABLE>

                                       44
<PAGE>   48

<TABLE>
<CAPTION>
        HCPI INDIANA, LLC/ DELAWARE LAW                               HCPI/ MARYLAND LAW
<S>                                                    <C>
VOTING RIGHTS -- (CONTINUED)

  units and only until December 22, 2008;              our charter, must have stockholder approval as
- - amending the operating agreement, except in          described below. All shares of common stock have
  limited circumstances;                               one vote per share. Our charter permit the board
- - causing HCPI Indiana, LLC to incur debt as           of directors to classify and issue preferred
  discussed above under "-- Borrowing Policies;"       stock in one or more series having voting power
  and                                                  which may differ from that of the common stock.
- - those other actions discussed above under            See "Description of Capital Stock."
  "Operating Agreement -- Management."
The non-managing members do not otherwise have
the right to vote on decisions relating to the
operation or management of HCPI Indiana, LLC.
</TABLE>

     The following is a comparison of the voting rights of the non-managing
members of HCPI Indiana, LLC and of our stockholders as they relate to major
transactions:

<TABLE>
<S>                                                    <C>
A. AMENDMENT OF THE CHARTER DOCUMENTS

Amendments to the operating agreement may be           Under Maryland law and our charter, most
proposed by us as managing member of HCPI              amendments to our charter must be approved by
Indiana, LLC or by holders of a majority of the        the board of directors and by the affirmative
non-managing member units held by non-managing         vote of at least two-thirds of the votes
members. Such proposal, in order to be                 entitled to be cast at a meeting of
effective, must be approved by the holders of a        stockholders.
majority of the outstanding managing member
units and non-managing member units voting             The affirmative vote of holders of at least 90%
together. In addition, amendments that would,          of our voting stock is required to repeal or
among other things:                                    amend the provisions of the charter relating to:
- - convert a non-managing member's interest into        (1) business combinations,
  a managing member interest;                          (2) the classification, removal and setting of
- - modify the limited liability of any non-                 the minimum and maximum number of our
  managing member;                                         directors and
- - alter the interest of any non-managing member        (3) limitations on ownership of our voting
  in profits, losses or distributions;                     capital stock.
- - alter or modify the right of a non-managing          See "Description of Capital Stock."
  member to exchange its non-managing member
  units for our common stock; or
- - cause the termination of HCPI Indiana, LLC at
  a time inconsistent with the terms of the
  operating agreement,
must be approved by each non-managing member
that would be adversely affected by any such
amendment. We may amend the operating agreement
without the consent of the non-managing members
if the purpose or the effect of such amendment
is to make administrative or inconsequential
changes, comply with any federal or state agency
rulings, guidelines or directives, or as are
</TABLE>

                                       45
<PAGE>   49

<TABLE>
<CAPTION>
        HCPI INDIANA, LLC/ DELAWARE LAW                               HCPI/ MARYLAND LAW
<S>                                                    <C>
A. AMENDMENT OF THE CHARTER DOCUMENTS -- (CONTINUED)

necessary for us to maintain our status as a
real estate investment trust

B. VOTE REQUIRED TO DISSOLVE; VOTE REQUIRED TO SELL
   ASSETS OR MERGE

We are not permitted to dissolve HCPI Indiana,         Under Maryland law, our board of directors and
LLC or, except in connection with a tax-free           holders of at least two-thirds of the
exchange, sell or transfer all or substantially        outstanding common stock must approve our
all of the properties currently held by HCPI           dissolution. Our charter require that "Busi-
Indiana, LLC prior to December 22, 2008 unless         ness Combinations" between us and a beneficial
the initial non-managing members own 17,890 non-       holder of 10% or more of our outstanding voting
managing member units or less. The sale,               stock be approved by the affirmative vote of at
exchange, transfer or other disposition of all         least 90% of our outstanding voting shares,
or substantially all of the properties of HCPI         unless approved in advance by our board or the
Indiana, LLC or the merger or consolidation of         "Business Combination" is between us and a
HCPI Indiana, LLC also requires the consent of         wholly owned subsidiary. See the disclosure
HCPI.                                                  under "Transfer Restrictions, Redemption and
                                                       Business Combination Provisions" in this
                                                       prospectus. No approval of our stockholders is
                                                       required for any sale of less than all or
                                                       substantially all of our assets which is not a
                                                       business combination.
COMPENSATION, FEES AND DISTRIBUTIONS

We do not receive any compensation for our             Our officers and outside directors receive
services as managing member of HCPI Indiana,           compensation for their services as more fully
LLC. HCPI Indiana, LLC will, however,                  described in the proxy statement incorporated by
reimburse HCPI for all expenses incurred               reference into this prospectus.
relating to the ongoing operation of HCPI
Indiana, LLC and any other offering of
additional interests in HCPI Indiana, LLC.

LIABILITY OF INVESTORS

Under the operating agreement and applicable           Under Maryland law, our stockholders are not
Delaware law, the liability of the non-                personally liable for our debts or obligations.
managing members for the debts and obligations
of HCPI Indiana, LLC is generally limited to the
amount of their investment in HCPI Indiana, LLC,
together with their interest in any
undistributed income, if any.

LIQUIDITY

A non-managing member may not transfer all or          Shares of common stock issued pursuant to this
any portion of its membership interest in HCPI         prospectus will be freely transferable, subject
Indiana, LLC without first offering that               to prospectus delivery and other requirements of
membership interest to us or otherwise obtaining       the Securities Act, and the transfer
our consent. HCPI has the right to receive an          restrictions in our charter.
opinion of counsel in connection with the
transfer of a membership interest by a                 Our common stock is listed on the New York Stock
non-managing member to the effect that the             Exchange. The breadth and strength of this
transfer may be effected without registration          secondary market will depend, among other
under the Securities Act and will not otherwise        things, upon the number of shares outstanding,
violate any applicable federal or state                our financial results and prospects, the general
securities law.                                        interest in our and other real estate
                                                       investments, and our dividend yield compared to
A transferee of a non-managing member's interest       that of other debt and equity securities.
in HCPI Indiana, LLC may not become a member of
HCPI Indiana, LLC
</TABLE>

                                       46
<PAGE>   50

<TABLE>
<CAPTION>
        HCPI INDIANA, LLC/ DELAWARE LAW                               HCPI/ MARYLAND LAW
<S>                                                    <C>
LIQUIDITY -- (CONTINUED)
without our consent. See "-- Anti-takeover
Provisions."

TAXES

HCPI Indiana, LLC itself is not subject to             Distributions made by us to our taxable domestic
federal income taxes. Instead, each holder of          stockholders out of our current or accumulated
units includes its allocable share of HCPI             earnings and profits will be taken into account
Indiana, LLC's taxable income or loss in               by them as ordinary income. Distributions that
determining its individual federal income tax          we designate as capital gain dividends generally
liability. Cash distributions from HCPI Indiana,       will be taxed as gains from the sale or
LLC are not taxable to a holder of                     disposition of a capital asset. Distributions in
non-managing member units except to the extent         excess of our current or accumulated earnings
they exceed such holder's basis in its interest        and profits will be treated as a non-taxable
in HCPI Indiana, LLC (which will include such          return of basis to the extent of a stockholder's
holder's allocable share of HCPI Indiana, LLC's        adjusted basis in its common stock, with the
non-recourse debt).                                    excess taxed as capital gain. See "Material
                                                       Federal Income Tax Consequences."
Income and loss from HCPI Indiana, LLC generally
are subject to the "passive activity"                  Dividends paid by us will be treated as
limitations. Under the "passive activity"              "portfolio" income and cannot be offset with
limitations, income and loss from HCPI Indiana,        losses from "passive activities."
LLC that is considered "passive income"
generally can be offset against income and loss        Stockholders who are individuals generally will
from other investments that constitute "passive        not be required to file state income tax returns
activities."                                           and/or pay state income taxes outside of their
                                                       state of residence with respect to our
Holders of non-managing member units are               operations and distributions. We may be required
required, in some cases, to file state income          to pay state income taxes in various states.
tax returns and/or pay state income taxes in the
states in which HCPI Indiana, LLC owns property,
even if they are not residents of those states.
</TABLE>

                                       47
<PAGE>   51

                         PROVISIONS OF MARYLAND LAW AND
                           HCPI'S CHARTER AND BYLAWS

     The following paragraphs summarize provisions of Maryland law and describe
our charter and bylaws. This is a summary, and does not completely describe
Maryland law, our charter or our bylaws. For a complete description, we refer
you to the Maryland General Corporation Law, our charter and our bylaws.

CLASSIFICATION OF THE BOARD OF DIRECTORS

     Under the bylaws, we have seven directors unless changed by the board of
directors or our stockholders. However, this number may not be fewer than the
minimum number required under Maryland law nor more than nine. Maryland law
requires a minimum of three directors under current circumstances. A vacancy
resulting from an increase in the number of directors may be filled by a
majority vote of the entire board of directors. Other vacancies may be filled,
at any regular meeting or at any special meeting called for that purpose, by a
majority of the remaining directors. Pursuant to the charter, the directors are
divided into three classes. Three directors hold office for a term which expires
at the annual meeting of stockholders to be held in April 2000. Two directors
hold office for a term which expires at the annual meeting of stockholders to be
held in April 2001. Two directors hold office for a term which expires at the
annual meeting of stockholders to be held in April 2002. As the term of each
class expires, directors in that class will be elected for a term of three years
and until their successors are duly elected and qualify. We believe that
classification of the board of directors helps to assure the continuity and
stability of our business strategies and policies.

     The classification of the Board may make the replacement of incumbent
directors more time-consuming and difficult. This could discourage a third party
from making a tender offer or otherwise attempting to obtain control of us, even
though such an attempt might be beneficial to us and our stockholders. A change
in a majority of the board of directors will generally require at least two
annual meetings of stockholders, instead of one. Thus, the classified board
provision could increase the likelihood that incumbent directors will retain
their positions. Holders of common stock have no right to cumulative voting for
the election of directors. Consequently, at each annual meeting of stockholders,
the holders of a majority of shares of common stock can elect all of the
successors of the class of directors whose term expires at that meeting and the
holders of the remaining shares of common stock cannot elect any directors.

REMOVAL OF DIRECTORS

     Under the terms of our charter and Maryland law, a director of ours may be
removed only for cause and only by the affirmative vote of the holders of
two-thirds of the outstanding shares of our voting stock or by a unanimous vote
of all other directors. The Maryland General Corporation Law does not define the
term "cause." As a result, removal for "cause" is subject to Maryland common law
and to judicial interpretation and review in the context of the unique facts and
circumstances of any particular situation. Our stockholders may elect a
successor to fill any vacancy which results from the removal of a director.

                                       48
<PAGE>   52

BUSINESS COMBINATIONS; OWNERSHIP RESTRICTIONS

     Under Maryland law, "business combinations" between a Maryland corporation
and an interested stockholder or an affiliate of an interested stockholder are
prohibited for five years after the most recent date on which the interested
stockholder becomes an interested stockholder. These business combinations
include a merger, consolidation, share exchange, or, in circumstances specified
in the statute, an asset transfer or issuance or reclassification of equity
securities. An interested stockholder is defined as:

     - any person who beneficially owns ten percent or more of the voting power
       of the corporation's shares; or

     - an affiliate of the corporation who, at any time within the two-year
       period prior to the date in question, was the beneficial owner of ten
       percent or more of the voting power of the then outstanding voting stock
       of the corporation.

     After the five-year prohibition, any business combination between the
Maryland corporation and an interested stockholder generally must be recommended
by the board of directors of the corporation and approved by the affirmative
vote of at least:

     - 80% of the votes entitled to be cast by holders of outstanding shares of
       voting stock of the corporation; and

     - two-thirds of the votes entitled to be cast by holders of voting stock of
       the corporation other than shares held by the interested stockholder with
       whom or with whose affiliate the business combination is to be effected.

     These super-majority vote requirements do not apply if the corporation's
common stockholders receive a minimum price, as defined under Maryland law, for
their shares in the form of cash or other consideration in the same form as
previously paid by the interested stockholder for its shares. None of these
provisions of the Maryland law will apply, however, to business combinations
that are approved or exempted by the board of directors of the corporation prior
to the time that the interested stockholder becomes an interested stockholder.

