Welltower Annual Report 2019

Plain-text annual report

ANNUAL REPORT2019 At the time of the writing of this letter, the outbreak of COVID-19 and the potential implications for the health and well-being of the broader population is of great concern for us. It is important to remind you that infection and ﬂu control are a critical part of the senior living operating model. Welltower has always maintained stringent ﬂu protocols and, in 2018, elected to further enhance these practices by retaining the University of California, San Francisco Health System to introduce and update the most current evidence-based patient and caregiver programs. While it is impossible to predict the path and broader implications of COVID-19, I can assure you that the safety of our residents, caregivers and all our employees and stakeholders is, and will always be, our priority. LETTER FROM THE CHAIRMAN AND CEO Dear Shareholders, 2019 was a pivotal year for Welltower, driven by strong ﬁnancial performance across our portfolio and stable earnings growth. Our strategy and astute capital allocation have solidiﬁed Welltower’s position as the preeminent owner, manager and developer of health care real estate. 2019 marked the end of a ﬁve-year plan that took the Company formerly known as Health Care REIT (NYSE: HCN) through a complete restructuring of its business strategy, real estate portfolio, operating partners, investment structures, and human capital and included a rebranding and renaming to Welltower (NYSE: WELL). During this period, we sold over $10 billion in outmoded or misaligned real estate investments and accretively redeployed that capital into $18 billion of high- quality, real estate investments. I am proud to tell you that over this ﬁve-year period we have delivered a 38.5% total return to our shareholders. Reimagining and Reinventing the Built Environment for Health Care Delivery Consider that the US spends a whopping 17% of GDP on ‘pills and procedures’ and signiﬁcantly less on social determinants of health such as nutrition, safety, exercise and social isolation when compared to other developed nations. This model of care has led to massive societal challenges that are simply unsustainable. To make meaningful change, we need to recalibrate the deﬁnition of health care delivery more toward these social determinants. As a purpose driven organization, Welltower is reimagining and reinventing the built environment for more effective health care delivery in order to improve the health and wellness of an aging population. A Platform for Health Care and Wellness Delivery We see every day how our real estate has a positive social impact that goes far beyond collecting rents and paying dividends. We see the 1701 buildings we own as a platform. This platform has hundreds of thousands of at-risk seniors who live with us every day and tens of millions of clinician – patient visits that occur every year in our outpatient facilities. This platform has value well beyond the ‘brick and mortar’ as it enables products, services, and technology to effectively and efficiently reach our residents and patients at scale. It is within this last mile of engagement that we can address some of the massive challenges faced by the health care sector today. If we are to improve health outcomes and lower the cost of delivering care, innovation and disruption of the status quo is imperative. This is Welltower’s value proposition. Innovation through Collaboration We have big structural issues to solve in healthcare delivery and Welltower is leading the way in cross industry solutions. Part of the problem is that healthcare systems are too invested in and reliant on outmoded and inefficient acute care hospital real estate. At the same time, the 80+ year old age cohort will grow by nearly 50% in the next ten years. Why is this a concern? Due to chronic illnesses associated with this same population, this cohort will account for 85% of all US health care spend. This is not sustainable. Therefore, in 2019, Welltower joined together with technology companies, health insurers, health systems and other companies committed to addressing these issues. In September, we announced a collaboration with CareMore Health, an Anthem subsidiary and integrated plan and care delivery system. This innovative partnership combines the beneﬁts of managing the complex critical health care needs of seniors in controlled, lower risk settings where their social determinants of health can be monitored and maintained. The integration of CareMore’s clinical programs in a residential setting unlocked key synergies across our platforms and delivered signiﬁcant value to our residents and their families by increasing access to and coordination of health and wellness premium residential senior care facilities by services. The success of this partnership welcoming ﬁve new operators to our family exempliﬁes the transformational impact of of brands. Top senior living operators like value-based care and affirms the critical role Atria Senior Living, Balfour Senior Living, of the right built environment in the delivery LCB Senior Living, Frontier Management, of care. In November, we announced a partnership with Royal Philips to bring its state-of-the- art elder technology platform to Sunrise at E. 56th, our ﬂagship senior living community in midtown Manhattan. When this property and Clover Management recognize that the strategic beneﬁts of partnering with Welltower extend beyond capital. We invest in our operators and have built a community of leaders who raise the bar for each other and for the entire industry. Together, we are delivering a next generation model of opens in mid-2020, we believe it will be the residential care. most technologically advanced, purpose- built, residential care facility for seniors in Unsuitable, traditional home settings the world. Philips technology will enable combined with the lack of professional resident locating, alerts, mobile-enabled oversight of nutrition, hydration, hygiene communications and wellness tracking. This and daily prescription drug compliance platform will provide actionable insights and and management create signiﬁcant data into resident activity as well as add an challenges for seniors, their families and additional layer of safety and security for home health care workers. The cost to those residents who are chronically ill, frail deliver appropriate care either in the home and cognitively impaired. or in institutional settings are considerable. Expanding our Senior Living Footprint The issues involved in caring for a senior with dementia and/or multiple chronic conditions are profound. We are proud of our team of senior housing operating partners in the US, Canada, and UK who are the best in the business. These operators care for hundreds of thousands of at-risk seniors in residential settings focused on Medicare does not reimburse the cost of this care. Welltower’s focus in the premium end of residential senior care results in costs that can run as high as $20,000 per month which is paid privately by our residents or their families. These costs are considerable, but our best-in-class operators deliver a high level of personal care that enables our residents to receive the assistance needed with activities of daily living in view of their health condition. wellness and providing assistance with welltowerLIVING…a new model activities of daily living. During 2019, Welltower further solidiﬁed its position as the preeminent owner and developer of As we continue to proﬁtably grow our premium senior care offering, the fact that 85% of seniors in the US have incomes of $50,000 or less makes residential senior existing platform. Our new total of 24 care out of reach for most Medicare seniors. million square feet of assets positions If we don’t get out in front of ensuring Welltower as the largest US public owner that this growing population of seniors of this asset class. As health care delivery maintains their social determinants of moves from acute care hospitals to more health, an already strained US health care ambulatory and accessible sites of care, system will be further challenged. This Welltower is well-positioned to lead this presents a sizable, untapped opportunity. transition. In November, in partnership with A new model where younger, independent Providence St. Joseph Health, we opened seniors can start to live in supportive, a state-of-the-art outpatient cancer center congregate living environments that adjacent to The Shops at Mission Viejo, a inspire better behaviors and a more luxury shopping mall in Mission Viejo, CA. wellness-oriented lifestyle is needed. This This building enables cancer patients to is why we purchased Clover, a portfolio receive outpatient treatments in a modern, of 32 purpose-built senior apartment convenient and technologically advanced communities that are designed to meet building designed to inspire wellness. the needs of an independent, middle income senior. These communities offer structural enhancements over traditional home settings like elevators, wide hallways with handrails and bathrooms designed to accommodate mobility issues. These Clover communities seeded the business line now branded as welltowerLIVING, a moderately priced senior living alternative at an average cost today of $1,100 per month. Our communities are focused on wellness, combating social isolation and safety and, with the beneﬁt of new technology and aligned partnerships, should accommodate a long path of aging-in-place at an affordable price. The Next Generation of Ambulatory Care Delivering Strong Financial Performance The consistency of our internal growth engine, the volume of accretive capital deployment activity and the discipline of our asset recycling efforts drove strong ﬁnancial performance across all segments last year, culminating in 23% total return to shareholders. We reported $4.16* per diluted share of normalized FFO to shareholders, representing 3% growth from 2018. Our stabilized portfolio of assets posted consistent performance through the year, resulting in 2.8%* same store net operating income growth. Our balance sheet strength remains a hallmark of the Company, allowing us to complete nearly $5 billion of pro rata gross investments during In 2019, we acquired $2.4 billion of 2019. We capitalized on advantageous outpatient medical assets contributing 6 market conditions, issuing approximately million square feet of real estate to our $3 billion of attractively priced debt while also generating nearly $1.5 billion of parity across our workforce and we lead proceeds through the methodical issuance by example as women and minorities also of common equity. As a result, we have make up 50% of our senior leadership eliminated all material unsecured debt team. As a result, I am pleased that in 2019, maturities through 2022 and lowered our Welltower was named to the Bloomberg weighted average borrowing cost to just Gender-Equality Index. 3.8%. The strength of our balance sheet and ability to deliver consistent, sector-leading performance validates our strategic vision and positions us to continually source high quality growth opportunities. ESG - Enhancing Strategy and Shareholder Value I believe that a successful public corporation can do well while doing good for society. To that end, in 2015, I launched the Welltower Foundation. Since its inception, the Welltower Foundation and Welltower have given nearly $45 million to well deserving organizations focused on health care, aging, wellness and education. Our commitment to the environment, It is also our belief that our business diversity and equality, and good corporate model is positioned to tackle massive governance is integral to the Welltower societal issues such as social isolation and strategy and, during 2019, numerous ESG loneliness. It is increasingly recognized that initiatives helped us drive shareholder value. these issues have a signiﬁcant negative Environmental Responsibility Our sustainability goals and results earned Welltower numerous accolades, including a place in the Dow Jones World Sustainability Index for the second consecutive year, and designation as ENERGY STAR Partner of the Year. Our recognized leadership here directly beneﬁted our shareholders by impact on the health and wellness of our senior population. We are optimistic that welltowerLIVING will help to address this growing issue as it provides a more affordable option for seniors to live in a wellness-oriented, congregate living community. Good Governance enabling us to issue our ﬁrst Green Bond in I must admit that I am in awe of the wise December. This innovative ﬁnancing vehicle words penned by Warren Buffett each year allowed Welltower to achieve its lowest in his Annual Shareholder Letter. If I may be coupon ever on a 7-year debt placement as so bold, I would like to quote a statement demand was seven times oversubscribed he made in his most recent letter regarding by large, global institutional investors with a Board composition. He spoke to the poor commitment to the environment. state of corporate boards noting there are Social Responsibility and Diversity Welltower is a company with true gender too few women and many seats are ﬁlled by directors all too prepared to go along with every decision made by management. He wrote, “When seeking directors, CEOs don’t while achieving industry leading ﬁnancial look for pit bulls. It’s the cocker spaniel that performance and building shareholder gets taken home.” I am pleased to say that value. This would not be possible without this is not the state of the Welltower Board. the hard-working and talented professionals Seventy-ﬁve percent of our Independent with whom I have the opportunity to work Directors are women and minorities and alongside every day at Welltower, as well as 50% are women which puts Welltower at the more than 50,000 caregivers who work the very top of all S&P 500 companies for tirelessly to ensure the wellness and dignity Board diversity. Welltower was recognized of our residents. Thank you for supporting as a 2019 ‘Corporate Champion’ by the us as we reimagine and reinvent the built Women’s Forum of New York for its strong environment for more effective health representation of women on our Board. care delivery. Diversity, however, also extends to skill set. Our Board brings vertical expertise in areas such as health care, real estate, health insurance and hospitality. This diversity of skill and perspective challenges me and my management team every day. In Conclusion By delivering a built environment that improves the social determinants of health for aging and other at-risk populations, Welltower is executing a long-term plan that addresses one of today’s most pressing societal issues. We’re able to do this Sincerely, Thomas J. DeRosa Chairman and CEO, Welltower Inc. *Please see Non-GAAP Reconciliations Non-GAAP Reconciliations Non-GAAP Financial Measures Welltower believes that net income and net income attributable to common shareholders (“NICS”), as deﬁned by U.S. GAAP, are the most appropriate earnings measurements. However, Welltower considers funds from operations (“FFO”), net operating income (“NOI”) and same store NOI (“SSNOI”) to be useful supplemental measures of its operating performance. 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 Welltower 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. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation. However, since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient. In response, the National Association of Real Estate Investment Trusts (“NAREIT”) created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO attributable to common stockholders, as deﬁned by NAREIT, means net income attributable to common stockholders, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairments of depreciable assets, plus real estate depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests. Normalized FFO attributable to common stockholders represents FFO attributable to common stockholders adjusted for certain items detailed in the following reconciliations and described in our earnings press releases for the relevant period ends. Welltower believes that normalized FFO attributable to common stockholders is a useful supplemental measure of operating performance because investors and equity analysts may use this measure to compare the operating performance of the company between periods or as compared to other REITs or other companies on a consistent basis without having to account for differences caused by unanticipated and/or incalculable items. Welltower deﬁnes NOI as total revenues, including tenant reimbursements, less property operating expenses. Property operating expenses represent costs associated with managing, maintaining and servicing our 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. SSNOI is used to evaluate the operating performance of Welltower’s 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 Seniors Housing 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 Welltower’s ﬁnancial statements prepared in accordance with U.S. GAAP. Signiﬁcant normalizers (deﬁned as any that individually exceeds 0.50% of SSNOI growth per property type) are separately disclosed and explained in Welltower’s respective Supplements. Welltower believes NOI and SSNOI provide investors relevant and useful information because they measure the operating performance of its properties at the property level on an unleveraged basis. Welltower use NOI and SSNOI to make decisions about resource allocations and to assess the property level performance of its properties. Welltower’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. Welltower’s management uses these ﬁnancial measures to facilitate internal and external comparisons to its historical operating results and in making operating decisions. Additionally, these measures are utilized by the Board to evaluate management. None of Welltower’s supplemental measures represent net income or cash ﬂow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of proﬁtability or liquidity. Finally, the supplemental measures, as deﬁned by us, may not be comparable to similarly entitled items reported by other REITs or other companies. Please see the tables below for reconciliations of supplemental reporting measures referenced in this document. SSNOI Reconciliations (1) Represents Welltower’s interests in joint ventures where Welltower is the minority partner. (2) Represents minority partners’ interests in joint ventures where Welltower is the majority partner. (3) Includes adjustments to reﬂect consistent property ownership percentages and foreign currency exchange rates for properties in the U.K. and Canada. (4) Includes other adjustments as described in the respective Supplements. FFO Reconciliations (1) Represents noncontrolling interests’ share of net FFO adjustments (2) Represents Welltower’s share of net FFO adjustments from unconsolidated entities. Form 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 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: Trading Symbol(s) Name of Each Exchange on Which Registered WELL WELL28 WELL34 New York Stock Exchange New York Stock Exchange New York Stock Exchange Title of Each Class Common Stock, $1.00 par value 4.800% Notes due 2028 4.500% Notes due 2034 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 such files). Yes Í No ‘ 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 ‘ Non-accelerated filer ‘ Smaller reporting company ‘ Emerging growth 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 $32,986,689,000. As of January 31, 2020, the registrant had 410,331,441 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 April 30, 2020, are incorporated by reference into Part III. WELLTOWER INC. AND SUBSIDIARIES 2019 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 Page 2 29 45 46 47 47 48 50 51 78 80 127 127 129 129 129 129 129 129 130 136 137 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, 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, 2019. 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 18 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 include seniors apartments, 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). Seniors Apartments Seniors apartments refer to age-restricted multi-unit housing with self-contained living units for older adults, usually aged 55+ who are able to care for themselves. Seniors apartments generally do not offer other additional services such as meals or transportation. 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 2 to meals and other services such as housekeeping, linen service, transportation and social and recreational activities. Continuing Care Retirement Communities Continuing care retirement communities typically include a combination of detached homes and properties offering independent living, assisted living and/or long-term/post- acute care services on one campus. These communities appeal to residents because there is no need to relocate when health and medical needs change. Resident payment plans vary, but can include entrance fees, condominium fees and rental fees. Many of these communities also charge monthly maintenance fees in exchange for a living unit, meals and some health services. Assisted Living Assisted living refers to state-regulated rental properties that provide independent living services, but also provide supportive care from trained employees to residents who require assistance with activities of daily living, including, but not limited to, management of medications, bathing, dressing, toileting, ambulating and eating. Alzheimer’s/Dementia Care Certain properties offering assisted living may include state-licensed settings that specialize in caring for those afflicted with Alzheimer’s disease and/or other types of dementia. Care Homes with or without Nursing (U.K.) Care homes without nursing, regulated by the Care Quality Commission (“CQC”), are rental properties that provide essentially the same services as U.S. assisted living. Care homes with nursing, also regulated by the CQC, are licensed daily rate or rental properties where most individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed for various national and local reimbursement programs. Unlike the U.S., care homes with nursing in the U.K. generally do not provide post-acute care. Our Seniors Housing Operating segment accounted for 67%, 69% and 65% of total revenues for the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, we had relationships with 25 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, 2019, our relationship with Sunrise Senior Living accounted for approximately 35% of our Seniors Housing Operating segment revenues and 24% 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 3 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%, 19% and 22% of total revenues for the years ended December 31, 2019, 2018 and 2017, respectively. For the year ended December 31, 2019, our revenues related to our relationship with ProMedica Health System (“ProMedica”) accounted for approximately 22% of our Triple-net segment revenues and 4% of total revenues. As of December 31, 2019, our relationship with ProMedica was comprised of a master lease for 218 properties owned by a joint venture landlord of which we own 80%. In addition to rent, the master lease requires ProMedica 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 ProMedica. For the year ended December 31, 2019, our revenues related to our relationship with Genesis HealthCare (“Genesis”) accounted for approximately 14% of our Triple-net segment revenues and 3% of our total revenues. As of December 31, 2019, our relationship with Genesis was comprised of a master lease for 54 properties owned 100% by us, six loans with a net balance of $296 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 94% 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 13%, 12% and 13% of total revenues for each of the years ended December 31, 2019, 2018 and 2017, 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. 4 Investment Types Real Property Our properties are primarily comprised of land, buildings, improvements and related rights. Our triple-net properties are generally leased to operators under long-term operating leases. The leases generally have a fixed contractual term of 12 to 15 years and contain one or more five to 15-year renewal options. Certain of our leases also contain purchase options, a portion of which could result in the disposition of properties for less than full market value if the options were to be exercised. Most of our rents are received under triple-net leases requiring the operator to pay rent and all additional charges incurred in the operation of the leased property. The tenants are required to repair, rebuild and maintain the leased properties. Substantially all these operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. At December 31, 2019, approximately 95% 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, 2019, 77% of our portfolio included leases with full (modified gross) and 3% with no expense pass through, 20% with a partial expense reimbursement reimbursement (gross). Our outpatient medical leases are non-cancellable operating leases that have a weighted- average remaining term of seven years at December 31, 2019 and are often credit enhanced by security deposits, guarantees 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. 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 guarantees. At December 31, 2019, we had outstanding construction investments of $507,931,000 and were committed to provide additional funds of approximately $446,633,000 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. Loans Our real estate loans are typically structured to provide us with interest income, principal amortization and transaction fees. Real estate loans consist of mortgage loans and other real estate loans which 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 guarantees and/or personal guarantees. Non real estate loans are generally corporate loans with no real estate backing. At December 31, 2019, we had outstanding 5 loans, net of allowances, of $607,236,000 with an interest yield of approximately 8.0% per annum. Our yield on 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 loans outstanding at December 31, 2019 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. Investments in Unconsolidated Entities Investments in entities that we do not consolidate but for which we can exercise significant influence over operating and financial policies are reported under the equity method of accounting. Our investments in unconsolidated entities generally represent interests ranging from 10% to 50% in real estate assets. Under the equity method of accounting, our share of the investee’s earnings or losses is included in our consolidated results of operations. 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. In Substance Real Estate Additionally, we provide loans to third parties for the acquisition, development and construction of real estate. Under these arrangements, it is possible that we will participate in the expected residual profits of the project through the sale, refinancing or acquisition of the property. We evaluate the characteristics of each arrangement, including its risks and rewards, to determine whether they are more similar to those associated with a loan or an investment in real estate. Arrangements with characteristics implying real estate joint ventures are treated as in substance real estate investments, accounted for using the equity method, and are presented as investments in unconsolidated entities. We have made loans totaling $165,193,000 related to seven properties as of December 31, 2019, which are classified as in substance real estate investments. 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 6 common stock. When terms are deemed favorable, we may invest in properties subject to existing mortgage indebtedness. In addition, we may obtain secured financing for unleveraged properties in which we have invested or may refinance properties acquired on a leveraged basis. In certain agreements with our lenders, we are subject to restrictions with respect to secured and unsecured indebtedness. Competition We compete with other real estate investment trusts, real estate partnerships, private equity and hedge fund investors, banks, insurance companies, finance/investment companies, government-sponsored agencies, taxable and tax-exempt bond funds, health care operators, developers and other investors in the acquisition, development, leasing and financing of health care and seniors housing properties. We compete for investments based on a number of factors including relationships, certainty of execution, investment structures and underwriting criteria. Our ability to successfully compete is impacted by economic and demographic trends, availability of acceptable investment opportunities, our ability to negotiate beneficial investment terms, availability and cost of capital, construction and renovation costs and applicable laws and regulations. The operators/tenants of our properties compete with properties that provide comparable services in the local markets. Operators/tenants compete for patients and residents based on a number of factors including quality of care, reputation, physical appearance of properties, location, services offered, family preferences, physicians, staff, and price. We also face competition from other health care facilities for tenants, such as physicians and other health care providers that provide comparable facilities and services. For additional information on the risks associated with our business, please see “Item 1A — Risk Factors” of this Annual Report on Form 10-K. Environmental, Social and Governance Environmental, Social and Governance (“ESG”) Approach Our corporate responsibility and sustainability strategy is focused on adopting the best ESG practices across our business and we have been recognized for our leadership in this space, including over the past year: • Named to Fortune’s World’s Most Admired Companies List; • Named to top quintile of Newsweek’s inaugural America’s Most Responsible Companies list; • Named to Corporate Responsibility Magazine’s 20th Annual 100 Best Corporate Citizens ranking; • Named to Dow Jones Sustainability World Index for the second consecutive year and to the Dow Jones Sustainability North American Index for the fourth consecutive year; • Named Energy Star Partner of the Year for the first time; • Designated as GRESB Green Star for sustainability performance for the fifth consecutive year; • Named to the Bloomberg Gender-Equality Index; • Achieved ISS-ESG Prime status; and • Garnered highest environmental and social quality score ratings by ISS. Environmental We strive to reduce our environmental impact by increasing energy and water efficiency, reducing greenhouse gas emissions, investing in projects that reduce energy and water consumption that meet our rate of return thresholds and focusing on the environmental aspects within our supply chain. 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, and as of the end of 2018 have executed over 405,000 square feet of green leases. We seek to increase our consumption of green and renewable energy where possible and have consumed over 32,000 MWh of renewable electricity, an increase of over 6,000 MWh versus the previous year. We are actively pursuing LEED or BREEAM certification for over 200,000 square feet of our new developments and have 12 BREEAM, 78 ENERGY STAR, 25 IREM, 12 LEED 7 and 63 Welltower Green Arrow 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 and we are constantly working to add to that number. Year(1) 2018 . . . . . . . . . . . . 2017 . . . . . . . . . . . . 2016 . . . . . . . . . . . . Year(1) Total energy consumption in control boundary (MWh)(2) Control boundary energy use intensity (kWH/square feet) Like-for-like change in energy consumption within control boundary(3) Percent renewable energy consumed within control boundary(4) 300,094 302,001 360,342 26.20 26.37 22.82 (1)% n/a n/a 10.82% 8.76% n/a Control boundary water consumption (kgal)(2) Water use intensity (gallons/square feet) Like-for-like change in water consumption within control boundary(3) 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293,609 303,616 337,081 25.6 26.5 26.4 (3.40)% 0.38% n/a (1) Full 2019 calendar year energy and water data is not available until March 2020. 2018 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 2017 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. We understand that as we continue to make our operations and buildings more sustainable, we also have a responsibility to look towards our supply chain and the effect of our purchasing decisions. Welltower created a Supplier Code of Conduct that is generally integrated into our standard contract to help ensure our suppliers abide by Welltower’s ethical standards. We also developed a Supplier Sustainability Survey that was delivered to our highest spend national accounts. Additionally, we partner with suppliers that offer take back programs for their products, look for the ENERGY STAR label when purchasing eligible items, seek to purchase office supply products that contain recycled content and purchase paper products that are either Forest Stewardship Council or Sustainable forestry initiative certified. 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 residents. Over the past five years, since we began reporting the impact of our charitable contributions through programs such as the Welltower Foundation, we have donated over $40 million to charitable initiatives related to aging, health care, education and the arts. We value and are committed to our employees. In addition to enacting progressive recruitment and development programs, we have reinforced our already strong commitment to diversity and inclusion with the creation of a Diversity Council, which together with other employee initiatives, supports our efforts to compete for and foster talent in a changing workforce. Governance We announced changes and appointments to our Board of Directors, resulting in 75% of our independent director positions being held by minorities and women as of December 31, 2019. We continue to to transparency and published our 7th consecutive Annual Corporate Social bolster our commitment Responsibility Report in accordance with Global Reporting Initiative Standards. Additionally, we also improved our already high Dow Jones Sustainability Index, GRESB, ISS and ISS-ESG scores through enhanced tracking and reporting. Employees As of January 31, 2020, we had 443 employees. Credit Concentrations Please see Note 9 to our consolidated financial statements. 8 Geographic Concentrations Please see “Item 2 — Properties” below and Note 18 to our consolidated financial statements. 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 the adequacy of the physical plant and equipment, of the administrative personnel and nursing staff, reimbursement and rate setting and operating policies. In addition, as described below, operators of these facilities are subject to extensive laws and regulations pertaining to health care fraud and abuse, including, but not limited to, the federal Anti-Kickback Statute (“AKS”), the federal Stark Law (“Stark Law”), and the federal False Claims Act (“FCA”), as well as comparable state laws. Hospitals, physician group practice clinics, and other health care providers that operate in our portfolio are subject to extensive federal, state, and local licensure, registration, certification, and inspection laws, regulations, and industry standards, as well as other conditions of participation in federal and state government programs such as Medicare and Medicaid. Further, operators of long-term care facilities are required to have in place compliance and ethics programs that meet the requirements of federal laws and regulations. Our tenants’ failure to comply with applicable laws and regulations could result in, among other things: 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. Moreover, in light of certain arrangements that Welltower may pursue with healthcare entities who are directly subject to laws and regulations pertaining to health care fraud and abuse, and given that certain of our arrangements are structured under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”), certain health care fraud and abuse laws and data privacy laws could apply directly to Welltower. See risk factor “We assume operational and legal risks with respect to our properties managed in RIDEA structures that could have a material adverse effect on our business results of operations, and financial condition” in “Item 1A — Risk Factors” below. loss of accreditation; denial of reimbursement; 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 9 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 implemented and may continue seeking to implement new or modified reimbursement methodologies, including value-based reimbursement methodologies that may negatively impact health care property operations. Likewise, third-party payors may continue imposing greater controls on operators, including through changes in reimbursement rates and fee structures. 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 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 10 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 the Medicare and increases than providers of those services have often expected. In addition, 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. The status of the Health Reform Laws may be subject to change as a result of political, legislative, regulatory and administrative developments and judicial proceedings. While legislative attempts to completely repeal the Health Reform Laws have been unsuccessful to date, there have been multiple attempts to repeal or amend the Health Reform Laws through legislative action and legal challenges. 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 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, effective in 2019, and could impact the future state of the HIEs established by the Health Reform Laws. In December 2018, a federal district court in Texas ruled the individual mandate was unconstitutional and could not be severed from the Health Reform Laws. As a result, the court ruled the remaining provisions of the Health Reform Laws were also invalid, though the court declined to issue a preliminary injunction with respect to the Health Reform Laws. In December 2019, the Fifth Circuit Court of Appeals agreed that the individual mandate was unconstitutional, but remanded the case back to the district court to reassess how much of the Health Reform Laws would be damaged without the individual mandate provision, and if the individual mandate could indeed be severed. In January 2020, 21 state Attorney Generals urged the Supreme Court of the United States to decide whether or not the Health Reform Laws should be struck down as unconstitutional, claiming that the Fifth Circuit erroneously remanded the case to the Texas district court. The House of Representatives filed a similar petition and motion to expedite. This litigation is still ongoing, but places great uncertainty upon the longevity and nature of the Health Reform Laws moving forward. There is still uncertainty with respect to the additional impact President Trump’s Administration and the U.S. Congress may have, if any, and any changes will likely take time to unfold, and could have an impact on coverage and reimbursement for health care items and services covered by plans that were authorized by the Health Reform Laws. We cannot predict whether the existing Health Reform Laws, or future health care reform legislation or regulatory changes, will have a material impact on our operators’ or tenants’ property or business. Fraud & Abuse Enforcement Long-term/post-acute care facilities (and seniors housing facilities that receive Medicaid payments) are subject to federal, state, and local laws, regulations, and applicable guidance that govern the operations and financial and other arrangements that may be entered into by health care providers. Certain of these laws, such as the AKS and Stark Law, prohibit direct or indirect payments of any kind for the purpose of inducing or encouraging the referral of patients for medical products or services reimbursable by government health care programs. Other 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 health care programs, such as Medicare and Medicaid, are subject to substantial 11 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. In addition, Welltower could potentially be directly subject to these health care fraud and abuse laws, as well as potential investigation or enforcement, as a result of our RIDEA-structured arrangements, and certain collaboration or other arrangements we may pursue with stakeholders who are directly subject to these laws. 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 information, govern the collection, security, dissemination, use, access to and confidentiality of personal including individually identifiable health information. Violations of these laws may result in substantial civil and/ or criminal fines and penalties. The costs to the business or for an operator of a health care property associated with developing and maintaining programs and systems to comply with data privacy and security laws, defending against privacy and security related claims or enforcement actions and paying any assessed fines, can be substantial. Moreover, such costs could have a material adverse effect on the ability of an operator to meet its obligations to us. Finally, data privacy and security laws and regulations continue to develop, including with regard to HIPAA and U.S. state privacy laws such as the California Consumer Privacy Act. These developments may add potential uncertainty towards compliance obligations, business operations or transactions that depend on data. These new privacy laws may create restrictions or requirements in our, operators and other business partner’s use, sharing and securing of data. New privacy and security laws further could require substantial investment in resources to comply with regulatory changes as privacy and security laws proliferate in divergent ways or impose additional obligations. United Kingdom In the U.K., care home services are principally regulated by the Health and Social Care Act 2008 (as amended) and other regulations. This legislation subjects service providers to a number of legally binding “Fundamental Standards” and requires, amongst other things, that all persons carrying out “Regulated Activities” in the U.K., and the managers of such persons, be registered. Providers of care home services are also subject (as data controllers) to laws governing their use of personal data (including in relation to their employees, clients and recipients of their services). These laws currently take the form of the U.K.’s Data Protection Act 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 obligations on controllers with the potential for fines of up to 12 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 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 national minimum wage is set to increase in April 2020. The U.K. exited from the EU (“Brexit”) on January 31, 2020. U.K. There will be a transition period until the end of 2020 during which time the U.K. will continue to abide by all EU rules while it seeks to negotiate its relationship with the EU, which would include inter alia the regulation and import of medicines. Further, the impact of Brexit on the health and care workforce will depend on future migration policy and the barriers or incentives to live in the U.K. Until the terms of the withdrawal are finally determined we cannot predict the impact of Brexit on U.K. regulations. Canada Senior living residences in Canada are provincially regulated. Within each province, there are different categories for senior living residences that are generally based on the level of care sought and/or required by a resident (e.g. assisted or retirement living, senior living residences, residential care, long-term care). In some of these categories and depending on the province, residences may be government funded, or the individual residents may be eligible for a government subsidy, while other residences are exclusively private-pay. The governing legislation and regulations vary by province, but generally the object of the laws is to set licensing requirements and minimum standards for senior living residences, and regulate operations. These laws empower regulators in each province to take a variety of steps to ensure compliance, conduct inspections, issue reports and generally regulate the industry. Our operations in Canada are subject to privacy legislation, including, in certain provinces, privacy laws specifically related to personal health information. Although the obligations of senior living residences in the various provinces differ, they all include the obligation to protect personal information. Under some of these laws, notification to the regulator in the event of an actual or suspected privacy breach is mandatory. The powers of privacy regulators and penalties for violations of privacy law vary according to the applicable law or are left to the courts. Senior living residences may also be subject to laws pertaining to residential tenancy, 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. 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 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 laws. 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 income tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income tax consequences of purchasing, owning and disposing of our securities as set forth in this summary. Before you purchase our securities, you should consult your own tax advisor regarding the particular U.S. federal, state, local, foreign and other tax consequences of acquiring, owning and selling our securities. 13 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 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” (e.g., the excess of the fair market value of the asset over the adjusted tax basis of 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, 14 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 19 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 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. 15 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. • • 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. 16 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 (1) the gross income attributable to (i) 75% of our gross income over the amount of qualifying gross income for purposes of the 75% income test and (ii) 95% of our gross income over the amount of qualifying gross income for purposes of the 95% income test, multiplied by (2) 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 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 17 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). If a 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 due to the ownership of assets that do 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 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 18 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, 2019. 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 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; an entity classified as a corporation or partnership, created or organized in or under the laws of the United States or of any political subdivision of the United States, including any state; 19 • • 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 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 Internal Revenue Code 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. 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 20 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. 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 21 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. 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 ordinary dividends, but not by the sale or exchange of our capital assets, generally will be subject to U.S. withholding tax at a rate of 30%, unless an applicable tax treaty reduces that tax and you file with us the required form evidencing the lower rate. In general, you will be subject to 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. 22 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 received by such income tax purposes (including any such capital gain stockholders treated as dividends for U.S. federal 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 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 establishes 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 23 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 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 the 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. 24 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 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. 