Company: WELLTOWER INC.
CIK: 766704
SIC: 6798
Filing Date: 2018-02-28 00:00:00

ITEM 1 - BUSINESS
Item 1. Business
General
Welltower Inc. (NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The company invests with leading seniors housing operators, post-acute providers and health systems to fund real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. WelltowerTM, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing and post-acute communities and outpatient medical properties. Our capital programs, when combined with comprehensive planning, development and property management services, make us a single-source solution for acquiring, planning, developing, managing, repositioning and monetizing real estate assets. More information is available on the Internet at www.welltower.com. The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive textual reference only.
Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders as a result of annual increases in net operating income and portfolio growth. To meet these objectives, we invest across the full spectrum of seniors housing and health care real estate and diversify our investment portfolio by property type, relationship and geographic location.
References herein to “we,” “us,” “our” or the “Company” refer to Welltower Inc., a Delaware corporation, and its subsidiaries unless specifically noted otherwise.
Portfolio of Properties
Please see “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operation - Executive Summary - Company Overview” for a table that summarizes our portfolio as of December 31, 2017.
Property Types
We invest in seniors housing and health care real estate and evaluate our business on three reportable segments: triple-net, seniors housing operating and outpatient medical. 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.
Triple-Net
Our triple-net properties include independent living facilities and independent supportive living facilities (Canada), continuing care retirement communities, assisted living facilities, care homes with and without nursing (U.K.), Alzheimer’s/dementia care facilities and long-term/post-acute care facilities. We invest primarily through acquisitions, development and joint venture partnerships. Our properties are primarily leased to operators under long-term, triple-net master leases that obligate the tenant to pay all operating costs, utilities, real estate taxes, insurance, building repairs, maintenance costs and all obligations under certain ground leases. We are not involved in property management. Our properties include stand-alone 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 and Independent Supportive Living Facilities (Canada). Independent living facilities and 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.
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 long-term/post-acute care 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 with or without Nursing (U.K.). Care homes without nursing, regulated by the Care Quality Commission (CQC”), are rental properties that provide essentially the same services as U.S. assisted living facilities. Care homes with nursing, also regulated by the CQC, 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 national and local reimbursement programs. Unlike the U.S., care homes with nursing in the U.K. generally do not provide post-acute care.
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.
Long-Term/Post-Acute Care Facilities. Our long-term/post-acute care facilities generally include skilled nursing/post-acute care facilities, inpatient rehabilitation facilities and long-term acute care facilities. Skilled nursing/post-acute care 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 in the U.S. or provincial reimbursement in Canada. 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. Inpatient rehabilitation facilities provide inpatient services for patients with intensive rehabilitation needs. Long-term acute care facilities provide inpatient services for patients with complex medical conditions that require more intensive care, monitoring or emergency support than is available in most skilled nursing/post-acute care facilities.
Our triple-net segment accounted for 22%, 28% and 31% of total revenues for the years ended December 31, 2017, 2016 and 2015, respectively. For the year ended December 31, 2017, our revenues related to our relationship with Genesis HealthCare (“Genesis”) accounted for approximately 20% of our triple-net segment revenues and 4% of our total revenues. As of December 31, 2017, our relationship with Genesis was comprised of a master lease for 86 properties owned 100% by us, three real estate loans totaling approximately $267 million, approximately 9.5 million shares of GEN Series A common stock (representing approximately 6% of total GEN common stock) and a 25% ownership stake in an unconsolidated joint venture that includes a master lease for 28 properties operated by Genesis. In addition to rent, the master lease requires Genesis to pay all operating costs, utilities, real estate taxes, insurance, building repairs, maintenance costs and all obligations under certain ground leases. All obligations under the master lease have been guaranteed by FC-GEN Operations Investment, LLC, a subsidiary of Genesis. Please see Notes 6 and 21 to our consolidated financial statements for additional information.
Seniors Housing Operating
Our seniors housing operating properties include several of the facility types described in “Item 1 - Business - Property Types - Triple-Net”, including independent living facilities and independent supportive living facilities, assisted living facilities, care homes and Alzheimer’s/dementia care facilities. Properties are primarily held in joint venture entities with operating partners. We utilize the structure proposed in the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure (the provisions of the Internal Revenue Code authorizing the RIDEA structure were enacted as part of the Housing and Economic Recovery Act of 2008). See Note 18 to our consolidated financial statements for more information.
Our seniors housing operating segment accounted for 65%, 59% and 56% of total revenues for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017, we had relationships with 17 operators to manage our seniors housing operating properties. In each instance, our partner provides management services to the properties pursuant to an incentive-based management contract. We rely on our partners to effectively and efficiently manage these properties. For the year ended December 31, 2017, our relationship with Sunrise Senior Living accounted for approximately 37% of our seniors housing operating segment revenues and 24% of our total revenues. See Note 7 to our consolidated financial statements for additional information.
Outpatient Medical
Outpatient Medical Buildings. The outpatient medical 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 95% of our outpatient medical building portfolio is affiliated with health systems (with buildings on hospital campuses or serving as satellite locations for the health system and its physicians). We typically lease our outpatient medical buildings to multiple tenants and provide varying levels of property management. Our outpatient medical segment accounted for 13% of total revenues for each of the years ended December 31, 2017, 2016 and 2015. No single tenant exceeds 20% of segment revenues.
Investments
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 seek to diversify our investment portfolio by property type, relationship and geographic location. In determining whether to invest in a property, we focus on the following: (1) the experience of the obligor’s/partner’s management
team; (2) the historical and projected financial and operational performance of the property; (3) the credit of the obligor/partner; (4) the security for any lease or loan; (5) the real estate attributes of the building and its location; (6) the capital committed to the property by the obligor/partner; and (7) the operating fundamentals of the applicable industry.
We monitor our investments through a variety of methods determined by the type of property. Our asset management process for seniors housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections, and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral. Our internal property management division manages and monitors the outpatient medical portfolio with a comprehensive process including review of, among other things, tenant relations, lease expirations, the mix of health service providers, hospital/health system relationships, property performance, capital improvement needs, and market conditions.
Investment Types
Real Property. Our properties are primarily comprised of land, buildings, improvements and related rights. Our triple-net properties are generally leased to operators under long-term operating leases. The leases generally have a fixed contractual term of 12 to 15 years and contain one or more five to 15-year renewal options. Certain of our leases also contain purchase options, a portion of which could result in the disposition of properties for less than full market value. 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, 2017, approximately 92% of our triple-net properties were subject to master leases. A master lease is a lease of multiple properties to one tenant entity under a single lease agreement. From time to time, we may acquire additional properties that are then leased to the tenant under the master lease. The tenant is required to make one monthly payment that represents rent on all the properties that are subject to the master lease. Typically, the master lease tenant can exercise its right to purchase the properties or to renew the master lease only with respect to all leased properties at the same time. 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 its unexpired leases and executory contracts. In the context of integrated master leases such as ours, our tenants in bankruptcy would be required to assume or reject the master lease as a whole, rather than deciding on a property by property basis.
Our outpatient medical portfolio is primarily self-managed and consists principally of multi-tenant properties leased to health care providers. Our leases typically include increasers and some form of operating expense reimbursement by the tenant. As of December 31, 2017, 80% of our portfolio included leases with full pass through, 19% with a partial expense reimbursement (modified gross) and 1% with no expense reimbursement (gross). Our outpatient medical leases are non-cancellable operating leases that have a weighted-average remaining term of seven years at December 31, 2017 and are often credit enhanced by security deposits, guaranties and/or letters of credit.
Construction. We provide for the construction of properties for tenants primarily as part of long-term operating leases. We capitalize certain interest costs associated with funds used for the construction of properties owned by us. The amount capitalized is based upon the amount advanced during the construction period using the rate of interest that approximates our Company-wide cost of financing. Our interest expense is reduced by the amount capitalized. 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, 2017, we had outstanding construction investments of $237,746,000 and were committed to provide additional funds of approximately $429,815,000 to complete construction for investment properties. See Note 3 to our consolidated financial statements for additional information. We also provide for construction loans which, depending on the terms and conditions, could be treated as loans, real property, or investments in unconsolidated entities.
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, 2017, we had gross outstanding real estate loans of $495,871,000. The interest yield averaged approximately 9.2% 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, 2017 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. See Note 6 to our consolidated financial statements for additional information.
Investments in Unconsolidated Entities. Investments in entities that we do not consolidate but have the ability to exercise significant influence over operating and financial policies are reported under the equity method of accounting. Our investments in unconsolidated entities generally represent interests ranging from 10% to 50% in real estate assets. Under the equity method of accounting, our share of the investee’s earnings or losses is included in our consolidated results of operations. 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. 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 are in conformity with U.S general accepted accounting principles (“U.S. GAAP”) and include the accounts of our wholly-owned subsidiaries and joint venture entities that we control, through voting rights or other means. All material intercompany transactions and balances have been eliminated in consolidation.
At inception of joint venture transactions, we identify entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and determine which business enterprise is the primary beneficiary of its operations. A VIE is broadly defined as an entity where either (i) the equity investors as a group, if any, do not have a controlling financial interest, or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. We consolidate investments in VIEs when we are determined to be the primary beneficiary. Accounting Standards Codification Topic 810, Consolidations, requires enterprises to perform a qualitative approach to determining whether or not a VIE will need to be consolidated. This evaluation is based on an enterprise’s ability to direct and influence the activities of a VIE that most significantly impact that entity’s economic performance.
For investments in joint ventures, U.S. GAAP may preclude consolidation by the sole general partner in certain circumstances based on the type of rights held by the limited partner(s). We assess the limited partners’ rights and their impact on our consolidation conclusions, and we reassess if there is a change to the terms or in the exercisability of the rights of the limited partners, the sole general partner increases or decreases its ownership of limited partnership interests, or there is an increase or decrease in the number of outstanding limited partnership interests. We similarly evaluate the rights of managing members of limited liability companies.
Borrowing Policies
We utilize a combination of debt and equity to fund investments. Our debt and equity levels are determined by management to maintain a conservative balance sheet and 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 investment strategy. For short-term purposes, we may borrow on our primary unsecured credit facility. We replace these borrowings with long-term capital such as senior unsecured notes or common stock. When terms are deemed favorable, we may invest in properties subject to existing mortgage indebtedness. In addition, we may obtain secured financing for unleveraged properties in which we have invested or may refinance properties acquired on a leveraged basis. In certain agreements with our lenders, we are subject to restrictions with respect to secured and unsecured indebtedness.
Competition
We compete with other real estate investment trusts, real estate partnerships, private equity and hedge fund investors, banks, insurance companies, finance/investment companies, government-sponsored agencies, taxable and tax-exempt bond funds, health care operators, developers and other investors in the acquisition, development, leasing and financing of health care and seniors housing properties. We compete for investments based on a number of factors including relationships, certainty of execution, investment structures and underwriting criteria. Our ability to successfully compete is impacted by economic and demographic trends, availability of acceptable investment opportunities, our ability to negotiate beneficial investment terms, availability and cost of capital, construction and renovation costs, and applicable laws and regulations.
The operators/tenants of our properties compete with properties that provide comparable services in the local markets. Operators/tenants compete for patients and residents based on a number of factors including quality of care, reputation, physical appearance of properties, location, services offered, family preferences, physicians, staff, and price. We also face competition from other health care facilities for tenants, such as physicians and other health care providers that provide comparable facilities and services.
For additional information on the risks associated with our business, please see “

ITEM 1A - RISK FACTORS
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 addressed in this section or that we have not yet identified, actually occur, we could be materially adversely affected and 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. Investments in and acquisitions of seniors housing and health care properties entail risks associated with real estate investments generally, including risks that the investment will not achieve expected returns, that the cost estimates for necessary property improvements will prove inaccurate or that the tenant, operator or manager will fail to meet performance expectations. Furthermore, there can be no assurance that our anticipated acquisitions and investments, the completion of which is subject to various conditions, will be consummated in accordance with anticipated timing, on anticipated terms, or at all. Health care properties are often highly customizable and the development or redevelopment of such properties may require costly tenant-specific improvements. We also may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and this could have an adverse effect on our results of operations and financial condition. As a result, we cannot assure you that we will achieve the economic benefit we expect from acquisitions, investment, development and redevelopment opportunities. All of the foregoing could affect our ability to continue paying dividends at the current rate.
Our investments in joint ventures could be adversely affected by our lack of exclusive control over these investments, our partners’ insolvency or failure to meet their obligations, and disputes between us and our partners
We have entered into, and may continue in the future to enter into, partnerships or joint ventures with other persons or entities. Joint venture investments involve risks that may not be present with other methods of ownership, including the possibility that our partner might become insolvent, refuse to make capital contributions when due or otherwise fail to meet its obligations, which may result in certain liabilities to us for guarantees and other commitments; that our partner might at any time have economic or other business interests or goals that are or become inconsistent with our interests or goals; that we could become engaged in a dispute with our partner, which could require us to expend additional resources to resolve such dispute and could have an adverse impact on the operations and profitability of the joint venture; 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. All of the foregoing could affect our ability to continue paying dividends at the current rate.
Increased competition and oversupply may affect our operators’ ability to meet their obligations to us
The operators of our properties compete on a local and regional basis with operators of properties and other health care providers that provide comparable services for residents and patients, including on the basis of the scope and quality of care and services provided, reputation and financial condition, physical appearance of the properties, price, and location. Our operators are expected to encounter increased competition in the future that could limit their ability to attract residents or expand their businesses. In addition, we expect that there will continue to be a more than adequate inventory of seniors housing facilities. We cannot be certain that the operators of all of our facilities will be able to achieve and maintain occupancy and rate levels that will enable them to meet all of their obligations to us. If our operators cannot compete effectively or if there is an oversupply of facilities, their financial performance and ability to meet their obligations to us could have a material adverse effect on our financial results.
A severe cold and flu season, epidemics or any other widespread illnesses could adversely affect the occupancy of our seniors housing operating and triple-net properties
Our and our operators’ revenues are dependent on occupancy. It is impossible to predict the severity of the cold and flu season or the occurrence of epidemics or any other widespread illnesses. The occupancy of our seniors housing operating and triple-net properties could significantly decrease in the event of a severe cold and flu season, an epidemic or any other widespread illness. Such a decrease could affect the operating income of our seniors housing operating properties and the ability of our triple-net operators to make payments to us. In addition, a flu pandemic could significantly increase the cost burdens faced by our operators, including if they are required to implement quarantines for residents, and adversely affect their ability to meet their obligations to us, which would have a material adverse effect on our financial results.
The insolvency or bankruptcy of our tenants, operators, borrowers, managers and other obligors may adversely affect our business, results of operations and financial condition
We are exposed to the risk that our tenants, operators, borrowers, managers or other obligors may not be able to meet the rent, principal and interest or other payments due us, which may result in a tenant, operator, borrower, manager or other obligor bankruptcy or insolvency, or that a tenant, operator, borrower, manager or other obligor might become subject to bankruptcy or insolvency proceedings for other reasons. Although our operating lease agreements provide us with the right to evict a tenant, demand immediate payment of rent and exercise other remedies, and our loans provide us with the right to terminate any funding obligation, demand immediate repayment of principal and unpaid interest, foreclose on the collateral and exercise other remedies, the bankruptcy and insolvency laws afford certain rights to a party that has filed for bankruptcy or reorganization. A tenant, operator, borrower, manager or other obligor in bankruptcy or subject to insolvency proceedings may be able to limit or delay our ability to collect unpaid rent in the case of a lease or to receive unpaid principal and interest in the case of a loan, and to exercise other rights and remedies. In addition, if a lease is rejected in a tenant bankruptcy, our claim against the tenant may be limited by applicable provisions of the bankruptcy law. We may be required to fund certain expenses (e.g., real estate taxes and maintenance) to preserve the value of an investment property, avoid the imposition of liens on a property and/or transition a property to a new tenant. In some instances, we have terminated our lease with a tenant and relet the property to another tenant. In some of those situations, we have provided working capital loans to and limited indemnification of the new obligor. If we cannot transition a leased property to a new tenant, we may take possession of that property, which may expose us to certain successor liabilities. Should such events occur, our revenue and operating cash flow may be adversely affected. All of the foregoing could affect our ability to continue paying dividends at the current rate.
We may not be able to timely reinvest our sale proceeds on terms acceptable to us
From time to time, we will have cash available from the proceeds of sales of our securities, principal payments on our loans receivable or the sale of properties, including non-elective dispositions, under the terms of master leases or similar financial support
arrangements. In order to maintain current revenues and continue generating attractive returns, we expect to re-invest these proceeds in a timely manner. We compete for real estate investments with a broad variety of potential investors, including other health care REITs, real estate partnerships, health care providers, health care lenders and other investors, including developers, banks, insurance companies, pension funds, government-sponsored entities and private equity firms, some of whom may have greater financial resources and lower costs of capital than we do. This competition for attractive investments may negatively affect our ability to make timely investments on terms acceptable to us.
We depend on Genesis HealthCare (“Genesis”) and Brookdale Senior Living (“Brookdale”) for a significant portion of our revenues and any failure, inability or unwillingness by them to satisfy obligations under their agreements with us could adversely affect us
The properties we lease to Genesis and Brookdale account for a significant portion of our revenues, and because our leases with Genesis and Brookdale are triple-net leases, we also depend on Genesis and Brookdale to pay all insurance, taxes, utilities and maintenance and repair expenses in connection with the leased properties. We cannot assure you that Genesis and Brookdale will have sufficient assets, income and access to financing to enable them to make rental payments to us or to otherwise satisfy their respective obligations under our leases, and any failure, inability or unwillingness by Genesis or Brookdale to do so could have an adverse effect on our business, results of operations and financial condition. Although the most recent publicly available financial statements of Genesis reflect going concern disclosures, the operator remains current on rent and the coverage remains above 1.0. Genesis and Brookdale have also agreed to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with their respective businesses, and we cannot assure you that Genesis and Brookdale will have sufficient assets, income, access to financing and insurance coverage to enable them to satisfy their respective indemnification obligations. Genesis’s and Brookdale’s failure to effectively conduct their operations or to maintain and improve our properties could adversely affect their business reputations and their ability to attract and retain patients and residents in our properties, which, in turn, could adversely affect our business, results of operations and financial condition. Additionally, we have made real estate and other loans to Genesis and their operational or other failures could adversely impact their ability to repay these loans when due. See Note 21 to our consolidated financial statements for additional information regarding Genesis.
The properties managed by Sunrise Senior Living, LLC (“Sunrise”) 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
As of December 31, 2017, Sunrise managed 158 of our seniors housing operating properties. These properties account for a significant portion of our revenues, and we rely on Sunrise to manage these properties efficiently and effectively. We also rely on Sunrise to set appropriate resident fees, to provide accurate property-level financial results for our properties in a timely manner and to otherwise operate them in compliance with the terms of our management agreements and all applicable laws and regulations. Any adverse developments in Sunrise’s business or financial condition could impair its ability to manage our properties efficiently and effectively, which could adversely affect our business, results of operations, and financial condition. Also, if Sunrise experiences any significant financial, legal, accounting or regulatory difficulties, such difficulties could result in, among other things, acceleration of its indebtedness, impairment of its continued access to capital or the commencement of insolvency proceedings by or against it under the U.S. Bankruptcy Code, which, in turn, could adversely affect our business, results of operations and financial condition. See Note 7 to our consolidated financial statements for additional information.
Ownership of property outside the U.S. may subject us to different or greater risks than those associated with our domestic operations
We have operations in Canada and the U.K. 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 (regionally, nationally and locally) including, but not limited to, the U.K.’s June 2016 vote to exit the EU; challenges in managing international operations; challenges of complying with a wide variety of foreign laws and regulations, including those relating to real estate, corporate governance, operations, taxes, employment and other civil and criminal legal proceedings; foreign ownership restrictions with respect to operations in countries; differences in lending practices and the willingness of domestic or foreign lenders to provide financing; regional or country-specific business cycles and political and economic instability; and failure to comply with applicable laws and regulations in the U.S. that affect foreign operations, including, but not limited to, the U.S. Foreign Corrupt Practices Act. If we are unable to successfully manage the risks associated with international expansion and operations, our results of operations and financial condition may be adversely affected.
If our tenants do not renew their existing leases, or if we are required to sell properties for liquidity reasons, we may be unable to lease or sell the properties on favorable terms, or at all
We cannot predict whether our tenants will renew existing leases at the end of their lease terms, which expire at various times. If these leases are not renewed, we would be required to find other tenants to occupy those properties or sell them. There can be no assurance that we would be able to identify suitable replacement tenants or enter into leases with new tenants on terms as favorable to us as the current leases or that we would be able to lease those properties at all.
Real estate investments are relatively illiquid and most of the property we own is highly customized for specific uses. Our ability to quickly sell or exchange any of our properties in response to changes in operator, economic and other conditions will be limited. No assurances can be given that we will recognize full value for any property that we are required to sell. Our inability to respond rapidly to changes in the performance of our investments could adversely affect our financial condition and results of operations. In addition, we are exposed to the risks inherent in concentrating investments in real estate, and in particular, the seniors housing and health care industries. A downturn in the real estate industry could adversely affect the value of our properties and our ability to sell properties for a price or on terms acceptable to us. All of the foregoing could affect our ability to continue paying dividends at the current rate.
Our tenants, operators and managers may not have the necessary insurance coverage to insure adequately against losses
We maintain or require our tenants, operators and managers to maintain comprehensive insurance coverage on our properties and their operations with terms, conditions, limits and deductibles that we believe are customary for similarly-situated companies in our industry, and we frequently review our insurance programs and requirements. That said, we cannot assure you that we or our tenants, operators or managers will continue to be able to maintain adequate levels of insurance and required coverages or that we will continue to require the same levels of insurance coverage under our lease, management and other agreements, which could adversely affect us in the event of a significant uninsured loss. Also, in recent years, long-term/post-acute care and seniors housing operators and managers have experienced substantial increases in both the number and size of patient care liability claims. As a result, general and professional liability costs have increased in some markets. General and professional liability insurance coverage may be restricted or very costly, which may adversely affect the tenants’, operators’ and managers’ future operations, cash flows and financial condition, and may have a material adverse effect on the tenants’, operators’ and managers’ ability to meet their obligations to us.
Our ownership of properties through ground leases exposes us to the loss of such properties upon breach or termination of the ground leases
We have acquired an interest in certain of our properties by acquiring a leasehold interest in the property on which the building is located, and we may acquire additional properties in the future through the purchase of interests in ground leases. As the lessee under a ground lease, we are exposed to the possibility of losing the property upon termination of the ground lease or an earlier breach of the ground lease by us.
The requirements of, or changes to, governmental reimbursement programs, such as Medicare, Medicaid or government funding, could have a material adverse effect on our obligors’ liquidity, financial condition and results of operations, which could adversely affect our obligors’ ability to meet their obligations to us
Some of our obligors’ businesses are affected by government reimbursement. To the extent that an operator/tenant receives a significant portion of its revenues from government payors, primarily Medicare and Medicaid, such revenues may be subject to statutory and regulatory changes, retroactive rate adjustments, recovery of program overpayments or set-offs, court decisions, administrative rulings, policy interpretations, payment or other delays by fiscal intermediaries or carriers, government funding restrictions (at a program level or with respect to specific facilities) 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.
The Health Reform Laws, provide those states that expand their Medicaid coverage to otherwise eligible state residents with incomes at or below 138% of the federal poverty level with an increased federal medical assistance percentage, effective January 1, 2014, when certain conditions are met. Given that the federal government substantially funds the Medicaid expansion, it is unclear how many states will ultimately pursue this option, although, as of early February 2018, more than 60% of the states have expanded Medicaid coverage. The participation by states in the Medicaid expansion could have the dual effect of increasing our tenants’ revenues, through new patients, but further straining state budgets and their ability to pay our tenants. We expect that the current Presidential Administration and U.S. Congress will seek to modify, repeal, or otherwise invalidate all, or certain provisions of, the Health Reform Laws, including Medicaid expansion. Since taking office, President Trump has continued to support the repeal of all or portions of the Health Reform Laws. See “Item 1 - Business - Certain Government Regulations - United States - Reimbursement” above for additional information. If the operations, cash flows or financial condition of our operators and tenants are
materially adversely impacted by the Health Reform Laws or future legislation, our revenue and operations may be adversely affected as well. More generally, and because of the dynamic nature of the legislative and regulatory environment for health care products and services, and in light of existing federal deficit and budgetary concerns, we cannot predict the impact that broad-based, far-reaching legislative or regulatory changes could have on the U.S. economy, our business, or that of our operators and tenants.
Our operators’ or tenants’ failure to comply with federal, state, province, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards could adversely affect such operators’ or tenants’ operations, which could adversely affect our operators’ and tenants’ ability to meet their obligations to us
Our operators and tenants generally are subject to 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 - Fraud & Abuse Enforcement” above.
Many of our properties may require a license, registration, and/or CON to operate. Failure to obtain a license, registration, or CON, or loss of a required license, registration, or CON would prevent a facility from operating in the manner intended by the operators or tenants. These events could materially adversely affect our operators’ or tenants’ ability to make rent or other obligatory payments to us. State and local laws also may regulate the expansion, including the addition of new beds or services or acquisition of medical equipment, and the construction or renovation of health care facilities, by requiring a CON or other similar approval from a state agency. See “Item 1 - Business - Certain Government Regulations - United States - Licensing and Certification” above.
The real estate market and our business may be negatively impacted by changes to U.S. tax laws
The Tax Act adopted on December 22, 2017 significantly changes the U.S. income tax rules for individuals and corporations. We are continuing to evaluate the impact of the Tax Act and, as such, its implications for our business remain uncertain. Although the Tax Act involves comprehensive changes to the system of corporate income tax, it does not substantively change the manner in which REITs are taxed. Although numerous provisions of the Tax Act do affect REITs, we are generally not subject to pay federal taxes applicable to regular corporations if we comply with the tax regulations governing REIT status. Nonetheless, the Tax Act makes numerous changes to the individual income tax rules that may affect the real estate market in the U.S., including limitations on the deductibility of state and local property taxes, the elimination of the deductibility of interest on new home equity loans and a reduction in the limit for an individual’s mortgage interest expense to interest on $750,000 of mortgages. Although the impact of these changes is likely to be most significant in the residential real estate market, rather than in the sectors where we operate, the effects of these changes on the broader real estate market in the geographic areas in which we operate and on our tenants remain uncertain.
Changes in applicable tax regulations could negatively affect our financial results
We are subject to taxation in the U.S. and numerous foreign jurisdictions. Because, even with the passage of the Tax Act, the U.S. maintains a worldwide corporate tax system, the foreign and U.S. tax systems are somewhat interdependent. Longstanding international norms that determine each country’s jurisdiction to tax cross-border international trade are evolving, such as the Base Erosion and Profit Shifting project (“BEPS”) currently being undertaken by the G8, G20 and Organization for Economic Cooperation and Development. Tax changes pursuant to BEPS could reduce the ability of our foreign subsidiaries to deduct for foreign tax purposes the interest they pay on loans from us, thereby, increasing the foreign tax liability of the subsidiaries; it is also possible that foreign countries could increase their withholding taxes on dividends and interest. Given the unpredictability of these possible changes and their potential interdependency, it is very difficult to assess the overall effect of such potential tax changes on our earnings and cash flow, but such changes could adversely impact our financial results.
Unfavorable resolution of pending and future litigation matters and disputes could have a material adverse effect on our financial condition
From time to time, we 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 or legal proceedings may have a material adverse effect on our business, results of operations and financial condition. Regardless of its outcome, litigation may result in substantial costs and expenses 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 frequently review our insurance programs and requirements. However, a large number of our properties are located in areas particularly susceptible to revenue loss, cost increase or damage caused by severe weather conditions or natural disasters such as hurricanes, earthquakes, tornadoes and floods. We believe, given current industry practice and analysis prepared by outside consultants, that our and our tenants’ insurance coverage is appropriate to cover reasonably anticipated losses that may be caused by hurricanes, earthquakes, tornadoes, floods and other severe weather conditions and natural disasters, including the effects of climate change. Nevertheless, we are always subject to the risk that such insurance will not fully cover all losses and, depending on the severity of the event and the impact on our properties, such insurance may not cover a significant portion of the losses. 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 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, including those resulting from human error, product defects and technology failures. Such cyber-attacks can range from individual attempts to gain unauthorized access to our information technology systems to
more sophisticated security threats. 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, compromise the confidential information of our employees, operators, tenants and partners, damage our reputation and have a materially adverse effect on our business, financial condition and results of operations.
Our success depends on key personnel whose continued service is not guaranteed
Our success depends on the continued availability and service of key personnel, including our executive officers and other highly qualified employees, and competition for their talents is intense. We cannot assure you that we will retain our key personnel or that we will be able to recruit and retain other highly qualified employees in the future. Losing any key personnel could, at least temporarily, have a material adverse effect on our business, financial position and results of operations.
Risks Arising from Our Capital Structure
Our certificate of incorporation and by-laws contain anti-takeover provisions
Our certificate of incorporation and by-laws contain anti-takeover provisions (restrictions on share ownership and transfer and super majority stockholder approval requirements for business combinations) that could make it more difficult for or even prevent a third party from acquiring us without the approval of our incumbent Board of Directors. Provisions and agreements that inhibit or discourage takeover attempts could reduce the market value of our common stock.
We may become more leveraged
Permanent financing for our investments is typically provided through a combination of public offerings of debt and equity securities and the incurrence or assumption of secured debt. The incurrence or assumption of indebtedness may cause us to become more leveraged, which could (1) require us to dedicate a greater portion of our cash flow to the payment of debt service, (2) make us more vulnerable to a downturn in the economy, (3) limit our ability to obtain additional financing, or (4) negatively affect our credit ratings or outlook by one or more of the rating agencies.
Cash available for distributions to stockholders may be insufficient to make dividend contributions at expected levels and are made at the discretion of the Board of Directors
If cash available for distribution generated by our assets decreases due to dispositions or otherwise, we may be unable to make dividend distributions at expected levels. Our inability to make expected distributions would likely result in a decrease in the market price of our common stock. All distributions are made at the discretion of our Board of Directors in accordance with Delaware law and depend on our earnings, our financial condition, debt and equity capital available to us, our expectation of our future capital requirements and operating performance, restrictive covenants in our financial and other contractual arrangements, maintenance of our REIT qualification, restrictions under Delaware law and other factors as our Board of Directors may deem relevant from time to time. Additionally, our ability to make distributions will be adversely affected if any of the risks described herein, or other significant adverse events, occur.
We are subject to covenants in our debt agreements that could have a material adverse 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 U.S. 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.
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 results of operations, liquidity and/or financial condition.
Increases in interest rates could have a material adverse impact on our cost of capital
An increase in interest rates may increase interest cost on new and existing variable rate debt. Such increases in the cost of capital could adversely impact our ability to finance operations, the acquisition and development of properties, and refinance existing debt. Additionally, increased interest rates may also result in less liquid property markets, limiting our ability to sell existing assets.
Fluctuations in the value of foreign currencies could adversely affect our results of operations and financial position
Currency exchange rate fluctuations could affect our results of operations and financial position. We generate a portion of our revenue and expenses in such foreign currencies as the Canadian dollar and the British pound sterling. Although we may enter into foreign exchange agreements with financial institutions and/or obtain local currency mortgage debt in order to reduce our exposure to fluctuations in the value of foreign currencies, we cannot assure you that foreign currency fluctuations will not have a material adverse effect on us.
Our entry into hedge agreements may not effectively reduce our exposure to changes in interest rates or foreign currency exchange rates
We enter into hedge agreements from time to time to manage some of our exposure to interest rate and foreign currency exchange rate volatility. These agreements involve risks, such as the risk that counterparties may fail to honor their obligations under these arrangements. 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. 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.
Certain subsidiaries might fail to qualify or remain qualified as a REIT
We own interests in a number of entities which have elected to be taxed as REITs for U.S. federal income tax purposes, some of which we consolidate for financial reporting purposes but each of which is treated as a separate REIT for federal income tax purposes (each a “Subsidiary REIT”). To qualify as a REIT, each Subsidiary REIT must independently satisfy all of the REIT qualification requirements under the Code, together with all other rules applicable to REITs. Provided that each Subsidiary REIT qualifies as a REIT, our interests in the Subsidiary REITs will be treated as qualifying real estate assets for purposes of the REIT asset tests. If a Subsidiary REIT fails to qualify as a REIT in any taxable year, such Subsidiary REIT will be subject to federal and state income taxes and may not be able to qualify as a REIT for the four subsequent taxable years. Any such failure could have an adverse effect on our ability to comply with the REIT income and asset tests, and thus our ability to qualify as a REIT, unless we are able to avail ourselves of certain relief provisions.
The 90% annual distribution requirement will decrease our liquidity and may limit our ability to engage in otherwise beneficial transactions
To comply with the 90% distribution requirement applicable to REITs and to avoid the nondeductible excise tax, we must make distributions to our stockholders. Although we anticipate that we generally will have sufficient cash or liquid assets to enable us to satisfy the REIT distribution requirement, it is possible that, from time to time, we may not have sufficient cash or other liquid assets to meet the 90% distribution requirement, 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.
If certain sale-leaseback transactions are not characterized by the Internal Revenue Service (“IRS”) as “true leases,” we may be subject to adverse tax consequences
We have purchased certain properties and leased them back to the sellers of such properties, and we may enter into similar transactions in the future. We intend for any such sale-leaseback transaction to be structured in such a manner that the lease will be characterized as a “true lease,” thereby allowing us to be treated as the owner of the property for U.S. federal income tax purposes. However, depending on the terms of any specific transaction, the IRS might take the position that the transaction is not a “true lease” but is more properly treated in some other manner. In the event any sale-leaseback transaction is challenged and successfully re-characterized by the IRS, we would not be entitled to claim the deductions for depreciation and cost recovery generally available to an owner of property. Furthermore, if a sale-leaseback transaction were so re-characterized, we might fail to satisfy the REIT asset tests or income tests and, consequently, could lose our REIT status effective with the year of re-characterization. Alternatively, the amount of our REIT taxable income could be recalculated, which may cause us to fail to meet the REIT annual distribution requirements for a taxable year.
We could be subject to changes in our tax rates, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities
We are subject to taxes in the U.S. and foreign jurisdictions. Our analysis of the Tax Act may be impacted by any corrective legislation and any guidance provided by the U.S. Treasury, the IRS or by the General Explanation of the Tax Act, which is under preparation by the Staff of the Congressional Joint Committee on Taxation. Our effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation. We are also subject to the examination of our tax returns and other tax matters by the IRS and other tax authorities and governmental bodies. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes. There can be no assurance as to the outcome of these examinations. If we were subject to review or examination by the IRS or applicable foreign jurisdiction as the result of any new tax law changes (including the recently enacted Tax Act) the ultimate determination of which may change our taxes owed for an amount in excess of amounts previously accrued or recorded, our financial condition, operating results, and cash flows could be adversely affected.

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 Canada, the United Kingdom and Luxembourg and have ground leases relating to certain of our properties. The following table sets forth certain information regarding the properties that comprise our consolidated real property and real estate loan investments as of December 31, 2017 (dollars in thousands and annualized revenues adjusted for timing of investment):
Triple-net
Seniors Housing Operating
Property Location
Number of Properties
Total Investment
Annualized Revenues
Number of Properties
Total Investment
Annualized Revenues
Alabama
$
34,374
$
4,198
-
$
-
$
-
Arizona
26,771
2,349
59,180
22,940
California
425,291
50,368
2,629,870
636,760
Colorado
253,330
22,718
137,842
39,864
Connecticut
162,800
20,314
420,700
135,459
District Of Columbia
-
-
-
62,508
14,169
Delaware
102,090
12,340
20,657
6,750
Florida
208,011
22,468
714,900
110,064
Georgia
21,769
4,435
119,906
35,284
Iowa
55,228
5,588
31,736
11,292
Idaho
21,801
3,547
-
-
-
Illinois
157,493
16,926
438,607
111,523
Indiana
462,707
50,889
-
-
-
Kansas
259,364
26,624
68,739
17,284
Kentucky
50,832
8,676
38,366
14,209
Louisiana
19,168
3,328
49,858
12,373
Massachusetts
185,084
32,601
1,124,085
253,943
Maryland
133,528
8,969
149,237
51,050
Maine
-
-
-
49,437
18,715
Michigan
96,814
10,165
108,521
24,860
Minnesota
222,546
18,809
111,503
21,595
Missouri
11,926
147,090
23,376
Mississippi
26,661
1,887
-
-
-
Montana
5,841
-
-
-
North Carolina
369,065
41,964
39,461
7,239
Nebraska
31,942
4,067
-
-
-
New Hampshire
51,186
7,599
117,062
29,986
New Jersey
1,229,004
132,850
233,766
65,306
New Mexico
-
-
-
18,199
1,375
Nevada
80,918
12,785
35,919
10,995
New York
147,412
15,993
334,217
87,283
Ohio
125,308
31,430
216,731
36,858
Oklahoma
225,662
20,181
39,679
3,374
Oregon
74,169
7,125
-
-
-
Pennsylvania
766,860
12,909
80,343
39,962
Rhode Island
-
-
-
59,215
20,345
South Carolina
31,653
5,698
-
-
-
Tennessee
39,654
3,839
48,830
15,741
Texas
387,507
48,760
928,494
205,362
Utah
30,108
2,582
16,315
10,546
Virginia
179,684
13,229
92,020
11,062
Vermont
-
-
-
26,501
6,710
Washington
318,379
33,773
403,565
78,355
Wisconsin
108,644
14,650
-
-
-
West Virginia
66,949
8,454
-
-
-
Total domestic
7,207,533
746,232
9,173,059
2,192,009
Canada
160,418
11,023
2,077,853
440,222
United Kingdom
1,220,528
107,728
1,542,910
312,009
Total international
1,380,946
118,751
3,620,763
752,231
Grand total
$
8,588,479
$
864,983
$
12,793,822
$
2,944,240
Outpatient Medical
Property Location
Number of Properties
Total Investment
Annualized Revenues
Alaska
$
23,414
$
2,423
Alabama
30,119
5,515
Arkansas
22,730
2,067
Arizona
62,649
9,453
California
866,727
91,492
Colorado
32,967
5,025
Connecticut
41,686
3,939
Florida
436,149
50,703
Georgia
169,521
28,178
Iowa
6,615
1,303
Illinois
49,505
8,749
Indiana
162,463
20,157
Kansas
72,142
12,695
Kentucky
7,297
Maryland
93,869
11,817
Maine
19,290
2,824
Michigan
30,159
4,141
Minnesota
165,704
26,127
Missouri
144,391
17,451
North Carolina
53,499
7,086
Nebraska
33,727
5,379
New Hampshire
13,344
1,758
New Jersey
266,546
44,194
New Mexico
31,760
3,731
Nevada
43,466
4,200
New York
109,193
7,214
Ohio
51,894
9,845
Oklahoma
23,633
3,318
Oregon
9,279
1,453
South Carolina
24,844
2,615
Tennessee
64,569
7,831
Texas
892,224
89,447
Virginia
31,824
4,846
Washington
170,665
20,456
Wisconsin
244,483
32,779
Total domestic
4,502,347
550,890
United Kingdom
286,434
25,880
Grand total
$
4,788,781
$
576,770
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)
Triple-net(4)
85.8%
86.5%
1.34x
1.43x
$
15,663
$
16,841
per bed/unit
Seniors housing operating(5)
86.5%
88.7%
n/a
n/a
60,828
59,627
per unit
Outpatient medical(6)
93.7%
94.7%
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 outpatient medical 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 twelve 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 represents average occupancy for the three months ended December 31.
(6) Occupancy represents the percentage of total rentable square feet leased and occupied (including month-to-month and holdover leases and excluding terminations) as of December 31.
The following table sets forth information regarding lease expirations for certain portions of our portfolio as of December 31, 2017 (dollars in thousands):
Expiration Year(1)
Thereafter
Triple-net:
Properties
-
Base rent(2)
$
107,517
$
-
$
17,740
$
16,576
$
9,895
$
8,348
$
10,842
$
76,589
$
63,138
$
95,730
$
482,337
% of base rent
12.1%
0.0%
2.0%
1.9%
1.1%
0.9%
1.2%
8.6%
7.1%
10.8%
54.3%
Units
8,715
-
1,225
1,620
1,220
1,432
4,489
3,662
4,647
26,065
% of units
16.2%
0.0%
2.3%
3.0%
2.3%
2.7%
1.3%
8.3%
6.8%
8.6%
48.5%
Outpatient medical:
Square feet
2,382,066
1,173,527
1,312,277
1,502,213
1,701,977
1,048,663
1,143,704
736,777
1,133,674
402,904
4,359,985
Base rent(2)
$
50,744
$
32,011
$
35,425
$
39,984
$
45,079
$
28,599
$
32,946
$
21,255
$
28,705
$
11,425
$
98,411
% of base rent
12.0%
7.5%
8.3%
9.4%
10.6%
6.7%
7.8%
5.0%
6.8%
2.7%
23.2%
Leases
% of leases
13.7%
13.4%
13.5%
11.6%
13.1%
8.8%
5.3%
4.7%
5.5%
3.4%
6.9%
(1) Excludes investments in unconsolidated entities. Investments classified as held for sale are included in 2018.
(2) 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 against us that arise in the ordinary course of our business. Management does not believe that the resolution of any of these legal proceedings either individually or in the aggregate will have a material adverse effect on our business, results of operations or financial condition. Further, from time to time, we are party to certain legal proceedings for which third parties, such as tenants, operators and/or managers are contractually obligated to indemnify, defend and hold us harmless. In some of these matters, the indemnitors have insurance for the potential damages. In other matters, we are being defended by tenants and other obligated third parties and these indemnitors may not have sufficient insurance, assets, income or resources to satisfy their defense and indemnification obligations to us. The unfavorable resolution of such legal proceedings could, individually or in the aggregate, materially adversely affect the indemnitors’ ability to satisfy their respective obligations to us, which, in turn, could have a material adverse effect on our business, results of operations or financial condition. It is management’s opinion that there are currently no such legal proceedings pending that will, individually or in the aggregate, have such a material adverse effect. Despite management’s view of the ultimate resolution of these legal proceedings, we may have significant legal expenses and costs associated with the defense of such matters. Further, management cannot predict the outcome of these legal proceedings and if management’s expectation regarding such matters is not correct, such proceedings could have a material adverse effect on our business, results of operations or financial condition.

