Welltower

Annual 
Report

WELL
LISTED
NYSE

LETTER FROM
THE CEO

Dear Shareholders,

As we look back on 2017, it was a year 

of great strides and significant and 

positive transition for the Company.

We continued to utilize our platform, 

the best in the industry, to invest with

our premier operating partners in 

markets with high barriers to entry, 

as well as to introduce new partners 

and innovative structures as Welltower 

drives the changes that are needed 

in health care delivery to manage 

the aging population. No company is 

better positioned to drive wellness to

this segment of the population than

Welltower, through our best in class 

real estate portfolio, data and analytics 

capabilities, and people. 

Thomas J. DeRosa
CEO, Welltower Inc.

buildings. Approximately 200,000 frail 

to cognitively impaired seniors live

and are cared for under the Welltower 

umbrella 365 days per year, and over 16 

million outpatient visits take place in our

outpatient medical office portfolio. The 

data that is collected in these settings

can provide great insight into measuring 

outcomes and reducing costs in health 

Well Positioned in the Transition to
Value Based Care

care delivery.

Welltower is the world leader in owning, 

As the shift to lower cost settings

managing and developing real estate 

continues, our ongoing collaboration 

that is crucial to the shift in U.S. health

with major health systems is expected

care from a fee-for-service model to 

to drive value for our shareholders for 

value-based care with a sharp focus 

years to come. There has never been 

on outcomes. Our real estate holdings 

more acceptance of Welltower as a 

allow us to elect REIT tax status. What

value-added partner in the health care 

differentiates Welltower, however, is 

delivery continuum. There is a growing 

that we are laser focused on driving 

understanding that we provide the lower 

value not only from the real estate, 

cost settings that health systems need

but from what goes on inside the 

to achieve their goals in value-based 

care. One example of this is Welltower’s 

four rental CCRCs for $368 million in 

participation in the World Economic 

top metro markets, such as Washington, 

Forum pilot in Atlanta focusing on heart 

D.C. and Miami, and at an above-market 

failure, where we are working alongside

7% yield:  great examples of what makes 

the nation’s leading health systems 

Welltower’s relationship investing model 

and foundations and 

superior to that of our peers.

As the shift to 

lower cost settings 

continues, our 

ongoing collaboration 

with major health 

systems is expected 

to drive value for our 

shareholders for years 

to come.

payors to make Atlanta 

a national leader in 

heart failure patient 

survival by 2022, while 

significantly improving

the quality of life and

reducing the average 

cost per patient.

We also are proud of how we enhanced

and expanded our relationship with 

Sagora Senior Living, a resident-first 

centered operator based in Fort Worth, 

TX. With Sagora, we used the security of 

a triple-net lease structure to incubate 

this outstanding team and business

model, and then progressed them 

The importance of 

into a RIDEA structure to share in the 

driving health care 

future upside of this real estate and the

delivery to lower cost 

resident-first centered operator, as well 

settings is why I have

as to align Welltower and Sagora to grow 

made public statements

and enhance investment returns.

that Welltower will not completely exit

the post-acute care sector. Post-acute 

2017 also marked a major milestone in 

care is a necessary part of the health 

care continuum and is deliverable at 

a fraction of the cost of a hospital

health care real estate, as we delivered 

on our stated goal of announcing a 

major partnership with the nation’s 

bed. This sector, however, needs to be 

third largest health system, Providence

reimagined in collaboration with leading 

St. Joseph Health, by building a world 

health care providers and payors, and we 

class cancer center on the campus of 

believe it is beneficial for Welltower to 

The Shops at Mission Viejo, a high end 

have a continued presence in the sector.

shopping and dining destination owned 

Innovation and Growth

In 2017, we announced over $1.7 billion 

by Simon Property Group in Southern 

California. This innovative structure was 

hailed not only in our industry, but in

the retail industry as such partnerships 

of new investments, a significant amount 

are expected to drive foot traffic by

of these investments was with our 

lead operating partner, Sunrise Senior 

Living, which was recognized “First”

in customer satisfaction by J.D. Power 

and Associates in their inaugural Senior 

Living Report. Towards the end of the

year, we announced the acquisition of 

bringing health care destinations to the 

world’s best retail locations. Another 

prime example of this strategy is having

UCLA Health occupying a prime retail 

storefront in one of our premier Beverly 

Hills outpatient medical buildings.

Another Strong Year of Financial 
Performance

Welltower delivered solid financial results 

in 2017, led by average total portfolio 

same store NOI growth of 2.7%*, at 

the high end of our original guidance, 

which was underpinned again by the 

consistent outperformance of our seniors 

housing operating portfolio. Our superior 

locations, buildings and operator 

capabilities once again delivered strong 

pricing power in our seniors housing 

portfolio in the U.S., as well as in the U.K. 

and Canada. 

leverage. At year end, our net debt 

to adjusted EBITDA was 5.4x* and 

our net debt to undepreciated book 

capitalization ratio was 36.3%*. Our 

balance sheet strength affords us 

significant flexibility to deploy capital to

the advantage of our shareholders.

Aging in Cities

In 2017, we released our “Aging in Cities” 

survey, which is the first of its kind. The

results of this survey challenge many

Options remain 

limited for the senior 

population in the urban 

core, which is why 

Welltower is committed 

to bringing these 

options to markets 

in which they do not 

exist: Manhattan, 

London and Toronto 

are good examples of 

markets where we are 

developing purpose-

built, state-of-the-art 

preconceived ideas 

and show that most

contemporary city 

dwellers want to age 

in their communities. 

We have heard about 

the desire to age in 

place for years, but 

what we found was 

aging in place to 

the modern senior 

means staying in

his/her city, not his/

her house. With the 

rapid growth of the 

aging population, 

these preferences 

will shape the way 

our cities function 

for years to come. 

Options remain

We took advantage 

throughout the 

year of favorable 

capital markets

by generating $1.5 

billion of proceeds 

from non-core asset 

dispositions and 

raising over $600 

million through 

our ATM and DRIP 

programs at an 

average stock price 

of approximately

$71 per share. With 

these proceeds, 

we selectively 

extinguished $1.4

billion of high coupon 

debt and preferred 

securities. 

Welltower’s balance 

sheet was further 

senior communities in 

limited for the senior

prime locations.

population in the 

urban core, which 

is why Welltower 

is committed to 

bringing these options to markets in

which they do not exist: Manhattan, 

London and Toronto are good examples 

strengthened during 2017 and is now 

among the most pristine in the sector,

near or at historically low levels of 

of markets where we are developing 

and hardworking colleagues who value

purpose-built, state-of-the-art senior

the Company’s mission as much as I do. 

communities in prime locations. Some 

All of us are focused on driving value 

further takeaways from the survey 

for you, the shareholder. It is our honor 

include: 

to do so and we greatly appreciate your 

confidence and continued support. 

•

Seven out of 10 city dwellers (and

eight out of 10 Baby Boomers) want

Sincerely,

to live in their current city when they

are 80+ years old

Thomas J. DeRosa

CEO, Welltower Inc.

• City dwellers want the urban 

experience for their 80+ year-old 

selves – places to gather with friends, 

scenic areas, outdoor recreation 

and shopping, cultural experiences, 

farmers’ markets, etc.

•

84 percent want to be in a

community with a diverse population,

with “a mix of different age groups”

as the top criterion

•

81 percent of city dwellers are open 

to living in an urban senior living 

community

Providing modern 

healthcare settings  

that promote Wellness 

is our mission and we 

are pleased to have  

this ticker represent 

not just what we do, 
but who we are.

We Are WELL

On February 28, 2018,

we changed our stock 

ticker from HCN to

WELL. Providing 

modern health care 

settings that promote

Wellness is our 

mission and we are 

pleased to have this 

ticker represent not 

just what we do, but 

who we are. I am fortunate to work 

alongside incredibly talented, diverse 

* Please see Non-GAAP Reconciliations

Non-GAAP Reconciliations

NON-GAAP RECONCILIATIONS

The company believes that net income and net income attributable to 
common stockholders, as defined by U.S. generally accepted accounting 
principles (U.S. GAAP), are the most appropriate earnings measurements. 
However, the company considers EBITDA, A-EBITDA, NOI and SSNOI 
to be useful supplemental measures of its operating performance. NOI 
and SSNOI are disclosed on a Welltower pro rata ownership basis. Pro 
rata amounts are derived by reducing consolidated amounts for minority 
partners’ noncontrolling ownership interests and adding Welltower’s 
minority ownership share of unconsolidated amounts. Welltower does not 
control unconsolidated investments. While the company considers pro rata
disclosures useful, they may not accurately depict the legal and economic 
implications of Welltower’s joint venture arrangements and should be used
with caution.

The company defines 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 paid to operators, 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 relevant
year-over-year reporting periods.  Land parcels, loans, sub-leases and
major capital restructurings as well as any properties acquired, developed/
redeveloped, transitioned, sold or classified as held for sale during that period
are excluded from the same store amounts.  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 the company’s
financial statements prepared in accordance with U.S. GAAP.  Significant
normalizers (defined as any that individually exceed 0.50% of SSNOI growth 
per property type) are separately disclosed and explained in the company’s 
quarterly earnings supplements.  The company believes NOI and SSNOI 
provide investors relevant and useful information because they measure the 
operating performance of the company’s properties at the property level on 
an unleveraged basis. The company uses NOI and SSNOI to make decisions 
about resource allocations and to assess the property level performance of 
our properties.

1031 deposits. 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 EBITDA which stands for earnings
(net income per income statement) before interest expense, income taxes, 
depreciation and amortization. Covenants in our senior unsecured notes 
contain financial ratios based on a definition of EBITDA that is specific to
those agreements.  Failure to satisfy these covenants could result in an
event of default that could have a material adverse impact on our cost and
availability of capital, which could in turn have a material adverse impact on
our consolidated results of operations, liquidity and/or financial condition. 
Due to the materiality of these debt agreements and the financial covenants,
we have defined A-EBITDA to exclude unconsolidated entities and 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/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. Our leverage ratios include net debt to A-EBITDA, book 
capitalization and undepreciated book capitalization. Book capitalization 
represents the sum of net debt (defined as total long-term debt less cash 
and cash equivalents and any IRC Section 1031 deposits), total equity and
redeemable noncontrolling interests. Undepreciated book capitalization
represents book capitalization adjusted for accumulated depreciation and 
amortization. Our leverage ratios are defined as the proportion of net debt to 
total capitalization.

The company’s 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.  The company’s management uses these 
financial measures to facilitate internal and external comparisons to historical 
operating results and in making operating decisions.  Additionally, these 
measures are utilized by the Board of Directors to evaluate management.  
None of the supplemental reporting 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 reporting measures, as defined by the company,
may not be comparable to similarly entitled items reported by other real 
estate investment trusts or other companies.  Multi-period amounts may not 
equal the sum of the individual quarterly amounts due to rounding.

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

The tables below reflect the reconciliations of certain Non-GAAP financial
measures used herein to the most directly comparable U.S. GAAP measure 
for the periods presented (dollars in thousands).

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, 2017
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
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

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 ‘

Smaller reporting company ‘

Emerging growth company ‘

Non-accelerated filer ‘
(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with

any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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 $27,562,002,967.

As of January 31, 2018, the registrant had 371,669,527 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 3, 2018, are incorporated by

reference into Part III.

WELLTOWER INC.
2017 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16. Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART IV

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Item 1.

Business

General

PART I

Welltower Inc. (NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the
transformation of health care infrastructure. The company invests with leading seniors housing operators, post-
acute providers and health systems to fund real estate and infrastructure needed to scale innovative care delivery
models and improve people’s wellness and overall health care experience. WelltowerTM, a real estate investment
trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States
(“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing and post-acute communities
and outpatient medical properties. Our capital programs, when combined with comprehensive planning,
development and property management services, make us a single-source solution for acquiring, planning,
developing, managing, repositioning and monetizing real estate assets. More information is available on the
Internet at www.welltower.com. The information on our website is not incorporated by reference in this Annual
Report on Form 10-K, and our web address is included as an inactive textual reference only.

Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay
consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders
as a result of annual increases in net operating income and portfolio growth. To meet these objectives, we invest
across the full spectrum of seniors housing and health care real estate and diversify our investment portfolio by
property type, relationship and geographic location.

References herein to “we,” “us,” “our” or the “Company” refer to Welltower Inc., a Delaware corporation,

and its subsidiaries unless specifically noted otherwise.

Portfolio of Properties

Please see “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of
Operation — Executive Summary — Company Overview” for a table that summarizes our portfolio as of
December 31, 2017.

Property Types

We invest in seniors housing and health care real estate and evaluate our business on three reportable
segments: triple-net, seniors housing operating and outpatient medical. For additional information regarding our
segments, please see Note 17 to our consolidated financial statements. The accounting policies of the segments
are the same as those described in the summary of significant accounting policies in Note 2 to our consolidated
financial statements. The following is a summary of our various property types.

Triple-Net

Our triple-net properties include independent living facilities and independent supportive living facilities
(Canada), continuing care retirement communities, assisted living facilities, care homes with and without nursing
(U.K.), Alzheimer’s/dementia care facilities and long-term/post-acute care facilities. We invest primarily through
acquisitions, development and joint venture partnerships. Our properties are primarily leased to operators under
long-term, triple-net master leases that obligate the tenant to pay all operating costs, utilities, real estate taxes,
insurance, building repairs, maintenance costs and all obligations under certain ground leases. We are not
involved in property management. Our properties include stand-alone facilities that provide one level of service,
combination facilities that provide multiple levels of service, and communities or campuses that provide a wide
range of services.

Independent Living Facilities and Independent Supportive Living Facilities (Canada).

Independent living
facilities and independent supportive living facilities are age-restricted, multifamily properties with central dining
facilities that provide residents access to meals and other services such as housekeeping,
linen service,
transportation and social and recreational activities.

2

Continuing Care Retirement Communities. Continuing care retirement communities typically include a
combination of detached homes, an independent living facility, an assisted living facility and/or a long-term/post-
acute care facility on one campus. These communities appeal to residents because there is no need to relocate
when health and medical needs change. Resident payment plans vary, but can include entrance fees,
condominium fees and rental fees. Many of these communities also charge monthly maintenance fees in
exchange for a living unit, meals and some health services.

Assisted Living Facilities. Assisted living facilities are state regulated rental properties that provide the
same services as independent living facilities, but also provide supportive care from trained employees to
residents who require assistance with activities of daily living, including, but not limited to, management of
medications, bathing, dressing, toileting, ambulating and eating.

Care Homes with or without Nursing (U.K.). Care homes without nursing, regulated by the Care Quality
Commission (CQC”), are rental properties that provide essentially the same services as U.S. assisted living
facilities. Care homes with nursing, also regulated by the CQC, are licensed daily rate or rental properties where
the majority of individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed
for various national and local reimbursement programs. Unlike the U.S., care homes with nursing in the U.K.
generally do not provide post-acute care.

Alzheimer’s/Dementia Care Facilities. Certain assisted living facilities may include state-licensed settings

that specialize in caring for those afflicted with Alzheimer’s disease and/or other types of dementia.

Long-Term/Post-Acute Care Facilities. Our long-term/post-acute care facilities generally include skilled
nursing/post-acute care facilities, inpatient rehabilitation facilities and long-term acute care facilities. Skilled
nursing/post-acute care facilities are licensed daily rate or rental properties where the majority of individuals
require 24-hour nursing and/or medical care. Generally, these properties are licensed for Medicaid and/or
Medicare reimbursement in the U.S. or provincial reimbursement in Canada. All facilities offer some level of
rehabilitation services. Some facilities focus on higher acuity patients and offer rehabilitation units specializing
in cardiac, orthopedic, dialysis, neurological or pulmonary rehabilitation. Inpatient rehabilitation facilities
provide inpatient services for patients with intensive rehabilitation needs. Long-term acute care facilities provide
inpatient services for patients with complex medical conditions that require more intensive care, monitoring or
emergency support than is available in most skilled nursing/post-acute care facilities.

Our triple-net segment accounted for 22%, 28% and 31% of total revenues for the years ended
December 31, 2017, 2016 and 2015, respectively. For the year ended December 31, 2017, our revenues related to
our relationship with Genesis HealthCare (“Genesis”) accounted for approximately 20% of our triple-net
segment revenues and 4% of our total revenues. As of December 31, 2017, our relationship with Genesis was
comprised of a master lease for 86 properties owned 100% by us, three real estate loans totaling approximately
$267 million, approximately 9.5 million shares of GEN Series A common stock (representing approximately 6%
of total GEN common stock) and a 25% ownership stake in an unconsolidated joint venture that includes a
master lease for 28 properties operated by Genesis. In addition to rent, the master lease requires Genesis to pay
all operating costs, utilities, real estate taxes, insurance, building repairs, maintenance costs and all obligations
under certain ground leases. All obligations under the master lease have been guaranteed by FC-GEN Operations
Investment, LLC, a subsidiary of Genesis. Please see Notes 6 and 21 to our consolidated financial statements for
additional information.

Seniors Housing Operating

Our seniors housing operating properties include several of the facility types described in “Item 1 —
Business — Property Types — Triple-Net”, including independent living facilities and independent supportive
living facilities, assisted living facilities, care homes and Alzheimer’s/dementia care facilities. Properties are
primarily held in joint venture entities with operating partners. We utilize the structure proposed in the REIT
Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA”
structure (the provisions of the Internal Revenue Code authorizing the RIDEA structure were enacted as part of
the Housing and Economic Recovery Act of 2008). See Note 18 to our consolidated financial statements for
more information.

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Our seniors housing operating segment accounted for 65%, 59% and 56% of total revenues for the years
ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017, we had relationships with
17 operators to manage our seniors housing operating properties. In each instance, our partner provides
management services to the properties pursuant to an incentive-based management contract. We rely on our
partners to effectively and efficiently manage these properties. For the year ended December 31, 2017, our
relationship with Sunrise Senior Living accounted for approximately 37% of our seniors housing operating
segment revenues and 24% of our total revenues. See Note 7 to our consolidated financial statements for
additional information.

Outpatient Medical

Outpatient Medical Buildings. The outpatient medical building portfolio consists of health care related
buildings that generally include physician offices, ambulatory surgery centers, diagnostic facilities, outpatient
services and/or labs. Our portfolio has a strong affiliation with health systems. Approximately 95% of our
outpatient medical building portfolio is affiliated with health systems (with buildings on hospital campuses or
serving as satellite locations for the health system and its physicians). We typically lease our outpatient medical
buildings to multiple tenants and provide varying levels of property management. Our outpatient medical
segment accounted for 13% of total revenues for each of the years ended December 31, 2017, 2016 and 2015. No
single tenant exceeds 20% of segment revenues.

Investments

We invest in seniors housing and health care real estate primarily through acquisitions, developments and
joint venture partnerships. For additional information regarding acquisition and development activity, please see
Note 3 to our consolidated financial statements. We seek to diversify our investment portfolio by property type,
relationship and geographic location. In determining whether to invest in a property, we focus on the following:
(1) the experience of the obligor’s/partner’s management team; (2) the historical and projected financial and
operational performance of the property; (3) the credit of the obligor/partner; (4) the security for any lease or
loan; (5) the real estate attributes of the building and its location; (6) the capital committed to the property by the
obligor/partner; and (7) the operating fundamentals of the applicable industry.

We monitor our investments through a variety of methods determined by the type of property. Our asset
management process for seniors housing properties generally includes review of monthly financial statements
and other operating data for each property, review of obligor/partner creditworthiness, property inspections, and
review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral. Our
internal property management division manages and monitors the outpatient medical portfolio with a
comprehensive process including review of, among other things, tenant relations, lease expirations, the mix of
health service providers, hospital/health system relationships, property performance, capital improvement needs,
and market conditions.

Investment Types

Real Property. Our properties are primarily comprised of land, buildings, improvements and related rights.
Our triple-net properties are generally leased to operators under long-term operating leases. The leases generally
have a fixed contractual term of 12 to 15 years and contain one or more five to 15-year renewal options. Certain
of our leases also contain purchase options, a portion of which could result in the disposition of properties for
less than full market value. Most of our rents are received under triple-net leases requiring the operator to pay
rent and all additional charges incurred in the operation of the leased property. The tenants are required to repair,
rebuild and maintain the leased properties. Substantially all of these operating leases are designed with escalating
rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over
the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent
rental escalators is generally recorded based on the contractual cash rental payments due for the period.

At December 31, 2017, approximately 92% of our triple-net properties were subject to master leases. A
master lease is a lease of multiple properties to one tenant entity under a single lease agreement. From time to
time, we may acquire additional properties that are then leased to the tenant under the master lease. The tenant is

4

required to make one monthly payment that represents rent on all the properties that are subject to the master
lease. Typically, the master lease tenant can exercise its right to purchase the properties or to renew the master
lease only with respect to all leased properties at the same time. This bundling feature benefits us because the
tenant cannot limit the purchase or renewal to the better performing properties and terminate the leasing
arrangement with respect to the poorer performing properties. This spreads our risk among the entire group of
properties within the master lease. The bundling feature should provide a similar advantage to us if the master
lease tenant is in bankruptcy. Subject to certain restrictions, a debtor in bankruptcy has the right to assume or
reject its unexpired leases and executory contracts. In the context of integrated master leases such as ours, our
tenants in bankruptcy would be required to assume or reject the master lease as a whole, rather than deciding on a
property by property basis.

Our outpatient medical portfolio is primarily self-managed and consists principally of multi-tenant
properties leased to health care providers. Our leases typically include increasers and some form of operating
expense reimbursement by the tenant. As of December 31, 2017, 80% of our portfolio included leases with full
pass through, 19% with a partial expense reimbursement
(modified gross) and 1% with no expense
reimbursement (gross). Our outpatient medical leases are non-cancellable operating leases that have a weighted-
average remaining term of seven years at December 31, 2017 and are often credit enhanced by security deposits,
guaranties and/or letters of credit.

Construction. We provide for the construction of properties for tenants primarily as part of long-term
operating leases. We capitalize certain interest costs associated with funds used for the construction of properties
owned by us. The amount capitalized is based upon the amount advanced during the construction period using
the rate of interest that approximates our Company-wide cost of financing. Our interest expense is reduced by the
amount capitalized. We also typically charge a transaction fee at the commencement of construction which we
defer and amortize to income over the term of the resulting lease. The construction period commences upon
funding and terminates upon the earlier of the completion of the applicable property or the end of a specified
period. During the construction period, we advance funds to the tenants in accordance with agreed upon terms
and conditions which require, among other things, periodic site visits by a Company representative. During the
construction period, we generally require an additional credit enhancement
in the form of payment and
performance bonds and/or completion guaranties. At December 31, 2017, we had outstanding construction
investments of $237,746,000 and were committed to provide additional funds of approximately $429,815,000 to
complete construction for investment properties. See Note 3 to our consolidated financial statements for
additional information. We also provide for construction loans which, depending on the terms and conditions,
could be treated as loans, real property, or investments in unconsolidated entities.

Real Estate Loans. Our real estate loans are typically structured to provide us with interest income,
principal amortization and transaction fees and are generally secured by first/second mortgage liens, leasehold
mortgages, corporate guaranties and/or personal guaranties. At December 31, 2017, we had gross outstanding
real estate loans of $495,871,000. The interest yield averaged approximately 9.2% per annum on our outstanding
real estate loan balances. Our yield on real estate loans depends upon a number of factors, including the stated
interest rate, average principal amount outstanding during the term of the loan and any interest rate adjustments.
The real estate loans outstanding at December 31, 2017 are generally subject to one to 15-year terms with
principal amortization schedules and/or balloon payments of the outstanding principal balances at the end of the
term. Typically, real estate loans are cross-defaulted and cross-collateralized with other real estate loans,
operating leases or agreements between us and the obligor and its affiliates. See Note 6 to our consolidated
financial statements for additional information.

Investments in Unconsolidated Entities.

Investments in entities that we do not consolidate but have the
ability to exercise significant influence over operating and financial policies are reported under the equity method
of accounting. Our investments in unconsolidated entities generally represent interests ranging from 10% to 50%
in real estate assets. Under the equity method of accounting, our share of the investee’s earnings or losses is
included in our consolidated results of operations. To the extent that our cost basis is different from the basis
reflected at the entity level, the basis difference is generally amortized over the lives of the related assets and
liabilities, and such amortization is included in our share of equity in earnings of the entity. The initial carrying
value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest or the

5

estimated fair value of the assets prior to the sale of interests in the entity. We evaluate our equity method
investments for impairment based upon a comparison of the estimated fair value of the equity method investment
to its carrying value. When we determine a decline in the estimated fair value of such an investment below its
carrying value is other-than-temporary, an impairment is recorded. See Note 7 to our consolidated financial
statements for more information.

Principles of Consolidation

The consolidated financial statements are in conformity with U.S general accepted accounting principles
(“U.S. GAAP”) and include the accounts of our wholly-owned subsidiaries and joint venture entities that we
control, through voting rights or other means. All material intercompany transactions and balances have been
eliminated in consolidation.

At inception of joint venture transactions, we identify entities for which control is achieved through means
other than voting rights (“variable interest entities” or “VIEs”) and determine which business enterprise is the
primary beneficiary of its operations. A VIE is broadly defined as an entity where either (i) the equity investors
as a group, if any, do not have a controlling financial interest, or (ii) the equity investment at risk is insufficient to
finance that entity’s activities without additional subordinated financial support. We consolidate investments in
VIEs when we are determined to be the primary beneficiary. Accounting Standards Codification Topic 810,
Consolidations, requires enterprises to perform a qualitative approach to determining whether or not a VIE will
need to be consolidated. This evaluation is based on an enterprise’s ability to direct and influence the activities of
a VIE that most significantly impact that entity’s economic performance.

For investments in joint ventures, U.S. GAAP may preclude consolidation by the sole general partner in
certain circumstances based on the type of rights held by the limited partner(s). We assess the limited partners’
rights and their impact on our consolidation conclusions, and we reassess if there is a change to the terms or in
the exercisability of the rights of the limited partners, the sole general partner increases or decreases its
ownership of limited partnership interests, or there is an increase or decrease in the number of outstanding
limited partnership interests. We similarly evaluate the rights of managing members of limited liability
companies.

Borrowing Policies

We utilize a combination of debt and equity to fund investments. Our debt and equity levels are determined
by management to maintain a conservative balance sheet and credit profile. Generally, we intend to issue
unsecured, fixed-rate public debt with long-term maturities to approximate the maturities on our triple-net leases
and investment strategy. For short-term purposes, we may borrow on our primary unsecured credit facility. We
replace these borrowings with long-term capital such as senior unsecured notes or common stock. When terms
are deemed favorable, we may invest in properties subject to existing mortgage indebtedness. In addition, we
may obtain secured financing for unleveraged properties in which we have invested or may refinance properties
acquired on a leveraged basis. In certain agreements with our lenders, we are subject to restrictions with respect
to secured and unsecured indebtedness.

Competition

We compete with other real estate investment trusts, real estate partnerships, private equity and hedge fund
investors, banks, insurance companies, finance/investment companies, government-sponsored agencies, taxable
and tax-exempt bond funds, health care operators, developers and other investors in the acquisition, development,
leasing and financing of health care and seniors housing properties. We compete for investments based on a
number of factors including relationships, certainty of execution, investment structures and underwriting criteria.
Our ability to successfully compete is impacted by economic and demographic trends, availability of acceptable
investment opportunities, our ability to negotiate beneficial investment terms, availability and cost of capital,
construction and renovation costs, and applicable laws and regulations.

The operators/tenants of our properties compete with properties that provide comparable services in the
local markets. Operators/tenants compete for patients and residents based on a number of factors including
quality of care, reputation, physical appearance of properties, location, services offered, family preferences,

6

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, 2018, we had 392 employees.

Credit Concentrations Please see Note 8 to our consolidated financial statements.

Geographic Concentrations Please see “Item 2 — Properties” below 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 $3.7 trillion in 2018 or 18.5% 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 seniors housing 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;

• 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 extensive regulation, including federal and state laws covering the type and quality of 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,

7

registration, certification, and inspection laws, regulations, and industry standards. Our tenants’ failure to comply
with applicable laws and regulations 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” in “Item 1A — Risk Factors” 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 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,
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.

•

to Medicaid waiver programs. For

Seniors Housing Facilities. Approximately 60% of our overall
revenues for the year ended
December 31, 2017 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 provided under state waiver programs for home and community based care. As
of September 30, 2017, 14 of our 43 seniors housing operators received Medicaid reimbursement
pursuant
the twelve months ended September 30, 2017,
approximately 1.2% 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

8

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 8% of our overall revenues for the year ended
December 31, 2017 were attributable to U.S. 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 focus 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, 2017, approximately
35% 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. In August 2017, CMS made some positive payment updates
for fiscal year (“FY”) 2017 under the SNF PPS, the IRF PPS and the LTCH PPS. In particular,
CMS published a final rule regarding FY 2018 Medicare payment policies and rates for:

•

•

SNF PPS. Under the final SNF PPS rule, CMS projects that payments to SNFs will increase
in FY 2018 on an aggregate basis by 1.0% from payments in FY 2017.

IRF PPS. Under the IRF PPS rule, CMS estimates that aggregate payments to IRFs will
increase in FY 2018 on an aggregate basis by 0.9% relative to payments in FY 2017.

• LTCH PPS. As a result of the continuation of the phase-in of site neutral payment rates for
specified cases in LTCHs, CMS projects FY 2018 Medicare payments to LTCHs will
decrease by 2.4%. Payment rates will increase by 1.0% for cases that qualify for the higher
standard LTCH PPS rate. CMS also finalized its proposal to remove from FY 2018 payment
rates the temporary 0.6% Medicare Part A hospital payment increase to FY 2017 payment
rates implemented in connection with a federal district court’s review of the “Two Midnight”
payment policy.

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, 2017, approximately
36% of the revenues of our 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 state revenues in a particular state are not
sufficient to fund budgeted expenditures.

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• Medicare Reimbursement

for Physicians, Hospital Outpatient Departments (“HOPDs”), and
Ambulatory Surgical Centers (“ASCs”). Changes in reimbursement to physicians, HOPDs, and 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, the Medicare and Children’s Health
Insurance Program Reauthorization Act of 2015 (“MACRA”) 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 outpatient 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. The Patient Protection and Affordable Care Act and the Health Care and
Education Reconciliation Act of 2010 (collectively, the “Health Reform Laws”) dramatically altered
how health care is delivered and reimbursed in the U.S. and contained various provisions, including
Medicaid expansion and the establishment of Health Insurance Exchanges (“HIEs”) providing
subsidized health insurance, that may directly impact us or the operators and tenants of our properties.
Since taking office, President Trump and the current U.S. Congress have sought to modify, repeal, or
otherwise invalidate all or portions of the Health Reform Laws. For example, in October 2017,
President Trump 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 the
Health Reform Laws to the maximum extent permitted by law. On the same day,
the federal
government separately announced that cost-sharing reduction payments to insurers offering qualified
health plans through the HIEs would end, effective immediately, unless Congress appropriated the
funds. Further, in December 2017, the U.S. Congress passed the Tax Cuts and Jobs Act, which
included a provision that eliminates the penalty under the Health Reform Laws’ individual mandate
and could impact the future state of the HIEs established by the Health Reform Laws. There is still
uncertainty with respect to the additional 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.

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

10

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 (“HIPAA”), as amended by the 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.
The costs for an operator of a health care property associated with developing and maintaining HIPAA
compliance systems, defending enforcement actions and paying any assessed fines, can be substantial and could
have a material adverse effect on the ability of an operator to meet its obligations to us.

United Kingdom

In the U.K., 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 the U.K., and the managers of such persons, be registered. Providers of care home services are also subject (as
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 U.K.’s Data Protection Act 1998, enforced
by the U.K.’s Information Commissioner’s Office, but are expected to be replaced by the European Union’s
(“EU”) 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 U.K. as well as individuals residing in the U.K.
are also subject to the U.K. Bribery Act 2010. The U.K. 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 U.K. 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.

11

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 and/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 senior 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
to legislated safeguards aimed at
legislation, and are subject
comply with additional provincial
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.

• 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
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

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,

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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.

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
food intake; structured behavior management and intervention; and
of cash resources; monitoring of
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 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.

the registrar may inspect

Québec

Provincial laws in Québec regulate retirement homes (private seniors’ residences) as well as long-term care
homes (residential and long-term care centers). Private seniors’ residences 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 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.

In May 2017, Quebec adopted the Act to combat maltreatment of seniors and other persons of full age in
vulnerable situations, which aims to implement a Quebec-wide framework agreement to combat maltreatment,
targets all facilities that provide health services and social services to seniors and vulnerable persons, including
health establishments and private residences. We expect that it will affect private seniors’ residences in the
following ways:

• Health establishments are required to adopt an “Anti-Maltreatment Policy”, providing notably for the

measures put in place to prevent maltreatment of persons in vulnerable situations;

• The policy adopted by health establishments will notably have to include the required adaptation for

the implementation of the policy in private sector residences; and

• Operators of private seniors’ residences will be required to apply the policy adopted by the integrated
health and social services center in their territory, as well as ensure that the policy is known by
residents, their family members and their employees.

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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. There
are over 60 privacy class actions which have been filed in Canada over recent years although none have yet
been decided on their merits. 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

U.S. Federal Income Tax Considerations

General

We elected to be taxed as 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
complex qualification tests imposed under federal income tax law with respect to income, assets, distribution
level and diversity of share ownership. 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.

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 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 and, subject to certain limitations, will be eligible for the
dividends received deduction for corporate 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

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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.

The Tax Cuts and Jobs Act (“Tax Act”)

The Tax Act made significant changes to the U.S. federal income tax laws applicable to businesses and their
owners, including REITs and their shareholders. Congressional leaders have recognized that the process of
adopting extensive tax legislation in a short amount of time without hearings and substantial time for review may
have led to drafting errors, issues needing clarification and unintended consequences that may need to be
addressed subsequent tax legislation. It is unknown when Congress may address these issues or when the Internal
Revenue Service (“IRS”) may issue guidance regarding the interpretation and implementation of the Tax Act.
We cannot predict what impact future legislation and guidance will have on us or our shareholders.

Internet Access to Our SEC Filings

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
to, the Securities and Exchange Commission (“SEC”) are made available, free of charge, on the Internet at
www.welltower.com, as soon as reasonably practicable after they are filed with, or furnished to, the SEC. 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,” within the meaning of the Private Securities Litigation Reform Act of
1995. 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
the expected
or dispositions on currently anticipated terms, or within currently anticipated timeframes;
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 REIT; and our ability to access capital markets or other sources of funds.

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:

•

•

•

•

•

•

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;

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•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

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 addressed in this
section or that we have not yet identified, actually occur, we could be materially adversely affected and the value
of our securities could decline. We group these risk factors into three categories:

• Risks arising from our business;

• Risks arising from our capital structure; and

• Risks arising from our status as a REIT.

Risks Arising from Our Business

Our investments in and acquisitions of health care and seniors housing properties may be unsuccessful or
fail to meet our expectations

We are exposed to the risk that some of our acquisitions may not prove to be successful. We could
encounter unanticipated difficulties and expenditures relating to any acquired properties, including contingent
liabilities, and acquired properties might require significant management attention that would otherwise be
devoted to our ongoing business. If we agree to provide construction funding to an operator/tenant and the
project is not completed, we may need to take steps to ensure completion of the project. Such expenditures may
negatively affect our results of operations. Investments in and acquisitions of seniors housing and health care
properties entail risks associated with real estate investments generally, including risks that the investment will
not achieve expected returns, that the cost estimates for necessary property improvements will prove inaccurate
or that the tenant, operator or manager will fail to meet performance expectations. Furthermore, there can be no

16

assurance that our anticipated acquisitions and investments, the completion of which is subject to various
conditions, will be consummated in accordance with anticipated timing, on anticipated terms, or at all. Health
care properties are often highly customizable and the development or redevelopment of such properties may
require costly tenant-specific improvements. We also may be unable to quickly and efficiently integrate new
acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and this could have
an adverse effect on our results of operations and financial condition. As a result, we cannot assure you that we
will achieve the economic benefit we expect from acquisitions, investment, development and redevelopment
opportunities. All of the foregoing could affect our ability to continue paying dividends at the current rate.

Our investments in joint ventures could be adversely affected by our lack of exclusive control over these
investments, our partners’ insolvency or failure to meet their obligations, and disputes between us and our
partners

We have entered into, and may continue in the future to enter into, partnerships or joint ventures with other
persons or entities. Joint venture investments involve risks that may not be present with other methods of
ownership, including the possibility that our partner might become insolvent, refuse to make capital contributions
when due or otherwise fail to meet its obligations, which may result in certain liabilities to us for guarantees and
other commitments; that our partner might at any time have economic or other business interests or goals that are
or become inconsistent with our interests or goals; that we could become engaged in a dispute with our partner,
which could require us to expend additional resources to resolve such dispute and could have an adverse impact
on the operations and profitability of the joint venture; and that our partner may be in a position to take action or
withhold consent contrary to our instructions or requests. In addition, our ability to transfer our interest in a joint
venture to a third party may be restricted. In some instances, we and/or our partner may have the right to trigger a
buy-sell arrangement, which could cause us to sell our interest, or acquire our partner’s interest, at a time when
we otherwise would not have initiated such a transaction. Our ability to acquire our partner’s interest may be
limited if we do not have sufficient cash, available borrowing capacity or other capital resources. In such event,
we may be forced to sell our interest in the joint venture when we would otherwise prefer to retain it. Joint
ventures may require us to share decision-making authority with our partners, which could limit our ability to
control the properties in the joint ventures. Even when we have a controlling interest, certain major decisions
may require partner approval, such as the sale, acquisition or financing of a property.

We are exposed to operational risks with respect to our seniors housing operating properties that could
adversely affect our revenue and operations

We are exposed to various operational risks with respect to our seniors housing operating properties that
may increase our costs or adversely affect our ability to generate revenues. These risks include fluctuations in
occupancy, Medicare and Medicaid reimbursement, if applicable, and private pay rates; economic conditions;
competition; federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations,
and standards; the availability and increases in cost of general and professional liability insurance coverage; state
regulation and rights of residents related to entrance fees; and the availability and increases in the cost of labor
(as a result of unionization or otherwise). Any one or a combination of these factors may adversely affect our
revenue and operations.

Decreases in our operators’ revenues or increases in our operators’ expenses could affect our operators’
ability to make payments to us

Our operators’ revenues are primarily driven by occupancy, private pay rates, and Medicare and Medicaid
reimbursement, if applicable. Expenses for these facilities are primarily driven by the costs of labor, food,
utilities, taxes, insurance and rent or debt service. Revenues from government reimbursement have, and may
continue to, come under pressure due to reimbursement cuts and state budget shortfalls. Operating costs continue
to increase for our operators. To the extent that any decrease in revenues and/or any increase in operating
expenses result in a property not generating enough cash to make payments to us, the credit of our operator and
the value of other collateral would have to be relied upon. To the extent the value of such property is reduced, we
may need to record an impairment for such asset. Furthermore, if we determine to dispose of an underperforming

17

property, such sale may result in a loss. Any such impairment or loss on sale would negatively affect our
financial results. All of the foregoing could affect our ability to continue paying dividends at the current rate.

Increased competition and oversupply may affect our operators’ ability to meet their obligations to us

The operators of our properties compete on a local and regional basis with operators of properties and other
health care providers that provide comparable services for residents and patients, including on the basis of the
scope and quality of care and services provided, reputation and financial condition, physical appearance of the
properties, price, and location. Our operators are expected to encounter increased competition in the future that
could limit their ability to attract residents or expand their businesses. In addition, we expect that there will
continue to be a more than adequate inventory of seniors housing facilities. We cannot be certain that the
operators of all of our facilities will be able to achieve and maintain occupancy and rate levels that will enable
them to meet all of their obligations to us. If our operators cannot compete effectively or if there is an oversupply
of facilities, their financial performance and ability to meet their obligations to us could have a material adverse
effect on our financial results.

A severe cold and flu season, epidemics or any other widespread illnesses could adversely affect the
occupancy of our seniors housing operating and triple-net properties

Our and our operators’ revenues are dependent on occupancy. It is impossible to predict the severity of the
cold and flu season or the occurrence of epidemics or any other widespread illnesses. The occupancy of our
seniors housing operating and triple-net properties could significantly decrease in the event of a severe cold and
flu season, an epidemic or any other widespread illness. Such a decrease could affect the operating income of our
seniors housing operating properties and the ability of our triple-net operators to make payments to us. In
addition, a flu pandemic could significantly increase the cost burdens faced by our operators, including if they
are required to implement quarantines for residents, and adversely affect their ability to meet their obligations to
us, which would have a material adverse effect on our financial results.

The insolvency or bankruptcy of our tenants, operators, borrowers, managers and other obligors may
adversely affect our business, results of operations and financial condition

We are exposed to the risk that our tenants, operators, borrowers, managers or other obligors may not be
able to meet the rent, principal and interest or other payments due us, which may result in a tenant, operator,
borrower, manager or other obligor bankruptcy or insolvency, or that a tenant, operator, borrower, manager or
other obligor might become subject to bankruptcy or insolvency proceedings for other reasons. Although our
operating lease agreements provide us with the right to evict a tenant, demand immediate payment of rent and
exercise other remedies, and our loans provide us with the right to terminate any funding obligation, demand
immediate repayment of principal and unpaid interest, foreclose on the collateral and exercise other remedies, the
bankruptcy and insolvency laws afford certain rights to a party that has filed for bankruptcy or reorganization. A
tenant, operator, borrower, manager or other obligor in bankruptcy or subject to insolvency proceedings may be
able to limit or delay our ability to collect unpaid rent in the case of a lease or to receive unpaid principal and
interest in the case of a loan, and to exercise other rights and remedies. In addition, if a lease is rejected in a
tenant bankruptcy, our claim against the tenant may be limited by applicable provisions of the bankruptcy law.
We may be required to fund certain expenses (e.g., real estate taxes and maintenance) to preserve the value of an
investment property, avoid the imposition of liens on a property and/or transition a property to a new tenant. In
some instances, we have terminated our lease with a tenant and relet the property to another tenant. In some of
those situations, we have provided working capital loans to and limited indemnification of the new obligor. If we
cannot transition a leased property to a new tenant, we may take possession of that property, which may expose
us to certain successor liabilities. Should such events occur, our revenue and operating cash flow may be
adversely affected. All of the foregoing could affect our ability to continue paying dividends at the current rate.

We may not be able to timely reinvest our sale proceeds on terms acceptable to us

From time to time, we will have cash available from the proceeds of sales of our securities, principal
payments on our loans receivable or the sale of properties, including non-elective dispositions, under the terms of

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master leases or similar financial support arrangements. In order to maintain current revenues and continue
generating attractive returns, we expect to re-invest these proceeds in a timely manner. We compete for real
estate investments with a broad variety of potential investors, including other health care REITs, real estate
partnerships, health care providers, health care lenders and other investors,
including developers, banks,
insurance companies, pension funds, government-sponsored entities and private equity firms, some of whom may
have greater financial resources and lower costs of capital
than we do. This competition for attractive
investments may negatively affect our ability to make timely investments on terms acceptable to us.

We depend on Genesis HealthCare (“Genesis”) and Brookdale Senior Living (“Brookdale”) for a
significant portion of our revenues and any failure, inability or unwillingness by them to satisfy obligations
under their agreements with us could adversely affect us

The properties we lease to Genesis and Brookdale account for a significant portion of our revenues, and
because our leases with Genesis and Brookdale are triple-net leases, we also depend on Genesis and Brookdale to
pay all insurance, taxes, utilities and maintenance and repair expenses in connection with the leased properties.
We cannot assure you that Genesis and Brookdale will have sufficient assets, income and access to financing to
enable them to make rental payments to us or to otherwise satisfy their respective obligations under our leases,
and any failure, inability or unwillingness by Genesis or Brookdale to do so could have an adverse effect on our
business, results of operations and financial condition. Although the most recent publicly available financial
statements of Genesis reflect going concern disclosures, the operator remains current on rent and the coverage
remains above 1.0. Genesis and Brookdale have also agreed to indemnify, defend and hold us harmless from and
against various claims, litigation and liabilities arising in connection with their respective businesses, and we
cannot assure you that Genesis and Brookdale will have sufficient assets, income, access to financing and
insurance coverage to enable them to satisfy their respective indemnification obligations. Genesis’s and
Brookdale’s failure to effectively conduct their operations or to maintain and improve our properties could
adversely affect their business reputations and their ability to attract and retain patients and residents in our
properties, which, in turn, could adversely affect our business, results of operations and financial condition.
Additionally, we have made real estate and other loans to Genesis and their operational or other failures could
adversely impact their ability to repay these loans when due. See Note 21 to our consolidated financial statements
for additional information regarding Genesis.

The properties managed by Sunrise Senior Living, LLC (“Sunrise”) account for a significant portion of our
revenues and operating income and any adverse developments in its business or financial condition could
adversely affect us

As of December 31, 2017, Sunrise managed 158 of our seniors housing operating properties. These
properties account for a significant portion of our revenues, and we rely on Sunrise to manage these properties
efficiently and effectively. We also rely on Sunrise to set appropriate resident fees, to provide accurate property-
level financial results for our properties in a timely manner and to otherwise operate them in compliance with the
terms of our management agreements and all applicable laws and regulations. Any adverse developments in
Sunrise’s business or financial condition could impair its ability to manage our properties efficiently and
effectively, which could adversely affect our business, results of operations, and financial condition. Also, if
Sunrise experiences any significant financial, legal, accounting or regulatory difficulties, such difficulties could
result in, among other things, acceleration of its indebtedness, impairment of its continued access to capital or the
commencement of insolvency proceedings by or against it under the U.S. Bankruptcy Code, which, in turn, could
adversely affect our business, results of operations and financial condition. See Note 7 to our consolidated
financial statements for additional information.

Ownership of property outside the U.S. may subject us to different or greater risks than those associated
with our domestic operations

We have operations in Canada and the U.K. International development, ownership, and operating activities
involve risks that are different from those we face with respect to our domestic properties and operations. These
risks include, but are not limited to, any international currency gain recognized with respect to changes in

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exchange rates may not qualify under the 75% gross income test or the 95% gross income test that we must
satisfy annually in order to qualify and maintain our status as a REIT; challenges with respect to the repatriation
of foreign earnings and cash; changes in foreign political, regulatory, and economic conditions (regionally,
nationally and locally) including, but not limited to, the U.K.’s June 2016 vote to exit the EU; challenges in
managing international operations; challenges of complying with a wide variety of foreign laws and regulations,
including those relating to real estate, corporate governance, operations, taxes, employment and other civil and
criminal legal proceedings; foreign ownership restrictions with respect to operations in countries; differences in
lending practices and the willingness of domestic or foreign lenders to provide financing; regional or country-
specific business cycles and political and economic instability; and failure to comply with applicable laws and
regulations in the U.S. that affect foreign operations, including, but not limited to, the U.S. Foreign Corrupt
Practices Act. If we are unable to successfully manage the risks associated with international expansion and
operations, our results of operations and financial condition may be adversely affected.

If our tenants do not renew their existing leases, or if we are required to sell properties for liquidity reasons,
we may be unable to lease or sell the properties on favorable terms, or at all

We cannot predict whether our tenants will renew existing leases at the end of their lease terms, which
expire at various times. If these leases are not renewed, we would be required to find other tenants to occupy
those properties or sell them. There can be no assurance that we would be able to identify suitable replacement
tenants or enter into leases with new tenants on terms as favorable to us as the current leases or that we would be
able to lease those properties at all.

Real estate investments are relatively illiquid and most of the property we own is highly customized for
specific uses. Our ability to quickly sell or exchange any of our properties in response to changes in operator,
economic and other conditions will be limited. No assurances can be given that we will recognize full value for
any property that we are required to sell. Our inability to respond rapidly to changes in the performance of our
investments could adversely affect our financial condition and results of operations. In addition, we are exposed
to the risks inherent in concentrating investments in real estate, and in particular, the seniors housing and health
care industries. A downturn in the real estate industry could adversely affect the value of our properties and our
ability to sell properties for a price or on terms acceptable to us. All of the foregoing could affect our ability to
continue paying dividends at the current rate.

Our tenants, operators and managers may not have the necessary insurance coverage to insure adequately
against losses

We maintain or require our tenants, operators and managers to maintain comprehensive insurance coverage
on our properties and their operations with terms, conditions, limits and deductibles that we believe are
customary for similarly-situated companies in our industry, and we frequently review our insurance programs
and requirements. That said, we cannot assure you that we or our tenants, operators or managers will continue to
be able to maintain adequate levels of insurance and required coverages or that we will continue to require the
same levels of insurance coverage under our lease, management and other agreements, which could adversely
affect us in the event of a significant uninsured loss. Also, in recent years, long-term/post-acute care and seniors
housing operators and managers have experienced substantial increases in both the number and size of patient
care liability claims. As a result, general and professional liability costs have increased in some markets. General
and professional liability insurance coverage may be restricted or very costly, which may adversely affect the
tenants’, operators’ and managers’ future operations, cash flows and financial condition, and may have a material
adverse effect on the tenants’, operators’ and managers’ ability to meet their obligations to us.

Our ownership of properties through ground leases exposes us to the loss of such properties upon breach or
termination of the ground leases

We have acquired an interest in certain of our properties by acquiring a leasehold interest in the property on
which the building is located, and we may acquire additional properties in the future through the purchase of
interests in ground leases. As the lessee under a ground lease, we are exposed to the possibility of losing the
property upon termination of the ground lease or an earlier breach of the ground lease by us.

20

The requirements of, or changes to, governmental reimbursement programs, such as Medicare, Medicaid or
government funding, could have a material adverse effect on our obligors’ liquidity, financial condition and
results of operations, which could adversely affect our obligors’ ability to meet their obligations to us

Some of our obligors’ businesses are affected by government reimbursement. To the extent that an operator/
tenant receives a significant portion of its revenues from government payors, primarily Medicare and Medicaid,
such revenues may be subject to statutory and regulatory changes, retroactive rate adjustments, recovery of
program overpayments or set-offs, court decisions, administrative rulings, policy interpretations, payment or
other delays by fiscal intermediaries or carriers, government funding restrictions (at a program level or with
to specific facilities) and interruption or delays in payments due to any ongoing government
respect
investigations and audits at such property. In recent years, government payors have frozen or reduced payments
to health care providers due to budgetary pressures. Health care reimbursement will likely continue to be of
paramount importance to federal and state authorities. We cannot make any assessment as to the ultimate timing
or effect any future legislative reforms may have on the financial condition of our obligors and properties. There
can be no assurance that adequate reimbursement levels will be available for services provided by any property
operator, whether the property receives reimbursement from Medicare, Medicaid or private payors. Significant
limits on the scope of services reimbursed and on reimbursement rates and fees could have a material adverse
effect on an obligor’s liquidity, financial condition and results of operations, which could adversely affect the
ability of an obligor to meet its obligations to us.

