Company: HEALTH CARE REIT INC /DE/
CIK: 766704
SIC: 6798
Filing Date: 2014-02-21 00:00:00

ITEM 1 - BUSINESS
Item 1. Business
General
Health Care REIT, Inc. is a real estate investment trust (“REIT”) that has been at the forefront of seniors housing and health care real estate since the company was founded in 1970. We are an S&P 500 company headquartered in Toledo, Ohio. Our portfolio spans the full spectrum of seniors housing and health care real estate, including seniors housing communities, skilled nursing/post-acute facilities, medical office buildings, inpatient and outpatient medical centers and life science facilities. 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. More information is available on the Internet at www.hcreit.com.
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, customer and geographic location.
Depending upon the availability and cost of external capital, we believe our liquidity is sufficient to fund operations, meet debt service obligations (both principal and interest), make dividend distributions and complete construction projects in process. We also continuously evaluate opportunities to finance future investments. New investments are generally funded from temporary borrowings under our primary unsecured line of credit arrangement, internally generated cash and the proceeds from investment dispositions. Our investments generate cash from net operating income and principal payments on loans receivable. Permanent financing for future investments, which replaces funds drawn under our primary unsecured line of credit arrangement, has historically been provided through a combination of the issuance of public debt and equity securities and the incurrence or assumption of secured debt.
References herein to “we,” “us,” “our” or the “Company” refer to Health Care REIT, Inc. 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, 2013.
Property Types
We invest in seniors housing and health care real estate and evaluate our business on three reportable segments: seniors housing triple-net, seniors housing operating, and medical facilities. For additional information regarding our segments, please see Note 17 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 Triple-Net
Our seniors housing triple-net properties include independent living facilities, continuing care retirement communities, assisted living facilities, care homes with and without nursing, Alzheimer’s/dementia facilities, skilled nursing/post-acute facilities and combinations thereof. We invest primarily through acquisitions, development and joint venture partnerships. Our properties are primarily leased to operators under long-term, triple-net master leases. We are not involved in property management. Our properties include stand-alone facilities 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.
Independent Living Facilities. Independent living facilities are age-restricted, multifamily properties with central dining facilities 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, an independent living facility, an assisted living facility and/or a skilled nursing facility 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 Facilities. Assisted living facilities are state regulated rental properties that provide the same services as independent living facilities, 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.
Care Homes (United Kingdom). Care homes, regulated by the Care Quality Commission, are rental properties that provide essentially the same services as U.S. assisted living facilities.
Alzheimer’s/Dementia Care Facilities. Certain assisted living facilities may include state-licensed settings that specialize in caring for those afflicted with Alzheimer’s disease and/or other types of dementia.
Skilled Nursing/Post-Acute Facilities. Skilled nursing/post-acute facilities are licensed daily rate or rental properties where the majority of individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed for Medicaid and/or Medicare reimbursement. All facilities offer some level of rehabilitation services. Some facilities focus on higher acuity patients and offer rehabilitation units specializing in cardiac, orthopedic, dialysis, neurological or pulmonary rehabilitation.
Care Homes with Nursing (United Kingdom). Care homes with nursing facilities are licensed daily rate or rental properties where the majority of individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed for various federal 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 triple-net segment accounted for 28%, 41% and 46% of total revenues (including discontinued operations) for the years ended December 31, 2013, 2012 and 2011, respectively. We lease 177 facilities to Genesis HealthCare, LLC, an operator of skilled nursing/post-acute facilities, pursuant to a long-term, triple-net master lease. 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 the ground leases. All obligations under the master lease have been guaranteed by FC-GEN Operations Investment, LLC. For the year ended December 31, 2013, our lease with Genesis accounted for approximately 34% of our seniors housing triple-net segment revenues and 10% of our total revenues.
Seniors Housing Operating
In addition to the facility types described in “Item 1 - Business - Property Types - Seniors Housing Triple-Net,” our seniors housing operating properties include facilities classified in Canada as independent supportive living facilities.
Independent Supportive Living Facilities (Canada). Independent supportive living facilities are age-restricted, multifamily properties with central dining facilities that provide residents access to meals and other services such as housekeeping, linen service, transportation and social and recreational activities.
Properties are primarily held in consolidated joint venture entities with operating partners. We utilize the structure proposed in the REIT Investment Diversification 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). See Note 18 for more information.
Our seniors housing operating segment accounted for 56%, 37% and 32% of total revenues (including discontinued operations) for the years ended December 31, 2013, 2012 and 2011, respectively. We have relationships with nine operators to own and operate 279 facilities (plus 44 unconsolidated facilities). 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, 2013, our relationship with Sunrise Senior Living accounted for approximately 40% of our seniors housing operating segment revenues and 23% of our total revenues.
Medical Facilities
Our medical facilities include medical office buildings, hospitals and life science facilities. We typically lease our medical office buildings to multiple tenants and provide varying levels of property management. Our hospital investments are typically structured similar to our seniors housing triple-net investments. Our life science investment represents an investment in an unconsolidated joint venture entity (see Note 7 to our consolidated financial statements). Our medical facilities segment accounted for 16%, 22% and 22%
of total revenues (including discontinued operations) for the years ended December 31, 2013, 2012 and 2011, respectively. No single tenant exceeds 20% of segment revenues.
Medical Office Buildings. The medical office building portfolio consists of health care related buildings that generally include physician offices, ambulatory surgery centers, diagnostic facilities, outpatient services and/or labs. Our portfolio has a strong affiliation with health systems. Approximately 93% of our medical office building portfolio is affiliated with health systems (with buildings on hospital campuses or serving as satellite locations for the health system and their physicians).
Hospitals. Our hospitals generally include acute care hospitals, inpatient rehabilitation hospitals, and long-term acute care hospitals. Acute care hospitals provide a wide range of inpatient and outpatient services, including, but not limited to, surgery, rehabilitation, therapy and clinical laboratories. Inpatient rehabilitation hospitals provide inpatient services for patients with intensive rehabilitation needs. Long-term acute care hospitals 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 facilities.
Life Science Facilities. The life science portfolio consists of laboratory and office facilities specifically designed and constructed for use by biotechnology and pharmaceutical companies. These facilities are located adjacent to The Massachusetts Institute of Technology, which is a well-established market known for pharmaceutical and biotechnology research. They are similar to commercial office buildings with advanced HVAC (heating, ventilation and air conditioning), electrical and mechanical systems.
Investments
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. 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. We 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 conduct market research and analysis for all potential investments. In addition, we review the value of all properties, the interest rates and covenant requirements of any facility-level debt to be assumed at the time of the acquisition and the anticipated sources of repayment of any existing debt that is not to be assumed at the time of the acquisition.
We monitor our investments through a variety of methods determined by the type of property. Our proactive and comprehensive 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 actively manages and monitors the medical office building 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. In monitoring our portfolio, our personnel use a proprietary database to collect and analyze property-specific data. Additionally, we conduct extensive research to ascertain industry trends.
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 are generally able 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.
Investment Types
Real Property. Our properties are primarily comprised of land, buildings, improvements and related rights. Our hospitals and seniors housing 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. 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 of 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, 2013, approximately 92% of our hospitals and seniors housing 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. This bundling feature benefits us because the tenant cannot limit the purchase or renewal to the better performing properties and terminate the leasing arrangement with respect to the 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 each of its leases. It is our intent that a tenant 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 medical office building 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, 2013, 76% of our portfolio included leases with full pass through, 20% with a partial expense reimbursement (modified gross) and 4% with no expense reimbursement (gross). Our medical office building leases are non-cancellable operating leases that have a weighted-average remaining term of eight years at December 31, 2013 and are often credit enhanced by security deposits, guaranties and/or letters of credit.
Construction. We occasionally provide for the construction of properties for tenants 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. We also typically charge a transaction fee at the commencement of construction which we defer and amortize to income over the term of the resulting lease. 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 guaranties. At December 31, 2013, we had outstanding construction investments of $141,085,000 and were committed to provide additional funds of approximately $243,083,000 to complete construction for investment properties.
Real Estate Loans. Our real estate loans are typically structured to provide us with interest income, principal amortization and transaction fees and are generally secured by first/second mortgage liens, leasehold mortgages, corporate guaranties and/or personal guaranties. At December 31, 2013, we had outstanding real estate loans of $332,146,000. The interest yield averaged approximately 8.4% per annum on our outstanding real estate loan balances. Our yield on real estate 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 real estate loans outstanding at December 31, 2013 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. Typically, real estate loans are cross-defaulted and cross-collateralized with other real estate loans, operating leases or agreements between us and the obligor and its affiliates.
Investments in Unconsolidated Entities. Our investments in unconsolidated entities generally represent interests ranging from 10% to 50% in real estate assets. Investments in less than majority owned entities are reported under the equity method of accounting when our interests represent either (1) general partnership interests subject to substantive participating or kick-out rights that have been granted to the limited partners, or (2) limited partnership interests with no control over major operating and financial policies of the entities. Under the equity method of accounting, our share of the investee’s earnings or losses is included in our consolidated results of operations. 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. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest or the estimated fair value of the assets prior to the sale of interests in the entity. Other equity investments include an investment in available-for-sale securities. These equity investments represented a minimal ownership interest in these companies. 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. See Note 7 to our consolidated financial statements for more information.
Principles of Consolidation
The consolidated financial statements 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 on a continuous basis. 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, we evaluate the type of rights held by the limited partner(s), which may preclude consolidation in circumstances in which the sole general partner would otherwise consolidate the limited partnership. The assessment of limited partners’ rights and their impact on the presumption of control over a limited partnership by the sole general partner should be made when an investor becomes the sole general partner and should be reassessed if (i) there is a change to the terms or in the exercisability of the rights of the limited partners, (ii) the sole general partner increases or decreases its ownership in the limited partnership interests, or (iii) 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. Our debt and equity levels are determined by management to maintain a conservative credit profile. Generally, we intend to issue unsecured, fixed-rate public debt with long-term maturities to approximate the maturities on our triple-net leases and loans. For short-term purposes, we may borrow on our primary unsecured line of credit arrangement. We replace these borrowings with long-term capital such as senior unsecured notes, common stock or preferred 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 investment structures, underwriting criteria and reputation. 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 new and existing laws and regulations.
The operators/tenants of our properties compete on a local and regional basis with operators/tenants of properties that provide comparable services. 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
Item 1A. Risk Factors
This section discusses the most significant factors that affect our business, operations and financial condition. It does not describe all risks and uncertainties applicable to us, our industry or ownership of our securities. If any of the following risks, as well as other risks and uncertainties that are not yet identified or that we currently think are not material, actually occur, we could be materially adversely affected. In that event, the value of our securities could decline.
We group these risk factors into three categories:
• Risks arising from our business;
• Risks arising from our capital structure; and
• 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. 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 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.
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 its 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 disputes and could have an adverse impact on the operations and profitability of the joint venture; and that our partner may be in a position to take action or withhold consent contrary to our instructions or requests. In addition, our ability to transfer our interest in a joint venture to a third party may be restricted. In some instances, we and/or our partner may have the right to trigger a buy-sell arrangement, which could cause us to sell our interest, or acquire our partner’s interest, 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. 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.
Decreases in our operators’ revenues or increases in our operators’ expenses could affect our operators’ ability to make payments to us
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.
The continued weakened economy may also have an adverse effect on our operators and tenants, including their ability to access credit or maintain occupancy and/or private pay rates. If the operations, cash flows or financial condition of our operators are materially adversely impacted by economic conditions, our revenue and operations may be adversely affected.
Increased competition 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. 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. Our operators are expected to encounter increased competition in the future that could limit their ability to attract residents or expand their businesses.
The insolvency or bankruptcy of our obligors may adversely affect our business, results of operations and financial condition
We are exposed to the risk that our obligors may not be able to meet the rent, principal and interest or other payments due us, which may result in an obligor bankruptcy or insolvency, or that an 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. An 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.
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. 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 (1) the proceeds of sales of our securities, (2) principal payments on our loans receivable and (3) 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 re-invest these proceeds in a timely manner. We compete for real estate investments with a broad variety of potential investors. This competition for attractive investments may negatively affect our ability to make timely investments on terms acceptable to us.
Failure to properly manage our rapid growth could distract our management or increase our expenses
We have experienced rapid growth and development in a relatively short period of time and expect to continue this rapid growth in the future. This growth has resulted in increased levels of responsibility for our management. Future property acquisitions could place significant additional demands on, and require us to expand, our management, resources and personnel. Our failure to manage any such rapid growth effectively could harm our business and, in particular, our financial condition, results of operations and cash flows, which could negatively affect our ability to make distributions to stockholders. Our growth could also increase our capital requirements, which may require us to issue potentially dilutive equity securities and incur additional debt.
We depend on Genesis HealthCare, LLC (“Genesis”) for a significant portion of our revenues and any inability or unwillingness by Genesis to satisfy its obligations under its agreements with us could adversely affect us
The properties we lease to Genesis account for a significant portion of our revenues, and because our leases with Genesis are triple-net leases, we also depend on Genesis to pay all insurance, taxes, utilities and maintenance and repair expenses in connection with the leased properties. We cannot assure you that Genesis will have sufficient assets, income and access to financing to enable it to make rental payments to us or to otherwise satisfy its obligations under our leases, and any inability or unwillingness by Genesis to do so could have an adverse effect on us. Genesis has also agreed to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with its business, and we cannot assure you that Genesis will have sufficient assets, income, access to financing and insurance coverage to enable it to satisfy its indemnification obligations.
The properties managed by Sunrise Senior Living, LLC account for a significant portion of our revenues and operating income and any adverse developments in its business or financial condition could adversely affect us
Sunrise Senior Living, LLC manages our entire Sunrise property portfolio, which as of December 31, 2013, consisted of 125 seniors housing properties. These properties account for a significant portion of our revenues, and we rely on Sunrise Senior Living, LLC to manage these properties efficiently and effectively. Any adverse developments in Sunrise Senior Living, LLC’s business or financial condition could impair its ability to manage our properties efficiently and effectively, which could adversely affect us.
Ownership of property outside the United States may subject us to different or greater risks than those associated with our domestic operations
We have operations in Canada and the United Kingdom. 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 may not qualify under the 75% gross income test or the 95% gross income test that we must satisfy annually in order to qualify and maintain our status as a REIT; challenges with respect to the repatriation of foreign earnings and cash; changes in foreign political, regulatory, and economic conditions, including regionally, nationally, and locally; 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 legal proceedings; foreign ownership restrictions with respect to operations in countries; differences in lending practices and the willingness of domestic or foreign lenders to provide financing; regional or country-specific business cycles and economic instability; and failure to comply with applicable laws and regulations in the United States 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.
We do not know if our tenants will renew their existing leases, and if they do not, we may be unable to lease the properties on as 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 operators’ may not have the necessary insurance coverage to insure adequately against losses
In recent years, skilled nursing and seniors housing operators 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 property operators’ future operations, cash flows and financial condition, and may have a material adverse effect on the property operators’ 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. 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 or Medicaid, 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) 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. 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. See “Item 1 - Business - Certain Government Regulations - United States - Reimbursement” above.
The Patient Protection and Affordable Care Act of 2010, as modified by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Health Reform Laws”), provides 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. On June 28, 2012, the United States Supreme Court upheld the individual mandate of the Health Reform Laws but partially invalidated the expansion of Medicaid. The ruling on Medicaid expansion allows states to elect not to participate in the expansion-and to forego funding for the Medicaid expansion-without losing their existing Medicaid funding. Given that the federal government substantially funds the Medicaid expansion, it is unclear how many states will ultimately pursue this option, although, as of late January 2014, roughly half of the states have made statements or otherwise indicated that they do not intend to expand Medicaid coverage at this time. 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. While the federal government will pay for approximately 100% of those additional costs from 2014 to 2016, states will be expected to pay for part of those additional costs beginning in 2017. In light of this, at least one state that has passed legislation to allow the state to expand its Medicaid coverage has included sunset provisions in the legislation that require that the expanded benefits be reduced or eliminated if the federal government’s funding for the program is decreased or eliminated, permitting the state to re-visit the issue once it begins to share financial responsibility for the expansion. With increasingly strained budgets, it is unclear how states that do not include such sunset provisions will pay their share of these additional Medicaid costs and what other health care expenditures could be reduced as a result. A significant reduction in other health care related spending by states to pay for increased Medicaid costs could affect our tenants’ revenue streams. See “Item 1 - Business - Certain Government Regulations - United States - Reimbursement” above and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Health Care Industry - Health Reform Laws” below.
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.
Our operators’ or tenants’ failure to comply with federal, state, 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 varying levels of federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards. 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, loss of license or closure of the facility. Such actions may have an effect on our operators’ or tenants’ ability to make lease payments to us and, therefore, adversely impact us. See “Item 1 - Business - Certain Government Regulations - United States - Other Related Laws” above.
Many of our properties may require a license, registration, and/or certificate of need (“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 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.
Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties
Real estate investments are relatively illiquid. Our ability to quickly sell or exchange any of our properties in response to changes in 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 for liquidity reasons. 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.
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 may be directly involved in a number of legal proceedings, lawsuits and other claims. We may also be 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. An unfavorable resolution of pending or future litigation 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 and significantly divert the attention of management. 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.
Development, redevelopment and construction risks could affect our profitability
At any given time, we may be in the process of constructing one or more new facilities that ultimately will 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.
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. 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.
We may experience losses caused by severe weather conditions or natural disasters, which could result in an increase of our or our tenants’ cost of insurance, 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 continually 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. 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. 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. 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.
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 federal and state 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. 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, and other electronic security breaches. Such cyber attacks can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated security threats. 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. Cybersecurity incidents could disrupt our business and compromise the confidential information of our employees, operators and tenants.
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.
Our success depends on key personnel whose continued service is not guaranteed
We are dependent on key personnel. Although we have entered into employment agreements with our executive officers, losing any one of them could, at least temporarily, have an adverse impact on our operations. We believe that losing more than one could have a material adverse impact on our business.
Risks Arising from Our Capital Structure
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, or (4) negatively affect our credit ratings or outlook by one or more of the rating agencies.
We are subject to covenants in our debt agreements that may restrict or limit our operations and acquisitions and our failure to comply with the covenants in our debt agreements could have a material adverse impact 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 impact 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 capital stock and the credit ratings of our debt securities; the financial stability of our lenders, which might impair their ability to meet their commitments to us or their willingness to make additional loans to us; changes in the credit ratings on U.S. government debt securities; or default or delay in payment by the United States of its obligations. 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.
Also, the federal government’s failure to increase the amount of debt that it is statutorily permitted to incur as needed to meet its future financial commitments or a downgrade in the debt rating on U.S. government securities could lead to a weakened U.S.
dollar, rising interest rates and constrained access to capital, which could materially adversely affect the U.S. and global economies, increase our costs of borrowing and have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.
Downgrades in our credit ratings could have a material adverse impact 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 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.
Fluctuations in the value of foreign currencies could adversely affect our results of operations and financial position
As we expand our operations internationally, currency exchange rate fluctuations could affect our results of operations and financial position. We expect to generate an increasing portion of our revenue and expenses in such foreign currencies as the Canadian dollar and the British pound. 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 swap agreements may not effectively reduce our exposure to changes in interest rates or foreign currency exchange rates
We enter into swap agreements from time to time to manage some of our exposure to interest rate and foreign currency exchange rate volatility. These swap agreements involve risks, such as the risk that counterparties may fail to honor their obligations under these arrangements. 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 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 could be subject to the federal alternative minimum tax and possibly 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 would 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. See “Item 1 - Business - Taxation - Federal Income Tax Considerations” above for a discussion of the provisions of the Code that apply to us and the effects of failure to qualify as a REIT.
In addition, if we fail to qualify as a REIT, all distributions to stockholders would 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 (currently at a maximum rate of 20%) 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 continue to qualify or remain qualified as a REIT for U.S. federal income tax purposes. See “Item 1 - Business - Taxation - Federal Income Tax Considerations” above.
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. See “Item 1 - Business - Taxation - Federal Income Tax Considerations - Qualification as a REIT - Annual Distribution Requirements” above. 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, or we may decide to retain cash or distribute such greater amount as may be necessary to avoid income and excise taxation. 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, 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 another transaction intended to enable us to meet the REIT distribution requirements. This may require us to raise additional capital to meet our obligations.
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 arms-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. See “Item 1 - Business - Taxation - Federal Income Tax Considerations - Qualification as a REIT - Income Tests” above.
If certain sale-leaseback transactions are not characterized by the Internal Revenue Service 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 Internal Revenue Service 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 Internal Revenue Service, 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. See “Item 1 - Business - Taxation - Federal Income Tax Considerations - Qualification as a REIT - Asset Tests” and “Item 1 - Business - Taxation - Federal Income Tax Considerations - Qualification as a REIT - Income Tests” above. 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. See “Item 1 - Business - Taxation - Federal Income Tax Considerations - Qualification as a REIT - Annual Distribution Requirements” above.

ITEM 1B - UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments
None.

ITEM 2 - PROPERTIES
Item 2. Properties
We own our corporate headquarters located at 4500 Dorr Street, Toledo, Ohio 43615. We also lease corporate offices in Florida, California and the United Kingdom 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, 2013 (dollars in thousands and annualized revenues adjusted for timing of investment):
Seniors Housing Triple-Net
Seniors Housing Operating
Property Location
Number of Properties
Total Investment
Annualized Revenues
Number of Properties
Total Investment
Annualized Revenues
Alabama
$
37,961
$
3,743
-
$
-
$
-
Arizona
19,004
2,197
64,572
21,052
California
312,429
31,421
1,413,141
349,086
Colorado
56,162
7,949
146,083
37,454
Connecticut
179,166
18,442
331,236
111,660
District of Columbia
-
-
-
70,486
12,830
Delaware
155,422
16,082
22,412
5,194
Florida
639,702
51,479
-
-
-
Georgia
158,816
13,646
108,685
28,974
Idaho
16,791
1,966
-
-
-
Illinois
313,466
26,038
462,724
89,186
Indiana
191,627
23,048
-
-
-
Iowa
49,469
4,140
35,111
5,808
Kansas
154,261
15,484
75,527
15,946
Kentucky
51,561
8,688
42,652
11,291
Louisiana
4,418
1,401
56,439
11,119
Maine
-
-
-
56,524
17,440
Maryland
419,066
33,834
88,065
29,355
Massachusetts
424,115
50,648
552,519
128,889
Michigan
120,125
10,678
120,062
26,459
Minnesota
37,761
3,825
123,640
23,705
Mississippi
31,965
3,354
-
-
-
Missouri
29,812
2,860
118,877
16,753
Montana
6,698
-
-
-
Nebraska
36,124
4,067
-
-
-
Nevada
81,238
10,216
11,630
8,845
New Hampshire
178,146
19,739
82,988
17,609
New Jersey
1,243,478
103,450
257,834
61,838
New Mexico
-
-
-
19,823
New York
208,437
16,415
322,064
66,096
North Carolina
267,645
31,298
44,353
6,825
Ohio
221,837
30,786
198,411
20,608
Oklahoma
106,898
10,491
39,470
2,480
Oregon
3,522
-
-
-
Pennsylvania
789,684
80,745
87,127
34,665
Rhode Island
46,401
5,100
72,114
21,759
South Carolina
269,647
21,459
-
-
-
Tennessee
194,981
27,213
52,091
13,985
Texas
415,404
49,368
312,150
69,281
Utah
6,025
17,496
10,030
Vermont
26,950
2,969
28,735
7,072
Virginia
92,491
10,253
39,267
9,664
Washington
388,347
38,533
279,480
46,114
West Virginia
381,196
41,890
-
-
-
Wisconsin
197,222
20,680
-
-
-
Total domestic
8,565,470
858,177
5,753,788
1,339,738
Canada
-
-
-
1,294,716
235,744
England
350,701
25,329
1,372,594
252,954
Total international
350,701
25,329
2,667,310
488,698
Grand total
$
8,916,171
$
883,506
$
8,421,098
$
1,828,436
Medical Facilities
Property Location
Number of Properties
Total Investment
Annualized Revenues
Alabama
$
32,971
$
5,838
Alaska
24,152
3,239
Arizona
75,278
9,233
Arkansas
27,023
3,103
California
519,765
59,042
Florida
453,554
47,154
Georgia
182,762
22,771
Idaho
18,679
1,768
Illinois
52,129
7,193
Indiana
129,308
15,061
Iowa
-
Kansas
77,519
11,837
Kentucky
26,912
3,242
Louisiana
19,416
1,925
Maine
23,985
2,903
Maryland
20,620
2,199
Massachusetts
16,311
Michigan
17,617
1,978
Minnesota
120,571
14,350
Missouri
190,277
19,546
Nebraska
144,864
16,626
Nevada
71,168
6,392
New Jersey
274,287
42,580
New Mexico
37,707
3,629
New York
69,852
7,734
North Carolina
62,089
6,575
Ohio
111,656
15,388
Oklahoma
35,752
4,024
Oregon
10,510
1,266
Pennsylvania
16,936
3,197
South Carolina
17,056
1,669
Tennessee
83,893
10,038
Texas
820,795
89,119
Virginia
77,293
10,118
Washington
174,234
15,402
Wisconsin
305,656
31,788
Total
$
4,342,952
$
498,616
The following table sets forth occupancy, coverages and average annualized revenues for certain property types (excluding investments in unconsolidated entities):
Occupancy(1)
Coverages(1,2)
Average Annualized Revenues(3)
Seniors housing triple-net(4)
88.5%
89.9%
1.32x
1.34x
$
14,864
$
14,509
per unit
Skilled nursing/post-acute(4)
87.7%
87.4%
1.71x
1.75x
11,429
11,681
per bed
Seniors housing operating(5)
90.7%
92.3%
n/a
n/a
50,849
54,183
per unit
Hospitals(4)
60.7%
60.3%
2.42x
2.40x
49,710
49,244
per bed
Medical office buildings(6)
94.5%
94.4%
n/a
n/a
per sq. ft.
(1) We use unaudited, periodic financial information provided solely by tenants/borrowers to calculate occupancy and coverages for properties other than medical office buildings and have not independently verified the information.
(2) Represents the ratio of our triple-net customers' earnings before interest, taxes, depreciation, amortization, rent and management fees to contractual rent or interest due us. Data reflects the 12 months ended September 30 for the periods presented.
(3) Represents annualized revenues divided by total beds, units or square feet as presented in the tables above.
(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 for seniors housing operating represents average occupancy for the three months ended December 31.
(6) Medical office building occupancy represents the percentage of total rentable square feet leased and occupied (including month-to-month and holdover leases and excluding terminations and discontinued operations) as of December 31.
The following table sets forth information regarding lease expirations for certain portions of our portfolio as of December 31, 2013 (dollars in thousands):
Expiration Year
Thereafter
Seniors housing triple-net:
Properties
Base rent(1)
$
28,262
$
1,435
$
$
16,569
$
37,398
$
$
13,356
$
34,960
$
40,709
$
5,772
$
680,021
% of base rent
3.3%
0.2%
0.0%
1.9%
4.4%
0.0%
1.6%
4.1%
4.7%
0.7%
79.2%
Units
1,993
1,732
3,151
3,587
5,463
47,480
% of units
3.1%
0.1%
0.0%
2.7%
4.9%
0.0%
1.4%
5.5%
8.4%
0.6%
73.3%
Hospitals:
Properties
Base rent(1)
$
$
$
$
$
$
$
$
$
$
1,979
$
88,564
% of base rent
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
2.2%
97.8%
Beds
1,957
% of beds
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
3.0%
97.0%
Medical office buildings:
Square feet
648,545
628,099
773,210
1,132,963
832,602
836,755
819,606
919,190
1,952,434
927,007
2,872,383
Base rent(1)
$
13,782
$
14,057
$
15,216
$
26,577
$
19,060
$
16,968
$
19,388
$
22,292
$
39,407
$
22,098
$
75,656
% of base rent
4.8%
4.9%
5.4%
9.3%
6.7%
6.0%
6.8%
7.8%
13.9%
7.8%
26.6%
Leases
% of leases
10.8%
12.7%
11.5%
13.8%
11.4%
8.2%
5.7%
6.9%
8.1%
3.9%
7.0%
(1) The most recent monthly base rent including straight line for leases with fixed escalators or annual cash rents with contingent escalators. Base rent does not include tenant recoveries or amortization of above and below market lease intangibles.

ITEM 3 - LEGAL PROCEEDINGS
Item 3. Legal Proceedings
From time to time, there are various legal proceedings pending to which we are a party or to which some of our properties are subject arising in the normal course of business. We do not believe that the ultimate resolution of these proceedings will have a material adverse effect on our consolidated financial position or results of operations.
In August 2012, we entered into a merger agreement with Sunrise Senior Living, Inc. (“Sunrise”). Following the announcement of the merger agreement, complaints were filed in the U.S. District Court for the Eastern District of Virginia and the Chancery Court for the State of Delaware challenging the merger. The complaints challenged the merger on behalf of a putative class of Sunrise public stockholders, and named as defendants Sunrise, its directors and us. The complaints generally alleged that the individual defendants breached their fiduciary duties in connection with the merger and that the entity defendants aided and abetted that breach. The complaint filed in the U.S. District Court for the Eastern District of Virginia additionally alleged that the preliminary proxy statement filed with the Securities and Exchange Commission by Sunrise failed to provide material information in violation of Sections 14(a) and 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder. The complaints sought, among other things, injunctive relief against the merger, unspecified damages and an award of plaintiffs’ expenses, including attorneys’ fees. On January 9, 2013, we completed our acquisition of the Sunrise property portfolio. Please see Note 3 to our consolidated financial statements for additional information.
On October 24, 2013, the parties entered into a Stipulation of Settlement and Release that settled the lawsuits subject to the approval of the U.S. District Court for the Eastern District of Virginia and the Chancery Court for the State of Delaware, respectively. On January 24, 2014, the U.S. District Court for the Eastern District of Virginia approved the Stipulation of Settlement and Release and dismissed the lawsuit with prejudice, and, on February 6, 2014, the Chancery Court for the State of Delaware approved the plaintiffs’ voluntarily dismissal of the lawsuit with prejudice.

ITEM 4 - RESERVED
Item 4. Mine Safety Disclosures
None.
PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
There were 4,944 stockholders of record as of January 31, 2014. The following table sets forth, for the periods indicated, the high and low prices of our common stock on the New York Stock Exchange (NYSE:HCN), and common dividends paid per share:
Sales Price
Dividends
High
Low
Paid
First Quarter
$
67.92
$
60.78
$
0.765
Second Quarter
80.07
61.62
0.765
Third Quarter
68.79
58.16
0.765
Fourth Quarter
66.76
52.43
0.765
First Quarter
$
57.66
$
53.26
$
0.740
Second Quarter
58.34
52.40
0.740
Third Quarter
62.80
56.48
0.740
Fourth Quarter
61.33
56.88
0.740
Our Board of Directors has approved a new quarterly cash dividend rate of $0.795 per share of common stock per quarter, commencing with the February 2014 dividend. The declaration and payment of quarterly dividends remains subject to the review and approval of the Board of Directors.
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, 2013, 140 companies comprised the FTSE NAREIT Equity Index. The Index 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. 2008 equals $100 and dividends are assumed to be reinvested.
12/31/08
12/31/09
12/31/10
12/31/11
12/31/12
12/31/13
S & P 500
100.00
126.46
145.51
148.59
172.37
228.19
Health Care REIT, Inc.
100.00
112.86
129.03
156.48
184.98
169.41
FTSE NAREIT Equity
100.00
127.99
163.78
177.36
209.39
214.56
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.
On October 15, 2013, we issued 116,618 shares of our common stock to a principal of a national medical office partner upon conversion of such principal’s 116,618 shares of our 6% Series H Cumulative Convertible and Redeemable Preferred Stock (the “Series H Preferred Stock”). These shares were issued without registration in reliance upon the federal statutory exemption of Section 4(2) of the Securities Act of 1933, as amended, upon conversion by the principal of his shares of Series H Preferred Stock, which were originally issued as partial consideration for an acquisition by us, in accordance with the terms of the Certificate of Designation for the Series H Preferred Stock.
On December 3, 2013, we issued 29,094 shares of our common stock to a principal of a national medical office partner upon exercise of such principal’s stock options. These shares were issued without registration in reliance upon the federal statutory exemption of Section 4(2) of the Securities Act of 1933, as amended, upon exercise by the principal of his stock options, which were originally issued as partial consideration for an acquisition by us, in accordance with the terms of a stock option agreement between the principal and us.
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, 2013 through October 31, 2013
-
$
-
November 1, 2013 through November 30, 2013
-
-
December 1, 2013 through December 31, 2013
53.57
Totals
$
53.57
(1) During the three months ended December 31, 2013, 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
Item 6. Selected Financial Data
The following selected financial data for the five years ended December 31, 2013 are derived from our audited consolidated financial statements (in thousands, except per share data):
Year Ended December 31,
Operating Data
Revenues(1)
$
425,541
$
559,491
$
1,313,182
$
1,805,044
$
2,880,608
Expenses(1)
322,929
526,515
1,200,979
1,619,132
2,778,363
Income from continuing operations before income taxes and income (loss) from unconsolidated entities
102,612
32,976
112,203
185,912
102,245
Income tax expense
(168)
(364)
(1,388)
(7,612)
(7,491)
Income (loss) from unconsolidated entities
-
6,673
5,772
2,482
(8,187)
Income from continuing operations
102,444
39,285
116,587
180,782
86,567
Income from discontinued operations, net(1)
90,483
89,599
96,129
114,058
51,713
Net income
192,927
128,884
212,716
294,840
138,280
Preferred stock dividends
22,079
21,645
60,502
69,129
66,336
Preferred stock redemption charge
-
-
-
6,242
-
Net income (loss) attributable to noncontrolling interests
(342)
(4,894)
(2,415)
(6,770)
Net income attributable to common stockholders
$
171,190
$
106,882
$
157,108
$
221,884
$
78,714
Other Data
Average number of common shares outstanding:
Basic
114,207
127,656
173,741
224,343
276,929
Diluted
114,612
128,208
174,401
225,953
278,761
Per Share Data
Basic:
Income from continuing operations attributable to common stockholders
$
0.71
$
0.14
$
0.35
$
0.48
$
0.10
Discontinued operations, net
0.79
0.70
0.55
0.51
0.19
Net income attributable to common stockholders *
$
1.50
$
0.84
$
0.90
$
0.99
$
0.28
Diluted:
Income from continuing operations attributable to common stockholders
$
0.70
$
0.13
$
0.35
$
0.48
$
0.10
Discontinued operations, net
0.79
0.70
0.55
0.50
0.19
Net income attributable to common stockholders *
$
1.49
$
0.83
$
0.90
$
0.98
$
0.28
Cash distributions per common share
$
2.72
$
2.74
$
2.835
$
2.96
$
3.06
* Amounts may not sum due to rounding
(1) We have reclassified the income and expenses attributable to properties sold prior to or held for sale at December 31, 2013, to discontinued operations for all periods presented. See Note 5 to our consolidated financial statements.
December 31,
Balance Sheet Data
Net real estate investments
$
6,080,620
$
8,590,833
$
13,942,350
$
17,423,009
$
21,680,221
Total assets
6,367,186
9,451,734
14,924,606
19,549,109
23,083,957
Total long-term obligations
2,414,022
4,469,736
7,240,752
8,531,899
10,652,014
Total liabilities
2,559,735
4,714,081
7,612,309
8,993,998
11,292,587
Total preferred stock
288,683
291,667
1,010,417
1,022,917
1,017,361
Total equity
3,807,451
4,733,100
7,278,647
10,520,519
11,756,331

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
EXECUTIVE SUMMARY
Company Overview
Business Strategy
Capital Market Outlook
Key Transactions in 2013
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 Triple-net
Senior Housing Operating
Medical Facilities
Non-Segment/Corporate
NON-GAAP FINANCIAL MEASURES & OTHER
FFO Reconciliation
Adjusted EBITDA Reconciliation
NOI Reconciliation
Health Care Industry
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 Health Care REIT, Inc. 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
Health Care REIT, Inc. is a real estate investment trust (“REIT”) that has been at the forefront of seniors housing and health care real estate since the company was founded in 1970. We are an S&P 500 company headquartered in Toledo, Ohio. Our portfolio spans the full spectrum of seniors housing and health care real estate, including seniors housing communities, skilled nursing/post-acute facilities, medical office buildings, inpatient and outpatient medical centers and life science facilities. 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 as of December 31, 2013:
Investments
Percentage of
Number of
Type of Property
(in thousands)
Investments
Properties
Seniors housing triple-net
$
8,916,171
41.2%
Seniors housing operating(1)
8,421,098
38.8%
Medical facilities(2)
4,342,952
20.0%
Totals
$
21,680,221
100.0%
1,142
(1) Excludes 44 properties with an investment amount of $389,418,000 which relates to our share of investments in unconsolidated entities with Chartwell and Sunrise. Please see Note 7 to our consolidated financial statements for additional information.
(2) Excludes 13 properties with an investment amount of $364,643,000 which relates to our share of investments in unconsolidated entities with Forest City and a strategic medical partnership. Please see Note 7 to our consolidated financial statements for additional information.
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 and 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 customers/partners experience operating difficulties and become unable to generate sufficient cash to make payments 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 proactive and comprehensive 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 actively manages and monitors the medical office building 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. In monitoring our portfolio, our personnel use a proprietary database to collect and analyze property-specific data. Additionally, we conduct extensive research to ascertain industry trends. 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 are generally able 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 structure our investments to help mitigate payment risk. Operating leases and loans are normally credit enhanced by guaranties 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.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
For the year ended December 31, 2013, rental income, resident fees and services and interest and other income represented 43%, 56%, and 1% respectively, of total revenues (including discontinued operations). 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.
Our primary sources of cash include rent and interest receipts, resident fees and services, borrowings under our primary unsecured line of credit arrangement, 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 primary unsecured line of credit arrangement, internally generated cash and the proceeds from investment dispositions. Our investments generate cash from net operating income and principal payments on loans receivable. Permanent financing for future investments, which generally replaces funds drawn under our primary unsecured line of credit arrangement, 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 possible 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 primary unsecured line of credit arrangement. At December 31, 2013, we had $158.8 million of cash and cash equivalents, $72.8 million of restricted cash and $2.1 billion of available borrowing capacity under our primary unsecured line of credit arrangement.
Capital Market Outlook
The capital markets remain supportive of our investment strategy. For the year ended December 31, 2013, we raised over $3.7 billion in aggregate gross proceeds through the issuance of common stock and unsecured debt. The capital raised, in combination with available cash and borrowing capacity under our primary unsecured line of credit arrangement, supported $5.7 billion in gross new investments for the year. We expect attractive investment opportunities to remain available in the future as we continue to leverage the benefits of our relationship investment strategy.
Key Transactions in 2013
Capital. In January 2013, we closed a $2.75 billion unsecured line of credit arrangement consisting of a $2.25 billion revolver and a $500 million term loan. The facility replaced our existing $2.0 billion unsecured line of credit arrangement. The revolver matures on March 31, 2017, but can be extended for an additional year at our option. The term loan matures on March 31, 2016, but can be extended up to two years at our option. The revolver bears interest at LIBOR plus 117.5 basis points and has an annual facility fee of 22.5 basis points. The term loan, which was fully drawn as of December 31, 2013, bears interest at LIBOR plus 135 basis points. We have an option to upsize the facility by up to an additional $1.0 billion through an accordion feature, allowing for aggregate commitments of up to $3.75 billion. The facility also allows us to borrow up to $500 million in certain alternative currencies. In May 2013, we completed the public issuance of 23 million shares of common stock for approximately $1.7 billion of gross proceeds. In October 2013, we issued $400 million of 4.5% 10-year senior unsecured notes, generating approximately $393 million of net proceeds. In November 2013, we issued £550 million of 4.8% 15-year senior unsecured notes, generating approximately $868 million of net proceeds. In addition, for the year ended December 31, 2013, we raised $215 million through our dividend reinvestment program.
