ANNUAL
REPORT
2 0 1 6
LETTER FROM
THE CEO
Dear Shareholders,
2016 was a year of significant
accomplishments and important
transitions. We repositioned our portfolio
to strengthen our focus on premium
private pay health care real estate,
continued to invest in the best markets
with the best operating partners, and
reinforced the strength of our balance
sheet. The power of our unique operating
We believe there will always be a place
platform continues to allow us to identify
for post-acute and long-term care
Thomas J. DeRosa
CEO, Welltower Inc.
and capture significant efficiencies and
high-quality growth opportunities as
health care delivery transitions from a
fee-for-service to a value-based model.
Successful Portfolio Repositioning
facilities in the overall health care delivery
continuum, particularly as health systems
evolve care delivery away from high-cost
hospital settings. However, the value of
these assets in the public markets today
is constrained by uncertainty surrounding
government funding for Medicare and
Central to our recent efforts has been the
Medicaid in the U.S. In light of this, it is
disposition of non-strategic assets, most
in the best interests of our shareholders
notably the sale of a portfolio of long-
to be selective in our exposure to
term/post-acute care facilities master
certain asset classes and operators and
leased to Genesis Healthcare, Inc. and
to proactively recycle capital to best
seniors housing properties master leased
position our portfolio, thereby limiting
to Brookdale Senior Living Inc. These
our risk exposure.
strategic moves further deleveraged
our balance sheet, drove a significant
The sale of Genesis and Brookdale assets
increase in our private pay revenue mix
mentioned earlier to a joint venture
to 92.8% and reduced our long-term/
with Cindat Capital Management and
post-acute care concentration to 13.3%*.
Union Life Insurance Co. Ltd. marked yet
We expect to generate a further $2 billion
another milestone in our ability to attract
of disposition proceeds in 2017 after
non-U.S. institutional capital – an investor
generating $2.8 billion in 2016.
class that historically has been absent
from the U.S. health care real estate
seniors housing communities run by
sector. The $930 million transaction is
great operators. Our Board of Directors
the latest example of how we’ve aligned
declared a cash dividend for the quarter
with new capital partners who see
ended December 31, 2016 of $0.87 per
aging demographics and health care
share and on February 21, 2017, we paid
trends that drive the need for innovative
our 183rd consecutive quarterly cash
infrastructure as an attractive global
dividend.
investment theme. Welltower executed
the industry’s first
partnership with a
non-U.S. institutional
partner in 2014 with
Canada’s Public
Sector Pension
Investment Board
(PSP Investments)
and followed in 2015
with two significant
investments with
the Canada Pension
Plan Investment
Board (CPPIB), one
of the world’s largest
public pension
funds. Welltower’s
Welltower’s ability to
attract new sources of
long-term institutional
capital into the health
care real estate
asset class reaffirms
the quality of our
platform and our
strategy.
We’re proud of our
strong balance sheet
and ended the year
with a net debt
to undepreciated
book capitalization
ratio of 37.4% (an
improvement of 210
basis points from
2015) and a net
debt to adjusted
EBITDA ratio of
5.4 times*.
Our
successful portfolio
repositioning and
deleveraging efforts,
along with our strong
ability to attract new sources of long-
balance sheet speak for themselves
term institutional capital into the health
and were recognized in credit rating
care real estate asset class reaffirms the
upgrades from both Moody’s and
quality of our platform and our strategy.
Standard and Poor’s to Baa1 and BBB+,
Another Strong Year of Financial
Performance
Welltower delivered solid financial
results in 2016 led by average total
portfolio same store NOI growth of 3%
and a 4% increase in normalized funds
from operations per diluted share.*
We have enjoyed strong pricing power
throughout 2016 in the U.S., U.K. and
Canada because consumers in major
respectively. These upgrades translate
into added value for our shareholders
through a reduced cost of capital. We
once again enhanced our financial
flexibility with an increased, extended
and lower-priced credit facility to $3.7
billion.
Best Assets with the Best Operators
in the Best Markets
Our portfolio is of approximately 1,400
metro markets want to live in modern
properties concentrated in major, high-
growth markets in the U.S., Canada and
by Welltower’s proprietary data and
the U.K. and includes facilities in and
systems that leverage our scale and drive
around large metropolitan areas namely
down operating costs, represent one of
Los Angeles, New York, Seattle, London
the unique advantages of our platform.
and Toronto. We established a key tenet
Together, we are better positioned to
of our investment approach years ago
drive occupancy and profitability while
to target markets where there is job
also supporting outstanding levels of
creation and population and income
service and care to building residents.
growth. When seniors housing was first
introduced, it was largely built where
In 2016, we took our vision
older people lived – suburbs and Sunbelt
for aging and living well
states. But the aging population today
increasingly wants to live in or near
to an urban market that is
dramatically underserved
major cities. Welltower’s seniors housing
in quality residential
operating presence in top metro markets
on the U.S. East and West coasts, as
well as in Canada and the U.K., creates a
distinct competitive advantage for us.
care options for frail and
demented elderly — New
York City. Together with
the global real estate
development company
Our strategy, rooted in long-term
Hines, we announced the
operating partner relationships, is a
development of a 16-story
continued source of differentiation that
assisted living and memory
cannot be easily replicated. The Vintage
care community at the
transaction in 2016 is representative
corner of East 56th Street
of how we operationalize our strategic
and Lexington Avenue
focus on premium properties with
in Midtown Manhattan.
best-in-class operators in high barrier-
Demographic trends point
to-entry markets. The $3 billion of pro
to significant growth in New
rata gross investments we made in 2016
York City’s elderly population
included the $1.15 billion acquisition
over the next decade and
of the Vintage Senior Living portfolio
the current availability of
of 19 seniors housing properties
assisted living is five times
concentrated in premier locations in
less than the national
We are very
fortunate to
work with
partners who
share our vision
to connect
senior care
with health
care provider
networks to
coordinate
patient care,
and ultimately
deliver better
outcomes at a
lower cost.
Northern and Southern California. The
average. Welltower is proud to be at
mix of independent living, assisted living
the forefront of developing senior living
and memory care assets was easily
environments with the latest innovations
transitioned to three of our leading
focused on residents’ needs for cognitive
partners – Senior Resource Group,
engagement, mobility and nutrition,
Sunrise Senior Living and Silverado
and continued access to neighborhoods
Senior Living – who already operate
and cultural institutions the city has to
in these West coast markets. These
offer. The community is expected to be
well respected operators, supported
completed in late 2019.
Driving Collaboration Across the
Health Care Continuum
Medicine in Baltimore, MD. With over
250 properties and 17 million square
We are very fortunate to work with
partners who share our vision to connect
senior care with health care provider
networks to coordinate patient care, and
ultimately deliver better outcomes at
a lower cost. Our commitment is more
important now than ever: We live in a
world where 65 to 85-year-old adults
are the fastest growing population in
most developed countries. As people
age, they tend to have chronic diseases
and multiple health problems, requiring
complex and integrated treatment and
care. We need to build infrastructure that
accommodates this demographic reality
– out of economic necessity as well as
for the sustainability of how health care
is delivered.
Health care is still in its early days of
transitioning to lower acuity settings
Moving forward,
we are committed
to using our
capabilities,
expertise, resources
and partnerships to
help make the world
a place where future
generations not only
live longer, but are
better able to
live well.
and to more connected
networks of micro-
hospitals, outpatient
medical and post-
acute care centers,
as well as assisted
living and memory
care communities.
Welltower’s full-service
outpatient medical
management group
already serves many of
the nation’s top health
and hospital systems
including: Memorial
Hermann in Houston,
TX; Virtua in the
suburbs of Philadelphia,
PA and Johns Hopkins
feet of space, we are one of the largest
owner/operators of this highly-desirable
asset class. As health systems realize
that building out their ambulatory
care strategies will require significant
new inflows of capital combined with
operating expertise in modern health
care and seniors housing settings,
Welltower is optimally positioned to be
their partner of choice.
Increasing our Impact – Advocacy
and Sustainability
We believe influencing society’s existing
value system regarding the elderly and
their care will increase quality of life
and dignity for the aging population –
regardless of whether people choose
to “age in place” or live in one of our
communities. It was with this conviction
that we launched the Welltower
Foundation to support organizations
and innovations that promote wellness
and improve care for people as they
age. The foundation launched with
a $250,000 grant to the Alzheimer’s
Association in support of its National
Brain Ball, an event designed to elevate
the profile of Alzheimer’s disease and
its impact on families. I’m tremendously
proud of efforts by Welltower employees
and operating partners who went on to
raise in excess of $3 million towards this
very important cause.
Moving forward, we are committed
to using our capabilities, expertise,
resources and partnerships to help
make the world a place where future
generations not only live longer, but are
top-quality investments through our
better able to live well.
partner network. Our targeted capital
Sustainability plays a key role in how
we intend to drive the evolution of
health care infrastructure. Through
responsible business practices and a
allocation strategies have resulted in
resilient operating performance and
we will continue to maintain capital
discipline and fine-tune our portfolio to
drive superior full-cycle returns for our
shareholders.
focus on sustainability
and conservation,
we create optimal
environments for
health and wellness.
In 2016, we achieved
a significant milestone
as Welltower was
added to the Dow
Jones North America
Sustainability
Index. We were also
recognized on the
Leadership Band for
the CDP (formerly
Welltower is
uniquely positioned
at the intersection of
two dynamic trends:
the aging of the
population and the
transition to value-
based health care.
We could not be more
excited about the
opportunities in the
year ahead. Welltower
is uniquely positioned
at the intersection of
two dynamic trends:
the aging of the
population and the
transition to value-
based health care. We
have the best seniors
housing real estate
the “Carbon Disclosure Project”). We
and operating platform, an outstanding
continue to look for ways to reduce
national outpatient medical management
our environmental footprint including
business and unmatched opportunities
through this newly designed Annual
to own the real estate that will drive
Report.
Determined to Deliver
health care delivery forward. With the
guidance of our Board of Directors, the
leadership of our management team and
the commitment of our employees, we
We began 2017 with a corporate
are more determined than ever to deliver
reorganization that is rationalizing and
value and earn your confidence.
reinventing the way we do business. We
have created a leaner, more integrated
Sincerely,
and efficient structure so that we can
effectively utilize the power of our
unique platform. Our financial priorities
heading into the new year are to
maintain our balance sheet strength
Thomas J. DeRosa
and find new and improved ways to
CEO, Welltower Inc.
drive growth, operating efficiencies and
cash flows, while continuing to source
* Please see Non-GAAP Reconciliations
LETTER FROM THE
CHAIRMAN
Dear Shareholders,
I am pleased to report that Welltower had an
especially successful and productive 2016. The
Company is evermore at the forefront of innovative
partnerships and investments in health care
infrastructure. The assets held, and being created
or acquired, encompass the physical and social
environments necessary to promote wellness while
driving the transition to value-based care. Investing
in the best assets, in the best markets and with
the best partners, has enabled us to build a unique
platform for driving both near-term performance
and long-term value. We are convinced that
now, more than ever, our very talented team is
well positioned to help transform health care
infrastructure and drive health care delivery costs
to new, lower levels.
As announced earlier this year, a reorganized
leadership team is now in place under the direction
of our Chief Executive Officer Thomas J. DeRosa.
We believe that this team, and the Company’s
new organizational structure, will drive further
opportunities for delivering superior returns to our
shareholders. The Board of Directors extended
Tom’s contract for an additional three years,
through April 2020. During his first three years
at the helm, Tom has delivered strong financial
and operating results along with a dramatic
improvement in the Company’s balance sheet.
At the same time, Tom has emerged as a global
advocate for the ability of innovative, modern
real estate partnerships and settings to promote
wellness and improved outcomes.
Jeffrey H. Donahue
Chairman, Welltower Inc.
Looking ahead, the Board believes that, under
the leadership of Tom and his excellent team, the
Company is well prepared to take on the challenges
of improving health care delivery through our
unique platform and portfolio of premium health
care real estate. This is inherently a value-creating
process and should prove to be highly beneficial
to our shareholders. The Board is very confident
that the Company is well positioned to deliver
consistent, long-term earnings growth while driving
positive change across the spectrum of health care
real estate assets and delivery systems.
Thank you for your continuing support of our work.
Sincerely,
Jeffrey H. Donahue
Chairman, Welltower Inc.
NON-GAAP RECONCILIATIONS
We believe net income attributable to common stockholders (NICS), as
defined by U.S. generally accepted accounting principles (U.S. GAAP),
is the most appropriate earnings measurement. However, we consider
Normalized Funds From Operations (N-FFO), Adjusted EBITDA
(A-EBITDA), In-Place Net Operating Income (IPNOI) and Same Store
Net Operating Income (SSNOI) to be useful supplemental measures of
its operating performance. Excluding A-EBITDA, these supplemental
measures are disclosed on our pro rata ownership basis. Pro rata amounts
are derived by reducing consolidated amounts for minority partners’
noncontrolling ownership interests and adding our minority ownership
share of unconsolidated amounts. We do not control unconsolidated
investments. While we consider pro rata disclosures useful, they may not
accurately depict the legal and economic implications of our joint venture
arrangements and should be used with caution.
Historical cost accounting for real estate assets in accordance with U.S.
GAAP implicitly assumes that the value of real estate assets diminishes
predictably over time as evidenced by the provision for depreciation.
However, since real estate values have historically risen or fallen with
market conditions, many industry investors and analysts have considered
presentations of operating results for real estate companies that use
historical cost accounting to be insufficient. In response, the National
Association of Real Estate Investment Trusts (NAREIT) created FFO as a
supplemental measure of operating performance for REITs that excludes
historical cost depreciation from net income. FFO, as defined by NAREIT,
means net income attributable to common stockholders, computed in
accordance with U.S. GAAP, excluding gains (or losses) from sales of real
estate and impairments of depreciable assets, plus real estate depreciation
and amortization, and after adjustments for unconsolidated entities and
noncontrolling interests. N-FFO represents FFO adjusted for certain
items as detailed in the reconciliations. We believe that N-FFO is a useful
supplemental measure of operating performance because investors
and equity analysts may use this measure to compare the operating
performance of the company between periods or as compared to other
REITs or other companies on a consistent basis without having to account
for differences caused by unanticipated and/or incalculable items.
or non-cash income/charges. We believe that EBITDA and A-EBITDA,
along with net income and cash flow provided from operating activities,
are important supplemental measures because they provide additional
information to assess and evaluate the performance of our operations.
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
properties. These expenses include, but are not limited to, property-related
payroll and benefits, property management fees, marketing, housekeeping,
food service, maintenance, utilities, property taxes and insurance. General
and administrative expenses represent costs unrelated to property
operations or transaction costs. These expenses include, but are not
limited to, payroll and benefits, professional services, office expenses and
depreciation of corporate fixed assets. IPNOI represents NOI excluding
interest income, other income and non-cash NOI and adjusted for timing
of current quarter portfolio changes such as acquisitions, development
conversions, segment transitions, dispositions and investments held for
sale.
SSNOI is used to evaluate the operating performance of our properties
under a consistent population which eliminates changes in the composition
of our portfolio. As used herein, same store is generally defined as those
revenue-generating properties in the portfolio for the relevant year-over-
year reporting periods. 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. Normalizers include adjustments that in management’s
opinion are appropriate in considering SSNOI, a supplemental, non-GAAP
performance measure. None of these adjustments, which may increase
or decrease SSNOI, are reflected in our financial statements prepared in
accordance with U.S. GAAP. We believe SSNOI provides investors relevant
and useful information because it measures the operating performance of
our properties at the property level on an unleveraged basis.
EBITDA stands for earnings (net income per income statement) before
interest expense, income taxes, depreciation and amortization. Covenants
in our primary unsecured credit facility and senior unsecured notes
contain financial ratios based on a definition of EBITDA that is specific
to those agreements. Failure to satisfy these covenants could result in an
event of default that could have a material adverse impact on our cost
and availability of capital, which could in turn have a material adverse
impact on our consolidated results of operations, liquidity and/or financial
condition. Due to the materiality of these debt agreements and the
financial covenants, we have defined A-EBITDA to include adjustments for
stock-based compensation expense, provision for loan losses, gains/losses
on extinguishment of debt, transactions costs, gains/losses/impairments
on properties, gains/losses on derivatives and other non-recurring and/
Our supplemental reporting measures and similarly entitled financial
measures are widely used by investors and equity analysts in the
valuation, comparison and investment recommendations of companies.
Our management uses these financial measures to facilitate internal
and external comparisons to historical operating results and in making
operating decisions. Additionally, they are utilized by the Board of
Directors to evaluate management. The supplemental reporting measures
do not 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 reporting measures, as defined by us, may not
be comparable to similarly entitled items reported by other real estate
investment trusts or other companies.
Normalized FFO Reconciliations
In thousands, except per share data
Net income (loss) attributable to common stockholders
Depreciation and amortization
Losses/impairments (gains) on properties, net
Noncontrolling interests and unconsolidated entities, net (1)
Transaction costs
Other expenses
Nonrecurring income tax benefits
Loss (gain) on extinguishments of debt, net
Loss (gain) on derivatives, net
Additional other income
Provision for loan losses
Normalized FFO
Average diluted common shares outstanding
Normalized FFO per diluted share
Year-over-year increase
Year Ended
12/31/2015
Year Ended
12/31/2016
$
818,344
826,240
(278,167)
$
1,012,397
901,242
(326,840)
42,911
3,368
110,926
46,926
(5,430)
34,677
(58,427)
(5,813)
-
1,532,187
349,424
4.38
42,910
11,998
(15,675)
17,214
(2,448)
(16,664)
10,215
1,637,717
360,227
4.55
4%
$
$
$
$
Notes:
(1) Represents net of noncontrolling interests' share of normalized FFO adjustments and Welltower's share of net
FFO adjustments from unconsolidated entities.
Adjusted EBITDA Reconciliation
In thousands
Net income
Interest expense
Income tax expense (benefit)
Depreciation and amortization
EBITDA
Transaction costs
Stock-based compensation
Provision for loan losses
Loss (gain) on extinguishment of debt, net
Loss/impairment (gain) on sales of properties, net
Loss (gain) on derivatives, net
Other expenses(1)
Additional other income
A-EBITDA
Net Debt to A-EBITDA Ratio:
Total debt
Less: cash and cash equivalents(2)
Net debt
A-EBITDA annualized
Net debt to A-EBITDA ratio
Notes:
Excludes stock-based compensation.
(1)
(2) Includes IRC section 1031 deposits, if any.
Three Months Ended
12/31/2016
$
351,108
126,360
(16,585)
227,916
688,799
9,704
8,251
10,215
17,204
(186,978)
68
5,983
(4,853)
548,393
$
$
12,358,245
$
(557,659)
11,800,586
2,193,572
5.4x
In-Place Net Operating Income Reconciliation
In thousands at Welltower pro rata ownership
Seniors housing triple-net
Long-term/post-acute care
Seniors housing operating
Outpatient medical
Total annualized IPNOI
Total current quarter IPNOI
Interest income
Other income
Held for sale & dispositions
Non IPNOI(1)
Timing adjustments(2)
Total current quarter NOI(3)
27.4%
13.3%
42.0%
17.3%
100.0%
Three Months
Ended 12/31/16
$
535,112
259,792
822,932
338,648
1,956,484
x 1/4
489,121
23,689
6,657
48,611
13,111
(9,387)
$
571,802
Notes:
(1)
(2)
(3)
Primarily represents non-cash NOI.
Represents timing adjustments for current quarter acquisitions, construction
conversions and segment transitions.
See SSNOI reconciliation.
Same Store Net Operating Income Reconciliations
In thousands
Consolidated total revenues
Consolidated property operating expenses
Consolidated NOI
Pro rata adjustments(1)
Pro rata NOI
Non-cash NOI at same store properties
NOI attributable to non same store properties
Currency and ownership adjustments(2)
Normalizing adjustments, net(3)
SSNOI
Year-over-year SSNOI growth
Three Months Ended
$
3/31/16
1,047,050
(449,636)
597,414
3/31/15
$
894,177
(376,461)
517,716
6/30/16
$
1,076,657
(458,832)
617,825
6/30/15
$
957,169
(398,354)
558,815
$
9/30/16
1,079,133
(473,680)
605,453
9/30/15
$
978,997
(408,703)
570,294
$
12/31/16
1,078,321
(494,835)
583,486
$
12/31/15
1,029,484
(438,738)
590,746
(8,798)
588,616
(24,171)
(96,944)
1,773
(1,735)
467,539
3.8%
$
8,186
525,902
(26,062)
(47,614)
(2,686)
750
450,290
$
(10,275)
607,550
(24,366)
(90,858)
167
(4,809)
487,684
$
3.3%
5,260
564,075
(29,355)
(56,094)
(4,461)
(2,105)
472,060
$
(9,945)
595,508
(21,311)
(96,841)
3,836
1,319
482,511
2.6%
$
(3,605)
566,689
(25,092)
(70,317)
(1,660)
807
470,427
$
(11,684)
571,802
(16,085)
(102,706)
(5,572)
(775)
446,664
2.3%
$
(5,399)
585,347
(21,162)
(114,908)
(13,047)
487
436,717
$
Avg.
3.0%
Notes:
(1)
(2)
(3)
Represents NOI amounts attributable to joint venture partners, both majority and minority, net.
Includes adjustments to reflect consistent ownership percentages, adjustments to translate Canadian properties at a USD/CAD rate of 1.3495, and adjustments to translate U.K.
properties at a GBP/USD rate of 1.4950.
Includes adjustments for certain items that are described in our 2016 quarterly earnings supplements.
Form 10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2016
Commission File No. 1-8923
WELLTOWER INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
4500 Dorr Street, Toledo, Ohio
(Address of principal executive offices)
34-1096634
(I.R.S. Employer
Identification No.)
43615
(Zip Code)
(419) 247-2800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Name of Each Exchange on Which Registered
Common Stock, $1.00 par value
6.50% Series I Cumulative
Convertible Perpetual Preferred Stock, $1.00 par value
6.50% Series J Cumulative
Redeemable Preferred Stock, $1.00 par value
4.800% Notes due 2028
4.500% Notes due 2034
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes Í
No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ‘
No Í
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes Í
No ‘
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such files). Yes Í
No ‘
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. Í
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Í
Accelerated filer ‘
Non-accelerated filer ‘
(Do not check if a smaller reporting company)
Smaller reporting company ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘
No Í
The aggregate market value of the shares of voting common stock held by non-affiliates of the registrant, computed by reference to the closing
sales price of such shares on the New York Stock Exchange as of the last business day of the registrant’s most recently completed second fiscal
quarter was $27,176,263,145.
As of January 31, 2017, the registrant had 362,558,457 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement for the annual stockholders’ meeting to be held May 4, 2017, are incorporated by
reference into Part III.
WELLTOWER INC.
2016 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8.
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . .
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III
Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 13. Certain Relationships and Related Transactions and Director Independence . . . . . . . . . . . . . . . . .
Item 14. Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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PART IV
Item 1.
Business
General
PART I
Welltower Inc. (NYSE:HCN), an S&P 500 company headquartered in Toledo, Ohio,
is driving the
transformation of health care infrastructure. The company invests with leading seniors housing operators, post-
acute providers and health systems to fund real estate and infrastructure needed to scale innovative care delivery
models and improve people’s wellness and overall health care experience. WelltowerTM, a real estate investment
trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States,
Canada and the United Kingdom, consisting of seniors housing and post-acute communities and outpatient
medical properties. Our capital programs, when combined with comprehensive planning, development and
property management services, make us a single-source solution for acquiring, planning, developing, managing,
repositioning and monetizing real estate assets. More information is available on the Internet at
www.welltower.com. The information on our website is not incorporated by reference in this Annual Report on
Form 10-K, and our web address is included as an inactive textual reference only.
Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay
consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders
as a result of annual increases in net operating income and portfolio growth. To meet these objectives, we invest
across the full spectrum of seniors housing and health care real estate and diversify our investment portfolio by
property type, relationship and geographic location.
Depending upon the availability and cost of external capital, we believe our liquidity is sufficient to fund
operations, meet debt service obligations (both principal and interest), make dividend distributions and complete
construction projects in process. We also continuously evaluate opportunities to finance future investments. New
investments are generally funded from temporary borrowings under our primary unsecured credit facility,
internally generated cash and the proceeds from investment dispositions. Our investments generate cash from net
operating income and principal payments on loans receivable. Permanent financing for future investments, which
replaces funds drawn under our primary unsecured credit facility, has historically been provided through a
combination of the issuance of public debt and equity securities and the incurrence or assumption of secured
debt.
References herein to “we,” “us,” “our” or the “Company” refer to Welltower Inc. and its subsidiaries unless
specifically noted otherwise.
Portfolio of Properties
Please see “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of
Operation — Executive Summary — Company Overview” for a table that summarizes our portfolio as of
December 31, 2016.
Property Types
We invest in seniors housing and health care real estate and evaluate our business on three reportable
segments: triple-net, seniors housing operating and outpatient medical. For additional information regarding our
segments, please see Note 17 to our consolidated financial statements. The accounting policies of the segments
are the same as those described in the summary of significant accounting policies in Note 2 to our consolidated
financial statements. The following is a summary of our various property types.
Triple-Net
Our triple-net properties include independent living facilities and independent supportive living facilities
(Canada), continuing care retirement communities, assisted living facilities, care homes with and without nursing
(United Kingdom), Alzheimer’s/dementia care facilities and long-term/post-acute care facilities. We invest
primarily through acquisitions, development and joint venture partnerships. Our properties are primarily leased to
2
operators under long-term, triple-net master leases. We are not involved in property management. Our properties
include stand-alone facilities that provide one level of service, combination facilities that provide multiple levels
of service, and communities or campuses that provide a wide range of services.
Independent Living Facilities and Independent Supportive Living Facilities (Canada).
Independent living
facilities and independent supportive living facilities are age-restricted, multifamily properties with central dining
linen service,
facilities that provide residents access to meals and other services such as housekeeping,
transportation and social and recreational activities.
Continuing Care Retirement Communities. Continuing care retirement communities typically include a
combination of detached homes, an independent living facility, an assisted living facility and/or a long-term/post-
acute care facility on one campus. These communities appeal to residents because there is no need to relocate
when health and medical needs change. Resident payment plans vary, but can include entrance fees,
condominium fees and rental fees. Many of these communities also charge monthly maintenance fees in
exchange for a living unit, meals and some health services.
Assisted Living Facilities. Assisted living facilities are state regulated rental properties that provide the
same services as independent living facilities, but also provide supportive care from trained employees to
residents who require assistance with activities of daily living, including, but not limited to, management of
medications, bathing, dressing, toileting, ambulating and eating.
Care Homes with Nursing (United Kingdom). Care homes with nursing, regulated by the Care Quality
Commission are licensed daily rate or rental properties where the majority of individuals require 24-hour nursing
and/or medical care. Generally, these properties are licensed for various national and local reimbursement
programs. Unlike the U.S., care homes with nursing in the U.K. generally do not provide post-acute care.
Care Homes (United Kingdom). Care homes, regulated by the Care Quality Commission, are rental
properties that provide essentially the same services as U.S. assisted living facilities.
Alzheimer’s/Dementia Care Facilities. Certain assisted living facilities may include state-licensed settings
that specialize in caring for those afflicted with Alzheimer’s disease and/or other types of dementia.
Long-Term/Post-Acute Care Facilities. Our long-term/post-acute care facilities generally include skilled
nursing/post-acute care facilities, inpatient rehabilitation facilities and long-term acute care facilities. Skilled
nursing/post-acute care facilities are licensed daily rate or rental properties where the majority of individuals
require 24-hour nursing and/or medical care. Generally, these properties are licensed for Medicaid and/or
Medicare reimbursement in the U.S. or provincial reimbursement in Canada. All facilities offer some level of
rehabilitation services. Some facilities focus on higher acuity patients and offer rehabilitation units specializing
in cardiac, orthopedic, dialysis, neurological or pulmonary rehabilitation. Inpatient rehabilitation facilities
provide inpatient services for patients with intensive rehabilitation needs. Long-term acute care facilities provide
inpatient services for patients with complex medical conditions that require more intensive care, monitoring or
emergency support than is available in most skilled nursing/post-acute care facilities.
Our triple-net segment accounted for 28%, 31% and 31% of total revenues for the years ended
December 31, 2016, 2015 and 2014, respectively. We lease 85 facilities to Genesis Healthcare, LLC, an operator
of long-term/post-acute care facilities, pursuant to a long-term, triple-net master lease. In addition to rent, the
master lease requires Genesis to pay all operating costs, utilities, real estate taxes, insurance, building repairs,
maintenance costs and all obligations under certain ground leases. All obligations under the master lease have
been guaranteed by FC-GEN Operations Investment, LLC, a subsidiary of Genesis Healthcare, LLC. For the year
ended December 31, 2016, our lease with Genesis accounted for approximately 27% of our triple-net segment
revenues and 8% of our total revenues.
Seniors Housing Operating
Our seniors housing operating properties include several of the facility types described in “Item 1 —
Business — Property Types — Triple-Net”, including independent living facilities and independent supportive
living facilities, assisted living facilities, care homes and Alzheimer’s/dementia care facilities. Properties are
3
primarily held in consolidated joint venture entities with operating partners. We utilize the structure proposed in
the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a
“RIDEA” structure (the provisions of the Internal Revenue Code authorizing the RIDEA structure were enacted
as part of the Housing and Economic Recovery Act of 2008). See Note 18 to our consolidated financial
statements for more information.
Our seniors housing operating segment accounted for 59%, 56% and 57% of total revenues for the years
ended December 31, 2016, 2015 and 2014, respectively. We have relationships with 16 operators to own and
operate 420 facilities (plus 69 unconsolidated facilities). In each instance, our partner provides management
services to the properties pursuant to an incentive-based management contract. We rely on our partners to
effectively and efficiently manage these properties. For the year ended December 31, 2016, our relationship with
Sunrise Senior Living accounted for approximately 40% of our seniors housing operating segment revenues and
23% of our total revenues.
Outpatient Medical
Our outpatient medical properties include outpatient medical buildings and, prior to June 30, 2015, life
science facilities. We typically lease our outpatient medical buildings to multiple tenants and provide varying
levels of property management. Our life science investment represented an investment in an unconsolidated joint
venture entity. Our outpatient medical segment accounted for 13%, 13% and 12% of total revenues for the years
ended December 31, 2016, 2015 and 2014, respectively. No single tenant exceeds 20% of segment revenues.
Outpatient Medical Buildings. The outpatient medical building portfolio consists of health care related
buildings that generally include physician offices, ambulatory surgery centers, diagnostic facilities, outpatient
services and/or labs. Our portfolio has a strong affiliation with health systems. Approximately 95% of our
outpatient medical building portfolio is affiliated with health systems (with buildings on hospital campuses or
serving as satellite locations for the health system and its physicians).
Life Science Facilities. The life science portfolio consisted of laboratory and office facilities specifically
designed and constructed for use by biotechnology and pharmaceutical companies. These facilities were located
adjacent
to The Massachusetts Institute of Technology, which is a well-established market known for
pharmaceutical and biotechnology research. They are similar to commercial office buildings with advanced
HVAC (heating, ventilation and air conditioning), electrical and mechanical systems. On June 30, 2015, we
disposed of our life science investments.
Investments
Depending upon market conditions, we believe that new investments will be available in the future with
spreads over our cost of capital that will generate appropriate returns to our stockholders. We invest in seniors
housing and health care real estate primarily through acquisitions, developments and joint venture partnerships.
For additional information regarding acquisition and development activity, please see Note 3 to our consolidated
financial statements. We diversify our investment portfolio by property type, relationship and geographic
location. In determining whether to invest in a property, we focus on the following: (1) the experience of the
obligor’s/partner’s management team; (2) the historical and projected financial and operational performance of
the property; (3) the credit of the obligor/partner; (4) the security for any lease or loan; (5) the real estate
attributes of the building and its location; (6) the capital committed to the property by the obligor/partner; and
(7) the operating fundamentals of the applicable industry. We conduct market research and analysis for all
potential investments. In addition, we review the value of all properties,
the interest rates and covenant
requirements of any facility-level debt to be assumed at the time of the acquisition and the anticipated sources of
repayment of any existing debt that is not to be assumed at the time of the acquisition.
We monitor our investments through a variety of methods determined by the type of property. Our proactive
and comprehensive asset management process for seniors housing properties generally includes review of
monthly financial
review of obligor/partner
creditworthiness, property inspections, and review of covenant compliance relating to licensure, real estate taxes,
letters of credit and other collateral. Our internal property management division actively manages and monitors
statements and other operating data for each property,
4
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. In monitoring our portfolio, our personnel use a
proprietary database to collect and analyze property-specific data. Additionally, we conduct extensive research to
ascertain industry trends.
We evaluate the operating environment in each property’s market to determine the likely trend in operating
performance of the facility. When we identify unacceptable trends, we seek to mitigate, eliminate or transfer the
risk. Through these efforts, we are generally able to intervene at an early stage to address any negative trends,
and in so doing, support both the collectability of revenue and the value of our investment.
Investment Types
Real Property. Our properties are primarily comprised of land, buildings, improvements and related rights.
Our triple-net properties are generally leased to operators under long-term operating leases. The leases generally
have a fixed contractual term of 12 to 15 years and contain one or more five to 15-year renewal options. Certain
of our leases also contain purchase options, a portion of which could result in the disposition of properties for
less than full market value. Most of our rents are received under triple-net leases requiring the operator to pay
rent and all additional charges incurred in the operation of the leased property. The tenants are required to repair,
rebuild and maintain the leased properties. Substantially all of these operating leases are designed with escalating
rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over
the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent
rental escalators is generally recorded based on the contractual cash rental payments due for the period.
At December 31, 2016, approximately 92% of our triple-net properties were subject to master leases. A
master lease is a lease of multiple properties to one tenant entity under a single lease agreement. From time to
time, we may acquire additional properties that are then leased to the tenant under the master lease. The tenant is
required to make one monthly payment that represents rent on all the properties that are subject to the master
lease. Typically, the master lease tenant can exercise its right to purchase the properties or to renew the master
lease only with respect to all leased properties at the same time. This bundling feature benefits us because the
tenant cannot limit the purchase or renewal to the better performing properties and terminate the leasing
arrangement with respect to the poorer performing properties. This spreads our risk among the entire group of
properties within the master lease. The bundling feature should provide a similar advantage to us if the master
lease tenant is in bankruptcy. Subject to certain restrictions, a debtor in bankruptcy has the right to assume or
reject each of its leases. It is our intent that a tenant in bankruptcy would be required to assume or reject the
master lease as a whole, rather than deciding on a property by property basis.
Our 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, 2016, 80% of our portfolio included leases with full
pass through, 17% with a partial expense reimbursement
(modified gross) and 3% with no expense
reimbursement (gross). Our outpatient medical leases are non-cancellable operating leases that have a weighted-
average remaining term of seven years at December 31, 2016 and are often credit enhanced by security deposits,
guaranties and/or letters of credit.
Construction. We occasionally provide for the construction of properties for tenants as part of long-term
operating leases. We capitalize certain interest costs associated with funds used for the construction of properties
owned by us. The amount capitalized is based upon the amount advanced during the construction period using
the rate of interest that approximates our Company-wide cost of financing. Our interest expense is reduced by the
amount capitalized. We also typically charge a transaction fee at the commencement of construction which we
defer and amortize to income over the term of the resulting lease. The construction period commences upon
funding and terminates upon the earlier of the completion of the applicable property or the end of a specified
period. During the construction period, we advance funds to the tenants in accordance with agreed upon terms
and conditions which require, among other things, periodic site visits by a Company representative. During the
in the form of payment and
construction period, we generally require an additional credit enhancement
5
performance bonds and/or completion guaranties. At December 31, 2016, we had outstanding construction
investments of $506,091,000 and were committed to provide additional funds of approximately $493,972,000 to
complete construction for investment properties.
Real Estate Loans. Our real estate loans are typically structured to provide us with interest income,
principal amortization and transaction fees and are generally secured by first/second mortgage liens, leasehold
mortgages, corporate guaranties and/or personal guaranties. At December 31, 2016, we had outstanding real
estate loans of $622,627,508. The interest yield averaged approximately 9.5% 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, 2016 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 have the
ability to exercise significant influence over operating and financial policies are reported under the equity method
of accounting. Our investments in unconsolidated entities generally represent interests ranging from 10% to 50%
in real estate assets. Under the equity method of accounting, our share of the investee’s earnings or losses is
included in our consolidated results of operations. To the extent that our cost basis is different from the basis
reflected at the entity level, the basis difference is generally amortized over the lives of the related assets and
liabilities, and such amortization is included in our share of equity in earnings of the entity. The initial carrying
value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest or the
estimated fair value of the assets prior to the sale of interests in the entity. We evaluate our equity method
investments for impairment based upon a comparison of the estimated fair value of the equity method investment
to its carrying value. When we determine a decline in the estimated fair value of such an investment below its
carrying value is other-than-temporary, an impairment is recorded. See Note 7 to our consolidated financial
statements for more information.
Principles of Consolidation
The consolidated financial statements include the accounts of our wholly-owned subsidiaries and joint
venture entities that we control, through voting rights or other means. All material intercompany transactions and
balances have been eliminated in consolidation.
At inception of joint venture transactions, we identify entities for which control is achieved through means
other than voting rights (“variable interest entities” or “VIEs”) and determine which business enterprise is the
primary beneficiary of its operations. A VIE is broadly defined as an entity where either (i) the equity investors
as a group, if any, do not have a controlling financial interest, or (ii) the equity investment at risk is insufficient to
finance that entity’s activities without additional subordinated financial support. We consolidate investments in
VIEs when we are determined to be the primary beneficiary. Accounting Standards Codification Topic 810,
Consolidations, requires enterprises to perform a qualitative approach to determining whether or not a VIE will
need to be consolidated on a continuous basis. This evaluation is based on an enterprise’s ability to direct and
influence the activities of a VIE that most significantly impact that entity’s economic performance.
For investments in joint ventures, GAAP may preclude consolidation by the sole general partner in certain
circumstances based on the type of rights held by the limited partner(s). We assess the limited partners’ rights
and their impact on our consolidation conclusions, and we reassess if there is a change to the terms or in the
exercisability of the rights of the limited partners, the sole general partner increases or decreases its ownership of
limited partnership interests, or there is an increase or decrease in the number of outstanding limited partnership
interests. We similarly evaluate the rights of managing members of limited liability companies.
Borrowing Policies
We utilize a combination of debt and equity to fund investments. Our debt and equity levels are determined
by management to maintain a conservative balance sheet and credit profile. Generally, we intend to issue
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unsecured, fixed-rate public debt with long-term maturities to approximate the maturities on our triple-net leases
and investment strategy. For short-term purposes, we may borrow on our primary unsecured credit facility. We
replace these borrowings with long-term capital such as senior unsecured notes or common stock. When terms
are deemed favorable, we may invest in properties subject to existing mortgage indebtedness. In addition, we
may obtain secured financing for unleveraged properties in which we have invested or may refinance properties
acquired on a leveraged basis. In certain agreements with our lenders, we are subject to restrictions with respect
to secured and unsecured indebtedness.
Competition
We compete with other real estate investment trusts, real estate partnerships, private equity and hedge fund
investors, banks, insurance companies, finance/investment companies, government-sponsored agencies, taxable
and tax-exempt bond funds, health care operators, developers and other investors in the acquisition, development,
leasing and financing of health care and seniors housing properties. We compete for investments based on a
number of factors including relationships, certainty of execution, investment structures and underwriting criteria.
Our ability to successfully compete is impacted by economic and demographic trends, availability of acceptable
investment opportunities, our ability to negotiate beneficial investment terms, availability and cost of capital,
construction and renovation costs and applicable laws and regulations.
The operators/tenants of our properties compete with properties that provide comparable services in the
local markets. Operators/tenants compete for patients and residents based on a number of factors including
quality of care, reputation, physical appearance of properties, location, services offered, family preferences,
physicians, staff and price. We also face competition from other health care facilities for tenants, such as
physicians and other health care providers that provide comparable facilities and services.
For additional information on the risks associated with our business, please see “Item 1A — Risk Factors”
of this Annual Report on Form 10-K.
Employees As of January 31, 2017, we had 466 employees.
Credit Concentrations Please see Note 8 to our consolidated financial statements.
Geographic Concentrations Please see “Item 2 — Properties” of this Annual Report on Form 10-K and Note 17
to our consolidated financial statements.
Health Care Industry
The demand for health care services, and consequently health care properties,
is projected to reach
unprecedented levels in the near future. The Centers for Medicare and Medicaid Services (“CMS”) projects that
national health expenditures will rise to approximately $3.5 trillion in 2017 or 18.2% of gross domestic product.
The average annual growth in national health expenditures for 2015 through 2025 is expected to be 5.8%. While
demographics are the primary driver of demand, economic conditions and availability of services contribute to
health care service utilization rates. We believe the health care property market may be less susceptible to
fluctuations and economic downturns relative to other property sectors. Investor interest in the market remains
strong, especially in specific sectors such as private-pay senior living and outpatient medical buildings. The total
U.S. population for 2015 through 2025 is projected to increase by 9.3%. The elderly population aged 65 and over
is projected to increase by 36% through 2025. The elderly are an important component of health care utilization,
especially independent living services, assisted living services, long-term/post-acute care services, inpatient and
outpatient hospital services and physician ambulatory care. Most health care services are provided within a health
care facility such as a hospital, a physician’s office or a seniors housing community. Therefore, we believe there
will be continued demand for companies, such as ours, with expertise in health care real estate.
Health care real estate investment opportunities tend to increase as demand for health care services
increases. We recognize the need for health care real estate as it correlates to health care service demand. Health
care providers require real estate to house their businesses and expand their services. We believe that investment
opportunities in health care real estate will continue to be present due to:
• The specialized nature of the industry, which enhances the credibility and experience of the Company;
7
• The projected population growth combined with stable or increasing health care utilization rates, which
ensures demand; and
• The on-going merger and acquisition activity.
Certain Government Regulations
United States
Health Law Matters — Generally
Typically, operators of seniors housing facilities do not receive significant funding from government
programs and are largely subject to state laws, as opposed to federal laws. Operators of long-term/post-acute care
facilities and hospitals do receive significant funding from government programs, and these facilities are subject
to the federal and state laws that regulate the type and quality of the medical and/or nursing care provided,
ancillary services (e.g., respiratory, occupational, physical and infusion therapies), qualifications of the
administrative personnel and nursing staff, the adequacy of the physical plant and equipment, reimbursement and
rate setting and operating policies. In addition, as described below, operators of these facilities are subject to
extensive laws and regulations pertaining to health care fraud and abuse, including, but not limited to, the federal
Anti-Kickback Statute (“AKS”), the federal Stark Law (“Stark Law”), and the federal False Claims Act (“FCA”),
as well as comparable state laws. Hospitals, physician group practice clinics, and other health care providers that
operate in our portfolio are subject to extensive federal, state, and local licensure, registration, certification, and
inspection laws, regulations, and industry standards. Our tenants’ failure to comply with any of these, and other,
laws could result in, among other things, 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. See Risk Factors “The requirements of, or changes to, governmental reimbursement programs, such
as Medicare or Medicaid, could have a material adverse effect on our obligors’ liquidity, financial condition and
results of operations, which could adversely affect our obligors’ ability to meet their obligations to us” and “Our
operators’ or tenants’ failure to comply with federal, state, local, and industry-regulated licensure, certification
and inspection laws, regulations, and standards could adversely affect such operators’ or tenants’ operations,
which could adversely affect our operators’ and tenants’ ability to meet their obligations to us” below.
Licensing and Certification
The primary regulations that affect
long-term and post-acute care facilities are state licensing and
registration laws. For example, certain health care facilities are subject to a variety of licensure and certificate of
need (“CON”) laws and regulations. Where applicable, CON laws generally require, among other requirements,
that a facility demonstrate the need for (1) constructing a new facility, (2) adding beds or expanding an existing
facility, (3) investing in major capital equipment or adding new services, (4) changing the ownership or control
of an existing licensed facility, or (5) terminating services that have been previously approved through the CON
process. Certain state CON laws and regulations may restrict the ability of operators to add new properties or
expand an existing facility’s size or services. In addition, CON laws may constrain the ability of an operator to
transfer responsibility for operating a particular facility to a new operator.
With respect to licensure, generally our long-term/post-acute care facilities and acute care facilities are
required to be licensed and certified for participation in Medicare, Medicaid, and other federal and state health
care programs. The failure of our operators to maintain or renew any required license or regulatory approval as
well as the failure of our operators to correct serious deficiencies identified in a compliance survey could require
those operators to discontinue operations at a property. In addition, if a property is found to be out of compliance
with Medicare, Medicaid, or other federal or state health care program conditions of participation, the property
operator may be excluded from participating in those government health care programs.
Reimbursement
The reimbursement methodologies applied to health care facilities continue to evolve. Federal and state
authorities have considered and may seek to implement new or modified reimbursement methodologies,
8
including value-based reimbursement methodologies that may negatively impact health care property operations.
The impact of any such changes, if implemented, may result in a material adverse effect on our portfolio. No
assurance can be given that current revenue sources or levels will be maintained. Accordingly, there can be no
assurance that payments under a government health care program are currently, or will be in the future, sufficient
to fully reimburse the property operators for their operating and capital expenses.
•
•
Seniors Housing Facilities (excluding long-term/post-acute care facilities). Approximately 55% of
our overall revenues for the year ended December 31, 2016 were attributable to U.S. seniors housing
facilities. The majority of the revenues received by the operators of these facilities are from private pay
sources. The remaining revenue source is primarily Medicaid under certain waiver programs. As of
September 30, 2016, 15 of our 44 seniors housing operators received Medicaid reimbursement pursuant
to Medicaid waiver programs. For the twelve months ended September 30, 2016, approximately 1.7%
of the revenues at our seniors housing facilities were from Medicaid reimbursement. There can be no
guarantee that a state Medicaid program operating pursuant to a waiver will be able to maintain its
waiver status. Rates paid by self-pay residents are set by the facilities and are determined by local
market conditions and operating costs. Generally, facilities receive a higher payment per day for a
private pay resident than for a Medicaid beneficiary who requires a comparable level of care. The level
of Medicaid reimbursement varies from state to state. Thus, the revenues generated by operators of our
assisted living facilities may be adversely affected by payor mix, acuity level, changes in Medicaid
eligibility, and reimbursement levels. In addition, a state could lose its Medicaid waiver and no longer
be permitted to utilize Medicaid dollars to reimburse for assisted living services.
Long-Term/Post-Acute Care Facilities. Approximately 13% of our overall revenues for the year
ended December 31, 2016 were attributable to long-term/post-acute care facilities. The majority of the
revenues received by the operators of these facilities are from the Medicare and Medicaid programs,
with the balance representing reimbursement payments from private payors. Consequently, changes in
federal or state reimbursement policies may adversely affect an operator’s ability to cover its expenses,
including our rent or debt service. Long-term/post-acute care facilities are subject to periodic pre- and
post-payment reviews, and other audits by federal and state authorities. A review or audit of a property
operator’s claims could result in recoupments, denials, or delay of payments in the future. Due to the
significant judgments and estimates inherent in payor settlement accounting, no assurance can be given
as to the adequacy of any reserves maintained by our property operators to cover potential adjustments
to reimbursements, or to cover settlements made to payors. Recent attention on billing practices,
payments, and quality of care, or ongoing government pressure to reduce spending by government
health care programs, could result in lower payments to long-term/post-acute care facilities and, as a
result, may impair an operator’s ability to meet its financial obligations to us.
• Medicare Reimbursement. For the twelve months ended September 30, 2016, approximately
39% of the revenues at our long-term/post-acute care facilities were paid by Medicare. Generally,
long-term/post-acute care facilities are reimbursed under the Medicare Skilled Nursing Facility
Prospective Payment System (“SNF PPS”), the Inpatient Rehabilitation Facility Prospective
Payment System (“IRF PPS”), or the Long Term Care Hospital Prospective Payment System
(“LTCH PPS”), which generally provide reimbursement based upon a predetermined fixed
amount per episode of care and are updated by CMS, an agency of the Department of Health and
Human Services (“HHS”) annually. CMS made some positive payment updates for fiscal year
(“FY”) 2017 under the SNF PPS, the IRF PPS and the LTCH PPS, specifically:
• On August 5, 2016, CMS published a final rule regarding FY 2017 Medicare payment
policies and rates for skilled nursing facilities (“SNFs”). Under the final SNF rule, CMS
projects that aggregate payments to SNFs will increase in FY 2017 by $920 million, or 2.4%,
from payments in FY 2016.
• On August 5, 2016, CMS published a final rule regarding FY 2017 Medicare payment
policies and rates for inpatient rehabilitation facilities (“IRFs”). Under the rule, CMS
estimates that aggregate payments to IRFs will increase in FY 2017 by $145 million, or
1.9%, relative to payments in FY 2016.
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• On August 22, 2016, CMS published a final rule regarding FY 2017 Medicare payment
policies and rates for long term care hospitals (“LTCHs”). As a result of the continuation of
the phase-in of site neutral payment rates for specified cases in LTCHs, CMS projects FY
2017 Medicare payments to LTCHs will decrease by 7.1%, or approximately $363 million.
Payment rates will increase by 0.7% for cases that qualify for the higher standard LTCH PPS
rate. In response to a federal district court’s review of the “Two-Midnight” payment policy,
CMS finalized its proposal to remove the 0.2% Medicare Part A hospital payment cut and
also its effects for FYs 2014, 2015, and 2016 though an approximate 0.8% increase to FY
2017 payment rates.
There is a risk under these payment systems that costs will exceed the fixed payments, or that
payments may be set below the costs to provide certain items and services. In addition, the HHS
Office of Inspector General has released recommendations to address SNF billing practices and
Medicare payment rates. If followed, these recommendations regarding SNF payment reform may
impact our tenants and operators.
• Medicaid Reimbursement. For the twelve months ended September 30, 2016, approximately
33% of the revenues of long-term/post-acute care facilities were paid by Medicaid. Many states
reimburse SNFs, for example, using fixed daily rates, which are applied prospectively based on
patient acuity and the historical costs incurred in providing patient care. In most states, Medicaid
does not fully reimburse the cost of providing services. Certain states are attempting to slow the
rate of Medicaid growth by freezing rates or restricting eligibility and benefits. In addition,
Medicaid reimbursement rates may decline if revenues in a particular state are not sufficient to
fund budgeted expenditures.
• Medicare Reimbursement for Physicians, Hospital Outpatient Departments, and Ambulatory Surgical
Centers. Changes in reimbursement to physicians, Hospital Outpatient Departments (“HOPDs”), and
Ambulatory Surgical Centers (“ASCs”) may further affect our tenants and operators. Generally,
Medicare reimburses physicians under the Physician Fee Schedule, while HOPDs and ASCs are
reimbursed under prospective payment systems. The Physician Fee Schedule and the HOPD and ASC
prospective payment systems are updated annually by CMS. These annual Medicare payment
regulations have resulted in lower net pay increases than providers of those services have often
expected. In addition, Congress recently passed the Medicare and CHIP Reauthorization Act of 2015
(“MACRA”), which includes payment reductions for providers who do not meet government quality
standards. The implementation of pay-for-quality models like those required under MACRA is
expected to produce funding disparities that could adversely impact some provider tenants in medical
buildings and other health care properties. Changes in Medicare Advantage plan payments may also
indirectly affect our operators and tenants that contract with Medicare Advantage plans.
• Health Reform Laws. On March 23, 2010, President Obama signed into law the Patient Protection
and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively,
the “Health Reform Laws”), which dramatically altered how health care is delivered and reimbursed in
the United States and contained various provisions,
including Medicaid expansion and the
establishment of Health Insurance Exchanges providing subsidized health insurance, that may directly
impact us or the operators and tenants of our properties. We expect
the new Presidential
Administration and U.S. Congress will seek to modify, repeal, or otherwise invalidate all, or certain
provisions of, the Health Reform Laws. Since taking office, President Trump has continued to support
the repeal of all or portions of the Health Reform Laws. The House and Senate have recently passed a
budget resolution that authorizes congressional committees to draft legislation to repeal all or portions
of the Health Reform Laws and permits such legislation to pass with a majority vote in the Senate.
President Trump has also recently issued an executive order in which he stated that
is his
Administration’s policy to seek the prompt repeal of the Health Reform Laws and directed executive
departments and federal agencies to waive, defer, grant exemptions from, or delay the implementation
of the provisions of the Health Reform Laws to the maximum extent permitted by law. There is still
uncertainty with respect to the impact President Trump’s Administration and the U.S. Congress may
that
it
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have, if any, and any changes will likely take time to unfold, and could have an impact on coverage and
reimbursement for health care items and services covered by plans that were authorized by the Health
Reform Laws. We cannot predict whether the existing Health Reform Laws, or future health care
reform legislation or regulatory changes, will have a material impact on our operators’ or tenants’
property or business.
Fraud & Abuse Enforcement
Long-term/post-acute care facilities (and seniors housing facilities that receive Medicaid payments) are
subject to federal, state, and local laws, regulations, and applicable guidance that govern the operations and
financial and other arrangements that may be entered into by health care providers. Certain of these laws, such as
the AKS and Stark Law, prohibit direct or indirect payments of any kind for the purpose of inducing or
encouraging the referral of patients for medical products or services reimbursable by government health care
programs. Other laws require providers to furnish only medically necessary services and submit
to the
government valid and accurate statements for each service. Specifically, our operators and tenants that receive
payments from federal healthcare programs, such as Medicare and Medicaid, are subject to substantial financial
penalties under the Civil Monetary Penalties Act and the FCA and, in particular, actions under the FCA’s
“whistleblower” provisions. Private enforcement of health care fraud has increased due in large part
to
amendments to the FCA that encourage private individuals to sue on behalf of the government. In addition, states
may also have separate false claims acts, which, among other things, generally prohibit health care providers
from filing false claims or making false statements to receive payments. Still other laws require providers to
comply with a variety of safety, health and other requirements relating to the condition of the licensed property
and the quality of care provided. Sanctions for violations of these laws, regulations, and other applicable
guidance may include, but are not limited to, criminal and/or civil penalties and fines, loss of licensure,
immediate termination of government payments, exclusion from any government health care program, damage
assessments, and imprisonment. In certain circumstances, violation of these rules (such as those prohibiting
abusive and fraudulent behavior) with respect to one property may subject other facilities under common control
or ownership to sanctions, including exclusion from participation in the Medicare and Medicaid programs, as
well as other government health care programs. In the ordinary course of its business, a property operator is
regularly subjected to inquiries, investigations, and audits by the federal and state agencies that oversee these
laws and regulations.
Prosecutions, investigations, or whistleblower actions could have a material adverse effect on a property
operator’s liquidity, financial condition, and operations, which could adversely affect the ability of the operator
to meet its financial obligations to us. In addition, government investigations and enforcement actions brought
against the health care industry have increased dramatically over the past several years and are expected to
continue. Although the responsibility for enforcing these laws and regulations lies with a variety of federal, state
and local governmental agencies, some may be enforced by private litigants through federal and state false
claims acts and other laws, including some state privacy laws, that allow for private individuals to bring actions.
The costs for an operator of a health care property associated with both defending such enforcement actions and
the undertakings in settling these actions can be substantial and could have a material adverse effect on the ability
of an operator to meet its obligations to us.
Federal and State Data Privacy and Security Laws
The Health Insurance Portability and Accountability Act of 1996, as amended by Health Information
Technology for Economic and Clinical Health Act, and numerous other state and federal laws govern the
collection, security, dissemination, use, access to and confidentiality of individually identifiable health
information. Violations of these laws may result in substantial civil and/or criminal fines and penalties.
United Kingdom
In England, care home services are principally regulated by the Health and Social Care Act 2008 (as
amended) and other regulations. This legislation subjects service providers to a number of legally binding
“Fundamental Standards” and requires, amongst other things, that all persons carrying out “Regulated Activities”
in England, and the managers of such persons, be registered. Providers of care home services are also subject (as
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data controllers) to laws governing their use of personal data (including in relation to their employees, clients and
recipients of their services). These laws currently take the form of the UK’s Data Protection Act 1998, enforced
by the UK’s Information Commissioner’s Office, but this will be replaced in mid-2018 by the EU’s new General
Data Protection Regulation (“GDPR”). The GDPR will impose a significant number of new obligations with the
potential for fines of up to 4% of annual worldwide turnover or €20 million, whichever is greater. Entities
incorporated in or carrying on a business in the UK as well as individuals residing in the U.K. are also subject to
the UK Bribery Act 2010. The UK recently introduced a new national minimum wage with a maximum fine for
non-payment of £20,000 per worker and employers who fail to pay will be banned from being a company
director for up to 15 years. The UK recently voted to exit from the EU (“Brexit”). Negotiations on the exit
agreement are underway but at present it is not possible to predict whether Brexit will have a material impact on
our operators’ or tenants’ property or business.
Canada
Retirement homes and long-term care homes are subject to regulation, and long-term care homes receive
funding, under provincial law. There is no federal regulation in this area. Set out below are summaries of the
principal regulatory requirements in the provinces where we have a material number of facilities.
Licensing and Regulation
Alberta
In Alberta, there are three relevant designations for seniors’ living arrangements, ordered below from the
most independent to the highest level of care.
• Retirement Homes (also called independent living) are designed for older adults able to live on their
own, and may offer various lifestyle amenities. These residences may be rented, privately owned, or
life-leased, and may be operated for profit or non-profit. Support services are not usually offered, but
can be arranged by residents. Retirement homes do not generally receive government funding;
residents pay for tenancy and services received. Rental subsidies may be available to qualified seniors.
Independent living residences are subject to provincial tenancy and housing laws.
•
Supportive Living (also called assisted living) provides home-like accommodation for residents who
wish or need to access care, assistance, and services. Operators provide at least one meal a day or
housekeeping services. There are four levels of supportive living, addressing care needs from basic to
advanced. In addition, there are two specialized designations of supportive care to address the needs of
residents who require the highest level of care including for those who have cognitive impairments.
Supportive living can include seniors lodges, group homes, and mental health and designated
supportive living accommodations, which can be operated by private for-profit or not-for-profit, or
public operators. Supportive living services are licensed and regulated under Provincial laws, and
governed by the Ministry of Health. Operators receiving public funds for health and personal care
services must also comply with additional provincial
to legislated
safeguards aimed at investigation of suspected abuse. The maximum accommodation fee in publicly-
funded designated supportive living is regulated by Alberta Health. In other supportive living settings,
the operator sets the cost of accommodation. Health services are publicly-funded and provided through
Alberta Health Services. Private sector operators are eligible to apply for government funding under a
government capital grant program that provides funding to develop long-term care and affordable
supportive living spaces.
legislation, and are subject
• Nursing Homes (also called long-term care) are for residents who have complex, unpredictable medical
needs and who require 24-hour on-site registered nurse assessment or treatment. Nursing homes are
regulated by Provincial laws, and governed by the Ministry of Health. Operators are not licensed, but
enter into agreements with the Ministry for the operation of nursing homes and must comply with
certain accommodation standards. Homes can be operated by private for-profit or not-for-profit, or
public operators. Operators that receive public funds for health and personal care services must also
comply with certain health service standards and legislation aimed at protecting residents. Alberta
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Health regulates the maximum accommodation fee in publicly-funded nursing homes. Health services
in long-term care are publicly-funded, provided through Alberta Health Services. Private sector
operators are eligible to apply for government funding, and the Minister may make grants to an
operator in respect of its operating or capital costs.
Ontario
Long-term care homes (also called nursing homes), receive government funding, are licensed under
provincial law aimed at resident protection, and are governed by the Ministry of Health and Long-Term Care.
Retirement homes are regulated and licensed under a provincial law aimed at protecting residents. Retirement
homes do not receive government funding; residents enter into tenancy agreements under provincial tenancy law,
and pay for tenancy and services received. Residents may access publicly-funded external care services at the
home from external suppliers. Retirement home licenses are granted by the Retirement Homes Regulatory
Authority (“RHRA”), and are non-transferable. The RHRA administers the law governing retirement homes, to
ensure that licensees are meeting certain standards, generally with respect to care and safety. The law requires
any person to report to the RHRA when there are reasonable grounds to suspect abuse of a resident by anyone, or
neglect of a resident by staff. The RHRA conducts a mandatory inspection and issues a report that is posted on
the RHRA’s public website, and also must be posted in the subject home if it is the most recent report. The
Registrar of the RHRA can receive complaints about a retirement home contravening a provision of the law, and
if such a complaint is received, it must be reviewed promptly. The Registrar has broad powers relating to
complaint investigation and action. The RHRA Registrar has the power to inspect a retirement home at any time
without warning or issue a warrant to ensure compliance. Compliance inspections occur at least every three
years. The Registrar has the power to make a variety of orders including the imposition of a fine or an order
revoking the operator’s license. The applicable law also enumerates offenses, such as operating without a license,
and provides for penalties for offenses. All of the homes in which we have an interest in Ontario are licensed as
retirement homes. One of the homes also has some licensed long-term care beds.
British Columbia
Provincial laws regulate and license “community care facilities” (long-term care homes) in substantially the
same manner as retirement homes are regulated under Ontario laws. Community care facilities are defined as
premises used for the purpose of supervising vulnerable persons who require three or more prescribed services
(from a list that includes regular assistance with activities of daily living; distribution of medication; management
of cash resources; monitoring of
food intake; structured behavior management and intervention; and
psychosocial or physical rehabilitative therapy).
Provincial
law also recognizes and regulates “assisted living residences,” for seniors who can live
independently, but require assistance with certain activities. Services available can include meals, housekeeping,
monitoring and emergency support, social/recreational opportunities, and transportation. Assisted living
residences do not require a license, but must be registered with the registrar of assisted living residences and
must be operated in a manner that does not jeopardize the health or safety of residents. If the registrar believes
the standard is not being met, the registrar may inspect the residence and may suspend or cancel a registration.
Independent living residences offer housing and hospitality services for retired adults who are functionally
independent and able to direct their own care. Most of the residences in which we have an interest in B.C. are
assisted living residences, with one being an independent living residence.
Québec
Provincial laws in Québec regulate retirement homes (private seniors’ residences) as well as long-term care
homes (residential and long-term care centers). All homes in which we have an interest in Québec are private
seniors’ residences which are required to obtain a certificate of compliance based on prescribed operating
standards.
A certificate of compliance is issued for a period of four years and is renewable. The regional health and
social agency may revoke or refuse to issue or renew a certificate of compliance if, among other things, the
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operator fails to comply with the applicable law. The agency may also order corrective measures, further to an
inspection, complaint or investigation. The agency is authorized to inspect a residence, at any reasonable time of
day, in order to ascertain whether it complies with the law.
Private seniors’ residences may belong to either or both of the following categories: (i) those offering
services to independent elderly persons and (ii) those offering services to semi-independent elderly persons. The
operator must, for each category, comply with the applicable criteria and standards, with some exceptions for
residences with fewer than six or ten rooms or apartments. There are requirements with respect to residents’
health and safety, meal services and recreation, content of residents’ files, disclosure of information to residents,
and staffing, among other things.
Other Related Laws
Privacy
The services provided in our facilities are subject to privacy legislation in Canada, including, in certain
provinces, privacy laws specifically related to personal health information. Although the obligations of
custodians of personal information in the various provinces differ, they all include the obligation to protect the
information. The organizations with which we have management agreements may be the custodian of personal
information collected in connection with the operation of our facilities.
Privacy laws in Canada are consent-based and require the implementation of a privacy program involving
policies, procedures and the designation of an individual or team with primary responsibility for privacy law
compliance. Mandatory breach notification to affected individuals is a requirement under some laws. Mandatory
breach notification to the applicable regulator is a requirement in some provinces. Some laws require notification
where personal information is processed or stored outside of Canada. One provincial law (in Quebec) provides
for fines where an organization fails to perform due diligence before outsourcing activities involving personal
information to a service provider outside of the province.
The powers of privacy regulators and penalties for violations of privacy law vary according to the applicable
law or are left to the courts. To date, monetary penalties granted have been on the low side, although that is
changing with civil actions for breach of privacy and may change further as a result of class action activity.
Regulators have the authority to make public the identity of a custodian that has been found to have committed a
breach, so there is a reputational risk associated with privacy law violations even where no monetary damages
are incurred. The notification of residents (mandatory under some privacy laws) and other activities required to
manage a privacy breach can give rise to significant costs.
Other Legislation
Retirement homes may be subject to residential tenancy laws, such that there can be restrictions on rent
increases and termination of tenancies, for instance. Other provincial and/or municipal laws applicable to fire
safety, food services, zoning, occupational health and safety, public health, and the provision of community
health care and funded long-term/post-acute care may also apply to retirement homes.
Taxation
Federal Income Tax Considerations
The following summary of the taxation of the Company and the material federal tax consequences to the
holders of our debt and equity securities is for general information only and is not tax advice. This summary does
not address all aspects of taxation that may be relevant to certain types of holders of stock or securities
(including, but not limited to, insurance companies, tax-exempt entities, financial institutions or broker-dealers,
persons holding shares of common stock as part of a hedging, integrated conversion, or constructive sale
transaction or a straddle, traders in securities that use a mark-to-market method of accounting for their securities,
investors in pass-through entities and foreign corporations and persons who are not citizens or residents of the
United States).
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This summary does not discuss all of the aspects of U.S. federal income taxation that may be relevant to you
in light of your particular investment or other circumstances. In addition, this summary does not discuss any state
or local income taxation or foreign income taxation or other tax consequences. This summary is based on current
U.S. federal income tax law. Subsequent developments in U.S. federal income tax law, including changes in law
or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal
income tax consequences of purchasing, owning and disposing of our securities as set forth in this summary.
Before you purchase our securities, you should consult your own tax advisor regarding the particular
U.S. federal, state, local, foreign and other tax consequences of acquiring, owning and selling our securities.
General
We elected to be taxed as a real estate investment trust (a “REIT”) commencing with our first taxable year.