The Health Reform Laws, provide those states that expand their Medicaid coverage to otherwise eligible state
residents with incomes at or below 138% of the federal poverty level with an increased federal medical assistance
percentage, effective January 1, 2014, when certain conditions are met. Given that the federal government
substantially funds the Medicaid expansion, it is unclear how many states will ultimately pursue this option,
although, as of early February 2018, more than 60% of the states have expanded Medicaid coverage. The
participation by states in the Medicaid expansion could have the dual effect of increasing our tenants’ revenues,
through new patients, but further straining state budgets and their ability to pay our tenants. We expect that the
current Presidential Administration and U.S. Congress will seek to modify, repeal, or otherwise invalidate all, or
certain provisions of, the Health Reform Laws, including Medicaid expansion. Since taking office, President Trump
has continued to support the repeal of all or portions of the Health Reform Laws. See “Item 1 — Business —
Certain Government Regulations — United States — Reimbursement” above for additional information. If the
operations, cash flows or financial condition of our operators and tenants are materially adversely impacted by the
Health Reform Laws or future legislation, our revenue and operations may be adversely affected as well. More
generally, and because of the dynamic nature of the legislative and regulatory environment for health care products
and services, and in light of existing federal deficit and budgetary concerns, we cannot predict the impact that
broad-based, far-reaching legislative or regulatory changes could have on the U.S. economy, our business, or that of
our operators and tenants.

Our operators’ or tenants’ failure to comply with federal, state, province, local, and industry-regulated
licensure, certification and inspection laws, regulations, and standards could adversely affect such
operators’ or tenants’ operations, which could adversely affect our operators’ and tenants’ ability to meet
their obligations to us

Our operators and tenants generally are subject to varying levels of federal, state, local, and industry-
regulated licensure, certification and inspection laws, regulations, and standards. Our operators’ or tenants’
failure to comply with any of these laws, regulations, or standards could result in loss of accreditation, denial of
reimbursement, imposition of fines, suspension, decertification or exclusion from federal and state health care
programs, loss of license or closure of the facility. Such actions may have an effect on our operators’ or tenants’
ability to make lease payments to us and, therefore, adversely impact us. See “Item 1 — Business — Certain
Government Regulations — United States — Fraud & Abuse Enforcement” above.

Many of our properties may require a license, registration, and/or CON to operate. Failure to obtain a
license, registration, or CON, or loss of a required license, registration, or CON would prevent a facility from
operating in the manner intended by the operators or tenants. These events could materially adversely affect our
operators’ or tenants’ ability to make rent or other obligatory payments to us. State and local laws also may

21

regulate the expansion, including the addition of new beds or services or acquisition of medical equipment, and
the construction or renovation of health care facilities, by requiring a CON or other similar approval from a state
agency. See “Item 1 — Business — Certain Government Regulations — United States — Licensing and
Certification” above.

The real estate market and our business may be negatively impacted by changes to U.S. tax laws

The Tax Act adopted on December 22, 2017 significantly changes the U.S. income tax rules for individuals
and corporations. We are continuing to evaluate the impact of the Tax Act and, as such, its implications for our
business remain uncertain. Although the Tax Act involves comprehensive changes to the system of corporate
income tax, it does not substantively change the manner in which REITs are taxed. Although numerous
provisions of the Tax Act do affect REITs, we are generally not subject to pay federal taxes applicable to regular
corporations if we comply with the tax regulations governing REIT status. Nonetheless, the Tax Act makes
numerous changes to the individual income tax rules that may affect the real estate market in the U.S., including
limitations on the deductibility of state and local property taxes, the elimination of the deductibility of interest on
new home equity loans and a reduction in the limit for an individual’s mortgage interest expense to interest on
$750,000 of mortgages. Although the impact of these changes is likely to be most significant in the residential
real estate market, rather than in the sectors where we operate, the effects of these changes on the broader real
estate market in the geographic areas in which we operate and on our tenants remain uncertain.

Changes in applicable tax regulations could negatively affect our financial results

We are subject to taxation in the U.S. and numerous foreign jurisdictions. Because, even with the passage of
the Tax Act, the U.S. maintains a worldwide corporate tax system, the foreign and U.S. tax systems are
somewhat interdependent. Longstanding international norms that determine each country’s jurisdiction to tax
cross-border international trade are evolving, such as the Base Erosion and Profit Shifting project (“BEPS”)
currently being undertaken by the G8, G20 and Organization for Economic Cooperation and Development. Tax
changes pursuant to BEPS could reduce the ability of our foreign subsidiaries to deduct for foreign tax purposes
the interest they pay on loans from us, thereby, increasing the foreign tax liability of the subsidiaries; it is also
possible that foreign countries could increase their withholding taxes on dividends and interest. Given the
unpredictability of these possible changes and their potential interdependency, it is very difficult to assess the
overall effect of such potential tax changes on our earnings and cash flow, but such changes could adversely
impact our financial results.

Unfavorable resolution of pending and future litigation matters and disputes could have a material adverse
effect on our financial condition

From time to time, we may be directly involved in a number of legal proceedings, lawsuits and other claims.
We may also be named as defendants in lawsuits allegedly arising out of our actions or the actions of our
operators/tenants or managers in which such operators/tenants or managers have agreed to indemnify, defend and
hold us harmless from and against various claims, litigation and liabilities arising in connection with their
respective businesses. An unfavorable resolution of pending or future litigation or legal proceedings may have a
material adverse effect on our business, results of operations and financial condition. Regardless of its outcome,
litigation may result in substantial costs and expenses and significantly divert the attention of management. There
can be no assurance that we will be able to prevail in, or achieve a favorable settlement of, pending or future
litigation. In addition, pending litigation or future litigation, government proceedings or environmental matters
could lead to increased costs or interruption of our normal business operations.

Development, redevelopment and construction risks could affect our profitability

At any given time, we may be in the process of constructing one or more new facilities that ultimately will
require a CON and license before they can be utilized by the operator for their intended use. The operator also
may need to obtain Medicare and Medicaid certification and enter into Medicare and Medicaid provider
agreements and/or third party payor contracts. In the event that the operator is unable to obtain the necessary
CON, licensure, certification, provider agreements or contracts after the completion of construction, there is a

22

risk that we will not be able to earn any revenues on the facility until either the initial operator obtains a license
or certification to operate the new facility and the necessary provider agreements or contracts or we find and
contract with a new operator that is able to obtain a license to operate the facility for its intended use and the
necessary provider agreements or contracts.

In connection with our renovation, redevelopment, development and related construction activities, we may
be unable to obtain, or suffer delays in obtaining, necessary zoning, land-use, building, occupancy and other
required governmental permits and authorizations. These factors could result
in increased costs or our
abandonment of these projects. In addition, we may not be able to obtain financing on favorable terms, which
may render us unable to proceed with our development activities, and we may not be able to complete
construction and lease-up of a property on schedule, which could result in increased debt service expense or
construction costs. Additionally, the time frame required for development, construction and lease-up of these
properties means that we may have to wait years for significant cash returns. Because we are required to make
cash distributions to our stockholders, if the cash flow from operations or refinancing is not sufficient, we may be
forced to borrow additional money to fund such distributions. Newly developed and acquired properties may not
produce the cash flow that we expect, which could adversely affect our overall financial performance.

In deciding whether to acquire or develop a particular property, we make assumptions regarding the
expected future performance of that property. In particular, we estimate the return on our investment based on
expected occupancy, rental rates and capital costs. If our financial projections with respect to a new property are
inaccurate as a result of increases in capital costs or other factors, the property may fail to perform as we
expected in analyzing our investment. Our estimate of the costs of repositioning or redeveloping an acquired
property may prove to be inaccurate, which may result in our failure to meet our profitability goals. Additionally,
we may acquire new properties that are not fully leased, and the cash flow from existing operations may be
insufficient to pay the operating expenses and debt service associated with that property.

We may experience losses caused by severe weather conditions or natural disasters, which could result in an
increase of our or our tenants’ cost of insurance, a decrease in our anticipated revenues or a significant
loss of the capital we have invested in a property

We maintain or require our tenants to maintain comprehensive insurance coverage on our properties with
terms, conditions, limits and deductibles that we believe are appropriate given the relative risk and costs of such
coverage, and we frequently review our insurance programs and requirements. However, a large number of our
properties are located in areas particularly susceptible to revenue loss, cost increase or damage caused by severe
weather conditions or natural disasters such as hurricanes, earthquakes, tornadoes and floods. We believe, given
current industry practice and analysis prepared by outside consultants, that our and our tenants’ insurance
coverage is appropriate to cover reasonably anticipated losses that may be caused by hurricanes, earthquakes,
tornadoes, floods and other severe weather conditions and natural disasters, including the effects of climate
change. Nevertheless, we are always subject to the risk that such insurance will not fully cover all losses and,
depending on the severity of the event and the impact on our properties, such insurance may not cover a
significant portion of the losses. These losses may lead to an increase of our and our tenants’ cost of insurance, a
decrease in our anticipated revenues from an affected property and a loss of all or a portion of the capital we have
invested in an affected property. In addition, we or our tenants may not purchase insurance under certain
circumstances if the cost of insurance exceeds, in our or our tenants’ judgment, the value of the coverage relative
to the risk of loss.

We may incur costs to remediate environmental contamination at our properties, which could have an
adverse effect on our or our obligors’ business or financial condition

Under various laws, owners or operators of real estate may be required to respond to the presence or release
of hazardous substances on the property and may be held liable for property damage, personal injuries or
penalties that result from environmental contamination or exposure to hazardous substances. We may become
liable to reimburse the government for damages and costs it incurs in connection with the contamination.
Generally, such liability attaches to a person based on the person’s relationship to the property. Our tenants or
borrowers are primarily responsible for the condition of the property. Moreover, we review environmental site

23

assessments of the properties that we own or encumber prior to taking an interest in them. Those assessments are
designed to meet the “all appropriate inquiry” standard, which we believe qualifies us for the innocent purchaser
defense if environmental liabilities arise. Based upon such assessments, we do not believe that any of our
properties are subject to material environmental contamination. However, environmental liabilities may be
present in our properties and we may incur costs to remediate contamination, which could have a material
adverse effect on our business or financial condition or the business or financial condition of our obligors.

Cybersecurity incidents could disrupt our business and result in the loss of confidential information

Our business is at risk from and may be impacted by cybersecurity attacks, including attempts to gain
unauthorized access to our confidential data, and other electronic security breaches, including those resulting
from human error, product defects and technology failures. Such cyber-attacks can range from individual
attempts to gain unauthorized access to our information technology systems to more sophisticated security
threats. While we employ a number of measures to prevent, detect and mitigate these threats, there is no
guarantee such efforts will be successful in preventing a cyber-attack. Cybersecurity incidents could disrupt our
business, compromise the confidential information of our employees, operators, tenants and partners, damage our
reputation and have a materially adverse effect on our business, financial condition and results of operations.

Our success depends on key personnel whose continued service is not guaranteed

Our success depends on the continued availability and service of key personnel, including our executive
officers and other highly qualified employees, and competition for their talents is intense. We cannot assure you
that we will retain our key personnel or that we will be able to recruit and retain other highly qualified employees
in the future. Losing any key personnel could, at least temporarily, have a material adverse effect on our
business, financial position and results of operations.

Risks Arising from Our Capital Structure

Our certificate of incorporation and by-laws contain anti-takeover provisions

Our certificate of incorporation and by-laws contain anti-takeover provisions (restrictions on share
ownership and transfer and super majority stockholder approval requirements for business combinations) that
could make it more difficult for or even prevent a third party from acquiring us without the approval of our
incumbent Board of Directors. Provisions and agreements that inhibit or discourage takeover attempts could
reduce the market value of our common stock.

We may become more leveraged

Permanent financing for our investments is typically provided through a combination of public offerings of
debt and equity securities and the incurrence or assumption of secured debt. The incurrence or assumption of
indebtedness may cause us to become more leveraged, which could (1) require us to dedicate a greater portion of
our cash flow to the payment of debt service, (2) make us more vulnerable to a downturn in the economy,
(3) limit our ability to obtain additional financing, or (4) negatively affect our credit ratings or outlook by one or
more of the rating agencies.

Cash available for distributions to stockholders may be insufficient to make dividend contributions at
expected levels and are made at the discretion of the Board of Directors

If cash available for distribution generated by our assets decreases due to dispositions or otherwise, we may
be unable to make dividend distributions at expected levels. Our inability to make expected distributions would
likely result in a decrease in the market price of our common stock. All distributions are made at the discretion of
our Board of Directors in accordance with Delaware law and depend on our earnings, our financial condition,
debt and equity capital available to us, our expectation of our future capital requirements and operating
performance, restrictive covenants in our financial and other contractual arrangements, maintenance of our REIT
qualification, restrictions under Delaware law and other factors as our Board of Directors may deem relevant
from time to time. Additionally, our ability to make distributions will be adversely affected if any of the risks
described herein, or other significant adverse events, occur.

24

We are subject to covenants in our debt agreements that could have a material adverse impact on our
business, results of operations and financial condition

Our debt agreements contain various covenants, restrictions and events of default. Among other things,
these provisions require us to maintain certain financial ratios and minimum net worth and impose certain limits
on our ability to incur indebtedness, create liens and make investments or acquisitions. Breaches of these
covenants could result in defaults under the instruments governing the applicable indebtedness, in addition to any
other indebtedness cross-defaulted against such instruments. These defaults could have a material adverse impact
on our business, results of operations and financial condition.

Limitations on our ability to access capital could have an adverse effect on our ability to make future
investments or to meet our obligations and commitments

We cannot assure you that we will be able to raise the capital necessary to make future investments or to
meet our obligations and commitments as they mature. Our access to capital depends upon a number of factors
over which we have little or no control, including rising interest rates, inflation and other general market
conditions; the market’s perception of our growth potential and our current and potential future earnings and cash
distributions; the market price of the shares of our capital stock and the credit ratings of our debt securities; the
financial stability of our lenders, which might impair their ability to meet their commitments to us or their
willingness to make additional loans to us; changes in the credit ratings on U.S. government debt securities; or
default or delay in payment by the U.S. of its obligations. If our access to capital is limited by these factors or
other factors, it could negatively impact our ability to acquire properties, repay or refinance our indebtedness,
fund operations or make distributions to our stockholders.

Downgrades in our credit ratings could have a material adverse impact on our cost and availability of
capital

We plan to manage the Company to maintain a capital structure consistent with our current profile, but there
can be no assurance that we will be able to maintain our current credit ratings. Any downgrades in terms of
ratings or outlook by any or all of the rating agencies could have a material adverse impact on our cost and
availability of capital, which could in turn have a material adverse impact on our results of operations, liquidity
and/or financial condition.

Increases in interest rates could have a material adverse impact on our cost of capital

An increase in interest rates may increase interest cost on new and existing variable rate debt. Such
increases in the cost of capital could adversely impact our ability to finance operations, the acquisition and
development of properties, and refinance existing debt. Additionally, increased interest rates may also result in
less liquid property markets, limiting our ability to sell existing assets.

Fluctuations in the value of foreign currencies could adversely affect our results of operations and
financial position

Currency exchange rate fluctuations could affect our results of operations and financial position. We
generate a portion of our revenue and expenses in such foreign currencies as the Canadian dollar and the British
pound sterling. Although we may enter into foreign exchange agreements with financial institutions and/or obtain
local currency mortgage debt in order to reduce our exposure to fluctuations in the value of foreign currencies,
we cannot assure you that foreign currency fluctuations will not have a material adverse effect on us.

Our entry into hedge agreements may not effectively reduce our exposure to changes in interest rates or
foreign currency exchange rates

We enter into hedge agreements from time to time to manage some of our exposure to interest rate and
foreign currency exchange rate volatility. These agreements involve risks, such as the risk that counterparties
may fail to honor their obligations under these arrangements. In addition, these arrangements may not be
effective in reducing our exposure to changes in interest rates or foreign currency exchange rates. When we use

25

forward-starting interest rate swaps, there is a risk that we will not complete the long-term borrowing against
which the swap is intended to hedge. If such events occur, our results of operations may be adversely affected.

Risks Arising from Our Status as a REIT

We might fail to qualify or remain qualified as a REIT

We intend to operate as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), and
believe we have and will continue to operate in such a manner. If we lose our status as a REIT, we will face
serious income tax consequences that will substantially reduce the funds available for satisfying our obligations
and for distribution to our stockholders because:

• we would not be allowed a deduction for distributions to stockholders in computing our taxable income

and would be subject to U.S. federal income tax at regular corporate rates;

• we could be subject to the federal alternative minimum tax and possibly increased state and local taxes;

and

•

unless we are entitled to relief under statutory provisions, we could not elect to be subject to tax as a
REIT for four taxable years following the year during which we were disqualified.

Since REIT qualification requires us to meet a number of complex requirements, it is possible that we may
fail to fulfill them, and if we do, our earnings will be reduced by the amount of U.S. federal and other income
taxes owed. A reduction in our earnings would affect the amount we could distribute to our stockholders. If we
do not qualify as a REIT, we would not be required to make distributions to stockholders since a non-REIT is not
required to pay dividends to stockholders in order to maintain REIT status or avoid an excise tax. In addition, if
we fail to qualify as a REIT, all distributions to stockholders would continue to be treated as dividends to the
extent of our current and accumulated earnings and profits, although corporate stockholders may be eligible for
the dividends received deduction, and individual stockholders may be eligible for taxation at the rates generally
applicable to long-term capital gains (currently at a maximum rate of 20%) with respect to distributions.

As a result of all these factors, our failure to qualify as a REIT also could impair our ability to implement
our business strategy and would adversely affect the value of our common stock. Qualification as a REIT
involves the application of highly technical and complex Code provisions for which there are only limited
judicial and administrative interpretations. The determination of various factual matters and circumstances not
entirely within our control may affect our ability to remain qualified as a REIT. Although we believe that we
qualify as a REIT, we cannot assure you that we will continue to qualify or remain qualified as a REIT for U.S.
federal income tax purposes.

Certain subsidiaries might fail to qualify or remain qualified as a REIT

We own interests in a number of entities which have elected to be taxed as REITs for U.S. federal income
tax purposes, some of which we consolidate for financial reporting purposes but each of which is treated as a
separate REIT for federal income tax purposes (each a “Subsidiary REIT”). To qualify as a REIT, each
Subsidiary REIT must independently satisfy all of the REIT qualification requirements under the Code, together
with all other rules applicable to REITs. Provided that each Subsidiary REIT qualifies as a REIT, our interests in
the Subsidiary REITs will be treated as qualifying real estate assets for purposes of the REIT asset tests. If a
Subsidiary REIT fails to qualify as a REIT in any taxable year, such Subsidiary REIT will be subject to federal
and state income taxes and may not be able to qualify as a REIT for the four subsequent taxable years. Any such
failure could have an adverse effect on our ability to comply with the REIT income and asset tests, and thus our
ability to qualify as a REIT, unless we are able to avail ourselves of certain relief provisions.

The 90% annual distribution requirement will decrease our liquidity and may limit our ability to engage in
otherwise beneficial transactions

To comply with the 90% distribution requirement applicable to REITs and to avoid the nondeductible excise
tax, we must make distributions to our stockholders. Although we anticipate that we generally will have
sufficient cash or liquid assets to enable us to satisfy the REIT distribution requirement, it is possible that, from

26

time to time, we may not have sufficient cash or other liquid assets to meet the 90% distribution requirement, or
we may decide to retain cash or distribute such greater amount as may be necessary to avoid income and excise
taxation. This may be due to timing differences between the actual receipt of income and actual payment of
deductible expenses, on the one hand, and the inclusion of that income and deduction of those expenses in
arriving at our taxable income, on the other hand. In addition, non-deductible expenses such as principal
amortization or repayments or capital expenditures in excess of non-cash deductions may cause us to fail to have
sufficient cash or liquid assets to enable us to satisfy the 90% distribution requirement. In the event that timing
differences occur, or we deem it appropriate to retain cash, we may borrow funds, issue additional equity
securities (although we cannot assure you that we will be able to do so), pay taxable stock dividends, if possible,
distribute other property or securities or engage in another transaction intended to enable us to meet the REIT
distribution requirements. This may require us to raise additional capital to meet our obligations.

The lease of qualified health care properties to a taxable REIT subsidiary is subject to special requirements

We lease certain qualified health care properties to taxable REIT subsidiaries (or limited liability companies
of which the taxable REIT subsidiaries are members), which lessees contract with managers (or related parties)
to manage the health care operations at these properties. The rents from this taxable REIT subsidiary lessee
structure are treated as qualifying rents from real property if (1) they are paid pursuant to an arms-length lease of
a qualified health care property with a taxable REIT subsidiary and (2) the manager qualifies as an eligible
independent contractor (as defined in the Code). If any of these conditions are not satisfied, then the rents will
not be qualifying rents.

If certain sale-leaseback transactions are not characterized by the Internal Revenue Service (“IRS”) as
“true leases,” we may be subject to adverse tax consequences

We have purchased certain properties and leased them back to the sellers of such properties, and we may
enter into similar transactions in the future. We intend for any such sale-leaseback transaction to be structured in
such a manner that the lease will be characterized as a “true lease,” thereby allowing us to be treated as the owner
of the property for U.S. federal income tax purposes. However, depending on the terms of any specific
transaction, the IRS might take the position that the transaction is not a “true lease” but is more properly treated
in some other manner. In the event any sale-leaseback transaction is challenged and successfully re-characterized
by the IRS, we would not be entitled to claim the deductions for depreciation and cost recovery generally
available to an owner of property. Furthermore, if a sale-leaseback transaction were so re-characterized, we
might fail to satisfy the REIT asset tests or income tests and, consequently, could lose our REIT status effective
with the year of re-characterization. Alternatively, the amount of our REIT taxable income could be recalculated,
which may cause us to fail to meet the REIT annual distribution requirements for a taxable year.

We could be subject to changes in our tax rates, the adoption of new U.S. or international tax legislation, or
exposure to additional tax liabilities

We are subject to taxes in the U.S. and foreign jurisdictions. Our analysis of the Tax Act may be impacted
by any corrective legislation and any guidance provided by the U.S. Treasury, the IRS or by the General
Explanation of the Tax Act, which is under preparation by the Staff of the Congressional Joint Committee on
Taxation. Our effective tax rates could be affected by changes in the mix of earnings in countries with differing
statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their
interpretation. We are also subject to the examination of our tax returns and other tax matters by the IRS and
other tax authorities and governmental bodies. We regularly assess the likelihood of an adverse outcome
resulting from these examinations to determine the adequacy of our provision for taxes. There can be no
assurance as to the outcome of these examinations. If we were subject to review or examination by the IRS or
applicable foreign jurisdiction as the result of any new tax law changes (including the recently enacted Tax Act)
the ultimate determination of which may change our taxes owed for an amount in excess of amounts previously
accrued or recorded, our financial condition, operating results, and cash flows could be adversely affected.

Item 1B. Unresolved Staff Comments

None.

27

Item 2. Properties

We own our corporate headquarters located at 4500 Dorr Street, Toledo, Ohio 43615. We also lease
corporate offices in Canada, the United Kingdom and Luxembourg and have ground leases relating to certain of
our properties. The following table sets forth certain information regarding the properties that comprise our
consolidated real property and real estate loan investments as of December 31, 2017 (dollars in thousands and
annualized revenues adjusted for timing of investment):

Triple-net

Seniors Housing Operating

Number of
Properties

Total
Investment

Annualized
Revenues

Number of
Properties

Total
Investment

Annualized
Revenues

$

— $

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

. . . . . . . . . . . . . . . . . . . . . . . . .

—
4
71
5
17
1
1
9
7
1
—
14
—
3
2
2
39
4
2
5
4
5
—
—
1
—
4
8
1
2
10
5
2
—
6
3
—
2
30
1
3
1
12
—
—
287
103
53
156

443

4
2
25
8
13
—
6
21
3
4
2
9
32
27
6
3
20
8
—
6
10
1
3
1
50
4
4
56
—
5
6
16
21
10
31
—
5
4
37
2
12
—
18
7
4
506
6
61
67

573

$

34,374
26,771
425,291
253,330
162,800
—
102,090
208,011
21,769
55,228
21,801
157,493
462,707
259,364
50,832
19,168
185,084
133,528
—
96,814
222,546
11,926
26,661
5,841
369,065
31,942
51,186
1,229,004
—
80,918
147,412
125,308
225,662
74,169
766,860
—
31,653
39,654
387,507
30,108
179,684
—
318,379
108,644
66,949
7,207,533
160,418
1,220,528
1,380,946

$

4,198
2,349
50,368
22,718
20,314
—
12,340
22,468
4,435
5,588
3,547
16,926
50,889
26,624
8,676
3,328
32,601
8,969
—
10,165
18,809
186
1,887
959
41,964
4,067
7,599
132,850
—
12,785
15,993
31,430
20,181
7,125
12,909
—
5,698
3,839
48,760
2,582
13,229
—
33,773
14,650
8,454
746,232
11,023
107,728
118,751

$8,588,479

$864,983

28

59,180
2,629,870
137,842
420,700
62,508
20,657
714,900
119,906
31,736
—
438,607
—
68,739
38,366
49,858
1,124,085
149,237
49,437
108,521
111,503
147,090
—
—
39,461
—
117,062
233,766
18,199
35,919
334,217
216,731
39,679
—
80,343
59,215
—
48,830
928,494
16,315
92,020
26,501
403,565
—
—
9,173,059
2,077,853
1,542,910
3,620,763

—
22,940
636,760
39,864
135,459
14,169
6,750
110,064
35,284
11,292
—
111,523
—
17,284
14,209
12,373
253,943
51,050
18,715
24,860
21,595
23,376
—
—
7,239
—
29,986
65,306
1,375
10,995
87,283
36,858
3,374
—
39,962
20,345
—
15,741
205,362
10,546
11,062
6,710
78,355
—
—
2,192,009
440,222
312,009
752,231

$12,793,822

$2,944,240

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

2
3
1
4
32
2
1
36
10
1
5
9
7
1
5
1
2
8
8
3
2
1
8
3
5
8
5
2
1
1
6
55
2
6
20

$

23,414
30,119
22,730
62,649
866,727
32,967
41,686
436,149
169,521
6,615
49,505
162,463
72,142
7,297
93,869
19,290
30,159
165,704
144,391
53,499
33,727
13,344
266,546
31,760
43,466
109,193
51,894
23,633
9,279
24,844
64,569
892,224
31,824
170,665
244,483

$

2,423
5,515
2,067
9,453
91,492
5,025
3,939
50,703
28,178
1,303
8,749
20,157
12,695
679
11,817
2,824
4,141
26,127
17,451
7,086
5,379
1,758
44,194
3,731
4,200
7,214
9,845
3,318
1,453
2,615
7,831
89,447
4,846
20,456
32,779

Total domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Grand total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

266
4

270

4,502,347
286,434

550,890
25,880

$4,788,781

$576,770

29

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)

2017

2016

2017

2016

2017

2016

. . . . . . . . . . . . . . . . . . .
Triple-net(4)
Seniors housing operating(5) . . . . . . .
. . . . . . . . . . . .
Outpatient medical(6)

85.8% 86.5% 1.34x
n/a
86.5% 88.7%
n/a
93.7% 94.7%

1.43x
n/a
n/a

$15,663
60,828
33

$16,841 per bed/unit
59,627 per unit
33 per sq. ft.

(1) We use unaudited, periodic financial information provided solely by tenants/borrowers to calculate occupancy and coverages for properties

other than outpatient medical buildings and have not independently verified the information.

(2) Represents the ratio of our triple-net customers’ earnings before interest, taxes, depreciation, amortization, rent and management fees to

contractual rent or interest due us. Data reflects the twelve months ended September 30 for the periods presented.

(3) Represents annualized revenues divided by total beds, units or square feet as presented in the tables above.
(4) Occupancy represents average quarterly operating occupancy based on the quarters ended September 30 and excludes properties that are

unstabilized, closed or for which data is not available or meaningful.

(5) Occupancy represents average occupancy for the three months ended December 31.
(6) Occupancy represents the percentage of total rentable square feet leased and occupied (including month-to-month and holdover leases and

excluding terminations) as of December 31.

The following table sets forth information regarding lease expirations for certain portions of our portfolio as of

December 31, 2017 (dollars in thousands):

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

Thereafter

Expiration Year(1)

Triple-net:

. . . . . . . $ 107,517 $

100

12.1%
8,715
16.2%

—
— $
0.0%
—
0.0%

14
17,740 $
2.0%

1,225

2.3%

10
16,576 $
1.9%

1,620

3.0%

13
9,895 $
1.1%

1,220

2.3%

11
8,348 $
0.9%

1,432

2.7%

4

59

10,842 $ 76,589 $

31

272
45
63,138 $ 95,730 $ 482,337

1.2%
692
1.3%

8.6%

4,489

8.3%

7.1%

3,662

6.8%

10.8%
4,647

8.6%

54.3%

26,065

48.5%

1,173,527

1,312,277

1,502,213

1,701,977

1,048,663

1,143,704

736,777

1,133,674

402,904

50,744 $
12.0%
317
13.7%

32,011 $
7.5%
310
13.4%

35,425 $
8.3%
311
13.5%

39,984 $
9.4%
268
11.6%

45,079 $
10.6%
302
13.1%

28,599 $
6.7%
203
8.8%

32,946 $ 21,255 $

7.8%
122
5.3%

5.0%
108
4.7%

28,705 $ 11,425 $

4,359,985
98,411

6.8%
126
5.5%

2.7%
78
3.4%

23.2%
162
6.9%

Properties . . . . . . . .
Base rent(2)
% of base rent . . . . .
Units . . . . . . . . . . . .
% of units . . . . . . . .

Outpatient medical:

Square feet
Base rent(2)
% of base rent . . . . .
Leases . . . . . . . . . . .
% of leases . . . . . . .

. . . . . . . 2,382,066
. . . . . . . $

(1) Excludes investments in unconsolidated entities. Investments classified as held for sale are included in 2018.
(2) The most recent monthly base rent including straight-line for leases with fixed escalators or annual cash rents with contingent escalators.

Base rent does not include tenant recoveries or amortization of above and below market lease intangibles.

Item 3. Legal Proceedings

From time to time, there are various legal proceedings pending against us that arise in the ordinary course of
our business. Management does not believe that the resolution of any of these legal proceedings either individually
or in the aggregate will have a material adverse effect on our business, results of operations or financial condition.
Further, from time to time, we are party to certain legal proceedings for which third parties, such as tenants,
operators and/or managers are contractually obligated to indemnify, defend and hold us harmless. In some of these
matters, the indemnitors have insurance for the potential damages. In other matters, we are being defended by
tenants and other obligated third parties and these indemnitors may not have sufficient insurance, assets, income or
resources to satisfy their defense and indemnification obligations to us. The unfavorable resolution of such legal
proceedings could, individually or in the aggregate, materially adversely affect the indemnitors’ ability to satisfy
their respective obligations to us, which, in turn, could have a material adverse effect on our business, results of
operations or financial condition. It is management’s opinion that there are currently no such legal proceedings
pending that will, individually or in the aggregate, have such a material adverse effect. Despite management’s view
of the ultimate resolution of these legal proceedings, we may have significant legal expenses and costs associated
with the defense of such matters. Further, management cannot predict the outcome of these legal proceedings and if
management’s expectation regarding such matters is not correct, such proceedings could have a material adverse
effect on our business, results of operations or financial condition.

Item 4. Mine Safety Disclosures

None.

30

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities

There were 4,761 stockholders of record as of January 31, 2018. The following table sets forth, for the
the high and low prices of our common stock on the New York Stock Exchange

periods indicated,
(NYSE:WELL), and common dividends paid per share:

2017

First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter

2016

First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter

Sales Price

Dividends Paid

High

Low

Per Share

$71.17
78.17
75.91
70.87

$70.45
76.24
80.19
74.85

$64.63
68.66
69.77
63.06

$52.80
66.55
72.34
59.39

$0.87
0.87
0.87
0.87

$0.86
0.86
0.86
0.86

Our Board of Directors has approved a 2018 quarterly cash dividend rate of $0.87 per share of common
stock per quarter, commencing with the February 2018 dividend. The declaration and payment of quarterly
dividends remains subject to the review and approval of the Board of Directors.

Stockholder Return Performance Presentation

Set forth below is a line graph comparing the yearly percentage change and the cumulative total stockholder
return on our shares of common stock against the cumulative total return of the S & P Composite-500 Stock
Index and the FTSE NAREIT Equity Index. As of December 31, 2017, 157 companies comprised the FTSE
NAREIT Equity Index, which consists of REITs identified by NAREIT as equity (those REITs which have at
least 75% of their investments in real property). The data are based on the closing prices as of December 31 for
each of the five years. 2012 equals $100 and dividends are assumed to be reinvested.

S&P 500

Welltower Inc.

FTSE NAREIT Equity

250

200

s
r
a
l
l

o
D

150

100

50

2012

2013

2014

2015

2016

2017

S & P 500

Welltower Inc.

FTSE NAREIT Equity

12/31/12

12/31/13

12/31/14

12/31/15

12/31/16

12/31/17

100.00

100.00

100.00

132.39

91.58

102.47

150.51

136.01

133.35

152.59

128.23

137.61

170.84

132.55

149.33

208.14

132.81

157.14

31

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, 2017 through October 31,

2017 . . . . . . . . . . . . . . . . . . . . . . . . .

November 1, 2017 through

November 30, 2017 . . . . . . . . . . . . .

December 1, 2017 through

—

249

December 31, 2017 . . . . . . . . . . . . .

32,072

Totals . . . . . . . . . . . . . . . . . . . . . . . . . .

32,321

$ —

68.46

67.94

$67.94

(1) During the three months ended December 31, 2017, the Company acquired shares of common stock held by employees who tendered

owned shares to satisfy tax withholding obligations.

(2) No shares were purchased as part of publicly announced plans or programs.

32

Item 6. Selected Financial Data

The following selected financial data for the five years ended December 31, 2017 are derived from our

audited consolidated financial statements (in thousands, except per share data):

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,

2013

2014

2015

2016

2017

$2,880,608
2,778,363

$3,343,546
2,959,333

$3,859,826
3,223,709

$4,281,160
3,571,907

$4,316,641
4,017,025

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
—

299,616
(20,128)
(83,125)

196,363
—
344,250

540,613
49,410
9,769

interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6,770)

147

4,799

4,267

17,839

Net income attributable to common stockholders . . . . . .

$

78,714

$ 446,745

$ 818,344

$1,012,397

$ 463,595

Other Data
Average number of common shares outstanding:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

276,929
278,761

306,272
307,747

348,240
349,424

358,275
360,227

367,237
369,001

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 . . . . . . . . . . . . . . .

$

$

$

$

$

0.10
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

$

$

$

$

$

1.26
—

1.26

1.26
—

1.26

3.48

2013

2014

2015

2016

2017

December 31,

Balance Sheet Data

Net real estate investments . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . .
Total long-term obligations . . . . . . .
Total liabilities . . . . . . . . . . . . . . . .
Total preferred stock . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . .

$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

$26,171,077
27,944,445
11,731,936
12,643,799
718,503
14,925,452

*

Amounts may not sum due to rounding

33

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

EXECUTIVE SUMMARY

Company Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Key Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Key Performance Indicators, Trends and Uncertainties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Off-Balance Sheet Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contractual Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

RESULTS OF OPERATIONS

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors Housing Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient Medical
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Segment/Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35
35
36
37
39

40
41
41
42

42
44
47
49
52

OTHER

Non-GAAP Financial Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Critical Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

53
59

34

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is based primarily on the consolidated financial statements of
Welltower Inc. presented in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for
the periods presented and should be read together with the notes thereto contained in this Annual Report on
Form 10-K. Other important factors are identified in “Item 1 — Business” and “Item 1A — Risk Factors” above.

Executive Summary

Company Overview

Welltower Inc. (NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the
transformation of health care infrastructure. The Company invests with leading seniors housing operators, post-
acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care
delivery models and improve people’s wellness and overall health care experience. WelltowerTM, a real estate
investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the
United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing and post-acute
communities and outpatient medical properties. Our capital programs, when combined with comprehensive
planning, development and property management services, make us a single-source solution for acquiring,
planning, developing, managing, repositioning and monetizing real estate assets.

The following table summarizes our consolidated portfolio for the year ended December 31, 2017 (dollars in

thousands):

Type of Property

NOI(1)

Percentage of
NOI

Number of
Properties

Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 967,084
880,026
384,068

43.3%
39.5%
17.2%

573
443
270

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,231,178

100.0%

1,286

(1) Represents consolidated NOI and excludes our share of investments in unconsolidated entities. Entities in which we have a joint venture
with a minority partner are shown at 100% of the joint venture amount. See Non-GAAP Financial Measures for additional information
and reconciliation.

Business Strategy

Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay
consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders
as a result of annual increases in net operating income and portfolio growth. To meet these objectives, we invest
across the full spectrum of seniors housing and health care real estate and diversify our investment portfolio by
property type, relationship and geographic location.

Substantially all of our revenues are derived from operating lease rentals, resident fees/services, and interest
earned on outstanding loans receivable. These items represent our primary sources of liquidity to fund
distributions and depend upon the continued ability of our obligors to make contractual rent and interest
payments to us and the profitability of our operating properties. To the extent that our obligors/partners
experience operating difficulties and become unable to generate sufficient cash to make payments or operating
distributions to us, there could be a material adverse impact on our consolidated results of operations, liquidity
and/or financial condition. To mitigate this risk, we monitor our investments through a variety of methods
determined by the type of property. Our asset management process for seniors housing properties generally
includes review of monthly financial statements and other operating data for each property, review of obligor/
partner creditworthiness, property inspections, and review of covenant compliance relating to licensure, real
estate taxes, letters of credit and other collateral. Our internal property management division manages and
monitors the outpatient medical portfolio with a comprehensive process including review of tenant relations,

35

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

lease expirations, the mix of health service providers, hospital/health system relationships, property performance,
capital improvement needs, and market conditions among other things. We evaluate the operating environment in
each property’s market to determine the likely trend in operating performance of the facility. When we identify
unacceptable trends, we seek to mitigate, eliminate or transfer the risk. Through these efforts, we are generally
able to intervene at an early stage to address any negative trends, and in so doing, support both the collectability
of revenue and the value of our investment.

In addition to our asset management and research efforts, we also structure our relevant investments to help
mitigate payment risk. Operating leases and loans are normally credit enhanced by guaranties and/or letters of
credit. In addition, operating leases are typically structured as master leases and loans are generally cross-
defaulted and cross-collateralized with other real estate loans, operating leases or agreements between us and the
obligor and its affiliates.

For the year ended December 31, 2017, rental income and resident fees/services represented 33% and 64%,
respectively, of total revenues. Substantially all of our operating leases are designed with escalating rent
structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the
initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental
escalators is generally recorded based on the contractual cash rental payments due for the period. Our yield on
loans receivable depends upon a number of factors, including the stated interest rate, the average principal
amount outstanding during the term of the loan, and any interest rate adjustments.

Our primary sources of cash include rent and interest receipts, resident fees/services, borrowings under our
primary unsecured credit facility, public issuances of debt and equity securities, proceeds from investment
dispositions, and principal payments on loans receivable. Our primary uses of cash include dividend
distributions, debt service payments (including principal and interest), real property investments (including
loan advances, property
acquisitions, capital expenditures, construction advances, and transaction costs),
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 exceed new
investment dispositions may occur in the future. To the extent
investments, our revenues and cash flows from operations could be adversely affected. We expect to reinvest the
proceeds from any investment dispositions in new investments. To the extent that new investment requirements
exceed our available cash on-hand, we expect to borrow under our primary unsecured credit facility. At
December 31, 2017, we had $243,777,000 of cash and cash equivalents, $65,526,000 of restricted cash and
$2,258,635,000 of available borrowing capacity under our primary unsecured credit facility.

that

Key Transactions

Capital. During the year ended December 31, 2017, we extinguished $1,080,268,000 of secured debt at a
blended average interest rate of 5.2%. In addition, we redeemed all 11,500,000 shares of our 6.5% Series J
Cumulative Redeemable Preferred Stock. Also, for the year ended December 31, 2017, we raised $611,443,000
through our dividend reinvestment program and our Equity Shelf Program (as defined below). The capital raised,
in combination with available cash and borrowing capacity under our primary unsecured credit facility and
proceeds from dispositions, supported new investment activity for the year.

36

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Investments. The following summarizes our property acquisitions and joint venture investments made

during the year ended December 31, 2017 (dollars in thousands):

Properties

Investment
Amount(1)

Capitalization
Rates(2)

Book
Amount(3)

Triple-net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . .
Outpatient medical . . . . . . . . . . . . . . . . . . . . . .

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9
8
9

26

$170,076
375,400
196,544

$742,020

6.4%
6.6%
5.9%

6.3%

$ 281,875
539,173
224,232

$1,045,280

(1) Represents stated pro rata purchase price including cash and any assumed debt but excludes fair value adjustments pursuant to U.S.

GAAP.

(2) Represents annualized contractual or projected net operating income to be received in cash divided by investment amounts.

(3) Represents amounts recorded on our books including fair value adjustments pursuant to U.S. GAAP. See Note 3 to our consolidated

financial statements for additional information.

Dispositions. The following summarizes property dispositions made during the year ended December 31,

2017 (dollars in thousands):

Properties

Proceeds(1)

Capitalization
Rates(2)

Book
Amount(3)

Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . .
Outpatient medical . . . . . . . . . . . . . . . . . . . . .

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

59
3
3

65

$1,190,791
105,349
23,590

$1,319,730

6.9%
4.6%
8.3%

6.7%

$ 916,689
74,832
19,697

$1,011,218

(1) Represents pro rata proceeds received upon disposition including any seller financing.

(2) Represents annualized contractual net operating income that was being received in cash at date of disposition divided by disposition

proceeds.

(3) Represents carrying value of assets at time of disposition. See Note 5 to our consolidated financial statements for additional information.

Dividends. Our Board of Directors announced the 2018 annual cash dividend of $3.48 per common share
($0.87 per share quarterly), consistent with 2017, beginning in February 2018. The dividend declared for the
quarter ended December 31, 2017 represents the 187th consecutive quarterly dividend payment.

Key Performance Indicators, Trends and Uncertainties

We utilize several key performance indicators to evaluate the various aspects of our business. These
indicators are discussed below and relate to operating performance, credit strength and concentration risk.
Management uses these key performance indicators to facilitate internal and external comparisons to our
historical operating results, in making operating decisions, and for budget planning purposes.

Operating Performance. We believe that net income and net income attributable to common stockholders
(“NICS”) per the Statement of Comprehensive Income are the most appropriate earnings measures. Other useful
supplemental measures of our operating performance include funds from operations attributable to common
stockholders (“FFO”), consolidated net operating income (“NOI”) and same store NOI (“SSNOI”); however,
these supplemental measures are not defined by U.S. GAAP. Please refer to the section entitled “Non-GAAP
Financial Measures” for further discussion and reconciliations. These earnings measures are widely used by
investors and analysts in the valuation, comparison, and investment recommendations of companies. The

37

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

following table reflects the recent historical trends of our operating performance measures for the periods
presented (in thousands):

Year Ended
December 31,

2015

2016

2017

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 888,549 $1,082,070 $ 540,613
463,595
Net income attributable to common stockholders . . . . . . . . . . . .
1,165,576
Funds from operations attributable to common stockholders . . .
2,232,716
Consolidated net operating income . . . . . . . . . . . . . . . . . . . . . . .
1,519,193
Same store net operating income . . . . . . . . . . . . . . . . . . . . . . . . .

1,012,397
1,582,940
2,404,177
1,499,511

818,344
1,409,640
2,237,569
1,523,666

Credit Strength. We measure our credit strength both in terms of leverage ratios and coverage ratios. The
leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and
Internal Revenue Code (“IRC”) section 1031 deposits. The coverage ratios indicate our ability to service interest
and fixed charges (interest, secured debt principal amortization and preferred dividends). We expect to maintain
capitalization ratios and coverage ratios sufficient to maintain a capital structure consistent with our current
profile. The coverage ratios are based on adjusted earnings before interest, taxes, depreciation and amortization
(“AEBITDA”). Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and
reconciliation of these measures. Leverage ratios and coverage ratios are widely used by investors, analysts and
rating agencies in the valuation, comparison, investment recommendations, and rating of companies. The
following table reflects the recent historical trends for our credit strength measures for the periods presented:

Year Ended
December 31,

2015

2016

2017

Net debt to book capitalization ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.8% 42.9% 42.9%
Net debt to undepreciated book capitalization ratio . . . . . . . . . . . . . . . . . . . . . . . . 39.5% 37.4% 36.3%
Net debt to market capitalization ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.5% 31.1% 31.2%
4.36x
Adjusted interest coverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.24x
3.54x
Adjusted fixed charge coverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.35x

4.21x
3.34x

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

38

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

equivalents). The following table reflects our recent historical trends of concentration risk by NOI for the periods
indicated below:

December 31,(1)

2015

2016

2017

Property mix:

Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

54% 50% 43%
31% 34% 40%
15% 16% 17%

Relationship mix:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sunrise Senior Living(2)
Genesis HealthCare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revera(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brookdale Senior Living . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benchmark Senior Living . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remaining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13% 13% 14%
9%
17% 16%
7%
6%
5%
7%
6%
7%
4%
4%
4%
54% 55% 59%

Geographic mix:

California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Jersey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remaining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13% 10% 13%
9%
8%
9%
8%
8%
8%
8%
7%
8%
7%
7%
7%
55% 60% 55%

(1) Excludes our share of investments in unconsolidated entities and non-segment/corporate NOI. Entities in which we have a joint venture

with a minority partner are shown at 100% of the joint venture amount.

(2) Revera owns a controlling interest in Sunrise Senior Living. See Note 8 to our consolidated financial statements for additional

information.

We evaluate our key performance indicators in conjunction with current expectations to determine if
historical trends are indicative of future results. Our expected results may not be achieved and actual results may
differ materially from our expectations. Factors that may cause actual results to differ from expected results are
described in more detail
in “Item 1 — Business — Cautionary Statement Regarding Forward-Looking
Statements” and “Item 1A — Risk Factors” and other sections of this Annual Report on Form 10-K.
Management regularly monitors economic and other factors to develop strategic and tactical plans designed to
improve performance and maximize our competitive position. Our ability to achieve our financial objectives is
dependent upon our ability to effectively execute these plans and to appropriately respond to emerging economic
and Company-specific trends. Please refer to “Item 1 — Business,” “Item 1A — Risk Factors” in this Annual
Report on Form 10-K for further discussion of these risk factors.

Corporate Governance

Maintaining investor confidence and trust is important in today’s business environment. Our Board of
Directors and management are strongly committed to policies and procedures that reflect the highest level of
ethical business practices. Our corporate governance guidelines provide the framework for our business
operations and emphasize our commitment to increase stockholder value while meeting all applicable legal
requirements. These guidelines meet the listing standards adopted by the New York Stock Exchange and are
available on the Internet at www.welltower.com/investors/governance. The information on our website is not
incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive
textual reference only.

39

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources

Sources and Uses of Cash

During the fourth quarter of 2017, we adopted Accounting Standards Update (“ASU”) No. 2016-18,
“Restricted Cash,” and ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments.” See
Note 2 to the consolidated financial statements for further information.

Our primary sources of cash include rent and interest receipts, resident fees/services, borrowings under our
primary unsecured credit facility, public issuances of debt and equity securities, proceeds from investment
dispositions, and principal payments on loans receivable. Our primary uses of cash include dividend
distributions, debt service payments (including principal and interest), real property investments (including
acquisitions, capital expenditures, construction advances and transaction costs),
loan advances, property
operating expenses, and general and administrative expenses. These sources and uses of cash are reflected in our
Consolidated Statements of Cash Flows and are discussed in further detail below. The following is a summary of
our sources and uses of cash flows for the periods presented (dollars in thousands):

Year Ended

One Year
Change

December 31,
2015

December 31,
2016

$

%

Year Ended
December 31,
2017

One Year
Change

Two Year
Change

$

%

$

%

Beginning cash, cash

equivalents and restricted
cash . . . . . . . . . . . . . . . . . . . $

Net cash provided from (used

in):
Operating activities . . . . . . .
Investing activities . . . . . . .
Financing activities . . . . . . .

Effect of foreign currency

553,423 $

422,690 $ (130,733) -24% $

607,220 $ 184,530

44% $

53,797 10%

1,382,599
(3,502,075)
1,997,318

256,465

1,639,064
(183,443) 3,318,632 -95%
(1,250,817) (3,248,135) n/a

19% 1,434,177 (204,887) -13%
n/a

4%
n/a
(1,913,527) (662,710) 53% (3,910,845) n/a

51,578
3,656,656

154,581

338,024

translation . . . . . . . . . . . . . .

(8,575)

(20,274)

(11,699) 136%

26,852

47,126

n/a

35,427

n/a

Ending cash, cash equivalents

and restricted cash . . . . . . . . $

422,690 $

607,220 $

184,530

44% $

309,303 $(297,917) -49% $ (113,387) -27%

Operating Activities. The change in net cash provided from operating activities is attributable to changes
in NOI, which is primarily due to dispositions in 2016 and 2017, partially offset by acquisitions and annual rent
increasers. Please see “Results of Operations” below for further discussion. For the years ended December 31,
2015, 2016 and 2017, cash flows from operations exceeded cash distributions to stockholders.

Investing Activities. The changes in net cash used in investing activities are primarily attributable to net
changes in real property investments, real estate loans receivable, and investments in unconsolidated entities
which are summarized above in “Key Transactions in 2017.” Please refer to Notes 3, 6, and 7 of our consolidated
financial statements for additional information. The following is a summary of cash used in non-acquisition
capital improvement activities for the periods presented (dollars in thousands):

Year Ended

One Year
Change

December 31,
2015

December 31,
2016

$

%

Year Ended

December 31,
2017

One Year
Change

Two Year
Change

$

%

$

%

$244,561

$403,131

$158,570 65% $232,715

$(170,416)

-42% $ (11,846)

-5%

64,458

66,332

1,874

3%

—

(66,332) -100% (64,458) -100%

123,294

152,814

29,520 24% 250,276

97,462

64% 126,982 103%

New development . . . . . . . . . .
Recurring capital

expenditures, tenant
improvements and lease
commissions . . . . . . . . . . . .

Renovations, redevelopments

and other capital
improvements . . . . . . . . . . .

Total

. . . . . . . . . . . . . . . . . . . .

$432,313

$622,277

$189,964 44% $482,991

$(139,286)

-22% $ 50,678

12%

40

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The change in new development is primarily due to the number and size of construction projects on-going
during the relevant periods. Renovations, redevelopments and other capital improvements include expenditures
to maximize property value, increase net operating income, maintain a market-competitive position, and/or
achieve property stabilization. Generally, these expenditures have increased as a result of acquisitions, primarily
in our seniors housing operating segment.

Financing Activities. The changes in net cash provided from financing activities are primarily attributable
to changes related to our long-term debt arrangements, the issuance/redemptions of common and preferred stock,
and dividend payments which are summarized above in “Key Transactions in 2017.” Please refer to Notes 9, 10
and 13 of our consolidated financial statements for additional information.

Off-Balance Sheet Arrangements

At December 31, 2017, we had investments in unconsolidated entities with our ownership generally ranging
from 10% to 50%. Please see Note 7 to our consolidated financial statements for additional information. We use
financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure. Please see
Note 11 to our consolidated financial statements for additional information. At December 31, 2017, we had
fourteen outstanding letter of credit obligations. Please see Note 12 to our consolidated financial statements for
additional information.

Contractual Obligations

The following table summarizes our payment

requirements under contractual obligations as of

December 31, 2017 (in thousands):

Contractual Obligations

Total

2018

2019-2020

2021-2022

Thereafter

Payments Due by Period

. . . . . . . . . . . $

Unsecured revolving credit facility(1)
Senior unsecured notes and term credit 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) . . . . . . . . .

