WELLTOWER INC.
Item 1. Business
General
Welltower Inc. (NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. Welltower™, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing, post-acute communities and outpatient medical properties. More information is available on the Internet at www.welltower.com. The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive textual reference only.
Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders as a result of annual increases in net operating income and portfolio growth. To meet these objectives, we invest across the full spectrum of seniors housing and health care real estate and diversify our investment portfolio by property type, relationship and geographic location.
References herein to “we,” “us,” “our” or the “company” refer to Welltower Inc., a Delaware corporation, and its subsidiaries unless specifically noted otherwise.
Portfolio of Properties
Please see “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operation - Executive Summary - Company Overview” for a table that summarizes our portfolio as of December 31, 2019.
Property Types
We invest in seniors housing and health care real estate and evaluate our business through three reportable segments: Seniors Housing Operating, Triple-net and Outpatient Medical. For additional information regarding our segments, please see Note 18 to our consolidated financial statements. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2 to our consolidated financial statements. The following is a summary of our various property types.
Seniors Housing Operating
Our seniors housing operating properties include seniors apartments, independent living and independent supportive living, continuing care retirement communities, assisted living, Alzheimer's/dementia care and include care homes with or without nursing (U.K.), which assist with activities of daily living that preserve a person's mobility and social systems to promote cognitive engagement. Our properties include stand-alone properties that provide one level of service, combination properties that provide multiple levels of service and communities or campuses that provide a wide range of services. Properties are primarily held in joint venture entities with operating partners. We utilize the structure authorized by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure (the provisions of the Internal Revenue Code authorizing the RIDEA structure were enacted as part of the Housing and Economic Recovery Act of 2008).
Seniors Apartments Seniors apartments refer to age-restricted multi-unit housing with self-contained living units for older adults, usually aged 55+ who are able to care for themselves. Seniors apartments generally do not offer other additional services such as meals or transportation.
Independent Living and Independent Supportive Living (Canada) Independent living and independent supportive living refers to age-restricted, multifamily properties with central dining that provide residents access to meals and other services such as housekeeping, linen service, transportation and social and recreational activities.
Continuing Care Retirement Communities Continuing care retirement communities typically include a combination of detached homes and properties offering independent living, assisted living and/or long-term/post-acute care services on one campus. These communities appeal to residents because there is no need to relocate when health and medical needs change. Resident payment plans vary, but can include entrance fees, condominium fees and rental fees. Many of these communities also charge monthly maintenance fees in exchange for a living unit, meals and some health services.
Assisted Living Assisted living refers to state-regulated rental properties that provide independent living services, but also provide supportive care from trained employees to residents who require assistance with activities of daily living, including, but not limited to, management of medications, bathing, dressing, toileting, ambulating and eating.
Alzheimer’s/Dementia Care Certain properties offering assisted living may include state-licensed settings that specialize in caring for those afflicted with Alzheimer’s disease and/or other types of dementia.
Care Homes with or without Nursing (U.K.) Care homes without nursing, regulated by the Care Quality Commission ("CQC”), are rental properties that provide essentially the same services as U.S. assisted living. Care homes with nursing, also regulated by the CQC, are licensed daily rate or rental properties where most individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed for various national and local reimbursement programs. Unlike the U.S., care homes with nursing in the U.K. generally do not provide post-acute care.
Our Seniors Housing Operating segment accounted for 67%, 69% and 65% of total revenues for the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, we had relationships with 25 operators to manage our seniors housing operating properties. In each instance, our partner provides management services to the properties pursuant to an incentive-based management contract. We rely on our partners to effectively and efficiently manage these properties. For the year ended December 31, 2019, our relationship with Sunrise Senior Living accounted for approximately 35% of our Seniors Housing Operating segment revenues and 24% of our total revenues.
Triple-net
Our triple-net properties offer services including independent living and independent supportive living (Canada), assisted living, continuing care retirement communities, Alzheimer's/dementia care and care homes with or without nursing (U.K.) described above, as well as long-term/post-acute care. We invest primarily through acquisitions, development and joint venture partnerships. Our properties are primarily leased to operators under long-term, triple-net master leases that obligate the tenant to pay all operating costs, utilities, real estate taxes, insurance, building repairs, maintenance costs and all obligations under certain ground leases. We are not involved in property management. Our properties include stand-alone properties that provide one level of service, combination facilities that provide multiple levels of service, and communities or campuses that provide a wide range of services.
Long-Term/Post-Acute Care Facilities Post-acute care is at the leading edge of reducing health care costs while improving quality. These high-impact centers help patients recover from illness or surgery with the goals of getting the patient home and healed faster and reducing hospital readmission rates. Our long-term/post-acute care properties generally offer skilled nursing/post-acute care, inpatient rehabilitation and long-term acute care services. Skilled nursing/post-acute care refers to licensed daily rate or rental properties where most individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed for Medicaid and/or Medicare reimbursement in the U.S. or provincial reimbursement in Canada. All properties offer some level of rehabilitation services. Some properties focus on higher acuity patients and offer rehabilitation units specializing in cardiac, orthopedic, dialysis, neurological or pulmonary rehabilitation. Inpatient rehabilitation properties provide intensive inpatient services after illness, injury or surgery to patients able to tolerate and benefit from three hours of rehabilitation hours per day. Long-term acute care properties provide inpatient services for patients with complex medical conditions that require more intensive care, monitoring or emergency support than is available in most skilled nursing/post-acute care properties.
Our Triple-net segment accounted for 19%, 19% and 22% of total revenues for the years ended December 31, 2019, 2018 and 2017, respectively. For the year ended December 31, 2019, our revenues related to our relationship with ProMedica Health System ("ProMedica") accounted for approximately 22% of our Triple-net segment revenues and 4% of total revenues. As of December 31, 2019, our relationship with ProMedica was comprised of a master lease for 218 properties owned by a joint venture landlord of which we own 80%. In addition to rent, the master lease requires ProMedica to pay all operating costs, utilities, real estate taxes, insurance, building repairs, maintenance costs and all obligations under certain ground leases. All obligations under the master lease have been guaranteed by ProMedica. For the year ended December 31, 2019, our revenues related to our relationship with Genesis HealthCare (“Genesis”) accounted for approximately 14% of our Triple-net segment revenues and 3% of our total revenues. As of December 31, 2019, our relationship with Genesis was comprised of a master lease for 54 properties owned 100% by us, six loans with a net balance of $296 million, approximately 9.5 million shares of GEN Series A common stock (representing approximately 9% of total GEN common stock) and a 25% ownership stake in an unconsolidated joint venture that includes a master lease for 28 properties operated by Genesis. In addition to rent, the master lease requires Genesis to pay all operating costs, utilities, real estate taxes, insurance, building repairs, maintenance costs and all obligations under certain ground leases. All obligations under the master lease have been guaranteed by FC-GEN Operations Investment, LLC, a subsidiary of Genesis.
Outpatient Medical
Outpatient Medical Buildings Demand for outpatient medical services is growing as more procedures are performed safely and efficiently outside the hospital setting. State-of-the-art outpatient centers are needed in accessible, consumer-friendly locations. Our portfolio of outpatient medical buildings is an integral part of creating health care provider connectivity in local markets and generally include physician offices, ambulatory surgery centers, diagnostic facilities, outpatient services and/or labs. Approximately 94% of our outpatient medical building portfolio is affiliated with health systems (buildings directly on hospital campuses or with tenants that are satellite locations for the health system and its physicians). We typically lease our outpatient medical buildings to multiple tenants and provide varying levels of property management. Our Outpatient Medical segment accounted for 13%, 12% and 13% of total revenues for each of the years ended December 31, 2019, 2018 and 2017, respectively. No single tenant exceeds 20% of segment revenues.
Investments
Providing high-quality and affordable health care to an aging global population requires vast investments and infrastructure development. We invest in seniors housing and health care real estate primarily through acquisitions, developments and joint venture partnerships. For additional information regarding acquisition and development activity, please see Note 3 to our consolidated financial statements. Our portfolio creates opportunities to connect partners across the continuum of care and drive efficiency. We seek to diversify our investment portfolio by property type, relationship and geographic location. In determining whether to invest in a property, we focus on the following: (1) the experience of the obligor’s/partner’s management team; (2) the historical and projected financial and operational performance of the property; (3) the credit of the obligor/partner; (4) the security for any lease or loan; (5) the real estate attributes of the building and its location; (6) the capital committed to the property by the obligor/partner; and (7) the operating fundamentals of the applicable industry.
We monitor our investments through a variety of methods determined by the type of property. Our asset management process for seniors housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections, and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral. Our internal property management division manages and monitors the outpatient medical portfolio with a comprehensive process including review of, among other things, tenant relations, lease expirations, the mix of health service providers, hospital/health system relationships, property performance, capital improvement needs, and market conditions.
Investment Types
Real Property Our properties are primarily comprised of land, buildings, improvements and related rights. Our triple-net properties are generally leased to operators under long-term operating leases. The leases generally have a fixed contractual term of 12 to 15 years and contain one or more five to 15-year renewal options. Certain of our leases also contain purchase options, a portion of which could result in the disposition of properties for less than full market value if the options were to be exercised. Most of our rents are received under triple-net leases requiring the operator to pay rent and all additional charges incurred in the operation of the leased property. The tenants are required to repair, rebuild and maintain the leased properties. Substantially all these operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period.
At December 31, 2019, approximately 95% of our triple-net properties were subject to master leases. A master lease is a lease of multiple properties to one tenant entity under a single lease agreement. From time to time, we may acquire additional properties that are then leased to the tenant under the master lease. The tenant is required to make one monthly payment that represents rent on all the properties that are subject to the master lease. Typically, the master lease tenant can exercise its right to purchase the properties or to renew the master lease only with respect to all leased properties at the same time. We believe this bundling feature benefits us because the tenant cannot limit the purchase or renewal to better performing properties and terminate the leasing arrangement with respect to poorer performing properties. This spreads our risk among the entire group of properties within the master lease. The bundling feature should provide a similar advantage to us if the master lease tenant is in bankruptcy. Subject to certain restrictions, a debtor in bankruptcy has the right to assume or reject its unexpired leases and executory contracts. In the context of integrated master leases such as ours, our tenants in bankruptcy would be required to assume or reject the master lease as a whole, rather than deciding on a property by property basis.
Our outpatient medical portfolio is primarily self-managed and consists principally of multi-tenant properties leased to health care providers. Our leases typically include increasers and some form of operating expense reimbursement by the tenant. As of December 31, 2019, 77% of our portfolio included leases with full pass through, 20% with a partial expense reimbursement (modified gross) and 3% with no expense reimbursement (gross). Our outpatient medical leases are non-cancellable operating leases that have a weighted-average remaining term of seven years at December 31, 2019 and are often credit enhanced by security deposits, guarantees and/or letters of credit.
Construction We provide for the construction of properties for tenants primarily as part of long-term operating leases. We capitalize certain interest costs associated with funds used for the construction of properties owned by us. The amount capitalized is based upon the amount advanced during the construction period using the rate of interest that approximates our company-wide cost of financing. Our interest expense is reduced by the amount capitalized. The construction period commences upon funding and terminates upon the earlier of the completion of the applicable property or the end of a specified period. During the construction period, we advance funds to the tenants in accordance with agreed upon terms and conditions which require, among other things, periodic site visits by a company representative. During the construction period, we generally require an additional credit enhancement in the form of payment and performance bonds and/or completion guarantees. At December 31, 2019, we had outstanding construction investments of $507,931,000 and were committed to provide additional funds of approximately $446,633,000 to complete construction for investment properties. We also provide for construction loans which, depending on the terms and conditions, could be treated as loans, real property or investments in unconsolidated entities.
Loans Our real estate loans are typically structured to provide us with interest income, principal amortization and transaction fees. Real estate loans consist of mortgage loans and other real estate loans which are primarily collateralized by a first, second or third mortgage lien, a leasehold mortgage on, or an assignment of the partnership interest in the related properties, corporate guarantees and/or personal guarantees. Non real estate loans are generally corporate loans with no real estate backing. At December 31, 2019, we had outstanding loans, net of allowances, of $607,236,000 with an interest yield of approximately 8.0% per annum. Our yield on loans depends upon a number of factors, including the stated interest rate, average principal amount outstanding during the term of the loan and any interest rate adjustments. The loans outstanding at December 31, 2019 are generally subject to one to 15-year terms with principal amortization schedules and/or balloon payments of the outstanding principal balances at the end of the term.
Investments in Unconsolidated Entities Investments in entities that we do not consolidate but for which we can exercise significant influence over operating and financial policies are reported under the equity method of accounting. Our investments in unconsolidated entities generally represent interests ranging from 10% to 50% in real estate assets. Under the equity method of accounting, our share of the investee’s earnings or losses is included in our consolidated results of operations. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest inclusive of transaction costs. We evaluate our equity method investments for impairment based upon a comparison of the estimated fair value of the equity method investment to its carrying value. When we determine a decline in the estimated fair value of such an investment below its carrying value is other-than-temporary, an impairment is recorded.
In Substance Real Estate Additionally, we provide loans to third parties for the acquisition, development and construction of real estate. Under these arrangements, it is possible that we will participate in the expected residual profits of the project through the sale, refinancing or acquisition of the property. We evaluate the characteristics of each arrangement, including its risks and rewards, to determine whether they are more similar to those associated with a loan or an investment in real estate. Arrangements with characteristics implying real estate joint ventures are treated as in substance real estate investments, accounted for using the equity method, and are presented as investments in unconsolidated entities. We have made loans totaling $165,193,000 related to seven properties as of December 31, 2019, which are classified as in substance real estate investments.
Principles of Consolidation
The consolidated financial statements are in conformity with U.S general accepted accounting principles (“U.S. GAAP”) and include the accounts of our wholly-owned subsidiaries and joint venture entities that we control, through voting rights or other means. All material intercompany transactions and balances have been eliminated in consolidation.
At inception of joint venture transactions, we identify entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and determine which business enterprise is the primary beneficiary of its operations. A VIE is broadly defined as an entity where either (i) the equity investors as a group, if any, do not have a controlling financial interest, or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. We consolidate investments in VIEs when we are determined to be the primary beneficiary. Accounting Standards Codification Topic 810, "Consolidations", requires enterprises to perform a qualitative approach to determining whether or not a VIE will need to be consolidated. This evaluation is based on an enterprise’s ability to direct and influence the activities of a VIE that most significantly impact that entity’s economic performance.
For investments in joint ventures, U.S. GAAP may preclude consolidation by the sole general partner in certain circumstances based on the type of rights held by the limited partner(s). We assess the limited partners’ rights and their impact on our consolidation conclusions, and we reassess if there is a change to the terms or in the exercisability of the rights of the limited partners, the sole general partner increases or decreases its ownership of limited partnership interests, or there is an increase or decrease in the number of outstanding limited partnership interests. We similarly evaluate the rights of managing members of limited liability companies.
Borrowing Policies
We utilize a combination of debt and equity to fund investments. Generally, we intend to issue unsecured, fixed-rate public debt with long-term maturities to approximate the maturities on our triple-net leases and investment strategy. For short-term purposes, we may borrow on our primary unsecured credit facility or issue commercial paper. We replace these borrowings with long-term capital such as senior unsecured notes or common stock. When terms are deemed favorable, we may invest in properties subject to existing mortgage indebtedness. In addition, we may obtain secured financing for unleveraged properties in which we have invested or may refinance properties acquired on a leveraged basis. In certain agreements with our lenders, we are subject to restrictions with respect to secured and unsecured indebtedness.
Competition
We compete with other real estate investment trusts, real estate partnerships, private equity and hedge fund investors, banks, insurance companies, finance/investment companies, government-sponsored agencies, taxable and tax-exempt bond funds, health care operators, developers and other investors in the acquisition, development, leasing and financing of health care and seniors housing properties. We compete for investments based on a number of factors including relationships, certainty of execution, investment structures and underwriting criteria. Our ability to successfully compete is impacted by economic and demographic trends, availability of acceptable investment opportunities, our ability to negotiate beneficial investment terms, availability and cost of capital, construction and renovation costs and applicable laws and regulations.
The operators/tenants of our properties compete with properties that provide comparable services in the local markets. Operators/tenants compete for patients and residents based on a number of factors including quality of care, reputation, physical appearance of properties, location, services offered, family preferences, physicians, staff, and price. We also face competition from other health care facilities for tenants, such as physicians and other health care providers that provide comparable facilities and services.
For additional information on the risks associated with our business, please see “
Item 1A. Risk Factors
This section highlights significant factors, events and uncertainties that could create risk with an investment in our securities. The events and consequences discussed in these risk factors could, in circumstances we may not be able to accurately predict, recognize or control, have a material adverse effect on our business, growth, reputation, prospects, financial condition, operating results, cash flows, liquidity, ability to pay dividends and stock price. These risk factors do not identify all risks that we face: our operations could also be affected by factors, events or uncertainties that are not presently known to us or that we currently do not consider to present significant risks to our operations. We group these risk factors into three categories:
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Risks arising from our business;
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Risks arising from our capital structure; and
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Risks arising from our status as a REIT.
Risks Arising from Our Business
Our investments in and acquisitions of health care and seniors housing properties may be unsuccessful or fail to meet our expectations
We are exposed to the risk that some of our acquisitions may not prove to be successful. We could encounter unanticipated difficulties and expenditures relating to any acquired properties, including contingent liabilities, and acquired properties might require significant management attention that would otherwise be devoted to our ongoing business. If we agree to provide construction funding to an operator/tenant and the project is not completed, we may need to take steps to ensure completion of the project. Such expenditures may negatively affect our results of operations. Investments in and acquisitions of seniors housing and health care properties entail risks associated with real estate investments generally, including risks that the investment will not achieve expected returns, that the cost estimates for necessary property improvements will prove inaccurate or that the tenant, operator or manager will fail to meet performance expectations. Furthermore, there can be no assurance that our anticipated acquisitions and investments, the completion of which is subject to various conditions, will be consummated in accordance with anticipated timing, on anticipated terms, or at all. We may be unable to obtain or assume financing for acquisitions on favorable terms or at all. Health care properties are often highly customizable and the development or redevelopment of such properties may require costly tenant-specific improvements. We also may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and this could have an adverse effect on our results of operations and financial condition. Acquired properties may be located in new markets, either within or outside the United States, where we may face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area, costs associated with opening a new regional office and unfamiliarity with local governmental and permitting procedures. As a result, we cannot assure you that we will achieve the economic benefit we expect from acquisitions, investment, development and redevelopment opportunities.
Acquired properties may expose us to unknown liability
We may acquire properties or invest in joint ventures that own properties subject to liabilities and without any recourse, or with only limited recourse, against the prior owners or other third parties with respect to unknown liabilities. As a result, if a liability were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle or contest it, which could adversely affect our results of operations and cash flow. Unknown liabilities with respect to acquired properties might include: liabilities for clean up of undisclosed environmental contamination, claims by tenants, vendors or other persons against the former owners of the properties, liabilities incurred in the ordinary course of business and claims for indemnification by general partners, directors and others indemnified by the former owners of the properties.
Competition for acquisitions may result in increased prices for properties
We may face competition for acquisition opportunities from other well-capitalized investors, including publicly traded and privately held REITs, private real estate funds, domestic and foreign financial institutions, life insurance companies, sovereign wealth funds, pension trusts, partnerships and individual investors. This competition may adversely affect us by subjecting us to the following risks: we may be unable to acquire a desired property because of competition from other well-capitalized real estate investors and, even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the purchase price.
Our investments in joint ventures could be adversely affected by our lack of exclusive control over these investments, our partners’ insolvency or failure to meet their obligations, and disputes between us and our partners
We have entered into, and may continue in the future to enter into, partnerships or joint ventures with other persons or entities. Joint venture investments involve risks that may not be present with other methods of ownership, including the possibility that our partner might become insolvent, refuse to make capital contributions when due or otherwise fail to meet its obligations, which may result in certain liabilities to us for guarantees and other commitments; that our partner might at any time have economic or other business interests or goals that are or become inconsistent with our interests or goals; that we could become engaged in a dispute with our partner, which could require us to expend additional resources to resolve such dispute and could have an adverse impact on the operations and profitability of the joint venture; that our partner may be in a position to take action or withhold consent contrary to our instructions or requests; and that our joint venture partners may be structured differently than us for tax purposes, which could create conflicts of interest and risks to our REIT status. In some instances, we and/or our partner may have the right to trigger a buy-sell, put right or forced sale arrangement, which could cause us to sell our interest, acquire our partner’s interest or sell the underlying asset at a time when we otherwise would not have initiated such a transaction. Our ability to acquire our partner’s interest may be limited if we do not have sufficient cash, available borrowing capacity or other capital resources. In such event, we may be forced to sell our interest in the joint venture when we would otherwise prefer to retain it. On the other hand, our ability to transfer our interest in a joint venture to a third party may be restricted and the market for our interest may be limited and/or valued lower than fair market value. Joint ventures may require us to share decision-making authority with our partners, which could limit our ability to control the properties in the joint ventures. Even when we have a controlling interest, certain major decisions may require partner approval, such as the sale, acquisition or financing of a property.
We are exposed to operational risks with respect to our Seniors Housing Operating properties that could adversely affect our revenue and operations
We are exposed to various operational risks with respect to our Seniors Housing Operating properties that may increase our costs or adversely affect our ability to generate revenues. These risks include fluctuations in occupancy, Medicare and Medicaid reimbursement, if applicable, and private pay rates; economic conditions; competition; federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards; the availability and increases in cost of general and professional liability insurance coverage; state regulation and rights of residents related to entrance fees; and the availability and increases in the cost of labor (as a result of unionization or otherwise). Any one or a combination of these factors may adversely affect our revenue and operations.
We assume operational and legal risks with respect to our properties managed in RIDEA structures that could have a material adverse effect on our business, results of operations and financial condition
We have entered into various joint ventures that were structured under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”), which permits REITs to own or partially own “qualified health care properties” in a structure through which we can participate directly in the cash flow of the properties’ operations (as compared to receiving only contractual rent payments) in compliance with REIT requirements. A “qualified health care property” includes real property and any personal property that is, or is necessary or incidental to the use of, a hospital, nursing facility, assisted living facility, congregate care facility, qualified continuing care facility, or other licensed facility which extends medical or nursing or ancillary services to patients.
Under a RIDEA structure, we are required to rely on our operator to manage and operate the property, including complying with laws and providing resident care. However, as the owner of the property under a RIDEA structure, we are responsible for operational and legal risks and liabilities of the property, including, but not limited to, those relating to employment matters of our operators, compliance with health care fraud and abuse and other laws, governmental reimbursement matters, compliance with federal, state, local and industry-related licensure, certification and inspection laws, regulations, and standards, and litigation involving our properties or residents/patients, even though we have limited ability to control or influence our operators’ management of these risks. Further, our taxable REIT subsidiary (“TRS”) is generally required to hold the applicable health care license and enroll in the applicable government health care programs (e.g., Medicare and Medicaid), which subjects us to potential liability under various health care regulatory laws. Penalties for failure to comply with applicable laws may include loss or suspension of licenses and certificates of need, certification or accreditation, exclusion from government health care programs (e.g., Medicare and Medicaid), administrative sanctions and civil monetary penalties. Although we have some general oversight approval rights and the right to review operational and financial reporting information, our operators are ultimately in control of the day-to-day business of the property, including clinical decision-making, we rely on them to operate the properties in compliance with a manner that complies with applicable law.
Decreases in our operators’ revenues or increases in our operators’ expenses could affect our operators’ ability to make payments to us
We have very limited control over the success or failure of our operators' businesses and, at any time, an operator may experience a downturn in its business that weakens its financial condition. Our operators’ revenues are primarily driven by occupancy, private pay rates, and Medicare and Medicaid reimbursement, if applicable. Expenses for these facilities are primarily driven by the costs of labor, food, utilities, taxes, insurance and rent or debt service. Revenues from government reimbursement have, and may continue to, come under pressure due to reimbursement cuts and state budget shortfalls. Operating costs continue to increase for our operators. To the extent that any decrease in revenues and/or any increase in operating expenses result in a property not generating enough cash to make payments to us, the credit of our operator and the value of other collateral would have to be relied upon. To the extent the value of such property is reduced, we may need to record an impairment for such asset. Furthermore, if we determine to dispose of an underperforming property, such sale may result in a loss. Any such impairment or loss on sale would negatively affect our financial results. These risks are magnified where we lease multiple properties to a single operator under a master lease, as an operator failure or default under a master lease would expose us to these risks across multiple properties. Although our lease agreements give us the right to exercise certain remedies in the event of default on the obligations owing to us, we may determine not to do so if we believe that enforcement of our rights would be more detrimental to our business than seeking alternative approaches.
Increased competition and oversupply may affect our operators’ ability to meet their obligations to us
The operators of our properties compete on a local and regional basis with operators of properties and other health care providers that provide comparable services for residents and patients, including on the basis of the scope and quality of care and services provided, reputation and financial condition, physical appearance of the properties, price, and location. Our operators are expected to encounter increased competition in the future that could limit their ability to attract residents or expand their businesses. In addition, we expect that there will continue to be a more than adequate inventory of seniors housing facilities. We cannot be certain that the operators of all of our facilities will be able to achieve and maintain occupancy and rate levels that will enable them to
meet all of their obligations to us. If our operators cannot compete effectively or if there is an oversupply of facilities, their financial performance and ability to meet their obligations to us could have a material adverse effect on our financial results.
A severe cold and flu season, epidemics or any other widespread illnesses could adversely affect the occupancy of our Seniors Housing Operating and Triple-net properties
Our revenues and our operators’ revenues are dependent on occupancy. It is impossible to predict the severity of the cold and flu season or the occurrence of epidemics or any other widespread illnesses. The occupancy of our Seniors Housing Operating and Triple-net properties could significantly decrease in the event of a severe cold and flu season, an epidemic or any other widespread illness. Such a decrease could affect the operating income of our Seniors Housing Operating properties and the ability of our Triple-net operators to make payments to us. In addition, a flu pandemic could significantly increase the cost burdens faced by our operators, including if they are required to implement quarantines for residents, and adversely affect their ability to meet their obligations to us, which would have a material adverse effect on our financial results.
The insolvency or bankruptcy of our tenants, operators, borrowers, managers and other obligors may adversely affect our business, results of operations and financial condition
We are exposed to the risk that our tenants, operators, borrowers, managers or other obligors may not be able to meet the rent, principal and interest or other payments due us, which may result in a tenant, operator, borrower, manager or other obligor bankruptcy or insolvency, or that a tenant, operator, borrower, manager or other obligor might become subject to bankruptcy or insolvency proceedings for other reasons. Although our operating lease agreements provide us with the right to evict a tenant, demand immediate payment of rent and exercise other remedies, and our loans provide us with the right to terminate any funding obligation, demand immediate repayment of principal and unpaid interest, foreclose on the collateral and exercise other remedies, the bankruptcy and insolvency laws afford certain rights to a party that has filed for bankruptcy or reorganization. A tenant, operator, borrower, manager or other obligor in bankruptcy or subject to insolvency proceedings may be able to limit or delay our ability to collect unpaid rent in the case of a lease or to receive unpaid principal and interest in the case of a loan, and to exercise other rights and remedies. In addition, if a lease is rejected in a tenant bankruptcy, our claim against the tenant may be limited by applicable provisions of the bankruptcy law. We may be required to fund certain expenses (e.g., real estate taxes and maintenance) to preserve the value of an investment property, avoid the imposition of liens on a property and/or transition a property to a new tenant. In some instances, we have terminated our lease with a tenant and relet the property to another tenant. In some of those situations, we have provided working capital loans to and limited indemnification of the new obligor. If we cannot transition a leased property to a new tenant, we may take possession of that property, which may expose us to certain successor liabilities. Publicity about the operator's financial condition and insolvency proceedings may also negatively impact their and our reputations, decreasing customer demand and revenues. Should such events occur, our revenue and operating cash flow may be adversely affected.
We may not be able to timely reinvest our sale proceeds on terms acceptable to us
From time to time, we will have cash available from the proceeds of sales of our securities, principal payments on our loans receivable or the sale of properties, including non-elective dispositions, under the terms of master leases or similar financial support arrangements. In order to maintain current revenues and continue generating attractive returns, we expect to reinvest these proceeds in a timely manner. We compete for real estate investments with a broad variety of potential investors, including other health care REITs, real estate partnerships, health care providers, health care lenders and other investors, including developers, banks, insurance companies, pension funds, government-sponsored entities and private equity firms, some of whom may have greater financial resources and lower costs of capital than we do. This competition for attractive investments may negatively affect our ability to make timely investments on terms acceptable to us.
The properties managed by Sunrise Senior Living, LLC (“Sunrise”) account for a significant portion of our revenues and net operating income and any adverse developments in its business or financial condition could adversely affect us
As of December 31, 2019, Sunrise managed 165 of our Seniors Housing Operating properties. These properties account for a significant portion of our revenues and net operating income. Although we have various rights as the property owner under our management agreements, we rely on Sunrise’s personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage our Seniors Housing Operating properties efficiently and effectively. We also rely on Sunrise to set appropriate resident fees, to provide accurate property-level financial results for our properties in a timely manner and to otherwise operate them in compliance with the terms of our management agreements and all applicable laws and regulations. Any adverse developments in Sunrise’s business or financial condition could impair its ability to manage our properties efficiently and effectively, which could adversely affect our business, results of operations, and financial condition. For example, we depend on Sunrise’s ability to attract and retain skilled management personnel who are responsible for the day-to-day operations of our Seniors Housing Operating properties. A shortage of nurses or other trained personnel or general inflationary pressures may force Sunrise to enhance its pay and benefits packages to compete effectively for such personnel, but it may not be able to offset these added costs by increasing the rates charged to residents. Any increase in labor costs and other property operating expenses, any failure by Sunrise to attract and retain qualified personnel, or significant changes in Sunrise’s senior management or equity ownership could adversely affect the income we receive from our Seniors Housing Operating properties and have a material adverse effect on us. Also, if Sunrise experiences any significant financial, legal, accounting or regulatory difficulties, such difficulties
could result in, among other things, acceleration of its indebtedness, impairment of its continued access to capital or the commencement of insolvency proceedings by or against it under the U.S. Bankruptcy Code, which, in turn, could adversely affect our business, results of operations and financial condition. If we determine to sell or transition additional properties currently managed by Sunrise, we may experience operational challenges and/or significantly declining financial performance for those properties. See Note 9 to our consolidated financial statements for additional information.
We depend on ProMedica Health System ("ProMedica") and Genesis HealthCare (“Genesis”) for a significant portion of our revenues and any failure, inability or unwillingness by them to satisfy obligations under their agreements with us could adversely affect us
The properties we lease to ProMedica and Genesis account for a significant portion of our revenues, and because these leases are triple-net leases, we also depend on ProMedica and Genesis to pay all insurance, taxes, utilities and maintenance and repair expenses in connection with the leased properties. We cannot assure you that ProMedica and Genesis will have sufficient assets, income and access to financing to enable them to make rental payments to us or to otherwise satisfy their respective obligations under our leases, and any failure, inability or unwillingness by ProMedica and Genesis to do so could have an adverse effect on our business, results of operations and financial condition. ProMedica and Genesis have also agreed to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with their respective businesses, and we cannot assure you that ProMedica and Genesis will have sufficient assets, income, access to financing and insurance coverage to enable them to satisfy their respective indemnification obligations. ProMedica and Genesis's failure to effectively conduct their operations or to maintain and improve our properties could adversely affect their business reputations and their ability to attract and retain patients and residents in our properties, which, in turn, could adversely affect our business, results of operations and financial condition. Additionally, we have made real estate and other loans to Genesis and their operational or other failures could adversely impact their ability to repay these loans when due.
Ownership of property outside the U.S. may subject us to different or greater risks than those associated with our domestic operations
We have operations in the U.K. and Canada which represent 8.8% and 9.1% of total Welltower revenues, respectively. As of December 31, 2019, Revera managed 94 of our Seniors Housing Operating properties in Canada, representing a significant portion of our revenues, and also owned a controlling interest in Sunrise. International development, ownership, and operating activities involve risks that are different from those we face with respect to our domestic properties and operations. These risks include, but are not limited to, any international currency gain recognized with respect to changes in exchange rates, which may not qualify under the 75% gross income test or the 95% gross income test required for us to satisfy annually in order to qualify and maintain our status as a REIT; challenges with respect to the repatriation of foreign earnings and cash; impact from international trade disputes and the associated impact on our tenants' supply chain and consumer spending levels; changes in foreign political, regulatory, and economic conditions (regionally, nationally and locally) including, but not limited to, continuing uncertainty surrounding the process of Brexit and the macroeconomic and regulatory effects of Brexit, including impacts on the U.K. real estate market; challenges in managing international operations; challenges of complying with a wide variety of foreign laws and regulations, including those relating to real estate, corporate governance, operations, taxes, employment and other civil and criminal legal proceedings; foreign ownership restrictions with respect to operations in foreign countries; local businesses and cultural factors that differ from our usual standards and practices; differences in lending practices and the willingness of domestic or foreign lenders to provide financing; regional or country-specific business cycles and political and economic instability; and failure to comply with applicable laws and regulations in the U.S. that affect foreign operations, including, but not limited to, the U.S. Foreign Corrupt Practices Act. If we are unable to successfully manage the risks associated with international expansion and operations, our results of operations and financial condition may be adversely affected.
The business and financial results of our operations located in the U.K. may be negatively impacted as a result of Brexit
The U.K.’s referendum on withdrawal from the EU in 2016 (commonly referred to as “Brexit”), and subsequent notification of the U.K.’s intention to withdraw from the EU given in March 2017, have adversely impacted global markets and foreign currencies. The terms governing the future relationship between the U.K. and the EU, as well as the legal and economic consequences of those terms, remain unclear, including with respect to the post-Brexit regulatory environment in the U.K. It is possible that the level of health care and other economic activity in the U.K. and the rest of Europe will be adversely impacted and that we will face increased regulatory and legal complexities in these regions which could have an adverse impact on the financial condition and results of operations of our properties in the U.K.
Moreover, the value of the British Pound Sterling incurred significant fluctuations. If the value of the British Pound Sterling continues to incur similar fluctuations, unfavorable exchange rate changes may negatively affect the value of our operations located in the U.K., as translated to our reporting currency, the U.S. Dollar, in accordance with U.S. GAAP, which may impact the revenue and earnings we report. Continued fluctuations in the British Pound Sterling may also result in the imposition of price adjustments by E.U.-based suppliers to our U.K. operations, as those suppliers seek to compensate for the changes in value of the British Pound Sterling as compared to the European Euro.
If our tenants do not renew their existing leases, or if we are required to sell properties for liquidity reasons, we may be unable to lease or sell the properties on favorable terms, or at all
We cannot predict whether our tenants will renew existing leases at the end of their lease terms, which expire at various times. If these leases are not renewed, we would be required to find other tenants to occupy those properties, or sell them. There can be no assurance that we would be able to identify suitable replacement tenants or enter into leases with new tenants on terms as favorable to us as the current leases or that we would be able to lease those properties at all. Our competitors may offer space at rental rates below current market rates or below the rental rates we currently charge our customers, we may lose potential customers, and we may be pressured to reduce our rental rates below those we currently charge to retain customers when leases expire. In addition, our ability to reposition our properties with a suitable replacement tenant or operator could be significantly delayed or limited by state licensing, receivership, CON or other laws, as well as by the Medicare and Medicaid change-of-ownership rules, and we could incur substantial additional expenses in connection with any licensing, receivership or change-of-ownership proceedings. Even if tenants decide to renew or lease new space, the terms of renewals or new leases, including the cost of required renovations or concessions to tenants, may be less favorable to us than current lease terms.
Real estate investments are relatively illiquid and most of the property we own is highly customized for specific uses. Our ability to quickly sell or exchange any of our properties in response to changes in operator, economic and other conditions will be limited. No assurances can be given that we will recognize full value for any property that we are required to sell. Our inability to respond rapidly to changes in the performance of our investments could adversely affect our financial condition and results of operations. In addition, we are exposed to the risks inherent in concentrating investments in real estate, and in particular, the seniors housing and health care industries. A downturn in the real estate industry could adversely affect the value of our properties and our ability to sell properties for a price or on terms acceptable to us.
Our tenants, operators and managers may not have the necessary insurance coverage to insure adequately against losses
We maintain or require our tenants, operators and managers to maintain comprehensive insurance coverage on our properties and their operations with terms, conditions, limits and deductibles that we believe are customary for similarly situated companies in our industry and we frequently review our insurance programs and requirements. Our tenants, operators and manager may not be able to maintain adequate levels of insurance and required coverages. Also, we may not be able to require the same levels of insurance coverage under our lease, management and other agreements, which could adversely affect us in the event of a significant uninsured loss. We cannot make any guarantee as to the future financial viability of the insurers that underwrite our policies and the policies maintained by our tenants, operators and managers. Insurance may not be available at a reasonable cost in the future or policies may not be maintained at a level that will fully cover all losses on our properties upon the occurrence of a catastrophic event. This may be especially the case due to increases in property insurance costs. In addition, in recent years, long-term/post-acute care and seniors housing operators and managers have experienced substantial increases in both the number and size of patient care liability claims. As a result, general and professional liability costs have increased in some markets. General and professional liability insurance coverage may be restricted or very costly, which may adversely affect the tenants’, operators’ and managers’ future operations, cash flows and financial conditions, and may have a material adverse effect on the tenants’, operators’ and managers’ ability to meet their obligations to us.
Our ownership of properties through ground leases exposes us to the loss of such properties upon breach or termination of the ground leases
We have acquired an interest in certain of our properties by acquiring a leasehold interest in the property on which the building is located, and we may acquire additional properties in the future through the purchase of interests in ground leases. Many of these ground leases impose significant limitations on our uses of the subject properties, restrict our ability to sell or otherwise transfer our interests in the properties or restrict the leasing of the properties. These restrictions may limit our ability to timely sell or exchange the properties, impair the properties’ value or negatively impact our ability to find suitable tenants for the properties. As the lessee under a ground lease, we are exposed to the possibility of losing the property upon termination of the ground lease or an earlier breach of the ground lease by us.
The requirements of, or changes to, governmental reimbursement programs, such as Medicare, Medicaid or government funding, could have a material adverse effect on our obligors’ liquidity, financial condition and results of operations, which could adversely affect our obligors’ ability to meet their obligations to us
Some of our obligors’ businesses are affected by government reimbursement. To the extent that an operator/tenant receives a significant portion of its revenues from government payors, primarily Medicare and Medicaid, such revenues may be subject to statutory and regulatory changes, retroactive rate adjustments, recovery of program overpayments or set-offs, court decisions, administrative rulings, policy interpretations, payment or other delays by fiscal intermediaries or carriers, government funding restrictions (at a program level or with respect to specific facilities), any lapse in Congressional funding of the Centers for Medicare and Medicaid Services and interruption or delays in payments due to any ongoing government investigations and audits at such property. In recent years, government payors have frozen or reduced payments to health care providers due to budgetary pressures. Federal and state authorities may continue seeking to implement new or modified reimbursement methodologies that may negatively impact health care property operations. See “Item 1 - Business - Certain Government Regulations - United States - Reimbursement”
above for additional information. Health care reimbursement will likely continue to be of paramount importance to federal and state authorities. We cannot make any assessment as to the ultimate timing or effect any future legislative reforms may have on the financial condition of our obligors and properties. There can be no assurance that adequate reimbursement levels will be available for services provided by any property operator, whether the property receives reimbursement from Medicare, Medicaid or private payors. Significant limits on the scope of services reimbursed and on reimbursement rates and fees could have a material adverse effect on an obligor’s liquidity, financial condition and results of operations, which could adversely affect the ability of an obligor to meet its obligations to us.
Since January 1, 2014, the Health Reform Laws have provided those states that expand their Medicaid coverage to otherwise eligible state residents with incomes at or below 138% of the federal poverty level with an increased federal medical assistance percentage, effective January 1, 2014, when certain conditions are met. Given that the federal government substantially funds the Medicaid expansion, it is unclear how many states will ultimately pursue this option, although, as of early January 2020, more than 70% of the states have expanded Medicaid coverage. The participation by states in the Medicaid expansion could have the dual effect of increasing our tenants’ revenues, through new patients, but further straining state budgets and their ability to pay our tenants.
The status of the Health Reform Laws may be subject to change as a result of political, legislative, regulatory, and administrative developments and judicial proceedings. The current Presidential Administration and U.S. Congress have sought to and may continue to seek to modify, repeal, or otherwise invalidate all, or certain provisions of, the Health Reform Laws, including Medicaid expansion. Since taking office, President Trump has continued to support the repeal of all or portions of the Health Reform Laws. See “Item 1 - Business - Certain Government Regulations - United States - Reimbursement” above for additional information. If the operations, cash flows or financial condition of our operators and tenants are materially adversely impacted by the Health Reform Laws or future legislation, our revenue and operations may be adversely affected as well. More generally, and because of the dynamic nature of the legislative and regulatory environment for health care products and services, and in light of existing federal deficit and budgetary concerns, we cannot predict the impact that broad-based, far-reaching legislative or regulatory changes could have on the U.S. economy, our business, or that of our operators and tenants.
If controls imposed on certain of our tenants who provide health care services that are reimbursed by Medicare, Medicaid and other third-party payors to reduce admissions and length of stay affect inpatient volumes at our health care facilities, the financial condition or results of operations of those tenants could be adversely affected
Controls imposed by Medicare, Medicaid and commercial third-party payors designed to reduce admissions and lengths of stay, commonly referred to as “utilization reviews,” have affected and are expected to continue to affect certain of our health care facilities, specifically our acute care hospitals and post-acute facilities. Utilization review entails the review of the admission and course of treatment of a patient by managed care plans. Inpatient utilization, average lengths of stay and occupancy rates continue to be negatively affected by payor-required preadmission authorization and utilization review and by payor pressures to maximize outpatient and alternative health care delivery services for less acutely ill patients. Efforts to impose more stringent cost controls and reductions are expected to continue, which could negatively impact the financial condition of our tenants who provide health care services in our hospitals and post-acute facilities. If so, this could adversely affect these tenants’ ability and willingness to comply with the terms of their leases with us and/or renew those leases upon expiration, which could have a material adverse effect on us.
Our operators’ or tenants’ failure to comply with federal, state, province, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards could adversely affect such operators’ or tenants’ operations, which could adversely affect our operators’ and tenants’ ability to meet their obligations to us
Our operators and tenants generally are subject to or impacted by varying levels of federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards. These laws and regulations include, among others: laws protecting consumers against deceptive practices; laws relating to the operation of our properties and how our tenants and operators conduct their business, such as fire, health and safety, data security and privacy laws; federal and state laws affecting hospitals, clinics and other health care communities that participate in both Medicare and Medicaid that specify reimbursement rates, pricing, reimbursement procedures and limitations, quality of services and care, background checks, food service and physical plants, and similar foreign laws regulating the health care industry; resident rights laws (including abuse and neglect laws) and fraud laws; anti-kickback and physician referral laws; the ADA and similar state and local laws; and safety and health standards set by the Occupational Safety and Health Administration or similar foreign agencies. Our operators’ or tenants’ failure to comply with any of these laws, regulations, or standards could result in loss of accreditation, denial of reimbursement, imposition of fines, suspension, decertification or exclusion from federal and state health care programs, civil liability, and in certain limited instances, criminal penalties, loss of license, closure of the facility and/or the incurrence of considerable costs arising from an investigation or regulatory action. Such actions may have an effect on our operators’ or tenants’ ability to make lease payments to us and, therefore, adversely impact us. In addition, we may be directly subject to certain health care fraud and abuse laws and data privacy laws, as well as potential investigation or enforcement, as a result of our RIDEA-structured arrangements, and certain other arrangements we may pursue with healthcare entities who are directly subject to these laws. See “Item 1 - Business - Certain Government Regulations
- United States - Fraud & Abuse Enforcement” and “Item 1 - Business - Certain Government Regulations - United States - Health Care Matters - Generally” above.
Many of our properties may require a license, registration, and/or CON to operate. Failure to obtain a license, registration, or CON, or loss of a required license, registration, or CON would prevent a facility from operating in the manner intended by the operators or tenants. These events could materially adversely affect our operators’ or tenants’ ability to make rent or other obligatory payments to us. State and local laws also may regulate the expansion, including the addition of new beds or services or acquisition of medical equipment, and the construction or renovation of health care facilities, by requiring a CON or other similar approval from a state agency. See “Item 1 - Business - Certain Government Regulations - United States - Licensing and Certification” above.
In addition, we cannot assure you that future changes in government regulation will not adversely affect the health care industry, including our tenants and operators, nor can we be certain that our tenants and operators will achieve and maintain occupancy and rate levels or labor cost levels that will enable them to satisfy their obligations to us.
Changes in applicable tax regulations could negatively affect our financial results
We are subject to taxation in the U.S. and numerous foreign jurisdictions. Because the U.S. maintains a worldwide corporate tax system, the foreign and U.S. tax systems are somewhat interdependent. Longstanding international norms that determine each country’s jurisdiction to tax cross-border international trade are evolving and could reduce the ability of our foreign subsidiaries to deduct for foreign tax purposes the interest they pay on loans from us, thereby increasing the foreign tax liability of the subsidiaries; it is also possible that foreign countries could increase their withholding taxes on dividends and interest. Given the unpredictability of these possible changes and their potential interdependency, it is very difficult to assess the overall effect of such potential tax changes on our earnings and cash flow, but such changes could adversely impact our financial results.
Unfavorable resolution of pending and future litigation matters and disputes could have a material adverse effect on our financial condition
From time to time, we are directly involved in legal proceedings, lawsuits and other claims. We also are named as defendants in lawsuits allegedly arising out of our actions or the actions of our operators/tenants or managers in which such operators/tenants or managers have agreed to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with their respective businesses. There can be no assurance that we will be able to prevail in, or achieve a favorable settlement of, pending or future litigation. In addition, pending litigation or future litigation, government proceedings or environmental matters could lead to increased costs or interruption of our normal business operations. An unfavorable resolution of pending or future litigation or legal proceedings may have a material adverse effect on our business, results of operations and financial condition. Regardless of its outcome, litigation may result in substantial costs and expenses, significantly divert the attention of management, and could damage our reputation and our brand. In addition, any such resolution could involve our agreement to terms that restrict the operation of our business. We cannot guarantee losses incurred in connection with any current or future legal or regulatory proceedings or actions will not exceed any provisions we may have set aside in respect of such proceedings or actions or will not exceed any available insurance coverage.
Development, redevelopment and construction risks could affect our profitability
In connection with our renovation, redevelopment, development and related construction activities, we may be unable to obtain, or suffer delays in obtaining, necessary zoning, land-use, building, occupancy and other required governmental permits and authorizations. These factors could result in increased costs or our abandonment of these projects. In addition, we may not be able to obtain financing on favorable terms, which may render us unable to proceed with our development activities, and we may not be able to complete construction and lease-up of a property on schedule, which could result in increased debt service expense or construction costs. Additionally, the time frame required for development, construction and lease-up of these properties means that we may have to wait years for significant cash returns. Because we are required to make cash distributions to our stockholders, if the cash flow from operations or refinancing is not sufficient, we may be forced to borrow additional money to fund such distributions. We may be unable to obtain financing with favorable terms, or at all, for the proposed development, which may cause us to delay or abandon an opportunity. Newly developed and acquired properties may not produce the cash flow that we expect, which could adversely affect our overall financial performance.
In deciding whether to acquire or develop a particular property, we make assumptions regarding the expected future performance of that property. In particular, we estimate the return on our investment based on expected occupancy, rental rates and capital costs. If our financial projections with respect to a new property are inaccurate as a result of increases in capital costs or other factors, the property may fail to perform as we expected in analyzing our investment. Our estimate of the costs of repositioning or redeveloping an acquired property may prove to be inaccurate, which may result in our failure to meet our profitability goals. Additionally, we may acquire new properties that are not fully leased, and the cash flow from existing operations may be insufficient to pay the operating expenses and debt service associated with that property.
New facilities that we construct often require a CON and license before they can be utilized by the operator for their intended use. The operator also may need to obtain Medicare and Medicaid certification and enter into Medicare and Medicaid provider agreements and/or third-party payor contracts. In the event that the operator is unable to obtain the necessary CON, licensure, certification, provider agreements or contracts after the completion of construction, there is a risk that we will not be able to earn any revenues on the facility until either the initial operator obtains a license or certification to operate the new facility and the necessary provider agreements or contracts or we find and contract with a new operator that is able to obtain a license to operate the facility for its intended use and the necessary provider agreements or contracts.
We may experience losses caused by severe weather conditions, natural disasters or the physical effects of climate change, which could result in an increase of our or our tenants’ cost of insurance, unanticipated costs associated with evacuation, a decrease in our anticipated revenues or a significant loss of the capital we have invested in a property
We maintain or require our tenants to maintain comprehensive insurance coverage on our properties with terms, conditions, limits and deductibles that we believe are appropriate given the relative risk and costs of such coverage, and we frequently review our insurance programs and requirements. However, a large number of our properties are located in areas particularly susceptible to revenue loss, cost increase or damage caused by severe weather conditions or natural disasters such as hurricanes, earthquakes, tornadoes and floods, as well as the effects of climate change. We believe, given current industry practice and analysis prepared by outside consultants, that our and our tenants’ insurance coverage is appropriate to cover reasonably anticipated losses that may be caused by hurricanes, earthquakes, tornadoes, floods and other severe weather conditions and natural disasters, including the effects of climate change. Nevertheless, we are always subject to the risk that such insurance will not fully cover all losses and, depending on the severity of the event and the impact on our properties, such insurance may not cover a significant portion of the losses including but not limited to the costs associated with evacuation. These losses may lead to an increase of our and our tenants’ cost of insurance, a decrease in our anticipated revenues from an affected property and a loss of all or a portion of the capital we have invested in an affected property. In addition, we or our tenants may not purchase insurance under certain circumstances if the cost of insurance exceeds, in our or our tenants’ judgment, the value of the coverage relative to the risk of loss. Also, changes in federal and state legislation and regulation relating to climate change could result in increased capital expenditures to improve the energy efficiency and resiliency of our existing properties and could also necessitate us to spend more on our new development properties without a corresponding increase in revenue.
To the extent that significant changes in the climate occur in areas where our communities are located, we may experience extreme weather and changes in precipitation and temperature, all of which may result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions. Should the impact of climate change be material in nature, including significant property damage to or destruction of our communities, or occur for lengthy periods of time, our financial condition or results of operations may be adversely affected. In addition, changes in federal, state and local legislation and regulation based on concerns about climate change could result in increased capital expenditures on our existing properties and our new development properties without a corresponding increase in revenue, resulting in adverse impacts to our net income.
We may incur costs to remediate environmental contamination at our properties, which could have an adverse effect on our or our obligors’ business or financial condition
Under various laws, owners or operators of real estate may be required to respond to the presence or release of hazardous substances on the property and may be held liable for property damage, personal injuries or penalties that result from environmental contamination or exposure to hazardous substances. These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused the release. We may become liable to reimburse the government for damages and costs it incurs in connection with the contamination. Generally, such liability attaches to a person based on the person’s relationship to the property. Our tenants or borrowers are primarily responsible for the condition of the property. Moreover, we review environmental site assessments of the properties that we own or encumber prior to taking an interest in them. Those assessments are designed to meet the “all appropriate inquiry” standard, which we believe qualifies us for the innocent purchaser defense if environmental liabilities arise. Based upon such assessments, we do not believe that any of our properties are subject to material environmental contamination. However, environmental liabilities may be present in our properties and we may incur costs to remediate contamination, which could have a material adverse effect on our business or financial condition or the business or financial condition of our obligors.
Cybersecurity incidents could disrupt our business and result in the loss of confidential information
Our business is at risk from and may be impacted by cybersecurity attacks, including attempts to gain unauthorized access to our confidential data through phishing or other malicious activity, attempts to interrupt our access to or use of IT systems through distributed denial-of-service or ransomware attacks, breaches related to our increased receipt and use of data from multiple sources, and other electronic security breaches or other cybersecurity incidents, including those resulting from human error, product defects and technology failures. Such cyber-attacks can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated security threats, and may be specifically targeted to our business or more general industry wide risks. Our information technology networks and related systems are essential to our ability to perform day-to-day operations of our business. While we employ a number of measures to prevent, detect and mitigate these threats, there is no guarantee such
efforts will be successful in preventing a cyber-attack. Even the most well-protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted cybersecurity breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, we may be unable to anticipate these techniques or to implement adequate cybersecurity barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk. In the past, we have experienced cybersecurity breaches, which to date have not had a material impact on our operations; however, there is no assurance that such impacts will not be material in the future. We must continuously monitor and develop our systems to protect our technology infrastructure and data from misappropriation or corruption. Cybersecurity incidents could disrupt our business, damage our reputation, cause us to incur significant remediation expense and have a materially adverse effect on our business, financial condition and results of operations. Cybersecurity breaches that compromise proprietary, personal identifying or confidential information of our employees, operators, tenants and partners could result in legal claims or proceedings, including under data privacy regulations.
