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Welltower
WELL
#154
Rank
$134.46 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$195.92
Share price
2.54%
Change (1 day)
39.46%
Change (1 year)
๐Ÿ  Real estate๐Ÿ’ฐ Investment ๐Ÿ˜๏ธ REITs
Categories
Welltower Inc. is a real estate investment company that invests primarily in senior housing, assisted living, acute care facilities, medical office buildings, hospitals and other healthcare properties
  1. Welltower
  2. Annual Reports (10-K)
  3. Financial Year 2018

Welltower - 10-K annual report 2018


Text size:
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2018
Commission File No. 1-8923
welllogoa06.gif  
WELLTOWER INC.
(Exact name of registrant as specified in its charter)
Delaware
 
34-1096634
 
 
 
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
4500 Dorr Street, Toledo, Ohio
 
43615
 
 
 
(Address of principal executive offices)
 
(Zip Code)
(419) 247-2800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Name of Each Exchange on Which Registered
Common Stock, $1.00 par value
New York Stock Exchange
6.50% Series I Cumulative
Convertible Perpetual Preferred Stock, $1.00 par value
New York Stock Exchange
4.800% Notes due 2028
New York Stock Exchange
4.500% Notes due 2034
New York Stock Exchange
 
Securities registered pursuant to Section 12(g) of the Act:  None 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  þ  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  þ
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  þ  No  ¨
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  þ  No  ¨  
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ  
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
þ
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
¨
Emerging growth company
¨
(Do not check if a smaller reporting company)
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨   No  þ
The aggregate market value of the shares of voting common stock held by non-affiliates of the registrant, computed by reference to the closing sales price of such shares on the New York Stock Exchange as of the last business day of the registrant’s most recently completed second fiscal quarter was $23,282,837,560. 
As of February 13, 2019, the registrant had 386,361,193 shares of common stock outstanding.
 
DOCUMENTS INCORPORATED BY REFERENCE 
Portions of the registrant’s definitive proxy statement for the annual stockholders’ meeting to be held May 2, 2019, are incorporated by reference into Part III.


WELLTOWER INC. AND SUBSIDIARIES
2018 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
 
 
 
Page
 
PART I
 
 
 
Item 1.
Business
2
Item 1A.
Risk Factors
25
Item 1B.
Unresolved Staff Comments
34
Item 2.
Properties
35
Item 3.
Legal Proceedings
36
Item 4.
Mine Safety Disclosures
36
 
 
 
 
PART II
 
 
 
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
37
Item 6.
Selected Financial Data
38
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
39
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
60
Item 8.
Financial Statements and Supplementary Data
61
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
94
Item 9A.
Controls and Procedures
94
Item 9B.
Other Information
95
 
 
 
 
PART III
 
 
 
Item 10.
Directors, Executive Officers and Corporate Governance
96
Item 11.
Executive Compensation
96
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
96
Item 13.
Certain Relationships and Related Transactions and Director Independence
96
Item 14.
Principal Accounting Fees and Services
96
 
 
 
 
PART IV
 
 
 
Item 15.
Exhibits and Financial Statement Schedules
97
Item 16.
Form 10-K Summary
102
 
 
 
 
Signature
103


PART I 
Item 1.  Business 
General
Welltower Inc. (NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure.  The company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. Welltower™, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing and post-acute communities and outpatient medical properties. More information is available on the Internet at www.welltower.com. The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive textual reference only.
Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders as a result of annual increases in net operating income and portfolio growth. To meet these objectives, we invest across the full spectrum of seniors housing and health care real estate and diversify our investment portfolio by property type, relationship and geographic location.
References herein to “we,” “us,” “our” or the “company” refer to Welltower Inc., a Delaware corporation, and its subsidiaries unless specifically noted otherwise.
Portfolio of Properties
Please see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operation – Executive Summary – Company Overview” for a table that summarizes our portfolio as of December 31, 2018.
Property Types
We invest in seniors housing and health care real estate and evaluate our business through three reportable segments: Seniors Housing Operating, Triple-net and Outpatient Medical. For additional information regarding our segments, please see Note 17 to our consolidated financial statements. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2 to our consolidated financial statements.  The following is a summary of our various property types. 
Seniors Housing Operating
Our seniors housing operating properties offer services including independent living and independent supportive living, continuing care retirement communities, assisted living, Alzheimer's/dementia care and include care homes with or without nursing (U.K.), which assist with activities of daily living that preserve a person's mobility and social systems to promote cognitive engagement. Our properties include stand-alone properties that provide one level of service, combination properties that provide multiple levels of service and communities or campuses that provide a wide range of services. Properties are primarily held in joint venture entities with operating partners. We utilize the structure authorized by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure (the provisions of the Internal Revenue Code authorizing the RIDEA structure were enacted as part of the Housing and Economic Recovery Act of 2008). 
Independent Living and Independent Supportive Living (Canada)  Independent living and independent supportive living refers to age-restricted, multifamily properties with central dining that provide residents access to meals and other services such as housekeeping, linen service, transportation and social and recreational activities. 
Continuing Care Retirement Communities  Continuing care retirement communities typically include a combination of detached homes and properties offering independent living, assisted living and/or long-term/post-acute care services on one campus. These communities appeal to residents because there is no need to relocate when health and medical needs change. Resident payment plans vary, but can include entrance fees, condominium fees and rental fees. Many of these communities also charge monthly maintenance fees in exchange for a living unit, meals and some health services. 
Assisted Living  Assisted living refers to state-regulated rental properties that provide independent living services, but also provide supportive care from trained employees to residents who require assistance with activities of daily living, including, but not limited to, management of medications, bathing, dressing, toileting, ambulating and eating.
Alzheimer’s/Dementia Care  Certain properties offering assisted living may include state-licensed settings that specialize in caring for those afflicted with Alzheimer’s disease and/or other types of dementia.
Care Homes with or without Nursing (U.K.)  Care homes without nursing, regulated by the Care Quality Commission ("CQC”), are rental properties that provide essentially the same services as U.S. assisted living. Care homes with nursing, also regulated by

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the CQC, are licensed daily rate or rental properties where most individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed for various national and local reimbursement programs.  Unlike the U.S., care homes with nursing in the U.K. generally do not provide post-acute care.
Our Seniors Housing Operating segment accounted for 69%, 65% and 59% of total revenues for the years ended December 31, 2018, 2017 and 2016, respectively. As of December 31, 2018, we had relationships with 21 operators to manage our seniors housing operating properties. In each instance, our partner provides management services to the properties pursuant to an incentive-based management contract. We rely on our partners to effectively and efficiently manage these properties. For the year ended December 31, 2018, our relationship with Sunrise Senior Living accounted for approximately 36% of our Seniors Housing Operating segment revenues and 25% of our total revenues.
Triple-net
Our triple-net properties offer services including independent living and independent supportive living (Canada), assisted living, continuing care retirement communities, Alzheimer's/dementia care and care homes with or without nursing (U.K.) described above, as well as long-term/post-acute care. We invest primarily through acquisitions, development and joint venture partnerships. Our properties are primarily leased to operators under long-term, triple-net master leases that obligate the tenant to pay all operating costs, utilities, real estate taxes, insurance, building repairs, maintenance costs and all obligations under certain ground leases. We are not involved in property management. Our properties include stand-alone properties that provide one level of service, combination facilities that provide multiple levels of service, and communities or campuses that provide a wide range of services. 
Long-Term/Post-Acute Care Facilities  Post-acute care is at the leading edge of reducing health care costs while improving quality. These high-impact centers help patients recover from illness or surgery with the goals of getting the patient home and healed faster and reducing hospital readmission rates. Our long-term/post-acute care properties generally offer skilled nursing/post-acute care, inpatient rehabilitation and long-term acute care services. Skilled nursing/post-acute care refers to licensed daily rate or rental properties where most individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed for Medicaid and/or Medicare reimbursement in the U.S. or provincial reimbursement in Canada. All properties offer some level of rehabilitation services. Some properties focus on higher acuity patients and offer rehabilitation units specializing in cardiac, orthopedic, dialysis, neurological or pulmonary rehabilitation. Inpatient rehabilitation properties provide intensive inpatient services after illness, injury or surgery to patients able to tolerate and benefit from three hours of rehabilitation hours per day. Long-term acute care properties provide inpatient services for patients with complex medical conditions that require more intensive care, monitoring or emergency support than is available in most skilled nursing/post-acute care properties.
Our Triple-net segment accounted for 19%, 22% and 28% of total revenues for the years ended December 31, 2018, 2017 and 2016, respectively.  For the year ended December 31, 2018, our revenues related to our relationship with Genesis HealthCare (“Genesis”) accounted for approximately 15% of our Triple-net segment revenues and 3% of our total revenues. As of December 31, 2018, our relationship with Genesis was comprised of a master lease for 87 properties owned 100% by us, two real estate loans totaling approximately $187 million, approximately 9.5 million shares of GEN Series A common stock (representing approximately 9% of total GEN common stock) and a 25% ownership stake in an unconsolidated joint venture that includes a master lease for 28 properties operated by Genesis. In addition to rent, the master lease requires Genesis to pay all operating costs, utilities, real estate taxes, insurance, building repairs, maintenance costs and all obligations under certain ground leases. All obligations under the master lease have been guaranteed by FC-GEN Operations Investment, LLC, a subsidiary of Genesis.
Outpatient Medical
Outpatient Medical Buildings  Demand for outpatient medical services is growing as more procedures are performed safely and efficiently outside the hospital setting. State-of-the-art outpatient centers are needed in accessible, consumer-friendly locations. Our portfolio of outpatient medical buildings is an integral part of creating health care provider connectivity in local markets and generally include physician offices, ambulatory surgery centers, diagnostic facilities, outpatient services and/or labs. Approximately 95% of our outpatient medical building portfolio is affiliated with health systems (buildings directly on hospital campuses or with tenants that are satellite locations for the health system and its physicians). We typically lease our outpatient medical buildings to multiple tenants and provide varying levels of property management. Our Outpatient Medical segment accounted for 12%, 13% and 13% of total revenues for each of the years ended December 31, 2018, 2017 and 2016, respectively.  No single tenant exceeds 20% of segment revenues.
Investments
Providing high-quality and affordable health care to an aging global population requires vast investments and infrastructure development. We invest in seniors housing and health care real estate primarily through acquisitions, developments and joint venture partnerships. For additional information regarding acquisition and development activity, please see Note 3 to our consolidated financial statements. Our portfolio creates opportunities to connect partners across the continuum of care and drive efficiency. We seek to diversify our investment portfolio by property type, relationship and geographic location. In determining whether to invest in a property, we focus on the following: (1) the experience of the obligor’s/partner’s management team; (2) the

