Welltower

2 01 8

Annual  
Report

LETTER FROM

THE CEO

Dear Shareholders,

2018 was a year of strategic transformation 

upcoming decade, all baby boomers will be 

and growth at Welltower. Our continued 

older than 65, and one in five Americans 

alignment with best-in-class partners, 

will be of retirement age. Developments 

proprietary data-driven investment 

in technology, changes in government 

approach, and persistent optimization of 

reimbursement, and evolving consumer 

our portfolio advanced our competitive 

expectations are propelling a movement 

position in the marketplace and led to 

to value-based, data-driven, outcome-

strong financial results and a significant 

oriented care. The concurrence of these 

increase in accretive new investment 

movements is generating a paradigm 

volume financed by our effective and 

shift in care delivery along the entire care 

efficient access to capital. Multiple large-

continuum. As the global leader in health 

scale achievements validated our innovative 

care real estate, Welltower is uniquely 

strategy and confirmed our demonstrable 

positioned to support this broad transition, 

leadership in health care real estate and 

and is committed to driving the health care 

infrastructure.

industry to new, cost-effective settings. 

Well Positioned in a Dynamic 
Health Care Landscape 

Prepared for Growth and 
Innovation

The health care industry is in a period 

2018 marked a definitive turning point 

of transformative change driven by 

in our strategic focus from portfolio 

a profound demographic shift. In the 

repositioning to growth and innovation.  

The most notable indicator of this shift 

demonstrates our ability to not only identify 

was the $4.4 billion acquisition of HCR 

areas of need, but to act on this thesis to 

ManorCare and the related real estate 

bring high quality, dignified care to a vastly 

with ProMedica Health System, which was 

underserved population.

completed in July.

This immediately 

accretive 

investment 

validated 

Welltower’s 

unique thesis of 

partnering with 

the nation’s largest 

non-profit health 

systems to drive 

new models of and 

settings for health 

care delivery.  The 

synergies created 

through this first of 

its kind partnership 

This immediately 
accretive investment 
validated Welltower’s 
unique thesis of 
partnering with  
the nation’s largest  
non-profit health systems 
to drive new models of 
and settings for health 
care delivery.  

In addition to major 

developments in seniors 

housing, 2018 saw a significant 

expansion of our outpatient 

medical portfolio. In December, 

we announced the acquisition 

of a 75% ownership interest in 

two state-of-the-art “Class A+” 

medical office buildings under 

development in Charlotte, North 

Carolina. This transaction aligned 

Welltower with two highly 

reputable entities: prominent 

Southeast developer Pappas 

Properties and world-class 

health system, Atrium Health, 

will bring immense value to the patients, 

residents, care providers, and shareholders 

we serve for years to come. 

In November, we announced the 

development of a modern, 140,000-sq.

ft., 17-story memory care and assisted 

living center on the Upper West Side of 

Manhattan. This will be the second senior 

living community that we will develop in 

Manhattan and illustrates our strategy to 

expand our presence in high barrier to 

entry markets. 

We have consistently recognized the 

critical shortage of seniors housing options 

in urban settings and articulated the 

widespread effects of this deficit on the 

elderly population, their families and the 

health care system. Our active presence in 

core markets such as Manhattan, London, 

Los Angeles, San Francisco, and Toronto 

and will serve as a foundation for future 

growth opportunities.  

We began 2019 with the announcement of a 

$1.25 billion acquisition of 55 medical office 

buildings from CNL Healthcare Properties 

which marked an important development 

for our outpatient medical and health 

system portfolio. The optimal location and 

high occupancy of the assets, combined 

with their affiliations with premier health 

systems including Novant Health, Memorial 

Hermann and Cleveland Clinic, provide a 

great opportunity for us. 

We completed several key restructurings 

and dispositions in 2018, including a broad 

restructuring of our Brookdale assets. 

By decreasing the overall concentration 

of Brookdale operated assets from 

7.6%* to 2.7%* of In-Place NOI while 

substantially improving lease coverage 

on the remaining Brookdale portfolio, we 

positioned ourselves for an optimal long-

care real estate industry. Titled “Health 

term relationship with multiple potential 

Systems & Post-Acute Care: An Evolving 

opportunities for expansion in the future. 

Perspective”, the report examined the  

We also completed $1.8 billion in total 

care-delivery strategies deployed by  

dispositions in the year, proving that the 

health systems in response to the 

acceleration in our growth opportunities 

challenges of an aging population and 

has not compromised our highly disciplined 

changing payment models that demand 

and selective approach to our portfolio 

better health outcomes at lower costs. 

management. 

Continuing our Trend of Strong 
Financial Performance

In November, we released The AL Quality 

Standards Report, which identified five  

key domains for assisted living care  

quality. The purpose of this report was  

Welltower’s strategy was validated by our 

to provide a foundation for the 

solid financial results in 2018. Average total 

development of standardized quality 

portfolio Same Store NOI growth increased 

measurement and care improvement  

by 1.6%*, driven by positive year-over-year 

at the national level. The publication  

growth in all segments. We generated $795 

outlined the work of the AL Quality 

million of gross proceeds from common 

Network, a new stakeholder group 

stock issuances at an average price of 

comprised of best-in-class assisted 

$67.51 per share, including a $300 million 

living operators, academics, industry 

investment from the Qatar Investment 

representatives, and family members of 

Authority (“QIA”). 

parents receiving assisted living care. 

Our relationship with QIA is yet another 

These two works highlighted the value of 

example of our ability to attract new 

integrated health systems and post-acute 

sources of long-term institutional capital. 

care settings and identified the real estate 

Our net debt to Adjusted EBITDA  

was 5.84x* and our net debt to 

undepreciated book capitalization 

ratio was 37.8%*. Our exceptional 

balance sheet strength allows 

us critical flexibility in deploying 

capital to the advantage of our 

shareholders. 

Building a Reputation of 
Thought Leadership

In October, we released the 

first edition of The Welltower 

Report, a thought-leadership 

initiative focused on trends and 

insights within the dynamic health 

implications of this growing care model. 

The industry trends that we outlined 

strongly support our use of data analytics 

to quantify 

meaningful 

quality-of-life 

enhancements 

and cost-savings 

achieved through 

the delivery of  

care in senior  

living settings.

The industry trends that 
we outlined strongly 
support our use of data 
analytics to quantify 
meaningful quality-of-life 
enhancements and cost-
savings achieved through 
the delivery of care in 
senior living settings.

Demonstrating Excellence 
in Environmental, Social and 
Governance

I am extremely proud of our tremendous 

progress in ESG initiatives. We were 

named to the Dow Jones Sustainability 

World Index for the first time in 2018 and 

to the Dow Jones Sustainability North 

America Index for the third consecutive 

year. We became the first North American 

REIT to sign the Women’s Empowerment 

Principles and the CEO Action for Diversity 

& Inclusion. 

Companies by Fortune Magazine, the only 

health care real estate company to be 

named to the list this year.

Welltower remains committed to driving the 

transformation of health care infrastructure, 

and I am fortunate to work alongside 

colleagues who are deeply invested in our 

vision for the future of the industry. The 

work that we do each day at Welltower is 

bringing wellness to our communities and 

creating value for you, our shareholders. 

We are thankful for your confidence in us 

and for your continued support. 

It was my honor to announce three 

Sincerely, 

appointments to the Board of Directors: 

•  Dr. Karen DeSalvo, M.D., MPH, physician 

and professor of medicine and 

population health at The University of 

Texas at Austin Dell Medical School and 

former Acting Assistant Secretary for 

Health at the U.S. Department of Health 

and Human Services during the Obama 

Administration 

•  Johnese Spisso, MPA, President of 

UCLA Health, Chief Executive Officer of 

UCLA Hospital System and Associate 

Vice Chancellor of UCLA Health 

Sciences 

•  Kathryn Sullivan, former Chief Executive 

Officer of UnitedHealthcare, Employer & 

Individual, Local Markets 

These national health care executives 

possess extensive experience in the 

medical, health system and health payer 

environments and will add immense value 

to the Board and to the organization as we 

continue to develop valuable collaborations 

and integrations along the health care 

continuum. In January 2019, Welltower was 

named one of the World’s Most Admired 

Thomas J. DeRosa

CEO, Welltower Inc.

*Please see Non-GAAP Reconciliations

Non-GAAP
Reconciliations

NON-GAAP RECONCILIATIONS

The company believes that revenues and net income, as defined 
by U.S. generally accepted accounting principles (U.S. GAAP), 
are the most appropriate earnings measurements. However, the 
company considers EBITDA, Adjusted EBITDA, NOI, In-Place NOI 
(IPNOI) and SSNOI to be useful supplemental measures of its 
operating performance. Excluding EBITDA and Adjusted EBITDA, 
these supplemental measures 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. 
These expenses include, but are not limited to, payroll and
benefits, professional services, office expenses and depreciation 
of corporate fixed assets. IPNOI represents NOI excluding
interest income, other income and non-IPNOI and adjusted for
timing of current quarter portfolio changes such as acquisitions, 
development conversions, segment transitions, dispositions
and investments held for sale. SSNOI is used to evaluate the
operating performance of our properties using a consistent
population which controls for changes in the composition of 
our portfolio.  As used herein, same store is generally defined
as those revenue-generating properties in the portfolio for the
relevant year-over-year reporting periods. Land parcels, loans, 
and sub-leases as well as any properties acquired, developed/
redeveloped (including major refurbishments where 20% or more 
of units are simultaneously taken out of commission for 30 days
or more), sold or classified as held for sale during that period are
excluded from the same store amounts.  Properties undergoing
operator transitions and/or segment transitions (except triple-
net to seniors housing operating with the same operator) are
also 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. The company believes NOI, IPNOI 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, 
IPNOI and SSNOI to make decisions about resource allocations
and to assess the property level performance of our properties.

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. 
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 and primary credit 
facility contain financial ratios based on a definition of EBITDA 
that is specific to those agreements.  Failure to satisfy these 
covenants could result in an event of default that could have a 
material adverse impact on our cost and availability of capital, 
which could in turn have a material adverse impact on our
consolidated results of operations, liquidity and/or financial 
condition. Due to the materiality of these debt agreements and 
the financial covenants, we have defined Adjusted EBITDA to
exclude unconsolidated entities and to include adjustments 
for stock-based compensation expense, provision for loan 
losses, gains/losses on extinguishment of debt, gains/losses/
impairments on properties, gains/losses on derivatives and 
financial instruments, other expenses, and additional other 
income. We believe that EBITDA and Adjusted 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. We primarily utilize them to measure our
interest coverage ratio, which represents EBITDA and Adjusted
EBITDA divided by total interest, and our fixed charge coverage 
ratio, which represents EBITDA and Adjusted EBITDA divided by 
fixed charges. Fixed charges include total interest, secured debt 
principal amortization and preferred dividends. Our leverage
ratios include net debt to Adjusted EBITDA, 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. 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.

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, 2018
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, every Interactive Data File required to be submitted 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, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and
“emerging growth 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 $23,282,837,560.

As of February 13, 2019, the registrant had 386,361,193 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 2, 2019, are incorporated by

reference into Part III.

WELLTOWER INC. AND SUBSIDIARIES
2018 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 the real estate and infrastructure needed to scale innovative care
delivery models and improve people’s wellness and overall health care experience. Welltower™, a real estate
investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United
States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing and post-acute
communities and outpatient medical properties. More information is available on the Internet at
www.welltower.com. The information on our website is not incorporated by reference in this Annual Report on
Form 10-K, and our web address is included as an inactive textual reference only.

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

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

and its subsidiaries unless specifically noted otherwise.

Portfolio of Properties

Please see “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of
Operation — Executive Summary — Company Overview” for a table that summarizes our portfolio as of
December 31, 2018.

Property Types

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

Seniors Housing Operating

Our seniors housing operating properties offer services including independent living and independent
supportive living, continuing care retirement communities, assisted living, Alzheimer’s/dementia care and
include care homes with or without nursing (U.K.), which assist with activities of daily living that preserve a
person’s mobility and social systems to promote cognitive engagement. Our properties include stand-alone
properties that provide one level of service, combination properties that provide multiple levels of service and
communities or campuses that provide a wide range of services. Properties are primarily held in joint venture
entities with operating partners. We utilize the structure authorized by the REIT Investment Diversification and
Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure (the provisions of the
Internal Revenue Code authorizing the RIDEA structure were enacted as part of the Housing and Economic
Recovery Act of 2008).

Independent Living and Independent Supportive Living (Canada)

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

Continuing Care Retirement Communities Continuing care retirement communities typically include a
combination of detached homes and properties offering independent living, assisted living and/or long-term/post-

2

acute care services on one campus. These communities appeal to residents because there is no need to relocate
when health and medical needs change. Resident payment plans vary, but can include entrance fees,
condominium fees and rental fees. Many of these communities also charge monthly maintenance fees in
exchange for a living unit, meals and some health services.

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

Alzheimer’s/Dementia Care Certain properties offering assisted living may include state-licensed settings

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

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

Our Seniors Housing Operating segment accounted for 69%, 65% and 59% of total revenues for the years
ended December 31, 2018, 2017 and 2016, respectively. As of December 31, 2018, we had relationships with 21
operators to manage our seniors housing operating properties. In each instance, our partner provides management
services to the properties pursuant to an incentive-based management contract. We rely on our partners to
effectively and efficiently manage these properties. For the year ended December 31, 2018, our relationship with
Sunrise Senior Living accounted for approximately 36% of our Seniors Housing Operating segment revenues and
25% of our total revenues.

Triple-net

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

Long-Term/Post-Acute Care Facilities Post-acute care is at the leading edge of reducing health care costs
while improving quality. These high-impact centers help patients recover from illness or surgery with the goals
of getting the patient home and healed faster and reducing hospital readmission rates. Our long-term/post-acute
care properties generally offer skilled nursing/post-acute care, inpatient rehabilitation and long-term acute care
services. Skilled nursing/post-acute care refers to licensed daily rate or rental properties where most individuals
require 24-hour nursing and/or medical care. Generally, these properties are licensed for Medicaid and/or
Medicare reimbursement in the U.S. or provincial reimbursement in Canada. All properties offer some level of
rehabilitation services. Some properties focus on higher acuity patients and offer rehabilitation units specializing
in cardiac, orthopedic, dialysis, neurological or pulmonary rehabilitation. Inpatient rehabilitation properties
provide intensive inpatient services after illness, injury or surgery to patients able to tolerate and benefit from
three hours of rehabilitation hours per day. Long-term acute care properties provide inpatient services for patients
with complex medical conditions that require more intensive care, monitoring or emergency support than is
available in most skilled nursing/post-acute care properties.

Our Triple-net segment accounted for 19%, 22% and 28% of total revenues for the years ended
December 31, 2018, 2017 and 2016, respectively. For the year ended December 31, 2018, our revenues related to

3

our relationship with Genesis HealthCare (“Genesis”) accounted for approximately 15% of our Triple-net
segment revenues and 3% of our total revenues. As of December 31, 2018, our relationship with Genesis was
comprised of a master lease for 87 properties owned 100% by us, two real estate loans totaling approximately
$187 million, approximately 9.5 million shares of GEN Series A common stock (representing approximately 9%
of total GEN common stock) and a 25% ownership stake in an unconsolidated joint venture that includes a
master lease for 28 properties operated by Genesis. In addition to rent, the master lease requires Genesis to pay
all operating costs, utilities, real estate taxes, insurance, building repairs, maintenance costs and all obligations
under certain ground leases. All obligations under the master lease have been guaranteed by FC-GEN Operations
Investment, LLC, a subsidiary of Genesis.

Outpatient Medical

Outpatient Medical Buildings Demand for outpatient medical services is growing as more procedures are
performed safely and efficiently outside the hospital setting. State-of-the-art outpatient centers are needed in
accessible, consumer-friendly locations. Our portfolio of outpatient medical buildings is an integral part of
creating health care provider connectivity in local markets and generally include physician offices, ambulatory
surgery centers, diagnostic facilities, outpatient services and/or labs. Approximately 95% of our outpatient
medical building portfolio is affiliated with health systems (buildings directly on hospital campuses or with
tenants that are satellite locations for the health system and its physicians). We typically lease our outpatient
medical buildings to multiple tenants and provide varying levels of property management. Our Outpatient
Medical segment accounted for 12%, 13% and 13% of total revenues for each of the years ended December 31,
2018, 2017 and 2016, respectively. No single tenant exceeds 20% of segment revenues.

Investments

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

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

Investment Types

Real Property Our properties are primarily comprised of land, buildings, improvements and related
rights. Our triple-net properties are generally leased to operators under long-term operating leases. The leases
generally have a fixed contractual term of 12 to 15 years and contain one or more five to 15-year renewal
options. Certain of our leases also contain purchase options, a portion of which could result in the disposition of
properties for less than full market value if the options were to be exercised. Most of our rents are received under
triple-net leases requiring the operator to pay rent and all additional charges incurred in the operation of the
leased property. The tenants are required to repair, rebuild and maintain the leased properties. Substantially all

4

these operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are
generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment.
Rental income related to leases with contingent rental escalators is generally recorded based on the contractual
cash rental payments due for the period.

At December 31, 2018, approximately 94% of our triple-net properties were subject to master leases. A
master lease is a lease of multiple properties to one tenant entity under a single lease agreement. From time to
time, we may acquire additional properties that are then leased to the tenant under the master lease. The tenant is
required to make one monthly payment that represents rent on all the properties that are subject to the master
lease. Typically, the master lease tenant can exercise its right to purchase the properties or to renew the master
lease only with respect to all leased properties at the same time. We believe this bundling feature benefits us
because the tenant cannot limit the purchase or renewal to better performing properties and terminate the leasing
arrangement with respect to poorer performing properties. This spreads our risk among the entire group of
properties within the master lease. The bundling feature should provide a similar advantage to us if the master
lease tenant is in bankruptcy. Subject to certain restrictions, a debtor in bankruptcy has the right to assume or
reject its unexpired leases and executory contracts. In the context of integrated master leases such as ours, our
tenants in bankruptcy would be required to assume or reject the master lease as a whole, rather than deciding on a
property by property basis.

Our outpatient medical portfolio is primarily self-managed and consists principally of multi-tenant
properties leased to health care providers. Our leases typically include increasers and some form of operating
expense reimbursement by the tenant. As of December 31, 2018, 75% of our portfolio included leases with full
(modified gross) and 2% with no expense
pass through, 23% with a partial expense reimbursement
reimbursement (gross). Our outpatient medical leases are non-cancellable operating leases that have a weighted-
average remaining term of six years at December 31, 2018 and are often credit enhanced by security deposits,
guaranties and/or letters of credit.

Construction We provide for the construction of properties for tenants primarily as part of long-term
operating leases. We capitalize certain interest costs associated with funds used for the construction of properties
owned by us. The amount capitalized is based upon the amount advanced during the construction period using
the rate of interest that approximates our company-wide cost of financing. Our interest expense is reduced by the
amount capitalized. We also typically charge a transaction fee at the commencement of construction which we
defer and amortize to income over the term of the resulting lease. The construction period commences upon
funding and terminates upon the earlier of the completion of the applicable property or the end of a specified
period. During the construction period, we advance funds to the tenants in accordance with agreed upon terms
and conditions which require, among other things, periodic site visits by a company representative. During the
construction period, we generally require an additional credit enhancement
in the form of payment and
performance bonds and/or completion guaranties. At December 31, 2018, we had outstanding construction
investments of $194,365,000 and were committed to provide additional funds of approximately $436,984,000 to
complete construction for investment properties. We also provide for construction loans which, depending on the
terms and conditions, could be treated as loans, real property or investments in unconsolidated entities.

Real Estate Loans Our real estate loans are typically structured to provide us with interest income,
principal amortization and transaction fees and are generally secured by first/second mortgage liens, leasehold
mortgages, corporate guaranties and/or personal guaranties. At December 31, 2018, we had gross outstanding
real estate loans of $398,711,000. The interest yield averaged approximately 7.9% per annum on our outstanding
real estate loan balances. Our yield on real estate loans depends upon a number of factors, including the stated
interest rate, average principal amount outstanding during the term of the loan and any interest rate adjustments.
The real estate loans outstanding at December 31, 2018 are generally subject to one to 15-year terms with
principal amortization schedules and/or balloon payments of the outstanding principal balances at the end of the
term. Typically, real estate loans are cross-defaulted and cross-collateralized with other real estate loans,
operating leases or agreements between us and the obligor and its affiliates.

Investments in Unconsolidated Entities

Investments in entities that we do not consolidate but for which we
can exercise significant influence over operating and financial policies are reported under the equity method of

5

accounting. Our investments in unconsolidated entities generally represent interests ranging from 10% to 50% in
real estate assets. Under the equity method of accounting, our share of the investee’s earnings or losses is
included in our consolidated results of operations. To the extent that our cost basis is different from the basis
reflected at the entity level, the basis difference is generally amortized over the lives of the related assets and
liabilities, and such amortization is included in our share of equity in earnings of the entity. The initial carrying
value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest
inclusive of transaction costs. We evaluate our equity method investments for impairment based upon a
comparison of the estimated fair value of the equity method investment to its carrying value. When we determine
a decline in the estimated fair value of such an investment below its carrying value is other-than-temporary, an
impairment is recorded.

Principles of Consolidation

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

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

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

Borrowing Policies

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

Competition

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

6

investment opportunities, our ability to negotiate beneficial investment terms, availability and cost of capital,
construction and renovation costs and applicable laws and regulations.

The operators/tenants of our properties compete with properties that provide comparable services in the
local markets. Operators/tenants compete for patients and residents based on a number of factors including
quality of care, reputation, physical appearance of properties, location, services offered, family preferences,
physicians, staff, and price. We also face competition from other health care facilities for tenants, such as
physicians and other health care providers that provide comparable facilities and services.

For additional information on the risks associated with our business, please see “Item 1A — Risk Factors”

of this Annual Report on Form 10-K.

Corporate Responsibility

Sustainability Approach Our sustainability strategy is focused on adopting the best environmental, social
and governance practices across our business and we have been recognized for our leadership in this space. Most
recently, Welltower was listed to the 2018 Dow Jones Sustainability World Index and named an industry mover
for highest corporate sustainability assessment score increase by sustainable investment specialists RobecoSAM.

Environmental We strive to reduce our environmental impact by increasing energy and water efficiency,
reducing greenhouse gas emissions and investing in projects that reduce energy and water consumption that meet
our rate of return thresholds. We have comprehensive employee, tenant and vendor engagement programs in
place focused on operational strategies to drive energy and water efficiency. In our medical office building
portfolio, we have transitioned to a standard green lease, which aligns tenant and landlord interests on energy and
water efficiency. We seek to increase our consumption of green and renewable energy where possible and have
on-site solar installations at seven properties in our medical office building portfolio. We are actively pursuing
LEED or BREEAM certification for over 200,000 square feet of our new developments, have 38 ENERGY
STAR certified properties and 11 IREM Certified Sustainable Property certifications across our portfolio.
Additionally, 100% of our control boundary, comprised of our managed outpatient medical portfolio,
is
benchmarked in EPA ENERGY STAR Portfolio Manager.

Year(1)

Total energy
consumption in control
boundary(2)

Control boundary energy
use intensity (EUI)

Like-for-like change in
energy consumption
within control
boundary(3)

Percent renewable energy
consumed within control
boundary(4)

2017 . . . . . . . . . . . .
2016 . . . . . . . . . . . .
2015 . . . . . . . . . . . .

375,059 MWh
360,165 MWh
350,342 MWh

24.35 kWh/sq ft
22.82 kWh/sq ft
21.49 kWh/sq ft

(1)%
n/a
n/a

7.25%
n/a
n/a

Year(1)

Control Boundary Water
consumption(2)

Water use intensity (WUI)

Like-for-like change in water
consumption within control
boundary(3)

2017 . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . .

319,045 kgal
337,081 kgal
319,630 kgal

24.0 gal/sq ft
26.4 gal/sq ft
25.0 gal/sq ft

(6.23)%
7.01%
n/a

(1) Full 2018 calendar year energy and water data is not available until March 2019. 2017 is the most recent year for which fill energy and

water is available and externally verified.

(2) Our control boundary refers to its managed medical office building portfolio. Energy and water data reported is reflective of control

boundary energy and water consumption.

(3) Like-for-like change in energy consumption within control boundary is not available prior to 2017 due to a change in energy
consumption methodology. 2017 represents the first year where tenant data is included in our sustainability performance metrics.
Like-for-like change in water consumption within control boundary is not available prior to 2016 due to lack of available data.

(4) Renewable energy consumption data within control boundary is not available prior to 2017 due to lack of data. The data represent on-site

and off-site renewable energy generated and consumed by properties within our control boundary.

Social We have a number of social initiatives in place that are focused on fostering a more diverse
workforce, giving back to our communities and ensuring the health and wellbeing of our employees, tenants and

7

residents. We were recently awarded Silver level of recognition by the American Heart Association’s Workplace
Health Achievement Index. Through our Welltower Foundation, we have donated over $2.5 million since 2015
to organizations that support health and wellness, the arts and education.

Governance We announced two new appointments to our Board of Directors, resulting in 55% of our

independent director positions being held by minorities and women as of December 31, 2018.

Employees As of January 31, 2019, we had 384 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,

8

registration, certification, and inspection laws, regulations, and industry standards, as well as other conditions of
participation in federal and state government programs such as Medicare or Medicaid. 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.

•

•

Seniors Housing Facilities The majority of the revenues received by the operators of U.S. seniors
housing facilities are from private pay sources. The remaining revenue source is primarily Medicaid
provided under state waiver programs for home and community based care. 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.

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

9

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.

• Medicare Reimbursement Generally,

long-term/post-acute care facilities are reimbursed by
Medicare under prospective payment systems, 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. 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 Many states reimburse SNFs 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.

• 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.

10

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 government health program laws require providers to furnish only medically necessary services
and submit to the government valid and accurate statements for each service. 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 upon a finding of noncompliance with
such laws. 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. Federal
and state FCAs contain “whistleblower” provisions that permit private individuals to bring health care fraud
enforcement claims on behalf of the government. Still other laws require providers to comply with a variety of
safety, health and other requirements relating to the condition of the licensed property and the quality of care
provided. Sanctions for violations of these laws, regulations, and other applicable guidance may include, but are
not limited to, criminal and/or civil penalties and fines, loss of licensure, immediate termination of government
payments, exclusion from any government health care program, damage assessments, and imprisonment. In
certain circumstances, violation of these rules (such as those prohibiting abusive and fraudulent behavior) with
respect to one property may subject other facilities under common control or ownership to sanctions, including
exclusion from participation in the Medicare and Medicaid programs, as well as other government health care
programs. In the ordinary course of its business, a property operator is regularly subjected to inquiries,
investigations, and audits by the federal and state agencies that oversee these laws and regulations.

Prosecutions, investigations or whistleblower actions could have a material adverse effect on a property
operator’s liquidity, financial condition, and operations, which could adversely affect the ability of the operator
to meet its financial obligations to us. In addition, government investigations and enforcement actions brought
against the health care industry have increased dramatically over the past several years and are expected to
continue. 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

11

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 2018 and the
European Union’s (“EU”) General Data Protection Regulation (“GDPR”) among other laws. The Data Protection
Act and the GDPR 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. has recently introduced a new national minimum wage legislation 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.

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

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Health regulates the maximum accommodation fee in publicly-funded nursing homes. Health services
in long-term care are publicly-funded, provided through Alberta Health Services. Private sector
operators are eligible to apply for government funding, and the Minister may make grants to an
operator in respect of its operating or capital costs.

Ontario

Retirement homes are regulated and licensed under a provincial

law aimed at protecting residents.
Retirement homes do not receive government funding; residents enter into tenancy agreements under provincial
tenancy law, and pay for tenancy and services received. Residents may access publicly-funded external care
services at the home from external suppliers. Retirement home licenses are granted by the Retirement Homes
Regulatory Authority (“RHRA”), and are non-transferable. The RHRA administers the law governing retirement
homes, to ensure that licensees are meeting certain standards, generally with respect to care and safety. The law
requires any person to report to the RHRA when there are reasonable grounds to suspect abuse of a resident by
anyone, or neglect of a resident by staff. The RHRA conducts a mandatory inspection and issues a report that is
posted on the RHRA’s public website, and also must be posted in the subject home if it is the most recent
report. The Registrar of the RHRA can receive complaints about a retirement home contravening a provision of
the law, and if such a complaint is received, it must be reviewed promptly. The Registrar has broad powers
relating to complaint investigation and action. The RHRA Registrar has the power to inspect a retirement home
at any time without warning or issue a warrant to ensure compliance. Compliance inspections occur at least every
three years. The Registrar has the power to make a variety of orders including the imposition of a fine or an order
revoking the operator’s license. The applicable law also enumerates offenses, such as operating without a license,
and provides for penalties for offenses.

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

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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.

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

The following summary of the taxation of the company and the material U.S. federal

income tax
consequences to the holders of our debt and equity securities is for general information only and is not tax

14

advice. This summary does not address all aspects of taxation that may be relevant to certain types of holders of
stock or securities (including, but not limited to, insurance companies, tax-exempt entities, financial institutions
or broker-dealers, persons holding shares of common stock as part of a hedging, integrated conversion, or
constructive sale transaction or a straddle, traders in securities that use a mark-to-market method of accounting
for their securities, investors in pass-through entities and foreign corporations and persons who are not citizens or
residents of the United States).

This summary does not discuss all of the aspects of U.S. federal income taxation that may be relevant to you
in light of your particular investment or other circumstances. In addition, this summary does not discuss any state
or local income taxation or foreign income taxation or other foreign tax consequences. This summary is based on
current U.S. federal income tax law, including the provisions of the “Tax Cuts and Jobs Act” (the “Tax Act”). A
discussion of the potential implications to the Company of the Tax Act is provided at the end of this summary
below. Subsequent developments in U.S. federal
including changes in law or differing
interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income tax
consequences of purchasing, owning and disposing of our securities as set forth in this summary. Before you
purchase our securities, you should consult your own tax advisor regarding the particular U.S. federal, state,
local, foreign and other tax consequences of acquiring, owning and selling our securities.

income tax law,

General

We elected to be taxed as a real estate investment trust (a “REIT”) commencing with our first taxable year.
We intend to continue to operate in such a manner as to qualify as a REIT, but there is no guarantee that we will
qualify or remain qualified as a REIT for subsequent years. Qualification and taxation as a REIT depends upon
our ability to meet a variety of qualification tests imposed under U.S. federal income tax law with respect to our
income, assets, distributions and share ownership, as discussed below under “Qualification as a REIT.” There can
be no assurance that we will qualify or remain qualified as a REIT.

In any year in which we qualify as a REIT, in general, we will not be subject to U.S. federal income tax on
that portion of our REIT taxable income or capital gain that is distributed to stockholders. We may, however, be
subject to tax at normal corporate rates on any taxable income or capital gain not distributed. If we elect to retain
and pay income tax on our net capital gain, stockholders would be taxed on their proportionate share of our
undistributed net capital gain and would receive a refundable credit for their share of any taxes paid by us on
such gain.

Despite the REIT election, we may be subject to U.S. federal income and excise tax as follows:

• To the extent that we do not distribute all of our net capital gain or distribute at least 90%, but less than
100%, of our “REIT taxable income,” as adjusted, we will be subject to tax on the undistributed
amount at regular corporate tax rates;

•

If we have net income from the sale or other disposition of “foreclosure property” that is held primarily
for sale to customers in the ordinary course of business or other non-qualifying income from
foreclosure property, such income will be taxed at the highest corporate rate;

• Any net income from prohibited transactions (which are, in general, sales or other dispositions of
property held primarily for sale to customers in the ordinary course of business, other than dispositions
of foreclosure property) will be subject to a 100% tax;

•

•

If we fail to satisfy either the 75% or 95% gross income tests (as discussed below), but nonetheless
maintain our qualification as a REIT because certain other requirements are met, we will be subject to a
100% tax on an amount equal to (1) the gross income attributable to the greater of (i) 75% of our gross
income over the amount of qualifying gross income for purposes of the 75% gross income test
(discussed below) or (ii) 95% of our gross income over the amount of qualifying gross income for
purposes of the 95% gross income test (discussed below) multiplied by (2) a fraction intended to reflect
our profitability;

If we fail to distribute during each year at least the sum of (1) 85% of our REIT ordinary income for the
year, (2) 95% of our REIT capital gain net income for such year (other than capital gain that we elect to

15

retain and pay tax on) and (3) any undistributed taxable income from preceding periods, we will be
subject to a 4% excise tax on the excess of such required distribution over amounts actually distributed;
and

• We will be subject to a 100% tax on certain amounts from certain transactions involving our “taxable
REIT subsidiaries” that are not conducted on an arm’s length basis. See “Qualification as a REIT -
Investments in Taxable REIT Subsidiaries.

If we acquire any assets from a corporation, which is or has been a “C” corporation, in a carryover basis
transaction (including where a “C” corporation elects REIT status), we could be liable for specified liabilities that
are inherited from the “C” corporation. A “C” corporation is generally defined as a corporation that is required to
pay full corporate level U.S. federal income tax. If we recognize gain on the disposition of the assets during the
five-year period beginning on the date on which the assets were acquired by us, then, to the extent of the assets’
“built-in gain” (i.e., the excess of the fair market value of the asset over the adjusted tax basis in the asset, in each
case determined as of the beginning of the five-year period), we will be subject to tax on the gain at the highest
regular corporate rate applicable. The results described in this paragraph with respect to the recognition of
built-in gain assume that the “C” corporation did not make and was not treated as making an election to treat the
built-in gain assets as sold to an unrelated party. For those properties that are subject to the built-in gains tax, the
potential amount of built-in gains tax will be an additional factor when considering a possible sale of the
properties within the five-year period beginning on the date on which the properties were acquired by us. See
Note 18 to our consolidated financial statements for additional information regarding the built-in gains tax.

Qualification as a REIT

A REIT is defined as a corporation, trust or association:

(1) which is managed by one or more trustees or directors;

(2)

the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of
beneficial interest;

(3) which would be taxable as a domestic corporation but for the U.S. federal income tax law relating to

REITs;

(4) which is neither a financial institution nor an insurance company;

(5)

the beneficial ownership of which is held by 100 or more persons in each taxable year of the REIT
except for its first taxable year;

(6) not more than 50% in value of the outstanding stock of which is owned during the last half of each
taxable year, excluding its first taxable year, directly, indirectly or constructively, by or for five or
fewer individuals (which includes certain entities) (the “Five or Fewer Requirement”); and

(7) which meets certain income and asset tests described below.

Conditions (1) to (4), inclusive, must be met during the entire taxable year and condition (5) must be met
during at least 335 days of a taxable year of 12 months or during a proportionate part of a taxable year of less
than 12 months. For purposes of conditions (5) and (6), pension funds and certain other tax-exempt entities are
treated as individuals, subject to a “look-through” exception in the case of condition (6).

Based on publicly available information, we believe we have satisfied the share ownership requirements set
forth in (5) and (6) above. In addition, Article VI of our by-laws provides for restrictions regarding ownership
and transfer of shares. These restrictions are intended to assist us in continuing to satisfy the share ownership
requirements described in (5) and (6) above but may not ensure that we will, in all cases, be able to satisfy such
requirements.

We have complied with, and will continue to comply with, regulatory rules to send annual letters to certain
of our stockholders requesting information regarding the actual ownership of our stock. If, despite sending the
annual letters, we do not know, or after exercising reasonable diligence would not have known, whether we

16

failed to meet the Five or Fewer Requirement, we will be treated as having met the Five or Fewer Requirement.
If we fail to comply with these regulatory rules, we will be subject to a monetary penalty. If our failure to comply
were due to intentional disregard of the requirement, the penalty would be increased. However, if our failure to
comply were due to reasonable cause and not willful neglect, no penalty would be imposed.

We may own a number of properties through wholly owned subsidiaries. A corporation will qualify as a
“qualified REIT subsidiary” if 100% of its stock is owned by a REIT, and the REIT does not elect to treat the
subsidiary as a taxable REIT subsidiary. A “qualified REIT subsidiary” will not be treated as a separate
corporation for U.S. federal income tax purposes, and all assets, liabilities and items of income, deductions and
credits of a “qualified REIT subsidiary” will be treated as assets, liabilities and items (as the case may be) of the
REIT for U.S. federal income tax purposes. A “qualified REIT subsidiary” is not subject to U.S. federal income
tax, and our ownership of the voting stock of a qualified REIT subsidiary will not violate the restrictions against
ownership of securities of any one issuer which constitute more than 10% of the value or total voting power of
such issuer or more than 5% of the value of our total assets, as described below under “- Asset Tests.”

If we invest in an entity treated as a partnership for U.S. federal income tax purposes, we will be deemed to
own a proportionate share of the entity’s assets. Likewise, we will be treated as receiving our share of the income
and loss of the entity, and the gross income will retain the same character in our hands as it has in the hands of
the entity. These “look-through” rules apply for purposes of the income tests and assets tests described below.

The deduction of business interest is limited to 30% of adjusted taxable income, which may limit the
deductibility of interest expense by us, our taxable REIT subsidiaries, or our joint venture and partnership
arrangements. A “real property trade or business” may irrevocably elect out of the applicability of the limitation,
but if it does so it must use the less favorable alternative depreciation system to depreciate real property used in
the trade or business. Proposed regulations provide guidance on how to allocate interest deductions among
multiple trades or businesses and contain special rules, including a safe harbor, regarding the allocation of a
REIT’s interest deductions to a “real property trade or business.”

Income Tests There are two separate percentage tests relating to our sources of gross income that we must

satisfy each taxable year:

• At least 75% of our gross income (excluding gross income from certain sales of property held primarily
for sale) generally must be directly or indirectly derived each taxable year from “rents from real
property,” other income from investments relating to real property or mortgages on real property or
certain income from qualified temporary investments.

• At least 95% of our gross income (excluding gross income from certain sales of property held primarily
for sale) generally must be directly or indirectly derived each taxable year from any of the sources
qualifying for the 75% gross income test and from dividends (including dividends from taxable REIT
subsidiaries) and interest.

Income from hedging and foreign currency transactions is excluded from the 95% and 75% gross income
tests if certain requirements are met but otherwise will constitute gross income which does not qualify under the
95% or 75% gross income tests.

Rents received by us will qualify as “rents from real property” for purposes of satisfying the gross income

tests for a REIT only if several conditions are met:

• The amount of rent must not be based in whole or in part on the income or profits of any person,
although rents generally will not be excluded merely because they are based on a fixed percentage or
percentages of receipts or sales.

• Rents received from a tenant will not qualify as rents from real property if the REIT, or an owner of
10% or more of the REIT, also directly or constructively owns 10% or more of the tenant, unless the
tenant is our taxable REIT subsidiary and certain other requirements are met with respect to the real
property being rented.

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•

•

If rent attributable to personal property leased in connection with a lease of real property is greater than
15% of the total rent received under the lease, then the portion of rent attributable to such personal
property will not qualify as “rents from real property.”

For rents to qualify as rents from real property, we generally must not furnish or render services to
tenants, other than through a taxable REIT subsidiary or an “independent contractor” from whom we
derive no income, except that we may directly provide services that are usually or customarily rendered
in the geographic area in which the property is located in connection with the rental of real property for
occupancy only or are not otherwise considered rendered to the occupant for his convenience.

• We may lease “qualified health care properties” on an arm’s-length basis to a taxable REIT subsidiary
if the property is operated on behalf of such subsidiary by a person who qualifies as an “independent
contractor” and who is, or is related to a person who is, actively engaged in the trade or business of
operating health care facilities for any person unrelated to us or our taxable REIT subsidiary (such
person, an “eligible independent contractor”). If this is the case, the rent that the REIT receives from
the taxable REIT subsidiary generally will be treated as “rents from real property.” A “qualified health
care property” includes any real property and any personal property that is, or is necessary or incidental
to the use of, a hospital, nursing facility, assisted living facility, congregate care facility, qualified
continuing care facility, or other licensed facility that extends medical or nursing or ancillary services
to patients and is operated by a provider of such services that is eligible for participation in the
Medicare program with respect to such facility.

A REIT is permitted to render a de minimis amount of impermissible services to tenants and still treat
amounts received with respect to that property as rent from real property. The amount received or accrued by the
REIT during the taxable year for the impermissible services with respect to a property may not exceed 1% of all
amounts received or accrued by the REIT directly or indirectly from the property. The amount received for any
service or management operation for this purpose shall be deemed to be not less than 150% of the direct cost of
the REIT in furnishing or rendering the service or providing the management or operation. Furthermore,
impermissible services may be furnished to tenants by a taxable REIT subsidiary subject to certain conditions,
which would permit us to still treat rents received with respect to the property as rent from real property.

The term “interest” generally does not include any amount if the determination of the amount depends in
whole or in part on the income or profits of any person, although an amount generally will not be excluded from
the term “interest” solely by reason of being based on a fixed percentage of receipts or sales.

If we fail to satisfy one or both of the 75% or 95% gross income tests for any taxable year, we may
nevertheless qualify as a REIT for such year if we are eligible for certain relief provisions provided by the
Internal Revenue Code. These relief provisions generally will be available if (1) following our identification of
the failure, we file a schedule for such taxable year describing each item of our gross income, and (2) the failure
to meet such tests was due to reasonable cause and not due to willful neglect. It is not now possible to determine
the circumstances under which we may be entitled to the benefit of these relief provisions. If these relief
provisions apply, a 100% tax is imposed on an amount equal to (a) the gross income attributable to (1) 75% of
our gross income over the amount of qualifying gross income for purposes of the 75% income test and (2) 95%
of our gross income over the amount of qualifying gross income for purposes of the 95% income test, multiplied
by (b) a fraction intended to reflect our profitability. The Secretary of the Treasury is given broad authority to
determine whether particular items of income or gain qualify under the 75% and 95% gross income tests and to
exclude items from the measure of gross income for such purposes.

Asset Tests Within 30 days after the close of each quarter of our taxable year, we must also satisfy several
tests relating to the nature and diversification of our assets determined in accordance with generally accepted
accounting principles. At least 75% of the value of our total assets must be represented by real estate assets
(including interests in real property, interests in mortgages on real property or on interests in real property, shares
in other REITs and debt instruments issued by publicly offered REITs), cash, cash items (including receivables
arising in the ordinary course of our operation), government securities and qualified temporary investments.
Although the remaining 25% of our assets generally may be invested without restriction, we are prohibited from
owning securities representing more than 10% of either the vote (the “10% vote test”) or value (the “10% value

18

test”) of the outstanding securities of any issuer other than a qualified REIT subsidiary, another REIT or a
taxable REIT subsidiary. Further, no more than 20% of our total assets may be represented by securities of one or
more taxable REIT subsidiaries (the “20% asset test”) and no more than 5% of the value of our total assets may
be represented by securities of any non-governmental issuer other than a qualified REIT subsidiary (the “5%
asset test”), another REIT or a taxable REIT subsidiary. Each of the 10% vote test, the 10% value test and the
20% and 5% asset tests must be satisfied at the end of each quarter. There are special rules which provide relief if
the value-related tests are not satisfied due to changes in the value of the assets of a REIT.

Certain items are excluded from the 10% value test, including: (1) straight debt securities meeting certain
requirements; (2) any loan to an individual or an estate; (3) any rental agreement described in Section 467 of the
Internal Revenue Code, other than with a “related person”; (4) any obligation to pay rents from real property;
(5) certain securities issued by a state or any subdivision thereof, the District of Columbia, a foreign government,
or any political subdivision thereof, or the Commonwealth of Puerto Rico; (6) any security issued by a REIT; and
(7) any other arrangement that, as determined by the Secretary of the Treasury, is excepted from the definition of
security (“excluded securities”). If a REIT, or its taxable REIT subsidiary, holds (1) straight debt securities of a
corporate or partnership issuer and (2) securities of such issuer that are not excluded securities and have an
aggregate value greater than 1% of such issuer’s outstanding securities, the straight debt securities will be
included in the 10% value test.

A REIT’s interest as a partner in a partnership is not treated as a security for purposes of applying the 10%
value test to securities issued by the partnership. Further, any debt instrument issued by a partnership that is not
an excluded security will not be a security for purposes of applying the 10% value test (1) to the extent of the
REIT’s interest as a partner in the partnership or (2) if at least 75% of the partnership’s gross income (excluding
gross income from prohibited transactions) would qualify for the 75% gross income test. For purposes of the
10% value test, a REIT’s interest in a partnership’s assets is determined by the REIT’s proportionate interest in
any securities issued by the partnership (other than the excluded securities described in the preceding paragraph).

For taxable years beginning after July 30, 2008, if the REIT or its “qualified business unit” uses a foreign
currency as its functional currency, the term “cash” includes such foreign currency, but only to the extent such
foreign currency is (i) held for use in the normal course of the activities of the REIT or “qualified business unit”
which give rise to items of income or gain that are included in the 95% and 75% gross income tests or are
directly related to acquiring or holding assets qualifying under the 75% asset test, and (ii) not held in connection
with dealing or engaging in substantial and regular trading in securities.

With respect to corrections of failures as to violations of the 10% vote test, the 10% value test or the 5%
asset test, a REIT may avoid disqualification as a REIT by disposing of sufficient assets to cure a violation that
does not exceed the lesser of 1% of the REIT’s assets at the end of the relevant quarter or $10,000,000, provided
that the disposition occurs within six months following the last day of the quarter in which the REIT first
identified the assets. For violations of any of the REIT asset tests due to reasonable cause and not willful neglect
that exceed the thresholds described in the preceding sentence, a REIT can avoid disqualification as a REIT after
the close of a taxable quarter by taking certain steps, including disposition of sufficient assets within the six
month period described above to meet the applicable asset test, paying a tax equal to the greater of $50,000 or the
highest corporate tax rate multiplied by the net income generated by the non-qualifying assets during the period
of time that the assets were held as non-qualifying assets and filing a schedule with the Internal Revenue Service
that describes the non-qualifying assets.

Investments in Taxable REIT Subsidiaries REITs may own more than 10% of the voting power and value
of securities in taxable REIT subsidiaries. Unlike a qualified REIT subsidiary, other disregarded entity or
partnership, the income and assets of a taxable REIT subsidiary are not attributable to the REIT for purposes of
satisfying the income and asset ownership requirements applicable to REIT qualification. We and any taxable
corporate entity in which we own an interest are allowed to jointly elect to treat such entity as a “taxable REIT
subsidiary.”

Certain of our subsidiaries have elected taxable REIT subsidiary status. Taxable REIT subsidiaries are
subject to full corporate level U.S. federal taxation on their earnings but are permitted to engage in certain types
of activities that cannot be performed directly by REITs without jeopardizing their REIT status. Our taxable

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REIT subsidiaries will attempt to minimize the amount of these taxes, but there can be no assurance whether or
the extent to which measures taken to minimize taxes will be successful. To the extent our taxable REIT
subsidiaries are required to pay U.S. federal, state or local taxes, the cash available for distribution as dividends
to us from our taxable REIT subsidiaries will be reduced.

The Internal Revenue Service may redetermine amounts from transactions between a REIT and its taxable
REIT subsidiary where there is a lack of arm’s-length dealing between the parties. Any taxable income allocated
to, or deductible expenses allocated away, from a taxable REIT subsidiary would increase its tax liability.
Further, certain amounts from certain transactions involving a REIT and its taxable REIT subsidiaries could be
subject to a 100% tax if not conducted on an arm’s length basis. Additional taxable REIT subsidiary elections
may be made in the future for additional entities in which we obtain an interest.

Annual Distribution Requirements

In order to avoid being taxed as a regular corporation, we are required
to make distributions (other than capital gain distributions) to our stockholders which qualify for the dividends
paid deduction in an amount at least equal to (1) the sum of (i) 90% of our “REIT taxable income” (computed
without regard to the dividends paid deduction and our net capital gain) and (ii) 90% of the after-tax net income,
if any, from foreclosure property, minus (2) a portion of certain items of non-cash income. These distributions
must be paid in the taxable year to which they relate, or in the following taxable year if declared before we timely
file our tax return for that year and if paid on or before the first regular distribution payment after such
declaration. Prior to 2014, with respect to all REITs the amount distributed could not be preferential. This means
that every stockholder of the class of stock to which a distribution is made must be treated the same as every
other stockholder of that class, and no class of stock may be treated otherwise than in accordance with its
dividend rights as a class (the “preferential dividend rule”). Beginning in tax years after 2014, the preferential
dividend rule no longer applies to publicly offered REITs, however, the rule is still applicable to other entities
taxed as REITs, which would include several of our subsidiaries. To the extent that we do not distribute all of our
net capital gain or distribute at least 90%, but less than 100%, of our “REIT taxable income,” as adjusted, we will
be subject to tax on the undistributed amount at regular corporate tax rates. As discussed above, we may be
subject to an excise tax if we fail to meet certain other distribution requirements. We believe we have satisfied
the annual distribution requirements for the year of our initial REIT election and each year thereafter through the
year ended December 31, 2018. Although we intend to make timely distributions sufficient to satisfy these
annual distribution requirements for subsequent years, economic, market, legal, tax or other factors could limit
our ability to meet those requirements. See “Item 1A — Risk Factors.”

It is also possible that, from time to time, we may not have sufficient cash or other liquid assets to meet the
90% distribution requirement, or to distribute such greater amount as may be necessary to avoid income and
excise taxation, due to, among other things, (1) timing differences between (i) the actual receipt of income and
actual payment of deductible expenses and (ii) the inclusion of income and deduction of expenses in arriving at
our taxable income, or (2) the payment of severance benefits that may not be deductible to us. In the event that
timing differences occur, we may find it necessary to arrange for borrowings or, if possible, pay dividends in the
form of taxable stock dividends in order to meet the distribution requirement.

Under certain circumstances, including in the event of a deficiency determined by the Internal Revenue
Service, we may be able to rectify a resulting failure to meet the distribution requirement for a year by paying
“deficiency dividends” to stockholders in a later year, which may be included in our deduction for distributions
paid for the earlier year. Thus, we may be able to avoid being disqualified as a REIT and/or taxed on amounts
distributed as deficiency dividends; however, we will be required to pay applicable penalties and interest based
upon the amount of any deduction taken for deficiency dividend distributions.

Failure to Qualify as a REIT

If we fail to qualify for taxation as a REIT in any taxable year, we will be subject to U.S. 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 dividends to the extent of current and accumulated
earnings and profits allocable to these distributions and, subject to certain limitations, will be eligible for the

20

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
to statutory relief. Failure to qualify for even one year could result in our need to incur indebtedness or liquidate
investments in order to pay potentially significant resulting tax liabilities.

In addition to the relief described above under “Income Tests” and “Asset Tests,” relief is available in the
event that we violate a provision of the Internal Revenue Code that would result in our failure to qualify as a
REIT if: (1) the violation is due to reasonable cause and not due to willful neglect; (2) we pay a penalty of
$50,000 for each failure to satisfy the provision; and (3) the violation does not include a violation described
under “Income Tests” or “Asset Tests” above. It is not now possible to determine the circumstances under which
we may be entitled to the benefit of these relief provisions.

U.S. Federal Income Taxation of Holders of Our Stock

Treatment of Taxable U.S. Stockholders The following summary applies to you only if you are a
“U.S. stockholder.” A “U.S. stockholder” is a holder of shares of stock who, for U.S. federal income tax
purposes, is:

•

•

•

•

a citizen or resident of the United States;

a corporation, partnership or other entity classified as a corporation or partnership for these purposes,
created or organize in or under the laws of the United States or of any political subdivision of the
United States, including any state;

an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

a trust, if, in general, a U.S. court is able to exercise primary supervision over the trust’s administration
and one or more U.S. persons, within the meaning of the Internal Revenue Code, has the authority to
control all of the trust’s substantial decisions.

So long as we qualify for taxation as a REIT, distributions on shares of our stock made out of the current or
accumulated earnings and profits allocable to these distributions (and not designated as capital gain dividends)
will be taxable as dividends for U.S. federal income tax purposes. None of these distributions will be eligible for
the dividends received deduction for U.S. corporate stockholders.

Generally, the current maximum marginal rate of tax payable by individuals on dividends received from
corporations that are subject to a corporate level of tax is 20%. Except in limited circumstances, this tax rate will
not apply to dividends paid to you by us on our shares, because generally we are not subject to U.S. federal
income tax on the portion of our REIT taxable income or capital gains distributed to our stockholders. The
reduced maximum U.S. federal income tax rate will apply to that portion, if any, of dividends received by you
with respect to our shares that are attributable to: (1) dividends received by us from non-REIT corporations or
other taxable REIT subsidiaries; (2) income from the prior year with respect to which we were required to pay
U.S. federal corporate income tax during the prior year (if, for example, we did not distribute 100% of our REIT
taxable income for the prior year); or (3) the amount of any earnings and profits that were distributed by us and
accumulated in a non-REIT year.

Although the preferential 20% rate on qualified dividends is generally not applicable to dividends to our
shareholders, the Tax Act provides for a deduction from income for individuals, trusts and estates for 20% of
taxable REIT dividends not eligible for the preferential rate, excluding capital gain dividends. This deduction is
not taken into account for purposes of determining the 3.8% tax on net investment income (described below) and,
unlike the preferential rate, expires after 2025.

Distributions that are designated as capital gain dividends will be taxed as long-term capital gains (to the
extent they do not exceed our actual net capital gain for the taxable year), without regard to the period for which
you held our stock. However, if you are a corporation, you may be required to treat a portion of some capital gain
dividends as ordinary income.

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If we elect to retain and pay income tax on any net capital gain and designate such amount in a timely notice
to you, you would include in income, as long-term capital gain, your proportionate share of this net capital gain.
You would also receive a refundable tax credit for your proportionate share of the tax paid by us on such retained
capital gains, and you would have an increase in the basis of your shares of our stock in an amount equal to your
includable capital gains less your share of the tax deemed paid.

You may not include in your U.S. federal income tax return any of our net operating losses or capital losses.
U.S. federal income tax rules may also require that certain minimum tax adjustments and preferences be
apportioned to you. In addition, any distribution declared by us in October, November or December of any year
on a specified date in any such month shall be treated as both paid by us and received by you on December 31 of
that year, provided that the distribution is actually paid by us no later than January 31 of the following year.

