SEC Form 10-K Filing Report

Company: WELLTOWER INC.
CIK: 766704
SIC Code: 6798
Filing Date: 2019-02-25 00:00:00
Market Capitalization: 27947914.173187256

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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 the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. Welltower™, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing and post-acute communities and outpatient medical properties. 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, 2018.
Property Types
We invest in seniors housing and health care real estate and evaluate our business through three reportable segments: Seniors Housing Operating, Triple-net and Outpatient Medical. For additional information regarding our segments, please see Note 17 to our consolidated financial statements. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2 to our consolidated financial statements. The following is a summary of our various property types.
Seniors Housing Operating
Our seniors housing operating properties offer services including independent living and independent supportive living, continuing care retirement communities, assisted living, Alzheimer's/dementia care and include care homes with or without nursing (U.K.), which assist with activities of daily living that preserve a person's mobility and social systems to promote cognitive engagement. Our properties include stand-alone properties that provide one level of service, combination properties that provide multiple levels of service and communities or campuses that provide a wide range of services. Properties are primarily held in joint venture entities with operating partners. We utilize the structure authorized by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure (the provisions of the Internal Revenue Code authorizing the RIDEA structure were enacted as part of the Housing and Economic Recovery Act of 2008).
Independent Living and Independent Supportive Living (Canada) Independent living and independent supportive living refers to age-restricted, multifamily properties with central dining that provide residents access to meals and other services such as housekeeping, linen service, transportation and social and recreational activities.
Continuing Care Retirement Communities Continuing care retirement communities typically include a combination of detached homes and properties offering independent living, assisted living and/or long-term/post-acute care services on one campus. These communities appeal to residents because there is no need to relocate when health and medical needs change. Resident payment plans vary, but can include entrance fees, condominium fees and rental fees. Many of these communities also charge monthly maintenance fees in exchange for a living unit, meals and some health services.
Assisted Living Assisted living refers to state-regulated rental properties that provide independent living services, but also provide supportive care from trained employees to residents who require assistance with activities of daily living, including, but not limited to, management of medications, bathing, dressing, toileting, ambulating and eating.
Alzheimer’s/Dementia Care Certain properties offering assisted living may include state-licensed settings that specialize in caring for those afflicted with Alzheimer’s disease and/or other types of dementia.
Care Homes with or without Nursing (U.K.) Care homes without nursing, regulated by the Care Quality Commission ("CQC”), are rental properties that provide essentially the same services as U.S. assisted living. Care homes with nursing, also regulated by
the CQC, are licensed daily rate or rental properties where most individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed for various national and local reimbursement programs. Unlike the U.S., care homes with nursing in the U.K. generally do not provide post-acute care.
Our Seniors Housing Operating segment accounted for 69%, 65% and 59% of total revenues for the years ended December 31, 2018, 2017 and 2016, respectively. As of December 31, 2018, we had relationships with 21 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, 2018, our relationship with Sunrise Senior Living accounted for approximately 36% of our Seniors Housing Operating segment revenues and 25% of our total revenues.
Triple-net
Our triple-net properties offer services including independent living and independent supportive living (Canada), assisted living, continuing care retirement communities, Alzheimer's/dementia care and care homes with or without nursing (U.K.) described above, as well as long-term/post-acute care. We invest primarily through acquisitions, development and joint venture partnerships. Our properties are primarily leased to operators under long-term, triple-net master leases that obligate the tenant to pay all operating costs, utilities, real estate taxes, insurance, building repairs, maintenance costs and all obligations under certain ground leases. We are not involved in property management. Our properties include stand-alone properties that provide one level of service, combination facilities that provide multiple levels of service, and communities or campuses that provide a wide range of services.
Long-Term/Post-Acute Care Facilities Post-acute care is at the leading edge of reducing health care costs while improving quality. These high-impact centers help patients recover from illness or surgery with the goals of getting the patient home and healed faster and reducing hospital readmission rates. Our long-term/post-acute care properties generally offer skilled nursing/post-acute care, inpatient rehabilitation and long-term acute care services. Skilled nursing/post-acute care refers to licensed daily rate or rental properties where most individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed for Medicaid and/or Medicare reimbursement in the U.S. or provincial reimbursement in Canada. All properties offer some level of rehabilitation services. Some properties focus on higher acuity patients and offer rehabilitation units specializing in cardiac, orthopedic, dialysis, neurological or pulmonary rehabilitation. Inpatient rehabilitation properties provide intensive inpatient services after illness, injury or surgery to patients able to tolerate and benefit from three hours of rehabilitation hours per day. Long-term acute care properties provide inpatient services for patients with complex medical conditions that require more intensive care, monitoring or emergency support than is available in most skilled nursing/post-acute care properties.
Our Triple-net segment accounted for 19%, 22% and 28% of total revenues for the years ended December 31, 2018, 2017 and 2016, respectively. For the year ended December 31, 2018, our revenues related to our relationship with Genesis HealthCare (“Genesis”) accounted for approximately 15% of our Triple-net segment revenues and 3% of our total revenues. As of December 31, 2018, our relationship with Genesis was comprised of a master lease for 87 properties owned 100% by us, two real estate loans totaling approximately $187 million, approximately 9.5 million shares of GEN Series A common stock (representing approximately 9% of total GEN common stock) and a 25% ownership stake in an unconsolidated joint venture that includes a master lease for 28 properties operated by Genesis. In addition to rent, the master lease requires Genesis to pay all operating costs, utilities, real estate taxes, insurance, building repairs, maintenance costs and all obligations under certain ground leases. All obligations under the master lease have been guaranteed by FC-GEN Operations Investment, LLC, a subsidiary of Genesis.
Outpatient Medical
Outpatient Medical Buildings Demand for outpatient medical services is growing as more procedures are performed safely and efficiently outside the hospital setting. State-of-the-art outpatient centers are needed in accessible, consumer-friendly locations. Our portfolio of outpatient medical buildings is an integral part of creating health care provider connectivity in local markets and generally include physician offices, ambulatory surgery centers, diagnostic facilities, outpatient services and/or labs. Approximately 95% of our outpatient medical building portfolio is affiliated with health systems (buildings directly on hospital campuses or with tenants that are satellite locations for the health system and its physicians). We typically lease our outpatient medical buildings to multiple tenants and provide varying levels of property management. Our Outpatient Medical segment accounted for 12%, 13% and 13% of total revenues for each of the years ended December 31, 2018, 2017 and 2016, respectively. No single tenant exceeds 20% of segment revenues.
Investments
Providing high-quality and affordable health care to an aging global population requires vast investments and infrastructure development. We invest in seniors housing and health care real estate primarily through acquisitions, developments and joint venture partnerships. For additional information regarding acquisition and development activity, please see Note 3 to our consolidated financial statements. Our portfolio creates opportunities to connect partners across the continuum of care and drive efficiency. We seek to diversify our investment portfolio by property type, relationship and geographic location. In determining whether to invest in a property, we focus on the following: (1) the experience of the obligor’s/partner’s management team; (2) the
historical and projected financial and operational performance of the property; (3) the credit of the obligor/partner; (4) the security for any lease or loan; (5) the real estate attributes of the building and its location; (6) the capital committed to the property by the obligor/partner; and (7) the operating fundamentals of the applicable industry.
We monitor our investments through a variety of methods determined by the type of property. Our asset management process for seniors housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections, and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral. Our internal property management division manages and monitors the outpatient medical portfolio with a comprehensive process including review of, among other things, tenant relations, lease expirations, the mix of health service providers, hospital/health system relationships, property performance, capital improvement needs, and market conditions.
Investment Types
Real Property Our properties are primarily comprised of land, buildings, improvements and related rights. Our triple-net properties are generally leased to operators under long-term operating leases. The leases generally have a fixed contractual term of 12 to 15 years and contain one or more five to 15-year renewal options. Certain of our leases also contain purchase options, a portion of which could result in the disposition of properties for less than full market value if the options were to be exercised. Most of our rents are received under triple-net leases requiring the operator to pay rent and all additional charges incurred in the operation of the leased property. The tenants are required to repair, rebuild and maintain the leased properties. Substantially all these operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period.
At December 31, 2018, approximately 94% of our triple-net properties were subject to master leases. A master lease is a lease of multiple properties to one tenant entity under a single lease agreement. From time to time, we may acquire additional properties that are then leased to the tenant under the master lease. The tenant is required to make one monthly payment that represents rent on all the properties that are subject to the master lease. Typically, the master lease tenant can exercise its right to purchase the properties or to renew the master lease only with respect to all leased properties at the same time. We believe this bundling feature benefits us because the tenant cannot limit the purchase or renewal to better performing properties and terminate the leasing arrangement with respect to poorer performing properties. This spreads our risk among the entire group of properties within the master lease. The bundling feature should provide a similar advantage to us if the master lease tenant is in bankruptcy. Subject to certain restrictions, a debtor in bankruptcy has the right to assume or reject its unexpired leases and executory contracts. In the context of integrated master leases such as ours, our tenants in bankruptcy would be required to assume or reject the master lease as a whole, rather than deciding on a property by property basis.
Our outpatient medical portfolio is primarily self-managed and consists principally of multi-tenant properties leased to health care providers. Our leases typically include increasers and some form of operating expense reimbursement by the tenant. As of December 31, 2018, 75% of our portfolio included leases with full pass through, 23% with a partial expense reimbursement (modified gross) and 2% with no expense reimbursement (gross). Our outpatient medical leases are non-cancellable operating leases that have a weighted-average remaining term of six years at December 31, 2018 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, 2018, we had outstanding construction investments of $194,365,000 and were committed to provide additional funds of approximately $436,984,000 to complete construction for investment properties. We also provide for construction loans which, depending on the terms and conditions, could be treated as loans, real property or investments in unconsolidated entities.
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, 2018, we had gross outstanding real estate loans of $398,711,000. The interest yield averaged approximately 7.9% 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, 2018 are generally subject to one to 15-year terms with principal amortization schedules and/or balloon payments of the outstanding principal balances at the end of the term. Typically, real estate
loans are cross-defaulted and cross-collateralized with other real estate loans, operating leases or agreements between us and the obligor and its affiliates.
Investments in Unconsolidated Entities Investments in entities that we do not consolidate but for which we can exercise significant influence over operating and financial policies are reported under the equity method of accounting. Our investments in unconsolidated entities generally represent interests ranging from 10% to 50% in real estate assets. Under the equity method of accounting, our share of the investee’s earnings or losses is included in our consolidated results of operations. 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 inclusive of transaction costs. We evaluate our equity method investments for impairment based upon a comparison of the estimated fair value of the equity method investment to its carrying value. When we determine a decline in the estimated fair value of such an investment below its carrying value is other-than-temporary, an impairment is recorded.
Principles of Consolidation
The consolidated financial statements are in conformity with U.S general accepted accounting principles (“U.S. GAAP”) and include the accounts of our wholly-owned subsidiaries and joint venture entities that we control, through voting rights or other means. All material intercompany transactions and balances have been eliminated in consolidation.
At inception of joint venture transactions, we identify entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and determine which business enterprise is the primary beneficiary of its operations. A VIE is broadly defined as an entity where either (i) the equity investors as a group, if any, do not have a controlling financial interest, or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. We consolidate investments in VIEs when we are determined to be the primary beneficiary. Accounting Standards Codification Topic 810, "Consolidations", requires enterprises to perform a qualitative approach to determining whether or not a VIE will need to be consolidated. This evaluation is based on an enterprise’s ability to direct and influence the activities of a VIE that most significantly impact that entity’s economic performance.
For investments in joint ventures, U.S. GAAP may preclude consolidation by the sole general partner in certain circumstances based on the type of rights held by the limited partner(s). We assess the limited partners’ rights and their impact on our consolidation conclusions, and we reassess if there is a change to the terms or in the exercisability of the rights of the limited partners, the sole general partner increases or decreases its ownership of limited partnership interests, or there is an increase or decrease in the number of outstanding limited partnership interests. We similarly evaluate the rights of managing members of limited liability companies.
Borrowing Policies
We utilize a combination of debt and equity to fund investments. Generally, we intend to issue unsecured, fixed-rate public debt with long-term maturities to approximate the maturities on our triple-net leases and investment strategy. For short-term purposes, we may borrow on our primary unsecured credit facility or issue commercial paper. We replace these borrowings with long-term capital such as senior unsecured notes or common stock. When terms are deemed favorable, we may invest in properties subject to existing mortgage indebtedness. In addition, we may obtain secured financing for unleveraged properties in which we have invested or may refinance properties acquired on a leveraged basis. In certain agreements with our lenders, we are subject to restrictions with respect to secured and unsecured indebtedness.
Competition
We compete with other real estate investment trusts, real estate partnerships, private equity and hedge fund investors, banks, insurance companies, finance/investment companies, government-sponsored agencies, taxable and tax-exempt bond funds, health care operators, developers and other investors in the acquisition, development, leasing and financing of health care and seniors housing properties. We compete for investments based on a number of factors including relationships, certainty of execution, investment structures and underwriting criteria. Our ability to successfully compete is impacted by economic and demographic trends, availability of acceptable investment opportunities, our ability to negotiate beneficial investment terms, availability and cost of capital, construction and renovation costs and applicable laws and regulations.
The operators/tenants of our properties compete with properties that provide comparable services in the local markets. Operators/tenants compete for patients and residents based on a number of factors including quality of care, reputation, physical appearance of properties, location, services offered, family preferences, physicians, staff, and price. We also face competition from other health care facilities for tenants, such as physicians and other health care providers that provide comparable facilities and services.
For additional information on the risks associated with our business, please see “

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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:
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Risks arising from our business;
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Risks arising from our capital structure; and
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Risks arising from our status as a REIT.
Risks Arising from Our Business
Our investments in and acquisitions of health care and seniors housing properties may be unsuccessful or fail to meet our expectations
We are exposed to the risk that some of our acquisitions may not prove to be successful. We could encounter unanticipated difficulties and expenditures relating to any acquired properties, including contingent liabilities, and acquired properties might require significant management attention that would otherwise be devoted to our ongoing business. If we agree to provide construction funding to an operator/tenant and the project is not completed, we may need to take steps to ensure completion of the project. Such expenditures may negatively affect our results of operations. Investments in and acquisitions of seniors housing and health care properties entail risks associated with real estate investments generally, including risks that the investment will not achieve expected returns, that the cost estimates for necessary property improvements will prove inaccurate or that the tenant, operator or manager will fail to meet performance expectations. Furthermore, there can be no assurance that our anticipated acquisitions and investments, the completion of which is subject to various conditions, will be consummated in accordance with
anticipated timing, on anticipated terms, or at all. 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 revenues and our operators’ revenues are dependent on occupancy. It is impossible to predict the severity of the cold and flu season or the occurrence of epidemics or any other widespread illnesses. The occupancy of our seniors housing operating and triple-net properties could significantly decrease in the event of a severe cold and flu season, an epidemic or any other widespread illness. Such a decrease could affect the operating income of our seniors housing operating properties and the ability of our triple-net operators to make payments to us. In addition, a flu pandemic could significantly increase the cost burdens faced by our operators, including if they are required to implement quarantines for residents, and adversely affect their ability to meet their obligations to us, which would have a material adverse effect on our financial results.
The insolvency or bankruptcy of our tenants, operators, borrowers, managers and other obligors may adversely affect our business, results of operations and financial condition
We are exposed to the risk that our tenants, operators, borrowers, managers or other obligors may not be able to meet the rent, principal and interest or other payments due us, which may result in a tenant, operator, borrower, manager or other obligor bankruptcy or insolvency, or that a tenant, operator, borrower, manager or other obligor might become subject to bankruptcy or insolvency proceedings for other reasons. Although our operating lease agreements provide us with the right to evict a tenant, demand immediate payment of rent and exercise other remedies, and our loans provide us with the right to terminate any funding obligation, demand immediate repayment of principal and unpaid interest, foreclose on the collateral and exercise other remedies, the bankruptcy and insolvency laws afford certain rights to a party that has filed for bankruptcy or reorganization. A tenant, operator, borrower, manager or other obligor in bankruptcy or subject to insolvency proceedings may be able to limit or delay our ability to collect unpaid rent in the case of a lease or to receive unpaid principal and interest in the case of a loan, and to exercise other rights and remedies. In addition, if a lease is rejected in a tenant bankruptcy, our claim against the tenant may be limited by applicable provisions of the bankruptcy law. We may be required to fund certain expenses (e.g., real estate taxes and maintenance) to preserve the value of an investment property, avoid the imposition of liens on a property and/or transition a property to a new tenant. In some instances, we have terminated our lease with a tenant and relet the property to another tenant. In some of those situations, we have provided working capital loans to and limited indemnification of the new obligor. If we cannot transition a leased property to a new tenant, we may take possession of that property, which may expose us to certain successor liabilities. 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.
The properties managed by Sunrise Senior Living, LLC (“Sunrise”) account for a significant portion of our revenues and net operating income and any adverse developments in its business or financial condition could adversely affect us
As of December 31, 2018, Sunrise managed 161 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 8 to our consolidated financial statements for additional information.
We depend on Genesis HealthCare (“Genesis”), Brookdale Senior Living (“Brookdale”) and ProMedica Health System ("ProMedica") 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, Brookdale and ProMedica account for a significant portion of our revenues, and because these leases are triple-net leases, we also depend on Genesis, Brookdale and ProMedica to pay all insurance, taxes, utilities and maintenance and repair expenses in connection with the leased properties. We cannot assure you that Genesis, Brookdale and ProMedica 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, Brookdale or ProMedica
to do so could have an adverse effect on our business, results of operations and financial condition. Genesis, Brookdale and ProMedica 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, Brookdale and ProMedica will have sufficient assets, income, access to financing and insurance coverage to enable them to satisfy their respective indemnification obligations. Genesis, Brookdale and ProMedica's failure to effectively conduct their operations or to maintain and improve our properties could adversely affect their business reputations and their ability to attract and retain patients and residents in our properties, which, in turn, could adversely affect our business, results of operations and financial condition. Additionally, we have made real estate and other loans to Genesis and their operational or other failures could adversely impact their ability to repay these loans when due.
Ownership of property outside the U.S. may subject us to different or greater risks than those associated with our domestic operations
We have operations in Canada and the U.K. which represent 10.0% and 9.6% of total Welltower revenues, respectively. As of December 31, 2018, Revera managed 98 of our seniors housing operating properties in Canada, representing a significant portion of our revenues, and also owned a controlling interest in Sunrise. International development, ownership, and operating activities involve risks that are different from those we face with respect to our domestic properties and operations. These risks include, but are not limited to, any international currency gain recognized with respect to changes in exchange rates 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, continuing uncertainty surrounding the process of Brexit and the macroeconomic and regulatory effects of Brexit, including impacts on the U.K. real estate market; challenges in managing international operations; challenges of complying with a wide variety of foreign laws and regulations, including those relating to real estate, corporate governance, operations, taxes, employment and other civil and criminal legal proceedings; foreign ownership restrictions with respect to operations in 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), any lapse in Congressional funding of the Centers for Medicare and Medicaid Services and interruption or delays in payments due to any ongoing government investigations and audits at such property. In recent years, government payors have frozen or reduced payments to health care providers due to budgetary pressures. 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 Cuts and Jobs Act ("Tax Act") enacted in December 2017 significantly changes the U.S. income tax rules for individuals and corporations. 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 federal taxes applicable to regular corporations if we comply with the tax law governing REIT status and distribute annually an amount at least equal to our taxable income. 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 and interest. 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 and could reduce the ability of our foreign subsidiaries to deduct for foreign tax purposes the interest they pay on loans from us, thereby, increasing the foreign tax liability of the subsidiaries; it is also possible that foreign countries could increase their withholding taxes on dividends and interest. Given the unpredictability of these possible changes and their potential interdependency, it is very difficult to assess the overall effect of such potential tax changes on our earnings and cash flow, but such changes could adversely impact our financial results.
Unfavorable resolution of pending and future litigation matters and disputes could have a material adverse effect on our financial condition
From time to time, we 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. In the past, we have experienced cybersecurity breaches, which to date have not had a material impact on our operations; however, there is no assurance that such impacts will not be material in the future. Cybersecurity incidents could disrupt our business, damage our reputation, cause us to incur significant remediation expense and have a materially adverse effect on our business, financial condition and results of operations. Cybersecurity breaches that compromise proprietary, personal identifying or confidential information of our employees, operators, tenants and partners could result in legal claims or proceedings, including under data privacy regulations.
Our success depends on key personnel whose continued service is not guaranteed
Our success depends on the continued availability and service of key personnel, including our executive officers and other highly qualified employees, and competition for their talents is intense. 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, including exchange rate fluctuations resulting from Brexit. We generate a portion of our revenue and expenses in such foreign currencies as the Canadian dollar and the British pound sterling. Although we may enter into foreign exchange agreements with financial institutions and/or obtain local currency mortgage debt in order to reduce our exposure to fluctuations in the value of foreign currencies, we cannot assure you that foreign currency fluctuations will not have a material adverse effect on us.
Our entry into hedge agreements may not effectively reduce our exposure to changes in interest rates or foreign currency exchange rates
We enter into hedge agreements from time to time to manage some of our exposure to interest rate and foreign currency exchange rate volatility. These agreements involve risks, such as the risk that counterparties may fail to honor their obligations under these arrangements. 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 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 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 other transactions 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 and the IRS. 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.

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

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ITEM 2. PROPERTIES
Item 2. Properties
We lease our corporate headquarters located at 4500 Dorr Street, Toledo, Ohio 43615. We also lease corporate offices throughout the U.S., Canada, the United Kingdom and Luxembourg and have ground leases relating to certain of our properties. The following table sets forth certain information regarding the properties that comprise our consolidated real property and real estate loan investments as of December 31, 2018 (dollars in thousands):
Seniors Housing Operating
Triple-net
Outpatient Medical
Property Location
Number of Properties
Total Investment
Annualized Revenues(1)
Number of Properties
Total Investment
Annualized Revenues(1)
Number of Properties
Total Investment
Annualized Revenues(1)
Alaska
-
$
-
$
-
-
$
-
$
-
$
28,820
$
3,628
Alabama
-
-
-
33,434
3,356
80,968
7,782
Arkansas
-
-
-
-
-
-
22,949
2,228
Arizona
52,715
20,712
34,957
2,192
61,618
8,539
California
2,762,952
715,203
390,915
40,140
877,181
89,356
Colorado
114,217
32,053
331,738
29,536
31,643
5,947
Connecticut
443,781
148,458
145,985
16,087
41,820
4,746
District Of Columbia
61,763
14,680
-
-
-
-
-
-
Delaware
85,736
28,372
101,096
16,269
-
19,687
Florida
820,940
138,385
580,495
54,033
465,835
54,695
Georgia
110,534
29,961
59,190
6,874
164,211
27,547
Iowa
31,059
11,937
105,633
10,551
6,435
1,438
Idaho
-
-
-
4,096
1,098
-
-
-
Illinois
428,803
113,909
399,815
35,118
106,276
10,514
Indiana
-
-
-
385,372
41,623
156,095
19,261
Kansas
29,458
10,668
300,665
28,286
61,037
13,562
Kentucky
37,556
14,754
59,124
13,121
6,872
Louisiana
48,893
11,173
18,177
2,717
-
-
-
Massachusetts
1,103,287
261,207
152,967
13,766
-
-
-
Maryland
250,315
74,605
306,394
17,290
175,587
18,271
Maine
48,130
19,155
-
-
-
18,293
2,404
Michigan
105,899
23,987
281,423
30,649
29,874
6,221
Minnesota
108,830
21,491
218,152
18,909
159,033
30,553
Missouri
142,202
23,278
12,376
137,216
19,352
Mississippi
-
-
-
25,835
1,057
-
-
-
Montana
5,710
4,302
6,281
-
-
-
North Carolina
119,188
20,243
362,777
60,081
103,708
8,906
Nebraska
-
-
-
30,897
4,067
32,719
5,310
New Hampshire
114,495
32,511
49,700
4,136
12,705
1,770
New Jersey
693,703
201,450
815,490
60,776
268,927
43,281
New Mexico
17,772
1,793
-
-
-
30,344
3,796
Nevada
35,225
11,279
32,315
4,309
42,113
3,263
New York
428,241
111,700
42,201
5,795
162,066
10,114
Ohio
299,653
41,009
363,009
34,429
49,245
8,985
Oklahoma
38,951
2,576
208,973
20,907
22,695
3,591
Oregon
-
-
-
2,914
9,330
1,562
Pennsylvania
155,558
61,400
1,012,532
99,319
35,687
1,386
Rhode Island
59,381
20,945
-
-
-
-
-
-
South Carolina
7,101
10,190
49,243
4,889
23,837
2,364
Tennessee
48,089
15,482
38,684
4,536
62,239
10,622
Texas
820,461
192,066
483,016
55,358
973,590
101,286
Utah
20,765
12,356
26,538
2,775
-
-
-
Virginia
243,676
60,168
299,224
34,530
58,476
6,337
Vermont
25,536
7,160
-
-
-
-
-
-
Washington
474,394
90,927
195,075
21,038
225,029
23,975
Wisconsin
-
-
-
105,832
11,694
29,513
2,197
West Virginia
-
-
-
65,116
8,866
-
-
-
Total domestic
10,394,969
2,611,545
8,137,656
822,701
4,793,673
565,926
Canada
2,101,067
451,347
143,362
9,944
-
-
-
United Kingdom
1,475,141
321,623
1,111,086
113,498
263,815
24,742
Total international
3,576,208
772,970
1,254,448
123,442
263,815
24,742
Grand total
$
13,971,177
$
3,384,515
$
9,392,104
$
946,143
$
5,057,488
$
590,668
(1) Represents revenue for the month ended December 31, 2018 annualized.
The following table sets forth occupancy, coverages and average annualized revenues for certain property types (excluding investments in unconsolidated entities):
Occupancy(1)
Coverages(1,2)
Average Annualized Revenues(3)
Seniors Housing Operating(4)
87.5%
86.5%
n/a
n/a
$
60,635
$
60,828
per unit
Triple-net(5)
84.9%
85.8%
1.39x
1.34x
12,831
15,663
per bed/unit
Outpatient Medical(6)
93.1%
93.7%
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 occupancy for the three months ended December 31.
(5) 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.
(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, 2018 (dollars in thousands):
Expiration Year(1)
Thereafter
Triple-net:
Properties
-
-
Base rent(2)
$
58,718
$
-
$
13,691
$
8,272
$
-
$
11,096
$
62,108
$
123,694
$
35,006
$
49,075
$
452,444
% of base rent
7.2
%
-
%
1.7
%
1.0
%
-
%
1.4
%
7.6
%
15.2
%
4.3
%
6.0
%
55.6
%
Units
8,401
-
1,416
1,245
-
4,140
7,717
2,401
2,840
43,019
% of units
11.7
%
-
%
2.0
%
1.7
%
-
%
1.0
%
5.8
%
10.7
%
3.3
%
4.0
%
59.9
%
Outpatient Medical:
Square feet
1,232,245
1,346,567
1,630,750
1,769,937
1,398,798
1,404,470
834,530
1,327,844
579,397
763,969
4,660,901
Base rent(2)
$
34,810
$
38,060
$
45,882
$
47,951
$
38,075
$
41,464
$
22,411
$
33,712
$
14,550
$
20,441
$
95,301
% of base rent
8.0
%
8.8
%
10.6
%
11.1
%
8.8
%
9.6
%
5.2
%
7.8
%
3.4
%
4.7
%
22.0
%
Leases
% of leases
14.3
%
13.6
%
13.2
%
12.8
%
12.8
%
7.4
%
5.5
%
6.3
%
3.5
%
3.6
%
7.0
%
(1) Excludes investments in unconsolidated entities. Investments classified as held for sale are included in 2019.
(2) The most recent monthly cash base rent annualized. Base rent does not include tenant recoveries or amortization of above and below market lease intangibles or other non cash income.

---

ITEM 3. LEGAL PROCEEDINGS
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
Our common stock trades on the New York Stock Exchange (NYSE:WELL). There were 3,668 stockholders of record as of January 31, 2019.
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, 2018, 161 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. 2013 equals $100 and dividends are assumed to be reinvested.
12/31/2013
12/31/2014
12/31/2015
12/31/2016
12/31/2017
12/31/2018
S & P 500
$
100.00
$
113.69
$
115.26
$
129.05
$
157.22
$
150.33
Welltower Inc.
100.00
148.51
140.01
144.73
145.02
167.21
FTSE NAREIT Equity
100.00
130.14
134.30
145.74
153.36
146.27
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, 2018 through October 31, 2018
1,739
$
62.01
November 1, 2018 through November 30, 2018
69.17
December 1, 2018 through December 31, 2018
-
-
Totals
2,155
$
63.39
(1) During the three months ended December 31, 2018, 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, 2018 are derived from our audited consolidated financial statements (in thousands, except per share data):
Year Ended December 31,
Operating Data
Total revenues
$
3,343,546
$
3,859,826
$
4,281,160
$
4,316,641
$
4,700,499
Total expenses
2,959,333
3,223,709
3,571,907
4,017,025
4,277,009
Income from continuing operations before income taxes and other items
384,213
636,117
709,253
299,616
423,490
Income tax (expense) benefit
1,267
(6,451
)
19,128
(20,128
)
(8,674
)
Income (loss) from unconsolidated entities
(27,426
)
(21,504
)
(10,357
)
(83,125
)
(641
)
Gain (loss) on real estate dispositions, net
147,111
280,387
364,046
344,250
415,575
Income from continuing operations
505,165
888,549
1,082,070
540,613
829,750
Income from discontinued operations, net
7,135
-
-
-
-
Net income
512,300
888,549
1,082,070
540,613
829,750
Preferred stock dividends
65,408
65,406
65,406
49,410
46,704
Preferred stock redemption charge
-
-
-
9,769
-
Net income (loss) attributable to noncontrolling interests
4,799
4,267
17,839
24,796
Net income attributable to common stockholders
$
446,745
$
818,344
$
1,012,397
$
463,595
$
758,250
Other Data
Average number of common shares outstanding:
Basic
306,272
348,240
358,275
367,237
373,620
Diluted
307,747
349,424
360,227
369,001
375,250
Per Share Data
Basic:
Income from continuing operations
$
1.65
$
2.55
$
3.02
$
1.47
$
2.22
Discontinued operations, net
$
0.02
$
-
$
-
$
-
$
-
Net income attributable to common stockholders
$
1.46
$
2.35
$
2.83
$
1.26
$
2.03
Diluted:
Income from continuing operations
$
1.64
$
2.54
$
3.00
$
1.47
$
2.21
Discontinued operations, net
$
0.02
$
-
$
-
$
-
$
-
Net income attributable to common stockholders
$
1.45
$
2.34
$
2.81
$
1.26
$
2.02
Cash distributions per common share
$
3.18
$
3.30
$
3.44
$
3.48
$
3.48
December 31,
Balance Sheet Data
Net real estate investments
$
22,851,196
$
26,888,685
$
26,563,629
$
26,171,077
$
28,420,769
Total assets
24,962,923
29,023,845
28,865,184
27,944,445
30,342,072
Total long-term obligations
10,776,640
12,967,686
12,358,245
11,731,936
13,297,144
Total liabilities
11,403,465
13,664,877
13,185,279
12,643,799
14,331,427
Total preferred stock
1,006,250
1,006,250
1,006,250
718,503
718,498
Total equity
13,473,049
15,175,885
15,281,472
14,925,452
15,586,599