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historical and projected financial and operational performance of the property; (3) the credit of the obligor/partner; (4) the security for any lease or loan; (5) the real estate attributes of the building and its location; (6) the capital committed to the property by the obligor/partner; and (7) the operating fundamentals of the applicable industry. 
We monitor our investments through a variety of methods determined by the type of property. Our asset management process for seniors housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections, and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral. Our internal property management division manages and monitors the outpatient medical portfolio with a comprehensive process including review of, among other things, tenant relations, lease expirations, the mix of health service providers, hospital/health system relationships, property performance, capital improvement needs, and market conditions. 
Investment Types 
Real Property  Our properties are primarily comprised of land, buildings, improvements and related rights. Our triple-net properties are generally leased to operators under long-term operating leases. The leases generally have a fixed contractual term of 12 to 15 years and contain one or more five to 15-year renewal options. Certain of our leases also contain purchase options, a portion of which could result in the disposition of properties for less than full market value if the options were to be exercised. Most of our rents are received under triple-net leases requiring the operator to pay rent and all additional charges incurred in the operation of the leased property. The tenants are required to repair, rebuild and maintain the leased properties. Substantially all these operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. 
At December 31, 2018, approximately 94% of our triple-net properties were subject to master leases. A master lease is a lease of multiple properties to one tenant entity under a single lease agreement. From time to time, we may acquire additional properties that are then leased to the tenant under the master lease. The tenant is required to make one monthly payment that represents rent on all the properties that are subject to the master lease. Typically, the master lease tenant can exercise its right to purchase the properties or to renew the master lease only with respect to all leased properties at the same time. We believe this bundling feature benefits us because the tenant cannot limit the purchase or renewal to better performing properties and terminate the leasing arrangement with respect to poorer performing properties. This spreads our risk among the entire group of properties within the master lease. The bundling feature should provide a similar advantage to us if the master lease tenant is in bankruptcy. Subject to certain restrictions, a debtor in bankruptcy has the right to assume or reject its unexpired leases and executory contracts.  In the context of integrated master leases such as ours, our tenants in bankruptcy would be required to assume or reject the master lease as a whole, rather than deciding on a property by property basis. 
Our outpatient medical portfolio is primarily self-managed and consists principally of multi-tenant properties leased to health care providers. Our leases typically include increasers and some form of operating expense reimbursement by the tenant. As of December 31, 2018, 75% of our portfolio included leases with full pass through, 23% with a partial expense reimbursement (modified gross) and 2% with no expense reimbursement (gross). Our outpatient medical leases are non-cancellable operating leases that have a weighted-average remaining term of six years at December 31, 2018 and are often credit enhanced by security deposits, guaranties and/or letters of credit.
Construction  We provide for the construction of properties for tenants primarily as part of long-term operating leases. We capitalize certain interest costs associated with funds used for the construction of properties owned by us. The amount capitalized is based upon the amount advanced during the construction period using the rate of interest that approximates our company-wide cost of financing. Our interest expense is reduced by the amount capitalized. We also typically charge a transaction fee at the commencement of construction which we defer and amortize to income over the term of the resulting lease. The construction period commences upon funding and terminates upon the earlier of the completion of the applicable property or the end of a specified period. During the construction period, we advance funds to the tenants in accordance with agreed upon terms and conditions which require, among other things, periodic site visits by a company representative. During the construction period, we generally require an additional credit enhancement in the form of payment and performance bonds and/or completion guaranties. At December 31, 2018, we had outstanding construction investments of $194,365,000 and were committed to provide additional funds of approximately $436,984,000 to complete construction for investment properties. We also provide for construction loans which, depending on the terms and conditions, could be treated as loans, real property or investments in unconsolidated entities. 
Real Estate Loans  Our real estate loans are typically structured to provide us with interest income, principal amortization and transaction fees and are generally secured by first/second mortgage liens, leasehold mortgages, corporate guaranties and/or personal guaranties. At December 31, 2018, we had gross outstanding real estate loans of $398,711,000. The interest yield averaged approximately 7.9% per annum on our outstanding real estate loan balances. Our yield on real estate loans depends upon a number of factors, including the stated interest rate, average principal amount outstanding during the term of the loan and any interest rate adjustments. The real estate loans outstanding at December 31, 2018 are generally subject to one to 15-year terms with principal amortization schedules and/or balloon payments of the outstanding principal balances at the end of the term. Typically, real estate

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loans are cross-defaulted and cross-collateralized with other real estate loans, operating leases or agreements between us and the obligor and its affiliates.
Investments in Unconsolidated Entities Investments in entities that we do not consolidate but for which we can exercise significant influence over operating and financial policies are reported under the equity method of accounting. Our investments in unconsolidated entities generally represent interests ranging from 10% to 50% in real estate assets. Under the equity method of accounting, our share of the investee’s earnings or losses is included in our consolidated results of operations. To the extent that our cost basis is different from the basis reflected at the entity level, the basis difference is generally amortized over the lives of the related assets and liabilities, and such amortization is included in our share of equity in earnings of the entity. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest inclusive of transaction costs. We evaluate our equity method investments for impairment based upon a comparison of the estimated fair value of the equity method investment to its carrying value. When we determine a decline in the estimated fair value of such an investment below its carrying value is other-than-temporary, an impairment is recorded.  
Principles of Consolidation
The consolidated financial statements are in conformity with U.S general accepted accounting principles (“U.S. GAAP”) and include the accounts of our wholly-owned subsidiaries and joint venture entities that we control, through voting rights or other means. All material intercompany transactions and balances have been eliminated in consolidation.
At inception of joint venture transactions, we identify entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and determine which business enterprise is the primary beneficiary of its operations. A VIE is broadly defined as an entity where either (i) the equity investors as a group, if any, do not have a controlling financial interest, or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. We consolidate investments in VIEs when we are determined to be the primary beneficiary.  Accounting Standards Codification Topic 810, "Consolidations", requires enterprises to perform a qualitative approach to determining whether or not a VIE will need to be consolidated. This evaluation is based on an enterprise’s ability to direct and influence the activities of a VIE that most significantly impact that entity’s economic performance.
For investments in joint ventures, U.S. GAAP may preclude consolidation by the sole general partner in certain circumstances based on the type of rights held by the limited partner(s). We assess the limited partners’ rights and their impact on our consolidation conclusions, and we reassess if there is a change to the terms or in the exercisability of the rights of the limited partners, the sole general partner increases or decreases its ownership of limited partnership interests, or there is an increase or decrease in the number of outstanding limited partnership interests. We similarly evaluate the rights of managing members of limited liability companies.
Borrowing Policies
We utilize a combination of debt and equity to fund investments. Generally, we intend to issue unsecured, fixed-rate public debt with long-term maturities to approximate the maturities on our triple-net leases and investment strategy. For short-term purposes, we may borrow on our primary unsecured credit facility or issue commercial paper. We replace these borrowings with long-term capital such as senior unsecured notes or common stock. When terms are deemed favorable, we may invest in properties subject to existing mortgage indebtedness. In addition, we may obtain secured financing for unleveraged properties in which we have invested or may refinance properties acquired on a leveraged basis. In certain agreements with our lenders, we are subject to restrictions with respect to secured and unsecured indebtedness.
Competition
We compete with other real estate investment trusts, real estate partnerships, private equity and hedge fund investors, banks, insurance companies, finance/investment companies, government-sponsored agencies, taxable and tax-exempt bond funds, health care operators, developers and other investors in the acquisition, development, leasing and financing of health care and seniors housing properties. We compete for investments based on a number of factors including relationships, certainty of execution, investment structures and underwriting criteria. Our ability to successfully compete is impacted by economic and demographic trends, availability of acceptable investment opportunities, our ability to negotiate beneficial investment terms, availability and cost of capital, construction and renovation costs and applicable laws and regulations.
The operators/tenants of our properties compete with properties that provide comparable services in the local markets. Operators/tenants compete for patients and residents based on a number of factors including quality of care, reputation, physical appearance of properties, location, services offered, family preferences, physicians, staff, and price. We also face competition from other health care facilities for tenants, such as physicians and other health care providers that provide comparable facilities and services.
For additional information on the risks associated with our business, please see “Item 1A — Risk Factors” of this Annual Report on Form 10-K.

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Corporate Responsibility
Sustainability Approach Our sustainability strategy is focused on adopting the best environmental, social and governance practices across our business and we have been recognized for our leadership in this space. Most recently, Welltower was listed to the 2018 Dow Jones Sustainability World Index and named an industry mover for highest corporate sustainability assessment score increase by sustainable investment specialists RobecoSAM.
Environmental We strive to reduce our environmental impact by increasing energy and water efficiency, reducing greenhouse gas emissions and investing in projects that reduce energy and water consumption that meet our rate of return thresholds. We have comprehensive employee, tenant and vendor engagement programs in place focused on operational strategies to drive energy and water efficiency. In our medical office building portfolio, we have transitioned to a standard green lease, which aligns tenant and landlord interests on energy and water efficiency. We seek to increase our consumption of green and renewable energy where possible and have on-site solar installations at seven properties in our medical office building portfolio. We are actively pursuing LEED or BREEAM certification for over 200,000 square feet of our new developments, have 38 ENERGY STAR certified properties and 11 IREM Certified Sustainable Property certifications across our portfolio. Additionally, 100% of our control boundary, comprised of our managed outpatient medical portfolio, is benchmarked in EPA ENERGY STAR Portfolio Manager.
Year(1)
 
Total energy consumption in control boundary(2)
 
Control boundary energy use intensity (EUI)
 
Like-for-like change in energy consumption within control boundary(3)
 
Percent renewable energy consumed within control boundary(4)
2017
 
375,059 MWh
 
24.35 kWh/sq ft
 
(1)%
 
7.25%
2016
 
360,165 MWh
 
22.82 kWh/sq ft
 
n/a
 
n/a
2015
 
350,342 MWh
 
21.49 kWh/sq ft
 
n/a
 
n/a
Year(1)
 
Control Boundary Water consumption(2)
 
Water use intensity (WUI)
 
Like-for-like change in water consumption within control boundary(3)
2017
 
319,045 kgal
 
24.0 gal/sq ft
 
(6.23)%
2016
 
337,081 kgal
 
26.4 gal/sq ft
 
7.01%
2015
 
319,630 kgal
 
25.0 gal/sq ft
 
n/a
(1) Full 2018 calendar year energy and water data is not available until March 2019. 2017 is the most recent year for which fill energy and water is available and externally verified.
(2) Our control boundary refers to its managed medical office building portfolio. Energy and water data reported is reflective of control boundary energy and water consumption.
(3) Like-for-like change in energy consumption within control boundary is not available prior to 2017 due to a change in energy consumption methodology. 2017 represents the first year where tenant data is included in our sustainability performance metrics. Like-for-like change in water consumption within control boundary is not available prior to 2016 due to lack of available data.
(4) Renewable energy consumption data within control boundary is not available prior to 2017 due to lack of data. The data represent on-site and off-site renewable energy generated and consumed by properties within our control boundary.