We intend to continue to operate in such a manner as to qualify as a REIT, but there is no guarantee that we will
qualify or remain qualified as a REIT for subsequent years. Qualification and taxation as a REIT depends upon
our ability to meet a variety of qualification tests imposed under federal income tax law with respect to income,
assets, distribution level and diversity of share ownership as discussed below under “— Qualification as a REIT.”
There can be no assurance that we will be owned and organized and will operate in a manner so as to qualify or
remain qualified.
In any year in which we qualify as a REIT, in general, we will not be subject to federal income tax on that
portion of our REIT taxable income or capital gain that is distributed to stockholders. We may, however, be
subject to tax at normal corporate rates on any taxable income or capital gain not distributed. If we elect to retain
and pay income tax on our net long-term capital gains, stockholders are required to include their proportionate
share of our undistributed long-term capital gains in income, but they will receive a refundable credit for their
share of any taxes paid by us on such gain.
Despite the REIT election, we may be subject to federal income and excise tax as follows:
• To the extent that we do not distribute all of our net capital gain or distribute at least 90%, but less than
100%, of our “REIT taxable income,” as adjusted, we will be subject to tax on the undistributed
amount at regular corporate tax rates;
• We may be subject to the “alternative minimum tax” (the “AMT”) on certain tax preference items to
the extent that the AMT exceeds our regular tax;
•
If we have net income from the sale or other disposition of “foreclosure property” that is held primarily
for sale to customers in the ordinary course of business or other non-qualifying income from
foreclosure property, such income will be taxed at the highest corporate rate;
• Any net income from prohibited transactions (which are, in general, sales or other dispositions of
property held primarily for sale to customers in the ordinary course of business, other than dispositions
of foreclosure property and dispositions of property due to an involuntary conversion) will be subject to
a 100% tax;
•
•
If we fail to satisfy either the 75% or 95% gross income tests (as discussed below), but nonetheless
maintain our qualification as a REIT because certain other requirements are met, we will be subject to a
100% tax on an amount equal to (1) the gross income attributable to the greater of (i) 75% of our gross
income over the amount of qualifying gross income for purposes of the 75% gross income test
(discussed below) or (ii) 95% of our gross income over the amount of qualifying gross income for
purposes of the 95% gross income test (discussed below) multiplied by (2) a fraction intended to reflect
our profitability;
If we fail to distribute during each year at least the sum of (1) 85% of our REIT ordinary income for the
year, (2) 95% of our REIT capital gain net income for such year (other than capital gain that we elect to
retain and pay tax on) and (3) any undistributed taxable income from preceding periods, we will be
subject to a 4% excise tax on the excess of such required distribution over amounts actually distributed;
• We will be subject to a 100% tax on the amount of any rents from real property, deductions or excess
interest paid to us by any of our “taxable REIT subsidiaries” that would be reduced through
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reallocation under certain federal income tax principles in order to more clearly reflect income of the
taxable REIT subsidiary. See “— Qualification as a REIT — Investments in Taxable REIT
Subsidiaries;” and
• We may be subject to the corporate “alternative minimum tax” on any items of tax preference,
including any deductions of net operating losses.
If we acquire any assets from a corporation, which is or has been a “C” corporation, in a carryover basis
transaction, we could be liable for specified liabilities that are inherited from the “C” corporation. A “C”
corporation is generally defined as a corporation that is required to pay full corporate level federal income tax. If
we recognize gain on the disposition of the assets during the five-year period beginning on the date on which the
assets were acquired by us, then, to the extent of the assets’ “built-in gain” (i.e., the excess of the fair market
value of the asset over the adjusted tax basis in the asset, in each case determined as of the beginning of the five-
year period), we will be subject to tax on the gain at the highest regular corporate rate applicable. The results
described in this paragraph with respect to the recognition of built-in gain assume that the built-in gain assets, at
the time the built-in gain assets were subject to a conversion transaction (either where a “C” corporation elected
REIT status or a REIT acquired the assets from a “C” corporation), were not treated as sold to an unrelated party
and gain recognized. For those properties that are subject to the built-in-gains tax, if triggered by a sale within the
five-year period beginning on the date on which the properties were acquired by us, then the potential amount of
built-in-gains tax will be an additional factor when considering a possible sale of the properties. See Note 18 to
our consolidated financial statements for additional information regarding the built-in gains tax.
Qualification as a REIT
A REIT is defined as a corporation, trust or association:
(1) which is managed by one or more trustees or directors;
(2)
the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of
beneficial interest;
(3) which would be taxable as a domestic corporation but for the federal income tax law relating to REITs;
(4) which is neither a financial institution nor an insurance company;
(5)
the beneficial ownership of which is held by 100 or more persons in each taxable year of the REIT
except for its first taxable year;
(6) not more than 50% in value of the outstanding stock of which is owned during the last half of each
taxable year, excluding its first taxable year, directly or indirectly, by or for five or fewer individuals
(which includes certain entities) (the “Five or Fewer Requirement”); and
(7) which meets certain income and asset tests described below.
Conditions (1) to (4), inclusive, must be met during the entire taxable year and condition (5) must be met
during at least 335 days of a taxable year of 12 months or during a proportionate part of a taxable year of less
than 12 months. For purposes of conditions (5) and (6), pension funds and certain other tax-exempt entities are
treated as individuals, subject to a “look-through” exception in the case of condition (6).
Based on publicly available information, we believe we have satisfied the share ownership requirements set
forth in (5) and (6) above. In addition, Article VI of our by-laws provides for restrictions regarding ownership
and transfer of shares. These restrictions are intended to assist us in continuing to satisfy the share ownership
requirements described in (5) and (6) above. These restrictions, however, may not ensure that we will, in all
cases, be able to satisfy the share ownership requirements described in (5) and (6) above.
We have complied with, and will continue to comply with, regulatory rules to send annual letters to certain
of our stockholders requesting information regarding the actual ownership of our stock. If, despite sending the
annual letters, we do not know, or after exercising reasonable diligence would not have known, whether we
failed to meet the Five or Fewer Requirement, we will be treated as having met the Five or Fewer Requirement.
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If we fail to comply with these regulatory rules, we will be subject to a monetary penalty. If our failure to comply
was due to intentional disregard of the requirement, the penalty would be increased. However, if our failure to
comply were due to reasonable cause and not willful neglect, no penalty would be imposed.
We may own a number of properties through wholly owned subsidiaries. A corporation will qualify as a
“qualified REIT subsidiary” if 100% of its stock is owned by a REIT, and the REIT does not elect to treat the
subsidiary as a taxable REIT subsidiary. A “qualified REIT subsidiary” will not be treated as a separate
corporation, and all assets,
liabilities and items of income, deductions and credits of a “qualified REIT
subsidiary” will be treated as assets, liabilities and items (as the case may be) of the REIT. A “qualified REIT
subsidiary” is not subject to federal income tax, and our ownership of the voting stock of a qualified REIT
subsidiary will not violate the restrictions against ownership of securities of any one issuer which constitute more
than 10% of the value or total voting power of such issuer or more than 5% of the value of our total assets, as
described below under “— Asset Tests.”
If we invest in a partnership, a limited liability company or a trust taxed as a partnership or as a disregarded
entity, we will be deemed to own a proportionate share of the partnership’s, limited liability company’s or trust’s
assets. Likewise, we will be treated as receiving our share of the income and loss of the partnership, limited
liability company or trust, and the gross income will retain the same character in our hands as it has in the hands
of the partnership, limited liability company or trust. These “look-through” rules apply for purposes of the
income tests and assets tests described below.
Income Tests. There are two separate percentage tests relating to our sources of gross income that we must
satisfy each taxable year.
• At least 75% of our gross income (excluding gross income from certain sales of property held primarily
for sale) must be directly or indirectly derived each taxable year from “rents from real property,” other
income from investments relating to real property or mortgages on real property or certain income from
qualified temporary investments.
• At least 95% of our gross income (excluding gross income from certain sales of property held primarily
for sale) must be directly or indirectly derived each taxable year from any of the sources qualifying for
the 75% gross income test and from dividends (including dividends from taxable REIT subsidiaries)
and interest.
As to transactions entered into in taxable years beginning after October 22, 2004 and on or prior to July 30,
2008, any of our income from a “clearly identified” hedging transaction that is entered into by us in the normal
course of business, directly or indirectly, to manage the risk of interest rate movements, price changes or
currency fluctuations with respect to borrowings or obligations incurred or to be incurred by us, or such other
risks that are prescribed by the Internal Revenue Service, is excluded from the 95% gross income test.
For transactions entered into after July 30, 2008, any of our income from a “clearly identified” hedging
transaction that is entered into by us in the normal course of business, directly or indirectly, to manage the risk of
interest rate movements, price changes or currency fluctuations with respect to borrowings or obligations
incurred or to be incurred by us is excluded from the 95% and 75% gross income tests. For transactions entered
into after July 30, 2008, any of our income from a “clearly identified” hedging transaction entered into by us
primarily to manage risk of currency fluctuations with respect to any item of income or gain that is included in
gross income in the 95% and 75% gross income tests is excluded from the 95% and 75% gross income tests.
In general, a hedging transaction is “clearly identified” if (1) the transaction is identified as a hedging
transaction before the end of the day on which it is entered into and (2) the items or risks being hedged are
identified “substantially contemporaneously” with the hedging transaction. An identification is not substantially
contemporaneous if it is made more than 35 days after entering into the hedging transaction.
As to gains and items of income recognized after July 30, 2008, “passive foreign exchange gain” for any
taxable year will not constitute gross income for purposes of the 95% gross income test and “real estate foreign
exchange gain” for any taxable year will not constitute gross income for purposes of the 75% gross income test.
Real estate foreign exchange gain is foreign currency gain (as defined in Internal Revenue Code
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Section 988(b)(1)) which is attributable to: (i) any qualifying item of income or gain for purposes of the 75%
gross income test; (ii) the acquisition or ownership of obligations secured by mortgages on real property or
interests in real property; or (iii) becoming or being the obligor under obligations secured by mortgages on real
property or on interests in real property. Real estate foreign exchange gain also includes Internal Revenue Code
Section 987 gain attributable to a qualified business unit (a “QBU”) of a REIT if the QBU itself meets the 75%
gross income test for the taxable year and the 75% asset test at the close of each quarter that the REIT has
directly or indirectly held the QBU. Real estate foreign exchange gain also includes any other foreign currency
gain as determined by the Secretary of the Treasury. Passive foreign exchange gain includes all real estate
foreign exchange gain and foreign currency gain which is attributable to: (i) any qualifying item of income or
gain for purposes of the 95% gross income test; (ii) the acquisition or ownership of obligations; (iii) becoming or
being the obligor under obligations; and (iv) any other foreign currency gain as determined by the Secretary of
the Treasury.
Generally, other than income from “clearly identified” hedging transactions entered into by us in the normal
course of business, any foreign currency gain derived by us from dealing, or engaging in substantial and regular
trading, in securities will constitute gross income which does not qualify under the 95% or 75% gross income
tests.
Rents received by us will qualify as “rents from real property” for purposes of satisfying the gross income
tests for a REIT only if several conditions are met:
• The amount of rent must not be based in whole or in part on the income or profits of any person,
although rents generally will not be excluded merely because they are based on a fixed percentage or
percentages of receipts or sales.
• Rents received from a tenant will not qualify as rents from real property if the REIT, or an owner of
10% or more of the REIT, also directly or constructively owns 10% or more of the tenant, unless the
tenant is our taxable REIT subsidiary and certain other requirements are met with respect to the real
property being rented.
•
•
•
If rent attributable to personal property leased in connection with a lease of real property is greater than
15% of the total rent received under the lease, then the portion of rent attributable to such personal
property will not qualify as “rents from real property.”
For rents to qualify as rents from real property, we generally must not furnish or render services to
tenants, other than through a taxable REIT subsidiary or an “independent contractor” from whom we
derive no income, except that we may directly provide services that are “usually or customarily
rendered” in the geographic area in which the property is located in connection with the rental of real
property for occupancy only, or are not otherwise considered “rendered to the occupant for his
convenience.”
For taxable years beginning after July 30, 2008, the REIT may lease “qualified health care properties”
on an arm’s-length basis to a taxable REIT subsidiary if the property is operated on behalf of such
subsidiary by a person who qualifies as an “independent contractor” and who is, or is related to a
person who is, actively engaged in the trade or business of operating health care facilities for any
person unrelated to us or our taxable REIT subsidiary, an “eligible independent contractor.” Generally,
the rent that the REIT receives from the taxable REIT subsidiary will be treated as “rents from real
property.” A “qualified health care property” includes any 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 that extends
medical or nursing or ancillary services to patients and is operated by a provider of such services that is
eligible for participation in the Medicare program with respect to such facility.
A REIT is permitted to render a de minimis amount of impermissible services to tenants and still treat
amounts received with respect to that property as rent from real property. The amount received or accrued by the
REIT during the taxable year for the impermissible services with respect to a property may not exceed 1% of all
amounts received or accrued by the REIT directly or indirectly from the property. The amount received for any
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service or management operation for this purpose shall be deemed to be not less than 150% of the direct cost of
the REIT in furnishing or rendering the service or providing the management or operation. Furthermore,
impermissible services may be furnished to tenants by a taxable REIT subsidiary subject to certain conditions,
and we may still treat rents received with respect to the property as rent from real property.
The term “interest” generally does not include any amount if the determination of the amount depends in
whole or in part on the income or profits of any person, although an amount generally will not be excluded from
the term “interest” solely by reason of being based on a fixed percentage of receipts or sales.
If we fail to satisfy one or both of the 75% or 95% gross income tests for any taxable year, we may
nevertheless qualify as a REIT for such year if we are eligible for relief. These relief provisions generally will be
available if (1) following our identification of the failure, we file a schedule for such taxable year describing each
item of our gross income, and (2) the failure to meet such tests was due to reasonable cause and not due to willful
neglect. It is not now possible to determine the circumstances under which we may be entitled to the benefit of
these relief provisions. If these relief provisions apply, a 100% tax is imposed on an amount equal to (a) the gross
income attributable to (1) 75% of our gross income over the amount of qualifying gross income for purposes of
the 75% income test and (2) 95% of our gross income over the amount of qualifying gross income for purposes
of the 95% income test, multiplied by (b) a fraction intended to reflect our profitability. The Secretary of the
Treasury is given broad authority to determine whether particular items of income or gain qualify or not under
the 75% and 95% gross income tests, or are to be excluded from the measure of gross income for such purposes.
Asset Tests. Within 30 days after the close of each quarter of our taxable year, we must also satisfy several
tests relating to the nature and diversification of our assets determined in accordance with generally accepted
accounting principles. At least 75% of the value of our total assets must be represented by real estate assets, cash,
cash items (including receivables arising in the ordinary course of our operation), government securities and
qualified temporary investments. Although the remaining 25% of our assets generally may be invested without
restriction, we are prohibited from owning securities representing more than 10% of either the vote (the “10%
vote test”) or value (the “10% value test”) of the outstanding securities of any issuer other than a qualified REIT
subsidiary, another REIT or a taxable REIT subsidiary. Further, no more than 25% (20% for tax years beginning
after 2017) of the total assets may be represented by securities of one or more taxable REIT subsidiaries (the
“25% asset test”) and no more than 5% of the value of our total assets may be represented by securities of any
non-governmental issuer other than a qualified REIT subsidiary (the “5% asset test”), another REIT or a taxable
REIT subsidiary. Each of the 10% vote test, the 10% value test and the 25% and 5% asset tests must be satisfied
at the end of each quarter. There are special rules which provide relief if the value related tests are not satisfied
due to changes in the value of the assets of a REIT.
Certain items are excluded from the 10% value test, including: (1) straight debt securities (as defined in
Internal Revenue Code Section 1361(c)(5)) of an issuer (including straight debt that provides certain contingent
payments); (2) any loan to an individual or an estate; (3) any rental agreement described in Section 467 of the
Internal Revenue Code, other than with a “related person”; (4) any obligation to pay rents from real property;
(5) certain securities issued by a state or any subdivision thereof, the District of Columbia, a foreign government,
or any political subdivision thereof, or the Commonwealth of Puerto Rico; (6) any security issued by a REIT; and
(7) any other arrangement that, as determined by the Secretary of the Treasury, is excepted from the definition of
security (“excluded securities”). Special rules apply to straight debt securities issued by corporations and entities
taxable as partnerships for federal income tax purposes. If a REIT, or its taxable REIT subsidiary, holds
(1) straight debt securities of a corporate or partnership issuer and (2) securities of such issuer that are not
excluded securities and have an aggregate value greater than 1% of such issuer’s outstanding securities, the
straight debt securities will be included in the 10% value test.
A REIT’s interest as a partner in a partnership is not treated as a security for purposes of applying the 10%
value test to securities issued by the partnership. Further, any debt instrument issued by a partnership will not be
a security for purposes of applying the 10% value test (1) to the extent of the REIT’s interest as a partner in the
partnership and (2) if at least 75% of the partnership’s gross income (excluding gross income from prohibited
transactions) would qualify for the 75% gross income test. For purposes of the 10% value test, a REIT’s interest
in a partnership’s assets is determined by the REIT’s proportionate interest in any securities issued by the
partnership (other than the excluded securities described in the preceding paragraph).
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For taxable years beginning after July 30, 2008, if the REIT or its QBU uses a foreign currency as its
functional currency, the term “cash” includes such foreign currency, but only to the extent such foreign currency
is (i) held for use in the normal course of the activities of the REIT or QBU which give rise to items of income or
gain that are included in the 95% and 75% gross income tests or are directly related to acquiring or holding assets
qualifying under the 75% asset test, and (ii) not held in connection with dealing or engaging in substantial and
regular trading in securities.
With respect to corrections of failures as to violations of the 10% vote test, the 10% value test or the 5%
asset test, a REIT may avoid disqualification as a REIT by disposing of sufficient assets to cure a violation that
does not exceed the lesser of 1% of the REIT’s assets at the end of the relevant quarter or $10,000,000, provided
that the disposition occurs within six months following the last day of the quarter in which the REIT first
identified the assets. For violations of any of the REIT asset tests due to reasonable cause and not willful neglect
that exceed the thresholds described in the preceding sentence, a REIT can avoid disqualification as a REIT after
the close of a taxable quarter by taking certain steps, including disposition of sufficient assets within the six
month period described above to meet the applicable asset test, paying a tax equal to the greater of $50,000 or the
highest corporate tax rate multiplied by the net income generated by the non-qualifying assets during the period
of time that the assets were held as non-qualifying assets and filing a schedule with the Internal Revenue Service
that describes the non-qualifying assets.
Investments in Taxable REIT Subsidiaries. REITs may own more than 10% of the voting power and value
of securities in taxable REIT subsidiaries. Unlike a qualified REIT subsidiary, other disregarded entity or
partnership, the income and assets of a taxable REIT subsidiary are not attributable to the REIT for purposes of
satisfying the income and asset ownership requirements applicable to REIT qualification. We and any taxable
corporate entity in which we own an interest are allowed to jointly elect to treat such entity as a “taxable REIT
subsidiary.”
Certain of our subsidiaries have elected to be treated as a taxable REIT subsidiary. Taxable REIT
subsidiaries are subject to full corporate level federal taxation on their earnings but are permitted to engage in
certain types of activities that cannot be performed directly by REITs without jeopardizing their REIT status. Our
taxable REIT subsidiaries will attempt to minimize the amount of these taxes, but there can be no assurance
whether or the extent to which measures taken to minimize taxes will be successful. To the extent our taxable
REIT subsidiaries are required to pay federal, state or local taxes, the cash available for distribution as dividends
to us from our taxable REIT subsidiaries will be reduced.
The amount of interest on related-party debt that a taxable REIT subsidiary may deduct is limited. Further, a
100% tax applies to any interest payments by a taxable REIT subsidiary to its affiliated REIT to the extent the
interest rate is not commercially reasonable. A taxable REIT subsidiary is permitted to deduct interest payments
to unrelated parties without any of these restrictions.
The Internal Revenue Service may reallocate costs between a REIT and its taxable REIT subsidiary where
there is a lack of arm’s-length dealing between the parties. Any deductible expenses allocated away from a
taxable REIT subsidiary would increase its tax liability. Further, any amount by which a REIT understates its
deductions and overstates those of its taxable REIT subsidiary may, subject to certain exceptions, be subject to a
100% tax. Additional taxable REIT subsidiary elections may be made in the future for additional entities in
which we obtain an interest.
Annual Distribution Requirements.
In order to avoid being taxed as a regular corporation, we are required
to make distributions (other than capital gain distributions) to our stockholders which qualify for the dividends
paid deduction in an amount at least equal to (1) the sum of (i) 90% of our “REIT taxable income” (computed
without regard to the dividends paid deduction and our net capital gain) and (ii) 90% of the after-tax net income,
if any, from foreclosure property, minus (2) a portion of certain items of non-cash income. These distributions
must be paid in the taxable year to which they relate, or in the following taxable year if declared before we timely
file our tax return for that year and if paid on or before the first regular distribution payment after such
declaration. Prior to recently enacted legislation, with respect to all REITs the amount distributed could not be
preferential. This means that every stockholder of the class of stock to which a distribution is made must be
treated the same as every other stockholder of that class, and no class of stock may be treated otherwise than in
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accordance with its dividend rights as a class (the “preferential dividend rule”). Beginning in tax years after
2014, the preferential dividend rule no longer applies to publicly offered REITs, however, the rule is still
applicable to other entities taxed as REITs, which would include several of our subsidiaries. To the extent that we
do not distribute all of our net capital gain or distribute at least 90%, but less than 100%, of our “REIT taxable
income,” as adjusted, we will be subject to tax on the undistributed amount at regular corporate tax rates. As
discussed above, we may be subject to an excise tax if we fail to meet certain other distribution requirements. We
believe we have satisfied the annual distribution requirements for the year of our initial REIT election and each
year thereafter through the year ended December 31, 2016. Although we intend to make timely distributions
sufficient to satisfy these annual distribution requirements for subsequent years, economic, market, legal, tax or
other factors could limit our ability to meet those requirements. See “Item 1A — Risk Factors.”
It is also possible that, from time to time, we may not have sufficient cash or other liquid assets to meet the
90% distribution requirement, or to distribute such greater amount as may be necessary to avoid income and
excise taxation, due to, among other things, (1) timing differences between (i) the actual receipt of income and
actual payment of deductible expenses and (ii) the inclusion of income and deduction of expenses in arriving at
our taxable income, or (2) the payment of severance benefits that may not be deductible to us. In the event that
timing differences occur, we may find it necessary to arrange for borrowings or, if possible, pay dividends in the
form of taxable stock dividends in order to meet the distribution requirement.
Under certain circumstances, in the event of a deficiency determined by the Internal Revenue Service, we
may be able to rectify a resulting failure to meet the distribution requirement for a year by paying “deficiency
dividends” to stockholders in a later year, which may be included in our deduction for distributions paid for the
earlier year. Thus, we may be able to avoid being taxed on amounts distributed as deficiency dividends; however,
we will be required to pay applicable penalties and interest based upon the amount of any deduction taken for
deficiency dividend distributions.
Failure to Qualify as a REIT
If we fail to qualify for taxation as a REIT in any taxable year, we will be subject to federal income tax,
including any applicable alternative minimum tax, on our taxable income at regular corporate rates. Distributions
to stockholders in any year in which we fail to qualify as a REIT will not be deductible nor will any particular
amount of distributions be required to be made in any year. All distributions to stockholders will be taxable as
ordinary income to the extent of current and accumulated earnings and profits allocable to these distributions
to certain limitations, will be eligible for the dividends received deduction for corporate
and, subject
stockholders. Unless entitled to relief under specific statutory provisions, we also will be disqualified from
taxation as a REIT for the four taxable years following the year during which qualification was lost. It is not
possible to state whether in all circumstances we would be entitled to statutory relief. Failure to qualify for even
one year could result in our need to incur indebtedness or liquidate investments in order to pay potentially
significant resulting tax liabilities.
In addition to the relief described above under “— Income Tests” and “— Asset Tests,” relief is available in
the event that we violate a provision of the Internal Revenue Code that would result in our failure to qualify as a
REIT if: (1) the violation is due to reasonable cause and not due to willful neglect; (2) we pay a penalty of
$50,000 for each failure to satisfy the provision; and (3) the violation does not include a violation described
under “— Income Tests” or “— Asset Tests” above. It is not now possible to determine the circumstances under
which we may be entitled to the benefit of these relief provisions.
Federal Income Taxation of Holders of Our Stock
Treatment of Taxable U.S. Stockholders. The following summary applies to you only if you are a
“U.S. stockholder.” A “U.S. stockholder” is a holder of shares of stock who, for United States federal income tax
purposes, is:
•
•
a citizen or resident of the United States;
a corporation, partnership or other entity classified as a corporation or partnership for these purposes,
created or organized in or under the laws of the United States or of any political subdivision of the
United States, including any state;
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•
•
an estate, the income of which is subject to United States federal income taxation regardless of its
source; or
a trust, if, in general, a U.S. court is able to exercise primary supervision over the trust’s administration
and one or more U.S. persons, within the meaning of the Internal Revenue Code, has the authority to
control all of the trust’s substantial decisions.
So long as we qualify for taxation as a REIT, distributions on shares of our stock made out of the current or
accumulated earnings and profits allocable to these distributions (and not designated as capital gain dividends)
will be includable as ordinary income for federal income tax purposes. None of these distributions will be
eligible for the dividends received deduction for U.S. corporate stockholders.
Generally, the current maximum marginal rate of tax payable by individuals on dividends received from
corporations that are subject to a corporate level of tax is 20%. Except in limited circumstances, this tax rate will
not apply to dividends paid to you by us on our shares, because generally we are not subject to federal income tax
on the portion of our REIT taxable income or capital gains distributed to our stockholders. The reduced
maximum federal income tax rate will apply to that portion, if any, of dividends received by you with respect to
our shares that are attributable to: (1) dividends received by us from non-REIT corporations or other taxable
REIT subsidiaries; (2) income from the prior year with respect to which we were required to pay federal
corporate income tax during the prior year (if, for example, we did not distribute 100% of our REIT taxable
income for the prior year); or (3) the amount of any earnings and profits that were distributed by us and
accumulated in a non-REIT year.
Distributions that are designated as capital gain dividends will be taxed as long-term capital gains (to the
extent they do not exceed our actual net capital gain for the taxable year), without regard to the period for which
you held our stock. However, if you are a corporation, you may be required to treat a portion of some capital gain
dividends as ordinary income.
If we elect to retain and pay income tax on any net long-term capital gain, you would include in income, as
long-term capital gain, your proportionate share of this net long-term capital gain. You would also receive a
refundable tax credit for your proportionate share of the tax paid by us on such retained capital gains, and you
would have an increase in the basis of your shares of our stock in an amount equal to your includable capital
gains less your share of the tax deemed paid.
You may not include in your federal income tax return any of our net operating losses or capital losses.
Federal income tax rules may also require that certain minimum tax adjustments and preferences be apportioned
to you. In addition, any distribution declared by us in October, November or December of any year on a specified
date in any such month shall be treated as both paid by us and received by you on December 31 of that year,
provided that the distribution is actually paid by us no later than January 31 of the following year.
We will be treated as having sufficient earnings and profits to treat as a dividend any distribution up to the
amount required to be distributed in order to avoid imposition of the 4% excise tax discussed under “— General”
and “— Qualification as a REIT — Annual Distribution Requirements” above. As a result, you may be required
to treat as taxable dividends certain distributions that would otherwise result in a tax-free return of capital.
Moreover, any “deficiency dividend” will be treated as a dividend (an ordinary dividend or a capital gain
dividend, as the case may be), regardless of our earnings and profits. Any other distributions in excess of current
or accumulated earnings and profits will not be taxable to you to the extent these distributions do not exceed the
adjusted tax basis of your shares of our stock. You will be required to reduce the tax basis of your shares of our
stock by the amount of these distributions until the basis has been reduced to zero, after which these distributions
will be taxable as capital gain, if the shares of our stock are held as capital assets. The tax basis as so reduced will
be used in computing the capital gain or loss, if any, realized upon sale of the shares of our stock. Any loss upon
a sale or exchange of shares of our stock which were held for six months or less (after application of certain
holding period rules) will generally be treated as a long-term capital loss to the extent you previously received
capital gain distributions with respect to these shares of our stock.
Upon the sale or exchange of any shares of our stock to or with a person other than us or a sale or exchange
of all shares of our stock (whether actually or constructively owned) with us, you will generally recognize capital
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gain or loss equal to the difference between the amount realized on the sale or exchange and your adjusted tax
basis in these shares of our stock. This gain will be capital gain if you held these shares of our stock as a capital
asset.
If we redeem any of your shares in us, the treatment can only be determined on the basis of particular facts
at the time of redemption. In general, you will recognize gain or loss (as opposed to dividend income) equal to
the difference between the amount received by you in the redemption and your adjusted tax basis in your shares
redeemed if such redemption: (1) results in a “complete termination” of your interest in all classes of our equity
securities; (2) is a “substantially disproportionate redemption”; or (3) is “not essentially equivalent to a dividend”
with respect to you. In applying these tests, you must take into account your ownership of all classes of our
equity securities (e.g., common stock, preferred stock, depositary shares and warrants). You also must take into
account any equity securities that are considered to be constructively owned by you.
If, as a result of a redemption by us of your shares, you no longer own (either actually or constructively) any
of our equity securities or only own (actually and constructively) an insubstantial percentage of our equity
securities, then it is probable that the redemption of your shares would be considered “not essentially equivalent
to a dividend” and, thus, would result in gain or loss to you. However, whether a distribution is “not essentially
equivalent to a dividend” depends on all of the facts and circumstances, and if you rely on any of these tests at
the time of redemption, you should consult your tax advisor to determine their application to the particular
situation.
Generally, if the redemption does not meet the tests described above, then the proceeds received by you
from the redemption of your shares will be treated as a distribution taxable as a dividend to the extent of the
allocable portion of current or accumulated earnings and profits. If the redemption is taxed as a dividend, your
adjusted tax basis in the redeemed shares will be transferred to any other shareholdings in us that you own. If you
own no other shareholdings in us, under certain circumstances, such basis may be transferred to a related person,
or it may be lost entirely.
Gain from the sale or exchange of our shares held for more than one year is generally taxed at a maximum
long-term capital gain rate of 20% in the case of stockholders who are individuals and 35% in the case of
stockholders that are corporations. Pursuant to Internal Revenue Service guidance, we may classify portions of
our capital gain dividends as gains eligible for the long-term capital gains rate or as gain taxable to individual
stockholders at a maximum rate of 25%. Capital losses recognized by a stockholder upon the disposition of our
shares held for more than one year at the time of disposition will be considered long-term capital losses, and are
generally available only to offset capital gain income of the stockholder but not ordinary income (except in the
case of individuals, who may offset up to $3,000 of ordinary income each year).
An additional tax of 3.8% generally will be imposed on the “net investment income” of U.S. stockholders
who meet certain requirements and are individuals, estates or certain trusts. Among other items, “net investment
income” generally includes gross income from dividends and net gain attributable to the disposition of certain
property, such as shares of our common stock or warrants. In the case of individuals, this tax will only apply to
the extent such individual’s modified adjusted gross income exceeds $200,000 ($250,000 for married couples
filing a joint return and surviving spouses, and $125,000 for married individuals filing a separate return). U.S.
stockholders should consult their tax advisors regarding the possible applicability of this additional tax in their
particular circumstances.
Treatment of Tax-Exempt U.S. Stockholders. Tax-exempt entities, including qualified employee pension
and profit sharing trusts and individual retirement accounts (“Exempt Organizations”), generally are exempt from
federal income taxation. However, they are subject to taxation on their unrelated business taxable income
(“UBTI”). The Internal Revenue Service has issued a published revenue ruling that dividend distributions from a
REIT to an exempt employee pension trust do not constitute UBTI, provided that the shares of the REIT are not
otherwise used in an unrelated trade or business of the exempt employee pension trust. Based on this ruling,
amounts distributed by us to Exempt Organizations generally should not constitute UBTI. However, if an Exempt
Organization finances its acquisition of the shares of our stock with debt, a portion of its income from us will
constitute UBTI pursuant to the “debt financed property” rules. Likewise, a portion of the Exempt Organization’s
income from us would constitute UBTI if we held a residual interest in a real estate mortgage investment conduit.
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In addition, in certain circumstances, a pension trust that owns more than 10% of our stock is required to
treat a percentage of our dividends as UBTI. This rule applies to a pension trust holding more than 10% of our
stock only if: (1) the percentage of our income that is UBTI (determined as if we were a pension trust) is at least
5%; (2) we qualify as a REIT by reason of the modification of the Five or Fewer Requirement that allows
beneficiaries of the pension trust to be treated as holding shares in proportion to their actuarial interests in the
pension trust; and (3) either (i) one pension trust owns more than 25% of the value of our stock, or (ii) a group of
pension trusts individually holding more than 10% of the value of our stock collectively own more than 50% of
the value of our stock.
Backup Withholding and Information Reporting. Under certain circumstances, you may be subject to
backup withholding at applicable rates on payments made with respect to, or cash proceeds of a sale or exchange
of, shares of our stock. Backup withholding will apply only if you: (1) fail to provide a correct taxpayer
identification number, which if you are an individual, is ordinarily your social security number; (2) furnish an
incorrect taxpayer identification number; (3) are notified by the Internal Revenue Service that you have failed to
properly report payments of interest or dividends; or (4) fail to certify, under penalties of perjury, that you have
furnished a correct taxpayer identification number and that the Internal Revenue Service has not notified you that
you are subject to backup withholding.
Backup withholding will not apply with respect to payments made to certain exempt recipients, such as
corporations and tax-exempt organizations. You should consult with a tax advisor regarding qualification for
exemption from backup withholding, and the procedure for obtaining an exemption. Backup withholding is not
an additional tax. Rather, the amount of any backup withholding with respect to a payment to a stockholder will
be allowed as a credit against such stockholder’s United States federal income tax liability and may entitle such
stockholder to a refund, provided that the required information is provided to the Internal Revenue Service. In
addition, withholding a portion of capital gain distributions made to stockholders may be required for
stockholders who fail to certify their non-foreign status.
Taxation of Foreign Stockholders. The following summary applies to you only if you are a foreign person.
The federal taxation of foreign persons is a highly complex matter that may be affected by many considerations.
Except as discussed below, distributions to you of cash generated by our real estate operations in the form of
ordinary dividends, but not by the sale or exchange of our capital assets, generally will be subject
to
U.S. withholding tax at a rate of 30%, unless an applicable tax treaty reduces that tax and you file with us the
required form evidencing the lower rate.
In general, you will be subject to United States federal income tax on a graduated rate basis rather than
withholding with respect to your investment in our stock if such investment is “effectively connected” with your
conduct of a trade or business in the United States. A corporate foreign stockholder that receives income that is,
or is treated as, effectively connected with a United States trade or business may also be subject to the branch
profits tax, which is payable in addition to regular United States corporate income tax. The following discussion
will apply to foreign stockholders whose investment in us is not so effectively connected. We expect to withhold
United States income tax, as described below, on the gross amount of any distributions paid to you unless (1) you
file an Internal Revenue Service Form W-8ECI with us claiming that the distribution is “effectively connected”
or (2) certain other exceptions apply.
Distributions by us that are attributable to gain from the sale or exchange of a United States real property
interest will be taxed to you under the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”) as if
these distributions were gains “effectively connected” with a United States trade or business. Accordingly, you
will be taxed at the normal capital gain rates applicable to a U.S. stockholder on these amounts, subject to any
applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien
individuals. Distributions subject to FIRPTA may also be subject to a branch profits tax in the hands of a
corporate foreign stockholder that is not entitled to treaty exemption.
We will be required to withhold from distributions subject to FIRPTA, and remit to the Internal Revenue
Service, 35% of designated capital gain dividends, or, if greater, 35% of the amount of any distributions that
could be designated as capital gain dividends. In addition, if we designate prior distributions as capital gain
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dividends, subsequent distributions, up to the amount of the prior distributions not withheld against, will be
treated as capital gain dividends for purposes of withholding.
Any capital gain dividend with respect to any class of stock that is “regularly traded” on an established
securities market will be treated as an ordinary dividend if the foreign stockholder did not own more than 10% of
such class of stock at any time during the taxable year. Foreign stockholders generally will not be required to
report distributions received from us on U.S. federal income tax returns and all distributions treated as dividends
for U.S. federal income tax purposes (including any such capital gain dividends) will be subject to a 30%
U.S. withholding tax (unless reduced under an applicable income tax treaty) as discussed above. In addition, the
branch profits tax will not apply to such distributions.
Unless our shares constitute a “United States real property interest” within the meaning of FIRPTA or are
effectively connected with a U.S. trade or business, a sale of our shares by you generally will not be subject to
United States taxation. Though, under the Protecting Americans from Tax Hikes Act of 2015 (the “PATH Act”),
enacted on December 18, 2015, even if our shares were to constitute a “United States real property interest,”
non-U.S. stockholders that are “qualified foreign pension funds” (or are owned by a qualified foreign pension)
meeting certain requirements may be exempt from FIRPTA withholding on the sale or disposition of our shares.
Our shares will not constitute a United States real property interest if we qualify as a “domestically controlled
REIT.” We believe that we, and expect to continue to, qualify as a domestically controlled REIT. A domestically
controlled REIT is a REIT in which at all times during a specified testing period less than 50% in value of its
shares is held directly or indirectly by foreign stockholders. Generally, under the PATH Act, we are permitted to
assume that holders of less than 5% of our shares at all times during a specified testing period are U.S. persons.
However, if you are a nonresident alien individual who is present in the United States for 183 days or more
during the taxable year and certain other conditions apply, you will be subject to a 30% tax on such capital gains.
In any event, a purchaser of our shares from you will not be required under FIRPTA to withhold on the purchase
price if the purchased shares are “regularly traded” on an established securities market or if we are a domestically
controlled REIT. Otherwise, under FIRPTA, the purchaser may be required to withhold 10% (increased to 15%
under the PATH Act for distributions occurring after February 16, 2016) of the purchase price and remit such
amount to the Internal Revenue Service.
Backup withholding tax and information reporting will generally not apply to distributions paid to you
outside the United States that are treated as: (1) dividends to which the 30% or lower treaty rate withholding tax
discussed above applies; (2) capital gains dividends; or (3) distributions attributable to gain from the sale or
exchange by us of U.S. real property interests. Payment of the proceeds of a sale of stock within the United States
or conducted through certain U.S. related financial intermediaries is subject to both backup withholding and
information reporting unless the beneficial owner certifies under penalties of perjury that he or she is not a
U.S. person (and the payor does not have actual knowledge that the beneficial owner is a U.S. person) or
otherwise established an exemption. You may obtain a refund of any amounts withheld under the backup
withholding rules by filing the appropriate claim for refund with the Internal Revenue Service.
Withholding tax at a rate of 30% will be imposed on certain payments to you or certain foreign financial
institutions (including investment funds) and other non-US persons receiving payments on your behalf, including
distributions in respect of shares of our stock and gross proceeds from the sale of shares of our stock, if you or
such institutions fail to comply with certain due diligence, disclosure and reporting rules, as set forth in recently
issued Treasury regulations. Accordingly, the entity through which shares of our stock are held will affect the
determination of whether such withholding is required. Withholding currently applies to payments of dividends
made after June 30, 2014, and will apply to payments of gross proceeds from a sale of shares of our stock made
after December 31, 2018. Stockholders that are otherwise eligible for an exemption from, or reduction of, U.S.
withholding taxes with respect to such dividends and proceeds will be required to seek a refund from the Internal
Revenue Service to obtain the benefit of such exemption or reduction. Additional requirements and conditions
may be imposed pursuant to an intergovernmental agreement, if and when entered into, between the United
States and such institution’s home jurisdiction. We will not pay any additional amounts to any stockholders in
respect of any amounts withheld. You are encouraged to consult with your tax advisor regarding U.S.
withholding taxes and the application of the recently issued Treasury regulations in light of your particular
circumstances.
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U.S. Federal Income Taxation of Holders of Depositary Shares
Owners of our depositary shares will be treated as if you were owners of the series of preferred stock
represented by the depositary shares. Thus, you will be required to take into account the income and deductions
to which you would be entitled if you were a holder of the underlying series of preferred stock.
Conversion or Exchange of Shares for Preferred Stock. No gain or loss will be recognized upon the
withdrawal of preferred stock in exchange for depositary shares and the tax basis of each share of preferred stock
will, upon exchange, be the same as the aggregate tax basis of the depositary shares exchanged. If you held your
depositary shares as a capital asset at the time of the exchange for shares of preferred stock, the holding period
for your shares of preferred stock will include the period during which you owned the depositary shares.
U.S. Federal Income and Estate Taxation of Holders of Our Debt Securities
is a non-U.S. holder, as defined below,
The following is a general summary of the United States federal income tax consequences and, in the case
that you are a holder that
the United States federal estate tax
consequences, of purchasing, owning and disposing of debt securities periodically offered under one or more
indentures (the “notes”). This summary assumes that you hold the notes as capital assets. This summary applies
to you only if you are the initial holder of the notes and you acquire the notes for a price equal to the issue price
of the notes. The issue price of the notes is the first price at which a substantial amount of the notes is sold other
than to bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement
agents or wholesalers. In addition, this summary does not consider any foreign, state, local or other tax laws that
may be applicable to us or a purchaser of the notes.
U.S. Holders
The following summary applies to you only if you are a U.S. holder, as defined below.
Definition of a U.S. Holder. A “U.S. holder” is a beneficial owner of a note or notes that is for United
States federal income tax purposes:
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a citizen or resident of the United States;
a corporation, partnership or other entity classified as a corporation or partnership for these purposes,
created or organized in or under the laws of the United States or of any political subdivision of the
United States, including any state;
an estate, the income of which is subject to United States federal income taxation regardless of its
source; or
a trust, if, in general, a U.S. court is able to exercise primary supervision over the trust’s administration
and one or more U.S. persons, within the meaning of the Internal Revenue Code, has the authority to
control all of the trust’s substantial decisions.
Payments of Interest. Stated interest on the notes generally will be taxed as ordinary interest income from
domestic sources at the time it is paid or accrues in accordance with your method of accounting for tax purposes.
Sale, Exchange or Other Disposition of Notes. The adjusted tax basis in your note acquired at a premium
will generally be your cost. You generally will recognize taxable gain or loss when you sell or otherwise dispose
of your notes equal to the difference, if any, between:
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the amount realized on the sale or other disposition, less any amount attributable to any accrued
interest, which will be taxable in the manner described under “— Payments of Interest” above; and
your adjusted tax basis in the notes.
Your gain or loss generally will be capital gain or loss. This capital gain or loss will be long-term capital
gain or loss if at the time of the sale or other disposition you have held the notes for more than one year. Subject
to limited exceptions, your capital losses cannot be used to offset your ordinary income (except in the case of
individuals, who may offset up to $3,000 of ordinary income each year).
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Backup Withholding and Information Reporting.
In general, “backup withholding” may apply to any
payments made to you of principal and interest on your note, and to payment of the proceeds of a sale or other
disposition of your note before maturity, if you are a non-corporate U.S. holder and: (1) fail to provide a correct
taxpayer identification number, which if you are an individual, is ordinarily your social security number;
(2) furnish an incorrect taxpayer identification number; (3) are notified by the Internal Revenue Service that you
have failed to properly report payments of interest or dividends; or (4) fail to certify, under penalties of perjury,
that you have furnished a correct taxpayer identification number and that the Internal Revenue Service has not
notified you that you are subject to backup withholding.
The amount of any reportable payments, including interest, made to you (unless you are an exempt
recipient) and the amount of tax withheld, if any, with respect to such payments will be reported to you and to the
Internal Revenue Service for each calendar year. You should consult your tax advisor regarding your
qualification for an exemption from backup withholding and the procedures for obtaining such an exemption, if
applicable. The backup withholding tax is not an additional tax and will be credited against your U.S. federal
income tax liability, provided that correct information is provided to the Internal Revenue Service.
Non-U.S. Holders
The following summary applies to you if you are a beneficial owner of a note and are not a U.S. holder, as
defined above (a “non-U.S. holder”).
Special rules may apply to certain non-U.S. holders such as “controlled foreign corporations,” “passive
foreign investment companies” and “foreign personal holding companies.” Such entities are encouraged to
consult their tax advisors to determine the United States federal, state, local and other tax consequences that may
be relevant to them.
U.S. Federal Withholding Tax. Subject to the discussion below, U.S. federal withholding tax will not
apply to payments by us or our paying agent, in its capacity as such, of principal and interest on your notes under
the “portfolio interest” exception of the Internal Revenue Code, provided that:
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you do not, directly or indirectly, actually or constructively, own 10% or more of the total combined
voting power of all classes of our stock entitled to vote;
you are not (1) a controlled foreign corporation for U.S. federal income tax purposes that is related,
directly or indirectly, to us through sufficient stock ownership, as provided in the Internal Revenue
Code, or (2) a bank receiving interest described in Section 881(c)(3)(A) of the Internal Revenue Code;
such interest is not effectively connected with your conduct of a U.S. trade or business; and
you provide a signed written statement, under penalties of perjury, which can reliably be related to you,
certifying that you are not a U.S. person within the meaning of the Internal Revenue Code and
providing your name and address to:
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us or our paying agent; or
institution that holds customers’
a securities clearing organization, bank or other financial
securities in the ordinary course of its trade or business and holds your notes on your behalf and
that certifies to us or our paying agent under penalties of perjury that it, or the bank or financial
institution between it and you, has received from you your signed, written statement and provides
us or our paying agent with a copy of such statement.
Treasury regulations provide that:
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if you are a foreign partnership, the certification requirement will generally apply to your partners, and
you will be required to provide certain information;
if you are a foreign trust, the certification requirement will generally be applied to you or your
beneficial owners depending on whether you are a “foreign complex trust,” “foreign simple trust,” or
“foreign grantor trust” as defined in the Treasury regulations; and
look-through rules will apply for tiered partnerships, foreign simple trusts and foreign grantor trusts.
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If you are a foreign partnership or a foreign trust, you should consult your own tax advisor regarding your
status under these Treasury regulations and the certification requirements applicable to you.
If you cannot satisfy the portfolio interest requirements described above, payments of interest will be subject
to the 30% United States withholding tax, unless you provide us with a properly executed (1) Internal Revenue
Service Form W-8BEN claiming an exemption from or reduction in withholding under the benefit of an
applicable treaty or (2) Internal Revenue Service Form W-8ECI stating that interest paid on the note is not
subject to withholding tax because it is effectively connected with your conduct of a trade or business in the
United States. Alternative documentation may be applicable in certain circumstances.
If you are engaged in a trade or business in the United States and interest on a note is effectively connected
with the conduct of that trade or business, you will be required to pay United States federal income tax on that
interest on a net income basis (although you will be exempt from the 30% withholding tax provided the
certification requirement described above is met) in the same manner as if you were a U.S. person, except as
otherwise provided by an applicable tax treaty. If you are a foreign corporation, you may be required to pay a
branch profits tax on the earnings and profits that are effectively connected to the conduct of your trade or
business in the United States.
Withholding tax at a rate of 30% will be imposed on payments of interest (including original issue discount)
and gross proceeds of sale in respect of debt instruments to you or certain foreign financial institutions (including
investment funds) and other non-US persons receiving payments on your behalf, if you or such institutions fail to
comply with certain due diligence, disclosure and reporting rules, as set forth in recently issued Treasury
regulations. However, the Treasury regulations generally exempt from such withholding requirement obligations,
such as debt instruments, issued before July 1, 2014, provided that any material modification of such an
obligation made after such date will result in such obligation being considered newly issued as of the effective
date of such modification. These withholding rules are generally effective with respect to payments of interest
made after June 30, 2014, and with respect to proceeds of sales received after December 31, 2018. We will not
pay any additional amounts to any holders or our debt instruments in respect of any amounts withheld. You are
encouraged to consult with your tax advisor regarding U.S. withholding taxes and the application of the recently
issued Treasury regulations in light of your particular circumstances.
Sale, Exchange or other Disposition of Notes. You generally will not have to pay U.S. federal income tax
on any gain or income realized from the sale, redemption, retirement at maturity or other disposition of your
notes, unless:
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in the case of gain, you are an individual who is present in the United States for 183 days or more
during the taxable year of the sale or other disposition of your notes, and specific other conditions are
met;
you are subject to tax provisions applicable to certain United States expatriates; or
the gain is effectively connected with your conduct of a U.S. trade or business.
If you are engaged in a trade or business in the United States, and gain with respect to your notes is
effectively connected with the conduct of that trade or business, you generally will be subject to U.S. income tax
on a net basis on the gain. In addition, if you are a foreign corporation, you may be subject to a branch profits tax
on your effectively connected earnings and profits for the taxable year, as adjusted for certain items.
U.S. Federal Estate Tax.
If you are an individual and are not a U.S. citizen or a resident of the United
States, as specially defined for U.S. federal estate tax purposes, at the time of your death, your notes will
generally not be subject to the U.S. federal estate tax, unless, at the time of your death (1) you owned actually or
constructively 10% or more of the total combined voting power of all our classes of stock entitled to vote, or
(2) interest on the notes is effectively connected with your conduct of a U.S. trade or business.
Backup Withholding and Information Reporting. Backup withholding will not apply to payments of
principal or interest made by us or our paying agent, in its capacity as such, to you if you have provided the
required certification that you are a non-U.S. holder as described in “— U.S. Federal Withholding Tax” above,
and provided that neither we nor our paying agent have actual knowledge that you are a U.S. holder, as described
in “— U.S. Holders” above. We or our paying agent may, however, report payments of interest on the notes.
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The gross proceeds from the disposition of your notes may be subject to information reporting and backup
withholding tax. If you sell your notes outside the United States through a non-U.S. office of a non-U.S. broker
and the sales proceeds are paid to you outside the United States, then the U.S. backup withholding and
information reporting requirements generally will not apply to that payment. However, U.S.
information
reporting, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made
outside the United States, if you sell your notes through a non-U.S. office of a broker that:
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is a U.S. person, as defined in the Internal Revenue Code;
derives 50% or more of its gross income in specific periods from the conduct of a trade or business in
the United States;
is a “controlled foreign corporation” for U.S. federal income tax purposes; or
is a foreign partnership, if at any time during its tax year, one or more of its partners are U.S. persons
who in the aggregate hold more than 50% of the income or capital interests in the partnership, or the
foreign partnership is engaged in a U.S. trade or business, unless the broker has documentary evidence
in its files that you are a non-U.S. person and certain other conditions are met or you otherwise
establish an exemption. If you receive payments of the proceeds of a sale of your notes to or through a
U.S. office of a broker, the payment is subject to both U.S. backup withholding and information
reporting unless you provide a Form W-8BEN certifying that you are a non-U.S. person or you
otherwise establish an exemption.
You should consult your own tax advisor regarding application of backup withholding in your particular
circumstance and the availability of and procedure for obtaining an exemption from backup withholding. Any
amounts withheld under the backup withholding rules from a payment to you will be allowed as a refund or
credit against your U.S. federal income tax liability, provided the required information is furnished to the Internal
Revenue Service.
U.S. Federal Income and Estate Taxation of Holders of Our Warrants
Exercise of Warrants. You will not generally recognize gain or loss upon the exercise of a warrant. Your
basis in the debt securities, preferred stock, depositary shares or common stock, as the case may be, received
upon the exercise of the warrant will be equal to the sum of your adjusted tax basis in the warrant and the
exercise price paid. Your holding period in the debt securities, preferred stock, depositary shares or common
stock, as the case may be, received upon the exercise of the warrant will not include the period during which the
warrant was held by you.
Expiration of Warrants. Upon the expiration of a warrant, you will recognize a capital loss in an amount
equal to your adjusted tax basis in the warrant.
Sale or Exchange of Warrants. Upon the sale or exchange of a warrant to a person other than us, you will
recognize gain or loss in an amount equal to the difference between the amount realized on the sale or exchange
and your adjusted tax basis in the warrant. Such gain or loss will be capital gain or loss and will be long-term
capital gain or loss if the warrant was held for more than one year. Upon the sale of the warrant to us, the Internal
Revenue Service may argue that you should recognize ordinary income on the sale. You are advised to consult
your own tax advisors as to the consequences of a sale of a warrant to us.
Potential Legislation or Other Actions Affecting Tax Consequences
Current and prospective securities holders should recognize that the present federal income tax treatment of
an investment in us may be modified by legislative, judicial or administrative action at any time and that any
such action may affect investments and commitments previously made. The rules dealing with federal income
taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue
Service and the Treasury Department, resulting in revisions of regulations and revised interpretations of
established concepts as well as statutory changes. Revisions in federal tax laws and interpretations of these laws
could adversely affect the tax consequences of an investment in us.
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State, Local and Foreign Taxes
We, and holders of our debt and equity securities, may be subject to state, local or foreign taxation in
various jurisdictions, including those in which we or they transact business, own property or reside. It should be
noted that we own properties located in a number of state, local and foreign jurisdictions, and may be required to
file tax returns in some or all of those jurisdictions. The state, local or foreign tax treatment of us and holders of
our debt and equity securities may not conform to the U.S. federal income tax consequences discussed above.
Consequently, you are urged to consult your advisor regarding the application and effect of state, local and
foreign tax laws with respect to any investment in our securities.
Changes in applicable tax regulations could negatively affect our financial results
The Company is subject to taxation in the U.S. and numerous foreign jurisdictions. Because the U.S.
maintains a worldwide corporate tax system, the foreign and U.S. tax systems are somewhat interdependent.
Longstanding international tax norms that determine each country’s jurisdiction to tax cross-border international
trade are evolving, such as the Base Erosion and Profit Shifting project (“BEPS”) currently being undertaken by
the G8, G20, and Organization for Economic Cooperation and Development. Tax changes pursuant to BEPS
could reduce the ability of our foreign subsidiaries to deduct for foreign tax purposes the interest they pay on
loans from the Company, 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.
Internet Access to Our SEC Filings
the Securities and Exchange Commission are made available,
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
amendments to those reports, as well as our proxy statements and other materials that are filed with, or furnished
free of charge, on the Internet at
to,
www.welltower.com, as soon as reasonably practicable after they are filed with, or furnished to, the Securities
and Exchange Commission. We routinely post important information on our website at www.welltower.com in
the “Investors” section, including corporate and investor presentations and financial information. We intend to
use our website as a means of disclosing material, non-public information and for complying with our disclosure
obligations under Regulation FD. Such disclosures will be included on our website under the heading
“Investors.” Accordingly, investors should monitor such portion of our website in addition to following our press
releases, public conference calls and filings with the Securities and Exchange Commission. 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.
Cautionary Statement Regarding Forward-Looking Statements
This Annual Report on Form 10-K and the documents incorporated by reference contain statements that
constitute “forward-looking statements” as that term is defined in the federal securities laws. When we use words
such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate” or similar
expressions that do not relate solely to historical matters, we are making forward-looking statements. In
particular, these forward-looking statements include, but are not limited to, those relating to our opportunities to
acquire, develop or sell properties; our ability to close our anticipated acquisitions, investments or dispositions on
currently anticipated terms, or within currently anticipated timeframes;
the expected performance of our
operators/tenants and properties; our expected occupancy rates; our ability to declare and to make distributions to
stockholders; our investment and financing opportunities and plans; our continued qualification as a real estate
investment trust (“REIT”); and our ability to access capital markets or other sources of funds.
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Forward-looking statements are not guarantees of future performance and involve risks and uncertainties
that may cause our actual results to differ materially from our expectations discussed in the forward-looking
statements. This may be a result of various factors, including, but not limited to:
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the status of the economy;
the status of capital markets, including availability and cost of capital;
issues facing the health care industry, including compliance with, and changes to, regulations and
payment policies, responding to government investigations and punitive settlements and operators’/
tenants’ difficulty in cost-effectively obtaining and maintaining adequate liability and other insurance;
changes in financing terms;
competition within the health care and seniors housing industries;
negative developments in the operating results or financial condition of operators/tenants, including,
but not limited to, their ability to pay rent and repay loans;
our ability to transition or sell properties with profitable results;
the failure to make new investments or acquisitions as and when anticipated;
natural disasters and other acts of God affecting our properties;
our ability to re-lease space at similar rates as vacancies occur;
our ability to timely reinvest sale proceeds at similar rates to assets sold;
operator/tenant or joint venture partner bankruptcies or insolvencies;
the cooperation of joint venture partners;
government
requirements;
regulations affecting Medicare and Medicaid reimbursement
rates and operational
liability or contract claims by or against operators/tenants;
unanticipated difficulties and/or expenditures relating to future investments or acquisitions;
environmental laws affecting our properties;
changes in rules or practices governing our financial reporting;
the movement of U.S. and foreign currency exchange rates;
our ability to maintain our qualification as a REIT;
key management personnel recruitment and retention; and
the risks described under “Item 1A — Risk Factors.”
We undertake no obligation to update or revise publicly any forward-looking statements, whether because of
new information, future events, or otherwise.
Item 1A. Risk Factors
This section discusses the most significant factors that affect our business, operations and financial
condition. It does not describe all risks and uncertainties applicable to us, our industry or ownership of our
securities. If any of the following risks, as well as other risks and uncertainties that are not yet identified or that
we currently think are not material, actually occur, we could be materially adversely affected. In that event, the
value of our securities could decline. We group these risk factors into three categories:
• Risks arising from our business;
• Risks arising from our capital structure; and
• Risks arising from our status as a REIT.
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Risks Arising from Our Business
Our investments in and acquisitions of health care and seniors housing properties may be unsuccessful or
fail to meet our expectations
We are exposed to the risk that some of our acquisitions may not prove to be successful. We could
encounter unanticipated difficulties and expenditures relating to any acquired properties, including contingent
liabilities, and acquired properties might require significant management attention that would otherwise be
devoted to our ongoing business. If we agree to provide construction funding to an operator/tenant and the
project is not completed, we may need to take steps to ensure completion of the project. Such expenditures may
negatively affect our results of operations. Furthermore,
there can be no assurance that our anticipated
acquisitions and investments, the completion of which is subject to various conditions, will be consummated in
accordance with anticipated timing, on anticipated terms, or at all. We also may be unable to quickly and
efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing
operations, and this could have an adverse effect on our results of operations and financial condition.
Our investments in joint ventures could be adversely affected by our lack of exclusive control over these
investments, our partners’ insolvency or failure to meet 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,
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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.
Increased competition may affect our operators’ ability to meet their obligations to us
The operators of our properties compete on a local and regional basis with operators of properties and other
health care providers that provide comparable services. We cannot be certain that the operators of all of our
facilities will be able to achieve and maintain occupancy and rate levels that will enable them to meet all of their
obligations to us. Our operators are expected to encounter increased competition in the future that could limit
their ability to attract residents or expand their businesses.
A severe cold and flu season, epidemics or any other widespread illnesses could adversely affect the
occupancy of our seniors housing operating and triple-net properties
Our and our operators’ revenues are dependent on occupancy. It is impossible to predict the severity of the
cold and flu season or the occurrence of epidemics or any other widespread illnesses. The occupancy of our
seniors housing operating and triple-net properties could significantly decrease in the event of a severe cold and
flu season, an epidemic or any other widespread illness. Such a decrease could affect the operating income of our
seniors housing operating properties and the ability of our triple-net operators to make payments to us.
The insolvency or bankruptcy of our obligors may adversely affect our business, results of operations and
financial condition
We are exposed to the risk that our obligors may not be able to meet the rent, principal and interest or other
payments due us, which may result in an obligor bankruptcy or insolvency, or that an obligor might become
subject to bankruptcy or insolvency proceedings for other reasons. Although our operating lease agreements
provide us with the right to evict a tenant, demand immediate payment of rent and exercise other remedies, and
our loans provide us with the right to terminate any funding obligation, demand immediate repayment of
principal and unpaid interest, foreclose on the collateral and exercise other remedies, the bankruptcy and
insolvency laws afford certain rights to a party that has filed for bankruptcy or reorganization. An obligor in
bankruptcy or subject to insolvency proceedings may be able to limit or delay our ability to collect unpaid rent in
the case of a lease or to receive unpaid principal and interest in the case of a loan, and to exercise other rights and
remedies. We may be required to fund certain expenses (e.g., real estate taxes and maintenance) to preserve the
value of an investment property, avoid the imposition of liens on a property and/or transition a property to a new
tenant. In some instances, we have terminated our lease with a tenant and relet the property to another tenant. In
some of those situations, we have provided working capital loans to and limited indemnification of the new
obligor. If we cannot transition a leased property to a new tenant, we may take possession of that property, which
may expose us to certain successor liabilities. Should such events occur, our revenue and operating cash flow
may be adversely affected.
We may not be able to timely reinvest our sale proceeds on terms acceptable to us
From time to time, we will have cash available from (1) the proceeds of sales of our securities, (2) principal
payments on our loans receivable and (3) the sale of properties, including non-elective dispositions, under the
terms of master leases or similar financial support arrangements. In order to maintain current revenues and
continue generating attractive returns, we expect to re-invest these proceeds in a timely manner. We compete for
real estate investments with a broad variety of potential investors. This competition for attractive investments
may negatively affect our ability to make timely investments on terms acceptable to us.
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Failure to properly manage our rapid growth could distract our management or increase our expenses
We have experienced rapid growth and development in a relatively short period of time and expect to
continue this rapid growth in the future. This growth has resulted in increased levels of responsibility for our
management. Future property acquisitions could place significant additional demands on, and require us to
expand, our management, resources and personnel. Our failure to manage any such rapid growth effectively
could harm our business and, in particular, our financial condition, results of operations and cash flows, which
could negatively affect our ability to make distributions to stockholders. Our growth could also increase our
capital requirements, which may require us to issue potentially dilutive equity securities and incur additional
debt.
We depend on Genesis Healthcare, LLC (“Genesis”) and Brookdale Senior Living for a significant portion
of our revenues and any inability or unwillingness by Genesis and Brookdale Senior Living to satisfy their
obligations under their agreements with us could adversely affect us
The properties we lease to Genesis and Brookdale Senior Living account for a significant portion of our
revenues, and because our leases with Genesis and Brookdale Senior Living are triple-net leases, we also depend
on Genesis and Brookdale Senior Living to pay all insurance, taxes, utilities and maintenance and repair
expenses in connection with the leased properties. We cannot assure you that Genesis and Brookdale Senior
Living 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 inability or unwillingness by Genesis
or Brookdale Senior Living to do so could have an adverse effect on our business, results of operations and
financial condition. Genesis and Brookdale Senior Living have also agreed to indemnify, defend and hold us
harmless from and against various claims, litigation and liabilities arising in connection with their respective
businesses, and we cannot assure you that Genesis and Brookdale Senior Living will have sufficient assets,
income, access to financing and insurance coverage to enable them to satisfy their respective indemnification
obligations. Genesis and Brookdale Senior Living’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.
The properties managed by Sunrise Senior Living, LLC account for a significant portion of our revenues
and operating income and any adverse developments in its business or financial condition could adversely
affect us
Sunrise Senior Living, LLC manages our entire Sunrise property portfolio, which as of December 31, 2016,
consisted of 157 seniors housing properties. These properties account for a significant portion of our revenues,
and we rely on Sunrise Senior Living, LLC to manage these properties efficiently and effectively. We also rely
on Sunrise Senior Living, LLC 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 Senior
Living, LLC’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 Senior Living, LLC 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.
Ownership of property outside the United States may subject us to different or greater risks than those
associated with our domestic operations
We have operations in Canada and the United Kingdom. International development, ownership, and
operating activities involve risks that are different from those we face with respect to our domestic properties and
operations. These risks include, but are not limited to, any international currency gain recognized with respect to
changes in exchange rates may not qualify under the 75% gross income test or the 95% gross income test that we
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must satisfy annually in order to qualify and maintain our status as a REIT; challenges with respect to the
repatriation of foreign earnings and cash; changes in foreign political, regulatory, and economic conditions,
including regionally, nationally, and locally, including, but not limited to, the United Kingdom’s June 2016 vote
to exit the European Union (commonly known as “Brexit”); 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 United States
that affect foreign operations, including, but not limited to, the U.S. Foreign Corrupt Practices Act. If we are
unable to successfully manage the risks associated with international expansion and operations, our results of
operations and financial condition may be adversely affected.
We do not know if our tenants will renew their existing leases, and if they do not, we may be unable to lease
the properties on as favorable terms, or at all
We cannot predict whether our tenants will renew existing leases at the end of their lease terms, which
expire at various times. If these leases are not renewed, we would be required to find other tenants to occupy
those properties or sell them. There can be no assurance that we would be able to identify suitable replacement
tenants or enter into leases with new tenants on terms as favorable to us as the current leases or that we would be
able to lease those properties at all.