ITEM 4 - 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 4,761 stockholders of record as of January 31, 2018. 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:WELL), and common dividends paid per share:
Sales Price
Dividends Paid
High
Low
Per Share
First Quarter
$
71.17
$
64.63
$
0.87
Second Quarter
78.17
68.66
0.87
Third Quarter
75.91
69.77
0.87
Fourth Quarter
70.87
63.06
0.87
First Quarter
$
70.45
$
52.80
$
0.86
Second Quarter
76.24
66.55
0.86
Third Quarter
80.19
72.34
0.86
Fourth Quarter
74.85
59.39
0.86
Our Board of Directors has approved a 2018 quarterly cash dividend rate of $0.87 per share of common stock per quarter, commencing with the February 2018 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, 2017, 157 companies comprised the FTSE NAREIT Equity Index, which consists of REITs identified by NAREIT as equity (those REITs which have at least 75% of their investments in real property). The data are based on the closing prices as of December 31 for each of the five years. 2012 equals $100 and dividends are assumed to be reinvested.
12/31/12
12/31/13
12/31/14
12/31/15
12/31/16
12/31/17
S & P 500
100.00
132.39
150.51
152.59
170.84
208.14
Welltower Inc.
100.00
91.58
136.01
128.23
132.55
132.81
FTSE NAREIT Equity
100.00
102.47
133.35
137.61
149.33
157.14
Except to the extent that we specifically incorporate this information by reference, the foregoing Stockholder Return Performance Presentation shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended. This information shall not otherwise be deemed filed under such Acts.
Issuer Purchases of Equity Securities
Period
Total Number of Shares Purchased(1)
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1, 2017 through October 31, 2017
-
$
-
November 1, 2017 through November 30, 2017
68.46
December 1, 2017 through December 31, 2017
32,072
67.94
Totals
32,321
$
67.94
(1) During the three months ended December 31, 2017, 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, 2017 are derived from our audited consolidated financial statements (in thousands, except per share data):
Year Ended December 31,
Operating Data
Revenues
$
2,880,608
$
3,343,546
$
3,859,826
$
4,281,160
$
4,316,641
Expenses
2,778,363
2,959,333
3,223,709
3,571,907
4,017,025
Income from continuing operations before income taxes and income (loss) from unconsolidated entities
102,245
384,213
636,117
709,253
299,616
Income tax (expense) benefit
(7,491)
1,267
(6,451)
19,128
(20,128)
Income (loss) from unconsolidated entities
(8,187)
(27,426)
(21,504)
(10,357)
(83,125)
Income from continuing operations
86,567
358,054
608,162
718,024
196,363
Income from discontinued operations, net
51,713
7,135
-
-
-
Gain (loss) on real estate dispositions, net
-
147,111
280,387
364,046
344,250
Net income
138,280
512,300
888,549
1,082,070
540,613
Preferred stock dividends
66,336
65,408
65,406
65,406
49,410
Preferred stock redemption charge
-
-
-
-
9,769
Net income (loss) attributable to noncontrolling interests
(6,770)
4,799
4,267
17,839
Net income attributable to common stockholders
$
78,714
$
446,745
$
818,344
$
1,012,397
$
463,595
Other Data
Average number of common shares outstanding:
Basic
276,929
306,272
348,240
358,275
367,237
Diluted
278,761
307,747
349,424
360,227
369,001
Per Share Data
Basic:
Income from continuing operations attributable to common stockholders
$
0.10
$
1.44
$
2.35
$
2.83
$
1.26
Discontinued operations, net
0.19
0.02
-
-
-
Net income attributable to common stockholders *
$
0.28
$
1.46
$
2.35
$
2.83
$
1.26
Diluted:
Income from continuing operations attributable to common stockholders
$
0.10
$
1.43
$
2.34
$
2.81
$
1.26
Discontinued operations, net
0.19
0.02
-
-
-
Net income attributable to common stockholders *
$
0.28
$
1.45
$
2.34
$
2.81
$
1.26
Cash distributions per common share
$
3.06
$
3.18
$
3.30
$
3.44
$
3.48
December 31,
Balance Sheet Data
Net real estate investments
$
21,680,221
$
22,851,196
$
26,888,685
$
26,563,629
$
26,171,077
Total assets
23,026,666
24,962,923
29,023,845
28,865,184
27,944,445
Total long-term obligations
10,594,723
10,776,640
12,967,686
12,358,245
11,731,936
Total liabilities
11,235,296
11,403,465
13,664,877
13,185,279
12,643,799
Total preferred stock
1,017,361
1,006,250
1,006,250
1,006,250
718,503
Total equity
11,756,331
13,473,049
15,175,885
15,281,472
14,925,452
* Amounts may not sum due to rounding

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
Key Transactions
Key Performance Indicators, Trends and Uncertainties
Corporate Governance
LIQUIDITY AND CAPITAL RESOURCES
Sources and Uses of Cash
Off-Balance Sheet Arrangements
Contractual Obligations
Capital Structure
RESULTS OF OPERATIONS
Summary
Triple-net
Seniors Housing Operating
Outpatient Medical
Non-Segment/Corporate
OTHER
Non-GAAP Financial Measures
Critical Accounting Policies
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is based primarily on the consolidated financial statements of Welltower Inc. presented in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for the periods presented and should be read together with the notes thereto contained in this Annual Report on Form 10-K. Other important factors are identified in “Item 1 - Business” and “Item 1A - Risk Factors” above. Executive Summary
Company Overview
Welltower Inc. (NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The Company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. WelltowerTM, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing and post-acute communities and outpatient medical properties. Our capital programs, when combined with comprehensive planning, development and property management services, make us a single-source solution for acquiring, planning, developing, managing, repositioning and monetizing real estate assets.
The following table summarizes our consolidated portfolio for the year ended December 31, 2017 (dollars in thousands):
Percentage of
Number of
Type of Property
NOI(1)
NOI
Properties
Triple-net
$
967,084
43.3%
Seniors housing operating
880,026
39.5%
Outpatient medical
384,068
17.2%
Totals
$
2,231,178
100.0%
1,286
(1) Represents consolidated NOI and excludes our share of investments in unconsolidated entities. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount. See Non-GAAP Financial Measures for additional information and reconciliation.
Business Strategy
Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders as a result of annual increases in net operating income and portfolio growth. To meet these objectives, we invest across the full spectrum of seniors housing and health care real estate and diversify our investment portfolio by property type, relationship and geographic location.
Substantially all of our revenues are derived from operating lease rentals, resident fees/services, and interest earned on outstanding loans receivable. These items represent our primary sources of liquidity to fund distributions and depend upon the continued ability of our obligors to make contractual rent and interest payments to us and the profitability of our operating properties. To the extent that our obligors/partners experience operating difficulties and become unable to generate sufficient cash to make payments or operating distributions to us, there could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. To mitigate this risk, we monitor our investments through a variety of methods determined by the type of property. Our asset management process for seniors housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections, and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral. Our internal property management division manages and monitors the outpatient medical portfolio with a comprehensive process including review of tenant relations, lease expirations, the mix of health service providers, hospital/health system relationships, property performance, capital improvement needs, and market conditions among other things. We evaluate the operating environment in each property’s market to determine the likely trend in operating performance of the facility. When we identify unacceptable trends, we seek to mitigate, eliminate or transfer the risk. Through these efforts, we 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 relevant 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.
For the year ended December 31, 2017, rental income and resident fees/services represented 33% and 64%, respectively, of total revenues. Substantially all of our operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. Our yield on loans receivable depends upon a number of factors, including the stated interest rate, the average principal amount outstanding during the term of the loan, and any interest rate adjustments.
Our primary sources of cash include rent and interest receipts, resident fees/services, borrowings under our primary unsecured credit facility, 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
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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 credit facility, 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 credit facility, has historically been provided through a combination of the issuance of public debt and equity securities and the incurrence or assumption of secured debt.
Depending upon market conditions, we believe that new investments will be available in the future with spreads over our cost of capital that will generate appropriate returns to our stockholders. It is also likely that investment dispositions may occur in the future. To the extent that investment dispositions exceed new investments, our revenues and cash flows from operations could be adversely affected. We expect to reinvest the proceeds from any investment dispositions in new investments. To the extent that new investment requirements exceed our available cash on-hand, we expect to borrow under our primary unsecured credit facility. At December 31, 2017, we had $243,777,000 of cash and cash equivalents, $65,526,000 of restricted cash and $2,258,635,000 of available borrowing capacity under our primary unsecured credit facility.
Key Transactions
Capital. During the year ended December 31, 2017, we extinguished $1,080,268,000 of secured debt at a blended average interest rate of 5.2%. In addition, we redeemed all 11,500,000 shares of our 6.5% Series J Cumulative Redeemable Preferred Stock. Also, for the year ended December 31, 2017, we raised $611,443,000 through our dividend reinvestment program and our Equity Shelf Program (as defined below). The capital raised, in combination with available cash and borrowing capacity under our primary unsecured credit facility and proceeds from dispositions, supported new investment activity for the year.
Investments. The following summarizes our property acquisitions and joint venture investments made during the year ended December 31, 2017 (dollars in thousands):
Properties
Investment Amount(1)
Capitalization Rates(2)
Book Amount(3)
Triple-net
$
170,076
6.4%
$
281,875
Seniors housing operating
375,400
6.6%
539,173
Outpatient medical
196,544
5.9%
224,232
Totals
$
742,020
6.3%
$
1,045,280
(1) Represents stated pro rata purchase price including cash and any assumed debt but excludes fair value adjustments pursuant to U.S. GAAP.
(2) Represents annualized contractual or projected net operating 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 Note 3 to our consolidated financial statements for additional information.
Dispositions. The following summarizes property dispositions made during the year ended December 31, 2017 (dollars in thousands):
Properties
Proceeds(1)
Capitalization Rates(2)
Book Amount(3)
Triple-net
$
1,190,791
6.9%
$
916,689
Seniors housing operating
105,349
4.6%
74,832
Outpatient medical
23,590
8.3%
19,697
Totals
$
1,319,730
6.7%
$
1,011,218
(1) Represents pro rata proceeds received upon disposition including any seller financing.
(2) Represents annualized contractual net operating income that was being received in cash at date of disposition divided by disposition proceeds.
(3) Represents carrying value of assets at time of disposition. See Note 5 to our consolidated financial statements for additional information.
Dividends. Our Board of Directors announced the 2018 annual cash dividend of $3.48 per common share ($0.87 per share quarterly), consistent with 2017, beginning in February 2018. The dividend declared for the quarter ended December 31, 2017 represents the 187th 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
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
purposes.
Operating Performance. We believe that net income and net income attributable to common stockholders (“NICS”) per the Statement of Comprehensive Income are the most appropriate earnings measures. Other useful supplemental measures of our operating performance include funds from operations attributable to common stockholders (“FFO”), consolidated net operating income (“NOI”) and same store NOI (“SSNOI”); however, these supplemental measures are not defined by U.S. GAAP. Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliations. These earnings measures are widely used by investors and analysts in the valuation, comparison, and investment recommendations of companies. The following table reflects the recent historical trends of our operating performance measures for the periods presented (in thousands):
Year Ended December 31,
Net income
$
888,549
$
1,082,070
$
540,613
Net income attributable to common stockholders
818,344
1,012,397
463,595
Funds from operations attributable to common stockholders
1,409,640
1,582,940
1,165,576
Consolidated net operating income
2,237,569
2,404,177
2,232,716
Same store net operating income
1,523,666
1,499,511
1,519,193
Credit Strength. We measure our credit strength both in terms of leverage ratios and coverage ratios. The leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and Internal Revenue Code (“IRC”) section 1031 deposits. The coverage ratios indicate our ability to service interest and fixed charges (interest, secured debt principal amortization and preferred dividends). We expect to maintain capitalization ratios and coverage ratios sufficient to maintain a capital structure consistent with our current profile. The coverage ratios are based on adjusted earnings before interest, taxes, depreciation and amortization (“AEBITDA”). Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliation of these measures. Leverage ratios and coverage ratios are widely used by investors, analysts and rating agencies in the valuation, comparison, investment recommendations, and rating of companies. The following table reflects the recent historical trends for our credit strength measures for the periods presented:
Year Ended December 31,
Net debt to book capitalization ratio
44.8%
42.9%
42.9%
Net debt to undepreciated book capitalization ratio
39.5%
37.4%
36.3%
Net debt to market capitalization ratio
32.5%
31.1%
31.2%
Adjusted interest coverage ratio
4.24x
4.21x
4.36x
Adjusted fixed charge coverage ratio
3.35x
3.34x
3.54x
Concentration Risk. We evaluate our concentration risk in terms of NOI by property mix, relationship mix and geographic mix. Concentration risk is a valuable measure in understanding what portion of our NOI could be at risk if certain sectors were to experience downturns. Property mix measures the portion of our NOI that relates to our various property types. Relationship mix measures the portion of our NOI that relates to our top five relationships. Geographic mix measures the portion of our NOI that relates to our top five states (or international equivalents). The following table reflects our recent historical trends of concentration risk by NOI for the periods indicated below:
December 31,(1)
Property mix:
Triple-net
54%
50%
43%
Seniors housing operating
31%
34%
40%
Outpatient medical
15%
16%
17%
Relationship mix:
Sunrise Senior Living(2)
13%
13%
14%
Genesis HealthCare
17%
16%
9%
Revera(2)
5%
6%
7%
Brookdale Senior Living
7%
6%
7%
Benchmark Senior Living
4%
4%
4%
Remaining
54%
55%
59%
Geographic mix:
California
13%
10%
13%
United Kingdom
9%
8%
9%
New Jersey
8%
8%
8%
Canada
8%
7%
8%
Texas
7%
7%
7%
Remaining
55%
60%
55%
(1) Excludes our share of investments in unconsolidated entities and non-segment/corporate NOI. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount.
(2) Revera owns a controlling interest in Sunrise Senior Living. See Note 8 to our consolidated financial statements for additional information.
We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results. Our expected results may not be achieved and actual results may differ materially from our expectations. Factors that may cause actual results to differ from expected results are described in more detail in “Item 1 - Business - Cautionary Statement Regarding Forward-Looking Statements” and “Item 1A - Risk Factors” and other sections of this Annual Report on Form 10-K. Management regularly monitors economic and other factors to develop strategic and tactical plans designed to improve performance and maximize our competitive position. Our ability to achieve our financial objectives is dependent upon our ability to effectively execute these plans and to appropriately respond to emerging economic and Company-specific trends. Please refer to “Item 1 - Business,” “Item 1A - Risk Factors” in this Annual Report on Form 10-K for further discussion of these risk factors.
Corporate Governance
Maintaining investor confidence and trust is important in today’s business environment. Our Board of Directors and management are strongly committed to policies and procedures that reflect the highest level of ethical business practices. Our corporate governance guidelines provide the framework for our business operations and emphasize our commitment to increase stockholder value while meeting all applicable legal requirements. These guidelines meet the listing standards adopted by the New York Stock Exchange and are available on the Internet at www.welltower.com/investors/governance. The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive textual reference only.
Liquidity and Capital Resources
Sources and Uses of Cash
During the fourth quarter of 2017, we adopted Accounting Standards Update (“ASU”) No. 2016-18, “Restricted Cash,” and ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments.” See Note 2 to the consolidated financial statements for further information.
Our primary sources of cash include rent and interest receipts, resident fees/services, borrowings under our primary unsecured credit facility, public issuances of debt and equity securities, proceeds from investment dispositions, and principal payments on loans receivable. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses, and general and administrative expenses. These sources and uses of cash are reflected in our Consolidated Statements of Cash Flows and are discussed in further detail below. The following is a summary of our sources and uses of cash flows for the periods presented (dollars in thousands):
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
Beginning cash, cash equivalents and restricted cash
$
553,423
$
422,690
$
(130,733)
-24%
$
607,220
$
184,530
44%
$
53,797
10%
Net cash provided from (used in):
Operating activities
1,382,599
1,639,064
256,465
19%
1,434,177
(204,887)
-13%
51,578
4%
Investing activities
(3,502,075)
(183,443)
3,318,632
-95%
154,581
338,024
n/a
3,656,656
n/a
Financing activities
1,997,318
(1,250,817)
(3,248,135)
n/a
(1,913,527)
(662,710)
53%
(3,910,845)
n/a
Effect of foreign currency translation
(8,575)
(20,274)
(11,699)
136%
26,852
47,126
n/a
35,427
n/a
Ending cash, cash equivalents and restricted cash
$
422,690
$
607,220
$
184,530
44%
$
309,303
$
(297,917)
-49%
$
(113,387)
-27%
Operating Activities. The change in net cash provided from operating activities is attributable to changes in NOI, which is primarily due to dispositions in 2016 and 2017, partially offset by acquisitions and annual rent increasers. Please see “Results of Operations” below for further discussion. For the years ended December 31, 2015, 2016 and 2017, cash flows from operations exceeded cash distributions to stockholders.
Investing Activities. The changes in net cash used in investing activities are primarily attributable to net changes in real property investments, real estate loans receivable, and investments in unconsolidated entities which are summarized above in “Key Transactions in 2017.” Please refer to Notes 3, 6, and 7 of our consolidated financial statements for additional information. The following is a summary of cash used in non-acquisition capital improvement activities for the periods presented (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
New development
$
244,561
$
403,131
$
158,570
65%
$
232,715
$
(170,416)
-42%
$
(11,846)
-5%
Recurring capital expenditures, tenant improvements and lease commissions
64,458
66,332
1,874
3%
-
(66,332)
-100%
(64,458)
-100%
Renovations, redevelopments and other capital improvements
123,294
152,814
29,520
24%
250,276
97,462
64%
126,982
103%
Total
$
432,313
$
622,277
$
189,964
44%
$
482,991
$
(139,286)
-22%
$
50,678
12%
The change in new development is primarily due to the number and size of construction projects on-going during the relevant periods. Renovations, redevelopments and other capital improvements include expenditures to maximize property value, increase net operating income, maintain a market-competitive position, and/or achieve property stabilization. Generally, these expenditures have increased as a result of acquisitions, primarily in our seniors housing operating 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 2017.” Please refer to Notes 9, 10 and 13 of our consolidated financial statements for additional information.
Off-Balance Sheet Arrangements
At December 31, 2017, we had investments in unconsolidated entities with our ownership generally 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 and foreign currency exchange rate exposure. Please see Note 11 to our consolidated financial statements for additional information. At December 31, 2017, we had fourteen 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, 2017 (in thousands):
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Payments Due by Period
Contractual Obligations
Total
2019-2020
2021-2022
Thereafter
Unsecured revolving credit facility(1)
$
719,000
$
-
$
-
$
719,000
$
-
Senior unsecured notes and term credit facilities:(2)
U.S. Dollar senior unsecured notes
6,050,000
450,000
1,050,000
1,050,000
3,500,000
Canadian Dollar senior unsecured notes(3)
239,674
-
239,674
-
-
Pounds Sterling senior unsecured notes(3)
1,420,545
-
-
-
1,420,545
U.S. Dollar term credit facility
507,500
-
7,500
500,000
-
Canadian Dollar term credit facility(3)
199,728
-
-
199,728
-
Secured debt:(2,3)
Consolidated
2,618,408
396,588
707,184
456,634
1,058,002
Unconsolidated
753,807
31,087
133,312
36,628
552,780
Contractual interest obligations:(4)
Unsecured revolving credit facility
80,485
20,121
40,243
20,121
-
Senior unsecured notes and term loans(3)
3,124,832
359,943
665,295
510,717
1,588,877
Consolidated secured debt(3)
502,477
96,372
145,563
101,972
158,570
Unconsolidated secured debt(3)
194,923
28,840
51,220
41,856
73,007
Capital lease obligations(5)
89,104
4,678
8,507
8,346
67,573
Operating lease obligations(5)
1,125,098
17,871
35,675
34,184
1,037,368
Purchase obligations(5)
441,647
304,188
137,459
-
-
Other long-term liabilities(6)
2,704
1,475
1,229
-
-
Total contractual obligations
$
18,069,932
$
1,711,163
$
3,222,861
$
3,679,186
$
9,456,722
(1) Relates to our unsecured revolving credit facility with an aggregate commitment of $3,000,000,000. See Note 9 to our consolidated financial statements.
(2) Amounts represent principal amounts due and do not reflect unamortized premiums/discounts or other fair value adjustments as reflected on the balance sheet.
(3) Based on foreign currency exchange rates in effect as of balance sheet date.
(4) Based on variable interest rates in effect as of December 31, 2017.
(5) See Note 12 to our consolidated financial statements.
(6) Primarily relates to payments to be made under a supplemental executive retirement plan for one former executive officer.
Capital Structure
Please refer to “Credit Strength” above for our leverage and coverage ratio trends. Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As of December 31, 2017, we believe we were in compliance with all of the covenants under our debt agreements. None of our debt agreements contain provisions for acceleration which could be triggered by our debt ratings. However, under our primary unsecured credit facility, the ratings on our senior unsecured notes are used to determine the fees and interest charged. We plan to manage the Company to maintain compliance with our debt covenants and with a capital structure consistent with our current profile. Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.
On May 1, 2015, we filed with the Securities and Exchange Commission (“SEC”) (1) an open-ended automatic or “universal” shelf registration statement covering an indeterminate amount of future offerings of debt securities, common stock, preferred stock, depositary shares, warrants and units and (2) a registration statement in connection with our enhanced dividend reinvestment plan (“DRIP”) under which we may issue up to 15,000,000 shares of common stock. As of January 31, 2018, 2,108,286 shares of common stock remained available for issuance under the DRIP registration statement. We have entered into separate Equity Distribution Agreements with each of Morgan Stanley & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman Sachs & Co. LLC, UBS Securities LLC and Wells Fargo Securities, LLC relating to the offer and sale from time to time of up to $1,000,000,000 aggregate amount of our common stock (“Equity Shelf Program”). The Equity Shelf Program also allows us to enter into forward sale agreements. We expect that, if entered into, we will physically settle each forward sale agreement on one or more dates on or prior to the maturity date of that particular forward sale agreement, in which case we will expect to receive per share cash proceeds at settlement equal to the forward sale price under the relevant forward sale agreement. However, we may elect to cash settle or net share settle a forward share agreement. As of January 31, 2018, we had $784,083,000 of remaining capacity under the Equity Shelf Program and there were no outstanding forward sales agreements. Depending upon market conditions, we anticipate issuing securities under our registration statements to invest in additional properties and to repay borrowings under our primary unsecured credit facility.
Results of Operations
Summary
Our primary sources of revenue include rent, resident fees/services, and interest income. Our primary expenses include interest
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
expense, depreciation and amortization, property operating expenses, other expenses, and general and administrative expenses. We evaluate our business and make resource allocations on our three business segments: triple-net, seniors housing operating and outpatient medical. The primary performance measures for our properties are NOI and SSNOI and other supplemental measures include FFO and AEBITDA, which are further discussed below. Please see Non-GAAP Financial Measures for additional information and reconciliations. The following is a summary of our results of operations for the periods presented (dollars in thousands, except per share amounts):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
Amount
%
Amount
%
Amount
%
Net income attributable to common stockholders
$
818,344
$
1,012,397
$
194,053
24%
$
463,595
$
(548,802)
-54%
$
(354,749)
-43%
Net income
888,549
1,082,070
193,521
22%
540,613
(541,457)
-50%
(347,936)
-39%
Funds from operations attributable to common stockholders
1,409,640
1,582,940
173,300
12%
1,165,576
(417,364)
-26%
(244,064)
-17%
Adjusted EBITDA
2,113,258
2,256,864
143,606
7%
2,128,429
(128,435)
-6%
15,171
1%
Consolidated NOI
2,237,569
2,404,177
166,608
7%
2,232,716
(171,461)
-7%
(4,853)
0%
Same store NOI
1,523,666
1,499,511
(24,155)
-2%
1,519,193
19,682
1%
(4,473)
0%
Per share data (fully diluted):
Net income attributable to common stockholders
$
2.34
$
2.81
$
0.47
20%
$
1.26
$
(1.55)
-55%
$
(1.08)
-46%
Funds from operations attributable to common stockholders
4.03
4.39
0.36
9%
3.16
(1.23)
-28%
(0.87)
-22%
Adjusted interest coverage ratio
4.24x
4.21x
-0.03x
-1%
4.36x
0.15x
4%
0.12x
3%
Adjusted fixed charge coverage ratio
3.35x
3.34x
-0.01x
0%
3.54x
0.20x
6%
0.19x
6%
The following table represents the changes in outstanding common stock for the period from January 1, 2015 to December 31, 2017 (in thousands):
Year Ended
December 31, 2015
December 31, 2016
December 31, 2017
Totals
Beginning balance
328,790
354,778
362,602
328,790
Public offerings
19,550
-
-
19,550
Dividend reinvestment plan issuances
4,024
4,145
5,640
13,809
Senior note conversions
1,330
-
-
1,330
Preferred stock conversions
-
-
Redemption of equity membership units
-
-
Option exercises
Equity Shelf Program issuances
3,135
2,987
6,818
Other, net
Ending balance
354,778
362,602
371,732
371,732
Average number of shares outstanding:
Basic
348,240
358,275
367,237
Diluted
349,424
360,227
369,001
During the past three years, inflation has not significantly affected our earnings because of the moderate inflation rate. Additionally, a portion of our earnings are derived primarily from long-term investments with predictable rates of return. These investments are mainly financed with a combination of equity, senior unsecured notes, secured debt, and borrowings under our primary unsecured credit facility. During inflationary periods, which generally are accompanied by rising interest rates, our ability to grow may be adversely affected because the yield on new investments may increase at a slower rate than new borrowing costs. Presuming the current inflation rate remains moderate and long-term interest rates do not increase significantly, we believe that inflation will not impact the availability of equity and debt financing for us.
Triple-net
The following is a summary of our NOI and SSNOI for the triple-net segment for the periods presented (dollars in thousands):
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
NOI
$
1,175,806
$
1,208,860
$
33,054
3%
$
967,084
$
(241,776)
-20%
$
(208,722)
-18%
Non-cash NOI attributable to same store properties(1)
(48,890)
(38,899)
9,991
-20%
(28,602)
10,297
-26%
20,288
-41%
NOI attributable to non same store properties(2)
(498,131)
(574,049)
(75,918)
15%
(333,279)
240,770
-42%
164,852
-33%
SSNOI(1)
$
628,785
$
595,912
$
(32,873)
-5%
$
605,203
$
9,291
2%
$
(23,582)
-4%
(1) Relates to 418 same store properties.
(2) Primarily relates to the acquisition of 74 properties and the conversion of 17 construction projects into revenue-generating properties subsequent to January 1, 2015 as well as 48 properties sold or held for sale at December 31, 2017.
The following is a summary of our results of operations for the triple-net segment for the periods presented (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
Revenues:
Rental income
$
1,094,827
$
1,112,325
$
17,498
2%
$
885,811
$
(226,514)
-20%
$
(209,016)
-19%
Interest income
74,108
90,476
16,368
22%
73,742
(16,734)
-18%
(366)
0%
Other income
6,871
6,059
(812)
-12%
7,531
1,472
24%
10%
1,175,806
1,208,860
33,054
3%
967,084
(241,776)
-20%
(208,722)
-18%
NOI(1)
1,175,806
1,208,860
33,054
3%
967,084
(241,776)
-20%
(208,722)
-18%
Other expenses:
Interest expense
28,384
21,370
(7,014)
-25%
15,194
(6,176)
-29%
(13,190)
-46%
Loss (gain) on derivatives, net
(58,427)
58,495
n/a
2,284
2,216
3259%
60,711
-104%
Depreciation and amortization
288,242
297,197
8,955
3%
243,830
(53,367)
-18%
(44,412)
-15%
Transaction costs(2)
53,195
10,016
(43,179)
-81%
-
(10,016)
-100%
(53,195)
-100%
Loss (gain) on extinguishment of debt, net
10,095
(9,232)
-91%
29,083
28,220
3270%
18,988
188%
Provision for loan losses(3)
-
6,935
6,935
n/a
62,966
56,031
808%
62,966
n/a
Impairment of assets(4)
2,220
20,169
17,949
809%
96,909
76,740
380%
94,689
4265%
Other expenses(2)
35,648
-
(35,648)
-100%
116,689
116,689
n/a
81,041
227%
359,357
356,618
(2,739)
-1%
566,955
210,337
59%
207,598
58%
Income from continuing operations before income taxes and income (loss) from unconsolidated entities
816,449
852,242
35,793
4%
400,129
(452,113)
-53%
(416,320)
-51%
Income tax benefit (expense)
(4,244)
(1,087)
3,157
-74%
(4,291)
(3,204)
295%
(47)
1%
Income (loss) from unconsolidated entities
8,260
9,767
1,507
18%
19,428
9,661
99%
11,168
135%
Income from continuing operations
820,465
860,922
40,457
5%
415,266
(445,656)
-52%
(405,199)
-49%
Gain (loss) on real estate dispositions, net(4)
86,261
355,394
269,133
312%
286,325
(69,069)
-19%
200,064
232%
Net income
906,726
1,216,316
309,590
34%
701,591
(514,725)
-42%
(205,135)
-23%
Less: Net income attributable to noncontrolling interests
6,348
1,221
(5,127)
-81%
4,603
3,382
277%
(1,745)
-27%
Net income attributable to common stockholders
$
900,378
$
1,215,095
$
314,717
35%
$
696,988
$
(518,107)
-43%
$
(203,390)
-23%
(1) See Non-GAAP Financial Measures below.
(2) See Note 3 to our consolidated financial statements.
(3) See Note 6 to our consolidated financial statements.
(4) See Note 5 to our consolidated financial statements.
The 2017 decrease in rental income is primarily attributable to the disposition of properties exceeding new acquisitions and conversions of newly constructed triple-net properties. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index (“CPI”) and/or changes in the gross operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If gross operating revenues at our facilities and/or the CPI do not increase, a portion of our revenues may not continue to increase. Our leases could renew above or below current rent rates, resulting in an increase or decrease in rental income. For the three months ended December 31, 2017, we had no triple-net lease renewals but we had 25 leases with rental rate increasers ranging from 0.15% to 0.36% in our triple-net portfolio. The 2017 decrease in interest income is primarily attributable to the volume of loan payoffs during 2016 and 2017 and the 2016 increase is attributable to higher loan volumes during the majority of 2016.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
During the year ended December 31, 2017, we completed seven triple-net construction projects totaling $283,472,000 or $347,818 per bed/unit and two expansion projects totaling $10,336,000. The following is a summary of triple-net construction projects pending as of December 31, 2017 (dollars in thousands):
Location
Units/Beds
Commitment
Balance
Est. Completion
Alexandria,VA
$
60,156
$
46,631
2Q18
Exton, PA
34,175
18,560
2Q18
Westerville, OH
22,800
3,595
4Q18
Total
$
117,131
$
68,786
Total interest expense represents secured debt interest expense and related fees. The change in secured debt interest expense is due to the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations. The fluctuations in loss (gain) on extinguishment of debt is primarily attributable to the volume of extinguishments and terms of the related secured debt. The following is a summary of our triple-net secured debt principal activity for the periods presented (dollars in thousands):
Year Ended
Year Ended
Year Ended
December 31, 2015
December 31, 2016
December 31, 2017
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
670,769
5.337%
$
554,014
5.488%
$
594,199
4.580%
Debt issued
-
0.000%
166,155
2.205%
13,000
4.570%
Debt assumed
44,142
5.046%
-
0.000%
-
0.000%
Debt extinguished
(132,545)
4.695%
(118,500)
5.562%
(274,048)
5.954%
Foreign currency
(15,633)
5.315%
3,157
5.247%
20,186
2.909%
Principal payments
(12,719)
5.450%
(10,627)
5.682%
(5,863)
5.657%
Ending balance
$
554,014
5.488%
$
594,199
4.580%
$
347,474
3.546%
Monthly averages
$
551,803
5.518%
$
497,213
5.414%
$
408,688
3.909%
Depreciation and amortization decreased in 2017 primarily as a result of the disposition of triple-net properties. To the extent that we acquire or dispose of additional properties in the future, our provision for depreciation and amortization will change accordingly. Changes in gains on sales of properties are related to the volume of property sales and the sales prices. During the years ended December 31, 2017, 2016 and 2015, we recorded impairment charges totaling $96,909,000 related to 21 properties, $20,169,000 related to 22 properties, and $2,220,000 related to two properties, respectively.
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” below and Note 6 to our consolidated financial statements. During the years ended December 31, 2017 and 2016, we recorded provision for loan losses related to certain first mortgage loans to Genesis HealthCare (“Genesis”) of $62,966,000 and $6,935,000, respectively.
During the year ended December 31, 2017, other expenses primarily represents non-capitalizable transaction costs, including $88,316,000 related to a joint venture transaction with an existing seniors housing operator, including the conversion of properties from triple-net to seniors housing operating, an exchange of PropCo/OpCo interests and termination/restructuring of pre-existing relationships.
In April 2011, we completed the acquisition of substantially all of the real estate assets of privately-owned Genesis. In conjunction with this transaction, we received the option to acquire an ownership interest in Genesis. In February 2015, Genesis closed on a transaction to merge with Skilled Healthcare Group to become a publicly traded company which required us to record the value of the derivative asset due to the net settlement feature. This event resulted in $58,427,000 gain. During the fourth quarter of 2015, the cost basis of this investment exceeded the fair value. Management performed an assessment to determine whether the decline in fair value was other than temporary and concluded that it was. As a result, we recognized an other than temporary impairment charge of $35,648,000 which was recorded in other expense. During the fourth quarter of 2017, management recorded an additional other than temporary charge of $18,294,000 in other expenses on the Genesis equity investment.
A portion of our triple-net properties were formed through partnerships. Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. Net income attributable to noncontrolling interests represents our partners’ share of net income relating to those partnerships where we are the controlling partner.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Seniors Housing Operating
The following is a summary of our NOI and SSNOI for the seniors housing operating segment for the periods presented (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
NOI
$
701,262
$
814,114
$
112,852
16%
$
880,026
$
65,912
8%
$
178,764
25%
Non-cash NOI attributable to same store properties(1)
1,003
1,990
98%
1,242
(748)
-38%
24%
NOI attributable to non same store properties(2)
(83,880)
(190,459)
(106,579)
127%
(246,731)
(56,272)
30%
(162,851)
194%
SSNOI(1)
$
618,385
$
625,645
$
7,260
1%
$
634,537
$
8,892
1%
$
16,152
3%
(1) Relates to 294 same store properties.
(2) Primarily relates to the acquisition of 129 properties subsequent to January 1, 2015.
The following is a summary of our results of operations for the seniors housing operating segment for the periods presented (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
Revenues:
Resident fees and services
$
2,158,031
$
2,504,731
$
346,700
16%
$
2,779,423
$
274,692
11%
$
621,392
29%
Interest income
4,180
4,180
-
0%
(4,111)
-98%
(4,111)
-98%
Other income
6,060
17,085
11,025
182%
5,127
(11,958)
-70%
(933)
-15%
2,168,271
2,525,996
357,725
16%
2,784,619
258,623
10%
616,348
28%
Property operating expenses
1,467,009
1,711,882
244,873
17%
1,904,593
192,711
11%
437,584
30%
NOI(1)
701,262
814,114
112,852
16%
880,026
65,912
8%
178,764
25%
Other expenses:
Interest expense
70,388
81,853
11,465
16%
63,265
(18,588)
-23%
(7,123)
-10%
Depreciation and amortization
351,733
415,429
63,696
18%
484,796
69,367
17%
133,063
38%
Transaction costs(2)
54,966
29,207
(25,759)
-47%
-
(29,207)
-100%
(54,966)
-100%
Loss (gain) on extinguishment of debt, net
(195)
(88)
-55%
3,785
3,873
-4401%
3,980
-2041%
Impairment of assets(3)
-
12,403
12,403
n/a
21,949
9,546
77%
21,949
n/a
Other expenses(2)
-
-
-
n/a
8,347
8,347
n/a
8,347
n/a
476,892
538,804
61,912
13%
582,142
43,338
8%
105,250
22%
Income (loss) from continuing operations before income from unconsolidated entities
224,370
275,310
50,940
23%
297,884
22,574
8%
73,514
33%
Income tax benefit (expense)
(3,762)
(4,748)
-482%
(16,430)
(12,668)
337%
(17,416)
-1766%
Income (loss) from unconsolidated entities
(32,672)
(20,442)
12,230
-37%
(105,236)
(84,794)
415%
(72,564)
222%
Income from continuing operations
192,684
251,106
58,422
30%
176,218
(74,888)
-30%
(16,466)
-9%
Gain (loss) on real estate dispositions, net(3)
-
9,880
9,880
n/a
56,295
46,415
470%
56,295
n/a
Net income (loss)
192,684
260,986
68,302
35%
232,513
(28,473)
-11%
39,829
21%
Less: Net income (loss) attributable to noncontrolling interests
(1,438)
2,292
3,730
-259%
8,472
6,180
270%
9,910
-689%
Net income (loss) attributable to common stockholders
$
194,122
$
258,694
$
64,572
33%
$
224,041
$
(34,653)
-13%
$
29,919
15%
(1) See Non-GAAP Financial Measures below.
(2) See Note 3 to our consolidated financial statements.
(3) See Note 5 to our consolidated financial statements.
Fluctuations in resident fees/services and property operating expenses are primarily a result of acquisitions and the movement of U.S. and foreign currency exchange rates. The fluctuations in depreciation and amortization are due to acquisitions and variations in amortization of short-lived intangible assets. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly. The increase in other income for the year ended December 31, 2016 is primarily a result of insurance proceeds received relating to a property as well as a bargain purchase gain recognized in conjunction with a single property acquisition.
The majority of our seniors housing operating properties are formed through partnership interests. The fluctuations in income (loss) from unconsolidated entities are largely due to the recognition of impairments related to one of our investments in unconsolidated
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
entities during the year ended December 31, 2017. In addition, losses are also attributable to depreciation and amortization of short-lived intangible assets related to certain investments in unconsolidated joint ventures in 2013 and 2014. Net income attributable to noncontrolling interests represents our partners’ share of net income (loss) related to joint ventures.
During the year ended December 31, 2017, we completed one seniors housing operating construction project representing $3,634,000 or $302,820 per unit. The following is a summary of our seniors housing operating construction projects, excluding expansions, pending as of December 31, 2017 (dollars in thousands):
Location
Units/Beds
Commitment
Balance
Est. Completion
Chertsey, UK
$
42,210
$
35,814
1Q18
Bushey, UK
55,131
36,784
3Q18
Wandsworth, UK
78,739
29,502
1Q20
Total
$
176,080
102,100
Interest expense represents secured debt interest expense which fluctuates based on the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations. The fluctuations in loss (gain) on extinguishment of debt is primarily attributable the volume of extinguishments and terms of the related secured debt. The following is a summary of our seniors housing operating property secured debt principal activity (dollars in thousands):
Year Ended
Year Ended
Year Ended
December 31, 2015
December 31, 2016
December 31, 2017
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
1,654,531
4.422%
$
2,290,552
3.958%
$
2,463,249
3.936%
Debt issued
228,685
2.776%
293,860
2.895%
228,772
2.722%
Debt assumed
842,316
3.420%
60,898
4.301%
-
0.000%
Debt extinguished
(285,599)
4.188%
(159,498)
3.656%
(668,804)
4.805%
Debt deconsolidated
-
0.000%
-
0.000%
(60,000)
3.799%
Foreign currency
(110,691)
3.625%
26,549
3.483%
72,636
3.234%
Principal payments
(38,690)
4.126%
(49,112)
3.888%
(47,153)
3.601%
Ending balance
$
2,290,552
3.958%
$
2,463,249
3.936%
$
1,988,700
3.661%
Monthly averages
$
1,894,609
4.261%
$
2,391,706
3.926%
$
2,065,477
3.662%
The increases in gains on real estate dispositions is due to higher volumes of property sales. During the years ended December 31, 2017, and 2016, we recorded impairment charges totaling $21,949,000 and $12,403,000, relating to three and two properties, respectively.
Outpatient Medical
The following is a summary of our NOI and SSNOI for the outpatient medical segment for the periods presented (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
NOI(1)
$
359,410
$
380,264
$
20,854
6%
$
384,068
$
3,804
1%
$
24,658
7%
Non-cash NOI attributable to same store properties(1)
(6,095)
(3,073)
3,022
-50%
(1,764)
1,309
-43%
4,331
-71%
NOI attributable to non same store properties(2)
(76,819)
(99,237)
(22,418)
29%
(102,851)
(3,614)
4%
(26,032)
34%
SSNOI(1)
$
276,496
$
277,954
$
1,458
1%
$
279,453
$
1,499
1%
$
2,957
1%
(1) Relates to 202 same store properties.
(2) Primarily relates to the acquisition of 28 properties and the conversion of 12 construction projects into revenue-generating properties subsequent to January 1, 2015 as well as 20 properties sold or held for sale at Dcember 31, 2017.