     Because our board of directors believes it is essential for us to continue
to qualify as a real estate investment trust, our charter contain restrictions
on the ownership and transfer of our capital stock which are intended to assist
us in complying with these requirements.

     The ownership limit relating to common stock described in the charter
provides that, if the board of directors shall, at any time and in good faith,
be of the opinion that direct or indirect ownership of more than 9.9% or more of
the voting shares of capital stock has or may become concentrated in the hands
of one beneficial owner, the board of directors shall have the power:

          (1) by lot or other means deemed equitable by it to call for the
     purchase from any of our stockholders a number of voting shares sufficient,
     in the opinion of the board of directors, to maintain or bring the direct
     or indirect ownership of voting shares of capital stock of such beneficial
     owner to a level of no more than 9.9% of the outstanding voting shares of
     our capital stock, and

          (2) to refuse to transfer or issue voting shares of capital stock to
     any person whose acquisition of such voting shares would, in the opinion of
     the board of directors,

                                       49
<PAGE>   53

     result in the direct or indirect ownership by that person of more than 9.9%
     of the outstanding voting shares of our capital stock.

     Further, any transfer of shares, options, warrants, or other securities
convertible into voting shares that would create a beneficial owner of more than
9.9% of the outstanding voting shares shall be deemed void ab initio and the
intended transferee shall be deemed never to have had an interest in the
securities in question.

     The purchase price for any voting shares of capital stock so redeemed shall
be equal to:

     - the fair market value of the shares reflected in the closing sales price
       for the shares, if then listed on a national securities exchange, or

     - the average of the closing sales prices for the shares if then listed on
       more than one national securities exchange, or

     - if the shares are not then listed on a national securities exchange, the
       latest bid quotation for the shares if then traded over-the-counter, on
       the last business day immediately preceding the day on which notices of
       such acquisitions are sent by us; or

     - if no losing sales prices or quotations are available, then the purchase
       price shall be equal to the net asset value of stock as determined by the
       board of directors under the provisions of applicable law.

From and after the date fixed for purchase by the board of directors, the holder
of any shares so called for purchase shall cease to be entitled to
distributions, voting rights and other benefits with respect to such shares,
except the right to payment of the purchase price for the shares.

     Our charter require that, except if the acquisition is unanimously approved
in advance by the Board or the transaction is with another corporation which we
own 100% of their voting stock, business combinations (as defined below) between
us and a beneficial holder of 10% or more of our outstanding voting stock (a
"related person") be approved by the affirmative vote of at least 90% of our
outstanding voting shares. A business combination is defined in the charter as:

          (1) any merger or consolidation of us with or into a related person,

          (2) any sale, lease, exchange, transfer or other disposition,
     including without limitation a mortgage or any other security device, of
     all or any substantial part of our assets, including, without limitation,
     any voting securities of our subsidiaries to a related person,

          (3) any merger or consolidation of a related person with or into us,

          (4) any sale, lease, exchange, transfer or other disposition of all or
     any substantial part of the assets of a related person to us,

          (5) the issuance of any of our securities (other than by way of pro
     rata distribution to all stockholders) to a related person, and

          (6) any agreement, contract or other arrangement providing for any of
     the transactions described in the definition of business combination. The
     term "substantial

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<PAGE>   54

     part" is defined in the charter to mean more than 10% of the book value of
     our total assets as of the end of its most recent fiscal year ending prior
     to the time the determination is being made.

     The foregoing provisions of the charter may not be amended without the
affirmative vote of at least 90% of our outstanding voting shares.

     The rights and the foregoing provisions may have the effect of discouraging
unilateral tender offers or other takeover proposals which stockholders might
deem to be in their interests or in which they might receive a substantial
premium. The board of directors' authority to issue and establish the terms of
currently authorized preferred stock, without stockholder approval, may also
have the effect of discouraging takeover attempts. The rights and the foregoing
provisions could also have the effect of insulating current management against
the possibility of removal and could, by possibly reducing temporary
fluctuations in market price caused by accumulations of shares of common stock,
deprive stockholders of opportunities to sell at a temporarily higher market
price. However, the board of directors believes that inclusion of the business
combination provisions in the charter and the rights may help assure fair
treatment of stockholders and preserve our assets.

CONTROL SHARE ACQUISITIONS

     Maryland law provides that "control shares" of a Maryland corporation
acquired in a "control share acquisition" have no voting rights except to the
extent approved by a vote of two-thirds of the votes entitled to be cast on the
matter. Shares of stock owned by the acquiror, by officers or by directors who
are employees of the corporation are excluded from shares entitled to vote on
the matter. "Control shares" are voting shares of stock which, if aggregated
with all other shares of stock owned by the acquiror or shares of stock for
which the acquiror is able to exercise or direct the exercise of voting power
except solely by virtue of a revocable proxy, would entitle the acquiror to
exercise voting power in electing directors within one of the following ranges
of voting power:

     - one-fifth or more but less than one-third;

     - one-third or more but less than a majority; or

     - a majority or more of all voting power.

     Control shares do not include shares the acquiring person is then entitled
to vote as a result of having previously obtained stockholder approval. Except
as otherwise specified in the statute, a "control share acquisition" means the
acquisition of control shares.

     Once a person who has made or proposes to make a control share acquisition
has undertaken to pay expenses and satisfied other conditions, the person may
compel the board of directors to call a special meeting of stockholders to be
held within 50 days of demand to consider the voting rights of the shares. If no
request for a meeting is made, the corporation may itself present the question
at any stockholders meeting.

     If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then
the corporation may be able to redeem any or all of the control shares for fair
value, except for control shares for which voting rights previously have been
approved. Fair value is determined without regard to the absence of voting
rights for control shares, as of the date of the last control

                                       51
<PAGE>   55

share acquisition or of any meeting of stockholders at which the voting rights
of control shares are considered and not approved. If voting rights for control
shares are approved at a stockholders meeting and the acquiror becomes entitled
to vote a majority of the shares entitled to vote, all other stockholders may
exercise appraisal rights. The fair value of the shares as determined for
purposes of these appraisal rights may not be less than the highest price per
share paid in the control share acquisition. Some of the limitations and
restrictions otherwise applicable to the exercise of dissenters' rights do not
apply in the context of a control share acquisition.

     The control share acquisition statute does not apply to shares acquired in
a merger, consolidation or share exchange if the corporation is a party to the
transaction or to acquisitions approved or exempted by the charter or bylaws of
the corporation. Our charter and bylaws do not provide for any such exemption.

AMENDMENTS TO THE CHARTER

     Provisions of our charter on business combinations, the number of
directors, classification of the board of directors and ownership restrictions
may be amended only if approved by our board of directors by a majority vote and
by our shareholders by the affirmative vote of the holders of not less than 90%
of all of the votes entitled to be cast on the matter. Other amendments to our
charter require approval by our board of directors by a majority vote and
approval by our stockholders by the affirmative vote of holders of shares
entitled to cast a two-thirds of all the votes entitled to be cast on the
matter.

AMENDMENT TO THE BYLAWS

     Provisions of our bylaws on the number of directors and the vote required
to amend the bylaws may be amended only by unanimous vote of the board of
directors or the affirmative vote of the holders of not less than 90% of all of
the votes entitled to be cast on the matter. Other amendments to our bylaws
require the affirmative vote of a majority of the entire board of directors or
the affirmative vote of the holders of not less than two-thirds of all of the
votes entitled to be cast on the matter.

DISSOLUTION OF HEALTH CARE PROPERTY INVESTORS, INC.

     Our dissolution must be approved by our board of directors by a majority
vote of the entire board and by our stockholders by the affirmative vote of not
less than two-thirds of all votes entitled to be cast on the matter.

ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS; PROCEDURES OF SPECIAL
MEETINGS REQUESTED BY STOCKHOLDERS

     Our bylaws provide that nominations of persons for election to the board of
directors and the proposal of business to be considered by stockholders at the
annual or special meeting of stockholders may be made only:

     - pursuant to our notice of the meeting;

     - by or at the direction of the board of directors; and

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<PAGE>   56

     - by a stockholder who is entitled to vote at the meeting and has complied
       with the advance notice procedures, including the minimum time period,
       described in the bylaws.

     Our bylaws also provide that only the business specified in our notice of
meeting may be brought before a special meeting of stockholders.

ANTI-TAKEOVER EFFECT OF PROVISIONS OF MARYLAND LAW, OUR RIGHTS PLAN AND OF THE
CHARTER AND BYLAWS

     The provisions in the charter on classification of the board of directors
and removal of directors and business combinations and bylaws do not contain
exemptions from the control share acquisition statutes, the business
combinations and control share acquisition provisions of Maryland law, the
advance notice provisions of our bylaws, the provisions of our bylaws relating
to stockholder-requested special meetings and our stockholder rights plan may
delay, defer or prevent a change of control or other transaction in which
holders of some, or a majority, of the common stock might receive a premium for
their common stock over the then prevailing market price or which such holders
might believe to be otherwise in their best interests.

LIMITATION OF LIABILITY AND INDEMNIFICATION

     Maryland law permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages. However, a Maryland
corporation may not limit liability resulting from actual receipt of an improper
benefit or profit in money, property or services. Also, liability resulting from
active and deliberate dishonesty may not be eliminated if a final judgment
establishes that the dishonesty is material to the cause of action. Our charter
contains a provision which limits liability of directors and officers to the
maximum extent permitted by Maryland law. This provision does not limit our
right or that of our stockholders to obtain equitable relief, such as an
injunction or rescission.

     Our bylaws obligate us, to the maximum extent permitted by Maryland law, to
indemnify and to pay or reimburse reasonable expenses before final disposition
of a proceeding to:

     - any present or former director or officer who is made a party to the
       proceeding by reason of his service in that capacity; or

     - any individual who, while one of our directors and at our request, serves
       or has served another corporation, partnership, joint venture, trust,
       employee benefit plan or any other enterprise as a director, officer,
       partner or trustee of such corporation, partnership, joint venture,
       trust, employee benefit plan, or other enterprise and who is made a party
       to the proceeding by reason of his service in that capacity.

     The bylaws authorize us, with the approval of our board of directors, to
provide indemnification and advancement of expenses to our agents and employees.

     Unless a corporation's charter provides otherwise, Maryland law requires a
corporation to indemnify a director or officer who has been successful, on the
merits or otherwise, in the defense of any proceeding to which he is made a
party by reason of his service in that capacity. Our charter does not alter this
requirement.

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<PAGE>   57

     Maryland law permits a corporation to indemnify its present and former
directors and officers, among others, against:

     - judgments;

     - penalties;

     - fines;

     - settlements; and

     - reasonable expenses actually incurred by them in connection with any
       proceeding to which they may be made a party by reason of their service
       in those or other capacities.

     Maryland law does not permit a corporation to indemnify its present and
former directors and officers if it is established that:

     - the act or omission of the director or officer was material to the matter
       giving rise to the proceeding and was committed in bad faith or was the
       result of active and deliberate dishonesty;

     - the director or officer actually received an improper personal benefit in
       money, property or services; or

     - in the case of any criminal proceeding, the director or officer had
       reasonable cause to believe that the act or omission was unlawful.

     Under Maryland law, a Maryland corporation generally may not indemnify for
an adverse judgment in a suit by or in the right of the corporation. Also, a
Maryland corporation generally may not indemnify for a judgment of liability on
the basis that personal benefit was improperly received. In either of these
cases, a Maryland corporation may indemnify for expenses only if a court so
orders.

     Maryland law permits a corporation to advance reasonable expenses to a
director or officer. First, however, the corporation must receive a written
affirmation by the director or officer of his good faith belief that he has met
the standard of conduct necessary for indemnification by the corporation. The
corporation must also receive a written undertaking, either by the director or
officer or on his behalf, to repay the amount paid or reimbursed by the
corporation if it shall ultimately be determined that the standard of conduct
was not met. The termination of any proceeding by conviction, or upon a plea of
nolo contendere or its equivalent, or an entry of any order of probation prior
to judgment, creates a rebuttable presumption that the director or officer did
not meet the requisite standard of conduct required for indemnification to be
permitted.