---

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
Seniors Housing Operating
Triple-net
Outpatient Medical
Non-Segment/Corporate
OTHER
Non-GAAP Financial Measures
Critical Accounting Policies
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is based primarily on the consolidated financial statements of Welltower Inc. presented in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for the periods presented and should be read together with the notes thereto contained in this Annual Report on Form 10-K. Other important factors are identified in “Item 1 - Business” and “Item 1A - Risk Factors” above.
Executive Summary
Company Overview
Welltower Inc. (NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. Welltower™, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing and post-acute communities and outpatient medical properties. Our capital programs, when combined with comprehensive planning, development and property management services, make us a single-source solution for acquiring, planning, developing, managing, repositioning and monetizing real estate assets.
The following table summarizes our consolidated portfolio for the year ended December 31, 2018 (dollars in thousands):
Percentage of
Number of
Type of Property
NOI(1)
NOI
Properties
Seniors Housing Operating
$
985,022
43.5
%
Triple-net
900,049
39.7
%
Outpatient Medical
380,136
16.8
%
Totals
$
2,265,207
100.0
%
1,510
(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 generally aim to intervene at an early stage to address any negative trends, and in so doing, support both the collectability of revenue and the value of our investment.
In addition to our asset management and research efforts, we also aim to structure our relevant investments to mitigate payment risk. Operating leases and loans are normally credit enhanced by 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, 2018, resident fees/services and rental income represented 69% and 29%, respectively, of total revenues. Substantially all of our operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. Our yield on loans receivable depends upon a number of factors, including the stated interest rate, the average principal amount outstanding during the term of the loan, and any interest rate adjustments.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our primary sources of cash include resident fees/services, rent and interest receipts, borrowings under our primary unsecured credit facility, public issuances of debt and equity securities, our commercial paper program, proceeds from investment dispositions and principal payments on loans receivable. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses and general and administrative expenses. Depending upon the availability and cost of external capital, we believe our liquidity is sufficient to fund these uses of cash.
We also continuously evaluate opportunities to finance future investments. New investments are generally funded from temporary borrowings under our primary unsecured credit facility, internally generated cash and the proceeds from investment dispositions. Our investments generate cash from net operating income. 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, 2018, we had $215,376,000 of cash and cash equivalents, $100,753,000 of restricted cash and $1,853,000,000 of available borrowing capacity under our primary unsecured credit facility.
Key Transactions
Capital The following summarizes key capital transactions that occurred and supported new investments made during the year ended December 31, 2018:
•
In April 2018, we issued $550,000,000 of 4.25% senior unsecured notes due 2028 for net proceeds of approximately $545,074,000.
•
In connection with the QCP acquisition, in July 2018, we drew on a $1,000,000,000 term loan facility to fund a portion of the cash consideration and other expenses.
•
In August 2018, we issued $200,000,000 of 4.25% senior unsecured notes due 2028, $600,000,000 of 3.95% senior unsecured notes due 2023 and $500,000,000 of 4.95% senior unsecured notes due 2048 for aggregate net proceeds of approximately $1,283,226,000. Proceeds from these issuances were used to repay advances under the $1,000,000,000 term loan facility drawn on in July 2018 and the primary unsecured credit facility.
•
In July 2018, we closed on a new $3,700,000,000 unsecured credit facility with improved pricing across both our line of credit and term loan facility and terminated the existing unsecured credit facility. The credit facility includes a $3,000,000,000 revolving credit facility at a borrowing rate of 0.825% over LIBOR, a $500,000,000 USD unsecured term credit facility at a borrowing rate of 0.90% over LIBOR and a $250,000,000 CAD unsecured term credit facility at 0.90% over CDOR.
•
We extinguished $306,553,000 of secured debt at a blended average interest rate of 5.36%.
•
We repaid our $450,000,000 of 2.25% senior unsecured notes at par upon maturity on March 15, 2018.
•
We raised $794,649,000 through our dividend reinvestment program and our Equity Shelf Program (as defined below).
Investments The following summarizes our property acquisitions and joint venture investments made during the year ended December 31, 2018 (dollars in thousands):
Properties
Investment Amount(1)
Capitalization Rates(2)
Book Amount(3)
Seniors Housing Operating
$
673,374
6.7%
$
742,675
Triple-net
2,438,899
6.9%
3,062,427
Outpatient Medical
605,866
5.8%
628,824
Totals
$
3,718,139
6.7%
$
4,433,926
(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 in real property including fair value adjustments pursuant to U.S. GAAP. See Note 3 to our consolidated financial statements for additional information.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Dispositions The following summarizes property dispositions made during the year ended December 31, 2018 (dollars in thousands):
Properties
Proceeds(1)
Capitalization Rates(2)
Book Amount(3)
Seniors Housing Operating
$
40,073
7.5%
$
36,627
Triple-net
1,050,290
5.3%
835,093
Outpatient Medical
464,843
6.2%
253,397
Totals
$
1,555,206
5.6%
$
1,125,117
(1) Represents pro rata proceeds received upon disposition.
(2) Represents annualized contractual net operating income that was being received in cash at date of disposition divided by disposition proceeds.
(3) Represents carrying value of assets at time of disposition. See Note 5 to our consolidated financial statements for additional information.
Dividends Our Board of Directors announced the 2019 annual cash dividend of $3.48 per common share ($0.87 per share quarterly), consistent with 2018, beginning in February 2019. The dividend declared for the quarter ended December 31, 2018 represents the 191st consecutive quarterly dividend payment.
Key Performance Indicators, Trends and Uncertainties
We utilize several key performance indicators to evaluate the various aspects of our business. These indicators are discussed below and relate to operating performance, credit strength and concentration risk. Management uses these key performance indicators to facilitate internal and external comparisons to our historical operating results, in making operating decisions, and for budget planning purposes.
Operating Performance We believe that net income and net income attributable to common stockholders (“NICS”) per the Statement of Comprehensive Income are the most appropriate earnings measures. Other useful supplemental measures of our operating performance include funds from operations attributable to common stockholders (“FFO”), 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
$
1,082,070
$
540,613
$
829,750
Net income attributable to common stockholders
1,012,397
463,595
758,250
Funds from operations attributable to common stockholders
1,582,940
1,165,576
1,392,183
Consolidated net operating income
2,404,177
2,232,716
2,267,482
Same store net operating income
1,528,340
1,544,462
1,551,424
Credit Strength We measure our credit strength both in terms of leverage ratios and coverage ratios. The leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and Internal Revenue Code (“IRC”) section 1031 deposits. The coverage ratios indicate our ability to service interest and fixed charges (interest, secured debt principal amortization and preferred dividends). We expect to maintain capitalization ratios and coverage ratios sufficient to maintain a capital structure consistent with our current profile. The coverage ratios are based on adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliation of these measures. Leverage ratios and coverage ratios are widely used by investors, analysts and rating agencies in the valuation, comparison, investment recommendations, and rating of companies. The following table reflects the recent historical trends for our credit strength measures for the periods presented:
Year Ended December 31,
Net debt to book capitalization ratio
42.9%
42.9%
45.0%
Net debt to undepreciated book capitalization ratio
37.4%
36.3%
37.8%
Net debt to market capitalization ratio
31.1%
31.2%
31.3%
Adjusted interest coverage ratio
4.21x
4.36x
4.11x
Adjusted fixed charge coverage ratio
3.34x
3.54x
3.44x
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
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
relates to our top five states (or international equivalents). The following table reflects our recent historical trends of concentration risk by NOI for the years indicated below:
December 31,(1)
Property mix:
Seniors Housing Operating
34%
40%
43%
Triple-net
50%
43%
40%
Outpatient Medical
16%
17%
17%
Relationship mix:
Sunrise Senior Living(2)
13%
14%
15%
Revera(2)
6%
7%
7%
Brookdale Senior Living
6%
7%
6%
Genesis HealthCare
16%
9%
6%
Benchmark Senior Living
4%
4%
4%
Remaining
55%
59%
62%
Geographic mix:
California
10%
13%
14%
United Kingdom
8%
9%
9%
Canada
7%
8%
8%
Texas
7%
7%
8%
New Jersey
8%
8%
7%
Remaining
60%
55%
54%
(1) Excludes our share of investments in unconsolidated entities and non-segment/corporate NOI. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount.
(2) Revera owns a controlling interest in Sunrise Senior Living.
We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results. Our expected results may not be achieved and actual results may differ materially from our expectations. Factors that may cause actual results to differ from expected results are described in more detail in “Item 1 - Business - Cautionary Statement Regarding Forward-Looking Statements” and “Item 1A - Risk Factors” and other sections of this Annual Report on Form 10-K. Management regularly monitors economic and other factors to develop strategic and tactical plans designed to improve performance and maximize our competitive position. Our ability to achieve our financial objectives is dependent upon our ability to effectively execute these plans and to appropriately respond to emerging economic and company-specific trends. Please refer to “Item 1 - Business,” “Item 1A - Risk Factors” in this Annual Report on Form 10-K for further discussion of these risk factors.
Corporate Governance
Maintaining investor confidence and trust is important in today’s business environment. Our Board of Directors and management are strongly committed to policies and procedures that reflect the highest level of ethical business practices. Our corporate governance guidelines provide the framework for our business operations and emphasize our commitment to increase stockholder value while meeting all applicable legal requirements. These guidelines meet the listing standards adopted by the New York Stock Exchange and are available on the Internet at www.welltower.com/investors/governance. The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive textual reference only.
Liquidity and Capital Resources
Sources and Uses of Cash
Our primary sources of cash include resident fees/services, rent and interest receipts, 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
$
422,690
$
607,220
$
184,530
%
$
309,303
$
(297,917
)
%
$
(113,387
)
%
Net cash provided from (used in):
Operating activities
1,639,064
1,434,177
(204,887
)
%
1,583,944
149,767
%
(55,120
)
%
Investing activities
(183,443
)
154,581
338,024
n/a
(2,386,471
)
(2,541,052
)
n/a
(2,203,028
)
1,201
%
Financing activities
(1,250,817
)
(1,913,527
)
(662,710
)
%
818,368
2,731,895
n/a
2,069,185
n/a
Effect of foreign currency translation
(20,274
)
26,852
47,126
n/a
(9,015
)
(35,867
)
n/a
11,259
%
Ending cash, cash equivalents and restricted cash
$
607,220
$
309,303
$
(297,917
)
%
$
316,129
$
6,826
%
$
(291,091
)
%
Operating Activities The change in net cash provided from operating activities is attributable to changes in NOI, which is primarily due to acquisitions and annual rent increasers, partially offset to dispostions. Please see “Results of Operations” below for further discussion. For the years ended December 31, 2016, 2017 and 2018, 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.” 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
$
403,131
$
232,715
$
(170,416
)
%
$
160,706
$
(72,009
)
%
$
(242,425
)
%
Recurring capital expenditures, tenant improvements and lease commissions
66,332
67,797
1,465
%
90,190
22,393
%
23,858
%
Renovations, redevelopments and other capital improvements
152,814
182,479
29,665
%
175,993
(6,486
)
%
23,179
%
Total
$
622,277
$
482,991
$
(139,286
)
%
$
426,889
$
(56,102
)
%
$
(195,388
)
%
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.” Please refer to Notes 9, 10 and 13 of our consolidated financial statements for additional information.
Off-Balance Sheet Arrangements
At December 31, 2018, we had investments in unconsolidated entities with our ownership generally ranging from 10% to 50%. We use financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure. At December 31, 2018, we had fourteen outstanding letter of credit obligations. Please see Notes 7, 11 and 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, 2018 (in thousands):
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Payments Due by Period
Contractual Obligations
Total
2020-2021
2022-2023
Thereafter
Unsecured revolving credit facility(1)
$
1,147,000
$
-
$
-
$
1,147,000
$
-
Senior unsecured notes and term credit facilities:(2)
U.S. Dollar senior unsecured notes
7,450,000
600,000
900,000
1,700,000
4,250,000
Canadian Dollar senior unsecured notes(3)
219,989
-
219,989
-
-
Pounds Sterling senior unsecured notes(3)
1,339,170
-
-
-
1,339,170
U.S. Dollar term credit facility
507,500
-
7,500
500,000
-
Canadian Dollar term credit facility(3)
183,325
-
-
183,325
-
Secured debt:(2,3)
Consolidated
2,485,711
508,899
507,412
605,789
863,611
Unconsolidated
790,643
51,614
88,024
39,495
611,510
Contractual interest obligations:(4)
Unsecured revolving credit facility
171,910
38,202
76,405
57,303
-
Senior unsecured notes and term loans(3)
3,930,812
424,529
758,541
638,183
2,109,559
Consolidated secured debt(3)
478,922
90,861
144,026
96,873
147,162
Unconsolidated secured debt(3)
211,077
30,919
51,892
47,904
80,362
Capital lease obligations(5)
84,265
4,173
8,346
71,746
-
Operating lease obligations(5)
1,138,046
18,242
35,392
33,965
1,050,447
Purchase obligations(5)
1,704,293
1,599,477
104,816
-
-
Other long-term liabilities(6)
1,229
1,229
-
-
-
Total contractual obligations
$
21,843,892
$
3,368,145
$
2,902,343
$
5,121,583
$
10,451,821
(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, 2018.
(5) See Note 12 to our consolidated financial statements for additional information.
(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 a discussion of our leverage and coverage ratio trends. Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As of December 31, 2018, we were in compliance with all of the covenants under our debt agreements. None of our debt agreements contain provisions for acceleration which could be triggered by our debt ratings. However, under our primary unsecured credit facility, the ratings on our senior unsecured notes are used to determine the fees and interest charged. We plan to manage the company to maintain compliance with our debt covenants and with a capital structure consistent with our current profile. Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.
On May 17, 2018, we filed with the Securities and Exchange Commission (1) an open-ended automatic or “universal” shelf registration statement covering an indeterminate amount of future offerings of debt securities, common stock, preferred stock, depositary shares, warrants and units and (2) a registration statement in connection with our enhanced dividend reinvestment plan (“DRIP”) under which we may issue up to 15,000,000 shares of common stock. As of February 13, 2019, 8,526,222 shares of common stock remained available for issuance under the DRIP registration statement. On August 3, 2018, we entered into separate amended and restated 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 $784,083,001 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 sale agreement. As of February 13, 2019, we had $227,958,000 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.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Summary
Our primary sources of revenue include resident fees/services,rent and interest income. Our primary expenses include interest expense, depreciation and amortization, property operating expenses, other expenses and general and administrative expenses. We evaluate our business and make resource allocations on our three business segments: Seniors Housing Operating, Triple-net and Outpatient Medical. The primary performance measures for our properties are NOI and SSNOI and other supplemental measures include FFO and Adjusted EBITDA, which are further discussed below. Please see Non-GAAP Financial Measures for additional information and reconciliations. The following is a summary of our results of operations for the periods presented (dollars in thousands, except per share amounts):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
Amount
%
Amount
%
Amount
%
Net income
$
1,082,070
$
540,613
$
(541,457
)
%
$
829,750
$
289,137
%
$
(252,320
)
%
NICS
1,012,397
463,595
(548,802
)
%
758,250
294,655
%
(254,147
)
%
FFO
1,582,940
1,165,576
(417,364
)
%
1,392,183
226,607
%
(190,757
)
%
Adjusted EBITDA
2,256,864
2,128,429
(128,435
)
%
2,153,005
24,576
%
(103,859
)
%
Consolidated NOI
2,404,177
2,232,716
(171,461
)
%
2,267,482
34,766
%
(136,695
)
%
Same store NOI
1,528,340
1,544,462
16,122
%
1,551,424
6,962
-
%
23,084
%
Per share data (fully diluted):
Net income attributable to common
stockholders
$
2.81
$
1.26
$
(1.55
)
%
$
2.02
$
0.76
%
$
(0.79
)
%
Funds from operations attributable to
common stockholders
4.39
3.16
(1.23
)
%
3.71
0.55
%
(0.68
)
%
Adjusted interest coverage ratio
4.21x
4.36x
0.15x
%
4.11x
-0.25x
%
0.15x
%
Adjusted fixed charge coverage ratio
3.34x
3.54x
0.20x
%
3.44x
-0.10x
%
0.20x
%
The following table represents the changes in outstanding common stock for the period from January 1, 2016 to December 31, 2018 (in thousands):
Year Ended
December 31, 2016
December 31, 2017
December 31, 2018
Totals
Beginning balance
354,778
362,602
371,732
354,778
Dividend reinvestment plan issuances
4,145
5,640
6,529
16,314
Preferred stock conversions
-
-
Redemption of equity membership units
-
-
Option exercises
Equity Shelf Program issuances
3,135
2,987
5,241
11,363
Other, net
Ending balance
362,602
371,732
383,675
383,675
Average number of shares outstanding:
Basic
358,275
367,237
373,620
Diluted
360,227
369,001
375,250
During the past three years, inflation has not significantly affected our earnings because of the moderate inflation rate. Additionally, a portion of our earnings are derived primarily from long-term investments with predictable rates of return. These investments are mainly financed with a combination of equity, senior unsecured notes, secured debt and borrowings under our primary unsecured credit facility. During inflationary periods, which generally are accompanied by rising interest rates, our ability to grow may be adversely affected because the yield on new investments may increase at a slower rate than new borrowing costs. Presuming the current inflation rate remains moderate and long-term interest rates do not increase significantly, we believe that inflation will not impact the availability of equity and debt financing for us.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Seniors Housing Operating
The following is a summary of our NOI and SSNOI for the Seniors Housing Operating segment for the years presented (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
NOI
$
814,114
$
880,026
$
65,912
%
$
985,022
$
104,996
%
$
170,908
%
Non-cash NOI attributable to same store properties(1)
1,990
1,242
(748
)
%
(406
)
%
(1,154
)
%
NOI attributable to non same store properties(2)
(77,334
)
(132,604
)
(55,270
)
%
(251,803
)
(119,199
)
%
(174,469
)
%
SSNOI(1)
$
738,770
$
748,664
$
9,894
%
$
734,055
$
(14,609
)
%
$
(4,715
)
%
(1) Relates to 348 same store properties.
(2) Primarily relates to the acquisition of 66 properties subsequent to January 1, 2016 and the transition of 69 properties from Triple-net to Seniors Housing Operating.
The following is a summary of our results of operations for the Seniors Housing Operating segment for the years presented (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
Revenues:
Resident fees and services
$
2,504,731
$
2,779,423
$
274,692
%
$
3,234,852
$
455,429
%
$
730,121
%
Interest income
4,180
(4,111
)
%
%
(3,602
)
%
Other income
17,085
5,127
(11,958
)
%
5,024
(103
)
%
(12,061
)
%
Total revenues
2,525,996
2,784,619
258,623
%
3,240,454
455,835
%
714,458
%
Property operating expenses
1,711,882
1,904,593
192,711
%
2,255,432
350,839
%
543,550
%
NOI(1)
814,114
880,026
65,912
%
985,022
104,996
%
170,908
%
Other expenses:
Depreciation and amortization
415,429
484,796
69,367
%
529,449
44,653
%
114,020
%
Interest expense
81,853
63,265
(18,588
)
%
69,060
5,795
%
(12,793
)
%
Transaction costs(2)
29,207
-
(29,207
)
%
-
-
n/a
(29,207
)
%
Loss (gain) on extinguishment of debt, net
(88
)
3,785
3,873
-4,401
%
(3,675
)
%
%
Impairment of assets
12,403
21,949
9,546
%
7,599
(14,350
)
%
(4,804
)
%
Other expenses(2)
-
8,347
8,347
n/a
6,624
(1,723
)
%
6,624
n/a
538,804
582,142
43,338
%
612,842
30,700
%
74,038
%
Income (loss) from continuing operations before income taxes and other items
275,310
297,884
22,574
%
372,180
74,296
%
96,870
%
Income tax benefit (expense)
(3,762
)
(16,430
)
(12,668
)
%
1,202
17,632
%
4,964
%
Income (loss) from unconsolidated entities
(20,442
)
(105,236
)
(84,794
)
%
(28,142
)
77,094
%
(7,700
)
%
Gain (loss) on real estate dispositions, net
9,880
56,295
46,415
%
(2,245
)
(58,540
)
%
(12,125
)
%
Income from continuing operations
260,986
232,513
(28,473
)
%
342,995
110,482
%
82,009
%
Net income (loss)
260,986
232,513
(28,473
)
%
342,995
110,482
%
82,009
%
Less: Net income (loss) attributable to noncontrolling interests
2,292
8,472
6,180
%
(660
)
(9,132
)
%
(2,952
)
%
Net income (loss) attributable to common stockholders
$
258,694
$
224,041
$
(34,653
)
%
$
343,655
$
119,614
%
$
84,961
%
(1) See Non-GAAP Financial Measures below.
(2) See Note 3 to our consolidated financial statements.
Fluctuations in resident fees/services and property operating expenses are primarily a result of acquisitions, segment transitions and the movement of U.S. and foreign currency exchange rates. The fluctuations in depreciation and amortization are due to acquisitions and variations in amortization of short-lived intangible assets. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly. The decrease in other income for the year ended December 31, 2018 is primarily a result of insurance proceeds received during 2017 relating to a property as well as a bargain purchase gain recognized in conjunction with a single property acquisition.
During the three years presented, we recorded impairment charges on certain held for sale properties as the carrying value exceeded the estimated fair value less costs to sell. The fluctuations in gains (losses) on real estate dispositions are due to the volume of property sales and sales prices. Beginning January 1, 2017, transaction costs related to asset acquisitions are capitalized
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
as a component of purchase price. The increase in other expenses since 2016 are primarily due to noncapitalizable transaction costs from acquisitions.
During the year ended December 31, 2018, we completed two seniors housing operating construction projects representing $86,931,000 or $459,952 per unit and one expansion project totaling $2,672,000. The following is a summary of our Seniors Housing Operating construction projects, excluding expansions, pending as of December 31, 2018 (dollars in thousands):
Location
Units/Beds
Commitment
Balance
Est. Completion
Wandsworth, UK
$
75,185
$
41,833
1Q20
Potomac, MD
56,623
7,627
4Q20
$
131,808
49,460
Toronto, ON
Project in planning stage
39,898
$
89,358
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, 2016
December 31, 2017
December 31, 2018
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
2,290,552
3.96%
$
2,463,249
3.94%
$
1,988,700
3.66%
Debt transferred in
-
-%
-
-%
35,830
3.84%
Debt issued
293,860
2.90%
228,772
2.72%
45,447
3.40%
Debt assumed
60,898
4.30%
-
-%
121,612
5.55%
Debt extinguished
(159,498
)
3.66%
(668,804
)
4.81%
(240,095
)
4.83%
Debt deconsolidated
-
-%
(60,000
)
3.80%
-
0.00%
Principal payments
(49,112
)
3.89%
(47,153
)
3.60%
(47,886
)
3.59%
Foreign currency
26,549
3.48%
72,636
3.23%
(93,021
)
3.31%
Ending balance
$
2,463,249
3.94%
$
1,988,700
3.66%
$
1,810,587
3.87%
Monthly averages
$
2,391,706
3.93%
$
2,065,477
3.66%
$
1,915,663
3.74%
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 entities during the year ended December 31, 2017. Losses are also attributable to depreciation and amortization of short-lived intangible assets related to certain investments in unconsolidated joint ventures. Net income attributable to noncontrolling interests represents our partners’ share of net income (loss) related to joint ventures.
Triple-net
The following is a summary of our NOI and SSNOI 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,
$
%
$
%
$
%
NOI
$
1,208,860
$
967,084
$
(241,776
)
%
$
900,049
$
(67,035
)
%
$
(308,811
)
%
Non-cash NOI attributable to same store properties(1)
(28,538
)
(23,764
)
4,774
%
(17,093
)
6,671
%
11,445
%
NOI attributable to non same store properties(2)
(709,606
)
(465,820
)
243,786
%
(401,878
)
63,942
%
307,728
%
SSNOI(1)
$
470,716
$
477,500
$
6,784
%
$
481,078
$
3,578
%
$
10,362
%
(1) Relates to 364 same store properties.
(2) Primarily relates to the acquisition of 264 properties and 40 properties sold or held for sale at December 31, 2018.
The following is a summary of our results of operations for the Triple-net segment for the years 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
$
1,112,325
$
885,811
$
(226,514
)
%
$
828,865
$
(56,946
)
%
$
(283,460
)
%
Interest income
90,476
73,742
(16,734
)
%
54,926
(18,816
)
%
(35,550
)
%
Other income
6,059
7,531
1,472
%
17,173
9,642
%
11,114
%
Total revenues
1,208,860
967,084
(241,776
)
%
900,964
(66,120
)
%
(307,896
)
%
Property operating expenses
-
-
-
n/a
n/a
(915
)
n/a
NOI(1)
1,208,860
967,084
(241,776
)
%
900,049
(67,035
)
%
(306,981
)
%
Other expenses:
Depreciation and amortization
297,197
243,830
(53,367
)
%
235,480
(8,350
)
%
(61,717
)
%
Interest expense
21,370
15,194
(6,176
)
%
14,225
(969
)
%
(7,145
)
%
Loss (gain) on derivatives and financial instruments, net
2,284
2,216
3,259
%
(4,016
)
(6,300
)
%
(4,084
)
-6,006
%
Transaction costs(2)
10,016
-
(10,016
)
%
-
-
n/a
(10,016
)
%
Loss (gain) on extinguishment of debt, net
29,083
28,220
3,270
%
(32
)
(29,115
)
%
(895
)
%
Provision for loan losses
6,935
62,966
56,031
%
-
(62,966
)
%
(6,935
)
%
Impairment of assets
20,169
96,909
76,740
%
107,980
11,071
%
87,811
%
Other expenses(2)
-
116,689
116,689
n/a
90,975
(25,714
)
%
90,975
n/a
356,618
566,955
210,337
%
444,612
(122,343
)
%
87,994
%
Income from continuing operations before income taxes and other items
852,242
400,129
(452,113
)
%
455,437
55,308
%
(396,805
)
%
Income tax benefit (expense)
(1,087
)
(4,291
)
(3,204
)
%
1,611
5,902
%
2,698
%
Income (loss) from unconsolidated entities
9,767
19,428
9,661
%
21,938
2,510
%
12,171
%
Gain (loss) on real estate dispositions, net
355,394
286,325
(69,069
)
%
196,589
(89,736
)
%
(158,805
)
%
Income from continuing operations
1,216,316
701,591
(514,725
)
%
675,575
(26,016
)
%
(540,741
)
%
Net income
1,216,316
701,591
(514,725
)
%
675,575
(26,016
)
%
(540,741
)
%
Less: Net income attributable to noncontrolling interests
1,221
4,603
3,382
%
19,306
14,703
%
18,085
1,481
%
Net income attributable to common stockholders
$
1,215,095
$
696,988
$
(518,107
)
%
$
656,269
$
(40,719
)
%
$
(558,826
)
%
(1) See Non-GAAP Financial Measures below.
(2) See Note 3 to our consolidated financial statements.
The 2017 and 2018 decreases in rental income are primarily attributable to the disposition of properties exceeding new acquisitions, segment transitions and the reduction in the Genesis HealthCare ("Genesis") annual cash rent obligation due to the restructuring of the master lease as of January 1, 2018. 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, 2018, we had 17 leases with rental rate increasers ranging from 0.18% to 0.76% in our triple-net portfolio. The decrease in interest income is primarily attributable to the volume of loan payoffs during the three years presented. The increase in other income for the year ended December 31, 2018 is primarily due to $10,805,000 of net lease termination fees recognized.
Depreciation and amortization decreased primarily as a result of the disposition of triple-net properties exceeding acquisition and segment transitions. To the extent we acquire or dispose of additional properties in the future, our provision for depreciation and amortization will change accordingly.
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 of $62,966,000 and $6,935,000, respectively.
During the three years presented, we recorded impairment charges on certain held for sale properties as the carrying value exceeded the estimated fair value less costs to sell. The fluctuations in gains on real estate dispositions are due to the volume of property sales and sales prices. Beginning January 1, 2017, transaction costs related to asset acquisitions are capitalized as a component of purchase price.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Other expenses primarily represents noncapitalizable transaction costs from acquisitions, segment transitions and the termination/restructuring of pre-existing relationships. In addition, during the year ended December 31, 2017, we recognized an other than temporary charge of $18,294,000 in other expenses on the Genesis available-for-sale equity investment.
During the year ended December 31, 2018, we completed two triple-net construction projects totaling $90,055,000 or $283,472 per bed/unit and two expansion projects totaling $17,357,000. The following is a summary of triple-net construction projects, excluding expansions, pending as of December 31, 2018 (dollars in thousands):
Location
Units/Beds
Commitment
Balance
Est. Completion
Westerville, OH
$
22,800
$
8,160
3Q19
Union, KY
34,600
9,848
1Q20
Droitwich , UK
16,153
4,573
4Q20
Total
$
73,553
$
22,581
Total interest expense represents secured debt interest expense and related fees. The change in secured debt interest expense is due to the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations. The fluctuations in loss (gain) on extinguishment of debt is primarily attributable to the volume of extinguishments and terms of the related secured debt. The fluctuation in loss (gain) on derivatives and financial instruments, net is primarily attributable to the mark-to-market adjustment recorded on the Genesis available-for-sale investment in accordance with the adoption of Accounting Standards Update 2016-01 described in Note 2 to our consolidated financial statements. 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, 2016
December 31, 2017
December 31, 2018
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
554,014
5.49%
$
594,199
4.58%
$
347,474
3.55%
Debt issued
166,155
2.21%
13,000
4.57%
-
-%
Debt extinguished
(118,500
)
5.56%
(274,048
)
5.95%
(4,107
)
4.94%
Debt transferred out
-
-%
-
-%
(35,830
)
3.84%
Principal payments
(10,627
)
5.68%
(5,863
)
5.66%
(3,982
)
5.38%
Foreign currency
3,157
5.25%
20,186
2.91%
(15,169
)
3.44%
Ending balance
$
594,199
4.58%
$
347,474
3.55%
$
288,386
3.63%
Monthly averages
$
497,213
5.41%
$
408,688
3.91%
$
321,730
3.51%
A portion of our triple-net properties were formed through partnerships. Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. Net income attributable to noncontrolling interests represents our partners’ share of net income relating to those partnerships where we are the controlling partner.
Outpatient Medical
The following is a summary of our 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
$
380,264
$
384,068
$
3,804
%
$
380,136
$
(3,932
)
%
$
(128
)
-
%
Non-cash NOI attributable to same store properties(1)
(8,190
)
(7,694
)
%
(8,226
)
(532
)
%
(36
)
-
%
NOI attributable to non same store properties(2)
(53,220
)
(58,076
)
(4,856
)
%
(35,619
)
22,457
%
17,601
%
SSNOI(1)
$
318,854
$
318,298
$
(556
)
-
%
$
336,291
$
17,993
%
$
17,437
%
(1) Relates to 212 same store properties.
(2) Primarily relates to the acquisition of 48 properties and the conversion of 15 construction projects into revenue-generating properties subsequent to January 1, 2016.
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
$
536,490
$
560,060
$
23,570
%
$
551,557
$
(8,503
)
%
$
15,067
%
Interest income
3,307
-
(3,307
)
%
n/a
(2,997
)
%
Other income
5,568
3,340
(2,228
)
%
4,939
1,599
%
(629
)
%
Total revenues
545,365
563,400
18,035
%
556,806
(6,594
)
%
11,441
%
Property operating expenses
165,101
179,332
14,231
%
176,670
(2,662
)
%
11,569
%
NOI(1)
380,264
384,068
3,804
%
380,136
(3,932
)
%
(128
)
-
%
Other expenses:
Depreciation and amortization
188,616
193,094
4,478
%
185,530
(7,564
)
%
(3,086
)
%
Interest expense
19,087
10,015
(9,072
)
%
7,051
(2,964
)
%
(12,036
)
%
Transaction costs(2)
3,687
-
(3,687
)
%
-
-
n/a
(3,687
)
%
Loss (gain) on extinguishment of debt, net
-
4,373
4,373
n/a
11,928
7,555
%
11,928
n/a
Provision for loan losses.
3,280
-
(3,280
)
%
-
-
n/a
(3,280
)
%
Impairment of assets
4,635
5,625
%
-
(5,625
)
%
(4,635
)
%
Other expenses(2)
-
1,911
1,911
n/a
7,570
5,659
%
7,570
n/a
219,305
215,018
(4,287
)
%
212,079
(2,939
)
%
(7,226
)
%
Income from continuing operations before income taxes and other item
160,959
169,050
8,091
%
168,057
(993
)
%
7,098
%
Income tax benefit (expense)
(511
)
(1,477
)
(966
)
%
(125
)
1,352
%
%
Income (loss) from unconsolidated entities
2,683
2,365
%
5,563
2,880
%
5,245
1,649
%
Gain (loss) on real estate dispositions, net
(1,228
)
1,630
2,858
n/a
221,231
219,601
13,472
%
222,459
n/a
Income from continuing operations
159,538
171,886
9,490
%
394,726
3,239
%
12,729
%
Net income (loss)
159,538
171,886
12,348
%
394,726
222,840
%
235,188
%
Less: Net income (loss) attributable to noncontrolling interests
4,765
3,997
%
6,150
1,385
%
5,382
%
Net income (loss) attributable to common stockholders
$
158,770
$
167,121
$
8,351
%
$
388,576
$
221,455
%
$
229,806
%
(1) See Non-GAAP Financial Measures below.
(2) See Note 3 to our consolidated financial statements.
The fluctuations in rental income are primarily attributable to the acquisitions of new properties and the conversion of newly constructed outpatient medical properties, offset by dispositions. Certain of our leases contain annual rental escalators that are contingent upon changes in the CPI. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If the CPI does not increase, a portion of our revenues may not continue to increase. Our leases could renew above or below current rent rates, resulting in an increase or decrease in rental income. For the three months ended December 31, 2018, our consolidated outpatient medical portfolio signed 77,850 square feet of new leases and 184,349 square feet of renewals. The weighted-average term of these leases was seven years, with a rate of $36.23 per square foot and tenant improvement and lease commission costs of $21.90 per square foot. Substantially all of these leases contain an annual fixed or contingent escalation rent structure ranging from 2.0% to 3.9%.
The fluctuation in property operating expenses and depreciation and amortization are primarily attributable to acquisitions and construction conversions of new outpatient medical facilities, offset by dispositions. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly. 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. Changes in gains/losses on sales of properties are related to volume of property sales and the sales prices.
During the year ended December 31, 2018, we completed one outpatient medical construction project representing $11,358,000 or $296 per square foot. The following is a summary of outpatient medical construction projects pending as of December 31, 2018 (dollars in thousands):
Location
Square Feet
Commitment
Balance
Est. Completion
Brooklyn, NY
140,955
$
105,306
$
58,390
3Q19
Houston, TX
73,500
23,455
5,097
4Q19
Porter, TX
55,000
20,800
4,198
4Q19
Total
269,455
$
149,561
$
67,685
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
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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, 2016
December 31, 2017
December 31, 2018
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
627,689
5.18%
$
404,079
4.85%
$
279,951
4.72%
Debt assumed
-
-%
23,094
6.67%
171,275
3.99%
Debt extinguished
(210,115
)
5.97%
(137,416
)
5.99%
(61,291
)
7.43%
Principal payments
(13,495
)
6.55%
(9,806
)
6.85%
(3,197
)
5.91%
Ending balance
$
404,079
4.85%
$
279,951
4.72%
$
386,738
4.20%
Monthly averages
$
536,774
5.11%
$
294,694
4.62%
$
238,214
4.25%
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
$
$
1,538
$
%
$
2,275
$
%
$
1,336
%
Expenses:
Interest expense
399,035
396,148
(2,887
)
%
436,256
40,108
%
37,221
%
General and administrative expenses
155,241
122,008
(33,233
)
%
126,383
4,375
%
(28,858
)
%
Loss (gain) on derivatives and financial instruments, net
(2,516
)
-
2,516
%
-
-
n/a
2,516
%
Loss (gain) on extinguishments of debt, net
16,439
-
(16,439
)
%
4,091
4,091
n/a
(12,348
)
%
Other expenses
11,998
50,829
38,831
%
7,729
(43,100
)
%
(4,269
)
%
Total expenses
580,197
568,985
(11,212
)
%
574,459
5,474
%
(5,738
)
%
Loss from continuing operations before income taxes
(579,258
)
(567,447
)
11,811
%
(572,184
)
(4,737
)
%
7,074
%
Income tax benefit (expense)
24,488
2,070
(22,418
)
%
(11,362
)
(13,432
)
n/a
(35,850
)
n/a
Net loss
(554,770
)
(565,377
)
(10,607
)
%
(583,546
)
(18,169
)
%
(28,776
)
%
Preferred stock dividends
65,406
49,410
(15,996
)
%
46,704
(2,706
)
%
(18,702
)
%
Preferred stock redemption charge
-
9,769
9,769
n/a
-
(9,769
)
%
-
n/a
Net loss attributable to common stockholders
$
(620,176
)
$
(624,556
)
$
(4,380
)
%
$
(630,250
)
$
(5,694
)
%
$
(10,074
)
%
The following is a summary of our non-segment/corporate interest expense for the periods presented (dollars in thousands):
Year Ended
One Year Change
Year Ended
One Year Change
Two Year Change
December 31,
December 31,
December 31,
$
%
$
%
$
%
Senior unsecured notes
$
368,775
$
364,773
$
(4,002
)
%
$
387,955
$
23,182
%
$
19,180
%
Secured debt
(183
)
%
(12
)
%
(195
)
%
Primary unsecured credit facility
16,811
17,863
1,052
%
34,626
16,763
%
17,815
%
Loan expense
13,139
13,385
%
13,560
%
%
Totals
$
399,035
$
396,148
$
(2,887
)
%
$
436,256
$
40,108
%
$
37,221
%
The change in interest expense on senior unsecured notes is due to the net effect of issuances and extinguishments. Please refer to Note 10 to consolidated financial statements for additional information. 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. Loan expenses represent the amortization of costs incurred in connection with senior unsecured notes issuances. The loss on extinguishment of debt in 2016 is due to the early extinguishment of the 2017 senior unsecured notes. The loss on extinguishment of debt in 2018 is due to the term loan facility drawn on in July 2018 and paid off in August 2018.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
General and administrative expenses as a percentage of consolidated revenues for the years ended December 31, 2018, 2017 and 2016 were 2.69%, 2.83% and 3.63%, respectively. The decrease in general and administrative expenses since 2016 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.
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.
Other
Non-GAAP Financial Measures
We believe that net income and net income attributable to common stockholders (“NICS”), as defined by U.S. GAAP, are the most appropriate earnings measurements. However, we consider FFO, NOI, SSNOI, EBITDA and Adjusted EBITDA to be useful supplemental measures of our operating performance. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation. However, since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient. In response, the National Association of Real Estate Investment Trusts (“NAREIT”) created funds from operations attributable to common stockholders (“FFO”) as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO, as defined by NAREIT, means NICS, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairment of depreciable assets, plus depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests.
Consolidated net operating income (“NOI”) is used to evaluate the operating performance of our properties. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. Property operating expenses represent costs associated with managing, maintaining and servicing tenants for our 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 represent costs unrelated to property operations. These expenses include, but are not limited to, payroll and benefits, professional services, office expenses, and depreciation of corporate fixed assets. Same store NOI (“SSNOI”) is used to evaluate the operating performance of our properties using a consistent population which controls for changes in the composition of our portfolio. As used herein, same store is generally defined as those revenue-generating properties in the portfolio for the reporting period subsequent to January 1, 2016. Land parcels, loans and sub-leases, 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 and primary unsecured credit facility contain financial ratios based on a definition of EBITDA that is specific to those agreements. Failure to satisfy these covenants could result in an event of default that could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. Due to the materiality of these debt agreements and the financial covenants, we have disclosed Adjusted EBITDA, which represents EBITDA as defined above excluding unconsolidated entities and adjusted for items per our covenant. We use Adjusted EBITDA to measure our adjusted fixed charge coverage ratio, which represents Adjusted EBITDA divided by fixed charges on a trailing twelve months basis. Fixed charges include total interest (excluding capitalized interest and non-cash interest expenses), secured debt principal amortization and preferred dividends. Our covenant requires an adjusted fixed charge coverage ratio of at least 1.50 times.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and rating agencies in the valuation, comparison, rating and investment recommendations of companies. Management uses these financial measures to facilitate internal and external comparisons to our historical operating results and in making operating decisions. Additionally, these measures are utilized by the Board of Directors to evaluate management. None of our supplemental measures represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, the supplemental measures, as defined by us, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies.
The table below reflects the reconciliation of FFO to NICS, the most directly comparable U.S. GAAP measure, for the periods presented. Noncontrolling interest and unconsolidated entity amounts represent adjustments to reflect our share of depreciation and amortization, gains/loss on real estate dispositions and impairments of assets. Amounts are in thousands except for per share data.
Year Ended December 31,
FFO Reconciliation:
Net income attributable to common stockholders
$
1,012,397
$
463,595
$
758,250
Depreciation and amortization
901,242
921,720
950,459
Impairment of assets
37,207
124,483
115,579
Loss (gain) on real estate dispositions, net
(364,046
)
(344,250
)
(415,575
)
Noncontrolling interests
(71,527
)
(60,018
)
(69,193
)
Unconsolidated entities
67,667
60,046
52,663
Funds from operations attributable to common stockholders
$
1,582,940
$
1,165,576
$
1,392,183
Average common shares outstanding:
Basic
358,275
367,237
373,620
Diluted
360,227
369,001
375,250
Per share data:
Net income attributable to common stockholders
Basic
$
2.83
$
1.26
$
2.03
Diluted
2.81
1.26
2.02
Funds from operations attributable to common stockholders
Basic
$
4.42
$
3.17
$
3.73
Diluted
4.39
3.16
3.71
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The table below reflects the reconciliation of EBITDA and Adjusted EBITDA to net income, the most directly comparable U.S. GAAP measure, for the periods presented. Dollars are in thousands.
Year Ended December 31,
Adjusted EBITDA Reconciliation:
Net income
$
1,082,070
$
540,613
$
829,750
Interest expense
521,345
484,622
526,592
Income tax expense (benefit)
(19,128
)
20,128
8,674
Depreciation and amortization
901,242
921,720
950,459
EBITDA
2,485,529
1,967,083
2,315,475
Loss (income) from unconsolidated entities
10,357
83,125
Transaction costs
42,910
-
-
Stock-based compensation expense(1)
28,869
19,102
27,646
Loss (gain) on extinguishment of debt, net
17,214
37,241
16,097
Loss (gain) on real estate dispositions, net
(364,046
)
(344,250
)
(415,575
)
Impairment of assets
37,207
124,483
115,579
Provision for loan losses
10,215
62,966
-
Loss (gain) on derivatives and financial instruments, net
(2,448
)
2,284
(4,016
)
Other expenses(1)
7,721
176,395
111,990
Additional other income
(16,664
)
-
(14,832
)
Adjusted EBITDA
$
2,256,864
$
2,128,429
$
2,153,005
Adjusted Interest Coverage Ratio:
Interest expense
$
521,345
$
484,622
$
526,592
Capitalized interest
16,943
13,489
7,905
Non-cash interest expense
(1,681
)
(10,359
)
(10,860
)
Total interest
536,607
487,752
523,637
Adjusted EBITDA
$
2,256,864
$
2,128,429
$
2,153,005
Adjusted interest coverage ratio
4.21x
4.36x
4.11x
Adjusted Fixed Charge Coverage Ratio:
Total interest
$
536,607
$
487,752
$
523,637
Secured debt principal payments
74,466
64,078
56,288
Preferred dividends
65,406
49,410
46,704
Total fixed charges
676,479
601,240
626,629
Adjusted EBITDA
$
2,256,864
$
2,128,429
$
2,153,005
Adjusted fixed charge coverage ratio
3.34x
3.54x
3.44x
(1) Certain severance-related costs are included in stock-based compensation and excluded from other expenses.
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
$
645,000
$
719,000
$
1,147,000
Long-term debt obligations(1)
11,713,245
11,012,936
12,150,144
Cash and cash equivalents(2)
(557,659
)
(249,620
)
(215,376
)
Total net debt
11,800,586
11,482,316
13,081,768
Total equity and noncontrolling interests(3)
15,679,905
15,300,646
16,010,645
Book capitalization
$
27,480,491
$
26,782,962
$
29,092,413
Net debt to book capitalization ratio
42.9
%
42.9
%
45.0
%
Undepreciated book capitalization:
Total net debt
$
11,800,586
$
11,482,316
$
13,081,768
Accumulated depreciation and amortization
4,093,494
4,838,370
5,499,958
Total equity and noncontrolling interests(3)
15,679,905
15,300,646
16,010,645
Undepreciated book capitalization
$
31,573,985
$
31,621,332
$
34,592,371
Net debt to undepreciated book capitalization ratio
37.4
%
36.3
%
37.8
%
Market capitalization:
Common shares outstanding
362,602
371,732
383,675
Period end share price
$
66.93
$
63.77
$
69.41
Common equity market capitalization
$
24,268,952
$
23,705,350
$
26,630,882
Total net debt
11,800,586
11,482,316
13,081,768
Noncontrolling interests(3)
873,512
877,499
1,378,311
Preferred stock
1,006,250
718,503
718,498
Market capitalization:
$
37,949,300
$
36,783,668
$
41,809,459
Net debt to market capitalization ratio
31.1
%
31.2
%
31.3
%
(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
$
1,082,070
$
540,613
$
829,750
Loss (gain) on real estate dispositions, net
(364,046
)
(344,250
)
(415,575
)
Loss (income) from unconsolidated entities
10,357
83,125
Income tax expense (benefit)
(19,128
)
20,128
8,674
Other expenses
11,998
177,776
112,898
Impairment of assets
37,207
124,483
115,579
Provision for loan losses
10,215
62,966
-
Loss (gain) on extinguishment of debt, net
17,214
37,241
16,097
Loss (gain) on derivatives and financial instruments, net
(2,448
)
2,284
(4,016
)
Transaction costs
42,910
-
-
General and administrative expenses
155,241
122,008
126,383
Depreciation and amortization
901,242
921,720
950,459
Interest expense
521,345
484,622
526,592
Consolidated net operating income (NOI)
$
2,404,177
$
2,232,716
$
2,267,482
NOI by segment:
Seniors Housing Operating
$
814,114
$
880,026
$
985,022
Triple-net
1,208,860
967,084
900,049
Outpatient Medical
380,264
384,068
380,136
Non-segment/corporate
1,538
2,275
Total NOI
$
2,404,177
$
2,232,716
$
2,267,482
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Year Ended December 31,
SSNOI Reconciliation:
NOI:
Seniors Housing Operating
$
814,114
$
880,026
$
985,022
Triple-net
1,208,860
967,084
900,049
Outpatient Medical
380,264
384,068
380,136
Total
2,403,238
2,231,178
2,265,207
Adjustments:
Seniors Housing Operating:
Non-cash NOI on same store properties
1,990
1,242
NOI attributable to non same store properties
(77,334
)
(132,604
)
(251,803
)
Subtotal
(75,344
)
(131,362
)
(250,967
)
Triple-net:
Non-cash NOI on same store properties
(28,538
)
(23,764
)
(17,093
)
NOI attributable to non same store properties
(709,606
)
(465,820
)
(401,878
)
Subtotal
(738,144
)
(489,584
)
(418,971
)
Outpatient Medical:
Non-cash NOI on same store properties
(8,190
)
(7,694
)
(8,226
)
NOI attributable to non same store properties
(53,220
)
(58,076
)
(35,619
)
Subtotal
(61,410
)
(65,770
)
(43,845
)
Total
(874,898
)
(686,716
)
(713,783
)
SSNOI by segment:
Seniors Housing Operating
738,770
748,664
734,055
Triple-net
470,716
477,500
481,078
Outpatient Medical
318,854
318,298
336,291
Total
$
1,528,340
$
1,544,462
$
1,551,424
SSNOI Property Reconciliation:
Total properties
1,510
Acquisitions
(378
)
Developments
(32
)
Disposals/Held-for-sale
(55
)
Segment transitions
(113
)
Other(1)
(8
)
Same store properties
(1) Includes seven land parcels and one loan.
Critical Accounting Policies
Our consolidated financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions. Management considers accounting estimates or assumptions critical if:
•
the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and
•
the impact of the estimates and assumptions on financial condition or operating performance is material.
Management has discussed the development and selection of its critical accounting policies with the Audit Committee of the Board of Directors and the Audit Committee has reviewed the disclosure presented below relating to them. Management believes the current assumptions and other considerations used to estimate amounts reflected in our consolidated financial statements are appropriate and are not reasonably likely to change in the future. However, since these estimates require assumptions to be made that were uncertain at the time the estimate was made, they bear the risk of change. If actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our consolidated financial statements, the resulting changes could have a material adverse effect on our consolidated results of operations, liquidity and/or financial condition. Please refer to Note 2 to our consolidated financial statements for further information on significant accounting policies that impact us and for the impact of new accounting standards, including accounting pronouncements that were issued but not yet adopted by us.
The following table presents information about our critical accounting policies, as well as the material assumptions used to develop each estimate:
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Nature of Critical
Accounting Estimate
Assumptions/Approach
Used
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.
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.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Nature of Critical
Accounting Estimate
Assumptions/Approach
Used
Allowance for Loan Losses
The allowance for loan losses is maintained at a level believed adequate to absorb potential losses in our loans receivable. The determination of the allowance is based on a quarterly evaluation of all outstanding loans. If this evaluation indicates that there is a greater risk of loan charge-offs, additional allowances or placement on non-accrual status may be required. A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the original loan agreement or if it has been modified in a troubled debt restructuring. Consistent with this definition, all loans on non-accrual are deemed impaired. To the extent circumstances improve and the risk of collectability is diminished, we will return these loans to income accrual status.
The determination of the allowance is based on a quarterly evaluation of all outstanding loans, including general economic conditions and estimated collectability of loan payments. We evaluate the collectability of our loans receivable based on a combination of factors, including, but not limited to, delinquency status, historical loan charge-offs, financial strength of the borrower and guarantors, and value of the underlying collateral. Any loans with collectability concerns are subjected to a projected payoff valuation. The valuation is based on the expected future cash flows and/or the estimated fair value of the underlying collateral. The valuation is compared to the outstanding balance to determine the reserve needed for each loan. We may base our valuation on 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.
Revenue Recognition
Revenue is 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. 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
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 presented to provide a discussion of the risks associated with potential fluctuations in interest rates and foreign currency exchange rates. For more information, see Notes 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 and new commercial paper program. We are subject to risks associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the terms of refinancing may not be as favorable as the terms of current indebtedness. The majority of our borrowings were completed under indentures or contractual agreements that limit the amount of indebtedness we may incur. Accordingly, in the event that we are unable to raise additional equity or borrow money because of these limitations, our ability to acquire additional properties may be limited.
A change in interest rates will not affect the interest expense associated with our fixed rate debt. Interest rate changes, however, will affect the fair value of our fixed rate debt. Changes in the interest rate environment upon maturity of this fixed rate debt could have an effect on our future cash flows and earnings, depending on whether the debt is replaced with other fixed rate debt, variable rate debt or equity or repaid by the sale of assets. To illustrate the impact of changes in the interest rate markets, we performed a sensitivity analysis on our fixed rate debt instruments whereby we modeled the change in net present values arising from a hypothetical 1% increase in interest rates to determine the instruments’ change in fair value. The following table summarizes the analysis performed as of the dates indicated (in thousands):
December 31, 2018
December 31, 2017
Principal balance
Fair value change
Principal balance
Fair value change
Senior unsecured notes
$
9,009,159
$
(548,558
)
$
7,710,219
$
(500,951
)
Secured debt
1,639,983
(59,522
)
1,749,958
(63,492
)
Totals
$
10,649,142
$
(608,080
)
$
9,460,177
$
(564,443
)
Our variable rate debt, including our primary unsecured credit facility, is reflected at fair value. At December 31, 2018, we had $2,683,553,000 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 $26,836,000. At December 31, 2017, we had $2,294,678,000 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 $22,947,000.
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, 2018, 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 $10,000,000. 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, 2018
December 31, 2017
Carrying value
Fair value change
Carrying value
Fair value change
Foreign currency exchange contracts
$
23,620
$
16,163
$
23,238
$
12,929
Debt designated as hedges
1,559,159
15,592
1,620,273
16,203
Totals
$
1,582,779
$
31,755
$
1,643,511
$
29,132