The following is a summary of our results of operations for the outpatient medical segment for the periods presented (dollars in thousands):
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
Revenues:
Rental income
$
504,121
$
536,490
$
32,369
6%
$
560,060
$
23,570
4%
$
55,939
11%
Interest income
5,853
3,307
(2,546)
-43%
-
(3,307)
-100%
(5,853)
-100%
Other income
4,684
5,568
19%
3,340
(2,228)
-40%
(1,344)
-29%
514,658
545,365
30,707
6%
563,400
18,035
3%
48,742
9%
Property operating expenses
155,248
165,101
9,853
6%
179,332
14,231
9%
24,084
16%
NOI(1)
359,410
380,264
20,854
6%
384,068
3,804
1%
24,658
7%
Other expenses:
Interest expense
27,542
19,087
(8,455)
-31%
10,015
(9,072)
-48%
(17,527)
-64%
Depreciation and amortization
186,265
188,616
2,351
1%
193,094
4,478
2%
6,829
4%
Transaction costs(2)
2,765
3,687
33%
-
(3,687)
-100%
(2,765)
-100%
Loss (gain) on extinguishment of debt, net
-
-
-
n/a
4,373
4,373
n/a
4,373
n/a
Provision for loan losses(3)
-
3,280
3,280
n/a
-
(3,280)
-100%
-
n/a
Impairment of assets(4)
-
4,635
4,635
n/a
5,625
21%
5,625
n/a
Other expenses(2)
-
-
-
n/a
1,911
1,911
n/a
1,911
n/a
216,572
219,305
2,733
1%
215,018
(4,287)
-2%
(1,554)
-1%
Income from continuing operations before income taxes and income (loss) from unconsolidated entities
142,838
160,959
18,121
13%
169,050
8,091
5%
26,212
18%
Income tax benefit (expense)
(511)
(756)
n/a
(1,477)
(966)
189%
(1,722)
n/a
Income (loss) from unconsolidated entities
2,908
(2,590)
-89%
2,683
2,365
744%
(225)
-8%
Income from continuing operations
145,991
160,766
14,775
10%
170,256
9,490
6%
24,265
17%
Gain (loss) on real estate dispositions, net(4)
194,126
(1,228)
(195,354)
n/a
1,630
2,858
n/a
(192,496)
-99%
Net income (loss)
340,117
159,538
(180,579)
-53%
171,886
12,348
8%
(168,231)
-49%
Less: Net income (loss) attributable to noncontrolling interests
(110)
n/a
4,765
3,997
520%
4,875
n/a
Net income (loss) attributable to common stockholders
$
340,227
$
158,770
$
(181,457)
-53%
$
167,121
$
8,351
5%
$
(173,106)
-51%
(1) See Non-GAAP Financial Measures below.
(2) See Note 3 to our consolidated financial statements.
(3) See Note 6 to our consolidated financial statements.
(3) See Note 5 to our consolidated financial statements.
The increases in rental income is primarily attributable to the acquisitions of new properties and the conversion of newly constructed outpatient medical properties from which we receive rent. Certain of our leases contain annual rental escalators that are contingent upon changes in the CPI. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If the CPI does not increase, a portion of our revenues may not continue to increase. Revenue from real property that is sold would offset revenue increases and, to the extent that revenues from sold properties exceed those from new acquisitions, we would experience 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, 2017, our consolidated outpatient medical portfolio signed 79,129 square feet of new leases and 270,505 square feet of renewals. The weighted-average term of these leases was six years, with a rate of $32.92 per square foot and tenant improvement and lease commission costs of $11.43 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 3.5%.
The fluctuation in property operating expenses is primarily attributable to acquisitions and construction conversions of new outpatient medical facilities for which we incur certain property operating expenses. The fluctuations in depreciation and amortization are due to acquisitions and variations in amortization of short-lived intangible assets. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly.
During the year ended December 31, 2016, we recorded a provision for loan loss related to our critical accounting estimate for the allowance for loan losses discussed in “Critical Accounting Policies” below and Note 6 to our consolidated financial statements.
Changes in gains/losses on sales of properties are related to volume of property sales and the sales prices. During 2016 and 2017, we recognized impairment charges related to certain held-for-sale properties as the carrying values exceeded the estimated fair values less costs to sell.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
During the year ended December 31, 2017, we completed four outpatient medical construction projects representing $63,036,000 or $311 per square foot. The following is a summary of outpatient medical construction projects pending as of December 31, 2017 (dollars in thousands):
Location
Square Feet
Commitment
Balance
Est. Completion
Palmer, AK
38,376
$
12,345
$
2,329
3Q18
Brooklyn, NY
140,955
105,177
49,901
3Q19
Total
179,331
$
117,522
$
52,230
Total interest expense represents secured debt interest expense. The change in secured debt interest expense is primarily due to the net effect and timing of assumptions, extinguishments and principal amortizations. The fluctuations in loss (gain) on extinguishment of debt is primarily attributable the volume of extinguishments and terms of the related secured debt. The following is a summary of our outpatient medical secured debt principal activity for the periods presented (dollars in thousands):
Year Ended
Year Ended
Year Ended
December 31, 2015
December 31, 2016
December 31, 2017
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
609,268
5.838%
$
627,689
5.177%
$
404,079
4.846%
Debt assumed
120,959
2.113%
-
0.000%
23,094
6.670%
Debt extinguished
(88,182)
5.257%
(210,115)
5.970%
(137,416)
5.990%
Principal payments
(14,356)
5.975%
(13,495)
6.552%
(9,806)
6.850%
Ending balance
$
627,689
5.177%
$
404,079
4.846%
$
279,951
4.720%
Monthly averages
$
613,155
5.434%
$
536,774
5.106%
$
294,694
4.624%
A portion of our outpatient medical properties were formed through partnerships. Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. Net income attributable to noncontrolling interests represents our partners’ share of net income or loss relating to those partnerships where we are the controlling partner.
Non-Segment/Corporate
The following is a summary of our results of operations for the non-segment/corporate activities (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
Revenues:
Other income
$
1,091
$
$
(152)
-14%
$
1,538
$
64%
$
41%
Expenses:
Interest expense
365,855
399,035
33,180
9%
396,148
(2,887)
-1%
30,293
8%
Loss (gain) on derivatives, net
-
(2,516)
(2,516)
n/a
-
2,516
-100%
-
n/a
General and administrative
147,416
155,241
7,825
5%
122,008
(33,233)
-21%
(25,408)
-17%
Loss (gain) on extinguishments of debt, net
24,777
16,439
(8,338)
-34%
-
(16,439)
-100%
(24,777)
-100%
Other expenses
10,583
11,998
1,415
13%
50,829
38,831
324%
40,246
380%
548,631
580,197
31,566
6%
568,985
(11,212)
-2%
20,354
4%
Loss from continuing operations before income taxes
(547,540)
(579,258)
(31,718)
6%
(567,447)
11,811
-2%
(19,907)
4%
Income tax benefit (expense)
(3,438)
24,488
27,926
n/a
2,070
(22,418)
-92%
5,508
n/a
Net loss
(550,978)
(554,770)
(3,792)
1%
(565,377)
(10,607)
2%
(14,399)
3%
Preferred stock dividends
65,406
65,406
-
0%
49,410
(15,996)
-24%
(15,996)
-24%
Preferred stock redemption charge
-
-
-
n/a
9,769
9,769
n/a
9,769
n/a
Net loss attributable to common stockholders
$
(616,384)
$
(620,176)
$
(3,792)
1%
$
(624,556)
$
(4,380)
1%
$
(8,172)
1%
The following is a summary of our non-segment/corporate interest expense for the periods presented (dollars in thousands):
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
Senior unsecured notes
$
341,265
$
368,775
$
27,510
8%
$
364,773
$
(4,002)
-1%
$
23,508
7%
Secured debt
(47)
-13%
(183)
-59%
(230)
-65%
Primary unsecured credit facility
10,812
16,811
5,999
55%
17,863
1,052
6%
7,051
65%
Loan expense
13,421
13,139
(282)
-2%
13,385
2%
(36)
0%
Totals
$
365,855
$
399,035
$
33,180
9%
$
396,148
$
(2,887)
-1%
$
30,293
8%
The change in interest expense on senior unsecured notes is due to the net effect of issuances and extinguishments, primarily the $450,000,000 of 4.70% senior unsecured notes extinguished in December 2016. Please refer to Note 10 to consolidated financial statements for additional information. The loss on extinguishment of debt in 2015 is primarily due to the early extinguishment of the 2016 senior unsecured notes. The loss on extinguishment of debt in 2016 is due to the early extinguishment of the 2017 senior unsecured notes. The change in interest expense on our primary unsecured credit facility 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 primary unsecured credit facility.
General and administrative expenses as a percentage of consolidated revenues for the years ended December 31, 2017, 2016 and 2015 were 2.83%, 3.63% and 3.82%, respectively. The 2017 decrease in general and administrative expenses is primarily related to a reduction in professional service fees for tax and legal consulting and compensation costs as a result of execution of our strategic initiatives.
Other expenses for 2017 primarily represents $40,730,000 of costs related to finalization of an agreement with the University of Toledo Foundation to transfer our corporate headquarters as a donation. Other expenses for all years also includes severance-related costs associated with the departure of certain executive officers and key employees. During 2017, we incurred expenses totaling approximately $3,811,000 in connection with the litigation captioned Welltower v. Brinker, Case No. G-4801-CI-0201702692-000 (Ct. Common Pleas, Toledo, Ohio). These expenses were offset by: 1) $4,000,000 we received pursuant to the terms of the settlement of the litigation; and 2) approximately $2,848,000 that Mr. Brinker was owed under his Separation Agreement with us, which was forgiven pursuant to the terms of the settlement of the litigation. Other expenses in 2015 also included costs associated with the termination of our investment in a strategic outpatient medical partnership.
The fluctuations in income taxes are primarily due to benefits recognized in the year ended December 31, 2016 related to the release of a valuation allowance reserve on a taxable subsidiary and the restructuring of an unconsolidated investment. The decrease in preferred dividends and the preferred stock redemption charge are due to the redemption of our 6.5% Series J preferred stock during the three months ended March 31, 2017.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Other
Non-GAAP Financial Measures
We believe that net income and net income attributable to common stockholders (“NICS”), as defined by U.S. GAAP, are the most appropriate earnings measurements. However, we consider FFO, NOI, SSNOI, EBITDA and Adjusted EBITDA (“AEBITDA”) to be useful supplemental measures of our operating performance. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation. However, since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient. In response, the National Association of Real Estate Investment Trusts (“NAREIT”) created funds from operations attributable to common stockholders (“FFO”) as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO, as defined by NAREIT, means NICS, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairment of depreciable assets, plus depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests.
Consolidated net operating income (“NOI”) is used to evaluate the operating performance of our properties. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. Property operating expenses represent costs associated with managing, maintaining and servicing tenants for our seniors housing operating and outpatient medical facility properties. These expenses include, but are not limited to, property-related payroll and benefits, property management fees paid to operators, marketing, housekeeping, food service, maintenance, utilities, property taxes and insurance. General and administrative expenses (excluded from NOI) represent costs unrelated to property operations. These expenses include, but are not limited to, payroll and benefits, professional services, office expenses, and depreciation of corporate fixed assets. Same store NOI (“SSNOI”) is used to evaluate the operating performance of our properties 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 reporting period subsequent to January 1, 2015. Land parcels, loans, sub-leases and major capital restructurings as well as any properties acquired, developed/redeveloped, transitioned, sold or classified as held for sale during that period are excluded from the same store amounts. We believe NOI and SSNOI provide investors relevant and useful information because they measure the operating performance of our properties at the property level on an unleveraged basis. We use NOI and SSNOI to make decisions about resource allocations and to assess the property level performance of our properties.
EBITDA stands for earnings (net income) before interest, taxes, depreciation and amortization. We believe that EBITDA, along with net income and cash flow provided from operating activities, is an important supplemental measure because it provides additional information to assess and evaluate the performance of our operations. We primarily utilize EBITDA to measure our interest coverage ratio, which represents EBITDA divided by total interest, and our fixed charge coverage ratio, which represents EBITDA divided by fixed charges. Fixed charges include total interest, secured debt principal amortization, and preferred dividends. Covenants in our senior unsecured notes contain financial ratios based on a definition of EBITDA that is specific to those agreements. Failure to satisfy these covenants could result in an event of default that could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. Due to the materiality of these debt agreements and the financial covenants, we have disclosed AEBITDA, which represents EBITDA as defined above excluding unconsolidated entities and adjusted for items per our covenant. We use AEBITDA to measure our adjusted fixed charge coverage ratio, which represents AEBITDA divided by fixed charges on a trailing twelve months basis. Fixed charges include total interest (excluding capitalized interest and non-cash interest expenses), secured debt principal amortization and preferred dividends. Our covenant requires an adjusted fixed charge coverage ratio of at least 1.50 times.
Our supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and rating agencies in the valuation, comparison, rating and investment recommendations of companies. Management uses these financial measures to facilitate internal and external comparisons to our historical operating results and in making operating decisions. Additionally, these measures are utilized by the Board of Directors to evaluate management. None of our supplemental measures represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, the supplemental measures, as defined by us, may not be comparable to similarly entitled items reported by other REITs or other companies.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The table below reflects the reconciliation of FFO to NICS, the most directly comparable U.S. GAAP measure, for the periods presented. Noncontrolling interest and unconsolidated entity amounts represent adjustments to reflect our share of depreciation and amortization, gains/loss on real estate dispositions and impairments of assets. Amounts are in thousands except for per share data.
Year Ended December 31,
FFO Reconciliation:
Net income attributable to common stockholders
$
818,344
$
1,012,397
$
463,595
Depreciation and amortization
826,240
901,242
921,720
Impairment of assets
2,220
37,207
124,483
Loss (gain) on real estate dispositions, net
(280,387)
(364,046)
(344,250)
Noncontrolling interests
(39,271)
(71,527)
(60,018)
Unconsolidated entities
82,494
67,667
60,046
Funds from operations attributable to common stockholders
$
1,409,640
$
1,582,940
$
1,165,576
Average common shares outstanding:
Basic
348,240
358,275
367,237
Diluted
349,424
360,227
369,001
Per share data:
Net income attributable to common stockholders
Basic
$
2.35
$
2.83
$
1.26
Diluted
2.34
2.81
1.26
Funds from operations attributable to common stockholders
Basic
$
4.05
$
4.42
$
3.17
Diluted
4.03
4.39
3.16
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The table below reflects the reconciliation of AEBITDA to net income, the most directly comparable U.S. GAAP measure, for the periods presented. Dollars are in thousands.
Year Ended December 31,
AEBITDA Reconciliation:
Net income
$
888,549
$
1,082,070
$
540,613
Interest expense
492,169
521,345
484,622
Income tax expense (benefit)
6,451
(19,128)
20,128
Depreciation and amortization
826,240
901,242
921,720
EBITDA
2,213,409
2,485,529
1,967,083
Stock-based compensation expense
30,844
28,869
19,102
Transaction costs
110,926
42,910
-
Provision for loan losses
-
10,215
62,966
Loss (gain) on extinguishment of debt, net
34,677
17,214
37,241
Impairment of assets
2,220
37,207
124,483
Loss (gain) on real estate dispositions, net
(280,387)
(364,046)
(344,250)
Loss (gain) on derivatives, net
(58,427)
(2,448)
2,284
Other expenses
40,636
7,721
176,395
Loss (income) from unconsolidated entities
21,504
10,357
83,125
Additional other income
(2,144)
(16,664)
-
AEBITDA
$
2,113,258
$
2,256,864
$
2,128,429
Adjusted Interest Coverage Ratio:
Interest expense
$
492,169
$
521,345
$
484,622
Capitalized interest
8,670
16,943
13,489
Non-cash interest expense
(2,586)
(1,681)
(10,359)
Total interest
498,253
536,607
487,752
AEBITDA
$
2,113,258
$
2,256,864
$
2,128,429
Adjusted interest coverage ratio
4.24x
4.21x
4.36x
Adjusted Fixed Charge Coverage Ratio:
Total interest
$
498,253
$
536,607
$
487,752
Secured debt principal payments
67,064
74,466
64,078
Preferred dividends
65,406
65,406
49,410
Total fixed charges
630,723
676,479
601,240
AEBITDA
$
2,113,258
$
2,256,864
$
2,128,429
Adjusted fixed charge coverage ratio
3.35x
3.34x
3.54x
Our leverage ratios include book capitalization, undepreciated book capitalization, and market capitalization. Book capitalization represents the sum of net debt (defined as total long-term debt less cash and cash equivalents and any IRC section 1031 deposits), total equity and redeemable noncontrolling interests. Undepreciated book capitalization represents book capitalization adjusted for accumulated depreciation and amortization. Market capitalization represents book capitalization adjusted for the fair market value of our common stock. Our leverage ratios are defined as the proportion of net debt to total capitalization. The table below reflects the reconciliation of our leverage ratios to our balance sheets for the periods presented. Amounts are in thousands, except share price.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Year Ended December 31,
Book capitalization:
Borrowings under primary unsecured credit facility
$
835,000
$
645,000
$
719,000
Long-term debt obligations(1)
12,132,686
11,713,245
11,012,936
Cash & cash equivalents(2)
(484,754)
(557,659)
(249,620)
Total net debt
12,482,932
11,800,586
11,482,316
Total equity
15,175,885
15,281,472
14,925,452
Redeemable noncontrolling interest
183,083
398,433
375,194
Book capitalization
$
27,841,900
$
27,480,491
$
26,782,962
Net debt to book capitalization ratio
44.8%
42.9%
42.9%
Undepreciated book capitalization:
Total net debt
$
12,482,932
$
11,800,586
$
11,482,316
Accumulated depreciation and amortization
3,796,297
4,093,494
4,838,370
Total equity
15,175,885
15,281,472
14,925,452
Redeemable noncontrolling interest
183,083
398,433
375,194
Undepreciated book capitalization
$
31,638,197
$
31,573,985
$
31,621,332
Net debt to undepreciated book capitalization ratio
39.5%
37.4%
36.3%
Market capitalization:
Common shares outstanding
354,778
362,602
371,732
Period end share price
$
68.03
$
66.93
$
63.77
Common equity market capitalization
$
24,135,547
$
24,268,952
$
23,705,350
Total net debt
12,482,932
11,800,586
11,482,316
Noncontrolling interests(3)
768,408
873,512
877,499
Preferred stock
1,006,250
1,006,250
718,503
Market capitalization:
$
38,393,137
$
37,949,300
$
36,783,668
Net debt to market capitalization ratio
32.5%
31.1%
31.2%
(1) Amounts include senior unsecured notes, secured debt and capital lease obligations as reflected on our consolidated balance sheet.
(2) Inclusive of IRC section 1031 deposits, if any.
(3) Includes all noncontrolling interests (redeemable and permanent) as reflected on our consolidated balance sheet.
The following tables reflect the reconciliation of NOI and SSNOI to net income, the most directly comparable U.S. GAAP measure, for the years presented. Dollar amounts are in thousands.
Year Ended December 31,
NOI Reconciliation:
Net income
$
888,549
$
1,082,070
$
540,613
Loss (gain) on real estate dispositions, net
(280,387)
(364,046)
(344,250)
Loss (income) from unconsolidated entities
21,504
10,357
83,125
Income tax expense (benefit)
6,451
(19,128)
20,128
Other expenses
46,231
11,998
177,776
Impairment of assets
2,220
37,207
124,483
Provision for loan losses
-
10,215
62,966
Loss (gain) on extinguishment of debt, net
34,677
17,214
37,241
Loss (gain) on derivatives, net
(58,427)
(2,448)
2,284
Transaction costs
110,926
42,910
-
General and administrative expenses
147,416
155,241
122,008
Depreciation and amortization
826,240
901,242
921,720
Interest expense
492,169
521,345
484,622
Consolidated net operating income (NOI)
$
2,237,569
$
2,404,177
$
2,232,716
NOI by segment:
Triple-net
$
1,175,806
$
1,208,860
$
967,084
Seniors housing operating
701,262
814,114
880,026
Outpatient medical
359,410
380,264
384,068
Non-segment/corporate
1,091
1,538
Total NOI
$
2,237,569
$
2,404,177
$
2,232,716
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Year Ended December 31,
SSNOI Reconciliation:
NOI:
Triple-net
$
1,175,806
$
1,208,860
$
967,084
Seniors housing operating
701,262
814,114
880,026
Outpatient medical
359,410
380,264
384,068
Total
2,236,478
2,403,238
2,231,178
Adjustments:
Triple-net:
Non-cash NOI on same store properties
(48,890)
(38,899)
(28,602)
NOI attributable to non same store properties
(498,131)
(574,049)
(333,279)
Subtotal
(547,021)
(612,948)
(361,881)
Seniors housing operating:
Non-cash NOI on same store properties
1,003
1,990
1,242
NOI attributable to non same store properties
(83,880)
(190,459)
(246,731)
Subtotal
(82,877)
(188,469)
(245,489)
Outpatient medical:
Non-cash NOI on same store properties
(6,095)
(3,073)
(1,764)
NOI attributable to non same store properties
(76,819)
(99,237)
(102,851)
Subtotal
(82,914)
(102,310)
(104,615)
Total
(712,812)
(903,727)
(711,985)
SSNOI by segment:
Triple-net
628,785
595,912
605,203
Seniors housing operating
618,385
625,645
634,537
Outpatient medical
276,496
277,954
279,453
Total
$
1,523,666
$
1,499,511
$
1,519,193
SSNOI Property Reconciliation:
Total properties
1,286
Acquisitions
(231)
Developments
(33)
Disposals/Held-for-sale
(71)
Segment transitions
(28)
Other(1)
(9)
Same store properties
(1) Includes eight land parcels and one loan.
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 2 to our consolidated financial statements for further information on significant accounting policies that impact us and for the impact of new accounting standards, including accounting pronouncements that were issued but not yet adopted by us.
The following table presents information about our critical accounting policies, as well as the material assumptions used to develop each estimate:
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 VIE, our assumptions may be different and may result in the identification of a different primary beneficiary.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Nature of Critical
Accounting Estimate
Assumptions/Approach
Used
Real Estate Acquisitions
On January 1, 2017, we adopted Accounting Standards Update 2017-01, Clarifying the Definition of a Business (“ASU 2017-01”) which narrows the Financial Accounting Standards Board’s (“FASB”) definition of a business and provides a framework that gives entities a basis for making reasonable judgments about whether a transaction involves an asset or a business. ASU 2017-01 states that when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the acquired asset is not a business. If this initial test is not met, an acquired asset cannot be considered a business unless it includes an input and a substantive process that together significantly contribute to the ability to create output. The primary differences between business combinations and asset acquisitions include recording the asset acquisition at relative fair value, capitalizing transaction costs, and the elimination of the measurement period in which to record adjustments to the transaction. We believe that substantially all our real estate acquisitions are considered asset acquisitions. We are applying ASU 2017-01 prospectively for acquisitions after January 1, 2017. Regardless of whether an acquisition is considered an asset acquisition or a business combination, 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 our overall relationship with that respective tenant. Real property developed by us is recorded at cost, including the capitalization of construction period interest.
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 remaining life of the lease or lease-up period.
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 or if it has been modified in a troubled debt restructuring. Consistent with this definition, all loans on non-accrual are deemed impaired. To the extent circumstances improve and the risk of collectability is diminished, we will return these loans to income accrual status.
The determination of the allowance is based on a quarterly evaluation of all outstanding loans, including general economic conditions and estimated collectability of loan payments. We evaluate the collectability of our loans receivable based on a combination of factors, including, but not limited to, delinquency status, historical loan charge-offs, financial strength of the borrower and guarantors, and value of the underlying collateral. Any loans with collectability concerns are subjected to a projected payoff valuation. The valuation is based on the expected future cash flows and/or the estimated fair value of the underlying collateral. The valuation is compared to the outstanding balance to determine the reserve needed for each loan. We may base our valuation on a loan’s observable market price, if any, or the fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the collateral.
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 uses 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. Properties that meet the held-for-sale criteria are recorded at the lesser of fair value less costs to sell or carrying value.

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 a discussion of the risks associated with potential fluctuations in interest rates and foreign currency exchange rates. For more information, see Notes 11 and 16 to our consolidated financial statements.
We historically borrow on our primary unsecured credit facility 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 primary unsecured credit facility. 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, 2017
December 31, 2016
Principal balance
Fair value change
Principal balance
Fair value change
Senior unsecured notes
$
7,710,219
$
(500,951)
$
7,568,832
$
(521,203)
Secured debt
1,749,958
(63,492)
2,489,276
(73,944)
Totals
$
9,460,177
$
(564,443)
$
10,058,108
$
(595,147)
Our variable rate debt, including our primary unsecured credit facility, is reflected at fair value. At December 31, 2017, we had $2,294,678,000 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 $22,947,000. At December 31, 2016, we had $2,311,996,000 outstanding under our variable rate debt. Assuming no changes in outstanding balances, a 1% increase in interest rates would have resulted in increased annual interest expense of $23,120,000.
We are subject to currency fluctuations that may, from time to time, affect our financial condition and results of operations. Increases or decreases in the value of the Canadian Dollar or British Pounds Sterling relative to the U.S. Dollar impact the amount of net income we earn from our investments in Canada and the United Kingdom. Based solely on our results for the year ended December 31, 2017, including the impact of existing hedging arrangements, if these exchange rates were to increase or decrease by 10%, our net income from these investments would increase or decrease, as applicable, by less than $12,000,000. We will continue to mitigate these underlying foreign currency exposures with non-U.S. denominated borrowings and gains and losses on derivative contracts. If we increase our international presence through investments in, or acquisitions or development of, seniors housing and health care properties outside the U.S., we may also decide to transact additional business or borrow funds in currencies other than U.S. Dollars, Canadian Dollars or British Pounds Sterling. To illustrate the impact of changes in foreign currency markets, we performed a sensitivity analysis on our derivative portfolio whereby we modeled the change in net present values arising from a hypothetical 1% increase in foreign currency exchange rates to determine the instruments’ change in fair value. The following table summarizes the results of the analysis performed, excluding cross currency hedge activity (dollars in thousands):
December 31, 2017
December 31, 2016
Carrying value
Fair value change
Carrying value
Fair value change
Foreign currency exchange contracts
$
23,238
$
12,929
$
87,962
$
Debt designated as hedges
1,620,273
16,203
1,481,591
13,000
Totals
$
1,643,511
$
29,132
$
1,569,553
$
13,722

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 Welltower Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Welltower Inc. and subsidiaries (the Company) as of December 31, 2017 and 2016, the related consolidated statements of comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2017 and 2016 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2017, 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 28, 2018 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1970.
Toledo, Ohio
February 28, 2018
CONSOLIDATED BALANCE SHEETS
WELLTOWER INC. AND SUBSIDIARIES
(in thousands)
December 31,
December 31,
Assets
Real estate investments:
Real property owned:
Land and land improvements
$
2,734,467
$
2,591,071
Buildings and improvements
25,373,117
24,496,153
Acquired lease intangibles
1,502,471
1,402,884
Real property held for sale, net of accumulated depreciation
734,147
1,044,859
Construction in progress
237,746
506,091
Gross real property owned
30,581,948
30,041,058
Less accumulated depreciation and amortization
(4,838,370)
(4,093,494)
Net real property owned
25,743,578
25,947,564
Real estate loans receivable
495,871
622,628
Less allowance for losses on loans receivable
(68,372)
(6,563)
Net real estate loans receivable
427,499
616,065
Net real estate investments
26,171,077
26,563,629
Other assets:
Investments in unconsolidated entities
445,585
457,138
Goodwill
68,321
68,321
Cash and cash equivalents
243,777
419,378
Restricted cash
65,526
187,842
Straight-line receivable
389,168
342,578
Receivables and other assets
560,991
826,298
Total other assets
1,773,368
2,301,555
Total assets
$
27,944,445
$
28,865,184
Liabilities and equity
Liabilities:
Borrowings under primary unsecured credit facility
$
719,000
$
645,000
Senior unsecured notes
8,331,722
8,161,619
Secured debt
2,608,976
3,477,699
Capital lease obligations
72,238
73,927
Accrued expenses and other liabilities
911,863
827,034
Total liabilities
12,643,799
13,185,279
Redeemable noncontrolling interests
375,194
398,433
Equity:
Preferred stock
718,503
1,006,250
Common stock
372,449
363,071
Capital in excess of par value
17,662,681
16,999,691
Treasury stock
(64,559)
(54,741)
Cumulative net income
5,316,580
4,803,575
Cumulative dividends
(9,471,712)
(8,144,981)
Accumulated other comprehensive income (loss)
(111,465)
(169,531)
Other equity
3,059
Total Welltower Inc. stockholders’ equity
14,423,147
14,806,393
Noncontrolling interests
502,305
475,079
Total equity
14,925,452
15,281,472
Total liabilities and equity
$
27,944,445
$
28,865,184
See accompanying notes
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
WELLTOWER INC. AND SUBSIDIARIES
(In thousands, except per share data)
Year Ended December 31,
Revenues:
Rental income
$
1,445,871
$
1,648,815
$
1,598,948
Resident fees and services
2,779,423
2,504,731
2,158,031
Interest income
73,811
97,963
84,141
Other income
17,536
29,651
18,706
Total revenues
4,316,641
4,281,160
3,859,826
Expenses:
Interest expense
484,622
521,345
492,169
Property operating expenses
2,083,925
1,876,983
1,622,257
Depreciation and amortization
921,720
901,242
826,240
General and administrative
122,008
155,241
147,416
Transaction costs
-
42,910
110,926
Loss (gain) on derivatives, net
2,284
(2,448)
(58,427)
Loss (gain) on extinguishment of debt, net
37,241
17,214
34,677
Provision for loan losses
62,966
10,215
-
Impairment of assets
124,483
37,207
2,220
Other expenses
177,776
11,998
46,231
Total expenses
4,017,025
3,571,907
3,223,709
Income from continuing operations before income taxes
and income from unconsolidated entities
299,616
709,253
636,117
Income tax (expense) benefit
(20,128)
19,128
(6,451)
Income (loss) from unconsolidated entities
(83,125)
(10,357)
(21,504)
Income from continuing operations
196,363
718,024
608,162
Gain (loss) on real estate dispositions, net
344,250
364,046
280,387
Net income
540,613
1,082,070
888,549
Less: Preferred stock dividends
49,410
65,406
65,406
Less: Preferred stock redemption charge
9,769
-
-
Less: Net income (loss) attributable to noncontrolling interests(1)
17,839
4,267
4,799
Net income attributable to common stockholders
$
463,595
$
1,012,397
$
818,344
Average number of common shares outstanding:
Basic
367,237
358,275
348,240
Diluted
369,001
360,227
349,424
Earnings per share:
Basic:
Income from continuing operations
$
0.53
$
2.00
$
1.75
Net income attributable to common stockholders
$
1.26
$
2.83
$
2.35
Diluted:
Income from continuing operations
$
0.53
$
1.99
$
1.74
Net income attributable to common stockholders
$
1.26
$
2.81
$
2.34
(1) Includes amounts attributable to redeemable noncontrolling interests
See accompanying notes
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED)
WELLTOWER INC. AND SUBSIDIARIES
(In thousands)
Year Ended December 31,
Net income
$
540,613
$
1,082,070
$
888,549
Other comprehensive income (loss):
Unrecognized gain (loss) on equity investments
-
5,120
-
Reclassification adjustment for write down of equity investment
(5,120)
-
-
Unrecognized gain (loss) on cash flow hedges
1,414
(766)
Unrecognized actuarial gain (loss)
Foreign currency translation gain (loss)
85,263
(85,557)
(46,679)
Total other comprehensive income (loss)
80,414
(78,833)
(47,199)
Total comprehensive income
621,027
1,003,237
841,350
Less: Total comprehensive income (loss) attributable to noncontrolling interests(1)
40,187
6,722
(31,166)
Total comprehensive income attributable to stockholders
$
580,840
$
996,515
$
872,516
(1) Includes amounts attributable to redeemable noncontrolling interests.
See accompanying notes
CONSOLIDATED STATEMENTS OF EQUITY
WELLTOWER INC. AND SUBSIDIARIES
(in thousands)
Accumulated
Capital in
Other
Preferred
Common
Excess of
Treasury
Cumulative
Cumulative
Comprehensive
Other
Noncontrolling
Stock
Stock
Par Value
Stock
Net Income
Dividends
Income (Loss)
Equity
Interests
Total
Balances at December 31, 2014
$
1,006,250
$
328,835
$
14,740,712
$
(35,241)
$
2,842,022
$
(5,635,923)
$
(77,009)
$
5,507
$
297,896
$
13,473,049
Comprehensive income:
Net income
883,750
4,878
888,628
Other comprehensive income (loss)
(11,234)
(35,965)
(47,199)
Total comprehensive income
841,429
Net change in noncontrolling interests
(23,077)
318,516
295,439
Amounts related to issuance of common stock
from dividend reinvestment and stock
incentive plans, net of forfeitures
25,053
(9,131)
(2,107)
13,941
Net proceeds from issuance of common stock
24,520
1,730,181
1,754,701
Equity component of convertible debt
1,330
5,431
6,761
Option compensation expense
Cash dividends paid:
Common stock dividends
(1,144,727)
(1,144,727)
Preferred stock dividends
(65,406)
(65,406)
Balances at December 31, 2015
1,006,250
354,811
16,478,300
(44,372)
3,725,772
(6,846,056)
(88,243)
4,098
585,325
15,175,885
Comprehensive income:
Net income
1,077,803
9,277
1,087,080
Other comprehensive income (loss)
(81,288)
2,455
(78,833)
Total comprehensive income
1,008,247
Net change in noncontrolling interests
(51,478)
(121,978)
(173,456)
Amounts related to issuance of common stock
from dividend reinvestment and stock
incentive plans, net of forfeitures
46,938
(10,369)
(1,305)
36,103
Net proceeds from issuance of common stock
7,421
525,931
533,352
Option compensation expense
Cash dividends paid:
Common stock dividends
(1,233,519)
(1,233,519)
Preferred stock dividends
(65,406)
(65,406)
Balances at December 31, 2016
1,006,250
363,071
16,999,691
(54,741)
4,803,575
(8,144,981)
(169,531)
3,059
475,079
15,281,472
Comprehensive income:
Net income
522,774
20,819
543,593
Other comprehensive income (loss)
58,066
22,348
80,414
Total comprehensive income
624,007
Net change in noncontrolling interests
13,473
(15,941)
(2,468)
Amounts related to issuance of common stock
from dividend reinvestment and stock
incentive plans, net of forfeitures
21,494
(9,807)
(2,399)
9,690
Net proceeds from issuance of common stock
8,881
612,555
621,436
Redemption of equity membership units
5,465
(11)
5,545
Redemption of preferred stock
(287,500)
9,760
(9,769)
(287,509)
Conversion of preferred stock
(247)
-
Option compensation expense
Cash dividends paid:
Common stock dividends
(1,277,321)
(1,277,321)
Preferred stock dividends
(49,410)
(49,410)
Balances at December 31, 2017
$
718,503
$
372,449
$
17,662,681
$
(64,559)
$
5,316,580
$
(9,471,712)
$
(111,465)
$
$
502,305
$
14,925,452
See accompanying notes
CONSOLIDATED STATEMENTS OF CASH FLOWS
WELLTOWER INC. AND SUBSIDIARIES
(in thousands)
Year Ended December 31,
Operating activities:
Net income
$
540,613
$
1,082,070
$
888,549
Adjustments to reconcile net income to
net cash provided from (used in) operating activities:
Depreciation and amortization
921,720
901,242
826,240
Other amortization expenses
16,521
8,822
4,991
Provision for loan losses
62,966
10,215
-
Impairment of assets
124,483
37,207
2,220
Stock-based compensation expense
19,102
28,869
30,844
Loss (gain) on derivatives, net
2,284
(2,448)
(58,427)
Loss (gain) on extinguishment of debt, net
37,241
17,214
34,677
Loss (income) from unconsolidated entities
83,125
10,357
21,504
Rental income in excess of cash received
(80,398)
(83,233)
(115,756)
Amortization related to above (below) market leases, net
4,018
Loss (gain) on sales of properties, net
(344,250)
(364,046)
(280,387)
Other (income) expense, net
(4,853)
31,979
Distributions by unconsolidated entities
1,065
Increase (decrease) in accrued expenses and other liabilities
26,809
14,298
(8,968)
Decrease (increase) in receivables and other assets
23,486
(18,037)
Net cash provided from (used in) operating activities
1,434,177
1,639,064
1,382,599
Investing activities:
Cash disbursed for acquisitions
(805,264)
(2,145,374)
(3,353,087)
Cash disbursed for capital improvements to existing properties
(250,276)
(219,146)
(187,752)
Cash disbursed for construction in progress
(232,715)
(403,131)
(244,561)
Capitalized interest
(13,489)
(16,943)
(8,670)
Investment in real estate loans receivable
(83,738)
(129,884)
(598,722)
Other investments, net of payments
57,385
4,760
(141,994)
Principal collected on real estate loans receivable
96,023
249,552
131,830
Contributions to unconsolidated entities
(114,365)
(101,415)
(160,323)
Distributions by unconsolidated entities
70,287
119,723
130,880
Proceeds from (payments on) derivatives
52,719
108,347
106,360
Proceeds from sales of real property
1,378,014
2,350,068
823,964
Net cash provided from (used in) investing activities
154,581
(183,443)
(3,502,075)
Financing activities:
Net increase (decrease) under unsecured credit facilities
74,000
(190,000)
835,000
Proceeds from issuance of senior unsecured notes
7,500
693,560
1,451,434
Payments to extinguish senior unsecured notes
(5,000)
(865,863)
(558,830)
Net proceeds from the issuance of secured debt
241,772
460,015
228,685
Payments on secured debt
(1,144,346)
(563,759)
(573,390)
Net proceeds from the issuance of common stock
621,987
534,194
1,755,722
Redemption of preferred stock
(287,500)
-
-
Decrease (increase) in deferred loan expenses
(54,333)
(22,196)
(11,513)
Contributions by noncontrolling interests(1)
56,560
148,666
173,018
Distributions to noncontrolling interests(1)
(87,711)
(134,578)
(50,877)
Acquisitions of noncontrolling interests
-
-
(5,663)
Cash distributions to stockholders
(1,325,617)
(1,298,925)
(1,210,133)
Other financing activities
(10,839)
(11,931)
(36,135)
Net cash provided from (used in) financing activities
(1,913,527)
(1,250,817)
1,997,318
Effect of foreign currency translation on cash and cash equivalents
26,852
(20,274)
(8,575)
Increase (decrease) in cash, cash equivalents and restricted cash
(297,917)
184,530
(130,733)
Cash, cash equivalents and restricted cash at beginning of period
607,220
422,690
553,423
Cash, cash equivalents and restricted cash at end of period
$
309,303
$
607,220
$
422,690
Supplemental cash flow information:
Interest paid
$
488,265
$
541,545
$
492,771
Income taxes paid
10,410
8,011
12,214
(1) Includes amounts attributable to redeemable noncontrolling interests.
See accompanying notes.
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Business
Welltower Inc., an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The Company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. WelltowerTM, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing and post-acute communities and outpatient medical properties.
2. Accounting Policies and Related Matters
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of our wholly-owned subsidiaries and joint venture (“JV”) entities that we control, through voting rights or other means. All material intercompany transactions and balances have been eliminated in consolidation. At inception of JV transactions, we identify entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and determine which business enterprise is the primary beneficiary of its operations. A VIE is broadly defined as an entity where either (i) the equity investors as a group, if any, do not have a controlling financial interest, or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. We consolidate investments in VIEs when we are determined to be the primary beneficiary. Accounting Standards Codification Topic 810, Consolidations (“ASC 810”), requires enterprises to perform a qualitative approach to determining whether or not a VIE will need to be consolidated. This evaluation is based on an enterprise’s ability to direct and influence the activities of a VIE that most significantly impact that entity’s economic performance. For investments in JVs, U.S. GAAP may preclude consolidation by the sole general partner in certain circumstances based on the type of rights held by the limited partner(s). We assess the limited partners’ rights and their impact on our consolidation conclusions, and we reassess if there is a change to the terms or in the exercisability of the rights of the limited partners, the sole general partner increases or decreases its ownership of limited partnership interests, or there is an increase or decrease in the number of outstanding limited partnership interests. We similarly evaluate the rights of managing members of limited liability companies.
Revenue Recognition
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 outpatient medical portfolio typically include some form of operating expense reimbursement by the tenant. Certain payments made to operators are treated as lease incentives and amortized as a reduction of revenue over the lease term. 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, amounts held in escrow relating to acquisitions we are entitled to receive over a period of time as outlined in the escrow agreement and net proceeds from property sales that were executed as tax-deferred dispositions under Internal Revenue Code (“IRC”) section 1031. At December 31, 2017, $5,843,000 of sales proceeds is on deposit in a IRC section 1031 exchange escrow account with a qualified intermediary.
Deferred Loan Expenses
Deferred loan expenses are costs incurred by us in connection with the issuance, assumption and amendments of debt arrangements. Deferred loan expenses related to debt instruments, excluding the primary unsecured credit facility, are recorded as a reduction of the related debt liability. Deferred loan expenses related to the primary unsecured credit facility are included in other assets. We amortize these costs over the term of the debt using the straight-line method, which approximates the effective interest
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
method.
Investments in Unconsolidated Entities
Investments in entities that we do not consolidate but have the ability to exercise significant influence over operating and financial policies are reported under the equity method of accounting. Under the equity method, our share of the investee’s earnings or losses is included in our consolidated results of operations. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest inclusive of transaction costs. To the extent that our cost basis is different from the basis reflected at the entity level, the basis difference is generally amortized over the lives of the related assets and liabilities, and such amortization is included in our share of equity in earnings of the entity. We evaluate our equity method investments for impairment based upon a comparison of the estimated fair value of the equity method investment to its carrying value. When we determine a decline in the estimated fair value of such an investment below its carrying value is other-than-temporary, an impairment is recorded.
Marketable Securities
We classify marketable securities as available-for-sale. These securities are carried at their fair value with unrealized gains and losses recognized in stockholders’ equity as a component of accumulated other comprehensive income. When we determine declines in fair value of marketable securities are other-than-temporary, a loss is recognized in earnings.
Redeemable Noncontrolling Interests
Certain noncontrolling interests are redeemable at fair value. Accordingly, we record the carrying amount of the noncontrolling interests at the greater of (i) the initial carrying amount, increased or decreased for the noncontrolling interest’s share of net income or loss and its share of other comprehensive income or loss, and dividends or (ii) the redemption value. If it is probable that the interests will be redeemed in the future, we accrete the carrying value to the redemption value over the period until expected redemption, currently a weighted-average period of approximately four years. In accordance with ASC 810, the redeemable noncontrolling interests are classified outside of permanent equity, as a mezzanine item, in the balance sheet. At December 31, 2017, the current redemption value of redeemable noncontrolling interests exceeded the carrying value of $375,194,000 by $29,587,000.
During 2014 and 2015, we entered into DownREIT partnerships which give a real estate seller the ability to exchange its property on a tax deferred basis for equity membership interests (“OP units”). The OP units may be redeemed any time following the first anniversary of the date of issuance at the election of the holders for one share of our common stock per unit or, at our option, cash.