Secured debt:(2,3)

719,000 $

— $

— $ 719,000 $

—

6,050,000
239,674
1,420,545
507,500
199,728

450,000 1,050,000 1,050,000 3,500,000
—
—
— 1,420,545
—
—

— 239,674
—
—
—
7,500
—

500,000
— 199,728

Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unconsolidated . . . . . . . . . . . . . . . . . . . . . . . . . .

2,618,408
753,807

396,588
31,087

707,184
133,312

456,634 1,058,002
552,780
36,628

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)

80,485
3,124,832
502,477
194,923
89,104
1,125,098
441,647
2,704

20,121
359,943
96,372
28,840
4,678
17,871
304,188
1,475

40,243
665,295
145,563
51,220
8,507
35,675
137,459
1,229

—
20,121
510,717 1,588,877
158,570
101,972
73,007
41,856
8,346
67,573
34,184 1,037,368
—
—

—
—

Total contractual obligations . . . . . . . . . . . . . . . . . . $18,069,932 $1,711,163 $3,222,861 $3,679,186 $9,456,722

(1) Relates to our unsecured revolving credit facility with an aggregate commitment of $3,000,000,000. See Note 9 to our consolidated

financial statements.

41

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(2) Amounts represent principal amounts due and do not reflect unamortized premiums/discounts or other fair value adjustments as reflected

on the balance sheet.

(3) Based on foreign currency exchange rates in effect as of balance sheet date.

(4) Based on variable interest rates in effect as of December 31, 2017.

(5) See Note 12 to our consolidated financial statements.

(6) Primarily relates to payments to be made under a supplemental executive retirement plan for one former executive officer.

Capital Structure

Please refer to “Credit Strength” above for our leverage and coverage ratio trends. Our debt agreements
contain various covenants, restrictions and events of default. Certain agreements require us to maintain financial
ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and
make investments or acquisitions. As of December 31, 2017, we believe we were in compliance with all of the
covenants under our debt agreements. None of our debt agreements contain provisions for acceleration which
could be triggered by our debt ratings. However, under our primary unsecured credit facility, the ratings on our
senior unsecured notes are used to determine the fees and interest charged. We plan to manage the Company to
maintain compliance with our debt covenants and with a capital structure consistent with our current profile. Any
downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse
impact on our cost and availability of capital, which could in turn have a material adverse impact on our
consolidated results of operations, liquidity and/or financial condition.

On May 1, 2015, we filed with the Securities and Exchange Commission (“SEC”) (1) an open-ended
automatic or “universal” shelf registration statement covering an indeterminate amount of future offerings of debt
securities, common stock, preferred stock, depositary shares, warrants and units and (2) a registration statement
in connection with our enhanced dividend reinvestment plan (“DRIP”) under which we may issue up to
15,000,000 shares of common stock. As of January 31, 2018, 2,108,286 shares of common stock remained
available for issuance under the DRIP registration statement. We have entered into separate Equity Distribution
Agreements with each of Morgan Stanley & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Goldman Sachs & Co. LLC, UBS Securities LLC and Wells Fargo Securities, LLC relating to the offer and sale
from time to time of up to $1,000,000,000 aggregate amount of our common stock (“Equity Shelf Program”).
The Equity Shelf Program also allows us to enter into forward sale agreements. We expect that, if entered into,
we will physically settle each forward sale agreement on one or more dates on or prior to the maturity date of that
particular forward sale agreement, in which case we will expect to receive per share cash proceeds at settlement
equal to the forward sale price under the relevant forward sale agreement. However, we may elect to cash settle
or net share settle a forward share agreement. As of January 31, 2018, we had $784,083,000 of remaining
capacity under the Equity Shelf Program and there were no outstanding forward sales agreements. Depending
upon market conditions, we anticipate issuing securities under our registration statements to invest in additional
properties and to repay borrowings under our primary unsecured credit facility.

Results of Operations

Summary

Our primary sources of revenue include rent, resident fees/services, and interest income. Our primary
expenses include interest expense, depreciation and amortization, property operating expenses, other expenses,
and general and administrative expenses. We evaluate our business and make resource allocations on our three
business segments: triple-net, seniors housing operating and outpatient medical. The primary performance
measures for our properties are NOI and SSNOI and other supplemental measures include FFO and AEBITDA,
which are further discussed below. Please see Non-GAAP Financial Measures for additional information and

42

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

reconciliations. The following is a summary of our results of operations for the periods presented (dollars in
thousands, except per share amounts):

Year Ended

One Year
Change

December 31,
2015

December 31,
2016

Amount %

Year Ended

December 31,
2017

One Year
Change

Two Year
Change

Amount %

Amount %

Net income attributable to

common stockholders . . . $ 818,344 $1,012,397 $194,053 24% $ 463,595 $(548,802) -54%$(354,749) -43%
888,549 1,082,070 193,521 22% 540,613 (541,457) -50% (347,936) -39%

Net income . . . . . . . . . . . . .
Funds from operations

attributable to common
stockholders . . . . . . . . . . 1,409,640 1,582,940 173,300 12% 1,165,576 (417,364) -26% (244,064) -17%
1%
0%
0%

Adjusted EBITDA . . . . . . . 2,113,258 2,256,864 143,606
Consolidated NOI . . . . . . . . 2,237,569 2,404,177 166,608
Same store NOI
Per share data (fully

7% 2,128,429 (128,435)
7% 2,232,716 (171,461)
19,682

-6% 15,171
-7% (4,853)
1% (4,473)

. . . . . . . . . 1,523,666 1,499,511

(24,155) -2% 1,519,193

diluted):
Net income attributable

to common
stockholders . . . . . . . . $

Funds from operations

attributable to common
stockholders . . . . . . . .

Adjusted interest coverage

2.34 $

2.81 $

0.47 20% $

1.26 $

(1.55) -55%$

(1.08) -46%

4.03

4.39

0.36

9%

3.16

(1.23) -28%

(0.87) -22%

ratio . . . . . . . . . . . . . . . . .

4.24x

4.21x

-0.03x -1%

4.36x

0.15x

4%

0.12x

3%

Adjusted fixed charge

coverage ratio . . . . . . . . .

3.35x

3.34x

-0.01x

0%

3.54x

0.20x

6%

0.19x

6%

The following table represents the changes in outstanding common stock for the period from January 1,

2015 to December 31, 2017 (in thousands):

December 31,
2015

Year Ended

December 31,
2016

December 31,
2017

Beginning balance . . . . . . . . . . . . . . . . . . . . .
Public offerings . . . . . . . . . . . . . . . . . . . . . . .
Dividend reinvestment plan issuances . . . . . .
Senior note conversions . . . . . . . . . . . . . . . . .
Preferred stock conversions . . . . . . . . . . . . . .
Redemption of equity membership units . . . .
Option exercises . . . . . . . . . . . . . . . . . . . . . . .
Equity Shelf Program issuances . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net

328,790
19,550
4,024
1,330
—
—
249
696
139

Ending balance . . . . . . . . . . . . . . . . . . . . . . . .

354,778

Average number of shares outstanding:

354,778
—
4,145
—
—
—
141
3,135
403

362,602

362,602
—
5,640
—
4
91
253
2,987
155

Totals

328,790
19,550
13,809
1,330
4
91
643
6,818
697

371,732

371,732

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . .

348,240
349,424

358,275
360,227

367,237
369,001

During the past three years, inflation has not significantly affected our earnings because of the moderate
inflation rate. Additionally, a portion of our earnings are derived primarily from long-term investments with

43

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

predictable rates of return. These investments are mainly financed with a combination of equity, senior unsecured
notes, secured debt, and borrowings under our primary unsecured credit facility. During inflationary periods, which
generally are accompanied by rising interest rates, our ability to grow may be adversely affected because the yield
on new investments may increase at a slower rate than new borrowing costs. Presuming the current inflation rate
remains moderate and long-term interest rates do not increase significantly, we believe that inflation will not impact
the availability of equity and debt financing for us.

Triple-net

The following is a summary of our NOI and SSNOI for the triple-net segment for the periods presented (dollars

in thousands):

Year Ended

One Year
Change

December 31,
2015

December 31,
2016

$

%

Year Ended

December 31,
2017

One Year
Change

Two Year
Change

$

%

$

%

NOI . . . . . . . . . . . . . . . . . . . . $1,175,806 $1,208,860 $ 33,054
Non-cash NOI attributable to
same store properties(1)
. . .
NOI attributable to non same
store properties(2) . . . . . . . .

(498,131)

(48,890)

(38,899)

9,991 -20% (28,602)

(574,049) (75,918) 15% (333,279)

10,297 -26% 20,288 -41%

240,770 -42% 164,852 -33%

3% $ 967,084 $(241,776) -20%$(208,722) -18%

SSNOI(1)

. . . . . . . . . . . . . . . . $ 628,785 $ 595,912 $(32,873) -5% $ 605,203 $

9,291

2%$ (23,582)

-4%

(1) Relates to 418 same store properties.

(2) Primarily relates to the acquisition of 74 properties and the conversion of 17 construction projects into revenue-generating properties

subsequent to January 1, 2015 as well as 48 properties sold or held for sale at December 31, 2017.

44

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 for the periods presented

(dollars in thousands):

Year Ended

December 31,
2015

December 31,
2016

One Year
Change

$

%

Year Ended

December 31,
2017

One Year
Change

Two Year
Change

$

%

$

%

Revenues:

Rental income . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . .

$1,094,827
74,108
6,871

$1,112,325
90,476
6,059

$ 17,498
16,368
(812)

2% $885,811
73,742
7,531

22%
-12%

$(226,514)
(16,734)
1,472

-20% $(209,016)
(366)
-18%
660
24%

-19%
0%
10%

NOI(1)

. . . . . . . . . . . . . . . . . . . . .

1,175,806

1,208,860

33,054

3% 967,084

(241,776)

-20% (208,722)

-18%

1,175,806

1,208,860

33,054

3% 967,084

(241,776)

-20% (208,722)

-18%

Other expenses:

Interest expense . . . . . . . . . . . . . .
. .
Loss (gain) on derivatives, net
Depreciation and amortization . .
Transaction costs(2)
. . . . . . . . . . .
Loss (gain) on extinguishment of
debt, net . . . . . . . . . . . . . . . . . .
Provision for loan losses(3)
. . . . .
Impairment of assets(4)
. . . . . . . .
Other expenses(2) . . . . . . . . . . . . .

28,384
(58,427)
288,242
53,195

10,095
—
2,220
35,648

21,370
68
297,197
10,016

(7,014)
58,495
8,955
(43,179)

-25%
15,194
2,284
n/a
3% 243,830
—

-81%

(6,176)
-46%
-29% (13,190)
2,216 3259% 60,711 -104%
(53,367)
-15%
-18% (44,412)
(10,016) -100% (53,195) -100%

863
6,935
20,169

-91%
(9,232)
6,935
n/a
17,949 809%

29,083
62,966
96,909
— (35,648) -100% 116,689

188%
28,220 3270% 18,988
808% 62,966
56,031
n/a
380% 94,689 4265%
76,740
227%
81,041
116,689

n/a

359,357

356,618

(2,739)

-1% 566,955

210,337

59% 207,598

58%

Income from continuing operations
before income taxes and income
(loss) from unconsolidated
entities . . . . . . . . . . . . . . . . . . . . .
Income tax benefit (expense) . . . . .
Income (loss) from unconsolidated
entities . . . . . . . . . . . . . . . . . . . . .

Income from continuing

816,449
(4,244)

852,242
(1,087)

35,793
3,157

4% 400,129
(4,291)

-74%

(452,113)

-53% (416,320)
(47)

-51%
1%

(3,204) 295%

8,260

9,767

1,507

18%

19,428

9,661

99% 11,168

135%

operations . . . . . . . . . . . . . . . . . .

820,465

860,922

40,457

5% 415,266

(445,656)

-52% (405,199)

-49%

Gain (loss) on real estate

dispositions, net(4) . . . . . . . . . . . .

86,261

355,394

269,133 312% 286,325

(69,069)

-19% 200,064

232%

Net income . . . . . . . . . . . . . . . . . . .
Less: Net income attributable to

noncontrolling interests . . . . . . . .

Net income attributable to common
stockholders . . . . . . . . . . . . . . . .

906,726

1,216,316

309,590

34% 701,591

(514,725)

-42% (205,135)

-23%

6,348

1,221

(5,127)

-81%

4,603

3,382

277%

(1,745)

-27%

$ 900,378

$1,215,095

$314,717

35% $696,988

$(518,107)

-43% $(203,390)

-23%

(1) See Non-GAAP Financial Measures below.

(2) See Note 3 to our consolidated financial statements.

(3) See Note 6 to our consolidated financial statements.

(4) See Note 5 to our consolidated financial statements.

The 2017 decrease in rental income is primarily attributable to the disposition of properties exceeding new
acquisitions and conversions of newly constructed triple-net properties. Certain of our leases contain annual rental
escalators that are contingent upon changes in the Consumer Price Index (“CPI”) and/or changes in the gross
operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-line rent is recorded;

45

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

however, rental income is recorded based on the contractual cash rental payments due for the period. If gross
operating revenues at our facilities and/or the CPI do not increase, a portion of our revenues may not continue to
increase. Our leases could renew above or below current rent rates, resulting in an increase or decrease in rental
income. For the three months ended December 31, 2017, we had no triple-net lease renewals but we had 25
leases with rental rate increasers ranging from 0.15% to 0.36% in our triple-net portfolio. The 2017 decrease in
interest income is primarily attributable to the volume of loan payoffs during 2016 and 2017 and the 2016
increase is attributable to higher loan volumes during the majority of 2016.

During the year ended December 31, 2017, we completed seven triple-net construction projects totaling
$283,472,000 or $347,818 per bed/unit and two expansion projects totaling $10,336,000. The following is a
summary of triple-net construction projects pending as of December 31, 2017 (dollars in thousands):

Location

Alexandria,VA . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exton, PA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Westerville, OH . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Units/
Beds

116
120
90

326

Commitment

Balance

Est. Completion

$ 60,156
34,175
22,800

$46,631
18,560
3,595

$117,131

$68,786

2Q18
2Q18
4Q18

Total interest expense represents secured debt interest expense and related fees. The change in secured debt
interest expense is due to the net effect and timing of assumptions, segment transitions, fluctuations in foreign
currency rates, extinguishments and principal amortizations. The fluctuations in loss (gain) on extinguishment of
debt is primarily attributable to the volume of extinguishments and terms of the related secured debt. The
following is a summary of our triple-net secured debt principal activity for the periods presented (dollars in
thousands):

Year Ended December 31, 2015 Year Ended December 31, 2016 Year Ended December 31, 2017

Beginning balance . . . . .
Debt issued . . . . . . . . . . .
Debt assumed . . . . . . . . .
Debt extinguished . . . . .
Foreign currency . . . . . .
Principal payments . . . . .

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)

Weighted Avg.
Interest Rate

5.488%
2.205%
0.000%
5.562%
5.247%
5.682%

Amount

$ 594,199
13,000
—
(274,048)
20,186
(5,863)

Ending balance . . . . . . . .

$ 554,014

5.488%

$ 594,199

4.580%

$ 347,474

Weighted Avg.
Interest Rate

4.580%
4.570%
0.000%
5.954%
2.909%
5.657%

3.546%

Monthly averages . . . . . .

$ 551,803

5.518%

$ 497,213

5.414%

$ 408,688

3.909%

Depreciation and amortization decreased in 2017 primarily as a result of the disposition of triple-net
properties. To the extent that we acquire or dispose of additional properties in the future, our provision for
depreciation and amortization will change accordingly. Changes in gains on sales of properties are related to the
volume of property sales and the sales prices. During the years ended December 31, 2017, 2016 and 2015, we
recorded impairment charges totaling $96,909,000 related to 21 properties, $20,169,000 related to 22 properties,
and $2,220,000 related to two properties, respectively.

The provision for loan losses is related to our critical accounting estimate for the allowance for loan losses
and is discussed in “Critical Accounting Policies” below and Note 6 to our consolidated financial statements.
During the years ended December 31, 2017 and 2016, we recorded provision for loan losses related to certain
first mortgage loans to Genesis HealthCare (“Genesis”) of $62,966,000 and $6,935,000, respectively.

46

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

During the year ended December 31, 2017, other expenses primarily represents non-capitalizable transaction
costs, including $88,316,000 related to a joint venture transaction with an existing seniors housing operator,
including the conversion of properties from triple-net to seniors housing operating, an exchange of PropCo/OpCo
interests and termination/restructuring of pre-existing relationships.

In April 2011, we completed the acquisition of substantially all of the real estate assets of privately-owned
Genesis. In conjunction with this transaction, we received the option to acquire an ownership interest in Genesis.
In February 2015, Genesis closed on a transaction to merge with Skilled Healthcare Group to become a publicly
traded company which required us to record the value of the derivative asset due to the net settlement feature.
This event resulted in $58,427,000 gain. During the fourth quarter of 2015, the cost basis of this investment
exceeded the fair value. Management performed an assessment to determine whether the decline in fair value
was other than temporary and concluded that it was. As a result, we recognized an other than temporary
impairment charge of $35,648,000 which was recorded in other expense. During the fourth quarter of 2017,
management recorded an additional other than temporary charge of $18,294,000 in other expenses on the Genesis
equity investment.

A portion of our triple-net properties were formed through partnerships. Income or loss from unconsolidated
entities represents our share of net income or losses from partnerships where we are the noncontrolling partner.
Net income attributable to noncontrolling interests represents our partners’ share of net income relating to those
partnerships where we are the controlling partner.

Seniors Housing Operating

The following is a summary of our NOI and SSNOI for the seniors housing operating segment for the

periods presented (dollars in thousands):

Year Ended

One Year
Change

December 31,
2015

December 31,
2016

$

%

Year Ended

December 31,
2017

One Year
Change

Two Year
Change

$

%

$

%

NOI . . . . . . . . . . . . . . . . . $701,262
Non-cash NOI

$ 814,114 $ 112,852

16% $ 880,026 $ 65,912

8% $ 178,764 25%

attributable to same
store properties(1)
NOI attributable to non

. . . .

same store
properties(2) . . . . . . . . .

1,003

1,990

987

98%

1,242

(748) -38%

239 24%

(83,880)

(190,459)

(106,579) 127% (246,731)

(56,272) 30% (162,851) 194%

SSNOI(1) . . . . . . . . . . . . . $618,385

$ 625,645 $

7,260

1% $ 634,537 $ 8,892

1% $ 16,152

3%

(1) Relates to 294 same store properties.

(2) Primarily relates to the acquisition of 129 properties subsequent to January 1, 2015.

47

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 for the

periods presented (dollars in thousands):

Year Ended

December 31,
2015

December 31,
2016

One Year
Change

$

%

Year Ended

December 31,
2017

One Year
Change

Two Year
Change

$

%

$

%

Revenues:

Resident fees and services . . . . . . . . .

$2,158,031

$2,504,731

$346,700

16% $2,779,423

$274,692

11% $621,392

Interest income . . . . . . . . . . . . . . . . . .

Other income . . . . . . . . . . . . . . . . . . .

4,180

6,060

4,180

17,085

— 0%

69

(4,111)

-98% (4,111)

11,025 182%

5,127

(11,958)

-70%

(933)

Property operating expenses . . . . . . . . . .

1,467,009

1,711,882

244,873

17% 1,904,593

192,711

11% 437,584

2,168,271

2,525,996

357,725

16% 2,784,619

258,623

10% 616,348

NOI(1)

. . . . . . . . . . . . . . . . . . . . . . . . .

701,262

814,114

112,852

16%

880,026

65,912

8% 178,764

29%

-98%

-15%

28%

30%

25%

Other expenses:

Interest expense . . . . . . . . . . . . . . . . .

Depreciation and amortization . . . . . .
Transaction costs(2) . . . . . . . . . . . . . . .
Loss (gain) on extinguishment of

debt, net

. . . . . . . . . . . . . . . . . . . . .

Impairment of assets(3)

. . . . . . . . . . . .

Other expenses(2)

. . . . . . . . . . . . . . . .

Income (loss) from continuing

operations before income from
unconsolidated entities . . . . . . . . . . . .

70,388

351,733
54,966

81,853

11,465

415,429
29,207

63,696
(25,759)

16%

18%
-47%

63,265

(18,588)

-23% (7,123)

-10%

484,796

69,367
— (29,207)

17% 133,063
-100% (54,966)

38%
-100%

(195)

—

—

(88)

107

-55%

12,403

12,403

n/a

—

— n/a

3,785

21,949

8,347

3,873 -4401%

3,980 -2041%

9,546

8,347

77% 21,949

n/a

8,347

n/a

n/a

476,892

538,804

61,912

13%

582,142

43,338

8% 105,250

22%

224,370

275,310

50,940

23%

297,884

22,574

8% 73,514

33%

Income tax benefit (expense) . . . . . . . . .

986

(3,762)

(4,748) -482%

(16,430)

(12,668)

337% (17,416) -1766%

Income (loss) from unconsolidated

entities . . . . . . . . . . . . . . . . . . . . . . . . .

(32,672)

(20,442)

12,230

-37% (105,236)

(84,794)

415% (72,564)

222%

Income from continuing operations . . . .

192,684

251,106

58,422

30%

176,218

(74,888)

-30% (16,466)

-9%

Gain (loss) on real estate dispositions,

net(3)

. . . . . . . . . . . . . . . . . . . . . . . . . .

—

9,880

9,880

n/a

56,295

46,415

470% 56,295

n/a

Net income (loss) . . . . . . . . . . . . . . . . . .

192,684

260,986

68,302

35%

232,513

(28,473)

-11% 39,829

21%

Less: Net income (loss) attributable to

noncontrolling interests . . . . . . . . . . .

(1,438)

2,292

3,730 -259%

8,472

6,180

270%

9,910

-689%

Net income (loss) attributable to

common stockholders . . . . . . . . . . . . .

$ 194,122

$ 258,694

$ 64,572

33% $ 224,041

$ (34,653)

-13% $ 29,919

15%

(1) See Non-GAAP Financial Measures below.

(2) See Note 3 to our consolidated financial statements.

(3) See Note 5 to our consolidated financial statements.

Fluctuations in resident fees/services and property operating expenses are primarily a result of acquisitions
and the movement of U.S. and foreign currency exchange rates. The fluctuations in depreciation and amortization
are due to acquisitions and variations in amortization of short-lived intangible assets. To the extent that we
acquire or dispose of additional properties in the future, these amounts will change accordingly. The increase in
other income for the year ended December 31, 2016 is primarily a result of insurance proceeds received relating
to a property as well as a bargain purchase gain recognized in conjunction with a single property acquisition.

The majority of our seniors housing operating properties are formed through partnership interests. The
fluctuations in income (loss) from unconsolidated entities are largely due to the recognition of impairments
related to one of our investments in unconsolidated entities during the year ended December 31, 2017. In
addition, losses are also attributable to depreciation and amortization of short-lived intangible assets related to

48

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

certain investments in unconsolidated joint ventures in 2013 and 2014. Net income attributable to noncontrolling
interests represents our partners’ share of net income (loss) related to joint ventures.

During the year ended December 31, 2017, we completed one seniors housing operating construction
project representing $3,634,000 or $302,820 per unit. The following is a summary of our seniors housing
operating construction projects, excluding expansions, pending as of December 31, 2017 (dollars in thousands):

Location

Units/Beds

Commitment

Balance

Est. Completion

Chertsey, UK . . . . . . . . . . . . . . . . . . . . . . . .
Bushey, UK . . . . . . . . . . . . . . . . . . . . . . . . .
Wandsworth, UK . . . . . . . . . . . . . . . . . . . . .

94
95
98

$ 42,210
55,131
78,739

$ 35,814
36,784
29,502

1Q18
3Q18
1Q20

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

287

$176,080

102,100

Interest expense represents secured debt interest expense which fluctuates based on the net effect and timing
of assumptions, segment
transitions, fluctuations in foreign currency rates, extinguishments and principal
amortizations. The fluctuations in loss (gain) on extinguishment of debt is primarily attributable the volume of
extinguishments and terms of the related secured debt. The following is a summary of our seniors housing
operating property secured debt principal activity (dollars in thousands):

Year Ended December 31, 2015 Year Ended December 31, 2016 Year Ended December 31, 2017

Amount

Weighted Avg.
Interest Rate

Amount

Weighted Avg.
Interest Rate

Amount

Weighted Avg.
Interest Rate

Beginning balance . . . . . . . . $1,654,531
228,685
Debt issued . . . . . . . . . . . . .
842,316
Debt assumed . . . . . . . . . . .
(285,599)
Debt extinguished . . . . . . . .
—
Debt deconsolidated . . . . . .
(110,691)
Foreign currency . . . . . . . . .
(38,690)
Principal payments . . . . . . .

4.422% $2,290,552
293,860
2.776%
60,898
3.420%
(159,498)
4.188%
—
0.000%
26,549
3.625%
(49,112)
4.126%

3.958% $2,463,249
228,772
2.895%
—
4.301%
(668,804)
3.656%
(60,000)
0.000%
72,636
3.483%
(47,153)
3.888%

Ending balance . . . . . . . . . . $2,290,552

3.958% $2,463,249

3.936% $1,988,700

3.936%
2.722%
0.000%
4.805%
3.799%
3.234%
3.601%

3.661%

Monthly averages . . . . . . . . $1,894,609

4.261% $2,391,706

3.926% $2,065,477

3.662%

The increases in gains on real estate dispositions is due to higher volumes of property sales. During the
years ended December 31, 2017, and 2016, we recorded impairment charges totaling $21,949,000 and
$12,403,000, relating to three and two properties, respectively.

Outpatient Medical

The following is a summary of our NOI and SSNOI for the outpatient medical segment for the periods

presented (dollars in thousands):

Year Ended

December 31,
2015

December 31,
2016

One Year
Change

$

%

Year Ended

December 31,
2017

One Year
Change

Two Year
Change

$

%

$

%

NOI(1) . . . . . . . . . . . . . . . . . . . $359,410
Non-cash NOI attributable to
same store properties(1)
. . .
NOI attributable to non same
store properties(2) . . . . . . . .

(76,819)

(6,095)

$380,264 $ 20,854

6% $ 384,068 $ 3,804

1% $ 24,658

7%

(3,073)

3,022 -50%

(1,764)

1,309 -43% 4,331 -71%

(99,237)

(22,418) 29% (102,851)

(3,614)

4% (26,032) 34%

SSNOI(1) . . . . . . . . . . . . . . . . . $276,496

$277,954 $ 1,458

1% $ 279,453 $ 1,499

1% $ 2,957

1%

49

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(1) Relates to 202 same store properties.

(2) Primarily relates to the acquisition of 28 properties and the conversion of 12 construction projects into revenue-generating properties

subsequent to January 1, 2015 as well as 20 properties sold or held for sale at December 31, 2017.

The following is a summary of our results of operations for the outpatient medical segment for the periods

presented (dollars in thousands):

Year Ended

December 31,
2015

December 31,
2016

One Year
Change

$

%

Year Ended

December 31,
2017

One Year
Change

Two Year
Change

$

%

$

%

Revenues:

Rental income . . . . . . . . . . . . . . . . . . . . .

$504,121

$536,490

$ 32,369

6% $560,060

$23,570

4% $ 55,939

11%

Interest income . . . . . . . . . . . . . . . . . . . .

Other income . . . . . . . . . . . . . . . . . . . . . .

Property operating expenses . . . . . . . . . . . .

5,853

4,684

514,658

155,248

3,307

5,568

545,365

165,101

NOI(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

359,410

380,264

Other expenses:

Interest expense . . . . . . . . . . . . . . . . . . . .

Depreciation and amortization . . . . . . . .

Transaction costs(2)

. . . . . . . . . . . . . . . . .

Loss (gain) on extinguishment of

debt, net . . . . . . . . . . . . . . . . . . . . . . . .

Provision for loan losses(3) . . . . . . . . . . . .

Impairment of assets(4) . . . . . . . . . . . . . . .

Other expenses(2) . . . . . . . . . . . . . . . . . . .

27,542

186,265

2,765

—

—

—

—

19,087

188,616

3,687

—

3,280

4,635

—

(2,546) -43%

—

(3,307) -100%

(5,853) -100%

884

19%

3,340

(2,228)

-40%

(1,344)

-29%

30,707

9,853

20,854

6%

6%

6%

563,400

179,332

18,035

14,231

384,068

3,804

3%

9%

1%

48,742

24,084

9%

16%

24,658

7%

(8,455) -31%

10,015

(9,072)

-48% (17,527)

-64%

2,351

1%

193,094

4,478

2%

6,829

4%

922

33%

—

(3,687) -100%

(2,765) -100%

— n/a

4,373

4,373

n/a

4,373

n/a

3,280

4,635

n/a

n/a

— n/a

—

(3,280) -100%

— n/a

5,625

1,911

990

1,911

21%

n/a

5,625

1,911

n/a

n/a

216,572

219,305

2,733

1%

215,018

(4,287)

-2%

(1,554)

-1%

Income from continuing operations before
income taxes and income (loss) from
unconsolidated entities . . . . . . . . . . . . . .

142,838

160,959

18,121

13%

169,050

8,091

5%

26,212

18%

Income tax benefit (expense)

. . . . . . . . . . .

245

(511)

(756) n/a

(1,477)

(966) 189%

(1,722)

n/a

Income (loss) from unconsolidated

entities . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,908

318

(2,590) -89%

2,683

2,365

744%

(225)

-8%

Income from continuing operations . . . . . .

145,991

160,766

14,775

10%

170,256

9,490

6%

24,265

17%

Gain (loss) on real estate dispositions,

net(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

194,126

(1,228)

(195,354) n/a

1,630

2,858

n/a

(192,496)

-99%

Net income (loss) . . . . . . . . . . . . . . . . . . . . .

340,117

159,538

(180,579) -53%

171,886

12,348

8% (168,231)

-49%

Less: Net income (loss) attributable to

noncontrolling interests . . . . . . . . . . . . . .

(110)

768

878

n/a

4,765

3,997

520%

4,875

n/a

Net income (loss) attributable to common

stockholders . . . . . . . . . . . . . . . . . . . . . . .

$340,227

$158,770

$(181,457) -53% $167,121

$ 8,351

5% $(173,106)

-51%

(1) See Non-GAAP Financial Measures below.

(2) See Note 3 to our consolidated financial statements.

(3) See Note 6 to our consolidated financial statements.

(4) See Note 5 to our consolidated financial statements.

The increases in rental income is primarily attributable to the acquisitions of new properties and the conversion
of newly constructed outpatient medical properties from which we receive rent. Certain of our leases contain annual
rental escalators that are contingent upon changes in the CPI. These escalators are not fixed, so no straight-line rent
is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If

50

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

the CPI does not increase, a portion of our revenues may not continue to increase. Revenue from real property
that is sold would offset revenue increases and, to the extent that revenues from sold properties exceed those
from new acquisitions, we would experience decreased revenues. Our leases could renew above or below current
rent rates, resulting in an increase or decrease in rental income. For the three months ended December 31, 2017,
our consolidated outpatient medical portfolio signed 79,129 square feet of new leases and 270,505 square feet of
renewals. The weighted-average term of these leases was six years, with a rate of $32.92 per square foot and
tenant improvement and lease commission costs of $11.43 per square foot. Substantially all of these leases during
the referenced quarter contain an annual fixed or contingent escalation rent structure ranging from the change in
CPI to 3.5%.

The fluctuation in property operating expenses is primarily attributable to acquisitions and construction
conversions of new outpatient medical facilities for which we incur certain property operating expenses. The
fluctuations in depreciation and amortization are due to acquisitions and variations in amortization of short-lived
intangible assets. To the extent that we acquire or dispose of additional properties in the future, these amounts
will change accordingly.

During the year ended December 31, 2016, we recorded a provision for loan loss related to our critical
accounting estimate for the allowance for loan losses discussed in “Critical Accounting Policies” below and Note
6 to our consolidated financial statements.

Changes in gains/losses on sales of properties are related to volume of property sales and the sales prices.
During 2016 and 2017, we recognized impairment charges related to certain held-for-sale properties as the
carrying values exceeded the estimated fair values less costs to sell.

During the year ended December 31, 2017, we completed four outpatient medical construction projects
representing $63,036,000 or $311 per square foot. The following is a summary of outpatient medical construction
projects pending as of December 31, 2017 (dollars in thousands):

Location

Square Feet

Commitment

Balance

Est. Completion

Palmer, AK . . . . . . . . . . . . . . . . . . . . . . . . . .
Brooklyn, NY . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

38,376
140,955

179,331

$ 12,345
105,177

$117,522

$ 2,329
49,901

$52,230

3Q18
3Q19

Total interest expense represents secured debt interest expense. The change in secured debt interest expense
is primarily due to the net effect and timing of assumptions, extinguishments and principal amortizations. The
fluctuations in loss (gain) on extinguishment of debt is primarily attributable the volume of extinguishments and
terms of the related secured debt. The following is a summary of our outpatient medical secured debt principal
activity for the periods presented (dollars in thousands):

Year Ended December 31, 2015 Year Ended December 31, 2016 Year Ended December 31, 2017

Beginning balance . . . . .
Debt assumed . . . . . . . . .
Debt extinguished . . . . .
Principal payments . . . . .

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)

Weighted Avg.
Interest Rate

5.177%
0.000%
5.970%
6.552%

Amount

$ 404,079
23,094
(137,416)
(9,806)

Ending balance . . . . . . . .

$627,689

5.177%

$ 404,079

4.846%

$ 279,951

Weighted Avg.
Interest Rate

4.846%
6.670%
5.990%
6.850%

4.720%

Monthly averages . . . . . .

$613,155

5.434%

$ 536,774

5.106%

$ 294,694

4.624%

A portion of our outpatient medical properties were formed through partnerships. Income or loss from
unconsolidated entities represents our share of net income or losses from partnerships where we are the
noncontrolling partner. Net income attributable to noncontrolling interests represents our partners’ share of net
income or loss relating to those partnerships where we are the controlling partner.

51

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

December 31,
2015

December 31,
2016

One Year
Change

$

%

Year Ended

December 31,
2017

One Year
Change

Two Year
Change

$

%

$

%

Other income . . . . . . . . . . . . . . . . . . $

1,091

$

939 $

(152) -14% $

1,538 $

599

64% $

447

41%

Expenses:

Interest expense . . . . . . . . . . . . . . . .
Loss (gain) on derivatives, net . . . . .
General and administrative . . . . . . . .
Loss (gain) on extinguishments of

debt, net

. . . . . . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . .

365,855
—
147,416

24,777
10,583

399,035
(2,516)
155,241

33,180
(2,516)
7,825

9% 396,148
n/a
—
5% 122,008

(2,887)
2,516 -100%

-1% 30,293

8%
— n/a
-21% (25,408) -17%

(33,233)

16,439
11,998

(8,338) -34%
1,415 13%

— (16,439) -100% (24,777) -100%
38,831 324% 40,246 380%

50,829

548,631

580,197

31,566

6% 568,985

(11,212)

-2% 20,354

4%

Loss from continuing operations before
income taxes . . . . . . . . . . . . . . . . . . .
Income tax benefit (expense) . . . . . . . .

Net loss . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred stock dividends . . . . . . . . . . .
Preferred stock redemption charge . . . .

(547,540)
(3,438)

(550,978)
65,406
—

Net loss attributable to common

(579,258)
24,488

(31,718)
27,926

6% (567,447)
2,070
n/a

11,811
(22,418)

-2% (19,907)
-92% 5,508

4%
n/a

(554,770)
65,406
—

(3,792)

1% (565,377)
49,410
9,769

— 0%
— n/a

(10,607)
(15,996)
9,769

2% (14,399)

3%
-24% (15,996) -24%
n/a
9,769

n/a

stockholders . . . . . . . . . . . . . . . . . . . $(616,384)

$(620,176) $ (3,792)

1% $(624,556) $ (4,380)

1% $ (8,172)

1%

The following is a summary of our non-segment/corporate interest expense for the periods presented (dollars in

thousands):

Year Ended

December 31,
2015

December 31,
2016

One Year
Change

$

%

Year Ended

December 31,
2017

One Year
Change

Two Year
Change

$

%

$

%

Senior unsecured notes . . . . . . . $341,265
Secured debt . . . . . . . . . . . . . . .
357
Primary unsecured credit

facility . . . . . . . . . . . . . . . . . .
Loan expense . . . . . . . . . . . . . .

10,812
13,421

$368,775 $27,510

8% $364,773
127

(47) -13%

$(4,002)

7%
-1% $23,508
(183) -59% (230) -65%

310

16,811
13,139

5,999 55% 17,863
-2% 13,385
(282)

1,052
246

6% 7,051 65%
0%
2%

(36)

Totals . . . . . . . . . . . . . . . . . . . . $365,855

$399,035 $33,180

9% $396,148 $ (2,887)

-1% $30,293

8%

The change in interest expense on senior unsecured notes is due to the net effect of issuances and
extinguishments, primarily the $450,000,000 of 4.70% senior unsecured notes extinguished in December 2016.
Please refer to Note 10 to consolidated financial statements for additional information. The loss on extinguishment
of debt in 2015 is primarily due to the early extinguishment of the 2016 senior unsecured notes. The loss on
extinguishment of debt in 2016 is due to the early extinguishment of the 2017 senior unsecured notes. The change in
interest expense on our primary unsecured credit facility is due primarily to the net effect and timing of draws,
paydowns and variable interest rate changes. Please refer to Note 9 of our consolidated financial statements for
additional information regarding our primary unsecured credit facility.

52

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General and administrative expenses as a percentage of consolidated revenues for the years ended December 31,
2017, 2016 and 2015 were 2.83%, 3.63% and 3.82%, respectively. The 2017 decrease in general and
administrative expenses is primarily related to a reduction in professional service fees for tax and legal consulting
and compensation costs as a result of execution of our strategic initiatives.

Other expenses for 2017 primarily represents $40,730,000 of costs related to finalization of an agreement
with the University of Toledo Foundation to transfer our corporate headquarters as a donation. Other expenses
for all years also includes severance-related costs associated with the departure of certain executive officers and
key employees. During 2017, we incurred expenses totaling approximately $3,811,000 in connection with the
litigation captioned Welltower v. Brinker, Case No. G-4801-CI-0201702692-000 (Ct. Common Pleas, Toledo,
Ohio). These expenses were offset by: 1) $4,000,000 we received pursuant to the terms of the settlement of the
litigation; and 2) approximately $2,848,000 that Mr. Brinker was owed under his Separation Agreement with us,
which was forgiven pursuant to the terms of the settlement of the litigation. Other expenses in 2015 also included
costs associated with the termination of our investment in a strategic outpatient medical partnership.

The fluctuations in income taxes are primarily due to benefits recognized in the year ended December 31,
2016 related to the release of a valuation allowance reserve on a taxable subsidiary and the restructuring of an
unconsolidated investment. The decrease in preferred dividends and the preferred stock redemption charge are
due to the redemption of our 6.5% Series J preferred stock during the three months ended March 31, 2017.

Other

Non-GAAP Financial Measures

We believe that net income and net income attributable to common stockholders (“NICS”), as defined by
U.S. GAAP, are the most appropriate earnings measurements. However, we consider FFO, NOI, SSNOI,
EBITDA and Adjusted EBITDA (“AEBITDA”)
to be useful supplemental measures of our operating
performance. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes
that
the value of real estate assets diminishes predictably over time as evidenced by the provision for
depreciation. However, since real estate values have historically risen or fallen with market conditions, many
industry investors and analysts have considered presentations of operating results for real estate companies that
use historical cost accounting to be insufficient. In response, the National Association of Real Estate Investment
Trusts (“NAREIT”) created funds from operations attributable to common stockholders (“FFO”) as a
supplemental measure of operating performance for REITs that excludes historical cost depreciation from net
income. FFO, as defined by NAREIT, means NICS, computed in accordance with U.S. GAAP, excluding gains
(or losses) from sales of real estate and impairment of depreciable assets, plus depreciation and amortization, and
after adjustments for unconsolidated entities and noncontrolling interests.

Consolidated net operating income (“NOI”) is used to evaluate the operating performance of our properties.
We define NOI as total revenues, including tenant reimbursements, less property operating expenses. Property
operating expenses represent costs associated with managing, maintaining and servicing tenants for our seniors
housing operating and outpatient medical facility properties. These expenses include, but are not limited to,
property-related payroll and benefits, property management fees paid to operators, marketing, housekeeping,
food service, maintenance, utilities, property taxes and insurance. General and administrative expenses (excluded
from NOI) represent costs unrelated to property operations. These expenses include, but are not limited to,
payroll and benefits, professional services, office expenses, and depreciation of corporate fixed assets. Same
store NOI (“SSNOI”) is used to evaluate the operating performance of our properties under a consistent
population which eliminates changes in the composition of our portfolio. As used herein, same store is generally
defined as those revenue-generating properties in the portfolio for the reporting period subsequent to January 1,
2015. Land parcels, loans, sub-leases and major capital restructurings as well as any properties acquired,
developed/redeveloped, transitioned, sold or classified as held for sale during that period are excluded from the
same store amounts. We believe NOI and SSNOI provide investors relevant and useful information because they
measure the operating performance of our properties at the property level on an unleveraged basis. We use NOI

53

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

and SSNOI to make decisions about resource allocations and to assess the property level performance of our
properties.

EBITDA stands for earnings (net income) before interest, taxes, depreciation and amortization. We believe
that EBITDA, along with net income and cash flow provided from operating activities,
is an important
supplemental measure because it provides additional information to assess and evaluate the performance of our
operations. We primarily utilize EBITDA to measure our interest coverage ratio, which represents EBITDA
divided by total interest, and our fixed charge coverage ratio, which represents EBITDA divided by fixed
charges. Fixed charges include total interest, secured debt principal amortization, and preferred dividends.
Covenants in our senior unsecured notes contain financial ratios based on a definition of EBITDA that is specific
to those agreements. Failure to satisfy these covenants could result in an event of default that could have a
material adverse impact on our cost and availability of capital, which could in turn have a material adverse
impact on our consolidated results of operations, liquidity and/or financial condition. Due to the materiality of
these debt agreements and the financial covenants, we have disclosed AEBITDA, which represents EBITDA as
defined above excluding unconsolidated entities and adjusted for items per our covenant. We use AEBITDA to
measure our adjusted fixed charge coverage ratio, which represents AEBITDA divided by fixed charges on a
trailing twelve months basis. Fixed charges include total interest (excluding capitalized interest and non-cash
interest expenses), secured debt principal amortization and preferred dividends. Our covenant requires an
adjusted fixed charge coverage ratio of at least 1.50 times.

Our supplemental reporting measures and similarly entitled financial measures are widely used by investors,
equity and debt analysts and rating agencies
rating and investment
recommendations of companies. Management uses these financial measures to facilitate internal and external
comparisons to our historical operating results and in making operating decisions. Additionally, these measures
are utilized by the Board of Directors to evaluate management. None of our supplemental measures represent net
income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should
not be considered as alternative measures of profitability or liquidity. Finally, the supplemental measures, as
defined by us, may not be comparable to similarly entitled items reported by other REITs or other companies.

in the valuation, comparison,

The table below reflects the reconciliation of FFO to NICS, the most directly comparable U.S. GAAP
measure, for the periods presented. Noncontrolling interest and unconsolidated entity amounts represent
adjustments to reflect our share of depreciation and amortization, gains/loss on real estate dispositions and
impairments of assets. Amounts are in thousands except for per share data.

Year Ended December 31,

2015

2016

2017

FFO Reconciliation:
Net income attributable to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on real estate dispositions, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Funds from operations attributable to common stockholders . . . . . . . . . . . . . . . . . . .
Average common shares outstanding:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 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

$ 463,595
921,720
124,483
(344,250)
(60,018)
60,046

$1,409,640

$1,582,940

$1,165,576

348,240
349,424

358,275
360,227

367,237
369,001

Per share data:
Net income attributable to common stockholders

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Funds from operations attributable to common stockholders

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

$

$

2.35
2.34

4.05
4.03

$

$

2.83
2.81

4.42
4.39

1.26
1.26

3.17
3.16

54

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The table below reflects the reconciliation of AEBITDA to net income, the most directly comparable U.S.

GAAP measure, for the periods presented. Dollars are in thousands.

AEBITDA Reconciliation:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on extinguishment of debt, net . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on real estate dispositions, net . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on derivatives, net
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (income) from unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . .
Additional other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

AEBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted Interest Coverage Ratio:
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized interest
Non-cash interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,

2015

2016

2017

$ 888,549
492,169
6,451
826,240

$1,082,070
521,345
(19,128)
901,242

$ 540,613
484,622
20,128
921,720

2,213,409
30,844
110,926
—
34,677
2,220
(280,387)
(58,427)
40,636
21,504
(2,144)

2,485,529
28,869
42,910
10,215
17,214
37,207
(364,046)
(2,448)
7,721
10,357
(16,664)

1,967,083
19,102
—
62,966
37,241
124,483
(344,250)
2,284
176,395
83,125
—

$2,113,258

$2,256,864

$2,128,429

$ 492,169
8,670
(2,586)

$ 521,345
16,943
(1,681)

$ 484,622
13,489
(10,359)

Total interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AEBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

498,253
$2,113,258

536,607
$2,256,864

487,752
$2,128,429

Adjusted interest coverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.24x

4.21x

4.36x

Adjusted Fixed Charge Coverage Ratio:
Total interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured debt principal payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 498,253
67,064
65,406

$ 536,607
74,466
65,406

$ 487,752
64,078
49,410

Total fixed charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AEBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

630,723
$2,113,258

676,479
$2,256,864

601,240
$2,128,429

Adjusted fixed charge coverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . .

3.35x

3.34x

3.54x

55

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our

leverage ratios

include book capitalization, undepreciated book capitalization, and market
capitalization. Book capitalization represents the sum of net debt (defined as total long-term debt less cash and
cash equivalents and any IRC section 1031 deposits), total equity and redeemable noncontrolling interests.
Undepreciated book capitalization represents book capitalization adjusted for accumulated depreciation and
amortization. Market capitalization represents book capitalization adjusted for the fair market value of our
common stock. Our leverage ratios are defined as the proportion of net debt to total capitalization. The table
below reflects the reconciliation of our leverage ratios to our balance sheets for the periods presented. Amounts
are in thousands, except share price.

Year Ended December 31,

2015

2016

2017

Book capitalization:
Borrowings under primary unsecured credit facility . . . . . . . . . . . . .
Long-term debt obligations(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash & cash equivalents(2)

$

835,000
12,132,686
(484,754)

$

645,000
11,713,245
(557,659)

$

719,000
11,012,936
(249,620)

Total net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . .

12,482,932
15,175,885
183,083

11,800,586
15,281,472
398,433

11,482,316
14,925,452
375,194

Book capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$27,841,900

$27,480,491

$26,782,962

Net debt to book capitalization ratio . . . . . . . . . . . . . . . . . . . . . . . .

44.8%

42.9%

42.9%

Undepreciated book capitalization:
Total net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . .

$12,482,932
3,796,297
15,175,885
183,083

$11,800,586
4,093,494
15,281,472
398,433

$11,482,316
4,838,370
14,925,452
375,194

Undepreciated book capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . .

$31,638,197

$31,573,985

$31,621,332

Net debt to undepreciated book capitalization ratio . . . . . . . . . . . .

39.5%

37.4%

36.3%

Market capitalization:
Common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Period end share price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

354,778
68.03

$

362,602
66.93

$

371,732
63.77

$

Common equity market capitalization . . . . . . . . . . . . . . . . . . . . . . . .
Total net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$24,135,547
12,482,932
768,408
1,006,250

$24,268,952
11,800,586
873,512
1,006,250

$23,705,350
11,482,316
877,499
718,503

Market capitalization: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$38,393,137

$37,949,300

$36,783,668

Net debt to market capitalization ratio . . . . . . . . . . . . . . . . . . . . . .

32.5%

31.1%

31.2%

(1) Amounts include senior unsecured notes, secured debt and capital lease obligations as reflected on our consolidated balance sheet.

(2)

(3)

Inclusive of IRC section 1031 deposits, if any.

Includes all noncontrolling interests (redeemable and permanent) as reflected on our consolidated balance sheet.

56

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 income, the most directly

comparable U.S. GAAP measure, for the years presented. Dollar amounts are in thousands.

Year Ended December 31,

2015

2016

2017

NOI Reconciliation:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on real estate dispositions, net . . . . . . . . . . . . . . . . . . . . . . . .
Loss (income) from unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on extinguishment of debt, net . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on derivatives, net
Transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 888,549
(280,387)
21,504
6,451
46,231
2,220
—
34,677
(58,427)
110,926
147,416
826,240
492,169

$1,082,070
(364,046)
10,357
(19,128)
11,998
37,207
10,215
17,214
(2,448)
42,910
155,241
901,242
521,345

$ 540,613
(344,250)
83,125
20,128
177,776
124,483
62,966
37,241
2,284
—
122,008
921,720
484,622

Consolidated net operating income (NOI) . . . . . . . . . . . . . . . . . . . . . . . .

$2,237,569

$2,404,177

$2,232,716

NOI by segment:

Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-segment/corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,175,806
701,262
359,410
1,091

$1,208,860
814,114
380,264
939

$ 967,084
880,026
384,068
1,538

Total NOI

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,237,569

$2,404,177

$2,232,716

57

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

SSNOI Reconciliation:
NOI:

Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical

$1,175,806
701,262
359,410

$1,208,860
814,114
380,264

$ 967,084
880,026
384,068

Year Ended December 31,

2015

2016

2017

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,236,478

2,403,238

2,231,178

Total
Adjustments:
Triple-net:

Non-cash NOI on same store properties . . . . . . . . . . . . . . . . . . . . . .
NOI attributable to non same store properties . . . . . . . . . . . . . . . . .

(48,890)
(498,131)

(38,899)
(574,049)

(28,602)
(333,279)

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(547,021)

(612,948)

(361,881)

Seniors housing operating:

Non-cash NOI on same store properties . . . . . . . . . . . . . . . . . . . . . .
NOI attributable to non same store properties . . . . . . . . . . . . . . . . .

1,003
(83,880)

1,990
(190,459)

1,242
(246,731)

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(82,877)

(188,469)

(245,489)

Outpatient medical:
Non-cash NOI on same store properties . . . . . . . . . . . . . . . . . . . . . .
NOI attributable to non same store properties . . . . . . . . . . . . . . . . .

(6,095)
(76,819)

(3,073)
(99,237)

(1,764)
(102,851)

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(82,914)

(102,310)

(104,615)

Total
SSNOI by segment:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(712,812)

(903,727)

(711,985)

Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical

628,785
618,385
276,496

595,912
625,645
277,954

605,203
634,537
279,453

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,523,666

$1,499,511

$1,519,193

SSNOI Property Reconciliation:

Total properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals/Held-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Segment transitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Same store properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,286
(231)
(33)
(71)
(28)
(9)

914

(1)

Includes eight land parcels and one loan.

58

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with U.S. GAAP, which requires us to

make estimates and assumptions. Management considers accounting estimates or assumptions critical if:

•

•

the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment
necessary to account for highly uncertain matters or the susceptibility of such matters to change; and

the impact of the estimates and assumptions on financial condition or operating performance is
material.

Management has discussed the development and selection of its critical accounting policies with the Audit
Committee of the Board of Directors and the Audit Committee has reviewed the disclosure presented below
relating to them. Management believes the current assumptions and other considerations used to estimate
amounts reflected in our consolidated financial statements are appropriate and are not reasonably likely to change
in the future. However, since these estimates require assumptions to be made that were uncertain at the time the
estimate was made, they bear the risk of change. If actual experience differs from the assumptions and other
considerations used in estimating amounts reflected in our consolidated financial statements, the resulting
changes could have a material adverse effect on our consolidated results of operations, liquidity and/or financial
condition. Please refer to Note 2 to our consolidated financial statements for further information on significant
accounting policies that impact us and for the impact of new accounting standards, including accounting
pronouncements that were issued but not yet adopted by us.