We will be treated as having sufficient earnings and profits to treat as a dividend any distribution up to the
amount required to be distributed in order to avoid imposition of the 4% excise tax discussed under “General”
and “Qualification as a REIT - Annual Distribution Requirements” above. As a result, you may be required to
treat as taxable dividends certain distributions that would otherwise result in a tax-free return of capital.
Moreover, any “deficiency dividend” will be treated as a dividend (an ordinary dividend or a capital gain
dividend, as the case may be), regardless of our earnings and profits. Any other distributions in excess of current
or accumulated earnings and profits will generally not be taxable to you to the extent these distributions do not
exceed the adjusted tax basis of your shares of our stock. You will be required to reduce the tax basis of your
shares of our stock by the amount of these distributions until the basis has been reduced to zero, after which these
distributions will be taxable as capital gain, if the shares of our stock are held as capital assets. The tax basis as so
reduced will be used in computing the capital gain or loss, if any, realized upon the sale of the shares of our
stock. Any loss upon a sale or exchange of shares of our stock which were held for six months or less (after
application of certain holding period rules) will generally be treated as a long-term capital loss to the extent you
previously received capital gain distributions with respect to these shares of our stock.

Upon the sale or exchange of any shares of our stock to or with a person other than us or a sale or exchange
of all shares of our stock (whether actually or constructively owned) with us, you will generally recognize gain or
loss equal to the difference between the amount realized on the sale or exchange and your adjusted tax basis in
these shares of our stock. This gain or loss will be capital gain or loss if you held these shares of our stock as a
capital asset.

If we redeem any of your shares in us, the treatment can only be determined on the basis of particular facts
at the time of redemption. In general, you will recognize gain or loss (as opposed to dividend income) equal to
the difference between the amount received by you in the redemption and your adjusted tax basis in your shares
redeemed if such redemption: (1) results in a “complete termination” of your interest in all classes of our equity
securities; (2) is a “substantially disproportionate redemption”; or (3) is “not essentially equivalent to a dividend”
with respect to you. In applying these tests, you must take into account your ownership of all classes of our
equity securities (e.g., common stock, preferred stock, depositary shares and warrants). You also must take into
account any equity securities that are considered to be constructively owned by you.

If, as a result of a redemption by us of your shares, you no longer own (either actually or constructively) any
of our equity securities or only own (actually and constructively) an insubstantial percentage of our equity
securities, then it is probable that the redemption of your shares would be considered “not essentially equivalent
to a dividend” and, thus, would result in gain or loss to you. However, whether a distribution is “not essentially
equivalent to a dividend” depends on all of the facts and circumstances, and if you rely on any of these tests at
the time of redemption, you should consult your tax advisor to determine their application to the particular
situation.

Generally, if the redemption does not meet the tests described above, then the proceeds received by you
from the redemption of your shares will be treated as a distribution taxable as a dividend to the extent of the
allocable portion of current or accumulated earnings and profits. If the redemption is taxed as a dividend, your
adjusted tax basis in the redeemed shares will be transferred to any other shareholdings in us that you own. If you
own no other shareholdings in us, under certain circumstances, such basis may be transferred to a related person,
or it may be lost entirely.

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Gain from the sale or exchange of our shares held for more than one year is generally taxed at a maximum
long-term capital gain rate of 20% in the case of stockholders who are individuals and 21% in the case of
stockholders that are corporations. Pursuant to Internal Revenue Service guidance, we may classify portions of
our capital gain dividends as eligible for specific treatment provided under the Internal Revenue Code, which,
depending on the nature of the capital gains, may result in taxation of such portions at rates of either 20% or
25%. Capital losses recognized by a stockholder upon the disposition of our shares held for more than one year at
the time of disposition will be considered long-term capital losses. The deduction for capital losses is subject to
limitations.

An additional tax of 3.8% generally will be imposed on the “net investment income” of U.S. stockholders
who meet certain requirements and are individuals, estates or certain trusts. Among other items, “net investment
income” generally includes gross income from dividends and net gain attributable to the disposition of certain
property, such as shares of our common stock or warrants. In the case of individuals, this tax will only apply to
the extent such individual’s modified adjusted gross income exceeds $200,000 ($250,000 for married couples
filing a joint return and surviving spouses, and $125,000 for married individuals filing a separate return). U.S.
stockholders should consult their tax advisors regarding the possible applicability of this additional tax in their
particular circumstances.

Treatment of Tax-Exempt U.S. Stockholders Tax-exempt entities, including qualified employee pension
and profit sharing trusts and individual retirement accounts (“Exempt Organizations”), generally are exempt from
U.S. federal income taxation. However, they are subject to taxation on their unrelated business taxable income
(“UBTI”). The Internal Revenue Service has issued a published revenue ruling that dividend distributions from a
REIT to an exempt employee pension trust do not constitute UBTI, provided that the shares of the REIT are not
otherwise used in an unrelated trade or business of the exempt employee pension trust. Based on this ruling,
amounts distributed by us to Exempt Organizations generally should not constitute UBTI. However, if an Exempt
Organization finances its acquisition of the shares of our stock with debt, a portion of its income from us will
constitute UBTI pursuant to the “debt financed property” rules. Likewise, a portion of the Exempt Organization’s
income from us would constitute UBTI if we held a residual interest in a real estate mortgage investment conduit.
A tax-exempt U.S. stockholder that is subject to tax on its UBTI will be required to segregate its taxable income
and loss for each unrelated trade or business activity for purposes of determining its UBTI.

Backup Withholding and Information Reporting Under certain circumstances, you may be subject to
backup withholding at applicable rates on payments made with respect to, or cash proceeds of a sale or exchange
of, shares of our stock. Backup withholding will apply only if you: (1) fail to provide a correct taxpayer
identification number, which if you are an individual, is ordinarily your social security number; (2) furnish an
incorrect taxpayer identification number; (3) are notified by the Internal Revenue Service that you have failed to
properly report payments of interest or dividends; or (4) fail to certify, under penalties of perjury, that you have
furnished a correct taxpayer identification number and that the Internal Revenue Service has not notified you that
you are subject to backup withholding.

Backup withholding will not apply with respect to payments made to certain exempt recipients, such as
corporations and tax-exempt organizations. You should consult with a tax advisor regarding qualification for
exemption from backup withholding, and the procedure for obtaining an exemption. Backup withholding is not
an additional tax. Rather, the amount of any backup withholding with respect to a payment to a stockholder will
be allowed as a credit against such stockholder’s U.S. federal income tax liability and may entitle such
stockholder to a refund, provided that the required information is provided to the Internal Revenue Service. In
addition, withholding a portion of capital gain distributions made to stockholders may be required for
stockholders who fail to certify their non-foreign status.

Taxation of Foreign Stockholders The following summary applies to you only if you are a foreign person.
A “foreign person” is a holder of shares of stock who, for U.S. federal income tax purposes, is not a U.S.
stockholder. The U.S. federal taxation of foreign persons is a highly complex matter that may be affected by
many considerations.

Except as discussed below, distributions to you of cash generated by our real estate operations in the form of
to

ordinary dividends, but not by the sale or exchange of our capital assets, generally will be subject

23

U.S. withholding tax at a rate of 30%, unless an applicable tax treaty reduces that tax and you file with us the
required form evidencing the lower rate.

In general, you will be subject to U.S. federal income tax on a graduated rate basis rather than withholding
with respect to your investment in our stock if such investment is “effectively connected” with your conduct of a
trade or business in the United States. A corporate foreign stockholder that receives income that is, or is treated
as, effectively connected with a United States trade or business may also be subject to the branch profits tax,
which is payable in addition to regular United States corporate income tax. The following discussion will apply
to foreign stockholders whose investment in us is not so effectively connected. We expect to withhold United
States income tax, as described below, on the gross amount of any distributions paid to you unless (1) you file an
Internal Revenue Service Form W-8ECI with us claiming that the distribution is “effectively connected” or
(2) certain other exceptions apply.

Distributions by us that are attributable to gain from the sale or exchange of a United States real property
interest will be taxed to you under the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”) as if
these distributions were gains “effectively connected” with a United States trade or business. Accordingly, you
will be taxed at the normal capital gain rates applicable to a U.S. stockholder on these amounts, subject to any
applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien
individuals. Distributions subject to FIRPTA may also be subject to a branch profits tax in the hands of a
corporate foreign stockholder that is not entitled to treaty exemption. We will be required to withhold tax at a rate
of 21% from distributions subject to FIRPTA. We will be required to withhold from distributions subject to
FIRPTA, and remit to the Internal Revenue Service, 21% of designated capital gain dividends, or, if greater, 21%
of the amount of any distributions that could be designated as capital gain dividends. In addition, if we designate
prior distributions as capital gain dividends, subsequent distributions, up to the amount of the prior distributions
not withheld against, will be treated as capital gain dividends for purposes of withholding.

Any capital gain dividend with respect to any class of stock that is “regularly traded” on an established
securities market will be treated as an ordinary dividend if the foreign stockholder did not own more than 10% of
such class of stock at any time during the taxable year. Foreign stockholders generally will not be required to
report distributions received from us on U.S. federal income tax returns and all distributions treated as dividends
for U.S. federal income tax purposes (including any such capital gain dividends) will be subject to a 30%
U.S. withholding tax (unless reduced under an applicable income tax treaty) as discussed above. In addition, the
branch profits tax will not apply to such distributions.

Unless our shares constitute a “United States real property interest” within the meaning of FIRPTA or are
effectively connected with a U.S. trade or business, a sale of our shares by you generally will not be subject to
United States taxation. Even if our shares were to constitute a “United States real property interest,” non-U.S.
stockholders that are “qualified foreign pension funds” (or are owned by a qualified foreign pension fund)
meeting certain requirements may be exempt from FIRPTA withholding on the sale or disposition of our shares.
Our shares will not constitute a United States real property interest if we qualify as a “domestically controlled
REIT.” We believe that we qualify as and expect to continue to qualify as a domestically controlled REIT. A
domestically controlled REIT is a REIT in which at all times during a specified testing period less than 50% in
value of its shares is held directly or indirectly by foreign stockholders. Generally, we are permitted to assume
that holders of less than 5% of our shares at all times during a specified testing period are U.S. persons. However,
if you are a nonresident alien individual who is present in the United States for 183 days or more during the
taxable year and certain other conditions apply, you will be subject to a 30% tax on such capital gains. In any
event, a purchaser of our shares from you will not be required under FIRPTA to withhold on the purchase price if
the purchased shares are “regularly traded” on an established securities market or if we are a domestically
controlled REIT. Otherwise, under FIRPTA, the purchaser may be required to withhold 15% of the purchase
price and remit such amount to the Internal Revenue Service.

Backup withholding tax and information reporting will generally not apply to distributions paid to you
outside the United States that are treated as: (1) dividends to which the 30% or lower treaty rate withholding tax
discussed above applies; (2) capital gains dividends; or (3) distributions attributable to gain from the sale or
exchange by us of U.S. real property interests. Payment of the proceeds of a sale of stock within the United States

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or conducted through certain U.S. related financial intermediaries is subject to both backup withholding and
information reporting unless the beneficial owner certifies under penalties of perjury that he or she is not a
U.S. person (and the payor does not have actual knowledge that the beneficial owner is a U.S. person) or
otherwise established an exemption. You may obtain a refund of any amounts withheld under the backup
withholding rules by filing the appropriate claim for refund with the Internal Revenue Service.

Withholding tax at a rate of 30% will be imposed on certain payments to you or certain foreign financial
institutions (including investment funds) and other non-US persons receiving payments on your behalf, including
distributions in respect of shares of our stock, if you or such institutions fail to comply with certain due diligence,
disclosure and reporting rules, as set forth in Treasury regulations. Accordingly, the entity through which shares
of our stock are held will affect the determination of whether such withholding is required. Stockholders that are
otherwise eligible for an exemption from, or reduction of, U.S. withholding taxes with respect to such dividends
will be required to seek a refund from the Internal Revenue Service to obtain the benefit of such exemption or
reduction. Additional requirements and conditions may be imposed pursuant to an intergovernmental agreement,
if and when entered into, between the United States and such institution’s home jurisdiction. We will not pay any
additional amounts to any stockholders in respect of any amounts withheld. You are encouraged to consult with
your tax advisor regarding U.S. withholding taxes and the application of Treasury regulations in light of your
particular circumstances.

U.S. Federal Income Taxation of Holders of Depositary Shares

Owners of our depositary shares will be treated as if you were owners of the series of preferred stock
represented by the depositary shares. Thus, you will be required to take into account the income and deductions
to which you would be entitled if you were a holder of the underlying series of preferred stock.

Conversion or Exchange of Shares for Preferred Stock No gain or loss will be recognized upon the
withdrawal of preferred stock in exchange for depositary shares and the tax basis of each share of preferred stock
will, upon exchange, be the same as the aggregate tax basis of the depositary shares exchanged. If you held your
depositary shares as a capital asset at the time of the exchange for shares of preferred stock, the holding period
for your shares of preferred stock will include the period during which you owned the depositary shares.

U.S. Federal Income and Estate Taxation of Holders of Our Debt Securities

The following is a general summary of the U.S. federal income tax consequences and, in the case that you
are a holder that is a non-U.S. holder, as defined below, the U.S. federal estate tax consequences, of purchasing,
owning and disposing of debt securities periodically offered under one or more indentures (the “notes”). This
summary assumes that you hold the notes as capital assets. This summary applies to you only if you are the
initial holder of the notes and you acquire the notes for a price equal to the issue price of the notes. The issue
price of the notes is the first price at which a substantial amount of the notes is sold other than to bond houses,
brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or
wholesalers. In addition, this summary does not consider any foreign, state, local or other tax laws that may be
applicable to us or a purchaser of the notes.

U.S. Holders

The following summary applies to you only if you are a U.S. holder, as defined below.

Definition of a U.S. Holder A “U.S. holder” is a beneficial owner of a note or notes that is for U.S. federal

income tax purposes:

•

•

•

a citizen or resident of the United States;

a corporation, partnership or other entity classified as a corporation or partnership for these purposes,
created or organized in or under the laws of the United States or of any political subdivision of the
United States, including any state;

an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

25

•

a trust, if, in general, a U.S. court is able to exercise primary supervision over the trust’s administration
and one or more U.S. persons, within the meaning of the Internal Revenue Code, has the authority to
control all of the trust’s substantial decisions.

Payments of Interest Stated interest on the notes generally will be taxed as ordinary interest income from
domestic sources at the time it is paid or accrues in accordance with your method of accounting for tax purposes.

Sale, Exchange or Other Disposition of Notes The adjusted tax basis in your note will generally be your
cost. You generally will recognize taxable gain or loss when you sell or otherwise dispose of your notes equal to
the difference, if any, between:

•

•

the amount realized on the sale or other disposition, less any amount attributable to any accrued
interest, which will be taxable in the manner described under “Payments of Interest” above; and

your adjusted tax basis in the notes.

Your gain or loss generally will be capital gain or loss. This capital gain or loss will be long-term capital
gain or loss if at the time of the sale or other disposition you have held the notes for more than one year. Subject
to limited exceptions, your capital losses cannot be used to offset your ordinary income (except in the case of
individuals, who may offset up to $3,000 of ordinary income each year).

Backup Withholding and Information Reporting

In general, “backup withholding” may apply to any
payments made to you of principal and interest on your note, and to payment of the proceeds of a sale or other
disposition of your note before maturity, if you are a non-corporate U.S. holder and: (1) fail to provide a correct
taxpayer identification number, which if you are an individual, is ordinarily your social security number;
(2) furnish an incorrect taxpayer identification number; (3) are notified by the Internal Revenue Service that you
have failed to properly report payments of interest or dividends; or (4) fail to certify, under penalties of perjury,
that you have furnished a correct taxpayer identification number and that the Internal Revenue Service has not
notified you that you are subject to backup withholding.

The amount of any reportable payments, including interest, made to you (unless you are an exempt
recipient) and the amount of tax withheld, if any, with respect to such payments will be reported to you and to the
Internal Revenue Service for each calendar year. You should consult your tax advisor regarding your
qualification for an exemption from backup withholding and the procedures for obtaining such an exemption, if
applicable. The backup withholding tax is not an additional tax and will be credited against your U.S. federal
income tax liability, provided that correct information is provided to the Internal Revenue Service.

Non-U.S. Holders

The following summary applies to you if you are a beneficial owner of a note and are not a U.S. holder, as

defined above (a “non-U.S. holder”).

Special rules may apply to certain non-U.S. holders such as “controlled foreign corporations,” “passive
foreign investment companies” and “foreign personal holding companies.” Such entities are encouraged to
consult their tax advisors to determine the U.S. federal, state, local and other tax consequences that may be
relevant to them.

U.S. Federal Withholding Tax Subject to the discussion below, U.S. federal withholding tax will not apply
to payments by us or our paying agent, in its capacity as such, of principal and interest on your notes under the
“portfolio interest” exception of the Internal Revenue Code, provided that:

•

•

•

you do not, directly or indirectly, actually or constructively, own 10% or more of the total combined
voting power of all classes of our stock entitled to vote;

you are not (1) a controlled foreign corporation for U.S. federal income tax purposes that is related,
directly or indirectly, to us through sufficient stock ownership, as provided in the Internal Revenue
Code, or (2) a bank receiving interest described in Section 881(c)(3)(A) of the Internal Revenue Code;

such interest is not effectively connected with your conduct of a U.S. trade or business; and

26

•

•

you provide a signed written statement, under penalties of perjury, which can reliably be related to you,
certifying that you are not a U.S. person within the meaning of the Internal Revenue Code and
providing your name and address to us or our paying agent; or

a securities clearing organization, bank or other financial institution that holds customers’ securities in
the ordinary course of its trade or business and holds your notes on your behalf and that certifies to us
or our paying agent under penalties of perjury that it, or the bank or financial institution between it and
you, has received from you your signed, written statement and provides us or our paying agent with a
copy of such statement.

Treasury regulations provide that:

•

•

•

if you are a foreign partnership, the certification requirement will generally apply to your partners, and
you will be required to provide certain information;

if you are a foreign trust, the certification requirement will generally be applied to you or your
beneficial owners depending on whether you are a “foreign complex trust,” “foreign simple trust,” or
“foreign grantor trust” as defined in the Treasury regulations; and

look-through rules will apply for tiered partnerships, foreign simple trusts and foreign grantor trusts.

If you are a foreign partnership or a foreign trust, you should consult your own tax advisor regarding your

status under these Treasury regulations and the certification requirements applicable to you.

If you cannot satisfy the portfolio interest requirements described above, payments of interest will be subject
to the 30% United States withholding tax, unless you provide us with a properly executed (1) Internal Revenue
Service Form W-8BEN claiming an exemption from or reduction in withholding under the benefit of an
applicable treaty or (2) Internal Revenue Service Form W-8ECI stating that interest paid on the note is not
subject to withholding tax because it is effectively connected with your conduct of a trade or business in the
United States. Alternative documentation may be applicable in certain circumstances.

If you are engaged in a trade or business in the United States and interest on a note is effectively connected
with the conduct of that trade or business, you will be required to pay U.S. federal income tax on that interest on
a net income basis (although you will be exempt from the 30% withholding tax provided the certification
requirement described above is met) in the same manner as if you were a U.S. person, except as otherwise
provided by an applicable tax treaty. If you are a foreign corporation, you may be required to pay a branch profits
tax on the earnings and profits that are effectively connected to the conduct of your trade or business in the
United States.

Withholding tax at a rate of 30% will be imposed on payments of interest (including original issue discount)
to you or certain foreign financial institutions (including investment funds) and other non-US persons receiving
payments on your behalf if you or such institutions fail to comply with certain due diligence, disclosure and
reporting rules, as set forth in Treasury regulations. We will not pay any additional amounts to any holders of our
debt instruments in respect of any amounts withheld. You are encouraged to consult with your tax advisor
regarding U.S. withholding taxes and the application of the relevant Treasury regulations in light of your
particular circumstances.

Sale, Exchange or other Disposition of Notes You generally will not have to pay U.S. federal income tax
on any gain or income realized from the sale, redemption, retirement at maturity or other disposition of your
notes, unless:

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in the case of gain, you are an individual who is present in the United States for 183 days or more
during the taxable year of the sale or other disposition of your notes, and specific other conditions are
met;

you are subject to tax provisions applicable to certain United States expatriates; or

the gain is effectively connected with your conduct of a U.S. trade or business.

If you are engaged in a trade or business in the United States, and gain with respect to your notes is
effectively connected with the conduct of that trade or business, you generally will be subject to U.S. income tax

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on a net basis on the gain. In addition, if you are a foreign corporation, you may be subject to a branch profits tax
on your effectively connected earnings and profits for the taxable year, as adjusted for certain items.

U.S. Federal Estate Tax.

If you are an individual and are not a U.S. citizen or a resident of the United
States, as specially defined for U.S. federal estate tax purposes, at the time of your death, your notes will
generally not be subject to the U.S. federal estate tax, unless, at the time of your death (1) you owned actually or
constructively 10% or more of the total combined voting power of all our classes of stock entitled to vote, or
(2) interest on the notes is effectively connected with your conduct of a U.S. trade or business.

Backup Withholding and Information Reporting Backup withholding will not apply to payments of
principal or interest made by us or our paying agent, in its capacity as such, to you if you have provided the
required certification that you are a non-U.S. holder as described in “U.S. Federal Withholding Tax” above, and
provided that neither we nor our paying agent have actual knowledge that you are a U.S. holder, as described in
“U.S. Holders” above. We or our paying agent may, however, report payments of interest on the notes.

The gross proceeds from the disposition of your notes may be subject to information reporting and backup
withholding tax. If you sell your notes outside the United States through a non-U.S. office of a non-U.S. broker
and the sales proceeds are paid to you outside the United States, then the U.S. backup withholding and
information
information reporting requirements generally will not apply to that payment. However, U.S.
reporting, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made
outside the United States, if you sell your notes through a non-U.S. office of a broker that:

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is a U.S. person, as defined in the Internal Revenue Code;

derives 50% or more of its gross income in specific periods from the conduct of a trade or business in
the United States;

is a “controlled foreign corporation” for U.S. federal income tax purposes; or

is a foreign partnership, if at any time during its tax year, one or more of its partners are U.S. persons
who in the aggregate hold more than 50% of the income or capital interests in the partnership, or the
foreign partnership is engaged in a U.S. trade or business, unless the broker has documentary evidence
in its files that you are a non-U.S. person and certain other conditions are met or you otherwise
establish an exemption. If you receive payments of the proceeds of a sale of your notes to or through a
U.S. office of a broker, the payment is subject to both U.S. backup withholding and information
reporting unless you provide a Form W-8BEN certifying that you are a non-U.S. person or you
otherwise establish an exemption.

You should consult your own tax advisor regarding application of backup withholding in your particular
circumstance and the availability of and procedure for obtaining an exemption from backup withholding. Any
amounts withheld under the backup withholding rules from a payment to you will be allowed as a refund or
credit against your U.S. federal income tax liability, provided the required information is furnished to the Internal
Revenue Service.

U.S. Federal Income of Holders of Our Warrants

Exercise of Warrants You will not generally recognize gain or loss upon the exercise of a warrant. Your
basis in the debt securities, preferred stock, depositary shares or common stock, as the case may be, received
upon the exercise of the warrant will be equal to the sum of your adjusted tax basis in the warrant and the
exercise price paid. Your holding period in the debt securities, preferred stock, depositary shares or common
stock, as the case may be, received upon the exercise of the warrant will not include the period during which the
warrant was held by you.

Expiration of Warrants Upon the expiration of a warrant, you will generally recognize a capital loss in an

amount equal to your adjusted tax basis in the warrant.

Sale or Exchange of Warrants Upon the sale or exchange of a warrant to a person other than us, you will
recognize gain or loss in an amount equal to the difference between the amount realized on the sale or exchange

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and your adjusted tax basis in the warrant. Such gain or loss will generally be capital gain or loss and will be
long-term capital gain or loss if the warrant was held for more than one year. Upon the sale of the warrant to us,
the Internal Revenue Service may argue that you should recognize ordinary income on the sale. You are advised
to consult your own tax advisors as to the consequences of a sale of a warrant to us.

Potential Legislation or Other Actions Affecting Tax Consequences

Current and prospective securities holders should recognize that the present U.S. federal income tax
treatment of an investment in us may be modified by legislative, judicial or administrative action at any time and
that any such action may affect investments and commitments previously made. The rules dealing with U.S.
federal income taxation are constantly under review by persons involved in the legislative process and by the
Internal Revenue Service and the Department of the Treasury, resulting in revisions of regulations and revised
interpretations of established concepts as well as statutory changes. Revisions in U.S. federal tax laws and
interpretations of these laws could adversely affect the tax consequences of an investment in us.

State, Local and Foreign Taxes

We, and holders of our debt and equity securities, may be subject to state, local or foreign taxation in
various jurisdictions, including those in which we or they transact business, own property or reside. It should be
noted that we own properties located in a number of state, local and foreign jurisdictions, and may be required to
file tax returns in some or all of those jurisdictions. The state, local or foreign tax treatment of us and holders of
our debt and equity securities may not conform to the U.S. federal income tax consequences discussed above.
Consequently, you are urged to consult your advisor regarding the application and effect of state, local and
foreign tax laws with respect to any investment in our securities.

Changes in applicable tax regulations could negatively affect our financial results

The Company is subject to taxation in the U.S. and numerous foreign jurisdictions. Because, 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 tax norms that determine each country’s jurisdiction to
tax cross-border international trade are evolving and could reduce the ability of our foreign subsidiaries to deduct
for foreign tax purposes the interest they pay on loans from the Company, thereby increasing the foreign tax
liability of the subsidiaries. It is also possible that foreign countries could increase their withholding taxes on
dividends and interest. Given the unpredictability of these possible changes and their potential interdependency,
it is very difficult to assess the overall effect of such potential tax changes on our earnings and cash flow, but
such changes could adversely impact our financial results.

Internet Access to Our SEC Filings

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/investors, 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 SEC. 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

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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:

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the status of the economy;

the status of capital markets, including availability and cost of capital;

issues facing the health care industry, including compliance with, and changes to, regulations and
payment policies, responding to government investigations and punitive settlements and operators’/
tenants’ difficulty in cost-effectively obtaining and maintaining adequate liability and other insurance;

changes in financing terms;

competition within the health care and seniors housing industries;

negative developments in the operating results or financial condition of operators/tenants, including,
but not limited to, their ability to pay rent and repay loans;

our ability to transition or sell properties with profitable results;

the failure to make new investments or acquisitions as and when anticipated;

natural disasters and other acts of God affecting our properties;

our ability to re-lease space at similar rates as vacancies occur;

our ability to timely reinvest sale proceeds at similar rates to assets sold;

operator/tenant or joint venture partner bankruptcies or insolvencies;

the cooperation of joint venture partners;

government
requirements;

regulations affecting Medicare and Medicaid reimbursement

rates and operational

liability or contract claims by or against operators/tenants;

unanticipated difficulties and/or expenditures relating to future investments or acquisitions;

environmental laws affecting our properties;

changes in rules or practices governing our financial reporting;

the movement of U.S. and foreign currency exchange rates;

our ability to maintain our qualification as a REIT;

key management personnel recruitment and retention; and

the risks described under “Item 1A — Risk Factors.”

We undertake no obligation to update or revise publicly any forward-looking statements, whether because of

new information, future events, or otherwise.

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Item 1A. Risk Factors

This section discusses the most significant factors that affect our business, operations and financial
condition. It does not describe all risks and uncertainties applicable to us, our industry or ownership of our
securities. If any of the following risks, as well as other risks and uncertainties that are not addressed in this
section or that we have not yet identified, actually occur, we could be materially adversely affected and the value
of our securities could decline. We group these risk factors into three categories:

• Risks arising from our business;

• Risks arising from our capital structure; and

• Risks arising from our status as a REIT.

Risks Arising from Our Business

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

We are exposed to the risk that some of our acquisitions may not prove to be successful. We could
encounter unanticipated difficulties and expenditures relating to any acquired properties, including contingent
liabilities, and acquired properties might require significant management attention that would otherwise be
devoted to our ongoing business. If we agree to provide construction funding to an operator/tenant and the
project is not completed, we may need to take steps to ensure completion of the project. Such expenditures may
negatively affect our results of operations. Investments in and acquisitions of seniors housing and health care
properties entail risks associated with real estate investments generally, including risks that the investment will
not achieve expected returns, that the cost estimates for necessary property improvements will prove inaccurate
or that the tenant, operator or manager will fail to meet performance expectations. Furthermore, there can be no
assurance that our anticipated acquisitions and investments, the completion of which is subject to various
conditions, will be consummated in accordance with anticipated timing, on anticipated terms, or at all. Health
care properties are often highly customizable and the development or redevelopment of such properties may
require costly tenant-specific improvements. We also may be unable to quickly and efficiently integrate new
acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and this could have
an adverse effect on our results of operations and financial condition. As a result, we cannot assure you that we
will achieve the economic benefit we expect from acquisitions, investment, development and redevelopment
opportunities. All of the foregoing could affect our ability to continue paying dividends at the current rate.

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

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

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control the properties in the joint ventures. Even when we have a controlling interest, certain major decisions
may require partner approval, such as the sale, acquisition or financing of a property.

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

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

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

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

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

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

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

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

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

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

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

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

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

As of December 31, 2018, Sunrise managed 161 of our seniors housing operating properties. These
properties account for a significant portion of our revenues, and we rely on Sunrise to manage these properties
efficiently and effectively. We also rely on Sunrise to set appropriate resident fees, to provide accurate property-
level financial results for our properties in a timely manner and to otherwise operate them in compliance with the
terms of our management agreements and all applicable laws and regulations. Any adverse developments in
Sunrise’s business or financial condition could impair its ability to manage our properties efficiently and
effectively, which could adversely affect our business, results of operations, and financial condition. Also, if
Sunrise experiences any significant financial, legal, accounting or regulatory difficulties, such difficulties could
result in, among other things, acceleration of its indebtedness, impairment of its continued access to capital or the
commencement of insolvency proceedings by or against it under the U.S. Bankruptcy Code, which, in turn, could
adversely affect our business, results of operations and financial condition. See Note 8 to our consolidated
financial statements for additional information.

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

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

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

We have operations in Canada and the U.K. which represent 10.0% and 9.6% of total Welltower revenues,
respectively. As of December 31, 2018, Revera managed 98 of our seniors housing operating properties in
Canada, representing a significant portion of our revenues, and also owned a controlling interest in Sunrise.
International development, ownership, and operating activities involve risks that are different from those we face
with respect
to our domestic properties and operations. These risks include, but are not limited to, any
international currency gain recognized with respect to changes in exchange rates may not qualify under the 75%
gross income test or the 95% gross income test that we must satisfy annually in order to qualify and maintain our
status as a REIT; challenges with respect to the repatriation of foreign earnings and cash; changes in foreign
political, regulatory, and economic conditions (regionally, nationally and locally) including, but not limited to,
continuing uncertainty surrounding the process of Brexit and the macroeconomic and regulatory effects of
Brexit, including impacts on the U.K. real estate market; challenges in managing international operations;
challenges of complying with a wide variety of foreign laws and regulations, including those relating to real
estate, corporate governance, operations, taxes, employment and other civil and criminal legal proceedings;
foreign ownership restrictions with respect to operations in countries; differences in lending practices and the
willingness of domestic or foreign lenders to provide financing; regional or country-specific business cycles and
political and economic instability; and failure to comply with applicable laws and regulations in the U.S. that
affect foreign operations, including, but not limited to, the U.S. Foreign Corrupt Practices Act. If we are unable
to successfully manage the risks associated with international expansion and operations, our results of operations
and financial condition may be adversely affected.

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

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

Real estate investments are relatively illiquid and most of the property we own is highly customized for
specific uses. Our ability to quickly sell or exchange any of our properties in response to changes in operator,

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

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

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

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

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

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

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

The Health Reform Laws, provide those states that expand their Medicaid coverage to otherwise eligible
state residents with incomes at or below 138% of the federal poverty level with an increased federal medical

35

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

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

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

Many of our properties may require a license, registration, and/or CON to operate. Failure to obtain a
license, registration, or CON, or loss of a required license, registration, or CON would prevent a facility from
operating in the manner intended by the operators or tenants. These events could materially adversely affect our
operators’ or tenants’ ability to make rent or other obligatory payments to us. State and local laws also may
regulate the expansion, including the addition of new beds or services or acquisition of medical equipment, and
the construction or renovation of health care facilities, by requiring a CON or other similar approval from a state
agency. See “Item 1 — Business — Certain Government Regulations — United States — Licensing and
Certification” above.

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

The Tax Cuts and Jobs Act (“Tax Act”) enacted in December 2017 significantly changes the U.S. income
tax rules for individuals and corporations. Although the Tax Act involves comprehensive changes to the system
of corporate income tax, it does not substantively change the manner in which REITs are taxed. Although
numerous provisions of the Tax Act do affect REITs, we are generally not subject to federal taxes applicable to
regular corporations if we comply with the tax law governing REIT status and distribute annually an amount at
least equal to our taxable income. Nonetheless, the Tax Act makes numerous changes to the individual income
tax rules that may affect the real estate market in the U.S., including limitations on the deductibility of state and
local property taxes and interest. Although the impact of these changes is likely to be most significant in the
residential real estate market, rather than in the sectors where we operate, the effects of these changes on the
broader real estate market in the geographic areas in which we operate and on our tenants remain uncertain.

Changes in applicable tax regulations could negatively affect our financial results

We are subject to taxation in the U.S. and numerous foreign jurisdictions. Because, even with the passage of
the Tax Act, the U.S. maintains a worldwide corporate tax system, the foreign and U.S. tax systems are

36

somewhat interdependent. Longstanding international norms that determine each country’s jurisdiction to tax
cross-border international trade are evolving and could reduce the ability of our foreign subsidiaries to deduct for
foreign tax purposes the interest they pay on loans from us, thereby, increasing the foreign tax liability of the
subsidiaries; it is also possible that foreign countries could increase their withholding taxes on dividends and
interest. Given the unpredictability of these possible changes and their potential interdependency, it is very
difficult to assess the overall effect of such potential tax changes on our earnings and cash flow, but such changes
could adversely impact our financial results.

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

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

Development, redevelopment and construction risks could affect our profitability

At any given time, we may be in the process of constructing one or more new facilities that ultimately will
require a CON and license before they can be utilized by the operator for their intended use. The operator also
may need to obtain Medicare and Medicaid certification and enter into Medicare and Medicaid provider
agreements and/or third party payor contracts. In the event that the operator is unable to obtain the necessary
CON, licensure, certification, provider agreements or contracts after the completion of construction, there is a
risk that we will not be able to earn any revenues on the facility until either the initial operator obtains a license
or certification to operate the new facility and the necessary provider agreements or contracts or we find and
contract with a new operator that is able to obtain a license to operate the facility for its intended use and the
necessary provider agreements or contracts.

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

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

37

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

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

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

Under various laws, owners or operators of real estate may be required to respond to the presence or release
of hazardous substances on the property and may be held liable for property damage, personal injuries or
penalties that result from environmental contamination or exposure to hazardous substances. We may become
liable to reimburse the government for damages and costs it incurs in connection with the contamination.
Generally, such liability attaches to a person based on the person’s relationship to the property. Our tenants or
borrowers are primarily responsible for the condition of the property. Moreover, we review environmental site
assessments of the properties that we own or encumber prior to taking an interest in them. Those assessments are
designed to meet the “all appropriate inquiry” standard, which we believe qualifies us for the innocent purchaser
defense if environmental liabilities arise. Based upon such assessments, we do not believe that any of our
properties are subject to material environmental contamination. However, environmental liabilities may be
present in our properties and we may incur costs to remediate contamination, which could have a material
adverse effect on our business or financial condition or the business or financial condition of our obligors.

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

Our business is at risk from and may be impacted by cybersecurity attacks, including attempts to gain
unauthorized access to our confidential data, and other electronic security breaches, including those resulting
from human error, product defects and technology failures. Such cyber-attacks can range from individual
attempts to gain unauthorized access to our information technology systems to more sophisticated security
threats. While we employ a number of measures to prevent, detect and mitigate these threats, there is no
guarantee such efforts will be successful in preventing a cyber-attack. In the past, we have experienced
cybersecurity breaches, which to date have not had a material impact on our operations; however, there is no
assurance that such impacts will not be material in the future. Cybersecurity incidents could disrupt our business,
damage our reputation, cause us to incur significant remediation expense and have a materially adverse effect on
our business, financial condition and results of operations. Cybersecurity breaches that compromise proprietary,
personal identifying or confidential information of our employees, operators, tenants and partners could result in
legal claims or proceedings, including under data privacy regulations.

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

Our success depends on the continued availability and service of key personnel, including our executive
officers and other highly qualified employees, and competition for their talents is intense. We cannot assure you

38

that we will retain our key personnel or that we will be able to recruit and retain other highly qualified employees
in the future. Losing any key personnel could, at least temporarily, have a material adverse effect on our
business, financial position and results of operations.

Risks Arising from Our Capital Structure

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

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

We may become more leveraged

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

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

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

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

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

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

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

39

default or delay in payment by the U.S. of its obligations. If our access to capital is limited by these factors or
other factors, it could negatively impact our ability to acquire properties, repay or refinance our indebtedness,
fund operations or make distributions to our stockholders.

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

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

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

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

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

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

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

We enter into hedge agreements from time to time to manage some of our exposure to interest rate and
foreign currency exchange rate volatility. These agreements involve risks, such as the risk that counterparties
may fail to honor their obligations under these arrangements. In addition, these arrangements may not be
effective in reducing our exposure to changes in interest rates or foreign currency exchange rates. When we use
forward-starting interest rate swaps, there is a risk that we will not complete the long-term borrowing against
which the swap is intended to hedge. If such events occur, our results of operations may be adversely affected.

Risks Arising from Our Status as a REIT

We might fail to qualify or remain qualified as a REIT

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

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

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

• we could be subject to possibly increased state and local taxes; and

•

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

Since REIT qualification requires us to meet a number of complex requirements, it is possible that we may
fail to fulfill them, and if we do, our earnings will be reduced by the amount of U.S. federal and other income

40

taxes owed. A reduction in our earnings would affect the amount we could distribute to our stockholders. If we
do not qualify as a REIT, we would not be required to make distributions to stockholders since a non-REIT is not
required to pay dividends to stockholders in order to maintain REIT status or avoid an excise tax. In addition, if
we fail to qualify as a REIT, all distributions to stockholders would continue to be treated as dividends to the
extent of our current and accumulated earnings and profits, although corporate stockholders may be eligible for
the dividends received deduction, and individual stockholders may be eligible for taxation at the rates generally
applicable to long-term capital gains (currently at a maximum rate of 20%) with respect to distributions.

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

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

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

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

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

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

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

41

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

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

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

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

Item 1B. Unresolved Staff Comments

None.

42

Item 2. Properties

We lease our corporate headquarters located at 4500 Dorr Street, Toledo, Ohio 43615. We also lease
corporate offices throughout the U.S., Canada, the United Kingdom and Luxembourg and have ground leases
relating to certain of our properties. The following table sets forth certain information regarding the properties
that comprise our consolidated real property and real estate loan investments as of December 31, 2018 (dollars in
thousands):

Property Location

Number of
Properties

Total
Investment

Annualized
Revenues(1)

Number of
Properties

Total
Investment

Annualized
Revenues(1)

Number of
Properties

Total
Investment

Annualized
Revenues(1)

Seniors Housing Operating

Triple-net

Outpatient Medical

Alaska . . . . . . . . . . . . . . . — $
Alabama . . . . . . . . . . . . . . —
Arkansas . . . . . . . . . . . . . . —
3
Arizona . . . . . . . . . . . . . . .
84
California . . . . . . . . . . . . .
4
Colorado . . . . . . . . . . . . . .
18
Connecticut
. . . . . . . . . . .
1
District Of Columbia . . . .
4
Delaware . . . . . . . . . . . . .
11
Florida . . . . . . . . . . . . . . .
6
Georgia . . . . . . . . . . . . . . .
Iowa . . . . . . . . . . . . . . . . .
1
Idaho . . . . . . . . . . . . . . . . —
Illinois . . . . . . . . . . . . . . .
14
Indiana . . . . . . . . . . . . . . . —
2
Kansas . . . . . . . . . . . . . . .
2
Kentucky . . . . . . . . . . . . .
2
Louisiana . . . . . . . . . . . . .
40
Massachusetts . . . . . . . . .
6
Maryland . . . . . . . . . . . . .
2
Maine . . . . . . . . . . . . . . . .
5
Michigan . . . . . . . . . . . . .
4
Minnesota . . . . . . . . . . . . .
Missouri . . . . . . . . . . . . . .
5
Mississippi . . . . . . . . . . . . —
1
Montana . . . . . . . . . . . . . .
2
North Carolina . . . . . . . . .
Nebraska . . . . . . . . . . . . . —
4
New Hampshire . . . . . . . .
26
New Jersey . . . . . . . . . . . .
1
New Mexico . . . . . . . . . . .
2
Nevada . . . . . . . . . . . . . . .
12
New York . . . . . . . . . . . . .
6
Ohio . . . . . . . . . . . . . . . . .
Oklahoma . . . . . . . . . . . . .
2
Oregon . . . . . . . . . . . . . . . —
9
Pennsylvania . . . . . . . . . .
3
Rhode Island . . . . . . . . . .
2
South Carolina . . . . . . . . .
2
Tennessee . . . . . . . . . . . . .
28
Texas . . . . . . . . . . . . . . . .
2
Utah . . . . . . . . . . . . . . . . .
5
Virginia . . . . . . . . . . . . . .
1
Vermont . . . . . . . . . . . . . .
Washington . . . . . . . . . . .
14
Wisconsin . . . . . . . . . . . . . —
West Virginia . . . . . . . . . . —
336
Total domestic . . . . . . . . .
110
Canada . . . . . . . . . . . . . . .
54
United Kingdom . . . . . . .
164
Total international
. . . . . .
500
Grand total . . . . . . . . . . . .

— $
—
—
52,715
2,762,952
114,217
443,781
61,763
85,736
820,940
110,534
31,059
—
428,803
—
29,458
37,556
48,893
1,103,287
250,315
48,130
105,899
108,830
142,202
—
5,710
119,188
—
114,495
693,703
17,772
35,225
428,241
299,653
38,951
—
155,558
59,381
7,101
48,089
820,461
20,765
243,676
25,536
474,394
—
—

— — $
—
4
— —
3
20,712
16
715,203
13
32,053
148,458
13
14,680 —
6
28,372
51
138,385
6
29,961
10
11,937
1
—
27
113,909
— 30
28
10,668
7
14,754
3
11,173
18
261,207
74,605
24
19,155 —
24
23,987
10
21,491
1
23,278
3
—
1
4,302
50
20,243
4
—
4
32,511
46
201,450
1,793 —
3
11,279
4
111,700
42
41,009
21
2,576
1
—
61,400
77
20,945 —
8
10,190
4
15,482
41
192,066
2
12,356
28
60,168
7,160 —
14
90,927
7
—
4
—
659
10,394,969 2,611,545
6
451,347
2,101,067
61
321,623
1,475,141
67
772,970
3,576,208
726
$13,971,177 $3,384,515

— $

33,434
—
34,957
390,915
331,738
145,985
—
101,096
580,495
59,190
105,633
4,096
399,815
385,372
300,665
59,124
18,177
152,967
306,394
—
281,423
218,152
12,376
25,835
6,281
362,777
30,897
49,700
815,490
—
32,315
42,201
363,009
208,973
2,914
1,012,532
—
49,243
38,684
483,016
26,538
299,224
—
195,075
105,832
65,116

—
3,356
—
2,192
40,140
29,536
16,087

2
7
1
4
34
2
1
— —
16,269 —
38
54,033
10
6,874
1
10,551
1,098 —
7
35,118
9
41,623
5
28,286
13,121
1
2,717 —
13,766 —
6
17,290
1
—
2
30,649
8
18,909
8
968
1,057 —
752 —
11
2
1
9
3
5
9
5
2
1
1
— —
1
4,889
6
4,536
55,358
62
2,775 —
4
34,530
— —
9
21,038
11,694
2
8,866 —
280
9,944 —
4
4
284

60,081
4,067
4,136
60,776
—
4,309
5,795
34,429
20,907
804
99,319

8,137,656 822,701

143,362

1,111,086 113,498
1,254,448 123,442
$9,392,104 $946,143

$

28,820 $
80,968
22,949
61,618
877,181
31,643
41,820
—
19,687
465,835
164,211
6,435
—
106,276
156,095
61,037
6,872
—
—
175,587
18,293
29,874
159,033
137,216
—
—
103,708
32,719
12,705
268,927
30,344
42,113
162,066
49,245
22,695
9,330
35,687
—
23,837
62,239

3,628
7,782
2,228
8,539
89,356
5,947
4,746
—
340
54,695
27,547
1,438
—
10,514
19,261
13,562
797
—
—
18,271
2,404
6,221
30,553
19,352
—
—
8,906
5,310
1,770
43,281
3,796
3,263
10,114
8,985
3,591
1,562
1,386
—
2,364
10,622
973,590 101,286
—
6,337
—
23,975
2,197
—
4,793,673 565,926
—
24,742
24,742
$5,057,488 $590,668

—
58,476
—
225,029
29,513
—

—
263,815
263,815

(1) Represents revenue for the month ended December 31, 2018 annualized.

43

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)

2018

2017

2018

2017

2018

2017

Seniors Housing Operating(4) . . . . .
Triple-net(5)
. . . . . . . . . . . . . . . . . .
Outpatient Medical(6) . . . . . . . . . . .

n/a
87.5% 86.5%
84.9% 85.8% 1.39x
n/a
93.1% 93.7%

n/a
1.34x
n/a

$60,635
12,831
34

$

60,828 per unit
15,663 per bed/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 occupancy for the three months ended December 31.
(5) Occupancy represents average quarterly operating occupancy based on the quarters ended September 30 and excludes properties that are

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

(6) Occupancy represents the percentage of total rentable square feet leased and occupied (including month-to-month and holdover leases and

excluding terminations) as of December 31.

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

December 31, 2018 (dollars in thousands):

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

Thereafter

Expiration Year(1)

Triple-net:

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

67
58,718 $
7.2%

8,401
11.7%

Outpatient Medical:

Square feet . . . . . . . . . 1,232,245
Base rent(2) . . . . . . . . . $
% of base rent
. . . . . .
Leases . . . . . . . . . . . . .
% of leases . . . . . . . . .

34,810 $
8.0%
350
14.3%

—
— $
—%
—
—%

8
13,691 $
1.7%

1,416

2.0%

12
8,272 $
1.0%

1,245

1.7%

—
— $
—%
—
—%

4

410
11,096 $ 62,108 $ 123,694 $ 35,006 $ 49,075 $ 452,444

55

19

95

33

1.4%
692
1.0%

7.6%

4,140

5.8%

15.2%
7,717
10.7%

4.3%

2,401

3.3%

6.0%

2,840

4.0%

55.6%

43,019

59.9%

1,346,567

1,630,750

1,769,937

1,398,798

1,404,470

834,530

1,327,844

579,397

763,969

38,060 $
8.8%
332
13.6%

45,882 $
10.6%
323
13.2%

47,951 $
11.1%
313
12.8%

38,075 $
8.8%
312
12.8%

41,464 $ 22,411 $

9.6%
181
7.4%

5.2%
134
5.5%

33,712 $ 14,550 $ 20,441 $
3.4%
86
3.5%

7.8%
154
6.3%

4.7%
88
3.6%

4,660,901
95,301

22.0%
171
7.0%

(1) Excludes investments in unconsolidated entities. Investments classified as held for sale are included in 2019.
(2) The most recent monthly cash base rent annualized. Base rent does not include tenant recoveries or amortization of above and below market

lease intangibles or other non cash income.

Item 3. Legal Proceedings

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.

44

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

Equity Securities

Our common stock trades on the New York Stock Exchange (NYSE:WELL). There were 3,668

PART II

stockholders of record as of January 31, 2019.

Stockholder Return Performance Presentation

Set forth below is a line graph comparing the yearly percentage change and the cumulative total stockholder
return on our shares of common stock against the cumulative total return of the S & P Composite-500 Stock
Index and the FTSE NAREIT Equity Index. As of December 31, 2018, 161 companies comprised the FTSE
NAREIT Equity Index, which consists of REITs identified by NAREIT as equity (those REITs which have at
least 75% of their investments in real property). The data are based on the closing prices as of December 31 for
each of the five years. 2013 equals $100 and dividends are assumed to be reinvested.

S&P 500

Welltower Inc.

FTSE NAREIT Equity

250

200

s
r
a
l
l

o
D

150

100

50

2013

2014

2015

2016

2017

2018

S & P 500

Welltower Inc.

FTSE NAREIT Equity

12/31/2013

12/31/2014

12/31/2015

12/31/2016

12/31/2017

12/31/2018

$100.00

$113.69

$115.26

$129.05

$157.22

$150.33

100.00

100.00

148.51

130.14

140.01

134.30

144.73

145.74

145.02

153.36

167.21

146.27

45

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.

Period

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

October 1, 2018 through October 31,

2018 . . . . . . . . . . . . . . . . . . . . . . . . .

1,739

$62.01

November 1, 2018 through

November 30, 2018 . . . . . . . . . . . . .

December 1, 2018 through

December 31, 2018 . . . . . . . . . . . . .

416

—

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

2,155

69.17

—

$63.39

(1) During the three months ended December 31, 2018, the company acquired shares of common stock held by employees who tendered

owned shares to satisfy tax withholding obligations.

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

46

Item 6. Selected Financial Data

The following selected financial data for the five years ended December 31, 2018 are derived from our

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

Operating Data
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income from continuing operations before income taxes
and other items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax (expense) benefit
. . . . . . . . . . . . . . . . . . . . .
Income (loss) from unconsolidated entities . . . . . . . . . . .
. . . . . . . . . . .
Gain (loss) on real estate dispositions, net

Income from continuing operations . . . . . . . . . . . . . . . .
. . . . . . . . . . .
Income from discontinued operations, net

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . .
Preferred stock redemption charge . . . . . . . . . . . . . . . . .
Net income (loss) attributable to noncontrolling

Year Ended December 31,

2014

2015

2016

2017

2018

$3,343,546
2,959,333

$3,859,826
3,223,709

$4,281,160
3,571,907

$4,316,641
4,017,025

$4,700,499
4,277,009

384,213
1,267
(27,426)
147,111

505,165
7,135

512,300
65,408
—

636,117
(6,451)
(21,504)
280,387

888,549
—

888,549
65,406
—

709,253
19,128
(10,357)
364,046

1,082,070
—

1,082,070
65,406
—

299,616
(20,128)
(83,125)
344,250

540,613
—

540,613
49,410
9,769

423,490
(8,674)
(641)
415,575

829,750
—

829,750
46,704
—

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

147

4,799

4,267

17,839

24,796

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

$ 446,745

$ 818,344

$1,012,397

$ 463,595

$ 758,250

Other Data
Average number of common shares outstanding:

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

306,272
307,747

348,240
349,424

358,275
360,227

367,237
369,001

373,620
375,250

Per Share Data
Basic:

Income from continuing operations . . . . . . . . . . . . . .
Discontinued operations, net . . . . . . . . . . . . . . . . . . . .
Net income attributable to common stockholders . . . .

Diluted:

Income from continuing operations . . . . . . . . . . . . . .
Discontinued operations, net . . . . . . . . . . . . . . . . . . . .
Net income attributable to common stockholders . . . .
Cash distributions per common share . . . . . . . . . . . . . . .

$
$
$

$
$
$
$

1.65
0.02
1.46

1.64
0.02
1.45
3.18

$
$
$

$
$
$
$

2.55

$
— $
$

2.35

3.02

$
— $
$

2.83

1.47

$
— $
$

1.26

2.54

$
— $
$
$

2.34
3.30

3.00

$
— $
$
$

2.81
3.44

1.47

$
— $
$
$

1.26
3.48

2.22
—
2.03

2.21
—
2.02
3.48

2014

2015

2016

2017

2018

December 31,

Balance Sheet Data

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

$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

$28,420,769
30,342,072
13,297,144
14,331,427
718,498
15,586,599

47

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

EXECUTIVE SUMMARY

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

LIQUIDITY AND CAPITAL RESOURCES

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

RESULTS OF OPERATIONS

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

49
49
50
52
53

54
55
55
56

57
58
61
64
67

OTHER

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

68
74

48

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

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

Executive Summary

Company Overview

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

The following table summarizes our consolidated portfolio for the year ended December 31, 2018 (dollars in

thousands):

Type of Property

NOI(1)

Percentage of
NOI

Number of
Properties

Seniors Housing Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient Medical

$ 985,022
900,049
380,136

43.5%
39.7%
16.8%

500
726
284

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

$2,265,207

100.0%

1,510

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

Business Strategy

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

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

49

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

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

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

For the year ended December 31, 2018, resident fees/services and rental income represented 69% and 29%,
respectively, of total revenues. Substantially all of our operating leases are designed with escalating rent
structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the
initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental
escalators is generally recorded based on the contractual cash rental payments due for the period. Our yield on
loans receivable depends upon a number of factors, including the stated interest rate, the average principal
amount outstanding during the term of the loan, and any interest rate adjustments.

Our primary sources of cash include resident fees/services, rent and interest receipts, borrowings under our
primary unsecured credit facility, public issuances of debt and equity securities, our commercial paper program,
proceeds from investment dispositions and principal payments on loans receivable. Our primary uses of cash
include dividend distributions, debt service payments (including principal and interest), real property investments
loan advances,
(including acquisitions, capital expenditures, construction advances and transaction costs),
property operating expenses and general and administrative expenses. Depending upon the availability and cost
of external capital, we believe our liquidity is sufficient to fund these uses of cash.

We also continuously evaluate opportunities to finance future investments. New investments are generally
funded from temporary borrowings under our primary unsecured credit facility, internally generated cash and the
proceeds from investment dispositions. Our investments generate cash from net operating income. Permanent
financing for future investments, which replaces funds drawn under our primary unsecured credit facility, has
historically been provided through a combination of the issuance of public debt and equity securities and the
incurrence or assumption of secured debt.