Our success depends on key personnel whose continued service is not guaranteed
Our success depends on the continued availability and service of key personnel, including our executive officers and other highly qualified employees, and competition for their talents is intense. There is substantial competition for qualified personnel. We cannot assure you that we will retain our key personnel or that we will be able to recruit and retain other highly qualified employees in the future. Losing any key personnel could, at least temporarily, have a material adverse effect on our business, financial position and results of operations.
Risks Arising from Our Capital Structure
Our certificate of incorporation and by-laws contain anti-takeover provisions
Our certificate of incorporation and by-laws contain anti-takeover provisions (restrictions on share ownership and transfer and super majority stockholder approval requirements for business combinations) that could make it more difficult for or even prevent a third party from acquiring us without the approval of our incumbent Board of Directors. Provisions and agreements that inhibit or discourage takeover attempts could reduce the market value of our common stock.
We may become more leveraged
Permanent financing for our investments is typically provided through a combination of public offerings of debt and equity securities and the incurrence or assumption of secured debt. The incurrence or assumption of indebtedness may cause us to become more leveraged, which could (1) require us to dedicate a greater portion of our cash flow to the payment of debt service, (2) make us more vulnerable to a downturn in the economy, (3) limit our ability to obtain additional financing, (4) negatively affect our credit ratings or outlook by one or more of the rating agencies or (5) make us more vulnerable to increases in interest rates because of the variable interest rates on some of our borrowings to the extent we have not entirely hedged such variable rate debt.
Cash available for distributions to stockholders may be insufficient to make dividend contributions at expected levels and are made at the discretion of the Board of Directors
If cash available for distribution generated by our assets decreases due to dispositions or otherwise, we may be unable to make dividend distributions at expected levels. Our inability to make expected distributions would likely result in a decrease in the market price of our common stock. All distributions are made at the discretion of our Board of Directors in accordance with Delaware law and depend on our earnings, our financial condition, debt and equity capital available to us, our expectation of our future capital requirements and operating performance, restrictive covenants in our financial and other contractual arrangements, maintenance of our REIT qualification, restrictions under Delaware law and other factors as our Board of Directors may deem relevant from time to time. Additionally, our ability to make distributions will be adversely affected if any of the risks described herein, or other significant adverse events, occur.
We are subject to covenants in our debt agreements that could have a material adverse effect on our business, results of operations and financial condition
Our debt agreements contain various covenants, restrictions and events of default. Among other things, these provisions require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. Breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness, in addition to any other indebtedness cross-defaulted against such instruments. These defaults could have a material adverse effect on our business, results of operations and financial condition.
Limitations on our ability to access capital could have an adverse effect on our ability to make future investments or to meet our obligations and commitments
We cannot assure you that we will be able to raise the capital necessary to make future investments or to meet our obligations and commitments as they mature. Our access to capital depends upon a number of factors over which we have little or no control, including rising interest rates, inflation and other general market conditions; the market’s perception of our growth potential and our current and potential future earnings and cash distributions; the market price of the shares of our common stock and the credit
ratings of our debt securities; changes in the credit ratings on U.S. government debt securities; uncertainty from the expected discontinuance of LIBOR and the transition to any other interest rate benchmark; and default or delay in payment by the U.S. of its obligations. We also rely on the financial institutions that are parties to our revolving credit facilities. If these institutions become capital constrained, tighten their lending standards or become insolvent or if they experience excessive volumes of borrowing requests from other borrowers within a short period of time, they may be unable or unwilling to honor their funding commitments to us, which would adversely affect our ability to draw on our revolving credit facilities and, over time, could negatively impact our ability to consummate acquisitions, repay indebtedness as it matures, fund capital expenditures or make distributions to our stockholders. If our access to capital is limited by these factors or other factors, it could negatively impact our ability to acquire properties, repay or refinance our indebtedness, fund operations or make distributions to our stockholders.
Changes affecting the availability of the London Interbank Offered Rate (“LIBOR”) may have consequences for us that cannot yet reasonably be predicted
We have outstanding debt, hedge agreements and receivable transactions with variable interest rates based on LIBOR. The LIBOR benchmark has been subject of national, international, and other regulatory guidance and proposals for reform. In July 2017, the U.K. Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. These reforms may cause LIBOR to perform differently than in the past and LIBOR may ultimately cease to exist after 2021. While it is not currently possible to determine precisely whether, or to what extent, the withdrawal and replacement of LIBOR would affect us, the implementation of alternative benchmark rates to LIBOR may have an adverse effect on our business, results of operations or financial condition. Any new benchmark rate will likely not replicate LIBOR exactly, which could impact contracts that terminate after 2021. There is uncertainty about how applicable law, the courts or we will address the replacement of LIBOR with alternative rates on agreements that do not include alternative rate fallback provisions. In addition, any changes to benchmark rates may have an uncertain impact on our cost of funds and our access to the capital markets, which could impact our results of operations and cash flows. Uncertainty as to the nature of such potential changes may also adversely affect the trading market for our securities. Additional financing, therefore, may be unavailable, more expensive or restricted by the terms of our outstanding indebtedness.
Downgrades in our credit ratings could have a material adverse effect on our cost and availability of capital
We plan to manage the company to maintain a capital structure consistent with our current profile, but there can be no assurance that we will be able to maintain our current credit ratings. Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse effect on our cost and availability of capital, which could in turn have a material adverse effect on our results of operations, liquidity, cash flows, the trading/redemption price of our securities and our ability to satisfy our debt service obligations and to pay dividends and distributions to our equity holders.
Increases in interest rates could have a material adverse effect on our cost of capital
An increase in interest rates may increase interest cost on new and existing variable rate debt. Such increases in the cost of capital could adversely impact our ability to finance operations, acquire and develop properties, and refinance existing debt. Additionally, increased interest rates may also result in less liquid property markets, limiting our ability to sell existing assets.
Fluctuations in the value of foreign currencies could adversely affect our results of operations and financial position
Currency exchange rate fluctuations could affect our results of operations and financial position, including exchange rate fluctuations resulting from Brexit. We generate a portion of our revenue and expenses in such foreign currencies as the Canadian dollar and the British pound sterling. Although we may enter into foreign exchange agreements with financial institutions and/or obtain local currency mortgage debt in order to reduce our exposure to fluctuations in the value of foreign currencies, we cannot assure you that foreign currency fluctuations will not have a material adverse effect on us.
Our entry into hedge agreements may not effectively reduce our exposure to changes in interest rates or foreign currency exchange rates
We enter into hedge agreements from time to time to manage some of our exposure to interest rate and foreign currency exchange rate volatility. These agreements involve risks, such as the risk that counterparties may fail to honor their obligations under these arrangements, that the amount of income we earn from hedging transactions may be limited by federal tax provisions governing REITs, and that these arrangements may cause us to pay higher interest rates on our debt obligations than otherwise would be the case. In addition, these arrangements may not be effective in reducing our exposure to changes in interest rates or foreign currency exchange rates. When we use forward-starting interest rate swaps, there is a risk that we will not complete the long-term borrowing against which the swap is intended to hedge. If such events occur, our results of operations may be adversely affected.
Risks Arising from Our Status as a REIT
We might fail to qualify or remain qualified as a REIT
We intend to operate as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), and believe we have operated and will continue to operate in such a manner. If we lose our status as a REIT, we will face serious income tax consequences that will substantially reduce the funds available for satisfying our obligations and for distribution to our stockholders because:
•
we would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates;
•
we would be subject to increased state and local taxes; and
•
unless we are entitled to relief under statutory provisions, we could not elect to be subject to tax as a REIT for four taxable years following the year during which we were disqualified.
Since REIT qualification requires us to meet a number of complex requirements, it is possible that we may fail to fulfill them, and if we do, our earnings will be reduced by the amount of U.S. federal and other income taxes owed. A reduction in our earnings would affect the amount we could distribute to our stockholders. If we do not qualify as a REIT, we will not be required to make distributions to stockholders, since a non-REIT is not required to pay dividends to stockholders in order to maintain REIT status or avoid an excise tax. In addition, if we fail to qualify as a REIT, all distributions to stockholders will continue to be treated as dividends to the extent of our current and accumulated earnings and profits, although corporate stockholders may be eligible for the dividends received deduction, and individual stockholders may be eligible for taxation at the rates generally applicable to long-term capital gains with respect to distributions.
As a result of all these factors, our failure to qualify as a REIT also could impair our ability to implement our business strategy and would adversely affect the value of our common stock. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to remain qualified as a REIT. Although we believe that we qualify as a REIT, we cannot assure you that we will remain qualified as a REIT for U.S. federal income tax purposes.
Certain subsidiaries might fail to qualify or remain qualified as a REIT
We own interests in a number of entities which have elected to be taxed as REITs for U.S. federal income tax purposes, some of which we consolidate for financial reporting purposes but each of which is treated as a separate REIT for federal income tax purposes (each a “Subsidiary REIT”). To qualify as a REIT, each Subsidiary REIT must independently satisfy all of the REIT qualification requirements under the Code, together with all other rules applicable to REITs. Provided that each Subsidiary REIT qualifies as a REIT, our interests in the Subsidiary REITs will be treated as qualifying real estate assets for purposes of the REIT asset tests. If a Subsidiary REIT fails to qualify as a REIT in any taxable year, such Subsidiary REIT will be subject to federal and state income taxes and may not be able to qualify as a REIT for the four subsequent taxable years. Any such failure could have an adverse effect on our ability to comply with the REIT income and asset tests, and thus our ability to qualify as a REIT, unless we are able to avail ourselves of certain relief provisions.
The 90% annual distribution requirement will decrease our liquidity and may limit our ability to engage in otherwise beneficial transactions
To comply with the 90% distribution requirement applicable to REITs and to avoid the nondeductible excise tax, we must make distributions to our stockholders. Although we anticipate that we generally will have sufficient cash or liquid assets to enable us to satisfy the REIT distribution requirement, it is possible that, from time to time, we may not have sufficient cash or other liquid assets to meet the 90% distribution requirement. This may be due to timing differences between the actual receipt of income and actual payment of deductible expenses, on the one hand, and the inclusion of that income and deduction of those expenses in arriving at our taxable income, on the other hand. In addition, non-deductible expenses such as principal amortization or repayments or capital expenditures in excess of non-cash deductions may cause us to fail to have sufficient cash or liquid assets to enable us to satisfy the 90% distribution requirement. In the event that timing differences occur, or we deem it appropriate to retain cash, we may borrow funds, even if the then-prevailing market conditions are not favorable for these borrowings, issue additional equity securities (although we cannot assure you that we will be able to do so), pay taxable stock dividends, if possible, distribute other property or securities or engage in other transactions intended to enable us to meet the REIT distribution requirements. This may require us to raise additional capital to meet our obligations.
Our use of TRSs is limited under the Code
Under the Code, no more than 20% of the value of the gross assets of a REIT may be represented by securities of one or more TRSs. This limitation may affect our ability to increase the size of our TRSs’ operations and assets, and there can be no assurance that we will be able to comply with the applicable limitation, or that such compliance will not adversely affect our business. Also, our TRSs may not, among other things, operate or manage certain health care facilities, which may cause us to forgo investments
we might otherwise make. Finally, we may be subject to a 100% excise tax on the income derived from certain transactions with our TRSs that are not on an arm's-length basis. We believe our arrangements with our TRSs are on arm's-length terms and intend to continue to operate in a manner that allows us to avoid incurring the 100% excise tax described above, but there can be no assurance that we will be able to avoid application of that tax.
The lease of qualified health care properties to a taxable REIT subsidiary is subject to special requirements
We lease certain qualified health care properties to taxable REIT subsidiaries (or limited liability companies of which the taxable REIT subsidiaries are members), which lessees contract with managers (or related parties) to manage the health care operations at these properties. The rents from this taxable REIT subsidiary lessee structure are treated as qualifying rents from real property if (1) they are paid pursuant to an arm's-length lease of a qualified health care property with a taxable REIT subsidiary and (2) the manager qualifies as an eligible independent contractor (as defined in the Code). If any of these conditions are not satisfied, then the rents will not be qualifying rents.
If certain sale-leaseback transactions are not characterized by the Internal Revenue Service (“IRS”) as “true leases,” we may be subject to adverse tax consequences
We have purchased certain properties and leased them back to the sellers of such properties, and we may enter into similar transactions in the future. We intend for any such sale-leaseback transaction to be structured in such a manner that the lease will be characterized as a “true lease,” thereby allowing us to be treated as the owner of the property for U.S. federal income tax purposes. However, depending on the terms of any specific transaction, the IRS might take the position that the transaction is not a “true lease” but is more properly treated in some other manner. In the event any sale-leaseback transaction is challenged and successfully re-characterized by the IRS, we would not be entitled to claim the deductions for depreciation and cost recovery generally available to an owner of property. Furthermore, if a sale-leaseback transaction were so re-characterized, we might fail to satisfy the REIT asset tests or income tests and, consequently, could lose our REIT status effective with the year of re-characterization. Alternatively, the amount of our REIT taxable income could be recalculated, which may cause us to fail to meet the REIT annual distribution requirements for a taxable year.
We could be subject to changes in our tax rates, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities
We are subject to taxes in the U.S. and foreign jurisdictions. Our effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates or changes in tax laws or their interpretation. We are also subject to the examination of our tax returns and other tax matters by the IRS and other tax authorities and governmental bodies. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes. There can be no assurance as to the outcome of these examinations. If we were subject to review or examination by the IRS or applicable foreign jurisdiction as the result of any new tax law changes, the ultimate determination of which may change our taxes owed for an amount in excess of amounts previously accrued or recorded, our financial condition, operating results, and cash flows could be adversely affected.
The present federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time, which could affect the federal income tax treatment of an investment in us. The federal income tax rules dealing with U.S. federal income taxation and REITs are constantly under review by persons involved in the legislative process, the IRS and the U.S. Treasury Department, which results in statutory changes as well as frequent revisions to regulations and interpretations. We cannot predict how changes in the tax laws might affect our investors or us. Revisions in federal tax laws and interpretations thereof could significantly and negatively affect our ability to qualify as a REIT, as well as the tax considerations relevant to an investment in us, or could cause us to change our investments and commitments.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
We lease our corporate headquarters located at 4500 Dorr Street, Toledo, Ohio 43615. We also lease corporate offices throughout the U.S., Canada, the United Kingdom and Luxembourg and have ground leases relating to certain of our properties. The following table sets forth certain information regarding the properties that comprise our consolidated real property and real estate loan investments as of December 31, 2019 (dollars in thousands):
Seniors Housing Operating
Triple-net
Outpatient Medical
Property Location
Number of Properties
Total Investment
Annualized Revenues(1)
Number of Properties
Total Investment
Annualized Revenues(1)
Number of Properties
Total Investment
Annualized Revenues(1)
Alaska
-
$
-
$
-
-
$
-
$
-
$
29,810
$
(2,240
)
Alabama
15,133
6,083
19,705
2,569
94,244
10,565
Arkansas
-
-
-
-
-
-
42,529
3,529
Arizona
86,883
32,517
-
-
-
87,655
11,077
California
3,052,393
688,631
456,935
64,633
1,092,865
105,239
Colorado
427,566
87,463
302,374
32,854
33,628
5,074
Connecticut
66,838
17,820
117,918
15,211
41,421
5,499
District Of Columbia
78,356
14,540
-
-
-
-
-
-
Delaware
69,290
25,484
114,126
9,544
-
46,998
1,402
Florida
898,178
144,974
583,500
56,682
529,060
74,346
Georgia
127,018
38,612
40,852
3,570
236,915
32,572
Iowa
75,655
28,926
57,537
5,884
7,734
1,648
Idaho
22,405
5,433
-
-
55,317
1,399
Illinois
454,088
119,759
356,243
31,919
108,941
14,426
Indiana
-
-
-
358,904
45,696
164,034
22,324
Kansas
67,263
15,133
242,844
27,460
62,249
8,665
Kentucky
37,074
14,461
50,485
4,187
6,792
Louisiana
50,062
15,957
8,076
-
-
-
Massachusetts
565,730
113,921
110,005
16,484
110,662
4,556
Maryland
393,479
90,687
298,974
18,155
283,567
28,576
Maine
25,151
11,995
-
-
-
18,601
2,693
Michigan
165,217
32,231
207,961
20,225
70,250
7,706
Minnesota
83,838
15,771
233,938
21,552
182,594
30,679
Missouri
153,312
25,085
12,089
201,245
23,578
Mississippi
14,870
8,354
10,820
-
37,866
1,020
Montana
5,635
4,484
6,131
-
-
-
North Carolina
113,352
19,680
372,570
54,641
479,061
39,975
Nebraska
-
-
-
29,852
4,418
32,943
4,885
New Hampshire
-
-
-
47,720
7,341
12,038
1,721
New Jersey
688,084
210,140
771,913
84,672
407,653
51,813
New Mexico
17,505
1,548
-
-
-
29,424
3,594
Nevada
47,210
23,816
18,780
3,767
100,851
10,794
New York
596,987
141,993
41,850
7,271
434,793
17,454
Ohio
422,614
66,041
288,499
35,030
125,346
13,712
Oklahoma
37,620
3,650
219,772
25,505
22,736
4,361
Oregon
10,339
2,678
2,793
55,131
4,059
Pennsylvania
222,217
67,864
837,818
116,500
34,315
2,312
South Carolina
4,086
7,121
37,460
3,069
33,762
3,684
Tennessee
48,041
16,259
37,879
4,791
177,859
18,778
Texas
1,088,682
234,874
393,201
53,592
1,386,701
135,489
Utah
20,355
7,875
23,614
2,103
-
-
-
Virginia
282,587
77,302
281,446
29,811
119,944
14,492
Washington
625,662
137,873
93,483
10,254
218,008
26,987
Wisconsin
19,850
8,493
67,702
8,640
94,723
6,123
West Virginia
-
-
-
45,336
5,107
-
-
-
Total domestic
11,180,625
2,585,528
7,201,172
836,416
7,310,265
755,328
Canada
2,150,044
452,734
146,737
10,341
-
-
-
United Kingdom
1,634,009
352,658
1,228,409
106,336
268,010
25,587
Total international
3,784,053
805,392
1,375,146
116,677
268,010
25,587
Grand total
$
14,964,678
$
3,390,920
$
8,576,318
$
953,093
$
7,578,275
$
780,915
(1) Represents revenue for the month ended December 31, 2019 annualized.
The following table sets forth occupancy and average annualized revenues for certain property types (excluding investments in unconsolidated entities):
Occupancy(1)
Average Annualized Revenues(2)
Seniors Housing Operating(3)
86.9%
87.5%
$
56,329
$
60,635
per unit
Triple-net(4)
84.3%
84.9%
14,578
12,831
per bed/unit
Outpatient Medical(5)
94.1%
93.1%
per sq. ft.
(1) We use unaudited, periodic financial information provided solely by tenants/borrowers to calculate occupancy for properties other than Outpatient Medical buildings and have not independently verified the information.
(2) Represents December annualized revenues divided by total beds, units or square feet as presented in the tables above.
(3) Occupancy represents average occupancy for the three months ended December 31.
(4) Occupancy represents average quarterly operating occupancy based on the quarters ended September 30 and excludes properties that are unstabilized, closed or for which data is not available or meaningful.
(5) Occupancy represents the percentage of total rentable square feet leased and occupied (including month-to-month and holdover leases and excluding terminations) as of December 31.
The following table sets forth information regarding lease expirations for certain portions of our portfolio as of December 31, 2019 (dollars in thousands):
Expiration Year(1)
Thereafter
Triple-net:
Properties
Base rent(2)
$
3,782
$
12,292
$
8,889
$
$
11,262
$
53,216
$
103,179
$
35,381
$
22,036
$
33,619
$
492,113
% of base rent
0.5
%
1.6
%
1.1
%
0.1
%
1.5
%
6.9
%
13.3
%
4.6
%
2.8
%
4.3
%
63.3
%
Units
1,101
1,394
1,264
3,033
6,085
2,350
1,633
1,429
44,811
% of units
1.7
%
2.2
%
2.0
%
0.1
%
1.1
%
4.7
%
9.5
%
3.7
%
2.6
%
2.2
%
70.2
%
Outpatient Medical:
Square feet
1,748,858
2,053,686
2,165,074
2,158,927
2,230,230
1,305,946
1,670,290
1,025,948
1,052,671
1,148,176
6,183,564
Base rent(2)
$
48,233
$
57,464
$
58,846
$
58,295
$
65,687
$
34,681
$
42,112
$
25,805
$
27,501
$
29,829
$
139,889
% of base rent
8.2
%
9.8
%
10.0
%
9.9
%
11.2
%
5.9
%
7.2
%
4.4
%
4.7
%
5.1
%
23.6
%
Leases
% of leases
14.9
%
13.3
%
13.7
%
14.0
%
11.2
%
6.7
%
6.6
%
4.3
%
3.7
%
4.8
%
6.8
%
(1) Excludes investments in unconsolidated entities, developments, land parcels, loans receivable and sub-leases. Investments classified as held for sale are included in 2020.
(2) The most recent monthly cash base rent annualized. Base rent does not include tenant recoveries or amortization of above and below market lease intangibles or other non cash income.
Item 3. Legal Proceedings
From time to time, there are various legal proceedings pending against us that arise in the ordinary course of our business. Management does not believe that the resolution of any of these legal proceedings either individually or in the aggregate will have a material adverse effect on our business, results of operations or financial condition. Further, from time to time, we are party to certain legal proceedings for which third parties, such as tenants, operators and/or managers are contractually obligated to indemnify, defend and hold us harmless. In some of these matters, the indemnitors have insurance for the potential damages. In other matters, we are being defended by tenants and other obligated third parties and these indemnitors may not have sufficient insurance, assets, income or resources to satisfy their defense and indemnification obligations to us. The unfavorable resolution of such legal proceedings could, individually or in the aggregate, materially adversely affect the indemnitors’ ability to satisfy their respective obligations to us, which, in turn, could have a material adverse effect on our business, results of operations or financial condition. It is management’s opinion that there are currently no such legal proceedings pending that will, individually or in the aggregate, have such a material adverse effect. Despite management’s view of the ultimate resolution of these legal proceedings, we may have significant legal expenses and costs associated with the defense of such matters. Further, management cannot predict the outcome of these legal proceedings and if management’s expectation regarding such matters is not correct, such proceedings could have a material adverse effect on our business, results of operations or financial condition.
Item 4. Mine Safety Disclosures
None.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock trades on the New York Stock Exchange (NYSE:WELL). There were 3,564 stockholders of record as of January 31, 2020.
Stockholder Return Performance Presentation
Set forth below is a line graph comparing the yearly percentage change and the cumulative total stockholder return on our shares of common stock against the cumulative total return of the S & P Composite-500 Stock Index and the FTSE NAREIT Equity Index. As of December 31, 2019, 155 companies comprised the FTSE NAREIT Equity Index, which consists of REITs identified by NAREIT as equity (those REITs which have at least 75% of their investments in real property). The data are based on the closing prices as of December 31 for each of the five years. 2014 equals $100 and dividends are assumed to be reinvested.
12/31/2014
12/31/2015
12/31/2016
12/31/2017
12/31/2018
12/31/2019
S & P 500
$
100.00
$
101.38
$
113.51
$
138.29
$
132.23
$
173.86
Welltower Inc.
100.00
94.28
97.45
97.65
112.59
138.52
FTSE NAREIT Equity
100.00
103.20
111.99
117.84
112.39
141.61
Except to the extent that we specifically incorporate this information by reference, the foregoing Stockholder Return Performance Presentation shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended. This information shall not otherwise be deemed filed under such Acts.
Issuer Purchases of Equity Securities
Period
Total Number of Shares Purchased(1)
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1, 2019 through October 31, 2019
4,546
$
91.04
November 1, 2019 through November 30, 2019
86.12
December 1, 2019 through December 31, 2019
78.67
Totals
6,165
$
89.43
(1) During the three months ended December 31, 2019, the company acquired shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations.
(2) No shares were purchased as part of publicly announced plans or programs.
Item 6. Selected Financial Data
The following selected financial data for the five years ended December 31, 2019 are derived from our audited consolidated financial statements (in thousands, except per share data):
Year Ended December 31,
Operating Data
Total revenues
$
3,859,826
$
4,281,160
$
4,316,641
$
4,700,499
$
5,121,306
Total expenses
3,223,709
3,571,907
4,017,025
4,277,009
4,578,414
Income from continuing operations before income taxes and other items
636,117
709,253
299,616
423,490
542,892
Income tax (expense) benefit
(6,451
)
19,128
(20,128
)
(8,674
)
(2,957
)
Income (loss) from unconsolidated entities
(21,504
)
(10,357
)
(83,125
)
(641
)
42,434
Gain (loss) on real estate dispositions, net
280,387
364,046
344,250
415,575
748,041
Income from continuing operations
888,549
1,082,070
540,613
829,750
1,330,410
Net income
888,549
1,082,070
540,613
829,750
1,330,410
Preferred stock dividends
65,406
65,406
49,410
46,704
-
Preferred stock redemption charge
-
-
9,769
-
-
Net income (loss) attributable to noncontrolling interests
4,799
4,267
17,839
24,796
97,978
Net income attributable to common stockholders
$
818,344
$
1,012,397
$
463,595
$
758,250
$
1,232,432
Other Data
Average number of common shares outstanding:
Basic
348,240
358,275
367,237
373,620
401,845
Diluted
349,424
360,227
369,001
375,250
403,808
Per Share Data
Basic:
Income from continuing operations
$
2.55
$
3.02
$
1.47
$
2.22
$
3.31
Net income attributable to common stockholders
$
2.35
$
2.83
$
1.26
$
2.03
$
3.07
Diluted:
Income from continuing operations
$
2.54
$
3.00
$
1.47
$
2.21
$
3.29
Net income attributable to common stockholders
$
2.34
$
2.81
$
1.26
$
2.02
$
3.05
Cash distributions per common share
$
3.30
$
3.44
$
3.48
$
3.48
$
3.48
December 31,
Balance Sheet Data
Net real estate investments(1)
$
26,888,685
$
26,563,629
$
26,171,077
$
28,420,769
$
31,119,271
Total assets
29,023,845
28,865,184
27,944,445
30,342,072
33,380,751
Total debt and lease obligations(1)
12,967,686
12,358,245
11,731,936
13,297,144
15,388,765
Total liabilities
13,664,877
13,185,279
12,643,799
14,331,427
16,398,247
Total preferred stock
1,006,250
1,006,250
718,503
718,498
-
Total equity
15,175,885
15,281,472
14,925,452
15,586,599
16,506,627
(1) Effective January 1, 2019, we adopted new guidance on leases using the prospective method. See Note 2 to the consolidated financial statements for further details.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
EXECUTIVE SUMMARY
Company Overview
Business Strategy
Key Transactions
Key Performance Indicators, Trends and Uncertainties
Corporate Governance
LIQUIDITY AND CAPITAL RESOURCES
Sources and Uses of Cash
Off-Balance Sheet Arrangements
Contractual Obligations
Capital Structure
RESULTS OF OPERATIONS
Summary
Seniors Housing Operating
Triple-net
Outpatient Medical
Non-Segment/Corporate
OTHER
Non-GAAP Financial Measures
Critical Accounting Policies
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is based primarily on the consolidated financial statements of Welltower Inc. presented in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for the periods presented and should be read together with the notes thereto contained in this Annual Report on Form 10-K. Other important factors are identified in “Item 1 - Business” and “Item 1A - Risk Factors” above.
Executive Summary
Company Overview
Welltower Inc. (NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. Welltower™, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing and post-acute communities and outpatient medical properties. Our capital programs, when combined with comprehensive planning, development and property management services, make us a single-source solution for acquiring, planning, developing, managing, repositioning and monetizing real estate assets.
The following table summarizes our consolidated portfolio for the year ended December 31, 2019 (dollars in thousands):
Percentage of
Number of
Type of Property
NOI(1)
NOI
Properties
Seniors Housing Operating
$
1,039,520
42.8
%
Triple-net
918,743
37.9
%
Outpatient Medical
469,035
19.3
%
Totals
$
2,427,298
100.0
%
1,578
(1) Represents consolidated net operating income ("NOI") and excludes our share of investments in unconsolidated entities. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount. See Non-GAAP Financial Measures for additional information and reconciliation.
Business Strategy
Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders as a result of annual increases in net operating income and portfolio growth. To meet these objectives, we invest across the full spectrum of seniors housing and health care real estate and diversify our investment portfolio by property type, relationship and geographic location.
Substantially all of our revenues are derived from operating lease rentals, resident fees/services and interest earned on outstanding loans receivable. These items represent our primary sources of liquidity to fund distributions and depend upon the continued ability of our obligors to make contractual rent and interest payments to us and the profitability of our operating properties. To the extent that our obligors/partners experience operating difficulties and become unable to generate sufficient cash to make payments or operating distributions to us, there could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. To mitigate this risk, we monitor our investments through a variety of methods determined by the type of property. Our asset management process for seniors housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral. Our internal property management division manages and monitors the outpatient medical portfolio with a comprehensive process including review of tenant relations, lease expirations, the mix of health service providers, hospital/health system relationships, property performance, capital improvement needs and market conditions among other things. We evaluate the operating environment in each property’s market to determine the likely trend in operating performance of the facility. When we identify unacceptable trends, we seek to mitigate, eliminate or transfer the risk. Through these efforts, we generally aim to intervene at an early stage to address any negative trends, and in so doing, support both the collectability of revenue and the value of our investment.
In addition to our asset management and research efforts, we also aim to structure our relevant investments to mitigate payment risk. Operating leases and loans are normally credit enhanced by guarantees and/or letters of credit. In addition, operating leases are typically structured as master leases and loans are generally cross-defaulted and cross-collateralized with other real estate loans, operating leases or agreements between us and the obligor and its affiliates.
For the year ended December 31, 2019, resident fees/services and rental income represented 67% and 31%, respectively, of total revenues. Substantially all of our operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. Our yield on loans receivable depends upon a number of factors, including the stated interest rate, the average principal amount outstanding during the term of the loan and any interest rate adjustments.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our primary sources of cash include resident fees and services, rent and interest receipts, borrowings under our unsecured revolving credit facility and commercial paper program, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses and general and administrative expenses. Depending upon the availability and cost of external capital, we believe our liquidity is sufficient to fund these uses of cash.
We also continuously evaluate opportunities to finance future investments. New investments are generally funded from temporary borrowings under our unsecured revolving credit facility and commercial paper program, internally generated cash and the proceeds from investment dispositions. Our investments generate cash from NOI and principal payments on loans receivable. Permanent financing for future investments, which replaces funds drawn under our unsecured revolving credit facility and commercial paper program, has historically been provided through a combination of the issuance of public debt and equity securities and the incurrence or assumption of secured debt.
Depending upon market conditions, we believe that new investments will be available in the future with spreads over our cost of capital that will generate appropriate returns to our stockholders. It is also likely that investment dispositions may occur in the future. To the extent that investment dispositions exceed new investments, our revenues and cash flows from operations could be adversely affected. We expect to reinvest the proceeds from any investment dispositions in new investments. To the extent that new investment requirements exceed our available cash on-hand, we expect to borrow under our unsecured revolving credit facility and commercial paper program. At December 31, 2019, we had $284,917,000 of cash and cash equivalents, $100,849,000 of restricted cash and $1,411,400,000 of available borrowing capacity under our unsecured revolving credit facility.
Key Transactions
Capital The following summarizes key capital transactions that occurred and supported new investments made during the year ended December 31, 2019:
•
In January 2019, we established an unsecured commercial paper program. Under the terms of the program, we may issue, from time to time, unsecured commercial paper with maturities that vary, but do not exceed 397 days from the date of issue, up to a maximum aggregate principal amount outstanding at any time of $1,000,000,000.
•
In February 2019, we elected to effect the mandatory conversion of all of the outstanding 6.50% Series I Cumulative Convertible Preferred Stock. Each share of convertible stock was converted into 0.8857 shares of common stock.
•
In February 2019, we entered into an amended and restated Equity Shelf Program (as defined below) pursuant to which we may offer and sell up to $1,500,000,000 of common stock from time to time. We sold 18,591,000 shares of common stock under our current and previous Equity Shelf Programs and DRIP (as defined below), via both cash settle and forward sale agreements, generating expected gross proceeds of approximately $1,498,731,000.
•
In February 2019, we completed the issuance of $500,000,000 of 3.625% senior unsecured notes due 2024 and $550,000,000 of 4.125% senior unsecured notes due 2029 for net proceeds of approximately $1,036,964,000.
•
In March 2019 we repaid our $600,000,000 of 4.125% senior unsecured notes due 2019 and $450,000,000 of 6.125% senior unsecured notes due 2020.
•
In August 2019, we completed the issuance of $750,000,000 of 3.10% senior unsecured notes due 2030 and a follow-on issuance of $450,000,000 of 3.625% senior unsecured notes due 2024 priced to yield 2.494%, for net proceeds of approximately $1,209,328,000.
•
In September 2019, we repaid our $450,000,000 of 4.95% senior unsecured notes due 2021 and $600,000,000 of 5.25% senior unsecured notes due 2022.
•
In December 2019, we completed the issuance of $500,000,000 of 2.70% senior unsecured notes due 2027. The net proceeds of approximately $495,066,000 will be used to fund renewable energy, water conservation, energy efficiency and green building projects. Additionally, we completed the issuance of $300,000,000 of 2.95% Canadian-denominated senior unsecured notes due 2027 generating net proceeds of approximately CAD $297,668,000.
•
In December 2019, we redeemed all of the outstanding $300,000,000 Canadian-denominated 3.35% senior unsecured notes due 2020.
•
We extinguished $230,108,000 of secured debt at a blended average interest rate of 4.35% throughout 2019.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Investments The following summarizes property acquisitions and joint venture investments made during the year ended December 31, 2019 (dollars in thousands):
Properties
Investment Amount(1)
Capitalization Rates(2)
Book Amount(3)
Seniors Housing Operating
$
1,459,254
5.1%
$
1,802,836
Triple-net
217,658
6.5%
227,379
Outpatient Medical
2,396,642
5.6%
2,491,159
Totals
$
4,073,554
5.4%
$
4,521,374
(1) Represents stated pro rata purchase price including cash and any assumed debt but excludes fair value adjustments pursuant to U.S. GAAP.
(2) Represents annualized contractual or projected NOI to be received in cash divided by investment amounts.
(3) Represents amounts recorded in real property including fair value adjustments pursuant to U.S. GAAP. See Note 3 to our consolidated financial statements for additional information.
Dispositions The following summarizes property dispositions made during the year ended December 31, 2019 (dollars in thousands):
Properties
Proceeds(1)
Capitalization Rates(2)
Book Amount(3)
Seniors Housing Operating(4)
$
1,803,413
5.4%
$
1,232,816
Triple-net
902,731
7.9%
667,632
Outpatient Medical(5)
8,500
10.5%
Totals
$
2,714,644
6.3%
$
1,900,930
(1) Represents pro rata proceeds received upon disposition.
(2) Represents annualized contractual net operating income that was being received in cash at date of disposition divided by disposition proceeds.
(3) Represents carrying value of assets at time of disposition. See Note 5 to our consolidated financial statements for additional information.
(4) Includes the disposition of an unconsolidated real estate investment.
(5) Reflects the disposition of an excess land parcel.
Dividends Our Board of Directors announced the 2020 annual cash dividend of $3.48 per common share ($0.87 per share quarterly), consistent with 2019, beginning in February 2020. The dividend declared for the quarter ended December 31, 2019 represents the 195th consecutive quarterly dividend payment.
Key Performance Indicators, Trends and Uncertainties
We utilize several key performance indicators to evaluate the various aspects of our business. These indicators are discussed below and relate to operating performance, credit strength and concentration risk. Management uses these key performance indicators to facilitate internal and external comparisons to our historical operating results, in making operating decisions, and for budget planning purposes.
Operating Performance We believe that net income and net income attributable to common stockholders (“NICS”) per the Statement of Comprehensive Income are the most appropriate earnings measures. Other useful supplemental measures of our operating performance include funds from operations attributable to common stockholders (“FFO”) and consolidated net operating income (“NOI”); however, these supplemental measures are not defined by U.S. GAAP. Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliations. These earnings measures are widely used by investors and analysts in the valuation, comparison and investment recommendations of companies. The following table reflects the recent historical trends of our operating performance measures for the periods presented (in thousands):
Year Ended December 31,
Net income
$
1,330,410
$
829,750
$
540,613
Net income attributable to common stockholders
1,232,432
758,250
463,595
Funds from operations attributable to common stockholders
1,577,080
1,392,183
1,165,576
Consolidated net operating income
2,431,264
2,267,482
2,232,716
Credit Strength We measure our credit strength both in terms of leverage ratios and coverage ratios. The leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and Internal Revenue Code (“IRC”) section 1031 deposits. The coverage ratios indicate our ability to service interest and fixed charges (interest, secured debt principal amortization and preferred dividends). We expect to maintain capitalization ratios and coverage ratios sufficient to maintain a capital structure consistent with our current profile. The coverage ratios are based on adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliation of these measures. Leverage ratios and coverage ratios are widely used by investors, analysts and rating agencies in the valuation, comparison, investment recommendations and rating of companies. The following table reflects the recent historical trends for our credit strength measures for the periods presented:
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Year Ended December 31,
Net debt to book capitalization ratio
46.5%
45.0%
42.9%
Net debt to undepreciated book capitalization ratio
39.4%
37.8%
36.3%
Net debt to market capitalization ratio
29.6%
31.3%
31.2%
Adjusted interest coverage ratio
4.14x
4.11x
4.36x
Adjusted fixed charge coverage ratio
3.78x
3.44x
3.54x
Concentration Risk We evaluate our concentration risk in terms of NOI by property mix, relationship mix and geographic mix. Concentration risk is a valuable measure in understanding what portion of our NOI could be at risk if certain sectors were to experience downturns. Property mix measures the portion of our NOI that relates to our various property types. Relationship mix measures the portion of our NOI that relates to our current top five relationships. Geographic mix measures the portion of our NOI that relates to our current top five states (or international equivalents). The following table reflects our recent historical trends of concentration risk by NOI for the years indicated below:
December 31,(1)
Property mix:
Seniors Housing Operating
43%
43%
40%
Triple-net
38%
40%
43%
Outpatient Medical
19%
17%
17%
Relationship mix:
Sunrise Senior Living(2)
14%
15%
14%
ProMedica
9%
4%
-%
Revera(2)
6%
7%
7%
Genesis HealthCare
5%
6%
9%
Belmont Village
3%
3%
3%
Remaining
63%
65%
67%
Geographic mix:
California
13%
14%
13%
United Kingdom
8%
9%
9%
Texas
8%
8%
7%
New Jersey
7%
8%
8%
Canada
7%
7%
8%
Remaining
57%
54%
55%
(1) Excludes our share of investments in unconsolidated entities and non-segment/corporate NOI. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount.
(2) Revera owns a controlling interest in Sunrise Senior Living.
We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results. Our expected results may not be achieved and actual results may differ materially from our expectations. Factors that may cause actual results to differ from expected results are described in more detail in “Item 1 - Business - Cautionary Statement Regarding Forward-Looking Statements” and “Item 1A - Risk Factors” and other sections of this Annual Report on Form 10-K. Management regularly monitors economic and other factors to develop strategic and tactical plans designed to improve performance and maximize our competitive position. Our ability to achieve our financial objectives is dependent upon our ability to effectively execute these plans and to appropriately respond to emerging economic and company-specific trends. Please refer to “Item 1 - Business,” “Item 1A - Risk Factors” in this Annual Report on Form 10-K for further discussion of these risk factors.
Corporate Governance
Maintaining investor confidence and trust is important in today’s business environment. Our Board of Directors and management are strongly committed to policies and procedures that reflect the highest level of ethical business practices. Our corporate governance guidelines provide the framework for our business operations and emphasize our commitment to increase stockholder value while meeting all applicable legal requirements. These guidelines meet the listing standards adopted by the New York Stock Exchange and are available on the Internet at www.welltower.com/investors/governance. The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive textual reference only.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Liquidity and Capital Resources
Sources and Uses of Cash
Our primary sources of cash include resident fees and services, rent and interest receipts, borrowings under our unsecured revolving credit facility and commercial paper program, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses and general and administrative expenses. These sources and uses of cash are reflected in our Consolidated Statements of Cash Flows and are discussed in further detail below. The following is a summary of our sources and uses of cash flows for the periods presented (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
Cash, cash equivalents and restricted cash at beginning of period
$
316,129
$
309,303
$
6,826
%
$
607,220
$
(297,917
)
%
$
(291,091
)
%
Net cash provided from (used in):
n/a
Operating activities
1,535,968
1,583,944
(47,976
)
%
1,434,177
149,767
%
101,791
%
Investing activities
(2,048,791
)
(2,386,471
)
337,680
%
154,581
(2,541,052
)
n/a
(2,203,372
)
n/a
Financing activities
577,150
818,368
(241,218
)
%
(1,913,527
)
2,731,895
n/a
2,490,677
n/a
Effect of foreign currency translation
5,310
(9,015
)
14,325
n/a
26,852
(35,867
)
n/a
(21,542
)
%
Cash, cash equivalents and restricted cash at end of period
$
385,766
$
316,129
$
69,637
%
$
309,303
$
6,826
%
$
76,463
%
Operating Activities The change in net cash provided from operating activities is attributable to changes in NOI, which is primarily due to acquisitions and annual rent increasers, partially offset by dispositions. Please see “Results of Operations” below for further discussion. For the years ended December 31, 2019, 2018 and 2017, cash flows from operations exceeded cash distributions to stockholders.
Investing Activities The changes in net cash used in investing activities are primarily attributable to net changes in real property investments, loans receivable and investments in unconsolidated entities which are summarized above in “Key Transactions.” Please refer to Notes 3, 7, and 8 of our consolidated financial statements for additional information. The following is a summary of cash used in non-acquisition capital improvement activities for the periods presented (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
New development
$
323,488
$
160,706
$
162,782
%
$
232,715
$
(72,009
)
%
$
90,773
%
Recurring capital expenditures, tenant improvements and lease commissions
136,535
90,190
46,345
%
67,797
22,393
%
68,738
%
Renovations, redevelopments and other capital improvements
192,289
175,993
16,296
%
182,479
(6,486
)
%
9,810
%
Total
$
652,312
$
426,889
$
225,423
%
$
482,991
$
(56,102
)
%
$
169,321
%
The change in new development is primarily due to the number and size of construction projects on-going during the relevant periods. Renovations, redevelopments and other capital improvements include expenditures to maximize property value, increase net operating income, maintain a market-competitive position and/or achieve property stabilization.
Financing Activities The changes in net cash provided from financing activities are primarily attributable to changes related to our long-term debt arrangements, the issuance/redemptions of common and preferred stock and dividend payments which are summarized above in “Key Transactions.” Please refer to Notes 10, 11 and 14 of our consolidated financial statements for additional information.
Off-Balance Sheet Arrangements
At December 31, 2019, we had investments in unconsolidated entities with our ownership generally ranging from 10% to 50%. We use financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure. At December 31, 2019, we had thirteen outstanding letter of credit obligations. Please see Notes 8, 12 and 13 to our consolidated financial statements for additional information.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Contractual Obligations
The following table summarizes our payment requirements under contractual obligations as of December 31, 2019 (in thousands):
Payments Due by Period
Contractual Obligations
Total
2021-2022
2023-2024
Thereafter
Unsecured revolving credit facility and commercial paper(1,2)
$
1,588,600
$
643,600
$
-
$
945,000
$
-
Senior unsecured notes and term credit facilities:(2)
U.S. Dollar senior unsecured notes
8,100,000
-
-
2,450,000
5,650,000
Canadian Dollar senior unsecured notes(3)
231,446
-
-
-
231,446
Pounds Sterling senior unsecured notes(3)
1,393,245
-
-
-
1,393,245
U.S. Dollar term credit facility
510,000
-
10,000
500,000
-
Canadian Dollar term credit facility(3)
192,871
-
-
192,871
-
Secured debt:(2,3)
Consolidated
2,993,342
354,329
861,052
771,911
1,006,050
Unconsolidated
826,396
57,728
52,172
95,783
620,713
Contractual interest obligations:(4)
Unsecured revolving credit facility and commercial paper
86,065
25,302
48,610
12,153
-
Senior unsecured notes and term loans(3)
4,144,774
410,322
838,436
735,197
2,160,819
Consolidated secured debt(3)
510,973
101,577
163,885
100,441
145,070
Unconsolidated secured debt(3)
179,382
28,056
52,130
39,623
59,573
Financing lease liabilities(5)
186,335
9,121
16,935
70,601
89,678
Operating lease obligations(5)
1,185,632
23,356
45,469
43,411
1,073,396
Purchase obligations(6)
727,558
536,105
150,656
27,787
13,010
Total contractual obligations
$
22,856,619
$
2,189,496
$
2,239,345
$
5,984,778
$
12,443,000
(1) Relates to our unsecured revolving credit facility and commercial paper with an aggregate commitment of $3,000,000,000. See Note 10 to our consolidated financial statements.
(2) Amounts represent principal amounts due and do not reflect unamortized premiums/discounts or other fair value adjustments as reflected on the balance sheet.
(3) Based on foreign currency exchange rates in effect as of balance sheet date.
(4) Based on variable interest rates in effect as of December 31, 2019.
(5) See Note 6 to our consolidated financial statements for additional information.
(6) See Note 13 to our consolidated financial statements for additional information.
Capital Structure
Please refer to “Credit Strength” above for a discussion of our leverage and coverage ratio trends. Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As of December 31, 2019, we were in compliance with all of the covenants under our debt agreements. None of our debt agreements contain provisions for acceleration which could be triggered by our debt ratings. However, under our primary unsecured credit facility, the ratings on our senior unsecured notes are used to determine the fees and interest charged. We plan to manage the company to maintain compliance with our debt covenants and with a capital structure consistent with our current profile. Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.
On May 17, 2018, we filed with the Securities and Exchange Commission (1) an open-ended automatic or “universal” shelf registration statement covering an indeterminate amount of future offerings of debt securities, common stock, preferred stock, depositary shares, warrants and units and (2) a registration statement in connection with our enhanced dividend reinvestment plan (“DRIP”) under which we may issue up to 15,000,000 shares of common stock. As of January 31, 2020, 2,728,696 shares of common stock remained available for issuance under the DRIP registration statement. On February 25, 2019, we entered into separate amended and restated equity distribution agreements with each of Barclays Capital Inc., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. LLC, MUFG Securities Americas Inc., RBC Capital Markets, LLC, UBS Securities LLC and Wells Fargo Securities, LLC relating to the offer and sale from time to time of up to $1,500,000,000 aggregate amount of our common stock (“Equity Shelf Program”), which replaced our existing equity shelf program entered into on August 3, 2018. The Equity Shelf Program also allows us to enter into forward sale agreements. As of January 31, 2020, we had $1,075,537,000 of remaining capacity under the Equity Shelf Program, which excludes
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
forward sales agreements outstanding for the sale of 6,799,978 shares with maturity dates in 2020 and 2021. We expect to physically settle the forward sales for cash proceeds. Depending upon market conditions, we anticipate issuing securities under our registration statements to invest in additional properties and to repay borrowings under our unsecured revolving credit facility and commercial paper program.
Results of Operations
Summary
Our primary sources of revenue include resident fees and services, rent and interest income. Our primary expenses include interest expense, depreciation and amortization, property operating expenses, other expenses and general and administrative expenses. We evaluate our business and make resource allocations on our three business segments: Seniors Housing Operating, Triple-net and Outpatient Medical. The primary performance measures for our properties are NOI and SSNOI and other supplemental measures include FFO and Adjusted EBITDA, which are further discussed below. Please see "Non-GAAP Financial Measures" for additional information and reconciliations related to these supplemental measures.
This section of this Form 10-K generally discusses 2019 and 2018 items and year-to-year comparisons between 2019 and 2018. Discussions of 2017 items and year-to-year comparisons between 2018 and 2017 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
The following is a summary of our results of operations for the periods presented (dollars in thousands, except per share amounts):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
Amount
%
Amount
%
Amount
%
Net income
$
1,330,410
$
829,750
$
500,660
%
$
540,613
$
289,137
%
$
789,797
%
NICS
1,232,432
758,250
474,182
%
463,595
294,655
%
768,837
%
FFO
1,577,080
1,392,183
184,897
%
1,165,576
226,607
%
411,504
%
Adjusted EBITDA
2,328,202
2,153,005
175,197
%
2,128,429
24,576
%
199,773
%
Consolidated NOI
2,431,264
2,267,482
163,782
%
2,232,716
34,766
%
198,548
%
Per share data (fully diluted):
Net income attributable to common
stockholders
$
3.05
$
2.02
$
1.03
%
$
1.26
$
0.76
%
$
1.79
%
Funds from operations attributable to
common stockholders
$
3.91
$
3.71
$
0.20
%
$
3.16
$
0.55
%
$
0.75
%
Adjusted interest coverage ratio
4.14x
4.11x
0.03x
%
4.36x
-0.25x
%
-0.22x
%
Adjusted fixed charge coverage ratio
3.78x
3.44x
0.34x
%
3.54x
-0.10x
%
0.24x
%
The following table represents the changes in outstanding common stock for the period from January 1, 2017 to December 31, 2019 (in thousands):
Year Ended
December 31, 2019
December 31, 2018
December 31, 2017
Totals
Beginning balance
383,675
371,732
362,602
362,602
Dividend reinvestment plan issuances
5,799
6,529
5,640
17,968
Preferred stock conversions
12,712
-
12,716
Redemption of equity membership units
-
-
Option exercises
Equity Shelf Program issuances
7,856
5,241
2,987
16,084
Other, net
Ending balance
410,257
383,675
371,732
410,257
Average number of shares outstanding:
Basic
401,845
373,620
367,237
Diluted
403,808
375,250
369,001
During the past three years, inflation has not significantly affected our earnings because of the moderate inflation rate. Additionally, a portion of our earnings are derived primarily from long-term investments with predictable rates of return. These investments are mainly financed with a combination of equity, senior unsecured notes, secured debt and borrowings under our primary unsecured credit facility. During inflationary periods, which generally are accompanied by rising interest rates, our ability to grow may be adversely affected because the yield on new investments may increase at a slower rate than new borrowing costs. Presuming the current inflation rate remains moderate and long-term interest rates do not increase significantly, we believe that inflation will not impact the availability of equity and debt financing for us.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Seniors Housing Operating
The following is a summary of our same store NOI ("SSNOI") for the Seniors Housing Operating segment for the years presented (dollars in thousands):
2018 and 2019 Same Store Pool
One Year Change
2017 and 2018 Same Store Pool
One Year Change
$
%
$
%
SSNOI(1)
$
699,867
$
701,493
$
(1,626
)
-0.2
%
$
816,416
824,415
$
(7,999
)
-1.0
%
(1) Relates to 341 properties for the 2018 and 2019 Same Store Pool and 390 properties for the 2017 and 2018 Same Store Pool.