     The operating agreement also provides for indemnification of us, as
managing member, and our officers and directors generally to the same extent as
permitted by Maryland law for a corporation's officers and directors. The
operating agreement also limits the our liability to HCPI Indiana, LLC and its
partners in the case of losses sustained, liabilities incurred or benefits not
derived as a result of errors in judgment or mistakes of fact or law or any act
or omission made in good faith.

     It is the position of the Commission that indemnification of directors and
officers for liabilities arising under the Securities Act is against public
policy and is unenforceable pursuant to Section 14 of the Securities Act.

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<PAGE>   58

                    MATERIAL FEDERAL INCOME TAX CONSEQUENCES

     The following is a summary of the federal income tax consequences
anticipated to be material to purchasers of our common stock. This summary is
based on current law, is for general information only and is not tax advice.
Your tax treatment will vary depending upon your particular situation, and this
discussion does not purport to deal with all aspects of taxation that may be
relevant to a stockholder in light of his or her personal investments or tax
circumstances, or to stockholders who receive special treatment under the
federal income tax law, or to holders of units, except to the extent discussed
under the headings "-- Taxation of Tax-Exempt Stockholders" on page 67,
"-- Taxation of Non-U.S. Stockholders" on page 68 and "-- Tax Consequences of
the Exercise of Exchange Rights" on page 56. Holders of units or common stock
receiving special treatment include, without limitation:

     - insurance companies;

     - financial institutions or broker-dealers;

     - tax-exempt organizations;

     - stockholders holding securities as part of a conversion transaction, or a
       hedge or hedging transaction, or as a position in a straddle for tax
       purposes; and

     - foreign corporations or partnerships and persons who are not citizens or
       residents of the United States.

     In addition, the summary below does not consider the effect of any foreign,
state, local or other tax laws that may be applicable to you as a holder of the
units or our common stock.

     The information in this section is based on:

     - the Internal Revenue Code,

     - current, temporary and proposed treasury regulations promulgated under
       the Internal Revenue Code,

     - the legislative history of the Internal Revenue Code,

     - current administrative interpretations and practices of the Internal
       Revenue Service, and

     - court decisions,

all as of the date of this prospectus. In addition, the administrative
interpretations and practices of the Internal Revenue Service include its
practices and policies as expressed in private letter rulings which are not
binding on the Internal Revenue Service, except with respect to the particular
taxpayers who requested and received such rulings. Future legislation, treasury
regulations, administrative interpretations and practices and/or court decisions
may adversely affect, perhaps retroactively, the tax consequences contained in
this discussion. Any change could apply retroactively to transactions preceding
the date of the change. We have not requested, and do not plan to request, any
rulings from the Internal Revenue Service concerning our tax treatment and the
statements in this prospectus are not binding on the Internal Revenue Service or
a court. Thus, we can provide no assurance that the tax consequences contained
in this discussion will not be

                                       55
<PAGE>   59

challenged by the Internal Revenue Service or sustained by a court if challenged
by the Internal Revenue Service.

     YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES TO YOU OF:

     - THE DISPOSITION OF THE UNITS;

     - THE ACQUISITION, OWNERSHIP AND SALE OR OTHER DISPOSITION OF OUR COMMON
       STOCK, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
       CONSEQUENCES;

     - OUR ELECTION TO BE TAXED AS A REAL ESTATE INVESTMENT TRUST FOR FEDERAL
       INCOME TAX PURPOSES; AND

     - POTENTIAL CHANGES IN THE TAX LAWS.

TAX CONSEQUENCES OF THE EXERCISE OF EXCHANGE RIGHTS

     If you exchange the units for common stock, the transaction will be a fully
taxable transaction. In the exchange, you will generally recognize gain to the
extent that the value of the common stock received pursuant to the exchange,
plus the amount of liabilities of HCPI Indiana, LLC that is allocated to the
units being exchanged, exceeds your tax basis in the units. As a result, the
gain you recognize or even the amount of tax you are required to pay, could
exceed the value of the common stock you receive in the exchange. Whether you
can recognize a loss resulting from an exchange is subject to a number of
limitations set forth in the Internal Revenue Code. The character of any such
gain or loss as capital or ordinary will depend on what types of assets HCPI
Indiana, LLC holds at the time of the exchange.

TAXATION OF HEALTH CARE PROPERTY INVESTORS, INC.

     General

     We elected to be taxed as a real estate investment trust under Sections 856
through 860 of the Internal Revenue Code, commencing with our taxable year ended
December 31, 1985. We believe we have been organized and have operated in a
manner which allows us to qualify for taxation as a real estate investment trust
under the Internal Revenue Code commencing with our taxable year ended December
31, 1985. We intend to continue to operate in this manner. However, no assurance
can be given that we have operated or will continue to operate in a manner so as
to qualify or remain qualified as a real estate investment trust. See
"-- Failure to Qualify" on page 64.

     The sections of the Internal Revenue Code that relate to the qualification
and operation as a real estate investment trust are highly technical and
complex. The following describes the material aspects of these sections of the
Internal Revenue Code that govern the federal income tax treatment of a real
estate investment trust and its stockholders. This summary is qualified in its
entirety by the Internal Revenue Code, relevant rules and treasury regulations
promulgated under the Internal Revenue Code, and administrative and judicial
interpretations of the Internal Revenue Code, and these rules and treasury
regulations.

     Latham & Watkins, Los Angeles, California has acted as our tax counsel in
connection with this issuance and our election to be taxed as a real estate
investment trust.

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<PAGE>   60

In the opinion of Latham & Watkins, commencing with our taxable year ended
December 31, 1985, we have been organized and have operated in conformity with
the requirements for qualification and taxation as a real estate investment
trust under the Internal Revenue Code, and our proposed method of operation will
enable us to continue to meet the requirements for qualification and taxation as
a real estate investment trust under the Internal Revenue Code. This opinion was
rendered as of December 1, 1999, and Latham & Watkins undertakes no obligation
to update its opinion subsequent to this date.

     The opinion of Latham & Watkins is based on various assumptions and
representations made by us as to factual matters, including representations made
by us in this prospectus and a factual certificate provided by one of our
officers. Moreover, our qualification and taxation as a real estate investment
trust depends upon our ability to meet the various qualification tests imposed
under the Internal Revenue Code and discussed below, relating to our actual
annual operating results, asset diversification, distribution levels, and
diversity of stock ownership, the results of which have not been and will not be
reviewed by Latham & Watkins. Accordingly, no assurance can be given that the
actual results of our operation for any particular taxable year will satisfy
such requirements. See "-- Failure to Qualify" on page 64. Further, the
anticipated income tax treatment described in this prospectus may be changed,
perhaps retroactively, by legislative, administrative or judicial action at any
time.

     If we qualify for taxation as a real estate investment trust, we generally
will not be required to pay federal corporate income taxes on our net income
that is currently distributed to our stockholders. This treatment substantially
eliminates the "double taxation" that generally results from investment in a
corporation. Double taxation means taxation once at the corporate level when
income is earned and once again at the stockholder level when such income is
distributed. We will be required to pay federal income taxes, however, as
follows:

     - We will be required to pay tax at regular corporate rates on any
       undistributed "real estate investment trust taxable income," including
       undistributed net capital gains.

     - We may be required to pay the "alternative minimum tax" on our items of
       tax preference.

     - If we have (a) net income from the sale or other disposition of
       "foreclosure property," which is held primarily for sale to customers in
       the ordinary course of business or (b) other nonqualifying income from
       foreclosure property, we will be required to pay tax at the highest
       corporate rate on this income. Foreclosure property is generally defined
       as property acquired through foreclosure or after a default on a loan
       secured by the property or on a lease of the property.

     - We will be required to pay a 100% tax on any net income from prohibited
       transactions. Prohibited transactions are, in general, sales or other
       taxable dispositions of property, other than foreclosure property, held
       primarily for sale to customers in the ordinary course of business.

     - If we fail to satisfy the 75% or 95% gross income test, as described
       below, but have maintained our qualification as a real estate investment
       trust, we will be required to pay a 100% tax on an amount equal to (a)
       the gross income attributable to the greater of the amount by which we
       fail the 75% or 95% gross income test multiplied by (b) a fraction
       intended to reflect our profitability.

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<PAGE>   61

     - We will be required to pay a 4% excise tax on the excess of the required
       distribution over the amounts actually distributed if we fail to
       distribute during each calendar year at least the sum of (a) 85% of our
       ordinary income for the year, (b) 95% of our real estate investment trust
       capital gain net income for the year, and (c) any undistributed taxable
       income from prior periods.

     - If we acquire any asset from a corporation which is or has been a C
       corporation in a transaction in which the basis of the asset in our hands
       is determined by reference to the basis of the asset in the hands of the
       C corporation, and we subsequently recognize gain on the disposition of
       the asset during the ten-year period beginning on the date on which we
       acquired the asset, then under treasury regulations not yet promulgated
       we will be required to pay tax at the highest regular corporate tax rate
       on this gain to the extent of the excess of (a) the fair market value of
       the asset over (b) our adjusted basis in the asset, in each case
       determined as of the date on which we acquired the asset. A C corporation
       is generally defined as a corporation required to pay full
       corporate-level tax. The results described in this paragraph with respect
       to the recognition of such gain assume that we will make an election
       under Internal Revenue Service Notice 88-19 and that the availability or
       nature of such election is not modified as proposed in President
       Clinton's Year 2000 Federal Budget Proposal.

     Requirements for Qualification as a Real Estate Investment Trust

     The Internal Revenue Code defines a real estate investment trust as a
corporation, trust or association:

          (1) that is managed by one or more trustees or directors;

          (2) that issues transferable shares or transferable certificates to
     evidence beneficial ownership;

          (3) that would be taxable as a domestic corporation, but for Sections
     856 through 860 of the Internal Revenue Code;

          (4) that is not a financial institution or an insurance company within
     the meaning of the Internal Revenue Code;

          (5) that is beneficially owned by 100 or more persons;

          (6) not more than 50% in value of the outstanding stock of which is
     owned, actually or constructively, by five or fewer individuals, including
     specified entities, during the last half of each taxable year; and

          (7) that meets other tests, described below, regarding the nature of
     its income and assets and the amount of its distributions.

     The Internal Revenue Code provides that conditions (1) to (4), inclusive,
must be met during the entire taxable year and that condition (5) must be met
during at least 335 days of a taxable year of twelve months, or during a
proportionate part of a taxable year of less than twelve months. Conditions (5)
and (6) do not apply until after the first taxable year for which an election is
made to be taxed as a real estate investment trust. For purposes of condition
(6), pension funds and specified other tax-exempt entities generally are treated
as individuals, except a "look-through" exception applies with respect to
pension funds.

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<PAGE>   62

     We believe that we have satisfied conditions (1) through (7) inclusive. In
addition, our charter provides for restrictions regarding transfer and, in
certain cases, ownership of shares. These restrictions are intended to assist us
in continuing to satisfy the share ownership requirement described in (6) above.
These stock ownership and transfer restrictions are described in "Description of
Capital Stock" on page 10. These restrictions, however, may not ensure that we
will, in all cases, be able to satisfy the share ownership requirements
described in (5) and (6) above. If we fail to satisfy these share ownership
requirements, our status as a real estate investment trust will terminate. If,
however, we comply with the rules contained in the treasury regulations that
require us to ascertain the actual ownership of our shares and we do not know,
or would not have known through the exercise of reasonable diligence, that we
failed to meet the requirement described in condition (6) above, we will be
treated as having met this requirement. See "-- Failure to Qualify" on page 64.

     In addition, a corporation may not elect to become a real estate investment
trust unless its taxable year is the calendar year. We have and will continue to
have a calendar taxable year.