Depending upon market conditions, we believe that new investments will be available in the future with
spreads over our cost of capital that will generate appropriate returns to our stockholders. It is also likely that
investment dispositions may occur in the future. To the extent
investment dispositions exceed new
investments, our revenues and cash flows from operations could be adversely affected. We expect to reinvest the
proceeds from any investment dispositions in new investments. To the extent that new investment requirements
exceed our available cash on-hand, we expect to borrow under our primary unsecured credit facility. At
December 31, 2018, we had $215,376,000 of cash and cash equivalents, $100,753,000 of restricted cash and
$1,853,000,000 of available borrowing capacity under our primary unsecured credit facility.

that

Key Transactions

Capital The following summarizes key capital transactions that occurred and supported new investments

made during the year ended December 31, 2018:

•

•

In April 2018, we issued $550,000,000 of 4.25% senior unsecured notes due 2028 for net proceeds of
approximately $545,074,000.

In connection with the QCP acquisition, in July 2018, we drew on a $1,000,000,000 term loan facility
to fund a portion of the cash consideration and other expenses.

50

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

•

•

In August 2018, we issued $200,000,000 of 4.25% senior unsecured notes due 2028, $600,000,000 of
3.95% senior unsecured notes due 2023 and $500,000,000 of 4.95% senior unsecured notes due 2048
for aggregate net proceeds of approximately $1,283,226,000. Proceeds from these issuances were used
to repay advances under the $1,000,000,000 term loan facility drawn on in July 2018 and the primary
unsecured credit facility.

In July 2018, we closed on a new $3,700,000,000 unsecured credit facility with improved pricing
across both our line of credit and term loan facility and terminated the existing unsecured credit
facility. The credit facility includes a $3,000,000,000 revolving credit facility at a borrowing rate of
0.825% over LIBOR, a $500,000,000 USD unsecured term credit facility at a borrowing rate of 0.90%
over LIBOR and a $250,000,000 CAD unsecured term credit facility at 0.90% over CDOR.

• We extinguished $306,553,000 of secured debt at a blended average interest rate of 5.36%.

• We repaid our $450,000,000 of 2.25% senior unsecured notes at par upon maturity on March 15, 2018.

• We raised $794,649,000 through our dividend reinvestment program and our Equity Shelf Program (as

defined below).

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

during the year ended December 31, 2018 (dollars in thousands):

Properties

Investment
Amount(1)

Capitalization
Rates(2)

Book
Amount(3)

Seniors Housing Operating . . . . . . . . . . . . . .
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .
Outpatient Medical

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

12
246
30

288

$ 673,374
2,438,899
605,866

$3,718,139

6.7%
6.9%
5.8%

6.7%

$ 742,675
3,062,427
628,824

$4,433,926

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

GAAP.

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

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

financial statements for additional information.

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

2018 (dollars in thousands):

Properties

Proceeds(1)

Capitalization
Rates(2)

Book
Amount(3)

Seniors Housing Operating . . . . . . . . . . . . . .
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .
Outpatient Medical

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

4
107
21

132

$

40,073
1,050,290
464,843

$1,555,206

7.5%
5.3%
6.2%

5.6%

$

36,627
835,093
253,397

$1,125,117

(1) Represents pro rata proceeds received upon disposition.

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

proceeds.

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

Dividends Our Board of Directors announced the 2019 annual cash dividend of $3.48 per common share
($0.87 per share quarterly), consistent with 2018, beginning in February 2019. The dividend declared for the
quarter ended December 31, 2018 represents the 191st consecutive quarterly dividend payment.

51

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

Key Performance Indicators, Trends and Uncertainties

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

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

Year Ended December 31,

2016

2017

2018

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,082,070 $ 540,613 $ 829,750
758,250
Net income attributable to common stockholders . . . . . . . . . . . .
1,392,183
Funds from operations attributable to common stockholders . . .
2,267,482
Consolidated net operating income . . . . . . . . . . . . . . . . . . . . . . .
1,551,424
Same store net operating income . . . . . . . . . . . . . . . . . . . . . . . . .

1,012,397
1,582,940
2,404,177
1,528,340

463,595
1,165,576
2,232,716
1,544,462

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

Year Ended
December 31,

2016

2017

2018

Net debt to book capitalization ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net debt to undepreciated book capitalization ratio . . . . . . . . . . . . . . . . . . . . .
Net debt to market capitalization ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted interest coverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.21x
Adjusted fixed charge coverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.34x

42.9% 42.9% 45.0%
37.4% 36.3% 37.8%
31.1% 31.2% 31.3%

4.36x
3.54x

4.11x
3.44x

Concentration Risk We evaluate our concentration risk in terms of NOI by property mix, relationship mix
and geographic mix. Concentration risk is a valuable measure in understanding what portion of our NOI could be
at risk if certain sectors were to experience downturns. Property mix measures the portion of our NOI that relates
to our various property types. Relationship mix measures the portion of our NOI that relates to our top five
relationships. Geographic mix measures the portion of our NOI that relates to our top five states (or international

52

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 years
indicated below:

December 31,(1)

2016

2017

2018

Property mix:

Seniors Housing Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient Medical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

34% 40% 43%
50% 43% 40%
16% 17% 17%

Relationship mix:

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

13% 14% 15%
7%
7%
6%
6%
7%
6%
6%
9%
16%
4%
4%
4%
55% 59% 62%

Geographic mix:

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

10% 13% 14%
9%
9%
8%
8%
8%
7%
8%
7%
7%
8%
7%
8%
60% 55% 54%

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

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

(2) Revera owns a controlling interest in Sunrise Senior Living.

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

Corporate Governance

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

53

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

Liquidity and Capital Resources

Sources and Uses of Cash

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

Year Ended

One Year
Change

December 31,
2016

December 31,
2017

$

%

Year Ended
December 31,
2018

One Year
Change

Two Year
Change

$

%

$

%

Beginning cash, cash

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

Net cash provided from

422,690 $

607,220 $ 184,530 44% $

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

-27%

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

Effect of foreign currency

1,639,064
(183,443)
(1,250,817)

1,434,177 (204,887) -13% 1,583,944
338,024 n/a

154,581

(1,913,527) (662,710) 53%

(2,386,471) (2,541,052) n/a
2,731,895 n/a

818,368

149,767

10%

(55,120)

-3%
(2,203,028) 1,201%
2,069,185

n/a

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

(20,274)

26,852

47,126 n/a

(9,015)

(35,867) n/a

11,259

-56%

Ending cash, cash

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

607,220 $

309,303 $(297,917) -49% $

316,129 $

6,826

2% $ (291,091)

-48%

Operating Activities The change in net cash provided from operating activities is attributable to changes in
NOI, which is primarily due to acquisitions and annual rent increasers, partially offset to dispositions. Please see
“Results of Operations” below for further discussion. For the years ended December 31, 2016, 2017 and 2018,
cash flows from operations exceeded cash distributions to stockholders.

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

Year Ended

One Year
Change

December 31,
2016

December 31,
2017

$

%

Year Ended

December 31,
2018

One Year
Change

Two Year
Change

$

%

$

%

$403,131

$232,715

$(170,416) -42% $160,706

$(72,009) -31% $(242,425) -60%

66,332

67,797

1,465

2%

90,190

22,393

33% 23,858

36%

152,814

182,479

29,665

19% 175,993

(6,486)

-4% 23,179

15%

New development . . . . . . . . . . .
Recurring capital expenditures,
tenant improvements and
lease commissions . . . . . . . .

Renovations, redevelopments

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

Total

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

$622,277

$482,991

$(139,286) -22% $426,889

$(56,102) -12% $(195,388) -31%

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

54

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

to maximize property value, increase net operating income, maintain a market-competitive position, and/or
achieve property stabilization. Generally, these expenditures have increased as a result of acquisitions, primarily
in our Seniors Housing Operating segment.

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

Off-Balance Sheet Arrangements

At December 31, 2018, we had investments in unconsolidated entities with our ownership generally ranging
from 10% to 50%. We use financial derivative instruments to hedge interest rate and foreign currency exchange
rate exposure. At December 31, 2018, we had fourteen outstanding letter of credit obligations. Please see Notes
7, 11 and 12 to our consolidated financial statements for additional information.

Contractual Obligations

The following table summarizes our payment

requirements under contractual obligations as of

December 31, 2018 (in thousands):

Contractual Obligations

Total

2019

2020-2021

2022-2023

Thereafter

Payments Due by Period

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

. . . . . . . . . . $ 1,147,000 $

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) . . . . . . . .

7,450,000
219,989
1,339,170
507,500
183,325

Secured debt:(2,3)

— $

— $1,147,000 $

—

600,000

4,250,000
900,000 1,700,000
—
—
— 1,339,170
—
—

500,000
— 183,325

— 219,989
—
—
—
7,500
—

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

2,485,711
790,643

508,899
51,614

507,412
88,024

605,789
39,495

863,611
611,510

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)

38,202
171,910
424,529
3,930,812
90,861
478,922
30,919
211,077
4,173
84,265
1,138,046
18,242
1,704,293 1,599,477
1,229

1,229

76,405
758,541
144,026
51,892
8,346
35,392
104,816
—

57,303
638,183
96,873
47,904
71,746
33,965
—
—

—
2,109,559
147,162
80,362
—
1,050,447
—
—

Total contractual obligations . . . . . . . . . . . . . . . . . $21,843,892 $3,368,145 $2,902,343 $5,121,583 $10,451,821

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

financial statements.

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

on the balance sheet.

55

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

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

(4) Based on variable interest rates in effect as of December 31, 2018.

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

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

Capital Structure

Please refer to “Credit Strength” above for a discussion of our leverage and coverage ratio trends. Our debt
agreements contain various covenants, restrictions and events of default. Certain agreements require us to
maintain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness,
create liens and make investments or acquisitions. As of December 31, 2018, we were in compliance with all of
the covenants under our debt agreements. None of our debt agreements contain provisions for acceleration which
could be triggered by our debt ratings. However, under our primary unsecured credit facility, the ratings on our
senior unsecured notes are used to determine the fees and interest charged. We plan to manage the company to
maintain compliance with our debt covenants and with a capital structure consistent with our current profile. Any
downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse
impact on our cost and availability of capital, which could in turn have a material adverse impact on our
consolidated results of operations, liquidity and/or financial condition.

On May 17, 2018, we filed with the Securities and Exchange Commission (1) an open-ended automatic or
“universal” shelf registration statement covering an indeterminate amount of future offerings of debt securities,
common stock, preferred stock, depositary shares, warrants and units and (2) a registration statement
in
connection with our enhanced dividend reinvestment plan (“DRIP”) under which we may issue up to 15,000,000
shares of common stock. As of February 13, 2019, 8,526,222 shares of common stock remained available for
issuance under the DRIP registration statement. On August 3, 2018, we entered into separate amended and
restated equity distribution agreements with each of Morgan Stanley & Co. LLC; Merrill Lynch, Pierce,
Fenner & Smith Incorporated; Goldman Sachs & Co. LLC; UBS Securities LLC and Wells Fargo Securities,
LLC relating to the offer and sale from time to time of up to $784,083,001 aggregate amount of our common
stock (“Equity Shelf Program”). The Equity Shelf Program also allows us to enter into forward sale
agreements. We expect that, if entered into, we will physically settle each forward sale agreement on one or more
dates on or prior to the maturity date of that particular forward sale agreement, in which case we will expect to
receive per share cash proceeds at settlement equal to the forward sale price under the relevant forward sale
agreement. However, we may elect to cash settle or net share settle a forward sale agreement. As of February 13,
2019, we had $227,958,000 of remaining capacity under the Equity Shelf Program and there were no outstanding
forward sales agreements. Depending upon market conditions, we anticipate issuing securities under our
registration statements to invest in additional properties and to repay borrowings under our primary unsecured
credit facility.

56

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

Results of Operations

Summary

Our primary sources of revenue include resident fees/services, rent and interest income. Our primary
expenses include interest expense, depreciation and amortization, property operating expenses, other expenses
and general and administrative expenses. We evaluate our business and make resource allocations on our three
business segments: Seniors Housing Operating, Triple-net and Outpatient Medical. The primary performance
measures for our properties are NOI and SSNOI and other supplemental measures include FFO and Adjusted
EBITDA, which are further discussed below. Please see Non-GAAP Financial Measures for additional
information and reconciliations. The following is a summary of our results of operations for the periods
presented (dollars in thousands, except per share amounts):

Year Ended

One Year
Change

December 31,
2016

December 31,
2017

Amount %

Year Ended

December 31,
2018

One Year
Change

Two Year
Change

Amount % Amount %

Net income . . . . . . . . . . . . . . . . . $1,082,070

$ 540,613 $(541,457) -50% $ 829,750 $289,137 53% $(252,320) -23%

NICS . . . . . . . . . . . . . . . . . . . . .

1,012,397

463,595

(548,802) -54%

758,250

294,655 64% (254,147) -25%

FFO . . . . . . . . . . . . . . . . . . . . . .

1,582,940

1,165,576

(417,364) -26% 1,392,183

226,607 19% (190,757) -12%

Adjusted EBITDA . . . . . . . . . . .

2,256,864

2,128,429

(128,435) -6% 2,153,005

24,576 1% (103,859)

-5%

Consolidated NOI . . . . . . . . . . .

2,404,177

2,232,716

(171,461) -7% 2,267,482

34,766 2% (136,695)

-6%

Same store NOI . . . . . . . . . . . . .

1,528,340

1,544,462

16,122

1% 1,551,424

6,962 —%

23,084

2%

Per share data (fully diluted):

Net income attributable to

common stockholders . . . . $

2.81

$

1.26 $

(1.55) -55% $

2.02 $

0.76 60% $

(0.79) -28%

Funds from operations

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

Adjusted interest coverage

4.39

3.16

(1.23) -28%

3.71

0.55 17%

(0.68) -15%

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

4.21x

4.36x

0.15x

4%

4.11x

-0.25x -6%

0.15x

4%

Adjusted fixed charge coverage

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

3.34x

3.54x

0.20x

6%

3.44x

-0.10x -3%

0.20x

6%

57

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

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

2016 to December 31, 2018 (in thousands):

December 31,
2016

Year Ended

December 31,
2017

December 31,
2018

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

354,778
4,145
—
—
141
3,135
403

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

362,602

Average number of shares outstanding:

362,602
5,640
4
91
253
2,987
155

371,732

371,732
6,529
—
—
57
5,241
116

Totals

354,778
16,314
4
91
451
11,363
674

383,675

383,675

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

358,275
360,227

367,237
369,001

373,620
375,250

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

Seniors Housing Operating

The following is a summary of our NOI and SSNOI for the Seniors Housing Operating segment for the

years presented (dollars in thousands):

Year Ended

One Year
Change

December 31,
2016

December 31,
2017

$

%

Year Ended

December 31,
2018

One Year
Change

Two Year
Change

$

%

$

%

NOI . . . . . . . . . . . . . . . . . $814,114
Non-cash NOI

$ 880,026 $ 65,912

8% $ 985,022 $ 104,996 12% $ 170,908

21%

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

. . . .

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

1,990

1,242

(748) -38%

836

(406) -33%

(1,154) -58%

(77,334)

(132,604)

(55,270) 71% (251,803)

(119,199) 90% (174,469) 226%

SSNOI(1) . . . . . . . . . . . . . $738,770

$ 748,664 $ 9,894

1% $ 734,055 $ (14,609)

-2% $

(4,715)

-1%

(1) Relates to 348 same store properties.

(2) Primarily relates to the acquisition of 66 properties subsequent to January 1, 2016 and the transition of 69 properties from Triple-net to

Seniors Housing Operating.

58

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

years presented (dollars in thousands):

Year Ended

December 31,
2016

December 31,
2017

One Year
Change

$

%

Year Ended

December 31,
2018

One Year
Change

Two Year
Change

$

%

$

%

Revenues:

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

$2,504,731

$2,779,423

$274,692

11% $3,234,852

$455,429

16% $730,121

29%

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

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

4,180

17,085

69

(4,111)

5,127

(11,958)

-98%

-70%

578

5,024

509 738% (3,602)

-86%

(103)

-2% (12,061)

-71%

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

2,525,996

2,784,619

258,623

10% 3,240,454

455,835

16% 714,458

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

1,711,882

1,904,593

192,711

11% 2,255,432

350,839

18% 543,550

28%

32%

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

814,114

880,026

65,912

8%

985,022

104,996

12% 170,908

21%

Other expenses:

Depreciation and amortization . . . . . . .

415,429

484,796

69,367

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

Transaction costs(2)

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

Loss (gain) on extinguishment of debt,
. . . . . . . . . . . . . . . . . . . . . . . . . .

net

81,853

29,207

(88)

Impairment of assets . . . . . . . . . . . . . .

12,403

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

—

63,265

(18,588)

17%

-23%

529,449

69,060

44,653

5,795

9% 114,020

27%

9% (12,793)

-16%

— (29,207)

-100%

—

— n/a

(29,207) -100%

3,785

21,949

8,347

3,873 -4,401%

9,546

8,347

77%

n/a

110

7,599

6,624

(3,675)

-97%

198 -225%

(14,350)

-65% (4,804)

-39%

(1,723)

-21%

6,624

n/a

538,804

582,142

43,338

8%

612,842

30,700

5% 74,038

14%

Income (loss) from continuing operations

before income taxes and other
items . . . . . . . . . . . . . . . . . . . . . . . . . .

275,310

297,884

22,574

8%

372,180

74,296

25% 96,870

35%

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

(3,762)

(16,430)

(12,668)

337%

1,202

17,632 -107%

4,964 -132%

Income (loss) from unconsolidated

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

(20,442)

(105,236)

(84,794)

415%

(28,142)

77,094

-73% (7,700)

38%

Gain (loss) on real estate dispositions,

net

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

9,880

56,295

46,415

470%

(2,245)

(58,540) -104% (12,125) -123%

Income from continuing operations . . . . .

260,986

232,513

(28,473)

-11%

342,995

110,482

48% 82,009

31%

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

260,986

232,513

(28,473)

-11%

342,995

110,482

48% 82,009

31%

Less: Net income (loss) attributable to

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

2,292

8,472

6,180

270%

(660)

(9,132) -108% (2,952) -129%

Net income (loss) attributable to

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

$ 258,694

$ 224,041

$ (34,653)

-13% $ 343,655

$119,614

53% $ 84,961

33%

(1) See Non-GAAP Financial Measures below.

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

Fluctuations in resident fees/services and property operating expenses are primarily a result of acquisitions,
segment
transitions and the movement of U.S. and foreign currency exchange rates. The fluctuations in
depreciation and amortization are due to acquisitions and variations in amortization of short-lived intangible
assets. To the extent that we acquire or dispose of additional properties in the future, these amounts will change
accordingly. The decrease in other income for the year ended December 31, 2018 is primarily a result of
insurance proceeds received during 2017 relating to a property as well as a bargain purchase gain recognized in
conjunction with a single property acquisition.

During the three years presented, we recorded impairment charges on certain held for sale properties as the
carrying value exceeded the estimated fair value less costs to sell. The fluctuations in gains (losses) on real estate
dispositions are due to the volume of property sales and sales prices. Beginning January 1, 2017, transaction

59

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

costs related to asset acquisitions are capitalized as a component of purchase price. The increase in other
expenses since 2016 are primarily due to noncapitalizable transaction costs from acquisitions.

During the year ended December 31, 2018, we completed two seniors housing operating construction
projects representing $86,931,000 or $459,952 per unit and one expansion project totaling $2,672,000. The
following is a summary of our Seniors Housing Operating construction projects, excluding expansions, pending
as of December 31, 2018 (dollars in thousands):

Location

Units/Beds

Commitment

Balance

Est. Completion

Wandsworth, UK . . . . . . . . . . . . . . . . . . . . . .
Potomac, MD . . . . . . . . . . . . . . . . . . . . . . . . .

98
120

218

$ 75,185
56,623

$41,833
7,627

$131,808

49,460

1Q20
4Q20

Toronto, ON . . . . . . . . . . . . . . . . . . . . . . . . . .

Project in planning stage

39,898

$89,358

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

Year Ended December 31, 2016 Year Ended December 31, 2017 Year Ended December 31, 2018

Amount

Weighted Avg.
Interest Rate

Amount

Weighted Avg.
Interest Rate

Amount

Weighted Avg.
Interest Rate

Beginning balance . . . . . .
Debt transferred in . . . . . .
Debt issued . . . . . . . . . . .
Debt assumed . . . . . . . . .
Debt extinguished . . . . . .
Debt deconsolidated . . . .
Principal payments . . . . .
Foreign currency . . . . . . .

$2,290,552
—
293,860
60,898
(159,498)
—
(49,112)
26,549

3.96%
—%
2.90%
4.30%
3.66%
—%
3.89%
3.48%

$2,463,249
—
228,772
—
(668,804)
(60,000)
(47,153)
72,636

3.94%
—%
2.72%
—%
4.81%
3.80%
3.60%
3.23%

$1,988,700
35,830
45,447
121,612
(240,095)
—
(47,886)
(93,021)

Ending balance . . . . . . . .

$2,463,249

3.94%

$1,988,700

3.66%

$1,810,587

Monthly averages . . . . . .

$2,391,706

3.93%

$2,065,477

3.66%

$1,915,663

3.66%
3.84%
3.40%
5.55%
4.83%
0.00%
3.59%
3.31%

3.87%

3.74%

The majority of our seniors housing operating properties are formed through partnership interests. The
fluctuations in income (loss) from unconsolidated entities are largely due to the recognition of impairments
related to one of our investments in unconsolidated entities during the year ended December 31, 2017. Losses are
also attributable to depreciation and amortization of short-lived intangible assets related to certain investments in
unconsolidated joint ventures. Net income attributable to noncontrolling interests represents our partners’ share
of net income (loss) related to joint ventures.

60

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

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

December 31, December 31,

2016

2017

One Year
Change

$

%

Year Ended

December 31,
2018

One Year
Change

Two Year
Change

$

%

$

%

NOI . . . . . . . . . . . . . . . . $1,208,860 $ 967,084 $(241,776) -20% $ 900,049 $(67,035)
Non-cash NOI

-7% $(308,811) -26%

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

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

(28,538)

(23,764)

4,774 -17% (17,093)

6,671 -28% 11,445 -40%

(709,606)

(465,820)

243,786 -34% (401,878)

63,942 -14% 307,728 -43%

SSNOI(1) . . . . . . . . . . . . $ 470,716 $ 477,500 $

6,784

1% $ 481,078 $ 3,578

1% $ 10,362

2%

(1) Relates to 364 same store properties.

(2) Primarily relates to the acquisition of 264 properties and 40 properties sold or held for sale at December 31, 2018.

61

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 years presented

(dollars in thousands):

Revenues:

Year Ended

December 31,
2016

December 31,
2017

One Year
Change

$

%

Year Ended

December 31,
2018

One Year
Change

Two Year
Change

$

%

$

%

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

$1,112,325

$885,811

$(226,514)

-20% $828,865

$ (56,946)

-6% $(283,460)

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

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

90,476

6,059

73,742

7,531

(16,734)

-18%

1,472

24%

54,926

17,173

(18,816)

-26% (35,550)

9,642

128%

11,114

-25%

-39%

183%

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

1,208,860

967,084

(241,776)

-20%

900,964

(66,120)

-7% (307,896)

-25%

Property operating expenses . . . .

—

—

— n/a

915

915

n/a

(915)

n/a

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

1,208,860

967,084

(241,776)

-20%

900,049

(67,035)

-7% (306,981)

-25%

Other expenses:

Depreciation and

amortization . . . . . . . . . . . . .

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

Loss (gain) on derivatives and
financial instruments, net

. .

Transaction costs(2)

. . . . . . . . .

10,016

Loss (gain) on extinguishment
of debt, net . . . . . . . . . . . . . .

Provision for loan losses . . . . .

Impairment of assets . . . . . . . .

863

6,935

20,169

2,284

—

29,083

62,966

96,909

297,197

21,370

243,830

15,194

(53,367)

(6,176)

-18%

-29%

235,480

14,225

(8,350)

-3% (61,717)

(969)

-6%

(7,145)

-21%

-33%

68

2,216 3,259%

(4,016)

(6,300) -276%

(4,084) -6,006%

(10,016)

-100%

28,220 3,270%

56,031

76,740

808%

380%

—

(32)

—

— n/a

(10,016)

-100%

(29,115) -100%

(895)

-104%

(62,966) -100%

(6,935)

-100%

107,980

90,975

11,071

11%

(25,714)

-22%

87,811

90,975

435%

n/a

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

—

116,689

116,689

n/a

Income from continuing

operations before income taxes
and other items . . . . . . . . . . . .

Income tax benefit (expense)

. . .

Income (loss) from

356,618

566,955

210,337

59%

444,612

(122,343)

-22%

87,994

25%

852,242

(1,087)

400,129

(452,113)

-53%

455,437

55,308

14% (396,805)

-47%

(4,291)

(3,204)

295%

1,611

5,902 -138%

2,698

-248%

unconsolidated entities . . . . . .

9,767

19,428

9,661

99%

21,938

2,510

13%

12,171

125%

Gain (loss) on real estate

dispositions, net . . . . . . . . . . . .

355,394

286,325

(69,069)

-19%

196,589

(89,736)

-31% (158,805)

-45%

Income from continuing

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

1,216,316

701,591

(514,725)

-42%

675,575

(26,016)

-4% (540,741)

-44%

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

1,216,316

701,591

(514,725)

-42%

675,575

(26,016)

-4% (540,741)

-44%

Less: Net income attributable to

noncontrolling interests . . . . . .

Net income attributable to

1,221

4,603

3,382

277%

19,306

14,703

319%

18,085

1,481%

common stockholders . . . . . . .

$1,215,095

$696,988

$(518,107)

-43% $656,269

$ (40,719)

-6% $(558,826)

-46%

(1) See Non-GAAP Financial Measures below.

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

The 2017 and 2018 decreases in rental income are primarily attributable to the disposition of properties
exceeding new acquisitions, segment transitions and the reduction in the Genesis HealthCare (“Genesis”) annual
cash rent obligation due to the restructuring of the master lease as of January 1, 2018. Certain of our leases
contain annual rental escalators that are contingent upon changes in the Consumer Price Index (“CPI”) and/or
changes in the gross operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-
line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for
the period. If gross operating revenues at our facilities and/or the CPI do not increase, a portion of our revenues

62

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

may not continue to increase. Our leases could renew above or below current rent rates, resulting in an increase
or decrease in rental income. For the three months ended December 31, 2018, we had 17 leases with rental rate
increasers ranging from 0.18% to 0.76% in our triple-net portfolio. The decrease in interest income is primarily
attributable to the volume of loan payoffs during the three years presented. The increase in other income for the
year ended December 31, 2018 is primarily due to $10,805,000 of net lease termination fees recognized.

Depreciation and amortization decreased primarily as a result of the disposition of triple-net properties
exceeding acquisition and segment transitions. To the extent we acquire or dispose of additional properties in the
future, our provision for depreciation and amortization will change accordingly.

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

During the three years presented, we recorded impairment charges on certain held for sale properties as the
carrying value exceeded the estimated fair value less costs to sell. The fluctuations in gains on real estate
dispositions are due to the volume of property sales and sales prices. Beginning January 1, 2017, transaction
costs related to asset acquisitions are capitalized as a component of purchase price.

Other expenses primarily represents noncapitalizable transaction costs from acquisitions, segment
transitions and the termination/restructuring of pre-existing relationships. In addition, during the year ended
December 31, 2017, we recognized an other than temporary charge of $18,294,000 in other expenses on the
Genesis available-for-sale equity investment.

During the year ended December 31, 2018, we completed two triple-net construction projects totaling
$90,055,000 or $283,472 per bed/unit and two expansion projects totaling $17,357,000. The following is a
summary of triple-net construction projects, excluding expansions, pending as of December 31, 2018 (dollars in
thousands):

Location

Units/Beds

Commitment

Balance

Est. Completion

Westerville, OH . . . . . . . . . . . . . . . . . . . . . . . . .
Union, KY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Droitwich, UK . . . . . . . . . . . . . . . . . . . . . . . . . .

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

90
162
70

322

$22,800
34,600
16,153

$ 8,160
9,848
4,573

$73,553

$22,581

3Q19
1Q20
4Q20

63

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

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
is primarily attributable to the
fluctuation in loss (gain) on derivatives and financial
mark-to-market adjustment recorded on the Genesis available-for-sale investment
in accordance with the
adoption of Accounting Standards Update 2016-01 described in Note 2 to our consolidated financial statements.
The following is a summary of our Triple-net secured debt principal activity for the periods presented (dollars in
thousands):

instruments, net

Year Ended December 31, 2016 Year Ended December 31, 2017 Year Ended December 31, 2018

Amount

Weighted Avg.
Interest Rate

Amount

Weighted Avg.
Interest Rate

Beginning balance . . . . . . . . . $ 554,014
166,155
Debt issued . . . . . . . . . . . . . . .
(118,500)
Debt extinguished . . . . . . . . .
—
Debt transferred out . . . . . . . .
(10,627)
Principal payments . . . . . . . . .
3,157
Foreign currency . . . . . . . . . .

5.49%
2.21%
5.56%
—%
5.68%
5.25%

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

4.58%
4.57%
5.95%
—%
5.66%
2.91%

Amount

$347,474
—
(4,107)
(35,830)
(3,982)
(15,169)

Ending balance . . . . . . . . . . . . $ 594,199

4.58%

$ 347,474

3.55%

$288,386

Monthly averages . . . . . . . . . . $ 497,213

5.41%

$ 408,688

3.91%

$321,730

Weighted Avg.
Interest Rate

3.55%
—%
4.94%
3.84%
5.38%
3.44%

3.63%

3.51%

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

Outpatient Medical

The following is a summary of our NOI and SSNOI for the Outpatient Medical segment for the periods

presented (dollars in thousands):

Year Ended

December 31,
2016

December 31,
2017

One Year
Change

$

%

Year Ended

December 31,
2018

One Year
Change

Two Year
Change

$

%

$

%

NOI . . . . . . . . . . . . . . . . . . . . . . $380,264
Non-cash NOI attributable to
same store properties(1)
NOI attributable to non same

. . . . .

(8,190)

$384,068 $ 3,804

1% $380,136 $ (3,932)

-1% $ (128) —%

(7,694)

496 -6%

(8,226)

(532)

7%

(36) —%

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

(53,220)

(58,076)

(4,856) 9% (35,619)

22,457 -39% 17,601 -33%

SSNOI(1) . . . . . . . . . . . . . . . . . . . $318,854

$318,298 $ (556) —% $336,291 $17,993

6% $17,437

5%

(1) Relates to 212 same store properties.

(2) Primarily relates to the acquisition of 48 properties and the conversion of 15 construction projects into revenue-generating properties

subsequent to January 1, 2016.

64

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

The following is a summary of our results of operations for the Outpatient Medical segment for the periods

presented (dollars in thousands):

Year Ended

December 31,
2016

December 31,
2017

One Year
Change

$

%

Year Ended

December 31,
2018

One Year
Change

Two Year
Change

$

%

$

%

Revenues:

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

$536,490

$560,060

$23,570

4% $551,557

$ (8,503)

-2% $ 15,067

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

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

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

Property operating expenses . . . . . . .

3,307

5,568

545,365

165,101

—

(3,307) -100%

3,340

(2,228)

-40%

563,400

179,332

18,035

14,231

310

4,939

556,806

176,670

310

1,599

(6,594)

(2,662)

n/a

48%

(2,997)

(629)

-1% 11,441

-1% 11,569

3%

-91%

-11%

2%

7%

NOI(1)

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

380,264

384,068

3,804

Other expenses:

Depreciation and amortization . . .

188,616

193,094

4,478

2%

185,530

380,136

(3,932)

-1%

(128) —%

10,015
—

(9,072)
-48%
(3,687) -100%

7,051
—

(7,564)

(2,964)
—

-4% (3,086)

-2%

-30% (12,036)
(3,687)
n/a

-63%
-100%

3%

9%

1%

Interest expense . . . . . . . . . . . . . .
Transaction costs(2) . . . . . . . . . . . .
Loss (gain) on extinguishment of

debt, net

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

Provision for loan losses.

. . . . . . .

Impairment of assets . . . . . . . . . . .

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

19,087
3,687

—

3,280

4,635

—

4,373

4,373

n/a

11,928

7,555

173% 11,928

n/a

—

(3,280) -100%

990

21%

—

—

—

n/a

(3,280)

-100%

(5,625)

-100% (4,635)

-100%

1,911

n/a

7,570

5,659

296%

7,570

n/a

5,625

1,911

219,305

215,018

(4,287)

-2%

212,079

(2,939)

-1% (7,226)

-3%

Income from continuing operations
before income taxes and other
item . . . . . . . . . . . . . . . . . . . . . . . .

160,959

169,050

8,091

5%

168,057

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

(511)

(1,477)

(966) 189%

(125)

(993)

1,352

-1%

-92%

7,098

4%

386

-76%

Income (loss) from unconsolidated

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

Gain (loss) on real estate

318

2,683

2,365

744%

5,563

2,880

107%

5,245 1,649%

dispositions, net

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

(1,228)

1,630

2,858

n/a

221,231

219,601 13,472% 222,459

n/a

Income from continuing

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

159,538

171,886

9,490

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

159,538

171,886

12,348

6%

8%

394,726

3,239

2% 12,729

8%

394,726

222,840

130% 235,188

147%

Less: Net income (loss) attributable

to noncontrolling interests . . . . . .

Net income (loss) attributable to

768

4,765

3,997

520%

6,150

1,385

29%

5,382

701%

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

$158,770

$167,121

$ 8,351

5% $388,576

$221,455

133% $229,806

145%

(1) See Non-GAAP Financial Measures below.

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

The fluctuations in rental income are primarily attributable to the acquisitions of new properties and the
conversion of newly constructed outpatient medical properties, offset by dispositions. Certain of our leases
contain annual rental escalators that are contingent upon changes in the CPI. These escalators are not fixed, so no
straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments
due for the period. If the CPI does not increase, a portion of our revenues may not continue to increase. Our
leases could renew above or below current rent rates, resulting in an increase or decrease in rental income. For
the three months ended December 31, 2018, our consolidated outpatient medical portfolio signed 77,850 square
feet of new leases and 184,349 square feet of renewals. The weighted-average term of these leases was seven
years, with a rate of $36.23 per square foot and tenant improvement and lease commission costs of $21.90 per

65

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

square foot. Substantially all of these leases contain an annual fixed or contingent escalation rent structure
ranging from 2.0% to 3.9%.

The fluctuation in property operating expenses and depreciation and amortization are primarily attributable
to acquisitions and construction conversions of new outpatient medical facilities, offset by dispositions. To the
extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly.
During 2016 and 2017, we recognized impairment charges related to certain held-for-sale properties as the
carrying values exceeded the estimated fair values less costs to sell. Changes in gains/losses on sales of
properties are related to volume of property sales and the sales prices.

During the year ended December 31, 2018, we completed one outpatient medical construction project
representing $11,358,000 or $296 per square foot. The following is a summary of outpatient medical construction
projects pending as of December 31, 2018 (dollars in thousands):

Location

Square Feet

Commitment

Balance

Est. Completion

Brooklyn, NY . . . . . . . . . . . . . . . . . . . . . . . .
Houston, TX . . . . . . . . . . . . . . . . . . . . . . . . .
Porter, TX . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

140,955
73,500
55,000

269,455

$105,306
23,455
20,800

$149,561

$58,390
5,097
4,198

$67,685

3Q19
4Q19
4Q19

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, 2016 Year Ended December 31, 2017 Year Ended December 31, 2018

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

Amount

$ 627,689
—
(210,115)
(13,495)

Ending balance . . . . . . . .

$ 404,079

Weighted Avg.
Interest Rate

5.18%
—%
5.97%
6.55%

4.85%

Amount

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

$ 279,951

Weighted Avg.
Interest Rate

4.85%
6.67%
5.99%
6.85%

4.72%

Amount

$279,951
171,275
(61,291)
(3,197)

$386,738

Monthly averages . . . . . .

$ 536,774

5.11%

$ 294,694

4.62%

$238,214

Weighted Avg.
Interest Rate

4.72%
3.99%
7.43%
5.91%

4.20%

4.25%

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

66

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,
2016

December 31,
2017

One Year
Change

$

%

Year Ended

December 31,
2018

One Year
Change

Two Year
Change

$

%

$

%

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

939

$

1,538 $

599

64% $

2,275 $

737

48% $ 1,336 142%

Expenses:

Interest expense . . . . . . . . . . . . .
General and administrative

399,035

396,148

(2,887)

-1% 436,256

40,108

10% 37,221

9%

expenses . . . . . . . . . . . . . . . .

155,241

122,008

(33,233)

-21% 126,383

4,375

4% (28,858) -19%

Loss (gain) on derivatives and
financial instruments, net
Loss (gain) on extinguishments

. . .

of debt, net . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . .

(2,516)

—

2,516 -100%

—

— n/a

2,516 -100%

16,439
11,998

— (16,439) -100%
38,831 324%

50,829

4,091
7,729

4,091
(43,100)

n/a

(12,348) -75%
-85% (4,269) -36%

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

580,197

568,985

(11,212)

-2% 574,459

5,474

1% (5,738)

-1%

Loss from continuing operations

before income taxes . . . . . . . . . .
. . . .

Income tax benefit (expense)

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

charge . . . . . . . . . . . . . . . . . . . .

Net loss attributable to common

(579,258)
24,488

(554,770)
65,406

(567,447)
2,070

11,811
(22,418)

-2% (572,184)
-92% (11,362)

(4,737)
(13,432)

1% 7,074
n/a

(35,850) n/a

-1%

(565,377)
49,410

(10,607)
(15,996)

2% (583,546)
46,704

-24%

(18,169)
(2,706)

5%
3% (28,776)
-5% (18,702) -29%

—

9,769

9,769

n/a

— (9,769) -100%

— n/a

stockholders . . . . . . . . . . . . . . . . $(620,176)

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

1% $(630,250) $ (5,694)

1% $(10,074)

2%

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

(dollars in thousands):

Year Ended

December 31,
2016

December 31,
2017

One Year
Change

$

%

Year Ended

December 31,
2018

One Year
Change

Two Year
Change

$

%

$

%

Senior unsecured notes . . . . . $368,775
Secured debt . . . . . . . . . . . . . .
310
Primary unsecured credit

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

16,811
13,139

$364,773 $(4,002)

127

(183) -59%

-1% $387,955
115

$23,182

5%
6% $19,180
(12) -9% (195) -63%

17,863
13,385

1,052
246

6% 34,626
2% 13,560

16,763 94% 17,815 106%
3%

175

421

1%

Totals . . . . . . . . . . . . . . . . . . . $399,035

$396,148 $(2,887)

-1% $436,256 $ 40,108 10% $37,221

9%

The change in interest expense on senior unsecured notes is due to the net effect of issuances and
extinguishments. Please refer to Note 10 to consolidated financial statements for additional information. The
change in interest expense on our primary unsecured credit facility is due primarily to the net effect and timing of
draws, paydowns and variable interest rate changes. Please refer to Note 9 of our consolidated financial
statements for additional information regarding our primary unsecured credit facility. Loan expenses represent
the amortization of costs incurred in connection with senior unsecured notes issuances. The loss on
extinguishment of debt in 2016 is due to the early extinguishment of the 2017 senior unsecured notes. The loss

67

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

on extinguishment of debt in 2018 is due to the term loan facility drawn on in July 2018 and paid off in August
2018.

General and administrative expenses as a percentage of consolidated revenues for the years ended
December 31, 2018, 2017 and 2016 were 2.69%, 2.83% and 3.63%, respectively. The decrease in general and
administrative expenses since 2016 is primarily related to a reduction in professional service fees for tax and
legal consulting and compensation costs as a result of execution of our strategic initiatives.

Other expenses for 2017 primarily represents $40,730,000 of costs related to finalization of an agreement
with the University of Toledo Foundation to transfer our corporate headquarters as a donation. Other expenses
for all years also includes severance-related costs associated with the departure of certain executive officers and
key employees.

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

Other

Non-GAAP Financial Measures

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

Consolidated net operating income (“NOI”) is used to evaluate the operating performance of our properties.
We define NOI as total revenues, including tenant reimbursements, less property operating expenses. Property
operating expenses represent costs associated with managing, maintaining and servicing tenants for our seniors
housing operating and outpatient medical facility properties. These expenses include, but are not limited to,
property-related payroll and benefits, property management fees paid to operators, marketing, housekeeping,
food service, maintenance, utilities, property taxes and insurance. General and administrative expenses represent
costs unrelated to property operations. These expenses include, but are not limited to, payroll and benefits,
professional services, office expenses, and depreciation of corporate fixed assets. Same store NOI (“SSNOI”) is
used to evaluate the operating performance of our properties using a consistent population which controls for
changes in the composition of our portfolio. As used herein, same store is generally defined as those revenue-
generating properties in the portfolio for the reporting period subsequent to January 1, 2016. Land parcels, loans
and sub-leases, as well as any properties acquired, developed /redeveloped, transitioned, sold or classified as held
for sale during that period are excluded from the same store amounts. We believe NOI and SSNOI provide
investors relevant and useful information because they measure the operating performance of our properties at
the property level on an unleveraged basis. We use NOI and SSNOI to make decisions about resource allocations
and to assess the property level performance of our properties.

EBITDA stands for earnings (net income) before interest, taxes, depreciation and amortization. We believe
is an important

that EBITDA, along with net income and cash flow provided from operating activities,

68

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

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

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 real estate investment trusts 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.

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:

Year Ended December 31,

2016

2017

2018

$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

$ 758,250
950,459
115,579
(415,575)
(69,193)
52,663

$1,582,940

$1,165,576

$1,392,183

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

358,275
360,227

367,237
369,001

373,620
375,250

Per share data:
Net income attributable to common stockholders

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

Funds from operations attributable to common stockholders

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

$

$

$

$

2.83
2.81

4.42
4.39

$

$

1.26
1.26

3.17
3.16

2.03
2.02

3.73
3.71

69

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

The table below reflects the reconciliation of EBITDA and Adjusted EBITDA to net income, the most

directly comparable U.S. GAAP measure, for the periods presented. Dollars are in thousands.

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

EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (income) from unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . .
Transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on extinguishment of debt, net . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on real estate dispositions, net . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on derivatives and financial instruments, net . . . . . . . . . . . . .
Other expenses(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,

2016

2017

2018

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

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

$ 829,750
526,592
8,674
950,459

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

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

2,315,475
641
—
27,646
16,097
(415,575)
115,579
—
(4,016)
111,990
(14,832)

Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,256,864

$2,128,429

$2,153,005

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

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

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

$ 526,592
7,905
(10,860)

Total interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

536,607
$2,256,864

487,752
$2,128,429

523,637
$2,153,005

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

4.21x

4.36x

4.11x

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

$ 536,607
74,466
65,406

$ 487,752
64,078
49,410

$ 523,637
56,288
46,704

Total fixed charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

676,479
$2,256,864

601,240
$2,128,429

626,629
$2,153,005

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

3.34x

3.54x

3.44x

(1) Certain severance-related costs are included in stock-based compensation and excluded from other expenses.

Our leverage ratios include book capitalization, undepreciated book capitalization and market capitalization.
Book capitalization represents the sum of net debt (defined as total long-term debt less cash and cash equivalents
and any IRC section 1031 deposits), total equity and redeemable noncontrolling interests. Undepreciated book
capitalization represents book capitalization adjusted for accumulated depreciation and amortization. Market
capitalization represents book capitalization adjusted for the fair market value of our common stock. Our

70

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

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,

2016

2017

2018

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

$

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

$

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

$ 1,147,000
12,150,144
(215,376)

Total net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity and noncontrolling interests(3) . . . . . . . . . . . . . . . . . . . . .

11,800,586
15,679,905

11,482,316
15,300,646

13,081,768
16,010,645

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

$27,480,491

$26,782,962

$29,092,413

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

42.9%

42.9%

45.0%

Undepreciated book capitalization:
Total net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . .
Total equity and noncontrolling interests(3) . . . . . . . . . . . . . . . . . . . . .

$11,800,586
4,093,494
15,679,905

$11,482,316
4,838,370
15,300,646

$13,081,768
5,499,958
16,010,645

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

$31,573,985

$31,621,332

$34,592,371

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

37.4%

36.3%

37.8%

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

362,602
66.93

$

371,732
63.77

$

383,675
69.41

$

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

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

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

$26,630,882
13,081,768
1,378,311
718,498

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

$37,949,300

$36,783,668

$41,809,459

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

31.1%

31.2%

31.3%

(1) Amounts include senior unsecured notes, secured debt and capital lease obligations as reflected on our Consolidated Balance Sheet.

(2)

(3)

Inclusive of IRC section 1031 deposits, if any.

Includes all noncontrolling interests (redeemable and permanent) as reflected on our Consolidated Balance Sheet.

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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,

2016

2017

2018

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 and financial instruments, net . . . . . . . . . . . . .
Transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$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

$ 829,750
(415,575)
641
8,674
112,898
115,579
—
16,097
(4,016)
—
126,383
950,459
526,592

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

$2,404,177

$2,232,716

$2,267,482

NOI by segment:

Seniors Housing Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient Medical
Non-segment/corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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

$ 985,022
900,049
380,136
2,275

Total NOI

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

$2,404,177

$2,232,716

$2,267,482

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

Year Ended December 31,

2016

2017

2018

SSNOI Reconciliation:
NOI:

Seniors Housing Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient Medical

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

$ 880,026
967,084
384,068

$ 985,022
900,049
380,136

Total
Adjustments:

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

2,403,238

2,231,178

2,265,207

Seniors Housing Operating:

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

1,990
(77,334)

1,242
(132,604)

836
(251,803)

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

(75,344)

(131,362)

(250,967)

Triple-net:

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

(28,538)
(709,606)

(23,764)
(465,820)

(17,093)
(401,878)

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

(738,144)

(489,584)

(418,971)

Outpatient Medical:

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

(8,190)
(53,220)

(7,694)
(58,076)

(8,226)
(35,619)

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

(61,410)

(65,770)

(43,845)

Total
SSNOI by segment:

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

(874,898)

(686,716)

(713,783)

Seniors Housing Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient Medical

738,770
470,716
318,854

748,664
477,500
318,298

734,055
481,078
336,291

Total

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

$1,528,340

$1,544,462

$1,551,424

SSNOI Property Reconciliation:

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

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

1,510
(378)
(32)
(55)
(113)
(8)

924

(1)

Includes seven land parcels and one loan.

73

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

Critical Accounting Policies

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

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

•

•

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

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

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

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

assumptions used to develop each estimate:

Nature of Critical
Accounting Estimate

Assumptions/
Approach Used

Principles of Consolidation

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

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
If we perform a primary beneficiary
financial statements.
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.

74

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

Nature of Critical
Accounting Estimate

Assumptions/
Approach Used

Real Estate Acquisitions

We make estimates as part of our allocation of the purchase price
of acquisitions to the various components of the acquisition based
upon the relative fair value of each component. The most
significant components of our allocations are typically the
allocation of fair value to the buildings as-if-vacant, land, and
in-place leases. In the case of the fair value of buildings and the
allocation of value to land and other intangibles, our estimates of
the values of these components will affect
the amount of
depreciation and amortization we record over the estimated
useful life of the property acquired or the remaining lease term.
In the case of the value of in-place leases, we make our best
estimates based on our evaluation of the specific characteristics
of each tenant’s lease. Factors considered include estimates of
carrying costs during hypothetical expected lease-up periods,
market conditions, and costs to execute similar leases. Our
assumptions affect the amount of future revenue that we will
recognize over the remaining lease term for the acquired in-place
leases.

We compute depreciation and amortization on our properties
using the straight-line method based on their estimated useful
lives which range from 15 to 40 years for buildings and five to
15 years for improvements. Amortization periods for intangibles
are based on the remaining life of the lease or lease-up period.

loan charge-offs,

financial strength of

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.

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

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

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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 recognized in a manner to depict the transfer of goods or
services to a customer at an amount that reflects the consideration
expected to be received in exchange for those goods or services.
Interest income on loans is recognized as earned based upon the
principal amount outstanding subject to an evaluation of collectability
risk. Substantially all of our operating leases contain fixed and/or
contingent escalating rent structures. Leases with fixed annual rental
escalators are generally recognized on a straight-line basis over the
initial
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, subject

Impairment of Long-Lived Assets

An impairment charge must be recognized when the carrying value of
a long-lived asset
is not recoverable. The carrying value is not
recoverable if it exceeds the sum of the undiscounted cash flows
expected to result from the use and eventual disposition of the asset. If
it is determined that a permanent impairment of a long-lived asset has
occurred, the carrying value of the asset is reduced to its fair value and
an impairment charge is recognized for the difference between the
carrying value and the fair value.

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
that may
estimated useful
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 presented to provide a discussion of the risks associated with potential
fluctuations in interest rates and foreign currency exchange rates. For more information, see Notes 11 and 16 to
our consolidated financial statements.

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

76

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

December 31, 2018

December 31, 2017

Principal
balance

Fair value
change

Principal
balance

Fair value
change

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

$ 9,009,159
1,639,983

$(548,558) $7,710,219
1,749,958

(59,522)

$(500,951)
(63,492)

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

$10,649,142

$(608,080) $9,460,177

$(564,443)

Our variable rate debt, including our primary unsecured credit facility, is reflected at fair value. At
December 31, 2018, we had $2,683,553,000 outstanding related to our variable rate debt. Assuming no changes
in outstanding balances, a 1% increase in interest rates would result in increased annual interest expense of
$26,836,000. At December 31, 2017, we had $2,294,678,000 outstanding under our variable rate debt. Assuming
no changes in outstanding balances, a 1% increase in interest rates would have resulted in increased annual
interest expense of $22,947,000.

We are subject to currency fluctuations that may, from time to time, affect our financial condition and
results of operations. Increases or decreases in the value of the Canadian Dollar or British Pounds Sterling
relative to the U.S. Dollar impact the amount of net income we earn from our investments in Canada and the
United Kingdom. Based solely on our results for the year ended December 31, 2018, including the impact of
existing hedging arrangements, if these exchange rates were to increase or decrease by 10%, our net income from
these investments would increase or decrease, as applicable, by less than $10,000,000. We will continue to
mitigate these underlying foreign currency exposures with non-U.S. denominated borrowings and gains and
losses on derivative contracts. If we increase our international presence through investments in, or acquisitions or
development of, seniors housing and health care properties outside the U.S., we may also decide to transact
additional business or borrow funds in currencies other than U.S. Dollars, Canadian Dollars or British Pounds
Sterling. To illustrate the impact of changes in foreign currency markets, we performed a sensitivity analysis on
our derivative portfolio whereby we modeled the change in net present values arising from a hypothetical 1%
increase in foreign currency exchange rates to determine the instruments’ change in fair value. The following
table summarizes the results of the analysis performed, excluding cross currency hedge activity (dollars in
thousands):

December 31, 2018

December 31, 2017

Carrying
value

Fair value
change

Carrying
value

Fair value
change

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

$

23,620
1,559,159

$16,163
15,592

$

23,238
1,620,273

$12,929
16,203

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

$1,582,779

$31,755

$1,643,511

$29,132

77

Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Shareholders and the Board of Directors of Welltower Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Welltower Inc. and subsidiaries (the
Company) as of December 31, 2018 and 2017, the related consolidated statements of comprehensive income,
equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes
and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated
financial statements”). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 2018 and 2017 and the results of its operations
and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S.
generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018,
based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) and our report dated February 25, 2019 expressed
an unqualified opinion thereon.

Basis for Opinion

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

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

We have served as the Company’s auditor since 1970.
Toledo, Ohio
February 25, 2019

/s/ Ernst & Young LLP

78

CONSOLIDATED BALANCE SHEETS

WELLTOWER INC. AND SUBSIDIARIES

December 31,
2018

December 31,
2017

(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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 3,205,091
28,019,502
1,581,159
590,271
194,365

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

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

33,590,388
(5,499,958)
28,090,430
398,711
(68,372)
330,339
28,420,769

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

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

482,914
68,321
215,376
100,753
367,093
686,846
1,921,303
$ 30,342,072

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

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

$ 1,147,000
9,603,299
2,476,177
70,668
1,034,283
14,331,427
424,046

$

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

718,498
384,465
18,424,368
(68,499)
6,121,534
(10,818,557)
(129,769)
294
14,632,334
954,265
15,586,599
$ 30,342,072

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

See accompanying notes

79

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

Year Ended December 31,

2018

2017

2016

Revenues:

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

$3,234,852
1,380,422
55,814
29,411

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

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

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

4,700,499

4,316,641

4,281,160

Expenses:

Property operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on derivatives and financial instruments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on extinguishment of debt, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,433,017
950,459
526,592
126,383
—
(4,016)
16,097
—
115,579
112,898

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

1,876,983
901,242
521,345
155,241
42,910
(2,448)
17,214
10,215
37,207
11,998

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

4,277,009

4,017,025

3,571,907

Income from continuing operations before income taxes and other items . . . . . . . . . . . . . . . . . . . . .
Income tax (expense) benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on real estate dispositions, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

423,490
(8,674)
(641)
415,575

299,616
(20,128)
(83,125)
344,250

709,253
19,128
(10,357)
364,046

Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

829,750

540,613

1,082,070

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

829,750
46,704
—
24,796

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

1,082,070
65,406
—
4,267

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

$ 758,250

$ 463,595

$1,012,397

Average number of common shares outstanding:

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

373,620
375,250

367,237
369,001

358,275
360,227

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

$

$

$

$

2.22

2.03

2.21

2.02

$

$

$

$

1.47

1.26

1.47

1.26

$

$

$

$

3.02

2.83

3.00

2.81

(1)

Includes amounts attributable to redeemable noncontrolling interests

See accompanying notes

80

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED)

WELLTOWER INC. AND SUBSIDIARIES
(In thousands)

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

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

Year Ended December 31,

2018

2017

2016

$829,750

$540,613

$1,082,070

—
—
—
344
(41,632)

—
(5,120)
2
269
85,263

5,120
—
1,414
190
(85,557)

(78,833)

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

(41,288)

80,414

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

788,462

621,027

1,003,237

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

1,812
$786,650

40,187
$580,840

6,722
$ 996,515

(1)

Includes amounts attributable to redeemable noncontrolling interests.