Social We have a number of social initiatives in place that are focused on fostering a more diverse workforce, giving back to our communities and ensuring the health and wellbeing of our employees, tenants and residents. We were recently awarded Silver level of recognition by the American Heart Association's Workplace Health Achievement Index. Through our Welltower Foundation, we have donated over $2.5 million since 2015 to organizations that support health and wellness, the arts and education.
Governance We announced two new appointments to our Board of Directors, resulting in 55% of our independent director positions being held by minorities and women as of December 31, 2018.
Employees  As of January 31, 2019, we had 384 employees.
Credit Concentrations  Please see Note 8 to our consolidated financial statements.
Geographic Concentrations  Please see “Item 2 – Properties” below and Note 17 to our consolidated financial statements.

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Health Care Industry
The demand for health care services, and consequently health care properties, is projected to reach unprecedented levels in the near future. The Centers for Medicare and Medicaid Services (“CMS”) projects that national health expenditures will rise to approximately $3.7 trillion in 2018 or 18.5% of gross domestic product. The average annual growth in national health expenditures for 2015 through 2025 is expected to be 5.8%. While demographics are the primary driver of demand, economic conditions and availability of services contribute to health care service utilization rates. We believe the health care property market may be less susceptible to fluctuations and economic downturns relative to other property sectors. Investor interest in the market remains strong, especially in specific sectors such as private-pay seniors housing and outpatient medical buildings. The total U.S. population for 2015 through 2025 is projected to increase by 9.3%. The elderly population aged 65 and over is projected to increase by 36% through 2025. The elderly are an important component of health care utilization, especially independent living services, assisted living services, long-term/post-acute care services, inpatient and outpatient hospital services and physician ambulatory care. Most health care services are provided within a health care facility such as a hospital, a physician’s office or a seniors housing community. Therefore, we believe there will be continued demand for companies, such as ours, with expertise in health care real estate. 
Health care real estate investment opportunities tend to increase as demand for health care services increases.  We recognize the need for health care real estate as it correlates to health care service demand.  Health care providers require real estate to house their businesses and expand their services.  We believe that investment opportunities in health care real estate will continue to be present due to:
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The specialized nature of the industry, which enhances the credibility and experience of the company;
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The projected population growth combined with stable or increasing health care utilization rates, which ensures demand; and
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The on-going merger and acquisition activity.
Certain Government Regulations
United States
Health Law Matters — Generally
Typically, operators of seniors housing facilities do not receive significant funding from government programs and are largely subject to state laws, as opposed to federal laws. Operators of long-term/post-acute care facilities and hospitals do receive significant funding from government programs, and these facilities are subject to extensive regulation, including federal and state laws covering the type and quality of medical and/or nursing care provided, ancillary services (e.g., respiratory, occupational, physical and infusion therapies), qualifications of the administrative personnel and nursing staff, the adequacy of the physical plant and equipment, reimbursement and rate setting and operating policies. In addition, as described below, operators of these facilities are subject to extensive laws and regulations pertaining to health care fraud and abuse, including, but not limited to, the federal Anti-Kickback Statute (“AKS”), the federal Stark Law (“Stark Law”), and the federal False Claims Act (“FCA”), as well as comparable state laws. Hospitals, physician group practice clinics, and other health care providers that operate in our portfolio are subject to extensive federal, state, and local licensure, registration, certification, and inspection laws, regulations, and industry standards, as well as other conditions of participation in federal and state government programs such as Medicare or Medicaid. Our tenants’ failure to comply with applicable laws and regulations could result in, among other things: loss of accreditation; denial of reimbursement; imposition of fines; suspension, decertification, or exclusion from federal and state health care programs; loss of license; or closure of the facility. See risk factors “The requirements of, or changes to, governmental reimbursement programs, such as Medicare or Medicaid, could have a material adverse effect on our obligors’ liquidity, financial condition and results of operations, which could adversely affect our obligors’ ability to meet their obligations to us” and “Our operators’ or tenants’ failure to comply with federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards could adversely affect such operators’ or tenants’ operations, which could adversely affect our operators’ and tenants’ ability to meet their obligations to us” in “Item 1A – Risk Factors” below. 
Licensing and Certification
The primary regulations that affect long-term and post-acute care facilities are state licensing and registration laws. For example, certain health care facilities are subject to a variety of licensure and certificate of need (“CON”) laws and regulations. Where applicable, CON laws generally require, among other requirements, that a facility demonstrate the need for (1) constructing a new facility, (2) adding beds or expanding an existing facility, (3) investing in major capital equipment or adding new services, (4) changing the ownership or control of an existing licensed facility, or (5) terminating services that have been previously approved through the CON process. Certain state CON laws and regulations may restrict the ability of operators to add new properties or expand an existing facility’s size or services. In addition, CON laws may constrain the ability of an operator to transfer responsibility for operating a particular facility to a new operator.

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With respect to licensure, generally our long-term/post-acute care facilities are required to be licensed and certified for participation in Medicare, Medicaid, and other federal and state health care programs. The failure of our operators to maintain or renew any required license or regulatory approval as well as the failure of our operators to correct serious deficiencies identified in a compliance survey could require those operators to discontinue operations at a property. In addition, if a property is found to be out of compliance with Medicare, Medicaid, or other federal or state health care program conditions of participation, the property operator may be excluded from participating in those government health care programs.
Reimbursement
The reimbursement methodologies applied to health care facilities continue to evolve. Federal and state authorities have considered and may seek to implement new or modified reimbursement methodologies, including value-based reimbursement methodologies that may negatively impact health care property operations. The impact of any such changes, if implemented, may result in a material adverse effect on our portfolio. No assurance can be given that current revenue sources or levels will be maintained. Accordingly, there can be no assurance that payments under a government health care program are currently, or will be in the future, sufficient to fully reimburse the property operators for their operating and capital expenses.
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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.
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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.
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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.
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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.
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Medicare Reimbursement for Physicians, Hospital Outpatient Departments (“HOPDs”), and Ambulatory Surgical Centers (“ASCs”) Changes in reimbursement to physicians, HOPDs and ASCs may further affect our tenants and operators.  Generally, Medicare reimburses physicians under the Physician Fee Schedule, while HOPDs and ASCs are reimbursed under prospective payment systems. The Physician Fee Schedule and the HOPD and ASC prospective payment systems are updated annually by CMS. These annual Medicare payment regulations have resulted in lower net pay increases than providers of those services have often expected. In addition, the Medicare and Children’s Health Insurance Program Reauthorization Act of 2015 (“MACRA”) includes payment reductions for providers who do not meet government quality standards. The implementation of pay-for-quality models like those required under MACRA is expected to produce funding disparities that could adversely impact some provider tenants in outpatient medical buildings and other health care properties. Changes in Medicare Advantage plan payments may also indirectly affect our operators and tenants that contract with Medicare Advantage plans.
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Health Reform Laws  The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the “Health Reform Laws”) dramatically altered how health care is delivered and reimbursed in the U.S. and contained various provisions, including Medicaid expansion and the establishment of Health Insurance Exchanges (“HIEs”) providing subsidized health insurance, that may directly impact us or the operators and tenants of our properties. Since taking office, President Trump and the current U.S. Congress have sought to modify, repeal, or otherwise invalidate all or

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portions of the Health Reform Laws. For example, in October 2017, President Trump issued an executive order in which he stated that it is his Administration’s policy to seek the prompt repeal of the Health Reform Laws and directed executive departments and federal agencies to waive, defer, grant exemptions from, or delay the implementation of the provisions of the Health Reform Laws to the maximum extent permitted by law. On the same day, the federal government separately announced that cost-sharing reduction payments to insurers offering qualified health plans through the HIEs would end, effective immediately, unless Congress appropriated the funds. Further, in December 2017, the U.S. Congress passed the Tax Cuts and Jobs Act, which included a provision that eliminates the penalty under the Health Reform Laws’ individual mandate and could impact the future state of the HIEs established by the Health Reform Laws. There is still uncertainty with respect to the additional impact President Trump’s Administration and the U.S. Congress may have, if any, and any changes will likely take time to unfold, and could have an impact on coverage and reimbursement for health care items and services covered by plans that were authorized by the Health Reform Laws. We cannot predict whether the existing Health Reform Laws, or future health care reform legislation or regulatory changes, will have a material impact on our operators’ or tenants’ property or business.
Fraud & Abuse Enforcement
Long-term/post-acute care facilities (and seniors housing facilities that receive Medicaid payments) are subject to federal, state, and local laws, regulations, and applicable guidance that govern the operations and financial and other arrangements that may be entered into by health care providers. Certain of these laws, such as the AKS and Stark Law, prohibit direct or indirect payments of any kind for the purpose of inducing or encouraging the referral of patients for medical products or services reimbursable by government health care programs. Other government health program laws require providers to furnish only medically necessary services and submit to the government valid and accurate statements for each service. Our operators and tenants that receive payments from federal healthcare programs, such as Medicare and Medicaid, are subject to substantial financial penalties under the Civil Monetary Penalties Act and the FCA upon a finding of noncompliance with such laws. In addition, states may also have separate false claims acts, which, among other things, generally prohibit health care providers from filing false claims or making false statements to receive payments. Federal and state FCAs contain "whistleblower" provisions that permit private individuals to bring health care fraud enforcement claims on behalf of the government. Still other laws require providers to comply with a variety of safety, health and other requirements relating to the condition of the licensed property and the quality of care provided. Sanctions for violations of these laws, regulations, and other applicable guidance may include, but are not limited to, criminal and/or civil penalties and fines, loss of licensure, immediate termination of government payments, exclusion from any government health care program, damage assessments, and imprisonment. In certain circumstances, violation of these rules (such as those prohibiting abusive and fraudulent behavior) with respect to one property may subject other facilities under common control or ownership to sanctions, including exclusion from participation in the Medicare and Medicaid programs, as well as other government health care programs. In the ordinary course of its business, a property operator is regularly subjected to inquiries, investigations, and audits by the federal and state agencies that oversee these laws and regulations.
Prosecutions, investigations or whistleblower actions could have a material adverse effect on a property operator’s liquidity, financial condition, and operations, which could adversely affect the ability of the operator to meet its financial obligations to us. In addition, government investigations and enforcement actions brought against the health care industry have increased dramatically over the past several years and are expected to continue. The costs for an operator of a health care property associated with both defending such enforcement actions and the undertakings in settling these actions can be substantial and could have a material adverse effect on the ability of an operator to meet its obligations to us.
Federal and State Data Privacy and Security Laws
The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act, and numerous other state and federal laws govern the collection, security, dissemination, use, access to and confidentiality of individually identifiable health information. Violations of these laws may result in substantial civil and/or criminal fines and penalties. The costs for an operator of a health care property associated with developing and maintaining HIPAA compliance systems, defending enforcement actions and paying any assessed fines, can be substantial and could have a material adverse effect on the ability of an operator to meet its obligations to us.
United Kingdom
In the U.K., care home services are principally regulated by the Health and Social Care Act 2008 (as amended) and other regulations. This legislation subjects service providers to a number of legally binding “Fundamental Standards” and requires, amongst other things, that all persons carrying out “Regulated Activities” in the U.K., and the managers of such persons, be registered. Providers of care home services are also subject (as data controllers) to laws governing their use of personal data (including in relation to their employees, clients and recipients of their services). These laws currently take the form of the U.K.’s Data Protection Act 2018 and the European Union’s (“EU”) General Data Protection Regulation (“GDPR”) among other laws. The Data Protection Act and the GDPR impose a significant number of new obligations with the potential for fines of up to 4% of annual worldwide turnover or €20 million, whichever is greater. Entities incorporated in or carrying on a business in the U.K. as well as individuals residing in the U.K. are also subject to the U.K. Bribery Act 2010. The U.K. has recently introduced a new