     Ownership of a Partnership Interest

     We own, directly or indirectly, interests in various partnerships and
limited liability companies. Income tax regulations provide that if we are a
partner in a partnership or member of a limited liability company, we will be
deemed to own our proportionate share of the assets of the partnership or
limited liability company, as the case may be. Also, we will be deemed to be
entitled to our proportionate share of the income of the partnership or limited
liability company. The character of the assets and gross income of the
partnership or limited liability company, as the case may be, retains the same
character in our hands for purposes of Section 856 of the Internal Revenue Code,
including satisfying the gross income tests and the asset tests. Thus, our
proportionate share of the assets and items of income of the partnerships and
limited liability companies in which we own a direct or indirect interest are
treated as our assets and items of income for purposes of applying the
requirements described in this prospectus, including the income and asset tests
described below. We have included a brief summary of the rules governing the
federal income taxation of partnerships and their partners below in "-- Tax
Aspects of the Partnerships" on page 64.

     Qualified Real Estate Investment Trust Subsidiaries

     We own a number of properties through wholly-owned subsidiaries that we
believe will be treated as "qualified real estate investment trust subsidiaries"
under Internal Revenue Code Section 856(i). A qualified real estate investment
trust subsidiary will not be treated as a separate corporation, and all assets,
liabilities, and items of income, deduction and credit of a qualified real
estate investment trust subsidiary shall be treated as assets, liabilities and
such items, as the case may be, of the real estate investment trust. Thus, in
applying the real estate investment trust requirements described in this
prospectus, our qualified real estate investment trust subsidiaries will be
ignored, and all assets, liabilities and items of income, deduction and credit
of such subsidiaries will be treated as our assets, liabilities and such items.
A qualified real estate investment trust subsidiary will not be subject to
federal income tax, and our ownership of the voting stock of a qualified real
estate investment trust will not violate the restrictions against ownership

                                       59
<PAGE>   63

of securities of any one issuer which constitutes more than 10% of such issuer's
voting securities or more than 5% of the value of our total assets.

     Income Tests

     We must satisfy two gross income requirements annually to maintain our
qualification as a real estate investment trust.

     - First, each taxable year we must derive directly or indirectly at least
       75% of our gross income, excluding gross income from prohibited
       transactions, from (a) investments relating to real property or mortgages
       on real property, including "rents from real property" and, in some
       circumstances, interest, or (b) specified types of temporary investments.

     - Second, each taxable year we must derive at least 95% of our gross
       income, excluding gross income from prohibited transactions, from (a) the
       real property investments described above, (b) dividends, interest and
       gain from the sale or disposition of stock or securities, or (c) any
       combination of the foregoing.

     For these purposes, the term "interest" generally does not include any
amount received or accrued, directly or indirectly, if the determination of all
or some of the amount depends in any way on the income or profits of any person.
An amount received or accrued generally will not be excluded from the term
"interest," however, solely by reason of being based on a fixed percentage or
percentages of receipts or sales.

     Rents we receive will qualify as "rents from real property" in satisfying
the gross income requirements for a real estate investment trust described above
only if the following conditions are met:

     - the amount of rent must not be based in any way on the income or profits
       of any person. An amount received or accrued generally will not be
       excluded from the term "rents from real property," however, solely by
       reason of being based on a fixed percentage or percentages of receipts or
       sales;

     - the Internal Revenue Code provides that rents received from a tenant will
       not qualify as "rents from real property" in satisfying the gross income
       tests if we, or an actual or constructive owner of 10% or more of our
       capital stock, actually or constructively owns 10% or more of the
       interests in such tenant;

     - if rent attributable to personal property, leased in connection with a
       lease of real property, is greater than 15% of the total rent received
       under the lease, then the portion of rent attributable to personal
       property will not qualify as "rents from real property"; and

     - for rents received to qualify as "rents from real property," we generally
       must not operate or manage the property or furnish or render services to
       the tenants of the property, subject to a 1% de minimis exception, other
       than through an independent contractor from whom we derive no revenue. We
       may, however, directly perform services that are "usually or customarily
       rendered" in connection with the rental of space for occupancy only and
       are not otherwise considered "rendered to the occupant" of the property.
       Examples of such services include the provision of light, heat, or other
       utilities, trash removal and general maintenance of common areas.

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<PAGE>   64

     HCPI generally does not intend to receive rent which fails to qualify as
"rents from real property." HCPI may, however, have failed to satisfy, and may
continue to fail to satisfy, some of the conditions described above to the
extent these actions will not, based on the advice of HCPI's tax counsel,
jeopardize HCPI's status as a real estate investment trust.

     Notwithstanding the foregoing, we may have taken and may continue to take
the actions described above to the extent these actions will not, based on the
advice of our tax counsel, jeopardize our status as a real estate investment
trust.

     If we fail to satisfy one or both of the 75% or 95% gross income tests for
any taxable year, we may nevertheless qualify as a real estate investment trust
for the year if we are entitled to relief under the Internal Revenue Code.
Generally, we may avail ourselves of the relief provisions if:

     - our failure to meet these tests was due to reasonable cause and not due
       to willful neglect;

     - we attach a schedule of the sources of our income to our federal income
       tax return; and

     - any incorrect information on the schedule was not due to fraud with
       intent to evade tax.

It is not possible, however, to state whether in all circumstances we would be
entitled to the benefit of these relief provisions. For example, if we fail to
satisfy the gross income tests because nonqualifying income that we
intentionally accrue or receive exceeds the limits on nonqualifying income, the
Internal Revenue Service could conclude that our failure to satisfy the tests
was not due to reasonable cause. If these relief provisions do not apply to a
particular set of circumstances, we will not qualify as a real estate investment
trust. As discussed above in "Taxation of Health Care Property Investors,
Inc. -- General" on page 56, even if these relief provisions apply, and we
retain our status as a real estate investment trust, a tax would be imposed with
respect to our non-qualifying income. We may not always be able to maintain
compliance with the gross income tests for real estate investment trust
qualification despite our periodic monitoring of our income.

     Prohibited Transaction Income

     Any gain realized by us on the sale of any property held as inventory or
other property held primarily for sale to customers in the ordinary course of
business will be treated as income from a prohibited transaction that is subject
to a 100% penalty tax. Our gain includes our share of any such gain realized by
any of the partnerships or limited liability companies in which we own an
interest. This prohibited transaction income may also adversely affect our
ability to satisfy the income tests for qualification as a real estate
investment trust. Under existing law, whether property is held as inventory or
primarily for sale to customers in the ordinary course of a trade or business
depends on all the facts and circumstances surrounding the particular
transaction. We intend to hold our properties for investment with a view to
long-term appreciation, to engage in the business of acquiring, developing and
owning our properties and other properties. We intend to make occasional sales
of our properties as are consistent with our investment objectives. The Internal
Revenue Service may contend, however, that one or more of these sales is subject
to the 100% penalty tax.

                                       61
<PAGE>   65

     Asset Tests

     At the close of each quarter of our taxable year, we also must satisfy
three tests relating to the nature and diversification of our assets:

     - First, at least 75% of the value of our total assets, including assets
       held by our qualified real estate investment trust subsidiaries and our
       allocable share of the assets held by the partnerships and limited
       liability companies in which we own an interest, must be represented by
       real estate assets, cash, cash items and government securities. For
       purposes of this test, real estate assets include stock or debt
       instruments held for one year or less that are purchased with the
       proceeds of a stock offering or a public debt offering with a term of at
       least five years.

     - Second, not more than 25% of our total assets may be represented by
       securities, other than those securities includable in the 75% asset test.

     - Third, of the investments included in the 25% asset class, the value of
       any one issuer's securities may not exceed 5% of the value of our total
       assets and we may not own more than 10% of any one issuer's outstanding
       voting securities.

     After initially meeting the asset tests at the close of any quarter, we
will not lose our status as a real estate investment trust for failure to
satisfy the asset tests at the end of a later quarter solely by reason of
changes in asset values. If we fail to satisfy the asset tests because we
acquire securities or other property during a quarter, we can cure this failure
by disposing of sufficient nonqualifying assets within 30 days after the close
of that quarter. For this purpose, an increase in our interests in a partnership
or limited liability company will be treated as an acquisition of a portion of
the securities or other property owned by the partnership or limited liability
company. We believe we have maintained and intend to continue to maintain
adequate records of the value of our assets to ensure compliance with the asset
tests. In addition, we intend to take such other actions within the 30 days
after the close of any quarter as may be required to cure any noncompliance. If
we fail to cure noncompliance with the asset tests within this time period, we
would cease to qualify as a real estate investment trust.

     Annual Distribution Requirements

     To maintain our qualification as a real estate investment trust, we are
required to distribute dividends, other than capital gain dividends, to our
stockholders in an amount at least equal to the sum of:

     - 95% of our "real estate investment trust taxable income"; and

     - 95% of our after tax net income, if any, from foreclosure property; minus

     - the excess of the sum of specified items of noncash income over 5% of
       "real estate investment trust taxable income" as described above. Our
       "real estate investment trust taxable income" is computed without regard
       to the dividends paid deduction and our net capital gain. In addition,
       for purposes of this test, non-cash income means income attributable to
       leveled stepped rents, original issue discount on purchase money debt, or
       a like-kind exchange that is later determined to be taxable.

     In addition, if we dispose of any asset we acquired from a corporation
which is or has been a C corporation in a transaction in which our basis in the
asset is determined by

                                       62
<PAGE>   66

reference to the basis of the asset in the hands of the C corporation within the
ten-year period following our acquisition of such asset, we would be required,
pursuant to treasury regulations which have not yet been promulgated, to
distribute at least 95% of the after-tax gain, if any, recognized by us on the
disposition of the asset, to the extent such gain does not exceed the excess of
(a) the fair market value of the asset on the date we acquired the asset over
(b) our adjusted basis in the asset on the date we acquired the asset.

     These distributions must be paid in the taxable year to which they relate,
or in the following taxable year if they are declared before we timely file our
tax return for such year and if paid on or before the first regular dividend
payment after such declaration. Except as provided in "-- Taxation of Taxable
U.S. Stockholders" on page 65, these distributions are taxable to holders of our
stock, other than tax-exempt entities, as discussed below, in the year in which
paid. This is so even though these distributions relate to the prior year for
purposes of our 95% distribution requirement. The amount distributed must not be
preferential. To avoid this treatment, every stockholder of the class of stock
to which a distribution is made must be treated the same as every other
stockholder of that class, and no class of stock may be treated other than
according to its dividend rights as a class. To the extent that we do not
distribute all of our net capital gain or distribute at least 95%, but less than
100%, of our "real estate investment trust taxable income," as adjusted, we will
be required to pay tax on this income at regular ordinary and capital gain
corporate tax rates. We believe we have made and intend to continue to make
timely distributions sufficient to satisfy these annual distribution
requirements.

     We expect that our "real estate investment trust taxable income" will be
less than our cash flow due to the allowance for depreciation and other non-cash
charges in computing "real estate investment trust taxable income." Accordingly,
we anticipate that we will generally have sufficient cash or liquid assets to
enable us to satisfy the distribution requirements described above. However, it
is possible that we may not have sufficient cash or other liquid assets to meet
these distribution requirements due to timing differences between the actual
receipt of income and actual payment of deductible expenses, and the inclusion
of income and deduction of expenses in arriving at our taxable income. If these
timing differences occur, in order to meet the distribution requirements, we may
need to arrange for short-term, or possibly long-term, borrowings or need to pay
dividends in the form of taxable stock dividends.

     We may be able to rectify an inadvertent failure to meet the distribution
requirement for a year by paying "deficiency dividends" to stockholders in a
later year, which may be included in our deduction for dividends paid for the
earlier year. Thus, we may be able to avoid being subject to tax on amounts
distributed as deficiency dividends. We will be required, however, to pay
interest to the Internal Revenue Service based upon the amount of any deduction
claimed for deficiency dividends.

     Furthermore, we would be required to pay a 4% excise tax on the excess of
the required distribution over the amount, if any, by which our actual annual
distributions during a calendar year are less than the sum of 85% of our
ordinary income for the year, 95% of our capital gain income for the year and
any undistributed taxable income from prior periods. Distributions with
declaration and record dates falling in the last three months of the calendar
year, which are made by the end of January immediately following such year, will
be treated as made on December 31 of the prior year. Any taxable income and net
capital gain on which this excise tax is imposed for any year is treated as an
amount distributed during that year for purposes of calculating such tax.