See accompanying notes

81

CONSOLIDATED STATEMENTS OF EQUITY

WELLTOWER INC. AND SUBSIDIARIES

(in thousands)

Preferred
Stock

Common
Stock

Capital in
Excess of
Par Value

Treasury
Stock

Cumulative
Net Income

Cumulative
Dividends

Accumulated
Other
Comprehensive
Income (Loss)

Other
Equity

Noncontrolling
Interests

Total

Balances at December 31, 2015 . . . . . . . . . . . . $1,006,250 $354,811 $16,478,300

$(44,372) $3,725,772

$ (6,846,056)

$ (88,243)

$ 4,098

$ 585,325

$15,175,885

Comprehensive income:

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

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

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

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

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

804,954

(18,304)

(43,101)

188

28,277

(3,940)

(376)

11,828

776,506

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

(5)

5

Dividends paid:

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

(1,300,141)
(46,704)

25,065

(22,984)

830,019

(41,288)

788,731

449,879

406,778

24,149

788,334

—

(1,300,141)
(46,704)

Balances at December 31, 2018 . . . . . . . . . . . . $ 718,498 $384,465 $18,424,368

$(68,499) $6,121,534

$(10,818,557)

$(129,769)

$

294

$ 954,265

$15,586,599

See accompanying notes

82

CONSOLIDATED STATEMENTS OF CASH FLOWS

WELLTOWER INC. AND SUBSIDIARIES

(in thousands)

Operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided from (used in) operating

activities:

Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other amortization expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on derivatives and financial instruments, 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 real estate dispositions, 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, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash disbursed for capital improvements to existing properties . . . . . . . . . . . . . . . . . . .
Cash disbursed for construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized interest
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in real estate loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal collected on real estate loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investments, net of payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for deferred financing costs and prepayment penalties . . . . . . . . . . . . . . . . .
Contributions by noncontrolling interests(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions to noncontrolling interests(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 and restricted

cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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,

2018

2017

2016

$

829,750

$

540,613

$ 1,082,070

950,459
17,000
—
115,579
27,646
(4,016)
16,097
641
(32,857)
2,608
(415,575)
—
21
70,762
5,829

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)

1,583,944

1,434,177

1,639,064

(3,560,360)
(266,183)
(160,706)
(7,905)
(83,048)
180,830
(50,430)
(136,854)
90,916
65,399
1,541,870

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

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

(2,386,471)

154,581

(183,443)

428,000
2,824,176
(1,450,000)
45,447
(362,841)
789,575
—
(29,691)
39,207
(109,871)
(1,348,863)
(6,771)

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)

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

818,368

(1,913,527)

(1,250,817)

(9,015)

26,852

(20,274)

6,826
309,303

316,129

501,404
2,250

(297,917)
607,220

309,303

488,265
10,410

$

$

$

$

184,530
422,690

607,220

541,545
8,011

$

$

See accompanying notes.

83

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Business

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

2. Accounting Policies and Related Matters

Use of Estimates

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

Principles of Consolidation

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

Revenue Recognition

On January 1, 2018 we adopted Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts
with Customers (ASC 606),” which is a comprehensive new revenue recognition model that requires revenue to
be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the
consideration expected to be received in exchange for those goods or services. We adopted ASC 606 using the
modified retrospective method.

We have evaluated our various revenue streams to identify whether they would be subject the provisions of
ASC 606 and any differences in timing, measurement or presentation of revenue recognition. A significant
source of our revenue is generated through leasing arrangements, which are specifically excluded from ASC 606.

84

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Substantially all of our operating leases contain escalating rent structures. Leases with fixed annual rental
escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability
assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the
contractual cash rental payments due for the period. Leases in our outpatient medical portfolio typically include
some form of operating expense reimbursement by the tenant. Certain payments made to operators are treated as
lease incentives and amortized as a reduction of revenue over the lease term.

We recognize resident fees and services, other than move-in fees, monthly as services are provided. Lease
agreements with residents generally have a term of one year and are cancelable by the resident with 30 days’
notice. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to
an evaluation of collectability risk. Management contracts are present in some of our joint venture agreements to
provide asset and property management, leasing, marketing and other services. Under ASC 606, the pattern and
timing of recognition of income from these contracts is consistent with the prior accounting model.

Cash and Cash Equivalents

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

or less.

Restricted Cash

Restricted cash primarily consists of amounts held by lenders to provide future payments for real estate
taxes, insurance, tenant and capital improvements, amounts held in escrow relating to transactions we are entitled
to receive over a period of time as outlined in the escrow agreement and net proceeds from property sales that
were executed as tax-deferred dispositions under Internal Revenue Code (“IRC”) section 1031.

Deferred Loan Expenses

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

Investments in Unconsolidated Entities

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

Equity Securities

In 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-01 “Financial Instruments
— Overall: Recognition and Measurement of Financial Assets and Liabilities,” which requires entities

85

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

to measure their investments at fair value and recognize any changes in fair value in net income rather than
through accumulated other comprehensive income. During the year ended December 31, 2018, we recognized a
gain of $4,016,000 related to our equity securities in loss (gain) on derivatives and financial instruments, net on
the Consolidated Statement of Comprehensive Income. There was no adjustment
to accumulated other
comprehensive income upon adoption at January 1, 2018 as accumulated losses of $18,294,000 were recognized
as other-than-temporary impairment during the year ended December 31, 2017.

Redeemable Noncontrolling Interests

Certain noncontrolling interests are redeemable at fair value. Accordingly, we record the carrying amount of
the noncontrolling interests at the greater of (i) the initial carrying amount, increased or decreased for the
noncontrolling interest’s share of net income or loss and its share of other comprehensive income or loss, and
dividends or (ii) the redemption value. If it is probable that the interests will be redeemed in the future, we
accrete the carrying value to the redemption value over the period until expected redemption, currently a
weighted-average period of approximately one year. In accordance with ASC 810, the redeemable noncontrolling
interests are classified outside of permanent equity, as a mezzanine item, in the balance sheet. At December 31,
2018, the current redemption value of redeemable noncontrolling interests exceeded the carrying value of
$424,046,000 by $18,891,000.

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

Real Property Owned

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

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

86

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

relationship values for

in-place tenants based on management’s evaluation of

The total amount of other intangible assets acquired is further allocated to in-place lease values and
customer
the specific
characteristics of each tenant’s lease and our overall relationship with that respective tenant. Characteristics
considered by management in allocating these values include the nature and extent of our existing business
relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit
quality and expectations of lease renewals, among other factors. The total amount of other intangible assets
acquired is further allocated to in-place lease values for in-place residents with such value representing (i) value
associated with lost revenue related to tenant reimbursable operating costs that would be incurred in an assumed
re-leasing period, and (ii) value associated with lost rental revenue from existing leases during an assumed
re-leasing period. This intangible asset will be amortized over the remaining life of the lease or the assumed
re-leasing period.

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

Capitalization of Construction Period Interest

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

Gain on Real Estate Dispositions

In 2017, the FASB issued ASU 2017-05, “Other Income — Gains and Losses from the Derecognition of
Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting
for Partial Sales of Nonfinancial Assets.” The standard clarifies that a financial asset is within the scope of
Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The standard also defines the
term “in substance nonfinancial asset” and clarifies that an entity should identify each distinct nonfinancial asset
or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty
obtains control over it. We adopted Subtopic 610-20 using a modified retrospective approach on January 1, 2018
and it did not have a material impact on our consolidated financial statements.

Prior to the adoption of Subtopic 610-20, we recognized sales of real estate assets only upon the closing of
the transaction with the purchaser. Payments received from purchasers prior to closing were recorded as deposits

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

Real Estate Loans Receivable

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

Allowance for Losses on Loans Receivable

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

Goodwill

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

Fair Value of Derivative Instruments

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

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Federal Income Tax

We have elected to be treated as a REIT under the applicable provisions of the IRC, commencing with our
first taxable year, and made no provision for U.S. federal income tax purposes prior to our acquisition of our
taxable REIT subsidiaries (“TRSs”). As a result of these as well as subsequent acquisitions, we now record
income tax expense or benefit with respect to certain of our entities that are taxed as TRSs under provisions
similar to those applicable to regular corporations and not under the REIT provisions. We account for deferred
income taxes using the asset and liability method and recognize deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in our consolidated financial statements or tax returns.
Under this method, we determine deferred tax assets and liabilities based on the differences between the financial
reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Any increase or decrease in the deferred tax liability that results from a
change in circumstances, and that causes a change in our judgment about expected future tax consequences of
events, is included in the tax provision when such changes occur. Deferred income taxes also reflect the impact
of operating loss and tax credit carryforwards. A valuation allowance is provided if we believe it is more likely
than not that all or some portion of the deferred tax asset will not be realized. Any increase or decrease in the
valuation allowance that results from a change in circumstances, and that causes a change in our judgment about
the realizability of the related deferred tax asset, is included in the tax provision when such changes occur. See
Note 18 for additional information.

Foreign Currency

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

Earnings Per Share

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

Reclassifications

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

New Accounting Standards

During the year ended December 31, 2018, we adopted the following additional accounting standard, which

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

•

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging: Targeted Improvements to
Accounting for Hedging Activities,” which expands and refines hedge accounting for both nonfinancial
and financial risk components and aligns the recognition and presentation of the effects of the hedging
instrument and the hedged item in the financial statements. It also includes certain targeted
improvements to simplify the application of current guidance related to hedge accounting. The early

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adoption of this standard on April 1, 2018, did not result in a cumulative effect adjustment and all
applicable changes for the company were prospectively made. Please refer to Note 11 of the
consolidated financial statements for additional detail on this adoption.

The following ASUs have been issued but not yet adopted:

•

In 2017, the FASB issued ASU 2016-02, “Leases (codified under ASC 842),” which requires lessees to
recognize assets and liabilities on their consolidated balance sheet related to the rights and obligations
created by most leases, while continuing to recognize expenses on their consolidated statements of
comprehensive income over the lease term. It will also require disclosures designed to give financial
statement users information regarding amount, timing, and uncertainty of cash flows arising from
leases. While we are currently evaluating the impact of this adoption, we believe it will likely have a
material impact to our consolidated financial statements for the recognition of certain operating leases
as right-of-use assets and lease liabilities where we are the lessee. Specifically, we believe the impact
to our consolidated financial statements will primarily be attributable to the approximately 139 ground
leases and various office and equipment leases which are currently accounted for under ASC 840,
“Leases,” as operating leases. Future lease payments under these leases total $1,138,046,000.

The FASB also issued ASU 2018-20 “Leases (Topic 842) — Narrow-scope Improvements for Lessors”
in December 2018, which provides lessors the ability to make an accounting policy election not to
evaluate whether certain sales taxes and other similar taxes imposed by a governmental authority on a
specific lease revenue-producing transaction are the primary obligation of the lessor as owner of the
underlying leased asset. A lessor that makes this election will exclude these taxes from the
measurement of lease revenue and the associated expense. We expect to utilize the practical expedient
in ASU 2018-20 as part of our adoption of this guidance.

Upon adoption of ASU 2016-02, lessors are required to separately recognize and measure the lease
component of a contract with a customer utilizing the provisions of ASC 842 and the non-lease
components utilizing the provisions of ASC 606. To separately account for the components, transaction
price is allocated based upon the estimated stand-alone selling prices of the components. Additionally,
certain components of a contract which were previously included within the lease element and
recognized in accordance with ASC 840 prior to the adoption of ASC 2016-02 (such as common area
maintenance services, other basic services and executory costs), are recognized as non-lease
components subject to the provisions of ASC 606 subsequent to the adoption of ASC 2016-02. Entities
are required to recognize a cumulative effect adjustment to beginning retained earnings as of the initial
application of ASU 2016-02 for changes to amounts recognized for these certain components for the
transition from ASC 840 to ASC 606.

The FASB issued ASU 2018-11, “Leases (Topic 842) Targeted Improvements” in July 2018, which
provides lessors with a practical expedient, allowing them to not separate lease and non-lease
components in a contract, and instead to account for as a single lease component, if certain criteria are
met. This practical expedient causes an entity to assess whether a contract is predominantly lease or
service-based and recognize the entire contract under
the relevant accounting guidance (i.e.,
predominantly lease-based would be accounted for under ASC 842 and predominantly service-based
would be accounted for under ASC 606). Entities that elect to utilize this practical expedient upon
initial application of ASC 842 are required to apply to all new and existing transactions as of the initial
application date with a cumulative effect adjustment to beginning retained earnings for any changes to
amounts recognized related to existing transactions. For the year ended December 31, 2018, we
recognized revenue for our Seniors Housing Operating segment in accordance with the provisions of
ASC 840. Upon adoption of ASU 2016-02, we will elect the lessor practical expedient and will
recognize the revenue for our Seniors Housing Operating segment based upon the predominant
component, which we have determined to be the non-lease component, and therefore, will account for

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these contracts under ASC 606. After the adoption of ASU 2016-02, we expect the timing and pattern
of revenue recognition will be substantially the same as that prior to the adoption of the standard.

•

In 2017,
the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial
Instruments.” This standard requires a new forward-looking “expected loss” model to be used for
receivables, held-to-maturity debt, loans, and other instruments. ASU 2016-13 is effective for fiscal
years, and interim periods within those years, beginning after December 15, 2019, and early adoption is
permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact
that the standard will have on our consolidated financial statements.

3. Real Property Acquisitions and Development

The total purchase price for all properties acquired has been allocated to the tangible and identifiable
intangible assets, liabilities and noncontrolling interests based upon their relative fair values in accordance with
our accounting policies. The results of operations for these acquisitions have been included in our consolidated
results of operations since the date of acquisition and are a component of the appropriate segments. Transaction
costs primarily represent costs incurred with property acquisitions, including due diligence costs, fees for legal
and valuation services, termination of pre-existing relationships computed based on the fair value of the assets
acquired, lease termination fees, and other acquisition-related costs. Effective January 1, 2017, with our adoption
of ASU 2017-01, transaction costs related to asset acquisitions are capitalized as a component of purchase price
and all other non-capitalizable costs are reflected in “Other expenses” on our Consolidated Statement of
Comprehensive Income. Acquisitions that occurred prior to January 1, 2017 were accounted for as business
combinations. Certain of our subsidiaries’ functional currencies are the local currencies of their respective
countries.

Acquisition of Quality Care Properties

On July 26, 2018, we completed the acquisition of Quality Care Properties Inc. (“QCP”), with QCP
shareholders receiving $20.75 of cash for each share of QCP common stock and all existing QCP debt was repaid
upon closing. Prior to the acquisition, ProMedica Health System (“ProMedica”) completed the acquisition of
HCR ManorCare. Immediately following the acquisition of QCP, we formed an 80/20 joint venture with
ProMedica to own the real estate associated with the 218 seniors housing properties leased to ProMedica under a
lease agreement with the following key terms: (i) 15-year absolute triple-net master lease with three five-year
renewal options; (ii) initial annual cash rent of $179 million with a year one escalator of 1.375% and 2.75%
annual escalators thereafter; and (iii) full corporate guarantee of ProMedica. Additionally, we acquired 59 seniors
housing properties classified as held for sale and leased to ProMedica under a non-yielding lease, 12 seniors
housing properties and one surgery center classified as held for sale and leased to operators under existing
triple-net leases, 14 seniors housing properties leased to operators under existing triple-net leases and one multi-
tenant medical office building leased to various tenants.

We drew on a $1.0 billion term loan facility to fund a portion of the acquisition cash consideration and other
related expenses. The term loan facility matures two years from the closing. In addition to the term loan facility
draw, we drew on our unsecured credit facility described in Note 9, in order to fund the acquisition. The
aggregate consideration to acquire the QCP shares and repay outstanding QCP debt was approximately
$3.5 billion.

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We concluded that the QCP acquisition met the definition of an asset acquisition under ASU 2017-01,
“Clarifying the Definition of a Business”. The following table presents the purchase price calculation and the
allocation to assets acquired and liabilities assumed based upon their relative fair value:

(In thousands)
Land and land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real property held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 417,983
2,253,451
12,820
418,297
381,913
4,981
1,354

3,490,799
(13,199)

(13,199)
(512,741)

Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,964,859

Net assets acquired in the QCP acquisition detailed above are included in the respective segment tables

below.

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Seniors Housing Operating Activity

Acquisitions of seniors housing operating properties are structured under RIDEA, which is described in
Note 18. This structure results in the inclusion of all resident revenues and related property operating expenses
from the operation of these qualified health care properties in our consolidated statements of comprehensive
income. The following is a summary of our Seniors Housing Operating real property investment activity for the
periods presented (in thousands):

Year Ended December 31,

2018

2017

2016

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

$ 51,440
621,731
69,504
1,492

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

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

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

744,167
(134,752)
(18,463)

539,173
—
(46,301)

1,801,230
(63,732)
(23,681)

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

(153,215)
(14,390)

(46,301)
(4,701)
— (67,633)

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

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

576,562
82,621
(3,190)
3,934

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

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

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

83,365
201,001

68,938
185,473

143,552
138,673

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

$ 860,928

$674,949

$1,942,970

(1) Excludes $5,784,000, $6,273,000 and $351,000 of cash and restricted cash acquired during the years ended December 31, 2018, 2017

and 2016, respectively.

(2) For the year ended December 31, 2017, includes $59,665,000 related to the acquisition of assets previously financed as investments in
unconsolidated entities and $6,349,000 related to the acquisition of assets previously financed as real estate loans receivable. For the year
ended December 31, 2016, includes $43,372,000 related to the acquisition of assets previously financed as investments in unconsolidated
entities.

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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,

2018

2017

2016

Land and land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real property held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 413,588
2,242,884
9,690
396,265
1,354

$ 33,416
248,459
—
—
—

$104,754
418,633
2,876
—
551

Total assets acquired(1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,063,781
(13,199)

281,875
(21,236)

526,814
(3,384)

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

(13,199)
(512,741)

(21,236)
(7,275)
— (54,901)

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

2,537,841
55,558
(2,238)
272

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

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

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

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

53,592
10,046

115,474
19,989

168,690
32,603

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

$2,601,479

$333,926

$646,219

(1) Excludes $386,894,000, $318,000 and $682,000 of cash and restricted cash acquired during the years ended December 31, 2018, 2017

and 2016, respectively.

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

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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,

2018

2017

2016

Land and land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real property held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 77,239
478,740
50,813
22,032
1,185

$ 40,565
159,643
24,014
—
10

$

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accruals(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

630,009
(169,156)
(14,896)

(184,052)
—
—

445,957
26,565
(2,477)
(339)

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

(28,889)
(9,080)

(1,670)
—
— (15,013)

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

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

5,738
46,056
4,592
—
—

56,386
—
(1,670)

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

23,749
55,136

48,303
44,814

90,889
47,870

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

$ 524,842

$279,380

$178,462

(1) Excludes $2,719,000 of unrestricted and restricted cash acquired during the year ended December 31, 2018.

(2) Relates to the acquisition of assets previously financed as real estate loans. Please refer to Note 6 for additional information.

(3) Represents non-cash accruals for amounts to be paid in future periods for properties that converted, off-set by amounts paid in the current

period.

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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,
2018

December 31,
2017

December 31,
2016

Development projects:

Seniors Housing Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient Medical

$ 86,931
90,055
11,358

Total development projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expansion projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

188,344
20,029

$

3,634
283,472
63,036

350,142
10,336

$ 18,979
46,094
108,001

173,074
11,363

Total construction in progress conversions . . . . . . . . . . . . . . . . . . . . . . .

$208,373

$360,478

$184,437

At December 31, 2018, future minimum lease payments receivable under operating leases (excluding
properties in our Seniors Housing Operating partnerships and excluding any operating expense reimbursements)
are as follows (in thousands):

2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter

$ 1,309,186
1,275,683
1,245,611
1,222,519
1,171,081
9,359,018

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

$15,583,098

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4. Real Estate Intangibles

The following is a summary of our real estate intangibles, excluding those classified as held for sale, as of

the dates indicated (dollars in thousands):

December 31,
2018

December 31,
2017

Assets:

In place lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Above market tenant leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Below market ground leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,410,725
63,935
64,513
41,986

$ 1,352,139
58,443
58,784
33,105

Gross historical cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,581,159
(1,197,336)

1,502,471
(1,125,437)

Net book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

383,823

$

377,034

Weighted-average amortization period in years . . . . . . . . . . . . . . . . . .

16.0

15.1

Liabilities:

Below market tenant leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Above market ground leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

Gross historical cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

81,676
8,540

90,216
(44,266)

60,430
8,540

68,970
(39,629)

Net book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

45,950

$

29,341

Weighted-average amortization period in years . . . . . . . . . . . . . . . . . .

14.7

20.1

The following is a summary of real estate intangible amortization income (expense) for the periods

presented (in thousands):

Rental income related to (above)/below market tenant leases,
net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property operating expenses related to above/(below) market
ground leases, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Depreciation and amortization related to in place lease

Year Ended December 31,

2018

2017

2016

$

(1,269)

$

875

$

919

(1,339)

(1,231)

(1,241)

intangibles and lease commissions . . . . . . . . . . . . . . . . . . . .

(122,515)

(145,132)

(132,141)

The future estimated aggregate amortization of intangible assets and liabilities is as follows for the periods

presented (in thousands):

Assets

Liabilities

2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 97,199
62,641
29,855
24,270
20,304
149,554

$ 7,005
6,475
5,838
5,300
3,440
17,892

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

$383,823

$45,950

5. Dispositions and Assets Held for Sale

We periodically sell properties for various reasons, including favorable market conditions, the exercise of
tenant purchase options or reduction of concentrations (e.g. property type, relationship or geography). At

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December 31, 2018, 13 seniors housing operating, 40 triple-net and two outpatient medical properties with an
aggregate net real estate balance of $590,271,000 were classified as held for sale. Impairment of assets, as
reflected in our Consolidated Statements of Comprehensive Income, primarily represents the charges necessary
to adjust the carrying values of certain properties to estimated fair values less costs to sell. The following is a
summary of our real property disposition activity for the periods presented (in thousands):

December 31,
2018

Year Ended

December 31,
2017

December 31,
2016

Real property dispositions:

Seniors Housing Operating . . . . . . . . . . . . . . . . . . . . . .
Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient Medical

Total dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on sales of real property, net . . . . . . . . . . . . . .
Net other assets (liabilities) disposed . . . . . . . . . . . . . . . .

$

36,627
835,093
253,397

1,125,117
415,575
1,178

$

74,832
916,689
19,697

1,011,218
344,250
22,546

$

—
1,773,614
78,786

1,852,400
364,046
133,622

Proceeds from real property sales . . . . . . . . . . . . . . . . . . .

$1,541,870

$1,378,014

$2,350,068

During the year ended December 31, 2016, we completed two portfolio dispositions of properties leased to
Genesis HealthCare (“Genesis”) for which we received loans in the amount of $74,445,000 for termination fees
relating to the properties sold under the master lease. The related termination fee income has been deferred and
will be recognized as the principal balance of the loans are repaid. At December 31, 2018, $61,994,000 of
principal is outstanding on the loans.

Dispositions and Assets Held for Sale

Pursuant to our adoption of ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property,
Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of
Components of an Entity” (ASU 2014-08”), operating results attributable to properties sold subsequent to or
classified as held for sale after January 1, 2014 and which do not meet the definition of discontinued operations
are no longer reclassified on our consolidated statements of comprehensive income. The following represents the
activity related to these properties for the periods presented (in thousands):

Year Ended December 31,

2018

2017

2016

Revenues:

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

$148,725

$275,087

$565,450

Expenses:

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . .

294
81,698
16,900

6,655
81,182
55,294

52,675
89,666
122,153

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

98,892

143,131

264,494

Income (loss) from real estate dispositions, net . . . . . . . . . . . . . .

$ 49,833

$131,956

$300,956

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6. Real Estate Loans Receivable

The following is a summary of our real estate loans receivable (in thousands):

December 31,

2018

2017

Mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other real estate loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$317,443
81,268

$374,492
121,379

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

$398,711

$495,871

The following is a summary of our real estate loan activity for the periods presented (in thousands):

December 31, 2018

December 31, 2017

December 31, 2016

Seniors
Housing
Operating Triple-net

Outpatient
Medical

Totals Triple-net

Outpatient
Medical

Totals Triple-net

Outpatient
Medical

Totals

Year Ended

Advances on real
estate loans
receivable:
Investments in new
loans . . . . . . . . .
Draws on existing
loans . . . . . . . . .

Net cash advances
on real estate
loans . . . . . . . . .

Receipts on real
estate loans
receivable:
Loan payoffs . . . .
Principal payments
on loans . . . . . .

$11,806

$ 13,062

$23,421

$ 48,289 $ 12,091

$

— $ 12,091 $

8,445

$

— $

8,445

—

34,759

—

34,759

71,647

—

71,647

118,788

2,651

121,439

11,806

47,822

23,421

83,048

83,738

—

83,738

127,233

2,651

129,884

15,000

116,161

— 131,161

157,912

60,500

218,412

275,439

27,303

302,742

—

49,669

—

49,669

1,219

—

1,219

6,867

—

6,867

Sub-total . . . . . .

15,000

165,830

— 180,830

159,131

60,500

219,631

282,306

27,303

309,609

Less: Non-cash

activity(1) . . . . . .

Net cash receipts
on real estate
loans . . . . . . . . .

Net cash advances
(receipts) on real
estate loans . . . . . .

—

—

—

— (63,108)

(60,500)

(123,608)

(45,044)

(15,013)

(60,057)

15,000

165,830

— 180,830

96,023

—

96,023

237,262

12,290

249,552

$ (3,194) $(118,008) $23,421

$ (97,781) $ (12,285) $

— $ (12,285) $(110,029) $ (9,639) $(119,668)

(1) Triple-net primarily represents acquisitions of assets previously financed as real estate loans. Please see Note 3 for further information.
Outpatient Medical represents a deed in lieu of foreclosure on a previously financed first mortgage property for the year ended
December 31, 2017 and acquisition of assets previously financed as real estate loans for the year ended December 31, 2016.

In 2016, we restructured two triple-net real estate loans with Genesis. The existing loans, with a combined
principal balance of $317,000,000, were scheduled to mature in 2017 and 2018. These loans were restructured
into four separate loans effective October 1, 2016, one of which was repaid during 2017. Each loan had a five
year term, a 10% interest rate and 25 basis point annual escalator. We recorded a loan loss charge in the amount
of $6,935,000 on one of the loans as the present value of expected future cash flows was less than the carrying
value of the loan. During 2017, we recorded a provision for loan loss of $62,966,000 relating to three real estate
loans receivable from Genesis. During 2018, aggregate principal payments of $85,289,000 were received on the
loans. The allowance for losses on loans receivable totals $68,372,000 and is deemed to be sufficient to absorb

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WELLTOWER INC. AND SUBSIDIARIES

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expected losses relating to the loans. Such allowance was based on an estimation of expected future cash flows
discounted at the effective interest rate for each loan. In addition, at December 31, 2018, we had one real estate
loan with an outstanding balance of $2,567,000 on non-accrual status. No provision for loan loss has been
recorded for this loan given the underlying collateral value.

The following is a summary of the allowance for losses on loans receivable for the periods presented (in

thousands):

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for loan losses(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in present value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$68,372
—
—

$ 6,563
62,966
(1,157)

$ —
6,935
(372)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$68,372

$68,372

$6,563

Year Ended December 31,

2018

2017

2016

(1) Excludes direct write down of an impaired loan receivable in 2016.

The following is a summary of our impaired loans (in thousands):

Year Ended December 31,

2018

2017

2016

Balance of impaired loans at end of year . . . . . . . . . . . . . . . . . . .
Allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$189,272
68,372

$282,882
68,372

$377,549
6,563

Balance of impaired loans not reserved . . . . . . . . . . . . . . . . . . . .

$120,900

$214,510

$370,986

Average impaired loans for the year . . . . . . . . . . . . . . . . . . . . . .
Interest recognized on impaired loans(1) . . . . . . . . . . . . . . . . . . . .

$236,077
17,241

$330,216
27,793

$188,775
8,707

(1) Represents cash interest recognized in the period since loans were identified as impaired.

7.

Investments in Unconsolidated Entities

We participate in a number of joint ventures, which generally invest in seniors housing and health care real
estate. The results of operations for these properties have been included in our consolidated results of operations
from the date of acquisition by the joint ventures and are reflected in our Consolidated Statements of
Comprehensive Income as income or loss from unconsolidated entities. The following is a summary of our
investments in unconsolidated entities (dollars in thousands):

Percentage
Ownership(1)

December 31,
2018

December 31,
2017

Seniors Housing Operating . . . . . . . . . . . . . . . . . . . . . . .
Triple-net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient Medical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10% to 50%
10% to 49%
43% to 50%

$344,982
34,284
103,648

$352,430
22,856
70,299

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

$482,914

$445,585

(1) Excludes ownership of in substance real estate.

During the year ended December 31, 2017, we increased our ownership in Sunrise Senior Living
Management, Inc. (“Sunrise”) from 24% to 34%. Sunrise provides comprehensive property management and
accounting services with respect to certain of our seniors housing operating properties that Sunrise operates, for

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WELLTOWER INC. AND SUBSIDIARIES

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which we pay annual management fees pursuant to long-term management agreements. Our management
agreements with Sunrise have initial terms expiring through December 2032 plus, if applicable, optional renewal
periods ranging from an additional 5 to 15 years depending on the property. The management fees payable to
Sunrise under the management agreements include a fee based on a percentage of revenues generated by the
applicable properties plus, if applicable, positive or negative adjustments based on specified performance
targets. For the years ended December 31, 2018, 2017 and 2016, we recognized fees to Sunrise of $36,378,000,
$37,573,000, and $37,751,000, respectively, which are reflected within property operating expenses in our
Consolidated Statements of Comprehensive Income.

At December 31, 2018, the aggregate unamortized basis difference of our joint venture investments of
$105,471,000 is primarily attributable to the difference between the amount for which we purchased our interest
in the entity, including transaction costs, and the historical carrying value of the net assets of the entity. This
difference is being amortized over the remaining useful life of the related assets and included in the reported
amount of income from unconsolidated entities.

8. Credit Concentration

We use consolidated net operating income (“NOI”) as our credit concentration metric. See Note 17 for
additional information and reconciliation. The following table summarizes certain information about our credit
concentration for the year ended December 31, 2018, excluding our share of NOI in unconsolidated entities
(dollars in thousands):

Number of
Properties

Total
NOI

Percent of
NOI(2)

Concentration by relationship:(1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sunrise Senior Living(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revera(3)
Brookdale Senior Living . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Genesis HealthCare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benchmark Senior Living . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remaining portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

161
98
102
87
48
1,014

1,510

$ 335,456
154,194
142,768
137,054
99,439
1,398,571

15%
7%
6%
6%
4%
62%

$2,267,482

100%

(1) Genesis is in our Triple-net segment. Sunrise Senior Living and Revera are in our Seniors Housing Operating segment. Brookdale Senior

Living and Benchmark Senior Living are in both our Triple-net and Seniors Housing Operating segments.

(2) NOI with our top five relationships comprised 41% of total NOI for the year ending December 31, 2017.

(3) Revera owns a controlling interest in Sunrise Senior Living. For the year ended December 31, 2018, we recognized $1,154,025,000 of

revenue from properties managed by Sunrise Senior Living.

9. Borrowings Under Credit Facilities and Related Items

At December 31, 2018, we had a primary unsecured credit facility with a consortium of 31 banks that
includes a $3,000,000,000 unsecured revolving credit facility, a $500,000,000 unsecured term credit facility, and
a $250,000,000 Canadian-denominated unsecured term credit facility. We have an option, through an accordion
feature, to upsize the unsecured revolving credit facility and the $500,000,000 unsecured term credit facility by
up to an additional $1,000,000,000, in the aggregate, and the $250,000,000 Canadian-denominated unsecured
term credit facility by up to an additional $250,000,000. The primary unsecured credit facility also allows us to
borrow up to $1,000,000,000 in alternate currencies (none outstanding at December 31, 2018). Borrowings under
the unsecured revolving credit facility are subject to interest payable at the applicable margin over LIBOR

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WELLTOWER INC. AND SUBSIDIARIES

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interest rate (3.33% at December 31, 2018). The applicable margin is based on our debt ratings and was 0.825%
at December 31, 2018. In addition, we pay a facility fee quarterly to each bank based on the bank’s commitment
amount. The facility fee depends on our debt ratings and was 0.15% at December 31, 2018. The term credit
facilities mature on July 19, 2023. The revolving credit facility is scheduled to mature on July 19, 2022 and can
be extended for two successive terms of six months each at our option.

The following information relates to aggregate borrowings under the primary unsecured revolving credit

facility for the periods presented (dollars in thousands):

Balance outstanding at year end . . . . . . . . . . . . . . . . . . . . .
Maximum amount outstanding at any month end . . . . . . . .
Average amount outstanding (total of daily principal

Year Ended December 31,

2018

2017

2016

$1,147,000
$2,148,000

$ 719,000
$1,010,000

$ 645,000
$1,560,000

balances divided by days in period) . . . . . . . . . . . . . . . .

$ 950,581

$ 597,422

$ 762,896

Weighted-average interest rate (actual interest expense

divided by average borrowings outstanding)

. . . . . . . . .

3.07%

2.02%

1.39%

10. Senior Unsecured Notes and Secured Debt

We may repurchase, redeem or refinance senior unsecured notes from time to time, taking advantage of
favorable market conditions when available. We may purchase senior notes for cash through open market
purchases, privately negotiated transactions, a tender offer or, in some cases, through the early redemption of
such securities pursuant to their terms. The senior unsecured notes are redeemable at our option, at any time in
whole or from time to time in part, at a redemption price equal to the sum of (1) the principal amount of the notes
(or portion of such notes) being redeemed plus accrued and unpaid interest thereon up to the redemption date and
(2)
in connection with early
redemptions. Redemptions and repurchases of debt, if any, will depend on prevailing market conditions, our
liquidity requirements, contractual restrictions, and other factors. At December 31, 2018, the annual principal
payments due on these debt obligations were as follows (in thousands):

amount due under

any “make-whole”

the notes

terms of

the

2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020(4)
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023(5,6)
Thereafter(7,8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Senior
Unsecured
Notes(1,2)

$ 600,000
677,489
450,000
600,000
1,783,325
5,589,170

Secured
Debt (1,3)

$ 508,899
138,288
369,124
280,418
325,371
863,611

Totals

$ 1,108,899
815,777
819,124
880,418
2,108,696
6,452,781

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

$9,699,984

$2,485,711

$12,185,695

(1) Amounts represent principal amounts due and do not include unamortized premiums/discounts, debt issuance costs, or other fair value

adjustments as reflected on the Consolidated Balance Sheet.

(2) Annual interest rates range from 3.05% to 6.50%.

(3) Annual interest rates range from 1.69% to 12.00%. Carrying value of the properties securing the debt totaled $5,347,428,000 at

December 31, 2018.

(4)

Includes a $300,000,000 Canadian-denominated 3.35% senior unsecured notes due 2020 (approximately $219,989,000 based on the
Canadian/U.S. Dollar exchange rate on December 31, 2018).

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WELLTOWER INC. AND SUBSIDIARIES

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(5)

(6)

(7)

(8)

Includes a $250,000,000 Canadian-denominated unsecured term credit facility (approximately $183,325,000 based on the Canadian/U.S.
Dollar exchange rate on December 31, 2018). The loan matures on July 19, 2023 and bears interest at the Canadian Dealer Offered Rate
plus 0.9% (3.15% at December 31, 2018).

Includes a $500,000,000 unsecured term credit facility. The loan matures on July 19, 2023 and bears interest at LIBOR plus 0.9% (3.37%
at December 31, 2018).

Includes a £550,000,000 4.80% senior unsecured notes due 2028 (approximately $701,470,000 based on the Pounds Sterling/U.S. Dollar
exchange rate in effect on December 31, 2018).

Includes a £500,000,000 4.50% senior unsecured notes due 2034 (approximately $637,700,000 based on the Pounds Sterling/U.S. Dollar
exchange rate in effect on December 31, 2018).

The following is a summary of our senior unsecured note principal activity during the periods presented

(dollars in thousands):

December 31, 2018

December 31, 2017

December 31, 2016

Amount

Weighted Avg.
Interest Rate

Amount

Weighted Avg.
Interest Rate

Amount

Weighted Avg.
Interest Rate

Year Ended

Beginning balance . . . . . .
Debt issued . . . . . . . . . . .
Debt extinguished . . . . . .
Foreign currency . . . . . . .

$ 8,417,447
2,850,000
(1,450,000)
(117,463)

4.31%
4.57%
3.46%
4.16%

$8,260,038
7,500
(5,000)
154,909

4.25%
1.97%
1.83%
4.29%

$8,645,758
705,000
(850,000)
(240,720)

Ending balance . . . . . . . .

$ 9,699,984

4.48%

$8,417,447

4.31%

$8,260,038

4.24%
4.23%
4.19%
4.57%

4.25%

The following is a summary of our secured debt principal activity for the periods presented (dollars in

thousands):

December 31, 2018

December 31, 2017

December 31, 2016

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 deconsolidated . . . .
Principal payments . . . . .
Foreign currency . . . . . . .

$2,618,408
45,447
292,887
(306,553)
—
(56,288)
(108,190)

3.76%
3.40%
4.64%
5.36%
—%
3.91%
3.33%

$ 3,465,066
241,772
23,094
(1,080,268)
(60,000)
(64,078)
92,822

4.09%
2.82%
6.67%
5.25%
3.80%
4.34%
3.16%

$3,478,207
460,015
60,898
(489,293)
—
(74,466)
29,705

Ending balance . . . . . . . .

$2,485,711

3.90%

$ 2,618,408

3.76%

$3,465,066

4.44%
2.65%
4.30%
5.11%
—%
4.66%
3.67%

4.09%

Our debt agreements contain various covenants, restrictions and events of default. Certain agreements
require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to
incur indebtedness, create liens and make investments or acquisitions. As of December 31, 2018, we were in
compliance with all of the covenants under our debt agreements.

11. Derivative Instruments

We are exposed to, among other risks, the impact of changes in foreign currency exchange rates as a result
of our non-U.S. investments. Our risk management program is designed to manage the exposure and volatility
arising from these risks, and utilizes derivative financial instruments and debt issued in foreign currencies to
offset a portion of these risks.

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WELLTOWER INC. AND SUBSIDIARIES

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Foreign Currency Forward Contracts Designated as Cash Flow Hedges

For instruments that are designated as and qualify as a cash flow hedge, the effective portion of the gain or
loss on the derivative is deferred as a component of other comprehensive income (“OCI”), and reclassified into
earnings in the same period, or periods, during which the hedged transaction affects earnings. Gains and losses
on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of
effectiveness are recognized in earnings.

Foreign Currency Forward Contracts and Cross Currency Swap Contracts Designated as Net Investment
Hedges

We use foreign currency forward and cross currency forward swap contracts to hedge a portion of the net
investment in foreign subsidiaries against fluctuations in foreign exchange rates. For instruments that are
designated and qualify as net investment hedges, the variability in the foreign currency to U.S. Dollar of the
instrument is recorded as a cumulative translation adjustment component of OCI.

In the second quarter of 2018, we redesignated these derivative financial instruments that qualify as hedges
of net investments in foreign operations using the spot method in order to more closely align the underlying
economics of the hedged transactions. The changes in fair values and the excluded components of derivative
instruments designated as net
investment hedges are recognized as a cumulative translation adjustment
component of OCI. The cross currency basis spread is recognized in interest expense on the Consolidated
Statement of Comprehensive Income using the swap accrual process. Prior to the adoption of ASU 2017-12, all
settlements and changes in the fair values of these instruments were recognized as a cumulative translation
adjustment component of OCI and there had been no ineffectiveness on these hedging relationships.

During the years ended December 31, 2018 and 2017, we settled certain net investment hedges generating
cash proceeds of $70,897,000 and $52,719,000, respectively. The balance of the cumulative translation
adjustment will be reclassified to earnings when the hedged investment is sold or substantially liquidated.

Derivative Contracts Undesignated

We use foreign currency exchange contracts to manage existing exposures to foreign currency exchange
risk. Gains and losses resulting from changes in the fair value of these instruments are recorded in interest
expense on the Consolidated Statement of Comprehensive Income, and are substantially offset by net revaluation
impacts on foreign currency denominated balance sheet exposures. In addition, we have several interest rate cap
contracts related to variable rate secured debt agreements. Gains and losses resulting from the changes in the fair
values of these instruments are also recorded in interest expense.

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WELLTOWER INC. AND SUBSIDIARIES

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The following presents the notional amount of derivatives and other financial instruments as of the dates

indicated (in thousands):

December 31, 2018 December 31, 2017

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 Canadian Dollars . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments not designated:
Interest rate caps denominated in U.S. Dollars . . . . . . . . . . . . . . . .
Forward purchase contracts denominated in Canadian Dollars . . .
Forward sales contracts denominated in Canadian Dollars . . . . . . .
Forward purchase contracts denominated in Pounds Sterling . . . . .
Forward sales contracts denominated in Pounds Sterling . . . . . . . .

$ 575,000
£ 890,708

$ 575,000
£ 550,000

$ 250,000
£1,050,000

$ 250,000
£1,050,000

$

—

$

36,000

$ 405,819
$ (325,000)
$ 405,000
£ (350,000)
£ 350,000

$ 408,007
—
$
80,000
$
—
£
—
£

The following presents the impact of derivative instruments on the Consolidated Statements of

Comprehensive Income for the periods presented (in thousands):

Location

December 31,
2018

December 31,
2017

December 31,
2016

Year Ended

Gain (loss) on derivative instruments designated

as hedges recognized in income . . . . . . . . . . . Interest expense $ 12,271

$

(2,476) $

7,871

Gain (loss) on derivative instruments not
designated as hedges recognized in
income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense $

5,233

$

(49) $

673

Gain on release of cumulative translation

adjustment related to ineffectiveness on net
investment hedge . . . . . . . . . . . . . . . . . . . . . . Loss (gain) on
derivatives, net

Gain (loss) on foreign exchange contracts and
term loans designated as net investment
hedge recognized in OCI . . . . . . . . . . . . . . . . OCI

$

— $

— $ (2,516)

$211,390

$(252,168) $357,021

12. Commitments and Contingencies

At December 31, 2018, we had 14 outstanding letter of credit obligations totaling $50,805,000 and expiring
between 2019 and 2024. At December 31, 2018, we had outstanding construction in process of $194,365,000 for
leased properties and were committed to providing additional funds of approximately $436,984,000 to complete
construction. Purchase obligations at December 31, 2018, include $1,250,000,000 representing a definitive
agreement to acquire outpatient medical facilities in 2019. Purchase obligations also include contingent purchase
obligations totaling $17,309,000. These contingent purchase obligations relate to unfunded capital improvement
obligations and contingent obligations on acquisitions. Rents due from the tenant are increased to reflect the
additional investment in the property. During the year ended December 31, 2017, we finalized an agreement with

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WELLTOWER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the University of Toledo Foundation to transfer our corporate headquarters as a gift and recognized an expense of
$40,730,000.

We evaluate our leases for operating versus capital lease treatment in accordance with ASC 840. A lease is
classified as a capital lease if it provides for transfer of ownership of the leased asset at the end of the lease term,
contains a bargain purchase option, has a lease term greater than 75% of the economic life of the leased asset, or
if the net present value of the future minimum lease payments are in excess of 90% of the fair value of the leased
asset. Certain leases contain bargain purchase options and have been classified as capital leases. At December 31,
2018, we had operating lease obligations of $1,138,046,000 relating to certain ground leases and company office
space. Regarding the ground leases, we have sublease agreements with certain of our operators that require the
operators to reimburse us for our monthly operating lease obligations. At December 31, 2018, aggregate future
minimum rentals to be received under these noncancelable subleases totaled $72,789,000.

At December 31, 2018, future minimum lease payments due under operating and capital leases are as

follows (in thousands):

Operating Leases

Capital Leases(1)

2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

18,242
17,785
17,607
16,961
17,004
1,050,447

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

$1,138,046

$ 4,173
4,173
4,173
4,173
67,573
—

$84,265

(1) Amounts above represent principal and interest obligations under capital lease arrangements. Related assets with a gross value of

$167,324,000 and accumulated depreciation of $33,676,000 are recorded in real property.

13. Stockholders’ Equity

The following is a summary of our stockholders’ equity capital accounts as of the dates indicated:

December 31, 2018

December 31, 2017

Preferred Stock, $1.00 par value:

Authorized shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issued shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

50,000,000
14,375,000
14,369,965

Common Stock, $1.00 par value:

Authorized shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issued shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

700,000,000
384,849,236
383,674,603

50,000,000
14,375,000
14,370,060

700,000,000
372,852,311
371,731,551

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WELLTOWER INC. AND SUBSIDIARIES

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Preferred Stock. The following is a summary of our preferred stock activity during the periods presented:

December 31, 2018

December 31, 2017

December 31, 2016

Shares

Weighted Avg.
Dividend Rate

Shares

Weighted Avg.
Dividend Rate

Shares

Weighted Avg.
Dividend Rate

Year Ended

Beginning balance . . . . . .
Shares redeemed . . . . . . .
Shares converted . . . . . . .

14,370,060
—
(95)

Ending balance . . . . . . . .

14,369,965

6.50%
—%
6.50%

6.50%

25,875,000
(11,500,000)
(4,940)

6.50%
6.50%
6.50%

25,875,000
—
—

14,370,060

6.50%

25,875,000

6.50%
—%
—%

6.50%

During the three months ended March 31, 2011, we issued 14,375,000 of 6.50% Series I Cumulative
Convertible Perpetual Preferred Stock (the “Series I Preferred Stock”). These shares have a liquidation value of
$50.00 per share. Dividends are payable quarterly in arrears. The Series I Preferred Stock is not redeemable by us
and are convertible, at the holder’s option, into 0.8460 shares of common stock (equal to an initial conversion
price of approximately $59.10). On or after April 30, 2018, we may at our option cause all outstanding shares of
the Series I Preferred Stock to be automatically converted into a number of shares of common stock equal to the
then-prevailing conversion rate if the daily volume-weighted average prices of our common stock for each day
equals or exceeds 130% of the then-prevailing conversion price for at least 20 trading days in a period of 30
consecutive trading days.

During the three months ended March 31, 2012, we issued 11,500,000 of 6.50% Series J Cumulative
Redeemable Preferred Stock. During the year ended December 31, 2017, we recognized a charge of $9,769,000
in connection with the redemption of the Series J preferred stock.

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WELLTOWER INC. AND SUBSIDIARIES

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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

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

$70.40
47.13
76.01

$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

$70.13
51.16
72.30

$395,526
12,942
215,917
—
—
—

$394,639
12,942
214,406
—
—
—

2017 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,129,378

$624,385

$621,987

2018 Dividend reinvestment plan issuances . . . . . . . . .
2018 Option exercises . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 Equity Shelf Program issuances . . . . . . . . . . . . . .
2018 Preferred stock conversions . . . . . . . . . . . . . . . . .
2018 Stock incentive plans, net of forfeitures . . . . . . . .

6,529,417
56,960
5,241,349
83
115,243

$65.55
42.66
69.95

$428,009
2,430
366,640
—
—

$423,075
2,430
364,070
—
—

2018 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,943,052

$797,079

$789,575

Dividends. The increase in dividends is primarily attributable to increases in our common shares
outstanding, offset by the redemption of the Series J preferred stock, as described above. Please refer to Note 18
for information related to federal income tax of dividends. The following is a summary of our dividend payments
(in thousands, except per share amounts):

December 31, 2018

December 31, 2017

December 31, 2016

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
—

$1,300,141
46,704

$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

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

$1,346,845

$1,326,731

$1,298,925

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WELLTOWER INC. AND SUBSIDIARIES

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Accumulated Other Comprehensive Income. The following is a summary of accumulated other

comprehensive income/(loss) for the periods presented (in thousands):

Unrecognized gains (losses) related to:

Foreign
Currency
Translation

Available for
Sale
Securities

Actuarial
losses

Cash Flow
Hedges

Total

$(110,581)

$ —

$ (884)

$—

$(111,465)

(18,648)

344

—

(18,304)

Balance at December 31, 2017 . . . .
Other comprehensive income

(loss) . . . . . . . . . . . . . . . . . . . . . .

Net current-period other

comprehensive income (loss) . . .

(18,648)

—

—

Balance at December 31, 2018 . . . .

$(129,229)

$ —

$ (540)

344

—

$—

(18,304)

$(129,769)

Balance at December 31, 2016 . . . .
Other comprehensive income (loss)

before reclassification
adjustments . . . . . . . . . . . . . . . . .

Reclassification adjustment for

write down of equity
investment . . . . . . . . . . . . . . . . . .

Net current-period other

$(173,496)

$ 5,120

$(1,153)

$ (2)

$(169,531)

62,915

—

269

—

(5,120)

—

2

—

2

63,186

(5,120)

58,066

comprehensive income (loss) . . .

62,915

(5,120)

269

Balance at December 31, 2017 . . . .

$(110,581)

$ —

$ (884)

$—

$(111,465)

14. Stock Incentive Plans

In May 2016, our shareholders approved the 2016 Long-Term Incentive Plan (“2016 Plan”), which
authorizes up to 10,000,000 shares of common stock to be issued at the discretion of the Compensation
Committee of the Board of Directors. Awards granted after May 5, 2016 are issued out of the 2016 Plan. The
awards granted under the Amended and Restated 2005 Long-Term Incentive Plan continue to vest and options
expire ten years from the date of grant. Our non-employee directors, officers and key employees are eligible to
participate in the 2016 Plan. The 2016 Plan allows for the issuance of, among other things, stock options, stock
appreciation rights, restricted stock, deferred stock units, and dividend equivalent rights. Vesting periods for
options, deferred stock units, and restricted shares generally range from three to five years.

Under our long-term incentive plan, certain restricted stock awards are market, performance and time-based.
For market and performance based awards, we will grant a target number of restricted stock units, with the
ultimate award determined by the total shareholder return and operating performance metrics, measured in each
case over a measurement period of two to three years. Generally awards vest over two to three years after the end
of the performance period with a portion vesting immediately at the end of the performance periods. The
expected term represents the period from the grant date to the end of the performance period. Compensation
expense for these performance grants is measured based on the probability of achievement of certain
performance goals and is recognized over both the performance period and vesting period. For the portion of the
grant for which the award is determined by the operating performance metrics, the compensation cost is based on
the grant date closing price and management’s estimate of corporate achievement of the financial metrics. If the
estimated number of performance based restricted stock to be earned changes, an adjustment will be recorded to
recognize the accumulated difference between the revised and previous estimates. For the portion of the grant

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WELLTOWER INC. AND SUBSIDIARIES

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determined by the total shareholder return, management used a Monte Carlo model to assess the fair value and
compensation cost. Forfeitures are accounted for as they occur.

The following table summarizes compensation expense (a component of general and administrative

expenses and property operating expenses) recognized for the periods presented (in thousands):

Year Ended December 31,

2018

2017

2016

Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ — $
27,646

10
19,092

$

266
28,603

$27,646

$19,102

$28,869

Restricted Stock

The fair value of the restricted stock is equal to the market price of the company’s common stock on the
date of grant and is amortized over the vesting periods. As of December 31, 2018, there was $35,834,000 of total
unrecognized compensation expense related to unvested restricted stock that is expected to be recognized over a
weighted-average period of two years. The following table summarizes information about non-vested restricted
stock incentive awards as of and for the year ended December 31, 2018:

Restricted Stock

Number of
Shares
(000’s)

Weighted-Average
Grant Date
Fair Value

Non-vested at December 31, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Terminated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

698
(166)
723
(35)

Non-vested at December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,220

$61.00
63.88
54.16
60.90

$62.56

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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,

2018

2017

2016

Numerator for basic and diluted earnings per share — net

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

$758,250

$463,595

$1,012,397

Denominator for basic earnings per share: weighted-average

shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

373,620

367,237

358,275

Effect of dilutive securities:

Employee stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-vested restricted shares . . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee stock purchase program . . . . . . . . . . . . . . . . . . . .

Dilutive potential common shares . . . . . . . . . . . . . . . . . . . . . . .

Denominator for diluted earnings per share: adjusted-

9
512
1,096
13

1,630

47
482
1,235
—

1,764

110
449
1,393
—

1,952

weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .

375,250

369,001

360,227

Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

2.03

2.02

$

$

1.26

1.26

$

$

2.83

2.81

The Series I Cumulative Convertible Perpetual Preferred Stock were excluded from the calculations as the

effect of the conversions were anti-dilutive.

16. Disclosure about Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability
(an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction
between market participants on the measurement date. A three-level valuation hierarchy exists for disclosures of
fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the
measurement date. A financial instrument’s categorization within the valuation hierarchy is based upon the
lowest level of input that is significant to the fair value measurement. The three levels are defined below:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are

significant to the fair value of the assets or liabilities.

The following methods and assumptions were used to estimate the fair value of each class of financial

instruments for which it is practicable to estimate that value:

Mortgage Loans and Other Real Estate Loans Receivable — The carrying value of mortgage loans and
other real estate loans receivable is net of related reserves. The fair value is generally estimated by using Level 2
and Level 3 inputs such as discounting the estimated future cash flows using the current rates at which similar
loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

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Cash and Cash Equivalents and Restricted Cash — The carrying amount approximates fair value.

Equity Securities — Equity securities are recorded at their fair value based on Level 1 publicly available

trading prices.

Borrowings Under Primary Unsecured Credit Facility — The carrying amount of the primary unsecured

credit facility approximates fair value because the borrowings are interest rate adjustable.

Senior Unsecured Notes — The fair value of the senior unsecured notes payable was estimated based on
Level 1 publicly available trading prices. The carrying amount of the variable rate senior unsecured notes
approximates fair value because they are interest rate adjustable.

Secured Debt — The fair value of fixed rate secured debt is estimated using Level 2 inputs by discounting
the estimated future cash flows using the current rates at which similar loans would be made with similar credit
ratings and for the same remaining maturities. The carrying amount of variable rate secured debt approximates
fair value because the borrowings are interest rate adjustable.

Foreign Currency Forward Contracts and Cross Currency Swaps — Foreign currency forward contracts
and cross currency swaps are recorded in other assets or other liabilities on the balance sheet at fair market
value. Fair market value is determined using Level 2 inputs by estimating the future value of the currency pair
based on existing exchange rates, comprised of current spot and traded forward points, and calculating a present
value of the net amount using a discount factor based on observable traded interest rates.