The following is a summary of our results of operations for the Seniors Housing Operating segment for the years presented (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
Revenues:
Resident fees and services
$
3,448,175
$
3,234,852
$
213,323
%
$
2,779,423
$
455,429
%
$
668,752
%
Interest income
(542
)
%
%
(33
)
%
Other income
8,658
5,024
3,634
%
5,127
(103
)
%
3,531
%
Total revenues
3,456,869
3,240,454
216,415
%
2,784,619
455,835
%
672,250
%
Property operating expenses
2,417,349
2,255,432
161,917
%
1,904,593
350,839
%
512,756
%
NOI(1)
1,039,520
985,022
54,498
%
880,026
104,996
%
159,494
%
Other expenses:
Depreciation and amortization
553,189
529,449
23,740
%
484,796
44,653
%
68,393
%
Interest expense
67,983
69,060
(1,077
)
%
63,265
5,795
%
4,718
%
Loss (gain) on extinguishment of debt, net
1,614
1,504
1,367
%
3,785
(3,675
)
%
(2,171
)
%
Impairment of assets
2,145
7,599
(5,454
)
%
21,949
(14,350
)
%
(19,804
)
%
Other expenses
26,348
6,624
19,724
%
8,347
(1,723
)
%
18,001
%
651,279
612,842
38,437
%
582,142
30,700
%
69,137
%
Income (loss) from continuing operations before income taxes and other items
388,241
372,180
16,061
%
297,884
74,296
%
90,357
%
Income tax benefit (expense)
6,246
1,202
5,044
%
(16,430
)
17,632
%
22,676
%
Income (loss) from unconsolidated entities
12,388
(28,142
)
40,530
%
(105,236
)
77,094
%
117,624
%
Gain (loss) on real estate dispositions, net
528,747
(2,245
)
530,992
23,652
%
56,295
(58,540
)
%
472,452
%
Income from continuing operations
935,622
342,995
592,627
%
232,513
110,482
%
703,109
%
Net income (loss)
935,622
342,995
592,627
%
232,513
110,482
%
703,109
%
Less: Net income (loss) attributable to noncontrolling interests
56,513
(660
)
57,173
8,663
%
8,472
(9,132
)
%
48,041
%
Net income (loss) attributable to common stockholders
$
879,109
$
343,655
$
535,454
%
$
224,041
$
119,614
%
$
655,068
%
(1) See Non-GAAP Financial Measures below.
Fluctuations in resident fees and services and property operating expenses are primarily a result of acquisitions, segment transitions and the movement of U.S. and foreign currency exchange rates. The fluctuations in depreciation and amortization are due to acquisitions and variations in amortization of short-lived intangible assets. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly.
During the three years presented, we recorded impairment charges on certain held for sale and held for use properties as the carrying value exceeded the estimated fair values. The fluctuations in gains (losses) on real estate dispositions are due to the volume of property sales and sales prices. The significant gain on real estate dispositions recognized during the year ended December 31, 2019 is related to the sale of the Benchmark Senior Living portfolio. Transaction costs related to asset acquisitions are capitalized as a component of the purchase price. The increase in other expenses during the year ended December 31, 2019 is primarily due to additional noncapitalizable transaction costs associated with acquisitions and operator transitions.
During the year ended December 31, 2019, we completed two Seniors Housing Operating construction projects representing $28,117,000 or $109,405 per unit. The following is a summary of our Seniors Housing Operating construction projects, excluding expansions, pending as of December 31, 2019 (dollars in thousands):
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Location
Units/Beds
Commitment
Balance
Est. Completion
Wandsworth, UK
$
78,221
$
69,877
1Q20
Taylor, PA
14,272
12,405
1Q20
Beavercreek, OH
12,032
11,561
1Q20
Potomac, MD
56,720
23,145
4Q20
Beckenham, UK
62,497
27,423
3Q21
Hendon, UK
74,041
33,698
4Q21
Barnet, UK
68,335
28,499
4Q21
$
366,118
206,608
Toronto, ON
Project in planning stage
43,854
Washington, DC
Project in planning stage
18,394
Brookline, MA
Project in planning stage
17,382
$
268,873
Interest expense represents secured debt interest expense which fluctuates based on the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations. The fluctuations in loss (gain) on extinguishment of debt is primarily attributable to the volume of extinguishments and terms of the related secured debt. The following is a summary of our Seniors Housing Operating property secured debt principal activity (dollars in thousands):
Year Ended
Year Ended
Year Ended
December 31, 2019
December 31, 2018
December 31, 2017
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
1,810,587
3.87%
$
1,988,700
3.66%
$
2,463,249
3.94%
Debt transferred in
-
-%
35,830
3.84%
-
-%
Debt issued
343,696
3.11%
45,447
3.40%
228,772
2.72%
Debt assumed
183,061
4.58%
121,612
5.55%
-
-%
Debt extinguished
(219,864
)
4.28%
(240,095
)
4.83%
(668,804
)
4.81%
Debt transferred out
(12,072
)
3.89%
-
-%
-
-%
Debt deconsolidated
-
-%
-
-%
(60,000
)
3.80%
Principal payments
(43,997
)
3.45%
(47,886
)
3.59%
(47,153
)
3.60%
Foreign currency
53,626
3.33%
(93,021
)
3.31%
72,636
3.23%
Ending balance
$
2,115,037
3.54%
$
1,810,587
3.87%
$
1,988,700
3.66%
Monthly averages
$
1,966,892
3.70%
$
1,915,663
3.74%
$
2,065,477
3.66%
The majority of our Seniors Housing Operating properties are formed through partnership interests. The increase in income (loss) from unconsolidated entities are largely due to a gain on the disposition of an unconsolidated entity during the year ended December 31, 2019. Net income attributable to noncontrolling interests represents our partners’ share of net income (loss) related to joint ventures. The increase during the year ended December 31, 2019 relates primarily to our partner's share of the gain recognized on the sale of the Benchmark Senior Living portfolio.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Triple-net
The following is a summary of our SSNOI for the Triple-net segment for the periods presented (dollars in thousands):
2018 and 2019 Same Store Pool
One Year Change
2017 and 2018 Same Store Pool
One Year Change
$
%
$
%
SSNOI(1)
$
516,340
$
508,897
$
7,443
1.5
%
$
516,008
$
508,257
$
7,751
1.5
%
(1) Relates to 368 properties for the 2018 and 2019 Same Store Pool and 366 properties for the 2017 and 2018 Same Store Pool.
The following is a summary of our results of operations for the Triple-net segment for the years presented (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
Revenues:
Rental income
$
903,798
$
828,865
$
74,933
%
$
885,811
$
(56,946
)
%
$
17,987
%
Interest income
62,599
54,926
7,673
%
73,742
(18,816
)
%
(11,143
)
%
Other income
6,246
17,173
(10,927
)
%
7,531
9,642
%
(1,285
)
%
Total revenues
972,643
900,964
71,679
%
967,084
(66,120
)
%
5,559
%
Property operating expenses
53,900
52,985
5,791
%
-
n/a
53,900
n/a
NOI(1)
918,743
900,049
18,694
%
967,084
(67,035
)
%
(48,341
)
%
Other expenses:
Depreciation and amortization
232,626
235,480
(2,854
)
%
243,830
(8,350
)
%
(11,204
)
%
Interest expense
12,892
14,225
(1,333
)
%
15,194
(969
)
%
(2,302
)
%
Loss (gain) on derivatives and financial instruments, net
(4,399
)
(4,016
)
(383
)
%
2,284
(6,300
)
%
(6,683
)
%
Loss (gain) on extinguishment of debt, net
-
(32
)
%
29,083
(29,115
)
%
(29,083
)
%
Provision for loan losses
18,690
-
18,690
n/a
62,966
(62,966
)
%
(44,276
)
%
Impairment of assets
11,926
107,980
(96,054
)
%
96,909
11,071
%
(84,983
)
%
Other expenses(2)
13,771
90,975
(77,204
)
%
116,689
(25,714
)
%
(102,918
)
%
285,506
444,612
(159,106
)
%
566,955
(122,343
)
%
(281,449
)
%
Income from continuing operations before income taxes and other items
633,237
455,437
177,800
%
400,129
55,308
%
233,108
%
Income tax benefit (expense)
(4,209
)
1,611
(5,820
)
%
(4,291
)
5,902
%
%
Income (loss) from unconsolidated entities
22,985
21,938
1,047
%
19,428
2,510
%
3,557
%
Gain (loss) on real estate dispositions, net
218,322
196,589
21,733
%
286,325
(89,736
)
%
(68,003
)
%
Income from continuing operations
870,335
675,575
194,760
%
701,591
(26,016
)
%
168,744
%
Net income
870,335
675,575
194,760
%
701,591
(26,016
)
%
168,744
%
Less: Net income attributable to noncontrolling interests
36,271
19,306
16,965
%
4,603
14,703
%
31,668
%
Net income attributable to common stockholders
$
834,064
$
656,269
$
177,795
%
$
696,988
$
(40,719
)
%
$
137,076
%
(1) See Non-GAAP Financial Measures below.
(2) See Note 18 to our consolidated financial statements.
The increase to rental income for the year ended December 31, 2019 is primarily attributable to acquisitions including Quality Care Properties ("QCP") in July 2018. In addition, we have recorded certain real estate property taxes on a gross basis, with the offset to property operating expenses, as a result of our ASC 842 adoption on January 1, 2019. These increases are partially offset by the disposition or segment transition of various properties. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index (“CPI”) and/or changes in the gross operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If gross operating revenues at our facilities and/or the CPI do not increase, a portion of our revenues may not continue to increase. Our leases could renew above or below current rent rates, resulting in an increase or decrease in rental income. For the three months ended December 31, 2019, we had 20 leases with rental rate increasers ranging from 0.12% to 0.76% in our Triple-net portfolio. The increase in other income for the year ended December 31, 2018 is primarily due to $10,805,000 of net lease termination fees recognized.
Depreciation and amortization decreased primarily as a result of the disposition of triple-net properties exceeding acquisition and segment transitions. To the extent we acquire or dispose of additional properties in the future, our provision for depreciation and amortization will change accordingly.
During the year ended December 31, 2019, we recognized a provision for loan loss of $18,690,000 to fully reserve for and eventually wrote off certain real estate loans receivable that are no longer deemed collectible.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
During the years presented, we recorded impairment charges on certain held for sale and held for use properties as the carrying value exceeded the estimated fair values. The fluctuations in gains on real estate dispositions are due to the volume of property sales and sales prices. Transaction costs related to asset acquisitions are capitalized as a component of purchase price. The fluctuations in other expenses is primarily due noncapitalizable transaction costs from acquisitions, segment transitions and the termination/restructuring of preexisting relationships. During the year ended December 31, 2018, we recognized $79,576,000 related to a joint venture transaction, including the conversion of properties from Triple-net to Seniors Housing Operating and termination/restructuring of preexisting relationships.
During the year ended December 31, 2019, there were no construction projects completed. The following is a summary of Triple-net construction projects, excluding expansions, pending as of December 31, 2019 (dollars in thousands):
Location
Units/Beds
Commitment
Balance
Est. Completion
Union, KY
$
34,600
$
25,649
1Q20
Westerville, OH
22,800
19,922
1Q20
Droitwich, UK
16,805
11,730
2Q20
Thousand Oaks, CA
24,763
9,971
4Q20
Redhill, UK
21,098
6,287
1Q21
Leicester, UK
14,861
3,505
1Q21
Wombourne, UK
15,923
3,515
2Q21
Total
$
150,850
$
80,579
Total interest expense represents secured debt interest expense and related fees. The change in secured debt interest expense is due to the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations. The fluctuations in loss (gain) on extinguishment of debt is primarily attributable to the volume of extinguishments and terms of the related secured debt. The fluctuation in loss (gain) on derivatives and financial instruments, net is primarily attributable to the mark-to-market adjustment recorded on our Genesis HealthCare available-for-sale investment. The following is a summary of our Triple-net secured debt principal activity for the periods presented (dollars in thousands):
Year Ended
Year Ended
Year Ended
December 31, 2019
December 31, 2018
December 31, 2017
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
288,386
3.63%
$
347,474
3.55%
$
594,199
4.58%
Debt transferred in
12,072
3.89%
-
-%
-
-%
Debt issued
-
-%
-
-%
13,000
4.57%
Debt extinguished
-
-%
(4,107
)
4.94%
(274,048
)
5.95%
Debt transferred out
-
-%
(35,830
)
3.84%
-
-%
Principal payments
(4,017
)
5.21%
(3,982
)
5.38%
(5,863
)
5.66%
Foreign currency
9,597
2.99%
(15,169
)
3.44%
20,186
2.91%
Ending balance
$
306,038
3.60%
$
288,386
3.63%
$
347,474
3.55%
Monthly averages
$
294,080
3.63%
$
321,730
3.51%
$
408,688
3.91%
A portion of our triple-net properties were formed through partnerships. Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. Net income attributable to noncontrolling interests represents our partners’ share of net income relating to those partnerships where we are the controlling partner.
Outpatient Medical
The following is a summary of our SSNOI for the Outpatient Medical segment for the periods presented (dollars in thousands):
2018 and 2019 Same Store Pool
One Year Change
2017 and 2018 Same Store Pool
One Year Change
$
%
$
%
SSNOI(1)
$
311,612
$
308,139
$
3,473
1.1
%
$
343,059
$
336,990
$
6,069
1.8
%
(1) Relates to 197 properties for the 2018 and 2019 Same Store Pool and 224 properties for the 2017 and 2018 Same Store Pool.
The following is a summary of our results of operations for the Outpatient Medical segment for the periods presented (dollars in thousands):
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
Revenues:
Rental income
$
684,602
$
551,557
$
133,045
%
$
560,060
$
(8,503
)
%
$
124,542
%
Interest income
1,195
%
-
n/a
1,195
n/a
Other income
2,031
4,939
(2,908
)
%
3,340
1,599
%
(1,309
)
%
Total revenues
687,828
556,806
131,022
%
563,400
(6,594
)
%
124,428
%
Property operating expenses
218,793
176,670
42,123
%
179,332
(2,662
)
%
39,461
%
NOI(1)
469,035
380,136
88,899
%
384,068
(3,932
)
%
84,967
%
Other expenses:
Depreciation and amortization
241,258
185,530
55,728
%
193,094
(7,564
)
%
48,164
%
Interest expense
13,411
7,051
6,360
%
10,015
(2,964
)
%
3,396
%
Loss (gain) on extinguishment of debt, net
-
11,928
(11,928
)
%
4,373
7,555
%
(4,373
)
%
Impairment of assets
14,062
-
14,062
n/a
5,625
(5,625
)
%
8,437
%
Other expenses
1,788
7,570
(5,782
)
%
1,911
5,659
%
(123
)
%
270,519
212,079
58,440
%
215,018
(2,939
)
%
55,501
%
Income from continuing operations before income taxes and other item
198,516
168,057
30,459
%
169,050
(993
)
%
29,466
%
Income tax benefit (expense)
(2,710
)
(125
)
(2,585
)
-2,068
%
(1,477
)
1,352
%
(1,233
)
%
Income (loss) from unconsolidated entities
7,061
5,563
1,498
%
2,683
2,880
%
4,378
%
Gain (loss) on real estate dispositions, net
221,231
(220,259
)
%
1,630
219,601
13,472
%
(658
)
%
Income from continuing operations
203,839
394,726
(190,887
)
%
171,886
222,840
%
31,953
%
Net income (loss)
203,839
394,726
(190,887
)
%
171,886
222,840
%
31,953
%
Less: Net income (loss) attributable to noncontrolling interests
5,194
6,150
(956
)
%
4,765
1,385
%
%
Net income (loss) attributable to common stockholders
$
198,645
$
388,576
$
(189,931
)
%
$
167,121
$
221,455
%
$
31,524
%
(1) See Non-GAAP Financial Measures below.
The fluctuations in rental income are primarily attributable to the acquisitions of new properties and the conversion of newly constructed outpatient medical properties, particularly the $1.25 billion CNL Healthcare Properties portfolio acquisition that closed in May 2019, partially offset by dispositions. Certain of our leases contain annual rental escalators that are contingent upon changes in the CPI. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If the CPI does not increase, a portion of our revenues may not continue to increase. Our leases could renew above or below current rent rates, resulting in an increase or decrease in rental income. For the three months ended December 31, 2019, our consolidated outpatient medical portfolio signed 193,173 square feet of new leases and 424,579 square feet of renewals. The weighted-average term of these leases was six years, with a rate of $31.95 per square foot and tenant improvement and lease commission costs of $23.59 per square foot. Substantially all of these leases contain an annual fixed or contingent escalation rent structure ranging from 2.0% to 3.5%.
The fluctuation in property operating expenses and depreciation and amortization are primarily attributable to acquisitions and construction conversions of new outpatient medical facilities, offset by dispositions. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly. We recognized impairment charges related to certain held for sale properties as the carrying values exceeded the estimated fair values less costs to sell. Changes in gains/losses on sales of properties are related to volume of property sales and the sales prices.
During the year ended December 31, 2019, we completed one Outpatient Medical construction project representing $21,006,000 or $286 per square foot. The following is a summary of Outpatient Medical construction projects pending as of December 31, 2019 (dollars in thousands):
Location
Square Feet
Commitment
Balance
Est. Completion
Porter, TX
55,000
$
20,800
$
16,124
1Q20
Lowell, MA
50,668
11,900
10,288
1Q20
Katy, TX
36,500
12,028
3,251
2Q20
Brooklyn, NY
140,955
105,306
80,799
3Q20
Total
283,123
$
150,034
$
110,462
Total interest expense represents secured debt interest expense. The change in secured debt interest expense is primarily due to the net effect and timing of assumptions, extinguishments and principal amortizations. The fluctuations in loss (gain) on extinguishment of debt is primarily attributable the volume of extinguishments and terms of the related secured debt. The following is a summary of our Outpatient Medical secured debt principal activity for the periods presented (dollars in thousands):
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Year Ended
Year Ended
Year Ended
December 31, 2019
December 31, 2018
December 31, 2017
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
386,738
4.20%
$
279,951
4.72%
$
404,079
4.85%
Debt assumed
202,084
4.12%
171,275
3.99%
23,094
6.67%
Debt extinguished
(10,244
)
5.75%
(61,291
)
7.43%
(137,416
)
5.99%
Principal payments
(6,311
)
4.97%
(3,197
)
5.91%
(9,806
)
6.85%
Ending balance
$
572,267
3.97%
$
386,738
4.20%
$
279,951
4.72%
Monthly averages
$
397,756
4.15%
$
238,214
4.25%
$
294,694
4.62%
A portion of our Outpatient Medical properties were formed through partnerships. Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. Net income attributable to noncontrolling interests represents our partners’ share of net income or loss relating to those partnerships where we are the controlling partner.
Non-Segment/Corporate
The following is a summary of our results of operations for the non-segment/corporate activities (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
Revenues:
Other income
$
3,966
$
2,275
$
1,691
%
$
1,538
$
%
$
2,428
%
Expenses:
Interest expense
461,273
436,256
25,017
%
396,148
40,108
%
65,125
%
General and administrative expenses
126,549
126,383
%
122,008
4,375
%
4,541
%
Loss (gain) on extinguishments of debt, net
82,541
4,091
78,450
1,918
%
-
4,091
n/a
82,541
n/a
Other expenses
10,705
7,729
2,976
%
50,829
(43,100
)
%
(40,124
)
%
Total expenses
681,068
574,459
106,609
%
568,985
5,474
%
112,083
%
Loss from continuing operations before income taxes
(677,102
)
(572,184
)
(104,918
)
%
(567,447
)
(4,737
)
%
(109,655
)
%
Income tax benefit (expense)
(2,284
)
(11,362
)
9,078
%
2,070
(13,432
)
%
(4,354
)
%
Loss from continuing operations
(679,386
)
(583,546
)
(95,840
)
%
(565,377
)
(18,169
)
%
(114,009
)
%
Preferred stock dividends
-
46,704
(46,704
)
%
49,410
(2,706
)
%
(49,410
)
%
Preferred stock redemption charge
-
-
-
n/a
9,769
(9,769
)
%
(9,769
)
%
Net loss attributable to common stockholders
$
(679,386
)
$
(630,250
)
$
(49,136
)
%
$
(624,556
)
$
(5,694
)
%
$
(54,830
)
%
The following is a summary of our Non-Segment/Corporate interest expense for the periods presented (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
Senior unsecured notes
$
402,133
$
387,955
$
14,178
%
$
364,773
$
23,182
%
$
37,360
%
Secured debt
-
(115
)
%
(12
)
%
(127
)
%
Unsecured revolving credit facility and commercial paper program
43,861
34,626
9,235
%
17,863
16,763
%
25,998
%
Loan expense
15,279
13,560
1,719
%
13,385
%
1,894
%
Totals
$
461,273
$
436,256
$
25,017
%
$
396,148
$
40,108
%
$
65,125
%
The change in interest expense on senior unsecured notes is due to the net effect of issuances and extinguishments, as well as the movement in foreign exchange rates and related hedge activity. Please refer to Note 11 to consolidated financial statements for additional information. The change in interest expense on our unsecured revolving credit facility and commercial paper program is due primarily to the net effect and timing of draws, paydowns and variable interest rate changes. Please refer to Note 10 of our consolidated financial statements for additional information regarding our unsecured revolving credit facility and commercial paper program. Loan expenses represent the amortization of costs incurred in connection with senior unsecured notes issuances. The loss on extinguishment recognized in 2019 is due primarily to the early extinguishment of the $600,000,000 of 4.125% senior unsecured notes due 2019 and the $450,000,000 of 6.125% senior unsecured notes due 2020 in March 2019, the early extinguishment of the $450,000,000 of 4.95% senior unsecured notes due 2021 and the $600,000,000 of 5.25% senior unsecured notes due 2022 in September 2019 and the early redemption of the $300 million Canadian-denominated 3.35% senior unsecured notes due 2020 in December 2019. The loss on extinguishment of debt in 2018 is due to the term loan facility drawn on in July 2018 and paid off in August 2018.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
General and administrative expenses as a percentage of consolidated revenues for the years ended December 31, 2019, 2018 and 2017 were 2.47%, 2.69% and 2.83%, respectively.
Other expenses for all years include severance-related costs associated with the departure of certain executive officers and key employees.
The decrease in preferred dividends is due to the conversion of all outstanding Series I Cumulative Convertible Perpetual Preferred Stock during the year ended December 31, 2019.
Other
Non-GAAP Financial Measures
We believe that net income and net income attributable to common stockholders (“NICS”), as defined by U.S. GAAP, are the most appropriate earnings measurements. However, we consider FFO, NOI, SSNOI, EBITDA and Adjusted EBITDA to be useful supplemental measures of our operating performance. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation. However, since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient. In response, the National Association of Real Estate Investment Trusts (“NAREIT”) created funds from operations attributable to common stockholders (“FFO”) as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO, as defined by NAREIT, means NICS, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairment of depreciable assets, plus depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests.
Consolidated net operating income (“NOI”) is used to evaluate the operating performance of our properties. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. Property operating expenses represent costs associated with managing, maintaining and servicing tenants for our properties. These expenses include, but are not limited to, property-related payroll and benefits, property management fees paid to operators, marketing, housekeeping, food service, maintenance, utilities, property taxes and insurance. General and administrative expenses represent costs unrelated to property operations. These expenses include, but are not limited to, payroll and benefits, professional services, office expenses and depreciation of corporate fixed assets. Same store NOI (“SSNOI”) is used to evaluate the operating performance of our properties using a consistent population which controls for changes in the composition of our portfolio. As used herein, same store is generally defined as those revenue-generating properties in the portfolio for the eight quarters ended December 31, 2019 ("2018 and 2019 Same Store Pool") and December 31, 2018 ("2017 and 2018 Same Store Pool"). Land parcels, loans and sub-leases, as well as any properties acquired, under development, transitioned to a different segment, sold or classified as held for sale during that period are excluded from the same store amounts. Additionally, unconsolidated properties are excluded from the same store amounts. We believe NOI and SSNOI provide investors relevant and useful information because they measure the operating performance of our properties at the property level on an unleveraged basis. We use NOI and SSNOI to make decisions about resource allocations and to assess the property level performance of our properties.
EBITDA stands for earnings (net income) before interest, taxes, depreciation and amortization. We believe that EBITDA, along with net income and cash flow provided from operating activities, is an important supplemental measure because it provides additional information to assess and evaluate the performance of our operations. We primarily utilize EBITDA to measure our interest coverage ratio, which represents EBITDA divided by total interest, and our fixed charge coverage ratio, which represents EBITDA divided by fixed charges. Fixed charges include total interest, secured debt principal amortization, and preferred dividends. Covenants in our senior unsecured notes and primary unsecured credit facility contain financial ratios based on a definition of EBITDA that is specific to those agreements. Failure to satisfy these covenants could result in an event of default that could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. Due to the materiality of these debt agreements and the financial covenants, we have disclosed Adjusted EBITDA, which represents EBITDA as defined above excluding unconsolidated entities and adjusted for items per our covenant. We use Adjusted EBITDA to measure our adjusted fixed charge coverage ratio, which represents Adjusted EBITDA divided by fixed charges on a trailing twelve months basis. Fixed charges include total interest (excluding capitalized interest and non-cash interest expenses), secured debt principal amortization and preferred dividends. Our covenant requires an adjusted fixed charge coverage ratio of at least 1.50 times.
Our supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and rating agencies in the valuation, comparison, rating and investment recommendations of companies. Management uses these financial measures to facilitate internal and external comparisons to our historical operating results and in making operating decisions. Additionally, these measures are utilized by the Board of Directors to evaluate management. None of our supplemental measures represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, the supplemental measures, as defined by us, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The table below reflects the reconciliation of FFO to NICS, the most directly comparable U.S. GAAP measure, for the periods presented. Noncontrolling interest and unconsolidated entity amounts represent adjustments to reflect our share of depreciation and amortization, gains/loss on real estate dispositions and impairments of assets. Amounts are in thousands except for per share data.
Year Ended December 31,
FFO Reconciliation:
Net income attributable to common stockholders
$
1,232,432
$
758,250
$
463,595
Depreciation and amortization
1,027,073
950,459
921,720
Impairment of assets
28,133
115,579
124,483
Loss (gain) on real estate dispositions, net
(748,041
)
(415,575
)
(344,250
)
Noncontrolling interests
(20,197
)
(69,193
)
(60,018
)
Unconsolidated entities
57,680
52,663
60,046
Funds from operations attributable to common stockholders
$
1,577,080
$
1,392,183
$
1,165,576
Average diluted shares outstanding:
403,808
375,250
369,001
Per diluted share data:
Net income attributable to common stockholders
$
3.05
$
2.02
$
1.26
Funds from operations attributable to common stockholders
$
3.91
$
3.71
$
3.16
The table below reflects the reconciliation of EBITDA and Adjusted EBITDA to net income, the most directly comparable U.S. GAAP measure, for the periods presented. Dollars are in thousands.
Year Ended December 31,
Adjusted EBITDA Reconciliation:
Net income
$
1,330,410
$
829,750
$
540,613
Interest expense
555,559
526,592
484,622
Income tax expense (benefit)
2,957
8,674
20,128
Depreciation and amortization
1,027,073
950,459
921,720
EBITDA
2,915,999
2,315,475
1,967,083
Loss (income) from unconsolidated entities
(42,434
)
83,125
Stock-based compensation expense(1)
25,047
27,646
19,102
Loss (gain) on extinguishment of debt, net
84,155
16,097
37,241
Loss (gain) on real estate dispositions, net
(748,041
)
(415,575
)
(344,250
)
Impairment of assets
28,133
115,579
124,483
Provision for loan losses
18,690
-
62,966
Loss (gain) on derivatives and financial instruments, net
(4,399
)
(4,016
)
2,284
Other expenses(1)
51,052
111,990
176,395
Additional other income
-
(14,832
)
-
Adjusted EBITDA
$
2,328,202
$
2,153,005
$
2,128,429
Adjusted Interest Coverage Ratio:
Interest expense
$
555,559
$
526,592
$
484,622
Capitalized interest
15,272
7,905
13,489
Non-cash interest expense
(8,645
)
(10,860
)
(10,359
)
Total interest
562,186
523,637
487,752
Adjusted EBITDA
$
2,328,202
$
2,153,005
$
2,128,429
Adjusted interest coverage ratio
4.14x
4.11x
4.36x
Adjusted Fixed Charge Coverage Ratio:
Total interest
$
562,186
$
523,637
$
487,752
Secured debt principal payments
54,325
56,288
64,078
Preferred dividends
-
46,704
49,410
Total fixed charges
616,511
626,629
601,240
Adjusted EBITDA
$
2,328,202
$
2,153,005
$
2,128,429
Adjusted fixed charge coverage ratio
3.78x
3.44x
3.54x
(1) Certain severance-related costs are included in stock-based compensation and excluded from other expenses.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our leverage ratios include book capitalization, undepreciated book capitalization and market capitalization. Book capitalization represents the sum of net debt (defined as total long-term debt less cash and cash equivalents and any IRC section 1031 deposits), total equity and redeemable noncontrolling interests. Undepreciated book capitalization represents book capitalization adjusted for accumulated depreciation and amortization. Market capitalization represents book capitalization adjusted for the fair market value of our common stock. Our leverage ratios are defined as the proportion of net debt to total capitalization. The table below reflects the reconciliation of our leverage ratios to our balance sheets for the periods presented. Amounts are in thousands, except share price.
Year Ended December 31,
Book capitalization:
Unsecured credit facility and commercial paper
$
1,587,597
$
1,147,000
$
719,000
Long-term debt obligations(1)
13,436,365
12,150,144
11,012,936
Cash and cash equivalents(2)
(284,917
)
(215,376
)
(249,620
)
Total net debt
14,739,045
13,081,768
11,482,316
Total equity and noncontrolling interests(3)
16,982,504
16,010,645
15,300,646
Book capitalization
$
31,721,549
$
29,092,413
$
26,782,962
Net debt to book capitalization ratio
46.5
%
45.0
%
42.9
%
Undepreciated book capitalization:
Total net debt
$
14,739,045
$
13,081,768
$
11,482,316
Accumulated depreciation and amortization
5,715,459
5,499,958
4,838,370
Total equity and noncontrolling interests(3)
16,982,504
16,010,645
15,300,646
Undepreciated book capitalization
$
37,437,008
$
34,592,371
$
31,621,332
Net debt to undepreciated book capitalization ratio
39.4
%
37.8
%
36.3
%
Market capitalization:
Common shares outstanding
410,257
383,675
371,732
Period end share price
$
81.78
$
69.41
$
63.77
Common equity market capitalization
$
33,550,817
$
26,630,882
$
23,705,350
Total net debt
14,739,045
13,081,768
11,482,316
Noncontrolling interests(3)
1,442,060
1,378,311
877,499
Preferred stock
-
718,498
718,503
Market capitalization:
$
49,731,922
$
41,809,459
$
36,783,668
Net debt to market capitalization ratio
29.6
%
31.3
%
31.2
%
(1) Amounts include senior unsecured notes, secured debt and lease liabilities related to financing leases, as reflected on our Consolidated Balance Sheet.
(2) Inclusive of IRC section 1031 deposits, if any.
(3) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests as reflected on our Consolidated Balance Sheet.
The following tables reflect the reconciliation of NOI to net income, the most directly comparable U.S. GAAP measure, for the years presented. Dollar amounts are in thousands.
Year Ended December 31,
NOI Reconciliation:
Net income
$
1,330,410
$
829,750
$
540,613
Loss (gain) on real estate dispositions, net
(748,041
)
(415,575
)
(344,250
)
Loss (income) from unconsolidated entities
(42,434
)
83,125
Income tax expense (benefit)
2,957
8,674
20,128
Other expenses
52,612
112,898
177,776
Impairment of assets
28,133
115,579
124,483
Provision for loan losses
18,690
-
62,966
Loss (gain) on extinguishment of debt, net
84,155
16,097
37,241
Loss (gain) on derivatives and financial instruments, net
(4,399
)
(4,016
)
2,284
General and administrative expenses
126,549
126,383
122,008
Depreciation and amortization
1,027,073
950,459
921,720
Interest expense
555,559
526,592
484,622
Consolidated net operating income (NOI)
$
2,431,264
$
2,267,482
$
2,232,716
NOI by segment:
Seniors Housing Operating
$
1,039,520
$
985,022
$
880,026
Triple-net
918,743
900,049
967,084
Outpatient Medical
469,035
380,136
384,068
Non-segment/corporate
3,966
2,275
1,538
Total NOI
$
2,431,264
$
2,267,482
$
2,232,716
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is a reconciliation of our consolidated NOI to same store NOI for the periods presented for the respective pools. Dollar amounts are in thousands.
2018 and 2019 Same Store Pool
2017 and 2018 Same Store Pool
SSNOI Reconciliations:
NOI:
Seniors Housing Operating
$
1,039,520
$
985,022
$
985,022
$
880,026
Triple-net
918,743
900,049
900,049
967,084
Outpatient Medical
469,035
380,136
380,136
384,068
Total
2,427,298
2,265,207
2,265,207
2,231,178
Adjustments:
Seniors Housing Operating:
Non-cash SSNOI on same store properties
(1,720
)
(1,344
)
(1,176
)
(1,542
)
NOI attributable to non same store properties
(337,933
)
(282,185
)
(167,430
)
(54,069
)
Subtotal
(339,653
)
(283,529
)
(168,606
)
(55,611
)
Triple-net:
Non-cash SSNOI on same store properties
28,033
25,981
17,057
23,970
NOI attributable to non same store properties
(430,436
)
(417,133
)
(401,098
)
(482,797
)
Subtotal
(402,403
)
(391,152
)
(384,041
)
(458,827
)
Outpatient Medical:
Non-cash SSNOI on same store properties
7,067
7,224
9,551
9,576
NOI attributable to non same store properties
(164,490
)
(79,221
)
(46,628
)
(56,654
)
Subtotal
(157,423
)
(71,997
)
(37,077
)
(47,078
)
SSNOI:
Seniors Housing Operating
699,867
701,493
816,416
824,415
Triple-net
516,340
508,897
516,008
508,257
Outpatient Medical
311,612
308,139
343,059
336,990
Total
$
1,527,819
$
1,518,529
$
1,675,483
$
1,669,662
2018 and 2019 Same Store Pool
2017 and 2018 Same Store Pool
SSNOI Property Reconciliations:
Seniors Housing Operating
Triple-net
Outpatient Medical
Total
Seniors Housing Operating
Triple-net
Outpatient Medical
Total
Total properties
1,578
1,508
Recent acquisitions/development
conversions
(77
)
(237
)
(138
)
(452
)
(26
)
(246
)
(44
)
(316
)
Developments
(11
)
(7
)
(4
)
(22
)
(4
)
(9
)
(4
)
(17
)
Held for sale
(18
)
(11
)
(42
)
(71
)
(13
)
(40
)
(2
)
(55
)
Segment transitions
(86
)
(18
)
-
(104
)
(68
)
(44
)
-
(112
)
Loans, land parcels and subleases(1)
-
(17
)
(6
)
(23
)
-
(21
)
(7
)
(28
)
Same store properties
(1) Includes eight land parcels, eight subleases and seven loans for the 2018 and 2019 Same Store Pool and nine land parcels, eight subleases and 11 loans for the 2017 and 2018 Same Store Pool.
Critical Accounting Policies
Our consolidated financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions. Management considers accounting estimates or assumptions critical if:
•
the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and
•
the impact of the estimates and assumptions on financial condition or operating performance is material.
Management has discussed the development and selection of its critical accounting policies with the Audit Committee of the Board of Directors and the Audit Committee has reviewed the disclosure presented below relating to them. Management believes the current assumptions and other considerations used to estimate amounts reflected in our consolidated financial statements are appropriate and are not reasonably likely to change in the future. However, since these estimates require assumptions to be made that were uncertain at the time the estimate was made, they bear the risk of change. If actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our consolidated financial statements, the resulting changes could have a material adverse effect on our consolidated results of operations, liquidity and/or financial condition. Please refer to Note 2 to our consolidated financial statements for further information on significant accounting policies that impact us and for the impact of new accounting standards, including accounting pronouncements that were issued but not yet adopted by us.
The following table presents information about our critical accounting policies, as well as the material assumptions used to develop each estimate:
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Nature of Critical
Accounting Estimate
Assumptions/Approach
Used
Impairment of Real Property
Assessing impairment of real property involves subjectivity in determining if indicators of impairment are present and in estimating the future undiscounted cash flows or estimated fair value of an asset. In estimating the undiscounted cash flows or fair value, key assumptions that would be made are the estimation of future rental revenues, operating expenses, capitalization rates and the ability and intent to hold the respective asset, all of which are affected by our expectations of future market or economic conditions. These estimates can have a significant impact on the undiscounted cash flows or estimated fair value of an asset.
Quarterly, we evaluate our real estate investments on a property by property basis to determine if there are indicators of impairment. These indicators may include expected operational performance, the tenant's ability to make rent payments, a decision to dispose of an asset before the end of its estimated useful life and changes in the market that may permanently reduce the value of the property. If indicators of impairment exist, an undiscounted cash flow analysis will be prepared and the results of such analysis will be compared to the current net book value to determine if an impairment charge is necessary. This analysis requires us to use judgment in determining whether indicators of impairment exist and to estimate the expected future undiscounted cash flows or estimated fair values of the property. Properties that meet the held for sale criteria are recorded at the lesser of the fair value less costs to sell or carrying value.
Real Estate Acquisitions
We believe that substantially all of our real estate acquisitions are considered asset acquisitions for which we record the related real estate acquired (tangible assets and identifiable intangible assets and liabilities) at cost on a relative fair value basis. Liabilities assumed and any associated noncontrolling interests are reflected at fair value. Tangible assets consist primarily of land, building and improvements. Identifiable intangible assets and liabilities primarily consist of the above or below market component of in-place leases and the value of in-place leases. The total amount of other intangible assets acquired is further allocated to in-place lease values and customer relationship values based on management's evaluation of the specific characteristics of each tenant's lease and our overall relationship with respect to that tenant.
The allocation of the purchase price to the related real estate acquired (tangible assets and intangible assets and liabilities) involves subjectivity as such allocations are based on a relative fair value analysis. In determining the fair values that drive such analysis, we estimate the fair value of each component of the real estate acquired which generally includes land, buildings and improvements, the above or below market component of in-place leases and the value of in-place leases. Significant assumptions used to determine such fair values include comparable land sales, capitalization rates, discount rates, market rental rates and property operating data, all of which can be impacted by expectations about future market or economic conditions. Our estimates of the values of these components affect the amount of depreciation and amortization we record over the estimated useful life of the property or the term of the lease.
Principles of Consolidation
The consolidated financial statements include our accounts, the accounts of our wholly-owned subsidiaries, and the accounts of joint venture entities in which we own a majority voting interest with the ability to control operations and where no substantive participating rights or substantive kick out rights have been granted to the noncontrolling interests. In addition, we consolidate those entities deemed to be variable interest entities (“VIEs”) in which we are determined to be the primary beneficiary. All material intercompany transactions and balances have been eliminated in consolidation.
We make judgments about which entities are VIEs based on an assessment of whether (i) the equity investors as a group, if any, do not have a controlling financial interest, or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. We make judgments with respect to our level of influence or control of an entity and whether we are (or are not) the primary beneficiary of a VIE. Consideration of various factors includes, but is not limited to, our ability to direct the activities that most significantly impact the entity's economic performance, our form of ownership interest, our representation on the entity's governing body, the size and seniority of our investment, our ability and the rights of other investors to participate in policy making decisions, replace the manager and/or liquidate the entity, if applicable. Our ability to correctly assess our influence or control over an entity at inception of our involvement or on a continuous basis when determining the primary beneficiary of a VIE affects the presentation of these entities in our consolidated financial statements. If we perform a primary beneficiary analysis at a date other than at inception of the VIE, our assumptions may be different and may result in the identification of a different primary beneficiary.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Nature of Critical
Accounting Estimate
Assumptions/Approach
Used
Allowance for Loan Losses
The allowance for loan losses is maintained at a level believed adequate to absorb potential losses in our loans receivable. The determination of the allowance is based on a quarterly evaluation of all outstanding loans. If this evaluation indicates that there is a greater risk of loan charge-offs, additional allowances or placement on non-accrual status may be required. A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the original loan agreement or if it has been modified in a troubled debt restructuring. Consistent with this definition, all loans on non-accrual are deemed impaired. To the extent circumstances improve and the risk of collectability is diminished, we will return these loans to income accrual status.
The determination of the allowance is based on a quarterly evaluation of all outstanding loans, including general economic conditions and estimated collectability of loan payments. We evaluate the collectability of our loans receivable based on a combination of factors, including, but not limited to, delinquency status, historical loan charge-offs, financial strength of the borrower and guarantors, and value of the underlying collateral. Any loans with collectability concerns are subjected to a projected payoff valuation. The valuation is based on the expected future cash flows and/or the estimated fair value of the underlying collateral. The valuation is compared to the outstanding balance to determine the reserve needed for each loan. We may base our valuation on the fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the collateral.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to various market risks, including the potential loss arising from adverse changes in interest rates and foreign currency exchange rates. We seek to mitigate the underlying foreign currency exposures with gains and losses on derivative contracts hedging these exposures. We seek to mitigate the effects of fluctuations in interest rates by matching the terms of new investments with new long-term fixed rate borrowings to the extent possible. We may or may not elect to use financial derivative instruments to hedge interest rate exposure. These decisions are principally based on our policy to match our variable rate investments with comparable borrowings, but are also based on the general trend in interest rates at the applicable dates and our perception of the future volatility of interest rates. This section is presented to provide a discussion of the risks associated with potential fluctuations in interest rates and foreign currency exchange rates. For more information, see Notes 12 and 17 to our consolidated financial statements.
We historically borrow on our unsecured revolving credit facility and commercial paper program to acquire, construct or make loans relating to health care and seniors housing properties. Then, as market conditions dictate, we will issue equity or long-term fixed rate debt to repay the borrowings under our unsecured revolving credit facility and commercial paper program. We are subject to risks associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the terms of refinancing may not be as favorable as the terms of current indebtedness. The majority of our borrowings were completed under indentures or contractual agreements that limit the amount of indebtedness we may incur. Accordingly, in the event that we are unable to raise additional equity or borrow money because of these limitations, our ability to acquire additional properties may be limited.
A change in interest rates will not affect the interest expense associated with our fixed rate debt. Interest rate changes, however, will affect the fair value of our fixed rate debt. Changes in the interest rate environment upon maturity of this fixed rate debt could have an effect on our future cash flows and earnings, depending on whether the debt is replaced with other fixed rate debt, variable rate debt or equity or repaid by the sale of assets. To illustrate the impact of changes in the interest rate markets, we performed a sensitivity analysis on our fixed rate debt instruments whereby we modeled the change in net present values arising from a hypothetical 1% increase in interest rates to determine the instruments’ change in fair value. The following table summarizes the analysis performed as of the dates indicated (in thousands):
December 31, 2019
December 31, 2018
Principal balance
Change in fair value
Principal balance
Change in fair value
Senior unsecured notes
$
9,724,691
$
(751,848
)
$
9,009,159
$
(548,558
)
Secured debt
1,814,229
(69,756
)
1,639,983
(59,522
)
Totals
$
11,538,920
$
(821,604
)
$
10,649,142
$
(608,080
)
Our variable rate debt, including our unsecured revolving credit facility and commercial paper program, is reflected at fair value. At December 31, 2019, we had $3,470,584,000 outstanding related to our variable rate debt. Assuming no changes in outstanding balances, a 1% increase in interest rates would result in increased annual interest expense of $34,706,000. At December 31, 2018, we had $2,683,553,000 outstanding under our variable rate debt. Assuming no changes in outstanding balances, a 1% increase in interest rates would have resulted in increased annual interest expense of $26,836,000.
We are subject to currency fluctuations that may, from time to time, affect our financial condition and results of operations. Increases or decreases in the value of the Canadian Dollar or British Pounds Sterling relative to the U.S. Dollar impact the amount of net income we earn from our investments in Canada and the United Kingdom. Based solely on our results for the year ended December 31, 2019, including the impact of existing hedging arrangements, if these exchange rates were to increase or decrease by 10%, our net income from these investments would increase or decrease, as applicable, by less than $13,000,000. We will continue to mitigate these underlying foreign currency exposures with non-U.S. denominated borrowings and gains and losses on derivative contracts. If we increase our international presence through investments in, or acquisitions or development of, seniors housing and health care properties outside the U.S., we may also decide to transact additional business or borrow funds in currencies other than U.S. Dollars, Canadian Dollars or British Pounds Sterling. To illustrate the impact of changes in foreign currency markets, we performed a sensitivity analysis on our derivative portfolio whereby we modeled the change in net present values arising from a hypothetical 1% increase in foreign currency exchange rates to determine the instruments’ change in fair value. The following table summarizes the results of the analysis performed, excluding cross currency hedge activity (dollars in thousands):
December 31, 2019
December 31, 2018
Carrying value
Change in fair value
Carrying value
Change in fair value
Foreign currency exchange contracts
$
26,767
$
12,136
$
23,620
$
16,163
Debt designated as hedges
1,586,116
15,861
1,559,159
15,592
Totals
$
1,612,883
$
27,997
$
1,582,779
$
31,755
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Welltower Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Welltower Inc. and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 14, 2020 expressed an unqualified opinion thereon.
Adoption of New Accounting Standard
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases effective January 1, 2019.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Impairment of Real Property
Description of the Matter
At December 31, 2019, the Company’s net real property owned was approximately $30.3 billion. As discussed in Note 2 to the consolidated financial statements, the Company reviews its real property quarterly on a property-by-property basis to determine if facts and circumstances suggest that the real property may be impaired. If the undiscounted cash flows indicate that the real property will not be recoverable, the carrying value of the real property is reduced to its estimated fair value and an impairment charge is recognized for the difference between the carrying value and the fair value.
Auditing the Company’s process to evaluate real property owned for impairment was complex due to the high degree of subjectivity in determining whether indicators of impairment were present for certain properties, and in determining the future undiscounted cash flows and estimated fair values, if necessary, of properties where indicators of impairment were determined to be present. In particular, the undiscounted cash flows and fair value estimates were sensitive to significant assumptions, including future rental revenues and operating expenses, capitalization rates, and anticipated hold period, which are affected by expectations about future market or economic conditions.
How We Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to evaluate real property owned for impairment. This included testing controls over the Company’s review of impairment indicators by property and management's review and approval of the significant assumptions described above.
To test the Company's evaluation of real property for impairment, we performed audit procedures that included, among others, assessing the methodologies used by management, evaluating the significant assumptions discussed above and testing the completeness and accuracy of the underlying data used by the Company in its analyses. We compared the significant assumptions used by management to current industry and economic trends and evaluated whether changes to the Company’s business and other relevant factors would affect the significant assumptions. In addition, we assessed the historical accuracy of the Company’s estimates and performed sensitivity analyses of the significant assumptions to evaluate the changes in the undiscounted future cash flows and estimated fair values of the property that would result from changes in the significant assumptions.
Real Estate Acquisitions
Description of the Matter
During 2019, the Company completed approximately $4.0 billion of real estate acquisitions. As disclosed in Note 3 of the consolidated financial statements, the total purchase price for all properties acquired has been allocated to the related real estate acquired (tangible assets and identifiable intangible assets and liabilities) based upon their relative fair values.
Auditing the fair values allocated by management to the real estate acquired was complex because the fair value estimates were sensitive to significant assumptions, including comparable land sales, capitalization rates, discount rates, market rental rates and property operating data, which can be impacted by expectations about future market or economic conditions.
How We Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to account for real estate acquisitions, including controls over the Company’s review of the significant assumptions discussed above.
To test the fair values allocated to the real estate acquired, we performed audit procedures that included, among others, assessing the methodologies used by management and evaluating the significant assumptions used by the Company discussed above. We compared certain of management’s assumptions to external market data for similar properties and tested the clerical accuracy of the valuation models. We involved our valuation specialist in our evaluation of the significant assumptions used by the Company and the review of the valuation models.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1970.
Toledo, Ohio
February 14, 2020
CONSOLIDATED BALANCE SHEETS
WELLTOWER INC. AND SUBSIDIARIES
(in thousands)
December 31,
December 31,
Assets
Real estate investments:
Real property owned:
Land and land improvements
$
3,486,620
$
3,205,091
Buildings and improvements
29,163,305
28,019,502
Acquired lease intangibles
1,617,051
1,581,159
Real property held for sale, net of accumulated depreciation
1,253,008
590,271
Construction in progress
507,931
194,365
Gross real property owned
36,027,915
33,590,388
Less accumulated depreciation and amortization
(5,715,459
)
(5,499,958
)
Net real property owned
30,312,456
28,090,430
Right of use assets, net
536,433
-
Real estate loans receivable, net of allowance
270,382
330,339
Net real estate investments
31,119,271
28,420,769
Other assets:
Investments in unconsolidated entities
583,423
482,914
Goodwill
68,321
68,321
Cash and cash equivalents
284,917
215,376
Restricted cash
100,849
100,753
Straight-line receivable
466,222
367,093
Receivables and other assets
757,748
686,846
Total other assets
2,261,480
1,921,303
Total assets
$
33,380,751
$
30,342,072
Liabilities and equity
Liabilities:
Unsecured credit facility and commercial paper
$
1,587,597
$
1,147,000
Senior unsecured notes
10,336,513
9,603,299
Secured debt
2,990,962
2,476,177
Lease liabilities
473,693
70,668
Accrued expenses and other liabilities
1,009,482
1,034,283
Total liabilities
16,398,247
14,331,427
Redeemable noncontrolling interests
475,877
424,046
Equity:
Preferred stock
-
718,498
Common stock
411,005
384,465
Capital in excess of par value
20,190,107
18,424,368
Treasury stock
(78,955
)
(68,499
)
Cumulative net income
7,353,966
6,121,534
Cumulative dividends
(12,223,534
)
(10,818,557
)
Accumulated other comprehensive income (loss)
(112,157
)
(129,769
)
Other equity
Total Welltower Inc. stockholders’ equity
15,540,444
14,632,334
Noncontrolling interests
966,183
954,265
Total equity
16,506,627
15,586,599
Total liabilities and equity
$
33,380,751
$
30,342,072
See accompanying notes
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
WELLTOWER INC. AND SUBSIDIARIES
(In thousands, except per share data)
Year Ended December 31,
Revenues:
Resident fees and services
$
3,448,175
$
3,234,852
$
2,779,423
Rental income
1,588,400
1,380,422
1,445,871
Interest income
63,830
55,814
73,811
Other income
20,901
29,411
17,536
Total revenues
5,121,306
4,700,499
4,316,641
Expenses:
Property operating expenses
2,690,042
2,433,017
2,083,925
Depreciation and amortization
1,027,073
950,459
921,720
Interest expense
555,559
526,592
484,622
General and administrative expenses
126,549
126,383
122,008
Loss (gain) on derivatives and financial instruments, net
(4,399
)
(4,016
)
2,284
Loss (gain) on extinguishment of debt, net
84,155
16,097
37,241
Provision for loan losses
18,690
-
62,966
Impairment of assets
28,133
115,579
124,483
Other expenses
52,612
112,898
177,776
Total expenses
4,578,414
4,277,009
4,017,025
Income from continuing operations before income taxes and other items
542,892
423,490
299,616
Income tax (expense) benefit
(2,957
)
(8,674
)
(20,128
)
Income (loss) from unconsolidated entities
42,434
(641
)
(83,125
)
Gain (loss) on real estate dispositions, net
748,041
415,575
344,250
Income (loss) from continuing operations
1,330,410
829,750
540,613
Net income
1,330,410
829,750
540,613
Less: Preferred stock dividends
-
46,704
49,410
Less: Preferred stock redemption charge
-
-
9,769
Less: Net income (loss) attributable to noncontrolling interests(1)
97,978
24,796
17,839
Net income (loss) attributable to common stockholders
$
1,232,432
$
758,250
$
463,595
Average number of common shares outstanding:
Basic
401,845
373,620
367,237
Diluted
403,808
375,250
369,001
Earnings per share:
Basic:
Income (loss) from continuing operations
$
3.31
$
2.22
$
1.47
Net income (loss) attributable to common stockholders
$
3.07
$
2.03
$
1.26
Diluted:
Income (loss) from continuing operations
$
3.29
$
2.21
$
1.47
Net income (loss) attributable to common stockholders
$
3.05
$
2.02
$
1.26
(1) Includes amounts attributable to redeemable noncontrolling interests
See accompanying notes
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED)
WELLTOWER INC. AND SUBSIDIARIES
(In thousands)
Year Ended December 31,
Net income
$
1,330,410
$
829,750
$
540,613
Other comprehensive income (loss):
Reclassification adjustment for write down of equity investment
-
-
(5,120
)
Unrecognized actuarial gain (loss)
Foreign currency translation gain (loss)
161,915
(253,022
)
337,433
Derivative and financial instruments designated as hedges gain (loss)
(131,120
)
211,390
(252,168
)
Total other comprehensive income (loss)
31,335
(41,288
)
80,414
Total comprehensive income (loss)
1,361,745
788,462
621,027
Less: Total comprehensive income (loss) attributable to
noncontrolling interests(1)
111,701
1,812
40,187
Total comprehensive income (loss) attributable to common stockholders
$
1,250,044
$
786,650
$
580,840
(1) Includes amounts attributable to redeemable noncontrolling interests.