                                       63
<PAGE>   67

TAX ASPECTS OF THE PARTNERSHIPS

     The ownership of an interest in a partnership or limited liability company
treated as a partnership for federal income tax purposes may involve special tax
risks, including the possible challenge by the Internal Revenue Service of:

     - allocations of income and expense items, which could affect the
       computation of our taxable income; and

     - the status of the partnership or limited liability company as a
       partnership, as opposed to an association taxable as a corporation, for
       federal income tax purposes.

     If any of our partnerships or limited liability companies were treated as
an association taxable as a corporation for federal income tax purposes, the
partnership or limited liability company would be treated as a taxable entity.
In addition, in such a situation, the following would occur:

     - If we owned more than 10% of the outstanding voting securities of such
       partnership or limited liability company, or the value of such securities
       exceeded 5% of the value of our assets, we would fail to satisfy the
       asset tests described above and would therefore fail to qualify as a real
       estate investment trust.

     - Distributions from any such partnership or limited liability company to
       us would be treated as dividends, which are not taken into account in
       satisfying the 75% gross income test described above and could,
       therefore, make it more difficult for us to satisfy such test.

     - The interest in any such partnership or limited liability company held by
       us would not qualify as a "real estate asset," which could make it more
       difficult for us to meet the 75% asset test described above.

     - We would not be able to deduct our share of any losses generated by such
       partnership or limited liability company in computing our taxable income.

     See "-- Failure to Qualify" below for a discussion of the effect of our
failure to meet such tests for a taxable year. We believe that each of the
partnerships and limited liability companies in which we own an interest will be
treated as a partnership, rather than an association taxable as a corporation.
No assurance can be given that the Internal Revenue Service will not
successfully challenge the Federal income tax status of the partnerships and
limited liability companies as partnerships.

FAILURE TO QUALIFY

     If we fail to qualify for taxation as a real estate investment trust in any
taxable year, and the relief provisions of the Internal Revenue Code do not
apply, we will be required to pay tax, including any alternative minimum tax and
possibly increased state and local taxes, on our taxable income at regular
corporate rates. Distributions to stockholders in any year in which we fail to
qualify as a real estate investment trust will not be deductible by us and we
will not be required to distribute any amounts to our stockholders. As a result,
we anticipate that our failure to qualify as a real estate investment trust
would reduce the cash available for distribution by us to our stockholders. In
addition, if we fail to qualify as a real estate investment trust, stockholders
will be required to pay tax on all distributions to them at ordinary income
rates to the extent of our current and accumulated earnings and profits. In this
event, corporate distributees may be eligible for the dividends received

                                       64
<PAGE>   68

deduction. Unless entitled to relief under specific statutory provisions, we
will also be disqualified from taxation as a real estate investment trust for
the four taxable years following the year during which we lost our
qualification. It is not possible to state whether in all circumstances we would
be entitled to this statutory relief. In addition, President Clinton's Year 2000
Federal Budget Proposal contains a provision which, if enacted in its present
form, would result in the immediate taxation of all gain inherent in a C
corporation's assets upon an election by the corporation to become a real estate
investment trust in taxable years beginning after January 1, 2000. If enacted,
this provision could impose a substantial tax upon our re-election to be taxed
as a real estate investment trust following any loss of our status as a real
estate investment trust.

TAXATION OF TAXABLE U.S. STOCKHOLDERS

     When we use the term "U.S. stockholder," we mean a holder of shares of
common stock who is, for United States federal income tax purposes:

     - a citizen or resident of the United States;

     - a corporation, partnership, or other entity created or organized in or
       under the laws of the United States or of any state or in the District of
       Columbia, unless, in the case of a partnership, treasury regulations
       provide otherwise;

     - an estate which is required to pay United States federal income tax
       regardless of the source of its income; or

     - a trust whose administration is under the primary supervision of a United
       States court and which has one or more United States persons who have the
       authority to control all substantial decisions of the trust.

Notwithstanding the preceding sentence, to the extent provided in the treasury
regulations, some trusts in existence on August 20, 1996, and treated as United
States persons prior to this date that elect to continue to be treated as United
States persons, shall also be considered U.S. stockholders.

     Distributions Generally

     Distributions out of our current or accumulated earnings and profits, other
than capital gain dividends discussed below, will constitute dividends taxable
to our taxable U.S. stockholders as ordinary income. As long as we qualify as a
real estate investment trust, these distributions will not be eligible for the
dividends-received deduction in the case of U.S. stockholders that are
corporations . For purposes of determining whether distributions to holders of
common stock are out of current or accumulated earnings and profits, our
earnings and profits will be allocated first to the outstanding series A
preferred stock and series B preferred stock and then to the common stock.

     To the extent that we make distributions, other than capital gain dividends
discussed below, in excess of our current and accumulated earnings and profits,
these distributions will be treated first as a tax-free return of capital to
each U.S. stockholder. This treatment will reduce the adjusted tax basis which
each U.S. stockholder has in his shares of stock by the amount of the
distribution, but not below zero. Distributions in excess of a U.S.
stockholder's adjusted tax basis in his shares will be taxable as capital gain,
provided that the shares have been held as capital assets. Such gain will be
taxable as long-term capital gain if the shares have been held for more than one
year. Dividends we declare in

                                       65
<PAGE>   69

October, November, or December of any year and payable to a stockholder of
record on a specified date in any of these months will be treated as both paid
by us and received by the stockholder on December 31 of that year, provided we
actually pay the dividend on or before January 31 of the following year.
Stockholders may not include in their own income tax returns any of our net
operating losses or capital losses.

     Capital Gain Distributions

     Distributions that we properly designate as capital gain dividends will be
taxable to our taxable U.S. stockholders as gain, to the extent that such gain
does not exceed our actual net capital gain for the taxable year, from the sale
or disposition of a capital asset. Depending on the characteristics of the
assets which produced these gains, and on specified designations, if any, which
we may make, these gains may be taxable to non-corporate U.S. stockholders at a
20% or 25% rate. U.S. stockholders that are corporations may, however, be
required to treat up to 20% of some capital gain dividends as ordinary income.
If we properly designate any portion of a dividend as a capital gain dividend,
your share of such capital gain dividend would be an amount which bears the same
ratio to the total amount of dividends, as determined for federal income tax
purposes, paid to you for the year as the aggregate amount designated as a
capital gain dividend bears to the aggregate amount of all dividends, as
determined for federal income tax purposes, paid on all classes of shares of our
capital stock for the year.

     Passive Activity Losses and Investment Interest Limitations

     Distributions we make and gain arising from the sale or exchange by a U.S.
stockholder of our shares will not be treated as passive activity income. As a
result, U.S. stockholders generally will not be able to apply any "passive
losses" against this income or gain. Distributions we make, to the extent they
do not constitute a return of capital, generally will be treated as investment
income for purposes of computing the investment interest limitation. Gain
arising from the sale or other disposition of our shares, however, may not be
treated as investment income depending upon your particular situation.

     Retention of Net Long-Term Capital Gains

     We may elect to retain, rather than distribute as a capital gain dividend,
our net long-term capital gains. If we make this election, we would pay tax on
our retained net long-term capital gains. In addition, to the extent we
designate, a U.S. stockholder generally would:

     - include its proportionate share of our undistributed long-term capital
       gains in computing its long-term capital gains in its return for its
       taxable year in which the last day of our taxable year falls;

     - be deemed to have paid the capital gains tax imposed on us on the
       designated amounts included in the U.S. stockholder's long-term capital
       gains;

     - receive a credit or refund for the amount of tax deemed paid by it;

     - increase the adjusted basis of its common stock by the difference between
       the amount of includable gains and the tax deemed to have been paid by
       it; and

                                       66
<PAGE>   70

     - in the case of a U.S. stockholder that is a corporation, appropriately
       adjust its earnings and profits for the retained capital gains as
       required by treasury regulations to be prescribed by the Internal Revenue
       Service.

DISPOSITIONS OF COMMON STOCK

     If you are a U.S. stockholder and you sell or dispose of your shares of
common stock, you will recognize gain or loss for federal income tax purposes in
an amount equal to the difference between the amount of cash and the fair market
value of any property you receive on the sale or other disposition and your
adjusted basis in the shares for tax purposes. This gain or loss will be capital
if you have held the common stock as a capital asset. This gain or loss, except
as provided below, will be long-term capital gain or loss if you have held the
common stock for more than one year. In general, if you are a U.S. stockholder
and you recognize loss upon the sale or other disposition of common stock that
you have held for six months or less, the loss you recognize will be treated as
a long-term capital loss to the extent you received distributions from us which
were required to be treated as long-term capital gains.

BACKUP WITHHOLDING

     We report to our U.S. stockholders and the Internal Revenue Service the
amount of dividends paid during each calendar year and the amount of any tax
withheld. Under the backup withholding rules, a stockholder may be subject to
backup withholding at the rate of 31% with respect to dividends paid unless the
holder is a corporation or is otherwise exempt and, when required, demonstrates
this fact or provides a taxpayer identification number, certifies as to no loss
of exemption from backup withholding, and otherwise complies with the backup
withholding rules. A U.S. stockholder that does not provide us with his correct
taxpayer identification number may also be subject to penalties imposed by the
Internal Revenue Service. Backup withholding is not an additional tax. Any
amount paid as backup withholding will be creditable against the stockholder's
income tax liability. In addition, we may be required to withhold a portion of
capital gain distributions to any stockholders who fail to certify their
non-foreign status. See "-- Taxation of Non-U.S. Stockholders" on page 68.

TAXATION OF TAX-EXEMPT STOCKHOLDERS

     The Internal Revenue Service has ruled that amounts distributed as
dividends by a qualified real estate investment trust do not constitute
unrelated business taxable income when received by a tax-exempt entity. Based on
that ruling, except as described below, dividend income from us and gain arising
upon your sale of shares generally will not be unrelated business taxable income
to a tax-exempt stockholder. This income or gain will be unrelated business
taxable income, however, if the tax-exempt stockholder holds its shares as "debt
financed property" within the meaning of the Internal Revenue Code or if the
shares are used in a trade or business of the tax-exempt stockholder. Generally,
debt financed property is property the acquisition or holding of which was
financed through a borrowing by the tax-exempt stockholder.

     For tax-exempt stockholders which are social clubs, voluntary employee
benefit associations, supplemental unemployment benefit trusts, and qualified
group legal services plans exempt from federal income taxation under Sections
501(c)(7), (c)(9), (c)(17) and (c)(20) of the Internal Revenue Code,
respectively, income from an

                                       67
<PAGE>   71

investment in our shares will constitute unrelated business taxable income
unless the organization is able to properly claim a deduction for amounts set
aside or placed in reserve for specific purposes so as to offset the income
generated by its investment in our shares. These prospective investors should
consult their tax advisors concerning these "set aside" and reserve
requirements.

     Notwithstanding the above, however, a portion of the dividends paid by a
"pension-held real estate investment trust" shall be treated as unrelated
business taxable income as to any trust which:

     - is described in Section 401(a) of the Internal Revenue Code;

     - is tax-exempt under Section 501(a) of the Internal Revenue Code; and

     - holds more than 10%, by value, of the interests in the real estate
       investment trust.

     Tax-exempt pension funds that are described in Section 401(a) of the
Internal Revenue Code and exempt from tax under Section 501(a) of the Internal
Revenue Code are referred to below as "qualified trusts."

     A real estate investment trust is a "pension-held real estate investment
trust" if:

     - it would not have qualified as a real estate investment trust but for the
       fact that Section 856(h)(3) of the Internal Revenue Code provides that
       stock owned by qualified trusts shall be treated, for purposes of the
       "not closely held" requirement, as owned by the beneficiaries of the
       trust, rather than by the trust itself; and

     - either at least one such qualified trust holds more than 25%, by value,
       of the interests in the real estate investment trust, or one or more such
       qualified trusts, each of which owns more than 10%, by value, of the
       interests in the real estate investment trust, holds in the aggregate
       more than 50%, by value, of the interests in the real estate investment
       trust.