Investments. We completed $5.7 billion of gross investments during the year, including 73% from existing relationships. The following summarizes investments made during the year ended December 31, 2013 (dollars in thousands):
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Properties
Investment Amount(1)
Capitalization Rates(2)
Book Amount(3)
Acquisitions/JVs:
Seniors housing triple-net
$
321,147
7.0%
$
321,195
Seniors housing operating
4,684,917
6.6%
5,290,392
Medical facilities
270,690
7.6%
276,087
Total acquisitions/JVs
5,276,754
6.7%
5,887,674
Construction in progress
273,012
273,012
Loan advances(4)
120,909
120,909
Total
$
5,670,675
$
6,281,595
(1) Represents stated purchase price including cash and any assumed debt but excludes fair value adjustments pursuant to U.S. GAAP.
(2) Represents annualized contractual or projected income to be received in cash divided by investment amounts.
(3) Represents amounts recorded on our books including fair value adjustments pursuant to U.S. GAAP. See Notes 3, 6 and 7 to our consolidated financial statements for additional information.
(4) Excludes $580,834,000 in advances under the Sunrise loan which was acquired upon merger consummation on January 9, 2013. See Note 3 to our consolidated financial statements for additional information.
Dispositions. We completed $519 million of dispositions during the year, generating $579 million in proceeds and $49 million in net gains. The following summarizes dispositions made during the year ended December 31, 2013 (dollars in thousands):
Properties
Proceeds(1)
Capitalization Rates(2)
Book Amount(3)
Property sales:
Seniors housing triple-net
$
242,385
9.8%
$
189,572
Medical facilities
255,692(4)
6.4%
259,367
Total property sales
498,077
8.1%
448,939
Loan payoffs(5)
69,596
69,596
Total dispositions
$
567,673
$
518,535
(1) Represents proceeds received upon disposition including any seller financing. See Notes 5 and 6 to our consolidated financial statements for additional information.
(2) Represents annualized contractual 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.
(4) Includes non-cash proceeds attributable to an asset swap that are excluded from the statement of cash flows. See Note 5 to our consolidated financial statements for additional information.
(5) Excludes $580,834,000 for the Sunrise loan which was acquired upon merger consummation on January 9, 2013.
Dividends. Our Board of Directors increased the annual cash dividend to $3.18 per common share ($0.795 per share quarterly), as compared to $3.06 per common share for 2013, beginning in February 2014. The dividend declared for the quarter ended December 31, 2013 represents the 171st 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 attributable to common stockholders (“NICS”) is the most appropriate earnings measure. Other useful supplemental measures of our operating performance include funds from operations (“FFO”), net operating income from continuing operations (“NOI”) and same store cash NOI (“SSCNOI”); however, these supplemental measures are not defined by U.S. generally accepted accounting principles (“U.S. GAAP”). Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliations of FFO, NOI and SSCNOI. These earnings measures and their relative per share amounts are widely used by investors and analysts in the valuation, comparison and investment recommendations of
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
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 attributable to common stockholders
$
157,108
$
221,884
$
78,714
Funds from operations
524,902
697,557
924,884
Net operating income from continuing operations
938,118
1,237,055
1,673,795
Same store cash net operating income
524,995
539,554
547,340
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. 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 compliance with our debt covenants. The coverage ratios are based on adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) which is discussed in further detail, and reconciled to net income, below in “Non-GAAP Financial 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:
Year Ended December 31,
Debt to book capitalization ratio
50%
45%
48%
Debt to undepreciated book capitalization ratio
46%
41%
43%
Debt to market capitalization ratio
38%
33%
39%
Adjusted interest coverage ratio
3.02x
3.31x
3.23x
Adjusted fixed charge coverage ratio
2.37x
2.58x
2.56x
Concentration Risk. We evaluate our concentration risk in terms of asset mix, investment mix, relationship mix and geographic mix. Concentration risk is a valuable measure in understanding what portion of our investments could be at risk if certain sectors were to experience downturns. Asset mix measures the portion of our investments that are real property. In order to qualify as an equity REIT, at least 75% of our real estate investments must be real property whereby each property, which includes the land, buildings, improvements, intangibles and related rights, is owned by us. Investment mix measures the portion of our investments that relate to our various property types. Relationship mix measures the portion of our investments that relate to our top five relationships. Geographic mix measures the portion of our investments that relate to our top five states (or international equivalents). The following table reflects our recent historical trends of concentration risk by investment balance for the periods presented:
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
December 31,
Asset mix:
Real property
95%
91%
95%
Real estate loans receivable
2%
5%
1%
Investments in unconsolidated entities
3%
4%
4%
Investment mix:(1)
Seniors housing triple-net
54%
47%
41%
Seniors housing operating
20%
28%
39%
Medical facilities
26%
25%
20%
Relationship mix:(1)
Sunrise Senior Living
6%
19%
Genesis HealthCare
18%
15%
12%
Revera
5%
Benchmark Senior Living
6%
5%
4%
Belmont Village
5%
4%
Merrill Gardens
8%
6%
Brandywine Senior Living
5%
Senior Living Communities
4%
Remaining customers
59%
63%
56%
Geographic mix:(1)
California
10%
9%
10%
New Jersey
10%
9%
8%
England
8%
Texas
7%
9%
7%
Florida
7%
7%
5%
Pennsylvania
5%
Massachusetts
6%
Remaining
60%
61%
62%
(1) Excludes our share of investments in unconsolidated entities.
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” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” 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.hcreit.com.
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 rent and interest receipts, resident fees and services, borrowings under our primary unsecured line of credit arrangement, 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 (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December,
December,
December,
$
%
$
%
$
%
Beginning cash and cash equivalents
$
131,570
$
163,482
$
31,912
24%
$
1,033,764
$
870,282
532%
$
902,194
686%
Cash provided from (used in):
Operating activities
588,224
818,133
229,909
39%
988,497
170,364
21%
400,273
68%
Investing activities
(4,520,129)
(3,592,979)
927,150
-21%
(3,531,593)
61,386
-2%
988,536
-22%
Financing activities
3,963,817
3,645,128
(318,689)
-8%
1,667,670
(1,977,458)
-54%
(2,296,147)
-58%
Effect of foreign currency translation on cash and cash equivalents
n/a
n/a
n/a
Ending cash and cash equivalents
$
163,482
$
1,033,764
$
870,282
532%
$
158,780
$
(874,984)
-85%
$
(4,702)
-3%
Operating Activities. The change in net cash provided from operating activities is primarily attributable to increases in NOI which is primarily due to acquisitions. Please see “Results of Operations” for further discussion. For the years ended December 31, 2011, 2012 and 2013, cash flows from operations exceeded cash distributions to stockholders.
Investing Activities. The changes in net cash used in investing activities are primarily attributable to acquisitions, real estate loans receivable and investments in unconsolidated entities which are summarized above in “Key Transactions in 2013.” Please refer to Notes 3, 6 and 7 of our consolidated financial statements for additional information. The following is a summary of non-acquisition capital improvements (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
New development
$
301,604
$
286,410
$
(15,194)
-5%
$
247,560
$
(38,850)
-14%
$
(54,044)
-18%
Recurring capital expenditures, tenant improvements and lease commissions
36,073
45,175
9,102
25%
60,984
15,809
35%
24,911
69%
Renovations, redevelopments and other capital improvements
53,174
90,275
37,101
70%
74,848
(15,427)
-17%
21,674
41%
Total
$
390,851
$
421,860
$
31,009
8%
$
383,392
$
(38,468)
-9%
$
(7,459)
-2%
The decrease in new development is primarily due to a decline in the number of properties under construction (resulting from completed properties being placed into service), which is partially offset by new construction starts. The increase in recurring capital expenditures, tenant improvements and lease commissions is primarily due to acquisitions. 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. Generally, these expenditures have increased as a result of acquisitions. The decrease during the year ended December 31, 2013 is attributable to a lower volume of acquisitions in our medical facilities segment.
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 in 2013.” Please refer to Notes 9, 10 and 13 of our consolidated financial statements for additional information.
Off-Balance Sheet Arrangements
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
At December 31, 2013, we had investments in unconsolidated entities with our ownership ranging from 10% to 50%. Please see Note 7 to our consolidated financial statements for additional information. We use financial derivative instruments to hedge interest rate exposure. Please see Note 11 to our consolidated financial statements for additional information. At December 31, 2013, we had five outstanding letter of credit obligations. Please see Note 12 to our consolidated financial statements for additional information.
Contractual Obligations
The following table summarizes our payment requirements under contractual obligations as of December 31, 2013 (in thousands):
Payments Due by Period
Contractual Obligations
Total
2015-2016
2017-2018
Thereafter
Unsecured line of credit arrangements
$
130,000
$
$
$
130,000
$
Senior unsecured notes and term loans(1)
7,421,707
1,185,029
1,400,000
4,836,678
Secured debt(1)
3,414,103
401,847
946,795
834,334
1,231,127
Contractual interest obligations
4,211,314
487,530
874,794
672,428
2,176,562
Capital lease obligations
117,118
5,392
17,889
9,411
84,426
Operating lease obligations
881,694
14,117
28,227
28,510
810,840
Purchase obligations
308,299
162,049
146,250
Other long-term liabilities
7,673
3,069
4,604
Total contractual obligations
$
16,491,908
$
1,070,935
$
3,198,984
$
3,077,752
$
9,144,237
(1) Amounts represent principal amounts due and do not reflect unamortized premiums/discounts or other fair value adjustments as reflected on the balance sheet.
At December 31, 2013, we had an unsecured line of credit arrangement with an aggregate commitment amount of $2,250,000,000. See Note 9 to our consolidated financial statements for additional information. Total contractual interest obligations on this arrangement totaled $5,662,000, using the interest rate in place at that date.
We have $5,775,108,000 of senior unsecured notes principal outstanding with interest payable semi-annually at fixed annual interest rates, ranging from 2.25% to 6.5%. Of these notes, a total of $275,108,000 are convertible notes that also contain put features. In addition, during the year ended December 31, 2013, we issued £550,000,000 (approximately $911,570,000 based on the Sterling/U.S. Dollar exchange rate on December 31, 2013) of 4.80% senior unsecured notes due 2028 generating net proceeds of $891,418,000. We also entered into a $500,000,000 unsecured term loan during the year ended December 31, 2013 that matures on March 16, 2016 and can be extended for two additional years at our option. Furthermore, we have a $250,000,000 Canadian denominated unsecured term loan (approximately $235,029,000 based on the Canadian/U.S. Dollar exchange rate on December 31, 2013.) The loan matures on July 27, 2015 and includes an option to extend for an additional year at our discretion. Please see Note 10 to our consolidated financial statements for additional information. Total contractual interest obligations on all senior unsecured notes and the term loans totaled $3,260,135,000 at December 31, 2013.
We have consolidated secured debt with total outstanding principal of $3,010,711,000, collateralized by owned properties, with annual interest rates ranging from 1.0% to 8.0%, payable monthly. The carrying values of the properties securing the debt totaled $6,243,475,000 at December 31, 2013. Total contractual interest obligations on consolidated secured debt totaled $880,164,000 at December 31, 2013. Our share of non-recourse secured debt associated with unconsolidated entities (as reflected in the contractual obligations table above) is $403,392,000 at December 31, 2013. Our share of contractual interest obligations on our unconsolidated entities’ secured debt is $65,353,000 at December 31, 2013.
At December 31, 2013, we had operating lease obligations of $881,694,000 relating primarily to ground leases at certain of our properties and office space leases and capital lease obligations of $117,118,000 relating to certain lease investment properties that contain bargain purchase options.
Purchase obligations include unfunded construction commitments and contingent purchase obligations. At December 31, 2013, we had outstanding construction financings of $141,085,000 for leased properties and were committed to providing additional financing of approximately $243,083,000 to complete construction. At December 31, 2013, we had contingent purchase obligations totaling $65,217,000. These contingent purchase obligations relate to unfunded capital improvement obligations and contingent obligations on acquisitions. Upon funding, amounts due from the tenant are increased to reflect the additional investment in the property.
Other long-term liabilities relate to our Supplemental Executive Retirement Plan, which is discussed in Note 19 to our consolidated financial statements.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
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 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, 2013, we were in compliance with all of the covenants under our debt agreements. Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion. None of our debt agreements contain provisions for acceleration which could be triggered by our debt ratings. However, under our primary unsecured line of credit arrangement, the ratings on our senior unsecured notes are used to determine the fees and interest charged. A summary of certain covenants and our results as of and for the year ended December 31, 2013 is as follows:
Per Agreement
Covenant
Unsecured Line of Credit(1)
Senior Unsecured Notes
Actual At December 31, 2013
Total Indebtedness to Book Capitalization Ratio maximum:
60%
n/a
48%
Secured Indebtedness to Total Assets Ratio maximum:
30%
40%
13%
Total Indebtedness to Total Assets maximum:
n/a
60%
46%
Unsecured Debt to Unencumbered Assets maximum:
60%
n/a
42%
Adjusted Interest Coverage Ratio minimum:
n/a
1.50x
3.23x
Adjusted Fixed Charge Coverage minimum:
1.50x
n/a
2.56x
(1) Canadian denominated term loan covenants are the same as those contained in our primary unsecured line of credit agreement.
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 4, 2012, we filed an open-ended automatic or “universal” shelf registration statement with the Securities and Exchange Commission covering an indeterminate amount of future offerings of debt securities, common stock, preferred stock, depositary shares, warrants and units. As of January 31, 2014, we had an effective registration statement on file in connection with our enhanced dividend reinvestment plan under which we may issue up to 10,000,000 shares of common stock. As of January 31, 2014, 7,084,703 shares of common stock remained available for issuance under this registration statement. We have entered into separate Equity Distribution Agreements with each of UBS Securities LLC, RBS Securities Inc., KeyBanc Capital Markets Inc. and Credit Agricole Securities (USA) Inc. relating to the offer and sale from time to time of up to $630,015,000 aggregate amount of our common stock (“Equity Shelf Program”). As of January 31, 2014, we had $457,112,000 of remaining capacity under the Equity Shelf Program. Depending upon market conditions, we anticipate issuing securities under our registration statements to invest in additional properties and to repay borrowings under our unsecured line of credit arrangements.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
Our primary sources of revenue include rent, resident fees and services, and interest income. Our primary expenses include interest expense, depreciation and amortization, property operating expenses, transaction costs and general and administrative expenses. These revenues and expenses are reflected in our Consolidated Statements of Comprehensive Income and are discussed in further detail below. The following is a summary of our results of operations (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 attributable to common stockholders
$
157,108
$
221,884
$
64,776
41%
$
78,714
$
(143,170)
-65%
$
(78,394)
-50%
Funds from operations
524,902
697,557
172,655
33%
924,884
227,327
33%
399,982
76%
Adjusted EBITDA
971,525
1,264,091
292,566
30%
1,503,715
239,624
19%
532,190
55%
Net operating income from continuing operations
938,118
1,237,055
298,937
32%
1,673,795
436,740
35%
735,677
78%
Same store cash NOI
524,995
539,554
14,559
3%
547,340
7,786
1%
22,345
4%
Per share data (fully diluted):
Net income attributable to common stockholders
$
0.90
$
0.98
$
0.08
9%
$
0.28
$
(0.70)
-71%
$
(0.62)
-69%
Funds from operations
3.01
3.09
0.08
3%
3.32
0.23
7%
0.31
10%
Adjusted interest coverage ratio
3.02x
3.31x
0.29x
10%
3.19x
-0.12x
-4%
0.17x
6%
Adjusted fixed charge coverage ratio
2.37x
2.58x
0.21x
9%
2.52x
-0.06x
-2%
0.15x
6%
The following table represents the changes in outstanding common stock for the period from January 1, 2011 to December 31, 2013 (in thousands):
Year Ended
December 31, 2011
December 31, 2012
December 31, 2013
Totals
Beginning balance
147,097
192,275
260,374
147,097
Public offerings
41,400
64,400
23,000
128,800
Dividend reinvestment plan issuances
2,534
2,136
3,430
8,100
Equity shelf program issuances
-
-
Senior note conversions
-
1,040
2,028
Preferred stock conversions
-
-
Issuances in acquisitions of noncontrolling interests
-
-
1,109
1,109
Option exercises
Other, net
Ending balance
192,275
260,374
289,564
289,564
Average number of shares outstanding:
Basic
173,741
224,343
276,929
Diluted
174,401
225,953
278,761
We evaluate our business and make resource allocations on our three business segments: seniors housing triple-net, seniors housing operating and medical facilities. The primary performance measures for our properties are NOI and SSCNOI, which are discussed below. Please see Note 17 to our consolidated financial statements for additional information.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Seniors Housing Triple-net
The following is a summary of our NOI for the seniors housing triple-net segment (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
SSCNOI(1)
$
306,957
$
313,698
$
6,741
2%
$
319,469
$
5,771
2%
$
12,512
4%
Non-cash NOI attributable to same store properties(1)
10,736
7,079
(3,657)
-34%
8,987
1,908
27%
(1,749)
-16%
NOI attributable to non same store properties(2)
260,577
390,111
129,534
50%
475,274
85,163
22%
214,697
82%
NOI
$
578,270
$
710,888
$
132,618
23%
$
803,730
$
92,842
13%
$
225,460
39%
(1) Due to increases in cash and non-cash revenues (described below) related to 279 same store properties.
(2) Primarily due to acquisitions of properties, which totaled 184, 51 and 19 for the years ended December 31, 2011, 2012 and 2013, respectively, the transition of 38 properties from our seniors housing operating segment on September 1, 2013 and conversions of construction projects into revenue-generating properties, which totaled seven, 11 and eight for the years ended December 31, 2011, 2012 and 2013, respectively.
The following is a summary of our results of operations for the seniors housing triple-net segment (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
$
537,581
$
684,097
$
146,516
27%
$
780,785
$
96,688
14%
$
243,204
45%
Interest income
34,068
24,380
(9,688)
-28%
21,512
(2,868)
-12%
(12,556)
-37%
Other income
6,620
2,412
(4,208)
-64%
1,434
(978)
-41%
(5,186)
-78%
Net operating income from continuing operations (NOI)
578,269
710,889
132,620
23%
803,731
92,842
13%
225,462
39%
Expenses:
Interest expense
(2,802)
1,745
4,547
n/a
23,322
21,577
1237%
26,124
-932%
Loss (gain) on derivatives, net
-
n/a
4,877
4,781
4980%
4,877
n/a
Depreciation and amortization
155,797
200,899
45,102
29%
228,523
27,624
14%
72,726
47%
Transaction costs
27,993
35,705
7,712
28%
24,350
(11,355)
-32%
(3,643)
-13%
Loss (gain) on extinguishment of debt, net
-
2,405
2,405
n/a
(2,365)
-98%
n/a
Provision for loan losses
-
27,008
27,008
n/a
2,110
(24,898)
-92%
2,110
n/a
180,988
267,858
86,870
48%
283,222
15,364
6%
102,234
56%
Income from continuing operations before income taxes and income (loss) from unconsolidated entities
397,281
443,031
45,750
12%
520,509
77,478
17%
123,228
31%
Income tax expense
(143)
(2,852)
(2,709)
1894%
(1,606)
1,246
-44%
(1,463)
1023%
Income (loss) from unconsolidated entities
(9)
(33)
(24)
267%
5,035
5,068
-15358%
5,044
-56044%
Income from continuing operations
397,129
440,146
43,017
11%
523,938
83,792
19%
126,809
32%
Discontinued operations:
Gain (loss) on sales of properties, net
59,108
116,838
57,730
98%
52,813
(64,025)
-55%
(6,295)
-11%
Impairment of assets
(1,103)
(14,699)
(13,596)
1233%
-
14,699
-100%
1,103
-100%
Income from discontinued operations, net
44,114
38,806
(5,308)
-12%
1,380
(37,426)
-96%
(42,734)
-97%
Discontinued operations, net
102,119
140,945
38,826
38%
54,193
(86,752)
-62%
(47,926)
-47%
Net income
499,248
581,091
81,843
16%
578,131
(2,960)
-1%
78,883
16%
Less: Net income attributable to noncontrolling interests
97%
1,476
1,047
244%
1,258
577%
Net income attributable to common stockholders
$
499,030
$
580,662
$
81,632
16%
$
576,655
$
(4,007)
-1%
$
77,625
16%
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
The increase in rental income is primarily attributable to the acquisitions of new properties, the transition of 38 properties from our seniors housing operating segment and the conversion of newly constructed seniors housing triple-net properties from which we receive rent. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index 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 Consumer Price Index do not increase, a portion of our revenues may not continue to increase. Sales of real property would offset revenue increases and, to the extent that they exceed new acquisitions, could result in decreased revenues. 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, 2013, we had no lease renewals but we had nine leases with rental rate increasers ranging from 0.08% to 0.30% in our seniors housing triple-net portfolio. The decrease in interest income is attributable to loan payoffs (see Note 6 to our consolidated financial statements for additional information).
During the year ended December 31, 2013, we completed eight seniors housing triple-net construction projects representing $133,181,000 or $171,403 per bed/unit plus expansion projects totaling $26,395,000. The following is a summary of seniors housing triple-net construction projects pending as of December 31, 2013 (dollars in thousands):
Location
Units/Beds
Commitment
Balance
Est. Completion
The Villages, FL
$
8,650
$
8,284
1Q14
Moorestown, NJ
31,500
24,808
2Q14
Gambrills, MD
19,700
15,711
2Q14
Burleson, TX
13,900
6,530
3Q14
Frederick, MD
19,000
7,036
4Q14
Upper Providence, PA
29,030
6,039
4Q14
Piscataway, NJ
30,600
10,358
1Q15
Haddonfield, NJ
18,815
2,968
1Q15
Mahwah, NJ
29,045
2,441
1Q15
Total
$
191,590
$
84,175
Total interest expense for the years ended December 31, 2013, 2012 and 2011 represents $25,394,000, $13,572,000 and $15,296,000, respectively, of secured debt interest expense offset by interest allocated to discontinued operations in the amounts of $2,072,000, $11,827,000 and $18,098,000 for the years ended December 31, 2013, 2012 and 2011, respectively. The change in secured debt interest expense is due to the net effect and timing of assumptions, segment transitions, extinguishments and principal amortizations. The following is a summary of our seniors housing triple-net secured debt principal activity (dollars in thousands):
Year Ended
Year Ended
Year Ended
December 31, 2011
December 31, 2012
December 31, 2013
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
172,862
5.265%
$
259,000
5.105%
$
218,741
5.393%
Debt transitioned
-
0.000%
-
0.000%
367,997
5.298%
Debt issued
-
0.000%
9,387
4.080%
13,800
5.480%
Debt assumed
90,120
4.819%
83,002
5.304%
9,578
5.582%
Debt extinguished
-
0.000%
(128,818)
4.743%
(16,482)
3.304%
Principal payments
(3,982)
5.556%
(3,830)
5.556%
(6,498)
5.698%
Ending balance
$
259,000
5.105%
$
218,741
5.393%
$
587,136
5.394%
Monthly averages
$
234,392
5.141%
$
216,314
5.254%
$
339,129
5.394%
In connection with secured debt extinguishments, we recognized losses of $2,405,000 and $40,000 during the years ended December 31, 2012 and 2013, respectively. The decrease in loss on debt extinguishment is attributable to the decreased volume of debt payoffs. Derivative losses during the year ended December 31, 2013 were incurred in conjunction with certain foreign currency forward exchange contracts related to properties acquired in the United Kingdom. Please refer to Note 11 to our consolidated financial statements for further discussion.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Depreciation and amortization increased primarily as a result of new property acquisitions and the conversions of newly constructed properties. To the extent that we acquire or dispose of additional properties in the future, our provision for depreciation and amortization will change accordingly.
Transaction costs represent costs incurred with property acquisitions (including due diligence costs, fees for legal and valuation services, and termination of pre-existing relationships computed based on the fair value of the assets acquired), lease termination fees and other similar costs.
Changes in gains on sales of properties are related to property sales which totaled 39, 73 and 24 for the years ended December 31, 2011, 2012 and 2013, respectively. We recognized impairment losses on certain held-for-sale properties in prior years as the fair value less estimated costs to sell exceeded our carrying values. Please refer to Note 5 to our consolidated financial statements for further discussion. The following illustrates the reclassification impact as a result of classifying the properties sold prior to or held for sale at December 31, 2013 as discontinued operations for the periods presented (dollars in thousands):
Year Ended December 31,
Rental income
$
84,736
$
63,984
$
7,889
Expenses:
Interest expense
18,098
11,827
2,072
Provision for depreciation
22,524
13,351
4,437
Income (loss) from discontinued operations, net
$
44,114
$
38,806
$
1,380
We did not record any provision for loan loss or have any loan write-offs for seniors housing triple-net investments during the year ended December 31, 2011. During the year ended December 31, 2012, we wrote off one loan totaling $27,008,000, which was attributable to a loan related to an entrance fee community. During the year ended December 31, 2013, we wrote off one loan totaling $2,110,000, which was attributable to one loan related to an active adult community. The provision for loan losses is related to our critical accounting estimate for the allowance for loan losses and is discussed in “Critical Accounting Policies” and Note 6 to our consolidated financial statements.
A portion of our seniors housing triple-net properties were formed through partnerships. Income 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.
Seniors Housing Operating
The following is a summary of our NOI for the seniors housing operating segment (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
SSCNOI(1)
$
33,763
$
39,111
$
5,348
16%
$
40,953
$
1,842
5%
$
7,190
21%
NOI attributable to non same store properties(2)
108,180
192,913
84,733
78%
487,210
294,297
153%
379,030
350%
NOI
$
141,943
$
232,024
$
90,081
63%
$
528,163
$
296,139
128%
$
386,220
272%
(1) Due to increases in cash revenues (described below) related to 27 same store properties.
(2) Primarily due to acquisitions of properties, which totaled 58, 80 and 162 for the years ended December 31, 2011, 2012 and 2013, respectively, and the transition of 38 properties to our seniors housing triple-net segment on September 1, 2013.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
The following is a summary of our results of operations for the seniors housing operating segment (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
$
456,085
$
697,494
$
241,409
53%
$
1,616,290
$
918,796
132%
$
1,160,205
254%
Interest income
-
6,208
6,208
n/a
(5,451)
n/a
n/a
Other income
-
-
-
n/a
n/a
n/a
456,085
703,702
247,617
54%
1,617,402
913,700
130%
1,161,317
255%
Property operating expenses
314,142
471,678
157,536
50%
1,089,239
617,561
131%
775,097
247%
Net operating income from continuing operations (NOI)
141,943
232,024
90,081
63%
528,163
296,139
128%
386,220
272%
Other expenses:
Interest expense
46,342
67,524
21,182
46%
92,148
24,624
36%
45,806
99%
Loss (gain) on derivatives, net
-
(1,921)
(1,921)
n/a
(407)
1,514
n/a
(407)
n/a
Depreciation and amortization
138,192
165,798
27,606
20%
478,007
312,209
188%
339,815
246%
Transaction costs
36,328
12,756
(23,572)
-65%
107,066
94,310
739%
70,738
195%
Loss (gain) on extinguishment of debt, net
(979)
(2,697)
(1,718)
175%
(3,372)
(675)
25%
(2,393)
n/a
219,883
241,460
21,577
10%
673,442
431,982
179%
453,559
206%
(Loss) income from continuing operations before income from unconsolidated entities
(77,940)
(9,436)
68,504
-88%
(145,279)
(135,843)
1440%
(67,339)
86%
Income tax expense
-
(1,086)
(1,086)
n/a
(5,337)
(4,251)
n/a
(5,337)
n/a
(Loss) income from unconsolidated entities
(1,531)
(6,364)
(4,833)
316%
(22,695)
(16,331)
257%
(21,164)
n/a
Net income (loss)
(79,471)
(16,886)
62,585
-79%
(173,311)
(156,425)
926%
(93,840)
118%
Less: Net income (loss) attributable to noncontrolling interests
(6,006)
(3,015)
2,991
-50%
(8,639)
(5,624)
187%
(2,633)
44%
Net income (loss) attributable to common stockholders
$
(73,465)
$
(13,871)
$
59,594
-81%
(164,672)
(150,801)
1087%
(91,207)
124%
Fluctuations in revenues and property operating expenses are primarily a result of acquisitions subsequent to January 1, 2011. Interest income relates to the Sunrise loan funded during the three months ended December 31, 2012 and acquired in January 2013 (please refer to Note 6 to our consolidated financial statements for additional information). The fluctuations in depreciation and amortization are due to the net impact of 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. Loss from unconsolidated entities during the year ended December 31, 2013 is primarily attributable to depreciation and amortization of short-lived intangible assets related to our joint ventures with Chartwell and Sunrise described in Note 7 to our consolidated financial statements.
Interest expense represents secured debt interest expense as well as interest expense related to our $250,000,000 Canadian-denominated unsecured term loan and our £550,000,000 Sterling-denominated senior unsecured notes due 2028. Please refer to Note 10 to our consolidated financial statements for additional information. The following is a summary of our seniors housing operating property secured debt principal activity (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, 2011
December 31, 2012
December 31, 2013
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
487,706
5.939%
$
1,318,599
4.665%
$
1,369,526
4.874%
Debt issued
114,903
5.779%
148,031
4.220%
75,408
4.891%
Debt assumed
780,955
4.269%
115,371
5.512%
1,228,706
4.063%
Debt extinguished
(55,317)
5.949%
(193,962)
4.395%
(548,876)
3.597%
Debt transitioned
-
0.000%
-
0.000%
(367,997)
5.298%
Foreign currency
-
0.000%
5.624%
(10,361)
4.013%
Principal payments
(9,648)
5.474%
(18,700)
4.850%
(31,692)
4.643%
Ending balance
$
1,318,599
4.665%
$
1,369,526
4.874%
$
1,714,714
4.622%
Monthly averages
$
969,265
5.679%
$
1,366,758
4.866%
$
1,723,122
4.820%
In connection with secured debt extinguishments, we recognized gains of $979,000, $2,697,000, and $3,332,000 during the years ended December 31, 2011, 2012, and 2013, respectively. The increase in gains on debt extinguishment is primarily attributable to the increased volume of extinguishments. Derivative gains relate to foreign currency forward exchange contracts entered into in conjunction with international investments made during the years ended December 31, 2012 and 2013, respectively. Please refer to Note 11 to our consolidated financial statements for further discussion.
Transaction costs represent costs incurred with property acquisitions (including due diligence costs, fees for legal and valuation services, and termination of pre-existing relationships computed based on the fair value of the assets acquired), lease termination fees and other similar costs. The increase in transaction costs relates to the increased number of acquisitions during the year ended December 31, 2013. The majority of our seniors housing operating properties are formed through partnership interests. Net income attributable to noncontrolling interests represents our partners’ share of net income or loss related to those partnerships where we are the controlling partner.
Medical Facilities
The following is a summary of our NOI for the medical facilities segment (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
SSCNOI(1)
$
184,275
$
186,745
$
2,470
1%
$
186,918
$
0%
$
2,643
1%
Non-cash NOI attributable to same store properties(1)
7,771
6,372
(1,399)
-18%
4,169
(2,203)
-35%
(3,602)
-46%
NOI attributable to non same store properties(2)
25,170
100,113
74,943
298%
150,518
50,405
50%
125,348
498%
NOI
$
217,216
$
293,230
$
76,014
35%
$
341,605
$
48,375
16%
$
124,389
57%
(1) Due to increases in cash and non-cash revenues (described below) related to 130 same store properties.
(2) Primarily due to acquisitions of properties, which totaled 35, 34 and 13 for the years ended December 31, 2011, 2012 and 2013, respectively, and conversions of construction projects into revenue-generating properties, which totaled seven, five and seven for the years ended December 31, 2011, 2012 and 2013, respectively.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
The following is a summary of our results of operations for the medical facilities segment (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
$
267,151
$
379,117
$
111,966
42%
$
446,804
$
67,687
18%
$
179,653
67%
Interest income
7,002
8,477
1,475
21%
10,394
1,917
23%
3,392
48%
Other income
3,985
1,947
(2,038)
-51%
1,981
2%
(2,004)
-50%
278,138
389,541
111,403
40%
459,179
69,638
18%
181,041
65%
Property operating expenses
60,922
96,311
35,389
58%
117,574
21,263
22%
56,652
93%
Net operating income from continuing operations (NOI)
217,216
293,230
76,014
35%
341,605
48,375
16%
124,389
57%
Other expenses:
Interest expense
18,557
28,878
10,321
56%
36,823
7,945
28%
18,266
98%
Depreciation and amortization
92,489
139,523
47,034
51%
159,270
19,747
14%
66,781
72%
Transaction costs
5,903
13,148
7,245
123%
1,985
(11,163)
-85%
(3,918)
-66%
Loss (gain) on extinguishment of debt, net
-
(483)
(483)
n/a
-
n/a
n/a
Provision for loan losses
2,010
-
(2,010)
-100%
-
n/a
(2,010)
n/a
118,959
181,066
62,107
52%
198,078
17,012
9%
79,119
67%
Income from continuing operations before income taxes and income (loss) from unconsolidated entities
98,257
112,164
13,907
14%
143,527
31,363
28%
45,270
46%
Income tax expense
(361)
(2,381)
(2,020)
560%
(481)
1,900
-80%
(120)
33%
Income (loss) from unconsolidated entities
7,312
8,879
1,567
21%
9,473
7%
2,161
30%
Income from continuing operations
105,208
118,662
13,454
13%
152,519
33,857
29%
47,311
45%
Discontinued operations:
Gain (loss) on sales of properties, net
2,052
(16,289)
(18,341)
n/a
(3,675)
12,614
-77%
(5,727)
-279%
Impairment of assets
(11,091)
(14,588)
(3,497)
32%
-
14,588
-100%
11,091
-100%
Income (loss) from discontinued operations, net
3,049
3,990
31%
1,195
(2,795)
-70%
(1,854)
-61%
Discontinued operations, net
(5,990)
(26,887)
(20,897)
349%
(2,480)
24,407
-91%
3,510
-59%
Net income (loss)
99,218
91,775
(7,443)
-8%
150,039
58,264
63%
50,821
51%
Less: Net income (loss) attributable to noncontrolling interests
(723)
-81%
130%
(501)
-56%
Net income (loss) attributable to common stockholders
$
98,324
$
91,604
$
(6,720)
-7%
$
149,646
$
58,042
63%
$
51,322
52%
The increase in rental income is primarily attributable to the acquisitions of new properties and the conversion of newly constructed medical facility properties from which we receive rent. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index. 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 Consumer Price Index does not increase, a portion of our revenues may not continue to increase. Sales of real property would offset revenue increases and, to the extent that they exceed new acquisitions, could result in decreased revenues. 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, 2013, our consolidated medical office building portfolio signed 74,027 square feet of new leases and 144,436 square feet of renewals. The weighted-average term of these leases was five years, with a rate of $22.45 per square foot and tenant improvement and lease commission costs of $15.04 per square foot. Substantially all of these leases during the referenced quarter contain an annual fixed or contingent escalation rent structure ranging from the change in CPI to 4%. For the three months ended December 31, 2013, there were no lease renewals and no leases with a rental rate increaser in our hospital portfolio. The increase in interest income is attributable to higher real estate loans receivable.
During the year ended December 31, 2013, we completed seven medical office building construction projects representing $127,363,000 or $278 per square foot. The following is a summary of medical office building construction projects pending as of
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
December 31, 2013 (dollars in thousands):
Location
Square Feet
Commitment
Balance
Est. Completion
Coon Rapids, MN
115,108
$
27,282
$
13,715
1Q14
Lenexa, KS
75,126
16,463
7,948
1Q14
Clear Lake, TX
54,713
14,750
3,410
2Q14
Burnsville, MN
123,857
36,087
10,556
3Q14
Humble, TX
36,475
10,885
1,881
3Q14
Bettendorf, IA
40,493
7,562
4Q14
Shenandoah, TX
80,085
24,600
4,738
1Q15
Total
525,857
$
137,629
$
42,603
Total interest expense for the years ended December 31, 2013, 2012 and 2011 represents $38,997,000, $38,786,000 and $31,477,000, respectively, of secured debt interest expense offset by interest allocated to discontinued operations in the amounts of $2,174,000, $9,908,000 and $12,920,000 for the years ended December 31, 2013, 2012 and 2011, respectively. The change in secured debt interest expense is primarily due to the net effect and timing of assumptions, extinguishments and principal amortizations. The following is a summary of our medical facility secured debt principal activity (dollars in thousands):
Year Ended
Year Ended
Year Ended
December 31, 2011
December 31, 2012
December 31, 2013
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
463,477
5.286%
$
520,066
5.981%
$
713,720
5.950%
Debt assumed
69,779
5.921%
246,371
5.888%
52,574
6.126%
Debt extinguished
-
0.000%
(37,622)
5.858%
(49,017)
5.357%
Principal payments
(13,190)
6.208%
(15,095)
6.180%
(16,850)
6.193%
Ending balance
$
520,066
5.981%
$
713,720
5.950%
$
700,427
5.999%
Monthly averages
$
489,923
6.179%
$
669,753
5.952%
$
708,107
5.956%
In connection with secured debt extinguishments, we recognized gains of $483,000 during the year ended December 31, 2012. During the year ended December 31, 2013, we did not recognize gain or loss, as the debt extinguishments related to contractual debt maturities.
The increases in property operating expenses and depreciation and amortization are primarily attributable to acquisitions and construction conversions of new medical facilities for which we incur certain property operating expenses offset by discontinued operations.
Transaction costs represent costs incurred with property acquisitions (including due diligence costs, fees for legal and valuation services, and termination of pre-existing relationships computed based on the fair value of the assets acquired) and other similar costs. The fluctuations in transaction costs are primarily due to acquisition volume fluctuations in the relevant years.
During the year ended December 31, 2011, we recorded $2,010,000 of provision for loan losses, which is primarily attributable to the write-off of a hospital loan.
Income from unconsolidated entities includes our share of net income related to our joint venture investment with Forest City Enterprises and certain unconsolidated property investments related to our strategic joint venture relationship with a national medical office building company. See Note 7 to our consolidated financial statements for additional information.
Changes in gains/losses on sales of properties is related to property sales which totaled three, 20 and 24 for the years ended December 31, 2011, 2012 and 2013, respectively. We recognized impairment losses on certain held for sale properties in prior years as the fair value less estimated costs to sell exceeded our carrying values. Please refer to Note 5 to our consolidated financial statements for further discussion. The following illustrates the reclassification impact as a result of classifying the properties sold prior to or held for sale at December 31, 2013 as discontinued operations for the periods presented (dollars in thousands):
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Year Ended December 31,
Rental income
$
39,377
$
32,394
$
10,488
Expenses:
Interest expense
12,920
9,908
2,174
Property operating expenses
8,806
4,482
3,396
Provision for depreciation
14,602
14,014
3,723
Income (loss) from discontinued operations, net
$
3,049
$
3,990
$
1,195
A portion of our medical facility properties were formed through partnerships. 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
$
$
$
32%
$
$
(616)
-68%
$
(394)
-57%
Expenses:
Interest expense
228,884
263,418
34,534
15%
306,067
42,649
16%
77,183
34%
General and administrative
77,201
97,341
20,140
26%
108,318
10,977
11%
31,117
40%
Loss (gain) on extinguishments of debt, net
-
-
n/a
2,423
2,423
n/a
2,423
n/a
306,085
360,759
54,674
18%
416,808
56,049
16%
110,723
36%
Loss from continuing operations before income taxes
(305,395)
(359,847)
(54,452)
18%
(416,512)
(56,665)
16%
(111,117)
36%
Income tax expense
(884)
(1,293)
(409)
46%
(67)
1,226
-95%
-92%
Net loss
(306,279)
(361,140)
(54,861)
18%
(416,579)
(55,439)
15%
(110,300)
36%
Preferred stock dividends
60,502
69,129
8,627
14%
66,336
(2,793)
-4%
5,834
10%
Preferred stock redemption charge
-
6,242
6,242
n/a
-
(6,242)
-100%
-
n/a
Net loss attributable to common stockholders
$
(366,781)
$
(436,511)
$
(69,730)
19%
$
(482,915)
$
(46,404)
11%
$
(116,134)
32%
Other income primarily represents income from non-real estate activities such as interest earned on temporary investments of cash reserves. The following is a summary of our non-segment/corporate interest expense (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
$
222,559
$
249,564
$
27,005
12%
$
279,617
$
30,053
12%
$
57,058
26%
Secured debt
(47)
-8%
(62)
-11%
(109)
-18%
Unsecured lines of credit
7,917
11,769
3,852
49%
15,498
3,729
32%
7,581
96%
Capitalized interest
(13,164)
(9,777)
3,387
-26%
(6,700)
3,077
-31%
6,464
-49%
Interest SWAP savings
(161)
(96)
-40%
(14)
-85%
-91%
Loan expense
11,129
11,401
2%
17,171
5,770
51%
6,042
54%
Totals
$
228,884
$
263,418
$
34,534
15%
$
306,067
$
42,649
16%
$
77,183
34%
The change in interest expense on senior unsecured notes is due to the net effect of issuances and extinguishments, excluding our $250,000,000 Canadian-denominated unsecured term loan and our £550,000,000 Sterling-denominated senior unsecured notes due 2028, both of which are in our seniors housing operating segment. Please refer to Note 10 to our consolidated financial statements for additional information. We capitalize certain interest costs associated with funds used for the construction of properties owned directly by us. The amount capitalized is based upon the balances outstanding during the construction period using the rate of interest
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
that approximates our cost of financing. Our interest expense is reduced by the amount capitalized. The decrease in capitalized interest is due to both a decrease in construction fundings and a decline in our weighted-average cost of financing. Please see Note 11 to our consolidated financial statements for a discussion of our interest rate swap agreements and their impact on interest expense. Loan expense represents the amortization of deferred loan costs incurred in connection with the issuance and amendments of debt. Loan expense changes are due to amortization of charges for costs incurred in connection with senior unsecured note issuances. The change in interest expense on the unsecured line of credit arrangements is due primarily to the net effect and timing of draws, paydowns and variable interest rate changes. Please refer to Note 9 of our consolidated financial statements for additional information regarding our unsecured line of credit arrangements.