See accompanying notes
CONSOLIDATED STATEMENTS OF EQUITY
WELLTOWER INC. AND SUBSIDIARIES
(in thousands)
Accumulated
Capital in
Other
Preferred
Common
Excess of
Treasury
Cumulative
Cumulative
Comprehensive
Other
Noncontrolling
Stock
Stock
Par Value
Stock
Net Income
Dividends
Income (Loss)
Equity
Interests
Total
Balances at December 31, 2016
$
1,006,250
$
363,071
$
16,999,691
$
(54,741
)
$
4,803,575
$
(8,144,981
)
$
(169,531
)
$
3,059
$
475,079
$
15,281,472
Comprehensive income:
Net income (loss)
522,774
20,819
543,593
Other comprehensive income (loss)
58,066
22,348
80,414
Total comprehensive income
624,007
Net change in noncontrolling interests
13,473
(15,941
)
(2,468
)
Amounts related to issuance of common stock
from dividend reinvestment and stock
incentive plans, net of forfeitures
21,494
(9,807
)
(2,399
)
9,690
Net proceeds from issuance of common stock
8,881
612,555
621,436
Redemption of equity membership units
5,465
(11
)
5,545
Redemption of preferred stock
(287,500
)
9,760
(9,769
)
(287,509
)
Conversion of preferred stock
(247
)
-
Option compensation expense
Dividends paid:
Common stock dividends
(1,277,321
)
(1,277,321
)
Preferred stock dividends
(49,410
)
(49,410
)
Balances at December 31, 2017
718,503
372,449
17,662,681
(64,559
)
5,316,580
(9,471,712
)
(111,465
)
502,305
14,925,452
Comprehensive income:
Net income (loss)
804,954
25,065
830,019
Other comprehensive income (loss)
(18,304
)
(22,984
)
(41,288
)
Total comprehensive income
788,731
Net change in noncontrolling interests
(43,101
)
449,879
406,778
Amounts related to issuance of common stock
from dividend reinvestment and stock
incentive plans, net of forfeitures
28,277
(3,940
)
(376
)
24,149
Net proceeds from issuance of common stock
11,828
776,506
788,334
Conversion of preferred stock
(5
)
-
Dividends paid:
Common stock dividends
(1,300,141
)
(1,300,141
)
Preferred stock dividends
(46,704
)
(46,704
)
Balances at December 31, 2018
718,498
384,465
18,424,368
(68,499
)
6,121,534
(10,818,557
)
(129,769
)
954,265
15,586,599
Comprehensive income:
Net income (loss)
1,232,432
67,365
1,299,797
Other comprehensive income (loss)
17,612
13,440
31,052
Total comprehensive income
1,330,849
Net change in noncontrolling interests
3,583
(68,887
)
(65,304
)
Amounts related to issuance of common stock
from dividend reinvestment and stock
incentive plans, net of forfeitures
25,445
(10,456
)
(282
)
14,869
Net proceeds from issuance of common stock
13,666
1,030,925
1,044,591
Conversion of preferred stock
(718,498
)
12,712
705,786
-
Dividends paid:
Common stock dividends
(1,404,977
)
(1,404,977
)
Balances at December 31, 2019
$
-
$
411,005
$
20,190,107
$
(78,955
)
$
7,353,966
$
(12,223,534
)
$
(112,157
)
$
$
966,183
$
16,506,627
See accompanying notes
CONSOLIDATED STATEMENTS OF CASH FLOWS
WELLTOWER INC. AND SUBSIDIARIES
(in thousands)
Year Ended December 31,
Operating activities:
Net income
$
1,330,410
$
829,750
$
540,613
Adjustments to reconcile net income to net cash provided from (used in) operating
activities:
Depreciation and amortization
1,027,073
950,459
921,720
Other amortization expenses
16,827
17,000
16,521
Provision for loan losses
18,690
-
62,966
Impairment of assets
28,133
115,579
124,483
Stock-based compensation expense
25,047
27,646
19,102
Loss (gain) on derivatives and financial instruments, net
(4,399
)
(4,016
)
2,284
Loss (gain) on extinguishment of debt, net
84,155
16,097
37,241
Loss (income) from unconsolidated entities
(42,434
)
83,125
Rental income in excess of cash received
(106,331
)
(32,857
)
(80,398
)
Amortization related to above (below) market leases, net
(676
)
2,608
Loss (gain) on real estate dispositions, net
(748,041
)
(415,575
)
(344,250
)
Distributions by unconsolidated entities
-
Increase (decrease) in accrued expenses and other liabilities
(29,068
)
70,762
26,811
Decrease (increase) in receivables and other assets
(63,418
)
5,829
23,486
Net cash provided from (used in) operating activities
1,535,968
1,583,944
1,434,177
Investing activities:
Cash disbursed for acquisitions, net of cash acquired
(3,959,683
)
(3,560,360
)
(805,264
)
Cash disbursed for capital improvements to existing properties
(328,824
)
(266,183
)
(250,276
)
Cash disbursed for construction in progress
(323,488
)
(160,706
)
(232,715
)
Capitalized interest
(15,272
)
(7,905
)
(13,489
)
Investment in loans receivable
(119,699
)
(112,048
)
(101,216
)
Principal collected on loans receivable
127,706
203,935
214,980
Other investments, net of payments
(8,282
)
(44,535
)
(44,094
)
Contributions to unconsolidated entities
(279,631
)
(136,854
)
(114,365
)
Distributions by unconsolidated entities
216,231
90,916
70,287
Proceeds from (payments on) derivatives
(8,499
)
65,399
52,719
Proceeds from sales of real property
2,650,650
1,541,870
1,378,014
Net cash provided from (used in) investing activities
(2,048,791
)
(2,386,471
)
154,581
Financing activities:
Net increase (decrease) under unsecured credit facility and commercial paper
440,597
428,000
74,000
Proceeds from issuance of senior unsecured notes
3,974,559
2,824,176
7,500
Payments to extinguish senior unsecured notes
(3,335,290
)
(1,450,000
)
(5,000
)
Net proceeds from the issuance of secured debt
343,696
45,447
241,772
Payments on secured debt
(284,433
)
(362,841
)
(1,144,346
)
Net proceeds from the issuance of common stock
1,056,125
789,575
621,987
Redemption of preferred stock
-
-
(287,500
)
Payments for deferred financing costs and prepayment penalties
(84,142
)
(29,691
)
(54,333
)
Contributions by noncontrolling interests(1)
55,365
39,207
56,560
Distributions to noncontrolling interests(1)
(172,940
)
(109,871
)
(87,711
)
Cash distributions to stockholders
(1,400,712
)
(1,348,863
)
(1,325,617
)
Other financing activities
(15,675
)
(6,771
)
(10,839
)
Net cash provided from (used in) financing activities
577,150
818,368
(1,913,527
)
Effect of foreign currency translation on cash and cash equivalents and restricted cash
5,310
(9,015
)
26,852
Increase (decrease) in cash, cash equivalents and restricted cash
69,637
6,826
(297,917
)
Cash, cash equivalents and restricted cash at beginning of period
316,129
309,303
607,220
Cash, cash equivalents and restricted cash at end of period
$
385,766
$
316,129
$
309,303
Supplemental cash flow information:
Interest paid
$
574,536
$
501,404
$
488,265
Income taxes paid
14,338
2,250
10,410
(1) Includes amounts attributable to redeemable noncontrolling interests.
See accompanying notes.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Business
Welltower Inc., an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. Welltower™, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing, post-acute communities and outpatient medical properties.
2. Accounting Policies and Related Matters
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of our wholly-owned subsidiaries and joint venture (“JV”) entities that we control, through voting rights or other means. All material intercompany transactions and balances have been eliminated in consolidation. At inception of JV transactions, we identify entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and determine which business enterprise is the primary beneficiary of its operations. A VIE is broadly defined as an entity where either (i) the equity investors as a group, if any, do not have a controlling financial interest, or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. We consolidate investments in VIEs when we are determined to be the primary beneficiary. Accounting Standards Codification Topic 810, Consolidations (“ASC 810”), requires enterprises to perform a qualitative approach to determining whether or not a VIE will need to be consolidated. This evaluation is based on an enterprise’s ability to direct and influence the activities of a VIE that most significantly impact that entity’s economic performance. For investments in JVs, U.S. GAAP may preclude consolidation by the sole general partner in certain circumstances based on the type of rights held by the limited partner(s). We assess the limited partners’ rights and their impact on our consolidation conclusions, and we reassess if there is a change to the terms or in the exercisability of the rights of the limited partners, the sole general partner increases or decreases its ownership of limited partnership interests, or there is an increase or decrease in the number of outstanding limited partnership interests. We similarly evaluate the rights of managing members of limited liability companies.
Revenue Recognition
For our Triple-net and Outpatient Medical segments, a significant source of our revenue is generated through leasing arrangements. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. Leases in our Outpatient Medical portfolio typically include some form of operating expense reimbursement by the tenant. Certain payments made to operators are treated as lease incentives and amortized as a reduction of revenue over the lease term.
For our Seniors Housing Operating segment, revenue from resident fees and services is predominantly service-based, and generally are recognized monthly as services are provided. Agreements with residents generally have a term of one year and are cancelable by the resident with 30 days’ notice. Management contracts are present in some of our joint venture agreements to provide asset and property management, leasing, marketing and other services.
Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of collectability risk.
We recognize gains on the disposition of real estate when the recognition criteria have been met, generally at the time the risks and rewards and title have transferred and we no longer have substantial continuing involvement with the real estate sold. We recognize losses from disposition of real estate when known.
Cash and Cash Equivalents
Cash and cash equivalents consist of all highly liquid investments with an original maturity of three months or less.
Restricted Cash
Restricted cash primarily consists of amounts held by lenders to provide future payments for real estate taxes, insurance, tenant and capital improvements, amounts held in escrow relating to transactions we are entitled to receive over a period of time as outlined in the escrow agreement and net proceeds from property sales that were executed as tax-deferred dispositions under Internal Revenue Code (“IRC”) section 1031.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred Loan Expenses
Deferred loan expenses are costs incurred by us in connection with the issuance, assumption and amendments of debt arrangements. Deferred loan expenses related to debt instruments, excluding the primary unsecured credit facility, are recorded as a reduction of the related debt liability. Deferred loan expenses related to the primary unsecured credit facility are included in other assets. We amortize these costs over the term of the debt using the straight-line method, which approximates the effective interest method.
Investments in Unconsolidated Entities
Investments in entities that we do not consolidate but have the ability to exercise significant influence over operating and financial policies are reported under the equity method of accounting. Under the equity method, our share of the investee’s earnings or losses is included in our consolidated results of operations. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest inclusive of transaction costs. To the extent that our cost basis is different from the basis reflected at the entity level, the basis difference is generally amortized over the lives of the related assets and liabilities, and such amortization is included in our share of equity in earnings of the entity. We evaluate our equity method investments for impairment based upon a comparison of the estimated fair value of the equity method investment to its carrying value. When we determine a decline in the estimated fair value of such an investment below its carrying value is other-than-temporary, an impairment is recorded.
Equity Securities
Equity securities are measured at fair value with gains and losses recognized in loss (gain) on derivatives and financial instruments, net in the Consolidated Statements of Comprehensive Income.
Redeemable Noncontrolling Interests
Certain noncontrolling interests are redeemable at fair value. Accordingly, we record the carrying amount of the noncontrolling interests at the greater of (i) the initial carrying amount, increased or decreased for the noncontrolling interest’s share of net income or loss and its share of other comprehensive income or loss, and dividends or (ii) the redemption value. If it is probable that the interests will be redeemed in the future, we accrete the carrying value to the redemption value over the period until expected redemption, currently a weighted-average period of approximately one year. In accordance with ASC 810, the redeemable noncontrolling interests are classified outside of permanent equity, as a mezzanine item, in the balance sheet. At December 31, 2019, the current redemption value of redeemable noncontrolling interests exceeded the carrying value of $475,877,000 by $14,953,000.
We entered into certain DownREIT partnerships which give a real estate seller the ability to exchange its property on a tax deferred basis for equity membership interests (“OP units”). The OP units may be redeemed any time following the first anniversary of the date of issuance at the election of the holders for one share of our common stock per unit or, at our option, cash.
Real Property Owned
Real estate acquisitions are generally classified as asset acquisitions for which we record tangible assets and identifiable intangible assets and liabilities at cost on a relative fair value basis. Liabilities assumed and any associated noncontrolling interests are reflected at fair value. Tangible assets primarily consist of land, buildings and improvements.
Identifiable intangible assets and liabilities consist primarily of the above or below market component of in-place leases and the value associated with the presence of in-place leases. The value allocable to the above or below market component of the acquired in-place lease is determined based upon the present value (using a discount rate which reflects the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term, and (ii) management’s estimate of the amounts that would be paid using fair market rates over the remaining term of the lease. The amounts allocated to above market leases are included in acquired lease intangibles and below market leases are included in other liabilities in the balance sheet and are amortized to rental income over the remaining terms of the respective leases or lease-up period.
The total amount of other intangible assets acquired is further allocated to in-place lease values and customer relationship values for in-place tenants based on management’s evaluation of the specific characteristics of each tenant’s lease and our overall relationship with that respective tenant. Characteristics considered by management in allocating these values include the nature and extent of our existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors. The total amount of other intangible assets acquired is further allocated to in-place lease values for in-place residents with such value representing (i) value associated with lost revenue related to tenant reimbursable operating costs that would be incurred in an assumed re-leasing period, and (ii) value associated with lost rental revenue from existing leases during an assumed re-leasing period. This intangible asset is amortized over the remaining life of the lease or the assumed re-leasing period.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Real property developed by us is recorded at cost, including the capitalization of construction period interest. These properties are depreciated on a straight-line basis over their estimated useful lives which range from 15 to 40 years for buildings and 5 to 15 years for improvements. We consider costs incurred in conjunction with re-leasing properties, including tenant improvements and lease commissions, to represent the acquisition of productive assets and, accordingly, such costs are reflected as investment activities in our Consolidated Statement of Cash Flows.
The net book value of long-lived assets is reviewed quarterly on a property by property basis to determine if facts and circumstances suggest that the assets may be impaired or that the depreciable life may need to be changed. We consider external factors relating to each asset and the existence of a master lease which may link the cash flows of an individual asset to a larger portfolio of assets leased to the same tenant. If these factors and the projected undiscounted cash flows of the assets over the remaining depreciation period indicate that the assets will not be recoverable, the carrying value is reduced to the estimated fair market value. In addition, we are exposed to the risks inherent in concentrating investments in real estate, and in particular, the seniors housing and health care industries. A downturn in the real estate industry could adversely affect the value of our properties and our ability to sell properties for a price or on terms acceptable to us. Additionally, properties that meet the held for sale criteria are recorded at the lessor of fair value less costs to sell or the carrying value.
Expenditures for repairs and maintenance are expensed as incurred.
Capitalization of Construction Period Interest
We capitalize interest costs associated with funds used for the construction of properties owned by us. The amount capitalized is based upon the balance outstanding during the construction period using the rate of interest which approximates our company-wide cost of financing. Our interest expense reflected in the Consolidated Statements of Comprehensive Income has been reduced by the amounts capitalized.
Loans Receivable
Loans receivable are recorded on our Consolidated Balance Sheets in real estate loans receivable, net of allowance, or for non real estate loans receivable, in receivables and other assets. Real estate loans receivable consists of mortgage loans and other real estate loans which are primarily collateralized by a first, second or third mortgage lien, a leasehold mortgage on, or an assignment of the partnership interest in, the related properties, corporate guarantees and/or personal guarantees. Non real estate loans are generally corporate loans with no real estate backing. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of collectability risks.
In Substance Real Estate Investments
We provide loans to third parties for the acquisition, development and construction of real estate. Under these arrangements, it is possible that we will participate in the expected residual profits of the project through the sale, refinancing or acquisition of the property. We evaluate the characteristics of each arrangement, including its risks and rewards, to determine whether they are more similar to those associated with a loan or an investment in real estate. Arrangements with characteristics implying loan classification are presented as real estate loans receivable and result in the recognition of interest income. Arrangements with characteristics implying real estate joint ventures are treated as in substance real estate investments and presented as investments in unconsolidated entities and are accounted for using the equity method. The classification of each arrangement as either a real estate loan receivable or investment in unconsolidated entity involves judgment and relies on various factors, including market conditions, amount and timing of expected residual profits, credit enhancements in the form of guarantees, estimated fair value of the collateral, and significance of borrower equity in the project, among others. The classification of such arrangements is performed at inception, and periodically reassessed when significant changes occur in the circumstances or conditions described above.
Allowance for Losses on Loans Receivable
The allowance for losses on loans receivable is maintained at a level believed adequate to absorb potential losses in our loans receivable. The determination of the allowance is based on a quarterly evaluation of these loans, including general economic conditions and estimated collectability of loan payments. We evaluate the collectability of our loans receivable based on a combination of factors, including, but not limited to, delinquency status, historical loan charge-offs, financial strength of the borrower and guarantors, and value of the underlying collateral. If such factors indicate that there is greater risk of loan charge-offs, additional allowances or placement on non-accrual status may be required. A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the original loan agreement. Consistent with this definition, all loans on non-accrual are deemed impaired. To the extent circumstances improve and the risk of collectability is diminished, we will return these loans to income accrual status. While a loan is on non-accrual status, any cash receipts are applied against the outstanding principal balance. Any loans with collectability concerns are subjected to a projected payoff valuation. The valuation is based on the expected future cash flows and/or the estimated fair value of the underlying collateral. The valuation is compared to the outstanding balance to determine the reserve needed for each loan. We may base our valuation on a loan’s observable market price, if any, or the fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the collateral.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Goodwill
Goodwill is tested annually for impairment and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount, including goodwill, exceeds the reporting unit’s fair value and the implied fair value of goodwill is less than the carrying amount of that goodwill. We have not had any goodwill impairments.
Fair Value of Derivative Instruments
Derivatives are recorded at fair value on the balance sheet as assets or liabilities. The valuation of derivative instruments requires us to make estimates and judgments that affect the fair value of the instruments. Fair values of our derivatives are estimated by pricing models that consider the forward yield curves and discount rates. The fair value of our forward exchange contracts are estimated by pricing models that consider foreign currency spot rates, forward trade rates and discount rates. Such amounts and the recognition of such amounts are subject to significant estimates that may change in the future. See Note 12 for additional information.
Federal Income Tax
We have elected to be treated as a REIT under the applicable provisions of the IRC, commencing with our first taxable year, and made no provision for U.S. federal income tax purposes prior to our acquisition of our taxable REIT subsidiaries (“TRSs”). As a result of these as well as subsequent acquisitions, we now record income tax expense or benefit with respect to certain of our entities that are taxed as TRSs under provisions similar to those applicable to regular corporations and not under the REIT provisions. We account for deferred income taxes using the asset and liability method and recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our consolidated financial statements or tax returns. Under this method, we determine deferred tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Any increase or decrease in the deferred tax liability that results from a change in circumstances, and that causes a change in our judgment about expected future tax consequences of events, is included in the tax provision when such changes occur. Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards. A valuation allowance is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will not be realized. Any increase or decrease in the valuation allowance that results from a change in circumstances, and that causes a change in our judgment about the realizability of the related deferred tax asset, is included in the tax provision when such changes occur. See Note 19 for additional information.
Foreign Currency
Certain of our subsidiaries’ functional currencies are the local currencies of their respective countries. We translate the results of operations of our foreign subsidiaries into U.S. Dollars using average rates of exchange in effect during the period, and we translate balance sheet accounts using exchange rates in effect at the end of the period. We record resulting currency translation adjustments in accumulated other comprehensive income, a component of stockholders’ equity, on our Consolidated Balance Sheets.
Earnings Per Share
Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares outstanding for the period adjusted for non-vested shares of restricted stock. The computation of diluted earnings per share is similar to basic earnings per share, except that the number of shares is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.
Reclassifications
Certain amounts in prior years have been reclassified to conform to current year presentation.
New Accounting Standards
We adopted Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) ("ASC 842") which requires lessees to recognize assets and liabilities on their Consolidated Balance Sheet related to the rights and obligations created by most leases, while continuing to recognize expenses on their Consolidated Statement of Comprehensive Income over the lease term. We adopted ASC 842 as of January 1, 2019, using the modified retrospective approach and have elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, permits us to carry forward our prior conclusions for lease classification and initial direct costs on existing leases. We also made an accounting policy election to keep short-term leases less than twelve months off the balance sheet for all classes of underlying assets.
In July 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-11 "Leases (Topic 842): Targeted Improvements" that (1) simplifies transition requirements for both lessees and lessors by adding an option that permits entities to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented in its financial statements and (2) allows lessors to elect, as a practical expedient, to not separate lease and non-lease components in
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
a contract, and instead to account for as a single lease component, if certain criteria are met. This practical expedient causes an entity to assess whether a contract is predominantly lease or service-based and recognize the entire contract under the relevant accounting guidance (e.g. predominantly lease-based would be accounted for under ASC 842 and predominantly service-based would be accounted for under ASU 2014-09, "Revenue from Contracts with Customers (ASC 606)"). For the year ended December 31, 2018, we recognized revenue for our Seniors Housing Operating resident agreements in accordance with the provisions of the prior lease guidance, ASC 840, "Leases". Upon adoption of ASC 842, we elected the lessor practical expedient described above and recognized our revenue for our Seniors Housing Operating segment based upon the predominant component, generally the non-lease service component. Therefore, beginning on January 1, 2019, we accounted for the majority of such resident agreements under ASC 606. The timing and pattern of revenue recognition is substantially the same as that prior to adoption.
The FASB also issued ASU 2018-20 "Leases (Topic 842): Narrow Improvements for Lessors", which provides lessors the ability to make an accounting policy election not to evaluate whether certain sales taxes and other similar taxes imposed by a governmental authority on a specific lease revenue-producing transaction are the primary obligation of the lessor as owner of the underlying leased asset. A lessor that makes this election will exclude these taxes from the measurement of lease revenue and the associated expense. Upon adoption of ASC 842, we utilized this practical expedient in instances in which real estate taxes are paid directly by our tenants to taxing authorities. For triple-net leasing arrangements in which the tenant remits payment for real estate taxes to us and we pay the taxing authority, we have included the associated revenue and expense in rental income and property operating expenses on the Consolidated Statements of Comprehensive Income. This reporting had no impact on our net income.
For leases in which the Company is the lessee, primarily consisting of ground leases and various office and equipment leases, we recognized upon adoption a right of use asset of $509,386,000 which included the present value of minimum leases payments, existing above and/or below market lease intangible values and existing straight-line rent liabilities associated with such leases. We also recognized operating lease liabilities of $357,070,000. The standard did not materially impact our Consolidated Statements of Comprehensive Income or our Consolidated Statement of Cash Flows. See Note 6 for additional details.
In 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” This standard requires a new forward-looking “expected loss” model to be used for receivables, held-to-maturity debt, loans receivable, and other instruments. In November 2018, the FASB issued an amendment excluding operating lease receivables accounted for under the new leases standard from the scope of the new credit loss standard. ASU 2016-13 is effective for the Company on January 1, 2020.
We have continued our implementation efforts, including data collection and processing, model development and validation, and establishment of the governance and control processes. We currently do not believe that the adoption of this new guidance will have a material impact on our consolidated financial statements.
3. Real Property Acquisitions and Development
The total purchase price for all properties acquired has been allocated to the tangible and identifiable intangible assets and liabilities at cost on a relative fair value basis. Liabilities assumed and any associated noncontrolling interests are reflected at fair value. The results of operations for these acquisitions have been included in our consolidated results of operations since the date of acquisition and are a component of the appropriate segments. Transaction costs primarily represent costs incurred with acquisitions, including due diligence costs, fees for legal and valuation services, termination of pre-existing relationships computed based on the fair value of the assets acquired, lease termination fees and other acquisition-related costs. Transaction costs related to asset acquisitions are capitalized as a component of the purchase price and all other non-capitalizable costs are reflected in other expenses on our Consolidated Statement of Comprehensive Income.
The following tables summarize our real property investment activity by segment for the years ended December 31, 2019, 2018 and 2017 (in thousands):
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2019
Seniors Housing Operating
Triple-net
Outpatient Medical
Total
Land and land improvements
$
154,470
$
24,097
$
293,933
$
472,500
Buildings and improvements
1,518,748
203,282
1,954,928
3,676,958
Acquired lease intangibles
76,009
-
183,921
259,930
Real property held for sale
17,435
-
-
17,435
Construction in progress
36,174
-
-
36,174
Right of use assets, net
-
-
58,377
58,377
Receivables and other assets
15,634
-
1,586
17,220
Total assets acquired(1)
1,818,470
227,379
2,492,745
4,538,594
Secured debt
(194,408
)
-
(206,754
)
(401,162
)
Lease liabilities
-
-
(47,740
)
(47,740
)
Accrued expenses and other liabilities
(12,024
)
-
(32,893
)
(44,917
)
Total liabilities assumed
(206,432
)
-
(287,387
)
(493,819
)
Noncontrolling interests(2)
(67,987
)
(4,015
)
(1,201
)
(73,203
)
Non-cash acquisition related activity(3)
(11,889
)
-
-
(11,889
)
Cash disbursed for acquisitions
1,532,162
223,364
2,204,157
3,959,683
Construction in progress additions
227,018
61,414
60,884
349,316
Capitalized interest
(8,889
)
(2,385
)
(3,998
)
(15,272
)
Foreign currency translation
(8,643
)
(878
)
-
(9,521
)
Accruals(4)
-
-
(1,035
)
(1,035
)
Cash disbursed for construction in progress
209,486
58,151
55,851
323,488
Capital improvements to existing properties
260,413
17,426
50,985
328,824
Total cash invested in real property, net of cash acquired
$
2,002,061
$
298,941
$
2,310,993
$
4,611,995
(1) Excludes $2,090,000 of unrestricted and restricted cash acquired.
(2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests.
(3) Relates to the acquisition of assets previously recognized as investments in unconsolidated entities.
(4) Represents non-cash accruals for amounts to be paid in future periods for properties that converted, off-set by amounts paid in the current period.
Year Ended December 31, 2018
Seniors Housing Operating
Triple-net
Outpatient Medical
Total
Land and land improvements
$
51,440
$
413,588
$
77,239
$
542,267
Buildings and improvements
621,731
2,242,884
478,740
3,343,355
Acquired lease intangibles
69,504
9,690
50,813
130,007
Real property held for sale
-
396,265
22,032
418,297
Receivables and other assets
1,492
1,354
1,185
4,031
Total assets acquired(1)
744,167
3,063,781
630,009
4,437,957
Secured debt
(134,752
)
-
(169,156
)
(303,908
)
Accrued expenses and other liabilities
(18,463
)
(13,199
)
(14,896
)
(46,558
)
Total liabilities assumed
(153,215
)
(13,199
)
(184,052
)
(350,466
)
Noncontrolling interests(2)
(14,390
)
(512,741
)
-
(527,131
)
Cash disbursed for acquisitions
576,562
2,537,841
445,957
3,560,360
Construction in progress additions
82,621
55,558
26,565
164,744
Capitalized interest
(3,190
)
(2,238
)
(2,477
)
(7,905
)
Foreign currency translation
3,934
-
4,206
Accruals(3)
-
-
(339
)
(339
)
Cash disbursed for construction in progress
83,365
53,592
23,749
160,706
Capital improvements to existing properties
201,001
10,046
55,136
266,183
Total cash invested in real property, net of cash acquired
$
860,928
$
2,601,479
$
524,842
$
3,987,249
(1) Excludes $395,397,000 of unrestricted and restricted cash acquired.
(2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests.
(3) Represents non-cash accruals for amounts to be paid in future periods for properties that converted, off-set by amounts paid in the current period.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2017
Seniors Housing Operating
Triple-net
Outpatient Medical
Total
Land and land improvements
$
42,525
$
33,416
$
40,565
$
116,506
Buildings and improvements
428,777
248,459
159,643
836,879
Acquired lease intangibles
63,912
-
24,014
87,926
Receivables and other assets
3,959
-
3,969
Total assets acquired(1)
539,173
281,875
224,232
1,045,280
Secured debt
-
-
(25,708
)
(25,708
)
Accrued expenses and other liabilities
(46,301
)
(21,236
)
(3,181
)
(70,718
)
Total liabilities assumed
(46,301
)
(21,236
)
(28,889
)
(96,426
)
Noncontrolling interests(2)
(4,701
)
(7,275
)
(9,080
)
(21,056
)
Non-cash acquisition related activity(3)
(67,633
)
(54,901
)
-
(122,534
)
Cash disbursed for acquisitions
420,538
198,463
186,263
805,264
Construction in progress additions
84,874
120,797
37,094
242,765
Capitalized interest
(9,106
)
(4,713
)
(2,406
)
(16,225
)
Foreign currency translation
(6,830
)
(610
)
-
(7,440
)
Accruals(4)
-
-
13,615
13,615
Cash disbursed for construction in progress
68,938
115,474
48,303
232,715
Capital improvements to existing properties
185,473
19,989
44,814
250,276
Total cash invested in real property, net of cash acquired
$
674,949
$
333,926
$
279,380
$
1,288,255
(1) Excludes $6,591,000 of unrestricted and restricted cash acquired.
(2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests.
(3) For the Seniors Housing Operating segment, includes $59,665,000 related to the acquisition of assets previously financed as investments in unconsolidated entities and $7,968,000 related to the acquisition of assets previously financed as loans receivable. For the Triple-net segment, amount is related to the acquisition of assets previously financed as loans receivable.
(4) Represents non-cash accruals for amounts to be paid in future periods for properties that converted, off-set by amounts paid in the current period.
Acquisition of Quality Care Properties
On July 26, 2018, we completed the acquisition of Quality Care Properties Inc. ("QCP"), with QCP shareholders receiving $20.75 of cash for each share of QCP common stock and all existing QCP debt was repaid upon closing. Prior to the acquisition, ProMedica Health System ("ProMedica") completed the acquisition of HCR ManorCare. Immediately following the acquisition of QCP, we formed an 80/20 joint venture with ProMedica to own the real estate associated with the 218 seniors housing properties leased to ProMedica under a lease agreement with the following key terms: (i) 15-year absolute triple-net master lease with three five-year renewal options; (ii) initial annual cash rent of $179 million with a year one escalator of 1.375% and 2.75% annual escalators thereafter; and (iii) full corporate guarantee of ProMedica. Additionally, we acquired 59 seniors housing properties classified as held for sale and leased to ProMedica under a non-yielding lease, 12 seniors housing properties and one surgery center classified as held for sale and leased to operators under existing triple-net leases, 14 seniors housing properties leased to operators under existing triple-net leases and one multi-tenant medical office building leased to various tenants. The aggregate consideration to acquire the QCP shares and repay outstanding QCP debt was approximately $3.5 billion.
We concluded that the QCP acquisition met the definition of an asset acquisition under ASU 2017-01, "Clarifying the Definition of a Business". The following table presents the purchase price calculation and the allocation to assets acquired and liabilities assumed based upon their relative fair value:
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
Land and land improvements
$
417,983
Buildings and improvements
2,253,451
Acquired lease intangibles
12,820
Real property held for sale
418,297
Cash and cash equivalents
381,913
Restricted cash
4,981
Receivables and other assets
1,354
Total assets acquired
3,490,799
Accrued expenses and other liabilities
(13,199
)
Total liabilities assumed
(13,199
)
Noncontrolling interests
(512,741
)
Net assets acquired
$
2,964,859
Construction Activity
The following is a summary of the construction projects that were placed into service and began generating revenues during the periods presented (in thousands):
Year Ended
December 31, 2019
December 31, 2018
December 31, 2017
Development projects:
Seniors Housing Operating
$
28,117
$
86,931
$
3,634
Triple-net
-
90,055
283,472
Outpatient Medical
21,006
11,358
63,036
Total development projects
49,123
188,344
350,142
Expansion projects
-
20,029
10,336
Total construction in progress conversions
$
49,123
$
208,373
$
360,478
4. Real Estate Intangibles
The following is a summary of our real estate intangibles, excluding those classified as held for sale, as of the dates indicated (dollars in thousands):
December 31, 2019
December 31, 2018
Assets:
In place lease intangibles
$
1,513,836
$
1,410,725
Above market tenant leases
59,540
63,935
Below market ground leases(1)
-
64,513
Lease commissions
43,675
41,986
Gross historical cost
1,617,051
1,581,159
Accumulated amortization
(1,181,158
)
(1,197,336
)
Net book value
$
435,893
$
383,823
Weighted-average amortization period in years
10.3
16.0
Liabilities:
Below market tenant leases
$
99,035
$
81,676
Above market ground leases(1)
-
8,540
Gross historical cost
99,035
90,216
Accumulated amortization
(49,390
)
(44,266
)
Net book value
$
49,645
$
45,950
Weighted-average amortization period in years
8.6
14.7
(1) Effective on January 1, 2019 with the adoption of ASC 842, above and below market ground lease intangibles are reported within the right of use assets, net line on the Consolidated Balance Sheet.
The following is a summary of real estate intangible amortization income (expense) for the periods presented (in thousands):
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31,
Rental income related to (above)/below market tenant leases, net
$
$
(1,269
)
$
Depreciation and amortization related to in place lease intangibles and lease commissions
(135,047
)
(122,515
)
(145,132
)
The future estimated aggregate amortization of intangible assets and liabilities is as follows for the periods presented (in thousands):
Assets
Liabilities
$
119,973
$
9,498
59,824
8,529
40,802
7,758
34,803
5,483
27,415
3,362
Thereafter
153,076
15,015
Totals
$
435,893
$
49,645
5. Dispositions and Real Property Held for Sale
We periodically sell properties for various reasons, including favorable market conditions, the exercise of tenant purchase options or reduction of concentrations (e.g. property type, relationship or geography). During the year ended December 31, 2019, we disposed of our Benchmark Senior Living portfolio for a gross sale price of $1.8 billion and a gain on sale of $520 million.
At December 31, 2019, 18 Seniors Housing Operating, 11 Triple-net and 42 Outpatient Medical properties with an aggregate net real estate balance of $1,253,008,000 were classified as held for sale for which we expect gross sales proceeds of approximately $1,960,685,000. In addition to the real property balances held for sale, secured debt of $112,589,000 and net other assets and liabilities of $25,194,000 are included in the Consolidated Balance Sheet related to held for sale properties. During the year ended December 31, 2019, we recorded net impairment charges of $13,130,000 related to certain held for sale properties for which the carrying value exceeded the fair values, less estimated costs to sell, and $15,003,000 related to five held for use properties for which the carrying value exceeded the sum of the future undiscounted cash flows. The following is a summary of our real property disposition activity for the periods presented (in thousands):
Year Ended
December 31, 2019
December 31, 2018
December 31, 2017
Real property dispositions:
Seniors Housing Operating
$
1,232,816
$
36,627
$
74,832
Triple-net
667,632
835,093
916,689
Outpatient Medical
253,397
19,697
Total dispositions
1,900,930
1,125,117
1,011,218
Gain (loss) on sales of real property, net
748,041
415,575
344,250
Net other assets (liabilities) disposed
1,679
1,178
22,546
Proceeds from real property sales
$
2,650,650
$
1,541,870
$
1,378,014
Dispositions and Assets Held for Sale
Pursuant to our adoption of ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (ASU 2014-08”), operating results attributable to properties sold subsequent to or classified as held for sale after January 1, 2014 and which do not meet the definition of discontinued operations are no longer reclassified on our Consolidated Statements of Comprehensive Income. The following represents the activity related to these properties for the periods presented (in thousands):
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31,
Revenues:
Total revenues
$
449,080
$
665,384
$
769,835
Expenses:
Interest expense
4,924
6,617
12,458
Property operating expenses
257,510
383,907
374,370
Provision for depreciation
65,698
109,674
153,009
Total expenses
328,132
500,198
539,837
Income (loss) from real estate dispositions, net
$
120,948
$
165,186
$
229,998
6. Leases
We lease land, buildings, office space and certain equipment. Many of our leases include a renewal option to extend the term from one to 25 years or more. Renewal options that we are reasonably certain to exercise are recognized in our right-of-use assets and lease liabilities. As most of our leases do not provide a rate implicit in the lease agreement, we use our incremental borrowing rate available at lease commencement to determine the present value of lease payments. The incremental borrowing rates were determined using our longer term borrowing rates (actual pricing through 30 years, as well as other longer-term market rates). For leases that commenced prior to January 1, 2019, we used the incremental borrowing rate on December 31, 2018.
We sublease certain real estate to a third party. Our sublease portfolio consists of a finance lease with Genesis HealthCare for seven buildings.
The components of lease expense were as follows for the period presented (in thousands):
Classification
Year Ended December 31, 2019
Operating lease cost: (1)
Real estate lease expense
Property operating expenses
$
25,166
Non-real estate investment lease expense
General and administrative expenses
1,654
Finance lease cost:
Amortization of leased assets
Property operating expenses
7,795
Interest on lease liabilities
Interest expense
4,748
Sublease income
Rental income
(4,173
)
Total
$
35,190
(1) Includes short-term leases which are immaterial.
Maturities of lease liabilities as of December 31, 2019 are as follows (in thousands):
Operating Leases
Finance Leases
$
23,356
$
9,121
23,322
8,786
22,147
8,149
22,117
69,182
21,294
1,419
Thereafter
1,073,396
89,678
Total lease payments
1,185,632
186,335
Less: Imputed interest
(820,829
)
(77,445
)
Total present value of lease liabilities
$
364,803
$
108,890
Supplemental balance sheet information related to leases was as follows as of December 31, 2019 (in thousands, except lease terms and discount rate):
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Classification
December 31, 2019
Right of use assets:
Operating leases - real estate
Right of use assets, net
$
374,217
Finance leases - real estate
Right of use assets, net
162,216
Real estate right of use assets, net
536,433
Operating leases - non-real estate investments
Receivables and other assets
12,474
Total right of use assets, net
$
548,907
Lease liabilities:
Operating leases
$
364,803
Financing leases
108,890
Total lease liabilities
$
473,693
Weighted average remaining lease term (years):
Operating leases
46.0
Finance leases
15.9
Weighted average discount rate:
Operating leases
5.00
%
Finance leases
5.18
%
Supplemental cash flow information related to leases was as follows for the date indicated (in thousands):
Classification
Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Decrease (increase) in receivables and other assets
$
6,397
Operating cash flows from operating leases
Increase (decrease) in accrued expenses and other liabilities
(5,489
)
Operating cash flows from finance leases
Decrease (increase) in receivables and other assets
10,732
Financing cash flows from finance leases
Other financing activities
(3,401
)
Substantially all of our operating leases in which we are the lessor contain escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. Leases in our Outpatient Medical portfolio typically include some form of operating expense reimbursement by the tenant. We recognized $1,588,400,000 of rental and other revenues related to operating leases, of which $200,564,000 was for variable lease payments, for the year ended December 31, 2019, which primarily represents the reimbursement of operating costs such as common area maintenance expenses, utilities, insurance and real estate taxes. The following table sets forth the future minimum lease payments receivable for leases in effect at December 31, 2019 (excluding properties in our Seniors Housing Operating portfolio and excluding any operating expense reimbursements) (in thousands):
$
1,430,978
1,384,721
1,346,917
1,302,601
1,265,988
Thereafter
9,026,163
Totals
$
15,757,368
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Loans Receivable
The following is a summary of our loans receivable (in thousands):
Year Ended December 31,
Mortgage loans
$
188,062
$
317,443
Other real estate loans
124,696
81,268
Allowance for losses on real estate loans receivable
(42,376
)
(68,372
)
Real estate loans receivable, net of allowance
270,382
330,339
Non real estate loans
362,850
282,443
Allowance for losses on non real estate loans receivable
(25,996
)
-
Non real estate loans receivable, net of allowance(1)
336,854
282,443
Total loans receivable, net of allowance
$
607,236
$
612,782
(1) Included in receivables and other assets on the Consolidated Balance Sheets
The following is a summary of our loan activity for the periods presented (in thousands):
Year Ended
December 31, 2019
December 31, 2018
December 31, 2017
Advances on loans receivable:
Investments in new loans
$
46,824
$
77,289
$
61,122
Draws on existing loans
72,875
34,759
40,094
Net cash advances on loans receivable
119,699
112,048
101,216
Receipts on loans receivable:
Loan payoffs
118,703
144,700
181,549
Principal payments on loans
9,003
59,235
33,431
Net cash receipts on loans
127,706
203,935
214,980
Net cash advances (receipts) on loans
$
(8,007
)
$
(91,887
)
$
(113,764
)
In 2016, we restructured real estate loans with Genesis Healthcare and recorded a loan loss charge in the amount of $6,935,000 on one of the loans as the present value of expected future cash flows was less than the carrying value of the loan. During 2017, we recorded an additional loan loss charge of $62,966,000 relating to real estate loans receivable from Genesis HealthCare based on an estimation of future cash flows discounted at the effective interest rate of the loans. In 2019, we recognized a provision for loan losses of $18,690,000 to fully reserve for and eventually wrote off certain Triple-net real estate loans receivable that were no longer deemed collectible. In the fourth quarter of 2019 one of the Genesis Healthcare real estate loans transitioned to a non real estate loan due to the sale of the underlying properties that served as collateral for the loan. As of December 31, 2019, the total allowance for loan loss balance of $68,372,000 is deemed to be sufficient to absorb expected losses. In addition, at December 31, 2019, we had one real estate loan with an outstanding balance of $2,534,000 on non-accrual status. No provision for loan loss has been recorded for this loan given the underlying collateral value. The following is a summary of the allowance for losses on loans receivable for the periods presented (in thousands):
Year Ended December 31,
Balance at beginning of year
$
68,372
$
68,372
$
6,563
Provision for loan losses
18,690
-
62,966
Charge-offs
(18,690
)
-
-
Change in present value
-
-
(1,157
)
Balance at end of year
$
68,372
$
68,372
$
68,372
The following is a summary of our impaired loans (in thousands):
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31,
Balance of impaired loans at end of year
$
188,018
$
189,272
$
282,882
Allowance for loan losses
(68,372
)
(68,372
)
(68,372
)
Balance of impaired loans not reserved
$
119,646
$
120,900
$
214,510
Average impaired loans for the year
$
192,728
$
236,077
$
330,216
Interest recognized on impaired loans(1)
16,235
17,241
27,793
(1) Represents cash interest recognized in the period since loans were identified as impaired.
8. Investments in Unconsolidated Entities
We participate in a number of joint ventures, which generally invest in seniors housing and health care real estate. The results of operations for these properties have been included in our consolidated results of operations from the date of acquisition by the joint ventures and are reflected in our Consolidated Statements of Comprehensive Income as income or loss from unconsolidated entities. The following is a summary of our investments in unconsolidated entities (dollars in thousands):
Percentage Ownership(1)
December 31, 2019
December 31, 2018
Seniors Housing Operating
10% to 50%
$
463,741
$
344,982
Triple-net
10% to 34%
7,740
34,284
Outpatient Medical
43% to 50%
111,942
103,648
Total
$
583,423
$
482,914
(1) Excludes ownership of in-substance real estate.
We own 34% of Sunrise Senior Living Management, Inc. ("Sunrise"), who provides comprehensive property management and accounting services with respect to certain of our Seniors Housing Operating properties that Sunrise operates. We pay Sunrise annual management fees pursuant to long-term management agreements. Our management agreements have initial terms expiring through December 2034 plus, if applicable, optional renewal periods ranging from an additional 5 to 15 years depending on the property. The management fees payable to Sunrise under the management agreements include a fee based on a percentage of revenues generated by the applicable properties plus, if applicable, positive or negative adjustments based on specified performance targets. For the years ended December 31, 2019, 2018 and 2017, we recognized fees to Sunrise of $41,200,000, $36,378,000 and $37,573,000, respectively, which are reflected within property operating expenses in our Consolidated Statements of Comprehensive Income.
During the year ended December 31, 2019, we sold our interest in a Seniors Housing Operating joint venture and recognized a gain of $38,681,000 in income (loss) from unconsolidated entities in our Consolidated Statements of Comprehensive Income.
At December 31, 2019, the aggregate unamortized basis difference of our joint venture investments of $101,275,000 is primarily attributable to the difference between the amount for which we purchased our interest in the entity, including transaction costs, and the historical carrying value of the net assets of the entity. This difference is being amortized over the remaining useful life of the related properties and included in the reported amount of income from unconsolidated entities.
We have made loans totaling $165,193,000 related to seven properties as of December 31, 2019 for the development and construction of certain properties which are classified as in substance real estate investments. We believe that such borrowers typically represent variable interest entities (“VIE” or VIE’s”) in accordance with ASC 810 Consolidation. VIE’s are required to be consolidated by their Primary Beneficiary (“PB”) which is the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impacts the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. We have concluded that we are not the PB of such borrowers, therefore, the loan arrangements were assessed based on among other factors, the amount and timing of expected residual profits, the estimated fair value of the collateral and the significance of the borrower’s equity in the project. Based on these assessments the arrangements have been classified as in substance real estate investments. We expect to fund an additional $139,472,000 related to these investments.
9. Credit Concentration
We use consolidated net operating income (“NOI”) as our credit concentration metric. See Note 18 for additional information and reconciliation. The following table summarizes certain information about our credit concentration for the year ended December 31, 2019, excluding our share of NOI in unconsolidated entities (dollars in thousands):
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Number of
Total
Percent of
Concentration by relationship:(1)
Properties
NOI
NOI(2)
Sunrise Senior Living(3)
$
342,595
14%
ProMedica
215,083
9%
Revera(3)
146,451
6%
Genesis HealthCare
119,928
5%
Belmont Village
76,354
3%
Remaining portfolio
1,026
1,530,853
63%
Totals
1,578
$
2,431,264
100%
(1) Genesis HealthCare and ProMedica are in our Triple-net segment. Sunrise Senior Living, Revera and Belmont Village are in our Seniors Housing Operating segment.
(2) NOI with our top five relationships comprised 38% of total NOI for the year ending December 31, 2018.
(3) Revera owns a controlling interest in Sunrise Senior Living. For the year ended December 31, 2019, we recognized $1,219,253,000 of revenue from properties managed by Sunrise Senior Living.
10. Borrowings Under Credit Facilities and Commercial Paper Program
At December 31, 2019, we had a primary unsecured credit facility with a consortium of 31 banks that includes a $3,000,000,000 unsecured revolving credit facility ($945,000,000 outstanding at December 31, 2019), a $500,000,000 unsecured term credit facility and a $250,000,000 Canadian-denominated unsecured term credit facility. We have an option, through an accordion feature, to upsize the unsecured revolving credit facility and the $500,000,000 unsecured term credit facility by up to an additional $1,000,000,000, in the aggregate, and the $250,000,000 Canadian-denominated unsecured term credit facility by up to an additional $250,000,000. The primary unsecured credit facility also allows us to borrow up to $1,000,000,000 in alternate currencies (none outstanding at December 31, 2019). Borrowings under the unsecured revolving credit facility are subject to interest payable at the applicable margin over LIBOR interest rate (2.59% at December 31, 2019). The applicable margin is based on our debt ratings and was 0.825% at December 31, 2019. In addition, we pay a facility fee quarterly to each bank based on the bank’s commitment amount. The facility fee depends on our debt ratings and was 0.15% at December 31, 2019. The term credit facilities mature on July 19, 2023. The revolving credit facility is scheduled to mature on July 19, 2022 and can be extended for two successive terms of six months each at our option.
In January 2019, we established an unsecured commercial paper program. Under the terms of the program, we may issue unsecured commercial paper notes with maturities that vary, but do not exceed 397 days from the date of issue, up to a maximum aggregate face or principal amount outstanding at any time of $1,000,000,000. As of December 31, 2019, there was a balance of $642,597,000 outstanding on the commercial paper program ($643,600,000 in principal outstanding net of an unamortized discount of $1,003,000), which reduces the borrowing capacity on the unsecured revolving credit facility. The notes bear interest at various floating rates with a weighted average of 2.16% as of December 31, 2019 and a weighted average maturity of 26 days as of December 31, 2019.
The following information relates to aggregate borrowings under the primary unsecured revolving credit facility and commercial paper program for the periods presented (dollars in thousands):
Year Ended December 31,
Balance outstanding at year end
$
1,588,600
$
1,147,000
$
719,000
Maximum amount outstanding at any month end
$
2,880,000
$
2,148,000
$
1,010,000
Average amount outstanding (total of daily principal balances
divided by days in period)
$
1,376,813
$
950,581
$
597,422
Weighted-average interest rate (actual interest expense divided
by average borrowings outstanding)
2.84
%
3.07
%
2.02
%
11. Senior Unsecured Notes and Secured Debt
We may repurchase, redeem or refinance senior unsecured notes from time to time, taking advantage of favorable market conditions when available. We may purchase senior notes for cash through open market purchases, privately negotiated transactions, a tender offer or, in some cases, through the early redemption of such securities pursuant to their terms. The senior unsecured notes are redeemable at our option, at any time in whole or from time to time in part, at a redemption price equal to the sum of (1) the principal amount of the notes (or portion of such notes) being redeemed plus accrued and unpaid interest thereon up to the redemption date and (2) any “make-whole” amount due under the terms of the notes in connection with early redemptions. Redemptions and repurchases of debt, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. At December 31, 2019, the annual principal payments due on these debt obligations were as follows (in thousands):
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Senior
Unsecured Notes(1,2)
Secured
Debt (1,3)
Totals
$
-
$
354,329
$
354,329
-
439,176
439,176
10,000
421,876
431,876
2023(4,5)
1,792,871
467,378
2,260,249
1,350,000
304,533
1,654,533
Thereafter(6,7,8)
7,274,691
1,006,050
8,280,741
Totals
$
10,427,562
$
2,993,342
$
13,420,904
(1) Amounts represent principal amounts due and do not include unamortized premiums/discounts, debt issuance costs, or other fair value adjustments as reflected on the Consolidated Balance Sheet.
(2) Annual interest rates range from 2.40% to 6.50%.
(3) Annual interest rates range from 1.25% to 12.00%. Carrying value of the properties securing the debt totaled $6,550,033,000 at December 31, 2019.
(4) Includes a $250,000,000 Canadian-denominated unsecured term credit facility (approximately $192,871,000 based on the Canadian/U.S. Dollar exchange rate on December 31, 2019). The loan matures on July 19, 2023 and bears interest at the Canadian Dealer Offered Rate plus 0.9% (2.93% at December 31, 2019).
(5) Includes a $500,000,000 unsecured term credit facility. The loan matures on July 19, 2023 and bears interest at LIBOR plus 0.9% (2.66% at December 31, 2019).
(6) Includes a $300,000,000 Canadian-denominated 2.95% senior unsecured notes due 2027 (approximately $231,446,000 based on the Canadian/U.S. Dollar exchange rate on December 31, 2019).
(7) Includes a £550,000,000 4.80% senior unsecured notes due 2028 (approximately $729,795,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on December 31, 2019).
(8) Includes a £500,000,000 4.50% senior unsecured notes due 2034 (approximately $663,450,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on December 31, 2019).
The following is a summary of our senior unsecured note principal activity during the periods presented (dollars in thousands):
Year Ended
December 31, 2019
December 31, 2018
December 31, 2017
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
9,699,984
4.48%
$
8,417,447
4.31%
$
8,260,038
4.25%
Debt issued
3,987,790
3.34%
2,850,000
4.57%
7,500
1.97%
Debt extinguished
(3,335,290
)
4.39%
(1,450,000
)
3.46%
(5,000
)
1.83%
Foreign currency
75,078
4.22%
(117,463
)
4.16%
154,909
4.29%
Ending balance
$
10,427,562
4.03%
$
9,699,984
4.48%
$
8,417,447
4.31%
The following is a summary of our secured debt principal activity for the periods presented (dollars in thousands):
Year Ended
December 31, 2019
December 31, 2018
December 31, 2017
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
2,485,711
3.90%
$
2,618,408
3.76%
$
3,465,066
4.09%
Debt issued
343,696
3.11%
45,447
3.40%
241,772
2.82%
Debt assumed
385,145
4.34%
292,887
4.64%
23,094
6.67%
Debt extinguished
(230,108
)
4.35%
(306,553
)
5.36%
(1,080,268
)
5.25%
Debt deconsolidated
-
-%
-
-%
(60,000
)
3.80%
Principal payments
(54,325
)
3.75%
(56,288
)
3.91%
(64,078
)
4.34%
Foreign currency
63,223
3.28%
(108,190
)
3.33%
92,822
3.16%
Ending balance
$
2,993,342
3.63%
$
2,485,711
3.90%
$
2,618,408
3.76%
Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As of December 31, 2019, we were in compliance with all of the covenants under our debt agreements.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Derivative Instruments
We are exposed to, among other risks, the impact of changes in foreign currency exchange rates as a result of our non-U.S. investments and interest rate risk related to our capital structure. Our risk management program is designed to manage the exposure and volatility arising from these risks, and utilizes foreign currency forward contracts, cross currency swap contracts, interest rate swaps, interest rate locks and debt issued in foreign currencies to offset a portion of these risks.