     The percentage of any real estate investment trust dividend treated as
unrelated business taxable income is equal to the ratio of:

     - the unrelated business taxable income earned by the real estate
       investment trust, treating the real estate investment trust as if it were
       a qualified trust and therefore required to pay tax on unrelated business
       taxable income, to

     - the total gross income of the real estate investment trust.

A de minimis exception applies where the percentage is less than 5% for any
year. The provisions requiring qualified trusts to treat a portion of real
estate investment trust distributions as unrelated business taxable income will
not apply if the real estate investment trust is able to satisfy the "not
closely held" requirement without relying upon the "look-through" exception with
respect to qualified trusts.

TAXATION OF NON-U.S. STOCKHOLDERS

     The preceding discussion does not address the rules governing United States
federal income taxation of the ownership and disposition of common stock by
persons that are non-U.S. stockholders. When we use the term "non-U.S.
stockholder" we mean stockholders who are not U.S. stockholders. In general,
non-U.S. stockholders may be subject to special tax withholding requirements on
distributions from us and with respect to

                                       68
<PAGE>   72

their sale or other disposition of our common stock, except to the extent
reduced or eliminated by an income tax treaty between the United States and the
non-U.S. stockholder's country. A non-U.S. stockholder who is a stockholder of
record and is eligible for reduction or elimination of withholding must file an
appropriate form with us in order to claim such treatment. Non-U.S. stockholders
should consult their own tax advisors concerning the federal income tax
consequences to them of an acquisition of shares of our common stock, including
the federal income tax treatment of dispositions of interests in and the receipt
of distributions from us.

PROPOSED LEGISLATION

     Recently the House of Representatives and the Senate approved legislation
that includes a provision that would limit a REIT's ability to own more than 10%
by vote or value of the securities of another corporation. As of December 3,
1999, this legislation has not been enacted into law. As discussed in the
prospectus under the heading "Material Federal Income Tax Consequences --
Taxation of Health Care Property Investors, Inc. -- Asset Tests," a REIT cannot
currently own more than 10% of the outstanding voting securities of any one
issuer. The provision contained in the legislation approved by the House of
Representatives and the Senate would allow a REIT to own any percentage of the
voting stock and value of the securities of a "taxable REIT subsidiary",
provided all of a REIT's taxable subsidiaries do not represent more than 20% of
the REIT's total assets and at least 75% of the REIT's total assets are real
estate assets and other qualifying assets. A taxable REIT subsidiary is a
corporation which jointly elects with a REIT to be treated as a taxable REIT
subsidiary. Additionally, the legislation approved in the House of
Representatives and in the Senate includes a provision that would prevent a
taxable REIT subsidiary from deducting interest on debt funded directly or
indirectly by a REIT if certain tests regarding the taxable REIT subsidiary's
debt to equity ratio and interest expense were satisfied. If this legislation is
enacted in its current form, Health Care Property Investors, Inc. may be
required to restructure some of its investments, because HCPI may own more than
10% of the value of the outstanding securities, including debt securities, of
corporations in which it has invested. The legislation also includes a provision
that would reduce the REIT distribution requirements from 95% to 90% of a REIT's
taxable income. The REIT provisions contained in this legislation are generally
effective for taxable years ending after December 31, 2000. On December 3, 1999,
it is anticipated that the legislation approved in the House of Representatives
and the Senate will be enacted in its current form. However, there can be no
assurance that this will be the case.

OTHER TAX CONSEQUENCES

     We may be required to pay state or local taxes in various state or local
jurisdictions, including those in which we transact business and our
stockholders may be required to pay state or local taxes in various state or
local jurisdictions, including those in which they reside. Our state and local
tax treatment may not conform to the federal income tax consequences summarized
above. In addition, your state and local tax treatment may not conform to the
federal income tax consequences summarized above. Consequently, you should
consult your tax advisor regarding the effect of state and local tax laws on a
disposition of the units and an investment in our shares.

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<PAGE>   73

                                SELLING HOLDERS

     "Selling holders" are those persons who may receive shares of our common
stock registered pursuant to this registration statement upon exchange of
non-managing member units. The following table provides the names of the selling
holders, the number of non-managing member units owned by the selling holders
and the aggregate number of shares of common stock that will be owned by the
selling holders after the exchange. The number of shares on the following table
represents the number of shares of common stock into which the non-managing
member units held by the person are currently exchangeable and assumes that no
change in the adjustment factor, which determines the number of shares of our
common stock issuable upon the exchange of an HCPI Indiana, LLC unit, will have
occurred. A change in the adjustment factor will occur if we declare a dividend
on our common stock payable in common stock, split or subdivide our common stock
or effect a reverse stock split or combine our common stock into a smaller
number of shares.

     Since the selling holders may sell all, some or none of their shares, we
cannot estimate the aggregate number of shares that the selling holders will
offer pursuant to this prospectus or that each selling holder will own upon
completion of the offering to which this prospectus relates. The selling
holders, prior to their exchange of non-managing member units, do not own any of
our common stock.

     The selling holders named below may from time to time offer the shares of
common stock offered by this prospectus:

<TABLE>
<CAPTION>
                                                                      COMMON STOCK
                                                NON-MANAGING         OWNED FOLLOWING
                                                MEMBER UNITS       THE EXCHANGE(1)(2)
                                             OWNED PRIOR TO THE    -------------------
                   NAME                         EXCHANGE(1)        SHARES     PERCENT
                   ----                      ------------------    -------    --------
<S>                                          <C>                   <C>        <C>
James D. Bremner(3)........................        29,731          29,731         *
The Michael F. Wiley Revocable Trust dated
April 4, 1979, as amended(3)...............        31,539          31,539         *
James P. Revel.............................        28,182          28,182         *
                                                   ------          ------        --
     Total.................................        89,452          89,452         *
                                                   ======          ======        ==
</TABLE>

- -------------------------
 *  Represents less than 1% of the total outstanding shares of our common stock.

(1) Based on information available to us as of December 1, 1999.

(2) Assumes the selling holders exchange all of their non-managing member units
    for shares of common stock. Also assumes that no transactions with respect
    to common stock or non-managing member units occur other than the exchange.

(3) James D. Bremner and Margaret Berry Wiley are the co-trustees of The Michael
    F. Wiley Revocable Trust dated April 4, 1979, as amended, and exercise
    control over the disposition of the non-managing member units previously
    held by Michael F. Wiley.

     The operating agreement provides that the selling holders may transfer
their non-managing member units. Such transferees of the non-managing members'
units may also be selling holders under this prospectus. We will file one or
more supplemental prospectuses pursuant to Rule 424 under the Securities Act to
describe the required information regarding any additional selling holder. We
will also file one or more supplemental prospectuses pursuant to Rule 424 under
the Securities Act to describe any

                                       70
<PAGE>   74

material arrangements for the distribution of the shares when such arrangements
are entered into by the selling holders and any broker-dealers that participate
in the distribution of shares of our common stock.

                              PLAN OF DISTRIBUTION

     This prospectus relates to:

          (1) the possible issuance by us of the shares of our common stock if,
     and to the extent that, holders of non-managing member units tender such
     non-managing member units for exchange; and

          (2) the offer and sale from time to time of any shares that may be
     issued to holders of such non-managing member units.

     We have registered the shares for sale to provide the holders of
non-managing member units with freely tradable securities, but registration of
such shares does not necessarily mean that any of such shares will be offered or
sold by the holders of non-managing member units.

     We will not receive any proceeds from the issuance of the shares of common
stock to the selling holders or from the sale of the shares by the selling
holders, but we have agreed to pay the following expenses, estimated to be
$59,613, of the registration of the shares:

     - all registration and filing fees;

     - fees and expenses for complying with securities or blue sky laws,
       including reasonable fees and disbursements of counsel in connection with
       blue sky qualifications; and

     - the fees and expenses incurred in connection with listing our common
       stock on each securities exchange on which our similar securities issued
       are then listed.

     We have no obligation to pay any underwriting fees, discounts or
commissions attributable to the sale of our common stock. We also have no
obligation to pay any out-of-pocket expenses of the selling holders, or the
agents who manage their accounts, or any transfer taxes relating to the
registration or sale of the common stock.

     Shares of our common stock may be sold from time to time to purchasers
directly by the selling holders. Alternatively, the selling holders may from
time to time offer the shares through dealers or agents, who may receive
compensation in the form of commissions from the selling holders and the
purchasers of shares for whom they may act as agent. The sale of the shares by
the selling holders may be effected from time to time in one or more negotiated
transactions at negotiated prices or in transactions on any exchange or
automated quotation system on which the securities may be listed or quoted. The
selling holders and any dealers or agents that participate in the distribution
of shares of our common stock may be deemed to be underwriters within the
meaning of the Securities Act and any profit on the sale of shares of our common
stock by them and any commissions received by any such dealers or agents might
be deemed to be underwriting commissions under the Securities Act.

                                       71
<PAGE>   75

     In connection with distribution of the shares of common stock covered by
this prospectus:

     - the selling holders may enter into hedging transactions with
       broker-dealers,

     - the broker-dealers may engage in short sales of the common stock in the
       course of hedging the position they assume with the selling holders,

     - the selling holders may sell the common stock short and deliver the
       common stock to close out these short positions,

     - the selling holders may enter into option or other transactions with
       broker-dealers that involve the delivery of the shares to the
       broker-dealers, who may then resell or otherwise transfer the shares,

     - the selling holders may also loan or pledge the shares to a broker-dealer
       and the broker-dealer may sell the shares so loaned or upon a default may
       sell or otherwise transfer the pledged shares.

     Persons participating in the distribution of the shares of our common stock
offered by this prospectus may engage in transactions that stabilize the price
of our common stock. The anti-manipulation rules of Regulation M under the
Exchange Act may apply to sales of common stock in the market and to the
activities of the selling holders.

     In order to comply with the securities laws of various states, the shares
of our common stock will not be sold in a particular state unless the shares
have been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.

                                 LEGAL MATTERS

     Ballard, Spahr, Andrews & Ingersoll, LLP, Baltimore, Maryland, will issue
an opinion to us regarding matters of Maryland law. Latham & Watkins will issue
an opinion to us regarding tax matters described under "Material Federal Income
Tax Consequences."

                                    EXPERTS

     The consolidated financial statements of Health Care Property Investors,
Inc. as of December 31, 1998, incorporated by reference in this prospectus and
elsewhere in the registration statement, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing.

                                       72
<PAGE>   76

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                                 89,452 SHARES

                      HEALTH CARE PROPERTY INVESTORS, INC.

                                  COMMON STOCK

                           -------------------------

                                   PROSPECTUS
                           -------------------------

     YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR IN
DOCUMENTS THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE
YOU WITH INFORMATION THAT IS DIFFERENT.

     THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED. THIS PROSPECTUS
IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES TO ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS CORRECT ON ANY DATE AFTER THE DATE ON THE PROSPECTUS, EVEN THOUGH
THIS PROSPECTUS IS DELIVERED OR SHARES ARE SOLD PURSUANT TO THIS PROSPECTUS ON A
LATER DATE.

                               DECEMBER   , 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>   77

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.

     The estimated expenses, in connection with this offering are estimated as
follows:

<TABLE>
<S>                                                           <C>
SEC Registration Fee........................................     613.00
Blue Sky fees and expense...................................   5,000.00
Printing and shipping expenses..............................  10,000.00
Legal fees and expenses.....................................  35,000.00
Accounting fees and expenses................................   2,000.00
Transfer agent or trustee fees..............................   1,000.00
Listing Fees................................................   1,000.00
Miscellaneous...............................................   5,000.00
                                                              ---------
  Total.....................................................  59,613.00
                                                              =========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

     Our charter (the "Charter") limits the liability of HCPI's directors and
officers to HCPI and its stockholders to the fullest extent permitted by the
laws of the State of Maryland. Maryland General Corporation Law presently
permits the liability of directors and officers to a corporation or its
shareholders for money damages to be limited, except (1) to the extent that it
is proved that the director or officer actually received an improper benefit or
profit or (2) if the judgment or other final adjudication is entered in a
proceeding based on a finding that the directors or officers action, or failure
to act, was a result of active or deliberate dishonesty and was material to the
cause of action adjudicated in the proceeding. The provisions of the Charter do
not limit the ability of us or our stockholders to obtain other relief, such as
injunction or recision.