General and administrative expenses as a percentage of consolidated revenues (including revenues from discontinued operations) for the years ended December 31, 2013, 2012 and 2011 were 3.74%, 5.12% and 5.37%, respectively. The increase in general and administrative expenses is primarily related to costs associated with our initiatives to attract and retain appropriate personnel to achieve our business objectives. The decline in percent of revenue is primarily related to the increasing revenue base as a result of our acquisitions. The loss on extinguishment of debt is due to the redemption of convertible senior notes. Please see Note 13 to our consolidated financial statements for additional information. The changes in preferred stock dividends and redemption charge are primarily attributable to the net effect of issuances, redemptions and conversions. Please see Note 13 to our consolidated financial statements for additional information.
Non-GAAP Financial Measures
We believe that net income, as defined by U.S. GAAP, is the most appropriate earnings measurement. However, we consider FFO to be a useful supplemental measure 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 FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO, as defined by NAREIT, means net income attributable to common stockholders, 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.
Net operating income from continuing operations (“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 seniors housing operating and medical facility properties. These expenses include, but are not limited to, property-related payroll and benefits, property management fees, marketing, housekeeping, food service, maintenance, utilities, property taxes and insurance. General and administrative expenses represent costs unrelated to property operations or transaction costs. These expenses include, but are not limited to, payroll and benefits, professional services, office expenses and depreciation of corporate fixed assets. Same store cash NOI (“SSCNOI”) is used to evaluate the cash-based operating performance of our properties under a consistent population which eliminates 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 full three year reporting period. Any properties acquired, developed, transitioned or classified in discontinued operations during that period are excluded from the same store amounts. We believe NOI and SSCNOI 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 SSCNOI to make decisions about resource allocations and to assess the property level performance of our properties.
EBITDA stands for earnings 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.
A covenant in our primary unsecured line of credit arrangement and Canadian denominated term loan contains a financial ratio based on a definition of EBITDA that is specific to that agreement. 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 and adjusted for stock-based compensation expense, provision for loan losses and gain/loss on extinguishment of debt. 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
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
amortization and preferred dividends. Our covenant requires an adjusted fixed charge coverage ratio of at least 1.50 times.
Other than Adjusted EBITDA, 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. Adjusted EBITDA is used solely to determine our compliance with a financial covenant in our primary line of credit arrangement and Canadian denominated term loan and is not being presented for use by investors for any other purpose. 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.
The table below reflects the reconciliation of FFO to net income attributable to common stockholders, the most directly comparable U.S. GAAP measure, for the periods presented. The provisions for depreciation and amortization include provisions for depreciation and amortization from discontinued operations. Noncontrolling interest and unconsolidated entity amounts represent adjustments to reflect our share of depreciation and amortization. Amounts are in thousands except for per share data.
Year Ended December 31,
FFO Reconciliation:
Net income attributable to common stockholders
$
157,108
$
221,884
$
78,714
Depreciation and amortization
423,605
533,585
873,960
Impairment of assets
12,194
29,287
-
Loss (gain) on sales of properties
(61,160)
(100,549)
(49,138)
Noncontrolling interests
(18,557)
(21,058)
(36,304)
Unconsolidated entities
11,712
34,408
57,652
Funds from operations
$
524,902
$
697,557
$
924,884
Average common shares outstanding:
Basic
173,741
224,343
276,929
Diluted
174,401
225,953
278,761
Per share data:
Net income attributable to common stockholders
Basic
$
0.90
$
0.99
$
0.28
Diluted
0.90
0.98
0.28
Funds from operations
Basic
$
3.02
$
3.11
$
3.34
Diluted
3.01
3.09
3.32
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
The table below reflects the reconciliation of Adjusted EBITDA to net income, the most directly comparable U.S. GAAP measure, for the periods presented. Interest expense and the provisions for depreciation and amortization include discontinued operations. Dollars are in thousands.
Year Ended December 31,
Adjusted EBITDA Reconciliation:
Net income
$
212,716
$
294,840
$
138,280
Interest expense
321,999
383,300
462,606
Income tax expense (benefit)
1,388
7,612
7,491
Depreciation and amortization
423,605
533,585
873,960
Stock-based compensation expense
10,786
18,521
20,177
Provision for loan losses
2,010
27,008
2,110
Loss (gain) on extinguishment of debt
(979)
(775)
(909)
Adjusted EBITDA
$
971,525
$
1,264,091
$
1,503,715
Adjusted Interest Coverage Ratio:
Interest expense
$
321,999
$
383,300
$
462,606
Capitalized interest
13,164
9,777
6,700
Non-cash interest expense
(13,905)
(11,395)
(4,044)
Total interest
321,258
381,682
465,262
Adjusted EBITDA
$
971,525
$
1,264,091
$
1,503,715
Adjusted interest coverage ratio
3.02x
3.31x
3.23x
Adjusted Fixed Charge Coverage Ratio:
Interest expense
$
321,999
$
383,300
$
462,606
Capitalized interest
13,164
9,777
6,700
Non-cash interest expense
(13,905)
(11,395)
(4,044)
Secured debt principal payments
27,804
38,554
56,205
Preferred dividends
60,502
69,129
66,336
Total fixed charges
409,564
489,365
587,803
Adjusted EBITDA
$
971,525
$
1,264,091
$
1,503,715
Adjusted fixed charge coverage ratio
2.37x
2.58x
2.56x
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
The following tables reflect the reconciliation of NOI and SSCNOI to net income attributable to common stockholders, the most directly comparable U.S. GAAP measure, for the periods presented. Amounts are in thousands.
Year Ended December 31,
NOI Reconciliation:
Total revenues:
Seniors housing triple-net
$
578,269
$
710,889
$
803,731
Seniors housing operating
456,085
703,702
1,617,402
Medical facilities
278,138
389,541
459,179
Non-segment/corporate
Total revenues
1,313,182
1,805,044
2,880,608
Property operating expenses:
Seniors housing operating
314,142
471,678
1,089,239
Medical facilities
60,922
96,311
117,574
Total property operating expenses
375,064
567,989
1,206,813
Net operating income:
Seniors housing triple-net
578,269
710,889
803,731
Seniors housing operating
141,943
232,024
528,163
Medical facilities
217,216
293,230
341,605
Non-segment/corporate
Net operating income from continuing operations
$
938,118
$
1,237,055
$
1,673,795
Reconciling items:
Interest expense
(290,981)
(361,565)
(458,360)
Loss (gain) on derivatives, net
-
1,825
(4,470)
Depreciation and amortization
(386,478)
(506,220)
(865,800)
General and administrative
(77,201)
(97,341)
(108,318)
Transaction costs
(70,224)
(61,609)
(133,401)
Loss (gain) on extinguishment of debt
Provision for loan losses
(2,010)
(27,008)
(2,110)
Income tax benefit (expense)
(1,388)
(7,612)
(7,491)
Income (loss) from unconsolidated entities
5,772
2,482
(8,187)
Income (loss) from discontinued operations, net
96,129
114,058
51,713
Preferred dividends
(60,502)
(69,129)
(66,336)
Preferred stock redemption charge
-
(6,242)
-
Loss (income) attributable to noncontrolling interests
4,894
2,415
6,770
(781,010)
(1,015,171)
(1,595,081)
Net income (loss) attributable to common stockholders
$
157,108
$
221,884
$
78,714
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Year Ended December 31,
Same Store Cash NOI Reconciliation:
Net operating income from continuing operations:
Seniors housing triple-net
$
578,269
$
710,889
$
803,731
Seniors housing operating
141,943
232,024
528,163
Medical facilities
217,216
293,230
341,605
Total
937,428
1,236,143
1,673,499
Adjustments:
Seniors housing triple-net:
Non-cash NOI on same store properties
(10,736)
(7,079)
(8,987)
NOI attributable to non same store properties
(260,576)
(390,112)
(475,275)
Subtotal
(271,312)
(397,191)
(484,262)
Seniors housing operating:
NOI attributable to non same store properties
(108,180)
(192,913)
(487,210)
Subtotal
(108,180)
(192,913)
(487,210)
Medical facilities:
Non-cash NOI on same store properties
(7,771)
(6,372)
(4,169)
NOI attributable to non same store properties
(25,170)
(100,113)
(150,518)
Subtotal
(32,941)
(106,485)
(154,687)
Total
(412,433)
(696,589)
(1,126,159)
Same store cash net operating income:
Seniors housing triple-net
306,957
313,698
319,469
Seniors housing operating
33,763
39,111
40,953
Medical facilities
184,275
186,745
186,918
Total
$
524,995
$
539,554
$
547,340
Same Store Cash NOI Property Reconciliation:
Total properties
1,142
Acquisitions
(619)
Developments
(29)
Disposals/Held-for-sale
(3)
Segment transitions
(40)
Other(1)
(15)
Same store properties
(1) Includes ten land parcels and five loans.
Health Care Industry
The demand for health care services, and consequently health care properties, is projected to reach unprecedented levels in the near future. The Centers for Medicare and Medicaid Services (“CMS”) projects that national health expenditures will rise to approximately $3.3 trillion in 2015 or 18.4% of gross domestic product (“GDP”). The average annual growth in national health expenditures for 2012 through 2022 is expected to be 5.8%.
While demographics are the primary driver of demand, economic conditions and availability of services contribute to health care service utilization rates. We believe the health care property market may be less susceptible to fluctuations and economic downturns relative to other property sectors. Investor interest in the market remains strong, especially in specific sectors such as private-pay senior living and medical office buildings.
The total U.S. population is projected to increase by 13.4% through 2033. The elderly population aged 65 and over is projected to increase by 68.3% through 2033. The elderly are an important component of health care utilization, especially independent living services, assisted living services, skilled nursing services, inpatient and outpatient hospital services and physician ambulatory care. Most health care services are provided within a health care facility such as a hospital, a physician’s office or a seniors housing community. Therefore, we believe there will be continued demand for companies, such as ours, with expertise in health care real estate.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Health care real estate investment opportunities tend to increase as demand for health care services increases. We recognize the need for health care real estate as it correlates to health care service demand. Health care providers require real estate to house their businesses and expand their services. We believe that investment opportunities in health care real estate will continue to be present due to:
· The specialized nature of the industry, which enhances the credibility and experience of our company;
· The projected population growth combined with stable or increasing health care utilization rates, which ensures demand; and
· The on-going merger and acquisition activity.
Health Reform Laws
On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act of 2010 (the “PPACA”) and the Health Care and Education Reconciliation Act of 2010, which amends the PPACA (collectively, the “Health Reform Laws”). The Health Reform Laws contain various provisions that may directly impact us or the operators and tenants of our properties. Some provisions of the Health Reform Laws may have a positive impact on our operators’ or tenants’ revenues, by, for example, increasing coverage of uninsured individuals, while others may have a negative impact on the reimbursement of our operators or tenants by, for example, altering the market basket adjustments for certain types of health care facilities. The Health Reform Laws also enhance certain fraud and abuse penalty provisions that could apply to our operators and tenants, in the event of one or more violations of the federal health care regulatory laws. In addition, there are provisions that impact the health coverage that we and our operators and tenants provide to our respective employees. The Health Reform Laws also provide additional Medicaid funding to allow states to carry out the expansion of Medicaid coverage to certain financially−eligible individuals beginning in 2014, and have also permitted states to expand their Medicaid coverage to these individuals since April 1, 2010, if certain conditions are met. On June 28, 2012, The United States Supreme Court upheld the individual mandate of the Health Reform Laws but partially invalidated the expansion of Medicaid. The ruling on Medicaid expansion will allow States not to participate in the expansion - and to forego funding for the Medicaid expansion - without losing their existing Medicaid funding. Given that the federal government substantially funds the Medicaid expansion, it is unclear how many states will ultimately pursue this option, although, as of mid-December 2013, almost half of the states have made statements or otherwise indicated that they do not intend to expand Medicaid coverage at this time. The participation by states in the Medicaid expansion could have the dual effect of increasing our tenants’ revenues, through new patients, but could also further strain state budgets. While the federal government will pay for approximately 100% of those additional costs from 2014 to 2016, states will be expected to pay for part of those additional costs beginning in 2017.
We cannot predict whether the existing Health Reform Laws, or future health care reform legislation or regulatory changes, will have a material impact on our operators’ or tenants’ property or business. 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.
Impact to Reimbursement of the Operators and Tenants of Our Properties. The Health Reform Laws provide for various changes to the reimbursement that our operators and tenants may receive. One such change is a reduction to the market basket adjustments for inpatient acute hospitals, long−term care hospitals, inpatient rehabilitation facilities, home health agencies, psychiatric hospitals, hospice care and outpatient hospitals. Since 2012, the otherwise applicable percentage increase to the market basket for inpatient acute hospitals has decreased. Since 2012, inpatient acute hospitals have also faced a downward adjustment of the annual percentage increase to the market basket rate by a “productivity adjustment.” The productivity adjustment may cause the annual percentage increase to be less than zero, which would mean that inpatient acute hospitals could face payment rates for a fiscal year that are less than the payment rates for the preceding year.
A similar productivity adjustment has applied to skilled nursing facilities since 2012, which means that the payment rates for skilled nursing facilities may decrease from one year to the next. Long−term care hospitals have faced a specified percentage decrease in their annual update for discharges since 2010. Additionally, since 2012, long-term care hospitals have been subject to the productivity adjustments, which may decrease the federal payment rates for long-term care hospitals. Similar productivity adjustments to payment rates have applied to inpatient rehabilitation facilities since 2012, inpatient psychiatric hospitals since 2013 and outpatient hospitals since 2012.
The Health Reform Laws revise other reimbursement provisions that may affect our business. For example, the Health Reform Laws reduce states’ Medicaid disproportionate share hospital (“DSH”) allotments, starting in 2014 through 2020. On September 18, 2013, CMS published a final rule that sets forth the annual reductions for Medicaid DSH payments for fiscal years 2014 and 2015, which were mandated by the Health Reform Laws, based on the assumption that the number of uninsured people will fall sharply beginning in 2014. Although the Health Reform Laws mandated reductions in Medicaid DSH spending from 2014 through 2020, the final rule addresses only DSH reductions for 2014 and 2015. In the final rule, CMS explained that, while the President’s FY 2014
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
budget proposed to delay these reductions until 2015, the Department of Health and Human Services has no flexibility to institute a delay without congressional action. These allotments would have provided additional funding for DSH hospitals that are operators or tenants of our properties, and thus, any reduction might negatively impact these operators or tenants.
Additionally, under the Health Reform Laws, beginning in fiscal year 2015, Medicare payments will decrease to hospitals for treatment associated with hospital acquired conditions. This decreased payment rate may negatively impact our operators or tenants. To account for excess readmissions, the Health Reform Laws also call for a reduction of 1% in payments for those hospitals with higher-than-average risk-adjusted readmission rates beginning October 1, 2012, 2% beginning in fiscal year 2014, and 3% from fiscal year 2015 onward. These reductions in payments to our operators or tenants may affect their ability to make payments to us.
The Health Reform Laws additionally call for the creation of the Independent Payment Advisory Board (the “Board”), which will be responsible for establishing payment policies, including recommendations in the event that Medicare costs exceed a certain threshold. Proposals for recommendations submitted by the Board prior to December 31, 2018 may not include recommendations that would reduce payments for hospitals, skilled nursing facilities, and physicians, among other providers, prior to December 31, 2019. Pursuant to statute, the Board’s first set of recommendations were due on January 15, 2014. However, the President has yet to nominate anyone to serve on the Board, and the fiscal year 2014 omnibus appropriations bill rescinds $10 million of funding from the Board.
The Health Reform Laws also create other mechanisms that could permit significant changes to payment. For example, the Health Reform Laws establish the Center for Medicare and Medicaid Innovation to test innovative payment and service delivery models to reduce program expenditures through the use of demonstration programs that can waive existing reimbursement methodologies. As another example, on November 2, 2011, CMS published the final rule implementing section 3022 of the Health Reform Laws, which contains provisions relating to Medicare payment to providers and suppliers participating in Accountable Care Organizations (“ACOs”) under the Medicare Shared Servings Program. Under the program, Medicare will share a percentage of savings with ACOs that meet certain quality and saving requirements, thereby allowing providers to receive incentive payments in addition to their traditional fee−for−service payments. Under the program, more experienced providers may assume the risk of losses in exchange for greater potential rewards: ACOs may share up to 50% of the savings under the one−sided model and up to 60% of the savings under the two−sided model, depending on their quality and performance. The amount of shared losses for which an ACO is liable in the two−sided model may not exceed the following percentages of its updated benchmark: 5% in the first performance year, 7.5% in the second year, and 10% in the third year. These shared losses could affect the ability of ACO operators or tenants to meet their financial obligations to us.
Additionally, although the Health Reform Laws delayed implementation of the Resource Utilization Group, Version Four (“RUG−IV”), which revises the payment classification system for skilled nursing facilities, the Medicare and Medicaid Extenders Act of 2010 repealed this delay retroactively to October 1, 2010. The implementation of the RUG-IV classification may impact our tenants and operators by revising the classifications of certain patients. The federal reimbursement for certain facilities, such as skilled nursing facilities, incorporates adjustments to account for facility case-mix. The Health Reform Laws also extend certain payment rules related to long−term acute care hospitals found in the Medicare, Medicaid, and SCHIP Extension Act of 2007 (“MMSEA”). The MMSEA delayed the implementation of a policy referred to as the “25% threshold rule” that would limit the proportion of patients who can be admitted from a co-located or host hospital during a cost reporting period and be paid under the long-term care hospital prospective payment system. The Health Reform Laws further extended the delay, which expired at various points in calendar year 2012, depending on the start of the provider’s cost reporting period. The Long Term Care Hospital Prospective Payment Final Rule for fiscal year 2013 extended the delay for an additional year. However, in the fiscal year 2014 final rule for the Medicare Inpatient Prospective Payment System, CMS finalized its proposal to let expire the one-year extension of the existing moratorium on the 25% threshold policy. The expiration of the moratorium on the 25% threshold policy impacts cost reporting periods that began on or after October 1, 2013.
Finally, many other changes resulting from the Health Reform Laws, or implementing regulations or guidance, may negatively impact our operators and tenants. We will continue to monitor and evaluate the Health Reform Laws and implementing regulations and guidance to determine other potential effects of the reform.
Impact of Fraud and Abuse Provisions. The Health Reform Laws revise health care fraud and abuse provisions that will affect our operators and tenants. Specifically, the Health Reform Laws allow for up to treble damages under the Federal False Claims Act for violations related to state−based health insurance exchanges authorized by the Health Reform Laws, which will be implemented beginning in 2014. The Health Reform Laws also impose new civil monetary penalties for false statements or actions that lead to delayed inspections, with penalties of up to $15,000 per day for failure to grant timely access and up to $50,000 for a knowing violation. Additionally, the Health Reform Laws require certain entities - including providers, suppliers, Medicaid managed care
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
organizations, Medicare Advantage organizations, and prescription drug program sponsors - to report and return overpayments to the appropriate payer by the later of (a) sixty (60) days after the date the overpayment was “identified,” or (b) the date that the “corresponding cost report” is due. The entity also must notify the payer in writing of the reason for the overpayment. A violation of these requirements may result in criminal liability, civil liability under the FCA, and/or exclusion from the federal health care programs. On February 14, 2012, CMS published a proposed rule implementing the Health Reform Laws requirement that health care providers and suppliers report and return self−identified overpayments by the later of 60 days after the date the overpayment was identified, or the date any corresponding cost report is due, if applicable; however, as early January 2014, the rule has yet to be finalized. The Health Reform Laws also amend the Federal Anti−Kickback Statute (“AKS”) to state that any items or services “resulting from” a violation of the AKS constitute a “false or fraudulent claim” under the Federal False Claims Act. The Health Reform Laws also provide for additional funding to investigate and prosecute health care fraud and abuse. Accordingly, the increased penalties under the Health Reform Laws for fraud and abuse violations may have a negative impact on our operators and tenants in the event that the government brings an enforcement action or subjects them to penalties.
Further, CMS published final rulemaking to implement the enhanced provider and supplier screening provisions called for in the Health Reform Laws. Under the final rule, as of March 25, 2011, all enrolling and participating providers and suppliers are assessed an annual administrative fee and are placed in one of three risk levels (limited, moderate, and high) based on an assessment of the individual’s or entity’s overall risk of fraud, waste and abuse. This rule also allows for the temporary suspension of Medicare payments to providers or suppliers in the event CMS receives credible information that an overpayment, fraud, or willful misrepresentation has occurred. The Health Reform Laws granted the Secretary of the Department of Health and Human Services significant discretionary authority to suspend, exclude, or impose fines on providers and suppliers based on the agency’s determination that such a provider or supplier is “high−risk,” and, as a result, this final rulemaking has the potential to materially adversely affect our operators and tenants who may be evaluated under the enhanced screening process.
On November 2, 2011, CMS and OIG jointly published the final rule establishing waivers of certain fraud and abuse laws to ACOs. These waivers include automatic AKS, Stark, and Civil Monetary Penalty Law waivers that may be applied in certain situations and that will apply uniformly to each ACO, ACO participant, and ACO provider/supplier. Notably, the final rule states that CMS and OIG intend to closely monitor ACOs through June 2013 to ensure that these waivers are not causing “undesirable effects” and do not need to be narrowed to prevent fraud and abuse. As of early January 2014, the results of this monitoring effort have not been made publicly available.
Additionally, provisions of Title VI of the Health Care Reform Laws are designed to increase transparency and program integrity by skilled nursing facilities, other nursing facilities and similar providers. Specifically, skilled nursing facilities and other providers and suppliers will be required to institute compliance and ethics programs. Additionally, the Health Reform Laws make it easier for consumers to file complaints against nursing homes by mandating that states establish complaint websites. The provisions calling for enhanced transparency will increase the administrative burden and costs on these providers.
Impact to the Health Care Plans Offered to Our Employees. The Health Reform Laws affect employers that provide health plans to their employees. The laws change the tax treatment of the Medicare Part D retiree drug subsidy and extend dependent coverage for dependents up to age 26, among other changes. We continue to evaluate our health care plans for these changes as new reform laws are enacted. These changes may affect our operators and tenants as well.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
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 1 to our consolidated financial statements for further information on significant accounting policies that impact us. There were no material changes to these policies in 2013.
The following table presents information about our critical accounting policies, as well as the material assumptions used to develop each estimate:
Nature of Critical
Accounting Estimate
Assumptions/Approach
Used
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 variable interest entity, our assumptions may be different and may result in the identification of a different primary beneficiary.
Income Taxes
As part of the process of preparing our consolidated financial statements, significant management judgment is required to evaluate our compliance with REIT requirements.
Our determinations are based on interpretation of tax laws, and our conclusions may have an impact on the income tax expense recognized. Adjustments to income tax expense may be required as a result of: (i) audits conducted by federal and state tax authorities, (ii) our ability to qualify as a REIT, (iii) the potential for built-in-gain recognized related to prior-tax-free acquisitions of C corporations, and (iv) changes in tax laws. Adjustments required in any given period are included in income.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Nature of Critical
Accounting Estimate
Assumptions/Approach
Used
Business Combinations
Real property developed by us is recorded at cost, including the capitalization of construction period interest. The cost of real property acquired is allocated to net tangible and identifiable intangible assets based on their respective fair values. Tangible assets primarily consist of land, buildings and improvements. The remaining purchase price is allocated among identifiable intangible assets primarily consisting 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 the Company’s overall relationship with that respective tenant.
We make estimates as part of our allocation of the purchase price of acquisitions to the various components of the acquisition based upon the relative fair value of each component. The most significant components of our allocations are typically the allocation of fair value to the buildings as-if-vacant, land and in-place leases. In the case of the fair value of buildings and the allocation of value to land and other intangibles, our estimates of the values of these components will affect the amount of depreciation and amortization we record over the estimated useful life of the property acquired or the remaining lease term. In the case of the value of in-place leases, we make our best estimates based on our evaluation of the specific characteristics of each tenant's lease. Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, market conditions and costs to execute similar leases. Our assumptions affect the amount of future revenue that we will recognize over the remaining lease term for the acquired in-place leases.
We compute depreciation and amortization on our properties using the straight-line method based on their estimated useful lives which range from 15 to 40 years for buildings and five to 15 years for improvements. Amortization periods for intangibles are based on the estimated remaining useful lives of the underlying agreements.
Allowance for Loan Losses
We maintain an allowance for loan losses in accordance with U.S. GAAP. 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. 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 full 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 and principal. 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 property.
Fair Value of Derivative Instruments
The valuation of derivative instruments is accounted for in accordance with U.S. GAAP, which requires companies to record derivatives at fair market 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 forward exchange contracts are estimated using pricing models that consider forward currency spot rates, forward trade rates and discount rates. Fair values of our interest rate swaps are estimated by utilizing pricing models that consider forward yield curves, discount rates and counterparty credit risk. Such amounts and their recognition are subject to significant estimates which may change in the future.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Nature of Critical
Accounting Estimate
Assumptions/Approach
Used
Revenue Recognition
Revenue is recorded in accordance with U.S. GAAP, which requires that revenue be recognized after four basic criteria are met. These four criteria include persuasive evidence of an arrangement, the rendering of service, fixed and determinable income and reasonably assured collectability. If the collectability of revenue is determined incorrectly, the amount and timing of our reported revenue could be significantly affected. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of collectability risk. Substantially all of our operating leases contain fixed and/or contingent 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. We recognize resident fees and services, other than move-in fees, monthly as services are provided. Lease agreements with residents generally have a term of one year and are cancelable by the resident with 30 days’ notice.
We evaluate the collectability of our revenues and related receivables on an on-going basis. We evaluate collectability based on assumptions and other considerations including, but not limited to, the certainty of payment, payment history, the financial strength of the investment’s underlying operations as measured by cash flows and payment coverages, the value of the underlying collateral and guaranties and current economic conditions.
If our evaluation indicates that collectability is not reasonably assured, we may place an investment on non-accrual or reserve against all or a portion of current income as an offset to revenue.
Impairment of Long-Lived Assets
We review our long-lived assets for potential impairment in accordance with U.S. GAAP. An impairment charge must be recognized when the carrying value of a long-lived asset is not recoverable. The carrying value is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If it is determined that a permanent impairment of a long-lived asset has occurred, the carrying value of the asset is reduced to its fair value and an impairment charge is recognized for the difference between the carrying value and the fair value.
The net book value of long-lived assets is reviewed quarterly on a property by property basis to determine if there are indicators of impairment. These indicators may include anticipated operating losses at the property level, the tenant’s inability 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, then the undiscounted future cash flows from the most likely use of the property are compared to the current net book value. This analysis requires us to determine if indicators of impairment exist and to estimate the most likely stream of cash flows to be generated from the property during the period the property is expected to be held.
Impact of Inflation
During the past three years, inflation has not significantly affected our earnings because of the moderate inflation rate. Additionally, our earnings are primarily 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 line of credit arrangement. 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 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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.
We historically borrow on our primary unsecured line of credit arrangement 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 line of credit arrangements. 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, 2013
December 31, 2012
Principal
Change in
Principal
Change in
balance
fair value
balance
fair value
Senior unsecured notes
$
7,421,707
$
(408,790)
$
6,145,457
$
(451,478)
Secured debt
2,787,236
(102,211)
2,024,454
(96,290)
Totals
$
10,208,943
$
(511,001)
$
8,169,911
$
(547,768)
Our variable rate debt, including our unsecured line of credit arrangements, is reflected at fair value. At December 31, 2013, we had $1,089,362,000 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 $10,893,620. At December 31, 2012, we had $527,060,000 outstanding related to 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 $5,271,000.
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 Pounds Sterling relative to the U.S. Dollar impacts the amount of net income we earn from our investments in Canada and the United Kingdom. Based solely on our results for the twelve months ended December 31, 2013, if these exchange rates were to increase or decrease by 100 basis points, our net income from these investments would decrease or increase, as applicable, by less than $500,000 for the twelve-month period. We seek to mitigate these underlying foreign currency exposures with non-U.S. denominated borrowings and gains and losses on derivative contracts hedging these exposures. If we increase our international presence through investments in, or acquisitions or development of, seniors housing and health care properties outside the United States, we may also decide to transact additional business or borrow funds in currencies other than the U.S. Dollar, Canadian Dollars or 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 (dollars in thousands):
December 31, 2013
December 31, 2012
Carrying
Change in
Carrying
Change in
Value
fair value
Value
fair value
Foreign currency exchange contracts(1)
$
4,066
$
(2,964)
$
$
(89)
Debt designated as hedges
1,146,596
8,002
251,054
2,500
Totals
$
1,150,662
$
5,038
$
251,350
$
2,411
(1) Amounts exclude cross currency hedge activity.
For additional information regarding derivatives and fair values of financial instruments, see “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies” and Notes 11 and 16 to our consolidated financial statements.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of Health Care REIT, Inc.
We have audited the accompanying consolidated balance sheets of Health Care REIT, Inc. as of December 31, 2013 and 2012, and the related consolidated statements of comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2013. Our audits also included the financial statement schedules listed in Item 15(a)(2) of this Form 10-K. These financial statements and schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Health Care REIT, Inc. at December 31, 2013 and 2012, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Health Care REIT, Inc.’s internal control over financial reporting as of December 31, 2013, 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 21, 2014 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Toledo, Ohio
February 21, 2014
CONSOLIDATED BALANCE SHEETS
HEALTH CARE REIT, INC. AND SUBSIDIARIES
December 31,
December 31,
Assets
(In thousands)
Real estate investments:
Real property owned:
Land and land improvements
$
1,878,877
$
1,365,391
Buildings and improvements
20,625,515
15,635,127
Acquired lease intangibles
1,070,754
673,684
Real property held for sale, net of accumulated depreciation
18,502
245,213
Construction in progress
141,085
162,984
Gross real property owned
23,734,733
18,082,399
Less accumulated depreciation and amortization
(2,386,658)
(1,555,055)
Net real property owned
21,348,075
16,527,344
Real estate loans receivable
332,146
895,665
Net real estate investments
21,680,221
17,423,009
Other assets:
Investments in unconsolidated entities
479,629
438,936
Goodwill
68,321
68,321
Deferred loan expenses
70,875
66,327
Cash and cash equivalents
158,780
1,033,764
Restricted cash
72,821
107,657
Receivables and other assets
553,310
411,095
Total other assets
1,403,736
2,126,100
Total assets
$
23,083,957
$
19,549,109
Liabilities and equity
Liabilities:
Borrowings under unsecured line of credit arrangements
$
130,000
$
Senior unsecured notes
7,379,308
6,114,151
Secured debt
3,058,248
2,336,196
Capital lease obligations
84,458
81,552
Accrued expenses and other liabilities
640,573
462,099
Total liabilities
11,292,587
8,993,998
Redeemable noncontrolling interests
35,039
34,592
Equity:
Preferred stock
1,017,361
1,022,917
Common stock
289,461
260,396
Capital in excess of par value
12,418,520
10,543,690
Treasury stock
(21,263)
(17,875)
Cumulative net income
2,329,869
2,184,819
Cumulative dividends
(4,600,854)
(3,694,579)
Accumulated other comprehensive income (loss)
(24,531)
(11,028)
Other equity
6,020
6,461
Total Health Care REIT, Inc. stockholders’ equity
11,414,583
10,294,801
Noncontrolling interests
341,748
225,718
Total equity
11,756,331
10,520,519
Total liabilities and equity
$
23,083,957
$
19,549,109
See accompanying notes
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
HEALTH CARE REIT, INC. AND SUBSIDIARIES
Year Ended December 31,
Revenues:
Rental income
$
1,227,589
$
1,063,214
$
804,732
Resident fees and services
1,616,290
697,494
456,085
Interest income
32,663
39,065
41,070
Other income
4,066
5,271
11,295
Total revenues
2,880,608
1,805,044
1,313,182
Expenses:
Interest expense
458,360
361,565
290,981
Property operating expenses
1,206,813
567,989
375,064
Depreciation and amortization
865,800
506,220
386,478
General and administrative
108,318
97,341
77,201
Transaction costs
133,401
61,609
70,224
Loss (gain) on derivatives, net
4,470
(1,825)
-
Loss (gain) on extinguishment of debt, net
(909)
(775)
(979)
Provision for loan losses
2,110
27,008
2,010
Total expenses
2,778,363
1,619,132
1,200,979
Income from continuing operations before income taxes
and income from unconsolidated entities
102,245
185,912
112,203
Income tax (expense) benefit
(7,491)
(7,612)
(1,388)
Income (loss) from unconsolidated entities
(8,187)
2,482
5,772
Income from continuing operations
86,567
180,782
116,587
Discontinued operations:
Gain (loss) on sales of properties, net
49,138
100,549
61,160
Impairment of assets
-
(29,287)
(12,194)
Income (loss) from discontinued operations, net
2,575
42,796
47,163
Discontinued operations, net
51,713
114,058
96,129
Net income
138,280
294,840
212,716
Less: Preferred stock dividends
66,336
69,129
60,502
Less: Preferred stock redemption charge
-
6,242
-
Less: Net income (loss) attributable to noncontrolling interests(1)
(6,770)
(2,415)
(4,894)
Net income attributable to common stockholders
$
78,714
$
221,884
$
157,108
Average number of common shares outstanding:
Basic
276,929
224,343
173,741
Diluted
278,761
225,953
174,401
Earnings per share:
Basic:
Income from continuing operations
attributable to common stockholders
$
0.10
$
0.48
$
0.35
Discontinued operations, net
0.19
0.51
0.55
Net income attributable to common stockholders*
$
0.28
$
0.99
$
0.90
Diluted:
Income from continuing operations
attributable to common stockholders
$
0.10
$
0.48
$
0.35
Discontinued operations, net
0.19
0.50
0.55
Net income attributable to common stockholders*
$
0.28
$
0.98
$
0.90
* Amounts may not sum due to rounding
(1) Includes amounts attributable to redeemable noncontrolling interests
See accompanying notes
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(CONTINUED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
Year Ended December 31,
Net income
$
138,280
$
294,840
$
212,716
Other comprehensive income (loss):
Unrecognized gain/(loss) on equity investments
(173)
(122)
Change in net unrealized gains (losses) on cash flow hedges:
Unrealized gain/(loss)
1,898
3,200
3,189
Reclassification adjustment realized in net income
(1,596)
(1,781)
Unrecognized actuarial gain/(loss)
1,522
(226)
(2,115)
Foreign currency translation gain/(loss)
(23,247)
(881)
Total other comprehensive income (loss)
(20,000)
(829)
Total comprehensive income
118,280
295,740
211,887
Total comprehensive income attributable to noncontrolling interests(1)
(13,267)
(2,415)
(4,894)
Total comprehensive income attributable to stockholders
$
105,013
$
293,325
$
206,993
(1) Includes amounts attributable to redeemable noncontrolling interests.