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Shareholders and the Board of Directors of Welltower Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Welltower Inc. and subsidiaries (the Company) as of December 31, 2018 and 2017, the related consolidated statements of comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2018, 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, 2018 and 2017 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, 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, 2018, 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 25, 2019 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 25, 2019
CONSOLIDATED BALANCE SHEETS
WELLTOWER INC. AND SUBSIDIARIES
(in thousands)
December 31,
December 31,
Assets
Real estate investments:
Real property owned:
Land and land improvements
$
3,205,091
$
2,734,467
Buildings and improvements
28,019,502
25,373,117
Acquired lease intangibles
1,581,159
1,502,471
Real property held for sale, net of accumulated depreciation
590,271
734,147
Construction in progress
194,365
237,746
Gross real property owned
33,590,388
30,581,948
Less accumulated depreciation and amortization
(5,499,958
)
(4,838,370
)
Net real property owned
28,090,430
25,743,578
Real estate loans receivable
398,711
495,871
Less allowance for losses on loans receivable
(68,372
)
(68,372
)
Net real estate loans receivable
330,339
427,499
Net real estate investments
28,420,769
26,171,077
Other assets:
Investments in unconsolidated entities
482,914
445,585
Goodwill
68,321
68,321
Cash and cash equivalents
215,376
243,777
Restricted cash
100,753
65,526
Straight-line receivable
367,093
389,168
Receivables and other assets
686,846
560,991
Total other assets
1,921,303
1,773,368
Total assets
$
30,342,072
$
27,944,445
Liabilities and equity
Liabilities:
Borrowings under primary unsecured credit facility
$
1,147,000
$
719,000
Senior unsecured notes
9,603,299
8,331,722
Secured debt
2,476,177
2,608,976
Capital lease obligations
70,668
72,238
Accrued expenses and other liabilities
1,034,283
911,863
Total liabilities
14,331,427
12,643,799
Redeemable noncontrolling interests
424,046
375,194
Equity:
Preferred stock
718,498
718,503
Common stock
384,465
372,449
Capital in excess of par value
18,424,368
17,662,681
Treasury stock
(68,499
)
(64,559
)
Cumulative net income
6,121,534
5,316,580
Cumulative dividends
(10,818,557
)
(9,471,712
)
Accumulated other comprehensive income (loss)
(129,769
)
(111,465
)
Other equity
Total Welltower Inc. stockholders’ equity
14,632,334
14,423,147
Noncontrolling interests
954,265
502,305
Total equity
15,586,599
14,925,452
Total liabilities and equity
$
30,342,072
$
27,944,445
See accompanying notes
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
WELLTOWER INC. AND SUBSIDIARIES
(In thousands, except per share data)
Year Ended December 31,
Revenues:
Resident fees and services
$
3,234,852
$
2,779,423
$
2,504,731
Rental income
1,380,422
1,445,871
1,648,815
Interest income
55,814
73,811
97,963
Other income
29,411
17,536
29,651
Total revenues
4,700,499
4,316,641
4,281,160
Expenses:
Property operating expenses
2,433,017
2,083,925
1,876,983
Depreciation and amortization
950,459
921,720
901,242
Interest expense
526,592
484,622
521,345
General and administrative expenses
126,383
122,008
155,241
Transaction costs
-
-
42,910
Loss (gain) on derivatives and financial instruments, net
(4,016
)
2,284
(2,448
)
Loss (gain) on extinguishment of debt, net
16,097
37,241
17,214
Provision for loan losses
-
62,966
10,215
Impairment of assets
115,579
124,483
37,207
Other expenses
112,898
177,776
11,998
Total expenses
4,277,009
4,017,025
3,571,907
Income from continuing operations before income taxes and other items
423,490
299,616
709,253
Income tax (expense) benefit
(8,674
)
(20,128
)
19,128
Income (loss) from unconsolidated entities
(641
)
(83,125
)
(10,357
)
Gain (loss) on real estate dispositions, net
415,575
344,250
364,046
Income from continuing operations
829,750
540,613
1,082,070
Net income
829,750
540,613
1,082,070
Less: Preferred stock dividends
46,704
49,410
65,406
Less: Preferred stock redemption charge
-
9,769
-
Less: Net income (loss) attributable to noncontrolling interests(1)
24,796
17,839
4,267
Net income attributable to common stockholders
$
758,250
$
463,595
$
1,012,397
Average number of common shares outstanding:
Basic
373,620
367,237
358,275
Diluted
375,250
369,001
360,227
Earnings per share:
Basic:
Income from continuing operations
$
2.22
$
1.47
$
3.02
Net income attributable to common stockholders
$
2.03
$
1.26
$
2.83
Diluted:
Income from continuing operations
$
2.21
$
1.47
$
3.00
Net income attributable to common stockholders
$
2.02
$
1.26
$
2.81
(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
$
829,750
$
540,613
$
1,082,070
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
Unrecognized actuarial gain (loss)
Foreign currency translation gain (loss)
(41,632
)
85,263
(85,557
)
Total other comprehensive income (loss)
(41,288
)
80,414
(78,833
)
Total comprehensive income
788,462
621,027
1,003,237
Less: Total comprehensive income (loss) attributable to
noncontrolling interests(1)
1,812
40,187
6,722
Total comprehensive income attributable to stockholders
$
786,650
$
580,840
$
996,515
(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, 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
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
Dividends paid:
Common stock dividends
(1,277,321
)
(1,277,321
)
Preferred stock dividends
(49,410
)
(49,410
)
Balances at December 31, 2017
718,503
372,449
17,662,681
(64,559
)
5,316,580
(9,471,712
)
(111,465
)
502,305
14,925,452
Comprehensive income:
Net income
804,954
25,065
830,019
Other comprehensive income (loss)
(18,304
)
(22,984
)
(41,288
)
Total comprehensive income
788,731
Net change in noncontrolling interests
(43,101
)
449,879
406,778
Amounts related to issuance of common stock
from dividend reinvestment and stock
incentive plans, net of forfeitures
28,277
(3,940
)
(376
)
24,149
Net proceeds from issuance of common stock
11,828
776,506
788,334
Conversion of preferred stock
(5
)
-
Dividends paid:
Common stock dividends
(1,300,141
)
(1,300,141
)
Preferred stock dividends
(46,704
)
(46,704
)
Balances at December 31, 2018
$
718,498
$
384,465
$
18,424,368
$
(68,499
)
$
6,121,534
$
(10,818,557
)
$
(129,769
)
$
$
954,265
$
15,586,599
See accompanying notes
CONSOLIDATED STATEMENTS OF CASH FLOWS
WELLTOWER INC. AND SUBSIDIARIES
(in thousands)
Year Ended December 31,
Operating activities:
Net income
$
829,750
$
540,613
$
1,082,070
Adjustments to reconcile net income to net cash provided from (used in) operating
activities:
Depreciation and amortization
950,459
921,720
901,242
Other amortization expenses
17,000
16,521
8,822
Provision for loan losses
-
62,966
10,215
Impairment of assets
115,579
124,483
37,207
Stock-based compensation expense
27,646
19,102
28,869
Loss (gain) on derivatives and financial instruments, net
(4,016
)
2,284
(2,448
)
Loss (gain) on extinguishment of debt, net
16,097
37,241
17,214
Loss (income) from unconsolidated entities
83,125
10,357
Rental income in excess of cash received
(32,857
)
(80,398
)
(83,233
)
Amortization related to above (below) market leases, net
2,608
Loss (gain) on real estate dispositions, net
(415,575
)
(344,250
)
(364,046
)
Other (income) expense, net
-
(4,853
)
Distributions by unconsolidated entities
1,065
Increase (decrease) in accrued expenses and other liabilities
70,762
26,809
14,298
Decrease (increase) in receivables and other assets
5,829
23,486
(18,037
)
Net cash provided from (used in) operating activities
1,583,944
1,434,177
1,639,064
Investing activities:
Cash disbursed for acquisitions, net of cash acquired
(3,560,360
)
(805,264
)
(2,145,374
)
Cash disbursed for capital improvements to existing properties
(266,183
)
(250,276
)
(219,146
)
Cash disbursed for construction in progress
(160,706
)
(232,715
)
(403,131
)
Capitalized interest
(7,905
)
(13,489
)
(16,943
)
Investment in real estate loans receivable
(83,048
)
(83,738
)
(129,884
)
Principal collected on real estate loans receivable
180,830
96,023
249,552
Other investments, net of payments
(50,430
)
57,385
4,760
Contributions to unconsolidated entities
(136,854
)
(114,365
)
(101,415
)
Distributions by unconsolidated entities
90,916
70,287
119,723
Proceeds from (payments on) derivatives
65,399
52,719
108,347
Proceeds from sales of real property
1,541,870
1,378,014
2,350,068
Net cash provided from (used in) investing activities
(2,386,471
)
154,581
(183,443
)
Financing activities:
Net increase (decrease) under unsecured credit facilities
428,000
74,000
(190,000
)
Proceeds from issuance of senior unsecured notes
2,824,176
7,500
693,560
Payments to extinguish senior unsecured notes
(1,450,000
)
(5,000
)
(865,863
)
Net proceeds from the issuance of secured debt
45,447
241,772
460,015
Payments on secured debt
(362,841
)
(1,144,346
)
(563,759
)
Net proceeds from the issuance of common stock
789,575
621,987
534,194
Redemption of preferred stock
-
(287,500
)
-
Payments for deferred financing costs and prepayment penalties
(29,691
)
(54,333
)
(22,196
)
Contributions by noncontrolling interests(1)
39,207
56,560
148,666
Distributions to noncontrolling interests(1)
(109,871
)
(87,711
)
(134,578
)
Cash distributions to stockholders
(1,348,863
)
(1,325,617
)
(1,298,925
)
Other financing activities
(6,771
)
(10,839
)
(11,931
)
Net cash provided from (used in) financing activities
818,368
(1,913,527
)
(1,250,817
)
Effect of foreign currency translation on cash and cash equivalents and restricted cash
(9,015
)
26,852
(20,274
)
Increase (decrease) in cash, cash equivalents and restricted cash
6,826
(297,917
)
184,530
Cash, cash equivalents and restricted cash at beginning of period
309,303
607,220
422,690
Cash, cash equivalents and restricted cash at end of period
$
316,129
$
309,303
$
607,220
Supplemental cash flow information:
Interest paid
$
501,404
$
488,265
$
541,545
Income taxes paid
2,250
10,410
8,011
(1) Includes amounts attributable to redeemable noncontrolling interests.
See accompanying notes.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Business
Welltower Inc., an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. Welltower™, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing 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
On January 1, 2018 we adopted Accounting Standards Update ("ASU") 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. We adopted ASC 606 using the modified retrospective method.
We have evaluated our various revenue streams to identify whether they would be subject 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 ASC 606. 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. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of collectability risk. Management contracts are present in some of our joint venture agreements to provide asset and property management, leasing, marketing and other services. Under ASC 606, the pattern and timing of recognition of income from these contracts is consistent with the prior accounting model.
Cash and Cash Equivalents
Cash and cash equivalents consist of all highly liquid investments with an original maturity of three months or less.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Restricted Cash
Restricted cash primarily consists of amounts held by lenders to provide future payments for real estate taxes, insurance, tenant and capital improvements, amounts held in escrow relating to transactions we are entitled to receive over a period of time as outlined in the escrow agreement and net proceeds from property sales that were executed as tax-deferred dispositions under Internal Revenue Code (“IRC”) section 1031.
Deferred Loan Expenses
Deferred loan expenses are costs incurred by us in connection with the issuance, assumption and amendments of debt arrangements. Deferred loan expenses related to debt instruments, excluding the primary unsecured credit facility, are recorded as a reduction of the related debt liability. Deferred loan expenses related to the primary unsecured credit facility are included in other assets. We amortize these costs over the term of the debt using the straight-line method, which approximates the effective interest method.
Investments in Unconsolidated Entities
Investments in entities that we do not consolidate but have the ability to exercise significant influence over operating and financial policies are reported under the equity method of accounting. Under the equity method, our share of the investee’s earnings or losses is included in our consolidated results of operations. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest inclusive of transaction costs. To the extent that our cost basis is different from the basis reflected at the entity level, the basis difference is generally amortized over the lives of the related assets and liabilities, and such amortization is included in our share of equity in earnings of the entity. We evaluate our equity method investments for impairment based upon a comparison of the estimated fair value of the equity method investment to its carrying value. When we determine a decline in the estimated fair value of such an investment below its carrying value is other-than-temporary, an impairment is recorded.
Equity Securities
In 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-01 "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Liabilities," which requires entities to measure their investments at fair value and recognize any changes in fair value in net income rather than through accumulated other comprehensive income. During the year ended December 31, 2018, we recognized a gain of $4,016,000 related to our equity securities in loss (gain) on derivatives and financial instruments, net on the Consolidated Statement of Comprehensive Income. There was no adjustment to accumulated other comprehensive income upon adoption at January 1, 2018 as accumulated losses of $18,294,000 were recognized as other-than-temporary impairment during the year ended December 31, 2017.
Redeemable Noncontrolling Interests
Certain noncontrolling interests are redeemable at fair value. Accordingly, we record the carrying amount of the noncontrolling interests at the greater of (i) the initial carrying amount, increased or decreased for the noncontrolling interest’s share of net income or loss and its share of other comprehensive income or loss, and dividends or (ii) the redemption value. If it is probable that the interests will be redeemed in the future, we accrete the carrying value to the redemption value over the period until expected redemption, currently a weighted-average period of approximately one year. In accordance with ASC 810, the redeemable noncontrolling interests are classified outside of permanent equity, as a mezzanine item, in the balance sheet. At December 31, 2018, the current redemption value of redeemable noncontrolling interests exceeded the carrying value of $424,046,000 by $18,891,000.
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 ASU 2017-01, Clarifying the Definition of a Business (“ASU 2017-01”) which narrows the FASB's 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.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 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 or the assumed re-leasing period.
The net book value of long-lived assets is reviewed quarterly on a property by property basis to determine if facts and circumstances suggest that the assets may be impaired or that the depreciable life may need to be changed. We consider external factors relating to each asset and the existence of a master lease which may link the cash flows of an individual asset to a larger portfolio of assets leased to the same tenant. If these factors and the projected undiscounted cash flows of the 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
In 2017, the FASB issued ASU 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. We adopted Subtopic 610-20 using a modified retrospective approach on January 1, 2018 and it did not have a material impact on our consolidated financial statements.
Prior to the adoption of Subtopic 610-20, we recognized sales of real estate assets only upon the closing of the transaction with the purchaser. Payments received from purchasers prior to closing were recorded as deposits and classified as other assets on our consolidated balance sheets. Gains on real estate assets sold were recognized using the full accrual method upon closing when (i) the collectability of the sales price was reasonably assured, (ii) we were 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 have been deferred in whole or in part until the sales satisfy the requirements of gain recognition on sales of real estate.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
Goodwill is tested annually for impairment and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount, including goodwill, exceeds the reporting unit’s fair value and the implied fair value of goodwill is less than the carrying amount of that goodwill. We have not had any goodwill impairments.
Fair Value of Derivative Instruments
Derivatives are recorded at fair value on the balance sheet as assets or liabilities. The valuation of derivative instruments requires us to make estimates and judgments that affect the fair value of the instruments. Fair values of our derivatives are estimated by pricing models that consider the forward yield curves and discount rates. The fair value of our forward exchange contracts are estimated by pricing models that consider foreign currency spot rates, forward trade rates and discount rates. Such amounts and the recognition of such amounts are subject to significant estimates that may change in the future. See Note 11 for additional information.
Federal Income Tax
We have elected to be treated as a REIT under the applicable provisions of the 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.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, 2018, we adopted the following additional accounting standard, which did not have a material impact on our consolidated financial statements:
•
In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities," which expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. It also includes certain targeted improvements to simplify the application of current guidance related to hedge accounting. The early adoption of this standard on April 1, 2018, did not result in a cumulative effect adjustment and all applicable changes for the company were prospectively made. Please refer to Note 11 of the consolidated financial statements for additional detail on this adoption.
The following ASUs have been issued but not yet adopted:
•
In 2017, the FASB issued ASU 2016-02, “Leases (codified under ASC 842),” which requires lessees to recognize assets and liabilities on their consolidated balance sheet related to the rights and obligations created by most leases, while continuing to recognize expenses on their consolidated 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. While we are currently evaluating the impact of this adoption, we believe it 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 where we are the lessee. Specifically, we believe the impact to our consolidated financial statements will primarily be attributable to the approximately 139 ground leases and various office and equipment leases which are currently accounted for under ASC 840, "Leases," as operating leases. Future lease payments under these leases total $1,138,046,000.
The FASB also issued ASU 2018-20 "Leases (Topic 842) - Narrow-scope Improvements for Lessors" in December 2018, which provides lessors the ability to make an accounting policy election not to evaluate whether certain sales taxes and other similar taxes imposed by a governmental authority on a specific lease revenue-producing transaction are the primary obligation of the lessor as owner of the underlying leased asset. A lessor that makes this election will exclude these taxes from the measurement of lease revenue and the associated expense. We expect to utilize the practical expedient in ASU 2018-20 as part of our adoption of this guidance.
Upon adoption of ASU 2016-02, lessors are required to separately recognize and measure the lease component of a contract with a customer utilizing the provisions of ASC 842 and the non-lease components utilizing the provisions of ASC 606. To separately account for the components, transaction price is allocated based upon the estimated stand-alone selling prices of the components. Additionally, certain components of a contract which were previously included within the lease element and recognized in accordance with ASC 840 prior to the adoption of ASC 2016-02 (such as common area maintenance services, other basic services and executory costs), are recognized as non-lease components subject to the provisions of ASC 606 subsequent to the adoption of ASC 2016-02. Entities are required to recognize a cumulative effect adjustment to beginning retained earnings as of the initial application of ASU 2016-02 for changes to amounts recognized for these certain components for the transition from ASC 840 to ASC 606.
The FASB issued ASU 2018-11, "Leases (Topic 842) Targeted Improvements" in July 2018, which provides lessors with a practical expedient, allowing them to not separate lease and non-lease components in a contract, and instead to account for as a single lease component, if certain criteria are met. This practical expedient causes an entity to assess whether a contract is predominantly lease or service-based and recognize the entire contract under the relevant accounting guidance (i.e., predominantly lease-based would be accounted for under ASC 842 and predominantly service-based would be accounted for under ASC 606). Entities that elect to utilize this practical expedient upon initial application of ASC 842 are required to apply to all new and existing transactions as of the initial application date with a cumulative effect adjustment to beginning retained earnings for any changes to amounts recognized related to existing transactions. For the year ended December 31, 2018, we recognized revenue for our Seniors Housing Operating segment in accordance with the provisions of ASC 840. Upon adoption of ASU 2016-02, we will elect the lessor practical expedient and will recognize the revenue
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
for our Seniors Housing Operating segment based upon the predominant component, which we have determined to be the non-lease component, and therefore, will account for these contracts under ASC 606. After the adoption of ASU 2016-02, we expect the timing and pattern of revenue recognition will be substantially the same as that prior to the adoption of the standard.
•
In 2017, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” This standard requires a new forward-looking “expected loss” model to be used for receivables, held-to-maturity debt, loans, 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.
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 related to 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.
Acquisition of Quality Care Properties
On July 26, 2018, we completed the acquisition of Quality Care Properties Inc. ("QCP"), with QCP shareholders receiving $20.75 of cash for each share of QCP common stock and all existing QCP debt was repaid upon closing. Prior to the acquisition, ProMedica Health System ("ProMedica") completed the acquisition of HCR ManorCare. Immediately following the acquisition of QCP, we formed an 80/20 joint venture with ProMedica to own the real estate associated with the 218 seniors housing properties leased to ProMedica under a lease agreement with the following key terms: (i) 15-year absolute triple-net master lease with three five-year renewal options; (ii) initial annual cash rent of $179 million with a year one escalator of 1.375% and 2.75% annual escalators thereafter; and (iii) full corporate guarantee of ProMedica. Additionally, we acquired 59 seniors housing properties classified as held for sale and leased to ProMedica under a non-yielding lease, 12 seniors housing properties and one surgery center classified as held for sale and leased to operators under existing triple-net leases, 14 seniors housing properties leased to operators under existing triple-net leases and one multi-tenant medical office building leased to various tenants.
We drew on a $1.0 billion term loan facility to fund a portion of the acquisition cash consideration and other related expenses. The term loan facility matures two years from the closing. In addition to the term loan facility draw, we drew on our unsecured credit facility described in Note 9, in order to fund the acquisition. The aggregate consideration to acquire the QCP shares and repay outstanding QCP debt was approximately $3.5 billion.
We concluded that the QCP acquisition met the definition of an asset acquisition under ASU 2017-01, "Clarifying the Definition of a Business". The following table presents the purchase price calculation and the allocation to assets acquired and liabilities assumed based upon their relative fair value:
(In thousands)
Land and land improvements
$
417,983
Buildings and improvements
2,253,451
Acquired lease intangibles
12,820
Real property held for sale
418,297
Cash and cash equivalents
381,913
Restricted cash
4,981
Receivables and other assets
1,354
Total assets acquired
3,490,799
Accrued expenses and other liabilities
(13,199
)
Total liabilities assumed
(13,199
)
Noncontrolling interests
(512,741
)
Net assets acquired
$
2,964,859
Net assets acquired in the QCP acquisition detailed above are included in the respective segment tables below.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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):
Year Ended December 31,
Land and land improvements
$
51,440
$
42,525
$
164,653
Buildings and improvements
621,731
428,777
1,518,472
Acquired lease intangibles
69,504
63,912
115,643
Receivables and other assets
1,492
3,959
2,462
Total assets acquired(1)
744,167
539,173
1,801,230
Secured debt
(134,752
)
-
(63,732
)
Accrued expenses and other liabilities
(18,463
)
(46,301
)
(23,681
)
Total liabilities assumed
(153,215
)
(46,301
)
(87,413
)
Noncontrolling interests
(14,390
)
(4,701
)
(6,007
)
Non-cash acquisition related activity(2)
-
(67,633
)
(47,065
)
Cash disbursed for acquisitions
576,562
420,538
1,660,745
Construction in progress additions
82,621
84,874
157,845
Capitalized interest
(3,190
)
(9,106
)
(5,793
)
Foreign currency translation
3,934
(6,830
)
(8,500
)
Cash disbursed for construction in progress
83,365
68,938
143,552
Capital improvements to existing properties
201,001
185,473
138,673
Total cash invested in real property, net of cash acquired
$
860,928
$
674,949
$
1,942,970
(1) Excludes $5,784,000, $6,273,000 and $351,000 of cash and restricted cash acquired during the years ended December 31, 2018, 2017 and 2016, respectively.
(2) For the year ended December 31, 2017, 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. For the year ended December 31, 2016, includes $43,372,000 related to the acquisition of assets previously financed as investments in unconsolidated entities.
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
$
413,588
$
33,416
$
104,754
Buildings and improvements
2,242,884
248,459
418,633
Acquired lease intangibles
9,690
-
2,876
Real property held for sale
396,265
-
-
Receivables and other assets
1,354
-
Total assets acquired(1)
3,063,781
281,875
526,814
Accrued expenses and other liabilities
(13,199
)
(21,236
)
(3,384
)
Total liabilities assumed
(13,199
)
(21,236
)
(3,384
)
Noncontrolling interests
(512,741
)
(7,275
)
(26,771
)
Non-cash acquisition related activity(2)
-
(54,901
)
(51,733
)
Cash disbursed for acquisitions
2,537,841
198,463
444,926
Construction in progress additions
55,558
120,797
181,084
Capitalized interest
(2,238
)
(4,713
)
(8,729
)
Foreign currency translation
(610
)
(3,665
)
Cash disbursed for construction in progress
53,592
115,474
168,690
Capital improvements to existing properties
10,046
19,989
32,603
Total cash invested in real property, net of cash acquired
$
2,601,479
$
333,926
$
646,219
(1) Excludes $386,894,000, $318,000 and $682,000 of cash and restricted cash acquired during the years ended December 31, 2018, 2017 and 2016, respectively.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(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 equity investments.
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
$
77,239
$
40,565
$
5,738
Buildings and improvements
478,740
159,643
46,056
Acquired lease intangibles
50,813
24,014
4,592
Real property held for sale
22,032
-
-
Receivables and other assets
1,185
-
Total assets acquired(1)
630,009
224,232
56,386
Secured debt
(169,156
)
(25,708
)
-
Accrued expenses and other liabilities
(14,896
)
(3,181
)
(1,670
)
Total liabilities assumed
(184,052
)
(28,889
)
(1,670
)
Noncontrolling interests
-
(9,080
)
-
Non-cash acquisition related activity(2)
-
-
(15,013
)
Cash disbursed for acquisitions
445,957
186,263
39,703
Construction in progress additions
26,565
37,094
113,933
Capitalized interest
(2,477
)
(2,406
)
(3,723
)
Accruals(3)
(339
)
13,615
(19,321
)
Cash disbursed for construction in progress
23,749
48,303
90,889
Capital improvements to existing properties
55,136
44,814
47,870
Total cash invested in real property, net of cash acquired
$
524,842
$
279,380
$
178,462
(1) Excludes $2,719,000 of unrestricted and restricted cash acquired during the year ended December 31, 2018.
(2) Relates to the acquisition of assets previously financed as real estate loans. Please refer to Note 6 for additional information.
(3) Represents non-cash accruals for amounts to be paid in future periods for properties that converted, off-set by amounts paid in the current period.
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, 2018
December 31, 2017
December 31, 2016
Development projects:
Seniors Housing Operating
$
86,931
$
3,634
$
18,979
Triple-net
90,055
283,472
46,094
Outpatient Medical
11,358
63,036
108,001
Total development projects
188,344
350,142
173,074
Expansion projects
20,029
10,336
11,363
Total construction in progress conversions
$
208,373
$
360,478
$
184,437
At December 31, 2018, 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):
$
1,309,186
1,275,683
1,245,611
1,222,519
1,171,081
Thereafter
9,359,018
Totals
$
15,583,098
WELLTOWER INC. AND SUBSIDIARIES
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, 2018
December 31, 2017
Assets:
In place lease intangibles
$
1,410,725
$
1,352,139
Above market tenant leases
63,935
58,443
Below market ground leases
64,513
58,784
Lease commissions
41,986
33,105
Gross historical cost
1,581,159
1,502,471
Accumulated amortization
(1,197,336
)
(1,125,437
)
Net book value
$
383,823
$
377,034
Weighted-average amortization period in years
16.0
15.1
Liabilities:
Below market tenant leases
$
81,676
$
60,430
Above market ground leases
8,540
8,540
Gross historical cost
90,216
68,970
Accumulated amortization
(44,266
)
(39,629
)
Net book value
$
45,950
$
29,341
Weighted-average amortization period in years
14.7
20.1
The following is a summary of real estate intangible amortization income (expense) for the periods presented (in thousands):
Year Ended December 31,
Rental income related to (above)/below market tenant leases, net
$
(1,269
)
$
$
Property operating expenses related to above/(below) market ground leases, net
(1,339
)
(1,231
)
(1,241
)
Depreciation and amortization related to in place lease intangibles and lease commissions
(122,515
)
(145,132
)
(132,141
)
The future estimated aggregate amortization of intangible assets and liabilities is as follows for the periods presented (in thousands):
Assets
Liabilities
$
97,199
$
7,005
62,641
6,475
29,855
5,838
24,270
5,300
20,304
3,440
Thereafter
149,554
17,892
Totals
$
383,823
$
45,950
5. Dispositions and Assets Held for Sale
We periodically sell properties for various reasons, including favorable market conditions, the exercise of tenant purchase options or reduction of concentrations (e.g. property type, relationship or geography). At December 31, 2018, 13 seniors housing operating, 40 triple-net and two outpatient medical properties with an aggregate net real estate balance of $590,271,000 were classified as held for sale. 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. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended
December 31, 2018
December 31, 2017
December 31, 2016
Real property dispositions:
Seniors Housing Operating
$
36,627
$
74,832
$
-
Triple-net
835,093
916,689
1,773,614
Outpatient Medical
253,397
19,697
78,786
Total dispositions
1,125,117
1,011,218
1,852,400
Gain (loss) on sales of real property, net
415,575
344,250
364,046
Net other assets (liabilities) disposed
1,178
22,546
133,622
Proceeds from real property sales
$
1,541,870
$
1,378,014
$
2,350,068
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, 2018, $61,994,000 of principal is outstanding on the loans.
Dispositions and Assets Held for Sale
Pursuant to our adoption of ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (ASU 2014-08”), operating results attributable to properties sold subsequent to or classified as held for sale after January 1, 2014 and which do not meet the definition of discontinued operations are no longer reclassified on our consolidated statements of comprehensive income. The following represents the activity related to these properties for the periods presented (in thousands):
Year Ended
December 31,
Revenues:
Total revenues
$
148,725
$
275,087
$
565,450
Expenses:
Interest expense
6,655
52,675
Property operating expenses
81,698
81,182
89,666
Provision for depreciation
16,900
55,294
122,153
Total expenses
98,892
143,131
264,494
Income (loss) from real estate dispositions, net
$
49,833
$
131,956
$
300,956
6. Real Estate Loans Receivable
The following is a summary of our real estate loans receivable (in thousands):
December 31,
Mortgage loans
$
317,443
$
374,492
Other real estate loans
81,268
121,379
Totals
$
398,711
$
495,871
The following is a summary of our real estate loan activity for the periods presented (in thousands):
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended
December 31, 2018
December 31, 2017
December 31, 2016
Seniors
Housing
Operating
Triple-net
Outpatient
Medical
Totals
Triple-net
Outpatient
Medical
Totals
Triple-net
Outpatient
Medical
Totals
Advances on real estate loans receivable:
Investments in new loans
$
11,806
$
13,062
$
23,421
$
48,289
$
12,091
$
-
$
12,091
$
8,445
$
-
$
8,445
Draws on existing loans
-
34,759
-
34,759
71,647
-
71,647
118,788
2,651
121,439
Net cash advances on real estate loans
11,806
47,822
23,421
83,048
83,738
-
83,738
127,233
2,651
129,884
Receipts on real estate loans receivable:
Loan payoffs
15,000
116,161
-
131,161
157,912
60,500
218,412
275,439
27,303
302,742
Principal payments on loans
-
49,669
-
49,669
1,219
-
1,219
6,867
-
6,867
Sub-total
15,000
165,830
-
180,830
159,131
60,500
219,631
282,306
27,303
309,609
Less: Non-cash activity(1)
-
-
-
-
(63,108
)
(60,500
)
(123,608
)
(45,044
)
(15,013
)
(60,057
)
Net cash receipts on real estate loans
15,000
165,830
-
180,830
96,023
-
96,023
237,262
12,290
249,552
Net cash advances (receipts) on real estate loans
$
(3,194
)
$
(118,008
)
$
23,421
$
(97,781
)
$
(12,285
)
$
-
$
(12,285
)
$
(110,029
)
$
(9,639
)
$
(119,668
)
(1) Triple-net primarily represents acquisitions of assets previously financed as real estate loans. Please see Note 3 for further information. Outpatient Medical represents a deed in lieu of foreclosure on a previously financed first mortgage property for the year ended December 31, 2017 and acquisition of assets previously financed as real estate loans for the year ended December 31, 2016.
In 2016, we restructured two triple-net real estate loans with Genesis. The 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, one of which was repaid during 2017. 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 from Genesis. During 2018, aggregate principal payments of $85,289,000 were received on the loans. The allowance for losses on loans receivable 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. In addition, at December 31, 2018, we had one real estate loan with an outstanding balance of $2,567,000 on non-accrual status. No provision for loan loss has been recorded for this loan given the underlying collateral value.
The following is a summary of the allowance for losses on loans receivable for the periods presented (in thousands):
Year Ended December 31,
Balance at beginning of year
$
68,372
$
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
$
68,372
$
6,563
(1) Excludes direct write down of an impaired loan receivable in 2016.
The following is a summary of our impaired loans (in thousands):
Year Ended December 31,
Balance of impaired loans at end of year
$
189,272
$
282,882
$
377,549
Allowance for loan losses
68,372
68,372
6,563
Balance of impaired loans not reserved
$
120,900
$
214,510
$
370,986
Average impaired loans for the year
$
236,077
$
330,216
$
188,775
Interest recognized on impaired loans(1)
17,241
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, 2018
December 31, 2017
Seniors Housing Operating
10% to 50%
$
344,982
$
352,430
Triple-net
10% to 49%
34,284
22,856
Outpatient Medical
43% to 50%
103,648
70,299
Total
$
482,914
$
445,585
(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, 2018, 2017 and 2016, we recognized fees to Sunrise of $36,378,000, $37,573,000, and $37,751,000, respectively, which are reflected within property operating expenses in our Consolidated Statements of Comprehensive Income.
At December 31, 2018, the aggregate unamortized basis difference of our joint venture investments of $105,471,000 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.
8. Credit Concentration
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, 2018, 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)
$
335,456
15%
Revera(3)
154,194
7%
Brookdale Senior Living
142,768
6%
Genesis HealthCare
137,054
6%
Benchmark Senior Living
99,439
4%
Remaining portfolio
1,014
1,398,571
62%
Totals
1,510
$
2,267,482
100%
(1) Genesis 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 41% of total NOI for the year ending December 31, 2017.
(3) Revera owns a controlling interest in Sunrise Senior Living. For the year ended December 31, 2018, we recognized $1,154,025,000 of revenue from properties managed by Sunrise Senior Living.
9. Borrowings Under Credit Facilities and Related Items