Redeemable OP Unitholder Interests — Our redeemable OP unitholder interests are recorded on the balance
sheet at fair value using Level 2 inputs. The fair value is measured using the closing price of our common stock,
as units may be redeemed at the election of the holder for cash or, at our option, one share of our common stock
per unit, subject to adjustment in certain circumstances.

The carrying amounts and estimated fair values of our financial instruments are as follows as of the dates

presented (in thousands):

Financial assets:

Mortgage loans receivable . . . . . . . . . .
Other real estate loans receivable . . . . .
Equity securities . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . .
Foreign currency forward contracts and
cross currency swaps . . . . . . . . . . . . .

Financial liabilities:

Borrowings under unsecured credit

facilities . . . . . . . . . . . . . . . . . . . . . . .
Senior unsecured notes . . . . . . . . . . . . .
Secured debt
. . . . . . . . . . . . . . . . . . . . .
Foreign currency forward contracts and
cross currency swaps . . . . . . . . . . . . .
Redeemable OP unitholder interests . . . . .

December 31, 2018

December 31, 2017

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value

$ 249,071
81,268
11,286
215,376
100,753

$

257,337
82,742
11,286
215,376
100,753

$ 306,120
121,379
7,269
243,777
65,526

$ 332,508
125,480
7,269
243,777
65,526

94,729

94,729

15,604

15,604

$1,147,000
9,603,299
2,476,177

$ 1,147,000
10,043,797
2,499,130

$ 719,000
8,331,722
2,608,976

$ 719,000
9,168,432
2,641,997

71,109
$ 103,071

71,109
103,071

$

38,654
97,476

$

38,654
97,476

$

112

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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):

Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency forward contracts and cross currency
swaps, net asset (liability)(1) . . . . . . . . . . . . . . . . . . . .
Redeemable OP unitholder interests . . . . . . . . . . . . . . .

Fair Value Measurements as of
December 31, 2018

Total

Level 1

Level 2

Level 3

$ 11,286

$11,286

$

— $—

23,620
103,071

—
—

23,620
103,071

—
—

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

$137,977

$11,286

$126,691

$—

(1) Please see Note 11 for additional information.

Items Measured at Fair Value on a Nonrecurring Basis

In addition to items that are measured at fair value on a recurring basis, we have assets and liabilities that
are measured at fair value on a nonrecurring basis that are not included in the tables above. Assets, liabilities and
noncontrolling interests that are measured at fair value on a nonrecurring basis include those acquired or
assumed. Asset impairments (if applicable, see Note 5 for impairments of real property and Note 6 for
impairments of real estate loans receivable) are also measured at fair value on a nonrecurring basis. We have
determined that the fair value measurements included in each of these assets and liabilities rely primarily on
company-specific inputs and our assumptions about the use of the assets and settlement of liabilities, as
observable inputs are not available. As such, we have determined that each of these fair value measurements
generally resides within Level 3 of the fair value hierarchy. We estimate the fair value of real estate and related
intangibles using the income approach using unobservable data such as net operating income, estimated
capitalization and discount rates. We also consider local and national industry market data including comparable
sales, and commonly engage an external real estate appraiser to assist us in our estimation of fair value. We
estimate the fair value of assets held for sale based on current sales price expectations or, in the absence of such
price expectations, Level 3 inputs described above. We estimate the fair value of loans receivable using projected
payoff valuations based on the expected future cash flows and/or the estimated fair value of collateral, net of
sales costs, if the repayment of the loan is expected to be provided solely by the collateral. We estimate the fair
value of secured debt assumed in business combinations and asset acquisitions using current interest rates at
which similar borrowings could be obtained on the transaction date.

17. Segment Reporting

We invest in seniors housing and health care real estate. We evaluate our business and make resource
allocations on our three operating segments: Seniors Housing Operating, Triple-net and Outpatient Medical. Our
seniors housing operating properties include assisted living,
living/continuing care retirement
communities,
living (Canada), care homes with and without nursing (U.K.), and
combinations thereof that are owned and/or operated through RIDEA structures (see Note 18). Our triple-net
properties include the property types described above as well as long-term/post-acute care. Under the Triple-net
segment, we invest in seniors housing and health care real estate through acquisition and financing of primarily
single tenant properties. Properties acquired are primarily leased under triple-net leases and we are not involved

independent support

independent

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WELLTOWER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in the management of the property. Our outpatient medical properties include outpatient medical buildings which
are typically leased to multiple tenants and generally require a certain level of property management by us.

We evaluate performance based upon NOI of each segment. We define NOI as total revenues, including
tenant reimbursements, less property operating expenses. We believe NOI provides investors relevant and useful
information because it measures the operating performance of our properties at the property level on an
unleveraged basis. We use NOI to make decisions about resource allocations and to assess the property level
performance of our properties.

Non-segment revenue consists mainly of interest income on certain non-real estate investments and other
income. Non-segment assets consist of corporate assets including cash, deferred loan expenses and corporate
offices and equipment among others. Non-property specific revenues and expenses are not allocated to individual
segments in determining NOI.

The accounting policies of the segments are the same as those described in the summary of significant
accounting policies (see Note 2). The results of operations for all acquisitions described in Note 3 are included in
our consolidated results of operations from the acquisition dates and are components of the appropriate
segments. There are no intersegment sales or transfers.

114

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Summary information for the reportable segments (which excludes unconsolidated entities) during the years

ended December 31, 2018, 2017 and 2016 is as follows (in thousands):

Seniors
Housing
Operating

Triple-net

Outpatient
Medical

Non-segment /
Corporate

Total

Year Ended December 31, 2018:
Resident fees and services . . . . . . . . . . .
Rental income . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . .

$ 3,234,852
—
578
5,024

Total revenues . . . . . . . . . . . . . . . . . . . .
Property operating expenses . . . . . . . . . .

3,240,454
2,255,432

Consolidated net operating income . . . .
Depreciation and amortization . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . .
Loss (gain) on derivatives and financial

instruments, net . . . . . . . . . . . . . . . . . .

Loss (gain) on extinguishment of debt,

net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of assets . . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . . . . .

Income (loss) from continuing

operations before income taxes and
other items . . . . . . . . . . . . . . . . . . . . .
Income tax benefit (expense) . . . . . . . . .
(Loss) income from unconsolidated

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

Gain (loss) on real estate dispositions,

$

— $

— $

828,865
54,926
17,173

900,964
915

900,049
235,480
14,225
—

551,557
310
4,939

556,806
176,670

380,136
185,530
7,051
—

— $ 3,234,852
1,380,422
—
55,814
—
29,411
2,275

2,275
—

2,275
—
436,256
126,383

4,700,499
2,433,017

2,267,482
950,459
526,592
126,383

985,022
529,449
69,060
—

—

(4,016)

—

—

(4,016)

110
7,599
6,624

(32)
107,980
90,975(1)

11,928
—
7,570

4,091
—
7,729

16,097
115,579
112,898

372,180
1,202

455,437
1,611

168,057
(125)

(572,184)
(11,362)

423,490
(8,674)

(28,142)

21,938

5,563

—

—

(641)

415,575

net . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2,245)

196,589

221,231

Income (loss) from continuing

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

342,995

675,575

394,726

(583,546)

829,750

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

$

342,995

$

675,575

$ 394,726

$(583,546) $

829,750

Total assets . . . . . . . . . . . . . . . . . . . . . . .

$14,607,127

$10,111,227

$5,426,810

$ 196,908

$30,342,072

(1) Represents non-capitalizable transaction costs of $81,116,000 primarily related to a joint venture transaction with an existing seniors
housing operator including the conversion of properties from Triple-net to Seniors Housing Operating and termination/restructuring of
pre-existing relationships.

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Seniors
Housing
Operating

Triple-net

Outpatient
Medical

Non-segment /
Corporate

Total

Year Ended December 31, 2017:
Resident fees and services . . . . . . . . . . . .
Rental income . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . .

$ 2,779,423
—
69
5,127

Total revenues . . . . . . . . . . . . . . . . . . .
Property operating expenses . . . . . . . . . . .

2,784,619
1,904,593

Consolidated net operating income . . . . .
Depreciation and amortization . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . .
Loss (gain) on derivatives and financial

instruments, net . . . . . . . . . . . . . . . . . . .

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 other items . .
Income tax benefit (expense) . . . . . . . . . .
(Loss) income from unconsolidated

$

— $

— $

885,811
73,742
7,531

967,084
—

967,084
243,830
15,194
—

560,060
—
3,340

563,400
179,332

384,068
193,094
10,015
—

— $ 2,779,423
1,445,871
—
73,811
—
17,536
1,538

1,538
—

1,538
—
396,148
122,008

4,316,641
2,083,925

2,232,716
921,720
484,622
122,008

880,026
484,796
63,265
—

—

2,284

—

—

2,284

3,785
—
21,949
8,347

29,083
62,966
96,909
116,689(1)

4,373
—
5,625
1,911

—
—
—
50,829(2)

297,884
(16,430)

400,129
(4,291)

169,050
(1,477)

(567,447)
2,070

37,241
62,966
124,483
177,776

299,616
(20,128)

(83,125)

344,250

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

(105,236)

19,428

2,683

Gain (loss) on real estate dispositions,

net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56,295

286,325

1,630

—

—

Income (loss) from continuing

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

232,513

701,591

171,886

(565,377)

540,613

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

$

232,513

$ 701,591

$ 171,886

$(565,377) $

540,613

Total assets . . . . . . . . . . . . . . . . . . . . . . . .

$13,432,001

$9,325,344

$5,082,145

$ 104,955

$27,944,445

(1) Primarily represents non-capitalizable transaction costs, including $88,316,000 due to a joint venture transaction with an existing seniors
housing operator which converted a portfolio of properties from Triple-net to Seniors Housing Operating and termination/restructuring of
pre-existing relationships. In addition, includes $18,294,000 other-than-temporary impairment charge on the Genesis available-for-sale
equity investment.

(2) Primarily related to $40,730,000 recognized for the donation of the corporate headquarters.

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Seniors
Housing
Operating

Triple-net

Outpatient
Medical

Non-segment /
Corporate

Total

Year Ended December 31, 2016:
Resident fees and services . . . . . . . . . . . . . . . .
Rental income . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,504,731

$

— $

— $

— 1,112,325
90,476
6,059

4,180
17,085

536,490
3,307
5,568

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . .
Property operating expenses . . . . . . . . . . . . . .

2,525,996
1,711,882

1,208,860

545,365
— 165,101

— $2,504,731
— 1,648,815
97,963
—
29,651
939

4,281,160
939
— 1,876,983

Consolidated net operating income . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . .
Loss (gain) on derivatives and financial

instruments, net . . . . . . . . . . . . . . . . . . . . . .
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 other items . . . . . .
Income tax benefit (expense) . . . . . . . . . . . . . .
(Loss) income from unconsolidated

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

Gain (loss) on real estate dispositions, net

814,114
415,429
81,853
—

1,208,860
297,197
21,370
—

380,264
188,616
19,087
—

939
—
399,035
155,241

2,404,177
901,242
521,345
155,241

—
29,207
(88)
—
12,403
—

68
10,016
863
6,935
20,169
—

—
3,687
—
3,280
4,635
—

(2,516)
—
16,439
—
—
11,998

(2,448)
42,910
17,214
10,215
37,207
11,998

275,310
(3,762)

852,242
(1,087)

160,959
(511)

(579,258)
24,488

709,253
19,128

(20,442)
9,880

9,767
355,394

318
(1,228)

—
—

(10,357)
364,046

Income from continuing operations . . . . . . . . .

260,986

1,216,316

159,538

(554,770)

1,082,070

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

$ 260,986

$1,216,316

$159,538

$(554,770) $1,082,070

Our portfolio of properties and other investments are located in the U.S., the U.K. and Canada. Revenues
and assets are attributed to the country in which the property is physically located. The following is a summary of
geographic information for the periods presented (dollars in thousands):

Year Ended

December 31, 2018

December 31, 2017

December 31, 2016

Amount

%

Amount

%

Amount

%

Revenues:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,777,960
452,956
469,583

80.4% $3,464,527
9.6% 407,351
10.0% 444,763

80.3% $3,453,485
9.4% 388,383
10.3% 439,292

80.6%
9.1%
10.3%

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

$4,700,499

100.0% $4,316,641

100.0% $4,281,160

100.0%

117

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of

December 31, 2018

December 31, 2017

Amount

%

Amount

%

Assets:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$24,884,292
3,078,994
2,378,786

82.0% $22,274,443
10.1% 3,239,039
7.9% 2,430,963

79.7%
11.6%
8.7%

Total

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

$30,342,072

100.0% $27,944,445

100.0%

18. Income Taxes and Distributions

We elected to be taxed as a REIT commencing with our first taxable year. To qualify as a REIT for federal
income tax purposes, at least 90% of taxable income (excluding net capital gains) must be distributed to
stockholders. REITs that do not distribute a 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,

2018

2017

2016

Ordinary dividend(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term capital gain/(loss)(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Return of capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2.1988
1.1153
0.1659

$1.8117
1.5755
0.0928

$2.5067
0.8760
0.0573

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

$3.4800

$3.4800

$3.4400

(1) For the year ended December 31, 2018, includes Section 199A dividends of $2.1988. For the years ended December 31, 2017 and

2016, includes Qualified Dividend of $0.0038 and $0.0047, respectively.

(2) For the years ended December 31, 2018, 2017 and 2016, includes Unrecaptured SEC. 1250 Gains of $0.3822, $0.3557 and

$0.4120, respectively.

Our consolidated provision for income tax expense (benefit) is as follows for the periods presented (in

thousands):

Year Ended December 31,

2018

2017

2016

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$15,850
(7,176)

$ 7,633
12,495

$ 14,944
(34,072)

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

$ 8,674

$20,128

$(19,128)

REITs generally are not subject to U.S. federal income taxes on that portion of REIT taxable income or
capital gain that is distributed to stockholders. For the tax year ended December 31, 2018, as a result of

118

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ownership of investments in Canada and the U.K., we were subject to foreign income taxes under the respective
tax laws of these jurisdictions.

The provision for income taxes for the year ended December 31, 2018 primarily relates to state taxes,
foreign taxes, and taxes based on income generated by entities that are structured as TRSs. For the tax years
included in the
ended December 31, 2018, 2017 and 2016,
consolidated provision for income taxes was $9,804,000, $4,806,000 and $(3,315,000), 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, 2018, 2017 and 2016, to the income tax expense/(benefit) is as follows for the periods
presented (in thousands):

Year Ended December 31,

2018

2017

2016

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

$ 176,069
28,309

$ 199,588
30,445

$ 372,030
(2,128)

(206,937)
8,110
3,123

(234,468)
10,065
14,498

(399,571)
9,205
1,336

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

$

8,674

$ 20,128

$ (19,128)

(1) Excluding purchase price accounting.

Each TRS and foreign entity subject to income taxes is a tax paying component for purposes of classifying
deferred tax assets and liabilities. The tax effects of taxable and deductible temporary differences, as well as tax
asset/(liability) attributes, are summarized as follows for the periods presented (in thousands):

Year Ended December 31,

2018

2017

2016

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

$

(2,533)
98,713
48,804
(155,592)

$ (11,812)
94,654
25,146
(127,283)

$ (7,089)
82,469
15,978
(96,838)

Net deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . .

$ (10,608)

$ (19,295)

$ (5,480)

We assess the available positive and negative evidence to estimate if sufficient future taxable income will be
generated to use the existing deferred tax assets. We apply the concepts on an entity-by-entity,
jurisdiction-by-jurisdiction basis. With respect to the analysis of certain entities in multiple jurisdictions, a
significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year
period ended December 31, 2018. Such objective evidence limits the ability to consider other subjective evidence
such as our projections for future growth.

On the basis of the evaluations performed as required by the codification, valuation allowances totaling
$155,592,000 were recorded on U.S. taxable REIT subsidiaries as well as entities in other jurisdictions to limit
the deferred tax assets to the amount that we believe is more likely that not realizable. However, the amount of

119

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the deferred tax asset considered realizable could be adjusted if (i) estimates of future taxable income during the
carryforward period are reduced or increased or (ii) objective negative evidence in the form of cumulative losses
is no longer present (and additional weight may be given to subjective evidence such as our projections for
growth). The valuation allowance rollforward is summarized as follows for the periods presented (in thousands):

Year Ended December 31,

2018

2017

2016

Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$127,283
28,309

$ 96,838
30,445

$98,966
(2,128)

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

$155,592

$127,283

$96,838

As a result of certain acquisitions, we are subject to corporate level taxes for any related asset dispositions
that may occur during the five-year period immediately after such assets were owned by a C corporation
(“built-in gains tax”). The amount of income potentially subject to this special corporate level tax is generally
equal to the lesser of (a) the excess of the fair value of the asset over its adjusted tax basis as of the date it
became a REIT asset, or (b) the actual amount of gain. Some but not all gains recognized during this period of
time could be offset by available net operating losses and capital loss carryforwards. During the year ended
December 31, 2017, we acquired certain additional assets with built-in gains as of the date of acquisition that
could be subject to the built-in gains tax if disposed of prior to the expiration of the applicable five-year
period. We have not recorded a deferred tax liability as a result of the potential built-in gains tax based on our
intentions with respect to such properties and available tax planning strategies.

Under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”),
the REIT may lease “qualified health care properties” on an arm’s-length basis to a TRS if the property is
operated on behalf of such subsidiary by a person who qualifies as an “eligible independent contractor.”
Generally, the rent received from the TRS will meet the related party rent exception and will be treated as “rents
from real property.” A “qualified health care property” includes real property and any personal property that is,
or is necessary or incidental to the use of, a hospital, nursing facility, assisted living facility, congregate care
facility, qualified continuing care facility, or other licensed facility which extends medical or nursing or ancillary
services to patients. We have entered into various joint ventures that were structured under RIDEA. Resident
level rents and related operating expenses for these facilities are reported in the consolidated financial statements
and are subject to federal, state and foreign income taxes as the operations of such facilities are included in a
TRS. Certain net operating loss carryforwards could be utilized to offset taxable income in future years.

Given the applicable statute of limitations, we generally are subject to audit by the Internal Revenue Service
(“IRS”) for the year ended December 31, 2015 and subsequent years. The statute of limitations may vary in the
states in which we own properties or conduct business. We do not expect to be subject to audit by state taxing
authorities for any year prior to the year ended December 31, 2012. We are also subject to audit by the Canada
Revenue Agency and provincial authorities generally for periods subsequent to May 2013 related to entities
acquired or formed in connection with acquisitions, and by the U.K.’s HM Revenue & Customs for periods
subsequent to August 2013 related to entities acquired or formed in connection with acquisitions.

At December 31, 2018, we had a net operating loss (“NOL”) carryforward related to the REIT of
$348,031,000. Due to our uncertainty regarding the realization of certain deferred tax assets, we have not
recorded a deferred tax asset related to NOLs generated by the REIT. These amounts can be used to offset future
taxable income (and/or taxable income for prior years if an audit determines that tax is owed), if any. The REIT
will be entitled to utilize NOLs and tax credit carryforwards only to the extent that REIT taxable income exceeds
our deduction for dividends paid. The NOL carryforwards generated through December 31, 2017 will expire
through 2037. Beginning with tax years after December 31, 2017, the Tax Cuts and Jobs Act eliminates the
carryback period, limits the NOLs to 80% of taxable income and replaces the 20-year carryforward period with
an indefinite carryforward period.

120

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2018 and 2017, we had an NOL carryforward related to Canadian entities of
$154,029,000, and $134,552,000, respectively. These Canadian losses have a 20-year carryforward period. At
December 31, 2018 and 2017, we had an NOL carryforward related to U.K. entities of $242,377,000 and
$183,712,000, respectively. These U.K. losses do not have a finite carryforward period.

19. Quarterly Results of Operations (Unaudited)

The following is a summary of our unaudited quarterly results of operations for the years ended
December 31, 2018 and 2017 (in thousands, except per share data). The sum of individual quarterly amounts may
not agree to the annual amounts included in the Consolidated Statements of Comprehensive Income due to
rounding.

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, 2018

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

$1,096,965

$1,125,912

$1,236,379

$1,241,243

437,671

154,432

64,384

101,763

$
$

1.18
1.17

$
$

0.42
0.41

$
$

0.17
0.17

$
$

0.27
0.27

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)

(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.

121

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

20. Variable Interest Entities

We have entered into joint ventures to own certain seniors housing and outpatient medical assets which are
deemed to be variable interest entities (“VIEs”). We have concluded that we are the primary beneficiary of these
VIEs based on a combination of operational control of the joint venture and the rights to receive residual returns
or the obligation to absorb losses arising from the joint ventures. Except for capital contributions associated with
the initial joint venture formations, the joint ventures have been and are expected to be funded from the ongoing
operations of the underlying properties. Accordingly, such joint ventures have been consolidated, and the table
below summarizes the balance sheets of consolidated VIEs in the aggregate (in thousands):

December 31,
2018

December 31,
2017

Assets:

Net real property owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 973,813
18,678
14,600

$1,002,137
12,308
16,330

Total assets(1)

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

$1,007,091

$1,030,775

Liabilities and equity:

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

$ 465,433
18,229
523,429

$ 471,103
14,832
544,840

Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,007,091

$1,030,775

(1) Note that assets of the consolidated VIEs can only be used to settle obligations relating to such VIEs. Liabilities of the consolidated VIEs

represent claims against the specific assets of the VIEs.

21. Subsequent Events

Senior Notes Activity

On February 15, 2019, we completed the issuance of $500 million of 3.625% senior unsecured notes due

2024 and $550 million of 4.125% senior unsecured notes due 2029.

On February 15, 2019, we also announced the redemption of $600 million of 4.125% senior unsecured notes

due 2019 and $450 million of 6.125% senior unsecured notes due 2020.

Preferred Stock Activity

On February 21, 2019, we announced that we elected to effect the conversion of all of the outstanding
Series I Preferred Stock. Each share of convertible preferred stock will be converted into 0.8857 shares of
common stock on February 28, 2019.

122

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, 2018 based on the criteria established by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) in a report entitled Internal Control — Integrated Framework.

Based on this assessment, using the criteria above, management concluded that the Company’s system of

internal control over financial reporting was effective as of December 31, 2018.

The independent registered public accounting firm of Ernst & Young LLP, as auditors of the Company’s
consolidated financial statements, has issued an attestation report on the Company’s internal control over
financial reporting.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities
Exchange Act of 1934, as amended) occurred during the fourth quarter of the one-year period covered by this
report that materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.

123

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Shareholders and Board of Directors of Welltower Inc.

Opinion on Internal Control over Financial reporting

We have audited Welltower

reporting as of
December 31, 2018, based on criteria established in Internal Control — Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the “COSO Criteria”).
In our opinion, Welltower Inc. and subsidiaries (the Company) maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2018, based on the COSO Criteria.

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,
2018 and 2017, the related consolidated statements of comprehensive income, equity and cash flows for each of
the three years in the period ended December 31, 2018, and the related notes and financial statement schedules
listed in the index at Item 15(a) and our report dated February 25, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management

is responsible for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the
accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the Company’s internal control over financial reporting based on our audit. We are a
public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
company’s assets that could have a material effect on the financial statements.

124

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Toledo, Ohio
February 25, 2019

125

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, 2019.

We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and
employees. The code is posted on the Internet at www.welltower.com/investors/governance. Any amendment to,
or waivers from, the code that relate to any officer or director of the company will be promptly disclosed on the
Internet at www.welltower.com.

In addition,

the Board has adopted charters for the Audit, Compensation and Nominating/Corporate
Governance Committees. These charters are posted on the Internet at www.welltower.com/investors/
governance. Please refer to “Item 7 — Management’s Discussion and Analysis of Financial Condition and
Results of Operations — Executive Summary — Corporate Governance” in the Annual Report on Form 10-K for
further discussion of corporate governance.

The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and

our web address is included as an inactive textual reference only.

Item 11. Executive Compensation

The information required by this Item is incorporated herein by reference to the information under the
headings “Executive Compensation” and “Director Compensation” in our definitive proxy statement, which will
be filed with the Commission prior to May 1, 2019.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters

The information required by this Item is incorporated herein by reference to the information under the
headings “Security Ownership of Directors and Management and Certain Beneficial Owners” and “Equity
Compensation Plan Information” in our definitive proxy statement, which will be filed with the Commission
prior to May 1, 2019.

Item 13. Certain Relationships and Related Transactions and Director Independence

The information required by this Item is incorporated herein by reference to the information under the
headings “Corporate Governance — Independence and Meetings” and “Security Ownership of Directors and
Management and Certain Beneficial Owners — Certain Relationships and Related Transactions” in our definitive
proxy statement, which will be filed with the Commission prior to May 1, 2019.

Item 14. Principal Accounting Fees and Services

The information required by this Item is incorporated herein by reference to the information under the
heading “Ratification of the Appointment of the Independent Registered Public Accounting Firm” in our
definitive proxy statement, which will be filed with the Commission prior to May 1, 2019.

126

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, 2018 and 2017 . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income — Years ended December 31,

2018, 2017 and 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Equity — Years ended December 31, 2018, 2017

and 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Cash Flows — Years ended December 31, 2018, 2017

and 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

78
79

80

82

83
84

2. The following Financial Statement Schedules are included beginning on page 134:

III — Real Estate and Accumulated Depreciation
IV — Mortgage Loans on Real Estate

The financial statement schedule required by Item15(a) (Schedule II, Valuation and Qualifying Accounts) is

included in Item 8 of this Annual Report on Form 10-K.

(b) Exhibits:

The exhibits listed below are either filed with this Form 10-K or incorporated by reference in accordance

with Rule 12b-32 of the Securities Exchange Act of 1934.

2.1

3.1(a)

3.1(b)

3.1(c)

3.1(d)

3.1(e)

3.1(f)

3.1(g)

Agreement and Plan of Merger, dated as of April 25, 2018, by and among the Company, Potomac
Acquisition LLC, Quality Care Properties, Inc. and certain subsidiaries of Quality Care Properties,
Inc. (filed with the Commission as Exhibit 2.1 to the Company’s Form 8-K filed April 26, 2018
(File No. 001-08923), and incorporated herein by reference thereto).

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).

127

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)

4.1(j)

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).

Sixth Amended and Restated By-laws of the Company (filed with the Commission as Exhibit 3.2
to the Company’s Form 8-K filed December 4, 2018 (File No. 001-08923), and incorporated herein
by reference thereto).

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).

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).

128

4.1(k)

4.1(l)

4.1(m)

4.1(n)

4.1(o)

4.1(p)

4.1(q)

4.1(r)

4.1(s)

4.2

4.3

4.4(a)

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).

Supplemental Indenture No. 13, dated as of April 10, 2018, between the Company and The Bank
of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the
Company’s Form 8-K filed April 10, 2018 (File No. 001-08923), and incorporated herein by
reference thereto).

Supplemental Indenture No. 14, dated as of August 16, 2018, between the Company and The Bank
of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the
Company’s Form 8-K filed August 16, 2018 (File No. 001-08923), and incorporated herein by
reference thereto).

Supplemental Indenture No. 15, dated as of February 15, 2019 between the Company and The
Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the
Company’s Form 8-K filed February 15, 2019 (File No. 001-08923), and incorporated herein by
reference thereto).

Form of Indenture for Senior Subordinated Debt Securities (filed with the Commission as Exhibit
4.2 to the Company’s Form S-3 (File No. 333-2250004) filed May 17, 2018, and incorporated
herein by reference thereto).

Form of Indenture for Junior Subordinated Debt Securities (filed with the Commission as Exhibit
4.3 to the Company’s Form S-3 (File No. 333-2250004) filed May 17, 2018, and incorporated
herein by reference thereto).

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).

129

4.4(b)

10.1

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)

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).

Credit Agreement dated as of July 19, 2018 by and among the Company; the lenders listed therein;
KeyBank National Association, as administrative agent, L/C issuer and a swingline lender; Bank
of America, N.A. and JPMorgan Chase Bank, N.A., as co-syndication agents; Deutsche Bank
Securities Inc., as documentation agent; Merrill Lynch, Pierce, Fenner & Smith Incorporated,
JPMorgan Chase Bank, N.A., KeyBanc Capital Markets Inc. and Deutsche Bank Securities Inc., as
U.S. joint lead arrangers; Merrill Lynch, Pierce, Fenner & Smith Incorporated, JPMorgan Chase
Bank, N.A., KeyBanc Capital Markets Inc. and RBC Capital Markets, as Canadian joint lead
arrangers; and Merrill Lynch, Pierce, Fenner & Smith Incorporated and JPMorgan Chase Bank,
N.A., as joint book runners (filed with the Commission as Exhibit 10.1 to the Company’s Form
8-K filed July 24, 2018 (File No. 001-08923), and incorporated herein by reference thereto).

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).*

Transfer Letter, dated August 17, 2018, by and between John A. Goodey and the Company (filed
with the Commission as Exhibit 10.1 to the Company’s Form 10-Q filed October 30, 2018 (File
No. 001-08923), and incorporated herein by reference thereto).

10.5(b)

Letter Agreement, dated January 30, 2019, by and between John A. Goodey and the Company.*

130

10.6

10.7

10.8

10.9(a)

10.9(b)

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).*

Summary of Director Compensation.*

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).*

10.10(a) Welltower Inc. 2016 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.1 to the
Company’s Form 8-K filed May 10, 2016 (File No. 001-08923), and incorporated herein by
reference thereto).*

10.10(b)

10.10(c)

10.10(d)

Form of Restricted Stock Grant Notice for Executive Officers under the 2016 Long-Term
Incentive Plan (filed with the Commission as Exhibit 10.14(b) to the Company’s Form 10-K filed
February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*

Form of Restricted Stock Grant Notice for Senior Vice Presidents under the 2016 Long-Term
Incentive Plan (filed with the Commission as Exhibit 10.14(c) to the Company’s Form 10-K filed
February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*

Form of Deferred Stock Unit Grant Agreement for Non-Employee Directors under the 2016 Long-
Term Incentive Plan (filed with the Commission as Exhibit 10.14(d) to the Company’s Form 10-K
filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*

10.11(a) Welltower Inc. 2016-2018 Long-Term Incentive Program (filed with the Commission as Exhibit
10.3 to the Company’s Form 10-Q filed August 2, 2016 (File No. 001-08923), and incorporated
herein by reference thereto).*

10.11(b)

Form of Performance Restricted Stock Unit Award Agreement under the 2016-2018 Long-Term
Incentive Program (filed with the Commission as Exhibit 10.15(b) to the Company’s Form 10-K
filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*

10.12(a) Welltower Inc. 2017-2019 Long-Term Incentive Program (filed with the Commission as Exhibit
10.4 to the Company’s Form 10-Q filed May 5, 2017 (File No. 001-08923), and incorporated
herein by reference thereto).*

10.12(b)

Form of Award Notice under the 2017-2019 Long-Term Incentive Program (filed with the
Commission as Exhibit 10.16(b) to the Company’s Form 10-K filed February 28, 2018 (File
No. 001-08923), and incorporated herein by reference thereto).*

10.12(c) Welltower Inc. 2017-2019 Long-Term Incentive Program — Bridge 1 (filed with the Commission
as Exhibit 10.2 to the Company’s Form 10-Q filed November 7, 2017 (File No. 001-08923), and
incorporated herein by reference thereto).*

10.12(d)

Form of Award Notice under the 2017-2019 Long Term Incentive Program — Bridge 1 (filed with
the Commission as Exhibit 10.16(d) to the Company’s Form 10-K filed February 28, 2018 (File
No. 001-08923), and incorporated herein by reference thereto).*

10.12(e) Welltower Inc. 2017-2019 Long-Term Incentive Program — Bridge 2 (filed with the Commission
as Exhibit 10.3 to the Company’s Form 10-Q filed November 7, 2017 (File No. 001-08923), and
incorporated herein by reference thereto).*

131

10.12(f)

Form of Award Notice under the 2017-2019 Long Term Incentive Program — Bridge 2 (filed with
the Commission as Exhibit 10.16(f) to the Company’s Form 10-K filed February 28, 2018 (File
No. 001-08923), and incorporated herein by reference thereto).*

10.13(a) Welltower Inc. 2018-2020 Long-Term Incentive Program (filed with the Commission as Exhibit
10.17(a) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and
incorporated herein by reference thereto).*

10.13(b)

Form of Restricted Stock Unit Award Agreement under the 2018-2020 Long-Term Incentive
Program (filed with the Commission as Exhibit 10.17(b) to the Company’s Form 10-K filed
February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*

10.14(a) Welltower Inc. 2019-2021 Long-Term Incentive Program.*

10.14(b)

Form of Restricted Stock Unit Award Agreement under the 2019-2021 Long-Term Incentive
Program.*

21

23

24

31.1

31.2

32.1

32.2

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.

Item 16. Form 10-K Summary

None.

132

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant

has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: February 25, 2019

WELLTOWER INC.

By:

/s/ Thomas J. DeRosa

Thomas J. DeRosa,
Chief Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on

February 25, 2019 by the following persons on behalf of the Registrant and in the capacities indicated.

/s/

Jeffrey H. Donahue **

Jeffrey H. Donahue, Chairman of the Board

/s/ Kenneth J. Bacon **

Kenneth J. Bacon, Director

/s/ Karen DeSalvo**

Karen DeSalvo, Director

/s/ Geoffrey G. Meyers **
Geoffrey G. Meyers, Director

/s/

Johnese Spisso**

Johnese Spisso, 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/ Timothy J. Naughton**

Timothy J. Naughton, Director

/s/

John A. Goodey**

John A. Goodey, Executive Vice President and Chief
Financial Officer (Principal Financial Officer)

/s/ Sharon M. Oster **

Sharon M. Oster, Director

/s/

Joshua T. Fieweger**

Joshua T. Fieweger, Vice President and
Controller (Principal Accounting Officer)

/s/

Judith C. Pelham **

**By:

/s/ Thomas J. DeRosa

Judith C. Pelham, Director

Thomas J. DeRosa, Attorney-in-Fact

/s/ Sergio D. Rivera **

Sergio D. Rivera, Director

133

Welltower Inc.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2018

(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, UK . . . . . .

Albuquerque, NM . . . .

Alexandria, VA . . . . . .

Alhambra, CA . . . . . . .

Altrincham, UK . . . . . .

Amherstview, ON . . . .

Anderson, SC . . . . . . . .

Apple Valley, CA . . . .

Arlington, VA . . . . . . .

Arlington, VA . . . . . . .

Arnprior, ON . . . . . . . .

Atlanta, GA . . . . . . . . .

Austin, TX . . . . . . . . . .

Austin, TX . . . . . . . . . .

Avon, CT . . . . . . . . . . .

Azusa, CA . . . . . . . . . .

Bagshot, UK . . . . . . . . .

Banstead, UK . . . . . . . .

Basingstoke, UK . . . . .

Basking Ridge, NJ . . . .

Bassett, UK . . . . . . . . .

Bath, UK . . . . . . . . . . .

—

—

—

—

—

486

—

—

—

—

147

—

—

—

—

—

—

—

—

—

—

—

Baton Rouge, LA . . . . .

8,838

Beaconsfield, UK . . . . .

Beaconsfield, QC . . . . .

Bedford, NH . . . . . . . .

Bee Cave, TX . . . . . . . .

Bellevue, WA . . . . . . . .

Belmont, CA . . . . . . . .

Belmont, CA . . . . . . . .

—

—

—

—

—

—

—

Berkeley, CA . . . . . . . .

12,195

Bethesda, MD . . . . . . .
Bethesda, MD . . . . . . .
Bethesda, MD . . . . . . .

Billerica, MA . . . . . . . .

Birmingham, UK . . . . .

Birmingham, UK . . . . .

Blainville, QC . . . . . . .

Bloomfield Hills, MI . .

Boca Raton, FL . . . . . .

Borehamwood, UK . . .

Bothell, WA . . . . . . . . .

Boulder, CO . . . . . . . . .

Bournemouth, UK . . . .

Braintree, MA . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

2,144

1,270

8,280

600

4,244

473

710

480

8,385

—

788

2,100

1,560

4,200

1,550

570

4,960

6,695

3,420

2,356

4,874

2,696

790

5,566

1,149

2,527

1,820

2,800

3,000

—

3,050

—

—

—

1,619

1,480

2,807

2,077

2,000

6,565

5,367

1,350

2,994

5,527

—

Brampton, ON . . . . . . .

40,685

Brick, NJ . . . . . . . . . . .

—

10,196

1,170

31,346

12,549

20,837

50,914

6,305

25,187

4,446

6,290

16,639

31,198

2,338

6,283

20,603

21,413

74,850

30,571

3,141

29,881

55,113

18,853

37,710

32,304

11,876

29,436

50,952

17,484

28,748

21,084

19,004

23,526

35,300

32,677

45,309

45

212

21,381

13,014

11,313

8,902

35,662

111,247

41,937

13,439

27,458

42,547

41,290

59,989

17,372

$

1,691

$

24

$

—

2,139

—

9,067

1,700

508

456

262

14,030

—

422

1,532

511

746

4,211

7,872

2,920

4,444

1,014

1,623

4,413

—

1,139

2,287

641

2,299

819

2,183

2,395

2,308

5,086

677

682

907

867

654

605

429

1,067

18,834

2,246

6,074

2,271

2,338

1,079

—

1,530

2,144

1,354

8,280

600

4,388

493

710

486

8,385

—

810

2,197

1,560

4,200

1,590

570

5,133

6,956

3,535

2,395

5,051

2,696

842

5,765

1,225

2,551

1,820

2,816

3,000

157

3,050

3

—

—

1,624

1,530

2,902

2,156

2,133

6,565

5,584

1,798

3,022

5,725

100

10,196

1,211

134

33,013

12,549

22,892

50,914

15,372

26,743

4,934

6,746

16,895

45,228

2,338

6,683

22,038

21,924

75,596

34,742

11,013

32,628

59,296

19,752

39,294

36,540

11,876

30,523

53,040

18,049

31,023

21,903

21,171

25,921

37,451

37,763

45,983

727

1,119

22,243

13,618

11,823

9,252

36,596

130,081

43,966

19,065

29,701

44,687

42,269

59,989

18,861

$

6,127

621

6,475

1,055

2,124

5,790

799

3,524

4,633

6,530

89

1,505

4,140

2,984

8,063

10,488

3,286

7,189

12,237

2,578

8,040

8,138

571

6,086

10,591

4,937

5,760

2,369

5,325

6,832

8,026

4,759

9,551

136

319

3,170

776

645

2,925

7,455

7,491

9,285

2,344

7,497

9,186

8,961

10,075

4,186

2013

2015

2010

2016

2011

2012

2015

2003

2010

2017

2018

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

2015

2015

2013

2013

2018

2012

2015

2013

2013

2013

2015

2010

2000 10 Devon Drive

2017 Banbury Road

1984 500 Paisano St NE

2018 5550 Cardinal Place

1923 1118 N. Stoneman Ave.

2009 295 Hale Road

1974 4567 Bath Road

1986 311 Simpson Rd.

1999 11825 Apple Valley Rd.

1992 900 N Taylor Street

1992 900 N Taylor Street

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

2016 47 Bristol Road South

2016 134 Jockey Road

2008 50 des Chateaux Boulevard

2009 6790 Telegraph Road

1994 6343 Via De Sonrise Del Sur

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

1998 515 Jack Martin Blvd

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

Brick, NJ . . . . . . . . . . .

Bridgewater, NJ . . . . . .

Brighton, MA . . . . . . . .

Brockport, NY . . . . . . .

Brockville, ON . . . . . . .

Brookfield, CT . . . . . . .

Broomfield, CO . . . . . .

—

—

9,686

—

4,288

—

—

Brossard, QC . . . . . . . .

10,432

Buckingham, UK . . . . .

Buffalo Grove, IL . . . .

Burbank, CA . . . . . . . .

—

—

—

Burbank, CA . . . . . . . .

19,237

Burleson, TX . . . . . . . .

Burlingame, CA . . . . . .

—

—

Burlington, ON . . . . . .

11,514

Burlington, MA . . . . . .

Burlington, MA . . . . . .

Bushey, UK . . . . . . . . .

Calgary, AB . . . . . . . . .

Calgary, AB . . . . . . . . .

Calgary, AB . . . . . . . . .

Calgary, AB . . . . . . . . .

Calgary, AB . . . . . . . . .

Camberley, UK . . . . . .

Cardiff, UK . . . . . . . . .

Cardiff by the Sea,

—

—

—

11,323

12,909

10,237

21,247

24,199

—

—

CA . . . . . . . . . . . . . .

37,025

Carol Stream, IL . . . . .

Carrollton, TX . . . . . . .

Cary, NC . . . . . . . . . . .

Cary, NC . . . . . . . . . . .

Cedar Park, TX . . . . . .

Cerritos, CA . . . . . . . . .

Charlottesville, VA . . .

—

—

—

—

—

—

—

Chatham, ON . . . . . . . .

895

Chelmsford, MA . . . . .

Chelmsford, MA . . . . .

Chertsey, UK . . . . . . . .

Chesterfield, MO . . . . .

Chorleywood, UK . . . .

Chula Vista, CA . . . . . .

Church Crookham,

UK . . . . . . . . . . . . . .

Cincinnati, OH . . . . . . .

Citrus Heights, CA . . . .

Claremont, CA . . . . . . .

Cohasset, MA . . . . . . . .

Colleyville, TX . . . . . .

Colorado

Springs, CO . . . . . . .

Colts Neck, NJ . . . . . . .

Concord, NH . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Coquitlam, BC . . . . . . .

9,139

Costa Mesa, CA . . . . . .

Crystal Lake, IL . . . . . .

Dallas, TX . . . . . . . . . .

Danvers, MA . . . . . . . .

—

—

—

—

690

1,730

2,100

1,500

484

2,250

4,140

5,499

2,979

2,850

4,940

3,610

3,150

—

1,309

2,443

2,750

12,690

2,252

2,793

3,122

3,431

2,385

2,654

3,191

5,880

1,730

4,280

740

6,112

1,750

—

4,651

1,098

1,040

1,589

9,566

1,857

5,636

17,125

48,201

14,616

23,496

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

36,482

37,415

41,179

38,971

28,983

36,776

5,736

12,566

64,711

55,048

31,444

45,240

70,008

15,664

27,494

91,468

12,462

10,951

26,432

25,886

48,366

43,191

2,072

22,163

2,591

2,060

2,300

2,430

2,485

1,050

800

780

720

3,047

2,050

875

6,330

1,120

14,215

109,388

31,876

9,928

26,147

17,082

14,756

14,733

21,164

24,567

19,969

12,461

114,794

14,557

5,610

1,562

1,712

582

432

3,337

11,976

285

744

3,154

2,067

3,983

659

85

623

1,388

3,304

—

1,286

1,065

1,241

1,676

1,152

21,500

884

4,243

2,104

1,041

744

8,355

1,162

6,570

11,276

1,809

1,525

1,301

—

1,462

3,864

1,201

835

13,733

726

1,479

1,919

47

1,980

1,759

852

775

1,404

1,482

1,613

1,505

695

1,767

2,135

1,705

498

2,271

10,135

5,427

3,080

2,850

4,940

3,610

3,150

—

1,338

2,522

2,750

12,690

2,298

2,843

3,184

3,498

2,427

8,150

3,307

5,880

1,730

4,280

740

6,112

1,750

—

4,651

1,193

1,040

1,656

9,566

1,917

5,833

22,730

49,726

16,293

23,873

7,863

33,496

50,528

32,211

14,523

52,283

45,533

54,800

11,096

62,871

19,905

35,663

60,792

36,482

38,655

42,194

40,150

30,592

37,886

21,937

13,334

68,954

57,152

32,485

45,984

78,363

16,826

34,064

102,744

14,176

12,476

27,666

25,886

49,768

46,858

4,152

10,329

4,736

3,890

1,170

9,272

16,614

5,560

1,882

10,571

10,721

5,663

1,354

4,858

4,321

8,007

6,120

308

8,580

9,176

8,632

5,754

5,774

1,230

3,647

15,985

12,748

4,207

8,360

3,652

1,215

6,011

6,952

3,167

4,625

3,882

743

9,624

10,193

2010

2010

2011

2015

2015

2011

2013

2015

2014

2012

2012

2016

2012

2016

2013

2013

2016

2015

2013

2013

2013

2013

2015

2014

2013

2011

2012

2013

2013

2018

2016

2016

2018

2015

2003

2015

2015

2013

2013

1999 1594 Route 88

1999 2005 Route 22 West

1995 50 Sutherland Road

1999 90 West Avenue

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

2018 Elton House, Elton Way

2003 20 Promenade Way SE

1998 80 Edenwold Drive NW

1998 150 Scotia Landing NW

1989 9229 16th Street SW

2006 2220-162nd Avenue SW

2016 Fernhill Road

2007 127 Cyncoed Road

2009 3535 Manchester Avenue

2001 545 Belmont Lane

2010 2105 North Josey Lane

2009 1206 West Chatham Street

1999 300 Kildaire Woods Drive

2015 800 C-Bar Ranch Trail

2002 11000 New Falcon Way

1991 2610 Barracks Road

1965 25 Keil Drive North

1997 4 Technology Dr.

1997 199 Chelmsford Street

2018 Bittams Lane

2001 1880 Clarkson Road

2007 High View, Rickmansworth

Road

2,162

23,274

4,942

2013

2003 3302 Bonita Road

2,691

2,080

2,300

2,483

2,493

1,050

1,026

1,092

789

3,098

2,050

971

6,330

1,145

14,950

123,101

32,602

11,354

28,058

17,129

16,510

16,180

21,947

25,291

21,373

13,847

116,407

16,037

2,596

26,921

8,987

2,806

6,009

921

3,610

3,628

5,450

6,583

5,647

3,480

13,498

4,429

2014

2007

2010

2013

2013

2016

2013

2010

2011

2013

2011

2013

2015

2011

2014 Bourley Road

2010 5445 Kenwood Road

1997 7418 Stock Ranch Rd.

2001 2053 North Towne Avenue

1998 125 King Street (Rt 3A)

2013 8100 Precinct Line Road

2105 University Park
Boulevard

2001

2002 3 Meridian Circle

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

135

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

Danvers, MA . . . . . . . .

Davenport, IA . . . . . . .

Decatur, GA . . . . . . . . .

Denver, CO . . . . . . . . .

Dix Hills, NY . . . . . . . .

Dollard-Des-Ormeaux,
QC . . . . . . . . . . . . . .

Dresher, PA . . . . . . . . .

Dublin, OH . . . . . . . . .

Dublin, OH . . . . . . . . .

East Haven, CT . . . . . .

East Meadow, NY . . . .

East Setauket, NY . . . .

Eastbourne, UK . . . . . .

Edgbaston, UK . . . . . . .

Edgewater, NJ . . . . . . .

Edison, NJ . . . . . . . . . .

Edmonds, WA . . . . . . .

Edmonton, AB . . . . . . .

Edmonton, AB . . . . . . .

Encinitas, CA . . . . . . . .

Encino, CA . . . . . . . . .

Englishtown, NJ . . . . . .

Escondido, CA . . . . . . .

Esher, UK . . . . . . . . . .

Fairfax, VA . . . . . . . . .

Fairfield, NJ . . . . . . . . .

Fairfield, CA . . . . . . . .

Fareham, UK . . . . . . . .

Flossmoor, IL . . . . . . . .

Folsom, CA . . . . . . . . .

Fort Worth, TX . . . . . .

Franklin, MA . . . . . . . .

Fremont, CA . . . . . . . .

Frome, UK . . . . . . . . . .

Fullerton, CA . . . . . . . .

Gahanna, OH . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

8,239

10,728

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Gilbert, AZ . . . . . . . . . .

15,436

Gilroy, CA . . . . . . . . . .

Glen Cove, NY . . . . . .

Glenview, IL . . . . . . . .

Golden Valley, MN . . .

Granbury, TX . . . . . . . .

Greenville, SC . . . . . . .

Grimsby, ON . . . . . . . .

Grosse Pointe Woods,

MI

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

Grosse Pointe Woods,

MI

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

Grove City, OH . . . . . .

Guelph, ON . . . . . . . . .

Guildford, UK . . . . . . .

Gurnee, IL . . . . . . . . . .

Haddonfield, NJ . . . . . .

Hamden, CT . . . . . . . . .

Hampshire, UK . . . . . .

Haverford, PA . . . . . . .

—

—

—

—

—

—

—

—

—

36,420

3,985

—

—

—

—

—

—

2,203

1,403

1,946

2,910

3,808

1,957

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

690

1,520

5,783

19

3,120

1,460

3,408

1,292

1,490

1,740

2,430

3,400

2,720

1,964

772

2,160

760

4,594

2,090

1,520

2,040

310

636

950

1,430

3,575

1,190

5,361

890

520

1,460

4,172

1,880

28,761

35,893

26,575

35,838

39,014

14,431

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

12,520

24,024

48,361

2,678

43,868

14,040

17,970

9,496

32,754

19,799

30,597

25,300

14,813

19,989

11,214

28,246

13,880

35,236

69,288

33,513

30,670

4,750

5,617

13,662

31,777

85,764

7,597

56,494

27,931

16,363

24,093

26,035

33,993

29,049

40,085

29,079

37,604

40,736

14,887

11,801

50,090

25,392

38,966

47,407

38,946

35,145

14,599

26,562

34,550

29,250

30,869

38,776

10,383

48,466

14,249

25,347

50,510

2,956

45,186

15,605

18,919

11,284

32,838

20,888

33,124

28,575

15,553

20,838

12,808

29,659

38,018

37,064

72,641

34,814

31,321

4,786

5,875

4,487

10,506

6,609

9,558

8,624

4,786

3,660

14,301

2,232

12,649

9,848

8,143

7,685

1,490

5,889

9,486

3,548

6,909

10,602

4,496

11,067

3,230

6,708

9,941

941

9,629

6,635

2,887

3,068

4,420

2,265

6,623

10,193

2,122

4,718

2,765

8,274

11,161

9,193

15,745

7,025

6,325

1,927

990

2015

2006

2013

2012

2013

2013

2013

2010

2016

2011

2013

2013

2013

2014

2013

2013

2015

2013

2013

2000

2012

2010

2011

2013

2013

2013

2002

2014

2013

2015

2016

2013

2005

2014

2013

2013

2013

2006

2013

2012

2013

2011

2004

2015

1997 9 Summer Street

2009 4500 Elmore Ave.

1998 920 Clairemont Avenue

2007 8101 E Mississippi Avenue

2003 337 Deer Park Road

2008 4377 St. Jean Blvd

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

1997 49 Lasatta Ave

1987 1500 Borden Rd

2006 42 Copsem Lane

1991 9207 Arlington Boulevard

1998 47 Greenbrook Road

1998 3350 Cherry Hills St.

2012 Redlands Lane

2000 19715 Governors Highway

2014 1574 Creekside Drive

2014 7001 Bryant Irvin Road

1999 4 Forge Hill Road

1987 2860 Country Dr.

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

1997 23 Southpointe Dr.

1991 84 Main Street East

14,273

2,835

2013

2006 1850 Vernier Road

32,890

87,184

7,970

58,770

29,996

16,378

25,972

27,070

35,293

6,544

15

1,551

11,811

5,768

1,796

7,593

5,857

7,263

2013

2018

2015

2013

2013

2011

2011

2013

2010

2005 21260 Mack Avenue

2017 3717 Orders Road

1978 165 Cole Road

2006 Astolat Way, Peasmarsh

2002 500 North Hunt Club Road

2015 132 Warwick Road

1999 35 Hamden Hills Drive

2006 22-26 Church Road

2000 731 Old Buck Lane

342

4,269

2,504

1,827

1,861

538

1,151

6,837

47

3,458

1,471

1,647

1,554

722

1,518

2,249

4,823

1,093

1,514

2,662

2,211

1,873

1,323

2,365

312

1,373

1,565

1,077

1,835

84

1,089

2,564

3,331

832

883

1,609

1,429

24,966

1,877

3,353

1,383

651

36

271

611

1,118

1,420

407

2,457

2,110

22

1,912

1,185

1,305

2,257

1,480

1,946

2,971

3,947

2,039

1,914

1,850

1,169

2,685

124

4,975

4,298

2,812

4,564

1,905

1,672

1,632

2,094

1,460

5,040

834

1,520

5,999

53

3,175

1,460

3,536

1,339

1,490

1,740

2,467

3,456

2,812

1,998

787

2,176

1,588

4,643

2,090

1,602

2,040

310

649

950

1,435

3,575

1,224

5,542

935

527

1,493

4,322

1,885

136

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

Haverhill, MA . . . . . . .
Henderson, NV . . . . . .
Henderson, NV . . . . . .

High Wycombe, UK . .
Highland Park, IL . . . .
Hingham, MA . . . . . . .
Holbrook, NY . . . . . . .
Horley, UK . . . . . . . . .
Houston, TX . . . . . . . .

Houston, TX . . . . . . . .
Houston, TX . . . . . . . .
Howell, NJ . . . . . . . . . .
Huntington Beach,

CA . . . . . . . . . . . . . .
Hutchinson, KS . . . . . .
Irving, TX . . . . . . . . . .

Johns Creek, GA . . . . .
Kanata, ON . . . . . . . . .
Kansas City, MO . . . . .
Kansas City, MO . . . . .
Kansas City, MO . . . . .
Kelowna, BC . . . . . . . .
Kennebunk, ME . . . . . .

Kennett Square, PA . . .
Kingston, ON . . . . . . . .
Kingwood, TX . . . . . . .
Kingwood, TX . . . . . . .
Kirkland, WA . . . . . . .
Kitchener, ON . . . . . . .
Kitchener, ON . . . . . . .
Kitchener, ON . . . . . . .
Kitchener, ON . . . . . . .
La Palma, CA . . . . . . . .
Lafayette Hill, PA . . . .
Laguna Hills, CA . . . . .
Laguna Woods, CA . . .
Laguna Woods, CA . . .
Lake Zurich, IL . . . . . .
Lancaster, CA . . . . . . .
Laval, QC . . . . . . . . . . .
Laval, QC . . . . . . . . . . .
Lawrenceville, GA . . . .
Leatherhead, UK . . . . .
Lecanto, FL . . . . . . . . .
Lenexa, KS . . . . . . . . .