See accompanying notes
CONSOLIDATED STATEMENTS OF EQUITY
HEALTH CARE REIT, 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
Equity
Interests
Total
Balances at December 31, 2010
$
291,667
147,155
4,932,468
(11,352)
1,676,196
(2,427,881)
(11,099)
5,697
130,249
$
4,733,100
Comprehensive income:
Net income
217,610
(3,591)
214,019
Other comprehensive income:
(829)
(829)
Total comprehensive income
213,190
Net change in noncontrolling interests
6,468
27,225
33,693
Amounts related to issuance of common stock
from dividend reinvestment and stock
incentive plans, net of forfeitures
2,895
138,989
(2,183)
(1,494)
138,207
Net proceeds from sale of common stock
42,249
1,964,102
2,006,351
Proceeds from issuance of preferred shares
718,750
(22,313)
696,437
Option compensation expense
1,917
1,917
Cash dividends paid:
Common stock cash dividends
(483,746)
(483,746)
Preferred stock cash dividends
(60,502)
(60,502)
Balances at December 31, 2011
1,010,417
192,299
7,019,714
(13,535)
1,893,806
(2,972,129)
(11,928)
6,120
153,883
7,278,647
Comprehensive income:
Net income
297,255
(1,480)
295,775
Other comprehensive income:
Total comprehensive income
296,675
Net change in noncontrolling interests
(7,136)
73,315
66,179
Amounts related to issuance of common stock
from dividend reinvestment and stock
incentive plans, net of forfeitures
2,658
149,955
(4,340)
(2,534)
145,739
Net proceeds from sale of common stock
64,400
3,382,532
3,446,932
Equity component of convertible debt
1,039
2,236
3,275
Proceeds from issuance of preferred shares
287,500
(9,813)
277,687
Redemption of preferred stock
(275,000)
6,202
(6,242)
(275,040)
Option compensation expense
2,875
2,875
Cash dividends paid:
Common stock cash dividends
(653,321)
(653,321)
Preferred stock cash dividends
(69,129)
(69,129)
Balances at December 31, 2012
1,022,917
260,396
10,543,690
(17,875)
2,184,819
(3,694,579)
(11,028)
6,461
225,718
10,520,519
Comprehensive income:
Net income
145,050
(5,487)
139,563
Other comprehensive income:
(13,503)
(6,497)
(20,000)
Total comprehensive income
119,563
Net change in noncontrolling interests
1,109
23,815
128,014
152,938
Amounts related to issuance of common stock
from dividend reinvestment and stock
incentive plans, net of forfeitures
3,852
239,837
(3,388)
(1,555)
238,746
Net proceeds from sale of common stock
23,000
1,607,281
1,630,281
Equity component of convertible debt
(1,543)
(555)
Conversion of preferred stock
(5,556)
5,440
Option compensation expense
1,114
1,114
Cash dividends paid:
Common stock cash dividends
(839,939)
(839,939)
Preferred stock cash dividends
(66,336)
(66,336)
Balances at December 31, 2013
$
1,017,361
$
289,461
$
12,418,520
$
(21,263)
$
2,329,869
$
(4,600,854)
$
(24,531)
$
6,020
$
341,748
$
11,756,331
See accompanying notes
CONSOLIDATED STATEMENTS OF CASH FLOWS
HEALTH CARE REIT, INC. AND SUBSIDIARIES
Year Ended December 31,
(In thousands)
Operating activities
Net income
$
138,280
$
294,840
$
212,716
Adjustments to reconcile net income to
net cash provided from (used in) operating activities:
Depreciation and amortization
873,960
533,585
423,605
Other amortization expenses
8,097
15,185
16,851
Provision for loan losses
2,110
27,008
2,010
Impairment of assets
29,287
12,194
Stock-based compensation expense
20,177
18,521
10,786
Loss (gain) on derivatives, net
4,470
(1,825)
Loss (gain) on extinguishment of debt, net
(909)
(775)
(979)
Loss (income) from unconsolidated entities
8,187
(2,482)
(5,772)
Rental income in excess of cash received
(46,068)
(32,362)
(31,578)
Amortization related to above (below) market leases, net
(2,507)
Loss (gain) on sales of properties, net
(49,138)
(100,549)
(61,160)
Distributions by unconsolidated entities
8,885
17,607
6,149
Increase (decrease) in accrued expenses and other liabilities
67,557
38,213
10,653
Decrease (increase) in receivables and other assets
(47,571)
(18,285)
(4,744)
Net cash provided from (used in) operating activities
988,497
818,133
588,224
Investing activities
Cash disbursed for acquisitions
(3,597,955)
(2,923,251)
(4,514,271)
Cash disbursed for capital improvements to existing properties
(135,832)
(135,450)
(89,247)
Cash disbursed for construction in progress
(247,560)
(286,410)
(301,604)
Capitalized interest
(6,700)
(9,777)
(13,164)
Investment in real estate loans receivable
(117,059)
(665,094)
(51,477)
Other investments, net of payments
(15,634)
25,425
(22,986)
Principal collected on real estate loans receivable
102,886
35,020
188,811
Contributions to unconsolidated entities
(99,769)
(227,735)
(2,784)
Distributions by unconsolidated entities
30,853
13,136
9,135
Proceeds from (payments on) derivatives
(6,803)
6,652
Decrease (increase) in restricted cash
79,957
(35,766)
30,248
Proceeds from sales of real property
482,023
610,271
247,210
Net cash provided from (used in) investing activities
(3,531,593)
(3,592,979)
(4,520,129)
Financing activities
Net increase (decrease) under unsecured lines of credit arrangements
130,000
(610,000)
310,000
Proceeds from issuance of senior unsecured notes
1,756,192
2,025,708
1,381,086
Payments to extinguish senior unsecured notes
(517,625)
(370,524)
(3)
Net proceeds from the issuance of secured debt
89,208
157,418
119,030
Payments on secured debt
(674,103)
(406,210)
(83,998)
Net proceeds from the issuance of common stock
1,854,637
3,581,292
2,137,594
Net proceeds from the issuance of preferred stock
277,687
696,437
Redemption of preferred stock
(275,000)
Decrease (increase) in deferred loan expenses
(13,503)
(7,152)
(28,867)
Contributions by noncontrolling interests(1)
5,072
24,115
8,604
Distributions to noncontrolling interests(1)
(35,592)
(29,353)
(30,705)
Acquisitions of non-controlling interests
(23,247)
Cash distributions to stockholders
(906,275)
(722,450)
(544,248)
Other financing activities
2,906
(403)
(1,113)
Net cash provided from (used in) financing activities
1,667,670
3,645,128
3,963,817
Effect of foreign currency translation on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
(874,984)
870,282
31,912
Cash and cash equivalents at beginning of period
1,033,764
163,482
131,570
Cash and cash equivalents at end of period
$
158,780
$
1,033,764
$
163,482
Supplemental cash flow information:
Interest paid
$
447,108
$
369,511
$
285,884
Income taxes paid
12,110
3,071
(1) Includes amounts attributable to redeemable noncontrolling interests.
See accompanying notes.
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
1. Business
Health Care REIT, Inc., an S&P 500 company with headquarters in Toledo, Ohio, is an equity real estate investment trust (“REIT”) that invests in seniors housing and health care real estate. Our full service platform offers property management and development services to our customers. As of December 31, 2013, our diversified portfolio consisted of 1,199 properties in 46 states, the United Kingdom, and Canada. Founded in 1970, we were the first real estate investment trust to invest exclusively in health care facilities.
2. Accounting Policies and Related Matters
Principles of Consolidation
The consolidated financial statements 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 (“ASC 810”), requires enterprises to perform a qualitative approach to determining whether or not a VIE will need to be consolidated on a continuous basis. 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, we evaluate the type of rights held by the limited partner(s), which may preclude consolidation in circumstances in which the sole general partner would otherwise consolidate the limited partnership. The assessment of limited partners’ rights and their impact on the presumption of control over a limited partnership by the sole general partner should be made when an investor becomes the sole general partner and should be reassessed if (i) there is a change to the terms or in the exercisability of the rights of the limited partners, (ii) the sole general partner increases or decreases its ownership in the limited partnership, or (iii) 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.
Use of Estimates
The preparation of the 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 financial statements and accompanying notes. Actual results could differ from those estimates.
Revenue Recognition
Revenue is recorded in accordance with U.S. GAAP, which requires that revenue be recognized after four basic criteria are met. These four criteria include persuasive evidence of an arrangement, the rendering of service, fixed and determinable income and reasonably assured collectability. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of collectability risk. Substantially all of our operating leases 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 medical office building 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. We recognize resident fees and services, other than move-in fees, monthly as services are provided. Lease agreements with residents generally have a term of one year and are cancelable by the resident with 30 days’ notice.
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 and amounts held in escrow relating to acquisitions we are entitled to receive over a period of time as outlined in the escrow agreement.
Deferred Loan Expenses
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Deferred loan expenses are costs incurred by us in connection with the issuance, assumption and amendments of debt arrangements. 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 less than majority owned entities are reported under the equity method of accounting when our interests represent either (1) general partnership interests subject to substantive participating or kick-out rights that have been granted to the limited partners, or (2) limited partnership interests with no control over major operating and financial policies of the entities. Under the equity method of accounting, our share of the investee’s earnings or losses is included in our consolidated results of operations. 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. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest or the estimated fair value of the assets prior to the sale of interests in the entity. Other equity investments include an investment in available-for-sale securities. These equity investments represented a minimal ownership interest in these companies. 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.
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. In accordance with ASC 810, the redeemable noncontrolling interests were classified outside of permanent equity, as a mezzanine item, in the balance sheet.
Real Property Owned
Real property developed by us is recorded at cost, including the capitalization of construction period interest. Expenditures for repairs and maintenance are expensed as incurred. Property acquisitions are accounted for as business combinations where we measure the assets acquired, liabilities (including assumed debt and contingencies) and any noncontrolling interests at their fair values on the acquisition date. The cost of real property acquired, which represents substantially all of the purchase price, is allocated to net tangible and identifiable intangible assets based on their respective fair values. 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. Tangible assets primarily consist of land, buildings and improvements, including those related to capital leases. 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 statement of cash flows.
The remaining purchase price is allocated among identifiable intangible assets primarily consisting of the above or below market component of in-place leases and the value associated with the presence of in-place tenants or residents. 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.
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 will be amortized over the assumed re-leasing period.
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 asset over the remaining
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
depreciation period indicate that the asset 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.
Capitalization of Construction Period Interest
We capitalize interest costs associated with funds used for the construction of properties owned directly by us. The amount capitalized is based upon the balance outstanding during the construction period using the rate of interest which approximates our cost of financing. We capitalize interest costs related to construction of real property owned by us. Our interest expense reflected in the consolidated statements of comprehensive income has been reduced by the amounts capitalized.
Gain on Sale of Assets
We recognize sales of assets only upon the closing of the transaction with the purchaser. Payments received from purchasers prior to closing are recorded as deposits and classified as other assets on our consolidated balance sheets. Gains on assets sold are recognized using the full accrual method upon closing when (i) the collectability of the sales price is reasonably assured, (ii) we are not obligated to perform significant activities after the sale to earn the profit, (iii) we have received adequate initial investment from the purchaser and (iv) other profit recognition criteria have been satisfied. Gains may be deferred in whole or in part until the sales satisfy the requirements of gain recognition on sales of real estate.
Real Estate Loans Receivable
Real estate loans receivable consist of mortgage loans and other real estate loans. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of collectability risks. The loans 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 guaranties and/or personal guaranties.
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 full accrual status. While a loan is on non-accrual status, any cash receipts are applied against the outstanding principal balance.
Goodwill
We account for goodwill in accordance with U.S. GAAP. 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 11 for additional information.
Federal Income Tax
We have elected to be treated as a REIT under the applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our first taxable year, and made no provision for federal income tax purposes prior to our acquisition of our “taxable REIT subsidiaries.” 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 taxable REIT subsidiaries under provisions similar to those applicable to regular corporations and not under the REIT provisions.
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
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 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 18 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. We record transaction gains and losses in our consolidated statements of comprehensive income.
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.
New Accounting Standards
In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,” which requires companies to provide information about the amounts that are reclassified out of accumulated other comprehensive income by component and by the respective line items of net income. The amendment to authoritative guidance associated with comprehensive income was effective for us on January 1, 2013. The adoption of this guidance did not have a material impact on our consolidated financial statements.
Reclassifications
Certain amounts in prior years have been reclassified to conform to current year presentation.
HEALTH
CARE REIT, INC.
NOTES TO
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, liabilities and noncontrolling interests based upon their respective fair values in accordance with our accounting policies. 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 property acquisitions, including due diligence costs, fees for legal and valuation services and termination of pre-existing relationships computed based on the fair value of the assets acquired, lease termination fees and other acquisition-related costs. During the year ended December 31, 2013, we finalized our purchase price allocation of certain previously reported acquisitions and there were no material changes from those previously disclosed.
Seniors Housing Triple-net Activity
The following provides our purchase price allocations and other seniors housing triple-net real property investment activity for the periods presented (in thousands):
Year Ended December 31,
2013(1)
Land and land improvements
$
54,596
$
87,242
$
212,156
Buildings and improvements
265,390
984,077
3,108,508
Restricted cash
Receivables and other assets
1,020
9,101
Total assets acquired(2)
321,195
1,071,438
3,329,765
Secured debt
(9,810)
(89,881)
(93,431)
Accrued expenses and other liabilities
(540)
(3,542)
(91,290)
Total liabilities assumed
(10,350)
(93,423)
(184,721)
Capital in excess of par
Noncontrolling interests
(17,215)
Non-cash acquisition related activity
(151)
(616)
(2,532)
Cash disbursed for acquisitions
310,694
961,105
3,142,512
Construction in progress additions
141,129
179,684
182,626
Less: Capitalized interest
(4,698)
(6,041)
(5,752)
Cash disbursed for construction in progress
136,431
173,643
176,874
Capital improvements to existing properties
34,926
67,026
49,336
Total cash invested in real property, net of cash acquired
$
482,051
$
1,201,774
$
3,368,722
(1)
Includes acquisitions with an aggregate purchase price of $212,043,000 for which the allocation of the purchase price consideration is preliminary and subject to change.
(2)
Excludes $2,031,000 of cash acquired during the year ended December 31, 2012.
Seniors Housing Operating Activity
Acquisitions of seniors housing operating properties are structured under RIDEA, which is described in Note 18. This structure results in the inclusion of all resident revenues and related property operating expenses from the operation of these qualified health care properties in our consolidated statements of comprehensive income. Certain of our subsidiaries’ functional currencies are the local currencies of their respective countries. See Note 2 for information regarding our foreign currency policies.
The following is a summary of our seniors housing operating real property investment activity for the periods presented (in thousands):
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31,
2013(1)
Land and land improvements
$
445,152
$
146,332
$
112,350
Buildings and improvements
4,275,046
1,341,560
1,512,764
Acquired lease intangibles
396,444
118,077
122,371
Restricted cash
44,427
1,296
20,699
Receivables and other assets
79,564
10,125
Total assets acquired(2)
5,240,633
1,617,390
1,769,085
Secured debt
(1,275,245)
(124,190)
(796,272)
Accrued expenses and other liabilities
(96,709)
(17,347)
(44,483)
Total liabilities assumed
(1,371,954)
(141,537)
(840,755)
Capital in excess of par
-
(6,017)
Noncontrolling interests
(232,575)
(56,884)
(69,984)
Non-cash acquisition related activity(3)
(555,563)
-
-
Cash disbursed for acquisitions
3,080,541
1,418,969
852,329
Construction in progress additions
3,894
-
-
Less: Capitalized interest
(57)
-
-
Cash disbursed for construction in progress
3,837
-
-
Capital improvements to existing properties
72,258
21,751
15,880
Total cash invested in real property, net of cash acquired
$
3,156,636
$
1,440,720
$
868,209
(1)
Includes an aggregate purchase price of $1,318,168,000 relating to the Revera Partnership for which the allocation of the purchase price consideration is preliminary and subject to change.
(2)
Excludes $92,148,000, $20,691,000 and $38,952,000 of cash acquired during the years ended December 31, 2013, 2012 and 2011, respectively.
(3)
Represents Sunrise loan and noncontrolling interest acquisitions during the first quarter of 2013.
Revera Acquisition
On May 28, 2013, we completed the formation of our partnership (the “Revera Partnership”) with Revera Inc. to own and operate a portfolio of 47 seniors housing properties in Canada. We own a 75% partnership interest and Revera Inc. owns the remaining 25% interest and manages the facilities. The results of operations for the Revera Partnership have been included in our consolidated results of operations beginning on May 28, 2013 and are a component of our seniors housing operating segment. Consolidation is based on a combination of ownership interest and control of operational decision-making authority. The total purchase price of $1,318,168,000 for the 47 properties acquired has been allocated to the tangible and identifiable intangible assets and liabilities based upon their respective fair values in accordance with the Company’s accounting policies. Such allocations have not been finalized as we are reviewing final asset valuations with our partner, and, as such, the allocation of the purchase consideration included in the accompanying Consolidated Balance Sheet as of December 31, 2013 is preliminary and subject to adjustment.
Sunrise Merger
In August 2012, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Sunrise Senior Living, Inc. (“Sunrise”), pursuant to which we agreed to acquire Sunrise in an all-cash merger (the “Merger”) in which Sunrise stockholders would receive $14.50 in cash for each share of Sunrise common stock. On January 9, 2013, we completed our acquisition of the Sunrise property portfolio. The Sunrise Merger advances our strategic vision to own higher-end, private pay properties located in major metropolitan markets. On July 1, 2013, we acquired the remaining interests in 49 previously unconsolidated properties. As of December 31, 2013, 120 properties are wholly owned and five properties are held in unconsolidated entities (see Note 7 for additional information). The total purchase price of approximately $4,155,052,000, including approximately $2,456,011,000 of cash consideration, has been allocated to the tangible and identifiable intangible assets and liabilities in the table above based on respective fair values in accordance with our accounting policies.
We recognized $654,717,000, $22,930,000 and $0 of revenues and $216,827,000, $11,698,000 and $0 of net operating income from continuing operations related to the consolidated Sunrise portfolio during the twelve month periods ended December 31, 2013, 2012 and 2011, respectively. In addition, we incurred $77,187,000 of transaction costs, which include advisory fees, due diligence
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
costs, severances, and fees for legal and valuation services during the twelve month period ended December 31, 2013. These amounts are included in the seniors housing operating results reflected in Note 17.
The following unaudited pro forma consolidated results of operations have been prepared as if the Sunrise Merger had occurred as of January 1, 2012 based on the purchase price allocations discussed above. Amounts are in thousands, except per share data:
Year Ended December 31,
Revenues
$
3,047,072
$
2,487,332
Income (loss) from continuing operations attributable to common stockholders
$
17,091
$
(50,424)
Income (loss) from continuing operations attributable to common stockholders per share:
Basic
$
0.06
$
(0.23)
Diluted
$
0.06
$
(0.23)
Medical Facilities Activity
Accrued contingent consideration related to certain medical facility acquisitions was $26,187,000 and $34,692,000 as of December 31, 2013 and 2012, respectively. Of the amount recognized, $12,500,000 is required to be settled in the Company’s common stock upon the achievement of certain performance thresholds. The following is a summary of our medical facilities real property investment activity for the periods presented (in thousands):
Year Ended December 31,
2013(1)
Land and land improvements
$
14,515
$
68,619
$
48,342
Buildings and improvements
251,291
648,409
520,976
Acquired lease intangibles
9,432
115,233
60,609
Restricted cash
Receivables and other assets
4,469
3,053
Total assets acquired(2)
276,087
837,705
633,080
Secured debt
(55,884)
(267,527)
(72,225)
Accrued expenses and other liabilities
(1,041)
(25,928)
(34,214)
Total liabilities assumed
(56,925)
(293,455)
(106,439)
Noncontrolling interests
(386)
(193)
(7,211)
Non-cash acquisition related activity(3)
(12,056)
(880)
Cash disbursed for acquisitions
206,720
543,177
519,430
Construction in progress additions
127,989
134,830
165,593
Less: Capitalized interest
(1,945)
(3,736)
(7,412)
Accruals
(18,752)
(18,327)
(33,451)
Cash disbursed for construction in progress
107,292
112,767
124,730
Capital improvements to existing properties
28,648
46,673
24,031
Total cash invested in real property, net of cash acquired
$
342,660
$
702,617
$
668,191
(1)
Includes acquisitions with an aggregate purchase price of $222,147,000 for which the allocation of the purchase price consideration is preliminary and subject to change.
(2)
Excludes $2,154,000 of cash acquired during the year ended December 31, 2011.
(3)
Represents non-cash consideration exchanged in an asset swap transaction during the year ended December 31, 2013.
Construction Activity
The following is a summary of the construction projects that were placed into service and began generating revenues during the periods presented:
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Year Ended
December 31, 2013
December 31, 2012
December 31, 2011
Development projects:
Seniors housing triple-net
$
133,181
$
146,913
$
114,161
Medical facilities
127,363
189,135
355,935
Total development projects
260,544
336,048
470,096
Expansion projects
26,395
4,983
45,414
Total construction in progress conversions
$
286,939
$
341,031
$
515,510
At December 31, 2013, future minimum lease payments receivable under operating leases (excluding properties in our seniors housing operating partnerships and excluding any operating expense reimbursements) are as follows (in thousands):
$
293,766
286,361
273,716
256,029
235,245
Thereafter
1,330,688
Totals
$
2,675,805
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, 2013
December 31, 2012
Assets:
In place lease intangibles
$
937,357
$
541,729
Above market tenant leases
55,939
56,086
Below market ground leases
59,165
61,450
Lease commissions
18,293
14,419
Gross historical cost
1,070,754
673,684
Accumulated amortization
(571,008)
(257,242)
Net book value
$
499,746
$
416,442
Weighted-average amortization period in years
16.7
16.4
Liabilities:
Below market tenant leases
$
76,381
$
77,036
Above market ground leases
9,490
9,490
Gross historical cost
85,871
86,526
Accumulated amortization
(34,434)
(27,753)
Net book value
$
51,437
$
58,773
Weighted-average amortization period in years
14.3
14.3
The following is a summary of real estate intangible amortization for the periods presented (in thousands):
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31,
Rental income related to above/below market tenant leases, net
$
$
1,120
$
3,340
Property operating expenses related to above/below market ground leases, net
(1,208)
(1,285)
(1,161)
Depreciation and amortization related to in place lease intangibles and lease commissions
(246,938)
(103,044)
(98,856)
The future estimated aggregate amortization of intangible assets and liabilities is as follows for the periods presented (in thousands):
Assets
Liabilities
$
217,179
$
6,623
60,154
5,646
27,400
5,232
21,393
4,937
18,532
4,610
Thereafter
155,088
24,389
Totals
$
499,746
$
51,437
5. Dispositions, Assets Held for Sale and Discontinued Operations
Impairment of assets as reflected in our consolidated statements of comprehensive income relate to properties designated as held for sale and represent the charges necessary to adjust the carrying values to estimated fair values less costs to sell based on current sales price expectations. The following is a summary of our real property disposition activity for the periods presented (in thousands):
Year Ended
December 31, 2013
December 31, 2012
December 31, 2011
Real property dispositions:
Seniors housing triple-net
$
189,572
$
372,378
$
150,755
Medical facilities
259,367
149,344
35,295
Total dispositions
448,939
521,722
186,050
Gain (loss) on sales of real property, net
49,138
100,549
61,160
Seller financing on sales of real property
(3,850)
(12,000)
Non-cash disposition activity
(12,204)
Proceeds from real property sales
$
482,023
$
610,271
$
247,210
We have reclassified the income and expenses attributable to all properties sold prior to or held for sale at December 31, 2013 to discontinued operations. Expenses include an allocation of interest expense based on property carrying values and our weighted-average cost of debt. The following illustrates the reclassification impact as a result of classifying properties as discontinued operations for the periods presented (in thousands):
Year Ended December 31,
Revenues:
Rental income
$
18,377
$
96,378
$
124,113
Expenses:
Interest expense
4,246
21,735
31,018
Property operating expenses
3,396
4,482
8,806
Provision for depreciation
8,160
27,365
37,126
Income (loss) from discontinued operations, net
$
2,575
$
42,796
$
47,163
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
6. Real Estate Loans Receivable
The following is a summary of our real estate loans receivable (in thousands):
December 31,
Mortgage loans
$
146,987
$
87,955
Other real estate loans
185,159
807,710
Totals
$
332,146
$
895,665
The following is a summary of our real estate loan activity for the periods presented (in thousands):
Year Ended
December 31, 2013
December 31, 2012
December 31, 2011
Seniors
Seniors
Seniors
Seniors
Housing
Medical
Housing
Housing
Medical
Housing
Medical
Triple-net
Facilities
Totals
Triple-net
Operating(1)
Facilities
Totals
Triple-net
Facilities
Totals
Advances on real estate loans receivable:
Investments in new loans
$
41,180
$
4,095
$
45,275
$
2,220
$
580,834
$
38,336
$
621,390
$
18,541
$
-
$
18,541
Draws on existing loans
67,451
8,183
75,634
41,754
-
1,950
43,704
29,752
3,184
32,936
Sub-total
108,631
12,278
120,909
43,974
580,834
40,286
665,094
48,293
3,184
51,477
Less: Seller financing on property sales
(3,850)
-
(3,850)
-
-
-
-
-
-
-
Net cash advances on real estate loans
104,781
12,278
117,059
43,974
580,834
40,286
665,094
48,293
3,184
51,477
Receipts on real estate loans receivable:
Loan payoffs
68,950
69,596
10,387
-
2,168
12,555
162,705
2,943
165,648
Principal payments on loans
30,821
2,469
33,290
19,786
-
2,679
22,465
17,856
5,307
23,163
Total receipts on real estate loans
99,771
3,115
102,886
30,173
-
4,847
35,020
180,561
8,250
188,811
Net cash advances (receipts) on real estate loans
5,010
9,163
14,173
13,801
580,834
35,439
630,074
(132,268)
(5,066)
(137,334)
Change in balance due to foreign currency translation
1,402
-
1,402
-
-
-
-
-
-
-
Net change in real estate loans receivable
$
6,412
$
9,163
$
15,575
$
13,801
$
580,834
$
35,439
$
630,074
$
(132,268)
$
(5,066)
$
(137,334)
(1) Represents loan to Sunrise Senior Living, Inc. that was acquired upon merger consummation on January 9, 2013 as discussed in Note 3.
The following is a summary of the allowance for losses on loans receivable for the periods presented (in thousands):
Year Ended December 31,
2013(1)
2012(2)
2011(3)
Balance at beginning of year
$
-
$
-
$
1,276
Provision for loan losses
2,110
27,008
2,010
Charge-offs
(2,110)
(27,008)
(3,286)
Balance at end of year
$
-
$
-
$
-
(1) Provision and charge-off amounts relate to one active adult community in our seniors housing triple-net segment.
(2) Provision and charge-off amounts relate to one entrance fee community in our seniors housing triple-net segment.
(3) Provision and charge-off amounts relate to one hospital in our medical facilities segment.
The following is a summary of our loan impairments (in thousands):
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31,
Balance of impaired loans at end of year
$
$
4,230
$
6,244
Allowance for loan losses
-
-
-
Balance of impaired loans not reserved
$
$
4,230
$
6,244
Average impaired loans for the year
$
2,365
$
5,237
$
7,968
Interest recognized on impaired loans(1)
-
-
(1) Represents interest recognized prior to placement on non-accrual status.
7. Investments in Unconsolidated Entities
During the year ended December 31, 2010, we entered into a joint venture investment with Forest City Enterprises (NYSE:FCE.A and FCE.B). We acquired a 49% interest in a seven-building life science campus located at University Park in Cambridge, Massachusetts, which is immediately adjacent to the campus of the Massachusetts Institute of Technology.
During the year ended December 31, 2012, we entered into a joint venture with Chartwell Retirement Residences (TSX:CSH.UN). The portfolio contains 42 properties in Canada, 39 of which are owned 50% by us and Chartwell, and three of which we wholly own. All properties are managed by Chartwell. The 39 properties are accounted for under the equity method of accounting and do not qualify as VIEs (variable interest entities). The joint venture is structured under RIDEA. See Note 18 for additional information. The aggregate remaining unamortized basis difference of our investment in this joint venture of $9,063,000 at December 31, 2013 is primarily attributable to transaction costs that will be amortized over the weighted-average useful life of the related properties and included in the reported amount of income from unconsolidated entities.
In conjunction with the Sunrise Merger, we acquired joint venture interests in 54 properties and a 20% interest in a newly formed Sunrise management company, which manages the entire property portfolio. On July 1, 2013, we acquired the remaining interests in 49 of the properties. Our original investment of $49,759,000 relating to the five remaining unconsolidated properties and the management company is recorded as an investment in unconsolidated entities on the balance sheet.
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 statements of comprehensive income as income or loss from unconsolidated entities. Summarized combined financial information for our investments in unconsolidated entities held as of December 31, 2013 is as follows (dollars in thousands):
Year Ended December 31,
Net real estate investments
$
1,589,590
$
1,675,877
Other assets
564,109
110,629
Total assets
2,153,699
1,786,506
Total liabilities
1,227,053
970,521
Redeemable noncontrolling interests
29,482
21,694
Total equity
$
897,164
$
794,291
Year Ended December 31,
2013(1)
2012(2)
Total revenues
$
1,619,251
$
324,941
$
160,860
Net income (loss)
(17,439)
10,702
20,124
(1) Beginning January 9, 2013, includes the financial information for the Sunrise management company and the five remaining unconsolidated Sunrise properties discussed above.
(2) Beginning May 1, 2012, includes the financial information for the Chartwell unconsolidated entities discussed above.
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
8. Credit Concentration
The following table summarizes certain information about our credit concentration as of December 31, 2013, excluding our share of investments in unconsolidated entities. See Note 7 for additional information (dollars in thousands):
Number of
Total
Percent of
Concentration by investment:(1)
Properties
Investment
Investment(2)
Sunrise Senior Living
$
4,019,340
19%
Genesis HealthCare
2,652,988
12%
Revera
1,170,552
5%
Benchmark Senior Living
940,124
4%
Belmont Village
850,500
4%
Remaining portfolio
12,046,717
56%
Totals
1,142
$
21,680,221
100%
_____________________
(1) Genesis is in our seniors housing triple-net segment. Sunrise, Revera, and Belmont Village are in our seniors housing operating segment. Benchmark is in both our seniors housing triple-net and seniors housing operating segments.
(2) Investments with our top five relationships comprised 37% of total investments at December 31, 2012.
9. Borrowings Under Line of Credit Arrangement and Related Items
At December 31, 2013, we had a $2,250,000,000 unsecured line of credit arrangement with a consortium of 30 banks. We have an option to upsize the facility by up to an additional $1,000,000,000 through an accordion feature, allowing for the aggregate commitment of up to $3,250,000,000. The arrangement also allows us to borrow up to $500,000,000 in certain alternative currencies. At December 31, 2013, we had $130,000,000 outstanding at 1.34%. The revolving credit facility is scheduled to expire March 31, 2017, but can be extended for an additional year at our option. Borrowings under the revolver are subject to interest payable in periods no longer than three months at either the agent bank’s prime rate of interest or the applicable margin over LIBOR interest rate, at our option (1.34% at December 31, 2013). The applicable margin is based on certain of our debt ratings and was 1.175% at December 31, 2013. In addition, we pay a facility fee annually to each bank based on the bank’s commitment amount. The facility fee depends on certain of our debt ratings and was 0.225% at December 31, 2013. Principal is due upon expiration of the agreement.
The following information relates to aggregate borrowings under our unsecured lines of credit arrangements for the periods presented (dollars in thousands):
Year Ended December 31,
Balance outstanding at year end
$
130,000
$
$
610,000
Maximum amount outstanding at any month end
$
1,019,050
$
897,000
$
710,000
Average amount outstanding (total of daily
principal balances divided by days in period)
$
488,842
$
191,378
$
240,104
Weighted-average interest rate (actual interest
expense divided by average borrowings outstanding)
1.45%
1.80%
1.51%
10. Senior Unsecured Notes and Secured Debt
We may repurchase, redeem or refinance convertible and non-convertible 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 non-convertible 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, 2013, the annual principal payments due on these debt obligations were as follows (in thousands):
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Senior
Secured
Unsecured Notes(1,2)
Debt (1,3)
Totals
$
$
330,295
$
330,295
2015(4)
485,029
409,239
894,268
2016(5)
1,200,000
382,917
1,582,917
450,000
324,110
774,110
450,000
429,284
879,284
Thereafter(6)
4,836,678
1,134,866
5,971,544
Totals
$
7,421,707
$
3,010,711
$
10,432,418
(1) Amounts represent principal amounts due and do not include unamortized premiums/discounts or other fair value adjustments as reflected on the consolidated balance sheet.
(2) Annual interest rates range from 1.5% to 6.5%.
(3) Annual interest rates range from 1.0% to 8.0%. Carrying value of the properties securing the debt totaled $6,243,475,000 at December 31, 2013.
(4) On July 30, 2012, we completed funding on a $250,000,000 Canadian denominated unsecured term loan (approximately $235,029,000 based on the Canadian/U.S. Dollar exchange rate on December 31, 2013). The loan matures on July 27, 2015 (with an option to extend for an additional year at our discretion) and bears interest at the Canadian Dealer Offered Rate plus 145 basis points (2.7% at December 31, 2013).
(5) On January 8, 2013, we completed funding on a $500,000,000 unsecured term loan. The loan matures on March 31, 2016 (with an option to extend for two additional years at our discretion) and bears interest at LIBOR plus 135 basis points (1.5% at December 31, 2013).
(6) On November 20, 2013, we completed funding on a £550,000,000 (approximately $911,570,000 based on the Sterling/U.S. Dollar exchange rate on December 31, 2013) of 4.8% senior unsecured notes due 2028.
The following is a summary of our senior unsecured note principal activity during the periods presented (dollars in thousands):
Year Ended
December 31, 2013
December 31, 2012
December 31, 2011
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
5,894,403
4.675%
$
4,464,927
5.133%
$
3,064,930
5.129%
Debt issued
1,786,930
3.824%
1,800,000
3.691%
1,400,000
5.143%
Debt extinguished
(300,000)
6.000%
(76,853)
8.000%
(3)
4.750%
Debt redeemed
(219,295)
3.000%
(293,671)
4.750%
-
0.000%
Foreign currency
24,640
4.800%
-
0.000%
-
0.000%
Ending balance
$
7,186,678
4.456%
$
5,894,403
4.675%
$
4,464,927
5.133%
During the twelve months ended December 31, 2010, we issued $494,403,000 of 3.00% senior unsecured convertible notes due December 2029, generating net proceeds of $486,084,000. The notes are convertible, in certain circumstances, into cash and, if applicable, shares of common stock at an initial conversion rate of 19.5064 shares per $1,000 principal amount of notes, which represents an initial conversion price of $51.27 per share. In general, upon conversion, the holder of each note would receive, in respect of the conversion value of such note, cash up to the principal amount of such note and common stock for the note’s conversion value in excess of such principal amount. In addition, on each of December 1, 2014, December 1, 2019 and December 1, 2024, holders may require us to purchase all or a portion of their notes at a purchase price in cash equal to 100% of the principal amount of the notes to be purchased, plus any accrued and unpaid interest. The notes are bifurcated into a debt component and an equity component since they may be settled in cash upon conversion. The value of the debt component is based upon the estimated fair value of a similar debt instrument without the conversion feature at the time of issuance. The difference between the contractual principal on the debt and the value allocated to the debt of $29,925,000 was recorded as an equity component and represents the conversion feature of the instrument. The excess of the contractual principal amount of the debt over its estimated fair value is amortized to interest expense using the effective interest method over the period used to estimate the fair value. During the year ended December 31, 2013, we received notice of conversion from holders of $219,295,000 of the senior unsecured convertible notes. These notes were converted into 988,007 shares of common stock and we recognized a loss on extinguishment of $2,423,000, which is reflected on the consolidated statement of comprehensive income.
The following is a summary of our secured debt principal activity for the periods presented (dollars in thousands):
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Year Ended
December 31, 2013
December 31, 2012
December 31, 2011
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
2,311,586
5.140%
$
2,108,384
5.285%
$
1,133,715
5.972%
Debt issued
89,208
4.982%
157,418
4.212%
116,903
5.697%
Debt assumed
1,290,858
4.159%
444,744
5.681%
940,854
4.444%
Debt extinguished
(614,375)
3.730%
(360,403)
4.672%
(55,317)
5.949%
Principal payments
(56,205)
5.248%
(38,744)
5.456%
(27,771)
5.845%
Foreign currency
(10,361)
4.013%
5.637%
-
0.000%
Ending balance
$
3,010,711
5.095%
$
2,311,586
5.140%
$
2,108,384
5.285%
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, 2013, we were in compliance with all of the covenants under our debt agreements.
11. Derivative Instruments
We are exposed to various market risks, including the potential loss arising from adverse changes in interest rates. We may elect to use financial derivative instruments to hedge interest rate exposure. These decisions are principally based on our policy to manage the general trend in interest rates at the applicable dates and our perception of the future volatility of interest rates. In addition, non-U.S. investments expose us to the potential losses associated with adverse changes in foreign currency to U.S. Dollar exchange rates. We have elected to manage these risks through the use of forward exchange contracts and issuing debt in the foreign currency.
Interest Rate Swap Contracts Designated as Cash Flow Hedges
For instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported 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. Approximately $1,890,000 of losses, which are included in accumulated other comprehensive income (“AOCI”), are expected to be reclassified into earnings in the next 12 months.
Foreign Currency Hedges
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. The balance of the cumulative translation adjustment will be reclassified to earnings when the hedged investment is sold or substantially liquidated.
On February 15, 2012, we entered into a forward exchange contract to purchase $250,000,000 Canadian Dollars at a fixed rate in the future. The forward contract was used to limit exposure to fluctuations in the Canadian Dollar to U.S. Dollar exchange rate associated with our initial cash investment funded for the Chartwell transaction. On May 3, 2012, this forward exchange contract was settled for a gain of $2,772,000, which was reflected on the consolidated statement of comprehensive income, and the proceeds were used to fund our investment. On May 3, 2012, we also entered into a forward contract to sell $250,000,000 Canadian Dollars at a fixed rate on July 31, 2012 to hedge our net investment. We settled the forward contract on July 31, 2012 with the net loss reflected in OCI. Upon settlement of the forward contract we entered into a $250,000,000 Canadian Dollar term loan, which has been designated as a net investment hedge of our Chartwell investment, and changes in fair value are reported in OCI as no ineffectiveness is anticipated.
On August 30, 2012, we entered into two cross currency swaps to purchase £125,000,000. The swaps were used to limit exposure to fluctuations in the Pound Sterling to U.S. Dollar exchange rate associated with our initial cash investment funded for the Sunrise transaction. The cross currency swaps have been designated as a net investment hedge, and changes in fair value are reported in OCI as no ineffectiveness is anticipated.
On September 17, 2012, we entered into two forward exchange contracts to purchase $14,000,000 Canadian Dollars and £23,000,000 at a fixed rate in the future. The forward contracts were used to limit exposure to fluctuations in foreign currency
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
associated with future international transactions. These forward contacts were settled on March 22, 2013 for a realized loss of $2,309,000, which was reflected on the consolidated statement of comprehensive income.
On January 14, 2013 and January 15, 2013, we entered into three forward exchange contracts to sell £675,000,000 at a fixed rate in the future. The forward exchange contracts were used to hedge a portion of our investment in the United Kingdom at a fixed Pound Sterling rate in U.S. dollars and were settled on July 12, 2013. We received proceeds of $63,514,000. The forward exchange contracts were designated as net investment hedges and the change in fair value is reported in OCI.
On April 4, 2013, we entered into three forward exchange contracts to purchase $600,000,000 Canadian Dollars at a fixed rate in the future and three forward exchange contracts to sell $600,000,000 Canadian Dollars at a fixed rate in the future. The forward contracts were used to limit exposure to fluctuations in the Canadian Dollar to U.S. Dollar exchange rate associated with our initial cash investment funded for an acquisition in Canada. On May 22, 2013, the three forward exchange purchase contracts were settled for a realized loss of $10,355,000, which was reflected on the consolidated statement of comprehensive income, and the proceeds were used to fund our investment. On May 22, 2013, we designated the three forward exchange sell contracts as net investment hedges, and changes in fair value are reported in OCI as no ineffectiveness is anticipated. Prior to designating the three forward exchange sell contracts as net investments, they were marked to fair value and an unrealized gain of $13,071,000 was reflected on the consolidated statement of comprehensive income. In December 2013, the three forward exchange sell contracts were settled with the net gain reflected in OCI, and we entered into three new forward exchange sell contracts to sell $600,000,000 Canadian Dollars at a fixed rate in the future. These new forward exchange contracts were designated as net investment hedges, and changes in fair value are reported in OCI as no ineffectiveness is anticipated.
On July 1, 2013, we entered into two forward exchange contracts to purchase £144,411,000 at a fixed rate in the future. The forward contracts were used to limit exposure to fluctuations in the Pound Sterling to U.S. Dollar exchange rate associated with our initial cash investment for an acquisition in the United Kingdom. In July 2013, these forward contracts were settled for a realized loss of $4,872,000, which was reflected on the consolidated statement of comprehensive income, and the proceeds were used to fund our investment.
On July 12, 2013, we entered into three forward exchange contracts to sell £675,000,000 at a fixed rate in the future. The forward exchange contracts were used to hedge a portion of our investment in the United Kingdom at a fixed Pound Sterling rate in U.S. dollars and mature on December 31, 2013. The forward exchange contracts were designated as net investment hedges and changes in fair value are reported in OCI as no ineffectiveness was expected. In November 2013, we sold £550,000,000 aggregate principal amount of the Company’s 4.800% senior notes due 2028. In conjunction with this transaction, we settled the three forward exchange sell contracts with the net loss reflected in OCI. Upon settlement of the forward exchange sell contracts, we entered into one new forward exchange contract to sell £225,000,000 at a fixed rate in the future. The new forward exchange contract and the £550,000,000 senior notes were designated as a net investment hedge of our investment in the United Kingdom, and changes in the fair value of the forward exchange sell contracts and senior notes are reported in OCI as no ineffectiveness is anticipated.
The following presents the impact of derivative instruments on the statement of comprehensive income and OCI for the periods presented (in thousands):
Year Ended
Location
December 31, 2013
December 31, 2012
December 31, 2011
Gain (loss) on interest rate swap recognized in OCI (effective portion)
OCI
$
(16)
$
3,200
$
3,189
Gain (loss) on interest rate swaps reclassified from AOCI into income (effective portion)
Interest expense
(1,914)
(1,596)
1,781
Gain (loss) on forward exchange contracts recognized in income
Gain (loss) on derivatives, net
(4,470)
1,921
Gain (loss) on interest rate swaps recognized in income
Gain (loss) on derivatives, net
(96)
Gain (loss) on forward exchange contracts and term loans designated as net investment hedge recognized in OCI
OCI
(28,244)
(5,134)
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
12. Commitments and Contingencies
At December 31, 2013, we had five outstanding letter of credit obligations totaling $5,103,000 and expiring between 2013 and 2014. At December 31, 2013, we had outstanding construction in process of $141,085,000 for leased properties and were committed to providing additional funds of approximately $243,083,000 to complete construction. At December 31, 2013, we had contingent purchase obligations totaling $65,217,000. These contingent purchase obligations relate to unfunded capital improvement obligations and contingent obligations on acquisitions. Rents due from the tenant are increased to reflect the additional investment in the property.