25 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: • • • in the case of gain, you are an individual who is present in the United States for 183 days or more during the taxable year of the sale or other disposition of your notes, and specific other conditions are met; you are subject to tax provisions applicable to certain United States expatriates; or the gain is effectively connected with your conduct of a U.S. trade or business. If you are engaged in a trade or business in the United States, and gain with respect to your notes is effectively connected with the conduct of that trade or business, you generally will be subject to U.S. income tax on a net basis on the gain. In addition, if you are a foreign corporation, you may be subject to a branch profits tax on your effectively connected earnings and profits for the taxable year, as adjusted for certain items. U.S. Federal Estate Tax. If you are an individual and are not a U.S. citizen or a resident of the United States, as specially defined for U.S. federal estate tax purposes, at the time of your death, your notes will generally not be subject to the U.S. federal estate tax, unless, at the time of your death (1) you owned actually or constructively 10% or more of the total combined voting power of all our classes of stock entitled to vote, or (2) interest on the notes is effectively connected with your conduct of a U.S. trade or business. Backup Withholding and Information Reporting Backup withholding will not apply to payments of principal or interest made by us or our paying agent, in its capacity as such, to you if you have provided the required certification that you are a non-U.S. holder as described in “U.S. Federal Withholding Tax” above, and provided that neither we nor our paying agent have actual knowledge that you are a U.S. holder, as described in “U.S. Holders” above. We or our paying agent may, however, report payments of interest on the notes. The gross proceeds from the disposition of your notes may be subject to information reporting and backup withholding tax. If you sell your notes outside the United States through a non-U.S. office of a non-U.S. broker and the sales proceeds are paid to you outside the United States, then the U.S. backup withholding and information reporting requirements generally will not apply to that payment. However, U.S. information reporting, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made outside the United States, if you sell your notes through a non-U.S. office of a broker that has certain connections with the United States. 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. 26 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 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. Because the U.S. generally 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 27 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 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 or dispositions on currently anticipated terms, or within currently anticipated timeframes; the expected performance of our operators/tenants and properties; our expected occupancy rates; our ability to declare and to make distributions to stockholders; our investment and financing opportunities and plans; our continued qualification as a REIT; and our ability to access capital markets or other sources of funds. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause our actual results to differ materially from our expectations discussed in the forward-looking statements. This may be a result of various factors, including, but not limited to: • • • • • • • • • • • • • • • • • • the status of the economy; the status of capital markets, including availability and cost of capital; uncertainty from the expected discontinuance of LIBOR and the transition to any other interest rate benchmark; 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; 28 • • • • • changes in rules or practices governing our financial reporting; the movement of U.S. and foreign currency exchange rates; our ability to maintain our qualification as a REIT; key management personnel recruitment and retention; and the risks described under “Item 1A — Risk Factors.” We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise. Item 1A. Risk Factors This section highlights significant factors, events and uncertainties that could create risk with an investment in our securities. The events and consequences discussed in these risk factors could, in circumstances we may not be able to accurately predict, recognize or control, have a material adverse effect on our business, growth, reputation, prospects, financial condition, operating results, cash flows, liquidity, ability to pay dividends and stock price. These risk factors do not identify all risks that we face: our operations could also be affected by factors, events or uncertainties that are not presently known to us or that we currently do not consider to present significant risks to our operations. 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. We may be unable to obtain or assume financing for acquisitions on favorable 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. Acquired properties may be located in new markets, either within or outside the United States, where we may face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area, costs associated with opening a new regional office and unfamiliarity with local governmental and permitting procedures. As a result, we cannot assure you that we will achieve the economic benefit we expect from acquisitions, investment, development and redevelopment opportunities. Acquired properties may expose us to unknown liability We may acquire properties or invest in joint ventures that own properties subject to liabilities and without any recourse, or with only limited recourse, against the prior owners or other third parties with respect to 29 unknown liabilities. As a result, if a liability were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle or contest it, which could adversely affect our results of operations and cash flow. Unknown liabilities with respect to acquired properties might include: liabilities for clean up of undisclosed environmental contamination, claims by tenants, vendors or other persons against the liabilities incurred in the ordinary course of business and claims for former owners of the properties, indemnification by general partners, directors and others indemnified by the former owners of the properties. Competition for acquisitions may result in increased prices for properties We may face competition for acquisition opportunities from other well-capitalized investors, including publicly traded and privately held REITs, private real estate funds, domestic and foreign financial institutions, life insurance companies, sovereign wealth funds, pension trusts, partnerships and individual investors. This competition may adversely affect us by subjecting us to the following risks: we may be unable to acquire a desired property because of competition from other well-capitalized real estate investors and, even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the purchase price. 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; that our partner may be in a position to take action or withhold consent contrary to our instructions or requests; and that our joint venture partners may be structured differently than us for tax purposes, which could create conflicts of interest and risks to our REIT status. In some instances, we and/or our partner may have the right to trigger a buy-sell, put right or forced sale arrangement, which could cause us to sell our interest, acquire our partner’s interest or sell the underlying asset 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. On the other hand, our ability to transfer our interest in a joint venture to a third party may be restricted and the market for our interest may be limited and/or valued lower than fair market value. Joint ventures may require us to share decision-making authority with our partners, which could limit our ability to control the properties in the joint ventures. Even when we have a controlling interest, certain major decisions may require partner approval, such as the sale, acquisition or financing of a property. We are exposed to operational risks with respect to our Seniors Housing Operating properties that could adversely affect our revenue and operations We are exposed to various operational risks with respect to our Seniors Housing Operating properties that may increase our costs or adversely affect our ability to generate revenues. These risks include fluctuations in occupancy, Medicare and Medicaid reimbursement, if applicable, and private pay rates; economic conditions; competition; federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards; the availability and increases in cost of general and professional liability insurance coverage; state regulation and rights of residents related to entrance fees; and the availability and increases in the cost of labor (as a result of unionization or otherwise). Any one or a combination of these factors may adversely affect our revenue and operations. 30 We assume operational and legal risks with respect to our properties managed in RIDEA structures that could have a material adverse effect on our business, results of operations and financial condition We have entered into various joint ventures that were structured under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”), which permits REITs to own or partially own “qualified health care properties” in a structure through which we can participate directly in the cash flow of the properties’ operations (as compared to receiving only contractual rent payments) in compliance with REIT requirements. 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. Under a RIDEA structure, we are required to rely on our operator to manage and operate the property, including complying with laws and providing resident care. However, as the owner of the property under a RIDEA structure, we are responsible for operational and legal risks and liabilities of the property, including, but not limited to, those relating to employment matters of our operators, compliance with health care fraud and abuse and other laws, governmental reimbursement matters, compliance with federal, state, local and industry- related licensure, certification and inspection laws, regulations, and standards, and litigation involving our properties or residents/patients, even though we have limited ability to control or influence our operators’ management of these risks. Further, our taxable REIT subsidiary (“TRS”) is generally required to hold the applicable health care license and enroll in the applicable government health care programs (e.g., Medicare and Medicaid), which subjects us to potential liability under various health care regulatory laws. Penalties for failure to comply with applicable laws may include loss or suspension of licenses and certificates of need, certification or accreditation, exclusion from government health care programs (e.g., Medicare and Medicaid), administrative sanctions and civil monetary penalties. Although we have some general oversight approval rights and the right to review operational and financial reporting information, our operators are ultimately in control of the day-to-day business of the property, including clinical decision-making, we rely on them to operate the properties in compliance with a manner that complies with applicable law. Decreases in our operators’ revenues or increases in our operators’ expenses could affect our operators’ ability to make payments to us We have very limited control over the success or failure of our operators’ businesses and, at any time, an operator may experience a downturn in its business that weakens its financial condition. 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. These risks are magnified where we lease multiple properties to a single operator under a master lease, as an operator failure or default under a master lease would expose us to these risks across multiple properties. Although our lease agreements give us the right to exercise certain remedies in the event of default on the obligations owing to us, we may determine not to do so if we believe that enforcement of our rights would be more detrimental to our business than seeking alternative approaches. 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 31 could limit their ability to attract residents or expand their businesses. In addition, we expect that there will continue to be a more than adequate inventory of seniors housing facilities. We cannot be certain that the operators of all of our facilities will be able to achieve and maintain occupancy and rate levels that will enable them to meet all of their obligations to us. If our operators cannot compete effectively or if there is an oversupply of facilities, their financial performance and ability to meet their obligations to us could have a material adverse effect on our financial results. A severe cold and flu season, epidemics or any other widespread illnesses could adversely affect the occupancy of our Seniors Housing Operating and Triple-net properties Our revenues and our operators’ revenues are dependent on occupancy. It is impossible to predict the severity of the cold and flu season or the occurrence of epidemics or any other widespread illnesses. The occupancy of our Seniors Housing Operating and Triple-net properties could significantly decrease in the event of a severe cold and flu season, an epidemic or any other widespread illness. Such a decrease could affect the operating income of our Seniors Housing Operating properties and the ability of our Triple-net operators to make payments to us. In addition, a flu pandemic could significantly increase the cost burdens faced by our operators, including if they are required to implement quarantines for residents, and adversely affect their ability to meet their obligations to us, which would have a material adverse effect on our financial results. The insolvency or bankruptcy of our tenants, operators, borrowers, managers and other obligors may adversely affect our business, results of operations and financial condition We are exposed to the risk that our tenants, operators, borrowers, managers or other obligors may not be able to meet the rent, principal and interest or other payments due us, which may result in a tenant, operator, borrower, manager or other obligor bankruptcy or insolvency, or that a tenant, operator, borrower, manager or other obligor might become subject to bankruptcy or insolvency proceedings for other reasons. Although our operating lease agreements provide us with the right to evict a tenant, demand immediate payment of rent and exercise other remedies, and our loans provide us with the right to terminate any funding obligation, demand immediate repayment of principal and unpaid interest, foreclose on the collateral and exercise other remedies, the bankruptcy and insolvency laws afford certain rights to a party that has filed for bankruptcy or reorganization. A tenant, operator, borrower, manager or other obligor in bankruptcy or subject to insolvency proceedings may be able to limit or delay our ability to collect unpaid rent in the case of a lease or to receive unpaid principal and interest in the case of a loan, and to exercise other rights and remedies. In addition, if a lease is rejected in a tenant bankruptcy, our claim against the tenant may be limited by applicable provisions of the bankruptcy law. We may be required to fund certain expenses (e.g., real estate taxes and maintenance) to preserve the value of an investment property, avoid the imposition of liens on a property and/or transition a property to a new tenant. In some instances, we have terminated our lease with a tenant and relet the property to another tenant. In some of those situations, we have provided working capital loans to and limited indemnification of the new obligor. If we cannot transition a leased property to a new tenant, we may take possession of that property, which may expose us to certain successor liabilities. Publicity about the operator’s financial condition and insolvency proceedings may also negatively impact their and our reputations, decreasing customer demand and revenues. Should such events occur, our revenue and operating cash flow may be adversely affected. We may not be able to timely reinvest our sale proceeds on terms acceptable to us From time to time, we will have cash available from 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 reinvest these proceeds in a timely manner. We compete for real estate including other health care REITs, real estate investments with a broad variety of potential investors, 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. 32 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, 2019, Sunrise managed 165 of our Seniors Housing Operating properties. These properties account for a significant portion of our revenues and net operating income. Although we have various rights as the property owner under our management agreements, we rely on Sunrise’s personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage our Seniors Housing Operating 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. For example, we depend on Sunrise’s ability to attract and retain skilled management personnel who are responsible for the day-to-day operations of our Seniors Housing Operating properties. A shortage of nurses or other trained personnel or general inflationary pressures may force Sunrise to enhance its pay and benefits packages to compete effectively for such personnel, but it may not be able to offset these added costs by increasing the rates charged to residents. Any increase in labor costs and other property operating expenses, any failure by Sunrise to attract and retain qualified personnel, or significant changes in Sunrise’s senior management or equity ownership could adversely affect the income we receive from our Seniors Housing Operating properties and have a material adverse effect on us. 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. If we determine to sell or transition additional properties currently managed by Sunrise, we may experience operational challenges and/or significantly declining financial performance for those properties. See Note 9 to our consolidated financial statements for additional information. We depend on ProMedica Health System (“ProMedica”) and Genesis HealthCare (“Genesis”) 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 ProMedica and Genesis account for a significant portion of our revenues, and because these leases are triple-net leases, we also depend on ProMedica and Genesis to pay all insurance, taxes, utilities and maintenance and repair expenses in connection with the leased properties. We cannot assure you that ProMedica and Genesis 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 ProMedica and Genesis to do so could have an adverse effect on our business, results of operations and financial condition. ProMedica and Genesis 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 ProMedica and Genesis will have sufficient assets, income, access to indemnification financing obligations. ProMedica and Genesis’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. respective them to insurance coverage satisfy enable their and to 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 the U.K. and Canada which represent 8.8% and 9.1% of total Welltower revenues, respectively. As of December 31, 2019, Revera managed 94 of our Seniors Housing Operating properties in 33 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, which may not qualify under the 75% gross income test or the 95% gross income test required for us to satisfy annually in order to qualify and maintain our status as a REIT; challenges with respect to the repatriation of foreign earnings and cash; impact from international trade disputes and the associated impact on our tenants’ supply chain and consumer spending levels; 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 foreign countries; local businesses and cultural factors that differ from our usual standards and practices; 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. The business and financial results of our operations located in the U.K. may be negatively impacted as a result of Brexit The U.K.’s referendum on withdrawal from the EU in 2016 (commonly referred to as “Brexit”), and subsequent notification of the U.K.’s intention to withdraw from the EU given in March 2017, have adversely impacted global markets and foreign currencies. The terms governing the future relationship between the U.K. and the EU, as well as the legal and economic consequences of those terms, remain unclear, including with respect to the post-Brexit regulatory environment in the U.K. It is possible that the level of health care and other economic activity in the U.K. and the rest of Europe will be adversely impacted and that we will face increased regulatory and legal complexities in these regions which could have an adverse impact on the financial condition and results of operations of our properties in the U.K. Moreover, the value of the British Pound Sterling incurred significant fluctuations. If the value of the British Pound Sterling continues to incur similar fluctuations, unfavorable exchange rate changes may negatively affect the value of our operations located in the U.K., as translated to our reporting currency, the U.S. Dollar, in accordance with U.S. GAAP, which may impact the revenue and earnings we report. Continued fluctuations in the British Pound Sterling may also result in the imposition of price adjustments by E.U.-based suppliers to our U.K. operations, as those suppliers seek to compensate for the changes in value of the British Pound Sterling as compared to the European Euro. 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. Our competitors may offer space at rental rates below current market rates or below the rental rates we currently charge our customers, we may lose potential customers, and we may be pressured to reduce our rental rates below those we currently charge to retain customers when leases expire. In addition, our ability to reposition our properties with a suitable replacement tenant or operator could be significantly delayed or limited by state licensing, receivership, CON or other laws, as well as by the Medicare and Medicaid change-of-ownership rules, and we could incur substantial additional expenses in connection with any licensing, receivership or change-of-ownership proceedings. Even if tenants decide to renew or lease new 34 space, the terms of renewals or new leases, including the cost of required renovations or concessions to tenants, may be less favorable to us than current lease terms. Real estate investments are relatively illiquid and most of the property we own is highly customized for specific uses. Our ability to quickly sell or exchange any of our properties in response to changes in operator, economic and other conditions will be limited. No assurances can be given that we will recognize full value for any property that we are required to sell. Our inability to respond rapidly to changes in the performance of our investments could adversely affect our financial condition and results of operations. In addition, we are exposed to the risks inherent in concentrating investments in real estate, and in particular, the seniors housing and health care industries. A downturn in the real estate industry could adversely affect the value of our properties and our ability to sell properties for a price or on terms acceptable to us. 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. Our tenants, operators and manager may not be able to maintain adequate levels of insurance and required coverages. Also, we may not be able 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. We cannot make any guarantee as to the future financial viability of the insurers that underwrite our policies and the policies maintained by our tenants, operators and managers. Insurance may not be available at a reasonable cost in the future or policies may not be maintained at a level that will fully cover all losses on our properties upon the occurrence of a catastrophic event. This may be especially the case due to increases in property insurance costs. In addition, 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 conditions, 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. Many of these ground leases impose significant limitations on our uses of the subject properties, restrict our ability to sell or otherwise transfer our interests in the properties or restrict the leasing of the properties. These restrictions may limit our ability to timely sell or exchange the properties, impair the properties’ value or negatively impact our ability to find suitable tenants for the properties. 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 35 property. In recent years, government payors have frozen or reduced payments to health care providers due to budgetary pressures. Federal and state authorities may continue seeking to implement new or modified reimbursement methodologies that may negatively impact health care property operations. See “Item 1 — Business — Certain Government Regulations — United States — Reimbursement” above for additional information. 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. Since January 1, 2014, the Health Reform Laws have provided those states that expand their Medicaid coverage to otherwise eligible state residents with incomes at or below 138% of the federal poverty level with an increased federal medical assistance percentage, effective January 1, 2014, when certain conditions are met. Given that the federal government substantially funds the Medicaid expansion, it is unclear how many states will ultimately pursue this option, although, as of early January 2020, more than 70% 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. The status of the Health Reform Laws may be subject to change as a result of political, legislative, regulatory, and administrative developments and judicial proceedings. The current Presidential Administration and U.S. Congress have sought to and may continue to 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. If controls imposed on certain of our tenants who provide health care services that are reimbursed by Medicare, Medicaid and other third-party payors to reduce admissions and length of stay affect inpatient volumes at our health care facilities, the financial condition or results of operations of those tenants could be adversely affected Controls imposed by Medicare, Medicaid and commercial third-party payors designed to reduce admissions and lengths of stay, commonly referred to as “utilization reviews,” have affected and are expected to continue to affect certain of our health care facilities, specifically our acute care hospitals and post-acute facilities. Utilization review entails the review of the admission and course of treatment of a patient by managed care plans. Inpatient utilization, average lengths of stay and occupancy rates continue to be negatively affected by payor- required preadmission authorization and utilization review and by payor pressures to maximize outpatient and alternative health care delivery services for less acutely ill patients. Efforts to impose more stringent cost controls and reductions are expected to continue, which could negatively impact the financial condition of our tenants who provide health care services in our hospitals and post-acute facilities. If so, this could adversely affect these tenants’ ability and willingness to comply with the terms of their leases with us and/or renew those leases upon expiration, which could have a material adverse effect on us. 36 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 or impacted by varying levels of federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards. These laws and regulations include, among others: laws protecting consumers against deceptive practices; laws relating to the operation of our properties and how our tenants and operators conduct their business, such as fire, health and safety, data security and privacy laws; federal and state laws affecting hospitals, clinics and other health care communities that participate in both Medicare and Medicaid that specify reimbursement rates, pricing, reimbursement procedures and limitations, quality of services and care, background checks, food service and physical plants, and similar foreign laws regulating the health care industry; resident rights laws (including abuse and neglect laws) and fraud laws; anti-kickback and physician referral laws; the ADA and similar state and local laws; and safety and health standards set by the Occupational Safety and Health Administration or similar foreign agencies. 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, civil liability, and in certain limited instances, criminal penalties, loss of license, closure of the facility and/or the incurrence of considerable costs arising from an investigation or regulatory action. Such actions may have an effect on our operators’ or tenants’ ability to make lease payments to us and, therefore, adversely impact us. In addition, we may be directly subject to certain health care fraud and abuse laws and data privacy laws, as well as potential investigation or enforcement, as a result of our RIDEA-structured arrangements, and certain other arrangements we may pursue with healthcare entities who are directly subject to these laws. See “Item 1 — Business — Certain Government Regulations — United States — Fraud & Abuse Enforcement” and “Item 1 — Business — Certain Government Regulations — United States — Health Care Matters — Generally” 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. In addition, we cannot assure you that future changes in government regulation will not adversely affect the health care industry, including our tenants and operators, nor can we be certain that our tenants and operators will achieve and maintain occupancy and rate levels or labor cost levels that will enable them to satisfy their obligations to us. 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 the U.S. maintains a worldwide corporate tax system, the foreign and U.S. tax systems are somewhat interdependent. Longstanding international norms that determine each country’s jurisdiction to tax cross-border international trade are evolving and could reduce the ability of our foreign subsidiaries to deduct for foreign tax purposes the interest they pay on loans from us, thereby increasing the foreign tax liability of the subsidiaries; it is also possible that foreign countries could increase their withholding taxes on dividends and interest. Given the unpredictability of these possible changes and their potential interdependency, it is very difficult to assess the overall effect of such potential tax changes on our earnings and cash flow, but such changes could adversely impact our financial results. 37 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 are directly involved in legal proceedings, lawsuits and other claims. We also are 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. 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. 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, significantly divert the attention of management, and could damage our reputation and our brand. In addition, any such resolution could involve our agreement to terms that restrict the operation of our business. We cannot guarantee losses incurred in connection with any current or future legal or regulatory proceedings or actions will not exceed any provisions we may have set aside in respect of such proceedings or actions or will not exceed any available insurance coverage. Development, redevelopment and construction risks could affect our profitability 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 in increased costs or our required governmental permits and authorizations. These factors could result 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. We may be unable to obtain financing with favorable terms, or at all, for the proposed development, which may cause us to delay or abandon an opportunity. 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. New facilities that we construct often 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. 38 We may experience losses caused by severe weather conditions, natural disasters or the physical effects of climate change, which could result in an increase of our or our tenants’ cost of insurance, unanticipated costs associated with evacuation, 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, as well as the effects of climate change. 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 including but not limited to the costs associated with evacuation. 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. Also, changes in federal and state legislation and regulation relating to climate change could result in increased capital expenditures to improve the energy efficiency and resiliency of our existing properties and could also necessitate us to spend more on our new development properties without a corresponding increase in revenue. To the extent that significant changes in the climate occur in areas where our communities are located, we may experience extreme weather and changes in precipitation and temperature, all of which may result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions. Should the impact of climate change be material including significant property damage to or destruction of our communities, or occur for lengthy periods of time, our financial condition or results of operations may be adversely affected. In addition, changes in federal, state and local legislation and regulation based on concerns about climate change could result in increased capital expenditures on our existing properties and our new development properties without a corresponding increase in revenue, resulting in adverse impacts to our net income. in nature, 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. These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused the release. 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. 39 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 through phishing or other malicious activity, attempts to interrupt our access to or use of IT systems through distributed denial-of-service or ransomware attacks, breaches related to our increased receipt and use of data from multiple sources, and other electronic security breaches or other cybersecurity incidents, 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, and may be specifically targeted to our business or more general industry wide risks. Our information technology networks and related systems are essential to our ability to perform day-to-day operations of our business. 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. Even the most well-protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted cybersecurity breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, we may be unable to anticipate these techniques or to implement adequate cybersecurity barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk. 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. We must continuously monitor and develop our systems to protect our technology infrastructure and data from misappropriation or corruption. 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. There is substantial competition for qualified personnel. We cannot assure you that we will retain our key personnel or that we will be able to recruit and retain other highly qualified employees in the future. Losing any key personnel could, at least temporarily, have a material adverse effect on our business, financial position and results of operations. Risks Arising from Our Capital Structure Our certificate of incorporation and by-laws contain anti-takeover provisions Our certificate of incorporation and by-laws contain anti-takeover provisions (restrictions on share ownership and transfer and super majority stockholder approval requirements for business combinations) that could make it more difficult for or even prevent a third party from acquiring us without the approval of our incumbent Board of Directors. Provisions and agreements that inhibit or discourage takeover attempts could reduce the market value of our common stock. We may become more leveraged Permanent financing for our investments is typically provided through a combination of public offerings of debt and equity securities and the incurrence or assumption of secured debt. The incurrence or assumption of indebtedness may cause us to become more leveraged, which could (1) require us to dedicate a greater portion of our cash flow to the payment of debt service, (2) make us more vulnerable to a downturn in the economy, (3) limit our ability to obtain additional financing, (4) negatively affect our credit ratings or outlook by one or more of the rating agencies or (5) make us more vulnerable to increases in interest rates because of the variable interest rates on some of our borrowings to the extent we have not entirely hedged such variable rate debt. 40 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 effect 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 effect 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 common stock and the credit ratings of our debt securities; changes in the credit ratings on U.S. government debt securities; uncertainty from the expected discontinuance of LIBOR and the transition to any other interest rate benchmark; and default or delay in payment by the U.S. of its obligations. We also rely on the financial institutions that are parties to our revolving credit facilities. If these institutions become capital constrained, tighten their lending standards or become insolvent or if they experience excessive volumes of borrowing requests from other borrowers within a short period of time, they may be unable or unwilling to honor their funding commitments to us, which would adversely affect our ability to draw on our revolving credit facilities and, over time, could negatively impact our ability to consummate acquisitions, repay indebtedness as it matures, fund capital expenditures or make distributions to our stockholders. 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. Changes affecting the availability of the London Interbank Offered Rate (“LIBOR”) may have consequences for us that cannot yet reasonably be predicted We have outstanding debt, hedge agreements and receivable transactions with variable interest rates based on LIBOR. The LIBOR benchmark has been subject of national, international, and other regulatory guidance and proposals for reform. In July 2017, the U.K. Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. These reforms may cause LIBOR to perform differently than in the past and LIBOR may ultimately cease to exist after 2021. While it is not currently possible to determine precisely whether, or to what extent, the withdrawal and replacement of LIBOR would affect us, the implementation of alternative benchmark rates to LIBOR may have an adverse effect on our business, results of operations or financial condition. Any new benchmark rate will likely not replicate LIBOR exactly, which could impact contracts that terminate after 2021. There is uncertainty about how applicable law, the courts or we will address the replacement of LIBOR with alternative rates on agreements that do not include alternative rate 41 fallback provisions. In addition, any changes to benchmark rates may have an uncertain impact on our cost of funds and our access to the capital markets, which could impact our results of operations and cash flows. Uncertainty as to the nature of such potential changes may also adversely affect the trading market for our securities. Additional financing, therefore, may be unavailable, more expensive or restricted by the terms of our outstanding indebtedness. Downgrades in our credit ratings could have a material adverse effect 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 effect on our cost and availability of capital, which could in turn have a material adverse effect on our results of operations, liquidity, cash flows, the trading/redemption price of our securities and our ability to satisfy our debt service obligations and to pay dividends and distributions to our equity holders. Increases in interest rates could have a material adverse effect 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, acquire and develop 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, that the amount of income we earn from hedging transactions may be limited by federal tax provisions governing REITs, and that these arrangements may cause us to pay higher interest rates on our debt obligations than otherwise would be the case. 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 operated 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; 42 • we would be subject to increased state and local taxes; and • unless we are entitled to relief under statutory provisions, we could not elect to be subject to tax as a REIT for four taxable years following the year during which we were disqualified. Since REIT qualification requires us to meet a number of complex requirements, it is possible that we may fail to fulfill them, and if we do, our earnings will be reduced by the amount of U.S. federal and other income taxes owed. A reduction in our earnings would affect the amount we could distribute to our stockholders. If we do not qualify as a REIT, we will 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 will 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 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. 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, even if the then-prevailing market conditions are not favorable for these borrowings, 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. 43 Our use of TRSs is limited under the Code Under the Code, no more than 20% of the value of the gross assets of a REIT may be represented by securities of one or more TRSs. This limitation may affect our ability to increase the size of our TRSs’ operations and assets, and there can be no assurance that we will be able to comply with the applicable limitation, or that such compliance will not adversely affect our business. Also, our TRSs may not, among other things, operate or manage certain health care facilities, which may cause us to forgo investments we might otherwise make. Finally, we may be subject to a 100% excise tax on the income derived from certain transactions with our TRSs that are not on an arm’s-length basis. We believe our arrangements with our TRSs are on arm’s-length terms and intend to continue to operate in a manner that allows us to avoid incurring the 100% excise tax described above, but there can be no assurance that we will be able to avoid application of that tax. 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 arm’s-length lease of a qualified health care property with a taxable REIT subsidiary and (2) the manager qualifies as an eligible independent contractor (as defined in the Code). If any of these conditions are not satisfied, then the rents will not be qualifying rents. If certain sale-leaseback transactions are not characterized by the Internal Revenue Service (“IRS”) as “true leases,” we may be subject to adverse tax consequences We have purchased certain properties and leased them back to the sellers of such properties, and we may enter into similar transactions in the future. We intend for any such sale-leaseback transaction to be structured in such a manner that the lease will be characterized as a “true lease,” thereby allowing us to be treated as the owner of the property for U.S. federal income tax purposes. However, depending on the terms of any specific transaction, the IRS might take the position that the transaction is not a “true lease” but is more properly treated in some other manner. In the event any sale-leaseback transaction is challenged and successfully re-characterized by the IRS, we would not be entitled to claim the deductions for depreciation and cost recovery generally available to an owner of property. Furthermore, if a sale-leaseback transaction were so re-characterized, we might fail to satisfy the REIT asset tests or income tests and, consequently, could lose our REIT status effective with the year of re-characterization. Alternatively, the amount of our REIT taxable income could be recalculated, which may cause us to fail to meet the REIT annual distribution requirements for a taxable year. We could be subject to changes in our tax rates, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities We are subject to taxes in the U.S. and foreign jurisdictions. Our effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates 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, 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. The present federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time, which could affect the federal income tax treatment of an investment in us. The federal income tax rules dealing with U.S. federal income taxation and REITs are constantly under review by persons involved in the legislative process, the IRS and the U.S. Treasury Department, which results in statutory changes as well as frequent revisions to regulations and interpretations. 44 We cannot predict how changes in the tax laws might affect our investors or us. Revisions in federal tax laws and interpretations thereof could significantly and negatively affect our ability to qualify as a REIT, as well as the tax considerations relevant to an investment in us, or could cause us to change our investments and commitments. Item 1B. Unresolved Staff Comments None. 45 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, 2019 (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 . . . . . . . . . . . . . . 2 Arkansas . . . . . . . . . . . . . . — 6 Arizona . . . . . . . . . . . . . . . 82 California . . . . . . . . . . . . . 11 Colorado . . . . . . . . . . . . . . 3 Connecticut . . . . . . . . . . . 2 District Of Columbia . . . . 3 Delaware . . . . . . . . . . . . . 14 Florida . . . . . . . . . . . . . . . 9 Georgia . . . . . . . . . . . . . . . 4 Iowa . . . . . . . . . . . . . . . . . 1 Idaho . . . . . . . . . . . . . . . . Illinois . . . . . . . . . . . . . . . 16 Indiana . . . . . . . . . . . . . . . — 3 Kansas . . . . . . . . . . . . . . . 2 Kentucky . . . . . . . . . . . . . 3 Louisiana . . . . . . . . . . . . . 19 Massachusetts . . . . . . . . . 8 Maryland . . . . . . . . . . . . . 1 Maine . . . . . . . . . . . . . . . . 6 Michigan . . . . . . . . . . . . . 3 Minnesota . . . . . . . . . . . . . 6 Missouri . . . . . . . . . . . . . . 2 Mississippi . . . . . . . . . . . . Montana . . . . . . . . . . . . . . 1 2 North Carolina . . . . . . . . . Nebraska . . . . . . . . . . . . . — New Hampshire . . . . . . . . — 26 New Jersey . . . . . . . . . . . . 1 New Mexico . . . . . . . . . . . 4 Nevada . . . . . . . . . . . . . . . 27 New York . . . . . . . . . . . . . 17 Ohio . . . . . . . . . . . . . . . . . 2 Oklahoma . . . . . . . . . . . . . 1 Oregon . . . . . . . . . . . . . . . 14 Pennsylvania . . . . . . . . . . 1 South Carolina . . . . . . . . . 2 Tennessee . . . . . . . . . . . . . 33 Texas . . . . . . . . . . . . . . . . 2 Utah . . . . . . . . . . . . . . . . . 5 Virginia . . . . . . . . . . . . . . 24 Washington . . . . . . . . . . . Wisconsin . . . . . . . . . . . . . 2 West Virginia . . . . . . . . . . — 370 Total domestic . . . . . . . . . 106 Canada . . . . . . . . . . . . . . . 57 United Kingdom . . . . . . . 163 . . . . . . Total international 6,083 119,759 15,133 — 86,883 3,052,393 427,566 66,838 78,356 69,290 898,178 127,018 75,655 22,405 454,088 — 67,263 37,074 50,062 565,730 393,479 25,151 165,217 83,838 153,312 14,870 5,635 113,352 — — 688,084 17,505 47,210 596,987 422,614 37,620 10,339 222,217 4,086 48,041 1,088,682 20,355 282,587 625,662 19,850 — 2 — — 32,517 — 23 688,631 12 87,463 17,820 8 14,540 — 7 25,484 51 144,974 3 38,612 28,926 7 5,433 — 25 — 28 27 15,133 6 14,461 1 15,957 9 113,921 90,687 24 11,995 — 18 32,231 11 15,771 1 25,085 1 8,354 1 4,484 50 19,680 4 — 4 — 41 210,140 1,548 — 1 23,816 4 141,993 34 66,041 20 3,650 1 2,678 71 67,864 8 7,121 4 16,259 37 234,874 1 7,875 27 77,302 7 137,873 4 8,493 3 — 586 11,180,625 2,585,528 6 452,734 2,150,044 66 352,658 1,634,009 72 805,392 3,784,053 — $ — 2,569 — — 64,633 32,854 15,211 19,705 — — 456,935 302,374 117,918 — 114,126 583,500 40,852 57,537 67 356,243 358,904 242,844 50,485 8,076 110,005 298,974 — 207,961 233,938 12,089 10,820 6,131 372,570 29,852 47,720 771,913 — 18,780 41,850 288,499 219,772 2,793 2 8 2 8 45 2 1 — — 9,544 — 42 56,682 13 3,570 1 5,884 2 — 7 31,919 10 45,696 5 27,460 1 4,187 840 — 7 16,484 12 18,155 1 — 3 20,225 9 21,552 11 854 1 — 767 — 26 54,641 2 4,418 1 7,341 15 84,672 3 — 8 3,767 18 7,271 9 35,030 2 25,505 2 818 1 837,818 116,500 3 3,069 37,460 9 4,791 37,879 53,592 393,201 71 2,103 — 23,614 6 29,811 281,446 9 10,254 93,483 8,640 67,702 5 5,107 — 45,336 383 10,341 — 4 4 146,737 7,201,172 836,416 1,228,409 106,336 1,375,146 116,677 $ 33,628 41,421 — 46,998 529,060 236,915 7,734 55,317 108,941 164,034 62,249 6,792 — 110,662 283,567 18,601 70,250 182,594 201,245 37,866 — 479,061 32,943 12,038 407,653 29,424 100,851 434,793 125,346 22,736 55,131 34,315 33,762 177,859 29,810 $ (2,240 ) 10,565 94,244 3,529 42,529 11,077 87,655 1,092,865 105,239 5,074 5,499 — 1,402 74,346 32,572 1,648 1,399 14,426 22,324 8,665 762 — 4,556 28,576 2,693 7,706 30,679 23,578 1,020 — 39,975 4,885 1,721 51,813 3,594 10,794 17,454 13,712 4,361 4,059 2,312 3,684 18,778 1,386,701 135,489 — 14,492 26,987 6,123 — 7,310,265 755,328 — 25,587 25,587 — 119,944 218,008 94,723 — — 268,010 268,010 Grand total . . . . . . . . . . . . 533 $14,964,678 $3,390,920 658 $8,576,318 $953,093 387 $7,578,275 $780,915 (1) Represents revenue for the month ended December 31, 2019 annualized. 46 The following table sets forth occupancy and average annualized revenues for certain property types (excluding investments in unconsolidated entities): Occupancy(1) Average Annualized Revenues(2) 2019 2018 2019 2018 Seniors Housing Operating(3) . . . . . . . . . . . . . . . . . . . . Triple-net(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outpatient Medical(5) . . . . . . . . . . . . . . . . . . . . . . . . . . 