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national minimum wage legislation with a maximum fine for non-payment of £20,000 per worker and employers who fail to pay will be banned from being a company director for up to 15 years. The U.K. recently voted to exit from the EU (“Brexit”). Negotiations on the exit agreement are underway but at present it is not possible to predict whether Brexit will have a material impact on our operators’ or tenants’ property or business.
Canada
Retirement homes and long-term care homes are subject to regulation, and long-term care homes receive funding, under provincial law. There is no federal regulation in this area. Set out below are summaries of the principal regulatory requirements in the provinces where we have a material number of facilities.
Licensing and Regulation
Alberta 
In Alberta, there are three relevant designations for seniors’ living arrangements, ordered below from the most independent to the highest level of care.
•
Retirement Homes (also called independent living) are designed for older adults able to live on their own, and may offer various lifestyle amenities. These residences may be rented, privately owned, or life-leased, and may be operated for profit or non-profit. Support services are not usually offered, but can be arranged by residents. Retirement homes do not generally receive government funding; residents pay for tenancy and services received. Rental subsidies may be available to qualified seniors. Independent living residences are subject to provincial tenancy and housing laws.
•
Supportive Living (also called assisted living) provides home-like accommodation for residents who wish or need to access care, assistance, and services. Operators provide at least one meal a day and/or housekeeping services. There are four levels of supportive living, addressing care needs from basic to advanced. In addition, there are two specialized designations of supportive care to address the needs of residents who require the highest level of care including for those who have cognitive impairments. Supportive living can include senior lodges, group homes, and mental health and designated supportive living accommodations, which can be operated by private for-profit or not-for-profit, or public operators. Supportive living services are licensed and regulated under provincial laws, and governed by the Ministry of Health. Operators receiving public funds for health and personal care services must also comply with additional provincial legislation, and are subject to legislated safeguards aimed at investigation of suspected abuse. The maximum accommodation fee in publicly-funded designated supportive living is regulated by Alberta Health. In other supportive living settings, the operator sets the cost of accommodation. Health services are publicly-funded and provided through Alberta Health Services. Private sector operators are eligible to apply for government funding under a government capital grant program that provides funding to develop long-term care and affordable supportive living spaces.
•
Nursing Homes (also called long-term care) are for residents who have complex, unpredictable medical needs and who require 24-hour on-site registered nurse assessment or treatment. Nursing homes are regulated by provincial laws, and governed by the Ministry of Health. Operators are not licensed, but enter into agreements with the Ministry for the operation of nursing homes and must comply with certain accommodation standards. Homes can be operated by private for-profit or not-for-profit, or public operators. Operators that receive public funds for health and personal care services must also comply with certain health service standards and legislation aimed at protecting residents. Alberta Health regulates the maximum accommodation fee in publicly-funded nursing homes. Health services in long-term care are publicly-funded, provided through Alberta Health Services. Private sector operators are eligible to apply for government funding, and the Minister may make grants to an operator in respect of its operating or capital costs.
Ontario
Retirement homes are regulated and licensed under a provincial law aimed at protecting residents. Retirement homes do not receive government funding; residents enter into tenancy agreements under provincial tenancy law, and pay for tenancy and services received. Residents may access publicly-funded external care services at the home from external suppliers. Retirement home licenses are granted by the Retirement Homes Regulatory Authority (“RHRA”), and are non-transferable. The RHRA administers the law governing retirement homes, to ensure that licensees are meeting certain standards, generally with respect to care and safety. The law requires any person to report to the RHRA when there are reasonable grounds to suspect abuse of a resident by anyone, or neglect of a resident by staff. The RHRA conducts a mandatory inspection and issues a report that is posted on the RHRA’s public website, and also must be posted in the subject home if it is the most recent report. The Registrar of the RHRA can receive complaints about a retirement home contravening a provision of the law, and if such a complaint is received, it must be reviewed promptly. The Registrar has broad powers relating to complaint investigation and action. The RHRA Registrar has the power to inspect a retirement home at any time without warning or issue a warrant to ensure compliance. Compliance inspections occur at least every three years. The Registrar has the power to make a variety of orders including the imposition of a fine or an order revoking the operator’s license. The applicable law also enumerates offenses, such as operating without a license, and provides for penalties for offenses.

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British Columbia
Provincial laws regulate and license “community care facilities” (long-term care homes) in substantially the same manner as retirement homes are regulated under Ontario laws. Community care facilities are defined as premises used for the purpose of supervising vulnerable persons who require three or more prescribed services (from a list that includes regular assistance with activities of daily living; distribution of medication; management of cash resources; monitoring of food intake; structured behavior management and intervention; and psychosocial or physical rehabilitative therapy).
Provincial law also recognizes and regulates “assisted living residences,” for seniors who can live independently, but require assistance with certain activities. Services available can include meals, housekeeping, monitoring and emergency support, social/recreational opportunities, and transportation. Assisted living residences do not require a license, but must be registered with the registrar of assisted living residences and must be operated in a manner that does not jeopardize the health or safety of residents. If the registrar believes the standard is not being met, the registrar may inspect the residence and may suspend or cancel a registration.  Independent living residences offer housing and hospitality services for retired adults who are functionally independent and able to direct their own care.
Québec
Provincial laws in Québec regulate retirement homes (private seniors’ residences) as well as long-term care homes (residential and long-term care centers). Private seniors’ residences are required to obtain a certificate of compliance based on prescribed operating standards. A certificate of compliance is issued for a period of four years and is renewable. The regional health and social agency may revoke or refuse to issue or renew a certificate of compliance if, among other things, the operator fails to comply with the applicable law. The agency may also order corrective measures, further to an inspection, complaint or investigation. The agency is authorized to inspect a residence, at any reasonable time of day, in order to ascertain whether it complies with the law. 
Private seniors’ residences may belong to either or both of the following categories: (i) those offering services to independent elderly persons and (ii) those offering services to semi-independent elderly persons. The operator must, for each category, comply with the applicable criteria and standards, with some exceptions for residences with fewer than six or ten rooms or apartments. There are requirements with respect to residents’ health and safety, meal services and recreation, content of residents’ files, disclosure of information to residents, and staffing, among other things.
In May 2017, Quebec adopted the Act to combat maltreatment of seniors and other persons of full age in vulnerable situations, which aims to implement a Quebec-wide framework agreement to combat maltreatment, targets all facilities that provide health services and social services to seniors and vulnerable persons, including health establishments and private residences. We expect that it will affect private seniors’ residences in the following ways:
•
Health establishments are required to adopt an “Anti-Maltreatment Policy”, providing notably for the measures put in place to prevent maltreatment of persons in vulnerable situations;
•
The policy adopted by health establishments will notably have to include the required adaptation for the implementation of the policy in private sector residences; and
•
Operators of private seniors’ residences will be required to apply the policy adopted by the integrated health and social services center in their territory, as well as ensure that the policy is known by residents, their family members and their employees.
Other Related Laws
Privacy
The services provided in our facilities are subject to privacy legislation in Canada, including, in certain provinces, privacy laws specifically related to personal health information. Although the obligations of custodians of personal information in the various provinces differ, they all include the obligation to protect the information. The organizations with which we have management agreements may be the custodian of personal information collected in connection with the operation of our facilities.
Privacy laws in Canada are consent-based and require the implementation of a privacy program involving policies, procedures and the designation of an individual or team with primary responsibility for privacy law compliance. Mandatory breach notification to affected individuals is a requirement under some laws. Mandatory breach notification to the applicable regulator is a requirement in some provinces. Some laws require notification where personal information is processed or stored outside of Canada. One provincial law (in Quebec) provides for fines where an organization fails to perform due diligence before outsourcing activities involving personal information to a service provider outside of the province.
The powers of privacy regulators and penalties for violations of privacy law vary according to the applicable law or are left to the courts. To date, monetary penalties granted have been on the low side, although that is changing with civil actions for breach of privacy and may change further as a result of class action activity. There are over 60 privacy class actions which have been filed in Canada over recent years although none have yet been decided on their merits. Regulators have the authority to make public

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the identity of a custodian that has been found to have committed a breach, so there is a reputational risk associated with privacy law violations even where no monetary damages are incurred. The notification of residents (mandatory under some privacy laws) and other activities required to manage a privacy breach can give rise to significant costs.
Other Legislation
Retirement homes may be subject to residential tenancy laws, such that there can be restrictions on rent increases and termination of tenancies, for instance. Other provincial and/or municipal laws applicable to fire safety, food services, zoning, occupational health and safety, public health, and the provision of community health care and funded long-term/post-acute care may also apply to retirement homes.  