We evaluate our leases for operating versus capital lease treatment in accordance with ASC Topic 840 “Leases.” A lease is classified as a capital lease if it provides for transfer of ownership of the leased asset at the end of the lease term, contains a bargain purchase option, has a lease term greater than 75% of the economic life of the leased asset, or if the net present value of the future minimum lease payments are in excess of 90% of the fair value of the leased asset. Certain leases contain bargain purchase options and have been classified as capital leases. At December 31, 2013, we had operating lease obligations of $881,694,000 relating to certain ground leases and Company office space. Regarding the ground leases, we have sublease agreements with certain of our operators that require the operators to reimburse us for our monthly operating lease obligations. At December 31, 2013, aggregate future minimum rentals to be received under these noncancelable subleases totaled $44,106,000.
At December 31, 2013, future minimum lease payments due under operating and capital leases are as follows (in thousands):
Operating Leases
Capital Leases(1)
$
14,117
$
5,392
14,057
13,157
14,170
4,732
14,210
4,732
14,300
4,679
Thereafter
810,840
84,426
Totals
$
881,694
$
117,118
(1) Amounts above represent principal and interest obligations under capital lease arrangements. Related assets with a gross value of $185,244,000 and accumulated depreciation of $13,132,000 are recorded in real property.
13. Stockholders’ Equity
The following is a summary of our stockholder’s equity capital accounts as of the dates indicated:
December 31, 2013
December 31, 2012
Preferred Stock, $1.00 par value:
Authorized shares
50,000,000
50,000,000
Issued shares
26,108,236
26,224,854
Outstanding shares
26,108,236
26,224,854
Common Stock, $1.00 par value:
Authorized shares
400,000,000
400,000,000
Issued shares
290,024,789
260,780,109
Outstanding shares
289,563,651
260,373,754
Preferred Stock. The following is a summary of our preferred stock activity during the periods presented (dollars in thousands, except per share amounts):
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Year Ended
December 31, 2013
December 31, 2012
December 31, 2011
Weighted Avg.
Weighted Avg.
Weighted Avg.
Shares
Dividend Rate
Shares
Dividend Rate
Shares
Dividend Rate
Beginning balance
26,224,854
6.493%
25,724,854
7.013%
11,349,854
7.663%
Shares issued
-
0.000%
11,500,000
6.500%
14,375,000
6.500%
Shares redeemed
-
0.000%
(11,000,000)
7.716%
-
0.000%
Shares converted
(116,618)
6.000%
-
0.000%
-
0.000%
Ending balance
26,108,236
6.496%
26,224,854
6.493%
25,724,854
7.013%
During the three months ended December 31, 2010, we issued 349,854 shares of 6.00% Series H Cumulative Convertible and Redeemable Preferred Stock in connection with a business combination. These shares have a liquidation value of $25.00 per share. Dividends are payable quarterly in arrears. The preferred stock, which has no stated maturity, may be redeemed by us at a redemption price of $25.00 per share, plus accrued and unpaid dividends on such shares to the redemption date, on or after December 31, 2015. During the twelve months ended December 31, 2013, 116,618 shares were converted into common stock.
During the three months ended March 31, 2011, we issued 14,375,000 of 6.50% Series I Cumulative Convertible Perpetual Preferred Stock. These shares have a liquidation value of $50.00 per share. Dividends are payable quarterly in arrears. The preferred stock is not redeemable by us. The preferred shares are convertible, at the holder’s option, into 0.8460 shares of common stock (equal to an initial conversion price of approximately $59.10).
During the three months ended March 31, 2012, we issued 11,500,000 of 6.50% Series J Cumulative Redeemable Preferred Stock. Dividends are payable quarterly in arrears. The preferred stock, which has no stated maturity, may be redeemed by us at a redemption price of $25.00 per share, plus accrued and unpaid dividends on such shares to the redemption date, on or after March 7, 2017.
Common Stock. The following is a summary of our common stock issuances during the periods indicated (dollars in thousands, except per share amounts):
Shares Issued
Average Price
Gross Proceeds
Net Proceeds
March 2011 public issuance
28,750,000
$
49.25
$
1,415,938
$
1,358,543
November 2011 public issuance
12,650,000
50.00
632,500
606,595
2011 Dividend reinvestment plan issuances
2,534,707
48.44
122,794
121,846
2011 Equity shelf program issuances
848,620
50.53
42,888
41,982
2011 Option exercises
232,081
37.17
8,628
8,628
2011 Totals
45,015,408
$
2,222,748
$
2,137,594
February 2012 public issuance
20,700,000
$
53.50
$
1,107,450
$
1,062,256
August 2012 public issuance
13,800,000
58.75
810,750
778,011
September 2012 public issuance
29,900,000
56.00
1,674,400
1,606,665
2012 Dividend reinvestment plan issuances
2,136,140
56.37
120,411
120,411
2012 Option exercises
341,371
40.86
13,949
13,949
2012 Senior note conversions
1,039,721
2012 Totals
67,917,232
$
3,726,960
$
3,581,292
May 2013 public issuance
23,000,000
$
73.50
$
1,690,500
$
1,630,281
2013 Dividend reinvestment plan issuances
3,429,928
62.78
215,346
215,346
2013 Option exercises
213,724
42.16
9,010
9,010
2013 Senior note conversions
988,007
2013 Preferred stock conversions
116,618
2013 Equity issued in acquisition of noncontrolling interest
1,108,917
2013 Totals
28,857,194
$
1,914,856
$
1,854,637
During the twelve months ended December 31, 2013, we acquired the remaining 20% noncontrolling interest in an existing
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
partnership for $91,000,000 which consisted of $23,247,000 of cash and 1,108,917 shares of common stock. In connection with the acquisition, we incurred $2,732,000 of transaction costs, which we have included as a reduction to additional paid in capital.
Dividends. The increase in dividends is primarily attributable to increases in our common and preferred shares outstanding as described above. Please refer to Notes 2 and 18 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, 2013
December 31, 2012
December 31, 2011
Per Share
Amount
Per Share
Amount
Per Share
Amount
Common Stock
$
3.06000
$
839,939
$
2.96000
$
653,321
$
2.83500
$
483,746
Series D Preferred Stock
-
0.50301
2,012
1.96875
7,875
Series F Preferred Stock
-
0.48715
3,410
1.90625
13,344
Series H Preferred Stock
2.85840
2.85840
1,000
2.85840
1,000
Series I Preferred Stock
3.25000
46,719
3.25000
46,719
1.33159
38,283
Series J Preferred Stock
1.62510
18,687
1.39038
15,988
-
Totals
$
906,275
$
722,450
$
544,248
Accumulated Other Comprehensive Income. The following is a summary of accumulated other comprehensive income/(loss) for the periods presented (in thousands):
Unrecognized gains (losses) related to:
Foreign Currency Translation
Equity Investments
Actuarial losses
Cash Flow Hedges
Total
Balance at December 31, 2012
$
(881)
$
(216)
$
(2,974)
$
(6,957)
$
(11,028)
Other comprehensive income before reclassification adjustments
(16,750)
(173)
1,522
(16)
(15,417)
Reclassification amount to net income
1,914(1)
1,914
Net current-period other comprehensive income
(16,750)
(173)
1,522
1,898
(13,503)
Balance at December 31, 2013
$
(17,631)
$
(389)
$
(1,452)
$
(5,059)
$
(24,531)
Balance at December 31, 2011
$
$
(619)
$
(2,748)
$
(8,561)
$
(11,928)
Other comprehensive income before reclassification adjustments
(881)
(226)
2,808
2,104
Reclassification amount to net income
(1,204)(1)
(1,204)
Net current-period other comprehensive income
(881)
(226)
1,604
Balance at December 31, 2012
$
(881)
$
(216)
$
(2,974)
$
(6,957)
$
(11,028)
(1) Please see Note 11 for additional information.
Other Equity. Other equity consists of accumulated option compensation expense, which represents the amount of amortized compensation costs related to stock options awarded to employees and directors. Expense, which is recognized as the options vest based on the market value at the date of the award, totaled $1,114,000, $2,875,000 and $1,917,000 for the years ended December 31, 2013, 2012 and 2011, respectively.
14. Stock Incentive Plans
Our Amended and Restated 2005 Long-Term Incentive Plan authorizes up to 6,200,000 shares of common stock to be issued at the discretion of the Compensation Committee of the Board of Directors. The 2005 Plan replaced the 1995 Stock Incentive Plan and the Stock Plan for Non-Employee Directors. The options granted to officers and key employees under the 1995 Plan vested through 2010 and expire ten years from the date of grant. Our non-employee directors, officers and key employees are eligible to participate in the 2005 Plan. The 2005 Plan allows for the issuance of, among other things, stock options, restricted stock, deferred stock units and dividend equivalent rights. Under our long term incentive plan, certain restricted stock awards are performance based. Compensation expense for these performance grants is measured based on the probability of achievement of certain objective and subjective performance goals and is recognized over both the performance period and vesting period. If the estimated number of performance
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
based restricted stock to be earned changes, an adjustment will be recorded to recognize the accumulated difference between the revised and previous estimates. Vesting periods for options, deferred stock units and restricted shares generally range from three years for non-employee directors to five years for officers and key employees. Options expire ten years from the date of grant.
Valuation Assumptions
The fair value of each option grant is estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following weighted-average assumptions:
Year Ended
December 31, 2012
December 31, 2011
Dividend yield
5.16%
5.74%
Expected volatility
35.15%
34.80%
Risk-free interest rate
1.48%
2.87%
Expected life (in years)
7.0
7.0
Weighted-average fair value
$11.11
$9.60
There were no options granted for the year ended December 31, 2013. The dividend yield represented the dividend yield of our common stock on the dates of grant. Our computation of expected volatility was based on historical volatility. The risk-free interest rates used were the 7-year U.S. Treasury Notes yield on the date of grant. The expected life was based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations regarding future employee behavior.
Option Award Activity
The following table summarizes information about stock option activity for the periods presented:
Year Ended
December 31, 2013
December 31, 2012
December 31, 2011
Number of
Weighted
Number of
Weighted
Number of
Weighted
Shares
Average
Shares
Average
Shares
Average
Stock Options
(000's)
Exercise Price
(000's)
Exercise Price
(000's)
Exercise Price
Options at beginning of year
1,162
$
46.40
1,252
$
42.12
1,207
$
39.45
Options granted
-
-
57.33
49.17
Options exercised
(214)
42.16
(341)
40.11
(232)
36.92
Options terminated
(14)
48.09
(81)
51.81
(12)
43.09
Options at end of period
$
47.35
1,162
$
46.40
1,252
$
42.12
Options exercisable at end of period
$
43.99
$
40.82
$
39.45
Weighted average fair value of
options granted during the period
$
11.11
$
9.60
The following table summarizes information about stock options outstanding at December 31, 2013:
Options Outstanding
Options Exercisable
Number
Weighted
Weighted Average
Number
Weighted
Weighted Average
Outstanding
Average
Remaining
Exercisable
Average
Remaining
Range of Per Share Exercise Prices
(thousands)
Exercise Price
Contract Life
(thousands)
Exercise Price
Contract Life
$30-$40
$
36.80
4.3
$
36.70
3.9
$40-$50
45.77
5.8
44.86
5.1
$50+
57.33
8.0
57.33
8.0
Totals
$
47.35
6.1
$
43.99
5.1
Aggregate intrinsic value
$
6,855,000
$
4,224,000
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the quoted price of our common stock for the options that were in-the-money at December 31, 2013. During the years ended December 31, 2013, 2012
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
and 2011, the aggregate intrinsic value of options exercised under our stock incentive plans was $5,160,000, $6,186,000 and $3,390,000, respectively (determined as of the date of option exercise).
As of December 31, 2013, there was approximately $2,073,000 of total unrecognized compensation cost related to unvested stock options granted under our stock incentive plans. That cost is expected to be recognized over a weighted-average period of three years. As of December 31, 2013, there was approximately $24,923,000 of total unrecognized compensation cost related to unvested restricted stock granted under our stock incentive plans. That cost is expected to be recognized over a weighted-average period of three years.
The following table summarizes information about non-vested stock incentive awards as of December 31, 2013 and changes for the year ended December 31, 2013:
Stock Options
Restricted Stock
Number of
Weighted-Average
Number of
Weighted-Average
Shares
Grant Date
Shares
Grant Date
(000's)
Fair Value
(000's)
Fair Value
Non-vested at December 31, 2012
$
8.97
$
52.60
Vested
(322)
8.50
(164)
47.50
Granted
-
-
61.97
Terminated
(14)
9.05
(13)
55.15
Non-vested at December 31, 2013
$
9.26
$
56.92
We use the Black-Scholes-Merton option pricing model to estimate the value of stock option grants and expect to continue to use this acceptable option valuation model. We recognize compensation cost for share-based grants on a straight-line basis through the date the awards become fully vested or to the retirement eligible date, if sooner. Compensation cost totaled $20,177,000, $18,521,000 and $10,786,000 for the years ended December 31, 2013, 2012 and 2011, respectively.
15. 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
$
78,714
$
221,884
$
157,108
Denominator for basic earnings per
share: weighted-average shares
276,929
224,343
173,741
Effect of dilutive securities:
Employee stock options
Non-vested restricted shares
Convertible senior unsecured notes
1,149
1,067
Dilutive potential common shares
1,832
1,610
Denominator for diluted earnings per
share: adjusted-weighted average shares
278,761
225,953
174,401
Basic earnings per share
$
0.28
$
0.99
$
0.90
Diluted earnings per share
$
0.28
$
0.98
$
0.90
The diluted earnings per share calculations exclude the dilutive effect of 0, 182,000, and 0 stock options for the years ended December 31, 2013, 2012 and 2011, respectively, because the exercise prices were more than the average market price. The Series H Cumulative Convertible and Redeemable Preferred Stock and the Series I Cumulative Convertible Perpetual Preferred Stock were excluded from the calculations for 2013, 2012 and 2011 as the effect of the conversions were anti-dilutive.
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
16. Disclosure about Fair Value of Financial Instruments
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 and Other Real Estate Loans Receivable - The fair value of mortgage loans and other real estate loans receivable is generally estimated by using level two and level three 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 - The carrying amount approximates fair value.
Available-for-sale Equity Investments - Available-for-sale equity investments are recorded at their fair value based on level one publicly available trading prices.
Borrowings Under Unsecured Line of Credit Arrangements - The carrying amount of the unsecured line of credit arrangements 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 one publicly available trading prices.
Secured Debt - The fair value of fixed rate secured debt is estimated using level two 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.
Interest Rate Swap Agreements - Interest rate swap agreements are recorded in other assets or other liabilities on the balance sheet at fair market value. Fair market value is estimated using level two inputs by utilizing pricing models that consider forward yield curves and discount rates.
Foreign Currency Forward Contracts - Foreign currency forward contracts are recorded in other assets or other liabilities on the balance sheet at fair market value. Fair market value is determined using level two inputs by estimating the future value of the currency pair based on existing exchange rates, comprised of current spot and traded forward points, and calculating a present value of the net amount using a discount factor based on observable traded interest rates.
The carrying amounts and estimated fair values of our financial instruments are as follows (in thousands):
December 31, 2013
December 31, 2012
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
Financial Assets:
Mortgage loans receivable
$
146,987
$
148,088
$
87,955
$
88,975
Other real estate loans receivable
185,159
188,920
807,710
820,195
Available-for-sale equity investments
1,211
1,211
1,384
1,384
Cash and cash equivalents
158,780
158,780
1,033,764
1,033,764
Interest rate swap agreements
Financial Liabilities:
Borrowings under unsecured lines of credit arrangements
$
130,000
$
130,000
$
$
Senior unsecured notes
7,379,308
7,743,730
6,114,151
6,793,424
Secured debt
3,058,248
3,168,775
2,336,196
2,515,145
Interest rate swap agreements
Foreign currency forward contracts
11,637
11,637
7,247
7,247
U.S. GAAP provides authoritative guidance for measuring and disclosing fair value measurements of assets and liabilities. The guidance defines fair value 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
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CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
date. The guidance also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to measure fair value:
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. Please see Note 2 for additional information.
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.
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.
Fair Value Measurements as of December 31, 2013
Total
Level
Level
Level
Available-for-sale equity investments(1)
$
1,211
$
1,211
$
$
Interest rate swap agreements(2)
Foreign currency forward contracts(2)
(11,637)
(11,637)
Totals
$
(10,388)
$
1,211
$
(11,599)
$
(1) Unrealized gains or losses on equity investments are recorded in accumulated other comprehensive income (loss) at each measurement date.
(2) Please see Note 11 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 also have assets and liabilities in our balance sheet that are measured at fair value on a nonrecurring basis. As these assets and liabilities are not measured at fair value on a recurring basis, they 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/assumed in business combinations (see Note 3) and asset impairments (see Note 5 for impairments of real property and Note 6 for impairments of loans receivable). 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 reside within Level 3 of the fair value hierarchy. We estimate the fair value of real estate and related intangibles using the income approach and unobservable data such as net operating income and 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 secured debt assumed in business combinations using current interest rates at which similar borrowings could be obtained on the transaction date.
17. Segment Reporting
We invest in seniors housing and health care real estate. We evaluate our business and make resource allocations on our five operating segments: seniors housing triple-net, seniors housing operating, medical office buildings, hospitals and life science. Our seniors housing triple-net properties include skilled nursing/post-acute facilities, assisted living facilities, independent living/continuing care retirement communities, care homes (United Kingdom), care homes with nursing (United Kingdom) and combinations thereof. Under the seniors housing 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 seniors housing operating properties include the seniors housing communities referenced above and independent supportive living facilities (Canada) that are owned and/or operated through RIDEA structures (see Notes 3 and 18).
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Our medical facility properties include medical office buildings, hospitals and life science buildings which are aggregated into our medical facilities reportable segment. Our medical office buildings are typically leased to multiple tenants and generally require a certain level of property management. Our hospital investments are leased and we are not involved in the management of the property. Our life science investment represents an investment in an unconsolidated entity (see Note 7).
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.
We evaluate performance based upon net operating income from continuing operations (“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 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.
Summary information for the reportable segments (which excludes unconsolidated entities) during the years ended December 31, 2013, 2012 and 2011 is as follows (in thousands):
Year Ended December 31, 2013:
Seniors Housing Triple-net
Seniors Housing Operating
Medical Facilities
Non-segment / Corporate
Total
Rental income
$
780,785
$
-
$
446,804
$
-
$
1,227,589
Resident fees and services
-
1,616,290
-
-
1,616,290
Interest income
21,512
10,394
-
32,663
Other income
1,434
1,981
4,066
Total revenues
803,731
1,617,402
459,179
2,880,608
Property operating expenses
-
(1,089,239)
(117,574)
-
(1,206,813)
Net operating income from continuing operations
803,731
528,163
341,605
1,673,795
Reconciling items:
Interest expense
(23,322)
(92,148)
(36,823)
(306,067)
(458,360)
(Loss) gain on derivatives, net
(4,877)
-
-
(4,470)
Depreciation and amortization
(228,523)
(478,007)
(159,270)
-
(865,800)
General and administrative
-
-
-
(108,318)
(108,318)
Transaction costs
(24,350)
(107,066)
(1,985)
-
(133,401)
(Loss) gain on extinguishment of debt, net
(40)
3,372
-
(2,423)
Provision for loan losses
(2,110)
-
-
-
(2,110)
Income (loss) from continuing operations before income taxes and income (loss) from unconsolidated entities
$
520,509
$
(145,279)
$
143,527
$
(416,512)
$
102,245
Total assets
$
9,232,833
$
8,984,316
$
4,718,527
$
148,281
$
23,083,957
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2012:
Seniors Housing Triple-net
Seniors Housing Operating
Medical Facilities
Non-segment / Corporate
Total
Rental income
$
684,097
$
-
$
379,117
$
-
$
1,063,214
Resident fees and services
-
697,494
-
-
697,494
Interest income
24,380
6,208
8,477
-
39,065
Other income
2,412
-
1,947
5,271
Total revenues
710,889
703,702
389,541
1,805,044
Property operating expenses
-
(471,678)
(96,311)
-
(567,989)
Net operating income from continuing operations
710,889
232,024
293,230
1,237,055
Reconciling items:
Interest expense
(1,745)
(67,524)
(28,878)
(263,418)
(361,565)
(Loss) gain on derivatives, net
(96)
1,921
-
-
1,825
Depreciation and amortization
(200,899)
(165,798)
(139,523)
-
(506,220)
General and administrative
-
-
-
(97,341)
(97,341)
Transaction costs
(35,705)
(12,756)
(13,148)
-
(61,609)
(Loss) gain on extinguishment of debt, net
(2,405)
2,697
-
Provision for loan losses
(27,008)
-
-
-
(27,008)
Income (loss) from continuing operations before income taxes and income (loss) from unconsolidated entities
$
443,031
$
(9,436)
$
112,164
$
(359,847)
$
185,912
Total assets
$
8,447,698
$
5,323,777
$
4,706,159
$
1,071,475
$
19,549,109
Year Ended December 31, 2011
Seniors Housing Triple-net
Seniors Housing Operating
Medical Facilities
Non-segment / Corporate
Total
Rental income
$
537,581
$
-
$
267,151
$
-
$
804,732
Resident fees and services
-
456,085
-
-
456,085
Interest income
34,068
-
7,002
-
41,070
Other income
6,620
-
3,985
11,295
Total revenues
578,269
456,085
278,138
1,313,182
Property operating expenses
-
(314,142)
(60,922)
-
(375,064)
Net operating income from continuing operations
578,269
141,943
217,216
938,118
Reconciling items:
Interest expense
2,802
(46,342)
(18,557)
(228,884)
(290,981)
Depreciation and amortization
(155,797)
(138,192)
(92,489)
-
(386,478)
General and administrative
-
-
-
(77,201)
(77,201)
Transaction costs
(27,993)
(36,328)
(5,903)
-
(70,224)
Loss (gain) on extinguishment of debt, net
-
-
-
Provision for loan losses
-
-
(2,010)
-
(2,010)
Income (loss) from continuing operations before income taxes and income (loss) from unconsolidated entities
$
397,281
$
(77,940)
$
98,257
$
(305,395)
$
112,203
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Our portfolio of properties and other investments are located in the United States, the United Kingdom 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, 2013
December 31, 2012
December 31, 2011
Revenues:
Amount
%
Amount
%
Amount
%
United States
$
2,489,196
86.4%
$
1,778,507
98.5%
$
1,313,182
100.0%
International
391,412
13.6%
26,537
1.5%
-
0.0%
Total
$
2,880,608
100.0%
$
1,805,044
100.0%
$
1,313,182
100.0%
As of
December 31, 2013
December 31, 2012
Assets:
Amount
%
Amount
%
United States
$
19,759,945
85.6%
$
18,692,214
95.6%
International
3,324,012
14.4%
856,895
4.4%
Total
$
23,083,957
100.0%
$
19,549,109
100.0%
18. 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 100% of net capital gains) must be distributed to stockholders. REITs that do not distribute a certain amount of current year taxable income in the current year are also subject to a 4% federal excise tax. The main differences between net income for federal income tax purposes and 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 income
$
1.4928
$
1.5000
$
1.1472
Return of capital
1.4176
1.3376
1.4227
Long-term capital gains
0.0448
0.1176
0.1059
Unrecaptured section 1250 gains
0.1048
0.0048
0.1592
Totals
$
3.0600
$
2.9600
$
2.8350
Our consolidated provision for income taxes is as follows for the periods presented (dollars in thousands):
Year Ended December 31,
Current
$
12,389
$
4,785
$
Deferred
(4,898)
2,827
Totals
$
7,491
$
7,612
$
1,388
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, 2013, as a result of acquisitions located in Canada and the United Kingdom in 2012 and 2013, 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, 2013 primarily relates to state taxes, foreign taxes, and taxes based on income generated by entities that are structured as taxable REIT subsidiaries.
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
For the tax year ended December 31, 2013, the Canadian and United Kingdom tax benefit amount included in the consolidated provision for income taxes was $484,000. For the tax year ended December 31, 2012, the Canadian and United Kingdom tax expense amount included in the consolidated provision for income taxes was $596,000. We did not hold an interest in any entity located in a foreign jurisdiction for the year ended December 31, 2011.
A reconciliation of income tax expense, which is computed by applying the federal corporate tax rate for the years ended December 31, 2013, 2012 and 2011, to the income tax provision/(benefit) is as follows for the periods presented (dollars in thousands):
Year Ended December 31,
Tax at statutory rate on earnings from continuing operations before unconsolidated entities, noncontrolling interests and income taxes
$
51,020
$
64,979
$
54,750
Increase / (decrease) in valuation allowance(1)
18,444
9,234
(4,732)
Tax at statutory rate on earnings not subject to federal income taxes
(88,762)
(72,640)
(48,630)
Foreign permanent depreciation
22,313
-
-
Other differences
4,476
6,039
-
Totals
$
7,491
$
7,612
$
1,388
(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 attributes, are summarized as follows for the periods presented (dollars in thousands):
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
$
(34,236)
$
(2,144)
$
(1,577)
Operating loss and interest deduction carryforwards
67,215
8,552
1,488
Expense accruals and other
19,309
4,372
5,749
Valuation allowance
(71,955)
(12,199)
(2,965)
Totals
$
(19,667)
$
(1,419)
$
2,695
Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. As required under the provisions of ASC 740, Management applied the concepts on an entity-by-entity, jurisdiction-by-jurisdiction basis. With respect to the analysis of certain entities in multiple jurisdictions, a significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2013. Such objective evidence limits the ability to consider other subjective evidence such as our projections for future growth.
On the basis of the evaluations performed as required by the codification, valuation allowances totaling $71,955,000 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 Management believes 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 (dollars in thousands):
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31,
Beginning balance
$
12,199
$
2,965
$
7,697
Additions:
Purchase price accounting
41,312
-
-
Expense
18,444
9,234
-
Deductions
-
-
(4,732)
Ending balance
$
71,955
$
12,199
$
2,965
As a result of certain acquisitions, we are subject to corporate level taxes for any related asset dispositions that may occur during the ten-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 (a) the excess of the fair value of the asset over its adjusted tax basis as of the date it became a REIT asset, or (b) 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, 2013, 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 ten-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.
Under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”), for taxable years beginning after July 30, 2008, the REIT may lease “qualified health care properties” on an arm’s-length basis to a TRS if the property is operated on behalf of such subsidiary by a person who qualifies as an “eligible independent contractor.” Generally, the rent received from the TRS will meet the related party rent exception and will be treated as “rents from real property.” 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. We have entered into various joint ventures that were structured under RIDEA. Resident level rents and related operating expenses for these facilities are reported in the consolidated financial statements and are subject to federal and state income taxes as the operations of such facilities are included in a TRS. Certain net operating loss carryforwards could be utilized to offset taxable income in future years.
Given the applicable statute of limitations, we generally are subject to audit by the Internal Revenue Service (“IRS”) for the year ended December 31, 2010 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, 2007. We are also subject to audit by the Canada Revenue Agency and provincial authorities generally for periods subsequent to our REIT acquisition in May 2012 related to entities acquired or formed in connection with the acquisition, and by HM Revenue & Customs for periods subsequent to our REIT acquisitions in August 2012 and January 2013 related to entities acquired or formed in connection with the acquisitions.
At December 31, 2013, we had a net operating loss (“NOL”) carryforward related to the REIT of $133,568,000. 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 will expire through 2033.
At December 31, 2013 and 2012, respectively, we had a net operating loss carryforward related to Canadian entities of $50,958,000 and $4,275,000. These Canadian losses have a 20-year carryforward period. At December 31, 2013, we had a net operating loss carryforward related to United Kingdom entities of $238,741,000, consisting of $232,305,000 of net operating losses from acquisitions and $6,436,000 of net operating losses from current year activities. These United Kingdom losses do not have a finite carryforward period.
We apply the rules under ASC 740-10 “Accounting for Uncertainty in Income Taxes” for uncertain tax positions using a “more likely than not” recognition threshold for tax positions. Pursuant to these rules, we will initially recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits of the tax position, that such a position will be sustained upon examination by the relevant tax authorities. If the tax benefit meets the “more likely than not” threshold, the measurement of the tax benefit will be based on our estimate of the ultimate tax benefit to be sustained if audited by the taxing
HEALTH
CARE REIT, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
authority. The following table summarizes the activity related to our unrecognized tax benefits for the periods presented (dollars in thousands):
Year Ended December 31,
Gross unrecognized tax benefits at beginning of year
$
6,098
$
6,098
Increases (decreases) in unrecognized tax benefits related to a prior year
(248)
Increases (decreases) in unrecognized tax benefits related to the current year
Lapse in statute of limitations for assessment
(21)
(146)
Gross unrecognized tax benefits at end of year
$
6,413
$
6,098
Of the total $6,413,000 of total liability for gross unrecognized tax benefits at December 31, 2013, $5,896,000 (exclusive of accrued interest and penalties) relates to the April 1, 2011 Genesis HealthCare Corporation transaction (“Genesis Acquisition”) and is included in accrued expenses and other liabilities on the consolidated balance sheet. As a part of the Genesis Acquisition, we received a full indemnification from FC-GEN Operations Investment, LLC covering income taxes or other taxes as well as interest and penalties relating to tax positions taken by FC-GEN Operations Investment, LLC prior to the acquisition. Accordingly, an offsetting indemnification asset is recorded in receivables and other assets on the consolidated balance sheet. Such indemnification asset is reviewed for collectability periodically.
There is no amount of unrecognized tax benefits, currently accrued for, that would have a material impact on the effective tax rate to the extent that would be recognized. There were insignificant uncertain tax positions as of December 31, 2013 for which it is reasonably possible that the amount of unrecognized tax benefits would decrease during 2014. Interest and penalties totaled $465,000 and $1,215,000, respectively, for the year ended December 31, 2013 and are included in income tax expense. Of these amounts, $337,000 and $996,000 of interest and penalties, respectively, relate to the Genesis Acquisition and are offset by the indemnification asset.
19. Retirement Arrangements
Under the retirement plan and trust (the “401(k) Plan”), eligible employees may make contributions, and we may make matching contributions and a profit sharing contribution. Our contributions to the 401(k) Plan totaled $2,562,000, $2,140,000, and $1,558,000 in 2013, 2012 and 2011, respectively.
We have a Supplemental Executive Retirement Plan (“SERP”), a non-qualified defined benefit pension plan, which provides one executive officer with supplemental deferred retirement benefits. The SERP provides an opportunity for the participant to receive retirement benefits that cannot be paid under our tax-qualified plans because of the restrictions imposed by ERISA and the Internal Revenue Code of 1986, as amended. Benefits are based on compensation and length of service and the SERP is unfunded. Benefit payments are expected to total $3,069,000 during the next five fiscal years and $4,604,000 thereafter. We use a December 31 measurement date for the SERP. The accrued liability on our balance sheet for the SERP was $6,453,000 at December 31, 2013 ($6,665,000 at December 31, 2012).
HEALTH
CARE REIT, INC.
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, 2013 and 2012 (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 income due to rounding.
Year Ended December 31, 2013
1st Quarter
2nd Quarter(2)
3rd Quarter
4th Quarter
Revenues - as reported
$
633,915
$
682,125
$
786,930
$
788,577
Discontinued operations
(4,129)
(3,592)
(3,217)
-
Revenues - as adjusted(1)
$
629,786
$
678,533
$
783,713
$
788,577
Net income (loss) attributable to common stockholders
$
55,058
$
(8,508)
$
20,691
$
11,473
Net income (loss) attributable to common stockholders per share:
Basic
$
0.21
$
(0.03)
$
0.07
$
0.04
Diluted
0.21
(0.03)
0.07
0.04
Year Ended December 31, 2012
1st Quarter
2nd Quarter
3rd Quarter(3)
4th Quarter
Revenues - as reported
$
435,359
$
453,082
$
474,139
$
500,663
Discontinued operations
(21,559)
(17,821)
(15,120)
(3,699)
Revenues - as adjusted(1)
$
413,800
$
435,261
$
459,019
$
496,964
Net income attributable to common stockholders
$
39,307
$
54,735
$
37,269
$
90,576
Net income attributable to common stockholders per share:
Basic
$
0.20
$
0.26
$
0.17
$
0.35
Diluted
0.19
0.25
0.16
0.35
(1) We have reclassified the income attributable to the properties sold prior to or held for sale at December 31, 2013 to discontinued operations. See Note 5.
(2) The decrease in net income and amounts per share are primarily attributable to gains on sales of real estate of $82,492,000 for the first quarter as compared to losses of $29,997,000 for the second quarter.
(3) The decrease in net income and amounts per share are primarily attributable to gains on sales of real estate of $32,450,000 for the second quarter as compared to $12,827,000 for the third quarter.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.

ITEM 9A - CONTROLS AND PROCEDURES
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, 2013 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.
The scope of management’s assessment as of December 31, 2013 did not include an assessment of the internal control over financial reporting for the Revera Partnership, as discussed in Note 3 to the Company’s consolidated financial statements, because the Revera Partnership was acquired during the year ended December 31, 2013. The acquired businesses represent 5% of total assets at December 31, 2013 and 4% and 3% of revenues and net operating income, respectively, for the year then ended. The scope of management’s assessment on internal control over financial reporting for the year ended December 31, 2014 will include the aforementioned acquired operations.
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, 2013.
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 on Internal Control over Financial Reporting
The Board of Directors and Shareholders of Health Care REIT, Inc.
We have audited Health Care REIT, Inc.’s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria, 2013 framework). Health Care REIT, Inc.’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 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 conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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.
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.
As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the Revera Partnership, which is included in the 2013 consolidated financial statements of Health Care REIT, Inc. and cumulatively constitute 5% of total assets at December 31, 2013 and 4% and 3% of revenues and net operating income, respectively, for the year then ended. Our audit of the internal control over financial reporting of Health Care REIT, Inc. also did not include an evaluation of the internal control over financial reporting of the Revera Partnership.
In our opinion, Health Care REIT, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Health Care REIT, Inc. as of December 31, 2013 and 2012, and the related consolidated statements of comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2013 and our report dated February 21, 2014 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Toledo, Ohio
February 21, 2014

ITEM 9B - OTHER INFORMATION
Item 9B. Other Information
None.
PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS
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) Compliance” in our definitive proxy statement, which will be filed with the Securities and Exchange Commission (the “Commission”) prior to April 30, 2014.
We have adopted a Code of Business Conduct & Ethics that applies to our directors, officers and employees. The code is posted on the Internet at www.hcreit.com. 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.hcreit.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.hcreit.com.

ITEM 11 - EXECUTIVE COMPENSATION
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 April 30, 2014.

ITEM 12 - SECURITY OWNERSHIP
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 April 30, 2014.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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 April 30, 2014.

ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES
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 April 30, 2014.
PART IV

ITEM 15 - EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules
(a) 1. Our Consolidated Financial Statements are included in Part II, Item 8:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets - December 31, 2013 and 2012
Consolidated Statements of Comprehensive Income - Years ended December 31, 2013, 2012 and 2011
Consolidated Statements of Equity - Years ended December 31, 2013, 2012 and 2011
Consolidated Statements of Cash Flows - Years ended December 31, 2013, 2012 and 2011
Notes to Consolidated Financial Statements
2. The following Financial Statement Schedules are included in Item 15(c):
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.
3. Exhibit Index:
The information required by this item is set forth on the Exhibit Index that follows the Financial Statement Schedules to this Annual Report on Form 10-K.
(b) Exhibits:
The exhibits listed on the Exhibit Index 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.
(c) Financial Statement Schedules:
Financial statement schedules are included beginning on page 117.
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.
HEALTH CARE REIT, INC.
By: /s/ George L. Chapman
George L. Chapman,
Chairman, Chief Executive Officer, President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 21, 2014 by the following persons on behalf of the Registrant and in the capacities indicated.