Our operators and managers may not have the necessary insurance coverage to insure adequately against
losses
industry, and we continually review our
We maintain or require our 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
insurance programs and
requirements. That said, we cannot assure you that we or our operators or managers will continue to be able to
maintain adequate levels of insurance and required coverages, 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 property operators’ and
managers’ future operations, cash flows and financial condition, and may have a material adverse effect on the
property 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 or Medicaid,
could have a material adverse effect on our obligors’ liquidity, financial condition and results of operations,
which could adversely affect our obligors’ ability to meet their obligations to us
Some of our obligors’ businesses are affected by government reimbursement. To the extent that an operator/
tenant receives a significant portion of its revenues from government payors, primarily Medicare and Medicaid,
such revenues may be subject to statutory and regulatory changes, retroactive rate adjustments, recovery of
program overpayments or set-offs, court decisions, administrative rulings, policy interpretations, payment or
other delays by fiscal intermediaries or carriers, government funding restrictions (at a program level or with
to specific facilities) and interruption or delays in payments due to any ongoing government
respect
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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 Patient Protection and Affordable Care Act, as modified by the Health Care and Education Reconciliation
Act of 2010 (collectively, the “Health Reform Laws”), provides those states that expand their Medicaid coverage to
otherwise eligible state residents with incomes at or below 138% of the federal poverty level with an increased
federal medical assistance percentage, effective January 1, 2014, when certain conditions are met. 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 2017, more than half 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 new
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. The House and Senate have recently
passed a budget resolution that authorizes congressional committees to draft legislation to repeal all or portions of
the Health Reform Laws and permits such legislation to pass with a majority vote in the Senate. President Trump
has also recently issued an executive order in which he stated that it is his Administration’s policy to seek the
prompt repeal of the Health Reform Laws and directed executive departments and federal agencies to waive, defer,
grant exemptions from, or delay the implementation of the provisions of Health Reform Laws to the maximum
extent permitted by law. There is still uncertainty with respect to the impact President Trump’s Administration and
the U.S. Congress may have, if any, and any changes will likely take time to unfold, and could have an impact on
coverage and reimbursement for health care items and services covered by plans that were authorized by the Health
Reform Laws. We cannot predict whether the existing Health Reform Laws, or future health care reform legislation
or regulatory changes, will have a material impact on our operators’ or tenants’ property or business. If the
operations, cash flows or financial condition of our operators and tenants are materially adversely impacted by the
Health Reform Laws or future legislation, our revenue and operations may be adversely affected as well. See “Item
1 — Business — Certain Government Regulations — United States — Reimbursement” above.
More generally, and because of the dynamic nature of the legislative and regulatory environment for health
care products and services, and in light of existing federal deficit and budgetary concerns, we cannot predict the
impact that broad-based, far-reaching legislative or regulatory changes could have on the U.S. economy, our
business or that of our operators and tenants.
Our operators’ or tenants’ failure to comply with federal, state, local, and industry-regulated licensure,
certification and inspection laws, regulations, and standards could adversely affect such operators’ or
tenants’ operations, which could adversely affect our operators’ and tenants’ ability to meet their
obligations to us
Our operators and tenants generally are subject to varying levels of federal, state, local, and industry-
regulated licensure, certification and inspection laws, regulations, and standards. Our operators’ or tenants’
failure to comply with any of these laws, regulations, or standards could result in loss of accreditation, denial of
reimbursement, imposition of fines, suspension, decertification or exclusion from federal and state health care
programs, loss of license or closure of the facility. Such actions may have an effect on our operators’ or tenants’
ability to make lease payments to us and, therefore, adversely impact us. See “Item 1 — Business — Certain
Government Regulations — United States — Fraud & Abuse Enforcement” above.
Many of our properties may require a license, registration, and/or certificate of need (“CON”) to operate.
Failure to obtain a license, registration, or CON, or loss of a required license, registration, or CON would prevent
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a facility from operating in the manner intended by the operators or tenants. These events could materially
adversely affect our operators’ or tenants’ ability to make rent payments to us. State and local laws also may
regulate the expansion, including the addition of new beds or services or acquisition of medical equipment, and
the construction or renovation of health care facilities, by requiring a CON or other similar approval from a state
agency. See “Item 1 — Business — Certain Government Regulations — United States — Licensing and
Certification” above.
Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in
the performance of our properties
Real estate investments are relatively illiquid. Our ability to quickly sell or exchange any of our properties
in response to changes in economic and other conditions will be limited. No assurances can be given that we will
recognize full value for any property that we are required to sell for liquidity reasons. Our inability to respond
rapidly to changes in the performance of our investments could adversely affect our financial condition and
results of operations. In addition, we are exposed to the risks inherent in concentrating investments in real estate,
and in particular, the seniors housing and health care industries. A downturn in the real estate industry could
adversely affect the value of our properties and our ability to sell properties for a price or on terms acceptable to
us.
Unfavorable resolution of pending and future litigation matters and disputes could have a material adverse
effect on our financial condition
From time to time, we may be directly involved in a number of legal proceedings, lawsuits and other claims.
We may also be named as defendants in lawsuits allegedly arising out of our actions or the actions of our
operators/tenants or managers in which such operators/tenants or managers have agreed to indemnify, defend and
hold us harmless from and against various claims, litigation and liabilities arising in connection with their
respective businesses. An unfavorable resolution of pending or future litigation may have a material adverse
effect on our business, results of operations and financial condition. Regardless of its outcome, litigation may
result in substantial costs and expenses and significantly divert the attention of management. There can be no
assurance that we will be able to prevail in, or achieve a favorable settlement of, pending or future litigation. In
addition, pending litigation or future litigation, government proceedings or environmental matters could lead to
increased costs or interruption of our normal business operations.
Development, redevelopment and construction risks could affect our profitability
At any given time, we may be in the process of constructing one or more new facilities that ultimately will
require a CON and license before they can be utilized by the operator for their intended use. The operator also
may need to obtain Medicare and Medicaid certification and enter into Medicare and Medicaid provider
agreements and/or third party payor contracts. In the event that the operator is unable to obtain the necessary
CON, licensure, certification, provider agreements or contracts after the completion of construction, there is a
risk that we will not be able to earn any revenues on the facility until either the initial operator obtains a license
or certification to operate the new facility and the necessary provider agreements or contracts or we find and
contract with a new operator that is able to obtain a license to operate the facility for its intended use and the
necessary provider agreements or contracts.
In connection with our renovation, redevelopment, development and related construction activities, we may
be unable to obtain, or suffer delays in obtaining, necessary zoning, land-use, building, occupancy and other
required governmental permits and authorizations. These factors could result
in increased costs or our
abandonment of these projects. In addition, we may not be able to obtain financing on favorable terms, which
may render us unable to proceed with our development activities, and we may not be able to complete
construction and lease-up of a property on schedule, which could result in increased debt service expense or
construction costs. Additionally, the time frame required for development, construction and lease-up of these
properties means that we may have to wait years for significant cash returns. Because we are required to make
cash distributions to our stockholders, if the cash flow from operations or refinancing is not sufficient, we may be
37
forced to borrow additional money to fund such distributions. Newly developed and acquired properties may not
produce the cash flow that we expect, which could adversely affect our overall financial performance.
In deciding whether to acquire or develop a particular property, we make assumptions regarding the
expected future performance of that property. In particular, we estimate the return on our investment based on
expected occupancy, rental rates and capital costs. If our financial projections with respect to a new property are
inaccurate as a result of increases in capital costs or other factors, the property may fail to perform as we
expected in analyzing our investment. Our estimate of the costs of repositioning or redeveloping an acquired
property may prove to be inaccurate, which may result in our failure to meet our profitability goals. Additionally,
we may acquire new properties that are not fully leased, and the cash flow from existing operations may be
insufficient to pay the operating expenses and debt service associated with that property.
We may experience losses caused by severe weather conditions or natural disasters, which could result in an
increase of our or our tenants’ cost of insurance, a decrease in our anticipated revenues or a significant
loss of the capital we have invested in a property
We maintain or require our tenants to maintain comprehensive insurance coverage on our properties with
terms, conditions, limits and deductibles that we believe are appropriate given the relative risk and costs of such
coverage, and we continually review our insurance programs and requirements. However, a large number of our
properties are located in areas particularly susceptible to revenue loss, cost increase or damage caused by severe
weather conditions or natural disasters such as hurricanes, earthquakes, tornadoes and floods. We believe, given
current industry practice and analysis prepared by outside consultants, that our and our tenants’ insurance
coverage is appropriate to cover reasonably anticipated losses that may be caused by hurricanes, earthquakes,
tornadoes, floods and other severe weather conditions and natural disasters. Nevertheless, we are always subject
to the risk that such insurance will not fully cover all losses and, depending on the severity of the event and the
impact on our properties, such insurance may not cover a significant portion of the losses. These losses may lead
to an increase of our and our tenants’ cost of insurance, a decrease in our anticipated revenues from an affected
property and a loss of all or a portion of the capital we have invested in an affected property. In addition, we or
our tenants may not purchase insurance under certain circumstances if the cost of insurance exceeds, in our or
our tenants’ judgment, the value of the coverage relative to the risk of loss.
We may incur costs to remediate environmental contamination at our properties, which could have an
adverse effect on our or our obligors’ business or financial condition
Under various federal and state laws, owners or operators of real estate may be required to respond to the
presence or release of hazardous substances on the property and may be held liable for property damage, personal
injuries or penalties that result from environmental contamination or exposure to hazardous substances. We may
become liable to reimburse the government for damages and costs it incurs in connection with the contamination.
Generally, such liability attaches to a person based on the person’s relationship to the property. Our tenants or
borrowers are primarily responsible for the condition of the property. Moreover, we review environmental site
assessments of the properties that we own or encumber prior to taking an interest in them. Those assessments are
designed to meet the “all appropriate inquiry” standard, which we believe qualifies us for the innocent purchaser
defense if environmental liabilities arise. Based upon such assessments, we do not believe that any of our
properties are subject to material environmental contamination. However, environmental liabilities may be
present in our properties and we may incur costs to remediate contamination, which could have a material
adverse effect on our business or financial condition or the business or financial condition of our obligors.
Cybersecurity incidents could disrupt our business and result in the loss of confidential information
Our business is at risk from and may be impacted by cybersecurity attacks, including attempts to gain
unauthorized access to our confidential data, and other electronic security breaches. Such cyber attacks can range
from individual attempts to gain unauthorized access to our information technology systems to more
sophisticated security threats. While we employ a number of measures to prevent, detect and mitigate these
threats, there is no guarantee such efforts will be successful in preventing a cyber attack. Cybersecurity incidents
could disrupt our business and compromise the confidential information of our employees, operators and tenants.
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Actual or threatened terrorist attacks could adversely affect the occupancy and the value of our properties
We have significant investments in large metropolitan markets that have been or may be in the future the
targets of actual or threatened terrorism attacks, including Boston, Chicago, New York, San Diego, San
Francisco, Los Angeles and Washington D.C. As a result, some of our tenants in these markets may choose to
relocate to other markets that may be perceived to be less likely targets of future terrorist activity. This could
result in an overall decrease in the occupancy of our properties. In addition, terrorist attacks could also result in
significant damages to, or loss of, our properties, which could exceed our insurance coverage.
Our certificate of incorporation and by-laws contain anti-takeover provisions
Our certificate of incorporation and by-laws contain anti-takeover provisions (restrictions on share
ownership and transfer and super majority stockholder approval requirements for business combinations) that
could make it more difficult for or even prevent a third party from acquiring us without the approval of our
incumbent Board of Directors. Provisions and agreements that inhibit or discourage takeover attempts could
reduce the market value of our common stock.
Our success depends on key personnel whose continued service is not guaranteed
We are dependent on key personnel. Although we have entered into employment agreements with our
executive officers, losing any one of them could, at least temporarily, have an adverse impact on our operations.
We believe that losing more than one could have a material adverse impact on our business.
Risks Arising from Our Capital Structure
We may become more leveraged
Permanent financing for our investments is typically provided through a combination of public offerings of
debt and equity securities and the incurrence or assumption of secured debt. The incurrence or assumption of
indebtedness may cause us to become more leveraged, which could (1) require us to dedicate a greater portion of
our cash flow to the payment of debt service, (2) make us more vulnerable to a downturn in the economy,
(3) limit our ability to obtain additional financing, or (4) negatively affect our credit ratings or outlook by one or
more of the rating agencies.
We are subject to covenants in our debt agreements that may restrict or limit our operations and
acquisitions and our failure to comply with the covenants in our debt agreements could have a material
adverse impact on our business, results of operations and financial condition
Our debt agreements contain various covenants, restrictions and events of default. Among other things,
these provisions require us to maintain certain financial ratios and minimum net worth and impose certain limits
on our ability to incur indebtedness, create liens and make investments or acquisitions. Breaches of these
covenants could result in defaults under the instruments governing the applicable indebtedness, in addition to any
other indebtedness cross-defaulted against such instruments. These defaults could have a material adverse impact
on our business, results of operations and financial condition.
Limitations on our ability to access capital could have an adverse effect on our ability to make future
investments or to meet our obligations and commitments
We cannot assure you that we will be able to raise the capital necessary to make future investments or to
meet our obligations and commitments as they mature. Our access to capital depends upon a number of factors
over which we have little or no control, including rising interest rates, inflation and other general market
conditions; the market’s perception of our growth potential and our current and potential future earnings and cash
distributions; the market price of the shares of our capital stock and the credit ratings of our debt securities; the
financial stability of our lenders, which might impair their ability to meet their commitments to us or their
willingness to make additional loans to us; changes in the credit ratings on U.S. government debt securities; or
default or delay in payment by the United States of its obligations. If our access to capital is limited by these
factors or other factors, it could negatively impact our ability to acquire properties, repay or refinance our
indebtedness, fund operations or make distributions to our stockholders.
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Downgrades in our credit ratings could have a material adverse impact on our cost and availability of
capital
We plan to manage the Company to maintain a capital structure consistent with our current profile, but there
can be no assurance that we will be able to maintain our current credit ratings. Any downgrades in terms of
ratings or outlook by any or all of the rating agencies could have a material adverse impact on our cost and
availability of capital, which could in turn have a material adverse impact on our consolidated results of
operations, liquidity and/or financial condition.
Fluctuations in the value of foreign currencies could adversely affect our results of operations and
financial position
As we expand our operations internationally, currency exchange rate fluctuations could affect our results of
operations and financial position. We expect to generate an increasing portion of our revenue and expenses in
such foreign currencies as the Canadian dollar and the British pound. Although we may enter into foreign
exchange agreements with financial institutions and/or obtain local currency mortgage debt in order to reduce our
exposure to fluctuations in the value of foreign currencies, we cannot assure you that foreign currency
fluctuations will not have a material adverse effect on us.
Our entry into swap agreements may not effectively reduce our exposure to changes in interest rates or
foreign currency exchange rates
We enter into swap agreements from time to time to manage some of our exposure to interest rate and
foreign currency exchange rate volatility. These swap agreements involve risks, such as the risk that
counterparties may fail to honor their obligations under these arrangements. In addition, these arrangements may
not be effective in reducing our exposure to changes in interest rates or foreign currency exchange rates. When
we use forward-starting interest rate swaps, there is a risk that we will not complete the long-term borrowing
against which the swap is intended to hedge. If such events occur, our results of operations may be adversely
affected.
Risks Arising from Our Status as a REIT
We might fail to qualify or remain qualified as a REIT
We intend to operate as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), and
believe we have and will continue to operate in such a manner. If we lose our status as a REIT, we will face
serious income tax consequences that will substantially reduce the funds available for satisfying our obligations
and for distribution to our stockholders because:
• we would not be allowed a deduction for distributions to stockholders in computing our taxable income
and would be subject to U.S. federal income tax at regular corporate rates;
• we could be subject to the federal alternative minimum tax and possibly increased state and local taxes;
and
•
unless we are entitled to relief under statutory provisions, we could not elect to be subject to tax as a
REIT for four taxable years following the year during which we were disqualified.
Since REIT qualification requires us to meet a number of complex requirements, it is possible that we may
fail to fulfill them, and if we do, our earnings will be reduced by the amount of U.S. federal and other income
taxes owed. A reduction in our earnings would affect the amount we could distribute to our stockholders. If we
do not qualify as a REIT, we would not be required to make distributions to stockholders since a non-REIT is not
required to pay dividends to stockholders in order to maintain REIT status or avoid an excise tax. See “Item 1 —
Business — Taxation — Federal Income Tax Considerations” above for a discussion of the provisions of the
Code that apply to us and the effects of failure to qualify as a REIT. In addition, if we fail to qualify as a REIT,
all distributions to stockholders would continue to be treated as dividends to the extent of our current and
accumulated earnings and profits, although corporate stockholders may be eligible for the dividends received
deduction, and individual stockholders may be eligible for taxation at the rates generally applicable to long-term
capital gains (currently at a maximum rate of 20%) with respect to distributions.
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As a result of all these factors, our failure to qualify as a REIT also could impair our ability to implement
our business strategy and would adversely affect the value of our common stock. Qualification as a REIT
involves the application of highly technical and complex Code provisions for which there are only limited
judicial and administrative interpretations. The determination of various factual matters and circumstances not
entirely within our control may affect our ability to remain qualified as a REIT. Although we believe that we
qualify as a REIT, we cannot assure you that we will continue to qualify or remain qualified as a REIT for U.S.
federal income tax purposes. See “Item 1 — Business — Taxation — Federal Income Tax Considerations”
above.
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 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. See
“Item 1 — Business — Taxation — Federal Income Tax Considerations — Qualification as a REIT — Asset
Tests” above. 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. See “Item 1 — Business — Taxation — Federal Income
Tax Considerations — Qualification as a REIT — Annual Distribution Requirements” above. Although we
anticipate that we generally will have sufficient cash or liquid assets to enable us to satisfy the REIT distribution
requirement, it is possible that, from time to time, we may not have sufficient cash or other liquid assets to meet
the 90% distribution requirement, or we may decide to retain cash or distribute such greater amount as may be
necessary to avoid income and excise taxation. This may be due to timing differences between the actual receipt
of income and actual payment of deductible expenses, on the one hand, and the inclusion of that income and
deduction of those expenses in arriving at our taxable income, on the other hand. In addition, non-deductible
expenses such as principal amortization or repayments or capital expenditures in excess of non-cash deductions
may cause us to fail to have sufficient cash or liquid assets to enable us to satisfy the 90% distribution
requirement. In the event that timing differences occur, or we deem it appropriate to retain cash, we may borrow
funds, issue additional equity securities (although we cannot assure you that we will be able to do so), pay
taxable stock dividends, if possible, distribute other property or securities or engage in another transaction
intended to enable us to meet the REIT distribution requirements. This may require us to raise additional capital
to meet our obligations.
The lease of qualified health care properties to a taxable REIT subsidiary is subject to special requirements
We lease certain qualified health care properties to taxable REIT subsidiaries (or limited liability companies
of which the taxable REIT subsidiaries are members), which lessees contract with managers (or related parties)
to manage the health care operations at these properties. The rents from this taxable REIT subsidiary lessee
structure are treated as qualifying rents from real property if (1) they are paid pursuant to an arms-length lease of
a qualified health care property with a taxable REIT subsidiary and (2) the manager qualifies as an eligible
independent contractor (as defined in the Code). If any of these conditions are not satisfied, then the rents will
not be qualifying rents. See “Item 1 — Business — Taxation — Federal Income Tax Considerations —
Qualification as a REIT — Income Tests” above.
41
If certain sale-leaseback transactions are not characterized by the Internal Revenue Service as “true
leases,” we may be subject to adverse tax consequences
We have purchased certain properties and leased them back to the sellers of such properties, and we may
enter into similar transactions in the future. We intend for any such sale-leaseback transaction to be structured in
such a manner that the lease will be characterized as a “true lease,” thereby allowing us to be treated as the owner
of the property for U.S. federal income tax purposes. However, depending on the terms of any specific
transaction, the Internal Revenue Service might take the position that the transaction is not a “true lease” but is
more properly treated in some other manner. In the event any sale-leaseback transaction is challenged and
successfully re-characterized by the Internal Revenue Service, we would not be entitled to claim the deductions
for depreciation and cost recovery generally available to an owner of property. Furthermore, if a sale-leaseback
transaction were so re-characterized, we might fail
tests or income tests and,
consequently, could lose our REIT status effective with the year of re-characterization. See “Item 1 —
Business — Taxation — Federal Income Tax Considerations — Qualification as a REIT — Asset Tests” and
“Item 1 — Business — Taxation — Federal Income Tax Considerations — Qualification as a REIT — Income
Tests” above. Alternatively, the amount of our REIT taxable income could be recalculated, which may cause us
to fail to meet the REIT annual distribution requirements for a taxable year. See “Item 1 — Business —
Taxation — Federal
Income Tax Considerations — Qualification as a REIT — Annual Distribution
Requirements” above.
to satisfy the REIT asset
The new Presidential Administration may propose substantial changes to fiscal and tax policies that, if
enacted, may adversely affect REITs and our business
The recently inaugurated U.S. President and his Administration have called for substantial changes to fiscal
and tax policies, which may include comprehensive tax reform. We cannot predict the impact, if any, of such tax
reform to REITs or to our business. It is possible that any comprehensive tax reform could adversely affect
REITs in general or our business specifically. Until any such tax reform changes are enacted, we will not know
whether we will benefit from, or will be negatively affected by, such changes.
Item 1B. Unresolved Staff Comments
None.
42
Item 2. Properties
We own our corporate headquarters located at 4500 Dorr Street, Toledo, Ohio 43615. We also lease
corporate offices in Canada, the United Kingdom and Luxembourg and have ground leases relating to certain of
our properties. The following table sets forth certain information regarding the properties that comprise our
consolidated real property and real estate loan investments as of December 31, 2016 (dollars in thousands and
annualized revenues adjusted for timing of investment):
Property Location
Alabama . . . . . . . . . . . . . . . . . . . . . . . . . .
Arizona . . . . . . . . . . . . . . . . . . . . . . . . . . .
California . . . . . . . . . . . . . . . . . . . . . . . . .
Colorado . . . . . . . . . . . . . . . . . . . . . . . . . .
Connecticut . . . . . . . . . . . . . . . . . . . . . . . .
District Of Columbia . . . . . . . . . . . . . . . . .
Delaware . . . . . . . . . . . . . . . . . . . . . . . . . .
Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . .
Iowa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Illinois . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indiana . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kansas . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kentucky . . . . . . . . . . . . . . . . . . . . . . . . . .
Louisiana . . . . . . . . . . . . . . . . . . . . . . . . . .
Massachusetts . . . . . . . . . . . . . . . . . . . . . .
Maryland . . . . . . . . . . . . . . . . . . . . . . . . . .
Maine . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michigan . . . . . . . . . . . . . . . . . . . . . . . . . .
Minnesota . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
Missouri
Mississippi
. . . . . . . . . . . . . . . . . . . . . . . .
Montana . . . . . . . . . . . . . . . . . . . . . . . . . .
North Carolina . . . . . . . . . . . . . . . . . . . . . .
Nebraska . . . . . . . . . . . . . . . . . . . . . . . . . .
New Hampshire . . . . . . . . . . . . . . . . . . . . .
New Jersey . . . . . . . . . . . . . . . . . . . . . . . .
New Mexico . . . . . . . . . . . . . . . . . . . . . . .
Nevada . . . . . . . . . . . . . . . . . . . . . . . . . . .
New York . . . . . . . . . . . . . . . . . . . . . . . . .
Ohio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oklahoma . . . . . . . . . . . . . . . . . . . . . . . . .
Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pennsylvania . . . . . . . . . . . . . . . . . . . . . . .
Rhode Island . . . . . . . . . . . . . . . . . . . . . . .
South Carolina . . . . . . . . . . . . . . . . . . . . . .
Tennessee . . . . . . . . . . . . . . . . . . . . . . . . .
Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vermont
. . . . . . . . . . . . . . . . . . . . . . . . . .
Washington . . . . . . . . . . . . . . . . . . . . . . . .
Wisconsin . . . . . . . . . . . . . . . . . . . . . . . . .
West Virginia . . . . . . . . . . . . . . . . . . . . . .
Total domestic . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . .
Total international . . . . . . . . . . . . . . . . . . .
Grand total . . . . . . . . . . . . . . . . . . . . . . . . .
Triple-Net
Seniors Housing Operating
Number of
Properties
Total
Investment
Annualized
Revenues
Number of
Properties
Total
Investment
Annualized
Revenues
—
4
69
5
15
1
1
6
7
1
—
14
—
3
2
2
39
4
2
5
4
4
—
—
1
—
4
8
1
2
11
4
2
—
6
3
—
2
20
1
2
1
12
—
—
268
104
48
152
420
$
— $
60,346
2,564,855
140,940
391,695
63,194
21,160
550,064
122,512
32,434
—
448,055
—
70,132
38,805
50,879
1,159,025
153,359
49,790
110,532
113,982
134,202
—
—
40,413
—
118,242
239,091
18,606
36,658
468,303
193,825
40,441
—
81,188
60,107
—
50,044
593,826
16,892
37,677
27,428
410,424
—
—
8,709,126
2,058,447
1,291,441
3,349,888
—
22,075
585,482
40,800
126,697
14,544
6,268
78,566
36,955
10,068
—
114,224
—
17,262
13,096
12,278
224,522
47,671
17,831
26,436
23,538
20,225
—
—
7,181
—
28,647
65,946
1,496
10,576
85,404
37,672
3,864
—
39,484
20,290
—
15,624
118,877
10,796
11,252
6,405
74,123
—
—
1,976,175
427,444
273,270
700,714
$12,059,014
$2,676,889
4
2
28
7
14
—
6
34
8
4
2
12
37
29
7
3
21
8
—
6
9
2
3
1
49
4
4
56
—
5
9
28
19
10
31
—
5
4
47
2
13
—
24
8
4
569
6
56
62
631
$
35,149
26,126
506,530
241,603
178,295
—
105,106
585,009
98,973
56,783
32,254
259,844
519,632
267,942
74,482
20,260
226,246
144,638
—
99,727
205,989
28,164
27,446
6,050
359,869
32,988
52,757
1,238,636
—
83,529
197,196
222,137
175,095
76,035
911,973
—
33,116
40,926
631,977
30,908
181,903
—
444,970
130,602
68,678
8,659,543
153,544
996,194
1,149,738
$
3,856
2,237
54,595
21,311
21,102
—
15,537
48,896
11,019
5,346
3,564
25,446
54,568
24,639
10,037
3,369
31,814
8,829
—
9,989
17,162
870
3,241
959
33,706
4,067
19,578
131,635
—
12,519
38,570
41,569
13,864
6,741
90,347
4,603
5,656
3,600
66,283
2,533
19,166
2,680
45,324
15,138
19,591
955,556
10,530
88,262
98,792
$9,809,281
$1,054,348
43
Property Location
Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alabama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Arkansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Arizona . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Colorado . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Connecticut . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Iowa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Illinois . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kentucky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maryland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michigan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minnesota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Missouri
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nebraska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Hampshire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Jersey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nevada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New York . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ohio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oklahoma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tennessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wisconsin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient Medical
Number of
Properties
Total
Investment
Annualized
Revenues
1
3
1
4
29
3
1
33
10
1
5
8
7
1
5
1
2
8
7
3
2
1
7
3
5
8
7
2
1
1
7
53
2
6
20
$
21,859
30,531
22,845
65,537
841,277
29,924
41,153
400,031
175,245
6,794
51,613
146,612
75,300
7,677
85,994
20,470
22,315
172,680
142,631
55,776
35,186
14,009
205,118
33,235
45,069
102,417
67,209
24,987
9,506
25,853
78,058
891,821
33,073
179,100
267,226
$
2,562
5,233
2,079
8,466
80,417
4,097
2,318
48,218
24,572
1,653
8,920
18,383
12,673
752
13,394
2,980
1,931
28,877
18,383
7,199
5,465
806
42,169
3,715
4,194
6,849
11,365
3,262
1,575
2,138
10,499
97,226
5,103
20,751
27,991
Total domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grand total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
258
4
262
4,428,131
267,204
536,215
23,849
$4,695,335
$560,064
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)
2016
2015
2016
2015
2016
2015
. . . . . . . . . . . . . . . . .
Triple-net(4)
Seniors housing operating(5)
. . . .
Outpatient medical(6) . . . . . . . . . .
86.5% 87.2% 1.43x
n/a
88.7% 91.2%
n/a
94.7% 95.1%
1.49x
n/a
n/a
$16,841
59,627
33
$15,966 per bed/unit
60,260 per unit
32 per sq. ft.
(1) We use unaudited, periodic financial information provided solely by tenants/borrowers to calculate occupancy and coverages for
properties other than medical office buildings and have not independently verified the information.
(2) Represents the ratio of our triple-net customers’ earnings before interest, taxes, depreciation, amortization, rent and management fees to
contractual rent or interest due us. Data reflects the 12 months ended September 30 for the periods presented.
(3) Represents annualized revenues divided by total beds, units or square feet as presented in the tables above.
44
(4) Occupancy represents average quarterly operating occupancy based on the quarters ended September 30 and excludes properties that are
unstabilized, closed or for which data is not available or meaningful.
(5) Occupancy for seniors housing operating represents average occupancy for the three months ended December 31.
(6) Outpatient medical
facilities occupancy represents the percentage of
rentable square feet
total
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, 2016 (dollars in thousands):
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
Thereafter
Expiration Year
Triple-net:
Properties . . . . . . .
Base rent(1) . . . . . . $
% of base rent
. . .
Units . . . . . . . . . .
% of units . . . . . .
Outpatient medical:
30
12,936
51
$ 37,120
$
1.4%
4.0%
1,165
3,151
2.0%
5.5%
0
0
0.0%
0
0.0%
14
17,740
$
12
24,906
$
$
7
7,295
$
4
4,175
$
5
11,076
61
$ 72,866
$
32
64,361
368
$ 665,719
1.9%
1,225
2.1%
2.7%
2,289
4.0%
0.8%
690
1.2%
0.5%
317
0.6%
1.2%
762
1.3%
7.9%
4,538
7.9%
7.0%
3,724
6.5%
72.5%
39,644
68.9%
Square feet . . . . . . 1,253,812
Base rent(1) . . . . . . $
32,570
% of base rent
. . .
Leases . . . . . . . . .
% of leases . . . . . .
8.1%
337
15.1%
923,728
$ 23,952
1,171,476
30,651
$
1,153,444
30,505
$
1,442,424
38,660
$
2,297,626
48,713
$
1,168,037
28,635
$
1,347,883
37,287
$
669,305
$ 18,552
1,064,151
27,262
$
3,684,305
83,817
$
6.0%
263
11.8%
7.7%
296
13.2%
7.6%
259
11.6%
9.7%
255
11.4%
12.2%
222
9.9%
7.1%
171
7.6%
9.3%
100
4.5%
4.6%
91
4.1%
6.8%
119
5.3%
20.9%
125
5.5%
(1) The most recent monthly base rent including straight line for leases with fixed escalators or annual cash rents with contingent escalators.
Base rent does not include tenant recoveries or amortization of above and below market lease intangibles.
Item 3. Legal Proceedings
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.
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.
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.
Item 4. Mine Safety Disclosures
None.
45
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
There were 5,066 stockholders of record as of January 31, 2017. The following table sets forth, for the
periods indicated, the high and low prices of our common stock on the New York Stock Exchange (NYSE:HCN),
and common dividends paid per share:
2016
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter
2015
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter
Sales Price
Dividends Paid
High
Low
Per Share
$70.45
76.24
80.19
74.85
$84.88
79.60
70.22
71.25
$52.80
66.55
72.34
59.39
$73.20
65.48
61.00
58.21
$ 0.86
0.86
0.86
0.86
$0.825
0.825
0.825
0.825
Our Board of Directors has approved a new quarterly cash dividend rate of $0.87 per share of common stock
per quarter, commencing with the February 2017 dividend. The declaration and payment of quarterly dividends
remains subject to the review and approval of the Board of Directors.
Stockholder Return Performance Presentation
Set forth below is a line graph comparing the yearly percentage change and the cumulative total stockholder
return on our shares of common stock against the cumulative total return of the S & P Composite-500 Stock
Index and the FTSE NAREIT Equity Index. As of December 31, 2016, 161 companies comprised the FTSE
NAREIT Equity Index. The Index consists of REITs identified by NAREIT as equity (those REITs which have at
least 75% of their investments in real property). The data are based on the closing prices as of December 31 for
each of the five years. 2011 equals $100 and dividends are assumed to be reinvested.
S&P 500
Welltower Inc.
FTSE NAREIT Equity
200
175
s
r
a
l
l
o
D
150
125
100
2011
2012
2013
2014
2015
2016
S & P 500
Welltower Inc.
FTSE NAREIT Equity
12/31/11
12/31/12
12/31/13
12/31/14
12/31/15
12/31/16
100.00
100.00
100.00
116.00
118.21
118.06
153.57
108.27
120.97
174.60
160.79
157.43
177.01
151.58
162.46
198.18
156.69
176.30
46
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
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
Period
October 1, 2016 through October 31,
2016 . . . . . . . . . . . . . . . . . . . . . . . . .
November 1, 2016 through
November 30, 2016 . . . . . . . . . . . . .
December 1, 2016 through
—
145
December 31, 2016 . . . . . . . . . . . . .
37,916
Totals . . . . . . . . . . . . . . . . . . . . . . . . . .
38,061
$ —
62.33
66.93
$66.90
(1) During the three months ended December 31, 2016, 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.
47
Item 6. Selected Financial Data
The following selected financial data for the five years ended December 31, 2016 are derived from our
audited consolidated financial statements (in thousands, except per share data):
Operating Data
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before income taxes
and income (loss) from unconsolidated entities . . . . .
Income tax (expense) benefit
. . . . . . . . . . . . . . . . . . . . .
Income (loss) from unconsolidated entities . . . . . . . . . . .
Income from continuing operations . . . . . . . . . . . . . . . .
. . . . . . . . . . .
Income from discontinued operations, net
. . . . . . . . . . .
Gain (loss) on real estate dispositions, net
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . .
Preferred stock redemption charge . . . . . . . . . . . . . . . . .
Net income (loss) attributable to noncontrolling
Year Ended December 31,
2012
2013
2014
2015
2016
$1,805,044
1,619,132
$2,880,608
2,778,363
$3,343,546
2,959,333
$3,859,826
3,223,709
$4,281,160
3,571,907
185,912
(7,612)
2,482
180,782
114,058
—
294,840
69,129
6,242
102,245
(7,491)
(8,187)
86,567
51,713
—
138,280
66,336
—
384,213
1,267
(27,426)
358,054
7,135
147,111
512,300
65,408
—
636,117
(6,451)
(21,504)
608,162
—
280,387
888,549
65,406
—
709,253
19,128
(10,357)
718,024
—
364,046
1,082,070
65,406
—
interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,415)
(6,770)
147
4,799
4,267
Net income attributable to common stockholders . . . . . .
$ 221,884
$
78,714
$ 446,745
$ 818,344
$1,012,397
Other Data
Average number of common shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
224,343
225,953
276,929
278,761
306,272
307,747
348,240
349,424
358,275
360,227
Per Share Data
Basic:
Income from continuing operations attributable to
common stockholders . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations, net . . . . . . . . . . . . . . . . . . . .
Net income attributable to common stockholders * . .
Diluted:
Income from continuing operations attributable to
common stockholders . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations, net . . . . . . . . . . . . . . . . . . . .
Net income attributable to common stockholders * . .
Cash distributions per common share . . . . . . . . . . . . . . .
$
$
$
$
$
0.48
0.51
0.99
0.48
0.50
0.98
2.96
$
$
$
$
$
0.10
0.19
0.28
0.10
0.19
0.28
3.06
$
$
$
$
$
1.44
0.02
1.46
1.43
0.02
1.45
3.18
$
$
$
$
$
2.35
—
2.35
2.34
—
2.34
3.30
$
$
$
$
$
2.83
—
2.83
2.81
—
2.81
3.44
2012
2013
2014
2015
2016
December 31,
Balance Sheet Data
Net real estate investments . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . .
Total long-term obligations . . . . . . .
Total liabilities . . . . . . . . . . . . . . . .
Total preferred stock . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . .
$17,423,009
19,491,552
8,474,342
8,936,441
1,022,917
10,520,519
$21,680,221
23,026,666
10,594,723
11,235,296
1,017,361
11,756,331
$22,851,196
24,962,923
10,776,640
11,403,465
1,006,250
13,473,049
$26,888,685
29,023,845
12,967,686
13,664,877
1,006,250
15,175,885
$26,563,629
28,865,184
12,358,245
13,185,279
1,006,250
15,281,472
*
Amounts may not sum due to rounding
48
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
EXECUTIVE SUMMARY
Company Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital Market Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Key Transactions in 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Key Performance Indicators, Trends and Uncertainties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LIQUIDITY AND CAPITAL RESOURCES
Sources and Uses of Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Off-Balance Sheet Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contractual Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RESULTS OF OPERATIONS
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors Housing Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient Medical
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Segment/Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50
50
51
52
53
54
55
56
57
57
58
59
62
65
68
OTHER
Non-GAAP Financial Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Critical Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69
74
49
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. 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: HCN), an S&P 500 company headquartered in Toledo, Ohio, is driving the
transformation of health care infrastructure. The Company invests with leading seniors housing operators, post-
acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care
delivery models and improve people’s wellness and overall health care experience. WelltowerTM, a real estate
investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United
States, Canada and the United Kingdom, 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, 2016 (dollars in
thousands):
Type of Property
Net Operating
Income (NOI)(1)
Percentage of
NOI
Number of
Properties
Triple-net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,208,860
814,114
380,264
50.3%
33.9%
15.8%
631
420
262
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,403,238
100.0%
1,313
(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.
Business Strategy
Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay
consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders
as a result of annual increases in net operating income and portfolio growth. To meet these objectives, we invest
across the full spectrum of seniors housing and health care real estate and diversify our investment portfolio by
property type, relationship and geographic location.
Substantially all of our revenues are derived from operating lease rentals, resident fees and services, and
interest earned on outstanding loans receivable. These items represent our primary sources of liquidity to fund
distributions and depend upon the continued ability of our obligors to make contractual rent and interest
payments to us and the profitability of our operating properties. To the extent that our customers/partners
experience operating difficulties and become unable to generate sufficient cash to make payments to us, there
could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.
To mitigate this risk, we monitor our investments through a variety of methods determined by the type of
property. Our proactive and comprehensive asset management process for seniors housing properties generally
includes review of monthly financial statements and other operating data for each property, review of obligor/
partner creditworthiness, property inspections, and review of covenant compliance relating to licensure, real
estate taxes, letters of credit and other collateral. Our internal property management division actively manages
and monitors the 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,
50
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
capital improvement needs, and market conditions among other things. In monitoring our portfolio, our personnel
use a proprietary database to collect and analyze property-specific data. Additionally, we conduct extensive
research to ascertain industry trends. We evaluate the operating environment in each property’s market to
determine the likely trend in operating performance of the facility. When we identify unacceptable trends, we
seek to mitigate, eliminate or transfer the risk. Through these efforts, we are generally able to intervene at an
early stage to address any negative trends, and in so doing, support both the collectability of revenue and the
value of our investment.
In addition to our asset management and research efforts, we also structure our investments to help mitigate
payment risk. Operating leases and loans are normally credit enhanced by guaranties and/or letters of credit. In
addition, operating leases are typically structured as master leases and loans are generally cross-defaulted and
cross-collateralized with other real estate loans, operating leases or agreements between us and the obligor and its
affiliates.
For the year ended December 31, 2016, rental income and resident fees represented 39% and 59%,
respectively, of total revenues. Substantially all of our operating leases are designed with escalating rent
structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the
initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental
escalators is generally recorded based on the contractual cash rental payments due for the period. Our yield on
loans receivable depends upon a number of factors, including the stated interest rate, the average principal
amount outstanding during the term of the loan and any interest rate adjustments.
Our primary sources of cash include rent and interest receipts, resident fees and services, borrowings under
our primary unsecured credit facility, public issuances of debt and equity securities, proceeds from investment
dispositions and principal payments on loans receivable. Our primary uses of cash include dividend distributions,
debt service payments (including principal and interest), real property investments (including acquisitions, capital
expenditures, construction advances and transaction costs), loan advances, property operating expenses and
general and administrative expenses. Depending upon the availability and cost of external capital, we believe our
liquidity is sufficient to fund these uses of cash.
We also continuously evaluate opportunities to finance future investments. New investments are generally
funded from temporary borrowings under our primary unsecured credit facility, internally generated cash and the
proceeds from investment dispositions. Our investments generate cash from net operating income and principal
payments on loans receivable. Permanent financing for future investments, which replaces funds drawn under our
primary unsecured credit facility, has historically been provided through a combination of the issuance of public
debt and equity securities and the incurrence or assumption of secured debt.
Depending upon market conditions, we believe that new investments will be available in the future with
spreads over our cost of capital that will generate appropriate returns to our stockholders. It is also likely that
investment dispositions may occur in the future. To the extent
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, 2016, we had $419,378,000 of cash and cash equivalents, $187,842,000 of restricted cash and
$2,313,122,000 of available borrowing capacity under our primary unsecured credit facility.
that
Capital Market Outlook
We believe the capital markets remain supportive of our investment strategy. For the year ended
December 31, 2016, we raised $1,235,138,000 in aggregate gross proceeds through the issuance of common
stock and unsecured debt. The capital raised, in combination with available cash and borrowing capacity under
our primary unsecured credit facility, supported pro rata gross new investments of $3,007,040,000 for the year.
We expect attractive investment opportunities to remain available in the future as we continue to leverage the
benefits of our relationship investment strategy.
51
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Key Transactions in 2016
Capital.
facility and the $500,000,000 unsecured term credit
In March 2016, we issued $700,000,000 of 4.25% senior unsecured notes due 2026, generating
approximately $688,560,000 of net proceeds. In May 2016, we closed on a new primary unsecured credit facility
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 plus an option to upsize the unsecured
revolving 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 facility also allows us to borrow up to $1,000,000,000 in alternate
currencies. Based on our current credit ratings, the unsecured revolving credit facility is priced at 0.90% over
LIBOR with a 0.15% annual facility fee and the unsecured term credit facilities are priced at 0.95% over LIBOR
for the U.S. tranche and CDOR for the Canadian tranche. The unsecured term credit facilities mature on May 13,
2021 and the unsecured revolving credit facility matures on May 13, 2020. The unsecured revolving credit
facility can be extended for two successive terms of six months each at our option. Also, for the year ended
December 31, 2016, we raised $527,530,000 through our dividend reinvestment program and our Equity Shelf
Program (as defined below).
Investments. The following summarizes our acquisitions and joint venture investments made during the
year ended December 31, 2016 (dollars in thousands):
Properties
Investment
Amount(1)
Capitalization
Rates(2)
Book
Amount(3)
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . .
Outpatient medical . . . . . . . . . . . . . . . . . . . . .
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
34
3
51
$ 450,537
1,680,165
51,434
$2,182,136
6.7%
6.2%
6.3%
6.3%
$ 526,814
1,801,446
56,386
$2,384,646
(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 income to be received in cash divided by investment amounts.
(3) Represents amounts recorded on our books including fair value adjustments pursuant to U.S. GAAP. See Note 3 to our consolidated
financial statements for additional information.
Dispositions. The following summarizes property dispositions made during the year ended December 31,
2016 (dollars in thousands):
Properties
Proceeds(1)
Capitalization
Rates(2)
Book
Amount(3)
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical . . . . . . . . . . . . . . . . . . . . .
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
151
7
158
$2,288,211
80,300
$2,368,511
8.8%
7.9%
8.8%
$1,773,614
78,786
$1,852,400
(1) Represents pro rata proceeds received upon disposition including any seller financing.
(2) Represents annualized contractual income that was being received in cash at date of disposition divided by disposition proceeds.
(3) Represents carrying value of assets at time of disposition. See Note 5 to our consolidated financial statements for additional information.
Dividends. Our Board of Directors increased the annual cash dividend to $3.48 per common share ($0.87
per share quarterly), as compared to $3.44 per common share for 2016, beginning in February 2017. The
dividend declared for the quarter ended December 31, 2016 represents the 183rd consecutive quarterly dividend
payment.
52
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Key Performance Indicators, Trends and Uncertainties
We utilize several key performance indicators to evaluate the various aspects of our business. These
indicators are discussed below and relate to operating performance, credit strength and concentration risk.
Management uses these key performance indicators to facilitate internal and external comparisons to our
historical operating results, in making operating decisions and for budget planning purposes.
Operating Performance. We believe that net income attributable to common stockholders (“NICS”) is the
most appropriate earnings measure. Other useful supplemental measures of our operating performance include
funds from operations attributable to common stockholders (“FFO”), net operating income from continuing
operations (“NOI”) and same store NOI (“SSNOI”); however, these supplemental measures are not defined by
U.S. generally accepted accounting principles (“U.S. GAAP”). Please refer to the section entitled “Non-GAAP
Financial Measures” for further discussion and reconciliations of FFO, NOI and SSNOI. These earnings
in the valuation, comparison and investment
measures are widely used by investors and analysts
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,
2014
2015
2016
Net income attributable to common stockholders . . . . . . . . . . . . $ 446,745 $ 818,344 $1,012,397
1,593,143
Funds from operations attributable to common stockholders . . .
2,404,177
Net operating income from continuing operations . . . . . . . . . . .
1,445,748
Same store net operating income . . . . . . . . . . . . . . . . . . . . . . . . .
1,409,640
2,237,569
1,425,795
1,174,081
1,940,188
1,404,158
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
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 earnings before interest, taxes, depreciation and amortization (“EBITDA”) which is discussed in
further detail, and reconciled to net income, below in “Non-GAAP Financial Measures.” Leverage ratios and
coverage ratios are widely used by investors, analysts and rating agencies in the valuation, comparison,
investment recommendations and rating of companies. The following table reflects the recent historical trends for
our credit strength measures for the periods presented:
Year Ended
December 31,
2014
2015
2016
Net debt to book capitalization ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net debt to undepreciated book capitalization ratio . . . . . . . . . . . . . . . . . . . . . . .
Net debt to market capitalization ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted interest coverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted fixed charge coverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53
43% 45% 43%
38% 40% 37%
28% 33% 31%
4.19x
3.32x
4.20x
3.32x
3.73x
2.96x
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Concentration Risk. We evaluate our concentration risk in terms of NOI by property mix, relationship mix
and geographic mix. Concentration risk is a valuable measure in understanding what portion of our NOI could be
at risk if certain sectors were to experience downturns. Property mix measures the portion of our NOI that relates
to our various property types. Relationship mix measures the portion of our NOI that relates to our top five
relationships. Geographic mix measures the portion of our NOI that relates to our top five states (or international
equivalents). The following table reflects our recent historical trends of concentration risk by NOI for the periods
indicated below:
December 31,
2014
2015
2016
Property mix:(1)
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53% 54% 50%
33% 31% 34%
14% 15% 16%
Relationship mix:(1)
Genesis Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sunrise Senior Living(2)
Revera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brookdale Senior Living(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benchmark Senior Living . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remaining customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16% 17% 16%
15% 13% 13%
6%
5%
4%
9%
6%
7%
4%
4%
4%
52% 54% 55%
Geographic mix:(1)
California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Jersey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remaining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10% 10% 10%
8%
8%
8%
7%
6%
5%
7%
9%
7%
7%
7%
7%
63% 60% 61%
(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” and “Item 7 —
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report
on Form 10-K for further discussion of these risk factors.
Corporate Governance
Maintaining investor confidence and trust is important in today’s business environment. Our Board of
Directors and management are strongly committed to policies and procedures that reflect the highest level of
ethical business practices. Our corporate governance guidelines provide the framework for our business
54
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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 rent and interest receipts, resident fees and services, borrowings under
our primary unsecured credit facility, public issuances of debt and equity securities, proceeds from investment
dispositions and principal payments on loans receivable. Our primary uses of cash include dividend distributions,
debt service payments (including principal and interest), real property investments (including acquisitions, capital
expenditures, construction advances and transaction costs), loan advances, property operating expenses, and
general and administrative expenses. These sources and uses of cash are reflected in our Consolidated Statements
of Cash Flows and are discussed in further detail below. The following is a summary of our sources and uses of
cash flows (dollars in thousands):
Year Ended
One Year
Change
December 31,
2014
December 31,
2015
$
%
Year Ended
December 31,
2016
One Year
Change
Two Year
Change
$
%
$
%
Beginning cash and
cash equivalents . . . . $
158,780 $
473,726 $
314,946
198% $
360,908 $ (112,818) -24% $
202,128
127%
Cash provided from
(used in):
Operating
activities . . . . . . . .
1,138,670
1,373,468
234,798
21% 1,628,695
255,227
19%
490,025
43%
Investing
activities . . . . . . . .
(2,126,206)
(3,484,160) (1,357,954)
64%
(309,503) 3,174,657 -91% 1,816,703
-85%
Financing
activities . . . . . . . .
1,303,172
2,006,449
703,277
54% (1,240,448) (3,246,897)
n/a
(2,543,620)
n/a
Effect of foreign
currency translation
on cash and cash
equivalents . . . . . . . .
Ending cash and cash
(690)
(8,575)
(7,885) 1,143%
(20,274)
(11,699) 136%
(19,584)2,838%
equivalents . . . . . . . . $
473,726 $
360,908 $ (112,818)
-24% $
419,378 $
58,470
16% $
(54,348)
-11%
Operating Activities. The change in net cash provided from operating activities is primarily attributable to
increases in NOI, which is primarily due to acquisitions, net of dispositions. Please see “Results of Operations”
for further discussion. For the years ended December 31, 2014, 2015 and 2016, cash flows from operations
exceeded cash distributions to stockholders.
55
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Investing Activities. The changes in net cash used in investing activities are primarily attributable to net
changes in real property investments, real estate loans receivable and investments in unconsolidated entities
which are summarized above in “Key Transactions in 2016.” Please refer to Notes 3 and 6 of our consolidated
financial statements for additional information. The following is a summary of cash used in non-acquisition
capital improvement activities (dollars in thousands):
New development . . . . . . . . . . . . .
Recurring capital expenditures,
tenant improvements and lease
commissions . . . . . . . . . . . . . . .
Renovations, redevelopments and
other capital improvements . . .
Year Ended
One Year
Change
December 31,
2014
December 31,
2015
$
%
Year Ended
December 31,
2016
One Year
Change
Two Year
Change
$
%
$
%
$197,881
$244,561
$ 46,680 24% $403,131
$158,570 65% $205,250 104%
59,134
64,458
5,324
9%
66,332
1,874
3%
7,198
12%
73,646
123,294
49,648 67% 152,814
29,520 24% 79,168 107%
Total
. . . . . . . . . . . . . . . . . . . . . . .
$330,661
$432,313
$101,652 31% $622,277
$189,964 44% $291,616
88%
The change in new development is primarily due to the number and size of construction projects on-going
during the relevant periods. Renovations, redevelopments and other capital improvements include expenditures
to maximize property value, increase net operating income, maintain a market-competitive position and/or
achieve property stabilization. Generally, these expenditures have increased as a result of acquisitions, primarily
in our seniors housing operating segment.
Financing Activities. The changes in net cash provided from financing activities are primarily attributable
to changes related to our long-term debt arrangements, the issuance/redemptions of common and preferred stock,
and dividend payments which are summarized above in “Key Transactions in 2016.” Please refer to Notes 9, 10
and 13 of our consolidated financial statements for additional information.
Off-Balance Sheet Arrangements
At December 31, 2016, we had investments in unconsolidated entities with our ownership ranging from
10% to 50%. Please see Note 7 to our consolidated financial statements for additional information. We use
financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure. Please see
Note 11 to our consolidated financial statements for additional information. At December 31, 2016, we had
twelve outstanding letter of credit obligations. Please see Note 12 to our consolidated financial statements for
additional information.
56
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Contractual Obligations
The following table summarizes our payment
requirements under contractual obligations as of
December 31, 2016 (in thousands):
Contractual Obligations
Total
2017
2018-2019
2020-2021
Thereafter
Unsecured revolving credit facility(1)
Senior unsecured notes and term credit
. . . . . . . . . . $
645,000 $
— $
— $ 645,000 $
—
Payments Due by Period
facilities:(2)
U.S. Dollar senior unsecured notes . . . . . . . . . .
Canadian Dollar senior unsecured notes(3)
. . . .
Pounds Sterling senior unsecured notes(3) . . . . .
U.S. Dollar term credit facility . . . . . . . . . . . . .
Canadian Dollar term credit facility(3) . . . . . . . .
6,050,000
223,447
1,295,385
505,000
186,206
Secured debt:(2,3)
900,000
— 223,447
—
5,000
— 1,050,000
—
—
—
—
500,000
— 186,206
4,100,000
—
— 1,295,385
—
—
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unconsolidated . . . . . . . . . . . . . . . . . . . . . . . . .
3,465,066
668,282
550,620 1,321,310
153,360
22,886
516,038
40,919
1,077,098
451,117
Contractual interest obligations:(4)
Unsecured revolving credit facility . . . . . . . . . .
Senior unsecured notes and term loans(3)
. . . . .
. . . . . . . . . . . . . . .
Consolidated secured debt(3)
. . . . . . . . . . . . .
Unconsolidated secured debt(3)
. . . . . . . . . . . . . . . . . .
Capital lease obligations(5)
Operating lease obligations(5)
. . . . . . . . . . . . . . . .
Purchase obligations(5) . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
Other long-term liabilities(6)
53,638
3,386,130
623,851
163,201
93,836
1,105,992
523,099
4,179
10,728
352,450
132,620
24,801
4,731
16,939
242,962
1,475
21,455
686,783
188,243
49,414
9,012
34,332
277,995
2,704
21,455
578,625
121,016
33,968
8,346
33,457
—
—
—
1,768,272
181,972
55,018
71,747
1,021,264
2,142
—
Total contractual obligations . . . . . . . . . . . . . . . . . $18,992,312 $1,360,212 $3,799,608 $3,808,477 $10,024,015
(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 balance sheet date.
(5) See Note 12 to our consolidated financial statements.
(6) Primarily relates to payments to be made under our Supplemental Executive Retirement Plan, which is discussed in Note 19 to the
consolidated financial statements.
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, 2016, 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
57
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
maintain compliance with our debt covenants and with a capital structure consistent with our current profile. Any
downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse
impact on our cost and availability of capital, which could in turn have a material adverse impact on our
consolidated results of operations, liquidity and/or financial condition.
On May 1, 2015, we filed with the Securities and Exchange Commission (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 under which we may issue up to 15,000,000 shares of
common stock. As of January 31, 2017, 7,737,978 shares of common stock remained available for issuance under
this registration statement. We have entered into separate Equity Distribution Agreements with each of UBS
Securities LLC, KeyBanc Capital Markets Inc. and Credit Agricole Securities (USA) Inc. relating to the offer and
sale from time to time of up to $630,015,000 aggregate amount of our common stock (“Equity Shelf Program”).
As of January 31, 2017, we had $170,640,000 of remaining capacity under the Equity Shelf Program. Depending
upon market conditions, we anticipate issuing securities under our registration statements to invest in additional
properties and to repay borrowings under our primary unsecured credit facility.
Results of Operations
Summary
Our primary sources of revenue include rent, resident fees and services, and interest income. Our primary
expenses include interest expense, depreciation and amortization, property operating expenses, transaction costs
and general and administrative expenses. We evaluate our business and make resource allocations on our three
business segments: triple-net, seniors housing operating and outpatient medical. The primary performance
measures for our properties are NOI and SSNOI, which are discussed below. Please see Note 17 to our
consolidated financial statements for additional information. The following is a summary of our results of
operations (dollars in thousands, except per share amounts):
Year Ended
One Year
Change
December 31,
2014
December 31,
2015
Amount %
Year Ended
December 31,
2016
One Year
Change
Two Year
Change
Amount % Amount %
Net income attributable to
common stockholders . . . . . $ 446,745 $ 818,344 $371,599 83% $1,012,397 $194,053 24%$565,652 127%
Funds from operations
attributable to common
stockholders . . . . . . . . . . . . . 1,174,081 1,409,640 235,559 20% 1,593,143 183,503 13% 419,062 36%
Adjusted EBITDA . . . . . . . . . . 1,813,241 2,091,754 278,513 15% 2,246,507 154,753 7% 433,266 24%
Net operating income from
continuing operations . . . . . 1,940,188 2,237,569 297,381 15% 2,404,177 166,608 7% 463,989 24%
3%
19,953 1% 41,590
2% 1,445,748
21,637
Same store NOI . . . . . . . . . . . . 1,404,158 1,425,795
Per share data (fully diluted):
Net income attributable to
common stockholders . . . $
1.45 $
2.34 $
0.89 61% $
2.81 $
0.47 20%$
1.36 94%
Funds from operations
attributable to common
stockholders . . . . . . . . . . .
Adjusted interest coverage
3.82
4.03
0.21
5%
4.42
0.39 10%
0.60 16%
ratio . . . . . . . . . . . . . . . . . . .
3.73x
4.20x
0.47x 13%
4.19x
-0.01x 0% 0.46x 12%
Adjusted fixed charge
coverage ratio . . . . . . . . . . .
2.96x
3.32x
0.36x 12%
3.32x
0.00x 0% 0.36x 12%
58
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following table represents the changes in outstanding common stock for the period from January 1,
2014 to December 31, 2016 (in thousands):
December 31,
2014
Year Ended
December 31,
2015
December 31,
2016
Beginning balance . . . . . . . . . . . . . . . . . . . . .
Public offerings . . . . . . . . . . . . . . . . . . . . . . .
Dividend reinvestment plan issuances . . . . . .
Senior note conversions . . . . . . . . . . . . . . . . .
Preferred stock conversions . . . . . . . . . . . . . .
Option exercises . . . . . . . . . . . . . . . . . . . . . . .
Equity Shelf Program issuances . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net
289,564
33,925
4,123
259
233
498
—
188
Ending balance . . . . . . . . . . . . . . . . . . . . . . . .
328,790
Average number of shares outstanding:
328,790
19,550
4,024
1,330
—
249
696
139
354,778
354,778
—
4,145
—
—
141
3,135
403
Totals
289,564
53,475
12,292
1,589
233
888
3,831
730
362,602
362,602
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . .
306,272
307,747
348,240
349,424
358,275
360,227
During the past three years, inflation has not significantly affected our earnings because of the moderate
inflation rate. Additionally, a large portion of our earnings are derived primarily from long-term investments with
predictable rates of return. These investments are mainly financed with a combination of equity, senior unsecured
notes, secured debt and borrowings under our primary unsecured credit facility. During inflationary periods,
which generally are accompanied by rising interest rates, our ability to grow may be adversely affected because
the yield on new investments may increase at a slower rate than new borrowing costs. Presuming the current
inflation rate remains moderate and long-term interest rates do not increase significantly, we believe that
inflation will not impact the availability of equity and debt financing for us.
Triple-net
The following is a summary of our NOI for the triple-net segment (dollars in thousands):
Year Ended
One Year
Change
December 31,
2014
December 31,
2015
$
%
Year Ended
December 31,
2016
One Year
Change
Two Year
Change
$
%
$
%
SSNOI(1)
Non-cash NOI attributable to
. . . . . . . . . . . . . . . . . . $ 536,231 $ 566,188 $ 29,957 6% $ 575,764 $ 9,576
2%$ 39,533 7%
same store properties(1) . . . . .
43,448
53,578
10,130 23%
44,215
(9,363)-17%
767 2%
NOI attributable to non same
store properties(2)
. . . . . . . . .
447,455
556,040 108,585 24% 588,881 32,841
6% 141,426 32%
NOI . . . . . . . . . . . . . . . . . . . . . . $1,027,134 $1,175,806 $148,672 14% $1,208,860 $33,054
3%$181,726 18%
(1) Change is due to increases in cash and non-cash NOI (described below) related to 397 same store properties.
(2) Change is primarily due to the acquisition of 144 properties and the conversion of 26 construction projects into revenue-generating
properties subsequent to January 1, 2014.
59
Depreciation and
amortization . . . . . . . . . . . .
Transaction costs . . . . . . . . . .
Loss (gain) on extinguishment
. . . . . . . . . . . . .
of debt, net
Provision for loan losses . . . . .
Impairment of assets . . . . . . . .
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is a summary of our results of operations for the triple-net segment (dollars in thousands):
Year Ended
December 31, December 31,
2014
2015
One Year
Change
$
%
Year Ended
December 31,
2016
One Year
Change
$
%
Two Year
Change
$
%
Revenues:
Rental income . . . . . . . . . . . . .
$ 992,638
$1,094,827
$102,189
10% $1,112,325
$ 17,498
2% $119,687
12%
Interest income . . . . . . . . . . . .
Other income . . . . . . . . . . . . .
32,255
2,973
74,108
6,871
41,853
3,898
130%
131%
90,476
6,059
16,368
22% 58,221 181%
(812)
-12%
3,086 104%
Property operating expenses . . . .
732
—
(732)
-100%
—
— n/a
(732) -100%
1,027,866
1,175,806
147,940
14% 1,208,860
33,054
3% 180,994
18%
Net operating income from
continuing operations
(NOI)
. . . . . . . . . . . . . . . . .
Other expenses:
1,027,134
1,175,806
148,672
14% 1,208,860
33,054
3% 181,726
18%
Interest expense . . . . . . . . . . .
32,135
28,384
(3,751)
-12%
21,370
(7,014)
-25% (10,765)
-33%
Loss (gain) on derivatives,
net . . . . . . . . . . . . . . . . . . . .
(1,770)
(58,427)
(56,657) 3,201%
68
58,495 -100%
1,838 -104%
273,296
45,146
288,242
53,195
14,946
8,049
5%
18%
297,197
8,955
3% 23,901
9%
10,016
(43,179)
-81% (35,130)
-78%
Other expenses . . . . . . . . . . . .
8,825
26,823
304%
— (35,648) -100% (8,825) -100%
10,095
9,997 10,201%
(9,232)
-91%
765 781%
—
2,220
n/a
n/a
6,935
n/a
6,935
20,169
17,949 809% 20,169
n/a
n/a
863
6,935
98
—
—
—
2,220
35,648
Income from continuing
operations before income
taxes and income (loss) from
unconsolidated entities . . . . . .
Income tax benefit (expense) . . .
Income (loss) from
357,730
359,357
1,627
0%
356,618
(2,739)
-1% (1,112)
0%
669,404
6,141
816,449
147,045
(4,244)
(10,385)
22%
n/a
852,242
35,793
4% 182,838
27%
(1,087)
3,157
-74% (7,228) -118%
unconsolidated entities . . . . . .
5,423
8,260
2,837
52%
9,767
1,507
18%
4,344
80%
Income from continuing
operations . . . . . . . . . . . . . . . .
680,968
820,465
139,497
20%
860,922
40,457
5% 179,954
26%
Discontinued operations, net
. . .
7,135
—
(7,135)
-100%
—
— n/a
(7,135) -100%
Gain (loss) on real estate
dispositions, net
. . . . . . . . . . .
146,205
86,261
(59,944)
-41%
355,394
269,133 312% 209,189 143%
Net income . . . . . . . . . . . . . . . . .
834,308
906,726
72,418
9% 1,216,316
309,590
34% 382,008
46%
Less: Net income attributable to
noncontrolling interests . . . . .
1,874
6,348
4,474
239%
1,221
(5,127)
-81%
(653)
-35%
Net income attributable to
common stockholders . . . . . . .
$ 832,434
$ 900,378
$ 67,944
8% $1,215,095
$314,717
35% $382,661
46%
The increase in rental income is primarily attributable to the acquisitions of new properties and the
conversion of newly constructed triple-net properties from which we receive rent. Certain of our leases contain
annual rental escalators that are contingent upon changes in the Consumer Price Index and/or changes in the
gross operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-line rent is
60
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If
gross operating revenues at our facilities and/or the Consumer Price Index do not increase, a portion of our
revenues may not continue to increase. Sales of real property would offset revenue increases and, to the extent
that they exceed new acquisitions, could result in decreased revenues. Our leases could renew above or below
current rent rates, resulting in an increase or decrease in rental income. For the three months ended December 31,
2016, we had no lease renewals but we had 26 leases with rental rate increasers ranging from 0.07% to 0.60% in
our triple-net portfolio.
The increase in interest income is attributable to higher loan volume in the current year, which includes first
mortgage loans to Genesis Healthcare. The decrease in other income is due to the receipt of an early prepayment
fee in 2015 related to a real estate loan receivable.
During the year ended December 31, 2016, we completed two triple-net construction projects totaling
$46,094,000 or $251,880 per bed/unit and one expansion project totaling $2,879,000. The following is a
summary of triple-net construction projects pending as of December 31, 2016 (dollars in thousands):
Location
Raleigh, NC . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Livingston, NJ . . . . . . . . . . . . . . . . . . . . . . . . . . .
Edmond, OK . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tulsa, OK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lititz, PA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lancaster, PA . . . . . . . . . . . . . . . . . . . . . . . . . . .
Piscataway, NJ . . . . . . . . . . . . . . . . . . . . . . . . . .
Bracknell, England . . . . . . . . . . . . . . . . . . . . . . .
Alexandria, VA . . . . . . . . . . . . . . . . . . . . . . . . . .
Units/
Beds
225
120
142
145
80
80
124
64
116
Commitment
Balance
Est. Completion
$ 95,700
53,439
27,300
28,500
15,200
15,875
40,800
15,573
60,156
$ 83,566
37,566
23,881
19,197
13,867
12,778
34,924
10,394
20,918
1Q17
1Q17
1Q17
1Q17
1Q17
1Q17
2Q17
2Q17
1Q18
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,096
$352,543
$257,091
Total interest expense represents secured debt interest expense and gains and losses on forward exchange
contracts. 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 following is a
summary of our triple-net secured debt principal activity (dollars in thousands):
Year Ended December 31, 2014 Year Ended December 31, 2015 Year Ended December 31, 2016
Beginning balance . . . . .
Debt issued . . . . . . . . . . .
Debt assumed . . . . . . . . .
Debt extinguished . . . . .
Foreign currency . . . . . .
Principal payments . . . . .
Amount
$587,136
—
120,352
(22,970)
(2,180)
(11,569)
Weighted Avg.
Interest Rate
5.394%
0.000%
5.404%
6.235%
5.317%
5.564%
Amount
$ 670,769
—
44,142
(132,545)
(15,633)
(12,719)
Weighted Avg.
Interest Rate
5.337%
0.000%
5.046%
4.695%
5.315%
5.450%
Amount
$ 554,014
166,155
—
(118,500)
3,157
(10,627)
Ending balance . . . . . . . .
$670,769
5.337%
$ 554,014
5.488%
$ 594,199
Monthly averages . . . . . .
$596,941
5.381%
$ 551,803
5.518%
$ 497,213
Weighted Avg.