Foreign Currency Forward Contracts Designated as Cash Flow Hedges
For instruments that are designated as and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is deferred as a component of other comprehensive income (“OCI”), and reclassified into earnings in the same period, or periods, during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in earnings.
Cash Flow Hedges of Interest Rate Risk
We enter into interest rate swaps in order to maintain a capital structure containing targeted amounts of fixed and floating-rate debt and manage interest rate risk. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for our fixed-rate payments. These interest rate swap agreements were used to hedge the variable cash flows associated with variable-rate debt.
Periodically, we enter into and designate interest rate locks to partially hedge the risk of changes in interest rate payments attributable to increases in the benchmark interest rate during the period leading up to the probable issuance of fixed-rate debt. We designate our interest rate locks as cash flow hedges. Gains and losses when we settle our interest rate locks are amortized into income over the life of the related debt, except where a material amount is deemed to be ineffective, which would be immediately reclassified to the Consolidated Statements of Comprehensive Income.
Foreign Currency Forward Contracts and Cross Currency Swap Contracts Designated as Net Investment Hedges
We use foreign currency forward and cross currency forward swap contracts to hedge a portion of the net investment in foreign subsidiaries against fluctuations in foreign exchange rates. For instruments that are designated and qualify as net investment hedges, the variability in the foreign currency to U.S. Dollar of the instrument is recorded as a cumulative translation adjustment component of OCI.
During the years ended December 31, 2019, 2018, and 2017 we settled certain net investment hedges generating cash proceeds of $6,716,000, $70,897,000, and $52,719,000, respectively. The balance of the cumulative translation adjustment will be reclassified to earnings when the hedged investment is sold or substantially liquidated.
Derivative Contracts Undesignated
We use foreign currency exchange contracts to manage existing exposures to foreign currency exchange risk. Gains and losses resulting from changes in the fair value of these instruments are recorded in interest expense on the Consolidated Statement of Comprehensive Income, and are substantially offset by net revaluation impacts on foreign currency denominated balance sheet exposures. In addition, we have several interest rate cap contracts related to variable rate secured debt agreements. Gains and losses resulting from the changes in the fair values of these instruments are also recorded in interest expense.
The following presents the notional amount of derivatives and other financial instruments as of the dates indicated (in thousands):
December 31, 2019
December 31, 2018
Derivatives designated as net investment hedges:
Denominated in Canadian Dollars
$
725,000
$
575,000
Denominated in Pounds Sterling
£
1,340,708
£
890,708
Financial instruments designated as net investment hedges:
Denominated in Canadian Dollars
$
250,000
$
250,000
Denominated in Pounds Sterling
£
1,050,000
£
1,050,000
Interest rate swaps designated as cash flow hedges:
Denominated in U.S. Dollars(1)
$
1,188,250
$
-
Derivative instruments not designated:
Interest rate caps denominated in U.S. Dollars
$
405,819
$
405,819
Forward purchase contracts denominated in Canadian Dollars
$
-
$
(325,000
)
Forward sales contracts denominated in Canadian Dollars
$
-
$
405,000
Forward purchase contracts denominated in Pounds Sterling
£
(125,000
)
£
(350,000
)
Forward sales contracts denominated in Pounds Sterling
£
125,000
£
350,000
(1) At December 31, 2019 the maximum maturity date was July 15, 2021.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following presents the impact of derivative instruments on the Consolidated Statements of Comprehensive Income for the periods presented (in thousands):
Year Ended
Location
December 31, 2019
December 31, 2018
December 31, 2017
Gain (loss) on derivative instruments designated as hedges recognized in income
Interest expense
$
26,419
$
12,271
$
(2,476
)
Gain (loss) on derivative instruments not designated as hedges recognized in income
Interest expense
$
(2,310
)
$
5,233
$
(49
)
Gain (loss) on derivative and financial instruments designated as hedges recognized in OCI
OCI
$
(131,120
)
$
211,390
$
(252,168
)
13. Commitments and Contingencies
At December 31, 2019, we had 13 outstanding letter of credit obligations totaling $47,180,000 and expiring between 2020 and 2024. At December 31, 2019, we had outstanding construction in process of $507,931,000 and were committed to providing additional funds of approximately $446,633,000 to complete construction. Purchase obligations at December 31, 2019, include $261,000,000 representing a definitive agreement to acquire outpatient medical facilities in 2020. Purchase obligations also include $19,925,000 of contingent obligations to fund capital improvements. Rents due from the tenant are increased to reflect the additional investment in the property. During the year ended December 31, 2017, we finalized an agreement with the University of Toledo Foundation to transfer our corporate headquarters as a gift and recognized an expense of $40,730,000.
14. Stockholders’ Equity
The following is a summary of our stockholders’ equity capital accounts as of the dates indicated:
December 31, 2019
December 31, 2018
Preferred Stock, $1.00 par value:
Authorized shares
50,000,000
50,000,000
Issued shares
-
14,375,000
Outstanding shares
-
14,369,965
Common Stock, $1.00 par value:
Authorized shares
700,000,000
700,000,000
Issued shares
411,550,857
384,849,236
Outstanding shares
410,256,615
383,674,603
Preferred Stock
The following is a summary of our preferred stock activity during the periods presented:
Year Ended
December 31, 2019
December 31, 2018
December 31, 2017
Weighted Avg.
Weighted Avg.
Weighted Avg.
Shares
Dividend Rate
Shares
Dividend Rate
Shares
Dividend Rate
Beginning balance
14,369,965
6.50%
14,370,060
6.50%
25,875,000
6.50%
Shares redeemed
-
-%
-
-%
(11,500,000
)
6.50%
Shares converted
(14,369,965
)
6.50%
(95
)
6.50%
(4,940
)
6.50%
Ending balance
-
-%
14,369,965
6.50%
14,370,060
6.50%
During the year ended December 31, 2019, we converted all of the outstanding Series I Preferred Stock. Each share was converted into 0.8857 shares of common stock. In addition, during the year ended December 31, 2017, we recognized a charge of $9,769,000 in connection with the redemption of the Series J preferred stock.
Common Stock
In February 2019, we entered into separate amended and restated equity distribution agreements whereby we can offer and sell up to $1,500,000,000 aggregate amount of our common stock ("Equity Shelf Program"). The Equity Shelf Program also allows us to enter into forward sale agreements. As of December 31, 2019, we had $1,075,537,000 of remaining capacity under the Equity Shelf Program, which excludes forward sales agreements outstanding for the sale of 4,935,804 shares with maturity dates in 2020 and 2021. We expect to physically settle the forward sales for cash proceeds. The following is a summary of our common stock activity during the periods indicated (dollars in thousands, except average price amounts):
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Shares Issued
Average Price
Gross Proceeds
Net Proceeds
2017 Dividend reinvestment plan issuances
5,640,008
$
70.13
$
395,526
$
394,639
2017 Option exercises
252,979
51.16
12,942
12,942
2017 Equity Shelf Program issuances
2,986,574
72.30
215,917
214,406
2017 Preferred stock conversions
4,300
-
-
2017 Redemption of equity membership units
91,180
-
-
2017 Stock incentive plans, net of forfeitures
154,337
-
-
2017 Totals
9,129,378
$
624,385
$
621,987
2018 Dividend reinvestment plan issuances
6,529,417
$
65.55
$
428,009
$
423,075
2018 Option exercises
56,960
42.66
2,430
2,430
2018 Equity Shelf Program issuances
5,241,349
69.95
366,640
364,070
2018 Preferred stock conversions
-
-
2018 Stock incentive plans, net of forfeitures
115,243
-
-
2018 Totals
11,943,052
$
797,079
$
789,575
2019 Dividend reinvestment plan issuances
5,798,979
$
77.18
$
447,559
$
443,929
2019 Option exercises
10,736
51.32
2019 Equity Shelf Program issuances
7,855,956
78.15
613,948
611,645
2019 Preferred stock conversions
12,712,452
-
-
2019 Stock incentive plans, net of forfeitures
203,889
-
-
2019 Totals
26,582,012
$
1,062,058
$
1,056,125
Dividends
The increase in dividends is primarily attributable to increases in our common shares outstanding, offset by the conversion and redemption of the Series I and Series J preferred stock, as described above. Please refer to Note 19 for information related to federal income tax of dividends. The following is a summary of our dividend payments (in thousands, except per share amounts):
Year Ended
December 31, 2019
December 31, 2018
December 31, 2017
Per Share
Amount
Per Share
Amount
Per Share
Amount
Common Stock
$
3.4800
$
1,404,977
$
3.4800
$
1,300,141
$
3.4800
$
1,277,321
Series I Preferred Stock
-
-
3.2500
46,704
3.2500
46,711
Series J Preferred Stock
-
-
-
-
0.2347
2,699
Totals
$
1,404,977
$
1,346,845
$
1,326,731
Accumulated Other Comprehensive Income
The following is a summary of accumulated other comprehensive income/(loss) for the periods presented (in thousands):
December 31, 2019
December 31, 2018
Foreign currency translation
$
(719,814
)
$
(868,006
)
Derivative and financial instruments designated as hedges
607,657
738,777
Actuarial losses
-
(540
)
Total accumulated other comprehensive loss
$
(112,157
)
$
(129,769
)
15. Stock Incentive Plans
In May 2016, our shareholders approved the 2016 Long-Term Incentive Plan (“2016 Plan”), which authorized up to 10,000,000 shares of common stock to be issued at the discretion of the Compensation Committee of the Board of Directors. Awards granted after May 5, 2016 are issued out of the 2016 Plan. The awards granted under the Amended and Restated 2005 Long-Term Incentive Plan continue to vest and options expire ten years from the date of grant. Our non-employee directors, officers and key employees are eligible to participate in the 2016 Plan. The 2016 Plan allows for the issuance of, among other things, stock options, stock appreciation rights, restricted stock, deferred stock units and dividend equivalent rights. Vesting periods for options, deferred stock units and restricted shares generally range from three to five years.
Under our long-term incentive plan, certain restricted stock awards are market, performance and time-based. For market and performance based awards, we will grant a target number of restricted stock units, with the ultimate award determined by the total
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
shareholder return and operating performance metrics, measured in each case over a measurement period of two to three years. Generally awards vest over two to three years after the end of the performance period with a portion vesting immediately at the end of the performance periods. The expected term represents the period from the grant date to the end of the performance period. Compensation expense for these performance grants is measured based on the probability of achievement of certain performance goals and is recognized over both the performance period and vesting period. For the portion of the grant for which the award is determined by the operating performance metrics, the compensation cost is based on the grant date closing price and management’s estimate of corporate achievement of the financial metrics. If the estimated number of performance based restricted stock to be earned changes, an adjustment will be recorded to recognize the accumulated difference between the revised and previous estimates. For the portion of the grant determined by the total shareholder return, management used a Monte Carlo model to assess the fair value and compensation cost. Forfeitures are accounted for as they occur.
The following table summarizes compensation expense (a component of general and administrative expenses and property operating expenses) recognized for the periods presented (in thousands):
Year Ended December 31,
Stock options
$
-
$
-
$
Restricted stock
25,047
27,646
19,092
$
25,047
$
27,646
$
19,102
Restricted Stock
The fair value of the restricted stock is equal to the market price of the company’s common stock on the date of grant and is amortized over the vesting periods. As of December 31, 2019, there was $30,755,000 of total unrecognized compensation expense related to unvested restricted stock that is expected to be recognized over a weighted-average period of two years. The following table summarizes information about non-vested restricted stock incentive awards as of and for the year ended December 31, 2019:
Restricted Stock
Number of Shares (000's)
Weighted-Average
Grant Date Fair Value
Non-vested at December 31, 2018
1,220
$
62.56
Vested
(364
)
52.15
Granted
85.80
Terminated
(117
)
66.25
Non-vested at December 31, 2019
1,106
$
70.26
16. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):
Year Ended December 31,
Numerator for basic and diluted earnings per share -
net income attributable to common stockholders
$
1,232,432
$
758,250
$
463,595
Denominator for basic earnings per share - weighted average shares
401,845
373,620
367,237
Effect of dilutive securities:
Employee stock options
-
Non-vested restricted shares
Redeemable shares
1,112
1,096
1,235
Employee stock purchase program
-
Dilutive potential common shares
1,963
1,630
1,764
Denominator for diluted earnings per share - adjusted weighted average shares
403,808
375,250
369,001
Basic earnings per share
$
3.07
$
2.03
$
1.26
Diluted earnings per share
$
3.05
$
2.02
$
1.26
As of December 31, 2018 and December 31, 2017, the Series I Cumulative Convertible Perpetual Preferred Stock were excluded from the calculations as the effect of the conversions were anti-dilutive. As of December 31, 2019, forward sales agreements outstanding for the sale of 4,935,804 shares of common stock were not included in the computation of diluted earnings per share because such forward sales were anti-dilutive for the period.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Disclosure about Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level valuation hierarchy exists for disclosures of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined below:
•Level 1 - Quoted prices in active markets for identical assets or liabilities.
•
Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:
Mortgage Loans, Other Real Estate Loans and Non Real Estate Loans Receivable - The fair value of mortgage loans, other real estate loans and non real estate loans receivable is generally estimated by using Level 2 and Level 3 inputs such as discounting the estimated future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.
Cash and Cash Equivalents and Restricted Cash - The carrying amount approximates fair value.
Equity Securities - Equity securities are recorded at their fair value based on Level 1 publicly available trading prices.
Borrowings Under Primary Unsecured Credit Facility and Commercial Paper Program - The carrying amount of the primary unsecured credit facility and commercial paper program approximates fair value because the borrowings are interest rate adjustable.
Senior Unsecured Notes - The fair value of the senior unsecured notes payable was estimated based on Level 1 publicly available trading prices. The carrying amount of the variable rate senior unsecured notes approximates fair value because they are interest rate adjustable.
Secured Debt - The fair value of fixed rate secured debt is estimated using Level 2 inputs by discounting the estimated future cash flows using the current rates at which similar loans would be made with similar credit ratings and for the same remaining maturities. The carrying amount of variable rate secured debt approximates fair value because the borrowings are interest rate adjustable.
Foreign Currency Forward Contracts, Interest Rate Swaps and Cross Currency Swaps - Foreign currency forward contracts, interest rate swaps and cross currency swaps are recorded in other assets or other liabilities on the balance sheet at fair value that is derived from observable market data, including yield curves and foreign exchange rates (all of our derivative instruments are Level 2).
Redeemable OP Unitholder Interests - Our redeemable OP unitholder interests are recorded on the balance sheet at fair value using Level 2 inputs. The fair value is measured using the closing price of our common stock, as units may be redeemed at the election of the holder for cash or, at our option, one share of our common stock per unit, subject to adjustment in certain circumstances.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The carrying amounts and estimated fair values of our financial instruments are as follows as of the dates presented (in thousands):
December 31, 2019
December 31, 2018
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
Financial assets:
Mortgage loans receivable
$
145,686
$
150,217
$
249,071
$
257,337
Other real estate loans receivable
124,696
128,512
81,268
82,742
Equity securities
15,685
15,685
11,286
11,286
Cash and cash equivalents
284,917
284,917
215,376
215,376
Restricted cash
100,849
100,849
100,753
100,753
Non real estate loans receivable
336,854
379,239
282,443
384,150
Foreign currency forward contracts, interest rate swaps and cross currency swaps
18,554
18,554
94,729
94,729
Financial liabilities:
Borrowings under unsecured credit facility and commercial paper
$
1,587,597
$
1,587,597
$
1,147,000
$
1,147,000
Senior unsecured notes
10,336,513
11,400,571
9,603,299
10,043,797
Secured debt
2,990,962
3,041,893
2,476,177
2,499,130
Foreign currency forward contracts, interest rate swaps and cross currency swaps
53,601
53,601
71,109
71,109
Redeemable OP unitholder interests
$
121,440
$
121,440
$
103,071
$
103,071
Items Measured at Fair Value on a Recurring Basis
The market approach is utilized to measure fair value for our financial assets and liabilities reported at fair value on a recurring basis. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The following summarizes items measured at fair value on a recurring basis (in thousands):
Fair Value Measurements as of December 31, 2019
Total
Level 1
Level 2
Level 3
Equity securities
$
15,685
$
15,685
$
-
$
-
Foreign currency forward contracts, interest rate swaps and cross currency swaps, net asset (liability)(1)
(35,047
)
-
(35,047
)
-
Redeemable OP unitholder interests
121,440
-
121,440
-
Totals
$
102,078
$
15,685
$
86,393
$
-
(1) Please see Note 12 for additional information.
Items Measured at Fair Value on a Nonrecurring Basis
In addition to items that are measured at fair value on a recurring basis, we have assets and liabilities that are measured at fair value on a nonrecurring basis that are not included in the tables above. Assets, liabilities and noncontrolling interests that are measured at fair value on a nonrecurring basis include those acquired or assumed. Asset impairments (if applicable, see Note 5 for impairments of real property and Note 7 for impairments of real estate loans receivable) are also measured at fair value on a nonrecurring basis. We have determined that the fair value measurements included in each of these assets and liabilities rely primarily on company-specific inputs and our assumptions about the use of the assets and settlement of liabilities, as observable inputs are not available. As such, we have determined that each of these fair value measurements generally resides within Level 3 of the fair value hierarchy. We estimate the fair value of real estate and related intangibles using the income approach using unobservable data such as net operating income, estimated capitalization and discount rates. We also consider local and national industry market data including comparable sales, and commonly engage an external real estate appraiser to assist us in our estimation of fair value. We estimate the fair value of assets held for sale based on current sales price expectations or, in the absence of such price expectations, Level 3 inputs described above. We estimate the fair value of loans receivable using projected payoff valuations based on the expected future cash flows and/or the estimated fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the collateral. We estimate the fair value of secured debt assumed in asset acquisitions using current interest rates at which similar borrowings could be obtained on the transaction date.
18. Segment Reporting
We invest in seniors housing and health care real estate. We evaluate our business and make resource allocations on our three operating segments: Seniors Housing Operating, Triple-net and Outpatient Medical. Our Seniors Housing Operating properties include seniors apartments, assisted living, independent living/continuing care retirement communities, independent support living (Canada), care homes with and without nursing (U.K.) and combinations thereof that are owned and/or operated through RIDEA structures (see Note 19). Our Triple-net properties include the property types described above as well as long-term/post-acute care facilities. Under the Triple-net segment, we invest in seniors housing and health care real estate through acquisition and financing of primarily single tenant properties. Properties acquired are primarily leased under triple-net leases and we are not involved in the management of the property. Our Outpatient Medical properties include outpatient medical buildings which are typically leased to multiple tenants and generally require a certain level of property management by us.
We evaluate performance based upon NOI of each segment. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. We believe NOI provides investors relevant and useful information because it measures the operating performance of our properties at the property level on an unleveraged basis. We use NOI to make decisions about resource allocations and to assess the property level performance of our properties.
Non-segment revenue consists mainly of interest income on certain non-real estate investments and other income. Non-segment assets consist of corporate assets including cash, deferred loan expenses and corporate offices and equipment among others. Non-property specific revenues and expenses are not allocated to individual segments in determining NOI.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 2). The results of operations for all acquisitions described in Note 3 are included in our consolidated results of operations from the acquisition dates and are components of the appropriate segments. There are no intersegment sales or transfers.
Summary information for the reportable segments (which excludes unconsolidated entities) during the years ended December 31, 2019, 2018 and 2017 is as follows (in thousands):
Year Ended December 31, 2019:
Seniors Housing Operating
Triple-net
Outpatient Medical
Non-segment / Corporate
Total
Resident fees and services
$
3,448,175
$
-
$
-
$
-
$
3,448,175
Rental income
-
903,798
684,602
-
1,588,400
Interest income
62,599
1,195
-
63,830
Other income
8,658
6,246
2,031
3,966
20,901
Total revenues
3,456,869
972,643
687,828
3,966
5,121,306
Property operating expenses
2,417,349
53,900
218,793
-
2,690,042
Consolidated net operating income
1,039,520
918,743
469,035
3,966
2,431,264
Depreciation and amortization
553,189
232,626
241,258
-
1,027,073
Interest expense
67,983
12,892
13,411
461,273
555,559
General and administrative expenses
-
-
-
126,549
126,549
Loss (gain) on derivatives and financial instruments, net
-
(4,399
)
-
-
(4,399
)
Loss (gain) on extinguishment of debt, net
1,614
-
-
82,541
84,155
Provision for loan losses
-
18,690
-
-
18,690
Impairment of assets
2,145
11,926
14,062
-
28,133
Other expenses
26,348
13,771
1,788
10,705
52,612
Income (loss) from continuing operations before income taxes and other items
388,241
633,237
198,516
(677,102
)
542,892
Income tax (expense) benefit
6,246
(4,209
)
(2,710
)
(2,284
)
(2,957
)
(Loss) income from unconsolidated entities
12,388
22,985
7,061
-
42,434
Gain (loss) on real estate dispositions, net
528,747
218,322
-
748,041
Income (loss) from continuing operations
935,622
870,335
203,839
(679,386
)
1,330,410
Net income (loss)
$
935,622
$
870,335
$
203,839
$
(679,386
)
$
1,330,410
Total assets
$
15,784,898
$
9,434,817
$
7,991,521
$
169,515
$
33,380,751
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2018:
Seniors Housing Operating
Triple-net
Outpatient Medical
Non-segment / Corporate
Total
Resident fees and services
$
3,234,852
$
-
$
-
$
-
$
3,234,852
Rental income
-
828,865
551,557
-
1,380,422
Interest income
54,926
-
55,814
Other income
5,024
17,173
4,939
2,275
29,411
Total revenues
3,240,454
900,964
556,806
2,275
4,700,499
Property operating expenses
2,255,432
176,670
-
2,433,017
Consolidated net operating income
985,022
900,049
380,136
2,275
2,267,482
Depreciation and amortization
529,449
235,480
185,530
-
950,459
Interest expense
69,060
14,225
7,051
436,256
526,592
General and administrative expenses
-
-
-
126,383
126,383
Loss (gain) on derivatives and financial instruments, net
-
(4,016
)
-
-
(4,016
)
Loss (gain) on extinguishment of debt, net
(32
)
11,928
4,091
16,097
Impairment of assets
7,599
107,980
-
-
115,579
Other expenses
6,624
90,975
(1)
7,570
7,729
112,898
Income (loss) from continuing operations before income taxes and other items
372,180
455,437
168,057
(572,184
)
423,490
Income tax (expense) benefit
1,202
1,611
(125
)
(11,362
)
(8,674
)
(Loss) income from unconsolidated entities
(28,142
)
21,938
5,563
-
(641
)
Gain (loss) on real estate dispositions, net
(2,245
)
196,589
221,231
-
415,575
Income (loss) from continuing operations
342,995
675,575
394,726
(583,546
)
829,750
Net income (loss)
$
342,995
$
675,575
$
394,726
$
(583,546
)
$
829,750
Total assets
$
14,607,127
$
10,111,227
$
5,426,810
$
196,908
$
30,342,072
(1) Represents non-capitalizable transaction costs of $81,116,000 primarily related to a joint venture transaction with an existing seniors housing operator including the conversion of properties from Triple-net to Seniors Housing Operating and termination/restructuring of preexisting relationships.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2017:
Seniors Housing Operating
Triple-net
Outpatient Medical
Non-segment / Corporate
Total
Resident fees and services
$
2,779,423
$
-
$
-
$
-
$
2,779,423
Rental income
-
885,811
560,060
-
1,445,871
Interest income
73,742
-
-
73,811
Other income
5,127
7,531
3,340
1,538
17,536
Total revenues
2,784,619
967,084
563,400
1,538
4,316,641
Property operating expenses
1,904,593
-
179,332
-
2,083,925
Consolidated net operating income
880,026
967,084
384,068
1,538
2,232,716
Depreciation and amortization
484,796
243,830
193,094
-
921,720
Interest expense
63,265
15,194
10,015
396,148
484,622
General and administrative
-
-
-
122,008
122,008
Loss (gain) on derivatives and financial instruments, net
-
2,284
-
-
2,284
Loss (gain) on extinguishment of debt, net
3,785
29,083
4,373
-
37,241
Provision for loan losses
-
62,966
-
-
62,966
Impairment of assets
21,949
96,909
5,625
-
124,483
Other expenses
8,347
116,689
(1)
1,911
50,829
(2)
177,776
Income (loss) from continuing operations before income taxes and other items
297,884
400,129
169,050
(567,447
)
299,616
Income tax (expense) benefit
(16,430
)
(4,291
)
(1,477
)
2,070
(20,128
)
(Loss) income from unconsolidated entities
(105,236
)
19,428
2,683
-
(83,125
)
Gain (loss) on real estate dispositions, net
56,295
286,325
1,630
-
344,250
Income (loss) from continuing operations
232,513
701,591
171,886
(565,377
)
540,613
Net income (loss)
$
232,513
$
701,591
$
171,886
$
(565,377
)
$
540,613
(1) Primarily represents non-capitalizable transaction costs, including $88,316,000 due to a joint venture transaction with an existing seniors housing operator which converted a portfolio of properties from Triple-net to Seniors Housing Operating and termination/restructuring of preexisting relationships. Also includes $18,294,000 other-than-temporary impairment charge on the Genesis available-for-sale equity investment.
(2) Primarily related to $40,730,000 expense recognized for the donation of the corporate headquarters.
Our portfolio of properties and other investments are located in the U.S., the U.K. and Canada. Revenues and assets are attributed to the country in which the property is physically located. The following is a summary of geographic information for the periods presented (dollars in thousands):
Year Ended
December 31, 2019
December 31, 2018
December 31, 2017
Revenues:
Amount(1)
%
Amount
%
Amount
%
United States
$
4,205,492
82.1
%
$
3,777,960
80.4
%
$
3,464,527
80.3
%
United Kingdom
452,698
8.8
%
452,956
9.6
%
407,351
9.4
%
Canada
463,116
9.1
%
469,583
10.0
%
444,763
10.3
%
Total
$
5,121,306
100.0
%
$
4,700,499
100.0
%
$
4,316,641
100.0
%
As of
December 31, 2019
December 31, 2018
Assets:
Amount
%
Amount
%
United States
$
27,513,911
82.4
%
$
24,884,292
82.0
%
United Kingdom
3,405,388
10.2
%
3,078,994
10.1
%
Canada
2,461,452
7.4
%
2,378,786
7.9
%
Total
$
33,380,751
100.0
%
$
30,342,072
100.0
%
(1) The United States, United Kingdom and Canada represent 77%, 10% and 13%, respectively, of our resident fees and services revenue stream for the year ended December 31, 2019.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. Income Taxes and Distributions
We elected to be taxed as a REIT commencing with our first taxable year. To qualify as a REIT for federal income tax purposes, at least 90% of taxable income (excluding net capital gains) must be distributed to stockholders. REITs that do not distribute a certain amount of current year taxable income are also subject to a 4% federal excise tax. The main differences between net income for federal income tax purposes and consolidated financial statement purposes are the recognition of straight-line rent for reporting purposes, basis differences in acquisitions, recording of impairments, differing useful lives and depreciation and amortization methods for real property and the provision for loan losses for reporting purposes versus bad debt expense for tax purposes.
Cash distributions paid to common stockholders, for federal income tax purposes, are as follows for the periods presented:
Year Ended December 31,
Per share:
Ordinary dividend(1)
$
2.6937
$
2.1988
$
1.8117
Long-term capital gain/(loss)(2)
0.7863
1.1153
1.5755
Return of capital
-
0.1659
0.0928
Totals
$
3.4800
$
3.4800
$
3.4800
(1) For the years ended December 31, 2019 and 2018, includes Section 199A dividends of $2.6937 and $2.1988, respectively. For the year ended December 31, 2017, includes Qualified Dividend of $0.0038.
(2) For the years ended December 31, 2019, 2018 and 2017, includes Unrecaptured SEC. 1250 Gains of $0.2835, $0.3822 and $0.3557, respectively.
Our consolidated provision for income tax expense (benefit) is as follows for the periods presented (in thousands):
Year Ended December 31,
Current
$
12,594
$
15,850
$
7,633
Deferred
(9,637
)
(7,176
)
12,495
Totals
$
2,957
$
8,674
$
20,128
REITs generally are not subject to U.S. federal income taxes on that portion of REIT taxable income or capital gain that is distributed to stockholders. For the tax year ended December 31, 2019, as a result of ownership of investments in Canada and the U.K., we were subject to foreign income taxes under the respective tax laws of these jurisdictions.
The provision for income taxes for the year ended December 31, 2019 primarily relates to state taxes, foreign taxes, and taxes based on income generated by entities that are structured as TRSs. For the tax years ended December 31, 2019, 2018 and 2017, the foreign tax provision/(benefit) amount included in the consolidated provision for income taxes was $(3,892,000), $9,804,000 and $4,806,000, respectively.
A reconciliation of income taxes, which is computed by applying the federal corporate tax rate for the years ended December 31, 2019, 2018 and 2017, to the income tax expense/(benefit) is as follows for the periods presented (in thousands):
Year Ended December 31,
Tax at statutory rate on earnings from continuing operations before unconsolidated entities, noncontrolling interests and income taxes
$
280,005
$
176,069
$
199,588
Increase (decrease) in valuation allowance(1)
3,465
28,309
30,445
Tax at statutory rate on earnings not subject to federal income taxes
(311,224
)
(206,937
)
(234,468
)
Foreign permanent depreciation
9,260
8,110
10,065
Other differences
21,451
3,123
14,498
Totals
$
2,957
$
8,674
$
20,128
(1) Excluding purchase price accounting.
Each TRS and foreign entity subject to income taxes is a tax paying component for purposes of classifying deferred tax assets and liabilities. The tax effects of taxable and deductible temporary differences, as well as tax asset/(liability) attributes, are summarized as follows for the periods presented (in thousands):
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31,
Investments and property, primarily differences in investment basis, depreciation and amortization, the basis of land assets and the treatment of interests and certain costs
$
(13,064
)
$
(2,533
)
$
(11,812
)
Operating loss and interest deduction carryforwards
127,525
98,713
94,654
Expense accruals and other
43,056
48,804
25,146
Valuation allowance
(159,057
)
(155,592
)
(127,283
)
Net deferred tax assets (liabilities)
$
(1,540
)
$
(10,608
)
$
(19,295
)
On the basis of the evaluations performed as required by the codification, valuation allowances totaling $159,057,000 were recorded on U.S. taxable REIT subsidiaries as well as entities in other jurisdictions to limit the deferred tax assets to the amount that we believe is more likely that not realizable. However, the amount of the deferred tax asset considered realizable could be adjusted if (i) estimates of future taxable income during the carryforward period are reduced or increased or (ii) objective negative evidence in the form of cumulative losses is no longer present (and additional weight may be given to subjective evidence such as our projections for growth). The valuation allowance rollforward is summarized as follows for the periods presented (in thousands):
Year Ended December 31,
Beginning balance
$
155,592
$
127,283
$
96,838
Expense (benefit)
3,465
28,309
30,445
Ending balance
$
159,057
$
155,592
$
127,283
As a result of certain acquisitions, we are subject to corporate level taxes for any related asset dispositions that may occur during the five-year period immediately after such assets were owned by a C corporation (“built-in gains tax”). The amount of income potentially subject to this special corporate level tax is generally equal to the lesser of (i) the excess of the fair value of the asset over its adjusted tax basis as of the date it became a REIT asset, or (ii) the actual amount of gain. Some but not all gains recognized during this period of time could be offset by available net operating losses and capital loss carryforwards. During the year ended December 31, 2017, we acquired certain additional assets with built-in gains as of the date of acquisition that could be subject to the built-in gains tax if disposed of prior to the expiration of the applicable five-year period. We have not recorded a deferred tax liability as a result of the potential built-in gains tax based on our intentions with respect to such properties and available tax planning strategies.
Given the applicable statute of limitations, we generally are subject to audit by the Internal Revenue Service (“IRS”) for the year ended December 31, 2016 and subsequent years. The statute of limitations may vary in the states in which we own properties or conduct business. We do not expect to be subject to audit by state taxing authorities for any year prior to the year ended December 31, 2015. We are also subject to audit by the Canada Revenue Agency and provincial authorities generally for periods subsequent to May 2013 related to entities acquired or formed in connection with acquisitions, and by the U.K.’s HM Revenue & Customs for periods subsequent to August 2013 related to entities acquired or formed in connection with acquisitions.
At December 31, 2019, we had a net operating loss (“NOL”) carryforward related to the REIT of $337,287,000. Due to our uncertainty regarding the realization of certain deferred tax assets, we have not recorded a deferred tax asset related to NOLs generated by the REIT. These amounts can be used to offset future taxable income (and/or taxable income for prior years if an audit determines that tax is owed), if any. The REIT will be entitled to utilize NOLs and tax credit carryforwards only to the extent that REIT taxable income exceeds our deduction for dividends paid. The NOL carryforwards generated through December 31, 2017 will expire through 2037. Beginning with tax years after December 31, 2017, the Tax Cuts and Jobs Act eliminates the carryback period, limits the NOLs to 80% of taxable income and replaces the 20-year carryforward period with an indefinite carryforward period.
At December 31, 2019 and 2018, we had an NOL carryforward related to Canadian entities of $195,791,000, and $154,029,000, respectively. These Canadian losses have a 20-year carryforward period. At December 31, 2019 and 2018, we had an NOL carryforward related to U.K. entities of $209,776,000 and $242,377,000, respectively. These U.K. losses do not have a finite carryforward period.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20. Quarterly Results of Operations (Unaudited)
The following is a summary of our unaudited quarterly results of operations for the years ended December 31, 2019 and 2018 (in thousands, except per share data). The sum of individual quarterly amounts may not agree to the annual amounts included in the Consolidated Statements of Comprehensive Income due to rounding.
Year Ended December 31, 2019
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Revenues
$
1,272,245
$
1,320,106
$
1,266,133
$
1,262,822
Net income (loss) attributable to common stockholders
280,470
137,762
589,876
224,324
Net income (loss) attributable to common stockholders per share:
Basic
$
0.72
$
0.34
$
1.46
$
0.55
Diluted
$
0.71
$
0.34
$
1.45
$
0.55
Year Ended December 31, 2018
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Revenues
$
1,096,965
$
1,125,912
$
1,236,379
$
1,241,243
Net income attributable to common stockholders
437,671
154,432
64,384
101,763
Net income attributable to common stockholders per share:
Basic
$
1.18
$
0.42
$
0.17
$
0.27
Diluted
$
1.17
$
0.41
$
0.17
$
0.27
21. Variable Interest Entities
We have entered into joint ventures to own certain seniors housing and outpatient medical assets which are deemed to be variable interest entities (“VIEs”). We have concluded that we are the primary beneficiary of these VIEs based on a combination of operational control of the joint venture and the rights to receive residual returns or the obligation to absorb losses arising from the joint ventures. Except for capital contributions associated with the initial joint venture formations, the joint ventures have been and are expected to be funded from the ongoing operations of the underlying properties. Accordingly, such joint ventures have been consolidated, and the table below summarizes the balance sheets of consolidated VIEs in the aggregate (in thousands):
December 31, 2019
December 31, 2018
Assets:
Net real estate investments
$
960,093
$
973,813
Cash and cash equivalents
27,522
18,678
Receivables and other assets
14,586
14,600
Total assets(1)
$
1,002,201
$
1,007,091
Liabilities and equity:
Secured debt
$
460,117
$
465,433
Lease liabilities
1,326
-
Accrued expenses and other liabilities
22,215
18,229
Total equity
518,543
523,429
Total liabilities and equity
$
1,002,201
$
1,007,091
(1) Note that assets of the consolidated VIEs can only be used to settle obligations relating to such VIEs. Liabilities of the consolidated VIEs represent claims against the specific assets of the VIEs.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
An evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, as amended). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019 based on the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) in a report entitled Internal Control - Integrated Framework.
Based on this assessment, using the criteria above, management concluded that the Company’s system of internal control over financial reporting was effective as of December 31, 2019.
The independent registered public accounting firm of Ernst & Young LLP, as auditors of the Company’s consolidated financial statements, has issued an attestation report on the Company’s internal control over financial reporting.
Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, as amended) occurred during the fourth quarter of the one-year period covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Welltower Inc.
Opinion on Internal Control over Financial Reporting
We have audited Welltower Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Welltower Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Welltower Inc. and subsidiaries as of December 31, 2019 and 2018, the related consolidated statements of comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and financial statement schedules listed in the index at Item 15(a) and our report dated February 14, 2020 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Toledo, Ohio
February 14, 2020
Item 9B. Other Information
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this Item is incorporated herein by reference to the information under the headings “Election of Directors,” “Corporate Governance,” “Executive Officers,” and “Security Ownership of Directors and Management and Certain Beneficial Owners - Section 16(a) Beneficial Ownership Reporting Compliance” in our definitive proxy statement, which will be filed with the Securities and Exchange Commission (the “Commission”) prior to May 1, 2020.
We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and employees. The code is posted on the Internet at www.welltower.com/investors/governance. Any amendment to, or waivers from, the code that relate to any officer or director of the company will be promptly disclosed on the Internet at www.welltower.com.
In addition, the Board has adopted charters for the Audit, Compensation and Nominating/Corporate Governance Committees. These charters are posted on the Internet at www.welltower.com/investors/governance. Please refer to “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Executive Summary - Corporate Governance” in the Annual Report on Form 10-K for further discussion of corporate governance.
The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive textual reference only.
Item 11. Executive Compensation
The information required by this Item is incorporated herein by reference to the information under the headings “Executive Compensation” and “Director Compensation” in our definitive proxy statement, which will be filed with the Commission prior to May 1, 2020.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item is incorporated herein by reference to the information under the headings “Security Ownership of Directors and Management and Certain Beneficial Owners” and “Equity Compensation Plan Information” in our definitive proxy statement, which will be filed with the Commission prior to May 1, 2020.
Item 13. Certain Relationships and Related Transactions and Director Independence
The information required by this Item is incorporated herein by reference to the information under the headings “Corporate Governance - Independence and Meetings” and “Security Ownership of Directors and Management and Certain Beneficial Owners - Certain Relationships and Related Transactions” in our definitive proxy statement, which will be filed with the Commission prior to May 1, 2020.
Item 14. Principal Accounting Fees and Services
The information required by this Item is incorporated herein by reference to the information under the heading “Ratification of the Appointment of the Independent Registered Public Accounting Firm” in our definitive proxy statement, which will be filed with the Commission prior to May 1, 2020.
PART IV
Item 15. Exhibits and Financial Statement Schedules
1. (i) Our Consolidated Financial Statements are included in Part II, Item 8:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets - December 31, 2019 and 2018
Consolidated Statements of Comprehensive Income - Years ended December 31, 2019, 2018 and 2017
Consolidated Statements of Equity - Years ended December 31, 2019, 2018 and 2017
Consolidated Statements of Cash Flows - Years ended December 31, 2019, 2018 and 2017
Notes to Consolidated Financial Statements
(ii) The following Financial Statement Schedules are included beginning on page 105
III - Real Estate and Accumulated Depreciation
IV - Mortgage Loans on Real Estate
The financial statement schedule required by Item15(a) (Schedule II, Valuation and Qualifying Accounts) is included in Item 8 of this Annual Report on Form 10-K.
2. Exhibits:
The exhibits listed below are either filed with this Form 10-K or incorporated by reference in accordance with Rule 12b-32 of the Securities Exchange Act of 1934.
2.1
Agreement and Plan of Merger, dated as of April 25, 2018, by and among the Company, Potomac Acquisition LLC, Quality Care Properties, Inc. and certain subsidiaries of Quality Care Properties, Inc. (filed with the Commission as Exhibit 2.1 to the Company’s Form 8-K filed April 26, 2018 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(a) Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(b) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(c) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed June 13, 2003 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(d) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.9 to the Company’s Form 10-Q filed August 9, 2007 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(e) Certificate of Change of Location of Registered Office and of Registered Agent of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-Q filed August 6, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(f) Certificate of Designation of 6.50% Series I Cumulative Convertible Perpetual Preferred Stock of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed March 7, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(g) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed May 10, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(h) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed May 6, 2014 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(i) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed September 30, 2015 (File No. 001-08923), and incorporated herein by reference thereto).
3.2
Seventh Amended and Restated By-laws of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed May 6, 2019 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(a) Indenture, dated as of March 15, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed March 15, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(b) Supplemental Indenture No. 1, dated as of March 15, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 15, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(c) Amendment No. 1 to Supplemental Indenture No. 1, dated as of June 18, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed June 18, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(d) Supplemental Indenture No. 2, dated as of April 7, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed April 7, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(e) Amendment No. 1 to Supplemental Indenture No. 2, dated as of June 8, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed June 8, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(f) Supplemental Indenture No. 3, dated as of September 10, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed September 13, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(g) Supplemental Indenture No. 4, dated as of November 16, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed November 16, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(h) Supplemental Indenture No. 5, dated as of March 14, 2011, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 14, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(i) Supplemental Indenture No. 6, dated as of April 3, 2012, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed April 4, 2012 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(j) Supplemental Indenture No. 7, dated as of December 6, 2012, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed December 11, 2012 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(k) Supplemental Indenture No. 8, dated as of October 7, 2013, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed October 9, 2013 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(l) Supplemental Indenture No. 9, dated as of November 20, 2013, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed November 20, 2013 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(m) Supplemental Indenture No. 10, dated as of November 25, 2014, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed November 25, 2014 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(n) Supplemental Indenture No. 11, dated as of May 26, 2015, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed May 27, 2015 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(o) Amendment No. 1 to Supplemental Indenture No. 11, dated as of October 19, 2015, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed October 20, 2015 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(p) Supplemental Indenture No. 12, dated as of March 1, 2016, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 3, 2016 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(q)
Supplemental Indenture No. 13, dated as of April 10, 2018, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed April 10, 2018 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(r)
Supplemental Indenture No. 14, dated as of August 16, 2018, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed August 16, 2018 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(s)
Supplemental Indenture No. 15, dated as of February 15, 2019 between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company's Form 8-K filed February 15, 2019 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(t)
Supplemental Indenture No. 16, dated as of August 19, 2019, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company's Form 8-K filed August 19, 2019 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(u)
Supplemental Indenture No. 17, dated as of December 16, 2019, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company's Form 8-K filed December 16, 2019 (File No. 001-08923), and incorporated herein by reference thereto).
4.2 Form of Indenture for Senior Subordinated Debt Securities (filed with the Commission as Exhibit 4.2 to the Company’s Form S-3 (File No. 333-2250004) filed May 17, 2018, and incorporated herein by reference thereto).
4.3 Form of Indenture for Junior Subordinated Debt Securities (filed with the Commission as Exhibit 4.3 to the Company’s Form S-3 (File No. 333-2250004) filed May 17, 2018, and incorporated herein by reference thereto).
4.4(a) Indenture, dated as of November 25, 2015, by and among HCN Canadian Holdings-1 LP, the Company and BNY Trust Company of Canada (filed with the Commission as Exhibit 4.5(a) to the Company’s Form 10-K filed February 18, 2016 (File No. 001-08923), and incorporated herein by reference thereto).
4.4(b) First Supplemental Indenture, dated as of November 25, 2015, by and among HCN Canadian Holdings-1 LP, the Company and BNY Trust Company of Canada (filed with the Commission as Exhibit 4.5(b) to the Company’s Form 10-K filed February 18, 2016 (File No. 001-08923), and incorporated herein by reference thereto).
4.4(c)
Second Supplemental Indenture, dated as of December 20, 2019, by and among HCN Canadian Holdings-1 LP, the Company and BNY Trust Company of Canada.
4.5
Description of Securities of the Registrant.
10.1(a)
Credit Agreement dated as of July 19, 2018 by and among the Company; the lenders listed therein; KeyBank National Association, as administrative agent, L/C issuer and a swingline lender; Bank of America, N.A. and JPMorgan Chase Bank, N.A., as co-syndication agents; Deutsche Bank Securities Inc., as documentation agent; Merrill Lynch, Pierce, Fenner & Smith Incorporated, JPMorgan Chase Bank, N.A., KeyBanc Capital Markets Inc. and Deutsche Bank Securities Inc., as U.S. joint lead arrangers; Merrill Lynch, Pierce, Fenner & Smith Incorporated, JPMorgan Chase Bank, N.A., KeyBanc Capital Markets Inc. and RBC Capital Markets, as Canadian joint lead arrangers; and Merrill Lynch, Pierce, Fenner & Smith Incorporated and JPMorgan Chase Bank, N.A., as joint book runners (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed July 24, 2018 (File No. 001-08923), and incorporated herein by reference thereto).
10.1(b)
First Amendment, dated April 26, 2019, to the Credit Agreement, dated as of July 19, 2018, by and among the Company; the lenders listed therein; KeyBank National Association, as administrative agent, L/C issuer and a swingline lender; Bank of America, N.A. and JPMorgan Chase Bank, N.A., as co-syndication agents; Deutsche Bank Securities Inc., as documentation agent; Merrill Lynch, Pierce, Fenner & Smith Incorporated, JPMorgan Chase Bank, N.A., KeyBanc Capital Markets Inc. and Deutsche Bank Securities Inc., as U.S. joint lead arrangers; Merrill Lynch, Pierce, Fenner & Smith Incorporated, JPMorgan Chase Bank, N.A., KeyBanc Capital Markets Inc. and RBC Capital Markets, as Canadian joint lead arrangers; and Merrill Lynch, Pierce, Fenner & Smith Incorporated and JPMorgan Chase Bank, N.A., as joint book runners (filed with the Commission as Exhibit 10.1 to the Company’s Form 10-Q filed April 30, 2019 (File No. 001-08923), and incorporated herein by reference thereto).
10.2(a) Amended and Restated Health Care REIT, Inc. 2005 Long-Term Incentive Plan (filed with the Commission as Appendix A to the Company’s Proxy Statement for the 2009 Annual Meeting of Stockholders, filed March 25, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*
10.2(b) Form of Stock Option Agreement (with Dividend Equivalent Rights) for Executive Officers under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.9 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*
10.2(c) Form of Stock Option Agreement (without Dividend Equivalent Rights) for Executive Officers under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*
10.2(d) Form of Restricted Stock Agreement for the Chief Executive Officer under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*
10.2(e) Form of Restricted Stock Agreement for Executive Officers under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.4 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*
10.3(a) Amended and Restated Employment Agreement, dated January 3, 2017, between the Company and Thomas J. DeRosa (filed with the Commission as Exhibit 10.4(a) to the Company’s Form 10-K filed February 22, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*
10.3(b) Performance-Based Restricted Stock Unit Grant Agreement, dated effective as of July 30, 2014, between the Company and Thomas J. DeRosa (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed November 4, 2014 (File No. 001-08923), and incorporated herein by reference thereto).*
10.4
Settlement Agreement, dated September 4, 2019, by and between John A. Goodey and the Company (filed with the Commission as Exhibit 10.1 to the Company's Form 10-Q filed October 30, 2019 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5
Resignation Agreement, dated July 1, 2019, by and between Mercedes T. Kerr and the Company (filed with the Commission as Exhibit 10.1 to the Company's Form 10-Q filed August 1, 2019 (File No. 001-08923), and incorporated herein by reference thereto).*
10.6 Form of Indemnification Agreement between the Company and each director, executive officer and officer of the Company (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed February 18, 2005 (File No. 001-08923), and incorporated herein by reference thereto).*
10.7
Summary of Director Compensation (filed with the Commission as Exhibit 10.2 to the Company's Form 10-Q filed August 1, 2019 (File No. 001-08923), and incorporated by reference thereto).*
10.8(a)
Welltower Inc. 2016 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed May 10, 2016 (File No. 001-08923), and incorporated herein by reference thereto).*
10.8(b)
Form of Restricted Stock Grant Notice for Executive Officers under the 2016 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.14(b) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.8(c)
Form of Restricted Stock Grant Notice for Senior Vice Presidents under the 2016 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.14(c) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.8(d)
Form of Deferred Stock Unit Grant Agreement for Non-Employee Directors under the 2016 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.14(d) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.9(a)
Welltower Inc. 2016-2018 Long-Term Incentive Program (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed August 2, 2016 (File No. 001-08923), and incorporated herein by reference thereto).*
10.9(b)
Form of Performance Restricted Stock Unit Award Agreement under the 2016-2018 Long-Term Incentive Program (filed with the Commission as Exhibit 10.15(b) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.10(a) Welltower Inc. 2017-2019 Long-Term Incentive Program (filed with the Commission as Exhibit 10.4 to the Company’s Form 10-Q filed May 5, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*
10.10(b) Form of Award Notice under the 2017-2019 Long-Term Incentive Program (filed with the Commission as Exhibit 10.16(b) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.10(c) Welltower Inc. 2017-2019 Long-Term Incentive Program - Bridge 1 (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed November 7, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*
10.10(d) Form of Award Notice under the 2017-2019 Long Term Incentive Program - Bridge 1 (filed with the Commission as Exhibit 10.16(d) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.10(e) Welltower Inc. 2017-2019 Long-Term Incentive Program - Bridge 2 (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed November 7, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*
10.10(f)
Form of Award Notice under the 2017-2019 Long Term Incentive Program - Bridge 2 (filed with the Commission as Exhibit 10.16(f) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.11(a) Welltower Inc. 2018-2020 Long-Term Incentive Program (filed with the Commission as Exhibit 10.17(a) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.11(b) Form of Restricted Stock Unit Award Agreement under the 2018-2020 Long-Term Incentive Program (filed with the Commission as Exhibit 10.17(b) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.12(a) Welltower Inc. 2019-2021 Long-Term Incentive Program (filed with the Commission as Exhibit 10.14(a) to the Company's Form 10-K filed February 25, 2019 (File No. 001-08923), and incorporated herein by reference thereto).*
10.12(b) Form of Restricted Stock Unit Award Agreement under the 2019-2021 Long-Term Incentive Program (filed with the Commission as Exhibit 10.14(b) to the Company's Form 10-K filed February 25, 2019 (File No. 001-08923), and incorporated herein by reference thereto).*
10.13
2019 Non-Qualified Deferred Compensation Plan (filed with the Commission as Exhibit 10.2 to the Company's Form 10-Q filed October 30, 2019 (File No. 001-08923), and incorporated herein by reference thereto).*
10.14(a)
Welltower Inc. 2020-2022 Long-Term Incentive Program.*
10.14(b) Form of Restricted Stock Unit Award Agreement under the 2020-2022 Long-Term Incentive Program.*
21 Subsidiaries of the Company.
23 Consent of Ernst & Young LLP, independent registered public accounting firm.
24 Powers of Attorney.
31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1 Certification pursuant to 18 U.S.C. Section 1350 by Chief Executive Officer.
32.2 Certification pursuant to 18 U.S.C. Section 1350 by Chief Financial Officer.
101.INS Inline XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
The cover page from the Company's Annual Report on Form 10-K for the year ended December 31, 2019, formatted in Inline XBRL (included in Exhibit 101)
*
Management Contract or Compensatory Plan or Arrangement.
Item 16. Form 10-K Summary
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 14, 2020
WELLTOWER INC.
By: /s/ Thomas J. DeRosa
Thomas J. DeRosa,
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 14, 2020 by the following persons on behalf of the Registrant and in the capacities indicated.