/s/ William C. Ballard, Jr.**
/s/ Jeffrey R. Otten**
William C. Ballard, Jr., Director
Jeffrey R. Otten, Director
/s/ Thomas J. DeRosa**
/s/ Judith C. Pelham**
Thomas J. DeRosa, Director
Judith C. Pelham, Director
/s/ Jeffrey H. Donahue**
/s/ R. Scott Trumbull**
Jeffrey H. Donahue, Director
R. Scott Trumbull, Director
/s/ Peter J. Grua**
/s/ George L. Chapman
Peter J. Grua, Director
George L. Chapman, Chairman, Chief Executive
Officer, President and Director
(Principal Executive Officer)
/s/ Fred S. Klipsch**
/s/ Scott A. Estes**
Fred S. Klipsch, Director
Scott A. Estes, Executive Vice President and Chief
Financial Officer (Principal Financial Officer)
/s/ Timothy J. Naughton**
/s/ Paul D. Nungester, Jr.**
Timothy J. Naughton, Director
Paul D. Nungester, Jr., Senior Vice President and
Corporate Controller (Principal Accounting Officer)
/s/ Sharon M. Oster **
**By: /s/ George L. Chapman
Sharon M. Oster, Director
George L. Chapman, Attorney-in-Fact
Health Care REIT, Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2013
(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 Triple-Net:
Aboite Twp, IN
$
-
$
1,770
$
19,930
$
1,601
$
1,770
$
21,531
$
1,787
611 W County Line Rd South
Agawam, MA
-
16,112
2,134
18,246
5,736
1200 Suffield St.
Agawam, MA
-
1,230
13,618
1,230
14,211
1,126
61 Cooper Street
Agawam, MA
-
15,304
15,596
1,203
55 Cooper Street
Agawam, MA
-
10,661
10,697
464 Main Street
Agawam, MA
-
10,562
10,607
65 Cooper Street
Akron, OH
-
8,219
8,710
2,084
721 Hickory St.
Akron, OH
-
7,535
7,764
1,634
209 Merriman Road
Albertville, AL
2,042
6,197
6,368
151 Woodham Dr.
Alliance, OH
-
7,723
7,830
1,767
1785 Freshley Ave.
Amelia Island, FL
-
3,290
24,310
20,314
3,290
44,624
7,573
48 Osprey Village Dr.
Ames, IA
-
8,870
-
8,870
1325 Coconino Rd.
Anderson, SC
-
6,290
6,709
2,235
311 Simpson Rd.
Andover, MA
-
1,310
12,647
1,310
12,674
1,067
89 Morton Street
Annapolis, MD
-
1,010
24,825
1,010
24,976
1,862
35 Milkshake Lane
Ansted, WV
-
14,113
14,221
1,042
106 Tyree Street, P.O. Drawer 400
Apple Valley, CA
10,809
16,639
16,716
2,483
11825 Apple Valley Rd.
Asheboro, NC
-
5,032
5,197
1,487
514 Vision Dr.
Asheville, NC
-
3,489
-
3,489
1,456
4 Walden Ridge Dr.
Asheville, NC
-
1,955
2,306
308 Overlook Rd.
Aspen Hill, MD
-
-
9,008
1,181
-
10,188
3227 Bel Pre Road
Atlanta, GA
7,678
2,058
14,914
1,101
2,080
15,993
10,275
1460 S Johnson Ferry Rd.
Aurora, OH
-
1,760
14,148
1,760
14,254
1,238
505 S. Chillicothe Rd
Aurora, CO
-
2,600
5,906
7,915
2,600
13,821
3,490
14101 E. Evans Ave.
Aurora, CO
-
2,440
28,172
-
2,440
28,172
5,586
14211 E. Evans Ave.
Austin, TX
19,028
9,520
1,152
10,667
4,102
12429 Scofield Farms Dr.
Austin, TX
9,799
18,970
-
18,970
3,440
3200 W. Slaughter Lane
Aventura, FL
-
4,540
33,986
4,540
34,184
1,223
2777 NE 183rd Street
Avon, IN
-
1,830
14,470
-
1,830
14,470
1,496
182 S Country RD. 550E
Avon Lake, OH
-
10,421
10,562
345 Lear Rd.
Ayer, MA
-
-
22,074
-
22,077
1,658
400 Groton Road
Baltic, OH
-
8,709
8,898
1,971
130 Buena Vista St.
Baltimore, MD
-
1,350
14,884
1,350
15,204
1,189
115 East Melrose Avenue
Baltimore, MD
-
5,039
5,186
6000 Bellona Avenue
Bartlesville, OK
-
1,380
-
1,380
5420 S.E. Adams Blvd.
Baytown, TX
9,191
6,150
-
6,150
2,067
3921 N. Main St.
Baytown, TX
-
11,110
-
11,110
1,336
2000 West Baker Lane
Beachwood, OH
-
1,260
23,478
-
1,260
23,478
7,835
3800 Park East Drive
Beattyville, KY
-
6,900
7,560
1,712
249 E. Main St.
Bedford, NH
-
2,250
28,831
2,250
28,836
2,153
25 Ridgewood Road
Bellevue, WI
-
1,740
18,260
1,740
18,831
3,707
1660 Hoffman Rd.
Bellingham, WA
8,724
1,500
19,861
1,507
19,975
2,861
4415 Columbine Dr.
Benbrook, TX
-
1,550
13,553
1,550
14,322
4242 Bryant Irvin Road
Bethel Park, PA
-
1,700
16,007
-
1,700
16,007
2,087
5785 Baptist Road
Bluefield, VA
-
12,463
12,495
Westwood Medical Park
Boca Raton, FL
-
1,440
31,048
1,440
31,834
1,108
1080 Northwest 15th Street
Boonville, IN
-
5,510
-
5,510
1,809
1325 N. Rockport Rd.
Bradenton, FL
-
3,298
-
3,298
1,608
6101 Pointe W. Blvd.
Bradenton, FL
-
9,953
-
9,953
2800 60th Avenue West
Braintree, MA
-
7,157
1,290
8,447
7,871
1102 Washington St.
Brandon, MS
-
1,220
10,241
-
1,220
10,241
140 Castlewoods Blvd
Bremerton, WA
-
2,210
2,354
3231 Pine Road
Bremerton, WA
-
10,420
10,570
3201 Pine Road NE
Brick, NJ
-
1,290
25,247
1,290
25,427
1,585
458 Jack Martin Blvd.
Brick, NJ
-
1,170
17,372
1,180
17,637
1,380
515 Jack Martin Blvd
Brick, NJ
-
17,125
17,230
1,325
1594 Route 88
Bridgewater, NJ
-
1,850
3,050
-
1,850
3,050
1,121
875 Route 202/206 North
Bridgewater, NJ
-
1,730
48,201
1,739
48,853
3,750
2005 Route 22 West
Bridgewater, NJ
-
1,800
31,810
1,800
31,949
1,968
680 US-202/206 North
Broadview Heights, OH
-
12,400
2,393
14,793
4,350
2801 E. Royalton Rd.
Brookfield, WI
-
1,300
12,830
-
1,300
12,830
1185 Davidson Road
Brookline, MA
-
2,760
9,217
3,369
2,760
12,586
30 Webster Street
Brooklyn Park, MD
-
1,290
16,329
1,290
16,358
1,270
613 Hammonds Lane
Burleson, TX
-
13,985
14,235
1,008
300 Huguley Boulevard
Burlington, NC
-
4,297
5,004
1,407
3619 S. Mebane St.
Burlington, NC
-
5,467
-
5,467
1,581
3615 S. Mebane St.
Burlington, NJ
-
1,700
12,554
1,700
13,020
1,134
115 Sunset Road
Burlington, NJ
-
1,170
19,205
1,170
19,372
1,368
2305 Rancocas Road
Byrdstown, TN
-
-
2,414
-
2,683
1,582
129 Hillcrest Dr.
Cambridge, MD
-
15,843
16,050
1,208
525 Glenburn Avenue
Canton, MA
-
8,201
8,464
3,824
One Meadowbrook Way
Canton, OH
-
2,098
-
2,098
1119 Perry Dr., N.W.
Cape Coral, FL
-
3,281
-
3,281
1,081
911 Santa Barbara Blvd.
Cape Coral, FL
9,229
18,868
-
18,868
831 Santa Barbara Boulevard
Carrollton, TX
-
4,280
31,444
-
4,280
31,444
-
2105 North Josey Lane
Carson City, NV
5,155
8,238
-
8,238
1111 W. College Parkway
Cary, NC
-
1,500
4,350
1,500
5,336
2,055
111 MacArthur
Catonsville, MD
-
1,330
15,003
1,330
15,552
1,202
16 Fusting Avenue
Cedar Grove, NJ
-
1,830
10,939
1,830
10,949
25 East Lindsley Road
Cedar Grove, NJ
-
2,850
27,737
2,850
27,757
2,124
536 Ridge Road
Centreville, MD(2)
-
14,602
14,843
1,142
205 Armstrong Avenue
Chapel Hill, NC
-
2,646
3,429
1,092
100 Lanark Rd.
Charles Town, WV
-
22,834
22,863
1,660
219 Prospect Ave
Charleston, WV
-
17,575
17,873
1,296
1000 Association Drive, North Gate Business Park
Charleston, WV
-
5,430
5,444
699 South Park Road
Chelmsford, MA
-
1,040
10,951
1,499
1,040
12,450
3,062
4 Technology Dr.
Chicago, IL
-
1,800
19,256
-
1,800
19,256
6700 South Keating Avenue
Chicago, IL
-
2,900
17,016
-
2,900
17,016
4239 North Oak Park Avenue
Chickasha, OK
-
1,395
-
1,395
801 Country Club Rd.
Cinnaminson, NJ
-
6,663
6,812
1700 Wynwood Drive
Citrus Heights, CA
14,974
2,300
31,876
2,300
32,383
4,726
7418 Stock Ranch Rd.
Claremore, OK
-
1,427
6,130
7,557
1605 N. Hwy. 88
Clarks Summit, PA
-
11,179
11,194
100 Edella Road
Clarks Summit, PA
-
6,529
6,583
150 Edella Road
Clarksville, TN
-
2,292
-
2,292
2183 Memorial Dr.
Cleburne, TX
-
5,369
-
5,369
402 S Colonial Drive
Cleveland, TN
-
5,000
5,122
1,833
2750 Executive Park N.W.
Clinton, MD
-
2,330
20,876
2,330
21,467
7520 Surratts Road
Cloquet, MN
-
4,660
-
4,660
705 Horizon Circle
Cobham, England
-
13,176
33,574
-
13,176
33,574
Redhill Road
Colchester, CT
-
4,860
5,355
59 Harrington Court
Colts Neck, NJ
-
14,733
15,084
1,215
3 Meridian Circle
Columbia, TN
-
2,295
-
2,295
5011 Trotwood Ave.
Columbia, TN
-
3,787
-
3,787
1,446
1410 Trotwood Ave.
Columbia, SC
-
2,120
4,860
5,709
2,120
10,569
2,969
731 Polo Rd.
Columbia Heights, MN
-
14,175
-
14,175
3807 Hart Boulevard
Columbus, IN
-
3,190
-
3,190
2564 Foxpointe Dr.
Columbus, OH
-
5,170
8,255
1,070
12,885
2,901
1425 Yorkland Rd.
Columbus, OH
-
1,010
5,022
-
1,010
5,022
1,244
1850 Crown Park Ct.
Columbus, OH
-
1,010
4,931
13,620
1,860
17,701
3,923
5700 Karl Rd.
Columbus, IN
-
6,710
-
6,710
2,048
2011 Chapa Dr.
Concord, NC
-
3,921
3,976
1,276
2452 Rock Hill Church Rd.
Concord, NH
-
18,423
18,869
1,371
20 Maitland Street
Concord, NH
-
1,760
43,179
1,760
43,747
3,187
239 Pleasant Street
Concord, NH
-
3,041
3,381
227 Pleasant Street
Conroe, TX
-
7,771
-
7,771
903 Longmire Road
Conyers, GA
-
2,740
19,302
2,740
19,407
1504 Renaissance Drive
Coppell, TX
-
1,550
8,386
-
1,550
8,386
1530 East Sandy Lake Road
Corpus Christi, TX
-
1,916
-
1,916
1101 S. Alameda
Cortland, NY
-
18,041
18,099
839 Bennie Road
Daniels, WV
-
17,320
17,370
1,270
1631 Ritter Drive
Danville, VA
-
3,954
4,676
1,372
149 Executive Ct.
Daphne, AL
-
2,880
8,670
2,880
8,797
27440 County Road 13
Dedham, MA
-
1,360
9,830
-
1,360
9,830
3,457
10 CareMatrix Dr.
DeForest, WI
-
5,350
5,704
6902 Parkside Circle
Defuniak Springs, FL
-
1,350
10,250
-
1,350
10,250
2,162
785 S. 2nd St.
Denton, TX
-
1,760
8,305
-
1,760
8,305
2125 Brinker Rd
Denver, CO
-
2,530
9,514
-
2,530
9,514
2,246
3701 W. Radcliffe Ave.
Dover, DE
-
7,717
7,755
1203 Walker Road
Dover, DE
-
22,266
22,356
1,671
1080 Silver Lake Blvd.
Dresher, PA
-
2,060
40,236
2,067
40,502
3,106
1405 N. Limekiln Pike
Dundalk, MD(2)
-
1,770
32,047
1,770
32,831
2,412
7232 German Hill Road
Durham, NC
-
1,476
10,659
2,196
1,476
12,855
8,822
4434 Ben Franklin Blvd.
East Brunswick, NJ
-
1,380
34,229
1,380
34,410
2,101
606 Cranbury Rd.
East Norriton, PA
-
1,200
28,129
1,210
28,604
2,228
2101 New Hope St
Easton, MD
-
24,539
-
24,539
1,892
610 Dutchman's Lane
Eatontown, NJ
-
1,190
23,358
1,190
23,426
1,788
3 Industrial Way East
Eden, NC
-
4,877
-
4,877
1,431
314 W. Kings Hwy.
Edmond, OK
-
8,388
-
8,388
15401 North Pennsylvania Avenue
Elizabeth City, NC
-
2,760
2,011
4,771
1,704
400 Hastings Lane
Elizabethton, TN
-
4,604
4,940
1,783
1200 Spruce Lane
Englewood, NJ
-
4,514
4,531
333 Grand Avenue
Englishtown, NJ
-
12,520
13,041
1,057
49 Lasatta Ave
Erin, TN
-
8,060
8,194
2,811
242 Rocky Hollow Rd.
Everett, WA
-
1,400
5,476
-
1,400
5,476
2,167
2015 Lake Heights Dr.
Fair Lawn, NJ
-
2,420
24,504
2,420
24,948
1,874
12-15 Saddle River Road
Fairfield, CA
-
1,460
14,040
1,541
1,460
15,581
4,776
3350 Cherry Hills St.
Fairhope, AL
-
9,119
-
9,119
50 Spring Run Road
Fall River, MA
-
5,829
4,856
10,685
4,205
1748 Highland Ave.
Fall River, MA
-
34,715
34,923
2,603
4901 North Main Street
Fanwood, NJ
-
2,850
55,175
2,850
55,504
3,341
295 South Ave.
Fayetteville, GA
-
12,665
12,928
1967 Highway 54 West
Fayetteville, NY
-
3,962
4,462
1,438
5125 Highbridge St.
Findlay, OH
-
1,800
-
1,800
725 Fox Run Rd.
Fishers, IN
-
1,500
14,500
-
1,500
14,500
1,499
9745 Olympia Dr.
Florence, NJ
-
2,978
-
2,978
901 Broad St.
Florence, AL
7,179
13,049
13,177
1,852
3275 County Road 47
Flourtown, PA
-
1,800
14,830
1,800
15,033
1,162
350 Haws Lane
Flower Mound, TX
-
1,800
8,414
-
1,800
8,414
4141 Long Prairie Road
Follansbee, WV
-
27,670
27,719
2,050
840 Lee Road
Forest City, NC
-
4,497
-
4,497
1,334
493 Piney Ridge Rd.
Fort Ashby, WV
-
19,566
19,689
1,425
Diane Drive, Box 686
Franconia, NH
-
11,320
11,390
93 Main Street
Franklin, NH
-
15,210
15,257
1,145
7 Baldwin Street
Fredericksburg, VA
-
1,000
20,000
1,200
1,000
21,200
4,688
3500 Meekins Dr.
Fredericksburg, VA
-
28,611
28,646
2,104
11 Dairy Lane
Fredericksburg, VA
-
3,700
22,016
3,700
22,075
12100 Chancellors Village
Fremont, CA
19,492
3,400
25,300
1,821
3,456
27,065
5,853
2860 Country Dr.
Gardner, MA
-
10,210
10,237
32 Hospital Hill Road
Gardnerville, NV
12,597
1,143
10,831
1,164
11,586
7,992
1565-A Virginia Ranch Rd.
Gastonia, NC
-
6,129
-
6,129
1,762
1680 S. New Hope Rd.
Gastonia, NC
-
3,096
3,118
1717 Union Rd.
Gastonia, NC
-
5,029
5,149
1,493
1750 Robinwood Rd.
Georgetown, TX
-
2,100
-
2,100
2600 University Dr., E.
Gettysburg, PA
-
8,913
9,003
867 York Road
Gig Harbor, WA
5,581
1,560
15,947
1,583
15,986
2,231
3213 45th St. Court NW
Glastonbury, CT
-
1,950
9,532
2,360
10,031
72 Salmon Brook Drive
Glen Mills, PA
-
9,110
9,275
549 Baltimore Pike
Glenside, PA
-
1,940
16,867
1,940
17,020
1,308
850 Paper Mill Road
Graceville, FL
-
13,000
-
13,000
2,666
1083 Sanders Ave.
Grafton, WV
-
18,824
18,861
1,374
8 Rose Street
Granbury, TX
-
2,040
30,670
2,040
30,819
2,182
100 Watermark Boulevard
Granbury, TX
-
2,550
2,940
2,550
3,340
916 East Highway 377
Grand Blanc, MI
-
7,843
-
7,843
5400 East Baldwin
Grand Ledge, MI
7,971
1,150
16,286
5,119
1,150
21,405
1,404
4775 Village Dr
Granger, IN
-
1,670
21,280
2,401
1,670
23,681
1,917
6330 North Fir Rd
Grass Valley, CA
4,409
7,667
-
7,667
-
415 Sierra College Drive
Greendale, WI
-
2,060
35,383
2,060
35,905
1,658
5700 Mockingbird Lane
Greeneville, TN
-
8,290
8,797
2,375
106 Holt Ct.
Greenfield, WI
-
6,626
6,954
1,180
3933 S. Prairie Hill Lane
Greensboro, NC
-
2,970
3,524
1,060
5809 Old Oak Ridge Rd.
Greensboro, NC
-
5,507
1,013
6,520
1,945
4400 Lawndale Dr.
Greenville, SC
-
4,750
-
4,750
1,293
23 Southpointe Dr.
Greenville, SC
-
5,400
100,523
3,551
5,400
104,074
10,812
10 Fountainview Terrace
Greenville, NC
-
4,393
4,561
1,306
2715 Dickinson Ave.
Greenwood, IN
-
1,550
22,770
1,550
22,851
1,942
2339 South SR 135
Groton, CT
-
2,430
19,941
2,430
20,836
1,672
1145 Poquonnock Road
Haddonfield, NJ
-
-
-
2,480
-
2,480
2,480
132 Warwick Road
Hamburg, PA
-
10,543
10,734
125 Holly Road
Hamilton, NJ
-
4,469
-
4,469
1,451
1645 Whitehorse-Mercerville Rd.
Hanford, England
-
1,856
13,205
-
1,856
13,205
Bankhouse Road
Hanover, IN
-
4,430
-
4,430
1,238
188 Thornton Rd
Harleysville, PA
-
11,355
-
11,355
1,392
695 Main Street
Harriman, TN
-
8,060
8,218
3,001
240 Hannah Rd.
Hatboro, PA
-
-
28,112
1,746
-
29,858
2,115
3485 Davisville Road
Hatfield, England
-
3,928
10,112
-
3,928
10,112
St Albans Road East
Hattiesburg, MS
-
15,518
15,694
1,230
217 Methodist Hospital Blvd
Haverford, PA
-
1,880
33,993
1,883
34,492
2,641
731 Old Buck Lane
Hemet, CA
-
3,405
-
3,405
25818 Columbia St.
Hemet, CA
13,550
1,890
28,606
1,899
29,247
6,649
1001 N. Lyon Ave
Hemet, CA
-
9,630
10,353
1,148
1001 N. Lyon Ave
Hermitage, TN
-
1,500
9,856
1,500
9,902
4131 Andrew Jackson Parkway
Herne Bay, England
-
2,552
32,717
-
2,552
32,717
165 Reculver Road
Hickory, NC
-
1,219
2530 16th St. N.E.
High Point, NC
-
4,443
5,236
1,543
1568 Skeet Club Rd.
High Point, NC
-
2,185
2,595
1564 Skeet Club Rd.
High Point, NC
-
3,395
3,423
1,017
201 W. Hartley Dr.
High Point, NC
-
4,143
-
4,143
1,220
1560 Skeet Club Rd.
Highland Park, IL
-
2,820
15,832
2,820
15,882
1651 Richfield Avenue
Highlands Ranch, CO
-
3,721
4,983
8,704
1,237
9160 S. University Blvd.
Hilltop, WV
-
25,355
25,370
1,881
Saddle Shop Road
Hinckley, England
-
2,900
5,634
-
2,900
5,634
Tudor Road
Hollywood, FL
-
1,240
13,806
1,240
14,048
3880 South Circle Drive
Homestead, FL
-
2,750
11,750
-
2,750
11,750
2,465
1990 S. Canal Dr.
Houston, TX
9,797
18,715
-
18,715
3,145
8702 South Course Drive
Houston, TX
-
5,090
9,471
-
5,090
9,471
1,303
15015 Cypress Woods Medical Drive
Houston, TX
10,148
5,970
6,720
2,186
3625 Green Crest Dr.
Howell, NJ
10,049
1,050
21,703
1,065
21,914
1,720
100 Meridian Place
Huntington, WV
-
32,261
32,387
2,405
101 13th Street
Huron, OH
-
6,088
1,452
7,540
1,602
1920 Cleveland Rd. W.
Hurricane, WV
-
21,454
22,258
1,648
590 N Poplar Fork Road
Hutchinson, KS
-
10,590
10,784
2,603
2416 Brentwood
Indianapolis, IN
-
6,287
22,565
28,852
6,840
8616 W. Tenth St.
Indianapolis, IN
-
2,473
12,123
14,596
3,315
8616 W.Tenth St.
Jackson, NJ
-
6,500
26,405
2,193
6,500
28,598
2 Kathleen Drive
Jacksonville Beach, FL
-
1,210
26,207
1,210
26,317
1700 The Greens Way
Jamestown, TN
-
-
6,707
-
7,215
4,369
208 N. Duncan St.
Jefferson, OH
-
9,120
-
9,120
2,126
222 Beech St.
Jupiter, FL
-
3,100
47,453
3,100
48,016
1,512
110 Mangrove Bay Way
Keene, NH
-
9,639
9,923
677 Court Street
Kenner, LA
-
1,100
10,036
1,100
10,364
7,047
1600 Joe Yenni Blvd
Kennesaw, GA
-
10,848
11,181
5235 Stilesboro Road
Kennett Square, PA
-
1,050
22,946
1,083
23,021
1,785
301 Victoria Gardens Dr.
Kennewick, WA
-
1,820
27,991
1,834
28,232
5,012
2802 W 35th Ave
Kenosha, WI
-
1,500
9,139
-
1,500
9,139
1,219
6300 67th Street
Kent, WA
-
20,318
10,470
30,788
4,461
24121 116th Avenue SE
Kirkland, WA
-
1,880
4,315
1,880
4,998
1,281
6505 Lakeview Dr.
Kirkstall, England
-
3,273
12,648
-
3,273
12,648
29 Broad Lane
Laconia, NH
-
14,434
14,930
1,128
175 Blueberry Lane
Lake Barrington, IL
-
3,400
66,179
3,400
66,225
2,096
22320 Classic Court
Lake Zurich, IL
-
1,470
9,830
-
1,470
9,830
550 America Court
Lakewood Ranch, FL
-
6,714
-
6,714
8230 Nature's Way
Lakewood Ranch, FL
7,387
1,000
22,388
-
1,000
22,388
8220 Natures Way
Lancaster, CA
10,083
15,295
15,857
2,504
43051 15th St. West
Lancaster, PA
-
7,623
7,702
336 South West End Ave
Lancaster, NH
-
15,804
15,964
1,191
91 Country Village Road
Lancaster, NH
-
63 Country Village Road
Langhorne, PA
-
1,350
24,881
1,350
24,998
1,919
262 Toll Gate Road
Lapeer, MI
-
7,625
-
7,625
2323 Demille Road
LaPlata, MD(2)
-
19,068
19,534
1,473
One Magnolia Drive
Lawrence, KS
3,704
8,716
-
8,716
3220 Peterson Road
Lebanon, NH
-
20,138
20,202
1,512
24 Old Etna Road
Lecanto, FL
-
6,900
-
6,900
1,802
2341 W. Norvell Bryant Hwy.
Lee, MA
-
18,135
19,061
6,105
600 & 620 Laurel St.
Leicester, England
-
6,897
30,240
(234)
4,110
32,793
307 London Road
Lenoir, NC
-
3,748
4,389
1,287
1145 Powell Rd., N.E.
Leominster, MA
-
6,201
6,226
44 Keystone Drive
Lewisburg, WV
-
3,699
3,769
331 Holt Lane
Lexington, NC
-
3,900
1,015
4,915
1,528
161 Young Dr.
Libertyville, IL
-
6,500
40,024
-
6,500
40,024
2,953
901 Florsheim Dr
Lincoln, NE
4,964
13,807
-
13,807
1,329
7208 Van Dorn St.
Linwood, NJ
-
21,984
22,522
1,788
432 Central Ave
Litchfield, CT
-
1,240
17,908
1,250
18,044
1,406
19 Constitution Way
Little Neck, NY
-
3,350
38,461
3,355
39,063
3,035
55-15 Little Neck Pkwy.
Loganville, GA
-
1,430
22,912
1,430
23,204
690 Tommy Lee Fuller Drive
Longview, TX
-
5,520
-
5,520
311 E Hawkins Pkwy
Longwood, FL
-
1,260
6,445
-
1,260
6,445
425 South Ronald Reagan Boulevard
Louisville, KY
-
10,010
-
10,010
3,003
4604 Lowe Rd
Louisville, KY
-
7,135
7,298
2,669
2529 Six Mile Lane
Louisville, KY
-
4,675
4,808
1,789
1120 Cristland Rd.
Lowell, MA
-
1,070
13,481
1,070
13,584
1,091
841 Merrimack Street
Lowell, MA
-
3,378
3,408
30 Princeton Blvd
Loxley, England
-
1,840
21,049
-
1,840
21,049
Loxley Road
Lutherville, MD
-
1,100
19,786
1,579
1,100
21,365
1,548
515 Brightfield Road
Macungie, PA
-
29,033
29,049
2,143
1718 Spring Creek Road
Mahwah, NJ
-
-
-
-
-
15 Edison Road
Manahawkin, NJ
-
1,020
20,361
1,020
20,483
1,559
1361 Route 72 West
Manalapan, NJ
-
22,624
22,719
1,393
445 Route 9 South
Manassas, VA
-
7,446
7,976
2,090
8341 Barrett Dr.
Mansfield, TX
-
5,251
-
5,251
2281 Country Club Dr
Manteca, CA
6,188
1,300
12,125
1,451
1,312
13,564
3,083
430 N. Union Rd.
Marianna, FL
-
8,910
-
8,910
1,822
2600 Forest Glenn Tr.
Marietta, GA
-
1,270
10,519
1,270
10,923
3039 Sandy Plains Road
Marlinton, WV
-
8,430
8,441
Stillwell Road, Route 1
Marmet, WV
-
26,483
-
26,483
1,924
1 Sutphin Drive
Martinsburg, WV
-
17,180
17,230
1,261
2720 Charles Town Road
Martinsville, VA
-
-
-
-
-
Rolling Hills Rd. & US Hwy. 58
Marysville, WA
4,585
4,780
5,109
1,404
9802 48th Dr. N.E.
Matawan, NJ
-
1,830
20,618
1,830
20,625
1,179
625 State Highway 34
Matthews, NC
-
4,738
-
4,738
1,432
2404 Plantation Center Dr.
McHenry, IL
-
1,576
-
-
1,576
-
-
_
McHenry, IL
-
3,550
15,300
6,718
3,550
22,018
3,677
3300 Charles Miller Rd.
McKinney, TX
-
1,570
7,389
-
1,570
7,389
2701 Alma Rd.
McMurray, PA
-
1,440
15,805
1,894
1,440
17,699
240 Cedar Hill Dr
Melbourne, FL
-
7,070
48,257
12,990
7,070
61,247
6,577
7300 Watersong Lane
Melbourne, FL
-
2,540
21,319
-
2,540
21,319
1,053
3260 N Harbor City Blvd
Melville, NY
-
4,280
73,283
1,111
4,282
74,392
5,700
70 Pinelawn Rd
Memphis, TN
-
5,963
-
5,963
1,931
1150 Dovecrest Rd.
Memphis, TN
-
9,660
1,600
11,260
141 N. McLean Blvd.
Mendham, NJ
-
1,240
27,169
1,240
27,802
2,023
84 Cold Hill Road
Menomonee Falls, WI
-
1,020
6,984
1,020
7,036
1,167
W128 N6900 Northfield Drive
Mercerville, NJ
-
9,929
10,045
2240 White Horse- Merceville Road
Meriden, CT
-
1,300
1,472
1,300
1,477
845 Paddock Ave
Merrillville, IN
-
7,084
3,526
10,610
6,623
101 W. 87th Ave.
Merrillville, IN
-
1,080
3,413
-
1,080
3,413
300 W. 89th Ave.
Mesa, AZ
6,111
9,087
9,800
3,499
7231 E. Broadway
Middleburg Heights, OH
-
7,780
-
7,780
1,945
15435 Bagley Rd.
Middleton, WI
-
4,006
4,606
1,349
6701 Stonefield Rd.
Middletown, RI
-
1,480
19,703
-
1,480
19,703
1,523
333 Green End Avenue
Midland, MI
-
11,025
11,083
2325 Rockwell Dr
Milford, DE
-
7,816
7,855
500 South DuPont Boulevard
Milford, DE
-
19,216
19,274
1,477
700 Marvel Road
Mill Creek, WA
28,882
10,150
60,274
10,179
60,859
11,315
14905 Bothell-Everett Hwy
Millersville, MD
-
1,020
1,045
1,045
899 Cecil Avenue
Millville, NJ
-
29,944
30,048
2,252
54 Sharp Street
Missoula, MT
-
7,490
7,867
1,719
3620 American Way
Monclova, OH
-
1,750
12,243
-
1,750
12,243
6935 Monclova Road
Monmouth Junction, NJ
-
6,209
6,266
2 Deer Park Drive
Monroe, NC
-
3,681
4,329
1,302
918 Fitzgerald St.
Monroe, NC
-
4,799
5,656
1,603
919 Fitzgerald St.
Monroe, NC
-
4,021
4,135
1,241
1316 Patterson Ave.
Monroe, WA
-
2,560
34,460
2,584
34,741
4,963
15465 179th Ave. SE
Monroe Twp, NJ
-
1,160
13,193
1,160
13,268
1,084
292 Applegarth Road
Monteagle, TN
-
3,318
-
3,318
1,177
218 Second St., N.E.
Monterey, TN
-
-
4,195
-
4,605
2,744
410 W. Crawford Ave.
Montville, NJ
-
3,500
31,002
3,500
31,234
1,949
165 Changebridge Rd.
Moorestown, NJ
-
2,060
51,628
2,063
52,170
4,019
1205 N. Church St
Morehead City, NC
-
3,104
1,648
4,752
1,704
107 Bryan St.
Morgantown, KY
-
3,705
4,320
1,266
206 S. Warren St.
Morgantown, WV
-
15,633
15,653
161 Bakers Ridge Road
Morton Grove, IL
-
1,900
19,374
1,900
19,432
1,092
5520 N. Lincoln Ave.
Mount Airy, NC
-
6,430
7,007
1,382
1000 Ridgecrest Lane
Mountain City, TN
-
5,896
6,556
3,874
919 Medical Park Dr.
Mt. Vernon, WA
-
2,200
2,356
3807 East College Way
Myrtle Beach, SC
-
6,890
41,526
11,668
6,890
53,194
5,700
101 Brightwater Dr.
Nacogdoches, TX
-
5,754
-
5,754
1,013
5902 North St
Naperville, IL
-
3,470
29,547
-
3,470
29,547
2,222
504 North River Road
Naperville, IL
-
1,550
12,237
-
1,550
12,237
-
1936 Brookdale Road
Naples, FL
-
1,716
17,306
1,878
1,738
19,162
16,267
1710 S.W. Health Pkwy.
Naples, FL
-
5,450
-
5,450
1,530
2900 12th St. N.
Nashville, TN
-
4,910
29,590
-
4,910
29,590
4,360
15 Burton Hills Boulevard
Nashville, TN
-
4,500
12,287
-
4,500
12,287
832 Wedgewood Ave
Naugatuck, CT
-
1,200
15,826
1,200
16,002
1,229
4 Hazel Avenue
Needham, MA
-
1,610
13,715
1,610
14,081
5,010
100 West St.
Neenah, WI
-
15,120
-
15,120
1,432
131 E. North Water St.
New Braunfels, TX
-
1,200
19,800
-
1,200
19,800
1,466
2294 East Common Street
New Haven, IN
-
3,524
-
3,524
1,175
1201 Daly Dr.
New Moston, England
-
1,989
5,882
-
1,989
5,882
90a Broadway
Newark, DE
-
21,220
1,488
22,708
5,185
200 E. Village Rd.
Newcastle Under Lyme, England
-
1,492
7,598
-
1,492
7,598
Hempstalls Lane
Newport, VT
-
3,867
-
3,867
35 Bel-Aire Drive
Norman, OK
-
1,484
-
1,484
1701 Alameda Dr.
Norman, OK
11,161
1,480
33,330
-
1,480
33,330
1,288
800 Canadian Trails Drive
Norristown, PA
-
1,200
19,488
1,762
1,200
21,250
1,521
1700 Pine Street
North Andover, MA
-
21,817
21,870
1,645
140 Prescott Street
North Andover, MA
-
1,070
17,341
1,303
1,070
18,644
1,403
1801 Turnpike Street
North Augusta, SC
-
2,558
-
2,558
1,049
105 North Hills Dr.
North Cape May, NJ
-
22,266
22,302
1,669
700 Townbank Road
Northampton, England
-
6,961
23,306
-
6,961
23,306
Cliftonville Road
Nuneaton, England
-
4,467
12,068
-
4,467
12,068
132 Coventry Road
Nuthall, England
-
3,356
14,020
-
3,356
14,020
172 Nottingham Road
Oak Hill, WV
-
24,506
-
24,506
1,777
422 23rd Street
Oak Hill, WV
-
-
438 23rd Street
Ocala, FL
-
1,340
10,564
-
1,340
10,564
1,272
2650 SE 18TH Avenue
Ogden, UT
-
6,700
7,399
1,734
1340 N. Washington Blv.
Oklahoma City, OK
-
7,513
-
7,513
1,139
13200 S. May Ave
Oklahoma City, OK
-
7,017
-
7,017
11320 N. Council Road
Olympia, WA
6,829
16,689
16,844
2,390
616 Lilly Rd. NE
Omaha, NE
-
10,230
-
10,230
1,003
11909 Miracle Hills Dr.
Omaha, NE
4,274
8,864
-
8,864
5728 South 108th St.
Oneonta, NY
-
5,020
-
5,020
1846 County Highway 48
Ormond Beach, FL
-
-
2,739
-
3,191
1,641
103 N. Clyde Morris Blvd.
Orwigsburg, PA
-
20,632
20,766
1,571
1000 Orwigsburg Manor Drive
Oshkosh, WI
-
3,800
3,687
7,487
1,471
711 Bayshore Drive
Oshkosh, WI
-
23,237
-
23,237
3,031
631 Hazel Street
Overland Park, KS
-
1,120
8,360
-
1,120
8,360
2,014
7541 Switzer St.
Overland Park, KS
-
3,730
27,076
3,730
27,416
3,092
12000 Lamar Avenue
Overland Park, KS
-
4,500
29,105
7,295
4,500
36,400
3,075
6101 W 119th St
Owasso, OK
-
1,380
-
1,380
12807 E. 86th Place N.
Owensboro, KY
-
6,760
7,369
1,735
1614 W. Parrish Ave.
Owensboro, KY
-
13,275
-
13,275
3,300
1205 Leitchfield Rd.
Owenton, KY
-
2,400
-
2,400
905 Hwy. 127 N.
Oxford, MI
11,500
1,430
15,791
-
1,430
15,791
1,359
701 Market St
Palestine, TX
-
4,320
1,300
5,620
1,046
1625 W. Spring St.
Palm Coast, FL
-
10,957
-
10,957
1,186
50 Town Ct.
Panama City Beach, FL
-
7,717
7,752
6012 Magnolia Beach Road
Paris, TX
-
5,452
-
5,452
2,604
750 N Collegiate Dr
Parkersburg, WV
-
21,288
21,931
1,599
723 Summers Street
Parkville, MD
-
1,350
16,071
1,350
16,345
1,265
8710 Emge Road
Parkville, MD
-
11,186
11,189
8720 Emge Road
Parkville, MD
-
1,100
11,768
-
1,100
11,768
1801 Wentworth Road
Pasadena, TX
9,820
24,080
-
24,080
4,301
3434 Watters Rd.
Paso Robles, CA
-
1,770
8,630
1,770
9,323
2,919
1919 Creston Rd.
Pawleys Island, SC
-
2,020
32,590
6,272
2,020
38,862
7,617
120 Lakes at Litchfield Dr.
Pella, IA
-
6,716
6,805
2602 Fifield Road
Pennington, NJ
-
1,380
27,620
1,432
28,074
1,617
143 West Franklin Avenue
Pennsauken, NJ
-
10,780
10,959
5101 North Park Drive
Petoskey, MI
6,102
14,452
-
14,452
1,141
965 Hager Dr
Philadelphia, PA
-
2,700
25,709
2,700
26,041
1,983
184 Bethlehem Pike
Philadelphia, PA
-
2,930
10,433
3,373
2,930
13,806
1,050
1526 Lombard Street
Philadelphia, PA
-
11,239
11,304
8015 Lawndale Avenue
Philadelphia, PA
-
1,810
16,898
1,810
16,931
1,424
650 Edison Avenue
Phillipsburg, NJ
-
21,175
21,368
1,644
290 Red School Lane
Phillipsburg, NJ
-
8,114
8,151
843 Wilbur Avenue
Pigeon Forge, TN
-
4,180
4,297
1,643
415 Cole Dr.
Pinehurst, NC
-
2,690
3,174
17 Regional Dr.
Piqua, OH
-
1,885
-
1,885
1744 W. High St.
Pittsburgh, PA
-
1,750
8,572
1,750
8,687
2,145
100 Knoedler Rd.
Plainview, NY
-
3,990
11,969
3,990
12,153
150 Sunnyside Blvd
Plattsmouth, NE
-
5,650
-
5,650
1913 E. Highway 34
Plymouth, MI
-
1,490
19,990
1,490
20,119
1,643
14707 Northville Rd
Port St. Joe, FL
-
2,055
-
2,055
220 9th St.
Port St. Lucie, FL
-
8,700
47,230
4,878
8,700
52,108
4,975
10685 SW Stony Creek Way
Post Falls, ID
-
2,700
14,217
2,181
2,700
16,398
2,308
460 N. Garden Plaza Ct.
Pottsville, PA
-
26,964
27,166
2,076
1000 Schuylkill Manor Road
Princeton, NJ
-
1,730
30,888
1,007
1,775
31,850
1,857
155 Raymond Road
Puyallup, WA
11,445
1,150
20,776
1,156
20,971
3,125
123 Fourth Ave. NW
Quakertown, PA
-
1,040
25,389
1,040
25,461
1,906
1020 South Main Street
Raleigh, NC
-
10,000
-
-
10,000
-
-
St. Albans Drive and Camelot Drive
Raleigh, NC
25,735
3,530
59,589
-
3,530
59,589
1,967
5301 Creedmoor Road
Raleigh, NC
-
2,580
16,837
-
2,580
16,837
7900 Creedmoor Road
Reading, PA
-
19,906
20,008
1,520
5501 Perkiomen Ave
Red Bank, NJ
-
1,050
21,275
1,050
21,398
1,312
One Hartford Dr.
Rehoboth Beach, DE
-
24,248
24,547
1,917
36101 Seaside Blvd
Reidsville, NC
-
3,830
4,687
1,475
2931 Vance St.
Reno, NV
-
1,060
11,440
1,060
12,045
2,893
5165 Summit Ridge Road
Ridgeland, MS
-
7,675
8,102
2,144
410 Orchard Park
Ridgely, TN
-
5,700
5,797
2,039
117 N. Main St.
Ridgewood, NJ
-
1,350
16,170
1,350
16,650
1,233
330 Franklin Turnpike
Rockledge, FL
-
4,117
-
4,117
1,782
1775 Huntington Lane
Rockville, MD
-
-
16,398
-
16,408
9701 Medical Center Drive
Rockville, CT
-
1,500
4,835
1,500
4,911
1253 Hartford Turnpike
Rockville Centre, NY
-
4,290
20,310
4,290
20,608
1,327
260 Maple Ave
Rockwood, TN
-
7,116
7,857
2,718
5580 Roane State Hwy.
Rocky Hill, CT
-
1,090
6,710
1,500
1,090
8,210
2,062
60 Cold Spring Rd.
Rogersville, TN
-
3,278
-
3,278
1,167
109 Hwy. 70 N.
Rohnert Park, CA
13,710
6,500
18,700
1,498
6,546
20,152
4,417
4855 Snyder Lane
Romeoville, IL
-
1,895
-
-
1,895
-
-
Grand Haven Circle
Roswell, GA
7,883
1,107
9,627
1,114
10,413
7,142
655 Mansell Rd.
Rugeley, England
-
2,552
13,786
-
2,552
13,786
Horse Fair
Rutland, VT
-
1,190
23,655
1,190
23,743
1,809
9 Haywood Avenue
Sacramento, CA
10,295
14,781
14,865
2,214
6350 Riverside Blvd
Saint Simons Island, GA
-
6,440
50,060
1,502
6,440
51,562
7,118
136 Marsh's Edge Lane
Salem, OR
-
5,171
-
5,172
2,099
1355 Boone Rd. S.E.
Salisbury, NC
-
5,697
5,865
1,683
2201 Statesville Blvd.
San Angelo, TX
-
8,800
9,225
2,170
2695 Valleyview Blvd.
San Antonio, TX
-
6,120
28,169
2,124
6,120
30,293
1,831
2702 Cembalo Blvd
San Antonio, TX
10,608
7,315
-
7,315
2,478
5437 Eisenhaur Rd.
San Antonio, TX
9,778
13,360
-
13,360
2,493
8503 Mystic Park
San Ramon, CA
9,107
2,430
17,488
2,435
17,535
2,483
18888 Bollinger Canyon Rd
Sanatoga, PA
-
30,695
30,733
2,260
225 Evergreen Road
Sand Springs, OK
6,711
19,654
-
19,654
4402 South 129th Avenue West
Sarasota, FL
-
3,175
-
3,175
1,548
8450 McIntosh Rd.
Sarasota, FL
-
3,400
-
3,400
1,064
4602 Northgate Ct.
Sarasota, FL
-
1,120
12,489
1,120
12,563
2290 Cattlemen Road
Sarasota, FL
-
8,825
9,069
3221 Fruitville Road
Sarasota, FL
-
9,854
9,919
3749 Sarasota Square Boulevard
Scituate, MA
-
1,740
10,640
-
1,740
10,640
2,374
309 Driftway
Scott Depot, WV
-
6,876
6,934
5 Rolling Meadows
Seaford, DE
-
14,029
14,082
1,129
1100 Norman Eskridge Highway
Seaford, DE
-
7,995
1,547
9,542
715 East King Street
Seattle, WA
7,664
5,190
9,350
5,199
9,692
2,366
11501 15th Ave NE
Seattle, WA
7,322
3,420
15,555
3,420
15,693
2,539
2326 California Ave SW
Seattle, WA
9,105
2,630
10,257
2,630
10,293
1,760
4611 35th Ave SW
Seattle, WA
28,615
10,670
37,291
10,700
37,418
7,938
805 4th Ave N
Selbyville, DE
-
25,912
26,096
2,051
21111 Arrington Dr
Seven Fields, PA
-
4,663
4,722
1,923
500 Seven Fields Blvd.
Severna Park, MD(2)
-
2,120
31,273
2,120
32,081
2,318
24 Truckhouse Road
Shawnee, OK
-
1,400
-
1,400
3947 Kickapoo
Sheboygan, WI
-
5,320
3,774
9,094
1,382
4221 Kadlec Dr.
Shelbyville, KY
-
3,870
-
3,870
1871 Midland Trail
Shelton, WA
-
17,049
17,186
900 W Alpine Way
Shepherdstown, WV
-
13,806
13,819
1,021
80 Maddex Drive
Sherman, TX
-
5,221
-
5,221
1011 E. Pecan Grove Rd.
Shillington, PA
-
1,020
19,569
1,020
20,525
1,515
500 E Philadelphia Ave
Shrewsbury, NJ
-
2,120
38,116
2,120
38,541
2,994
5 Meridian Way
Silver Spring, MD
-
1,250
7,278
1,250
7,547
2101 Fairland Road
Silver Spring, MD
-
1,150
9,252
1,150
9,356
12325 New Hampshire
Silvis, IL
-
16,420
-
16,420
1,470
1900 10th St.