Interest Rate
5.488%
2.205%
0.000%
5.562%
5.247%
5.682%
4.580%
5.414%
In April 2011, we completed the acquisition of substantially all of the real estate assets of privately-owned
Genesis Healthcare Corporation. In conjunction with this transaction, we received the option to acquire an
ownership interest in Genesis Healthcare. In February 2015, Genesis Healthcare closed on a transaction to merge
with Skilled Healthcare Group to become a publicly traded company which required us to record the value of the
derivative asset due to the net settlement feature. This event resulted in $58,427,000 gain. During the fourth
quarter of 2015, the cost basis of this investment exceeded the fair value. Management performed an assessment
61
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
to determine whether the decline in fair value was other than temporary and concluded that it was. As a result, we
recognized an other than temporary impairment charge of $35,648,000 which is recorded in other expense.
Depreciation and amortization increased primarily as a result of new property acquisitions and the
conversions of newly constructed properties. To the extent that we acquire or dispose of additional properties in
the future, our provision for depreciation and amortization will change accordingly.
Transaction costs are costs incurred with property acquisitions including due diligence costs, fees for legal
and valuation services, the termination of pre-existing relationships, lease termination expenses and other similar
costs. The change in transaction costs from year to year is primarily a function of investment volume. The
fluctuations in loss (gain) on extinguishment of debt is primarily attributable to the volume of extinguishments
and terms of the related secured debt.
Changes in gains on sales of properties are related to the volume of property sales and the sales prices. We
recognized impairment losses on certain held-for-sale properties as the fair value less estimated costs to sell
exceeded our carrying values.
During the year ended December 31, 2016, we recorded a provision for loan loss related to the restructuring
of two first mortgage loans. During the years ended December 31, 2014 and 2015, we did not record a provision
for loan loss or record loan write-offs. The provision for loan losses is related to our critical accounting estimate
for the allowance for loan losses and is discussed in “Critical Accounting Policies” and Note 6 to our
consolidated financial statements.
A portion of our 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.
Seniors Housing Operating
The following is a summary of our NOI for the seniors housing operating segment (dollars in thousands):
Year Ended
One Year
Change
December 31,
2014
December 31,
2015
$
%
Year Ended
December 31,
2016
One Year
Change
Two Year
Change
$
%
$
%
SSNOI(1) . . . . . . . . . . . $625,732
Non-cash NOI
$614,044 $(11,688)
-2% $619,850 $
5,806
1% $ (5,882)
-1%
attributable to same
store properties . . . .
NOI attributable to
non same store
properties(2) . . . . . . .
(1,044)
(1,003)
41
-4%
(2,404)
(1,401) 140% (1,360) 130%
6,575
88,221
81,646 1,242% 196,668
108,447 123% 190,093 2,891%
NOI . . . . . . . . . . . . . . . $631,263
$701,262 $ 69,999
11% $814,114 $112,852
16% $182,851
29%
(1) Relates to 278 same store properties.
(2) Primarily due to the acquisition of 137 properties subsequent to January 1, 2014.
62
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is a summary of our results of operations for the seniors housing operating segment (dollars
in thousands):
Revenues:
Year Ended
December 31, December 31,
2014
2015
One Year
Change
$
%
Year Ended
December 31,
2016
One Year
Change
$
%
Two Year
Change
$
%
Resident fees and services . . . . . . . . . . .
$1,892,237
$2,158,031
$265,794
14% $2,504,731
$346,700
16% $612,494
Interest income . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . .
2,119
3,215
4,180
6,060
2,061
2,845
97%
88%
4,180
17,085
— 0%
2,061
11,025 182% 13,870 431%
32%
97%
Property operating expenses . . . . . . . . . . .
1,266,308
1,467,009
200,701
16% 1,711,882
244,873
17% 445,574
1,897,571
2,168,271
270,700
14% 2,525,996
357,725
16% 628,425
33%
35%
Net operating income from continuing
operations (NOI) . . . . . . . . . . . . . . . .
631,263
701,262
69,999
11%
814,114
112,852
16% 182,851
29%
Other expenses:
Interest expense . . . . . . . . . . . . . . . . . . .
Loss (gain) on derivatives, net . . . . . . . .
Depreciation and amortization . . . . . . . .
Transaction costs . . . . . . . . . . . . . . . . . .
Loss (gain) on extinguishment of debt,
net
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of assets . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . . . . .
64,130
275
418,199
16,880
383
—
1,437
70,388
6,258
10%
81,853
11,465
16% 17,723
28%
—
(275) -100%
—
— n/a
(275) -100%
351,733
(66,466)
-16%
415,429
63,696
18% (2,770)
54,966
38,086 226%
29,207
(25,759)
-47% 12,327
-1%
73%
(195)
(578) -151%
(88)
107
-55%
(471) -123%
—
—
— n/a
12,403
12,403
n/a
12,403
n/a
(1,437) -100%
—
— n/a
(1,437) -100%
501,304
476,892
(24,412)
-5%
538,804
61,912
13% 37,500
7%
(Loss) income from continuing operations
before income from unconsolidated
entities . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . .
(Loss) income from unconsolidated
129,959
(3,047)
224,370
94,411
73%
275,310
50,940
23% 145,351 112%
986
4,033 -132%
(3,762)
(4,748) -482%
(715)
23%
entities . . . . . . . . . . . . . . . . . . . . . . . . . .
(38,204)
(32,672)
5,532
-14%
(20,442)
12,230
-37% 17,762
-46%
Net income (loss) . . . . . . . . . . . . . . . . . . . .
88,708
192,684
103,976 117%
251,106
58,422
30% 162,398 183%
Less: Net income (loss) attributable to
noncontrolling interests . . . . . . . . . . . . .
(2,335)
(1,438)
897
-38%
2,292
3,730 -259%
4,627 -198%
Net income (loss) attributable to common
stockholders . . . . . . . . . . . . . . . . . . . . . .
$
91,043
$ 194,122
$103,079 113% $ 248,814
$ 54,692
28% $157,771 173%
Fluctuations in revenues and property operating expenses are primarily a result of acquisitions and the
movement of U.S. and foreign currency exchange rates. The increase in other income for the year ended
December 31, 2016 is primarily a result of insurance proceeds received relating to a property as well as a bargain
purchase gain recognized in conjunction with a single property acquisition. The fluctuations in depreciation and
amortization are due to the net impact of acquisitions and variations in amortization of short-lived intangible
assets. To the extent that we acquire or dispose of additional properties in the future, these amounts will change
accordingly. Losses from unconsolidated entities are primarily attributable to depreciation and amortization of
short-lived intangible assets related to our investments in unconsolidated joint ventures with Chartwell in 2012,
Sunrise in 2013 and Senior Resource Group in 2014.
63
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
During the year ended December 31, 2016, we completed one seniors housing operating construction
project representing $18,979,000 or $210,878 per unit plus one expansion project representing $8,484,000. The
following is a summary of our seniors housing operating construction projects, excluding expansions, pending as
of December 31, 2016 (dollars in thousands):
Location
Units/Beds
Commitment
Balance
Est. Completion
Camberley, England . . . . . . . . . . . . . . . . . . .
Chertsey, England . . . . . . . . . . . . . . . . . . . .
Bushey, England . . . . . . . . . . . . . . . . . . . . .
12
93
95
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
200
$ 3,487
38,160
48,861
$90,508
$
3,436
18,727
16,949
39,112
1Q17
1Q18
2Q18
New York, NY . . . . . . . . . . . . . . . . . . . . . . .
Project in planning stage 126,781
$165,893
Interest expense represents secured debt interest expense. Please refer to Note 10 to our consolidated
financial statements for additional information. The following is a summary of our seniors housing operating
property secured debt principal activity (dollars in thousands):
Year Ended December 31, 2014 Year Ended December 31, 2015 Year Ended December 31, 2016
Amount
Weighted Avg.
Interest Rate
Amount
Weighted Avg.
Interest Rate
Amount
Weighted Avg.
Interest Rate
Beginning balance . . . . . . . . $1,714,714
109,503
Debt issued . . . . . . . . . . . . .
18,484
Debt assumed . . . . . . . . . . .
(114,793)
Debt extinguished . . . . . . . .
(39,379)
Foreign currency . . . . . . . . .
(33,998)
Principal payments . . . . . . .
4.622% $1,654,531
228,685
3.374%
842,316
4.359%
(285,599)
3.626%
(110,691)
3.727%
(38,690)
4.296%
4.422% $2,290,552
293,860
2.776%
3.420%
60,898
(159,498)
4.188%
26,549
3.625%
(49,112)
4.126%
3.958%
2.895%
4.301%
3.656%
3.483%
3.888%
Ending balance . . . . . . . . . . $1,654,531
4.422% $2,290,552
3.958% $2,463,249
3.936%
Monthly averages . . . . . . . . $1,657,416
4.515% $1,894,609
4.261% $2,391,706
3.926%
The fluctuations in gains/losses on debt extinguishments is primarily attributable the volume of
extinguishments and terms of the related secured debt. During the year ended December 31, 2016, we recorded
impairment charges totaling $12,403,000 relating to two properties. Transaction costs represent costs incurred
with property acquisitions (including due diligence costs, fees for legal and valuation services, and termination of
pre-existing relationships computed based on the fair value of the assets acquired), lease termination fees and
other similar costs. The change in transaction costs from year to year is primarily a function of investment
volume. The majority of our seniors housing operating properties are formed through partnership interests. Net
income attributable to noncontrolling interests represents our partners’ share of net income or loss related to
those partnerships where we are the controlling partner.
64
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Outpatient Medical
The following is a summary of our NOI for the outpatient medical segment (dollars in thousands):
Year Ended
One Year
December 31, December 31,
Change
Year Ended
December 31,
One Year
Change
Two Year
Change
2014
2015
$
%
2016
$
%
$
%
SSNOI(1) . . . . . . . . . . . . . . . . . $242,195
Non-cash NOI attributable to
same store properties(1) . . . .
8,015
NOI attributable to non same
$245,563 $ 3,368
1% $250,134 $ 4,571
2% $ 7,939
3%
5,186
(2,829) -35%
2,440
(2,746) -53% (5,575) -70%
store properties(2)
. . . . . . . .
30,904
108,661
77,757 252% 127,690
19,029 18% 96,786 313%
NOI . . . . . . . . . . . . . . . . . . . . . $281,114
$359,410 $78,296 28% $380,264 $20,854
6% $99,150
35%
(1) Due to increases in cash and non-cash NOI (described below) related to 176 same store properties.
(2) Primarily due to the acquisition of 54 properties and conversions of construction projects into 17 revenue-generating properties
subsequent to January 1, 2013.
65
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is a summary of our results of operations for the outpatient medical segment (dollars in
thousands):
Revenues:
Year Ended
December 31, December 31,
2014
2015
One Year
Change
$
%
Year Ended
December 31,
2016
One Year
Change
$
%
Two Year
Change
$
%
Rental income . . . . . . . . . . . . . . . . .
$413,129
$504,121
$ 90,992
22% $536,490
$ 32,369
6% $123,361
Interest income . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . .
Property operating expenses . . . . . . . .
Net operating income from
3,293
1,010
417,432
136,318
5,853
4,684
514,658
155,248
2,560
3,674
97,226
18,930
78%
364%
3,307
5,568
(2,546) -43%
14
884 19%
4,558
451%
23% 545,365
30,707
6% 127,933
14% 165,101
9,853
6% 28,783
31%
21%
30%
0%
continuing operations (NOI) . . . .
281,114
359,410
78,296
28% 380,264
20,854
6% 99,150
35%
Other expenses:
Interest expense . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . .
Transaction costs . . . . . . . . . . . . . . .
Loss (gain) on extinguishment of
debt, net . . . . . . . . . . . . . . . . . . . .
Provision for loan losses . . . . . . . . .
Impairment of assets . . . . . . . . . . . .
31,050
152,635
7,512
405
—
—
27,542
186,265
2,765
(3,508)
-11%
19,087
(8,455) -31% (11,963)
-39%
33,630
22% 188,616
2,351
1% 35,981
24%
(4,747)
-63%
3,687
922 33% (3,825)
-51%
—
—
—
(405)
-100%
—
—
n/a
n/a
—
3,280
4,635
— n/a
(405) -100%
3,280
4,635
n/a
n/a
3,280
4,635
n/a
n/a
191,602
216,572
24,970
13% 219,305
2,733
1% 27,703
14%
Income from continuing operations
before income taxes and income
(loss) from unconsolidated
entities . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . .
Income (loss) from unconsolidated
89,512
(1,827)
142,838
245
53,326
2,072
60% 160,959
18,121 13% 71,447
80%
n/a
(511)
(756)
n/a
1,316
-72%
entities . . . . . . . . . . . . . . . . . . . . . . .
5,355
2,908
(2,447)
-46%
318
(2,590) -89% (5,037)
-94%
Income from continuing operations . . .
93,040
145,991
52,951
57% 160,766
14,775 10% 67,726
73%
Gain (loss) on real estate dispositions,
. . . . . . . . . . . . . . . . . . . . . . . . . .
net
906
194,126
193,220 21,327%
(1,228)
(195,354)
n/a
(2,134)
n/a
Net income (loss) . . . . . . . . . . . . . . . . .
93,946
340,117
246,171
262% 159,538
(180,579) -53% 65,592
70%
Less: Net income (loss) attributable to
noncontrolling interests . . . . . . . . . .
Net income (loss) attributable to
608
(110)
(718)
n/a
768
878
n/a
160
26%
common stockholders . . . . . . . . . . .
$ 93,338
$340,227
$246,889
265% $158,770
$(181,457) -53% $ 65,432
70%
The increase in rental income is primarily attributable to the acquisitions of new properties and the
conversion of newly constructed outpatient medical properties from which we receive rent. Certain of our leases
contain annual rental escalators that are contingent upon changes in the Consumer Price Index. These escalators
are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual
cash rental payments due for the period. If the Consumer Price Index does not increase, a portion of our revenues
may not continue to increase. Revenue from real property that is sold would offset revenue increases and, to the
extent that revenues from sold properties exceed those from new acquisitions, we would experience decreased
revenues. Our leases could renew above or below current rent rates, resulting in an increase or decrease in rental
income. For the three months ended December 31, 2016, our consolidated outpatient medical portfolio signed
81,930 square feet of new leases and 305,176 square feet of renewals. The weighted-average term of these leases
was eight years, with a rate of $35.61 per square foot and tenant improvement and lease commission costs of
66
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
$18.23 per square foot. Substantially all of these leases during the referenced quarter contain an annual fixed or
contingent escalation rent structure ranging from the change in CPI to 5%.
The increase in other income is primarily attributable to the acquisition of a controlling interest in a
portfolio of properties that were historically reported as unconsolidated property investments, and subsequent
adjustments made to certain contingent receivables.
During the year ended December 31, 2016, we completed five outpatient medical construction projects
representing $108,001,000 or $304 per square foot. The following is a summary of outpatient medical
construction projects pending as of December 31, 2016 (dollars in thousands):
Location
Square Feet
Commitment
Balance
Est. Completion
Wausau, WI . . . . . . . . . . . . . . . . . . . . . . . . . .
Castle Rock, CO . . . . . . . . . . . . . . . . . . . . . .
Timmonium, MD . . . . . . . . . . . . . . . . . . . . . .
Howell, MI . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brooklyn, NY . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43,883
56,822
46,000
56,211
140,955
343,871
$ 14,100
13,148
20,996
15,509
103,624
$167,377
$13,125
7,290
10,717
7,174
39,867
$78,173
1Q17
1Q17
2Q17
2Q17
1Q18
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
following is a summary of our outpatient medical secured debt principal activity (dollars in thousands):
Year Ended December 31, 2014 Year Ended December 31, 2015 Year Ended December 31, 2016
Beginning balance . . . . .
Debt assumed . . . . . . . . .
Debt extinguished . . . . .
Principal payments . . . . .
Amount
$ 700,427
66,113
(141,796)
(15,476)
Weighted Avg.
Interest Rate
5.999%
3.670%
5.567%
5.797%
Amount
$609,268
120,959
(88,182)
(14,356)
Weighted Avg.
Interest Rate
5.838%
2.113%
5.257%
5.975%
Amount
$ 627,689
—
(210,115)
(13,495)
Ending balance . . . . . . . .
$ 609,268
5.838%
$627,689
5.177%
$ 404,079
Weighted Avg.
Interest Rate
5.177%
0.000%
5.970%
6.552%
4.846%
Monthly averages . . . . . .
$ 626,797
5.928%
$613,155
5.434%
$ 536,774
5.106%
The increases in property operating expenses and depreciation and amortization are primarily attributable to
acquisitions and construction conversions of new outpatient medical facilities for which we incur certain property
operating expenses. Transaction costs represent costs incurred with property acquisitions including due diligence
costs, fees for legal and valuation services, termination of pre-existing relationships, a lease termination expense
and other similar costs. During the year ended December 31, 2016, we recorded a provision for loan loss related
to our critical accounting estimate for the allowance for loan losses discussed in “Critical Accounting Policies”
and Note 6 to our consolidated financial statements. In addition, we recognized impairment losses on certain
held-for-sale properties as the fair value less estimated costs to sell exceeded our carrying values. Income from
unconsolidated entities represents our share of net income or losses related to the periods for which we held a
joint venture investment with Forest City Enterprises and certain unconsolidated property investments. Changes
in gains/losses on sales of properties are related to volume of property sales and the sales prices.
A portion of our outpatient medical properties were formed through partnerships. Net income attributable to
noncontrolling interests represents our partners’ share of net income or loss relating to those partnerships where
we are the controlling partner.
67
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Non-Segment/Corporate
The following is a summary of our results of operations for the non-segment/corporate activities (dollars in
thousands):
Revenues:
Year Ended
One Year
Year Ended
One Year
Two Year
December 31, December 31,
Change
December 31,
Change
Change
2014
2015
$
%
2016
$
%
$
%
Other income . . . . . . . . . . . . . . . . . . . . $
677
$
1,091 $
414 61% $
939 $
(152)-14%$
262 39%
Expenses:
Interest expense . . . . . . . . . . . . . . . . . .
Loss (gain) on derivatives, net
. . . . . .
General and administrative . . . . . . . . .
Loss (gain) on extinguishments of
debt, net . . . . . . . . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . . .
353,724
—
142,943
365,855
—
147,416
12,131
— n/a
3% 399,035
(2,516)
3% 155,241
33,180
(2,516) n/a
7,825
9% 45,311 13%
(2,516) n/a
5% 12,298 9%
4,473
8,672
—
24,777
10,583
16,105 186%
n/a
10,583
16,439
11,998
(8,338)-34% 7,767 90%
1,415 13% 11,998 n/a
505,339
548,631
43,292
9% 580,197
31,566
6% 74,858 15%
Loss from continuing operations before
income taxes . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . .
(504,662)
—
(547,540)
(3,438)
(42,878)
(3,438)
8% (579,258)
24,488
n/a
(31,718) 6% (74,596)15%
24,488 n/a
27,926
n/a
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred stock dividends . . . . . . . . . . . .
(504,662)
65,408
(550,978)
65,406
(46,316)
(2)
9% (554,770)
65,406
0%
(3,792) 1% (50,108)10%
(2) 0%
— 0%
Net loss attributable to common
stockholders . . . . . . . . . . . . . . . . . . . . $(570,070)
$(616,384) $(46,314)
8% $(620,176) $ (3,792) 1%$(50,106) 9%
The following is a summary of our non-segment/corporate interest expense (dollars in thousands):
Year Ended
December 31, December 31,
2014
2015
One Year
Change
$
%
Year Ended
December 31,
2016
One Year
Change
$
%
Two Year
Change
$
%
Senior unsecured notes . . . . . $329,352
Secured debt . . . . . . . . . . . . .
460
Primary unsecured credit
facility . . . . . . . . . . . . . . . .
Loan expense . . . . . . . . . . . .
8,914
14,998
$341,265 $11,913
357
(103) -22%
4% $368,775
310
$27,510
8% $39,423 12%
(47) -13% (150) -33%
10,812
13,421
1,898 21% 16,811
(1,577) -11% 13,139
5,999 55% 7,897 89%
-2% (1,859) -12%
(282)
Totals . . . . . . . . . . . . . . . . . . $353,724
$365,855 $12,131
3% $399,035 $ 33,180
9% $45,311 13%
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 our consolidated financial statements for additional information. The
increases in interest expense are attributed to the £500,000,000 Sterling-denominated senior unsecured notes
issued in November 2014, the $300,000,000 Canadian-denominated senior unsecured notes issued in November
2015 and the $700,000,000 of 4.25% senior unsecured notes issued in March 2016. Loan expense represents the
amortization of deferred loan costs incurred in connection with the issuance and amendments of debt. Loan
expense changes are due to amortization of charges for costs incurred in connection with senior unsecured note
issuances. The change in interest expense on our primary unsecured credit facility is due primarily to the net
effect and timing of draws, paydowns and variable interest rate changes. Please refer to Note 9 of our
consolidated financial statements for additional information regarding our primary unsecured credit facility.
General and administrative expenses for 2014 included $19,688,000 of CEO transition costs. Excluding
these costs, general and administrative expenses as a percentage of consolidated revenues for the years ended
68
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
December 31, 2016, 2015 and 2014 were 3.63%, 3.82% and 3.69%, respectively. The loss on extinguishment of
debt in 2015 is primarily due to the early extinguishment of the 2016 senior unsecured notes. The loss on
extinguishment of debt in 2016 is due to the early extinguishment of the 2017 senior unsecured notes. Other
expenses in 2016 and 2015 included costs associated with the departure of executive officers. Other expenses in
2015 also included costs associated with the termination of our investment in a strategic outpatient medical
partnership.
Other
Non-GAAP Financial Measures
We believe that net income, as defined by U.S. GAAP, is the most appropriate earnings measurement.
However, we consider funds from operations attributable to common stockholders (“FFO”), net operating income
from continuing operations (“NOI”), same store 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 FFO as a supplemental measure of operating
performance for REITs that excludes historical cost depreciation from net income. FFO, as defined by NAREIT,
means net income attributable to common stockholders, computed in accordance with U.S. GAAP, excluding
gains (or losses) from sales of real estate and impairment of depreciable assets, plus depreciation and
amortization, and after adjustments for unconsolidated entities and noncontrolling interests.
NOI is used to evaluate the operating performance of our properties. We define NOI as total revenues,
including tenant reimbursements, less property operating expenses. Property operating expenses represent costs
associated with managing, maintaining and servicing tenants for our seniors housing operating and medical
facility properties. These expenses include, but are not limited to, property-related payroll and benefits, property
management fees, marketing, housekeeping, food service, maintenance, utilities, property taxes and insurance.
General and administrative expenses represent costs unrelated to property operations or transaction costs. These
expenses include, but are not limited to, payroll and benefits, professional services, office expenses and
depreciation of corporate fixed assets. SSNOI is used to evaluate the operating performance of our properties
under a consistent population which eliminates changes in the composition of our portfolio. As used herein, same
store is generally defined as those revenue-generating properties in the portfolio for the reporting period
subsequent to January 1, 2015. Land parcels, loans 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 before interest, taxes, depreciation and amortization. We believe that EBITDA,
along with net income and cash flow provided from operating activities, is an important supplemental measure
because it provides additional information to assess and evaluate the performance of our operations. We
primarily utilize EBITDA to measure our interest coverage ratio, which represents EBITDA divided by total
interest, and our fixed charge coverage ratio, which represents EBITDA divided by fixed charges. Fixed charges
include total interest, secured debt principal amortization and preferred dividends.
A covenant in our primary unsecured credit facility contains a financial ratio based on a definition of
EBITDA that is specific to that agreement. Failure to satisfy these covenants could result in an event of default
that could have a material adverse impact on our cost and availability of capital, which could in turn have a
material adverse impact on our consolidated results of operations, liquidity and/or financial condition. Due to the
materiality of these debt agreements and the financial covenants, we have disclosed Adjusted EBITDA, which
69
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
represents EBITDA as defined above 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.
Other than Adjusted EBITDA, our supplemental reporting measures and similarly entitled financial
measures are widely used by investors, equity and debt analysts and rating agencies in the valuation, comparison,
rating and investment recommendations of companies. Management uses these financial measures to facilitate
internal and external comparisons to our historical operating results and in making operating decisions.
Additionally, these measures are utilized by the Board of Directors to evaluate management. Adjusted EBITDA
is used to demonstrate our compliance with a comparable financial covenant in our primary unsecured credit
facility and is not being presented for use by investors for any other purpose. None of our supplemental measures
represent net income or cash flow provided from operating activities as determined in accordance with U.S.
GAAP and should not be considered as alternative measures of profitability or liquidity. Finally,
the
supplemental measures, as defined by us, may not be comparable to similarly entitled items reported by other
real estate investment trusts or other companies.
The table below reflects the reconciliation of FFO to net income attributable to common stockholders, the
most directly comparable U.S. GAAP measure, for the periods presented. The provisions for depreciation and
amortization include provisions for depreciation and amortization from discontinued operations. Noncontrolling
interest and unconsolidated entity amounts represent adjustments to reflect our share of depreciation and
amortization. Amounts are in thousands except for per share data.
Year Ended December 31,
2014
2015
2016
FFO Reconciliation:
Net income attributable to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on sales of properties, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Funds from operations attributable to common stockholders . . . . . . . . . . . . . . . . . . .
Average common shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 446,745
844,130
—
(153,522)
(37,852)
74,580
$ 818,344
826,240
2,220
(280,387)
(39,271)
82,494
$1,012,397
901,242
37,207
(364,046)
(71,527)
67,667
$1,174,081
$1,409,640
$1,582,940
306,272
307,747
348,240
349,424
358,275
360,227
Per share data:
Net income attributable to common stockholders
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Funds from operations attributable to common stockholders
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
1.46
1.45
3.83
3.82
$
$
2.35
2.34
4.05
4.03
2.83
2.81
4.42
4.39
70
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The table below reflects the reconciliation of Adjusted EBITDA to net
the most directly
comparable U.S. GAAP measure, for the periods presented. Interest expense and the provisions for depreciation
and amortization include discontinued operations. Dollars are in thousands.
income,
Adjusted EBITDA Reconciliation:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit), net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on extinguishment of debt, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss/impairment (gain) on sales of properties, net
Loss (gain) on derivatives, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CEO transition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2014
2015
2016
$ 512,300
481,196
(1,267)
844,130
$ 888,549
492,169
6,451
826,240
$1,082,070
521,345
(19,128)
901,242
1,836,359
32,075
69,538
—
9,558
(153,522)
(1,495)
10,465
10,262
—
2,213,409
30,844
110,926
—
34,677
(278,167)
(58,427)
—
40,636
(2,144)
2,485,529
28,869
42,910
10,215
17,214
(326,839)
(2,448)
—
7,721
(16,664)
Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,813,240
$2,091,754
$2,246,507
Adjusted Interest Coverage Ratio:
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 481,196
7,150
(2,427)
$ 492,169
8,670
(2,586)
$ 521,345
16,943
(1,681)
Total interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
485,919
$1,813,240
498,253
$2,091,754
536,607
$2,246,507
Adjusted interest coverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.73x
4.20x
4.19x
Adjusted Fixed Charge Coverage Ratio:
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured debt principal payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 481,196
7,150
(2,427)
62,280
65,408
$ 492,169
8,670
(2,586)
67,064
65,406
$ 521,345
16,943
(1,681)
74,466
65,406
Total fixed charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
613,607
$1,813,240
630,723
$2,091,754
676,479
$2,246,507
Adjusted fixed charge coverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.96x
3.32x
3.32x
71
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following tables reflect the reconciliation of NOI and SSNOI to net operating income from continuing
operations, the most directly comparable U.S. GAAP measure, for the periods presented. Dollar amounts are in
thousands.
Year Ended December 31,
2014
2015
2016
NOI Reconciliation:
Total revenues:
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-segment/corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,027,866
1,897,571
417,432
677
$1,175,806
2,168,271
514,658
1,091
$1,208,860
2,525,996
545,365
939
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,343,546
3,859,826
4,281,160
Property operating expenses:
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical
732
1,266,308
136,318
—
1,467,009
155,248
—
1,711,882
165,101
Total property operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
1,403,358
1,622,257
1,876,983
Net operating income:
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-segment/corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,027,134
631,263
281,114
677
1,175,806
701,262
359,410
1,091
1,208,860
814,114
380,264
939
Net operating income from continuing operations . . . . . . . . . . . . . .
$1,940,188
$2,237,569
$2,404,177
72
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Same Store NOI Reconciliation:
Net operating income from continuing operations:
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical
$1,027,134
631,263
281,114
$1,175,806
701,262
359,410
$1,208,860
814,114
380,264
Year Ended December 31,
2014
2015
2016
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,939,511
2,236,478
2,403,238
Total
Adjustments:
Triple-net:
Non-cash NOI on same store properties . . . . . . . . . . . . . . . . . . . . . .
NOI attributable to non same store properties . . . . . . . . . . . . . . . . .
(43,448)
(447,455)
(53,578)
(556,040)
(44,215)
(588,881)
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(490,903)
(609,618)
(633,096)
Seniors housing operating:
Non-cash NOI on same store properties . . . . . . . . . . . . . . . . . . . . . .
NOI attributable to non same store properties . . . . . . . . . . . . . . . . .
1,044
(6,575)
1,003
(88,221)
2,404
(196,668)
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5,531)
(87,218)
(194,264)
Outpatient medical:
Non-cash NOI on same store properties . . . . . . . . . . . . . . . . . . . . . .
NOI attributable to non same store properties . . . . . . . . . . . . . . . . .
(8,015)
(30,904)
(5,186)
(108,661)
(2,440)
(127,690)
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(38,919)
(113,847)
(130,130)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(535,353)
(810,683)
(957,490)
Same store net operating income:
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical
536,231
625,732
242,195
566,188
614,044
245,563
575,764
619,850
250,134
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,404,158
$1,425,795
$1,445,748
Same Store NOI Property Reconciliation:
Total properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals/Held-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Segment transitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Same store properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,313
(335)
(44)
(72)
(2)
(9)
851
(1)
Includes eight land parcels and one loan.
73
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Critical Accounting Policies
Our consolidated financial statements are prepared in accordance with U.S. GAAP, which requires us to
make estimates and assumptions. Management considers accounting estimates or assumptions critical if:
•
•
the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment
necessary to account for highly uncertain matters or the susceptibility of such matters to change; and
the impact of the estimates and assumptions on financial condition or operating performance is
material.
Management has discussed the development and selection of its critical accounting policies with the Audit
Committee of the Board of Directors and the Audit Committee has reviewed the disclosure presented below
relating to them. Management believes the current assumptions and other considerations used to estimate
amounts reflected in our consolidated financial statements are appropriate and are not reasonably likely to change
in the future. However, since these estimates require assumptions to be made that were uncertain at the time the
estimate was made, they bear the risk of change. If actual experience differs from the assumptions and other
considerations used in estimating amounts reflected in our consolidated financial statements, the resulting
changes could have a material adverse effect on our consolidated results of operations, liquidity and/or financial
condition. Please refer to Note 2 to our consolidated financial statements for further information on significant
accounting policies that impact us and for the impact of new accounting standards, including accounting
pronouncements that were issued but not yet adopted by us.
The following table presents information about our critical accounting policies, as well as the material
assumptions used to develop each estimate:
Nature of Critical
Accounting Estimate
Assumptions/
Approach Used
Principles of Consolidation
The consolidated financial statements include our accounts,
the
accounts of our wholly-owned subsidiaries and the accounts of joint
venture entities in which we own a majority voting interest with the
ability to control operations and where no substantive participating
rights or substantive kick out
rights have been granted to the
noncontrolling interests. In addition, we consolidate those entities
deemed to be variable interest entities (VIEs) in which we are
determined to be the primary beneficiary. All material intercompany
transactions and balances have been eliminated in consolidation.
Income Taxes
As part of
the process of preparing our consolidated financial
statements, significant management judgment is required to evaluate
our compliance with REIT requirements.
74
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
to finance that entity’s activities without
at risk is insufficient
additional subordinated financial support. We make judgments with
respect to our level of influence or control of an entity and whether
we are (or are not) the primary beneficiary of a VIE. Consideration
of various factors includes, but is not limited to, our ability to direct
the activities that most significantly impact the entity’s economic
performance, our form of ownership interest, our representation on
the entity’s governing body,
the size and seniority of our
investment, our ability and the rights of other investors to participate
in policy making decisions, replace the manager and/or liquidate the
entity, if applicable. Our ability to correctly assess our influence or
control over an entity at inception of our involvement or on a
continuous basis when determining the primary beneficiary of a
VIE affects the presentation of these entities in our consolidated
financial statements. If we perform a primary beneficiary analysis at
a date other than at inception of the variable interest entity, our
assumptions may be different and may result in the identification of
a different primary beneficiary.
Our determinations are based on interpretation of tax laws, and our
conclusions may have an impact on the income tax expense
recognized. Adjustments to income tax expense may be required as
a result of: (i) audits conducted by federal, state and international
tax authorities, (ii) our ability to qualify as a REIT, (iii) the
potential
for built-in-gain recognized related to prior-tax-free
acquisitions of C corporations and (iv) changes in tax laws.
Adjustments required in any given period are included in income.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Nature of Critical
Accounting Estimate
Assumptions/
Approach Used
Business Combinations
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
the amount of
these components will affect
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.
The determination of the allowance is based on a quarterly
evaluation of all outstanding loans, including general economic
conditions and estimated collectability of loan payments and
principal. We evaluate the collectability of our loans receivable
based on a combination of factors, including, but not limited to,
delinquency status, historical loan charge-offs, financial strength of
the borrower and guarantors and value of the underlying property.
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.
the fair value of
The valuation of derivative instruments requires us to make
estimates and judgments
the
that affect
instruments. Fair values of our forward exchange contracts are
estimated using pricing models that consider forward currency spot
rates, forward trade rates and discount rates. Fair values of our
interest rate swaps are estimated by utilizing pricing models that
consider forward yield curves, discount rates and counterparty
credit risk. Such amounts and their recognition are subject to
significant estimates which may change in the future.
Real property developed by us is recorded at cost, including the
capitalization of construction period interest. The cost of real property
acquired is allocated to net tangible and identifiable intangible assets
based on their respective fair values. Tangible assets primarily consist
of land, buildings and improvements. The remaining purchase price is
allocated among identifiable intangible assets primarily consisting of
the above or below market component of in-place leases and the value
of in-place leases. The total amount of other intangible assets acquired
is further allocated to in-place lease values and customer relationship
values
specific
characteristics of each tenant’s lease and the Company’s overall
relationship with that respective tenant.
on management’s
evaluation
based
the
of
Allowance for Loan Losses
We maintain an allowance for loan losses in accordance with U.S.
GAAP. The allowance for loan losses is maintained at a level believed
adequate to absorb potential
losses in our loans receivable. The
determination of the allowance is based on a quarterly evaluation of all
outstanding loans. If this evaluation indicates that there is a greater risk
of loan charge-offs, additional allowances or placement on non-accrual
status may be required. A loan is impaired when, based on current
information and events, it is probable that we will be unable to collect
all amounts due as scheduled according to the contractual terms of the
original loan agreement or if it has been modified in a troubled debt
restructuring. Consistent with this definition, all loans on non-accrual
are deemed impaired. To the extent circumstances improve and the
risk of collectability is diminished, we will return these loans to full
accrual status.
Fair Value of Derivative Instruments
The valuation of derivative instruments is accounted for in accordance
with U.S. GAAP, which requires companies to record derivatives at
fair market value on the balance sheet as assets or liabilities.
75
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Nature of Critical
Accounting Estimate
Assumptions/
Approach Used
Revenue Recognition
Revenue is recorded in accordance with U.S. GAAP, which requires
that revenue be recognized after four basic criteria are met. These four
criteria include persuasive evidence of an arrangement, the rendering
of service, fixed and determinable income and reasonably assured
collectability. If the collectability of revenue is determined incorrectly,
the amount and timing of our reported revenue could be significantly
affected. Interest income on loans is recognized as earned based upon
the principal amount outstanding subject
to an evaluation of
collectability risk. Substantially all of our operating leases contain
fixed and/or contingent escalating rent structures. Leases with fixed
annual rental escalators are generally recognized on a straight-line
basis over
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.
lease period,
the initial
subject
Impairment of Long-Lived Assets
impairment
for potential
long-lived assets
We review our
in
accordance with U.S. GAAP. An impairment charge must be
is not
recognized when the carrying value of a long-lived asset
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.
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 underlying
collateral and guaranties and current economic conditions.
the value of
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.
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
that may
permanently reduce the value of the property. If indicators of
impairment exist, then the undiscounted future cash flows from the
most likely use of the property are compared to the current net
book value. This analysis requires us to determine if indicators of
impairment exist and to estimate the most likely stream of cash
flows to be generated from the property during the period the
property is expected to be held.
life and changes in the market
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to various market risks, including the potential loss arising from adverse changes in interest
rates and foreign currency exchange rates. We seek to mitigate the underlying foreign currency exposures with
gains and losses on derivative contracts hedging these exposures. We seek to mitigate the effects of fluctuations
in interest rates by matching the terms of new investments with new long-term fixed rate borrowings to the extent
possible. We may or may not elect to use financial derivative instruments to hedge interest rate exposure. These
decisions are principally based on our policy to match our variable rate investments with comparable borrowings,
but are also based on the general trend in interest rates at the applicable dates and our perception of the future
volatility of interest rates. This section is a discussion of the risks associated with potential fluctuations in interest
rates and foreign currency exchange rates. For additional information, see “Item 7 — Management’s Discussion
and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” and Notes 11
and 16 to our consolidated financial statements.
We historically borrow on our primary unsecured credit facility to acquire, construct or make loans relating
to health care and seniors housing properties. Then, as market conditions dictate, we will issue equity or long-
term fixed rate debt to repay the borrowings under our primary unsecured credit facility. We are subject to risks
associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the
terms of refinancing may not be as favorable as the terms of current indebtedness. The majority of our
borrowings were completed under indentures or contractual agreements that limit the amount of indebtedness we
may incur. Accordingly, in the event that we are unable to raise additional equity or borrow money because of
these limitations, our ability to acquire additional properties may be limited.
76
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, 2016
December 31, 2015
Principal
balance
Fair value
change
Principal
balance
Fair value
change
Senior unsecured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 7,568,832
2,489,276
$(521,203) $ 7,965,107
2,757,123
(73,944)
$(519,901)
(91,376)
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$10,058,108
$(595,147) $10,722,230
$(611,277)
Our variable rate debt, including our primary unsecured credit facility, is reflected at fair value. At
December 31, 2016, we had $2,311,996,000 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
$23,120,000. At December 31, 2015, we had $2,236,733,000 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 $22,367,000.
We are subject to currency fluctuations that may, from time to time, affect our financial condition and
results of operations. Increases or decreases in the value of the Canadian Dollar or Pounds Sterling relative to the
U.S. Dollar 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, 2016, including the impact of existing hedging
if these exchange rates were to increase or decrease by 10%, our net income from these
arrangements,
investments would increase or decrease, as applicable, by less than $2,000,000. 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 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, 2016
December 31, 2015
Carrying
value
Fair value
change
Carrying
value
Fair value
change
Foreign currency exchange contracts . . . . . . . . . . . . . . . . . . . . .
Debt designated as hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
87,962
1,481,591
$
722
13,000
$ 117,452
1,728,979
$ 1,915
13,000
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,569,553
$13,722
$1,846,431
$14,915
77
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of Welltower Inc.
We have audited the accompanying consolidated balance sheets of Welltower Inc. and subsidiaries as of
December 31, 2016 and 2015, and the related consolidated statements of comprehensive income, equity, and cash
flows for each of the three years in the period ended December 31, 2016. Our audits also included the financial
statement schedules listed in Item 15(a)(2) of this Form 10-K. These financial statements and schedules are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
consolidated financial position of Welltower Inc. and subsidiaries at December 31, 2016 and 2015, and the
consolidated results of their operations and their cash flows for each of the three years in the period ended
December 31, 2016, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the
related financial statement schedules, when considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), Welltower Inc.’s internal control over financial reporting as of December 31, 2016, 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 22, 2017 expressed
an unqualified opinion thereon.
Toledo, Ohio
February 22, 2017
/s/ ERNST & YOUNG LLP
78
CONSOLIDATED BALANCE SHEETS
WELLTOWER INC. AND SUBSIDIARIES
Assets
Real estate investments:
Real property owned:
Land and land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real property held for sale, net of accumulated depreciation . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross real property owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . .
Net real property owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less allowance for losses on loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . .
Net real estate loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net real estate investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets:
Investments in unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Straight-line receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities and equity
Liabilities:
Borrowings under primary unsecured credit facility . . . . . . . . . . . . . . . . . . . . .
Senior unsecured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured debt
Capital lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity:
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital in excess of par value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income (loss)
. . . . . . . . . . . . . . . . . . . . . . .
Other equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Welltower Inc. stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
See accompanying notes
79
December 31,
2016
December 31,
2015
(In thousands)
$ 2,591,071
24,496,153
1,402,884
1,044,859
506,091
30,041,058
(4,093,494)
25,947,564
622,628
(6,563)
616,065
26,563,629
457,138
68,321
419,378
187,842
342,578
826,298
2,301,555
$28,865,184
$ 2,563,445
25,522,542
1,350,585
169,950
258,968
29,865,490
(3,796,297)
26,069,193
819,492
—
819,492
26,888,685
542,281
68,321
360,908
61,782
395,562
706,306
2,135,160
$29,023,845
$
645,000
8,161,619
3,477,699
73,927
827,034
13,185,279
398,433
$
835,000
8,548,055
3,509,142
75,489
697,191
13,664,877
183,083
1,006,250
363,071
16,999,691
(54,741)
4,803,575
(8,144,981)
(169,531)
3,059
14,806,393
475,079
15,281,472
$28,865,184
1,006,250
354,811
16,478,300
(44,372)
3,725,772
(6,846,056)
(88,243)
4,098
14,590,560
585,325
15,175,885
$29,023,845
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
WELLTOWER INC. AND SUBSIDIARIES
(In thousands, except per share data)
Year Ended December 31,
2016
2015
2014
Revenues:
Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Resident fees and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,648,815
2,504,731
97,963
29,651
$1,598,948
2,158,031
84,141
18,706
$1,405,767
1,892,237
37,667
7,875
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,281,160
3,859,826
3,343,546
Expenses:
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on derivatives, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on extinguishment of debt, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
521,345
1,876,983
901,242
155,241
42,910
(2,448)
17,214
10,215
37,207
11,998
492,169
1,622,257
826,240
147,416
110,926
(58,427)
34,677
—
2,220
46,231
481,039
1,403,358
844,130
142,943
69,538
(1,495)
9,558
—
—
10,262
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,571,907
3,223,709
2,959,333
Income from continuing operations before income taxes and income from unconsolidated
entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax (expense) benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations:
Gain (loss) on sales of properties, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from discontinued operations, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on real estate dispositions, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net income (loss) attributable to noncontrolling interests(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
709,253
19,128
(10,357)
636,117
(6,451)
(21,504)
384,213
1,267
(27,426)
718,024
608,162
358,054
—
—
—
364,046
1,082,070
65,406
4,267
—
—
—
280,387
888,549
65,406
4,799
6,411
724
7,135
147,111
512,300
65,408
147
Net income attributable to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,012,397
$ 818,344
$ 446,745
Average number of common shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
358,275
360,227
348,240
349,424
306,272
307,747
Earnings per share:
Basic:
Income from continuing operations attributable to common stockholders, including real estate
dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to common stockholders* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted:
Income from continuing operations attributable to common stockholders, including real estate
dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to common stockholders* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
2.83
—
2.83
2.81
—
2.81
$
$
$
$
2.35
—
2.35
2.34
—
2.34
$
$
$
$
1.44
0.02
1.46
1.43
0.02
1.45
*
Amounts may not sum due to rounding
(1)
Includes amounts attributable to redeemable noncontrolling interests
See accompanying notes
80
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED)
WELLTOWER INC. AND SUBSIDIARIES
(In thousands)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss):
Unrecognized gain/(loss) on equity investments . . . . . . . . . . . . . . . . . . . .
Unrecognized gain/(loss) on cash flow hedges . . . . . . . . . . . . . . . . . . . . . .
Unrecognized actuarial gain/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation gain/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2016
2015
2014
$1,082,070
$888,549
$512,300
5,120
1,414
190
(85,557)
—
(766)
246
(46,679)
389
4,409
(137)
(71,964)
Total other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(78,833)
(47,199)
(67,303)
Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Total comprehensive income (loss) attributable to noncontrolling
1,003,237
841,350
444,997
interests(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,722
(31,166)
(14,678)
Total comprehensive income attributable to stockholders . . . . . . . . . . . . . . .
$ 996,515
$872,516
$459,675
(1)
Includes amounts attributable to redeemable noncontrolling interests.
See accompanying notes
81
CONSOLIDATED STATEMENTS OF EQUITY
WELLTOWER INC. AND SUBSIDIARIES
(in thousands)
Preferred
Stock
Common
Stock
Capital in
Excess of
Par Value
Treasury
Stock
Cumulative
Net Income
Cumulative
Dividends
Accumulated
Other
Comprehensive
Income
Other
Equity
Noncontrolling
Interests
Total
Balances at December 31, 2013 . . . . . . . . . . . . $1,017,361 $289,461 $12,418,520
$(21,263) $2,329,869
$(4,600,854)
$ (24,531)
$ 6,020
$ 341,748
$11,756,331
Comprehensive income:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income:
Total comprehensive income . . . . . . . . . . . . . . .
Net change in noncontrolling interests . . . . . . .
Amounts related to issuance of common stock
from dividend reinvestment and stock
incentive plans, net of forfeitures . . . . . . . . .
(17,653)
337
22,710
(13,978)
512,153
(52,478)
Net proceeds from sale of common stock . . . . .
38,546
2,305,322
Equity component of convertible debt
. . . . . . .
Conversion of preferred stock . . . . . . . . . . . . . .
(11,111)
258
233
935
10,878
Option compensation expense . . . . . . . . . . . . . .
Cash dividends paid:
Common stock cash dividends . . . . . . . . . . .
Preferred stock cash dividends . . . . . . . . . . .
(969,661)
(65,408)
(342)
(14,825)
511,811
(67,303)
444,508
(28,685)
(46,338)
7,644
2,343,868
1,193
—
912
(969,661)
(65,408)
(1,425)
912
Balances at December 31, 2014 . . . . . . . . . . . .
1,006,250
328,835
14,740,712
(35,241)
2,842,022
(5,635,923)
(77,009)
5,507
297,896
13,473,049
Comprehensive income:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income:
Total comprehensive income . . . . . . . . . . . . . . .
Net change in noncontrolling interests . . . . . . .
Amounts related to issuance of common stock
incentive plans, net of forfeitures . . . . . . . . .
Net proceeds from sale of common stock . . . . .
Equity component of convertible debt
. . . . . . .
Option compensation expense . . . . . . . . . . . . . .
Cash dividends paid:
Common stock cash dividends . . . . . . . . . . .
Preferred stock cash dividends . . . . . . . . . . .
883,750
(11,234)
(23,077)
126
25,053
(9,131)
24,520
1,730,181
1,330
5,431
(1,144,727)
(65,406)
4,878
(35,965)
888,628
(47,199)
841,429
318,516
295,439
13,941
1,754,701
6,761
698
(1,144,727)
(65,406)
(2,107)
698
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 . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income:
Total comprehensive income . . . . . . . . . . . . . . .
Net change in noncontrolling interests . . . . . . .
Amounts related to issuance of common stock
from dividend reinvestment and stock
incentive plans, net of forfeitures . . . . . . . . .
Net proceeds from sale of common stock . . . . .
Option compensation expense . . . . . . . . . . . . . .
Cash dividends paid:
Common stock cash dividends . . . . . . . . .
Preferred stock cash dividends . . . . . . . . .
1,077,803
(81,288)
(51,478)
839
7,421
46,938
(10,369)
525,931
(1,233,519)
(65,406)
9,277
2,455
1,087,080
(78,833)
1,008,247
(121,978)
(173,456)
(1,305)
266
36,103
533,352
266
(1,233,519)
(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
See accompanying notes
82
CONSOLIDATED STATEMENTS OF CASH FLOWS
WELLTOWER INC. AND SUBSIDIARIES
(In thousands)
Operating activities
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided from (used in) operating
activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other amortization expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on derivatives, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on extinguishment of debt, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (income) from unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rental income in excess of cash received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization related to above (below) market leases, net
. . . . . . . . . . . . . . . . . . . . .
Loss (gain) on sales of properties, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (income) expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions by unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . .
Decrease (increase) in receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided from (used in) operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investing activities
Cash disbursed for acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash disbursed for capital improvements to existing properties . . . . . . . . . . . . . . . . . . .
Cash disbursed for construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized interest
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in real estate loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investments, net of payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal collected on real estate loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contributions to unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions by unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from (payments on) derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (increase) in restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of real property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided from (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing activities
Net increase (decrease) under unsecured credit facilities . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of senior unsecured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments to extinguish senior unsecured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net proceeds from the issuance of secured debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments on secured debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net proceeds from the issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (increase) in deferred loan expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contributions by noncontrolling interests(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions to noncontrolling interests(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions of noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash distributions to stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2016
2015
2014
$ 1,082,070
$
888,549
$
512,300
901,242
8,822
10,215
37,207
28,869
(2,448)
17,214
10,357
(83,233)
322
(364,046)
(4,853)
1,065
3,929
(18,037)
826,240
4,991
—
2,220
30,844
(58,427)
34,677
21,504
(115,756)
4,018
(280,387)
31,979
637
(18,099)
478
844,130
6,971
—
—
32,075
(1,495)
9,558
27,426
(74,552)
739
(153,522)
—
9,060
(48,381)
(25,639)
1,628,695
1,373,468
1,138,670
(2,145,590)
(219,146)
(403,131)
(16,943)
(129,884)
4,760
249,552
(101,415)
119,723
108,347
(125,844)
2,350,068
(3,364,891)
(187,752)
(244,561)
(8,670)
(598,722)
(141,994)
131,830
(160,323)
130,880
106,360
29,719
823,964
(2,210,600)
(132,780)
(197,881)
(7,150)
(202,207)
(100,033)
105,496
(353,496)
57,183
10,269
(6,072)
911,065
(309,503)
(3,484,160)
(2,126,206)
(190,000)
693,560
(865,863)
460,015
(563,759)
534,194
(22,196)
148,666
(134,578)
—
(1,298,925)
(1,562)
835,000
1,451,434
(558,830)
228,685
(573,390)
1,755,722
(11,513)
173,018
(50,877)
(5,663)
(1,210,133)
(27,004)
(130,000)
773,992
(365,188)
109,503
(341,839)
2,343,868
(16,782)
9,962
(43,691)
(1,175)
(1,035,069)
(409)
Net cash provided from (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,240,448)
2,006,449
1,303,172
Effect of foreign currency translation on cash and cash equivalents . . . . . . . . . . . . . . . . .
Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental cash flow information:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(20,274)
58,470
360,908
419,378
541,545
8,011
(8,575)
(112,818)
473,726
360,908
492,771
12,214
$
$
$
$
(690)
314,946
158,780
473,726
504,165
18,548
$
$
(1)
Includes amounts attributable to redeemable noncontrolling interests.
See accompanying notes.
83
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Business
Welltower Inc., an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health
care infrastructure. The Company invests with leading seniors housing operators, post-acute providers and health
systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve
people’s wellness and overall health care experience. WelltowerTM, a real estate investment trust (“REIT”), owns
interests in properties concentrated in major, high-growth markets in the United States, Canada and the United
Kingdom, consisting of seniors housing and post-acute communities and outpatient medical properties. Founded
in 1970, we were the first REIT to invest exclusively in health care facilities.
2. Accounting Policies and Related Matters
Principles of Consolidation
The consolidated financial statements include the accounts of our wholly-owned subsidiaries and joint
venture (“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 on a continuous
basis. This evaluation is based on an enterprise’s ability to direct and influence the activities of a VIE that most
that entity’s economic performance. For investments in JVs, GAAP may preclude
significantly impact
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.
Use of Estimates
The preparation of the financial statements in conformity with U.S. generally accepted accounting principles
(“U.S. GAAP”) requires us to make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those estimates.
Revenue Recognition
Revenue is recorded in accordance with U.S. GAAP, which requires that revenue be recognized after four
basic criteria are met. These four criteria include persuasive evidence of an arrangement, the rendering of service,
fixed and determinable income and reasonably assured collectability. Interest income on loans is recognized as
earned based upon the principal amount outstanding subject to an evaluation of collectability risk. Substantially
all of our operating leases contain escalating rent structures. Leases with fixed annual rental escalators are
generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment.
Rental income related to leases with contingent rental escalators is generally recorded based on the contractual
cash rental payments due for the period. Leases in our 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,
84
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
other than move-in fees, monthly as services are provided. Lease agreements with residents generally have a term
of one year and are cancelable by the resident with 30 days’ notice.
Cash and Cash Equivalents
Cash and cash equivalents consist of all highly liquid investments with an original maturity of three months
or less.
Restricted Cash
Restricted cash primarily consists of amounts held by lenders to provide future payments for real estate
taxes, insurance, tenant and capital improvements, amounts held in escrow relating to acquisitions we are entitled
to receive over a period of time as outlined in the escrow agreement and net proceeds from property sales that
were executed as tax-deferred dispositions. At December 31, 2016, $138,281,000 of sales proceeds is on deposit
in an Internal Revenue Code Section 1031 exchange escrow account with a qualified intermediary.
Deferred Loan Expenses
Deferred loan expenses are costs incurred by us in connection with the issuance, assumption and
amendments of debt arrangements. Deferred loan expenses related to debt instruments, excluding the primary
unsecured credit facility, are recorded as a reduction of the related debt liability. Deferred loan expenses related
to the primary unsecured credit facility are included in other assets. We amortize these costs over the term of the
debt using the straight-line method, which approximates the effective interest method.
Investments in Unconsolidated Entities
Investments in entities that we do not consolidate but have the ability to exercise significant influence over
operating and financial policies are reported under the equity method of accounting. Under the equity method,
our share of the investee’s earnings or losses is included in our consolidated results of operations. The initial
carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity
interest inclusive of transaction costs. To the extent that our cost basis is different from the basis reflected at the
entity level, the basis difference is generally amortized over the lives of the related assets and liabilities, and such
amortization is included in our share of equity in earnings of the entity. We evaluate our equity method
investments for impairment based upon a comparison of the estimated fair value of the equity method investment
to its carrying value. When we determine a decline in the estimated fair value of such an investment below its
carrying value is other-than-temporary, an impairment is recorded.
Marketable Securities
We classify marketable securities as available-for-sale. These securities are carried at their fair value with
unrealized gains and losses recognized in stockholders’ equity as a component of accumulated other
comprehensive income (loss). When we determine declines in fair value of marketable securities are other-than-
temporary, a loss is recognized in earnings.
Redeemable Noncontrolling Interests
Certain noncontrolling interests are redeemable at fair value. Accordingly, we record the carrying amount of
the noncontrolling interests at the greater of (i) the initial carrying amount, increased or decreased for the
noncontrolling interest’s share of net income or loss and its share of other comprehensive income or loss and
85
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
the redeemable
weighted-average period of approximately four years.
noncontrolling interests are classified outside of permanent equity, as a mezzanine item, in the balance sheet. At
December 31, 2016, the current redemption value of redeemable noncontrolling interests exceeded the carrying
value of $398,433,000 by $70,818,000.
In accordance with ASC 810,
During the year ended December 31, 2016, we determined that an immaterial portion of our noncontrolling
interests related to a 2015 transaction was misclassified in permanent equity rather than temporary equity based
on a redemption feature of the partnership agreement. We have corrected the $114,714,000 misclassification by
recording the change in the consolidated statement of equity for the year ended December 31, 2016.
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
Real property developed by us is recorded at cost, including the capitalization of construction period
interest. Expenditures for repairs and maintenance are expensed as incurred. Property acquisitions are accounted
for as business combinations where we measure the assets acquired, liabilities (including assumed debt and
contingencies) and any noncontrolling interests at their fair values on the acquisition date. The cost of real
property acquired, which represents substantially all of the purchase price, is allocated to net tangible and
identifiable intangible assets based on their respective fair values. These properties are depreciated on a straight-
line basis over their estimated useful lives which range from 15 to 40 years for buildings and 5 to 15 years for
improvements. Tangible assets primarily consist of land, buildings and improvements, including those related to
capital
including tenant
improvements and lease commissions, to represent the acquisition of productive assets and, accordingly, such
costs are reflected as investment activities in our statement of cash flows.
leases. We consider costs incurred in conjunction with re-leasing properties,
The remaining purchase price is allocated among identifiable intangible assets primarily consisting of the
above or below market component of in-place leases and the value associated with the presence of in-place
tenants or residents. The value allocable to the above or below market component of the acquired in-place lease
is determined based upon the present value (using a discount rate which reflects the risks associated with the
acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its
remaining term, and (ii) management’s estimate of the amounts that would be paid using fair market rates over
the remaining term of the lease. The amounts allocated to above market leases are included in acquired lease
intangibles and below market leases are included in other liabilities in the balance sheet and are amortized to
rental income over the remaining terms of the respective leases.
relationship values for
in-place tenants based on management’s evaluation of
The total amount of other intangible assets acquired is further allocated to in-place lease values and
customer
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.
86
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The net book value of long-lived assets is reviewed quarterly on a property by property basis to determine if
facts and circumstances suggest that the assets may be impaired or that the depreciable life may need to be
changed. We consider external factors relating to each asset and the existence of a master lease which may link
the cash flows of an individual asset to a larger portfolio of assets leased to the same tenant. If these factors and
the projected undiscounted cash flows of the asset over the remaining depreciation period indicate that the asset
will not be recoverable, the carrying value is reduced to the estimated fair market value. In addition, we are
exposed to the risks inherent in concentrating investments in real estate, and in particular, the seniors housing and
health care industries. A downturn in the real estate industry could adversely affect the value of our properties
and our ability to sell properties for a price or on terms acceptable to us.
Capitalization of Construction Period Interest
We capitalize interest costs associated with funds used for the construction of properties owned directly by
us. The amount capitalized is based upon the balance outstanding during the construction period using the rate of
interest which approximates our cost of financing. Our interest expense reflected in the consolidated statements
of comprehensive income has been reduced by the amounts capitalized.
Gain on Sale of Assets
We recognize sales of assets only upon the closing of the transaction with the purchaser. Payments received
from purchasers prior to closing are recorded as deposits and classified as other assets on our consolidated
balance sheets. Gains on assets sold are recognized using the full accrual method upon closing when (i) the
collectability of the sales price is reasonably assured, (ii) we are not obligated to perform significant activities
after the sale to earn the profit, (iii) we have received adequate initial investment from the purchaser and
(iv) other profit recognition criteria have been satisfied. Gains may be deferred in whole or in part until the sales
satisfy the requirements of gain recognition on sales of real estate.
Real Estate Loans Receivable
Real estate loans receivable consist of mortgage loans and other real estate loans. Interest income on loans is
recognized as earned based upon the principal amount outstanding subject to an evaluation of collectability risks.
The loans are primarily collateralized by a first, second or third mortgage lien, a leasehold mortgage on, or an
assignment of the partnership interest in, the related properties, corporate guaranties and/or personal guaranties.
Allowance for Losses on Loans Receivable
The allowance for losses on loans receivable is maintained at a level believed adequate to absorb potential
losses in our loans receivable. The determination of the allowance is based on a quarterly evaluation of these
loans, including general economic conditions and estimated collectability of loan payments. We evaluate the
collectability of our loans receivable based on a combination of factors, including, but not limited to, delinquency
status, historical loan charge-offs, financial strength of the borrower and guarantors and value of the underlying
collateral. If such factors indicate that there is greater risk of loan charge-offs, additional allowances or
placement on non-accrual status may be required. A loan is impaired when, based on current information and
events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual
terms of the original loan agreement. Consistent with this definition, all loans on non-accrual are deemed
impaired. To the extent circumstances improve and the risk of collectability is diminished, we will return these
loans to full accrual status. While a loan is on non-accrual status, any cash receipts are applied against the
outstanding principal balance. 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
87
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
underlying collateral. The valuation is compared to the outstanding balance to determine the reserve needed for
each loan. We may base our valuation on a loan’s observable market price, if any, or the fair value of collateral,
net of sales costs, if the repayment of the loan is expected to be provided solely by the collateral.
Goodwill
We account for goodwill in accordance with U.S. GAAP. Goodwill is tested annually for impairment and is
tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An
impairment loss is recognized to the extent that the carrying amount, including goodwill, exceeds the reporting
unit’s fair value and the implied fair value of goodwill is less than the carrying amount of that goodwill. We have
not had any goodwill impairments.
Fair Value of Derivative Instruments
Derivatives are recorded at fair value on the balance sheet as assets or liabilities. The valuation of derivative
instruments requires us to make estimates and judgments that affect the fair value of the instruments. Fair values
of our derivatives are estimated by pricing models that consider the forward yield curves and discount rates. The
fair value of our forward exchange contracts are estimated by pricing models that consider foreign currency spot
rates, forward trade rates and discount rates. Such amounts and the recognition of such amounts are subject to
significant estimates that may change in the future. See Note 11 for additional information.
Federal Income Tax
We have elected to be treated as a REIT under the applicable provisions of the Internal Revenue Code of
1986, as amended (the “Code”), commencing with our first taxable year, and made no provision for federal
income tax purposes prior to our acquisition of our “taxable REIT subsidiaries.” As a result of these as well as
subsequent acquisitions, we now record income tax expense or benefit with respect to certain of our entities that
are taxed as taxable REIT subsidiaries under provisions similar to those applicable to regular corporations and
not under the REIT provisions. We account for deferred income taxes using the asset and liability method and
recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been
included in our financial statements or tax returns. Under this method, we determine deferred tax assets and
liabilities based on the differences between the financial reporting and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected to reverse. Any increase or decrease
in the deferred tax liability that results from a change in circumstances, and that causes a change in our judgment
about expected future tax consequences of events, is included in the tax provision when such changes occur.
Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards. A valuation
allowance is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will
not be realized. Any increase or decrease in the valuation allowance that results from a change in circumstances,
and that causes a change in our judgment about the realizability of the related deferred tax asset, is included in
the tax provision when such changes occur. See Note 18 for additional information.
Foreign Currency
Certain of our subsidiaries’ functional currencies are the local currencies of their respective countries. We
translate the results of operations of our foreign subsidiaries into U.S. dollars using average rates of exchange in
effect during the period, and we translate balance sheet accounts using exchange rates in effect at the end of the
period. We record resulting currency translation adjustments in accumulated other comprehensive income, a
component of stockholders’ equity, on our consolidated balance sheets. We record transaction gains and losses in
our consolidated statements of comprehensive income.
88
WELLTOWER INC.
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.
Immaterial Error Correction
During the year ended December 31, 2016, we identified and corrected an immaterial mathematical error in
the Consolidated Statement of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013.
line item of “total comprehensive income attributable to
The error affected only the financial statement
stockholders” in the Consolidated Statement of Comprehensive Income. Total comprehensive income and total
accumulated comprehensive income for all periods presented were not impacted. Additionally, no other line
items within any of the other financial statements and none of the footnotes were impacted. The error resulted in
an understatement of total comprehensive income attributable to stockholders of $62,332,000, $29,356,000 and
$26,534,000 for the years ended December 31, 2015, 2014 and 2013, respectively. See the Consolidated
Statement of Comprehensive Income for corrected total comprehensive income attributable to stockholders.
New Accounting Standards
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”
(“ASU 2014-09”). The standard 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. ASU 2014-09 is effective for
fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is
permitted beginning after December 15, 2016. A reporting entity may apply the new standard using either a
modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the
fiscal year of adoption or a full retrospective approach. We are currently evaluating the impact of the adoption on
our consolidated financial statements and have not yet determined the method by which we will adopt the
standard. A significant source of revenue for the Company is generated through leasing arrangements, which are
specifically excluded from the new standard. We expect that the new standard will affect our accounting policies
related to non-lease revenue, including certain fees in our RIDEA joint ventures, common area maintenance in
our outpatient medical properties and real estate sales. Under 2014-09, revenue recognition for real estate sales is
mainly based on the transfer of control versus current guidance of continuing involvement. We expect that the
new guidance will result in more transactions qualifying as sales of real estate and being recognized at an earlier
date than under the current guidance.
In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the
Consolidation Analysis” (“ASU 2015-02”), which makes certain changes to both the variable interest model and
the voting interest model, including changes to (1) the identification of variable interests (fees paid to a decision
maker or service provider), (2) the variable interest entity characteristics for a limited partnership or similar
entity and (3) the primary beneficiary determination. We adopted ASU 2015-02 on January 1, 2016. This
guidance did not have a significant impact on our consolidated financial statements.
In September 2015, the FASB issued ASU No. 2015-16, “Simplifying the Accounting for Measurement-
Period Adjustments” (“ASU 2015-16”) to simplify the accounting for business combinations, specifically as it
89
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
relates to measurement-period adjustments. Acquiring entities in a business combination must recognize
measurement-period adjustments in the reporting period in which the adjustment amounts are determined. Also,
ASU 2015-16 requires entities to present separately on the face of the income statement (or disclose in the notes
to the financial statements) the portion of the amount recorded in the current period earnings, by line item, that
would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been
recognized as of the acquisition date. We adopted ASU 2015-16 on January 1, 2016. This guidance did not have
a significant impact on our consolidated financial statements.