The following table presents information about our critical accounting policies, as well as the material

assumptions used to develop each estimate:

Nature of Critical
Accounting Estimate

Assumptions/
Approach Used

Principles of Consolidation

The consolidated financial statements include our accounts,
the
accounts of our wholly-owned subsidiaries, and the accounts of joint
venture entities in which we own a majority voting interest with the
ability to control operations and where no substantive participating
rights or substantive kick out
rights have been granted to the
noncontrolling interests. In addition, we consolidate those entities
deemed to be variable interest entities (“VIEs”) in which we are
determined to be the primary beneficiary. All material intercompany
transactions and balances have been eliminated in consolidation.

We make judgments about which entities are VIEs based on an
assessment of whether (i) the equity investors as a group, if any, do
not have a controlling financial interest, or (ii) the equity investment
at risk is insufficient
to finance that entity’s activities without
additional subordinated financial support. We make judgments with
respect to our level of influence or control of an entity and whether
we are (or are not) the primary beneficiary of a VIE. Consideration
of various factors includes, but is not limited to, our ability to direct
the activities that most significantly impact the entity’s economic
performance, our form of ownership interest, our representation on
the entity’s governing body,
the size and seniority of our
investment, our ability and the rights of other investors to participate
in policy making decisions, replace the manager and/or liquidate the
entity, if applicable. Our ability to correctly assess our influence or
control over an entity at inception of our involvement or on a
continuous basis when determining the primary beneficiary of a
VIE affects the presentation of these entities in our consolidated
financial statements. If we perform a primary beneficiary analysis at
a date other than at inception of the VIE, our assumptions may be
different and may result in the identification of a different primary
beneficiary.

59

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Nature of Critical
Accounting Estimate

Assumptions/
Approach Used

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 or lease-up period.

loan charge-offs,

The determination of the allowance is based on a quarterly
evaluation of all outstanding loans, including general economic
conditions and estimated collectability of loan payments. We
evaluate the collectability of our loans receivable based on a
combination of factors, including, but not limited to, delinquency
status, historical
the
borrower and guarantors, and value of the underlying collateral.
Any loans with collectability concerns are subjected to a projected
payoff valuation. The valuation is based on the expected future
cash flows and/or the estimated fair value of the underlying
collateral. The valuation is compared to the outstanding balance to
determine the reserve needed for each loan. We may base our
valuation on a loan’s observable market price, if any, or the fair
value of collateral, net of sales costs, if the repayment of the loan is
expected to be provided solely by the collateral.

financial strength of

Real Estate Acquisitions
On January 1, 2017, we adopted Accounting Standards Update
2017-01, Clarifying the Definition of a Business (“ASU 2017-01”)
which narrows the Financial Accounting Standards Board’s (“FASB”)
definition of a business and provides a framework that gives entities a
basis for making reasonable judgments about whether a transaction
involves an asset or a business. ASU 2017-01 states that when
substantially all of the fair value of the gross assets acquired is
concentrated in a single identifiable asset or group of similar
identifiable assets, the acquired asset is not a business. If this initial
test is not met, an acquired asset cannot be considered a business
unless it includes an input and a substantive process that together
significantly contribute to the ability to create output. The primary
differences between business combinations and asset acquisitions
include recording the asset acquisition at
relative fair value,
capitalizing transaction costs, and the elimination of the measurement
period in which to record adjustments to the transaction. We believe
that substantially all our real estate acquisitions are considered asset
acquisitions. We are applying ASU 2017-01 prospectively for
January 1, 2017. Regardless of whether an
acquisitions after
acquisition is
a business
combination, the cost of real property acquired is allocated to net
tangible and identifiable intangible assets based on their respective fair
values. Tangible assets primarily consist of land, buildings, and
improvements. The remaining purchase price is allocated among
identifiable intangible assets primarily consisting of the above or
below market component of in-place leases and the value of in-place
leases. The total amount of other intangible assets acquired is further
allocated to in-place lease values and customer relationship values
based on management’s evaluation of the specific characteristics of
each tenant’s lease and our overall relationship with that respective
tenant. Real property developed by us is recorded at cost, including the
capitalization of construction period interest.

considered an asset

acquisition or

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
losses in our loans receivable. The
adequate to absorb potential
determination of the allowance is based on a quarterly evaluation of all
outstanding loans. If this evaluation indicates that there is a greater risk
of loan charge-offs, additional allowances or placement on non-accrual
status may be required. A loan is impaired when, based on current
information and events, it is probable that we will be unable to collect
all amounts due as scheduled according to the contractual terms of the
original loan agreement or if it has been modified in a troubled debt
restructuring. Consistent with this definition, all loans on non-accrual
are deemed impaired. To the extent circumstances improve and the
risk of collectability is diminished, we will return these loans to
income accrual status.

60

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

for potential

long-lived assets

Impairment of Long-Lived Assets
We review our
in
accordance with U.S. GAAP. An impairment charge must be
recognized when the carrying value of a long-lived asset
is not
recoverable. The carrying value is not recoverable if it exceeds the sum
of the undiscounted cash flows expected to result from the use and
eventual disposition of the asset. If it is determined that a permanent
impairment of a long-lived asset has occurred, the carrying value of the
asset
is reduced to its fair value and an impairment charge is
recognized for the difference between the carrying value and the fair
value.

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
the underlying
flows and payment coverages,
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.

life, and changes in the market

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 uses of the property are compared to the current net
book value. This analysis requires us to determine if indicators of
impairment exist and to estimate the most likely stream of cash
flows to be generated from the property during the period the
property is expected to be held. Properties that meet
the
held-for-sale criteria are recorded at the lesser of fair value less
costs to sell or carrying value.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market risks, including the potential loss arising from adverse changes in interest
rates and foreign currency exchange rates. We seek to mitigate the underlying foreign currency exposures with
gains and losses on derivative contracts hedging these exposures. We seek to mitigate the effects of fluctuations
in interest rates by matching the terms of new investments with new long-term fixed rate borrowings to the extent
possible. We may or may not elect to use financial derivative instruments to hedge interest rate exposure. These
decisions are principally based on our policy to match our variable rate investments with comparable borrowings,
but are also based on the general trend in interest rates at the applicable dates and our perception of the future
volatility of interest rates. This section is a discussion of the risks associated with potential fluctuations in interest
rates and foreign currency exchange rates. For more information, see Notes 11 and 16 to our consolidated
financial statements.

We historically borrow on our primary unsecured credit facility to acquire, construct or make loans relating
to health care and seniors housing properties. Then, as market conditions dictate, we will issue equity or long-
term fixed rate debt to repay the borrowings under our primary unsecured credit facility. We are subject to risks
associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the
terms of refinancing may not be as favorable as the terms of current indebtedness. The majority of our
borrowings were completed under indentures or contractual agreements that limit the amount of indebtedness we
may incur. Accordingly, in the event that we are unable to raise additional equity or borrow money because of
these limitations, our ability to acquire additional properties may be limited.

61

A change in interest rates will not affect the interest expense associated with our fixed rate debt. Interest rate
changes, however, will affect the fair value of our fixed rate debt. Changes in the interest rate environment upon
maturity of this fixed rate debt could have an effect on our future cash flows and earnings, depending on whether
the debt is replaced with other fixed rate debt, variable rate debt or equity, or repaid by the sale of assets. To
illustrate the impact of changes in the interest rate markets, we performed a sensitivity analysis on our fixed rate
debt instruments whereby we modeled the change in net present values arising from a hypothetical 1% increase
in interest rates to determine the instruments’ change in fair value. The following table summarizes the analysis
performed as of the dates indicated (in thousands):

December 31, 2017

December 31, 2016

Principal
balance

Fair value
change

Principal
balance

Fair value
change

Senior unsecured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$7,710,219
1,749,958

$(500,951) $ 7,568,832
2,489,276

(63,492)

$(521,203)
(73,944)

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$9,460,177

$(564,443) $10,058,108

$(595,147)

Our variable rate debt, including our primary unsecured credit facility, is reflected at fair value. At
December 31, 2017, we had $2,294,678,000 outstanding related to our variable rate debt. Assuming no changes
in outstanding balances, a 1% increase in interest rates would result in increased annual interest expense of
$22,947,000. At December 31, 2016, we had $2,311,996,000 outstanding under our variable rate debt. Assuming
no changes in outstanding balances, a 1% increase in interest rates would have resulted in increased annual
interest expense of $23,120,000.

We are subject to currency fluctuations that may, from time to time, affect our financial condition and
results of operations. Increases or decreases in the value of the Canadian Dollar or British Pounds Sterling
relative to the U.S. Dollar impact the amount of net income we earn from our investments in Canada and the
United Kingdom. Based solely on our results for the year ended December 31, 2017, including the impact of
existing hedging arrangements, if these exchange rates were to increase or decrease by 10%, our net income from
these investments would increase or decrease, as applicable, by less than $12,000,000. We will continue to
mitigate these underlying foreign currency exposures with non-U.S. denominated borrowings and gains and
losses on derivative contracts. If we increase our international presence through investments in, or acquisitions or
development of, seniors housing and health care properties outside the U.S., we may also decide to transact
additional business or borrow funds in currencies other than U.S. Dollars, Canadian Dollars or British Pounds
Sterling. To illustrate the impact of changes in foreign currency markets, we performed a sensitivity analysis on
our derivative portfolio whereby we modeled the change in net present values arising from a hypothetical 1%
increase in foreign currency exchange rates to determine the instruments’ change in fair value. The following
table summarizes the results of the analysis performed, excluding cross currency hedge activity (dollars in
thousands):

December 31, 2017

December 31, 2016

Carrying
value

Fair value
change

Carrying
value

Fair value
change

Foreign currency exchange contracts . . . . . . . . . . . . . . . . . . . . .
Debt designated as hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

23,238
1,620,273

$12,929
16,203

$

87,962
1,481,591

$

722
13,000

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,643,511

$29,132

$1,569,553

$13,722

62

Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Welltower Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Welltower Inc. and subsidiaries (the
Company) as of December 31, 2017 and 2016, the related consolidated statements of comprehensive income,
equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes
and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated
financial statements”). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 2017 and 2016 and the results of its operations
and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S.
generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2017,
based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) and our report dated February 28, 2018 expressed
an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the
risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 1970.
Toledo, Ohio
February 28, 2018

/s/ ERNST & YOUNG LLP

63

CONSOLIDATED BALANCE SHEETS

WELLTOWER INC. AND SUBSIDIARIES

December 31,
2017

December 31,
2016

(In thousands)

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2,734,467
25,373,117
1,502,471
734,147
237,746

$ 2,591,071
24,496,153
1,402,884
1,044,859
506,091

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30,581,948
(4,838,370)
25,743,578
495,871
(68,372)
427,499
26,171,077

30,041,058
(4,093,494)
25,947,564
622,628
(6,563)
616,065
26,563,629

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

445,585
68,321
243,777
65,526
389,168
560,991
1,773,368
$27,944,445

457,138
68,321
419,378
187,842
342,578
826,298
2,301,555
$28,865,184

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

719,000
8,331,722
2,608,976
72,238
911,863
12,643,799
375,194

$

645,000
8,161,619
3,477,699
73,927
827,034
13,185,279
398,433

718,503
372,449
17,662,681
(64,559)
5,316,580
(9,471,712)
(111,465)
670
14,423,147
502,305
14,925,452
$27,944,445

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

See accompanying notes

64

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

WELLTOWER INC. AND SUBSIDIARIES
(In thousands, except per share data)

Year Ended December 31,

2017

2016

2015

Revenues:

Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Resident fees and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,445,871
2,779,423
73,811
17,536

$1,648,815
2,504,731
97,963
29,651

$1,598,948
2,158,031
84,141
18,706

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,316,641

4,281,160

3,859,826

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

484,622
2,083,925
921,720
122,008
—
2,284
37,241
62,966
124,483
177,776

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

Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,017,025

3,571,907

3,223,709

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on real estate dispositions, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Preferred stock redemption charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net income (loss) attributable to noncontrolling interests(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

299,616
(20,128)
(83,125)

196,363
344,250

540,613
49,410
9,769
17,839

709,253
19,128
(10,357)

718,024
364,046

1,082,070
65,406
—
4,267

636,117
(6,451)
(21,504)

608,162
280,387

888,549
65,406
—
4,799

Net income attributable to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 463,595

$1,012,397

$ 818,344

Average number of common shares outstanding:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

367,237
369,001

358,275
360,227

348,240
349,424

Earnings per share:

Basic:
Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income attributable to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted:
Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income attributable to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

$

$

0.53

1.26

0.53

1.26

$

$

$

$

2.00

2.83

1.99

2.81

$

$

$

$

1.75

2.35

1.74

2.34

(1)

Includes amounts attributable to redeemable noncontrolling interests

See accompanying notes

65

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED)

WELLTOWER INC. AND SUBSIDIARIES
(In thousands)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss):

Unrecognized gain (loss) on equity investments . . . . . . . . . . . . . . . . . . . .
Reclassification adjustment for write down of equity investment
. . . . . . .
Unrecognized gain (loss) on cash flow hedges . . . . . . . . . . . . . . . . . . . . . .
Unrecognized actuarial gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Total comprehensive income (loss) attributable to noncontrolling

Year Ended December 31,

2017

2016

2015

$540,613

$1,082,070

$888,549

—
(5,120)
2
269
85,263

80,414

5,120
—
1,414
190
(85,557)

—
—
(766)
246
(46,679)

(78,833)

(47,199)

621,027

1,003,237

841,350

interests(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive income attributable to stockholders . . . . . . . . . . . . . . .

40,187
$580,840

6,722
$ 996,515

(31,166)
$872,516

(1)

Includes amounts attributable to redeemable noncontrolling interests.

See accompanying notes

66

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 (Loss)

Other
Equity

Noncontrolling
Interests

Total

Balances at December 31, 2014 . . . . . . . . . . . . $1,006,250 $328,835 $14,740,712

$(35,241) $2,842,022

$(5,635,923)

$ (77,009)

$ 5,507

$ 297,896

$13,473,049

Comprehensive income:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . .

Other comprehensive income (loss) . . . . . . .

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 issuance of common

stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Equity component of convertible debt

. . . . . . .

Option compensation expense . . . . . . . . . . . . . .

Cash dividends paid:

Common stock dividends

Preferred stock 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 (loss) . . . . . . .

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 issuance of common

stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Option compensation expense . . . . . . . . . . . . . .

Cash dividends paid:

Common stock dividends . . . . . . . . . . . . . . .

Preferred stock dividends . . . . . . . . . . . . . . .

1,077,803

(81,288)

(51,478)

839

46,938

(10,369)

7,421

525,931

(1,233,519)

(65,406)

9,277

2,455

1,087,080

(78,833)

1,008,247

(121,978)

(173,456)

36,103

533,352

266

(1,233,519)

(65,406)

(1,305)

266

Balances at December 31, 2016 . . . . . . . . . . . .

1,006,250

363,071

16,999,691

(54,741)

4,803,575

(8,144,981)

(169,531)

3,059

475,079

15,281,472

Comprehensive income:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . .

Other comprehensive income (loss) . . . . . . .

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 issuance of common

stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Redemption of equity membership units . . . . . .

Redemption of preferred stock . . . . . . . . . . . . .

(287,500)

Conversion of preferred stock . . . . . . . . . . . . . .

(247)

Option compensation expense . . . . . . . . . . . . . .

Cash dividends paid:

Common stock dividends . . . . . . . . . . . . .
Preferred stock dividends . . . . . . . . . . . . .

522,774

58,066

13,473

402

21,494

(9,807)

(2,399)

8,881

612,555

91

4

5,465

9,760

243

(11)

(9,769)

10

(1,277,321)
(49,410)

20,819

22,348

543,593

80,414

624,007

(15,941)

(2,468)

9,690

621,436

5,545

(287,509)

—

10

(1,277,321)
(49,410)

Balances at December 31, 2017 . . . . . . . . . . . . $ 718,503 $372,449 $17,662,681

$(64,559) $5,316,580

$(9,471,712)

$(111,465)

$

670

$ 502,305

$14,925,452

See accompanying notes

67

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redemption of preferred 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net cash provided from (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of foreign currency translation on cash and cash equivalents . . . . . . . . . . . . . . . . .

Increase (decrease) in cash, cash equivalents and restricted cash . . . . . . . . . . . . . . . . . . . .
Cash, cash equivalents and restricted cash at beginning of period . . . . . . . . . . . . . . . . . . .

Cash, cash equivalents and restricted cash at end of period . . . . . . . . . . . . . . . . . . . . . . . .

Supplemental cash flow information:

Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1)

Includes amounts attributable to redeemable noncontrolling interests.

Year Ended December 31,

2017

2016

2015

$

540,613

$ 1,082,070

$

888,549

921,720
16,521
62,966
124,483
19,102
2,284
37,241
83,125
(80,398)
357
(344,250)
2
116
26,809
23,486

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
14,298
(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
(8,968)
478

1,434,177

1,639,064

1,382,599

(805,264)
(250,276)
(232,715)
(13,489)
(83,738)
57,385
96,023
(114,365)
70,287
52,719
1,378,014

(2,145,374)
(219,146)
(403,131)
(16,943)
(129,884)
4,760
249,552
(101,415)
119,723
108,347
2,350,068

(3,353,087)
(187,752)
(244,561)
(8,670)
(598,722)
(141,994)
131,830
(160,323)
130,880
106,360
823,964

154,581

(183,443)

(3,502,075)

74,000
7,500
(5,000)
241,772
(1,144,346)
621,987
(287,500)
(54,333)
56,560
(87,711)
—
(1,325,617)
(10,839)

(1,913,527)
26,852

(190,000)
693,560
(865,863)
460,015
(563,759)
534,194
—
(22,196)
148,666
(134,578)
—
(1,298,925)
(11,931)

(1,250,817)
(20,274)

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)
(36,135)

1,997,318
(8,575)

(297,917)
607,220

309,303

488,265
10,410

$

$

$

$

184,530
422,690

607,220

541,545
8,011

(130,733)
553,423

422,690

492,771
12,214

$

$

See accompanying notes.

68

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Business

Welltower Inc., an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health
care infrastructure. The Company invests with leading seniors housing operators, post-acute providers and health
systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve
people’s wellness and overall health care experience. WelltowerTM, a real estate investment trust (“REIT”), owns
interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the
United Kingdom (“U.K.”), consisting of seniors housing and post-acute communities and outpatient medical
properties.

2. Accounting Policies and Related Matters

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. generally accepted
accounting principles (“U.S. GAAP”) requires us to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying notes. Actual results could differ from those
estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of our wholly-owned subsidiaries and joint
venture (“JV”) entities that we control, through voting rights or other means. All material intercompany
transactions and balances have been eliminated in consolidation. At inception of JV transactions, we identify
entities for which control is achieved through means other than voting rights (“variable interest entities” or
“VIEs”) and determine which business enterprise is the primary beneficiary of its operations. A VIE is broadly
defined as an entity where either (i) the equity investors as a group, if any, do not have a controlling financial
interest, or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional
subordinated financial support. We consolidate investments in VIEs when we are determined to be the primary
beneficiary. Accounting Standards Codification Topic 810, Consolidations (“ASC 810”), requires enterprises to
perform a qualitative approach to determining whether or not a VIE will need to be consolidated. This evaluation
is based on an enterprise’s ability to direct and influence the activities of a VIE that most significantly impact
that entity’s economic performance. For investments in JVs, U.S. GAAP may preclude consolidation by the sole
general partner in certain circumstances based on the type of rights held by the limited partner(s). We assess the
limited partners’ rights and their impact on our consolidation conclusions, and we reassess if there is a change to
the terms or in the exercisability of the rights of the limited partners, the sole general partner increases or
decreases its ownership of limited partnership interests, or there is an increase or decrease in the number of
outstanding limited partnership interests. We similarly evaluate the rights of managing members of limited
liability companies.

Revenue Recognition

Revenue is recorded in accordance with U.S. GAAP, which requires that revenue be recognized after four
basic criteria are met. These four criteria include persuasive evidence of an arrangement, the rendering of service,
fixed and determinable income, and reasonably assured collectability. Interest income on loans is recognized as
earned based upon the principal amount outstanding subject to an evaluation of collectability risk. Substantially
all of our operating leases contain escalating rent structures. Leases with fixed annual rental escalators are
generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment.
Rental income related to leases with contingent rental escalators is generally recorded based on the contractual
cash rental payments due for the period. Leases in our outpatient medical portfolio typically include some form

69

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of operating expense reimbursement by the tenant. Certain payments made to operators are treated as lease
incentives and amortized as a reduction of revenue over the lease term. We recognize resident fees and services,
other than move-in fees, monthly as services are provided. Lease agreements with residents generally have a term
of one year and are cancelable by the resident with 30 days’ notice.

Cash and Cash Equivalents

Cash and cash equivalents consist of all highly liquid investments with an original maturity of three months

or less.

Restricted Cash

Restricted cash primarily consists of amounts held by lenders to provide future payments for real estate
taxes, insurance, tenant and capital improvements, amounts held in escrow relating to acquisitions we are entitled
to receive over a period of time as outlined in the escrow agreement and net proceeds from property sales that
were executed as tax-deferred dispositions under Internal Revenue Code (“IRC”) section 1031. At December 31,
2017, $5,843,000 of sales proceeds is on deposit in a IRC section 1031 exchange escrow account with a qualified
intermediary.

Deferred Loan Expenses

Deferred loan expenses are costs incurred by us in connection with the issuance, assumption and
amendments of debt arrangements. Deferred loan expenses related to debt instruments, excluding the primary
unsecured credit facility, are recorded as a reduction of the related debt liability. Deferred loan expenses related
to the primary unsecured credit facility are included in other assets. We amortize these costs over the term of the
debt using the straight-line method, which approximates the effective interest method.

Investments in Unconsolidated Entities

Investments in entities that we do not consolidate but have the ability to exercise significant influence over
operating and financial policies are reported under the equity method of accounting. Under the equity method,
our share of the investee’s earnings or losses is included in our consolidated results of operations. The initial
carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity
interest inclusive of transaction costs. To the extent that our cost basis is different from the basis reflected at the
entity level, the basis difference is generally amortized over the lives of the related assets and liabilities, and such
amortization is included in our share of equity in earnings of the entity. We evaluate our equity method
investments for impairment based upon a comparison of the estimated fair value of the equity method investment
to its carrying value. When we determine a decline in the estimated fair value of such an investment below its
carrying value is other-than-temporary, an impairment is recorded.

Marketable Securities

We classify marketable securities as available-for-sale. These securities are carried at their fair value with
unrealized gains and losses recognized in stockholders’ equity as a component of accumulated other
comprehensive income. When we determine declines in fair value of marketable securities are other-than-
temporary, a loss is recognized in earnings.

70

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Redeemable Noncontrolling Interests

Certain noncontrolling interests are redeemable at fair value. Accordingly, we record the carrying amount of
the noncontrolling interests at the greater of (i) the initial carrying amount, increased or decreased for the
noncontrolling interest’s share of net income or loss and its share of other comprehensive income or loss, and
dividends or (ii) the redemption value. If it is probable that the interests will be redeemed in the future, we
accrete the carrying value to the redemption value over the period until expected redemption, currently a
weighted-average period of approximately four years.
the redeemable
noncontrolling interests are classified outside of permanent equity, as a mezzanine item, in the balance sheet. At
December 31, 2017, the current redemption value of redeemable noncontrolling interests exceeded the carrying
value of $375,194,000 by $29,587,000.

In accordance with ASC 810,

During 2014 and 2015, we entered into DownREIT partnerships which give a real estate seller the ability to
exchange its property on a tax deferred basis for equity membership interests (“OP units”). The OP units may be
redeemed any time following the first anniversary of the date of issuance at the election of the holders for one
share of our common stock per unit or, at our option, cash.

Real Property Owned

On January 1, 2017, we adopted Accounting Standards Update (“ASU”) 2017-01, Clarifying the Definition
of a Business (“ASU 2017-01”) which narrows the Financial Accounting Standards Board’s (“FASB”) definition
of a business and provides a framework that gives entities a basis for making reasonable judgments about
whether a transaction involves an asset or a business. ASU 2017-01 states that when substantially all of the fair
value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable
assets, the acquired asset is not a business. If this initial test is not met, an acquired asset cannot be considered a
business unless it includes an input and a substantive process that together significantly contribute to the ability
to create output. The primary differences between business combinations and asset acquisitions include recording
the asset acquisition at relative fair value, capitalizing transaction costs, and the elimination of the measurement
period in which to record adjustments to the transaction. We believe that substantially all our real estate
acquisitions are considered asset acquisitions. We are applying ASU 2017-01 prospectively for acquisitions after
January 1, 2017. Real property developed by us is recorded at cost, including the capitalization of construction
period interest. Expenditures for repairs and maintenance are expensed as incurred.

Regardless of whether an acquisition is considered an asset acquisition or a business combination, the cost
of real property acquired, which represents substantially all of the purchase price, is allocated to net tangible and
identifiable intangible assets based on their relative fair values. These properties are depreciated on a straight-line
basis over their estimated useful lives which range from 15 to 40 years for buildings and 5 to 15 years for
improvements. Tangible assets primarily consist of land, buildings and improvements, including those related to
capital
including tenant
improvements and lease commissions, to represent the acquisition of productive assets and, accordingly, such
costs are reflected as investment activities in our consolidated statement of cash flows.

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
leases. The value allocable to the above or below market component of the acquired in-place lease is determined
based upon the present value (using a discount rate which reflects the risks associated with the acquired leases) of
the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term, and
(ii) management’s estimate of the amounts that would be paid using fair market rates over the remaining term of
the lease. The amounts allocated to above market leases are included in acquired lease intangibles and below
market leases are included in other liabilities in the balance sheet and are amortized to rental income over the
remaining terms of the respective leases or lease-up period.

71

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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
the specific
customer
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.

The net book value of long-lived assets is reviewed quarterly on a property by property basis to determine if
facts and circumstances suggest that the assets may be impaired or that the depreciable life may need to be
changed. We consider external factors relating to each asset and the existence of a master lease which may link
the cash flows of an individual asset to a larger portfolio of assets leased to the same tenant. If these factors and
the projected undiscounted cash flows of the assets over the remaining depreciation period indicate that the assets
will not be recoverable, the carrying value is reduced to the estimated fair market value. In addition, we are
exposed to the risks inherent in concentrating investments in real estate, and in particular, the seniors housing and
health care industries. A downturn in the real estate industry could adversely affect the value of our properties
and our ability to sell properties for a price or on terms acceptable to us. Additionally, properties that meet the
held-for-sale criteria are recorded at the lessor of fair value less costs to sell or the carrying value.

Capitalization of Construction Period Interest

We capitalize interest costs associated with funds used for the construction of properties owned directly by
us. The amount capitalized is based upon the balance outstanding during the construction period using the rate of
interest which approximates our Company-wide cost of financing. Our interest expense reflected in the
consolidated statements of comprehensive income has been reduced by the amounts capitalized.

Gain on Real Estate Dispositions

We recognize sales of real estate assets only upon the closing of the transaction with the purchaser.
Payments received from purchasers prior to closing are recorded as deposits and classified as other assets on our
consolidated balance sheets. Gains on real estate assets sold are recognized using the full accrual method upon
closing when (i) the collectability of the sales price is reasonably assured, (ii) we are not obligated to perform
significant activities after the sale to earn the profit, (iii) we have received adequate initial investment from the
purchaser, and (iv) other profit recognition criteria have been satisfied. Gains may be deferred in whole or in part
until the sales satisfy the requirements of gain recognition on sales of real estate.

Real Estate Loans Receivable

Real estate loans receivable consist of mortgage loans and other real estate loans. Interest income on loans is
recognized as earned based upon the principal amount outstanding subject to an evaluation of collectability risks.
The loans are primarily collateralized by a first, second or third mortgage lien, a leasehold mortgage on, or an
assignment of the partnership interest in, the related properties, corporate guaranties and/or personal guaranties.

Allowance for Losses on Loans Receivable

The allowance for losses on loans receivable is maintained at a level believed adequate to absorb potential
losses in our loans receivable. The determination of the allowance is based on a quarterly evaluation of these

72

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

loans, including general economic conditions and estimated collectability of loan payments. We evaluate the
collectability of our loans receivable based on a combination of factors, including, but not limited to, delinquency
status, historical loan charge-offs, financial strength of the borrower and guarantors, and value of the underlying
collateral. If such factors indicate that there is greater risk of loan charge-offs, additional allowances or
placement on non-accrual status may be required. A loan is impaired when, based on current information and
events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual
terms of the original loan agreement. Consistent with this definition, all loans on non-accrual are deemed
impaired. To the extent circumstances improve and the risk of collectability is diminished, we will return these
loans to income accrual status. While a loan is on non-accrual status, any cash receipts are applied against the
outstanding principal balance. Any loans with collectability concerns are subjected to a projected payoff
valuation. The valuation is based on the expected future cash flows and/or the estimated fair value of the
underlying collateral. The valuation is compared to the outstanding balance to determine the reserve needed for
each loan. We may base our valuation on a loan’s observable market price, if any, or the fair value of collateral,
net of sales costs, if the repayment of the loan is expected to be provided solely by the collateral.

Goodwill

We account for goodwill in accordance with U.S. GAAP. Goodwill is tested annually for impairment and is
tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An
impairment loss is recognized to the extent that the carrying amount, including goodwill, exceeds the reporting
unit’s fair value and the implied fair value of goodwill is less than the carrying amount of that goodwill. We have
not had any goodwill impairments.

Fair Value of Derivative Instruments

Derivatives are recorded at fair value on the balance sheet as assets or liabilities. The valuation of derivative
instruments requires us to make estimates and judgments that affect the fair value of the instruments. Fair values
of our derivatives are estimated by pricing models that consider the forward yield curves and discount rates. The
fair value of our forward exchange contracts are estimated by pricing models that consider foreign currency spot
rates, forward trade rates and discount rates. Such amounts and the recognition of such amounts are subject to
significant estimates that may change in the future. See Note 11 for additional information.

Federal Income Tax

We have elected to be treated as a REIT under the applicable provisions of the IRC, commencing with our
first taxable year, and made no provision for U.S. federal income tax purposes prior to our acquisition of our
taxable REIT subsidiaries (“TRSs”). As a result of these as well as subsequent acquisitions, we now record
income tax expense or benefit with respect to certain of our entities that are taxed as TRSs under provisions
similar to those applicable to regular corporations and not under the REIT provisions. We account for deferred
income taxes using the asset and liability method and recognize deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in our consolidated financial statements or tax returns.
Under this method, we determine deferred tax assets and liabilities based on the differences between the financial
reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Any increase or decrease in the deferred tax liability that results from a
change in circumstances, and that causes a change in our judgment about expected future tax consequences of
events, is included in the tax provision when such changes occur. Deferred income taxes also reflect the impact
of operating loss and tax credit carryforwards. A valuation allowance is provided if we believe it is more likely
than not that all or some portion of the deferred tax asset will not be realized. Any increase or decrease in the
valuation allowance that results from a change in circumstances, and that causes a change in our judgment about

73

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the realizability of the related deferred tax asset, is included in the tax provision when such changes occur. See
Note 18 for additional information.

Foreign Currency

Certain of our subsidiaries’ functional currencies are the local currencies of their respective countries. We
translate the results of operations of our foreign subsidiaries into U.S. dollars using average rates of exchange in
effect during the period, and we translate balance sheet accounts using exchange rates in effect at the end of the
period. We record resulting currency translation adjustments in accumulated other comprehensive income, a
component of stockholders’ equity, on our consolidated balance sheets. We record transaction gains and losses in
our consolidated statements of comprehensive income.

Earnings Per Share

Basic earnings per share is computed by dividing net income available to common stockholders by the
weighted-average number of shares outstanding for the period adjusted for non-vested shares of restricted stock.
The computation of diluted earnings per share is similar to basic earnings per share, except that the number of
shares is increased to include the number of additional common shares that would have been outstanding if the
potentially dilutive common shares had been issued.

Reclassifications

Certain amounts in prior years have been reclassified to conform to current year presentation.

New Accounting Standards

During the year ended December 31, 2017, we adopted the following additional accounting standards, each

of which did not have a material impact on our consolidated financial statements:

• We adopted ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting” on
January 1, 2017, which allows companies to make a policy election as to whether they will include an
estimate of awards expected to be forfeited or whether they will account for forfeitures as they occur.
We elected to account for forfeitures as they occur. This election had an immaterial impact on our
consolidated financial statements. The standard also requires an employer to classify as a financing
activity in the consolidated statement of cash flow the cash paid to a tax authority when shares are
withheld to satisfy the employer’s statutory income tax withholding obligation. This aspect of the
standard is required to be applied on a retrospective basis and resulted in an increase in net cash
provided by operating activities and a decrease in net cash used in financing activities of $10,369,000
and $9,131,000 for the years ended December 31, 2016 and 2015, respectively. Upon adoption, no
other provisions of ASU 2016-09 had an effect on our consolidated financial statements or related
footnote disclosures.

• During the three months ended December 31, 2017, we adopted ASU No. 2016-18, “Restricted Cash,”
and ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments.” ASU
No. 2016-18 requires an entity to reconcile and explain the period over period change in total cash,
cash equivalents and restricted cash within its consolidated statement of cash flows and ASU 2016-15
provides guidance clarifying how certain cash receipts and cash payments should be classified. We
adopted these accounting standards retrospectively and, accordingly, certain line items in the
consolidated statement of cash flows have been reclassified to conform to the current presentation. The

74

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

following table summarizes the change in cash flows as reported and as previously reported prior to the
adoption of these standards (in thousands):

Year Ended

December 31, 2016

December 31, 2015

As Reported

As Previously
Reported

As Reported

As Previously
Reported

Cash disbursed for acquisitions . . . . . . . . . . . . . . . . . . .
Decrease (increase) in restricted cash . . . . . . . . . . . . . .
Net cash provided from (used in) investing

activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in balance(1)
. . . . . . . . . . . . . . . . . .
Balance at beginning of period(1) . . . . . . . . . . . . . . . . . .
Balance at end of period(1) . . . . . . . . . . . . . . . . . . . . . . .

$(2,145,374) $(2,145,590) $(3,353,087) $(3,364,891)
29,719

(125,844)

—

—

(183,443)
184,530
422,690
607,220

(309,503)
58,470
360,908
419,378

(3,502,075)
(130,733)
553,423
422,690

(3,484,160)
(112,818)
473,726
360,908

(1) Amounts in As Reported column include cash and cash equivalents and restricted cash as required. Amounts in the As Previously

Reported column reflect only cash and cash equivalents.

The following ASUs have been issued but not yet adopted:

•

•

•

In 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (ASC 606),”
which is a comprehensive new revenue recognition model that requires revenue to be recognized in a
manner to depict the transfer of goods or services to a customer at an amount that reflects the
consideration expected to be received in exchange for those goods or services. ASC 606 is effective for
us beginning January 1, 2018 and we will use the modified retrospective method of adoption.

We have evaluated our various revenue streams to identify whether they would be subject to the
provisions of ASC 606 and any differences in timing, measurement, or presentation of revenue
recognition. A significant source of our revenue is generated through leasing arrangements, which are
specifically excluded from ASU 2014-09. Management contracts are present in our seniors housing
operating and outpatient medical segments and represent agreements to provide asset and property
management, leasing, marketing and other services. We do not believe that the pattern and timing of
recognition of income for these contracts will change under the provisions of ASC 606. In addition,
revenue recognition for real estate sales is mainly based on the transfer of control and when it is
probable that we will collect substantially all of the related consideration. We expect that the new
guidance will result in more transactions qualifying as sales of real estate and being recognized at an
earlier date than under the current guidance.

In 2016, the FASB issued ASU No. 2016-01, “Financial Instruments — Overall: Recognition and
Measurement of Financial Assets and Financial Liabilities,” which will require entities to measure their
financial instrument investments at fair value and recognize any changes in fair value in net income
unless the investments qualify for the new practicability exception. The practicability exception will be
available for equity investments that do not have readily determinable fair values. ASU 2016-01 is
effective for fiscal years and interim periods within those years, beginning after December 15, 2017.
This standard will require us to recognize gains and losses from changes in the fair value of our
available-for-sale equity securities through the consolidated statement of comprehensive income rather
than through accumulated other comprehensive income beginning in 2018.

In 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires lessees to
recognize assets and liabilities on their consolidated balance sheet related to the rights and obligations
created by most leases, while continuing to recognize expenses on their consolidated statements of
comprehensive income over the lease term. It will also require disclosures designed to give financial

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WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

statement users information regarding amount, timing, and uncertainty of cash flows arising from
leases. The FASB issued an Exposure Draft in January 2018 proposing to amend ASU 2016-02, which
would provide lessors with a practical expedient, by class of underlying assets, to not separate
non-lease components from the related lease components and, instead, to account for those components
as a single lease component, if certain criteria are met. ASU 2016-02 and the Exposure Draft are
effective for us beginning January 1, 2019, with early adoption permitted. Entities are required to use a
modified retrospective approach for leases that exist or are entered into after the beginning of the
earliest comparative period in the consolidated financial statements. We are currently evaluating the
impact of this guidance on our consolidated financial statements from both the lessee and lessor
perspective. We believe that adoption will likely have a material impact to our consolidated financial
statements for the recognition of certain operating leases as right-of-use assets and lease liabilities and
related amortizations. We expect to utilize the practical expedients proposed in the Exposure Draft as
part of our adoption of this guidance.

the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial
In 2016,
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 2017,
the FASB issued ASU No. 2017-05, “Other Income — Gains and Losses from the
Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition
Guidance and Accounting for Partial Sales of Nonfinancial Assets.” The standard clarifies that a
financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance
nonfinancial asset. The standard also defines the term in substance nonfinancial asset and clarifies that
an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to
a counterparty and derecognize each asset when a counterparty obtains control over it. ASU 2017-05 is
effective for annual periods beginning after December 15, 2017 and interim periods therein. Entities
may use either a full or modified adoption approach. We are assessing the impact of the standard but do
not expect it to have a material impact on our consolidated financial statements or disclosures.

•

•

3. Real Property Acquisitions and Development

The total purchase price for all properties acquired has been allocated to the tangible and identifiable
intangible assets, liabilities and noncontrolling interests based upon their relative fair values in accordance with
our accounting policies. The results of operations for these acquisitions have been included in our consolidated
results of operations since the date of acquisition and are a component of the appropriate segments. Transaction
costs primarily represent costs incurred with property acquisitions, including due diligence costs, fees for legal
and valuation services, termination of pre-existing relationships computed based on the fair value of the assets
acquired, lease termination fees, and other acquisition-related costs. Effective January 1, 2017, with our adoption
of ASU 2017-01, transaction costs incurred for asset acquisitions are capitalized as a component of purchase
price and all other non-capitalizable costs are reflected in “Other Expenses” on our consolidated statement of
comprehensive income. Acquisitions that occurred prior to January 1, 2017, were accounted for as business
combinations. Certain of our subsidiaries’ functional currencies are the local currencies of their respective
countries. See Notes 2 and 11 for information regarding our foreign currency policies. During the year ended
December 31, 2017, we finalized our purchase price allocation of certain previously reported acquisitions and
there were no material changes from those previously disclosed.

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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,

2017

2016

2015

Land and land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 33,416
248,459
—
—

$104,754
418,633
2,876
551

$

95,835
1,061,431
4,408
194

Total assets acquired(1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured debt
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash acquisition related activity(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cash disbursed for acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Capitalized interest
Accruals Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . .

281,875
—
(21,236)

(21,236)
(7,275)
(54,901)

198,463
120,797
(4,713)
(610)

526,814
—
(3,384)

(3,384)
(26,771)
(51,733)

444,926
181,084
(8,729)
(3,665)

1,161,868
(47,741)
(2,905)

(50,646)
(13,465)
(38,355)

1,059,402
143,140
(5,699)
(167)

Cash disbursed for construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital improvements to existing properties . . . . . . . . . . . . . . . . . . . . . . . . . .

115,474
19,989

168,690
32,603

137,274
45,293

Total cash invested in real property, net of cash acquired . . . . . . . . . . . . .

$333,926

$646,219

$1,241,969

(1) Excludes $318,000, $682,000 and $16,578,000 of cash and restricted cash acquired during the years ended December 31, 2017, 2016 and

2015, respectively.

(2) For the year ended December 31, 2017, $54,901,000 is related to the acquisition of assets previously financed as real estate loans
receivable. For the year ended December 31, 2016, primarily relates to $45,044,000 for the acquisition of assets previously financed as
real estate loans receivable and $6,630,000 previously financed as an equity investment. For the year ended December 31, 2015,
primarily relates to $23,288,000 for the acquisition of assets previously financed as real estate loans receivable and $6,743,000
previously financed as equity investments.

Seniors Housing Operating Activity

Acquisitions of seniors housing operating properties are structured under RIDEA, which is described in
Note 18. This structure results in the inclusion of all resident revenues and related property operating expenses
from the operation of these qualified health care properties in our consolidated statements of comprehensive

77

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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,

2017

2016

2015

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land and land improvements
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 42,525
428,777
63,912
3,959

$ 164,653
1,518,472
115,643
2,462

$ 218,581
2,367,486
187,512
29,501

Total assets acquired(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior unsecured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

539,173
—
—
(46,301)

1,801,230
(63,732)
—
(23,681)

2,803,080
(871,471)
(24,621)
(81,778)

Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash acquisition related activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(46,301)
(4,701)
(67,633)(2)

(87,413)
(6,007)
(47,065)(3)

(977,870)
(183,854)
—

Cash disbursed for acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

420,538
84,874
(9,106)
(6,830)

1,660,745
157,845
(5,793)
(8,500)

1,641,356
44,173
(1,740)
(2,499)

Cash disbursed for construction in progress . . . . . . . . . . . . . . . . . . . . . . . .
Capital improvements to existing properties . . . . . . . . . . . . . . . . . . . . . . . .

68,938
185,473

143,552
138,673

39,934
104,308

Total cash invested in real property, net of cash acquired . . . . . . . . .

$674,949

$1,942,970

$1,785,598

(1) Excludes $6,273,000, $351,000 and $42,728,000 of cash and restricted cash acquired during the years ended December 31, 2017, 2016

and 2015, respectively.

(2)

Includes $59,665,000 related to the acquisition of assets previously financed as investments in unconsolidated entities, and $6,349,000
related to the acquisition of assets previously financed as real estate loans receivable.

(3)

Includes $43,372,000 related to the acquisition of assets previously financed as investments in unconsolidated entities.

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Outpatient Medical Activity

The following is a summary of our outpatient medical real property investment activity for the periods

presented (in thousands):

Year Ended December 31,

2017

2016

2015

Land and land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets

$ 40,565
159,643
24,014
10

$

5,738
46,056
4,592
—

$ 223,708
614,770
45,226
939

Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash acquisition related activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

224,232
(25,708)
(3,181)

(28,889)
(9,080)

56,386

884,643
— (120,977)
(7,777)

(1,670)

(1,670)
—

(128,754)
(76,535)
(27,025)(3)

— (15,013)(2)

Cash disbursed for acquisitions(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Capitalized interest
Accruals(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

186,263
37,094
(2,406)
13,615

39,703
113,933
(3,723)
(19,321)

652,329
70,560
(1,286)
(1,921)

Cash disbursed for construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital improvements to existing properties . . . . . . . . . . . . . . . . . . . . . . . . . .

48,303
44,814

90,889
47,870

67,353
38,151

Total cash invested in real property, net of cash acquired . . . . . . . . . . . .

$279,380

$178,462

$ 757,833

(1) Excludes $5,522,000 of cash acquired during the year ended December 31, 2015.

(2) The non-cash activity relates to the acquisition of assets previously financed as real estate loans. Please refer to Note 6 for additional

information.

(3) The non-cash activity relates to the acquisition of a controlling interest in a portfolio of properties that was historically reported as an

unconsolidated property investment.

(4) Represents non-cash consideration accruals for amounts to be paid in future periods for properties that converted, off-set by amounts paid

in the current period.

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Construction Activity

The following is a summary of the construction projects that were placed into service and began generating

revenues during the periods presented (in thousands):

Year Ended

December 31,
2017

December 31,
2016

December 31,
2015

Development projects:

Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical

$283,472
3,634
63,036

Total development projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expansion projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

350,142
10,336

$ 46,094
18,979
108,001

173,074
11,363

$104,844
19,869
16,592

141,305
38,808

Total construction in progress conversions . . . . . . . . . . . . . . . . . . . . . . .

$360,478

$184,437

$180,113

At December 31, 2017, future minimum lease payments receivable under operating leases (excluding
properties in our seniors housing operating partnerships and excluding any operating expense reimbursements)
are as follows (in thousands):

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter

$ 1,098,987
1,056,731
1,034,583
980,716
944,028
7,771,145

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$12,886,190

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Real Estate Intangibles

The following is a summary of our real estate intangibles, excluding those classified as held for sale, as of

the dates indicated (dollars in thousands):

December 31,
2017

December 31,
2016

Assets:

In place lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Above market tenant leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Below market ground leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,352,139
58,443
58,784
33,105

$1,252,143
61,700
61,628
27,413

Gross historical cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,502,471
(1,125,437)

1,402,884
(966,714)

Net book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

377,034

$ 436,170

Weighted-average amortization period in years . . . . . . . . . . . . . . . . . .

15.1

13.7

Liabilities:

Below market tenant leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Above market ground leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

Gross historical cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

60,430
8,540

68,970
(39,629)

$

89,468
8,107

97,575
(52,134)

Net book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

29,341

$

45,441

Weighted-average amortization period in years . . . . . . . . . . . . . . . . . .

20.1

15.2

The following is a summary of real estate intangible amortization for the periods presented (in thousands):

Year Ended December 31,

2017

2016

2015

Rental income related to above/below market tenant leases,

net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

875

$

919

$

(2,746)

Property operating expenses related to above/below market

ground leases, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,231)

(1,241)

(1,272)

Depreciation and amortization related to in place lease

intangibles and lease commissions . . . . . . . . . . . . . . . . . . . .

(145,132)

(132,141)

(115,855)

The future estimated aggregate amortization of intangible assets and liabilities is as follows for the periods

presented (in thousands):

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$111,339
55,336
34,402
20,419
17,213
138,325

$ 3,765
3,306
2,809
2,321
1,856
15,284

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$377,034

$29,341

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, relationship, or geography). At

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December 31, 2017, 50 triple-net, three seniors housing operating and 20 outpatient medical properties with an
aggregate net real estate balance of $734,147,000 were classified as held for sale. Secured debt related to the held
for sale properties totaled $66,872,000. Impairment of assets, as reflected in our consolidated statements of
comprehensive income, primarily represents the charges necessary to adjust the carrying values of certain
properties to estimated fair values less costs to sell. The following is a summary of our real property disposition
activity for the periods presented (in thousands):

December 31,
2017

Year Ended

December 31,
2016

December 31,
2015

Real property dispositions:

Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical(1) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land parcels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on sales of real property, net . . . . . . . . . . . . . .
Net other assets (liabilities) disposed . . . . . . . . . . . . . . . .

$ 916,689
74,832
19,697
—

1,011,218
344,250
22,546

$1,773,614
—
78,786
—

1,852,400
364,046
133,622

$356,300
—
181,553
5,724

543,577
280,387
—

Proceeds from real property sales . . . . . . . . . . . . . . . . . . .

$1,378,014

$2,350,068

$823,964

(1) Dispositions occurring in the year ended December 31, 2015 primarily relate to the disposition of an unconsolidated equity investment

with Forest City Enterprises.

During the year ended December 31, 2016, we completed two portfolio dispositions of properties leased to
Genesis HealthCare (“Genesis”) for which we received loans in the amount of $74,445,000 for termination fees
relating to the properties sold under the master lease. The related termination fee income has been deferred and
will be recognized as the principal balance of the loans are repaid. At December 31, 2017, $61,994,000 of
principal is outstanding on the loans.

Dispositions and Assets Held for Sale

Pursuant to our adoption of ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and
Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of
Components of an Entity” (ASU 2014-08”), operating results attributable to properties sold subsequent to or
classified as held for sale after January 1, 2014 and which do not meet the definition of discontinued operations
are no longer reclassified on our consolidated statements of comprehensive income. The following represents the
activity related to these properties for the periods presented (in thousands):

Year Ended December 31,

2017

2016

2015

Revenues:

Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$120,681

$401,742

$435,404

Expenses:

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,570
12,402
31,736

50,708

47,083
20,847
98,949

68,978
22,313
114,869

166,879

206,160

Income (loss) from real estate dispositions, net . . . . . . . . . . . . . .

$ 69,973

$234,863

$229,244

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WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Real Estate Loans Receivable

The following is a summary of our real estate loans receivable (in thousands):

December 31,

2017

2016

Mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other real estate loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$374,492
121,379

$485,735
136,893

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$495,871

$622,628

The following is a summary of our real estate loan activity for the periods presented (in thousands):

December 31, 2017

December 31, 2016

December 31, 2015

Triple-net

Outpatient
Medical

Totals Triple-net

Outpatient
Medical

Totals Triple-net

Outpatient
Medical

Totals

Year Ended

Advances on real estate loans

receivable:
Investments in new loans . . . . . $ 12,091
71,647
Draws on existing loans . . . . . .

Net cash advances on real

$

— $ 12,091 $
—

71,647

8,445
118,788

$

— $

2,651

8,445 $530,497
65,614

121,439

$ — $530,497
68,225

2,611

estate loans . . . . . . . . . . . . . .

83,738

—

83,738

127,233

2,651

129,884

596,111

2,611

598,722

Receipts on real estate loans

receivable:
Loan payoffs . . . . . . . . . . . . . .
Principal payments on loans . .

Sub-total

Less: Non-cash activity(1)

. . . . . . . . . . . . . . .
. . . .

157,912
1,219

60,500
—

218,412
1,219

275,439
6,867

27,303
—

302,742
6,867

121,778
33,340

159,131
(63,108)

60,500
(60,500)

219,631
(123,608)

282,306
(45,044)

27,303
(15,013)

309,609
(60,057)

155,118
(23,288)

— 121,778
33,340
—

— 155,118
(23,288)
—

Net cash receipts on real estate
loans . . . . . . . . . . . . . . . . . . .

96,023

Net cash advances (receipts) on

real estate loans . . . . . . . . . . . .

(12,285)

Change in balance due to foreign
currency translation . . . . . . . . .
Loan impairments(2) . . . . . . . . . . .

9,136
—

Net change in real estate loans

—

—

—
—

96,023

237,262

12,290

249,552

131,830

— 131,830

(12,285)

(110,029)

(9,639)

(119,668) 464,281

2,611

466,892

9,136
—

(14,086)
—

—
(3,053)

(14,086)
(3,053)

(4,281)
—

—
—

(4,281)
—

receivable . . . . . . . . . . . . . . . . . $ (66,257) $(60,500) $(126,757) $(169,159) $(27,705) $(196,864) $436,712

$2,611

$439,323

(1) Primarily represents aquisitions of assets previously financed as a real estate loans. Please see Note 3 for additional information.

(2) Represents a direct write down of an impaired loan receivable.