At December 31, 2018, we had a primary unsecured credit facility with a consortium of 31 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, 2018). Borrowings under the unsecured revolving credit facility are subject to interest payable at the applicable margin over LIBOR interest rate (3.33% at December 31, 2018). The applicable margin is based on our debt ratings and was 0.825% at December 31, 2018. In addition, we pay a facility fee quarterly to each bank based on the bank’s commitment amount. The facility fee depends on our debt ratings and
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
was 0.15% at December 31, 2018. The term credit facilities mature on July 19, 2023. The revolving credit facility is scheduled to mature on July 19, 2022 and can be extended for two successive terms of six months each at our option.
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
$
1,147,000
$
719,000
$
645,000
Maximum amount outstanding at any month end
$
2,148,000
$
1,010,000
$
1,560,000
Average amount outstanding (total of daily principal balances
divided by days in period)
$
950,581
$
597,422
$
762,896
Weighted-average interest rate (actual interest expense divided
by average borrowings outstanding)
3.07
%
2.02
%
1.39
%
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, 2018, the annual principal payments due on these debt obligations were as follows (in thousands):
Senior
Unsecured Notes(1,2)
Secured
Debt (1,3)
Totals
$
600,000
$
508,899
$
1,108,899
2020(4)
677,489
138,288
815,777
450,000
369,124
819,124
600,000
280,418
880,418
2023(5,6)
1,783,325
325,371
2,108,696
Thereafter(7,8)
5,589,170
863,611
6,452,781
Totals
$
9,699,984
$
2,485,711
$
12,185,695
(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 3.05% to 6.50%.
(3) Annual interest rates range from 1.69% to 12.00%. Carrying value of the properties securing the debt totaled $5,347,428,000 at December 31, 2018.
(4) Includes a $300,000,000 Canadian-denominated 3.35% senior unsecured notes due 2020 (approximately $219,989,000 based on the Canadian/U.S. Dollar exchange rate on December 31, 2018).
(5) Includes a $250,000,000 Canadian-denominated unsecured term credit facility (approximately $183,325,000 based on the Canadian/U.S. Dollar exchange rate on December 31, 2018). The loan matures on July 19, 2023 and bears interest at the Canadian Dealer Offered Rate plus 0.9% (3.15% at December 31, 2018).
(6) Includes a $500,000,000 unsecured term credit facility. The loan matures on July 19, 2023 and bears interest at LIBOR plus 0.9% (3.37% at December 31, 2018).
(7) Includes a £550,000,000 4.80% senior unsecured notes due 2028 (approximately $701,470,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on December 31, 2018).
(8) Includes a £500,000,000 4.50% senior unsecured notes due 2034 (approximately $637,700,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on December 31, 2018).
The following is a summary of our senior unsecured note principal activity during the periods presented (dollars in thousands):
Year Ended
December 31, 2018
December 31, 2017
December 31, 2016
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
8,417,447
4.31%
$
8,260,038
4.25%
$
8,645,758
4.24%
Debt issued
2,850,000
4.57%
7,500
1.97%
705,000
4.23%
Debt extinguished
(1,450,000
)
3.46%
(5,000
)
1.83%
(850,000
)
4.19%
Foreign currency
(117,463
)
4.16%
154,909
4.29%
(240,720
)
4.57%
Ending balance
$
9,699,984
4.48%
$
8,417,447
4.31%
$
8,260,038
4.25%
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following is a summary of our secured debt principal activity for the periods presented (dollars in thousands):
Year Ended
December 31, 2018
December 31, 2017
December 31, 2016
Weighted Avg.
Weighted Avg.
Weighted Avg.
Amount
Interest Rate
Amount
Interest Rate
Amount
Interest Rate
Beginning balance
$
2,618,408
3.76%
$
3,465,066
4.09%
$
3,478,207
4.44%
Debt issued
45,447
3.40%
241,772
2.82%
460,015
2.65%
Debt assumed
292,887
4.64%
23,094
6.67%
60,898
4.30%
Debt extinguished
(306,553
)
5.36%
(1,080,268
)
5.25%
(489,293
)
5.11%
Debt deconsolidated
-
-%
(60,000
)
3.80%
-
-%
Principal payments
(56,288
)
3.91%
(64,078
)
4.34%
(74,466
)
4.66%
Foreign currency
(108,190
)
3.33%
92,822
3.16%
29,705
3.67%
Ending balance
$
2,485,711
3.90%
$
2,618,408
3.76%
$
3,465,066
4.09%
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, 2018, we were in compliance with all of the covenants under our debt agreements.
11. Derivative Instruments
We are exposed to, among other risks, the impact of changes in foreign currency exchange rates as a result of our non-U.S. investments. Our risk management program is designed to manage the exposure and volatility arising from these risks, and utilizes derivative financial instruments and debt issued in foreign currencies to offset a portion of these risks.
Foreign Currency Forward Contracts Designated as Cash Flow Hedges
For instruments that are designated as and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is deferred as a component of other comprehensive income (“OCI”), and reclassified into earnings in the same period, or periods, during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in earnings.
Foreign Currency Forward Contracts and Cross Currency Swap Contracts Designated as Net Investment Hedges
We use foreign currency forward and cross currency forward swap contracts to hedge a portion of the net investment in foreign subsidiaries against fluctuations in foreign exchange rates. For instruments that are designated and qualify as net investment hedges, the variability in the foreign currency to U.S. Dollar of the instrument is recorded as a cumulative translation adjustment component of OCI.
In the second quarter of 2018, we redesignated these derivative financial instruments that qualify as hedges of net investments in foreign operations using the spot method in order to more closely align the underlying economics of the hedged transactions. The changes in fair values and the excluded components of derivative instruments designated as net investment hedges are recognized as a cumulative translation adjustment component of OCI. The cross currency basis spread is recognized in interest expense on the Consolidated Statement of Comprehensive Income using the swap accrual process. Prior to the adoption of ASU 2017-12, all settlements and changes in the fair values of these instruments were recognized as a cumulative translation adjustment component of OCI and there had been no ineffectiveness on these hedging relationships.
During the years ended December 31, 2018 and 2017, we settled certain net investment hedges generating cash proceeds of $70,897,000 and $52,719,000, respectively. The balance of the cumulative translation adjustment will be reclassified to earnings when the hedged investment is sold or substantially liquidated.
Derivative Contracts Undesignated
We use foreign currency exchange contracts to manage existing exposures to foreign currency exchange risk. Gains and losses resulting from changes in the fair value of these instruments are recorded in interest expense on the Consolidated Statement of Comprehensive Income, and are substantially offset by net revaluation impacts on foreign currency denominated balance sheet exposures. In addition, we have several interest rate cap contracts related to variable rate secured debt agreements. Gains and losses resulting from the changes in the fair values of these instruments are also recorded in interest expense.
The following presents the notional amount of derivatives and other financial instruments as of the dates indicated (in thousands):
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018
December 31, 2017
Derivatives designated as net investment hedges:
Denominated in Canadian Dollars
$
575,000
$
575,000
Denominated in Pounds Sterling
£
890,708
£
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 Canadian Dollars
$
-
$
36,000
Derivative instruments not designated:
Interest rate caps denominated in U.S. Dollars
$
405,819
$
408,007
Forward purchase contracts denominated in Canadian Dollars
$
(325,000
)
$
-
Forward sales contracts denominated in Canadian Dollars
$
405,000
$
80,000
Forward purchase contracts denominated in Pounds Sterling
£
(350,000
)
£
-
Forward sales contracts denominated in Pounds Sterling
£
350,000
£
-
The following presents the impact of derivative instruments on the Consolidated Statements of Comprehensive Income for the periods presented (in thousands):
Year Ended
Location
December 31, 2018
December 31, 2017
December 31, 2016
Gain (loss) on derivative instruments designated as hedges recognized in income
Interest expense
$
12,271
$
(2,476
)
$
7,871
Gain (loss) on derivative instruments not designated as hedges recognized in income
Interest expense
$
5,233
$
(49
)
$
Gain on release of cumulative translation adjustment related to ineffectiveness on net investment hedge
Loss (gain) on derivatives, net
$
-
$
-
$
(2,516
)
Gain (loss) on foreign exchange contracts and term loans designated as net investment hedge recognized in OCI
OCI
$
211,390
$
(252,168
)
$
357,021
12. Commitments and Contingencies
At December 31, 2018, we had 14 outstanding letter of credit obligations totaling $50,805,000 and expiring between 2019 and 2024. At December 31, 2018, we had outstanding construction in process of $194,365,000 for leased properties and were committed to providing additional funds of approximately $436,984,000 to complete construction. Purchase obligations at December 31, 2018, include $1,250,000,000 representing a definitive agreement to acquire outpatient medical facilities in 2019. Purchase obligations also include contingent purchase obligations totaling $17,309,000. 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. During the year ended December 31, 2017, we finalized an agreement with the University of Toledo Foundation to transfer our corporate headquarters as a gift and recognized an expense of $40,730,000.
We evaluate our leases for operating versus capital lease treatment in accordance with ASC 840. 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, 2018, we had operating lease obligations of $1,138,046,000 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, 2018, aggregate future minimum rentals to be received under these noncancelable subleases totaled $72,789,000.
At December 31, 2018, future minimum lease payments due under operating and capital leases are as follows (in thousands):
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Operating Leases
Capital Leases(1)
$
18,242
$
4,173
17,785
4,173
17,607
4,173
16,961
4,173
17,004
67,573
Thereafter
1,050,447
-
Totals
$
1,138,046
$
84,265
(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 $33,676,000 are recorded in real property.
13. Stockholders’ Equity
The following is a summary of our stockholders’ equity capital accounts as of the dates indicated:
December 31, 2018
December 31, 2017
Preferred Stock, $1.00 par value:
Authorized shares
50,000,000
50,000,000
Issued shares
14,375,000
14,375,000
Outstanding shares
14,369,965
14,370,060
Common Stock, $1.00 par value:
Authorized shares
700,000,000
700,000,000
Issued shares
384,849,236
372,852,311
Outstanding shares
383,674,603
371,731,551
Preferred Stock. The following is a summary of our preferred stock activity during the periods presented:
Year Ended
December 31, 2018
December 31, 2017
December 31, 2016
Weighted Avg.
Weighted Avg.
Weighted Avg.
Shares
Dividend Rate
Shares
Dividend Rate
Shares
Dividend Rate
Beginning balance
14,370,060
6.50%
25,875,000
6.50%
25,875,000
6.50%
Shares redeemed
-
-%
(11,500,000
)
6.50%
-
-%
Shares converted
(95
)
6.50%
(4,940
)
6.50%
-
-%
Ending balance
14,369,965
6.50%
14,370,060
6.50%
25,875,000
6.50%
During the three months ended March 31, 2011, we issued 14,375,000 of 6.50% Series I Cumulative Convertible Perpetual Preferred Stock (the "Series I Preferred Stock"). These shares have a liquidation value of $50.00 per share. Dividends are payable quarterly in arrears. The Series I Preferred Stock is not redeemable by us and are convertible, at the holder’s option, into 0.8460 shares of common stock (equal to an initial conversion price of approximately $59.10). On or after April 30, 2018, we may at our option cause all outstanding shares of the Series I Preferred Stock to be automatically converted into a number of shares of common stock equal to the then-prevailing conversion rate if the daily volume-weighted average prices of our common stock for each day equals or exceeds 130% of the then-prevailing conversion price for at least 20 trading days in a period of 30 consecutive trading days.
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. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Shares Issued
Average Price
Gross Proceeds
Net Proceeds
2016 Dividend reinvestment plan issuances
4,145,457
$70.40
$
291,852
$
291,571
2016 Option exercises
141,405
47.13
6,664
6,664
2016 Equity Shelf Program issuances
3,134,901
76.01
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
$70.13
$
395,526
$
394,639
2017 Option exercises
252,979
51.16
12,942
12,942
2017 Equity Shelf Program issuances
2,986,574
72.30
215,917
214,406
2017 Preferred stock conversions
4,300
-
-
2017 Redemption of equity membership units
91,180
-
-
2017 Stock incentive plans, net of forfeitures
154,337
-
-
2017 Totals
9,129,378
$
624,385
$
621,987
2018 Dividend reinvestment plan issuances
6,529,417
$65.55
$
428,009
$
423,075
2018 Option exercises
56,960
42.66
2,430
2,430
2018 Equity Shelf Program issuances
5,241,349
69.95
366,640
364,070
2018 Preferred stock conversions
-
-
2018 Stock incentive plans, net of forfeitures
115,243
-
-
2018 Totals
11,943,052
$
797,079
$
789,575
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, 2018
December 31, 2017
December 31, 2016
Per Share
Amount
Per Share
Amount
Per Share
Amount
Common Stock
$
3.4800
$
1,300,141
$
3.4800
$
1,277,321
$
3.4400
$
1,233,519
Series I Preferred Stock
3.2500
46,704
3.2500
46,711
3.2500
46,719
Series J Preferred Stock
-
-
0.2347
2,699
1.6251
18,687
Totals
$
1,346,845
$
1,326,731
$
1,298,925
Accumulated Other Comprehensive Income. The following is a summary of accumulated other comprehensive income/(loss) for the periods presented (in thousands):
Unrecognized gains (losses) related to:
Foreign Currency Translation
Available for Sale Securities
Actuarial losses
Cash Flow Hedges
Total
Balance at December 31, 2017
$
(110,581
)
$
-
$
(884
)
$
-
$
(111,465
)
Other comprehensive income (loss)
(18,648
)
-
-
(18,304
)
Net current-period other comprehensive income (loss)
(18,648
)
-
-
(18,304
)
Balance at December 31, 2018
$
(129,229
)
$
-
$
(540
)
$
-
$
(129,769
)
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
)
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, performance and time-based. For market and performance based awards, we will grant a target number of restricted stock units, with the ultimate award determined by the total shareholder return and operating performance metrics, measured in each case over a measurement period of two to three years. Generally awards vest over two to three years after the end of the performance period with a portion vesting immediately at the end of the performance periods. The expected term represents the period from the grant date to the end of the performance period. Compensation expense for these performance grants is measured based on the probability of achievement of certain performance goals and is recognized over both the performance period and vesting period. For the portion of the grant for which the award is determined by the operating performance metrics, the compensation cost is based on the grant date closing price and management’s estimate of corporate achievement of the financial metrics. If the estimated number of performance based restricted stock to be earned changes, an adjustment will be recorded to recognize the accumulated difference between the revised and previous estimates. For the portion of the grant determined by the total shareholder return, management used a Monte Carlo model to assess the fair value and compensation cost. Forfeitures are accounted for as they occur.
The following table summarizes compensation expense (a component of general and administrative expenses and property operating expenses) recognized for the periods presented (in thousands):
Year Ended December 31,
Stock options
$
-
$
$
Restricted stock
27,646
19,092
28,603
$
27,646
$
19,102
$
28,869
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, 2018, there was $35,834,000 of total unrecognized compensation expense related to unvested restricted stock that is expected to be recognized over a weighted-average period of two years. The following table summarizes information about non-vested restricted stock incentive awards as of and for the year ended December 31, 2018:
Restricted Stock
Number of
Shares
(000's)
Weighted-Average
Grant Date
Fair Value
Non-vested at December 31, 2017
$
61.00
Vested
(166
)
63.88
Granted
54.16
Terminated
(35
)
60.90
Non-vested at December 31, 2018
1,220
$
62.56
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
$
758,250
$
463,595
$
1,012,397
Denominator for basic earnings per
share: weighted-average shares
373,620
367,237
358,275
Effect of dilutive securities:
Employee stock options
Non-vested restricted shares
Redeemable shares
1,096
1,235
1,393
Employee stock purchase program
-
-
Dilutive potential common shares
1,630
1,764
1,952
Denominator for diluted earnings per
share: adjusted-weighted average shares
375,250
369,001
360,227
Basic earnings per share
$
2.03
$
1.26
$
2.83
Diluted earnings per share
$
2.02
$
1.26
$
2.81
The Series I Cumulative Convertible Perpetual Preferred Stock were excluded from the calculations as the effect of the conversions were anti-dilutive.
16. Disclosure about Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level valuation hierarchy exists for disclosures of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined below:
•Level 1 - Quoted prices in active markets for identical assets or liabilities.
•
Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:
Mortgage Loans 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.
Equity Securities - Equity securities 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
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
maturities. The carrying amount of variable rate secured debt approximates fair value because the borrowings are interest rate adjustable.
Foreign Currency Forward Contracts and Cross Currency Swaps - Foreign currency forward contracts and cross currency swaps 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):
December 31, 2018
December 31, 2017
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
Financial assets:
Mortgage loans receivable
$
249,071
$
257,337
$
306,120
$
332,508
Other real estate loans receivable
81,268
82,742
121,379
125,480
Equity securities
11,286
11,286
7,269
7,269
Cash and cash equivalents
215,376
215,376
243,777
243,777
Restricted cash
100,753
100,753
65,526
65,526
Foreign currency forward contracts and cross currency swaps
94,729
94,729
15,604
15,604
Financial liabilities:
Borrowings under unsecured credit facilities
$
1,147,000
$
1,147,000
$
719,000
$
719,000
Senior unsecured notes
9,603,299
10,043,797
8,331,722
9,168,432
Secured debt
2,476,177
2,499,130
2,608,976
2,641,997
Foreign currency forward contracts and cross currency swaps
71,109
71,109
38,654
38,654
Redeemable OP unitholder interests
$
103,071
$
103,071
$
97,476
$
97,476
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, 2018
Total
Level 1
Level 2
Level 3
Equity securities
$
11,286
$
11,286
$
-
$
-
Foreign currency forward contracts and cross currency swaps, net asset (liability)(1)
23,620
-
23,620
-
Redeemable OP unitholder interests
103,071
-
103,071
-
Totals
$
137,977
$
11,286
$
126,691
$
-
(1) 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 have assets and liabilities that are measured at fair value on a nonrecurring basis that are not included in the tables above. Assets, liabilities and noncontrolling interests that are measured at fair value on a nonrecurring basis include those acquired or assumed. Asset impairments (if applicable, see Note 5 for impairments of real property and Note 6 for impairments of real estate loans receivable) are also measured at fair value on a nonrecurring basis. We have determined that the fair value measurements included in each of these assets and liabilities rely primarily on company-specific inputs and our assumptions about the use of the assets and settlement of liabilities, as observable
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
inputs are not available. As such, we have determined that each of these fair value measurements generally resides within Level 3 of the fair value hierarchy. We estimate the fair value of real estate and related intangibles using the income approach using unobservable data such as net operating income, estimated capitalization and discount rates. We also consider local and national industry market data including comparable sales, and commonly engage an external real estate appraiser to assist us in our estimation of fair value. We estimate the fair value of assets held for sale based on current sales price expectations or, in the absence of such price expectations, Level 3 inputs described above. We estimate the fair value of loans receivable using projected payoff valuations based on the expected future cash flows and/or the estimated fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the collateral. We estimate the fair value of secured debt assumed in business combinations and asset acquisitions using current interest rates at which similar borrowings could be obtained on the transaction date.
17. Segment Reporting
We invest in seniors housing and health care real estate. We evaluate our business and make resource allocations on our three operating segments: Seniors Housing Operating, Triple-net and Outpatient Medical. Our seniors housing operating properties include assisted living, independent living/continuing care retirement communities, independent support living (Canada), care homes with and without nursing (U.K.), and combinations thereof that are owned and/or operated through RIDEA structures (see Note 18). Our triple-net properties include the property types described above as well as long-term/post-acute care. Under the Triple-net segment, we invest in seniors housing and health care real estate through acquisition and financing of primarily single tenant properties. Properties acquired are primarily leased under triple-net leases and we are not involved in the management of the property. Our outpatient medical properties include outpatient medical buildings which are typically leased to multiple tenants and generally require a certain level of property management by us.
We evaluate performance based upon NOI of each segment. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. We believe NOI provides investors relevant and useful information because it measures the operating performance of our properties at the property level on an unleveraged basis. We use NOI to make decisions about resource allocations and to assess the property level performance of our properties.
Non-segment revenue consists mainly of interest income on certain non-real estate investments and other income. Non-segment assets consist of corporate assets including cash, deferred loan expenses and corporate offices and equipment among others. Non-property specific revenues and expenses are not allocated to individual segments in determining NOI.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 2). The results of operations for all acquisitions described in Note 3 are included in our consolidated results of operations from the acquisition dates and are components of the appropriate segments. There are no intersegment sales or transfers.
Summary information for the reportable segments (which excludes unconsolidated entities) during the years ended December 31, 2018, 2017 and 2016 is as follows (in thousands):
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2018:
Seniors Housing Operating
Triple-net
Outpatient Medical
Non-segment / Corporate
Total
Resident fees and services
$
3,234,852
$
-
$
-
$
-
$
3,234,852
Rental income
-
828,865
551,557
-
1,380,422
Interest income
54,926
-
55,814
Other income
5,024
17,173
4,939
2,275
29,411
Total revenues
3,240,454
900,964
556,806
2,275
4,700,499
Property operating expenses
2,255,432
176,670
-
2,433,017
Consolidated net operating income
985,022
900,049
380,136
2,275
2,267,482
Depreciation and amortization
529,449
235,480
185,530
-
950,459
Interest expense
69,060
14,225
7,051
436,256
526,592
General and administrative
-
-
-
126,383
126,383
Loss (gain) on derivatives and financial instruments, net
-
(4,016
)
-
-
(4,016
)
Loss (gain) on extinguishment of debt, net
(32
)
11,928
4,091
16,097
Impairment of assets
7,599
107,980
-
-
115,579
Other expenses
6,624
90,975
(1)
7,570
7,729
112,898
Income (loss) from continuing operations before income taxes and other items
372,180
455,437
168,057
(572,184
)
423,490
Income tax benefit (expense)
1,202
1,611
(125
)
(11,362
)
(8,674
)
(Loss) income from unconsolidated entities
(28,142
)
21,938
5,563
-
(641
)
Gain (loss) on real estate dispositions, net
(2,245
)
196,589
221,231
-
415,575
Income (loss) from continuing operations
342,995
675,575
394,726
(583,546
)
829,750
Net income (loss)
$
342,995
$
675,575
$
394,726
$
(583,546
)
$
829,750
Total assets
$
14,607,127
$
10,111,227
$
5,426,810
$
196,908
$
30,342,072
(1) Represents non-capitalizable transaction costs of $81,116,000 primarily related to a joint venture transaction with an existing seniors housing operator including the conversion of properties from Triple-net to Seniors Housing Operating and termination/restructuring of pre-existing relationships.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2017:
Seniors Housing Operating
Triple-net
Outpatient Medical
Non-segment / Corporate
Total
Resident fees and services
$
2,779,423
$
-
$
-
$
-
$
2,779,423
Rental income
-
885,811
560,060
-
1,445,871
Interest income
73,742
-
-
73,811
Other income
5,127
7,531
3,340
1,538
17,536
Total revenues
2,784,619
967,084
563,400
1,538
4,316,641
Property operating expenses
1,904,593
-
179,332
-
2,083,925
Consolidated net operating income
880,026
967,084
384,068
1,538
2,232,716
Depreciation and amortization
484,796
243,830
193,094
-
921,720
Interest expense
63,265
15,194
10,015
396,148
484,622
General and administrative
-
-
-
122,008
122,008
Loss (gain) on derivatives and financial instruments, net
-
2,284
-
-
2,284
Loss (gain) on extinguishment of debt, net
3,785
29,083
4,373
-
37,241
Provision for loan losses
-
62,966
-
-
62,966
Impairment of assets
21,949
96,909
5,625
-
124,483
Other expenses
8,347
116,689
(1)
1,911
50,829
(2)
177,776
Income (loss) from continuing operations before income taxes and other items
297,884
400,129
169,050
(567,447
)
299,616
Income tax benefit (expense)
(16,430
)
(4,291
)
(1,477
)
2,070
(20,128
)
(Loss) income from unconsolidated entities
(105,236
)
19,428
2,683
-
(83,125
)
Gain (loss) on real estate dispositions, net
56,295
286,325
1,630
-
344,250
Income (loss) from continuing operations
232,513
701,591
171,886
(565,377
)
540,613
Net income (loss)
$
232,513
$
701,591
$
171,886
$
(565,377
)
$
540,613
Total assets
$
13,432,001
$
9,325,344
$
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 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.
(2) Primarily related to $40,730,000 recognized for the donation of the corporate headquarters.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2016:
Seniors Housing Operating
Triple-net
Outpatient Medical
Non-segment / Corporate
Total
Resident fees and services
$
2,504,731
$
-
$
-
$
-
$
2,504,731
Rental income
-
1,112,325
536,490
-
1,648,815
Interest income
4,180
90,476
3,307
-
97,963
Other income
17,085
6,059
5,568
29,651
Total revenues
2,525,996
1,208,860
545,365
4,281,160
Property operating expenses
1,711,882
-
165,101
-
1,876,983
Consolidated net operating income
814,114
1,208,860
380,264
2,404,177
Depreciation and amortization
415,429
297,197
188,616
-
901,242
Interest expense
81,853
21,370
19,087
399,035
521,345
General and administrative
-
-
-
155,241
155,241
Loss (gain) on derivatives and financial instruments, net
-
-
(2,516
)
(2,448
)
Transaction costs
29,207
10,016
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
12,403
20,169
4,635
-
37,207
Other expenses
-
-
-
11,998
11,998
Income (loss) from continuing operations before income taxes and other items
275,310
852,242
160,959
(579,258
)
709,253
Income tax benefit (expense)
(3,762
)
(1,087
)
(511
)
24,488
19,128
(Loss) income from unconsolidated entities
(20,442
)
9,767
-
(10,357
)
Gain (loss) on real estate dispositions, net
9,880
355,394
(1,228
)
-
364,046
Income from continuing operations
260,986
1,216,316
159,538
(554,770
)
1,082,070
Net income (loss)
$
260,986
$
1,216,316
$
159,538
$
(554,770
)
$
1,082,070
Our portfolio of properties and other investments are located in the U.S., the U.K. and Canada. Revenues and assets are attributed to the country in which the property is physically located. The following is a summary of geographic information for the periods presented (dollars in thousands):
Year Ended
December 31, 2018
December 31, 2017
December 31, 2016
Revenues:
Amount
%
Amount
%
Amount
%
United States
$
3,777,960
80.4
%
$
3,464,527
80.3
%
$
3,453,485
80.6
%
United Kingdom
452,956
9.6
%
407,351
9.4
%
388,383
9.1
%
Canada
469,583
10.0
%
444,763
10.3
%
439,292
10.3
%
Total
$
4,700,499
100.0
%
$
4,316,641
100.0
%
$
4,281,160
100.0
%
As of
December 31, 2018
December 31, 2017
Assets:
Amount
%
Amount
%
United States
$
24,884,292
82.0
%
$
22,274,443
79.7
%
United Kingdom
3,078,994
10.1
%
3,239,039
11.6
%
Canada
2,378,786
7.9
%
2,430,963
8.7
%
Total
$
30,342,072
100.0
%
$
27,944,445
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 net capital gains) must be distributed to stockholders. REITs that do not distribute a
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
certain amount of current year taxable income are also subject to a 4% federal excise tax. The main differences between net income for federal income tax purposes and consolidated financial statement purposes are the recognition of straight-line rent for reporting purposes, basis differences in acquisitions, recording of impairments, differing useful lives and depreciation and amortization methods for real property and the provision for loan losses for reporting purposes versus bad debt expense for tax purposes.
Cash distributions paid to common stockholders, for federal income tax purposes, are as follows for the periods presented:
Year Ended December 31,
Per share:
Ordinary dividend(1)
$
2.1988
$
1.8117
$
2.5067
Long-term capital gain/(loss)(2)
1.1153
1.5755
0.8760
Return of capital
0.1659
0.0928
0.0573
Totals
$
3.4800
$
3.4800
$
3.4400
(1) For the year ended December 31, 2018, includes Section 199A dividends of $2.1988. For the years ended December 31, 2017 and 2016, includes Qualified Dividend of $0.0038 and $0.0047, respectively.
(2) For the years ended December 31, 2018, 2017 and 2016, includes Unrecaptured SEC. 1250 Gains of $0.3822, $0.3557 and $0.4120, respectively.
Our consolidated provision for income tax expense (benefit) is as follows for the periods presented (in thousands):
Year Ended December 31,
Current
$
15,850
$
7,633
$
14,944
Deferred
(7,176
)
12,495
(34,072
)
Totals
$
8,674
$
20,128
$
(19,128
)
REITs generally are not subject to U.S. federal income taxes on that portion of REIT taxable income or capital gain that is distributed to stockholders. For the tax year ended December 31, 2018, as a result of ownership of investments in Canada and the U.K., we were subject to foreign income taxes under the respective tax laws of these jurisdictions.
The provision for income taxes for the year ended December 31, 2018 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, 2018, 2017 and 2016, the foreign tax provision/(benefit) amount included in the consolidated provision for income taxes was $9,804,000, $4,806,000 and $(3,315,000), respectively.
A reconciliation of income taxes, which is computed by applying the federal corporate tax rate for the years ended December 31, 2018, 2017 and 2016, 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
$
176,069
$
199,588
$
372,030
Increase (decrease) in valuation allowance(1)
28,309
30,445
(2,128
)
Tax at statutory rate on earnings not subject to federal income taxes
(206,937
)
(234,468
)
(399,571
)
Foreign permanent depreciation
8,110
10,065
9,205
Other differences
3,123
14,498
1,336
Totals
$
8,674
$
20,128
$
(19,128
)
(1) Excluding purchase price accounting.
Each TRS and foreign entity subject to income taxes is a tax paying component for purposes of classifying deferred tax assets and liabilities. The tax effects of taxable and deductible temporary differences, as well as tax asset/(liability) attributes, are summarized as follows for the periods presented (in thousands):
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31,
Investments and property, primarily differences in investment basis, depreciation and amortization, the basis of land assets and the treatment of interests and certain costs
$
(2,533
)
$
(11,812
)
$
(7,089
)
Operating loss and interest deduction carryforwards
98,713
94,654
82,469
Expense accruals and other
48,804
25,146
15,978
Valuation allowance
(155,592
)
(127,283
)
(96,838
)
Net deferred tax assets (liabilities)
$
(10,608
)
$
(19,295
)
$
(5,480
)
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, 2018. 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 $155,592,000 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
$
127,283
$
96,838
$
98,966
Expense (benefit)
28,309
30,445
(2,128
)
Ending balance
$
155,592
$
127,283
$
96,838
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, 2017, we acquired certain additional assets with built-in gains as of the date of acquisition that could be subject to the built-in gains tax if disposed of prior to the expiration of the applicable five-year period. We have not recorded a deferred tax liability as a result of the potential built-in gains tax based on our intentions with respect to such properties and available tax planning strategies.
Under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”), the REIT may lease “qualified health care properties” on an arm’s-length basis to a TRS if the property is operated on behalf of such subsidiary by a person who qualifies as an “eligible independent contractor.” Generally, the rent received from the TRS will meet the related party rent exception and will be treated as “rents from real property.” A “qualified health care property” includes real property and any personal property that is, or is necessary or incidental to the use of, a hospital, nursing facility, assisted living facility, congregate care facility, qualified continuing care facility, or other licensed facility which extends medical or nursing or ancillary services to patients. We have entered into various joint ventures that were structured under RIDEA. Resident level rents and related operating expenses for these facilities are reported in the consolidated financial statements and are subject to federal, 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, 2015 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, 2012. We are also subject to audit by the Canada Revenue Agency and provincial authorities generally for periods subsequent to May 2013 related to entities acquired or formed in connection with acquisitions, and by the U.K.’s HM Revenue & Customs for periods subsequent to August 2013 related to entities acquired or formed in connection with acquisitions.
At December 31, 2018, we had a net operating loss (“NOL”) carryforward related to the REIT of $348,031,000. 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
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
audit determines that tax is owed), if any. The REIT will be entitled to utilize NOLs and tax credit carryforwards only to the extent that REIT taxable income exceeds our deduction for dividends paid. The NOL carryforwards generated through December 31, 2017 will expire through 2037. Beginning with tax years after December 31, 2017, the Tax Cuts and Jobs Act eliminates the carryback period, limits the NOLs to 80% of taxable income and replaces the 20-year carryforward period with an indefinite carryforward period.
At December 31, 2018 and 2017, we had an NOL carryforward related to Canadian entities of $154,029,000, and $134,552,000, respectively. These Canadian losses have a 20-year carryforward period. At December 31, 2018 and 2017, we had an NOL carryforward related to U.K. entities of $242,377,000 and $183,712,000, respectively. These U.K. losses do not have a finite carryforward period.
19. Quarterly Results of Operations (Unaudited)
The following is a summary of our unaudited quarterly results of operations for the years ended December 31, 2018 and 2017 (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, 2018
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Revenues
$
1,096,965
$
1,125,912
$
1,236,379
$
1,241,243
Net income (loss) attributable to common stockholders
437,671
154,432
64,384
101,763
Net income (loss) attributable to common stockholders per share:
Basic
$
1.18
$
0.42
$
0.17
$
0.27
Diluted
$
1.17
$
0.41
$
0.17
$
0.27
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 attributable to common stockholders
312,639
188,429
74,043
(111,523
)
Net income attributable to common stockholders per share:
Basic
$
0.86
$
0.51
$
0.20
$
(0.31
)
Diluted
$
0.86
$
0.51
$
0.20
$
(0.31
)
(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.
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, 2018
December 31, 2017
Assets:
Net real property owned
$
973,813
$
1,002,137
Cash and cash equivalents
18,678
12,308
Receivables and other assets
14,600
16,330
Total assets(1)
$
1,007,091
$
1,030,775
Liabilities and equity:
Secured debt
$
465,433
$
471,103
Accrued expenses and other liabilities
18,229
14,832
Total equity
523,429
544,840
Total liabilities and equity
$
1,007,091
$
1,030,775
(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.
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. Subsequent Events
Senior Notes Activity
On February 15, 2019, we completed the issuance of $500 million of 3.625% senior unsecured notes due 2024 and $550 million of 4.125% senior unsecured notes due 2029.
On February 15, 2019, we also announced the redemption of $600 million of 4.125% senior unsecured notes due 2019 and $450 million of 6.125% senior unsecured notes due 2020.
Preferred Stock Activity
On February 21, 2019, we announced that we elected to effect the conversion of all of the outstanding Series I Preferred Stock. Each share of convertible preferred stock will be converted into 0.8857 shares of common stock on February 28, 2019.