/s/ Jeffrey H. Donahue **
/s/ Kathryn M. Sullivan **
Jeffrey H. Donahue, Lead Director
Kathryn M. Sullivan, Director
/s/ Kenneth J. Bacon **
/s/ R. Scott Trumbull **
Kenneth J. Bacon, Director
R. Scott Trumbull, Director
/s/ Karen B. DeSalvo **
/s/ Thomas J. DeRosa **
Karen B. DeSalvo, Director
Thomas J. DeRosa, Chairman and Chief Executive Officer
(Principal Executive Officer)
/s/ Sharon M. Oster **
/s/ Timothy G. McHugh **
Sharon M. Oster, Director
Timothy G. McHugh, Senior Vice President and Chief
Financial Officer (Principal Financial Officer)
/s/ Sergio D. Rivera **
/s/ Joshua T. Fieweger**
Sergio D. Rivera, Director
Joshua T. Fieweger, Senior Vice President and
Controller (Principal Accounting Officer)
/s/ Johnese M. Spisso **
Johnese M. Spisso, Director
**By: /s/ Thomas J. DeRosa
Thomas J. DeRosa, Attorney-in-Fact
Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2019
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Adderbury, UK
$
-
$
2,144
$
12,549
$
$
2,230
$
13,120
$
1,032
Banbury Road
Albertville, AL
-
6,203
6,686
1,998
151 Woodham Dr.
Albuquerque, NM
-
1,270
20,837
2,653
1,354
23,406
7,255
500 Paisano St NE
Alexandria, VA
-
8,280
50,914
8,280
51,210
2,459
5550 Cardinal Place
Altrincham, UK
-
4,244
25,187
3,274
4,565
28,140
6,892
295 Hale Road
Amherst, NY
-
1,131
10,520
1,131
11,326
1880 Sweet Home Road
Amherstview, ON
-
4,446
5,091
1,019
4567 Bath Road
Anderson, SC
-
6,290
7,168
3,811
311 Simpson Rd.
Ankeny, IA
-
1,129
10,239
-
1,129
10,239
1275 SW State Street
Apple Valley, CA
-
16,639
17,489
5,084
11825 Apple Valley Rd.
Arlington, TX
-
1,660
37,395
3,019
1,660
40,414
10,850
1250 West Pioneer Parkway
Arlington, VA
-
8,385
31,198
15,162
8,386
46,359
13,165
900 N Taylor Street
Arlington, VA
-
-
2,338
1,657
3,990
900 N Taylor Street
Arnprior, ON
-
6,283
7,100
1,783
15 Arthur Street
Atlanta, GA
-
2,058
14,914
2,148
2,080
17,040
12,165
1460 S Johnson Ferry Rd.
Atlanta, GA
-
2,100
20,603
1,824
2,197
22,330
4,829
1000 Lenox Park Blvd NE
Austin, TX
-
9,520
1,902
11,417
6,144
12429 Scofield Farms Dr.
Austin, TX
-
1,560
21,413
1,560
22,163
3,533
11330 Farrah Lane
Austin, TX
-
4,200
74,850
1,287
4,200
76,137
10,166
4310 Bee Caves Road
Bagshot, UK
-
4,960
29,881
6,822
5,340
36,323
8,360
14 - 16 London Road
Banstead, UK
-
6,695
55,113
9,912
7,246
64,474
14,801
Croydon Lane
Basingstoke, UK
-
3,420
18,853
1,958
3,678
20,553
3,155
Grove Road
Basking Ridge, NJ
-
2,356
37,710
1,738
2,395
39,409
9,083
404 King George Road
Bassett, UK
-
4,874
32,304
8,919
5,255
40,842
10,030
111 Burgess Road
Bath, UK
-
2,696
11,876
2,805
12,550
Clarks Way, Rush Hill
Baton Rouge, LA
12,930
29,436
1,242
30,582
6,912
9351 Siegen Lane
Beaconsfield, UK
-
5,566
50,952
4,746
5,998
55,266
12,416
30-34 Station Road
Beaconsfield, QC
-
1,149
17,484
1,808
1,289
19,152
5,644
505 Elm Avenue
Bee Cave, TX
-
1,820
21,084
1,820
21,716
2,694
14058 A Bee Cave Parkway
Bellevue, WA
-
2,800
19,004
2,392
2,816
21,380
6,062
15928 NE 8th Street
Bellingham, WA
-
1,500
19,861
1,507
20,676
5,982
4415 Columbine Dr.
Belmont, CA
-
-
35,300
2,426
37,548
9,080
1010 Alameda de Las Pulgas
Bethel Park, PA
-
1,609
12,989
-
1,609
12,989
631 McMurray Road
Bethesda, MD
-
-
45,309
1,263
46,569
10,744
8300 Burdett Road
Bethesda, MD
-
-
-
8300 Burdett Road
Bethesda, MD
-
-
-
1,138
8300 Burdett Road
Bethesda, MD
-
-
-
69,690
3,513
66,252
1,421
4925 Battery Lane
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Birmingham, UK
-
18,956
-
18,956
4,844
5 Church Road, Edgbaston
Birmingham, UK
-
1,480
13,014
1,302
1,592
14,204
1,211
47 Bristol Road South
Birmingham, UK
-
2,807
11,313
1,598
3,019
12,699
1,038
134 Jockey Road
Blainville, QC
-
2,077
8,902
1,388
2,301
10,066
3,242
50 des Chateaux Boulevard
Bloomfield Hills, MI
-
2,000
35,662
1,413
2,133
36,942
8,446
6790 Telegraph Road
Boca Raton, FL
32,270
6,565
111,247
23,813
6,565
135,060
17,762
6343 Via De Sonrise Del Sur
Boise, ID
-
2,220
18,703
1,830
2,220
20,533
10250 W Smoke Ranch Drive
Borehamwood, UK
-
5,367
41,937
4,370
5,810
45,864
10,954
Edgwarebury Lane
Bothell, WA
-
1,350
13,439
6,927
1,798
19,918
3,354
10605 NE 185th Street
Boulder, CO
-
2,994
27,458
2,434
3,064
29,822
8,429
3955 28th Street
Bournemouth, UK
-
5,527
42,547
4,509
5,966
46,617
10,820
42 Belle Vue Road
Braintree, MA
-
-
41,290
1,251
42,441
10,092
618 Granite Street
Brampton, ON
41,370
10,196
59,989
3,806
10,736
63,255
12,158
100 Ken Whillans Drive
Brandon, MS
-
1,220
10,241
1,220
10,518
2,594
140 Castlewoods Blvd
Brick, NJ
-
1,170
17,372
1,752
1,213
19,081
4,778
515 Jack Martin Blvd
Brick, NJ
-
17,125
5,803
22,923
4,778
1594 Route 88
Bridgewater, NJ
-
1,730
48,201
2,785
1,774
50,942
11,700
2005 Route 22 West
Brockport, NY
-
1,500
23,496
1,705
23,930
4,631
90 West Avenue
Brockville, ON
4,375
7,445
8,321
1,480
1026 Bridlewood Drive
Brookfield, WI
-
1,300
12,830
1,300
12,977
2,137
1105 Davidson Road
Broomfield, CO
-
4,140
44,547
12,797
10,140
51,344
18,769
400 Summit Blvd
Brossard, QC
10,516
5,499
31,854
2,991
5,720
34,624
7,003
2455 Boulevard Rome
Buckingham, UK
-
2,979
13,880
1,801
3,231
15,429
2,436
Church Street
Buffalo Grove, IL
-
2,850
49,129
3,932
2,850
53,061
12,104
500 McHenry Road
Burbank, CA
-
4,940
43,466
4,101
4,940
47,567
12,013
455 E. Angeleno Avenue
Burbank, CA
18,865
3,610
50,817
4,219
3,610
55,036
7,089
2721 Willow Street
Burke, VA
-
-
-
52,827
2,575
50,252
1,194
9617 Burke Lake Road
Burleson, TX
-
3,150
10,437
3,150
11,118
1,669
621 Old Highway 1187
Burlingame, CA
-
-
62,786
-
62,879
7,356
1818 Trousdale Avenue
Burlington, ON
11,513
1,309
19,311
1,829
1,413
21,036
5,071
500 Appleby Line
Burlington, MA
-
2,443
34,354
1,645
2,578
35,864
8,967
24 Mall Road
Burlington, WA
-
14,938
15,853
1,085
410 S Norris St
Burlington, WA
-
7,619
8,187
210 / 212 N Skagit St
Bushey, UK
-
12,690
36,482
2,005
13,203
37,974
1,554
Elton House, Elton Way
Calgary, AB
11,355
2,252
37,415
3,512
2,424
40,755
10,035
20 Promenade Way SE
Calgary, AB
12,899
2,793
41,179
3,625
2,991
44,606
10,754
80 Edenwold Drive NW
Calgary, AB
10,250
3,122
38,971
3,592
3,358
42,327
10,117
150 Scotia Landing NW
Calgary, AB
21,583
3,431
28,983
3,573
3,680
32,307
6,936
9229 16th Street SW
Calgary, AB
25,255
2,385
36,776
3,595
2,553
40,203
7,071
2220-162nd Avenue SW
Camberley, UK
-
2,654
5,736
20,735
6,091
23,034
1,967
Fernhill Road
Camillus, NY
-
2,064
11,132
2,064
11,898
3877 Milton Avenue
Cardiff, UK
-
3,191
12,566
2,206
3,457
14,506
4,212
127 Cyncoed Road
Cardiff by the Sea, CA
36,097
5,880
64,711
4,838
5,880
69,549
18,178
3535 Manchester Avenue
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Carmichael, CA
24,548
2,440
41,988
1,935
2,440
43,923
-
4717 Engle Road
Carol Stream, IL
-
1,730
55,048
3,139
1,730
58,187
14,359
545 Belmont Lane
Carrollton, TX
-
4,280
31,444
1,477
4,280
32,921
5,127
2105 North Josey Lane
Cary, NC
-
45,240
46,158
9,522
1206 West Chatham Street
Cary, NC
-
6,112
70,008
9,070
6,155
79,035
9,215
300 Kildaire Woods Drive
Cedar Park, TX
-
1,750
15,664
1,750
16,406
1,351
800 C-Bar Ranch Trail
Cerritos, CA
-
-
27,494
6,833
-
34,327
7,207
11000 New Falcon Way
Charlottesville, VA
-
4,651
91,468
13,629
4,651
105,097
15,730
2610 Barracks Road
Chatham, ON
1,098
12,462
3,290
1,255
15,595
3,709
25 Keil Drive North
Chelmsford, MA
-
1,040
10,951
2,018
1,120
12,889
4,935
4 Technology Dr.
Chertsey, UK
-
9,566
25,886
1,951
9,952
27,451
1,660
Bittams Lane
Chesterfield, MO
-
1,857
48,366
1,512
1,917
49,818
10,924
1880 Clarkson Road
Chorleywood, UK
-
5,636
43,191
6,354
6,076
49,105
12,352
High View, Rickmansworth Road
Chula Vista, CA
-
2,072
22,163
1,484
2,162
23,557
5,574
3302 Bonita Road
Church Crookham, UK
-
2,591
14,215
1,882
2,806
15,882
3,197
Bourley Road
Cincinnati, OH
-
1,750
11,279
1,750
11,358
732 Clough Pike Road
Cincinnati, OH
-
2,060
109,388
13,965
2,106
123,307
30,961
5445 Kenwood Road
Citrus Heights, CA
-
2,300
31,876
1,658
2,300
33,534
9,837
7418 Stock Ranch Rd.
Claremont, CA
-
2,430
9,928
1,765
2,515
11,608
3,183
2053 North Towne Avenue
Clay, NY
-
1,296
10,695
1,296
11,429
8547 Morgan Road
Cohasset, MA
-
2,485
26,147
2,040
2,500
28,172
6,861
125 King Street (Rt 3A)
Colleyville, TX
-
1,050
17,082
1,050
17,135
1,385
8100 Precinct Line Road
Colorado Springs, CO
-
14,756
2,026
1,026
16,556
4,211
2105 University Park Boulevard
Colts Neck, NJ
-
14,733
2,599
1,131
16,981
4,194
3 Meridian Circle
Coquitlam, BC
9,102
3,047
24,567
2,439
3,264
26,789
7,628
1142 Dufferin Street
Crystal Lake, IL
-
12,461
1,556
13,921
3,869
751 E Terra Cotta Avenue
Dallas, TX
-
6,330
114,794
2,288
6,330
117,082
16,762
3535 N Hall Street
Davenport, IA
-
1,403
35,893
4,830
1,614
40,512
11,931
4500 Elmore Ave.
Decatur, GA
-
-
-
31,177
1,946
29,231
7,458
920 Clairemont Avenue
Denver, CO
-
1,450
19,389
3,671
1,450
23,060
4,957
4901 South Monaco Street
Denver, CO
-
2,910
35,838
2,010
2,910
37,848
9,701
8101 E Mississippi Avenue
Denver, CO
-
5,411
104,641
8,008
5,411
112,649
3,672
1500 Little Raven St
Dix Hills, NY
-
3,808
39,014
2,045
3,959
40,908
9,751
337 Deer Park Road
Dollard-Des-Ormeaux, QC
-
1,957
14,431
1,585
2,145
15,828
5,414
4377 St. Jean Blvd
Dresher, PA
8,380
1,900
10,664
1,211
1,914
11,861
4,008
1650 Susquehanna Road
Dublin, OH
-
1,680
43,423
7,075
1,850
50,328
16,148
6470 Post Rd
Dublin, OH
-
1,169
25,345
1,169
25,457
3,252
4175 Stoneridge Lane
East Amherst, NY
-
1,626
10,721
1,626
11,584
8040 Roll Road
East Meadow, NY
-
45,991
1,837
47,773
11,123
1555 Glen Curtiss Boulevard
East Setauket, NY
-
4,920
37,354
1,982
4,986
39,270
9,211
1 Sunrise Drive
Eastbourne, UK
-
4,145
33,744
3,384
4,472
36,801
8,971
6 Upper Kings Drive
Edgbaston, UK
-
2,720
13,969
1,524
2,926
15,287
2,003
Pershore Road
Edgewater, NJ
-
4,561
25,047
1,767
4,564
26,811
6,634
351 River Road
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Edison, NJ
-
1,892
32,314
3,498
1,911
35,793
10,447
1801 Oak Tree Road
Edmonds, WA
-
1,650
24,449
8,055
1,686
32,468
4,664
21500 72nd Avenue West
Edmonton, AB
8,211
1,589
29,819
3,016
1,753
32,671
8,106
103 Rabbit Hill Court NW
Edmonton, AB
10,735
2,063
37,293
3,913
2,209
41,060
12,124
10015 103rd Avenue NW
El Dorado Hills, CA
-
5,190
52,171
5,190
52,327
-
2020 Town Center West Way
Encino, CA
-
5,040
46,255
5,021
5,040
51,276
12,449
15451 Ventura Boulevard
Englishtown, NJ
-
12,520
2,267
14,617
3,781
49 Lasatta Ave
Erie, PA
-
1,422
8,198
1,422
8,990
4400 East Lake Road
Esher, UK
-
5,783
48,361
7,998
6,242
55,900
11,709
42 Copsem Lane
Fairfield, NJ
-
3,120
43,868
2,277
3,180
46,085
10,815
47 Greenbrook Road
Fairfield, CA
-
1,460
14,040
2,711
1,460
16,751
7,033
3350 Cherry Hills St.
Fairfield, OH
-
1,416
12,566
1,416
12,860
520 Patterson Boulevard
Fareham, UK
-
3,408
17,970
2,088
3,681
19,785
3,622
Redlands Lane
Florence, AL
-
13,049
13,746
3,938
3275 County Road 47
Flossmoor, IL
-
1,292
9,496
2,090
1,339
11,539
3,515
19715 Governors Highway
Folsom, CA
-
1,490
32,754
1,490
32,847
5,416
1574 Creekside Drive
Fort Worth, TX
-
7,118
52,772
1,744
7,118
54,516
1,910
3401 Amador Drive
Fort Worth, TX
-
2,080
27,888
4,371
2,080
32,259
8,525
2151 Green Oaks Road
Fort Worth, TX
-
1,740
19,799
1,740
20,531
2,435
7001 Bryant Irvin Road
Fremont, CA
-
3,400
25,300
5,295
3,456
30,539
11,041
2860 Country Dr.
Fresno, CA
23,720
2,459
33,048
1,755
2,459
34,803
-
5605 North Gates Avenue
Frome, UK
-
2,720
14,813
1,884
2,926
16,491
2,706
Welshmill Lane
Fullerton, CA
-
1,964
19,989
1,168
1,998
21,123
5,300
2226 North Euclid Street
Gahanna, OH
-
11,214
1,884
13,083
3,180
775 East Johnstown Road
Gardnerville, NV
-
1,143
10,831
1,364
1,164
12,174
9,112
1565-A Virginia Ranch Rd.
Gig Harbor, WA
-
1,560
15,947
1,155
1,583
17,079
4,706
3213 45th St. Court NW
Gilbert, AZ
14,200
2,160
28,246
2,025
2,180
30,251
9,137
580 S. Gilbert Road
Glen Cove, NY
-
4,594
35,236
2,276
4,643
37,463
10,265
39 Forest Avenue
Glenview, IL
-
2,090
69,288
4,276
2,090
73,564
17,854
2200 Golf Road
Golden Valley, MN
3,600
1,520
33,513
1,578
1,634
34,977
8,005
4950 Olson Memorial Highway
Granbury, TX
-
2,040
30,670
2,040
31,380
7,189
100 Watermark Boulevard
Grimsby, ON
-
5,617
6,302
1,224
84 Main Street East
Grosse Pointe Woods, MI
-
13,662
14,553
3,255
1850 Vernier Road
Grosse Pointe Woods, MI
-
1,430
31,777
1,282
1,435
33,054
7,444
21260 Mack Avenue
Grove City, OH
36,420
3,575
85,764
3,491
86,713
3,901
3717 Orders Road
Guildford, UK
-
5,361
56,494
5,122
5,766
61,211
13,881
Astolat Way, Peasmarsh
Gurnee, IL
-
27,931
2,478
30,364
6,640
500 North Hunt Club Road
Haddonfield, NJ
-
16,363
16,946
2,315
132 Warwick Road
Hamburg, NY
-
10,006
10,827
4600 Southwestern Blvd
Hamilton, OH
-
1,163
11,960
-
1,163
11,960
1740 Eden Park Drive
Hampshire, UK
-
4,172
26,035
2,581
4,496
28,292
6,835
22-26 Church Road
Happy Valley, OR
-
9,889
10,335
8915 S.E. Monterey
Haverford, PA
-
1,880
33,993
2,648
1,904
36,617
8,274
731 Old Buck Lane
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Henderson, NV
-
1,190
11,600
1,111
1,253
12,648
4,139
1555 West Horizon Ridge Parkway
High Wycombe, UK
-
3,567
13,422
1,140
3,711
14,418
1,087
The Row Lane End
Highland Park, IL
-
2,820
15,832
2,820
16,628
3,013
1651 Richfield Avenue
Highland Park, IL
-
2,250
25,313
1,556
2,271
26,848
7,216
1601 Green Bay Road
Hingham, MA
-
1,440
32,292
1,444
32,606
5,373
1 Sgt. William B Terry Drive
Holbrook, NY
-
3,957
35,337
2,351
4,145
37,500
8,607
320 Patchogue Holbrook Road
Horley, UK
-
2,332
12,144
1,851
2,516
13,811
2,788
Court Lodge Road
Houston, TX
-
3,830
55,674
7,693
3,830
63,367
16,958
2929 West Holcombe Boulevard
Houston, TX
-
1,040
31,965
5,466
1,040
37,431
8,478
505 Bering Drive
Houston, TX
-
1,750
15,603
1,595
1,750
17,198
1,485
10120 Louetta Road
Houston, TX
-
15,275
-
15,275
7,461
10225 Cypresswood Dr
Howell, NJ
8,096
1,066
21,577
1,348
1,149
22,842
5,460
100 Meridian Place
Huntington Beach, CA
-
3,808
31,172
2,646
3,931
33,695
9,396
7401 Yorktown Avenue
Independence, MO
-
1,550
14,463
-
1,550
14,463
19301 East Eastland Ctr Ct
Irving, TX
-
1,030
6,823
1,030
7,705
2,246
8855 West Valley Ranch Parkway
Jacksonville, FL
-
6,550
29,316
-
6,550
29,316
10520 Validus Drive
Johns Creek, GA
-
1,580
23,285
1,070
1,588
24,347
5,794
11405 Medlock Bridge Road
Johnson City, NY
-
1,392
11,828
1,392
12,704
1035 Anna Maria Drive
Kanata, ON
-
1,689
28,670
1,972
1,750
30,581
7,368
70 Stonehaven Drive
Kansas City, MO
-
1,820
34,898
5,277
1,889
40,106
13,314
12100 Wornall Road
Kansas City, MO
4,880
1,930
39,997
5,488
1,987
45,428
14,964
6500 North Cosby Ave
Kansas City, MO
-
23,962
24,275
3,884
6460 North Cosby Avenue
Kelowna, BC
5,176
2,688
13,647
2,123
2,895
15,563
4,386
863 Leon Avenue
Kennebunk, ME
-
2,700
30,204
5,587
3,223
35,268
13,375
One Huntington Common Drive
Kenner, LA
-
1,100
10,036
1,392
1,100
11,428
10,059
1600 Joe Yenni Blvd
Kennett Square, PA
-
1,050
22,946
1,103
23,726
5,474
301 Victoria Gardens Dr.
Kingston, ON
4,229
1,030
11,416
1,597
1,115
12,928
2,200
181 Ontario Street
Kingwood, TX
-
9,777
10,631
2,704
22955 Eastex Freeway
Kingwood, TX
-
1,683
24,207
2,471
1,683
26,678
3,931
24025 Kingwood Place
Kirkland, WA
-
1,880
4,315
1,231
1,880
5,546
2,073
6505 Lakeview Dr.
Kitchener, ON
1,329
2,744
3,064
164 - 168 Ferfus Avenue
Kitchener, ON
3,323
1,093
7,327
1,182
8,127
2,513
290 Queen Street South
Kitchener, ON
12,374
1,341
13,939
4,284
1,400
18,164
3,702
1250 Weber Street E
La Palma, CA
-
2,950
16,591
1,269
2,973
17,837
4,369
5321 La Palma Avenue
Lackawanna, NY
-
1,011
5,254
1,011
5,732
133 Orchard Place
Lafayette Hill, PA
-
1,750
11,848
2,372
1,867
14,103
4,471
429 Ridge Pike
Laguna Hills, CA
-
12,820
75,926
19,001
12,820
94,927
18,601
24903 Moulton Parkway
Laguna Woods, CA
-
11,280
76,485
12,995
11,280
89,480
15,798
24441 Calle Sonora
Laguna Woods, CA
-
9,150
57,842
11,547
9,150
69,389
12,299
24962 Calle Aragon
Lake Zurich, IL
-
1,470
9,830
2,707
1,470
12,537
4,401
550 America Court
Lancaster, CA
-
15,295
1,364
16,647
5,201
43051 15th St. West
Lancaster, NY
-
1,252
11,084
1,252
12,060
18 Pavement Road
Laval, QC
22,375
2,105
32,161
5,368
2,214
37,420
4,851
269, boulevard Ste. Rose
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Laval, QC
4,306
2,383
5,968
1,419
2,507
7,263
263, boulevard Ste. Rose
Lawrenceville, GA
-
1,500
29,003
1,529
29,768
7,241
1375 Webb Gin House Road
Leatherhead, UK
-
4,682
17,835
1,727
4,871
19,373
1,338
Rectory Lane
Leawood, KS
-
2,490
32,493
3,749
5,610
33,122
8,386
4400 West 115th Street
Lecanto, FL
-
6,900
7,313
2,884
2341 W. Norvell Bryant Hwy.
Lenexa, KS
9,700
26,251
1,332
27,487
7,167
15055 West 87th Street Parkway
Lincroft, NJ
-
19,958
1,906
21,742
5,324
734 Newman Springs Road
Linwood, NJ
-
21,984
1,489
23,412
5,695
432 Central Ave
Litchfield, CT
-
1,240
17,908
11,640
1,272
29,516
5,671
19 Constitution Way
Little Neck, NY
-
3,350
38,461
3,016
3,358
41,469
9,556
5515 Little Neck Pkwy.
Livingston, NJ
-
8,000
44,424
8,017
45,326
3,595
369 E Mt Pleasant Avenue
Lombard, IL
17,010
2,130
59,943
1,755
2,218
61,610
14,083
2210 Fountain Square Dr
London, UK
-
3,121
10,027
1,988
3,370
11,766
1,952
71 Hatch Lane
London, UK
-
7,691
16,797
1,369
8,001
17,781
1,592
6 Victoria Drive
London, ON
-
8,228
1,204
1,084
9,335
1,829
760 Horizon Drive
London, ON
11,200
1,969
16,985
2,534
2,102
19,386
3,680
1486 Richmond Street North
London, ON
1,445
13,631
2,213
1,667
15,622
2,672
81 Grand Avenue
Longueuil, QC
9,155
3,992
23,711
4,584
4,340
27,947
5,201
70 Rue Levis
Lorain, OH
-
1,394
12,956
1,394
12,979
5401 North Pointe Pkwy
Los Angeles, CA
58,514
-
114,438
6,152
-
120,590
31,800
10475 Wilshire Boulevard
Los Angeles, CA
-
3,540
19,007
3,369
3,540
22,376
5,696
2051 N. Highland Avenue
Los Angeles, CA
-
-
28,050
5,879
33,858
4,310
4061 Grand View Boulevard
Louisville, KY
-
2,420
20,816
2,470
2,420
23,286
6,078
4600 Bowling Boulevard
Louisville, KY
13,650
1,600
20,326
1,044
1,600
21,370
5,524
6700 Overlook Drive
Louisville, CO
-
2,023
31,562
1,769
2,023
33,331
1,416
1336 E Hecla Drive
Louisville, CO
-
1,158
26,656
-
1,158
26,656
1800 Plaza Drive
Louisville, CO
-
2,672
50,972
6,311
2,672
57,283
2,492
1331 E Hecla Drive
Louisville, CO
-
1,480
15,546
1,480
16,228
282 McCaslin Blvd
Louisville, CO
-
2,567
42,712
2,681
2,567
45,393
1,811
1331 E Hecla Drive
Lynnfield, MA
-
3,165
45,200
2,707
3,736
47,336
11,558
55 Salem Street
Mahwah, NJ
-
1,605
27,249
1,606
28,161
3,280
15 Edison Road
Malvern, PA
-
1,651
17,194
2,421
1,800
19,466
6,072
324 Lancaster Avenue
Manteca, CA
-
1,300
12,125
2,947
1,312
15,060
5,908
430 N. Union Rd.
Maple Ridge, BC
8,331
2,875
11,922
5,974
3,097
17,674
1,858
12241 224th Street
Marieville, QC
6,335
1,278
12,113
1,088
1,385
13,094
2,154
425 rue Claude de Ramezay
Markham, ON
50,918
3,727
48,939
4,472
4,032
53,106
15,995
7700 Bayview Avenue
Marlboro, NJ
-
2,222
14,888
1,542
2,250
16,402
4,281
3A South Main Street
Marysville, WA
-
4,780
1,652
6,432
2,434
9802 48th Dr. N.E.
Medicine Hat, AB
10,438
1,432
14,141
1,541
15,030
3,491
223 Park Meadows Drive SE
Medina, OH
-
1,683
12,036
1,683
12,493
699 North Huntington St
Melbourne, FL
-
7,070
48,257
31,764
7,070
80,021
25,011
7300 Watersong Lane
Melville, NY
-
4,280
73,283
7,212
4,326
80,449
18,189
70 Pinelawn Rd
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Memphis, TN
-
1,800
17,744
2,736
1,800
20,480
6,270
6605 Quail Hollow Road
Menomonee Falls, WI
-
1,020
6,984
2,256
1,020
9,240
2,550
W128 N6900 Northfield Drive
Mesa, AZ
-
9,087
2,881
11,968
5,472
7231 E. Broadway
Metairie, LA
14,200
27,708
28,656
6,367
3732 West Esplanade Ave. S
Mill Creek, WA
-
10,150
60,274
3,448
10,179
63,693
20,215
14905 Bothell-Everett Hwy
Milton, ON
19,890
4,542
25,321
3,668
4,882
28,649
4,305
611 Farmstead Drive
Minnetonka, MN
-
29,344
1,257
30,557
6,768
18605 Old Excelsior Blvd.
Mission Viejo, CA
13,570
6,600
52,118
8,447
6,600
60,565
9,097
27783 Center Drive
Mississauga, ON
8,491
1,602
17,996
1,803
1,711
19,690
4,855
1130 Bough Beeches Boulevard
Mississauga, ON
2,861
4,655
5,163
1,359
3051 Constitution Boulevard
Mississauga, ON
27,219
3,649
35,137
3,795
3,946
38,635
9,565
1490 Rathburn Road East
Mississauga, ON
6,066
2,548
15,158
2,904
2,724
17,886
3,821
85 King Street East
Missoula, MT
-
7,490
8,050
2,968
3620 American Way
Mobberley, UK
-
5,146
26,665
3,279
5,563
29,527
8,637
Barclay Park, Hall Lane
Monterey, CA
-
6,440
29,101
2,549
6,443
31,647
7,438
1110 Cass St.
Montgomery, MD
-
6,482
83,642
12,311
6,482
95,953
9,510
3701 International Dr
Montgomery Village, MD
-
3,530
18,246
7,214
4,291
24,699
10,011
19310 Club House Road
Montreal-Nord, QC
11,903
4,407
23,719
7,965
4,637
31,454
3,715
6700, boulevard Gouin Est
Moorestown, NJ
-
2,060
51,628
5,205
2,095
56,798
12,519
1205 N. Church St
Moose Jaw, SK
1,973
12,973
1,885
14,819
3,548
425 4th Avenue NW
Morton Grove, IL
-
1,900
19,374
1,900
20,238
4,284
5520 N. Lincoln Ave.
Murphy, TX
-
1,950
19,182
1,950
19,993
2,350
304 West FM 544
Naperville, IL
-
1,550
12,237
2,195
1,550
14,432
3,841
1936 Brookdale Road
Naperville, IL
-
1,540
28,204
1,435
1,593
29,586
7,300
535 West Ogden Avenue
Naples, FL
55,188
8,989
119,398
7,188
9,088
126,487
25,666
4800 Aston Gardens Way
Nashville, TN
-
3,900
35,788
3,911
3,900
39,699
11,568
4206 Stammer Place
Nepean, ON
5,491
1,575
5,770
1,110
1,697
6,758
1,716
1 Mill Hill Road
New Braunfels, TX
-
1,200
19,800
10,408
2,729
28,679
5,682
2294 East Common Street
Newbury, UK
-
2,850
12,796
1,498
3,065
14,079
1,239
370 London Road
Newmarket, UK
-
4,071
11,902
2,441
4,398
14,016
2,596
Jeddah Way
Newtown Square, PA
-
1,930
14,420
1,149
1,953
15,546
4,989
333 S. Newtown Street Rd.
North Tonawanda, NY
-
1,172
7,297
1,172
7,897
705 Sandra Lane
North Tustin, CA
-
2,880
18,059
3,044
18,828
4,067
12291 Newport Avenue
Oak Harbor, WA
-
7,667
8,115
171 SW 6th Ave
Oak Park, IL
-
1,250
40,383
2,640
1,250
43,023
10,749
1035 Madison Street
Oakdale, PA
-
1,865
11,925
1,865
12,805
7420 Steubenville Pike
Oakland, CA
-
3,877
47,508
3,465
4,114
50,736
12,439
11889 Skyline Boulevard
Oakton, VA
-
2,250
37,576
2,851
2,393
40,284
9,511
2863 Hunter Mill Road
Oakville, ON
5,618
1,252
7,382
1,346
8,210
2,113
289 and 299 Randall Street
Oakville, ON
9,189
2,134
29,963
3,314
2,280
33,131
8,518
25 Lakeshore Road West
Oakville, ON
4,812
1,271
13,754
1,646
1,361
15,310
3,474
345 Church Street
Ogden, UT
-
6,700
7,636
2,880
1340 N. Washington Blv.
Okotoks, AB
18,824
20,943
1,908
22,785
4,375
51 Riverside Gate
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Orange, CA
36,000
8,021
65,234
3,238
8,021
68,472
-
630 The City Drive South
Oshawa, ON
6,698
7,570
8,439
2,167
649 King Street East
Ottawa, ON
9,668
1,341
15,425
2,720
1,469
18,017
2,719
110 Berrigan Drive
Ottawa, ON
18,152
3,454
23,309
3,181
3,760
26,184
7,627
2370 Carling Avenue
Ottawa, ON
20,738
4,256
39,141
2,962
4,477
41,882
7,129
751 Peter Morand Crescent
Ottawa, ON
7,212
2,103
18,421
4,969
2,294
23,199
3,852
1 Eaton Street
Ottawa, ON
13,711
2,963
26,424
3,754
3,196
29,945
4,611
691 Valin Street
Ottawa, ON
10,377
1,561
18,170
2,828
1,751
20,808
3,069
22 Barnstone Drive
Ottawa, ON
13,702
3,663
30,633
-
3,663
30,633
5,208
990 Hunt Club Road
Ottawa, ON
17,456
3,411
28,335
6,228
3,684
34,290
6,357
2 Valley Stream Drive
Ottawa, ON
2,809
4,710
5,283
1,375
1345 Ogilvie Road
Ottawa, ON
2,044
2,165
1,484
3,740
1,040
370 Kennedy Lane
Ottawa, ON
9,559
2,809
27,299
3,021
3,020
30,109
8,289
43 Aylmer Avenue
Ottawa, ON
4,517
1,156
9,758
1,129
1,290
10,753
2,564
1351 Hunt Club Road
Ottawa, ON
5,876
7,800
1,142
8,885
2,129
140 Darlington Private
Ottawa, ON
8,898
1,176
12,764
1,663
1,298
14,305
2,340
10 Vaughan Street
Outremont, QC
17,866
6,746
45,981
11,155
7,098
56,784
6,385
1000, avenue Rockland
Overland Park, KS
-
1,540
16,269
1,663
1,670
17,802
3,918
9201 Foster
Palo Alto, CA
25,050
-
39,639
3,072
42,687
10,156
2701 El Camino Real
Paramus, NJ
-
2,840
35,728
1,855
2,986
37,437
8,755
567 Paramus Road
Parkland, FL
54,784
4,880
111,481
5,181
4,904
116,638
23,531
5999 University Drive
Parma, OH
-
1,533
9,185
1,533
9,886
11500 Huffman Road
Paso Robles, CA
-
1,770
8,630
1,379
1,770
10,009
4,288
1919 Creston Rd.
Peabody, MA
5,892
2,250
16,071
1,250
2,380
17,191
3,328
73 Margin Street
Pella, IA
-
6,716
6,779
1,218
2602 Fifield Road
Pembroke, ON
-
1,931
9,427
1,082
2,000
10,440
2,485
1111 Pembroke Street West
Pennington, NJ
-
1,380
27,620
1,418
1,507
28,911
6,386
143 West Franklin Avenue
Peoria, AZ
-
21,796
1,468
23,264
2,628
13391 N 94th Drive
Pittsburgh, PA
-
1,580
18,017
1,143
1,587
19,153
5,010
900 Lincoln Club Dr.
Placentia, CA
-
8,480
17,076
5,896
8,513
22,939
4,445
1180 N Bradford Avenue
Plainview, NY
-
3,066
19,901
1,211
3,182
20,996
4,693
1231 Old Country Road
Plano, TX
28,960
3,120
59,950
3,806
3,227
63,649
18,286
4800 West Parker Road
Plano, TX
-
1,750
15,390
1,505
1,750
16,895
1,660
3690 Mapleshade Lane
Playa Vista, CA
-
1,580
40,531
3,084
1,605
43,590
10,040
5555 Playa Vista Drive
Pleasanton, CA
-
-
-
52,166
3,676
48,490
1,289
5700 Pleasant Hill Road
Port Perry, ON
12,123
3,685
26,788
4,160
3,932
30,701
4,569
15987 Simcoe Street
Port St. Lucie, FL
-
8,700
47,230
20,937
8,700
68,167
19,243
10685 SW Stony Creek Way
Portage, MI
42,000
2,857
59,848
2,569
2,857
62,417
3,653
3951 W. Milham Ave.
Princeton, NJ
-
1,730
30,888
2,236
1,814
33,040
7,486
155 Raymond Road
Purley, UK
-
7,365
35,161
4,079
7,982
38,623
10,333
21 Russell Hill Road
Puyallup, WA
-
1,150
20,776
1,494
1,156
22,264
6,346
123 Fourth Ave. NW
Quebec City, QC
8,325
2,420
21,977
3,662
2,546
25,513
2,956
795, rue Alain
Quebec City, QC
12,294
3,300
28,325
5,172
3,472
33,325
3,740
650 and 700, avenue Murray
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Queensbury, NY
-
1,260
21,744
1,273
22,308
3,213
27 Woodvale Road
Rancho Cucamonga, CA
-
1,480
10,055
2,144
2,084
11,595
3,388
9519 Baseline Road
Rancho Palos Verdes, CA
-
5,450
60,034
3,646
5,450
63,680
16,003
5701 Crestridge Road
Randolph, NJ
29,300
1,540
46,934
2,370
1,718
49,126
11,141
648 Route 10 West
Red Deer, AB
12,551
1,247
19,283
2,099
1,339
21,290
3,727
3100 - 22 Street
Red Deer, AB
14,770
1,199
22,339
2,201
1,282
24,457
4,460
10 Inglewood Drive
Redding, CA
26,887
4,474
36,857
2,161
4,474
39,018
-
2150 Bechelli Lane
Regina, SK
6,218
1,485
21,148
2,096
1,678
23,051
6,144
3651 Albert Street
Regina, SK
6,204
1,244
21,036
1,989
1,333
22,936
5,411
3105 Hillsdale Street
Regina, SK
15,477
1,539
24,053
4,685
1,663
28,614
4,673
1801 McIntyre Street
Rehoboth Beach, DE
-
24,248
9,200
33,415
6,994
36101 Seaside Blvd
Reno, NV
-
1,060
11,440
1,060
12,370
4,762
5165 Summit Ridge Court
Ridgeland, MS
-
7,675
8,576
3,384
410 Orchard Park
Riviere-du-Loup, QC
2,854
7,601
1,820
9,348
1,574
35 des Cedres
Riviere-du-Loup, QC
12,164
1,454
16,848
5,339
1,812
21,829
4,316
230-235 rue Des Chenes
Rocky Hill, CT
-
1,090
6,710
1,752
1,090
8,462
3,291
60 Cold Spring Rd.
Rohnert Park, CA
-
6,500
18,700
3,756
6,546
22,410
8,277
4855 Snyder Lane
Romeoville, IL
-
12,646
61,722
6,197
69,025
18,583
605 S Edward Dr.
Roseville, MN
-
1,540
35,877
1,252
1,628
37,041
8,190
2555 Snelling Avenue, North
Roseville, CA
-
3,300
41,652
6,832
3,300
48,484
7,624
5161 Foothills Boulevard
Roswell, GA
-
1,107
9,627
1,876
1,114
11,496
8,369
655 Mansell Rd.
Roswell, GA
-
2,080
6,486
1,686
2,380
7,872
1,913
75 Magnolia Street
Sabre Springs, CA
-
-
-
47,090
3,726
43,364
1,047
12515 Springhurst Drive
Sacramento, CA
-
14,781
15,381
4,492
6350 Riverside Blvd
Sacramento, CA
-
1,300
23,394
1,556
1,369
24,881
5,802
345 Munroe Street
Saint-Lambert, QC
34,002
10,259
61,903
3,868
11,054
64,976
15,584
1705 Avenue Victoria
Salinas, CA
-
5,110
41,424
9,387
5,150
50,771
8,906
1320 Padre Drive
Salisbury, UK
-
2,720
15,269
1,676
2,926
16,739
2,579
Shapland Close
Salt Lake City, UT
-
1,360
19,691
1,360
20,470
6,592
1430 E. 4500 S.
San Antonio, TX
-
6,120
28,169
2,630
6,120
30,799
6,947
2702 Cembalo Blvd
San Antonio, TX
-
5,045
58,048
3,253
5,045
61,301
5,962
11300 Wild Pine
San Antonio, TX
-
11,683
69,623
3,634
11,683
73,257
2,722
6870 Heuermann Road
San Diego, CA
-
5,810
63,078
3,968
5,810
67,046
18,976
13075 Evening Creek Drive S
San Diego, CA
-
3,000
27,164
1,521
3,016
28,669
6,231
810 Turquoise Street
San Diego, CA
29,843
4,179
40,639
1,920
4,179
42,559
-
955 Grand Ave
San Francisco, CA
-
5,920
91,639
13,564
5,920
105,203
17,446
1550 Sutter Street
San Francisco, CA
-
11,800
77,214
10,401
11,800
87,615
14,542
1601 19th Avenue
San Gabriel, CA
-
3,120
15,566
1,135
3,165
16,656
4,208
8332 Huntington Drive
San Jose, CA
-
3,280
46,823
3,925
3,280
50,748
12,727
500 S Winchester Boulevard
San Jose, CA
-
11,900
27,647
5,198
11,966
32,779
5,773
4855 San Felipe Road
San Rafael, CA
-
1,620
27,392
3,964
1,854
31,122
4,342
111 Merrydale Road
San Ramon, CA
-
8,700
72,223
9,954
8,716
82,161
13,500
9199 Fircrest Lane
Sandy Springs, GA
-
2,214
8,360
1,454
2,220
9,808
3,133
5455 Glenridge Drive NE
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Santa Monica, CA
15,820
5,250
28,340
1,091
5,266
29,415
6,912
1312 15th Street
Santa Rosa, CA
-
2,250
26,273
3,525
2,292
29,756
4,508
4225 Wayvern Drive
Saskatoon, SK
3,836
13,905
1,407
1,047
15,246
3,431
220 24th Street East
Saskatoon, SK
13,372
1,382
17,609
1,763
1,476
19,278
4,307
1622 Acadia Drive
Schaumburg, IL
-
2,460
22,863
1,277
2,497
24,103
6,501
790 North Plum Grove Road
Scottsdale, AZ
-
2,500
3,890
1,476
2,500
5,366
1,458
9410 East Thunderbird Road
Scranton, PA
-
10,504
11,199
1651 Dickson Avenue
Seal Beach, CA
-
6,204
72,954
2,876
6,271
75,763
21,133
3850 Lampson Avenue
Seattle, WA
-
5,190
9,350
1,726
5,199
11,067
3,888
11501 15th Ave NE
Seattle, WA
27,180
10,670
37,291
1,618
10,700
38,879
13,281
805 4th Ave N
Seattle, WA
-
1,150
19,887
2,737
1,153
22,621
3,336
11039 17th Avenue
Selbyville, DE
-
25,912
26,760
6,298
21111 Arrington Dr
Sevenoaks, UK
-
6,181
40,240
6,340
6,648
46,113
12,282
64 - 70 Westerham Road
Severna Park, MD
-
-
67,623
5,944
73,529
10,854
43 W McKinsey Road
Shelby Township, MI
13,180
1,040
26,344
1,438
1,110
27,712
6,384
46471 Hayes Road
Shrewsbury, NJ
-
2,120
38,116
2,333
2,148
40,421
9,371
5 Meridian Way
Sidcup, UK
-
7,446
56,570
6,330
8,030
62,316
17,441
Frognal Avenue
Silver Spring, MD
-
-
-
64,540
3,436
61,104
1,466
2201 Colston Drive
Simi Valley, CA
-
3,200
16,664
1,889
3,298
18,455
5,390
190 Tierra Rejada Road
Simi Valley, CA
-
5,510
51,406
8,426
5,510
59,832
10,275
5300 E Los Angeles Avenue
Solihull, UK
-
5,070
43,297
6,660
5,453
49,574
12,641
1270 Warwick Road
Solihull, UK
-
3,571
26,053
2,969
3,894
28,699
7,375
1 Worcester Way
Solihull, UK
-
1,851
10,585
1,421
1,990
11,867
1,153
Warwick Road
Sonning, UK
-
5,644
42,155
4,828
6,100
46,527
11,020
Old Bath Rd.