Sissonville, WV
-
23,948
24,003
1,785
302 Cedar Ridge Road
Sisterville, WV
-
5,400
5,642
201 Wood Street
Smithfield, NC
-
5,680
-
5,680
1,647
830 Berkshire Rd.
Somerset, MA
-
1,010
29,577
1,010
29,728
2,192
455 Brayton Avenue
Sonoma, CA
14,899
1,100
18,400
1,374
1,109
19,764
4,269
800 Oregon St.
South Boston, MA
-
2,002
5,218
7,220
2,989
804 E. Seventh St.
South Pittsburg, TN
-
5,628
-
5,628
1,724
201E. 10th St.
Southbury, CT
-
1,860
23,613
1,860
24,571
1,741
655 Main St
Sparks, NV
-
3,700
46,526
-
3,700
46,526
5,594
275 Neighborhood Way
Spartanburg, SC
-
3,350
15,750
13,385
3,350
29,135
4,555
110 Summit Hills Dr.
Spencer, WV
-
8,810
8,838
825 Summit Street
Spring City, TN
-
6,085
3,210
9,295
2,896
331 Hinch St.
Spring House, PA
-
10,780
10,979
905 Penllyn Pike
St. Charles, MD
-
15,555
15,639
1,203
4140 Old Washington Highway
St. Louis, MO
-
1,890
12,165
1,890
12,297
1,043
6543 Chippewa St
Stanwood, WA
-
2,260
28,474
2,283
28,728
4,391
7212 265th St NW
Statesville, NC
-
1,447
1,713
2441 E. Broad St.
Statesville, NC
-
6,183
6,191
1,735
2806 Peachtree Place
Statesville, NC
-
3,627
-
3,627
1,046
2814 Peachtree Rd.
Stillwater, OK
-
1,400
-
1,400
1616 McElroy Rd.
Stockton, CA
2,963
2,280
5,983
2,372
6,176
1,093
6725 Inglewood
Summit, NJ
-
3,080
14,152
-
3,080
14,152
1,054
41 Springfield Avenue
Superior, WI
-
1,020
13,735
-
1,020
13,735
1915 North 34th Street
Swanton, OH
-
6,370
-
6,370
1,690
401 W. Airport Hwy.
Takoma Park, MD
-
1,300
10,136
-
1,300
10,136
7525 Carroll Avenue
Texarkana, TX
-
1,403
-
1,403
4204 Moores Lane
Thomasville, GA
-
13,899
14,335
423 Covington Avenue
Tomball, TX
-
1,050
13,300
1,050
13,971
1221 Graham Dr
Toms River, NJ
-
1,610
34,627
1,671
35,074
2,747
1587 Old Freehold Rd
Topeka, KS
-
12,712
-
12,712
1931 Southwest Arvonia Place
Towson, MD(2)
-
1,180
13,280
1,180
13,475
1,048
7700 York Road
Troy, OH
-
2,000
4,254
6,254
1,336
81 S. Stanfield Rd.
Troy, OH
-
16,730
-
16,730
4,273
512 Crescent Drive
Trumbull, CT
-
4,440
43,384
-
4,440
43,384
3,084
6949 Main Street
Tucson, AZ
-
13,399
-
13,399
3,077
6211 N. La Cholla Blvd.
Tulsa, OK
-
1,390
7,110
1,390
7,572
7220 S. Yale Ave.
Tulsa, OK
-
1,320
10,087
-
1,320
10,087
7902 South Mingo Road East
Tyler, TX
-
5,268
-
5,268
5550 Old Jacksonville Hwy.
Uhrichsville, OH
-
6,716
-
6,716
1,499
5166 Spanson Drive S.E.
Uniontown, PA
-
6,817
6,901
75 Hikle Street
Vacaville, CA
14,097
17,100
1,417
18,517
4,050
799 Yellowstone Dr.
Vallejo, CA
14,113
4,000
18,000
1,841
4,030
19,812
4,320
350 Locust Dr.
Vallejo, CA
7,458
2,330
15,407
2,330
15,559
2,539
2261 Tuolumne
Valley Falls, RI
-
1,080
7,433
1,080
7,443
100 Chambers Street
Valparaiso, IN
-
2,558
-
2,558
2601 Valparaiso St.
Valparaiso, IN
-
2,962
-
2,962
1,028
2501 Valparaiso St.
Vancouver, WA
11,826
1,820
19,042
1,821
19,140
2,895
10011 NE 118th Ave
Venice, FL
-
6,000
-
6,000
1,654
1240 Pinebrook Rd.
Venice, FL
-
1,150
10,674
-
1,150
10,674
1,207
1600 Center Rd.
Vero Beach, FL
-
3,187
-
3,187
1,094
420 4th Ct.
Vero Beach, FL
-
3,263
-
3,263
1,131
410 4th Ct.
Vero Beach, FL
-
2,930
40,070
14,729
2,930
54,799
7,741
7955 16th Manor
Voorhees, NJ
-
1,800
37,299
1,800
37,858
2,854
2601 Evesham Road
Voorhees, NJ(2)
-
1,900
26,040
1,900
26,934
2,014
3001 Evesham Road
Voorhees, NJ
-
3,100
25,950
-
3,100
25,950
113 South Route 73
Voorhees, NJ
-
3,700
24,312
-
3,700
24,312
311 Route 73
Waconia, MN
-
14,726
4,334
19,060
1,049
500 Cherry Street
Wake Forest, NC
-
3,003
1,742
4,745
1,752
611 S. Brooks St.
Walkersville, MD
-
1,650
15,103
-
1,650
15,103
56 West Frederick Street
Wall, NJ
-
1,650
25,350
1,907
1,690
27,217
1,500
2021 Highway 35
Wallingford, CT
-
1,210
1,269
35 Marc Drive
Wareham, MA
-
10,313
1,701
12,014
4,017
50 Indian Neck Rd.
Warren, NJ
-
2,000
30,810
2,000
31,019
1,879
274 King George Rd
Warwick, RI
-
1,530
18,564
1,530
18,734
1,453
660 Commonwealth Avenue
Watchung, NJ
-
1,920
24,880
1,960
25,341
1,465
680 Mountain Boulevard
Waukee, IA
-
1,870
31,878
1,075
1,870
32,953
1,113
1650 SE Holiday Crest Circle
Waukesha, WI
-
1,100
14,910
-
1,100
14,910
1,608
400 Merrill Hills Rd.
Waxahachie, TX
-
5,763
-
5,763
1329 Brown St.
Weatherford, TX
-
5,261
-
5,261
1818 Martin Drive
Webster, TX
9,344
5,940
-
5,940
2,004
17231 Mill Forest
Webster, NY
-
8,968
9,004
100 Kidd Castle Way
Webster, NY
-
1,300
21,127
1,300
21,136
200 Kidd Castle Way
Webster Groves, MO
-
1,790
15,425
-
1,790
15,425
45 E Lockwood Avenue
West Bend, WI
-
17,790
-
17,790
2130 Continental Dr
West Chester, PA
-
1,350
29,237
1,350
29,359
2,218
800 West Miner Street
West Chester, PA
-
3,290
42,258
3,290
42,852
1,982
1615 East Boot Road
West Chester, PA
-
11,894
11,899
1615 East Boot Road
West Orange, NJ
-
2,280
10,687
2,280
10,869
20 Summit Street
West Worthington, OH
-
5,090
-
5,090
1,180
111 Lazelle Rd., E.
Westerville, OH
-
8,287
3,105
11,392
6,967
690 Cooper Rd.
Westfield, NJ(2)
-
2,270
16,589
2,270
17,086
1,401
1515 Lamberts Mill Road
Westford, MA
-
13,829
14,034
1,096
3 Park Drive
Westlake, OH
-
1,330
17,926
-
1,330
17,926
6,076
27601 Westchester Pkwy.
Westmoreland, TN
-
1,822
2,640
4,462
1,629
1559 New Hwy. 52
Weston Super Mare, England
-
3,381
9,477
-
3,381
9,477
141b Milton Road
White Lake, MI
10,479
2,920
20,179
2,920
20,271
1,691
935 Union Lake Rd
Whittier, CA
11,228
4,470
22,151
4,483
22,439
4,848
13250 E Philadelphia St
Wichita, KS
-
1,400
11,000
-
1,400
11,000
2,622
505 North Maize Road
Wichita, KS
-
1,760
19,007
-
1,760
19,007
10604 E 13th Street North
Wichita, KS
13,759
19,747
-
19,747
2050 North Webb Road
Wilkes-Barre, PA
-
13,842
13,961
1,094
440 North River Street
Wilkes-Barre, PA
-
2,301
2,345
300 Courtright Street
Willard, OH
-
6,447
-
6,447
1100 Neal Zick
Williamsport, PA
-
4,946
5,319
1251 Rural Avenue
Williamsport, PA
-
8,487
8,925
1201 Rural Avenue
Williamstown, KY
-
6,430
-
6,430
1,614
201 Kimberly Lane
Willow Grove, PA
-
1,300
14,736
1,300
14,845
1,213
1113 North Easton Road
Wilmington, DE
-
9,494
9,551
810 S Broom Street
Wilmington, NC
-
2,991
-
2,991
1,207
3501 Converse Dr.
Windsor, CT
-
2,250
8,539
1,842
2,250
10,382
One Emerson Drive
Windsor, CT
-
1,800
1,800
1,544
1 Emerson Drive
Winston-Salem, NC
-
2,514
2,973
2980 Reynolda Rd.
Winston-Salem, NC
-
5,700
13,550
21,096
5,700
34,646
4,962
2101 Homestead Hills
Winter Garden, FL
-
1,350
7,937
-
1,350
7,937
720 Roper Road
Witherwack, England
-
1,268
9,290
-
1,268
9,290
Whitchurch road
Wolverhampton, England
-
2,113
8,972
-
2,113
8,972
378 Prestonwood Road
Worcester, MA
-
3,500
54,099
-
3,500
54,099
5,793
101 Barry Road
Worcester, MA
-
2,300
9,060
-
2,300
9,060
1,343
378 Plantation St.
Wyncote, PA
-
2,700
22,244
2,700
22,392
1,739
1245 Church Road
Wyncote, PA
-
1,610
21,256
1,610
21,470
1,590
8100 Washington Lane
Wyncote, PA
-
7,811
7,843
240 Barker Road
Zionsville, IN
-
1,610
22,400
1,691
1,610
24,091
2,007
11755 N Michigan Rd
Seniors Housing Triple-Net Total
$
587,136
$
781,397
$
8,430,604
$
428,753
$
782,390
$
8,858,364
$
1,075,955
Health Care REIT, Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2013
(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:
Acton, MA
$
-
$
-
$
31,346
$
-
$
-
$
31,346
$
10 Devon Drive
Agawam, MA
6,675
10,047
10,259
1,430
153 Cardinal Drive
Albuquerque, NM
5,525
1,270
20,837
1,272
21,697
3,145
500 Paisano St NE
Alhambra, CA
2,972
6,305
6,377
1118 N. Stoneman Ave.
Altrincham, England
-
5,685
29,221
-
5,685
29,221
2,556
295 Hale Road
Arlington, TX
22,210
1,660
37,395
1,660
37,570
2,768
1250 West Pioneer Parkway
Arnprior, ON
7,896
-
7,896
15 Arthur Street
Avon, CT
19,641
1,550
30,571
1,550
31,045
5,566
101 Bickford Extension
Azusa, CA
-
3,141
6,222
9,363
1,807
125 W. Sierra Madre Ave.
Bagshot, England
-
6,537
38,668
2,255
6,663
40,798
3,204
14 - 16 London Road
Banstead, England
-
8,781
54,836
17,633
8,950
72,300
5,318
Croydon Lane
Basking Ridge, NJ
-
2,356
37,710
-
2,356
37,710
1,514
404 King George Road
Bassett, England
-
6,547
42,063
-
6,547
42,063
3,117
111 Burgess Road
Baton Rouge, LA
9,643
29,436
-
29,436
1,028
9351 Siegen Lane
Beaconsfield, England
-
7,473
68,201
-
7,473
68,201
4,788
30-34 Station Road
Beaconsfield, QC
-
3,009
20,695
-
3,009
20,695
2,501
505 Elm Avenue
Bedford, NH
-
-
-
33,000
2,520
30,480
-
5 Corporate Drive
Bellevue, WA
-
2,800
19,004
-
2,800
19,004
1,867
15928 NE 8th Street
Belmont, CA
-
3,000
23,526
3,000
24,007
3,293
1301 Ralston Avenue
Belmont, CA
-
-
35,300
-
-
35,300
1,433
1010 Alameda de Las Pulgas
Bethesda, MD
-
-
45,309
-
-
45,309
3,656
8300 Burdett Road
Birmingham, England
-
28,024
-
28,024
2,077
5 Church Road, Edgbaston
Blainville, QC
-
2,689
11,199
-
2,689
11,199
1,694
50 des Chateaux Boulevard
Bloomfield Hills, MI
-
2,000
35,662
-
2,000
35,662
1,253
6790 Telegraph Road
Borehamwood, England
-
7,074
41,060
13,518
7,210
54,442
3,755
Edgwarebury Lane
Boulder, CO
-
2,994
27,458
-
2,994
27,458
2,188
3955 28th Street
Bournemouth, England
-
7,425
57,277
-
7,425
57,277
4,080
42 Belle Vue Road
Braintree, MA
21,729
-
41,290
-
-
41,290
2,743
618 Granite Street
Brighton, MA
10,718
2,100
14,616
2,100
14,946
2,159
50 Sutherland Road
Brookfield, CT
20,015
2,250
30,180
2,250
30,574
4,486
246A Federal Road
Broomfield, CO
-
4,140
44,547
-
4,140
44,547
1,692
400 Summit Blvd
Buffalo Grove, IL
-
2,850
49,129
2,850
49,268
3,309
500 McHenry Road
Burbank, CA
-
4,940
43,466
4,940
43,638
3,339
455 E. Angeleno Avenue
Burlington, ON
8,384
1,692
24,560
-
1,692
24,560
1,445
500 Appleby Line
Burlington, MA
17,774
2,443
34,354
-
2,443
34,354
2,774
24 Mall Road
Calabasas, CA
-
-
6,438
-
-
6,438
25100 Calabasas Road
Calgary, AB
17,663
2,928
48,408
-
2,928
48,408
2,706
20 Promenade Way SE
Calgary, AB
14,163
3,581
50,498
-
3,581
50,498
2,752
80 Edenwold Drive NW
Calgary, AB
16,059
4,026
48,507
-
4,026
48,507
2,551
150 Scotia Landing NW
Calgary, AB
-
4,398
35,898
-
4,398
35,898
1,109
9229 16th Street SW
Cardiff, England
-
4,277
16,353
-
4,277
16,353
1,699
127 Cyncoed Road
Cardiff by the Sea, CA
41,115
5,880
64,711
5,880
64,923
7,116
3535 Manchester Avenue
Carol Stream, IL
-
1,730
55,048
1,730
55,593
3,502
545 Belmont Lane
Cary, NC
-
45,240
-
45,240
1,627
1206 West Chatham Street
Centerville, MA
-
1,300
27,357
1,300
27,679
3,140
22 Richardson Road
Chesterfield, MO
-
1,857
48,366
-
1,857
48,366
1,792
1880 Clarkson Road
Chorleywood, England
-
7,542
56,322
-
7,542
56,322
4,309
High View, Rickmansworth Road
Chula Vista, CA
-
2,072
22,163
-
2,072
22,163
1,666
3302 Bonita Road
Cincinnati, OH
-
2,060
109,388
2,744
2,060
112,132
9,867
5445 Kenwood Road
Claremont, CA
-
2,430
9,928
-
2,430
9,928
2053 North Towne Avenue
Cohasset, MA
-
2,485
26,147
-
2,485
26,147
2,076
125 King Street (Rt 3A)
Colorado Springs, CO
-
14,756
-
14,756
2105 University Park Boulevard
Concord, NH
13,780
21,164
21,391
2,318
300 Pleasant Street
Coquitlam, BC
14,541
3,948
31,181
-
3,948
31,181
1,607
1142 Dufferin Street
Costa Mesa, CA
-
2,050
19,969
2,050
20,095
2,778
350 West Bay St
Crystal Lake, IL
-
12,461
-
12,461
751 E Terra Cotta Avenue
Dallas, TX
-
1,080
9,655
1,080
9,842
1,188
3611 Dickason Avenue
Danvers, MA
9,665
1,120
14,557
1,120
14,950
1,858
1 Veronica Drive
Davenport, IA
-
1,403
35,893
2,202
1,426
38,072
4,388
4500 Elmore Ave.
Decatur, GA
-
1,932
27,523
-
1,932
27,523
2,354
920 Clairemont Avenue
Denver, CO
12,959
1,450
19,389
1,450
19,550
1,429
4901 South Monaco Street
Denver, CO
-
2,910
35,838
2,910
36,107
2,535
8101 E Mississippi Avenue
Dix Hills, NY
-
3,808
39,014
-
3,808
39,014
1,576
337 Deer Park Road
Dollard-Des-Ormeaux, QC
-
2,539
18,330
-
2,539
18,330
2,369
4377 St. Jean Blvd
Dresher, PA
7,476
1,900
10,664
-
1,900
10,664
1650 Susquehanna Road
Dublin, OH
18,541
1,680
43,423
2,152
1,694
45,561
6,395
6470 Post Rd
East Haven, CT
23,258
2,660
35,533
2,660
36,365
6,816
111 South Shore Drive
East Meadow, NY
-
45,991
-
45,991
1,887
1555 Glen Curtiss Boulevard
East Setauket, NY
-
4,920
37,354
-
4,920
37,354
1,660
1 Sunrise Drive
Eastbourne, England
-
5,552
44,549
-
5,552
44,549
3,178
6 Upper Kings Drive
Edgewater, NJ
-
4,561
25,047
-
4,561
25,047
1,256
351 River Road
Edison, NJ
-
1,892
32,314
-
1,892
32,314
3,486
1801 Oak Tree Road
Edmonton, AB
13,083
1,936
36,132
-
1,936
36,132
1,980
103 Rabbit Hill Court NW
Edmonton, AB
16,774
2,660
46,017
-
2,660
46,017
2,380
10015 103rd Avenue NW
Encinitas, CA
-
1,460
7,721
1,460
8,189
3,173
335 Saxony Rd.
Encino, CA
-
5,040
46,255
5,040
46,479
3,633
15451 Ventura Boulevard
Escondido, CA
12,844
1,520
24,024
1,520
24,241
3,310
1500 Borden Rd
Esher, England
-
7,740
64,204
-
7,740
64,204
4,237
42 Copsem Lane
Fairfax, VA
-
2,678
-
2,678
9207 Arlington Boulevard
Fairfield, NJ
-
3,120
43,868
-
3,120
43,868
3,237
47 Greenbrook Road
Flossmoor, IL
-
1,292
9,496
-
1,292
9,496
19715 Governors Highway
Fort Worth, TX
-
2,080
27,888
2,080
28,223
2,352
2151 Green Oaks Road
Franklin, MA
14,390
2,430
30,597
-
2,430
30,597
4 Forge Hill Road
Fullerton, CA
13,214
1,964
19,989
-
1,964
19,989
1,727
2226 North Euclid Street
Gahanna, OH
-
11,214
-
11,214
775 East Johnstown Road
Gilbert, AZ
16,841
2,160
28,246
-
2,160
28,246
1,414
580 S. Gilbert Road
Gilroy, CA
-
13,880
24,013
1,520
37,133
6,005
7610 Isabella Way
Glen Cove, NY
-
4,594
35,236
-
4,594
35,236
3,159
39 Forest Avenue
Glenview, IL
-
2,090
69,288
2,090
69,505
4,611
2200 Golf Road
Golden Valley, MN
20,417
1,520
33,513
-
1,520
33,513
1,348
4950 Olson Memorial Highway
Gross Pointe Woods, MI
-
13,662
-
13,662
1850 Vernier Road
Grosse Pointe Woods, MI
-
1,430
31,777
-
1,430
31,777
2,168
21260 Mack Avenue
Guildford, England
-
7,195
75,166
-
7,195
75,166
5,009
Astolat Way, Peasmarsh
Gurnee, IL
-
27,931
-
27,931
1,065
500 North Hunt Club Road
Hamden, CT
15,651
1,460
24,093
1,460
24,596
3,693
35 Hamden Hills Drive
Hampshire, England
-
5,604
34,119
-
5,604
34,119
2,529
22-26 Church Road
Henderson, NV
-
29,809
29,879
2,477
1935 Paseo Verde Parkway
Henderson, NV
5,873
1,190
11,600
-
1,190
11,600
1,223
1555 West Horizon Ridge Parkway
Highland Park, IL
20,893
2,250
25,313
-
2,250
25,313
2,191
1601 Green Bay Road
Holbrook, NY
-
3,957
35,337
-
3,957
35,337
1,560
320 Patchogue Holbrook Road
Houston, TX
-
3,830
55,674
3,830
56,054
7,041
2929 West Holcombe Boulevard
Houston, TX
18,224
1,040
31,965
1,040
32,536
2,884
505 Bering Drive
Houston, TX
7,942
27,598
28,028
3,365
10225 Cypresswood Dr
Huntington Beach, CA
-
3,808
31,172
-
3,808
31,172
3,003
7401 Yorktown Avenue
Irving, TX
-
1,030
6,823
1,030
7,519
1,194
8855 West Valley Ranch Parkway
Johns Creek, GA
-
1,580
23,285
-
1,580
23,285
1,072
11405 Medlock Bridge Road
Kanata, ON
-
2,132
39,336
-
2,132
39,336
3,487
70 Stonehaven Drive
Kansas City, MO
5,554
1,820
34,898
2,181
1,836
37,062
5,138
12100 Wornall Road
Kansas City, MO
6,790
1,930
39,997
1,335
1,954
41,308
6,576
6500 North Cosby Ave
Kelowna, BC
8,214
3,478
15,810
-
3,478
15,810
1,028
863 Leon Avenue
Kennebunk, ME
-
2,700
30,204
-
2,700
30,204
1,632
One Huntington Common Drive
Kingwood, TX
3,176
9,777
9,943
1,194
22955 Eastex Freeway
Kirkland, WA
24,600
3,450
38,709
3,450
38,975
3,883
201 Kirkland Avenue
Kitchener, ON
-
3,249
-
3,249
164 - 168 Ferfus Avenue
Kitchener, ON
-
1,382
15,380
-
1,382
15,380
20 Fieldgate Street
Kitchener, ON
-
1,415
10,478
-
1,415
10,478
290 Queen Street South
La Palma, CA
-
2,950
16,591
-
2,950
16,591
1,405
5321 La Palma Avenue
Lafayette Hill, PA
-
1,750
11,848
-
1,750
11,848
1,559
429 Ridge Pike
Lawrenceville, GA
16,444
1,500
29,003
-
1,500
29,003
2,130
1375 Webb Gin House Road
Leawood, KS
16,142
2,490
32,493
5,610
29,718
2,477
4400 West 115th Street
Lenexa, KS
10,085
26,251
-
26,251
1,029
15055 West 87th Street Parkway
Lincroft, NJ
-
19,958
-
19,958
734 Newman Springs Road
Lombard, IL
17,429
2,130
59,943
-
2,130
59,943
1,775
2210 Fountain Square Dr
Los Angeles, CA
-
-
11,430
-
12,137
1,376
330 North Hayworth Avenue
Los Angeles, CA
66,649
-
114,438
-
114,793
13,772
10475 Wilshire Boulevard
Los Angeles, CA
-
3,540
19,007
3,540
19,230
1,664
2051 N. Highland Avenue
Louisville, KY
-
2,420
20,816
2,420
21,033
1,738
4600 Bowling Boulevard
Louisville, KY
11,523
1,600
20,326
-
1,600
20,326
6700 Overlook Drive
Lynnfield, MA
17,453
3,165
45,200
-
3,165
45,200
3,324
55 Salem Street
Malvern, PA
-
1,651
17,194
-
1,651
17,194
1,799
324 Lancaster Avenue
Mansfield, MA
28,807
3,320
57,011
1,220
3,320
58,230
9,064
25 Cobb Street
Markham, ON
22,788
4,762
61,686
-
4,762
61,686
3,081
7700 Bayview Avenue
Marlboro, NJ
-
2,222
14,888
-
2,222
14,888
3A South Main Street
Memphis, TN
-
1,800
17,744
1,800
17,971
2,713
6605 Quail Hollow Road
Meriden, CT
9,540
1,500
14,874
1,500
15,231
3,130
511 Kensington Avenue
Metairie, LA
13,661
27,708
-
27,708
1,192
3732 West Esplanade Ave. S
Middletown, CT
15,713
1,430
24,242
1,430
24,537
3,905
645 Saybrook Road
Middletown, RI
16,711
2,480
24,628
2,480
25,193
3,834
303 Valley Road
Milford, CT
11,722
3,210
17,364
3,210
17,982
2,956
77 Plains Road
Minnetonka, MN
14,705
2,080
24,360
2,080
24,601
1,869
500 Carlson Parkway
Minnetonka, MN
16,799
29,344
-
29,344
1,092
18605 Old Excelsior Blvd.
Mississauga, ON
2,283
2,073
24,443
-
2,073
24,443
1,306
1130 Bough Beeches Boulevard
Mississauga, ON
-
1,121
5,308
-
1,121
5,308
3051 Constitution Boulevard
Mobberley, England
-
6,912
35,130
-
6,912
35,130
3,007
Barclay Park, Hall Lane
Monterey, CA
-
6,440
29,101
-
6,440
29,101
2,388
1110 Cass St.
Montgomery Village, MD
-
3,530
18,246
-
3,530
18,246
1,284
19310 Club House Road
Moose Jaw, SK
3,881
16,240
-
16,240
425 4th Avenue NW
Mystic, CT
11,722
1,400
18,274
1,400
18,702
2,521
20 Academy Lane Mystic
Naperville, IL
-
1,540
28,204
-
1,540
28,204
1,205
535 West Ogden Avenue
Nashville, TN
-
3,900
35,788
3,900
36,054
4,922
4206 Stammer Place
Newton, MA
28,433
2,250
43,614
2,250
43,826
5,640
2300 Washington Street
Newton, MA
16,467
2,500
30,681
1,400
2,500
32,081
4,533
280 Newtonville Avenue
Newton, MA
-
3,360
25,099
3,360
25,651
3,977
430 Centre Street
Newtown Square, PA
-
1,930
14,420
-
1,930
14,420
1,677
333 S. Newtown Street Rd.
Niantic, CT
-
1,320
25,986
1,320
26,354
3,042
417 Main Street
North Andover, MA
23,071
1,960
34,976
1,960
35,369
4,817
700 Chickering Road
North Chelmsford, MA
12,159
18,478
18,944
2,166
2 Technology Drive
North Tustin, CA
-
2,880
18,059
-
2,880
18,059
12291 Newport Avenue
Oak Park, IL
-
1,250
40,383
1,250
40,546
2,707
1035 Madison Street
Oakland, CA
-
3,877
47,508
-
3,877
47,508
3,862
11889 Skyline Boulevard
Oakton, VA
-
2,250
37,576
-
2,250
37,576
2,846
2863 Hunter Mill Road
Oakville, ON
2,195
1,622
8,357
-
1,622
8,357
289 and 299 Randall Street
Oakville, ON
14,289
2,750
37,613
-
2,750
37,613
1,988
25 Lakeshore Road West
Oakville, ON
7,424
1,656
17,217
-
1,656
17,217
1,007
345 Church Street
Oceanside, CA
12,951
2,160
18,352
2,160
18,818
2,841
3500 Lake Boulevard
Oshawa, ON
4,562
1,086
10,205
-
1,086
10,205
649 King Street East
Ottawa, ON
4,083
4,998
-
4,998
1345 Ogilvie Road
Ottawa, ON
-
2,165
-
2,165
370 Kennedy Lane
Ottawa, ON
14,990
3,654
34,247
-
3,654
34,247
2,068
43 Aylmer Avenue
Ottawa, ON
6,653
1,438
12,432
-
1,438
12,432
1351 Hunt Club Road
Ottawa, ON
4,935
9,029
-
9,029
140 Darlington Private
Overland Park, KS
3,592
1,540
16,269
1,670
16,290
1,332
9201 Foster
Palo Alto, CA
17,405
-
39,639
-
-
39,639
1,659
2701 El Camino Real
Paramus, NJ
-
2,840
35,728
-
2,840
35,728
2,526
567 Paramus Road
Pembroke, ON
-
2,437
12,966
-
2,437
12,966
1,107
1111 Pembroke Street West
Pittsburgh, PA
-
1,580
18,017
-
1,580
18,017
1,059
900 Lincoln Club Dr.
Plainview, NY
-
3,066
19,901
-
3,066
19,901
1,029
1231 Old Country Road
Plano, TX
4,228
8,538
9,023
1,299
5521 Village Creek Dr
Plano, TX
29,699
3,120
59,950
-
3,120
59,950
2,272
4800 West Parker Road
Playa Vista, CA
-
1,580
40,531
-
1,580
40,531
3,258
5555 Playa Vista Drive
Providence, RI
-
2,600
27,546
2,600
28,299
5,631
700 Smith Street
Purley, England
-
9,676
35,251
11,244
9,872
46,299
3,973
21 Russell Hill Road
Quincy, MA
-
1,350
12,584
1,350
12,971
1,878
2003 Falls Boulevard
Rancho Cucamonga, CA
-
1,480
10,055
-
1,480
10,055
9519 Baseline Road
Rancho Palos Verdes, CA
-
5,450
60,034
5,450
60,305
4,434
5701 Crestridge Road
Randolph, NJ
17,228
1,540
46,934
-
1,540
46,934
3,305
648 Route 10 West
Redondo Beach, CA
-
-
9,557
-
9,618
2,299
514 North Prospect Ave
Regina, SK
9,797
1,932
26,372
-
1,932
26,372
1,248
3651 Albert Street
Regina, SK
9,352
1,608
26,330
-
1,608
26,330
1,200
3105 Hillsdale Street
Renton, WA
22,270
3,080
51,824
3,080
51,957
5,194
104 Burnett Avenue South
Rocky Hill, CT
10,600
16,351
16,547
2,106
1160 Elm Street
Romeoville, IL
-
12,646
58,656
6,140
66,016
6,892
605 S Edward Dr.
Roseville, MN
-
1,540
35,877
-
1,540
35,877
1,444
2555 Snelling Avenue, North
Roswell, GA
-
2,080
6,486
2,380
6,325
75 Magnolia Street
Sacramento, CA
-
1,300
23,394
-
1,300
23,394
1,647
345 Munroe Street
Salem, NH
21,263
32,721
33,038
3,823
242 Main Street
Salt Lake City, UT
-
1,360
19,691
1,360
19,964
3,828
1430 E. 4500 S.
San Diego, CA
-
4,200
30,707
4,200
30,750
1,665
2567 Second Avenue
San Diego, CA
-
5,810
63,078
5,810
63,320
8,478
13075 Evening Creek Drive S
San Diego, CA
-
3,000
27,164
-
3,000
27,164
1,725
810 Turquoise Street
San Gabriel, CA
-
3,120
15,566
-
3,120
15,566
1,395
8332 Huntington Drive
San Jose, CA
-
2,850
35,098
2,850
35,176
3,469
1420 Curvi Drive
San Jose, CA
-
3,280
46,823
3,280
47,045
3,677
500 S Winchester Boulevard
San Juan Capistrano, CA
-
1,390
6,942
1,390
7,134
2,511
30311 Camino Capistrano
Sandy Springs, GA
-
2,214
8,360
2,220
8,513
1,235
5455 Glenridge Drive NE
Santa Maria, CA
-
6,050
50,658
6,050
51,008
7,107
1220 Suey Road
Santa Monica, CA
20,653
5,250
28,340
-
5,250
28,340
1,377
1312 15th Street
Saskatoon, SK
6,044
1,274
19,207
-
1,274
19,207
220 24th Street East
Saskatoon, SK
13,846
1,797
21,579
-
1,797
21,579
1622 Acadia Drive
Schaumburg, IL
-
2,460
22,863
-
2,460
22,863
1,143
790 North Plum Grove Road
Scottsdale, AZ
-
2,500
3,890
2,500
4,824
9410 East Thunderbird Road
Seal Beach, CA
-
6,204
72,954
-
6,204
72,954
5,771
3850 Lampson Avenue
Seatlle, WA
48,540
6,790
85,369
6,790
86,057
8,826
5300 24th Avenue NE
Sevenoaks, England
-
8,131
51,963
2,984
8,287
54,790
4,506
64 - 70 Westerham Road
Shelburne, VT
20,203
31,041
31,369
3,355
687 Harbor Road
Shelby Township, MI
17,059
1,040
26,344
-
1,040
26,344
1,167
46471 Hayes Road
Sidcup, England
-
9,773
56,163
17,547
9,961
73,522
5,429
Frognal Avenue
Simi Valley, CA
-
3,200
16,664
-
3,200
16,664
190 Tierra Rejada Road
Solihull, England
-
6,667
55,336
3,380
6,809
58,574
3,684
1270 Warwick Road
Solihull, England
-
4,767
34,466
-
4,767
34,466
2,784
1 Worcester Way
Sonning, England
-
7,552
56,227
-
7,552
56,227
4,168
Old Bath Rd.