86.9% 87.5% $56,329 84.3% 84.9% 14,578 34 94.1% 93.1% $ 60,635 per unit 12,831 per bed/unit 34 per sq. ft. (1) We use unaudited, periodic financial information provided solely by tenants/borrowers to calculate occupancy for properties other than Outpatient Medical buildings and have not independently verified the information. (2) Represents December annualized revenues divided by total beds, units or square feet as presented in the tables above. (3) Occupancy represents average occupancy for the three months ended December 31. (4) Occupancy represents average quarterly operating occupancy based on the quarters ended September 30 and excludes properties that are unstabilized, closed or for which data is not available or meaningful. (5) Occupancy represents 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, 2019 (dollars in thousands): 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Thereafter Expiration Year(1) Triple-net: Properties . . . . . . . . Base rent(2) . . . . . . . . $ % of base rent . . . . . Units . . . . . . . . . . . . % of units . . . . . . . . Outpatient Medical: 11 3,782 $ 0.5% 1,101 1.7% 7 12,292 $ 1.6% 1,394 2.2% 10 8,889 $ 1.1% 1,264 2.0% 1 840 $ 0.1% 70 0.1% 4 11,262 $ 1.5% 692 1.1% 48 76 53,216 $ 103,179 $ 13.3% 6,085 3,033 6.9% 4.7% 9.5% 18 35,381 $ 4.6% 2,350 3.7% 15 22,036 $ 2.8% 1,633 2.6% 15 431 33,619 $ 492,113 4.3% 1,429 2.2% 63.3% 44,811 70.2% . . . . . . . 1,748,858 2,053,686 2,165,074 2,158,927 2,230,230 1,305,946 1,670,290 1,025,948 1,052,671 48,233 $ 8.2% 471 14.9% 57,464 $ 9.8% 422 13.3% 58,846 $ 10.0% 433 13.7% 58,295 $ 9.9% 442 14.0% 65,687 $ 11.2% 355 11.2% 34,681 $ 5.9% 213 6.7% 42,112 $ 7.2% 208 6.6% 25,805 $ 4.4% 137 4.3% 27,501 $ 4.7% 118 3.7% 1,148,176 6,183,564 29,829 $ 139,889 5.1% 152 4.8% 23.6% 214 6.8% Square feet Base rent(2) . . . . . . . . $ % of base rent . . . . . Leases . . . . . . . . . . . % of leases . . . . . . . (1) Excludes investments in unconsolidated entities, developments, land parcels, loans receivable and sub-leases. Investments classified as held for sale are included in 2020. (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 expenses and costs associated with the defense of such legal proceedings, we may have significant 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. 47 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 3,564 PART II stockholders of record as of January 31, 2020. 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, 2019, 155 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. 2014 equals $100 and dividends are assumed to be reinvested. S&P 500 Welltower Inc. FTSE NAREIT Equity s r a l l o D 175 155 135 115 95 75 2014 2015 2016 2017 2018 2019 S & P 500 Welltower Inc. FTSE NAREIT Equity 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 $100.00 $101.38 $113.51 $138.29 $132.23 $173.86 100.00 100.00 94.28 103.20 97.45 111.99 97.65 117.84 112.59 112.39 138.52 141.61 48 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, 2019 through October 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . 4,546 $91.04 November 1, 2019 through November 30, 2019 . . . . . . . . . . . . . December 1, 2019 through December 31, 2019 . . . . . . . . . . . . . 728 891 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . 6,165 86.12 78.67 $89.43 (1) During the three months ended December 31, 2019, 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. 49 Item 6. Selected Financial Data The following selected financial data for the five years ended December 31, 2019 are derived from our audited consolidated financial statements (in thousands, except per share data): Year Ended December 31, 2015 2016 2017 2018 2019 $3,859,826 3,223,709 $4,281,160 3,571,907 $4,316,641 4,017,025 $4,700,499 4,277,009 $5,121,306 4,578,414 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 636,117 (6,451) (21,504) 280,387 709,253 19,128 (10,357) 364,046 Income from continuing operations . . . . . . . . . . . . . . . . 888,549 1,082,070 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . Preferred stock redemption charge . . . . . . . . . . . . . . . . . Net income (loss) attributable to noncontrolling 888,549 65,406 — 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) 415,575 542,892 (2,957) 42,434 748,041 829,750 1,330,410 829,750 46,704 — 1,330,410 — — interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,799 4,267 17,839 24,796 97,978 Net income attributable to common stockholders . . . . . . $ 818,344 $1,012,397 $ 463,595 $ 758,250 $1,232,432 Other Data Average number of common shares outstanding: Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348,240 349,424 358,275 360,227 367,237 369,001 373,620 375,250 401,845 403,808 Per Share Data Basic: Income from continuing operations . . . . . . . . . . . . . . Net income attributable to common stockholders . . . . Diluted: Income from continuing operations . . . . . . . . . . . . . . Net income attributable to common stockholders . . . . Cash distributions per common share . . . . . . . . . . . . . . . $ $ $ $ $ 2.55 2.35 2.54 2.34 3.30 $ $ $ $ $ 3.02 2.83 3.00 2.81 3.44 $ $ $ $ $ 1.47 1.26 1.47 1.26 3.48 $ $ $ $ $ 2.22 2.03 2.21 2.02 3.48 $ $ $ $ $ 3.31 3.07 3.29 3.05 3.48 2015 2016 2017 2018 2019 December 31, Balance Sheet Data Net real estate investments(1) . . . . . . . . . . . $26,888,685 $26,563,629 $26,171,077 $28,420,769 $31,119,271 33,380,751 Total assets . . . . . . . . . . . . . . . . . . . . . . . . 15,388,765 Total debt and lease obligations(1) . . . . . . . 16,398,247 Total liabilities . . . . . . . . . . . . . . . . . . . . . — Total preferred stock . . . . . . . . . . . . . . . . . 16,506,627 Total equity . . . . . . . . . . . . . . . . . . . . . . . . 28,865,184 12,358,245 13,185,279 1,006,250 15,281,472 27,944,445 11,731,936 12,643,799 718,503 14,925,452 30,342,072 13,297,144 14,331,427 718,498 15,586,599 29,023,845 12,967,686 13,664,877 1,006,250 15,175,885 (1) Effective January 1, 2019, we adopted new guidance on leases using the prospective method. See Note 2 to the consolidated financial statements for further details. 50 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 52 53 55 57 57 58 59 59 60 62 64 67 70 OTHER Non-GAAP Financial Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Critical Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 77 51 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, 2019 (dollars in thousands): Type of Property NOI(1) Percentage of NOI Number of Properties Seniors Housing Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outpatient Medical $1,039,520 918,743 469,035 42.8% 37.9% 19.3% 533 658 387 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,427,298 100.0% 1,578 (1) Represents consolidated net operating income (“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, 52 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 guarantees 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, 2019, resident fees/services and rental income represented 67% and 31%, 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 and services, rent and interest receipts, borrowings under our unsecured revolving credit facility and commercial paper program, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses and general and administrative expenses. Depending upon the availability and cost of external capital, we believe our liquidity is sufficient to fund these uses of cash. We also continuously evaluate opportunities to finance future investments. New investments are generally funded from temporary borrowings under our unsecured revolving credit facility and commercial paper program, internally generated cash and the proceeds from investment dispositions. Our investments generate cash from NOI and principal payments on loans receivable. Permanent financing for future investments, which replaces funds drawn under our unsecured revolving credit facility and commercial paper program, has historically been provided through a combination of the issuance of public debt and equity securities and the incurrence or assumption of secured debt. Depending upon market conditions, we believe that new investments will be available in the future with spreads over our cost of capital that will generate appropriate returns to our stockholders. It is also likely that investment dispositions exceed new investment dispositions may occur in the future. To the extent investments, our revenues and cash flows from operations could be adversely affected. We expect to reinvest the proceeds from any investment dispositions in new investments. To the extent that new investment requirements exceed our available cash on-hand, we expect to borrow under our unsecured revolving credit facility and commercial paper program. At December 31, 2019, we had $284,917,000 of cash and cash equivalents, $100,849,000 of restricted cash and $1,411,400,000 of available borrowing capacity under our unsecured revolving 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, 2019: • In January 2019, we established an unsecured commercial paper program. Under the terms of the program, we may issue, from time to time, unsecured commercial paper with maturities that vary, but do not exceed 397 days from the date of issue, up to a maximum aggregate principal amount outstanding at any time of $1,000,000,000. 53 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations • • • • • • • • In February 2019, we elected to effect the mandatory conversion of all of the outstanding 6.50% Series I Cumulative Convertible Preferred Stock. Each share of convertible stock was converted into 0.8857 shares of common stock. In February 2019, we entered into an amended and restated Equity Shelf Program (as defined below) pursuant to which we may offer and sell up to $1,500,000,000 of common stock from time to time. We sold 18,591,000 shares of common stock under our current and previous Equity Shelf Programs and DRIP (as defined below), via both cash settle and forward sale agreements, generating expected gross proceeds of approximately $1,498,731,000. In February 2019, we completed the issuance of $500,000,000 of 3.625% senior unsecured notes due 2024 and $550,000,000 of 4.125% senior unsecured notes due 2029 for net proceeds of approximately $1,036,964,000. In March 2019 we repaid our $600,000,000 of 4.125% senior unsecured notes due 2019 and $450,000,000 of 6.125% senior unsecured notes due 2020. In August 2019, we completed the issuance of $750,000,000 of 3.10% senior unsecured notes due 2030 and a follow-on issuance of $450,000,000 of 3.625% senior unsecured notes due 2024 priced to yield 2.494%, for net proceeds of approximately $1,209,328,000. In September 2019, we repaid our $450,000,000 of 4.95% senior unsecured notes due 2021 and $600,000,000 of 5.25% senior unsecured notes due 2022. In December 2019, we completed the issuance of $500,000,000 of 2.70% senior unsecured notes due 2027. The net proceeds of approximately $495,066,000 will be used to fund renewable energy, water conservation, energy efficiency and green building projects. Additionally, we completed the issuance of $300,000,000 of 2.95% Canadian-denominated senior unsecured notes due 2027 generating net proceeds of approximately CAD $297,668,000. In December 2019, we redeemed all of the outstanding $300,000,000 Canadian-denominated 3.35% senior unsecured notes due 2020. • We extinguished $230,108,000 of secured debt at a blended average interest rate of 4.35% throughout 2019. Investments The following summarizes property acquisitions and joint venture investments made during the year ended December 31, 2019 (dollars in thousands): Properties Investment Amount(1) Capitalization Rates(2) Book Amount(3) Seniors Housing Operating . . . . . . . . . . . . . . Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outpatient Medical Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 10 105 177 $1,459,254 217,658 2,396,642 $4,073,554 5.1% 6.5% 5.6% 5.4% $1,802,836 227,379 2,491,159 $4,521,374 (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 NOI 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. 54 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Dispositions The following summarizes property dispositions made during the year ended December 31, 2019 (dollars in thousands): Properties Proceeds(1) Capitalization Rates(2) Book Amount(3) Seniors Housing Operating(4) . . . . . . . . . . . . . Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outpatient Medical(5) . . . . . . . . . . . . . . . . . . . 55 57 1 $1,803,413 902,731 8,500 5.4% 7.9% 10.5% $1,232,816 667,632 482 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 $2,714,644 6.3% $1,900,930 (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. (4) Includes the disposition of an unconsolidated real estate investment. (5) Reflects the disposition of an excess land parcel. Dividends Our Board of Directors announced the 2020 annual cash dividend of $3.48 per common share ($0.87 per share quarterly), consistent with 2019, beginning in February 2020. The dividend declared for the quarter ended December 31, 2019 represents the 195th consecutive quarterly dividend payment. Key Performance Indicators, Trends and Uncertainties We utilize several key performance indicators to evaluate the various aspects of our business. These indicators are discussed below and relate to operating performance, credit strength and concentration risk. Management uses these key performance indicators to facilitate internal and external comparisons to our historical operating results, in making operating decisions, and for budget planning purposes. Operating Performance We believe that net income and net income attributable to common stockholders (“NICS”) per the Statement of Comprehensive Income are the most appropriate earnings measures. Other useful supplemental measures of our operating performance include funds from operations attributable to common stockholders (“FFO”) and consolidated net operating income (“NOI”); 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, 2019 2018 2017 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,330,410 $ 829,750 $ 540,613 463,595 Net income attributable to common stockholders . . . . . . . . . . . . 1,165,576 Funds from operations attributable to common stockholders . . . 2,232,716 Consolidated net operating income . . . . . . . . . . . . . . . . . . . . . . . 1,232,432 1,577,080 2,431,264 758,250 1,392,183 2,267,482 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 55 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“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, 2019 2018 2017 Net debt to book capitalization ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net debt to undepreciated book capitalization ratio . . . . . . . . . . . . . . . . . . . . . Net debt to market capitalization ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjusted interest coverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.14x Adjusted fixed charge coverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.78x 46.5% 45.0% 42.9% 39.4% 37.8% 36.3% 29.6% 31.3% 31.2% 4.11x 3.44x 4.36x 3.54x Concentration Risk We evaluate our concentration risk in terms of NOI by property mix, relationship mix and geographic mix. Concentration risk is a valuable measure in understanding what portion of our NOI could be at risk if certain sectors were to experience downturns. Property mix measures the portion of our NOI that relates to our various property types. Relationship mix measures the portion of our NOI that relates to our current top five relationships. Geographic mix measures the portion of our NOI that relates to our current top five states (or international equivalents). The following table reflects our recent historical trends of concentration risk by NOI for the years indicated below: December 31,(1) 2019 2018 2017 Property mix: Seniors Housing Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outpatient Medical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43% 43% 40% 38% 40% 43% 19% 17% 17% Relationship mix: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sunrise Senior Living(2) ProMedica . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Revera(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Genesis HealthCare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Belmont Village . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Remaining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14% 15% 14% 4% —% 9% 7% 7% 6% 9% 6% 5% 3% 3% 3% 63% 65% 67% Geographic mix: California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . New Jersey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Remaining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13% 14% 13% 9% 9% 8% 7% 8% 8% 8% 8% 7% 8% 7% 7% 57% 54% 55% (1) Excludes our share of investments in unconsolidated entities and non-segment/corporate NOI. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount. (2) Revera owns a controlling interest in Sunrise Senior Living. 56 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results. Our expected results may not be achieved and actual results may differ materially from our expectations. Factors that may cause actual results to differ from expected results are described in more detail in “Item 1 — Business — Cautionary Statement Regarding Forward-Looking Statements” and “Item 1A — Risk Factors” and other sections of this Annual Report on Form 10-K. Management regularly monitors economic and other factors to develop strategic and tactical plans designed to improve performance and maximize our competitive position. Our ability to achieve our financial objectives is dependent upon our ability to effectively execute these plans and to appropriately respond to emerging economic and company-specific trends. Please refer to “Item 1 — Business,” “Item 1A — Risk Factors” in this Annual Report on Form 10-K for further discussion of these risk factors. Corporate Governance Maintaining investor confidence and trust is important in today’s business environment. Our Board of Directors and management are strongly committed to policies and procedures that reflect the highest level of ethical business practices. Our corporate governance guidelines provide the framework for our business operations and emphasize our commitment to increase stockholder value while meeting all applicable legal requirements. These guidelines meet the listing standards adopted by the New York Stock Exchange and are available on the Internet at www.welltower.com/investors/governance. The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive textual reference only. Liquidity and Capital Resources Sources and Uses of Cash Our primary sources of cash include resident fees and services, rent and interest receipts, borrowings under our unsecured revolving credit facility and commercial paper program, 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): Two Year Change $ Year Ended December 31, 2017 One Year Change $ One Year Change $ December 31, 2018 December 31, 2019 Year Ended % % % Cash, cash equivalents and restricted cash at beginning of period . . . . . . . . . . . . . . . . $ Net cash provided from (used in): Operating activities . . . . . . . Investing activities . . . . . . . . Financing activities . . . . . . . Effect of foreign currency 316,129 $ 309,303 $ 6,826 2% $ 607,220 $ (297,917) -49% $ (291,091) -48% 1,535,968 (2,048,791) 577,150 1,583,944 (2,386,471) 337,680 -14% (47,976) 154,581 (2,541,052) n/a 818,368 (241,218) -29% (1,913,527) 2,731,895 n/a -3% 1,434,177 149,767 10% 7% 101,791 (2,203,372) n/a 2,490,677 n/a translation . . . . . . . . . . . . . . 5,310 (9,015) 14,325 n/a 26,852 (35,867) n/a (21,542) -80% Cash, cash equivalents and restricted cash at end of period . . . . . . . . . . . . . . . . . . $ 385,766 $ 316,129 $ 69,637 22% $ 309,303 $ 6,826 2% $ 76,463 25% 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 by dispositions. Please see “Results of Operations” below for further discussion. For the years ended December 31, 2019, 2018 and 2017, cash flows from operations exceeded cash distributions to stockholders. 57 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Investing Activities The changes in net cash used in investing activities are primarily attributable to net changes in real property investments, loans receivable and investments in unconsolidated entities which are summarized above in “Key Transactions.” Please refer to Notes 3, 7, and 8 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): . . . . . . . . . . . New development Recurring capital expenditures, tenant improvements and lease commissions . . . . . . . . . Renovations, redevelopments and other capital improvements . . . . . . . . . . . . . Year Ended December 31, 2019 December 31, 2018 One Year Change $ % Year Ended December 31, 2017 One Year Change Two Year Change $ % $ % $323,488 $160,706 $162,782 101% $232,715 $(72,009) -31% $ 90,773 39% 136,535 90,190 46,345 51% 67,797 22,393 33% 68,738 101% 192,289 175,993 16,296 9% 182,479 (6,486) -4% 9,810 5% Total . . . . . . . . . . . . . . . . . . . . . . $652,312 $426,889 $225,423 53% $482,991 $(56,102) -12% $169,321 35% The change in new development is primarily due to the number and size of construction projects on-going during the relevant periods. Renovations, redevelopments and other capital improvements include expenditures to maximize property value, increase net operating income, maintain a market-competitive position and/or achieve property stabilization. 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 10, 11 and 14 of our consolidated financial statements for additional information. Off-Balance Sheet Arrangements At December 31, 2019, 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, 2019, we had thirteen outstanding letter of credit obligations. Please see Notes 8, 12 and 13 to our consolidated financial statements for additional information. 58 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Contractual Obligations The following table summarizes our payment requirements under contractual obligations as of December 31, 2019 (in thousands): Contractual Obligations Total 2020 2021-2022 2023-2024 Thereafter Unsecured revolving credit facility and commercial paper(1,2) . . . . . . . . . . . . . . . . . . . . . $ 1,588,600 $ 643,600 $ — $ 945,000 $ — Payments Due by Period Senior unsecured notes and term credit facilities:(2) U.S. Dollar senior unsecured notes . . . . . . . . . . Canadian Dollar senior unsecured notes(3) . . . . Pounds Sterling senior unsecured notes(3) . . . . . U.S. Dollar term credit facility . . . . . . . . . . . . . Canadian Dollar term credit facility(3) . . . . . . . . Secured debt:(2,3) 8,100,000 231,446 1,393,245 510,000 192,871 — — — — — 5,650,000 — 2,450,000 — — 231,446 — 1,393,245 — — 10,000 — 500,000 — 192,871 Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . Unconsolidated . . . . . . . . . . . . . . . . . . . . . . . . . 2,993,342 826,396 354,329 57,728 861,052 52,172 771,911 95,783 1,006,050 620,713 Contractual interest obligations:(4) Unsecured revolving credit facility and Senior unsecured notes and term loans(3) Consolidated secured debt(3) Unconsolidated secured debt(3) commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financing lease liabilities(5) . . . . . . . . . . . . . . . . . . Operating lease obligations(5) . . . . . . . . . . . . . . . . Purchase obligations(6) . . . . . . . . . . . . . . . . . . . . . . 86,065 4,144,774 510,973 179,382 186,335 1,185,632 727,558 25,302 410,322 101,577 28,056 9,121 23,356 536,105 48,610 838,436 163,885 52,130 16,935 45,469 150,656 12,153 735,197 100,441 39,623 70,601 43,411 27,787 — 2,160,819 145,070 59,573 89,678 1,073,396 13,010 Total contractual obligations . . . . . . . . . . . . . . . . . $22,856,619 $2,189,496 $2,239,345 $5,984,778 $12,443,000 (1) Relates to our unsecured revolving credit facility and commercial paper with an aggregate commitment of $3,000,000,000. See Note 10 to our consolidated financial statements. (2) Amounts represent principal amounts due and do not reflect unamortized premiums/discounts or other fair value adjustments as reflected on the balance sheet. (3) Based on foreign currency exchange rates in effect as of balance sheet date. (4) Based on variable interest rates in effect as of December 31, 2019. (5) See Note 6 to our consolidated financial statements for additional information. (6) See Note 13 to our consolidated financial statements for additional information. 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, 2019, 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 59 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 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 January 31, 2020, 2,728,696 shares of common stock remained available for issuance under the DRIP registration statement. On February 25, 2019, we entered into separate amended and restated equity distribution agreements with each of Barclays Capital Inc., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. LLC, MUFG Securities Americas Inc., RBC Capital Markets, LLC, UBS Securities LLC and Wells Fargo Securities, LLC relating to the offer and sale from time to time of up to $1,500,000,000 aggregate amount of our common stock (“Equity Shelf Program”), which replaced our existing equity shelf program entered into on August 3, 2018. The Equity Shelf Program also allows us to enter into forward sale agreements. As of January 31, 2020, we had $1,075,537,000 of remaining capacity under the Equity Shelf Program, which excludes forward sales agreements outstanding for the sale of 6,799,978 shares with maturity dates in 2020 and 2021. We expect to physically settle the forward sales for cash proceeds. Depending upon market conditions, we anticipate issuing securities under our registration statements to invest in additional properties and to repay borrowings under our unsecured revolving credit facility and commercial paper program. Results of Operations Summary Our primary sources of revenue include resident fees and 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 related to these supplemental measures. This section of this Form 10-K generally discusses 2019 and 2018 items and year-to-year comparisons between 2019 and 2018. Discussions of 2017 items and year-to-year comparisons between 2018 and 2017 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. 60 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 periods presented (dollars in thousands, except per share amounts): Year Ended December 31, 2019 December 31, 2018 One Year Change Amount % Year Ended December 31, 2017 One Year Change Two Year Change Amount % Amount % Net income . . . . . . . . . . . . . . . . . $1,330,410 $ 829,750 $500,660 60% $ 540,613 $289,137 53% $789,797 146% NICS . . . . . . . . . . . . . . . . . . . . . 1,232,432 758,250 474,182 63% 463,595 294,655 64% 768,837 166% FFO . . . . . . . . . . . . . . . . . . . . . . 1,577,080 1,392,183 184,897 13% 1,165,576 226,607 19% 411,504 35% Adjusted EBITDA . . . . . . . . . . . 2,328,202 2,153,005 175,197 8% 2,128,429 24,576 1% 199,773 Consolidated NOI . . . . . . . . . . . 2,431,264 2,267,482 163,782 7% 2,232,716 34,766 2% 198,548 9% 9% Per share data (fully diluted): Net income attributable to common stockholders . . . . $ 3.05 $ 2.02 $ 1.03 51% $ 1.26 $ 0.76 60% $ 1.79 142% Funds from operations attributable to common stockholders . . . . . . . . . . . . $ Adjusted interest coverage 3.91 $ 3.71 $ 0.20 5% $ 3.16 $ 0.55 17% $ 0.75 24% ratio . . . . . . . . . . . . . . . . . . . . 4.14x 4.11x 0.03x 1% 4.36x -0.25x -6% -0.22x -5% Adjusted fixed charge coverage ratio . . . . . . . . . . . . . . . . . . . . 3.78x 3.44x 0.34x 10% 3.54x -0.10x -3% 0.24x 7% The following table represents the changes in outstanding common stock for the period from January 1, 2017 to December 31, 2019 (in thousands): December 31, 2019 Year Ended December 31, 2018 December 31, 2017 Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividend reinvestment plan issuances . . . . . . . . . . . . . . Preferred stock conversions . . . . . . . . . . . . . . . . . . . . . . Redemption of equity membership units . . . . . . . . . . . . Option exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity Shelf Program issuances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other, net 383,675 5,799 12,712 — 11 7,856 204 Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410,257 371,732 6,529 — — 57 5,241 116 383,675 362,602 5,640 4 91 253 2,987 155 Totals 362,602 17,968 12,716 91 321 16,084 475 371,732 410,257 Average number of shares outstanding: Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401,845 403,808 373,620 375,250 367,237 369,001 During the past three years, inflation has not significantly affected our earnings because of the moderate inflation rate. Additionally, a portion of our earnings are derived primarily from long-term investments with 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. 61 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Seniors Housing Operating The following is a summary of our same store NOI (“SSNOI”) for the Seniors Housing Operating segment for the years presented (dollars in thousands): 2018 and 2019 Same Store Pool One Year Change 2017 and 2018 Same Store Pool One Year Change 2019 2018 $ % 2018 2017 $ % SSNOI(1) . . . . . . . . . . . . $699,867 $701,493 $(1,626) -0.2% $816,416 $824,415 $(7,999) -1.0% (1) Relates to 341 properties for the 2018 and 2019 Same Store Pool and 390 properties for the 2017 and 2018 Same Store Pool. 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, 2019 December 31, 2018 One Year Change $ % Year Ended December 31, 2017 One Year Change Two Year Change $ % $ % Revenues: Resident fees and services . . . . . . . . . . $3,448,175 $3,234,852 $213,323 7% $2,779,423 $455,429 16% $668,752 24% Interest income . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . 36 8,658 578 5,024 (542) 3,634 -94% 72% 69 5,127 509 738% (33) -48% (103) -2% 3,531 69% Total revenues . . . . . . . . . . . . . . . . . . . 3,456,869 3,240,454 216,415 7% 2,784,619 455,835 16% 672,250 Property operating expenses . . . . . . . . . . 2,417,349 2,255,432 161,917 7% 1,904,593 350,839 18% 512,756 24% 27% NOI(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,039,520 985,022 54,498 6% 880,026 104,996 12% 159,494 18% Other expenses: Depreciation and amortization . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . Loss (gain) on extinguishment of debt, net . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment of assets . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . 553,189 67,983 1,614 2,145 26,348 529,449 23,740 69,060 (1,077) 4% -2% 484,796 63,265 44,653 5,795 9% 68,393 14% 9% 4,718 7% 110 7,599 6,624 1,504 1,367% 3,785 (3,675) -97% (2,171) -57% (5,454) 19,724 -72% 298% 21,949 (14,350) -65% (19,804) -90% 8,347 (1,723) -21% 18,001 216% 651,279 612,842 38,437 6% 582,142 30,700 5% 69,137 12% Income (loss) from continuing operations before income taxes and other items . . Income tax benefit (expense) . . . . . . . . . . Income (loss) from unconsolidated 388,241 6,246 372,180 16,061 4% 297,884 74,296 25% 90,357 30% 1,202 5,044 420% (16,430) 17,632 107% 22,676 138% entities . . . . . . . . . . . . . . . . . . . . . . . . . 12,388 (28,142) 40,530 144% (105,236) 77,094 73% 117,624 112% Gain (loss) on real estate dispositions, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 528,747 (2,245) 530,992 23,652% 56,295 (58,540) -104% 472,452 839% Income from continuing operations . . . . . 935,622 342,995 592,627 173% 232,513 110,482 48% 703,109 302% Net income (loss) . . . . . . . . . . . . . . . . . . . 935,622 342,995 592,627 173% 232,513 110,482 48% 703,109 302% Less: Net income (loss) attributable to noncontrolling interests . . . . . . . . . . . . 56,513 (660) 57,173 8,663% 8,472 (9,132) -108% 48,041 567% Net income (loss) attributable to common stockholders . . . . . . . . . . . . . . . . . . . . . $ 879,109 $ 343,655 $535,454 156% $ 224,041 $119,614 53% $655,068 292% (1) See Non-GAAP Financial Measures below. Fluctuations in resident fees and 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. 62 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations During the three years presented, we recorded impairment charges on certain held for sale and held for use properties as the carrying value exceeded the estimated fair values. The fluctuations in gains (losses) on real estate dispositions are due to the volume of property sales and sales prices. The significant gain on real estate dispositions recognized during the year ended December 31, 2019 is related to the sale of the Benchmark Senior Living portfolio. Transaction costs related to asset acquisitions are capitalized as a component of the purchase price. The increase in other expenses during the year ended December 31, 2019 is primarily due to additional noncapitalizable transaction costs associated with acquisitions and operator transitions. During the year ended December 31, 2019, we completed two Seniors Housing Operating construction projects representing $28,117,000 or $109,405 per unit. The following is a summary of our Seniors Housing Operating construction projects, excluding expansions, pending as of December 31, 2019 (dollars in thousands): Location Units/Beds Commitment Balance Wandsworth, UK . . . . . . . . . . . . . . . . . . . . . . . . Taylor, PA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Beavercreek, OH . . . . . . . . . . . . . . . . . . . . . . . . Potomac, MD . . . . . . . . . . . . . . . . . . . . . . . . . . . Beckenham, UK . . . . . . . . . . . . . . . . . . . . . . . . . Hendon, UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . Barnet, UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 113 100 120 100 102 100 732 $ 78,221 14,272 12,032 56,720 62,497 74,041 68,335 $ 69,877 12,405 11,561 23,145 27,423 33,698 28,499 $366,118 206,608 Toronto, ON . . . . . . . . . . . . . . . . . . . . . . . . . . . . Washington, DC . . . . . . . . . . . . . . . . . . . . . . . . . Brookline, MA . . . . . . . . . . . . . . . . . . . . . . . . . . Project in planning stage Project in planning stage Project in planning stage 43,854 18,394 17,382 $268,873 Est. Completion 1Q20 1Q20 1Q20 4Q20 3Q21 4Q21 4Q21 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 to 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, 2019 Year Ended December 31, 2018 Year Ended December 31, 2017 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 transferred out . . . . . Debt deconsolidated . . . . Principal payments . . . . . Foreign currency . . . . . . . $1,810,587 — 343,696 183,061 (219,864) (12,072) — (43,997) 53,626 3.87% —% 3.11% 4.58% 4.28% 3.89% —% 3.45% 3.33% $1,988,700 35,830 45,447 121,612 (240,095) — — (47,886) (93,021) 3.66% 3.84% 3.40% 5.55% 4.83% —% —% 3.59% 3.31% $2,463,249 — 228,772 — (668,804) — (60,000) (47,153) 72,636 Ending balance . . . . . . . . $2,115,037 3.54% $1,810,587 3.87% $1,988,700 Monthly averages . . . . . . $1,966,892 3.70% $1,915,663 3.74% $2,065,477 3.94% —% 2.72% —% 4.81% —% 3.80% 3.60% 3.23% 3.66% 3.66% 63 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The majority of our Seniors Housing Operating properties are formed through partnership interests. The increase in income (loss) from unconsolidated entities are largely due to a gain on the disposition of an unconsolidated entity during the year ended December 31, 2019. Net income attributable to noncontrolling interests represents our partners’ share of net income (loss) related to joint ventures. The increase during the year ended December 31, 2019 relates primarily to our partner’s share of the gain recognized on the sale of the Benchmark Senior Living portfolio. Triple-net The following is a summary of our SSNOI for the Triple-net segment for the periods presented (dollars in thousands): 2018 and 2019 Same Store Pool One Year Change 2017 and 2018 Same Store Pool One Year Change 2019 2018 $ % 2018 2017 $ % SSNOI(1) . . . . . . . . . . . . . $516,340 $508,897 $7,443 1.5% $516,008 $508,257 $7,751 1.5% (1) Relates to 368 properties for the 2018 and 2019 Same Store Pool and 366 properties for the 2017 and 2018 Same Store Pool. 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 Triple-net segment for the years presented (dollars in thousands): Year Ended December 31, 2019 December 31, 2018 One Year Change $ % Year Ended December 31, 2017 One Year Change Two Year Change $ % $ % Revenues: Rental income . . . . . . . . . . . . . $903,798 $828,865 $ 74,933 9% $885,811 $ (56,946) -6% $ 17,987 Interest income . . . . . . . . . . . . Other income . . . . . . . . . . . . . . Total revenues . . . . . . . . . . . . . . . Property operating expenses . . . . 62,599 6,246 972,643 53,900 54,926 17,173 7,673 14% (10,927) -64% 73,742 7,531 (18,816) -26% (11,143) 9,642 128% (1,285) 900,964 71,679 8% 967,084 (66,120) -7% 5,559 1% 915 52,985 5,791% — 915 n/a 53,900 n/a 2% -15% -17% NOI(1) . . . . . . . . . . . . . . . . . . . 918,743 900,049 18,694 2% 967,084 (67,035) -7% (48,341) -5% Other expenses: Depreciation and amortization . . . . . . . . . . . . Interest expense . . . . . . . . . . . . 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) . . . . . . . . . . . Income from continuing operations before income taxes and other items . . . . . . . . . . . . Income tax benefit (expense) . . . Income (loss) from 232,626 12,892 235,480 14,225 (2,854) (1,333) -1% -9% 243,830 15,194 (8,350) -3% (11,204) -5% (969) -6% (2,302) -15% (4,399) (4,016) (383) -10% 2,284 (6,300) -276% (6,683) -293% — 18,690 11,926 13,771 (32) — 107,980 90,975 32 100% 18,690 n/a (96,054) (77,204) -89% -85% 29,083 62,966 96,909 116,689 (29,115) -100% (29,083) -100% (62,966) -100% (44,276) 11,071 (25,714) 11% (84,983) -22% (102,918) -70% -88% -88% 285,506 444,612 (159,106) -36% 566,955 (122,343) -22% (281,449) -50% 633,237 (4,209) 455,437 177,800 39% 400,129 55,308 14% 233,108 1,611 (5,820) -361% (4,291) 5,902 138% 82 58% 2% unconsolidated entities . . . . . . 22,985 21,938 1,047 5% 19,428 2,510 13% 3,557 18% Gain (loss) on real estate dispositions, net . . . . . . . . . . . 218,322 196,589 21,733 11% 286,325 (89,736) -31% (68,003) -24% Income from continuing operations . . . . . . . . . . . . . . . . 870,335 675,575 194,760 29% 701,591 (26,016) -4% 168,744 Net income . . . . . . . . . . . . . . . . . 870,335 675,575 194,760 29% 701,591 (26,016) -4% 168,744 24% 24% Less: Net income attributable to noncontrolling interests . . . . . . 36,271 19,306 16,965 88% 4,603 14,703 319% 31,668 688% Net income attributable to common stockholders . . . . . . . $834,064 $656,269 $ 177,795 27% $696,988 $ (40,719) -6% $ 137,076 20% (1) See Non-GAAP Financial Measures below. (2) See Note 18 to our consolidated financial statements. The increase to rental income for the year ended December 31, 2019 is primarily attributable to acquisitions including Quality Care Properties (“QCP”) in July 2018. In addition, we have recorded certain real estate property taxes on a gross basis, with the offset to property operating expenses, as a result of our ASC 842 adoption on January 1, 2019. These increases are partially offset by the disposition or segment transition of various properties. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index (“CPI”) and/or changes in the gross operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the 65 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations contractual cash rental payments due for the period. If gross operating revenues at our facilities and/or the CPI do not increase, a portion of our revenues may not continue to increase. Our leases could renew above or below current rent rates, resulting in an increase or decrease in rental income. For the three months ended December 31, 2019, we had 20 leases with rental rate increasers ranging from 0.12% to 0.76% in our Triple-net portfolio. 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. During the year ended December 31, 2019, we recognized a provision for loan loss of $18,690,000 to fully reserve for and eventually wrote off certain real estate loans receivable that are no longer deemed collectible. During the years presented, we recorded impairment charges on certain held for sale and held for use properties as the carrying value exceeded the estimated fair values. The fluctuations in gains on real estate dispositions are due to the volume of property sales and sales prices. Transaction costs related to asset acquisitions are capitalized as a component of purchase price. The fluctuations in other expenses is primarily due noncapitalizable transaction costs from acquisitions, segment transitions and the termination/restructuring of preexisting relationships. During the year ended December 31, 2018, we recognized $79,576,000 related to a joint venture transaction, including the conversion of properties from Triple-net to Seniors Housing Operating and termination/restructuring of preexisting relationships. During the year ended December 31, 2019, there were no construction projects completed. The following is a summary of Triple-net construction projects, excluding expansions, pending as of December 31, 2019 (dollars in thousands): Location Units/Beds Commitment Balance Est. Completion Union, KY . . . . . . . . . . . . . . . . . . . . . . . . . . Westerville, OH . . . . . . . . . . . . . . . . . . . . . . Droitwich, UK . . . . . . . . . . . . . . . . . . . . . . . Thousand Oaks, CA . . . . . . . . . . . . . . . . . . . Redhill, UK . . . . . . . . . . . . . . . . . . . . . . . . . Leicester, UK . . . . . . . . . . . . . . . . . . . . . . . . Wombourne, UK . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 102 70 82 76 60 66 618 $ 34,600 22,800 16,805 24,763 21,098 14,861 15,923 $25,649 19,922 11,730 9,971 6,287 3,505 3,515 $150,850 $80,579 1Q20 1Q20 2Q20 4Q20 1Q21 1Q21 2Q21 66 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 fluctuation in loss (gain) on derivatives and financial is primarily attributable to the mark-to-market adjustment recorded on our Genesis HealthCare available-for-sale investment. 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, 2019 Year Ended December 31, 2018 Year Ended December 31, 2017 Beginning balance . . . . . Debt transferred in . . . . . Debt issued . . . . . . . . . . . Debt extinguished . . . . . Debt transferred out . . . . Principal payments . . . . . Foreign currency . . . . . . Amount $288,386 12,072 — — — (4,017) 9,597 Ending balance . . . . . . . . $306,038 Weighted Avg. Interest Rate 3.63% 3.89% —% —% —% 5.21% 2.99% 3.60% Amount $347,474 — — (4,107) (35,830) (3,982) (15,169) $288,386 Weighted Avg. Interest Rate 3.55% —% —% 4.94% 3.84% 5.38% 3.44% 3.63% Amount $ 594,199 — 13,000 (274,048) — (5,863) 20,186 $ 347,474 Monthly averages . . . . . . $294,080 3.63% $321,730 3.51% $ 408,688 Weighted Avg. Interest Rate 4.58% —% 4.57% 5.95% —% 5.66% 2.91% 3.55% 3.91% 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 SSNOI for the Outpatient Medical segment for the periods presented (dollars in thousands): 2018 and 2019 Same Store Pool One Year Change 2017 and 2018 Same Store Pool One Year Change 2019 2018 $ % 2018 2017 $ % SSNOI(1) . . . . . . . . . . . . . $311,612 $308,139 $3,473 1.1% $343,059 $336,990 $6,069 1.8% (1) Relates to 197 properties for the 2018 and 2019 Same Store Pool and 224 properties for the 2017 and 2018 Same Store Pool. 67 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, 2019 December 31, 2018 One Year Change $ % Year Ended December 31, 2017 One Year Change Two Year Change $ % $ % Revenues: Rental income . . . . . . . . . . . . . Interest income . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . Total revenues . . . . . . . . . . . . . Property operating expenses . . . . $684,602 1,195 2,031 687,828 218,793 $551,557 310 4,939 556,806 176,670 $ 133,045 885 (2,908) 24% $560,060 — 285% 3,340 -59% $ (8,503) 310 1,599 -2% $124,542 n/a 1,195 48% (1,309) 131,022 42,123 24% 24% 563,400 179,332 (6,594) (2,662) -1% 124,428 -1% 39,461 22% n/a -39% 22% 22% NOI(1) . . . . . . . . . . . . . . . . . . . . 469,035 380,136 88,899 23% 384,068 (3,932) -1% 84,967 22% Other expenses: Depreciation and amortization . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . Loss (gain) on extinguishment of debt, net . . . . . . . . . . . . . . Impairment of assets . . . . . . . . Other expenses . . . . . . . . . . . . . 241,258 13,411 — 14,062 1,788 185,530 7,051 11,928 — 7,570 55,728 6,360 30% 90% 193,094 10,015 (7,564) (2,964) -4% 48,164 3,396 -30% 25% 34% (11,928) 14,062 (5,782) -100% n/a -76% 4,373 5,625 1,911 7,555 (5,625) 5,659 173% (4,373) -100% 150% 8,437 -100% -6% (123) 296% 270,519 212,079 58,440 28% 215,018 (2,939) -1% 55,501 26% Income from continuing operations before income taxes and other item . . . . . . . . . . . . . . Income tax benefit (expense) . . . . Income (loss) from unconsolidated entities . . . . . . . Gain (loss) on real estate 198,516 (2,710) 168,057 (125) 18% 30,459 (2,585) -2,068% 169,050 (1,477) (993) 1,352 -1% 29,466 92% (1,233) 17% -83% 7,061 5,563 1,498 27% 2,683 2,880 107% 4,378 163% dispositions, net . . . . . . . . . . . . 972 221,231 (220,259) -100% 1,630 219,601 13,472% (658) -40% Income from continuing operations . . . . . . . . . . . . . . . . . 203,839 394,726 (190,887) -48% 171,886 222,840 130% 31,953 19% Net income (loss) . . . . . . . . . . . . . Less: Net income (loss) attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . Net income (loss) attributable to 203,839 394,726 (190,887) -48% 171,886 222,840 130% 31,953 19% 5,194 6,150 (956) -16% 4,765 1,385 29% 429 9% common stockholders . . . . . . . $198,645 $388,576 $(189,931) -49% $167,121 $221,455 133% $ 31,524 19% (1) See Non-GAAP Financial Measures below. The fluctuations in rental income are primarily attributable to the acquisitions of new properties and the conversion of newly constructed outpatient medical properties, particularly the $1.25 billion CNL Healthcare Properties portfolio acquisition that closed in May 2019, partially 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, 2019, our consolidated outpatient medical portfolio signed 193,173 square feet of new leases and 424,579 square feet of renewals. The weighted-average term of these leases was six years, with a rate of $31.95 per square foot and tenant improvement and lease commission costs of $23.59 per square foot. Substantially all of these leases contain an annual fixed or contingent escalation rent structure ranging from 2.0% to 3.5%. 68 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 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. 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, 2019, we completed one Outpatient Medical construction project representing $21,006,000 or $286 per square foot. The following is a summary of Outpatient Medical construction projects pending as of December 31, 2019 (dollars in thousands): Location Square Feet Commitment Balance Est. Completion Porter, TX . . . . . . . . . . . . . . . . . . . . . . . . . . Lowell, MA . . . . . . . . . . . . . . . . . . . . . . . . . Katy, TX . . . . . . . . . . . . . . . . . . . . . . . . . . . Brooklyn, NY . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,000 50,668 36,500 140,955 283,123 $ 20,800 11,900 12,028 105,306 $150,034 $ 16,124 10,288 3,251 80,799 $110,462 1Q20 1Q20 2Q20 3Q20 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, 2019 Year Ended December 31, 2018 Year Ended December 31, 2017 Beginning balance . . . . . Debt assumed . . . . . . . . Debt extinguished . . . . . Principal payments . . . . Amount $386,738 202,084 (10,244) (6,311) Ending balance . . . . . . . $572,267 Monthly averages . . . . . $397,756 Weighted Avg. Interest Rate 4.20% 4.12% 5.75% 4.97% 3.97% 4.15% Amount $279,951 171,275 (61,291) (3,197) $386,738 Weighted Avg. Interest Rate 4.72% 3.99% 7.43% 5.91% 4.20% Amount $ 404,079 23,094 (137,416) (9,806) $ 279,951 $238,214 4.25% $ 294,694 Weighted Avg. Interest Rate 4.85% 6.67% 5.99% 6.85% 4.72% 4.62% 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. 69 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, 2019 December 31, 2018 One Year Change $ % Year Ended December 31, 2017 One Year Change Two Year Change $ % $ % Other income . . . . . . . . . . . . $ 3,966 $ 2,275 $ 1,691 74% $ 1,538 $ 737 48% $ 2,428 158% Expenses: Interest expense . . . . . . . . . . General and administrative 461,273 436,256 25,017 6% 396,148 40,108 10% 65,125 16% expenses . . . . . . . . . . . . . . 126,549 126,383 166 0% 122,008 4,375 4% 4,541 4% Loss (gain) on extinguishments of debt, net . . . . . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . 82,541 10,705 4,091 7,729 78,450 1,918% 39% 2,976 — 50,829 4,091 (43,100) 82,541 n/a -85% (40,124) -79% n/a Total expenses . . . . . . . . . . . 681,068 574,459 106,609 19% 568,985 5,474 1% 112,083 20% Loss from continuing operations before income taxes . . . . . . . . . . . . . . . . . . . Income tax benefit (677,102) (572,184) (104,918) -18% (567,447) (4,737) -1% (109,655) -19% (expense) . . . . . . . . . . . . . . . (2,284) (11,362) 9,078 80% 2,070 (13,432) -649% (4,354) -210% Loss from continuing operations . . . . . . . . . . . . . . . Preferred stock dividends . . . . Preferred stock redemption charge . . . . . . . . . . . . . . . . . . Net loss attributable to (679,386) — (583,546) 46,704 (95,840) (46,704) -100% -16% (565,377) 49,410 (18,169) (2,706) -3% (114,009) -20% -5% (49,410) -100% — — — n/a 9,769 (9,769) -100% (9,769) -100% common stockholders . . . . . $(679,386) $(630,250) $ (49,136) -8% $(624,556) $ (5,694) -1% $ (54,830) -9% The following is a summary of our Non-Segment/Corporate interest expense for the periods presented (dollars in thousands): Year Ended December 31, 2019 December 31, 2018 One Year Change $ % Year Ended December 31, 2017 One Year Change Two Year Change $ % $ % Senior unsecured notes . . . $402,133 Secured debt . . . . . . . . . . . . — Unsecured revolving credit facility and commercial paper program . . . . . . . . Loan expense . . . . . . . . . . . 