Taxation

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

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

General

We elected to be taxed as a real estate investment trust (a “REIT”) commencing with our first taxable year. We intend to continue to operate in such a manner as to qualify as a REIT, but there is no guarantee that we will qualify or remain qualified as a REIT for subsequent years. Qualification and taxation as a REIT depends upon our ability to meet a variety of qualification tests imposed under 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

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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” (i.e., the excess of the fair market value of the asset over the adjusted tax basis in the asset, in each case determined as of the beginning of the five-year period), we will be subject to tax on the gain at the highest regular corporate rate applicable. The results described in this paragraph with respect to the recognition of built-in gain assume that the “C” corporation did not make and was not treated as making an election to treat the built-in gain assets as sold to an unrelated party. For those properties that are subject to the built-in gains tax, the potential amount of built-in gains tax will be an additional factor when considering a possible sale of the properties within the five-year period beginning on the date on which the properties were acquired by us. See Note 18 to our consolidated financial statements for additional information regarding the built-in gains tax.

Qualification as a REIT

A REIT is defined as a corporation, trust or association:
(1)
which is managed by one or more trustees or directors;
(2)
the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest;
(3)
which would be taxable as a domestic corporation but for the U.S. federal income tax law relating to REITs;
(4)
which is neither a financial institution nor an insurance company;
(5)
the beneficial ownership of which is held by 100 or more persons in each taxable year of the REIT except for its first
taxable year;
(6)
not more than 50% in value of the outstanding stock of which is owned during the last half of each taxable year, excluding
its first taxable year, directly, indirectly or constructively, by or for five or fewer individuals (which includes certain
entities) (the “Five or Fewer Requirement”); and
(7)
which meets certain income and asset tests described below.

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

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

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

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federal income tax, and our ownership of the voting stock of a qualified REIT subsidiary will not violate the restrictions against ownership of securities of any one issuer which constitute more than 10% of the value or total voting power of such issuer or more than 5% of the value of our total assets, as described below under “- Asset Tests.”

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

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

Income Tests  There are two separate percentage tests relating to our sources of gross income that we must satisfy each taxable year:
•
At least 75% of our gross income (excluding gross income from certain sales of property held primarily for sale) generally must be directly or indirectly derived each taxable year from “rents from real property,” other income from investments relating to real property or mortgages on real property or certain income from qualified temporary investments.
•
At least 95% of our gross income (excluding gross income from certain sales of property held primarily for sale) generally must be directly or indirectly derived each taxable year from any of the sources qualifying for the 75% gross income test and from dividends (including dividends from taxable REIT subsidiaries) and interest.

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

Rents received by us will qualify as “rents from real property” for purposes of satisfying the gross income tests for a REIT only if several conditions are met:
•
The amount of rent must not be based in whole or in part on the income or profits of any person, although rents generally will not be excluded merely because they are based on a fixed percentage or percentages of receipts or sales.
•
Rents received from a tenant will not qualify as rents from real property if the REIT, or an owner of 10% or more of the REIT, also directly or constructively owns 10% or more of the tenant, unless the tenant is our taxable REIT subsidiary and certain other requirements are met with respect to the real property being rented.
•
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.


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

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

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

Asset Tests  Within 30 days after the close of each quarter of our taxable year, we must also satisfy several tests relating to the nature and diversification of our assets determined in accordance with generally accepted accounting principles. At least 75% of the value of our total assets must be represented by real estate assets (including interests in real property, interests in mortgages on real property or on interests in real property, shares in other REITs and debt instruments issued by publicly offered REITs), cash, cash items (including receivables arising in the ordinary course of our operation), government securities and qualified temporary investments. Although the remaining 25% of our assets generally may be invested without restriction, we are prohibited from owning securities representing more than 10% of either the vote (the “10% vote test”) or value (the “10% value test”) of the outstanding securities of any issuer other than a qualified REIT subsidiary, another REIT or a taxable REIT subsidiary. Further, no more than 20% of our total assets may be represented by securities of one or more taxable REIT subsidiaries (the “20% asset test”) and no more than 5% of the value of our total assets may be represented by securities of any non-governmental issuer other than a qualified REIT subsidiary (the “5% asset test”), another REIT or a taxable REIT subsidiary. Each of the 10% vote test, the 10% value test and the 20% and 5% asset tests must be satisfied at the end of each quarter. There are special rules which provide relief if the value-related tests are not satisfied due to changes in the value of the assets of a REIT.

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

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

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


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

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

Certain of our subsidiaries have elected taxable REIT subsidiary status. Taxable REIT subsidiaries are subject to full corporate level U.S. federal taxation on their earnings but are permitted to engage in certain types of activities that cannot be performed directly by REITs without jeopardizing their REIT status. Our taxable REIT subsidiaries will attempt to minimize the amount of these taxes, but there can be no assurance whether or the extent to which measures taken to minimize taxes will be successful. To the extent our taxable REIT subsidiaries are required to pay U.S. federal, state or local taxes, the cash available for distribution as dividends to us from our taxable REIT subsidiaries will be reduced.

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

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

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

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

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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:
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a citizen or resident of the United States;
•
a corporation, partnership or other entity classified as a corporation or partnership for these purposes, created or organize in or under the laws of the United States or of any political subdivision of the United States, including any state;
•
an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
•
a trust, if, in general, a U.S. court is able to exercise primary supervision over the trust’s administration and one or more U.S. persons, within the meaning of the Internal Revenue Code, has the authority to control all of the trust’s substantial decisions.
So long as we qualify for taxation as a REIT, distributions on shares of our stock made out of the current or accumulated earnings and profits allocable to these distributions (and not designated as capital gain dividends) will be taxable as dividends for U.S. federal income tax purposes. None of these distributions will be eligible for the dividends received deduction for U.S. corporate stockholders.

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

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

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

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

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tax credit for your proportionate share of the tax paid by us on such retained capital gains, and you would have an increase in the basis of your shares of our stock in an amount equal to your includable capital gains less your share of the tax deemed paid.

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

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

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

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

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

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

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

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warrants. In the case of individuals, this tax will only apply to the extent such individual’s modified adjusted gross income exceeds $200,000 ($250,000 for married couples filing a joint return and surviving spouses, and $125,000 for married individuals filing a separate return). U.S. stockholders should consult their tax advisors regarding the possible applicability of this additional tax in their particular circumstances.

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

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

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

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

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

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distributions, up to the amount of the prior distributions not withheld against, will be treated as capital gain dividends for purposes of withholding.

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

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

Backup withholding tax and information reporting will generally not apply to distributions paid to you outside the United States that are treated as: (1) dividends to which the 30% or lower treaty rate withholding tax discussed above applies; (2) capital gains dividends; or (3) distributions attributable to gain from the sale or exchange by us of U.S. real property interests. Payment of the proceeds of a sale of stock within the United States or conducted through certain U.S. related financial intermediaries is subject to both backup withholding and information reporting unless the beneficial owner certifies under penalties of perjury that he or she is not a U.S. person (and the payor does not have actual knowledge that the beneficial owner is a U.S. person) or otherwise established an exemption. You may obtain a refund of any amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the Internal Revenue Service.

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

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

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

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

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


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

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

Non-U.S. Holders

The following summary applies to you if you are a beneficial owner of a note and are not a U.S. holder, as defined above (a “non-U.S. holder”).


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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:
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you do not, directly or indirectly, actually or constructively, own 10% or more of the total combined voting power of all classes of our stock entitled to vote;
•
you are not (1) a controlled foreign corporation for U.S. federal income tax purposes that is related, directly or indirectly, to us through sufficient stock ownership, as provided in the Internal Revenue Code, or (2) a bank receiving interest described in Section 881(c)(3)(A) of the Internal Revenue Code;
•
such interest is not effectively connected with your conduct of a U.S. trade or business; and
•
you provide a signed written statement, under penalties of perjury, which can reliably be related to you, certifying that you are not a U.S. person within the meaning of the Internal Revenue Code and providing your name and address to 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:
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if you are a foreign partnership, the certification requirement will generally apply to your partners, and you will be required to provide certain information;
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if you are a foreign trust, the certification requirement will generally be applied to you or your beneficial owners depending on whether you are a “foreign complex trust,” “foreign simple trust,” or “foreign grantor trust” as defined in the Treasury regulations; and
•
look-through rules will apply for tiered partnerships, foreign simple trusts and foreign grantor trusts.

If you are a foreign partnership or a foreign trust, you should consult your own tax advisor regarding your status under these Treasury regulations and the certification requirements applicable to you.

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

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

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

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

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in the case of gain, you are an individual who is present in the United States for 183 days or more during the taxable year of the sale or other disposition of your notes, and specific other conditions are met;
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you are subject to tax provisions applicable to certain United States expatriates; or
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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:
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is a U.S. person, as defined in the Internal Revenue Code;
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derives 50% or more of its gross income in specific periods from the conduct of a trade or business in the United States;
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is a “controlled foreign corporation” for U.S. federal income tax purposes; or
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is a foreign partnership, if at any time during its tax year, one or more of its partners are U.S. persons who in the aggregate hold more than 50% of the income or capital interests in the partnership, or the foreign partnership is engaged in a U.S. trade or business, unless the broker has documentary evidence in its files that you are a non-U.S. person and certain other conditions are met or you otherwise establish an exemption. If you receive payments of the proceeds of a sale of your notes to or through a U.S. office of a broker, the payment is subject to both U.S. backup withholding and information reporting unless you provide a Form W-8BEN certifying that you are a non-U.S. person or you otherwise establish an exemption.

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

U.S. Federal Income of Holders of Our Warrants

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

Expiration of Warrants  Upon the expiration of a warrant, you will generally recognize a capital loss in an amount equal to your adjusted tax basis in the warrant.