In 2016, we restructured two existing real estate loans in the triple-net segment to Genesis. The two existing
loans, with a combined principal balance of $317,000,000, were scheduled to mature in 2017 and 2018. These
loans were restructured into four separate loans effective October 1, 2016. Each loan had a five year term, a 10%
interest rate and 25 basis point annual escalator. We recorded a loan loss charge in the amount of $6,935,000 on
one of the loans as the present value of expected future cash flows was less than the carrying value of the loan.
During 2017, we recorded a provision for loan loss of $62,966,000 relating to three real estate loans receivable to
Genesis. The allowance for losses on loans receivable for these three loans totals $68,372,000 and is deemed to
be sufficient to absorb expected losses relating to the loans. Such allowance was based on an estimation of
expected future cash flows discounted at the effective interest rate for each loan. Please see Note 21 for
additional information.

83

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 6,563
62,966
(1,157)

$ — $—
6,935
—
(372) —

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$68,372

$6,563

$—

Year Ended December 31,

2017

2016

2015

(1) Excludes direct write down of an impaired loan receivable in 2016.

The following is a summary of our loan impairments (in thousands):

Year Ended December 31,

2017

2016

2015

Balance of impaired loans at end of year . . . . . . . . . . . . . . . . . . . .
Allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$282,882
68,372

$377,549
6,563

$ —
—

Balance of impaired loans not reserved . . . . . . . . . . . . . . . . . . . . .

$214,510

$370,986

$ —

Average impaired loans for the year . . . . . . . . . . . . . . . . . . . . . . .
Interest recognized on impaired loans(1) . . . . . . . . . . . . . . . . . . . . .

$330,216
27,793

$188,775
8,707

$10,500
—

(1) Represents cash interest recognized in the period since loans were identified as impaired.

7.

Investments in Unconsolidated Entities

We participate in a number of joint ventures, which generally invest in seniors housing and health care real
estate. The results of operations for these properties have been included in our consolidated results of operations
from the date of acquisition by the joint ventures and are reflected in our consolidated statements of
comprehensive income as income or loss from unconsolidated entities. The following is a summary of our
investments in unconsolidated entities (dollars in thousands):

Percentage
Ownership(1)

December 31,
2017

December 31,
2016

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Triple-net
Seniors housing operating . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient medical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10% to 49%
10% to 50%
43%

$ 22,856
352,430
70,299

$ 27,005
407,172
22,961

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$445,585

$457,138

(1) Excludes ownership of in substance real estate.

During the year ended December 31, 2017, we increased our ownership in Sunrise Senior Living
Management, Inc. (“Sunrise”) from 24% to 34%. Sunrise provides comprehensive property management and
accounting services with respect to certain of our seniors housing operating properties that Sunrise operates, for
which we pay annual management fees pursuant to long-term management agreements. Our management
agreements with Sunrise have initial terms expiring through December 2032 plus, if applicable, optional renewal
periods ranging from an additional 5 to 15 years depending on the property. The management fees payable to
Sunrise under the management agreements include a fee based on a percentage of revenues generated by the
applicable properties plus, if applicable, positive or negative adjustments based on specified performance targets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2017, 2016 and 2015, we recognized fees to Sunrise of $37,573,000,
$37,751,000, and $36,403,000, respectively, the majority of which are reflected within property operating
expenses in our consolidated statements of comprehensive income.

At December 31, 2017, the aggregate unamortized basis difference of our joint venture investments of
$110,063,000 is primarily attributable to the difference between the amount for which we purchased our interest
in the entity, including transaction costs, and the historical carrying value of the net assets of the entity. This
difference is being amortized over the remaining useful life of the related assets and included in the reported
amount of income from unconsolidated entities.

Summary combined financial information for our investments in unconsolidated entities held for the periods

presented is as follows (in thousands):

December 31,
2017

December 31,
2016

Net real estate investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,955,527
2,582,943

$2,595,107
2,298,503

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,538,470
4,037,145

4,893,610
3,588,007

Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,501,325

$1,305,603

Year Ended December 31,

2017

2016

2015

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss)

$2,074,139
(264,473)

$1,867,464
(86,167)

$2,947,993
(40,116)

8. Credit Concentration

We use consolidated net operating income (“NOI”) as our credit concentration metric. See Note 17 for
additional information and reconciliation. The following table summarizes certain information about our credit
concentration for the year ended December 31, 2017, excluding our share of NOI in unconsolidated entities
(dollars in thousands):

Number of
Properties

Total
NOI

Percent of
NOI(2)

Concentration by relationship:(1)

Sunrise Senior Living(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Genesis HealthCare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revera(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brookdale Senior Living . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benchmark Senior Living . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remaining portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

158
86
98
137
48
759

$ 315,409
190,506
156,698
151,026
97,779
1,321,298

14%
9%
7%
7%
4%
59%

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,286

$2,232,716

100%

(1) Genesis HealthCare is in our triple-net segment. Sunrise Senior Living and Revera are in our seniors housing operating segment.

Brookdale Senior Living and Benchmark Senior Living are in both our triple-net and seniors housing operating segments.

(2) NOI with our top five relationships comprised 45% of total NOI for the year ending December 31, 2016.

(3) Revera owns a controlling interest in Sunrise Senior Living. For the year ended December 31, 2017, we recognized $1,032,562,000 of

revenue from properties managed by Sunrise Senior Living.

85

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Borrowings Under Credit Facilities and Related Items

At December 31, 2017, we had a primary unsecured credit facility with a consortium of 29 banks that
includes a $3,000,000,000 unsecured revolving credit facility, a $500,000,000 unsecured term credit facility, and
a $250,000,000 Canadian-denominated unsecured term credit facility. We have an option, through an accordion
feature, to upsize the unsecured revolving credit facility and the $500,000,000 unsecured term credit facility by
up to an additional $1,000,000,000, in the aggregate, and the $250,000,000 Canadian-denominated unsecured
term credit facility by up to an additional $250,000,000. The primary unsecured credit facility also allows us to
borrow up to $1,000,000,000 in alternate currencies (none outstanding at December 31, 2017). Borrowings under
the unsecured revolving credit facility are subject to interest payable at the applicable margin over LIBOR
interest rate (2.46% at December 31, 2017). The applicable margin is based on certain of our debt ratings and
was 0.90% at December 31, 2017. In addition, we pay a facility fee quarterly to each bank based on the bank’s
commitment amount. The facility fee depends on certain of our debt ratings and was 0.15% at December 31,
2017. The term credit facilities mature on May 13, 2021. The revolving credit facility is scheduled to mature on
May 13, 2020 and can be extended for two successive terms of six months each at our option.

The following information relates to aggregate borrowings under the primary unsecured revolving credit

facility for the periods presented (dollars in thousands):

Balance outstanding at year end(1)
. . . . . . . . . . . . . . . . . . . . .
Maximum amount outstanding at any month end . . . . . . . . .
Average amount outstanding (total of daily principal

Year Ended December 31,

2017

2016

2015

$ 719,000
$1,010,000

$ 645,000
$1,560,000

$835,000
$835,000

balances divided by days in period) . . . . . . . . . . . . . . . . . .

$ 597,422

$ 762,896

$452,644

Weighted-average interest rate (actual interest expense

divided by average borrowings outstanding) . . . . . . . . . . .

2.02%

1.39%

1.17%

(1) As of December 31, 2017, letters of credit in the aggregate amount of $22,365,000 have been issued, which reduce the available

borrowing capacity on our primary unsecured revolving credit facility.

10. Senior Unsecured Notes and Secured Debt

We may repurchase, redeem or refinance senior unsecured notes from time to time, taking advantage of
favorable market conditions when available. We may purchase senior notes for cash through open market
purchases, privately negotiated transactions, a tender offer or, in some cases, through the early redemption of
such securities pursuant to their terms. The senior unsecured notes are redeemable at our option, at any time in
whole or from time to time in part, at a redemption price equal to the sum of (1) the principal amount of the notes
(or portion of such notes) being redeemed plus accrued and unpaid interest thereon up to the redemption date and
(2) any “make-whole” amount due under the terms of the notes in connection with early redemptions.
Redemptions and repurchases of debt, if any, will depend on prevailing market conditions, our liquidity

86

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

requirements, contractual restrictions, and other factors. At December 31, 2017, the annual principal payments
due on these debt obligations were as follows (in thousands):

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022(5,6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter(7,8,9,10)

Senior
Unsecured
Notes(1,2)

$ 450,000
600,000
697,174
1,149,728
600,000
4,920,545

Secured
Debt(1,3)

$ 396,588
522,458
184,726
221,784
234,850
1,058,002

$

Totals

846,588
1,122,458
881,900
1,371,512
834,850
5,978,547

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$8,417,447

$2,618,408

$11,035,855

(1) Amounts represent principal amounts due and do not include unamortized premiums/discounts, debt issuance costs, or other fair value

adjustments as reflected on the consolidated balance sheet.

(2) Annual interest rates range from 2.1% to 6.5%.

(3) Annual interest rates range from 1.69% to 7.98%. Carrying value of the properties securing the debt totaled $5,475,672,000 at

December 31, 2017.

(4)

In November 2015, one of our wholly-owned subsidiaries issued and we guaranteed $300,000,000 of Canadian-denominated 3.35%
senior unsecured notes due 2020 (approximately $239,674,000 based on the Canadian/U.S. Dollar exchange rate on December 31, 2017).

(5) On May 13, 2016, we refinanced the funding on a $250,000,000 Canadian-denominated unsecured term credit facility (approximately
$199,728,000 based on the Canadian/U.S. Dollar exchange rate on December 31, 2017). The loan matures on May 13, 2021 and bears
interest at the Canadian Dealer Offered Rate plus 95 basis points (2.28% at December 31, 2017).

(6) On May 13, 2016, we refinanced the funding on a $500,000,000 unsecured term credit facility. The loan matures on May 13, 2021 and

bears interest at LIBOR plus 95 basis points (2.41% at December 31, 2017).

(7) On November 20, 2013, we completed the sale of £550,000,000 (approximately $744,095,000 based on the Pounds Sterling/U.S. Dollar

exchange rate in effect on December 31, 2017) of 4.8% senior unsecured notes due 2028.

(8) On November 25, 2014, we completed the sale of £500,000,000 (approximately $676,450,000 based on the Pounds Sterling/U.S. Dollar

exchange rate in effect on December 31, 2017) of 4.5% senior unsecured notes due 2034.

(9)

In May 2015, we issued $750,000,000 of 4.0% senior unsecured notes due 2025. In October 2015, we issued an additional $500,000,000
of these notes under a re-opening of the offer.

(10) In March 2016, we issued $700,000,000 of 4.25% senior unsecured notes due 2026.

The following is a summary of our senior unsecured note principal activity during the periods presented

(dollars in thousands):

December 31, 2017

December 31, 2016

December 31, 2015

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 . . . . . . . .

$8,260,038
7,500
—
(5,000)
—
154,909

4.245% $8,645,758
705,000
1.973%
—
0.000%
(850,000)
1.830%
—
0.000%
(240,720)
4.288%

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%
3.901%
6.000%
6.200%
3.303%
3.966%

Ending balance . . . . . . . . .

$8,417,447

4.306% $8,260,038

4.245% $8,645,758

4.237%

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of our secured debt principal activity for the periods presented (dollars in

thousands):

December 31, 2017

December 31, 2016

December 31, 2015

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 . . . . .
Debt deconsolidated . . . .
Foreign currency . . . . . . .

$ 3,465,066
241,772
23,094
(1,080,268)
(64,078)
(60,000)
92,822

4.094% $3,478,207
460,015
2.822%
60,898
6.670%
(489,293)
5.247%
(74,466)
4.340%
—
3.799%
29,705
3.164%

4.440% $2,941,765
228,685
2.646%
1,007,482
4.301%
(506,326)
5.105%
(67,064)
4.663%
0.000%
—
(126,335)
3.670%

4.940%
2.776%
3.334%
4.506%
4.801%
0.000%
3.834%

Ending balance . . . . . . . .

$ 2,618,408

3.761% $3,465,066

4.094% $3,478,207

4.440%

Our debt agreements contain various covenants, restrictions and events of default. Certain agreements
require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to
incur indebtedness, create liens and make investments or acquisitions. As of December 31, 2017, we believe we
were in compliance with all of the covenants under our debt agreements.

11. Derivative Instruments

We are exposed to various market risks, including the potential loss arising from adverse changes in interest
rates. We may elect to use financial derivative instruments to hedge interest rate exposure. These decisions are
principally based on our policy to manage the general trend in interest rates at the applicable dates and our
perception of the future volatility of interest rates. In addition, non-U.S. investments expose us to the potential
losses associated with adverse changes in foreign currency to U.S. Dollar exchange rates. We have elected to
manage these risks through the use of forward exchange contracts and issuing debt in foreign currencies.

Interest Rate Swap Contracts and Foreign Currency Forward Contracts Designated as Cash Flow Hedges

For instruments that are designated as and qualify as a cash flow hedge, the effective portion of the gain or
loss on the derivative is reported as a component of other comprehensive income (“OCI”), and reclassified into
earnings in the same period, or periods, during which the hedged transaction affects earnings. Gains and losses
on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of
effectiveness are recognized in earnings. Approximately $914,000 of gains, which are included in accumulated
other comprehensive income (“AOCI”), are expected to be reclassified into earnings in the next 12 months.

Foreign Currency Hedges

For instruments that are designated and qualify as net investment hedges, the variability in the foreign
currency to U.S. dollar of the instrument is recorded as a cumulative translation adjustment component of
OCI. During the years ended December 31, 2017 and 2016, we settled certain net investment hedges generating
cash proceeds of $52,719,000 and $108,347,000, respectively. The balance of the cumulative translation
adjustment will be reclassified to earnings when the hedged investment is sold or substantially liquidated.

88

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following presents the notional amount of derivatives and other financial instruments as of the dates

indicated (in thousands):

December 31, 2017

December 31, 2016

Derivatives designated as net investment hedges:
Denominated in Canadian Dollars . . . . . . . . . . . . . . . . . . . . . . . .
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 U.S. Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Denominated in Canadian Dollars . . . . . . . . . . . . . . . . . . . . . . . .

$ 575,000
£ 550,000

$
£

900,000
550,000

$ 250,000
£1,050,000

$
250,000
£ 1,050,000

$
$
£

—
36,000
—

$ 408,007
80,000
$

$
$
£

$
$

57,000
54,000
48,000

—
37,000

The following presents the impact of derivative instruments on the consolidated statements of

comprehensive income for the periods presented (in thousands):

Location

December 31,
2017

December 31,
2016

December 31,
2015

Year Ended

Gain (loss) on forward exchange contracts

recognized in income . . . . . . . . . . . . . . . . . . . Interest expense $

(2,476) $

8,544

$ 14,474

Loss (gain) on option exercise(1) . . . . . . . . . . . . . Loss (gain) on
derivatives, net

Gain on release of cumulative translation

adjustment related to ineffectiveness on net
investment hedge . . . . . . . . . . . . . . . . . . . . . . Loss (gain) on
derivatives, net

$

$

— $

— $ (58,427)

— $ (2,516) $

—

Gain (loss) on forward exchange contracts and
term loans designated as net investment
hedge recognized in OCI . . . . . . . . . . . . . . . . OCI

$(252,168) $357,021

$298,116

(1)

In April 2011, we completed the acquisition of substantially all of the real estate assets of privately-owned Genesis. In conjunction with
this transaction, we received the option to acquire an ownership interest in Genesis. In February 2015, Genesis closed on a transaction to
merge with Skilled Healthcare Group to become a publicly traded company which required us to record the value of the derivative asset
due to the net settlement feature.

12. Commitments and Contingencies

At December 31, 2017, we had fourteen outstanding letter of credit obligations totaling $159,151,000 and
expiring between 2018 and 2024. At December 31, 2017, we had outstanding construction in process of
$237,746,000 for leased properties and were committed to providing additional funds of approximately
$429,815,000 to complete construction. At December 31, 2017, we had contingent purchase obligations totaling
$11,832,000. These contingent purchase obligations relate to unfunded capital improvement obligations and
the additional
contingent obligations on acquisitions. Rents due from the tenant are increased to reflect

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WELLTOWER INC.

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investment in the property. In December 2017, we finalized an agreement with the University of Toledo
Foundation to transfer our corporate headquarters as a gift and recognized an expense of $40,730,000.

We evaluate our leases for operating versus capital lease treatment in accordance with ASC Topic 840
“Leases.” A lease is classified as a capital lease if it provides for transfer of ownership of the leased asset at the
end of the lease term, contains a bargain purchase option, has a lease term greater than 75% of the economic life
of the leased asset, or if the net present value of the future minimum lease payments are in excess of 90% of the
fair value of the leased asset. Certain leases contain bargain purchase options and have been classified as capital
leases. At December 31, 2017, we had operating lease obligations of $1,125,098,000 relating to certain ground
leases and Company office space. Regarding the ground leases, we have sublease agreements with certain of our
operators that require the operators to reimburse us for our monthly operating lease obligations. At December 31,
2017, aggregate future minimum rentals to be received under these noncancelable subleases totaled $77,385,000.

At December 31, 2017, future minimum lease payments due under operating and capital leases are as

follows (in thousands):

Operating Leases

Capital Leases(1)

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

17,871
18,070
17,605
17,419
16,765
1,037,368

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,125,098

$ 4,678
4,334
4,173
4,173
4,173
67,573

$89,104

(1) Amounts above represent principal and interest obligations under capital lease arrangements. Related assets with a gross value of

$167,324,000 and accumulated depreciation of $29,303,000 are recorded in real property.

13. Stockholders’ Equity

The following is a summary of our stockholder’s equity capital accounts as of the dates indicated:

December 31, 2017

December 31, 2016

Preferred Stock, $1.00 par value:

Authorized shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issued shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

50,000,000
14,375,000
14,370,060

Common Stock, $1.00 par value:

Authorized shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issued shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

700,000,000
372,852,311
371,731,551

50,000,000
25,875,000
25,875,000

700,000,000
363,576,924
362,602,173

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WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Preferred Stock. The following is a summary of our preferred stock activity during the periods presented:

December 31, 2017

December 31, 2016

December 31, 2015

Shares

Weighted Avg.
Dividend Rate

Shares

Weighted Avg.
Dividend Rate

Shares

Weighted Avg.
Dividend Rate

Year Ended

Beginning balance . . . . . .
Shares redeemed . . . . . . .
Shares converted . . . . . . .

25,875,000
(11,500,000)
(4,940)

6.500% 25,875,000
—
6.500%
—
6.500%

6.500% 25,875,000
—
0.000%
—
0.000%

6.500%
0.000%
0.000%

Ending balance . . . . . . . .

14,370,060

6.500% 25,875,000

6.500% 25,875,000

6.500%

During the three months ended March 31, 2011, we issued 14,375,000 of 6.50% Series I Cumulative
Convertible Perpetual Preferred Stock. These shares have a liquidation value of $50.00 per share. Dividends are
payable quarterly in arrears. The preferred stock is not redeemable by us. The preferred shares are convertible, at
the holder’s option, into 0.8460 shares of common stock (equal to an initial conversion price of approximately
$59.10). During the year ended December 31, 2017, 4,940 shares of Series I preferred stock were converted into
common stock.

During the three months ended March 31, 2012, we issued 11,500,000 of 6.50% Series J Cumulative
Redeemable Preferred Stock. During the year ended December 31, 2017, we recognized a charge of $9,769,000
in connection with the redemption of the Series J preferred stock.

Common Stock. The following is a summary of our common stock activity during the periods indicated

(dollars in thousands, except average price amounts):

Shares Issued Average Price Gross Proceeds Net Proceeds

February 2015 public issuance . . . . . . . . . . . . . . . . . . . .
2015 Dividend reinvestment plan issuances . . . . . . . . .
2015 Option exercises . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 Equity Shelf Program issuances . . . . . . . . . . . . . .
2015 Stock incentive plans, net of forfeitures . . . . . . . .
2015 Senior note conversions . . . . . . . . . . . . . . . . . . . .

19,550,000
4,024,169
249,054
696,070
137,837
1,330,474

$75.50
67.72
47.35
69.23

$1,476,025
272,531
11,793
48,186
—
—

$1,423,935
272,531
11,793
47,463
—
—

2015 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,987,604

$1,808,535

$1,755,722

2016 Dividend reinvestment plan issuances . . . . . . . . .
2016 Option exercises . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 Equity Shelf Program issuances . . . . . . . . . . . . . .
2016 Stock incentive plans, net of forfeitures . . . . . . . .

4,145,457
141,405
3,134,901
402,740

$70.34
47.13
75.27

$ 291,852
6,664
238,286
—

$ 291,571
6,664
235,959
—

2016 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,824,503

$ 536,802

$ 534,194

2017 Dividend reinvestment plan issuances . . . . . . . . .
2017 Option exercises . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 Equity Shelf Program issuances . . . . . . . . . . . . . .
2017 Preferred stock conversions . . . . . . . . . . . . . . . . .
2017 Redemption of equity membership units . . . . . . .
2017 Stock incentive plans, net of forfeitures . . . . . . . .

5,640,008
252,979
2,986,574
4,300
91,180
154,337

$69.97
51.16
71.79

$ 395,526
12,942
215,917
—
—
—

$ 394,639
12,942
214,406
—
—
—

2017 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,129,378

$ 624,385

$ 621,987

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WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dividends. The increase in dividends is primarily attributable to increases in our common shares
outstanding, offset by the redemption of the Series J preferred stock, as described above. Please refer to Note 18
for information related to federal income tax of dividends. The following is a summary of our dividend payments
(in thousands, except per share amounts):

December 31, 2017

December 31, 2016

December 31, 2015

Per Share

Amount

Per Share

Amount

Per Share

Amount

Year Ended

Common Stock . . . . . . . . . . . . . . . . . . .
Series I Preferred Stock . . . . . . . . . . . .
Series J Preferred Stock . . . . . . . . . . . .

$3.4800
3.2500
0.2347

$1,277,321
46,711
2,699

$3.4400
3.2500
1.6251

$1,233,519
46,719
18,687

$3.3000
3.2500
1.6251

$1,144,727
46,719
18,687

Totals . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,326,731

$1,298,925

$1,210,133

Accumulated Other Comprehensive Income. The following is a summary of accumulated other comprehensive

income/(loss) for the periods presented (in thousands):

Unrecognized gains (losses) related to:

Foreign
Currency
Translation

Equity
Investments

Actuarial
losses

Cash Flow
Hedges

Total

$(173,496)

$ 5,120

$(1,153)

$

(2)

$(169,531)

Balance at December 31, 2016 . . . . .
Other comprehensive income (loss)

before reclassification
adjustments . . . . . . . . . . . . . . . . . .
Reclassification adjustment for write
down of equity investment . . . . . .

Net current-period other

comprehensive income (loss) . . . .

62,915

(5,120)

62,915

—

—

(5,120)

269

—

269

2

—

2

63,186

(5,120)

58,066

Balance at December 31, 2017 . . . . .

$(110,581)

$ —

$ (884)

$ — $(111,465)

Balance at December 31, 2015 . . . . .
Other comprehensive income (loss)

before reclassification
adjustments . . . . . . . . . . . . . . . . . .

Reclassification amount to net

$ (85,484)

$ —

$(1,343)

$(1,416)

$ (88,243)

(90,528)

5,120

190

1,414

(83,804)

income . . . . . . . . . . . . . . . . . . . . .

2,516

—

—

—

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)

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Committee of the Board of Directors. Awards granted after May 5, 2016 are issued out of the 2016 Plan. The
awards granted under the Amended and Restated 2005 Long-Term Incentive Plan continue to vest and options
expire ten years from the date of grant. Our non-employee directors, officers and key employees are eligible to
participate in the 2016 Plan. The 2016 Plan allows for the issuance of, among other things, stock options, stock
appreciation rights, restricted stock, deferred stock units, and dividend equivalent rights. Vesting periods for
options, deferred stock units, and restricted shares generally range from three to five years.

Under our long-term incentive plan, certain restricted stock awards are market and performance based. We
will grant a target number of restricted stock units, with the ultimate award determined by the total shareholder
return and operating performance metrics, measured in each case over a measurement period of two to three
years. Awards vest over two to three years after the end of the performance period with a portion vesting
immediately at the end of the performance periods. The expected term represents the period from the grant date
to the end of the performance period. Compensation expense for these performance grants is measured based on
the probability of achievement of certain performance goals and is recognized over both the performance period
and vesting period. For the portion of the grant for which the award is determined by the operating performance
metrics, the compensation cost is based on the grant date closing price and management’s estimate of corporate
achievement of the financial metrics. If the estimated number of performance based restricted stock to be earned
changes, an adjustment will be recorded to recognize the accumulated difference between the revised and
previous estimates. For the portion of the grant determined by the total shareholder return, management used a
Monte Carlo model to assess the fair value and compensation cost.

The following table summarizes compensation expense (a component of general and administrative

expenses) recognized for the periods presented (in thousands):

Year Ended December 31,

2017

2016

2015

Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

10
19,092

$

266
28,603

$

698
30,146

$19,102

$28,869

$30,844

Stock Options

We have not granted stock options since the year ended December 31, 2012 but some remain outstanding.
As of December 31, 2016, there was no unrecognized compensation expense related to unvested stock options.
Stock options outstanding at December 31, 2017 have an aggregate intrinsic value of $1,346,000.

Restricted Stock

The fair value of the restricted stock is equal to the market price of the Company’s common stock on the
date of grant and is amortized over the vesting periods. As of December 31, 2017, there was $31,709,000 of total
unrecognized compensation expense related to unvested restricted stock that is expected to be recognized over a

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WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

weighted-average period of three years. The following table summarizes information about non-vested restricted
stock incentive awards as of and for the year ended December 31, 2017:

Restricted Stock

Number of
Shares
(000’s)

Weighted-Average
Grant Date
Fair Value

Non-vested at December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Terminated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-vested at December 31, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

987
(477)
247
(59)

698

$58.98
63.15
69.78
63.20

$61.00

15. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except

per share data):

Year Ended December 31,

2017

2016

2015

Numerator for basic and diluted earnings per share — net

income attributable to common stockholders . . . . . . . . . . . .

$463,595

$1,012,397

$818,344

Denominator for basic earnings per share: weighted-average

shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

367,237

358,275

348,240

Effect of dilutive securities:

Employee stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-vested restricted shares . . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Convertible senior unsecured notes . . . . . . . . . . . . . . . . . . .

Dilutive potential common shares . . . . . . . . . . . . . . . . . . . . . . .

Denominator for diluted earnings per share: adjusted-

47
482
1,235
—

1,764

110
449
1,393
—

1,952

143
535
310
196

1,184

weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .

369,001

360,227

349,424

Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

1.26

1.26

$

$

2.83

2.81

$

$

2.35

2.34

Stock options outstanding were anti-dilutive for the years ended December 31, 2017, 2016 and 2015. The
Series I Cumulative Convertible Perpetual Preferred Stock were excluded from the calculations as the effect of
the conversions also were anti-dilutive.

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

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WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to
measure fair value:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are

significant to the fair value of the assets or liabilities.

The following methods and assumptions were used to estimate the fair value of each class of financial

instruments for which it is practicable to estimate that value.

Mortgage Loans and Other Real Estate Loans Receivable — The carrying value of mortgage loans and
other real estate loans receivable is net of related reserves. The fair value is generally estimated by using Level 2
and Level 3 inputs such as discounting the estimated future cash flows using the current rates at which similar
loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Cash and Cash Equivalents and Restricted Cash — The carrying amount approximates fair value.

Available-for-sale Equity Investments — Available-for-sale equity investments are recorded at their fair

value based on Level 1 publicly available trading prices.

Borrowings Under Primary Unsecured Credit Facility — The carrying amount of the primary unsecured

credit facility approximates fair value because the borrowings are interest rate adjustable.

Senior Unsecured Notes — The fair value of the senior unsecured notes payable was estimated based on
Level 1 publicly available trading prices. The carrying amount of the variable rate senior unsecured notes
approximates fair value because they are interest rate adjustable.

Secured Debt — The fair value of fixed rate secured debt is estimated using Level 2 inputs by discounting
the estimated future cash flows using the current rates at which similar loans would be made with similar credit
ratings and for the same remaining maturities. The carrying amount of variable rate secured debt approximates
fair value because the borrowings are interest rate adjustable.

Foreign Currency Forward Contracts — Foreign currency forward contracts are recorded in other assets or
other liabilities on the balance sheet at fair market value. Fair market value is determined using Level 2 inputs by
estimating the future value of the currency pair based on existing exchange rates, comprised of current spot and
traded forward points, and calculating a present value of the net amount using a discount factor based on
observable traded interest rates.

Redeemable OP Unitholder Interests — Our redeemable OP unitholder interests are recorded on the balance
sheet at fair value using Level 2 inputs. The fair value is measured using the closing price of our common stock,
as units may be redeemed at the election of the holder for cash or, at our option, one share of our common stock
per unit, subject to adjustment in certain circumstances.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The carrying amounts and estimated fair values of our financial instruments are as follows as of the dates

presented (in thousands):

Financial Assets:

December 31, 2017

December 31, 2016

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value

Mortgage loans receivable . . . . . . . . . . .
Other real estate loans receivable . . . . . .
Available-for-sale equity investments . . .
Cash and cash equivalents . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . .
Foreign currency forward contracts . . . .

$ 306,120
121,379
7,269
243,777
65,526
15,604

$ 332,508
125,480
7,269
243,777
65,526
15,604

$ 485,735
136,893
27,899
419,378
187,842
135,561

$ 521,773
138,050
27,899
419,378
187,842
135,561

Financial Liabilities:

Borrowings under unsecured lines of

credit arrangements . . . . . . . . . . . . . . .
Senior unsecured notes . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
Secured debt
Foreign currency forward contracts . . . .
Redeemable OP unitholder interests . . . . . .

$ 719,000
8,331,722
2,608,976
38,654
97,476

$

$ 719,000
9,168,432
2,641,997
38,654
97,476

$

$ 645,000
8,161,619
3,477,699
4,342
$ 110,502

$ 645,000
8,879,176
3,558,378
4,342
$ 110,502

Items Measured at Fair Value on a Recurring Basis

The market approach is utilized to measure fair value for our financial assets and liabilities reported at fair
value on a recurring basis. The market approach uses prices and other relevant information generated by market
transactions involving identical or comparable assets or liabilities. The following summarizes items measured at
fair value on a recurring basis (in thousands):

Fair Value Measurements as of
December 31, 2017

Total

Level 1

Level 2

Level 3

Available-for-sale equity investments(1)
. . . . . . . . . . . . . .
Foreign currency forward contracts, net(2) . . . . . . . . . . . . .
Redeemable OP unitholder interests . . . . . . . . . . . . . . . . .

$ 7,269
(23,050)
97,476

$7,269
—
—

$

— $—
—
—

(23,050)
97,476

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 81,695

$7,269

$ 74,426

$—

(1) Unrealized gains or losses on available-for-sale equity investments are recorded in accumulated other comprehensive income (loss) at
each measurement date. During the years ended December 31, 2017 and 2015, we recognized other than temporary impairment charges
of $18,294,000 and $35,648,000, respectively, on the Genesis HealthCare stock investment. Also, see Note 11 for details related to the
gain on the derivative asset originally recognized.

(2) Please see Note 11 for additional information.

Items Measured at Fair Value on a Nonrecurring Basis

In addition to items that are measured at fair value on a recurring basis, we also have assets and liabilities in
our balance sheet that are measured at fair value on a nonrecurring basis. Assets, liabilities and noncontrolling
interests that are measured at fair value on a nonrecurring basis include those acquired/assumed in asset

96

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

acquisitions and business combinations (see Note 3), and asset impairments (see Note 5 for impairments of real
property and Note 6 for impairments of loans receivable). We have determined that the fair value measurements
included in each of these assets and liabilities rely primarily on company-specific inputs and our assumptions
about the use of the assets and settlement of liabilities as observable inputs are not available. As such, we have
determined that each of these fair value measurements generally reside within Level 3 of the fair value hierarchy.
We estimate the fair value of real estate and related intangibles using the income approach and unobservable data
such as net operating income and estimated capitalization and discount rates. We also consider local and national
industry market data including comparable sales, and commonly engage an external real estate appraiser to assist
us in our estimation of fair value. We estimate the fair value of assets held for sale based on current sales price
expectations or, in the absence of such price expectations, Level 3 inputs described above. We estimate the fair
value of loans receivable using projected payoff valuations based on the expected future cash flows and/or the
estimated fair value of the underlying collateral. We may base our valuation on a loan’s observable market price,
if any, or the fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided
solely by the collateral. We estimate the fair value of secured debt assumed in business combinations and asset
acquisitions using current interest rates at which similar borrowings could be obtained on the transaction date.

17. Segment Reporting

We invest in seniors housing and health care real estate. We evaluate our business and make resource
allocations on our three operating segments: triple-net, seniors housing operating and outpatient medical. Our
triple-net properties include long-term/post-acute care facilities, assisted living facilities, independent living/
continuing care retirement communities, independent support living facilities (Canada), care homes with and
without nursing (U.K.), and combinations thereof. Under the triple-net segment, we invest in seniors housing and
health care real estate through acquisition and financing of primarily single tenant properties. Properties acquired
are primarily leased under triple-net leases and we are not involved in the management of the property. Our
seniors housing operating properties include the seniors housing communities referenced above that are owned
and/or operated through RIDEA structures (see Note 18). Our outpatient medical properties include outpatient
medical buildings which are typically leased to multiple tenants and generally require a certain level of property
management by us.

We evaluate performance based upon consolidated net operating income (“NOI”) of each segment. We
define NOI as total revenues, including tenant reimbursements, less property operating expenses. We believe
NOI provides investors relevant and useful information because it measures the operating performance of our
properties at the property level on an unleveraged basis. We use NOI to make decisions about resource
allocations and to assess the property level performance of our properties.

Non-segment revenue consists mainly of interest income on certain non-real estate investments and other
income. Non-segment assets consist of corporate assets including cash, deferred loan expenses and corporate
offices and equipment among others. Non-property specific revenues and expenses are not allocated to individual
segments in determining NOI.

The accounting policies of the segments are the same as those described in the summary of significant
accounting policies (see Note 2). The results of operations for all acquisitions described in Note 3 are included in
our consolidated results of operations from the acquisition dates and are components of the appropriate segments.
There are no intersegment sales or transfers.

97

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Summary information for the reportable segments (which excludes unconsolidated entities) during the years

ended December 31, 2017, 2016 and 2015 is as follows (in thousands):

Year Ended December 31, 2017:
Rental income . . . . . . . . . . . . . . . . . . . . . .
Resident fees and services . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . .

Total revenues . . . . . . . . . . . . . . . . . . . . . .
Property operating expenses . . . . . . . . . . .

Consolidated net operating income . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on derivatives, net
. . . . . . . . .
Depreciation and amortization . . . . . . . . .
General and administrative . . . . . . . . . . . .
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 benefit (expense)
(Loss) income from unconsolidated

entities . . . . . . . . . . . . . . . . . . . . . . . . . .

Income (loss) from continuing

Triple-net

Seniors
Housing
Operating

Outpatient
Medical

Non-segment
/ Corporate

Total

$ 885,811
—
73,742
7,531

$

— $ 560,060
—
—
3,340

2,779,423
69
5,127

$

— $ 1,445,871
2,779,423
—
73,811
—
17,536
1,538

967,084
—

967,084
15,194
2,284
243,830
—

29,083
62,966
96,909
116,689(1)

2,784,619
1,904,593

880,026
63,265
—
484,796
—

3,785
—
21,949
8,347

563,400
179,332

384,068
10,015
—
193,094
—

4,373
—
5,625
1,911

1,538
—

1,538
396,148
—
—
122,008

—
—
—
50,829(2)

4,316,641
2,083,925

2,232,716
484,622
2,284
921,720
122,008

37,241
62,966
124,483
177,776

400,129
(4,291)

297,884
(16,430)

169,050
(1,477)

(567,447)
2,070

299,616
(20,128)

19,428

(105,236)

2,683

—

(83,125)

operations . . . . . . . . . . . . . . . . . . . . . . .

415,266

176,218

170,256

(565,377)

196,363

Gain (loss) on real estate dispositions,

net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

286,325

56,295

1,630

—

344,250

Net income (loss)

. . . . . . . . . . . . . . . . . . .

$ 701,591

$

232,513

$ 171,886

$(565,377) $

540,613

Total assets . . . . . . . . . . . . . . . . . . . . . . . .

$9,325,344

$13,432,001

$5,082,145

$ 104,955

$27,944,445

(1) Primarily represents non-capitalizable transaction costs, including $88,316,000 due to a joint venture transaction with an existing seniors
housing operator which converted a portfolio of properties from triple-net to seniors housing operating, an exchange of PropCo/OpCo
interests, and termination/restructuring of pre-existing relationships. In addition, includes $18,294,000 other than temporary impairment
charge on the Genesis available-for-sale equity investment (see also Notes 11 and 16).

(2) Primarily related to $40,730,000 recognized for the donation of the corporate headquarters. See also Note 12.

98

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year Ended December 31, 2016:
Rental income . . . . . . . . . . . . . . . . . . . . .
Resident fees and services . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . .

Total revenues . . . . . . . . . . . . . . . . . . . . .
Property operating expenses . . . . . . . . . .

Consolidated net operating income . . . . .
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 benefit (expense)
(Loss) income from unconsolidated

entities . . . . . . . . . . . . . . . . . . . . . . . . .

Income (loss) from continuing

Triple-net

Seniors
Housing
Operating

Outpatient
Medical

Non-segment
/ Corporate

Total

$ 1,112,325
—
90,476
6,059

$

— $ 536,490
—
3,307
5,568

2,504,731
4,180
17,085

$

— $ 1,648,815
2,504,731
—
97,963
—
29,651
939

1,208,860
—

1,208,860
21,370
68
297,197
—
10,016

863
6,935
20,169
—

2,525,996
1,711,882

814,114
81,853
—
415,429
—
29,207

(88)
—
12,403
—

545,365
165,101

380,264
19,087
—
188,616
—
3,687

—
3,280
4,635
—

939
—

939
399,035
(2,516)
—
155,241
—

16,439
—
—
11,998

4,281,160
1,876,983

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

99

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

$

— 2,158,031
4,180
6,060

74,108
6,871

— $504,121
—
5,853
4,684

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . .
Property operating expenses . . . . . . . . . . . . . . .

1,175,806

2,168,271
— 1,467,009

$

— $1,598,948
— 2,158,031
84,141
—
18,706
1,091

1,091

3,859,826
— 1,622,257

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

514,658
155,248

359,410
27,542
—
186,265
—
2,765
—
—
—

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)
—
—

816,449
(4,244)
8,260

820,465
86,261

224,370
986
(32,672)

142,838
245
2,908

192,684

145,991
— 194,126

(547,540)
(3,438)
—

(550,978)
—

636,117
(6,451)
(21,504)

608,162
280,387

Consolidated net operating income . . . . . . . . .
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 benefit (expense) . . . . . . . . . . . . . .
(Loss) income from unconsolidated entities . .

Income from continuing operations . . . . . . . . .
Gain (loss) on real estate dispositions, net . . . .

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . .

$ 906,726

$ 192,684

$340,117

$(550,978) $ 888,549

Our portfolio of properties and other investments are located in the U.S., the U.K. and Canada. Revenues
and assets are attributed to the country in which the property is physically located. The following is a summary of
geographic information for the periods presented (dollars in thousands):

Year Ended

December 31, 2017

December 31, 2016

December 31, 2015

Amount

%

Amount

%

Amount

%

Revenues:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,464,527
407,351
444,763

80.3% $3,453,485
9.4% 388,383
10.3% 439,292

80.6% $3,133,327
9.1% 407,745
10.3% 318,754

81.1%
10.6%
8.3%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$4,316,641

100.0% $4,281,160

100.0% $3,859,826

100.0%

100

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of

December 31, 2017

December 31, 2016

Amount

%

Amount

%

Assets:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$22,274,443
3,239,039
2,430,963

79.7% $23,572,459
11.6% 2,782,489
8.7% 2,510,236

81.7%
9.6%
8.7%

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$27,944,445

100.0% $28,865,184

100.0%

18. Income Taxes and Distributions

We elected to be taxed as a REIT commencing with our first taxable year. To qualify as a REIT for federal
income tax purposes, at least 90% of taxable income (excluding 100% of net capital gains) must be distributed to
stockholders. REITs that do not distribute a certain amount of current year taxable income are also subject to a
4% federal excise tax. The main differences between net
income tax purposes and
consolidated financial statement purposes are the recognition of straight-line rent for reporting purposes, basis
differences in acquisitions, recording of impairments, differing useful lives and depreciation and amortization
methods for real property and the provision for loan losses for reporting purposes versus bad debt expense for tax
purposes.

income for federal

Cash distributions paid to common stockholders, for federal income tax purposes, are as follows for the

periods presented:

Per Share:

Year Ended December 31,

2017

2016

2015

Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Qualified dividend* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return of capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term capital gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecaptured section 1250 gains* . . . . . . . . . . . . . . . . . . . . . . . . .

$1.8117
0.0038
0.0929
1.5750
0.3557

$2.5067
0.0047
0.0573
0.4593
0.4120

$1.9134
0.0529
0.0503
0.9352
0.3482

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3.4800

$3.4400

$3.3000

* Informational purposes only

Our consolidated provision for income tax expense (benefit) is as follows for the periods presented (in

thousands):

Year Ended December 31,

2017

2016

2015

Current
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 7,633
12,495

$ 14,944
(34,072)

$10,177
(3,726)

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$20,128

$(19,128)

$ 6,451

REITs generally are not subject to U.S. federal income taxes on that portion of REIT taxable income or
capital gain that is distributed to stockholders. For the tax year ended December 31, 2017, as a result of
acquisitions located in Canada and the U.K., we were subject to foreign income taxes under the respective tax
laws of these jurisdictions.

101

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The provision for income taxes for the year ended December 31, 2017 primarily relates to state taxes,
foreign taxes, and taxes based on income generated by entities that are structured as TRSs. For the tax years
ended December 31, 2017, 2016 and 2015,
included in the
consolidated provision for income taxes was $4,806,000, ($3,315,000) and $7,385,000, respectively.

the foreign tax provision/(benefit) amount

A reconciliation of income taxes, which is computed by applying the federal corporate tax rate for the years
ended December 31, 2017, 2016 and 2015, to the income tax expense/(benefit) is as follows for the periods
presented (in thousands):

Year Ended December 31,

2017

2016

2015

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 199,588
30,445

$ 372,030
(2,128)

$ 313,250
13,759

(234,468)
10,065
14,498

(399,571)
9,205
1,336

(319,832)
7,500
(8,226)

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 20,128

$ (19,128)

$

6,451

(1) Excluding purchase price accounting.

Each TRS and foreign entity subject to income taxes is a tax paying component for purposes of classifying
deferred tax assets and liabilities. The tax effects of taxable and deductible temporary differences, as well as tax
asset/(liability) attributes, are summarized as follows for the periods presented (in thousands):

Year Ended December 31,

2017

2016

2015

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (11,812)
94,654
25,146
(127,283)

$ (7,089)
82,469
15,978
(96,838)

$(30,564)
75,455
6,259
(98,966)

Net deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . . .

$ (19,295)

$ (5,480)

$(47,816)

We assess the available positive and negative evidence to estimate if sufficient future taxable income will be
generated to use the existing deferred tax assets. We apply the concepts on an entity-by-entity,
jurisdiction-by-jurisdiction basis. With respect to the analysis of certain entities in multiple jurisdictions, a
significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year
period ended December 31, 2017. Such objective evidence limits the ability to consider other subjective evidence
such as our projections for future growth.

On the basis of the evaluations performed as required by the codification, valuation allowances totaling
$127,283,000 were recorded on U.S. taxable REIT subsidiaries as well as entities in other jurisdictions to limit
the deferred tax assets to the amount that we believe is more likely that not realizable. However, the amount of
the deferred tax asset considered realizable could be adjusted if (i) estimates of future taxable income during the
carryforward period are reduced or increased or (ii) objective negative evidence in the form of cumulative losses

102

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

is no longer present (and additional weight may be given to subjective evidence such as our projections for
growth). The valuation allowance rollforward is summarized as follows for the periods presented (in thousands):

Year Ended December 31,

2017

2016

2015

Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 96,838
30,445

$98,966
(2,128)

$85,207
13,759

Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$127,283

$96,838

$98,966

As a result of certain acquisitions, we are subject to corporate level taxes for any related asset dispositions
that may occur during the five-year period immediately after such assets were owned by a C corporation
(“built-in gains tax”). The amount of income potentially subject to this special corporate level tax is generally
equal to the lesser of (a) the excess of the fair value of the asset over its adjusted tax basis as of the date it
became a REIT asset, or (b) the actual amount of gain. Some but not all gains recognized during this period of
time could be offset by available net operating losses and capital loss carryforwards. During the year ended
December 31, 2016, we acquired certain additional assets with built-in gains as of the date of acquisition that
could be subject to the built-in gains tax if disposed of prior to the expiration of the applicable ten-year period.
We have not recorded a deferred tax liability as a result of the potential built-in gains tax based on our intentions
with respect to such properties and available tax planning strategies.

Under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”),
for taxable years beginning after July 30, 2008, the REIT may lease “qualified health care properties” on an
arm’s-length basis to a TRS if the property is operated on behalf of such subsidiary by a person who qualifies as
an “eligible independent contractor.” Generally, the rent received from the TRS will meet the related party rent
exception and will be treated as “rents from real property.” A “qualified health care property” includes real
property and any personal property that is, or is necessary or incidental to the use of, a hospital, nursing facility,
assisted living facility, congregate care facility, qualified continuing care facility, or other licensed facility which
extends medical or nursing or ancillary services to patients. We have entered into various joint ventures that were
structured under RIDEA. Resident level rents and related operating expenses for these facilities are reported in
the consolidated financial statements and are subject to federal, state and foreign income taxes as the operations
of such facilities are included in a TRS. Certain net operating loss carryforwards could be utilized to offset
taxable income in future years.

Given the applicable statute of limitations, we generally are subject to audit by the Internal Revenue Service
(“IRS”) for the year ended December 31, 2014 and subsequent years. The statute of limitations may vary in the
states in which we own properties or conduct business. We do not expect to be subject to audit by state taxing
authorities for any year prior to the year ended December 31, 2011. We are also subject to audit by the Canada
Revenue Agency and provincial authorities generally for periods subsequent to May 2012 related to entities
acquired or formed in connection with acquisitions, and by the U.K.’s HM Revenue & Customs for periods
subsequent to August 2012 related to entities acquired or formed in connection with acquisitions.

At December 31, 2017, we had a net operating loss (“NOL”) carryforward related to the REIT of
$448,475,000. Due to our uncertainty regarding the realization of certain deferred tax assets, we have not
recorded a deferred tax asset related to NOLs generated by the REIT. These amounts can be used to offset future
taxable income (and/or taxable income for prior years if an audit determines that tax is owed), if any. The REIT
will be entitled to utilize NOLs and tax credit carryforwards only to the extent that REIT taxable income exceeds
our deduction for dividends paid. The NOL carryforwards generated through December 31, 2017 will expire
through 2036. Beginning with tax years after December 31, 2017, the Tax Cuts and Jobs Act (“Tax Act”)
limits the NOLs to 80% of taxable income and replaces the 20-year
eliminates the carryback period,
carryforward period with an indefinite carryforward period.

103

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2017 and 2016, we had an NOL carryforward related to Canadian entities of
$134,552,000, and $104,988,000, respectively. These Canadian losses have a 20-year carryforward period. At
December 31, 2017 and 2016, we had an NOL carryforward related to U.K. entities of $183,712,000 and
$158,156,000, respectively. These U.K. losses do not have a finite carryforward period.

We did not identify items for which the income tax effects of the Tax Act have not been completed and a
reasonable estimate could not be determined as of December 31, 2017. Our analysis of the Tax Act may be
impacted by any corrective legislation and any guidance provided by the U.S. Treasury, the IRS or by the
General Explanation of the Tax Act, which is under preparation by the Staff of the Congressional Joint
Committee on Taxation. Based on the Tax Act as enacted, we do not believe there will be further material
impacts to the consolidated financial statements related to the other Tax Act provisions but cannot assure you as
to the outcome of this matter.

19. Quarterly Results of Operations (Unaudited)

The following is a summary of our unaudited quarterly results of operations for the years ended
December 31, 2017 and 2016 (in thousands, except per share data). The sum of individual quarterly amounts may
not agree to the annual amounts included in the consolidated statements of comprehensive income due to
rounding.

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, 2017

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter(1)

$1,062,298

$1,058,602

$1,091,483

$1,104,257

312,639

188,429

74,043

(111,523)

$
$

0.86
0.86

$
$

0.51
0.51

$
$

0.20
0.20

$
$

(0.31)
(0.31)

Year Ended December 31, 2016

1st Quarter

2nd Quarter

3rd Quarter(2)

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

(1) The decrease in net income (loss) and amounts per share are primarily attributable to $99,821,100 impairment of assets and $62,966,000

provision for loan losses recognized in the fourth quarter as compared to none in the third quarter.

(2) The increase in net income and amounts per share are primarily attributable to gains on sales of real estate of $162,351,000 for the third

quarter as compared to gains of $1,530,000 for the second quarter.

20. Variable Interest Entities

We have entered into joint ventures to own certain seniors housing and outpatient medical assets which are
deemed to be variable interest entities (“VIEs”). We have concluded that we are the primary beneficiary of these
VIEs based on a combination of operational control of the joint venture and the rights to receive residual returns

104

WELLTOWER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

or the obligation to absorb losses arising from the joint ventures. Except for capital contributions associated with
the initial joint venture formations, the joint ventures have been and are expected to be funded from the ongoing
operations of the underlying properties. Accordingly, such joint ventures have been consolidated, and the table
below summarizes the balance sheets of consolidated VIEs in the aggregate (in thousands):

December 31,
2017

December 31,
2016

Assets

Net real property owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,002,137
12,308
16,330

$ 989,596
10,501
12,102

Total assets(1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,030,775

$1,012,199

Liabilities and equity

Secured debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 471,103
14,832
171,898
372,942

$ 450,255
13,803
185,556
362,585

Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,030,775

$1,012,199

(1) Note that assets of the consolidated VIEs can only be used to settle obligations relating to such VIEs. Liabilities of the consolidated VIEs

represent claims against the specific assets of the VIEs.

21. Subsequent Events

Genesis Restructuring. Subsequent to December 31, 2017, we entered into agreements with Genesis, our

largest triple-net relationship, which included the following terms:

• Master Lease: Effective January 1, 2018, the Genesis annual cash rent obligation under the Welltower
master lease was reduced by $35 million and the term was extended by 5 years. Additionally, lease
escalators will be set to 2.5% in year one and 2% thereafter, and rent will be reset on January 31, 2023
in such fashion to permit the rent payable to Welltower to increase up to $35 million subject to
increases in Genesis’s EBITDAR relative to the trailing twelve months ended December 31, 2017,
generated by the properties comprising the Welltower master lease portfolio.

• Term Loan: Welltower and Omega Healthcare Investors, Inc. (“Omega”) have entered into an
agreement with Genesis to amend and expand the existing Genesis $120 million term loan agreement.
Welltower will fund a $24 million tranche and will receive priority of repayment among lenders.

• Real Estate Loans: As of December 31, 2017, Welltower had approximately $267 million (excluding
allowances and non-accrual interest) of real estate loans. Welltower and Genesis have entered into a
definitive agreement to amend the annual interest rate beginning February 15, 2018 to 12%, of which
7% will be paid in cash and 5% will be paid-in-kind.