43,861 15,279 $387,955 $14,178 115 (115) -100% 4% $364,773 127 $23,182 10% 6% $37,360 (12) -9% (127) -100% 34,626 13,560 9,235 1,719 27% 17,863 13% 13,385 16,763 94% 25,998 146% 14% 1% 1,894 175 Totals . . . . . . . . . . . . . . . . . $461,273 $436,256 $25,017 6% $396,148 $ 40,108 10% $65,125 16% The change in interest expense on senior unsecured notes is due to the net effect of issuances and extinguishments, as well as the movement in foreign exchange rates and related hedge activity. Please refer to Note 11 to consolidated financial statements for additional information. The change in interest expense on our unsecured revolving credit facility and commercial paper program is due primarily to the net effect and timing of draws, paydowns and variable interest rate changes. Please refer to Note 10 of our consolidated financial 70 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations statements for additional information regarding our unsecured revolving credit facility and commercial paper program. Loan expenses represent the amortization of costs incurred in connection with senior unsecured notes issuances. The loss on extinguishment recognized in 2019 is due primarily to the early extinguishment of the $600,000,000 of 4.125% senior unsecured notes due 2019 and the $450,000,000 of 6.125% senior unsecured notes due 2020 in March 2019, the early extinguishment of the $450,000,000 of 4.95% senior unsecured notes due 2021 and the $600,000,000 of 5.25% senior unsecured notes due 2022 in September 2019 and the early redemption of the $300 million Canadian-denominated 3.35% senior unsecured notes due 2020 in December 2019. The loss on extinguishment of debt in 2018 is due to the term loan facility drawn on in July 2018 and paid off in August 2018. General and administrative expenses as a percentage of consolidated revenues for the years ended December 31, 2019, 2018 and 2017 were 2.47%, 2.69% and 2.83%, respectively. Other expenses for all years include severance-related costs associated with the departure of certain executive officers and key employees. The decrease in preferred dividends is due to the conversion of all outstanding Series I Cumulative Convertible Perpetual Preferred Stock during the year ended December 31, 2019. 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 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 eight quarters ended December 31, 2019 (“2018 and 2019 Same Store Pool”) and December 31, 2018 (“2017 and 2018 Same Store Pool”). Land parcels, loans and sub-leases, as well as any properties acquired, under development, transitioned to a different segment, sold or classified as held for sale during that period are excluded from the same store amounts. Additionally, unconsolidated properties 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. 71 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations EBITDA stands for earnings (net income) before interest, taxes, depreciation and amortization. We believe that EBITDA, along with net income and cash flow provided from operating activities, is an important supplemental measure because it provides additional information to assess and evaluate the performance of our operations. We primarily utilize EBITDA to measure our interest coverage ratio, which represents EBITDA divided by total interest, and our fixed charge coverage ratio, which represents EBITDA divided by fixed charges. Fixed charges include total interest, secured debt principal amortization, and preferred dividends. Covenants in our senior unsecured notes and primary unsecured credit facility contain financial ratios based on a definition of EBITDA that is specific to those agreements. Failure to satisfy these covenants could result in an event of default that could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. Due to the materiality of these debt agreements and the financial covenants, we have disclosed Adjusted EBITDA, which represents EBITDA as defined above excluding unconsolidated entities and adjusted for items per our covenant. We use Adjusted EBITDA to measure our adjusted fixed charge coverage ratio, which represents Adjusted EBITDA divided by fixed charges on a trailing twelve months basis. Fixed charges include total interest (excluding capitalized interest and non-cash interest expenses), secured debt principal amortization and preferred dividends. Our covenant requires an adjusted fixed charge coverage ratio of at least 1.50 times. 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 diluted shares outstanding: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Per diluted share data: Year Ended December 31, 2019 2018 2017 $1,232,432 1,027,073 28,133 (748,041) (20,197) 57,680 $ 758,250 950,459 115,579 (415,575) (69,193) 52,663 $ 463,595 921,720 124,483 (344,250) (60,018) 60,046 $1,577,080 403,808 $1,392,183 375,250 $1,165,576 369,001 Net income attributable to common stockholders . . . . . . . . . . . . . . . . . Funds from operations attributable to common stockholders . . . . . . . . $ $ 3.05 3.91 $ $ 2.02 3.71 $ $ 1.26 3.16 72 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The table below reflects the reconciliation of EBITDA and Adjusted EBITDA to net income, the most directly comparable U.S. GAAP measure, for the periods presented. Dollars are in thousands. Year Ended December 31, 2019 2018 2017 Adjusted EBITDA Reconciliation: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,330,410 555,559 2,957 1,027,073 $ 829,750 526,592 8,674 950,459 $ 540,613 484,622 20,128 921,720 EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss (income) from unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,915,999 (42,434) 25,047 84,155 (748,041) 28,133 18,690 (4,399) 51,052 — 2,315,475 641 27,646 16,097 (415,575) 115,579 — (4,016) 111,990 (14,832) 1,967,083 83,125 19,102 37,241 (344,250) 124,483 62,966 2,284 176,395 — Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,328,202 $2,153,005 $2,128,429 Adjusted Interest Coverage Ratio: Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capitalized interest Non-cash interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 555,559 15,272 (8,645) $ 526,592 7,905 (10,860) $ 484,622 13,489 (10,359) Total interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562,186 $2,328,202 523,637 $2,153,005 487,752 $2,128,429 Adjusted interest coverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.14x 4.11x 4.36x Adjusted Fixed Charge Coverage Ratio: Total interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Secured debt principal payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preferred dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 562,186 54,325 — $ 523,637 56,288 46,704 $ 487,752 64,078 49,410 Total fixed charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 616,511 $2,328,202 626,629 $2,153,005 601,240 $2,128,429 Adjusted fixed charge coverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . 3.78x 3.44x 3.54x (1) Certain severance-related costs are included in stock-based compensation and excluded from other expenses. Our leverage ratios include book capitalization, undepreciated book capitalization and market capitalization. Book capitalization represents the sum of net debt (defined as total long-term debt less cash and cash equivalents and any IRC section 1031 deposits), total equity and redeemable noncontrolling interests. Undepreciated book capitalization represents book capitalization adjusted for accumulated depreciation and amortization. Market capitalization represents book capitalization adjusted for the fair market value of our common stock. Our leverage ratios are defined as the proportion of net debt to total capitalization. The table below reflects the 73 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations reconciliation of our leverage ratios to our balance sheets for the periods presented. Amounts are in thousands, except share price. Year Ended December 31, 2019 2018 2017 Book capitalization: Unsecured credit facility and commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term debt obligations(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents(2) $ 1,587,597 13,436,365 (284,917) $ 1,147,000 12,150,144 (215,376) $ 719,000 11,012,936 (249,620) Total net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total equity and noncontrolling interests(3) . . . . . . . . . . . . . . . . . . . . . 14,739,045 16,982,504 13,081,768 16,010,645 11,482,316 15,300,646 Book capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $31,721,549 $29,092,413 $26,782,962 Net debt to book capitalization ratio . . . . . . . . . . . . . . . . . . . . . . . . 46.5% 45.0% 42.9% Undepreciated book capitalization: Total net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . Total equity and noncontrolling interests(3) . . . . . . . . . . . . . . . . . . . . . $14,739,045 5,715,459 16,982,504 $13,081,768 5,499,958 16,010,645 $11,482,316 4,838,370 15,300,646 Undepreciated book capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . $37,437,008 $34,592,371 $31,621,332 Net debt to undepreciated book capitalization ratio . . . . . . . . . . . . 39.4% 37.8% 36.3% Market capitalization: Common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Period end share price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410,257 81.78 $ 383,675 69.41 $ 371,732 63.77 $ Common equity market capitalization . . . . . . . . . . . . . . . . . . . . . . . . Total net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Noncontrolling interests(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $33,550,817 14,739,045 1,442,060 — $26,630,882 13,081,768 1,378,311 718,498 $23,705,350 11,482,316 877,499 718,503 Market capitalization: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $49,731,922 $41,809,459 $36,783,668 Net debt to market capitalization ratio . . . . . . . . . . . . . . . . . . . . . . 29.6% 31.3% 31.2% (1) Amounts include senior unsecured notes, secured debt and lease liabilities related to financing leases, as reflected on our Consolidated (2) (3) Balance Sheet. Inclusive of IRC section 1031 deposits, if any. Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests as reflected on our Consolidated Balance Sheet. 74 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following tables reflect the reconciliation of NOI to net income, the most directly comparable U.S. GAAP measure, for the years presented. Dollar amounts are in thousands. Year Ended December 31, 2019 2018 2017 NOI Reconciliation: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss (gain) on real estate dispositions, net . . . . . . . . . . . . . . . . . . . . . . . . Loss (income) from unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss (gain) on extinguishment of debt, net . . . . . . . . . . . . . . . . . . . . . . . . Loss (gain) on derivatives and financial instruments, net . . . . . . . . . . . . . General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,330,410 (748,041) (42,434) 2,957 52,612 28,133 18,690 84,155 (4,399) 126,549 1,027,073 555,559 $ 829,750 (415,575) 641 8,674 112,898 115,579 — 16,097 (4,016) 126,383 950,459 526,592 $ 540,613 (344,250) 83,125 20,128 177,776 124,483 62,966 37,241 2,284 122,008 921,720 484,622 Consolidated net operating income (NOI) . . . . . . . . . . . . . . . . . . . . $2,431,264 $2,267,482 $2,232,716 NOI by segment: Seniors Housing Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outpatient Medical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-segment/corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,039,520 918,743 469,035 3,966 $ 985,022 900,049 380,136 2,275 $ 880,026 967,084 384,068 1,538 Total NOI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,431,264 $2,267,482 $2,232,716 75 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following is a reconciliation of our consolidated NOI to same store NOI for the periods presented for the respective pools. Dollar amounts are in thousands. 2018 and 2019 Same Store Pool 2017 and 2018 Same Store Pool 2019 2018 2018 2017 SSNOI Reconciliations: NOI: Seniors Housing Operating . . . . . . . . . . . . . . . . . . . Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outpatient Medical $1,039,520 918,743 469,035 $ 985,022 900,049 380,136 $ 985,022 900,049 380,136 $ 880,026 967,084 384,068 Total Adjustments: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,427,298 2,265,207 2,265,207 2,231,178 Seniors Housing Operating: Non-cash SSNOI on same store properties . . . . . NOI attributable to non same store properties . . (1,720) (337,933) (1,344) (282,185) (1,176) (167,430) Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (339,653) (283,529) (168,606) (1,542) (54,069) (55,611) Triple-net: Non-cash SSNOI on same store properties . . . . . NOI attributable to non same store properties . . 28,033 (430,436) 25,981 (417,133) 17,057 (401,098) 23,970 (482,797) (402,403) (391,152) (384,041) (458,827) Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outpatient Medical: . . . . . . . . . . . . . . . . . . . . . . . . . Non-cash SSNOI on same store properties . . . . . NOI attributable to non same store properties . . 7,067 (164,490) Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (157,423) SSNOI: Seniors Housing Operating . . . . . . . . . . . . . . . . . Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outpatient Medical 699,867 516,340 311,612 7,224 (79,221) (71,997) 701,493 508,897 308,139 9,551 (46,628) (37,077) 816,416 516,008 343,059 9,576 (56,654) (47,078) 824,415 508,257 336,990 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,527,819 $1,518,529 $1,675,483 $1,669,662 SSNOI Property Reconciliations: Total properties . . . . . . . . . . . . . . . . . . Recent acquisitions/development conversions . . . . . . . . . . . . . . . . . . . Developments . . . . . . . . . . . . . . . . . . . Held for sale . . . . . . . . . . . . . . . . . . . . . Segment transitions . . . . . . . . . . . . . . . Loans, land parcels and subleases(1) . . Same store properties . . . . . . . . . . . . . . 341 2018 and 2019 Same Store Pool 2017 and 2018 Same Store Pool Seniors Housing Operating Triple-net Outpatient Medical Total Seniors Housing Operating Triple-net Outpatient Medical Total 533 658 387 1,578 501 726 281 1,508 (77) (11) (18) (86) — (237) (7) (11) (18) (17) 368 (452) (138) (22) (4) (42) (71) — (104) (6) (26) (4) (13) (68) (23) — 197 906 390 (246) (9) (40) (44) (21) 366 (44) (4) (2) — (7) 224 (316) (17) (55) (112) (28) 980 (1) Includes eight land parcels, eight subleases and seven loans for the 2018 and 2019 Same Store Pool and nine land parcels, eight subleases and 11 loans for the 2017 and 2018 Same Store Pool. 76 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 Impairment of Real Property Assessing impairment of real property involves subjectivity in determining if indicators of impairment are present and in estimating the future undiscounted cash flows or estimated fair value of an asset. In estimating the undiscounted cash flows or fair value, key assumptions that would be made are the estimation of future rental revenues, operating expenses, capitalization rates and the ability and intent to hold the respective asset, all of which are affected by our expectations of future market or economic conditions. These estimates can have a significant impact on the undiscounted cash flows or estimated fair value of an asset. Real Estate Acquisitions We believe that substantially all of our real estate acquisitions are considered asset acquisitions for which we record the related real estate acquired (tangible assets and identifiable intangible assets and liabilities) at cost on a relative fair value basis. Liabilities assumed and any associated noncontrolling interests are reflected at fair value. Tangible assets consist primarily of land, building and improvements. Identifiable intangible assets and liabilities primarily consist of the above or below market component of in-place leases and the value of in-place leases. The total amount of other intangible assets acquired is further allocated to in-place lease values and customer relationship values specific characteristics of each tenant’s lease and our overall relationship with respect to that tenant. on management’s evaluation based the of Quarterly, we evaluate our real estate investments on a property by property basis to determine if there are indicators of impairment. These indicators may include expected operational performance, the tenant’s ability to make rent payments, a decision to dispose of an asset before the end of its estimated useful life and changes in the market that may permanently reduce the value of the property. If indicators of impairment exist, an undiscounted cash flow analysis will be prepared and the results of such analysis will be compared to the current net book value to determine if an impairment charge is necessary. This analysis requires us to use judgment in determining whether indicators of impairment exist and to estimate the expected future undiscounted cash flows or estimated fair values of the property. Properties that meet the held for sale criteria are recorded at the lesser of the fair value less costs to sell or carrying value. The allocation of the purchase price to the related real estate acquired (tangible assets and intangible assets and liabilities) involves subjectivity as such allocations are based on a relative fair value analysis. In determining the fair values that drive such analysis, we estimate the fair value of each component of the real estate acquired which generally includes land, buildings and improvements, the above or below market component of in-place leases and the value of in-place leases. Significant assumptions used to determine such fair values include comparable land sales, capitalization rates, discount rates, market rental rates and property operating data, all of which can be impacted by expectations about future market or economic conditions. Our estimates of the values the amount of depreciation and of amortization we record over the estimated useful life of the property or the term of the lease. these components affect 77 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Nature of Critical Accounting Estimate Principles of Consolidation the The consolidated financial statements include our accounts, 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. 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. Assumptions/ Approach Used (ii) interest, or 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 the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. We make judgments with respect to our level of influence or control of an entity and whether we are (or are not) the primary beneficiary of a VIE. Consideration of various factors includes, but is not limited to, our ability to direct the activities that most significantly impact the entity’s economic performance, our form of ownership interest, our representation on the entity’s governing body, the size and seniority of our investment, our ability and the rights of other investors to participate in policy making decisions, replace the manager and/or liquidate the entity, if applicable. Our ability to correctly assess our influence or control over an entity at inception of our involvement or on a continuous basis when determining the primary beneficiary of a VIE affects the presentation of these entities in our consolidated financial statements. If we perform a primary beneficiary analysis at a date other than at inception of the VIE, our assumptions may be different and may result in the identification of a different primary beneficiary. loan charge-offs, The determination of the allowance is based on a quarterly evaluation of all outstanding loans, including general economic conditions and estimated collectability of loan payments. We evaluate the collectability of our loans receivable based on a combination of factors, including, but not limited to, delinquency status, historical the borrower and guarantors, and value of the underlying collateral. Any loans with collectability concerns are subjected to a projected payoff valuation. The valuation is based on the expected future cash flows and/or the estimated fair value of the underlying collateral. The valuation is compared to the outstanding balance to determine the reserve needed for each loan. We may base our valuation on the fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the collateral. financial strength of 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 12 and 17 to our consolidated financial statements. We historically borrow on our unsecured revolving credit facility and commercial paper program 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 unsecured revolving credit facility and commercial paper program. We are subject to risks associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the terms of refinancing may not be as favorable as the terms of current indebtedness. The majority of our borrowings were completed under indentures or contractual 78 agreements that limit the amount of indebtedness we may incur. Accordingly, in the event that we are unable to raise additional equity or borrow money because of these limitations, our ability to acquire additional properties may be limited. A change in interest rates will not affect the interest expense associated with our fixed rate debt. Interest rate changes, however, will affect the fair value of our fixed rate debt. Changes in the interest rate environment upon maturity of this fixed rate debt could have an effect on our future cash flows and earnings, depending on whether the debt is replaced with other fixed rate debt, variable rate debt or equity or repaid by the sale of assets. To illustrate the impact of changes in the interest rate markets, we performed a sensitivity analysis on our fixed rate debt instruments whereby we modeled the change in net present values arising from a hypothetical 1% increase in interest rates to determine the instruments’ change in fair value. The following table summarizes the analysis performed as of the dates indicated (in thousands): December 31, 2019 December 31, 2018 Principal balance Change in fair value Principal balance Change in fair value Senior unsecured notes . . . . . . . . . . . . Secured debt . . . . . . . . . . . . . . . . . . . . . $ 9,724,691 1,814,229 $(751,848) (69,756) $ 9,009,159 1,639,983 $(548,558) (59,522) Totals . . . . . . . . . . . . . . . . . . . . . . . . . . $11,538,920 $(821,604) $10,649,142 $(608,080) Our variable rate debt, including our unsecured revolving credit facility and commercial paper program, is reflected at fair value. At December 31, 2019, we had $3,470,584,000 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 $34,706,000. At December 31, 2018, we had $2,683,553,000 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 $26,836,000. 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, 2019, 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 $13,000,000. 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, 2019 December 31, 2018 Carrying value Change in fair value Carrying value Change in fair value Foreign currency exchange contracts . . . . . Debt designated as hedges . . . . . . . . . . . . . $ 26,767 1,586,116 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,612,883 $12,136 15,861 $27,997 $ 23,620 1,559,159 $1,582,779 $16,163 15,592 $31,755 79 Item 8. Financial Statements and Supplementary Data REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To 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, 2019 and 2018, the related consolidated statements of comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2019, 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, 2019 and 2018 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, 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, 2019, 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 14, 2020 expressed an unqualified opinion thereon. Adoption of New Accounting Standard As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases effective January 1, 2019. 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. 80 Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Description of the Matter How We Addressed the Matter in Our Audit Impairment of Real Property At December 31, 2019, real property owned was the Company’s net approximately $30.3 billion. As discussed in Note 2 to the consolidated financial statements, the Company reviews its real property quarterly on a property-by-property basis to determine if facts and circumstances suggest that the real property may be impaired. If the undiscounted cash flows indicate that the real property will not be recoverable, the carrying value of the real property is reduced to its estimated fair value and an impairment charge is recognized for the difference between the carrying value and the fair value. Auditing the Company’s process to evaluate real property owned for impairment was complex due to the high degree of subjectivity in determining whether indicators of impairment were present for certain properties, and in determining the future undiscounted cash flows and estimated fair values, if necessary, of properties where indicators of impairment were determined to be present. In particular, the undiscounted cash flows and fair value estimates were sensitive to significant assumptions, revenues and operating including future rental expenses, capitalization rates, and anticipated hold period, which are affected by expectations about future market or economic conditions. We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to evaluate real property owned for impairment. This included testing controls over the Company’s review of impairment indicators by property and management’s review and approval of the significant assumptions described above. To test the Company’s evaluation of real property for impairment, we performed audit procedures that included, among others, assessing the methodologies used by management, evaluating the significant assumptions discussed above and testing the completeness and accuracy of the underlying data used by the Company in its analyses. We compared the significant assumptions used by management to current industry and economic trends and evaluated whether changes to the Company’s business and other relevant factors would affect the significant assumptions. In addition, we assessed the historical accuracy of the Company’s estimates and performed sensitivity analyses of the significant assumptions to evaluate the changes in the undiscounted future cash flows and estimated fair values of the property that would result from changes in the significant assumptions. 81 Description of the Matter How We Addressed the Matter in Our Audit Real Estate Acquisitions During 2019, the Company completed approximately $4.0 billion of real estate acquisitions. As disclosed in Note 3 of the consolidated financial statements, the total purchase price for all properties acquired has been allocated to the related real estate acquired (tangible assets and identifiable intangible assets and liabilities) based upon their relative fair values. Auditing the fair values allocated by management to the real estate acquired was complex because the fair value estimates were sensitive to significant assumptions, including comparable land sales, capitalization rates, discount rates, market rental rates and property operating data, which can be impacted by expectations about future market or economic conditions. We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to account for real estate acquisitions, including controls over the Company’s review of the significant assumptions discussed above. To test the fair values allocated to the real estate acquired, we performed audit procedures that included, among others, assessing the methodologies used by management and evaluating the significant assumptions used by the Company discussed above. We compared certain of management’s assumptions to external market data for similar properties and tested the clerical accuracy of the valuation models. We involved our valuation specialist in our evaluation of the significant assumptions used by the Company and the review of the valuation models. We have served as the Company’s auditor since 1970. Toledo, Ohio February 14, 2020 /s/ Ernst & Young LLP 82 CONSOLIDATED BALANCE SHEETS WELLTOWER INC. AND SUBSIDIARIES (in thousands) December 31, 2019 December 31, 2018 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,486,620 29,163,305 1,617,051 1,253,008 507,931 $ 3,205,091 28,019,502 1,581,159 590,271 194,365 Gross real property owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . 36,027,915 (5,715,459) 33,590,388 (5,499,958) Net real property owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Right of use assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Real estate loans receivable, net of allowance . . . . . . . . . . . . . . . . . . . . . . . . . Net real estate investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,312,456 536,433 270,382 31,119,271 28,090,430 — 330,339 28,420,769 Other assets: Investments in unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Straight-line receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583,423 68,321 284,917 100,849 466,222 757,748 482,914 68,321 215,376 100,753 367,093 686,846 Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,261,480 1,921,303 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 33,380,751 $ 30,342,072 Liabilities and equity Liabilities: Unsecured credit facility and commercial paper . . . . . . . . . . . . . . . . . . . . . . . Senior unsecured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Secured debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,587,597 10,336,513 2,990,962 473,693 1,009,482 $ 1,147,000 9,603,299 2,476,177 70,668 1,034,283 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,398,247 475,877 14,331,427 424,046 — 411,005 20,190,107 (78,955) 7,353,966 (12,223,534) (112,157) 12 15,540,444 966,183 16,506,627 718,498 384,465 18,424,368 (68,499) 6,121,534 (10,818,557) (129,769) 294 14,632,334 954,265 15,586,599 Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 33,380,751 $ 30,342,072 See accompanying notes 83 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME WELLTOWER INC. AND SUBSIDIARIES (In thousands, except per share data) Year Ended December 31, 2019 2018 2017 Revenues: Resident fees and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,448,175 1,588,400 63,830 20,901 $3,234,852 1,380,422 55,814 29,411 $2,779,423 1,445,871 73,811 17,536 Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,121,306 4,700,499 4,316,641 Expenses: Property operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss (gain) on derivatives and financial instruments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss (gain) on extinguishment of debt, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,690,042 1,027,073 555,559 126,549 (4,399) 84,155 18,690 28,133 52,612 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 Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,578,414 4,277,009 4,017,025 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 542,892 (2,957) 42,434 748,041 423,490 (8,674) (641) 415,575 299,616 (20,128) (83,125) 344,250 Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,330,410 829,750 540,613 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Preferred stock redemption charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Net income (loss) attributable to noncontrolling interests(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,330,410 — — 97,978 829,750 46,704 — 24,796 540,613 49,410 9,769 17,839 Net income (loss) attributable to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,232,432 $ 758,250 $ 463,595 Average number of common shares outstanding: Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401,845 403,808 373,620 375,250 367,237 369,001 Earnings per share: Basic: Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income (loss) attributable to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted: Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income (loss) attributable to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ $ $ $ 3.31 3.07 3.29 3.05 $ $ $ $ 2.22 2.03 2.21 2.02 $ $ $ $ 1.47 1.26 1.47 1.26 (1) Includes amounts attributable to redeemable noncontrolling interests See accompanying notes 84 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED) WELLTOWER INC. AND SUBSIDIARIES (In thousands) Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other comprehensive income (loss): Reclassification adjustment for write down of equity investment . . . . . . Unrecognized actuarial gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency translation gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative and financial instruments designated as hedges gain Year Ended December 31, 2019 2018 2017 $1,330,410 $ 829,750 $ 540,613 — 540 161,915 — 344 (253,022) (5,120) 269 337,433 (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (131,120) 211,390 (252,168) Total other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,335 (41,288) 80,414 Total comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Total comprehensive income (loss) attributable to noncontrolling 1,361,745 788,462 621,027 interests(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,701 1,812 40,187 Total comprehensive income (loss) attributable to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,250,044 $ 786,650 $ 580,840 (1) Includes amounts attributable to redeemable noncontrolling interests. See accompanying notes 85 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, 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 (loss) . . . . . . . . . . . . . . . . . . . . . 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 (loss) . . . . . . . . . . . . . . . . . . . . . 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 Comprehensive income: Net income (loss) . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,232,432 17,612 3,583 162 25,445 (10,456) (282) 13,666 1,030,925 Conversion of preferred stock . . . . . . . . . . . . . (718,498) 12,712 705,786 Dividends paid: Common stock dividends . . . . . . . . . . . . . . . (1,404,977) 67,365 13,440 1,299,797 31,052 1,330,849 (68,887) (65,304) 14,869 1,044,591 — (1,404,977) Balances at December 31, 2019 . . . . . . . . . . . . $ — $411,005 $20,190,107 $(78,955) $7,353,966 $(12,223,534) $(112,157) $ 12 $966,183 $16,506,627 See accompanying notes 86 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Principal collected on 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 facility and commercial paper . . . . . . . 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. See accompanying notes. 87 Year Ended December 31, 2019 2018 2017 $ 1,330,410 $ 829,750 $ 540,613 1,027,073 16,827 18,690 28,133 25,047 (4,399) 84,155 (42,434) (106,331) (676) (748,041) — (29,068) (63,418) 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) 116 26,811 23,486 1,535,968 1,583,944 1,434,177 (3,959,683) (328,824) (323,488) (15,272) (119,699) 127,706 (8,282) (279,631) 216,231 (8,499) 2,650,650 (3,560,360) (266,183) (160,706) (7,905) (112,048) 203,935 (44,535) (136,854) 90,916 65,399 1,541,870 (805,264) (250,276) (232,715) (13,489) (101,216) 214,980 (44,094) (114,365) 70,287 52,719 1,378,014 (2,048,791) (2,386,471) 154,581 440,597 3,974,559 (3,335,290) 343,696 (284,433) 1,056,125 — (84,142) 55,365 (172,940) (1,400,712) (15,675) 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) 577,150 818,368 (1,913,527) 5,310 69,637 316,129 385,766 574,536 14,338 $ $ (9,015) 26,852 6,826 309,303 316,129 501,404 2,250 (297,917) 607,220 309,303 488,265 10,410 $ $ $ $ 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, 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 For our Triple-net and Outpatient Medical segments, a significant source of our revenue is generated through leasing arrangements. 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. For our Seniors Housing Operating segment, revenue from resident fees and services is predominantly service-based, and generally are recognized monthly as services are provided. Agreements with residents 88 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS generally have a term of one year and are cancelable by the resident with 30 days’ notice. Management contracts are present in some of our joint venture agreements to provide asset and property management, leasing, marketing and other services. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of collectability risk. We recognize gains on the disposition of real estate when the recognition criteria have been met, generally at the time the risks and rewards and title have transferred and we no longer have substantial continuing involvement with the real estate sold. We recognize losses from disposition of real estate when known. 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 Equity securities are measured at fair value with gains and losses recognized in loss (gain) on derivatives and financial instruments, net in the Consolidated Statements of Comprehensive Income. 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 89 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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, 2019, the current redemption value of redeemable noncontrolling interests exceeded the carrying value of $475,877,000 by $14,953,000. We entered into certain DownREIT partnerships which give a real estate seller the ability to exchange its property on a tax deferred basis for equity membership interests (“OP units”). The OP units may be redeemed any time following the first anniversary of the date of issuance at the election of the holders for one share of our common stock per unit or, at our option, cash. Real Property Owned Real estate acquisitions are generally classified as asset acquisitions for which we record tangible assets and identifiable intangible assets and liabilities at cost on a relative fair value basis. Liabilities assumed and any associated noncontrolling interests are reflected at fair value. Tangible assets primarily consist of land, buildings and improvements. Identifiable intangible assets and liabilities consist primarily of the above or below market component of in-place leases and the value associated with the presence of in-place leases. The value allocable to the above or below market component of the acquired in-place lease is determined based upon the present value (using a discount rate which reflects the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term, and (ii) management’s estimate of the amounts that would be paid using fair market rates over the remaining term of the lease. The amounts allocated to above market leases are included in acquired lease intangibles and below market leases are included in other liabilities in the balance sheet and are amortized to rental income over the remaining terms of the respective leases or lease-up period. relationship values for in-place tenants based on management’s evaluation of The total amount of other intangible assets acquired is further allocated to in-place lease values and the specific customer characteristics of each tenant’s lease and our overall relationship with that respective tenant. Characteristics considered by management in allocating these values include the nature and extent of our existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors. The total amount of other intangible assets acquired is further allocated to in-place lease values for in-place residents with such value representing (i) value associated with lost revenue related to tenant reimbursable operating costs that would be incurred in an assumed re-leasing period, and (ii) value associated with lost rental revenue from existing leases during an assumed re-leasing period. This intangible asset is amortized over the remaining life of the lease or the assumed re-leasing period. Real property developed by us is recorded at cost, including the capitalization of construction period interest. 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. We consider costs incurred in conjunction with re-leasing properties, including tenant improvements and lease commissions, to represent the acquisition of productive assets and, accordingly, such costs are reflected as investment activities in our Consolidated Statement of Cash Flows. The 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 90 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. Expenditures for repairs and maintenance are expensed as incurred. Capitalization of Construction Period Interest We capitalize interest costs associated with funds used for the construction of properties owned 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. Loans Receivable Loans receivable are recorded on our Consolidated Balance Sheets in real estate loans receivable, net of allowance, or for non real estate loans receivable, in receivables and other assets. Real estate loans receivable consists of mortgage loans and other real estate loans which 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 guarantees and/or personal guarantees. Non real estate loans are generally corporate loans with no real estate backing. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of collectability risks. In Substance Real Estate Investments We provide loans to third parties for the acquisition, development and construction of real estate. Under these arrangements, it is possible that we will participate in the expected residual profits of the project through the sale, refinancing or acquisition of the property. We evaluate the characteristics of each arrangement, including its risks and rewards, to determine whether they are more similar to those associated with a loan or an investment in real estate. Arrangements with characteristics implying loan classification are presented as real estate loans receivable and result in the recognition of interest income. Arrangements with characteristics implying real estate joint ventures are treated as in substance real estate investments and presented as investments in unconsolidated entities and are accounted for using the equity method. The classification of each arrangement as either a real estate loan receivable or investment in unconsolidated entity involves judgment and relies on various factors, including market conditions, amount and timing of expected residual profits, credit enhancements in the form of guarantees, estimated fair value of the collateral, and significance of borrower equity in the project, among others. The classification of such arrangements is performed at inception, and periodically reassessed when significant changes occur in the circumstances or conditions described above. 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 91 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 12 for additional information. Federal Income Tax We have elected to be treated as a REIT under the applicable provisions of the IRC, commencing with our first taxable year, and made no provision for U.S. federal income tax purposes prior to our acquisition of our taxable REIT subsidiaries (“TRSs”). As a result of these as well as subsequent acquisitions, we now record income tax expense or benefit with respect to certain of our entities that are taxed as TRSs under provisions similar to those applicable to regular corporations and not under the REIT provisions. We account for deferred income taxes using the asset and liability method and recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our consolidated financial statements or tax returns. Under this method, we determine deferred tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Any increase or decrease in the deferred tax liability that results from a change in circumstances, and that causes a change in our judgment about expected future tax consequences of events, is included in the tax provision when such changes occur. Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards. A valuation allowance is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will not be realized. Any increase or decrease in the valuation allowance that results from a change in circumstances, and that causes a change in our judgment about the realizability of the related deferred tax asset, is included in the tax provision when such changes occur. See Note 19 for additional information. 92 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 We adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“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 Statement of Comprehensive Income over the lease term. We adopted ASC 842 as of January 1, 2019, using the modified retrospective approach and have elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, permits us to carry forward our prior conclusions for lease classification and initial direct costs on existing leases. We also made an accounting policy election to keep short-term leases less than twelve months off the balance sheet for all classes of underlying assets. In July 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-11 “Leases (Topic 842): Targeted Improvements” that (1) simplifies transition requirements for both lessees and lessors by adding an option that permits entities to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented in its financial statements and (2) allows lessors to elect, as a practical expedient, 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 (e.g. predominantly lease-based would be accounted for under ASC 842 and predominantly service- based would be accounted for under ASU 2014-09, “Revenue from Contracts with Customers (ASC 606)”). For the year ended December 31, 2018, we recognized revenue for our Seniors Housing Operating resident agreements in accordance with the provisions of the prior lease guidance, ASC 840, “Leases”. Upon adoption of ASC 842, we elected the lessor practical expedient described above and recognized our revenue for our Seniors Housing Operating segment based upon the predominant component, generally the non-lease service component. Therefore, beginning on January 1, 2019, we accounted for the majority of such resident agreements under ASC 606. The timing and pattern of revenue recognition is substantially the same as that prior to adoption. The FASB also issued ASU 2018-20 “Leases (Topic 842): Narrow Improvements for Lessors”, 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 93 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS exclude these taxes from the measurement of lease revenue and the associated expense. Upon adoption of ASC 842, we utilized this practical expedient in instances in which real estate taxes are paid directly by our tenants to taxing authorities. For triple-net leasing arrangements in which the tenant remits payment for real estate taxes to us and we pay the taxing authority, we have included the associated revenue and expense in rental income and property operating expenses on the Consolidated Statements of Comprehensive Income. This reporting had no impact on our net income. For leases in which the Company is the lessee, primarily consisting of ground leases and various office and equipment leases, we recognized upon adoption a right of use asset of $509,386,000 which included the present value of minimum leases payments, existing above and/or below market lease intangible values and existing liabilities associated with such leases. We also recognized operating lease liabilities of straight-line rent $357,070,000. The standard did not materially impact our Consolidated Statements of Comprehensive Income or our Consolidated Statement of Cash Flows. See Note 6 for additional details. In 2016, 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 receivable, and other instruments. In November 2018, the FASB issued an amendment excluding operating lease receivables accounted for under the new leases standard from the scope of the new credit loss standard. ASU 2016-13 is effective for the Company on January 1, 2020. We have continued our including data collection and processing, model development and validation, and establishment of the governance and control processes. We currently do not believe that the adoption of this new guidance will have a material impact on our consolidated financial statements. implementation efforts, 3. Real Property Acquisitions and Development The total purchase price for all properties acquired has been allocated to the tangible and identifiable intangible assets and liabilities at cost on a relative fair value basis. Liabilities assumed and any associated noncontrolling interests are reflected at fair value. 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 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. Transaction costs related to asset acquisitions are capitalized as a component of the purchase price and all other non-capitalizable costs are reflected in other expenses on our Consolidated Statement of Comprehensive Income. 94 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following tables summarize our real property investment activity by segment for the years ended December 31, 2019, 2018 and 2017 (in thousands): Year Ended December 31, 2019 Seniors Housing Operating Land and land improvements . . . . . . . . . . . . . . . . . . . . . . . Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . Acquired lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . . Real property held for sale . . . . . . . . . . . . . . . . . . . . . . . . . Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . Right of use assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . $ 154,470 1,518,748 76,009 17,435 36,174 — 15,634 Total assets acquired(1) . . . . . . . . . . . . . . . . . . . . . . . . . . Secured debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses and other liabilities . . . . . . . . . . . . . . . . Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Noncontrolling interests(2) Non-cash acquisition related activity(3) Cash disbursed for acquisitions . . . . . . . . . . . . . . . . . . . Construction in progress additions . . . . . . . . . . . . . . . . . . . Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accruals(4) Cash disbursed for construction in progress . . . . . . . . . . . Capital improvements to existing properties . . . . . . . . . . . Total cash invested in real property, net of cash 1,818,470 (194,408) — (12,024) (206,432) (67,987) (11,889) 1,532,162 227,018 (8,889) (8,643) — 209,486 260,413 Triple-net $ 24,097 203,282 — — — — — Outpatient Medical $ 293,933 1,954,928 183,921 — — 58,377 1,586 Total $ 472,500 3,676,958 259,930 17,435 36,174 58,377 17,220 227,379 2,492,745 — (206,754) (47,740) — (32,893) — — (287,387) (1,201) — (4,015) — 2,204,157 60,884 (3,998) — (1,035) 223,364 61,414 (2,385) (878) — 58,151 17,426 4,538,594 (401,162) (47,740) (44,917) (493,819) (73,203) (11,889) 3,959,683 349,316 (15,272) (9,521) (1,035) 55,851 50,985 323,488 328,824 acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,002,061 $298,941 $2,310,993 $4,611,995 (1) Excludes $2,090,000 of unrestricted and restricted cash acquired. (2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests. (3) Relates to the acquisition of assets previously recognized as investments in unconsolidated entities. (4) 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. 95 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2018 Seniors Housing Operating Land and land improvements . . . . . . . . . . . . . . . . . . . . . . Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . Acquired lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . Real property held for sale . . . . . . . . . . . . . . . . . . . . . . . . Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . $ 51,440 621,731 69,504 — 1,492 Total assets acquired(1) . . . . . . . . . . . . . . . . . . . . . . . . . Secured debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses and other liabilities . . . . . . . . . . . . . . . Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Noncontrolling interests(2) Cash disbursed for acquisitions . . . . . . . . . . . . . . . . . . Construction in progress additions . . . . . . . . . . . . . . . . . . Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . Accruals(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash disbursed for construction in progress . . . . . . . . . . . Capital improvements to existing properties . . . . . . . . . . Total cash invested in real property, net of cash 744,167 (134,752) (18,463) (153,215) (14,390) 576,562 82,621 (3,190) 3,934 — 83,365 201,001 Triple-net $ 413,588 2,242,884 9,690 396,265 1,354 Outpatient Medical $ 77,239 478,740 50,813 22,032 1,185 3,063,781 630,009 — (169,156) (14,896) (13,199) Total $ 542,267 3,343,355 130,007 418,297 4,031 4,437,957 (303,908) (46,558) (13,199) (512,741) (184,052) (350,466) — (527,131) 2,537,841 55,558 (2,238) 272 — 53,592 10,046 445,957 26,565 (2,477) — (339) 23,749 55,136 3,560,360 164,744 (7,905) 4,206 (339) 160,706 266,183 acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 860,928 $2,601,479 $ 524,842 $3,987,249 (1) Excludes $395,397,000 of unrestricted and restricted cash acquired. (2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests. (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. 96 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2017 Seniors Housing Operating Land and land improvements . . . . . . . . . . . . . . . . . . . . . . . . Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . Acquired lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,525 428,777 63,912 3,959 Total assets acquired(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Secured debt Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . Noncontrolling interests(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-cash acquisition related activity(3) . . . . . . . . . . . . . . . . . Cash disbursed for acquisitions . . . . . . . . . . . . . . . . . . . . Construction in progress additions . . . . . . . . . . . . . . . . . . . . Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . Accruals(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash disbursed for construction in progress . . . . . . . . . . . . . Capital improvements to existing properties . . . . . . . . . . . . Total cash invested in real property, net of cash 539,173 — (46,301) (46,301) (4,701) (67,633) 420,538 84,874 (9,106) (6,830) — 68,938 185,473 Triple-net $ 33,416 248,459 — — Outpatient Medical $ 40,565 159,643 24,014 10 281,875 224,232 — (25,708) (3,181) (21,236) Total $ 116,506 836,879 87,926 3,969 1,045,280 (25,708) (70,718) (21,236) (7,275) (54,901) 198,463 120,797 (4,713) (610) — 115,474 19,989 (28,889) (9,080) (96,426) (21,056) — (122,534) 186,263 37,094 (2,406) — 13,615 48,303 44,814 805,264 242,765 (16,225) (7,440) 13,615 232,715 250,276 acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $674,949 $333,926 $279,380 $1,288,255 (1) Excludes $6,591,000 of unrestricted and restricted cash acquired. (2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests. (3) For the Seniors Housing Operating segment, includes $59,665,000 related to the acquisition of assets previously financed as investments in unconsolidated entities and $7,968,000 related to the acquisition of assets previously financed as loans receivable. For the Triple-net segment, amount is related to the acquisition of assets previously financed as loans receivable. (4) 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. 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. The aggregate consideration to acquire the QCP shares and repay outstanding QCP debt was approximately $3.5 billion. 97 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 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, 2019 December 31, 2018 December 31, 2017 Development projects: Seniors Housing Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outpatient Medical Total development projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expansion projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $28,117 — 21,006 49,123 — $ 86,931 90,055 11,358 188,344 20,029 3,634 $ 283,472 63,036 350,142 10,336 Total construction in progress conversions . . . . . . . . . . . . . . . . . . . . . . . $49,123 $208,373 $360,478 98 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. Real Estate Intangibles The following is a summary of our real estate intangibles, excluding those classified as held for sale, as of the dates indicated (dollars in thousands): December 31, 2019 December 31, 2018 Assets: In place lease intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above market tenant leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Below market ground leases(1) Lease commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross historical cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,513,836 59,540 — 43,675 1,617,051 (1,181,158) 435,893 $ $ 1,410,725 63,935 64,513 41,986 1,581,159 (1,197,336) 383,823 $ Weighted-average amortization period in years . . . . . . . . . . . . . . . . . . 10.3 16.0 Liabilities: Below market tenant leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above market ground leases(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Gross historical cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 99,035 — 99,035 (49,390) 81,676 8,540 90,216 (44,266) Net book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 49,645 $ 45,950 Weighted-average amortization period in years . . . . . . . . . . . . . . . . . . 8.6 14.7 (1) Effective on January 1, 2019 with the adoption of ASC 842, above and below market ground lease intangibles are reported within the right of use assets, net line on the Consolidated Balance Sheet. 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization related to in place lease Year Ended December 31, 2019 2018 2017 $ 508 $ (1,269) $ 875 intangibles and lease commissions . . . . . . . . . . . . . . . . . . . . (135,047) (122,515) (145,132) The future estimated aggregate amortization of intangible assets and liabilities is as follows for the periods presented (in thousands): 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $119,973 59,824 40,802 34,803 27,415 153,076 $ 9,498 8,529 7,758 5,483 3,362 15,015 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $435,893 $49,645 Assets Liabilities 99 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. Dispositions and Real Property 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). During the year ended December 31, 2019, we disposed of our Benchmark Senior Living portfolio for a gross sale price of $1.8 billion and a gain on sale of $520 million. At December 31, 2019, 18 Seniors Housing Operating, 11 Triple-net and 42 Outpatient Medical properties with an aggregate net real estate balance of $1,253,008,000 were classified as held for sale for which we expect gross sales proceeds of approximately $1,960,685,000. In addition to the real property balances held for sale, secured debt of $112,589,000 and net other assets and liabilities of $25,194,000 are included in the Consolidated Balance Sheet related to held for sale properties. During the year ended December 31, 2019, we recorded net impairment charges of $13,130,000 related to certain held for sale properties for which the carrying value exceeded the fair values, less estimated costs to sell, and $15,003,000 related to five held for use properties for which the carrying value exceeded the sum of the future undiscounted cash flows. The following is a summary of our real property disposition activity for the periods presented (in thousands): December 31, 2019 Year Ended December 31, 2018 December 31, 2017 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 . . . . . . . . . . . . . . . . $1,232,816 667,632 482 1,900,930 748,041 1,679 $ 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 Proceeds from real property sales . . . . . . . . . . . . . . . . . . . $2,650,650 $1,541,870 $1,378,014 100 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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, 2019 2018 2017 Revenues: Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $449,080 $665,384 $769,835 Expenses: Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,924 257,510 65,698 6,617 383,907 109,674 12,458 374,370 153,009 Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328,132 500,198 539,837 Income (loss) from real estate dispositions, net . . . . . . . . . . . . . . $120,948 $165,186 $229,998 6. Leases We lease land, buildings, office space and certain equipment. Many of our leases include a renewal option to extend the term from one to 25 years or more. Renewal options that we are reasonably certain to exercise are recognized in our right-of-use assets and lease liabilities. As most of our leases do not provide a rate implicit in the lease agreement, we use our incremental borrowing rate available at lease commencement to determine the present value of lease payments. The incremental borrowing rates were determined using our longer term borrowing rates (actual pricing through 30 years, as well as other longer-term market rates). For leases that commenced prior to January 1, 2019, we used the incremental borrowing rate on December 31, 2018. We sublease certain real estate to a third party. Our sublease portfolio consists of a finance lease with Genesis HealthCare for seven buildings. The components of lease expense were as follows for the period presented (in thousands): Classification Year Ended December 31, 2019 Operating lease cost:(1) Real estate lease expense . . . . . . . . . . . . . . . . Property operating expenses Non-real estate investment lease expense . . . General and administrative expenses $25,166 1,654 Finance lease cost: Amortization of leased assets . . . . . . . . . . . . Property operating expenses Interest on lease liabilities . . . . . . . . . . . . . . . Interest expense Sublease income . . . . . . . . . . . . . . . . . . . . . . . . Rental income Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,795 4,748 (4,173) $35,190 (1) Includes short-term leases which are immaterial. 101 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Maturities of lease liabilities as of December 31, 2019 are as follows (in thousands): Operating Leases Finance Leases 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,356 23,322 22,147 22,117 21,294 1,073,396 $ 9,121 8,786 8,149 69,182 1,419 89,678 Total lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Imputed interest 1,185,632 (820,829) 186,335 (77,445) Total present value of lease liabilities . . . . . . . . . . . . . . . . . . . . . . $ 364,803 $108,890 Supplemental balance sheet information related to leases was as follows as of December 31, 2019 (in thousands, except lease terms and discount rate): Classification December 31, 2019 Right of use assets: Operating leases — real estate . . . . . . . Finance leases — real estate . . . . . . . . Right of use assets, net Right of use assets, net Real estate right of use assets, net Operating leases — non-real estate . . investments . . . . . . . . . . . . . . . . . . . . Receivables and other assets Total right of use assets, net . . . . . . . . . . . Lease liabilities: Operating leases . . . . . . . . . . . . . . . . . . Financing leases . . . . . . . . . . . . . . . . . . Total lease liabilities . . . . . . . . . . . . . . . . Weighted average remaining lease term (years): Operating leases . . . . . . . . . . . . . . . . . . Finance leases . . . . . . . . . . . . . . . . . . . . Weighted average discount rate: Operating leases . . . . . . . . . . . . . . . . . . Finance leases . . . . . . . . . . . . . . . . . . . . $374,217 162,216 536,433 12,474 $548,907 $364,803 108,890 $473,693 46.0 15.9 5.00% 5.18% 102 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Supplemental cash flow information related to leases was as follows for the date indicated (in thousands): Classification Year Ended December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases . . . . . Decrease (increase) in receivables and other assets Operating cash flows from operating leases . . . . . Increase (decrease) in accrued expenses and other liabilities Operating cash flows from finance leases . . . . . . . Decrease (increase) in receivables and other assets Financing cash flows from finance leases . . . . . . . Other financing activities $ 6,397 (5,489) 10,732 (3,401) Substantially all of our operating leases in which we are the lessor 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. We recognized $1,588,400,000 of rental and other revenues related to operating leases, of which $200,564,000 was for variable lease payments, for the year ended December 31, 2019, which primarily represents the reimbursement of operating costs such as common area maintenance expenses, utilities, insurance and real estate taxes. The following table sets forth the future minimum lease payments receivable for leases in effect at December 31, 2019 (excluding properties in our Seniors Housing Operating portfolio and excluding any operating expense reimbursements) (in thousands): 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter $ 1,430,978 1,384,721 1,346,917 1,302,601 1,265,988 9,026,163 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,757,368 103 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. Loans Receivable The following is a summary of our loans receivable (in thousands): Year Ended December 31, 2019 2018 Mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other real estate loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allowance for losses on real estate loans receivable . . . . . . . . . . . . . . . . . . . . $188,062 124,696 (42,376) $317,443 81,268 (68,372) Real estate loans receivable, net of allowance . . . . . . . . . . . . . . . . . . . . . . . . . Non real estate loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allowance for losses on non real estate loans receivable . . . . . . . . . . . . . . . . . 270,382 362,850 (25,996) 330,339 282,443 — Non real estate loans receivable, net of allowance(1) . . . . . . . . . . . . . . . . . . . . 336,854 282,443 Total loans receivable, net of allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $607,236 $612,782 (1) Included in receivables and other assets on the Consolidated Balance Sheets The following is a summary of our loan activity for the periods presented (in thousands): December 31, 2019 December 31, 2018 December 31, 2017 Year Ended Advances on loans receivable: Investments in new loans . . . . . . . . . . . . . Draws on existing loans . . . . . . . . . . . . . . $ 46,824 72,875 Net cash advances on loans receivable . . 119,699 Receipts on loans receivable: Loan payoffs . . . . . . . . . . . . . . . . . . . . . . Principal payments on loans . . . . . . . . . . Net cash receipts on loans . . . . . . . . . . . . 118,703 9,003 127,706 $ 77,289 34,759 112,048 144,700 59,235 203,935 $ 61,122 40,094 101,216 181,549 33,431 214,980 Net cash advances (receipts) on loans . . . . . $ (8,007) $ (91,887) $(113,764) 104 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In 2016, we restructured real estate loans with Genesis Healthcare and 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 an additional loan loss charge of $62,966,000 relating to real estate loans receivable from Genesis HealthCare based on an estimation of future cash flows discounted at the effective interest rate of the loans. In 2019, we recognized a provision for loan losses of $18,690,000 to fully reserve for and eventually wrote off certain Triple-net real estate loans receivable that were no longer deemed collectible. In the fourth quarter of 2019 one of the Genesis Healthcare real estate loans transitioned to a non real estate loan due to the sale of the underlying properties that served as collateral for the loan. As of December 31, 2019, the total allowance for loan loss balance of $68,372,000 is deemed to be sufficient to absorb expected losses. In addition, at December 31, 2019, we had one real estate loan with an outstanding balance of $2,534,000 on non-accrual status. No provision for loan loss has been recorded for this loan given the underlying collateral value. The following is a summary of the allowance for losses on loans receivable for the periods presented (in thousands): Year Ended December 31, 2019 2018 2017 Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in present value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 68,372 18,690 (18,690) — $68,372 — — — $ 6,563 62,966 — (1,157) Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 68,372 $68,372 $68,372 The following is a summary of our impaired loans (in thousands): Year Ended December 31, 2019 2018 2017 Balance of impaired loans at end of year . . . . . . . . . . . . . . . . . . . Allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $188,018 (68,372) $189,272 (68,372) $282,882 (68,372) Balance of impaired loans not reserved . . . . . . . . . . . . . . . . . . . . $119,646 $120,900 $214,510 Average impaired loans for the year . . . . . . . . . . . . . . . . . . . . . . Interest recognized on impaired loans(1) . . . . . . . . . . . . . . . . . . . . $192,728 16,235 $236,077 17,241 $330,216 27,793 (1) Represents cash interest recognized in the period since loans were identified as impaired. 8. 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, 2019 December 31, 2018 Seniors Housing Operating . . . . . . . . . . . . . . . . . . . . . . . Triple-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outpatient Medical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10% to 50% 10% to 34% 43% to 50% $463,741 7,740 111,942 $344,982 34,284 103,648 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $583,423 $482,914 (1) Excludes ownership of in-substance real estate. 105 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS We own 34% of Sunrise Senior Living Management, Inc. (“Sunrise”), who provides comprehensive to certain of our Seniors Housing Operating property management and accounting services with respect properties that Sunrise operates. We pay Sunrise annual management fees pursuant to long-term management agreements. Our management agreements have initial terms expiring through December 2034 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, 2019, 2018 and 2017, we recognized fees to Sunrise of $41,200,000, $36,378,000 and $37,573,000, respectively, which are reflected within property operating expenses in our Consolidated Statements of Comprehensive Income. During the year ended December 31, 2019, we sold our interest in a Seniors Housing Operating joint venture and recognized a gain of $38,681,000 in income (loss) from unconsolidated entities in our Consolidated Statements of Comprehensive Income. At December 31, 2019, the aggregate unamortized basis difference of our joint venture investments of $101,275,000 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 properties and included in the reported amount of income from unconsolidated entities. We have made loans totaling $165,193,000 related to seven properties as of December 31, 2019 for the development and construction of certain properties which are classified as in substance real estate investments. We believe that such borrowers typically represent variable interest entities (“VIE” or VIE’s”) in accordance with ASC 810 Consolidation. VIE’s are required to be consolidated by their Primary Beneficiary (“PB”) which is the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impacts the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. We have concluded that we are not the PB of such borrowers, therefore, the loan arrangements were assessed based on among other factors, the amount and timing of expected residual profits, the estimated fair value of the collateral and the significance of the borrower’s equity in the project. Based on these assessments the arrangements have been classified as in substance real estate investments. We expect to fund an additional $139,472,000 related to these investments. 106 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9. Credit Concentration We use consolidated net operating income (“NOI”) as our credit concentration metric. See Note 18 for additional information and reconciliation. The following table summarizes certain information about our credit concentration for the year ended December 31, 2019, 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) ProMedica . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Revera(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Genesis HealthCare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Belmont Village . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Remaining portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 218 94 54 21 1,026 1,578 $ 342,595 215,083 146,451 119,928 76,354 1,530,853 14% 9% 6% 5% 3% 63% $2,431,264 100% (1) Genesis HealthCare and ProMedica are in our Triple-net segment. Sunrise Senior Living, Revera and Belmont Village are in our Seniors Housing Operating segment. (2) NOI with our top five relationships comprised 38% of total NOI for the year ending December 31, 2018. (3) Revera owns a controlling interest in Sunrise Senior Living. For the year ended December 31, 2019, we recognized $1,219,253,000 of revenue from properties managed by Sunrise Senior Living. 10. Borrowings Under Credit Facilities and Commercial Paper Program At December 31, 2019, we had a primary unsecured credit facility with a consortium of 31 banks that includes a $3,000,000,000 unsecured revolving credit facility ($945,000,000 outstanding at December 31, 2019), 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, 2019). Borrowings under the unsecured revolving credit facility are subject to interest payable at the applicable margin over LIBOR interest rate (2.59% at December 31, 2019). The applicable margin is based on our debt ratings and was 0.825% at December 31, 2019. 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, 2019. 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. In January 2019, we established an unsecured commercial paper program. Under the terms of the program, we may issue unsecured commercial paper notes with maturities that vary, but do not exceed 397 days from the date of issue, up to a maximum aggregate face or principal amount outstanding at any time of $1,000,000,000. As of December 31, 2019, there was a balance of $642,597,000 outstanding on the commercial paper program ($643,600,000 in principal outstanding net of an unamortized discount of $1,003,000), which reduces the borrowing capacity on the unsecured revolving credit facility. The notes bear interest at various floating rates with a weighted average of 2.16% as of December 31, 2019 and a weighted average maturity of 26 days as of December 31, 2019. 107 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following information relates to aggregate borrowings under the primary unsecured revolving credit facility and commercial paper program 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 balances divided by days in period) . . . . . . . . . . . . . . . . Weighted-average interest rate (actual interest expense divided by average borrowings outstanding) . . . . . . . . . 11. Senior Unsecured Notes and Secured Debt Year Ended December 31, 2019 2018 2017 $1,588,600 $2,880,000 $1,147,000 $2,148,000 $ 719,000 $1,010,000 $1,376,813 $ 950,581 $ 597,422 2.84% 3.07% 2.02% 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, 2019, 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 Senior Unsecured Notes(1,2) Secured Debt(1,3) 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2023(4,5) 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter(6,7,8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 354,329 439,176 — 421,876 10,000 467,378 1,792,871 304,533 1,350,000 1,006,050 7,274,691 $ Totals 354,329 439,176 431,876 2,260,249 1,654,533 8,280,741 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,427,562 $2,993,342 $13,420,904 (1) Amounts represent principal amounts due and do not include unamortized premiums/discounts, debt issuance costs, or other fair value adjustments as reflected on the Consolidated Balance Sheet. (2) Annual interest rates range from 2.40% to 6.50%. (3) Annual interest rates range from 1.25% to 12.00%. Carrying value of the properties securing the debt totaled $6,550,033,000 at December 31, 2019. (4) (5) (6) (7) (8) Includes a $250,000,000 Canadian-denominated unsecured term credit facility (approximately $192,871,000 based on the Canadian/U.S. Dollar exchange rate on December 31, 2019). The loan matures on July 19, 2023 and bears interest at the Canadian Dealer Offered Rate plus 0.9% (2.93% at December 31, 2019). Includes a $500,000,000 unsecured term credit facility. The loan matures on July 19, 2023 and bears interest at LIBOR plus 0.9% (2.66% at December 31, 2019). Includes a $300,000,000 Canadian-denominated 2.95% senior unsecured notes due 2027 (approximately $231,446,000 based on the Canadian/U.S. Dollar exchange rate on December 31, 2019). Includes a £550,000,000 4.80% senior unsecured notes due 2028 (approximately $729,795,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on December 31, 2019). Includes a £500,000,000 4.50% senior unsecured notes due 2034 (approximately $663,450,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on December 31, 2019). 108 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following is a summary of our senior unsecured note principal activity during the periods presented (dollars in thousands): December 31, 2019 December 31, 2018 December 31, 2017 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 . . . . . . $ 9,699,984 3,987,790 (3,335,290) 75,078 4.48% 3.34% 4.39% 4.22% $ 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 Ending balance . . . . . . . $10,427,562 4.03% $ 9,699,984 4.48% $8,417,447 4.25% 1.97% 1.83% 4.29% 4.31% The following is a summary of our secured debt principal activity for the periods presented (dollars in thousands): December 31, 2019 December 31, 2018 December 31, 2017 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 . . . . . . . $2,485,711 343,696 385,145 (230,108) — (54,325) 63,223 3.90% 3.11% 4.34% 4.35% —% 3.75% 3.28% $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 Ending balance . . . . . . . . $2,993,342 3.63% $2,485,711 3.90% $ 2,618,408 4.09% 2.82% 6.67% 5.25% 3.80% 4.34% 3.16% 3.76% 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, 2019, we were in compliance with all of the covenants under our debt agreements. 12. 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 and interest rate risk related to our capital structure. Our risk management program is designed to manage the exposure and volatility arising from these risks, and utilizes foreign currency forward contracts, cross currency swap contracts, interest rate swaps, interest rate locks and debt issued in foreign currencies to offset a portion of these risks. Foreign Currency Forward Contracts Designated as Cash Flow Hedges For instruments that are designated as and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is deferred as a component of other comprehensive income (“OCI”), and reclassified into earnings in the same period, or periods, during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in earnings. 109 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Cash Flow Hedges of Interest Rate Risk We enter into interest rate swaps in order to maintain a capital structure containing targeted amounts of fixed and floating-rate debt and manage interest rate risk. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for our fixed-rate payments. These interest rate swap agreements were used to hedge the variable cash flows associated with variable-rate debt. Periodically, we enter into and designate interest rate locks to partially hedge the risk of changes in interest rate payments attributable to increases in the benchmark interest rate during the period leading up to the probable issuance of fixed-rate debt. We designate our interest rate locks as cash flow hedges. Gains and losses when we settle our interest rate locks are amortized into income over the life of the related debt, except where a material amount is deemed to be ineffective, which would be immediately reclassified to the Consolidated Statements of Comprehensive Income. 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. During the years ended December 31, 2019, 2018, and 2017 we settled certain net investment hedges generating cash proceeds of $6,716,000, $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. 110 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following presents the notional amount of derivatives and other financial instruments as of the dates indicated (in thousands): December 31, 2019 December 31, 2018 Derivatives designated as net investment hedges: Denominated in Canadian Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Denominated in Pounds Sterling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 725,000 £1,340,708 $ 575,000 £ 890,708 Financial instruments designated as net investment hedges: Denominated in Canadian Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Denominated in Pounds Sterling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 250,000 £1,050,000 $ 250,000 £1,050,000 Interest rate swaps designated as cash flow hedges: Denominated in U.S. Dollars(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,188,250 $ — 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 . . . . . . . . . . . . . $ 405,819 $ 405,819 — $ (325,000) $ — $ 405,000 $ £ (125,000) £ (350,000) £ 350,000 £ 125,000 (1) At December 31, 2019 the maximum maturity date was July 15, 2021. The following presents the impact of derivative instruments on the Consolidated Statements of Comprehensive Income for the periods presented (in thousands): Location December 31, 2019 December 31, 2018 December 31, 2017 Year Ended Gain (loss) on derivative instruments designated as hedges recognized in income . . . . . . . . . . . Interest expense $ 26,419 $ 12,271 $ (2,476) Gain (loss) on derivative instruments not designated as hedges recognized in income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense $ (2,310) $ 5,233 $ (49) Gain (loss) on derivative and financial instruments designated as hedges recognized in OCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OCI $(131,120) $211,390 $(252,168) 13. Commitments and Contingencies At December 31, 2019, we had 13 outstanding letter of credit obligations totaling $47,180,000 and expiring between 2020 and 2024. At December 31, 2019, we had outstanding construction in process of $507,931,000 and were committed to providing additional funds of approximately $446,633,000 to complete construction. Purchase obligations at December 31, 2019, to acquire outpatient medical facilities in 2020. Purchase obligations also include $19,925,000 of contingent obligations to fund capital improvements. Rents due from the tenant are increased to reflect the additional investment in the property. During the year ended December 31, 2017, we finalized an agreement with the University of Toledo Foundation to transfer our corporate headquarters as a gift and recognized an expense of $40,730,000. include $261,000,000 representing a definitive agreement 111 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 14. Stockholders’ Equity The following is a summary of our stockholders’ equity capital accounts as of the dates indicated: December 31, 2019 December 31, 2018 Preferred Stock, $1.00 par value: Authorized shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Issued shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000,000 — — Common Stock, $1.00 par value: Authorized shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Issued shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700,000,000 411,550,857 410,256,615 50,000,000 14,375,000 14,369,965 700,000,000 384,849,236 383,674,603 Preferred Stock The following is a summary of our preferred stock activity during the periods presented: December 31, 2019 December 31, 2018 December 31, 2017 Shares Weighted Avg. Dividend Rate Shares Weighted Avg. Dividend Rate Shares Weighted Avg. Dividend Rate Year Ended Beginning balance . . . . . Shares redeemed . . . . . . Shares converted . . . . . . 14,369,965 — (14,369,965) 6.50% —% 6.50% 14,370,060 — (95) Ending balance . . . . . . . . — —% 14,369,965 6.50% —% 6.50% 6.50% 25,875,000 (11,500,000) (4,940) 14,370,060 6.50% 6.50% 6.50% 6.50% During the year ended December 31, 2019, we converted all of the outstanding Series I Preferred Stock. Each share was converted into 0.8857 shares of common stock. In addition, 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. 112 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Common Stock In February 2019, we entered into separate amended and restated equity distribution agreements whereby we can offer and sell up to $1,500,000,000 aggregate amount of our common stock (“Equity Shelf Program”). The Equity Shelf Program also allows us to enter into forward sale agreements. As of December 31, 2019, we had $1,075,537,000 of remaining capacity under the Equity Shelf Program, which excludes forward sales agreements outstanding for the sale of 4,935,804 shares with maturity dates in 2020 and 2021. We expect to physically settle the forward sales for cash proceeds. 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 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 2019 Dividend reinvestment plan issuances . . . . . . . . . 2019 Option exercises . . . . . . . . . . . . . . . . . . . . . . . . . . 2019 Equity Shelf Program issuances . . . . . . . . . . . . . . 2019 Preferred stock conversions . . . . . . . . . . . . . . . . . 2019 Stock incentive plans, net of forfeitures . . . . . . . . 5,798,979 10,736 7,855,956 12,712,452 203,889 $77.18 51.32 78.15 $ 447,559 551 613,948 — — $ 443,929 551 611,645 — — 2019 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,582,012 $1,062,058 $1,056,125 Dividends The increase in dividends is primarily attributable to increases in our common shares outstanding, offset by the conversion and redemption of the Series I and Series J preferred stock, as described above. Please refer to Note 19 for information related to federal income tax of dividends. The following is a summary of our dividend payments (in thousands, except per share amounts): Year Ended December 31, 2019 December 31, 2018 December 31, 2017 Per Share Amount Per Share Amount Per Share Amount Common Stock . . . . . . . . . . . . . . . . . . . . Series I Preferred Stock . . . . . . . . . . . . . Series J Preferred Stock . . . . . . . . . . . . . $3.4800 — — $1,404,977 $3.4800 — 3.2500 — — $1,300,141 46,704 $3.4800 3.2500 — 0.2347 $1,277,321 46,711 2,699 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,404,977 $1,346,845 $1,326,731 113 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Accumulated Other Comprehensive Income The following is a summary of accumulated other comprehensive income/(loss) for the periods presented (in thousands): Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative and financial instruments designated as hedges . . . . . . . . . . . . Actuarial losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(719,814) 607,657 — $(868,006) 738,777 (540) Total accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . $(112,157) $(129,769) December 31, 2019 December 31, 2018 15. Stock Incentive Plans In May 2016, our shareholders approved the 2016 Long-Term Incentive Plan (“2016 Plan”), which authorized up to 10,000,000 shares of common stock to be issued at the discretion of the Compensation Committee of the Board of Directors. Awards granted after May 5, 2016 are issued out of the 2016 Plan. The awards granted under the Amended and Restated 2005 Long-Term Incentive Plan continue to vest and options expire ten years from the date of grant. Our non-employee directors, officers and key employees are eligible to participate in the 2016 Plan. The 2016 Plan allows for the issuance of, among other things, stock options, stock appreciation rights, restricted stock, deferred stock units and dividend equivalent rights. Vesting periods for options, deferred stock units and restricted shares generally range from three to five years. Under our long-term incentive plan, certain restricted stock awards are market, performance and time-based. For market and performance based awards, we will grant a target number of restricted stock units, with the ultimate award determined by the total shareholder return and operating performance metrics, measured in each case over a measurement period of two to three years. Generally awards vest over two to three years after the end of the performance period with a portion vesting immediately at the end of the performance periods. The expected term represents the period from the grant date to the end of the performance period. Compensation expense for these performance grants is measured based on the probability of achievement of certain performance goals and is recognized over both the performance period and vesting period. For the portion of the grant for which the award is determined by the operating performance metrics, the compensation cost is based on the grant date closing price and management’s estimate of corporate achievement of the financial metrics. If the estimated number of performance based restricted stock to be earned changes, an adjustment will be recorded to recognize the accumulated difference between the revised and previous estimates. For the portion of the grant determined by the total shareholder return, management used a Monte Carlo model to assess the fair value and compensation cost. Forfeitures are accounted for as they occur. The following table summarizes compensation expense (a component of general and administrative expenses and property operating expenses) recognized for the periods presented (in thousands): Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restricted stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ — $ 25,047 27,646 10 19,092 $25,047 $27,646 $19,102 Year Ended December 31, 2019 2018 2017 114 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Restricted Stock The fair value of the restricted stock is equal to the market price of the company’s common stock on the date of grant and is amortized over the vesting periods. As of December 31, 2019, there was $30,755,000 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, 2019: Restricted Stock Number of Shares (000’s) Weighted-Average Grant Date Fair Value Non-vested at December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Terminated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-vested at December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,220 (364) 367 (117) 1,106 $62.56 52.15 85.80 66.25 $70.26 16. 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, 2019 2018 2017 Numerator for basic and diluted earnings per share — net income attributable to common stockholders . . . . . . . . . . . . $1,232,432 $758,250 $463,595 Denominator for basic earnings per share — weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401,845 373,620 367,237 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 — 835 1,112 16 1,963 9 512 1,096 13 1,630 47 482 1,235 — 1,764 weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403,808 375,250 369,001 Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ $ 3.07 3.05 $ $ 2.03 2.02 $ $ 1.26 1.26 As of December 31, 2018 and December 31, 2017, the Series I Cumulative Convertible Perpetual Preferred Stock were excluded from the calculations as the effect of the conversions were anti-dilutive. As of December 31, 2019, forward sales agreements outstanding for the sale of 4,935,804 shares of common stock were not included in the computation of diluted earnings per share because such forward sales were anti-dilutive for the period. 115 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 17. 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, Other Real Estate Loans and Non Real Estate Loans Receivable — The fair value of mortgage loans, other real estate loans and non real estate loans receivable is generally estimated by using Level 2 and Level 3 inputs such as discounting the estimated future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Cash and Cash Equivalents 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 and Commercial Paper Program — The carrying amount of the primary unsecured credit facility and commercial paper program 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, Interest Rate Swaps and Cross Currency Swaps — Foreign currency forward contracts, interest rate swaps and cross currency swaps are recorded in other assets or other liabilities on the balance sheet at fair value that is derived from observable market data, including yield curves and foreign exchange rates (all of our derivative instruments are Level 2). 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. 116 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The carrying amounts and estimated fair values of our financial instruments are as follows as of the dates presented (in thousands): Financial assets: Mortgage loans receivable . . . . . . . . . . . . . . . . Other real estate loans receivable . . . . . . . . . . . Equity securities . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents . . . . . . . . . . . . . . . . . Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . Non real estate loans receivable . . . . . . . . . . . . Foreign currency forward contracts, interest rate swaps and cross currency swaps . . . . . . Financial liabilities: Borrowings under unsecured credit facility and commercial paper . . . . . . . . . . . . . . . . . . . . . Senior unsecured notes . . . . . . . . . . . . . . . . . . . Secured debt . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency forward contracts, interest rate swaps and cross currency swaps . . . . . . Redeemable OP unitholder interests . . . . . . . . . December 31, 2019 December 31, 2018 Carrying Amount Fair Value Carrying Amount Fair Value $ 145,686 124,696 15,685 284,917 100,849 336,854 $ 150,217 128,512 15,685 284,917 100,849 379,239 $ 249,071 81,268 11,286 215,376 100,753 282,443 $ 257,337 82,742 11,286 215,376 100,753 384,150 18,554 18,554 94,729 94,729 $ 1,587,597 10,336,513 2,990,962 $ 1,587,597 11,400,571 3,041,893 $1,147,000 9,603,299 2,476,177 $ 1,147,000 10,043,797 2,499,130 53,601 121,440 53,601 121,440 71,109 $ 103,071 $ $ 71,109 103,071 $ Items Measured at Fair Value on a Recurring Basis The market approach is utilized to measure fair value for our financial assets and liabilities reported at fair value on a recurring basis. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The following summarizes items measured at fair value on a recurring basis (in thousands): Fair Value Measurements as of December 31, 2019 Total Level 1 Level 2 Level 3 $ 15,685 $15,685 $ — $— Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency forward contracts, interest rate swaps and cross currency swaps, net asset (liability)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Redeemable OP unitholder interests . . . . . . . . . . . Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $102,078 $15,685 $ 86,393 (35,047) 121,440 — — (35,047) 121,440 — — $— (1) Please see Note 12 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 7 for 117 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 asset acquisitions using current interest rates at which similar borrowings could be obtained on the transaction date. 18. 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 seniors apartments, assisted living, independent living/continuing care retirement communities, independent support living (Canada), care homes with and without nursing (U.K.) and combinations thereof that are owned and/or operated through RIDEA structures (see Note 19). Our Triple-net properties include the property types described above as well as long-term/post-acute care facilities. Under the Triple-net segment, we invest in seniors housing and health care real estate through acquisition and financing of primarily single tenant properties. Properties acquired are primarily leased under triple-net leases and we are not involved in the management of the property. Our Outpatient Medical properties include outpatient medical buildings which are typically leased to multiple tenants and generally require a certain level of property management by us. We evaluate performance based upon NOI of each segment. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. We believe NOI provides investors relevant and useful information because it measures the operating performance of our properties at the property level on an unleveraged basis. We use NOI to make decisions about resource allocations and to assess the property level performance of our properties. Non-segment revenue consists mainly of interest income on certain non-real estate investments and other income. Non-segment assets consist of corporate assets including cash, deferred loan expenses and corporate offices and equipment among others. Non-property specific revenues and expenses are not allocated to individual segments in determining NOI. The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 2). The results of operations for all acquisitions described in Note 3 are included in our consolidated results of operations from the acquisition dates and are components of the appropriate segments. There are no intersegment sales or transfers. 118 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, 2019, 2018 and 2017 is as follows (in thousands): Seniors Housing Operating $ 3,448,175 — 36 8,658 3,456,869 2,417,349 1,039,520 553,189 67,983 — Triple-net Outpatient Medical Non-segment / Corporate Total $ — $ — $ 903,798 62,599 6,246 972,643 53,900 918,743 232,626 12,892 — 684,602 1,195 2,031 687,828 218,793 469,035 241,258 13,411 — — $ 3,448,175 1,588,400 — 63,830 — 20,901 3,966 3,966 — 3,966 — 461,273 126,549 5,121,306 2,690,042 2,431,264 1,027,073 555,559 126,549 — (4,399) — — (4,399) 1,614 — 2,145 26,348 — 18,690 11,926 13,771 — — 14,062 1,788 82,541 — — 10,705 84,155 18,690 28,133 52,612 388,241 6,246 633,237 (4,209) 198,516 (2,710) (677,102) (2,284) 542,892 (2,957) Year Ended December 31, 2019: Resident fees and services . . . . . . . . . . . . Rental income . . . . . . . . . . . . . . . . . . . . . . Interest income . . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . . . Total revenues . . . . . . . . . . . . . . . . . . . Property operating expenses . . . . . . . . . . . Consolidated net operating income . . . . . Depreciation and amortization . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . General and administrative expenses . . . . 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 (expense) benefit . . . . . . . . . . (Loss) income from unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . Gain (loss) on real estate dispositions, 12,388 22,985 7,061 — — 42,434 748,041 net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 528,747 218,322 972 Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . 935,622 870,335 203,839 (679,386) 1,330,410 Net income (loss) . . . . . . . . . . . . . . . . . . . $ 935,622 $ 870,335 $ 203,839 $(679,386) $ 1,330,410 Total assets . . . . . . . . . . . . . . . . . . . . . . . . $15,784,898 $9,434,817 $7,991,521 $ 169,515 $33,380,751 119 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 expenses . . . 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 (expense) benefit . . . . . . . . . (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 preexisting relationships. 120 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 $ — $ — $ — 885,811 73,742 69 7,531 5,127 560,060 — 3,340 Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . Property operating expenses . . . . . . . . . . . . . . . . 2,784,619 1,904,593 967,084 563,400 — 179,332 — $2,779,423 — 1,445,871 73,811 — 17,536 1,538 1,538 4,316,641 — 2,083,925 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 (expense) benefit . . . . . . . . . . . . . . . (Loss) income from unconsolidated entities . . . Gain (loss) on real estate dispositions, net . . . . . 