Real Property Owned
On January 1, 2017, we adopted Accounting Standards Update (“ASU”) 2017-01, Clarifying the Definition of a Business (“ASU 2017-01”) which narrows the Financial Accounting Standards Board’s (“FASB”) definition of a business and provides a framework that gives entities a basis for making reasonable judgments about whether a transaction involves an asset or a business. ASU 2017-01 states that when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the acquired asset is not a business. If this initial test is not met, an acquired asset cannot be considered a business unless it includes an input and a substantive process that together significantly contribute to the ability to create output. The primary differences between business combinations and asset acquisitions include recording the asset acquisition at relative fair value, capitalizing transaction costs, and the elimination of the measurement period in which to record adjustments to the transaction. We believe that substantially all our real estate acquisitions are considered asset acquisitions. We are applying ASU 2017-01 prospectively for acquisitions after January 1, 2017. 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.
Regardless of whether an acquisition is considered an asset acquisition or a business combination, 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 relative 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 consolidated 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 leases. The value allocable to the above or below market component of the acquired in-place lease is determined based upon the present value (using a discount rate which reflects the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term, and (ii) management’s estimate of the amounts that would be paid using fair market rates over the remaining term of the lease. The amounts allocated to above market leases are included in acquired lease intangibles and below market leases are included in other liabilities in the balance sheet and are amortized to rental income over the remaining terms of the respective leases or lease-up period.
The total amount of other intangible assets acquired is further allocated to in-place lease values and customer relationship values for in-place tenants based on management’s evaluation of the specific characteristics of each tenant’s lease and our overall relationship with that respective tenant. Characteristics considered by management in allocating these values include the nature and extent of our
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 remaining life of the lease.
The net book value of long-lived assets is reviewed quarterly on a property by property basis to determine if facts and circumstances suggest that the assets may be impaired or that the depreciable life may need to be changed. We consider external factors relating to each asset and the existence of a master lease which may link the cash flows of an individual asset to a larger portfolio of assets leased to the same tenant. If these factors and the projected undiscounted cash flows of the assets over the remaining depreciation period indicate that the assets will not be recoverable, the carrying value is reduced to the estimated fair market value. In addition, we are exposed to the risks inherent in concentrating investments in real estate, and in particular, the seniors housing and health care industries. A downturn in the real estate industry could adversely affect the value of our properties and our ability to sell properties for a price or on terms acceptable to us. Additionally, properties that meet the held-for-sale criteria are recorded at the lessor of fair value less costs to sell or the carrying value.
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 Company-wide cost of financing. Our interest expense reflected in the consolidated statements of comprehensive income has been reduced by the amounts capitalized.
Gain on Real Estate Dispositions
We recognize sales of real estate 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 real estate 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 income accrual status. While a loan is on non-accrual status, any cash receipts are applied against the outstanding principal balance. Any loans with collectability concerns are subjected to a projected payoff valuation. The valuation is based on the expected future cash flows and/or the estimated fair value of the underlying collateral. The valuation is compared to the outstanding balance to determine the reserve needed for each loan. We may base our valuation on a loan’s observable market price, if any, or the fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the collateral.
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
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 IRC, commencing with our first taxable year, and made no provision for U.S. federal income tax purposes prior to our acquisition of our taxable REIT subsidiaries (“TRSs”). As a result of these as well as subsequent acquisitions, we now record income tax expense or benefit with respect to certain of our entities that are taxed as TRSs under provisions similar to those applicable to regular corporations and not under the REIT provisions. We account for deferred income taxes using the asset and liability method and recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our consolidated financial statements or tax returns. Under this method, we determine deferred tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Any increase or decrease in the deferred tax liability that results from a change in circumstances, and that causes a change in our judgment about expected future tax consequences of events, is included in the tax provision when such changes occur. Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards. A valuation allowance is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will not be realized. Any increase or decrease in the valuation allowance that results from a change in circumstances, and that causes a change in our judgment about the realizability of the related deferred tax asset, is included in the tax provision when such changes occur. See Note 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.
Reclassifications
Certain amounts in prior years have been reclassified to conform to current year presentation.
New Accounting Standards
During the year ended December 31, 2017, we adopted the following additional accounting standards, each of which did not have a material impact on our consolidated financial statements:
· We adopted ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting” on January 1, 2017, which allows companies to make a policy election as to whether they will include an estimate of awards expected to be forfeited or whether they will account for forfeitures as they occur. We elected to account for forfeitures as they occur. This election had an immaterial impact on our consolidated financial statements. The standard also requires an employer to classify as a financing activity in the consolidated statement of cash flow the cash paid to a tax authority when shares are withheld to satisfy the employer’s statutory income tax withholding obligation. This aspect of the standard is required to be applied on a retrospective basis and resulted in an increase in net cash provided by operating activities and a decrease in net cash used in financing activities of $10,369,000 and $9,131,000 for the years ended December 31, 2016 and 2015, respectively. Upon adoption, no other provisions of ASU 2016-09 had an effect on our consolidated financial statements or related footnote disclosures.
· During the three months ended December 31, 2017, we adopted ASU No. 2016-18, “Restricted Cash,” and ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments.” ASU No. 2016-18 requires an entity to reconcile and explain the period over period change in total cash, cash equivalents and restricted cash within its consolidated statement of cash flows and ASU 2016-15 provides guidance clarifying how certain cash receipts and cash payments should be classified. We adopted these accounting standards retrospectively and, accordingly, certain line items in the consolidated statement of cash flows have been reclassified to conform to the current presentation. The following table summarizes the change in cash flows as reported and as previously reported prior to the adoption of these standards (in thousands):
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended
December 31, 2016
December 31, 2015
As Previously
As Previously
As Reported
Reported
As Reported
Reported
Cash disbursed for acquisitions
$
(2,145,374)
$
(2,145,590)
$
(3,353,087)
$
(3,364,891)
Decrease (increase) in restricted cash
-
(125,844)
-
29,719
Net cash provided from (used in) investing activities
(183,443)
(309,503)
(3,502,075)
(3,484,160)
Increase (decrease) in balance(1)
184,530
58,470
(130,733)
(112,818)
Balance at beginning of period(1)
422,690
360,908
553,423
473,726
Balance at end of period(1)
607,220
419,378
422,690
360,908
(1) Amounts in As Reported column include cash and cash equivalents and restricted cash as required. Amounts in the As Previously Reported column reflect only cash and cash equivalents.
The following ASUs have been issued but not yet adopted:
· In 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (ASC 606),” which is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. ASC 606 is effective for us beginning January 1, 2018 and we will use the modified retrospective method of adoption.
We have evaluated our various revenue streams to identify whether they would be subject to the provisions of ASC 606 and any differences in timing, measurement, or presentation of revenue recognition. A significant source of our revenue is generated through leasing arrangements, which are specifically excluded from ASU 2014-09. Management contracts are present in our seniors housing operating and outpatient medical segments and represent agreements to provide asset and property management, leasing, marketing and other services. We do not believe that the pattern and timing of recognition of income for these contracts will change under the provisions of ASC 606. In addition, revenue recognition for real estate sales is mainly based on the transfer of control and when it is probable that we will collect substantially all of the related consideration. We expect that the new guidance will result in more transactions qualifying as sales of real estate and being recognized at an earlier date than under the current guidance.
· In 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities,” which will require entities to measure their financial instrument investments at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicability exception. The practicability exception will be available for equity investments that do not have readily determinable fair values. ASU 2016-01 is effective for fiscal years and interim periods within those years, beginning after December 15, 2017. This standard will require us to recognize gains and losses from changes in the fair value of our available-for-sale equity securities through the consolidated statement of comprehensive income rather than through accumulated other comprehensive income beginning in 2018.
· In 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires lessees to recognize assets and liabilities on their consolidated balance sheet related to the rights and obligations created by most leases, while continuing to recognize expenses on their consolidated statements of comprehensive income over the lease term. It will also require disclosures designed to give financial statement users information regarding amount, timing, and uncertainty of cash flows arising from leases. The FASB issued an Exposure Draft in January 2018 proposing to amend ASU 2016-02, which would provide lessors with a practical expedient, by class of underlying assets, to not separate non-lease components from the related lease components and, instead, to account for those components as a single lease component, if certain criteria are met. ASU 2016-02 and the Exposure Draft are effective for us beginning January 1, 2019, with early adoption permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the consolidated financial statements. We are currently evaluating the impact of this guidance on our consolidated financial statements from both the lessee and lessor perspective. We believe that adoption will likely have a material impact to our consolidated financial statements for the recognition of certain operating leases as right-of-use assets and lease liabilities and related amortizations. We expect to utilize the practical expedients proposed in the Exposure Draft as part of our adoption of this guidance.
· In 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” This standard requires a new forward-looking “expected loss” model to be used for receivables, held-to-maturity debt, loans, and other instruments. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, and early adoption is permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact that the standard will have on our consolidated financial statements.
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
· In 2017, the FASB issued ASU No. 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.” The standard clarifies that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The standard also defines the term in substance nonfinancial asset and clarifies that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control over it. ASU 2017-05 is effective for annual periods beginning after December 15, 2017 and interim periods therein. Entities may use either a full or modified adoption approach. We are assessing the impact of the standard but do not expect it to have a material impact on our consolidated financial statements or disclosures.
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 relative 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, termination of pre-existing relationships computed based on the fair value of the assets acquired, lease termination fees, and other acquisition-related costs. Effective January 1, 2017, with our adoption of ASU 2017-01, transaction costs incurred for asset acquisitions are capitalized as a component of purchase price and all other non-capitalizable costs are reflected in “Other Expenses” on our consolidated statement of comprehensive income. Acquisitions that occurred prior to January 1, 2017, were accounted for as business combinations. Certain of our subsidiaries’ functional currencies are the local currencies of their respective countries. See Notes 2 and 11 for information regarding our foreign currency policies. During the year ended December 31, 2017, we finalized our purchase price allocation of certain previously reported acquisitions and there were no material changes from those previously disclosed.
Triple-Net Activity
The following provides our purchase price allocations and other triple-net real property investment activity for the periods presented (in thousands):
Year Ended December 31,
Land and land improvements
$
33,416
$
104,754
$
95,835
Buildings and improvements
248,459
418,633
1,061,431
Acquired lease intangibles
-
2,876
4,408
Receivables and other assets
-
Total assets acquired(1)
281,875
526,814
1,161,868
Secured debt
-
-
(47,741)
Accrued expenses and other liabilities
(21,236)
(3,384)
(2,905)
Total liabilities assumed
(21,236)
(3,384)
(50,646)
Noncontrolling interests
(7,275)
(26,771)
(13,465)
Non-cash acquisition related activity(2)
(54,901)
(51,733)
(38,355)
Cash disbursed for acquisitions
198,463
444,926
1,059,402
Construction in progress additions
120,797
181,084
143,140
Less: Capitalized interest
(4,713)
(8,729)
(5,699)
Accruals
Foreign currency translation
(610)
(3,665)
(167)
Cash disbursed for construction in progress
115,474
168,690
137,274
Capital improvements to existing properties
19,989
32,603
45,293
Total cash invested in real property, net of cash acquired
$
333,926
$
646,219
$
1,241,969
(1) Excludes $318,000, $682,000 and $16,578,000 of cash and restricted cash acquired during the years ended December 31, 2017, 2016 and 2015, respectively.
(2) For the year ended December 31, 2017, $54,901,000 is related to the acquisition of assets previously financed as real estate loans receivable. For the year ended December 31, 2016, primarily relates to $45,044,000 for the acquisition of assets previously financed as real estate loans receivable and $6,630,000 previously financed as an equity investment. For the year ended December 31, 2015, primarily relates to $23,288,000 for the acquisition of assets previously financed as real estate loans receivable and $6,743,000 previously financed as equity investments.
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. The following is a summary of our seniors housing operating real property investment activity for the periods presented (in thousands):
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31,
Land and land improvements
$
42,525
$
164,653
$
218,581
Buildings and improvements
428,777
1,518,472
2,367,486
Acquired lease intangibles
63,912
115,643
187,512
Receivables and other assets
3,959
2,462
29,501
Total assets acquired(1)
539,173
1,801,230
2,803,080
Secured debt
-
(63,732)
(871,471)
Senior unsecured notes
-
-
(24,621)
Accrued expenses and other liabilities
(46,301)
(23,681)
(81,778)
Total liabilities assumed
(46,301)
(87,413)
(977,870)
Noncontrolling interests
(4,701)
(6,007)
(183,854)
Non-cash acquisition related activity
(67,633)(2)
(47,065)(3)
-
Cash disbursed for acquisitions
420,538
1,660,745
1,641,356
Construction in progress additions
84,874
157,845
44,173
Less: Capitalized interest
(9,106)
(5,793)
(1,740)
Less: Foreign currency translation
(6,830)
(8,500)
(2,499)
Cash disbursed for construction in progress
68,938
143,552
39,934
Capital improvements to existing properties
185,473
138,673
104,308
Total cash invested in real property, net of cash acquired
$
674,949
$
1,942,970
$
1,785,598
(1) Excludes $6,273,000, $351,000 and $42,728,000 of cash and restricted cash acquired during the years ended December 31, 2017, 2016 and 2015, respectively.
(2) Includes $59,665,000 related to the acquisition of assets previously financed as investments in unconsolidated entities, and $6,349,000 related to the acquisition of assets previously financed as real estate loans receivable.
(3) Includes $43,372,000 related to the acquisition of assets previously financed as investments in unconsolidated entities.
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Outpatient Medical Activity
The following is a summary of our outpatient medical real property investment activity for the periods presented (in thousands):
Year Ended December 31,
Land and land improvements
$
40,565
$
5,738
$
223,708
Buildings and improvements
159,643
46,056
614,770
Acquired lease intangibles
24,014
4,592
45,226
Receivables and other assets
-
Total assets acquired
224,232
56,386
884,643
Secured debt
(25,708)
-
(120,977)
Accrued expenses and other liabilities
(3,181)
(1,670)
(7,777)
Total liabilities assumed
(28,889)
(1,670)
(128,754)
Noncontrolling interests
(9,080)
-
(76,535)
Non-cash acquisition related activity
-
(15,013)(2)
(27,025)(3)
Cash disbursed for acquisitions(1)
186,263
39,703
652,329
Construction in progress additions
37,094
113,933
70,560
Less: Capitalized interest
(2,406)
(3,723)
(1,286)
Accruals(4)
13,615
(19,321)
(1,921)
Cash disbursed for construction in progress
48,303
90,889
67,353
Capital improvements to existing properties
44,814
47,870
38,151
Total cash invested in real property, net of cash acquired
$
279,380
$
178,462
$
757,833
(1) Excludes $5,522,000 of cash acquired during the year ended December 31, 2015.
(2) The non-cash activity relates to the acquisition of assets previously financed as real estate loans. Please refer to Note 6 for additional information.
(3) The non-cash activity relates to the acquisition of a controlling interest in a portfolio of properties that was historically reported as an unconsolidated property investment.
(4) Represents non-cash consideration accruals for amounts to be paid in future periods for properties that converted, off-set by amounts paid in the current period.
Construction Activity
The following is a summary of the construction projects that were placed into service and began generating revenues during the periods presented (in thousands):
Year Ended
December 31, 2017
December 31, 2016
December 31, 2015
Development projects:
Triple-net
$
283,472
$
46,094
$
104,844
Seniors housing operating
3,634
18,979
19,869
Outpatient medical
63,036
108,001
16,592
Total development projects
350,142
173,074
141,305
Expansion projects
10,336
11,363
38,808
Total construction in progress conversions
$
360,478
$
184,437
$
180,113
At December 31, 2017, 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):
$
1,098,987
1,056,731
1,034,583
980,716
944,028
Thereafter
7,771,145
Totals
$
12,886,190
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, 2017
December 31, 2016
Assets:
In place lease intangibles
$
1,352,139
$
1,252,143
Above market tenant leases
58,443
61,700
Below market ground leases
58,784
61,628
Lease commissions
33,105
27,413
Gross historical cost
1,502,471
1,402,884
Accumulated amortization
(1,125,437)
(966,714)
Net book value
$
377,034
$
436,170
Weighted-average amortization period in years
15.1
13.7
Liabilities:
Below market tenant leases
$
60,430
$
89,468
Above market ground leases
8,540
8,107
Gross historical cost
68,970
97,575
Accumulated amortization
(39,629)
(52,134)
Net book value
$
29,341
$
45,441
Weighted-average amortization period in years
20.1
15.2
The following is a summary of real estate intangible amortization for the periods presented (in thousands):
Year Ended December 31,
Rental income related to above/below market tenant leases, net
$
$
$
(2,746)
Property operating expenses related to above/below market ground leases, net
(1,231)
(1,241)
(1,272)
Depreciation and amortization related to in place lease intangibles and lease commissions
(145,132)
(132,141)
(115,855)
The future estimated aggregate amortization of intangible assets and liabilities is as follows for the periods presented (in thousands):
Assets
Liabilities
$
111,339
$
3,765
55,336
3,306
34,402
2,809
20,419
2,321
17,213
1,856
Thereafter
138,325
15,284
Totals
$
377,034
$
29,341
5. Dispositions, Assets Held for Sale and Discontinued Operations
We periodically sell properties for various reasons, including favorable market conditions, the exercise of tenant purchase options, or reduction of concentrations (e.g. property type, relationship, or geography). At December 31, 2017, 50 triple-net, three seniors housing operating and 20 outpatient medical properties with an aggregate net real estate balance of $734,147,000 were classified as held for sale. Secured debt related to the held for sale properties totaled $66,872,000. Impairment of assets, as reflected in our consolidated statements of comprehensive income, primarily represents the charges necessary to adjust the carrying values of certain properties to estimated fair values less costs to sell. The following is a summary of our real property disposition activity for the periods presented (in thousands):
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended
December 31, 2017
December 31, 2016
December 31, 2015
Real property dispositions:
Triple-net
$
916,689
$
1,773,614
$
356,300
Seniors housing operating
74,832
-
-
Outpatient medical(1)
19,697
78,786
181,553
Land parcels
-
-
5,724
Total dispositions
1,011,218
1,852,400
543,577
Gain (loss) on sales of real property, net
344,250
364,046
280,387
Net other assets (liabilities) disposed
22,546
133,622
-
Proceeds from real property sales
$
1,378,014
$
2,350,068
$
823,964
(1) Dispositions occurring in the year ended December 31, 2015 primarily relate to the disposition of an unconsolidated equity investment with Forest City Enterprises.
During the year ended December 31, 2016, we completed two portfolio dispositions of properties leased to Genesis HealthCare (“Genesis”) for which we received loans in the amount of $74,445,000 for termination fees relating to the properties sold under the master lease. The related termination fee income has been deferred and will be recognized as the principal balance of the loans are repaid. At December 31, 2017, $61,994,000 of principal is outstanding on the loans.
Dispositions and Assets Held for Sale
Pursuant to our adoption of ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (ASU 2014-08”), operating results attributable to properties sold subsequent to or classified as held for sale after January 1, 2014 and which do not meet the definition of discontinued operations are no longer reclassified on our consolidated statements of comprehensive income. The following represents the activity related to these properties for the periods presented (in thousands):
Year Ended
December 31,
Revenues:
Rental income
$
120,681
$
401,742
$
435,404
Expenses:
Interest expense
6,570
47,083
68,978
Property operating expenses
12,402
20,847
22,313
Provision for depreciation
31,736
98,949
114,869
Total expenses
50,708
166,879
206,160
Income (loss) from real estate dispositions, net
$
69,973
$
234,863
$
229,244
6. Real Estate Loans Receivable
The following is a summary of our real estate loans receivable (in thousands):
December 31,
Mortgage loans
$
374,492
$
485,735
Other real estate loans
121,379
136,893
Totals
$
495,871
$
622,628
The following is a summary of our real estate loan activity for the periods presented (in thousands):
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended
December 31, 2017
December 31, 2016
December 31, 2015
Outpatient
Outpatient
Outpatient
Triple-net
Medical
Totals
Triple-net
Medical
Totals
Triple-net
Medical
Totals
Advances on real estate loans receivable:
Investments in new loans
$
12,091
$
-
$
12,091
$
8,445
$
-
$
8,445
$
530,497
$
-
$
530,497
Draws on existing loans
71,647
-
71,647
118,788
2,651
121,439
65,614
2,611
68,225
Net cash advances on real estate loans
83,738
-
83,738
127,233
2,651
129,884
596,111
2,611
598,722
Receipts on real estate loans receivable:
Loan payoffs
157,912
60,500
218,412
275,439
27,303
302,742
121,778
-
121,778
Principal payments on loans
1,219
-
1,219
6,867
-
6,867
33,340
-
33,340
Sub-total
159,131
60,500
219,631
282,306
27,303
309,609
155,118
-
155,118
Less: Non-cash activity(1)
(63,108)
(60,500)
(123,608)
(45,044)
(15,013)
(60,057)
(23,288)
-
(23,288)
Net cash receipts on real estate loans
96,023
-
96,023
237,262
12,290
249,552
131,830
-
131,830
Net cash advances (receipts) on real estate loans
(12,285)
-
(12,285)
(110,029)
(9,639)
(119,668)
464,281
2,611
466,892
Change in balance due to foreign currency translation
9,136
-
9,136
(14,086)
-
(14,086)
(4,281)
-
(4,281)
Loan impairments(2)
-
-
-
-
(3,053)
(3,053)
-
-
-
Net change in real estate loans receivable
$
(66,257)
$
(60,500)
$
(126,757)
$
(169,159)
$
(27,705)
$
(196,864)
$
436,712
$
2,611
$
439,323
(1) Primarily represents aquisitions of assets previously financed as a real estate loans. Please see Note 3 for additional information.
(2) Represents a direct write down of an impaired loan receivable.
In 2016, we restructured two existing real estate loans in the triple-net segment to Genesis. The two existing loans, with a combined principal balance of $317,000,000, were scheduled to mature in 2017 and 2018. These loans were restructured into four separate loans effective October 1, 2016. Each loan had a five year term, a 10% interest rate and 25 basis point annual escalator. We recorded a loan loss charge in the amount of $6,935,000 on one of the loans as the present value of expected future cash flows was less than the carrying value of the loan. During 2017, we recorded a provision for loan loss of $62,966,000 relating to three real estate loans receivable to Genesis. The allowance for losses on loans receivable for these three loans totals $68,372,000 and is deemed to be sufficient to absorb expected losses relating to the loans. Such allowance was based on an estimation of expected future cash flows discounted at the effective interest rate for each loan. Please see Note 21 for additional information.
The following is a summary of the allowance for losses on loans receivable for the periods presented (in thousands):
Year Ended December 31,
Balance at beginning of year
$
6,563
$
-
$
-
Provision for loan losses(1)
62,966
6,935
-
Change in present value
(1,157)
(372)
-
Balance at end of year
$
68,372
$
6,563
$
-
(1) Excludes direct write down of an impaired loan receivable in 2016.
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following is a summary of our loan impairments (in thousands):
Year Ended December 31,
Balance of impaired loans at end of year
$
282,882
$
377,549
$
-
Allowance for loan losses
68,372
6,563
-
Balance of impaired loans not reserved
$
214,510
$
370,986
$
-
Average impaired loans for the year
$
330,216
$
188,775
$
10,500
Interest recognized on impaired loans(1)
27,793
8,707
-
(1) Represents cash interest recognized in the period since loans were identified as impaired.
7. Investments in Unconsolidated Entities
We participate in a number of joint ventures, which generally invest in seniors housing and health care real estate. The results of operations for these properties have been included in our consolidated results of operations from the date of acquisition by the joint ventures and are reflected in our consolidated statements of comprehensive income as income or loss from unconsolidated entities. The following is a summary of our investments in unconsolidated entities (dollars in thousands):
Percentage Ownership(1)
December 31, 2017
December 31, 2016
Triple-net
10% to 49%
$
22,856
$
27,005
Seniors housing operating
10% to 50%
352,430
407,172
Outpatient medical
43%
70,299
22,961
Total
$
445,585
$
457,138
(1) Excludes ownership of in substance real estate.
During the year ended December 31, 2017, we increased our ownership in Sunrise Senior Living Management, Inc. (“Sunrise”) from 24% to 34%. Sunrise provides comprehensive property management and accounting services with respect to certain of our seniors housing operating properties that Sunrise operates, for which we pay annual management fees pursuant to long-term management agreements. Our management agreements with Sunrise have initial terms expiring through December 2032 plus, if applicable, optional renewal periods ranging from an additional 5 to 15 years depending on the property. The management fees payable to Sunrise under the management agreements include a fee based on a percentage of revenues generated by the applicable properties plus, if applicable, positive or negative adjustments based on specified performance targets. For the years ended December 31, 2017, 2016 and 2015, we recognized fees to Sunrise of $37,573,000, $37,751,000, and $36,403,000, respectively, the majority of which are reflected within property operating expenses in our consolidated statements of comprehensive income.
At December 31, 2017, the aggregate unamortized basis difference of our joint venture investments of $110,063,000 is primarily attributable to the difference between the amount for which we purchased our interest in the entity, including transaction costs, and the historical carrying value of the net assets of the entity. This difference is being amortized over the remaining useful life of the related assets and included in the reported amount of income from unconsolidated entities.
Summary combined financial information for our investments in unconsolidated entities held for the periods presented is as follows (in thousands):
December 31, 2017
December 31, 2016
Net real estate investments
$
2,955,527
$
2,595,107
Other assets
2,582,943
2,298,503
Total assets
5,538,470
4,893,610
Total liabilities
4,037,145
3,588,007
Total equity
$
1,501,325
$
1,305,603
Year Ended December 31,
Total revenues
$
2,074,139
$
1,867,464
$
2,947,993
Net income (loss)
(264,473)
(86,167)
(40,116)
8. Credit Concentration
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We use consolidated net operating income (“NOI”) as our credit concentration metric. See Note 17 for additional information and reconciliation. The following table summarizes certain information about our credit concentration for the year ended December 31, 2017, excluding our share of NOI in unconsolidated entities (dollars in thousands):
Number of
Total
Percent of
Concentration by relationship:(1)
Properties
NOI
NOI(2)
Sunrise Senior Living(3)
$
315,409
14%
Genesis HealthCare
190,506
9%
Revera(3)
156,698
7%
Brookdale Senior Living
151,026
7%
Benchmark Senior Living
97,779
4%
Remaining portfolio
1,321,298
59%
Totals
1,286
$
2,232,716
100%
(1) Genesis HealthCare is in our triple-net segment. Sunrise Senior Living and Revera are in our seniors housing operating segment. Brookdale Senior Living and Benchmark Senior Living are in both our triple-net and seniors housing operating segments.
(2) NOI with our top five relationships comprised 45% of total NOI for the year ending December 31, 2016.
(3) Revera owns a controlling interest in Sunrise Senior Living. For the year ended December 31, 2017, we recognized $1,032,562,000 of revenue from properties managed by Sunrise Senior Living.
9. Borrowings Under Credit Facilities and Related Items
At December 31, 2017, we had a primary unsecured credit facility with a consortium of 29 banks that includes a $3,000,000,000 unsecured revolving credit facility, a $500,000,000 unsecured term credit facility, and a $250,000,000 Canadian-denominated unsecured term credit facility. We have an option, through an accordion feature, to upsize the unsecured revolving credit facility and the $500,000,000 unsecured term credit facility by up to an additional $1,000,000,000, in the aggregate, and the $250,000,000 Canadian-denominated unsecured term credit facility by up to an additional $250,000,000. The primary unsecured credit facility also allows us to borrow up to $1,000,000,000 in alternate currencies (none outstanding at December 31, 2017). Borrowings under the unsecured revolving credit facility are subject to interest payable at the applicable margin over LIBOR interest rate (2.46% at December 31, 2017). The applicable margin is based on certain of our debt ratings and was 0.90% at December 31, 2017. In addition, we pay a facility fee quarterly to each bank based on the bank’s commitment amount. The facility fee depends on certain of our debt ratings and was 0.15% at December 31, 2017. The term credit facilities mature on May 13, 2021. The revolving credit facility is scheduled to mature on May 13, 2020 and can be extended for two successive terms of six months each at our option.
The following information relates to aggregate borrowings under the primary unsecured revolving credit facility for the periods presented (dollars in thousands):
Year Ended December 31,
Balance outstanding at year end(1)
$
719,000
$
645,000
$
835,000
Maximum amount outstanding at any month end
$
1,010,000
$
1,560,000
$
835,000
Average amount outstanding (total of daily
principal balances divided by days in period)
$
597,422
$
762,896
$
452,644
Weighted-average interest rate (actual interest
expense divided by average borrowings outstanding)
2.02%
1.39%
1.17%
(1) As of December 31, 2017, letters of credit in the aggregate amount of $22,365,000 have been issued, which reduce the available borrowing capacity on our primary unsecured revolving credit facility.
10. Senior Unsecured Notes and Secured Debt
We may repurchase, redeem or refinance senior unsecured notes from time to time, taking advantage of favorable market conditions when available. We may purchase senior notes for cash through open market purchases, privately negotiated transactions, a tender offer or, in some cases, through the early redemption of such securities pursuant to their terms. The senior unsecured notes are redeemable at our option, at any time in whole or from time to time in part, at a redemption price equal to the sum of (1) the principal amount of the notes (or portion of such notes) being redeemed plus accrued and unpaid interest thereon up to the redemption date and (2) any “make-whole” amount due under the terms of the notes in connection with early redemptions. Redemptions and repurchases of debt, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. At December 31, 2017, the annual principal payments due on these debt obligations were as follows (in thousands):
Senior
Secured
Unsecured Notes(1,2)
Debt (1,3)
Totals
$
450,000
$
396,588
$
846,588
600,000
522,458
1,122,458
697,174
184,726
881,900
2021(4)
1,149,728
221,784
1,371,512
2022(5,6)
600,000
234,850
834,850
Thereafter(7,8,9,10)
4,920,545
1,058,002
5,978,547
Totals
$
8,417,447
$
2,618,408
$
11,035,855
(1) Amounts represent principal amounts due and do not include unamortized premiums/discounts, debt issuance costs, or other fair value adjustments as reflected on the consolidated balance sheet.
(2) Annual interest rates range from 2.1% to 6.5%.
(3) Annual interest rates range from 1.69% to 7.98%. Carrying value of the properties securing the debt totaled $5,475,672,000 at December 31, 2017.
(4) In November 2015, one of our wholly-owned subsidiaries issued and we guaranteed $300,000,000 of Canadian-denominated 3.35% senior unsecured notes due 2020 (approximately $239,674,000 based on the Canadian/U.S. Dollar exchange rate on December 31, 2017).
(5) On May 13, 2016, we refinanced the funding on a $250,000,000 Canadian-denominated unsecured term credit facility (approximately $199,728,000 based on the Canadian/U.S. Dollar exchange rate on December 31, 2017). The loan matures on May 13, 2021 and bears interest at the Canadian Dealer Offered Rate plus 95 basis points (2.28% at December 31, 2017).
(6) On May 13, 2016, we refinanced the funding on a $500,000,000 unsecured term credit facility. The loan matures on May 13, 2021 and bears interest at LIBOR plus 95 basis points (2.41% at December 31, 2017).
(7) On November 20, 2013, we completed the sale of £550,000,000 (approximately $744,095,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on December 31, 2017) of 4.8% senior unsecured notes due 2028.
(8) On November 25, 2014, we completed the sale of £500,000,000 (approximately $676,450,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on December 31, 2017) of 4.5% senior unsecured notes due 2034.
(9) In May 2015, we issued $750,000,000 of 4.0% senior unsecured notes due 2025. In October 2015, we issued an additional $500,000,000 of these notes under a re-opening of the offer.
(10) In March 2016, we issued $700,000,000 of 4.25% senior unsecured notes due 2026.
The following is a summary of our senior unsecured note principal activity during the periods presented (dollars in thousands):
Year Ended
December 31, 2017
December 31, 2016
December 31, 2015
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
8,260,038
4.245%
$
8,645,758
4.237%
$
7,817,154
4.385%
Debt issued
7,500
1.973%
705,000
4.228%
1,475,540
3.901%
Debt assumed
-
0.000%
-
0.000%
24,621
6.000%
Debt extinguished
(5,000)
1.830%
(850,000)
4.194%
(300,000)
6.200%
Debt redeemed
-
0.000%
-
0.000%
(240,249)
3.303%
Foreign currency
154,909
4.288%
(240,720)
4.565%
(131,308)
3.966%
Ending balance
$
8,417,447
4.306%
$
8,260,038
4.245%
$
8,645,758
4.237%
The following is a summary of our secured debt principal activity for the periods presented (dollars in thousands):
Year Ended
December 31, 2017
December 31, 2016
December 31, 2015
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
3,465,066
4.094%
$
3,478,207
4.440%
$
2,941,765
4.940%
Debt issued
241,772
2.822%
460,015
2.646%
228,685
2.776%
Debt assumed
23,094
6.670%
60,898
4.301%
1,007,482
3.334%
Debt extinguished
(1,080,268)
5.247%
(489,293)
5.105%
(506,326)
4.506%
Principal payments
(64,078)
4.340%
(74,466)
4.663%
(67,064)
4.801%
Debt deconsolidated
(60,000)
3.799%
-
0.000%
-
0.000%
Foreign currency
92,822
3.164%
29,705
3.670%
(126,335)
3.834%
Ending balance
$
2,618,408
3.761%
$
3,465,066
4.094%
$
3,478,207
4.440%
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, 2017, we believe we were in compliance with all of the covenants under our debt agreements.
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 foreign currencies.
Interest Rate Swap Contracts and Foreign Currency Forward Contracts Designated as Cash Flow Hedges
For instruments that are designated as and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is 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 $914,000 of gains, 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. During the years ended December 31, 2017 and 2016, we settled certain net investment hedges generating cash proceeds of $52,719,000 and $108,347,000, respectively. The balance of the cumulative translation adjustment will be reclassified to earnings when the hedged investment is sold or substantially liquidated.
The following presents the notional amount of derivatives and other financial instruments as of the dates indicated (in thousands):
December 31, 2017
December 31, 2016
Derivatives designated as net investment hedges:
Denominated in Canadian Dollars
$
575,000
$
900,000
Denominated in Pounds Sterling
£
550,000
£
550,000
Financial instruments designated as net investment hedges:
Denominated in Canadian Dollars
$
250,000
$
250,000
Denominated in Pounds Sterling
£
1,050,000
£
1,050,000
Derivatives designated as cash flow hedges:
Denominated in U.S. Dollars
$
-
$
57,000
Denominated in Canadian Dollars
$
36,000
$
54,000
Denominated in Pounds Sterling
£
-
£
48,000
Derivative instruments not designated:
Denominated in U.S. Dollars
$
408,007
$
-
Denominated in Canadian Dollars
$
80,000
$
37,000
The following presents the impact of derivative instruments on the consolidated statements of comprehensive income for the periods presented (in thousands):
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended
Location
December 31, 2017
December 31, 2016
December 31, 2015
Gain (loss) on forward exchange contracts recognized in income
Interest expense
$
(2,476)
$
8,544
$
14,474
Loss (gain) on option exercise(1)
Loss (gain) on derivatives, net
$
-
$
-
$
(58,427)
Gain on release of cumulative translation adjustment related to ineffectiveness on net investment hedge
Loss (gain) on derivatives, net
$
-
$
(2,516)
$
-
Gain (loss) on forward exchange contracts and term loans designated as net investment hedge recognized in OCI
OCI
$
(252,168)
$
357,021
$
298,116
(1) In April 2011, we completed the acquisition of substantially all of the real estate assets of privately-owned Genesis. In conjunction with this transaction, we received the option to acquire an ownership interest in Genesis. In February 2015, Genesis closed on a transaction to merge with Skilled Healthcare Group to become a publicly traded company which required us to record the value of the derivative asset due to the net settlement feature.
12. Commitments and Contingencies
At December 31, 2017, we had fourteen outstanding letter of credit obligations totaling $159,151,000 and expiring between 2018 and 2024. At December 31, 2017, we had outstanding construction in process of $237,746,000 for leased properties and were committed to providing additional funds of approximately $429,815,000 to complete construction. At December 31, 2017, we had contingent purchase obligations totaling $11,832,000. 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. In December 2017, we finalized an agreement with the University of Toledo Foundation to transfer our corporate headquarters as a gift and recognized an expense of $40,730,000.
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, 2017, we had operating lease obligations of $1,125,098,000 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, 2017, aggregate future minimum rentals to be received under these noncancelable subleases totaled $77,385,000.
At December 31, 2017, future minimum lease payments due under operating and capital leases are as follows (in thousands):
Operating Leases
Capital Leases(1)
$
17,871
$
4,678
18,070
4,334
17,605
4,173
17,419
4,173
16,765
4,173
Thereafter
1,037,368
67,573
Totals
$
1,125,098
$
89,104
(1) Amounts above represent principal and interest obligations under capital lease arrangements. Related assets with a gross value of $167,324,000 and accumulated depreciation of $29,303,000 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:
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
December 31, 2016
Preferred Stock, $1.00 par value:
Authorized shares
50,000,000
50,000,000
Issued shares
14,375,000
25,875,000
Outstanding shares
14,370,060
25,875,000
Common Stock, $1.00 par value:
Authorized shares
700,000,000
700,000,000
Issued shares
372,852,311
363,576,924
Outstanding shares
371,731,551
362,602,173
Preferred Stock. The following is a summary of our preferred stock activity during the periods presented:
Year Ended
December 31, 2017
December 31, 2016
December 31, 2015
Weighted Avg.
Weighted Avg.
Weighted Avg.
Shares
Dividend Rate
Shares
Dividend Rate
Shares
Dividend Rate
Beginning balance
25,875,000
6.500%
25,875,000
6.500%
25,875,000
6.500%
Shares redeemed
(11,500,000)
6.500%
-
0.000%
-
0.000%
Shares converted
(4,940)
6.500%
-
0.000%
-
0.000%
Ending balance
14,370,060
6.500%
25,875,000
6.500%
25,875,000
6.500%
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 year ended December 31, 2017, 4,940 shares of Series I preferred stock were converted into common stock.
During the three months ended March 31, 2012, we issued 11,500,000 of 6.50% Series J Cumulative Redeemable Preferred Stock. During the year ended December 31, 2017, we recognized a charge of $9,769,000 in connection with the redemption of the Series J preferred stock.
Common Stock. The following is a summary of our common stock activity during the periods indicated (dollars in thousands, except average price amounts):
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Shares Issued
Average Price
Gross Proceeds
Net Proceeds
February 2015 public issuance
19,550,000
$
75.50
$
1,476,025
$
1,423,935
2015 Dividend reinvestment plan issuances
4,024,169
67.72
272,531
272,531
2015 Option exercises
249,054
47.35
11,793
11,793
2015 Equity Shelf Program issuances
696,070
69.23
48,186
47,463
2015 Stock incentive plans, net of forfeitures
137,837
-
-
2015 Senior note conversions
1,330,474
-
-
2015 Totals
25,987,604
$
1,808,535
$
1,755,722
2016 Dividend reinvestment plan issuances
4,145,457
$
70.34
$
291,852
$
291,571
2016 Option exercises
141,405
47.13
6,664
6,664
2016 Equity Shelf Program issuances
3,134,901
75.27
238,286
235,959
2016 Stock incentive plans, net of forfeitures
402,740
-
-
2016 Totals
7,824,503
$
536,802
$
534,194
2017 Dividend reinvestment plan issuances
5,640,008
$
69.97
$
395,526
$
394,639
2017 Option exercises
252,979
51.16
12,942
12,942
2017 Equity Shelf Program issuances
2,986,574
71.79
215,917
214,406
2017 Preferred stock conversions
4,300
-
-
2017 Redemption of equity membership units
91,180
-
-
2017 Stock incentive plans, net of forfeitures
154,337
-
-
2017 Totals
9,129,378
$
624,385
$
621,987
Dividends. The increase in dividends is primarily attributable to increases in our common shares outstanding, offset by the redemption of the Series J preferred stock, as described above. Please refer to Note 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, 2017
December 31, 2016
December 31, 2015
Per Share
Amount
Per Share
Amount
Per Share
Amount
Common Stock
$
3.4800
$
1,277,321
$
3.4400
$
1,233,519
$
3.3000
$
1,144,727
Series I Preferred Stock
3.2500
46,711
3.2500
46,719
3.2500
46,719
Series J Preferred Stock
0.2347
2,699
1.6251
18,687
1.6251
18,687
Totals
$
1,326,731
$
1,298,925
$
1,210,133
Accumulated Other Comprehensive Income. The following is a summary of accumulated other comprehensive income/(loss) for the periods presented (in thousands):
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unrecognized gains (losses) related to:
Foreign Currency Translation
Equity Investments
Actuarial losses
Cash Flow Hedges
Total
Balance at December 31, 2016
$
(173,496)
$
5,120
$
(1,153)
$
(2)
$
(169,531)
Other comprehensive income (loss) before reclassification adjustments
62,915
-
63,186
Reclassification adjustment for write down of equity investment
-
(5,120)
-
-
(5,120)
Net current-period other comprehensive income (loss)
62,915
(5,120)
58,066
Balance at December 31, 2017
$
(110,581)
$
-
$
(884)
$
-
$
(111,465)
Balance at December 31, 2015
$
(85,484)
$
-
$
(1,343)
$
(1,416)
$
(88,243)
Other comprehensive income (loss) before reclassification adjustments
(90,528)
5,120
1,414
(83,804)
Reclassification amount to net income
2,516
-
-
-
2,516
Net current-period other comprehensive income (loss)
(88,012)
5,120
1,414
(81,288)
Balance at December 31, 2016
$
(173,496)
$
5,120
$
(1,153)
$
(2)
$
(169,531)
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.
14. Stock Incentive Plans
In May 2016, our shareholders approved the 2016 Long-Term Incentive Plan (“2016 Plan”), which authorizes up to 10,000,000 shares of common stock to be issued at the discretion of the Compensation Committee of the Board of Directors. Awards granted after May 5, 2016 are issued out of the 2016 Plan. The awards granted under the Amended and Restated 2005 Long-Term Incentive Plan continue to vest and options expire ten years from the date of grant. Our non-employee directors, officers and key employees are eligible to participate in the 2016 Plan. The 2016 Plan allows for the issuance of, among other things, stock options, stock appreciation rights, restricted stock, deferred stock units, and dividend equivalent rights. Vesting periods for options, deferred stock units, and restricted shares generally range from three to five years.