In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments — Overall: Recognition and
Measurement of Financial Assets and Financial Liabilities,” which will require entities to measure their
investments at fair value and recognize any changes in fair value in net income unless the investments qualify for
the new practicability exception. The practicability exception will be available for equity investments that do not
have readily determinable fair values. ASU 2016-01 is effective for fiscal years and interim periods within those
years, beginning after December 15, 2017. We are currently evaluating the impact that the standard will have on
our consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires lessees to
recognize assets and liabilities on their balance sheet related to the rights and obligations created by most leases,
while continuing to recognize expenses on their income statements 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. ASU 2016-02 is effective for fiscal years, and interim periods within those years,
beginning after December 15, 2018, and early adoption is permitted. Entities are required to use a modified
retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative
period in the financial statements. We are currently evaluating the impact of this guidance on our consolidated
financial statements. We believe that the adoption of this standard will likely have a material impact to our
consolidated balance sheet for the recognition of certain operating leases as right-of-use assets and lease
liabilities. Our operating lease obligations are described in Note 12 of the consolidated financial statements. We
are in the process of analyzing our lease portfolio and evaluating systems to comply with the standard’s
retrospective adoption requirements.
In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment
Accounting”. This standard simplifies the accounting treatment for excess tax benefits and deficiencies,
forfeitures, and cash flow considerations related to share-based compensation. ASU 2016-09 is effective for
fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is
permitted. We are currently evaluating the impact of the standard; however, we do not expect its adoption to have
a significant impact on our consolidated financial statements.
In June 2016,
the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial
Instruments”. This standard requires a new forward-looking “expected loss” model to be used for receivables,
held-to-maturity debt, loans, and other instruments. ASU 2016-13 is effective for fiscal years, and interim
periods within those years, beginning after December 15, 2019, and early adoption is permitted for fiscal years
beginning after December 15, 2018. We are currently evaluating the impact that the standard will have on our
consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-01, “Clarifying the Definition of a Business”. This
standard changes the definition of a business to assist entities with evaluating when a set of transferred assets and
activities is a business. ASU 2017-01 is effective for fiscal years, and interim periods within those years,
beginning after December 15, 2017, and early adoption is permitted. A reporting entity must apply ASU 2017-01
using a prospective approach. Upon adoption, we expect that the majority of our real estate acquisitions will be
deemed asset acquisitions rather than business combinations. We will record identifiable assets acquired,
liabilities assumed and any noncontrolling interests associated with any asset acquisitions at cost on a relative fair
90
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
value basis and will capitalize transaction costs. Furthermore, contingent considerations associated with asset
acquisitions will be recorded when the contingency is resolved.
3. Real Property Acquisitions and Development
The total purchase price for all properties acquired has been allocated to the tangible and identifiable
intangible assets, liabilities and noncontrolling interests based upon their respective fair values in accordance
with our accounting policies. The results of operations for these acquisitions have been included in our
consolidated results of operations since the date of acquisition and are a component of the appropriate segments.
Transaction costs primarily represent costs incurred with property acquisitions, including due diligence costs,
fees for legal and valuation services and termination of pre-existing relationships computed based on the fair
lease termination fees and other acquisition-related costs. Certain of our
value of the assets acquired,
subsidiaries’ functional currencies are the local currencies of their respective countries. See Note 2 for
information regarding our foreign currency policies. During the year ended December 31, 2016, we finalized our
purchase price allocation of certain previously reported acquisitions and there were no material changes from
those previously disclosed.
Triple-Net Activity
The following provides our purchase price allocations and other triple-net real property investment activity
for the periods presented (in thousands):
Year Ended December 31,
2016(1)
2015
2014
Land and land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$104,754
418,633
2,876
—
551
$
95,835
1,061,431
4,408
6
194
$ 141,387
1,365,638
19,196
—
4,895
Total assets acquired(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior unsecured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
526,814
—
—
(3,384)
1,161,874
(47,741)
—
(2,905)
Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash acquisition related activity(3)
Cash disbursed for acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accruals Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash related activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash disbursed for construction in progress . . . . . . . . . . . . . . . . . . . . . . . .
Capital improvements to existing properties . . . . . . . . . . . . . . . . . . . . . . . .
(3,384)
(26,771)
(51,733)
444,926
181,084
(8,729)
(3,665)
—
168,690
32,603
(50,646)
(13,465)
(38,355)
1,059,408
143,140
(5,699)
(167)
—
1,531,116
(130,638)
(48,567)
(9,067)
(188,272)
—
(3,453)
1,339,391
135,349
(4,582)
421
(14,459)
137,274
45,293
116,729
18,901
Total cash invested in real property, net of cash acquired . . . . . . . . . . . .
$646,219
$1,241,975
$1,475,021
91
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1)
Includes acquisitions with an aggregate purchase price of $67,847,000 for which the allocation of the purchase price consideration is
preliminary and subject to change.
(2) Excludes $682,000, $16,572,000 and $1,382,000 of cash acquired during the years ended December 31, 2016, 2015 and 2014,
respectively.
(3) For the year ended December 31, 2016, primarily relates to $45,044,000 for the acquisition of assets previously financed as real estate
loans receivable and $6,630,000 previously financed as an equity investment. For the year ended December 31, 2015, primarily relates to
$23,288,000 for the acquisition of assets previously financed as real estate loans receivable and $6,743,000 previously financed as equity
investments.
Seniors Housing Operating Activity
Acquisitions of seniors housing operating properties are structured under RIDEA, which is described in
Note 18. This structure results in the inclusion of all resident revenues and related property operating expenses
from the operation of these qualified health care properties in our consolidated statements of comprehensive
income.
The following is a summary of our seniors housing operating real property investment activity for the
periods presented (in thousands):
Year Ended December 31,
2016(1)
2015
2014
Land and land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets acquired(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior unsecured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash acquisition related activity(3)
$ 164,653
1,518,472
115,643
—
216
2,462
1,801,446
(63,732)
—
(23,681)
(87,413)
(6,007)
(47,065)
Cash disbursed for acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,660,961
157,845
(5,793)
(8,500)
$ 218,581
2,367,486
187,512
—
11,798
29,501
$ 57,534
297,314
12,983
27,957
804
9,327
2,814,878
(871,471)
(24,621)
(81,778)
(977,870)
(183,854)
—
1,653,154
44,173
(1,740)
(2,499)
405,919
(19,834)
—
(17,802)
(37,636)
(482)
—
367,801
12,291
(714)
(2,012)
Cash disbursed for construction in progress . . . . . . . . . . . . . . . . . . . . . . . .
Capital improvements to existing properties . . . . . . . . . . . . . . . . . . . . . . . .
143,552
138,673
39,934
104,308
9,565
86,803
Total cash invested in real property, net of cash acquired . . . . . . . . . .
$1,943,186
$1,797,396
$464,169
(1)
Includes an aggregate purchase price of $1,672,961,000 relating to acquisitions for which the allocation of the purchase price
consideration is preliminary and subject to change.
(2) Excludes $135,000, $30,930,000 and $9,060,000 of cash acquired during the years ended December 31, 2016, 2015 and 2014,
respectively.
(3) Primarily relates to the acquisition of assets previously financed as an equity investment.
92
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Outpatient Medical Activity
Accrued contingent consideration related to certain outpatient medical acquisitions was $0, $0 and
$27,374,000 as of December 31, 2016, 2015 and 2014, respectively. The following is a summary of our
outpatient medical real property investment activity for the periods presented (in thousands):
Year Ended December 31,
2016(1)
2015
2014
Land and land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets
$ 5,738
46,056
4,592
—
$ 223,708
614,770
45,226
939
$ 63,129
567,847
46,661
—
Total assets acquired(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56,386
884,643
— (120,977)
(7,777)
(1,670)
677,637
(66,113)
(22,293)
Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash acquisition related activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,670)
—
(15,013)(3)
(128,754)
(76,535)
(27,025)(4) (45,836)(3)
(88,406)
(39,987)
Cash disbursed for acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Capitalized interest
Accruals(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39,703
113,933
(3,723)
(19,321)
652,329
70,560
(1,286)
(1,921)
503,408
99,878
(1,854)
(26,437)
Cash disbursed for construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital improvements to existing properties . . . . . . . . . . . . . . . . . . . . . . . . . .
90,889
47,870
67,353
38,151
71,587
27,076
Total cash invested in real property, net of cash acquired . . . . . . . . . . . .
$178,462
$ 757,833
$602,071
(1)
Includes acquisitions with an aggregate purchase price of $18,784,000 for which the allocation of the purchase price consideration is
preliminary and subject to change.
(2) Excludes $0, $5,522,000 and $0 of cash acquired during the years ended December 31, 2016, 2015 and 2014, respectively.
(3) The non-cash activity relates to the acquisition of assets previously financed as real estate loans. Please refer to Note 6 for additional
information.
(4) The non-cash activity relates to the acquisition of a controlling interest in a portfolio of properties that was historically reported as an
unconsolidated property investment.
(5) Represents non-cash consideration accruals for amounts to be paid in future periods relating to properties that converted in the periods
noted above.
93
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Construction Activity
The following is a summary of the construction projects that were placed into service and began generating
revenues during the periods presented:
December 31,
2016
Year Ended
December 31,
2015
December 31,
2014
Development projects:
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical
$ 46,094
18,979
108,001
Total development projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expansion projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
173,074
11,363
$104,844
19,869
16,592
141,305
38,808
$ 71,569
—
127,290
198,859
24,804
Total construction in progress conversions . . . . . . . . . . . . . . . . . . . . . . .
$184,437
$180,113
$223,663
At December 31, 2016, 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):
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,258,565
1,243,041
1,196,065
1,178,410
1,126,074
8,459,291
$14,461,446
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):
Assets:
In place lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Above market tenant leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Below market ground leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross historical cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average amortization period in years . . . . . . . . . . . . . . . . . .
Liabilities:
Below market tenant leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Above market ground leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross historical cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average amortization period in years . . . . . . . . . . . . . . . . . .
94
December 31,
2016
December 31,
2015
$1,252,143
61,700
61,628
27,413
1,402,884
(966,714)
$ 436,170
$1,179,537
67,529
80,224
23,295
1,350,585
(881,096)
$ 469,489
13.7
13.4
$
$
89,468
8,107
97,575
(52,134)
45,441
15.2
$
$
93,089
7,907
100,996
(46,048)
54,948
14.5
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following is a summary of real estate intangible amortization for the periods presented (in thousands):
Year Ended December 31,
2015
2014
2016
Rental income related to above/below market tenant leases,
net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
919
$
(2,746)
$
509
Property operating expenses related to above/below market
ground leases, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,241)
(1,272)
(1,248)
Depreciation and amortization related to in place lease
intangibles and lease commissions . . . . . . . . . . . . . . . . . . . .
(132,141)
(115,855)
(214,966)
The future estimated aggregate amortization of intangible assets and liabilities is as follows for the periods
presented (in thousands):
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$141,094
78,905
33,228
22,958
19,045
140,940
$ 6,544
5,959
5,551
5,074
4,586
17,727
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$436,170
$45,441
Assets
Liabilities
5. Dispositions, Assets Held for Sale and Discontinued Operations
We periodically sell properties for various reasons, including favorable market conditions, the exercise of
tenant purchase options or reduction of concentrations (e.g. property type, operator or geography). 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):
December 31,
2016
Year Ended
December 31,
2015
December 31,
2014
Real property dispositions:
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical(1) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land parcels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on sales of real property, net . . . . . . . . . . . . . .
Net other assets/liabilities disposed . . . . . . . . . . . . . . . . .
$1,773,614
78,786
—
1,852,400
364,046
133,622
$356,300
181,553
5,724
543,577
280,387
—
$747,720
45,695
—
793,415
153,522
(35,872)
Proceeds from real property sales . . . . . . . . . . . . . . . . . . .
$2,350,068
$823,964
$911,065
(1) Dispositions occurring in the year ended December 31, 2015 primarily relate to the disposition of an unconsolidated equity investment
with Forest City Enterprises.
95
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the year ended December 31, 2016, we completed two portfolio dispositions of properties leased to
Genesis Healthcare for which we received loans for termination fees relating to the properties sold under the
is outstanding on the loans. The related
master lease. At December 31, 2016, $74,445,000 of principal
termination fee income will be deferred and recognized as the principal balance of the loans are repaid.
Dispositions and Assets Held for Sale
Pursuant to our adoption of ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and
Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of
Components of an Entity” (ASU 2014-08”), operating results attributable to properties sold subsequent to or
classified as held for sale after January 1, 2014 and which do not meet the definition of discontinued operations
are no longer reclassified on our Consolidated Statements of Comprehensive Income. The following represents
the activity related to these properties for the periods presented (in thousands):
Year Ended December 31,
2016
2015
2014
Revenues:
Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$310,390
$352,615
$401,640
Expenses:
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49,599
10,846
68,280
64,741
12,117
88,580
80,893
14,127
111,593
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
128,725
165,438
206,613
Income (loss) from real estate dispositions, net . . . . . . . . . . . . . .
$181,665
$187,177
$195,027
6. Real Estate Loans Receivable
The following is a summary of our real estate loans receivable (in thousands):
Mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other real estate loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$485,735
136,893
$635,492
184,000
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$622,628
$819,492
December 31,
2016
2015
96
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following is a summary of our real estate loan activity for the periods presented (in thousands):
December 31, 2016
Year Ended
December 31, 2015
December 31, 2014
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 . . . . . $
Draws on existing loans . . . . . .
Net cash advances on real estate
loans . . . . . . . . . . . . . . . . . . .
Receipts on real estate loans
receivable:
Loan payoffs . . . . . . . . . . . . . . .
Principal payments on loans . . .
Sub-total
Less: Non-cash activity(1)
. . . . . . . . . . . . . . . .
. . . . .
8,445
118,788
$
— $
2,651
8,445 $530,497
65,614
121,439
$ — $530,497 $ 61,730
59,420
68,225
2,611
$ 60,902
20,155
$122,632
79,575
127,233
2,651
129,884
596,111
2,611
598,722
121,150
81,057
202,207
275,439
6,867
27,303
—
302,742
6,867
121,778
33,340
— 121,778
33,340
—
71,004
31,998
48,258
72
119,262
32,070
282,306
(45,044)
27,303
(15,013)
309,609
(60,057)
155,118
(23,288)
— 155,118
(23,288)
—
103,002
48,330
— (45,836)
151,332
(45,836)
Net cash receipts on real estate
loans . . . . . . . . . . . . . . . . . . .
237,262
12,290
249,552
131,830
— 131,830
103,002
2,494
105,496
Net cash advances (receipts) on
real estate loans . . . . . . . . . . . . .
(110,029)
(9,639)
(119,668) 464,281
2,611
466,892
18,148
78,563
96,711
Change in balance due to foreign
currency translation . . . . . . . . . .
. . . . . . . . . . .
Loan impairments(2)
Net change in real estate loans
(14,086)
—
—
(3,053)
(14,086)
(3,053)
(4,281)
—
—
—
(4,281)
—
(2,852)
—
—
—
(2,852)
—
receivable . . . . . . . . . . . . . . . . . $(169,159) $(27,705) $(196,864) $436,712
$2,611
$439,323 $ 15,296
$ 32,727
$ 48,023
(1) Represents an acquisition of assets previously financed as a real estate loan. Please see Note 3 for additional information.
(2) Represents a direct write down of an impaired loan receivable.
The Company restructured two existing real estate loans in the triple-net segment to Genesis Healthcare.
The two existing loans, with a combined principal balance of $317,000,000, were scheduled to mature in 2017
and 2018. These loans were restructured into four separate loans effective October 1, 2016. Each loan has 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. We expect to collect all principal amounts due under the loans.
The following is a summary of the allowance for losses on loans receivable for the periods presented (in
thousands):
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for loan losses(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in present value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ — $— $—
—
6,935
—
—
(372) —
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$6,563
$— $—
Year Ended December 31,
2016
2015
2014
(1) Excludes direct write down of an impaired loan receivable.
97
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following is a summary of our loan impairments (in thousands):
Year Ended December 31,
2015
2016
2014
Balance of impaired loans at end of year . . . . . . . . . . . . . . . . . . . . .
Allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$377,549
6,563
$ — $21,000
—
—
Balance of impaired loans not reserved . . . . . . . . . . . . . . . . . . . . . .
$370,986
$ — $21,000
Average impaired loans for the year . . . . . . . . . . . . . . . . . . . . . . . .
Interest recognized on impaired loans(1) . . . . . . . . . . . . . . . . . . . . . .
$188,775
8,707
$10,500
—
$10,750
757
(1) Represents interest recognized in 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,
2016
December 31,
2015
Triple-net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10% to 49%
10% to 50%
43%
$ 27,005
407,172
22,961
$ 36,351
499,537
6,393
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$457,138
$542,281
(1) Excludes ownership of in-substance real estate.
At December 31, 2016, the aggregate unamortized basis difference of our joint venture investments of
$149,147,000 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 will be amortized over the remaining useful life of the related properties and included in the reported
amount of income from unconsolidated entities.
98
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Credit Concentration
We use net operating income from continuing operations (“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, 2016, excluding our share of NOI in unconsolidated
entities (dollars in thousands):
Number of
Properties
Total
NOI
Percent of
NOI(2)
Concentration by relationship:(1)
Genesis Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sunrise Senior Living(3)
Revera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brookdale Senior Living . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benchmark Senior Living . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remaining portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86
152
98
148
48
781
$ 373,577
308,771
153,712
151,337
96,958
1,319,822
16%
13%
6%
6%
4%
55%
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,313
$2,404,177
100%
(1) Genesis Healthcare is in our triple-net segment. Sunrise Senior Living and Revera are in our seniors housing operating segment.
Brookdale Senior Living and Benchmark Senior Living are in both our triple-net and seniors housing operating segments.
(2)
Investments with our top five relationships comprised 46% of total NOI in 2015.
(3) Revera owns a controlling interest in Sunrise Senior Living. For the year ended December 31, 2016, we recognized $998,783,000 of
revenue from Sunrise Senior Living.
9. Borrowings Under Credit Facilities and Related Items
At December 31, 2016, we had a primary unsecured credit facility with a consortium of 29 banks that
includes a $3,000,000,000 unsecured revolving credit facility, a $500,000,000 unsecured term credit facility and
a $250,000,000 Canadian-denominated unsecured term credit facility. We have an option, through an accordion
feature, to upsize the unsecured revolving credit facility and the $500,000,000 unsecured term credit facility by
up to an additional $1,000,000,000, in the aggregate, and the $250,000,000 Canadian-denominated unsecured
term credit facility by up to an additional $250,000,000. The primary unsecured credit facility also allows us to
borrow up to $1,000,000,000 in alternate currencies (none outstanding at December 31, 2016). Borrowings under
the unsecured revolving credit facility are subject to interest payable at the applicable margin over LIBOR
interest rate (1.66% at December 31, 2016). The applicable margin is based on certain of our debt ratings and
was 0.90% at December 31, 2016. In addition, we pay a facility fee quarterly to each bank based on the bank’s
commitment amount. The facility fee depends on certain of our debt ratings and was 0.15% at December 31,
2016. The term credit facilities mature on May 13, 2021. The revolving credit facility is scheduled to mature on
May 13, 2020 and can be extended for two successive terms of six months each at our option.
The following information relates to aggregate borrowings under the primary unsecured revolving credit
facility for the periods presented (dollars in thousands):
Balance outstanding at year end(1) . . . . . . . . . . . . . . . . . . . . . . .
Maximum amount outstanding at any month end . . . . . . . . . . .
Average amount outstanding (total of daily principal balances
divided by days in period) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average interest rate (actual interest expense
Year Ended December 31,
2016
2015
2014
$ 645,000
$1,560,000
$835,000
$835,000
—
$
$637,000
$ 762,896
$452,644
$207,452
divided by average borrowings outstanding)
. . . . . . . . . . . .
1.39%
1.17%
1.50%
99
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) As of December 31, 2016, letters of credit in the aggregate amount of $41,878,000 have been issued, which reduce the available
borrowing capacity on our primary unsecured revolving credit facility.
10. Senior Unsecured Notes and Secured Debt
We may repurchase, redeem or refinance senior unsecured notes from time to time, taking advantage of
favorable market conditions when available. We may purchase senior notes for cash through open market
purchases, privately negotiated transactions, a tender offer or, in some cases, through the early redemption of
such securities pursuant to their terms. The senior unsecured notes are redeemable at our option, at any time in
whole or from time to time in part, at a redemption price equal to the sum of (1) the principal amount of the notes
(or portion of such notes) being redeemed plus accrued and unpaid interest thereon up to the redemption date and
(2) any “make-whole” amount due under the terms of the notes in connection with early redemptions.
Redemptions and repurchases of debt, if any, will depend on prevailing market conditions, our liquidity
requirements, contractual restrictions and other factors. At December 31, 2016, the annual principal payments
due on these debt obligations were as follows (in thousands):
Senior
Unsecured
Notes(1,2)
Secured
Debt(1,3)
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021(5,6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter(7,8,9,10)
$
— $ 550,620
697,557
623,753
166,932
349,106
1,077,098
450,000
605,000
673,447
1,136,206
5,395,385
$
Totals
550,620
1,147,557
1,228,753
840,379
1,485,312
6,472,483
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$8,260,038
$3,465,066
$11,725,104
(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 1.4% to 6.5%.
(3) Annual interest rates range from 1.24% to 7.98%. Carrying value of the properties securing the debt totaled $6,149,872,000 at
December 31, 2016.
(4)
In November 2015, one of our wholly-owned subsidiaries issued and we guaranteed $300,000,000 of Canadian-denominated 3.35%
senior unsecured notes due 2020 (approximately $223,447,000 based on the Canadian/U.S. Dollar exchange rate on December 31, 2016).
(5) On May 13, 2016, we refinanced the funding on a $250,000,000 Canadian-denominated unsecured term credit facility (approximately
$186,206,000 based on the Canadian/U.S. Dollar exchange rate on December 31, 2016). The loan matures on May 13, 2021 and bears
interest at the Canadian Dealer Offered Rate plus 95 basis points (1.84% at December 31, 2016).
(6) On May 13, 2016, we refinanced the funding on a $500,000,000 unsecured term credit facility. The loan matures on May 13, 2021 and
bears interest at LIBOR plus 95 basis points (1.63% at December 31, 2016).
(7) On November 20, 2013, we completed the sale of £550,000,000 (approximately $678,535,000 based on the Sterling/U.S. Dollar
exchange rate in effect on December 31, 2016) of 4.8% senior unsecured notes due 2028.
(8) On November 25, 2014, we completed the sale of £500,000,000 (approximately $616,850,000 based on the Sterling/U.S. Dollar
exchange rate in effect on December 31, 2016) of 4.5% senior unsecured notes due 2034.
(9)
In May 2015, we issued $750,000,000 of 4.0% senior unsecured notes due 2025. In October 2015, we issued an additional $500,000,000
of these notes under a re-opening of the offer.
(10) In March 2016, we issued $700,000,000 of 4.25% senior unsecured notes due 2026.
100
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following is a summary of our senior unsecured note principal activity during the periods presented
(dollars in thousands):
December 31, 2016
December 31, 2015
December 31, 2014
Amount
Weighted Avg.
Interest Rate
Amount
Weighted Avg.
Interest Rate
Amount
Weighted Avg.
Interest Rate
Year Ended
Beginning balance . . . . . .
Debt issued . . . . . . . . . . . .
Debt assumed . . . . . . . . . .
Debt extinguished . . . . . . .
Debt redeemed . . . . . . . . .
Foreign currency . . . . . . . .
$8,645,758
705,000
—
(850,000)
—
(240,720)
4.237% $7,817,154
1,475,540
4.228%
24,621
0.000%
(300,000)
4.194%
(240,249)
0.000%
(131,308)
4.565%
4.385% $7,421,707
838,804
3.901%
—
6.000%
(298,567)
6.200%
(59,143)
3.303%
(85,647)
3.966%
4.395%
4.572%
0.000%
5.855%
3.000%
4.222%
Ending balance . . . . . . . . .
$8,260,038
4.245% $8,645,758
4.237% $7,817,154
4.385%
The following is a summary of our secured debt principal activity for the periods presented (dollars in
thousands):
December 31, 2016
December 31, 2015
December 31, 2014
Amount
Weighted Avg.
Interest Rate
Amount
Weighted Avg.
Interest Rate
Amount
Weighted Avg.
Interest Rate
Year Ended
Beginning balance . . . . . .
Debt issued . . . . . . . . . . . .
Debt assumed . . . . . . . . . .
Debt extinguished . . . . . . .
Principal payments . . . . . .
Foreign currency . . . . . . . .
$3,478,207
460,015
60,898
(489,293)
(74,466)
29,705
4.440% $2,941,765
228,685
2.646%
1,007,482
4.301%
(506,326)
5.105%
(67,064)
4.663%
(126,335)
3.670%
4.940% $3,010,711
109,503
2.776%
204,949
3.334%
(279,559)
4.506%
(62,280)
4.801%
(41,559)
3.834%
5.095%
3.374%
4.750%
4.824%
4.930%
3.811%
Ending balance . . . . . . . . .
$3,465,066
4.094% $3,478,207
4.440% $2,941,765
4.940%
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, 2016, we were in
compliance with all of the covenants under our debt agreements.
11. Derivative Instruments
We are exposed to various market risks, including the potential loss arising from adverse changes in interest
rates. We may elect to use financial derivative instruments to hedge interest rate exposure. These decisions are
principally based on our policy to manage the general trend in interest rates at the applicable dates and our
perception of the future volatility of interest rates. In addition, non-U.S. investments expose us to the potential
losses associated with adverse changes in foreign currency to U.S. Dollar exchange rates. We have elected to
manage these risks through the use of forward exchange contracts and issuing debt in the foreign currency.
101
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Interest Rate Swap Contracts and Foreign Currency Forward Contracts Designated as Cash Flow Hedges
For instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss
on the derivative is reported as a component of other comprehensive income (“OCI”), and reclassified into
earnings in the same period, or periods, during which the hedged transaction affects earnings. Gains and losses
on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of
effectiveness are recognized in earnings. Approximately $7,650,000 of gains, which are included in accumulated
other comprehensive income (“AOCI”), are expected to be reclassified into earnings in the next 12 months.
Foreign Currency Hedges
For instruments that are designated and qualify as net investment hedges, the variability in the foreign
currency to U.S. dollar of the instrument is recorded as a cumulative translation adjustment component of
OCI. During the years ended December 31, 2016 and 2015, we settled certain net investment hedges generating
cash proceeds of $108,347,000 and $106,360,000, respectively. The balance of the cumulative translation
adjustment will be reclassified to earnings when the hedged investment is sold or substantially liquidated.
The following presents the notional amount of derivatives and other financial instruments as of the dates
indicated (in thousands):
December 31, 2016
December 31, 2015
Derivatives designated as net investment hedges:
Denominated in Canadian Dollars . . . . . . . . . . . . . . . . . . . . . . . .
Denominated in Pounds Sterling . . . . . . . . . . . . . . . . . . . . . . . . .
Financial instruments designated as net investment hedges:
Denominated in Canadian Dollars . . . . . . . . . . . . . . . . . . . . . . . .
Denominated in Pounds Sterling . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives designated as cash flow hedges:
Denominated in U.S. Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Denominated in Canadian Dollars . . . . . . . . . . . . . . . . . . . . . . . .
Denominated in Pounds Sterling . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments not designated:
Denominated in Canadian Dollars . . . . . . . . . . . . . . . . . . . . . . . .
$ 900,000
£ 550,000
$ 1,175,000
550,000
£
$ 250,000
£1,050,000
250,000
$
£ 1,050,000
$
$
£
$
57,000
54,000
48,000
37,000
$
$
£
$
57,000
72,000
60,000
47,000
The following presents the impact of derivative instruments on the Consolidated Statements of
Comprehensive Income for the periods presented (in thousands):
Location
December 31,
2016
December 31,
2015
December 31,
2014
Year Ended
Gain (loss) on forward exchange contracts
recognized in income . . . . . . . . . . . . . . . . . . . Interest expense $
8,544
$ 14,474
$
Loss (gain) on option exercise(1) . . . . . . . . . . . . . Loss (gain) on
derivatives, net
$
— $ (58,427) $
—
—
Gain on release of cumulative translation
adjustment related to ineffectiveness on net
investment hedge . . . . . . . . . . . . . . . . . . . . . . Loss (gain) on
derivatives, net
Gain (loss) on forward exchange contracts and
term loans designated as net investment
hedge recognized in OCI . . . . . . . . . . . . . . . . OCI
$ (2,516) $
— $
—
$357,021
$298,116
$103,140
102
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1)
In April 2011, we completed the acquisition of substantially all of the real estate assets of privately-owned Genesis Healthcare
Corporation. In conjunction with this transaction, we received the option to acquire an ownership interest in Genesis Healthcare. In
February 2015, Genesis Healthcare closed on a transaction to merge with Skilled Healthcare Group to become a publicly traded company
which required us to record the value of the derivative asset due to the net settlement feature.
12. Commitments and Contingencies
At December 31, 2016, we had twelve outstanding letter of credit obligations totaling $174,799,000 and
expiring between 2017 and 2024. At December 31, 2016, we had outstanding construction in process of
$506,091,000 for leased properties and were committed to providing additional funds of approximately
$493,972,000 to complete construction. At December 31, 2016, we had contingent purchase obligations totaling
$29,127,000. These contingent purchase obligations relate to unfunded capital improvement obligations and
contingent obligations on acquisitions. Rents due from the tenant are increased to reflect
the additional
investment in the property.
We evaluate our leases for operating versus capital lease treatment in accordance with ASC Topic 840
“Leases.” A lease is classified as a capital lease if it provides for transfer of ownership of the leased asset at the
end of the lease term, contains a bargain purchase option, has a lease term greater than 75% of the economic life
of the leased asset, or if the net present value of the future minimum lease payments are in excess of 90% of the
fair value of the leased asset. Certain leases contain bargain purchase options and have been classified as capital
leases. At December 31, 2016, we had operating lease obligations of $1,105,992,000 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,
2016, aggregate future minimum rentals to be received under these noncancelable subleases totaled $74,744,000.
At December 31, 2016, future minimum lease payments due under operating and capital leases are as
follows (in thousands):
Operating Leases
Capital Leases(1)
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
16,939
17,063
17,269
16,810
16,647
1,021,264
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,105,992
$ 4,731
4,678
4,334
4,173
4,173
71,747
$93,836
(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 $24,929,000 are recorded in real property.
103
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Stockholders’ Equity
The following is a summary of our stockholder’s equity capital accounts as of the dates indicated:
December 31, 2016
December 31, 2015
Preferred Stock, $1.00 par value:
Authorized shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issued shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50,000,000
25,875,000
25,875,000
Common Stock, $1.00 par value:
Authorized shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issued shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
700,000,000
363,576,924
362,602,173
50,000,000
25,875,000
25,875,000
700,000,000
355,594,373
354,777,670
Preferred Stock. The following is a summary of our preferred stock activity during the periods presented:
December 31, 2016
December 31, 2015
December 31, 2014
Shares
Weighted Avg.
Dividend Rate
Shares
Weighted Avg.
Dividend Rate
Shares
Weighted Avg.
Dividend Rate
Year Ended
Beginning balance . . . . . .
Shares converted . . . . . . .
25,875,000
—
6.500%
0.000%
25,875,000
—
6.500% 26,108,236
(233,236)
0.000%
Ending balance . . . . . . . .
25,875,000
6.500%
25,875,000
6.500% 25,875,000
6.496%
6.000%
6.500%
During the three months ended December 31, 2010, we issued 349,854 shares of 6.00% Series H
Cumulative Convertible and Redeemable Preferred Stock in connection with a business combination. During the
years ended December 31, 2013 and 2014, all shares were converted into common stock, leaving zero shares
outstanding.
During the three months ended March 31, 2011, we issued 14,375,000 of 6.50% Series I Cumulative
Convertible Perpetual Preferred Stock. These shares have a liquidation value of $50.00 per share. Dividends are
payable quarterly in arrears. The preferred stock is not redeemable by us. The preferred shares are convertible, at
the holder’s option, into 0.8460 shares of common stock (equal to an initial conversion price of approximately
$59.10).
During the three months ended March 31, 2012, we issued 11,500,000 of 6.50% Series J Cumulative
Redeemable Preferred Stock. Dividends are payable quarterly in arrears. On February 2, 2017, we announced
that we will redeem all 11,500,000 shares outstanding on March 7, 2017 at a redemption price of $25.00 per
share plus accrued and unpaid dividends to, but not including, March 7, 2017.
104
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Common Stock. The following is a summary of our common stock issuances during the periods indicated
(dollars in thousands, except per share amounts):
Shares Issued Average Price Gross Proceeds Net Proceeds
June 2014 public issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,100,000
September 2014 public issuance . . . . . . . . . . . . . . . . . . . . . . . . 17,825,000
2014 Dividend reinvestment plan issuances . . . . . . . . . . . . . . . 4,122,941
498,549
2014 Option exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
233,236
2014 Preferred stock conversions . . . . . . . . . . . . . . . . . . . . . . .
188,147
2014 Stock incentive plans, net of forfeitures . . . . . . . . . . . . . .
258,542
2014 Senior note conversions . . . . . . . . . . . . . . . . . . . . . . . . . .
$62.35
63.75
62.35
45.79
$1,003,835 $ 968,517
1,095,465
1,136,344
257,055
257,055
22,831
22,831
—
—
—
—
—
—
2014 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,226,415
$2,420,065 $2,343,868
February 2015 public issuance . . . . . . . . . . . . . . . . . . . . . . . . . 19,550,000
2015 Dividend reinvestment plan issuances . . . . . . . . . . . . . . . 4,024,169
249,054
2015 Option exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
696,070
2015 Equity Shelf Program issuances . . . . . . . . . . . . . . . . . . . .
2015 Stock incentive plans, net of forfeitures . . . . . . . . . . . . . .
137,837
2015 Senior note conversions . . . . . . . . . . . . . . . . . . . . . . . . . . 1,330,474
$75.50
67.72
47.35
69.23
$1,476,025 $1,423,935
272,531
11,793
47,463
—
—
272,531
11,793
48,186
—
—
2015 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,987,604
$1,808,535 $1,755,722
2016 Dividend reinvestment plan issuances . . . . . . . . . . . . . . . 4,145,457
141,405
2016 Option exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 Equity Shelf Program issuances . . . . . . . . . . . . . . . . . . . . 3,134,901
402,740
2016 Stock incentive plans, net of forfeitures . . . . . . . . . . . . . .
$70.34
47.13
75.27
$ 291,852 $ 291,571
6,664
235,959
—
6,664
238,286
—
2016 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,824,503
$ 536,802 $ 534,194
Dividends. The increase in dividends is primarily attributable to increases in our common shares
outstanding as described above. Please refer to Notes 2 and 18 for information related to federal income tax of
dividends. The following is a summary of our dividend payments (in thousands, except per share amounts):
December 31, 2016
December 31, 2015
December 31, 2014
Per Share
Amount
Per Share
Amount
Per Share
Amount
Year Ended
$1,144,727
$3.18000
— 0.00794
3.25000
1.62510
46,719
18,687
$1,210,133
$ 969,661
1
46,719
18,688
$1,035,069
Common Stock . . . . . . . . . . . . . . . . .
Series H Preferred Stock . . . . . . . . .
Series I Preferred Stock . . . . . . . . . .
Series J Preferred Stock . . . . . . . . . .
$3.44000
—
3.25000
1.62510
Totals . . . . . . . . . . . . . . . . . . . . . . . .
$3.30000
—
3.25000
1.62510
$1,233,519
—
46,719
18,687
$1,298,925
105
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Accumulated Other Comprehensive Income. The following is a summary of accumulated other
comprehensive income/(loss) for the periods presented (in thousands):
Unrecognized gains (losses) related to:
Foreign
Currency
Translation
Equity
Investments
Actuarial
losses
Cash Flow
Hedges
Total
Balance at December 31, 2015 . . . . . . . . . . . . $ (85,484)
Other comprehensive income (loss) before
$ — $(1,343) $(1,416) $ (88,243)
reclassification adjustments . . . . . . . . . . . .
Reclassification amount to net income . . . . . .
(90,528)
2,516
5,120
—
190
—
1,414
—
(83,804)
2,516
Net current-period other comprehensive
income (loss) . . . . . . . . . . . . . . . . . . . . . . . .
(88,012)
5,120
190
1,414
(81,288)
Balance at December 31, 2016 . . . . . . . . . . . . $(173,496)
$5,120
$(1,153) $
(2) $(169,531)
Balance at December 31, 2014 . . . . . . . . . . . . $ (74,770)
Other comprehensive income (loss) before
reclassification adjustments . . . . . . . . . . . .
Reclassification amount to net income . . . . . .
(10,714)
—
Net current-period other comprehensive
income (loss) . . . . . . . . . . . . . . . . . . . . . . . .
(10,714)
$ — $(1,589) $ (650) $ (77,009)
—
—
—
246
(2,626)
— 1,860
(13,094)
1,860
246
(766)
(11,234)
Balance at December 31, 2015 . . . . . . . . . . . . $ (85,484)
$ — $(1,343) $(1,416) $ (88,243)
Other Equity. Other equity consists of accumulated option compensation expense, which represents the
amount of amortized compensation costs related to stock options awarded to employees and directors.
14. Stock Incentive Plans
In May 2016, our shareholders approved the 2016 Long-Term Incentive Plan (“2016 Plan”), which
authorizes up to 10,000,000 shares of common stock to be issued at the discretion of the Compensation
Committee of the Board of Directors. Awards granted after May 5, 2016 will be 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. Options expire ten
years from the date of grant.
Under our long-term incentive plan, certain restricted stock awards are performance based. We will grant a
target number of restricted stock units, with the ultimate award determined by the total shareholder return and
operating performance metrics, measured in each case over a measurement period of three years. One third of the
award will vest immediately at the end of the three year performance period, one third will vest a year after the
performance period, and the remaining one third will vest two years after 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 estimated compensation cost
was based on the grant date closing price and management’s estimate of corporate achievement for the financial
metrics. If the estimated number of performance based restricted stock to be earned changes, an adjustment will
106
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
compensation cost. The expected term represents the period from the grant date to the end of the three-year
performance period.
The estimated compensation cost for each performance based plan was derived using the assumptions
presented in the following table:
Risk Free Rates
Volatility(1)
Dividend Yield
2015-2017 Program . . . . . . . . . . . . . . . . . . . . .
2016-2018 Program . . . . . . . . . . . . . . . . . . . . .
0.16% - 1.16% 13.64% - 42.75%
0.40% - 1.07% 15.75% - 38.61%
4.818%
5.039%
(1) Figures use 50% historical and 50% implied volatility.
The following table summarizes compensation expense recognized for the periods presented (in thousands):
Year Ended December 31,
2016
2015
2014
Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
266
28,603
$
698
30,146
$
912
31,163
$28,869
$30,844
$32,075
Stock Options
We have not granted stock options since the year ended December 31, 2012 but some remain outstanding.
As of December 31, 2016, there was no unrecognized compensation expense related to unvested stock options.
Stock options outstanding at December 31, 2016 have an aggregate intrinsic value of $5,553,000.
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, 2016, there was $32,830,000 of total
unrecognized compensation expense related to unvested restricted stock that is expected to be recognized over a
weighted-average period of three years. The following table summarizes information about non-vested restricted
stock incentive awards as of and for the year ended December 31, 2016:
Restricted Stock
Number of
Shares
(000’s)
Weighted-Average
Grant Date
Fair Value
Non-vested at December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Terminated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-vested at December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
638
(396)
785
(40)
987
$62.00
64.36
59.42
62.64
$58.98
107
WELLTOWER INC.
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,
2016
2015
2014
Numerator for basic and diluted earnings per share — net
income attributable to common stockholders . . . . . . . . . . . .
$1,012,397
$818,344
$446,745
Denominator for basic earnings per share: weighted-average
shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
358,275
348,240
306,272
Effect of dilutive securities:
Employee stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-vested restricted shares . . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Convertible senior unsecured notes . . . . . . . . . . . . . . . . . . .
Dilutive potential common shares . . . . . . . . . . . . . . . . . . . . . . .
Denominator for diluted earnings per share: adjusted-
110
449
1,393
—
1,952
143
535
310
196
188
500
—
787
1,184
1,475
weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .
360,227
349,424
307,747
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2.83
2.81
$
$
2.35
2.34
$
$
1.46
1.45
Stock options outstanding were anti-dilutive for the years ended December 31, 2016, 2015 and 2014. The
Series H Cumulative Convertible and Redeemable Preferred Stock and the Series I Cumulative Convertible
Perpetual Preferred Stock were excluded from the calculations as the effect of the conversions also were anti-
dilutive.
16. Disclosure about Fair Value of Financial Instruments
U.S. GAAP provides authoritative guidance for measuring and disclosing fair value measurements of assets
and liabilities. The guidance defines fair value as the exchange price that would be received for an asset or paid
to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an
orderly transaction between market participants on the measurement date. The guidance also establishes a fair
value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to
measure fair value:
• Level 1 — Quoted prices in active markets for identical assets or liabilities.
• Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the assets or liabilities.
• Level 3 — Unobservable inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities.
108
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following methods and assumptions were used to estimate the fair value of each class of financial
instruments for which it is practicable to estimate that value.
Mortgage Loans and Other Real Estate Loans Receivable — The fair value of mortgage loans and other real
estate loans receivable is generally estimated by using Level 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 — The carrying amount approximates fair value.
Available-for-sale Equity Investments — Available-for-sale equity investments are recorded at their fair
value based on Level 1 publicly available trading prices.
Borrowings Under Primary Unsecured Credit Facility — The carrying amount of the primary unsecured
credit facility approximates fair value because the borrowings are interest rate adjustable.
Senior Unsecured Notes — The fair value of the senior unsecured notes payable was estimated based on
Level 1 publicly available trading prices. The carrying amount of the variable rate senior unsecured notes
approximates fair value because they are interest rate adjustable.
Secured Debt — The fair value of fixed rate secured debt is estimated using Level 2 inputs by discounting
the estimated future cash flows using the current rates at which similar loans would be made with similar credit
ratings and for the same remaining maturities. The carrying amount of variable rate secured debt approximates
fair value because the borrowings are interest rate adjustable.
Foreign Currency Forward Contracts — Foreign currency forward contracts are recorded in other assets or
other liabilities on the balance sheet at fair market value. Fair market value is determined using Level 2 inputs by
estimating the future value of the currency pair based on existing exchange rates, comprised of current spot and
traded forward points, and calculating a present value of the net amount using a discount factor based on
observable traded interest rates.
Redeemable OP Unitholder Interests — Our redeemable 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 (in thousands):
December 31, 2016
December 31, 2015
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Financial Assets:
Mortgage loans receivable . . . . . . . . . . .
Other real estate loans receivable . . . . . .
Available-for-sale equity investments . . .
Cash and cash equivalents . . . . . . . . . . . .
Foreign currency forward contracts . . . .
$ 485,735
136,893
27,899
419,378
135,561
$ 521,773
138,050
27,899
419,378
135,561
$ 635,492
184,000
22,779
360,908
129,520
$ 663,501
185,693
22,779
360,908
129,520
Financial Liabilities:
Borrowings under unsecured lines of
credit arrangements . . . . . . . . . . . . . . .
Senior unsecured notes . . . . . . . . . . . . . .
Secured debt
. . . . . . . . . . . . . . . . . . . . . .
Foreign currency forward contracts . . . .
Redeemable OP unitholder interests . . . . . .
$ 645,000
8,879,176
3,558,378
4,342
$ 110,502
$ 835,000
8,548,055
3,509,142
—
$ 112,029
$ 835,000
9,020,529
3,678,564
—
$ 112,029
$ 645,000
8,161,619
3,477,699
4,342
$ 110,502
109
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, 2016
Total
Level 1
Level 2
Level 3
Available-for-sale equity investments(1) . . . . . . . . . . . . .
Foreign currency forward contracts, net(2) . . . . . . . . . . .
Redeemable OP unitholder interests . . . . . . . . . . . . . . .
$ 27,899
131,219
110,502
$27,899
—
—
$
— $—
—
—
131,219
110,502
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$269,620
$27,899
$241,721
$—
(1) Unrealized gains or losses on equity investments are recorded in accumulated other comprehensive income (loss) at each measurement
date. During the year ended December 31, 2015, we recognized an other than temporary impairment charge of $35,648,000 on the
Genesis Healthcare stock investment. Also, see Note 11 for details related to the gain on the derivative asset originally recognized.
(2) Please see Note 11 for additional information.
Items Measured at Fair Value on a Nonrecurring Basis
In addition to items that are measured at fair value on a recurring basis, we also have assets and liabilities in
our balance sheet that are measured at fair value on a nonrecurring basis. As these assets and liabilities are not
measured at fair value on a recurring basis, they are not included in the tables above. Assets, liabilities and
noncontrolling interests that are measured at fair value on a nonrecurring basis include those acquired/assumed in
business combinations (see Note 3) and asset impairments (see Note 5 for impairments of real property and Note
6 for impairments of loans receivable). We have determined that the fair value measurements included in each of
these assets and liabilities rely primarily on Company-specific inputs and our assumptions about the use of the
assets and settlement of liabilities, as observable inputs are not available. As such, we have determined that each
of these fair value measurements generally reside within Level 3 of the fair value hierarchy. We estimate the fair
value of real estate and related intangibles using the income approach and unobservable data such as net
operating income and estimated capitalization and discount rates. We also consider local and national industry
market data including comparable sales, and commonly engage an external real estate appraiser to assist us in our
estimation of fair value. We estimate the fair value of assets held for sale based on current sales price
expectations or, in the absence of such price expectations, Level 3 inputs described above. We estimate the fair
value of secured debt assumed in business combinations using current interest rates at which similar borrowings
could be obtained on the transaction date.
17. Segment Reporting
We invest in seniors housing and health care real estate. We evaluate our business and make resource
allocations on our three operating segments: triple-net, seniors housing operating and outpatient medical. During
the year ended December 31, 2016, we reclassified four properties previously classified in the triple-net segment
to the outpatient medical segment. In addition, we reclassified interest expense on our foreign-denominated
senior notes from the seniors housing operating segment to non-segment. Accordingly, the segment information
provided in this Note has been reclassified to conform to the current presentation for all periods presented.
Our triple-net properties include long-term/post-acute care facilities, assisted living facilities, independent
living/continuing care retirement communities, care homes (United Kingdom), independent support living
110
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
facilities (Canada), care homes with nursing (United Kingdom) and combinations thereof. Under the triple-net
segment, we invest in seniors housing and health care real estate through acquisition and financing of primarily
single tenant properties. Properties acquired are primarily leased under triple-net leases and we are not involved
in the management of the property. Our seniors housing operating properties include the seniors housing
communities referenced above that are owned and/or operated through RIDEA structures (see Notes 3 and 18).
Our outpatient medical properties include outpatient medical buildings and, during past years, life science
buildings which are aggregated into our outpatient medical reportable segment. Our outpatient medical buildings
are typically leased to multiple tenants and generally require a certain level of property management. During the
year ended December 31, 2015, we disposed of our life science investments.
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.
111
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Summary information for the reportable segments (which excludes unconsolidated entities) during the years
ended December 31, 2016, 2015 and 2014 is as follows (in thousands):
Triple-net
Seniors
Housing
Operating
Outpatient
Medical
Non-segment
/ Corporate
Total
Year Ended December 31, 2016:
Rental income . . . . . . . . . . . . . . . . . . . . .
Resident fees and services . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . .
$ 1,112,325
—
90,476
6,059
$
— $ 536,490
—
3,307
5,568
2,504,731
4,180
17,085
$
Total revenues . . . . . . . . . . . . . . . . . . . . .
Property operating expenses . . . . . . . . . .
1,208,860
—
2,525,996
1,711,882
545,365
165,101
— $ 1,648,815
2,504,731
—
97,963
—
29,651
939
939
—
4,281,160
1,876,983
Net operating income from continuing
operations . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . .
Loss (gain) on derivatives, net
. . . . . . . .
Depreciation and amortization . . . . . . . .
General and administrative . . . . . . . . . . .
Transaction costs . . . . . . . . . . . . . . . . . . .
Loss (gain) on extinguishment of debt,
net
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for loan losses . . . . . . . . . . . . .
Impairment of assets . . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . . . . .
Income (loss) from continuing
operations before income taxes and
income (loss) from unconsolidated
entities . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . .
(Loss) income from unconsolidated
entities . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from continuing
1,208,860
21,370
68
297,197
—
10,016
863
6,935
20,169
—
814,114
81,853
—
415,429
—
29,207
(88)
—
12,403
—
380,264
19,087
—
188,616
—
3,687
—
3,280
4,635
—
939
399,035
(2,516)
—
155,241
—
16,439
—
—
11,998
2,404,177
521,345
(2,448)
901,242
155,241
42,910
17,214
10,215
37,207
11,998
852,242
(1,087)
275,310
(3,762)
160,959
(511)
(579,258)
24,488
709,253
19,128
9,767
(20,442)
318
—
(10,357)
operations . . . . . . . . . . . . . . . . . . . . . .
860,922
251,106
160,766
(554,770)
718,024
Gain (loss) on real estate dispositions,
net
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
355,394
9,880
(1,228)
—
364,046
Net income (loss)
. . . . . . . . . . . . . . . . . .
$ 1,216,316
$
260,986
$ 159,538
$(554,770) $ 1,082,070
Total assets . . . . . . . . . . . . . . . . . . . . . . .
$10,713,032
$12,851,414
$4,951,538
$ 349,200
$28,865,184
112
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Triple-net
Seniors
Housing
Operating
Outpatient
Medical
Non-segment
/ Corporate
Total
Year Ended December 31, 2015:
Rental income . . . . . . . . . . . . . . . . . . . . .
Resident fees and services . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . .
$ 1,094,827
—
74,108
6,871
$
— $ 504,121
—
5,853
4,684
2,158,031
4,180
6,060
$
Total revenues . . . . . . . . . . . . . . . . . . . . .
Property operating expenses . . . . . . . . . .
1,175,806
—
2,168,271
1,467,009
514,658
155,248
— $ 1,598,948
2,158,031
—
84,141
—
18,706
1,091
1,091
—
3,859,826
1,622,257
Net operating income from continuing
operations . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . .
. . . . . . . .
Loss (gain) on derivatives, net
Depreciation and amortization . . . . . . . .
General and administrative . . . . . . . . . . .
Transaction costs . . . . . . . . . . . . . . . . . . .
Loss (gain) on extinguishment of debt,
net
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of Assets . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . . . . .
Income (loss) from continuing
operations before income taxes and
income (loss) from unconsolidated
entities . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . .
(Loss) income from unconsolidated
entities . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from continuing
1,175,806
28,384
(58,427)
288,242
—
53,195
10,095
2,220
35,648
701,262
70,388
—
351,733
—
54,966
(195)
—
—
359,410
27,542
—
186,265
—
2,765
—
—
—
1,091
365,855
—
—
147,416
—
24,777
—
10,583
2,237,569
492,169
(58,427)
826,240
147,416
110,926
34,677
2,220
46,231
816,449
(4,244)
224,370
986
142,838
245
(547,540)
(3,438)
636,117
(6,451)
8,260
(32,672)
2,908
—
(21,504)
operations . . . . . . . . . . . . . . . . . . . . . .
820,465
192,684
145,991
(550,978)
608,162
Gain (loss) on real estate dispositions,
net
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
86,261
—
194,126
—
280,387
Net income (loss)
. . . . . . . . . . . . . . . . . .
$
906,726
$
192,684
$ 340,117
$(550,978) $
888,549
Total assets . . . . . . . . . . . . . . . . . . . . . . .
$12,358,605
$11,519,902
$5,060,676
$ 84,662
$29,023,845
113
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Triple-net
Seniors
Housing
Operating
Outpatient
Medical
Non-segment
/ Corporate
Total
Year Ended December 31, 2014:
Rental income . . . . . . . . . . . . . . . . . . . . . . . . . .
Resident fees and services . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 992,638
$
— 1,892,237
2,119
3,215
32,255
2,973
— $413,129
—
3,293
1,010
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . .
Property operating expenses . . . . . . . . . . . . . . .
1,027,866
732
1,897,571
1,266,308
417,432
136,318
$
— $1,405,767
— 1,892,237
37,667
—
7,875
677
677
3,343,546
— 1,403,358
Net operating income from continuing
operations . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on derivatives, net . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . .
Transaction costs . . . . . . . . . . . . . . . . . . . . . . .
. . .
Loss (gain) on extinguishment of debt, net
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from continuing operations
before income taxes and income (loss) from
unconsolidated entities . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . .
(Loss) income from unconsolidated entities . .
Income from continuing operations . . . . . . . . .
Income (loss) from discontinued operations . .
Gain (loss) on real estate dispositions, net . . . .
1,027,134
32,135
(1,770)
273,296
—
45,146
98
8,825
631,263
64,130
275
418,199
—
16,880
383
1,437
281,114
31,050
—
152,635
—
7,512
405
—
677
353,724
—
—
142,943
—
8,672
—
1,940,188
481,039
(1,495)
844,130
142,943
69,538
9,558
10,262
669,404
6,141
5,423
680,968
7,135
146,205
129,959
(3,047)
(38,204)
88,708
—
—
89,512
(1,827)
5,355
93,040
—
906
(504,662)
—
—
(504,662)
—
—
384,213
1,267
(27,426)
358,054
7,135
147,111
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . .
$ 834,308
$
88,708
$ 93,946
$(504,662) $ 512,300
Our portfolio of properties and other investments are located in the United States, the United Kingdom and
Canada. Revenues and assets are attributed to the country in which the property is physically located. The
following is a summary of geographic information for the periods presented (dollars in thousands):
Year Ended
December 31, 2016
December 31, 2015
December 31, 2014
Amount
%
Amount
%
Amount
%
Revenues:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,453,485
388,383
439,292
80.6% $3,133,327
9.1% 407,745
10.3% 318,754
81.2% $2,801,474
10.6% 305,275
8.3% 236,797
83.8%
9.1%
7.1%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$4,281,160
100.0% $3,859,826
100.0% $3,343,546
100.0%
114
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of
December 31, 2016
%
Amount
December 31, 2015
%
Amount
Assets:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$23,572,459
2,782,489
2,510,236
81.7% $23,513,498
9.6% 2,958,509
8.7% 2,551,838
81.0%
10.2%
8.8%
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$28,865,184
100.0% $29,023,845
100.0%
18. Income Taxes and Distributions
We elected to be taxed as a REIT commencing with our first taxable year. To qualify as a REIT for federal
income tax purposes, at least 90% of taxable income (excluding 100% of net capital gains) must be distributed to
stockholders. REITs that do not distribute a certain amount of current year taxable income are also subject to a
4% federal excise tax. The main differences between net income for federal income tax purposes and 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:
Per Share:
Year Ended December 31,
2016
2015
2014
Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Qualified dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return of capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term capital gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecaptured section 1250 gains . . . . . . . . . . . . . . . . . . . . . . . . . .
$2.5067
0.0047
0.0573
0.4593
0.4120
$1.9134
0.0529
0.0503
0.9352
0.3482
$1.7861
—
0.8368
0.1638
0.3933
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3.4400
$3.3000
$3.1800
Our consolidated provision for income taxes is as follows for the periods presented (dollars in thousands):
Year Ended December 31,
2016
2015
2014
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 14,944
(34,072)
$10,177
(3,726)
$ 2,672
(3,939)
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(19,128)
$ 6,451
$(1,267)
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, 2016, as a result of
acquisitions located in Canada and the United Kingdom, 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, 2016 primarily relates to state taxes,
foreign taxes, and taxes based on income generated by entities that are structured as taxable REIT subsidiaries.
For the tax years ended December 31, 2016, 2015 and 2014, the foreign tax provision/(benefit) amount included
in the consolidated provision for income taxes was ($3,315,000), $7,385,000 and ($6,069,000), respectively.
115
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of income tax expense, which is computed by applying the federal corporate tax rate for the
years ended December 31, 2016, 2015 and 2014, to the income tax provision/(benefit) is as follows for the
periods presented (dollars in thousands):
Year Ended December 31,
2016
2015
2014
Tax at statutory rate on earnings from continuing operations
before unconsolidated entities, noncontrolling interests and
income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase / (decrease) in valuation allowance(1) . . . . . . . . . . . . .
Tax at statutory rate on earnings not subject to federal income
taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign permanent depreciation . . . . . . . . . . . . . . . . . . . . . . . .
Other differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 372,030
(2,128)
$ 313,250
13,759
$ 178,862
9,133
(399,571)
9,205
1,336
(319,832)
7,500
(8,226)
(189,070)
4,383
(4,575)
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (19,128)
$
6,451
$
(1,267)
(1) Excluding purchase price accounting.
Each TRS and foreign entity subject to income taxes is a tax paying component for purposes of classifying
deferred tax assets and liabilities. The tax effects of taxable and deductible temporary differences, as well as tax
attributes, are summarized as follows for the periods presented (dollars in thousands):
Year Ended December 31,
2016
2015
2014
Investments and property, primarily differences in investment
basis, depreciation and amortization, the basis of land assets
and the treatment of interests and certain costs . . . . . . . . . . . . .
Operating loss and interest deduction carryforwards . . . . . . . . . . .
Expense accruals and other
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (7,089)
82,469
15,978
(96,838)
$(30,564)
75,455
6,259
(98,966)
$ (1,020)
47,528
26,191
(85,207)
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (5,480)
$(47,816)
$(12,508)
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. As required under the provisions of ASC 740, 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, 2016. Such objective evidence limits the ability to
consider other subjective evidence such as our projections for future growth.
116
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On the basis of the evaluations performed as required by the codification, valuation allowances totaling
$96,838,000 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 (dollars in
thousands):
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions:
Year Ended December 31,
2016
2015
2014
$98,966
$85,207
$71,955
Purchase price accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(2,128)
—
13,759
4,119
9,133
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$96,838
$98,966
$85,207
As a result of certain acquisitions, we are subject to corporate level taxes for any related asset dispositions
that may occur during the five-year period immediately after such assets were owned by a C corporation
(“built-in gains tax”). The amount of income potentially subject to this special corporate level tax is generally
equal to the lesser of (a) the excess of the fair value of the asset over its adjusted tax basis as of the date it
became a REIT asset, or (b) the actual amount of gain. Some but not all gains recognized during this period of
time could be offset by available net operating losses and capital loss carryforwards. During the year ended
December 31, 2016, we acquired certain additional assets with built-in gains as of the date of acquisition that
could be subject to the built-in gains tax if disposed of prior to the expiration of the applicable ten-year period.
We have not recorded a deferred tax liability as a result of the potential built-in gains tax based on our intentions
with respect to such properties and available tax planning strategies.
Under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”),
for taxable years beginning after July 30, 2008, the REIT may lease “qualified health care properties” on an
arm’s-length basis to a TRS if the property is operated on behalf of such subsidiary by a person who qualifies as
an “eligible independent contractor.” Generally, the rent received from the TRS will meet the related party rent
exception and will be treated as “rents from real property.” A “qualified health care property” includes real
property and any personal property that is, or is necessary or incidental to the use of, a hospital, nursing facility,
assisted living facility, congregate care facility, qualified continuing care facility, or other licensed facility which
extends medical or nursing or ancillary services to patients. We have entered into various joint ventures that were
structured under RIDEA. Resident level rents and related operating expenses for these facilities are reported in
the consolidated financial statements and are subject to federal and state income taxes as the operations of such
facilities are included in a TRS. Certain net operating loss carryforwards could be utilized to offset taxable
income in future years.
Given the applicable statute of limitations, we generally are subject to audit by the Internal Revenue Service
(“IRS”) for the year ended December 31, 2013 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, 2010. We are also subject to audit by the Canada
Revenue Agency and provincial authorities generally for periods subsequent to May 2012 related to entities
acquired or formed in connection with acquisitions, and by HM Revenue & Customs for periods subsequent to
August 2012 related to entities acquired or formed in connection with acquisitions.
At December 31, 2016, we had a net operating loss (“NOL”) carryforward related to the REIT of
$418,739,000. Due to our uncertainty regarding the realization of certain deferred tax assets, we have not
117
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
recorded a deferred tax asset related to NOLs generated by the REIT. These amounts can be used to offset future
taxable income (and/or taxable income for prior years if an audit determines that tax is owed), if any. The REIT
will be entitled to utilize NOLs and tax credit carryforwards only to the extent that REIT taxable income exceeds
our deduction for dividends paid. The NOL carryforwards will expire through 2035.
At December 31, 2016 and 2015, we had a net operating loss carryforward related to Canadian entities of
$104,988,000, and $78,680,000, respectively. These Canadian losses have a 20-year carryforward period. At
December 31, 2016 and 2015, we had a net operating loss carryforward related to United Kingdom entities of
$158,156,000 and $179,598,000, respectively. These United Kingdom losses do not have a finite carryforward
period.
19. Retirement Arrangements
We have a Supplemental Executive Retirement Plan (“SERP”), a non-qualified defined benefit pension
plan, which provides one former executive officer with supplemental deferred retirement benefits. The SERP
to receive retirement benefits that cannot be paid under our
provides an opportunity for the participant
tax-qualified plans because of the restrictions imposed by ERISA and the Internal Revenue Code of 1986, as
amended. Benefits are based on compensation and length of service and the SERP is unfunded. Benefit payments
are expected to total $4,179,000 during the next three fiscal years. We use a December 31 measurement date for
the SERP. The accrued liability on our balance sheet for the SERP was $4,081,000 at December 31, 2016
($5,474,000 at December 31, 2015).
On April 13, 2014, George L. Chapman, formerly the Chairman, Chief Executive Officer and President of
the Company, informed the Board of Directors that he wished to retire from the Company, effective immediately.
As a result of Mr. Chapman’s retirement, general and administrative expenses for the year ended December 31,
2014 included charges of $19,688,000 related to: (i) the acceleration of $9,223,000 of deferred compensation for
restricted stock; and (ii) consulting, retirement payments and other costs of $10,465,000.
118
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20. Quarterly Results of Operations (Unaudited)
The following is a summary of our unaudited quarterly results of operations for the years ended
December 31, 2016 and 2015 (in thousands, except per share data). The sum of individual quarterly amounts may
not agree to the annual amounts included in the consolidated statements of income due to rounding.
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) attributable to common
stockholders . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) attributable to common
stockholders per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to common
stockholders . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to common
stockholders per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31, 2016
1st Quarter
2nd Quarter
3rd Quarter(1)
4th Quarter
$1,047,050
$1,076,657
$1,079,133
$1,078,321
148,969
195,474
334,910
333,044
$
$
0.42
0.42
$
0.55
0.54
$
0.93
0.93
0.92
0.91
Year Ended December 31, 2015
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
$ 894,177
$ 957,169
$ 978,997
$1,029,484
190,799
312,573
182,043
132,929
$
$
0.57
0.56
$
0.89
0.89
$
0.52
0.52
0.38
0.37
(1) The increase in net income and amounts per share are primarily attributable to gains on sales of real estate of $162,351,000 for the third
quarter as compared to gains of $1,530,000 for the second quarter.
119
WELLTOWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. Variable Interest Entities
We have entered into joint ventures to own certain seniors housing and outpatient medical assets which are
deemed to be variable interest entities (“VIE”). We have concluded that we are the primary beneficiary of these
VIE’s 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 VIE’s in the aggregate (in thousands):
December 31,
2016
December 31,
2015
Assets
Net real property owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 989,596
10,501
12,102
$453,889
8,759
8,082
Total assets(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,012,199
$470,730
Liabilities and equity
Secured debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 450,255
13,803
185,556
362,585
$147,021
7,732
70,090
245,887
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,012,199
$470,730
(1) Note that assets of the consolidated variable interest entities can only be used to settle obligations relating to such variable interest
entities. Liabilities of the consolidated variable interest entities represent claims against the specific assets of the variable interest entities.
120
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
An evaluation was carried out under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the disclosure controls
and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended) as of the end
of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the disclosure controls and procedures were effective as of the end of the period covered
by this report.
Management’s Report on Internal Control over Financial Reporting
Management
is responsible for establishing and maintaining adequate internal control over financial
reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, as amended). The Company’s
internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with U.S. generally accepted accounting principles. The Company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect
the transactions and dispositions of the assets of the Company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the
Company are being made only in accordance with authorizations of management and directors of the Company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the Company’s assets that could have a material effect on the financial statements. Because of
its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
Management has assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2016 based on the criteria established by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) in a report entitled Internal Control — Integrated Framework.
The scope of management’s assessment as of December 31, 2016 did not include an assessment of the
internal control over financial reporting for certain acquisitions because the business combinations occurred
during the year ended December 31, 2016. The acquired businesses represent 4% of total assets at December 31,
2016 and less than 1% of revenues and net operating income for the year then ended. The scope of management’s
assessment on internal control over financial reporting for the year ended December 31, 2017 will include the
aforementioned acquired operations.
Based on this assessment, using the criteria above, management concluded that the Company’s system of
internal control over financial reporting was effective as of December 31, 2016.
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.
121
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of Welltower Inc.
We have audited Welltower Inc.’s internal control over financial reporting as of December 31, 2016, based
on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of
Inc.’s
the Treadway Commission (the COSO criteria, 2013 framework). Welltower
is responsible for maintaining effective internal control over financial reporting, and for its
management
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 conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether effective internal control over financial reporting was maintained in all material respects. Our
audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting,
management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did
not include the internal controls of certain acquisitions, which are included in the 2016 consolidated financial
statements of Welltower Inc. and subsidiaries and aggregate to 4% of total assets as of December 31, 2016 and
less than 1% of revenues and net operating income for the year then ended. Our audit of the internal control over
financial reporting of Welltower Inc. also did not include an evaluation of the internal control over financial
reporting of the aforementioned acquisitions.
In our opinion, Welltower Inc. maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2016, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of Welltower Inc. and subsidiaries as of December 31, 2016 and
2015, and the related consolidated statements of comprehensive income, equity, and cash flows for each of the
three years in the period ended December 31, 2016 of Welltower Inc. and subsidiaries and our report dated
February 22, 2017 expressed an unqualified opinion thereon.
Toledo, Ohio
February 22, 2017
/s/ ERNST & YOUNG LLP
122
Item 9B. Other Information
None.
Item 10. Directors, Executive Officers and Corporate Governance
PART III
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, 2017.
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.