880,026 484,796 63,265 — 967,084 243,830 15,194 — 384,068 193,094 10,015 — 1,538 — 396,148 122,008 2,232,716 921,720 484,622 122,008 — 3,785 — 21,949 8,347 2,284 29,083 62,966 96,909 116,689(1) — 4,373 — 5,625 1,911 — — — — 50,829(2) 297,884 (16,430) (105,236) 56,295 400,129 (4,291) 19,428 286,325 169,050 (1,477) 2,683 1,630 (567,447) 2,070 — — 2,284 37,241 62,966 124,483 177,776 299,616 (20,128) (83,125) 344,250 Income (loss) from continuing operations . . . . . 232,513 701,591 171,886 (565,377) 540,613 Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . $ 232,513 $701,591 $171,886 $(565,377) $ 540,613 (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 preexisting relationships. Also includes $18,294,000 other-than-temporary impairment charge on the Genesis available-for-sale equity investment. (2) Primarily related to $40,730,000 expense recognized for the donation of the corporate headquarters. 121 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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, 2019 December 31, 2018 December 31, 2017 Amount(1) % Amount % Amount % Revenues: United States . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom . . . . . . . . . . . . . . . . . . . . . . . Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,205,492 452,698 463,116 82.1% $3,777,960 8.8% 452,956 9.1% 469,583 80.4% $3,464,527 9.6% 407,351 10.0% 444,763 80.3% 9.4% 10.3% Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,121,306 100.0% $4,700,499 100.0% $4,316,641 100.0% As of December 31, 2019 December 31, 2018 Amount % Amount % Assets: United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $27,513,911 3,405,388 2,461,452 82.4% $24,884,292 10.2% 3,078,994 7.4% 2,378,786 82.0% 10.1% 7.9% Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $33,380,751 100.0% $30,342,072 100.0% (1) The United States, United Kingdom and Canada represent 77%, 10% and 13%, respectively, of our resident fees and services revenue stream for the year ended December 31, 2019. 19. 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, 2019 2018 2017 Ordinary dividend(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term capital gain/(loss)(2) Return of capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2.6937 0.7863 — $2.1988 1.1153 0.1659 $1.8117 1.5755 0.0928 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3.4800 $3.4800 $3.4800 122 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) For the years ended December 31, 2019 and 2018, includes Section 199A dividends of $2.6937 and $2.1988, respectively. For the year ended December 31, 2017, includes Qualified Dividend of $0.0038. (2) For the years ended December 31, 2019, 2018 and 2017, includes Unrecaptured SEC. 1250 Gains of $0.2835, $0.3822 and $0.3557, respectively. Our consolidated provision for income tax expense (benefit) is as follows for the periods presented (in thousands): Year Ended December 31, 2019 2018 2017 Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,594 (9,637) $15,850 (7,176) $ 7,633 12,495 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,957 $ 8,674 $20,128 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, 2019, as a result of ownership of investments in Canada and the U.K., we were subject to foreign income taxes under the respective tax laws of these jurisdictions. The provision for income taxes for the year ended December 31, 2019 primarily relates to state taxes, foreign taxes, and taxes based on income generated by entities that are structured as TRSs. For the tax years ended December 31, 2019, 2018 and 2017, included in the consolidated provision for income taxes was $(3,892,000), $9,804,000 and $4,806,000, 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, 2019, 2018 and 2017, to the income tax expense/(benefit) is as follows for the periods presented (in thousands): Year Ended December 31, 2019 2018 2017 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 280,005 3,465 $ 176,069 28,309 $ 199,588 30,445 (311,224) 9,260 21,451 (206,937) 8,110 3,123 (234,468) 10,065 14,498 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,957 $ 8,674 $ 20,128 (1) Excluding purchase price accounting. 123 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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, 2019 2018 2017 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (13,064) 127,525 43,056 (159,057) $ (2,533) 98,713 48,804 (155,592) $ (11,812) 94,654 25,146 (127,283) Net deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . $ (1,540) $ (10,608) $ (19,295) On the basis of the evaluations performed as required by the codification, valuation allowances totaling $159,057,000 were recorded on U.S. taxable REIT subsidiaries as well as entities in other jurisdictions to limit the deferred tax assets to the amount that we believe is more likely that not realizable. However, the amount of the deferred tax asset considered realizable could be adjusted if (i) estimates of future taxable income during the carryforward period are reduced or increased or (ii) objective negative evidence in the form of cumulative losses is no longer present (and additional weight may be given to subjective evidence such as our projections for growth). The valuation allowance rollforward is summarized as follows for the periods presented (in thousands): Year Ended December 31, 2019 2018 2017 Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $155,592 3,465 $127,283 28,309 $ 96,838 30,445 Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $159,057 $155,592 $127,283 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 (i) the excess of the fair value of the asset over its adjusted tax basis as of the date it became a REIT asset, or (ii) 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. Given the applicable statute of limitations, we generally are subject to audit by the Internal Revenue Service (“IRS”) for the year ended December 31, 2016 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, 2015. 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, 2019, we had a net operating loss (“NOL”) carryforward related to the REIT of $337,287,000. Due to our uncertainty regarding the realization of certain deferred tax assets, we have not 124 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS recorded a deferred tax asset related to NOLs generated by the REIT. These amounts can be used to offset future taxable income (and/or taxable income for prior years if an audit determines that tax is owed), if any. The REIT will be entitled to utilize NOLs and tax credit carryforwards only to the extent that REIT taxable income exceeds our deduction for dividends paid. The NOL carryforwards generated through December 31, 2017 will expire through 2037. Beginning with tax years after December 31, 2017, the Tax Cuts and Jobs Act eliminates the carryback period, limits the NOLs to 80% of taxable income and replaces the 20-year carryforward period with an indefinite carryforward period. At December 31, 2019 and 2018, we had an NOL carryforward related to Canadian entities of $195,791,000, and $154,029,000, respectively. These Canadian losses have a 20-year carryforward period. At December 31, 2019 and 2018, we had an NOL carryforward related to U.K. entities of $209,776,000 and $242,377,000, respectively. These U.K. losses do not have a finite carryforward period. 20. Quarterly Results of Operations (Unaudited) The following is a summary of our unaudited quarterly results of operations for the years ended December 31, 2019 and 2018 (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 Year Ended December 31, 2019 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter $1,272,245 $1,320,106 $1,266,133 $1,262,822 stockholders . . . . . . . . . . . . . . . . . . . . . . . 280,470 137,762 589,876 224,324 Net income (loss) attributable to common stockholders per share: Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income attributable to common $ $ 0.72 0.71 $ $ 0.34 0.34 $ $ 1.46 1.45 $ $ 0.55 0.55 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 stockholders . . . . . . . . . . . . . . . . . . . . . . . 437,671 154,432 64,384 101,763 Net income attributable to common stockholders per share: Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . $ $ 1.18 1.17 $ $ 0.42 0.41 $ $ 0.17 0.17 $ $ 0.27 0.27 125 WELLTOWER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 21. Variable Interest Entities We have entered into joint ventures to own certain seniors housing and outpatient medical assets which are deemed to be variable interest entities (“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, 2019 December 31, 2018 Assets: Net real estate investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 960,093 27,522 14,586 $ 973,813 18,678 14,600 Total assets(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,002,201 $1,007,091 Liabilities and equity: Secured debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 460,117 1,326 22,215 518,543 $ 465,433 — 18,229 523,429 Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,002,201 $1,007,091 (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. 126 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, 2019 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, 2019. 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. 127 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Welltower Inc. Opinion on Internal Control over Financial Reporting We have audited Welltower reporting as of December 31, 2019, 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, 2019, 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, 2019 and 2018, the related consolidated statements of comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and financial statement schedules listed in the index at Item 15(a) and our report dated February 14, 2020 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Toledo, Ohio February 14, 2020 /s/ Ernst & Young LLP 128 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, 2020. 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, 2020. 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, 2020. 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, 2020. 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, 2020. 129 Item 15. Exhibits and Financial Statement Schedules 1. (i) 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, 2019 and 2018 . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Comprehensive Income — Years ended December 31, 2019, 2018 and 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Equity — Years ended December 31, 2019, 2018 and 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Cash Flows — Years ended December 31, 2019, 2018 and 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 83 84 86 87 88 (ii) The following Financial Statement Schedules are included beginning on page 138 III — Real Estate and Accumulated Depreciation IV — Mortgage Loans on Real Estate The financial statement schedule required by Item 15(a) (Schedule II, Valuation and Qualifying Accounts) is included in Item 8 of this Annual Report on Form 10-K. 2. 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). 130 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). Seventh Amended and Restated By-laws of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed May 6, 2019 (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). 131 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) 4.1(t) 4.1(u) 4.2 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). Supplemental Indenture No. 16, dated as of August 19, 2019, 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 19, 2019 (File No. 001-08923), and incorporated herein by reference thereto). Supplemental Indenture No. 17, dated as of December 16, 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 December 16, 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). 132 4.3 4.4(a) 4.4(b) 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). 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). 4.4(c) Second Supplemental Indenture, dated as of December 20, 2019, by and among HCN Canadian Holdings-1 LP, the Company and BNY Trust Company of Canada. 4.5 Description of Securities of the Registrant. 10.1(a) 10.1(b) 10.2(a) 10.2(b) 10.2(c) 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). First Amendment, dated April 26, 2019, to the 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 10-Q filed April 30, 2019 (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).* 133 10.2(d) 10.2(e) 10.3(a) 10.3(b) 10.4 10.5 10.6 10.7 10.8(a) 10.8(b) 10.8(c) 10.8(d) 10.9(a) 10.9(b) 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).* Settlement Agreement, dated September 4, 2019, 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, 2019 (File No. 001-08923), and incorporated herein by reference thereto).* Resignation Agreement, dated July 1, 2019, by and between Mercedes T. Kerr and the Company (filed with the Commission as Exhibit 10.1 to the Company's Form 10-Q filed August 1, 2019 (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 (filed with the Commission as Exhibit 10.2 to the Company's Form 10-Q filed August 1, 2019 (File No. 001-08923), and incorporated by reference thereto).* 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).* 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).* 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).* 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).* 10.10(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).* 134 10.10(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).* 10.10(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).* 10.10(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).* 10.10(e) Welltower Inc. 2017-2019 Long-Term Incentive Program — Bridge 2 (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed November 7, 2017 (File No. 001-08923), and incorporated herein by reference thereto).* 10.10(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).* 10.11(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).* 10.11(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).* 10.12(a) Welltower Inc. 2019-2021 Long-Term Incentive Program (filed with the Commission as Exhibit 10.14(a) to the Company's Form 10-K filed February 25, 2019 (File No. 001-08923), and incorporated herein by reference thereto).* 10.12(b) 10.13 Form of Restricted Stock Unit Award Agreement under the 2019-2021 Long-Term Incentive Program (filed with the Commission as Exhibit 10.14(b) to the Company's Form 10-K filed February 25, 2019 (File No. 001-08923), and incorporated herein by reference thereto).* 2019 Non-Qualified Deferred Compensation Plan (filed with the Commission as Exhibit 10.2 to the Company's Form 10-Q filed October 30, 2019 (File No. 001-08923), and incorporated herein by reference thereto).* 10.14(a) Welltower Inc. 2020-2022 Long-Term Incentive Program.* 10.14(b) Form of Restricted Stock Unit Award Agreement under the 2020-2022 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 Inline XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 135 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 104 The cover page from the Company's Annual Report on Form 10-K for the year ended December 31, 2019, formatted in Inline XBRL (included in Exhibit 101) * Management Contract or Compensatory Plan or Arrangement. Item 16. Form 10-K Summary None. 136 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 14, 2020 WELLTOWER INC. By: /s/ Thomas J. DeRosa Thomas J. DeRosa, Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 14, 2020 by the following persons on behalf of the Registrant and in the capacities indicated. /s/ Jeffrey H. Donahue ** Jeffrey H. Donahue, Lead Director /s/ Kenneth J. Bacon ** Kenneth J. Bacon, Director /s/ Karen B. DeSalvo ** Karen B. DeSalvo, Director /s/ Sharon M. Oster ** Sharon M. Oster, Director /s/ Sergio D. Rivera ** Sergio D. Rivera, Director /s/ Kathryn M. Sullivan ** Kathryn M. Sullivan, Director /s/ R. Scott Trumbull ** R. Scott Trumbull, Director /s/ Thomas J. DeRosa ** Thomas J. DeRosa, Chairman and Chief Executive Officer (Principal Executive Officer) /s/ Timothy G. McHugh ** Timothy G. McHugh, Senior Vice President and Chief Financial Officer (Principal Financial Officer) /s/ Joshua T. Fieweger ** Joshua T. Fieweger, Senior Vice President and Controller (Principal Accounting Officer) /s/ Johnese M. Spisso ** **By: /s/ Thomas J. DeRosa Johnese M. Spisso, Director Thomas J. DeRosa, Attorney-in-Fact 137 Welltower Inc. Schedule III Real Estate and Accumulated Depreciation December 31, 2019 (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: Adderbury, UK . . . . . . . $ — $ 2,144 $ 12,549 $ $ 2,230 $ 13,120 $ 6,203 20,837 50,914 25,187 10,520 4,446 6,290 10,239 16,639 37,395 31,198 2,338 6,283 14,914 20,603 9,520 21,413 74,850 29,881 55,113 18,853 37,710 32,304 11,876 29,436 50,952 17,484 21,084 19,004 19,861 35,300 12,989 45,309 45 212 — 18,956 13,014 11,313 8,902 35,662 Albertville, AL . . . . . . . Albuquerque, NM . . . . . Alexandria, VA . . . . . . Altrincham, UK . . . . . . Amherst, NY . . . . . . . . Amherstview, ON . . . . . Anderson, SC . . . . . . . . Ankeny, IA . . . . . . . . . . Apple Valley, CA . . . . . Arlington, TX . . . . . . . . Arlington, VA . . . . . . . . Arlington, VA . . . . . . . . Arnprior, ON . . . . . . . . Atlanta, GA . . . . . . . . . Atlanta, GA . . . . . . . . . Austin, TX . . . . . . . . . . Austin, TX . . . . . . . . . . Austin, TX . . . . . . . . . . Bagshot, UK . . . . . . . . . Banstead, UK . . . . . . . . Basingstoke, UK . . . . . . Basking Ridge, NJ . . . . Bassett, UK . . . . . . . . . . Bath, UK . . . . . . . . . . . . — — — — — — — — — — — — — — — — — — — — — — — — Baton Rouge, LA . . . . . 12,930 Beaconsfield, UK . . . . . Beaconsfield, QC . . . . . Bee Cave, TX . . . . . . . . Bellevue, WA . . . . . . . . Bellingham, WA . . . . . . Belmont, CA . . . . . . . . . Bethel Park, PA . . . . . . Bethesda, MD . . . . . . . . Bethesda, MD . . . . . . . . Bethesda, MD . . . . . . . . Bethesda, MD . . . . . . . . Birmingham, UK . . . . . Birmingham, UK . . . . . Birmingham, UK . . . . . Blainville, QC . . . . . . . . Bloomfield Hills, MI . . — — — — — — — — — — — — — — — — Boca Raton, FL . . . . . . . 32,270 Boise, ID . . . . . . . . . . . . Borehamwood, UK . . . . Bothell, WA . . . . . . . . . Boulder, CO . . . . . . . . . Bournemouth, UK . . . . — — — — — 170 1,270 8,280 4,244 1,131 473 710 1,129 480 1,660 8,385 — 788 2,058 2,100 880 1,560 4,200 4,960 6,695 3,420 2,356 4,874 2,696 790 5,566 1,149 1,820 2,800 1,500 — 1,609 — — — — 148 1,480 2,807 2,077 2,000 6,565 2,220 5,367 1,350 2,994 5,527 657 489 2,653 296 3,274 806 691 878 — 856 3,019 15,162 1,657 880 2,148 1,824 1,902 750 1,287 6,822 9,912 1,958 1,738 8,919 783 1,242 4,746 1,808 632 2,392 822 2,426 — 1,263 886 926 69,690 — 1,302 1,598 1,388 1,413 176 1,354 8,280 4,565 1,131 519 710 1,129 486 1,660 8,386 5 851 2,080 2,197 885 1,560 4,200 5,340 7,246 3,678 2,395 5,255 2,805 886 5,998 1,289 1,820 2,816 1,507 178 1,609 3 — — 3,513 148 1,592 3,019 2,301 2,133 6,565 2,220 5,810 1,798 3,064 5,966 6,686 23,406 51,210 28,140 11,326 5,091 7,168 10,239 17,489 40,414 46,359 3,990 7,100 17,040 22,330 11,417 22,163 76,137 36,323 64,474 20,553 39,409 40,842 12,550 30,582 55,266 19,152 21,716 21,380 20,676 37,548 12,989 46,569 931 1,138 66,252 18,956 14,204 12,699 10,066 36,942 135,060 20,533 45,864 19,918 29,822 46,617 1,032 1,998 7,255 2,459 6,892 623 1,019 3,811 970 5,084 10,850 13,165 259 1,783 12,165 4,829 6,144 3,533 10,166 8,360 14,801 3,155 9,083 10,030 979 6,912 12,416 5,644 2,694 6,062 5,982 9,080 259 10,744 229 480 1,421 4,844 1,211 1,038 3,242 8,446 17,762 349 10,954 3,354 8,429 10,820 2015 2010 2010 2016 2012 2019 2015 2003 2016 2010 2012 2017 2018 2013 1997 2014 1999 2014 2015 2012 2012 2014 2013 2013 2015 2013 2013 2013 2016 2013 2010 2013 2019 2013 2013 2013 2016 2013 2015 2015 2013 2013 2018 2019 2012 2015 2013 2013 2017 Banbury Road 1999 151 Woodham Dr. 1984 500 Paisano St NE 2018 5550 Cardinal Place 2009 295 Hale Road 2013 1880 Sweet Home Road 1974 4567 Bath Road 1986 311 Simpson Rd. 2012 1275 SW State Street 1999 11825 Apple Valley Rd. 2000 1250 West Pioneer Parkway 1992 900 N Taylor Street 1992 900 N Taylor Street 1991 15 Arthur Street 1999 1460 S Johnson Ferry Rd. 2000 1000 Lenox Park Blvd NE 1998 12429 Scofield Farms Dr. 2013 11330 Farrah Lane 2014 4310 Bee Caves Road 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 2014 14058 A Bee Cave Parkway 1998 15928 NE 8th Street 1996 4415 Columbine Dr. 2002 1010 Alameda de Las Pulgas 2019 631 McMurray Road 2009 8300 Burdett Road 2009 8300 Burdett Road 2009 8300 Burdett Road 2018 4925 Battery Lane 2006 5 Church Road, Edgbaston 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 1999 10250 W Smoke Ranch Drive 2003 Edgwarebury Lane 1988 10605 NE 185th Street 2003 3955 28th Street 2008 42 Belle Vue Road 111,247 23,813 18,703 41,937 13,439 27,458 42,547 1,830 4,370 6,927 2,434 4,509 138 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 Braintree, MA . . . . . . . . — — Brampton, ON . . . . . . . 41,370 10,196 Brandon, MS . . . . . . . . Brick, NJ . . . . . . . . . . . . Brick, NJ . . . . . . . . . . . . Bridgewater, NJ . . . . . . Brockport, NY . . . . . . . — — — — — Brockville, ON . . . . . . . 4,375 Brookfield, WI . . . . . . . Broomfield, CO . . . . . . — — Brossard, QC . . . . . . . . 10,516 Buckingham, UK . . . . . Buffalo Grove, IL . . . . . Burbank, CA . . . . . . . . . — — — Burbank, CA . . . . . . . . . 18,865 Burke, VA . . . . . . . . . . Burleson, TX . . . . . . . . Burlingame, CA . . . . . . — — — Burlington, ON . . . . . . . 11,513 Burlington, MA . . . . . . Burlington, WA . . . . . . Burlington, WA . . . . . . Bushey, UK . . . . . . . . . Calgary, AB . . . . . . . . . Calgary, AB . . . . . . . . . Calgary, AB . . . . . . . . . Calgary, AB . . . . . . . . . Calgary, AB . . . . . . . . . Camberley, UK . . . . . . . Camillus, NY . . . . . . . . Cardiff, UK . . . . . . . . . . Cardiff by the Sea, CA . . . . . . . . . . . . . . Carmichael, CA . . . . . . Carol Stream, IL . . . . . . Carrollton, TX . . . . . . . Cary, NC . . . . . . . . . . . . Cary, NC . . . . . . . . . . . . Cedar Park, TX . . . . . . . Cerritos, CA . . . . . . . . . Charlottesville, VA . . . . — — — — 11,355 12,899 10,250 21,583 25,255 — — — 36,097 24,548 — — — — — — — Chatham, ON . . . . . . . . 642 Chelmsford, MA . . . . . . Chertsey, UK . . . . . . . . Chesterfield, MO . . . . . Chorleywood, UK . . . . Chula Vista, CA . . . . . . Church Crookham, UK . . . . . . . . . . . . . . Cincinnati, OH . . . . . . . Cincinnati, OH . . . . . . . Citrus Heights, CA . . . . Claremont, CA . . . . . . . Clay, NY . . . . . . . . . . . . Cohasset, MA . . . . . . . . Colleyville, TX . . . . . . . — — — — — — — — — — — — — 41,290 59,989 10,241 17,372 17,125 48,201 23,496 7,445 12,830 44,547 31,854 13,880 49,129 43,466 50,817 — 10,437 62,786 19,311 34,354 14,938 7,619 36,482 37,415 41,179 38,971 28,983 36,776 5,736 11,132 12,566 64,711 41,988 55,048 31,444 45,240 70,008 15,664 27,494 91,468 12,462 10,951 25,886 48,366 43,191 1,220 1,170 690 1,730 1,500 484 1,300 4,140 5,499 2,979 2,850 4,940 3,610 — 3,150 — 1,309 2,443 877 768 12,690 2,252 2,793 3,122 3,431 2,385 2,654 2,064 3,191 5,880 2,440 1,730 4,280 740 6,112 1,750 — 4,651 1,098 1,040 9,566 1,857 5,636 1,251 3,806 277 1,752 5,803 2,785 639 916 147 100 10,736 1,220 1,213 695 1,774 1,705 524 1,300 12,797 10,140 42,441 63,255 10,518 19,081 22,923 50,942 23,930 8,321 12,977 51,344 34,624 15,429 53,061 47,567 55,036 50,252 11,118 62,879 21,036 35,864 15,853 8,187 37,974 40,755 44,606 42,327 32,307 40,203 23,034 11,898 14,506 69,549 43,923 58,187 32,921 46,158 79,035 16,406 34,327 105,097 15,595 12,889 27,451 49,818 49,105 10,092 12,158 2,594 4,778 4,778 11,700 4,631 1,480 2,137 18,769 7,003 2,436 12,104 12,013 7,089 1,194 1,669 7,356 5,071 8,967 1,085 695 1,554 10,035 10,754 10,117 6,936 7,071 1,967 748 4,212 18,178 — 14,359 5,127 9,522 9,215 1,351 7,207 15,730 3,709 4,935 1,660 10,924 12,352 2013 2015 2010 2010 2010 2010 2015 2015 2012 2013 2015 2014 2012 2012 2016 2016 2012 2016 2013 2013 2019 2019 2015 2013 2013 2013 2013 2015 2014 2019 2013 2011 2019 2012 2013 2013 2018 2016 2016 2018 2015 2003 2015 2013 2013 2007 618 Granite Street 2009 100 Ken Whillans Drive 1999 140 Castlewoods Blvd 1998 515 Jack Martin Blvd 1999 1594 Route 88 1999 2005 Route 22 West 1999 90 West Avenue 1996 1026 Bridlewood Drive 2013 1105 Davidson 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 2018 9617 Burke Lake Road 2014 621 Old Highway 1187 2015 1818 Trousdale Avenue 1990 500 Appleby Line 2005 24 Mall Road 1999 410 S Norris St 1996 210 / 212 N Skagit St 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 2016 3877 Milton Avenue 2007 127 Cyncoed Road 2009 3535 Manchester Avenue 2014 4717 Engle Road 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. 2018 Bittams Lane 2001 1880 Clarkson Road 2007 High View, Rickmansworth Road 5,720 3,231 2,850 4,940 3,610 2,575 3,150 — 1,413 2,578 877 768 13,203 2,424 2,991 3,358 3,680 2,553 6,091 2,064 3,457 5,880 2,440 1,730 4,280 740 6,155 1,750 — 4,651 1,255 1,120 9,952 1,917 6,076 2,072 22,163 2,591 1,750 2,060 2,300 2,430 1,296 2,485 1,050 14,215 11,279 109,388 31,876 9,928 10,695 26,147 17,082 2,162 23,557 5,574 2013 2003 3302 Bonita Road 2,806 1,750 2,106 2,300 2,515 1,296 2,500 1,050 15,882 11,358 123,307 33,534 11,608 11,429 28,172 17,135 3,197 355 30,961 9,837 3,183 702 6,861 1,385 2014 2019 2007 2010 2013 2019 2013 2016 2014 Bourley Road 2019 732 Clough Pike Road 2010 5445 Kenwood Road 1997 7418 Stock Ranch Rd. 2001 2053 North Towne Avenue 2014 8547 Morgan Road 1998 125 King Street (Rt 3A) 2013 8100 Precinct Line Road 139 2,991 1,801 3,932 4,101 4,219 52,827 681 93 1,829 1,645 915 568 2,005 3,512 3,625 3,592 3,573 3,595 20,735 766 2,206 4,838 1,935 3,139 1,477 918 9,070 742 6,833 13,629 3,290 2,018 1,951 1,512 6,354 1,484 1,882 79 13,965 1,658 1,765 734 2,040 53 Description Encumbrances Land Building & Improvements Initial Cost to Company Cost Capitalized Subsequent to Acquisition Gross Amount at Which Carried at Close of Period Land Building & Improvements Accumulated Depreciation(1) Year Acquired Year Built Address Colorado Springs, CO . . . . . . . . . . . . . . Colts Neck, NJ . . . . . . . — — Coquitlam, BC . . . . . . . 9,102 Crystal Lake, IL . . . . . . Dallas, TX . . . . . . . . . . Davenport, IA . . . . . . . . Decatur, GA . . . . . . . . . Denver, CO . . . . . . . . . . Denver, CO . . . . . . . . . . Denver, CO . . . . . . . . . . Dix Hills, NY . . . . . . . . Dollard-Des-Ormeaux, QC . . . . . . . . . . . . . . — — — — — — — — — Dresher, PA . . . . . . . . . 8,380 Dublin, OH . . . . . . . . . . Dublin, OH . . . . . . . . . . East Amherst, NY . . . . . East Meadow, NY . . . . East Setauket, NY . . . . . Eastbourne, UK . . . . . . Edgbaston, UK . . . . . . . Edgewater, NJ . . . . . . . Edison, NJ . . . . . . . . . . Edmonds, WA . . . . . . . Edmonton, AB . . . . . . . Edmonton, AB . . . . . . . El Dorado Hills, CA . . . Encino, CA . . . . . . . . . . Englishtown, NJ . . . . . . Erie, PA . . . . . . . . . . . . Esher, UK . . . . . . . . . . . Fairfield, NJ . . . . . . . . . Fairfield, CA . . . . . . . . . Fairfield, OH . . . . . . . . Fareham, UK . . . . . . . . Florence, AL . . . . . . . . . Flossmoor, IL . . . . . . . . Folsom, CA . . . . . . . . . Fort Worth, TX . . . . . . . Fort Worth, TX . . . . . . . Fort Worth, TX . . . . . . . Fremont, CA . . . . . . . . . — — — — — — — — — — 8,211 10,735 — — — — — — — — — — — — — — — — Fresno, CA . . . . . . . . . . 23,720 Frome, UK . . . . . . . . . . Fullerton, CA . . . . . . . . Gahanna, OH . . . . . . . . Gardnerville, NV . . . . . Gig Harbor, WA . . . . . . — — — — — Gilbert, AZ . . . . . . . . . . 14,200 Glen Cove, NY . . . . . . . Glenview, IL . . . . . . . . . — — Golden Valley, MN . . . 3,600 Granbury, TX . . . . . . . . Grimsby, ON . . . . . . . . Grosse Pointe Woods, MI . . . . . . . . . . . . . . . — — — 800 780 3,047 875 6,330 1,403 — 1,450 2,910 5,411 3,808 1,957 1,900 1,680 1,169 1,626 69 4,920 4,145 2,720 4,561 1,892 1,650 1,589 2,063 5,190 5,040 690 1,422 5,783 3,120 1,460 1,416 3,408 353 1,292 1,490 7,118 2,080 1,740 3,400 2,459 2,720 1,964 772 1,143 1,560 2,160 4,594 2,090 1,520 2,040 636 14,756 14,733 24,567 12,461 114,794 35,893 — 19,389 35,838 104,641 39,014 14,431 10,664 43,423 25,345 10,721 45,991 37,354 33,744 13,969 25,047 32,314 24,449 29,819 37,293 52,171 46,255 12,520 8,198 48,361 43,868 14,040 12,566 17,970 13,049 9,496 32,754 52,772 27,888 19,799 25,300 33,048 14,813 19,989 11,214 10,831 15,947 28,246 35,236 69,288 33,513 30,670 5,617 950 13,662 2,026 2,599 2,439 1,556 2,288 4,830 31,177 3,671 2,010 8,008 2,045 1,585 1,211 7,075 112 863 1,837 1,982 3,384 1,524 1,767 3,498 8,055 3,016 3,913 156 5,021 2,267 792 7,998 2,277 2,711 294 2,088 729 2,090 93 1,744 4,371 732 5,295 1,755 1,884 1,168 1,884 1,364 1,155 2,025 2,276 4,276 1,578 710 732 891 1,026 1,131 3,264 971 6,330 1,614 1,946 1,450 2,910 5,411 3,959 2,145 1,914 1,850 1,169 1,626 124 4,986 4,472 2,926 4,564 1,911 1,686 1,753 2,209 5,190 5,040 860 1,422 6,242 3,180 1,460 1,416 3,681 385 1,339 1,490 7,118 2,080 1,740 3,456 2,459 2,926 1,998 787 1,164 1,583 2,180 4,643 2,090 1,634 2,040 683 16,556 16,981 26,789 13,921 117,082 40,512 29,231 23,060 37,848 112,649 40,908 15,828 11,861 50,328 25,457 11,584 47,773 39,270 36,801 15,287 26,811 35,793 32,468 32,671 41,060 52,327 51,276 14,617 8,990 55,900 46,085 16,751 12,860 19,785 13,746 11,539 32,847 54,516 32,259 20,531 30,539 34,803 16,491 21,123 13,083 12,174 17,079 30,251 37,463 73,564 34,977 31,380 6,302 4,211 4,194 7,628 3,869 16,762 11,931 7,458 4,957 9,701 3,672 9,751 5,414 4,008 16,148 3,252 704 11,123 9,211 8,971 2,003 6,634 10,447 4,664 8,106 12,124 — 12,449 3,781 586 11,709 10,815 7,033 517 3,622 3,938 3,515 5,416 1,910 8,525 2,435 11,041 — 2,706 5,300 3,180 9,112 4,706 9,137 10,265 17,854 8,005 7,189 1,224 2013 2010 2013 2013 2015 2006 2013 2012 2012 2019 2013 2013 2013 2010 2016 2019 2013 2013 2013 2014 2013 2013 2015 2013 2013 2017 2012 2010 2019 2013 2013 2002 2019 2014 2010 2013 2015 2019 2012 2016 2005 2019 2014 2013 2013 1998 2010 2013 2013 2012 2013 2011 2015 2001 2105 University Park Boulevard 2002 3 Meridian Circle 1990 1142 Dufferin Street 2001 751 E Terra Cotta Avenue 2013 3535 N Hall Street 2009 4500 Elmore Ave. 1998 920 Clairemont Avenue 1997 4901 South Monaco Street 2007 8101 E Mississippi Avenue 2014 1500 Little Raven St 2003 337 Deer Park Road 2008 4377 St. Jean Blvd 2006 1650 Susquehanna Road 1990 6470 Post Rd 2015 4175 Stoneridge Lane 2015 8040 Roll Road 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 2019 2020 Town Center West Way 2003 15451 Ventura Boulevard 1997 49 Lasatta Ave 2013 4400 East Lake Road 2006 42 Copsem Lane 1998 47 Greenbrook Road 1998 3350 Cherry Hills St. 2018 520 Patterson Boulevard 2012 Redlands Lane 1999 3275 County Road 47 2000 19715 Governors Highway 2014 1574 Creekside Drive 2017 3401 Amador Drive 2001 2151 Green Oaks Road 2014 7001 Bryant Irvin Road 1987 2860 Country Dr. 2014 5605 North Gates Avenue 2012 Welshmill Lane 2008 2226 North Euclid Street 1998 775 East Johnstown Road 1999 1565-A Virginia Ranch Rd. 1994 3213 45th St. Court NW 2008 580 S. Gilbert Road 1998 39 Forest Avenue 2001 2200 Golf Road 2005 4950 Olson Memorial Highway 2009 100 Watermark Boulevard 1991 84 Main Street East 950 14,553 3,255 2013 2006 1850 Vernier Road 140 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 Grosse Pointe Woods, MI . . . . . . . . . . . . . . . — Grove City, OH . . . . . . 36,420 Guildford, UK . . . . . . . Gurnee, IL . . . . . . . . . . Haddonfield, NJ . . . . . . Hamburg, NY . . . . . . . . Hamilton, OH . . . . . . . . Hampshire, UK . . . . . . . Happy Valley, OR . . . . Haverford, PA . . . . . . . Henderson, NV . . . . . . . High Wycombe, UK . . . Highland Park, IL . . . . . Highland Park, IL . . . . . Hingham, MA . . . . . . . . Holbrook, NY . . . . . . . . Horley, UK . . . . . . . . . . Houston, TX . . . . . . . . . Houston, TX . . . . . . . . . Houston, TX . . . . . . . . . Houston, TX . . . . . . . . . — — — — — — — — — — — — — — — — — — — Howell, NJ . . . . . . . . . . 8,096 Huntington Beach, CA . . . . . . . . . . . . . . Independence, MO . . . . Irving, TX . . . . . . . . . . . Jacksonville, FL . . . . . . Johns Creek, GA . . . . . . Johnson City, NY . . . . . Kanata, ON . . . . . . . . . . Kansas City, MO . . . . . Kansas City, MO . . . . . Kansas City, MO . . . . . Kelowna, BC . . . . . . . . Kennebunk, ME . . . . . . Kenner, LA . . . . . . . . . . Kennett Square, PA . . . — — — — — — — — 4,880 — 5,176 — — — Kingston, ON . . . . . . . . 4,229 Kingwood, TX . . . . . . . Kingwood, TX . . . . . . . Kirkland, WA . . . . . . . . Kitchener, ON . . . . . . . Kitchener, ON . . . . . . . Kitchener, ON . . . . . . . La Palma, CA . . . . . . . . Lackawanna, NY . . . . . Lafayette Hill, PA . . . . Laguna Hills, CA . . . . . Laguna Woods, CA . . . Laguna Woods, CA . . . Lake Zurich, IL . . . . . . Lancaster, CA . . . . . . . . Lancaster, NY . . . . . . . . — — — 1,329 3,323 12,374 — — — — — — — — — 1,430 3,575 5,361 890 520 967 1,163 4,172 709 1,880 1,190 3,567 2,820 2,250 1,440 3,957 2,332 3,830 1,040 1,750 960 1,066 3,808 1,550 1,030 6,550 1,580 1,392 1,689 1,820 1,930 541 2,688 2,700 1,100 1,050 1,030 480 1,683 1,880 708 1,093 1,341 2,950 1,011 1,750 12,820 11,280 9,150 1,470 700 1,252 31,777 85,764 56,494 27,931 16,363 10,006 11,960 26,035 9,889 33,993 11,600 13,422 15,832 25,313 32,292 35,337 12,144 55,674 31,965 15,603 15,275 21,577 31,172 14,463 6,823 29,316 23,285 11,828 28,670 34,898 39,997 23,962 13,647 30,204 10,036 22,946 11,416 9,777 24,207 4,315 2,744 7,327 13,939 16,591 5,254 11,848 75,926 76,485 57,842 9,830 15,295 11,084 33,054 86,713 61,211 30,364 16,946 10,827 11,960 28,292 10,335 36,617 12,648 14,418 16,628 26,848 32,606 37,500 13,811 63,367 37,431 17,198 15,275 22,842 33,695 14,463 7,705 29,316 24,347 12,704 30,581 40,106 45,428 24,275 15,563 35,268 11,428 23,726 12,928 10,631 26,678 5,546 3,064 8,127 18,164 17,837 5,732 14,103 94,927 89,480 69,389 12,537 16,647 12,060 1,282 865 5,122 2,478 590 821 — 2,581 446 2,648 1,111 1,140 796 1,556 318 2,351 1,851 7,693 5,466 1,595 — 1,348 2,646 — 882 — 1,070 876 1,972 5,277 5,488 320 2,123 5,587 1,392 833 1,597 854 2,471 1,231 296 889 4,284 1,269 478 2,372 1,435 3,491 5,766 935 527 967 1,163 4,496 709 1,904 1,253 3,711 2,820 2,271 1,444 4,145 2,516 3,830 1,040 1,750 960 1,149 3,931 1,550 1,030 6,550 1,588 1,392 1,750 1,889 1,987 548 2,895 3,223 1,100 1,103 1,115 480 1,683 1,880 684 1,182 1,400 2,973 1,011 1,867 19,001 12,995 11,547 2,707 1,364 976 12,820 11,280 9,150 1,470 712 1,252 141 7,444 3,901 13,881 6,640 2,315 622 364 6,835 706 8,274 4,139 1,087 3,013 7,216 5,373 8,607 2,788 16,958 8,478 1,485 7,461 5,460 9,396 396 2,246 100 5,794 727 7,368 13,314 14,964 3,884 4,386 13,375 10,059 5,474 2,200 2,704 3,931 2,073 901 2,513 3,702 4,369 453 4,471 18,601 15,798 12,299 4,401 5,201 689 2013 2018 2013 2013 2011 2019 2019 2013 2019 2010 2013 2015 2011 2013 2015 2013 2014 2012 2012 2016 2011 2010 2013 2019 2007 2019 2013 2019 2012 2010 2010 2015 2013 2013 1998 2010 2015 2011 2017 2003 2013 2013 2016 2013 2019 2013 2016 2016 2016 2011 2010 2019 2005 21260 Mack Avenue 2017 3717 Orders Road 2006 Astolat Way, Peasmarsh 2002 500 North Hunt Club Road 2015 132 Warwick Road 2009 4600 Southwestern Blvd 2019 1740 Eden Park Drive 2006 22-26 Church Road 1998 8915 S.E. Monterey 2000 731 Old Buck Lane 2008 1555 West Horizon Ridge Parkway 2017 The Row Lane End 2012 1651 Richfield Avenue 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 1999 505 Bering Drive 2014 10120 Louetta Road 1995 10225 Cypresswood Dr 2007 100 Meridian Place 2004 7401 Yorktown Avenue 2019 19301 East Eastland Ctr Ct 1999 8855 West Valley Ranch Parkway 2019 10520 Validus Drive 2009 11405 Medlock Bridge Road 2013 1035 Anna Maria Drive 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 2000 1600 Joe Yenni Blvd 2008 301 Victoria Gardens Dr. 1983 181 Ontario Street 1999 22955 Eastex Freeway 2012 24025 Kingwood Place 1996 6505 Lakeview Dr. 1979 164 - 168 Ferfus Avenue 1964 290 Queen Street South 2003 1250 Weber Street E 2003 5321 La Palma Avenue 2002 133 Orchard Place 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 2011 18 Pavement 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 Laval, QC . . . . . . . . . . . Laval, QC . . . . . . . . . . . Lawrenceville, GA . . . . Leatherhead, UK . . . . . Leawood, KS . . . . . . . . Lecanto, FL . . . . . . . . . 22,375 4,306 — — — — Lenexa, KS . . . . . . . . . . 9,700 Lincroft, NJ . . . . . . . . . Linwood, NJ . . . . . . . . . Litchfield, CT . . . . . . . . Little Neck, NY . . . . . . Livingston, NJ . . . . . . . — — — — — Lombard, IL . . . . . . . . . 17,010 London, UK . . . . . . . . . London, UK . . . . . . . . . London, ON . . . . . . . . . — — — London, ON . . . . . . . . . 11,200 London, ON . . . . . . . . . Longueuil, QC . . . . . . . Lorain, OH . . . . . . . . . . 32 9,155 — Los Angeles, CA . . . . . 58,514 Los Angeles, CA . . . . . Los Angeles, CA . . . . . Louisville, KY . . . . . . . — — — Louisville, KY . . . . . . . 13,650 Louisville, CO . . . . . . . Louisville, CO . . . . . . . Louisville, CO . . . . . . . Louisville, CO . . . . . . . Louisville, CO . . . . . . . Lynnfield, MA . . . . . . . Mahwah, NJ . . . . . . . . . Malvern, PA . . . . . . . . . Manteca, CA . . . . . . . . . Maple Ridge, BC . . . . . Marieville, QC . . . . . . . Markham, ON . . . . . . . . Marlboro, NJ . . . . . . . . Marysville, WA . . . . . . — — — — — — — — — 8,331 6,335 50,918 — — Medicine Hat, AB . . . . . 10,438 Medina, OH . . . . . . . . . Melbourne, FL . . . . . . . Melville, NY . . . . . . . . . Memphis, TN . . . . . . . . Menomonee Falls, WI . . . . . . . . . . . . . . . Mesa, AZ . . . . . . . . . . . — — — — — — Metairie, LA . . . . . . . . . 14,200 2,105 2,383 1,500 4,682 2,490 200 826 9 800 1,240 3,350 8,000 2,130 3,121 7,691 987 1,969 1,445 3,992 1,394 — 3,540 — 2,420 1,600 2,023 1,158 2,672 1,480 2,567 3,165 1,605 1,651 1,300 2,875 1,278 3,727 2,222 620 1,432 1,683 7,070 4,280 1,800 1,020 950 725 Mill Creek, WA . . . . . . — 10,150 Milton, ON . . . . . . . . . . 19,890 Minnetonka, MN . . . . . Mission Viejo, CA . . . . Mississauga, ON . . . . . . Mississauga, ON . . . . . . Mississauga, ON . . . . . . — 13,570 8,491 2,861 27,219 4,542 920 6,600 1,602 873 3,649 32,161 5,968 29,003 17,835 32,493 6,900 26,251 19,958 21,984 17,908 38,461 44,424 59,943 10,027 16,797 8,228 16,985 13,631 23,711 12,956 114,438 19,007 28,050 20,816 20,326 31,562 26,656 50,972 15,546 42,712 45,200 27,249 17,194 12,125 11,922 12,113 48,939 14,888 4,780 14,141 12,036 48,257 73,283 17,744 6,984 9,087 27,708 60,274 25,321 29,344 52,118 17,996 4,655 35,137 37,420 7,263 29,768 19,373 33,122 7,313 27,487 21,742 23,412 29,516 41,469 45,326 61,610 11,766 17,781 9,335 19,386 15,622 27,947 12,979 4,851 894 7,241 1,338 8,386 2,884 7,167 5,324 5,695 5,671 9,556 3,595 14,083 1,952 1,592 1,829 3,680 2,672 5,201 340 120,590 31,800 22,376 33,858 23,286 21,370 33,331 26,656 57,283 16,228 45,393 47,336 28,161 19,466 15,060 17,674 13,094 53,106 16,402 6,432 15,030 12,493 80,021 80,449 20,480 9,240 11,968 28,656 63,693 28,649 30,557 60,565 19,690 5,163 38,635 5,696 4,310 6,078 5,524 1,416 447 2,492 881 1,811 11,558 3,280 6,072 5,908 1,858 2,154 15,995 4,281 2,434 3,491 545 25,011 18,189 6,270 2,550 5,472 6,367 20,215 4,305 6,768 9,097 4,855 1,359 9,565 2018 2018 2013 2015 2012 2004 2013 2013 2010 2010 2010 2015 2013 2014 2015 2015 2015 2015 2015 2019 2011 2012 2016 2012 2013 2019 2019 2019 2019 2019 2013 2012 2013 2005 2015 2015 2013 2013 2003 2015 2019 2007 2010 2012 2006 1999 2013 2010 2015 2013 2016 2013 2013 2015 2005 269, boulevard Ste. Rose 1989 263, boulevard Ste. Rose 2008 1375 Webb Gin House Road 2017 Rectory Lane 1999 4400 West 115th Street 1986 2341 W. Norvell Bryant Hwy. 2006 15055 West 87th Street Parkway 2002 734 Newman Springs Road 1997 432 Central Ave 1998 19 Constitution Way 2000 5515 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 1989 70 Rue Levis 2018 5401 North Pointe Pkwy 2009 10475 Wilshire Boulevard 2001 2051 N. Highland Avenue 2006 4061 Grand View Boulevard 1999 4600 Bowling Boulevard 2010 6700 Overlook Drive 2008 1336 E Hecla Drive 2019 1800 Plaza Drive 1999 1331 E Hecla Drive 1999 282 McCaslin Blvd 2004 1331 E Hecla Drive 2006 55 Salem Street 2015 15 Edison Road 1998 324 Lancaster Avenue 1986 430 N. Union Rd. 2009 12241 224th Street 2002 425 rue Claude de Ramezay 1981 7700 Bayview Avenue 2002 3A South Main Street 1998 9802 48th Dr. N.E. 1999 223 Park Meadows Drive SE 2017 699 North Huntington St 2009 7300 Watersong Lane 2001 70 Pinelawn Rd 1999 6605 Quail Hollow Road 2007 W128 N6900 Northfield Drive 2000 7231 E. Broadway 2009 3732 West Esplanade Ave. S 1998 14905 Bothell-Everett Hwy 2012 611 Farmstead Drive 2006 18605 Old Excelsior Blvd. 1998 27783 Center Drive 1984 1130 Bough Beeches Boulevard 1978 3051 Constitution Boulevard 1988 1490 Rathburn Road East 5,368 1,419 794 1,727 3,749 421 1,332 1,906 1,489 11,640 3,016 919 1,755 1,988 1,369 1,204 2,534 2,213 4,584 23 6,152 3,369 5,879 2,470 1,044 1,769 — 6,311 682 2,681 2,707 913 2,421 2,947 5,974 1,088 4,472 1,542 1,652 998 457 31,764 7,212 2,736 2,256 2,881 948 3,448 3,668 1,257 8,447 1,803 569 3,795 2,214 2,507 1,529 4,871 5,610 208 922 131 861 1,272 3,358 8,017 2,218 3,370 8,001 1,084 2,102 1,667 4,340 1,394 — 3,540 71 2,420 1,600 2,023 1,158 2,672 1,480 2,567 3,736 1,606 1,800 1,312 3,097 1,385 4,032 2,250 620 1,541 1,683 7,070 4,326 1,800 1,020 950 725 10,179 4,882 964 6,600 1,711 934 3,946 142 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 Mississauga, ON . . . . . . 6,066 Missoula, MT . . . . . . . . Mobberley, UK . . . . . . . Monterey, CA . . . . . . . . Montgomery, MD . . . . . Montgomery Village, MD . . . . . . . . . . . . . . Montreal-Nord, QC . . . Moorestown, NJ . . . . . . Moose Jaw, SK . . . . . . . Morton Grove, IL . . . . . Murphy, TX . . . . . . . . . Naperville, IL . . . . . . . . Naperville, IL . . . . . . . . Naples, FL . . . . . . . . . . Nashville, TN . . . . . . . . Nepean, ON . . . . . . . . . New Braunfels, TX . . . . Newbury, UK . . . . . . . . Newmarket, UK . . . . . . Newtown Square, PA . . . . . . . . . . . . . . . North Tonawanda, NY . . . . . . . . . . . . . . North Tustin, CA . . . . . Oak Harbor, WA . . . . . Oak Park, IL . . . . . . . . . Oakdale, PA . . . . . . . . . Oakland, CA . . . . . . . . . Oakton, VA . . . . . . . . . Oakville, ON . . . . . . . . Oakville, ON . . . . . . . . Oakville, ON . . . . . . . . Ogden, UT . . . . . . . . . . Okotoks, AB . . . . . . . . . Orange, CA . . . . . . . . . . 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 . . . . . . . . . . — — — — — 11,903 — 1,973 — — — — 55,188 — 5,491 — — — — — — — — — — — 5,618 9,189 4,812 — 18,824 36,000 6,698 9,668 18,152 20,738 7,212 13,711 10,377 13,702 17,456 2,809 2,044 9,559 4,517 5,876 8,898 Outremont, QC . . . . . . . 17,866 Overland Park, KS . . . . — Palo Alto, CA . . . . . . . . 25,050 Paramus, NJ . . . . . . . . . — Parkland, FL . . . . . . . . . 54,784 Parma, OH . . . . . . . . . . — 2,548 550 5,146 6,440 6,482 3,530 4,407 2,060 582 1,900 1,950 1,550 1,540 8,989 3,900 1,575 1,200 2,850 4,071 15,158 7,490 26,665 29,101 83,642 18,246 23,719 51,628 12,973 19,374 19,182 12,237 28,204 119,398 35,788 5,770 19,800 12,796 11,902 2,904 563 3,279 2,549 12,311 7,214 7,965 5,205 1,885 864 811 2,195 1,435 7,188 3,911 1,110 10,408 1,498 2,441 2,724 553 5,563 6,443 6,482 4,291 4,637 2,095 621 1,900 1,950 1,550 1,593 9,088 3,900 1,697 2,729 3,065 4,398 17,886 8,050 29,527 31,647 95,953 24,699 31,454 56,798 14,819 20,238 19,993 14,432 29,586 126,487 39,699 6,758 28,679 14,079 14,016 3,821 2,968 8,637 7,438 9,510 10,011 3,715 12,519 3,548 4,284 2,350 3,841 7,300 25,666 11,568 1,716 5,682 1,239 2,596 2015 2005 2013 2013 2018 2013 2018 2010 2013 2010 2015 2012 2013 2015 2012 2015 2011 2015 2014 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 2011 5520 N. Lincoln Ave. 2012 304 West FM 544 2013 1936 Brookdale Road 2002 535 West Ogden Avenue 2000 4800 Aston Gardens Way 1999 4206 Stammer Place 1988 1 Mill Hill Road 2009 2294 East Common Street 2016 370 London Road 2011 Jeddah Way 1,930 14,420 1,149 1,953 15,546 4,989 2013 2004 333 S. Newtown Street Rd. 1,172 2,880 739 1,250 1,865 3,877 2,250 1,252 2,134 1,271 360 714 8,021 841 1,341 3,454 4,256 2,103 2,963 1,561 3,663 3,411 724 818 2,809 1,156 746 1,176 6,746 1,540 — 2,840 4,880 1,533 7,297 18,059 7,667 40,383 11,925 47,508 37,576 7,382 29,963 13,754 6,700 20,943 65,234 7,570 15,425 23,309 39,141 18,421 26,424 18,170 30,633 28,335 4,710 2,165 27,299 9,758 7,800 12,764 45,981 16,269 39,639 35,728 111,481 9,185 600 933 448 2,640 880 3,465 2,851 922 3,314 1,646 936 1,908 3,238 985 2,720 3,181 2,962 4,969 3,754 2,828 — 6,228 623 1,484 3,021 1,129 1,142 1,663 11,155 1,663 3,072 1,855 5,181 701 1,172 3,044 739 1,250 1,865 4,114 2,393 1,346 2,280 1,361 360 780 8,021 957 1,469 3,760 4,477 2,294 3,196 1,751 3,663 3,684 774 727 3,020 1,290 803 1,298 7,098 1,670 24 2,986 4,904 1,533 7,897 18,828 8,115 43,023 12,805 50,736 40,284 8,210 33,131 15,310 7,636 22,785 68,472 8,439 18,017 26,184 41,882 23,199 29,945 20,808 30,633 34,290 5,283 3,740 30,109 10,753 8,885 14,305 56,784 17,802 42,687 37,437 116,638 9,886 143 517 4,067 669 10,749 724 12,439 9,511 2,113 8,518 3,474 2,880 4,375 — 2,167 2,719 7,627 7,129 3,852 4,611 3,069 5,208 6,357 1,375 1,040 8,289 2,564 2,129 2,340 6,385 3,918 10,156 8,755 23,531 631 2019 2013 2019 2012 2019 2013 2013 2013 2013 2013 2004 2015 2019 2013 2015 2015 2015 2015 2015 2015 2015 2015 2013 2013 2013 2013 2013 2015 2018 2012 2013 2013 2015 2019 2005 705 Sandra Lane 2000 12291 Newport Avenue 1998 171 SW 6th Ave 2004 1035 Madison Street 2017 7420 Steubenville Pike 1999 11889 Skyline Boulevard 1997 2863 Hunter Mill Road 1982 289 and 299 Randall Street 1994 25 Lakeshore Road West 1988 345 Church Street 1998 1340 N. Washington Blv. 2010 51 Riverside Gate 2018 630 The City Drive South 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 1998 9201 Foster 2007 2701 El Camino Real 1998 567 Paramus Road 2000 5999 University Drive 2016 11500 Huffman 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 Paso Robles, CA . . . . . . Peabody, MA . . . . . . . . Pella, IA . . . . . . . . . . . . Pembroke, ON . . . . . . . Pennington, NJ . . . . . . . Peoria, AZ . . . . . . . . . . Pittsburgh, PA . . . . . . . Placentia, CA . . . . . . . . Plainview, NY . . . . . . . — 5,892 — — — — — — — Plano, TX . . . . . . . . . . . 28,960 Plano, TX . . . . . . . . . . . Playa Vista, CA . . . . . . Pleasanton, CA . . . . . . . — — — Port Perry, ON . . . . . . . 12,123 Port St. Lucie, FL . . . . . — Portage, MI . . . . . . . . . . 42,000 Princeton, NJ . . . . . . . . Purley, UK . . . . . . . . . . Puyallup, WA . . . . . . . . Quebec City, QC . . . . . Quebec City, QC . . . . . Queensbury, NY . . . . . . Rancho Cucamonga, CA . . . . . . . . . . . . . . Rancho Palos Verdes, CA . . . . . . . . . . . . . . Randolph, NJ . . . . . . . . Red Deer, AB . . . . . . . . Red Deer, AB . . . . . . . . Redding, CA . . . . . . . . . Regina, SK . . . . . . . . . . Regina, SK . . . . . . . . . . Regina, SK . . . . . . . . . . Rehoboth Beach, DE . . Reno, NV . . . . . . . . . . . Ridgeland, MS . . . . . . . Riviere-du-Loup, — — — 8,325 12,294 — — — 29,300 12,551 14,770 26,887 6,218 6,204 15,477 — — — 1,770 2,250 870 1,931 1,380 766 1,580 8,480 3,066 3,120 1,750 1,580 — 3,685 8,700 2,857 1,730 7,365 1,150 2,420 3,300 1,260 8,630 16,071 6,716 9,427 27,620 21,796 18,017 17,076 19,901 59,950 15,390 40,531 — 26,788 47,230 59,848 30,888 35,161 20,776 21,977 28,325 21,744 1,480 10,055 5,450 1,540 1,247 1,199 4,474 1,485 1,244 1,539 960 1,060 520 60,034 46,934 19,283 22,339 36,857 21,148 21,036 24,053 24,248 11,440 7,675 QC . . . . . . . . . . . . . . 2,854 592 7,601 Riviere-du-Loup, QC . . . . . . . . . . . . . . 12,164 Rocky Hill, CT . . . . . . . Rohnert Park, CA . . . . . Romeoville, IL . . . . . . . Roseville, MN . . . . . . . Roseville, CA . . . . . . . . Roswell, GA . . . . . . . . . Roswell, GA . . . . . . . . . Sabre Springs, CA . . . . Sacramento, CA . . . . . . Sacramento, CA . . . . . . — — — — — — — — — — Saint-Lambert, QC . . . . 34,002 Salinas, CA . . . . . . . . . . Salisbury, UK . . . . . . . . Salt Lake City, UT . . . . San Antonio, TX . . . . . San Antonio, TX . . . . . San Antonio, TX . . . . . San Diego, CA . . . . . . . — — — — — — — 1,454 1,090 6,500 854 1,540 3,300 1,107 2,080 — 940 1,300 10,259 5,110 2,720 1,360 6,120 5,045 11,683 5,810 16,848 6,710 18,700 12,646 35,877 41,652 9,627 6,486 — 14,781 23,394 61,903 41,424 15,269 19,691 28,169 58,048 69,623 63,078 1,379 1,250 63 1,082 1,418 1,468 1,143 5,896 1,211 3,806 1,505 3,084 52,166 4,160 20,937 2,569 2,236 4,079 1,494 3,662 5,172 577 2,144 3,646 2,370 2,099 2,201 2,161 2,096 1,989 4,685 9,200 930 901 1,820 5,339 1,752 3,756 61,722 1,252 6,832 1,876 1,686 47,090 612 1,556 3,868 9,387 1,676 779 2,630 3,253 3,634 3,968 1,770 2,380 870 2,000 1,507 766 1,587 8,513 3,182 3,227 1,750 1,605 3,676 3,932 8,700 2,857 1,814 7,982 1,156 2,546 3,472 1,273 10,009 17,191 6,779 10,440 28,911 23,264 19,153 22,939 20,996 63,649 16,895 43,590 48,490 30,701 68,167 62,417 33,040 38,623 22,264 25,513 33,325 22,308 4,288 3,328 1,218 2,485 6,386 2,628 5,010 4,445 4,693 18,286 1,660 10,040 1,289 4,569 19,243 3,653 7,486 10,333 6,346 2,956 3,740 3,213 2002 2013 2012 2012 2011 2018 2013 2016 2013 2013 2016 2013 2016 2015 2008 2019 2011 2012 2010 2018 2018 2015 1998 1919 Creston Rd. 1994 73 Margin Street 2002 2602 Fifield Road 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 2017 5700 Pleasant Hill Road 2009 15987 Simcoe Street 2010 10685 SW Stony Creek Way 2017 3951 W. Milham Ave. 2001 155 Raymond Road 2005 21 Russell Hill Road 1985 123 Fourth Ave. NW 2000 795, rue Alain 1987 650 and 700, avenue Murray 1999 27 Woodvale Road 2,084 11,595 3,388 2013 2001 9519 Baseline Road 5,450 1,718 1,339 1,282 4,474 1,678 1,333 1,663 993 1,060 520 63,680 49,126 21,290 24,457 39,018 23,051 22,936 28,614 33,415 12,370 8,576 16,003 11,141 3,727 4,460 — 6,144 5,411 4,673 6,994 4,762 3,384 2012 2013 2015 2015 2019 2013 2013 2015 2010 2004 2003 2004 5701 Crestridge Road 2006 648 Route 10 West 2004 3100 - 22 Street 2004 10 Inglewood Drive 2017 2150 Bechelli Lane 1999 3651 Albert Street 2004 3105 Hillsdale Street 1992 1801 McIntyre Street 1999 36101 Seaside Blvd 1998 5165 Summit Ridge Court 1997 410 Orchard Park 665 9,348 1,574 2015 1956 35 des Cedres 21,829 8,462 22,410 69,025 37,041 48,484 11,496 7,872 43,364 15,381 24,881 64,976 50,771 16,739 20,470 30,799 61,301 73,257 67,046 4,316 3,291 8,277 18,583 8,190 7,624 8,369 1,913 1,047 4,492 5,802 15,584 8,906 2,579 6,592 6,947 5,962 2,722 18,976 2015 2003 2005 2006 2013 2016 1997 2012 2016 2010 2013 2015 2016 2014 2011 2010 2017 2019 2012 1993 230-235 rue Des Chenes 1996 60 Cold Spring Rd. 1986 4855 Snyder Lane 2010 605 S Edward Dr. 2002 2555 Snelling Avenue, North 2000 5161 Foothills Boulevard 1999 655 Mansell Rd. 1997 75 Magnolia Street 2017 12515 Springhurst Drive 1978 6350 Riverside Blvd 2004 345 Munroe Street 1989 1705 Avenue Victoria 1990 1320 Padre Drive 2013 Shapland Close 1986 1430 E. 4500 S. 2011 2702 Cembalo Blvd 2015 11300 Wild Pine 2016 6870 Heuermann Road 2001 13075 Evening Creek Drive S 1,812 1,090 6,546 6,197 1,628 3,300 1,114 2,380 3,726 952 1,369 11,054 5,150 2,926 1,360 6,120 5,045 11,683 5,810 144 Description Encumbrances Land Building & Improvements Initial Cost to Company Cost Capitalized Subsequent to Acquisition Gross Amount at Which Carried at Close of Period Land Building & Improvements Accumulated Depreciation(1) Year Acquired Year Built Address San Diego, CA . . . . . . . — San Diego, CA . . . . . . . 