•

Interest: Genesis continues to seek refinancing and asset sale transactions to secure commitments to
repay no less than $105 million of obligations. If Genesis is unsuccessful
in securing such
commitments or otherwise reducing the outstanding obligation on or before April 1, 2018, the cash pay
component of loan interest will increase by approximately $2 million annually.

105

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, 2017 based on the criteria established by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) in a report entitled Internal Control — Integrated Framework.

Based on this assessment, using the criteria above, management concluded that the Company’s system of

internal control over financial reporting was effective as of December 31, 2017.

The independent registered public accounting firm of Ernst & Young LLP, as auditors of the Company’s
consolidated financial statements, has issued an attestation report on the Company’s internal control over
financial reporting.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities
Exchange Act of 1934, as amended) occurred during the fourth quarter of the one-year period covered by this
report that materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.

106

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Welltower Inc.

Opinion on Internal Control over Financial reporting

We have audited Welltower

reporting as of
December 31, 2017, based on criteria established in Internal Control — Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the “COSO Criteria”).
In our opinion, Welltower Inc. and subsidiaries (the Company) maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2017, based on the COSO Criteria.

internal control over financial

Inc. and subsidiaries’

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated balance sheets of Welltower Inc. and subsidiaries as of December 31,
2017 and 2016, the related consolidated statements of comprehensive income, equity and cash flows for each of
the three years in the period ended December 31, 2017, and the related notes and financial statement schedules
listed in the index at Item 15(a) of the Company and our report dated February 28, 2018 expressed an unqualified
opinion thereon.

Basis for Opinion

The Company’s management

is responsible for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the
accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the Company’s internal control over financial reporting based on our audit. We are a
public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
company’s assets that could have a material effect on the financial statements.

107

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

/s/ ERNST & YOUNG LLP

Toledo, Ohio
February 28, 2018

108

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, 2018.

We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and
employees. The code is posted on the Internet at www.welltower.com/investors/governance. Any amendment to,
or waivers from, the code that relate to any officer or director of the Company will be promptly disclosed on the
Internet at www.welltower.com.

In addition,

the Board has adopted charters for the Audit, Compensation and Nominating/Corporate
Governance Committees. These charters are posted on the Internet at www.welltower.com/investors/governance.
Please refer to “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of
Operations — Executive Summary — Corporate Governance” in the Annual Report on Form 10-K for further
discussion of corporate governance.

The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and

our web address is included as an inactive textual reference only.

Item 11. Executive Compensation

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

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters

The information required by this Item is incorporated herein by reference to the information under the
headings “Security Ownership of Directors and Management and Certain Beneficial Owners” and “Equity
Compensation Plan Information” in our definitive proxy statement, which will be filed with the Commission
prior to May 1, 2018.

Item 13. Certain Relationships and Related Transactions and Director Independence

The information required by this Item is incorporated herein by reference to the information under the
headings “Corporate Governance — Independence and Meetings” and “Security Ownership of Directors and
Management and Certain Beneficial Owners — Certain Relationships and Related Transactions” in our definitive
proxy statement, which will be filed with the Commission prior to May 1, 2018.

Item 14. Principal Accounting Fees and Services

The information required by this Item is incorporated herein by reference to the information under the
heading “Ratification of the Appointment of the Independent Registered Public Accounting Firm” in our
definitive proxy statement, which will be filed with the Commission prior to May 1, 2018.

109

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, 2017 and 2016 . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income — Years ended December 31,

2017, 2016 and 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Equity — Years ended December 31, 2017, 2016 and

2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows — Years ended December 31, 2017, 2016 and
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notes to Consolidated Financial Statements

63
64

65

67

68
69

2. The following Financial Statement Schedules are included beginning on page 117:

III — Real Estate and Accumulated Depreciation
IV — Mortgage Loans on Real Estate

The financial statement schedule required by Item15(a) (Schedule II, Valuation and Qualifying Accounts) is

included in Item 8 of this Annual Report on Form 10-K.

(b) Exhibits:

The exhibits listed below are either filed with this Form 10-K or incorporated by reference in accordance

with Rule 12b-32 of the Securities Exchange Act of 1934.

3.1(a)

3.1(b)

3.1(c)

3.1(d)

3.1(e)

3.1(f)

3.1(g)

Second Restated Certificate of Incorporation of the Company (filed with the Commission as
Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000 (File No. 001-08923), and
incorporated herein by reference thereto).

Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed
with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000 (File
No. 001-08923), and incorporated herein by reference thereto).

Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed
with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed June 13, 2003 (File
No. 001-08923), and incorporated herein by reference thereto).

Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed
with the Commission as Exhibit 3.9 to the Company’s Form 10-Q filed August 9, 2007 (File
No. 001-08923), and incorporated herein by reference thereto).

Certificate of Change of Location of Registered Office and of Registered Agent of the Company
(filed with the Commission as Exhibit 3.1 to the Company’s Form 10-Q filed August 6, 2010 (File
No. 001-08923), and incorporated herein by reference thereto).

Certificate of Designation of 6.50% Series I Cumulative Convertible Perpetual Preferred Stock of
the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed
March 7, 2011 (File No. 001-08923), and incorporated herein by reference thereto).

Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed
with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed May 10, 2011 (File
No. 001-08923), and incorporated herein by reference thereto).

110

3.1(h)

3.1(i)

3.2

4.1(a)

4.1(b)

4.1(c)

4.1(d)

4.1(e)

4.1(f)

4.1(g)

4.1(h)

4.1(i)

Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed
with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed May 6, 2014 (File
No. 001-08923), and incorporated herein by reference thereto).

Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed
with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed September 30, 2015 (File
No. 001-08923), and incorporated herein by reference thereto).

Fifth Amended and Restated By-Laws of the Company (filed with the Commission as Exhibit 3.2
to the Company’s Form 10-Q filed October 30, 2015 (File No. 001-08923), and incorporated
herein by reference thereto).

Indenture, dated as of March 15, 2010, between the Company and The Bank of New York Mellon
Trust Company, N.A. (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed
March 15, 2010 (File No. 001-08923), and incorporated herein by reference thereto).

Supplemental Indenture No. 1, dated as of March 15, 2010, between the Company and The Bank
of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the
Company’s Form 8-K filed March 15, 2010 (File No. 001-08923), and incorporated herein by
reference thereto).

Amendment No. 1 to Supplemental Indenture No. 1, dated as of June 18, 2010, between the
Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as
Exhibit 4.3 to the Company’s Form 8-K filed June 18, 2010 (File No. 001-08923), and
incorporated herein by reference thereto).

Supplemental Indenture No. 2, dated as of April 7, 2010, between the Company and The Bank of
New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the
Company’s Form 8-K filed April 7, 2010 (File No. 001-08923), and incorporated herein by
reference thereto).

Amendment No. 1 to Supplemental Indenture No. 2, dated as of June 8, 2010, between the
Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as
Exhibit 4.3 to the Company’s Form 8-K filed June 8, 2010 (File No. 001-08923), and incorporated
herein by reference thereto).

Supplemental Indenture No. 3, dated as of September 10, 2010, between the Company and The
Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the
Company’s Form 8-K filed September 13, 2010 (File No. 001-08923), and incorporated herein by
reference thereto).

Supplemental Indenture No. 4, dated as of November 16, 2010, between the Company and The
Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the
Company’s Form 8-K filed November 16, 2010 (File No. 001-08923), and incorporated herein by
reference thereto).

Supplemental Indenture No. 5, dated as of March 14, 2011, between the Company and The Bank
of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the
Company’s Form 8-K filed March 14, 2011 (File No. 001-08923), and incorporated herein by
reference thereto).

Supplemental Indenture No. 6, dated as of April 3, 2012, between the Company and The Bank of
New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the
Company’s Form 8-K filed April 4, 2012 (File No. 001-08923), and incorporated herein by
reference thereto).

111

4.1(j)

4.1(k)

4.1(l)

4.1(m)

4.1(n)

4.1(o)

4.1(p)

4.2

4.3

4.4(a)

4.4(b)

Supplemental Indenture No. 7, dated as of December 6, 2012, between the Company and The Bank
of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the
Company’s Form 8-K filed December 11, 2012 (File No. 001-08923), and incorporated herein by
reference thereto).

Supplemental Indenture No. 8, dated as of October 7, 2013, between the Company and The Bank
of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the
Company’s Form 8-K filed October 9, 2013 (File No. 001-08923), and incorporated herein by
reference thereto).

Supplemental Indenture No. 9, dated as of November 20, 2013, between the Company and The
Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the
Company’s Form 8-K filed November 20, 2013 (File No. 001-08923), and incorporated herein by
reference thereto).

Supplemental Indenture No. 10, dated as of November 25, 2014, between the Company and The
Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the
Company’s Form 8-K filed November 25, 2014 (File No. 001-08923), and incorporated herein by
reference thereto).

Supplemental Indenture No. 11, dated as of May 26, 2015, between the Company and The Bank of
New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the
Company’s Form 8-K filed May 27, 2015 (File No. 001-08923), and incorporated herein by
reference thereto).

Amendment No. 1 to Supplemental Indenture No. 11, dated as of October 19, 2015, between the
Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as
Exhibit 4.3 to the Company’s Form 8-K filed October 20, 2015 (File No. 001-08923), and
incorporated herein by reference thereto).

Supplemental Indenture No. 12, dated as of March 1, 2016, between the Company and The Bank
of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the
Company’s Form 8-K filed March 3, 2016 (File No. 001-08923), and incorporated herein by
reference thereto).

Form of Indenture for Senior Subordinated Debt Securities (filed with the Commission as
Exhibit 4.9 to the Company’s Form S-3 (File No. 333-73936) filed November 21, 2001, and
incorporated herein by reference thereto).

Form of Indenture for Junior Subordinated Debt Securities (filed with the Commission as
Exhibit 4.10 to the Company’s Form S-3 (File No. 333-73936) filed November 21, 2001, and
incorporated herein by reference thereto).

Indenture, dated as of November 25, 2015, by and among HCN Canadian Holdings-1 LP, the
Company and BNY Trust Company of Canada (filed with the Commission as Exhibit 4.5(a) to the
Company’s Form 10-K filed February 18, 2016 (File No. 001-08923), and incorporated herein by
reference thereto).

First Supplemental Indenture, dated as of November 25, 2015, by and among HCN Canadian
Holdings-1 LP, the Company and BNY Trust Company of Canada (filed with the Commission as
Exhibit 4.5(b) to the Company’s Form 10-K filed February 18, 2016 (File No. 001-08923), and
incorporated herein by reference thereto).

10.1

Credit Agreement dated as of May 13, 2016 by and among the Company; the lenders listed therein;
KeyBank National Association, as administrative agent, L/C issuer and a swingline lender; Bank
of America, N.A. and JPMorgan Chase Bank, N.A., as co-syndication agents; Deutsche Bank
Securities Inc., as documentation agent; Merrill Lynch, Pierce, Fenner & Smith Incorporated,
JPMorgan Chase Bank, N.A., KeyBanc Capital Markets Inc. and Deutsche Bank Securities Inc., as

112

U.S. joint lead arrangers; Merrill Lynch, Pierce, Fenner & Smith Incorporated, JPMorgan Chase
Bank, N.A., KeyBanc Capital Markets Inc. and RBC Capital Markets, as Canadian joint lead
arrangers; and Merrill Lynch, Pierce, Fenner & Smith Incorporated and JPMorgan Chase Bank,
N.A., as joint book runners (filed with the Commission as Exhibit 10.1 to the Company’s
Form 8-K filed May 16, 2016 (File No. 001-08923), and incorporated herein by reference thereto).

Equity Purchase Agreement, dated as of February 28, 2011, by and among the Company, FC-GEN
Investment, LLC and FC-GEN Operations Investment, LLC (filed with the Commission as
Exhibit 10.1 to the Company’s Form 8-K filed February 28, 2011 (File No. 001-08923), and
incorporated herein by reference thereto).

Amended and Restated Health Care REIT, Inc. 2005 Long-Term Incentive Plan (filed with the
Commission as Appendix A to the Company’s Proxy Statement for the 2009 Annual Meeting of
Stockholders, filed March 25, 2009 (File No. 001-08923), and incorporated herein by reference
thereto).*

Form of Stock Option Agreement (with Dividend Equivalent Rights) for Executive Officers under
the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.9 to the Company’s
Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference
thereto).*

Form of Stock Option Agreement (without Dividend Equivalent Rights) for Executive Officers
under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as
Exhibit 10.2 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and
incorporated herein by reference thereto).*

Form of Restricted Stock Agreement for the Chief Executive Officer under the Amended and
Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.3 to the
Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by
reference thereto).*

Form of Restricted Stock Agreement for Executive Officers under the Amended and Restated 2005
Long-Term Incentive Plan (filed with the Commission as Exhibit 10.4 to the Company’s
Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference
thereto).*

Amended and Restated Employment Agreement, dated January 3, 2017, between the Company and
Thomas J. DeRosa (filed with the Commission as Exhibit 10.4(a) to the Company’s Form 10-K
filed February 22, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*

Performance-Based Restricted Stock Unit Grant Agreement, dated effective as of July 30, 2014,
between the Company and Thomas J. DeRosa (filed with the Commission as Exhibit 10.2 to the
Company’s Form 10-Q filed November 4, 2014 (File No. 001-08923), and incorporated herein by
reference thereto).*

Employment Contract, dated May 6, 2014, between HCN UK Management Services Limited and
John Goodey.*

Deed of Assignment and Amendment of Employment Contract, dated effective October 3, 2017,
between HCN UK Management Services Limited, John Goodey, and the Company.*

Third Amended and Restated Employment Agreement, dated June 16, 2017, between the Company
and Scott A. Estes (filed with the Commission as Exhibit 10.1 to the Company’s Form 10-Q filed
July 28, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*

Resignation Agreement, dated October 3, 2017, between the Company and Scott A. Estes (filed
with the Commission as Exhibit 10.1 to the Company’s Form 10-Q filed November 7, 2017 (File
No. 001-08923), and incorporated herein by reference thereto).*

113

10.2

10.3(a)

10.3(b)

10.3(c)

10.3(d)

10.3(e)

10.4(a)

10.4(b)

10.5(a)

10.5(b)

10.6

10.7

10.8

10.9

10.10

10.11

Amended and Restated Employment Agreement, dated December 29, 2008, between the Company
and Jeffrey H. Miller (filed with the Commission as Exhibit 10.8 to the Company’s Form 10-K
filed March 2, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*

Executive Retirement Agreement, dated as of February 16, 2017, by and between Jeffery H. Miller
and the Company (filed with the Commission as Exhibit 10.8 to the Company’s Form 10-K filed
February 22, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*

Amended and Restated Employment Agreement, dated June 16, 2017, by and between the
Company and Mercedes T. Kerr (filed with the Commission as Exhibit 10.2 to the Company’s
Form 10-Q filed July 28, 2017 (File No. 001-08923), and incorporated herein by reference
thereto).*

Form of Indemnification Agreement between the Company and each director, executive officer
and officer of the Company (filed with the Commission as Exhibit 10.1 to the Company’s
Form 8-K filed February 18, 2005 (File No. 001-08923), and incorporated herein by reference
thereto).*

10.12

Summary of Director Compensation.*

10.13(a)

10.13(b)

Health Care REIT, Inc. 2015-2017 Long-Term Incentive Program (filed with the Commission as
Exhibit 10.3 to the Company’s Form 10-Q filed August 4, 2015 (File No. 001-08923), and
incorporated herein by reference thereto).*

Form of Performance Restricted Stock Unit Award Agreement under the 2015-2017 Long-Term
Incentive Program (filed with the Commission as Exhibit 10.4 to the Company’s Form 10-Q filed
August 4, 2015 (File No. 001-08923), and incorporated herein by reference thereto).*

10.14(a) Welltower Inc. 2016 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.1 to the
Company’s Form 8-K filed May 10, 2016 (File No. 001-08923), and incorporated herein by
reference thereto).*

10.14(b)

10.14(c)

10.14(d)

Form of Restricted Stock Grant Notice for Executive Officers under the 2016 Long-Term
Incentive Plan.*

Form of Restricted Stock Grant Notice for Senior Vice Presidents under the 2016 Long-Term
Incentive Plan.*

Form of Deferred Stock Unit Grant Agreement for Non-Employee Directors under the 2016 Long-
Term Incentive Plan.*

10.15(a) Welltower

Inc. 2016-2018 Long-Term Incentive Program (filed with the Commission as
Exhibit 10.3 to the Company’s Form 10-Q filed August 2, 2016 (File No. 001-08923), and
incorporated herein by reference thereto).*

10.15(b)

Form of Performance Restricted Stock Unit Award Agreement under the 2016-2018 Long-Term
Incentive Program.*

10.16(a) Welltower

Inc. 2017-2019 Long-Term Incentive Program (filed with the Commission as
Exhibit 10.4 to the Company’s Form 10-Q filed May 5, 2017 (File No. 001-08923), and
incorporated herein by reference thereto).*

10.16(b)

Form of Award Notice under the 2017-2019 Long-Term Incentive Program.*

10.16(c) Welltower Inc. 2017-2019 Long-Term Incentive Program – Bridge 1 (filed with the Commission
as Exhibit 10.2 to the Company’s Form 10-Q filed November 7, 2017 (File No. 001-08923), and
incorporated herein by reference thereto).*

10.16(d)

Form of Award Notice under the 2017-2019 Long Term Incentive Program — Bridge 1.*

114

10.16(e) Welltower Inc. 2017-2019 Long-Term Incentive Program — Bridge 2 (filed with the Commission
as Exhibit 10.3 to the Company’s Form 10-Q filed November 7, 2017 (File No. 001-08923), and
incorporated herein by reference thereto).*

10.16(f)

Form of Award Notice under the 2017-2019 Long Term Incentive Program — Bridge 2.*

10.17(a) Welltower Inc. 2018-2020 Long-Term Incentive Program.*

10.17(b)

Form of Restricted Stock Unit Award Agreement under the 2018-2020 Long-Term Incentive
Program.*

12

21

23

24

31.1

31.2

32.1

32.2

Statement Regarding Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends (Unaudited).

Subsidiaries of the Company.

Consent of Ernst & Young LLP, independent registered public accounting firm.

Powers of Attorney.

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

Certification pursuant to 18 U.S.C. Section 1350 by Chief Executive Officer.

Certification pursuant to 18 U.S.C. Section 1350 by Chief Financial Officer.

101.INS

XBRL Instance Document**

101.SCH

XBRL Taxonomy Extension Schema Document**

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document**

101.LAB

XBRL Taxonomy Extension Label Linkbase Document**

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document**

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document**

* Management Contract or Compensatory Plan or Arrangement.

** Attached as Exhibit 101 to this Annual Report on Form 10-K are the following materials, formatted in XBRL (eXtensible Business
Reporting Language): (i) the Consolidated Balance Sheets at December 31, 2017 and 2016, (ii) the Consolidated Statements of
Comprehensive Income for the years ended December 31, 2017, 2016 and 2015, (iii) the Consolidated Statements of Equity for the years
ended December 31, 2017, 2016 and 2015, (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016
and 2015, (v) the Notes to Consolidated Financial Statements, (vi) Schedule III — Real Estate and Accumulated Depreciation and
(vii) Schedule IV — Mortgage Loans on Real Estate.

Item 16. Form 10-K Summary

Not applicable.

115

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant

has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: February 28, 2018

WELLTOWER INC.

By:

/s/ 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 28, 2018 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/ SERGIO D. RIVERA**
Sergio D. Rivera, Director

/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

/s/ R. SCOTT TRUMBULL**
R. Scott Trumbull, Director

/s/ GARY WHITELAW**
Gary Whitelaw, Director

/s/ THOMAS J. DEROSA**
Thomas J. DeRosa, Chief Executive
Officer and Director
(Principal Executive Officer)

/s/

JOHN A. GOODEY**

John A. Goodey, 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)

/s/
JUDITH C. PELHAM**
Judith C. Pelham, Director

**By:

/s/ THOMAS J. DEROSA
Thomas J. DeRosa, Attorney-in-Fact

116

Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2017

(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 . . . . . . . . .

Albertville, AL . . . . . . . .

Ames, IA . . . . . . . . . . . . .

Anderson, SC . . . . . . . . .

Ankeny, IA . . . . . . . . . . .

Apple Valley, CA . . . . . .

Asheboro, NC . . . . . . . . .

Asheville, NC . . . . . . . . .

Asheville, NC . . . . . . . . .

Atchison, KS . . . . . . . . . .

Atlanta, GA . . . . . . . . . . .

Aurora, OH . . . . . . . . . . .

Aurora, CO . . . . . . . . . . .

Austin, TX . . . . . . . . . . .

Avon, IN . . . . . . . . . . . . .

Avon, IN . . . . . . . . . . . . .

Avon Lake, OH . . . . . . . .

Baldwin City, KS . . . . . .

Bartlesville, OK . . . . . . .

Bellingham, WA . . . . . . .

Benbrook, TX . . . . . . . . .

Bethel Park, PA . . . . . . .

Beverly Hills, CA . . . . . .

Bexleyheath, UKI . . . . . .

Birmingham, UKG . . . . .

Birmingham, UKG . . . . .

Birmingham, UKG . . . . .

Birmingham, UKG . . . . .

Bloomington, IN . . . . . . .

Boardman, OH . . . . . . . .
Bowling Green, KY . . . .
Bracknell, UKJ . . . . . . . .

Bradenton, FL . . . . . . . . .

Bradenton, FL . . . . . . . . .

Braintree, MA . . . . . . . . .

Braintree, UKH . . . . . . . .

Brandon, MS . . . . . . . . . .

Brecksville, OH . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Brentwood, UKH . . . . . .

38,810

Brick, NJ . . . . . . . . . . . . .

Brick, NJ . . . . . . . . . . . . .

Brick, NJ . . . . . . . . . . . . .

Bridgewater, NJ . . . . . . .

Bridgewater, NJ . . . . . . .

Bridgewater, NJ . . . . . . .

—

—

—

—

—

—

950

990

1,770

880

170

330

710

1,129

480

290

204

280

140

2,058

1,760

2,440

880

1,830

900

790

190

100

1,500

1,550

1,700

6,000

3,750

1,647

1,591

1,462

1,184

670

1,200

3,800

4,329

252

480

170

—

1,220

990

8,537

1,290

1,170

690

1,850

1,730

1,800

$

20,987

$

361

$

8,187

19,930

16,112

6,203

8,870

6,290

10,270

16,639

5,032

3,489

1,955

5,610

14,914

14,148

28,172

9,520

14,470

19,444

10,421

4,810

1,380

19,861

13,553

16,007

13,385

10,807

14,853

19,092

9,056

10,085

17,423

12,800

26,700

12,167

3,298

9,953

7,157

13,296

10,241

19,353

45,869

25,247

17,372

17,125

3,050

48,201

31,810

1,089

1,601

2,134

280

—

419

—

168

165

—

351

19

1,143

106

—

1,216

—

—

5,822

48

—

321

2,206

—

—

1,407

1,594

1,998

1,016

1,089

—

—

149

—

—

—

1,290

1,285

—

—

5,304

916

1,405

5,548

48

1,406

1,347

$

21,348

$

1,990

9,276

21,531

18,246

6,477

8,870

6,709

10,270

16,801

5,197

3,489

2,306

5,629

16,035

14,254

28,172

10,731

14,470

19,444

16,243

4,858

1,380

20,175

15,759

16,007

13,385

11,851

16,288

20,937

9,931

11,059

17,423

12,800

26,849

12,167

3,298

9,953

8,447

14,581

10,241

19,353

50,348

26,163

18,758

22,671

3,098

49,571

33,157

739

4,048

7,621

1,613

1,835

3,278

534

4,199

2,019

1,777

983

316

11,518

2,943

10,233

5,451

3,127

1,762

2,666

279

795

4,945

2,484

3,837

1,079

970

1,160

1,469

718

782

1,156

3,877

6,423

108

1,915

1,450

8,414

1,281

2,011

1,746

1,335

4,357

3,605

3,534

1,546

8,989

5,419

950

990

1,770

880

176

330

710

1,129

486

290

204

280

140

2,080

1,760

2,440

885

1,830

900

790

190

100

1,507

1,550

1,700

6,000

4,113

1,806

1,745

1,603

1,299

670

1,200

3,800

4,329

252

480

170

—

1,220

990

9,362

1,290

1,188

692

1,850

1,766

1,800

117

2014

2014

2010

2002

2010

2010

2003

2016

2010

2003

1999

2003

2015

1997

2011

2006

1999

2010

2014

2011

2015

1996

2010

2011

2007

2014

2014

2015

2015

2015

2015

2015

2008

2008

2014

1996

2012

1997

2014

2010

2014

2016

2011

2010

2010

2004

2010

2011

1998 6565 Central Park Boulevard

1985 1250 East N 10th Street

2008 611 W County Line Rd South

1993 1200 Suffield St.

1999 151 Woodham Dr.

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.

2001 1301 N 4th St.

1999 1460 S Johnson Ferry Rd.

2002 505 S. Chillicothe Rd

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.

2000 321 Crimson Ave

1995 5420 S.E. Adams Blvd.

1996 4415 Columbine Dr.

1984 4242 Bryant Irvin Road

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

2017 Bagshot Road

1995 6101 Pointe W. Blvd.

2000 2800 60th Avenue West

1968 1102 Washington St.

2009 Meadow Park Tortoiseshell Way

1999 140 Castlewoods Blvd

2011 8757 Brecksville 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

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

Broadview Heights,

OH . . . . . . . . . . . . . . .

Brookfield, WI . . . . . . . .

—

—

Brooks, AB . . . . . . . . . . .

2,016

Burleson, TX . . . . . . . . .

Burlington, NC . . . . . . . .

Burlington, NC . . . . . . . .

Burlington, NJ . . . . . . . .

Burlington, NJ . . . . . . . .

Burnaby, BC . . . . . . . . . .

Calgary, AB . . . . . . . . . .

Calgary, AB . . . . . . . . . .

Camberley, UKJ . . . . . . .

Canton, MA . . . . . . . . . .

Canton, OH . . . . . . . . . . .

Cape Coral, FL . . . . . . . .

—

—

—

—

—

8,341

17,109

28,391

—

—

—

—

Cape Coral, FL . . . . . . . .

8,530

Cape May Court House,

NJ . . . . . . . . . . . . . . . .

Carmel, IN . . . . . . . . . . .

Carrollton, TX . . . . . . . .

Cary, NC . . . . . . . . . . . . .

Castleton, IN . . . . . . . . . .

Cedar Grove, NJ . . . . . . .

Centreville, MD . . . . . . .

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 . . . . . . .

Cobham, UKJ . . . . . . . . .

Colchester, CT . . . . . . . .

Colorado Springs, CO . . .

Colorado Springs, CO . . .

Colts Neck, NJ . . . . . . . .

Columbia, TN . . . . . . . . .

Columbia Heights,

MN . . . . . . . . . . . . . . .

Columbus, IN . . . . . . . . .

Concord, NC . . . . . . . . . .

Concord, NH . . . . . . . . . .

Congleton, UKD . . . . . . .

Conroe, TX . . . . . . . . . . .

Coppell, TX . . . . . . . . . .

Corby, UKF . . . . . . . . . .

Coventry, UKG . . . . . . . .

Crawfordsville, IN . . . . .

Danville, VA . . . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

920

1,300

376

670

280

460

1,700

1,170

7,623

2,341

4,569

10,580

820

300

530

760

1,440

1,700

2,010

1,500

920

2,850

600

354

230

440

320

1,040

1,320

85

860

2,300

155

330

520

520

2,838

9,808

980

4,280

1,730

780

341

825

610

550

1,760

2,036

980

1,550

1,228

1,962

720

410

12,400

12,830

4,951

13,985

4,297

5,467

12,554

19,205

13,844

42,768

70,199

41,548

8,201

2,098

3,281

18,868

17,002

19,491

19,549

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

24,991

4,860

62,168

25,493

14,733

2,295

14,175

3,190

3,921

43,179

5,120

7,771

8,386

5,144

13,830

17,239

3,954

14,793

12,830

5,474

15,631

5,004

5,467

13,055

19,377

15,306

47,307

77,613

41,548

8,464

2,098

3,281

18,868

18,777

19,491

19,549

5,336

15,137

27,757

14,843

3,429

22,974

17,881

14,039

12,450

18,127

1,395

6,835

32,465

7,557

2,292

15,733

5,369

18,563

27,406

5,404

62,168

26,186

15,802

2,295

14,338

3,190

3,976

43,813

5,615

7,771

8,486

5,144

15,166

18,665

4,676

2,393

—

563

1,646

707

—

501

172

2,267

4,787

7,897

—

263

—

—

—

1,775

—

—

986

—

20

241

783

140

306

—

1,499

—

—

172

589

6,130

—

—

—

1,910

3,362

544

—

693

1,371

—

163

—

55

634

691

—

100

—

1,526

1,426

722

920

1,300

415

670

280

460

1,700

1,170

8,429

2,588

5,051

10,580

820

300

530

760

1,440

1,700

2,010

1,500

920

2,850

600

354

230

440

320

1,040

1,320

85

860

2,300

155

330

520

520

3,112

10,756

980

4,280

1,730

1,082

341

825

610

550

1,760

2,232

980

1,550

1,228

2,151

720

410

118

5,769

1,435

483

2,588

1,917

2,142

2,809

3,560

1,372

4,026

6,544

559

6,353

1,066

1,396

2,778

1,746

1,421

663

2,570

1,427

5,210

2,822

1,428

4,081

3,203

1,372

4,320

1,733

798

1,461

8,132

1,410

1,159

1,339

1,524

1,631

3,164

1,252

3,730

1,184

3,108

1,165

2,359

676

1,693

7,855

460

1,736

1,084

108

1,113

1,695

1,853

2001

2012

2014

2011

2003

2003

2011

2011

2014

2014

2014

2016

2002

1998

2002

2012

2014

2015

2014

1998

2014

2011

2011

2002

2011

2011

2014

2003

2014

1996

2011

2010

1996

1998

2014

2006

2014

2013

2011

2015

2016

2010

1999

2011

2010

2003

2011

2014

2009

2012

2017

2015

2014

2003

1984 2801 E. Royalton Rd.

2013 1185 Davidson Road

2000 951 Cassils Road West

1988 300 Huguley Boulevard

2000 3619 S. Mebane St.

1997 3615 S. Mebane St.

1965 115 Sunset Road

1994 2305 Rancocas Road

2006 7195 Canada Way

1971 1729-90th Avenue SW

2001 500 Midpark Way SE

2017 Pembroke Broadway

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

2016 2645 East Trinity Mills Road

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

2013 Redhill Road

1986 59 Harrington Court

2008 1605 Elm Creek View

2016 2818 Grand Vista Circle

2002 3 Meridian Circle

1999 5011 Trotwood Ave.

2009 3807 Hart Boulevard

1998 2564 Foxpointe Dr.

1997 2452 Rock Hill Church Rd.

1994 239 Pleasant Street

1994 Rood Hill

2010 903 Longmire Road

2013 1530 East Sandy Lake Road

1997 25 Rockingham Road

2014 Banner Lane, Tile Hill

2013 517 Concord Road

1998 149 Executive Ct.

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

Danville, VA . . . . . . . . . .

Daphne, AL . . . . . . . . . .

Dedham, MA . . . . . . . . .

Denton, TX . . . . . . . . . . .

Derby, UKF . . . . . . . . . .

Dover, DE . . . . . . . . . . . .

Dresher, PA . . . . . . . . . .

Dundalk, MD . . . . . . . . .

Durham, NC . . . . . . . . . .

—

—

—

—

—

—

—

—

—

Eagan, MN . . . . . . . . . . .

16,741

East Brunswick, NJ . . . . .

East Norriton, PA . . . . . .

Eastbourne, UKJ . . . . . . .

Eden, NC . . . . . . . . . . . .

Edmond, OK . . . . . . . . . .

Edmond, OK . . . . . . . . . .

Edmond, OK . . . . . . . . . .

Elizabeth City, NC . . . . .

Emeryville, CA . . . . . . . .

Englewood, NJ . . . . . . . .

Englishtown, NJ . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

240

2,880

1,360

1,760

2,503

600

2,060

1,770

1,476

2,260

1,380

1,200

4,071

390

410

1,810

1,650

200

2,560

930

690

Epsom, UKJ . . . . . . . . . .

39,175

20,159

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 . . . . . . . .

Fort Ashby, WV . . . . . . .

Fort Collins, CO . . . . . . .

Fort Wayne, IN . . . . . . . .

Fort Worth, TX . . . . . . . .

Franconia, NH . . . . . . . .

Fredericksburg, VA . . . .

Fredericksburg, VA . . . .

Fremont, CA . . . . . . . . . .

Fresno, CA . . . . . . . . . . .

Gardner, KS . . . . . . . . . .

Gardnerville, NV . . . . . .

Gastonia, NC . . . . . . . . .

Gastonia, NC . . . . . . . . .

Gastonia, NC . . . . . . . . .

Georgetown, TX . . . . . . .

Gettysburg, PA . . . . . . . .

Gig Harbor, WA . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

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

330

3,680

170

450

360

1,000

1,130

3,400

2,500

200

1,143

470

310

400

200

590

8,436

8,670

9,830

8,305

9,058

22,266

40,236

32,047

10,659

31,643

34,229

28,129

24,438

4,877

8,388

14,849

25,167

2,760

57,491

4,514

12,520

34,803

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

19,566

58,608

8,232

13,615

11,320

20,000

23,202

25,300

35,800

2,800

10,831

6,129

3,096

5,029

2,100

8,913

1,560

15,947

—

384

—

100

—

141

1,148

784

2,196

4

835

1,604

2,755

—

—

1,921

—

2,011

641

26

1,489

5,346

70

—

1,541

112

4,856

1,071

50

751

1,802

500

—

—

—

200

266

100

—

—

356

—

—

5,086

70

1,200

—

3,203

118

91

1,075

—

22

120

—

118

253

240

2,880

1,360

1,760

2,503

600

2,120

1,770

1,476

2,260

1,380

1,264

4,465

390

410

1,810

1,650

200

2,560

930

769

22,106

50

1,400

1,460

570

620

2,850

780

2,232

2,150

410

200

1,500

300

385

1,800

1,800

1,582

320

330

3,680

170

450

360

1,000

1,130

3,456

2,500

200

1,164

470

310

400

200

590

8,436

9,054

9,830

8,405

9,058

22,407

41,324

32,831

12,855

31,647

35,064

29,670

26,799

4,877

8,388

16,770

25,167

4,771

58,132

4,540

13,930

38,201

4,020

5,476

15,581

9,231

10,685

56,246

11,590

6,291

34,753

4,462

1,800

14,500

2,978

13,217

15,096

8,514

32,018

4,497

19,922

58,608

8,232

18,701

11,390

21,200

23,202

28,447

35,918

2,891

11,885

6,129

3,118

5,149

2,100

9,031

1,583

16,177

119

822

1,366

4,418

1,538

529

4,104

7,471

5,984

11,283

1,772

5,769

5,414

2,323

1,931

1,321

1,530

621

2,152

5,204

936

2,718

1,014

225

2,689

6,266

1,402

5,212

9,157

658

501

2,191

1,866

976

3,132

1,262

3,234

2,866

1,276

4,045

1,797

3,512

3,505

2,408

3,614

2,119

6,879

2,045

9,360

8,599

172

8,717

2,390

1,283

2,022

1,127

1,844

3,863

2014

2012

2002

2010

2014

2011

2010

2011

1997

2015

2011

2010

2014

2003

2012

2014

2014

1998

2014

2011

2010

2016

2015

1999

2002

2012

1996

2011

2015

2014

2015

2001

1997

2010

2002

2010

2011

2011

2013

2003

2011

2015

2006

2010

2011

2005

2014

2005

2008

2015

1998

2003

2003

2003

1997

2011

2010

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.

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

2017 2709 East Danforth Road

1999 400 Hastings Lane

2010 1440 40th Street

1966 333 Grand Avenue

1997 49 Lasatta Ave

2014 450-458 Reigate Road

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.

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

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

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

Granbury, TX . . . . . . . . .

Grand Ledge, MI

. . . . . .

Granger, IN . . . . . . . . . . .

Grapevine, TX . . . . . . . .

Greeley, CO . . . . . . . . . .

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 . . . . . . . .

Hattiesburg, MS . . . . . . .

Haverford, PA . . . . . . . . .

Hermitage, TN . . . . . . . .

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 . . . . . . . .

47,374

Hockessin, DE . . . . . . . .

Holton, KS . . . . . . . . . . .

Howard, WI

. . . . . . . . . .

—

—

—

2,550

1,150

1,670

2,220

1,077

—

330

560

310

290

1,550

2,430

520

840

440

1,382

7,402

—

2,924

450

1,880

1,500

1,900

40

290

560

370

330

430

2,820

940

2,159

17,852

1,120

40

579

Howell, NJ . . . . . . . . . . .

8,835

1,066

Hutchinson, KS . . . . . . . .

Indianapolis, IN . . . . . . .

Indianapolis, IN . . . . . . .

Jackson, NJ . . . . . . . . . . .

Jacksonville, FL . . . . . . .

Jacksonville, FL . . . . . . .

Kansas City, KS . . . . . . .

Katy, TX . . . . . . . . . . . . .

Kenner, LA . . . . . . . . . . .

Kennett Square, PA . . . .

Kingston upon Thames,

UKI . . . . . . . . . . . . . . .

Kirkland, WA . . . . . . . . .

Kirkstall, UKE . . . . . . . .

Kokomo, IN . . . . . . . . . .

Lafayette, LA . . . . . . . . .

Lafayette, CO . . . . . . . . .

Lafayette, IN . . . . . . . . . .

Lakeway, TX . . . . . . . . .

Lakewood, CO . . . . . . . .

—

—

—

—

—

—

—

—

—

—

600

870

890

6,500

750

—

700

1,778

1,100

1,050

56,849

33,063

—

—

—

—

—

—

—

—

1,880

2,437

710

1,928

1,420

670

5,142

2,160

2,940

16,286

21,280

17,648

18,051

15,204

2,970

5,507

4,750

4,393

22,770

19,941

16,363

10,543

4,469

9,829

8,266

28,112

7,527

13,469

33,993

9,943

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

32,122

21,577

10,590

14,688

18,781

26,405

25,231

26,381

20,116

22,622

10,036

22,946

46,696

4,315

9,414

16,044

10,483

20,192

16,833

23,203

28,091

3,717

21,405

23,681

17,648

18,051

14,314

3,524

6,520

4,750

4,561

22,851

20,909

16,363

10,765

4,469

10,779

9,064

29,883

8,254

13,469

35,069

9,943

26,706

4,239

1,219

5,236

2,595

3,423

4,143

16,021

8,704

4,599

53,383

7,555

7,473

32,122

22,341

10,784

14,688

18,781

29,512

25,231

26,381

20,116

22,622

10,364

23,229

51,252

4,998

10,324

16,044

10,509

20,192

16,833

23,203

28,153

777

5,119

2,401

—

—

—

554

1,013

—

168

81

968

—

222

—

1,083

1,514

1,771

1,010

—

1,080

—

2,537

29

232

793

410

28

—

189

4,983

614

6,463

1,247

13

—

769

194

—

—

2,550

1,150

1,670

2,220

1,077

890

330

560

310

290

1,550

2,430

520

840

440

1,515

8,117

—

3,206

450

1,884

1,500

2,083

40

290

560

370

330

430

2,820

940

2,368

19,576

1,120

40

579

1,071

600

870

890

3,107

6,500

—

—

—

—

328

316

7,751

683

1,145

—

25

—

—

—

62

750

—

700

1,778

1,100

1,083

36,258

1,880

2,672

710

1,928

1,420

670

5,142

2,160

120

597

3,731

4,392

1,105

270

1,685

1,425

2,618

1,814

1,774

4,334

4,156

1,293

2,271

1,882

1,257

772

5,298

970

2,364

6,307

1,695

3,389

247

627

2,083

1,090

1,370

1,646

2,136

2,091

592

1,392

718

407

157

4,129

3,716

1,390

1,639

3,820

987

1,031

1,113

387

9,033

4,219

1,351

1,792

1,207

1,515

4,358

1,430

1,372

2,550

2,823

2012

2010

2010

2013

2017

2013

2003

2003

2004

2003

2010

2011

2011

2011

2001

2013

2014

2011

2013

2010

2010

2011

2013

2015

2003

2003

2003

2003

2003

2011

2002

2013

2016

2014

2015

2017

2010

2004

2014

2014

2012

2013

2013

2015

2017

1998

2010

2016

2003

2013

2014

2006

2015

2015

2007

2014

1996 916 East Highway 377

1999 4775 Village Dr

2009 6330 North Fir Rd

2014 4545 Merlot Drive

2009 5300 West 29th Street

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

2009 217 Methodist Hospital Blvd

2000 731 Old Buck Lane

2006 4131 Andrew Jackson Parkway

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

2016 2790 Elm Tree Hill

2007 100 Meridian Place

1997 2416 Brentwood

2014 1635 N Arlington Avenue

2014 5404 Georgetown Road

2001 2 Kathleen Drive

2014 5939 Roosevelt Boulevard

2014 4000 San Pablo Parkway

2015 8900 Parallel Parkway

2015 24802 Kingsland Boulevard

2000 1600 Joe Yenni Blvd

2008 301 Victoria Gardens Dr.

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

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

Lakewood Ranch, FL . . .

Lakewood Ranch, FL . . .

Lancaster, CA . . . . . . . . .

Lancaster, PA . . . . . . . . .

Langhorne, PA . . . . . . . .

LaPlata, MD . . . . . . . . . .

Las Vegas, NV . . . . . . . .

Lawrence, KS . . . . . . . . .

Lecanto, FL . . . . . . . . . . .

Lee, MA . . . . . . . . . . . . .

Leeds, UKE . . . . . . . . . .

Leicester, UKF . . . . . . . .

Lenoir, NC . . . . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

Lethbridge, AB . . . . . . . .

1,505

Lexana, KS . . . . . . . . . . .

Lexington, NC . . . . . . . .

Libertyville, IL . . . . . . . .

Lichfield, UKG . . . . . . . .

Lillington, NC . . . . . . . . .

Lillington, NC . . . . . . . . .

Lincoln, NE . . . . . . . . . .

Linwood, NJ . . . . . . . . . .

Litchfield, CT . . . . . . . . .

Lititz, PA . . . . . . . . . . . .

Little Neck, NY . . . . . . .

Livermore, CA . . . . . . . .

Livingston, NJ . . . . . . . .

London, UKI . . . . . . . . . .

Longview, TX . . . . . . . . .

Longwood, FL . . . . . . . .

Louisburg, KS . . . . . . . . .

Louisville, KY . . . . . . . .

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 . . . . . . . . . . .

Marion, IN . . . . . . . . . . .

Marlborough, UKK . . . .

Marlow, UKJ . . . . . . . . .

Martinsville, VA . . . . . . .

Marysville, WA . . . . . . .

Matawan, NJ . . . . . . . . . .

Matthews, NC . . . . . . . . .

McHenry, IL . . . . . . . . . .

McKinney, TX . . . . . . . .

McMurray, PA . . . . . . . .

Mechanicsburg, PA . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

650

1,000

700

1,680

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

1,200

3,350

4,100

8,000

8,158

610

1,260

280

490

680

1,369

1,100

340

960

1,605

900

750

1,460

660

1,300

1,050

720

990

2,677

9,619

349

620

1,830

560

1,576

1,570

1,440

1,350

6,714

22,388

15,295

14,039

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

13,836

38,461

24,996

44,424

17,545

5,520

6,445

4,320

10,010

3,378

15,668

19,786

16,114

29,033

27,249

22,624

7,446

32,104

5,251

12,125

13,633

12,750

9,190

6,822

42,134

—

4,780

20,618

4,738

—

7,389

15,805

16,650

8,702

22,388

15,907

14,039

25,052

19,534

23,420

8,716

6,900

19,061

14,518

26,769

4,389

3,040

1,918

4,915

40,024

33,254

17,579

16,451

13,902

22,980

28,882

13,836

39,720

24,996

44,424

17,545

5,520

6,445

4,355

12,778

3,422

17,182

21,530

16,114

29,117

27,249

23,213

7,976

32,117

5,251

13,679

13,633

13,886

10,014

7,482

42,134

—

5,683

20,784

4,738

—

7,389

19,699

16,650

1,988

—

625

—

171

466

—

—

—

926

1,470

2,654

641

419

148

1,015

—

3,063

—

—

95

1,056

10,991

—

1,265

—

—

—

—

—

35

2,768

44

1,646

1,744

—

84

—

589

530

13

—

1,566

—

1,136

824

918

—

—

903

166

—

—

—

3,894

—

650

1,000

712

1,680

1,350

700

580

250

200

290

2,165

3,355

190

1,342

480

200

6,500

1,515

470

500

390

859

1,258

1,200

3,357

4,100

8,000

8,158

610

1,260

280

490

680

1,502

1,100

340

960

1,605

900

750

1,460

660

1,312

1,050

720

990

2,936

9,619

349

620

1,830

560

1,576

1,570

1,440

1,350

121

1,240

3,234

4,279

364

4,717

3,653

3,967

1,245

2,541

7,947

1,007

3,516

1,739

348

120

2,011

7,376

2,350

1,598

1,402

2,789

4,341

4,068

359

7,308

2,008

667

579

1,576

1,172

240

4,594

824

2,161

3,877

1,484

5,262

1,826

3,813

2,899

1,792

1,516

5,000

868

1,264

1,083

622

1,970

—

2,072

3,552

1,920

—

1,666

3,093

2,888

2011

2012

2010

2015

2011

2011

2011

2012

2004

2002

2015

2012

2003

2014

2015

2002

2011

2015

2014

2014

2010

2010

2010

2015

2010

2014

2015

2015

2006

2011

2015

2005

2011

2013

2011

2014

2011

2012

2011

2003

2015

2006

2005

2015

2014

2014

2014

2013

2003

2003

2011

2003

2006

2009

2010

2011

2012 8230 Nature’s Way

2005 8220 Natures Way

1999 43051 15th St. West

2017 31 Millersville Road

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

2016 80 West Millport Road

2000 55-15 Little Neck Pkwy.

1974 35 Fenton Street

2017 369 E Mt Pleasant Avenue

2016 6 Victoria Drive

2007 311 E Hawkins Pkwy

2011 425 South Ronald Reagan

Boulevard

1996 202 Rogers St

1978 4604 Lowe Rd

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

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.

2011 240 Cedar Hill Dr

1971 4950 Wilson 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

Medicine Hat, AB . . . . . .

2,471

Melville, NY . . . . . . . . . .

Mendham, NJ . . . . . . . . .

Menomonee Falls, WI

. .

Mercerville, NJ . . . . . . . .

Meriden, CT . . . . . . . . . .

Merrillville, IN . . . . . . . .

Mesa, AZ . . . . . . . . . . . .

Middleburg Heights,

OH . . . . . . . . . . . . . . .

Middleton, WI

. . . . . . . .

Midland, MI . . . . . . . . . .

Mill Creek, WA . . . . . . .

Millville, NJ . . . . . . . . . .

Milton Keynes, UKJ . . . .

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 . . . . . .

Moulton, UKF . . . . . . . .

Mount Pleasant, SC . . . .

Nacogdoches, TX . . . . . .

Naperville, IL . . . . . . . . .

Nashville, TN . . . . . . . . .

Naugatuck, CT . . . . . . . .

Needham, MA . . . . . . . .

New Moston, UKD . . . . .

Newark, DE . . . . . . . . . .

Newcastle Under Lyme,

UKG . . . . . . . . . . . . . .

Newcastle-under-Lyme,

UKG . . . . . . . . . . . . . .

Norman, OK . . . . . . . . . .

Norman, OK . . . . . . . . . .

North Augusta, SC . . . . .

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 . . . . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

932

4,280

1,240

1,020

860

1,300

700

950

960

420

200

10,150

840

1,826

740

550

720

470

310

450

3,250

1,160

3,500

2,060

6,400

200

1,900

1,695

—

390

3,470

4,910

1,200

1,610

1,480

560

5,566

73,283

27,169

6,984

9,929

1,472

11,699

9,087

7,780

4,006

11,025

60,274

29,944

18,654

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

12,510

17,200

5,754

29,547

29,590

15,826

13,715

4,378

21,220

1,110

5,655

1,125

55

1,480

332

600

5,182

2,013

3,325

1,628

2,498

4,760

1,340

360

590

760

1,930

370

5,537

1,484

33,330

2,558

22,266

17,348

6,257

8,983

6,263

10,436

16,143

10,564

6,700

7,513

7,017

19,765

10,230

6,154

77,874

27,807

8,636

10,102

1,705

11,853

10,654

7,780

4,606

16,547

61,179

30,073

20,456

16,114

7,867

6,295

4,329

5,656

4,135

27,991

13,307

32,075

53,270

23,902

4,752

19,533

12,510

13,149

5,754

29,547

29,590

16,025

14,081

4,801

22,708

6,202

6,072

1,484

33,330

2,558

22,384

19,024

6,862

9,850

6,868

11,444

16,252

10,564

7,399

7,513

7,017

20,318

10,230

686

4,616

638

1,652

173

233

154

1,567

—

600

5,522

935

129

1,979

—

377

86

648

857

114

219

114

1,073

1,653

27

1,648

159

—

—

—

—

—

199

366

566

1,488

654

644

—

—

—

118

2,177

799

1,189

762

1,250

109

—

699

—

—

553

—

1,031

4,306

1,240

1,020

860

1,300

700

950

960

420

200

10,179

840

2,002

740

550

720

470

310

450

3,250

1,160

3,500

2,071

6,400

200

1,900

1,695

4,052

390

3,470

4,910

1,200

1,610

1,623

560

1,218

1,234

55

1,480

332

600

5,682

2,208

3,646

1,786

2,740

4,760

1,340

360

590

760

1,930

370

122

559

13,828

5,006

2,057

2,012

623

3,105

4,657

2,758

1,802

2,555

17,227

5,532

1,488

1,569

2,576

1,323

1,750

2,181

1,669

1,454

2,666

5,350

9,619

2,531

2,149

3,201

247

2,586

1,636

5,550

7,529

3,028

6,424

585

7,504

2014

2010

2011

2006

2011

2011

2007

1999

2004

2001

2010

2010

2011

2015

2014

2005

2011

2003

2003

2003

2015

2011

2011

2010

2012

1999

2010

2017

2013

2006

2011

2008

2011

2002

2013

2004

1999 65 Valleyview Drive SW

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 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

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.

1995 Northampton Lane North

1985 1200 Hospital Drive

2007 5902 North St

2001 504 North River Road

2007 15 Burton Hills Boulevard

1980 4 Hazel Avenue

1994 100 West St.

2010 90a Broadway

1998 200 E. Village Rd.

721

2013

2010 Hempstalls Lane

505

906

4,715

1,288

4,099

2,300

543

1,147

530

1,346

1,500

2,468

2,509

1,968

1,788

1,138

2,096

2014

1995

2012

1999

2011

2013

2014

2013

2014

2013

2014

2008

2004

2007

2007

2016

2010

1999 Silverdale Road

1995 1701 Alameda Dr.

1985 800 Canadian Trails Drive

1998 105 North Hills Dr.

1995 700 Townbank 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.

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

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 . . . . . . . .

Panama City Beach,

FL . . . . . . . . . . . . . . . .

Paola, KS . . . . . . . . . . . .

Paris, TX . . . . . . . . . . . . .

Paso Robles, CA . . . . . . .