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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, 2018 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, 2018.
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 Shareholders and Board of Directors of Welltower Inc.
Opinion on Internal Control over Financial reporting
We have audited Welltower Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2018, 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, 2018, 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, 2018 and 2017, the related consolidated statements of comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedules listed in the index at Item 15(a) and our report dated February 25, 2019 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 25, 2019

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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, 2019.
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, 2019.

---

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, 2019.

---

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, 2019.

---

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, 2019.
PART IV

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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, 2018 and 2017
Consolidated Statements of Comprehensive Income - Years ended December 31, 2018, 2017 and 2016
Consolidated Statements of Equity - Years ended December 31, 2018, 2017 and 2016
Consolidated Statements of Cash Flows - Years ended December 31, 2018, 2017 and 2016
Notes to Consolidated Financial Statements
2.
The following Financial Statement Schedules are included beginning on page 105:
III - Real Estate and Accumulated Depreciation
IV - Mortgage Loans on Real Estate
The financial statement schedule required by Item15(a) (Schedule II, Valuation and Qualifying Accounts) is included in Item 8 of this Annual Report on Form 10-K.
(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.
2.1
Agreement and Plan of Merger, dated as of April 25, 2018, by and among the Company, Potomac Acquisition LLC, Quality Care Properties, Inc. and certain subsidiaries of Quality Care Properties, Inc. (filed with the Commission as Exhibit 2.1 to the Company’s Form 8-K filed April 26, 2018 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(a) Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(b) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(c) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed June 13, 2003 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(d) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.9 to the Company’s Form 10-Q filed August 9, 2007 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(e) Certificate of Change of Location of Registered Office and of Registered Agent of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-Q filed August 6, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(f) Certificate of Designation of 6.50% Series I Cumulative Convertible Perpetual Preferred Stock of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed March 7, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(g) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed May 10, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(h) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed May 6, 2014 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(i) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed September 30, 2015 (File No. 001-08923), and incorporated herein by reference thereto).
3.2
Sixth Amended and Restated By-laws of the Company (filed with the Commission as Exhibit 3.2 to the Company’s Form 8-K filed December 4, 2018 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(a) Indenture, dated as of March 15, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed March 15, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(b) Supplemental Indenture No. 1, dated as of March 15, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 15, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(c) Amendment No. 1 to Supplemental Indenture No. 1, dated as of June 18, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed June 18, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(d) Supplemental Indenture No. 2, dated as of April 7, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed April 7, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(e) Amendment No. 1 to Supplemental Indenture No. 2, dated as of June 8, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed June 8, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(f) Supplemental Indenture No. 3, dated as of September 10, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed September 13, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(g) Supplemental Indenture No. 4, dated as of November 16, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed November 16, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(h) Supplemental Indenture No. 5, dated as of March 14, 2011, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 14, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(i) Supplemental Indenture No. 6, dated as of April 3, 2012, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed April 4, 2012 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(j) Supplemental Indenture No. 7, dated as of December 6, 2012, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed December 11, 2012 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(k) Supplemental Indenture No. 8, dated as of October 7, 2013, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed October 9, 2013 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(l) Supplemental Indenture No. 9, dated as of November 20, 2013, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed November 20, 2013 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(m) Supplemental Indenture No. 10, dated as of November 25, 2014, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed November 25, 2014 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(n) Supplemental Indenture No. 11, dated as of May 26, 2015, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed May 27, 2015 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(o) Amendment No. 1 to Supplemental Indenture No. 11, dated as of October 19, 2015, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed October 20, 2015 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(p) Supplemental Indenture No. 12, dated as of March 1, 2016, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 3, 2016 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(q)
Supplemental Indenture No. 13, dated as of April 10, 2018, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed April 10, 2018 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(r)
Supplemental Indenture No. 14, dated as of August 16, 2018, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed August 16, 2018 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(s)
Supplemental Indenture No. 15, dated as of February 15, 2019 between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company's Form 8-K filed February 15, 2019 (File No. 001-08923), and incorporated herein by reference thereto).
4.2 Form of Indenture for Senior Subordinated Debt Securities (filed with the Commission as Exhibit 4.2 to the Company’s Form S-3 (File No. 333-2250004) filed May 17, 2018, and incorporated herein by reference thereto).
4.3 Form of Indenture for Junior Subordinated Debt Securities (filed with the Commission as Exhibit 4.3 to the Company’s Form S-3 (File No. 333-2250004) filed May 17, 2018, and incorporated herein by reference thereto).
4.4(a) Indenture, dated as of November 25, 2015, by and among HCN Canadian Holdings-1 LP, the Company and BNY Trust Company of Canada (filed with the Commission as Exhibit 4.5(a) to the Company’s Form 10-K filed February 18, 2016 (File No. 001-08923), and incorporated herein by reference thereto).
4.4(b) First Supplemental Indenture, dated as of November 25, 2015, by and among HCN Canadian Holdings-1 LP, the Company and BNY Trust Company of Canada (filed with the Commission as Exhibit 4.5(b) to the Company’s Form 10-K filed February 18, 2016 (File No. 001-08923), and incorporated herein by reference thereto).
10.1
Credit Agreement dated as of July 19, 2018 by and among the Company; the lenders listed therein; KeyBank National Association, as administrative agent, L/C issuer and a swingline lender; Bank of America, N.A. and JPMorgan Chase Bank, N.A., as co-syndication agents; Deutsche Bank Securities Inc., as documentation agent; Merrill Lynch, Pierce, Fenner & Smith Incorporated, JPMorgan Chase Bank, N.A., KeyBanc Capital Markets Inc. and Deutsche Bank Securities Inc., as U.S. joint lead arrangers; Merrill Lynch, Pierce, Fenner & Smith Incorporated, JPMorgan Chase Bank, N.A., KeyBanc Capital Markets Inc. and RBC Capital Markets, as Canadian joint lead arrangers; and Merrill Lynch, Pierce, Fenner & Smith Incorporated and JPMorgan Chase Bank, N.A., as joint book runners (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed July 24, 2018 (File No. 001-08923), and incorporated herein by reference thereto).
10.2 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)
Transfer Letter, dated August 17, 2018, by and between John A. Goodey and the Company (filed with the Commission as Exhibit 10.1 to the Company’s Form 10-Q filed October 30, 2018 (File No. 001-08923), and incorporated herein by reference thereto).
10.5(b)
Letter Agreement, dated January 30, 2019, by and between John A. Goodey and the Company.*
10.6 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).*
10.7 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).*
10.8 Summary of Director Compensation.*
10.9(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).*
10.9(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).*
10.10(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).*
10.10(b) Form of Restricted Stock Grant Notice for Executive Officers under the 2016 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.14(b) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.10(c) Form of Restricted Stock Grant Notice for Senior Vice Presidents under the 2016 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.14(c) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.10(d) Form of Deferred Stock Unit Grant Agreement for Non-Employee Directors under the 2016 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.14(d) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.11(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).*
10.11(b) Form of Performance Restricted Stock Unit Award Agreement under the 2016-2018 Long-Term Incentive Program (filed with the Commission as Exhibit 10.15(b) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.12(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).*
10.12(b) Form of Award Notice under the 2017-2019 Long-Term Incentive Program (filed with the Commission as Exhibit 10.16(b) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.12(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).*
10.12(d) Form of Award Notice under the 2017-2019 Long Term Incentive Program - Bridge 1 (filed with the Commission as Exhibit 10.16(d) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.12(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).*
10.12(f) Form of Award Notice under the 2017-2019 Long Term Incentive Program - Bridge 2 (filed with the Commission as Exhibit 10.16(f) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.13(a) Welltower Inc. 2018-2020 Long-Term Incentive Program (filed with the Commission as Exhibit 10.17(a) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.13(b) Form of Restricted Stock Unit Award Agreement under the 2018-2020 Long-Term Incentive Program (filed with the Commission as Exhibit 10.17(b) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.14(a)
Welltower Inc. 2019-2021 Long-Term Incentive Program.*
10.14(b) Form of Restricted Stock Unit Award Agreement under the 2019-2021 Long-Term Incentive Program.*
21 Subsidiaries of the Company.
23 Consent of Ernst & Young LLP, independent registered public accounting firm.
24 Powers of Attorney.
31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1 Certification pursuant to 18 U.S.C. Section 1350 by Chief Executive Officer.
32.2 Certification pursuant to 18 U.S.C. Section 1350 by Chief Financial Officer.
101.INS 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.
Item 16. Form 10-K Summary
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 25, 2019
WELLTOWER INC.
By: /s/ Thomas 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 25, 2019 by the following persons on behalf of the Registrant and in the capacities indicated.
/s/ Jeffrey H. Donahue **
/s/ Johnese Spisso **
Jeffrey H. Donahue, Chairman of the Board
Johnese Spisso, Director
/s/ Kenneth J. Bacon **
/s/ R. Scott Trumbull **
Kenneth J. Bacon, Director
R. Scott Trumbull, Director
/s/ Karen DeSalvo **
/s/ Gary Whitelaw **
Karen DeSalvo, 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/ Joshua T. Fieweger**
Sharon M. Oster, Director
Joshua T. Fieweger, 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
/s/ Sergio D. Rivera **
Sergio D. Rivera, Director
Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2018
(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
$
1,691
$
$
33,013
$
6,127
10 Devon Drive
Adderbury, UK
-
2,144
12,549
-
2,144
12,549
Banbury Road
Albuquerque, NM
-
1,270
20,837
2,139
1,354
22,892
6,475
500 Paisano St NE
Alexandria, VA
-
8,280
50,914
-
8,280
50,914
1,055
5550 Cardinal Place
Alhambra, CA
-
6,305
9,067
15,372
2,124
1118 N. Stoneman Ave.
Altrincham, UK
-
4,244
25,187
1,700
4,388
26,743
5,790
295 Hale Road
Amherstview, ON
4,446
4,934
4567 Bath Road
Anderson, SC
-
6,290
6,746
3,524
311 Simpson Rd.
Apple Valley, CA
-
16,639
16,895
4,633
11825 Apple Valley Rd.
Arlington, VA
-
8,385
31,198
14,030
8,385
45,228
6,530
900 N Taylor Street
Arlington, VA
-
-
2,338
-
-
2,338
900 N Taylor Street
Arnprior, ON
6,283
6,683
1,505
15 Arthur Street
Atlanta, GA
-
2,100
20,603
1,532
2,197
22,038
4,140
1000 Lenox Park Blvd NE
Austin, TX
-
1,560
21,413
1,560
21,924
2,984
11330 Farrah Lane
Austin, TX
-
4,200
74,850
4,200
75,596
8,063
4310 Bee Caves Road
Avon, CT
-
1,550
30,571
4,211
1,590
34,742
10,488
101 Bickford Extension
Azusa, CA
-
3,141
7,872
11,013
3,286
125 W. Sierra Madre Ave.
Bagshot, UK
-
4,960
29,881
2,920
5,133
32,628
7,189
14 - 16 London Road
Banstead, UK
-
6,695
55,113
4,444
6,956
59,296
12,237
Croydon Lane
Basingstoke, UK
-
3,420
18,853
1,014
3,535
19,752
2,578
Grove Road
Basking Ridge, NJ
-
2,356
37,710
1,623
2,395
39,294
8,040
404 King George Road
Bassett, UK
-
4,874
32,304
4,413
5,051
36,540
8,138
111 Burgess Road
Bath, UK
-
2,696
11,876
-
2,696
11,876
Clarks Way, Rush Hill
Baton Rouge, LA
8,838
29,436
1,139
30,523
6,086
9351 Siegen Lane
Beaconsfield, UK
-
5,566
50,952
2,287
5,765
53,040
10,591
30-34 Station Road
Beaconsfield, QC
-
1,149
17,484
1,225
18,049
4,937
505 Elm Avenue
Bedford, NH
-
2,527
28,748
2,299
2,551
31,023
5,760
5 Corporate Drive
Bee Cave, TX
-
1,820
21,084
1,820
21,903
2,369
14058 A Bee Cave Parkway
Bellevue, WA
-
2,800
19,004
2,183
2,816
21,171
5,325
15928 NE 8th Street
Belmont, CA
-
3,000
23,526
2,395
3,000
25,921
6,832
1301 Ralston Avenue
Belmont, CA
-
-
35,300
2,308
37,451
8,026
1010 Alameda de Las Pulgas
Berkeley, CA
12,195
3,050
32,677
5,086
3,050
37,763
4,759
2235 Sacramento Street
Bethesda, MD
-
-
45,309
45,983
9,551
8300 Burdett Road
Bethesda, MD
-
-
-
8300 Burdett Road
Bethesda, MD
-
-
-
1,119
8300 Burdett Road
Billerica, MA
-
1,619
21,381
1,624
22,243
3,170
20 Charnstaffe Lane
Birmingham, UK
-
1,480
13,014
1,530
13,618
47 Bristol Road South
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Birmingham, UK
-
2,807
11,313
2,902
11,823
134 Jockey Road
Blainville, QC
-
2,077
8,902
2,156
9,252
2,925
50 des Chateaux Boulevard
Bloomfield Hills, MI
-
2,000
35,662
1,067
2,133
36,596
7,455
6790 Telegraph Road
Boca Raton, FL
-
6,565
111,247
18,834
6,565
130,081
7,491
6343 Via De Sonrise Del Sur
Borehamwood, UK
-
5,367
41,937
2,246
5,584
43,966
9,285
Edgwarebury Lane
Bothell, WA
-
1,350
13,439
6,074
1,798
19,065
2,344
10605 NE 185th Street
Boulder, CO
-
2,994
27,458
2,271
3,022
29,701
7,497
3955 28th Street
Bournemouth, UK
-
5,527
42,547
2,338
5,725
44,687
9,186
42 Belle Vue Road
Braintree, MA
-
-
41,290
1,079
42,269
8,961
618 Granite Street
Brampton, ON
40,685
10,196
59,989
-
10,196
59,989
10,075
100 Ken Whillans Drive
Brick, NJ
-
1,170
17,372
1,530
1,211
18,861
4,186
515 Jack Martin Blvd
Brick, NJ
-
17,125
5,610
22,730
4,152
1594 Route 88
Bridgewater, NJ
-
1,730
48,201
1,562
1,767
49,726
10,329
2005 Route 22 West
Brighton, MA
9,686
2,100
14,616
1,712
2,135
16,293
4,736
50 Sutherland Road
Brockport, NY
-
1,500
23,496
1,705
23,873
3,890
90 West Avenue
Brockville, ON
4,288
7,445
7,863
1,170
1026 Bridlewood Drive
Brookfield, CT
-
2,250
30,180
3,337
2,271
33,496
9,272
246A Federal Road
Broomfield, CO
-
4,140
44,547
11,976
10,135
50,528
16,614
400 Summit Blvd
Brossard, QC
10,432
5,499
31,854
5,427
32,211
5,560
2455 Boulevard Rome
Buckingham, UK
-
2,979
13,880
3,080
14,523
1,882
Church Street
Buffalo Grove, IL
-
2,850
49,129
3,154
2,850
52,283
10,571
500 McHenry Road
Burbank, CA
-
4,940
43,466
2,067
4,940
45,533
10,721
455 E. Angeleno Avenue
Burbank, CA
19,237
3,610
50,817
3,983
3,610
54,800
5,663
2721 Willow Street
Burleson, TX
-
3,150
10,437
3,150
11,096
1,354
621 Old Highway 1187
Burlingame, CA
-
-
62,786
-
62,871
4,858
1818 Trousdale Avenue
Burlington, ON
11,514
1,309
19,311
1,338
19,905
4,321
500 Appleby Line
Burlington, MA
-
2,443
34,354
1,388
2,522
35,663
8,007
24 Mall Road
Burlington, MA
-
2,750
57,488
3,304
2,750
60,792
6,120
50 Greenleaf Way
Bushey, UK
-
12,690
36,482
-
12,690
36,482
Elton House, Elton Way
Calgary, AB
11,323
2,252
37,415
1,286
2,298
38,655
8,580
20 Promenade Way SE
Calgary, AB
12,909
2,793
41,179
1,065
2,843
42,194
9,176
80 Edenwold Drive NW
Calgary, AB
10,237
3,122
38,971
1,241
3,184
40,150
8,632
150 Scotia Landing NW
Calgary, AB
21,247
3,431
28,983
1,676
3,498
30,592
5,754
9229 16th Street SW
Calgary, AB
24,199
2,385
36,776
1,152
2,427
37,886
5,774
2220-162nd Avenue SW
Camberley, UK
-
2,654
5,736
21,500
8,150
21,937
1,230
Fernhill Road
Cardiff, UK
-
3,191
12,566
3,307
13,334
3,647
127 Cyncoed Road
Cardiff by the Sea, CA
37,025
5,880
64,711
4,243
5,880
68,954
15,985
3535 Manchester Avenue
Carol Stream, IL
-
1,730
55,048
2,104
1,730
57,152
12,748
545 Belmont Lane
Carrollton, TX
-
4,280
31,444
1,041
4,280
32,485
4,207
2105 North Josey Lane
Cary, NC
-
45,240
45,984
8,360
1206 West Chatham Street
Cary, NC
-
6,112
70,008
8,355
6,112
78,363
3,652
300 Kildaire Woods Drive
Cedar Park, TX
-
1,750
15,664
1,162
1,750
16,826
1,215
800 C-Bar Ranch Trail
Cerritos, CA
-
-
27,494
6,570
-
34,064
6,011
11000 New Falcon Way
(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:
Charlottesville, VA
-
4,651
91,468
11,276
4,651
102,744
6,952
2610 Barracks Road
Chatham, ON
1,098
12,462
1,809
1,193
14,176
3,167
25 Keil Drive North
Chelmsford, MA
-
1,040
10,951
1,525
1,040
12,476
4,625
4 Technology Dr.
Chelmsford, MA
-
1,589
26,432
1,301
1,656
27,666
3,882
199 Chelmsford Street
Chertsey, UK
-
9,566
25,886
-
9,566
25,886
Bittams Lane
Chesterfield, MO
-
1,857
48,366
1,462
1,917
49,768
9,624
1880 Clarkson Road
Chorleywood, UK
-
5,636
43,191
3,864
5,833
46,858
10,193
High View, Rickmansworth Road
Chula Vista, CA
-
2,072
22,163
1,201
2,162
23,274
4,942
3302 Bonita Road
Church Crookham, UK
-
2,591
14,215
2,691
14,950
2,596
Bourley Road
Cincinnati, OH
-
2,060
109,388
13,733
2,080
123,101
26,921
5445 Kenwood Road
Citrus Heights, CA
-
2,300
31,876
2,300
32,602
8,987
7418 Stock Ranch Rd.
Claremont, CA
-
2,430
9,928
1,479
2,483
11,354
2,806
2053 North Towne Avenue
Cohasset, MA
-
2,485
26,147
1,919
2,493
28,058
6,009
125 King Street (Rt 3A)
Colleyville, TX
-
1,050
17,082
1,050
17,129
8100 Precinct Line Road
Colorado Springs, CO
-
14,756
1,980
1,026
16,510
3,610
2105 University Park Boulevard
Colts Neck, NJ
-
14,733
1,759
1,092
16,180
3,628
3 Meridian Circle
Concord, NH
-
21,164
21,947
5,450
300 Pleasant Street
Coquitlam, BC
9,139
3,047
24,567
3,098
25,291
6,583
1142 Dufferin Street
Costa Mesa, CA
-
2,050
19,969
1,404
2,050
21,373
5,647
350 West Bay St
Crystal Lake, IL
-
12,461
1,482
13,847
3,480
751 E Terra Cotta Avenue
Dallas, TX
-
6,330
114,794
1,613
6,330
116,407
13,498
3535 N Hall Street
Danvers, MA
-
1,120
14,557
1,505
1,145
16,037
4,429
1 Veronica Drive
Danvers, MA
-
2,203
28,761
2,257
29,049
4,487
9 Summer Street
Davenport, IA
-
1,403
35,893
4,269
1,480
40,085
10,506
4500 Elmore Ave.
Decatur, GA
-
1,946
26,575
2,504
1,946
29,079
6,609
920 Clairemont Avenue
Denver, CO
-
2,910
35,838
1,827
2,971
37,604
9,558
8101 E Mississippi Avenue
Dix Hills, NY
-
3,808
39,014
1,861
3,947
40,736
8,624
337 Deer Park Road
Dollard-Des-Ormeaux, QC
-
1,957
14,431
2,039
14,887
4,786
4377 St. Jean Blvd
Dresher, PA
-
1,900
10,664
1,151
1,914
11,801
3,660
1650 Susquehanna Road
Dublin, OH
-
1,680
43,423
6,837
1,850
50,090
14,301
6470 Post Rd
Dublin, OH
-
1,169
25,345
1,169
25,392
2,232
4175 Stoneridge Lane
East Haven, CT
-
2,660
35,533
3,458
2,685
38,966
12,649
111 South Shore Drive
East Meadow, NY
-
45,991
1,471
47,407
9,848
1555 Glen Curtiss Boulevard
East Setauket, NY
-
4,920
37,354
1,647
4,975
38,946
8,143
1 Sunrise Drive
Eastbourne, UK
-
4,145
33,744
1,554
4,298
35,145
7,685
6 Upper Kings Drive
Edgbaston, UK
-
2,720
13,969
2,812
14,599
1,490
Pershore Road
Edgewater, NJ
-
4,561
25,047
1,518
4,564
26,562
5,889
351 River Road
Edison, NJ
-
1,892
32,314
2,249
1,905
34,550
9,486
1801 Oak Tree Road
Edmonds, WA
-
1,650
24,449
4,823
1,672
29,250
3,548
21500 72nd Avenue West
Edmonton, AB
8,239
1,589
29,819
1,093
1,632
30,869
6,909
103 Rabbit Hill Court NW
Edmonton, AB
10,728
2,063
37,293
1,514
2,094
38,776
10,602
10015 103rd Avenue NW
Encinitas, CA
-
1,460
7,721
2,662
1,460
10,383
4,496
335 Saxony Rd.
Encino, CA
-
5,040
46,255
2,211
5,040
48,466
11,067
15451 Ventura Boulevard
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Englishtown, NJ
-
12,520
1,873
14,249
3,230
49 Lasatta Ave
Escondido, CA
-
1,520
24,024
1,323
1,520
25,347
6,708
1500 Borden Rd
Esher, UK
-
5,783
48,361
2,365
5,999
50,510
9,941
42 Copsem Lane
Fairfax, VA
-
2,678
2,956
9207 Arlington Boulevard
Fairfield, NJ
-
3,120
43,868
1,373
3,175
45,186
9,629
47 Greenbrook Road
Fairfield, CA
-
1,460
14,040
1,565
1,460
15,605
6,635
3350 Cherry Hills St.
Fareham, UK
-
3,408
17,970
1,077
3,536
18,919
2,887
Redlands Lane
Flossmoor, IL
-
1,292
9,496
1,835
1,339
11,284
3,068
19715 Governors Highway
Folsom, CA
-
1,490
32,754
1,490
32,838
4,420
1574 Creekside Drive
Fort Worth, TX
-
1,740
19,799
1,089
1,740
20,888
2,265
7001 Bryant Irvin Road
Franklin, MA
-
2,430
30,597
2,564
2,467
33,124
6,623
4 Forge Hill Road
Fremont, CA
-
3,400
25,300
3,331
3,456
28,575
10,193
2860 Country Dr.
Frome, UK
-
2,720
14,813
2,812
15,553
2,122
Welshmill Lane
Fullerton, CA
-
1,964
19,989
1,998
20,838
4,718
2226 North Euclid Street
Gahanna, OH
-
11,214
1,609
12,808
2,765
775 East Johnstown Road
Gilbert, AZ
15,436
2,160
28,246
1,429
2,176
29,659
8,274
580 S. Gilbert Road
Gilroy, CA
-
13,880
24,966
1,588
38,018
11,161
7610 Isabella Way
Glen Cove, NY
-
4,594
35,236
1,877
4,643
37,064
9,193
39 Forest Avenue
Glenview, IL
-
2,090
69,288
3,353
2,090
72,641
15,745
2200 Golf Road
Golden Valley, MN
-
1,520
33,513
1,383
1,602
34,814
7,025
4950 Olson Memorial Highway
Granbury, TX
-
2,040
30,670
2,040
31,321
6,325
100 Watermark Boulevard
Greenville, SC
-
4,750
4,786
1,927
23 Southpointe Dr.
Grimsby, ON
-
5,617
5,875
84 Main Street East
Grosse Pointe Woods, MI
-
13,662
14,273
2,835
1850 Vernier Road
Grosse Pointe Woods, MI
-
1,430
31,777
1,118
1,435
32,890
6,544
21260 Mack Avenue
Grove City, OH
36,420
3,575
85,764
1,420
3,575
87,184
3717 Orders Road
Guelph, ON
3,985
1,190
7,597
1,224
7,970
1,551
165 Cole Road
Guildford, UK
-
5,361
56,494
2,457
5,542
58,770
11,811
Astolat Way, Peasmarsh
Gurnee, IL
-
27,931
2,110
29,996
5,768
500 North Hunt Club Road
Haddonfield, NJ
-
16,363
16,378
1,796
132 Warwick Road
Hamden, CT
-
1,460
24,093
1,912
1,493
25,972
7,593
35 Hamden Hills Drive
Hampshire, UK
-
4,172
26,035
1,185
4,322
27,070
5,857
22-26 Church Road
Haverford, PA
-
1,880
33,993
1,305
1,885
35,293
7,263
731 Old Buck Lane
Haverhill, MA
-
1,720
50,046
1,165
1,729
51,202
7,876
254 Amesbury Road
Henderson, NV
-
29,809
30,786
6,451
1935 Paseo Verde Parkway
Henderson, NV
-
1,190
11,600
1,253
12,505
3,765
1555 West Horizon Ridge Parkway
High Wycombe, UK
-
3,567
13,422
-
3,567
13,422
The Row Lane End
Highland Park, IL
-
2,250
25,313
1,378
2,265
26,676
6,466
1601 Green Bay Road
Hingham, MA
-
1,440
32,292
1,444
32,557
4,511
1 Sgt. William B Terry Drive
Holbrook, NY
-
3,957
35,337
1,819
4,021
37,092
7,637
320 Patchogue Holbrook Road
Horley, UK
-
2,332
12,144
2,418
12,834
2,253
Court Lodge Road
Houston, TX
-
3,830
55,674
6,995
3,830
62,669
15,150
2929 West Holcombe Boulevard
Houston, TX
-
1,750
15,603
1,531
1,750
17,134
1,328
10120 Louetta Road
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Houston, TX
-
16,151
-
16,151
7,703
10225 Cypresswood Dr
Howell, NJ
8,493
1,066
21,577
1,077
22,502
4,782
100 Meridian Place
Huntington Beach, CA
-
3,808
31,172
2,573
3,886
33,667
8,390
7401 Yorktown Avenue
Hutchinson, KS
-
10,590
10,910
3,986
2416 Brentwood
Irving, TX
-
1,030
6,823
1,332
1,030
8,155
2,320
8855 West Valley Ranch Parkway
Johns Creek, GA
-
1,580
23,285
1,588
24,104
5,111
11405 Medlock Bridge Road
Kanata, ON
-
1,689
28,670
1,663
28,783
6,073
70 Stonehaven Drive
Kansas City, MO
-
1,820
34,898
5,057
1,856
39,919
11,822
12100 Wornall Road
Kansas City, MO
5,265
1,930
39,997
4,923
1,963
44,887
13,359
6500 North Cosby Ave
Kansas City, MO
-
23,962
24,229
3,142
6460 North Cosby Avenue
Kelowna, BC
5,190
2,688
13,647
1,125
2,739
14,721
3,777
863 Leon Avenue
Kennebunk, ME
-
2,700
30,204
5,353
3,200
35,057
12,239
One Huntington Common Drive
Kennett Square, PA
-
1,050
22,946
1,092
23,260
4,837
301 Victoria Gardens Dr.
Kingston, ON
4,202
1,030
11,416
1,060
12,230
1,768
181 Ontario Street
Kingwood, TX
-
9,777
1,096
10,873
2,698
22955 Eastex Freeway
Kingwood, TX
-
1,683
24,207
2,465
1,683
26,672
2,493
24025 Kingwood Place
Kirkland, WA
24,600
3,450
38,709
1,204
3,523
39,840
8,936
14 Main Street South
Kitchener, ON
1,327
2,744
2,913
164 - 168 Ferfus Avenue
Kitchener, ON
4,293
1,130
9,939
1,163
10,323
2,398
20 Fieldgate Street
Kitchener, ON
3,271
1,093
7,327
1,112
7,654
2,201
290 Queen Street South
Kitchener, ON
12,164
1,341
13,939
2,763
1,324
16,719
3,178
1250 Weber Street E
La Palma, CA
-
2,950
16,591
1,313
2,973
17,881
3,857
5321 La Palma Avenue
Lafayette Hill, PA
-
1,750
11,848
2,311
1,867
14,042
3,981
429 Ridge Pike
Laguna Hills, CA
-
12,820
75,926
17,135
12,820
93,061
12,877
24903 Moulton Parkway
Laguna Woods, CA
-
11,280
76,485
12,253
11,280
88,738
12,298
24441 Calle Sonora
Laguna Woods, CA
-
9,150
57,842
8,919
9,150
66,761
9,651
24962 Calle Aragon
Lake Zurich, IL
-
1,470
9,830
3,002
1,470
12,832
4,506
550 America Court
Lancaster, CA
-
15,295
16,064
4,731
43051 15th St. West
Laval, QC
21,982
2,105
32,161
3,051
2,105
35,212
269, boulevard Ste. Rose
Laval, QC
4,283
2,383
5,968
2,383
6,518
263, boulevard Ste. Rose
Lawrenceville, GA
-
1,500
29,003
1,529
29,715
6,432
1375 Webb Gin House Road
Leatherhead, UK
-
4,682
17,835
-
4,682
17,835
Rectory Lane
Lecanto, FL
-
6,900
7,271
2,705
2341 W. Norvell Bryant Hwy.
Lenexa, KS
-
26,251
1,285
27,440
6,432
15055 West 87th Street Parkway
Leominster, MA
-
23,164
23,801
3,687
1160 Main Street
Lincroft, NJ
-
19,958
1,706
21,594
4,667
734 Newman Springs Road
Linwood, NJ
-
21,984
1,168
23,091
5,012
432 Central Ave
Litchfield, CT
-
1,240
17,908
11,060
1,258
28,950
4,862
19 Constitution Way
Little Neck, NY
-
3,350
38,461
1,421
3,358
39,874
8,411
55-15 Little Neck Pkwy.
Livingston, NJ
-
8,000
44,424
8,000
44,584
2,119
369 E Mt Pleasant Avenue
Lombard, IL
15,975
2,130
59,943
1,474
2,147
61,400
12,455
2210 Fountain Square Dr
London, UK
-
3,121
10,027
3,231
10,851
1,465
71 Hatch Lane
London, UK
-
7,691
16,797
-
7,691
16,797
1,007
6 Victoria Drive
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
London, ON
8,228
1,030
8,813
1,477
760 Horizon Drive
London, ON
11,009
1,969
16,985
1,214
1,998
18,170
3,022
1486 Richmond Street North
London, ON
-
1,445
13,631
1,579
14,450
2,131
81 Grand Avenue
Longueuil, QC
9,064
3,992
23,711
1,778
4,102
25,379
4,144
70 Rue Levis
Los Angeles, CA
-
-
11,430
1,951
-
13,381
3,690
330 North Hayworth Avenue
Los Angeles, CA
60,018
-
114,438
2,355
-
116,793
28,628
10475 Wilshire Boulevard
Los Angeles, CA
-
3,540
19,007
2,583
3,540
21,590
4,919
2051 N. Highland Avenue
Los Angeles, CA
-
-
28,050
3,370
-
31,420
3,286
4061 Grand View Boulevard
Louisville, KY
-
2,420
20,816
1,863
2,420
22,679
5,317
4600 Bowling Boulevard
Louisville, KY
10,562
1,600
20,326
1,600
21,100
4,926