29,843 San Francisco, CA . . . . San Francisco, CA . . . . San Gabriel, CA . . . . . . San Jose, CA . . . . . . . . . San Jose, CA . . . . . . . . . San Rafael, CA . . . . . . . San Ramon, CA . . . . . . Sandy Springs, GA . . . . — — — — — — — — Santa Monica, CA . . . . 15,820 Santa Rosa, CA . . . . . . . Saskatoon, SK . . . . . . . Saskatoon, SK . . . . . . . Schaumburg, IL . . . . . . Scottsdale, AZ . . . . . . . Scranton, PA . . . . . . . . . Seal Beach, CA . . . . . . . Seattle, WA . . . . . . . . . — 3,836 13,372 — — — — — 3,000 4,179 5,920 11,800 3,120 3,280 11,900 1,620 8,700 2,214 5,250 2,250 981 1,382 2,460 2,500 875 6,204 5,190 Seattle, WA . . . . . . . . . 27,180 10,670 Seattle, WA . . . . . . . . . Selbyville, DE . . . . . . . Sevenoaks, UK . . . . . . . Severna Park, MD . . . . Shelby Township, — — — — MI . . . . . . . . . . . . . . . 13,180 Shrewsbury, NJ . . . . . . Sidcup, UK . . . . . . . . . . Silver Spring, MD . . . . Simi Valley, CA . . . . . . Simi Valley, CA . . . . . . Solihull, UK . . . . . . . . . Solihull, UK . . . . . . . . . Solihull, UK . . . . . . . . . Sonning, UK . . . . . . . . . Sonoma, CA . . . . . . . . . Sonoma, CA . . . . . . . . . Southlake, TX . . . . . . . . Spokane, WA . . . . . . . . Spokane, WA . . . . . . . . St. Albert, AB . . . . . . . . St. John’s, NL . . . . . . . . Stittsville, ON . . . . . . . . Stockport, UK . . . . . . . . Stockton, CA . . . . . . . . Strongsville, OH . . . . . . Stuart, FL . . . . . . . . . . . Studio City, CA . . . . . . Suffield, CT . . . . . . . . . Sugar Land, TX . . . . . . Sugar Land, TX . . . . . . Sun City, FL . . . . . . . . . Sun City, FL . . . . . . . . . Sun City West, AZ . . . . Sunnyvale, CA . . . . . . . — — — — — — — — — — — — — — 9,894 5,449 4,227 — — — — — — — — 20,609 23,220 — — Surrey, BC . . . . . . . . . . 6,316 1,150 750 6,181 — 1,040 2,120 7,446 — 3,200 5,510 5,070 3,571 1,851 5,644 1,100 2,820 6,207 3,200 2,580 1,145 706 1,175 4,369 2,280 1,113 5,276 4,006 4,409 960 4,272 6,521 5,040 1,250 5,420 3,605 27,164 40,639 91,639 77,214 15,566 46,823 27,647 27,392 72,223 8,360 28,340 26,273 13,905 17,609 22,863 3,890 10,504 72,954 9,350 37,291 19,887 25,912 40,240 67,623 26,344 38,116 56,570 — 16,664 51,406 43,297 26,053 10,585 42,155 18,400 21,890 56,675 25,064 25,342 17,863 11,765 17,397 25,018 5,983 10,882 23,796 25,307 27,694 31,423 60,493 48,476 50,923 21,778 41,682 18,818 28,669 42,559 105,203 87,615 16,656 50,748 32,779 31,122 82,161 9,808 29,415 29,756 15,246 19,278 24,103 5,366 11,199 75,763 11,067 38,879 22,621 26,760 46,113 73,529 27,712 40,421 62,316 61,104 18,455 59,832 49,574 28,699 11,867 46,527 22,155 25,041 64,299 26,083 25,724 20,953 12,552 19,193 27,531 7,105 11,538 24,526 26,558 30,086 32,422 67,033 54,788 56,357 22,940 44,397 21,040 1,521 1,920 13,564 10,401 1,135 3,925 5,198 3,964 9,954 1,454 1,091 3,525 1,407 1,763 1,277 1,476 695 2,876 1,726 1,618 2,737 867 6,340 5,944 1,438 2,333 6,330 64,540 1,889 8,426 6,660 2,969 1,421 4,828 3,764 3,158 7,624 1,019 382 3,192 829 1,884 2,864 1,214 656 730 1,360 2,392 999 6,540 6,439 5,782 1,162 2,715 2,466 3,016 4,179 5,920 11,800 3,165 3,280 11,966 1,854 8,716 2,220 5,266 2,292 1,047 1,476 2,497 2,500 875 6,271 5,199 10,700 1,153 769 6,648 38 1,110 2,148 8,030 3,436 3,298 5,510 5,453 3,894 1,990 6,100 1,109 2,827 6,207 3,200 2,580 1,247 748 1,263 4,720 2,372 1,113 5,276 4,115 4,409 960 4,272 6,648 5,388 1,250 5,420 3,849 145 6,231 — 17,446 14,542 4,208 12,727 5,773 4,342 13,500 3,133 6,912 4,508 3,431 4,307 6,501 1,458 666 21,133 3,888 13,281 3,336 6,298 12,282 10,854 6,384 9,371 17,441 1,466 5,390 10,275 12,641 7,375 1,153 11,020 7,932 3,787 3,184 7,538 6,597 5,779 2,009 4,306 7,480 2,223 651 223 7,094 826 8,673 8,760 13,348 12,170 5,012 11,522 6,563 2013 2019 2016 2016 2013 2012 2016 2016 2016 2012 2013 2016 2013 2013 2013 2008 2019 2013 2010 2010 2015 2010 2012 2016 2013 2010 2012 2016 2013 2016 2012 2013 2015 2013 2005 2016 2019 2013 2013 2014 2015 2013 2013 2010 2019 2019 2013 2019 2011 2017 2015 2015 2012 2012 2013 2003 810 Turquoise Street 2017 955 Grand Ave 1998 1550 Sutter Street 1923 1601 19th Avenue 2005 8332 Huntington Drive 2002 500 S Winchester Boulevard 2002 4855 San Felipe Road 2001 111 Merrydale Road 1992 9199 Fircrest Lane 1997 5455 Glenridge Drive NE 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 2014 1651 Dickson Avenue 2004 3850 Lampson Avenue 1962 11501 15th Ave NE 2005 805 4th Ave N 1995 11039 17th Avenue 2008 21111 Arrington Dr 2009 64 - 70 Westerham Road 1997 43 W McKinsey Road 2006 46471 Hayes Road 2000 5 Meridian Way 2000 Frognal Avenue 2018 2201 Colston Drive 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 2008 101 Watermere Drive 2001 3117 E. Chaser Lane 1999 1110 E. Westview Ct. 2005 78C McKenney Avenue 2005 64 Portugal Cove Road 1996 1340 - 1354 Main Street 2008 1 Dairyground Road 1988 6725 Inglewood 2017 15100 Howe Road 2019 2625 SE Cove Road 2004 4610 Coldwater Canyon Avenue 1998 7 Canal Road 1996 1221 Seventh St 2015 744 Brooks Street 1995 231 Courtyards 1999 1311 Aston Gardens Court 1998 13810 West Sandridge Drive 2002 1039 East El Camino Real 2000 16028 83rd Avenue 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 Surrey, BC . . . . . . . . . . 15,386 Sutton, UK . . . . . . . . . . Suwanee, GA . . . . . . . . Sway, UK . . . . . . . . . . . — — — Swift Current, SK . . . . . 1,790 Sylvania, OH . . . . . . . . Syracuse, NY . . . . . . . . Tacoma, WA . . . . . . . . — — — Tampa, FL . . . . . . . . . . 69,330 Tampa, FL . . . . . . . . . . The Woodlands, TX . . . Toledo, OH . . . . . . . . . . Toms River, NJ . . . . . . . Tonawanda, NY . . . . . . Tonawanda, NY . . . . . . Toronto, ON . . . . . . . . . Toronto, ON . . . . . . . . . Toronto, ON . . . . . . . . . Toronto, ON . . . . . . . . . Toronto, ON . . . . . . . . . Toronto, ON . . . . . . . . . Toronto, ON . . . . . . . . . Toronto, ON . . . . . . . . . Toronto, ON . . . . . . . . . Toronto, ON . . . . . . . . . Torrance, CA . . . . . . . . Tucson, AZ . . . . . . . . . . Tulsa, OK . . . . . . . . . . . Tulsa, OK . . . . . . . . . . . Turlock, CA . . . . . . . . . Twinsburg, OH . . . . . . . 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 . . . . Washington, DC . . . . . . Watchung, NJ . . . . . . . . Waukee, IA . . . . . . . . . . Wayland, MA . . . . . . . . Webster Groves, MO . . — — — — — — 17,976 8,049 12,756 36,974 7,665 4,701 7,545 17,746 5,807 31,276 — — — — — — — — — — — — — — 665 8,012 64,425 — 6,877 6,340 7,109 — — — — — — — — — — 4,552 4,096 1,560 4,145 492 1,205 1,385 4,170 4,910 3,451 480 2,040 1,610 1,534 2,425 2,927 5,082 2,008 5,132 2,480 1,079 2,513 3,400 1,447 5,304 3,497 830 1,330 1,500 2,266 1,035 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 22,338 14,532 11,538 15,508 10,119 12,024 11,555 73,377 114,148 25,775 12,379 47,129 34,627 13,264 12,433 20,713 25,493 19,620 41,657 7,571 5,364 19,695 32,757 3,918 53,488 73,138 6,179 21,285 20,861 12,737 8,302 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 2,939 2,444 1,531 2,261 1,185 — 863 17,171 7,556 — 557 4,107 1,428 1,252 1,428 4,001 3,119 1,286 5,581 1,099 731 2,250 3,552 673 8,935 186 4,055 4,679 4,285 1,122 543 68 404 1,623 3,051 4,463 1,224 1,052 1,440 541 1,686 5,560 25,748 1,833 1,700 2,265 7,580 2,503 2,985 2,931 4,905 4,408 1,560 4,509 531 1,205 1,385 4,170 5,073 3,451 480 2,144 1,695 1,534 2,425 3,157 5,448 2,113 5,484 2,662 1,152 2,718 3,635 1,572 5,675 3,497 830 1,362 1,614 2,266 1,035 3,160 1,906 1,153 900 4,030 2,330 1,821 7,661 421 1,924 6,958 2,930 3,049 3,931 2,647 5,856 3,854 1,694 3,808 24,924 16,664 13,069 17,405 11,265 12,024 12,418 90,548 121,541 25,775 12,936 51,132 35,970 14,516 13,861 24,484 28,246 20,801 46,886 8,488 6,022 21,740 36,074 4,466 62,052 73,324 10,234 25,932 25,032 13,859 8,845 42,664 28,593 15,027 20,151 22,433 16,631 20,093 7,633 3,469 15,828 105,923 65,818 19,678 17,224 17,473 38,767 26,661 28,291 15,290 10,320 100,890 18,143 10,320 119,033 4,000 1,920 1,870 1,207 1,790 69,154 24,880 31,878 27,462 15,425 3,222 1,979 790 2,349 2,637 4,004 2,055 1,870 1,340 1,801 72,372 26,724 32,668 29,678 18,051 146 8,226 1,396 3,743 3,692 2,713 270 743 17,187 23,400 65 3,351 16,567 8,532 820 852 4,292 6,299 3,744 12,124 2,084 1,488 4,677 9,152 1,361 17,963 6,464 2,031 8,192 8,129 263 569 6,592 3,475 4,186 7,599 8,210 4,928 5,810 5,714 960 2,837 22,077 24,423 5,414 4,936 2,713 10,904 4,867 6,175 4,571 20,636 16,427 5,918 5,905 7,435 5,039 2013 2015 2012 2014 2013 2019 2019 2016 2015 2019 2011 2010 2010 2019 2019 2015 2015 2015 2015 2015 2013 2013 2013 2013 2013 2016 2012 2010 2010 2019 2019 2015 2013 2013 2005 2005 2010 2010 2015 2013 2015 2015 2007 2013 2013 2015 2012 2012 2011 2013 2016 2013 2011 2012 2013 2011 1987 15501 16th Avenue 2016 123 Westmead Road 2000 4315 Johns Creek Parkway 2008 Sway Place 2001 301 Macoun Drive 2019 4120 King Road 2011 6715 Buckley Road 1987 8201 6th Avenue 2001 12951 W Linebaugh Avenue 2019 11330 Countryway Blvd 1999 7950 Bay Branch Dr 1985 3501 Executive Parkway 2005 1587 Old Freehold Rd 2011 300 Fries Road 2009 285 Crestmount Avenue 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 1987 1340 York Mills Road 1988 8 The Donway East 2016 25535 Hawthorne Boulevard 1997 5660 N. Kolb Road 1986 8887 South Lewis Ave 1984 9524 East 71st St 2001 3791 Crowell Road 2016 3092 Kendal Lane 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 2004 5111 Connecticut Avenue NW 2000 680 Mountain Boulevard 2007 1650 SE Holiday Crest Circle 1997 285 Commonwealth Road 2012 45 E Lockwood 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 Welland, ON . . . . . . . . . 6,027 Wellesley, MA . . . . . . . West Babylon, NY . . . . West Bloomfield, MI . . West Hills, CA . . . . . . . West Seneca, NY . . . . . West Seneca, NY . . . . . — — — — — — West Vancouver, BC . . 17,934 Westbourne, UK . . . . . . Westford, MA . . . . . . . . Weston, MA . . . . . . . . . Westworth Village, TX . . . . . . . . . . . . . . . Weybridge, UK . . . . . . Weymouth, UK . . . . . . White Oak, MD . . . . . . Whitesboro, NY . . . . . . Willoughby, OH . . . . . . Wilmington, DE . . . . . . Winchester, UK . . . . . . Winnipeg, MB . . . . . . . Winnipeg, MB . . . . . . . Winnipeg, MB . . . . . . . Woking, UK . . . . . . . . . Wolverhampton, UK . . Woodland Hills, CA . . . Yonkers, NY . . . . . . . . . — — — — — — — — — — — 11,736 25,459 12,328 — — — — Yorkton, SK . . . . . . . . . 3,108 Seniors Housing 983 4,690 3,960 1,040 2,600 1,232 1,035 7,059 5,441 1,440 1,160 2,060 7,899 2,591 2,304 1,575 1,298 1,040 6,009 1,960 1,276 1,317 2,990 2,941 3,400 3,962 463 7,530 77,462 47,085 12,300 7,521 6,600 7,438 28,155 41,420 32,607 6,200 31,296 48,240 16,551 24,768 11,873 10,514 23,338 29,405 38,612 21,732 15,609 12,523 8,922 20,478 50,107 8,760 793 347 2,440 905 1,714 634 604 4,380 8,236 400 1,555 64 4,888 1,841 2,991 789 662 2,208 3,178 4,839 2,563 2,937 1,032 1,393 1,383 2,314 886 1,019 4,690 3,960 1,100 2,658 1,232 1,035 7,545 5,854 1,468 1,160 2,060 8,496 2,824 2,358 1,575 1,298 1,176 6,471 2,206 1,493 1,420 3,118 3,170 3,447 3,956 496 8,287 77,809 49,525 13,145 9,177 7,234 8,042 32,049 49,243 32,979 7,755 31,360 52,531 18,159 27,705 12,662 11,176 25,410 32,121 43,205 24,078 18,443 13,427 10,086 21,814 52,427 9,613 1,338 13,734 11,042 3,320 2,957 546 546 8,354 11,299 5,100 1,879 4,169 14,169 2,702 6,232 737 688 5,951 8,270 13,892 5,682 3,740 786 3,591 5,855 12,283 2,348 2015 2015 2013 2013 2013 2019 2019 2013 2013 2015 2013 2014 2013 2014 2013 2019 2019 2013 2012 2013 2013 2015 2016 2013 2013 2013 2013 2006 110 First Street 2012 23 & 27 Washington Street 2003 580 Montauk Highway 2000 7005 Pontiac Trail 2002 9012 Topanga Canyon Road 2000 1187 Orchard Park Drive 2007 2341 Union 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 2015 4770 Clinton Road 2016 35100 Chardon Road 2004 2215 Shipley Street 2010 Stockbridge Road 1999 857 Wilkes Avenue 1988 3161 Grant Avenue 1999 125 Portsmouth Boulevard 2017 12 Streets Heath, West End 2008 73 Wergs Road 2005 20461 Ventura Boulevard 2005 65 Crisfield Street 2001 94 Russell Drive Operating Total . . . $1,990,607 $1,383,927 $13,886,675 $1,879,176 $1,469,078 $15,680,700 $3,194,057 147 Welltower Inc. Schedule III Real Estate and Accumulated Depreciation December 31, 2019 (Dollars in thousands) Description Encumbrances Land Building & Improvements Initial Cost to Company Cost Capitalized Subsequent to Acquisition Gross Amount at Which Carried at Close of Period Land Building & Improvements Accumulated Depreciation(1) Year Acquired Year Built Address Triple-net: Abilene, TX . . . . . . . . . $ — $ Abilene, TX . . . . . . . . . Aboite Twp, IN . . . . . . Agawam, MA . . . . . . . . Akron, OH . . . . . . . . . . Alexandria, VA . . . . . . Alhambra, CA . . . . . . . Allen Park, MI . . . . . . . Allentown, PA . . . . . . . Allentown, PA . . . . . . . Ames, IA . . . . . . . . . . . Ann Arbor, MI . . . . . . . Annandale, VA . . . . . . Arlington, VA . . . . . . . Asheboro, NC . . . . . . . Asheville, NC . . . . . . . . Asheville, NC . . . . . . . . Atchison, KS . . . . . . . . Aurora, CO . . . . . . . . . Austin, TX . . . . . . . . . . Avon, IN . . . . . . . . . . . Avon, IN . . . . . . . . . . . Avon, CT . . . . . . . . . . . Azusa, CA . . . . . . . . . . Baldwin City, KS . . . . . Baltimore, MD . . . . . . . Baltimore, MD . . . . . . . Barberton, OH . . . . . . . Bartlesville, OK . . . . . . Battle Creek, MI . . . . . Bay City, MI . . . . . . . . Bedford, PA . . . . . . . . . Belmont, CA . . . . . . . . Belvidere, NJ . . . . . . . . Benbrook, TX . . . . . . . — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Berkeley, CA . . . . . . . . 11,947 Bethel Park, PA . . . . . . Bethel Park, PA . . . . . . Bethesda, MD . . . . . . . Bethlehem, PA . . . . . . . Bethlehem, PA . . . . . . . Beverly Hills, CA . . . . Bexleyheath, UK . . . . . Bingham Farms, MI . . . Birmingham, UK . . . . . Birmingham, UK . . . . . Birmingham, UK . . . . . — — — — — — — — — — — 950 990 1,770 880 633 2,452 600 1,767 494 1,491 330 2,172 1,687 4,016 290 204 280 140 2,440 1,691 1,830 900 2,132 570 190 4,306 3,069 1,307 100 857 633 637 3,000 2,001 1,550 3,050 1,700 1,008 2,218 1,191 1,143 6,000 3,750 781 1,647 1,591 1,462 $ 20,987 $ 11,660 $ 8,187 19,930 16,112 3,003 6,829 6,305 5,027 11,849 4,823 8,870 11,127 18,980 8,805 5,032 3,489 1,955 5,610 28,172 5,006 14,470 19,444 7,627 3,141 4,810 4,305 3,150 9,313 1,380 1,822 2,620 4,434 23,526 26,191 13,553 32,677 16,007 6,742 6,871 16,892 13,592 13,385 10,807 15,676 14,853 19,092 9,056 1,089 1,601 2,134 — — 8,847 — — — — — — — 261 — 518 23 — — — — — 7,429 55 — — — — — — — 1,653 — 2,747 4,982 — — — — — — 1,101 — 1,246 1,564 794 148 950 990 1,770 880 633 2,452 600 1,767 494 1,491 330 2,172 1,687 4,016 290 204 280 140 2,440 1,691 1,830 900 2,132 570 190 4,306 3,069 1,307 100 857 633 637 3,000 2,001 1,550 3,050 1,700 1,008 2,218 1,191 1,143 6,000 4,034 781 1,771 1,712 1,572 $ 32,647 $ 9,276 21,531 18,246 3,003 6,829 15,152 5,027 11,849 4,823 8,870 11,127 18,980 8,805 5,293 3,489 2,473 5,633 28,172 5,006 14,470 19,444 7,627 10,570 4,865 4,305 3,150 9,313 1,380 1,822 2,620 4,434 25,179 26,191 16,300 37,659 16,007 6,742 6,871 16,892 13,592 13,385 11,624 15,676 15,975 20,535 9,740 3,442 1,262 5,178 8,476 121 267 2,322 199 457 195 2,314 463 716 339 2,265 1,938 1,086 634 12,556 257 3,942 2,896 359 3,172 560 181 141 356 860 99 115 201 6,778 771 3,242 5,614 4,712 276 259 620 502 1,761 1,567 597 1,964 2,488 1,216 2014 2014 2010 2002 2018 2018 2011 2018 2018 2018 2010 2018 2018 2018 2003 1999 2003 2015 2006 2018 2010 2014 2018 1998 2015 2018 2018 2018 1996 2018 2018 2018 2011 2019 2011 2016 2007 2018 2018 2018 2018 2014 2014 2018 2015 2015 2015 1998 6565 Central Park Boulevard 1985 1250 East N 10th Street 2008 611 W County Line Rd South 1993 1200 Suffield St. 1999 171 North Cleveland Massillon Road 1964 1510 Collingwood Road 1923 1118 N. Stoneman Ave. 1960 9150 Allen Road 1995 5151 Hamilton Boulevard 1988 1265 Cedar Crest Boulevard 1999 1325 Coconino Rd. 1997 4701 East Huron River Drive 2002 7104 Braddock Road 1976 550 South Carlin Southprings Road 1998 514 Vision Dr. 1999 4 Walden Ridge Dr. 1992 308 Overlook Rd. 2001 1301 N 4th St. 2007 14211 E. Evans Ave. 2000 11630 Four Iron Drive 2004 182 S Country RD. 550E 2013 10307 E. CR 100 N 2000 100 Fisher Drive 1953 125 W. Sierra Madre Ave. 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 1971 1301 Ralston Avenue 2009 1 Brookfield Ct 1984 4242 Bryant Irvin Road 1966 2235 Sacramento Street 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 1999 24005 West 13 Mile Road 2010 Clinton Street, Winson Green 2010 Braymoor Road, Tile Cross 2010 Clinton Street, Winson Green 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 Birmingham, UK . . . . . Bloomington, IN . . . . . Boca Raton, FL . . . . . . Boca Raton, FL . . . . . . Boulder, CO . . . . . . . . . Bournemouth, UK . . . . Boynton Beach, FL . . . Boynton Beach, FL . . . Bracknell, UK . . . . . . . Bradenton, FL . . . . . . . Bradenton, FL . . . . . . . Braintree, MA . . . . . . . Braintree, UK . . . . . . . . Brecksville, OH . . . . . . — — — — — — — — — — — — — — Brentwood, UK . . . . . . 34,515 Brick, NJ . . . . . . . . . . . Bridgewater, NJ . . . . . . Bristol, UK . . . . . . . . . . Bristol, UK . . . . . . . . . . — — — — Brooks, AB . . . . . . . . . 1,747 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 . . . . . . . — — — — — — 7,292 14,841 24,614 — — — — — — Cape Coral, FL . . . . . . . 8,135 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 . . . . . . Chagrin Falls, OH . . . . Chambersburg, PA . . . . Chapel Hill, NC . . . . . . Charleston, SC . . . . . . . — — — — — — — — — — — — — — — 1,184 10,085 852 1,274 10,847 1,324 2015 1997 122 Tile Cross Road, Garretts 670 2,200 2,826 3,601 2,589 2,138 2,804 4,081 252 480 170 — 990 8,537 1,290 1,800 4,256 2,270 376 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 17,423 4,976 4,063 21,371 15,984 10,204 14,226 11,470 3,298 9,953 7,157 13,296 19,353 45,869 25,247 31,810 17,962 13,030 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 2,850 596 920 832 1,373 354 1,333 19,549 4,350 15,137 27,737 9,354 3,960 10,841 8,864 2,646 5,556 — — — — — — — 217 — 110 1,290 1,005 — 4,443 1,330 1,678 — — 370 — 2,457 835 53 501 172 1,463 3,122 5,069 1,984 — — — — — 106 1,775 — 1 — — — 1,051 — 20 — — — — 1,034 — 670 2,200 2,826 3,601 2,589 2,138 2,804 4,246 252 480 170 — 990 9,182 1,290 1,800 4,256 2,270 401 1,119 670 280 460 1,700 1,170 8,139 2,500 4,878 10,376 517 911 300 1,399 530 760 1,440 978 1,700 1,583 17,423 4,976 4,063 21,371 15,984 10,204 14,226 11,522 3,298 10,063 8,447 14,301 19,353 49,667 26,577 33,488 17,962 13,030 5,296 2,612 16,442 5,132 5,520 13,055 19,377 14,791 45,731 74,959 40,750 3,597 4,830 2,098 16,971 3,281 18,974 18,777 8,207 19,492 6,071 2,146 247 180 870 44 425 541 713 2,068 1,978 8,444 2,010 2,872 3,992 5,851 7,340 411 183 768 122 3,430 2,157 2,400 3,652 4,657 2,177 6,386 10,375 2,725 142 207 1,165 644 1,551 3,788 2,784 331 2,521 263 2015 2018 2018 2018 2019 2018 2018 2014 1996 2012 1997 2014 2014 2016 2011 2011 2015 2017 2014 2018 2011 2003 2003 2011 2011 2014 2014 2014 2016 2018 2018 1998 2018 2002 2012 2014 2018 2015 2018 Green 2015 363 S. Fieldstone Boulevard 1994 7225 Boca Del Mar Drive 1984 375 Northwest 51st Street 1990 2800 Palo Parkway 2017 Poole 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 2011 8757 Brecksville Road 2013 London Road 2000 458 Jack Martin Blvd. 2001 680 US-202/206 North 2017 339 Badminton Road 2019 Avon Valley Care Home, Tenniscourt 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 82 2018 1985 12999 North Pennsylvania 2,010 1,500 920 2,850 596 920 832 1,373 354 1,333 19,549 5,401 15,137 27,757 9,354 3,960 10,841 8,864 3,680 5,556 1,724 2,827 2,343 6,753 348 228 431 370 1,587 220 2014 1998 2014 2011 2018 2018 2018 2018 2002 2018 Street 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 1999 8100 East Washington Street 1976 1070 Stouffer Avenue 1997 100 Lanark Rd. 1982 1137 Sam Rittenberg Boulevard 149 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 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 . . . . . . . Cloquet, MN . . . . . . . . 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 . . . . . . . . . . Costa Mesa, CA . . . . . . 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 . . . . . . . . . Derby, UK . . . . . . . . . . Dover, DE . . . . . . . . . . Dublin, OH . . . . . . . . . Dubuque, IA . . . . . . . . Dunedin, FL . . . . . . . . . Durham, NC . . . . . . . . . — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Eagan, MN . . . . . . . . . . 16,186 440 17,575 306 440 17,881 4,158 2011 1998 1000 Association Drive, 320 1,416 1,320 4,515 85 1,145 912 5,207 155 330 520 520 2,838 340 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 4,660 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 2,050 1,962 720 1,377 410 240 2,880 566 910 1,188 1,197 1,413 1,158 2,125 1,760 3,222 2,359 600 1,393 568 1,883 1,476 2,260 25,493 2,295 2,320 14,175 3,190 3,921 43,179 5,120 7,771 8,386 5,144 19,969 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 24,811 8,539 22,266 2,912 8,904 13,329 10,659 31,643 — — — — — — — — 6,130 — — — 1,493 120 2,629 544 — 693 — — 163 — 270 634 540 — 169 672 969 1,193 1,426 — 829 — 384 — — — — — — — 175 — 441 141 — — — 2,587 300 320 1,416 1,320 4,515 85 1,145 912 5,207 155 330 520 520 3,052 340 10,549 980 14,039 9,874 18,127 8,688 1,395 8,997 14,014 31,725 7,557 2,292 15,733 5,369 18,206 4,780 26,879 5,404 2,222 408 2,844 338 863 348 550 1,172 1,783 1,267 2,204 1,814 2,558 1,104 4,507 1,636 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 2006 705 Horizon Circle 2013 Redhill Road 1986 59 Harrington Court 2014 2018 2014 2018 1996 2018 2018 2018 1996 1998 2014 2006 2014 2011 2013 2011 4,280 62,168 6,926 2015 2008 1605 Elm Creek View 26,186 2,295 2,320 14,338 3,190 4,191 43,813 5,507 7,771 8,555 5,840 20,938 14,875 18,665 16,802 4,783 8,436 9,054 2,017 20,043 5,414 3,396 13,800 13,576 11,844 8,480 24,811 8,884 22,407 2,912 8,904 13,329 13,246 31,943 1,730 341 1,699 825 610 550 1,760 2,189 980 1,550 1,204 2,050 2,110 720 1,377 410 240 2,880 566 910 1,188 1,197 1,413 1,158 2,125 1,760 3,222 2,455 600 1,393 568 1,883 1,476 2,260 150 2,760 1,271 100 3,117 852 1,871 10,199 744 2,193 1,609 418 5,806 1,885 2,794 661 2,072 1,352 1,884 81 766 227 157 505 537 482 2,060 912 963 5,331 139 332 500 12,451 3,572 2016 1999 2018 2011 2010 2003 2011 2014 2009 2012 2017 2011 2015 2014 2018 2003 2014 2012 2018 2018 2018 2018 2018 2018 2018 2010 2018 2014 2011 2018 2018 2018 1997 2015 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 1965 350 West Bay St 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 1988 290 South Monaco Parkway 2015 Rykneld Road 1984 1080 Silver Lake Blvd. 2014 4075 W. Dublin-Granville Road 1971 901 West Third Street 1983 870 Patricia Avenue 1999 4434 Ben Franklin Blvd. 2004 3810 Alder 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 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 . . . . . . . . . . . . . . . Encinitas, CA . . . . . . . . Englewood, NJ . . . . . . . — — — — — — — — — — — — — — Epsom, UK . . . . . . . . . 33,969 Escondido, CA . . . . . . . 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 . . . . . . . . . Flourtown, PA . . . . . . . Flower Mound, TX . . . Floyd, VA . . . . . . . . . . Flushing, MI . . . . . . . . Flushing, MI . . . . . . . . Forest City, NC . . . . . . Fort Ashby, WV . . . . . . Fort Collins, CO . . . . . . Fort Collins, CO . . . . . . Fort Worth, TX . . . . . . Fountain Valley, CA . . Franconia, NH . . . . . . . Fredericksburg, VA . . . Fredericksburg, VA . . . Ft. Myers, FL . . . . . . . . Ft. Myers, FL . . . . . . . . Ft. Myers, FL . . . . . . . . Gainesville, FL . . . . . . — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 1,380 4,071 1,109 1,430 1,620 390 410 1,810 1,650 200 1,344 3,733 1,460 930 20,159 1,520 50 1,400 3,600 1,827 34,229 24,438 7,502 13,400 10,052 4,877 8,388 14,849 25,167 2,760 7,076 18,751 7,721 4,514 34,803 24,024 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 1,800 1,800 680 690 1,415 320 330 3,680 890 450 5,259 360 1,000 1,130 1,110 2,139 2,502 2,374 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 14,830 8,414 3,618 1,702 8,536 4,497 19,566 58,608 4,532 13,615 9,379 11,320 20,000 23,202 10,562 18,240 9,744 29,088 1,093 2,154 — — — 20 — 3,260 1,700 2,165 — — 1,987 26 4,554 785 71 — — — — 112 4,856 1,467 300 — 586 2,468 500 — — — — — 266 174 — — — 38 356 — — 5,086 — 70 2,070 — — — — — 1,380 4,379 1,109 1,430 1,620 390 410 1,810 1,650 200 1,344 3,733 1,460 930 21,682 1,520 50 1,400 3,600 1,827 35,322 26,284 7,502 13,400 10,052 4,897 8,388 18,109 26,867 4,925 7,076 18,751 9,708 4,540 37,834 24,809 4,021 5,476 27,267 17,309 7,664 3,646 384 529 469 2,162 1,766 2,425 2,103 2,376 2011 2014 2018 2018 2018 2003 2012 2014 2014 1998 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 292 2018 1995 1940 Nerge Road Elk 685 4,196 1,215 3,062 6,863 453 2,950 1,193 690 2018 2000 2011 2016 2011 2015 1999 2017 2018 1988 1920 Nerge Road 1988 335 Saxony Rd. 1966 333 Grand Avenue 2014 450-458 Reigate Road 1987 1500 Borden Rd 1994 1820 E River St 1999 2015 Lake Heights Dr. 2018 501 Thomas Jones Way 1997 12469 Lee Jackson Mem Highway 4,099 17,620 687 2018 1990 12475 Lee Jackson Memorial 1,910 5,715 12,133 1,269 425 810 4,037 2,080 1,061 3,949 672 668 1,403 3,728 1,803 463 105 347 2,007 4,597 6,508 376 4,812 365 2,748 7,918 3,363 422 713 461 75 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 Crossroad Lane 1969 3011 North Center Road 1999 901 Broad St. 1908 350 Haws Lane 2012 4141 Long Prairie Road 1979 237 Franklin Pike Rd SE 1999 640 Sunnyside Drive 1967 540 Sunnyside Drive 1999 493 Piney Ridge Rd. 1980 Diane Drive, Box 686 2007 4750 Pleasant Oak Drive 1965 1005 East Elizabeth 2011 425 Alabama Ave. 1988 11680 Warner Avenue 1971 93 Main Street 1999 3500 Meekins Dr. 2010 140 Brimley Drive 1999 15950 McGregor Boulevard 1990 1600 Matthew Drive 2000 13881 Eagle Ridge Drive 2018 3605 NW 83rd Street 2012 1996 2011 2015 2018 2014 2015 2001 1997 2010 2018 2018 2002 2011 2011 2018 2018 2018 2003 2011 2015 2018 2010 2018 2011 2005 2014 2018 2018 2018 2016 9,231 10,685 56,642 11,839 10,459 6,170 35,419 4,462 1,800 14,500 2,101 18,056 2,978 15,096 8,588 3,618 1,702 8,536 4,535 19,922 58,608 4,532 18,701 9,379 11,390 22,070 23,202 10,562 18,240 9,744 29,088 570 620 2,850 780 1,693 2,189 2,150 410 200 1,500 788 1,271 300 1,800 1,800 680 690 1,415 320 330 3,680 890 450 5,259 360 1,000 1,130 1,110 2,139 2,502 2,374 151 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 Galesburg, IL . . . . . . . . Gardner, KS . . . . . . . . . Gastonia, NC . . . . . . . . Gastonia, NC . . . . . . . . Gastonia, NC . . . . . . . . Geneva, IL . . . . . . . . . . Georgetown, TX . . . . . Gig Harbor, WA . . . . . Glen Ellyn, IL . . . . . . . Granbury, TX . . . . . . . . Granger, IN . . . . . . . . . Grapevine, TX . . . . . . . Greeley, CO . . . . . . . . . Greensboro, NC . . . . . . Greensboro, NC . . . . . . Greenville, SC . . . . . . . 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 . . . . . . Highlands Ranch, CO . . . . . . . . . . . . . . Hillsboro, OH . . . . . . . Hinckley, UK . . . . . . . . — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Hindhead, UK . . . . . . . 39,141 Hinsdale, IL . . . . . . . . . Hockessin, DE . . . . . . . Holton, KS . . . . . . . . . . Homewood, IL . . . . . . . Howard, WI . . . . . . . . . Huntingdon Valley, PA . . . . . . . . . . . . . . Hutchinson, KS . . . . . . — — — — — — — 1,708 200 470 310 400 1,502 200 3,000 1,496 2,550 1,670 2,220 1,077 330 560 310 1,751 947 290 1,550 867 2,430 440 1,934 1,382 569 7,402 — 1,192 2,924 450 6,224 1,860 1,500 3,841 2,800 6,129 3,096 5,029 16,198 2,100 4,463 6,636 2,940 21,280 17,648 18,051 2,970 5,507 4,750 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 — 93 17 36 202 — — — — 777 2,401 69 — 594 1,332 — — — 236 81 — 968 — — 846 — 1,183 1,771 — 789 — — — 540 1,708 200 470 310 400 1,502 200 3,000 1,496 2,550 1,670 2,220 1,077 330 560 310 1,751 947 290 1,550 867 2,430 440 1,934 1,486 569 7,961 — 1,192 3,145 450 6,224 1,860 1,500 3,841 2,893 6,146 3,132 5,231 16,198 2,100 4,463 6,636 3,717 23,681 17,717 18,051 3,564 6,839 4,750 8,774 1,445 4,629 22,851 2,386 20,909 4,469 3,988 10,571 12,826 8,890 29,883 7,611 8,095 13,469 8,414 3,689 10,483 1,900 24,353 2,726 2,043 26,936 40 290 560 370 330 430 940 1,792 2,159 17,852 4,033 1,120 40 2,395 579 1,150 600 4,210 987 4,443 2,185 3,395 4,143 3,721 6,341 4,194 48,645 24,287 6,308 7,460 7,652 32,122 3,730 10,590 4,239 1,299 5,291 2,636 3,503 4,179 8,704 6,341 4,511 52,702 24,287 7,555 7,473 7,652 32,132 3,730 10,784 29 312 848 451 108 36 4,983 — 480 5,405 — 1,247 13 — 10 — 194 40 290 560 370 330 430 940 1,792 2,322 19,200 4,033 1,120 40 2,395 579 1,150 600 152 152 346 2,680 1,426 2,264 631 1,227 213 288 876 5,629 2,003 1,341 1,587 2,921 2,034 351 97 1,989 5,530 100 5,411 2,098 2018 2015 2003 2003 2003 2018 1997 2018 2018 2012 2010 2013 2017 2003 2003 2004 2018 2018 2003 2010 2018 2011 2001 1964 280 East Losey Street 2000 869 Juniper Terrace 1998 1680 S. New Hope Rd. 1994 1717 Union Rd. 1996 1750 Robinwood Rd. 2000 2388 Bricher Road 1997 2600 University Dr., E. 1990 3309 45th Street Court Northwest 2001 2S706 Park Boulevard 1996 916 East Highway 377 2009 6330 North Fir Rd 2014 4545 Merlot Drive 2009 5300 West 29th Street 1996 5809 Old Oak Ridge Rd. 1997 4400 Lawndale Dr. 1997 23 Southpointe 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. 190 2018 1989 1800 Eagle Landing 1,791 497 1,248 6,894 402 1,382 3,099 339 141 2,212 4,843 495 673 2,327 1,207 1,530 1,840 2,516 347 843 4,171 894 1,163 814 288 2,040 209 4,242 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. 1999 9160 S. University Blvd. 1983 1141 Northview Drive 2013 Tudor Road 2012 Portsmouth Road 1971 600 W Ogden Avenue 1992 100 Saint Claire Drive 1996 410 Juniper Dr 1989 940 Maple Avenue 2016 2790 Elm Tree Hill 1993 3430 Huntingdon Pike 1997 2416 Brentwood 2013 2018 2014 2011 2018 2013 2010 2018 2018 2011 2013 2015 2003 2003 2003 2003 2003 2002 2018 2013 2016 2018 2014 2015 2018 2017 2018 2004 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 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 . . . . . . . . . . . Kensington, MD . . . . . . Kenwood, OH . . . . . . . Kettering, OH . . . . . . . King of Prussia, PA . . . King of Prussia, PA . . . Kingsford, MI . . . . . . . Kingston, PA . . . . . . . . Kingston upon Thames, UK . . . . . . . . . . . . . . Kirkstall, UK . . . . . . . . Kokomo, IN . . . . . . . . . Lacey, WA . . . . . . . . . . Lafayette, CO . . . . . . . . Lafayette, IN . . . . . . . . Lakeway, TX . . . . . . . . Lakewood, CO . . . . . . . Lakewood Ranch, FL . . . . . . . . . . . . . . . Lakewood Ranch, FL . . . . . . . . . . . . . . . Lancaster, PA . . . . . . . . Lancaster, PA . . . . . . . . Largo, FL . . . . . . . . . . . Las Vegas, NV . . . . . . . Laureldale, PA . . . . . . . Lawrence, KS . . . . . . . Lebanon, PA . . . . . . . . Lebanon, PA . . . . . . . . Lee, MA . . . . . . . . . . . . Leeds, UK . . . . . . . . . . Leicester, UK . . . . . . . . Lenoir, NC . . . . . . . . . . — — — — — — — — — — — — — — — — — — — 71,089 — — — — — — — — — — — — — — — — — — — — — Lethbridge, AB . . . . . . 1,305 Lexana, KS . . . . . . . . . Lexington, NC . . . . . . . Libertyville, IL . . . . . . . Libertyville, IL . . . . . . . Lichfield, UK . . . . . . . . Lillington, NC . . . . . . . Lillington, NC . . . . . . . Lincoln, NE . . . . . . . . . Lititz, PA . . . . . . . . . . . Livermore, CA . . . . . . . Livonia, MI . . . . . . . . . — — — — — — — — — — — 1,082 870 1,105 6,500 750 — 1,752 2,182 2,265 600 700 1,778 1,753 821 1,229 720 1,205 1,362 986 33,063 2,437 710 2,582 1,420 670 5,142 2,160 6,767 14,688 6,645 26,405 25,231 26,381 2,553 9,491 13,618 8,107 20,115 22,622 18,626 11,043 4,703 14,780 4,727 10,598 5,711 46,696 9,414 16,044 18,180 20,192 16,833 23,203 28,091 — — — 3,107 111 1,801 — — — — — — — — — — — — — 6,439 896 — — — 1 — 62 1,082 870 1,105 6,500 750 1,691 1,752 2,182 2,265 600 700 1,778 1,753 821 1,229 720 1,205 1,362 986 35,561 2,621 710 2,582 1,420 670 5,142 2,160 6,767 14,688 6,645 29,512 25,342 26,491 2,553 9,491 13,618 8,107 20,115 22,622 18,626 11,043 4,703 14,780 4,727 10,598 5,711 50,637 10,126 16,044 18,180 20,192 16,834 23,203 28,153 829 2,283 252 5,334 2,303 2,403 102 406 771 294 2,322 1,707 699 428 207 594 225 428 225 4,056 1,720 2,488 692 2,572 2,368 3,995 4,299 2018 2014 2018 2012 2013 2013 2018 2018 2018 2018 2015 2017 2018 2018 2018 2018 2018 2018 2018 2016 2013 2014 2018 2015 2015 2007 2014 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 3648 University Blvd South 1980 8495 Normandy Blvd 1997 380 Wray Large Road 1973 1008 Thompson Street 2015 8900 Parallel Parkway 2015 24802 Kingsland Boulevard 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 2009 29 Broad Lane 2014 2200 S. Dixon Rd 2012 4524 Intelco Loop SE 2015 329 Exempla Circle 2014 2402 South Street 2011 2000 Medical Dr 2010 7395 West Eastman Place 650 6,714 1,988 650 8,702 1,726 2011 2012 8230 Nature’s Way 1,000 1,680 1,011 1,166 580 1,171 250 728 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 22,388 14,039 7,504 3,427 23,420 14,424 8,716 10,370 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 22,474 14,039 7,504 3,427 23,420 14,424 8,716 10,370 5,962 19,061 14,239 26,254 4,466 2,947 1,922 4,990 40,024 11,550 32,615 17,579 16,451 13,902 13,836 24,996 13,558 86 — — — — — — — — 926 1,149 2,075 718 279 152 1,090 — — 2,395 — — 95 — — — 1,000 1,680 1,011 1,166 580 1,171 250 728 1,214 290 2,123 3,291 190 1,296 480 200 6,500 2,993 1,486 470 500 390 1,200 4,100 985 153 4,410 1,159 296 175 5,220 549 1,697 432 278 8,860 1,728 4,798 1,945 554 247 2,243 9,587 431 3,979 2,626 2,307 3,519 1,144 3,276 544 2012 2015 2018 2018 2011 2018 2012 2018 2018 2002 2015 2012 2003 2014 2015 2002 2011 2018 2015 2014 2014 2010 2015 2014 2018 2005 8220 Natures Way 2017 31 Millersville Road 1966 100 Abbeyville Road 1997 300 Highland Avenue Northeast 2002 2500 North Tenaya Way 1980 2125 Elizabeth Avenue 1996 3220 Peterson Road 1998 100 Tuck Court 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 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 Livonia, MI . . . . . . . . . Longview, TX . . . . . . . Longwood, FL . . . . . . . Los Angeles, CA . . . . . 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 . . . . . Matawan, NJ . . . . . . . . Matthews, NC . . . . . . . McHenry, IL . . . . . . . . McKinney, TX . . . . . . . McMurray, PA . . . . . . . — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Medicine Hat, AB . . . . 2,144 Mentor, OH . . . . . . . . . Mercerville, NJ . . . . . . Meriden, CT . . . . . . . . . Miamisburg, OH . . . . . Middleburg Heights, OH . . . . . . . . . . . . . . Middleton, WI . . . . . . . Milton Keynes, UK . . . Minnetonka, MN . . . . . Mishawaka, IN . . . . . . . Moline, IL . . . . . . . . . . Monmouth Junction, NJ . . . . . . . . . . . . . . . Monroe, NC . . . . . . . . . Monroe, NC . . . . . . . . . Monroe, NC . . . . . . . . . Monroe Township, NJ . . . . . . . . . . . . . . . Monroeville, PA . . . . . Monroeville, PA . . . . . Montgomeryville, PA . . . . . . . . . . . . . . Montville, NJ . . . . . . . . — — — — — — — — — — — — — — — — — — — 1,836 610 1,260 — 280 490 1,369 1,100 340 2,904 2,302 1,586 960 900 750 1,460 660 1,149 2,406 1,050 720 990 2,768 2,677 9,068 349 1,830 560 1,576 1,570 1,440 932 1,827 860 1,300 786 960 420 1,826 2,080 740 2,946 720 470 310 450 3,250 1,216 1,237 1,176 3,500 2,278 5,520 6,445 11,430 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 — 20,618 4,738 — 7,389 15,805 5,566 9,941 9,929 1,472 3,233 7,780 4,006 18,654 24,360 16,113 18,677 6,209 3,681 4,799 4,021 27,771 12,753 3,642 9,827 31,002 — — — 1,050 44 2,768 1,288 1,744 — — — — 84 760 1,069 300 — — — 463 1,136 824 — 718 1,970 — 166 39 — — 3,894 450 — 173 233 — 427 600 1,547 1,554 — — 86 788 883 154 765 — — — 1,699 1,836 610 1,260 — 280 490 1,473 1,100 340 2,904 2,302 1,586 960 900 750 1,460 660 1,149 2,406 1,050 720 990 2,768 2,879 9,434 349 1,830 560 1,576 1,570 1,440 995 1,827 860 1,300 786 960 420 1,964 2,080 740 2,946 720 470 310 450 3,250 1,216 1,237 1,176 3,500 154 2,278 5,520 6,445 12,480 4,364 12,778 16,852 21,530 16,114 3,697 5,634 4,059 29,117 23,384 8,515 32,404 5,251 9,376 12,233 14,096 13,886 10,014 17,420 7,338 41,324 — 20,784 4,777 — 7,389 19,699 5,953 9,941 10,102 1,705 3,233 8,207 4,606 20,063 25,914 16,113 18,677 6,295 4,469 5,682 4,175 28,536 12,753 3,642 9,827 32,701 109 1,873 1,552 3,242 481 5,144 3,003 5,068 2,444 144 222 153 6,833 5,094 3,285 3,451 1,802 362 462 1,585 2,086 1,782 856 1,006 4,037 — 4,764 2,141 — 2,096 4,190 889 389 2,619 848 178 3,134 2,028 2,520 6,078 2,565 682 1,721 1,950 2,450 1,860 2,966 593 225 404 7,173 2018 2006 2011 2008 2015 2005 2013 2011 2014 2018 2018 2018 2011 2011 2003 2015 2006 2018 2018 2015 2014 2014 2018 2014 2013 2003 2011 2003 2006 2009 2010 2014 2018 2011 2011 2018 2004 2001 2015 2012 2014 2018 2011 2003 2003 2003 2015 2018 2018 2018 2011 1960 28550 Five Mile Road 2007 311 E Hawkins Pkwy 2011 425 South Ronald Reagan Boulevard 1971 330 North Hayworth Avenue 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 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 1999 65 Valleyview Drive SW 1985 8200 Mentor Hills Drive 1967 2240 White Horse- Merceville Road 1968 845 Paddock Ave 1983 450 Oak Ridge Boulevard 1998 15435 Bagley Rd. 1991 6701 Stonefield Rd. 2007 Tunbridge Grove, Kents Hill 1999 500 Carlson Parkway 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. 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 Moorestown, NJ . . . . . . Morehead City, NC . . . Morrison, CO . . . . . . . . Moulton, UK . . . . . . . . Mountainside, NJ . . . . . Nacogdoches, TX . . . . . Naperville, IL . . . . . . . . Naples, FL . . . . . . . . . . Naples, FL . . . . . . . . . . Naples, FL . . . . . . . . . . Nashville, TN . . . . . . . . Naugatuck, CT . . . . . . . Needham, MA . . . . . . . New Lenox, IL . . . . . . . New Moston, UK . . . . . Newark, DE . . . . . . . . . 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 . . . . . . . . . . . Oklahoma City, OK . . . 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 . . . . Owasso, OK . . . . . . . . . Owensboro, KY . . . . . . Owenton, KY . . . . . . . . Palestine, TX . . . . . . . . Palm Beach Gardens, FL . . . . . . . . . . . . . . . Palm Coast, FL . . . . . . — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 4,143 200 2,720 1,695 3,097 390 3,470 1,222 1,672 1,854 4,910 1,200 1,610 1,225 1,480 560 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 1,340 590 760 1,590 1,930 370 380 950 80 2,201 2,150 50 130 160 4,500 410 1,300 215 225 100 180 2,082 870 23,902 3,104 16,261 12,510 7,810 5,754 29,547 10,642 23,126 12,402 29,590 15,826 12,667 21,575 4,378 21,220 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 7,513 7,017 16,272 19,765 10,230 8,769 15,998 5,020 4,018 24,107 1,700 2,970 6,590 29,105 2,840 25,311 1,380 13,275 2,400 4,320 6,624 10,957 — 1,701 — 1,611 — — — — — — — 199 — — 443 2,422 512 503 — — — — 1,702 626 — 929 597 977 — — 109 102 — — — 553 — — 390 — — — 142 136 44 38,441 92 677 — — — 1,300 — 98 4,143 200 2,720 1,662 3,097 390 3,470 1,222 1,672 1,854 4,910 1,200 1,610 1,225 1,592 560 1,194 1,210 839 55 1,480 332 5,573 2,166 1,298 3,576 1,752 2,687 2,418 3,876 4,760 1,340 590 760 1,590 1,930 370 380 950 80 2,201 2,150 50 130 160 8,230 410 1,300 215 225 100 180 2,082 870 155 23,902 4,805 16,261 14,154 7,810 5,754 29,547 10,642 23,126 12,402 29,590 16,025 12,667 21,575 4,709 23,642 3,947 2,371 1,359 960 309 1,948 7,214 441 1,068 463 9,113 3,931 5,644 429 833 8,621 2012 1999 2018 2017 2018 2006 2011 2018 2018 2018 2008 2011 2002 2019 2013 2004 2014 250 Marter Avenue 1999 107 Bryan St. 1974 150 Spring Street 1995 Northampton Lane North 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. 2007 1023 South Cedar Rd 2010 90a Broadway 1998 200 E. Village Rd. 6,083 1,028 2013 2010 Hempstalls Lane 5,955 6,077 1,484 33,330 2,558 18,659 6,730 13,341 9,661 6,736 11,224 5,428 7,988 16,252 10,666 7,513 7,017 16,272 20,318 10,230 8,769 16,388 5,020 4,018 24,107 1,842 3,106 6,634 63,816 2,932 25,988 1,380 13,275 2,400 5,620 6,624 11,055 817 739 969 6,428 1,407 3,277 869 510 1,634 856 1,917 206 315 2,372 3,067 2,382 2,197 44 2,378 2,643 2,392 1,820 1,570 212 2,642 247 380 742 17,220 374 2,995 834 5,428 1,157 1,949 289 3,040 2014 2018 1995 2012 1999 2013 2014 2018 2013 2014 2013 2018 2018 2014 2008 2007 2007 2014 2016 2010 2010 2015 2007 2018 2015 2015 2015 2015 2010 2015 2016 1996 2005 2005 2006 2018 2008 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 2008 13200 S. May Ave 2009 11320 N. Council Road 2016 2800 SW 131st Street 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 2004 14430 Metcalf Ave 2015 7600 Antioch Road 1996 12807 E. 86th Place N. 1964 1205 Leitchfield Rd. 1979 905 Hwy. 127 N. 2005 1625 W. Spring St. 1991 11375 Prosperity Farms Road 2010 50 Town Ct. Description Encumbrances Land Building & Improvements Initial Cost to Company Cost Capitalized Subsequent to Acquisition Gross Amount at Which Carried at Close of Period Land Building & Improvements Accumulated Depreciation(1) Year Acquired Year Built Address 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 . . . . . . . . Perrysburg, OH . . . . . . Perrysburg, OH . . . . . . 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 . . . . . . . Plainview, NY . . . . . . . Plano, TX . . . . . . . . . . . Plattsmouth, NE . . . . . . Poole, UK . . . . . . . . . . Potomac, MD . . . . . . . . Potomac, MD . . . . . . . . Pottstown, PA . . . . . . . Pottsville, PA . . . . . . . . — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Prior Lake, MN . . . . . . 13,567 Raleigh, NC . . . . . . . . . Raleigh, NC . . . . . . . . . Raleigh, NC . . . . . . . . . Reading, PA . . . . . . . . . Red Bank, NJ . . . . . . . . Redondo Beach, CA . . Reidsville, NC . . . . . . . Richardson, TX . . . . . . Richmond, IN . . . . . . . Richmond, VA . . . . . . . Richmond, VA . . . . . . . Roanoke, VA . . . . . . . . Rockville Centre, NY . . . . . . . . . . . . . . Rockwall, TX . . . . . . . . Romeoville, IL . . . . . . . — — — — — — — — — — — — — — — 6,195 1,306 3,281 1,225 3,431 2,590 900 190 490 960 1,833 3,264 1,456 1,213 2,930 800 300 — 4,247 290 204 3,100 603 1,005 1,140 994 761 1,480 1,139 1,750 3,990 1,840 250 3,416 1,448 4,119 984 171 1,870 7,598 3,530 2,580 980 1,050 — 170 1,468 700 3,261 1,046 748 4,290 2,220 1,895 8,922 13,811 22,457 12,457 28,812 7,647 6,402 5,610 5,452 12,722 10,318 8,026 5,433 7,110 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 11,969 20,152 5,650 17,171 14,626 14,921 4,565 3,560 29,849 88,870 59,589 16,837 19,906 21,275 9,557 3,830 12,979 14,222 17,980 8,235 4,483 20,310 17,650 — 8,922 13,811 22,457 12,457 28,812 7,647 7,136 5,669 5,452 12,722 10,318 8,026 5,433 7,110 13,969 21,413 8,215 2,488 8,383 3,207 1,885 33,501 11,357 15,164 3,166 3,790 4,214 9,715 5,846 14,892 13,682 20,712 5,650 17,171 14,626 14,921 4,565 3,560 30,149 89,363 59,589 16,837 20,046 22,433 10,210 4,737 12,979 14,615 17,980 8,235 4,483 21,689 17,719 — — — — — — — 734 59 — — — — — — 3,536 238 101 — — 517 — — — — — — — — — 6,320 1,713 560 — — — — — — 300 493 — — 140 1,158 653 907 — 393 — — — 1,379 69 — 6,195 1,306 3,281 1,225 3,431 2,590 900 190 490 960 1,833 3,264 1,456 1,213 2,930 800 300 — 4,247 290 204 3,100 603 1,005 1,140 994 761 1,480 1,139 1,750 3,990 1,840 250 3,416 1,448 4,119 984 171 1,870 7,598 3,530 2,580 980 1,050 — 170 1,468 700 3,261 1,046 748 4,290 2,220 1,895 156 353 567 904 468 1,046 288 1,340 646 4,784 512 468 327 224 271 3,647 5,254 2,015 89 357 1,463 1,069 2,369 455 584 123 210 157 423 249 3,701 3,235 2,190 1,535 50 553 583 191 140 3,208 6,542 11,396 3,433 4,850 4,785 6,913 2,155 511 1,699 672 330 715 4,889 2,049 — 2018 2018 2018 2018 2018 2018 2011 2015 2005 2018 2018 2018 2018 2018 2011 2011 2011 2018 2018 2003 1997 2013 2018 2018 2018 2018 2018 2018 2018 2005 2011 2016 2010 2019 2018 2018 2018 2018 2015 2008 2012 2012 2011 2011 2011 2002 2018 2016 2018 2018 2018 2011 2012 2006 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 1973 10540 Fremont Pike 1978 10542 Fremont Pike 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. 1963 150 Sunnyside Blvd 2016 3325 W Plano Parkway 1999 1913 E. Highway 34 2019 Kingsmill Road 1994 10718 Potomac Tennis Lane 1988 10714 Potomac Tennis Lane 1907 724 North Charlotte Street 1976 420 Pulaski Drive 2003 4685 Park Nicollet Avenue 2017 4030 Cardinal at North Hills St 2002 5301 Creedmoor Road 1988 7900 Creedmoor Road 1994 5501 Perkiomen Ave 1997 One Hartford Dr. 1957 514 North Prospect Ave 1998 2931 Vance St. 1999 410 Buckingham Road 2015 400 Industries Road 1990 1719 Bellevue Avenue 1966 2125 Hilliard Road 1997 4355 Pheasant Ridge Rd 2002 260 Maple Ave 2014 720 E Ralph Hall Parkway 1900 Grand Haven Circle 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 Roseville, MN . . . . . . . Rugeley, UK . . . . . . . . Ruston, LA . . . . . . . . . . S Holland, IL . . . . . . . . Salem, OR . . . . . . . . . . Salisbury, NC . . . . . . . . San Angelo, TX . . . . . . San Angelo, TX . . . . . . San Antonio, TX . . . . . San Antonio, TX . . . . . San Diego, CA . . . . . . . San Juan Capistrano, 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 . . . . . 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 . . . . . . . . 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 . . . . . . . . . — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 2,140 1,900 710 1,423 449 370 260 1,050 1,499 — — 1,390 910 475 4,101 1,370 2,792 3,360 443 440 320 1,165 484 3,127 80 630 700 1,469 4,678 880 1,393 1,357 290 360 670 1,135 1,519 1,860 2,649 990 1,890 2,100 2,009 1,820 150 310 140 899 790 1,583 80 790 340 3,080 24,679 10,262 9,790 8,910 5,171 5,697 8,800 24,689 12,662 17,303 22,003 6,942 19,654 3,175 11,208 4,084 11,177 19,140 8,895 17,609 12,144 8,977 4,663 14,095 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 11,703 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 14,152 100 918 — — 1 196 425 1,221 — — 1,845 1,434 — — — — — — — — 1 — 59 — — 630 — — — 139 — 597 455 — — — 710 958 — 1,085 837 100 414 382 338 61 9 — — — — 1,155 — — 2,140 2,043 710 1,423 449 370 260 1,050 1,499 — — 1,390 910 475 4,101 1,370 2,792 3,360 443 440 320 1,165 484 3,127 80 630 700 1,469 4,678 880 1,393 1,460 290 360 670 1,135 1,581 1,860 2,649 990 1,890 2,100 2,090 1,957 150 310 140 899 790 1,583 80 849 340 3,080 157 24,779 11,037 9,790 8,910 5,172 5,893 9,225 25,910 12,662 17,303 23,848 8,376 19,654 3,175 11,208 4,084 11,177 19,140 8,895 17,609 12,145 8,977 4,722 14,095 1,400 4,500 5,221 10,395 11,683 16,559 19,848 7,033 6,135 8,216 17,770 9,390 16,689 24,571 11,703 14,463 13,227 33,119 8,571 3,483 1,785 6,244 3,636 6,391 10,787 15,639 1,400 15,604 16,313 14,152 2,677 1,976 2,424 359 2,828 2,561 3,572 3,682 493 8,455 6,664 3,500 3,861 1,991 701 164 434 4,182 382 2,530 1,741 373 2,585 624 870 1,684 1,838 405 485 4,135 764 926 2,497 1,177 2,652 362 1,013 5,579 456 2,121 3,028 3,546 750 489 788 2,662 1,589 792 423 622 872 1,901 2,619 3,422 2015 2013 2011 2018 1999 2003 2004 2014 2018 2007 2008 2000 2012 1996 2018 2018 2018 2011 2018 2014 2014 2018 1999 2018 1996 2005 2005 2018 2018 2010 2018 2014 2003 2014 2014 2018 2017 2011 2018 2014 2010 2015 2014 2014 2003 2003 2003 2018 2018 2018 1995 2015 2014 2011 1989 2750 North Victoria Street 2010 Horse Fair 1988 1401 Ezelle St 1997 2045 East 170th Street 1998 1355 Boone Rd. S.E. 1997 2201 Statesville Blvd. 1997 2695 Valleyview Blvd. 1999 6101 Grand Court Road 2000 15290 Huebner Road 2007 8902 Floyd Curl Dr. 1992 555 Washington St. 2001 30311 Camino Capistrano 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. 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 1985 6025 North Assembly 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 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 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 . . . . . . . . Toms River, NJ . . . . . . Tonganoxie, KS . . . . . . Topeka, KS . . . . . . . . . Towson, MD . . . . . . . . Towson, MD . . . . . . . . Towson, MD . . . . . . . . Troy, MI . . . . . . . . . . . . Troy, OH . . . . . . . . . . . Trumbull, CT . . . . . . . . Tulsa, OK . . . . . . . . . . . Tulsa, OK . . . . . . . . . . . Tulsa, OK . . . . . . . . . . . — — — — — — — — — — — — — — — — — — — — — — — — Tulsa, OK . . . . . . . . . . . 13,000 Tulsa, OK . . . . . . . . . . . Tustin, CA . . . . . . . . . . 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 . . . . . . . . 