     Article X of our Second Amended and Restated Bylaws (the "Bylaws") provides
that HCPI shall indemnify and hold harmless, in the manner and to the fullest
extent permitted by law, any person who is or was a party to, or is threatened
to be made a party to, any threatened, pending or completed action, suit or
proceeding, whether or not by or in the right of HCPI, and whether civil,
criminal, administrative, investigative or otherwise, by reason of the fact that
such person is or was a director or officer of HCPI, or, as a director or
officer of HCPI, is or was serving at the request of us as a director, officer,
trustee, partner, member, agent or employee of another corporation, partnership,
limited liability company, association, joint venture, trust, benefit plan or
other enterprise.

     Article X of the Bylaws further provides that HCPI may, with the approval
of the Board of Directors, provide such indemnification and advancement of
expenses as described in the above paragraph to agents and employees of HCPI.

     Section 2-418 of the Maryland Corporation Law generally permits
indemnification of any director or officer made a party to any proceedings by
reason of service as a director or officer unless it is established that (1) the
act or omission of such person was material to the matter giving rise to the
proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty; or (2) such person actually received an improper personal
benefit in money, property or services; or (3) in the case of any criminal
proceeding, such person had reasonable cause to believe that the act or omission
was

                                      II-1
<PAGE>   78

unlawful. The indemnity may include judgments, penalties, fines, settlements and
reasonable expenses actually incurred by the director or officer in connection
with the proceeding; provided, however, that if the proceeding is one by, or in
the right of the corporation, indemnification is not permitted with respect to
any proceeding in which the director or officer has been adjudged to be liable
to the corporation. In addition, a director or officer may not be indemnified
with respect to any proceeding charging improper personal benefit to the
director or officer adjudged to be liable on the basis that personal benefit was
improperly received. The termination of any proceeding by conviction or upon a
plea of nolo contendere or its equivalent creates a rebuttable presumption that
the director or officer did not meet the requisite standard of conduct required
for permitted indemnification. The termination of any proceeding by judgment,
order or settlement, however, does not create a presumption that the director or
officer failed to meet the requisite standard of conduct for permitted
indemnification. The Company has provided for the benefit of its directors and
officers, a Directors and Officers Liability Policy.

ITEM 16. EXHIBITS.

<TABLE>
<C>   <S>
  2.1 Agreement and Plan of Merger, dated as of August 4, 1999,
      between Health Care Property Investors, Inc. and American
      Health Properties, Inc. (incorporated herein by reference to
      exhibit 2.1 to Health Care Property Investors, Inc.'s
      current report on form 8-K (file no. 001-08895) dated August
      4, 1999).
  3.1 Articles of restatement of Health Care Property Investors,
      Inc. (incorporated herein by reference to exhibit 3.1 to our
      annual report on form 10-K for the year ending December 31,
      1994).
  3.2 Second amended and restated bylaws of Health Care Property
      Investors, Inc. (incorporated herein by reference to Exhibit
      3.2 of our quarterly report on form 10-Q (File No.
      001-08895) for the period ended March 31, 1999).
  4.1 Rights agreement, dated as of July 5, 1990, between Health
      Care Property Investors, Inc. and Manufacturers Hanover
      Trust Company of California, as rights agent (incorporated
      herein by reference to exhibit 1 to our registration
      statement on form 8-A (File No. 001-08895), filed with the
      Commission on July 17, 1990).
  4.2 Articles supplementary establishing the terms of the 7 7/8%
      Series A Cumulative Redeemable Preferred Stock (incorporated
      herein by reference from HCPI's form 8-A (File No.
      001-08895) filed with the SEC on September 25, 1997).
  4.3 Articles supplementary establishing and fixing the rights
      and preferences of the 8.7% Series B Cumulative Preferred
      Stock (incorporated herein by reference to Exhibit 3.3 of
      HCPI's form 8-A (File No. 001-08895), dated September 2,
      1998).
  4.4 Articles supplementary establishing and fixing the rights
      and preferences of the 8.60% Series C Cumulative Redeemable
      Preferred Stock (incorporated herein by reference to exhibit
      2.1 to our current report on form 8-K (file no. 001-08895),
      dated August 4, 1999).
  4.5 Form of Deposit Agreement (including form of Depositary
      Receipt with respect to the Depositary Shares, each
      representing one-one hundredth of a share of Health Care
      Property Investors, Inc. 8.60% Cumulative Redeemable
      Preferred Stock, Series C) dated as of November   , 1999 by
      and among Health Care Property Investors, Inc., ChaseMellon
      Shareholder Services, L.L.C. and the holders from time to
      time of the Depositary Shares described therein
      (incorporated herein by reference to exhibit 4 to our form
      8-A (file no. 001-08895) filed with the Commission on
      November 4, 1999).
</TABLE>

                                      II-2
<PAGE>   79
<TABLE>
<C>   <S>
  4.6 First Amendment to Rights Agreement dated as of January 28,
      1999 between Health Care Property Investors, Inc. and The
      Bank of New York (incorporated herein by reference to
      Exhibit 4.7 to Health Care Property Investors, Inc.'s annual
      report on form 10-K (file no. 001-08895) for the year ended
      December 31, 1998).
  4.7 Registration Rights Agreement dated November 20, 1998
      between Health Care Property Investors, Inc. and James D.
      Bremner (incorporated herein by reference to Exhibit 4.8 to
      Health Care Property Investors, Inc.'s annual report on form
      10-K (file no. 001-08895) for the year ended December 31,
      1998).*
  5.1 Opinion of Ballard Spahr as to the validity of the common
      stock being registered.
  8.1 Opinion of Latham & Watkins regarding tax matters.
 10.1 Amended and Restated Limited Liability Company Agreement of
      HCPI Indiana, LLC, a Delaware limited liability company
      dated November 20, 1998 (incorporated herein by reference to
      Exhibit 10.15 to Health Care Property Investors, Inc.'s
      Annual Report on Form 10-K for the year ended December 31,
      1998).
 23.1 Consent of Arthur Andersen LLP.
 23.2 Consent of Ballard Spahr (included in exhibit 5.1).
 23.3 Consent of Latham & Watkins (included in exhibit 8.1).
 24.1 Power of Attorney (contained on page II-5).
</TABLE>

- -------------------------
* This exhibit is identical in all material respects to two other documents
  except for the parties thereto. The parties to these other documents, other
  than Health Care Property Investors, Inc., were Michael F. Wiley and James P.
  Revel.

ITEM 17. UNDERTAKINGS.

     (a) The undersigned registrant hereby undertakes:

          (1) To file, during any period in which offers or sales are being
     made, a post-effective amendment to this registration statement:

             (A) To include any prospectus required by Section 10(a)(3) of the
        Securities Act of 1933 (the "Securities Act"):

             (B) To reflect in the prospectus any facts or events arising after
        the effective date of the registration statement (or the most recent
        post-effective amendment thereof) which, individually or in the
        aggregate, represent a fundamental change in the information in the
        registration statement. Notwithstanding the foregoing, any increase or
        decrease in volume of securities offered (if the total dollar value of
        securities offered would not exceed that which was registered) and any
        deviation from the low or high end of the estimated maximum offering
        range may be reflected in the form of prospectus filed with the
        Securities and Exchange Commission (the "SEC") pursuant to Rule 424(b)
        if, in the aggregate, the changes in volume and price represent no more
        than a 20 percent change in the maximum aggregate offering price set for
        the in the "Calculation of Registration Fee" table in the effective
        registration statement.

             (C) To include any material information with respect to the plan of
        distribution not previously disclosed in the registration statement or
        any material change to such information in the registration statement;
        provided, however, that the information required to be included in a
        post-effective amendment by paragraphs (a)(1)(A) and (a)(1)(B) above may
        be contained in periodic reports filed by the registrant pursuant to
        Section 13 or 15(d) of the Securities
                                      II-3
<PAGE>   80

        Exchange Act of 1934, as amended (the "Exchange Act"), that are
        incorporated by reference in the registration statement.

          (2) That, for the purpose of determining any liability under the
     Securities Act each such post-effective amendment shall be deemed to be a
     new registration statement relating to the securities offered therein, and
     the offering of such securities at that time shall be deemed to be the
     initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.

     (b) The undersigned registrant hereby undertakes, that, for purposes of
determining any liability under the Securities Act, each filing the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

     (c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

                                      II-4
<PAGE>   81

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Newport
Beach, State of California, on the 1st day of December, 1999.

                                   HEALTH CARE PROPERTY INVESTORS, INC.

                                   By:         /s/ KENNETH B. ROATH
                                      ------------------------------------------
                                                   Kenneth B. Roath
                                               Chairman, President and
                                               Chief Executive Officer

                               POWER OF ATTORNEY

     Each person whose signature appears below appoints Kenneth B. Roath and
James G. Reynolds, and both or either of them, as his true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement thereto pursuant to Rule
462(b) of the Securities Act, and to file the same, with all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the foregoing, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them or
their or his substitutes, may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated:

<TABLE>
<CAPTION>
          SIGNATURE                        TITLE                      DATE
          ---------                        -----                      ----
<S>                            <C>                              <C>
    /s/ KENNETH B. ROATH        Chairman, President, Chief      December 1, 1999
- -----------------------------      Executive Officer and
      Kenneth B. Roath         Director (Principal Executive
                                         Officer)

    /s/ JAMES G. REYNOLDS         Chief Financial Officer       December 1, 1999
- -----------------------------  (Principal Financial Officer)
      James G. Reynolds

      /s/ DEVASIS GHOSE          Senior Vice President and      December 1, 1999
- -----------------------------      Treasurer (Principal
        Devasis Ghose               Accounting Officer)
</TABLE>

                                      II-5
<PAGE>   82

<TABLE>
<CAPTION>
          SIGNATURE                        TITLE                      DATE
          ---------                        -----                      ----
<S>                            <C>                              <C>
     /s/ PAUL V. COLONY                  Director               December 1, 1999
- -----------------------------
       Paul V. Colony

 /s/ ROBERT R. FANNING, JR.              Director               December 1, 1999
- -----------------------------
   Robert R. Fanning, Jr.

    /s/ MICHAEL D. MCKEE                 Director               December 1, 1999
- -----------------------------
      Michael D. McKee

    /s/ ORVILLE E. MELBY                 Director               December 1, 1999
- -----------------------------
      Orville E. Melby

 /s/ HAROLD M. MESSMER, JR.              Director               December 1, 1999
- -----------------------------
   Harold M. Messmer, Jr.