Pella, IA . . . . . . . . . . . . .

Pennington, NJ . . . . . . . .

Pennsauken, NJ . . . . . . . .

Petoskey, MI . . . . . . . . . .

Philadelphia, PA . . . . . . .

Phillipsburg, NJ . . . . . . .

Phillipsburg, NJ . . . . . . .

Pinehurst, NC . . . . . . . . .

Piqua, OH . . . . . . . . . . . .

Piscataway, NJ . . . . . . . .

Pittsburgh, PA . . . . . . . . .

Plainview, NY . . . . . . . .

Plano, TX . . . . . . . . . . . .

Plattsmouth, NE . . . . . . .

Plymouth, MI . . . . . . . . .

Princeton, NJ . . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Prior Lake, MN . . . . . . . .

14,033

Puyallup, WA . . . . . . . . .

Raleigh, NC . . . . . . . . . .

Raleigh, NC . . . . . . . . . .

Raleigh, NC . . . . . . . . . .

Reading, PA . . . . . . . . . .

Red Bank, NJ . . . . . . . . .

Rehoboth Beach, DE . . .

Reidsville, NC . . . . . . . .

Reno, NV . . . . . . . . . . . .

Richmond, IN . . . . . . . . .

Richmond, VA . . . . . . . .

Ridgeland, MS . . . . . . . .

Rochdale, MA . . . . . . . . .

Rockville, CT . . . . . . . . .

Rockville Centre, NY . . .

Rockwall, TX . . . . . . . . .

Rocky Hill, CT . . . . . . . .

Rohnert Park, CA . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

380

950

80

2,150

50

130

160

3,730

4,500

410

1,300

215

225

100

1,430

180

870

900

190

490

1,770

870

1,380

900

860

2,930

800

300

290

204

3,100

1,750

3,990

1,840

250

1,490

1,730

1,870

1,150

7,598

3,530

2,580

980

1,050

960

170

1,060

700

—

520

—

1,500

4,290

2,220

1,090

6,500

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

6,402

5,610

5,452

8,630

6,716

27,620

10,780

14,452

10,433

21,175

8,114

2,690

1,885

33,501

8,572

11,969

20,152

5,650

19,990

30,888

29,849

20,776

88,870

59,589

16,837

19,906

21,275

24,248

3,830

11,440

14,222

12,000

7,675

7,100

4,835

20,310

17,650

6,710

18,700

8,769

15,998

5,020

24,107

1,836

3,096

6,630

27,416

36,400

2,910

25,988

1,380

13,275

2,400

15,791

5,620

10,957

6,402

5,667

5,452

9,323

6,805

28,462

10,959

14,452

13,969

21,413

8,215

3,174

1,885

33,501

8,687

13,054

20,712

5,650

20,320

32,521

29,862

21,216

88,870

59,589

16,837

20,046

21,840

32,938

4,687

12,045

14,615

11,750

8,102

6,410

5,016

21,178

17,650

8,210

20,769

—

—

—

—

136

126

40

340

7,295

70

677

—

—

—

—

1,300

—

—

57

—

693

89

937

179

—

3,536

238

101

484

—

—

115

1,085

560

—

330

1,713

13

445

—

—

—

140

565

8,708

857

605

393

—

427

—

181

868

—

1,500

2,116

380

950

80

2,150

50

130

160

3,730

4,500

410

1,300

215

225

100

1,430

180

870

900

190

490

1,770

870

1,476

900

860

2,930

800

300

290

204

3,100

1,750

3,990

1,840

250

1,490

1,810

1,870

1,156

7,598

3,530

2,580

980

1,050

977

170

1,060

700

250

520

690

1,500

4,290

2,220

1,090

6,546

123

1,896

980

1,315

1,400

119

186

370

6,190

7,345

184

1,464

769

4,813

1,059

3,172

1,668

2,421

981

320

4,057

3,811

955

4,740

2,340

2,750

2,765

4,046

1,546

1,320

979

477

3,096

2,355

968

1,218

3,862

5,525

1,666

5,246

1,959

8,253

2,497

3,736

3,593

5,180

1,935

4,148

813

1,624

2,966

841

1,248

3,656

1,131

2,889

7,032

2010

2015

2007

2015

2015

2015

2015

2008

2010

2015

2016

1996

2005

2005

2010

2006

2008

2011

2015

2005

2002

2012

2011

2011

2011

2011

2011

2011

2003

1997

2013

2005

2011

2016

2010

2010

2011

2015

2010

2008

2012

2012

2011

2011

2010

2002

2004

2016

2013

2003

2013

2011

2011

2012

2003

2005

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.

2005 6012 Magnolia Beach Road

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

1952 1526 Lombard Street

1992 290 Red School Lane

1905 843 Wilbur Avenue

1998 17 Regional Dr.

1997 1744 W. High St.

2017 10 Sterling Drive

1998 100 Knoedler Rd.

1963 150 Sunnyside Blvd

2016 3325 W Plano Parkway

1999 1913 E. Highway 34

1972 14707 Northville Rd

2001 155 Raymond Road

2003 4685 Park Nicollet Avenue

1985 123 Fourth Ave. NW

2017 4030 Cardinal at North Hills St

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

2015 400 Industries Road

1989 2220 Edward Holland Drive

1997 410 Orchard Park

1994 111 Huntoon Memorial Highway

1960 1253 Hartford Turnpike

2002 260 Maple Ave

2014 720 E Ralph Hall Parkway

1996 60 Cold Spring Rd.

1986 4855 Snyder 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

Romeoville, IL . . . . . . . .

Roseville, MN . . . . . . . . .

Roswell, GA . . . . . . . . . .

Rugeley, UKG . . . . . . . .

Ruston, LA . . . . . . . . . . .

Sacramento, CA . . . . . . .

Salem, OR . . . . . . . . . . . .

Salisbury, NC . . . . . . . . .

San Angelo, TX . . . . . . .

San Angelo, 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 . . . . . . . . . . .

27,180

Selbyville, DE . . . . . . . . .

Seven Fields, PA . . . . . . .

Severna Park, MD . . . . . .

Shawnee, OK . . . . . . . . .

Shelbyville, KY . . . . . . .

Sherman, TX . . . . . . . . . .

Shrewsbury, NJ . . . . . . . .

Silvis, IL . . . . . . . . . . . . .

Sittingbourne, UKJ . . . . .

Smithfield, NC . . . . . . . .

Smithfield, NC . . . . . . . .

Sonoma, CA . . . . . . . . . .

South Bend, IN . . . . . . . .

South Boston, MA . . . . .

Southampton, UKJ . . . . .

Southbury, CT . . . . . . . .

Springfield, IL . . . . . . . .

Springfield, IL . . . . . . . .

St. Louis, MO . . . . . . . . .

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 . . . . . . . . . . .

Sunninghill, UKJ . . . . . .

Superior, WI . . . . . . . . . .

Swanton, OH . . . . . . . . .

Terre Haute, IN . . . . . . . .

Texarkana, TX . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

1,895

2,140

1,107

1,900

710

940

449

370

260

1,050

—

3,700

—

980

910

475

3,360

440

320

5,190

10,670

750

484

2,120

80

630

700

2,120

880

1,357

290

360

1,100

670

385

1,612

1,860

—

990

1,890

2,100

2,131

1,820

150

310

140

80

2,280

790

340

3,080

12,338

1,020

330

1,370

192

—

24,679

9,627

10,262

9,790

14,781

5,171

5,697

8,800

24,689

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

5,221

38,116

16,420

6,539

5,680

8,216

18,400

17,770

2,002

16,803

23,613

10,100

13,378

12,390

33,019

8,739

3,238

1,447

6,183

3,627

1,400

5,983

14,508

16,313

14,152

44,799

13,735

6,370

18,016

1,403

—

24,746

10,706

11,253

9,790

15,020

5,172

5,865

9,225

25,741

17,303

14,987

23,848

30,787

19,654

3,175

19,140

17,609

12,144

9,905

38,155

26,308

4,722

32,081

1,400

4,500

5,221

39,188

16,559

7,170

5,680

8,216

20,090

17,770

7,220

16,803

24,571

9,332

14,462

12,390

33,097

8,739

3,551

1,713

6,191

3,627

1,400

6,288

15,910

16,313

14,152

44,799

19,894

6,370

18,016

1,403

—

67

1,086

1,175

—

251

—

168

425

1,052

—

687

1,845

92

—

—

—

—

—

564

894

415

60

808

—

630

—

1,080

139

763

—

—

1,700

—

5,218

—

958

—

1,084

—

78

—

489

266

8

—

—

397

1,478

—

—

—

6,159

—

—

—

1,895

2,140

1,114

2,083

710

952

449

370

260

1,050

—

3,700

—

980

910

475

3,360

440

320

5,199

10,700

769

484

2,120

80

630

700

2,128

880

1,488

290

360

1,109

670

385

1,612

1,860

768

990

1,890

2,100

2,131

1,996

150

310

140

80

2,372

866

340

3,080

12,338

1,020

330

1,370

192

124

—

1,391

7,942

1,387

1,842

3,718

2,585

2,284

3,122

2,358

7,106

3,490

5,472

5,551

2,832

1,843

3,179

1,533

1,059

3,373

11,465

4,848

2,364

5,756

804

1,474

1,555

7,156

3,247

573

2,228

715

6,758

1,604

3,652

114

4,300

1,682

1,292

2,354

1,843

294

303

710

2,365

1,416

806

1,821

1,123

1,573

2,633

600

2,361

2,392

1,408

781

2006

2015

1997

2013

2011

2010

1999

2003

2004

2014

2007

2008

2008

2011

2012

1996

2011

2014

2014

2010

2010

2010

1999

2011

1996

2005

2005

2010

2010

2014

2003

2014

2005

2014

1995

2017

2011

2013

2014

2010

2015

2014

2014

2003

2003

2003

1995

2010

2015

2014

2011

2014

2009

2004

2015

1996

1900 Grand Haven Circle

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.

1997 2201 Statesville Blvd.

1997 2695 Valleyview Blvd.

1999 6101 Grand Court Road

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

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

1961 804 E. Seventh St.

2013 Botley Road, Park Gate

2001 655 Main St

2010 701 North Walnut Street

2013 3089 Old Jacksonville Road

1963 6543 Chippewa St

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

2017 Bagshot Road

2010 1915 North 34th Street

1950 401 W. Airport Hwy.

2015 395 8th Avenue

1996 4204 Moores 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

The Villages, FL . . . . . . .

Thomasville, GA . . . . . .

Tomball, TX . . . . . . . . . .

Toms River, NJ . . . . . . . .

Tonganoxie, KS . . . . . . .

Topeka, KS . . . . . . . . . . .

Towson, MD . . . . . . . . . .

Troy, OH . . . . . . . . . . . . .

Troy, OH . . . . . . . . . . . . .

Trumbull, CT . . . . . . . . .

Tulsa, OK . . . . . . . . . . . .

Tulsa, OK . . . . . . . . . . . .

Tulsa, OK . . . . . . . . . . . .

Tulsa, OK . . . . . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Tulsa, OK . . . . . . . . . . . .

13,000

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 . . . . . . . .

Virginia Beach, VA . . . .

Voorhees, NJ . . . . . . . . .

Voorhees, NJ . . . . . . . . .

Voorhees, NJ . . . . . . . . .

Voorhees, NJ . . . . . . . . .

Wabash, IN . . . . . . . . . . .

Waconia, MN . . . . . . . . .

Wake Forest, NC . . . . . .

Wall, NJ . . . . . . . . . . . . .

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 . . . . . . . . .

Weston Super Mare,

UKK . . . . . . . . . . . . . .

White Lake, MI . . . . . . . .

Wichita, KS . . . . . . . . . .

Wichita, KS . . . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Wichita, KS . . . . . . . . . .

13,001

1,035

530

1,050

1,610

310

260

1,180

200

470

4,440

3,003

1,390

1,320

1,100

1,752

890

650

1,900

900

4,000

2,330

112

108

1,820

1,150

263

297

1,540

1,800

1,900

3,100

3,700

670

890

200

1,650

1,184

40

875

2,000

1,920

1,870

650

660

1,480

620

1,350

2,280

740

890

2,270

2,517

2,920

1,400

860

627

7,446

12,520

13,300

34,627

3,690

12,712

13,280

2,000

16,730

43,384

6,025

7,110

10,087

27,007

28,421

9,410

5,268

28,195

17,100

18,000

15,407

2,558

2,962

19,042

10,674

3,187

3,263

22,593

37,299

26,040

25,950

24,312

14,588

14,726

3,003

25,350

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

7,054

20,179

11,000

8,873

19,748

7,446

12,520

14,140

35,423

3,762

12,712

13,475

6,254

16,730

43,384

6,045

8,212

10,087

27,007

28,421

9,410

5,268

28,195

18,751

20,315

15,717

2,558

2,962

19,311

10,674

3,187

3,263

22,593

37,970

26,934

25,976

25,796

14,588

19,221

4,745

27,807

9,389

2,565

12,014

31,824

25,947

32,953

5,763

5,261

6,277

17,828

29,497

10,874

11,392

15,964

17,086

7,736

20,271

11,000

8,873

19,752

—

—

840

865

72

—

195

4,254

—

—

20

1,102

—

—

—

—

—

—

1,651

2,344

310

—

—

270

—

—

—

—

671

894

26

1,631

—

4,495

1,742

2,499

942

55

1,701

1,014

1,138

1,075

—

—

696

38

260

187

3,105

—

497

925

92

—

—

—

1,035

530

1,050

1,679

310

260

1,180

200

470

4,440

3,003

1,390

1,320

1,100

1,752

890

650

1,900

900

4,030

2,330

112

108

1,821

1,150

263

297

1,540

1,800

1,900

3,100

3,847

670

890

200

1,692

1,299

40

875

2,000

1,991

1,870

650

660

1,623

620

1,350

2,280

740

890

2,270

2,760

2,920

1,400

860

629

125

878

1,757

2,438

6,545

234

1,892

2,589

2,009

6,074

7,703

3,432

1,708

1,529

597

407

44

1,509

1,968

6,462

6,950

4,110

1,146

1,309

4,822

2,415

1,398

1,441

1,996

7,042

5,017

3,724

3,228

1,381

3,073

2,197

4,554

702

149

5,255

5,165

4,363

4,544

1,521

1,519

538

2,837

5,462

2,249

9,171

1,499

3,481

905

3,951

4,399

1,527

2,810

2013

2011

2011

2010

2015

2012

2011

1997

2004

2011

2006

2010

2011

2015

2017

2017

2006

2013

2005

2005

2010

2001

2001

2010

2008

2001

2001

2014

2011

2011

2011

2012

2014

2011

1998

2011

2015

2015

2002

2011

2011

2012

2007

2006

2015

2010

2011

2011

1998

2014

2011

2013

2010

2006

2011

2012

2014 2450 Parr Drive

2006 423 Covington Avenue

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

1992 3219 S. 79th E. Ave.

1998 7220 S. Yale Ave.

2012 7902 South Mingo Road East

2017 18001 East 51st Street

2014 701 W 71st Street South

2009 7210 South Yale Avenue

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.

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

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

2011 141b Milton Road

2000 935 Union Lake Rd

1997 505 North Maize Road

2012 10604 E 13th Street North

2009 2050 North Webb 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

Wichita, KS . . . . . . . . . .

Wichita, KS . . . . . . . . . .

Williamstown, KY . . . . .

Wilmington, DE . . . . . . .

Wilmington, NC . . . . . . .

Wilmington, NC . . . . . . .

Windsor, CT . . . . . . . . . .

Windsor, CT . . . . . . . . . .

Winston-Salem, NC . . . .

Winter Garden, FL . . . . .

Witherwack, UKC . . . . .

Wolverhampton, UKG . .

Woodbury, MN . . . . . . . .

Worcester, MA . . . . . . . .

Worcester, MA . . . . . . . .

Wyncote, PA . . . . . . . . . .

York, UKE . . . . . . . . . . .

Youngsville, NC . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

260

900

70

800

210

400

2,250

1,800

360

1,110

944

1,573

1,317

3,500

2,300

2,700

2,961

380

2,240

10,134

6,430

9,494

2,991

15,356

8,539

600

2,514

7,937

6,915

6,678

20,935

54,099

9,060

22,244

8,266

10,689

114

—

—

114

—

—

1,855

970

459

—

759

797

—

—

6,000

274

1,085

—

260

900

70

800

210

400

2,250

1,800

360

1,110

1,035

1,725

1,317

3,500

2,300

2,700

3,247

380

2,354

10,134

6,430

9,608

2,991

15,356

10,394

1,570

2,973

7,937

7,583

7,323

20,935

54,099

15,060

22,518

9,064

10,689

137

1,646

2,352

1,906

1,489

1,401

2,104

470

1,199

1,145

888

865

454

11,586

3,152

4,282

758

950

Zionsville, IN . . . . . . . . .

$

— $

1,610

$

22,400

$

1,691

$

1,610

$

24,091

$

4,523

Triple-net total

. . . . . . .

$343,361

$818,863

$7,759,508

$382,344

$847,780

$8,112,937

$1,380,023

2015

2011

2005

2011

1999

2014

2011

2011

2003

2012

2013

2013

2017

2007

2008

2011

2014

2014

2010

1992 900 N Bayshore Dr

2012 10600 E 13th Street North

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

2015 2195 Century Avenue South

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

126

Welltower Inc.

Schedule III
Real Estate and Accumulated Depreciation
December 31, 2017

(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 . . . . . . . . . . .

$

— $

— $

Adderbury, UKJ . . . . . . .

Agawam, MA . . . . . . . . .

Albuquerque, NM . . . . . .

Alhambra, CA . . . . . . . . .

Altrincham, UKD . . . . . .

Amherstview, ON . . . . . .

Arlington, VA . . . . . . . . .

Arlington, TX . . . . . . . . .

Arnprior, ON . . . . . . . . . .

Atlanta, GA . . . . . . . . . . .

Austin, TX . . . . . . . . . . .

Austin, TX . . . . . . . . . . .

Avon, CT . . . . . . . . . . . .

Azusa, CA . . . . . . . . . . . .

Bagshot, UKJ . . . . . . . . .

Banstead, UKJ . . . . . . . . .

Basingstoke, UKJ . . . . . .

Basking Ridge, NJ . . . . .

Bassett, UKJ . . . . . . . . . .

Bath, UKK . . . . . . . . . . .

—

—

—

—

—

583

—

20,668

303

—

—

—

—

—

—

—

—

—

—

—

Baton Rouge, LA . . . . . .

9,017

Beaconsfield, UKJ . . . . .

Beaconsfield, QC . . . . . .

Bedford, NH . . . . . . . . . .

Bee Cave, TX . . . . . . . . .

Bellevue, WA . . . . . . . . .

Belmont, CA . . . . . . . . . .

Belmont, CA . . . . . . . . . .

—

—

—

—

—

—

—

Berkeley, CA . . . . . . . . .

12,433

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 . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

2,274

880

1,270

600

4,244

473

8,385

1,660

788

2,100

1,560

4,200

1,550

570

4,960

6,695

3,420

2,356

4,874

2,855

790

5,566

1,149

2,527

1,820

2,800

3,000

—

3,050

—

—

—

1,619

4

1,480

2,807

2,077

2,000

5,367

1,350

2,994

5,527

—

45,677

9,911

—

10,256

2,100

1,500

31,346

13,222

10,044

20,837

6,305

25,187

4,446

31,198

37,395

6,283

20,603

21,413

74,850

30,571

3,141

29,881

55,113

18,853

37,710

32,304

12,485

29,436

50,952

17,484

28,748

21,084

19,004

23,526

35,300

32,677

45,309

45

212

21,381

21,321

13,014

11,313

8,902

35,662

41,937

13,439

27,458

42,547

41,290

60,021

14,616

23,496

$

1,484

$

14

$

—

671

1,824

9,025

3,246

770

15,714

3,110

961

1,167

185

510

3,806

7,769

3,750

7,232

2,220

1,359

5,617

—

612

5,591

2,304

2,105

708

2,072

2,254

1,837

3,757

593

489

871

753

2,252

1,500

1,449

1,398

767

5,041

4,808

2,065

5,311

862

5,524

1,391

503

2,274

959

1,276

600

4,654

537

8,385

1,709

880

2,154

1,560

4,200

1,588

570

5,445

7,342

3,750

2,395

5,358

2,855

842

6,115

1,335

2,548

1,820

2,816

3,000

37

3,050

3

—

—

1,624

30

1,623

3,078

2,306

2,008

5,900

1,361

3,022

6,061

56

11,107

2,109

1,705

127

32,816

13,222

10,636

22,655

15,330

28,023

5,152

46,912

40,456

7,152

21,717

21,598

75,361

34,339

10,910

33,146

61,698

20,742

39,031

37,436

12,485

29,996

55,993

19,602

30,832

21,792

21,060

25,780

37,100

36,434

45,900

534

1,083

22,130

23,547

14,371

12,491

10,071

36,421

46,445

18,237

29,495

47,324

42,097

64,694

15,998

23,794

$

5,154

280

2,802

5,732

1,776

5,255

717

—

9,983

1,435

3,478

2,408

6,004

9,420

3,003

6,692

10,975

2,112

6,952

7,099

237

5,264

9,757

4,833

4,927

1,755

4,586

6,244

6,940

3,323

8,359

67

128

2,501

4,629

423

335

2,907

6,477

8,293

1,626

6,557

6,943

7,828

8,646

4,149

3,164

2013

2015

2011

2010

2011

2012

2015

2017

2012

2013

2014

2014

2015

2011

1998

2012

2012

2014

2013

2013

2015

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

2000 10 Devon Drive

2017 Banbury Road

1996 153 Cardinal Drive

1984 500 Paisano St NE

1923 1118 N. Stoneman Ave.

2009 295 Hale Road

1974 4567 Bath Road

1992 900 N Taylor Street

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

2017 Clarks Way, Rush Hill

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

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

Brockville, ON . . . . . . . .

4,808

Brookfield, CT . . . . . . . .

Broomfield, CO . . . . . . .

—

—

Brossard, QC . . . . . . . . . .

11,807

Buckingham, UKJ . . . . . .

Buffalo Grove, IL . . . . . .

Burbank, CA . . . . . . . . . .

—

—

—

Burbank, CA . . . . . . . . . .

19,593

Burleson, TX . . . . . . . . . .

Burlingame, CA . . . . . . .

—

—

Burlington, ON . . . . . . . .

13,151

Burlington, MA . . . . . . . .

Burlington, MA . . . . . . . .

Calabasas, CA . . . . . . . . .

Calgary, AB . . . . . . . . . .

Calgary, AB . . . . . . . . . .

Calgary, AB . . . . . . . . . .

Calgary, AB . . . . . . . . . .

Calgary, AB . . . . . . . . . .

Camberley, UKJ . . . . . . .

Camberley, UKJ . . . . . . .

Cardiff, UKL . . . . . . . . . .

—

—

—

12,898

14,751

11,678

23,927

26,364

—

—

—

Cardiff by the Sea, CA . .

37,915

Carol Stream, IL . . . . . . .

Carrollton, TX . . . . . . . . .

Cary, NC . . . . . . . . . . . . .

Cedar Park, TX . . . . . . . .

Centerville, MA . . . . . . .

Cerritos, CA . . . . . . . . . .

—

—

—

—

—

—

Chatham, ON . . . . . . . . .

1,253

Chelmsford, MA . . . . . . .

Chertsey, UKJ . . . . . . . . .

Chesterfield, MO . . . . . .

Chorleywood, UKH . . . .

Chula Vista, CA . . . . . . .
Church Crookham,

UKJ . . . . . . . . . . . . . . .

Cincinnati, OH . . . . . . . .

Claremont, CA . . . . . . . .

Cohasset, MA . . . . . . . . .

Colleyville, TX . . . . . . . .

Colorado Springs, CO . . .

Concord, NH . . . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

Coquitlam, BC . . . . . . . .

10,477

Costa Mesa, CA . . . . . . .

Crystal Lake, IL . . . . . . .

Dallas, TX . . . . . . . . . . . .

Danvers, MA . . . . . . . . . .

Danvers, MA . . . . . . . . . .

Davenport, IA . . . . . . . . .

Decatur, GA . . . . . . . . . .

—

—

—

—

—

—

—

Denver, CO . . . . . . . . . . .

12,033

Denver, CO . . . . . . . . . . .

Dix Hills, NY . . . . . . . . .

Dollard-Des-Ormeaux,

QC . . . . . . . . . . . . . . . .

—

—

—

484

2,250

4,140

5,499

2,979

2,850

4,940

3,610

3,150

—

1,309

2,443

2,750

—

2,252

2,793

3,122

3,431

2,385

2,654

731

3,191

5,880

1,730

4,280

740

1,750

1,300

—

1,098

1,589

—

1,857

5,636

7,445

30,180

44,547

31,854

13,880

49,129

43,466

50,817

10,437

62,786

19,311

34,354

57,488

6,438

37,415

41,179

38,971

28,983

36,776

5,736

3,164

12,566

64,711

55,048

31,444

45,240

15,664

27,357

27,494

12,462

26,432

105

48,366

43,191

1,040

2,422

11,669

3,168

1,764

1,272

1,324

3,284

626

—

2,496

1,350

3,167

977

4,862

4,956

4,817

4,572

4,457

19,242

—

1,786

1,925

1,723

941

635

759

1,113

5,633

2,960

1,214

—

1,299

6,324

543

2,262

10,135

5,912

3,267

2,850

4,940

3,610

3,150

—

1,453

2,522

2,750

—

2,492

3,098

3,464

3,810

2,642

7,914

731

3,499

5,880

1,730

4,280

740

1,750

1,324

—

1,290

1,651

—

1,917

6,184

8,426

32,590

50,221

34,609

15,356

50,401

44,790

54,101

11,063

62,786

21,663

35,626

60,655

7,415

42,036

45,831

43,446

33,176

40,978

19,717

3,164

14,043

66,636

56,771

32,385

45,875

16,422

28,446

33,127

15,230

27,585

105

49,605

48,967

1,034

8,207

14,474

4,674

2,047

9,134

9,465

4,187

1,049

980

4,163

6,963

3,673

5,256

8,321

8,857

8,314

5,378

5,167

624

24

3,315

14,057

11,184

3,353

7,154

649

6,327

3,641

2,947

2,988

—

8,273

8,985

2015

2011

2013

2015

2014

2012

2012

2016

2012

2016

2013

2013

2016

2013

2013

2013

2013

2013

2015

2014

2014

2013

2011

2012

2013

2013

2016

2011

2016

2015

2015

2015

2013

2013

1996 1026 Bridlewood Drive

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

2014 621 Old Highway 1187

2015 1818 Trousdale Avenue

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

2017 Fernhill Road

2007 127 Cyncoed Road

2009 3535 Manchester Avenue

2001 545 Belmont Lane

2010 2105 North Josey 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

1900 Bittams Lane

2001 1880 Clarkson Road

2007 High View, Rickmansworth

Road

2,072

22,163

863

2,128

22,970

4,259

2013

2003 3302 Bonita Road

2,591

2,060

2,430

2,485

1,050

800

720

3,047

2,050

875

6,330

1,120

2,203

1,403

1,946

1,450

2,910

3,808

14,215

109,388

9,928

26,147

17,082

14,756

21,164

24,567

19,969

12,461

114,794

14,557

28,761

35,893

26,575

19,389

35,838

39,014

1,957

14,431

2,855

2,078

2,483

2,487

1,050

1,017

779

3,375

2,050

893

6,330

1,145

2,257

1,480

1,946

1,470

2,962

3,824

15,783

122,485

11,249

27,903

17,122

16,341

21,893

27,507

21,289

13,701

2,283

22,924

2,373

5,172

459

3,010

4,812

6,467

5,139

3,023

115,993

10,306

15,576

28,983

39,448

28,656

22,489

37,246

40,428

3,873

3,667

9,192

5,798

4,114

8,399

7,473

2014

2007

2013

2013

2016

2013

2011

2013

2011

2013

2015

2011

2015

2006

2013

2012

2012

2013

2014 Bourley Road

2010 5445 Kenwood Road

2001 2053 North Towne Avenue

1998 125 King Street (Rt 3A)

2013 8100 Precinct Line Road

2001 2105 University Park

Boulevard

2001 300 Pleasant Street

1990 1142 Dufferin Street

1965 350 West Bay St

2001 751 E Terra Cotta 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

2003 337 Deer Park Road

2,222

16,149

4,757

2013

2008 4377 St. Jean Blvd

1,832

13,115

1,375

1,758

40

1,801

789

3,268

1,320

1,259

1,199

1,045

276

3,632

2,080

3,119

1,459

1,430

1,982

128

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

Dresher, PA . . . . . . . . . . .

6,966

Dublin, OH . . . . . . . . . . .

Dublin, OH . . . . . . . . . . .

East Haven, CT . . . . . . . .

East Meadow, NY . . . . . .

East Setauket, NY . . . . . .

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 . . . . . . . . .

—

—

—

—

—

—

—

—

—

—

9,439

12,242

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Gilbert, AZ . . . . . . . . . . .

15,747

Gilroy, CA . . . . . . . . . . .

Glen Cove, NY . . . . . . . .

Glenview, IL . . . . . . . . . .

—

—

—

Golden Valley, MN . . . . .

19,022

Granbury, TX . . . . . . . . .

Grimsby, ON . . . . . . . . . .

Grosse Pointe Woods,

MI . . . . . . . . . . . . . . . .

Grosse Pointe Woods,

MI . . . . . . . . . . . . . . . .

—

—

—

—

Guelph, ON . . . . . . . . . . .

4,486

Guildford, UKJ . . . . . . . .

Gurnee, IL . . . . . . . . . . . .

Hamden, CT . . . . . . . . . .

Hampshire, UKJ . . . . . . .

Haverhill, MA . . . . . . . . .

Henderson, NV . . . . . . . .

Henderson, NV . . . . . . . .

High Wycombe, UKJ . . .

Highland Park, IL . . . . . .

Hingham, MA . . . . . . . . .

Holbrook, NY . . . . . . . . .

Horley, UKJ . . . . . . . . . .

Houston, TX . . . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

1,900

1,680

1,169

2,660

69

4,920

4,145

2,720

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

2,040

636

10,664

43,423

25,345

35,533

45,991

37,354

33,744

13,969

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

30,670

5,617

950

13,662

1,430

1,190

5,361

890

1,460

4,172

1,720

880

1,190

3,784

2,250

1,440

31,777

7,597

56,494

27,931

24,093

26,035

50,046

29,809

11,600

14,191

25,313

32,292

3,957

35,337

2,332

3,830

12,144

55,674

1,914

1,847

1,169

2,681

124

4,975

4,557

2,983

4,564

1,905

1,651

1,778

2,281

1,460

5,040

1,520

6,346

53

3,175

3,743

1,339

1,490

2,093

1,740

2,458

2,983

1,998

787

2,176

1,578

4,634

2,090

1,545

2,040

708

11,547

49,685

25,345

38,621

47,296

38,648

37,224

15,386

26,393

33,764

27,113

33,520

42,023

10,667

48,185

25,382

53,118

2,883

44,937

19,960

11,082

32,791

31,513

20,811

33,053

16,411

20,792

12,537

29,179

37,875

36,857

72,045

34,614

31,172

6,348

3,259

12,524

452

11,385

8,545

7,038

7,009

1,130

5,108

8,522

2,679

6,718

10,604

4,504

9,720

6,200

9,005

822

8,407

2,442

2,631

3,354

7,915

1,610

5,582

1,747

4,094

2,302

7,465

10,084

8,125

13,683

6,045

5,475

885

2013

2010

2016

2011

2013

2013

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

2011

2015

2006 1650 Susquehanna Road

1990 6470 Post Rd

2015 4175 Stoneridge Lane

2000 111 South Shore Drive

2002 1555 Glen Curtiss
Boulevard

2002 1 Sunrise Drive

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

2009 100 Watermark Boulevard

1991 84 Main Street East

950

14,156

2,422

2013

2006 1850 Vernier Road

1,435

1,333

5,879

935

1,487

4,584

1,723

897

1,252

3,784

2,265

1,440

32,734

8,638

62,254

29,786

25,764

28,633

51,010

30,437

12,312

14,191

26,521

32,467

5,626

1,432

10,783

4,857

6,780

5,267

6,411

5,605

3,374

241

5,662

3,666

2013

2015

2013

2013

2011

2013

2015

2011

2013

2015

2013

2015

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

2017 The Row Lane End

2005 1601 Green Bay Road

2012 1 Sgt. William B Terry

Drive

4,021

36,382

6,615

2013

2001 320 Patchogue Holbrook

Road

2,565

3,830

13,432

62,163

1,981

13,392

2014

2012

2014 Court Lodge Road

1998 2929 West Holcombe

Boulevard

896

6,429

—

3,109

1,360

1,349

3,892

1,680

1,349

1,463

2,665

3,890

4,948

2,946

1,930

1,358

5,320

239

1,125

2,324

1,633

37

3,638

1,012

2,484

1,861

837

1,337

949

24,812

1,661

2,757

1,126

502

803

494

962

1,183

6,278

1,900

1,698

3,010

968

645

774

—

1,223

176

1,109

1,521

6,489

129

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 . . . . . . . . . .

16,922

Houston, TX . . . . . . . . . .

Huntington Beach, CA . .

Irving, TX . . . . . . . . . . . .

Johns Creek, GA . . . . . . .

Kanata, ON . . . . . . . . . . .

Kansas City, MO . . . . . . .

Kansas City, MO . . . . . . .

Kansas City, MO . . . . . . .

Kelowna, BC . . . . . . . . . .

Kennebunk, ME . . . . . . .

Kingston, ON . . . . . . . . .

Kingwood, TX . . . . . . . .

Kingwood, TX . . . . . . . .

—

—

—

—

—

—

5,620

—

5,942

—

4,767

—

—

Kirkland, WA . . . . . . . . .

24,600

Kitchener, ON . . . . . . . . .

Kitchener, ON . . . . . . . . .

Kitchener, ON . . . . . . . . .

1,514

4,833

3,682

Kitchener, ON . . . . . . . . .

13,681

La Palma, CA . . . . . . . . .

Lafayette Hill, PA . . . . . .

Laguna Hills, CA . . . . . .

Laguna Woods, CA . . . . .

Laguna Woods, CA . . . . .

Lake Zurich, IL . . . . . . . .

Lawrenceville, GA . . . . .

Leatherhead, UKJ . . . . . .

Leawood, KS . . . . . . . . .

Lenexa, KS . . . . . . . . . . .

Leominster, MA . . . . . . .

Lincroft, NJ . . . . . . . . . . .

—

—

—

—

—

—

—

—

15,021

9,396

—

—

Lombard, IL . . . . . . . . . .

16,297

London, UKI . . . . . . . . . .

London, ON . . . . . . . . . .

—

476

London, ON . . . . . . . . . .

12,381

London, ON . . . . . . . . . .

—

Longueuil, QC . . . . . . . .

10,257

Los Angeles, CA . . . . . . .

—

Los Angeles, CA . . . . . . .

61,460

Los Angeles, CA . . . . . . .

Los Angeles, CA . . . . . . .

Louisville, KY . . . . . . . .

—

—

—

Louisville, KY . . . . . . . .

10,775

Lynnfield, MA . . . . . . . .

Malvern, PA . . . . . . . . . .

Mansfield, MA . . . . . . . .

Maple Ridge, BC . . . . . .

Marieville, QC . . . . . . . .

Markham, ON . . . . . . . . .

Marlboro, NJ . . . . . . . . . .

—

—

—

9,158

7,008

41,037

—

Medicine Hat, AB . . . . . .

11,543

Melbourne, FL . . . . . . . .

Memphis, TN . . . . . . . . .

—

—

1,040

1,750

3,808

1,030

1,580

1,689

1,820

1,930

541

2,688

2,700

1,030

480

1,683

3,450

708

1,130

1,093

1,341

2,950

1,750

12,820

11,280

9,150

1,470

1,500

4,967

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

7,070

1,800

31,965

15,603

31,172

6,823

23,285

28,670

34,898

39,997

23,962

13,647

30,204

11,416

9,777

24,207

38,709

2,744

9,939

7,327

13,939

16,591

11,848

75,926

76,485

57,842

9,830

29,003

18,859

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

48,257

17,744

1,049

1,750

3,886

1,030

1,588

1,812

1,845

1,963

545

2,984

3,200

1,154

480

1,683

3,515

708

1,267

1,212

1,443

2,966

1,867

12,820

11,280

9,150

1,470

1,508

4,967

5,690

850

992

29

2,147

3,428

1,122

2,177

1,689

4,469

—

—

3,540

—

2,420

1,600

3,165

1,739

3,447

3,095

1,419

4,161

2,250

1,591

7,070

1,800

37,517

16,867

33,523

8,331

23,863

31,189

39,443

44,333

24,131

15,453

34,442

12,928

10,857

26,655

39,491

3,138

11,169

8,239

17,901

17,398

13,945

87,838

86,414

64,206

12,770

29,672

18,859

33,091

27,173

23,763

21,391

61,316

11,179

9,517

19,650

15,331

27,428

13,554

7,104

738

7,290

2,428

4,448

5,491

10,363

11,808

2,418

3,689

11,037

1,574

2,524

496

7,883

727

2,307

2,164

1,974

3,346

3,430

6,020

6,754

5,550

4,074

5,615

226

7,993

5,665

2,958

3,979

10,789

1,391

1,321

2,795

1,917

3,623

3,397

116,346

25,572

21,257

30,010

22,321

20,973

47,226

18,910

65,149

12,860

13,110

54,564

15,918

15,372

77,110

19,221

4,179

2,169

4,614

4,334

8,848

4,875

15,871

1,306

1,453

13,923

3,273

2,746

14,328

4,957

2012

2016

2013

2007

2013

2012

2010

2010

2015

2013

2013

2015

2011

2017

2011

2013

2013

2013

2016

2013

2013

2016

2016

2016

2011

2013

2015

2012

2013

2015

2013

2013

2014

2015

2015

2015

2015

2008

2011

2012

2016

2012

2013

2013

2013

2011

2015

2015

2013

2013

2015

2007

2012

1999 505 Bering Drive

2014 10120 Louetta Road

2004 7401 Yorktown Avenue

1999 8855 West Valley Ranch

Parkway

2009 11405 Medlock Bridge 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

2012 24025 Kingwood Place

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

2017 Rectory Lane

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

2009 7300 Watersong Lane

1999 6605 Quail Hollow Road

5,561

1,264

2,429

1,508

586

2,642

4,570

4,369

173

2,103

4,739

1,637

1,080

2,448

848

393

1,367

1,030

4,064

822

2,214

11,912

9,929

6,364

2,940

677

—

3,799

947

647

1,453

1,390

1,459

1,425

2,873

1,944

4,195

2,124

1,908

2,250

1,960

1,505

647

2,027

1,803

8,265

1,158

1,138

6,060

1,058

1,390

28,853

1,477

130

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

Meriden, CT . . . . . . . . . .

—

Metairie, LA . . . . . . . . . .

12,773

Middletown, CT . . . . . . .

Middletown, RI . . . . . . . .

Milford, CT . . . . . . . . . . .

Milton, ON . . . . . . . . . . .

Minnetonka, MN . . . . . . .

Minnetonka, MN . . . . . . .

Mission Viejo, CA . . . . .

Mississauga, ON . . . . . . .

Mississauga, ON . . . . . . .

Mississauga, ON . . . . . . .

Mississauga, ON . . . . . . .

Mobberley, UKD . . . . . .

Monterey, CA . . . . . . . . .

Montgomery Village,

MD . . . . . . . . . . . . . . .

—

—

—

15,391

13,654

15,651

14,118

9,409

3,169

30,008

6,471

—

—

—

Moose Jaw, SK . . . . . . . .

2,476

Murphy, TX . . . . . . . . . .

Mystic, CT . . . . . . . . . . .

Naperville, IL . . . . . . . . .

Naperville, IL . . . . . . . . .

—

—

—

—

Naples, FL . . . . . . . . . . . .

57,022

Nashua, NH . . . . . . . . . . .

Nashville, TN . . . . . . . . .

Needham, MA . . . . . . . . .

—

—

—

Nepean, ON . . . . . . . . . .

6,045

New Braunfels, TX . . . . .

Newbury, UKJ . . . . . . . .

Newburyport, MA . . . . . .

Newmarket, UKH . . . . . .

Newton, MA . . . . . . . . . .

—

—

—

—

—

Newton, MA . . . . . . . . . .

15,227

Newton, MA . . . . . . . . . .

Newtown Square, PA . . .

—

—

Niagara Falls, ON . . . . . .

7,109

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 . . . . . . . . . . .

—

—

—

—

—

—

—

—

6,158

10,439

5,462

—

19,493

3,144

10,658

19,984

22,945

7,940

15,092

1,500

725

1,430

2,480

3,210

4,542

2,080

920

6,600

1,602

873

3,649

2,548

5,146

6,440

3,530

582

1,950

1,400

1,550

1,540

8,989

1,264

3,900

1,240

1,575

1,200

2,850

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

14,874

27,708

24,242

24,628

17,364

25,321

24,360

29,344

52,118

17,996

4,655

35,137

15,158

26,665

29,101

18,246

12,973

19,182

18,274

12,237

28,204

119,398

43,026

35,788

32,992

5,770

19,800

12,796

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

1,538

725

1,441

2,511

3,233

5,039

2,376

954

6,600

1,771

966

4,053

2,817

5,654

6,440

4,187

643

1,950

1,427

1,550

1,546

9,074

1,264

3,900

1,240

1,757

2,729

3,125

1,750

4,471

2,263

2,521

3,385

1,941

1,355

1,334

2,092

951

1,700

2,975

1,250

3,901

2,300

1,392

2,363

1,405

2,210

789

963

1,520

3,872

4,632

2,345

3,294

15,940

28,372

25,717

26,373

19,176

29,335

26,353

30,112

57,683

20,161

5,290

39,449

18,085

29,573

30,043

24,037

14,837

19,960

19,201

14,520

29,377

5,185

4,812

6,965

7,065

5,738

3,036

5,430

5,056

4,621

4,016

1,091

7,892

2,977

6,980

5,624

7,944

2,931

1,214

5,096

3,380

5,687

123,401

15,758

43,637

37,986

34,178

6,626

28,567

14,111

30,350

13,308

44,717

33,027

26,692

15,450

9,105

30,404

36,624

19,342

36,965

18,788

41,879

50,449

39,509

8,239

33,832

15,543

22,078

23,342

8,700

17,998

26,530

42,274

22,739

30,571

4,311

9,120

1,952

1,377

4,142

467

1,855

1,702

10,785

8,396

7,199

4,093

1,340

6,405

8,965

4,544

2,298

3,056

8,350

9,458

7,200

1,733

7,199

2,791

5,314

3,412

1,774

1,930

6,517

5,449

2,719

3,225

2011

2013

2011

2011

2011

2015

2012

2013

2016

2013

2013

2015

2015

2013

2013

2013

2013

2015

2011

2012

2013

2015

2015

2012

2016

2015

2011

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

2001 511 Kensington Avenue

2009 3732 West Esplanade Ave. S

1999 645 Saybrook Road

1998 303 Valley Road

1999 77 Plains Road

2012 611 Farmstead Drive

1999 500 Carlson Parkway

2006 18605 Old Excelsior Blvd.

1998 27783 Center Drive

1984 1130 Bough Beeches

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

2012 304 West FM 544

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

2009 2294 East Common Street

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

1,103

663

1,487

1,777

1,835

4,512

2,289

803

5,565

2,334

728

4,715

3,195

3,417

942

6,448

1,925

778

954

2,283

1,178

4,088

611

2,198

1,186

1,038

10,296

1,591

1,162

1,806

1,116

2,367

1,618

1,041

1,272

4,432

1,780

935

1,628

825

1,496

2,965

1,983

996

4,098

1,924

3,776

2,475

1,252

2,752

3,639

3,494

4,560

4,480

131

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 . . . . . . . . . . .

Ottawa, ON . . . . . . . . . . .

Ottawa, ON . . . . . . . . . . .

Ottawa, ON . . . . . . . . . . .

Ottawa, ON . . . . . . . . . . .

Ottawa, ON . . . . . . . . . . .

Overland Park, KS . . . . .

11,412

14,405

19,417

3,112

2,266

10,914

4,994

6,500

9,796

3,336

Palo Alto, CA . . . . . . . . .

16,217

Paramus, NJ . . . . . . . . . .

Parkland, FL . . . . . . . . . .

Peabody, MA . . . . . . . . .

Pembroke, ON . . . . . . . .

Pittsburgh, PA . . . . . . . . .

Placentia, CA . . . . . . . . .

Plainview, NY . . . . . . . . .

—

56,604

6,117

—

—

—

—

Plano, TX . . . . . . . . . . . .

27,671

Plano, TX . . . . . . . . . . . .

Playa Vista, CA . . . . . . . .

Plymouth, MA . . . . . . . .

Plymouth, MA . . . . . . . .

Port Perry, ON . . . . . . . .

Port St. Lucie, FL . . . . . .

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 . . . . . . .

—

—

—

13,462

9,905

—

—

—

—

—

—

—

—

13,102

15,419

—

7,115

6,980

16,884

20,790

—

3,326

9,515

—

—

—

—

—

—

Saint-Lambert, QC . . . . .

37,529

10,259

Salem, NH . . . . . . . . . . . .

Salinas, CA . . . . . . . . . . .

Salisbury, UKK . . . . . . . .

Salt Lake City, UT . . . . .

San Antonio, TX . . . . . . .

—

—

—

—

—

980

5,110

2,720

1,360

6,120

1,561

3,403

3,411

724

818

2,809

1,156

746

1,176

1,540

—

2,840

4,880

2,250

1,931

1,580

8,480

3,066

3,120

1,750

1,580

1,444

2,550

3,685

8,700

2,655

7,365

1,260

1,350

18,170

31,090

28,335

4,710

2,165

27,299

9,758

7,800

12,764

16,269

39,639

35,728

111,481

16,071

9,427

18,017

17,076

19,901

59,950

15,390

40,531

34,951

35,055

26,788

47,230

21,910

35,161

21,744

12,584

1,480

10,055

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

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

28,169

1,762

3,775

3,799

801

753

3,109

1,336

831

1,320

1,728

24

2,903

4,885

2,324

2,071

1,587

8,480

3,182

3,173

1,750

1,605

1,444

2,550

4,079

8,700

2,655

8,077

1,260

1,428

20,738

35,702

35,075

5,339

3,732

30,890

10,987

8,926

14,560

17,413

42,311

37,231

2,116

3,631

4,910

1,122

853

7,089

2,038

1,739

1,649

3,549

7,559

6,566

114,751

15,436

16,992

10,362

18,817

19,525

20,549

62,102

17,051

41,536

35,648

37,178

31,453

67,602

22,230

39,033

22,708

13,337

2,353

1,804

3,881

2,402

3,521

14,899

1,053

7,854

4,039

2,440

2,988

11,380

8,980

8,201

2,401

3,635

2015

2015

2015

2013

2013

2013

2013

2013

2015

2012

2013

2013

2015

2013

2012

2013

2016

2013

2013

2016

2013

2015

2016

2015

2008

2011

2012

2015

2011

2006 22 Barnstone Drive

2009 990 Hunt Club Road

2009 2 Valley Stream Drive

1995 1345 Ogilvie Road

1993 370 Kennedy Lane

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

2010 10685 SW Stony Creek Way

1998 700 Smith Street

2005 21 Russell Hill Road

1999 27 Woodvale Road

1998 2003 Falls Boulevard

1,567

11,109

2,568

2013

2001 9519 Baseline Road

5,450

1,570

1,379

1,328

—

1,662

1,380

1,704

3,119

3,150

642

1,700

909

6,174

1,607

3,300

2,385

1,334

11,414

1,054

5,110

2,983

1,360

6,120

62,057

47,703

21,476

24,966

10,435

23,590

23,620

28,722

52,908

85,302

8,489

21,503

16,995

67,897

36,741

44,886

7,739

24,587

66,709

36,828

46,916

16,826

21,640

30,651

12,432

8,586

2,820

3,330

5,609

5,180

4,380

3,385

10,446

11,313

895

2,890

4,150

14,427

6,269

3,868

1,891

4,343

10,015

7,726

4,462

1,636

6,685

5,207

2012

2013

2015

2015

2011

2013

2013

2015

2011

2015

2015

2015

2011

2006

2013

2016

2012

2013

2015

2011

2016

2014

2011

2010

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 2702 Cembalo Blvd

2,770

4,983

7,128

705

1,502

3,891

1,408

1,211

1,941

1,331

2,696

1,566

3,276

995

1,075

807

2,448

764

2,205

1,660

1,029

697

2,123

5,059

20,372

320

4,583

964

831

1,141

2,023

799

2,324

2,756

878

2,618

2,720

4,834

1,123

4,737

938

4,901

744

60,571

932

3,235

1,558

1,226

5,961

4,181

5,493

1,820

1,949

2,482

132

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

San Antonio, TX . . . . . . .

San Diego, CA . . . . . . . .

San Diego, CA . . . . . . . .

San Diego, CA . . . . . . . .

San Francisco, CA . . . . .

San Francisco, CA . . . . .

San Gabriel, CA . . . . . . .

San Jose, CA . . . . . . . . . .

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 . . . . . .

19,149

Santa Rosa, CA . . . . . . . .

Saskatoon, SK . . . . . . . . .

Saskatoon, SK . . . . . . . . .

Schaumburg, IL . . . . . . .

Scottsdale, AZ . . . . . . . . .

Seal Beach, CA . . . . . . . .

—

4,390

14,740

—

—

—

Seattle, WA . . . . . . . . . . .

48,540

Seattle, WA . . . . . . . . . . .

Sevenoaks, UKJ . . . . . . .

Severna Park, MD . . . . . .

Shelburne, VT . . . . . . . . .

—

—

—

—

Shelby Township, MI . . .

15,894

Shelton, CT . . . . . . . . . . .

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 . . . . . . . .

Sugar Land, TX . . . . . . . .

Sun City, FL . . . . . . . . . .

Sun City, FL . . . . . . . . . .

Sun City West, AZ . . . . .

Sunnyvale, CA . . . . . . . .

Surrey, BC . . . . . . . . . . .