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 . . . . . . . . Waxahachie, TX . . . . . — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 695 11,632 4,946 1,020 2,522 1,315 1,370 192 1,035 530 1,255 1,050 3,466 310 260 1,715 3,100 4,527 1,381 200 4,440 1,390 1,320 1,100 1,752 890 840 1,446 650 1,932 112 108 2,503 1,150 2,246 263 297 1,540 1,800 3,100 2,193 1,175 1,921 670 890 200 1,356 4,358 5,394 1,184 40 875 2,000 605 650 7,246 42,233 22,131 13,735 8,576 6,913 18,016 1,403 7,446 12,520 2,761 13,300 23,311 3,690 12,712 13,115 6,468 3,128 24,452 2,000 43,384 7,110 10,087 27,007 28,421 9,410 15,299 5,921 5,268 2,374 2,558 2,962 28,401 10,674 10,097 3,187 3,263 22,593 37,299 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 5,763 7,246 43,938 22,131 19,894 8,576 6,913 18,016 1,403 7,446 13,867 2,761 14,140 23,311 3,766 12,712 13,115 6,468 3,128 24,452 6,254 43,384 8,212 10,087 29,240 28,421 9,410 15,836 5,921 5,268 2,374 2,558 2,962 28,401 10,782 10,097 3,187 3,263 22,593 37,970 25,976 6,992 8,297 5,733 14,589 19,221 5,042 6,489 18,413 39,096 9,209 2,567 12,014 32,147 3,031 5,763 — 2,174 — 6,159 — — — — — 1,347 — 840 — 76 — — — — — 4,254 — 1,102 — 2,233 — — 537 — — — — — — 108 — — — — 671 26 — — — 1 4,495 2,039 — — — 737 57 1,701 1,337 — — 695 12,101 4,946 1,020 2,522 1,315 1,370 192 1,035 530 1,255 1,050 3,466 310 260 1,715 3,100 4,527 1,381 200 4,440 1,390 1,320 1,100 1,752 890 840 1,446 650 1,932 112 108 2,503 1,150 2,246 263 297 1,540 1,800 3,100 2,193 1,175 1,921 670 890 200 1,356 4,358 5,394 1,274 40 875 2,000 605 650 158 273 2,925 829 3,457 328 313 2,463 847 1,327 2,429 142 3,171 832 473 2,579 510 240 147 909 2,345 10,012 2,264 2,121 2,334 2,023 572 3,986 255 1,794 142 1,266 1,449 1,047 3,019 418 1,550 1,596 3,282 9,153 5,244 301 350 234 2,269 4,086 2,420 285 708 1,429 1,189 298 5,798 6,904 129 1,838 2018 2014 2018 2009 2018 2018 2015 1996 2013 2011 2018 2011 2019 2015 2012 2018 2018 2018 2018 1997 2011 2010 2011 2015 2017 2017 2011 2018 2006 2018 2001 2001 2018 2008 2018 2001 2001 2014 2011 2011 2018 2018 2018 2014 2011 1998 2018 2018 2018 2015 2015 2002 2011 2018 2007 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 2006 1657 Silverton Rd 2009 120 W 8th St 2011 1931 Southwest Arvonia Place 2000 8101 Bellona Avenue 1960 509 East Joppa Road 1970 7001 North Charles Street 2006 925 West South Boulevard 1997 81 S. Stanfield Rd. 2001 6949 Main Street 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 1965 240 East 3rd St 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 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 2008 1329 Brown St. 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 Wayne, NJ . . . . . . . . . . Weatherford, TX . . . . . Wellingborough, UK . . . . . . . . . . . . . . West Bend, WI . . . . . . . West Des Moines, IA . . . . . . . . . . . . . . . West Milford, NJ . . . . . West Orange, NJ . . . . . West Reading, PA . . . . Westerville, OH . . . . . . Westerville, OH . . . . . . Westerville, OH . . . . . . Westfield, IN . . . . . . . . Westlake, OH . . . . . . . . Weston Super Mare, UK . . . . . . . . . . . . . . Wheaton, MD . . . . . . . . Whippany, NJ . . . . . . . Wichita, KS . . . . . . . . . Wichita, KS . . . . . . . . . — — — — — — — — — — — — — — — — — — Wichita, KS . . . . . . . . . 12,545 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 . . . . . . . . — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 1,427 660 1,480 620 828 1,960 1,347 890 740 1,420 1,582 890 855 2,517 3,864 1,571 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 15,679 5,261 5,724 17,790 5,104 24,614 19,395 12,122 8,287 5,373 10,282 15,964 11,966 7,054 3,790 14,982 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 10,686 6,671 22,400 — — 544 38 — — — — 4,076 — — 1 — 723 — — — — — 129 — — — — — — — 114 — — — — — — 488 — — 593 624 298 — — 6,000 — — — — — — 848 — — 1,683 1,427 660 1,592 620 828 1,960 1,347 890 740 1,420 1,582 890 855 2,707 3,864 1,571 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 1,015 1,692 1,317 594 3,500 2,300 773 1,561 1,075 976 1,050 1,121 3,185 380 2,131 1,609 15,679 5,261 6,156 17,828 5,104 24,614 19,395 12,122 12,363 5,373 10,282 15,965 11,966 7,587 3,790 14,982 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 3,002 7,937 14,826 7,437 7,183 21,233 5,108 54,099 15,060 14,918 9,442 10,694 9,357 4,212 7,586 8,890 10,686 6,671 24,084 766 1,805 890 3,783 219 672 888 441 10,273 218 424 2,462 474 1,290 159 597 5,288 2,058 3,840 277 2,218 160 722 276 100 2,649 349 2,481 525 1,388 381 1,630 2,307 828 1,337 1,618 573 1,265 1,232 1,665 594 14,483 4,863 609 459 401 372 198 322 1,225 1,563 297 5,782 2018 2006 2015 2010 2018 2019 2018 2018 1998 2018 2018 2014 2018 2013 2018 2018 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 1998 800 Hamburg Turnpike 2007 1818 Martin Drive 2015 159 Northampton 2011 2130 Continental Dr 2006 5010 Grand Ridge Drive 2000 197 Cahill Cross Road 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 1997 28400 Center Ridge Road 2011 141b Milton Road 1961 11901 Georgia Avenue 2000 18 Eden Lane 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 . . . . . $306,038 $1,036,151 $7,894,992 $351,136 $1,057,708 $8,224,571 $1,272,903 159 Welltower Inc. Schedule III Real Estate and Accumulated Depreciation December 31, 2019 (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 Building & Improvements Accumulated Depreciation(1) Year Acquired Year Built Land Address Outpatient Medical: Addison, IL . . . . . . . . . . . . $ 5,762 $ 102 $18,842 $ — $ 102 $18,842 $ 575 Agawam, MA . . . . . . . . . . Allen, TX . . . . . . . . . . . . . Alpharetta, GA . . . . . . . . . Alpharetta, GA . . . . . . . . . Alpharetta, GA . . . . . . . . . Alpharetta, GA . . . . . . . . . Alpharetta, GA . . . . . . . . . Anderson, IN . . . . . . . . . . . Appleton, WI . . . . . . . . . . Appleton, WI . . . . . . . . . . Arcadia, CA . . . . . . . . . . . Arlington, TX . . . . . . . . . . Atlanta, GA . . . . . . . . . . . . Atlanta, GA . . . . . . . . . . . . Atlanta, GA . . . . . . . . . . . . Austin, TX . . . . . . . . . . . . Austin, TX . . . . . . . . . . . . Baltimore, MD . . . . . . . . . Bardstown, KY . . . . . . . . . Bartlett, TN . . . . . . . . . . . . Bel Air, MD . . . . . . . . . . . Bellaire, TX . . . . . . . . . . . Bellaire, TX . . . . . . . . . . . Bellevue, NE . . . . . . . . . . . Bend, OR . . . . . . . . . . . . . Berkeley Heights, NJ . . . . Bettendorf, IA . . . . . . . . . . Beverly Hills, CA . . . . . . . Beverly Hills, CA . . . . . . . — — — — — — — — 7,045 12,343 — — — — — — — — — — — — — — — — — — — Beverly Hills, CA . . . . . . . 33,729 Beverly Hills, CA . . . . . . . — Beverly Hills, CA . . . . . . . 78,271 Birmingham, AL . . . . . . . . Birmingham, AL . . . . . . . . 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 . . . . . . . . . . . — 8,477 — — — — — — — — — — 1,072 726 476 1,862 548 773 1,769 584 1,881 3,782 5,408 82 4,931 — 1,947 1,066 1,688 4,490 274 187 — 5,482 5,572 5,164 14,196 14,694 — 17,103 18,902 36,152 21,077 8,866 20,440 23,219 18,243 18,720 43,425 24,248 10,112 6,784 31,222 7,537 15,015 24,769 32,478 72,478 — 16,680 16,516 30,338 49,555 — 20,766 19,863 32,603 18,863 52,772 3,940 896 31 109 50 13,324 214 2,048 2,048 1,184 1,035 1,437 92,806 7,110 40,730 31,690 28,639 1,192 87,366 12,315 13,755 12,312 34,002 12,951 40,369 5,611 7,692 7,403 9,799 4,298 7,006 — 1,302 — — 611 115 762 — — — 4,825 413 7,281 2,062 2,258 — — — — 2,346 56 — — 2 — — 73 3,591 1,683 1,149 420 897 — 6 444 4,125 915 3,178 7,597 1,233 1,705 417 17 — 1,072 726 476 1,862 548 773 1,769 584 1,881 3,782 5,618 82 5,387 — 2,172 1,066 1,688 4,490 274 187 — 5,482 5,572 5,164 15,498 14,694 — 17,714 19,017 36,914 21,077 8,866 20,440 27,834 18,656 25,545 45,487 26,281 10,112 6,784 31,222 7,537 17,361 24,825 32,478 72,478 — 5,329 5,694 — 6,751 7,097 14,961 2,042 — — 11,877 4,290 12,588 14,031 8,775 926 279 — 1,765 7,436 2,385 790 1,172 2018 2019 2012 2011 2011 2011 2011 2011 2017 2019 2019 2006 2012 2006 2012 2012 2017 2019 2019 2010 2007 2014 2019 2019 2012 303 West Lake Street 2005 230-232 Main Street 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. 2004 5320 W Michael Drive 2005 2323 N Casaloma Drive 1984 301 W. Huntington Drive 2012 902 W. Randol Mill Road 1991 755 Mt. Vernon Hwy. 2006 5670 Peachtree-Dunwoody Road 1984 975 Johnson Ferry Road 2017 5301-B Davis Lane 2015 5301-A Davis Lane 2014 1420 Key Highway 2006 4359 New Shepherdsville Rd 2004 2996 Kate Bond Rd. 2016 12 Medstar Boulevard 2007 5420 WEST LOOP SOUTH 2007 5410-5420 WEST LOOP SOUTH — 16,682 5,909 2010 2010 2510 Bellevue Medical Center Drive 16,516 30,338 830 2019 2001 1501 Northeast Medical 1,117 928 7,885 5,461 6,111 793 13,738 286 480 4,018 15,196 4,004 13,758 5,995 4,106 4,266 2,337 1,085 425 Center Drive 1978 1 Diamond Hill Road 2014 2140 53rd Avenue 1946 9675 Brighton Way 1946 416 North Bedford 1950 435 North Bedford 1955 415 North Bedford 1989 436 North Bedford 2015 4600 Highway 280 1985 3485 Independence Drive 1993 9960 S. Central Park Boulevard 1995 9970 S. Central Park Blvd. 2007 134 Menger Springs Road 1995 10301 Hagen Ranch Road 1996 10075 Jog Rd. 1995 8188 Jog Rd. 1997 8200 Jog Road 1975 315 75th Street West 2006 7005 Cortez Road West 2016 2020 Town Center Boulevard 2019 2013 2015 2015 2015 2015 2015 2019 2018 2012 2006 2011 2013 2007 2006 2006 2014 2014 2018 49,555 — 20,766 19,863 32,603 18,885 52,772 3,940 896 251 214 86 14,049 320 2,185 2,185 1,184 1,035 1,437 92,806 7,183 44,321 33,373 29,788 1,590 88,263 12,315 13,761 12,536 38,022 13,830 42,822 13,102 8,788 8,971 10,216 4,315 7,006 160 Description Encumbrances Land Building & Improvements Initial Cost to Company Cost Capitalized Subsequent to Acquisition Bridgeton, MO . . . . . . . . . Bridgeton, MO . . . . . . . . . Buckhurst Hill, UK . . . . . . Burleson, TX . . . . . . . . . . . Burnsville, MN . . . . . . . . . Cary, NC . . . . . . . . . . . . . . Castle Rock, CO . . . . . . . . Castle Rock, CO . . . . . . . . Cedar Park, TX . . . . . . . . . Chapel Hill, NC . . . . . . . . Chapel Hill, NC . . . . . . . . Chapel Hill, NC . . . . . . . . — — — — — — — — — — 5,161 5,161 Chapel Hill, NC . . . . . . . . 14,669 Charleston, SC . . . . . . . . . Charlotte, NC . . . . . . . . . . Charlotte, NC . . . . . . . . . . Charlotte, NC . . . . . . . . . . Charlotte, NC . . . . . . . . . . Charlotte, NC . . . . . . . . . . Chicopee, MA . . . . . . . . . . Chula Vista, CA . . . . . . . . Chula Vista, CA . . . . . . . . Chula Vista, CA . . . . . . . . Chula Vista, CA . . . . . . . . Cincinnati, OH . . . . . . . . . Cincinnati, OH . . . . . . . . . Claremont, CA . . . . . . . . . Clarkson Valley, MO . . . . Clear Lake, TX . . . . . . . . . Clyde, NC . . . . . . . . . . . . . Columbia, MD . . . . . . . . . Columbia, MO . . . . . . . . . Columbia, MO . . . . . . . . . Columbia, MO . . . . . . . . . Columbia, MD . . . . . . . . . Columbia, MD . . . . . . . . . Coon Rapids, MN . . . . . . . Coral Springs, FL . . . . . . . Coral Springs, FL . . . . . . . — — — — — — — — — — — — — — — — — — — — — — — — — — 1,701 450 11,989 10 — 2,816 80 — 132 488 1,970 1,970 5,681 2,815 10 30 40 1,746 1,158 6,078 1,045 826 1,114 1,075 — 537 3,950 — — 1,433 23 438 488 199 12,159 2,333 — 2,109 1,313 Costa Mesa, CA . . . . . . . . 21,243 22,033 Cypress, TX . . . . . . . . . . . Dade City, FL . . . . . . . . . . Dallas, TX . . . . . . . . . . . . . Dallas, TX . . . . . . . . . . . . . Dallas, TX . . . . . . . . . . . . . Deerfield Beach, FL . . . . . Delray Beach, FL . . . . . . . Dunkirk, MD . . . . . . . . . . . Durham, NC . . . . . . . . . . . Durham, NC . . . . . . . . . . . Durham, NC . . . . . . . . . . . Edina, MN . . . . . . . . . . . . . El Paso, TX . . . . . . . . . . . . Elmhurst, IL . . . . . . . . . . . — — — — — — — — — — — — — — 1,287 1,211 122 6,086 462 2,408 1,882 259 1,212 1,403 1,751 310 677 41 6,228 21,221 50,907 12,611 31,596 11,146 13,004 11,795 23,753 2,390 8,874 8,925 25,035 25,648 24,796 61,799 40,606 8,645 8,802 15,842 22,252 5,557 15,459 7,165 17,880 10,122 20,168 35,592 13,882 22,062 33,885 12,949 16,033 23,403 72,636 19,232 26,679 12,189 13,118 24,332 — 5,511 15,418 18,007 52,488 7,809 34,767 2,458 22,858 25,163 44,425 13,105 17,075 39,562 245 1,248 2,540 701 2,182 — 536 195 4,448 — 50 5 15 — — — — — — — — — — — 288 — — — 20 — 3,041 — — — 320 1,920 1,143 — — 135 — — 25 1,437 1,984 793 816 — 2 — — — 1,628 63 Gross Amount at Which Carried at Close of Period Building & Improvements Accumulated Depreciation(1) Year Acquired Year Built Address 6,673 22,469 52,963 13,312 33,778 11,146 13,541 11,990 28,201 2,390 8,924 8,930 25,050 25,648 24,796 61,799 40,606 8,645 8,802 15,842 22,252 5,557 15,459 7,165 18,166 10,122 20,168 35,592 11,583 22,062 27,596 12,949 16,033 23,403 72,956 21,152 27,822 12,189 13,118 24,467 — 5,511 15,443 18,994 54,472 8,470 35,014 2,458 22,860 25,163 44,425 13,105 18,703 39,625 1,009 7,743 6,406 4,701 9,564 460 3,543 747 3,471 61 406 462 1,193 5,380 1,003 2,329 1,482 564 509 — 1,075 280 357 167 4,254 548 448 14,085 1,544 402 8,367 716 629 823 3,187 5,855 6,473 516 415 4,889 — 1,675 2,311 1,362 12,770 3,608 18,094 128 4,750 552 801 4,988 8,779 1,622 2017 2010 2015 2011 2013 2019 2014 2016 2017 2019 2018 2018 2018 2014 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2012 2019 2019 2009 2013 2019 2015 2019 2019 2019 2018 2012 2013 2019 2019 2017 2016 2011 2013 2018 2012 2011 2006 2019 2013 2019 2019 2010 2006 2018 2008 3440 De Paul Ln. 2006 12266 DePaul Dr 2013 High Road 2007 12001 South Freeway 2014 14101 Fairview Dr 2007 540 Waverly Place 2013 2352 Meadows Boulevard 2017 Meadows Boulevard 2014 1401 Medical Parkway, Building 2 2010 100 Perkins Drive 2007 6011 Farrington Road 2007 6013 Farrington Road 2006 2226 North Carolina Highway 54 2009 325 Folly Road 1971 1900 Randolph Road 1994 1918 Randolph Road 1989 1718 East Fourth Street 1998 309 South Sharon Amity Road 1998 5039 Airport Center Parkway 2005 444 Montgomery Street 1973 480 4th Avenue 1985 450 4th Avenue 2008 971 Lane Ave 2006 959 Lane Ave 2013 3301 Mercy Health Boulevard 2001 4850 Red Bank Expressway 2008 1601 Monte Vista Avenue 2010 15945 Clayton Rd 2014 1010 South Ponds Drive 2012 581 Leroy George Drive 1982 5450 & 5500 Knoll N Dr. 1994 1601 E. Broadway 1999 1605 E. Broadway 2007 1705 E. Broadway 2009 10710 Charter Drive 2002 10700 Charter Drive 2014 11850 Blackfoot Street NW 2005 2901 Coral Hills Drive 2008 3001 Coral Hills Drive 2007 1640 Newport Boulevard 1900 14940 Mueschke Road 1998 13413 US Hwy 301 2014 8196 Walnut Hill Lane 2010 10740 North Central Expressway 2004 7115 Greenville Avenue 2001 1192 East Newport Center Drive 1985 5130-5150 Linton Blvd. 1997 10845 Town Center Blvd 2012 1823 Hillandale Road 2000 120 William Penn Plaza 2004 3916 Ben Fanklin Boulevard 2003 8100 W 78th St 1997 2400 Trawood Dr. 2011 133 E Brush Hill Road Land 1,501 450 12,473 10 — 2,816 79 — 132 488 1,970 1,970 5,681 2,815 10 30 40 1,746 1,158 6,078 1,045 826 1,114 1,075 2 537 3,950 — 2,319 1,433 9,353 438 488 199 12,159 2,333 — 2,109 1,313 22,033 1,287 1,211 122 6,536 462 2,540 2,451 259 1,212 1,403 1,751 310 677 41 161 Description Encumbrances Land Building & Improvements Initial Cost to Company Cost Capitalized Subsequent to Acquisition Gross Amount at Which Carried at Close of Period Building & Improvements Accumulated Depreciation(1) Year Acquired Year Built Land Address Elyria, OH . . . . . . . . . . . . . . Escondido, CA . . . . . . . . . . Everett, WA . . . . . . . . . . . . Fenton, MO . . . . . . . . . . . . . Fenton, MO . . . . . . . . . . . . . Fish Kill, NY . . . . . . . . . . . Florham Park, NJ . . . . . . . . Flower Mound, TX . . . . . . . Flower Mound, TX . . . . . . . Flower Mound, TX . . . . . . . Fort Worth, TX . . . . . . . . . . Fort Worth, TX . . . . . . . . . . Franklin, TN . . . . . . . . . . . . Frederick, MD . . . . . . . . . . . Frederick, MD . . . . . . . . . . . Fresno, CA . . . . . . . . . . . . . Frisco, TX . . . . . . . . . . . . . . Frisco, TX . . . . . . . . . . . . . . Gallatin, TN . . . . . . . . . . . . — — — — — — — — — — — — — — — — — — — Gardendale, AL . . . . . . . . . . 4,246 Garland, TX . . . . . . . . . . . . Gastonia, NC . . . . . . . . . . . . Gig Harbor, WA . . . . . . . . . Glendale, CA . . . . . . . . . . . Glendale, CA . . . . . . . . . . . Gloucester, VA . . . . . . . . . . Grand Prairie, TX . . . . . . . . Grapevine, TX . . . . . . . . . . Grapevine, TX . . . . . . . . . . Greenville, SC . . . . . . . . . . . Greenwood, IN . . . . . . . . . . Greenwood, IN . . . . . . . . . . Harrisburg, NC . . . . . . . . . . — — — — — — — — — — — — — Hattiesburg, MS . . . . . . . . . 17,986 Haymarket, VA . . . . . . . . . . Henderson, NV . . . . . . . . . . Henderson, NV . . . . . . . . . . Henderson, NV . . . . . . . . . . Highland, IL . . . . . . . . . . . . Hopewell Junction, NY . . . . Hopewell Junction, NY . . . . Houston, TX . . . . . . . . . . . . Houston, TX . . . . . . . . . . . . Houston, TX . . . . . . . . . . . . Houston, TX . . . . . . . . . . . . Houston, TX . . . . . . . . . . . . — — — — — — — — — — — — Houston, TX . . . . . . . . . . . . 3,775 Howell, MI . . . . . . . . . . . . . Humble, TX . . . . . . . . . . . . Huntersville, NC . . . . . . . . . Jackson, MI . . . . . . . . . . . . . Jacksonville, FL . . . . . . . . . — — — — — 3,263 2,278 4,842 958 369 2,144 8,578 737 4,164 4,620 462 401 2,338 1,065 1,930 1,497 — — 20 1,150 4,952 569 80 70 37 2,128 981 — 3,365 1,567 2,098 1,262 1,347 3,155 1,250 2,587 7,372 5,492 — 2,164 2,316 10,403 28,176 20,967 26,010 27,461 13,911 36,880 61,779 9,276 27,027 — 26,020 5,266 12,138 7,430 18,748 12,669 18,635 15,309 21,801 8,162 32,718 1,092 30,810 44,354 18,398 9,169 6,086 5,943 15,669 5,167 21,538 7,045 3,059 34,710 29,254 5,654 24,027 18,718 8,834 5,333 5,332 — — — 62 — 198 — — 232 1,171 — 373 — 3,060 — — — 219 2,357 1,763 211 — — 1,302 — 310 5 — 4,778 2,248 — 638 8 — — — — — — 31 — — — 3,263 2,278 4,842 958 369 2,144 8,578 737 4,164 4,620 462 401 2,338 1,065 1,930 1,497 — — 44 1,150 4,952 569 80 70 37 2,128 981 2,081 3,365 1,567 2,098 1,262 1,347 3,155 1,250 2,587 7,372 5,492 — 2,164 2,316 10,403 28,176 20,967 26,072 27,461 14,109 36,880 61,779 9,508 28,198 — 26,393 5,266 15,198 7,430 18,748 12,669 18,854 17,666 23,540 8,373 32,718 1,092 32,112 44,354 18,708 9,174 6,086 8,640 17,917 5,167 22,176 7,053 3,059 34,710 29,254 5,654 24,027 18,718 8,865 5,333 5,332 — 655 536 8,671 8,411 3,371 — 3,905 1,916 6,161 — 6,226 1,508 6,716 266 905 — 7,798 7,383 9,124 465 883 128 5,032 1,011 7,136 473 2,399 2,004 4,449 504 4,393 1,953 170 — 595 141 730 504 1,897 — — 8 2019 2019 2010 2013 2013 2019 2017 2015 2014 2014 2012 2014 2007 2019 2019 2019 2007 2007 2010 2018 2019 2019 2010 2019 2007 2018 2012 2014 2014 2019 2014 2014 2019 2019 2019 2019 2019 2019 2012 2019 2019 2011 2008 303 Chestnut Commons Drive 1994 225 East 2nd Avenue 2011 13020 Meridian Ave. S. 2009 1011 Bowles Avenue 2009 1055 Bowles Avenue 2008 2507 South Road 2017 150 Park Avenue 2014 2560 Central Park Avenue 2012 4370 Medical Arts Drive 1900 Medical Arts Drive 2012 10840 Texas Health Trail 2007 7200 Oakmont Boulevard 1988 100 Covey Drive 1979 194 Thomas Johnson Drive 2006 45 Thomas Johnson Drive 2004 1105 E Spruce Ave 2004 4401 Coit Road 2004 4461 Coit Road 1997 300 Steam Plant Rd 2005 2217 Decatur Highway 2018 7217 Telecome Parkway 2000 934 Cox Road 2009 11511 Canterwood Blvd. NW 2008 1500 E Chevy Chase Drive 2002 222 W. Eulalia St. 2008 5659 Parkway Drive 2009 2740 N State Hwy 360 2002 2040 W State Hwy 114 2002 2020 W State Hwy 114 1987 10 Enterprise Boulevard 2013 3000 S State Road 135 2010 333 E County Line Road 2012 9550 Rocky River Road 2012 3688 Veterans Memorial Drive 2008 15195 Heathcote Blvd 2002 2825 Siena Heights Drive 2005 2845 Siena Heights Drive 2005 2865 Siena Heights Drive 2013 12860 Troxler Avenue 1999 10 Cranberry Drive 2015 1955 NY-52 1900 F.M. 1960 & Northgate Forest Dr. 5,837 33,109 1,028 5,837 34,137 12,856 2012 2005 15655 Cypress Woods 2,988 3,688 1,099 377 2,000 — — 668 3,562 18,018 13,313 1,604 13,660 13,928 9,941 42,143 17,294 27,249 — 132 2,988 3,688 81,406 12,815 — 794 — — — — 377 2,000 1,702 — 668 3,562 18,018 13,445 71,294 13,660 14,722 8,239 42,143 17,294 27,249 — 3,990 16,843 741 747 1,064 1,357 5,075 799 2016 2012 2012 2018 2016 2013 2019 2013 2019 Medical Dr. 2019 13105 Wortham Center Drive 2007 10701 Vintage Preserve Parkway 1998 2727 W Holcombe Boulevard 2011 20207 Chasewood Park Drive 2017 1225 South Latson Road 2014 8233 N. Sam Houston Parkway E. 2004 10030 Gilead Road 2009 1201 E Michigan Avenue 2006 10475 Centurion Parkway North 162 Description Encumbrances Land Building & Improvements Initial Cost to Company Cost Capitalized Subsequent to Acquisition Gross Amount at Which Carried at Close of Period Building & Improvements Accumulated Depreciation(1) Year Acquired Year Built Land Address Jefferson City, TN . . . . . . . Jonesboro, GA . . . . . . . . . . Jonesboro, GA . . . . . . . . . . Jupiter, FL . . . . . . . . . . . . . . Jupiter, FL . . . . . . . . . . . . . . Killeen, TX . . . . . . . . . . . . . Killeen, TX . . . . . . . . . . . . . Killeen, TX . . . . . . . . . . . . . Knoxville, TN . . . . . . . . . . . La Jolla, CA . . . . . . . . . . . . La Jolla, CA . . . . . . . . . . . . La Quinta, CA . . . . . . . . . . . — — — — — — — — — — — — Lacey, WA . . . . . . . . . . . . . 6,589 Lake St Louis, MO . . . . . . . Lakeway, TX . . . . . . . . . . . Lakewood, CA . . . . . . . . . . Lakewood, WA . . . . . . . . . . Land O Lakes, FL . . . . . . . . Land O Lakes, FL . . . . . . . . Las Vegas, NV . . . . . . . . . . Las Vegas, NV . . . . . . . . . . Lincoln, NE . . . . . . . . . . . . . Little Rock, AR . . . . . . . . . . London, UK . . . . . . . . . . . . London, UK . . . . . . . . . . . . London, UK . . . . . . . . . . . . Los Alamitos, CA . . . . . . . . Los Gatos, CA . . . . . . . . . . . Los Gatos, CA . . . . . . . . . . . Loxahatchee, FL . . . . . . . . . Loxahatchee, FL . . . . . . . . . Loxahatchee, FL . . . . . . . . . Lubbock, TX . . . . . . . . . . . . Lynbrook, NY . . . . . . . . . . . Madison, WI . . . . . . . . . . . . Margate, FL . . . . . . . . . . . . Marietta, GA . . . . . . . . . . . . Matthews, NC . . . . . . . . . . . Menasha, WI . . . . . . . . . . . . Merced, CA . . . . . . . . . . . . . Meridian, ID . . . . . . . . . . . . Mesquite, TX . . . . . . . . . . . — — — — — — — — — — — — — — — — — — — 42,982 27,196 — — — — — — — — Mission Hills, CA . . . . . . . . 23,325 Missouri City, TX . . . . . . . . — Mobile, AL . . . . . . . . . . . . . 15,755 Moline, IL . . . . . . . . . . . . . . Monticello, MN . . . . . . . . . Moorestown, NJ . . . . . . . . . Mount Juliet, TN . . . . . . . . . Mount Kisco, NY . . . . . . . . Mount Vernon, IL . . . . . . . . Murrieta, CA . . . . . . . . . . . . Murrieta, CA . . . . . . . . . . . . — 6,367 — — — — — — 109 567 627 2,825 2,252 — 1,907 760 199 12,855 9,425 3,266 1,751 240 2,801 146 72 3,025 1,376 433 2,319 1,420 3,021 5,229 17,983 4,081 39 488 16,896 1,340 1,553 1,637 2,286 10,028 3,670 219 2,682 10 1,374 — 3,206 496 — 1,360 2,759 — 61 6 1,566 12,632 — — 3,800 16,453 16,329 16,554 5,858 11,415 3,756 3,575 22,878 45,961 32,658 26,525 22,066 10,345 14,249 — 14,885 16,017 26,249 6,750 4,928 4,612 29,723 16,058 11,551 157,802 28,107 18,340 21,961 — 6,509 4,694 5,048 72,893 37,319 28,329 9,293 20,053 32,741 13,861 13,772 27,107 3,834 42,276 7,143 25,180 8,783 18,489 50,896 11,697 51,220 24,892 47,190 — — — — 1,298 3,889 2,235 — 143 — 1,496 392 668 — 337 — 1,956 707 — — — 1,486 711 — 678 7,098 1,300 — — — 1,490 1,680 1,280 — 658 — — 1,516 — 2,963 815 — — 6,889 — 13 69 139 867 1,779 — 109 110 — 109 567 627 3,036 2,639 — 1,907 795 199 12,855 9,425 3,279 1,751 240 2,801 146 72 3,025 1,376 433 2,319 1,420 3,021 5,440 18,709 4,246 39 488 16,896 1,440 1,650 1,719 2,286 10,028 3,670 219 2,703 10 1,345 — 3,206 496 4,791 1,360 2,759 — 61 362 1,601 12,632 — — 3,800 16,453 16,329 16,554 6,945 14,917 5,991 3,575 22,986 45,961 34,154 26,917 22,721 10,345 14,586 — 16,841 16,724 26,249 6,750 4,928 6,098 30,434 16,058 12,018 164,174 29,242 18,340 21,961 — 7,899 6,277 6,246 72,893 37,977 28,329 9,293 21,548 32,741 16,853 14,587 27,107 3,834 44,374 7,143 25,193 8,852 18,628 51,407 13,441 51,220 25,001 47,300 — 163 559 482 452 3,289 6,242 387 655 8,746 1,003 7,206 4,894 5,515 530 5,462 — 6,771 4,648 2,035 581 2,088 2,962 11,316 124 1,454 19,858 3,537 7,081 9,127 — 3,475 2,948 2,942 — 1,635 620 410 3,465 983 2,827 5,593 — 1,203 10,268 595 990 1,416 4,661 14,676 6,077 — 7,330 20,411 — 2019 2019 2001 120 Hospital Drive 2009 7813 Spivey Station Boulevard 2019 2007 7823 Spivey Station Boulevard 2004 600 Heritage Dr. 2001 550 Heritage Dr. 1990 2301 S. Clear Creek 2012 5702 E Central Texas Expressway 2010 2405 Clear Creek Rd 2012 1926 Alcoa Highway 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 1997 1776 E. Warm Springs Rd. 1991 2870 S. Maryland Pkwy. 2003 575 South 70th St 2014 6119 Midtown Avenue 2007 17-19 View Road 2010 53 Parkside 2003 49 Parkside 2003 3771 Katella Ave. 1993 555 Knowles Dr. 1900 555 Knowles Dr. 1993 12989 Southern Blvd. 1994 12983 Southern Blvd. 1997 12977 Southern Blvd. 2006 4515 Marsha Sharp Freeway 1962 444 Merrick Road 2012 1102 South Park Street 2004 2960 N. State Rd 7 2016 4800 Olde Towne Parkway 1994 1450 Matthews Township Parkway 1994 1550 Midway Place 2010 315 Mercy Ave. 2009 3277 E Louise Drive 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 2005 5002 Crossings Circle 1996 90-110 South Bedford Road 2012 2 Good Samaritan Way 2011 28078 Baxter Rd. 1900 28078 Baxter Rd. 2007 2006 2018 2011 2010 2019 2015 2015 2014 2018 2010 2007 2006 2012 2017 2017 2007 2006 2010 2019 2015 2015 2015 2007 2006 2019 2006 2006 2006 2019 2018 2019 2019 2016 2019 2016 2009 2019 2012 2014 2015 2018 2012 2012 2011 2007 2019 2011 2010 2014 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 Myrtle Beach, SC . . . . . . — Nampa, ID . . . . . . . . . . . . 15,675 Nashville, TN . . . . . . . . . New Albany, IN . . . . . . . Newburgh, NY . . . . . . . . Newburyport, MA . . . . . . Niagara Falls, NY . . . . . . Niagara Falls, NY . . . . . . Norfolk, VA . . . . . . . . . . — — — — — — — North Canton, OH . . . . . . 13,202 North Easton, MA . . . . . . North Easton, MA . . . . . . Norwood, OH . . . . . . . . . Novi, MI . . . . . . . . . . . . . Oklahoma City, OK . . . . Oro Valley, AZ . . . . . . . . Oxford, NC . . . . . . . . . . . Palmer, AK . . . . . . . . . . . Palmer, AK . . . . . . . . . . . Pasadena, TX . . . . . . . . . Pearland, TX . . . . . . . . . . Pearland, TX . . . . . . . . . . Pendleton, OR . . . . . . . . . Phoenix, AZ . . . . . . . . . . Phoenix, AZ . . . . . . . . . . Phoenix, AZ . . . . . . . . . . Phoenix, AZ . . . . . . . . . . Pineville, NC . . . . . . . . . . Plano, TX . . . . . . . . . . . . Plano, TX . . . . . . . . . . . . Plantation, FL . . . . . . . . . Plantation, FL . . . . . . . . . Port Orchard, WA . . . . . . Poughkeepsie, NY . . . . . Poughkeepsie, NY . . . . . — — — — — — — — — — — — — — — — — — — — — — 9,973 — — Poughkeepsie, NY . . . . . 19,065 Powell, TN . . . . . . . . . . . Powell, TN . . . . . . . . . . . Prince Frederick, MD . . . Prince Frederick, MD . . . Rancho Mirage, CA . . . . Redmond, WA . . . . . . . . Reno, NV . . . . . . . . . . . . Richmond, TX . . . . . . . . Richmond, VA . . . . . . . . Rockwall, TX . . . . . . . . . Rogers, AR . . . . . . . . . . . Rolla, MO . . . . . . . . . . . . Rome, GA . . . . . . . . . . . . Roseville, MN . . . . . . . . . Roxboro, NC . . . . . . . . . . Salem, NH . . . . . . . . . . . . San Antonio, TX . . . . . . . San Antonio, TX . . . . . . . San Antonio, TX . . . . . . . San Antonio, TX . . . . . . . — — — — — — — — — — — — — — — — — — — — 1,357 3,439 1,806 2,411 9,213 3,104 1,433 454 1,138 2,518 2,336 2,882 1,017 895 216 89 478 283 217 1,700 1,500 9,594 — 199 109 229 1,149 961 793 5,423 8,563 8,848 2,810 4,035 6,513 5,128 179 179 229 179 7,292 5,015 1,117 2,000 2,969 132 1,062 1,931 99 2,963 368 1,655 1,057 1,038 2,915 3,050 3,658 21,566 7,165 16,494 32,354 19,370 10,891 8,362 26,989 24,452 19,876 15,999 6,638 36,944 18,762 18,339 4,971 8,335 29,705 8,009 11,253 32,753 10,312 3,853 2,207 5,867 48,018 6,974 83,209 20,698 10,666 9,262 22,716 30,459 27,863 20,769 27,417 34,903 26,889 12,801 15,141 26,697 21,972 9,118 26,697 17,197 28,680 47,639 29,597 20,169 2,477 14,050 10,101 9,173 11,141 12,073 3,658 21,566 10,917 16,643 32,354 19,370 11,122 8,672 26,989 24,452 19,876 15,999 6,638 36,944 18,762 19,440 4,971 8,600 31,191 8,167 11,259 32,731 10,692 3,853 2,207 5,867 59,427 9,436 88,568 22,576 15,426 11,238 22,755 30,459 27,863 20,769 27,417 34,903 26,889 12,801 15,141 27,777 24,211 9,122 28,026 17,590 31,091 47,640 29,597 20,169 2,477 14,070 10,224 10,963 11,141 12,104 — — 3,888 152 — — 519 310 — — — — — — — 1,101 — 265 1,486 158 6 191 380 — — — 11,409 2,582 5,359 1,878 4,772 2,036 39 — — — — — — — — 1,080 2,239 4 1,450 393 2,411 1 — — — 46 123 1,848 — 31 1,357 3,439 1,942 2,414 9,213 3,104 1,721 454 1,138 2,518 2,336 2,882 1,017 895 216 89 478 283 217 1,700 1,500 9,807 — 199 109 229 1,149 1,081 793 5,423 8,575 8,908 2,810 4,035 6,513 5,128 179 179 229 179 7,292 5,015 1,117 2,000 3,090 132 1,062 1,931 99 2,963 368 1,681 1,057 1,096 2,915 3,050 164 565 — 5,061 3,643 — 684 6,187 3,620 1,006 — — — 50 1,013 5,419 7,305 125 549 11,825 1,328 1,739 6,265 1,672 132 138 241 27,378 5,009 23,750 13,141 8,343 7,026 1,037 — — — 907 699 792 389 — 9,474 10,179 856 9,730 4,751 10,619 14,809 1,510 — 63 3,713 5,375 5,795 462 600 2019 2019 2006 2014 2019 2019 2007 2007 2019 2019 2019 2019 2019 2019 2013 2007 2019 2017 2007 2012 2012 2014 2012 2019 2019 2019 2006 2006 2012 2008 2006 2006 2018 2019 2019 2019 2019 2019 2019 2019 2019 2010 2006 2015 2012 2012 2011 2011 2019 2019 2019 2014 2006 2006 2019 2016 1996 8170 Rourk Street 2017 1512 12th Avenue 1986 310 25th Ave. N. 2001 2210 Green Valley Road 2015 1200 NY-300 2008 One Wallace Bashaw Jr. Way 1995 6932-6934 Williams Rd 2004 6930 Williams Rd 2014 155 Kingsley Lane 2014 7442 Frank Avenue 2007 15 Roche Brothers Way 2008 31 Roche Brothers Way 2006 4685 Forest Avenue 2008 26750 Providence Parkway 2008 535 NW 9th Street 2004 1521 East Tangerine Rd. 2011 107 East McClanahan Street 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 1980 9225 N 3rd Street 1986 9327 North 3rd Street 1994 9100 N 2nd Street 1998 2222 E. Highland Ave. 1988 10512 Park Rd. 2005 6020 West Parker Road 2007 6957 Plano Parkway 1997 851-865 SW 78th Ave. 1996 600 Pine Island Rd. 1995 450 South Kitsap Boulevard 2010 30 Columbia Street 2006 600 Westage Drive 2012 1910 South Road 2005 7557 A Dannaher Drive 2008 7557 B Dannaher Drive 2009 130 Hospital Road 1991 110 Hospital Road 2005 72780 Country Club Drive 2011 18100 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 2005 330 Turner McCall Boulevard 2015 1835 W County Road C 2000 799 Doctors Court 2013 31 Stiles Road 1999 19016 Stone Oak Pkwy. 1999 540 Stone Oak Centre Drive 2006 150 E Sonterra Blvd 2017 5206 Research Drive Description Encumbrances Land Building & Improvements Initial Cost to Company Cost Capitalized Subsequent to Acquisition Gross Amount at Which Carried at Close of Period Land Building & Improvements Accumulated Depreciation(1) Year Acquired Year Built Address San Antonio, TX . . . . . . . Santa Clarita, CA . . . . . . Santa Clarita, CA . . . . . . Santa Clarita, CA . . . . . . — — — — Santa Clarita, CA . . . . . . 25,000 Santa Clarita, CA . . . . . . Seattle, WA . . . . . . . . . . . Sewell, NJ . . . . . . . . . . . . Sewell, NJ . . . . . . . . . . . . Shakopee, MN . . . . . . . . Shakopee, MN . . . . . . . . Shenandoah, TX . . . . . . . Sherman Oaks, CA . . . . . — — — — 5,393 9,093 — — Silverdale, WA . . . . . . . . 13,117 Somerville, NJ . . . . . . . . Southlake, TX . . . . . . . . . Southlake, TX . . . . . . . . . Southlake, TX . . . . . . . . . Southlake, TX . . . . . . . . . Springfield, IL . . . . . . . . . Springfield, IL . . . . . . . . . Springfield, MA . . . . . . . St Paul, MN . . . . . . . . . . St. Louis, MO . . . . . . . . . St. Paul, MN . . . . . . . . . . Stamford, CT . . . . . . . . . — — — — — — — — — — — — Stockton, CA . . . . . . . . . . 11,639 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 . . . . . . . . . . . . Tyler, TX . . . . . . . . . . . . Van Nuys, CA . . . . . . . . . Voorhees, NJ . . . . . . . . . . Voorhees, NJ . . . . . . . . . . Waco, TX . . . . . . . . . . . . Waco, TX . . . . . . . . . . . . Waco, TX . . . . . . . . . . . . Waco, TX . . . . . . . . . . . . Washington, PA . . . . . . . . . . . . . . . . . Wausau, WI Waxahachie, TX . . . . . . . Wellington, FL . . . . . . . . Wellington, FL . . . . . . . . Westlake Village, CA . . . Westlake Village, CA . . . — — — — — — — — — — — — 61,899 — — — — — — 14,496 19,273 — — — — 6,360 7,999 938 — — 278 295 — 4,410 1,242 164 509 707 — — 3,451 3,400 3,000 2,875 592 16,437 2,338 28,384 185 39,284 20,618 38,428 11,616 53,859 11,350 18,089 21,135 32,186 21,176 22,244 — 15,471 18,123 698 30,549 1,569 177 2,721 49 336 2,706 — 4,966 696 1,566 3,543 — — 4,319 1,462 2,900 8,829 1,302 3,345 3,361 2,903 — 6 6,404 125 35 441 2,250 3,981 2,050 303 580 107 2,487 2,553 10,350 3,519 6,615 37,695 17,247 39,507 41,153 16,844 37,211 11,511 15,532 64,307 17,449 12,234 7,270 9,954 12,568 4,925 541 12,039 114,853 36,187 96,075 24,251 164 113 2,537 28,632 31,706 12,175 18,069 11,047 16,933 9,776 15,851 — 20,669 2,550 11,594 — 1,076 409 6 — — 156 62 3,412 12 2 — — — 48 — 31 — 400 2,397 386 2,636 — — 229 — — — — — 26 161 1,113 223 1,913 — — 757 1,817 — — — 106 17 — — — 2,229 6 95 938 5,304 5,277 11,872 295 4,407 4,410 1,242 164 509 773 4,574 3,121 3,451 3,400 3,000 2,875 592 16,437 17,703 25,657 185 39,284 17,287 38,837 11,622 53,859 11,350 18,179 16,623 32,477 21,188 22,246 — 15,471 18,123 4,571 3,884 5,165 178 6,311 3,670 17,817 641 21,033 4,472 5,640 2,083 7,246 919 6,349 — 350 5,863 2014 2014 2014 2014 2014 2014 2010 2018 2007 2010 2010 2013 2014 2018 2008 2014 2019 2012 2007 3903 Wiseman Boulevard 1976 23861 McBean Parkway 1998 23929 McBean Parkway 1996 23871 McBean Parkway 2013 23803 McBean Parkway 1989 24355 Lyons Avenue 2010 5350 Tallman Ave 2007 556 Egg Harbor Road 2009 239 Hurffville-Cross Keys Road 1996 1515 St Francis Ave 2007 1601 St Francis Ave 2014 106 Vision Park Boulevard 1969 4955 Van Nuys Boulevard 2004 2200 NW Myhre Road 2007 30 Rehill Avenue 1900 Central Avenue 2017 925 E. Southlake Boulevard 2004 1545 East Southlake Boulevard 698 30,597 8,090 2012 2004 1545 East Southlake 1,637 580 — 6,317 8,096 13,580 3,620 — 13,568 5,119 6,172 20,433 6,615 3,181 614 1,880 1,323 3,095 310 3,436 — 10,936 29,171 10,633 4 3 195 1,240 1,389 1,223 2,578 5,030 7,693 684 1,044 Boulevard 2011 1100 East Lincolnshire Blvd 2011 2801 Mathers Rd. 2012 305 Bicentennial Highway 2006 225 Smith Avenue N. 2001 2325 Dougherty Rd. 2007 435 Phalen Boulevard 2016 29 Hospital Plaza 2009 2488 N California Street 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 2013 1814 Roseland Boulevard 1991 6815 Noble Ave. 2012 200 Bowman Drive 1997 900 Centennial Blvd. 1962 6612 Fish Pond Road 1961 6620 Fish Pond Rd 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 2003 1395 State Rd. 7 2000 10115 Forest Hill Blvd. 1989 1220 La Venta Drive 1975 1250 La Venta Drive 2010 2010 2019 2014 2007 2011 2015 2019 2011 2010 2012 2011 2010 2011 2017 2011 2015 2008 2015 2015 2019 2009 2010 2006 2018 2018 2018 2018 2018 2015 2016 2007 2006 2018 2018 1,568 177 2,721 49 336 2,701 — 4,966 696 1,620 3,543 — — 4,319 1,462 2,900 8,850 1,325 3,345 3,361 2,903 — 99 6,477 125 35 441 2,250 3,981 2,050 303 580 326 2,487 2,553 10,351 3,550 6,615 38,095 19,644 39,898 43,789 16,844 37,211 11,686 15,532 64,307 17,449 12,234 7,270 9,980 12,708 6,015 764 13,952 114,853 36,187 96,739 25,995 164 113 2,537 28,738 31,723 12,175 18,069 11,047 18,943 9,782 15,946 165 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 Westville, IN . . . . . . . . . . Winston-Salem, NC . . . . Woodbridge, VA . . . . . . . Yuma, AZ . . . . . . . . . . . . Zephyrhills, FL . . . . . . . . Zephyrhills, FL . . . . . . . . Outpatient Medical — — — — — — 1,293 2,006 346 1,592 3,875 5,444 13,227 7,497 16,534 10,185 27,270 29,088 — — — — — — 1,293 2,006 346 1,592 3,875 5,444 13,227 7,497 16,534 10,185 27,270 29,088 279 526 617 496 7,779 1,725 2019 2019 2018 2019 2011 2018 2010 1668 South US 421 1998 2025 Frontis Plaza 2012 12825 Minnieville Road 2004 2270 South Ridgeview Drive 1974 38135 Market Square Dr 2016 2352 Bruce B Downs Boulevard Total . . . . . . . . . . . . . . $572,266 $885,789 $6,626,075 $323,055 $959,834 $6,875,085 $1,248,499 166 Welltower Inc. Schedule III Real Estate and Accumulated Depreciation December 31, 2019 (Dollars in thousands) Description Encumbrances 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: Adelphi, MD . . . . . . . . . . $ — $ 1,429 $ Akron, OH . . . . . . . . . . . Ayer, MA . . . . . . . . . . . . Birmingham, AL . . . . . . . Birmingham, AL . . . . . . . Birmingham, AL . . . . . . . Boardman, OH . . . . . . . . Brookline, MA . . . . . . . . Burlington, MA . . . . . . . . Carmel, IN . . . . . . . . . . . Carmel, IN . . . . . . . . . . . Claremore, OK . . . . . . . . Concord, NH . . . . . . . . . . Dallas, TX . . . . . . . . . . . . Dayton, OH . . . . . . . . . . . Fort Wayne, IN . . . . . . . . Fullerton, CA . . . . . . . . . Gilroy, CA . . . . . . . . . . . Great Falls, MT . . . . . . . . Greenwood, IN . . . . . . . . Guelph, ON . . . . . . . . . . . Henderson, NV . . . . . . . . High Point, NC . . . . . . . . Houston, TX . . . . . . . . . . Houston, TX . . . . . . . . . . Hudson, OH . . . . . . . . . . Hyattsville, MD . . . . . . . — — — — — — — — — — — — — — — — — — — — — — — — — — Kirkland, WA . . . . . . . . . 24,600 Kitchener, ON . . . . . . . . . Kyle, TX . . . . . . . . . . . . . Largo, MD . . . . . . . . . . . Las Vegas, NV . . . . . . . . Las Vegas, NV . . . . . . . . Lenexa, KS . . . . . . . . . . . Lenexa, KS . . . . . . . . . . . Mechanicsburg, PA . . . . . Melbourne, FL . . . . . . . . Merriam, KS . . . . . . . . . . Merriam, KS . . . . . . . . . . Merriam, KS . . . . . . . . . . Merrillville, IN . . . . . . . . Mesa, AZ . . . . . . . . . . . . Morrow, GA . . . . . . . . . . Nassau Bay, TX . . . . . . . Nassau Bay, TX . . . . . . . — — — — — — — — — — — — — — — — — 821 — 52 124 476 80 — 2,750 2,280 4,312 12,105 22,074 10,201 11,733 18,726 12,161 17,435 57,488 19,238 2,026 21,559 132 720 137 730 1,105 5,477 760 630 8,316 1,190 880 2,659 3,102 5,090 2,587 4,017 3,450 1,130 2,569 3,361 74 — 540 100 1,350 3,439 176 — 1,257 — 1,558 818 378 91 11,173 3,041 28,690 6,919 22,836 53,890 13,880 6,007 26,384 7,597 29,809 29,069 32,323 9,471 13,720 2,298 38,709 9,939 14,384 3,623 15,287 2,945 17,926 13,766 16,650 50,461 8,005 10,222 24,911 22,134 9,561 8,064 29,947 10,613 $ — $ — $ — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 13,331 — — — — — — — — — — — — — — — — — — — — — — — — — — — 167 $ 5,554 9,544 8,735 5,508 7,995 12,234 7,403 17,435 56,762 14,226 14,292 7,529 3,344 18,703 4,586 17,809 54,244 27,971 6,131 26,763 — 24,506 24,246 31,476 7,840 11,865 6,206 33,598 — 13,928 6,819 9,765 2,945 12,460 11,718 1,964 43,431 5,235 8,218 18,927 15,000 7,244 4,673 14,655 5,303 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 2018 2012 2011 2006 2006 2006 2010 2019 2016 2011 1967 1801 Metzerott Road 2010 701 White Pond Drive 1988 400 Groton Road 1971 801 Princeton Avenue SW 1985 817 Princeton Avenue SW 1989 833 Princeton Avenue SW 2007 8423 Market St 1900 110 Fisher Avenue 2011 50 Greenleaf Way 2005 12188-A North Meridian Street 2011 2007 12188-B North Meridian Street 2007 2011 2006 2011 2012 2014 2006 2018 2012 2015 2011 2012 2014 2007 2012 2018 2011 2013 2014 2018 2006 2007 2010 2013 2011 2014 2011 2011 2013 2008 2008 2007 2012 2012 2005 1501 N. Florence Ave. 1926 227 Pleasant Street 1995 9330 Poppy Dr. 1988 1530 Needmore Road 2004 7916 Jefferson Boulevard 2007 1950 Sunny Crest Drive 2007 7610 Isabella Way 2001 1801 9th Street South 2010 1260 Innovation Parkway 1978 165 Cole Road 2009 1935 Paseo Verde Parkway 2010 4515 Premier Drive 2014 1900 N Loop W Freeway 2009 15015 Cypress Woods Medical Drive 2006 5655 Hudson Drive 1964 6500 Riggs Road 2009 14 Main Street South 1988 20 Fieldgate Street 2011 135 Bunton Creek Road 1978 600 Largo Road 2000 1815 E. Lake Mead Blvd. 1900 SW corner of Deer Springs Way and Riley Street 2008 23401 Prairie Star Pkwy 2013 23351 Prairie Star Parkway 1971 4950 Wilson Lane 2009 2222 South Harbor City Boulevard 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 1990 6635 Lake Drive 1981 18100 St John Drive 1986 2060 Space Park Drive Description Encumbrances 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 Needham, MA . . . . . . . . . Newburyport, MA . . . . . . Niagara Falls, ON . . . . . . North Cape May, NJ . . . . North Dartmouth, MA . . Oceanside, CA . . . . . . . . Ogden, UT . . . . . . . . . . . Palm Springs, FL . . . . . . Palm Springs, FL . . . . . . — — — — — — — — — Plymouth, MA . . . . . . . . 12,860 Portland, ME . . . . . . . . . . — Renton, WA . . . . . . . . . . 20,790 Rexburg, ID . . . . . . . . . . Roswell, NM . . . . . . . . . . Roswell, NM . . . . . . . . . . Roswell, NM . . . . . . . . . . Sacramento, CA . . . . . . . San Antonio, TX . . . . . . . San Diego, CA . . . . . . . . San Diego, CA . . . . . . . . San Jose, CA . . . . . . . . . . Santa Maria, CA . . . . . . . Sarasota, FL . . . . . . . . . . Seattle, WA . . . . . . . . . . . Tacoma, WA . . . . . . . . . . Tacoma, WA . . . . . . . . . . Tewksbury, MA . . . . . . . Toronto, ON . . . . . . . . . . West Seneca, NY . . . . . . Wilkes-Barre, PA . . . . . . Assets Held For Sale — — — — — — — — — — — 48,540 17,640 — — — — — 1,240 1,750 1,225 77 1,700 2,160 384 739 1,182 2,550 655 3,080 1,267 183 883 762 866 4,518 — 4,200 2,850 6,050 62 6,790 2,400 1,535 2,350 1,361 917 570 32,992 29,187 7,963 151 35,337 18,352 2,228 4,066 7,765 35,055 25,529 51,824 3,213 5,850 15,984 17,171 12,756 31,041 22,003 30,707 35,098 50,658 47,325 85,369 35,053 6,068 24,118 2,915 22,435 2,301 — — — 4,203 — — — — — — — 12,281 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 32,308 29,118 — 4,431 35,298 18,111 — 2,061 3,790 35,551 17,783 67,185 67 3,909 11,896 13,361 7,714 28,015 — 29,218 30,088 44,355 36,149 73,052 30,014 6,479 25,200 — 16,218 2,847 Total . . . . . . . . . . . . . . $ 124,430 $ 122,167 $ 1,511,800 $ 29,815 $ — $ 1,253,008 $ 2016 2016 2015 2015 2016 2011 2018 2006 2006 2016 2011 2011 2018 2011 2011 2011 2006 2012 2008 2011 2011 2011 2012 2011 2011 2015 2016 2013 2007 2011 2011 880 Greendale Avenue 2015 4 Wallace Bashaw Junior Way 1991 7860 Lundy’s Lane 1988 610 Town Bank Road 1997 239 Cross Road 2005 3500 Lake Boulevard 1987 400 East 5350 South 1993 1640 S. Congress Ave. 1997 1630 S. Congress Ave. 1970 60 Stafford Hill 2008 195 Fore River Parkway 2007 104 Burnett Avenue South 1988 660 South 2nd West 2004 601 West Country Club Road 2006 350 West Country Club Road 2009 300 West Country Club Road 1990 8120 Timberlake Way 1986 5282 Medical Drive 1992 555 Washington St. 2011 2567 Second Avenue 2009 1420 Curvi Drive 2001 1220 Suey Road 1990 1921 Waldemere Street 2009 5300 24th Avenue NE 2008 7290 Rosemount Circle 2012 7290 Rosemount Circle 2006 2000 Emerald Court 1985 3705 Bathurst Street 1990 550 Orchard Park Rd 1992 300 Courtright Street — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Summary: Seniors Housing Operating . . . . . . . . . . $1,990,607 $1,383,927 $13,886,675 $1,879,176 $1,469,078 $15,680,700 $3,194,057 Triple-net . . . . . . . . . . . . Outpatient Medical . . . . . 306,038 572,266 1,036,151 885,789 7,894,992 6,626,075 351,136 323,055 1,057,708 959,834 8,224,571 6,875,085 1,272,903 1,248,499 Construction in progress . . . . . . . . . . . . — — 507,931 — — 507,931 — Total continuing operating properties . . . . . . . . . . Assets held for sale . . . . . Total investments in real property owned . . . . . . . . . . . . . 2,868,911 3,305,867 28,915,673 2,553,367 3,486,620 31,288,287 5,715,459 124,430 122,167 1,511,800 29,815 — 1,253,008 — $2,993,341 $3,428,034 $30,427,473 $2,583,182 $3,486,620 $32,541,295 $5,715,459 (1) Please see Note 2 to our consolidated financial statements for information regarding lives used for depreciation and amortization. 168 Year Ended December 31, 2019 2018 2017 (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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $33,590,388 4,807,418 328,824 — (28,074) (2,673,203) 187,853 (185,291) $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 Ending balance(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $36,027,915 $33,590,388 $30,581,948 Accumulated depreciation: Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . Amortization of above market leases . . . . . . . . . . . . . . . . . . . . . Disposition and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,499,958 1,027,073 5,752 (772,273) (45,051) $ 4,838,370 950,459 6,375 (205,562) (89,684) $ 4,093,494 921,720 7,303 (192,029) 7,882 Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,715,459 $ 5,499,958 $ 4,838,370 (1) 2019 change primarily relates to the adoption of ASC 842 and the 2017 change primarily relates to the acquisition of an asset through foreclosure. (2) The unaudited aggregate cost for tax purposes for real property equals $30,691,276,000 at December 31, 2019. 169 Welltower Inc. Schedule IV—Mortgage Loans on Real Estate December 31, 2019 (in thousands) Location Segment Interest Rate Final Maturity Date Monthly Payment Terms Prior Liens Face Amount of Mortgages First mortgages relating to 1 property located in: California . . . . . . . . . . . . . . . . United Kingdom . . . . . . . . . . . United Kingdom . . . . . . . . . . . Pennsylvania . . . . . . . . . . . . . . North Carolina . . . . . . . . . . . . . Texas . . . . . . . . . . . . . . . . . . . . United Kingdom . . . . . . . . . . . Triple-net Triple-net Triple-net Triple-net Triple-net Outpatient Medical Triple-net Totals . . . . . . . . . . . . . . . . . . . . 7.95% 7.25% 8.53% 8.72% 7.83% 7.86% 8.50% 1/1/2022 3/15/2022 7/7/2021 3/1/2022 12/18/2023 1/19/2025 2/1/2024 $696 139 140 108 92 24 92 $— — — — — — — $— $131,100 27,828 19,904 15,530 30,883 3,740 19,876 Carrying Amount of Mortgages $ 53,071 23,788 19,904 15,108 16,259 3,733 13,823 $— — — — — — — $— Principal Amount of Loans Subject to Delinquent Principal or Interest $248,861 $145,686 Year Ended December 31, 2019 2018 2017 (in thousands) Reconciliation of mortgage loans: Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 249,071 $ 306,120 $ 485,735 Additions: New mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Draws on existing loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 45,961 45,961 25,290 36,458 61,748 6,706 58,224 64,930 Deductions: Collections of principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (87,249) (116,905) (180,135) Loan balance transferred to non real estate loans receivable . . . . . . . . . . . . . . . . (64,040) Change in allowance for loan losses and charge-offs . . . . . . . . . . . . . . . . . . . . . . — — — — (71,535) Total deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (151,289) (116,905) (251,670) Change in balance due to foreign currency translation . . . . . . . . . . . . . . . . . . . . . 1,944 (1,892) 7,125 Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 145,686 $ 249,071 $ 306,120 170 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 14, 2020 /s/ THOMAS J. DEROSA Thomas J. DeRosa, Chairman and Chief Executive Officer EXHIBIT 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER I, Timothy G. McHugh, 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 14, 2020 /s/ TIMOTHY G. MCHUGH Timothy G. McHugh, 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, 2019 (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, Chairman and Chief Executive Officer Date: February 14, 2020 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, Timothy G. McHugh, 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, 2019 (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/ TIMOTHY G. MCHUGH Timothy G. McHugh, Chief Financial Officer Date: February 14, 2020 A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. [THIS PAGE INTENTIONALLY LEFT BLANK] EXECUTIVE OFFICERS Thomas J. DeRosa Chairman and Chief Executive Officer Shankh Mitra Executive Vice President – Chief Investment Officer Timothy G. McHugh Senior Vice President – Chief Financial Officer & Treasurer Matthew G. McQueen Senior Vice President – General Counsel & Corporate Secretary Ayesha Menon Senior Vice President – Strategic Investments CORPORATE OFFICES Welltower Inc. 4500 Dorr Street Toledo, Ohio 43615-4040 (877) 670-0070 (419) 247-2800 (419) 247-2826 Fax www.welltower.com 443 employees as of 1/31/20 3,564 registered shareholders as of 1/31/20 BOARD OF DIRECTORS Kenneth J. Bacon Age 65 Co-Founder and Managing Partner RailField Realty Partners Bethesda, Maryland Thomas J. DeRosa Age 62 Chairman of the Board and Chief Executive Officer Welltower Inc. Toledo, Ohio Karen B. DeSalvo Age 54 Chief Health Officer Google Health Austin, Texas Jeffrey H. Donahue Age 73 Lead Independent Director Former President & Chief Executive Officer Enterprise Community Investment, Inc. Columbia, Maryland Sharon M. Oster Age 71 Frederic D. Wolfe Professor Emeritus of Management & Entrepreneurship, Professor of Economics Yale University School of Management New Haven, Connecticut Sergio D. Rivera Age 57 Chief Executive Officer SeaWorld Entertainment, Inc. Orlando, Florida Johnese M. Spisso Age 59 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 64 Former Chief Executive Officer United Healthcare Employer and Individual, Local Markets UnitedHealth Group Minnetonka, Minnesota R. Scott Trumbull Age 71 Retired CEO and Chairman of the Board Franklin Electric Co., Inc. Fort Wayne, Indiana COMMITTEES OF THE BOARD Audit Committee Rivera (Chair), Sullivan, Trumbull Compensation Committee Bacon (Chair), DeSalvo, Donahue, Oster, Spisso Nominating/Corporate Governance Committee DeSalvo, Donahue, Oster (Chair), Spisso Executive Committee Bacon, DeRosa (Chair), Donahue, Oster, Rivera 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 2019 Annual Report, visit www.welltower.com. www.welltower.com 4500 Dorr Street Toledo, Ohio 43615-4040 877.670.0070 419.247.2800 © COPYRIGHT 2020 WELLTOWER INC.

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