6700 Overlook Drive
Lynnfield, MA
-
3,165
45,200
2,580
3,507
47,438
10,225
55 Salem Street
Mahwah, NJ
-
1,605
27,249
1,605
27,266
2,539
15 Edison Road
Malvern, PA
-
1,651
17,194
2,128
1,739
19,234
5,499
324 Lancaster Avenue
Mansfield, MA
-
3,320
57,011
8,714
3,486
65,559
17,826
25 Cobb Street
Manteca, CA
-
1,300
12,125
1,648
1,312
13,761
5,447
430 N. Union Rd.
Maple Ridge, BC
8,159
2,875
11,922
2,943
12,175
1,489
12241 224th Street
Marieville, QC
6,198
1,278
12,113
1,302
12,206
1,691
425 rue Claude de Ramezay
Markham, ON
36,530
3,727
48,939
1,429
3,825
50,270
13,999
7700 Bayview Avenue
Marlboro, NJ
-
2,222
14,888
1,395
2,250
16,255
3,791
3A South Main Street
Medicine Hat, AB
10,262
1,432
14,141
1,460
14,161
2,923
223 Park Meadows Drive SE
Melbourne, FL
-
7,070
48,257
31,652
7,070
79,909
19,642
7300 Watersong Lane
Melville, NY
-
4,280
73,283
4,916
4,313
78,166
15,980
70 Pinelawn Rd
Memphis, TN
-
1,800
17,744
1,919
1,800
19,663
5,597
6605 Quail Hollow Road
Meriden, CT
-
1,500
14,874
1,429
1,542
16,261
5,727
511 Kensington Avenue
Metairie, LA
12,521
27,708
28,486
5,596
3732 West Esplanade Ave. S
Middletown, CT
-
1,430
24,242
1,986
1,460
26,198
7,799
645 Saybrook Road
Milford, CT
-
3,210
17,364
2,328
3,233
19,669
6,536
77 Plains Road
Mill Creek, WA
-
10,150
60,274
1,320
10,179
61,565
18,700
14905 Bothell-Everett Hwy
Milton, ON
13,723
4,542
25,321
1,962
4,627
27,198
3,433
611 Farmstead Drive
Minnetonka, MN
-
2,080
24,360
2,571
2,450
26,561
6,303
500 Carlson Parkway
Minnetonka, MN
-
29,344
1,161
30,461
5,900
18605 Old Excelsior Blvd.
Mission Viejo, CA
13,850
6,600
52,118
7,758
6,600
59,876
7,475
27783 Center Drive
Mississauga, ON
8,358
1,602
17,996
1,626
18,593
4,140
1130 Bough Beeches Boulevard
Mississauga, ON
2,816
4,655
4,873
1,147
3051 Constitution Boulevard
Mississauga, ON
26,718
3,649
35,137
1,441
3,723
36,504
8,161
1490 Rathburn Road East
Mississauga, ON
5,916
2,548
15,158
1,751
2,589
16,868
3,177
85 King Street East
Missoula, MT
-
7,490
7,927
2,767
3620 American Way
Mobberley, UK
-
5,146
26,665
1,834
5,340
28,305
7,514
Barclay Park, Hall Lane
Monterey, CA
-
6,440
29,101
1,549
6,440
30,650
6,486
1110 Cass St.
Montgomery, MD
-
6,482
83,642
10,924
6,482
94,566
3,480
3701 International Dr
Montgomery Village, MD
-
3,530
18,246
6,745
4,279
24,242
9,021
19310 Club House Road
Montreal-Nord, QC
11,740
4,407
23,719
2,992
4,407
26,711
6700, boulevard Gouin Est
(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:
Moorestown, NJ
-
2,060
51,628
1,982
2,083
53,587
11,069
1205 N. Church St
Moose Jaw, SK
2,076
12,973
13,871
3,039
425 4th Avenue NW
Murphy, TX
-
1,950
19,182
1,950
19,987
1,781
304 West FM 544
Naperville, IL
-
1,550
12,237
2,433
1,550
14,670
3,760
1936 Brookdale Road
Naperville, IL
-
1,540
28,204
1,392
1,573
29,563
6,517
535 West Ogden Avenue
Naples, FL
56,105
8,989
119,398
5,055
9,088
124,354
22,444
4800 Aston Gardens Way
Nashua, NH
-
1,264
43,026
1,373
1,264
44,399
5,491
674 West Hollis Street
Nashville, TN
-
3,900
35,788
2,848
3,900
38,636
10,313
4206 Stammer Place
Needham, MA
-
1,240
32,992
1,322
1,240
34,314
2,853
880 Greendale Avenue
Nepean, ON
5,387
1,575
5,770
1,613
6,260
1,447
1 Mill Hill Road
New Braunfels, TX
-
1,200
19,800
10,352
2,729
28,623
4,906
2294 East Common Street
Newark, DE
-
21,220
1,569
22,789
8,065
200 E. Village Rd.
Newbury, UK
-
2,850
12,796
2,946
13,372
370 London Road
Newburyport, MA
-
1,750
29,187
1,194
1,750
30,381
2,656
4 Wallace Bashaw Junior Way
Newmarket, UK
-
4,071
11,902
1,190
4,228
12,935
2,005
Jeddah Way
Newton, MA
-
2,250
43,614
1,253
2,263
44,854
11,966
2300 Washington Street
Newton, MA
14,881
2,500
30,681
3,183
2,574
33,790
9,409
280 Newtonville Avenue
Newton, MA
-
3,360
25,099
1,820
3,385
26,894
8,053
430 Centre Street
Newtown Square, PA
-
1,930
14,420
1,161
1,946
15,565
4,577
333 S. Newtown Street Rd.
Niagara Falls, ON
6,335
1,225
7,963
1,242
8,412
1,457
7860 Lundy's Lane
North Andover, MA
-
1,960
34,976
2,116
2,111
36,941
10,087
700 Chickering Road
North Chelmsford, MA
-
18,478
19,406
5,126
2 Technology Drive
North Dartmouth, MA
-
1,700
35,337
1,723
1,700
37,060
3,374
239 Cross Road
North Tustin, CA
-
2,880
18,059
2,975
18,855
3,564
12291 Newport Avenue
Oak Park, IL
-
1,250
40,383
1,749
1,250
42,132
9,526
1035 Madison Street
Oakland, CA
-
3,877
47,508
3,252
4,036
50,601
10,954
11889 Skyline Boulevard
Oakton, VA
-
2,250
37,576
2,218
2,378
39,666
8,352
2863 Hunter Mill Road
Oakville, ON
5,499
1,252
7,382
1,278
7,729
1,795
289 and 299 Randall Street
Oakville, ON
9,164
2,134
29,963
1,107
2,165
31,039
7,349
25 Lakeshore Road West
Oakville, ON
4,797
1,271
13,754
1,289
14,342
2,929
345 Church Street
Oceanside, CA
-
2,160
18,352
4,094
2,243
22,363
6,097
3500 Lake Boulevard
Ogden, UT
-
6,700
7,431
2,689
1340 N. Washington Blv.
Okotoks, AB
17,892
20,943
21,486
3,640
51 Riverside Gate
Oshawa, ON
6,547
7,570
7,985
1,834
649 King Street East
Ottawa, ON
9,469
1,341
15,425
1,439
1,396
16,809
2,176
110 Berrigan Drive
Ottawa, ON
17,808
3,454
23,309
1,351
3,559
24,555
6,617
2370 Carling Avenue
Ottawa, ON
20,414
4,256
39,141
-
4,256
39,141
5,917
751 Peter Morand Crescent
Ottawa, ON
7,070
2,103
18,421
3,150
2,180
21,494
3,096
1 Eaton Street
Ottawa, ON
13,444
2,963
26,424
1,880
3,041
28,226
3,647
691 Valin Street
Ottawa, ON
10,161
1,561
18,170
1,336
1,647
19,420
2,412
22 Barnstone Drive
Ottawa, ON
13,568
3,403
31,090
1,941
3,467
32,967
4,134
990 Hunt Club Road
Ottawa, ON
17,204
3,411
28,335
4,152
3,502
32,396
5,257
2 Valley Stream Drive
Ottawa, ON
2,765
4,710
4,930
1,171
1345 Ogilvie Road
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Ottawa, ON
2,012
2,165
1,192
3,484
370 Kennedy Lane
Ottawa, ON
9,559
2,809
27,299
1,253
2,880
28,481
7,177
43 Aylmer Avenue
Ottawa, ON
4,441
1,156
9,758
1,227
10,168
2,151
1351 Hunt Club Road
Ottawa, ON
5,778
7,800
8,324
1,805
140 Darlington Private
Ottawa, ON
8,729
1,176
12,764
1,231
13,487
1,876
10 Vaughan Street
Outremont, QC
17,544
6,746
45,981
5,133
6,746
51,114
1,007
1000, avenue Rockland
Palo Alto, CA
-
-
39,639
3,055
42,670
8,872
2701 El Camino Real
Paramus, NJ
-
2,840
35,728
1,729
2,947
37,350
7,659
567 Paramus Road
Parkland, FL
55,694
4,880
111,481
4,087
4,904
115,544
20,538
5999 University Drive
Paso Robles, CA
-
1,770
8,630
1,770
9,337
4,032
1919 Creston Rd.
Peabody, MA
6,012
2,250
16,071
1,099
2,324
17,096
2,858
73 Margin Street
Pembroke, ON
-
1,931
9,427
1,901
9,890
2,011
1111 Pembroke Street West
Pennington, NJ
-
1,380
27,620
1,115
1,491
28,624
5,562
143 West Franklin Avenue
Peoria, AZ
-
21,796
1,635
23,431
1,482
13391 N 94th Drive
Pittsburgh, PA
-
1,580
18,017
1,587
18,935
4,437
900 Lincoln Club Dr.
Placentia, CA
-
8,480
17,076
5,087
8,480
22,163
3,576
1180 N Bradford Avenue
Plainview, NY
-
3,066
19,901
1,018
3,182
20,803
4,124
1231 Old Country Road
Plano, TX
-
3,120
59,950
3,124
3,173
63,021
16,579
4800 West Parker Road
Plano, TX
-
1,750
15,390
1,954
1,750
17,344
1,626
3690 Mapleshade Lane
Playa Vista, CA
-
1,580
40,531
1,636
1,605
42,142
8,978
5555 Playa Vista Drive
Plymouth, MA
-
1,444
34,951
1,122
1,453
36,064
5,093
157 South Street
Plymouth, MA
13,169
2,550
35,055
2,256
2,550
37,311
3,895
60 Stafford Hill
Port Perry, ON
11,989
3,685
26,788
2,365
3,747
29,091
3,509
15987 Simcoe Street
Port St. Lucie, FL
-
8,700
47,230
20,478
8,700
67,708
15,304
10685 SW Stony Creek Way
Princeton, NJ
-
1,730
30,888
1,839
1,810
32,647
6,494
155 Raymond Road
Purley, UK
-
7,365
35,161
2,104
7,625
37,005
8,905
21 Russell Hill Road
Quebec City, QC
8,495
2,420
21,977
1,767
2,420
23,744
795, rue Alain
Quebec City, QC
12,067
3,300
28,325
2,207
3,300
30,532
650 and 700, avenue Murray
Queensbury, NY
-
1,260
21,744
1,014
1,264
22,754
3,140
27 Woodvale Road
Quincy, MA
-
1,350
12,584
1,428
13,487
4,083
2003 Falls Boulevard
Rancho Cucamonga, CA
-
1,480
10,055
1,848
2,073
11,310
2,978
9519 Baseline Road
Rancho Palos Verdes, CA
-
5,450
60,034
2,453
5,450
62,487
14,179
5701 Crestridge Road
Randolph, NJ
-
1,540
46,934
1,379
1,619
48,234
9,841
648 Route 10 West
Red Deer, AB
12,026
1,247
19,283
1,273
19,849
3,093
3100 - 22 Street
Red Deer, AB
14,153
1,199
22,339
1,219
22,951
3,655
10 Inglewood Drive
Redondo Beach, CA
-
-
9,557
-
10,470
6,436
514 North Prospect Ave
Regina, SK
6,224
1,485
21,148
1,525
21,746
5,280
3651 Albert Street
Regina, SK
6,158
1,244
21,036
1,267
21,729
4,579
3105 Hillsdale Street
Regina, SK
15,076
1,539
24,053
2,617
1,579
26,630
3,750
1801 McIntyre Street
Rehoboth Beach, DE
-
24,248
8,847
33,062
6,077
36101 Seaside Blvd
Renton, WA
20,790
3,080
51,824
1,999
3,124
53,779
11,898
104 Burnett Avenue South
Ridgefield, CT
-
3,100
80,614
5,250
3,152
85,812
13,614
640 Danbury Road
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Riviere-du-Loup, QC
2,892
7,601
8,364
1,150
35 des Cedres
Riviere-du-Loup, QC
11,905
1,454
16,848
3,500
1,563
20,239
3,453
230-235 rue Des Chenes
Rocky Hill, CT
-
1,090
6,710
1,534
1,090
8,244
3,089
60 Cold Spring Rd.
Rocky Hill, CT
-
16,351
17,068
4,679
1160 Elm Street
Rohnert Park, CA
-
6,500
18,700
2,205
6,556
20,849
7,644
4855 Snyder Lane
Romeoville, IL
-
12,646
61,135
6,197
68,438
16,480
605 S Edward Dr.
Roseville, MN
-
1,540
35,877
1,053
1,607
36,863
7,263
2555 Snelling Avenue, North
Roseville, CA
-
3,300
41,652
6,273
3,300
47,925
6,003
5161 Foothills Boulevard
Sacramento, CA
-
14,781
15,083
4,097
6350 Riverside Blvd
Sacramento, CA
-
1,300
23,394
1,402
1,369
24,727
5,105
345 Munroe Street
Saint-Lambert, QC
33,431
10,259
61,903
10,499
62,029
12,901
1705 Avenue Victoria
Salem, NH
-
32,721
4,326
1,054
36,973
8,805
242 Main Street
Salinas, CA
-
5,110
41,424
7,694
5,110
49,118
7,379
1320 Padre Drive
Salisbury, UK
-
2,720
15,269
2,812
15,896
2,011
Shapland Close
Salt Lake City, UT
-
1,360
19,691
1,601
1,360
21,292
6,988
1430 E. 4500 S.
San Angelo, TX
-
8,800
9,253
3,349
2695 Valleyview Blvd.
San Antonio, TX
-
6,120
28,169
2,590
6,120
30,759
6,071
2702 Cembalo Blvd
San Antonio, TX
-
5,045
58,048
3,228
5,045
61,276
3,306
11300 Wild Pine
San Diego, CA
-
4,200
30,707
4,243
31,395
5,825
2567 Second Avenue
San Diego, CA
-
5,810
63,078
2,808
5,810
65,886
17,092
13075 Evening Creek Drive S
San Diego, CA
-
3,000
27,164
3,016
28,029
5,495
810 Turquoise Street
San Francisco, CA
-
5,920
91,639
12,609
5,920
104,248
13,874
1550 Sutter Street
San Francisco, CA
-
11,800
77,214
9,969
11,800
87,183
11,932
1601 19th Avenue
San Gabriel, CA
-
3,120
15,566
3,138
16,496
3,797
8332 Huntington Drive
San Jose, CA
-
2,850
35,098
2,858
35,901
8,000
1420 Curvi Drive
San Jose, CA
-
3,280
46,823
3,149
3,280
49,972
11,218
500 S Winchester Boulevard
San Jose, CA
-
11,900
27,647
4,820
11,900
32,467
4,801
4855 San Felipe Road
San Juan Capistrano, CA
-
1,390
6,942
1,450
1,390
8,392
3,797
30311 Camino Capistrano
San Rafael, CA
-
1,620
27,392
2,858
1,832
30,038
3,412
111 Merrydale Road
San Ramon, CA
-
8,700
72,223
9,628
8,700
81,851
11,263
9199 Fircrest Lane
Sandy Springs, GA
-
2,214
8,360
1,307
2,220
9,661
2,733
5455 Glenridge Drive NE
Santa Maria, CA
-
6,050
50,658
3,231
6,089
53,850
14,846
1220 Suey Road
Santa Monica, CA
18,727
5,250
28,340
5,263
29,277
6,184
1312 15th Street
Santa Rosa, CA
-
2,250
26,273
3,303
2,250
29,576
3,623
4225 Wayvern Drive
Saskatoon, SK
3,840
13,905
14,392
2,916
220 24th Street East
Saskatoon, SK
13,125
1,382
17,609
1,403
18,354
3,632
1622 Acadia Drive
Schaumburg, IL
-
2,460
22,863
1,175
2,497
24,001
5,884
790 North Plum Grove Road
Scottsdale, AZ
-
2,500
3,890
1,664
2,500
5,554
1,614
9410 East Thunderbird Road
Seal Beach, CA
-
6,204
72,954
2,078
6,271
74,965
19,259
3850 Lampson Avenue
Seattle, WA
-
5,190
9,350
5,199
10,089
3,616
11501 15th Ave NE
Seattle, WA
27,180
10,670
37,291
1,094
10,700
38,355
12,353
805 4th Ave N
Seattle, WA
48,540
6,790
85,369
3,258
6,825
88,592
20,335
5300 24th Avenue NE
Seattle, WA
-
1,150
19,887
1,284
1,153
21,168
2,724
11039 17th Avenue
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Selbyville, DE
-
25,912
26,401
5,564
21111 Arrington Dr
Sevenoaks, UK
-
6,181
40,240
4,176
6,390
44,207
10,318
64 - 70 Westerham Road
Severna Park, MD
-
-
67,623
5,574
73,173
8,947
43 W McKinsey Road
Shelburne, VT
-
31,041
1,966
32,950
8,191
687 Harbor Road
Shelby Township, MI
-
1,040
26,344
1,439
1,105
27,718
5,566
46471 Hayes Road
Shelton, CT
-
2,246
33,967
2,246
34,009
3,424
708A Bridgeport Avenue
Shrewsbury, NJ
-
2,120
38,116
1,244
2,138
39,342
8,247
5 Meridian Way
Shrewsbury, MA
-
26,824
1,397
28,215
4,209
3111 Main Street
Sidcup, UK
-
7,446
56,570
3,312
7,714
59,614
15,051
Frognal Avenue
Simi Valley, CA
-
3,200
16,664
1,092
3,298
17,658
4,909
190 Tierra Rejada Road
Simi Valley, CA
-
5,510
51,406
8,073
5,510
59,479
8,314
5300 E Los Angeles Avenue
Solihull, UK
-
5,070
43,297
4,211
5,241
47,337
10,579
1270 Warwick Road
Solihull, UK
-
3,571
26,053
1,429
3,692
27,361
6,320
1 Worcester Way
Solihull, UK
-
1,851
10,585
1,913
11,022
Warwick Road
Sonning, UK
-
5,644
42,155
2,660
5,853
44,606
9,317
Old Bath Rd.
Sonoma, CA
-
1,100
18,400
1,773
1,109
20,164
7,332
800 Oregon St.
Sonoma, CA
-
2,820
21,890
2,683
2,820
24,573
3,043
91 Napa Road
St. Albert, AB
7,432
1,145
17,863
1,854
1,185
19,677
5,098
78C McKenney Avenue
St. John's, NL
5,444
11,765
11,833
1,575
64 Portugal Cove Road
Stittsville, ON
4,237
1,175
17,397
1,192
18,133
3,630
1340 - 1354 Main Street
Stockport, UK
-
4,369
25,018
1,329
4,521
26,195
6,471
1 Dairyground Road
Stockton, CA
-
2,280
5,983
2,372
6,404
2,006
6725 Inglewood
Studio City, CA
-
4,006
25,307
1,151
4,109
26,355
6,453
4610 Coldwater Canyon Avenue
Sugar Land, TX
-
31,423
1,339
32,762
8,143
1221 Seventh St
Sugar Land, TX
-
4,272
60,493
6,530
4,272
67,023
4,864
744 Brooks Street
Sun City, FL
20,951
6,521
48,476
5,134
6,648
53,483
11,537
231 Courtyards
Sun City, FL
23,606
5,040
50,923
4,577
5,369
55,171
10,639
1311 Aston Gardens Court
Sunnyvale, CA
-
5,420
41,682
2,155
5,420
43,837
10,239
1039 East El Camino Real
Surrey, BC
6,323
3,605
18,818
1,018
3,658
19,783
5,725
16028 83rd Avenue
Surrey, BC
15,142
4,552
22,338
1,332
4,631
23,591
7,190
15501 16th Avenue
Sutton, UK
-
4,096
14,532
4,234
15,124
123 Westmead Road
Suwanee, GA
-
1,560
11,538
1,665
1,560
13,203
3,281
4315 Johns Creek Parkway
Sway, UK
-
4,145
15,508
1,113
4,334
16,432
3,004
Sway Place
Swift Current, SK
1,871
10,119
10,561
2,324
301 Macoun Drive
Tacoma, WA
17,640
2,400
35,053
1,276
2,493
36,236
8,057
7290 Rosemount Circle
Tacoma, WA
-
1,535
6,068
1,537
6,133
1,095
7290 Rosemount Circle
Tacoma, WA
-
4,170
73,377
12,917
4,170
86,294
11,797
8201 6th Avenue
Tampa, FL
69,330
4,910
114,148
5,229
4,996
119,291
20,181
12951 W Linebaugh Avenue
Tewksbury, MA
-
2,350
24,118
2,172
2,350
26,290
3,205
2000 Emerald Court
The Woodlands, TX
-
12,379
13,058
3,238
7950 Bay Branch Dr
Toledo, OH
-
2,040
47,129
3,722
2,144
50,747
15,040
3501 Executive Parkway
Toms River, NJ
-
1,610
34,627
1,077
1,681
35,633
7,529
1587 Old Freehold Rd
Toronto, ON
17,086
2,927
20,713
1,635
2,997
22,278
3,323
54 Foxbar Road
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Seniors Housing Operating:
Toronto, ON
8,268
5,082
25,493
1,375
5,178
26,772
5,294
645 Castlefield Avenue
Toronto, ON
12,478
2,008
19,620
-
2,008
19,620
3,033
4251 Dundas Street West
Toronto, ON
36,296
5,132
41,657
2,931
5,209
44,511
10,383
10 William Morgan Drive
Toronto, ON
4,268
2,480
7,571
2,527
8,016
1,724
123 Spadina Road
Toronto, ON
1,217
1,079
5,364
1,095
5,617
1,246
25 Centennial Park Road
Toronto, ON
7,531
2,513
19,695
2,583
20,594
3,845
305 Balliol Street
Toronto, ON
17,407
3,400
32,757
1,488
3,456
34,189
7,774
1055 and 1057 Don Mills Road
Toronto, ON
1,361
2,915
1,414
3,165
1,155
3705 Bathurst Street
Toronto, ON
5,685
1,447
3,918
1,494
4,229
1,147
1340 York Mills Road
Toronto, ON
30,679
5,304
53,488
2,130
5,387
55,535
15,694
8 The Donway East
Torrance, CA
-
3,497
73,138
3,497
73,154
4,639
25525 Hawthorne Boulevard
Tulsa, OK
-
1,330
21,285
4,417
1,362
25,670
7,149
8887 South Lewis Ave
Tulsa, OK
-
1,500
20,861
3,934
1,581
24,714
7,228
9524 East 71st St
Tustin, CA
-
15,299
16,043
3,784
240 East 3rd St
Upland, CA
-
3,160
42,596
3,160
42,651
5,414
2419 North Euclid Avenue
Upper Providence, PA
-
1,900
28,195
1,900
28,232
2,719
1133 Black Rock Road
Upper St Claire, PA
-
1,102
13,455
1,396
1,125
14,828
3,714
500 Village Drive
Vacaville, CA
-
17,100
1,756
18,849
7,022
799 Yellowstone Dr.
Vallejo, CA
-
4,000
18,000
2,476
4,030
20,446
7,573
350 Locust Dr.
Vallejo, CA
-
2,330
15,407
2,330
15,797
4,505
2261 Tuolumne
Vancouver, WA
-
1,820
19,042
1,821
19,479
5,299
10011 NE 118th Ave
Vancouver, BC
-
7,282
6,572
-
7,282
6,572
5,332
2803 West 41st Avenue
Vankleek Hill, ON
2,960
3,242
48 Wall Street
Vaudreuil, QC
7,822
1,852
14,214
1,829
14,783
2,234
333 rue Querbes
Venice, FL
64,425
6,820
100,501
4,362
6,892
104,791
19,357
1000 Aston Gardens Drive
Vero Beach, FL
-
2,930
40,070
25,658
2,930
65,728
19,456
7955 16th Manor
Victoria, BC
6,833
2,856
18,038
2,898
18,561
4,657
3000 Shelbourne Street
Victoria, BC
6,299
3,681
15,774
3,736
16,274
4,244
3051 Shelbourne Street
Victoria, BC
7,064
2,476
15,379
1,020
2,516
16,359
2,115
3965 Shelbourne Street
Virginia Water, UK
-
7,106
29,937
5,937
5,629
37,351
8,494
Christ Church Road
Voorhees, NJ
-
3,700
24,312
1,821
3,854
25,979
4,025
311 Route 73
Wall, NJ
-
1,650
25,350
2,679
1,692
27,987
5,356
2021 Highway 35
Walnut Creek, CA
-
3,700
12,467
2,280
3,808
14,639
4,072
2175 Ygnacio Valley Road
Walnut Creek, CA
-
10,320
100,890
15,190
10,320
116,080
15,633
1580 Geary Road
Waltham, MA
-
2,462
40,062
1,457
2,551
41,430
6,700
126 Smith Street
Washington, DC
30,162
4,000
69,154
3,157
4,004
72,307
14,549
5111 Connecticut Avenue NW
Watchung, NJ
-
1,920
24,880
1,348
2,048
26,100
5,131
680 Mountain Boulevard
Wayland, MA
-
1,207
27,462
2,157
1,334
29,492
6,527
285 Commonwealth Road
Webster Groves, MO
-
1,790
15,425
2,391
1,793
17,813
4,543
45 E Lockwood Avenue
Welland, ON
6,041
7,530
7,638
1,060
110 First Street
Wellesley, MA
-
4,690
77,462
4,690
77,681
11,776
23 & 27 Washington Street
West Babylon, NY
-
3,960
47,085
2,224
3,960
49,309
9,640
580 Montauk Highway
West Bloomfield, MI
-
1,040
12,300
1,094
13,081
2,977
7005 Pontiac Trail
(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:
West Hills, CA
-
2,600
7,521
1,545
2,636
9,030
2,681
9012 Topanga Canyon Road
West Vancouver, BC
17,668
7,059
28,155
1,997
7,168
30,043
7,104
2095 Marine Drive
Westbourne, UK
-
5,441
41,420
3,300
5,627
44,534
9,612
16-18 Poole Road
Westford, MA
-
1,440
32,607
1,468
32,898
4,202
108 Littleton Road
Weston, MA
-
1,160
6,200
1,274
1,160
7,474
1,583
135 North Avenue
Westworth Village, TX
-
2,060
31,296
2,060
31,356
3,346
25 Leonard Trail
Weybridge, UK
-
7,899
48,240
2,386
8,166
50,359
12,363
Ellesmere Road
Weymouth, UK
-
2,591
16,551
2,714
17,308
2,114
Cross Road
White Oak, MD
-
2,304
24,768
1,936
2,316
26,692
5,465
11621 New Hampshire Avenue
Wilmington, DE
-
1,040
23,338
1,771
1,129
25,020
5,281
2215 Shipley Street
Winchester, UK
-
6,009
29,405
1,472
6,220
30,666
7,194
Stockbridge Road
Winnipeg, MB
11,756
1,960
38,612
2,244
2,058
40,758
12,275
857 Wilkes Avenue
Winnipeg, MB
14,961
1,276
21,732
1,083
1,419
22,672
4,820
3161 Grant Avenue
Winnipeg, MB
12,124
1,317
15,609
1,864
1,346
17,444
3,116
125 Portsmouth Boulevard
Woking, UK
-
2,990
12,523
-
2,990
12,523
12 Streets Heath, West End
Wolverhampton, UK
-
2,941
8,922
3,047
9,540
3,114
73 Wergs Road
Woodbridge, CT
-
1,370
14,219
1,594
1,426
15,757
5,754
21 Bradley Road
Woodland Hills, CA
-
3,400
20,478
1,079
3,447
21,510
5,278
20461 Ventura Boulevard
Worcester, MA
-
1,140
21,664
1,382
1,166
23,020
6,192
340 May Street
Yarmouth, ME
-
27,711
1,410
29,087
7,458
27 Forest Falls Drive
Yonkers, NY
-
3,962
50,107
2,111
3,967
52,213
10,824
65 Crisfield Street
Yorkton, SK
3,085
8,760
9,090
2,004
94 Russell Drive
Seniors Housing Operating Total
$
1,810,587
$
1,331,171
$
14,047,033
$
1,206,757
$
1,373,258
$
15,211,900
$
2,962,334
Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2018
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Abilene, TX
$
-
$
$
20,987
$
11,660
$
$
32,647
$
2,632
6565 Central Park Boulevard
Abilene, TX
-
8,187
1,089
9,276
1,000
1250 East N 10th Street
Aboite Twp, IN
-
1,770
19,930
1,601
1,770
21,531
4,613
611 W County Line Rd South
Adelphi, MD
-
1,429
4,312
-
1,429
4,312
1801 Metzerott Road
Agawam, MA
-
16,112
2,134
18,246
8,048
1200 Suffield St.
Akron, OH
-
3,003
-
3,003
171 North Cleveland Massillon Road
Albertville, AL
-
6,203
6,550
1,796
151 Woodham Dr.
Alexandria, VA
-
2,452
6,829
-
2,452
6,829
1510 Collingwood Road
Allen Park, MI
-
1,767
5,027
-
1,767
5,027
9150 Allen Road
Allentown, PA
-
11,849
-
11,849
5151 Hamilton Boulevard
Allentown, PA
-
1,491
4,823
-
1,491
4,823
1265 Cedar Crest Boulevard
Ames, IA
-
8,870
-
8,870
2,075
1325 Coconino Rd.
Ankeny, IA
-
1,129
10,270
-
1,129
10,270
1275 SW State Street
Ann Arbor, MI
-
2,172
11,127
-
2,172
11,127
4701 East Huron River Drive
Annandale, VA
-
1,687
18,980
-
1,687
18,980
7104 Braddock Road
Arlington, TX
-
1,660
37,395
1,825
1,660
39,220
9,668
1250 West Pioneer Parkway
Arlington, VA
-
4,016
8,805
-
4,016
8,805
550 South Carlin Southprings Road
Asheboro, NC
-
5,032
5,197
2,142
514 Vision Dr.
Asheville, NC
-
3,489
-
3,489
1,858
4 Walden Ridge Dr.
Asheville, NC
-
1,955
2,306
1,034
308 Overlook Rd.
Atchison, KS
-
5,610
5,633
1301 N 4th St.
Atlanta, GA
-
2,058
14,914
1,214
2,080
16,106
11,826
1460 S Johnson Ferry Rd.
Aurora, OH
-
1,760
14,148
1,760
14,254
3,369
505 S. Chillicothe Rd
Aurora, CO
-
2,440
28,172
-
2,440
28,172
11,394
14211 E. Evans Ave.
Austin, TX
-
9,520
1,299
10,814
5,784
12429 Scofield Farms Dr.
Austin, TX
-
1,691
5,006
-
1,691
5,006
11630 Four Iron Drive
Avon, IN
-
1,830
14,470
-
1,830
14,470
3,534
182 S Country RD. 550E
Avon, IN
-
19,444
-
19,444
2,329
10307 E. CR 100 N
Avon, CT
-
2,132
7,627
-
2,132
7,627
100 Fisher Drive
Avon Lake, OH
-
10,421
5,822
16,243
3,136
345 Lear Rd.
Baldwin City, KS
-
4,810
4,865
321 Crimson Ave
Baltimore, MD
-
4,306
4,305
-
4,306
4,305
6600 Ridge Road
Baltimore, MD
-
3,069
3,150
-
3,069
3,150
4669 Falls Road
Barberton, OH
-
1,307
9,313
-
1,307
9,313
85 Third Street
Bartlesville, OK
-
1,380
-
1,380
5420 S.E. Adams Blvd.
Battle Creek, MI
-
1,822
-
1,822
200 Roosevelt Avenue East
Bay City, MI
-
2,620
-
2,620
800 Mulholland Street
Bedford, PA
-
4,434
-
4,434
136 Donahoe Manor Road
Bellingham, WA
-
1,500
19,861
1,507
20,250
5,450
4415 Columbine Dr.
Benbrook, TX
-
1,550
13,553
2,657
1,550
16,210
3,016
4242 Bryant Irvin Road
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Bethel Park, PA
-
1,700
16,007
-
1,700
16,007
4,274
5785 Baptist Road
Bethel Park, PA
-
1,008
6,742
-
1,008
6,742
60 Highland Road
Bethesda, MD
-
2,218
6,871
-
2,218
6,871
6530 Democracy Boulevard
Bethlehem, PA
-
1,191
16,892
-
1,191
16,892
2021 Westgate Drive
Bethlehem, PA
-
1,143
13,592
-
1,143
13,592
2029 Westgate Drive
Beverly Hills, CA
-
6,000
13,385
-
6,000
13,385
1,420
220 N Clark Drive
Bexleyheath, UK
-
3,750
10,807
3,877
11,173
1,210
35 West Street
Bingham Farms, MI
-
15,676
-
15,676
24005 West 13 Mile Road
Birmingham, UK
-
1,647
14,853
1,703
15,355
1,491
Clinton Street, Winson Green
Birmingham, UK
-
1,591
19,092
1,645
19,738
1,888
Braymoor Road, Tile Cross
Birmingham, UK
-
1,462
9,056
1,511
9,362
Clinton Street, Winson Green
Birmingham, UK
-
1,184
10,085
1,224
10,426
1,005
122 Tile Cross Road, Garretts Green
Bloomington, IN
-
17,423
-
17,423
1,651
363 S. Fieldstone Boulevard
Boardman, OH
-
1,200
12,800
-
1,200
12,800
4,308
8049 South Ave.
Boca Raton, FL
-
2,200
4,976
-
2,200
4,976
7225 Boca Del Mar Drive
Boca Raton, FL
-
2,826
4,063
-
2,826
4,063
375 Northwest 51st Street
Boulder, CO
-
3,601
21,371
-
3,601
21,371
2800 Palo Parkway
Bowling Green, KY
-
3,800
26,700
3,800
26,849
7,094
1300 Campbell Lane
Boynton Beach, FL
-
2,138
10,204
-
2,138
10,204
3600 Old Boynton Road
Boynton Beach, FL
-
2,804
14,226
-
2,804
14,226
3001 South Congress Avenue
Bracknell, UK
-
4,081
11,470
-
4,081
11,470
Bagshot Road
Bradenton, FL
-
3,298
-
3,298
1,991
6101 Pointe W. Blvd.
Bradenton, FL
-
9,953
-
9,953
1,714
2800 60th Avenue West
Braintree, MA
-
7,157
1,290
8,447
8,433
1102 Washington St.
Braintree, UK
-
-
13,296
-
13,746
1,570
Meadow Park Tortoiseshell Way
Brandon, MS
-
1,220
10,241
1,220
10,249
2,291
140 Castlewoods Blvd
Brecksville, OH
-
19,353
-
19,353
2,309
8757 Brecksville Road
Brentwood, UK
36,589
8,537
45,869
1,998
8,826
47,578
2,534
London Road
Brick, NJ
-
1,290
25,247
1,290
26,243
5,086
458 Jack Martin Blvd.
Bridgewater, NJ
-
1,800
31,810
1,397
1,800
33,207
6,365
680 US-202/206 North
Brookfield, WI
-
1,300
12,830
-
1,300
12,830
1,779
1105 Davidson Road
Brooks, AB
1,757
4,951
5,026
951 Cassils Road West
Bucyrus, OH
-
1,119
2,612
-
1,119
2,612
1170 West Mansfield Street
Burleson, TX
-
13,985
2,105
16,090
3,142
300 Huguley Boulevard
Burlington, NC
-
4,297
5,004
2,037
3619 S. Mebane St.
Burlington, NC
-
5,467
-
5,467
2,271
3615 S. Mebane St.
Burlington, NJ
-
1,700
12,554
1,700
13,055
3,231
115 Sunset Road
Burlington, NJ
-
1,170
19,205
1,170
19,377
4,109
2305 Rancocas Road
Burnaby, BC
7,326
7,623
13,844
7,736
14,051
1,664
7195 Canada Way
Calgary, AB
14,921
2,341
42,768
2,376
43,459
4,882
1729-90th Avenue SW
Calgary, AB
24,745
4,569
70,199
1,109
4,636
71,241
7,933
500 Midpark Way SE
Camberley, UK
-
9,974
39,168
-
9,974
39,168
1,574
Pembroke Broadway
Camp Hill, PA
-
3,597
-
3,597
1700 Market Street
Canonsburg, PA
-
4,830
-
4,830
113 West McMurray Road
Canton, OH
-
2,098
-
2,098
1,115
1119 Perry Dr., N.W.
(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:
Canton, MI
-
1,399
16,971
-
1,399
16,971
7025 Lilley Road
Cape Coral, FL
-
3,281
-
3,281
1,473
911 Santa Barbara Blvd.
Cape Coral, FL
8,337
18,868
-
18,868
3,282
831 Santa Barbara Boulevard
Cape May Court House, NJ
-
1,440
17,002
1,775
1,440
18,777
2,265
144 Magnolia Drive
Carlisle, PA
-
8,207
-
8,207
940 Walnut Bottom Road
Carmel, IN
-
1,700
19,491
1,700
19,492
1,971
12315 Pennsylvania Street
Carmel, IN
-
1,583
6,071
-
1,583
6,071
12999 North Pennsylvania Street
Carmel, IN
-
-
2,296
-
-
2,296
12999 North Pennsylvania Street
Carrollton, TX
-
2,010
19,549
-
2,010
19,549
1,194
2645 East Trinity Mills Road
Cary, NC
-
1,500
4,350
1,500
5,336
2,698
111 MacArthur
Castleton, IN
-
15,137
-
15,137
1,885
8405 Clearvista Lake
Cedar Grove, NJ
-
2,850
27,737
2,850
27,757
5,981
536 Ridge Road
Cedar Rapids, IA
-
9,354
-
9,354
1940 1st Avenue Northeast
Centerville, OH
-
3,960
-
3,960
1001 E. Alex Bell Road
Centreville, MD
-
14,602
14,843
3,242
205 Armstrong Avenue
Chagrin Falls, OH
-
10,841
-
10,841
8100 East Washington Street
Chambersburg, PA
-
1,373
8,864
-
1,373
8,864
1070 Stouffer Avenue
Chapel Hill, NC
-
2,646
3,429
1,508
100 Lanark Rd.
Charleston, SC
-
1,333
5,556
-
1,333
5,556
1137 Sam Rittenberg Boulevard
Charleston, WV
-
17,575
17,881
3,680
1000 Association Drive, North Gate Business Park
Chatham, VA
-
14,039
-
14,039
1,814
100 Rorer Street
Cherry Hill, NJ
-
1,416
9,874
-
1,416
9,874
2700 Chapel Avenue West
Chester, VA
-
1,320
18,127
-
1,320
18,127
2,292
12001 Iron Bridge Road
Chevy Chase, MD
-
4,515
8,688
-
4,515
8,688
8700 Jones Mill Road
Chickasha, OK
-
1,395
-
1,395
801 Country Club Rd.
Chillicothe, OH
-
1,145
8,997
-
1,145
8,997
1058 Columbus Street
Cincinnati, OH
-
14,014
-
14,014
6870 Clough Pike
Citrus Heights, CA
-
5,207
31,725
-
5,207
31,725
7807 Upland Way
Claremore, OK
-
1,427
6,130
7,557
1,597
1605 N. Hwy. 88
Clarksville, TN
-
2,292
-
2,292
1,213
2183 Memorial Dr.
Clayton, NC
-
15,733
-
15,733
1,771
84 Johnson Estate Road
Cleburne, TX
-
5,369
-
5,369
1,669
402 S Colonial Drive
Clevedon, UK
-
2,838
16,927
2,933
17,499
1,998
18/19 Elton Road
Cobham, UK
-
9,808
24,991
1,176
10,139
25,836
3,657
Redhill Road
Colchester, CT
-
4,860
5,404
1,444
59 Harrington Court
Colorado Springs, CO
-
4,280
62,168
-
4,280
62,168
5,328
1605 Elm Creek View
Colorado Springs, CO
-
1,730
25,493
1,730
26,186
1,972
2818 Grand Vista Circle
Columbia, TN
-
2,295
-
2,295
1,218
5011 Trotwood Ave.
Columbia, SC
-
1,699
2,320
-
1,699
2,320
2601 Forest Drive
Columbia Heights, MN
-
14,175
14,338
2,738
3807 Hart Boulevard
Columbus, IN
-
3,190
-
3,190
2564 Foxpointe Dr.
Concord, NC
-
3,921
3,976
1,782
2452 Rock Hill Church Rd.
Concord, NH
-
1,760
43,179
1,760
43,813
9,027
239 Pleasant Street
Congleton, UK
-
2,036
5,120
2,104
5,293
Rood Hill
Conroe, TX
-
7,771
-
7,771
1,965
903 Longmire Road
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Coppell, TX
-
1,550
8,386
1,550
8,486
1,347
1530 East Sandy Lake Road
Corby, UK
-
1,228
5,144
1,157
5,613
25 Rockingham Road
Coventry, UK
-
1,962
13,830
2,028
14,297
1,430
Banner Lane, Tile Hill
Crawfordsville, IN
-
17,239
1,426
18,665
2,245
517 Concord Road
Dallastown, PA
-
1,377
16,802
-
1,377
16,802
100 West Queen Street
Danville, VA
-
3,954
4,676
1,963
149 Executive Ct.
Danville, VA
-
8,436
-
8,436
1,087
508 Rison Street
Daphne, AL
-
2,880
8,670
2,880
9,054
1,625
27440 County Road 13
Davenport, IA
-
2,017
-
2,017
815 East Locust Street
Davenport, IA
-
20,043
-
20,043
3800 Commerce Blvd.
Dayton, OH
-
1,188
5,414
-
1,188
5,414
1974 North Fairfield Road
Dearborn Heights, MI
-
1,197
3,396
-
1,197
3,396
26001 Ford Road
Decatur, GA
-
1,413
13,800
-
1,413