     /s/ PETER L. RHEIN                  Director               December 1, 1999
- -----------------------------
       Peter L. Rhein
</TABLE>

                                      II-6
<PAGE>   83

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                            DESCRIPTION
- -------                           -----------
<C>       <S>
  2.1     Agreement and Plan of Merger, dated as of August 4, 1999,
          between Health Care Property Investors, Inc. and American
          Health Properties, Inc. (incorporated herein by reference to
          exhibit 2.1 to Health Care Property Investors, Inc.'s
          current report on form 8-K (file no. 001-08895) dated August
          4, 1999).
  3.1     Articles of restatement of Health Care Property Investors,
          Inc. (incorporated herein by reference to exhibit 3.1 to our
          annual report on form 10-K for the year ending December 31,
          1994).
  3.2     Second amended and restated bylaws of Health Care Property
          Investors, Inc. (incorporated herein by reference to Exhibit
          3.2 of our quarterly report on form 10-Q (File No.
          001-08895) for the period ended March 31, 1999).
  4.1     Rights agreement, dated as of July 5, 1990, between Health
          Care Property Investors, Inc. and Manufacturers Hanover
          Trust Company of California, as rights agent (incorporated
          herein by reference to exhibit 1 to our registration
          statement on form 8-A (File No. 001-08895), filed with the
          Commission on July 17, 1990).
  4.2     Articles supplementary establishing the terms of the 7 7/8%
          Series A Cumulative Redeemable Preferred Stock (incorporated
          herein by reference from HCPI's form 8-A (File No.
          001-08895) filed with the SEC on September 25, 1997).
  4.3     Articles supplementary establishing and fixing the rights
          and preferences of the 8.7% Series B Cumulative Preferred
          Stock (incorporated herein by reference to Exhibit 3.3 of
          HCPI's form 8-A (File No. 001-08895), dated September 2,
          1998).
  4.4     Articles supplementary establishing and fixing the rights
          and preferences of the 8.60% Series C Cumulative Redeemable
          Preferred Stock (incorporated herein by reference to exhibit
          2.1 to our current report on form 8-K (file no. 001-08895),
          dated August 4, 1999).
  4.5     Form of Deposit Agreement (including form of Depositary
          Receipt with respect to the Depositary Shares, each
          representing one-one hundredth of a share of Health Care
          Property Investors, Inc. 8.60% Cumulative Redeemable
          Preferred Stock, Series C) dated as of November   , 1999 by
          and among Health Care Property Investors, Inc., ChaseMellon
          Shareholder Services, L.L.C. and the holders from time to
          time of the Depositary Shares described therein
          (incorporated herein by reference to exhibit 4 to our form
          8-A (file no. 001-08895) filed with the Commission on
          November 4, 1999).
  4.6     First Amendment to Rights Agreement dated as of January 28,
          1999 between Health Care Property Investors, Inc. and The
          Bank of New York (incorporated herein by reference to
          Exhibit 4.7 to Health Care Property Investors, Inc.'s annual
          report on form 10-K (file no. 001-08895) for the year ended
          December 31, 1998).
  4.7     Registration Rights Agreement dated November 20, 1998
          between Health Care Property Investors, Inc. and James D.
          Bremner (incorporated herein by reference to Exhibit 4.8 to
          Health Care Property Investors, Inc.'s annual report on form
          10-K (file no. 001-08895) for the year ended December 31,
          1998).*
  5.1     Opinion of Ballard Spahr as to the validity of the common
          stock being registered.
  8.1     Opinion of Latham & Watkins regarding tax matters.
</TABLE>
<PAGE>   84

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                            DESCRIPTION
- -------                           -----------
<C>       <S>
 10.1     Amended and Restated Limited Liability Company Agreement of
          HCPI Indiana, LLC, a Delaware limited liability company
          dated November 20, 1998 (incorporated herein by reference to
          Exhibit 10.15 to Health Care Property Investors, Inc.'s
          Annual Report on Form 10-K for the year ended December 31,
          1998).
 23.1     Consent of Arthur Andersen LLP.
 23.2     Consent of Ballard Spahr (included in exhibit 5.1).
 23.3     Consent of Latham & Watkins (included in exhibit 8.1).
 24.1     Power of Attorney (contained on page II-5).
</TABLE>

- -------------------------
* This exhibit is identical in all material respects to two other documents
  except for the parties thereto. The parties to these other documents, other
  than Health Care Property Investors, Inc., were Michael F. Wiley and James P.
  Revel.

<PAGE>   1
                                                                     EXHIBIT 5.1



                                December 6, 1999



Health Care Property Investors, Inc.
4675 MacArthur Court
Suite 900
Newport Beach, California 92660

         Re:      Health Care Property Investors, Inc., a Maryland corporation
                  (the "Company") Registration Statement on Form S-3, pertaining
                  to Eighty Nine Thousand Four Hundred Fifty-Two (89,452) shares
                  (the "Shares") of common stock of the Company, par value one
                  dollar ($1.00) per share ("Common Stock"), to be issued to
                  certain holders (the "Selling Unit Holders") of non-managing
                  member units (the "Units") in HCPI Indiana, LLC, a Delaware
                  limited liability company (the "LLC"), upon exchange of such
                  Units

Ladies and Gentlemen:

         In connection with the registration of the Shares under the Securities
Act of 1933, as amended (the "Act"), by the Company on Form S-3, filed or to be
filed with the Securities and Exchange Commission (the "Commission") on or about
December 6, 1999 and any amendments thereto, if any are to be filed with the
Commission subsequent to the date hereof (the "Registration Statement"), you
have requested our opinion with respect to the matters set forth below.

         We have acted as special Maryland corporate counsel for the Company in
connection with the matters described herein. In our capacity as special
Maryland corporate counsel to the Company, we have reviewed and are familiar
with proceedings taken and proposed to be taken by the Company in connection
with the authorization, issuance and delivery of the Shares, and for purposes of
this opinion have assumed such proceedings will be timely completed in the
manner presently proposed. In addition, we have relied upon certificates and
advice from the officers of the Company upon which we believe we are justified
in relying and on various certificates from, and documents recorded with, the
State Department of Assessments and Taxation of Maryland (the "SDAT"), including
the charter of the Company (the "Charter"), consisting of Articles of
Restatement filed with the SDAT on April 27, 1992, Articles Supplementary filed
with the SDAT on September 25, 1997, September 3, 1998 and September 24, 1999
and Articles of Merger filed with the SDAT on November 4, 1999. We have also
examined the Second Amended and Restated Bylaws of the Company, resolutions of
the Board of Directors of the Company, or a committee thereof, adopted on or
before the date hereof and in full force and effect on the date hereof
(collectively, the "Directors' Resolutions"), the Amended and Restated Limited
Liability Company Agreement of the LLC (the "LLC Agreement"), the Registration
Statement, and such other laws, records, documents, certificates, opinions and
instruments as we have deemed necessary to render this opinion.


<PAGE>   2
BALLARD SPAHR ANDREWS & INGERSOLL, LLP

Health Care Property Investors, Inc.
December 6, 1999

Page 2


         We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals and the conformity to the originals
of all documents submitted to us as certified, photostatic or conformed copies.
In addition, we have assumed that each person executing any instrument, document
or certificate referred to herein on behalf of any party is duly authorized to
do so. We have also assumed that none of the Shares will be issued or
transferred in violation of the provisions of Section 4 of Article V of the
Charter entitled "Provisions for Defining, Limiting and Regulating Certain
Powers of the Corporation and the Board of Directors and Stockholders".

         Based on the foregoing, and subject to the assumptions and
qualifications set forth herein, it is our opinion that, as of the date of this
letter, the Shares have been duly reserved and authorized for issuance by all
necessary corporate action on the part of the Company, and when such Shares are
issued and delivered by the Company to the Selling Unit Holders in exchange for
Units of the LLC, upon and subject to the terms and conditions set forth in the
LLC Agreement and the Directors' Resolutions, such Shares will be duly
authorized, validly issued, fully paid and non-assessable.

         We consent to your filing this opinion as an exhibit to the
Registration Statement, and further consent to the filing of this opinion as an
exhibit to the applications to securities commissioners for the various states
of the United States for registration of the Shares. We also consent to the
identification of our firm as Maryland counsel to the Company in the section of
the Prospectus (which is part of the Registration Statement) entitled "Legal
Matters".

         The opinions expressed herein are limited to the laws of the State of
Maryland and we express no opinion concerning any laws other than the laws of
the State of Maryland. Furthermore, the opinions presented in this letter are
limited to the matters specifically set forth herein and no other opinion shall
be inferred beyond the matters expressly stated.

                                   Very truly yours,

                                   /s/ Ballard Spahr Andrews & Ingersoll, LLP

<PAGE>   1
                                                                     EXHIBIT 8.1



                        [LETTERHEAD OF LATHAM & WATKINS]



                                December 6, 1999

Health Care Property Investors, Inc.
4675 MacArthur Court, 9th Floor
Newport Beach, California 92660

      Re:   Health Care Property Investors, Inc.
            Registration Statement on Form S-3

Ladies and Gentlemen:

                  We have acted as special counsel to Health Care Property
Investors, Inc., a Maryland corporation (the "Company"), in connection with the
registration statement on Form S-3 (Registration No. 333-______) filed by the
Company with the Securities and Exchange Commission (the "Commission") on
December 6, 1999, in connection with the registration, under the Securities Act
of 1933, as amended, of 89,452 shares of the Company's common stock, par value
$1.00 per share (the "Common Stock")(together with all amendments and exhibits
thereto and documents incorporated by reference therein, the "Registration
Statement").

                  You have requested our opinion concerning the material federal
income tax consequences to the Company and the purchasers of the securities
described above in connection with the registration described above. This
opinion is based on various facts and assumptions, including the facts set forth
in the Registration Statement concerning the business, properties and governing
documents of the Company and its subsidiaries. We have also been furnished with,
and with your consent have relied upon, certain representations made by the
Company with respect to certain factual matters through a certificate of an
officer of the Company (the "Officer's Certificate").

                  In our capacity as such counsel, we have made such legal and
factual examinations and inquiries, including an examination of originals or
copies certified or otherwise identified to our satisfaction of such documents,
corporate records and other instruments, as we have deemed necessary or
appropriate for purposes of this opinion. In our examination, we have assumed
the authenticity of all documents submitted to us as originals, the genuineness
of all signatures thereon, the legal capacity of natural persons executing such
documents and the conformity to authentic original documents of all documents
submitted to us as copies.

                  We are opining herein as to the effect on the subject
transaction only of the federal income tax laws of the United States, and we
express no opinion with respect to the applicability thereto, or the effect
thereon, of other federal laws, the laws of any state or other jurisdiction or
as to any matters of municipal law or the laws of any other local agencies with
any state.


<PAGE>   2

                  Based upon such facts, assumptions and representations,
including the facts set forth in the Registration Statement and the Officer's
Certificate, it is our opinion that:

                  1. The information in the Registration Statement set forth
under the caption "Material Federal Income Tax Consequences," to the extent that
it constitutes matters of law, summaries of legal matters, documents or
proceedings, or legal conclusions, is an accurate summary of the federal income
tax consequences anticipated to be material to purchasers of Common Stock; and

                  2. Commencing with the Company's taxable year ending December
31, 1985, the Company has been organized and has operated in conformity with the
requirements for qualification as a "real estate investment trust" under the
Internal Revenue Code of 1986, as amended (the "Code"), and its proposed method
of operation, as described in the representations of the Company referred to
above, will enable the Company to continue to meet the requirements for
qualification and taxation as such a real estate investment trust.

                  No opinion is expressed as to any matter not discussed herein.

                  This opinion is rendered to you as of the date of this letter,
and we undertake no obligation to update this opinion subsequent to the date
hereof. This opinion is based on various statutory provisions, regulations
promulgated thereunder and interpretations thereof by the Internal Revenue
Service and the courts having jurisdiction over such matters, all of which are
subject to change either prospectively or retroactively. Also, any variation or
difference in the facts from those set forth in the representations described
above, including in the Registration Statement or the Officer's Certificate, may
affect the conclusions stated herein. Moreover, the Company's qualification and
taxation as a real estate investment trust depends upon the Company's ability to
meet (through actual annual operating results, asset diversification,
distribution levels and diversity of stock ownership) the various qualification
tests imposed under the Code, the results of which have not been and will not be
reviewed by Latham & Watkins. Accordingly, no assurance can be given that the
actual results of the Company's operation for any one taxable year will satisfy
such requirements.

                  This opinion is rendered to you and is for your benefit and
the benefit of your stockholders in connection with the filing of the
Registration Statement with the Commission. This opinion may not be relied upon
by you or your stockholders for any other purpose, or furnished to, quoted to or
relied upon by any other person, firm or corporation for any purpose, without
our prior written consent. We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the use of the name of our firm
therein under the headings "Material Federal Income Tax Consequences" and "Legal
Matters." In giving this consent, we do not hereby admit that we are within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933 or the rules or regulations of the Commission promulgated
thereunder.

                                          Very truly yours,

                                          /s/ LATHAM & WATKINS



<PAGE>   1
                                                                    EXHIBIT 23.1

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

     As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated January 19,
1999 included in Health Care Property Investors, Inc.'s Form 10-K for the year
ended December 31, 1998 and to all references to our Firm included in this
registration statement.

                                        /s/ ARTHUR ANDERSEN LLP
                                        ----------------------------------------
                                        ARTHUR ANDERSEN LLP

Orange County, California
December 1, 1999


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