Sonoma, CA
-
1,100
18,400
3,764
1,109
22,155
7,932
800 Oregon St.
Sonoma, CA
-
2,820
21,890
3,158
2,827
25,041
3,787
91 Napa Road
Southlake, TX
-
6,207
56,675
7,624
6,207
64,299
3,184
101 Watermere Drive
Spokane, WA
-
3,200
25,064
1,019
3,200
26,083
7,538
3117 E. Chaser Lane
Spokane, WA
-
2,580
25,342
2,580
25,724
6,597
1110 E. Westview Ct.
St. Albert, AB
9,894
1,145
17,863
3,192
1,247
20,953
5,779
78C McKenney Avenue
St. John's, NL
5,449
11,765
12,552
2,009
64 Portugal Cove Road
Stittsville, ON
4,227
1,175
17,397
1,884
1,263
19,193
4,306
1340 - 1354 Main Street
Stockport, UK
-
4,369
25,018
2,864
4,720
27,531
7,480
1 Dairyground Road
Stockton, CA
-
2,280
5,983
1,214
2,372
7,105
2,223
6725 Inglewood
Strongsville, OH
-
1,113
10,882
1,113
11,538
15100 Howe Road
Stuart, FL
-
5,276
23,796
5,276
24,526
2625 SE Cove Road
Studio City, CA
-
4,006
25,307
1,360
4,115
26,558
7,094
4610 Coldwater Canyon Avenue
Suffield, CT
-
4,409
27,694
2,392
4,409
30,086
7 Canal Road
Sugar Land, TX
-
31,423
32,422
8,673
1221 Seventh St
Sugar Land, TX
-
4,272
60,493
6,540
4,272
67,033
8,760
744 Brooks Street
Sun City, FL
20,609
6,521
48,476
6,439
6,648
54,788
13,348
231 Courtyards
Sun City, FL
23,220
5,040
50,923
5,782
5,388
56,357
12,170
1311 Aston Gardens Court
Sun City West, AZ
-
1,250
21,778
1,162
1,250
22,940
5,012
13810 West Sandridge Drive
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Sunnyvale, CA
-
5,420
41,682
2,715
5,420
44,397
11,522
1039 East El Camino Real
Surrey, BC
6,316
3,605
18,818
2,466
3,849
21,040
6,563
16028 83rd Avenue
Surrey, BC
15,386
4,552
22,338
2,939
4,905
24,924
8,226
15501 16th Avenue
Sutton, UK
-
4,096
14,532
2,444
4,408
16,664
1,396
123 Westmead Road
Suwanee, GA
-
1,560
11,538
1,531
1,560
13,069
3,743
4315 Johns Creek Parkway
Sway, UK
-
4,145
15,508
2,261
4,509
17,405
3,692
Sway Place
Swift Current, SK
1,790
10,119
1,185
11,265
2,713
301 Macoun Drive
Sylvania, OH
-
1,205
12,024
-
1,205
12,024
4120 King Road
Syracuse, NY
-
1,385
11,555
1,385
12,418
6715 Buckley Road
Tacoma, WA
-
4,170
73,377
17,171
4,170
90,548
17,187
8201 6th Avenue
Tampa, FL
69,330
4,910
114,148
7,556
5,073
121,541
23,400
12951 W Linebaugh Avenue
Tampa, FL
-
3,451
25,775
-
3,451
25,775
11330 Countryway Blvd
The Woodlands, TX
-
12,379
12,936
3,351
7950 Bay Branch Dr
Toledo, OH
-
2,040
47,129
4,107
2,144
51,132
16,567
3501 Executive Parkway
Toms River, NJ
-
1,610
34,627
1,428
1,695
35,970
8,532
1587 Old Freehold Rd
Tonawanda, NY
-
1,534
13,264
1,252
1,534
14,516
300 Fries Road
Tonawanda, NY
-
2,425
12,433
1,428
2,425
13,861
285 Crestmount Avenue
Toronto, ON
17,976
2,927
20,713
4,001
3,157
24,484
4,292
54 Foxbar Road
Toronto, ON
8,049
5,082
25,493
3,119
5,448
28,246
6,299
645 Castlefield Avenue
Toronto, ON
12,756
2,008
19,620
1,286
2,113
20,801
3,744
4251 Dundas Street West
Toronto, ON
36,974
5,132
41,657
5,581
5,484
46,886
12,124
10 William Morgan Drive
Toronto, ON
7,665
2,480
7,571
1,099
2,662
8,488
2,084
123 Spadina Road
Toronto, ON
4,701
1,079
5,364
1,152
6,022
1,488
25 Centennial Park Road
Toronto, ON
7,545
2,513
19,695
2,250
2,718
21,740
4,677
305 Balliol Street
Toronto, ON
17,746
3,400
32,757
3,552
3,635
36,074
9,152
1055 and 1057 Don Mills Road
Toronto, ON
5,807
1,447
3,918
1,572
4,466
1,361
1340 York Mills Road
Toronto, ON
31,276
5,304
53,488
8,935
5,675
62,052
17,963
8 The Donway East
Torrance, CA
-
3,497
73,138
3,497
73,324
6,464
25535 Hawthorne Boulevard
Tucson, AZ
-
6,179
4,055
10,234
2,031
5660 N. Kolb Road
Tulsa, OK
-
1,330
21,285
4,679
1,362
25,932
8,192
8887 South Lewis Ave
Tulsa, OK
-
1,500
20,861
4,285
1,614
25,032
8,129
9524 East 71st St
Turlock, CA
-
2,266
12,737
1,122
2,266
13,859
3791 Crowell Road
Twinsburg, OH
-
1,035
8,302
1,035
8,845
3092 Kendal Lane
Upland, CA
-
3,160
42,596
3,160
42,664
6,592
2419 North Euclid Avenue
Upper Providence, PA
-
1,900
28,195
1,906
28,593
3,475
1133 Black Rock Road
Upper St Claire, PA
-
1,102
13,455
1,623
1,153
15,027
4,186
500 Village Drive
Vacaville, CA
-
17,100
3,051
20,151
7,599
799 Yellowstone Dr.
Vallejo, CA
-
4,000
18,000
4,463
4,030
22,433
8,210
350 Locust Dr.
Vallejo, CA
-
2,330
15,407
1,224
2,330
16,631
4,928
2261 Tuolumne
Vancouver, WA
-
1,820
19,042
1,052
1,821
20,093
5,810
10011 NE 118th Ave
Vancouver, BC
-
7,282
6,572
1,440
7,661
7,633
5,714
2803 West 41st Avenue
Vankleek Hill, ON
2,960
3,469
48 Wall Street
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Vaudreuil, QC
8,012
1,852
14,214
1,686
1,924
15,828
2,837
333 rue Querbes
Venice, FL
64,425
6,820
100,501
5,560
6,958
105,923
22,077
1000 Aston Gardens Drive
Vero Beach, FL
-
2,930
40,070
25,748
2,930
65,818
24,423
7955 16th Manor
Victoria, BC
6,877
2,856
18,038
1,833
3,049
19,678
5,414
3000 Shelbourne Street
Victoria, BC
6,340
3,681
15,774
1,700
3,931
17,224
4,936
3051 Shelbourne Street
Victoria, BC
7,109
2,476
15,379
2,265
2,647
17,473
2,713
3965 Shelbourne Street
Virginia Water, UK
-
7,106
29,937
7,580
5,856
38,767
10,904
Christ Church Road
Voorhees, NJ
-
3,700
24,312
2,503
3,854
26,661
4,867
311 Route 73
Wall, NJ
-
1,650
25,350
2,985
1,694
28,291
6,175
2021 Highway 35
Walnut Creek, CA
-
3,700
12,467
2,931
3,808
15,290
4,571
2175 Ygnacio Valley Road
Walnut Creek, CA
-
10,320
100,890
18,143
10,320
119,033
20,636
1580 Geary Road
Washington, DC
-
4,000
69,154
3,222
4,004
72,372
16,427
5111 Connecticut Avenue NW
Watchung, NJ
-
1,920
24,880
1,979
2,055
26,724
5,918
680 Mountain Boulevard
Waukee, IA
-
1,870
31,878
1,870
32,668
5,905
1650 SE Holiday Crest Circle
Wayland, MA
-
1,207
27,462
2,349
1,340
29,678
7,435
285 Commonwealth Road
Webster Groves, MO
-
1,790
15,425
2,637
1,801
18,051
5,039
45 E Lockwood Avenue
Welland, ON
6,027
7,530
1,019
8,287
1,338
110 First Street
Wellesley, MA
-
4,690
77,462
4,690
77,809
13,734
23 & 27 Washington Street
West Babylon, NY
-
3,960
47,085
2,440
3,960
49,525
11,042
580 Montauk Highway
West Bloomfield, MI
-
1,040
12,300
1,100
13,145
3,320
7005 Pontiac Trail
West Hills, CA
-
2,600
7,521
1,714
2,658
9,177
2,957
9012 Topanga Canyon Road
West Seneca, NY
-
1,232
6,600
1,232
7,234
1187 Orchard Park Drive
West Seneca, NY
-
1,035
7,438
1,035
8,042
2341 Union Road
West Vancouver, BC
17,934
7,059
28,155
4,380
7,545
32,049
8,354
2095 Marine Drive
Westbourne, UK
-
5,441
41,420
8,236
5,854
49,243
11,299
16-18 Poole Road
Westford, MA
-
1,440
32,607
1,468
32,979
5,100
108 Littleton Road
Weston, MA
-
1,160
6,200
1,555
1,160
7,755
1,879
135 North Avenue
Westworth Village, TX
-
2,060
31,296
2,060
31,360
4,169
25 Leonard Trail
Weybridge, UK
-
7,899
48,240
4,888
8,496
52,531
14,169
Ellesmere Road
Weymouth, UK
-
2,591
16,551
1,841
2,824
18,159
2,702
Cross Road
White Oak, MD
-
2,304
24,768
2,991
2,358
27,705
6,232
11621 New Hampshire Avenue
Whitesboro, NY
-
1,575
11,873
1,575
12,662
4770 Clinton Road
Willoughby, OH
-
1,298
10,514
1,298
11,176
35100 Chardon Road
Wilmington, DE
-
1,040
23,338
2,208
1,176
25,410
5,951
2215 Shipley Street
Winchester, UK
-
6,009
29,405
3,178
6,471
32,121
8,270
Stockbridge Road
Winnipeg, MB
11,736
1,960
38,612
4,839
2,206
43,205
13,892
857 Wilkes Avenue
Winnipeg, MB
25,459
1,276
21,732
2,563
1,493
24,078
5,682
3161 Grant Avenue
Winnipeg, MB
12,328
1,317
15,609
2,937
1,420
18,443
3,740
125 Portsmouth Boulevard
Woking, UK
-
2,990
12,523
1,032
3,118
13,427
12 Streets Heath, West End
Wolverhampton, UK
-
2,941
8,922
1,393
3,170
10,086
3,591
73 Wergs Road
Woodland Hills, CA
-
3,400
20,478
1,383
3,447
21,814
5,855
20461 Ventura Boulevard
Yonkers, NY
-
3,962
50,107
2,314
3,956
52,427
12,283
65 Crisfield Street
Yorkton, SK
3,108
8,760
9,613
2,348
94 Russell Drive
Seniors Housing Operating Total
$
1,990,607
$
1,383,927
$
13,886,675
$
1,879,176
$
1,469,078
$
15,680,700
$
3,194,057
Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2019
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Abilene, TX
$
-
$
$
20,987
$
11,660
$
$
32,647
$
3,442
6565 Central Park Boulevard
Abilene, TX
-
8,187
1,089
9,276
1,262
1250 East N 10th Street
Aboite Twp, IN
-
1,770
19,930
1,601
1,770
21,531
5,178
611 W County Line Rd South
Agawam, MA
-
16,112
2,134
18,246
8,476
1200 Suffield St.
Akron, OH
-
3,003
-
3,003
171 North Cleveland Massillon Road
Alexandria, VA
-
2,452
6,829
-
2,452
6,829
1510 Collingwood Road
Alhambra, CA
-
6,305
8,847
15,152
2,322
1118 N. Stoneman Ave.
Allen Park, MI
-
1,767
5,027
-
1,767
5,027
9150 Allen Road
Allentown, PA
-
11,849
-
11,849
5151 Hamilton Boulevard
Allentown, PA
-
1,491
4,823
-
1,491
4,823
1265 Cedar Crest Boulevard
Ames, IA
-
8,870
-
8,870
2,314
1325 Coconino Rd.
Ann Arbor, MI
-
2,172
11,127
-
2,172
11,127
4701 East Huron River Drive
Annandale, VA
-
1,687
18,980
-
1,687
18,980
7104 Braddock Road
Arlington, VA
-
4,016
8,805
-
4,016
8,805
550 South Carlin Southprings Road
Asheboro, NC
-
5,032
5,293
2,265
514 Vision Dr.
Asheville, NC
-
3,489
-
3,489
1,938
4 Walden Ridge Dr.
Asheville, NC
-
1,955
2,473
1,086
308 Overlook Rd.
Atchison, KS
-
5,610
5,633
1301 N 4th St.
Aurora, CO
-
2,440
28,172
-
2,440
28,172
12,556
14211 E. Evans Ave.
Austin, TX
-
1,691
5,006
-
1,691
5,006
11630 Four Iron Drive
Avon, IN
-
1,830
14,470
-
1,830
14,470
3,942
182 S Country RD. 550E
Avon, IN
-
19,444
-
19,444
2,896
10307 E. CR 100 N
Avon, CT
-
2,132
7,627
-
2,132
7,627
100 Fisher Drive
Azusa, CA
-
3,141
7,429
10,570
3,172
125 W. Sierra Madre Ave.
Baldwin City, KS
-
4,810
4,865
321 Crimson Ave
Baltimore, MD
-
4,306
4,305
-
4,306
4,305
6600 Ridge Road
Baltimore, MD
-
3,069
3,150
-
3,069
3,150
4669 Falls Road
Barberton, OH
-
1,307
9,313
-
1,307
9,313
85 Third Street
Bartlesville, OK
-
1,380
-
1,380
5420 S.E. Adams Blvd.
Battle Creek, MI
-
1,822
-
1,822
200 Roosevelt Avenue East
Bay City, MI
-
2,620
-
2,620
800 Mulholland Street
Bedford, PA
-
4,434
-
4,434
136 Donahoe Manor Road
Belmont, CA
-
3,000
23,526
1,653
3,000
25,179
6,778
1301 Ralston Avenue
Belvidere, NJ
-
2,001
26,191
-
2,001
26,191
1 Brookfield Ct
Benbrook, TX
-
1,550
13,553
2,747
1,550
16,300
3,242
4242 Bryant Irvin Road
Berkeley, CA
11,947
3,050
32,677
4,982
3,050
37,659
5,614
2235 Sacramento Street
Bethel Park, PA
-
1,700
16,007
-
1,700
16,007
4,712
5785 Baptist Road
Bethel Park, PA
-
1,008
6,742
-
1,008
6,742
60 Highland Road
Bethesda, MD
-
2,218
6,871
-
2,218
6,871
6530 Democracy Boulevard
Bethlehem, PA
-
1,191
16,892
-
1,191
16,892
2021 Westgate Drive
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Bethlehem, PA
-
1,143
13,592
-
1,143
13,592
2029 Westgate Drive
Beverly Hills, CA
-
6,000
13,385
-
6,000
13,385
1,761
220 N Clark Drive
Bexleyheath, UK
-
3,750
10,807
1,101
4,034
11,624
1,567
35 West Street
Bingham Farms, MI
-
15,676
-
15,676
24005 West 13 Mile Road
Birmingham, UK
-
1,647
14,853
1,246
1,771
15,975
1,964
Clinton Street, Winson Green
Birmingham, UK
-
1,591
19,092
1,564
1,712
20,535
2,488
Braymoor Road, Tile Cross
Birmingham, UK
-
1,462
9,056
1,572
9,740
1,216
Clinton Street, Winson Green
Birmingham, UK
-
1,184
10,085
1,274
10,847
1,324
122 Tile Cross Road, Garretts Green
Bloomington, IN
-
17,423
-
17,423
2,146
363 S. Fieldstone Boulevard
Boca Raton, FL
-
2,200
4,976
-
2,200
4,976
7225 Boca Del Mar Drive
Boca Raton, FL
-
2,826
4,063
-
2,826
4,063
375 Northwest 51st Street
Boulder, CO
-
3,601
21,371
-
3,601
21,371
2800 Palo Parkway
Bournemouth, UK
-
2,589
15,984
-
2,589
15,984
Poole Lane
Boynton Beach, FL
-
2,138
10,204
-
2,138
10,204
3600 Old Boynton Road
Boynton Beach, FL
-
2,804
14,226
-
2,804
14,226
3001 South Congress Avenue
Bracknell, UK
-
4,081
11,470
4,246
11,522
Bagshot Road
Bradenton, FL
-
3,298
-
3,298
2,068
6101 Pointe W. Blvd.
Bradenton, FL
-
9,953
10,063
1,978
2800 60th Avenue West
Braintree, MA
-
7,157
1,290
8,447
8,444
1102 Washington St.
Braintree, UK
-
-
13,296
1,005
-
14,301
2,010
Meadow Park Tortoiseshell Way
Brecksville, OH
-
19,353
-
19,353
2,872
8757 Brecksville Road
Brentwood, UK
34,515
8,537
45,869
4,443
9,182
49,667
3,992
London Road
Brick, NJ
-
1,290
25,247
1,330
1,290
26,577
5,851
458 Jack Martin Blvd.
Bridgewater, NJ
-
1,800
31,810
1,678
1,800
33,488
7,340
680 US-202/206 North
Bristol, UK
-
4,256
17,962
-
4,256
17,962
339 Badminton Road
Bristol, UK
-
2,270
13,030
-
2,270
13,030
Avon Valley Care Home, Tenniscourt Road
Brooks, AB
1,747
4,951
5,296
951 Cassils Road West
Bucyrus, OH
-
1,119
2,612
-
1,119
2,612
1170 West Mansfield Street
Burleson, TX
-
13,985
2,457
16,442
3,430
300 Huguley Boulevard
Burlington, NC
-
4,297
5,132
2,157
3619 S. Mebane St.
Burlington, NC
-
5,467
5,520
2,400
3615 S. Mebane St.
Burlington, NJ
-
1,700
12,554
1,700
13,055
3,652
115 Sunset Road
Burlington, NJ
-
1,170
19,205
1,170
19,377
4,657
2305 Rancocas Road
Burnaby, BC
7,292
7,623
13,844
1,463
8,139
14,791
2,177
7195 Canada Way
Calgary, AB
14,841
2,341
42,768
3,122
2,500
45,731
6,386
1729-90th Avenue SW
Calgary, AB
24,614
4,569
70,199
5,069
4,878
74,959
10,375
500 Midpark Way SE
Camberley, UK
-
9,974
39,168
1,984
10,376
40,750
2,725
Pembroke Broadway
Camp Hill, PA
-
3,597
-
3,597
1700 Market Street
Canonsburg, PA
-
4,830
-
4,830
113 West McMurray Road
Canton, OH
-
2,098
-
2,098
1,165
1119 Perry Dr., N.W.
Canton, MI
-
1,399
16,971
-
1,399
16,971
7025 Lilley Road
Cape Coral, FL
-
3,281
-
3,281
1,551
911 Santa Barbara Blvd.
Cape Coral, FL
8,135
18,868
18,974
3,788
831 Santa Barbara Boulevard
Cape May Court House, NJ
-
1,440
17,002
1,775
1,440
18,777
2,784
144 Magnolia Drive
Carlisle, PA
-
8,207
-
8,207
940 Walnut Bottom Road
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Carmel, IN
-
1,700
19,491
1,700
19,492
2,521
12315 Pennsylvania Street
Carmel, IN
-
1,583
6,071
-
1,583
6,071
12999 North Pennsylvania Street
Carmel, IN
-
-
2,296
-
-
2,296
12999 North Pennsylvania Street
Carrollton, TX
-
2,010
19,549
-
2,010
19,549
1,724
2645 East Trinity Mills Road
Cary, NC
-
1,500
4,350
1,051
1,500
5,401
2,827
111 MacArthur
Castleton, IN
-
15,137
-
15,137
2,343
8405 Clearvista Lake
Cedar Grove, NJ
-
2,850
27,737
2,850
27,757
6,753
536 Ridge Road
Cedar Rapids, IA
-
9,354
-
9,354
1940 1st Avenue Northeast
Centerville, OH
-
3,960
-
3,960
1001 E. Alex Bell Road
Chagrin Falls, OH
-
10,841
-
10,841
8100 East Washington Street
Chambersburg, PA
-
1,373
8,864
-
1,373
8,864
1070 Stouffer Avenue
Chapel Hill, NC
-
2,646
1,034
3,680
1,587
100 Lanark Rd.
Charleston, SC
-
1,333
5,556
-
1,333
5,556
1137 Sam Rittenberg Boulevard
Charleston, WV
-
17,575
17,881
4,158
1000 Association Drive, North Gate Business Park
Chatham, VA
-
14,039
-
14,039
2,222
100 Rorer Street
Cherry Hill, NJ
-
1,416
9,874
-
1,416
9,874
2700 Chapel Avenue West
Chester, VA
-
1,320
18,127
-
1,320
18,127
2,844
12001 Iron Bridge Road
Chevy Chase, MD
-
4,515
8,688
-
4,515
8,688
8700 Jones Mill Road
Chickasha, OK
-
1,395
-
1,395
801 Country Club Rd.
Chillicothe, OH
-
1,145
8,997
-
1,145
8,997
1058 Columbus Street
Cincinnati, OH
-
14,014
-
14,014
6870 Clough Pike
Citrus Heights, CA
-
5,207
31,725
-
5,207
31,725
1,172
7807 Upland Way
Claremore, OK
-
1,427
6,130
7,557
1,783
1605 N. Hwy. 88
Clarksville, TN
-
2,292
-
2,292
1,267
2183 Memorial Dr.
Clayton, NC
-
15,733
-
15,733
2,204
84 Johnson Estate Road
Cleburne, TX
-
5,369
-
5,369
1,814
402 S Colonial Drive
Clevedon, UK
-
2,838
16,927
1,493
3,052
18,206
2,558
18/19 Elton Road
Cloquet, MN
-
4,660
4,780
1,104
705 Horizon Circle
Cobham, UK
-
9,808
24,991
2,629
10,549
26,879
4,507
Redhill Road
Colchester, CT
-
4,860
5,404
1,636
59 Harrington Court
Colorado Springs, CO
-
4,280
62,168
-
4,280
62,168
6,926
1605 Elm Creek View
Colorado Springs, CO
-
1,730
25,493
1,730
26,186
2,760
2818 Grand Vista Circle
Columbia, TN
-
2,295
-
2,295
1,271
5011 Trotwood Ave.
Columbia, SC
-
1,699
2,320
-
1,699
2,320
2601 Forest Drive
Columbia Heights, MN
-
14,175
14,338
3,117
3807 Hart Boulevard
Columbus, IN
-
3,190
-
3,190
2564 Foxpointe Dr.
Concord, NC
-
3,921
4,191
1,871
2452 Rock Hill Church Rd.
Concord, NH
-
1,760
43,179
1,760
43,813
10,199
239 Pleasant Street
Congleton, UK
-
2,036
5,120
2,189
5,507
Rood Hill
Conroe, TX
-
7,771
-
7,771
2,193
903 Longmire Road
Coppell, TX
-
1,550
8,386
1,550
8,555
1,609
1530 East Sandy Lake Road
Corby, UK
-
1,228
5,144
1,204
5,840
25 Rockingham Road
Costa Mesa, CA
-
2,050
19,969
2,050
20,938
5,806
350 West Bay St
Coventry, UK
-
1,962
13,830
1,193
2,110
14,875
1,885
Banner Lane, Tile Hill
Crawfordsville, IN
-
17,239
1,426
18,665
2,794
517 Concord Road
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Dallastown, PA
-
1,377
16,802
-
1,377
16,802
100 West Queen Street
Danville, VA
-
3,954
4,783
2,072
149 Executive Ct.
Danville, VA
-
8,436
-
8,436
1,352
508 Rison Street
Daphne, AL
-
2,880
8,670
2,880
9,054
1,884
27440 County Road 13
Davenport, IA
-
2,017
-
2,017
815 East Locust Street
Davenport, IA
-
20,043
-
20,043
3800 Commerce Blvd.
Dayton, OH
-
1,188
5,414
-
1,188
5,414
1974 North Fairfield Road
Dearborn Heights, MI
-
1,197
3,396
-
1,197
3,396
26001 Ford Road
Decatur, GA
-
1,413
13,800
-
1,413
13,800
2722 North Decatur Road
Delray Beach, FL
-
1,158
13,576
-
1,158
13,576
16150 Jog Road
Delray Beach, FL
-
2,125
11,844
-
2,125
11,844
16200 Jog Road
Denton, TX
-
1,760
8,305
1,760
8,480
2,060
2125 Brinker Rd
Denver, CO
-
3,222
24,811
-
3,222
24,811
290 South Monaco Parkway
Derby, UK
-
2,359
8,539
2,455
8,884
Rykneld Road
Dover, DE
-
22,266
22,407
5,331
1080 Silver Lake Blvd.
Dublin, OH
-
1,393
2,912
-
1,393
2,912
4075 W. Dublin-Granville Road
Dubuque, IA
-
8,904
-
8,904
901 West Third Street
Dunedin, FL
-
1,883
13,329
-
1,883
13,329
870 Patricia Avenue
Durham, NC
-
1,476
10,659
2,587
1,476
13,246
12,451
4434 Ben Franklin Blvd.
Eagan, MN
16,186
2,260
31,643
2,260
31,943
3,572
3810 Alder Avenue
East Brunswick, NJ
-
1,380
34,229
1,093
1,380
35,322
7,664
606 Cranbury Rd.
Eastbourne, UK
-
4,071
24,438
2,154
4,379
26,284
3,646
Carew Road
Easton, PA
-
1,109
7,502
-
1,109
7,502
4100 Freemansburg Avenue
Easton, PA
-
1,430
13,400
-
1,430
13,400
2600 Northampton Street
Easton, PA
-
1,620
10,052
-
1,620
10,052
4100 Freemansburg Avenue
Eden, NC
-
4,877
4,897
2,162
314 W. Kings Hwy.
Edmond, OK
-
8,388
-
8,388
1,766
15401 North Pennsylvania Avenue
Edmond, OK
-
1,810
14,849
3,260
1,810
18,109
2,425
1225 Lakeshore Drive
Edmond, OK
-
1,650
25,167
1,700
1,650
26,867
2,103
2709 East Danforth Road
Elizabeth City, NC
-
2,760
2,165
4,925
2,376
400 Hastings Lane
Elk Grove Village, IL
-
1,344
7,076
-
1,344
7,076
1940 Nerge Road Elk
Elk Grove Village, IL
-
3,733
18,751
-
3,733
18,751
1920 Nerge Road
Encinitas, CA
-
1,460
7,721
1,987
1,460
9,708
4,196
335 Saxony Rd.
Englewood, NJ
-
4,514
4,540
1,215
333 Grand Avenue
Epsom, UK
33,969
20,159
34,803
4,554
21,682
37,834
3,062
450-458 Reigate Road
Escondido, CA
-
1,520
24,024
1,520
24,809
6,863
1500 Borden Rd
Eureka, KS
-
3,950
4,021
1820 E River St
Everett, WA
-
1,400
5,476
-
1,400
5,476
2,950
2015 Lake Heights Dr.
Exton, PA
-
3,600
27,267
-
3,600
27,267
1,193
501 Thomas Jones Way
Fairfax, VA
-
1,827
17,309
-
1,827
17,309
12469 Lee Jackson Mem Highway
Fairfax, VA
-
4,099
17,620
-
4,099
17,620
12475 Lee Jackson Memorial Highway
Fairhope, AL
-
9,119
9,231
1,910
50 Spring Run Road
Fall River, MA
-
5,829
4,856
10,685
5,715
1748 Highland Ave.
Fanwood, NJ
-
2,850
55,175
1,467
2,850
56,642
12,133
295 South Ave.
Faribault, MN
-
11,539
11,839
1,269
828 1st Street NE
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Farmington, CT
-
1,693
10,459
-
1,693
10,459
45 South Road
Farnborough, UK
-
2,036
5,737
2,189
6,170
Bruntile Close, Reading Road
Fayetteville, PA
-
2,150
32,951
2,468
2,150
35,419
4,037
6375 Chambersburg Road
Fayetteville, NY
-
3,962
4,462
2,080
5125 Highbridge St.
Findlay, OH
-
1,800
-
1,800
1,061
725 Fox Run Rd.
Fishers, IN
-
1,500
14,500
-
1,500
14,500
3,949
9745 Olympia Dr.
Fishersville, VA
-
2,101
-
2,101
83 Crossroad Lane
Flint, MI
-
1,271
18,056
-
1,271
18,056
3011 North Center Road
Florence, NJ
-
2,978
-
2,978
1,403
901 Broad St.
Flourtown, PA
-
1,800
14,830
1,800
15,096
3,728
350 Haws Lane
Flower Mound, TX
-
1,800
8,414
1,800
8,588
1,803
4141 Long Prairie Road
Floyd, VA
-
3,618
-
3,618
237 Franklin Pike Rd SE
Flushing, MI
-
1,702
-
1,702
640 Sunnyside Drive
Flushing, MI
-
1,415
8,536
-
1,415
8,536
540 Sunnyside Drive
Forest City, NC
-
4,497
4,535
2,007
493 Piney Ridge Rd.
Fort Ashby, WV
-
19,566
19,922
4,597
Diane Drive, Box 686
Fort Collins, CO
-
3,680
58,608
-
3,680
58,608
6,508
4750 Pleasant Oak Drive
Fort Collins, CO
-
4,532
-
4,532
1005 East Elizabeth
Fort Worth, TX
-
13,615
5,086
18,701
4,812
425 Alabama Ave.
Fountain Valley, CA
-
5,259
9,379
-
5,259
9,379
11680 Warner Avenue
Franconia, NH
-
11,320
11,390
2,748
93 Main Street
Fredericksburg, VA
-
1,000
20,000
2,070
1,000
22,070
7,918
3500 Meekins Dr.
Fredericksburg, VA
-
1,130
23,202
-
1,130
23,202
3,363
140 Brimley Drive
Ft. Myers, FL
-
1,110
10,562
-
1,110
10,562
15950 McGregor Boulevard
Ft. Myers, FL
-
2,139
18,240
-
2,139
18,240
1600 Matthew Drive
Ft. Myers, FL
-
2,502
9,744
-
2,502
9,744
13881 Eagle Ridge Drive
Gainesville, FL
-
2,374
29,088
-
2,374
29,088
3605 NW 83rd Street
Galesburg, IL
-
1,708
3,841
-
1,708
3,841
280 East Losey Street
Gardner, KS
-
2,800
2,893
869 Juniper Terrace
Gastonia, NC
-
6,129
6,146
2,680
1680 S. New Hope Rd.
Gastonia, NC
-
3,096
3,132
1,426
1717 Union Rd.
Gastonia, NC
-
5,029
5,231
2,264
1750 Robinwood Rd.
Geneva, IL
-
1,502
16,198
-
1,502
16,198
2388 Bricher Road
Georgetown, TX
-
2,100
-
2,100
1,227
2600 University Dr., E.
Gig Harbor, WA
-
3,000
4,463
-
3,000
4,463
3309 45th Street Court Northwest
Glen Ellyn, IL
-
1,496
6,636
-
1,496
6,636
2S706 Park Boulevard
Granbury, TX
-
2,550
2,940
2,550
3,717
916 East Highway 377
Granger, IN
-
1,670
21,280
2,401
1,670
23,681
5,629
6330 North Fir Rd
Grapevine, TX
-
2,220
17,648
2,220
17,717
2,003
4545 Merlot Drive
Greeley, CO
-
1,077
18,051
-
1,077
18,051
1,341
5300 West 29th Street
Greensboro, NC
-
2,970
3,564
1,587
5809 Old Oak Ridge Rd.
Greensboro, NC
-
5,507
1,332
6,839
2,921
4400 Lawndale Dr.
Greenville, SC
-
4,750
-
4,750
2,034
23 Southpointe Dr.
Greenville, SC
-
1,751
8,774
-
1,751
8,774
600 Sulphur Springs Road
Greenville, SC
-
1,445
-
1,445
601 Sulphur Springs Road
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Greenville, NC
-
4,393
4,629
1,989
2715 Dickinson Ave.
Greenwood, IN
-
1,550
22,770
1,550
22,851
5,530
2339 South SR 135
Grosse Pointe, MI
-
2,386
-
2,386
21401 Mack Avenue
Groton, CT
-
2,430
19,941
2,430
20,909
5,411
1145 Poquonnock Road
Hamilton, NJ
-
4,469
-
4,469
2,098
1645 Whitehorse-Mercerville Rd.
Hanahan, SC
-
1,934
3,988
-
1,934
3,988
1800 Eagle Landing Boulevard
Hanford, UK
-
1,382
9,829
1,486
10,571
1,791
Bankhouse Road
Harrisburg, PA
-
12,826
-
12,826
2625 Ailanthus Lane
Harrow, UK
-
7,402
8,266
1,183
7,961
8,890
1,248
177 Preston Hill
Hatboro, PA
-
-
28,112
1,771
-
29,883
6,894
3485 Davisville Road
Hatboro, PA
-
1,192
7,611
-
1,192
7,611
779 West County Line Road
Hatfield, UK
-
2,924
7,527
3,145
8,095
1,382
St Albans Road East
Hattiesburg, MS
-
13,469
-
13,469
3,099
217 Methodist Hospital Blvd
Hemet, CA
-
6,224
8,414
-
6,224
8,414
1717 West Stetson Avenue
Henry, IL
-
1,860
3,689
-
1,860
3,689
1650 Old Indian Town Road
Hermitage, TN
-
1,500
9,943
1,500
10,483
2,212
4131 Andrew Jackson Parkway
Herne Bay, UK
-
1,900
24,353
2,726
2,043
26,936
4,843
165 Reculver Road
Hiawatha, KS
-
4,210
4,239
400 Kansas Ave
Hickory, NC
-
1,299
2530 16th St. N.E.
High Point, NC
-
4,443
5,291
2,327
1568 Skeet Club Rd.
High Point, NC
-
2,185
2,636
1,207
1564 Skeet Club Rd.
High Point, NC
-
3,395
3,503
1,530
201 W. Hartley Dr.
High Point, NC
-
4,143
4,179
1,840
1560 Skeet Club Rd.
Highlands Ranch, CO
-
3,721
4,983
8,704
2,516
9160 S. University Blvd.
Hillsboro, OH
-
1,792
6,341
-
1,792
6,341
1141 Northview Drive
Hinckley, UK
-
2,159
4,194
2,322
4,511
Tudor Road
Hindhead, UK
39,141
17,852
48,645
5,405
19,200
52,702
4,171
Portsmouth Road
Hinsdale, IL
-
4,033
24,287
-
4,033
24,287
600 W Ogden Avenue
Hockessin, DE
-
1,120
6,308
1,247
1,120
7,555
1,163
100 Saint Claire Drive
Holton, KS
-
7,460
7,473
410 Juniper Dr
Homewood, IL
-
2,395
7,652
-
2,395
7,652
940 Maple Avenue
Howard, WI
-
32,122
32,132
2,040
2790 Elm Tree Hill
Huntingdon Valley, PA
-
1,150
3,730
-
1,150
3,730
3430 Huntingdon Pike
Hutchinson, KS
-
10,590
10,784
4,242
2416 Brentwood
Independence, VA
-
1,082
6,767
-
1,082
6,767
400 S Independence Ave
Indianapolis, IN
-
14,688
-
14,688
2,283
1635 N Arlington Avenue
Indianapolis, IN
-
1,105
6,645
-
1,105
6,645
8549 South Madison Avenue
Jackson, NJ
-
6,500
26,405
3,107
6,500
29,512
5,334
2 Kathleen Drive
Jacksonville, FL
-
25,231
25,342
2,303
5939 Roosevelt Boulevard
Jacksonville, FL
-
-
26,381
1,801
1,691
26,491
2,403
4000 San Pablo Parkway
Jacksonville, FL
-
1,752
2,553
-
1,752
2,553
3648 University Blvd South
Jacksonville, FL
-
2,182
9,491
-
2,182
9,491
8495 Normandy Blvd
Jefferson Hills, PA
-
2,265
13,618
-
2,265
13,618
380 Wray Large Road
Jersey Shore, PA
-
8,107
-
8,107
1008 Thompson Street
Kansas City, KS
-
20,115
-
20,115
2,322
8900 Parallel Parkway
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Katy, TX
-
1,778
22,622
-
1,778
22,622
1,707
24802 Kingsland Boulevard
Kensington, MD
-
1,753
18,626
-
1,753
18,626
4301 Knowles Avenue
Kenwood, OH
-
11,043
-
11,043
4580 East Galbraith Road
Kettering, OH
-
1,229
4,703
-
1,229
4,703
3313 Wilmington Pike
King of Prussia, PA
-
14,780
-
14,780
620 West Valley Forge Road
King of Prussia, PA
-
1,205
4,727
-
1,205
4,727
600 West Valley Forge Road
Kingsford, MI
-
1,362
10,598
-
1,362
10,598
1225 Woodward Avenue
Kingston, PA
-
5,711
-
5,711
200 Second Avenue
Kingston upon Thames, UK
71,089
33,063
46,696
6,439
35,561
50,637
4,056
Coombe Lane West
Kirkstall, UK
-
2,437
9,414
2,621
10,126
1,720
29 Broad Lane
Kokomo, IN
-
16,044
-
16,044
2,488
2200 S. Dixon Rd
Lacey, WA
-
2,582
18,180
-
2,582
18,180
4524 Intelco Loop SE
Lafayette, CO
-
1,420
20,192
-
1,420
20,192
2,572
329 Exempla Circle
Lafayette, IN
-
16,833
16,834
2,368
2402 South Street
Lakeway, TX
-
5,142
23,203
-
5,142
23,203
3,995
2000 Medical Dr
Lakewood, CO
-
2,160
28,091
2,160
28,153
4,299
7395 West Eastman Place
Lakewood Ranch, FL
-
6,714
1,988
8,702
1,726
8230 Nature's Way
Lakewood Ranch, FL
-
1,000
22,388
1,000
22,474
4,410
8220 Natures Way
Lancaster, PA
-
1,680
14,039
-
1,680
14,039
1,159
31 Millersville Road
Lancaster, PA
-
1,011
7,504
-
1,011
7,504
100 Abbeyville Road
Largo, FL
-
1,166
3,427
-
1,166
3,427
300 Highland Avenue Northeast
Las Vegas, NV
-
23,420
-
23,420
5,220
2500 North Tenaya Way
Laureldale, PA
-
1,171
14,424
-
1,171
14,424
2125 Elizabeth Avenue
Lawrence, KS
-
8,716
-
8,716
1,697
3220 Peterson Road
Lebanon, PA
-
10,370
-
10,370
100 Tuck Court
Lebanon, PA
-
1,214
5,962
-
1,214
5,962
900 Tuck Street
Lee, MA
-
18,135
19,061
8,860
600 & 620 Laurel St.
Leeds, UK
-
1,974
13,239
1,149
2,123
14,239
1,728
100 Grove Lane
Leicester, UK
-
3,060
24,410
2,075
3,291
26,254
4,798
307 London Road
Lenoir, NC
-
3,748
4,466
1,945
1145 Powell Rd., N.E.
Lethbridge, AB
1,305
1,214
2,750
1,296
2,947
785 Columbia Boulevard West
Lexana, KS
-
1,770
1,922
8710 Caenen Lake Rd
Lexington, NC
-
3,900
1,090
4,990
2,243
161 Young Dr.
Libertyville, IL
-
6,500
40,024
-
6,500
40,024
9,587
901 Florsheim Dr
Libertyville, IL
-
2,993
11,550
-
2,993
11,550
1500 South Milwaukee
Lichfield, UK
-
1,382
30,324
2,395
1,486
32,615
3,979
Wissage Road
Lillington, NC
-
17,579
-
17,579
2,626
54 Red Mulberry Way
Lillington, NC
-
16,451
-
16,451
2,307
2041 NC-210 N
Lincoln, NE
-
13,807
13,902
3,519
7208 Van Dorn St.
Lititz, PA
-
1,200
13,836
-
1,200
13,836
1,144
80 West Millport Road
Livermore, CA
-
4,100
24,996
-
4,100
24,996
3,276
35 Fenton Street
Livonia, MI
-
13,558
-
13,558
32500 Seven Mile Road
Livonia, MI
-
1,836
2,278
-
1,836
2,278
28550 Five Mile Road
Longview, TX
-
5,520
-
5,520
1,873
311 E Hawkins Pkwy
Longwood, FL
-
1,260
6,445
-
1,260
6,445
1,552
425 South Ronald Reagan Boulevard
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Los Angeles, CA
-
-
11,430
1,050
-
12,480
3,242
330 North Hayworth Avenue
Louisburg, KS
-
4,320
4,364
202 Rogers St
Louisville, KY
-
10,010
2,768
12,778
5,144
4604 Lowe Rd
Loxley, UK
-
1,369
15,668
1,288
1,473
16,852
3,003
Loxley Road
Lutherville, MD
-
1,100
19,786
1,744
1,100
21,530
5,068
515 Brightfield Road
Lynchburg, VA
-
16,114
-
16,114
2,444
189 Monica Blvd
Lynchburg, VA
-
2,904
3,697
-
2,904
3,697
2200 Landover Place
Lynnwood, WA
-
2,302
5,634
-
2,302
5,634
3701 188th Street
Macomb, IL
-
1,586
4,059
-
1,586
4,059
8 Doctors Lane
Macungie, PA
-
29,033
29,117
6,833
1718 Spring Creek Road
Manalapan, NJ
-
22,624
23,384
5,094
445 Route 9 South
Manassas, VA
-
7,446
1,069
8,515
3,285
8341 Barrett Dr.
Mankato, MN
-
1,460
32,104
1,460
32,404
3,451
100 Dublin Road
Mansfield, TX
-
5,251
-
5,251
1,802
2281 Country Club Dr
Marietta, OH
-
1,149
9,376
-
1,149
9,376
5001 State Route 60
Marietta, GA
-
2,406
12,233
-
2,406
12,233
4360 Johnson Ferry Place
Marietta, PA
-
1,050
13,633
1,050
14,096
1,585
2760 Maytown Road
Marion, IN
-
12,750
1,136
13,886
2,086
614 W. 14th Street
Marion, IN
-
9,190
10,014
1,782
505 N. Bradner Avenue
Marion, OH
-
2,768
17,420
-
2,768
17,420
400 Barks Road West
Marlborough, UK
-
2,677
6,822
2,879
7,338
1,006
The Common
Marlow, UK
-
9,068
39,720
1,970
9,434
41,324
4,037
210 Little Marlow Road
Martinsville, VA
-
-
-
-
-
Rolling Hills Rd. & US Hwy. 58
Matawan, NJ
-
1,830
20,618
1,830
20,784
4,764
625 State Highway 34
Matthews, NC
-
4,738
4,777
2,141
2404 Plantation Center Dr.
McHenry, IL
-
1,576
-
-
1,576
-
-
5200 Block of Bull Valley Road
McKinney, TX
-
1,570
7,389
-
1,570
7,389
2,096
2701 Alma Rd.
McMurray, PA
-
1,440
15,805
3,894
1,440
19,699
4,190
240 Cedar Hill Dr
Medicine Hat, AB
2,144
5,566
5,953
65 Valleyview Drive SW
Mentor, OH
-
1,827
9,941
-
1,827
9,941
8200 Mentor Hills Drive
Mercerville, NJ
-
9,929
10,102
2,619
2240 White Horse- Merceville Road
Meriden, CT
-
1,300
1,472
1,300
1,705
845 Paddock Ave
Miamisburg, OH
-
3,233
-
3,233
450 Oak Ridge Boulevard
Middleburg Heights, OH
-
7,780
8,207
3,134
15435 Bagley Rd.
Middleton, WI
-
4,006
4,606
2,028
6701 Stonefield Rd.
Milton Keynes, UK
-
1,826
18,654
1,547
1,964
20,063
2,520
Tunbridge Grove, Kents Hill
Minnetonka, MN
-
2,080
24,360
1,554
2,080
25,914
6,078
500 Carlson Parkway
Mishawaka, IN
-
16,113
-
16,113
2,565
60257 Bodnar Blvd
Moline, IL
-
2,946
18,677
-
2,946
18,677
833 Sixteenth Avenue
Monmouth Junction, NJ
-
6,209
6,295
1,721
2 Deer Park Drive
Monroe, NC
-
3,681
4,469
1,950
918 Fitzgerald St.
Monroe, NC
-
4,799
5,682
2,450
919 Fitzgerald St.
Monroe, NC
-
4,021
4,175
1,860
1316 Patterson Ave.
Monroe Township, NJ
-
3,250
27,771
3,250
28,536
2,966
319 Forsgate Drive
Monroeville, PA
-
1,216
12,753
-
1,216
12,753
120 Wyngate Drive
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Monroeville, PA
-
1,237
3,642
-
1,237
3,642
885 MacBeth Drive
Montgomeryville, PA
-
1,176
9,827
-
1,176
9,827
640 Bethlehem Pike
Montville, NJ
-
3,500
31,002
1,699
3,500
32,701
7,173
165 Changebridge Rd.
Moorestown, NJ
-
4,143
23,902
-
4,143
23,902
3,947
250 Marter Avenue
Morehead City, NC
-
3,104
1,701
4,805
2,371
107 Bryan St.
Morrison, CO
-
2,720
16,261
-
2,720
16,261
1,359
150 Spring Street
Moulton, UK
-
1,695
12,510
1,611
1,662
14,154
Northampton Lane North
Mountainside, NJ
-
3,097
7,810
-
3,097
7,810
1180 Route 22
Nacogdoches, TX
-
5,754
-
5,754
1,948
5902 North St
Naperville, IL
-
3,470
29,547
-
3,470
29,547
7,214
504 North River Road
Naples, FL
-
1,222
10,642
-
1,222
10,642
6125 Rattlesnake Hammock Road
Naples, FL
-
1,672
23,126
-
1,672
23,126
1,068
1000 Lely Palms Drive
Naples, FL
-
1,854
12,402
-
1,854
12,402
3601 Lakewood Boulevard
Nashville, TN
-
4,910
29,590
-
4,910
29,590
9,113
15 Burton Hills Boulevard
Naugatuck, CT
-
1,200
15,826
1,200
16,025
3,931
4 Hazel Avenue
Needham, MA
-
1,610
12,667
-
1,610
12,667
5,644
100 West St.
New Lenox, IL
-
1,225
21,575
-
1,225
21,575
1023 South Cedar Rd
New Moston, UK
-
1,480
4,378
1,592
4,709
90a Broadway
Newark, DE
-
21,220
2,422
23,642
8,621
200 E. Village Rd.
Newcastle Under Lyme, UK
-
1,110
5,655
1,194
6,083
1,028
Hempstalls Lane
Newcastle-under-Lyme, UK
-
1,125
5,537
1,210
5,955
Silverdale Road
Newport News, VA
-
6,077
-
6,077
12997 Nettles Dr
Norman, OK
-
1,484
-
1,484
1701 Alameda Dr.
Norman, OK
-
1,480
33,330
-
1,480
33,330
6,428
800 Canadian Trails Drive
North Augusta, SC
-
2,558
-
2,558
1,407
105 North Hills Dr.
Northampton, UK
-
5,182
17,348
1,702
5,573
18,659
3,277
Cliftonville Road
Northampton, UK
-
2,013
6,257
2,166
6,730
Cliftonville Road
Northbrook, IL
-
1,298
13,341
-
1,298
13,341
3240 Milwaukee Avenue
Nuneaton, UK
-
3,325
8,983
3,576
9,661
1,634
132 Coventry Road
Nuthall, UK
-
1,628
6,263
1,752
6,736
172A Nottingham Road
Nuthall, UK
-
2,498
10,436
2,687
11,224
1,917
172 Nottingham Road
Oak Lawn, IL
-
2,418
5,428
-
2,418
5,428
9401 South Kostner Avenue
Oak Lawn, IL
-
3,876
7,988
-
3,876
7,988
6300 W 95th Street
Oakland, CA
-
4,760
16,143
4,760
16,252
2,372
468 Perkins Street
Ocala, FL
-
1,340
10,564
1,340
10,666
3,067
2650 SE 18TH Avenue
Oklahoma City, OK
-
7,513
-
7,513
2,382
13200 S. May Ave
Oklahoma City, OK
-
7,017
-
7,017
2,197
11320 N. Council Road
Oklahoma City, OK
-
1,590
16,272
-
1,590
16,272
2800 SW 131st Street
Olathe, KS
-
1,930
19,765
1,930
20,318
2,378
21250 W 151 Street
Omaha, NE
-
10,230
-
10,230
2,643
11909 Miracle Hills Dr.
Omaha, NE
-
8,769
-
8,769
2,392
5728 South 108th St.
Ona, WV
-
15,998
16,388
1,820
100 Weatherholt Drive
Oneonta, NY
-
5,020
-
5,020
1,570
1846 County Highway 48
Orange Park, FL
-
2,201
4,018
-
2,201
4,018
570 Wells Road
Orem, UT
-
2,150
24,107
-
2,150
24,107
2,642
250 East Center Street
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Osage City, KS
-
1,700
1,842
1403 Laing St
Osawatomie, KS
-
2,970
3,106
1520 Parker Ave
Ottawa, KS
-
6,590
6,634
2250 S Elm St
Overland Park, KS
-
4,500
29,105
38,441
8,230
63,816
17,220
6101 W 119th St
Overland Park, KS
-
2,840
2,932
14430 Metcalf Ave
Overland Park, KS
-
1,300
25,311
1,300
25,988
2,995
7600 Antioch Road
Owasso, OK
-
1,380
-
1,380
12807 E. 86th Place N.
Owensboro, KY
-
13,275
-
13,275
5,428
1205 Leitchfield Rd.
Owenton, KY
-
2,400
-
2,400
1,157
905 Hwy. 127 N.
Palestine, TX
-
4,320
1,300
5,620
1,949
1625 W. Spring St.
Palm Beach Gardens, FL
-
2,082
6,624
-
2,082
6,624
11375 Prosperity Farms Road
Palm Coast, FL
-
10,957
11,055
3,040
50 Town Ct.
Palm Desert, CA
-
6,195
8,922
-
6,195
8,922
74350 Country Club Drive
Palm Harbor, FL
-
1,306
13,811
-
1,306
13,811
2895 Tampa Road
Palm Harbor, FL
-
3,281
22,457
-
3,281
22,457
2851 Tampa Road
Palos Heights, IL
-
1,225
12,457
-
1,225
12,457
7880 West College Drive
Palos Heights, IL
-
3,431
28,812
-
3,431
28,812
1,046
7850 West College Drive
Palos Heights, IL
-
2,590
7,647
-
2,590
7,647
11860 Southwest Hwy
Panama City Beach, FL
-
6,402
7,136
1,340
6012 Magnolia Beach Road
Paola, KS
-
5,610
5,669
601 N. East Street
Paris, TX
-
5,452
-
5,452
4,784
750 N Collegiate Dr
Parma, OH
-
12,722
-
12,722
9205 Sprague Road
Parma, OH
-
1,833
10,318
-
1,833
10,318
9055 West Sprague Road
Paulsboro, NJ
-
3,264
8,026
-
3,264
8,026
550 Jessup Road
Perrysburg, OH
-
1,456
5,433
-
1,456
5,433
10540 Fremont Pike
Perrysburg, OH
-
1,213
7,110
-
1,213
7,110
10542 Fremont Pike
Philadelphia, PA
-
2,930
10,433
3,536
2,930
13,969
3,647
1526 Lombard Street
Phillipsburg, NJ
-
21,175
21,413
5,254
290 Red School Lane
Phillipsburg, NJ
-
8,114
8,215
2,015
843 Wilbur Avenue
Pikesville, MD
-
-
2,488
-
-
2,488
8911 Reisterstown Road
Pikesville, MD
-
4,247
8,383
-
4,247
8,383
8909 Reisterstown Road
Pinehurst, NC
-
2,690
3,207
1,463
17 Regional Dr.
Piqua, OH
-
1,885
-
1,885
1,069
1744 W. High St.
Piscataway, NJ
-
3,100
33,501
-
3,100
33,501
2,369
10 Sterling Drive
Pittsburgh, PA
-
11,357
-
11,357
1125 Perry Highway
Pittsburgh, PA
-
1,005
15,164
-
1,005
15,164
505 Weyman Road
Pittsburgh, PA
-
1,140
3,166
-
1,140
3,166
550 South Negley Avenue
Pittsburgh, PA
-
3,790
-
3,790
2170 Rhine Street
Pittsburgh, PA
-
4,214
-
4,214
5609 Fifth Avenue
Pittsburgh, PA
-
1,480
9,715
-
1,480
9,715
1105 Perry Highway
Pittsburgh, PA
-
1,139
5,846
-
1,139
5,846
1848 Greentree Road
Pittsburgh, PA
-
1,750
8,572
6,320
1,750
14,892
3,701
100 Knoedler Rd.
Plainview, NY
-
3,990
11,969
1,713
3,990
13,682
3,235
150 Sunnyside Blvd
Plano, TX
-
1,840
20,152
1,840
20,712
2,190
3325 W Plano Parkway
Plattsmouth, NE
-
5,650
-
5,650
1,535
1913 E. Highway 34
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Poole, UK
-
3,416
17,171
-
3,416
17,171
Kingsmill Road
Potomac, MD
-
1,448
14,626
-
1,448
14,626
10718 Potomac Tennis Lane
Potomac, MD
-
4,119
14,921
-
4,119
14,921
10714 Potomac Tennis Lane
Pottstown, PA
-
4,565
-
4,565
724 North Charlotte Street
Pottsville, PA
-
3,560
-
3,560
420 Pulaski Drive
Prior Lake, MN
13,567
1,870
29,849
1,870
30,149
3,208
4685 Park Nicollet Avenue
Raleigh, NC
-
7,598
88,870
7,598
89,363
6,542
4030 Cardinal at North Hills St
Raleigh, NC
-
3,530
59,589
-
3,530
59,589
11,396
5301 Creedmoor Road
Raleigh, NC
-
2,580
16,837
-
2,580
16,837
3,433
7900 Creedmoor Road
Reading, PA
-
19,906
20,046
4,850
5501 Perkiomen Ave
Red Bank, NJ
-
1,050
21,275
1,158
1,050
22,433
4,785
One Hartford Dr.
Redondo Beach, CA
-
-
9,557
-
10,210
6,913
514 North Prospect Ave
Reidsville, NC
-
3,830
4,737
2,155
2931 Vance St.
Richardson, TX
-
1,468
12,979
-
1,468
12,979
410 Buckingham Road
Richmond, IN
-
14,222
14,615
1,699
400 Industries Road
Richmond, VA
-
3,261
17,980
-
3,261
17,980
1719 Bellevue Avenue
Richmond, VA
-
1,046
8,235
-
1,046
8,235
2125 Hilliard Road
Roanoke, VA
-
4,483
-
4,483
4355 Pheasant Ridge Rd
Rockville Centre, NY
-
4,290
20,310
1,379
4,290
21,689
4,889
260 Maple Ave
Rockwall, TX
-
2,220
17,650
2,220
17,719
2,049
720 E Ralph Hall Parkway
Romeoville, IL
-
1,895
-
-
1,895
-
-
Grand Haven Circle
Roseville, MN
-
2,140
24,679
2,140
24,779
2,677
2750 North Victoria Street
Rugeley, UK
-
1,900
10,262
2,043
11,037
1,976
Horse Fair
Ruston, LA
-
9,790
-
9,790
2,424
1401 Ezelle St
S Holland, IL
-
1,423
8,910
-
1,423
8,910
2045 East 170th Street
Salem, OR
-
5,171
5,172
2,828
1355 Boone Rd. S.E.
Salisbury, NC
-
5,697
5,893
2,561
2201 Statesville Blvd.
San Angelo, TX
-
8,800
9,225
3,572
2695 Valleyview Blvd.
San Angelo, TX
-
1,050
24,689
1,221
1,050
25,910
3,682
6101 Grand Court Road
San Antonio, TX
-
1,499
12,662
-
1,499
12,662
15290 Huebner Road
San Antonio, TX
-
-
17,303
-
-
17,303
8,455
8902 Floyd Curl Dr.
San Diego, CA
-
-
22,003
1,845
-
23,848
6,664
555 Washington St.
San Juan Capistrano, CA
-
1,390
6,942
1,434
1,390
8,376
3,500
30311 Camino Capistrano
Sand Springs, OK
-
19,654
-
19,654
3,861
4402 South 129th Avenue West
Sarasota, FL
-
3,175
-
3,175
1,991
8450 McIntosh Rd.
Sarasota, FL
-
4,101
11,208
-
4,101
11,208
5401 Sawyer Road
Sarasota, FL
-
1,370
4,084
-
1,370
4,084
3250 12th Street
Sarasota, FL
-
2,792
11,177
-
2,792
11,177
5511 Swift Road
Sarasota, FL
-
3,360
19,140
-
3,360
19,140
4,182
6150 Edgelake Drive
Sarasota, FL
-
8,895
-
8,895
5509 Swift Road
Scranton, PA
-
17,609
-
17,609
2,530
2741 Blvd. Ave
Scranton, PA
-
12,144
12,145
1,741
2751 Boulevard Ave
Seminole, FL
-
1,165
8,977
-
1,165
8,977
9300 Antilles Drive
Seven Fields, PA
-
4,663
4,722
2,585
500 Seven Fields Blvd.
Sewell, NJ
-
3,127
14,095
-
3,127
14,095
378 Fries Mill Road
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Shawnee, OK
-
1,400
-
1,400
3947 Kickapoo
Shelbyville, KY
-
3,870
4,500
1,684
1871 Midland Trail
Sherman, TX
-
5,221
-
5,221
1,838
1011 E. Pecan Grove Rd.
Silver Spring, MD
-
1,469
10,395
-
1,469
10,395
2505 Musgrove Road
Silver Spring, MD
-
4,678
11,683
-
4,678
11,683
2501 Musgrove Road
Silvis, IL
-
16,420
16,559
4,135
1900 10th St.
Sinking Spring, PA
-
1,393
19,848
-
1,393
19,848
3000 Windmill Road
Sittingbourne, UK
-
1,357
6,539
1,460
7,033
200 London Road
Smithfield, NC
-
5,680
6,135
2,497
830 Berkshire Rd.
Smithfield, NC
-
8,216
-
8,216
1,177
250 Highway 210 West
South Bend, IN
-
17,770
-
17,770
2,652
52565 State Road 933
South Point, OH
-
1,135
9,390
-
1,135
9,390
7743 County Road 1
Southampton, UK
-
1,519
16,041
1,581
16,689
1,013
Botley Road, Park Gate
Southbury, CT
-
1,860
23,613
1,860
24,571
5,579
655 Main St
Spokane, WA
-
2,649
11,703
-
2,649
11,703
6025 North Assembly Street
Springfield, IL
-
13,378
1,085
14,463
2,121
3089 Old Jacksonville Road
St. Louis, MO
-
1,890
12,390
1,890
13,227
3,028
6543 Chippewa St
St. Paul, MN
-
2,100
33,019
2,100
33,119
3,546
750 Mississippi River
Stafford, UK
-
2,009
8,238
2,090
8,571
Stone Road
Stamford, UK
-
1,820
3,238
1,957
3,483
Priory Road
Statesville, NC
-
1,447
1,785
2441 E. Broad St.
Statesville, NC
-
6,183
6,244
2,662
2806 Peachtree Place
Statesville, NC
-
3,627
3,636
1,589
2814 Peachtree Rd.
Staunton, VA
-
6,391
-
6,391
1410 N Augusta St
Sterling Heights, MI
-
10,787
-
10,787
11095 East Fourteen Mile Road
Sterling Heights, MI
-
1,583
15,639
-
1,583
15,639
38200 Schoenherr Road
Stillwater, OK
-
1,400
-
1,400
1616 McElroy Rd.
Stratford-upon-Avon, UK
-
14,508
1,155
15,604
1,901
Scholars Lane
Stroudsburg, PA
-
16,313
-
16,313
2,619
370 Whitestone Corner Road
Summit, NJ
-
3,080
14,152
-
3,080
14,152
3,422
41 Springfield Avenue
Sunbury, PA
-
7,246
-
7,246
800 Court Street Circle
Sunninghill, UK
-
11,632
42,233
2,174
12,101
43,938
2,925
Bagshot Road
Sunnyvale, CA
-
4,946
22,131
-
4,946
22,131
1150 Tilton Drive
Superior, WI
-
1,020
13,735
6,159
1,020
19,894
3,457
1915 North 34th Street
Tacoma, WA
-
2,522
8,576
-
2,522
8,576
5601 South Orchard Southtreet
Tampa, FL
-
1,315
6,913
-
1,315
6,913
14950 Casey Road
Terre Haute, IN
-
1,370
18,016
-
1,370
18,016
2,463
395 8th Avenue
Texarkana, TX
-
1,403
-
1,403
4204 Moores Lane
The Villages, FL
-
1,035
7,446
-
1,035
7,446
1,327
2450 Parr Drive
Thomasville, GA
-
12,520
1,347
13,867
2,429
423 Covington Avenue
Three Rivers, MI
-
1,255
2,761
-
1,255
2,761
517 South Erie Southtreet
Tomball, TX
-
1,050
13,300
1,050
14,140
3,171
1221 Graham Dr
Toms River, NJ
-
3,466
23,311
-
3,466
23,311
1657 Silverton Rd
Tonganoxie, KS
-
3,690
3,766
120 W 8th St
Topeka, KS
-
12,712
-
12,712
2,579
1931 Southwest Arvonia Place
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Towson, MD
-
1,715
13,115
-
1,715
13,115
8101 Bellona Avenue
Towson, MD
-
3,100
6,468
-
3,100
6,468
509 East Joppa Road
Towson, MD
-
4,527
3,128
-
4,527
3,128
7001 North Charles Street
Troy, MI
-
1,381
24,452
-
1,381
24,452
925 West South Boulevard
Troy, OH
-
2,000
4,254
6,254
2,345
81 S. Stanfield Rd.
Trumbull, CT
-
4,440
43,384
-
4,440
43,384
10,012
6949 Main Street
Tulsa, OK
-
1,390
7,110
1,102
1,390
8,212
2,264
7220 S. Yale Ave.
Tulsa, OK
-
1,320
10,087
-
1,320
10,087
2,121
7902 South Mingo Road East
Tulsa, OK
-
1,100
27,007
2,233
1,100
29,240
2,334
18001 East 51st Street
Tulsa, OK
13,000
1,752
28,421
-
1,752
28,421
2,023
701 W 71st Street South
Tulsa, OK
-
9,410
-
9,410
7210 South Yale Avenue
Tustin, CA
-
15,299
15,836
3,986
240 East 3rd St
Twinsburg, OH
-
1,446
5,921
-
1,446
5,921
8551 Darrow Road
Tyler, TX
-
5,268
-
5,268
1,794
5550 Old Jacksonville Hwy.
Union, SC
-
1,932
2,374
-
1,932
2,374
709 Rice Avenue
Valparaiso, IN
-
2,558
-
2,558
1,266
2601 Valparaiso St.
Valparaiso, IN
-
2,962
-
2,962
1,449
2501 Valparaiso St.
Vancouver, WA
-
2,503
28,401
-
2,503
28,401
1,047
2811 N.E. 139th Street
Venice, FL
-
1,150
10,674
1,150
10,782
3,019
1600 Center Rd.
Venice, FL
-
2,246
10,097
-
2,246
10,097
1450 East Venice Avenue
Vero Beach, FL
-
3,187
-
3,187
1,550
420 4th Ct.