13,800
2722 North Decatur Road
Delray Beach, FL
-
1,158
13,576
-
1,158
13,576
16150 Jog Road
Delray Beach, FL
-
2,125
11,844
-
2,125
11,844
16200 Jog Road
Denton, TX
-
1,760
8,305
1,760
8,405
1,799
2125 Brinker Rd
Denver, CO
-
1,450
19,389
3,133
1,450
22,522
4,292
4901 South Monaco Street
Denver, CO
-
3,222
24,811
-
3,222
24,811
290 South Monaco Parkway
Derby, UK
-
2,359
8,539
-
2,359
8,539
Rykneld Road
Dover, DE
-
22,266
22,407
4,718
1080 Silver Lake Blvd.
Dublin, OH
-
1,393
2,912
-
1,393
2,912
4075 W. Dublin-Granville Road
Dubuque, IA
-
8,904
-
8,904
901 West Third Street
Dundalk, MD
-
1,770
32,047
1,770
32,831
6,877
7232 German Hill Road
Dunedin, FL
-
1,883
13,329
-
1,883
13,329
870 Patricia Avenue
Durham, NC
-
1,476
10,659
2,196
1,476
12,855
11,898
4434 Ben Franklin Blvd.
Eagan, MN
16,470
2,260
31,643
2,260
31,943
2,737
3810 Alder Avenue
East Brunswick, NJ
-
1,380
34,229
1,380
35,078
6,708
606 Cranbury Rd.
Eastbourne, UK
-
4,071
24,438
4,209
25,264
2,847
Carew Road
Easton, PA
-
1,109
7,502
-
1,109
7,502
4100 Freemansburg Avenue
Easton, PA
-
1,430
13,400
-
1,430
13,400
2600 Northampton Street
Easton, PA
-
1,620
10,052
-
1,620
10,052
4100 Freemansburg Avenue
Eden, NC
-
4,877
-
4,877
2,046
314 W. Kings Hwy.
Edmond, OK
-
8,388
-
8,388
1,543
15401 North Pennsylvania Avenue
Edmond, OK
-
1,810
14,849
2,630
1,810
17,479
2,118
1225 Lakeshore Drive
Edmond, OK
-
1,650
25,167
-
1,650
25,167
1,300
2709 East Danforth Road
Elizabeth City, NC
-
2,760
2,011
4,771
2,264
400 Hastings Lane
Elk Grove Village, IL
-
1,344
7,076
-
1,344
7,076
1940 Nerge Road Elk
Elk Grove Village, IL
-
3,733
18,751
-
3,733
18,751
1920 Nerge Road
Emeryville, CA
-
2,560
57,491
2,560
58,132
6,734
1440 40th Street
Englewood, NJ
-
4,514
4,540
1,075
333 Grand Avenue
Epsom, UK
36,932
20,159
34,803
2,053
20,840
36,175
1,933
450-458 Reigate Road
Eureka, KS
-
3,950
4,021
1820 E River St
Everett, WA
-
1,400
5,476
-
1,400
5,476
2,819
2015 Lake Heights Dr.
Exton, PA
-
3,600
27,267
-
3,600
27,267
501 Thomas Jones Way
Fairfax, VA
-
1,827
17,309
-
1,827
17,309
12469 Lee Jackson Mem Highway
(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:
Fairfax, VA
-
4,099
17,620
-
4,099
17,620
12475 Lee Jackson Memorial Highway
Fairhope, AL
-
9,119
9,231
1,656
50 Spring Run Road
Fall River, MA
-
5,829
4,856
10,685
5,463
1748 Highland Ave.
Fanwood, NJ
-
2,850
55,175
1,123
2,850
56,298
10,633
295 South Ave.
Faribault, MN
-
11,539
11,839
828 1st Street NE
Farmington, CT
-
1,693
10,459
-
1,693
10,459
45 South Road
Farnborough, UK
-
2,036
5,737
2,104
5,931
Bruntile Close, Reading Road
Fayetteville, PA
-
2,150
32,951
2,013
2,150
34,964
3,114
6375 Chambersburg Road
Fayetteville, NY
-
3,962
4,462
1,973
5125 Highbridge St.
Findlay, OH
-
1,800
-
1,800
1,019
725 Fox Run Rd.
Fishers, IN
-
1,500
14,500
-
1,500
14,500
3,540
9745 Olympia Dr.
Fishersville, VA
-
2,101
-
2,101
83 Cross Rd Ln
Flint, MI
-
1,271
18,056
-
1,271
18,056
3011 North Center Road
Florence, NJ
-
2,978
-
2,978
1,332
901 Broad St.
Florence, AL
-
13,049
13,240
3,575
3275 County Road 47
Flourtown, PA
-
1,800
14,830
1,800
15,096
3,297
350 Haws Lane
Flower Mound, TX
-
1,800
8,414
1,800
8,514
1,539
4141 Long Prairie Road
Floyd, VA
-
3,618
-
3,618
237 Franklin Pike Rd SE
Flushing, MI
-
1,702
-
1,702
640 Sunnyside Drive
Flushing, MI
-
1,415
8,536
-
1,415
8,536
540 Sunnyside Drive
Folsom, CA
-
-
33,600
-
1,582
32,018
5,004
330 Montrose Drive
Forest City, NC
-
4,497
-
4,497
1,902
493 Piney Ridge Rd.
Fort Ashby, WV
-
19,566
19,922
4,054
Diane Drive, Box 686
Fort Collins, CO
-
3,680
58,608
-
3,680
58,608
5,006
4750 Pleasant Oak Drive
Fort Collins, CO
-
4,532
-
4,532
1005 East Elizabeth
Fort Wayne, IN
-
8,232
-
8,232
2,649
2626 Fairfield Ave.
Fort Worth, TX
-
13,615
5,086
18,701
4,213
425 Alabama Ave.
Fort Worth, TX
-
2,080
27,888
2,401
2,080
30,289
7,355
2151 Green Oaks Road
Fountain Valley, CA
-
5,259
9,379
-
5,259
9,379
11680 Warner Avenue
Franconia, NH
-
11,320
11,390
2,433
93 Main Street
Fredericksburg, VA
-
1,000
20,000
1,200
1,000
21,200
7,399
3500 Meekins Dr.
Fredericksburg, VA
-
1,130
23,202
-
1,130
23,202
2,704
140 Brimley Drive
Fresno, CA
-
2,500
35,800
2,500
35,918
9,497
7173 North Sharon Avenue
Ft. Myers, FL
-
1,110
10,562
-
1,110
10,562
15950 McGregor Boulevard
Ft. Myers, FL
-
2,139
18,240
-
2,139
18,240
1600 Matthew Drive
Ft. Myers, FL
-
2,502
9,744
-
2,502
9,744
13881 Eagle Ridge Drive
Galesburg, IL
-
1,708
3,841
-
1,708
3,841
280 East Losey Street
Gardner, KS
-
2,800
2,893
869 Juniper Terrace
Gardnerville, NV
-
1,143
10,831
1,118
1,164
11,928
8,904
1565-A Virginia Ranch Rd.
Gastonia, NC
-
6,129
-
6,129
2,535
1680 S. New Hope Rd.
Gastonia, NC
-
3,096
3,118
1,355
1717 Union Rd.
Gastonia, NC
-
5,029
5,149
2,143
1750 Robinwood Rd.
Geneva, IL
-
1,502
16,198
-
1,502
16,198
2388 Bricher Road
Georgetown, TX
-
2,100
-
2,100
1,177
2600 University Dr., E.
Gig Harbor, WA
-
1,560
15,947
1,583
16,199
4,269
3213 45th St. Court NW
(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:
Gig Harbor, WA
-
3,000
4,463
-
3,000
4,463
3309 45th Street Court Northwest
Glen Ellyn, IL
-
1,496
6,636
-
1,496
6,636
2S706 Park Boulevard
Granbury, TX
-
2,550
2,940
2,550
3,717
916 East Highway 377
Grand Ledge, MI
-
1,150
16,286
5,119
1,150
21,405
4,313
4775 Village Dr
Granger, IN
-
1,670
21,280
2,401
1,670
23,681
5,011
6330 North Fir Rd
Grapevine, TX
-
2,220
17,648
-
2,220
17,648
1,554
4545 Merlot Drive
Great Falls, MT
-
6,007
-
6,007
1801 9th Street South
Greeley, CO
-
1,077
18,051
-
1,077
18,051
5300 West 29th Street
Greenfield, WI
-
-
15,204
-
14,314
2,085
5017 South 110th Street
Greensboro, NC
-
2,970
3,524
1,506
5809 Old Oak Ridge Rd.
Greensboro, NC
-
5,507
1,013
6,520
2,770
4400 Lawndale Dr.
Greenville, SC
-
1,751
8,774
-
1,751
8,774
600 Sulphur Springs Road
Greenville, SC
-
1,445
-
1,445
601 Sulphur Springs Road
Greenville, NC
-
4,393
4,561
1,882
2715 Dickinson Ave.
Greenwood, IN
-
1,550
22,770
1,550
22,851
4,932
2339 South SR 135
Grosse Pointe, MI
-
2,386
-
2,386
21401 Mack Avenue
Groton, CT
-
2,430
19,941
2,430
20,909
4,784
1145 Poquonnock Road
Hamilton, NJ
-
4,469
-
4,469
1,990
1645 Whitehorse-Mercerville Rd.
Hanahan, SC
-
1,944
3,988
-
1,944
3,988
1800 Eagle Landing Boulevard
Hanford, UK
-
1,382
9,829
1,428
10,161
1,453
Bankhouse Road
Harrisburg, PA
-
12,826
-
12,826
2625 Ailanthus Lane
Harrow, UK
-
7,402
8,266
7,652
8,545
177 Preston Hill
Hatboro, PA
-
-
28,112
1,771
-
29,883
6,096
3485 Davisville Road
Hatboro, PA
-
1,192
7,611
-
1,192
7,611
779 West County Line Road
Hatfield, UK
-
2,924
7,527
3,023
7,781
1,121
St Albans Road East
Hattiesburg, MS
-
13,469
-
13,469
2,732
217 Methodist Hospital Blvd
Hemet, CA
-
6,224
8,414
-
6,224
8,414
1717 West Stetson Avenue
Henry, IL
-
1,860
3,689
-
1,860
3,689
1650 Old Indian Town Road
Hermitage, TN
-
1,500
9,943
1,500
10,131
1,953
4131 Andrew Jackson Parkway
Herne Bay, UK
-
1,900
24,353
1,602
1,964
25,891
3,934
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
2,205
1568 Skeet Club Rd.
High Point, NC
-
2,185
2,595
1,149
1564 Skeet Club Rd.
High Point, NC
-
3,395
3,423
1,450
201 W. Hartley Dr.
High Point, NC
-
4,143
-
4,143
1,743
1560 Skeet Club Rd.
Highland Park, IL
-
2,820
15,832
2,820
16,021
2,557
1651 Richfield Avenue
Highlands Ranch, CO
-
3,721
4,983
8,704
2,303
9160 S. University Blvd.
Hillsboro, OH
-
1,792
6,341
-
1,792
6,341
1141 Northview Drive
Hinckley, UK
-
2,159
4,194
2,232
4,336
Tudor Road
Hindhead, UK
44,662
17,852
48,645
2,466
18,455
50,508
2,649
Portsmouth Road
Hinsdale, IL
-
4,033
24,287
-
4,033
24,287
600 W Ogden Avenue
Hockessin, DE
-
1,120
6,308
1,247
1,120
7,555
100 Saint Claire Drive
Holton, KS
-
7,460
7,473
410 Juniper Dr
Homewood, IL
-
2,395
7,652
-
2,395
7,652
940 Maple Avenue
(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:
Houston, TX
-
1,040
31,965
4,969
1,040
36,934
7,493
505 Bering Drive
Howard, WI
-
32,122
32,132
1,099
2790 Elm Tree Hill
Huntingdon Valley, PA
-
1,150
3,730
-
1,150
3,730
3430 Huntingdon Pike
Hyattsville, MD
-
4,017
2,298
-
4,017
2,298
6500 Riggs Road
Independence, VA
-
1,082
6,767
-
1,082
6,767
400 S Independence Ave
Indianapolis, IN
-
14,688
-
14,688
1,837
1635 N Arlington Avenue
Indianapolis, IN
-
1,105
6,645
-
1,105
6,645
8549 South Madison Avenue
Jackson, NJ
-
6,500
26,405
3,107
6,500
29,512
4,577
2 Kathleen Drive
Jacksonville, FL
-
25,231
-
25,231
1,645
5939 Roosevelt Boulevard
Jacksonville, FL
-
-
26,381
1,691
1,691
26,381
1,716
4000 San Pablo Parkway
Jacksonville, FL
-
1,752
2,553
-
1,752
2,553
8495 Normandy Boulevard Jacksonville
Jacksonville, FL
-
2,182
9,491
-
2,182
9,491
3648 University Boulevard South
Jefferson Hills, PA
-
2,265
13,618
-
2,265
13,618
380 Wray Large Road
Jersey Shore, PA
-
8,107
-
8,107
1008 Thompson Street
Kansas City, KS
-
20,115
-
20,115
1,646
8900 Parallel Parkway
Katy, TX
-
1,778
22,622
-
1,778
22,622
1,047
24802 Kingsland Boulevard
Kenner, LA
-
1,100
10,036
1,100
10,385
9,529
1600 Joe Yenni Blvd
Kensington, MD
-
1,753
18,626
-
1,753
18,626
4301 Knowles Avenue
Kenwood, OH
-
11,043
-
11,043
4580 East Galbraith Road
Kettering, OH
-
1,229
4,703
-
1,229
4,703
3313 Wilmington Pike
King of Prussia, PA
-
14,780
-
14,780
620 West Valley Forge Road
King of Prussia, PA
-
1,205
4,727
-
1,205
4,727
600 West Valley Forge Road
Kingsford, MI
-
1,362
10,598
-
1,362
10,598
1225 Woodward Avenue
Kingston, PA
-
5,711
-
5,711
200 Second Avenue
Kingston upon Thames, UK
53,595
33,063
46,696
2,926
34,181
48,504
2,573
Coombe Lane West
Kirkland, WA
-
1,880
4,315
1,880
4,998
1,911
6505 Lakeview Dr.
Kirkstall, UK
-
2,437
9,414
2,519
9,733
1,396
29 Broad Lane
Kokomo, IN
-
16,044
-
16,044
2,001
2200 S. Dixon Rd
Lacey, WA
-
2,582
18,180
-
2,582
18,180
4524 Intelco Loop SE
Lafayette, LA
-
1,928
10,483
1,928
10,509
4,581
204 Energy Parkway
Lafayette, CO
-
1,420
20,192
-
1,420
20,192
2,001
329 Exempla Circle
Lafayette, IN
-
16,833
16,834
1,870
2402 South Street
Lakeway, TX
-
5,142
23,203
-
5,142
23,203
3,272
2000 Medical Dr
Lakewood, CO
-
2,160
28,091
2,160
28,153
3,561
7395 West Eastman Place
Lakewood Ranch, FL
-
6,714
1,988
8,702
1,484
8230 Nature's Way
Lakewood Ranch, FL
-
1,000
22,388
-
1,000
22,388
3,822
8220 Natures Way
Lancaster, PA
-
1,680
14,039
-
1,680
14,039
31 Millersville Road
Lancaster, PA
-
1,011
7,504
-
1,011
7,504
100 Abbeyville Road
LaPlata, MD
-
19,068
19,534
4,198
One Magnolia Drive
Largo, MD
-
3,361
3,623
-
3,361
3,623
600 Largo Road
Largo, FL
-
1,166
3,427
-
1,166
3,427
300 Highland Avenue Northeast
Las Vegas, NV
-
23,420
-
23,420
4,594
2500 North Tenaya Way
Laureldale, PA
-
1,171
14,424
-
1,171
14,424
2125 Elizabeth Avenue
Lawrence, KS
-
8,716
-
8,716
1,471
3220 Peterson Road
Leawood, KS
-
2,490
32,493
2,209
5,610
31,582
7,303
4400 West 115th Street
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Lebanon, PA
-
10,370
-
10,370
100 Tuck Court
Lebanon, PA
-
1,214
5,962
-
1,214
5,962
900 Tuck Street
Lee, MA
-
18,135
19,061
8,404
600 & 620 Laurel St.
Leeds, UK
-
1,974
13,239
2,041
13,687
1,305
100 Grove Lane
Leicester, UK
-
3,060
24,410
3,163
25,235
3,953
307 London Road
Lenoir, NC
-
3,748
4,389
1,842
1145 Powell Rd., N.E.
Lethbridge, AB
1,312
1,214
2,750
1,232
2,793
785 Columbia Boulevard West
Lexana, KS
-
1,770
1,922
8710 Caenen Lake Rd
Lexington, NC
-
3,900
1,015
4,915
2,127
161 Young Dr.
Libertyville, IL
-
6,500
40,024
-
6,500
40,024
8,481
901 Florsheim Dr
Libertyville, IL
-
2,993
11,550
-
2,993
11,550
1500 South Milwaukee
Lichfield, UK
-
1,382
30,324
1,071
1,428
31,349
3,020
Wissage Road
Lillington, NC
-
17,579
-
17,579
2,112
54 Red Mulberry Way
Lillington, NC
-
16,451
-
16,451
1,855
2041 NC-210 N
Lincoln, NE
-
13,807
13,902
3,154
7208 Van Dorn St.
Lititz, PA
-
1,200
13,836
-
1,200
13,836
80 West Millport Road
Livermore, CA
-
4,100
24,996
-
4,100
24,996
2,642
35 Fenton Street
Livonia, MI
-
13,558
-
13,558
32500 Seven Mile Road
Livonia, MI
-
1,836
2,278
-
1,836
2,278
28550 Five Mile Road
Longview, TX
-
5,520
-
5,520
1,725
311 E Hawkins Pkwy
Longwood, FL
-
1,260
6,445
-
1,260
6,445
1,362
425 South Ronald Reagan Boulevard
Louisburg, KS
-
4,320
4,364
202 Rogers St
Louisville, KY
-
10,010
2,768
12,778
4,869
4604 Lowe Rd
Loxley, UK
-
1,369
15,668
1,416
16,198
2,474
Loxley Road
Lutherville, MD
-
1,100
19,786
1,744
1,100
21,530
4,472
515 Brightfield Road
Lynchburg, VA
-
16,114
-
16,114
1,964
189 Monica Blvd
Lynchburg, VA
-
2,904
3,697
-
2,904
3,697
2200 Landover Place
Lynnwood, WA
-
2,308
5,634
-
2,308
5,634
3701 188th Street
Macomb, IL
-
1,586
4,059
-
1,586
4,059
8 Doctors Lane
Macungie, PA
-
29,033
29,117
6,047
1718 Spring Creek Road
Manalapan, NJ
-
22,624
23,246
4,447
445 Route 9 South
Manassas, VA
-
7,446
7,976
3,092
8341 Barrett Dr.
Mankato, MN
-
1,460
32,104
1,460
32,404
2,620
100 Dublin Road
Mansfield, TX
-
5,251
-
5,251
1,659
2281 Country Club Dr
Marietta, OH
-
1,149
9,376
-
1,149
9,376
5001 State Route 60
Marietta, GA
-
2,406
12,233
-
2,406
12,233
4360 Johnson Ferry Place
Marietta, PA
-
1,050
13,633
1,050
13,903
1,226
2760 Maytown Road
Marion, IN
-
12,750
1,136
13,886
1,675
614 W. 14th Street
Marion, IN
-
9,190
10,014
1,432
505 N. Bradner Avenue
Marion, OH
-
2,768
17,420
-
2,768
17,420
400 Barks Road West
Marlborough, UK
-
2,677
6,822
2,768
7,053
The Common
Marlow, UK
-
9,068
39,720
-
9,068
39,720
2,869
210 Little Marlow Road
Martinsville, VA
-
-
-
-
-
Rolling Hills Rd. & US Hwy. 58
Marysville, WA
-
4,780
5,749
2,233
9802 48th Dr. N.E.
Matawan, NJ
-
1,830
20,618
1,830
20,784
4,158
625 State Highway 34
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Matthews, NC
-
4,738
-
4,738
2,031
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
1,881
2701 Alma Rd.
McMurray, PA
-
1,440
15,805
3,894
1,440
19,699
3,641
240 Cedar Hill Dr
Mechanicsburg, PA
-
1,350
16,650
-
1,350
16,650
3,344
4950 Wilson Lane
Medicine Hat, AB
2,156
5,566
5,650
65 Valleyview Drive SW
Menomonee Falls, WI
-
1,020
6,984
1,652
1,020
8,636
2,285
W128 N6900 Northfield Drive
Mentor, OH
-
1,827
9,941
-
1,827
9,941
8200 Mentor Hills Drive
Mercerville, NJ
-
9,929
10,102
2,315
2240 White Horse- Merceville Road
Meriden, CT
-
1,300
1,472
1,300
1,705
845 Paddock Ave
Merrillville, IN
-
11,699
11,853
3,430
9509 Georgia St.
Mesa, AZ
-
9,087
1,971
11,058
5,022
7231 E. Broadway
Miamisburg, OH
-
3,233
-
3,233
450 Oak Ridge Boulevard
Middleburg Heights, OH
-
7,780
-
7,780
2,946
15435 Bagley Rd.
Middleton, WI
-
4,006
4,606
1,915
6701 Stonefield Rd.
Midland, MI
-
11,025
5,522
16,547
2,992
2325 Rockwell Dr
Milton Keynes, UK
-
1,826
18,654
1,888
19,284
1,913
Tunbridge Grove, Kents Hill
Mishawaka, IN
-
16,113
-
16,113
2,067
60257 Bodnar Blvd
Moline, IL
-
2,946
18,677
-
2,946
18,677
833 Sixteenth Avenue
Monmouth Junction, NJ
-
6,209
6,295
1,522
2 Deer Park Drive
Monroe, NC
-
3,681
4,329
1,850
918 Fitzgerald St.
Monroe, NC
-
4,799
5,656
2,316
919 Fitzgerald St.
Monroe, NC
-
4,021
4,135
1,764
1316 Patterson Ave.
Monroe Township, NJ
-
3,250
27,771
3,250
28,041
2,200
319 Forsgate Drive
Monroeville, PA
-
1,216
12,753
-
1,216
12,753
120 Wyngate Drive
Monroeville, PA
-
1,237
3,642
-
1,237
3,642
885 MacBeth Drive
Montgomeryville, PA
-
1,176
9,827
-
1,176
9,827
640 Bethlehem Pike
Montville, NJ
-
3,500
31,002
1,171
3,500
32,173
6,238
165 Changebridge Rd.
Moorestown, NJ
-
6,400
23,875
6,400
23,902
3,239
250 Marter Avenue
Morehead City, NC
-
3,104
1,648
4,752
2,260
107 Bryan St.
Morrison, CO
-
2,720
16,261
-
2,720
16,261
150 Spring Street
Morton Grove, IL
-
1,900
19,374
1,900
19,533
3,728
5520 N. Lincoln Ave.
Moulton, UK
-
1,695
12,510
1,597
13,605
Northampton Lane North
Mount Pleasant, SC
-
-
17,200
4,052
13,149
3,228
1200 Hospital Drive
Mountainside, NJ
-
3,097
7,810
-
3,097
7,810
1180 Route 22
Nacogdoches, TX
-
5,754
-
5,754
1,792
5902 North St
Naperville, IL
-
3,470
29,547
-
3,470
29,547
6,382
504 North River Road
Naples, FL
-
1,222
10,642
-
1,222
10,642
6125 Rattlesnake Hammock Road
Naples, FL
-
1,672
26,170
-
1,672
26,170
1000 Lely Palms Drive
Naples, FL
-
1,854
12,402
-
1,854
12,402
3601 Lakewood Boulevard
Nashville, TN
-
4,910
29,590
-
4,910
29,590
8,321
15 Burton Hills Boulevard
Naugatuck, CT
-
1,200
15,826
1,200
16,025
3,479
4 Hazel Avenue
Needham, MA
-
1,610
12,667
-
1,610
12,667
5,327
100 West St.
New Moston, UK
-
1,480
4,378
1,530
4,526
90a Broadway
Newcastle Under Lyme, UK
-
1,110
5,655
1,148
5,846
Hempstalls Lane
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Newcastle-under-Lyme, UK
-
1,125
5,537
1,163
5,724
Silverdale Road
Newport News, VA
-
6,077
-
6,077
12997 Nettles Dr
Norman, OK
-
1,484
-
1,484
1701 Alameda Dr.
Norman, OK
-
1,480
33,330
-
1,480
33,330
5,571
800 Canadian Trails Drive
North Augusta, SC
-
2,558
-
2,558
1,348
105 North Hills Dr.
Northampton, UK
-
5,182
17,348
5,357
17,935
2,659
Cliftonville Road
Northampton, UK
-
2,013
6,257
2,081
6,469
Cliftonville Road
Northbrook, IL
-
1,298
13,341
-
1,298
13,341
3240 Milwaukee Avenue
Nuneaton, UK
-
3,325
8,983
3,437
9,286
1,326
132 Coventry Road
Nuthall, UK
-
1,628
6,263
1,684
6,475
172A Nottingham Road
Nuthall, UK
-
2,498
10,436
2,583
10,789
1,556
172 Nottingham Road
Oak Lawn, IL
-
2,418
5,428
-
2,418
5,428
9401 South Kostner Avenue
Oak Lawn, IL
-
3,876
7,988
-
3,876
7,988
6300 W 95th Street
Oakland, CA
-
4,760
16,143
4,760
16,252
1,936
468 Perkins Street
Ocala, FL
-
1,340
10,564
-
1,340
10,564
2,767
2650 SE 18TH Avenue
Ogden, UT
-
2,228
-
2,228
400 East 5350 South
Oklahoma City, OK
-
7,513
-
7,513
2,175
13200 S. May Ave
Oklahoma City, OK
-
7,017
-
7,017
1,993
11320 N. Council Road
Olathe, KS
-
1,930
19,765
1,930
20,318
1,758
21250 W 151 Street
Omaha, NE
-
10,230
-
10,230
2,369
11909 Miracle Hills Dr.
Omaha, NE
-
8,769
-
8,769
2,144
5728 South 108th St.
Ona, WV
-
15,998
16,220
1,400
100 Weatherholt Drive
Oneonta, NY
-
5,020
-
5,020
1,442
1846 County Highway 48
Orange Park, FL
-
2,201
4,018
-
2,201
4,018
570 Wells Road
Orem, UT
-
2,150
24,107
-
2,150
24,107
2,021
250 East Center Street
Osage City, KS
-
1,700
1,842
1403 Laing St
Osawatomie, KS
-
2,970
3,106
1520 Parker Ave
Ottawa, KS
-
6,590
6,634
2250 S Elm St
Overland Park, KS
-
4,500
29,105
38,441
8,230
63,816
15,377
6101 W 119th St
Overland Park, KS
-
1,540
16,269
1,670
17,082
3,342
9201 Foster
Overland Park, KS
-
2,840
2,932
14430 Metcalf Ave
Overland Park, KS
-
1,300
25,311
1,300
25,988
2,229
7600 Antioch Road
Owasso, OK
-
1,380
-
1,380
12807 E. 86th Place N.
Owensboro, KY
-
13,275
-
13,275
5,120
1205 Leitchfield Rd.
Owenton, KY
-
2,400
-
2,400
1,108
905 Hwy. 127 N.
Oxford, MI
-
1,430
15,791
-
1,430
15,791
3,625
701 Market St
Palestine, TX
-
4,320
1,300
5,620
1,814
1625 W. Spring St.
Palm Beach Gardens, FL
-
2,082
6,624
-
2,082
6,624
11375 Prosperity Farms Road
Palm Coast, FL
-
10,957
-
10,957
2,730
50 Town Ct.
Palm Desert, CA
-
6,195
8,922
-
6,195
8,922
74350 Country Club Drive
Palm Harbor, FL
-
1,306
13,811
-
1,306
13,811
2895 Tampa Road
Palm Harbor, FL
-
3,281
22,457
-
3,281
22,457
2851 Tampa Road
Palos Heights, IL
-
1,225
12,457
-
1,225
12,457
7880 West College Drive
Palos Heights, IL
-
3,431
28,812
-
3,431
28,812
7850 West College Drive
Palos Heights, IL
-
2,590
7,647
-
2,590
7,647
11860 Southwest Hwy
(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:
Panama City Beach, FL
-
6,402
7,022
1,161
6012 Magnolia Beach Road
Paola, KS
-
5,610
5,669
601 N. East Street
Paris, TX
-
5,452
-
5,452
4,421
750 N Collegiate Dr
Parma, OH
-
12,722
-
12,722
9205 Sprague Road
Parma, OH
-
1,833
10,318
-
1,833
10,318
9055 West Sprague Road
Paulsboro, NJ
-
3,264
8,026
-
3,264
8,026
550 Jessup Road
Pella, IA
-
6,716
6,805
1,135
2602 Fifield Road
Perrysburg, OH
-
1,456
5,433
-
1,456
5,433
10540 Fremont Pike
Perrysburg, OH
-
1,213
7,110
-
1,213
7,110
10542 Fremont Pike
Petoskey, MI
-
14,452
-
14,452
3,152
965 Hager Dr
Philadelphia, PA
-
2,930
10,433
3,536
2,930
13,969
3,206
1526 Lombard Street
Phillipsburg, NJ
-
21,175
21,413
4,650
290 Red School Lane
Phillipsburg, NJ
-
8,114
8,215
1,780
843 Wilbur Avenue
Pikesville, MD
-
-
2,488
-
-
2,488
8911 Reisterstown Road
Pikesville, MD
-
4,247
8,383
-
4,247
8,383
8909 Reisterstown Road
Pinehurst, NC
-
2,690
3,174
1,392
17 Regional Dr.
Piqua, OH
-
1,885
-
1,885
1,024
1744 W. High St.
Piscataway, NJ
-
3,100
33,501
-
3,100
33,501
1,423
10 Sterling Drive
Pittsburgh, PA
-
11,357
-
11,357
1125 Perry Highway
Pittsburgh, PA
-
1,005
15,164
-
1,005
15,164
505 Weyman Road
Pittsburgh, PA
-
1,140
3,166
-
1,140
3,166
550 South Negley Avenue
Pittsburgh, PA
-
3,790
-
3,790
2170 Rhine Street
Pittsburgh, PA
-
4,214
-
4,214
5609 Fifth Avenue
Pittsburgh, PA
-
1,480
9,715
-
1,480
9,715
1105 Perry Highway
Pittsburgh, PA
-
1,139
5,846
-
1,139
5,846
1848 Greentree Road
Pittsburgh, PA
-
1,750
8,572
6,322
1,750
14,894
3,340
100 Knoedler Rd.
Plainview, NY
-
3,990
11,969
1,186
3,990
13,155
2,774
150 Sunnyside Blvd
Plano, TX
-
1,840
20,152
1,840
20,712
1,579
3325 W Plano Parkway
Plattsmouth, NE
-
5,650
-
5,650
1,377
1913 E. Highway 34
Plymouth, MI
-
1,490
19,990
1,490
20,320
4,431
14707 Northville Rd
Potomac, MD
-
1,448
14,626
-
1,448
14,626
10718 Potomac Tennis Lane
Potomac, MD
-
4,119
14,921
-
4,119
14,921
10714 Potomac Tennis Lane
Pottstown, PA
-
4,565
-
4,565
724 North Charlotte Street
Pottsville, PA
-
3,560
-
3,560
420 Pulaski Drive
Prior Lake, MN
13,806
1,870
29,849
1,870
30,149
2,435
4685 Park Nicollet Avenue
Puyallup, WA
-
1,150
20,776
1,156
21,275
5,775
123 Fourth Ave. NW
Raleigh, NC
-
7,598
88,870
-
7,598
88,870
4,212
4030 Cardinal at North Hills St
Raleigh, NC
-
3,530
59,589
-
3,530
59,589
9,825
5301 Creedmoor Road
Raleigh, NC
-
2,580
16,837
-
2,580
16,837
2,965
7900 Creedmoor Road
Reading, PA
-
19,906
20,046
4,293
5501 Perkiomen Ave
Red Bank, NJ
-
1,050
21,275
1,050
21,861
4,176
One Hartford Dr.
Reidsville, NC
-
3,830
4,687
2,045
2931 Vance St.
Reno, NV
-
1,060
11,440
1,060
12,099
4,440
5165 Summit Ridge Road
Rexburg, ID
-
1,267
3,213
-
1,267
3,213
660 South 2nd West
Richardson, TX
-
1,468
12,979
-
1,468
12,979
410 Buckingham Road
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Richmond, IN
-
14,222
14,615
1,256
400 Industries Road
Richmond, VA
-
-
12,000
-
11,750
2,018
2220 Edward Holland Drive
Richmond, VA
-
3,261
17,980
-
3,261
17,980
1719 Bellevue Avenue
Richmond, VA
-
1,046
8,235
-
1,046
8,235
2125 Hilliard Road
Ridgeland, MS
-
7,675
8,112
3,162
410 Orchard Park
Roanoke, VA
-
4,483
-
4,483
4355 Pheasant Ridge Rd
Rochdale, MA
-
-
7,100
-
6,410
1,039
111 Huntoon Memorial Highway
Rockville Centre, NY
-
4,290
20,310
4,290
21,242
4,259
260 Maple Ave
Rockwall, TX
-
2,220
17,650
-
2,220
17,650
1,590
720 E Ralph Hall Parkway
Romeoville, IL
-
1,895
-
-
1,895
-
-
Grand Haven Circle
Roseville, MN
-
2,140
24,679
2,140
24,779
2,037
2750 North Victoria Street
Roswell, GA
-
1,107
9,627
1,127
1,114
10,747
8,139
655 Mansell Rd.
Roswell, GA
-
2,080
6,486
1,130
2,380
7,316
1,645
75 Magnolia Street
Rugeley, UK
-
1,900
10,262
1,964
10,609
1,603
Horse Fair
Ruston, LA
-
9,790
-
9,790
2,133
1401 Ezelle St
S Holland, IL
-
1,423
8,910
-
1,423
8,910
2045 East 170th Street
Salem, OR
-
5,171
5,172
2,706
1355 Boone Rd. S.E.
Salisbury, NC
-
5,697
5,865
2,422
2201 Statesville Blvd.
San Angelo, TX
-
1,050
24,689
1,221
1,050
25,910
3,073
6101 Grand Court Road
San Antonio, TX
-
1,499
12,662
-
1,499
12,662
15290 Huebner Road
San Antonio, TX
-
-
17,303
-
-
17,303
7,781
8902 Floyd Curl Dr.
San Bernardino, CA
-
3,700
14,300
3,700
14,987
3,865
1760 W. 16th St.
San Diego, CA
-
-
22,003
1,845
-
23,848
6,068
555 Washington St.
Sand Springs, OK
-
19,654
-
19,654
3,346
4402 South 129th Avenue West
Sarasota, FL
-
3,175
-
3,175
1,917
8450 McIntosh Rd.
Sarasota, FL
-
4,101
11,208
-
4,101
11,208
5401 Sawyer Road
Sarasota, FL
-
1,370
4,084
-
1,370
4,084
3250 12th Street
Sarasota, FL
-
2,792
11,177
-
2,792
11,177
5511 Swift Road
Sarasota, FL
-
3,360
19,140
-
3,360
19,140
3,681
6150 Edgelake Drive
Sarasota, FL
-
9,699
-
9,699
5509 Swift Road
Scranton, PA
-
17,609
-
17,609
2,032
2741 Blvd. Ave
Scranton, PA
-
12,144
12,145
1,400
2751 Boulevard Ave
Seminole, FL
-
1,165
8,977
-
1,165
8,977
9300 Antilles Drive
Seven Fields, PA
-
4,663
4,722
2,475
500 Seven Fields Blvd.
Severna Park, MD
-
2,120
31,273
2,120
32,081
6,616
24 Truckhouse Road
Sewell, NJ
-
3,127
14,095
-
3,127
14,095
378 Fries Mill Road
Shawnee, OK
-
1,400
-
1,400
3947 Kickapoo
Shelbyville, KY
-
3,870
4,500
1,579
1871 Midland Trail
Sherman, TX
-
5,221
-
5,221
1,696
1011 E. Pecan Grove Rd.
Silver Spring, MD
-
1,469
10,395
-
1,469
10,395
2505 Musgrove Road
Silver Spring, MD
-
4,678
11,683
-
4,678
11,683
2501 Musgrove Road
Silvis, IL
-
16,420
16,559
3,691
1900 10th St.
Sinking Spring, PA
-
1,393
19,848
-
1,393
19,848
3000 Windmill Road
Sittingbourne, UK
-
1,357
6,539
1,403
6,760
200 London Road
Smithfield, NC
-
5,680
-
5,680
2,363
830 Berkshire Rd.
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Smithfield, NC
-
8,216
-
8,216
250 Highway 210 West
South Bend, IN
-
17,770
-
17,770
2,128
52565 State Road 933
South Point, OH
-
1,135
9,390
-
1,135
9,390
7743 County Road 1
Southampton, UK
-
1,519
16,041
-
1,519
16,041
Botley Road, Park Gate
Southbury, CT
-
1,860
23,613
1,860
24,571
4,939
655 Main St
Spokane, WA
-
3,200
25,064
3,200
25,348
6,895
3117 E. Chaser Lane
Spokane, WA
-
2,580
25,342
2,580
25,537
5,958
1110 E. Westview Ct.
Spokane, WA
-
2,649
11,703
-
2,649
11,703
6025 North Assembly Street
Springfield, IL
-
-
10,100
-
9,332
2,107
701 North Walnut Street
Springfield, IL
-
13,378
1,085
14,463
1,707
3089 Old Jacksonville Road
St. Louis, MO
-
1,890
12,390
1,890
13,177
2,691
6543 Chippewa St
St. Paul, MN
-
2,100
33,019
2,100
33,119
2,698
750 Mississippi River
Stafford, UK
-
2,009
8,238
-
2,009
8,238
Stone Road
Stamford, UK
-
1,820
3,238
1,881
3,348
Priory Road
Statesville, NC
-
1,447
1,713
2441 E. Broad St.
Statesville, NC
-
6,183
6,191
2,514
2806 Peachtree Place
Statesville, NC
-
3,627
-
3,627
1,503
2814 Peachtree Rd.
Staunton, VA
-
6,391
-
6,391
1410 N Augusta St
Sterling Heights, MI
-
10,787
-
10,787
11095 East Fourteen Mile Road
Sterling Heights, MI
-
1,583
15,639
-
1,583
15,639
38200 Schoenherr Road
Stillwater, OK
-
1,400
-
1,400
1616 McElroy Rd.
Stratford-upon-Avon, UK
-
14,508
14,999
1,443
Scholars Lane
Stroudsburg, PA
-
16,313
-
16,313
2,096
370 Whitestone Corner Road
Summit, NJ
-
3,080
14,152
-
3,080
14,152
3,027
41 Springfield Avenue
Sun City West, AZ
-
1,250
21,778
1,250
22,378
4,357
13810 West Sandridge Drive
Sunbury, PA
-
7,246
-
7,246
800 Court Street Circle
Sunninghill, UK
-
11,632
42,233
-
11,632
42,233
1,689
Bagshot Road
Sunnyvale, CA
-
4,946
22,131
-
4,946
22,131
1150 Tilton Drive
Superior, WI
-
1,020
13,735
6,159
1,020
19,894
2,909
1915 North 34th Street
Tacoma, WA
-
2,522
8,576
-
2,522
8,576
5601 South Orchard Southtreet
Tampa, FL
-
1,315
6,913
-
1,315
6,913
14950 Casey Road
Terre Haute, IN
-
1,370
18,016
-
1,370
18,016
1,936
395 8th Avenue
Texarkana, TX
-
1,403
-
1,403
4204 Moores Lane
The Villages, FL
-
1,035
7,446
-
1,035
7,446
1,103
2450 Parr Drive
Thomasville, GA
-
12,520
13,060
2,093
423 Covington Avenue
Three Rivers, MI
-
1,258
2,761
-
1,258
2,761
517 South Erie Southtreet
Tomball, TX
-
1,050
13,300
1,050
14,140
2,805
1221 Graham Dr
Tonganoxie, KS
-
3,690
3,766
120 W 8th St
Topeka, KS
-
12,712
-
12,712
2,236
1931 Southwest Arvonia Place
Towson, MD
-
1,180
13,280
1,180
13,475
2,974
7700 York Road
Towson, MD
-
1,715
13,115
-
1,715
13,115
8101 Bellona Avenue
Towson, MD
-
3,100
6,468
-
3,100
6,468
509 East Joppa Road
Towson, MD
-
4,527
3,128
-
4,527
3,128
7001 North Charles Street
Troy, MI
-
1,381
24,452
-
1,381
24,452
925 West South Boulevard
Troy, OH
-
2,000
4,254
6,254
2,177
81 S. Stanfield Rd.
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Trumbull, CT
-
4,440
43,384
-
4,440
43,384
8,857
6949 Main Street
Tucson, AZ
-
6,179
3,370
9,549
1,678
5660 N. Kolb Road
Tulsa, OK
-
3,003
6,025
3,003
6,045
3,553
3219 S. 79th E. Ave.
Tulsa, OK
-
1,390
7,110
1,102
1,390
8,212
1,986
7220 S. Yale Ave.
Tulsa, OK
-
1,320
10,087
-
1,320
10,087
1,825
7902 South Mingo Road East
Tulsa, OK
-
1,100
27,007
-
1,100
27,007
1,388
18001 East 51st Street
Tulsa, OK
13,000
1,752
28,421
-
1,752
28,421
1,215
701 W 71st Street South
Tulsa, OK
-
9,410
-
9,410
7210 South Yale Avenue
Twinsburg, OH
-
1,446
5,921
-
1,446
5,921
8551 Darrow Road
Tyler, TX
-
5,268
-
5,268
1,651
5550 Old Jacksonville Hwy.
Union, SC
-
1,932
2,374
-
1,932
2,374
709 Rice Avenue
Valparaiso, IN
-
2,558
-
2,558
1,206
2601 Valparaiso St.
Valparaiso, IN
-
2,962
-
2,962
1,379
2501 Valparaiso St.
Vancouver, WA
-
2,503
28,401
-
2,503
28,401
2811 N.E. 139th Street
Venice, FL
-
1,150
10,674
-
1,150
10,674
2,717
1600 Center Rd.
Venice, FL
-
2,246
10,097
-
2,246
10,097
1450 East Venice Avenue
Vero Beach, FL
-
3,187
-
3,187
1,474
420 4th Ct.
Vero Beach, FL
-
3,263
-
3,263
1,518
410 4th Ct.
Virginia Beach, VA
-
1,540
22,593
-
1,540
22,593
2,639
5520 Indian River Rd
Voorhees, NJ
-
1,800
37,299
1,800
37,970
8,097
2601 Evesham Road
Voorhees, NJ
-
1,900
26,040
1,900
26,934
5,768
3001 Evesham Road
Voorhees, NJ
-
3,100
25,950
3,100
25,976
4,484
113 South Route 73
Voorhees, NJ
-
2,193
6,992
-
2,193
6,992
1086 Dumont Circle
W Palm Beach, FL
-
1,175
8,297
-
1,175
8,297
2330 Village Boulevard
W Palm Beach, FL
-
1,921
5,733
-
1,921
5,733
2300 Village Boulevard
Wabash, IN
-
14,588
14,589
1,825