Leominster, MA . . . . . .
Lincroft, NJ . . . . . . . . .
Linwood, NJ . . . . . . . .
Litchfield, CT . . . . . . .
Little Neck, NY . . . . . .
Livingston, NJ . . . . . . .
Lombard, IL . . . . . . . . .
London, UK . . . . . . . . .
London, UK . . . . . . . . .
London, ON . . . . . . . . .
London, ON . . . . . . . . .
London, ON . . . . . . . . .

—
—
—

—
—
—
—
—
—

—
—
8,493

—
—
—

—
—
—
5,265
—
5,190
—

—
4,202
—
—
24,600
1,327
4,293
3,271
12,164
—
—
—
—
—
—
—
21,982
4,283
—
—
—
—

—
—
—
—
—
—
15,975
—
—
34
11,009
—

1,720
880
1,190

3,567
2,250
1,440
3,957
2,332
3,830

1,750
960
1,066

3,808
600
1,030

1,580
1,689
1,820
1,930
541
2,688
2,700

1,050
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
700
2,105
2,383
1,500
4,682
200
826

944
9
800
1,240
3,350
8,000
2,130
3,121
7,691
987
1,969
1,445

50,046
29,809
11,600

13,422
25,313
32,292
35,337
12,144
55,674

15,603
16,151
21,577

31,172
10,590
6,823

23,285
28,670
34,898
39,997
23,962
13,647
30,204

22,946
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
15,295
32,161
5,968
29,003
17,835
6,900
26,251

23,164
19,958
21,984
17,908
38,461
44,424
59,943
10,027
16,797
8,228
16,985
13,631

51,202
30,786
12,505

13,422
26,676
32,557
37,092
12,834
62,669

17,134
16,151
22,502

33,667
10,910
8,155

24,104
28,783
39,919
44,887
24,229
14,721
35,057

23,260
12,230
10,873
26,672
39,840
2,913
10,323
7,654
16,719
17,881
14,042
93,061
88,738
66,761
12,832
16,064
35,212
6,518
29,715
17,835
7,271
27,440

23,801
21,594
23,091
28,950
39,874
44,584
61,400
10,851
16,797
8,813
18,170
14,450

1,165
994
968

—
1,378
269
1,819
776
6,995

1,531
—
936

2,573
324
1,332

827
87
5,057
4,923
274
1,125
5,353

356
844
1,096
2,465
1,204
111
417
346
2,763
1,313
2,311
17,135
12,253
8,919
3,002
781
3,051
550
741
—
371
1,285

688
1,706
1,168
11,060
1,421
160
1,474
934
—
628
1,214
953

1,729
897
1,253

3,567
2,265
1,444
4,021
2,418
3,830

1,750
960
1,077

3,886
604
1,030

1,588
1,663
1,856
1,963
548
2,739
3,200

1,092
1,060
480
1,683
3,523
650
1,163
1,112
1,324
2,973
1,867
12,820
11,280
9,150
1,470
712
2,105
2,383
1,529
4,682
200
922

995
79
861
1,258
3,358
8,000
2,147
3,231
7,691
1,030
1,998
1,579

137

7,876
6,451
3,765

622
6,466
4,511
7,637
2,253
15,150

1,328
7,703
4,782

8,390
3,986
2,320

5,111
6,073
11,822
13,359
3,142
3,777
12,239

4,837
1,768
2,698
2,493
8,936
764
2,398
2,201
3,178
3,857
3,981
12,877
12,298
9,651
4,506
4,731
721
136
6,432
718
2,705
6,432

3,687
4,667
5,012
4,862
8,411
2,119
12,455
1,465
1,007
1,477
3,022
2,131

2015
2011
2013

2015
2013
2015
2013
2014
2012

2016
2011
2010

2013
2004
2007

2013
2012
2010
2010
2015
2013
2013

2010
2015
2011
2017
2011
2013
2013
2013
2016
2013
2013
2016
2016
2016
2011
2010
2018
2018
2013
2015
2004
2013

2015
2013
2010
2010
2010
2015
2013
2014
2015
2015
2015
2015

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
2001 320 Patchogue Holbrook Road
2014 Court Lodge Road
1998 2929 West Holcombe

Boulevard

2014 10120 Louetta Road
1995 10225 Cypresswood Dr
2007 100 Meridian Place

2004 7401 Yorktown Avenue
1997 2416 Brentwood
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

2008 301 Victoria Gardens Dr.
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
1999 43051 15th St. West
2005 269, boulevard Ste. Rose
1989 263, boulevard Ste. Rose
2008 1375 Webb Gin House Road
2017 Rectory Lane
1986 2341 W. Norvell Bryant Hwy.
2006 15055 West 87th Street

Parkway
1999 1160 Main Street
2002 734 Newman Springs Road
1997 432 Central Ave
1998 19 Constitution Way
2000 55-15 Little Neck Pkwy.
2017 369 E Mt Pleasant Avenue
2009 2210 Fountain Square Dr
2012 71 Hatch Lane
2016 6 Victoria Drive
1989 760 Horizon Drive
1953 1486 Richmond Street North
1950 81 Grand Avenue

Initial Cost to Company

Description

Encumbrances

Land

Longueuil, QC . . . . . . .

Los Angeles, CA . . . . .

Los Angeles, CA . . . . .

Los Angeles, CA . . . . .

Los Angeles, CA . . . . .

Louisville, KY . . . . . . .

9,064

—

60,018

—

—

—

Louisville, KY . . . . . . .

10,562

Lynnfield, MA . . . . . . .

Mahwah, NJ . . . . . . . . .

Malvern, PA . . . . . . . . .

Mansfield, MA . . . . . . .

Manteca, CA . . . . . . . .

Maple Ridge, BC . . . . .

Marieville, QC . . . . . . .

Markham, ON . . . . . . .

Marlboro, NJ . . . . . . . .

—

—

—

—

—

8,159

6,198

36,530

—

Medicine Hat, AB . . . .

10,262

Melbourne, FL . . . . . . .

Melville, NY . . . . . . . .

Memphis, TN . . . . . . . .

Meriden, CT . . . . . . . . .

—

—

—

—

Metairie, LA . . . . . . . .

12,521

Middletown, CT . . . . . .

Milford, CT . . . . . . . . .

Mill Creek, WA . . . . . .

—

—

—

Milton, ON . . . . . . . . . .

13,723

Minnetonka, MN . . . . .

Minnetonka, MN . . . . .

Mission Viejo, CA . . . .

Mississauga, ON . . . . .

Mississauga, ON . . . . .

Mississauga, ON . . . . .

Mississauga, ON . . . . .
Missoula, MT . . . . . . . .
Mobberley, UK . . . . . .

Monterey, CA . . . . . . .

Montgomery, MD . . . .

Montgomery Village,

MD . . . . . . . . . . . . . .

Montreal-Nord, QC . . .
Moorestown, NJ . . . . . .
Moose Jaw, SK . . . . . .
Murphy, TX . . . . . . . . .
Naperville, IL . . . . . . . .
Naperville, IL . . . . . . . .
Naples, FL . . . . . . . . . .
Nashua, NH . . . . . . . . .
Nashville, TN . . . . . . . .
Needham, MA . . . . . . .
Nepean, ON . . . . . . . . .
New Braunfels, TX . . .
Newark, DE . . . . . . . . .
Newbury, UK . . . . . . . .
Newburyport, MA . . . .
Newmarket, UK . . . . . .
Newton, MA . . . . . . . .
Newton, MA . . . . . . . .

—

—

13,850

8,358

2,816

26,718

5,916

—

—

—

—

—

11,740
—
2,076
—
—
—
56,105
—
—
—
5,387
—
—
—
—
—
—
14,881

3,992

—

—

3,540

—

2,420

1,600

3,165

1,605

1,651

3,320

1,300

2,875

1,278

3,727

2,222

1,432

7,070

4,280

1,800

1,500

725

1,430

3,210

10,150

4,542

2,080

920

6,600

1,602

873

3,649

2,548

550

5,146

6,440

6,482

3,530

4,407
2,060
582
1,950
1,550
1,540
8,989
1,264
3,900
1,240
1,575
1,200
560
2,850
1,750
4,071
2,250
2,500

Building &
Improvements

23,711

11,430

114,438

19,007

28,050

20,816

20,326

45,200

27,249

17,194

57,011

12,125

11,922

12,113

48,939

14,888

14,141

48,257

73,283

17,744

14,874

27,708

24,242

17,364

60,274

25,321

24,360

29,344

52,118

17,996

4,655

35,137

15,158

7,490

26,665

29,101

83,642

18,246

23,719
51,628
12,973
19,182
12,237
28,204
119,398
43,026
35,788
32,992
5,770
19,800
21,220
12,796
29,187
11,902
43,614
30,681

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

25,379

13,381

116,793

21,590

31,420

22,679

21,100

47,438

27,266

19,234

65,559

13,761

12,175

12,206

50,270

16,255

14,161

79,909

78,166

19,663

16,261

28,486

26,198

19,669

61,565

27,198

26,561

30,461

59,876

18,593

4,873

36,504

16,868

7,927

28,305

30,650

94,566

24,242

26,711
53,587
13,871
19,987
14,670
29,563
124,354
44,399
38,636
34,314
6,260
28,623
22,789
13,372
30,381
12,935
44,854
33,790

1,778

1,951

2,355

2,583

3,370

1,863

774

2,580

17

2,128

8,714

1,648

321

117

1,429

1,395

48

31,652

4,916

1,919

1,429

778

1,986

2,328

1,320

1,962

2,571

1,161

7,758

621

232

1,441

1,751

437

1,834

1,549

10,924

6,745

2,992
1,982
906
805
2,433
1,392
5,055
1,373
2,848
1,322
528
10,352
1,569
672
1,194
1,190
1,253
3,183

4,102

—

—

3,540

—

2,420

1,600

3,507

1,605

1,739

3,486

1,312

2,943

1,302

3,825

2,250

1,460

7,070

4,313

1,800

1,542

725

1,460

3,233

10,179

4,627

2,450

964

6,600

1,626

887

3,723

2,589

550

5,340

6,440

6,482

4,279

4,407
2,083
590
1,950
1,550
1,573
9,088
1,264
3,900
1,240
1,613
2,729
560
2,946
1,750
4,228
2,263
2,574

138

4,144

3,690

28,628

4,919

3,286

5,317

4,926

10,225

2,539

5,499

17,826

5,447

1,489

1,691

13,999

3,791

2,923

19,642

15,980

5,597

5,727

5,596

7,799

6,536

18,700

3,433

6,303

5,900

7,475

4,140

1,147

8,161

3,177

2,767

7,514

6,486

3,480

9,021

511
11,069
3,039
1,781
3,760
6,517
22,444
5,491
10,313
2,853
1,447
4,906
8,065
810
2,656
2,005
11,966
9,409

2015

2008

2011

2012

2016

2012

2013

2013

2012

2013

2011

2005

2015

2015

2013

2013

2015

2007

2010

2012

2011

2013

2011

2011

2010

2015

2012

2013

2016

2013

2013

2015

2015

2005

2013

2013

2018

2013

2018
2010
2013
2015
2012
2013
2015
2015
2012
2016
2015
2011
2004
2015
2016
2014
2011
2011

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

2015 15 Edison Road

1998 324 Lancaster Avenue

1998 25 Cobb Street

1986 430 N. Union Rd.

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

2001 70 Pinelawn Rd

1999 6605 Quail Hollow Road

2001 511 Kensington Avenue

2009 3732 West Esplanade Ave. S

1999 645 Saybrook Road

1999 77 Plains Road

1998 14905 Bothell-Everett Hwy

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

1998 3620 American Way

2007 Barclay Park, Hall Lane

2009 1110 Cass St.

1992 3701 International Dr

1993 19310 Club House Road

1988 6700, boulevard Gouin Est
2000 1205 N. Church St
2001 425 4th Avenue NW
2012 304 West FM 544
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
1998 200 E. Village Rd.
2016 370 London Road
2015 4 Wallace Bashaw Junior Way
2011 Jeddah Way
1996 2300 Washington Street
1996 280 Newtonville Avenue

Description

Encumbrances

Land

Building &
Improvements

Initial Cost to Company

Cost Capitalized
Subsequent to
Acquisition

—

—
6,335
—

3,360

1,930
1,225
1,960

25,099

14,420
7,963
34,976

—

880

18,478

Newton, MA . . . . . . . .
Newtown Square,

PA . . . . . . . . . . . . . .
Niagara Falls, ON . . . .
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 . . . . . . .
Ogden, UT . . . . . . . . . .
Okotoks, AB . . . . . . . .
Oshawa, ON . . . . . . . . .
Ottawa, ON . . . . . . . . .
Ottawa, ON . . . . . . . . .
Ottawa, ON . . . . . . . . .
Ottawa, ON . . . . . . . . .
Ottawa, ON . . . . . . . . .
Ottawa, ON . . . . . . . . .
Ottawa, ON . . . . . . . . .
Ottawa, ON . . . . . . . . .
Ottawa, ON . . . . . . . . .

Ottawa, ON . . . . . . . . .

Ottawa, ON . . . . . . . . .

Ottawa, ON . . . . . . . . .

Ottawa, ON . . . . . . . . .

Ottawa, ON . . . . . . . . .

—
—
—
—
—
5,499
9,164
4,797
—
—
17,892
6,547
9,469
17,808
20,414
7,070
13,444
10,161
13,568
17,204
2,765

2,012

9,559

4,441

5,778

8,729

Outremont, QC . . . . . .

17,544

Palo Alto, CA . . . . . . . .

Paramus, NJ . . . . . . . . .
Parkland, FL . . . . . . . .
Paso Robles, CA . . . . .

Peabody, MA . . . . . . . .

Pembroke, ON . . . . . . .

Pennington, NJ . . . . . . .

Peoria, AZ . . . . . . . . . .

Pittsburgh, PA . . . . . . .

Placentia, CA . . . . . . . .

Plainview, NY . . . . . . .

Plano, TX . . . . . . . . . . .

Plano, TX . . . . . . . . . . .

Playa Vista, CA . . . . . .

Plymouth, MA . . . . . . .

Plymouth, MA . . . . . . .

Port Perry, ON . . . . . . .

Port St. Lucie, FL . . . . .

Princeton, NJ . . . . . . . .

Purley, UK . . . . . . . . . .

Quebec City, QC . . . . .

Quebec City, QC . . . . .

Queensbury, NY . . . . .

Quincy, MA . . . . . . . . .

—

—
55,694

—

6,012

—

—

—

—

—

—

—

—

—

—

13,169

11,989

—

—

—

8,495

12,067

—

—

1,700
2,880
1,250
3,877
2,250
1,252
2,134
1,271
2,160
360
714
841
1,341
3,454
4,256
2,103
2,963
1,561
3,403
3,411
724

818

2,809

1,156

746

1,176

6,746

—

2,840
4,880

1,770

2,250

1,931

1,380

766

1,580

8,480

3,066

3,120

1,750

1,580

1,444

2,550

3,685

8,700

1,730

7,365

2,420

3,300

1,260

1,350

35,337
18,059
40,383
47,508
37,576
7,382
29,963
13,754
18,352
6,700
20,943
7,570
15,425
23,309
39,141
18,421
26,424
18,170
31,090
28,335
4,710

2,165

27,299

9,758

7,800

12,764

45,981

39,639

35,728
111,481

8,630

16,071

9,427

27,620

21,796

18,017

17,076

19,901

59,950

15,390

40,531

34,951

35,055

26,788

47,230

30,888

35,161

21,977

28,325

21,744

12,584

Gross Amount at Which
Carried at Close of Period

Land

Building &
Improvements

Accumulated
Depreciation(1)

Year
Acquired

Year
Built

Address

3,385

1,946
1,242
2,111

26,894

15,565
8,412
36,941

8,053

2011

1994 430 Centre Street

4,577
1,457
10,087

2013
2015
2011

2004 333 S. Newtown Street Rd.
1991 7860 Lundy’s Lane
1995 700 Chickering Road

951

19,406

5,126

2011

1998 2 Technology Drive

37,060
18,855
42,132
50,601
39,666
7,729
31,039
14,342
22,363
7,431
21,486
7,985
16,809
24,555
39,141
21,494
28,226
19,420
32,967
32,396
4,930

3,484

28,481

10,168

8,324

13,487

51,114

42,670

37,350
115,544

9,337

17,096

9,890

28,624

23,431

18,935

22,163

20,803

63,021

17,344

42,142

36,064

37,311

29,091

67,708

32,647

37,005

23,744

30,532

22,754

13,487

1,700
2,975
1,250
4,036
2,378
1,278
2,165
1,289
2,243
360
728
884
1,396
3,559
4,256
2,180
3,041
1,647
3,467
3,502
735

691

2,880

1,227

763

1,231

6,746

24

2,947
4,904

1,770

2,324

1,901

1,491

766

1,587

8,480

3,182

3,173

1,750

1,605

1,453

2,550

3,747

8,700

1,810

7,625

2,420

3,300

1,264

1,428

139

3,374
3,564
9,526
10,954
8,352
1,795
7,349
2,929
6,097
2,689
3,640
1,834
2,176
6,617
5,917
3,096
3,647
2,412
4,134
5,257
1,171

888

7,177

2,151

1,805

1,876

1,007

8,872

7,659
20,538

4,032

2,858

2,011

5,562

1,482

4,437

3,576

4,124

16,579

1,626

8,978

5,093

3,895

3,509

15,304

6,494

8,905

466

605

3,140

4,083

2016
2013
2012
2013
2013
2013
2013
2013
2011
2004
2015
2013
2015
2015
2015
2015
2015
2015
2015
2015
2013

2013

2013

2013

2013

2015

2018

2013

2013
2015

2002

2013

2012

2011

2018

2013

2016

2013

2013

2016

2013

2015

2016

2015

2008

2011

2012

2018

2018

2015

2011

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
1998 1340 N. Washington Blv.
2010 51 Riverside Gate
1991 649 King Street East
2001 110 Berrigan Drive
1966 2370 Carling Avenue
2005 751 Peter Morand Crescent
1989 1 Eaton Street
2008 691 Valin Street
2006 22 Barnstone Drive
2009 990 Hunt Club Road
2009 2 Valley Stream Drive
1995 1345 Ogilvie Road

1993 370 Kennedy Lane

1998 43 Aylmer Avenue

1998 1351 Hunt Club Road

1999 140 Darlington Private

1987 10 Vaughan Street

1976 1000, avenue Rockland

2007 2701 El Camino Real

1998 567 Paramus Road
2000 5999 University Drive

1998 1919 Creston Rd.

1994 73 Margin Street

1999 1111 Pembroke Street West

2000 143 West Franklin Avenue

2014 13391 N 94th Drive

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

2001 155 Raymond Road

2005 21 Russell Hill Road

2000 795, rue Alain

1987 650 and 700, avenue Murray

1999 27 Woodvale Road

1998 2003 Falls Boulevard

1,820

1,161
466
2,116

999

1,723
891
1,749
3,252
2,218
373
1,107
606
4,094
731
557
458
1,439
1,351
—
3,150
1,880
1,336
1,941
4,152
231

1,192

1,253

481

541

778

5,133

3,055

1,729
4,087

707

1,099

433

1,115

1,635

925

5,087

1,018

3,124

1,954

1,636

1,122

2,256

2,365

20,478

1,839

2,104

1,767

2,207

1,014

981

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

Rancho Cucamonga,

CA . . . . . . . . . . . . . .

Rancho Palos Verdes,

CA . . . . . . . . . . . . . .

Randolph, NJ . . . . . . . .

Red Deer, AB . . . . . . . .

Red Deer, AB . . . . . . . .

Redondo Beach, CA . .

Regina, SK . . . . . . . . . .

Regina, SK . . . . . . . . . .

—

—

—

12,026

14,153

—

6,224

6,158

Regina, SK . . . . . . . . . .

15,076

Rehoboth Beach, DE . .

—

Renton, WA . . . . . . . . .

20,790

—

1,480

10,055

5,450

1,540

1,247

1,199

—

1,485

1,244

1,539

960

3,080

3,100

60,034

46,934

19,283

22,339

9,557

21,148

21,036

24,053

24,248

51,824

80,614

Ridgefield, CT . . . . . . .
Riviere-du-Loup,

QC . . . . . . . . . . . . . .

Riviere-du-Loup,

QC . . . . . . . . . . . . . .
Rocky Hill, CT . . . . . . .
Rocky Hill, CT . . . . . . .
Rohnert Park, CA . . . . .
Romeoville, IL . . . . . . .
Roseville, MN . . . . . . .
Roseville, CA . . . . . . . .
Sacramento, CA . . . . . .
Sacramento, CA . . . . . .
Saint-Lambert, QC . . . .
Salem, NH . . . . . . . . . .
Salinas, CA . . . . . . . . .
Salisbury, UK . . . . . . .
Salt Lake City, UT . . . .
San Angelo, TX . . . . . .
San Antonio, TX . . . . .
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 . . . .
Santa Rosa, CA . . . . . .
Saskatoon, SK . . . . . . .
Saskatoon, SK . . . . . . .
Schaumburg, IL . . . . . .
Scottsdale, AZ . . . . . . .
Seal Beach, CA . . . . . .
Seattle, WA . . . . . . . . .
Seattle, WA . . . . . . . . .
Seattle, WA . . . . . . . . .
Seattle, WA . . . . . . . . .

2,892

592

7,601

11,905
—
—
—
—
—
—
—
—
33,431
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
18,727
—
3,840
13,125
—
—
—
—
27,180
48,540
—

1,454
1,090
810
6,500
854
1,540
3,300
940
1,300
10,259
980
5,110
2,720
1,360
260
6,120
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
5,190
10,670
6,790
1,150

16,848
6,710
16,351
18,700
12,646
35,877
41,652
14,781
23,394
61,903
32,721
41,424
15,269
19,691
8,800
28,169
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
9,350
37,291
85,369
19,887

1,848

2,453

1,379

592

632

913

638

716

2,617

8,847

1,999

5,250

761

3,500
1,534
833
2,205
61,135
1,053
6,273
314
1,402
366
4,326
7,694
719
1,601
459
2,590
3,228
731
2,808
881
12,609
9,969
948
811
3,149
4,820

1,450
2,858
9,628
1,307
3,231
950
3,303
501
766
1,175
1,664
2,078
748
1,094
3,258
1,284

2,073

11,310

2,978

2013

2001 9519 Baseline Road

5,450

1,619

1,273

1,219

—

1,525

1,267

1,579

993

3,124

3,152

62,487

48,234

19,849

22,951

10,470

21,746

21,729

26,630

33,062

53,779

85,812

14,179

9,841

3,093

3,655

6,436

5,280

4,579

3,750

6,077

11,898

13,614

2012

2013

2015

2015

2011

2013

2013

2015

2010

2011

2015

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

1999 36101 Seaside Blvd

2007 104 Burnett Avenue South

1998 640 Danbury Road

590

8,364

1,150

2015

1956 35 des Cedres

20,239
8,244
17,068
20,849
68,438
36,863
47,925
15,083
24,727
62,029
36,973
49,118
15,896
21,292
9,253
30,759
61,276
31,395
65,886
28,029
104,248
87,183
16,496
35,901
49,972
32,467

8,392
30,038
81,851
9,661
53,850
29,277
29,576
14,392
18,354
24,001
5,554
74,965
10,089
38,355
88,592
21,168

1,563
1,090
926
6,556
6,197
1,607
3,300
952
1,369
10,499
1,054
5,110
2,812
1,360
266
6,120
5,045
4,243
5,810
3,016
5,920
11,800
3,138
2,858
3,280
11,900

1,390
1,832
8,700
2,220
6,089
5,263
2,250
995
1,403
2,497
2,500
6,271
5,199
10,700
6,825
1,153

140

3,453
3,089
4,679
7,644
16,480
7,263
6,003
4,097
5,105
12,901
8,805
7,379
2,011
6,988
3,349
6,071
3,306
5,825
17,092
5,495
13,874
11,932
3,797
8,000
11,218
4,801

3,797
3,412
11,263
2,733
14,846
6,184
3,623
2,916
3,632
5,884
1,614
19,259
3,616
12,353
20,335
2,724

2015
2003
2011
2005
2006
2013
2016
2010
2013
2015
2011
2016
2014
2011
2004
2010
2017
2011
2012
2013
2016
2016
2013
2011
2012
2016

2000
2016
2016
2012
2011
2013
2016
2013
2013
2013
2008
2013
2010
2010
2011
2015

1993 230-235 rue Des Chenes
1996 60 Cold Spring Rd.
2000 1160 Elm Street
1986 4855 Snyder Lane
2010 605 S Edward Dr.
2002 2555 Snelling Avenue, North
2000 5161 Foothills Boulevard
1978 6350 Riverside Blvd
2004 345 Munroe Street
1989 1705 Avenue Victoria
2000 242 Main Street
1990 1320 Padre Drive
2013 Shapland Close
1986 1430 E. 4500 S.
1997 2695 Valleyview Blvd.
2011 2702 Cembalo Blvd
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
1962 11501 15th Ave NE
2005 805 4th Ave N
2009 5300 24th Avenue NE
1995 11039 17th 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

Selbyville, DE . . . . . . .

Sevenoaks, UK . . . . . . .

Severna Park, MD . . . .

Shelburne, VT . . . . . . .

Shelby Township,

MI

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

Shelton, CT . . . . . . . . .

Shrewsbury, NJ . . . . . .

Shrewsbury, MA . . . . .

Sidcup, UK . . . . . . . . .

Simi Valley, CA . . . . . .

Simi Valley, CA . . . . . .

Solihull, UK . . . . . . . . .

Solihull, UK . . . . . . . . .

Solihull, UK . . . . . . . . .

Sonning, UK . . . . . . . .

Sonoma, CA . . . . . . . . .

Sonoma, CA . . . . . . . . .

St. Albert, AB . . . . . . .

St. John’s, NL . . . . . . .

Stittsville, ON . . . . . . .

Stockport, UK . . . . . . .

Stockton, CA . . . . . . . .

Studio City, CA . . . . . .

Sugar Land, TX . . . . . .

Sugar Land, TX . . . . . .

Sun City, FL . . . . . . . . .

Sun City, FL . . . . . . . . .

Sunnyvale, CA . . . . . . .

Surrey, BC . . . . . . . . . .

Surrey, BC . . . . . . . . . .

Sutton, UK . . . . . . . . . .

Suwanee, GA . . . . . . . .

Sway, UK . . . . . . . . . . .

Swift Current, SK . . . .

Tacoma, WA . . . . . . . .

Tacoma, WA . . . . . . . .

Tacoma, WA . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

7,432

5,444

4,237

—

—

—

—

—

20,951

23,606

—

6,323

15,142

—

—

—

1,871

17,640

—

—

Tampa, FL . . . . . . . . . .

69,330

Tewksbury, MA . . . . . .

The Woodlands, TX . . .

Toledo, OH . . . . . . . . .

Toms River, NJ . . . . . .

Toronto, ON . . . . . . . . .

Toronto, ON . . . . . . . . .

Toronto, ON . . . . . . . . .

Toronto, ON . . . . . . . . .

Toronto, ON . . . . . . . . .

Toronto, ON . . . . . . . . .

Toronto, ON . . . . . . . . .

Toronto, ON . . . . . . . . .

Toronto, ON . . . . . . . . .

Toronto, ON . . . . . . . . .

Toronto, ON . . . . . . . . .

Torrance, CA . . . . . . . .

Tulsa, OK . . . . . . . . . . .

—

—

—

—

17,086

8,268

12,478

36,296

4,268

1,217

7,531

17,407

751

5,685

30,679

—

—

750

6,181

—

720

1,040

2,246

2,120

950

7,446

3,200

5,510

5,070

3,571

1,851

5,644

1,100

2,820

1,145

706

1,175

4,369

2,280

4,006

960

4,272

6,521

5,040

5,420

3,605

4,552

4,096

1,560

4,145

492

2,400

1,535

4,170

4,910

2,350

480

2,040

1,610

2,927

5,082

2,008

5,132

2,480

1,079

2,513

3,400

1,361

1,447

5,304

3,497

1,330

25,912

40,240

67,623

31,041

26,344

33,967

38,116

26,824

56,570

16,664

51,406

43,297

26,053

10,585

42,155

18,400

21,890

17,863

11,765

17,397

25,018

5,983

25,307

31,423

60,493

48,476

50,923

41,682

18,818

22,338

14,532

11,538

15,508

10,119

35,053

6,068

73,377

114,148

24,118

12,379

47,129

34,627

20,713

25,493

19,620

41,657

7,571

5,364

19,695

32,757

2,915

3,918

53,488

73,138

21,285

26,401

44,207

73,173

32,950

27,718

34,009

39,342

28,215

59,614

17,658

59,479

47,337

27,361

11,022

44,606

20,164

24,573

19,677

11,833

18,133

26,195

6,404

26,355

32,762

67,023

53,483

55,171

43,837

19,783

23,591

15,124

13,203

16,432

10,561

36,236

6,133

86,294

119,291

26,290

13,058

50,747

35,633

22,278

26,772

19,620

44,511

8,016

5,617

20,594

34,189

3,165

4,229

55,535

73,154

25,670

508

4,176

5,574

1,966

1,439

42

1,244

1,397

3,312

1,092

8,073

4,211

1,429

499

2,660

1,773

2,683

1,854

73

753

1,329

513

1,151

1,339

6,530

5,134

4,577

2,155

1,018

1,332

730

1,665

1,113

455

1,276

67

12,917

5,229

2,172

679

3,722

1,077

1,635

1,375

—

2,931

492

269

969

1,488

303

358

2,130

16

4,417

769

6,390

24

777

1,105

2,246

2,138

956

7,714

3,298

5,510

5,241

3,692

1,913

5,853

1,109

2,820

1,185

711

1,192

4,521

2,372

4,109

960

4,272

6,648

5,369

5,420

3,658

4,631

4,234

1,560

4,334

505

2,493

1,537

4,170

4,996

2,350

480

2,144

1,681

2,997

5,178

2,008

5,209

2,527

1,095

2,583

3,456

1,414

1,494

5,387

3,497

1,362

141

5,564

10,318

8,947

8,191

5,566

3,424

8,247

4,209

15,051

4,909

8,314

10,579

6,320

770

9,317

7,332

3,043

5,098

1,575

3,630

6,471

2,006

6,453

8,143

4,864

11,537

10,639

10,239

5,725

7,190

851

3,281

3,004

2,324

8,057

1,095

11,797

20,181

3,205

3,238

15,040

7,529

3,323

5,294

3,033

10,383

1,724

1,246

3,845

7,774

1,155

1,147

15,694

4,639

7,149

2010

2012

2016

2011

2013

2013

2010

2015

2012

2013

2016

2012

2013

2015

2013

2005

2016

2014

2015

2013

2013

2010

2013

2011

2017

2015

2015

2012

2013

2013

2015

2012

2014

2013

2011

2015

2016

2015

2016

2011

2010

2010

2015

2015

2015

2015

2015

2013

2013

2013

2013

2013

2013

2016

2010

2008 21111 Arrington Dr

2009 64 - 70 Westerham Road

1997 43 W McKinsey Road

1988 687 Harbor Road

2006 46471 Hayes Road

2014 708A Bridgeport Avenue

2000 5 Meridian Way

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.

1988 800 Oregon St.

2005 91 Napa Road

2005 78C McKenney Avenue

2005 64 Portugal Cove Road

1996 1340 - 1354 Main Street

2008 1 Dairyground Road

1988 6725 Inglewood

2004 4610 Coldwater Canyon

Avenue

1996 1221 Seventh St

2015 744 Brooks Street

1995 231 Courtyards

1999 1311 Aston Gardens Court

2002 1039 East El Camino Real

2000 16028 83rd Avenue

1987 15501 16th Avenue

2016 123 Westmead Road

2000 4315 Johns Creek Parkway

2008 Sway Place

2001 301 Macoun Drive

2008 7290 Rosemount Circle

2012 7290 Rosemount Circle

1987 8201 6th Avenue

2001 12951 W Linebaugh Avenue

2006 2000 Emerald Court

1999 7950 Bay Branch Dr

1985 3501 Executive Parkway

2005 1587 Old Freehold Rd

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

1986 8887 South Lewis Ave

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

Tulsa, OK . . . . . . . . . . .
Tustin, CA . . . . . . . . . .
Upland, CA . . . . . . . . .
Upper Providence,

PA . . . . . . . . . . . . . .
Upper St Claire, PA . . .
Vacaville, CA . . . . . . . .
Vallejo, CA . . . . . . . . .
Vallejo, CA . . . . . . . . .
Vancouver, WA . . . . . .
Vancouver, BC . . . . . . .
Vankleek Hill, ON . . . .
Vaudreuil, QC . . . . . . .
Venice, FL . . . . . . . . . .
Vero Beach, FL . . . . . .
Victoria, BC . . . . . . . . .
Victoria, BC . . . . . . . . .
Victoria, BC . . . . . . . . .
Virginia Water, UK . . .
Voorhees, NJ . . . . . . . .
Wall, NJ . . . . . . . . . . . .
Walnut Creek, CA . . . .
Walnut Creek, CA . . . .
Waltham, MA . . . . . . .
Washington, DC . . . . . .
Watchung, NJ . . . . . . . .
Wayland, MA . . . . . . . .
Webster Groves,

MO . . . . . . . . . . . . . .
Welland, ON . . . . . . . .
Wellesley, MA . . . . . . .
West Babylon, NY . . . .
West Bloomfield,

MI

. . . . . . . . . . . . . .
West Hills, CA . . . . . . .
West Vancouver,

BC . . . . . . . . . . . . . .
Westbourne, UK . . . . .
Westford, MA . . . . . . .
Weston, MA . . . . . . . . .
Westworth Village,

TX . . . . . . . . . . . . . .
Weybridge, UK . . . . . .
Weymouth, UK . . . . . .
White Oak, MD . . . . . .
Wilmington, DE . . . . . .
Winchester, UK . . . . . .
Winnipeg, MB . . . . . . .
Winnipeg, MB . . . . . . .
Winnipeg, MB . . . . . . .
Woking, UK . . . . . . . . .
Wolverhampton, UK . .
Woodbridge, CT . . . . .
Woodland Hills, CA . .
Worcester, MA . . . . . . .
Yarmouth, ME . . . . . . .
Yonkers, NY . . . . . . . .
Yorkton, SK . . . . . . . . .

Seniors Housing

—
—
—

—
—
—
—
—
—
—
750
7,822
64,425
—
6,833
6,299
7,064
—
—
—
—
—
—
30,162
—
—

—
6,041
—
—

—
—

17,668
—
—
—

—
—
—
—
—
—
11,756
14,961
12,124
—
—
—
—
—
—
—
3,085

1,500
840
3,160

1,900
1,102
900
4,000
2,330
1,820
7,282
389
1,852
6,820
2,930
2,856
3,681
2,476
7,106
3,700
1,650
3,700
10,320
2,462
4,000
1,920
1,207

1,790
983
4,690
3,960

1,040
2,600

7,059
5,441
1,440
1,160

2,060
7,899
2,591
2,304
1,040
6,009
1,960
1,276
1,317
2,990
2,941
1,370
3,400
1,140
450
3,962
463

20,861
15,299
42,596

28,195
13,455
17,100
18,000
15,407
19,042
6,572
2,960
14,214
100,501
40,070
18,038
15,774
15,379
29,937
24,312
25,350
12,467
100,890
40,062
69,154
24,880
27,462

15,425
7,530
77,462
47,085

12,300
7,521

28,155
41,420
32,607
6,200

31,296
48,240
16,551
24,768
23,338
29,405
38,612
21,732
15,609
12,523
8,922
14,219
20,478
21,664
27,711
50,107
8,760

3,934
744
55

37
1,396
1,756
2,476
390
438
—
293
546
4,362
25,658
565
555
1,020
5,937
1,821
2,679
2,280
15,190
1,457
3,157
1,348
2,157

2,391
94
219
2,224

835
1,545

1,997
3,300
319
1,274

60
2,386
880
1,936
1,771
1,472
2,244
1,083
1,864
—
724
1,594
1,079
1,382
1,410
2,111
340

1,581
840
3,160

1,900
1,125
907
4,030
2,330
1,821
7,282
400
1,829
6,892
2,930
2,898
3,736
2,516
5,629
3,854
1,692
3,808
10,320
2,551
4,004
2,048
1,334

1,793
969
4,690
3,960

1,094
2,636

7,168
5,627
1,468
1,160

2,060
8,166
2,714
2,316
1,129
6,220
2,058
1,419
1,346
2,990
3,047
1,426
3,447
1,166
484
3,967
473

24,714
16,043
42,651

28,232
14,828
18,849
20,446
15,797
19,479
6,572
3,242
14,783
104,791
65,728
18,561
16,274
16,359
37,351
25,979
27,987
14,639
116,080
41,430
72,307
26,100
29,492

17,813
7,638
77,681
49,309

13,081
9,030

30,043
44,534
32,898
7,474

31,356
50,359
17,308
26,692
25,020
30,666
40,758
22,672
17,444
12,523
9,540
15,757
21,510
23,020
29,087
52,213
9,090

7,228
3,784
5,414

2,719
3,714
7,022
7,573
4,505
5,299
5,332
820
2,234
19,357
19,456
4,657
4,244
2,115
8,494
4,025
5,356
4,072
15,633
6,700
14,549
5,131
6,527

4,543
1,060
11,776
9,640

2,977
2,681

7,104
9,612
4,202
1,583

3,346
12,363
2,114
5,465
5,281
7,194
12,275
4,820
3,116
363
3,114
5,754
5,278
6,192
7,458
10,824
2,004

2010
2011
2015

2013
2013
2005
2005
2010
2010
2015
2013
2015
2015
2007
2013
2013
2015
2012
2012
2011
2013
2016
2015
2013
2011
2013

2011
2015
2015
2013

2013
2013

2013
2013
2015
2013

2014
2013
2014
2013
2013
2012
2013
2013
2015
2016
2013
2011
2013
2011
2011
2013
2013

1984 9524 East 71st St
1965 240 East 3rd St
2014 2419 North Euclid Avenue

2015 1133 Black Rock Road
2005 500 Village Drive
1987 799 Yellowstone Dr.
1989 350 Locust Dr.
1990 2261 Tuolumne
2006 10011 NE 118th Ave
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
2013 311 Route 73
2003 2021 Highway 35
1998 2175 Ygnacio Valley Road
1988 1580 Geary Road
2000 126 Smith Street
2004 5111 Connecticut Avenue NW
2000 680 Mountain Boulevard
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
1998 135 North Avenue

2014 25 Leonard Trail
2008 Ellesmere Road
2013 Cross Road
2002 11621 New Hampshire Avenue
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 . . .

$1,810,587

$1,331,171

$14,047,033

$1,206,757

$1,373,258

$15,211,900

$2,962,334

142

Welltower Inc.
Schedule III

Real Estate and Accumulated Depreciation
December 31, 2018

(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 . . . . . .

Adelphi, MD . . . . . . . .

Agawam, MA . . . . . . . .

Akron, OH . . . . . . . . . .

Albertville, AL . . . . . . .

Alexandria, VA . . . . . .

Allen Park, MI . . . . . . .

Allentown, PA . . . . . . .

Allentown, PA . . . . . . .

Ames, IA . . . . . . . . . . .

Ankeny, IA . . . . . . . . .

Ann Arbor, MI . . . . . . .

Annandale, VA . . . . . .

Arlington, TX . . . . . . .

Arlington, VA . . . . . . .

Asheboro, NC . . . . . . .

Asheville, NC . . . . . . . .

Asheville, NC . . . . . . . .

Atchison, KS . . . . . . . .

Atlanta, GA . . . . . . . . .

Aurora, OH . . . . . . . . .

Aurora, CO . . . . . . . . .

Austin, TX . . . . . . . . . .

Austin, TX . . . . . . . . . .

Avon, IN . . . . . . . . . . .

Avon, IN . . . . . . . . . . .

Avon, CT . . . . . . . . . . .

Avon Lake, OH . . . . . .

Baldwin City, KS . . . . .

Baltimore, MD . . . . . . .

Baltimore, MD . . . . . . .

Barberton, OH . . . . . . .

Bartlesville, OK . . . . . .

Battle Creek, MI

. . . . .

Bay City, MI . . . . . . . .

Bedford, PA . . . . . . . . .

Bellingham, WA . . . . .

Benbrook, TX . . . . . . .

Bethel Park, PA . . . . . .

Bethel Park, PA . . . . . .

Bethesda, MD . . . . . . .

Bethlehem, PA . . . . . . .

Bethlehem, PA . . . . . . .

Beverly Hills, CA . . . .

Bexleyheath, UK . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

950

990

1,770

1,429

880

633

170

2,452

1,767

494

1,491

330

1,129

2,172

1,687

1,660

4,016

290

204

280

140

2,058

1,760

2,440

880

1,691

1,830

900

2,132

790

190

4,306

3,069

1,307

100

857

633

637

1,500

1,550

1,700

1,008

2,218

1,191

1,143

6,000

3,750

$

20,987

$ 11,660

$

8,187

19,930

4,312

16,112

3,003

6,203

6,829

5,027

11,849

4,823

8,870

10,270

11,127

18,980

37,395

8,805

5,032

3,489

1,955

5,610

14,914

14,148

28,172

9,520

5,006

14,470

19,444

7,627

10,421

4,810

4,305

3,150

9,313

1,380

1,822

2,620

4,434

19,861

13,553

16,007

6,742

6,871

16,892

13,592

13,385

10,807

1,089

1,601

—

2,134

—

353

—

—

—

—

—

—

—

—

1,825

—

165

—

351

23

1,214

106

—

1,299

—

—

—

—

5,822

55

—

—

—

—

—

—

—

396

2,657

—

—

—

—

—

—

493

143

950

990

1,770

1,429

880

633

176

2,452

1,767

494

1,491

330

1,129

2,172

1,687

1,660

4,016

290

204

280

140

2,080

1,760

2,440

885

1,691

1,830

900

2,132

790

190

4,306

3,069

1,307

100

857

633

637

1,507

1,550

1,700

1,008

2,218

1,191

1,143

6,000

3,877

$

32,647

$

9,276

21,531

4,312

18,246

3,003

6,550

6,829

5,027

11,849

4,823

8,870

10,270

11,127

18,980

39,220

8,805

5,197

3,489

2,306

5,633

16,106

14,254

28,172

10,814

5,006

14,470

19,444

7,627

16,243

4,865

4,305

3,150

9,313

1,380

1,822

2,620

4,434

20,250

16,210

16,007

6,742

6,871

16,892

13,592

13,385

11,173

2,632

1,000

4,613

56

8,048

37

1,796

81

60

138

59

2,075

813

140

216

9,668

102

2,142

1,858

1,034

475

11,826

3,369

11,394

5,784

78

3,534

2,329

109

3,136

420

55

43

108

828

30

35

61

5,450

3,016

4,274

83

78

187

152

1,420

1,210

2014

2014

2010

2018

2002

2018

2010

2018

2018

2018

2018

2010

2016

2018

2018

2012

2018

2003

1999

2003

2015

1997

2011

2006

1999

2018

2010

2014

2018

2011

2015

2018

2018

2018

1996

2018

2018

2018

2010

2011

2007

2018

2018

2018

2018

2014

2014

1998 6565 Central Park Boulevard

1985 1250 East N 10th Street

2008 611 W County Line Rd South

1967 1801 Metzerott Road

1993 1200 Suffield St.

1999 171 North Cleveland
Massillon Road

1999 151 Woodham Dr.

1964 1510 Collingwood Road

1960 9150 Allen Road

1995 5151 Hamilton Boulevard

1988 1265 Cedar Crest Boulevard

1999 1325 Coconino Rd.

2012 1275 SW State Street

1997 4701 East Huron River Drive

2002 7104 Braddock Road

2000 1250 West Pioneer Parkway

1976 550 South Carlin Southprings

Road

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.

2000 11630 Four Iron Drive

2004 182 S Country RD. 550E

2013 10307 E. CR 100 N

2000 100 Fisher Drive

2001 345 Lear Rd.

2000 321 Crimson Ave

1978 6600 Ridge Road

1996 4669 Falls Road

1979 85 Third Street

1995 5420 S.E. Adams Blvd.

1965 200 Roosevelt Avenue East

1968 800 Mulholland Street

1965 136 Donahoe Manor Road

1996 4415 Columbine Dr.

1984 4242 Bryant Irvin Road

2009 5785 Baptist Road

1986 60 Highland Road

1974 6530 Democracy Boulevard

1979 2021 Westgate Drive

1982 2029 Westgate Drive

2000 220 N Clark Drive

1996 35 West Street

Description

Encumbrances

Land

Building &
Improvements

Initial Cost to Company

Cost Capitalized
Subsequent to
Acquisition

Gross Amount at Which
Carried at Close of Period

Land

Building &
Improvements

Accumulated
Depreciation(1)

Year
Acquired

Year
Built

Address

Bingham Farms, MI . . .
Birmingham, UK . . . . .
Birmingham, UK . . . . .
Birmingham, UK . . . . .
Birmingham, UK . . . . .

Bloomington, IN . . . . .
Boardman, OH . . . . . . .
Boca Raton, FL . . . . . .
Boca Raton, FL . . . . . .
Boulder, CO . . . . . . . . .
Bowling Green, KY . . .
Boynton Beach, FL . . .
Boynton Beach, FL . . .
Bracknell, UK . . . . . . .
Bradenton, FL . . . . . . .
Bradenton, FL . . . . . . .
Braintree, MA . . . . . . .
Braintree, UK . . . . . . . .

Brandon, MS . . . . . . . .
Brecksville, OH . . . . . .
Brentwood, UK . . . . . .
Brick, NJ . . . . . . . . . . .
Bridgewater, NJ . . . . . .
Brookfield, WI . . . . . . .
Brooks, AB . . . . . . . . .
Bucyrus, OH . . . . . . . .
Burleson, TX . . . . . . . .
Burlington, NC . . . . . .
Burlington, NC . . . . . .
Burlington, NJ . . . . . . .
Burlington, NJ . . . . . . .
Burnaby, BC . . . . . . . .
Calgary, AB . . . . . . . . .
Calgary, AB . . . . . . . . .
Camberley, UK . . . . . .
Camp Hill, PA . . . . . . .
Canonsburg, PA . . . . . .
Canton, OH . . . . . . . . .
Canton, MI . . . . . . . . . .
Cape Coral, FL . . . . . . .
Cape Coral, FL . . . . . . .
Cape May Court House,
NJ . . . . . . . . . . . . . . .
Carlisle, PA . . . . . . . . .
Carmel, IN . . . . . . . . . .
Carmel, IN . . . . . . . . . .

Carmel, IN . . . . . . . . . .

Carrollton, TX . . . . . . .
Cary, NC . . . . . . . . . . .
Castleton, IN . . . . . . . .
Cedar Grove, NJ . . . . .
Cedar Rapids, IA . . . . .
Centerville, OH . . . . . .
Centreville, MD . . . . . .
Chagrin Falls, OH . . . .

—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—
—

—
—
36,589
—
—
—
1,757
—
—
—
—
—
—
7,326
14,921
24,745
—
—
—
—
—
—
8,337

—
—
—
—

—

—
—
—
—
—
—
—
—

781
1,647
1,591
1,462
1,184

670
1,200
2,200
2,826
3,601
3,800
2,138
2,804
4,081
252
480
170
—

1,220
990
8,537
1,290
1,800
1,300
376
1,119
670
280
460
1,700
1,170
7,623
2,341
4,569
9,974
517
911
300
1,399
530
760

1,440
978
1,700
1,583

15,676
14,853
19,092
9,056
10,085

17,423
12,800
4,976
4,063
21,371
26,700
10,204
14,226
11,470
3,298
9,953
7,157
13,296

10,241
19,353
45,869
25,247
31,810
12,830
4,951
2,612
13,985
4,297
5,467
12,554
19,205
13,844
42,768
70,199
39,168
3,597
4,830
2,098
16,971
3,281
18,868

17,002
8,207
19,491
6,071

—

2,296

2,010
1,500
920
2,850
596
920
600
832

19,549
4,350
15,137
27,737
9,354
3,960
14,602
10,841

—
558
700
355
381

—
—
—
—
—
149
—
—
—
—
—
1,290
450

8
—
1,998
996
1,397
—
80
—
2,105
707
—
501
172
320
726
1,109
—
—
—
—
—
—
—

1,775
—
1
—

—

—
986
—
20
—
—
241
—

781
1,703
1,645
1,511
1,224

670
1,200
2,200
2,826
3,601
3,800
2,138
2,804
4,081
252
480
170
—

1,220
990
8,826
1,290
1,800
1,300
381
1,119
670
280
460
1,700
1,170
7,736
2,376
4,636
9,974
517
911
300
1,399
530
760

1,440
978
1,700
1,583

15,676
15,355
19,738
9,362
10,426

17,423
12,800
4,976
4,063
21,371
26,849
10,204
14,226
11,470
3,298
9,953
8,447
13,746

10,249
19,353
47,578
26,243
33,207
12,830
5,026
2,612
16,090
5,004
5,467
13,055
19,377
14,051
43,459
71,241
39,168
3,597
4,830
2,098
16,971
3,281
18,868

18,777
8,207
19,492
6,071

180
1,491
1,888
923
1,005

1,651
4,308
74
54
263
7,094
128
163
405
1,991
1,714
8,433
1,570

2,291
2,309
2,534
5,086
6,365
1,779
586
37
3,142
2,037
2,271
3,231
4,109
1,664
4,882
7,933
1,574
43
63
1,115
195
1,473
3,282

2,265
100
1,971
80

2018
2015
2015
2015
2015

2015
2008
2018
2018
2018
2008
2018
2018
2014
1996
2012
1997
2014

2010
2014
2016
2011
2011
2012
2014
2018
2011
2003
2003
2011
2011
2014
2014
2014
2016
2018
2018
1998
2018
2002
2012

2014
2018
2015
2018

1999 24005 West 13 Mile Road
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.
1994 7225 Boca Del Mar Drive
1984 375 Northwest 51st Street
1990 2800 Palo Parkway
1992 1300 Campbell Lane
1991 3600 Old Boynton Road
1984 3001 South Congress Avenue
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.
2001 680 US-202/206 North
2013 1105 Davidson Road
2000 951 Cassils Road West
1976 1170 West Mansfield Street
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
1970 1700 Market Street
1986 113 West McMurray Road
1998 1119 Perry Dr., N.W.
2005 7025 Lilley Road
2000 911 Santa Barbara Blvd.
2009 831 Santa Barbara Boulevard

1990 144 Magnolia Drive
1987 940 Walnut Bottom Road
2015 12315 Pennsylvania Street
1985 12999 North Pennsylvania

Street

—

2,296

25

2018

1985 12999 North Pennsylvania

1,194
2,698
1,885
5,981
105
69
3,242
130

Street

2014
1998
2014
2011
2018
2018
2011
2018

2016 2645 East Trinity Mills Road
1996 111 MacArthur
2013 8405 Clearvista Lake
1970 536 Ridge Road
1965 1940 1st Avenue Northeast
1997 1001 E. Alex Bell Road
1978 205 Armstrong Avenue
1999 8100 East Washington Street

2,010
1,500
920
2,850
596
920
600
832

19,549
5,336
15,137
27,757
9,354
3,960
14,843
10,841

144

Description

Encumbrances

Land

Building &
Improvements

Initial Cost to Company

Cost Capitalized
Subsequent to
Acquisition

Chambersburg, PA . . . .

Chapel Hill, NC . . . . . .

Charleston, SC . . . . . . .

Charleston, WV . . . . . .

Chatham, VA . . . . . . . .

Cherry Hill, NJ . . . . . . .

Chester, VA . . . . . . . . .

Chevy Chase, MD . . . .

Chickasha, OK . . . . . . .

Chillicothe, OH . . . . . .

Cincinnati, OH . . . . . . .

Citrus Heights, CA . . . .

Claremore, OK . . . . . . .

Clarksville, TN . . . . . .

Clayton, NC . . . . . . . . .

Cleburne, TX . . . . . . . .

Clevedon, UK . . . . . . .

Cobham, UK . . . . . . . .

Colchester, CT . . . . . . .

Colorado Springs,

CO . . . . . . . . . . . . . .

Colorado Springs,

CO . . . . . . . . . . . . . .

Columbia, TN . . . . . . .

Columbia, SC . . . . . . . .

Columbia Heights,

MN . . . . . . . . . . . . . .

Columbus, IN . . . . . . . .

Concord, NC . . . . . . . .

Concord, NH . . . . . . . .

Congleton, UK . . . . . . .

Conroe, TX . . . . . . . . .

Coppell, TX . . . . . . . . .

Corby, UK . . . . . . . . . .

Coventry, UK . . . . . . . .

Crawfordsville, IN . . . .

Dallastown, PA . . . . . .

Danville, VA . . . . . . . .

Danville, VA . . . . . . . .

Daphne, AL . . . . . . . . .

Davenport, IA . . . . . . .

Davenport, IA . . . . . . .

Dayton, OH . . . . . . . . .

Dearborn Heights,

MI

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

Decatur, GA . . . . . . . . .

Delray Beach, FL . . . . .

Delray Beach, FL . . . . .

Denton, TX . . . . . . . . .

Denver, CO . . . . . . . . .

Denver, CO . . . . . . . . .

Derby, UK . . . . . . . . . .

Dover, DE . . . . . . . . . .

Dublin, OH . . . . . . . . .

Dubuque, IA . . . . . . . .