Vero Beach, FL
-
3,263
-
3,263
1,596
410 4th Ct.
Virginia Beach, VA
-
1,540
22,593
-
1,540
22,593
3,282
5520 Indian River Rd
Voorhees, NJ
-
1,800
37,299
1,800
37,970
9,153
2601 Evesham Road
Voorhees, NJ
-
3,100
25,950
3,100
25,976
5,244
113 South Route 73
Voorhees, NJ
-
2,193
6,992
-
2,193
6,992
1086 Dumont Circle
W Palm Beach, FL
-
1,175
8,297
-
1,175
8,297
2330 Village Boulevard
W Palm Beach, FL
-
1,921
5,733
-
1,921
5,733
2300 Village Boulevard
Wabash, IN
-
14,588
14,589
2,269
20 John Kissinger Drive
Waconia, MN
-
14,726
4,495
19,221
4,086
500 Cherry Street
Wake Forest, NC
-
3,003
2,039
5,042
2,420
611 S. Brooks St.
Wallingford, PA
-
1,356
6,489
-
1,356
6,489
115 South Providence Road
Walnut Creek, CA
-
4,358
18,413
-
4,358
18,413
1975 Tice Valley Boulevard
Walnut Creek, CA
-
5,394
39,096
-
5,394
39,096
1,429
1226 Rossmoor Parkway
Walsall, UK
-
1,184
8,562
1,274
9,209
1,189
Little Aston Road
Wamego, KS
-
2,510
2,567
1607 4th St
Wareham, MA
-
10,313
1,701
12,014
5,798
50 Indian Neck Rd.
Warren, NJ
-
2,000
30,810
1,337
2,000
32,147
6,904
274 King George Rd
Waterloo, IA
-
3,031
-
3,031
201 West Ridgeway Avenue
Waxahachie, TX
-
5,763
-
5,763
1,838
1329 Brown St.
Wayne, NJ
-
1,427
15,679
-
1,427
15,679
800 Hamburg Turnpike
Weatherford, TX
-
5,261
-
5,261
1,805
1818 Martin Drive
Wellingborough, UK
-
1,480
5,724
1,592
6,156
159 Northampton
West Bend, WI
-
17,790
17,828
3,783
2130 Continental Dr
West Des Moines, IA
-
5,104
-
5,104
5010 Grand Ridge Drive
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
West Milford, NJ
-
1,960
24,614
-
1,960
24,614
197 Cahill Cross Road
West Orange, NJ
-
1,347
19,395
-
1,347
19,395
510 Prospect Avenue
West Reading, PA
-
12,122
-
12,122
425 Buttonwood Street
Westerville, OH
-
8,287
4,076
12,363
10,273
690 Cooper Rd.
Westerville, OH
-
1,420
5,373
-
1,420
5,373
1060 Eastwind Drive
Westerville, OH
-
1,582
10,282
-
1,582
10,282
215 Huber Village Boulevard
Westfield, IN
-
15,964
15,965
2,462
937 E. 186th Street
Westlake, OH
-
11,966
-
11,966
28400 Center Ridge Road
Weston Super Mare, UK
-
2,517
7,054
2,707
7,587
1,290
141b Milton Road
Wheaton, MD
-
3,864
3,790
-
3,864
3,790
11901 Georgia Avenue
Whippany, NJ
-
1,571
14,982
-
1,571
14,982
18 Eden Lane
Wichita, KS
-
1,400
11,000
-
1,400
11,000
5,288
505 North Maize Road
Wichita, KS
-
8,873
-
8,873
2,058
10604 E 13th Street North
Wichita, KS
12,545
19,747
-
19,747
3,840
2050 North Webb Road
Wichita, KS
-
2,240
2,369
900 N Bayshore Dr
Wichita, KS
-
10,134
-
10,134
2,218
10600 E 13th Street North
Wilkes-Barre, PA
-
3,457
-
3,457
1548 Sans Souci Parkway
Williamsburg, VA
-
1,187
5,728
-
1,187
5,728
1811 Jamestown Rd
Williamsport, PA
-
6,926
-
6,926
300 Leader Drive
Williamsport, PA
-
1,899
-
1,899
101 Leader Drive
Williamstown, KY
-
6,430
-
6,430
2,649
201 Kimberly Lane
Willoughby, OH
-
1,774
8,655
-
1,774
8,655
37603 Euclid Avenue
Wilmington, DE
-
9,494
9,608
2,481
810 S Broom Street
Wilmington, DE
-
1,376
13,454
-
1,376
13,454
700 1/2 Foulk Road
Wilmington, DE
-
2,843
36,959
-
2,843
36,959
1,388
5651 Limestone Road
Wilmington, DE
-
2,266
9,503
-
2,266
9,503
700 Foulk Road
Wilmington, NC
-
2,991
-
2,991
1,630
3501 Converse Dr.
Wilmington, NC
-
15,355
-
15,355
2,307
3828 Independence Blvd
Windsor, VA
-
1,148
6,514
-
1,148
6,514
23352 Courthouse Hwy
Winston-Salem, NC
-
2,514
3,002
1,337
2980 Reynolda Rd.
Winter Garden, FL
-
1,110
7,937
-
1,110
7,937
1,618
720 Roper Road
Winter Springs, FL
-
1,152
14,826
-
1,152
14,826
1057 Willa Springs Drive
Witherwack, UK
-
6,915
1,015
7,437
1,265
Whitchurch Road
Wolverhampton, UK
-
1,573
6,678
1,692
7,183
1,232
378 Prestonwood Road
Woodbury, MN
-
1,317
20,935
1,317
21,233
1,665
2195 Century Avenue South
Woodstock, VA
-
5,108
-
5,108
803 S Main St
Worcester, MA
-
3,500
54,099
-
3,500
54,099
14,483
101 Barry Road
Worcester, MA
-
2,300
9,060
6,000
2,300
15,060
4,863
378 Plantation St.
Yardley, PA
-
14,918
-
14,918
493 Stony Hill Road
Yardley, PA
-
1,561
9,442
-
1,561
9,442
1480 Oxford Valley Road
Yeadon, PA
-
1,075
10,694
-
1,075
10,694
14 Lincoln Avenue
York, PA
-
9,357
-
9,357
200 Pauline Drive
York, PA
-
1,050
4,212
-
1,050
4,212
2400 Kingston Court
York, PA
-
1,121
7,586
-
1,121
7,586
1770 Barley Road
York, UK
-
2,961
8,266
3,185
8,890
1,225
Rosetta Way, Boroughbridge Road
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Youngsville, NC
-
10,686
-
10,686
1,563
100 Sunset Drive
Zephyrhills, FL
-
2,131
6,671
-
2,131
6,671
38220 Henry Drive
Zionsville, IN
-
1,610
22,400
1,683
1,609
24,084
5,782
11755 N Michigan Rd
Triple-net Total
$
306,038
$
1,036,151
$
7,894,992
$
351,136
$
1,057,708
$
8,224,571
$
1,272,903
Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2019
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Outpatient Medical:
Addison, IL
$
5,762
$
$
18,842
$
-
$
$
18,842
$
303 West Lake Street
Agawam, MA
-
1,072
5,164
-
1,072
5,164
-
230-232 Main Street
Allen, TX
-
14,196
1,302
15,498
5,329
1105 N Central Expressway
Alpharetta, GA
-
14,694
-
14,694
5,694
11975 Morris Road
Alpharetta, GA
-
1,862
-
-
1,862
-
-
940 North Point Parkway
Alpharetta, GA
-
17,103
17,714
6,751
3300 Old Milton Parkway
Alpharetta, GA
-
18,902
19,017
7,097
3400-A Old Milton Parkway
Alpharetta, GA
-
1,769
36,152
1,769
36,914
14,961
3400-C Old Milton Parkway
Anderson, IN
-
21,077
-
21,077
2,042
3125 S. Scatterfield Rd.
Appleton, WI
7,045
1,881
8,866
-
1,881
8,866
-
5320 W Michael Drive
Appleton, WI
12,343
3,782
20,440
-
3,782
20,440
-
2323 N Casaloma Drive
Arcadia, CA
-
5,408
23,219
4,825
5,618
27,834
11,877
301 W. Huntington Drive
Arlington, TX
-
18,243
18,656
4,290
902 W. Randol Mill Road
Atlanta, GA
-
4,931
18,720
7,281
5,387
25,545
12,588
755 Mt. Vernon Hwy.
Atlanta, GA
-
-
43,425
2,062
-
45,487
14,031
5670 Peachtree-Dunwoody Road
Atlanta, GA
-
1,947
24,248
2,258
2,172
26,281
8,775
975 Johnson Ferry Road
Austin, TX
-
1,066
10,112
-
1,066
10,112
5301-B Davis Lane
Austin, TX
-
1,688
6,784
-
1,688
6,784
5301-A Davis Lane
Baltimore, MD
-
4,490
31,222
-
4,490
31,222
-
1420 Key Highway
Bardstown, KY
-
7,537
-
7,537
1,765
4359 New Shepherdsville Rd
Bartlett, TN
-
15,015
2,346
17,361
7,436
2996 Kate Bond Rd.
Bel Air, MD
-
-
24,769
-
24,825
2,385
12 Medstar Boulevard
Bellaire, TX
-
5,482
32,478
-
5,482
32,478
5420 WEST LOOP SOUTH
Bellaire, TX
-
5,572
72,478
-
5,572
72,478
1,172
5410 - 5420 WEST LOOP SOUTH
Bellevue, NE
-
-
16,680
-
16,682
5,909
2510 Bellevue Medical Center Drive
Bend, OR
-
16,516
30,338
-
16,516
30,338
1501 Northeast Medical Center Drive
Berkeley Heights, NJ
-
49,555
92,806
-
49,555
92,806
1,117
1 Diamond Hill Road
Bettendorf, IA
-
-
7,110
-
7,183
2140 53rd Avenue
Beverly Hills, CA
-
20,766
40,730
3,591
20,766
44,321
7,885
9675 Brighton Way
Beverly Hills, CA
-
19,863
31,690
1,683
19,863
33,373
5,461
416 North Bedford
Beverly Hills, CA
33,729
32,603
28,639
1,149
32,603
29,788
6,111
435 North Bedford
Beverly Hills, CA
-
18,863
1,192
18,885
1,590
415 North Bedford
Beverly Hills, CA
78,271
52,772
87,366
52,772
88,263
13,738
436 North Bedford
Birmingham, AL
-
3,940
12,315
-
3,940
12,315
4600 Highway 280
Birmingham, AL
8,477
13,755
13,761
3485 Independence Drive
Boca Raton, FL
-
12,312
12,536
4,018
9960 S. Central Park Boulevard
Boca Raton, FL
-
34,002
4,125
38,022
15,196
9970 S. Central Park Blvd.
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Outpatient Medical:
Boerne, TX
-
12,951
13,830
4,004
134 Menger Springs Road
Boynton Beach, FL
-
13,324
40,369
3,178
14,049
42,822
13,758
10301 Hagen Ranch Road
Boynton Beach, FL
-
5,611
7,597
13,102
5,995
10075 Jog Rd.
Boynton Beach, FL
-
2,048
7,692
1,233
2,185
8,788
4,106
8188 Jog Rd.
Boynton Beach, FL
-
2,048
7,403
1,705
2,185
8,971
4,266
8200 Jog Road
Bradenton, FL
-
1,184
9,799
1,184
10,216
2,337
315 75th Street West
Bradenton, FL
-
1,035
4,298
1,035
4,315
1,085
7005 Cortez Road West
Brandon, FL
-
1,437
7,006
-
1,437
7,006
2020 Town Center Boulevard
Bridgeton, MO
-
1,701
6,228
1,501
6,673
1,009
3440 De Paul Ln.
Bridgeton, MO
-
21,221
1,248
22,469
7,743
12266 DePaul Dr
Buckhurst Hill, UK
-
11,989
50,907
2,540
12,473
52,963
6,406
High Road
Burleson, TX
-
12,611
13,312
4,701
12001 South Freeway
Burnsville, MN
-
-
31,596
2,182
-
33,778
9,564
14101 Fairview Dr
Cary, NC
-
2,816
11,146
-
2,816
11,146
540 Waverly Place
Castle Rock, CO
-
13,004
13,541
3,543
2352 Meadows Boulevard
Castle Rock, CO
-
-
11,795
-
11,990
Meadows Boulevard
Cedar Park, TX
-
23,753
4,448
28,201
3,471
1401 Medical Parkway, Building 2
Chapel Hill, NC
-
2,390
-
2,390
100 Perkins Drive
Chapel Hill, NC
5,161
1,970
8,874
1,970
8,924
6011 Farrington Road
Chapel Hill, NC
5,161
1,970
8,925
1,970
8,930
6013 Farrington Road
Chapel Hill, NC
14,669
5,681
25,035
5,681
25,050
1,193
2226 North Carolina Highway 54
Charleston, SC
-
2,815
25,648
-
2,815
25,648
5,380
325 Folly Road
Charlotte, NC
-
24,796
-
24,796
1,003
1900 Randolph Road
Charlotte, NC
-
61,799
-
61,799
2,329
1918 Randolph Road
Charlotte, NC
-
40,606
-
40,606
1,482
1718 East Fourth Street
Charlotte, NC
-
1,746
8,645
-
1,746
8,645
309 South Sharon Amity Road
Charlotte, NC
-
1,158
8,802
-
1,158
8,802
5039 Airport Center Parkway
Chicopee, MA
-
6,078
15,842
-
6,078
15,842
-
444 Montgomery Street
Chula Vista, CA
-
1,045
22,252
-
1,045
22,252
1,075
480 4th Avenue
Chula Vista, CA
-
5,557
-
5,557
450 4th Avenue
Chula Vista, CA
-
1,114
15,459
-
1,114
15,459
971 Lane Ave
Chula Vista, CA
-
1,075
7,165
-
1,075
7,165
959 Lane Ave
Cincinnati, OH
-
-
17,880
18,166
4,254
3301 Mercy Health Boulevard
Cincinnati, OH
-
10,122
-
10,122
4850 Red Bank Expressway
Claremont, CA
-
3,950
20,168
-
3,950
20,168
1601 Monte Vista Avenue
Clarkson Valley, MO
-
-
35,592
-
-
35,592
14,085
15945 Clayton Rd
Clear Lake, TX
-
-
13,882
2,319
11,583
1,544
1010 South Ponds Drive
Clyde, NC
-
1,433
22,062
-
1,433
22,062
581 Leroy George Drive
Columbia, MD
-
33,885
3,041
9,353
27,596
8,367
5450 & 5500 Knoll N Dr.
Columbia, MO
-
12,949
-
12,949
1601 E. Broadway
Columbia, MO
-
16,033
-
16,033
1605 E. Broadway
Columbia, MO
-
23,403
-
23,403
1705 E. Broadway
Columbia, MD
-
12,159
72,636
12,159
72,956
3,187
10710 Charter Drive
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Outpatient Medical:
Columbia, MD
-
2,333
19,232
1,920
2,333
21,152
5,855
10700 Charter Drive
Coon Rapids, MN
-
-
26,679
1,143
-
27,822
6,473
11850 Blackfoot Street NW
Coral Springs, FL
-
2,109
12,189
-
2,109
12,189
2901 Coral Hills Drive
Coral Springs, FL
-
1,313
13,118
-
1,313
13,118
3001 Coral Hills Drive
Costa Mesa, CA
21,243
22,033
24,332
22,033
24,467
4,889
1640 Newport Boulevard
Cypress, TX
-
1,287
-
-
1,287
-
-
14940 Mueschke Road
Dade City, FL
-
1,211
5,511
-
1,211
5,511
1,675
13413 US Hwy 301
Dallas, TX
-
15,418
15,443
2,311
8196 Walnut Hill Lane
Dallas, TX
-
6,086
18,007
1,437
6,536
18,994
1,362
10740 North Central Expressway
Dallas, TX
-
52,488
1,984
54,472
12,770
7115 Greenville Avenue
Deerfield Beach, FL
-
2,408
7,809
2,540
8,470
3,608
1192 East Newport Center Drive
Delray Beach, FL
-
1,882
34,767
2,451
35,014
18,094
5130-5150 Linton Blvd.
Dunkirk, MD
-
2,458
-
2,458
10845 Town Center Blvd
Durham, NC
-
1,212
22,858
1,212
22,860
4,750
1823 Hillandale Road
Durham, NC
-
1,403
25,163
-
1,403
25,163
120 William Penn Plaza
Durham, NC
-
1,751
44,425
-
1,751
44,425
3916 Ben Fanklin Boulevard
Edina, MN
-
13,105
-
13,105
4,988
8100 W 78th St
El Paso, TX
-
17,075
1,628
18,703
8,779
2400 Trawood Dr.
Elmhurst, IL
-
39,562
39,625
1,622
133 E Brush Hill Road
Elyria, OH
-
3,263
28,176
-
3,263
28,176
303 Chestnut Commons Drive
Escondido, CA
-
2,278
20,967
-
2,278
20,967
225 East 2nd Avenue
Everett, WA
-
4,842
26,010
4,842
26,072
8,671
13020 Meridian Ave. S.
Fenton, MO
-
27,461
-
27,461
8,411
1011 Bowles Avenue
Fenton, MO
-
13,911
14,109
3,371
1055 Bowles Avenue
Fish Kill, NY
-
2,144
36,880
-
2,144
36,880
-
2507 South Road
Florham Park, NJ
-
8,578
61,779
-
8,578
61,779
3,905
150 Park Avenue
Flower Mound, TX
-
9,276
9,508
1,916
2560 Central Park Avenue
Flower Mound, TX
-
4,164
27,027
1,171
4,164
28,198
6,161
4370 Medical Arts Drive
Flower Mound, TX
-
4,620
-
-
4,620
-
-
Medical Arts Drive
Fort Worth, TX
-
26,020
26,393
6,226
10840 Texas Health Trail
Fort Worth, TX
-
5,266
-
5,266
1,508
7200 Oakmont Boulevard
Franklin, TN
-
2,338
12,138
3,060
2,338
15,198
6,716
100 Covey Drive
Frederick, MD
-
1,065
7,430
-
1,065
7,430
194 Thomas Johnson Drive
Frederick, MD
-
1,930
18,748
-
1,930
18,748
45 Thomas Johnson Drive
Fresno, CA
-
1,497
12,669
-
1,497
12,669
-
1105 E Spruce Ave
Frisco, TX
-
-
18,635
-
18,854
7,798
4401 Coit Road
Frisco, TX
-
-
15,309
2,357
-
17,666
7,383
4461 Coit Road
Gallatin, TN
-
21,801
1,763
23,540
9,124
300 Steam Plant Rd
Gardendale, AL
4,246
1,150
8,162
1,150
8,373
2217 Decatur Highway
Garland, TX
-
4,952
32,718
-
4,952
32,718
7217 Telecome Parkway
Gastonia, NC
-
1,092
-
1,092
934 Cox Road
Gig Harbor, WA
-
30,810
1,302
32,112
5,032
11511 Canterwood Blvd. NW
Glendale, CA
-
44,354
-
44,354
1,011
1500 E Chevy Chase Drive
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Outpatient Medical:
Glendale, CA
-
18,398
18,708
7,136
222 W. Eulalia St.
Gloucester, VA
-
2,128
9,169
2,128
9,174
5659 Parkway Drive
Grand Prairie, TX
-
6,086
-
6,086
2,399
2740 N State Hwy 360
Grapevine, TX
-
-
5,943
4,778
2,081
8,640
2,004
2040 W State Hwy 114
Grapevine, TX
-
3,365
15,669
2,248
3,365
17,917
4,449
2020 W State Hwy 114
Greenville, SC
-
1,567
5,167
-
1,567
5,167
10 Enterprise Boulevard
Greenwood, IN
-
2,098
21,538
2,098
22,176
4,393
3000 S State Road 135
Greenwood, IN
-
1,262
7,045
1,262
7,053
1,953
333 E County Line Road
Harrisburg, NC
-
1,347
3,059
-
1,347
3,059
9550 Rocky River Road
Hattiesburg, MS
17,986
3,155
34,710
-
3,155
34,710
-
3688 Veterans Memorial Drive
Haymarket, VA
-
1,250
29,254
-
1,250
29,254
15195 Heathcote Blvd
Henderson, NV
-
2,587
5,654
-
2,587
5,654
2825 Siena Heights Drive
Henderson, NV
-
7,372
24,027
-
7,372
24,027
2845 Siena Heights Drive
Henderson, NV
-
5,492
18,718
-
5,492
18,718
2865 Siena Heights Drive
Highland, IL
-
-
8,834
-
8,865
1,897
12860 Troxler Avenue
Hopewell Junction, NY
-
2,164
5,333
-
2,164
5,333
-
10 Cranberry Drive
Hopewell Junction, NY
-
2,316
5,332
-
2,316
5,332
-
1955 NY-52
Houston, TX
-
10,403
-
-
10,403
-
F.M. 1960 & Northgate Forest Dr.
Houston, TX
-
5,837
33,109
1,028
5,837
34,137
12,856
15655 Cypress Woods Medical Dr.
Houston, TX
-
2,988
18,018
-
2,988
18,018
-
13105 Wortham Center Drive
Houston, TX
-
3,688
13,313
3,688
13,445
3,990
10701 Vintage Preserve Parkway
Houston, TX
-
1,099
1,604
81,406
12,815
71,294
16,843
2727 W Holcombe Boulevard
Houston, TX
3,775
13,660
-
13,660
20207 Chasewood Park Drive
Howell, MI
-
2,000
13,928
2,000
14,722
1225 South Latson Road
Humble, TX
-
-
9,941
-
1,702
8,239
1,064
8233 N. Sam Houston Parkway E.
Huntersville, NC
-
-
42,143
-
-
42,143
1,357
10030 Gilead Road
Jackson, MI
-
17,294
-
17,294
5,075
1201 E Michigan Avenue
Jacksonville, FL
-
3,562
27,249
-
3,562
27,249
10475 Centurion Parkway North
Jefferson City, TN
-
16,453
-
16,453
120 Hospital Drive
Jonesboro, GA
-
16,329
-
16,329
7813 Spivey Station Boulevard
Jonesboro, GA
-
16,554
-
16,554
7823 Spivey Station Boulevard
Jupiter, FL
-
2,825
5,858
1,298
3,036
6,945
3,289
600 Heritage Dr.
Jupiter, FL
-
2,252
11,415
3,889
2,639
14,917
6,242
550 Heritage Dr.
Killeen, TX
-
-
3,756
2,235
-
5,991
2301 S. Clear Creek
Killeen, TX
-
1,907
3,575
-
1,907
3,575
5702 E Central Texas Expressway
Killeen, TX
-
22,878
22,986
8,746
2405 Clear Creek Rd
Knoxville, TN
-
45,961
-
45,961
1,003
1926 Alcoa Highway
La Jolla, CA
-
12,855
32,658
1,496
12,855
34,154
7,206
4150 Regents Park Row
La Jolla, CA
-
9,425
26,525
9,425
26,917
4,894
4120 & 4130 La Jolla Village Drive
La Quinta, CA
-
3,266
22,066
3,279
22,721
5,515
47647 Caleo Bay Drive
Lacey, WA
6,589
1,751
10,345
-
1,751
10,345
2555 Marvin Road Northeast
Lake St Louis, MO
-
14,249
14,586
5,462
400 Medical Dr
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Outpatient Medical:
Lakeway, TX
-
2,801
-
-
2,801
-
-
Lohmans Crossing Road
Lakewood, CA
-
14,885
1,956
16,841
6,771
5750 Downey Ave.
Lakewood, WA
-
16,017
16,724
4,648
11307 Bridgeport Way SW
Land O Lakes, FL
-
3,025
26,249
-
3,025
26,249
2,035
2100 Via Bella
Land O Lakes, FL
-
1,376
6,750
-
1,376
6,750
2150 Via Bella
Las Vegas, NV
-
4,928
-
4,928
2,088
1776 E. Warm Springs Rd.
Las Vegas, NV
-
2,319
4,612
1,486
2,319
6,098
2,962
2870 S. Maryland Pkwy.
Lincoln, NE
-
1,420
29,723
1,420
30,434
11,316
575 South 70th St
Little Rock, AR
-
3,021
16,058
-
3,021
16,058
6119 Midtown Avenue
London, UK
-
5,229
11,551
5,440
12,018
1,454
17-19 View Road
London, UK
-
17,983
157,802
7,098
18,709
164,174
19,858
53 Parkside
London, UK
-
4,081
28,107
1,300
4,246
29,242
3,537
49 Parkside
Los Alamitos, CA
-
18,340
-
18,340
7,081
3771 Katella Ave.
Los Gatos, CA
-
21,961
-
21,961
9,127
555 Knowles Dr.
Los Gatos, CA
-
16,896
-
-
16,896
-
-
555 Knowles Dr.
Loxahatchee, FL
-
1,340
6,509
1,490
1,440
7,899
3,475
12989 Southern Blvd.
Loxahatchee, FL
-
1,553
4,694
1,680
1,650
6,277
2,948
12983 Southern Blvd.
Loxahatchee, FL
-
1,637
5,048
1,280
1,719
6,246
2,942
12977 Southern Blvd.
Lubbock, TX
42,982
2,286
72,893
-
2,286
72,893
-
4515 Marsha Sharp Freeway
Lynbrook, NY
27,196
10,028
37,319
10,028
37,977
1,635
444 Merrick Road
Madison, WI
-
3,670
28,329
-
3,670
28,329
1102 South Park Street
Margate, FL
-
9,293
-
9,293
2960 N. State Rd 7
Marietta, GA
-
2,682
20,053
1,516
2,703
21,548
3,465
4800 Olde Towne Parkway
Matthews, NC
-
32,741
-
32,741
1450 Matthews Township Parkway
Menasha, WI
-
1,374
13,861
2,963
1,345
16,853
2,827
1550 Midway Place
Merced, CA
-
-
13,772
-
14,587
5,593
315 Mercy Ave.
Meridian, ID
-
3,206
27,107
-
3,206
27,107
-
3277 E Louise Drive
Mesquite, TX
-
3,834
-
3,834
1,203
1575 I-30
Mission Hills, CA
23,325
-
42,276
6,889
4,791
44,374
10,268
11550 Indian Hills Road
Missouri City, TX
-
1,360
7,143
-
1,360
7,143
7010 Highway 6
Mobile, AL
15,755
2,759
25,180
2,759
25,193
6144 Airport Boulevard
Moline, IL
-
-
8,783
-
8,852
1,416
3900 28th Avenue Drive
Monticello, MN
6,367
18,489
18,628
4,661
1001 Hart Boulevard
Moorestown, NJ
-
50,896
51,407
14,676
401 Young Avenue
Mount Juliet, TN
-
1,566
11,697
1,779
1,601
13,441
6,077
5002 Crossings Circle
Mount Kisco, NY
-
12,632
51,220
-
12,632
51,220
-
90 - 110 South Bedford Road
Mount Vernon, IL
-
-
24,892
-
25,001
7,330
2 Good Samaritan Way
Murrieta, CA
-
-
47,190
-
47,300
20,411
28078 Baxter Rd.
Murrieta, CA
-
3,800
-
-
3,800
-
-
28078 Baxter Rd.
Myrtle Beach, SC
-
1,357
3,658
-
1,357
3,658
8170 Rourk Street
Nampa, ID
15,675
3,439
21,566
-
3,439
21,566
-
1512 12th Avenue
Nashville, TN
-
1,806
7,165
3,888
1,942
10,917
5,061
310 25th Ave. N.
New Albany, IN
-
2,411
16,494
2,414
16,643
3,643
2210 Green Valley Road
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Outpatient Medical:
Newburgh, NY
-
9,213
32,354
-
9,213
32,354
-
1200 NY-300
Newburyport, MA
-
3,104
19,370
-
3,104
19,370
One Wallace Bashaw Jr. Way
Niagara Falls, NY
-
1,433
10,891
1,721
11,122
6,187
6932 - 6934 Williams Rd
Niagara Falls, NY
-
8,362
8,672
3,620
6930 Williams Rd
Norfolk, VA
-
1,138
26,989
-
1,138
26,989
1,006
155 Kingsley Lane
North Canton, OH
13,202
2,518
24,452
-
2,518
24,452
-
7442 Frank Avenue
North Easton, MA
-
2,336
19,876
-
2,336
19,876
-
15 Roche Brothers Way
North Easton, MA
-
2,882
15,999
-
2,882
15,999
-
31 Roche Brothers Way
Norwood, OH
-
1,017
6,638
-
1,017
6,638
4685 Forest Avenue
Novi, MI
-
36,944
-
36,944
1,013
26750 Providence Parkway
Oklahoma City, OK
-
18,762
-
18,762
5,419
535 NW 9th Street
Oro Valley, AZ
-
18,339
1,101
19,440
7,305
1521 East Tangerine Rd.
Oxford, NC
-
4,971
-
4,971
107 East McClanahan Street
Palmer, AK
-
8,335
8,600
2480 S Woodworth Loop
Palmer, AK
-
29,705
1,486
31,191
11,825
2490 South Woodworth Loop
Pasadena, TX
-
1,700
8,009
1,700
8,167
1,328
5001 E Sam Houston Parkway S
Pearland, TX
-
1,500
11,253
1,500
11,259
1,739
2515 Business Center Drive
Pearland, TX
-
9,594
32,753
9,807
32,731
6,265
11511 Shadow Creek Parkway
Pendleton, OR
-
-
10,312
-
10,692
1,672
3001 St. Anthony Way
Phoenix, AZ
-
3,853
-
3,853
9225 N 3rd Street
Phoenix, AZ
-
2,207
-
2,207
9327 North 3rd Street
Phoenix, AZ
-
5,867
-
5,867
9100 N 2nd Street
Phoenix, AZ
-
1,149
48,018
11,409
1,149
59,427
27,378
2222 E. Highland Ave.
Pineville, NC
-
6,974
2,582
1,081
9,436
5,009
10512 Park Rd.
Plano, TX
-
83,209
5,359
88,568
23,750
6020 West Parker Road
Plano, TX
-
5,423
20,698
1,878
5,423
22,576
13,141
6957 Plano Parkway
Plantation, FL
-
8,563
10,666
4,772
8,575
15,426
8,343
851-865 SW 78th Ave.
Plantation, FL
-
8,848
9,262
2,036
8,908
11,238
7,026
600 Pine Island Rd.
Port Orchard, WA
9,973
2,810
22,716
2,810
22,755
1,037
450 South Kitsap Boulevard
Poughkeepsie, NY
-
4,035
30,459
-
4,035
30,459
-
30 Columbia Street
Poughkeepsie, NY
-
6,513
27,863
-
6,513
27,863
-
600 Westage Drive
Poughkeepsie, NY
19,065
5,128
20,769
-
5,128
20,769
-
1910 South Road
Powell, TN
-
27,417
-
27,417
7557 A Dannaher Drive
Powell, TN
-
34,903
-
34,903
7557 B Dannaher Drive
Prince Frederick, MD
-
26,889
-
26,889
130 Hospital Road
Prince Frederick, MD
-
12,801
-
12,801
110 Hospital Road
Rancho Mirage, CA
-
7,292
15,141
-
7,292
15,141
-
72780 Country Club Drive
Redmond, WA
-
5,015
26,697
1,080
5,015
27,777
9,474
18100 NE Union Hill Rd.
Reno, NV
-
1,117
21,972
2,239
1,117
24,211
10,179
343 Elm St.
Richmond, TX
-
2,000
9,118
2,000
9,122
22121 FM 1093 Road
Richmond, VA
-
2,969
26,697
1,450
3,090
28,026
9,730
7001 Forest Avenue
Rockwall, TX
-
17,197
17,590
4,751
3142 Horizon Road
Rogers, AR
-
1,062
28,680
2,411
1,062
31,091
10,619
2708 Rife Medical Lane
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Outpatient Medical:
Rolla, MO
-
1,931
47,639
1,931
47,640
14,809
1605 Martin Spring Drive
Rome, GA
-
29,597
-
29,597
1,510
330 Turner McCall Boulevard
Roseville, MN
-
2,963
20,169
-
2,963
20,169
-
1835 W County Road C
Roxboro, NC
-
2,477
-
2,477
799 Doctors Court
Salem, NH
-
1,655
14,050
1,681
14,070
3,713
31 Stiles Road
San Antonio, TX
-
1,057
10,101
1,057
10,224
5,375
19016 Stone Oak Pkwy.
San Antonio, TX
-
1,038
9,173
1,848
1,096
10,963
5,795
540 Stone Oak Centre Drive
San Antonio, TX
-
2,915
11,141
-
2,915
11,141
150 E Sonterra Blvd
San Antonio, TX
-
3,050
12,073
3,050
12,104
5206 Research Drive
San Antonio, TX
-
16,437
-
16,437
4,571
3903 Wiseman Boulevard
Santa Clarita, CA
-
-
2,338
20,669
5,304
17,703
3,884
23861 McBean Parkway
Santa Clarita, CA
-
-
28,384
2,550
5,277
25,657
5,165
23929 McBean Parkway
Santa Clarita, CA
-
11,594
11,872
23871 McBean Parkway
Santa Clarita, CA
25,000
39,284
-
39,284
6,311
23803 McBean Parkway
Santa Clarita, CA
-
-
20,618
1,076
4,407
17,287
3,670
24355 Lyons Avenue
Seattle, WA
-
4,410
38,428
4,410
38,837
17,817
5350 Tallman Ave
Sewell, NJ
-
1,242
11,616
1,242
11,622
556 Egg Harbor Road
Sewell, NJ
-
53,859
-
53,859
21,033
239 Hurffville-Cross Keys Road
Shakopee, MN
5,393
11,350
-
11,350
4,472
1515 St Francis Ave
Shakopee, MN
9,093
18,089
18,179
5,640
1601 St Francis Ave
Shenandoah, TX
-
-
21,135
4,574
16,623
2,083
106 Vision Park Boulevard
Sherman Oaks, CA
-
-
32,186
3,412
3,121
32,477
7,246
4955 Van Nuys Boulevard
Silverdale, WA
13,117
3,451
21,176
3,451
21,188
2200 NW Myhre Road
Somerville, NJ
-
3,400
22,244
3,400
22,246
6,349
30 Rehill Avenue
Southlake, TX
-
3,000
-
-
3,000
-
-
Central Avenue
Southlake, TX
-
2,875
15,471
-
2,875
15,471
925 E. Southlake Boulevard
Southlake, TX
-
18,123
-
18,123
5,863
1545 East Southlake Boulevard
Southlake, TX
-
30,549
30,597
8,090
1545 East Southlake Boulevard
Springfield, IL
-
1,569
10,350
-
1,568
10,351
1,637
1100 East Lincolnshire Blvd
Springfield, IL
-
3,519
3,550
2801 Mathers Rd.
Springfield, MA
-
2,721
6,615
-
2,721
6,615
-
305 Bicentennial Highway
St Paul, MN
-
37,695
38,095
6,317
225 Smith Avenue N.
St. Louis, MO
-
17,247
2,397
19,644
8,096
2325 Dougherty Rd.
St. Paul, MN
-
2,706
39,507
2,701
39,898
13,580
435 Phalen Boulevard
Stamford, CT
-
-
41,153
2,636
-
43,789
3,620
29 Hospital Plaza
Stockton, CA
11,639
4,966
16,844
-
4,966
16,844
-
2488 N California Street
Suffern, NY
-
37,211
-
37,211
13,568
257 Lafayette Avenue
Suffolk, VA
-
1,566
11,511
1,620
11,686
5,119
5838 Harbour View Blvd.
Sugar Land, TX
-
3,543
15,532
-
3,543
15,532
6,172
11555 University Boulevard
Tacoma, WA
-
-
64,307
-
-
64,307
20,433
1608 South J Street
Tallahassee, FL
-
-
17,449
-
-
17,449
6,615
One Healing Place
Tampa, FL
-
4,319
12,234
-
4,319
12,234
3,181
14547 Bruce B Downs Blvd
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Outpatient Medical:
Tampa, FL
-
1,462
7,270
-
1,462
7,270
12500 N Dale Mabry
Temple, TX
-
2,900
9,954
2,900
9,980
1,880
2601 Thornton Lane
Timonium, MD
-
8,829
12,568
8,850
12,708
1,323
2118 Greenspring Drive
Tucson, AZ
-
1,302
4,925
1,113
1,325
6,015
3,095
2055 W. Hospital Dr.
Tustin, CA
-
3,345
3,345
14591 Newport Ave
Tustin, CA
-
3,361
12,039
1,913
3,361
13,952
3,436
14642 Newport Ave
Tyler, TX
61,899
2,903
114,853
-
2,903
114,853
-
1814 Roseland Boulevard
Van Nuys, CA
-
-
36,187
-
-
36,187
10,936
6815 Noble Ave.
Voorhees, NJ
-
96,075
96,739
29,171
200 Bowman Drive
Voorhees, NJ
-
6,404
24,251
1,817
6,477
25,995
10,633
900 Centennial Blvd.
Waco, TX
-
-
6612 Fish Pond Road
Waco, TX
-
-
6620 Fish Pond Rd
Waco, TX
-
2,537
-
2,537
6600 Fish Pond Rd
Waco, TX
14,496
2,250
28,632
2,250
28,738
1,240
601 Highway 6 West
Washington, PA
19,273
3,981
31,706
3,981
31,723
1,389
100 Trich Drive
Wausau, WI
-
2,050
12,175
-
2,050
12,175
1,223
1901 Westwood Center Boulevard
Waxahachie, TX
-
18,069
-
18,069
2,578
2460 N I-35 East
Wellington, FL
-
11,047
-
11,047
5,030
1395 State Rd. 7
Wellington, FL
-
16,933
2,229
18,943
7,693
10115 Forest Hill Blvd.
Westlake Village, CA
6,360
2,487
9,776
2,487
9,782
1220 La Venta Drive
Westlake Village, CA
7,999
2,553
15,851
2,553
15,946
1,044
1250 La Venta Drive
Westville, IN
-
1,293
13,227
-
1,293
13,227
1668 South US 421
Winston-Salem, NC
-
2,006
7,497
-
2,006
7,497
2025 Frontis Plaza
Woodbridge, VA
-
16,534
-
16,534
12825 Minnieville Road
Yuma, AZ
-
1,592
10,185
-
1,592
10,185
2270 South Ridgeview Drive
Zephyrhills, FL
-
3,875
27,270
-
3,875
27,270
7,779
38135 Market Square Dr
Zephyrhills, FL
-
5,444
29,088
-
5,444
29,088
1,725
2352 Bruce B Downs Boulevard
Outpatient Medical Total
$
572,266
$
885,789
$
6,626,075
$
323,055
$
959,834
$
6,875,085
$
1,248,499
Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2019
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Buildings & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Buildings & Improvements
Accumulated Depreciation
Year Acquired
Year Built
Address
Assets Held For Sale:
Adelphi, MD
$
-
$
1,429
$
4,312
$
-
$
-
$
5,554
$
-
1801 Metzerott Road
Akron, OH
-
12,105
-
-
9,544
-
701 White Pond Drive
Ayer, MA
-
-
22,074
-
-
8,735
-
400 Groton Road
Birmingham, AL
-
10,201
-
-
5,508
-
801 Princeton Avenue SW
Birmingham, AL
-
11,733
-
-
7,995
-
817 Princeton Avenue SW
Birmingham, AL
-
18,726
-
-
12,234
-
833 Princeton Avenue SW
Boardman, OH
-
12,161
-
-
7,403
-
8423 Market St
Brookline, MA
-
-
17,435
-
-
17,435
-
110 Fisher Avenue
Burlington, MA
-
2,750
57,488
-
-
56,762
-
50 Greenleaf Way
Carmel, IN
-
2,280
19,238
-
-
14,226
-
12188-A North Meridian Street
Carmel, IN
-
2,026
21,559
-
-
14,292
-
12188-B North Meridian Street
Claremore, OK
-
11,173
-
-
7,529
-
1501 N. Florence Ave.
Concord, NH
-
3,041
-
-
3,344
-
227 Pleasant Street
Dallas, TX
-
28,690
-
-
18,703
-
9330 Poppy Dr.
Dayton, OH
-
6,919
-
-
4,586
-
1530 Needmore Road
Fort Wayne, IN
-
1,105
22,836
-
-
17,809
-
7916 Jefferson Boulevard
Fullerton, CA
-
5,477
53,890
-
-
54,244
-
1950 Sunny Crest Drive
Gilroy, CA
-
13,880
13,331
-
27,971
-
7610 Isabella Way
Great Falls, MT
-
6,007
-
-
6,131
-
1801 9th Street South
Greenwood, IN
-
8,316
26,384
-
-
26,763
-
1260 Innovation Parkway
Guelph, ON
-
1,190
7,597
-
-
-
-
165 Cole Road
Henderson, NV
-
29,809
-
-
24,506
-
1935 Paseo Verde Parkway
High Point, NC
-
2,659
29,069
-
-
24,246
-
4515 Premier Drive
Houston, TX
-
3,102
32,323
-
-
31,476
-
1900 N Loop W Freeway
Houston, TX
-
5,090
9,471
-
-
7,840
-
15015 Cypress Woods Medical Drive
Hudson, OH
-
2,587
13,720
-
-
11,865
-
5655 Hudson Drive
Hyattsville, MD
-
4,017
2,298
-
-
6,206
-
6500 Riggs Road
Kirkland, WA
24,600
3,450
38,709
-
-
33,598
-
14 Main Street South
Kitchener, ON
-
1,130
9,939
-
-
-
-
20 Fieldgate Street
Kyle, TX
-
2,569
14,384
-
-
13,928
-
135 Bunton Creek Road
Largo, MD
-
3,361
3,623
-
-
6,819
-
600 Largo Road
Las Vegas, NV
-
15,287
-
-
9,765
-
1815 E. Lake Mead Blvd.
Las Vegas, NV
-
-
2,945
-
-
2,945
-
SW corner of Deer Springs Way and Riley Street
Lenexa, KS
-
17,926
-
-
12,460
-
23401 Prairie Star Pkwy
Lenexa, KS
-
13,766
-
-
11,718
-
23351 Prairie Star Parkway
Mechanicsburg, PA
-
1,350
16,650
-
-
1,964
-
4950 Wilson Lane
Melbourne, FL
-
3,439
50,461
-
-
43,431
-
2222 South Harbor City Boulevard
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Buildings & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Buildings & Improvements
Accumulated Depreciation
Year Acquired
Year Built
Address
Assets Held For Sale:
Merriam, KS
-
8,005
-
-
5,235
-
8800 West 75th Street
Merriam, KS
-
-
10,222
-
-
8,218
-
8901 West 74th Street
Merriam, KS
-
1,257
24,911
-
-
18,927
-
9301 West 74th Street
Merrillville, IN
-
-
22,134
-
-
15,000
-
101 E. 87th Ave.
Mesa, AZ
-
1,558
9,561
-
-
7,244
-
6424 East Broadway Road
Morrow, GA
-
8,064
-
-
4,673
-
6635 Lake Drive
Nassau Bay, TX
-
29,947
-
-
14,655
-
18100 St John Drive
Nassau Bay, TX
-
10,613
-
-
5,303
-
2060 Space Park Drive
Needham, MA
-
1,240
32,992
-
-
32,308
-
880 Greendale Avenue
Newburyport, MA
-
1,750
29,187
-
-
29,118
-
4 Wallace Bashaw Junior Way
Niagara Falls, ON
-
1,225
7,963
-
-
-
-
7860 Lundy's Lane
North Cape May, NJ
-
4,203
-
4,431
-
610 Town Bank Road
North Dartmouth, MA
-
1,700
35,337
-
-
35,298
-
239 Cross Road
Oceanside, CA
-
2,160
18,352
-
-
18,111
-
3500 Lake Boulevard
Ogden, UT
-
2,228
-
-
-
-
400 East 5350 South
Palm Springs, FL
-
4,066
-
-
2,061
-
1640 S. Congress Ave.
Palm Springs, FL
-
1,182
7,765
-
-
3,790
-
1630 S. Congress Ave.
Plymouth, MA
12,860
2,550
35,055
-
-
35,551
-
60 Stafford Hill
Portland, ME
-
25,529
-
-
17,783
-
195 Fore River Parkway
Renton, WA
20,790
3,080
51,824
12,281
-
67,185
-
104 Burnett Avenue South
Rexburg, ID
-
1,267
3,213
-
-
-
660 South 2nd West
Roswell, NM
-
5,850
-
-
3,909
-
601 West Country Club Road
Roswell, NM
-
15,984
-
-
11,896
-
350 West Country Club Road
Roswell, NM
-
17,171
-
-
13,361
-
300 West Country Club Road
Sacramento, CA
-
12,756
-
-
7,714
-
8120 Timberlake Way
San Antonio, TX
-
4,518
31,041
-
-
28,015
-
5282 Medical Drive
San Diego, CA
-
-
22,003
-
-
-
-
555 Washington St.
San Diego, CA
-
4,200
30,707
-
-
29,218
-
2567 Second Avenue
San Jose, CA
-
2,850
35,098
-
-
30,088
-
1420 Curvi Drive
Santa Maria, CA
-
6,050
50,658
-
-
44,355
-
1220 Suey Road
Sarasota, FL
-
47,325
-
-
36,149
-
1921 Waldemere Street
Seattle, WA
48,540
6,790
85,369
-
-
73,052
-
5300 24th Avenue NE
Tacoma, WA
17,640
2,400
35,053
-
-
30,014
-
7290 Rosemount Circle
Tacoma, WA
-
1,535
6,068
-
-
6,479
-
7290 Rosemount Circle
Tewksbury, MA
-
2,350
24,118
-
-
25,200
-
2000 Emerald Court
Toronto, ON
-
1,361
2,915
-
-
-
-
3705 Bathurst Street
West Seneca, NY
-
22,435
-
-
16,218
-
550 Orchard Park Rd
Wilkes-Barre, PA
-
2,301
-
-
2,847
-
300 Courtright Street
Assets Held For Sale Total
$
124,430
$
122,167
$
1,511,800
$
29,815
$
-
$
1,253,008
$
-
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Encumbrances
Land
Buildings & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Buildings & Improvements
Accumulated Depreciation
Summary:
Seniors Housing Operating
$
1,990,607
$
1,383,927
$
13,886,675
$
1,879,176
$
1,469,078
$
15,680,700
$
3,194,057
Triple-net
306,038
1,036,151
7,894,992
351,136
1,057,708
8,224,571
1,272,903
Outpatient Medical
572,266
885,789
6,626,075
323,055
959,834
6,875,085
1,248,499
Construction in progress
-
-
507,931
-
-
507,931
-
Total continuing operating properties
2,868,911
3,305,867
28,915,673
2,553,367
3,486,620
31,288,287
5,715,459
Assets held for sale
124,430
122,167
1,511,800
29,815
-
1,253,008
-
Total investments in real property owned
$
2,993,341
$
3,428,034
$
30,427,473
$
2,583,182
$
3,486,620
$
32,541,295
$
5,715,459
(1) Please see Note 2 to our consolidated financial statements for information regarding lives used for depreciation and amortization.
Year Ended December 31,
(in thousands)
Investment in real estate:
Beginning balance
$
33,590,388
$
30,581,948
$
30,041,058
Acquisitions and development
4,807,418
4,598,670
1,276,636
Improvements
328,824
266,183
250,276
Deconsolidation of previously consolidated venture
-
-
(144,897
)
Impairment of assets
(28,074
)
(71,336
)
(101,527
)
Dispositions
(2,673,203
)
(1,330,679
)
(1,203,247
)
Foreign currency translation
187,853
(454,398
)
415,879
Other(1)
(185,291
)
-
47,770
Ending balance(2)
$
36,027,915
$
33,590,388
$
30,581,948
Accumulated depreciation:
Beginning balance
$
5,499,958
$
4,838,370
$
4,093,494
Depreciation and amortization expenses
1,027,073
950,459
921,720
Amortization of above market leases
5,752
6,375
7,303
Disposition and other
(772,273
)
(205,562
)
(192,029
)
Foreign currency translation
(45,051
)
(89,684
)
7,882
Ending balance
$
5,715,459
$
5,499,958
$
4,838,370
(1) 2019 change primarily relates to the adoption of ASC 842 and the 2017 change primarily relates to the acquisition of an asset through foreclosure.
(2) The unaudited aggregate cost for tax purposes for real property equals $30,691,276,000 at December 31, 2019.
Welltower Inc.
Schedule IV - Mortgage Loans on Real Estate
December 31, 2019
(in thousands)
Location
Segment
Interest Rate
Final Maturity Date
Monthly Payment Terms
Prior Liens
Face Amount of Mortgages
Carrying Amount of Mortgages
Principal Amount of Loans Subject to Delinquent Principal or Interest
First mortgages relating to 1 property located in:
California
Triple-net
7.95%
1/1/2022
$
$
-
$
131,100
$
53,071
$
-
United Kingdom
Triple-net
7.25%
3/15/2022
-
27,828
23,788
-
United Kingdom
Triple-net
8.53%
7/7/2021
-
19,904
19,904
-
Pennsylvania
Triple-net
8.72%
3/1/2022
-
15,530
15,108
-
North Carolina
Triple-net
7.83%
12/18/2023
-
30,883
16,259
-
Texas
Outpatient Medical
7.86%
1/19/2025
-
3,740
3,733
-
United Kingdom
Triple-net
8.50%
2/1/2024
-
19,876
13,823
-
Totals
$
-
$
248,861
$
145,686
$
-
Year Ended December 31,
Reconciliation of mortgage loans:
(in thousands)
Balance at beginning of year
$
249,071
$
306,120
$
485,735
Additions:
New mortgage loans
-
25,290
6,706
Draws on existing loans
45,961
36,458
58,224
Total additions
45,961
61,748
64,930
Deductions:
Collections of principal
(87,249
)
(116,905
)
(180,135
)
Loan balance transferred to non real estate loans receivable
(64,040
)
-
-
Change in allowance for loan losses and charge-offs
-
-
(71,535
)
Total deductions
(151,289
)
(116,905
)
(251,670
)
Change in balance due to foreign currency translation
1,944
(1,892
)
7,125
Balance at end of year
$
145,686
$
249,071
$
306,120