20 John Kissinger Drive
Waconia, MN
-
14,726
4,495
19,221
3,580
500 Cherry Street
Wake Forest, NC
-
3,003
1,742
4,745
2,308
611 S. Brooks St.
Wallingford, PA
-
1,356
6,489
-
1,356
6,489
115 South Providence Road
Walnut Creek, CA
-
4,358
18,413
-
4,358
18,413
1975 Tice Valley Boulevard
Walnut Creek, CA
-
5,394
39,096
-
5,394
39,096
1226 Rossmoor Parkway
Walsall, UK
-
1,184
8,562
1,224
8,851
Little Aston Road
Wamego, KS
-
2,510
2,567
1607 4th St
Wareham, MA
-
10,313
1,701
12,014
5,527
50 Indian Neck Rd.
Warren, NJ
-
2,000
30,810
1,073
2,000
31,883
6,023
274 King George Rd
Waterloo, IA
-
3,031
-
3,031
201 West Ridgeway Avenue
Waukee, IA
-
1,870
31,878
1,075
1,870
32,953
5,402
1650 SE Holiday Crest Circle
Waxahachie, TX
-
5,763
-
5,763
1,680
1329 Brown St.
Wayne, NJ
-
1,427
16,751
-
1,427
16,751
800 Hamburg Turnpike
Weatherford, TX
-
5,261
-
5,261
1,662
1818 Martin Drive
Wellingborough, UK
-
1,480
5,724
1,530
5,917
159 Northampton
West Bend, WI
-
17,790
17,828
3,310
2130 Continental Dr
West Des Moines, IA
-
5,104
-
5,104
5010 Grand Ridge Drive
West Orange, NJ
-
1,347
20,467
-
1,347
20,467
510 Prospect Avenue
West Reading, PA
-
12,122
-
12,122
425 Buttonwood Street
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Triple-net:
Westerville, OH
-
8,287
3,105
11,392
9,722
690 Cooper Rd.
Westerville, OH
-
1,420
5,373
-
1,420
5,373
1060 Eastwind Drive
Westerville, OH
-
1,582
10,282
-
1,582
10,282
215 Huber Village Boulevard
Westfield, IN
-
15,964
15,965
1,981
937 E. 186th Street
Westfield, NJ
-
2,270
16,589
2,270
17,086
4,001
1515 Lamberts Mill Road
Westlake, OH
-
11,966
-
11,966
28400 Center Ridge Road
Weston Super Mare, UK
-
2,517
7,054
2,602
7,293
1,047
141b Milton Road
Wheaton, MD
-
3,864
3,790
-
3,864
3,790
11901 Georgia Avenue
Whippany, NJ
-
1,571
14,982
-
1,571
14,982
18 Eden Lane
White Lake, MI
-
2,920
20,179
2,920
20,271
4,516
935 Union Lake Rd
Wichita, KS
-
1,400
11,000
-
1,400
11,000
4,844
505 North Maize Road
Wichita, KS
-
8,873
-
8,873
1,792
10604 E 13th Street North
Wichita, KS
12,779
19,747
-
19,747
3,328
2050 North Webb Road
Wichita, KS
-
2,240
2,369
900 N Bayshore Dr
Wichita, KS
-
10,134
-
10,134
1,932
10600 E 13th Street North
Wilkes-Barre, PA
-
3,457
-
3,457
1548 Sans Souci Parkway
Williamsburg, VA
-
1,187
5,728
-
1,187
5,728
1811 Jamestown Rd
Williamsport, PA
-
6,926
-
6,926
300 Leader Drive
Williamsport, PA
-
1,899
-
1,899
101 Leader Drive
Williamstown, KY
-
6,430
-
6,430
2,501
201 Kimberly Lane
Willoughby, OH
-
1,774
8,655
-
1,774
8,655
37603 Euclid Avenue
Wilmington, DE
-
9,494
9,608
2,193
810 S Broom Street
Wilmington, DE
-
1,376
13,454
-
1,376
13,454
700 1/2 Foulk Road
Wilmington, DE
-
2,843
36,959
-
2,843
36,959
5651 Limestone Road
Wilmington, DE
-
2,266
9,503
-
2,266
9,503
700 Foulk Road
Wilmington, NC
-
2,991
-
2,991
1,560
3501 Converse Dr.
Wilmington, NC
-
15,355
-
15,355
1,854
3828 Independence Blvd
Windsor, VA
-
1,148
6,514
-
1,148
6,514
23352 Courthouse Hwy
Winston-Salem, NC
-
2,514
2,973
1,268
2980 Reynolda Rd.
Winter Garden, FL
-
1,110
7,937
-
1,110
7,937
1,382
720 Roper Road
Winter Springs, FL
-
1,152
14,826
-
1,152
14,826
1057 Willa Springs Drive
Witherwack, UK
-
6,915
7,149
1,027
Whitchurch Road
Wolverhampton, UK
-
1,573
6,678
1,626
6,904
1,000
378 Prestonwood Road
Woodbury, MN
-
1,317
20,935
1,317
21,233
1,057
2195 Century Avenue South
Woodstock, VA
-
5,108
-
5,108
803 S Main St
Worcester, MA
-
3,500
54,099
-
3,500
54,099
13,035
101 Barry Road
Worcester, MA
-
2,300
9,060
6,000
2,300
15,060
4,007
378 Plantation St.
Yardley, PA
-
14,918
-
14,918
493 Stony Hill Road
Yardley, PA
-
1,561
9,442
-
1,561
9,442
1480 Oxford Valley Road
Yeadon, PA
-
1,075
10,694
-
1,075
10,694
14 Lincoln Avenue
York, PA
-
9,357
-
9,357
200 Pauline Drive
York, PA
-
1,050
4,212
-
1,050
4,212
2400 Kingston Court
York, PA
-
1,121
7,586
-
1,121
7,586
1770 Barley Road
York, UK
-
2,961
8,266
3,061
8,545
Rosetta Way, Boroughbridge Road
Youngsville, NC
-
10,689
-
10,689
1,256
100 Sunset Drive
Zephyrhills, FL
-
2,131
6,671
-
2,131
6,671
38220 Henry Drive
Zionsville, IN
-
1,610
22,400
1,686
1,610
24,086
5,158
11755 N Michigan Rd
Triple-net Total
$
288,387
$
1,096,169
$
8,585,481
$
301,960
$
1,119,576
$
8,864,034
$
1,261,486
Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2018
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Outpatient Medical:
Addison, IL
$
6,052
$
$
19,089
$
-
$
$
19,089
$
-
303 West Lake Street
Akron, OH
-
12,105
12,106
2,993
701 White Pond Drive
Allen, TX
-
14,196
1,221
15,417
4,722
1105 N Central Expressway
Alpharetta, GA
-
14,757
15,205
5,141
11975 Morris Road
Alpharetta, GA
-
1,862
-
-
1,862
-
-
940 North Point Parkway
Alpharetta, GA
-
17,103
17,651
6,275
3300 Old Milton Parkway
Alpharetta, GA
-
18,902
1,640
20,542
6,627
3400-A Old Milton Parkway
Alpharetta, GA
-
1,769
36,152
1,805
1,769
37,957
13,445
3400-C Old Milton Parkway
Anderson, IN
-
21,077
-
21,077
1,300
3125 S. Scatterfield Rd.
Arcadia, CA
-
5,408
23,219
4,567
5,618
27,576
10,909
301 W. Huntington Drive
Arlington, TX
-
18,243
18,645
3,550
902 W. Randol Mill Road
Atlanta, GA
-
4,931
18,720
7,068
5,387
25,332
11,504
755 Mt. Vernon Hwy.
Atlanta, GA
-
1,947
24,248
1,973
2,184
25,984
7,822
975 Johnson Ferry Road
Atlanta, GA
-
-
43,425
1,972
-
45,397
12,796
5670 Peachtree-Dunwoody Road
Austin, TX
-
1,066
10,112
-
1,066
10,112
5301-B Davis Lane
Bardstown, KY
-
7,966
8,007
1,409
4359 New Shepherdsville Rd
Bartlett, TN
-
15,015
2,225
17,240
6,860
2996 Kate Bond Rd.
Bel Air, MD
-
-
24,769
-
24,818
1,724
12 Medstar Boulevard
Bellevue, NE
-
-
16,680
-
16,682
5,283
2510 Bellevue Medical Center Drive
Bettendorf, IA
-
-
7,110
-
7,183
2140 53rd Avenue
Beverly Hills, CA
-
20,766
40,730
3,400
20,766
44,130
6,159
9675 Brighton Way
Beverly Hills, CA
-
18,863
1,192
18,885
1,378
415 North Bedford
Beverly Hills, CA
-
19,863
31,690
1,058
19,863
32,748
4,403
416 North Bedford
Beverly Hills, CA
33,729
32,603
28,639
32,603
29,451
5,043
435 North Bedford
Beverly Hills, CA
78,271
52,772
87,366
52,772
87,876
11,291
436 North Bedford
Birmingham, AL
-
10,201
10,840
4,243
801 Princeton Avenue SW
Birmingham, AL
-
11,733
2,047
13,780
4,905
817 Princeton Avenue SW
Birmingham, AL
-
18,726
2,196
20,922
7,981
833 Princeton Avenue SW
Birmingham, AL
8,626
13,755
-
13,755
-
3485 Independence Drive
Boardman, OH
-
12,161
12,201
4,585
8423 Market St
Boca Raton, FL
-
12,312
12,988
3,622
9960 S. Central Park Boulevard
Boca Raton, FL
-
34,002
3,823
37,720
14,246
9970 S. Central Park Blvd.
Boerne, TX
-
12,951
13,369
3,535
134 Menger Springs Road
Boynton Beach, FL
-
2,048
7,692
1,374
2,185
8,929
3,798
8188 Jog Rd.
Boynton Beach, FL
-
2,048
7,403
1,631
2,185
8,897
3,902
8200 Jog Road
Boynton Beach, FL
-
5,611
8,423
13,928
5,714
10075 Jog Rd.
Boynton Beach, FL
-
13,324
40,369
2,925
14,049
42,569
11,591
10301 Hagen Ranch Road
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Outpatient Medical:
Bradenton, FL
-
1,184
9,799
1,184
10,216
1,896
315 75th Street West
Bradenton, FL
-
1,035
4,298
1,035
4,315
7005 Cortez Road West
Brandon, FL
-
1,437
7,006
-
1,437
7,006
2020 Town Center Boulevard
Bridgeton, MO
-
1,701
6,228
1,501
6,621
3440 De Paul Ln.
Bridgeton, MO
-
21,221
21,486
6,906
12266 DePaul Dr
Buckhurst Hill, UK
-
11,989
50,907
-
11,989
50,907
4,885
High Road
Burleson, TX
-
12,611
13,342
4,177
12001 South Freeway
Burnsville, MN
-
-
31,596
1,463
-
33,059
8,685
14101 Fairview Dr
Carmel, IN
-
2,280
19,238
2,475
19,987
7,581
12188-A North Meridian Street
Carmel, IN
-
2,026
21,559
2,186
21,585
8,691
12188-B North Meridian Street
Castle Rock, CO
-
13,004
13,591
3,008
2352 Meadows Boulevard
Castle Rock, CO
-
-
11,795
-
11,960
Meadows Boulevard
Cedar Park, TX
-
23,753
-
23,753
1,819
1401 Medical Parkway, Building 2
Chapel Hill, NC
5,259
1,970
8,874
-
1,970
8,874
-
6011 Farrington Road
Chapel Hill, NC
5,259
1,970
8,925
-
1,970
8,925
-
6013 Farrington Road
Chapel Hill, NC
14,949
5,681
25,035
-
5,681
25,035
-
2226 North Carolina Highway 54
Charleston, SC
-
2,773
25,928
2,815
26,010
4,988
325 Folly Road
Cincinnati, OH
-
-
17,880
18,128
3,561
3301 Mercy Health Boulevard
Claremore, OK
-
11,173
11,249
3,318
1501 N. Florence Ave.
Clarkson Valley, MO
-
-
35,592
-
-
35,592
12,590
15945 Clayton Rd
Clear Lake, TX
-
-
13,882
-
13,902
1,504
1010 South Ponds Drive
Columbia, MD
-
33,885
1,766
9,353
26,321
6,522
5450 & 5500 Knoll N Dr.
Columbia, MD
-
12,159
72,636
-
12,159
72,636
10710 Charter Drive
Columbia, MD
-
2,333
19,232
1,567
2,333
20,799
4,971
10700 Charter Drive
Coon Rapids, MN
-
-
26,679
1,123
-
27,802
5,356
11850 Blackfoot Street NW
Costa Mesa, CA
22,020
22,033
24,332
22,033
24,511
3,664
1640 Newport Boulevard
Cypress, TX
-
1,287
-
-
1,287
-
-
14940 Mueschke Road
Dade City, FL
-
1,211
5,511
-
1,211
5,511
1,476
13413 US Hwy 301
Dallas, TX
-
15,418
-
15,418
1,681
8196 Walnut Hill Lane
Dallas, TX
-
28,690
3,836
32,526
13,032
9330 Poppy Dr.
Dallas, TX
-
52,488
2,070
54,558
11,436
7115 Greenville Avenue
Dallas, TX
-
6,086
18,007
-
6,086
18,007
10740 North Central Expressway
Dayton, OH
-
6,919
7,281
3,039
1530 Needmore Road
Deerfield Beach, FL
-
2,408
7,809
2,540
8,470
3,356
1192 East Newport Center Drive
Delray Beach, FL
-
1,882
34,767
7,280
2,449
41,480
18,890
5130-5150 Linton Blvd.
Durham, NC
-
1,212
22,858
1,212
22,860
3,958
1823 Hillandale Road
Edina, MN
-
15,132
16,121
4,820
8100 W 78th St
El Paso, TX
-
17,075
2,457
19,532
8,868
2400 Trawood Dr.
Elmhurst, IL
-
39,562
-
39,562
-
133 E Brush Hill Road
Everett, WA
-
4,842
26,010
4,842
26,011
7,650
13020 Meridian Ave. S.
Fenton, MO
10,559
27,485
27,924
7,480
1011 Bowles Avenue
Fenton, MO
-
13,911
14,268
2,793
1055 Bowles Avenue
Florham Park, NJ
-
8,578
61,779
-
8,578
61,779
1,953
150 Park Avenue
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Outpatient Medical:
Flower Mound, TX
-
9,276
-
9,276
1,475
2560 Central Park Avenue
Flower Mound, TX
-
4,164
27,027
4,164
27,989
4,930
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
5,324
7916 Jefferson Boulevard
Fort Worth, TX
-
26,020
26,393
5,128
10840 Texas Health Trail
Fort Worth, TX
-
6,099
6,100
1,227
7200 Oakmont Boulevard
Franklin, TN
-
2,338
12,138
2,821
2,338
14,959
6,092
100 Covey Drive
Frisco, TX
-
-
18,635
1,534
-
20,169
7,805
4401 Coit Road
Frisco, TX
-
-
15,309
2,549
-
17,858
7,344
4461 Coit Road
Fullerton, CA
-
5,477
53,890
5,477
54,323
3,694
1950 Sunny Crest Drive
Gallatin, TN
-
21,801
1,868
23,645
8,066
300 Steam Plant Rd
Gardendale, AL
4,300
1,150
8,162
-
1,150
8,162
-
2217 Decatur Highway
Gig Harbor, WA
-
30,810
31,792
3,944
11511 Canterwood Blvd. NW
Glendale, CA
-
18,398
1,651
20,049
6,951
222 W. Eulalia St.
Gloucester, VA
-
2,128
9,169
-
2,128
9,169
-
5659 Parkway Drive
Grand Prairie, TX
-
6,086
-
6,086
2,096
2740 N State Hwy 360
Grapevine, TX
-
-
5,943
4,778
2,081
8,640
1,603
2040 W State Hwy 114
Grapevine, TX
-
3,365
15,669
1,661
3,365
17,330
3,778
2020 W State Hwy 114
Greeneville, TN
-
10,104
10,178
3,880
438 East Vann Rd
Greenwood, IN
-
8,316
26,384
-
8,316
26,384
6,879
1260 Innovation Parkway
Greenwood, IN
-
2,098
21,538
2,098
22,176
3,486
3000 S State Road 135
Greenwood, IN
-
1,262
7,045
1,262
7,053
1,589
333 E County Line Road
High Point, NC
-
2,659
29,069
2,659
29,234
6,581
4515 Premier Drive
Highland, IL
-
-
8,834
-
-
8,834
1,598
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
11,293
15655 Cypress Woods Medical Dr.
Houston, TX
-
3,102
32,323
4,489
3,242
36,672
7,580
1900 N Loop W Freeway
Houston, TX
-
3,688
13,313
3,688
13,445
3,449
10701 Vintage Preserve Parkway
Houston, TX
-
1,099
1,604
80,605
12,815
70,493
14,163
2727 W Holcombe Boulevard
Houston, TX
3,899
13,726
-
13,726
-
20207 Chasewood Park Drive
Howell, MI
-
2,000
13,928
2,000
14,731
1225 South Latson Road
Hudson, OH
-
2,587
13,720
2,868
14,127
4,921
5655 Hudson Drive
Humble, TX
-
-
9,941
-
-
9,941
1,036
8233 N. Sam Houston Parkway E.
Jackson, MI
-
17,367
17,436
4,502
1201 E Michigan Avenue
Jupiter, FL
-
2,252
11,415
3,422
2,636
14,453
5,598
550 Heritage Dr.
Jupiter, FL
-
2,825
5,858
1,082
3,036
6,729
3,037
600 Heritage Dr.
Killeen, TX
-
-
3,756
-
-
3,756
2301 S. Clear Creek
Killeen, TX
-
22,878
23,148
7,882
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
14,922
2,962
135 Bunton Creek Road
La Jolla, CA
-
12,855
32,658
12,855
33,363
5,946
4150 Regents Park Row
La Jolla, CA
-
9,425
26,525
9,425
27,067
3,912
4120 & 4130 La Jolla Village Drive
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Outpatient Medical:
La Quinta, CA
-
3,266
22,066
3,279
22,250
4,719
47647 Caleo Bay Drive
Lacey, WA
6,768
1,751
10,383
-
1,751
10,383
-
2555 Marvin Road Northeast
Lake St Louis, MO
-
14,249
14,453
5,048
400 Medical Dr
Lakeway, TX
-
2,801
-
-
2,801
-
-
Lohmans Crossing Road
Lakewood, CA
-
14,885
2,294
17,179
6,528
5750 Downey Ave.
Lakewood, WA
-
16,017
16,693
3,952
11307 Bridgeport Way SW
Land O Lakes, FL
-
3,025
26,249
-
3,025
26,249
1,096
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
1,214
2,319
5,826
2,708
2870 S. Maryland Pkwy.
Las Vegas, NV
-
15,287
1,484
16,771
6,416
1815 E. Lake Mead Blvd.
Las Vegas, NV
-
6,921
7,135
3,196
1776 E. Warm Springs Rd.
Lenexa, KS
-
17,926
18,216
5,492
23401 Prairie Star Pkwy
Lenexa, KS
-
13,766
-
13,766
1,751
23351 Prairie Star Parkway
Lincoln, NE
-
1,420
29,723
1,052
1,420
30,775
10,875
575 South 70th St
London, UK
-
5,229
11,551
-
5,229
11,551
1,108
17-19 View Road
London, UK
-
17,983
157,802
-
17,983
157,802
15,142
53 Parkside
London, UK
-
4,081
28,107
-
4,081
28,107
2,697
49 Parkside
Los Alamitos, CA
-
18,635
1,114
19,749
7,389
3771 Katella Ave.
Los Gatos, CA
-
22,386
2,410
24,796
11,137
555 Knowles Dr.
Loxahatchee, FL
-
1,637
5,048
1,280
1,719
6,246
2,713
12977 Southern Blvd.
Loxahatchee, FL
-
1,340
6,509
1,464
1,440
7,873
3,144
12989 Southern Blvd.
Loxahatchee, FL
-
1,553
4,694
1,544
1,650
6,141
2,655
12983 Southern Blvd.
Lynbrook, NY
27,745
10,028
37,319
-
10,028
37,319
-
444 Merrick Road
Marietta, GA
-
2,682
20,053
1,409
2,703
21,441
2,224
4800 Olde Towne Parkway
Melbourne, FL
-
3,439
50,461
3,538
51,164
9,227
2222 South Harbor City Boulevard
Menasha, WI
-
1,374
13,861
2,940
1,345
16,830
2,099
1550 Midway Place
Merced, CA
-
-
13,772
-
14,587
5,015
315 Mercy Ave.
Merriam, KS
-
8,005
1,088
9,093
3,256
8800 West 75th Street
Merriam, KS
-
-
10,222
4,517
14,295
5,210
8901 West 74th Street
Merriam, KS
-
1,257
24,911
1,257
24,975
6,116
9301 West 74th Street
Merrillville, IN
-
-
22,134
-
23,049
7,183
101 E. 87th Ave.
Mesa, AZ
-
1,558
9,561
1,347
1,558
10,908
4,756
6424 East Broadway Road
Mesquite, TX
-
3,834
-
3,834
1,035
1575 I-30
Mission Hills, CA
23,835
-
42,276
6,672
4,791
44,157
8,540
11550 Indian Hills Road
Missouri City, TX
-
1,360
7,146
1,360
7,208
7010 Highway 6
Mobile, AL
16,028
2,759
25,180
-
2,759
25,180
-
6144 Airport Boulevard
Moline, IL
-
-
8,783
-
8,852
1,179
3900 28th Avenue Drive
Monticello, MN
6,976
18,489
18,620
3,986
1001 Hart Boulevard
Moorestown, NJ
-
50,896
51,234
12,506
401 Young Avenue
Morrow, GA
-
8,064
8,309
4,320
6635 Lake Drive
Mount Juliet, TN
-
1,566
11,697
1,734
1,601
13,396
5,609
5002 Crossings Circle
(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:
Mount Vernon, IL
-
-
24,892
-
24,917
6,306
2 Good Samaritan Way
Murrieta, CA
-
-
47,190
-
47,253
18,061
28078 Baxter Rd.
Murrieta, CA
-
3,800
-
-
3,800
-
-
28078 Baxter Rd.
Nashville, TN
-
1,806
7,165
3,728
1,942
10,757
4,509
310 25th Ave. N.
Nassau Bay, TX
-
29,947
-
29,947
7,296
18100 St John Drive
Nassau Bay, TX
-
10,613
1,386
11,999
3,829
2060 Space Park Drive
New Albany, IN
-
2,411
16,494
2,411
16,524
2,981
2210 Green Valley Road
Niagara Falls, NY
-
1,433
10,891
1,721
11,044
5,761
6932 - 6934 Williams Rd
Niagara Falls, NY
-
8,362
8,672
3,298
6930 Williams Rd
Oklahoma City, OK
-
19,135
19,533
5,116
535 NW 9th Street
Oro Valley, AZ
-
18,339
1,052
19,391
6,798
1521 East Tangerine Rd.
Palmer, AK
-
8,335
-
8,335
2480 S Woodworth Loop
Palmer, AK
-
29,705
1,442
31,147
10,991
2490 South Woodworth Loop
Pasadena, TX
-
1,700
8,009
-
1,700
8,009
1,102
5001 E Sam Houston Parkway S
Pearland, TX
-
1,500
11,253
1,500
11,264
1,457
2515 Business Center Drive
Pearland, TX
-
9,594
32,753
9,807
32,731
5,033
11511 Shadow Creek Parkway
Pendleton, OR
-
-
10,312
-
10,692
1,362
3001 St. Anthony Way
Phoenix, AZ
-
1,149
48,018
13,128
1,149
61,146
25,399
2222 E. Highland Ave.
Pineville, NC
-
6,974
2,507
1,077
9,365
4,615
10512 Park Rd.
Plano, TX
-
5,423
20,698
5,423
21,252
12,431
6957 Plano Parkway
Plano, TX
-
83,209
2,668
85,877
20,969
6020 West Parker Road
Plantation, FL
-
8,563
10,666
4,461
8,575
15,115
7,703
851-865 SW 78th Ave.
Plantation, FL
-
8,848
9,262
1,442
8,908
10,644
6,782
600 Pine Island Rd.
Port Orchard, WA
10,172
2,810
22,716
-
2,810
22,716
-
450 South Kitsap Boulevard
Portland, ME
-
25,529
-
25,529
7,892
195 Fore River Parkway
Redmond, WA
-
5,015
26,697
1,080
5,015
27,777
8,340
18000 NE Union Hill Rd.
Reno, NV
-
1,117
21,972
2,068
1,117
24,040
9,409
343 Elm St.
Richmond, TX
-
2,000
9,118
2,000
9,125
22121 FM 1093 Road
Richmond, VA
-
2,969
26,697
3,059
27,489
8,796
7001 Forest Avenue
Rockwall, TX
-
17,197
17,340
4,240
3142 Horizon Road
Rogers, AR
-
1,062
28,680
3,206
1,062
31,886
9,999
2708 Rife Medical Lane
Rolla, MO
-
1,931
47,639
1,931
47,640
12,977
1605 Martin Spring Drive
Roswell, NM
-
5,850
-
5,850
1,870
601 West Country Club Road
Roswell, NM
-
15,984
16,025
4,578
350 West Country Club Road
Roswell, NM
-
17,171
-
17,171
4,082
300 West Country Club Road
Sacramento, CA
-
12,756
2,023
14,776
5,835
8120 Timberlake Way
Salem, NH
-
1,655
14,050
1,681
14,070
3,046
31 Stiles Road
San Antonio, TX
-
1,057
10,101
-
1,057
10,101
4,943
19016 Stone Oak Pkwy.
San Antonio, TX
-
1,038
9,173
1,758
1,096
10,873
5,389
540 Stone Oak Centre Drive
San Antonio, TX
-
4,518
31,041
4,087
4,593
35,053
10,558
5282 Medical Drive
San Antonio, TX
-
17,288
18,048
4,489
3903 Wiseman Boulevard
San Antonio, TX
-
3,050
12,073
-
3,050
12,073
5206 Research Drive
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Outpatient Medical:
Santa Clarita, CA
-
-
2,338
20,485
5,304
17,519
3,177
23861 McBean Parkway
Santa Clarita, CA
-
-
28,384
1,866
5,277
24,973
4,346
23929 McBean Parkway
Santa Clarita, CA
-
11,594
11,872
23871 McBean Parkway
Santa Clarita, CA
25,000
40,257
40,317
5,184
23803 McBean Parkway
Santa Clarita, CA
-
-
20,618
4,407
17,130
3,150
24355 Lyons Avenue
Sarasota, FL
-
47,325
4,118
51,443
13,413
1921 Waldemere Street
Seattle, WA
-
4,410
38,428
4,410
38,820
15,744
5350 Tallman Ave
Sewell, NJ
-
57,929
58,671
23,914
239 Hurffville-Cross Keys Road
Sewell, NJ
-
1,242
11,616
-
1,242
11,616
-
556 Egg Harbor Road
Shakopee, MN
5,654
11,412
12,262
4,159
1515 St Francis Ave
Shakopee, MN
9,541
18,089
18,118
5,061
1601 St Francis Ave
Shenandoah, TX
-
-
21,135
21,173
2,117
106 Vision Park Boulevard
Sherman Oaks, CA
-
-
32,186
3,228
3,121
32,293
6,038
4955 Van Nuys Boulevard
Silverdale, WA
13,378
3,451
21,176
-
3,451
21,176
-
2200 NW Myhre Road
Somerville, NJ
-
3,400
22,244
3,400
22,246
5,793
30 Rehill Avenue
Southlake, TX
-
3,000
-
-
3,000
-
-
Central Avenue
Southlake, TX
-
18,243
1,821
20,064
5,076
1545 East Southlake Boulevard
Southlake, TX
-
30,549
3,915
34,464
7,578
1545 East Southlake Boulevard
Springfield, IL
-
1,569
10,350
-
1,568
10,351
1,244
1100 East Lincolnshire Blvd
Springfield, IL
-
3,519
3,550
2801 Mathers Rd.
St Paul, MN
-
37,695
38,043
5,050
225 Smith Avenue N.
St. Louis, MO
-
17,247
2,068
19,315
7,425
2325 Dougherty Rd.
St. Paul, MN
-
2,706
39,507
2,701
39,821
12,101
435 Phalen Boulevard
Stamford, CT
-
-
41,153
3,071
-
44,224
2,403
29 Hospital Plaza
Suffern, NY
-
37,255
37,493
11,886
257 Lafayette Avenue
Suffolk, VA
-
1,566
11,511
1,620
11,525
4,693
5838 Harbour View Blvd.
Sugar Land, TX
-
3,543
15,532
-
3,543
15,532
5,290
11555 University Boulevard
Tacoma, WA
-
-
64,307
-
-
64,307
17,445
1608 South J Street
Tallahassee, FL
-
-
17,449
-
-
17,449
5,855
One Healing Place
Tampa, FL
-
4,319
12,234
-
4,319
12,234
2,803
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
1,628
2601 Thornton Lane
Timonium, MD
-
8,829
12,568
8,850
12,577
2118 Greenspring Drive
Tucson, AZ
-
1,302
4,925
1,325
5,892
2,886
2055 W. Hospital Dr.
Tustin, CA
-
3,345
3,345
14591 Newport Ave
Tustin, CA
-
3,361
12,039
1,880
3,361
13,919
2,891
14642 Newport Ave
Van Nuys, CA
-
-
36,187
-
-
36,187
9,842
6815 Noble Ave.
Voorhees, NJ
-
6,404
24,251
1,816
6,477
25,994
9,866
900 Centennial Blvd.
Voorhees, NJ
-
96,075
96,429
25,331
200 Bowman Drive
Waco, TX
-
2,594
-
2,594
-
6600 Fish Pond Rd
Waco, TX
14,930
2,250
28,632
-
2,250
28,632
-
601 Highway 6 West
Washington, PA
19,425
3,981
31,706
-
3,981
31,706
-
100 Trich Drive
Wausau, WI
-
2,050
12,175
-
2,050
12,175
1901 Westwood Center Boulevard
(Dollars in thousands)
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Description
Encumbrances
Land
Building & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Building & Improvements
Accumulated Depreciation(1)
Year Acquired
Year Built
Address
Outpatient Medical:
Waxahachie, TX
-
-
18,784
18,711
1,749
2460 N I-35 East
Wellington, FL
-
16,933
2,705
19,419
7,051
10115 Forest Hill Blvd.
Wellington, FL
-
13,697
1,756
15,261
5,163
1395 State Rd. 7
West Seneca, NY
-
22,435
4,230
1,665
25,917
10,390
550 Orchard Park Rd
Westlake Village, CA
6,360
2,487
9,776
-
2,487
9,776
1220 La Venta Drive
Westlake Village, CA
8,002
2,553
15,851
-
2,553
15,851
1250 La Venta Drive
Woodbridge, VA
-
16,629
-
16,629
-
12825 Minnieville Road
Zephyrhills, FL
-
3,875
27,270
-
3,875
27,270
6,850
38135 Market Square Dr
Zephyrhills, FL
-
5,927
29,082
-
5,927
29,082
2352 Bruce B Downs Boulevard
Outpatient Medical Total
$
386,737
$
645,891
$
5,233,682
$
357,411
$
712,257
$
5,524,727
$
1,276,138
Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2018
(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
$
-
$
$
10,044
$
-
$
-
$
8,696
$
-
153 Cardinal Drive
Agawam, MA
-
1,230
13,618
-
-
6,074
-
61 Cooper Street
Agawam, MA
-
15,304
-
-
6,511
-
55 Cooper Street
Agawam, MA
-
10,661
-
-
4,592
-
464 Main Street
Agawam, MA
-
10,562
-
-
4,537
-
65 Cooper Street
Ayer, MA
-
-
22,074
-
-
8,691
-
400 Groton Road
Beachwood, OH
-
1,260
23,478
-
-
10,503
-
3800 Park East Drive
Birmingham, UKG
-
21,321
-
-
13,200
-
5 Church Road, Edgbaston
Bridgewater, NJ
-
1,850
3,050
-
-
3,342
-
875 Route 202/206 North
Broadview Heights, OH
-
12,400
-
-
9,590
-
2801 E. Royalton Rd.
Canton, MA
-
8,201
-
-
2,626
-
One Meadowbrook Way
Centerville, MA
-
1,300
27,357
-
-
23,139
-
22 Richardson Road
Charles Town, WV
-
22,834
-
-
18,509
-
219 Prospect Ave
Cinnaminson, NJ
-
6,663
-
-
6,014
-
1700 Wynwood Drive
Cloquet, MN
-
4,660
-
-
4,285
-
705 Horizon Circle
Concord, NH
-
3,041
-
-
3,344
-
227 Pleasant Street
Dallas, TX
-
1,080
9,655
-
-
4,412
-
3611 Dickason Avenue
Gettysburg, PA
-
8,913
-
-
7,501
-
867 York Road
Glastonbury, CT
-
1,950
9,532
-
-
5,500
-
72 Salmon Brook Drive
Hamburg, PA
-
10,543
-
-
8,994
-
125 Holly Road
Houston, TX
-
5,090
9,471
-
-
7,840
-
15015 Cypress Woods Medical Drive
Lancaster, NH
-
-
-
-
63 Country Village Road
Langhorne, PA
-
1,350
24,881
-
-
3,551
-
262 Toll Gate Road
Lowell, MA
-
1,070
13,481
-
-
1,960
-
841 Merrimack Street
Lowell, MA
-
3,378
-
-
3,155
-
30 Princeton Blvd
Mendham, NJ
-
1,240
27,169
-
-
23,295
-
84 Cold Hill Road
Merriam, KS
-
-
1,996
-
-
-
-
7301 Frontage Street
Merriam, KS
-
-
5,862
-
-
-
-
9119 West 74th Street
Middletown, RI
-
2,480
24,628
-
-
21,727
-
303 Valley Road
Millville, NJ
-
29,944
-
-
24,559
-
54 Sharp Street
Monroe Twp, NJ
-
1,160
13,193
-
-
11,403
-
292 Applegarth Road
Mystic, CT
-
1,400
18,274
-
-
15,316
-
20 Academy Lane Mystic
Niantic, CT
-
1,320
25,986
-
-
25,167
-
417 Main Street
North Cape May, NJ
-
-
-
610 Town Bank Road
North Cape May, NJ
-
22,266
-
-
18,270
-
700 Townbank Road
Palm Springs, FL
-
4,066
-
-
2,061
-
1640 S. Congress Ave.
Palm Springs, FL
-
1,182
7,765
-
-
3,477
-
1630 S. Congress Ave.
(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:
Pennsauken, NJ
-
10,780
-
-
9,172
-
5101 North Park Drive
Providence, RI
-
2,655
21,910
-
-
16,021
-
700 Smith Street
Rockville, CT
-
1,500
4,835
-
-
5,073
-
1253 Hartford Turnpike
Sanatoga, PA
-
30,695
-
-
14,166
-
225 Evergreen Road
South Boston, MA
-
2,002
1,525
-
3,912
-
804 E. Seventh St.
South Windsor, CT
-
3,000
29,295
-
-
26,338
-
432 Buckland Road
Swanton, OH
-
6,370
-
-
4,160
-
401 W. Airport Hwy.
Troy, OH
-
16,730
-
-
10,730
-
512 Crescent Drive
Trumbull, CT
-
2,850
37,685
-
-
32,020
-
2750 Reservoir Avenue
Wallingford, CT
-
1,210
-
-
-
35 Marc Drive
Warwick, RI
-
2,400
24,635
-
-
21,633
-
75 Minnesota Avenue
Waterbury, CT
-
2,460
39,547
-
-
30,909
-
180 Scott Road
West Chester, PA
-
1,350
29,237
-
-
24,564
-
800 West Miner Street
West Orange, NJ
-
2,280
10,687
-
-
10,571
-
20 Summit Street
Westlake, OH
-
1,330
17,926
-
-
8,673
-
27601 Westchester Pkwy.
Wilbraham, MA
-
17,639
-
-
14,484
-
2387 Boston Road
Wilkes-Barre, PA
-
2,301
-
-
1,176
-
300 Courtright Street
Windsor, CT
-
2,250
8,539
-
-
10,218
-
One Emerson Drive
Windsor, CT
-
1,800
-
2,824
-
One Emerson Drive
Wyncote, PA
-
2,700
22,244
-
-
20,290
-
1245 Church Road
Assets Held For Sale Total
$
-
$
68,392
$
821,723
$
1,997
$
-
$
590,271
$
-
Initial Cost to Company
Gross Amount at Which Carried at Close of Period
Encumbrances
Land
Buildings & Improvements
Cost Capitalized Subsequent to Acquisition
Land
Buildings & Improvements
Accumulated Depreciation
Summary:
Seniors Housing Operating
$
1,810,587
$
1,331,171
$
14,047,033
$
1,206,757
$
1,373,258
$
15,211,900
$
2,962,334
Triple-net
288,387
1,096,169
8,585,481
301,960
1,119,576
8,864,034
1,261,486
Outpatient Medical
386,737
645,891
5,233,682
357,411
712,257
5,524,727
1,276,138
Construction in progress
-
-
194,365
-
-
194,365
-
Total continuing operating properties
2,485,711
3,073,231
28,060,561
1,866,128
3,205,091
29,795,026
5,499,958
Assets held for sale
-
68,392
821,723
1,997
-
590,271
-
Total investments in real property owned
$
2,485,711
$
3,141,623
$
28,882,284
$
1,868,125
$
3,205,091
$
30,385,297
$
5,499,958
(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
$
30,581,948
$
30,041,058
$
29,865,490
Acquisitions and development
4,598,670
1,276,636
2,834,279
Improvements
266,183
250,276
219,146
Deconsolidation of previously consolidated venture
-
(144,897
)
-
Impairment of assets
(71,336
)
(101,527
)
(37,207
)
Dispositions
(1,330,679
)
(1,203,247
)
(2,411,219
)
Foreign currency translation
(454,398
)
415,879
(429,431
)
Other(1)
-
47,770
-
Ending balance(2)
$
33,590,388
$
30,581,948
$
30,041,058
Accumulated depreciation:
Beginning balance
$
4,838,370
$
4,093,494
$
3,796,297
Depreciation and amortization expenses
950,459
921,720
901,242
Amortization of above market leases
6,375
7,303
7,909
Disposition and other
(205,562
)
(192,029
)
(514,651
)
Foreign currency translation
(89,684
)
7,882
(97,303
)
Ending balance
$
5,499,958
$
4,838,370
$
4,093,494
(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, 2018.
Welltower Inc.
Schedule IV - Mortgage Loans on Real Estate
December 31, 2018
(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%
12/15/2020
$
-
$
-
$
28,000
$
9,247
$
-
California
Triple-net
7.95%
1/1/2022
-
131,100
53,172
-
United Kingdom
Triple-net
8.54%
12/14/2018
-
-
2,678
1,284
-
United Kingdom
Triple-net
8.00%
8/24/2022
-
-
11,041
6,638
-
United Kingdom
Triple-net
8.55%
7/1/2019
-
-
14,600
14,599
-
United Kingdom
Triple-net
7.00%
3/15/2022
-
-
26,748
20,283
-
United Kingdom
Triple-net
8.28%
7/6/2019
-
-
19,131
19,131
-
Oklahoma
Triple-net
9.32%
11/1/2019
-
-
11,610
11,595
-
Pennsylvania
Triple-net
8.47%
3/1/2022
-
-
15,530
14,237
-
Florida
Triple-net
10.20%
6/23/2021
-
-
17,100
17,385
-
North Carolina
Triple-net
7.60%
12/18/2023
-
-
30,883
3,000
-
Texas
Outpatient medical
7.60%
1/19/2025
-
-
3,740
3,733
-
United Kingdom
Triple-net
8.50%
12/31/2021
-
-
19,104
6,505
-
First mortgages relating to multiple properties:
4 properties in Texas
Triple-net
7.95%
1/1/2022
-
106,218
65,162
Second mortgages relating to 1 property located in:
Texas
Triple-net
12.17%
5/1/2019
-
11,367
3,100
3,100
Totals
$
11,367
$
440,583
$
249,071
$
-
Year Ended December 31,
Reconciliation of mortgage loans:
(in thousands)
Balance at beginning of year
$
306,120
$
485,735
$
635,492
Additions:
New mortgage loans
25,290
6,706
8,223
Draws on existing loans
36,458
58,224
92,815
Total Additions
61,748
64,930
101,038
Deductions:
Collections of principal
(116,905
)
(180,135
)
(191,134
)
Conversions to real property
-
-
(45,044
)
Change in allowance for loan losses and charge-offs
-
(71,535
)
(3,053
)
Total deductions
(116,905
)
(251,670
)
(239,231
)
Change in balance due to foreign currency translation
(1,892
)
7,125
(11,564
)
Balance at end of year
$
249,071
$
306,120
$
485,735

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Stock Performance Metrics:
Return: -0.01378580182790756
1-Day Return: $1_day_return
3-Day Return: $3_day_return
5-Day Return: $5_day_return
10-Day Return: $10_day_return
20-Day Return: $20_day_return
40-Day Return: $40_day_return
60-Day Return: $60_day_return
80-Day Return: $80_day_return
100-Day Return: $100_day_return
150-Day Return: $150_day_return
252-Day Return: $252_day_return