Dundalk, MD . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

1,373

354

1,333

8,864

2,646

5,556

440

17,575

320

1,416

1,320

4,515

85

1,145

912

5,207

155

330

520

520

2,838

9,808

980

14,039

9,874

18,127

8,688

1,395

8,997

14,014

31,725

1,427

2,292

15,733

5,369

16,927

24,991

4,860

4,280

62,168

1,730

341

1,699

825

610

550

1,760

2,036

980

1,550

1,228

1,962

720

1,377

410

240

2,880

566

910

1,188

1,197

1,413

1,158

2,125

1,760

1,450

3,222

2,359

600

1,393

568

1,770

25,493

2,295

2,320

14,175

3,190

3,921

43,179

5,120

7,771

8,386

5,144

13,830

17,239

16,802

3,954

8,436

8,670

2,017

20,043

5,414

3,396

13,800

13,576

11,844

8,305

19,389

24,811

8,539

22,266

2,912

8,904

32,047

—

783

—

306

—

—

—

—

—

—

—

—

6,130

—

—

—

667

1,176

544

—

693

—

—

163

—

55

634

241

—

100

398

533

1,426

—

722

—

384

—

—

—

—

—

—

—

100

3,133

—

—

141

—

—

784

Gross Amount at Which
Carried at Close of Period

Land

Building &
Improvements

Accumulated
Depreciation(1)

Year
Acquired

Year
Built

Address

1,373

354

1,333

8,864

3,429

5,556

112

1,508

67

2018

2002

2018

1976 1070 Stouffer Avenue

1997 100 Lanark Rd.

1982 1137 Sam Rittenberg

Boulevard

440

17,881

3,680

2011

1998 1000 Association Drive,

320

1,416

1,320

4,515

85

1,145

912

5,207

155

330

520

520

2,933

10,139

980

14,039

9,874

18,127

8,688

1,395

8,997

14,014

31,725

7,557

2,292

15,733

5,369

17,499

25,836

5,404

1,814

123

2,292

102

831

105

166

354

1,597

1,213

1,771

1,669

1,998

3,657

1,444

North Gate Business Park

2009 100 Rorer Street

1997 2700 Chapel Avenue West

2009 12001 Iron Bridge Road

1964 8700 Jones Mill Road

1996 801 Country Club Rd.

1977 1058 Columbus Street

2000 6870 Clough Pike

1988 7807 Upland Way

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

2014

2018

2014

2018

1996

2018

2018

2018

1996

1998

2014

2006

2014

2013

2011

4,280

62,168

5,328

2015

2008 1605 Elm Creek View

26,186

2,295

2,320

14,338

3,190

3,976

43,813

5,293

7,771

8,486

5,613

14,297

18,665

16,802

4,676

8,436

9,054

2,017

20,043

5,414

3,396

13,800

13,576

11,844

8,405

22,522

24,811

8,539

22,407

2,912

8,904

32,831

1,730

341

1,699

825

610

550

1,760

2,104

980

1,550

1,157

2,028

720

1,377

410

240

2,880

566

910

1,188

1,197

1,413

1,158

2,125

1,760

1,450

3,222

2,359

600

1,393

568

1,770

145

1,972

1,218

30

2,738

764

1,782

9,027

575

1,965

1,347

248

1,430

2,245

200

1,963

1,087

1,625

25

231

69

47

152

162

146

1,799

4,292

275

712

4,718

42

100

6,877

2016

1999

2018

2011

2010

2003

2011

2014

2009

2012

2017

2015

2014

2018

2003

2014

2012

2018

2018

2018

2018

2018

2018

2018

2010

2012

2018

2014

2011

2018

2018

2011

2016 2818 Grand Vista Circle

1999 5011 Trotwood Ave.

1968 2601 Forest Drive

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

1979 100 West Queen Street

1998 149 Executive Ct.

1996 508 Rison Street

2001 27440 County Road 13

1966 815 East Locust Street

2008 3800 Commerce Blvd.

1977 1974 North Fairfield Road

1964 26001 Ford Road

1977 2722 North Decatur Road

1998 16150 Jog Road

1998 16200 Jog Road

2011 2125 Brinker Rd

1997 4901 South Monaco Street

1988 290 South Monaco Parkway

2015 Rykneld Road

1984 1080 Silver Lake Blvd.

2014 4075 W. Dublin-Granville

Road

1971 901 West Third Street

1978 7232 German Hill 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

Dunedin, FL . . . . . . . . .

Durham, NC . . . . . . . . .

—

—

Eagan, MN . . . . . . . . . .

16,470

East Brunswick, NJ . . .

Eastbourne, UK . . . . . .

Easton, PA . . . . . . . . . .

Easton, PA . . . . . . . . . .

Easton, PA . . . . . . . . . .

Eden, NC . . . . . . . . . . .

Edmond, OK . . . . . . . .

Edmond, OK . . . . . . . .

Edmond, OK . . . . . . . .

Elizabeth City, NC . . . .

Elk Grove Village,

IL . . . . . . . . . . . . . . .

Elk Grove Village,

IL . . . . . . . . . . . . . . .

Emeryville, CA . . . . . .

Englewood, NJ . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Epsom, UK . . . . . . . . .

36,932

Eureka, KS . . . . . . . . . .

Everett, WA . . . . . . . . .

Exton, PA . . . . . . . . . . .

Fairfax, VA . . . . . . . . .

Fairfax, VA . . . . . . . . .

Fairhope, AL . . . . . . . .

Fall River, MA . . . . . . .

Fanwood, NJ . . . . . . . .

Faribault, MN . . . . . . .

Farmington, CT . . . . . .

Farnborough, UK . . . . .

Fayetteville, PA . . . . . .

Fayetteville, NY . . . . . .

Findlay, OH . . . . . . . . .

Fishers, IN . . . . . . . . . .

Fishersville, VA . . . . . .

Flint, MI . . . . . . . . . . . .

Florence, NJ . . . . . . . . .

Florence, AL . . . . . . . .

Flourtown, PA . . . . . . .

Flower Mound, TX . . .

Floyd, VA . . . . . . . . . .

Flushing, MI

. . . . . . . .

Flushing, MI

. . . . . . . .

Folsom, CA . . . . . . . . .

Forest City, NC . . . . . .

Fort Ashby, WV . . . . . .

Fort Collins, CO . . . . . .

Fort Collins, CO . . . . . .

Fort Wayne, IN . . . . . .

Fort Worth, TX . . . . . .

Fort Worth, TX . . . . . .

Fountain Valley, CA . .

Franconia, NH . . . . . . .

Fredericksburg, VA . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

1,883

1,476

2,260

1,380

4,071

1,109

1,430

1,620

390

410

1,810

1,650

200

1,344

3,733

2,560

930

20,159

50

1,400

3,600

1,827

13,329

10,659

31,643

34,229

24,438

7,502

13,400

10,052

4,877

8,388

14,849

25,167

2,760

7,076

18,751

57,491

4,514

34,803

3,950

5,476

27,267

17,309

4,099

17,620

570

620

2,850

780

1,693

2,036

2,150

410

200

1,500

788

1,271

300

353

1,800

1,800

680

690

1,415

—

320

330

3,680

890

170

450

2,080

5,259

360

1,000

9,119

5,829

55,175

11,539

10,459

5,737

32,951

3,962

1,800

14,500

2,101

18,056

2,978

13,049

14,830

8,414

3,618

1,702

8,536

33,600

4,497

19,566

58,608

4,532

8,232

13,615

27,888

9,379

11,320

20,000

—

2,196

300

849

964

—

—

—

—

—

2,630

—

2,011

—

—

641

26

2,053

71

—

—

—

—

112

4,856

1,123

300

—

262

2,013

500

—

—

—

—

—

223

266

100

—

—

—

—

—

356

—

—

—

5,086

2,401

—

70

1,200

1,883

1,476

2,260

1,380

4,209

1,109

1,430

1,620

390

410

1,810

1,650

200

1,344

3,733

2,560

930

20,840

50

1,400

3,600

1,827

13,329

12,855

31,943

35,078

25,264

7,502

13,400

10,052

4,877

8,388

17,479

25,167

4,771

7,076

18,751

58,132

4,540

36,175

4,021

5,476

27,267

17,309

151

11,898

2,737

6,708

2,847

116

160

142

2,046

1,543

2,118

1,300

2,264

2018

1997

2015

2011

2014

2018

2018

2018

2003

2012

2014

2014

1998

1983 870 Patricia Avenue

1999 4434 Ben Franklin Blvd.

2004 3810 Alder Avenue

1998 606 Cranbury Rd.

1999 Carew Road

2015 4100 Freemansburg Avenue

1981 2600 Northampton Street

2000 4100 Freemansburg Avenue

1998 314 W. Kings Hwy.

2001 15401 North Pennsylvania

Avenue

1985 1225 Lakeshore Drive

2017 2709 East Danforth Road

1999 400 Hastings Lane

88

2018

1995 1940 Nerge Road Elk

207

6,734

1,075

1,933

339

2,819

299

208

2018

2014

2011

2016

2015

1999

2017

2018

1988 1920 Nerge Road

2010 1440 40th Street

1966 333 Grand Avenue

2014 450-458 Reigate Road

1994 1820 E River St

1999 2015 Lake Heights Dr.

2018 501 Thomas Jones Way

1997 12469 Lee Jackson Mem

Highway

4,099

17,620

208

2018

1990 12475 Lee Jackson Memorial

1,656

5,463

10,633

964

128

626

3,114

1,973

1,019

3,540

437

202

1,332

3,575

3,297

1,539

247

32

105

5,004

1,902

4,054

5,006

89

2,649

4,213

7,355

110

2,433

7,399

Highway

1987 50 Spring Run Road

1973 1748 Highland Ave.

1982 295 South Ave.

2003 828 1st Street NE

1997 45 South Road

1980 Bruntile Close, Reading Road

1991 6375 Chambersburg Road

1997 5125 Highbridge St.

1997 725 Fox Run Rd.

2000 9745 Olympia Dr.

1998 83 Cross Rd Ln

1969 3011 North Center Road

1999 901 Broad St.

1999 3275 County Road 47

1908 350 Haws Lane

2012 4141 Long Prairie Road

1979 237 Franklin Pike Rd SE

1999 640 Sunnyside Drive

1967 540 Sunnyside Drive

2009 330 Montrose Drive

1999 493 Piney Ridge Rd.

1980 Diane Drive, Box 686

2007 4750 Pleasant Oak Drive

1965 1005 East Elizabeth

2006 2626 Fairfield Ave.

2011 425 Alabama Ave.

2001 2151 Green Oaks Road

1988 11680 Warner Avenue

1971 93 Main Street

1999 3500 Meekins Dr.

2012

1996

2011

2015

2018

2014

2015

2001

1997

2010

2018

2018

2002

2010

2011

2011

2018

2018

2018

2013

2003

2011

2015

2018

2006

2010

2012

2018

2011

2005

9,231

10,685

56,298

11,839

10,459

5,931

34,964

4,462

1,800

14,500

2,101

18,056

2,978

13,240

15,096

8,514

3,618

1,702

8,536

32,018

4,497

19,922

58,608

4,532

8,232

18,701

30,289

9,379

11,390

21,200

570

620

2,850

780

1,693

2,104

2,150

410

200

1,500

788

1,271

300

385

1,800

1,800

680

690

1,415

1,582

320

330

3,680

890

170

450

2,080

5,259

360

1,000

146

Description

Encumbrances

Land

Building &
Improvements

Initial Cost to Company

Cost Capitalized
Subsequent to
Acquisition

Gross Amount at Which
Carried at Close of Period

Land

Building &
Improvements

Accumulated
Depreciation(1)

Year
Acquired

Year
Built

Address

Fredericksburg, VA . . .

Fresno, CA . . . . . . . . . .

Ft. Myers, FL . . . . . . . .

Ft. Myers, FL . . . . . . . .

Ft. Myers, FL . . . . . . . .

Galesburg, IL . . . . . . . .

Gardner, KS . . . . . . . . .

Gardnerville, NV . . . . .

Gastonia, NC . . . . . . . .

Gastonia, NC . . . . . . . .

Gastonia, NC . . . . . . . .

Geneva, IL . . . . . . . . . .

Georgetown, TX . . . . .

Gig Harbor, WA . . . . .

Gig Harbor, WA . . . . .

Glen Ellyn, IL . . . . . . .

Granbury, TX . . . . . . . .

Grand Ledge, MI . . . . .

Granger, IN . . . . . . . . .

Grapevine, TX . . . . . . .

Great Falls, MT . . . . . .

Greeley, CO . . . . . . . . .

Greenfield, WI . . . . . . .

Greensboro, NC . . . . . .

Greensboro, NC . . . . . .

Greenville, SC . . . . . . .

Greenville, SC . . . . . . .

Greenville, NC . . . . . . .

Greenwood, IN . . . . . .

Grosse Pointe, MI . . . .

Groton, CT . . . . . . . . . .

Hamilton, NJ . . . . . . . .

Hanahan, SC . . . . . . . .

Hanford, UK . . . . . . . .
Harrisburg, PA . . . . . . .

Harrow, UK . . . . . . . . .

Hatboro, PA . . . . . . . . .

Hatboro, PA . . . . . . . . .

Hatfield, UK . . . . . . . .

Hattiesburg, MS . . . . . .

Hemet, CA . . . . . . . . . .

Henry, IL . . . . . . . . . . .

Hermitage, TN . . . . . . .

Herne Bay, UK . . . . . .

Hiawatha, KS . . . . . . . .

Hickory, NC . . . . . . . . .

High Point, NC . . . . . .

High Point, NC . . . . . .

High Point, NC . . . . . .

High Point, NC . . . . . .

Highland Park, IL . . . .

Highlands Ranch,

CO . . . . . . . . . . . . . .

Hillsboro, OH . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

1,130

2,500

1,110

2,139

2,502

1,708

200

1,143

470

310

400

1,502

200

1,560

3,000

1,496

2,550

1,150

1,670

2,220

630

1,077

—

330

560

1,751

947

290

1,550

867

2,430

440

1,944

1,382

569

7,402

—

1,192

2,924

450

6,224

1,860

1,500

1,900

40

290

560

370

330

430

23,202

35,800

10,562

18,240

9,744

3,841

2,800

10,831

6,129

3,096

5,029

16,198

2,100

15,947

4,463

6,636

2,940

16,286

21,280

17,648

6,007

18,051

15,204

2,970

5,507

8,774

1,445

4,393

22,770

2,386

19,941

4,469

3,988

9,829

12,826

8,266

28,112

7,611

7,527

13,469

8,414

3,689

9,943

24,353

4,210

987

4,443

2,185

3,395

4,143

2,820

15,832

—

118

—

—

—

—

93

1,118

—

22

120

—

—

275

—

—

777

5,119

2,401

—

—

—

—

554

1,013

—

—

168

81

—

968

—

—

378

—

529

1,771

—

353

—

—

—

188

1,130

2,500

1,110

2,139

2,502

1,708

200

1,164

470

310

400

1,502

200

1,583

3,000

1,496

2,550

1,150

1,670

2,220

630

1,077

890

330

560

1,751

947

290

1,550

867

2,430

440

1,944

1,428

569

7,652

—

1,192

3,023

450

6,224

1,860

1,500

23,202

35,918

10,562

18,240

9,744

3,841

2,893

11,928

6,129

3,118

5,149

16,198

2,100

16,199

4,463

6,636

3,717

21,405

23,681

17,648

6,007

18,051

14,314

3,524

6,520

8,774

1,445

4,561

22,851

2,386

20,909

4,469

3,988

10,161

12,826

8,545

29,883

7,611

7,781

13,469

8,414

3,689

10,131

1,602

1,964

25,891

29

232

793

410

28

—

189

40

290

560

370

330

430

4,239

1,219

5,236

2,595

3,423

4,143

2,820

16,021

940

1,792

3,721

6,341

4,983

—

940

1,792

8,704

6,341

147

2,704

9,497

128

215

139

46

259

8,904

2,535

1,355

2,143

191

1,177

4,269

64

87

737

4,313

5,011

1,554

357

806

2,085

1,506

2,770

106

29

1,882

4,932

30

4,784

1,990

2014

2008

2018

2018

2018

2018

2015

1998

2003

2003

2003

2018

1997

2010

2018

2018

2012

2010

2010

2013

2018

2017

2013

2003

2003

2018

2018

2003

2010

2018

2011

2001

2010 140 Brimley Drive

1991 7173 North Sharon Avenue

1999 15950 McGregor Boulevard

1990 1600 Matthew Drive

2000 13881 Eagle Ridge Drive

1964 280 East Losey Street

2000 869 Juniper Terrace

1999 1565-A Virginia Ranch Rd.

1998 1680 S. New Hope Rd.

1994 1717 Union Rd.

1996 1750 Robinwood Rd.

2000 2388 Bricher Road

1997 2600 University Dr., E.

1994 3213 45th St. Court NW

1990 3309 45th Street Court

Northwest

2001 2S706 Park Boulevard

1996 916 East Highway 377

1999 4775 Village Dr

2009 6330 North Fir Rd

2014 4545 Merlot Drive

2001 1801 9th Street South

2009 5300 West 29th Street

1983 5017 South 110th Street

1996 5809 Old Oak Ridge Rd.

1997 4400 Lawndale Dr.

1966 600 Sulphur Springs Road

1976 601 Sulphur Springs Road

1998 2715 Dickinson Ave.

2007 2339 South SR 135

1964 21401 Mack Avenue

1975 1145 Poquonnock Road

1998 1645 Whitehorse-Mercerville

Rd.

57

2018

1989 1800 Eagle Landing

1,453

150

964

6,096

122

1,121

2,732

102

43

1,953

3,934

371

650

2,205

1,149

1,450

1,743

2,557

2,303

105

Boulevard

2012 Bankhouse Road

2000 2625 Ailanthus Lane

2001 177 Preston Hill

1996 3485 Davisville Road

2000 779 West County Line Road

2012 St Albans Road East

2009 217 Methodist Hospital Blvd

1989 1717 West Stetson Avenue

1987 1650 Old Indian Town Road

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.

1983 1141 Northview Drive

2013

2018

2014

2011

2018

2013

2010

2018

2018

2011

2013

2015

2003

2003

2003

2003

2003

2011

2002

2018

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

Hinckley, UK . . . . . . . .

—

Hindhead, UK . . . . . . .

44,662

2,159

17,852

Hinsdale, IL . . . . . . . . .

Hockessin, DE . . . . . . .

Holton, KS . . . . . . . . . .

Homewood, IL . . . . . . .

Houston, TX . . . . . . . .

Howard, WI . . . . . . . . .

Huntingdon Valley,

PA . . . . . . . . . . . . . .

Hyattsville, MD . . . . . .

Independence, VA . . . .

Indianapolis, IN . . . . . .

Indianapolis, IN . . . . . .

Jackson, NJ . . . . . . . . .

Jacksonville, FL . . . . . .

Jacksonville, FL . . . . . .

Jacksonville, FL . . . . . .

Jacksonville, FL . . . . . .

Jefferson Hills, PA . . . .

Jersey Shore, PA . . . . .

Kansas City, KS . . . . . .

Katy, TX . . . . . . . . . . .

Kenner, LA . . . . . . . . .

Kensington, MD . . . . . .

Kenwood, OH . . . . . . .

Kettering, OH . . . . . . .

King of Prussia, PA . . .

King of Prussia, PA . . .

Kingsford, MI

. . . . . . .

Kingston, PA . . . . . . . .

Kingston upon Thames,
UK . . . . . . . . . . . . . .

Kirkland, WA . . . . . . .

Kirkstall, UK . . . . . . . .

Kokomo, IN . . . . . . . . .

Lacey, WA . . . . . . . . . .

Lafayette, LA . . . . . . . .

Lafayette, CO . . . . . . . .

Lafayette, IN . . . . . . . .

Lakeway, TX . . . . . . . .

Lakewood, CO . . . . . . .

Lakewood Ranch,

FL . . . . . . . . . . . . . . .

Lakewood Ranch,

FL . . . . . . . . . . . . . . .

Lancaster, PA . . . . . . . .

Lancaster, PA . . . . . . . .

LaPlata, MD . . . . . . . . .

Largo, MD . . . . . . . . . .

Largo, FL . . . . . . . . . . .

Las Vegas, NV . . . . . . .

Laureldale, PA . . . . . . .

Lawrence, KS . . . . . . .

Leawood, KS . . . . . . . .

Lebanon, PA . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

4,033

1,120

40

2,395

1,040

579

1,150

4,017

1,082

870

1,105

6,500

750

—

1,752

2,182

2,265

600

700

1,778

1,100

1,753

821

1,229

720

1,205

1,362

986

53,595

33,063

1,880

2,437

710

2,582

1,928

1,420

670

5,142

2,160

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

4,194

48,645

24,287

6,308

7,460

7,652

31,965

32,122

3,730

2,298

6,767

14,688

6,645

26,405

25,231

26,381

2,553

9,491

13,618

8,107

20,115

22,622

10,036

18,626

11,043

4,703

14,780

4,727

10,598

5,711

46,696

4,315

9,414

16,044

18,180

10,483

20,192

16,833

23,203

28,091

215

2,466

—

1,247

13

—

4,969

10

—

—

—

—

—

3,107

—

1,691

—

—

—

—

—

—

349

—

—

—

—

—

—

—

2,926

683

401

—

—

26

—

1

—

62

2,232

18,455

4,033

1,120

40

2,395

1,040

579

1,150

4,017

1,082

870

1,105

6,500

750

1,691

1,752

2,182

2,265

600

700

1,778

1,100

1,753

821

1,229

720

1,205

1,362

986

34,181

1,880

2,519

710

2,582

1,928

1,420

670

5,142

2,160

4,336

50,508

24,287

7,555

7,473

7,652

36,934

32,132

3,730

2,298

6,767

14,688

6,645

29,512

25,231

26,381

2,553

9,491

13,618

8,107

20,115

22,622

10,385

18,626

11,043

4,703

14,780

4,727

10,598

5,711

48,504

4,998

9,733

16,044

18,180

10,509

20,192

16,834

23,203

28,153

684

2,649

270

941

611

87

7,493

1,099

63

33

438

1,837

76

4,577

1,645

1,716

31

2013

2016

2018

2014

2015

2018

2012

2017

2018

2018

2018

2014

2018

2012

2013

2013

2018

2013 Tudor Road

2012 Portsmouth Road

1971 600 W Ogden Avenue

1992 100 Saint Claire Drive

1996 410 Juniper Dr

1989 940 Maple Avenue

1999 505 Bering Drive

2016 2790 Elm Tree Hill

1993 3430 Huntingdon Pike

1964 6500 Riggs Road

1998 400 S Independence Ave

2014 1635 N Arlington Avenue

1979 8549 South Madison Avenue

2001 2 Kathleen Drive

2014 5939 Roosevelt Boulevard

2014 4000 San Pablo Parkway

1989 8495 Normandy Boulevard

Jacksonville

123

2018

1980 3648 University Boulevard

233

89

1,646

1,047

9,529

211

129

63

180

68

129

68

2,573

1,911

1,396

2,001

209

4,581

2,001

1,870

3,272

3,561

South

1997 380 Wray Large Road

1973 1008 Thompson Street

2015 8900 Parallel Parkway

2015 24802 Kingsland Boulevard

2000 1600 Joe Yenni Blvd

2002 4301 Knowles Avenue

2000 4580 East Galbraith Road

1977 3313 Wilmington Pike

1995 620 West Valley Forge Road

1990 600 West Valley Forge Road

1968 1225 Woodward Avenue

1974 200 Second Avenue

2014 Coombe Lane West

1996 6505 Lakeview Dr.

2009 29 Broad Lane

2014 2200 S. Dixon Rd

2012 4524 Intelco Loop SE

1993 204 Energy Parkway

2015 329 Exempla Circle

2014 2402 South Street

2011 2000 Medical Dr

2010 7395 West Eastman Place

2018

2018

2015

2017

1998

2018

2018

2018

2018

2018

2018

2018

2016

2003

2013

2014

2018

2006

2015

2015

2007

2014

650

6,714

1,988

650

8,702

1,484

2011

2012 8230 Nature’s Way

1,000

1,680

1,011

700

3,361

1,166

580

1,171

250

2,490

728

22,388

14,039

7,504

19,068

3,623

3,427

23,420

14,424

8,716

32,493

10,370

—

—

—

466

—

—

—

—

—

2,209

—

1,000

1,680

1,011

700

3,361

1,166

580

1,171

250

5,610

728

22,388

14,039

7,504

19,534

3,623

3,427

23,420

14,424

8,716

31,582

10,370

148

3,822

761

89

4,198

50

53

4,594

166

1,471

7,303

130

2012

2015

2018

2011

2018

2018

2011

2018

2012

2012

2018

2005 8220 Natures Way

2017 31 Millersville Road

1966 100 Abbeyville Road

1984 One Magnolia Drive

1978 600 Largo Road

1997 300 Highland Avenue

Northeast

2002 2500 North Tenaya Way

1980 2125 Elizabeth Avenue

1996 3220 Peterson Road

1999 4400 West 115th Street

1998 100 Tuck Court

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

Lebanon, PA . . . . . . . .

Lee, MA . . . . . . . . . . . .

Leeds, UK . . . . . . . . . .

Leicester, UK . . . . . . . .

Lenoir, NC . . . . . . . . . .

—

—

—

—

—

Lethbridge, AB . . . . . .

1,312

Lexana, KS . . . . . . . . .

Lexington, NC . . . . . . .

Libertyville, IL . . . . . . .

Libertyville, IL . . . . . . .

Lichfield, UK . . . . . . . .

Lillington, NC . . . . . . .

Lillington, NC . . . . . . .

Lincoln, NE . . . . . . . . .

Lititz, PA . . . . . . . . . . .

Livermore, CA . . . . . . .

Livonia, MI . . . . . . . . .

Livonia, MI . . . . . . . . .

Longview, TX . . . . . . .

Longwood, FL . . . . . . .

Louisburg, KS . . . . . . .

Louisville, KY . . . . . . .

Loxley, UK . . . . . . . . .

Lutherville, MD . . . . . .

Lynchburg, VA . . . . . .

Lynchburg, VA . . . . . .

Lynnwood, WA . . . . . .

Macomb, IL . . . . . . . . .

Macungie, PA . . . . . . .

Manalapan, NJ . . . . . . .

Manassas, VA . . . . . . .

Mankato, MN . . . . . . . .

Mansfield, TX . . . . . . .
Marietta, OH . . . . . . . .
Marietta, GA . . . . . . . .

Marietta, PA . . . . . . . . .

Marion, IN . . . . . . . . . .

Marion, IN . . . . . . . . . .

Marion, OH . . . . . . . . .

Marlborough, UK . . . .

Marlow, UK . . . . . . . . .

Martinsville, VA . . . . .

Marysville, WA . . . . . .

Matawan, NJ . . . . . . . .

Matthews, NC . . . . . . .

McHenry, IL . . . . . . . .

McKinney, TX . . . . . . .

McMurray, PA . . . . . . .

Mechanicsburg, PA . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Medicine Hat, AB . . . .

2,156

Menomonee Falls,

WI

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

Mentor, OH . . . . . . . . .

Mercerville, NJ . . . . . .

—

—

—

1,214

290

1,974

3,060

190

1,214

480

200

6,500

2,993

1,382

470

500

390

1,200

4,100

985

1,836

610

1,260

280

490

1,369

1,100

340

2,904

2,308

1,586

960

900

750

1,460

660

1,149

2,406

1,050

720

990

2,768

2,677

9,068

349

620

1,830

560

1,576

1,570

1,440

1,350

932

1,020

1,827

860

5,962

18,135

13,239

24,410

3,748

2,750

1,770

3,900

40,024

11,550

30,324

17,579

16,451

13,807

13,836

24,996

13,558

2,278

5,520

6,445

4,320

10,010

15,668

19,786

16,114

3,697

5,634

4,059

29,033

22,624

7,446

32,104

5,251

9,376

12,233

13,633

12,750

9,190

17,420

6,822

39,720

—

4,780

20,618

4,738

—

7,389

15,805

16,650

5,566

6,984

9,941

9,929

5,962

19,061

13,687

25,235

4,389

2,793

1,922

4,915

40,024

11,550

31,349

17,579

16,451

13,902

13,836

24,996

13,558

2,278

5,520

6,445

4,364

12,778

16,198

21,530

16,114

3,697

5,634

4,059

29,117

23,246

7,976

32,404

5,251

9,376

12,233

13,903

13,886

10,014

17,420

7,053

39,720

—

5,749

20,784

4,738

—

7,389

19,699

16,650

5,650

8,636

9,941

10,102

—

926

515

928

641

61

152

1,015

—

—

1,071

—

—

95

—

—

—

—

—

—

44

2,768

577

1,744

—

—

—

—

84

622

530

300

—

—

—

270

1,136

824

—

322

—

—

969

166

—

—

—

3,894

—

98

1,652

—

173

1,214

290

2,041

3,163

190

1,232

480

200

6,500

2,993

1,428

470

500

390

1,200

4,100

985

1,836

610

1,260

280

490

1,416

1,100

340

2,904

2,308

1,586

960

900

750

1,460

660

1,149

2,406

1,050

720

990

2,768

2,768

9,068

349

620

1,830

560

1,576

1,570

1,440

1,350

946

1,020

1,827

860

149

84

8,404

1,305

3,953

1,842

422

184

2,127

8,481

130

3,020

2,112

1,855

3,154

752

2,642

164

33

1,725

1,362

360

4,869

2,474

4,472

1,964

43

67

46

6,047

4,447

3,092

2,620

1,659

109

140

1,226

1,675

1,432

259

777

2,869

—

2,233

4,158

2,031

—

1,881

3,641

3,344

679

2,285

117

2,315

2018

2002

2015

2012

2003

2014

2015

2002

2011

2018

2015

2014

2014

2010

2015

2014

2018

2018

2006

2011

2015

2005

2013

2011

2014

2018

2018

2018

2011

2011

2003

2015

2006

2018

2018

2015

2014

2014

2018

2014

2013

2003

2003

2011

2003

2006

2009

2010

2011

2014

2006

2018

2011

1980 900 Tuck Street

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

1988 1500 South Milwaukee

2012 Wissage Road

2013 54 Red Mulberry Way

1999 2041 NC-210 N

2000 7208 Van Dorn St.

2016 80 West Millport Road

1974 35 Fenton Street

1999 32500 Seven Mile Road

1960 28550 Five Mile Road

2007 311 E Hawkins Pkwy

2011 425 South Ronald Reagan

Boulevard

1996 202 Rogers St

1978 4604 Lowe Rd

2008 Loxley Road

1988 515 Brightfield Road

2013 189 Monica Blvd

1978 2200 Landover Place

1987 3701 188th Street

1966 8 Doctors Lane

1994 1718 Spring Creek Road

2001 445 Route 9 South

1996 8341 Barrett Dr.

2006 100 Dublin Road

2007 2281 Country Club Dr

1977 5001 State Route 60

1980 4360 Johnson Ferry Place

1999 2760 Maytown Road

2012 614 W. 14th Street

1976 505 N. Bradner Avenue

2004 400 Barks Road West

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

1999 65 Valleyview Drive SW

2007 W128 N6900 Northfield Drive

1985 8200 Mentor Hills Drive

1967 2240 White Horse- Merceville

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

Meriden, CT . . . . . . . . .

Merrillville, IN . . . . . . .

Mesa, AZ . . . . . . . . . . .

Miamisburg, OH . . . . .

Middleburg Heights,

OH . . . . . . . . . . . . . .

Middleton, WI . . . . . . .

Midland, MI . . . . . . . . .

Milton Keynes, UK . . .

Mishawaka, IN . . . . . . .

Moline, IL . . . . . . . . . .

Monmouth Junction,

NJ . . . . . . . . . . . . . . .

Monroe, NC . . . . . . . . .

Monroe, NC . . . . . . . . .

Monroe, NC . . . . . . . . .

Monroe Township,

NJ . . . . . . . . . . . . . . .

Monroeville, PA . . . . .

Monroeville, PA . . . . .

Montgomeryville,

PA . . . . . . . . . . . . . .

Montville, NJ . . . . . . . .

Moorestown, NJ . . . . . .

Morehead City, NC . . .

Morrison, CO . . . . . . . .

Morton Grove, IL . . . . .

Moulton, UK . . . . . . . .

Mount Pleasant, SC . . .

Mountainside, NJ . . . . .

Nacogdoches, TX . . . . .

Naperville, IL . . . . . . . .

Naples, FL . . . . . . . . . .

Naples, FL . . . . . . . . . .

Naples, FL . . . . . . . . . .

Nashville, TN . . . . . . . .

Naugatuck, CT . . . . . . .

Needham, MA . . . . . . .

New Moston, UK . . . . .

Newcastle Under

Lyme, UK . . . . . . . .

Newcastle-under-Lyme,
UK . . . . . . . . . . . . . .

Newport News, VA . . .

Norman, OK . . . . . . . .

Norman, OK . . . . . . . .

North Augusta, SC . . . .

Northampton, UK . . . .

Northampton, UK . . . .

Northbrook, IL . . . . . . .

Nuneaton, UK . . . . . . .

Nuthall, UK . . . . . . . . .

Nuthall, UK . . . . . . . . .

Oak Lawn, IL . . . . . . . .

Oak Lawn, IL . . . . . . . .

Oakland, CA . . . . . . . .

Ocala, FL . . . . . . . . . . .

Ogden, UT . . . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

1,300

700

950

786

960

420

200

1,826

740

2,946

720

470

310

450

3,250

1,216

1,237

1,176

3,500

6,400

200

2,720

1,900

1,695

—

3,097

390

3,470

1,222

1,672

1,854

4,910

1,200

1,610

1,480

1,110

1,125

839

55

1,480

332

5,182

2,013

1,298

3,325

1,628

2,498

2,418

3,876

4,760

1,340

384

1,472

11,699

9,087

3,233

7,780

4,006

11,025

18,654

16,113

18,677

6,209

3,681

4,799

4,021

27,771

12,753

3,642

9,827

31,002

23,875

3,104

16,261

19,374

12,510

17,200

7,810

5,754

29,547

10,642

26,170

12,402

29,590

15,826

12,667

4,378

5,655

5,537

6,077

1,484

33,330

2,558

17,348

6,257

13,341

8,983

6,263

10,436

5,428

7,988

16,143

10,564

2,228

233

154

1,971

—

—

600

5,522

692

—

—

86

648

857

114

270

—

—

—

1,171

27

1,648

—

159

997

1

—

—

—

—

—

—

—

199

—

198

229

225

—

—

—

—

762

280

—

415

268

438

—

—

109

—

—

1,300

700

950

786

960

420

200

1,888

740

2,946

720

470

310

450

3,250

1,216

1,237

1,176

3,500

6,400

200

2,720

1,900

1,597

4,052

3,097

390

3,470

1,222

1,672

1,854

4,910

1,200

1,610

1,530

1,148

1,163

839

55

1,480

332

5,357

2,081

1,298

3,437

1,684

2,583

2,418

3,876

4,760

1,340

384

150

1,705

11,853

11,058

3,233

7,780

4,606

16,547

19,284

16,113

18,677

6,295

4,329

5,656

4,135

28,041

12,753

3,642

9,827

32,173

23,902

4,752

16,261

19,533

13,605

13,149

7,810

5,754

29,547

10,642

26,170

12,402

29,590

16,025

12,667

4,526

5,846

5,724

6,077

1,484

33,330

2,558

17,935

6,469

13,341

9,286

6,475

10,789

5,428

7,988

16,252

10,564

2,228

736

3,430

5,022

54

2,946

1,915

2,992

1,913

2,067

206

1,522

1,850

2,316

1,764

2,200

179

68

122

6,238

3,239

2,260

311

3,728

568

3,228

93

1,792

6,382

133

344

140

8,321

3,479

5,327

676

2011

2007

1999

2018

2004

2001

2010

2015

2014

2018

2011

2003

2003

2003

2015

2018

2018

2018

2011

2012

1999

2018

2010

2017

2013

2018

2006

2011

2018

2018

2018

2008

2011

2002

2013

1968 845 Paddock Ave

2008 9509 Georgia St.

2000 7231 E. Broadway

1983 450 Oak Ridge Boulevard

1998 15435 Bagley Rd.

1991 6701 Stonefield Rd.

1994 2325 Rockwell Dr

2007 Tunbridge Grove, Kents Hill

2013 60257 Bodnar Blvd

1964 833 Sixteenth Avenue

1996 2 Deer Park Drive

2001 918 Fitzgerald St.

2000 919 Fitzgerald St.

1997 1316 Patterson Ave.

1996 319 Forsgate Drive

1997 120 Wyngate Drive

1996 885 MacBeth Drive

1989 640 Bethlehem Pike

1988 165 Changebridge Rd.

2014 250 Marter Avenue

1999 107 Bryan St.

1974 150 Spring Street

2011 5520 N. Lincoln Ave.

1995 Northampton Lane North

1985 1200 Hospital Drive

1988 1180 Route 22

2007 5902 North St

2001 504 North River Road

1998 6125 Rattlesnake Hammock

Road

1993 1000 Lely Palms Drive

1987 3601 Lakewood Boulevard

2007 15 Burton Hills Boulevard

1980 4 Hazel Avenue

1994 100 West St.

2010 90a Broadway

834

2013

2010 Hempstalls Lane

631

407

938

5,571

1,348

2,659

674

154

1,326

661

1,556

62

95

1,936

2,767

310

2014

2018

1995

2012

1999

2013

2014

2018

2013

2014

2013

2018

2018

2014

2008

2018

1999 Silverdale Road

1998 12997 Nettles Dr

1995 1701 Alameda Dr.

1985 800 Canadian Trails Drive

1998 105 North Hills Dr.

2011 Cliftonville Road

2014 Cliftonville Road

1999 3240 Milwaukee Avenue

2011 132 Coventry Road

2014 172A Nottingham Road

2011 172 Nottingham Road

1977 9401 South Kostner Avenue

1960 6300 W 95th Street

2002 468 Perkins Street

2009 2650 SE 18TH Avenue

1987 400 East 5350 South

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

Oklahoma City, OK . . .

Oklahoma City, OK . . .

Olathe, KS . . . . . . . . . .

Omaha, NE . . . . . . . . .

Omaha, NE . . . . . . . . .

Ona, WV . . . . . . . . . . .

Oneonta, NY . . . . . . . .

Orange Park, FL . . . . . .

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 Beach Gardens,

FL . . . . . . . . . . . . . . .

Palm Coast, FL . . . . . .

Palm Desert, CA . . . . .

Palm Harbor, FL . . . . .

Palm Harbor, FL . . . . .

Palos Heights, IL . . . . .

Palos Heights, IL . . . . .

Palos Heights, IL . . . . .

Panama City Beach,

FL . . . . . . . . . . . . . . .

Paola, KS . . . . . . . . . . .

Paris, TX . . . . . . . . . . .

Parma, OH . . . . . . . . . .

Parma, OH . . . . . . . . . .

Paulsboro, NJ . . . . . . . .
Pella, IA . . . . . . . . . . . .
Perrysburg, OH . . . . . .

Perrysburg, OH . . . . . .

Petoskey, MI . . . . . . . .

Philadelphia, PA . . . . .

Phillipsburg, NJ . . . . . .

Phillipsburg, NJ . . . . . .

Pikesville, MD . . . . . . .

Pikesville, MD . . . . . . .

Pinehurst, NC . . . . . . . .

Piqua, OH . . . . . . . . . .

Piscataway, NJ . . . . . . .

Pittsburgh, PA . . . . . . .

Pittsburgh, PA . . . . . . .

Pittsburgh, PA . . . . . . .

Pittsburgh, PA . . . . . . .

Pittsburgh, PA . . . . . . .

Pittsburgh, PA . . . . . . .

Pittsburgh, PA . . . . . . .

Pittsburgh, PA . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

590

760

1,930

370

380

950

80

2,201

2,150

50

130

160

4,500

1,540

410

1,300

215

225

100

1,430

180

2,082

870

6,195

1,306

3,281

1,225

3,431

2,590

900

190

490

960

1,833

3,264

870

1,456

1,213

860

2,930

800

300

—

4,247

290

204

3,100

603

1,005

1,140

994

761

1,480

1,139

1,750

7,513

7,017

19,765

10,230

8,769

15,998

5,020

4,018

24,107

1,700

2,970

6,590

29,105

16,269

2,840

25,311

1,380

13,275

2,400

15,791

4,320

6,624

10,957

8,922

13,811

22,457

12,457

28,812

7,647

6,402

5,610

5,452

12,722

10,318

8,026

6,716

5,433

7,110

14,452

10,433

21,175

8,114

2,488

8,383

2,690

1,885

33,501

11,357

15,164

3,166

3,790

4,214

9,715

5,846

8,572

7,513

7,017

20,318

10,230

8,769

16,220

5,020

4,018

24,107

1,842

3,106

6,634

63,816

17,082

2,932

25,988

1,380

13,275

2,400

15,791

5,620

6,624

10,957

8,922

13,811

22,457

12,457

28,812

7,647

7,022

5,669

5,452

12,722

10,318

8,026

6,805

5,433

7,110

14,452

13,969

21,413

8,215

2,488

8,383

3,174

1,885

33,501

11,357

15,164

3,166

3,790

4,214

9,715

5,846

2,175

1,993

1,758

2,369

2,144

1,400

1,442

64

2,021

183

283

556

15,377

3,342

279

2,229

801

5,120

1,108

3,625

1,814

87

2,730

107

171

273

141

316

87

1,161

483

4,421

155

141

99

1,135

68

82

3,152

3,206

4,650

1,780

27

108

1,392

1,024

1,423

137

177

37

63

47

128

75

14,894

3,340

2007

2007

2016

2010

2010

2015

2007

2018

2015

2015

2015

2015

2010

2012

2015

2016

1996

2005

2005

2010

2006

2018

2008

2018

2018

2018

2018

2018

2018

2011

2015

2005

2018

2018

2018

2012

2018

2018

2011

2011

2011

2011

2018

2018

2003

1997

2013

2018

2018

2018

2018

2018

2018

2018

2005

2008 13200 S. May Ave

2009 11320 N. Council Road

2015 21250 W 151 Street

1998 11909 Miracle Hills Dr.

1999 5728 South 108th St.

2007 100 Weatherholt Drive

1996 1846 County Highway 48

1990 570 Wells Road

2014 250 East Center Street

1996 1403 Laing St

2003 1520 Parker Ave

2007 2250 S Elm St

1988 6101 W 119th St

1998 9201 Foster

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.

1991 11375 Prosperity Farms Road

2010 50 Town Ct.

1989 74350 Country Club Drive

1997 2895 Tampa Road

1990 2851 Tampa Road

1999 7880 West College Drive

1987 7850 West College Drive

1996 11860 Southwest Hwy

2005 6012 Magnolia Beach Road

2000 601 N. East Street

2006 750 N Collegiate Dr

1998 9205 Sprague Road

2006 9055 West Sprague Road

1987 550 Jessup Road

2002 2602 Fifield Road

1973 10540 Fremont Pike

1978 10542 Fremont Pike

1997 965 Hager Dr

1952 1526 Lombard Street

1992 290 Red School Lane

1905 843 Wilbur Avenue

1998 8911 Reisterstown Road

1996 8909 Reisterstown Road

1998 17 Regional Dr.

1997 1744 W. High St.

2017 10 Sterling Drive

1998 1125 Perry Highway

1997 505 Weyman Road

1962 550 South Negley Avenue

1986 2170 Rhine Street

1965 5609 Fifth Avenue

1986 1105 Perry Highway

1986 1848 Greentree Road

1998 100 Knoedler Rd.

—

—

553

—

—

222

—

—

—

142

136

44

38,441

943

92

677

—

—

—

—

1,300

—

—

—

—

—

—

—

—

620

59

—

—

—

—

89

—

—

—

3,536

238

101

—

—

484

—

—

—

—

—

—

—

—

—

6,322

590

760

1,930

370

380

950

80

2,201

2,150

50

130

160

8,230

1,670

410

1,300

215

225

100

1,430

180

2,082

870

6,195

1,306

3,281

1,225

3,431

2,590

900

190

490

960

1,833

3,264

870

1,456

1,213

860

2,930

800

300

—

4,247

290

204

3,100

603

1,005

1,140

994

761

1,480

1,139

1,750

151

Description

Encumbrances

Land

Building &
Improvements

Initial Cost to Company

Plainview, NY . . . . . . .

Plano, TX . . . . . . . . . . .

Plattsmouth, NE . . . . . .

Plymouth, MI . . . . . . . .

Potomac, MD . . . . . . . .

Potomac, MD . . . . . . . .

Pottstown, PA . . . . . . .

Pottsville, PA . . . . . . . .

—

—

—

—

—

—

—

—

Prior Lake, MN . . . . . .

13,806

Puyallup, WA . . . . . . .

Raleigh, NC . . . . . . . . .

Raleigh, NC . . . . . . . . .

Raleigh, NC . . . . . . . . .

Reading, PA . . . . . . . . .

Red Bank, NJ . . . . . . . .

Reidsville, NC . . . . . . .

Reno, NV . . . . . . . . . . .

Rexburg, ID . . . . . . . . .

Richardson, TX . . . . . .

Richmond, IN . . . . . . .

Richmond, VA . . . . . . .

Richmond, VA . . . . . . .

Richmond, VA . . . . . . .

Ridgeland, MS . . . . . . .

Roanoke, VA . . . . . . . .

Rochdale, MA . . . . . . .

Rockville Centre,

NY . . . . . . . . . . . . . .

Rockwall, TX . . . . . . . .

Romeoville, IL . . . . . . .

Roseville, MN . . . . . . .

Roswell, GA . . . . . . . . .

Roswell, GA . . . . . . . . .

Rugeley, UK . . . . . . . .

Ruston, LA . . . . . . . . . .

S Holland, IL . . . . . . . .

Salem, OR . . . . . . . . . .

Salisbury, NC . . . . . . . .

San Angelo, TX . . . . . .

San Antonio, TX . . . . .

San Antonio, TX . . . . .

San Bernardino, CA . . .

San Diego, CA . . . . . . .

Sand Springs, OK . . . .

Sarasota, FL . . . . . . . . .

Sarasota, FL . . . . . . . . .

Sarasota, FL . . . . . . . . .

Sarasota, FL . . . . . . . . .

Sarasota, FL . . . . . . . . .

Sarasota, FL . . . . . . . . .

Scranton, PA . . . . . . . .

Scranton, PA . . . . . . . .

Seminole, FL . . . . . . . .

Seven Fields, PA . . . . .

Severna Park, MD . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

3,990

1,840

250

1,490

1,448

4,119

984

171

1,870

1,150

7,598

3,530

2,580

980

1,050

170

1,060

1,267

1,468

700

—

3,261

1,046

520

748

—

4,290

2,220

1,895

2,140

1,107

2,080

1,900

710

1,423

449

370

1,050

1,499

—

3,700

—

910

475

4,101

1,370

2,792

3,360

443

440

320

1,165

484

2,120

11,969

20,152

5,650

19,990

14,626

14,921

4,565

3,560

29,849

20,776

88,870

59,589

16,837

19,906

21,275

3,830

11,440

3,213

12,979

14,222

12,000

17,980

8,235

7,675

4,483

7,100

20,310

17,650

—

24,679

9,627

6,486

10,262

9,790

8,910

5,171

5,697

24,689

12,662

17,303

14,300

22,003

19,654

3,175

11,208

4,084

11,177

19,140

9,699

17,609

12,144

8,977

4,663

31,273

Cost Capitalized
Subsequent to
Acquisition

1,186

560

—

330

—

—

—

—

300

505

—

—

—

140

586

857

659

—

—

393

—

—

—

437

—

—

932

—

—

100

1,127

1,130

411

—

—

1

168

1,221

—

—

687

1,845

—

—

—

—

—

—

—

—

1

—

59

808

Gross Amount at Which
Carried at Close of Period

Land

Building &
Improvements

Accumulated
Depreciation(1)

Year
Acquired

Year
Built

Address

13,155

20,712

5,650

20,320

14,626

14,921

4,565

3,560

30,149

21,275

88,870

59,589

16,837

20,046

21,861

4,687

12,099

3,213

12,979

14,615

11,750

17,980

8,235

8,112

4,483

6,410

21,242

17,650

—

24,779

10,747

7,316

10,609

9,790

8,910

5,172

5,865

25,910

12,662

17,303

14,987

23,848

19,654

3,175

11,208

4,084

11,177

19,140

9,699

17,609

12,145

8,977

4,722

32,081

3,990

1,840

250

1,490

1,448

4,119

984

171

1,870

1,156

7,598

3,530

2,580

980

1,050

170

1,060

1,267

1,468

700

250

3,261

1,046

520

748

690

4,290

2,220

1,895

2,140

1,114

2,380

1,964

710

1,423

449

370

1,050

1,499

—

3,700

—

910

475

4,101

1,370

2,792

3,360

443

440

320

1,165

484

2,120

152

2,774

1,579

1,377

4,431

167

176

58

42

2,435

5,775

4,212

9,825

2,965

4,293

4,176

2,045

4,440

383

154

1,256

2,018

203

100

3,162

435

1,039

4,259

1,590

—

2,037

8,139

1,645

1,603

2,133

108

2,706

2,422

3,073

149

7,781

3,865

6,068

3,346

1,917

212

49

131

3,681

120

2,032

1,400

113

2,475

6,616

2011

2016

2010

2010

2018

2018

2018

2018

2015

2010

2008

2012

2012

2011

2011

2002

2004

2018

2018

2016

2013

2018

2018

2003

2018

2013

2011

2012

2006

2015

1997

2012

2013

2011

2018

1999

2003

2014

2018

2007

2008

2008

2012

1996

2018

2018

2018

2011

2018

2014

2014

2018

1999

2011

1963 150 Sunnyside Blvd

2016 3325 W Plano Parkway

1999 1913 E. Highway 34

1972 14707 Northville Rd

1994 10718 Potomac Tennis Lane

1988 10714 Potomac Tennis Lane

1907 724 North Charlotte Street

1976 420 Pulaski Drive

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.

1998 2931 Vance St.

1998 5165 Summit Ridge Road

1988 660 South 2nd West

1999 410 Buckingham Road

2015 400 Industries Road

1989 2220 Edward Holland Drive

1990 1719 Bellevue Avenue

1966 2125 Hilliard Road

1997 410 Orchard Park

1997 4355 Pheasant Ridge Rd

1994 111 Huntoon Memorial

Highway

2002 260 Maple Ave

2014 720 E Ralph Hall Parkway

1900 Grand Haven Circle

1989 2750 North Victoria Street

1999 655 Mansell Rd.

1997 75 Magnolia Street

2010 Horse Fair

1988 1401 Ezelle St

1997 2045 East 170th Street

1998 1355 Boone Rd. S.E.

1997 2201 Statesville Blvd.

1999 6101 Grand Court Road

2000 15290 Huebner Road

2007 8902 Floyd Curl Dr.

1993 1760 W. 16th St.

1992 555 Washington St.

2002 4402 South 129th Avenue

West

1995 8450 McIntosh Rd.

1993 5401 Sawyer Road

1968 3250 12th Street

1993 5511 Swift Road

2006 6150 Edgelake Drive

1998 5509 Swift Road

2005 2741 Blvd. Ave

2013 2751 Boulevard Ave

1998 9300 Antilles Drive

1999 500 Seven Fields Blvd.

1981 24 Truckhouse 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

Sewell, NJ . . . . . . . . . .

Shawnee, OK . . . . . . . .

Shelbyville, KY . . . . . .

Sherman, TX . . . . . . . .

Silver Spring, MD . . . .

Silver Spring, MD . . . .

Silvis, IL . . . . . . . . . . .

Sinking Spring, PA . . .

Sittingbourne, UK . . . .

Smithfield, NC . . . . . . .

Smithfield, NC . . . . . . .

South Bend, IN . . . . . .

South Point, OH . . . . . .

Southampton, UK . . . .

Southbury, CT . . . . . . .

Spokane, WA . . . . . . . .

Spokane, WA . . . . . . . .

Spokane, WA . . . . . . . .

Springfield, IL . . . . . . .

Springfield, IL . . . . . . .

St. Louis, MO . . . . . . .

St. Paul, MN . . . . . . . .

Stafford, UK . . . . . . . .

Stamford, UK . . . . . . . .

Statesville, NC . . . . . . .

Statesville, NC . . . . . . .

Statesville, NC . . . . . . .

Staunton, VA . . . . . . . .

Sterling Heights, MI

. .

Sterling Heights, MI

. .

Stillwater, OK . . . . . . .

Stratford-upon-Avon,

UK . . . . . . . . . . . . . .

Stroudsburg, PA . . . . . .

Summit, NJ . . . . . . . . .

Sun City West, AZ . . . .

Sunbury, PA . . . . . . . . .

Sunninghill, UK . . . . . .

Sunnyvale, CA . . . . . . .

Superior, WI

. . . . . . . .

Tacoma, WA . . . . . . . .

Tampa, FL . . . . . . . . . .

Terre Haute, IN . . . . . .

Texarkana, TX . . . . . . .

The Villages, FL . . . . .

Thomasville, GA . . . . .

Three Rivers, MI . . . . .

Tomball, TX . . . . . . . .

Tonganoxie, KS . . . . . .

Topeka, KS . . . . . . . . .

Towson, MD . . . . . . . .

Towson, MD . . . . . . . .

Towson, MD . . . . . . . .

Towson, MD . . . . . . . .

Troy, MI . . . . . . . . . . . .