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

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

Potential Legislation or Other Actions Affecting Tax Consequences

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

State, Local and Foreign Taxes

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

Changes in applicable tax regulations could negatively affect our financial results

The Company is subject to taxation in the U.S. and numerous foreign jurisdictions. Because, even with the passage of the Tax Act, the U.S. maintains a worldwide corporate tax system, the foreign and U.S. tax systems are somewhat interdependent. Longstanding international tax norms that determine each country’s jurisdiction to tax cross-border international trade are evolving and could reduce the ability of our foreign subsidiaries to deduct for foreign tax purposes the interest they pay on loans from the Company, thereby increasing the foreign tax liability of the subsidiaries. It is also possible that foreign countries could increase their withholding taxes on dividends and interest. Given the unpredictability of these possible changes and their potential interdependency, it is very difficult to assess the overall effect of such potential tax changes on our earnings and cash flow, but such changes could adversely impact our financial results.
Internet Access to Our SEC Filings
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as well as our proxy statements and other materials that are filed with, or furnished to, the Securities and Exchange Commission (“SEC”) are made available, free of charge, on the Internet at www.welltower.com/investors, as soon as reasonably practicable after they are filed with, or furnished to, the SEC. We routinely post important information on our website at www.welltower.com in the “Investors” section, including corporate and investor presentations and financial information.  We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included on our website under the heading “Investors.”  Accordingly, investors should monitor such portion of our website in addition to following our press releases, public conference calls, and filings with the SEC.  The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive textual reference only.
Cautionary Statement Regarding Forward-Looking Statements
This Annual Report on Form 10-K and the documents incorporated by reference contain statements that constitute “forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 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:
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the status of the economy;
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the status of capital markets, including availability and cost of capital;

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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;
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changes in financing terms;
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competition within the health care and seniors housing industries;
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negative developments in the operating results or financial condition of operators/tenants, including, but not limited to, their ability to pay rent and repay loans;
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our ability to transition or sell properties with profitable results;
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the failure to make new investments or acquisitions as and when anticipated;
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natural disasters and other acts of God affecting our properties;
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our ability to re-lease space at similar rates as vacancies occur;
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our ability to timely reinvest sale proceeds at similar rates to assets sold;
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operator/tenant or joint venture partner bankruptcies or insolvencies;
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the cooperation of joint venture partners;
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government regulations affecting Medicare and Medicaid reimbursement rates and operational requirements;
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liability or contract claims by or against operators/tenants;
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unanticipated difficulties and/or expenditures relating to future investments or acquisitions;
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environmental laws affecting our properties;
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changes in rules or practices governing our financial reporting;
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the movement of U.S. and foreign currency exchange rates;
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our ability to maintain our qualification as a REIT;
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key management personnel recruitment and retention; and
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the risks described under “Item 1A — Risk Factors.”
We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.
Item 1A. Risk Factors
This section discusses the most significant factors that affect our business, operations and financial condition. It does not describe all risks and uncertainties applicable to us, our industry or ownership of our securities. If any of the following risks, as well as other risks and uncertainties that are not addressed in this section or that we have not yet identified, actually occur, we could be materially adversely affected and the value of our securities could decline. We group these risk factors into three categories:
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Risks arising from our business;
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Risks arising from our capital structure; and
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Risks arising from our status as a REIT. 
Risks Arising from Our Business
Our investments in and acquisitions of health care and seniors housing properties may be unsuccessful or fail to meet our expectations 
We are exposed to the risk that some of our acquisitions may not prove to be successful. We could encounter unanticipated difficulties and expenditures relating to any acquired properties, including contingent liabilities, and acquired properties might require significant management attention that would otherwise be devoted to our ongoing business. If we agree to provide construction funding to an operator/tenant and the project is not completed, we may need to take steps to ensure completion of the project. Such expenditures may negatively affect our results of operations. Investments in and acquisitions of seniors housing and health care properties entail risks associated with real estate investments generally, including risks that the investment will not achieve expected returns, that the cost estimates for necessary property improvements will prove inaccurate or that the tenant, operator or manager will fail to meet performance expectations. Furthermore, there can be no assurance that our anticipated acquisitions and investments, the completion of which is subject to various conditions, will be consummated in accordance with

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anticipated timing, on anticipated terms, or at all. Health care properties are often highly customizable and the development or redevelopment of such properties may require costly tenant-specific improvements. We also may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and this could have an adverse effect on our results of operations and financial condition. As a result, we cannot assure you that we will achieve the economic benefit we expect from acquisitions, investment, development and redevelopment opportunities. All of the foregoing could affect our ability to continue paying dividends at the current rate. 
Our investments in joint ventures could be adversely affected by our lack of exclusive control over these investments, our partners’ insolvency or failure to meet their obligations, and disputes between us and our partners 
We have entered into, and may continue in the future to enter into, partnerships or joint ventures with other persons or entities. Joint venture investments involve risks that may not be present with other methods of ownership, including the possibility that our partner might become insolvent, refuse to make capital contributions when due or otherwise fail to meet its obligations, which may result in certain liabilities to us for guarantees and other commitments; that our partner might at any time have economic or other business interests or goals that are or become inconsistent with our interests or goals; that we could become engaged in a dispute with our partner, which could require us to expend additional resources to resolve such dispute and could have an adverse impact on the operations and profitability of the joint venture; and that our partner may be in a position to take action or withhold consent contrary to our instructions or requests. In addition, our ability to transfer our interest in a joint venture to a third party may be restricted. In some instances, we and/or our partner may have the right to trigger a buy-sell arrangement, which could cause us to sell our interest, or acquire our partner’s interest, at a time when we otherwise would not have initiated such a transaction. Our ability to acquire our partner’s interest may be limited if we do not have sufficient cash, available borrowing capacity or other capital resources. In such event, we may be forced to sell our interest in the joint venture when we would otherwise prefer to retain it. Joint ventures may require us to share decision-making authority with our partners, which could limit our ability to control the properties in the joint ventures. Even when we have a controlling interest, certain major decisions may require partner approval, such as the sale, acquisition or financing of a property. 
We are exposed to operational risks with respect to our seniors housing operating properties that could adversely affect our revenue and operations
We are exposed to various operational risks with respect to our seniors housing operating properties that may increase our costs or adversely affect our ability to generate revenues. These risks include fluctuations in occupancy, Medicare and Medicaid reimbursement, if applicable, and private pay rates; economic conditions; competition; federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards; the availability and increases in cost of general and professional liability insurance coverage; state regulation and rights of residents related to entrance fees; and the availability and increases in the cost of labor (as a result of unionization or otherwise). Any one or a combination of these factors may adversely affect our revenue and operations.
Decreases in our operators’ revenues or increases in our operators’ expenses could affect our operators’ ability to make payments to us
Our operators’ revenues are primarily driven by occupancy, private pay rates, and Medicare and Medicaid reimbursement, if applicable. Expenses for these facilities are primarily driven by the costs of labor, food, utilities, taxes, insurance and rent or debt service. Revenues from government reimbursement have, and may continue to, come under pressure due to reimbursement cuts and state budget shortfalls. Operating costs continue to increase for our operators. To the extent that any decrease in revenues and/or any increase in operating expenses result in a property not generating enough cash to make payments to us, the credit of our operator and the value of other collateral would have to be relied upon. To the extent the value of such property is reduced, we may need to record an impairment for such asset. Furthermore, if we determine to dispose of an underperforming property, such sale may result in a loss. Any such impairment or loss on sale would negatively affect our financial results.  All of the foregoing could affect our ability to continue paying dividends at the current rate. 
Increased competition and oversupply may affect our operators’ ability to meet their obligations to us 
The operators of our properties compete on a local and regional basis with operators of properties and other health care providers that provide comparable services for residents and patients, including on the basis of the scope and quality of care and services provided, reputation and financial condition, physical appearance of the properties, price, and location. Our operators are expected to encounter increased competition in the future that could limit their ability to attract residents or expand their businesses.  In addition, we expect that there will continue to be a more than adequate inventory of seniors housing facilities. We cannot be certain that the operators of all of our facilities will be able to achieve and maintain occupancy and rate levels that will enable them to meet all of their obligations to us.  If our operators cannot compete effectively or if there is an oversupply of facilities, their financial performance and ability to meet their obligations to us could have a material adverse effect on our financial results. 
A severe cold and flu season, epidemics or any other widespread illnesses could adversely affect the occupancy of our seniors housing operating and triple-net properties

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Our revenues and our operators’ revenues are dependent on occupancy. It is impossible to predict the severity of the cold and flu season or the occurrence of epidemics or any other widespread illnesses. The occupancy of our seniors housing operating and triple-net properties could significantly decrease in the event of a severe cold and flu season, an epidemic or any other widespread illness.  Such a decrease could affect the operating income of our seniors housing operating properties and the ability of our triple-net operators to make payments to us. In addition, a flu pandemic could significantly increase the cost burdens faced by our operators, including if they are required to implement quarantines for residents, and adversely affect their ability to meet their obligations to us, which would have a material adverse effect on our financial results. 
The insolvency or bankruptcy of our tenants, operators, borrowers, managers and other obligors may adversely affect our business, results of operations and financial condition 
We are exposed to the risk that our tenants, operators, borrowers, managers or other obligors may not be able to meet the rent, principal and interest or other payments due us, which may result in a tenant, operator, borrower, manager or other obligor bankruptcy or insolvency, or that a tenant, operator, borrower, manager or other obligor might become subject to bankruptcy or insolvency proceedings for other reasons. Although our operating lease agreements provide us with the right to evict a tenant, demand immediate payment of rent and exercise other remedies, and our loans provide us with the right to terminate any funding obligation, demand immediate repayment of principal and unpaid interest, foreclose on the collateral and exercise other remedies, the bankruptcy and insolvency laws afford certain rights to a party that has filed for bankruptcy or reorganization. A tenant, operator, borrower, manager or other obligor in bankruptcy or subject to insolvency proceedings may be able to limit or delay our ability to collect unpaid rent in the case of a lease or to receive unpaid principal and interest in the case of a loan, and to exercise other rights and remedies. In addition, if a lease is rejected in a tenant bankruptcy, our claim against the tenant may be limited by applicable provisions of the bankruptcy law. We may be required to fund certain expenses (e.g., real estate taxes and maintenance) to preserve the value of an investment property, avoid the imposition of liens on a property and/or transition a property to a new tenant. In some instances, we have terminated our lease with a tenant and relet the property to another tenant. In some of those situations, we have provided working capital loans to and limited indemnification of the new obligor. If we cannot transition a leased property to a new tenant, we may take possession of that property, which may expose us to certain successor liabilities. Should such events occur, our revenue and operating cash flow may be adversely affected. All of the foregoing could affect our ability to continue paying dividends at the current rate. 
We may not be able to timely reinvest our sale proceeds on terms acceptable to us 
From time to time, we will have cash available from the proceeds of sales of our securities, principal payments on our loans receivable or the sale of properties, including non-elective dispositions, under the terms of master leases or similar financial support arrangements. In order to maintain current revenues and continue generating attractive returns, we expect to re-invest these proceeds in a timely manner. We compete for real estate investments with a broad variety of potential investors, including other health care REITs, real estate partnerships, health care providers, health care lenders and other investors, including developers, banks, insurance companies, pension funds, government-sponsored entities and private equity firms, some of whom may have greater financial resources and lower costs of capital than we do. This competition for attractive investments may negatively affect our ability to make timely investments on terms acceptable to us. 
The properties managed by Sunrise Senior Living, LLC (“Sunrise”) account for a significant portion of our revenues and net operating income and any adverse developments in its business or financial condition could adversely affect us 
As of December 31, 2018, Sunrise managed 161 of our seniors housing operating properties.  These properties account for a significant portion of our revenues, and we rely on Sunrise to manage these properties efficiently and effectively. We also rely on Sunrise to set appropriate resident fees, to provide accurate property-level financial results for our properties in a timely manner and to otherwise operate them in compliance with the terms of our management agreements and all applicable laws and regulations.  Any adverse developments in Sunrise’s business or financial condition could impair its ability to manage our properties efficiently and effectively, which could adversely affect our business, results of operations, and financial condition. Also, if Sunrise experiences any significant financial, legal, accounting or regulatory difficulties, such difficulties could result in, among other things, acceleration of its indebtedness, impairment of its continued access to capital or the commencement of insolvency proceedings by or against it under the U.S. Bankruptcy Code, which, in turn, could adversely affect our business, results of operations and financial condition. See Note 8 to our consolidated financial statements for additional information. 
We depend on Genesis HealthCare (“Genesis”), Brookdale Senior Living (“Brookdale”) and ProMedica Health System ("ProMedica") for a significant portion of our revenues and any failure, inability or unwillingness by them to satisfy obligations under their agreements with us could adversely affect us 
The properties we lease to Genesis, Brookdale and ProMedica account for a significant portion of our revenues, and because these leases are triple-net leases, we also depend on Genesis, Brookdale and ProMedica to pay all insurance, taxes, utilities and maintenance and repair expenses in connection with the leased properties. We cannot assure you that Genesis, Brookdale and ProMedica will have sufficient assets, income and access to financing to enable them to make rental payments to us or to otherwise satisfy their respective obligations under our leases, and any failure, inability or unwillingness by Genesis, Brookdale or ProMedica