Under our long-term incentive plan, certain restricted stock awards are market and performance based. We will grant a target number of restricted stock units, with the ultimate award determined by the total shareholder return and operating performance metrics, measured in each case over a measurement period of two to three years. Awards vest over two to three years after the end of the performance period with a portion vesting immediately at the end of the performance periods. The expected term represents the period from the grant date to the end of the performance period. Compensation expense for these performance grants is measured based on the probability of achievement of certain performance goals and is recognized over both the performance period and vesting period. For the portion of the grant for which the award is determined by the operating performance metrics, the compensation cost is based on the grant date closing price and management’s estimate of corporate achievement of the financial metrics. If the estimated number of performance based restricted stock to be earned changes, an adjustment will be recorded to recognize the accumulated difference between the revised and previous estimates. For the portion of the grant determined by the total shareholder return, management used a Monte Carlo model to assess the fair value and compensation cost.
The following table summarizes compensation expense (a component of general and administrative expenses) recognized for the periods presented (in thousands):
Year Ended December 31,
Stock options
$
$
$
Restricted stock
19,092
28,603
30,146
$
19,102
$
28,869
$
30,844
Stock Options
We have not granted stock options since the year ended December 31, 2012 but some remain outstanding. As of December 31, 2016, there was no unrecognized compensation expense related to unvested stock options. Stock options outstanding at December 31, 2017 have an aggregate intrinsic value of $1,346,000.
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Restricted Stock
The fair value of the restricted stock is equal to the market price of the Company’s common stock on the date of grant and is amortized over the vesting periods. As of December 31, 2017, there was $31,709,000 of total unrecognized compensation expense related to unvested restricted stock that is expected to be recognized over a weighted-average period of three years. The following table summarizes information about non-vested restricted stock incentive awards as of and for the year ended December 31, 2017:
Restricted Stock
Number of
Weighted-Average
Shares
Grant Date
(000's)
Fair Value
Non-vested at December 31, 2016
$
58.98
Vested
(477)
63.15
Granted
69.78
Terminated
(59)
63.20
Non-vested at December 31, 2017
$
61.00
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
$
463,595
$
1,012,397
$
818,344
Denominator for basic earnings per
share: weighted-average shares
367,237
358,275
348,240
Effect of dilutive securities:
Employee stock options
Non-vested restricted shares
Redeemable shares
1,235
1,393
Convertible senior unsecured notes
-
-
Dilutive potential common shares
1,764
1,952
1,184
Denominator for diluted earnings per
share: adjusted-weighted average shares
369,001
360,227
349,424
Basic earnings per share
$
1.26
$
2.83
$
2.35
Diluted earnings per share
$
1.26
$
2.81
$
2.34
Stock options outstanding were anti-dilutive for the years ended December 31, 2017, 2016 and 2015. The Series I Cumulative Convertible Perpetual Preferred Stock were excluded from the calculations as the effect of the conversions also were anti-dilutive.
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Disclosure about Fair Value of Financial Instruments
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 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.
· Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value.
Mortgage Loans and Other Real Estate Loans Receivable - The carrying value of mortgage loans and other real estate loans receivable is net of related reserves. The fair value is generally estimated by using Level 2 and Level 3 inputs such as discounting the estimated future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.
Cash and Cash Equivalents and Restricted Cash - The carrying amount approximates fair value.
Available-for-sale Equity Investments - Available-for-sale equity investments are recorded at their fair value based on Level 1 publicly available trading prices.
Borrowings Under Primary Unsecured Credit Facility - The carrying amount of the primary unsecured credit facility approximates fair value because the borrowings are interest rate adjustable.
Senior Unsecured Notes - The fair value of the senior unsecured notes payable was estimated based on Level 1 publicly available trading prices. The carrying amount of the variable rate senior unsecured notes approximates fair value because they are interest rate adjustable.
Secured Debt - The fair value of fixed rate secured debt is estimated using Level 2 inputs by discounting the estimated future cash flows using the current rates at which similar loans would be made with similar credit ratings and for the same remaining maturities. The carrying amount of variable rate secured debt approximates fair value because the borrowings are interest rate adjustable.
Foreign Currency Forward Contracts - 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 2 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.
Redeemable OP Unitholder Interests - Our redeemable OP unitholder interests are recorded on the balance sheet at fair value using Level 2 inputs. The fair value is measured using the closing price of our common stock, as units may be redeemed at the election of the holder for cash or, at our option, one share of our common stock per unit, subject to adjustment in certain circumstances.
The carrying amounts and estimated fair values of our financial instruments are as follows as of the dates presented (in thousands):
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
December 31, 2016
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
Financial Assets:
Mortgage loans receivable
$
306,120
$
332,508
$
485,735
$
521,773
Other real estate loans receivable
121,379
125,480
136,893
138,050
Available-for-sale equity investments
7,269
7,269
27,899
27,899
Cash and cash equivalents
243,777
243,777
419,378
419,378
Restricted cash
65,526
65,526
187,842
187,842
Foreign currency forward contracts
15,604
15,604
135,561
135,561
Financial Liabilities:
Borrowings under unsecured lines of credit arrangements
$
719,000
$
719,000
$
645,000
$
645,000
Senior unsecured notes
8,331,722
9,168,432
8,161,619
8,879,176
Secured debt
2,608,976
2,641,997
3,477,699
3,558,378
Foreign currency forward contracts
38,654
38,654
4,342
4,342
Redeemable OP unitholder interests
$
97,476
$
97,476
$
110,502
$
110,502
Items Measured at Fair Value on a Recurring Basis
The market approach is utilized to measure fair value for our financial assets and liabilities reported at fair value on a recurring basis. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The following summarizes items measured at fair value on a recurring basis (in thousands):
Fair Value Measurements as of December 31, 2017
Total
Level 1
Level 2
Level 3
Available-for-sale equity investments(1)
$
7,269
$
7,269
$
-
$
-
Foreign currency forward contracts, net(2)
(23,050)
-
(23,050)
-
Redeemable OP unitholder interests
97,476
-
97,476
-
Totals
$
81,695
$
7,269
$
74,426
$
-
(1) Unrealized gains or losses on available-for-sale equity investments are recorded in accumulated other comprehensive income (loss) at each measurement date. During the years ended December 31, 2017 and 2015, we recognized other than temporary impairment charges of $18,294,000 and $35,648,000, respectively, on the Genesis HealthCare stock investment. Also, see Note 11 for details related to the gain on the derivative asset originally recognized.
(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. Assets, liabilities and noncontrolling interests that are measured at fair value on a nonrecurring basis include those acquired/assumed in asset acquisitions and 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 loans receivable using projected payoff valuations based on the expected future cash flows and/or the estimated fair value of the underlying collateral. We may base our valuation on a loan’s observable market price, if any, or the fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the collateral. We estimate the fair value of secured debt assumed in business combinations and asset acquisitions using current interest rates at which similar borrowings could be obtained on the transaction date.
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Segment Reporting We invest in seniors housing and health care real estate. We evaluate our business and make resource allocations on our three operating segments: triple-net, seniors housing operating and outpatient medical. Our triple-net properties include long-term/post-acute care facilities, assisted living facilities, independent living/continuing care retirement communities, independent support living facilities (Canada), care homes with and without nursing (U.K.), and combinations thereof. Under the triple-net segment, we invest in seniors housing and health care real estate through acquisition and financing of primarily single tenant properties. Properties acquired are primarily leased under triple-net leases and we are not involved in the management of the property. Our seniors housing operating properties include the seniors housing communities referenced above that are owned and/or operated through RIDEA structures (see Note 18). Our outpatient medical properties include outpatient medical buildings which are typically leased to multiple tenants and generally require a certain level of property management by us.
We evaluate performance based upon consolidated net operating income (“NOI”) of each segment. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. We believe NOI provides investors relevant and useful information because it measures the operating performance of our properties at the property level on an unleveraged basis. We use NOI to make decisions about resource allocations and to assess the property level performance of our properties.
Non-segment revenue consists mainly of interest income on certain non-real estate investments and other income. Non-segment assets consist of corporate assets including cash, deferred loan expenses and corporate offices and equipment among others. Non-property specific revenues and expenses are not allocated to individual segments in determining NOI.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 2). The results of operations for all acquisitions described in Note 3 are included in our consolidated results of operations from the acquisition dates and are components of the appropriate segments. There are no intersegment sales or transfers.
Summary information for the reportable segments (which excludes unconsolidated entities) during the years ended December 31, 2017, 2016 and 2015 is as follows (in thousands):
Year Ended December 31, 2017:
Triple-net
Seniors Housing Operating
Outpatient Medical
Non-segment / Corporate
Total
Rental income
$
885,811
$
-
$
560,060
$
-
$
1,445,871
Resident fees and services
-
2,779,423
-
-
2,779,423
Interest income
73,742
-
-
73,811
Other income
7,531
5,127
3,340
1,538
17,536
Total revenues
967,084
2,784,619
563,400
1,538
4,316,641
Property operating expenses
-
1,904,593
179,332
-
2,083,925
Consolidated net operating income
967,084
880,026
384,068
1,538
2,232,716
Interest expense
15,194
63,265
10,015
396,148
484,622
Loss (gain) on derivatives, net
2,284
-
-
-
2,284
Depreciation and amortization
243,830
484,796
193,094
-
921,720
General and administrative
-
-
-
122,008
122,008
Loss (gain) on extinguishment of debt, net
29,083
3,785
4,373
-
37,241
Provision for loan losses
62,966
-
-
-
62,966
Impairment of assets
96,909
21,949
5,625
-
124,483
Other expenses
116,689 (1)
8,347
1,911
50,829 (2)
177,776
Income (loss) from continuing operations before income taxes and income (loss) from unconsolidated entities
400,129
297,884
169,050
(567,447)
299,616
Income tax benefit (expense)
(4,291)
(16,430)
(1,477)
2,070
(20,128)
(Loss) income from unconsolidated entities
19,428
(105,236)
2,683
-
(83,125)
Income (loss) from continuing operations
415,266
176,218
170,256
(565,377)
196,363
Gain (loss) on real estate dispositions, net
286,325
56,295
1,630
-
344,250
Net income (loss)
$
701,591
$
232,513
$
171,886
$
(565,377)
$
540,613
Total assets
$
9,325,344
$
13,432,001
$
5,082,145
$
104,955
$
27,944,445
(1) Primarily represents non-capitalizable transaction costs, including $88,316,000 due to a joint venture transaction with an existing seniors housing operator which converted a portfolio of properties from triple-net to seniors housing operating, an exchange of PropCo/OpCo interests, and termination/restructuring of pre-existing relationships. In addition, includes $18,294,000 other than temporary impairment charge on the Genesis available-for-sale equity investment (see also Notes 11 and 16).
(2) Primarily related to $40,730,000 recognized for the donation of the corporate headquarters. See also Note 12.
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2016:
Triple-net
Seniors Housing Operating
Outpatient Medical
Non-segment / Corporate
Total
Rental income
$
1,112,325
$
-
$
536,490
$
-
$
1,648,815
Resident fees and services
-
2,504,731
-
-
2,504,731
Interest income
90,476
4,180
3,307
-
97,963
Other income
6,059
17,085
5,568
29,651
Total revenues
1,208,860
2,525,996
545,365
4,281,160
Property operating expenses
-
1,711,882
165,101
-
1,876,983
Consolidated net operating income
1,208,860
814,114
380,264
2,404,177
Interest expense
21,370
81,853
19,087
399,035
521,345
Loss (gain) on derivatives, net
-
-
(2,516)
(2,448)
Depreciation and amortization
297,197
415,429
188,616
-
901,242
General and administrative
-
-
-
155,241
155,241
Transaction costs
10,016
29,207
3,687
-
42,910
Loss (gain) on extinguishment of debt, net
(88)
-
16,439
17,214
Provision for loan losses
6,935
-
3,280
-
10,215
Impairment of assets
20,169
12,403
4,635
-
37,207
Other expenses
-
-
-
11,998
11,998
Income (loss) from continuing operations before income taxes and income (loss) from unconsolidated entities
852,242
275,310
160,959
(579,258)
709,253
Income tax benefit (expense)
(1,087)
(3,762)
(511)
24,488
19,128
(Loss) income from unconsolidated entities
9,767
(20,442)
-
(10,357)
Income (loss) from continuing operations
860,922
251,106
160,766
(554,770)
718,024
Gain (loss) on real estate dispositions, net
355,394
9,880
(1,228)
-
364,046
Net income (loss)
$
1,216,316
$
260,986
$
159,538
$
(554,770)
$
1,082,070
Total assets
$
10,713,032
$
12,851,414
$
4,951,538
$
349,200
$
28,865,184
Year Ended December 31, 2015:
Triple-net
Seniors Housing Operating
Outpatient Medical
Non-segment / Corporate
Total
Rental income
$
1,094,827
$
-
$
504,121
$
-
$
1,598,948
Resident fees and services
-
2,158,031
-
-
2,158,031
Interest income
74,108
4,180
5,853
-
84,141
Other income
6,871
6,060
4,684
1,091
18,706
Total revenues
1,175,806
2,168,271
514,658
1,091
3,859,826
Property operating expenses
-
1,467,009
155,248
-
1,622,257
Consolidated net operating income
1,175,806
701,262
359,410
1,091
2,237,569
Interest expense
28,384
70,388
27,542
365,855
492,169
Loss (gain) on derivatives, net
(58,427)
-
-
-
(58,427)
Depreciation and amortization
288,242
351,733
186,265
-
826,240
General and administrative
-
-
-
147,416
147,416
Transaction costs
53,195
54,966
2,765
-
110,926
Loss (gain) on extinguishment of debt, net
10,095
(195)
-
24,777
34,677
Impairment of assets
2,220
-
-
-
2,220
Other expenses
35,648
-
-
10,583
46,231
Income (loss) from continuing operations before income taxes and income (loss) from unconsolidated entities
816,449
224,370
142,838
(547,540)
636,117
Income tax benefit (expense)
(4,244)
(3,438)
(6,451)
(Loss) income from unconsolidated entities
8,260
(32,672)
2,908
-
(21,504)
Income from continuing operations
820,465
192,684
145,991
(550,978)
608,162
Gain (loss) on real estate dispositions, net
86,261
-
194,126
-
280,387
Net income (loss)
$
906,726
$
192,684
$
340,117
$
(550,978)
$
888,549
Our portfolio of properties and other investments are located in the U.S., the U.K. and Canada. Revenues and assets are attributed to the country in which the property is physically located. The following is a summary of geographic information for the periods presented (dollars in thousands):
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended
December 31, 2017
December 31, 2016
December 31, 2015
Revenues:
Amount
%
Amount
%
Amount
%
United States
$
3,464,527
80.3%
$
3,453,485
80.6%
$
3,133,327
81.1%
United Kingdom
407,351
9.4%
388,383
9.1%
407,745
10.6%
Canada
444,763
10.3%
439,292
10.3%
318,754
8.3%
Total
$
4,316,641
100.0%
$
4,281,160
100.0%
$
3,859,826
100.0%
As of
December 31, 2017
December 31, 2016
Assets:
Amount
%
Amount
%
United States
$
22,274,443
79.7%
$
23,572,459
81.7%
United Kingdom
3,239,039
11.6%
2,782,489
9.6%
Canada
2,430,963
8.7%
2,510,236
8.7%
Total
$
27,944,445
100.0%
$
28,865,184
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 are also subject to a 4% federal excise tax. The main differences between net income for federal income tax purposes and consolidated financial statement purposes are the recognition of straight-line rent for reporting purposes, basis differences in acquisitions, recording of impairments, differing useful lives and depreciation and amortization methods for real property and the provision for loan losses for reporting purposes versus bad debt expense for tax purposes.
Cash distributions paid to common stockholders, for federal income tax purposes, are as follows for the periods presented:
Year Ended December 31,
Per Share:
Ordinary income
$
1.8117
$
2.5067
$
1.9134
Qualified dividend*
0.0038
0.0047
0.0529
Return of capital
0.0929
0.0573
0.0503
Long-term capital gains
1.5750
0.4593
0.9352
Unrecaptured section 1250 gains*
0.3557
0.4120
0.3482
Totals
$
3.4800
$
3.4400
$
3.3000
*Informational purposes only
Our consolidated provision for income tax expense (benefit) is as follows for the periods presented (in thousands):
Year Ended December 31,
Current
$
7,633
$
14,944
$
10,177
Deferred
12,495
(34,072)
(3,726)
Totals
$
20,128
$
(19,128)
$
6,451
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, 2017, as a result of acquisitions located in Canada and the U.K., we were subject to foreign income taxes under the respective tax laws of these jurisdictions.
The provision for income taxes for the year ended December 31, 2017 primarily relates to state taxes, foreign taxes, and taxes based on income generated by entities that are structured as TRSs. For the tax years ended December 31, 2017, 2016 and 2015, the foreign tax provision/(benefit) amount included in the consolidated provision for income taxes was $4,806,000, ($3,315,000) and $7,385,000, respectively.
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of income taxes, which is computed by applying the federal corporate tax rate for the years ended December 31, 2017, 2016 and 2015, to the income tax expense/(benefit) is as follows for the periods presented (in thousands):
Year Ended December 31,
Tax at statutory rate on earnings from continuing operations before unconsolidated entities, noncontrolling interests and income taxes
$
199,588
$
372,030
$
313,250
Increase (decrease) in valuation allowance(1)
30,445
(2,128)
13,759
Tax at statutory rate on earnings not subject to federal income taxes
(234,468)
(399,571)
(319,832)
Foreign permanent depreciation
10,065
9,205
7,500
Other differences
14,498
1,336
(8,226)
Totals
$
20,128
$
(19,128)
$
6,451
(1) Excluding purchase price accounting.
Each TRS and foreign entity subject to income taxes is a tax paying component for purposes of classifying deferred tax assets and liabilities. The tax effects of taxable and deductible temporary differences, as well as tax asset/(liability) attributes, are summarized as follows for the periods presented (in thousands):
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
$
(11,812)
$
(7,089)
$
(30,564)
Operating loss and interest deduction carryforwards
94,654
82,469
75,455
Expense accruals and other
25,146
15,978
6,259
Valuation allowance
(127,283)
(96,838)
(98,966)
Net deferred tax assets (liabilities)
$
(19,295)
$
(5,480)
$
(47,816)
We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. We apply 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, 2017. 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 $127,283,000 were recorded on U.S. taxable REIT subsidiaries as well as entities in other jurisdictions to limit the deferred tax assets to the amount that we believe is more likely that not realizable. However, the amount of the deferred tax asset considered realizable could be adjusted if (i) estimates of future taxable income during the carryforward period are reduced or increased or (ii) objective negative evidence in the form of cumulative losses is no longer present (and additional weight may be given to subjective evidence such as our projections for growth). The valuation allowance rollforward is summarized as follows for the periods presented (in thousands):
Year Ended December 31,
Beginning balance
$
96,838
$
98,966
$
85,207
Expense (benefit)
30,445
(2,128)
13,759
Ending balance
$
127,283
$
96,838
$
98,966
As a result of certain acquisitions, we are subject to corporate level taxes for any related asset dispositions that may occur during the five-year period immediately after such assets were owned by a C corporation (“built-in gains tax”). The amount of income potentially subject to this special corporate level tax is generally equal to the lesser of (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, 2016, 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
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, state and foreign 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, 2014 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, 2011. We are also subject to audit by the Canada Revenue Agency and provincial authorities generally for periods subsequent to May 2012 related to entities acquired or formed in connection with acquisitions, and by the U.K.’s HM Revenue & Customs for periods subsequent to August 2012 related to entities acquired or formed in connection with acquisitions.
At December 31, 2017, we had a net operating loss (“NOL”) carryforward related to the REIT of $448,475,000. Due to our uncertainty regarding the realization of certain deferred tax assets, we have not recorded a deferred tax asset related to NOLs generated by the REIT. These amounts can be used to offset future taxable income (and/or taxable income for prior years if an audit determines that tax is owed), if any. The REIT will be entitled to utilize NOLs and tax credit carryforwards only to the extent that REIT taxable income exceeds our deduction for dividends paid. The NOL carryforwards generated through December 31, 2017 will expire through 2036. Beginning with tax years after December 31, 2017, the Tax Cuts and Jobs Act (“Tax Act”) eliminates the carryback period, limits the NOLs to 80% of taxable income and replaces the 20-year carryforward period with an indefinite carryforward period.
At December 31, 2017 and 2016, we had an NOL carryforward related to Canadian entities of $134,552,000, and $104,988,000, respectively. These Canadian losses have a 20-year carryforward period. At December 31, 2017 and 2016, we had an NOL carryforward related to U.K. entities of $183,712,000 and $158,156,000, respectively. These U.K. losses do not have a finite carryforward period.
We did not identify items for which the income tax effects of the Tax Act have not been completed and a reasonable estimate could not be determined as of December 31, 2017. Our analysis of the Tax Act may be impacted by any corrective legislation and any guidance provided by the U.S. Treasury, the IRS or by the General Explanation of the Tax Act, which is under preparation by the Staff of the Congressional Joint Committee on Taxation. Based on the Tax Act as enacted, we do not believe there will be further material impacts to the consolidated financial statements related to the other Tax Act provisions but cannot assure you as to the outcome of this matter.
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. Quarterly Results of Operations (Unaudited)
The following is a summary of our unaudited quarterly results of operations for the years ended December 31, 2017 and 2016 (in thousands, except per share data). The sum of individual quarterly amounts may not agree to the annual amounts included in the consolidated statements of comprehensive income due to rounding.
Year Ended December 31, 2017
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter(1)
Revenues
$
1,062,298
$
1,058,602
$
1,091,483
$
1,104,257
Net income (loss) attributable to common stockholders
312,639
188,429
74,043
(111,523)
Net income (loss) attributable to common stockholders per share:
Basic
$
0.86
$
0.51
$
0.20
$
(0.31)
Diluted
$
0.86
$
0.51
$
0.20
$
(0.31)
Year Ended December 31, 2016
1st Quarter
2nd Quarter
3rd Quarter(2)
4th Quarter
Revenues
$
1,047,050
$
1,076,657
$
1,079,133
$
1,078,321
Net income attributable to common stockholders
148,969
195,474
334,910
333,044
Net income attributable to common stockholders per share:
Basic
$
0.42
$
0.55
$
0.93
$
0.92
Diluted
$
0.42
$
0.54
$
0.93
$
0.91
(1) The decrease in net income (loss) and amounts per share are primarily attributable to $99,821,100 impairment of assets and $62,966,000 provision for loan losses recognized in the fourth quarter as compared to none in the third quarter.
(2) The increase in net income and amounts per share are primarily attributable to gains on sales of real estate of $162,351,000 for the third quarter as compared to gains of $1,530,000 for the second quarter.
20. Variable Interest Entities
We have entered into joint ventures to own certain seniors housing and outpatient medical assets which are deemed to be variable interest entities (“VIEs”). We have concluded that we are the primary beneficiary of these VIEs based on a combination of operational control of the joint venture and the rights to receive residual returns or the obligation to absorb losses arising from the joint ventures. Except for capital contributions associated with the initial joint venture formations, the joint ventures have been and are expected to be funded from the ongoing operations of the underlying properties. Accordingly, such joint ventures have been consolidated, and the table below summarizes the balance sheets of consolidated VIEs in the aggregate (in thousands):
December 31, 2017
December 31, 2016
Assets
Net real property owned
$
1,002,137
$
989,596
Cash and cash equivalents
12,308
10,501
Receivables and other assets
16,330
12,102
Total assets(1)
$
1,030,775
$
1,012,199
Liabilities and equity
Secured debt
$
471,103
$
450,255
Accrued expenses and other liabilities
14,832
13,803
Redeemable noncontrolling interests
171,898
185,556
Total equity
372,942
362,585
Total liabilities and equity
$
1,030,775
$
1,012,199
(1) Note that assets of the consolidated VIEs can only be used to settle obligations relating to such VIEs. Liabilities of the consolidated VIEs represent claims against the specific assets of the VIEs.
21. Subsequent Events
Genesis Restructuring. Subsequent to December 31, 2017, we entered into agreements with Genesis, our largest triple-net relationship, which included the following terms:
· Master Lease: Effective January 1, 2018, the Genesis annual cash rent obligation under the Welltower master lease was reduced by $35 million and the term was extended by 5 years. Additionally, lease escalators will be set to 2.5% in year one and 2% thereafter, and rent will be reset on January 31, 2023 in such fashion to permit the rent payable to Welltower to increase up to $35 million subject to increases in Genesis’s EBITDAR relative to the trailing twelve months ended December 31, 2017, generated by the properties comprising the Welltower master lease portfolio.
· Term Loan: Welltower and Omega Healthcare Investors, Inc. (“Omega”) have entered into an agreement with Genesis to amend and expand the existing Genesis $120 million term loan agreement. Welltower will fund a $24 million tranche and will receive priority of repayment among lenders.
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
· Real Estate Loans: As of December 31, 2017, Welltower had approximately $267 million (excluding allowances and non-accrual interest) of real estate loans. Welltower and Genesis have entered into a definitive agreement to amend the annual interest rate beginning February 15, 2018 to 12%, of which 7% will be paid in cash and 5% will be paid-in-kind.
· Interest: Genesis continues to seek refinancing and asset sale transactions to secure commitments to repay no less than $105 million of obligations. If Genesis is unsuccessful in securing such commitments or otherwise reducing the outstanding obligation on or before April 1, 2018, the cash pay component of loan interest will increase by approximately $2 million annually.

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, 2017 based on the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) in a report entitled Internal Control - Integrated Framework.
Based on this assessment, using the criteria above, management concluded that the Company’s system of internal control over financial reporting was effective as of December 31, 2017.
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
The Board of Directors and Shareholders of Welltower Inc.
Opinion on Internal Control over Financial reporting
We have audited Welltower Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the “COSO Criteria”). In our opinion, Welltower Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on the COSO Criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Welltower Inc. and subsidiaries as of December 31, 2017 and 2016, the related consolidated statements of comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and financial statement schedules listed in the index at Item 15(a) of the Company and our report dated February 28, 2018 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Toledo, Ohio
February 28, 2018

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) Beneficial Ownership Reporting Compliance” in our definitive proxy statement, which will be filed with the Securities and Exchange Commission (the “Commission”) prior to May 1, 2018.
We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and employees. The code is posted on the Internet at www.welltower.com/investors/governance. Any amendment to, or waivers from, the code that relate to any officer or director of the Company will be promptly disclosed on the Internet at www.welltower.com.
In addition, the Board has adopted charters for the Audit, Compensation and Nominating/Corporate Governance Committees. These charters are posted on the Internet at www.welltower.com/investors/governance. Please refer to “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Executive Summary - Corporate Governance” in the Annual Report on Form 10-K for further discussion of corporate governance.
The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive textual reference only.

ITEM 11 - EXECUTIVE COMPENSATION
Item 11. Executive Compensation
The information required by this Item is incorporated herein by reference to the information under the headings “Executive Compensation” and “Director Compensation” in our definitive proxy statement, which will be filed with the Commission prior to May 1, 2018.

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 May 1, 2018.

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 May 1, 2018.

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 May 1, 2018.
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, 2017 and 2016
Consolidated Statements of Comprehensive Income - Years ended December 31, 2017, 2016 and 2015
Consolidated Statements of Equity - Years ended December 31, 2017, 2016 and 2015
Consolidated Statements of Cash Flows - Years ended December 31, 2017, 2016 and 2015
Notes to Consolidated Financial Statements
2. The following Financial Statement Schedules are included beginning on page 97:
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.
(b) Exhibits:
The exhibits listed below are either filed with this Form 10-K or incorporated by reference in accordance with Rule 12b-32 of the Securities Exchange Act of 1934.
3.1(a) Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000 (File No. 001-08923), and incorporated herein by reference thereto). 3.1(b) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(c) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed June 13, 2003 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(d) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.9 to the Company’s Form 10-Q filed August 9, 2007 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(e) Certificate of Change of Location of Registered Office and of Registered Agent of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-Q filed August 6, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(f) Certificate of Designation of 6.50% Series I Cumulative Convertible Perpetual Preferred Stock of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed March 7, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(g) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed May 10, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(h) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed May 6, 2014 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(i) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed September 30, 2015 (File No. 001-08923), and incorporated herein by reference thereto).
3.2 Fifth Amended and Restated By-Laws of the Company (filed with the Commission as Exhibit 3.2 to the Company’s Form 10-Q filed October 30, 2015 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(a) Indenture, dated as of March 15, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed March 15, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(b) Supplemental Indenture No. 1, dated as of March 15, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 15, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(c) Amendment No. 1 to Supplemental Indenture No. 1, dated as of June 18, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed June 18, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(d) Supplemental Indenture No. 2, dated as of April 7, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed April 7, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(e) Amendment No. 1 to Supplemental Indenture No. 2, dated as of June 8, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed June 8, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(f) Supplemental Indenture No. 3, dated as of September 10, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed September 13, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(g) Supplemental Indenture No. 4, dated as of November 16, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed November 16, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(h) Supplemental Indenture No. 5, dated as of March 14, 2011, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 14, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(i) Supplemental Indenture No. 6, dated as of April 3, 2012, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed April 4, 2012 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(j) Supplemental Indenture No. 7, dated as of December 6, 2012, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed December 11, 2012 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(k) Supplemental Indenture No. 8, dated as of October 7, 2013, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed October 9, 2013 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(l) Supplemental Indenture No. 9, dated as of November 20, 2013, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed November 20, 2013 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(m) Supplemental Indenture No. 10, dated as of November 25, 2014, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed November 25, 2014 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(n) Supplemental Indenture No. 11, dated as of May 26, 2015, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed May 27, 2015 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(o) Amendment No. 1 to Supplemental Indenture No. 11, dated as of October 19, 2015, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed October 20, 2015 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(p) Supplemental Indenture No. 12, dated as of March 1, 2016, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 3, 2016 (File No. 001-08923), and incorporated herein by reference thereto).
4.2 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).
4.3 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).
4.4(a) Indenture, dated as of November 25, 2015, by and among HCN Canadian Holdings-1 LP, the Company and BNY Trust Company of Canada (filed with the Commission as Exhibit 4.5(a) to the Company’s Form 10-K filed February 18, 2016 (File No. 001-08923), and incorporated herein by reference thereto).
4.4(b) First Supplemental Indenture, dated as of November 25, 2015, by and among HCN Canadian Holdings-1 LP, the Company and BNY Trust Company of Canada (filed with the Commission as Exhibit 4.5(b) to the Company’s Form 10-K filed February 18, 2016 (File No. 001-08923), and incorporated herein by reference thereto).
10.1 Credit Agreement dated as of May 13, 2016 by and among the Company; the lenders listed therein; KeyBank National Association, as administrative agent, L/C issuer and a swingline lender; Bank of America, N.A. and JPMorgan Chase Bank, N.A., as co-syndication agents; Deutsche Bank Securities Inc., as documentation agent; Merrill Lynch, Pierce, Fenner & Smith Incorporated, JPMorgan Chase Bank, N.A., KeyBanc Capital Markets Inc. and Deutsche Bank Securities Inc., as U.S. joint lead arrangers; Merrill Lynch, Pierce, Fenner & Smith Incorporated, JPMorgan Chase Bank, N.A., KeyBanc Capital Markets Inc. and RBC Capital Markets, as Canadian joint lead arrangers; and Merrill Lynch, Pierce, Fenner & Smith Incorporated and JPMorgan Chase Bank, N.A., as joint book runners (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed May 16, 2016 (File No. 001-08923), and incorporated herein by reference thereto).
10.2 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).
10.3(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).*
10.3(b) Form of Stock Option Agreement (with Dividend Equivalent Rights) for Executive Officers under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.9 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*
10.3(c) Form of Stock Option Agreement (without Dividend Equivalent Rights) for Executive Officers under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*
10.3(d) Form of Restricted Stock Agreement for the Chief Executive Officer under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*
10.3(e) Form of Restricted Stock Agreement for Executive Officers under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.4 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*
10.4(a) Amended and Restated Employment Agreement, dated January 3, 2017, between the Company and Thomas J. DeRosa (filed with the Commission as Exhibit 10.4(a) to the Company’s Form 10-K filed February 22, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*
10.4(b) Performance-Based Restricted Stock Unit Grant Agreement, dated effective as of July 30, 2014, between the Company and Thomas J. DeRosa (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed November 4, 2014 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5(a) Employment Contract, dated May 6, 2014, between HCN UK Management Services Limited and John Goodey.*
10.5(b) Deed of Assignment and Amendment of Employment Contract, dated effective October 3, 2017, between HCN UK Management Services Limited, John Goodey, and the Company.*
10.6 Third Amended and Restated Employment Agreement, dated June 16, 2017, between the Company and Scott A. Estes (filed with the Commission as Exhibit 10.1 to the Company’s Form 10-Q filed July 28, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*
10.7 Resignation Agreement, dated October 3, 2017, between the Company and Scott A. Estes (filed with the Commission as Exhibit 10.1 to the Company’s Form 10-Q filed November 7, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*
10.8 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).*
10.9 Executive Retirement Agreement, dated as of February 16, 2017, by and between Jeffery H. Miller and the Company (filed with the Commission as Exhibit 10.8 to the Company’s Form 10-K filed February 22, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*
10.10 Amended and Restated Employment Agreement, dated June 16, 2017, by and between the Company and Mercedes T. Kerr (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed July 28, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*
10.11 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).*
10.12 Summary of Director Compensation.*
10.13(a) Health Care REIT, Inc. 2015-2017 Long-Term Incentive Program (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed August 4, 2015 (File No. 001-08923), and incorporated herein by reference thereto).*
10.13(b) Form of Performance Restricted Stock Unit Award Agreement under the 2015-2017 Long-Term Incentive Program (filed with the Commission as Exhibit 10.4 to the Company’s Form 10-Q filed August 4, 2015 (File No. 001-08923), and incorporated herein by reference thereto).*
10.14(a) Welltower Inc. 2016 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed May 10, 2016 (File No. 001-08923), and incorporated herein by reference thereto).*
10.14(b) Form of Restricted Stock Grant Notice for Executive Officers under the 2016 Long-Term Incentive Plan.*
10.14(c) Form of Restricted Stock Grant Notice for Senior Vice Presidents under the 2016 Long-Term Incentive Plan.*
10.14(d) Form of Deferred Stock Unit Grant Agreement for Non-Employee Directors under the 2016 Long-Term Incentive Plan.*
10.15(a) Welltower Inc. 2016-2018 Long-Term Incentive Program (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed August 2, 2016 (File No. 001-08923), and incorporated herein by reference thereto).*
10.15(b) Form of Performance Restricted Stock Unit Award Agreement under the 2016-2018 Long-Term Incentive Program.*
10.16(a) Welltower Inc. 2017-2019 Long-Term Incentive Program (filed with the Commission as Exhibit 10.4 to the Company’s Form 10-Q filed May 5, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*
10.16(b) Form of Award Notice under the 2017-2019 Long-Term Incentive Program.*
10.16(c) Welltower Inc. 2017-2019 Long-Term Incentive Program - Bridge 1 (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed November 7, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*
10.16(d) Form of Award Notice under the 2017-2019 Long Term Incentive Program - Bridge 1.*
10.16(e) Welltower Inc. 2017-2019 Long-Term Incentive Program - Bridge 2 (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed November 7, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*
10.16(f) Form of Award Notice under the 2017-2019 Long Term Incentive Program - Bridge 2.*
10.17(a) Welltower Inc. 2018-2020 Long-Term Incentive Program.*
10.17(b) Form of Restricted Stock Unit Award Agreement under the 2018-2020 Long-Term Incentive Program.*
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, 2017 and 2016, (ii) the Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015, (iii) the Consolidated Statements of Equity for the years ended December 31, 2017, 2016 and 2015, (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015, (v) the Notes to Consolidated Financial Statements, (vi) Schedule III - Real Estate and Accumulated Depreciation and (vii) Schedule IV - Mortgage Loans on Real Estate.
Item 16. Form 10-K Summary
Not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 28, 2018
WELLTOWER INC.
By: /s/ T homas J. DeRosa
Thomas J. DeRosa,
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 28, 2018 by the following persons on behalf of the Registrant and in the capacities indicated.