Troy, OH . . . . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

3,127

14,095

80

630

700

1,469

4,678

880

1,393

1,357

290

360

670

1,135

1,519

1,860

3,200

2,580

2,649

—

990

1,890

2,100

2,009

1,820

150

310

140

899

790

1,583

80

790

340

3,080

1,250

695

11,632

4,946

1,020

2,522

1,315

1,370

192

1,035

530

1,258

1,050

310

260

1,180

1,715

3,100

4,527

1,381

200

1,400

3,870

5,221

10,395

11,683

16,420

19,848

6,539

5,680

8,216

17,770

9,390

16,041

23,613

25,064

25,342

11,703

10,100

13,378

12,390

33,019

8,238

3,238

1,447

6,183

3,627

6,391

10,787

15,639

1,400

14,508

16,313

14,152

21,778

7,246

42,233

22,131

13,735

8,576

6,913

18,016

1,403

7,446

12,520

2,761

13,300

3,690

12,712

13,280

13,115

6,468

3,128

24,452

2,000

—

—

630

—

—

—

139

—

267

—

—

—

—

—

958

284

195

—

—

1,085

787

100

—

171

266

8

—

—

—

—

—

517

—

—

600

—

—

—

6,159

—

—

—

—

—

540

—

840

76

—

195

—

—

—

—

4,254

3,127

14,095

1,400

4,500

5,221

10,395

11,683

16,559

19,848

6,760

5,680

8,216

17,770

9,390

16,041

24,571

25,348

25,537

11,703

9,332

14,463

13,177

33,119

8,238

3,348

1,713

6,191

3,627

6,391

10,787

15,639

1,400

14,999

16,313

14,152

22,378

7,246

42,233

22,131

19,894

8,576

6,913

18,016

1,403

7,446

13,060

2,761

14,140

3,766

12,712

13,475

13,115

6,468

3,128

24,452

6,254

80

630

700

1,469

4,678

880

1,393

1,403

290

360

670

1,135

1,519

1,860

3,200

2,580

2,649

768

990

1,890

2,100

2,009

1,881

150

310

140

899

790

1,583

80

816

340

3,080

1,250

695

11,632

4,946

1,020

2,522

1,315

1,370

192

1,035

530

1,258

1,050

310

260

1,180

1,715

3,100

4,527

1,381

200

153

188

837

1,579

1,696

122

146

3,691

231

715

2,363

946

2,128

109

541

4,939

6,895

5,958

138

2,107

1,707

2,691

2,698

499

378

749

2,514

1,503

432

128

188

839

1,443

2,096

3,027

4,357

82

1,689

251

2,909

99

94

1,936

814

1,103

2,093

43

2,805

353

2,236

2,974

154

73

44

275

2,177

2018

1996

2005

2005

2018

2018

2010

2018

2014

2003

2014

2014

2018

2017

2011

2013

2013

2018

2013

2014

2010

2015

2014

2014

2003

2003

2003

2018

2018

2018

1995

2015

2014

2011

2012

2018

2014

2018

2009

2018

2018

2015

1996

2013

2011

2018

2011

2015

2012

2011

2018

2018

2018

2018

1997

2010 378 Fries Mill Road

1995 3947 Kickapoo

1965 1871 Midland Trail

2006 1011 E. Pecan Grove Rd.

1995 2505 Musgrove Road

1990 2501 Musgrove Road

2005 1900 10th St.

1982 3000 Windmill Road

1997 200 London Road

1998 830 Berkshire Rd.

1999 250 Highway 210 West

2014 52565 State Road 933

1984 7743 County Road 1

2013 Botley Road, Park Gate

2001 655 Main St

2001 3117 E. Chaser Lane

1999 1110 E. Westview Ct.

1985 6025 North Assembly Street

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.

1999 1410 N Augusta St

1996 11095 East Fourteen Mile

Road

2013 38200 Schoenherr Road

1995 1616 McElroy Rd.

2012 Scholars Lane

2011 370 Whitestone Corner Road

2001 41 Springfield Avenue

1998 13810 West Sandridge Drive

1981 800 Court Street Circle

2017 Bagshot Road

1990 1150 Tilton Drive

2010 1915 North 34th Street

1984 5601 South Orchard

Southtreet

1999 14950 Casey Road

2015 395 8th Avenue

1996 4204 Moores Lane

2014 2450 Parr Drive

2006 423 Covington Avenue

1976 517 South Erie Southtreet

2001 1221 Graham Dr

2009 120 W 8th St

2011 1931 Southwest Arvonia Place

1973 7700 York Road

2000 8101 Bellona Avenue

1960 509 East Joppa Road

1970 7001 North Charles Street

2006 925 West South Boulevard

1997 81 S. Stanfield 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

Trumbull, CT . . . . . . . .

Tucson, AZ . . . . . . . . .

Tulsa, OK . . . . . . . . . . .

Tulsa, OK . . . . . . . . . . .

Tulsa, OK . . . . . . . . . . .

Tulsa, OK . . . . . . . . . . .

—

—

—

—

—

—

Tulsa, OK . . . . . . . . . . .

13,000

Tulsa, OK . . . . . . . . . . .

Twinsburg, OH . . . . . .

Tyler, TX . . . . . . . . . . .

Union, SC . . . . . . . . . .

Valparaiso, IN . . . . . . .

Valparaiso, IN . . . . . . .

Vancouver, WA . . . . . .

Venice, FL . . . . . . . . . .

Venice, FL . . . . . . . . . .

Vero Beach, FL . . . . . .

Vero Beach, FL . . . . . .

Virginia Beach, VA . . .

Voorhees, NJ . . . . . . . .

Voorhees, NJ . . . . . . . .

Voorhees, NJ . . . . . . . .

Voorhees, NJ . . . . . . . .

W Palm Beach, FL . . . .

W Palm Beach, FL . . . .

Wabash, IN . . . . . . . . .

Waconia, MN . . . . . . . .

Wake Forest, NC . . . . .

Wallingford, PA . . . . . .

Walnut Creek, CA . . . .

Walnut Creek, CA . . . .

Walsall, UK . . . . . . . . .

Wamego, KS . . . . . . . .

Wareham, MA . . . . . . .

Warren, NJ . . . . . . . . . .

Waterloo, IA . . . . . . . .

Waukee, IA . . . . . . . . .

Waxahachie, TX . . . . .

Wayne, NJ . . . . . . . . . .

Weatherford, TX . . . . .

Wellingborough,

UK . . . . . . . . . . . . . .

West Bend, WI . . . . . . .

West Des Moines,

IA . . . . . . . . . . . . . . .

West Orange, NJ . . . . .

West Reading, PA . . . .

Westerville, OH . . . . . .

Westerville, OH . . . . . .

Westerville, OH . . . . . .

Westfield, IN . . . . . . . .

Westfield, NJ . . . . . . . .

Westlake, OH . . . . . . . .

Weston Super Mare,

UK . . . . . . . . . . . . . .

Wheaton, MD . . . . . . . .

Whippany, NJ . . . . . . .

White Lake, MI . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

4,440

830

3,003

1,390

1,320

1,100

1,752

890

1,446

650

1,932

112

108

2,503

1,150

2,246

263

297

1,540

1,800

1,900

3,100

2,193

1,175

1,921

670

890

200

1,356

4,358

5,394

1,184

40

875

2,000

605

1,870

650

1,427

660

1,480

620

828

1,347

890

740

1,420

1,582

890

2,270

855

2,517

3,864

1,571

2,920

43,384

6,179

6,025

7,110

10,087

27,007

28,421

9,410

5,921

5,268

2,374

2,558

2,962

28,401

10,674

10,097

3,187

3,263

22,593

37,299

26,040

25,950

6,992

8,297

5,733

14,588

14,726

3,003

6,489

18,413

39,096

8,562

2,510

10,313

30,810

3,031

31,878

5,763

16,751

5,261

5,724

17,790

5,104

20,467

12,122

8,287

5,373

10,282

15,964

16,589

11,966

7,054

3,790

14,982

20,179

—

3,370

20

1,102

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

671

894

26

—

—

—

1

4,495

1,742

—

—

—

329

57

1,701

1,073

—

1,075

—

—

—

243

38

—

—

—

3,105

—

—

1

497

—

324

—

—

92

4,440

830

3,003

1,390

1,320

1,100

1,752

890

1,446

650

1,932

112

108

2,503

1,150

2,246

263

297

1,540

1,800

1,900

3,100

2,193

1,175

1,921

670

890

200

1,356

4,358

5,394

1,224

40

875

2,000

605

1,870

650

1,427

660

1,530

620

828

1,347

890

740

1,420

1,582

890

2,270

855

2,602

3,864

1,571

2,920

154

43,384

9,549

6,045

8,212

10,087

27,007

28,421

9,410

5,921

5,268

2,374

2,558

2,962

28,401

10,674

10,097

3,187

3,263

22,593

37,970

26,934

25,976

6,992

8,297

5,733

14,589

19,221

4,745

6,489

18,413

39,096

8,851

2,567

12,014

31,883

3,031

32,953

5,763

16,751

5,261

5,917

17,828

5,104

20,467

12,122

11,392

5,373

10,282

15,965

17,086

11,966

7,293

3,790

14,982

20,271

8,857

1,678

3,553

1,986

1,825

1,388

1,215

308

77

1,651

43

1,206

1,379

316

2,717

126

1,474

1,518

2,639

8,097

5,768

4,484

91

106

71

1,825

3,580

2,308

86

214

432

902

223

5,527

6,023

39

5,402

1,680

237

1,662

681

3,310

66

274

133

9,722

66

128

1,981

4,001

143

1,047

48

180

4,516

2011

2012

2006

2010

2011

2015

2017

2017

2018

2006

2018

2001

2001

2018

2008

2018

2001

2001

2014

2011

2011

2011

2018

2018

2018

2014

2011

1998

2018

2018

2018

2015

2015

2002

2011

2018

2012

2007

2018

2006

2015

2010

2018

2018

2018

1998

2018

2018

2014

2011

2018

2013

2018

2018

2010

2001 6949 Main Street

1997 5660 N. Kolb Road

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

2014 8551 Darrow Road

2007 5550 Old Jacksonville Hwy.

1981 709 Rice Avenue

1998 2601 Valparaiso St.

1999 2501 Valparaiso St.

2011 2811 N.E. 139th Street

2009 1600 Center Rd.

1997 1450 East Venice Avenue

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

2006 1086 Dumont Circle

1996 2330 Village Boulevard

1996 2300 Village Boulevard

2013 20 John Kissinger Drive

2005 500 Cherry Street

1999 611 S. Brooks St.

1930 115 South Providence Road

1997 1975 Tice Valley Boulevard

1990 1226 Rossmoor Parkway

2015 Little Aston Road

1996 1607 4th St

1989 50 Indian Neck Rd.

1999 274 King George Rd

1964 201 West Ridgeway Avenue

2007 1650 SE Holiday Crest Circle

2008 1329 Brown St.

1998 800 Hamburg Turnpike

2007 1818 Martin Drive

2015 159 Northampton

2011 2130 Continental Dr

2006 5010 Grand Ridge Drive

1998 510 Prospect Avenue

1975 425 Buttonwood Street

2001 690 Cooper Rd.

1982 1060 Eastwind Drive

1980 215 Huber Village Boulevard

2013 937 E. 186th Street

1970 1515 Lamberts Mill Road

1997 28400 Center Ridge Road

2011 141b Milton Road

1961 11901 Georgia Avenue

2000 18 Eden Lane

2000 935 Union Lake 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

Wichita, KS . . . . . . . . .

Wichita, KS . . . . . . . . .

—

—

Wichita, KS . . . . . . . . .

12,779

Wichita, KS . . . . . . . . .

Wichita, KS . . . . . . . . .

Wilkes-Barre, PA . . . . .

Williamsburg, VA . . . .

Williamsport, PA . . . . .

Williamsport, PA . . . . .

Williamstown, KY . . . .

Willoughby, OH . . . . .

Wilmington, DE . . . . . .

Wilmington, DE . . . . . .

Wilmington, DE . . . . . .

Wilmington, DE . . . . . .

Wilmington, NC . . . . .

Wilmington, NC . . . . .

Windsor, VA . . . . . . . .

Winston-Salem, NC . . .

Winter Garden, FL . . . .

Winter Springs, FL . . .

Witherwack, UK . . . . .

Wolverhampton, UK . .

Woodbury, MN . . . . . .

Woodstock, VA . . . . . .

Worcester, MA . . . . . . .

Worcester, MA . . . . . . .

Yardley, PA . . . . . . . . .

Yardley, PA . . . . . . . . .

Yeadon, PA . . . . . . . . .

York, PA . . . . . . . . . . .

York, PA . . . . . . . . . . .

York, PA . . . . . . . . . . .

York, UK . . . . . . . . . . .

Youngsville, NC . . . . .

Zephyrhills, FL . . . . . .
Zionsville, IN . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

1,400

860

630

260

900

753

1,187

919

780

70

1,774

800

1,376

2,843

2,266

210

400

1,148

360

1,110

1,152

944

1,573

1,317

594

3,500

2,300

773

1,561

1,075

976

1,050

1,121

2,961

380

2,131

1,610

11,000

8,873

19,747

2,240

10,134

3,457

5,728

6,926

1,899

6,430

8,655

9,494

13,454

36,959

9,503

2,991

15,355

6,514

2,514

7,937

14,826

6,915

6,678

20,935

5,108

54,099

9,060

14,918

9,442

10,694

9,357

4,212

7,586

8,266

10,689

6,671

22,400

—

—

—

129

—

—

—

—

—

—

—

114

—

—

—

—

—

—

459

—

—

266

279

298

—

—

6,000

—

—

—

—

—

—

379

—

—

1,686

1,400

860

630

260

900

753

1,187

919

780

70

1,774

800

1,376

2,843

2,266

210

400

1,148

360

1,110

1,152

976

1,626

1,317

594

3,500

2,300

773

1,561

1,075

976

1,050

1,121

3,061

380

2,131

1,610

11,000

8,873

19,747

2,369

10,134

3,457

5,728

6,926

1,899

6,430

8,655

9,608

13,454

36,959

9,503

2,991

15,355

6,514

2,973

7,937

14,826

7,149

6,904

21,233

5,108

54,099

15,060

14,918

9,442

10,694

9,357

4,212

7,586

8,545

10,689

6,671

24,086

4,844

1,792

3,328

207

1,932

48

375

83

30

2,501

105

2,193

159

419

115

1,560

1,854

443

1,268

1,382

173

1,027

1,000

1,057

338

13,035

4,007

184

139

121

112

60

97

946

1,256

90

5,158

2006

2011

2012

2015

2011

2018

2018

2018

2018

2005

2018

2011

2018

2018

2018

1999

2014

2018

2003

2012

2018

2013

2013

2017

2018

2007

2008

2018

2018

2018

2018

2018

2018

2014

2014

2018

2010

1997 505 North Maize Road

2012 10604 E 13th Street North

2009 2050 North Webb Road

1992 900 N Bayshore Dr

2012 10600 E 13th Street North

1970 1548 Sans Souci Parkway

2000 1811 Jamestown Rd

1976 300 Leader Drive

1972 101 Leader Drive

1987 201 Kimberly Lane

1974 37603 Euclid Avenue

1970 810 S Broom Street

1998 700 1/2 Foulk Road

1988 5651 Limestone Road

1984 700 Foulk Road

1999 3501 Converse Dr.

2012 3828 Independence Blvd

1999 23352 Courthouse Hwy

1996 2980 Reynolda Rd.

2013 720 Roper Road

1999 1057 Willa Springs Drive

2009 Whitchurch Road

2011 378 Prestonwood Road

2015 2195 Century Avenue South

2001 803 S Main St

2009 101 Barry Road

1993 378 Plantation St.

1995 493 Stony Hill Road

1990 1480 Oxford Valley Road

1963 14 Lincoln Avenue

1972 200 Pauline Drive

1983 2400 Kingston Court

1979 1770 Barley Road

2006 Rosetta Way, Boroughbridge

Road

2013 100 Sunset Drive

1987 38220 Henry Drive

2009 11755 N Michigan Rd

Triple-net Total

$288,387

$1,096,169

$8,585,481

$301,960

$1,119,576

$8,864,034

$1,261,486

155

Welltower Inc.

Schedule III
Real Estate and Accumulated Depreciation
December 31, 2018

(Dollars in thousands)

Initial Cost to Company

Description

Encumbrances

Land

Outpatient Medical:

Addison, IL . . . . . . . . .

$ 6,052

$

$

$ —

1

1,221

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

Building &
Improvements

$19,089

12,105

14,196

14,757

—

17,103

18,902

36,152

21,077

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

13,755

12,161

12,312

34,002

12,951

7,692

7,403

5,611

102

821

726

476

1,862

548

773

1,769

584

5,408

82

4,931

1,947

—

1,066

273

187

—

—

—

20,766

18,863

19,863

32,603

52,772

52

124

476

896

80

31

109

50

2,048

2,048

214

13,324

40,369

1,184

1,035

1,437

1,701

450

11,989

10

—

9,799

4,298

7,006

6,228

21,221

50,907

12,611

31,596

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 . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

33,729

78,271

—

—

—

Birmingham, AL . . . . .

8,626

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 . . . . . . .

Brandon, FL . . . . . . . . .

Bridgeton, MO . . . . . . .

Bridgeton, MO . . . . . . .

Buckhurst Hill, UK . . .

Burleson, TX . . . . . . . .

Burnsville, MN . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

$19,089

$ —

12,106

15,417

15,205

—

17,651

20,542

37,957

21,077

27,576

18,645

25,332

25,984

45,397

10,112

8,007

17,240

24,818

16,682

7,183

44,130

1,378

32,748

29,451

87,876

10,840

13,780

20,922

13,755

12,201

12,988

37,720

13,369

8,929

8,897

13,928

42,569

10,216

4,315

7,006

6,621

21,486

50,907

13,342

33,059

2,993

4,722

5,141

—

6,275

6,627

13,445

1,300

10,909

3,550

11,504

7,822

12,796

499

1,409

6,860

1,724

5,283

748

6,159

684

4,403

5,043

11,291

4,243

4,905

7,981

—

4,585

3,622

14,246

3,535

3,798

3,902

5,714

11,591

1,896

889

182

649

6,906

4,885

4,177

8,685

2018

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

2018

2010

2012

2006

2011

2006

2006

2007

2013

2014

2014

2018

2017

2010

2015

2011

2013

2012 303 West Lake Street

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

1985 3485 Independence Drive

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

2016 2020 Town Center Boulevard

2008 3440 De Paul Ln.

2006 12266 DePaul Dr

2013 High Road

2007 12001 South Freeway

2014 14101 Fairview Dr

448

—

548

1,640

1,805

—

4,567

402

7,068

1,973

1,972

—

42

2,225

49

2

73

3,400

208

1,058

812

510

639

2,047

2,196

—

40

896

3,823

454

1,374

1,631

8,423

2,925

417

17

—

193

265

—

731

1,463

102

821

726

476

1,862

548

773

1,769

584

5,618

82

5,387

2,184

—

1,066

274

187

—

—

—

20,766

18,885

19,863

32,603

52,772

52

124

476

896

80

251

214

86

2,185

2,185

320

14,049

1,184

1,035

1,437

1,501

450

11,989

10

—

156

Description

Encumbrances

Land

Building &
Improvements

Initial Cost to Company

Cost Capitalized
Subsequent to
Acquisition

Carmel, IN . . . . . . . . . .

Carmel, IN . . . . . . . . . .

Castle Rock, CO . . . . .

Castle Rock, CO . . . . .

Cedar Park, TX . . . . . .

—

—

—

—

—

Chapel Hill, NC . . . . . .

Chapel Hill, NC . . . . . .

5,259

5,259

Chapel Hill, NC . . . . . .

14,949

Charleston, SC . . . . . . .

Cincinnati, OH . . . . . . .

Claremore, OK . . . . . . .

Clarkson Valley,

MO . . . . . . . . . . . . . .
Clear Lake, TX . . . . . .
Columbia, MD . . . . . . .

Columbia, MD . . . . . . .

Columbia, MD . . . . . . .

Coon Rapids, MN . . . .

—

—

—

—

—
—

—

—

—

Costa Mesa, CA . . . . . .

22,020

Cypress, TX . . . . . . . . .

Dade City, FL . . . . . . .

Dallas, TX . . . . . . . . . .

Dallas, TX . . . . . . . . . .

Dallas, TX . . . . . . . . . .

Dallas, TX . . . . . . . . . .

Dayton, OH . . . . . . . . .

Deerfield Beach, FL . . .

Delray Beach, FL . . . . .

Durham, NC . . . . . . . . .

Edina, MN . . . . . . . . . .

El Paso, TX . . . . . . . . .

Elmhurst, IL . . . . . . . . .

Everett, WA . . . . . . . . .
Fenton, MO . . . . . . . . .
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 . . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

10,559

—

—

—

—

—

—

—

—

—

—

—

—

—

Gardendale, AL . . . . . .

4,300

Gig Harbor, WA . . . . .

Glendale, CA . . . . . . . .

Gloucester, VA . . . . . .

Grand Prairie, TX . . . .

—

—

—

—

2,280

19,238

2,026

21,559

80

—

132

1,970

1,970

5,681

2,773

—

132

—

—
23

12,159

2,333

—

22,033

1,287

1,211

122

137

462

6,086

730

2,408

1,882

1,212

310

677

41

4,842

958

369

8,578

737

4,164

4,620

1,105

462

401

2,338

—

—

5,477

20

1,150

80

37

2,128

981

13,004

11,795

23,753

8,874

8,925

25,035

25,928

17,880

11,173

35,592

13,882
33,885

72,636

19,232

26,679

24,332

—

5,511

15,418

28,690

52,488

18,007

6,919

7,809

34,767

22,858

15,132

17,075

39,562

26,010

27,485

13,911

61,779

9,276

27,027

—

22,836

26,020

6,099

12,138

18,635

15,309

53,890

21,801

8,162

30,810

18,398

9,169

6,086

944

186

586

165

—

—

—

—

124

250

76

—

20
1,766

—

1,567

1,123

179

—

—

—

3,836

2,070

—

362

793

7,280

2

989

2,457

—

1

439

357

—

—

962

—

—

373

1

2,821

1,534

2,549

433

1,868

—

982

1,651

—

—

Gross Amount at Which
Carried at Close of Period

Land

Building &
Improvements

Accumulated
Depreciation(1)

Year
Acquired

Year
Built

Address

2,475

19,987

7,581

2011

2005 12188-A North Meridian

Street

2,186

21,585

8,691

2011

2007 12188-B North Meridian

3,008

483

1,819

—

—

—

4,988

3,561

3,318

12,590

1,504
6,522

249

4,971

5,356

3,664

—

1,476

1,681

13,032

11,436

373

3,039

3,356

18,890

3,958

4,820

8,868

—

7,650

7,480

2,793

1,953

1,475

4,930

—

5,324

5,128

1,227

6,092

7,805

7,344

3,694

8,066

—

3,944

6,951

—

2,096

Street

2013 2352 Meadows Boulevard

2017 Meadows Boulevard

2014 1401 Medical Parkway,

Building 2

2007 6011 Farrington Road

2007 6013 Farrington Road

2006 2226 North Carolina
Highway 54

2009 325 Folly Road

2013 3301 Mercy Health Boulevard

2005 1501 N. Florence Ave.

2010 15945 Clayton Rd

2014 1010 South Ponds Drive
1982 5450 & 5500 Knoll N Dr.

2009 10710 Charter Drive

2002 10700 Charter Drive

2014 11850 Blackfoot Street NW

2007 1640 Newport Boulevard

1900 14940 Mueschke Road

1998 13413 US Hwy 301

2014 8196 Walnut Hill Lane

1995 9330 Poppy Dr.

2004 7115 Greenville Avenue

2010 10740 North Central
Expressway

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 133 E Brush Hill Road

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

2005 2217 Decatur Highway

2009 11511 Canterwood Blvd. NW

2002 222 W. Eulalia St.

2008 5659 Parkway Drive

2009 2740 N State Hwy 360

2014

2016

2017

2018

2018

2018

2014

2012

2007

2009

2013
2015

2018

2012

2013

2017

2016

2011

2013

2006

2012

2018

2011

2011

2006

2013

2010

2006

2018

2010

2013

2013

2017

2015

2014

2014

2012

2012

2014

2007

2007

2007

2014

2010

2018

2010

2007

2018

2012

13,591

11,960

23,753

8,874

8,925

25,035

26,010

18,128

11,249

35,592

13,902
26,321

72,636

20,799

27,802

24,511

—

5,511

15,418

32,526

54,558

18,007

7,281

8,470

41,480

22,860

16,121

19,532

39,562

26,011

27,924

14,268

61,779

9,276

27,989

—

22,836

26,393

6,100

14,959

20,169

17,858

54,323

23,645

8,162

31,792

20,049

9,169

6,086

79

—

132

1,970

1,970

5,681

2,815

2

132

—

—
9,353

12,159

2,333

—

22,033

1,287

1,211

122

137

462

6,086

730

2,540

2,449

1,212

310

677

41

4,842

958

369

8,578

737

4,164

4,620

1,105

462

401

2,338

—

—

5,477

44

1,150

80

37

2,128

981

157

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

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 . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

Houston, TX . . . . . . . .

3,899

Howell, MI . . . . . . . . . .

Hudson, OH . . . . . . . . .

Humble, TX . . . . . . . . .

Jackson, MI . . . . . . . . .

Jupiter, FL . . . . . . . . . .

Jupiter, FL . . . . . . . . . .

Killeen, TX . . . . . . . . .

Killeen, TX . . . . . . . . .

Killeen, TX . . . . . . . . .

Kyle, TX . . . . . . . . . . .

La Jolla, CA . . . . . . . . .

La Jolla, CA . . . . . . . . .

La Quinta, CA . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

Lacey, WA . . . . . . . . . .

6,768

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, UK . . . . . . . . .

London, UK . . . . . . . . .

London, UK . . . . . . . . .

Los Alamitos, CA . . . .

Los Gatos, CA . . . . . . .

Loxahatchee, FL . . . . .

Loxahatchee, FL . . . . .

Loxahatchee, FL . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Lynbrook, NY . . . . . . .

27,745

Marietta, GA . . . . . . . .

—

—

3,365

970

8,316

2,098

1,262

2,659

—

10,403

5,943

15,669

10,104

26,384

21,538

7,045

29,069

8,834

—

5,837

33,128

4,778

1,661

74

—

638

8

165

—

—

150

2,081

3,365

970

8,316

2,098

1,262

2,659

—

10,403

8,640

17,330

10,178

26,384

22,176

7,053

29,234

8,834

—

1,603

3,778

3,880

6,879

3,486

1,589

6,581

1,598

6

2014

2014

2010

2012

2014

2014

2012

2012

2011

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

11,293

2012

2005 15655 Cypress Woods

3,102

3,688

1,099

377

2,000

2,587

—

607

2,252

2,825

—

760

1,907

2,569

12,855

9,425

3,266

1,751

240

2,801

146

72

3,025

1,376

6,127

2,319

74

433

540

100

1,420

5,229

17,983

4,081

39

488

1,637

1,340

1,553

10,028

2,682

32,323

13,313

1,604

13,726

13,928

13,720

9,941

17,367

11,415

5,858

3,756

22,878

3,575

14,384

32,658

26,525

22,066

10,383

14,249

—

14,885

16,017

26,249

6,750

—

4,612

15,287

6,921

17,926

13,766

29,723

11,551

157,802

28,107

18,635

22,386

5,048

6,509

4,694

37,319

20,053

36,672

13,445

70,493

13,726

14,731

14,127

9,941

17,436

14,453

6,729

3,756

23,148

3,575

14,922

33,363

27,067

22,250

10,383

14,453

—

17,179

16,693

26,249

6,750

—

5,826

16,771

7,135

18,216

13,766

30,775

11,551

157,802

28,107

19,749

24,796

6,246

7,873

6,141

37,319

21,441

4,489

132

3,242

3,688

80,605

12,815

—

803

688

—

130

3,422

1,082

—

305

—

538

705

542

197

—

204

—

2,294

676

—

—

—

1,214

1,484

214

290

—

1,052

—

—

—

1,114

2,410

1,280

1,464

1,544

—

1,409

377

2,000

2,868

—

668

2,636

3,036

—

795

1,907

2,569

12,855

9,425

3,279

1,751

240

2,801

146

72

3,025

1,376

6,127

2,319

74

433

540

100

1,420

5,229

17,983

4,081

39

488

1,719

1,440

1,650

10,028

2,703

158

7,580

3,449

14,163

—

459

4,921

1,036

4,502

5,598

3,037

325

7,882

566

2,962

5,946

3,912

4,719

—

5,048

—

6,528

3,952

1,096

313

—

2,708

6,416

3,196

5,492

1,751

10,875

1,108

15,142

2,697

7,389

11,137

2,713

3,144

2,655

—

2,224

Medical Dr.

2014 1900 N Loop W Freeway

2007 10701 Vintage Preserve

Parkway

1998 2727 W Holcombe Boulevard

2011 20207 Chasewood Park Drive

2017 1225 South Latson Road

2006 5655 Hudson Drive

2014 8233 N. Sam Houston

Parkway E.

2009 1201 E Michigan Avenue

2001 550 Heritage Dr.

2004 600 Heritage Dr.

1990 2301 S. Clear Creek

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

1971 2555 Marvin Road Northeast

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.

1962 444 Merrick Road

2016 4800 Olde Towne Parkway

2014

2012

2012

2018

2016

2012

2013

2013

2006

2007

2018

2010

2011

2014

2015

2015

2014

2018

2010

2007

2006

2012

2017

2017

2007

2006

2006

2007

2010

2013

2010

2015

2015

2015

2007

2006

2006

2006

2006

2018

2016

Description

Encumbrances

Land

Building &
Improvements

Initial Cost to Company

Cost Capitalized
Subsequent to
Acquisition

Gross Amount at Which
Carried at Close of Period

Melbourne, FL . . . . . . .

Menasha, WI . . . . . . . .

Merced, CA . . . . . . . . .

Merriam, KS . . . . . . . .

Merriam, KS . . . . . . . .

Merriam, KS . . . . . . . .

Merrillville, IN . . . . . . .

Mesa, AZ . . . . . . . . . . .

Mesquite, TX . . . . . . . .

—

—

—

—

—

—

—

—

—

Mission Hills, CA . . . .

23,835

Missouri City, TX . . . .

—

Mobile, AL . . . . . . . . .

16,028

Moline, IL . . . . . . . . . .

Monticello, MN . . . . . .

Moorestown, NJ . . . . . .

Morrow, GA . . . . . . . .

Mount Juliet, TN . . . . .

Mount Vernon, IL . . . .

Murrieta, CA . . . . . . . .

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 . . . . . . . . .

Palmer, AK . . . . . . . . .

Pasadena, TX . . . . . . . .

Pearland, TX . . . . . . . .

Pearland, TX . . . . . . . .

Pendleton, OR . . . . . . .

Phoenix, AZ . . . . . . . . .

Pineville, NC . . . . . . . .

Plano, TX . . . . . . . . . . .

Plano, TX . . . . . . . . . . .

Plantation, FL . . . . . . .

Plantation, FL . . . . . . .

—

6,976

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Port Orchard, WA . . . .

10,172

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 . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

3,439

50,461

1,374

—

176

—

1,257

—

1,558

496

—

1,360

2,759

—

61

6

818

1,566

—

—

3,800

1,806

378

91

2,411

1,433

454

216

89

283

217

1,700

1,500

9,594

—

1,149

961

5,423

793

8,563

8,848

2,810

655

5,015

1,117

2,000

2,969

132

1,062

1,931

183

883

762

866

1,655

1,057

13,861

13,772

8,005

10,222

24,911

22,134

9,561

3,834

42,276

7,146

25,180

8,783

18,489

50,896

8,064

11,697

24,892

47,190

—

7,165

29,947

10,613

16,494

10,891

8,362

19,135

18,339

8,335

29,705

8,009

11,253

32,753

10,312

48,018

6,974

20,698

83,209

10,666

9,262

22,716

25,529

26,697

21,972

9,118

26,697

17,197

28,680

47,639

5,850

15,984

17,171

12,756

14,050

10,101

Building &
Improvements

Accumulated
Depreciation(1)

Year
Acquired

Year
Built

Address

51,164

16,830

14,587

9,093

14,295

24,975

23,049

10,908

3,834

44,157

7,208

25,180

8,852

18,620

51,234

8,309

13,396

24,917

47,253

—

10,757

29,947

11,999

16,524

11,044

8,672

19,533

19,391

8,335

31,147

8,009

11,264

32,731

10,692

61,146

9,365

21,252

85,877

15,115

10,644

22,716

25,529

27,777

24,040

9,125

27,489

17,340

31,886

47,640

5,850

16,025

17,171

14,776

14,070

10,101

9,227

2014

2009 2222 South Harbor City

2,099

5,015

3,256

5,210

6,116

7,183

4,756

1,035

8,540

420

—

1,179

3,986

12,506

4,320

5,609

6,306

18,061

—

4,509

7,296

3,829

2,981

5,761

3,298

5,116

6,798

171

10,991

1,102

1,457

5,033

1,362

25,399

4,615

12,431

20,969

7,703

6,782

—

7,892

8,340

9,409

627

8,796

4,240

9,999

12,977

1,870

4,578

4,082

5,835

3,046

4,943

Boulevard

1994 1550 Midway Place

2010 315 Mercy Ave.

1972 8800 West 75th Street

1977 8901 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

2003 6144 Airport Boulevard

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

2011 28078 Baxter Rd.

1900 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.

2018 2480 S Woodworth Loop

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.

1995 450 South Kitsap Boulevard

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.

2016

2009

2011

2011

2013

2008

2008

2012

2014

2015

2018

2012

2012

2011

2007

2007

2011

2010

2014

2006

2012

2012

2014

2007

2007

2013

2007

2017

2007

2012

2012

2014

2012

2006

2006

2008

2012

2006

2006

2018

2011

2010

2006

2015

2012

2012

2011

2011

2011

2011

2011

2006

2014

2006

Land

3,538

1,345

—

176

444

1,257

—

1,558

496

4,791

1,360

2,759

—

61

362

845

802

2,940

815

1,088

4,517

64

915

1,347

—

6,672

62

—

69

131

694

272

1,734

1,601

25

63

—

3,728

—

1,386

30

441

310

398

1,052

—

1,442

—

11

191

380

13,128

2,507

554

2,668

4,461

1,442

—

—

1,080

2,068

7

882

143

3,206

1

—

41

—

2,023

46

—

—

—

3,800

1,942

378

91

2,411

1,721

454

216

89

283

217

1,700

1,500

9,807

—

1,149

1,077

5,423

793

8,575

8,908

2,810

655

5,015

1,117

2,000

3,059

132

1,062

1,931

183

883

762

869

1,681

1,057

159

Description

Encumbrances

Land

Building &
Improvements

Initial Cost to Company

Cost Capitalized
Subsequent to
Acquisition

San Antonio, TX . . . . .

San Antonio, TX . . . . .

San Antonio, TX . . . . .

San Antonio, TX . . . . .

Santa Clarita, CA . . . . .

Santa Clarita, CA . . . . .

Santa Clarita, CA . . . . .

—

—

—

—

—

—

—

Santa Clarita, CA . . . . .

25,000

Santa Clarita, CA . . . . .

Sarasota, FL . . . . . . . . .

Seattle, WA . . . . . . . . .

Sewell, NJ . . . . . . . . . .

Sewell, NJ . . . . . . . . . .

Shakopee, MN . . . . . . .

Shakopee, MN . . . . . . .

Shenandoah, TX . . . . .

Sherman Oaks, CA . . .

—

—

—

—

—

5,654

9,541

—

—

Silverdale, WA . . . . . .

13,378

Somerville, NJ . . . . . . .

Southlake, TX . . . . . . .

Southlake, TX . . . . . . .

Southlake, TX . . . . . . .

Springfield, IL . . . . . . .

Springfield, IL . . . . . . .

St Paul, MN . . . . . . . . .

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 . . . . . . . .

Waco, TX . . . . . . . . . . .

Waco, TX . . . . . . . . . . .

Washington, PA . . . . . .

Wausau, WI . . . . . . . . .

Waxahachie, TX . . . . .

Wellington, FL . . . . . . .

Wellington, FL . . . . . . .

West Seneca, NY . . . . .

Westlake Village,

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

14,930

19,425

—

—

—

—

—

1,038

4,518

900

3,050

—

—

278

295

—

62

4,410

60

1,242

508

707

—

—

3,451

3,400

3,000

592

9,173

31,041

17,288

12,073

2,338

28,384

185

40,257

20,618

47,325

38,428

57,929

11,616

11,412

18,089

21,135

32,186

21,176

22,244

—

18,243

698

30,549

1,569

177

49

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

601

2,250

3,981

2,050

—

107

388

917

10,350

3,519

37,695

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

2,594

28,632

31,706

12,175

18,784

16,933

13,697

22,435

CA . . . . . . . . . . . . . .

6,360

2,487

9,776

1,758

4,087

798

—

20,485

1,866

11,594

60

919

4,118

392

846

—

851

95

62

3,228

—

2

—

1,821

3,915

—

31

348

2,068

309

3,071

283

68

—

—

—

—

—

26

30

990

325

1,880

—

1,816

447

—

—

—

—

230

2,705

1,756

4,230

—

Gross Amount at Which
Carried at Close of Period

Land

1,096

4,593

938

3,050

5,304

5,277

11,872

295

4,407

62

4,410

164

1,242

509

773

24

3,121

3,451

3,400

3,000

592

Building &
Improvements

Accumulated
Depreciation(1)

Year
Acquired

Year
Built

Address

10,873

35,053

18,048

12,073

17,519

24,973

185

40,317

17,130

51,443

38,820

58,671

11,616

12,262

18,118

21,173

32,293

21,176

22,246

—

20,064

5,389

10,558

4,489

47

3,177

4,346

151

5,184

3,150

13,413

15,744

23,914

—

4,159

5,061

2,117

6,038

—

5,793

—

5,076

2006

2012

2014

2016

2014

2014

2014

2014

2014

2012

2010

2007

2018

2010

2010

2013

2014

2018

2008

2014

2012

1999 540 Stone Oak Centre Drive

1986 5282 Medical Drive

2007 3903 Wiseman Boulevard

2017 5206 Research Drive

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

2007 556 Egg Harbor Road

1996 1515 St Francis Ave

2007 1601 St Francis Ave

2014 106 Vision Park Boulevard

1969 4955 Van Nuys Boulevard

2004 2200 NW Myhre Road

2007 30 Rehill Avenue

1900 Central Avenue

2004 1545 East Southlake

Boulevard

698

34,464

7,578

2012

2004 1545 East Southlake

1,244

440

5,050

7,425

12,101

2,403

11,886

4,693

5,290

17,445

5,855

2,803

331

1,628

794

2,886

290

2,891

9,842

9,866

25,331

—

—

—

788

1,749

7,051

5,163

10,390

Boulevard

2011 1100 East Lincolnshire Blvd

2011 2801 Mathers Rd.

2006 225 Smith Avenue N.

2001 2325 Dougherty Rd.

2007 435 Phalen Boulevard

2016 29 Hospital Plaza

2007 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

2000 6600 Fish Pond Rd

1981 601 Highway 6 West

2010 100 Trich 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

2010

2010

2014

2007

2011

2015

2011

2010

2012

2011

2010

2011

2017

2011

2015

2008

2015

2015

2009

2006

2010

2018

2018

2018

2015

2016

2006

2007

2007

154

2018

1989 1220 La Venta Drive

10,351

3,550

38,043

19,315

39,821

44,224

37,493

11,525

15,532

64,307

17,449

12,234

7,270

9,980

12,577

5,892

866

13,919

36,187

25,994

96,429

2,594

28,632

31,706

12,175

18,711

19,419

15,261

25,917

9,776

1,568

177

49

336

2,701

—

698

1,620

3,543

—

—

4,319

1,462

2,900

8,850

1,325

3,345

3,361

—

6,477

99

601

2,250

3,981

2,050

303

326

580

1,665

2,487

160

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

Westlake Village,

CA . . . . . . . . . . . . . .

8,002

Woodbridge, VA . . . . .

Zephyrhills, FL . . . . . .

Zephyrhills, FL . . . . . .

—

—

—

Outpatient Medical

2,553

346

3,875

5,927

15,851

16,629

27,270

29,082

—

—

—

—

2,553

346

3,875

5,927

15,851

16,629

27,270

29,082

214

—

6,850

742

2018

2018

2011

2018

1975 1250 La Venta Drive

2012 12825 Minnieville Road

1974 38135 Market Square Dr

2016 2352 Bruce B Downs

Boulevard

Total

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

$386,737

$645,891

$5,233,682

$357,411

$712,257

$5,524,727

$1,276,138

161

Welltower Inc.

Schedule III
Real Estate and Accumulated Depreciation
December 31, 2018

(Dollars in thousands)

Description

Encum
brances

Land

Buildings &
Improvements

Initial Cost to Company

Cost Capitalized
Subsequent to
Acquisition

Gross Amount at Which
Carried at Close of Period

Land

Buildings &
Improvements

Accumulated
Depreciation

Year
Acquired

Year
Built

Address

Assets Held For Sale:

Agawam, MA . . . . . . . .

$

Agawam, MA . . . . . . . .

Agawam, MA . . . . . . . .

Agawam, MA . . . . . . . .

Agawam, MA . . . . . . . .

Ayer, MA . . . . . . . . . . .

Beachwood, OH . . . . . .

Birmingham, UKG . . .

Bridgewater, NJ . . . . . .

Broadview Heights,

OH . . . . . . . . . . . . . .

Canton, MA . . . . . . . . .

Centerville, MA . . . . . .

Charles Town, WV . . .

Cinnaminson, NJ . . . . .

Cloquet, MN . . . . . . . .

Concord, NH . . . . . . . .

Dallas, TX . . . . . . . . . .

Gettysburg, PA . . . . . .

Glastonbury, CT . . . . .

Hamburg, PA . . . . . . . .

Houston, TX . . . . . . . .

Lancaster, NH . . . . . . .

Langhorne, PA . . . . . . .

Lowell, MA . . . . . . . . .

Lowell, MA . . . . . . . . .

Mendham, NJ . . . . . . . .

Merriam, KS . . . . . . . .

Merriam, KS . . . . . . . .

Middletown, RI . . . . . .

Millville, NJ . . . . . . . . .

Monroe Twp, NJ . . . . .

Mystic, CT . . . . . . . . . .

Niantic, CT . . . . . . . . .

North Cape May, NJ . .

North Cape May, NJ . .

Palm Springs, FL . . . . .

Palm Springs, FL . . . . .

Pennsauken, NJ . . . . . .

Providence, RI . . . . . . .

Rockville, CT . . . . . . . .

Sanatoga, PA . . . . . . . .

South Boston, MA . . . .

South Windsor, CT . . .

Swanton, OH . . . . . . . .

Troy, OH . . . . . . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

$ 880

1,230

930

920

920

—

1,260

4

1,850

920

820

1,300

230

860

340

720

1,080

590

1,950

840

5,090

160

1,350

1,070

680

1,240

—

—

2,480

840

1,160

1,400

1,320

77

600

739

1,182

900

2,655

1,500

980

385

3,000

330

470

$10,044

$

13,618

15,304

10,661

10,562

22,074

23,478

21,321

3,050

12,400

8,201

27,357

22,834

6,663

4,660

3,041

9,655

8,913

9,532

10,543

9,471

434

24,881

13,481

3,378

27,169

1,996

5,862

24,628

29,944

13,193

18,274

25,986

151

22,266

4,066

7,765

10,780

21,910

4,835

30,695

2,002

29,295

6,370

16,730

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

$

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

48

—

—

—

—

—

—

—

1,525

—

—

—

162

$ 8,696

$

6,074

6,511

4,592

4,537

8,691

10,503

13,200

3,342

9,590

2,626

23,139

18,509

6,014

4,285

3,344

4,412

7,501

5,500

8,994

7,840

493

3,551

1,960

3,155

23,295

—

—

21,727

24,559

11,403

15,316

25,167

276

18,270

2,061

3,477

9,172

16,021

5,073

14,166

3,912

26,338

4,160

10,730

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

2011

2011

2011

2011

2011

2011

2001

2013

2004

2001

2002

2011

2011

2011

2011

2011

2011

2011

2011

2011

2007

2011

2011

2011

2011

2011

2011

2011

2011

2011

2011

2011

2011

2015

2011

2006

2006

2011

2011

2011

2011

1995

2011

2004

2004

1996 153 Cardinal Drive

1975 61 Cooper Street

1970 55 Cooper Street

1985 464 Main Street

1967 65 Cooper Street

1988 400 Groton Road

1990 3800 Park East Drive

2006 5 Church Road, Edgbaston

1970 875 Route 202/206 North

1984 2801 E. Royalton Rd.

1993 One Meadowbrook Way

1998 22 Richardson Road

1997 219 Prospect Ave

1965 1700 Wynwood Drive

2006 705 Horizon Circle

1926 227 Pleasant Street

1997 3611 Dickason Avenue

1987 867 York Road

1966 72 Salmon Brook Drive

1966 125 Holly Road

2009 15015 Cypress Woods
Medical Drive

1905 63 Country Village Road

1979 262 Toll Gate Road

1975 841 Merrimack Street

1969 30 Princeton Blvd

1968 84 Cold Hill Road

1980 7301 Frontage Street

1985 9119 West 74th Street

1998 303 Valley Road

1986 54 Sharp Street

1996 292 Applegarth Road

2001 20 Academy Lane Mystic

2001 417 Main Street

1988 610 Town Bank Road

1995 700 Townbank Road

1993 1640 S. Congress Ave.

1997 1630 S. Congress Ave.

1985 5101 North Park Drive

1998 700 Smith Street

1960 1253 Hartford Turnpike

1993 225 Evergreen Road

1961 804 E. Seventh St.

1999 432 Buckland Road

1950 401 W. Airport Hwy.

1971 512 Crescent Drive

Description

Encum
brances

Land

Buildings &
Improvements

Initial Cost to Company

Cost Capitalized
Subsequent to
Acquisition

Gross Amount at Which
Carried at Close of Period

Land

Buildings &
Improvements

Accumulated
Depreciation

Year
Acquired

Year
Built

Address

Trumbull, CT . . . . . . . .

Wallingford, CT . . . . . .

Warwick, RI . . . . . . . . .

Waterbury, CT . . . . . . .

West Chester, PA . . . . .

West Orange, NJ . . . . .

Westlake, OH . . . . . . . .

Wilbraham, MA . . . . . .

Wilkes-Barre, PA . . . . .

Windsor, CT . . . . . . . .

Windsor, CT . . . . . . . .

Wyncote, PA . . . . . . . .

Assets Held For Sale

—

—

—

—

—

—

—

—

—

—

—

—

2,850

490

2,400

2,460

1,350

2,280

1,330

660

570

2,250

1,800

2,700

37,685

1,210

24,635

39,547

29,237

10,687

17,926

17,639

2,301

8,539

600

22,244

—

—

—

—

—

—

—

—

—

—

424

—

—

—

—

—

—

—

—

—

—

—

—

—

32,020

727

21,633

30,909

24,564

10,571

8,673

14,484

1,176

10,218

2,824

20,290

Total

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

$

— $

68,392

$

821,723

$

1,997

$

— $

590,271

$

2011

2011

2011

2011

2011

2011

2001

2011

2011

2011

2011

2011

1998 2750 Reservoir Avenue

1962 35 Marc Drive

1998 75 Minnesota Avenue

1998 180 Scott Road

1974 800 West Miner Street

1963 20 Summit Street

1985 27601 Westchester Pkwy.

2000 2387 Boston Road

1992 300 Courtright Street

1969 One Emerson Drive

1974 One Emerson Drive

1960 1245 Church Road

—

—

—

—

—

—

—

—

—

—

—

—

—

Summary:

Seniors Housing

Operating . . . . . . . . .
Triple-net . . . . . . . . . . .

Outpatient Medical

. . .

Construction in

progress . . . . . . . . . .

Total continuing
operating
properties . . . . . . . .
Assets held for sale . . .

Total investments in
real property
owned . . . . . . . . . . .

$1,810,587

$1,331,171

$14,047,033

$1,206,757

$1,373,258

$15,211,900

$2,962,334

288,387

386,737

—

1,096,169

645,891

—

8,585,481

5,233,682

194,365

301,960

357,411

—

1,119,576

712,257

—

8,864,034

5,524,727

194,365

1,261,486

1,276,138

—

2,485,711

3,073,231

28,060,561

1,866,128

3,205,091

29,795,026

5,499,958

—

68,392

821,723

1,997

—

590,271

—

$2,485,711

$3,141,623

$28,882,284

$1,868,125

$3,205,091

$30,385,297

$5,499,958

(1) Please see Note 2 to our consolidated financial statements for information regarding lives used for depreciation and amortization.

(2) Represents real property asset associated with a capital lease.

163

Year Ended December 31,

2018

2017

2016

(in thousands)

Investment in real estate:

Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions and development
. . . . . . . . . . . . . . . . . . . . . . . . . .
Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deconsolidation of previously consolidated venture . . . . . . . . .
Impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$30,581,948
4,598,670
266,183
—
(71,336)
(1,330,679)
(454,398)
—

$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)
—

Ending balance(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$33,590,388

$30,581,948

$30,041,058

Accumulated depreciation:

Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . .
Amortization of above market leases . . . . . . . . . . . . . . . . . . . . .
Disposition and other
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 4,838,370
950,459
6,375
(205,562)
(89,684)

$ 4,093,494
921,720
7,303
(192,029)
7,882

$ 3,796,297
901,242
7,909
(514,651)
(97,303)

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

$ 5,499,958

$ 4,838,370

$ 4,093,494

(1) Primarily relates to the acquisition of an asset through foreclosure.

(2) The unaudited aggregate cost for tax purposes for real property equals $25,618,090,000 at December 31, 2018.

164

Welltower Inc.

Schedule IV— Mortgage Loans on Real Estate
December 31, 2018

Location

Segment

Interest Rate

(in thousands)

Final
Maturity
Date

Monthly
Payment
Terms

Prior
Liens

Face Amount
of Mortgages

Carrying
Amount of
Mortgages

Principal Amount
of Loans Subject
to Delinquent
Principal or
Interest

First mortgages relating to 1 property located in:
California
California
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Oklahoma
Pennsylvania
Florida
North Carolina
Texas
United Kingdom

Triple-net
Triple-net
Triple-net
Triple-net
Triple-net
Triple-net
Triple-net
Triple-net
Triple-net
Triple-net
Triple-net
Outpatient medical
Triple-net

First mortgages relating to multiple properties:
4 properties in Texas . . . . . . . .

Triple-net

Second mortgages relating to 1 property located in:
Texas . . . . . . . . . . . . . . . . . . . .

Triple-net

8.11%
7.95%
8.54%
8.00%
8.55%
7.00%
8.28%
9.32%
8.47%
10.20%
7.60%
7.60%
8.50%

12/15/2020
1/1/2022
12/14/2018
8/24/2022
7/1/2019
3/15/2022
7/6/2019
11/1/2019
3/1/2022
6/23/2021
12/18/2023
1/19/2025
12/31/2021

$—
1
—
—
—
—
—
—
—
—
—
—
—

$ —
—
—
—
—
—
—
—
—
—
—
—
—

$ 28,000
131,100
2,678
11,041
14,600
26,748
19,131
11,610
15,530
17,100
30,883
3,740
19,104

$

9,247
53,172
1,284
6,638
14,599
20,283
19,131
11,595
14,237
17,385
3,000
3,733
6,505

$—
—
—
—
—
—
—
—
—
—
—
—
—

7.95%

1/1/2022

1

—

106,218

65,162

12.17%

5/1/2019

—

11,367

3,100

3,100

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

$11,367

$440,583

$249,071

$—

Reconciliation of mortgage loans:

Year Ended December 31,

2018

2017

2016

(in thousands)

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 306,120

$ 485,735

$ 635,492

Additions:

New mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Draws on existing loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,290

36,458

61,748

6,706

58,224

8,223

92,815

64,930

101,038

Deductions:

Collections of principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(116,905)

(180,135)

(191,134)

Conversions to real property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Change in allowance for loan losses and charge-offs . . . . . . . . . . . . . . . . . . . . . .

—

—

—

(71,535)

(45,044)

(3,053)

Total deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(116,905)

(251,670)

(239,231)

Change in balance due to foreign currency translation . . . . . . . . . . . . . . . . . . . . . . .

(1,892)

7,125

(11,564)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 249,071

$ 306,120

$ 485,735

165

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 25, 2019

/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 25, 2019

/s/

JOHN A. GOODEY

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, 2018 (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 25, 2019

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, 2018 (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/

JOHN A. GOODEY

John A. Goodey,
Chief Financial Officer

Date: February 25, 2019

A signed original of this written statement required by Section 906 has been provided to the Company and will
be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

BOARD OF DIRECTORS
Kenneth J. Bacon
Age 64
Co-Founder and Managing Partner
RailField Realty Partners
Bethesda, Maryland

Thomas J. DeRosa
Age 61
Chief Executive Officer
Welltower Inc.
Toledo, Ohio

Karen B. DeSalvo
Age 53
Physician and Professor of Medicine and 
Population Health
University of Texas at Austin Dell Medical School
Austin, Texas

Jeffrey H. Donahue
Age 72
Chairman
Former President & Chief Executive Officer
Enterprise Community Investment, Inc.
Columbia, Maryland

Geoffrey G. Meyers
Age 74
Retired Chief Financial Officer,
Executive Vice President and Treasurer
HCR ManorCare, Inc.
Toledo, Ohio

Timothy J. Naughton
Age 57
Chairman, Chief Executive Officer and President
AvalonBay Communities, Inc.
Arlington, Virginia

Sharon M. Oster
Age 70
Frederic D. Wolfe Professor Emeritus of 
Management & Entrepreneurship, Professor of 
Economics
Yale University School of Management
New Haven, Connecticut

Judith C. Pelham
Age 73
President Emeritus
Trinity Health
Livonia, Michigan

Sergio D. Rivera
Age 56
President
Ocean Reef Club
Key Largo, Florida

Johnese M. Spisso
Age 58
President of UCLA Health, Chief Executive Officer 
of UCLA Hospital System and Associate Vice
Chancellor of UCLA Health Sciences
Los Angeles, California

Kathryn M. Sullivan
Age 63
Former Chief Executive Officer
United Healthcare Employer and Individual,
Local Markets UnitedHealth Group
Minnetonka, Minnesota

R. Scott Trumbull
Age 70
Retired CEO and Chairman of the Board
Franklin Electric Co., Inc.
Fort Wayne, Indiana

Gary Whitelaw
Age 63
Chief Executive Officer
Bentall Kennedy
Toronto, Canada

COMMITTEES OF THE BOARD
Audit Committee
Meyers, Rivera, Trumbull (Chair)

Compensation Committee
Bacon, Naughton, Oster (Chair), Pelham

Investment Committee
Bacon, Naughton (Chair), Rivera, Whitelaw

Nominating/Corporate Governance Committee
Donahue (Chair), 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

Shankh Mitra
Executive Vice President - Chief Investment 
Officer

Matthew G. McQueen
Senior Vice President – General Counsel &
Corporate Secretary

CORPORATE OFFICES
Welltower Inc.
4500 Dorr Street
Toledo, Ohio 43615-4040
(877) 670-0070
(419) 247-2800
(419) 247-2826 Fax
www.welltower.com

384 employees as of 1/31/19
3,668 registered shareholders as of 1/31/19

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 2018 Annual Report, visit 
www.welltower.com.

www.welltower.com

4500 Dorr Street
Toledo, Ohio 43615-4040
877.670.0070
419.247.2800

© COPYRIGHT 2019 WELLTOWER INC.