The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and
our web address is included as an inactive textual reference only.
Item 11. Executive Compensation
The information required by this Item is incorporated herein by reference to the information under the
headings “Executive Compensation” and “Director Compensation” in our definitive proxy statement, which will
be filed with the Commission prior to May 1, 2017.
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, 2017.
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, 2017.
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, 2017.
123
Item 15. Exhibits and Financial Statement Schedules
(a) 1. Our Consolidated Financial Statements are included in Part II, Item 8:
PART IV
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets — December 31, 2016 and 2015 . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income — Years ended December 31,
2016, 2015 and 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Equity — Years ended December 31, 2016, 2015 and
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows — Years ended December 31, 2016, 2015 and
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78
79
80
82
83
84
2. The following Financial Statement Schedules are included in Item 15(c):
III — Real Estate and Accumulated Depreciation
IV — Mortgage Loans on Real Estate
The financial statement schedule required by Item 15(a) (Schedule II, Valuation and Qualifying
Accounts) is included in Item 8 of this Annual Report on Form 10-K.
3. Exhibit Index:
The information required by this item is set forth on the Exhibit Index that follows the Financial
Statement Schedules to this Annual Report on Form 10-K.
(b) Exhibits:
The exhibits listed on the Exhibit Index are either filed with this Form 10-K or incorporated by
reference in accordance with Rule 12b-32 of the Securities Exchange Act of 1934.
(c) Financial Statement Schedules:
Financial statement schedules are included beginning on page 126.
124
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 22, 2017
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 22, 2017 by the following persons on behalf of the Registrant and in the capacities indicated.
/s/
JEFFREY H. DONAHUE**
Jeffrey H. Donahue, Chairman of the Board
/s/ KENNETH J. BACON**
Kenneth J. Bacon, Director
/s/ FRED S. KLIPSCH**
Fred S. Klipsch, Director
/s/ GEOFFREY G. MEYERS**
Geoffrey G. Meyers, Director
/s/ TIMOTHY J. NAUGHTON**
Timothy J. Naughton, Director
/s/ SHARON M. OSTER**
Sharon M. Oster, Director
JUDITH C. PELHAM**
/s/
Judith C. Pelham, Director
/s/ SERGIO D. RIVERA**
Sergio D. Rivera, Director
/s/ R. SCOTT TRUMBULL**
R. Scott Trumbull, Director
/s/ THOMAS J. DEROSA**
Thomas J. DeRosa, Chief Executive
Officer and Director
(Principal Executive Officer)
/s/ SCOTT A. ESTES**
Scott A. Estes, Executive Vice President and Chief
Financial Officer (Principal Financial Officer)
/s/ PAUL D. NUNGESTER, JR.**
Paul D. Nungester, Jr., Senior Vice President and
Controller (Principal Accounting Officer)
**By:
/s/ THOMAS J. DEROSA
Thomas J. DeRosa, Attorney-in-Fact
125
Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2016
(Dollars in thousands)
Description
Encumbrances Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Triple-net:
Abilene, TX . . . . . . . . . . . . .
Abilene, TX . . . . . . . . . . . . .
Aboite Twp, IN . . . . . . . . . .
Agawam, MA . . . . . . . . . . .
Agawam, MA . . . . . . . . . . .
Agawam, MA . . . . . . . . . . .
Agawam, MA . . . . . . . . . . .
Agawam, MA . . . . . . . . . . .
Albertville, AL . . . . . . . . . . .
Alexandria, IN . . . . . . . . . . .
Ames, IA . . . . . . . . . . . . . . .
Anderson, SC . . . . . . . . . . . .
Ankeny, IA . . . . . . . . . . . . .
Apple Valley, CA . . . . . . . .
Asheboro, NC . . . . . . . . . . .
Asheville, NC . . . . . . . . . . .
Asheville, NC . . . . . . . . . . .
Aspen Hill, MD . . . . . . . . . .
Atchison, KS . . . . . . . . . . . .
Atlanta, GA . . . . . . . . . . . . .
Aurora, OH . . . . . . . . . . . . .
Aurora, CO . . . . . . . . . . . . .
Aurora, CO . . . . . . . . . . . . .
Austin, TX . . . . . . . . . . . . . .
Avon, IN . . . . . . . . . . . . . . .
Avon, IN . . . . . . . . . . . . . . .
Avon Lake, OH . . . . . . . . . .
Ayer, MA . . . . . . . . . . . . . . .
Baldwin City, KS . . . . . . . . .
Bartlesville, OK . . . . . . . . . .
Beachwood, OH . . . . . . . . . .
Bellingham, WA . . . . . . . . .
Benbrook, TX . . . . . . . . . . .
Bend, OR . . . . . . . . . . . . . . .
Bethel Park, PA . . . . . . . . . .
Beverly Hills, CA . . . . . . . .
. . . . . . . .
Bexleyheath, UKI
Birmingham, UKG . . . . . . .
Birmingham, UKG . . . . . . .
Birmingham, UKG . . . . . . .
Birmingham, UKG . . . . . . .
Bloomington, IN . . . . . . . . .
Boardman, OH . . . . . . . . . . .
Bowling Green, KY . . . . . . .
Bradenton, FL . . . . . . . . . . .
Bradenton, FL . . . . . . . . . . .
Braintree, MA . . . . . . . . . . .
Braintree, UKH . . . . . . . . . .
$
— $
—
—
—
—
—
—
—
1,956
—
—
—
—
10,250
—
—
—
—
—
7,294
—
—
—
18,076
—
—
—
—
—
—
—
8,272
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
950
990
1,770
880
1,230
930
920
920
170
190
330
710
1,129
480
290
204
280
—
140
2,058
1,760
2,600
2,440
880
1,830
900
790
—
190
100
1,260
1,500
1,550
1,210
1,700
6,000
3,750
1,647
1,591
1,462
1,184
670
1,200
3,800
252
480
170
—
20,987
8,187
19,930
16,112
13,618
15,304
10,661
10,562
6,203
6,491
8,870
6,290
10,270
16,639
5,032
3,489
1,955
9,008
5,610
14,914
14,148
5,906
28,172
9,520
14,470
19,444
10,421
22,074
4,810
1,380
23,478
19,861
13,553
9,181
16,007
13,385
10,807
14,853
19,092
9,056
10,085
17,423
12,800
26,700
3,298
9,953
7,157
13,296
$
1,409
496
3,483
7,193
2,393
2,524
1,826
1,811
1,423
408
1,596
3,032
255
3,770
1,897
1,697
932
1,687
158
11,207
2,517
5,212
9,071
5,113
2,719
1,201
2,195
3,464
138
763
9,511
4,423
2,065
410
3,399
738
598
674
853
417
454
661
3,447
5,751
1,838
1,187
8,381
818
2014
2014
2010
2002
2011
2011
2011
2011
2010
2014
2010
2003
2016
2010
2003
1999
2003
2011
2015
1997
2011
2006
2006
1999
2010
2014
2011
2011
2015
1996
2001
2010
2011
2015
2007
2014
2014
2015
2015
2015
2015
2015
2008
2008
1996
2012
1997
2014
1998 6565 Central Park Boulevard
1985 1250 East N 10th Street
2008 611 W County Line Rd South
1993 1200 Suffield St.
1975 61 Cooper Street
1970 55 Cooper Street
1985 464 Main Street
1967 65 Cooper Street
1999 151 Woodham Dr.
1982 1912 South Park Avenue
1999 1325 Coconino Rd.
1986 311 Simpson Rd.
2012 1275 SW State Street
1999 11825 Apple Valley Rd.
1998 514 Vision Dr.
1999 4 Walden Ridge Dr.
1992 308 Overlook Rd.
1988 3227 Bel Pre Road
2001 1301 N 4th St.
1999 1460 S Johnson Ferry Rd.
2002 505 S. Chillicothe Rd
1988 14101 E. Evans Ave.
2007 14211 E. Evans Ave.
1998 12429 Scofield Farms Dr.
2004 182 S Country RD. 550E
2013 10307 E. CR 100 N
2001 345 Lear Rd.
1988 400 Groton Road
2000 321 Crimson Ave
1995 5420 S.E. Adams Blvd.
1990 3800 Park East Drive
1996 4415 Columbine Dr.
1984 4242 Bryant Irvin Road
1981 1801 NE Lotus Drive
2009 5785 Baptist Road
2000 220 N Clark Drive
1996 35 West Street
2010 Clinton Street, Winson
Green
2010 Braymoor Road, Tile Cross
2010 Clinton Street, Winson Green
1997 122 Tile Cross Road,
Garretts Green
2015 363 S. Fieldstone Boulevard
2008 8049 South Ave.
1992 1300 Campbell Lane
1995 6101 Pointe W. Blvd.
2000 2800 60th Avenue West
1968 1102 Washington St.
2009 Meadow Park Tortoiseshell
Way
$
950
990
1,770
880
1,230
930
920
920
176
190
330
710
1,129
486
290
204
280
—
140
2,080
1,760
2,600
2,440
885
1,830
900
790
—
190
100
1,260
1,507
1,550
1,210
1,700
6,000
3,750
1,647
1,591
1,462
1,184
670
1,200
3,800
252
480
170
—
$
21,172
8,987
21,531
18,246
14,211
15,596
10,697
10,607
6,477
6,491
8,870
6,709
10,270
16,801
5,197
3,489
2,306
11,402
5,618
16,035
14,254
13,821
28,172
10,731
14,470
19,444
16,243
22,077
4,850
1,380
23,478
20,175
14,701
9,206
16,007
13,385
10,807
14,853
19,092
9,056
10,085
17,423
12,800
26,849
3,298
9,953
8,447
13,296
$
185
800
1,601
2,134
593
292
36
45
280
—
—
419
—
168
165
—
351
2,394
8
1,143
106
7,915
—
1,216
—
—
5,822
3
40
—
—
321
1,148
25
—
—
—
—
—
—
—
—
—
149
—
—
1,290
—
126
Description
Encumbrances Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Brandon, MS . . . . . . . . . . . .
Brecksville, OH . . . . . . . . . .
Bremerton, WA . . . . . . . . . .
Bremerton, WA . . . . . . . . . .
Bremerton, WA . . . . . . . . . .
Brentwood, UKH . . . . . . . . .
Brick, NJ . . . . . . . . . . . . . . .
Brick, NJ . . . . . . . . . . . . . . .
Brick, NJ . . . . . . . . . . . . . . .
Bridgewater, NJ . . . . . . . . . .
Bridgewater, NJ . . . . . . . . . .
Bridgewater, NJ . . . . . . . . . .
Broadview Heights, OH . . . .
Brookfield, WI . . . . . . . . . . .
Brooks, AB . . . . . . . . . . . . .
Brookville, IN . . . . . . . . . . .
Burleson, TX . . . . . . . . . . . .
Burleson, TX . . . . . . . . . . . .
Burlington, NC . . . . . . . . . .
Burlington, NC . . . . . . . . . .
Burlington, NJ . . . . . . . . . . .
Burlington, NJ . . . . . . . . . . .
Burlington, WA . . . . . . . . . .
Burnaby, BC . . . . . . . . . . . .
Calgary, AB . . . . . . . . . . . . .
Calgary, AB . . . . . . . . . . . . .
Canton, MA . . . . . . . . . . . . .
Canton, OH . . . . . . . . . . . . .
Cape Coral, FL . . . . . . . . . . .
Cape Coral, FL . . . . . . . . . . .
Cape May Court House,
NJ . . . . . . . . . . . . . . . . . . .
Carmel, IN . . . . . . . . . . . . . .
Carrollton, TX . . . . . . . . . . .
Carrollton, TX . . . . . . . . . . .
Carson City, NV . . . . . . . . .
Cary, NC . . . . . . . . . . . . . . .
Castleton, IN . . . . . . . . . . . .
Cedar Grove, NJ . . . . . . . . .
. . . . . . . .
Centreville, MD(2)
Chapel Hill, NC . . . . . . . . . .
Charles Town, WV . . . . . . .
Charleston, WV . . . . . . . . . .
Chatham, VA . . . . . . . . . . . .
Chelmsford, MA . . . . . . . . .
Chester, VA . . . . . . . . . . . . .
Chickasha, OK . . . . . . . . . . .
Cinnaminson, NJ . . . . . . . . .
Citrus Heights, CA . . . . . . . .
Claremore, OK . . . . . . . . . . .
Clarksville, TN . . . . . . . . . .
Clayton, NC . . . . . . . . . . . . .
Cleburne, TX . . . . . . . . . . . .
Clevedon, UKK . . . . . . . . . .
Cloquet, MN . . . . . . . . . . . .
Cobham, UKJ . . . . . . . . . . .
Colchester, CT . . . . . . . . . . .
Colleyville, TX . . . . . . . . . .
Colorado Springs, CO . . . . .
—
—
—
—
—
47,467
—
—
—
—
—
—
—
—
1,971
—
—
—
—
—
—
—
—
8,082
16,716
27,724
—
—
—
8,716
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
14,252
—
—
—
—
—
—
—
—
—
—
1,220
990
390
830
590
8,537
1,290
1,170
690
1,850
1,730
1,800
920
1,300
376
300
670
3,150
280
460
1,700
1,170
3,860
7,623
2,341
4,569
820
300
530
760
1,440
1,700
4,280
—
520
1,500
920
2,850
600
354
230
440
320
1,040
1,320
85
860
2,300
155
330
520
520
2,838
340
9,808
980
1,050
4,280
10,241
19,353
2,210
10,420
2,899
45,869
25,247
17,372
17,125
3,050
48,201
31,810
12,400
12,830
4,951
13,461
13,985
10,437
4,297
5,467
12,554
19,205
31,722
13,844
42,768
70,199
8,201
2,098
3,281
18,868
17,002
19,491
31,444
—
8,238
4,350
15,137
27,737
14,602
2,646
22,834
17,575
14,039
10,951
18,127
1,395
6,663
31,876
1,427
2,292
15,733
5,369
16,927
4,660
24,991
4,860
17,082
62,168
10,241
19,353
2,354
11,370
2,912
45,869
25,907
18,681
22,607
3,087
49,469
32,362
14,793
12,830
5,103
13,461
14,330
11,013
5,004
5,467
13,036
19,377
31,805
14,270
44,105
72,358
8,464
2,098
3,281
18,868
18,675
19,491
32,305
19,549
8,488
5,336
15,137
27,757
14,843
3,429
22,896
17,879
14,039
12,450
18,127
1,395
6,820
32,465
7,557
2,292
15,733
5,369
16,927
4,780
24,991
5,392
17,082
62,168
1,220
990
390
830
590
8,537
1,290
1,184
692
1,850
1,752
1,800
920
1,300
387
300
670
3,150
280
460
1,700
1,170
3,860
7,858
2,413
4,709
820
300
530
760
1,440
1,700
4,280
2,010
520
1,500
920
2,850
600
354
230
440
320
1,040
1,320
85
860
2,300
155
330
520
520
2,838
340
9,808
980
1,050
4,280
—
—
144
950
13
—
660
1,323
5,484
37
1,289
552
2,393
—
164
—
345
576
707
—
482
172
84
660
1,408
2,300
263
—
—
—
1,673
—
861
21,559
250
986
—
20
241
783
62
304
—
1,499
—
—
157
589
6,130
—
—
—
—
120
—
532
—
—
127
1,730
1,185
609
1,982
221
—
3,649
3,038
2,925
1,485
7,660
4,524
5,414
1,091
306
794
2,159
738
1,798
2,012
2,388
3,012
1,518
869
2,549
4,144
5,743
1,016
1,318
2,273
1,232
872
2,510
133
731
2,441
970
4,438
2,402
1,348
3,471
2,726
936
4,016
1,177
766
1,242
7,280
1,223
1,104
912
1,379
1,041
700
2,232
1,061
—
2,132
2010
2014
2006
2010
2014
2016
2011
2010
2010
2004
2010
2011
2001
2012
2014
2014
2011
2012
2003
2003
2011
2011
2015
2014
2014
2014
2002
1998
2002
2012
2014
2015
2013
2014
2013
1998
2014
2011
2011
2002
2011
2011
2014
2003
2014
1996
2011
2010
1996
1998
2014
2006
2014
2011
2013
2011
2016
2015
1999 140 Castlewoods Blvd
2011 8757 Brecksville Road
1999 3231 Pine Road
1984 3201 Pine Road NE
1997 3210 Rickey Road
2013 London Road
2000 458 Jack Martin Blvd.
1998 515 Jack Martin Blvd
1999 1594 Route 88
1970 875 Route 202/206 North
1999 2005 Route 22 West
2001 680 US-202/206 North
1984 2801 E. Royalton Rd.
2013 1185 Davidson Road
2000 951 Cassils Road West
1987 11049 State Road 101
1988 300 Huguley Boulevard
2014 621 Old Highway 1187
2000 3619 S. Mebane St.
1997 3615 S. Mebane St.
1965 115 Sunset Road
1994 2305 Rancocas Road
2001 400 Gilkey Road
2006 7195 Canada Way
1971 1729-90th Avenue SW
2001 500 Midpark Way SE
1993 One Meadowbrook Way
1998 1119 Perry Dr., N.W.
2000 911 Santa Barbara Blvd.
2009 831 Santa Barbara
Boulevard
1990 144 Magnolia Drive
2015 12315 Pennsylvania Street
2010 2105 North Josey Lane
2016 2645 East Trinity Mills
Road
1997 1111 W. College Parkway
1996 111 MacArthur
2013 8405 Clearvista Lake
1970 536 Ridge Road
1978 205 Armstrong Avenue
1997 100 Lanark Rd.
1997 219 Prospect Ave
1998 1000 Association Drive,
North Gate Business Park
2009 100 Rorer Street
1997 4 Technology Dr.
2009 12001 Iron Bridge Road
1996 801 Country Club Rd.
1965 1700 Wynwood Drive
1997 7418 Stock Ranch Rd.
1996 1605 N. Hwy. 88
1998 2183 Memorial Dr.
2013 84 Johnson Estate Road
2007 402 S Colonial Drive
1994 18/19 Elton Road
2006 705 Horizon Circle
2013 Redhill Road
1986 59 Harrington Court
2013 8100 Precinct Line Road
2008 1605 Elm Creek View
Description
Encumbrances Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Colorado Springs, CO . . . . .
Colts Neck, NJ . . . . . . . . . . .
Columbia, TN . . . . . . . . . . .
Columbia, SC . . . . . . . . . . . .
Columbia Heights, MN . . . .
Columbus, IN . . . . . . . . . . . .
Concord, NC . . . . . . . . . . . .
Concord, NH . . . . . . . . . . . .
Concord, NH . . . . . . . . . . . .
Congleton, UKD . . . . . . . . .
Conroe, TX . . . . . . . . . . . . .
Coppell, TX . . . . . . . . . . . . .
Coventry, UKG . . . . . . . . . .
Crawfordsville, IN . . . . . . . .
Crown Point, IN . . . . . . . . . .
Dallas, OR . . . . . . . . . . . . . .
Danville, VA . . . . . . . . . . . .
Danville, VA . . . . . . . . . . . .
Daphne, AL . . . . . . . . . . . . .
Dedham, MA . . . . . . . . . . . .
Denton, TX . . . . . . . . . . . . .
Derby, UKF . . . . . . . . . . . . .
Dover, DE . . . . . . . . . . . . . .
Dresher, PA . . . . . . . . . . . . .
. . . . . . . . . .
Dundalk, MD(2)
Durham, NC . . . . . . . . . . . . .
Dyer, IN . . . . . . . . . . . . . . . .
Eagan, MN . . . . . . . . . . . . . .
East Brunswick, NJ . . . . . . .
East Norriton, PA . . . . . . . . .
Eastbourne, UKJ . . . . . . . . .
Eden, NC . . . . . . . . . . . . . . .
Edmond, OK . . . . . . . . . . . .
Edmond, OK . . . . . . . . . . . .
Elizabeth City, NC . . . . . . . .
Emeryville, CA . . . . . . . . . .
Englewood, NJ . . . . . . . . . . .
Englishtown, NJ . . . . . . . . . .
Epsom, UKJ . . . . . . . . . . . . .
Eugene, OR . . . . . . . . . . . . .
Eureka, KS . . . . . . . . . . . . . .
Everett, WA . . . . . . . . . . . . .
Fairfield, CA . . . . . . . . . . . .
Fairhope, AL . . . . . . . . . . . .
Fall River, MA . . . . . . . . . . .
Fanwood, NJ . . . . . . . . . . . .
Faribault, MN . . . . . . . . . . .
Farnborough, UKJ . . . . . . . .
Fayetteville, PA . . . . . . . . . .
Fayetteville, NY . . . . . . . . . .
Findlay, OH . . . . . . . . . . . . .
Fishers, IN . . . . . . . . . . . . . .
Florence, NJ . . . . . . . . . . . . .
Florence, AL . . . . . . . . . . . .
Flourtown, PA . . . . . . . . . . .
Flower Mound, TX . . . . . . .
Folsom, CA . . . . . . . . . . . . .
Forest City, NC . . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
17,000
—
—
—
—
—
—
—
—
—
—
39,189
—
—
—
—
—
—
—
—
—
—
—
—
—
—
6,879
—
—
—
—
1,730
780
341
2,120
825
610
550
1,760
720
2,036
980
1,550
1,962
720
920
410
410
240
2,880
1,360
1,760
—
600
2,060
1,770
1,476
1,800
2,260
1,380
1,200
4,071
390
410
1,810
200
2,560
930
690
20,159
800
50
1,400
1,460
570
620
2,850
780
2,036
2,150
410
200
1,500
300
353
1,800
1,800
—
320
25,493
14,733
2,295
4,860
14,175
3,190
3,921
43,179
3,041
5,120
7,771
8,386
13,830
17,239
20,044
9,427
3,954
8,436
8,670
9,830
8,305
—
22,266
40,236
32,047
10,659
25,061
31,643
34,229
28,129
24,438
4,877
8,388
14,849
2,760
57,491
4,514
12,520
34,803
5,822
3,950
5,476
14,040
9,119
5,829
55,175
11,539
5,737
32,951
3,962
1,800
14,500
2,978
13,049
14,830
8,414
33,600
4,497
26,186
15,729
2,295
10,569
14,338
3,190
3,976
43,785
3,381
5,120
7,771
8,432
13,830
18,665
20,044
10,428
4,676
8,436
8,862
9,830
8,395
8,260
22,357
41,210
32,831
12,855
25,061
31,647
34,908
29,454
24,438
4,877
8,388
15,955
4,771
58,052
4,531
13,583
34,803
5,857
3,990
5,476
15,581
9,165
10,685
56,143
11,590
5,737
34,753
4,462
1,800
14,500
2,978
13,217
15,066
8,451
32,018
4,497
1,730
1,028
341
2,120
825
610
550
1,760
720
2,036
980
1,550
1,962
720
920
410
410
240
2,880
1,360
1,760
2,282
600
2,083
1,770
1,476
1,800
2,260
1,380
1,262
4,071
390
410
1,810
200
2,560
930
768
20,159
800
50
1,400
1,460
570
620
2,850
780
2,036
2,150
410
200
1,500
300
385
1,800
1,800
1,582
320
693
1,244
—
5,709
163
—
55
606
340
—
—
46
—
1,426
—
1,000
722
—
192
—
90
10,542
91
997
784
2,196
—
4
679
1,387
—
—
—
1,106
2,011
561
17
1,141
—
35
40
—
1,541
46
4,856
968
50
—
1,802
500
—
—
—
200
236
37
—
—
128
396
2,613
1,112
4,232
1,980
588
1,604
6,683
643
284
1,507
822
646
1,149
852
414
1,744
558
1,119
4,191
1,276
276
3,494
6,361
5,091
10,667
884
954
4,842
4,582
1,483
1,816
1,099
1,048
2,040
3,683
797
2,270
—
254
111
2,558
5,898
1,152
4,960
7,694
351
309
1,267
1,759
933
2,724
1,191
2,888
2,436
1,014
3,087
1,691
2016
2010
1999
2003
2011
2010
2003
2011
2011
2014
2009
2012
2015
2014
2015
2015
2003
2014
2012
2002
2010
2014
2011
2010
2011
1997
2015
2015
2011
2010
2014
2003
2012
2014
1998
2014
2011
2010
2016
2015
2015
1999
2002
2012
1996
2011
2015
2014
2015
2001
1997
2010
2002
2010
2011
2011
2013
2003
2016 2818 Grand Vista Circle
2002 3 Meridian Circle
1999 5011 Trotwood Ave.
2000 731 Polo Rd.
2009 3807 Hart Boulevard
1998 2564 Foxpointe Dr.
1997 2452 Rock Hill Church Rd.
1994 239 Pleasant Street
1926 227 Pleasant Street
1994 Rood Hill
2010 903 Longmire Road
2013 1530 East Sandy Lake
Road
2014 Banner Lane, Tile Hill
2013 517 Concord Road
2015 1555 South Main Street
1972 664 SE Jefferson
1998 149 Executive Ct.
1996 508 Rison Street
2001 27440 County Road 13
1996 10 CareMatrix Dr.
2011 2125 Brinker Rd
2015 Rykneld Road
1984 1080 Silver Lake Blvd.
2001 1405 N. Limekiln Pike
1978 7232 German Hill Road
1999 4434 Ben Franklin Blvd.
2015 1532 Calumet Avenue
2004 3810 Alder Avenue
1998 606 Cranbury Rd.
1988 2101 New Hope St
1999 Carew Road
1998 314 W. Kings Hwy.
2001 15401 North Pennsylvania
Avenue
1985 1225 Lakeshore Drive
1999 400 Hastings Lane
2010 1440 40th Street
1966 333 Grand Avenue
1997 49 Lasatta Ave
2014 450-458 Reigate Road
1990 4550 West Amazon Drive
1994 1820 E River St
1999 2015 Lake Heights Dr.
1998 3350 Cherry Hills St.
1987 50 Spring Run Road
1973 1748 Highland Ave.
1982 295 South Ave.
2003 828 1st Street NE
1980 Bruntile Close, Reading
Road
1991 6375 Chambersburg Road
1997 5125 Highbridge St.
1997 725 Fox Run Rd.
2000 9745 Olympia Dr.
1999 901 Broad St.
1999 3275 County Road 47
1908 350 Haws Lane
2012 4141 Long Prairie Road
2009 330 Montrose Drive
1999 493 Piney Ridge Rd.
Description
Encumbrances Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Fort Ashby, WV . . . . . . . . . .
Fort Collins, CO . . . . . . . . . .
Fort Wayne, IN . . . . . . . . . .
Fort Worth, TX . . . . . . . . . .
Franconia, NH . . . . . . . . . . .
Fredericksburg, VA . . . . . . .
Fredericksburg, VA . . . . . . .
Fredonia, KS . . . . . . . . . . . .
Fremont, CA . . . . . . . . . . . .
Fresno, CA . . . . . . . . . . . . . .
Gardner, KS . . . . . . . . . . . . .
Gardnerville, NV . . . . . . . . .
Gastonia, NC . . . . . . . . . . . .
Gastonia, NC . . . . . . . . . . . .
Gastonia, NC . . . . . . . . . . . .
Georgetown, TX . . . . . . . . .
Gettysburg, PA . . . . . . . . . .
Gig Harbor, WA . . . . . . . . .
Glastonbury, CT . . . . . . . . .
Granbury, TX . . . . . . . . . . . .
Granbury, TX . . . . . . . . . . . .
Grand Ledge, MI . . . . . . . . .
Granger, IN . . . . . . . . . . . . .
Grapevine, TX . . . . . . . . . . .
Grass Valley, CA . . . . . . . . .
Greenfield, WI . . . . . . . . . . .
Greensboro, NC . . . . . . . . . .
Greensboro, NC . . . . . . . . . .
Greenville, SC . . . . . . . . . . .
Greenville, NC . . . . . . . . . . .
Greenwood, IN . . . . . . . . . .
Groton, CT . . . . . . . . . . . . . .
Haddonfield, NJ . . . . . . . . . .
Hamburg, PA . . . . . . . . . . . .
Hamilton, NJ . . . . . . . . . . . .
Hanford, UKG . . . . . . . . . . .
Harrow, UKI . . . . . . . . . . . .
Hatboro, PA . . . . . . . . . . . . .
Hatfield, UKH . . . . . . . . . . .
Haverford, PA . . . . . . . . . . .
Hemet, CA . . . . . . . . . . . . . .
Herne Bay, UKJ . . . . . . . . . .
Hiawatha, KS . . . . . . . . . . . .
Hickory, NC . . . . . . . . . . . . .
High Point, NC . . . . . . . . . .
High Point, NC . . . . . . . . . .
High Point, NC . . . . . . . . . .
High Point, NC . . . . . . . . . .
Highland Park, IL . . . . . . . .
Highlands Ranch, CO . . . . .
Hinckley, UKF . . . . . . . . . . .
Hindhead, UKJ . . . . . . . . . .
Hockessin, DE . . . . . . . . . . .
Holton, KS . . . . . . . . . . . . . .
Howell, NJ . . . . . . . . . . . . . .
Hutchinson, KS . . . . . . . . . .
Indianapolis, IN . . . . . . . . . .
Indianapolis, IN . . . . . . . . . .
Indianapolis, IN . . . . . . . . . .
Indianapolis, IN . . . . . . . . . .
—
—
—
—
—
—
—
—
18,517
—
—
11,967
—
—
—
—
—
4,867
—
—
—
—
—
—
4,193
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
38,700
—
—
9,177
—
—
—
—
—
330
3,680
170
450
360
1,000
1,130
40
3,400
2,500
200
1,143
470
310
400
200
590
1,560
1,950
2,040
2,550
1,150
1,670
—
260
—
330
560
310
290
1,550
2,430
—
840
440
1,382
7,402
—
2,924
1,880
870
1,900
40
290
560
370
330
430
2,820
940
2,159
17,852
1,120
40
1,066
600
495
255
870
890
19,566
58,608
8,232
13,615
11,320
20,000
23,202
460
25,300
35,800
2,800
10,831
6,129
3,096
5,029
2,100
8,913
15,947
9,532
30,670
2,940
16,286
21,280
—
7,667
15,204
2,970
5,507
4,750
4,393
22,770
19,941
—
10,543
4,469
9,829
8,266
28,112
7,527
33,993
3,405
24,353
4,210
987
4,443
2,185
3,395
4,143
15,832
3,721
4,194
48,645
6,308
7,460
21,577
10,590
6,287
2,473
14,688
18,781
19,694
58,608
8,232
18,701
11,390
21,200
23,202
495
28,447
35,918
2,858
11,885
6,129
3,118
5,149
2,100
9,029
16,177
11,199
30,928
3,420
21,405
23,681
17,583
7,925
14,314
3,524
6,520
4,750
4,561
22,851
20,852
16,363
10,758
4,469
9,829
8,266
29,858
7,527
34,977
3,405
24,353
4,232
1,219
5,236
2,595
3,423
4,143
16,021
8,704
4,194
48,645
7,542
7,472
21,956
10,784
28,852
14,596
14,688
18,781
330
3,680
170
450
360
1,000
1,130
40
3,456
2,500
200
1,164
470
310
400
200
590
1,583
2,360
2,040
2,550
1,150
1,670
2,220
260
890
330
560
310
290
1,550
2,430
520
840
440
1,382
7,402
—
2,924
1,883
870
1,900
40
290
560
370
330
430
2,820
940
2,159
17,852
1,120
40
1,070
600
495
255
870
890
128
—
—
5,086
70
1,200
—
35
3,203
118
58
1,075
—
22
120
—
116
253
2,077
258
480
5,119
2,401
19,803
258
—
554
1,013
—
168
81
911
16,883
215
—
—
—
1,746
—
987
—
—
22
232
793
410
28
—
189
4,983
—
—
1,234
12
383
194
22,565
12,123
—
—
129
2,983
2,003
2,167
3,016
1,805
6,351
1,387
20
8,469
7,701
85
8,531
2,245
1,212
1,901
1,077
1,568
3,453
1,724
4,646
476
3,150
3,773
659
643
1,285
1,343
2,467
1,704
1,666
3,736
3,532
790
1,932
1,774
887
476
4,501
684
5,374
847
2,464
123
604
1,960
1,032
1,291
1,549
1,714
1,879
418
—
497
203
3,507
3,453
10,370
5,170
945
1,104
2011
2015
2006
2010
2011
2005
2014
2015
2005
2008
2015
1998
2003
2003
2003
1997
2011
2010
2011
2011
2012
2010
2010
2013
2013
2013
2003
2003
2004
2003
2010
2011
2011
2011
2001
2013
2014
2011
2013
2010
2007
2013
2015
2003
2003
2003
2003
2003
2011
2002
2013
2016
2014
2015
2010
2004
2006
2006
2014
2014
1980 Diane Drive, Box 686
2007 4750 Pleasant Oak Drive
2006 2626 Fairfield Ave.
2011 425 Alabama Ave.
1971 93 Main Street
1999 3500 Meekins Dr.
2010 140 Brimley Drive
1991 2111 E Washington St
1987 2860 Country Dr.
1991 7173 North Sharon Avenue
2000 869 Juniper Terrace
1999 1565-A Virginia Ranch Rd.
1998 1680 S. New Hope Rd.
1994 1717 Union Rd.
1996 1750 Robinwood Rd.
1997 2600 University Dr., E.
1987 867 York Road
1994 3213 45th St. Court NW
1966 72 Salmon Brook Drive
2009 100 Watermark Boulevard
1996 916 East Highway 377
1999 4775 Village Dr
2009 6330 North Fir Rd
2014 4545 Merlot Drive
2001 415 Sierra College Drive
1983 5017 South 110th Street
1996 5809 Old Oak Ridge Rd.
1997 4400 Lawndale Dr.
1997 23 Southpointe Dr.
1998 2715 Dickinson Ave.
2007 2339 South SR 135
1975 1145 Poquonnock Road
2015 132 Warwick Road
1966 125 Holly Road
1998 1645 Whitehorse-
Mercerville Rd.
2012 Bankhouse Road
2001 177 Preston Hill
1996 3485 Davisville Road
2012 St Albans Road East
2000 731 Old Buck Lane
1996 25818 Columbia St.
2011 165 Reculver Road
1996 400 Kansas Ave
1994 2530 16th St. N.E.
2000 1568 Skeet Club Rd.
1999 1564 Skeet Club Rd.
1994 201 W. Hartley Dr.
1998 1560 Skeet Club Rd.
2012 1651 Richfield Avenue
1999 9160 S. University Blvd.
2013 Tudor Road
2012 Portsmouth Road
1992 100 Saint Claire Drive
1996 410 Juniper Dr
2007 100 Meridian Place
1997 2416 Brentwood
1981 8616 W. Tenth St.
1981 8616 W.Tenth St.
2014 1635 N Arlington Avenue
2014 5404 Georgetown Road
Description
Encumbrances Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Jacksonville, FL . . . . . . . . . .
Jacksonville, FL . . . . . . . . . .
Kansas City, KS . . . . . . . . . .
Kenner, LA . . . . . . . . . . . . .
Kennett Square, PA . . . . . . .
Kent, WA . . . . . . . . . . . . . . .
Kingston upon Thames,
UKI
. . . . . . . . . . . . . . . . .
Kirkland, WA . . . . . . . . . . .
Kirkstall, UKE . . . . . . . . . . .
Kokomo, IN . . . . . . . . . . . . .
Lafayette, LA . . . . . . . . . . . .
Lafayette, CO . . . . . . . . . . . .
Lafayette, IN . . . . . . . . . . . .
Lakeway, TX . . . . . . . . . . . .
Lakewood, CO . . . . . . . . . . .
Lakewood Ranch, FL . . . . . .
Lakewood Ranch, FL . . . . . .
Lancaster, CA . . . . . . . . . . .
Langhorne, PA . . . . . . . . . . .
. . . . . . . . . . .
LaPlata, MD(2)
Las Vegas, NV . . . . . . . . . . .
Lawrence, KS . . . . . . . . . . .
Lecanto, FL . . . . . . . . . . . . .
Lee, MA . . . . . . . . . . . . . . . .
Leeds, UKE . . . . . . . . . . . . .
Leicester, UKF . . . . . . . . . . .
Lenoir, NC . . . . . . . . . . . . . .
Lethbridge, AB . . . . . . . . . .
Lexana, KS . . . . . . . . . . . . .
Lexington, NC . . . . . . . . . . .
Libertyville, IL . . . . . . . . . . .
Lichfield, UKG . . . . . . . . . .
Lillington, NC . . . . . . . . . . .
Lillington, NC . . . . . . . . . . .
Lincoln, NE . . . . . . . . . . . . .
Linwood, NJ . . . . . . . . . . . .
Litchfield, CT . . . . . . . . . . .
Little Neck, NY . . . . . . . . . .
Livermore, CA . . . . . . . . . . .
London, UKI . . . . . . . . . . . .
Longview, TX . . . . . . . . . . .
Longwood, FL . . . . . . . . . . .
Louisburg, KS . . . . . . . . . . .
Louisville, KY . . . . . . . . . . .
Lowell, MA . . . . . . . . . . . . .
Lowell, MA . . . . . . . . . . . . .
Loxley, UKE . . . . . . . . . . . .
Lutherville, MD . . . . . . . . . .
Lynchburg, VA . . . . . . . . . .
Macungie, PA . . . . . . . . . . .
Mahwah, NJ . . . . . . . . . . . . .
Manalapan, NJ . . . . . . . . . . .
Manassas, VA . . . . . . . . . . .
Mankato, MN . . . . . . . . . . . .
Mansfield, TX . . . . . . . . . . .
Manteca, CA . . . . . . . . . . . .
Marietta, PA . . . . . . . . . . . . .
Marion, IN . . . . . . . . . . . . . .
—
—
—
—
—
—
40,799
—
—
—
—
—
—
—
—
—
—
9,561
—
—
—
—
—
—
—
—
—
1,469
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
12,512
—
5,878
—
—
—
—
700
1,100
1,050
940
33,063
1,880
2,437
710
1,928
1,420
670
—
2,160
650
1,000
700
1,350
700
580
250
200
290
1,974
3,060
190
1,214
480
200
6,500
1,382
470
500
390
800
1,240
3,350
4,100
—
610
1,260
280
490
1,070
680
1,369
1,100
340
960
—
900
750
1,460
660
1,300
1,050
720
—
—
20,116
10,036
22,946
20,318
46,696
4,315
9,414
16,044
10,483
20,192
16,833
—
28,091
6,714
22,388
15,295
24,881
19,068
23,420
8,716
6,900
18,135
13,239
24,410
3,748
2,750
1,770
3,900
40,024
30,324
17,579
16,451
13,807
21,984
17,908
38,461
24,996
—
5,520
6,445
4,320
10,010
13,481
3,378
15,668
19,786
16,114
29,033
—
22,624
7,446
32,104
5,251
12,125
13,633
12,750
25,231
26,381
20,116
10,364
23,206
30,788
46,696
4,998
9,414
16,044
10,509
20,192
16,833
22,840
28,140
8,702
22,388
15,907
25,021
19,534
23,420
8,716
6,900
19,061
13,239
24,410
4,389
2,835
1,865
4,915
40,024
30,324
17,579
16,451
13,902
22,925
28,864
39,689
24,996
15,818
5,520
6,445
4,340
12,778
13,650
3,422
15,668
21,461
16,114
29,089
27,249
22,971
7,976
32,117
5,251
13,679
13,633
13,886
750
—
700
1,100
1,083
940
33,063
1,880
2,437
710
1,928
1,420
670
5,142
2,160
650
1,000
712
1,350
700
580
250
200
290
1,974
3,060
190
1,251
480
200
6,500
1,382
470
500
390
838
1,254
3,357
4,100
7,439
610
1,260
280
490
1,070
680
1,369
1,100
340
960
1,605
900
750
1,460
660
1,312
1,050
720
25,981
26,381
—
328
293
10,470
—
683
—
—
25
—
—
27,982
49
1,988
—
625
140
466
—
—
—
926
—
—
641
122
95
1,015
—
—
—
—
95
979
10,969
1,235
—
23,257
—
—
20
2,768
169
44
—
1,675
—
56
28,854
347
530
13
—
1,566
—
1,136
130
330
345
579
8,536
3,604
6,892
—
1,673
852
1,030
4,053
859
873
1,796
2,086
995
2,646
3,835
4,014
3,108
3,341
1,019
2,378
7,491
575
2,569
1,636
221
57
1,895
6,270
1,365
1,089
958
2,424
3,685
3,283
6,221
1,374
105
1,427
982
119
4,245
2,284
701
1,573
3,285
1,011
4,478
1,117
3,195
2,706
965
1,373
4,520
509
857
2013
2013
2015
1998
2010
2007
2016
2003
2013
2014
2006
2015
2015
2007
2014
2011
2012
2010
2011
2011
2011
2012
2004
2002
2015
2012
2003
2014
2015
2002
2011
2015
2014
2014
2010
2010
2010
2010
2014
2015
2006
2011
2015
2005
2011
2011
2013
2011
2014
2011
2012
2011
2003
2015
2006
2005
2015
2014
2014 5939 Roosevelt Boulevard
2014 4000 San Pablo Parkway
2015 8900 Parallel Parkway
2000 1600 Joe Yenni Blvd
2008 301 Victoria Gardens Dr.
2000 24121 116th Avenue SE
2014 Coombe Lane West
1996 6505 Lakeview Dr.
2009 29 Broad Lane
2014 2200 S. Dixon Rd
1993 204 Energy Parkway
2015 329 Exempla Circle
2014 2402 South Street
2011 2000 Medical Dr
2010 7395 West Eastman Place
2012 8230 Nature’s Way
2005 8220 Natures Way
1999 43051 15th St. West
1979 262 Toll Gate Road
1984 One Magnolia Drive
2002 2500 North Tenaya Way
1996 3220 Peterson Road
1986 2341 W. Norvell Bryant
Hwy.
1998 600 & 620 Laurel St.
2013 100 Grove Lane
2010 307 London Road
1998 1145 Powell Rd., N.E.
2003 785 Columbia Boulevard
West
1994 8710 Caenen Lake Rd
1997 161 Young Dr.
2001 901 Florsheim Dr
2012 Wissage Road
2013 54 Red Mulberry Way
1999 2041 NC-210 N
2000 7208 Van Dorn St.
1997 432 Central Ave
1998 19 Constitution Way
2000 55-15 Little Neck Pkwy.
1974 35 Fenton Street
2016 6 Victoria Drive
2007 311 E Hawkins Pkwy
2011 425 South Ronald Reagan
Boulevard
1996 202 Rogers St
1978 4604 Lowe Rd
1975 841 Merrimack Street
1969 30 Princeton Blvd
2008 Loxley Road
1988 515 Brightfield Road
2013 189 Monica Blvd
1994 1718 Spring Creek Road
2015 15 Edison Road
2001 445 Route 9 South
1996 8341 Barrett Dr.
2006 100 Dublin Road
2007 2281 Country Club Dr
1986 430 N. Union Rd.
1999 2760 Maytown Road
2012 614 W. 14th Street
Description
Encumbrances Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Marion, IN . . . . . . . . . . . . . .
Marlborough, UKK . . . . . . .
Marlow, UKJ . . . . . . . . . . . .
Martinsville, VA . . . . . . . . .
Marysville, WA . . . . . . . . . .
Matawan, NJ . . . . . . . . . . . .
Matthews, NC . . . . . . . . . . .
McHenry, IL . . . . . . . . . . . .
McKinney, TX . . . . . . . . . . .
McMinnville, OR . . . . . . . . .
McMurray, PA . . . . . . . . . . .
Mechanicsburg, PA . . . . . . .
Medicine Hat, AB . . . . . . . .
Melbourne, FL . . . . . . . . . . .
Melville, NY . . . . . . . . . . . .
Mendham, NJ . . . . . . . . . . . .
Menomonee Falls, WI . . . . .
—
—
—
—
4,355
—
—
—
—
—
—
—
2,412
—
—
—
—
990
2,677
—
349
620
1,830
560
1,576
1,570
720
1,440
1,350
932
7,070
4,280
1,240
1,020
9,190
6,822
—
—
4,780
20,618
4,738
—
7,389
7,984
15,805
16,650
5,566
48,257
73,283
27,169
6,984
Mercerville, NJ . . . . . . . . . .
—
860
9,929
Meriden, CT . . . . . . . . . . . . .
Meridian, ID . . . . . . . . . . . .
Merrillville, IN . . . . . . . . . . .
Mesa, AZ . . . . . . . . . . . . . . .
Middleburg Heights, OH . . .
Middleton, WI . . . . . . . . . . .
Midland, MI . . . . . . . . . . . . .
Mill Creek, WA . . . . . . . . . .
Millville, NJ . . . . . . . . . . . . .
Milton Keynes, UKJ . . . . . .
Milwaukie, OR . . . . . . . . . .
Mishawaka, IN . . . . . . . . . . .
Missoula, MT . . . . . . . . . . . .
Monmouth Junction, NJ . . . .
Monroe, NC . . . . . . . . . . . . .
Monroe, NC . . . . . . . . . . . . .
Monroe, NC . . . . . . . . . . . . .
Monroe Township, NJ . . . . .
Monroe Twp, NJ . . . . . . . . .
Montville, NJ . . . . . . . . . . . .
Moorestown, NJ . . . . . . . . . .
Moorestown, NJ . . . . . . . . . .
Morehead City, NC . . . . . . .
Morton Grove, IL . . . . . . . . .
Mount Pleasant, SC . . . . . . .
Mount Vernon, WA . . . . . . .
Mt. Vernon, WA . . . . . . . . .
Murphy, TX . . . . . . . . . . . . .
Nacogdoches, TX . . . . . . . .
Naperville, IL . . . . . . . . . . . .
Nashville, TN . . . . . . . . . . . .
Naugatuck, CT . . . . . . . . . . .
Needham, MA . . . . . . . . . . .
Neodesha, KS . . . . . . . . . . .
New Braunfels, TX . . . . . . .
New Haven, IN . . . . . . . . . .
New Moston, UKD . . . . . . .
Newark, DE . . . . . . . . . . . . .
—
—
—
5,805
—
—
—
18,239
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,300
3,600
700
950
960
420
200
10,150
840
1,826
1,472
20,802
11,699
9,087
7,780
4,006
11,025
60,274
29,944
18,654
400
6,782
740
550
720
470
310
450
3,250
1,160
3,500
2,060
6,400
200
1,900
—
3,440
400
1,950
390
3,470
4,910
1,200
1,610
20
1,200
176
1,480
560
16,114
7,490
6,209
3,681
4,799
4,021
27,771
13,193
31,002
51,628
23,875
3,104
19,374
17,200
21,842
2,200
19,182
5,754
29,547
29,590
15,826
13,715
430
19,800
3,524
4,378
21,220
990
2,677
8,772
349
620
1,830
560
1,576
1,570
720
1,440
1,350
961
7,070
4,299
1,240
1,020
10,014
6,822
38,421
—
5,683
20,701
4,738
—
7,389
8,134
19,699
16,650
5,737
64,581
77,570
27,807
8,636
860
10,096
1,300
3,600
700
950
960
420
200
10,179
840
1,826
1,570
21,053
11,853
9,888
7,780
4,606
16,547
61,179
30,071
18,654
400
6,897
740
550
720
470
310
450
3,250
1,160
3,500
2,071
6,400
200
1,900
4,052
3,440
400
1,950
390
3,470
4,910
1,200
1,610
20
2,729
176
1,480
560
16,114
7,867
6,288
4,329
5,656
4,135
27,862
13,295
31,849
53,186
23,875
4,752
19,533
13,149
24,069
2,356
19,760
5,754
29,547
29,590
16,023
14,081
449
28,425
3,524
4,378
22,708
824
—
47,193
—
903
83
—
—
—
150
3,894
—
200
16,324
4,305
638
1,652
167
98
251
154
801
—
600
5,522
935
127
—
115
—
377
79
648
857
114
91
102
847
1,569
—
1,648
159
—
2,227
156
578
—
—
—
197
366
19
10,154
—
—
1,488
131
732
384
1,329
—
1,905
2,950
1,810
—
1,452
350
2,544
2,432
353
11,663
11,736
4,260
1,830
1,709
518
7,802
2,781
4,367
2,571
1,689
2,118
15,746
4,710
864
294
1,054
2,367
1,125
1,650
2,046
1,573
723
2,268
4,485
8,185
1,824
2,038
2,673
1,945
1,259
627
660
1,480
4,718
6,736
2,576
6,108
19
3,382
1,559
412
6,946
2014
2014
2013
2003
2003
2011
2003
2006
2009
2015
2010
2011
2014
2007
2010
2011
2006
2011
2011
2006
2007
1999
2004
2001
2010
2010
2011
2015
2015
2014
2005
2011
2003
2003
2003
2015
2011
2011
2010
2012
1999
2010
2013
2014
2006
2015
2006
2011
2008
2011
2002
2015
2011
2004
2013
2004
1976 505 N. Bradner Avenue
1999 The Common
2014 210 Little Marlow Road
1900 Rolling Hills Rd. & US
Hwy. 58
1998 9802 48th Dr. N.E.
1965 625 State Highway 34
1998 2404 Plantation Center Dr.
1900 5200 Block of Bull Valley
Road
2010 2701 Alma Rd.
1996 3121 NE Cumulus Avenue
2011 240 Cedar Hill Dr
1971 4950 Wilson Lane
1999 65 Valleyview Drive SW
2009 7300 Watersong Lane
2001 70 Pinelawn Rd
1968 84 Cold Hill Road
2007 W128 N6900 Northfield
Drive
1967 2240 White Horse-
Merceville Road
1968 845 Paddock Ave
2008 2825 E. Blue Horizon Dr.
2008 9509 Georgia St.
2000 7231 E. Broadway
1998 15435 Bagley Rd.
1991 6701 Stonefield Rd.
1994 2325 Rockwell Dr
1998 14905 Bothell-Everett Hwy
1986 54 Sharp Street
2007 Tunbridge Grove, Kents
Hill
1991 5770 SE Kellogg Creek
Drive
2013 60257 Bodnar Blvd
1998 3620 American Way
1996 2 Deer Park Drive
2001 918 Fitzgerald St.
2000 919 Fitzgerald St.
1997 1316 Patterson Ave.
1996 319 Forsgate Drive
1996 292 Applegarth Road
1988 165 Changebridge Rd.
2000 1205 N. Church St
2014 250 Marter Avenue
1999 107 Bryan St.
2011 5520 N. Lincoln Ave.
1985 1200 Hospital Drive
1987 1810 E. Division Street
2001 3807 East College Way
2012 304 West FM 544
2007 5902 North St
2001 504 North River Road
2007 15 Burton Hills Boulevard
1980 4 Hazel Avenue
1994 100 West St.
1994 400 Fir St
2009 2294 East Common Street
1981 1201 Daly Dr.
2010 90a Broadway
1998 200 E. Village Rd.
Description
Encumbrances Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Newcastle Under Lyme,
UKG . . . . . . . . . . . . . . . . .
Newcastle-under-Lyme,
UKG . . . . . . . . . . . . . . . . .
Norman, OK . . . . . . . . . . . .
Norman, OK . . . . . . . . . . . .
North Augusta, SC . . . . . . . .
North Bend, OR . . . . . . . . . .
North Cape May, NJ . . . . . .
North Cape May, NJ . . . . . .
Northampton, UKF . . . . . . .
Northampton, UKF . . . . . . .
Nuneaton, UKG . . . . . . . . . .
Nuthall, UKF . . . . . . . . . . . .
Nuthall, UKF . . . . . . . . . . . .
Oakland, CA . . . . . . . . . . . .
Ocala, FL . . . . . . . . . . . . . . .
Ogden, UT . . . . . . . . . . . . . .
Oklahoma City, OK . . . . . . .
Oklahoma City, OK . . . . . . .
Olathe, KS . . . . . . . . . . . . . .
Omaha, NE . . . . . . . . . . . . .
Omaha, NE . . . . . . . . . . . . .
Ona, WV . . . . . . . . . . . . . . .
Oneonta, NY . . . . . . . . . . . .
Orem, UT . . . . . . . . . . . . . . .
Osage City, KS . . . . . . . . . .
Osawatomie, KS . . . . . . . . .
Ottawa, KS . . . . . . . . . . . . . .
Overland Park, KS . . . . . . . .
Overland Park, KS . . . . . . . .
Overland Park, KS . . . . . . . .
Overland Park, KS . . . . . . . .
Owasso, OK . . . . . . . . . . . . .
Owensboro, KY . . . . . . . . . .
Owenton, KY . . . . . . . . . . . .
Oxford, MI . . . . . . . . . . . . . .
Palestine, TX . . . . . . . . . . . .
Palm Coast, FL . . . . . . . . . .
Paola, KS . . . . . . . . . . . . . . .
Paris, TX . . . . . . . . . . . . . . .
Paso Robles, CA . . . . . . . . .
Pella, IA . . . . . . . . . . . . . . . .
Pennington, NJ . . . . . . . . . . .
Pennsauken, NJ . . . . . . . . . .
Petoskey, MI . . . . . . . . . . . .
Pewaukee, WI . . . . . . . . . . .
Philadelphia, PA . . . . . . . . .
Phillipsburg, NJ . . . . . . . . . .
Phillipsburg, NJ . . . . . . . . . .
Pinehurst, NC . . . . . . . . . . . .
Piqua, OH . . . . . . . . . . . . . .
Pittsburgh, PA . . . . . . . . . . .
Plainview, NY . . . . . . . . . . .
Plano, TX . . . . . . . . . . . . . . .
Plattsmouth, NE . . . . . . . . . .
Plymouth, MI . . . . . . . . . . . .
Port St. Lucie, FL . . . . . . . .
Post Falls, ID . . . . . . . . . . . .
Princeton, NJ . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,110
1,125
55
1,480
332
1,290
600
77
5,182
2,013
3,325
1,628
2,498
4,760
1,340
360
590
760
1,930
370
380
950
80
2,150
50
130
160
3,730
4,500
410
1,300
215
225
100
1,430
180
870
190
490
1,770
870
1,380
900
860
4,700
2,930
800
300
290
204
1,750
3,990
1,840
250
1,490
8,700
2,700
1,730
5,655
5,537
1,484
33,330
2,558
7,361
22,266
151
17,348
6,257
8,983
6,263
10,436
16,143
10,564
6,700
7,513
7,017
19,765
10,230
8,769
15,998
5,020
24,107
1,700
2,970
6,590
27,076
29,105
2,840
25,311
1,380
13,275
2,400
15,791
4,320
10,957
5,610
5,452
8,630
6,716
27,620
10,780
14,452
20,669
10,433
21,175
8,114
2,690
1,885
8,572
11,969
20,152
5,650
19,990
47,230
14,217
30,888
5,655
5,537
1,484
33,330
2,558
8,047
22,314
610
17,348
6,257
8,983
6,263
10,436
16,200
10,564
7,399
7,513
7,017
20,318
10,230
8,769
15,998
5,020
24,107
1,802
3,037
6,618
27,416
36,400
2,867
25,988
1,380
13,275
2,400
15,791
5,620
10,957
5,620
5,452
9,323
6,805
28,343
10,959
14,452
20,669
13,960
21,401
8,191
3,174
1,885
8,687
12,787
20,712
5,650
20,225
53,320
16,398
32,324
1,110
1,125
55
1,480
332
1,290
600
77
5,182
2,013
3,325
1,628
2,498
4,760
1,340
360
590
760
1,930
370
380
950
80
2,150
50
130
160
3,730
4,500
410
1,300
215
225
100
1,430
180
870
190
490
1,770
870
1,471
900
860
4,700
2,930
800
300
290
204
1,750
3,990
1,840
250
1,490
8,700
2,700
1,810
—
—
—
—
—
686
48
460
—
—
—
—
—
57
—
699
—
—
553
—
—
—
—
—
102
67
28
340
7,295
27
677
—
—
—
—
1,300
—
10
—
693
89
814
179
—
—
3,527
226
77
484
—
115
818
560
—
235
6,090
2,181
1,516
132
509
2013
2010 Hempstalls Lane
311
875
3,858
1,228
331
3,488
31
1,623
339
809
326
950
1,065
2,169
2,330
1,761
1,584
517
1,823
1,647
560
1,188
778
56
90
185
5,416
6,277
90
699
737
4,465
992
2,719
1,512
2,112
158
3,694
3,591
776
3,947
1,992
2,348
6,858
2,324
3,443
1,312
1,248
934
2,881
1,958
357
1,059
3,293
9,314
3,695
4,587
2014
1995
2012
1999
2015
2011
2015
2013
2014
2013
2014
2013
2014
2008
2004
2007
2007
2016
2010
2010
2015
2007
2015
2015
2015
2015
2008
2010
2015
2016
1996
2005
2005
2010
2006
2008
2015
2005
2002
2012
2011
2011
2011
2007
2011
2011
2011
2003
1997
2005
2011
2016
2010
2010
2008
2007
2011
1999 Silverdale Road
1995 1701 Alameda Dr.
1985 800 Canadian Trails Drive
1998 105 North Hills Dr.
1995 2290 Inland Drive
1995 700 Townbank Road
1988 610 Town Bank Road
2011 Cliftonville Road
2014 Cliftonville Road
2011 132 Coventry Road
2014 172A Nottingham Road
2011 172 Nottingham Road
2002 468 Perkins Street
2009 2650 SE 18TH Avenue
1998 1340 N. Washington Blv.
2008 13200 S. May Ave
2009 11320 N. Council Road
2015 21250 W 151 Street
1998 11909 Miracle Hills Dr.
1999 5728 South 108th St.
2007 100 Weatherholt Drive
1996 1846 County Highway 48
2014 250 East Center Street
1996 1403 Laing St
2003 1520 Parker Ave
2007 2250 S Elm St
2009 12000 Lamar Avenue
1988 6101 W 119th St
2004 14430 Metcalf Ave
2015 7600 Antioch Road
1996 12807 E. 86th Place N.
1964 1205 Leitchfield Rd.
1979 905 Hwy. 127 N.
2001 701 Market St
2005 1625 W. Spring St.
2010 50 Town Ct.
2000 601 N. East Street
2006 750 N Collegiate Dr
1998 1919 Creston Rd.
2002 2602 Fifield Road
2000 143 West Franklin Avenue
1985 5101 North Park Drive
1997 965 Hager Dr
2007 2400 Golf Rd.
1952 1526 Lombard Street
1992 290 Red School Lane
1905 843 Wilbur Avenue
1998 17 Regional Dr.
1997 1744 W. High St.
1998 100 Knoedler Rd.
1963 150 Sunnyside Blvd
2016 3325 W Plano Parkway
1999 1913 E. Highway 34
1972 14707 Northville Rd
2010 10685 SW Stony Creek
Way
2008 460 N. Garden Plaza Ct.
2001 155 Raymond Road
Description
Encumbrances Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Prior Lake, MN . . . . . . . . . .
Puyallup, WA . . . . . . . . . . .
Raleigh, NC . . . . . . . . . . . . .
Raleigh, NC . . . . . . . . . . . . .
Reading, PA . . . . . . . . . . . . .
Red Bank, NJ . . . . . . . . . . . .
Rehoboth Beach, DE . . . . . .
Reidsville, NC . . . . . . . . . . .
Reno, NV . . . . . . . . . . . . . . .
Richardson, TX . . . . . . . . . .
Richmond, IN . . . . . . . . . . .
Richmond, VA . . . . . . . . . . .
Ridgeland, MS . . . . . . . . . . .
Rochdale, MA . . . . . . . . . . .
Rockville, MD . . . . . . . . . . .
Rockville, CT . . . . . . . . . . . .
Rockville Centre, NY . . . . .
Rockwall, TX . . . . . . . . . . . .
Rocky Hill, CT . . . . . . . . . . .
Rohnert Park, CA . . . . . . . . .
Romeoville, IL . . . . . . . . . . .
Roseburg, OR . . . . . . . . . . .
Roseville, MN . . . . . . . . . . .
Roswell, GA . . . . . . . . . . . .
Rugeley, UKG . . . . . . . . . . .
Ruston, LA . . . . . . . . . . . . . .
Sacramento, CA . . . . . . . . . .
Salem, OR . . . . . . . . . . . . . .
Salem, OR . . . . . . . . . . . . . .
Salisbury, NC . . . . . . . . . . . .
San Angelo, TX . . . . . . . . . .
San Angelo, TX . . . . . . . . . .
San Antonio, TX . . . . . . . . .
San Antonio, TX . . . . . . . . .
San Bernardino, CA . . . . . . .
San Diego, CA . . . . . . . . . . .
Sanatoga, PA . . . . . . . . . . . .
Sand Springs, OK . . . . . . . .
Sarasota, FL . . . . . . . . . . . . .
Sarasota, FL . . . . . . . . . . . . .
Scranton, PA . . . . . . . . . . . .
Scranton, PA . . . . . . . . . . . .
Seattle, WA . . . . . . . . . . . . .
Seattle, WA . . . . . . . . . . . . .
Selbyville, DE . . . . . . . . . . .
Seven Fields, PA . . . . . . . . .
Severna Park, MD(2) . . . . . . .
Shawnee, OK . . . . . . . . . . . .
Shelbyville, KY . . . . . . . . . .
Shelton, WA . . . . . . . . . . . .
Sherman, TX . . . . . . . . . . . .
Shrewsbury, NJ . . . . . . . . . .
Silvis, IL . . . . . . . . . . . . . . .
Sittingbourne, UKJ . . . . . . .
Smithfield, NC . . . . . . . . . . .
Smithfield, NC . . . . . . . . . . .
Sonoma, CA . . . . . . . . . . . . .
South Bend, IN . . . . . . . . . .
14,250
10,968
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
13,024
—
—
—
7,489
—
—
9,762
—
—
—
—
—
—
—
—
—
—
6,431
—
—
—
—
7,344
27,180
—
—
—
—
—
—
—
—
—
—
—
—
14,278
—
1,870
1,150
3,530
2,580
980
1,050
960
170
1,060
1,800
700
—
520
—
—
1,500
4,290
—
1,090
6,500
1,895
1,200
2,140
1,107
1,900
710
940
449
440
370
260
1,050
6,120
—
3,700
—
980
910
475
3,360
440
320
5,190
10,670
750
484
2,120
80
630
530
700
2,120
880
1,357
290
360
1,100
670
29,849
20,776
59,589
16,837
19,906
21,275
24,248
3,830
11,440
16,562
14,222
12,000
7,675
7,100
16,398
4,835
20,310
—
6,710
18,700
—
4,891
24,679
9,627
10,262
9,790
14,781
5,171
4,726
5,697
8,800
24,689
28,169
17,303
14,300
22,003
30,695
19,654
3,175
19,140
17,609
12,144
9,350
37,291
25,912
4,663
31,273
1,400
3,870
17,049
5,221
38,116
16,420
6,539
5,680
8,216
18,400
17,770
29,862
21,216
59,589
16,837
20,026
21,771
32,864
4,687
12,045
16,893
14,615
11,750
8,102
6,410
16,408
4,967
21,091
17,581
8,210
20,769
—
4,935
24,746
10,706
10,262
9,790
15,020
5,172
4,796
5,865
9,225
25,241
30,450
17,303
14,987
23,848
30,770
19,654
3,175
19,140
17,609
12,144
9,905
38,155
26,253
4,722
32,081
1,400
4,500
17,521
5,221
39,018
16,559
6,539
5,680
8,216
20,090
17,770
1,870
1,156
3,530
2,580
980
1,050
976
170
1,060
1,800
700
250
520
690
—
1,500
4,290
2,220
1,090
6,546
1,895
1,200
2,140
1,114
1,900
710
952
449
440
370
260
1,050
6,120
—
3,700
—
980
910
475
3,360
440
320
5,199
10,700
769
484
2,120
80
630
530
700
2,128
880
1,357
290
360
1,109
670
13
445
—
—
120
496
8,632
857
605
331
393
—
427
—
10
132
781
19,801
1,500
2,116
—
44
67
1,086
—
—
251
—
71
168
425
552
2,281
—
687
1,845
75
—
—
—
—
—
564
894
360
60
808
—
630
472
—
910
139
—
—
—
1,700
—
133
896
4,713
6,682
2,029
3,180
3,016
4,296
1,825
3,857
769
370
1,229
2,771
642
2,195
1,056
3,064
674
2,690
6,372
—
215
746
7,739
978
1,551
3,341
2,463
209
2,145
2,896
1,650
4,358
6,432
3,115
4,875
4,725
2,317
1,769
2,677
1,056
722
3,119
10,575
4,141
2,254
4,897
771
1,357
2,157
1,414
6,095
2,802
353
2,094
487
6,132
1,080
2015
2010
2012
2012
2011
2011
2010
2002
2004
2015
2016
2013
2003
2013
2012
2011
2011
2012
2003
2005
2006
2015
2015
1997
2013
2011
2010
1999
2015
2003
2004
2014
2010
2007
2008
2008
2011
2012
1996
2011
2014
2014
2010
2010
2010
1999
2011
1996
2005
2012
2005
2010
2010
2014
2003
2014
2005
2014
2003 4685 Park Nicollet Avenue
1985 123 Fourth Ave. NW
2002 5301 Creedmoor Road
1988 7900 Creedmoor Road
1994 5501 Perkiomen Ave
1997 One Hartford Dr.
1999 36101 Seaside Blvd
1998 2931 Vance St.
1998 5165 Summit Ridge Road
2009 1350 East Lookout Drive
2015 400 Industries Road
1989 2220 Edward Holland
Drive
1997 410 Orchard Park
1994 111 Huntoon Memorial
Highway
1986 9701 Medical Center Drive
1960 1253 Hartford Turnpike
2002 260 Maple Ave
2014 720 E Ralph Hall Parkway
1996 60 Cold Spring Rd.
1986 4855 Snyder Lane
1900 Grand Haven Circle
1990 1901 NW Hughwood Drive
1989 2750 North Victoria Street
1999 655 Mansell Rd.
2010 Horse Fair
1988 1401 Ezelle St
1978 6350 Riverside Blvd
1998 1355 Boone Rd. S.E.