/s/ Jeffrey H. Donahue **
/s/ Sergio D. Rivera **
Jeffrey H. Donahue, Chairman of the Board
Sergio D. Rivera, Director
/s/ Kenneth J. Bacon **
/s/ R. Scott Trumbull **
Kenneth J. Bacon, Director
R. Scott Trumbull, Director
/s/ Fred S. Klipsch **
/s/ Gary Whitelaw **
Fred S. Klipsch, Director
Gary Whitelaw, Director
/s/ Geoffrey G. Meyers **
/s/ Thomas J. DeRosa **
Geoffrey G. Meyers, Director
Thomas J. DeRosa, Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Timothy J. Naughton **
/s/ John A. Goodey **
Timothy J. Naughton, Director
John A. Goodey, Executive Vice President and Chief
Financial Officer (Principal Financial Officer)
/s/ Sharon M. Oster **
/s/ Paul D. Nungester, Jr.**
Sharon M. Oster, Director
Paul D. Nungester, Jr., Senior Vice President and
Controller (Principal Accounting Officer)
/s/ Judith C. Pelham **
**By: /s/ Thomas J. DeRosa
Judith C. Pelham, Director
Thomas J. DeRosa, Attorney-in-Fact
Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2017
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Abilene, TX
$
-
$
$
20,987
$
$
$
21,348
$
1,990
6565 Central Park Boulevard
Abilene, TX
-
8,187
1,089
9,276
1250 East N 10th Street
Aboite Twp, IN
-
1,770
19,930
1,601
1,770
21,531
4,048
611 W County Line Rd South
Agawam, MA
-
16,112
2,134
18,246
7,621
1200 Suffield St.
Albertville, AL
-
6,203
6,477
1,613
151 Woodham Dr.
Ames, IA
-
8,870
-
8,870
1,835
1325 Coconino Rd.
Anderson, SC
-
6,290
6,709
3,278
311 Simpson Rd.
Ankeny, IA
-
1,129
10,270
-
1,129
10,270
1275 SW State Street
Apple Valley, CA
-
16,639
16,801
4,199
11825 Apple Valley Rd.
Asheboro, NC
-
5,032
5,197
2,019
514 Vision Dr.
Asheville, NC
-
3,489
-
3,489
1,777
4 Walden Ridge Dr.
Asheville, NC
-
1,955
2,306
308 Overlook Rd.
Atchison, KS
-
5,610
5,629
1301 N 4th St.
Atlanta, GA
-
2,058
14,914
1,143
2,080
16,035
11,518
1460 S Johnson Ferry Rd.
Aurora, OH
-
1,760
14,148
1,760
14,254
2,943
505 S. Chillicothe Rd
Aurora, CO
-
2,440
28,172
-
2,440
28,172
10,233
14211 E. Evans Ave.
Austin, TX
-
9,520
1,216
10,731
5,451
12429 Scofield Farms Dr.
Avon, IN
-
1,830
14,470
-
1,830
14,470
3,127
182 S Country RD. 550E
Avon, IN
-
19,444
-
19,444
1,762
10307 E. CR 100 N
Avon Lake, OH
-
10,421
5,822
16,243
2,666
345 Lear Rd.
Baldwin City, KS
-
4,810
4,858
321 Crimson Ave
Bartlesville, OK
-
1,380
-
1,380
5420 S.E. Adams Blvd.
Bellingham, WA
-
1,500
19,861
1,507
20,175
4,945
4415 Columbine Dr.
Benbrook, TX
-
1,550
13,553
2,206
1,550
15,759
2,484
4242 Bryant Irvin Road
Bethel Park, PA
-
1,700
16,007
-
1,700
16,007
3,837
5785 Baptist Road
Beverly Hills, CA
-
6,000
13,385
-
6,000
13,385
1,079
220 N Clark Drive
Bexleyheath, UKI
-
3,750
10,807
1,407
4,113
11,851
35 West Street
Birmingham, UKG
-
1,647
14,853
1,594
1,806
16,288
1,160
Clinton Street, Winson Green
Birmingham, UKG
-
1,591
19,092
1,998
1,745
20,937
1,469
Braymoor Road, Tile Cross
Birmingham, UKG
-
1,462
9,056
1,016
1,603
9,931
Clinton Street, Winson Green
Birmingham, UKG
-
1,184
10,085
1,089
1,299
11,059
122 Tile Cross Road, Garretts Green
Bloomington, IN
-
17,423
-
17,423
1,156
363 S. Fieldstone Boulevard
Boardman, OH
-
1,200
12,800
-
1,200
12,800
3,877
8049 South Ave.
Bowling Green, KY
-
3,800
26,700
3,800
26,849
6,423
1300 Campbell Lane
Bracknell, UKJ
-
4,329
12,167
-
4,329
12,167
Bagshot Road
Bradenton, FL
-
3,298
-
3,298
1,915
6101 Pointe W. Blvd.
Bradenton, FL
-
9,953
-
9,953
1,450
2800 60th Avenue West
Braintree, MA
-
7,157
1,290
8,447
8,414
1102 Washington St.
Braintree, UKH
-
-
13,296
1,285
-
14,581
1,281
Meadow Park Tortoiseshell Way
Brandon, MS
-
1,220
10,241
-
1,220
10,241
2,011
140 Castlewoods Blvd
Brecksville, OH
-
19,353
-
19,353
1,746
8757 Brecksville Road
Brentwood, UKH
38,810
8,537
45,869
5,304
9,362
50,348
1,335
London Road
Brick, NJ
-
1,290
25,247
1,290
26,163
4,357
458 Jack Martin Blvd.
Brick, NJ
-
1,170
17,372
1,405
1,188
18,758
3,605
515 Jack Martin Blvd
Brick, NJ
-
17,125
5,548
22,671
3,534
1594 Route 88
Bridgewater, NJ
-
1,850
3,050
1,850
3,098
1,546
875 Route 202/206 North
Bridgewater, NJ
-
1,730
48,201
1,406
1,766
49,571
8,989
2005 Route 22 West
Bridgewater, NJ
-
1,800
31,810
1,347
1,800
33,157
5,419
680 US-202/206 North
Broadview Heights, OH
-
12,400
2,393
14,793
5,769
2801 E. Royalton Rd.
Brookfield, WI
-
1,300
12,830
-
1,300
12,830
1,435
1185 Davidson Road
Brooks, AB
2,016
4,951
5,474
951 Cassils Road West
Burleson, TX
-
13,985
1,646
15,631
2,588
300 Huguley Boulevard
Burlington, NC
-
4,297
5,004
1,917
3619 S. Mebane St.
Burlington, NC
-
5,467
-
5,467
2,142
3615 S. Mebane St.
Burlington, NJ
-
1,700
12,554
1,700
13,055
2,809
115 Sunset Road
Burlington, NJ
-
1,170
19,205
1,170
19,377
3,560
2305 Rancocas Road
Burnaby, BC
8,341
7,623
13,844
2,267
8,429
15,306
1,372
7195 Canada Way
Calgary, AB
17,109
2,341
42,768
4,787
2,588
47,307
4,026
1729-90th Avenue SW
Calgary, AB
28,391
4,569
70,199
7,897
5,051
77,613
6,544
500 Midpark Way SE
Camberley, UKJ
-
10,580
41,548
-
10,580
41,548
Pembroke Broadway
Canton, MA
-
8,201
8,464
6,353
One Meadowbrook Way
Canton, OH
-
2,098
-
2,098
1,066
1119 Perry Dr., N.W.
Cape Coral, FL
-
3,281
-
3,281
1,396
911 Santa Barbara Blvd.
Cape Coral, FL
8,530
18,868
-
18,868
2,778
831 Santa Barbara Boulevard
Cape May Court House, NJ
-
1,440
17,002
1,775
1,440
18,777
1,746
144 Magnolia Drive
Carmel, IN
-
1,700
19,491
-
1,700
19,491
1,421
Pennsylvania Street
Carrollton, TX
-
2,010
19,549
-
2,010
19,549
2645 East Trinity Mills Road
Cary, NC
-
1,500
4,350
1,500
5,336
2,570
111 MacArthur
Castleton, IN
-
15,137
-
15,137
1,427
8405 Clearvista Lake
Cedar Grove, NJ
-
2,850
27,737
2,850
27,757
5,210
536 Ridge Road
Centreville, MD
-
14,602
14,843
2,822
205 Armstrong Avenue
Chapel Hill, NC
-
2,646
3,429
1,428
100 Lanark Rd.
Charles Town, WV
-
22,834
22,974
4,081
219 Prospect Ave
Charleston, WV
-
17,575
17,881
3,203
1000 Association Drive, North Gate Business Park
Chatham, VA
-
14,039
-
14,039
1,372
100 Rorer Street
Chelmsford, MA
-
1,040
10,951
1,499
1,040
12,450
4,320
4 Technology Dr.
Chester, VA
-
1,320
18,127
-
1,320
18,127
1,733
12001 Iron Bridge Road
Chickasha, OK
-
1,395
-
1,395
801 Country Club Rd.
Cinnaminson, NJ
-
6,663
6,835
1,461
1700 Wynwood Drive
Citrus Heights, CA
-
2,300
31,876
2,300
32,465
8,132
7418 Stock Ranch Rd.
Claremore, OK
-
1,427
6,130
7,557
1,410
1605 N. Hwy. 88
Clarksville, TN
-
2,292
-
2,292
1,159
2183 Memorial Dr.
Clayton, NC
-
15,733
-
15,733
1,339
84 Johnson Estate Road
Cleburne, TX
-
5,369
-
5,369
1,524
402 S Colonial Drive
Clevedon, UKK
-
2,838
16,927
1,910
3,112
18,563
1,631
18/19 Elton Road
Cobham, UKJ
-
9,808
24,991
3,362
10,756
27,406
3,164
Redhill Road
Colchester, CT
-
4,860
5,404
1,252
59 Harrington Court
Colorado Springs, CO
-
4,280
62,168
-
4,280
62,168
3,730
1605 Elm Creek View
Colorado Springs, CO
-
1,730
25,493
1,730
26,186
1,184
2818 Grand Vista Circle
Colts Neck, NJ
-
14,733
1,371
1,082
15,802
3,108
3 Meridian Circle
Columbia, TN
-
2,295
-
2,295
1,165
5011 Trotwood Ave.
Columbia Heights, MN
-
14,175
14,338
2,359
3807 Hart Boulevard
Columbus, IN
-
3,190
-
3,190
2564 Foxpointe Dr.
Concord, NC
-
3,921
3,976
1,693
2452 Rock Hill Church Rd.
Concord, NH
-
1,760
43,179
1,760
43,813
7,855
239 Pleasant Street
Congleton, UKD
-
2,036
5,120
2,232
5,615
Rood Hill
Conroe, TX
-
7,771
-
7,771
1,736
903 Longmire Road
Coppell, TX
-
1,550
8,386
1,550
8,486
1,084
1530 East Sandy Lake Road
Corby, UKF
-
1,228
5,144
-
1,228
5,144
25 Rockingham Road
Coventry, UKG
-
1,962
13,830
1,526
2,151
15,166
1,113
Banner Lane, Tile Hill
Crawfordsville, IN
-
17,239
1,426
18,665
1,695
517 Concord Road
Danville, VA
-
3,954
4,676
1,853
149 Executive Ct.
Danville, VA
-
8,436
-
8,436
508 Rison Street
Daphne, AL
-
2,880
8,670
2,880
9,054
1,366
27440 County Road 13
Dedham, MA
-
1,360
9,830
-
1,360
9,830
4,418
10 CareMatrix Dr.
Denton, TX
-
1,760
8,305
1,760
8,405
1,538
2125 Brinker Rd
Derby, UKF
-
2,503
9,058
-
2,503
9,058
Rykneld Road
Dover, DE
-
22,266
22,407
4,104
1080 Silver Lake Blvd.
Dresher, PA
-
2,060
40,236
1,148
2,120
41,324
7,471
1405 N. Limekiln Pike
Dundalk, MD
-
1,770
32,047
1,770
32,831
5,984
7232 German Hill Road
Durham, NC
-
1,476
10,659
2,196
1,476
12,855
11,283
4434 Ben Franklin Blvd.
Eagan, MN
16,741
2,260
31,643
2,260
31,647
1,772
3810 Alder Avenue
East Brunswick, NJ
-
1,380
34,229
1,380
35,064
5,769
606 Cranbury Rd.
East Norriton, PA
-
1,200
28,129
1,604
1,264
29,670
5,414
2101 New Hope St
Eastbourne, UKJ
-
4,071
24,438
2,755
4,465
26,799
2,323
Carew Road
Eden, NC
-
4,877
-
4,877
1,931
314 W. Kings Hwy.
Edmond, OK
-
8,388
-
8,388
1,321
15401 North Pennsylvania Avenue
Edmond, OK
-
1,810
14,849
1,921
1,810
16,770
1,530
1225 Lakeshore Drive
Edmond, OK
-
1,650
25,167
-
1,650
25,167
2709 East Danforth Road
Elizabeth City, NC
-
2,760
2,011
4,771
2,152
400 Hastings Lane
Emeryville, CA
-
2,560
57,491
2,560
58,132
5,204
1440 40th Street
Englewood, NJ
-
4,514
4,540
333 Grand Avenue
Englishtown, NJ
-
12,520
1,489
13,930
2,718
49 Lasatta Ave
Epsom, UKJ
39,175
20,159
34,803
5,346
22,106
38,201
1,014
450-458 Reigate Road
Eureka, KS
-
3,950
4,020
1820 E River St
Everett, WA
-
1,400
5,476
-
1,400
5,476
2,689
2015 Lake Heights Dr.
Fairfield, CA
-
1,460
14,040
1,541
1,460
15,581
6,266
3350 Cherry Hills St.
Fairhope, AL
-
9,119
9,231
1,402
50 Spring Run Road
Fall River, MA
-
5,829
4,856
10,685
5,212
1748 Highland Ave.
Fanwood, NJ
-
2,850
55,175
1,071
2,850
56,246
9,157
295 South Ave.
Faribault, MN
-
11,539
11,590
828 1st Street NE
Farnborough, UKJ
-
2,036
5,737
2,232
6,291
Bruntile Close, Reading Road
Fayetteville, PA
-
2,150
32,951
1,802
2,150
34,753
2,191
Chambersburg Road
Fayetteville, NY
-
3,962
4,462
1,866
5125 Highbridge St.
Findlay, OH
-
1,800
-
1,800
725 Fox Run Rd.
Fishers, IN
-
1,500
14,500
-
1,500
14,500
3,132
9745 Olympia Dr.
Florence, NJ
-
2,978
-
2,978
1,262
901 Broad St.
Florence, AL
-
13,049
13,217
3,234
3275 County Road
Flourtown, PA
-
1,800
14,830
1,800
15,096
2,866
350 Haws Lane
Flower Mound, TX
-
1,800
8,414
1,800
8,514
1,276
4141 Long Prairie Road
Folsom, CA
-
-
33,600
-
1,582
32,018
4,045
330 Montrose Drive
Forest City, NC
-
4,497
-
4,497
1,797
493 Piney Ridge Rd.
Fort Ashby, WV
-
19,566
19,922
3,512
Diane Drive, Box
Fort Collins, CO
-
3,680
58,608
-
3,680
58,608
3,505
4750 Pleasant Oak Drive
Fort Wayne, IN
-
8,232
-
8,232
2,408
2626 Fairfield Ave.
Fort Worth, TX
-
13,615
5,086
18,701
3,614
425 Alabama Ave.
Franconia, NH
-
11,320
11,390
2,119
93 Main Street
Fredericksburg, VA
-
1,000
20,000
1,200
1,000
21,200
6,879
3500 Meekins Dr.
Fredericksburg, VA
-
1,130
23,202
-
1,130
23,202
2,045
140 Brimley Drive
Fremont, CA
-
3,400
25,300
3,203
3,456
28,447
9,360
2860 Country Dr.
Fresno, CA
-
2,500
35,800
2,500
35,918
8,599
7173 North Sharon Avenue
Gardner, KS
-
2,800
2,891
869 Juniper Terrace
Gardnerville, NV
-
1,143
10,831
1,075
1,164
11,885
8,717
1565-A Virginia Ranch Rd.
Gastonia, NC
-
6,129
-
6,129
2,390
1680 S. New Hope Rd.
Gastonia, NC
-
3,096
3,118
1,283
1717 Union Rd.
Gastonia, NC
-
5,029
5,149
2,022
1750 Robinwood Rd.
Georgetown, TX
-
2,100
-
2,100
1,127
2600 University Dr., E.
Gettysburg, PA
-
8,913
9,031
1,844
867 York Road
Gig Harbor, WA
-
1,560
15,947
1,583
16,177
3,863
3213 45th St. Court NW
Granbury, TX
-
2,550
2,940
2,550
3,717
916 East Highway
Grand Ledge, MI
-
1,150
16,286
5,119
1,150
21,405
3,731
4775 Village Dr
Granger, IN
-
1,670
21,280
2,401
1,670
23,681
4,392
6330 North Fir Rd
Grapevine, TX
-
2,220
17,648
-
2,220
17,648
1,105
4545 Merlot Drive
Greeley, CO
-
1,077
18,051
-
1,077
18,051
5300 West 29th Street
Greenfield, WI
-
-
15,204
-
14,314
1,685
5017 South 110th Street
Greensboro, NC
-
2,970
3,524
1,425
5809 Old Oak Ridge Rd.
Greensboro, NC
-
5,507
1,013
6,520
2,618
4400 Lawndale Dr.
Greenville, SC
-
4,750
-
4,750
1,814
23 Southpointe Dr.
Greenville, NC
-
4,393
4,561
1,774
2715 Dickinson Ave.
Greenwood, IN
-
1,550
22,770
1,550
22,851
4,334
2339 South SR
Groton, CT
-
2,430
19,941
2,430
20,909
4,156
1145 Poquonnock Road
Haddonfield, NJ
-
16,363
-
16,363
1,293
132 Warwick Road
Hamburg, PA
-
10,543
10,765
2,271
125 Holly Road
Hamilton, NJ
-
4,469
-
4,469
1,882
Whitehorse-Mercerville Rd.
Hanford, UKG
-
1,382
9,829
1,083
1,515
10,779
1,257
Bankhouse Road
Harrow, UKI
-
7,402
8,266
1,514
8,117
9,064
177 Preston Hill
Hatboro, PA
-
-
28,112
1,771
-
29,883
5,298
3485 Davisville Road
Hatfield, UKH
-
2,924
7,527
1,010
3,206
8,254
St Albans Road East
Hattiesburg, MS
-
13,469
-
13,469
2,364
217 Methodist Hospital Blvd
Haverford, PA
-
1,880
33,993
1,080
1,884
35,069
6,307
731 Old Buck Lane
Hermitage, TN
-
1,500
9,943
-
1,500
9,943
1,695
4131 Andrew Jackson Parkway
Herne Bay, UKJ
-
1,900
24,353
2,537
2,083
26,706
3,389
165 Reculver Road
Hiawatha, KS
-
4,210
4,239
400 Kansas Ave
Hickory, NC
-
1,219
2530 16th St. N.E.
High Point, NC
-
4,443
5,236
2,083
1568 Skeet Club Rd.
High Point, NC
-
2,185
2,595
1,090
1564 Skeet Club Rd.
High Point, NC
-
3,395
3,423
1,370
201 W. Hartley Dr.
High Point, NC
-
4,143
-
4,143
1,646
1560 Skeet Club Rd.
Highland Park, IL
-
2,820
15,832
2,820
16,021
2,136
1651 Richfield Avenue
Highlands Ranch, CO
-
3,721
4,983
8,704
2,091
9160 S. University Blvd.
Hinckley, UKF
-
2,159
4,194
2,368
4,599
Tudor Road
Hindhead, UKJ
47,374
17,852
48,645
6,463
19,576
53,383
1,392
Portsmouth Road
Hockessin, DE
-
1,120
6,308
1,247
1,120
7,555
100 Saint Claire Drive
Holton, KS
-
7,460
7,473
410 Juniper Dr
Howard, WI
-
32,122
-
32,122
2790 Elm Tree Hill
Howell, NJ
8,835
1,066
21,577
1,071
22,341
4,129
100 Meridian Place
Hutchinson, KS
-
10,590
10,784
3,716
2416 Brentwood
Indianapolis, IN
-
14,688
-
14,688
1,390
1635 N Arlington Avenue
Indianapolis, IN
-
18,781
-
18,781
1,639
5404 Georgetown Road
Jackson, NJ
-
6,500
26,405
3,107
6,500
29,512
3,820
2 Kathleen Drive
Jacksonville, FL
-
25,231
-
25,231
5939 Roosevelt Boulevard
Jacksonville, FL
-
-
26,381
-
-
26,381
1,031
4000 San Pablo Parkway
Kansas City, KS
-
20,116
-
20,116
1,113
8900 Parallel Parkway
Katy, TX
-
1,778
22,622
-
1,778
22,622
24802 Kingsland Boulevard
Kenner, LA
-
1,100
10,036
1,100
10,364
9,033
1600 Joe Yenni Blvd
Kennett Square, PA
-
1,050
22,946
1,083
23,229
4,219
301 Victoria Gardens Dr.
Kingston upon Thames, UKI
56,849
33,063
46,696
7,751
36,258
51,252
1,351
Coombe Lane West
Kirkland, WA
-
1,880
4,315
1,880
4,998
1,792
6505 Lakeview Dr.
Kirkstall, UKE
-
2,437
9,414
1,145
2,672
10,324
1,207
29 Broad Lane
Kokomo, IN
-
16,044
-
16,044
1,515
2200 S. Dixon Rd
Lafayette, LA
-
1,928
10,483
1,928
10,509
4,358
204 Energy Parkway
Lafayette, CO
-
1,420
20,192
-
1,420
20,192
1,430
329 Exempla Circle
Lafayette, IN
-
16,833
-
16,833
1,372
2402 South Street
Lakeway, TX
-
5,142
23,203
-
5,142
23,203
2,550
2000 Medical Dr
Lakewood, CO
-
2,160
28,091
2,160
28,153
2,823
7395 West Eastman Place
Lakewood Ranch, FL
-
6,714
1,988
8,702
1,240
8230 Nature's Way
Lakewood Ranch, FL
-
1,000
22,388
-
1,000
22,388
3,234
8220 Natures Way
Lancaster, CA
-
15,295
15,907
4,279
43051 15th St. West
Lancaster, PA
-
1,680
14,039
-
1,680
14,039
31 Millersville Road
Langhorne, PA
-
1,350
24,881
1,350
25,052
4,717
262 Toll Gate Road
LaPlata, MD
-
19,068
19,534
3,653
One Magnolia Drive
Las Vegas, NV
-
23,420
-
23,420
3,967
2500 North Tenaya Way
Lawrence, KS
-
8,716
-
8,716
1,245
3220 Peterson Road
Lecanto, FL
-
6,900
-
6,900
2,541
2341 W. Norvell Bryant Hwy.
Lee, MA
-
18,135
19,061
7,947
600 & 620 Laurel St.
Leeds, UKE
-
1,974
13,239
1,470
2,165
14,518
1,007
100 Grove Lane
Leicester, UKF
-
3,060
24,410
2,654
3,355
26,769
3,516
307 London Road
Lenoir, NC
-
3,748
4,389
1,739
1145 Powell Rd., N.E.
Lethbridge, AB
1,505
1,214
2,750
1,342
3,040
785 Columbia Boulevard West
Lexana, KS
-
1,770
1,918
8710 Caenen Lake Rd
Lexington, NC
-
3,900
1,015
4,915
2,011
161 Young Dr.
Libertyville, IL
-
6,500
40,024
-
6,500
40,024
7,376
901 Florsheim Dr
Lichfield, UKG
-
1,382
30,324
3,063
1,515
33,254
2,350
Wissage Road
Lillington, NC
-
17,579
-
17,579
1,598
54 Red Mulberry Way
Lillington, NC
-
16,451
-
16,451
1,402
2041 NC-210 N
Lincoln, NE
-
13,807
13,902
2,789
7208 Van Dorn St.
Linwood, NJ
-
21,984
1,056
22,980
4,341
432 Central Ave
Litchfield, CT
-
1,240
17,908
10,991
1,258
28,882
4,068
19 Constitution Way
Lititz, PA
-
1,200
13,836
-
1,200
13,836
80 West Millport Road
Little Neck, NY
-
3,350
38,461
1,265
3,357
39,720
7,308
55-15 Little Neck Pkwy.
Livermore, CA
-
4,100
24,996
-
4,100
24,996
2,008
35 Fenton Street
Livingston, NJ
-
8,000
44,424
-
8,000
44,424
369 E Mt Pleasant Avenue
London, UKI
-
8,158
17,545
-
8,158
17,545
6 Victoria Drive
Longview, TX
-
5,520
-
5,520
1,576
311 E Hawkins Pkwy
Longwood, FL
-
1,260
6,445
-
1,260
6,445
1,172
425 South Ronald Reagan Boulevard
Louisburg, KS
-
4,320
4,355
202 Rogers St
Louisville, KY
-
10,010
2,768
12,778
4,594
4604 Lowe Rd
Lowell, MA
-
3,378
3,422
30 Princeton Blvd
Loxley, UKE
-
1,369
15,668
1,646
1,502
17,182
2,161
Loxley Road
Lutherville, MD
-
1,100
19,786
1,744
1,100
21,530
3,877
515 Brightfield Road
Lynchburg, VA
-
16,114
-
16,114
1,484
189 Monica Blvd
Macungie, PA
-
29,033
29,117
5,262
1718 Spring Creek Road
Mahwah, NJ
-
1,605
27,249
-
1,605
27,249
1,826
15 Edison Road
Manalapan, NJ
-
22,624
23,213
3,813
445 Route 9 South
Manassas, VA
-
7,446
7,976
2,899
8341 Barrett Dr.
Mankato, MN
-
1,460
32,104
1,460
32,117
1,792
100 Dublin Road
Mansfield, TX
-
5,251
-
5,251
1,516
2281 Country Club Dr
Manteca, CA
-
1,300
12,125
1,566
1,312
13,679
5,000
430 N. Union Rd.
Marietta, PA
-
1,050
13,633
-
1,050
13,633
2760 Maytown Road
Marion, IN
-
12,750
1,136
13,886
1,264
614 W. 14th Street
Marion, IN
-
9,190
10,014
1,083
505 N. Bradner Avenue
Marlborough, UKK
-
2,677
6,822
2,936
7,482
The Common
Marlow, UKJ
-
9,619
42,134
-
9,619
42,134
1,970
210 Little Marlow Road
Martinsville, VA
-
-
-
-
-
Rolling Hills Rd. & US Hwy. 58
Marysville, WA
-
4,780
5,683
2,072
9802 48th Dr. N.E.
Matawan, NJ
-
1,830
20,618
1,830
20,784
3,552
625 State Highway 34
Matthews, NC
-
4,738
-
4,738
1,920
2404 Plantation Center Dr.
McHenry, IL
-
1,576
-
-
1,576
-
-
5200 Block of Bull Valley Road
McKinney, TX
-
1,570
7,389
-
1,570
7,389
1,666
2701 Alma Rd.
McMurray, PA
-
1,440
15,805
3,894
1,440
19,699
3,093
240 Cedar Hill Dr
Mechanicsburg, PA
-
1,350
16,650
-
1,350
16,650
2,888
4950 Wilson Lane
Medicine Hat, AB
2,471
5,566
1,031
6,154
65 Valleyview Drive SW
Melville, NY
-
4,280
73,283
4,616
4,306
77,874
13,828
70 Pinelawn Rd
Mendham, NJ
-
1,240
27,169
1,240
27,807
5,006
84 Cold Hill Road
Menomonee Falls, WI
-
1,020
6,984
1,652
1,020
8,636
2,057
W128 N6900 Northfield Drive
Mercerville, NJ
-
9,929
10,102
2,012
2240 White Horse- Merceville Road
Meriden, CT
-
1,300
1,472
1,300
1,705
845 Paddock Ave
Merrillville, IN
-
11,699
11,853
3,105
9509 Georgia St.
Mesa, AZ
-
9,087
1,567
10,654
4,657
7231 E. Broadway
Middleburg Heights, OH
-
7,780
-
7,780
2,758
15435 Bagley Rd.
Middleton, WI
-
4,006
4,606
1,802
6701 Stonefield Rd.
Midland, MI
-
11,025
5,522
16,547
2,555
2325 Rockwell Dr
Mill Creek, WA
-
10,150
60,274
10,179
61,179
17,227
Bothell-Everett Hwy
Millville, NJ
-
29,944
30,073
5,532
54 Sharp Street
Milton Keynes, UKJ
-
1,826
18,654
1,979
2,002
20,456
1,488
Tunbridge Grove, Kents Hill
Mishawaka, IN
-
16,114
-
16,114
1,569
60257 Bodnar Blvd
Missoula, MT
-
7,490
7,867
2,576
3620 American Way
Monmouth Junction, NJ
-
6,209
6,295
1,323
2 Deer Park Drive
Monroe, NC
-
3,681
4,329
1,750
918 Fitzgerald St.
Monroe, NC
-
4,799
5,656
2,181
919 Fitzgerald St.
Monroe, NC
-
4,021
4,135
1,669
1316 Patterson Ave.
Monroe Township, NJ
-
3,250
27,771
3,250
27,991
1,454
319 Forsgate Drive
Monroe Twp, NJ
-
1,160
13,193
1,160
13,307
2,666
292 Applegarth Road
Montville, NJ
-
3,500
31,002
1,073
3,500
32,075
5,350
165 Changebridge Rd.
Moorestown, NJ
-
2,060
51,628
1,653
2,071
53,270
9,619
1205 N. Church St
Moorestown, NJ
-
6,400
23,875
6,400
23,902
2,531
250 Marter Avenue
Morehead City, NC
-
3,104
1,648
4,752
2,149
107 Bryan St.
Morton Grove, IL
-
1,900
19,374
1,900
19,533
3,201
5520 N. Lincoln Ave.
Moulton, UKF
-
1,695
12,510
-
1,695
12,510
Northampton Lane North
Mount Pleasant, SC
-
-
17,200
-
4,052
13,149
2,586
1200 Hospital Drive
Nacogdoches, TX
-
5,754
-
5,754
1,636
5902 North St
Naperville, IL
-
3,470
29,547
-
3,470
29,547
5,550
504 North River Road
Nashville, TN
-
4,910
29,590
-
4,910
29,590
7,529
15 Burton Hills Boulevard
Naugatuck, CT
-
1,200
15,826
1,200
16,025
3,028
4 Hazel Avenue
Needham, MA
-
1,610
13,715
1,610
14,081
6,424
100 West St.
New Moston, UKD
-
1,480
4,378
1,623
4,801
90a Broadway
Newark, DE
-
21,220
1,488
22,708
7,504
200 E. Village Rd.
Newcastle Under Lyme, UKG
-
1,110
5,655
1,218
6,202
Hempstalls Lane
Newcastle-under-Lyme, UKG
-
1,125
5,537
1,234
6,072
Silverdale Road
Norman, OK
-
1,484
-
1,484
1701 Alameda Dr.
Norman, OK
-
1,480
33,330
-
1,480
33,330
4,715
800 Canadian Trails Drive
North Augusta, SC
-
2,558
-
2,558
1,288
105 North Hills Dr.
North Cape May, NJ
-
22,266
22,384
4,099
700 Townbank Road
Northampton, UKF
-
5,182
17,348
2,177
5,682
19,024
2,300
Cliftonville Road
Northampton, UKF
-
2,013
6,257
2,208
6,862
Cliftonville Road
Nuneaton, UKG
-
3,325
8,983
1,189
3,646
9,850
1,147
132 Coventry Road
Nuthall, UKF
-
1,628
6,263
1,786
6,868
172A Nottingham Road
Nuthall, UKF
-
2,498
10,436
1,250
2,740
11,444
1,346
172 Nottingham Road
Oakland, CA
-
4,760
16,143
4,760
16,252
1,500
468 Perkins Street
Ocala, FL
-
1,340
10,564
-
1,340
10,564
2,468
2650 SE 18TH Avenue
Ogden, UT
-
6,700
7,399
2,509
1340 N. Washington Blv.
Oklahoma City, OK
-
7,513
-
7,513
1,968
13200 S. May Ave
Oklahoma City, OK
-
7,017
-
7,017
1,788
11320 N. Council Road
Olathe, KS
-
1,930
19,765
1,930
20,318
1,138
21250 W 151 Street
Omaha, NE
-
10,230
-
10,230
2,096
11909 Miracle Hills Dr.
Omaha, NE
-
8,769
-
8,769
1,896
5728 South 108th St.
Ona, WV
-
15,998
-
15,998
100 Weatherholt Drive
Oneonta, NY
-
5,020
-
5,020
1,315
1846 County Highway 48
Orem, UT
-
2,150
24,107
-
2,150
24,107
1,400
250 East Center Street
Osage City, KS
-
1,700
1,836
1403 Laing St
Osawatomie, KS
-
2,970
3,096
1520 Parker Ave
Ottawa, KS
-
6,590
6,630
2250 S Elm St
Overland Park, KS
-
3,730
27,076
3,730
27,416
6,190
12000 Lamar Avenue
Overland Park, KS
-
4,500
29,105
7,295
4,500
36,400
7,345
6101 W 119th St
Overland Park, KS
-
2,840
2,910
14430 Metcalf Ave
Overland Park, KS
-
1,300
25,311
1,300
25,988
1,464
7600 Antioch Road
Owasso, OK
-
1,380
-
1,380
12807 E. 86th Place N.
Owensboro, KY
-
13,275
-
13,275
4,813
1205 Leitchfield Rd.
Owenton, KY
-
2,400
-
2,400
1,059
905 Hwy. 127 N.
Oxford, MI
-
1,430
15,791
-
1,430
15,791
3,172
701 Market St
Palestine, TX
-
4,320
1,300
5,620
1,668
1625 W. Spring St.
Palm Coast, FL
-
10,957
-
10,957
2,421
50 Town Ct.
Panama City Beach, FL
-
6,402
-
6,402
6012 Magnolia Beach Road
Paola, KS
-
5,610
5,667
601 N. East Street
Paris, TX
-
5,452
-
5,452
4,057
750 N Collegiate Dr
Paso Robles, CA
-
1,770
8,630
1,770
9,323
3,811
1919 Creston Rd.
Pella, IA
-
6,716
6,805
2602 Fifield Road
Pennington, NJ
-
1,380
27,620
1,476
28,462
4,740
143 West Franklin Avenue
Pennsauken, NJ
-
10,780
10,959
2,340
5101 North Park Drive
Petoskey, MI
-
14,452
-
14,452
2,750
965 Hager Dr
Philadelphia, PA
-
2,930
10,433
3,536
2,930
13,969
2,765
1526 Lombard Street
Phillipsburg, NJ
-
21,175
21,413
4,046
290 Red School Lane
Phillipsburg, NJ
-
8,114
8,215
1,546
843 Wilbur Avenue
Pinehurst, NC
-
2,690
3,174
1,320
17 Regional Dr.
Piqua, OH
-
1,885
-
1,885
1744 W. High St.
Piscataway, NJ
-
3,100
33,501
-
3,100
33,501
10 Sterling Drive
Pittsburgh, PA
-
1,750
8,572
1,750
8,687
3,096
100 Knoedler Rd.
Plainview, NY
-
3,990
11,969
1,085
3,990
13,054
2,355
150 Sunnyside Blvd
Plano, TX
-
1,840
20,152
1,840
20,712
3325 W Plano Parkway
Plattsmouth, NE
-
5,650
-
5,650
1,218
1913 E. Highway
Plymouth, MI
-
1,490
19,990
1,490
20,320
3,862
14707 Northville Rd
Princeton, NJ
-
1,730
30,888
1,713
1,810
32,521
5,525
155 Raymond Road
Prior Lake, MN
14,033
1,870
29,849
1,870
29,862
1,666
4685 Park Nicollet Avenue
Puyallup, WA
-
1,150
20,776
1,156
21,216
5,246
123 Fourth Ave. NW
Raleigh, NC
-
7,598
88,870
-
7,598
88,870
1,959
4030 Cardinal at North Hills St
Raleigh, NC
-
3,530
59,589
-
3,530
59,589
8,253
5301 Creedmoor Road
Raleigh, NC
-
2,580
16,837
-
2,580
16,837
2,497
7900 Creedmoor Road
Reading, PA
-
19,906
20,046
3,736
5501 Perkiomen Ave
Red Bank, NJ
-
1,050
21,275
1,050
21,840
3,593
One Hartford Dr.
Rehoboth Beach, DE
-
24,248
8,708
32,938
5,180
36101 Seaside Blvd
Reidsville, NC
-
3,830
4,687
1,935
2931 Vance St.
Reno, NV
-
1,060
11,440
1,060
12,045
4,148
5165 Summit Ridge Road
Richmond, IN
-
14,222
14,615
400 Industries Road
Richmond, VA
-
-
12,000
-
11,750
1,624
2220 Edward Holland Drive
Ridgeland, MS
-
7,675
8,102
2,966
410 Orchard Park
Rochdale, MA
-
-
7,100
-
6,410
111 Huntoon Memorial Highway
Rockville, CT
-
1,500
4,835
1,500
5,016
1,248
1253 Hartford Turnpike
Rockville Centre, NY
-
4,290
20,310
4,290
21,178
3,656
260 Maple Ave
Rockwall, TX
-
2,220
17,650
-
2,220
17,650
1,131
720 E Ralph Hall Parkway
Rocky Hill, CT
-
1,090
6,710
1,500
1,090
8,210
2,889
60 Cold Spring Rd.
Rohnert Park, CA
-
6,500
18,700
2,116
6,546
20,769
7,032
4855 Snyder Lane
Romeoville, IL
-
1,895
-
-
1,895
-
-
Grand Haven Circle
Roseville, MN
-
2,140
24,679
2,140
24,746
1,391
2750 North Victoria Street
Roswell, GA
-
1,107
9,627
1,086
1,114
10,706
7,942
655 Mansell Rd.
Rugeley, UKG
-
1,900
10,262
1,175
2,083
11,253
1,387
Horse Fair
Ruston, LA
-
9,790
-
9,790
1,842
1401 Ezelle St
Sacramento, CA
-
14,781
15,020
3,718
6350 Riverside Blvd
Salem, OR
-
5,171
-
5,172
2,585
1355 Boone Rd. S.E.
Salisbury, NC
-
5,697
5,865
2,284
2201 Statesville Blvd.
San Angelo, TX
-
8,800
9,225
3,122
2695 Valleyview Blvd.
San Angelo, TX
-
1,050
24,689
1,052
1,050
25,741
2,358
6101 Grand Court Road
San Antonio, TX
-
-
17,303
-
-
17,303
7,106
8902 Floyd Curl Dr.
San Bernardino, CA
-
3,700
14,300
3,700
14,987
3,490
1760 W. 16th St.
San Diego, CA
-
-
22,003
1,845
-
23,848
5,472
555 Washington St.
Sanatoga, PA
-
30,695
30,787
5,551
225 Evergreen Road
Sand Springs, OK
-
19,654
-
19,654
2,832
4402 South 129th Avenue West
Sarasota, FL
-
3,175
-
3,175
1,843
8450 McIntosh Rd.
Sarasota, FL
-
3,360
19,140
-
3,360
19,140
3,179
6150 Edgelake Drive
Scranton, PA
-
17,609
-
17,609
1,533
2741 Blvd. Ave
Scranton, PA
-
12,144
-
12,144
1,059
2751 Boulevard Ave
Seattle, WA
-
5,190
9,350
5,199
9,905
3,373
11501 15th Ave NE
Seattle, WA
27,180
10,670
37,291
10,700
38,155
11,465
805 4th Ave N
Selbyville, DE
-
25,912
26,308
4,848
21111 Arrington Dr
Seven Fields, PA
-
4,663
4,722
2,364
500 Seven Fields Blvd.
Severna Park, MD
-
2,120
31,273
2,120
32,081
5,756
24 Truckhouse Road
Shawnee, OK
-
1,400
-
1,400
3947 Kickapoo
Shelbyville, KY
-
3,870
4,500
1,474
1871 Midland Trail
Sherman, TX
-
5,221
-
5,221
1,555
1011 E. Pecan Grove Rd.
Shrewsbury, NJ
-
2,120
38,116
1,080
2,128
39,188
7,156
5 Meridian Way
Silvis, IL
-
16,420
16,559
3,247
1900 10th St.
Sittingbourne, UKJ
-
1,357
6,539
1,488
7,170
200 London Road
Smithfield, NC
-
5,680
-
5,680
2,228
830 Berkshire Rd.
Smithfield, NC
-
8,216
-
8,216
250 Highway 210 West
Sonoma, CA
-
1,100
18,400
1,700
1,109
20,090
6,758
800 Oregon St.
South Bend, IN
-
17,770
-
17,770
1,604
52565 State Road
South Boston, MA
-
2,002
5,218
7,220
3,652
804 E. Seventh St.
Southampton, UKJ
-
1,612
16,803
-
1,612
16,803
Botley Road, Park Gate
Southbury, CT
-
1,860
23,613
1,860
24,571
4,300
655 Main St
Springfield, IL
-
-
10,100
-
9,332
1,682
701 North Walnut Street
Springfield, IL
-
13,378
1,084
14,462
1,292
3089 Old Jacksonville Road
St. Louis, MO
-
1,890
12,390
-
1,890
12,390
2,354
6543 Chippewa St
St. Paul, MN
-
2,100
33,019
2,100
33,097
1,843
750 Mississippi River
Stafford, UKG
-
2,131
8,739
-
2,131
8,739
Stone Road
Stamford, UKF
-
1,820
3,238
1,996
3,551
Priory Road
Statesville, NC
-
1,447
1,713
2441 E. Broad St.
Statesville, NC
-
6,183
6,191
2,365
2806 Peachtree Place
Statesville, NC
-
3,627
-
3,627
1,416
2814 Peachtree Rd.
Stillwater, OK
-
1,400
-
1,400
1616 McElroy Rd.
Stockton, CA
-
2,280
5,983
2,372
6,288
1,821
6725 Inglewood
Stratford-upon-Avon, UKG
-
14,508
1,478
15,910
1,123
Scholars Lane
Stroudsburg, PA
-
16,313
-
16,313
1,573
370 Whitestone Corner Road
Summit, NJ
-
3,080
14,152
-
3,080
14,152
2,633
41 Springfield Avenue
Sunninghill, UKJ
-
12,338
44,799
-
12,338
44,799
Bagshot Road
Superior, WI
-
1,020
13,735
6,159
1,020
19,894
2,361
1915 North 34th Street
Swanton, OH
-
6,370
-
6,370
2,392
401 W. Airport Hwy.
Terre Haute, IN
-
1,370
18,016
-
1,370
18,016
1,408
395 8th Avenue
Texarkana, TX
-
1,403
-
1,403
4204 Moores Lane
The Villages, FL
-
1,035
7,446
-
1,035
7,446
2450 Parr Drive
Thomasville, GA
-
12,520
-
12,520
1,757
423 Covington Avenue
Tomball, TX
-
1,050
13,300
1,050
14,140
2,438
1221 Graham Dr
Toms River, NJ
-
1,610
34,627
1,679
35,423
6,545
1587 Old Freehold Rd
Tonganoxie, KS
-
3,690
3,762
120 W 8th St
Topeka, KS
-
12,712
-
12,712
1,892
1931 Southwest Arvonia Place
Towson, MD
-
1,180
13,280
1,180
13,475
2,589
7700 York Road
Troy, OH
-
2,000
4,254
6,254
2,009
81 S. Stanfield Rd.
Troy, OH
-
16,730
-
16,730
6,074
512 Crescent Drive
Trumbull, CT
-
4,440
43,384
-
4,440
43,384
7,703
6949 Main Street
Tulsa, OK
-
3,003
6,025
3,003
6,045
3,432
3219 S. 79th E. Ave.
Tulsa, OK
-
1,390
7,110
1,102
1,390
8,212
1,708
7220 S. Yale Ave.
Tulsa, OK
-
1,320
10,087
-
1,320
10,087
1,529
7902 South Mingo Road East
Tulsa, OK
-
1,100
27,007
-
1,100
27,007
18001 East 51st Street
Tulsa, OK
13,000
1,752
28,421
-
1,752
28,421
701 W 71st Street South
Tulsa, OK
-
9,410
-
9,410
7210 South Yale Avenue
Tyler, TX
-
5,268
-
5,268
1,509
5550 Old Jacksonville Hwy.
Upper Providence, PA
-
1,900
28,195
-
1,900
28,195
1,968
1133 Black Rock Road
Vacaville, CA
-
17,100
1,651
18,751
6,462
799 Yellowstone Dr.
Vallejo, CA
-
4,000
18,000
2,344
4,030
20,315
6,950
350 Locust Dr.
Vallejo, CA
-
2,330
15,407
2,330
15,717
4,110
2261 Tuolumne
Valparaiso, IN
-
2,558
-
2,558
1,146
2601 Valparaiso St.
Valparaiso, IN
-
2,962
-
2,962
1,309
2501 Valparaiso St.
Vancouver, WA
-
1,820
19,042
1,821
19,311
4,822
10011 NE 118th Ave
Venice, FL
-
1,150
10,674
-
1,150
10,674
2,415
1600 Center Rd.
Vero Beach, FL
-
3,187
-
3,187
1,398
420 4th Ct.
Vero Beach, FL
-
3,263
-
3,263
1,441
410 4th Ct.