Surrey, BC . . . . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

8,701

6,222

4,848

—

—

—

—

21,294

23,992

11,780

—

7,228

17,047

5,045

4,200

5,810

3,000

5,920

11,800

3,120

2,850

3,280

11,900

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

2,246

950

7,446

3,200

5,510

5,070

3,571

1,851

5,644

2,820

3,000

3,200

2,580

1,145

706

1,175

4,369

4,006

960

4,272

6,521

5,040

1,250

5,420

3,605

4,552

58,048

30,707

63,078

27,164

91,639

77,214

15,566

35,098

46,823

27,647

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

33,967

26,824

56,570

16,664

51,406

43,297

26,053

10,585

42,155

21,890

29,295

25,064

25,342

17,863

11,765

17,397

25,018

25,307

31,423

60,493

48,476

50,923

21,778

41,682

18,818

22,338

5,045

4,243

5,810

3,000

5,920

11,800

3,138

2,858

3,280

11,900

1,390

1,635

8,700

2,220

6,089

5,263

2,250

1,084

1,528

2,486

2,500

6,271

6,825

1,150

6,778

6

777

1,100

2,246

950

8,183

3,238

5,510

5,560

3,917

2,029

6,189

2,820

3,104

3,271

2,639

1,266

757

1,299

4,791

4,071

960

4,272

6,622

5,338

1,274

5,420

3,985

5,045

61,177

31,177

65,407

27,927

103,168

86,346

16,407

35,690

49,178

30,918

8,433

29,337

78,968

9,030

53,585

29,196

28,367

15,580

19,735

23,896

5,594

74,644

87,854

20,919

45,599

72,882

32,904

27,453

33,967

28,139

62,636

17,524

57,875

48,264

28,899

11,670

46,807

23,769

32,061

25,612

25,682

20,745

12,795

19,559

27,637

26,230

33,146

66,989

52,030

53,990

22,877

43,677

21,338

25,625

3,129

513

2,329

763

11,529

9,132

860

600

2,355

3,271

1,491

1,960

6,745

676

2,966

869

2,094

1,778

2,272

1,060

1,704

1,757

2,520

1,032

5,956

5,264

1,921

1,170

—

1,315

6,802

898

6,469

5,457

3,191

1,263

5,197

1,879

2,870

619

399

3,003

1,081

2,286

3,041

988

1,723

6,497

3,655

3,365

1,123

1,995

2,900

3,780

133

656

4,952

15,249

4,709

7,666

6,679

3,283

7,052

9,756

3,497

3,634

2,597

6,181

2,404

13,408

5,352

2,623

2,760

3,435

5,198

1,583

17,334

17,947

2,119

9,281

7,069

7,180

4,716

1,839

3,286

14,212

4,377

4,891

9,412

5,786

494

8,529

2,202

8,587

6,718

5,571

5,136

1,308

3,456

6,015

5,707

8,437

970

8,661

8,143

4,311

8,985

5,675

7,201

2017

2011

2012

2013

2016

2016

2013

2011

2012

2016

2000

2016

2016

2012

2011

2013

2016

2013

2013

2013

2008

2013

2011

2015

2012

2016

2011

2013

2013

2015

2012

2013

2016

2012

2013

2015

2013

2016

2011

2013

2013

2014

2015

2013

2013

2013

2011

2017

2015

2015

2012

2012

2013

2013

2015 11300 Wild Pine

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

2002 500 S Winchester Boulevard

2002 4855 San Felipe Road

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

1998 9410 East Thunderbird 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

2014 708A Bridgeport Avenue

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

2015 744 Brooks Street

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

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

Sutton, UKI . . . . . . . . . . .

Suwanee, GA . . . . . . . . .

Sway, UKJ . . . . . . . . . . .

Swift Current, SK . . . . . .

Tacoma, WA . . . . . . . . . .

Tacoma, WA . . . . . . . . . .

Tacoma, WA . . . . . . . . . .

—

—

—

2,228

17,760

—

—

Tampa, FL . . . . . . . . . . . .

69,330

Tewksbury, MA . . . . . . .

The Woodlands, TX . . . .

Toledo, OH . . . . . . . . . . .

Toronto, ON . . . . . . . . . .

Toronto, ON . . . . . . . . . .

Toronto, ON . . . . . . . . . .

Toronto, ON . . . . . . . . . .

Toronto, ON . . . . . . . . . .

Toronto, ON . . . . . . . . . .

Toronto, ON . . . . . . . . . .

—

—

—

18,615

9,662

13,959

40,768

4,650

1,439

8,587

Toronto, ON . . . . . . . . . .

19,525

Toronto, ON . . . . . . . . . .

Toronto, ON . . . . . . . . . .

Toronto, ON . . . . . . . . . .

Torrance, CA . . . . . . . . .

Trumbull, CT . . . . . . . . .

962

6,355

34,411

—

—

Tucson, AZ . . . . . . . . . . .

4,436

Tulsa, OK . . . . . . . . . . . .

Tulsa, OK . . . . . . . . . . . .

Tustin, CA . . . . . . . . . . . .

Upland, CA . . . . . . . . . . .

Upper St Claire, PA . . . .

Vancouver, BC . . . . . . . .

Vankleek Hill, ON . . . . .

Vaudreuil, QC . . . . . . . . .
Venice, FL . . . . . . . . . . .
Vero Beach, FL . . . . . . . .

Victoria, BC . . . . . . . . . .

Victoria, BC . . . . . . . . . .

Victoria, BC . . . . . . . . . .

Virginia Water, UKJ . . . .

Walnut Creek, CA . . . . . .

Walnut Creek, CA . . . . . .

Waltham, MA . . . . . . . . .

Warwick, RI . . . . . . . . . .

—

—

—

—

—

—

943

8,744

64,425

—

7,752

7,147

8,015

—

—

—

—

—

Washington, DC . . . . . . .

30,841

Waterbury, CT . . . . . . . .

Wayland, MA . . . . . . . . .

Webster Groves, MO . . .

—

—

—

Welland, ON . . . . . . . . . .

6,858

Wellesley, MA . . . . . . . .

West Babylon, NY . . . . .

West Bloomfield, MI . . .

West Hills, CA . . . . . . . .

—

—

—

—

West Vancouver, BC . . .

19,905

Westbourne, UKK . . . . .

Westford, MA . . . . . . . . .

—

—

4,096

1,560

4,145

492

2,400

1,535

4,170

4,910

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

3,497

2,850

830

1,330

1,500

840

3,160

1,102

7,934

389

1,852

6,820

2,930

2,856

3,681

2,476

7,106

3,700

14,532

11,538

15,508

10,119

35,053

6,068

73,377

114,148

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

73,138

37,685

6,179

21,285

20,861

15,299

42,596

13,455

6,875

2,960

14,214

100,501

40,070

18,038

15,774

15,379

29,937

12,467

10,320

100,890

2,462

2,400

4,000

2,460

1,207

1,790

983

4,690

3,960

1,040

2,600

7,059

5,441

1,440

40,062

24,635

69,154

39,547

27,462

15,425

7,530

77,462

47,085

12,300

7,521

28,155

41,420

32,607

1,872

842

2,094

1,315

584

59

8,824

3,636

1,985

824

3,358

3,327

3,817

1,608

7,208

1,343

844

2,814

4,524

667

725

7,151

—

2,058

3,732

3,767

3,455

716

14

875

—

553

1,844

3,093

25,412

2,502

2,273

2,591

6,182

1,695

10,385

1,355

2,407

2,023

3,283

1,389

2,152

691

162

1,759

726

857

4,847

5,289

148

4,492

1,560

4,596

550

2,459

1,537

4,170

4,962

2,350

480

2,144

3,266

5,624

2,188

5,674

2,742

1,193

2,815

3,764

1,528

1,600

5,869

3,497

2,935

913

1,350

1,581

840

3,160

1,102

7,934

436

1,993

6,872

2,930

3,157

4,070

2,741

5,943

3,794

16,009

12,380

17,151

11,376

35,579

6,125

82,201

117,732

26,104

13,203

50,383

23,701

28,767

21,282

48,322

8,652

6,094

22,208

36,917

3,415

4,490

60,074

73,138

39,657

9,827

25,032

24,235

16,015

42,610

14,330

6,875

3,466

15,917

103,542

65,482

20,238

17,658

17,705

37,281

14,067

10,320

111,275

2,536

2,407

4,002

2,495

1,334

1,790

1,055

4,690

3,960

1,089

2,636

7,805

5,969

1,468

41,344

27,036

71,175

42,795

28,724

17,577

8,149

77,624

48,844

12,977

8,342

32,256

46,181

32,727

134

464

2,876

2,722

2,236

7,107

935

6,113

15,060

1,826

3,065

13,525

2,802

5,008

2,737

9,699

1,638

1,170

3,535

7,504

1,139

1,107

15,630

972

10,412

1,801

6,186

6,334

3,409

4,098

3,267

5,704

784

1,932

14,087

14,513

4,544

4,125

1,829

7,286

3,603

8,442

5,437

7,952

12,670

13,963

5,630

3,197

954

9,840

8,199

2,563

2,363

6,834

8,676

3,329

2015

2012

2014

2013

2011

2015

2016

2015

2016

2011

2010

2015

2015

2015

2015

2015

2013

2013

2013

2013

2013

2013

2016

2011

2012

2010

2010

2011

2015

2013

2015

2013

2015

2015

2007

2013

2013

2015

2012

2013

2016

2015

2011

2013

2011

2013

2011

2015

2015

2013

2013

2013

2013

2013

2015

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

2001 12951 W Linebaugh 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

2016 25525 Hawthorne Boulevard

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

2003 7955 16th Manor

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

2012 45 E Lockwood Avenue

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

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

Weston, MA . . . . . . . . . .

Westworth Village,

TX . . . . . . . . . . . . . . . .

Weybridge, UKJ . . . . . . .

Weymouth, UKK . . . . . .

White Oak, MD . . . . . . . .

Wilbraham, MA . . . . . . .

Wilmington, DE . . . . . . .

Winchester, UKJ . . . . . . .

Winnipeg, MB . . . . . . . .

Winnipeg, MB . . . . . . . .

Winnipeg, MB . . . . . . . .

Woking, UKJ . . . . . . . . .

Wolverhampton, UKG . .

Woodbridge, CT . . . . . . .

Woodland Hills, CA . . . .

Worcester, MA . . . . . . . .

Yarmouth, ME . . . . . . . .

Yonkers, NY . . . . . . . . . .

—

—

—

—

—

—

—

—

13,446

16,833

13,641

—

—

—

—

—

—

—

1,160

2,060

7,899

2,591

2,304

660

1,040

6,009

1,960

1,276

1,317

3,172

2,941

1,370

3,400

1,140

450

3,962

Yorkton, SK . . . . . . . . . .

$

3,493

$

466

$

Seniors housing

6,200

31,296

48,240

16,551

24,768

17,639

23,338

29,405

38,612

21,732

15,609

13,233

8,922

14,219

20,478

21,664

27,711

50,107

8,756

1,240

56

5,667

1,912

1,747

931

867

3,647

5,818

3,031

3,176

—

1,363

1,423

947

1,057

1,257

1,419

1,128

$

1,160

2,060

8,662

2,879

2,316

685

1,129

6,598

2,225

1,466

1,456

3,172

3,232

1,426

3,447

1,166

470

3,967

$

511

$

7,440

1,285

2013

1998 135 North Avenue

31,352

53,144

18,174

26,503

18,544

24,116

32,463

44,164

24,572

18,645

13,233

9,994

15,586

21,378

22,695

28,948

51,521

9,839

2,523

11,619

1,712

4,644

4,515

4,588

6,719

12,378

4,643

2,899

—

2,856

5,225

4,637

5,493

6,586

9,381

1,916

$

2014

2013

2014

2013

2011

2013

2012

2013

2013

2015

2016

2013

2011

2013

2011

2011

2013

2013

2014 25 Leonard Trail

2008 Ellesmere Road

2013 Cross Road

2002 11621 New Hampshire

Avenue

2000 2387 Boston Road

2004 2215 Shipley Street

2010 Stockbridge Road

1999 857 Wilkes Avenue

1988 3161 Grant Avenue

1999 125 Portsmouth Boulevard

2017 12 Streets Heath, West End

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

operating total . . . . . .

$1,988,700

$1,174,980

$12,626,419

$1,234,180

$1,246,991

$13,788,584

$2,362,335

135

Welltower Inc.

Schedule III
Real Estate and Accumulated Depreciation
December 31, 2017

(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 . . . . . . . .

Anderson, IN . . . . . . . . .

Arcadia, CA . . . . . . . . . .

Arlington, TX . . . . . . . . .

Atlanta, GA . . . . . . . . . .

Atlanta, GA . . . . . . . . . .

Atlanta, GA . . . . . . . . . .

Austin, TX . . . . . . . . . . .

Bardstown, KY . . . . . . . .

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 . . . . . . . .

Bridgeton, MO . . . . . . . .

Buckhurst Hill, UKH . . .

Burleson, TX . . . . . . . . .

Burnsville, MN . . . . . . . .

Carmel, IN . . . . . . . . . . .

Carmel, IN . . . . . . . . . . .

Castle Rock, CO . . . . . . .

Castle Rock, CO . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

33,729

78,271

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

821

726

476

1,862

548

773

1,769

1,193

5,408

82

4,931

1,947

—

1,066

273

187

—

—

—

20,766

18,863

19,863

32,603

52,772

52

124

476

80

31

109

50

2,048

2,048

214

$

12,105

$

14,196

14,757

—

17,103

18,902

36,152

20,644

23,219

18,243

18,720

24,248

43,425

10,112

7,966

15,015

24,769

16,680

7,110

40,730

1,192

31,690

28,639

87,366

10,201

11,733

18,726

12,161

12,312

34,002

12,951

7,692

7,403

5,611

13,324

40,369

1,184

1,035

1,701

450

12,717

10

—

2,280

2,026

80

—

9,799

4,298

6,228

21,221

54,001

12,611

31,596

19,238

21,559

13,004

11,795

—

798

323

—

440

1,259

784

—

4,058

374

6,731

1,681

1,098

—

42

2,042

—

2

73

1,871

187

315

493

—

626

1,949

2,006

10

430

3,261

—

984

1,576

8,340

2,681

417

—

—

188

—

698

568

649

26

571

—

$

821

726

476

1,862

548

773

1,769

1,193

5,618

82

5,387

2,030

—

1,066

274

187

—

—

—

20,766

18,863

19,863

32,603

52,772

52

124

476

80

59

214

50

2,185

2,185

270

14,030

1,184

1,035

1,701

450

12,717

10

—

2,280

2,026

79

—

136

$

12,105

$

14,994

15,081

—

17,543

20,161

36,936

20,644

27,067

18,617

24,996

25,845

44,523

10,112

8,007

17,057

24,769

16,682

7,183

42,601

1,379

32,005

29,132

87,366

10,827

13,682

20,731

12,170

12,714

37,158

12,951

8,539

8,841

13,895

42,344

10,216

4,298

6,228

21,409

54,001

13,309

32,164

19,886

21,586

13,576

11,795

2,528

4,117

4,456

—

5,809

5,652

11,834

562

9,859

2,796

10,420

6,803

11,603

71

984

6,305

1,069

4,658

569

4,352

513

3,514

4,117

8,731

3,863

4,512

7,398

4,225

3,103

13,169

3,100

3,507

3,640

5,191

9,445

1,454

694

296

6,149

3,832

3,599

6,446

6,935

7,913

2,347

217

2012

2012

2011

2011

2011

2011

2011

2017

2006

2012

2006

2012

2012

2017

2010

2007

2014

2010

2013

2015

2015

2015

2015

2015

2006

2006

2006

2010

2012

2006

2011

2006

2006

2007

2013

2014

2014

2017

2010

2015

2011

2013

2011

2011

2014

2016

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

2016 3125 S. Scatterfield Rd.

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

2017 5301-B Davis Lane

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

2008 3440 De Paul Ln.

2006 12266 DePaul Dr

2013 High Road

2007 12001 South Freeway

2014 14101 Fairview Dr

2005 12188-A North Meridian Street

2007 12188-B North Meridian Street

2013 2352 Meadows Boulevard

2017 Meadows Boulevard

Description

Encumbrances Land

Building &
Improvements

Initial Cost to Company

Cost Capitalized
Subsequent to
Acquisition

132

20,701

Costa Mesa, CA . . . . . . .

22,748

22,033

2,773

—

132

—

—

2,333

23

—

1,287

2,985

1,211

122

137

462

730

2,408

1,882

1,212

310

677

4,842

958

369

8,578

737

4,164

4,620

1,105

462

401

2,338

—

—

5,477

20

80

37

981

—

3,365

970

8,316

2,098

1,262

2,659

—

10,403

25,928

17,880

11,173

35,592

13,882

19,232

33,885

26,679

24,332

—

—

5,511

15,419

28,690

52,488

6,919

7,809

34,767

22,858

15,132

17,075

26,010

27,485

13,911

61,779

9,277

27,027

—

22,836

26,020

6,099

12,138

18,635

15,309

53,890

21,801

30,810

18,398

6,086

5,943

15,669

10,104

26,384

21,538

7,045

29,069

8,834

—

Cedar Park, TX . . . . . . . .

Charleston, SC . . . . . . . .

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 . . . . . . . . . .

10,919

Fenton, MO . . . . . . . . . .

Florham Park, NJ . . . . . .

Flower Mound, TX . . . . .

Flower Mound, TX . . . . .

Flower Mound, TX . . . . .

Fort Wayne, IN . . . . . . . .

Fort Worth, TX . . . . . . . .

Fort Worth, TX . . . . . . . .

Franklin, TN . . . . . . . . . .

Frisco, TX . . . . . . . . . . . .
Frisco, TX . . . . . . . . . . . .
Fullerton, CA . . . . . . . . .

Gallatin, TN . . . . . . . . . .

Gig Harbor, WA . . . . . . .

Glendale, CA . . . . . . . . .

Grand Prairie, TX . . . . . .

Grapevine, TX . . . . . . . .

Grapevine, TX . . . . . . . .

Greeneville, TN . . . . . . .

Greenwood, IN . . . . . . . .

Greenwood, IN . . . . . . . .

Greenwood, IN . . . . . . . .

High Point, NC . . . . . . . .

Highland, IL . . . . . . . . . .

Houston, TX . . . . . . . . . .

Houston, TX . . . . . . . . . .

Houston, TX . . . . . . . . . .

Houston, TX . . . . . . . . . .

Houston, TX . . . . . . . . . .

Howell, MI . . . . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Gross Amount at Which
Carried at Close of Period

Land

Building &
Improvements

Accumulated
Depreciation(1)

Year
Acquired

Year
Built

Address

132

20,701

910

2017

2014 1401 Medical Parkway,

2,815

2

132

—

—

2,333

9,353

—

22,033

1,287

2,985

1,211

122

137

462

730

2,540

2,449

1,212

310

677

4,842

958

369

8,578

737

4,164

4,620

1,105

462

401

2,338

—

—

5,477

44

80

37

981

2,081

3,365

970

8,316

2,098

1,262

2,659

—

10,403

25,980

18,080

11,173

35,592

13,882

20,098

25,972

27,798

24,332

—

—

5,511

15,419

32,315

52,714

7,281

8,094

41,094

22,859

16,077

19,324

26,010

28,199

14,016

61,779

9,277

27,027

—

22,836

26,378

6,099

14,699

20,111

17,846

53,890

23,506

30,810

19,853

6,086

8,640

15,699

10,178

26,384

22,176

7,053

29,191

8,834

—

3,950

2,853

3,009

11,095

1,157

4,106

4,616

4,240

1,376

—

—

1,277

1,051

12,204

9,869

2,591

3,104

17,406

3,166

4,346

8,236

6,630

6,192

2,226

—

1,075

3,751

—

4,515

4,027

933

5,518

7,141

6,838

1,929

6,998

2,712

6,341

1,793

1,203

3,256

3,387

5,821

2,579

1,226

5,515

1,298

5

2014

2012

2007

2009

2013

2012

2015

2013

2017

2016

2016

2011

2013

2006

2012

2011

2011

2006

2013

2010

2006

2010

2013

2013

2017

2015

2014

2014

2012

2012

2014

2007

2007

2007

2014

2010

2010

2007

2012

2014

2014

2010

2012

2014

2014

2012

2012

2011

Building 2

2009 325 Folly Road

2013 3301 Mercy Health Boulevard

2005 1501 N. Florence Ave.

2010 15945 Clayton Rd

2014 1010 South Ponds Drive

2002 10700 Charter Drive

1982 5450 & 5500 Knoll N Dr.

2014 11850 Blackfoot Street NW

2007 1640 Newport Boulevard

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

2017 150 Park 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

2004 4401 Coit Road

2004 4461 Coit Road

2007 1950 Sunny Crest Drive

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

2005 438 East Vann Rd

2010 1260 Innovation Parkway

2013 3000 S State Road 135

2010 333 E County Line Road

2010 4515 Premier Drive

2013 12860 Troxler Avenue

1900 F.M. 1960 & Northgate

Forest Dr.

5,837

33,278

9,728

2012

2005 15655 Cypress Woods

Medical Dr.

—

94

203

—

—

—

867

1,417

1,119

—

—

—

—

—

3,624

225

362

417

6,895

1

945

2,249

—

714

104

—

—

—

—

—

358

—

2,560

1,476

2,537

—

1,729

—

1,455

—

4,778

30

73

—

638

8

122

—

—

150

5,837

33,128

3,102

3,688

1,099

2,000

32,323

13,313

1,604

13,928

2,497

116

78,408

—

3,242

3,688

12,815

2,000

137

34,680

13,430

68,296

13,928

5,775

2,910

11,702

158

2014

2012

2012

2016

2014 1900 N Loop W Freeway

2007 10701 Vintage Preserve

Parkway

1998 2727 W Holcombe Boulevard

2017 1225 South Latson 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

Hudson, OH . . . . . . . . . .

Humble, TX . . . . . . . . . .

Jackson, MI

. . . . . . . . . .

Jupiter, FL . . . . . . . . . . .

Jupiter, FL . . . . . . . . . . .

Killeen, TX . . . . . . . . . . .

Killeen, TX . . . . . . . . . . .

Kyle, TX . . . . . . . . . . . . .

La Jolla, CA . . . . . . . . . .

La Jolla, CA . . . . . . . . . .

La Quinta, CA . . . . . . . .

Lake St Louis, MO . . . . .

Lakeway, TX . . . . . . . . .

Lakewood, CA . . . . . . . .

Lakewood, WA . . . . . . .

Land O Lakes, FL . . . . . .

Land O Lakes, FL . . . . . .

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 . . . . . . . . . .
Melbourne, FL . . . . . . . .

Menasha, WI

. . . . . . . . .

Merced, CA . . . . . . . . . .

Merriam, KS . . . . . . . . . .

Merriam, KS . . . . . . . . . .

Merriam, KS . . . . . . . . . .

Merriam, KS . . . . . . . . . .

Merriam, KS . . . . . . . . . .

Merrillville, IN . . . . . . . .

Mesa, AZ . . . . . . . . . . . .

Mesquite, TX . . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Mission Hills, CA . . . . . .

24,325

Missouri City, TX . . . . . .

Moline, IL . . . . . . . . . . . .

—

—

Monticello, MN . . . . . . .

7,526

Moorestown, NJ . . . . . . .

Morrow, GA . . . . . . . . . .

Mount Juliet, TN . . . . . .

Mount Vernon, IL . . . . . .

Murrieta, CA . . . . . . . . .

—

—

—

—

—

2,587

—

607

2,252

2,825

760

1,907

2,569

12,855

9,425

3,266

240

2,801

146

72

3,025

1,376

6,127

2,319

74

433

540

100

1,420

5,547

19,076

4,329

39

488

1,637

1,340

1,553

2,682

3,439

1,374

—

176

—

—

—

1,257

—

1,558

496

—

1,360

—

61

6

818

1,566

—

3,800

13,720

9,941

17,367

11,415

5,858

22,878

3,575

14,384

32,658

26,525

22,066

14,249

—

14,885

16,017

26,249

6,750

—

4,612

15,287

6,921

17,926

13,767

29,723

12,253

167,391

29,815

18,635

22,386

5,048

6,509

4,694

20,053

50,461

13,861

13,772

8,005

1,996

10,222

5,862

24,911

22,134

9,561

3,834

42,276

7,146

8,783

18,489

50,896

8,064

11,697

24,892

—

14,111

9,941

17,429

14,456

6,540

22,970

3,575

14,850

32,826

26,525

22,247

14,441

—

17,176

16,693

26,249

6,750

—

5,651

16,638

7,135

18,216

13,767

30,145

12,253

167,391

29,815

19,720

24,739

6,029

7,662

5,966

21,446

50,783

16,964

14,586

8,309

4,099

14,287

8,842

24,911

23,024

10,300

3,834

43,262

7,146

8,812

18,537

50,902

8,270

13,131

24,892

—

672

—

123

3,397

863

127

—

466

168

—

194

192

—

2,291

675

—

—

—

1,039

1,351

214

290

—

422

—

—

—

1,085

2,354

1,063

1,252

1,369

1,392

420

3,074

814

304

2,184

4,510

3,163

—

890

739

—

5,777

—

29

48

147

234

1,434

—

—

2,868

—

668

2,608

3,005

795

1,907

2,569

12,855

9,425

3,279

240

2,801

146

72

3,025

1,376

6,127

2,319

74

433

540

100

1,420

5,547

19,076

4,329

39

488

1,719

1,440

1,650

2,682

3,538

1,345

—

176

81

444

182

1,257

—

1,558

496

4,791

1,360

—

61

147

845

1,566

—

3,800

138

4,157

787

3,709

4,941

2,807

7,008

477

2,321

4,500

2,814

3,785

4,499

—

5,902

3,256

157

45

—

2,478

5,930

3,022

4,676

1,353

9,862

869

11,878

2,116

6,792

10,115

2,484

2,853

2,358

1,010

7,147

1,364

4,436

2,898

1,508

4,793

2,960

4,881

6,471

4,396

867

6,715

238

947

3,317

10,435

4,063

5,153

5,282

—

2012

2013

2013

2006

2007

2010

2011

2014

2015

2015

2014

2010

2007

2006

2012

2017

2017

2007

2006

2006

2007

2010

2013

2010

2015

2015

2015

2007

2006

2006

2006

2006

2016

2014

2016

2009

2011

2011

2011

2011

2013

2008

2008

2012

2014

2015

2012

2012

2011

2007

2007

2011

2014

2006 5655 Hudson Drive

2014 8233 N. Sam Houston

Parkway E.

2009 1201 E Michigan Avenue

2001 550 Heritage Dr.

2004 600 Heritage Dr.

2010 2405 Clear Creek Rd

2012 5702 E Central Texas

Expressway

2011 135 Bunton Creek 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

2009 2100 Via Bella

2011 2150 Via Bella

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

2007 17-19 View Road

2010 53 Parkside

2003 49 Parkside

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

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

1986 11550 Indian Hills Road

2016 7010 Highway 6

2013 3900 28th Avenue Drive

2008 1001 Hart Boulevard

2012 401 Young Avenue

1990 6635 Lake Drive

2005 5002 Crossings Circle

2012 2 Good Samaritan Way

1900 28078 Baxter 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

Murrieta, CA . . . . . . . .
Nashville, TN . . . . . . .
Nassau Bay, TX . . . . . .
Nassau Bay, TX . . . . . .
New Albany, IN . . . . .
Niagara Falls, NY . . . .
Niagara Falls, NY . . . .
Oklahoma City, OK . . .
Oro Valley, AZ . . . . . .
Palmer, AK . . . . . . . . .
Pasadena, TX . . . . . . . .

Pearland, TX . . . . . . . .
Pearland, TX . . . . . . . .
Pendleton, OR . . . . . . .
Phoenix, AZ . . . . . . . .
Pineville, NC . . . . . . . .
Plano, TX . . . . . . . . . .
Plano, TX . . . . . . . . . .
Plantation, FL . . . . . . .
Plantation, FL . . . . . . .
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 . . . . .
Santa Clarita, CA . . . . .
Sarasota, FL . . . . . . . . .
Seattle, WA . . . . . . . . .
Sewell, NJ . . . . . . . . . .

Shakopee, MN . . . . . . .
Shakopee, MN . . . . . . .
Shenandoah, TX . . . . .
Sherman Oaks, CA . . .
Somerville, NJ . . . . . . .
Southlake, TX . . . . . . .
Southlake, TX . . . . . . .

Southlake, TX . . . . . . .

Springfield, IL . . . . . . .
Springfield, IL . . . . . . .
St Paul, MN . . . . . . . . .

—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
25,000
—
—
—
—

5,900
9,964
—
—
—
—
—

—

—
—
—

—
1,806
378
91
2,411
1,433
454
216
89
217
1,700

1,500
9,594
—
1,149
961
5,423
793
8,563
8,848
655
5,015
1,117
2,000
2,969
132
1,062
1,931
183
883
762
866
1,655
1,048
1,038
4,518
900
—
—
278
295
—
62
4,410
60

508
707
—
—
3,400
3,000
592

47,190
7,165
31,206
10,613
16,494
10,891
8,362
19,135
18,339
29,705
8,009

11,253
32,753
10,312
48,018
6,974
20,698
83,209
10,666
9,262
25,930
26,697
21,972
9,118
26,697
17,197
28,680
47,639
5,851
15,984
17,171
12,756
14,050
10,252
9,173
31,041
17,288
2,338
28,384
185
40,257
20,618
47,325
38,428
57,929

11,412
18,089
21,135
32,186
22,244
—
18,243

698

30,549

1,569
177
49

10,350
3,519
37,695

46
3,234
168
1,282
30
435
307
378
969
1,333
—

—
191
43
11,667
2,504
138
1,356
4,269
893
13
876
2,056
—
630
527
2,004
—
—
18
1
1,737
20
—
1,853
3,353
620
20,063
1,499
11,595
—
718
3,134
392
683

391
78
51
2,729
2
—
1,101

3,915

—
31
402

—
1,942
378
91
2,411
1,721
454
216
89
217
1,700

1,500
9,807
—
1,149
1,077
5,423
793
8,575
8,908
655
5,015
1,117
2,000
3,004
132
1,062
1,931
183
883
762
869
1,655
1,048
1,074
4,548
900
5,218
5,250
11,872
295
4,407
62
4,410
164

509
773
24
3,121
3,400
3,000
592

47,236
10,263
31,374
11,894
16,524
11,037
8,669
19,513
19,308
31,038
8,009

11,253
32,731
10,355
59,685
9,362
20,836
84,566
14,923
10,095
25,943
27,573
24,028
9,118
27,291
17,723
30,684
47,639
5,851
16,002
17,171
14,490
14,070
10,252
10,990
34,364
17,907
17,183
24,633
185
40,257
16,929
50,459
38,820
58,508

11,802
18,102
21,162
31,795
22,246
—
19,344

15,692
3,951
7,866
3,369
2,318
5,311
2,967
4,392
6,489
10,170
902

1,175
3,801
1,076
23,017
4,180
11,412
18,638
7,044
6,498
7,307
7,241
8,627
399
7,440
4,142
9,017
11,144
1,619
3,974
3,499
5,359
2,381
4,636
5,151
9,138
3,636
2,505
3,534
123
3,964
2,615
11,273
13,671
21,485

3,714
4,421
1,586
4,762
5,237
—
4,305

2010
2006
2012
2012
2014
2007
2007
2013
2007
2007
2012

2012
2014
2012
2006
2006
2008
2012
2006
2006
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

2010
2010
2013
2014
2008
2014
2012

2011 28078 Baxter Rd.
1986 310 25th Ave. N.
1981 18100 St John Drive
1986 2060 Space Park Drive
2001 2210 Green Valley Road
1995 6932 - 6934 Williams Rd
2004 6930 Williams Rd
2008 535 NW 9th Street
2004 1521 East Tangerine Rd.
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 Way
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.
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

1996 1515 St Francis Ave
2007 1601 St Francis Ave
2014 106 Vision Park Boulevard
1969 4955 Van Nuys Boulevard
2007 30 Rehill Avenue
1900 Central Avenue
2004 1545 East Southlake

Boulevard

698

34,464

6,472

2012

2004 1545 East Southlake

Boulevard

1,568
177
49

10,351
3,551
38,096

852
300
4,007

2010
2010
2014

2011 1100 East Lincolnshire Blvd
2011 2801 Mathers Rd.
2006 225 Smith Avenue N.

139

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

St. Louis, MO . . . . . . .
St. Paul, MN . . . . . . . .
Stamford, CT . . . . . . . .
Suffern, NY . . . . . . . . .
Suffolk, VA . . . . . . . . .
Sugar Land, TX . . . . . .
Tacoma, WA . . . . . . . .
Tallahassee, FL . . . . . .
Tampa, FL . . . . . . . . . .
Tampa, FL . . . . . . . . . .
Temple, TX . . . . . . . . .
Timonium, MD . . . . . .
Tucson, AZ . . . . . . . . .
Tustin, CA . . . . . . . . . .
Tustin, CA . . . . . . . . . .
Van Nuys, CA . . . . . . .
Voorhees, NJ . . . . . . . .
Voorhees, NJ . . . . . . . .
Wausau, WI . . . . . . . . .

Waxahachie, TX . . . . .
Wellington, FL . . . . . .
Wellington, FL . . . . . .
West Seneca, NY . . . . .
Zephyrhills, FL . . . . . .

Outpatient medical

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
— $

$

336
2,706
—
653
1,566
3,543
—
—
4,319
1,462
2,900
8,829
1,302
3,345
3,361
—
6,404
6
2,050

—
107
388
917
3,874

$

17,247
39,507
41,153
37,255
11,511
15,532
64,307
17,449
12,234
7,270
9,954
12,568
4,925
541
12,039
36,187
24,251
96,075
12,176

18,784
16,933
13,697
22,435
27,266

2,004
325
1,709
183
219
—
—
—
—
—
26
—
897
61
1,421
—
1,499
400
—

95
2,685
1,637
3,841

$

— $

336
2,701
—
696
1,620
3,543
—
—
4,319
1,462
2,900
8,829
1,325
3,345
3,361
—
6,477
99
2,050

303
326
580
1,665
3,875

$

19,250
39,838
42,862
37,394
11,676
15,532
64,307
17,449
12,234
7,270
9,980
12,568
5,799
602
13,460
36,187
25,677
96,381
12,176

18,576
19,398
15,142
25,528
27,274

6,769
10,622
1,176
10,155
4,328
4,408
14,457
5,095
2,425
47
1,375
263
2,662
230
2,124
8,749
9,126
21,530
352

909
6,388
4,720
9,442
5,923

$

total: . . . . . . . . . . . .

$ 218,382

$ 574,346

$ 4,724,190

$ 315,225

$ 639,696

$ 4,974,067

$1,096,012

$

Assets held for sale:
Agawam, MA . . . . . . .
Agawam, MA . . . . . . .
Agawam, MA . . . . . . .
Agawam, MA . . . . . . .
Aspen Hill, MD . . . . . .
Aurora, CO . . . . . . . . .
Ayer, MA . . . . . . . . . .
Beachwood, OH . . . . .
Bend, OR . . . . . . . . . . .
Bremerton, WA . . . . . .
Bremerton, WA . . . . . .
Bremerton, WA . . . . . .
Burlington, WA . . . . . .
Carson City, NV . . . . .
Cedar Grove, WI . . . . .
Cloquet, MN . . . . . . . .
Columbia, SC . . . . . . .
Concord, NH . . . . . . . .
Crown Point, IN . . . . .
Dallas, OR . . . . . . . . . .
Dallas, TX . . . . . . . . . .
Dyer, IN . . . . . . . . . . . .
Eugene, OR . . . . . . . . .
Franklin, WI . . . . . . . .
Glastonbury, CT . . . . .
Grass Valley, CA . . . . .
Green Bay, WI . . . . . . .
Green Bay, WI . . . . . . .
Green Bay, WI . . . . . . .
Hemet, CA . . . . . . . . . .
Houston, TX . . . . . . . .

— $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4,161
—
4,113
5,178
—
—
—
—

$

1,230
930
920
920
—
2,600
—
1,260
1,210
390
830
590
3,860
520
113
340
2,120
720
920
410
1,080
1,800
800
6,872
1,950
260
—
—
—
870
5,090

13,618
15,304
10,661
10,562
9,008
5,906
22,074
23,478
9,181
2,210
10,420
2,899
31,722
8,238
618
4,660
4,860
3,041
20,044
9,427
9,655
25,061
5,822
7,550
9,532
7,667
14,891
20,098
11,696
3,405
9,471

$

$

— $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—

8,189
8,807
6,185
6,111
7,730
10,634
11,708
13,114
9,762
2,073
9,872
3,200
33,317
8,037
554
4,285
8,050
3,344
15,895
10,129
6,615
20,365
6,252
10,294
7,520
7,324
10,945
14,874
7,474
3,342
8,442

— $
—
—
—
—
2,128
—
—
—
—
—
—
—
—
—
—
1,070
—
—
292
—
—
—
—
—
—
—
—
—
—
—

140

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—

2007
2011
2015
2011
2010
2012
2011
2010
2011
2017
2011
2015
2008
2015
2015
2009
2006
2010
2015

2016
2006
2007
2007
2011

2011
2011
2011
2011
2011
2006
2011
2001
2015
2006
2010
2014
2015
2013
2010
2011
2003
2011
2015
2015
2011
2015
2015
2010
2011
2013
2010
2010
2010
2007
2007

2001 2325 Dougherty Rd.
2007 435 Phalen Boulevard
2016 29 Hospital Plaza
2007 257 Lafayette Avenue
2007 5838 Harbour View Blvd.
2005 11555 University Boulevard
2013 1608 South J Street
2011 One Healing Place
2003 14547 Bruce B Downs Blvd
1996 12500 N Dale Mabry
2012 2601 Thornton Lane
2017 2118 Greenspring Drive
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
2017 1901 Westwood Center

Boulevard
2014 2460 N I-35 East
2000 10115 Forest Hill Blvd.
2003 1395 State Rd. 7
1990 550 Orchard Park Rd
1974 38135 Market Square Dr

1975 61 Cooper Street
1970 55 Cooper Street
1985 464 Main Street
1967 65 Cooper Street
1988 3227 Bel Pre Road
1988 14101 E. Evans Ave.
1988 400 Groton Road
1990 3800 Park East Drive
1981 1801 NE Lotus Drive
1999 3231 Pine Road
1984 3201 Pine Road NE
1997 3210 Rickey Road
2001 400 Gilkey Road
1997 1111 W. College Parkway
1986 313 S. Main St.
2006 705 Horizon Circle
2000 731 Polo Rd.
1926 227 Pleasant Street
2015 1555 South Main Street
1972 664 SE Jefferson
1997 3611 Dickason Avenue
2015 1532 Calumet Avenue
1990 4550 West Amazon Drive
1984 9200 W. Loomis Rd.
1966 72 Salmon Brook Drive
2001 415 Sierra College Drive
2002 2253 W. Mason St.
2002 2845 Greenbrier Road
2002 2845 Greenbrier Road
1996 25818 Columbia St.
2009 15015 Cypress Woods Medical

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

Houston, TX . . . . . . . .
Hove, UKJ . . . . . . . . . .
Indianapolis, IN . . . . . .
Indianapolis, IN . . . . . .
Kenosha, WI . . . . . . . .
Kent, WA . . . . . . . . . .
Lancaster, NH . . . . . . .
Lowell, MA . . . . . . . . .
Marinette, WI
. . . . . . .
McMinnville, OR . . . .
Meridian, ID . . . . . . . .
Milwaukee, WI . . . . . .
Milwaukee, WI . . . . . .
Milwaukee, WI . . . . . .
Milwaukee, WI . . . . . .
Milwaukie, OR . . . . . .
Mount Vernon, WA . . .
Mt. Vernon, WA . . . . .
Muskego, WI . . . . . . . .
New Berlin, WI . . . . . .
New Haven, IN . . . . . .
North Bend, OR . . . . . .
North Cape May, NJ . .
Oshkosh, WI . . . . . . . .
Oshkosh, WI . . . . . . . .
Palm Springs, FL . . . . .
Palm Springs, FL . . . . .
Plymouth, WI . . . . . . .
Post Falls, ID . . . . . . . .
Richardson, TX . . . . . .
Rockville, MD . . . . . . .
Roseburg, OR . . . . . . .
Salem, OR . . . . . . . . . .
Sheboygan, WI . . . . . .
Shelton, WA . . . . . . . .
Sparks, NV . . . . . . . . .
Springfield, OR . . . . . .
Summit, WI . . . . . . . . .
Tucson, AZ . . . . . . . . .
Wallingford, CT . . . . .
West Allis, WI . . . . . . .
Westlake, OH . . . . . . .
Wilkes-Barre, PA . . . .

Assets held for sale

total . . . . . . . . . . . . .

—
—
—
—
5,676
—
—
—
4,832
—
—
3,424
7,547
1,888
13,270
—
—
—
908
3,500
—
—
—
—
5,978
—
—
1,059
—
—
—
—
—
1,463
—
—
—
—
—
—
2,685
—
— $

960
1,360
495
255
—
940
160
1,070
—
720
3,600
540
1,425
922
—
400
3,440
400
964
3,739
176
1,290
77
—
—
739
1,182
1,250
2,700
1,800
—
1,200
440
1,012
530
3,700
1,790
2,899
1,190
490
1,106
1,330
570

65,682

$

85,466

$

$

27,598
6,979
6,287
2,473
18,058
20,318
434
13,481
13,538
7,984
20,802
8,457
11,520
2,185
44,535
6,782
21,842
2,200
2,159
8,290
3,524
7,361
151
18,339
15,881
4,066
7,765
1,870
14,217
16,562
16,398
4,891
4,726
2,216
17,049
46,526
8,865
87,666
18,318
1,210
3,308
17,926
2,301

909,837

$

$

$

$

—
—
11,018
6,335
—
2,768
—
—
—
—
—
—
—
—
—
—
128
—
—
—
—
164
137
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
316
—
—
—
— $

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— $

9,332
2,361
17,800
9,063
12,519
24,026
493
1,960
8,664
8,296
6,860
5,846
8,731
2,108
30,222
6,828
25,410
2,066
2,156
8,129
1,961
8,815
365
12,160
11,337
2,061
3,072
2,149
14,941
17,440
8,715
5,792
4,903
2,318
15,409
39,559
10,131
60,029
19,824
941
3,159
10,208
1,545

$

24,356

$

— $

734,147

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—

—

2011
2014
2006
2006
2010
2007
2011
2011
2010
2015
2006
2010
2010
2010
2010
2015
2014
2006
2010
2010
2004
2015
2015
2010
2010
2006
2006
2010
2007
2015
2012
2015
2015
2010
2012
2007
2015
2008
2015
2011
2010
2001
2011

1995 10225 Cypresswood Dr
1987 Furze Hill
1981 8616 W. Tenth St.
1981 8616 W.Tenth St.
1993 10400 75th St.
2000 24121 116th Avenue SE
1905 63 Country Village Road
1975 841 Merrimack Street
2002 4061 Old Peshtigo Rd.
1996 3121 NE Cumulus Avenue
2008 2825 E. Blue Horizon Dr.
1930 1218 W. Kilbourn Ave.
1962 3301-3355 W. Forest Home Ave.
1958 840 N. 12th St.
1983 2801 W. Kinnickinnic Pkwy.
1991 5770 SE Kellogg Creek Drive
1987 1810 E. Division Street
2001 3807 East College Way
1993 S74 W16775 Janesville Rd.
1993 14555 W. National Ave.
1981 1201 Daly Dr.
1995 2290 Inland Drive
1988 610 Town Bank Road
2000 855 North Wethaven Dr.
2000 855 North Wethaven Dr.
1993 1640 S. Congress Ave.
1997 1630 S. Congress Ave.
1991 2636 Eastern Ave.
2008 460 N. Garden Plaza Ct.
2009 1350 East Lookout Drive
1986 9701 Medical Center Drive
1990 1901 NW Hughwood Drive
1992 3988 12th Street SE
1958 1813 Ashland Ave.
1989 900 W Alpine Way
2009 275 Neighborhood Way
1994 770 Harlow Road
2009 36500 Aurora Dr.
1997 8151 E Speedway Boulevard
1962 35 Marc Drive
1961 11333 W. National Ave.
1985 27601 Westchester Pkwy.
1992 300 Courtright Street

Summary:
Triple-net . . . . . . . . . . .
Seniors housing

operating . . . . . . . . .
. . .

Outpatient medical
Construction in

progress . . . . . . . . . .

$ 343,361
1,988,700

$ 818,863
1,174,980

$ 7,759,508
12,626,419

$ 382,344
1,234,180

$ 847,780
1,246,991

$ 8,112,937
13,788,584

$1,380,023
2,362,335

218,382
—

574,346
—

4,724,190
237,746

315,225
—

639,696
—

4,974,067
237,746

1,096,012
—

Total continuing

operating properties
Assets held for sale . . .

Total investments in

real property owned

2,550,443
65,682

2,568,189
85,466

25,347,863
909,837

1,931,749
24,356

2,734,467
—

27,113,334
734,147

4,838,370
—

$2,616,125

$2,653,655

$26,257,700

$1,956,105

$2,734,467

$27,847,481

$4,838,370

(1) Please see Note 2 to our consolidated financial statements for information regarding lives used for depreciation and amortization.
(2) Represents real property asset associated with a capital lease.

141

Investment in real estate:
Beginning balance

Acquisitions and development
. . . . . . . . . . . . . . . . . . . . . . . . . .
Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deconsolidation of previously consolidated venture . . . . . . . . .
Impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,

2017

2016

2015

(in thousands)

$30,041,058
1,276,636
250,276
(144,897)
(101,527)
(1,203,247)
415,879
47,770

$29,865,490
2,834,279
219,146
—
(37,207)
(2,411,219)
(429,431)
—

$25,491,935
5,076,830
187,752
—
(2,220)
(491,396)
(397,411)
—

Ending balance(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$30,581,948

$30,041,058

$29,865,490

Accumulated depreciation:

Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . .
Amortization of above market leases . . . . . . . . . . . . . . . . . . . . .
Disposition and other
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 4,093,494
921,720
7,303
(192,029)
7,882

$ 3,796,297
901,242
7,909
(514,651)
(97,303)

$ 3,020,908
826,240
11,912
(111,199)
48,436

Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 4,838,370

$ 4,093,494

$ 3,796,297

(1) Primarily relates to the acquisition of an asset through foreclosure.
(2) The unaudited aggregate cost for tax purposes for real property equals $25,618,090,000 at December 31, 2017.

142

Welltower Inc.

Schedule IV — Mortgage Loans on Real Estate
December 31, 2017

Location

Segment

Interest Rate

Final
Maturity
Date

Monthly
Payment
Terms

Prior
Liens

Face Amount
of Mortgages

Carrying
Amount of
Mortgages

Principal Amount
of Loans Subject
to Delinquent
Principal or
Interest

(in thousands)

First mortgages relating to 1 property located in:
Triple-Net
California
Triple-Net
United Kingdom
Triple-Net
United Kingdom
Triple-Net
United Kingdom
Triple-Net
United Kingdom
Triple-Net
United Kingdom
Triple-Net
United Kingdom
Triple-Net
Oklahoma
Triple-Net
Oregon
Triple-Net
Pennsylvania
Triple-Net
Florida

First mortgages relating to multiple properties:
Triple-Net
7 properties in four states
Triple-Net
13 properties in Texas
Triple-Net
13 properties in six states

Second mortgages relating to 1 property located in:

8.11%
7.25%
8.29%
8.00%
8.55%
7.00%
8.00%
9.02%
7.10%
8.11%
8.79%

12/15/20
11/21/19
01/16/18
08/24/22
07/01/19
03/14/22
07/06/19
11/01/19
12/31/17
03/01/22
06/23/21

$

2,011,590
115,794,386
9,521,615
10,858,294
83,119,990
96,303,670
137,884,551
88,826,160
1,356,780
36,683,720
94,519,150

$ —
—
—
—
—
—
—
—
—
—
—

$ 28,000
18,805
2,841
11,712
15,487
28,374
20,294
11,610
225
15,530
17,100

10.00%
10.00%
10.00%

01/01/22
01/01/22
01/01/22

$ 297,169,200
851,672,100
1,139,453,100

—
—
—

65,796
103,620
138,633

$

292
18,805
1,352
1,645
15,486
16,139
20,294
11,595
225
5,706
12,444

25,832
82,041
91,164

Texas

Totals

Triple-Net

12.17%

05/01/19

32,033

11,367

3,100

3,100

$11,367

$481,127

$306,120

$—
—
—
—
—
—
—
—
—
—
—

—
—
—

—

$—

Reconciliation of mortgage loans:

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions:

New mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Draws on existing loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deductions:

Collections of principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conversions to real property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in allowance for loan losses and charge-offs . . . . . . . . . . . . . . . . . . . . . .

Total deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in balance due to foreign currency translation . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,

2017

2016

2015

$ 485,735

(in thousands)
$ 635,492

$ 188,651

6,706
58,224

64,930

(180,135)
—
(71,535)

(251,670)
7,125

8,223
92,815

101,038

(191,134)
(45,044)
(3,053)

(239,231)
(11,564)

524,088
30,550

554,638

(80,552)
(23,288)
—

(103,840)
(3,957)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 306,120

$ 485,735

$ 635,492

143

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 28, 2018

/s/ THOMAS J. DEROSA
Thomas J. DeRosa,
Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, John A. Goodey, 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 28, 2018

JOHN A. GOODEY

/s/
John A. Goodey,
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, 2017 (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 28, 2018

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, John A. Goodey, 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, 2017 (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.

JOHN A. GOODEY

/s/
John A. Goodey,
Chief Financial Officer

Date: February 28, 2018

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.

[THIS PAGE INTENTIONALLY LEFT BLANK]

[THIS PAGE INTENTIONALLY LEFT BLANK]

COMMITTEES OF THE BOARD
Audit Committee
Klipsch, Meyers, Rivera, Trumbull (Chair)

Compensation Committee
Bacon, Naughton, Oster (Chair), Pelham

Investment Committee
Bacon, Klipsch, Naughton (Chair), Rivera, 
Whitelaw

Nominating/Corporate Governance Committee
Donahue (Chair), Klipsch, Meyers, Oster, Pelham, 
Whitelaw

Executive Committee
DeRosa, Donahue (Chair), Naughton, Oster, 
Trumbull

EXECUTIVE OFFICERS
Thomas J. DeRosa
Chief Executive Officer

John Goodey
Executive Vice President - Chief Financial Officer

Mercedes T. Kerr
Executive Vice President - Business & 
Relationship Management

Matthew G. McQueen
Senior Vice President – General Counsel &
Corporate Secretary

Shankh Mitra
Senior Vice President - Investments

CORPORATE OFFICES
Welltower Inc.
4500 Dorr Street
Toledo, Ohio 43615-4040
(877) 670-0070
(419) 247-2800
(419) 247-2826 Fax
www.welltower.com

392 employees as of 1/31/18
4,761 registered shareholders as of 1/31/18

BOARD OF DIRECTORS
Kenneth J. Bacon
Age 63
Co-Founder and Managing Partner
RailField Realty Partners
Bethesda, Maryland

Thomas J. DeRosa
Age 60
Chief Executive Officer
Welltower Inc.
Toledo, Ohio

Jeffrey H. Donahue
Age 71
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 73
Retired Chief Financial Officer,
Executive Vice President and Treasurer
HCR ManorCare, Inc.
Toledo, Ohio

Timothy J. Naughton
Age 56
Chairman and Chief Executive Officer
AvalonBay Communities, Inc.
Arlington, Virginia

Sharon M. Oster
Age 69
Frederic D. Wolfe Professor of Management & 
Entrepreneurship, Professor of Economics
Yale University School of Management
New Haven, Connecticut

Judith C. Pelham
Age 72
President Emeritus
Trinity Health
Livonia, Michigan

Sergio D. Rivera
Age 55
CEO and President of the Vacation Ownership
Segment
ILG, Inc.
Miami, Florida

R. Scott Trumbull
Age 69
Retired CEO and Chairman of the Board
Franklin Electric Co., Inc.
Fort Wayne, Indiana

Gary Whitelaw
Age 62
Chief Executive Officer
Bentall Kennedy
Toronto, Canada

TRANSFER AGENT, REGISTRAR, 
DIVIDEND DISBURSING AGENT AND 
PLAN ADMINISTRATOR
Computershare
P.O. Box 505000 
Louisville, KY  40233
(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.

EXCHANGE LISTING
New York Stock Exchange
Trading Symbol: WELL

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.

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 2017 Annual Report, visit
www.welltower.com.

     
    
www.welltower.com

4500 Dorr Street
Toledo, Ohio 43615-4040
877.670.0070
419.247.2800

WELL
LISTED
NYSE

© COPYRIGHT 2018 WELLTOWER INC.