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to do so could have an adverse effect on our business, results of operations and financial condition. Genesis, Brookdale and ProMedica have also agreed to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with their respective businesses, and we cannot assure you that Genesis, Brookdale and ProMedica will have sufficient assets, income, access to financing and insurance coverage to enable them to satisfy their respective indemnification obligations.  Genesis, Brookdale and ProMedica's failure to effectively conduct their operations or to maintain and improve our properties could adversely affect their business reputations and their ability to attract and retain patients and residents in our properties, which, in turn, could adversely affect our business, results of operations and financial condition. Additionally, we have made real estate and other loans to Genesis and their operational or other failures could adversely impact their ability to repay these loans when due.
Ownership of property outside the U.S. may subject us to different or greater risks than those associated with our domestic operations 
We have operations in Canada and the U.K. which represent 10.0% and 9.6% of total Welltower revenues, respectively. As of December 31, 2018, Revera managed 98 of our seniors housing operating properties in Canada, representing a significant portion of our revenues, and also owned a controlling interest in Sunrise. International development, ownership, and operating activities involve risks that are different from those we face with respect to our domestic properties and operations. These risks include, but are not limited to, any international currency gain recognized with respect to changes in exchange rates may not qualify under the 75% gross income test or the 95% gross income test that we must satisfy annually in order to qualify and maintain our status as a REIT; challenges with respect to the repatriation of foreign earnings and cash; changes in foreign political, regulatory, and economic conditions (regionally, nationally and locally) including, but not limited to, continuing uncertainty surrounding the process of Brexit and the macroeconomic and regulatory effects of Brexit, including impacts on the U.K. real estate market; challenges in managing international operations; challenges of complying with a wide variety of foreign laws and regulations, including those relating to real estate, corporate governance, operations, taxes, employment and other civil and criminal legal proceedings; foreign ownership restrictions with respect to operations in countries; differences in lending practices and the willingness of domestic or foreign lenders to provide financing; regional or country-specific business cycles and political and economic instability; and failure to comply with applicable laws and regulations in the U.S. that affect foreign operations, including, but not limited to, the U.S. Foreign Corrupt Practices Act. If we are unable to successfully manage the risks associated with international expansion and operations, our results of operations and financial condition may be adversely affected. 
If our tenants do not renew their existing leases, or if we are required to sell properties for liquidity reasons, we may be unable to lease or sell the properties on favorable terms, or at all
We cannot predict whether our tenants will renew existing leases at the end of their lease terms, which expire at various times. If these leases are not renewed, we would be required to find other tenants to occupy those properties or sell them. There can be no assurance that we would be able to identify suitable replacement tenants or enter into leases with new tenants on terms as favorable to us as the current leases or that we would be able to lease those properties at all. 
Real estate investments are relatively illiquid and most of the property we own is highly customized for specific uses. Our ability to quickly sell or exchange any of our properties in response to changes in operator, economic and other conditions will be limited. No assurances can be given that we will recognize full value for any property that we are required to sell. Our inability to respond rapidly to changes in the performance of our investments could adversely affect our financial condition and results of operations. In addition, we are exposed to the risks inherent in concentrating investments in real estate, and in particular, the seniors housing and health care industries. A downturn in the real estate industry could adversely affect the value of our properties and our ability to sell properties for a price or on terms acceptable to us.  All of the foregoing could affect our ability to continue paying dividends at the current rate. 
Our tenants, operators and managers may not have the necessary insurance coverage to insure adequately against losses 
We maintain or require our tenants, operators and managers to maintain comprehensive insurance coverage on our properties and their operations with terms, conditions, limits and deductibles that we believe are customary for similarly-situated companies in our industry, and we frequently review our insurance programs and requirements. That said, we cannot assure you that we or our tenants, operators or managers will continue to be able to maintain adequate levels of insurance and required coverages or that we will continue to require the same levels of insurance coverage under our lease, management and other agreements, which could adversely affect us in the event of a significant uninsured loss. Also, in recent years, long-term/post-acute care and seniors housing operators and managers have experienced substantial increases in both the number and size of patient care liability claims. As a result, general and professional liability costs have increased in some markets. General and professional liability insurance coverage may be restricted or very costly, which may adversely affect the tenants’, operators’ and managers’ future operations, cash flows and financial condition, and may have a material adverse effect on the tenants’, operators’ and managers’ ability to meet their obligations to us. 
Our ownership of properties through ground leases exposes us to the loss of such properties upon breach or termination of the ground leases 

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We have acquired an interest in certain of our properties by acquiring a leasehold interest in the property on which the building is located, and we may acquire additional properties in the future through the purchase of interests in ground leases. As the lessee under a ground lease, we are exposed to the possibility of losing the property upon termination of the ground lease or an earlier breach of the ground lease by us. 
The requirements of, or changes to, governmental reimbursement programs, such as Medicare, Medicaid or government funding, could have a material adverse effect on our obligors’ liquidity, financial condition and results of operations, which could adversely affect our obligors’ ability to meet their obligations to us 
Some of our obligors’ businesses are affected by government reimbursement. To the extent that an operator/tenant receives a significant portion of its revenues from government payors, primarily Medicare and Medicaid, such revenues may be subject to statutory and regulatory changes, retroactive rate adjustments, recovery of program overpayments or set-offs, court decisions, administrative rulings, policy interpretations, payment or other delays by fiscal intermediaries or carriers, government funding restrictions (at a program level or with respect to specific facilities), any lapse in Congressional funding of the Centers for Medicare and Medicaid Services and interruption or delays in payments due to any ongoing government investigations and audits at such property. In recent years, government payors have frozen or reduced payments to health care providers due to budgetary pressures. Health care reimbursement will likely continue to be of paramount importance to federal and state authorities. We cannot make any assessment as to the ultimate timing or effect any future legislative reforms may have on the financial condition of our obligors and properties. There can be no assurance that adequate reimbursement levels will be available for services provided by any property operator, whether the property receives reimbursement from Medicare, Medicaid or private payors. Significant limits on the scope of services reimbursed and on reimbursement rates and fees could have a material adverse effect on an obligor’s liquidity, financial condition and results of operations, which could adversely affect the ability of an obligor to meet its obligations to us. 
The Health Reform Laws, provide those states that expand their Medicaid coverage to otherwise eligible state residents with incomes at or below 138% of the federal poverty level with an increased federal medical assistance percentage, effective January 1, 2014, when certain conditions are met. Given that the federal government substantially funds the Medicaid expansion, it is unclear how many states will ultimately pursue this option, although, as of early February 2018, more than 60% of the states have expanded Medicaid coverage. The participation by states in the Medicaid expansion could have the dual effect of increasing our tenants’ revenues, through new patients, but further straining state budgets and their ability to pay our tenants. We expect that the current Presidential Administration and U.S. Congress will seek to modify, repeal, or otherwise invalidate all, or certain provisions of, the Health Reform Laws, including Medicaid expansion. Since taking office, President Trump has continued to support the repeal of all or portions of the Health Reform Laws.  See “Item 1 — Business — Certain Government Regulations — United States — Reimbursement” above for additional information. If the operations, cash flows or financial condition of our operators and tenants are materially adversely impacted by the Health Reform Laws or future legislation, our revenue and operations may be adversely affected as well. More generally, and because of the dynamic nature of the legislative and regulatory environment for health care products and services, and in light of existing federal deficit and budgetary concerns, we cannot predict the impact that broad-based, far-reaching legislative or regulatory changes could have on the U.S. economy, our business, or that of our operators and tenants. 
Our operators’ or tenants’ failure to comply with federal, state, province, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards could adversely affect such operators’ or tenants’ operations, which could adversely affect our operators’ and tenants’ ability to meet their obligations to us 
Our operators and tenants generally are subject to varying levels of federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards. Our operators’ or tenants’ failure to comply with any of these laws, regulations, or standards could result in loss of accreditation, denial of reimbursement, imposition of fines, suspension, decertification or exclusion from federal and state health care programs, loss of license or closure of the facility. Such actions may have an effect on our operators’ or tenants’ ability to make lease payments to us and, therefore, adversely impact us. See “Item 1 — Business — Certain Government Regulations — United States — Fraud & Abuse Enforcement” above. 
Many of our properties may require a license, registration, and/or CON to operate. Failure to obtain a license, registration, or CON, or loss of a required license, registration, or CON would prevent a facility from operating in the manner intended by the operators or tenants. These events could materially adversely affect our operators’ or tenants’ ability to make rent or other obligatory payments to us. State and local laws also may regulate the expansion, including the addition of new beds or services or acquisition of medical equipment, and the construction or renovation of health care facilities, by requiring a CON or other similar approval from a state agency. See “Item 1 — Business — Certain Government Regulations — United States — Licensing and Certification” above. 
The real estate market and our business may be negatively impacted by changes to U.S. tax laws 
The Tax Cuts and Jobs Act ("Tax Act") enacted in December 2017 significantly changes the U.S. income tax rules for individuals and corporations. Although the Tax Act involves comprehensive changes to the system of corporate income tax, it does not substantively change the manner in which REITs are taxed. Although numerous provisions of the Tax Act do affect REITs, we are