Virginia Beach, VA
-
1,540
22,593
-
1,540
22,593
1,996
5520 Indian River Rd
Voorhees, NJ
-
1,800
37,299
1,800
37,970
7,042
2601 Evesham Road
Voorhees, NJ
-
1,900
26,040
1,900
26,934
5,017
3001 Evesham Road
Voorhees, NJ
-
3,100
25,950
3,100
25,976
3,724
113 South Route
Voorhees, NJ
-
3,700
24,312
1,631
3,847
25,796
3,228
311 Route 73
Wabash, IN
-
14,588
-
14,588
1,381
20 John Kissinger Drive
Waconia, MN
-
14,726
4,495
19,221
3,073
500 Cherry Street
Wake Forest, NC
-
3,003
1,742
4,745
2,197
611 S. Brooks St.
Wall, NJ
-
1,650
25,350
2,499
1,692
27,807
4,554
2021 Highway 35
Walsall, UKG
-
1,184
8,562
1,299
9,389
Little Aston Road
Wamego, KS
-
2,510
2,565
1607 4th St
Wareham, MA
-
10,313
1,701
12,014
5,255
50 Indian Neck Rd.
Warren, NJ
-
2,000
30,810
1,014
2,000
31,824
5,165
274 King George Rd
Watchung, NJ
-
1,920
24,880
1,138
1,991
25,947
4,363
680 Mountain Boulevard
Waukee, IA
-
1,870
31,878
1,075
1,870
32,953
4,544
1650 SE Holiday Crest Circle
Waxahachie, TX
-
5,763
-
5,763
1,521
1329 Brown St.
Weatherford, TX
-
5,261
-
5,261
1,519
1818 Martin Drive
Wellingborough, UKF
-
1,480
5,724
1,623
6,277
159 Northampton
West Bend, WI
-
17,790
17,828
2,837
2130 Continental Dr
West Chester, PA
-
1,350
29,237
1,350
29,497
5,462
800 West Miner Street
West Orange, NJ
-
2,280
10,687
2,280
10,874
2,249
20 Summit Street
Westerville, OH
-
8,287
3,105
11,392
9,171
690 Cooper Rd.
Westfield, IN
-
15,964
-
15,964
1,499
937 E. 186th Street
Westfield, NJ
-
2,270
16,589
2,270
17,086
3,481
1515 Lamberts Mill Road
Weston Super Mare, UKK
-
2,517
7,054
2,760
7,736
141b Milton Road
White Lake, MI
-
2,920
20,179
2,920
20,271
3,951
935 Union Lake Rd
Wichita, KS
-
1,400
11,000
-
1,400
11,000
4,399
505 North Maize Road
Wichita, KS
-
8,873
-
8,873
1,527
10604 E 13th Street North
Wichita, KS
13,001
19,748
-
19,752
2,810
2050 North Webb Road
Wichita, KS
-
2,240
2,354
900 N Bayshore Dr
Wichita, KS
-
10,134
-
10,134
1,646
10600 E 13th Street North
Williamstown, KY
-
6,430
-
6,430
2,352
201 Kimberly Lane
Wilmington, DE
-
9,494
9,608
1,906
810 S Broom Street
Wilmington, NC
-
2,991
-
2,991
1,489
3501 Converse Dr.
Wilmington, NC
-
15,356
-
15,356
1,401
Independence Blvd
Windsor, CT
-
2,250
8,539
1,855
2,250
10,394
2,104
One Emerson Drive
Windsor, CT
-
1,800
1,800
1,570
One Emerson Drive
Winston-Salem, NC
-
2,514
2,973
1,199
2980 Reynolda Rd.
Winter Garden, FL
-
1,110
7,937
-
1,110
7,937
1,145
720 Roper Road
Witherwack, UKC
-
6,915
1,035
7,583
Whitchurch Road
Wolverhampton, UKG
-
1,573
6,678
1,725
7,323
378 Prestonwood Road
Woodbury, MN
-
1,317
20,935
-
1,317
20,935
2195 Century Avenue South
Worcester, MA
-
3,500
54,099
-
3,500
54,099
11,586
101 Barry Road
Worcester, MA
-
2,300
9,060
6,000
2,300
15,060
3,152
378 Plantation St.
Wyncote, PA
-
2,700
22,244
2,700
22,518
4,282
1245 Church Road
York, UKE
-
2,961
8,266
1,085
3,247
9,064
Rosetta Way, Boroughbridge Road
Youngsville, NC
-
10,689
-
10,689
100 Sunset Drive
Zionsville, IN
$
-
$
1,610
$
22,400
$
1,691
$
1,610
$
24,091
$
4,523
11755 N Michigan Rd
Triple-net total
$
343,361
$
818,863
$
7,759,508
$
382,344
$
847,780
$
8,112,937
$
1,380,023
Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2017
(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
$
1,484
$
$
32,816
$
5,154
10 Devon Drive
Adderbury, UKJ
-
2,274
13,222
-
2,274
13,222
Banbury Road
Agawam, MA
-
10,044
10,636
2,802
153 Cardinal Drive
Albuquerque, NM
-
1,270
20,837
1,824
1,276
22,655
5,732
500 Paisano St NE
Alhambra, CA
-
6,305
9,025
15,330
1,776
1118 N. Stoneman Ave.
Altrincham, UKD
-
4,244
25,187
3,246
4,654
28,023
5,255
295 Hale Road
Amherstview, ON
4,446
5,152
4567 Bath Road
Arlington, VA
-
8,385
31,198
15,714
8,385
46,912
-
900 N Taylor Street
Arlington, TX
20,668
1,660
37,395
3,110
1,709
40,456
9,983
1250 West Pioneer Parkway
Arnprior, ON
6,283
7,152
1,435
15 Arthur Street
Atlanta, GA
-
2,100
20,603
1,167
2,154
21,717
3,478
1000 Lenox Park Blvd NE
Austin, TX
-
1,560
21,413
1,560
21,598
2,408
11330 Farrah Lane
Austin, TX
-
4,200
74,850
4,200
75,361
6,004
4310 Bee Caves Road
Avon, CT
-
1,550
30,571
3,806
1,588
34,339
9,420
101 Bickford Extension
Azusa, CA
-
3,141
7,769
10,910
3,003
125 W. Sierra Madre Ave.
Bagshot, UKJ
-
4,960
29,881
3,750
5,445
33,146
6,692
14 - 16 London Road
Banstead, UKJ
-
6,695
55,113
7,232
7,342
61,698
10,975
Croydon Lane
Basingstoke, UKJ
-
3,420
18,853
2,220
3,750
20,742
2,112
Grove Road
Basking Ridge, NJ
-
2,356
37,710
1,359
2,395
39,031
6,952
404 King George Road
Bassett, UKJ
-
4,874
32,304
5,617
5,358
37,436
7,099
111 Burgess Road
Bath, UKK
-
2,855
12,485
-
2,855
12,485
Clarks Way, Rush Hill
Baton Rouge, LA
9,017
29,436
29,996
5,264
9351 Siegen Lane
Beaconsfield, UKJ
-
5,566
50,952
5,591
6,115
55,993
9,757
30-34 Station Road
Beaconsfield, QC
-
1,149
17,484
2,304
1,335
19,602
4,833
505 Elm Avenue
Bedford, NH
-
2,527
28,748
2,105
2,548
30,832
4,927
5 Corporate Drive
Bee Cave, TX
-
1,820
21,084
1,820
21,792
1,755
14058 A Bee Cave Parkway
Bellevue, WA
-
2,800
19,004
2,072
2,816
21,060
4,586
15928 NE 8th Street
Belmont, CA
-
3,000
23,526
2,254
3,000
25,780
6,244
1301 Ralston Avenue
Belmont, CA
-
-
35,300
1,837
37,100
6,940
1010 Alameda de Las Pulgas
Berkeley, CA
12,433
3,050
32,677
3,757
3,050
36,434
3,323
2235 Sacramento Street
Bethesda, MD
-
-
45,309
45,900
8,359
8300 Burdett Road
Bethesda, MD
-
-
-
8300 Burdett Road
Bethesda, MD
-
-
-
1,083
8300 Burdett Road
Billerica, MA
-
1,619
21,381
1,624
22,130
2,501
20 Charnstaffe Lane
Birmingham, UKG
-
21,321
2,252
23,547
4,629
5 Church Road, Edgbaston
Birmingham, UKG
-
1,480
13,014
1,500
1,623
14,371
47 Bristol Road South
Birmingham, UKG
-
2,807
11,313
1,449
3,078
12,491
134 Jockey Road
Blainville, QC
-
2,077
8,902
1,398
2,306
10,071
2,907
50 des Chateaux Boulevard
Bloomfield Hills, MI
-
2,000
35,662
2,008
36,421
6,477
6790 Telegraph Road
Borehamwood, UKH
-
5,367
41,937
5,041
5,900
46,445
8,293
Edgwarebury Lane
Bothell, WA
-
1,350
13,439
4,808
1,361
18,237
1,626
10605 NE 185th Street
Boulder, CO
-
2,994
27,458
2,065
3,022
29,495
6,557
3955 28th Street
Bournemouth, UKK
-
5,527
42,547
5,311
6,061
47,324
6,943
42 Belle Vue Road
Braintree, MA
-
-
41,290
42,097
7,828
618 Granite Street
Brampton, ON
45,677
10,256
60,021
5,524
11,107
64,694
8,646
100 Ken Whillans Drive
Brighton, MA
9,911
2,100
14,616
1,391
2,109
15,998
4,149
50 Sutherland Road
Brockport, NY
-
1,500
23,496
1,705
23,794
3,164
90 West Avenue
Brockville, ON
4,808
7,445
1,040
8,426
1,034
1026 Bridlewood Drive
Brookfield, CT
-
2,250
30,180
2,422
2,262
32,590
8,207
246A Federal Road
Broomfield, CO
-
4,140
44,547
11,669
10,135
50,221
14,474
400 Summit Blvd
Brossard, QC
11,807
5,499
31,854
3,168
5,912
34,609
4,674
2455 Boulevard Rome
Buckingham, UKJ
-
2,979
13,880
1,764
3,267
15,356
2,047
Church Street
Buffalo Grove, IL
-
2,850
49,129
1,272
2,850
50,401
9,134
500 McHenry Road
Burbank, CA
-
4,940
43,466
1,324
4,940
44,790
9,465
455 E. Angeleno Avenue
Burbank, CA
19,593
3,610
50,817
3,284
3,610
54,101
4,187
2721 Willow Street
Burleson, TX
-
3,150
10,437
3,150
11,063
1,049
621 Old Highway
Burlingame, CA
-
-
62,786
-
-
62,786
1818 Trousdale Avenue
Burlington, ON
13,151
1,309
19,311
2,496
1,453
21,663
4,163
500 Appleby Line
Burlington, MA
-
2,443
34,354
1,350
2,522
35,626
6,963
24 Mall Road
Burlington, MA
-
2,750
57,488
3,167
2,750
60,655
3,673
50 Greenleaf Way
Calabasas, CA
-
-
6,438
-
7,415
5,256
25100 Calabasas Road
Calgary, AB
12,898
2,252
37,415
4,862
2,492
42,036
8,321
20 Promenade Way SE
Calgary, AB
14,751
2,793
41,179
4,956
3,098
45,831
8,857
80 Edenwold Drive NW
Calgary, AB
11,678
3,122
38,971
4,817
3,464
43,446
8,314
150 Scotia Landing NW
Calgary, AB
23,927
3,431
28,983
4,572
3,810
33,176
5,378
9229 16th Street SW
Calgary, AB
26,364
2,385
36,776
4,457
2,642
40,978
5,167
2220-162nd Avenue SW
Camberley, UKJ
-
2,654
5,736
19,242
7,914
19,717
Fernhill Road
Camberley, UKJ
-
3,164
-
3,164
Fernhill Road
Cardiff, UKL
-
3,191
12,566
1,786
3,499
14,043
3,315
127 Cyncoed Road
Cardiff by the Sea, CA
37,915
5,880
64,711
1,925
5,880
66,636
14,057
3535 Manchester Avenue
Carol Stream, IL
-
1,730
55,048
1,723
1,730
56,771
11,184
545 Belmont Lane
Carrollton, TX
-
4,280
31,444
4,280
32,385
3,353
2105 North Josey Lane
Cary, NC
-
45,240
45,875
7,154
1206 West Chatham Street
Cedar Park, TX
-
1,750
15,664
1,750
16,422
800 C-Bar Ranch Trail
Centerville, MA
-
1,300
27,357
1,113
1,324
28,446
6,327
22 Richardson Road
Cerritos, CA
-
-
27,494
5,633
-
33,127
3,641
11000 New Falcon Way
Chatham, ON
1,253
1,098
12,462
2,960
1,290
15,230
2,947
25 Keil Drive North
Chelmsford, MA
-
1,589
26,432
1,214
1,651
27,585
2,988
199 Chelmsford Street
Chertsey, UKJ
-
-
-
-
-
Bittams Lane
Chesterfield, MO
-
1,857
48,366
1,299
1,917
49,605
8,273
1880 Clarkson Road
Chorleywood, UKH
-
5,636
43,191
6,324
6,184
48,967
8,985
High View, Rickmansworth Road
Chula Vista, CA
-
2,072
22,163
2,128
22,970
4,259
3302 Bonita Road
Church Crookham, UKJ
-
2,591
14,215
1,832
2,855
15,783
2,283
Bourley Road
Cincinnati, OH
-
2,060
109,388
13,115
2,078
122,485
22,924
5445 Kenwood Road
Claremont, CA
-
2,430
9,928
1,375
2,483
11,249
2,373
2053 North Towne Avenue
Cohasset, MA
-
2,485
26,147
1,758
2,487
27,903
5,172
125 King Street (Rt 3A)
Colleyville, TX
-
1,050
17,082
1,050
17,122
8100 Precinct Line Road
Colorado Springs, CO
-
14,756
1,801
1,017
16,341
3,010
2105 University Park Boulevard
Concord, NH
-
21,164
21,893
4,812
300 Pleasant Street
Coquitlam, BC
10,477
3,047
24,567
3,268
3,375
27,507
6,467
1142 Dufferin Street
Costa Mesa, CA
-
2,050
19,969
1,320
2,050
21,289
5,139
350 West Bay St
Crystal Lake, IL
-
12,461
1,259
13,701
3,023
751 E Terra Cotta Avenue
Dallas, TX
-
6,330
114,794
1,199
6,330
115,993
10,306
3535 N Hall Street
Danvers, MA
-
1,120
14,557
1,045
1,145
15,576
3,873
1 Veronica Drive
Danvers, MA
-
2,203
28,761
2,257
28,983
3,667
9 Summer Street
Davenport, IA
-
1,403
35,893
3,632
1,480
39,448
9,192
4500 Elmore Ave.
Decatur, GA
-
1,946
26,575
2,080
1,946
28,656
5,798
920 Clairemont Avenue
Denver, CO
12,033
1,450
19,389
3,119
1,470
22,489
4,114
4901 South Monaco Street
Denver, CO
-
2,910
35,838
1,459
2,962
37,246
8,399
8101 E Mississippi Avenue
Dix Hills, NY
-
3,808
39,014
1,430
3,824
40,428
7,473
337 Deer Park Road
Dollard-Des-Ormeaux, QC
-
1,957
14,431
1,982
2,222
16,149
4,757
4377 St. Jean Blvd
Dresher, PA
6,966
1,900
10,664
1,914
11,547
3,259
1650 Susquehanna Road
Dublin, OH
-
1,680
43,423
6,429
1,847
49,685
12,524
6470 Post Rd
Dublin, OH
-
1,169
25,345
-
1,169
25,345
4175 Stoneridge Lane
East Haven, CT
-
2,660
35,533
3,109
2,681
38,621
11,385
111 South Shore Drive
East Meadow, NY
-
45,991
1,360
47,296
8,545
1555 Glen Curtiss Boulevard
East Setauket, NY
-
4,920
37,354
1,349
4,975
38,648
7,038
1 Sunrise Drive
Eastbourne, UKJ
-
4,145
33,744
3,892
4,557
37,224
7,009
6 Upper Kings Drive
Edgbaston, UKG
-
2,720
13,969
1,680
2,983
15,386
1,130
Pershore Road
Edgewater, NJ
-
4,561
25,047
1,349
4,564
26,393
5,108
351 River Road
Edison, NJ
-
1,892
32,314
1,463
1,905
33,764
8,522
1801 Oak Tree Road
Edmonds, WA
-
1,650
24,449
2,665
1,651
27,113
2,679
21500 72nd Avenue West
Edmonton, AB
9,439
1,589
29,819
3,890
1,778
33,520
6,718
103 Rabbit Hill Court NW
Edmonton, AB
12,242
2,063
37,293
4,948
2,281
42,023
10,604
10015 103rd Avenue NW
Encinitas, CA
-
1,460
7,721
2,946
1,460
10,667
4,504
335 Saxony Rd.
Encino, CA
-
5,040
46,255
1,930
5,040
48,185
9,720
15451 Ventura Boulevard
Escondido, CA
-
1,520
24,024
1,358
1,520
25,382
6,200
1500 Borden Rd
Esher, UKJ
-
5,783
48,361
5,320
6,346
53,118
9,005
42 Copsem Lane
Fairfax, VA
-
2,678
2,883
9207 Arlington Boulevard
Fairfield, NJ
-
3,120
43,868
1,125
3,175
44,937
8,407
47 Greenbrook Road
Fareham, UKJ
-
3,408
17,970
2,324
3,743
19,960
2,442
Redlands Lane
Flossmoor, IL
-
1,292
9,496
1,633
1,339
11,082
2,631
19715 Governors Highway
Folsom, CA
-
1,490
32,754
1,490
32,791
3,354
1574 Creekside Drive
Fort Worth, TX
-
2,080
27,888
3,638
2,093
31,513
7,915
2151 Green Oaks Road
Fort Worth, TX
-
1,740
19,799
1,012
1,740
20,811
1,610
7001 Bryant Irvin Road
Franklin, MA
-
2,430
30,597
2,484
2,458
33,053
5,582
4 Forge Hill Road
Frome, UKK
-
2,720
14,813
1,861
2,983
16,411
1,747
Welshmill Lane
Fullerton, CA
-
1,964
19,989
1,998
20,792
4,094
2226 North Euclid Street
Gahanna, OH
-
11,214
1,337
12,537
2,302
775 East Johnstown Road
Gilbert, AZ
15,747
2,160
28,246
2,176
29,179
7,465
580 S. Gilbert Road
Gilroy, CA
-
13,880
24,812
1,578
37,875
10,084
7610 Isabella Way
Glen Cove, NY
-
4,594
35,236
1,661
4,634
36,857
8,125
39 Forest Avenue
Glenview, IL
-
2,090
69,288
2,757
2,090
72,045
13,683
2200 Golf Road
Golden Valley, MN
19,022
1,520
33,513
1,126
1,545
34,614
6,045
4950 Olson Memorial Highway
Granbury, TX
-
2,040
30,670
2,040
31,172
5,475
100 Watermark Boulevard
Grimsby, ON
-
5,617
6,348
84 Main Street East
Grosse Pointe Woods, MI
-
13,662
14,156
2,422
1850 Vernier Road
Grosse Pointe Woods, MI
-
1,430
31,777
1,435
32,734
5,626
21260 Mack Avenue
Guelph, ON
4,486
1,190
7,597
1,183
1,333
8,638
1,432
165 Cole Road
Guildford, UKJ
-
5,361
56,494
6,278
5,879
62,254
10,783
Astolat Way, Peasmarsh
Gurnee, IL
-
27,931
1,900
29,786
4,857
500 North Hunt Club Road
Hamden, CT
-
1,460
24,093
1,698
1,487
25,764
6,780
35 Hamden Hills Drive
Hampshire, UKJ
-
4,172
26,035
3,010
4,584
28,633
5,267
22-26 Church Road
Haverhill, MA
-
1,720
50,046
1,723
51,010
6,411
254 Amesbury Road
Henderson, NV
-
29,809
30,437
5,605
1935 Paseo Verde Parkway
Henderson, NV
-
1,190
11,600
1,252
12,312
3,374
1555 West Horizon Ridge Parkway
High Wycombe, UKJ
-
3,784
14,191
-
3,784
14,191
The Row Lane End
Highland Park, IL
-
2,250
25,313
1,223
2,265
26,521
5,662
1601 Green Bay Road
Hingham, MA
-
1,440
32,292
1,440
32,467
3,666
1 Sgt. William B Terry Drive
Holbrook, NY
-
3,957
35,337
1,109
4,021
36,382
6,615
320 Patchogue Holbrook Road
Horley, UKJ
-
2,332
12,144
1,521
2,565
13,432
1,981
Court Lodge Road
Houston, TX
-
3,830
55,674
6,489
3,830
62,163
13,392
2929 West Holcombe Boulevard
Houston, TX
16,922
1,040
31,965
5,561
1,049
37,517
7,104
505 Bering Drive
Houston, TX
-
1,750
15,603
1,264
1,750
16,867
10120 Louetta Road
Huntington Beach, CA
-
3,808
31,172
2,429
3,886
33,523
7,290
7401 Yorktown Avenue
Irving, TX
-
1,030
6,823
1,508
1,030
8,331
2,428
8855 West Valley Ranch Parkway
Johns Creek, GA
-
1,580
23,285
1,588
23,863
4,448
11405 Medlock Bridge Road
Kanata, ON
-
1,689
28,670
2,642
1,812
31,189
5,491
70 Stonehaven Drive
Kansas City, MO
-
1,820
34,898
4,570
1,845
39,443
10,363
12100 Wornall Road
Kansas City, MO
5,620
1,930
39,997
4,369
1,963
44,333
11,808
6500 North Cosby Ave
Kansas City, MO
-
23,962
24,131
2,418
6460 North Cosby Avenue
Kelowna, BC
5,942
2,688
13,647
2,103
2,984
15,453
3,689
863 Leon Avenue
Kennebunk, ME
-
2,700
30,204
4,739
3,200
34,442
11,037
One Huntington Common Drive
Kingston, ON
4,767
1,030
11,416
1,637
1,154
12,928
1,574
181 Ontario Street
Kingwood, TX
-
9,777
1,080
10,857
2,524
22955 Eastex Freeway
Kingwood, TX
-
1,683
24,207
2,448
1,683
26,655
24025 Kingwood Place
Kirkland, WA
24,600
3,450
38,709
3,515
39,491
7,883
14 Main Street South
Kitchener, ON
1,514
2,744
3,138
164 - 168 Ferfus Avenue
Kitchener, ON
4,833
1,130
9,939
1,367
1,267
11,169
2,307
20 Fieldgate Street
Kitchener, ON
3,682
1,093
7,327
1,030
1,212
8,239
2,164
290 Queen Street South
Kitchener, ON
13,681
1,341
13,939
4,064
1,443
17,901
1,974
1250 Weber Street E
La Palma, CA
-
2,950
16,591
2,966
17,398
3,346
5321 La Palma Avenue
Lafayette Hill, PA
-
1,750
11,848
2,214
1,867
13,945
3,430
429 Ridge Pike
Laguna Hills, CA
-
12,820
75,926
11,912
12,820
87,838
6,020
24903 Moulton Parkway
Laguna Woods, CA
-
11,280
76,485
9,929
11,280
86,414
6,754
24441 Calle Sonora
Laguna Woods, CA
-
9,150
57,842
6,364
9,150
64,206
5,550
24962 Calle Aragon
Lake Zurich, IL
-
1,470
9,830
2,940
1,470
12,770
4,074
550 America Court
Lawrenceville, GA
-
1,500
29,003
1,508
29,672
5,615
1375 Webb Gin House Road
Leatherhead, UKJ
-
4,967
18,859
-
4,967
18,859
Rectory Lane
Leawood, KS
15,021
2,490
32,493
3,799
5,690
33,091
7,993
4400 West 115th Street
Lenexa, KS
9,396
26,251
27,173
5,665
15055 West 87th Street Parkway
Leominster, MA
-
23,164
23,763
2,958
1160 Main Street
Lincroft, NJ
-
19,958
1,453
21,391
3,979
734 Newman Springs Road
Lombard, IL
16,297
2,130
59,943
1,390
2,147
61,316
10,789
2210 Fountain Square Dr
London, UKI
-
3,121
10,027
1,459
3,428
11,179
1,391
71 Hatch Lane
London, ON
8,228
1,425
1,122
9,517
1,321
760 Horizon Drive
London, ON
12,381
1,969
16,985
2,873
2,177
19,650
2,795
1486 Richmond Street North
London, ON
-
1,445
13,631
1,944
1,689
15,331
1,917
81 Grand Avenue
Longueuil, QC
10,257
3,992
23,711
4,195
4,469
27,428
3,623
70 Rue Levis
Los Angeles, CA
-
-
11,430
2,124
-
13,554
3,397
330 North Hayworth Avenue
Los Angeles, CA
61,460
-
114,438
1,908
-
116,346
25,572
10475 Wilshire Boulevard
Los Angeles, CA
-
3,540
19,007
2,250
3,540
21,257
4,179
2051 N. Highland Avenue
Los Angeles, CA
-
-
28,050
1,960
-
30,010
2,169
4061 Grand View Boulevard
Louisville, KY
-
2,420
20,816
1,505
2,420
22,321
4,614
4600 Bowling Boulevard
Louisville, KY
10,775
1,600
20,326
1,600
20,973
4,334
6700 Overlook Drive
Lynnfield, MA
-
3,165
45,200
2,027
3,165
47,226
8,848
55 Salem Street
Malvern, PA
-
1,651
17,194
1,803
1,739
18,910
4,875
324 Lancaster Avenue
Mansfield, MA
-
3,320
57,011
8,265
3,447
65,149
15,871
25 Cobb Street
Maple Ridge, BC
9,158
2,875
11,922
1,158
3,095
12,860
1,306
12241 224th Street
Marieville, QC
7,008
1,278
12,113
1,138
1,419
13,110
1,453
425 rue Claude de Ramezay
Markham, ON
41,037
3,727
48,939
6,060
4,161
54,564
13,923
7700 Bayview Avenue
Marlboro, NJ
-
2,222
14,888
1,058
2,250
15,918
3,273
3A South Main Street
Medicine Hat, AB
11,543
1,432
14,141
1,390
1,591
15,372
2,746
223 Park Meadows Drive SE
Melbourne, FL
-
7,070
48,257
28,853
7,070
77,110
14,328
7300 Watersong Lane
Memphis, TN
-
1,800
17,744
1,477
1,800
19,221
4,957
6605 Quail Hollow Road
Meriden, CT
-
1,500
14,874
1,103
1,538
15,940
5,185
511 Kensington Avenue
Metairie, LA
12,773
27,708
28,372
4,812
3732 West Esplanade Ave. S
Middletown, CT
-
1,430
24,242
1,487
1,441
25,717
6,965
645 Saybrook Road
Middletown, RI
-
2,480
24,628
1,777
2,511
26,373
7,065
303 Valley Road
Milford, CT
-
3,210
17,364
1,835
3,233
19,176
5,738
77 Plains Road
Milton, ON
15,391
4,542
25,321
4,512
5,039
29,335
3,036
611 Farmstead Drive
Minnetonka, MN
13,654
2,080
24,360
2,289
2,376
26,353
5,430
500 Carlson Parkway
Minnetonka, MN
15,651
29,344
30,112
5,056
18605 Old Excelsior Blvd.
Mission Viejo, CA
14,118
6,600
52,118
5,565
6,600
57,683
4,621
27783 Center Drive
Mississauga, ON
9,409
1,602
17,996
2,334
1,771
20,161
4,016
1130 Bough Beeches Boulevard
Mississauga, ON
3,169
4,655
5,290
1,091
Constitution Boulevard
Mississauga, ON
30,008
3,649
35,137
4,715
4,053
39,449
7,892
1490 Rathburn Road East
Mississauga, ON
6,471
2,548
15,158
3,195
2,817
18,085
2,977
85 King Street East
Mobberley, UKD
-
5,146
26,665
3,417
5,654
29,573
6,980
Barclay Park, Hall Lane
Monterey, CA
-
6,440
29,101
6,440
30,043
5,624
1110 Cass St.
Montgomery Village, MD
-
3,530
18,246
6,448
4,187
24,037
7,944
19310 Club House Road
Moose Jaw, SK
2,476
12,973
1,925
14,837
2,931
425 4th Avenue NW
Murphy, TX
-
1,950
19,182
1,950
19,960
1,214
304 West FM 544
Mystic, CT
-
1,400
18,274
1,427
19,201
5,096
20 Academy Lane Mystic
Naperville, IL
-
1,550
12,237
2,283
1,550
14,520
3,380
1936 Brookdale Road
Naperville, IL
-
1,540
28,204
1,178
1,546
29,377
5,687
535 West Ogden Avenue
Naples, FL
57,022
8,989
119,398
4,088
9,074
123,401
15,758
4800 Aston Gardens Way
Nashua, NH
-
1,264
43,026
1,264
43,637
4,311
674 West Hollis Street
Nashville, TN
-
3,900
35,788
2,198
3,900
37,986
9,120
4206 Stammer Place
Needham, MA
-
1,240
32,992
1,186
1,240
34,178
1,952
880 Greendale Avenue
Nepean, ON
6,045
1,575
5,770
1,038
1,757
6,626
1,377
1 Mill Hill Road
New Braunfels, TX
-
1,200
19,800
10,296
2,729
28,567
4,142
2294 East Common Street
Newbury, UKJ
-
2,850
12,796
1,591
3,125
14,111
370 London Road
Newburyport, MA
-
1,750
29,187
1,162
1,750
30,350
1,855
4 Wallace Bashaw Junior Way
Newmarket, UKH
-
4,071
11,902
1,806
4,471
13,308
1,702
Jeddah Way
Newton, MA
-
2,250
43,614
1,116
2,263
44,717
10,785
2300 Washington Street
Newton, MA
15,227
2,500
30,681
2,367
2,521
33,027
8,396
280 Newtonville Avenue
Newton, MA
-
3,360
25,099
1,618
3,385
26,692
7,199
430 Centre Street
Newtown Square, PA
-
1,930
14,420
1,041
1,941
15,450
4,093
333 S. Newtown Street Rd.
Niagara Falls, ON
7,109
1,225
7,963
1,272
1,355
9,105
1,340
7860 Lundy's Lane
Niantic, CT
-
1,320
25,986
4,432
1,334
30,404
6,405
417 Main Street
North Andover, MA
-
1,960
34,976
1,780
2,092
36,624
8,965
700 Chickering Road
North Chelmsford, MA
-
18,478
19,342
4,544
2 Technology Drive
North Dartmouth, MA
-
1,700
35,337
1,628
1,700
36,965
2,298
239 Cross Road
North Tustin, CA
-
2,880
18,059
2,975
18,788
3,056
12291 Newport Avenue
Oak Park, IL
-
1,250
40,383
1,496
1,250
41,879
8,350
1035 Madison Street
Oakland, CA
-
3,877
47,508
2,965
3,901
50,449
9,458
11889 Skyline Boulevard
Oakton, VA
-
2,250
37,576
1,983
2,300
39,509
7,200
2863 Hunter Mill Road
Oakville, ON
6,158
1,252
7,382
1,392
8,239
1,733
289 and 299 Randall Street
Oakville, ON
10,439
2,134
29,963
4,098
2,363
33,832
7,199
25 Lakeshore Road West
Oakville, ON
5,462
1,271
13,754
1,924
1,405
15,543
2,791
345 Church Street
Oceanside, CA
-
2,160
18,352
3,776
2,210
22,078
5,314
3500 Lake Boulevard
Okotoks, AB
19,493
20,943
2,475
23,342
3,412
51 Riverside Gate
Oshawa, ON
3,144
7,570
1,252
8,700
1,774
649 King Street East
Ottawa, ON
10,658
1,341
15,425
2,752
1,520
17,998
1,930
110 Berrigan Drive
Ottawa, ON
19,984
3,454
23,309
3,639
3,872
26,530
6,517
2370 Carling Avenue
Ottawa, ON
22,945
4,305
39,106
3,494
4,632
42,274
5,449
751 Peter Morand Crescent
Ottawa, ON
7,940
2,103
18,421
4,560
2,345
22,739
2,719
1 Eaton Street
Ottawa, ON
15,092
2,963
26,424
4,480
3,294
30,571
3,225
691 Valin Street
Ottawa, ON
11,412
1,561
18,170
2,770
1,762
20,738
2,116
22 Barnstone Drive
Ottawa, ON
14,405
3,403
31,090
4,983
3,775
35,702
3,631
990 Hunt Club Road
Ottawa, ON
19,417
3,411
28,335
7,128
3,799
35,075
4,910
2 Valley Stream Drive
Ottawa, ON
3,112
4,710
5,339
1,122
1345 Ogilvie Road
Ottawa, ON
2,266
2,165
1,502
3,732
370 Kennedy Lane
Ottawa, ON
10,914
2,809
27,299
3,891
3,109
30,890
7,089
43 Aylmer Avenue
Ottawa, ON
4,994
1,156
9,758
1,408
1,336
10,987
2,038
1351 Hunt Club Road
Ottawa, ON
6,500
7,800
1,211
8,926
1,739
140 Darlington Private
Ottawa, ON
9,796
1,176
12,764
1,941
1,320
14,560
1,649
10 Vaughan Street
Overland Park, KS
3,336
1,540
16,269
1,331
1,728
17,413
3,549
9201 Foster
Palo Alto, CA
16,217
-
39,639
2,696
42,311
7,559
2701 El Camino Real
Paramus, NJ
-
2,840
35,728
1,566
2,903
37,231
6,566
567 Paramus Road
Parkland, FL
56,604
4,880
111,481
3,276
4,885
114,751
15,436
5999 University Drive
Peabody, MA
6,117
2,250
16,071
2,324
16,992
2,353
73 Margin Street
Pembroke, ON
-
1,931
9,427
1,075
2,071
10,362
1,804
1111 Pembroke Street West
Pittsburgh, PA
-
1,580
18,017
1,587
18,817
3,881
900 Lincoln Club Dr.
Placentia, CA
-
8,480
17,076
2,448
8,480
19,525
2,402
1180 N Bradford Avenue
Plainview, NY
-
3,066
19,901
3,182
20,549
3,521
1231 Old Country Road
Plano, TX
27,671
3,120
59,950
2,205
3,173
62,102
14,899
4800 West Parker Road
Plano, TX
-
1,750
15,390
1,660
1,750
17,051
1,053
3690 Mapleshade Lane
Playa Vista, CA
-
1,580
40,531
1,029
1,605
41,536
7,854
5555 Playa Vista Drive
Plymouth, MA
-
1,444
34,951
1,444
35,648
4,039
157 South Street
Plymouth, MA
13,462
2,550
35,055
2,123
2,550
37,178
2,440
60 Stafford Hill
Port Perry, ON
9,905
3,685
26,788
5,059
4,079
31,453
2,988
15987 Simcoe Street
Port St. Lucie, FL
-
8,700
47,230
20,372
8,700
67,602
11,380
10685 SW Stony Creek Way
Providence, RI
-
2,655
21,910
2,655
22,230
8,980
700 Smith Street
Purley, UKI
-
7,365
35,161
4,583
8,077
39,033
8,201
21 Russell Hill Road
Queensbury, NY
-
1,260
21,744
1,260
22,708
2,401
27 Woodvale Road
Quincy, MA
-
1,350
12,584
1,428
13,337
3,635
2003 Falls Boulevard
Rancho Cucamonga, CA
-
1,480
10,055
1,141
1,567
11,109
2,568
9519 Baseline Road
Rancho Palos Verdes, CA
-
5,450
60,034
2,023
5,450
62,057
12,432
5701 Crestridge Road
Randolph, NJ
-
1,540
46,934
1,570
47,703
8,586
648 Route 10 West
Red Deer, AB
13,102
1,247
19,283
2,324
1,379
21,476
2,820
3100 - 22 Street
Red Deer, AB
15,419
1,199
22,339
2,756
1,328
24,966
3,330
10 Inglewood Drive
Redondo Beach, CA
-
-
9,557
-
10,435
5,609
514 North Prospect Ave
Regina, SK
7,115
1,485
21,148
2,618
1,662
23,590
5,180
3651 Albert Street
Regina, SK
6,980
1,244
21,036
2,720
1,380
23,620
4,380
3105 Hillsdale Street
Regina, SK
16,884
1,539
24,053
4,834
1,704
28,722
3,385
1801 McIntyre Street
Renton, WA
20,790
3,080
51,824
1,123
3,119
52,908
10,446
104 Burnett Avenue South
Ridgefield, CT
-
3,100
80,614
4,737
3,150
85,302
11,313
640 Danbury Road
Riviere-du-Loup, QC
3,326
7,601
8,489
35 des Cedres
Riviere-du-Loup, QC
9,515
1,454
16,848
4,901
1,700
21,503
2,890
230-235 rue Des Chenes
Rocky Hill, CT
-
16,351
16,995
4,150
1160 Elm Street
Romeoville, IL
-
12,646
60,571
6,174
67,897
14,427
605 S Edward Dr.
Roseville, MN
-
1,540
35,877
1,607
36,741
6,269
2555 Snelling Avenue, North
Roseville, CA
-
3,300
41,652
3,235
3,300
44,886
3,868
5161 Foothills Boulevard
Roswell, GA
-
2,080
6,486
1,558
2,385
7,739
1,891
75 Magnolia Street
Sacramento, CA
-
1,300
23,394
1,226
1,334
24,587
4,343
345 Munroe Street
Saint-Lambert, QC
37,529
10,259
61,903
5,961
11,414
66,709
10,015
1705 Avenue Victoria
Salem, NH
-
32,721
4,181
1,054
36,828
7,726
242 Main Street
Salinas, CA
-
5,110
41,424
5,493
5,110
46,916
4,462
1320 Padre Drive
Salisbury, UKK
-
2,720
15,269
1,820
2,983
16,826
1,636
Shapland Close
Salt Lake City, UT
-
1,360
19,691
1,949
1,360
21,640
6,685
1430 E. 4500 S.
San Antonio, TX
-
6,120
28,169
2,482
6,120
30,651
5,207
2702 Cembalo Blvd
San Antonio, TX
-
5,045
58,048
3,129
5,045
61,177
11300 Wild Pine
San Diego, CA
-
4,200
30,707
4,243
31,177
4,952
2567 Second Avenue
San Diego, CA
-
5,810
63,078
2,329
5,810
65,407
15,249
13075 Evening Creek Drive S
San Diego, CA
-
3,000
27,164
3,000
27,927
4,709
810 Turquoise Street
San Francisco, CA
-
5,920
91,639
11,529
5,920
103,168
7,666
1550 Sutter Street
San Francisco, CA
-
11,800
77,214
9,132
11,800
86,346
6,679
1601 19th Avenue
San Gabriel, CA
-
3,120
15,566
3,138
16,407
3,283
8332 Huntington Drive
San Jose, CA
-
2,850
35,098
2,858
35,690
7,052
1420 Curvi Drive
San Jose, CA
-
3,280
46,823
2,355
3,280
49,178
9,756
500 S Winchester Boulevard
San Jose, CA
-
11,900
27,647
3,271
11,900
30,918
3,497
4855 San Felipe Road
San Juan Capistrano, CA
-
1,390
6,942
1,491
1,390
8,433
3,634
30311 Camino Capistrano
San Rafael, CA
-
1,620
27,392
1,960
1,635
29,337
2,597
111 Merrydale Road
San Ramon, CA
-
8,700
72,223
6,745
8,700
78,968
6,181
9199 Fircrest Lane
Sandy Springs, GA
-
2,214
8,360
2,220
9,030
2,404
5455 Glenridge Drive NE
Santa Maria, CA
-
6,050
50,658
2,966
6,089
53,585
13,408
1220 Suey Road
Santa Monica, CA
19,149
5,250
28,340
5,263
29,196
5,352
1312 15th Street
Santa Rosa, CA
-
2,250
26,273
2,094
2,250
28,367
2,623
4225 Wayvern Drive
Saskatoon, SK
4,390
13,905
1,778
1,084
15,580
2,760
220 24th Street East
Saskatoon, SK
14,740
1,382
17,609
2,272
1,528
19,735
3,435
1622 Acadia Drive
Schaumburg, IL
-
2,460
22,863
1,060
2,486
23,896
5,198
790 North Plum Grove Road
Scottsdale, AZ
-
2,500
3,890
1,704
2,500
5,594
1,583
9410 East Thunderbird Road
Seal Beach, CA
-
6,204
72,954
1,757
6,271
74,644
17,334
3850 Lampson Avenue
Seattle, WA
48,540
6,790
85,369
2,520
6,825
87,854
17,947
5300 24th Avenue NE
Seattle, WA
-
1,150
19,887
1,032
1,150
20,919
2,119
11039 17th Avenue
Sevenoaks, UKJ
-
6,181
40,240
5,956
6,778
45,599
9,281
64 - 70 Westerham Road
Severna Park, MD
-
-
67,623
5,264
72,882
7,069
43 W McKinsey Road
Shelburne, VT
-
31,041
1,921
32,904
7,180
687 Harbor Road
Shelby Township, MI
15,894
1,040
26,344
1,170
1,100
27,453
4,716
46471 Hayes Road
Shelton, CT
-
2,246
33,967
-
2,246
33,967
1,839
708A Bridgeport Avenue
Shrewsbury, MA
-
26,824
1,315
28,139
3,286
3111 Main Street
Sidcup, UKI
-
7,446
56,570
6,802
8,183
62,636
14,212
Frognal Avenue
Simi Valley, CA
-
3,200
16,664
3,238
17,524
4,377
190 Tierra Rejada Road
Simi Valley, CA
-
5,510
51,406
6,469
5,510
57,875
4,891
5300 E Los Angeles Avenue
Solihull, UKG
-
5,070
43,297
5,457
5,560
48,264
9,412
1270 Warwick Road
Solihull, UKG
-
3,571
26,053
3,191
3,917
28,899
5,786
1 Worcester Way
Solihull, UKG
-
1,851
10,585
1,263
2,029
11,670
Warwick Road
Sonning, UKJ
-
5,644
42,155
5,197
6,189
46,807
8,529
Old Bath Rd.