1992 3988 12th Street SE
1997 2201 Statesville Blvd.
1997 2695 Valleyview Blvd.
1999 6101 Grand Court Road
2011 2702 Cembalo Blvd
2007 8902 Floyd Curl Dr.
1993 1760 W. 16th St.
1992 555 Washington St.
1993 225 Evergreen Road
2002 4402 South 129th Avenue
West
1995 8450 McIntosh Rd.
2006 6150 Edgelake Drive
2005 2741 Blvd. Ave
2013 2751 Boulevard Ave
1962 11501 15th Ave NE
2005 805 4th Ave N
2008 21111 Arrington Dr
1999 500 Seven Fields Blvd.
1981 24 Truckhouse Road
1995 3947 Kickapoo
1965 1871 Midland Trail
1989 900 W Alpine Way
2006 1011 E. Pecan Grove Rd.
2000 5 Meridian Way
2005 1900 10th St.
1997 200 London Road
1998 830 Berkshire Rd.
1999 250 Highway 210 West
1988 800 Oregon St.
2014 52565 State Road 933
Description
Encumbrances Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
South Boston, MA . . . . . . . .
Southbury, CT . . . . . . . . . . .
Sparks, NV . . . . . . . . . . . . . .
Springfield, OR . . . . . . . . . .
Springfield, IL . . . . . . . . . . .
Springfield, IL . . . . . . . . . . .
St. Paul, MN . . . . . . . . . . . .
Stafford, UKG . . . . . . . . . . .
Stamford, UKF . . . . . . . . . .
Statesville, NC . . . . . . . . . . .
Statesville, NC . . . . . . . . . . .
Statesville, NC . . . . . . . . . . .
Stillwater, OK . . . . . . . . . . .
Stockton, CA . . . . . . . . . . . .
Stratford-upon-Avon,
UKG . . . . . . . . . . . . . . . . .
Stroudsburg, PA . . . . . . . . . .
Summit, NJ . . . . . . . . . . . . .
. . . . . . . . . . . .
Superior, WI
Swanton, OH . . . . . . . . . . . .
Terre Haute, IN . . . . . . . . . .
Texarkana, TX . . . . . . . . . . .
The Villages, FL . . . . . . . . .
Tomball, TX . . . . . . . . . . . .
Toms River, NJ . . . . . . . . . .
Tonganoxie, KS . . . . . . . . . .
Topeka, KS . . . . . . . . . . . . .
Towson, MD(2) . . . . . . . . . . .
Troy, OH . . . . . . . . . . . . . . .
Troy, OH . . . . . . . . . . . . . . .
Trumbull, CT . . . . . . . . . . . .
Tucson, AZ . . . . . . . . . . . . .
Tulsa, OK . . . . . . . . . . . . . . .
Tulsa, OK . . . . . . . . . . . . . . .
Tulsa, OK . . . . . . . . . . . . . . .
Tyler, TX . . . . . . . . . . . . . . .
Upper Providence, PA . . . . .
Vacaville, CA . . . . . . . . . . .
Vallejo, CA . . . . . . . . . . . . .
Vallejo, CA . . . . . . . . . . . . .
Valparaiso, IN . . . . . . . . . . .
Valparaiso, IN . . . . . . . . . . .
Vancouver, WA . . . . . . . . . .
Venice, FL . . . . . . . . . . . . . .
Vero Beach, FL . . . . . . . . . .
Vero Beach, FL . . . . . . . . . .
Vero Beach, FL . . . . . . . . . .
Virginia Beach, VA . . . . . . .
Voorhees, NJ . . . . . . . . . . . .
Voorhees, NJ(2) . . . . . . . . . . .
Voorhees, NJ . . . . . . . . . . . .
Voorhees, NJ . . . . . . . . . . . .
Wabash, IN . . . . . . . . . . . . .
Waconia, MN . . . . . . . . . . . .
Wake Forest, NC . . . . . . . . .
Wall, NJ . . . . . . . . . . . . . . . .
Wallingford, CT . . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
2,810
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
13,392
13,407
7,147
—
—
11,214
—
—
—
—
—
—
—
—
—
—
—
—
—
—
385
1,860
3,700
1,790
—
990
2,100
—
1,820
150
310
140
80
2,280
790
340
3,080
1,020
330
1,370
192
1,035
1,050
1,610
310
260
1,180
200
470
4,440
1,190
3,003
1,390
1,320
2,002
23,613
46,526
8,865
10,100
13,378
33,019
—
3,238
1,447
6,183
3,627
1,400
5,983
14,508
16,313
14,152
13,735
6,370
18,016
1,403
7,446
13,300
34,627
3,690
12,712
13,280
2,000
16,730
43,384
18,318
6,025
7,110
10,087
650
5,268
—
900
4,000
2,330
112
108
1,820
1,150
263
297
2,930
1,540
1,800
1,900
3,100
3,700
670
890
200
1,650
490
—
17,100
18,000
15,407
2,558
2,962
19,042
10,674
3,187
3,263
40,070
22,593
37,299
26,040
25,950
24,312
14,588
14,726
3,003
25,350
1,210
5,218
958
—
90
—
1,084
78
9,909
—
266
8
—
—
397
—
—
—
6,159
—
—
—
—
779
813
69
—
195
4,254
—
—
668
20
517
—
—
30,095
1,651
2,344
310
—
—
270
—
—
—
15,112
—
657
894
21
1,560
—
4,495
1,742
2,421
65
385
1,860
3,700
1,790
768
990
2,100
1,943
1,820
150
310
140
80
2,372
790
340
3,080
1,020
330
1,370
192
1,035
1,050
1,679
310
260
1,180
200
470
4,440
1,190
3,003
1,390
1,320
7,220
24,571
46,526
8,954
9,332
14,462
33,097
7,966
3,238
1,713
6,191
3,627
1,400
6,288
14,508
16,313
14,152
19,894
6,370
18,016
1,403
7,446
14,079
35,371
3,759
12,712
13,475
6,254
16,730
43,384
18,985
6,045
7,627
10,087
650
5,268
1,900
900
4,030
2,330
112
108
1,821
1,150
263
297
2,930
1,540
1,800
1,900
3,100
3,847
670
890
200
1,692
490
28,195
18,751
20,315
15,717
2,558
2,962
19,311
10,674
3,187
3,263
55,182
22,593
37,956
26,934
25,971
25,725
14,588
19,221
4,745
27,729
1,275
134
3,486
3,660
9,398
385
1,258
866
988
54
187
672
2,216
1,330
774
1,638
652
987
2,238
1,813
2,245
881
749
654
2,076
5,584
114
1,548
2,204
1,841
5,678
6,548
521
3,248
1,467
1,233
1,366
1,226
5,857
6,287
3,716
1,087
1,238
4,339
2,113
1,322
1,363
12,173
1,361
5,987
4,266
2,965
2,443
940
2,567
2,086
3,774
343
1995
2011
2007
2015
2013
2014
2015
2014
2014
2003
2003
2003
1995
2010
2015
2014
2011
2009
2004
2015
1996
2013
2011
2010
2015
2012
2011
1997
2004
2011
2015
2006
2010
2011
2006
2013
2005
2005
2010
2001
2001
2010
2008
2001
2001
2007
2014
2011
2011
2011
2012
2014
2011
1998
2011
2011
1961 804 E. Seventh St.
2001 655 Main St
2009 275 Neighborhood Way
1994 770 Harlow Road
2010 701 North Walnut Street
2013 3089 Old Jacksonville
Road
1996 750 Mississippi River
2016 Stone Road
1998 Priory Road
1990 2441 E. Broad St.
1996 2806 Peachtree Place
1999 2814 Peachtree Rd.
1995 1616 McElroy Rd.
1988 6725 Inglewood
2012 Scholars Lane
2011 370 Whitestone Corner
Road
2001 41 Springfield Avenue
2010 1915 North 34th Street
1950 401 W. Airport Hwy.
2015 395 8th Avenue
1996 4204 Moores Lane
2014 2450 Parr Drive
2001 1221 Graham Dr
2005 1587 Old Freehold Rd
2009 120 W 8th St
2011 1931 Southwest Arvonia
Place
1973 7700 York Road
1997 81 S. Stanfield Rd.
1971 512 Crescent Drive
2001 6949 Main Street
1997 8151 E Speedway
Boulevard
1992 3219 S. 79th E. Ave.
1998 7220 S. Yale Ave.
2012 7902 South Mingo Road
East
2007 5550 Old Jacksonville
Hwy.
2015 1133 Black Rock Road
1987 799 Yellowstone Dr.
1989 350 Locust Dr.
1990 2261 Tuolumne
1998 2601 Valparaiso St.
1999 2501 Valparaiso St.
2006 10011 NE 118th Ave
2009 1600 Center Rd.
1999 420 4th Ct.
1996 410 4th Ct.
2003 7955 16th Manor
1993 5520 Indian River Rd
1965 2601 Evesham Road
1985 3001 Evesham Road
2013 113 South Route 73
2013 311 Route 73
2013 20 John Kissinger Drive
2005 500 Cherry Street
1999 611 S. Brooks St.
2003 2021 Highway 35
1962 35 Marc Drive
Description
Encumbrances Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Walsall, UKG . . . . . . . . . . .
Wamego, KS . . . . . . . . . . . .
Wareham, MA . . . . . . . . . . .
Warren, NJ . . . . . . . . . . . . . .
Watchung, NJ . . . . . . . . . . .
Waukee, IA . . . . . . . . . . . . .
Waxahachie, TX . . . . . . . . .
Weatherford, TX . . . . . . . . .
Wellingborough, UKF . . . . .
West Bend, WI . . . . . . . . . . .
West Chester, PA . . . . . . . . .
West Orange, NJ . . . . . . . . .
Westerville, OH . . . . . . . . . .
Westfield, IN . . . . . . . . . . . .
. . . . . . . . . .
Westfield, NJ(2)
Westlake, OH . . . . . . . . . . . .
Weston Super Mare,
UKK . . . . . . . . . . . . . . . . .
Westworth Village, TX . . . .
White Lake, MI . . . . . . . . . .
Wichita, KS . . . . . . . . . . . . .
Wichita, KS . . . . . . . . . . . . .
Wichita, KS . . . . . . . . . . . . .
Wichita, KS . . . . . . . . . . . . .
Wichita, KS . . . . . . . . . . . . .
Wilkes-Barre, PA . . . . . . . . .
Williamstown, KY . . . . . . . .
Wilmington, DE . . . . . . . . . .
Wilmington, NC . . . . . . . . .
Wilmington, NC . . . . . . . . .
Windsor, CT . . . . . . . . . . . .
Windsor, CT . . . . . . . . . . . .
Winston-Salem, NC . . . . . . .
Winter Garden, FL . . . . . . . .
Witherwack, UKC . . . . . . . .
Wolverhampton, UKG . . . . .
Worcester, MA . . . . . . . . . .
Worcester, MA . . . . . . . . . .
Wyncote, PA . . . . . . . . . . . .
York, UKE . . . . . . . . . . . . . .
Youngsville, NC . . . . . . . . .
Zionsville, IN . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
13,208
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,184
40
875
2,000
1,920
1,870
650
660
1,480
620
1,350
2,280
740
890
2,270
1,330
2,517
2,060
2,920
1,400
860
629
260
—
570
70
800
210
400
2,250
1,800
360
1,350
944
1,573
3,500
2,300
2,700
2,961
380
1,610
8,562
2,510
10,313
30,810
24,880
31,878
5,763
5,261
5,724
17,790
29,237
10,687
8,287
15,964
16,589
17,926
7,054
31,296
20,179
11,000
8,873
19,749
2,240
—
2,301
6,430
9,494
2,991
15,356
8,539
600
2,514
7,937
6,915
6,678
54,099
9,060
22,244
8,266
10,689
22,400
—
14
1,701
727
1,030
1,075
—
—
—
38
251
182
3,105
—
497
—
—
—
92
—
—
—
81
11,034
44
—
59
—
—
1,848
944
459
—
—
—
—
5,037
233
—
—
1,691
1,184
40
875
2,000
1,976
1,870
650
660
1,480
620
1,350
2,280
740
890
2,270
1,330
2,517
2,060
2,920
1,400
860
629
260
900
570
70
800
210
400
2,250
1,800
360
1,350
944
1,573
3,500
2,300
2,700
2,961
380
1,610
8,562
2,524
12,014
31,537
25,853
32,953
5,763
5,261
5,724
17,828
29,488
10,869
11,392
15,964
17,086
17,926
7,054
31,296
20,271
11,000
8,873
19,752
2,321
10,134
2,345
6,430
9,553
2,991
15,356
10,387
1,544
2,973
7,937
6,915
6,678
54,099
14,097
22,477
8,266
10,689
24,091
408
74
4,983
4,322
3,620
3,686
1,362
1,375
322
2,364
4,641
1,915
8,620
1,019
2,961
7,346
639
1,705
3,386
3,955
1,261
2,302
67
1,360
603
2,183
1,621
1,419
955
1,783
394
1,130
908
627
610
10,138
2,185
3,639
467
647
3,894
2015
2015
2002
2011
2011
2012
2007
2006
2015
2010
2011
2011
1998
2014
2011
2001
2013
2014
2010
2006
2011
2012
2015
2011
2011
2005
2011
1999
2014
2011
2011
2003
2012
2013
2013
2007
2008
2011
2014
2014
2010
2015 Little Aston Road
1996 1607 4th St
1989 50 Indian Neck Rd.
1999 274 King George Rd
2000 680 Mountain Boulevard
2007 1650 SE Holiday Crest
Circle
2008 1329 Brown St.
2007 1818 Martin Drive
2015 159 Northampton
2011 2130 Continental Dr
1974 800 West Miner Street
1963 20 Summit Street
2001 690 Cooper Rd.
2013 937 E. 186th Street
1970 1515 Lamberts Mill Road
1985 27601 Westchester Pkwy.
2011 141b Milton Road
2014 25 Leonard Trail
2000 935 Union Lake Rd
1997 505 North Maize Road
2012 10604 E 13th Street North
2009 2050 North Webb Road
1992 900 N Bayshore Dr
2012 10604 E 13th Street North
1992 300 Courtright Street
1987 201 Kimberly Lane
1970 810 S Broom Street
1999 3501 Converse Dr.
2012 3828 Independence Blvd
1969 One Emerson Drive
1974 One Emerson Drive
1996 2980 Reynolda Rd.
2013 720 Roper Road
2009 Whitchurch Road
2011 378 Prestonwood Road
2009 101 Barry Road
1993 378 Plantation St.
1960 1245 Church Road
2006 Rosetta Way,
Boroughbridge Road
2013 100 Sunset Drive
2009 11755 N Michigan Rd
Triple-net total . . . . . . . . . .
$ 594,199
$ 804,007
$7,794,067
$ 718,637
$ 853,984
$8,462,729
$1,317,149
135
Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2016
(Dollars in thousands)
Description
Encumbrances
Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Seniors housing operating:
Acton, MA . . . . . . . . . . . . .
$
— $
— $
Agawam, MA . . . . . . . . . . .
6,334
Albuquerque, NM . . . . . . .
Alhambra, CA . . . . . . . . . .
Altrincham, UKD . . . . . . . .
Amherstview, ON . . . . . . .
Arlington, TX . . . . . . . . . . .
Arnprior, ON . . . . . . . . . . .
Atlanta, GA . . . . . . . . . . . .
Austin, TX . . . . . . . . . . . . .
Austin, TX . . . . . . . . . . . . .
—
—
—
591
21,090
412
—
—
—
Avon, CT . . . . . . . . . . . . . .
18,645
Azusa, CA . . . . . . . . . . . . .
Bagshot, UKJ . . . . . . . . . . .
Banstead, UKJ . . . . . . . . . .
Basingstoke, UKJ . . . . . . . .
Basking Ridge, NJ . . . . . . .
Bassett, UKJ . . . . . . . . . . . .
—
—
—
—
—
—
Baton Rouge, LA . . . . . . . .
9,186
Beaconsfield, UKJ . . . . . . .
Beaconsfield, QC . . . . . . . .
Bedford, NH . . . . . . . . . . . .
Bee Cave, TX . . . . . . . . . . .
Bellevue, WA . . . . . . . . . . .
Belmont, CA . . . . . . . . . . .
Belmont, CA . . . . . . . . . . .
—
—
—
—
—
—
—
Berkeley, CA . . . . . . . . . . .
12,663
Bethesda, MD . . . . . . . . . . .
Bethesda, MD . . . . . . . . . . .
Bethesda, MD . . . . . . . . . . .
Billerica, MA . . . . . . . . . . .
Birmingham, UKG . . . . . . .
Birmingham, UKG . . . . . . .
Birmingham, UKG . . . . . . .
Blainville, QC . . . . . . . . . .
Bloomfield Hills, MI . . . . .
Borehamwood, UKH . . . . .
Bothell, WA . . . . . . . . . . . .
Boulder, CO . . . . . . . . . . . .
Bournemouth, UKK . . . . . .
Braintree, MA . . . . . . . . . .
Brampton, ON . . . . . . . . . .
Brighton, MA . . . . . . . . . . .
Brockport, NY . . . . . . . . . .
Brockville, ON . . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
20,617
43,804
10,127
—
4,604
880
1,270
600
4,244
473
1,660
788
2,100
1,560
4,200
1,550
570
4,960
6,695
3,420
2,356
4,874
790
5,566
1,149
—
1,820
2,800
3,000
—
3,050
—
—
—
1,619
4
—
—
2,077
2,000
5,367
1,350
2,994
5,527
—
10,256
2,100
1,500
484
31,346
10,044
20,837
6,305
25,187
4,446
37,395
6,283
20,603
21,413
74,850
30,571
3,141
29,881
55,113
18,853
37,710
32,304
29,436
50,952
17,484
—
21,084
19,004
23,526
35,300
32,677
45,309
—
—
21,381
21,321
—
—
8,902
35,662
41,937
13,439
27,458
42,547
41,290
60,021
14,616
23,496
7,445
$
1,107
$
14
$
959
1,275
600
4,244
500
1,709
813
2,154
1,560
4,200
1,580
570
4,960
6,695
3,420
2,389
4,874
801
5,566
1,197
2,548
1,820
2,816
3,000
—
3,050
3
—
—
1,624
4
1,480
2,807
2,141
2,000
5,367
1,361
3,014
5,527
56
10,256
2,109
1,500
506
629
1,543
8,987
—
236
2,990
331
749
113
418
2,290
6,941
—
—
—
1,000
—
367
—
739
33,235
634
1,543
1,889
1,206
2,058
500
127
405
657
—
14,494
14,119
399
604
—
1,928
1,821
—
607
—
1,060
94
338
136
32,440
10,594
22,375
15,292
25,187
4,654
40,336
6,590
21,298
21,526
75,268
32,831
10,082
29,881
55,113
18,853
38,677
32,304
29,792
50,952
18,175
30,687
21,718
20,531
25,415
36,506
34,735
45,807
127
405
22,034
21,321
13,014
11,313
9,237
36,266
41,937
15,357
29,259
42,547
41,841
60,021
15,667
23,590
7,761
$
4,201
2,441
5,044
1,342
4,127
530
8,632
1,148
2,843
1,840
3,964
8,359
2,656
5,347
8,492
1,395
5,871
5,540
4,477
7,642
3,954
4,123
1,153
3,885
5,447
5,883
716
7,170
22
51
1,852
3,631
28
—
2,400
5,510
6,423
1,270
5,621
5,235
6,713
4,334
3,583
1,808
744
2013
2011
2010
2011
2012
2015
2012
2013
2014
2014
2015
2011
1998
2012
2012
2014
2013
2013
2013
2013
2013
2011
2016
2013
2011
2013
2016
2013
2013
2013
2015
2013
2015
2015
2013
2013
2012
2015
2013
2013
2013
2015
2011
2015
2015
2000 10 Devon Drive
1996 153 Cardinal Drive
1984 500 Paisano St NE
1923 1118 N. Stoneman Ave.
2009 295 Hale Road
1974 4567 Bath Road
2000 1250 West Pioneer
Parkway
1991 15 Arthur Street
2000 1000 Lenox Park Blvd NE
2013 11330 Farrah Lane
2014 4310 Bee Caves Road
1998 101 Bickford Extension
1953 125 W. Sierra Madre Ave.
2009 14 - 16 London Road
2005 Croydon Lane
2012 Grove Road
2002 404 King George Road
2006 111 Burgess Road
2009 9351 Siegen Lane
2009 30-34 Station Road
2008 505 Elm Avenue
2012 5 Corporate Drive
2014 14058 A Bee Cave
Parkway
1998 15928 NE 8th Street
1971 1301 Ralston Avenue
2002 1010 Alameda de Las
Pulgas
1966 2235 Sacramento Street
2009 8300 Burdett Road
2009 8300 Burdett Road
2009 8300 Burdett Road
2000 20 Charnstaffe Lane
2006 5 Church Road, Edgbaston
2016 47 Bristol Road South
2016 134 Jockey Road
2008 50 des Chateaux
Boulevard
2009 6790 Telegraph Road
2003 Edgwarebury Lane
1988 10605 NE 185th Street
2003 3955 28th Street
2008 42 Belle Vue Road
2007 618 Granite Street
2009 100 Ken Whillans Drive
1995 50 Sutherland Road
1999 90 West Avenue
1996 1026 Bridlewood Drive
Description
Encumbrances
Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Brookfield, CT . . . . . . . . . .
Broomfield, CO . . . . . . . . .
Brossard, QC . . . . . . . . . . .
Buckingham, UKJ . . . . . . .
Buffalo Grove, IL . . . . . . . .
Burbank, CA . . . . . . . . . . .
Burbank, CA . . . . . . . . . . .
Burlington, ON . . . . . . . . . .
Burlington, MA . . . . . . . . .
Burlington, MA . . . . . . . . .
Calabasas, CA . . . . . . . . . .
Calgary, AB . . . . . . . . . . . .
Calgary, AB . . . . . . . . . . . .
Calgary, AB . . . . . . . . . . . .
Calgary, AB . . . . . . . . . . . .
Calgary, AB . . . . . . . . . . . .
Camberley, UKJ . . . . . . . . .
Cardiff, UKL . . . . . . . . . . .
Cardiff by the Sea, CA . . . .
Carol Stream, IL . . . . . . . . .
Cary, NC . . . . . . . . . . . . . .
Cedar Park, TX . . . . . . . . .
Centerville, MA . . . . . . . . .
Cerritos, CA . . . . . . . . . . . .
Chatham, ON . . . . . . . . . . .
Chelmsford, MA . . . . . . . .
Chesterfield, MO . . . . . . . .
Chorleywood, UKH . . . . . .
Chula Vista, CA . . . . . . . . .
Church Crookham, UKJ . . .
Cincinnati, OH . . . . . . . . . .
Claremont, CA . . . . . . . . . .
Cohasset, MA . . . . . . . . . . .
Colorado Springs, CO . . . .
Concord, NH . . . . . . . . . . .
Coquitlam, BC . . . . . . . . . .
Costa Mesa, CA . . . . . . . . .
Crystal Lake, IL . . . . . . . . .
Dallas, TX . . . . . . . . . . . . .
Dallas, TX . . . . . . . . . . . . .
Danvers, MA . . . . . . . . . . .
Danvers, MA . . . . . . . . . . .
Davenport, IA . . . . . . . . . . .
Decatur, GA . . . . . . . . . . . .
Denver, CO . . . . . . . . . . . .
Denver, CO . . . . . . . . . . . .
Dix Hills, NY . . . . . . . . . . .
Dollard-Des - Ormeaux,
QC . . . . . . . . . . . . . . . . .
Dresher, PA . . . . . . . . . . . .
Dublin, OH . . . . . . . . . . . . .
East Haven, CT . . . . . . . . .
East Meadow, NY . . . . . . .
19,001
—
11,401
—
—
—
19,935
12,810
—
—
—
12,534
14,376
11,364
23,014
24,579
—
—
38,767
—
—
—
—
—
1,422
—
—
—
—
—
—
—
—
—
13,081
10,245
—
—
—
—
9,175
—
—
—
12,283
—
2,250
4,140
5,499
2,979
2,850
4,940
3,610
1,309
2,443
2,750
—
2,252
2,793
3,122
3,431
2,385
2,654
3,191
5,880
1,730
740
1,750
1,300
—
1,098
1,589
1,857
5,636
2,072
2,591
2,060
2,430
2,485
800
720
3,047
2,050
875
1,080
6,330
1,120
2,203
1,403
—
1,450
2,910
30,180
44,547
31,854
13,880
49,129
43,466
50,817
19,311
34,354
57,488
6,438
37,415
41,179
38,971
28,983
36,776
5,736
12,566
64,711
55,048
45,240
15,664
27,357
27,494
12,462
26,432
48,366
43,191
22,163
14,215
109,388
9,928
26,147
14,756
21,164
24,567
19,969
12,461
9,655
114,794
14,557
28,761
35,893
—
19,389
35,838
—
3,808
39,014
—
7,103
—
22,079
—
1,957
1,900
1,680
2,660
69
14,431
10,664
43,423
35,533
45,991
East Setauket, NY . . . . . . .
—
4,920
37,354
2,262
10,054
5,499
2,979
2,850
4,940
3,610
1,349
2,522
2,750
—
2,324
2,888
3,229
3,551
2,463
7,217
3,191
5,880
1,730
740
1,750
1,324
—
1,139
1,594
1,857
5,636
2,128
2,591
2,060
2,438
2,487
840
779
3,142
2,050
893
1,080
6,330
1,145
2,257
1,480
1,946
1,470
2,933
31,799
49,279
31,854
13,880
49,914
44,469
53,320
20,156
35,298
60,512
7,315
38,909
42,650
40,325
30,155
38,047
18,048
12,566
65,885
56,468
45,630
15,782
28,375
31,048
13,536
27,141
49,164
43,191
22,802
14,215
119,409
11,019
27,347
16,125
21,807
25,507
21,145
13,483
10,267
115,431
15,442
28,860
38,884
28,510
22,379
36,817
7,206
12,387
2,272
969
7,822
8,242
941
3,377
5,935
—
4,377
6,804
7,196
6,743
4,188
3,082
106
2,665
12,242
9,664
5,956
9
5,481
779
1,253
2,148
6,929
6,942
3,583
1,690
19,242
1,963
4,369
2,433
4,171
5,378
4,508
2,575
2,202
7,170
3,328
2,865
7,930
4,979
3,490
7,299
2011
2013
2015
2014
2012
2012
2016
2013
2013
2016
2013
2013
2013
2013
2013
2015
2014
2013
2011
2012
2013
2016
2011
2016
2015
2015
2013
2013
2013
2014
2007
2013
2013
2013
2011
2013
2011
2013
2011
2015
2011
2015
2006
2013
2012
2012
1999 246A Federal Road
2009 400 Summit Blvd
1989 2455 Boulevard Rome
1883 Church Street
2003 500 McHenry Road
2002 455 E. Angeleno Avenue
1985 2721 Willow Street
1990 500 Appleby Line
2005 24 Mall Road
2011 50 Greenleaf Way
1972 25100 Calabasas Road
2003 20 Promenade Way SE
1998 80 Edenwold Drive NW
1998 150 Scotia Landing NW
1989 9229 16th Street SW
2006 2220-162nd Avenue SW
2016 Fernhill Road
2007 127 Cyncoed Road
2009 3535 Manchester Avenue
2001 545 Belmont Lane
2009 1206 West Chatham Street
2015 800 C-Bar Ranch Trail
1998 22 Richardson Road
2002 11000 New Falcon Way
1965 25 Keil Drive North
1997 199 Chelmsford Street
2001 1880 Clarkson Road
2007 High View, Rickmansworth
Road
2003 3302 Bonita Road
2014 Bourley Road
2010 5445 Kenwood Road
2001 2053 North Towne Avenue
1998 125 King Street (Rt 3A)
2001 2105 University Park
Boulevard
2001 300 Pleasant Street
1990 1142 Dufferin Street
1965 350 West Bay St
2001 751 E Terra Cotta Avenue
1997 3611 Dickason Avenue
2013 3535 N Hall Street
2000 1 Veronica Drive
1997 9 Summer Street
2009 4500 Elmore Ave.
1998 920 Clairemont Avenue
1997 4901 South Monaco Street
2007 8101 E Mississippi
Avenue
3,809
40,072
6,394
2013
2003 337 Deer Park Road
2,017
1,900
1,775
2,681
124
15,000
11,438
49,055
37,746
46,783
3,932
2,871
10,839
10,112
7,311
2013
2013
2010
2011
2013
4,975
38,347
5,962
2013
2008 4377 St. Jean Blvd
2006 1650 Susquehanna Road
1990 6470 Post Rd
2000 111 South Shore Drive
2002 1555 Glen Curtiss
Boulevard
2002 1 Sunrise Drive
1,630
10,646
—
—
785
1,003
2,503
885
1,022
3,024
877
1,566
1,565
1,461
1,292
1,348
16,874
—
1,174
1,420
390
118
1,041
3,554
1,114
714
798
—
695
—
10,021
1,100
1,202
1,409
702
1,035
1,176
1,040
612
637
910
154
3,068
30,456
3,009
1,002
1,059
629
774
5,727
2,234
848
1,047
137
Description
Encumbrances
Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Eastbourne, UKJ . . . . . . . . .
Edgbaston, UKG . . . . . . . . .
Edgewater, NJ . . . . . . . . . . .
Edison, NJ . . . . . . . . . . . . . .
Edmonds, WA . . . . . . . . . . .
Edmonton, AB . . . . . . . . . . .
Edmonton, AB . . . . . . . . . . .
Encinitas, CA . . . . . . . . . . . .
Encino, CA . . . . . . . . . . . . .
Escondido, CA . . . . . . . . . . .
Esher, UKJ . . . . . . . . . . . . . .
Fairfax, VA . . . . . . . . . . . . .
Fairfield, NJ . . . . . . . . . . . . .
Fareham, UKJ . . . . . . . . . . .
Flossmoor, IL . . . . . . . . . . . .
Folsom, CA . . . . . . . . . . . . .
Fort Worth, TX . . . . . . . . . .
Fort Worth, TX . . . . . . . . . .
Franklin, MA . . . . . . . . . . . .
Frome, UKK . . . . . . . . . . . .
Fullerton, CA . . . . . . . . . . . .
Gahanna, OH . . . . . . . . . . . .
Gilbert, AZ . . . . . . . . . . . . . .
Gilroy, CA . . . . . . . . . . . . . .
Glen Cove, NY . . . . . . . . . .
Glenview, IL . . . . . . . . . . . .
Golden Valley, MN . . . . . . .
Grimsby, ON . . . . . . . . . . . .
Grosse Pointe Woods, MI . .
Grosse Pointe Woods, MI . .
Guelph, ON . . . . . . . . . . . . .
Guildford, UKJ . . . . . . . . . .
Gurnee, IL . . . . . . . . . . . . . .
Hamden, CT . . . . . . . . . . . . .
Hampshire, UKJ . . . . . . . . . .
Haverhill, MA . . . . . . . . . . .
Henderson, NV . . . . . . . . . .
—
—
—
—
10,991
9,222
11,914
—
—
—
—
—
—
—
—
—
—
—
—
—
12,537
—
16,042
—
—
—
19,396
—
—
—
4,313
—
—
14,857
—
—
—
4,145
—
4,561
1,892
1,650
1,589
2,063
1,460
5,040
1,520
5,783
19
3,120
3,408
1,292
1,490
2,080
1,740
2,430
2,720
1,964
772
2,160
760
4,594
2,090
1,520
636
950
1,430
1,190
5,361
890
1,460
4,172
1,720
880
33,744
—
25,047
32,314
24,449
29,819
37,293
7,721
46,255
24,024
48,361
2,678
43,868
17,970
9,496
32,754
27,888
19,799
30,597
14,813
19,989
11,214
28,246
13,880
35,236
69,288
33,513
5,617
13,662
31,777
7,597
56,494
27,931
24,093
26,035
50,046
29,809
Henderson, NV . . . . . . . . . .
5,572
1,190
11,600
Highland Park, IL . . . . . . . .
Hingham, MA . . . . . . . . . . .
Holbrook, NY . . . . . . . . . . .
Horley, UKJ . . . . . . . . . . . . .
Houston, TX . . . . . . . . . . . .
Houston, TX . . . . . . . . . . . .
Houston, TX . . . . . . . . . . . .
Houston, TX . . . . . . . . . . . .
Hove, UKJ . . . . . . . . . . . . . .
Huntington Beach, CA . . . . .
Irving, TX . . . . . . . . . . . . . .
—
—
—
—
—
17,274
—
—
—
—
—
2,250
1,440
25,313
32,292
3,957
35,337
2,332
3,830
1,040
1,750
960
1,360
3,808
1,030
12,144
55,674
31,965
15,603
27,598
6,979
31,172
6,823
4,145
2,720
4,564
1,896
1,651
1,638
2,127
1,460
5,040
1,520
5,783
47
3,175
3,408
1,339
1,490
2,085
1,740
2,442
2,720
1,998
787
2,160
1,575
4,615
2,090
1,545
655
950
1,430
1,237
5,361
935
1,487
4,172
1,723
895
33,744
13,969
26,044
33,361
24,989
30,946
38,816
10,098
47,450
25,324
48,361
2,825
44,747
17,970
10,788
32,765
31,100
20,760
33,000
14,813
20,593
12,408
28,718
37,680
36,662
70,830
34,314
5,857
13,912
32,576
7,930
56,494
28,891
25,362
26,035
50,873
30,265
5,511
638
4,349
7,579
2,056
5,496
8,990
4,102
8,407
5,450
6,956
708
7,192
1,699
2,209
2,292
6,747
—
4,550
1,160
3,484
1,870
6,703
9,028
7,045
11,838
5,088
651
2,025
4,721
1,098
8,384
4,033
5,965
4,104
4,973
4,784
2013
2014
2013
2013
2015
2013
2013
2000
2012
2011
2013
2013
2013
2014
2013
2015
2012
2016
2013
2014
2013
2013
2013
2006
2013
2012
2013
2015
2013
2013
2015
2013
2013
2011
2013
2015
2011
1,212
12,078
3,007
2013
2,259
1,440
26,150
32,356
4,895
2,840
2013
2015
2008 6 Upper Kings Drive
2015 Pershore Road
2000 351 River Road
1996 1801 Oak Tree Road
1976 21500 72nd Avenue West
1999 103 Rabbit Hill Court
NW
1968 10015 103rd Avenue NW
1988 335 Saxony Rd.
2003 15451 Ventura Boulevard
1987 1500 Borden Rd
2006 42 Copsem Lane
1991 9207 Arlington
Boulevard
1998 47 Greenbrook Road
2012 Redlands Lane
2000 19715 Governors
Highway
2014 1574 Creekside Drive
2001 2151 Green Oaks Road
2014 7001 Bryant Irvin Road
1999 4 Forge Hill Road
2012 Welshmill Lane
2008 2226 North Euclid Street
1998 775 East Johnstown Road
2008 580 S. Gilbert Road
2007 7610 Isabella Way
1998 39 Forest Avenue
2001 2200 Golf Road
2005 4950 Olson Memorial
Highway
1991 84 Main Street East
2006 1850 Vernier Road
2005 21260 Mack Avenue
1978 165 Cole Road
2006 Astolat Way, Peasmarsh
2002 500 North Hunt Club
Road
1999 35 Hamden Hills Drive
2006 22-26 Church Road
1997 254 Amesbury Road
2009 1935 Paseo Verde
Parkway
2008 1555 West Horizon
Ridge Parkway
2005 1601 Green Bay Road
2012 1 Sgt. William B Terry
Drive
4,016
36,051
5,617
2013
2001 320 Patchogue Holbrook
2,332
3,830
1,044
1,750
960
1,360
3,886
1,030
12,144
60,789
37,218
15,813
29,136
6,979
32,838
8,244
1,457
11,699
6,026
9
6,194
656
6,231
2,122
2014
2012
2012
2016
2011
2014
2013
2007
Road
2014 Court Lodge Road
1998 2929 West Holcombe
Boulevard
1999 505 Bering Drive
2014 10120 Louetta Road
1995 10225 Cypresswood Dr
1987 Furze Hill
2004 7401 Yorktown Avenue
1999 8855 West Valley Ranch
Parkway
—
16,689
1,000
1,051
541
1,176
1,587
2,377
1,195
1,300
—
175
934
—
1,339
11
3,217
961
2,416
—
638
1,209
472
24,615
1,447
1,542
827
259
250
799
380
—
1,005
1,296
—
831
471
499
847
64
773
—
5,115
5,258
210
1,538
—
1,743
1,421
138
Description
Encumbrances
Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Johns Creek, GA . . . . . . . .
—
1,580
23,285
Kanata, ON . . . . . . . . . . . . .
Kansas City, MO . . . . . . . .
Kansas City, MO . . . . . . . .
Kansas City, MO . . . . . . . .
Kelowna, BC . . . . . . . . . . .
Kennebunk, ME . . . . . . . . .
Kingston, ON . . . . . . . . . . .
Kingwood, TX . . . . . . . . . .
Kirkland, WA . . . . . . . . . . .
Kitchener, ON . . . . . . . . . .
Kitchener, ON . . . . . . . . . .
Kitchener, ON . . . . . . . . . .
Kitchener, ON . . . . . . . . . .
La Palma, CA . . . . . . . . . . .
Lafayette Hill, PA . . . . . . .
Laguna Hills, CA . . . . . . . .
Laguna Woods, CA . . . . . .
Laguna Woods, CA . . . . . .
Lake Zurich, IL . . . . . . . . .
Lawrenceville, GA . . . . . . .
Leawood, KS . . . . . . . . . . .
Lenexa, KS . . . . . . . . . . . . .
Leominster, MA . . . . . . . . .
Lincroft, NJ . . . . . . . . . . . .
Lombard, IL . . . . . . . . . . . .
London, UKI . . . . . . . . . . .
London, ON . . . . . . . . . . . .
London, ON . . . . . . . . . . . .
London, ON . . . . . . . . . . . .
Longueuil, QC . . . . . . . . . .
Los Angeles, CA . . . . . . . .
Los Angeles, CA . . . . . . . .
Los Angeles, CA . . . . . . . .
Los Angeles, CA . . . . . . . .
Louisville, KY . . . . . . . . . .
Louisville, KY . . . . . . . . . .
Lynnfield, MA . . . . . . . . . .
Malvern, PA . . . . . . . . . . . .
Mansfield, MA . . . . . . . . . .
Maple Ridge, BC . . . . . . . .
Marieville, QC . . . . . . . . . .
Markham, ON . . . . . . . . . .
Marlboro, NJ . . . . . . . . . . .
Medicine Hat, AB . . . . . . .
Memphis, TN . . . . . . . . . . .
Meriden, CT . . . . . . . . . . . .
Metairie, LA . . . . . . . . . . . .
Middletown, CT . . . . . . . . .
Middletown, RI . . . . . . . . .
Milford, CT . . . . . . . . . . . .
—
—
5,950
—
5,802
—
4,614
—
24,600
1,473
4,645
3,539
13,146
—
—
—
—
—
—
15,602
15,328
9,581
—
—
16,603
—
835
6,329
—
9,905
—
62,843
—
—
—
10,977
—
—
27,347
8,781
6,762
39,383
—
11,092
—
9,056
13,013
14,916
15,863
11,128
1,689
1,820
1,930
541
2,688
2,700
1,030
480
3,450
640
1,130
1,093
1,341
2,950
1,750
12,820
11,280
9,150
1,470
1,500
2,490
826
944
9
2,130
3,121
987
1,969
1,445
3,992
—
—
3,540
—
2,420
1,600
3,165
1,651
3,320
2,875
1,278
3,727
2,222
1,432
1,800
1,500
725
1,430
2,480
3,210
28,670
34,898
39,997
23,962
13,647
30,204
11,416
9,777
38,709
2,744
9,939
7,327
13,939
16,591
11,848
75,926
76,485
57,842
9,830
29,003
32,493
26,251
23,164
19,958
59,943
10,027
8,228
16,985
13,631
23,711
11,430
114,438
19,007
28,050
20,816
20,326
45,200
17,194
57,011
11,922
12,113
48,939
14,888
14,141
17,744
14,874
27,708
24,242
24,628
17,364
362
—
4,138
3,760
52
620
3,199
549
1,033
595
161
437
372
2,419
640
1,738
10,284
7,142
5,246
2,799
507
3,191
599
534
1,268
501
—
473
1,087
570
852
2,034
1,599
1,151
1,122
1,039
333
1,817
1,318
5,846
—
87
1,801
680
137
1,116
1,032
380
1,226
1,577
1,420
139
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
1,588
23,639
3,789
2013
2009 11405 Medlock Bridge
1,689
1,845
1,963
541
2,771
3,022
1,061
480
3,515
660
1,167
1,129
1,341
2,966
1,867
12,820
11,280
9,150
1,470
1,508
5,690
836
947
9
2,130
3,121
1,037
2,029
1,598
4,166
—
—
3,540
—
2,420
1,600
3,165
1,708
3,431
2,875
1,323
3,848
2,222
1,476
1,800
1,538
725
1,439
2,511
3,213
28,670
39,011
43,724
24,015
14,184
33,081
11,933
10,810
39,239
2,885
10,338
7,663
16,358
17,216
13,469
86,210
83,627
63,088
12,629
29,502
32,484
26,841
23,695
21,226
60,444
10,027
8,651
18,012
14,048
24,388
13,464
116,037
20,158
29,172
21,855
20,659
47,016
18,454
62,747
11,922
12,155
50,620
15,568
14,234
18,860
15,868
28,089
25,458
26,174
18,781
3,951
8,933
10,341
1,713
3,047
9,952
1,144
2,148
6,861
581
1,870
1,801
262
2,835
2,909
—
1,628
1,358
2,074
4,799
6,775
4,937
2,240
3,302
9,202
817
969
2,153
1,155
1,771
2,849
22,542
3,470
547
3,954
3,774
7,489
4,281
13,897
926
927
11,766
2,772
2,156
4,350
4,645
4,051
6,148
6,217
4,973
Road
2005 70 Stonehaven Drive
1980 12100 Wornall Road
1986 6500 North Cosby Ave
2014 6460 North Cosby Avenue
1999 863 Leon Avenue
2006 One Huntington Common
Drive
1983 181 Ontario Street
1999 22955 Eastex Freeway
2009 14 Main Street South
1979 164 - 168 Ferfus Avenue
1988 20 Fieldgate Street
1964 290 Queen Street South
2003 1250 Weber Street E
2003 5321 La Palma Avenue
1998 429 Ridge Pike
1988 24903 Moulton Parkway
1987 24441 Calle Sonora
1986 24962 Calle Aragon
2007 550 America Court
2008 1375 Webb Gin House
Road
1999 4400 West 115th Street
2006 15055 West 87th Street
Parkway
1999 1160 Main Street
2002 734 Newman Springs
Road
2009 2210 Fountain Square Dr
2012 71 Hatch Lane
1989 760 Horizon Drive
1953 1486 Richmond Street
North
1950 81 Grand Avenue
1989 70 Rue Levis
1971 330 North Hayworth
Avenue
2009 10475 Wilshire Boulevard
2001 2051 N. Highland Avenue
2006 4061 Grand View
Boulevard
1999 4600 Bowling Boulevard
2010 6700 Overlook Drive
2006 55 Salem Street
1998 324 Lancaster Avenue
1998 25 Cobb Street
2009 12241 224th Street
2002 425 rue Claude de
Ramezay
1981 7700 Bayview Avenue
2002 3A South Main Street
1999 223 Park Meadows
Drive SE
1999 6605 Quail Hollow Road
2001 511 Kensington Avenue
2009 3732 West Esplanade
Ave. S
1999 645 Saybrook Road
1998 303 Valley Road
1999 77 Plains Road
2012
2010
2010
2015
2013
2013
2015
2011
2011
2013
2013
2013
2016
2013
2013
2016
2016
2016
2011
2013
2012
2013
2015
2013
2013
2014
2015
2015
2015
2015
2008
2011
2012
2016
2012
2013
2013
2013
2011
2015
2015
2013
2013
2015
2012
2011
2013
2011
2011
2011
Description
Encumbrances
Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Milton, ON . . . . . . . . . . . . .
Minnetonka, MN . . . . . . . .
Minnetonka, MN . . . . . . . .
Mission Viejo, CA . . . . . . .
Mississauga, ON . . . . . . . .
14,760
13,938
15,959
14,375
9,046
4,542
2,080
920
6,600
1,602
25,321
24,360
29,344
52,118
17,996
Mississauga, ON . . . . . . . .
3,046
873
4,655
Mississauga, ON . . . . . . . .
Mississauga, ON . . . . . . . .
Mobberley, UKD . . . . . . . .
Monterey, CA . . . . . . . . . . .
Montgomery Village,
MD . . . . . . . . . . . . . . . . .
Moose Jaw, SK . . . . . . . . .
Mystic, CT . . . . . . . . . . . . .
Naperville, IL . . . . . . . . . . .
Naperville, IL . . . . . . . . . . .
Naples, FL . . . . . . . . . . . . .
Nashua, NH . . . . . . . . . . . .
Nashville, TN . . . . . . . . . . .
Needham, MA . . . . . . . . . .
Nepean, ON . . . . . . . . . . . .
Newbury, UKJ . . . . . . . . . .
Newburyport, MA . . . . . . .
Newmarket, UKH . . . . . . .
Newton, MA . . . . . . . . . . . .
Newton, MA . . . . . . . . . . . .
Newton, MA . . . . . . . . . . . .
Newtown Square, PA . . . . .
Niagara Falls, ON . . . . . . .
Niantic, CT . . . . . . . . . . . . .
North Andover, MA . . . . . .
North Chelmsford, MA . . .
North Dartmouth, MA . . . .
North Tustin, CA . . . . . . . .
Oak Park, IL . . . . . . . . . . . .
Oakland, CA . . . . . . . . . . . .
Oakton, VA . . . . . . . . . . . .
Oakville, ON . . . . . . . . . . .
Oakville, ON . . . . . . . . . . .
Oakville, ON . . . . . . . . . . .
Oceanside, CA . . . . . . . . . .
Okotoks, AB . . . . . . . . . . . .
Oshawa, ON . . . . . . . . . . . .
Ottawa, ON . . . . . . . . . . . .
Ottawa, ON . . . . . . . . . . . .
Ottawa, ON . . . . . . . . . . . .
Ottawa, ON . . . . . . . . . . . .
Ottawa, ON . . . . . . . . . . . .
Ottawa, ON . . . . . . . . . . . .
Ottawa, ON . . . . . . . . . . . .
Ottawa, ON . . . . . . . . . . . .
Ottawa, ON . . . . . . . . . . . .
Ottawa, ON . . . . . . . . . . . .
19,440
6,191
—
—
—
2,507
11,128
—
—
57,939
—
—
—
5,794
—
—
—
26,992
15,558
—
—
6,814
—
21,901
11,542
—
—
—
—
—
5,890
10,145
5,306
—
18,174
3,119
10,221
19,153
22,027
6,720
12,149
10,138
13,924
18,783
2,991
2,180
3,649
2,548
5,146
6,440
3,530
582
1,400
1,550
1,540
8,989
1,264
3,900
1,240
1,575
—
1,750
4,071
2,250
2,500
3,360
1,930
1,225
1,320
1,960
880
1,700
2,880
1,250
3,877
2,250
1,252
2,134
1,271
2,160
714
841
1,341
3,454
4,305
2,103
2,963
1,561
3,403
3,411
724
818
35,137
15,158
26,665
29,101
18,246
12,973
18,274
12,237
28,204
119,398
43,026
35,788
32,992
5,770
—
29,187
11,902
43,614
30,681
25,099
14,420
7,963
25,986
34,976
18,478
35,337
18,059
40,383
47,508
37,576
7,382
29,963
13,754
18,352
20,943
7,570
15,425
23,309
39,106
18,421
26,424
18,170
31,090
28,335
4,710
2,165
2,068
1,923
564
4,025
729
270
1,569
842
—
680
5,175
584
860
2,227
887
2,012
492
2,004
1,068
383
15,646
1,063
—
992
1,897
1,508
669
380
4,266
1,459
839
1,463
562
1,058
2,539
1,753
322
1,310
674
3,518
716
363
1,018
1,033
—
2,337
2,093
848
2,159
4,221
215
1,129
140
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
4,687
2,376
920
6,600
1,651
27,244
25,987
29,908
56,143
18,675
1,920
4,604
4,241
1,031
3,274
2015
2012
2013
2016
2013
2012 611 Farmstead Drive
1999 500 Carlson Parkway
2006 18605 Old Excelsior Blvd.
1998 27783 Center Drive
1984 1130 Bough Beeches
900
4,899
872
2013
3,778
2,626
5,146
6,440
3,570
600
1,427
1,550
1,540
9,068
1,264
3,900
1,240
1,638
2,850
1,750
4,071
2,263
2,514
3,385
1,941
1,263
1,334
2,019
927
1,700
2,901
1,250
3,900
2,260
1,291
2,214
1,310
2,202
736
882
1,395
3,606
4,305
2,176
3,054
1,612
3,511
3,516
747
702
36,577
15,922
26,665
29,781
23,381
13,539
19,107
14,464
29,091
121,331
43,519
37,792
34,060
6,090
12,796
30,250
11,902
44,593
32,564
26,582
15,078
8,305
30,238
36,377
19,271
36,800
18,600
41,441
50,024
39,319
7,666
31,192
14,389
21,829
21,636
7,892
16,388
24,190
39,106
20,685
28,425
18,966
33,142
32,451
4,902
3,409
4,676
2,359
5,676
4,786
6,912
2,392
4,431
2,868
4,868
8,426
3,149
7,958
—
1,101
85
—
1,212
9,596
7,387
6,339
3,629
1,025
5,525
7,872
3,938
—
2,510
7,219
8,007
6,066
1,400
5,960
2,227
4,566
2,660
1,464
1,400
3,854
2,868
1,506
2,127
1,440
2,360
2,524
904
690
2015
2015
2013
2013
2013
2013
2011
2012
2013
2015
2015
2012
2016
2015
2015
2016
2014
2011
2011
2011
2013
2015
2011
2011
2011
2016
2013
2012
2013
2013
2013
2013
2013
2011
2015
2013
2015
2015
2015
2015
2015
2015
2015
2015
2013
2013
Boulevard
1978 3051 Constitution
Boulevard
1988 1490 Rathburn Road East
1989 85 King Street East
2007 Barclay Park, Hall Lane
2009 1110 Cass St.
1993 19310 Club House Road
2001 425 4th Avenue NW
2001 20 Academy Lane Mystic
2013 1936 Brookdale Road
2002 535 West Ogden Avenue
2000 4800 Aston Gardens Way
1999 674 West Hollis Street
1999 4206 Stammer Place
2011 880 Greendale Avenue
1988 1 Mill Hill Road
2016 370 London Road
2015 4 Wallace Bashaw Junior
Way
2011 Jeddah Way
1996 2300 Washington Street
1996 280 Newtonville Avenue
1994 430 Centre Street
2004 333 S. Newtown Street
Rd.
1991 7860 Lundy’s Lane
2001 417 Main Street
1995 700 Chickering Road
1998 2 Technology Drive
1997 239 Cross Road
2000 12291 Newport Avenue
2004 1035 Madison Street
1999 11889 Skyline Boulevard
1997 2863 Hunter Mill Road
1982 289 and 299 Randall
Street
1994 25 Lakeshore Road West
1988 345 Church Street
2005 3500 Lake Boulevard
2010 51 Riverside Gate
1991 649 King Street East
2001 110 Berrigan Drive
1966 2370 Carling Avenue
2005 751 Peter Morand
Crescent
1989 1 Eaton Street
2008 691 Valin Street
2006 22 Barnstone Drive
2009 990 Hunt Club Road
2009 2 Valley Stream Drive
1995 1345 Ogilvie Road
1993 370 Kennedy Lane
Description
Encumbrances
Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Ottawa, ON . . . . . . . . . . . .
Ottawa, ON . . . . . . . . . . . .
Ottawa, ON . . . . . . . . . . . .
Ottawa, ON . . . . . . . . . . . .
Overland Park, KS . . . . . . .
Palo Alto, CA . . . . . . . . . . .
Paramus, NJ . . . . . . . . . . . .
Parkland, FL . . . . . . . . . . . .
Peabody, MA . . . . . . . . . . .
Pembroke, ON . . . . . . . . . .
Pittsburgh, PA . . . . . . . . . .
Placentia, CA . . . . . . . . . . .
Plainview, NY . . . . . . . . . .
Plano, TX . . . . . . . . . . . . . .
Plano, TX . . . . . . . . . . . . . .
Playa Vista, CA . . . . . . . . .
Plymouth, MA . . . . . . . . . .
Plymouth, MA . . . . . . . . . .
Port Perry, ON . . . . . . . . . .
Providence, RI . . . . . . . . . .
Purley, UKI . . . . . . . . . . . .
Queensbury, NY . . . . . . . . .
Quincy, MA . . . . . . . . . . . .
Rancho Cucamonga, CA . .
Rancho Palos Verdes,
CA . . . . . . . . . . . . . . . . .
Randolph, NJ . . . . . . . . . . .
Red Deer, AB . . . . . . . . . . .
Red Deer, AB . . . . . . . . . . .
Redondo Beach, CA . . . . . .
Regina, SK . . . . . . . . . . . . .
Regina, SK . . . . . . . . . . . . .
Regina, SK . . . . . . . . . . . . .
Renton, WA . . . . . . . . . . . .
Ridgefield, CT . . . . . . . . . .
Riviere-du-Loup, QC . . . . .
Riviere-du-Loup, QC . . . . .
Rocky Hill, CT . . . . . . . . . .
Romeoville, IL . . . . . . . . . .
Roseville, MN . . . . . . . . . .
Roseville, CA . . . . . . . . . . .
Roswell, GA . . . . . . . . . . . .
Sacramento, CA . . . . . . . . .
Saint-Lambert, QC . . . . . . .
Salem, NH . . . . . . . . . . . . .
Salinas, CA . . . . . . . . . . . . .
Salisbury, UKK . . . . . . . . .
Salt Lake City, UT . . . . . . .
San Diego, CA . . . . . . . . . .
San Diego, CA . . . . . . . . . .
San Diego, CA . . . . . . . . . .
San Francisco, CA . . . . . . .
San Francisco, CA . . . . . . .
San Gabriel, CA . . . . . . . . .
San Jose, CA . . . . . . . . . . .
10,626
4,795
6,246
9,389
3,405
16,535
—
57,514
6,235
—
—
—
—
28,215
—
—
—
13,742
9,723
—
—
—
—
—
—
—
12,215
14,375
—
6,937
6,749
13,241
21,150
—
3,258
9,331
10,063
—
—
—
—
—
23,342
20,184
—
—
—
—
—
—
—
—
—
—
2,809
1,156
746
1,176
1,540
—
2,840
4,880
—
1,931
1,580
8,480
3,066
3,120
1,750
1,580
1,444
2,550
3,685
2,655
7,365
1,260
1,350
1,480
5,450
1,540
1,247
1,199
—
1,485
1,244
1,539
3,080
3,100
592
1,454
810
854
1,540
3,300
2,080
1,300
10,259
980
5,110
2,720
1,360
4,200
5,810
3,000
5,920
11,800
3,120
2,850
27,299
9,758
7,800
12,764
16,269
39,639
35,728
111,481
—
9,427
18,017
17,076
19,901
59,950
15,390
40,531
34,951
35,055
26,788
21,910
35,161
21,744
12,584
10,055
60,034
46,934
19,283
22,339
9,557
21,148
21,036
24,053
51,824
80,614
7,601
16,848
16,351
12,646
35,877
41,652
6,486
23,394
61,903
32,721
41,424
15,269
19,691
30,707
63,078
27,164
91,639
77,214
15,566
35,098
28,343
10,132
8,198
13,427
17,258
41,554
37,174
113,088
16,949
9,427
18,436
18,739
20,390
60,959
15,808
41,389
35,576
37,059
29,079
21,910
35,161
22,399
13,276
10,667
61,715
47,570
19,984
23,125
10,378
21,892
21,838
26,715
52,407
82,456
7,601
19,353
16,934
67,189
36,553
44,437
7,606
24,321
61,903
34,680
45,420
15,269
21,457
30,995
64,868
27,674
100,120
84,125
16,103
35,545
2,899
1,221
775
1,228
1,728
22
2,851
4,885
2,250
1,931
1,587
8,480
3,174
3,120
1,750
1,584
1,444
2,550
3,799
2,655
7,365
1,260
1,423
1,539
5,450
1,540
1,285
1,238
—
1,531
1,287
1,586
3,103
3,150
592
1,585
909
6,168
1,585
3,300
2,385
1,334
10,259
1,051
5,110
2,720
1,360
4,228
5,810
3,000
5,920
11,800
3,130
2,856
1,134
439
426
715
1,177
1,937
1,457
1,612
19,199
—
427
1,663
597
1,009
418
862
625
2,004
2,405
—
—
655
765
671
1,681
636
740
825
821
790
844
2,709
606
1,892
—
2,636
682
59,857
720
2,785
1,425
961
—
2,031
3,996
—
1,766
315
1,790
510
8,480
6,911
548
453
141
5,910
1,620
1,410
1,176
2,992
6,344
5,520
8,239
1,855
1,320
3,346
578
2,923
13,352
9
6,732
3,016
—
2,005
8,265
6,581
1,712
3,180
2,200
10,709
7,337
1,585
1,935
4,750
4,285
3,517
1,931
9,093
8,965
550
1,394
3,612
12,459
5,273
953
1,601
3,601
5,074
6,651
1,088
1,046
5,925
4,114
13,456
3,941
1,674
1,623
2,783
6,132
2013
2013
2013
2015
2012
2013
2013
2015
2013
2012
2013
2016
2013
2013
2016
2013
2015
2016
2015
2011
2012
2015
2011
2013
2012
2013
2015
2015
2011
2013
2013
2015
2011
2015
2015
2015
2011
2006
2013
2016
2012
2013
2015
2011
2016
2014
2011
2011
2012
2013
2016
2016
2013
2011
1998 43 Aylmer Avenue
1998 1351 Hunt Club Road
1999 140 Darlington Private
1987 10 Vaughan Street
1998 9201 Foster
2007 2701 El Camino Real
1998 567 Paramus Road
2000 5999 University Drive
1994 73 Margin Street
1999 1111 Pembroke Street
West
2009 900 Lincoln Club Dr.
1987 1180 N Bradford Avenue
2001 1231 Old Country Road
2006 4800 West Parker Road
2014 3690 Mapleshade Lane
2006 5555 Playa Vista Drive
1998 157 South Street
1970 60 Stafford Hill
2009 15987 Simcoe Street
1998 700 Smith Street
2005 21 Russell Hill Road
1999 27 Woodvale Road
1998 2003 Falls Boulevard
2001 9519 Baseline Road
2004 5701 Crestridge Road
2006 648 Route 10 West
2004 3100 - 22 Street
2004 10 Inglewood Drive
1957 514 North Prospect Ave
1999 3651 Albert Street
2004 3105 Hillsdale Street
1992 1801 McIntyre Street
2007 104 Burnett Avenue South
1998 640 Danbury Road
1956 35 des Cedres
1993 230-235 rue Des Chenes
2000 1160 Elm Street
2010 605 S Edward Dr.
2002 2555 Snelling Avenue,
North
2000 5161 Foothills Boulevard
1997 75 Magnolia Street
2004 345 Munroe Street
1989 1705 Avenue Victoria
2000 242 Main Street
1990 1320 Padre Drive
2013 Shapland Close
1986 1430 E. 4500 S.
2011 2567 Second Avenue
2001 13075 Evening Creek
Drive S
2003 810 Turquoise Street
1998 1550 Sutter Street
1923 1601 19th Avenue
2005 8332 Huntington Drive
2009 1420 Curvi Drive
Description
Encumbrances
Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
San Jose, CA . . . . . . . . . . .
San Jose, CA . . . . . . . . . . .
San Juan Capistrano,
CA . . . . . . . . . . . . . . . . .
San Rafael, CA . . . . . . . . . .
San Ramon, CA . . . . . . . . .
Sandy Springs, GA . . . . . . .
Santa Maria, CA . . . . . . . . .
—
—
—
—
—
—
—
Santa Monica, CA . . . . . . .
19,551
Santa Rosa, CA . . . . . . . . .
Saskatoon, SK . . . . . . . . . .
Saskatoon, SK . . . . . . . . . .
Schaumburg, IL . . . . . . . . .
Scottsdale, AZ . . . . . . . . . .
Seal Beach, CA . . . . . . . . .
Seattle, WA . . . . . . . . . . . .
Seattle, WA . . . . . . . . . . . .
Sevenoaks, UKJ . . . . . . . . .
Severna Park, MD . . . . . . .
Shelburne, VT . . . . . . . . . .
Shelby Township, MI . . . . .
Shrewsbury, MA . . . . . . . .
Sidcup, UKI . . . . . . . . . . . .
Simi Valley, CA . . . . . . . . .
Simi Valley, CA . . . . . . . . .
Solihull, UKG . . . . . . . . . .
Solihull, UKG . . . . . . . . . .
Solihull, UKG . . . . . . . . . .
Sonning, UKJ . . . . . . . . . . .
Sonoma, CA . . . . . . . . . . . .
South Windsor, CT . . . . . .
Spokane, WA . . . . . . . . . . .
Spokane, WA . . . . . . . . . . .
St. Albert, AB . . . . . . . . . . .
St. John’s, NL . . . . . . . . . . .
Stittsville, ON . . . . . . . . . . .
Stockport, UKD . . . . . . . . .
Studio City, CA . . . . . . . . .
Sugar Land, TX . . . . . . . . .
Sun City, FL . . . . . . . . . . . .
Sun City, FL . . . . . . . . . . . .
Sun City West, AZ . . . . . . .
Sunnyvale, CA . . . . . . . . . .
Surrey, BC . . . . . . . . . . . . .
Surrey, BC . . . . . . . . . . . . .
Sutton, UKI . . . . . . . . . . . .
Suwanee, GA . . . . . . . . . . .
Sway, UKJ . . . . . . . . . . . . .
Swift Current, SK . . . . . . . .
Tacoma, WA . . . . . . . . . . .
Tacoma, WA . . . . . . . . . . .
Tacoma, WA . . . . . . . . . . .
—
4,280
10,080
—
—
—
48,540
10,539
—
—
19,178
16,207
—
—
—
—
—
—
—
—
—
—
—
—
8,616
6,063
4,732
—
—
—
21,636
24,378
12,026
—
7,047
16,391
—
—
—
2,248
18,080
—
—
3,280
46,823
11,900
27,647
1,390
1,620
8,700
2,214
6,050
5,250
2,250
981
1,382
2,460
2,500
6,204
6,790
1,150
6,181
—
720
1,040
950
7,446
3,200
5,510
5,070
3,571
—
5,644
2,820
3,000
3,200
2,580
1,145
706
1,175
4,369
4,006
960
6,521
5,040
1,250
5,420
3,605
4,552
—
1,560
4,145
492
2,400
1,535
4,170
6,942
27,392
72,223
8,360
50,658
28,340
26,273
13,905
17,609
22,863
3,890
72,954
85,369
19,887
40,240
67,623
31,041
26,344
26,824
56,570
16,664
51,406
43,297
26,053
—
42,155
21,890
29,295
25,064
25,342
17,863
11,765
17,397
25,018
25,307
31,423
48,476
50,923
21,778
41,682
18,818
22,338
—
11,538
15,508
10,119
35,053
6,068
73,377
1,833
2,606
1,304
1,308
6,220
552
2,450
767
1,634
639
714
980
1,507
1,232
2,103
1,002
—
4,391
1,833
486
924
—
580
4,123
—
—
12,436
—
1,352
2,630
558
306
851
—
748
—
807
1,535
1,244
1,383
1,030
1,564
795
1,380
18,628
742
—
381
413
39
7,687
142
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
3,280
48,656
8,350
2012
2002 500 S Winchester
Boulevard
11,900
30,253
860
2016
2002 4855 San Felipe Road
1,390
1,620
8,700
2,220
6,089
5,263
2,250
1,011
1,425
2,479
2,500
6,229
6,825
1,150
6,181
—
772
1,093
950
7,446
3,217
5,510
5,070
3,571
1,851
5,644
2,820
3,099
3,271
2,639
1,180
706
1,211
4,369
4,040
960
6,560
5,066
1,271
5,420
3,716
4,692
4,096
1,560
4,145
507
2,457
1,535
4,170
8,246
28,700
78,443
8,905
53,069
29,094
27,907
14,514
18,280
23,824
3,324
1,610
1,388
2,093
11,991
4,526
738
2,185
2,719
4,509
2000
2016
2016
2012
2011
2013
2016
2013
2013
2013
2001 30311 Camino Capistrano
2001 111 Merrydale Road
1992 9199 Fircrest Lane
1997 5455 Glenridge Drive NE
2001 1220 Suey Road
2004 1312 15th Street
2001 4225 Wayvern Drive
1999 220 24th Street East
2004 1622 Acadia Drive
2001 790 North Plum Grove
Road
5,397
1,354
2008
1998 9410 East Thunderbird
74,161
87,437
20,889
40,240
72,015
32,821
26,777
27,747
56,570
17,227
55,529
43,297
26,053
10,585
42,155
23,241
31,826
25,551
25,589
18,679
11,765
18,109
25,018
26,080
32,958
49,680
52,280
22,787
43,246
19,503
23,578
14,532
12,280
15,508
10,485
35,408
6,107
81,064
15,443
15,599
1,499
7,403
2,437
6,165
3,961
2,398
11,400
3,877
1,175
7,435
4,584
162
6,711
651
7,537
6,047
4,897
4,394
842
2,752
4,828
4,965
7,509
4,592
4,325
3,630
7,780
4,767
6,114
10
2,486
2,033
1,815
6,180
777
475
Road
2004 3850 Lampson Avenue
2009 5300 24th Avenue NE
1995 11039 17th Avenue
2009 64 - 70 Westerham Road
1997 43 W McKinsey Road
1988 687 Harbor Road
2006 46471 Hayes Road
1997 3111 Main Street
2000 Frognal Avenue
2009 190 Tierra Rejada Road
2003 5300 E Los Angeles
Avenue
2009 1270 Warwick Road
2007 1 Worcester Way
2016 Warwick Road
2009 Old Bath Rd.
2005 91 Napa Road
1999 432 Buckland Road
2001 3117 E. Chaser Lane
1999 1110 E. Westview Ct.