South Windsor, CT
-
3,000
29,295
3,000
29,921
4,834
432 Buckland Road
Spokane, WA
-
3,200
25,064
-
3,200
25,064
1,572
3117 E. Chaser Lane
Spokane, WA
-
2,580
25,342
-
2,580
25,342
1,500
1110 E. Westview Ct.
Stittsville, ON
6,704
1,529
17,762
-
1,529
17,762
1,014
1340 - 1354 Main Street
Stockport, England
-
5,868
33,028
-
5,868
33,028
2,679
1 Dairyground Road
Studio City, CA
-
4,006
25,307
-
4,006
25,307
2,529
4610 Coldwater Canyon Avenue
Sugar Land, TX
5,623
31,423
1,079
32,501
4,351
1221 Seventh St
Sun City West, AZ
12,687
1,250
21,778
1,250
21,838
1,638
13810 West Sandridge Drive
Sunnyvale, CA
-
5,420
41,682
5,420
41,821
3,339
1039 East El Camino Real
Surrey, BC
9,952
4,686
29,265
-
4,686
29,265
1,725
16028 83rd Avenue
Surrey, BC
4,914
5,923
27,210
-
5,923
27,210
1,829
15501 16th Avenue
Suwanee, GA
-
1,560
11,538
1,560
11,707
1,408
4315 Johns Creek Parkway
Swift Current, SK
3,450
12,034
-
12,034
301 Macoun Drive
Tacoma, WA
18,960
2,400
35,053
2,400
35,145
3,523
7290 Rosemount Circle
The Woodlands, TX
2,551
12,379
12,503
1,525
7950 Bay Branch Dr
Toledo, OH
16,055
2,040
47,129
2,043
47,795
7,991
3501 Executive Parkway
Toronto, ON
2,190
1,340
7,087
-
1,340
7,087
25 Centennial Park Road
Toronto, ON
11,732
3,257
26,348
-
3,257
26,348
305 Balliol Street
Toronto, ON
25,307
4,033
39,031
-
4,033
39,031
1,961
1055 and 1057 Don Mills Road
Toronto, ON
1,764
1,767
2,730
-
1,767
2,730
3705 Bathurst Street
Toronto, ON
2,861
1,851
3,785
-
1,851
3,785
1340 York Mills Road
Toronto, ON
44,601
6,523
70,824
-
6,523
70,824
3,327
8 The Donway East
Trumbull, CT
25,066
2,850
37,685
2,850
38,275
5,936
2750 Reservoir Avenue
Tucson, AZ
4,777
6,179
7,174
5660 N. Kolb Road
Tulsa, OK
6,251
1,330
21,285
1,330
21,827
3,270
8887 South Lewis Ave
Tulsa, OK
8,169
1,500
20,861
1,500
21,611
3,528
9524 East 71st St
Tustin, CA
6,924
15,299
15,372
1,684
240 East 3rd St
Upper St Claire, PA
-
1,102
13,455
-
1,102
13,455
1,575
500 Village Drive
Vankleek Hill, ON
1,681
5,097
-
5,097
48 Wall Street
Victoria, BC
-
3,478
18,180
-
3,478
18,180
1,667
2638 Ross Lane
Victoria, BC
10,420
3,713
22,972
-
3,713
22,972
1,709
3000 Shelbourne Street
Victoria, BC
9,607
4,754
19,351
-
4,754
19,351
1,132
3051 Shelbourne Street
Virginia Water, England
-
7,106
29,937
9,507
7,243
39,307
3,319
Christ Church Road
Walnut Creek, CA
-
3,700
12,467
-
3,700
12,467
1,598
2175 Ygnacio Valley Road
Warwick, RI
16,212
2,400
24,635
2,400
25,361
4,754
75 Minnesota Avenue
Washington, DC
33,263
4,000
69,154
-
4,000
69,154
2,669
5111 Connecticut Avenue NW
Waterbury, CT
25,128
2,460
39,547
2,460
40,135
9,141
180 Scott Road
Wayland, MA
-
1,207
27,462
-
1,207
27,462
2,226
285 Commonwealth Road
West Babylon, NY
-
3,960
47,085
-
3,960
47,085
1,740
580 Montauk Highway
West Bloomfield, MI
-
1,040
12,300
-
1,040
12,300
7005 Pontiac Trail
West Hills, CA
-
2,600
7,521
-
2,600
7,521
9012 Topanga Canyon Road
West Vancouver, BC
12,537
9,128
32,217
-
9,128
32,217
2,189
2095 Marine Drive
Westbourne, England
-
7,297
54,745
-
7,297
54,745
3,986
16-18 Poole Road
Weston, MA
-
1,160
6,200
-
1,160
6,200
135 North Avenue
Weybridge, England
-
10,574
63,972
-
10,574
63,972
4,802
Ellesmere Road
White Oak, MD
-
2,304
24,768
-
2,304
24,768
1,152
11621 New Hampshire Avenue
Wilbraham, MA
11,348
17,639
17,930
2,270
2387 Boston Road
Wilmington, DE
-
1,040
23,338
-
1,040
23,338
1,966
2215 Shipley Street
Winchester, England
-
7,887
37,873
2,283
8,047
39,996
3,065
Stockbridge Road
Winnipeg, MB
18,550
2,519
49,216
-
2,519
49,216
2,517
857 Wilkes Avenue
Winnipeg, MB
10,834
1,653
27,401
-
1,653
27,401
1,440
3161 Grant Avenue
Wolverhampton, England
-
3,945
11,350
-
3,945
11,350
1,600
73 Wergs Road
Woodbridge, CT
-
1,370
14,219
1,370
14,782
3,221
21 Bradley Road
Woodland Hills, CA
-
3,400
20,478
-
3,400
20,478
2,195
20461 Ventura Boulevard
Worcester, MA
14,217
1,140
21,664
1,140
22,146
2,770
340 May Street
Yarmouth, ME
17,708
27,711
28,046
3,245
27 Forest Falls Drive
Yonkers, NY
-
3,962
50,107
-
3,962
50,107
3,688
65 Crisfield Street
Yorkton, SK
4,682
11,233
-
11,233
94 Russell Drive
Seniors Housing Operating Total
$
1,714,714
$
738,098
$
8,145,281
$
249,360
$
751,712
$
8,381,027
$
715,534
Health Care REIT, Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2013
(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
Medical Facilities:
Akron, OH
$
-
$
$
20,200
$
-
$
$
20,200
$
2,113
200 E. Market St.
Akron, OH
-
12,079
-
12,079
701 White Pond Drive
Allen, TX
12,082
14,511
-
14,509
2,302
1105 N Central Expressway
Alpharetta, GA
-
1,700
-
1,862
-
-
940 North Point Parkway
Alpharetta, GA
-
18,205
1,041
18,706
2,035
3400-A Old Milton Parkway
Alpharetta, GA
-
32,729
3,503
1,769
34,960
4,991
3400-C Old Milton Parkway
Alpharetta, GA
-
14,406
14,602
1,868
11975 Morris Road
Alpharetta, GA
-
16,063
17,090
2,255
3300 Old Milton Parkway
Arcadia, CA
-
5,408
23,219
2,312
5,618
25,321
6,039
301 W. Huntington Drive
Atlanta, GA
-
4,931
18,720
3,297
5,301
21,647
6,364
755 Mt. Vernon Hwy.
Atlanta, GA
17,637
1,945
23,437
1,947
24,115
1,821
975 Johnson Ferry Road
Atlanta, GA
26,426
-
42,468
-
42,996
4,645
5670 Peachtree-Dunwoody Road
Bartlett, TN
8,060
15,015
1,408
16,423
4,061
2996 Kate Bond Rd.
Bellaire, TX
-
4,551
46,105
-
4,551
46,105
9,190
5410 W. Loop S.
Bellaire, TX
-
2,972
33,445
2,026
2,972
35,471
8,097
5420 W. Loop S.
Bellevue, NE
-
4,500
109,719
-
4,500
109,719
9,849
2500 Bellevue Medical Center Dr
Bellevue, NE
-
-
15,833
-
16,701
2,155
2510 Bellevue Medical Center Drive
Bellingham, MA
-
9,270
-
-
9,270
-
-
Maple Street and High Street
Birmingham, AL
-
9,950
10,181
2,507
801 Princeton Avenue SW
Birmingham, AL
-
12,238
12,350
2,961
817 Princeton Avenue SW
Birmingham, AL
-
18,994
19,712
4,454
833 Princeton Avenue SW
Boardman, OH
-
1,200
12,800
-
1,200
12,800
2,154
8049 South Ave.
Boardman, OH
-
11,787
12,155
1,850
8423 Market St
Boca Raton, FL
-
34,002
2,249
36,146
8,723
9970 S. Central Park Blvd.
Boca Raton, FL
-
11,659
12,168
9960 S. Central Park Boulevard
Boerne, TX
-
13,317
13,318
1,658
134 Menger Springs Road
Bowling Green, KY
-
3,800
26,700
3,800
26,849
3,738
1300 Campbell Lane
Boynton Beach, FL
-
2,048
7,692
2,048
8,115
2,436
8188 Jog Rd.
Boynton Beach, FL
-
2,048
7,403
1,058
2,048
8,461
2,208
8200 Jog Road
Boynton Beach, FL
5,789
5,611
7,390
13,098
3,063
10075 Jog Rd.
Boynton Beach, FL
26,276
13,303
39,981
-
13,303
39,981
10301 Hagen Ranch Road
Bridgeton, MO
-
-
30,221
-
30,499
1,525
12380 DePaul Drive
Bridgeton, MO
11,025
21,221
21,242
3,171
12266 DePaul Dr
Burleson, TX
-
11,619
11,869
1,366
12001 South Freeway
Carmel, IN
-
2,280
18,820
2,280
19,158
3,049
12188-A North Meridian Street
Carmel, IN
-
2,152
18,591
2,837
2,026
21,554
4,826
12188-B North Meridian Street
Cedar Grove, WI
-
-
313 S. Main St.
Cincinnati, OH
-
-
16,317
-
-
16,317
3301 Mercy West Boulevard
Claremore, OK
8,006
12,829
13,131
3,400
1501 N. Florence Ave.
Clarkson Valley, MO
-
-
35,592
-
-
35,592
5,278
15945 Clayton Rd
Columbia, MD
-
2,258
18,861
2,291
19,311
10700 Charter Drive
Columbus, OH
-
6,764
7,043
750 Mt. Carmel Mall
Coral Springs, FL
-
1,598
10,627
1,255
1,636
11,844
3,633
1725 N. University Dr.
Dade City, FL
-
1,211
5,511
-
1,211
5,511
13413 US Hwy 301
Dallas, TX
14,595
28,690
1,761
30,451
7,508
9330 Poppy Dr.
Dallas, TX
28,450
53,963
54,120
3,951
7115 Greenville Avenue
Dayton, OH
-
6,515
6,878
1530 Needmore Road
Deerfield Beach, FL
-
2,408
7,482
2,408
7,809
1,331
1192 East Newport Center Drive
Delray Beach, FL
-
1,882
34,767
5,347
2,064
39,932
11,089
5130-5150 Linton Blvd.
Denton, TX
11,810
-
19,407
-
20,038
4,248
2900 North I-35
Durham, NC
-
1,212
22,858
-
1,212
22,858
-
1823 Hillandale Road
Edina, MN
-
15,132
-
15,132
1,964
8100 W 78th St
El Paso, TX
9,787
17,075
1,782
18,857
5,198
2400 Trawood Dr.
Everett, WA
-
4,842
26,010
-
4,842
26,010
2,818
13020 Meridian Ave. S.
Fayetteville, GA
-
7,540
8,280
2,181
1275 Hwy. 54 W.
Fenton, MO
12,166
-
27,055
-
-
27,055
-
1011 Bowles Avenue
Fenton, MO
5,911
-
13,432
-
-
13,432
-
1055 Bowles Avenue
Folsom, CA
-
-
33,600
-
-
33,600
330 Montrose Drive
Fort Wayne, IN
-
8,232
-
8,232
1,445
2626 Fairfield Ave.
Fort Wayne, IN
16,606
1,105
22,836
-
1,105
22,836
1,281
7916 Jefferson Boulevard
Fort Worth, TX
-
13,615
-
13,615
1,220
425 Alabama Ave.
Franklin, WI
5,175
6,872
7,550
-
6,872
7,550
1,109
9200 W. Loomis Rd.
Franklin, TN
-
2,338
12,138
1,955
2,338
14,093
3,281
100 Covey Drive
Fresno, CA
-
2,500
35,800
2,500
35,918
5,007
7173 North Sharon Avenue
Frisco, TX
-
16,445
-
16,445
2990 Legacy Drive
Frisco, TX
8,677
-
18,635
-
19,133
4,576
4401 Coit Road
Frisco, TX
-
-
15,309
1,717
-
17,026
4,454
4461 Coit Road
Gallatin, TN
-
19,432
20,323
3,777
300 Steam Plant Rd
Germantown, TN
-
3,049
12,456
3,049
13,193
3,182
1325 Wolf Park Drive
Glendale, CA
7,769
18,398
19,059
4,228
222 W. Eulalia St.
Grand Prairie, TX
-
6,086
-
6,086
2740 N State Hwy 360
Green Bay, WI
8,349
-
14,891
-
-
14,891
1,932
2253 W. Mason St.
Green Bay, WI
-
-
20,098
-
-
20,098
2,558
2845 Greenbrier Road
Green Bay, WI
-
-
11,696
-
-
11,696
2,068
2845 Greenbrier Road
Greeneville, TN
-
10,032
10,064
1,436
438 East Vann Rd
Greenfield, WI
-
-
15,204
-
-
15,204
5017 South 110th Street
Greenwood, IN
-
8,316
26,384
-
8,316
26,384
1,590
1260 Innovation Parkway
Harker Heights, TX
-
1,907
3,575
-
1,907
3,575
E Central Texas Expressway
High Point, NC
-
2,595
29,013
2,604
29,068
1,302
4515 Premier Drive
Highland, IL
-
-
8,612
-
-
8,612
12860 Troxler Avenue
Houston, TX
-
10,395
-
10,403
-
15655 Cypress Woods Medical Drive
Houston, TX
-
3,688
13,302
3,688
13,313
10701 Vintage Preserve Parkway
Houston, TX
-
12,815
44,717
12,815
45,191
2,478
2727 W Holcombe Boulevard
Houston, TX
14,000
31,018
-
31,018
2,694
18100 St John Drive
Houston, TX
-
11,136
11,175
1,217
2060 Space Park Drive
Houston, TX
-
5,837
32,986
5,837
33,087
2,975
15655 Cypress Woods Medical Drive
Hudson, OH
-
2,473
13,622
2,473
13,830
5655 Hudson Drive
Jackson, MI
8,197
-
17,617
-
-
17,617
-
1201 E Michigan Avenue
Jupiter, FL
6,817
2,252
11,415
2,252
11,811
3,010
550 Heritage Dr.
Jupiter, FL
4,237
2,825
5,858
2,825
5,945
1,768
600 Heritage Dr.
Katy, TX
-
1,099
1,604
-
1,099
1,604
21660 Kingsland Blvd
Kenosha, WI
9,222
-
18,058
-
-
18,058
2,293
10400 75th St.
Killeen, TX
-
22,667
22,874
2,967
2405 Clear Creek Rd
Lafayette, LA
-
1,928
10,483
1,928
10,509
2,842
204 Energy Parkway
Lake St Louis, MO
-
11,937
1,978
13,915
2,031
400 Medical Dr
Lakeway, TX
-
5,142
18,574
-
5,142
18,574
2000 Medical Dr
Lakeway, TX
-
2,801
-
-
2,801
-
-
Lohmans Crossing Road
Lakewood, CA
-
14,885
1,307
16,192
3,637
5750 Downey Ave.
Lakewood, WA
7,431
15,932
-
15,932
11307 Bridgeport Way SW
Las Vegas, NV
-
6,127
-
-
6,127
-
-
SW corner of Deer Springs Way and Riley Street
Las Vegas, NV
-
23,420
-
23,420
1,462
2500 North Tenaya Way
Las Vegas, NV
-
2,319
4,612
1,010
2,319
5,622
1,455
2870 S. Maryland Pkwy.
Las Vegas, NV
2,889
6,921
7,133
1,867
1776 E. Warm Springs Rd.
Las Vegas , NV
5,665
15,287
15,987
4,053
1815 E. Lake Mead Blvd.
Lenexa, KS
-
16,013
2,377
18,390
2,285
23401 Prairie Star Pkwy
Lincoln, NE
-
1,420
29,692
1,420
29,701
5,173
575 South 70th St
Los Alamitos, CA
7,891
18,635
19,451
4,514
3771 Katella Ave.
Los Gatos, CA
-
22,386
1,361
23,747
6,456
555 Knowles Dr.
Loxahatchee, FL
-
1,637
5,048
1,652
5,875
1,511
12977 Southern Blvd.
Loxahatchee, FL
-
1,340
6,509
1,345
6,731
1,738
12989 Southern Blvd.
Loxahatchee, FL
-
1,553
4,694
1,567
5,275
1,344
12983 Southern Blvd.
Marinette, WI
7,079
-
13,538
-
-
13,538
2,068
4061 Old Peshtigo Rd.
Marlton, NJ
-
-
38,300
1,500
-
39,800
5,385
92 Brick Road
Mechanicsburg, PA
-
1,350
16,650
-
1,350
16,650
1,064
4950 Wilson Lane
Merced, CA
-
-
13,772
-
14,699
2,108
315 Mercy Ave.
Meridian, ID
-
3,600
20,802
3,600
21,053
5,974
2825 E. Blue Horizon Dr.
Merriam, KS
-
7,189
7,794
1,720
8800 West 75th Street
Merriam, KS
-
3,122
3,810
7301 Frontage Street
Merriam, KS
-
12,972
13,174
2,397
8901 West 74th Street
Merriam, KS
15,032
7,393
7,881
1,354
9119 West 74th Street
Merriam, KS
-
-
25,458
-
-
25,458
-
9301 West 74th Street
Merrillville, IN
-
11,699
11,853
1,808
9509 Georgia St.
Merrillville, IN
-
-
22,134
-
22,344
3,652
101 E. 87th Ave.
Mesa, AZ
-
1,558
9,561
1,558
9,961
2,926
6424 East Broadway Road
Mesquite, TX
-
3,834
-
3,834
1575 I-30
Milwaukee, WI
4,258
8,457
-
8,457
1,162
1218 W. Kilbourn Ave.
Milwaukee, WI
9,386
1,425
11,519
-
1,425
11,520
2,063
3301-3355 W. Forest Home Ave.
Milwaukee, WI
2,347
2,185
-
2,185
840 N. 12th St.
Milwaukee, WI
20,781
-
44,535
-
-
44,535
5,533
2801 W. Kinnickinnic Pkwy.
Moline, IL
-
-
8,690
-
-
8,690
3900 28th Avenue Drive
Monticello, MN
9,212
18,489
-
18,489
1001 Hart Boulevard
Moorestown, NJ
-
-
52,645
1,479
-
54,124
2,311
401 Young Avenue
Morrow, GA
-
8,064
8,270
2,436
6635 Lake Drive
Mount Juliet, TN
4,003
1,566
11,697
1,086
1,566
12,783
3,278
5002 Crossing Circle
Mount Pleasant, SC
-
-
17,200
-
-
17,200
1200 Hospital Drive
Mount Vernon, IL
-
-
25,163
-
26,069
1,141
4121 Veterans Memorial Dr
Murrieta, CA
-
8,800
202,412
-
8,800
202,412
13,453
28062 Baxter Road
Murrieta, CA
-
-
46,520
-
46,895
6,362
28078 Baxter Rd.
Muskego, WI
1,129
2,158
-
2,159
S74 W16775 Janesville Rd.
Nashville, TN
-
1,806
7,165
1,548
1,806
8,713
2,618
310 25th Ave. N.
New Berlin, WI
4,352
3,739
8,290
-
3,739
8,290
1,142
14555 W. National Ave.
Niagara Falls, NY
-
1,145
10,574
1,280
10,883
3,256
6932 - 6934 Williams Rd
Niagara Falls, NY
-
7,870
8,221
1,783
6930 Williams Rd
Oklahoma City, OK
-
-
19,119
-
-
19,119
-
535 NW 9th Street
Orange Village, OH
-
7,419
7,877
2,131
3755 Orange Place
Oro Valley, AZ
9,818
18,339
19,218
4,431
1521 E. Tangerine Rd.
Oshkosh, WI
-
-
18,339
-
-
18,339
2,311
855 North Wethaven Dr.
Oshkosh, WI
8,758
-
15,881
-
-
15,881
1,980
855 North Wethaven Dr.
Palm Springs, FL
2,607
4,066
4,532
1,260
1640 S. Congress Ave.
Palm Springs, FL
-
1,182
7,765
1,182
8,239
2,312
1630 S. Congress Ave.
Palmer, AK
18,957
29,705
30,559
6,625
2490 South Woodworth Loop
Pasadena, TX
-
1,700
7,991
-
1,700
7,991
5001 E Sam Houston Parkway S
Pearland, TX
-
1,500
11,484
-
1,500
11,484
2515 Business Center Drive
Pendleton, OR
-
-
10,533
-
-
10,533
3001 St. Anthony Drive
Pewaukee, WI
-
4,700
20,669
-
4,700
20,669
4,583
2400 Golf Rd.
Phoenix, AZ
27,199
1,149
48,018
11,155
1,149
59,174
13,907
2222 E. Highland Ave.
Pineville, NC
-
6,974
2,081
1,077
8,939
2,368
10512 Park Rd.
Plano, TX
-
5,423
20,752
5,423
21,150
7,070
6957 Plano Parkway
Plano, TX
53,948
82,703
-
82,703
7,072
6020 West Parker Road
Plantation, FL
9,214
8,563
10,666
2,517
8,575
13,171
4,477
851-865 SW 78th Ave.
Plantation, FL
8,559
8,848
9,262
8,907
9,535
5,130
600 Pine Island Rd.
Plymouth, WI
1,317
1,250
1,870
-
1,250
1,870
2636 Eastern Ave.
Portland, ME
15,418
25,500
25,921
2,592
195 Fore River Parkway
Redmond, WA
-
5,015
26,697
-
5,015
26,697
3,073
18000 NE Union Hill Rd.
Reno, NV
-
1,117
21,972
1,117
22,903
5,710
343 Elm St.
Richmond, VA
-
-
12,000
-
-
12,000
2220 Edward Holland Drive
Richmond, VA
-
2,838
26,305
2,838
26,343
1,429
7001 Forest Avenue
Rochdale, MA
-
-
7,100
-
-
7,100
111 Huntoon Memorial Highway
Rockwall, TX
-
17,056
17,195
1,541
3142 Horizon Road
Rogers, AR
-
1,062
28,680
1,062
28,911
2,950
2708 Rife Medical Lane
Rolla, MO
-
1,931
47,640
-
1,931
47,639
3,816
1605 Martin Spring Drive
Roswell, NM
1,674
5,851
-
5,851
601 West Country Club Road
Roswell, NM
4,756
15,984
-
15,984
1,360
350 West Country Club Road
Roswell, NM
-
17,171
-
17,171
1,166
300 West Country Club Road
Ruston, LA
-
9,790
-
9,790
1401 Ezelle St
Sacramento, CA
-
12,756
1,274
14,030
3,284
8120 Timberlake Way
San Antonio, TX
-
-
17,303
-
-
17,303
4,409
8902 Floyd Curl Dr.
San Antonio, TX
-
2,050
16,251
2,811
2,050
19,062
6,304
540 & 19016 Stone Oak Pkwy.
San Antonio, TX
18,400
4,518
29,905
4,518
30,231
3,486
5282 Medical Drive
San Bernardino, CA
-
3,700
14,300
3,700
14,987
1,991
1760 W. 16th St.
San Diego, CA
-
-
22,003
1,845
-
23,848
3,087
555 Washington St.
Sarasota, FL
-
3,360
19,140
-
3,360
19,140
1,171
6150 Edgelake Drive
Sarasota, FL
-
46,348
47,048
2,385
1921 Waldemere Street
Seattle, WA
-
4,410
35,787
2,056
4,410
37,844
4,889
5350 Tallman Ave
Sewell, NJ
-
-
53,360
4,553
-
57,913
10,862
239 Hurffville-Cross Keys Road
Shakopee, MN
6,749
11,360
11,371
1,669
1515 St Francis Ave
Shakopee, MN
11,428
18,089
-
18,089
1,877
1601 St Francis Ave
Sheboygan, WI
1,819
1,012
2,216
-
1,012
2,216
1813 Ashland Ave.
Somerville, NJ
-
3,400
22,244
3,400
22,246
3,013
30 Rehill Avenue
Southlake, TX
11,680
17,905
18,072
1,537
1545 East Southlake Boulevard
Southlake, TX
18,293
30,524
-
30,524
2,089
1545 East Southlake Boulevard
Springfield, IL
-
-
10,100
-
-
10,100
701 North Walnut Street
St. Louis, MO
7,106
17,247
18,188
4,422
2325 Dougherty Rd.
St. Paul, MN
25,694
2,681
39,507
-
2,681
39,507
4,229
435 Phalen Boulevard
Stafford, VA
-
-
11,260
-
11,573
1,737
125 Hospital Center Blvd
Suffern, NY
-
35,220
2,035
37,255
3,263
255 Lafayette Avenue
Suffolk, VA
-
1,530
10,979
1,547
11,521
2,323
5838 Harbour View Blvd.
Sugar Land, TX
8,727
3,513
15,527
3,543
15,532
11555 University Boulevard
Summit, WI
-
2,899
87,666
-
2,899
87,666
15,631
36500 Aurora Dr.
Tacoma, WA
-
-
67,385
-
-
67,385
2,570
1608 South J Street
Tallahassee, FL
-
-
14,719
2,730
-
17,449
2,055
One Healing Place
Tampa, FL
-
4,319
12,234
-
4,319
12,234
14547 Bruce B Downs Blvd
Tampa, FL
-
1,210
19,572
1,212
19,633
1,625
3000 Medical Park Drive
Tampa, FL
-
2,208
6,464
2,208
6,484
3000 E. Fletcher Avenue
Temple, TX
-
2,900
9,851
2,900
9,954
2601 Thornton Lane
Tucson, AZ
-
1,302
4,925
1,302
5,736
1,644
2055 W. Hospital Dr.
Tulsa, OK
-
3,003
6,025
3,003
6,045
2,279
329 S. 79th E. Ave.
Van Nuys, CA
-
-
36,187
-
-
36,187
4,374
6815 Noble Ave.
Virginia Beach, VA
-
18,289
18,831
2,665
828 Health Way
Voorhees, NJ
-
6,404
24,251
1,387
6,477
25,564
5,767
900 Centennial Blvd.
Voorhees, NJ
-
-
96,006
2,642
98,642
6,548
200 Bowman Drive
Wellington, FL
6,605
16,933
1,705
18,638
3,667
10115 Forest Hill Blvd.
Wellington , FL
5,925
13,697
13,917
3,096
1395 State Rd. 7
West Allis, WI
3,341
1,106
3,309
-
1,106
3,309
11333 W. National Ave.
West Palm Beach, FL
6,353
14,740
14,861
3,890
5325 Greenwood Ave.
West Palm Beach, FL
5,860
14,618
15,005
4,365
927 45th St.
West Seneca, NY
11,698
22,435
1,870
1,642
23,580
5,783
550 Orchard Park Rd
Westerville, OH
-
2,122
5,403
2,122
5,459
444 N Cleveland Avenue
Zephyrhills, FL
-
3,875
23,907
3,364
3,875
27,270
2,205
38135 Market Square Dr
Medical facilities total:
$
700,427
$
340,690
$
4,326,337
$
134,627
$
344,775
$
4,456,878
$
595,169
Assets held for sale:
Durham, NC
$
-
$
5,350
$
9,320
$
-
$
-
$
-
$
-
2609 N. Duke Street
Goshen, IN
-
6,120
-
-
4,880
-
1332 Waterford Circle
Kalida, OH
-
8,173
-
-
7,123
-
755 Ottawa St.
McConnelsville, OH
-
7,060
-
-
6,499
-
4114 North SR 376 NW
Assets held for sale total
$
-
$
6,230
$
30,673
$
-
$
-
$
18,502
-
Summary:
Seniors housing triple-net
$
587,136
$
781,397
$
8,430,604
$
428,753
$
782,390
$
8,858,364
$
1,075,955
Seniors housing operating
1,714,714
738,098
8,145,281
249,360
751,712
8,381,027
715,534
Medical facilities
700,427
340,690
4,326,337
134,627
344,775
4,456,878
595,169
Construction in progress
-
-
141,085
-
-
141,085
-
Total continuing operating properties
3,002,277
1,860,185
21,043,307
812,740
1,878,877
21,837,354
2,386,658
Assets held for sale
-
6,230
30,673
-
-
18,502
-
Total investments in real property owned
$
3,002,277
$
1,866,415
$
21,073,980
$
812,740
$
1,878,877
$
21,855,856
$
2,386,658
(1) Please see Note 2 to our consolidated financial statements for information regarding lives used for depreciation and amortization.
(2) Represents real property asset associated with a capital lease.
Year Ended December 31,
Reconciliation of real property:
(in thousands)
Investment in real estate:
Balance at beginning of year
$
18,082,399
$
14,844,319
$
8,992,495
Additions:
Acquisitions
3,597,955
2,923,251
4,525,737
Improvements
408,844
449,964
426,000
Assumed other items, net
772,972
108,404
210,411
Assumed debt
1,340,939
481,598
961,928
Total additions
6,154,628
3,969,299
6,124,076
Deductions:
Cost of real estate sold
(498,564)
(581,696)
(250,047)
Reclassification of accumulated depreciation and amortization for assets held for sale
(3,730)
(120,236)
(10,011)
Impairment of assets
-
(29,287)
(12,194)
Total deductions
(502,294)
(731,219)
(272,252)
Foreign currency translation
33,918
6,082
-
Balance at end of year(3)
$
23,734,733
$
18,082,399
$
14,844,319
Accumulated depreciation:
Balance at beginning of year
$
1,555,055
$
1,194,476
$
836,966
Additions:
Depreciation and amortization expenses
873,960
533,585
423,605
Amortization of above market leases
7,831
7,204
6,409
Total additions
881,791
540,789
430,014
Deductions:
Sale of properties
(49,625)
(59,974)
(63,997)
Reclassification of accumulated depreciation and amortization for assets held for sale
(3,730)
(120,236)
(8,507)
Total deductions
(53,355)
(180,210)
(72,504)
Foreign currency translation
3,167
-
-
Balance at end of year
$
2,386,658
$
1,555,055
$
1,194,476
(3) The aggregate cost for tax purposes for real property equals $20,260,297,000, $14,788,080,000, and $13,604,448,000 at December 31, 2013, 2012 and 2011, respectively.
Health Care REIT, Inc.
Schedule IV - Mortgage Loans on Real Estate
December 31, 2013
(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:
Texas
Medical office buildings
6.18%
12/31/17
$133,300
$
-
$
25,936
$
25,864
$
-
Massachusetts
Seniors housing triple-net
7.60%
12/31/16
$130,934
-
21,000
20,285
-
California
Hospital
10.39%
06/01/20
$205,064
-
25,050
18,546
-
California
Hospital
8.72%
12/01/17
$127,158
-
17,500
17,500
-
Texas
Medical office buildings
6.18%
12/31/17
$83,353
-
16,402
16,173
-
United Kingdom
Seniors housing triple-net
7.00%
04/19/18
$87,414
-
24,032
15,002
-
United Kingdom
Seniors housing triple-net
7.00%
11/21/18
$52,667
-
23,038
9,219
-
Georgia
Medical office buildings
6.50%
10/01/14
$38,556
-
6,100
5,940
-
United Kingdom
Seniors housing triple-net
7.54%
07/31/15
$21,227
-
3,315
3,315
-
Texas
Seniors housing triple-net
7.50%
10/31/18
$12,887
-
8,800
2,023
-
Texas
Seniors housing triple-net
7.50%
10/31/18
$11,639
-
8,800
1,827
-
Texas
Seniors housing triple-net
10.50%
03/01/14
$56,574
-
2,635
-
Arizona
Seniors housing triple-net
3.55%
01/01/14
$12,275
-
4,500
Georgia
Medical office buildings
8.11%
10/01/14
$1,676
-
-
Second mortgages relating to 1 property located in:
Connecticut
Seniors housing triple-net
8.11%
04/01/18
$31,909
6,536
5,300
4,616
-
Florida
Seniors housing triple-net
12.17%
07/01/18
$27,908
4,107
2,700
2,700
-
Florida
Seniors housing triple-net
12.17%
11/01/18
$27,685
1,324
2,700
2,700
-
Totals
$
11,967
$
198,608
$
146,987
$
Year Ended December 31,
Reconciliation of mortgage loans:
(in thousands)
Balance at beginning of year
$
87,955
$
63,934
$
109,283
Additions:
New mortgage loans
68,530
40,641
11,286
Total additions
68,530
40,641
11,286
Deductions:
Collections of principal
(8,790)
(11,819)
(50,579)
Conversions to real property
-
(3,300)
(4,000)
Charge-offs
(2,110)
(1,501)
-
Reclass to other real estate loans
-
-
(2,056)
Total deductions
(10,900)
(16,620)
(56,635)
Change in balance due to foreign currency translation
1,402
-
-
Balance at end of year
$
146,987
$
87,955
$
63,934
EXHIBIT INDEX
1.1(a) Form of Equity Distribution Agreement, dated as of November 12, 2010, entered into by and between the Company and each of UBS Securities LLC, RBS Securities Inc., KeyBanc Capital Markets Inc. and Credit Agricole Securities (USA) Inc. (filed with the Commission as Exhibit 1.1 to the Company’s Form 8-K filed November 15, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
1.1(b) Form of Amendment No. 1, dated September 1, 2011, to the Equity Distribution Agreements entered into by and between the Company and each of UBS Securities LLC, RBS Securities Inc., KeyBanc Capital Markets Inc. and Credit Agricole Securities (USA) Inc. (filed with the Commission as Exhibit 1.1 to the Company’s Form 8-K filed September 8, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
2.1 Agreement and Plan of Merger, dated as of August 21, 2012, by and among Sunrise Senior Living, Inc., Brewer Holdco, Inc., Brewer Holdco Sub, Inc., the Company and Red Fox, Inc. (the exhibits and schedules to the Agreement and Plan of Merger have been omitted pursuant to Item 601(b)(2) of Regulation S-K) (filed with the Commission as Exhibit 2.1 to the Company’s Form 8-K filed August 22, 2012 (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 Designation, Preferences and Rights of Junior Participating Preferred Stock, Series A, 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 10-K filed March 20, 2000 (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 3.1 to the Company’s Form 8-K filed June 13, 2003 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(e) 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(f) 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(g) Certificate of Designation of 6% Series H Cumulative Convertible and Redeemable Preferred Stock of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-Q filed May 10, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(h) 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(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 May 10, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(j) Certificate of Designation of 6.50% Series J Cumulative Redeemable Preferred Stock of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed March 8, 2012 (File No. 001-08923), and incorporated herein by reference thereto).
3.2 Fourth Amended and Restated By-Laws of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed November 1, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(a) Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed September 9, 2002 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(b) Supplemental Indenture No. 1, dated as of September 6, 2002, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed September 9, 2002 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(c) Amendment No. 1, dated March 12, 2003, to Supplemental Indenture No. 1, dated as of September 6, 2002, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed March 14, 2003 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(d) Supplemental Indenture No. 2, dated as of September 10, 2003, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed September 24, 2003 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(e) Amendment No. 1, dated September 16, 2003, to Supplemental Indenture No. 2, dated as of September 10, 2003, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.4 to the Company’s Form 8-K filed September 24, 2003 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(f) Supplemental Indenture No. 3, dated as of October 29, 2003, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed October 30, 2003 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(g) Amendment No. 1, dated September 13, 2004, to Supplemental Indenture No. 3, dated as of October 29, 2003, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and The Bank of New York Trust Company, N.A., as successor to Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed September 13, 2004 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(h) Supplemental Indenture No. 4, dated as of April 27, 2005, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and The Bank of New York Trust Company, N.A. (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed April 28, 2005 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(i) Supplemental Indenture No. 5, dated as of November 30, 2005, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and The Bank of New York Trust Company, N.A. (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed November 30, 2005 (File No. 001-08923), and incorporated herein by reference thereto).
4.2(a) Indenture, dated as of November 20, 2006, between the Company and The Bank of New York Trust Company, N.A. (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed November 20, 2006 (File No. 001-08923), and incorporated herein by reference thereto).
4.2(b) Supplemental Indenture No. 1, dated as of November 20, 2006, between the Company and The Bank of New York Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed November 20, 2006 (File No. 001-08923), and incorporated herein by reference thereto).
4.2(c) Supplemental Indenture No. 2, dated as of July 20, 2007, between the Company and The Bank of New York Trust Company, N.A. (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed July 20, 2007 (File No. 001-08923), and incorporated herein by reference thereto).
4.3(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).
4.3(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).
4.3(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).
4.3(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).
4.3(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).
4.3(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).
4.3(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).
4.3(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).
4.3(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).
4.3(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).
4.3(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).
4.3(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).
4.4 Form of Indenture for Senior Subordinated Debt Securities (filed with the Commission as Exhibit 4.9 to the Company’s Form S-3 (File No. 333-73936) filed November 21, 2001, and incorporated herein by reference thereto).
4.5 Form of Indenture for Junior Subordinated Debt Securities (filed with the Commission as Exhibit 4.10 to the Company’s Form S-3 (File No. 333-73936) filed November 21, 2001, and incorporated herein by reference thereto).
10.1 Credit Agreement dated as of January 7, 2013, by and among the Company, the lenders listed therein, KeyBank National Association, as administrative agent, LC 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, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc. and Deutsche Bank Securities Inc., as joint lead arrangers, and Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as joint book managers (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed January 11, 2013 (File No. 001-08923), and incorporated herein by reference thereto).
10.2 Term Loan Agreement, dated as of May 24, 2012, by and among the Company, the banks signatory thereto, KeyBank National Association, as administrative agent, JPMorgan Chase Bank, N.A., Bank of America, N.A. and Royal Bank of Canada, as co-syndication agents, Citibank, N.A., Compass Bank, Fifth Third Bank, PNC Bank, National Association, The Bank of New York Mellon and Wells Fargo Bank, National Association, as co-documentation agents, and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and RBC Capital Markets, as joint lead arrangers and joint bookrunners (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed May 30, 2012 (File No. No. 001-08923), and incorporated herein by reference thereto).
10.3 Equity Purchase Agreement, dated as of February 28, 2011, by and among the Company, FC-GEN Investment, LLC and FC-GEN Operations Investment, LLC (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed February 28, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
10.4(a) The 1995 Stock Incentive Plan of Health Care REIT, Inc. (filed with the Commission as Appendix II to the Company’s Proxy Statement for the 1995 Annual Meeting of Stockholders, filed September 29, 1995 (File No. 001-08923), and incorporated herein by reference thereto).*
10.4(b) First Amendment to the 1995 Stock Incentive Plan of Health Care REIT, Inc. (filed with the Commission as Exhibit 4.2 to the Company’s Form S-8 (File No. 333-40771) filed November 21, 1997, and incorporated herein by reference thereto).*
10.4(c) Second Amendment to the 1995 Stock Incentive Plan of Health Care REIT, Inc. (filed with the Commission as Exhibit 4.3 to the Company’s Form S-8 (File No. 333-73916) filed November 21, 2001, and incorporated herein by reference thereto).*
10.4(d) Third Amendment to the 1995 Stock Incentive Plan of Health Care REIT, Inc. (filed with the Commission as Exhibit 10.15 to the Company’s Form 10-K filed March 12, 2004 (File No. 001-08923), and incorporated herein by reference thereto).*
10.4(e) Form of Stock Option Agreement for Executive Officers under the 1995 Stock Incentive Plan (filed with the Commission as Exhibit 10.17 to the Company’s Form 10-K filed March 16, 2005 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5(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).*
10.5(b) Form of Stock Option Agreement (with Dividend Equivalent Rights) for the Chief Executive Officer under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.18 to the Company’s Form 10-K filed March 10, 2006 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5(c) Form of Amendment to Stock Option Agreements (with Dividend Equivalent Rights) for the Chief Executive Officer under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.6 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5(d) Form of Stock Option Agreement (with Dividend Equivalent Rights) for the Chief Executive Officer under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.8 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5(e) 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 10.19 to the Company’s Form 10-K filed March 10, 2006 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5(f) Form of Amendment to Stock Option Agreements (with Dividend Equivalent Rights) for Executive Officers under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.7 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5(g) 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).*
10.5(h) Form of Stock Option Agreement (without Dividend Equivalent Rights) for the Chief Executive Officer under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.20 to the Company’s Form 10-K filed March 10, 2006 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5(i) Form of Stock Option Agreement (without Dividend Equivalent Rights) for the Chief Executive Officer under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.1 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5(j) Form of Stock Option Agreement (without Dividend Equivalent Rights) for Executive Officers under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.21 to the Company’s Form 10-K filed March 10, 2006 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5(k) 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).*
10.5(l) Form of Restricted Stock Agreement for the Chief Executive Officer under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.22 to the Company’s Form 10-K filed March 10, 2006 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5(m) Form of Restricted Stock Agreement for Executive Officers under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.23 to the Company’s Form 10-K filed March 10, 2006 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5(n) 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).*
10.5(o) 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).*
10.5(p) Form of Deferred Stock Unit Grant Agreement for Non-Employee Directors under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.24 to the Company’s Form 10-K filed March 10, 2006 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5(q) Form of Amendment to Deferred Stock Unit Grant Agreements for Non-Employee Directors under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.10 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5(r) Form of Deferred Stock Unit Grant Agreement for Non-Employee Directors under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.11 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5(s) Form of Deferred Stock Unit Grant Agreement for Non-Employee Directors under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.5 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*
10.6(a) Fifth Amended and Restated Employment Agreement, dated December 2, 2010, by and between the Company and George L. Chapman (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed December 8, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*
10.6(b) Letter Agreement, dated February 4, 2013, by and between the Company and George L. Chapman (filed with the Commission as Exhibit 10.8(b) to the Company’s Form 10-K filed February 26, 2013 (File No. 001-08923), and incorporated herein by reference thereto).*
10.6(c) Sixth Amended and Restated Employment Agreement, dated July 16, 2013, by and between the Company and George L. Chapman (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed July 17, 2013 (File No. 001-08923), and incorporated herein by reference thereto).*
10.7 Second Amended and Restated Employment Agreement, dated December 29, 2008, between the Company and Scott A. Estes (filed with the Commission as Exhibit 10.4 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*
10.8 Second Amended and Restated Employment Agreement, dated December 29, 2008, between the Company and Charles J. Herman, Jr. (filed with the Commission as Exhibit 10.3 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*
10.9 Amended and Restated Employment Agreement, dated December 29, 2008, between the Company and Jeffrey H. Miller (filed with the Commission as Exhibit 10.8 to the Company’s Form 10-K filed March 2, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*
10.10 Employment Agreement, dated March 11, 2013, by and between the Company and Scott M. Brinker (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed May 7, 2013 (File No. 001-08923), and incorporated herein by reference thereto).*
10.11 Third Amended and Restated Employment Agreement, dated December 29, 2008, between the Company and Erin C. Ibele (filed with the Commission as Exhibit 10.11 to the Company’s Form 10-K filed March 2, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*
10.12 Amended and Restated Health Care REIT, Inc. Supplemental Executive Retirement Plan, dated December 29, 2008 (filed with the Commission as Exhibit 10.12 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*
10.13 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).*
10.14 Summary of Director Compensation.*
10.15 Health Care REIT, Inc. 2013-2015 Long-Term Incentive Program (filed with the Commission as Exhibit 10.1 to the Company’s Form 10-Q filed August 6, 2013 (File No. 001-08923), and incorporated herein by reference thereto).*
12 Statement Regarding Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (Unaudited).
Subsidiaries of the Company.
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 XBRL Instance Document**
101.SCH XBRL Taxonomy Extension Schema Document**
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document**
101.LAB XBRL Taxonomy Extension Label Linkbase Document**
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document**
101.DEF XBRL Taxonomy Extension Definition Linkbase Document**
*
Management Contract or Compensatory Plan or Arrangement.
**
Attached as Exhibit 101 to this Annual Report on Form 10-K are the following materials, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets at December 31, 2013 and 2012, (ii) the Consolidated Statements of Comprehensive Income for the years ended December 31, 2013, 2012 and 2011, (iii) the Consolidated Statements of Equity for the years ended December 31, 2013, 2012 and 2011, (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011, (v) the Notes to Consolidated Financial Statements, (vi) Schedule III - Real Estate and Accumulated Depreciation and (vii) Schedule IV - Mortgage Loans on Real Estate.

Market Capitalization: 16390739.027618408
1-Year Return: 0.003534763818606734
252-Day Return: $252_day_return