Sonoma, CA
-
2,820
21,890
1,879
2,820
23,769
2,202
91 Napa Road
South Windsor, CT
-
3,000
29,295
2,870
3,104
32,061
8,587
432 Buckland Road
Spokane, WA
-
3,200
25,064
3,271
25,612
6,718
3117 E. Chaser Lane
Spokane, WA
-
2,580
25,342
2,639
25,682
5,571
1110 E. Westview Ct.
St. Albert, AB
8,701
1,145
17,863
3,003
1,266
20,745
5,136
78C McKenney Avenue
St. John's, NL
6,222
11,765
1,081
12,795
1,308
64 Portugal Cove Road
Stittsville, ON
4,848
1,175
17,397
2,286
1,299
19,559
3,456
1340 - 1354 Main Street
Stockport, UKD
-
4,369
25,018
3,041
4,791
27,637
6,015
1 Dairyground Road
Studio City, CA
-
4,006
25,307
4,071
26,230
5,707
4610 Coldwater Canyon Avenue
Sugar Land, TX
-
31,423
1,723
33,146
8,437
1221 Seventh St
Sugar Land, TX
-
4,272
60,493
6,497
4,272
66,989
744 Brooks Street
Sun City, FL
21,294
6,521
48,476
3,655
6,622
52,030
8,661
231 Courtyards
Sun City, FL
23,992
5,040
50,923
3,365
5,338
53,990
8,143
1311 Aston Gardens Court
Sun City West, AZ
11,780
1,250
21,778
1,123
1,274
22,877
4,311
13810 West Sandridge Drive
Sunnyvale, CA
-
5,420
41,682
1,995
5,420
43,677
8,985
1039 East El Camino Real
Surrey, BC
7,228
3,605
18,818
2,900
3,985
21,338
5,675
16028 83rd Avenue
Surrey, BC
17,047
4,552
22,338
3,780
5,045
25,625
7,201
15501 16th Avenue
Sutton, UKI
-
4,096
14,532
1,872
4,492
16,009
123 Westmead Road
Suwanee, GA
-
1,560
11,538
1,560
12,380
2,876
4315 Johns Creek Parkway
Sway, UKJ
-
4,145
15,508
2,094
4,596
17,151
2,722
Sway Place
Swift Current, SK
2,228
10,119
1,315
11,376
2,236
301 Macoun Drive
Tacoma, WA
17,760
2,400
35,053
2,459
35,579
7,107
7290 Rosemount Circle
Tacoma, WA
-
1,535
6,068
1,537
6,125
7290 Rosemount Circle
Tacoma, WA
-
4,170
73,377
8,824
4,170
82,201
6,113
8201 6th Avenue
Tampa, FL
69,330
4,910
114,148
3,636
4,962
117,732
15,060
12951 W Linebaugh Avenue
Tewksbury, MA
-
2,350
24,118
1,985
2,350
26,104
1,826
2000 Emerald Court
The Woodlands, TX
-
12,379
13,203
3,065
7950 Bay Branch Dr
Toledo, OH
-
2,040
47,129
3,358
2,144
50,383
13,525
3501 Executive Parkway
Toronto, ON
18,615
2,927
20,713
3,327
3,266
23,701
2,802
54 Foxbar Road
Toronto, ON
9,662
5,082
25,493
3,817
5,624
28,767
5,008
645 Castlefield Avenue
Toronto, ON
13,959
2,040
19,822
1,608
2,188
21,282
2,737
4251 Dundas Street West
Toronto, ON
40,768
5,132
41,657
7,208
5,674
48,322
9,699
10 William Morgan Drive
Toronto, ON
4,650
2,480
7,571
1,343
2,742
8,652
1,638
123 Spadina Road
Toronto, ON
1,439
1,079
5,364
1,193
6,094
1,170
25 Centennial Park Road
Toronto, ON
8,587
2,513
19,695
2,814
2,815
22,208
3,535
305 Balliol Street
Toronto, ON
19,525
3,400
32,757
4,524
3,764
36,917
7,504
1055 and 1057 Don Mills Road
Toronto, ON
1,361
2,915
1,528
3,415
1,139
3705 Bathurst Street
Toronto, ON
6,355
1,447
3,918
1,600
4,490
1,107
1340 York Mills Road
Toronto, ON
34,411
5,304
53,488
7,151
5,869
60,074
15,630
8 The Donway East
Torrance, CA
-
3,497
73,138
-
3,497
73,138
25525 Hawthorne Boulevard
Trumbull, CT
-
2,850
37,685
2,058
2,935
39,657
10,412
2750 Reservoir Avenue
Tucson, AZ
4,436
6,179
3,732
9,827
1,801
5660 N. Kolb Road
Tulsa, OK
-
1,330
21,285
3,767
1,350
25,032
6,186
8887 South Lewis Ave
Tulsa, OK
-
1,500
20,861
3,455
1,581
24,235
6,334
9524 East 71st St
Tustin, CA
-
15,299
16,015
3,409
240 East 3rd St
Upland, CA
-
3,160
42,596
3,160
42,610
4,098
2419 North Euclid Avenue
Upper St Claire, PA
-
1,102
13,455
1,102
14,330
3,267
500 Village Drive
Vancouver, BC
-
7,934
6,875
-
7,934
6,875
5,704
2803 West 41st Avenue
Vankleek Hill, ON
2,960
3,466
48 Wall Street
Vaudreuil, QC
8,744
1,852
14,214
1,844
1,993
15,917
1,932
333 rue Querbes
Venice, FL
64,425
6,820
100,501
3,093
6,872
103,542
14,087
1000 Aston Gardens Drive
Vero Beach, FL
-
2,930
40,070
25,412
2,930
65,482
14,513
7955 16th Manor
Victoria, BC
7,752
2,856
18,038
2,502
3,157
20,238
4,544
3000 Shelbourne Street
Victoria, BC
7,147
3,681
15,774
2,273
4,070
17,658
4,125
3051 Shelbourne Street
Victoria, BC
8,015
2,476
15,379
2,591
2,741
17,705
1,829
3965 Shelbourne Street
Virginia Water, UKJ
-
7,106
29,937
6,182
5,943
37,281
7,286
Christ Church Road
Walnut Creek, CA
-
3,700
12,467
1,695
3,794
14,067
3,603
2175 Ygnacio Valley Road
Walnut Creek, CA
-
10,320
100,890
10,385
10,320
111,275
8,442
1580 Geary Road
Waltham, MA
-
2,462
40,062
1,355
2,536
41,344
5,437
126 Smith Street
Warwick, RI
-
2,400
24,635
2,407
2,407
27,036
7,952
75 Minnesota Avenue
Washington, DC
30,841
4,000
69,154
2,023
4,002
71,175
12,670
5111 Connecticut Avenue NW
Waterbury, CT
-
2,460
39,547
3,283
2,495
42,795
13,963
180 Scott Road
Wayland, MA
-
1,207
27,462
1,389
1,334
28,724
5,630
285 Commonwealth Road
Webster Groves, MO
-
1,790
15,425
2,152
1,790
17,577
3,197
45 E Lockwood Avenue
Welland, ON
6,858
7,530
1,055
8,149
110 First Street
Wellesley, MA
-
4,690
77,462
4,690
77,624
9,840
23 & 27 Washington Street
West Babylon, NY
-
3,960
47,085
1,759
3,960
48,844
8,199
580 Montauk Highway
West Bloomfield, MI
-
1,040
12,300
1,089
12,977
2,563
7005 Pontiac Trail
West Hills, CA
-
2,600
7,521
2,636
8,342
2,363
9012 Topanga Canyon Road
West Vancouver, BC
19,905
7,059
28,155
4,847
7,805
32,256
6,834
2095 Marine Drive
Westbourne, UKK
-
5,441
41,420
5,289
5,969
46,181
8,676
16-18 Poole Road
Westford, MA
-
1,440
32,607
1,468
32,727
3,329
108 Littleton Road
Weston, MA
-
1,160
6,200
1,240
1,160
7,440
1,285
135 North Avenue
Westworth Village, TX
-
2,060
31,296
2,060
31,352
2,523
25 Leonard Trail
Weybridge, UKJ
-
7,899
48,240
5,667
8,662
53,144
11,619
Ellesmere Road
Weymouth, UKK
-
2,591
16,551
1,912
2,879
18,174
1,712
Cross Road
White Oak, MD
-
2,304
24,768
1,747
2,316
26,503
4,644
11621 New Hampshire Avenue
Wilbraham, MA
-
17,639
18,544
4,515
2387 Boston Road
Wilmington, DE
-
1,040
23,338
1,129
24,116
4,588
2215 Shipley Street
Winchester, UKJ
-
6,009
29,405
3,647
6,598
32,463
6,719
Stockbridge Road
Winnipeg, MB
13,446
1,960
38,612
5,818
2,225
44,164
12,378
857 Wilkes Avenue
Winnipeg, MB
16,833
1,276
21,732
3,031
1,466
24,572
4,643
3161 Grant Avenue
Winnipeg, MB
13,641
1,317
15,609
3,176
1,456
18,645
2,899
125 Portsmouth Boulevard
Woking, UKJ
-
3,172
13,233
-
3,172
13,233
-
12 Streets Heath, West End
Wolverhampton, UKG
-
2,941
8,922
1,363
3,232
9,994
2,856
73 Wergs Road
Woodbridge, CT
-
1,370
14,219
1,423
1,426
15,586
5,225
21 Bradley Road
Woodland Hills, CA
-
3,400
20,478
3,447
21,378
4,637
20461 Ventura Boulevard
Worcester, MA
-
1,140
21,664
1,057
1,166
22,695
5,493
340 May Street
Yarmouth, ME
-
27,711
1,257
28,948
6,586
27 Forest Falls Drive
Yonkers, NY
-
3,962
50,107
1,419
3,967
51,521
9,381
65 Crisfield Street
Yorkton, SK
$
3,493
$
$
8,756
$
1,128
$
$
9,839
$
1,916
94 Russell Drive
Seniors housing operating total
$
1,988,700
$
1,174,980
$
12,626,419
$
1,234,180
$
1,246,991
$
13,788,584
$
2,362,335
Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2017
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Outpatient medical:
Akron, OH
$
-
$
$
12,105
$
-
$
$
12,105
$
2,528
701 White Pond Drive
Allen, TX
-
14,196
14,994
4,117
1105 N Central Expressway
Alpharetta, GA
-
14,757
15,081
4,456
11975 Morris Road
Alpharetta, GA
-
1,862
-
-
1,862
-
-
940 North Point Parkway
Alpharetta, GA
-
17,103
17,543
5,809
3300 Old Milton Parkway
Alpharetta, GA
-
18,902
1,259
20,161
5,652
3400-A Old Milton Parkway
Alpharetta, GA
-
1,769
36,152
1,769
36,936
11,834
3400-C Old Milton Parkway
Anderson, IN
-
1,193
20,644
-
1,193
20,644
3125 S. Scatterfield Rd.
Arcadia, CA
-
5,408
23,219
4,058
5,618
27,067
9,859
301 W. Huntington Drive
Arlington, TX
-
18,243
18,617
2,796
902 W. Randol Mill Road
Atlanta, GA
-
4,931
18,720
6,731
5,387
24,996
10,420
755 Mt. Vernon Hwy.
Atlanta, GA
-
1,947
24,248
1,681
2,030
25,845
6,803
975 Johnson Ferry Road
Atlanta, GA
-
-
43,425
1,098
-
44,523
11,603
Peachtree-Dunwoody Road
Austin, TX
-
1,066
10,112
-
1,066
10,112
5301-B Davis Lane
Bardstown, KY
-
7,966
8,007
4359 New Shepherdsville Rd
Bartlett, TN
-
15,015
2,042
17,057
6,305
2996 Kate Bond Rd.
Bel Air, MD
-
-
24,769
-
-
24,769
1,069
12 Medstar Boulevard
Bellevue, NE
-
-
16,680
-
16,682
4,658
2510 Bellevue Medical Center Drive
Bettendorf, IA
-
-
7,110
-
7,183
2140 53rd Avenue
Beverly Hills, CA
-
20,766
40,730
1,871
20,766
42,601
4,352
9675 Brighton Way
Beverly Hills, CA
-
18,863
1,192
18,863
1,379
415 North Bedford
Beverly Hills, CA
-
19,863
31,690
19,863
32,005
3,514
416 North Bedford
Beverly Hills, CA
33,729
32,603
28,639
32,603
29,132
4,117
435 North Bedford
Beverly Hills, CA
78,271
52,772
87,366
-
52,772
87,366
8,731
436 North Bedford
Birmingham, AL
-
10,201
10,827
3,863
801 Princeton Avenue SW
Birmingham, AL
-
11,733
1,949
13,682
4,512
817 Princeton Avenue SW
Birmingham, AL
-
18,726
2,006
20,731
7,398
833 Princeton Avenue SW
Boardman, OH
-
12,161
12,170
4,225
8423 Market St
Boca Raton, FL
-
12,312
12,714
3,103
9960 S. Central Park Boulevard
Boca Raton, FL
-
34,002
3,261
37,158
13,169
9970 S. Central Park Blvd.
Boerne, TX
-
12,951
-
12,951
3,100
134 Menger Springs Road
Boynton Beach, FL
-
2,048
7,692
2,185
8,539
3,507
8188 Jog Rd.
Boynton Beach, FL
-
2,048
7,403
1,576
2,185
8,841
3,640
8200 Jog Road
Boynton Beach, FL
-
5,611
8,340
13,895
5,191
10075 Jog Rd.
Boynton Beach, FL
-
13,324
40,369
2,681
14,030
42,344
9,445
10301 Hagen Ranch Road
Bradenton, FL
-
1,184
9,799
1,184
10,216
1,454
315 75th Street West
Bradenton, FL
-
1,035
4,298
-
1,035
4,298
7005 Cortez Road West
Bridgeton, MO
-
1,701
6,228
-
1,701
6,228
3440 De Paul Ln.
Bridgeton, MO
-
21,221
21,409
6,149
12266 DePaul Dr
Buckhurst Hill, UKH
-
12,717
54,001
-
12,717
54,001
3,832
High Road
Burleson, TX
-
12,611
13,309
3,599
12001 South Freeway
Burnsville, MN
-
-
31,596
-
32,164
6,446
14101 Fairview Dr
Carmel, IN
-
2,280
19,238
2,280
19,886
6,935
12188-A North Meridian Street
Carmel, IN
-
2,026
21,559
2,026
21,586
7,913
12188-B North Meridian Street
Castle Rock, CO
-
13,004
13,576
2,347
2352 Meadows Boulevard
Castle Rock, CO
-
-
11,795
-
-
11,795
Meadows Boulevard
Cedar Park, TX
-
20,701
-
20,701
1401 Medical Parkway, Building 2
Charleston, SC
-
2,773
25,928
2,815
25,980
3,950
325 Folly Road
Cincinnati, OH
-
-
17,880
18,080
2,853
3301 Mercy Health Boulevard
Claremore, OK
-
11,173
-
11,173
3,009
1501 N. Florence Ave.
Clarkson Valley, MO
-
-
35,592
-
-
35,592
11,095
15945 Clayton Rd
Clear Lake, TX
-
-
13,882
-
-
13,882
1,157
1010 South Ponds Drive
Columbia, MD
-
2,333
19,232
2,333
20,098
4,106
10700 Charter Drive
Columbia, MD
-
33,885
1,417
9,353
25,972
4,616
5450 & 5500 Knoll N Dr.
Coon Rapids, MN
-
-
26,679
1,119
-
27,798
4,240
11850 Blackfoot Street NW
Costa Mesa, CA
22,748
22,033
24,332
-
22,033
24,332
1,376
1640 Newport Boulevard
Cypress, TX
-
1,287
-
-
1,287
-
-
14940 Mueschke Road
Cypress, TX
-
2,985
-
-
2,985
-
-
13105 Wortham Center Drive
Dade City, FL
-
1,211
5,511
-
1,211
5,511
1,277
13413 US Hwy 301
Dallas, TX
-
15,419
-
15,419
1,051
8196 Walnut Hill Lane
Dallas, TX
-
28,690
3,624
32,315
12,204
9330 Poppy Dr.
Dallas, TX
-
52,488
52,714
9,869
7115 Greenville Avenue
Dayton, OH
-
6,919
7,281
2,591
1530 Needmore Road
Deerfield Beach, FL
-
2,408
7,809
2,540
8,094
3,104
1192 East Newport Center Drive
Delray Beach, FL
-
1,882
34,767
6,895
2,449
41,094
17,406
5130-5150 Linton Blvd.
Durham, NC
-
1,212
22,858
1,212
22,859
3,166
1823 Hillandale Road
Edina, MN
-
15,132
16,077
4,346
8100 W 78th St
El Paso, TX
-
17,075
2,249
19,324
8,236
2400 Trawood Dr.
Everett, WA
-
4,842
26,010
-
4,842
26,010
6,630
13020 Meridian Ave. S.
Fenton, MO
10,919
27,485
28,199
6,192
1011 Bowles Avenue
Fenton, MO
-
13,911
14,016
2,226
1055 Bowles Avenue
Florham Park, NJ
-
8,578
61,779
-
8,578
61,779
-
150 Park Avenue
Flower Mound, TX
-
9,277
-
9,277
1,075
2560 Central Park Avenue
Flower Mound, TX
-
4,164
27,027
-
4,164
27,027
3,751
4370 Medical Arts Drive
Flower Mound, TX
-
4,620
-
-
4,620
-
-
Medical Arts Drive
Fort Wayne, IN
-
1,105
22,836
-
1,105
22,836
4,515
7916 Jefferson Boulevard
Fort Worth, TX
-
26,020
26,378
4,027
10840 Texas Health Trail
Fort Worth, TX
-
6,099
-
6,099
7200 Oakmont Boulevard
Franklin, TN
-
2,338
12,138
2,560
2,338
14,699
5,518
100 Covey Drive
Frisco, TX
-
-
18,635
1,476
-
20,111
7,141
4401 Coit Road
Frisco, TX
-
-
15,309
2,537
-
17,846
6,838
4461 Coit Road
Fullerton, CA
-
5,477
53,890
-
5,477
53,890
1,929
1950 Sunny Crest Drive
Gallatin, TN
-
21,801
1,729
23,506
6,998
300 Steam Plant Rd
Gig Harbor, WA
-
30,810
-
30,810
2,712
11511 Canterwood Blvd. NW
Glendale, CA
-
18,398
1,455
19,853
6,341
222 W. Eulalia St.
Grand Prairie, TX
-
6,086
-
6,086
1,793
2740 N State Hwy
Grapevine, TX
-
-
5,943
4,778
2,081
8,640
1,203
2040 W State Hwy
Grapevine, TX
-
3,365
15,669
3,365
15,699
3,256
2020 W State Hwy
Greeneville, TN
-
10,104
10,178
3,387
438 East Vann Rd
Greenwood, IN
-
8,316
26,384
-
8,316
26,384
5,821
1260 Innovation Parkway
Greenwood, IN
-
2,098
21,538
2,098
22,176
2,579
3000 S State Road 135
Greenwood, IN
-
1,262
7,045
1,262
7,053
1,226
333 E County Line Road
High Point, NC
-
2,659
29,069
2,659
29,191
5,515
4515 Premier Drive
Highland, IL
-
-
8,834
-
-
8,834
1,298
12860 Troxler Avenue
Houston, TX
-
10,403
-
-
10,403
-
F.M. 1960 & Northgate Forest Dr.
Houston, TX
-
5,837
33,128
5,837
33,278
9,728
15655 Cypress Woods Medical Dr.
Houston, TX
-
3,102
32,323
2,497
3,242
34,680
5,775
1900 N Loop W Freeway
Houston, TX
-
3,688
13,313
3,688
13,430
2,910
10701 Vintage Preserve Parkway
Houston, TX
-
1,099
1,604
78,408
12,815
68,296
11,702
2727 W Holcombe Boulevard
Howell, MI
-
2,000
13,928
-
2,000
13,928
1225 South Latson Road
Hudson, OH
-
2,587
13,720
2,868
14,111
4,157
5655 Hudson Drive
Humble, TX
-
-
9,941
-
-
9,941
8233 N. Sam Houston Parkway E.
Jackson, MI
-
17,367
17,429
3,709
1201 E Michigan Avenue
Jupiter, FL
-
2,252
11,415
3,397
2,608
14,456
4,941
550 Heritage Dr.
Jupiter, FL
-
2,825
5,858
3,005
6,540
2,807
600 Heritage Dr.
Killeen, TX
-
22,878
22,970
7,008
2405 Clear Creek Rd
Killeen, TX
-
1,907
3,575
-
1,907
3,575
5702 E Central Texas Expressway
Kyle, TX
-
2,569
14,384
2,569
14,850
2,321
135 Bunton Creek Road
La Jolla, CA
-
12,855
32,658
12,855
32,826
4,500
4150 Regents Park Row
La Jolla, CA
-
9,425
26,525
-
9,425
26,525
2,814
4120 & 4130 La Jolla Village Drive
La Quinta, CA
-
3,266
22,066
3,279
22,247
3,785
47647 Caleo Bay Drive
Lake St Louis, MO
-
14,249
14,441
4,499
400 Medical Dr
Lakeway, TX
-
2,801
-
-
2,801
-
-
Lohmans Crossing Road
Lakewood, CA
-
14,885
2,291
17,176
5,902
5750 Downey Ave.
Lakewood, WA
-
16,017
16,693
3,256
11307 Bridgeport Way SW
Land O Lakes, FL
-
3,025
26,249
-
3,025
26,249
2100 Via Bella
Land O Lakes, FL
-
1,376
6,750
-
1,376
6,750
2150 Via Bella
Las Vegas, NV
-
6,127
-
-
6,127
-
-
SW corner of Deer Springs Way and Riley Street
Las Vegas, NV
-
2,319
4,612
1,039
2,319
5,651
2,478
2870 S. Maryland Pkwy.
Las Vegas, NV
-
15,287
1,351
16,638
5,930
1815 E. Lake Mead Blvd.
Las Vegas, NV
-
6,921
7,135
3,022
1776 E. Warm Springs Rd.
Lenexa, KS
-
17,926
18,216
4,676
23401 Prairie Star Pkwy
Lenexa, KS
-
13,767
-
13,767
1,353
23351 Prairie Star Parkway
Lincoln, NE
-
1,420
29,723
1,420
30,145
9,862
575 South 70th St
London, UKI
-
5,547
12,253
-
5,547
12,253
17-19 View Road
London, UKI
-
19,076
167,391
-
19,076
167,391
11,878
53 Parkside
London, UKI
-
4,329
29,815
-
4,329
29,815
2,116
49 Parkside
Los Alamitos, CA
-
18,635
1,085
19,720
6,792
3771 Katella Ave.
Los Gatos, CA
-
22,386
2,354
24,739
10,115
555 Knowles Dr.
Loxahatchee, FL
-
1,637
5,048
1,063
1,719
6,029
2,484
12977 Southern Blvd.
Loxahatchee, FL
-
1,340
6,509
1,252
1,440
7,662
2,853
12989 Southern Blvd.
Loxahatchee, FL
-
1,553
4,694
1,369
1,650
5,966
2,358
12983 Southern Blvd.
Marietta, GA
-
2,682
20,053
1,392
2,682
21,446
1,010
4800 Olde Towne Parkway
Melbourne, FL
-
3,439
50,461
3,538
50,783
7,147
2222 South Harbor City Boulevard
Menasha, WI
-
1,374
13,861
3,074
1,345
16,964
1,364
1550 Midway Place
Merced, CA
-
-
13,772
-
14,586
4,436
315 Mercy Ave.
Merriam, KS
-
8,005
8,309
2,898
8800 West 75th Street
Merriam, KS
-
-
1,996
2,184
4,099
1,508
7301 Frontage Street
Merriam, KS
-
-
10,222
4,510
14,287
4,793
8901 West 74th Street
Merriam, KS
-
-
5,862
3,163
8,842
2,960
9119 West 74th Street
Merriam, KS
-
1,257
24,911
-
1,257
24,911
4,881
9301 West 74th Street
Merrillville, IN
-
-
22,134
-
23,024
6,471
101 E. 87th Ave.
Mesa, AZ
-
1,558
9,561
1,558
10,300
4,396
6424 East Broadway Road
Mesquite, TX
-
3,834
-
3,834
1575 I-30
Mission Hills, CA
24,325
-
42,276
5,777
4,791
43,262
6,715
11550 Indian Hills Road
Missouri City, TX
-
1,360
7,146
-
1,360
7,146
7010 Highway 6
Moline, IL
-
-
8,783
-
8,812
3900 28th Avenue Drive
Monticello, MN
7,526
18,489
18,537
3,317
1001 Hart Boulevard
Moorestown, NJ
-
50,896
50,902
10,435
401 Young Avenue
Morrow, GA
-
8,064
8,270
4,063
6635 Lake Drive
Mount Juliet, TN
-
1,566
11,697
1,434
1,566
13,131
5,153
5002 Crossings Circle
Mount Vernon, IL
-
-
24,892
-
-
24,892
5,282
2 Good Samaritan Way
Murrieta, CA
-
3,800
-
-
3,800
-
-
28078 Baxter Rd.
Murrieta, CA
-
-
47,190
-
47,236
15,692
28078 Baxter Rd.
Nashville, TN
-
1,806
7,165
3,234
1,942
10,263
3,951
310 25th Ave. N.
Nassau Bay, TX
-
31,206
31,374
7,866
18100 St John Drive
Nassau Bay, TX
-
10,613
1,282
11,894
3,369
2060 Space Park Drive
New Albany, IN
-
2,411
16,494
2,411
16,524
2,318
2210 Green Valley Road
Niagara Falls, NY
-
1,433
10,891
1,721
11,037
5,311
6932 - 6934 Williams Rd
Niagara Falls, NY
-
8,362
8,669
2,967
6930 Williams Rd
Oklahoma City, OK
-
19,135
19,513
4,392
535 NW 9th Street
Oro Valley, AZ
-
18,339
19,308
6,489
1521 East Tangerine Rd.
Palmer, AK
-
29,705
1,333
31,038
10,170
2490 South Woodworth Loop
Pasadena, TX
-
1,700
8,009
-
1,700
8,009
5001 E Sam Houston Parkway S
Pearland, TX
-
1,500
11,253
-
1,500
11,253
1,175
2515 Business Center Drive
Pearland, TX
-
9,594
32,753
9,807
32,731
3,801
11511 Shadow Creek Parkway
Pendleton, OR
-
-
10,312
-
10,355
1,076
3001 St. Anthony Way
Phoenix, AZ
-
1,149
48,018
11,667
1,149
59,685
23,017
2222 E. Highland Ave.
Pineville, NC
-
6,974
2,504
1,077
9,362
4,180
10512 Park Rd.
Plano, TX
-
5,423
20,698
5,423
20,836
11,412
6957 Plano Parkway
Plano, TX
-
83,209
1,356
84,566
18,638
6020 West Parker Road
Plantation, FL
-
8,563
10,666
4,269
8,575
14,923
7,044
851-865 SW 78th Ave.
Plantation, FL
-
8,848
9,262
8,908
10,095
6,498
600 Pine Island Rd.
Portland, ME
-
25,930
25,943
7,307
195 Fore River Parkway
Redmond, WA
-
5,015
26,697
5,015
27,573
7,241
18000 NE Union Hill Rd.
Reno, NV
-
1,117
21,972
2,056
1,117
24,028
8,627
343 Elm St.
Richmond, TX
-
2,000
9,118
-
2,000
9,118
22121 FM 1093 Road
Richmond, VA
-
2,969
26,697
3,004
27,291
7,440
7001 Forest Avenue
Rockwall, TX
-
17,197
17,723
4,142
3142 Horizon Road
Rogers, AR
-
1,062
28,680
2,004
1,062
30,684
9,017
2708 Rife Medical Lane
Rolla, MO
-
1,931
47,639
-
1,931
47,639
11,144
1605 Martin Spring Drive
Roswell, NM
-
5,851
-
5,851
1,619
601 West Country Club Road
Roswell, NM
-
15,984
16,002
3,974
350 West Country Club Road
Roswell, NM
-
17,171
17,171
3,499
300 West Country Club Road
Sacramento, CA
-
12,756
1,737
14,490
5,359
8120 Timberlake Way
Salem, NH
-
1,655
14,050
1,655
14,070
2,381
31 Stiles Road
San Antonio, TX
-
1,048
10,252
-
1,048
10,252
4,636
19016 Stone Oak Pkwy.
San Antonio, TX
-
1,038
9,173
1,853
1,074
10,990
5,151
540 Stone Oak Centre Drive
San Antonio, TX
-
4,518
31,041
3,353
4,548
34,364
9,138
5282 Medical Drive
San Antonio, TX
-
17,288
17,907
3,636
3903 Wiseman Boulevard
Santa Clarita, CA
-
-
2,338
20,063
5,218
17,183
2,505
23861 McBean Parkway
Santa Clarita, CA
-
-
28,384
1,499
5,250
24,633
3,534
23929 McBean Parkway
Santa Clarita, CA
-
11,595
11,872
23871 McBean Parkway
Santa Clarita, CA
25,000
40,257
-
40,257
3,964
23803 McBean Parkway
Santa Clarita, CA
-
-
20,618
4,407
16,929
2,615
24355 Lyons Avenue
Sarasota, FL
-
47,325
3,134
50,459
11,273
1921 Waldemere Street
Seattle, WA
-
4,410
38,428
4,410
38,820
13,671
5350 Tallman Ave
Sewell, NJ
-
57,929
58,508
21,485
Hurffville-Cross Keys Road
Shakopee, MN
5,900
11,412
11,802
3,714
1515 St Francis Ave
Shakopee, MN
9,964
18,089
18,102
4,421
1601 St Francis Ave
Shenandoah, TX
-
-
21,135
21,162
1,586
106 Vision Park Boulevard
Sherman Oaks, CA
-
-
32,186
2,729
3,121
31,795
4,762
4955 Van Nuys Boulevard
Somerville, NJ
-
3,400
22,244
3,400
22,246
5,237
30 Rehill Avenue
Southlake, TX
-
3,000
-
-
3,000
-
-
Central Avenue
Southlake, TX
-
18,243
1,101
19,344
4,305
1545 East Southlake Boulevard
Southlake, TX
-
30,549
3,915
34,464
6,472
1545 East Southlake Boulevard
Springfield, IL
-
1,569
10,350
-
1,568
10,351
1100 East Lincolnshire Blvd
Springfield, IL
-
3,519
3,551
2801 Mathers Rd.
St Paul, MN
-
37,695
38,096
4,007
225 Smith Avenue N.
St. Louis, MO
-
17,247
2,004
19,250
6,769
2325 Dougherty Rd.
St. Paul, MN
-
2,706
39,507
2,701
39,838
10,622
435 Phalen Boulevard
Stamford, CT
-
-
41,153
1,709
-
42,862
1,176
29 Hospital Plaza
Suffern, NY
-
37,255
37,394
10,155
257 Lafayette Avenue
Suffolk, VA
-
1,566
11,511
1,620
11,676
4,328
5838 Harbour View Blvd.
Sugar Land, TX
-
3,543
15,532
-
3,543
15,532
4,408
11555 University Boulevard
Tacoma, WA
-
-
64,307
-
-
64,307
14,457
1608 South J Street
Tallahassee, FL
-
-
17,449
-
-
17,449
5,095
One Healing Place
Tampa, FL
-
4,319
12,234
-
4,319
12,234
2,425
14547 Bruce B Downs Blvd
Tampa, FL
-
1,462
7,270
-
1,462
7,270
12500 N Dale Mabry
Temple, TX
-
2,900
9,954
2,900
9,980
1,375
2601 Thornton Lane
Timonium, MD
-
8,829
12,568
-
8,829
12,568
2118 Greenspring Drive
Tucson, AZ
-
1,302
4,925
1,325
5,799
2,662
2055 W. Hospital Dr.
Tustin, CA
-
3,345
3,345
14591 Newport Ave
Tustin, CA
-
3,361
12,039
1,421
3,361
13,460
2,124
14642 Newport Ave
Van Nuys, CA
-
-
36,187
-
-
36,187
8,749
6815 Noble Ave.
Voorhees, NJ
-
6,404
24,251
1,499
6,477
25,677
9,126
900 Centennial Blvd.
Voorhees, NJ
-
96,075
96,381
21,530
200 Bowman Drive
Wausau, WI
-
2,050
12,176
-
2,050
12,176
1901 Westwood Center Boulevard
Waxahachie, TX
-
-
18,784
18,576
2460 N I-35 East
Wellington, FL
-
16,933
2,685
19,398
6,388
10115 Forest Hill Blvd.
Wellington, FL
-
13,697
1,637
15,142
4,720
1395 State Rd. 7
West Seneca, NY
-
22,435
3,841
1,665
25,528
9,442
550 Orchard Park Rd
Zephyrhills, FL
$
-
$
3,874
$
27,266
$
-
$
3,875
$
27,274
$
5,923
38135 Market Square Dr
Outpatient medical total:
$
218,382
$
574,346
$
4,724,190
$
315,225
$
639,696
$
4,974,067
$
1,096,012
Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2017
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Buildings & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Buildings & Improvements
Accumulated Depreciation
Year Acquired
Year Built
Address
Assets held for sale:
Agawam, MA
$
-
$
1,230
$
13,618
$
-
$
-
$
8,189
$
-
61 Cooper Street
Agawam, MA
-
15,304
-
-
8,807
-
55 Cooper Street
Agawam, MA
-
10,661
-
-
6,185
-
464 Main Street
Agawam, MA
-
10,562
-
-
6,111
-
65 Cooper Street
Aspen Hill, MD
-
-
9,008
-
-
7,730
-
3227 Bel Pre Road
Aurora, CO
-
2,600
5,906
2,128
-
10,634
-
14101 E. Evans Ave.
Ayer, MA
-
-
22,074
-
-
11,708
-
400 Groton Road
Beachwood, OH
-
1,260
23,478
-
-
13,114
-
3800 Park East Drive
Bend, OR
-
1,210
9,181
-
-
9,762
-
1801 NE Lotus Drive
Bremerton, WA
-
2,210
-
-
2,073
-
3231 Pine Road
Bremerton, WA
-
10,420
-
-
9,872
-
3201 Pine Road NE
Bremerton, WA
-
2,899
-
-
3,200
-
3210 Rickey Road
Burlington, WA
-
3,860
31,722
-
-
33,317
-
400 Gilkey Road
Carson City, NV
-
8,238
-
-
8,037
-
1111 W. College Parkway
Cedar Grove, WI
-
-
-
-
313 S. Main St.
Cloquet, MN
-
4,660
-
-
4,285
-
705 Horizon Circle
Columbia, SC
-
2,120
4,860
1,070
-
8,050
-
731 Polo Rd.
Concord, NH
-
3,041
-
-
3,344
-
227 Pleasant Street
Crown Point, IN
-
20,044
-
-
15,895
-
1555 South Main Street
Dallas, OR
-
9,427
-
10,129
-
664 SE Jefferson
Dallas, TX
-
1,080
9,655
-
-
6,615
-
3611 Dickason Avenue
Dyer, IN
-
1,800
25,061
-
-
20,365
-
1532 Calumet Avenue
Eugene, OR
-
5,822
-
-
6,252
-
4550 West Amazon Drive
Franklin, WI
4,161
6,872
7,550
-
-
10,294
-
9200 W. Loomis Rd.
Glastonbury, CT
-
1,950
9,532
-
-
7,520
-
72 Salmon Brook Drive
Grass Valley, CA
4,113
7,667
-
-
7,324
-
415 Sierra College Drive
Green Bay, WI
5,178
-
14,891
-
-
10,945
-
2253 W. Mason St.
Green Bay, WI
-
-
20,098
-
-
14,874
-
2845 Greenbrier Road
Green Bay, WI
-
-
11,696
-
-
7,474
-
2845 Greenbrier Road
Hemet, CA
-
3,405
-
-
3,342
-
25818 Columbia St.
Houston, TX
-
5,090
9,471
-
-
8,442
-
15015 Cypress Woods Medical Drive
Houston, TX
-
27,598
-
-
9,332
-
Cypresswood Dr
Hove, UKJ
-
1,360
6,979
-
-
2,361
-
Furze Hill
Indianapolis, IN
-
6,287
11,018
-
17,800
-
8616 W. Tenth St.
Indianapolis, IN
-
2,473
6,335
-
9,063
-
8616 W.Tenth St.
Kenosha, WI
5,676
-
18,058
-
-
12,519
-
10400 75th St.
Kent, WA
-
20,318
2,768
-
24,026
-
24121 116th Avenue SE
Lancaster, NH
-
-
-
-
63 Country Village Road
Lowell, MA
-
1,070
13,481
-
-
1,960
-
841 Merrimack Street
Marinette, WI
4,832
-
13,538
-
-
8,664
-
4061 Old Peshtigo Rd.
McMinnville, OR
-
7,984
-
-
8,296
-
3121 NE Cumulus Avenue
Meridian, ID
-
3,600
20,802
-
-
6,860
-
2825 E. Blue Horizon Dr.
Milwaukee, WI
3,424
8,457
-
-
5,846
-
1218 W. Kilbourn Ave.
Milwaukee, WI
7,547
1,425
11,520
-
-
8,731
-
3301-3355 W. Forest Home Ave.
Milwaukee, WI
1,888
2,185
-
-
2,108
-
840 N. 12th St.
Milwaukee, WI
13,270
-
44,535
-
-
30,222
-
2801 W. Kinnickinnic Pkwy.
Milwaukie, OR
-
6,782
-
-
6,828
-
5770 SE Kellogg Creek Drive
Mount Vernon, WA
-
3,440
21,842
-
25,410
-
1810 E. Division Street
Mt. Vernon, WA
-
2,200
-
-
2,066
-
3807 East College Way
Muskego, WI
2,159
-
-
2,156
-
S74 W16775 Janesville Rd.
New Berlin, WI
3,500
3,739
8,290
-
-
8,129
-
14555 W. National Ave.
New Haven, IN
-
3,524
-
-
1,961
-
1201 Daly Dr.
North Bend, OR
-
1,290
7,361
-
8,815
-
2290 Inland Drive
North Cape May, NJ
-
-
-
610 Town Bank Road
Oshkosh, WI
-
-
18,339
-
-
12,160
-
855 North Wethaven Dr.
Oshkosh, WI
5,978
-
15,881
-
-
11,337
-
855 North Wethaven Dr.
Palm Springs, FL
-
4,066
-
-
2,061
-
1640 S. Congress Ave.
Palm Springs, FL
-
1,182
7,765
-
-
3,072
-
1630 S. Congress Ave.
Plymouth, WI
1,059
1,250
1,870
-
-
2,149
-
2636 Eastern Ave.
Post Falls, ID
-
2,700
14,217
-
-
14,941
-
460 N. Garden Plaza Ct.
Richardson, TX
-
1,800
16,562
-
-
17,440
-
1350 East Lookout Drive
Rockville, MD
-
-
16,398
-
-
8,715
-
9701 Medical Center Drive
Roseburg, OR
-
1,200
4,891
-
-
5,792
-
1901 NW Hughwood Drive
Salem, OR
-
4,726
-
-
4,903
-
3988 12th Street SE
Sheboygan, WI
1,463
1,012
2,216
-
-
2,318
-
1813 Ashland Ave.
Shelton, WA
-
17,049
-
-
15,409
-
900 W Alpine Way
Sparks, NV
-
3,700
46,526
-
-
39,559
-
275 Neighborhood Way
Springfield, OR
-
1,790
8,865
-
-
10,131
-
770 Harlow Road
Summit, WI
-
2,899
87,666
-
-
60,029
-
36500 Aurora Dr.
Tucson, AZ
-
1,190
18,318
-
19,824
-
8151 E Speedway Boulevard
Wallingford, CT
-
1,210
-
-
-
35 Marc Drive
West Allis, WI
2,685
1,106
3,308
-
-
3,159
-
11333 W. National Ave.
Westlake, OH
-
1,330
17,926
-
-
10,208
-
Westchester Pkwy.
Wilkes-Barre, PA
$
-
$
$
2,301
$
-
$
-
$
1,545
$
-
300 Courtright Street
Assets held for sale total
$
65,682
$
85,466
$
909,837
$
24,356
$
-
$
734,147
-
Summary:
Triple-net
$
343,361
$
818,863
$
7,759,508
$
382,344
$
847,780
$
8,112,937
$
1,380,023
Seniors housing operating
1,988,700
1,174,980
12,626,419
1,234,180
1,246,991
13,788,584
2,362,335
Outpatient medical
218,382
574,346
4,724,190
315,225
639,696
4,974,067
1,096,012
Construction in progress
-
-
237,746
-
-
237,746
-
Total continuing operating properties
2,550,443
2,568,189
25,347,863
1,931,749
2,734,467
27,113,334
4,838,370
Assets held for sale
65,682
85,466
909,837
24,356
-
734,147
-
Total investments in real property owned
$
2,616,125
$
2,653,655
$
26,257,700
$
1,956,105
$
2,734,467
$
27,847,481
$
4,838,370
(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,
(in thousands)
Investment in real estate:
Beginning balance
$
30,041,058
$
29,865,490
$
25,491,935
Acquisitions and development
1,276,636
2,834,279
5,076,830
Improvements
250,276
219,146
187,752
Deconsolidation of previously consolidated venture
(144,897)
-
-
Impairment of assets
(101,527)
(37,207)
(2,220)
Dispositions
(1,203,247)
(2,411,219)
(491,396)
Foreign currency translation
415,879
(429,431)
(397,411)
Other(1)
47,770
-
-
Ending balance(2)
$
30,581,948
$
30,041,058
$
29,865,490
Accumulated depreciation:
Beginning balance
$
4,093,494
$
3,796,297
$
3,020,908
Depreciation and amortization expenses
921,720
901,242
826,240
Amortization of above market leases
7,303
7,909
11,912
Disposition and other
(192,029)
(514,651)
(111,199)
Foreign currency translation
7,882
(97,303)
48,436
Ending balance
$
4,838,370
$
4,093,494
$
3,796,297
(1) Primarily relates to the acquisition of an asset through foreclosure.
(2) The unaudited aggregate cost for tax purposes for real property equals $25,618,090,000 at December 31, 2017.
Welltower Inc.
Schedule IV - Mortgage Loans on Real Estate
December 31, 2017
(in thousands)
Location
Segment
Interest Rate
Final Maturity Date
Monthly Payment Terms
Prior Liens
Face Amount of Mortgages
Carrying Amount of Mortgages
Principal Amount of Loans Subject to Delinquent Principal or Interest
First mortgages relating to 1 property located in:
California
Triple-Net
8.11%
12/15/20
$
2,011,590
$
-
$
28,000
$
$
-
United Kingdom
Triple-Net
7.25%
11/21/19
115,794,386
-
18,805
18,805
-
United Kingdom
Triple-Net
8.29%
01/16/18
9,521,615
-
2,841
1,352
-
United Kingdom
Triple-Net
8.00%
08/24/22
10,858,294
-
11,712
1,645
-
United Kingdom
Triple-Net
8.55%
07/01/19
83,119,990
-
15,487
15,486
-
United Kingdom
Triple-Net
7.00%
03/14/22
96,303,670
-
28,374
16,139
-
United Kingdom
Triple-Net
8.00%
07/06/19
137,884,551
-
20,294
20,294
-
Oklahoma
Triple-Net
9.02%
11/01/19
88,826,160
-
11,610
11,595
-
Oregon
Triple-Net
7.10%
12/31/17
1,356,780
-
-
Pennsylvania
Triple-Net
8.11%
03/01/22
36,683,720
-
15,530
5,706
-
Florida
Triple-Net
8.79%
06/23/21
94,519,150
-
17,100
12,444
-
First mortgages relating to multiple properties:
7 properties in four states
Triple-Net
10.00%
01/01/22
$
297,169,200
-
65,796
25,832
-
13 properties in Texas
Triple-Net
10.00%
01/01/22
851,672,100
-
103,620
82,041
-
13 properties in six states
Triple-Net
10.00%
01/01/22
1,139,453,100
-
138,633
91,164
-
Second mortgages relating to 1 property located in:
Texas
Triple-Net
12.17%
05/01/19
32,033
11,367
3,100
3,100
-
Totals
$
11,367
$
481,127
$
306,120
$
-
Year Ended December 31,
Reconciliation of mortgage loans:
(in thousands)
Balance at beginning of year
$
485,735
$
635,492
$
188,651
Additions:
New mortgage loans
6,706
8,223
524,088
Draws on existing loans
58,224
92,815
30,550
64,930
101,038
554,638
Deductions:
Collections of principal
(180,135)
(191,134)
(80,552)
Conversions to real property
-
(45,044)
(23,288)
Change in allowance for loan losses and charge-offs
(71,535)
(3,053)
-
Total deductions
(251,670)
(239,231)
(103,840)
Change in balance due to foreign currency translation
7,125
(11,564)
(3,957)
Balance at end of year
$
306,120
$
485,735
$
635,492

Market Capitalization: 19512675.0
1-Year Return: 0.005361906718462706
252-Day Return: $252_day_return