2005 78C McKenney Avenue
2005 64 Portugal Cove Road
1996 1340 - 1354 Main Street
2008 1 Dairyground Road
2004 4610 Coldwater
Canyon Avenue
1996 1221 Seventh St
1995 231 Courtyards
1999 1311 Aston Gardens Court
1998 13810 West Sandridge
Drive
2002 1039 East El Camino Real
2000 16028 83rd Avenue
1987 15501 16th Avenue
2016 123 Westmead Road
2000 4315 Johns Creek
Parkway
2008 Sway Place
2001 301 Macoun Drive
2008 7290 Rosemount Circle
2012 7290 Rosemount Circle
1987 8201 6th Avenue
2013
2011
2015
2012
2016
2011
2013
2015
2012
2013
2016
2012
2013
2015
2013
2016
2011
2013
2013
2014
2015
2013
2013
2013
2011
2015
2015
2012
2012
2013
2013
2015
2012
2014
2013
2011
2015
2016
Description
Encumbrances
Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Tampa, FL . . . . . . . . . . . . .
69,330
4,910
114,148
Tewksbury, MA . . . . . . . . .
The Woodlands, TX . . . . . .
Toledo, OH . . . . . . . . . . . . .
Toronto, ON . . . . . . . . . . . .
Toronto, ON . . . . . . . . . . . .
Toronto, ON . . . . . . . . . . . .
Toronto, ON . . . . . . . . . . . .
Toronto, ON . . . . . . . . . . . .
Toronto, ON . . . . . . . . . . . .
Toronto, ON . . . . . . . . . . . .
—
—
—
17,354
9,601
13,336
22,989
4,335
1,445
8,351
Toronto, ON . . . . . . . . . . . .
18,699
Toronto, ON . . . . . . . . . . . .
Toronto, ON . . . . . . . . . . . .
Toronto, ON . . . . . . . . . . . .
Trumbull, CT . . . . . . . . . . .
Tucson, AZ . . . . . . . . . . . . .
Tulsa, OK . . . . . . . . . . . . . .
Tulsa, OK . . . . . . . . . . . . . .
Tustin, CA . . . . . . . . . . . . .
Upland, CA . . . . . . . . . . . .
Upper St Claire, PA . . . . . .
Vancouver, BC . . . . . . . . . .
Vankleek Hill, ON . . . . . . .
Vaudreuil, QC . . . . . . . . . .
Venice, FL . . . . . . . . . . . . .
Victoria, BC . . . . . . . . . . . .
Victoria, BC . . . . . . . . . . . .
Victoria, BC . . . . . . . . . . . .
Virginia Water, UKJ . . . . .
Walnut Creek, CA . . . . . . .
Walnut Creek, CA . . . . . . .
Waltham, MA . . . . . . . . . . .
Warwick, RI . . . . . . . . . . . .
Washington, DC . . . . . . . . .
Waterbury, CT . . . . . . . . . .
Wayland, MA . . . . . . . . . . .
Welland, ON . . . . . . . . . . .
Wellesley, MA . . . . . . . . . .
West Babylon, NY . . . . . . .
West Bloomfield, MI . . . . .
West Hills, CA . . . . . . . . . .
1,027
1,700
32,956
23,795
4,528
—
—
—
—
—
14,862
994
8,348
64,425
7,502
6,916
7,756
—
—
—
—
15,390
31,489
23,854
—
6,637
—
—
—
—
West Vancouver, BC . . . . .
19,151
Westbourne, UKK . . . . . . .
Westford, MA . . . . . . . . . .
Weston, MA . . . . . . . . . . . .
Weybridge, UKJ . . . . . . . . .
Weymouth, UKK . . . . . . . .
White Oak, MD . . . . . . . . .
—
—
—
—
—
—
Wilbraham, MA . . . . . . . . .
10,773
Wilmington, DE . . . . . . . . .
—
2,350
480
2,040
2,927
5,082
2,040
5,132
2,480
1,079
2,513
3,400
1,361
1,447
5,304
2,850
830
1,330
1,500
840
3,160
1,102
24,122
389
1,852
6,820
2,856
3,681
2,476
7,106
3,700
24,118
12,379
47,129
20,713
25,493
19,822
41,657
7,571
5,364
19,695
32,757
2,915
3,918
53,488
37,685
6,179
21,285
20,861
15,299
42,596
13,455
42,675
2,960
14,214
100,501
18,038
15,774
15,379
29,937
12,467
10,320
100,890
2,462
2,400
4,000
2,460
1,207
983
4,690
3,960
1,040
2,600
7,059
5,441
1,440
1,160
7,899
2,591
2,304
660
1,040
40,062
24,635
69,154
39,547
27,462
7,530
77,462
47,085
12,300
7,521
28,155
41,420
32,607
6,200
48,240
16,551
24,768
17,639
23,338
1,699
1,779
787
3,125
1,203
1,298
—
3,422
508
257
897
1,483
233
264
2,399
1,395
3,645
3,318
2,912
577
3
614
2,620
215
—
1,225
745
717
980
314
1,397
9,225
1,115
1,420
909
2,511
1,163
—
111
912
564
477
1,578
—
67
812
—
—
1,417
835
691
143
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
4,950
115,807
8,042
2015
2001 12951 W Linebaugh
2,350
480
2,144
3,017
5,243
2,040
5,290
2,556
1,112
2,602
3,509
1,405
1,491
5,467
2,927
905
1,350
1,551
840
3,160
1,102
37,543
401
1,852
6,832
2,944
3,795
2,554
5,419
3,794
25,897
13,166
50,150
21,826
26,629
19,822
44,921
8,003
5,588
20,504
34,131
3,104
4,137
55,725
39,004
9,749
24,583
23,722
15,876
42,600
14,069
31,874
3,164
14,214
101,714
18,695
16,377
16,281
31,938
13,770
10,320
110,115
2,486
2,407
4,002
2,495
1,307
983
4,690
3,960
1,060
2,610
7,276
5,441
1,440
1,160
7,899
2,591
2,316
685
1,129
41,153
26,048
70,061
42,023
28,525
7,530
77,573
47,997
12,844
7,988
29,516
41,420
32,674
7,012
48,240
16,551
26,173
18,449
23,940
—
2,657
12,012
1,861
3,841
2,030
5,740
1,305
917
2,694
6,106
952
896
13,210
9,228
1,453
5,283
5,481
2,957
2,781
2,828
5,207
630
1,099
7,572
3,741
3,384
1,269
5,473
3,120
2,085
4,199
7,115
10,870
12,656
4,755
702
7,260
6,886
2,159
2,083
5,545
6,812
2,480
1,004
9,412
1,099
3,846
3,935
3,910
Avenue
2006 2000 Emerald Court
1999 7950 Bay Branch Dr
1985 3501 Executive Parkway
1900 54 Foxbar Road
1988 645 Castlefield Avenue
1999 4251 Dundas Street West
1964 10 William Morgan Drive
1971 123 Spadina Road
1982 25 Centennial Park Road
2002 305 Balliol Street
1973 1055 and 1057
Don Mills Road
1985 3705 Bathurst Street
1987 1340 York Mills Road
1988 8 The Donway East
1998 2750 Reservoir Avenue
1997 5660 N. Kolb Road
1986 8887 South Lewis Ave
1984 9524 East 71st St
1965 240 East 3rd St
2014 2419 North Euclid Avenue
2005 500 Village Drive
1974 2803 West 41st Avenue
1987 48 Wall Street
1975 333 rue Querbes
2002 1000 Aston Gardens Drive
1974 3000 Shelbourne Street
1988 3051 Shelbourne Street
1990 3965 Shelbourne Street
2002 Christ Church Road
1998 2175 Ygnacio Valley
Road
1988 1580 Geary Road
2000 126 Smith Street
1998 75 Minnesota Avenue
2004 5111 Connecticut
Avenue NW
1998 180 Scott Road
1997 285 Commonwealth Road
2006 110 First Street
2012 23 & 27 Washington
Street
2003 580 Montauk Highway
2000 7005 Pontiac Trail
2002 9012 Topanga Canyon
Road
1987 2095 Marine Drive
2006 16-18 Poole Road
2013 108 Littleton Road
1998 135 North Avenue
2008 Ellesmere Road
2013 Cross Road
2002 11621 New
Hampshire Avenue
2000 2387 Boston Road
2004 2215 Shipley Street
2016
2011
2010
2015
2015
2015
2015
2015
2013
2013
2013
2013
2013
2013
2011
2012
2010
2010
2011
2015
2013
2015
2013
2015
2015
2013
2013
2015
2012
2013
2016
2015
2011
2013
2011
2013
2015
2015
2013
2013
2013
2013
2013
2015
2013
2013
2014
2013
2011
2013
Description
Encumbrances
Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Winchester, UKJ . . . . . . . .
Winnipeg, MB . . . . . . . . . .
Winnipeg, MB . . . . . . . . . .
Winnipeg, MB . . . . . . . . . .
Wolverhampton, UKG . . . .
Woodbridge, CT . . . . . . . . .
Woodland Hills, CA . . . . . .
Worcester, MA . . . . . . . . . .
Yarmouth, ME . . . . . . . . . .
Yonkers, NY . . . . . . . . . . .
Yorkton, SK . . . . . . . . . . . .
Seniors housing operating
. . . . . . . . . . . . . . . .
total
—
13,116
16,190
13,111
—
—
—
13,496
16,811
—
3,384
6,009
1,960
1,276
1,317
2,941
1,370
3,400
1,140
450
3,962
467
29,405
38,612
21,732
15,609
8,922
14,219
20,478
21,664
27,711
50,107
8,762
—
1,973
894
1,631
—
1,180
742
993
1,185
1,341
355
6,009
2,024
1,315
1,357
2,941
1,426
3,436
1,156
470
3,967
476
29,405
40,521
22,586
17,200
8,922
15,343
21,183
22,640
28,876
51,443
9,102
5,367
10,618
3,765
2,245
2,316
4,691
4,005
4,797
5,706
7,956
1,536
2012
2013
2013
2015
2013
2011
2013
2011
2011
2013
2013
2010 Stockbridge Road
1999 857 Wilkes Avenue
1988 3161 Grant Avenue
1999 125 Portsmouth Boulevard
2008 73 Wergs Road
1998 21 Bradley Road
2005 20461 Ventura Boulevard
1999 340 May Street
1999 27 Forest Falls Drive
2005 65 Crisfield Street
2001 94 Russell Drive
$2,400,836
$1,085,554
$11,775,094
$807,677
$1,151,566
$12,516,758
$1,791,579
144
Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2016
(Dollars in thousands)
Description
Encumbrances
Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Outpatient medical:
Akron, OH . . . . . . . . . . . . . . .
$
— $
Allen, TX . . . . . . . . . . . . . . .
Alpharetta, GA . . . . . . . . . . .
Alpharetta, GA . . . . . . . . . . .
Alpharetta, GA . . . . . . . . . . .
Alpharetta, GA . . . . . . . . . . .
Alpharetta, GA . . . . . . . . . . .
Arcadia, CA . . . . . . . . . . . . .
Arlington, TX . . . . . . . . . . . .
Atlanta, GA . . . . . . . . . . . . . .
Atlanta, GA . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
Atlanta, GA . . . . . . . . . . . . . .
25,347
Bardstown, KY . . . . . . . . . . .
1,928
Bartlett, TN . . . . . . . . . . . . . .
Bel Air, MD . . . . . . . . . . . . .
Bellevue, NE . . . . . . . . . . . . .
Bettendorf, IA . . . . . . . . . . . .
Beverly Hills, CA . . . . . . . . .
Beverly Hills, CA . . . . . . . . .
Beverly Hills, CA . . . . . . . . .
Beverly Hills, CA . . . . . . . . .
Beverly Hills, CA . . . . . . . . .
Birmingham, AL . . . . . . . . . .
Birmingham, AL . . . . . . . . . .
Birmingham, AL . . . . . . . . . .
Boardman, OH . . . . . . . . . . .
Boca Raton, FL . . . . . . . . . . .
Boca Raton, FL . . . . . . . . . . .
Boerne, TX . . . . . . . . . . . . . .
Boynton Beach, FL . . . . . . . .
Boynton Beach, FL . . . . . . . .
Boynton Beach, FL . . . . . . . .
Boynton Beach, FL . . . . . . . .
Bradenton, FL . . . . . . . . . . . .
Bradenton, FL . . . . . . . . . . . .
Bridgeton, MO . . . . . . . . . . .
Buckhurst Hill, UKH . . . . . .
Burleson, TX . . . . . . . . . . . . .
Burnsville, MN . . . . . . . . . . .
Carmel, IN . . . . . . . . . . . . . . .
Carmel, IN . . . . . . . . . . . . . . .
Castle Rock, CO . . . . . . . . . .
Cedar Grove, WI . . . . . . . . . .
Charleston, SC . . . . . . . . . . .
—
—
—
—
—
—
—
33,729
78,271
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
821
726
476
1,862
548
773
1,769
5,408
82
4,931
1,947
—
—
187
—
—
—
20,766
18,863
19,863
32,603
52,772
52
124
476
80
31
109
50
2,048
2,048
214
1,184
1,035
450
11,597
10
—
2,280
$
12,105
$
14,196
14,757
—
17,103
18,902
36,152
23,219
18,243
18,720
24,248
43,425
—
15,015
—
16,680
7,110
40,730
1,192
31,690
28,639
87,192
10,201
11,733
18,726
12,161
12,312
34,002
13,120
7,692
7,403
5,611
40,369
9,799
4,298
21,084
49,243
12,611
31,596
19,238
2,026
21,559
80
113
2,773
13,004
618
25,928
—
412
31
—
205
522
594
3,343
295
6,650
1,687
611
8,238
1,889
24,708
—
73
124
—
156
2
—
503
1,235
1,881
10
88
2,588
—
588
1,261
8,279
2,175
30
—
—
—
401
391
425
26
571
—
53
$
821
726
476
1,862
548
773
1,769
5,618
82
5,301
1,947
—
274
187
—
—
—
20,766
18,863
19,863
32,603
52,772
52
124
476
80
50
214
50
2,048
2,048
270
13,963
1,184
1,035
450
11,597
10
—
2,280
$
12,105
$
2,050
14,607
14,789
—
17,308
19,424
36,745
26,352
18,537
25,000
25,934
44,036
7,964
16,904
24,708
16,680
7,183
40,854
1,192
31,846
28,642
87,192
10,704
12,967
20,607
12,170
12,381
36,485
13,120
8,280
8,664
13,834
41,905
9,829
4,298
21,084
49,243
13,012
31,987
19,663
3,626
3,798
—
5,331
4,755
10,190
8,913
1,941
9,325
5,558
10,358
561
5,734
464
4,032
389
2,755
332
2,334
2,918
5,720
3,496
4,127
6,776
3,768
2,548
12,111
3,067
3,253
3,324
4,708
7,314
1,037
498
5,382
2,263
3,068
4,373
6,292
2012
2012
2011
2011
2011
2011
2011
2006
2012
2006
2012
2012
2010
2007
2014
2010
2013
2015
2015
2015
2015
2015
2006
2006
2006
2010
2012
2006
2011
2006
2006
2007
2013
2014
2014
2010
2015
2011
2013
2011
2010 701 White Pond Drive
2006 1105 N Central Expressway
2003 11975 Morris Road
1900 940 North Point Parkway
2007 3300 Old Milton Parkway
1993 3400-A Old Milton Parkway
1999 3400-C Old Milton Parkway
1984 301 W. Huntington Drive
2012 902 W. Randol Mill Road
1991 755 Mt. Vernon Hwy.
1984 975 Johnson Ferry Road
2006 5670 Peachtree-Dunwoody
Road
2006 4359 New Shepherdsville Rd
2004 2996 Kate Bond Rd.
2016 12 Medstar Boulevard
2010 2510 Bellevue Medical
Center Drive
2014 2140 53rd Avenue
1946 9675 Brighton Way
1955 415 North Bedford
1946 416 North Bedford
1950 435 North Bedford
1989 436 North Bedford
1971 801 Princeton Avenue SW
1985 817 Princeton Avenue SW
1989 833 Princeton Avenue SW
2007 8423 Market St
1993 9960 S. Central Park
Boulevard
1995 9970 S. Central Park Blvd.
2007 134 Menger Springs Road
1995 8188 Jog Rd.
1997 8200 Jog Road
1996 10075 Jog Rd.
1995 10301 Hagen Ranch Road
1975 315 75th Street West
2006 7005 Cortez Road West
2006 12266 DePaul Dr
2013 High Road
2007 12001 South Freeway
2014 14101 Fairview Dr
2005 12188-A North Meridian
Street
2,026
21,586
7,140
2011
2007 12188-B North Meridian
79
113
2,815
13,576
618
25,939
1,679
154
2,900
2014
2010
2014
Street
2013 2352 Meadows Boulevard
1986 313 S. Main St.
2009 325 Folly Road
145
25,399
13,324
Description
Encumbrances
Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Cincinnati, OH . . . . . . . . . . .
Claremore, OK . . . . . . . . . . .
Clarkson Valley, MO . . . . . .
Clear Lake, TX . . . . . . . . . . .
Columbia, MD . . . . . . . . . . .
Columbia, MD . . . . . . . . . . .
Coon Rapids, MN . . . . . . . . .
Cypress, TX . . . . . . . . . . . . .
Cypress, TX . . . . . . . . . . . . .
Dade City, FL . . . . . . . . . . . .
Dallas, TX . . . . . . . . . . . . . . .
Dallas, TX . . . . . . . . . . . . . . .
Dallas, TX . . . . . . . . . . . . . . .
Dayton, OH . . . . . . . . . . . . . .
Deerfield Beach, FL . . . . . . .
Delray Beach, FL . . . . . . . . .
Durham, NC . . . . . . . . . . . . .
Edina, MN . . . . . . . . . . . . . . .
El Paso, TX . . . . . . . . . . . . . .
Everett, WA . . . . . . . . . . . . .
Fenton, MO . . . . . . . . . . . . . .
Fenton, MO . . . . . . . . . . . . . .
Flower Mound, TX . . . . . . . .
Flower Mound, TX . . . . . . . .
Flower Mound, TX . . . . . . . .
Fort Wayne, IN . . . . . . . . . . .
Fort Worth, TX . . . . . . . . . . .
Fort Worth, TX . . . . . . . . . . .
Franklin, TN . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
11,258
5,345
—
—
—
—
—
—
—
Franklin, WI . . . . . . . . . . . . .
4,445
Frisco, TX . . . . . . . . . . . . . . .
Frisco, TX . . . . . . . . . . . . . . .
Gallatin, TN . . . . . . . . . . . . .
Gig Harbor, WA . . . . . . . . . .
Glendale, CA . . . . . . . . . . . . .
Grand Prairie, TX . . . . . . . . .
Grapevine, TX . . . . . . . . . . . .
Grapevine, TX . . . . . . . . . . . .
—
—
—
—
—
—
—
—
Green Bay, WI
. . . . . . . . . . .
6,053
Green Bay, WI
. . . . . . . . . . .
Green Bay, WI
. . . . . . . . . . .
Greeneville, TN . . . . . . . . . . .
Greenwood, IN . . . . . . . . . . .
Greenwood, IN . . . . . . . . . . .
Grenwood, IN . . . . . . . . . . . .
Harker Heights, TX . . . . . . . .
High Point, NC . . . . . . . . . . .
Highland, IL . . . . . . . . . . . . .
Houston, TX . . . . . . . . . . . . .
Houston, TX . . . . . . . . . . . . .
Houston, TX . . . . . . . . . . . . .
Houston, TX . . . . . . . . . . . . .
Houston, TX . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
132
—
—
2,333
23
—
1,287
2,985
1,211
—
137
462
730
2,408
1,882
1,212
310
677
4,842
958
369
737
4,164
4,620
1,105
462
401
2,338
6,872
—
—
20
—
37
981
—
3,365
—
—
—
970
8,316
1,262
2,098
1,907
2,659
—
—
17,880
12,829
35,592
13,882
19,232
33,885
26,679
—
—
5,511
—
28,690
52,488
6,919
7,809
34,767
22,858
15,132
17,075
26,010
27,485
13,911
9,654
27,529
—
22,836
26,020
6,099
12,138
7,550
18,635
15,309
21,801
—
18,398
6,086
5,943
15,669
14,891
20,098
11,696
10,104
26,384
7,045
21,538
3,575
29,069
8,834
—
135
811
—
—
12
—
1,106
—
—
—
15,541
3,395
36
85
137
6,015
1
263
2,132
—
329
49
71
80
—
—
218
—
2,449
—
1,443
2,314
533
30,890
1,207
—
4,778
—
—
—
—
73
—
645
1
—
163
—
—
132
—
—
2,333
23
—
1,287
2,985
1,211
122
137
462
730
2,540
2,152
1,212
310
677
4,842
958
369
737
4,164
4,620
1,105
462
401
2,338
6,872
—
—
20
80
37
981
2,081
3,365
—
—
—
970
8,316
1,262
2,098
1,907
2,659
—
10,403
10,403
18,015
13,640
35,592
13,882
19,243
33,885
27,785
—
—
5,511
15,419
32,085
52,524
7,005
7,814
40,512
22,859
15,395
19,208
26,010
27,814
13,961
9,724
27,609
—
22,836
26,238
6,099
14,587
7,550
20,078
17,623
22,334
30,810
19,605
6,086
8,640
15,669
14,891
20,098
11,696
10,178
26,384
7,691
21,538
3,575
29,232
8,834
—
2,151
4,900
9,599
810
3,412
1,039
3,124
—
—
1,078
421
11,242
8,297
2,165
2,872
15,966
2,375
3,791
7,613
5,637
4,826
1,666
807
2,525
—
3,707
2,785
639
4,973
1,976
6,460
6,401
6,053
1,481
5,747
1,490
802
2,170
3,442
4,557
3,683
2,894
4,763
863
1,761
387
4,463
999
3
2012
2007
2009
2013
2012
2015
2013
2016
2016
2011
2013
2006
2012
2011
2011
2006
2013
2010
2006
2010
2013
2013
2015
2014
2014
2012
2012
2014
2007
2010
2007
2007
2010
2010
2007
2012
2014
2014
2010
2010
2010
2010
2012
2014
2014
2011
2012
2012
2011
5,837
33,128
9
5,837
33,137
8,093
2012
2013 3301 Mercy West Boulevard
2005 1501 N. Florence Ave.
2010 15945 Clayton Rd
2014 1010 South Ponds Drive
2002 10700 Charter Drive
1982 5450 & 5500 Knoll N Drive
2014 11850 Blackfoot Street NW
1900 14940 Mueschke Road
1900 13105 Wortham Center
Drive
1998 13413 US Hwy 301
2014 8196 Walnut Hill Lane
1995 9330 Poppy Dr.
2004 7115 Greenville Avenue
1988 1530 Needmore Road
2001 1192 East Newport Center
Drive
1985 5130-5150 Linton Blvd.
2012 1823 Hillandale Road
2003 8100 W 78th St
1997 2400 Trawood Dr.
2011 13020 Meridian Ave. S.
2009 1011 Bowles Avenue
2009 1055 Bowles Avenue
2014 2560 Central Park Avenue
2012 4370 Medical Arts Drive
1900 Medical Arts Drive
2004 7916 Jefferson Boulevard
2012 10840 Texas Health Trail
2007 7200 Oakmont Boulevard
1988 100 Covey Drive
1984 9200 W. Loomis Rd.
2004 4401 Coit Road
2004 4461 Coit Road
1997 300 Steam Plant Rd
2009 11511 Canterwood Blvd NW
2002 222 W. Eulalia St.
2009 2740 N State Hwy 360
2002 2040 W State Hwy 114
2002 2020 W State Hwy 114
2002 2253 W. Mason St.
2002 2845 Greenbrier Road
2002 2845 Greenbrier Road
2005 438 East Vann Rd
2010 1260 Innovation Parkway
2010 333 E County Line Road
2013 3000 S State Road 135
2012 E Central Texas Expressway
2010 4515 Premier Drive
2013 12860 Troxler Avenue
1900 15655 Cypress Woods
Medical Drive
2005 15655 Cypress Woods
Medical Drive
3,102
378
91
32,323
31,206
10,613
910
—
1,217
3,242
378
91
33,094
31,206
11,830
3,999
6,893
3,098
2014
2012
2012
2014 1900 N Loop W Freeway
1981 18100 St John Drive
1986 2060 Space Park Drive
146
Description
Encumbrances
Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Houston, TX . . . . . . . . . . . . .
Houston, TX . . . . . . . . . . . . .
Hudson, OH . . . . . . . . . . . . .
Humble, TX . . . . . . . . . . . . .
Jackson, MI . . . . . . . . . . . . . .
Jupiter, FL . . . . . . . . . . . . . . .
Jupiter, FL . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
Kenosha, WI . . . . . . . . . . . . .
6,110
Killeen, TX . . . . . . . . . . . . . .
Kyle, TX . . . . . . . . . . . . . . . .
La Jolla, CA . . . . . . . . . . . . .
La Jolla, CA . . . . . . . . . . . . .
La Quinta, CA . . . . . . . . . . . .
Lake St Louis, MO . . . . . . . .
Lakeway, TX . . . . . . . . . . . . .
Lakewood, CA . . . . . . . . . . .
Lakewood, WA . . . . . . . . . . .
Las Vegas, NV . . . . . . . . . . .
Las Vegas, NV . . . . . . . . . . .
Las Vegas, NV . . . . . . . . . . .
Las Vegas, NV . . . . . . . . . . .
Lenexa, KS . . . . . . . . . . . . . .
Lenexa, KS . . . . . . . . . . . . . .
Lincoln, NE . . . . . . . . . . . . . .
London, UKI . . . . . . . . . . . . .
London, UKI . . . . . . . . . . . . .
London, UKI . . . . . . . . . . . . .
Los Alamitos, CA . . . . . . . . .
Los Gatos, CA . . . . . . . . . . . .
Loxahatchee, FL . . . . . . . . . .
Loxahatchee, FL . . . . . . . . . .
Loxahatchee, FL . . . . . . . . . .
Marietta, GA . . . . . . . . . . . . .
Marinette, WI . . . . . . . . . . . .
Melbourne, FL . . . . . . . . . . .
Menasha, WI . . . . . . . . . . . . .
Merced, CA . . . . . . . . . . . . . .
Merriam, KS . . . . . . . . . . . . .
Merriam, KS . . . . . . . . . . . . .
Merriam, KS . . . . . . . . . . . . .
Merriam, KS . . . . . . . . . . . . .
Merriam, KS . . . . . . . . . . . . .
Merrillville, IN . . . . . . . . . . .
Mesa, AZ . . . . . . . . . . . . . . . .
Mesquite, TX . . . . . . . . . . . .
Milwaukee, WI . . . . . . . . . . .
Milwaukee, WI . . . . . . . . . . .
Milwaukee, WI . . . . . . . . . . .
Milwaukee, WI . . . . . . . . . . .
Mission Hills, CA . . . . . . . . .
Missouri City, TX . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5,455
—
—
—
—
—
—
—
—
—
—
—
3,658
8,062
2,016
15,896
24,796
—
3,688
13,313
91
3,688
13,405
2,374
2012
2007 10701 Vintage Preserve
—
2,587
—
607
2,252
2,825
—
760
2,569
12,855
9,425
3,266
240
—
146
72
—
2,319
74
433
540
100
1,420
17,395
3,948
5,058
39
488
1,637
1,340
1,553
2,682
—
3,439
1,374
—
176
—
—
—
1,226
—
1,558
496
540
1,425
922
—
—
—
—
13,720
9,941
17,367
11,415
5,858
18,058
22,878
14,384
32,229
26,571
22,066
14,249
—
14,885
16,017
—
4,612
15,287
6,921
17,926
13,723
29,723
152,642
27,188
11,174
18,635
22,386
5,048
6,509
4,694
20,053
13,538
50,461
13,861
14,585
8,005
1,996
10,222
5,862
24,998
22,134
9,561
3,834
8,457
11,520
2,185
44,535
42,276
—
12,815
2,587
—
668
2,608
3,005
—
760
2,569
12,855
9,425
3,279
240
2,801
146
72
6,127
2,319
74
433
540
100
1,420
17,395
3,948
5,058
39
488
1,719
1,440
1,650
2,682
—
3,439
1,374
—
176
81
358
182
1,257
—
1,558
496
540
1,425
922
—
4,791
1,360
68,072
14,116
9,941
17,389
13,962
6,562
18,058
22,954
14,756
32,229
26,571
22,234
14,355
—
16,842
16,675
—
5,632
16,546
7,133
18,228
13,723
29,876
152,642
27,188
11,174
19,722
24,147
5,990
7,170
5,719
20,053
13,538
50,779
16,980
14,585
8,138
4,081
14,146
8,811
25,029
22,823
10,214
3,834
8,457
11,520
2,185
44,535
39,565
7,523
80,886
396
—
83
2,903
884
—
76
372
—
—
180
106
2,801
1,957
658
6,127
1,021
1,259
212
302
—
153
—
—
—
1,087
1,761
1,024
761
1,121
—
—
318
3,119
—
133
2,166
4,283
3,132
62
689
653
—
—
—
—
—
2,080
8,883
147
9,242
3,403
539
2,917
4,344
2,579
4,086
6,000
1,676
2,871
1,665
2,727
3,919
—
5,315
2,561
—
2,254
5,430
2,763
3,995
969
8,758
7,015
1,250
514
6,191
9,201
2,272
2,582
2,083
—
3,685
5,089
650
3,858
2,592
1,347
4,293
2,655
3,699
5,749
3,928
699
2,069
3,676
871
9,857
4,793
63
Parkway
1998 2727 W Holcombe Boulevard
2006 5655 Hudson Drive
2014 8233 N. Sam Houston
Parkway E.
2009 1201 E Michigan Avenue
2001 550 Heritage Dr.
2004 600 Heritage Dr.
1993 10400 75th St.
2010 2405 Clear Creek Rd
2011 135 Bunton Road
1989 4150 Regents Park Row
1988 4120 & 4130 La Jolla Village
Drive
2006 47647 Caleo Bay Drive
2008 400 Medical Dr
1900 Lohmans Crossing Road
1993 5750 Downey Ave.
2005 11307 Bridgeport Way SW
1900 SW corner of Deer Springs
Way and Riley Street
1991 2870 S. Maryland Pkwy.
2000 1815 E. Lake Mead Blvd.
1997 1776 E. Warm Springs Rd.
2008 23401 Prairie Star Pkwy
2013 23351 Prairie Star Parkway
2003 575 South 70th St
2010 53 Parkside
2003 49 Parkside
2007 17-19 View Road
2003 3771 Katella Ave.
1993 555 Knowles Dr.
1997 12977 Southern Blvd.
1993 12989 Southern Blvd.
1994 12983 Southern Blvd.
2016 4800 Olde Towne Parkway
2002 4061 Old Peshtigo Rd.
2009 2222 South Harbor City
Boulevard
1994 1550 Midway Place
2010 315 Mercy Ave.
1972 8800 West 75th Street
1980 7301 Frontage Street
1977 8901 West 74th Street
1985 9119 West 74th Street
2009 9301 West 74th Street
2006 101 E. 87th Ave.
1989 6424 East Broadway Road
2012 1575 I-30
1930 1218 W. Kilbourn Ave.
1962 3301-3355 W. Forest Home
Ave.
1958 840 N. 12th St.
1983 2801 W. Kinnickinnic Pkwy.
1986 11550 Indian Hills Road
2016 7010 Highway 6
2012
2012
2013
2013
2006
2007
2010
2010
2014
2015
2015
2014
2010
2007
2006
2012
2007
2006
2006
2007
2010
2013
2010
2015
2015
2015
2007
2006
2006
2006
2006
2016
2010
2014
2016
2009
2011
2011
2011
2011
2013
2008
2008
2012
2010
2010
2010
2010
2014
2015
Description
Encumbrances
Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Moline, IL . . . . . . . . . . . . . . .
Monticello, MN . . . . . . . . . . .
Moorestown, NJ . . . . . . . . . .
Mount Juliet, TN . . . . . . . . . .
Mount Vernon, IL . . . . . . . . .
Murrieta, CA . . . . . . . . . . . . .
Murrieta, CA . . . . . . . . . . . . .
Muskego, WI . . . . . . . . . . . . .
Nashville, TN . . . . . . . . . . . .
New Albany, IN . . . . . . . . . .
—
8,021
—
2,479
—
—
—
970
—
—
New Berlin, WI . . . . . . . . . . .
3,738
Niagara Falls, NY . . . . . . . . .
Niagara Falls, NY . . . . . . . . .
Oklahoma City, OK . . . . . . .
Oro Valley, AZ . . . . . . . . . . .
Oshkosh, WI . . . . . . . . . . . . .
—
—
—
—
—
Oshkosh, WI . . . . . . . . . . . . .
6,749
Palmer, AK . . . . . . . . . . . . . .
Pasadena, TX . . . . . . . . . . . .
Pearland, TX . . . . . . . . . . . . .
Pearland, TX . . . . . . . . . . . . .
Pendleton, OR . . . . . . . . . . . .
Phoenix, AZ . . . . . . . . . . . . .
Pineville, NC . . . . . . . . . . . . .
Plano, TX . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
Plano, TX . . . . . . . . . . . . . . .
51,686
Plantation, FL . . . . . . . . . . . .
Plantation, FL . . . . . . . . . . . .
—
—
Plymouth, WI . . . . . . . . . . . .
1,131
Portland, ME . . . . . . . . . . . . .
Redmond, WA . . . . . . . . . . .
Reno, NV . . . . . . . . . . . . . . .
Richmond, TX . . . . . . . . . . . .
Richmond, VA . . . . . . . . . . .
Rockwall, TX . . . . . . . . . . . .
Rogers, AR . . . . . . . . . . . . . .
Rolla, MO . . . . . . . . . . . . . . .
Roswell, NM . . . . . . . . . . . . .
Roswell, NM . . . . . . . . . . . . .
Roswell, NM . . . . . . . . . . . . .
Sacramento, CA . . . . . . . . . .
Salem, NH . . . . . . . . . . . . . . .
San Antonio, TX . . . . . . . . . .
San Antonio, TX . . . . . . . . . .
San Antonio, TX . . . . . . . . . .
San Antonio, TX . . . . . . . . . .
Santa Clarita, CA . . . . . . . . .
Santa Clarita, CA . . . . . . . . .
Santa Clarita, CA . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Santa Clarita, CA . . . . . . . . .
25,000
Santa Clarita, CA . . . . . . . . .
Sarasota, FL . . . . . . . . . . . . .
Seattle, WA . . . . . . . . . . . . . .
Sewell, NJ . . . . . . . . . . . . . . .
—
—
—
—
—
61
6
1,566
—
3,800
—
964
1,806
2,411
3,739
1,433
454
216
89
—
—
217
1,700
1,500
9,594
—
1,149
961
5,423
793
8,563
8,848
1,250
655
5,015
1,117
—
2,969
132
1,062
1,931
183
883
762
866
1,655
1,012
1,038
4,518
900
—
—
278
295
—
62
4,410
60
8,783
18,489
50,896
11,697
24,892
—
47,190
2,159
7,165
16,494
8,290
10,891
8,362
19,135
18,339
18,339
15,881
29,705
8,009
11,253
32,753
10,312
48,018
6,974
20,698
83,209
10,666
9,262
1,870
25,930
26,709
21,972
—
26,697
17,197
29,277
47,639
5,851
15,984
17,171
12,756
14,050
10,178
9,173
31,041
17,288
2,338
28,384
185
40,257
20,618
47,325
38,428
57,929
Shakopee, MN . . . . . . . . . . . .
6,132
508
11,412
29
48
6
1,173
—
—
46
—
3,120
30
—
448
322
280
856
—
—
1,362
—
—
191
6
11,308
2,463
57
989
3,475
640
—
13
284
2,070
11,118
60
522
—
—
—
30
1
1,834
20
—
1,777
2,610
473
19,914
1,926
11,595
—
375
1,964
392
294
275
—
61
6
1,566
—
3,800
—
964
1,806
2,411
3,739
1,731
454
216
89
—
—
217
1,700
1,500
9,807
—
1,149
1,077
5,423
793
8,575
8,908
1,250
655
5,015
1,117
2,000
3,004
132
1,062
1,931
183
883
762
869
1,655
1,012
1,038
4,548
900
5,196
5,250
11,872
295
4,407
62
4,410
74
8,812
18,537
50,902
12,870
24,892
—
47,236
2,159
10,285
16,524
8,290
11,042
8,683
19,415
19,195
18,339
15,881
31,067
8,009
11,253
32,731
10,318
59,327
9,321
20,755
84,198
14,130
9,842
1,870
25,943
26,993
24,042
9,118
26,722
17,719
29,277
47,639
5,851
16,014
17,171
14,587
14,070
10,178
10,950
33,621
17,761
17,056
25,060
185
40,257
16,586
49,290
38,820
58,209
715
2,651
8,377
4,749
4,238
—
13,323
488
3,787
1,656
2,035
4,807
2,662
3,515
6,000
4,117
3,528
9,424
702
894
2,569
812
20,711
3,747
10,292
16,056
6,384
6,207
515
6,128
6,187
7,907
171
5,926
3,516
7,493
9,312
1,368
3,346
2,916
5,092
1,716
4,177
4,777
7,824
2,700
1,932
2,736
95
2,745
1,957
9,088
11,598
18,809
2012
2012
2011
2007
2011
2014
2010
2010
2006
2014
2010
2007
2007
2013
2007
2010
2010
2007
2012
2012
2014
2012
2006
2006
2008
2012
2006
2006
2010
2011
2010
2006
2015
2012
2012
2011
2011
2011
2011
2011
2006
2014
2006
2006
2012
2014
2014
2014
2014
2014
2014
2012
2010
2007
2013 3900 28th Avenue Drive
2008 1001 Hart Boulevard
2012 401 Young Avenue
2005 5002 Crossings Circle
2012 4121 Veterans Memorial Dr
1900 28078 Baxter Rd.
2011 28078 Baxter Rd.
1993 S74 W16775 Janesville Rd.
1986 310 25th Ave. N.
2001 2210 Green Valley Road
1993 14555 W. National Ave.
1995 6932 - 6934 Williams Rd
2004 6930 Williams Rd
2008 535 NW 9th Street
2004 1521 E. Tangerine Rd.
2000 855 North Wethaven Dr.
2000 855 North Wethaven Dr.
2006 2490 South Woodworth Loop
2013 5001 E Sam Houston
Parkway S
2013 2515 Business Center Drive
2013 11511 Shadow Creek Parkway
2013 3001 St. Anthony Drive
1998 2222 E. Highland Ave.
1988 10512 Park Rd.
2007 6957 Plano Parkway
2005 6020 West Parker Road
1997 851-865 SW 78th Ave.
1996 600 Pine Island Rd.
1991 2636 Eastern Ave.
2008 195 Fore River Parkway
2011 18000 NE Union Hill Rd.
1991 343 Elm St.
2016 22121 FM 1093 Road
2008 7001 Forest Avenue
2008 3142 Horizon Road
2008 2708 Rife Medical Lane
2009 1605 Martin Spring Drive
2004 601 West Country Club Road
2006 350 West Country Club Road
2009 300 West Country Club Road
1990 8120 Timberlake Way
2013 31 Stiles Road
1999 19016 Stone Oak Pkwy.
1999 540 Stone Oak Centre Drive
1986 5282 Medical Drive
2007 3903 Wiseman Boulevard
1976 23861 McBean Parkway
1998 23929 McBean Parkway
1996 23871 McBean Parkway
2013 23803 McBean Parkway
1989 24355 Lyons Avenue
1990 1921 Waldemere Street
2010 5350 Tallman Ave
2009 239 Hurffville-Cross Keys
Road
509
11,687
3,201
2010
1996 1515 St Francis Ave
148
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
773
1,012
—
3,121
3,400
3,000
592
18,089
2,216
21,135
31,488
22,246
—
18,581
3,781
616
1,057
3,439
4,681
—
3,616
2010
2010
2013
2014
2008
2014
2012
2007 1601 St Francis Ave
1958 1813 Ashland Ave.
2014 106 Vision Park Boulevard
1969 4955 Van Nuys Boulevard
2007 30 Rehill Avenue
1900 Central Avenue
2004 1545 East Southlake
Boulevard
698
34,389
5,370
2012
2004 1545 East Southlake
Description
Encumbrances
Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Shakopee, MN . . . . . . . . . . . .
Sheboygan, WI . . . . . . . . . . .
Shenandoah, TX . . . . . . . . . .
Sherman Oaks, CA . . . . . . . .
Somerville, NJ . . . . . . . . . . . .
Southlake, TX . . . . . . . . . . . .
Southlake, TX . . . . . . . . . . . .
10,363
1,563
—
—
—
—
—
707
1,012
—
—
3,400
3,000
592
18,089
2,216
21,135
32,186
22,244
—
18,243
Southlake, TX . . . . . . . . . . . .
17,534
698
30,549
Springfield, IL . . . . . . . . . . . .
Springfield, IL . . . . . . . . . . . .
St Paul, MN . . . . . . . . . . . . . .
St. Louis, MO . . . . . . . . . . . .
St. Paul, MN . . . . . . . . . . . . .
Stamford, CT . . . . . . . . . . . . .
Suffern, NY . . . . . . . . . . . . . .
Suffolk, VA . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
Sugar Land, TX . . . . . . . . . . .
8,076
Summit, WI . . . . . . . . . . . . . .
Tacoma, WA . . . . . . . . . . . . .
Tallahassee, FL . . . . . . . . . . .
Tampa, FL . . . . . . . . . . . . . . .
Temple, TX . . . . . . . . . . . . . .
Tucson, AZ . . . . . . . . . . . . . .
Tustin, CA . . . . . . . . . . . . . . .
Tustin, CA . . . . . . . . . . . . . . .
Van Nuys, CA . . . . . . . . . . . .
Voorhees, NJ . . . . . . . . . . . . .
Voorhees, NJ . . . . . . . . . . . . .
Waxahachie, TX . . . . . . . . . .
Wellington, FL . . . . . . . . . . .
Wellington, FL . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
—
West Allis, WI . . . . . . . . . . . .
2,869
West Seneca, NY . . . . . . . . .
Zephyrhills, FL . . . . . . . . . . .
—
—
Outpatient medical
—
—
49
336
2,706
—
653
1,566
3,543
2,899
—
—
4,319
2,900
1,302
3,345
3,361
—
6,404
6
—
107
388
1,104
917
3,875
—
—
37,695
17,247
39,507
—
37,255
11,511
15,532
87,416
64,307
17,449
12,234
9,954
4,925
541
12,039
36,187
24,251
96,075
18,784
16,933
13,697
3,303
22,435
27,270
66
—
—
2,423
2
—
338
3,840
11,919
3,728
330
1,501
11
41,153
200
25
—
—
—
—
—
26
847
—
1,374
—
1,474
77
—
2,639
1,572
—
3,531
—
1,568
177
49
336
2,701
—
696
1,566
3,543
2,899
—
—
4,319
2,900
1,325
3,345
3,361
—
6,477
6
—
316
580
1,106
1,665
3,875
10,351
3,551
38,025
18,748
39,523
41,153
37,412
11,537
15,532
87,416
64,307
17,449
12,234
9,980
5,749
541
13,413
36,187
25,651
96,152
18,784
19,364
15,077
3,301
25,218
27,270
459
161
2,691
6,141
9,139
—
8,423
3,829
3,526
26,616
11,469
4,335
2,047
1,122
2,429
193
1,294
7,655
8,389
17,750
40
5,685
4,256
1,100
8,459
4,992
total: . . . . . . . . . . . . . . . . .
$404,079
$505,698
$4,548,662
$450,707
$585,521
$4,919,550
$984,766
Assets held for sale:
Akron, OH . . . . . . . . . . . . . . .
$
— $
Akron, OH . . . . . . . . . . . . . . .
Alliance, OH . . . . . . . . . . . . .
Aventura, FL . . . . . . . . . . . . .
Baltic, OH . . . . . . . . . . . . . . .
Bellingham, MA . . . . . . . . . .
Boca Raton, FL . . . . . . . . . . .
Boonville, IN . . . . . . . . . . . . .
Chicago, IL . . . . . . . . . . . . . .
Chicago, IL . . . . . . . . . . . . . .
Columbus, OH . . . . . . . . . . .
Columbus, OH . . . . . . . . . . .
Columbus, OH . . . . . . . . . . .
Columbus, IN . . . . . . . . . . . .
Columbus, OH . . . . . . . . . . .
Conyers, GA . . . . . . . . . . . . .
Cortland, NY . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
630
290
270
4,540
50
9,270
1,440
190
1,800
2,900
530
1,010
1,010
530
—
2,740
700
$
7,535
8,219
7,723
33,986
8,709
—
31,048
5,510
19,256
17,016
5,170
5,022
4,931
6,710
—
19,302
18,041
$
—
—
—
—
—
—
—
—
—
—
4,434
—
8,418
—
7,023
—
—
$
— $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
6,212
6,260
5,764
35,599
6,339
1,372
30,214
3,492
18,878
17,840
10,134
4,386
14,359
4,703
7,023
20,186
16,935
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
149
Boulevard
2011 1100 East Lincolnshire Blvd
2011 2801 Mathers Rd
2006 225 Smith Avenue N.
2001 2325 Dougherty Rd.
2007 435 Phalen Boulevard
2016 29 Hospital Plaza
2007 255 Lafayette Avenue
2007 5838 Harbour View Blvd.
2005 11555 University Boulevard
2009 36500 Aurora Dr.
2013 1608 South J Street
2011 One Healing Place
2003 14547 Bruce B Downs Blvd
2012 2601 Thornton Lane
1995 2055 W. Hospital Dr.
1976 14591 Newport Ave
1985 14642 Newport Ave
1991 6815 Noble Ave.
1997 900 Centennial Blvd.
2012 200 Bowman Drive
2014 2460 N I-35 East
2000 10115 Forest Hill Blvd.
2003 1395 State Rd. 7
1961 11333 W. National Ave.
1990 550 Orchard Park Rd
1974 38135 Market Square Dr
1915 209 Merriman Road
1961 721 Hickory St.
1982 1785 Freshley Ave.
2001 2777 NE 183rd Street
1983 130 Buena Vista St.
1900 Maple Street and High
Street
1989 1080 Northwest 15th Street
2000 1325 N. Rockport Rd.
2005 6700 South Keating Avenue
2007 4239 North Oak Park
Avenue
1968 1425 Yorkland Rd.
1983 1850 Crown Park Ct.
1978 5700 Karl Rd.
2001 2011 Chapa Dr.
1994 750 Mt. Carmel Mall
1998 1504 Renaissance Drive
2001 839 Bennie Road
2010
2010
2014
2007
2011
2015
2011
2010
2012
2008
2011
2010
2011
2011
2008
2015
2015
2009
2006
2010
2016
2006
2007
2010
2007
2011
2006
2005
2006
2012
2006
2007
2012
2002
2012
2012
2005
2006
2006
2002
2012
2012
2012
Description
Encumbrances
Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
El Paso, TX . . . . . . . . . . . .
Fayetteville, GA . . . . . . . . .
Fredericksburg, VA . . . . . .
Germantown, TN . . . . . . . .
Greendale, WI . . . . . . . . . .
Hanover, IN . . . . . . . . . . . .
Hattiesburg, MS . . . . . . . . .
Hemet, CA . . . . . . . . . . . . .
Hemet, CA . . . . . . . . . . . . .
Hermitage, TN . . . . . . . . . .
Hollywood, FL . . . . . . . . . .
Houston, TX . . . . . . . . . . . .
Huron, OH . . . . . . . . . . . . .
Jackson, NJ . . . . . . . . . . . . .
Jacksonville Beach, FL . . .
Jefferson, OH . . . . . . . . . . .
Jupiter, FL . . . . . . . . . . . . .
Kennesaw, GA . . . . . . . . . .
Kennewick, WA . . . . . . . . .
Lake Barrington, IL . . . . . .
Lancaster, NH . . . . . . . . . .
Lexington, KY . . . . . . . . . .
Loganville, GA . . . . . . . . . .
Marietta, GA . . . . . . . . . . .
Monclova, OH . . . . . . . . . .
Monroe, WA . . . . . . . . . . .
Morrow, GA . . . . . . . . . . . .
Naples, FL . . . . . . . . . . . . .
Olympia, WA . . . . . . . . . . .
Orange Village, OH . . . . . .
Palm Springs, FL . . . . . . . .
Palm Springs, FL . . . . . . . .
Panama City Beach, FL . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Plano, TX . . . . . . . . . . . . . .
4,032
San Ramon, CA . . . . . . . . .
Sarasota, FL . . . . . . . . . . . .
Sarasota, FL . . . . . . . . . . . .
Sarasota, FL . . . . . . . . . . . .
Seattle, WA . . . . . . . . . . . .
Seattle, WA . . . . . . . . . . . .
St. Louis, MO . . . . . . . . . . .
Stanwood, WA . . . . . . . . . .
Thomasville, GA . . . . . . . .
Uhrichsville, OH . . . . . . . .
Victoria, BC . . . . . . . . . . . .
Webster, NY . . . . . . . . . . . .
Webster, NY . . . . . . . . . . . .
Webster Groves, MO . . . . .
West Chester, PA . . . . . . . .
West Chester, PA . . . . . . . .
West Worthington, OH . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,420
560
3,700
3,049
2,060
210
—
1,890
430
—
1,240
5,090
160
6,500
1,210
80
3,100
940
1,820
3,400
160
1,980
1,430
1,270
1,750
2,560
818
1,716
550
610
739
1,182
—
840
2,430
950
1,120
880
3,420
2,630
—
2,260
—
24
2,674
800
1,300
1,790
3,290
600
510
12,394
12,665
22,016
12,456
35,383
4,430
—
28,606
9,630
—
13,806
9,471
6,088
26,405
26,207
9,120
47,453
10,848
27,991
66,179
434
21,258
22,912
10,519
11,868
34,460
8,064
17,306
16,689
7,419
4,066
7,765
—
8,538
17,488
8,825
12,489
9,854
15,555
10,257
—
28,474
—
6,716
14,218
8,968
21,127
15,425
42,258
11,894
5,090
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
13,347
12,165
23,684
12,202
33,762
3,025
11,863
22,635
8,993
10,121
14,106
8,503
5,566
32,201
25,088
6,402
46,458
10,943
23,390
63,190
493
21,928
22,257
11,054
12,230
29,936
5,913
4,055
13,830
6,096
2,061
3,062
6,367
2,499
16,188
9,314
12,360
9,998
15,455
10,996
12,522
24,648
11,378
4,763
13,876
8,847
20,295
15,642
41,176
11,065
4,046
—
—
—
—
—
—
11,863
—
—
10,121
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
6,367
—
—
—
—
—
—
—
12,522
—
11,378
—
—
—
—
—
—
—
—
150
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2014
2012
2012
2006
2012
2004
2010
2010
2010
2011
2012
2007
2005
2012
2012
2006
2012
2012
2010
2012
2011
2014
2012
2012
2011
2010
2007
1997
2010
2007
2006
2006
2011
2011
2010
2012
2012
2012
2010
2010
2010
2010
2011
2006
2012
2012
2012
2011
2012
2012
2006
1999 435 S Mesa Hills Drive
1994 1967 Highway 54 West
1992 12100 Chancellors Village
2002 1325 Wolf Park Drive
1988 5700 Mockingbird Lane
2000 188 Thornton Rd
2009 217 Methodist Hospital
Blvd
1989 1001 N. Lyon Ave
1988 1001 N. Lyon Ave
2006 4131 Andrew Jackson
Parkway
2001 3880 South Circle Drive
2009 15015 Cypress Woods
Medical Drive
1983 1920 Cleveland Rd. W.
2001 2 Kathleen Drive
1999 1700 The Greens Way
1984 222 Beech St.
2002 110 Mangrove Bay Way
1998 5235 Stilesboro Road
1994 2802 W 35th Ave
2000 22320 Classic Court
1905 63 Country Village Road
2013 2531 Old Rosebud Road
1997 690 Tommy Lee Fuller
Drive
1997 3039 Sandy Plains Road
2013 6935 Monclova Road
1994 15465 179th Ave. SE
1990 6635 Lake Drive
1999 1710 S.W. Health Pkwy.
1995 616 Lilly Rd. NE
1985 3755 Orange Place
1993 1640 S. Congress Ave.
1997 1630 S. Congress Ave.
2005 6012 Magnolia Beach
Road
1996 5521 Village Creek Dr
1989 18888 Bollinger Canyon
Rd
1998 3221 Fruitville Road
1999 2290 Cattlemen Road
1990 3749 Sarasota Square
Boulevard
2000 2326 California Ave SW
2003 4611 35th Ave SW
1963 6543 Chippewa St
1998 7212 265th St NW
2006 423 Covington Avenue
1977 5166 Spanson Drive S.E.
2002 2638 Ross Lane
2001 100 Kidd Castle Way
2001 200 Kidd Castle Way
2012 45 E Lockwood Avenue
2000 1615 East Boot Road
2002 1615 East Boot Road
1980 111 Lazelle Rd., E.
Description
Encumbrances
Land
Building &
Improvements
Initial Cost to Company
Cost Capitalized
Subsequent to
Acquisition
Gross Amount at Which
Carried at Close of Period
Land
Building &
Improvements
Accumulated
Depreciation(1)
Year
Acquired
Year
Built
Address
Whittier, CA . . . . . . . . . . . .
Wichita Falls, TX . . . . . . . .
Willard, OH . . . . . . . . . . . .
Winter Haven, FL . . . . . . .
—
—
—
—
4,470
1,070
730
710
22,151
26,167
6,447
10,038
—
—
—
—
—
—
—
—
20,590
25,898
6,317
10,364
Assets held for sale
total
. . . . . . . . . . . . . . . .
$
4,032
$ 112,022
$ 1,044,065
$
72,126
$
— $ 1,044,859
Summary:
2010
2014
2011
2014
1988 13250 E Philadelphia St
1998 3908 Kell W Boulevard
2012 1050 Neal Zick
1979 650 North Lake Howard
Drive
—
—
—
—
—
Triple-net . . . . . . . . . . . . . .
$ 594,199
$ 804,007
$ 7,794,067
$ 718,637
$ 853,984
$ 8,462,729
$1,317,149
Seniors housing
operating . . . . . . . . . . . . .
2,400,836
1,085,554
11,775,094
Outpatient medical . . . . . . .
Construction in progress . .
404,079
58,381
505,698
4,548,662
—
506,091
807,677
450,707
—
1,151,566
12,516,758
1,791,579
585,521
4,919,550
984,766
—
506,091
—
Total continuing
operating properties . . .
Assets held for sale . . . . . .
Total investments in real
3,457,495
2,395,259
24,623,914
1,977,021
2,591,071
26,405,128
4,093,494
4,032
112,022
1,044,065
72,126
—
1,044,859
—
property owned . . . . . .
$3,461,527
$2,507,281
$25,667,979
$2,049,147
$2,591,071
$27,449,987
$4,093,494
(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.
151
Year Ended December 31,
2016
2015
2014
(in thousands)
Reconciliation of real property:
Investment in real estate:
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . .
Additions:
$29,865,490
$25,491,935
$23,734,733
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Assumed other items, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assumed debt
2,145,590
672,008
172,095
63,732
3,364,891
445,625
389,256
1,064,810
2,210,600
380,298
160,897
265,152
Total additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deductions:
Cost of real estate sold . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification of accumulated depreciation and
amortization for assets held for sale . . . . . . . . . . . . . . .
Impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,053,425
5,264,582
3,016,947
(2,118,305)
(449,932)
(916,997)
(292,914)
(37,207)
(41,464)
(2,220)
(493,616)
(397,411)
(64,476)
—
(981,473)
(278,272)
Total deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . .
(2,448,426)
(429,431)
Balance at end of year(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
$30,041,058
$29,865,490
$25,491,935
Accumulated depreciation:
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . .
Additions:
Depreciation and amortization expenses . . . . . . . . . . . . . .
Amortization of above market leases . . . . . . . . . . . . . . . .
Total additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deductions:
Sale of properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification of accumulated depreciation and
$ 3,796,297
$ 3,020,908
$ 2,386,658
901,242
7,909
909,151
826,240
11,912
838,152
844,130
7,935
852,065
(221,737)
(69,735)
(123,582)
amortization for assets held for sale . . . . . . . . . . . . . . .
(292,914)
(41,464)
(64,476)
Total deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . .
(514,651)
(97,303)
(111,199)
48,436
(188,058)
(29,757)
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 4,093,494
$ 3,796,297
$ 3,020,908
(1) The unaudited aggregate cost for tax purposes for real property equals $24,887,189,000 at December 31, 2016.
152
Welltower Inc.
Schedule IV — Mortgage Loans on Real Estate
December 31, 2016
Location
Segment
Interest Rate
(in thousands)
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
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Oklahoma
Oregon
Pennsylvania
Texas
Florida
Outpatient Medical
Triple-Net
Triple-Net
Triple-Net
Triple-Net
Triple-Net
Triple-Net
Triple-Net
Triple-Net
Triple-Net
Triple-Net
Triple-Net
First mortgages relating to multiple properties:
Triple-Net
3 properties in two states
Triple-Net
13 properties in Texas
Triple-Net
11 properties in six states
Triple-Net
18 properties in six states
Second mortgages relating to 1 property located in:
6.35%
7.25%
7.00%
8.55%
8.00%
8.04%
7.00%
8.72%
7.10%
7.10%
8.00%
8.11%
12/22/17
11/21/18
12/31/19
07/01/19
07/06/19
01/16/18
02/28/21
11/01/19
05/01/17
06/01/17
02/28/21
06/23/21
$ 348,542
105,443
133,193
64,706
48,485
8,409
107,010
85,043
1,357
1,479
53,507
13,955
$ —
—
—
—
—
—
—
—
—
—
—
—
10.00%
10.00%
10.00%
10.00%
01/01/22
01/01/22
01/01/22
01/01/22
$
76,331
878,820
558,025
1,175,775
$ —
—
—
—
$ 65,000
17,149
28,047
14,122
18,506
2,591
26,074
11,610
225
250
7,875
17,100
$
9,000
103,620
65,796
138,634
$ 60,500
17,149
22,273
9,022
7,202
1,233
17,680
11,486
225
250
7,875
2,029
$
9,000
103,620
65,796
138,634
Connecticut
Texas
Texas
Totals
Triple-Net
Triple-Net
Triple-Net
8.11%
12.17%
10.00%
04/01/18
05/01/19
12/30/18
$
43,225
32,033
20,247
$16,709
11,751
11,186
$
6,270
3,100
25,000
$
6,270
3,100
2,391
$39,646
$559,969
$485,735
$63,553
—
—
—
—
—
—
—
—
—
—
—
$ —
—
—
—
$ —
—
—
$63,553
Reconciliation of mortgage loans:
Balance at beginning of year
Additions:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2016
2015
2014
$ 635,492
(in thousands)
$ 188,651
$146,987
New mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Draws on existing loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,223
92,815
524,088
30,550
113,996
26,330
Total additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deductions:
Collections of principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conversions to real property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in balance due to foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . .
101,038
554,638
140,326
(191,134)
(45,044)
(3,053)
(239,231)
(11,564)
(80,552)
(23,288)
—
(103,840)
(3,957)
(49,974)
(45,836)
—
(95,810)
(2,852)
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 485,735
$ 635,492
$188,651
153
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Thomas J. DeRosa, certify that:
1. I have reviewed this annual report on Form 10-K of Welltower Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, 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;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: February 22, 2017
/s/ THOMAS J. DEROSA
Thomas J. DeRosa,
Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Scott A. Estes, certify that:
1. I have reviewed this annual report on Form 10-K of Welltower Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, 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;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: February 22, 2017
/s/ SCOTT A. ESTES
Scott A. Estes,
Chief Financial Officer
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
I, Thomas J. DeRosa, the Chief Executive Officer of Welltower Inc. (the “Company”), certify, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that (i) the Annual Report on Form
10-K for the Company for the year ended December 31, 2016 (the “Report”), fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained
in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
/s/ THOMAS J. DEROSA
Thomas J. DeRosa,
Chief Executive Officer
Date: February 22, 2017
A signed original of this written statement required by Section 906 has been provided to the Company and will
be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
I, Scott A. Estes, the Chief Financial Officer of Welltower Inc. (the “Company”), certify, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that (i) the Annual Report on Form
10-K for the Company for the year ended December 31, 2016 (the “Report”), fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained
in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
/s/ SCOTT A. ESTES
Scott A. Estes,
Chief Financial Officer
Date: February 22, 2017
A signed original of this written statement required by Section 906 has been provided to the Company and will
be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
BOARD OF DIRECTORS
Kenneth J. Bacon
Age 62
Co-Founder and Managing Partner
RailField Realty Partners
Bethesda, Maryland
Thomas J. DeRosa
Age 59
Chief Executive Officer
Welltower Inc.
Toledo, Ohio
Jeffrey H. Donahue
Age 70
Chairman
Former President & Chief Executive Officer
Enterprise Community Investment, Inc.
Columbia, Maryland
Fred S. Klipsch
Age 75
Founder and Chairman
Hoosiers for Quality Education
Indianapolis, Indiana
Geoffrey G. Meyers
Age 72
Retired Chief Financial Officer,
Executive Vice President and Treasurer
HCR ManorCare, Inc.
Toledo, Ohio
Timothy J. Naughton
Age 55
Chairman and Chief Executive Officer
AvalonBay Communities, Inc.
Arlington, Virginia
Sharon M. Oster
Age 68
Frederic D. Wolfe Professor of Management &
Entrepreneurship, Professor of Economics
Yale University School of Management
New Haven, Connecticut
Judith C. Pelham
Age 71
President Emeritus
Trinity Health
Livonia, Michigan
Sergio D. Rivera
Age 54
CEO and President of the Vacation Ownership
Segment
ILG, Inc.
Miami, Florida
R. Scott Trumbull
Age 68
Retired CEO and Chairman of the Board
Franklin Electric Co., Inc.
Fort Wayne, Indiana
COMMITTEES OF THE BOARD
Audit Committee
Klipsch, Meyers, Rivera, Trumbull (Chair)
Compensation Committee
Bacon, Naughton, Oster (Chair), Pelham
Nominating/Corporate Governance Committee
Donahue (Chair), Klipsch, Meyers, Oster, Pelham
Executive Committee
DeRosa, Donahue (Chair), Oster, Trumbull
EXECUTIVE OFFICERS
Thomas J. DeRosa
Chief Executive Officer
Scott A. Estes
Executive Vice President - Chief Financial Officer
Mercedes T. Kerr
Executive Vice President - Business &
Relationship Management
Matthew McQueen
Senior Vice President – General Counsel &
Corporate Secretary
TRANSFER AGENT, REGISTRAR,
DIVIDEND DISBURSING AGENT AND
PLAN ADMINISTRATOR
Computershare
P.O. Box 30170
College Station, Texas 77842-3170
(888) 216-7206
www.computershare.com/investor
SHAREHOLDER SERVICES
Computershare provides shareholder services
to registered shareholders via telephone and
online. Computershare representatives can
assist you in change of name or address,
consolidation of accounts, duplicate mailings,
dividend reinvestment enrollment, lost share
certificates, transfer of shares to another person
and additional administrative services. For more
information, go to www.computershare.com/
investor or call toll-free (888) 216-7206.
INVESTOR INFORMATION
Current and prospective investors can access
the Annual Report, Proxy Statement, SEC
filings, earnings announcements and other press
releases on our website at www.welltower.com,
or by email request to info@welltower.com.
Shankh Mitra
Senior Vice President - Finance & Investments
EXCHANGE LISTING
New York Stock Exchange
Trading Symbol: HCN
CORPORATE OFFICES
Welltower Inc.
4500 Dorr Street
Toledo, Ohio 43615-4040
(877) 670-0070
(419) 247-2800
(419) 247-2826 Fax
www.welltower.com
466 employees as of 1/31/17
5,066 registered shareholders as of 1/31/17
MEMBER
National Association of Real Estate
Investment Trusts
INDUSTRY PARTNER
World Economic Forum
FORWARD-LOOKING STATEMENTS
This Annual Report and the Letter to
Shareholders contain “forward-looking
statements” as that term is defined in the
Private Securities Litigation Reform Act of
1995. For example, when we use words such
as “may,” “will,” “intend,” “should,” “believe,”
“expect,” “anticipate,” “project,” “estimate,” or
similar expressions that do not relate solely
to historical matters, we are making forward-
looking statements. Forward-looking statements
are not guarantees of future performance
and involve risks and uncertainties that may
cause the company’s actual results to differ
from the company’s expectations discussed
in the forward-looking statements. Important
factors that could cause our actual results to be
materially different from the forward-looking
statements are discussed in our Form 10-K
under the heading “Risk Factors.” We assume
no obligation to update or revise any forward-
looking statements, whether because of new
information, future events or otherwise, or to
update the reasons why actual results could
differ from those projected in any forward-
looking statements.
LEGAL COUNSEL
Shumaker, Loop & Kendrick, LLP
Toledo, Ohio
INDEPENDENT AUDITORS
Ernst & Young LLP
Toledo, Ohio
WELLTOWER ONLINE
Our website: www.welltower.com
www.twitter.com/welltower
www.linkedin.com/company/welltower
To view the Welltower 2016 Year in Review, visit
www.welltower.com.
www.welltower.com
4500 Dorr Street
Toledo, Ohio 43615-4040
877.670.0070
419.247.2800
© COPYRIGHT 2017 WELLTOWER INC.