29

generally not subject to federal taxes applicable to regular corporations if we comply with the tax law governing REIT status and distribute annually an amount at least equal to our taxable income. Nonetheless, the Tax Act makes numerous changes to the individual income tax rules that may affect the real estate market in the U.S., including limitations on the deductibility of state and local property taxes and interest. Although the impact of these changes is likely to be most significant in the residential real estate market, rather than in the sectors where we operate, the effects of these changes on the broader real estate market in the geographic areas in which we operate and on our tenants remain uncertain. 
Changes in applicable tax regulations could negatively affect our financial results 
We are subject to taxation in the U.S. and numerous foreign jurisdictions.  Because, even with the passage of the Tax Act, the U.S. maintains a worldwide corporate tax system, the foreign and U.S. tax systems are somewhat interdependent. Longstanding international norms that determine each country’s jurisdiction to tax cross-border international trade are evolving and could reduce the ability of our foreign subsidiaries to deduct for foreign tax purposes the interest they pay on loans from us, thereby, increasing the foreign tax liability of the subsidiaries; it is also possible that foreign countries could increase their withholding taxes on dividends and interest. Given the unpredictability of these possible changes and their potential interdependency, it is very difficult to assess the overall effect of such potential tax changes on our earnings and cash flow, but such changes could adversely impact our financial results.
Unfavorable resolution of pending and future litigation matters and disputes could have a material adverse effect on our financial condition
From time to time, we may be directly involved in a number of legal proceedings, lawsuits and other claims. We may also be named as defendants in lawsuits allegedly arising out of our actions or the actions of our operators/tenants or managers in which such operators/tenants or managers have agreed to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with their respective businesses. An unfavorable resolution of pending or future litigation or legal proceedings may have a material adverse effect on our business, results of operations and financial condition. Regardless of its outcome, litigation may result in substantial costs and expenses and significantly divert the attention of management. There can be no assurance that we will be able to prevail in, or achieve a favorable settlement of, pending or future litigation. In addition, pending litigation or future litigation, government proceedings or environmental matters could lead to increased costs or interruption of our normal business operations.
Development, redevelopment and construction risks could affect our profitability
At any given time, we may be in the process of constructing one or more new facilities that ultimately will require a CON and license before they can be utilized by the operator for their intended use. The operator also may need to obtain Medicare and Medicaid certification and enter into Medicare and Medicaid provider agreements and/or third party payor contracts. In the event that the operator is unable to obtain the necessary CON, licensure, certification, provider agreements or contracts after the completion of construction, there is a risk that we will not be able to earn any revenues on the facility until either the initial operator obtains a license or certification to operate the new facility and the necessary provider agreements or contracts or we find and contract with a new operator that is able to obtain a license to operate the facility for its intended use and the necessary provider agreements or contracts. 
In connection with our renovation, redevelopment, development and related construction activities, we may be unable to obtain, or suffer delays in obtaining, necessary zoning, land-use, building, occupancy and other required governmental permits and authorizations. These factors could result in increased costs or our abandonment of these projects. In addition, we may not be able to obtain financing on favorable terms, which may render us unable to proceed with our development activities, and we may not be able to complete construction and lease-up of a property on schedule, which could result in increased debt service expense or construction costs. Additionally, the time frame required for development, construction and lease-up of these properties means that we may have to wait years for significant cash returns. Because we are required to make cash distributions to our stockholders, if the cash flow from operations or refinancing is not sufficient, we may be forced to borrow additional money to fund such distributions. Newly developed and acquired properties may not produce the cash flow that we expect, which could adversely affect our overall financial performance. 
In deciding whether to acquire or develop a particular property, we make assumptions regarding the expected future performance of that property. In particular, we estimate the return on our investment based on expected occupancy, rental rates and capital costs. If our financial projections with respect to a new property are inaccurate as a result of increases in capital costs or other factors, the property may fail to perform as we expected in analyzing our investment. Our estimate of the costs of repositioning or redeveloping an acquired property may prove to be inaccurate, which may result in our failure to meet our profitability goals. Additionally, we may acquire new properties that are not fully leased, and the cash flow from existing operations may be insufficient to pay the operating expenses and debt service associated with that property. 
We may experience losses caused by severe weather conditions or natural disasters, which could result in an increase of our or our tenants’ cost of insurance, a decrease in our anticipated revenues or a significant loss of the capital we have invested in a property 

30

We maintain or require our tenants to maintain comprehensive insurance coverage on our properties with terms, conditions, limits and deductibles that we believe are appropriate given the relative risk and costs of such coverage, and we frequently review our insurance programs and requirements. However, a large number of our properties are located in areas particularly susceptible to revenue loss, cost increase or damage caused by severe weather conditions or natural disasters such as hurricanes, earthquakes, tornadoes and floods. We believe, given current industry practice and analysis prepared by outside consultants, that our and our tenants’ insurance coverage is appropriate to cover reasonably anticipated losses that may be caused by hurricanes, earthquakes, tornadoes, floods and other severe weather conditions and natural disasters, including the effects of climate change. Nevertheless, we are always subject to the risk that such insurance will not fully cover all losses and, depending on the severity of the event and the impact on our properties, such insurance may not cover a significant portion of the losses. These losses may lead to an increase of our and our tenants’ cost of insurance, a decrease in our anticipated revenues from an affected property and a loss of all or a portion of the capital we have invested in an affected property.  In addition, we or our tenants may not purchase insurance under certain circumstances if the cost of insurance exceeds, in our or our tenants’ judgment, the value of the coverage relative to the risk of loss. 
We may incur costs to remediate environmental contamination at our properties, which could have an adverse effect on our or our obligors’ business or financial condition
Under various laws, owners or operators of real estate may be required to respond to the presence or release of hazardous substances on the property and may be held liable for property damage, personal injuries or penalties that result from environmental contamination or exposure to hazardous substances. We may become liable to reimburse the government for damages and costs it incurs in connection with the contamination. Generally, such liability attaches to a person based on the person’s relationship to the property. Our tenants or borrowers are primarily responsible for the condition of the property. Moreover, we review environmental site assessments of the properties that we own or encumber prior to taking an interest in them. Those assessments are designed to meet the “all appropriate inquiry” standard, which we believe qualifies us for the innocent purchaser defense if environmental liabilities arise. Based upon such assessments, we do not believe that any of our properties are subject to material environmental contamination. However, environmental liabilities may be present in our properties and we may incur costs to remediate contamination, which could have a material adverse effect on our business or financial condition or the business or financial condition of our obligors. 
Cybersecurity incidents could disrupt our business and result in the loss of confidential information
Our business is at risk from and may be impacted by cybersecurity attacks, including attempts to gain unauthorized access to our confidential data, and other electronic security breaches, including those resulting from human error, product defects and technology failures. Such cyber-attacks can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated security threats. While we employ a number of measures to prevent, detect and mitigate these threats, there is no guarantee such efforts will be successful in preventing a cyber-attack. In the past, we have experienced cybersecurity breaches, which to date have not had a material impact on our operations; however, there is no assurance that such impacts will not be material in the future. Cybersecurity incidents could disrupt our business, damage our reputation, cause us to incur significant remediation expense and have a materially adverse effect on our business, financial condition and results of operations. Cybersecurity breaches that compromise proprietary, personal identifying or confidential information of our employees, operators, tenants and partners could result in legal claims or proceedings, including under data privacy regulations.
Our success depends on key personnel whose continued service is not guaranteed 
Our success depends on the continued availability and service of key personnel, including our executive officers and other highly qualified employees, and competition for their talents is intense. We cannot assure you that we will retain our key personnel or that we will be able to recruit and retain other highly qualified employees in the future. Losing any key personnel could, at least temporarily, have a material adverse effect on our business, financial position and results of operations. 
Risks Arising from Our Capital Structure 
Our certificate of incorporation and by-laws contain anti-takeover provisions 
Our certificate of incorporation and by-laws contain anti-takeover provisions (restrictions on share ownership and transfer and super majority stockholder approval requirements for business combinations) that could make it more difficult for or even prevent a third party from acquiring us without the approval of our incumbent Board of Directors. Provisions and agreements that inhibit or discourage takeover attempts could reduce the market value of our common stock. 
We may become more leveraged 
Permanent financing for our investments is typically provided through a combination of public offerings of debt and equity securities and the incurrence or assumption of secured debt. The incurrence or assumption of indebtedness may cause us to become more leveraged, which could (1) require us to dedicate a greater portion of our cash flow to the payment of debt service, (2) make

31

us more vulnerable to a downturn in the economy, (3) limit our ability to obtain additional financing, or (4) negatively affect our credit ratings or outlook by one or more of the rating agencies. 
Cash available for distributions to stockholders may be insufficient to make dividend contributions at expected levels and are made at the discretion of the Board of Directors 
If cash available for distribution generated by our assets decreases due to dispositions or otherwise, we may be unable to make dividend distributions at expected levels. Our inability to make expected distributions would likely result in a decrease in the market price of our common stock. All distributions are made at the discretion of our Board of Directors in accordance with Delaware law and depend on our earnings, our financial condition, debt and equity capital available to us, our expectation of our future capital requirements and operating performance, restrictive covenants in our financial and other contractual arrangements, maintenance of our REIT qualification, restrictions under Delaware law and other factors as our Board of Directors may deem relevant from time to time. Additionally, our ability to make distributions will be adversely affected if any of the risks described herein, or other significant adverse events, occur. 
We are subject to covenants in our debt agreements that could have a material adverse impact on our business, results of operations and financial condition
Our debt agreements contain various covenants, restrictions and events of default. Among other things, these provisions require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. Breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness, in addition to any other indebtedness cross-defaulted against such instruments. These defaults could have a material adverse impact on our business, results of operations and financial condition. 
Limitations on our ability to access capital could have an adverse effect on our ability to make future investments or to meet our obligations and commitments
We cannot assure you that we will be able to raise the capital necessary to make future investments or to meet our obligations and commitments as they mature. Our access to capital depends upon a number of factors over which we have little or no control, including rising interest rates, inflation and other general market conditions; the market’s perception of our growth potential and our current and potential future earnings and cash distributions; the market price of the shares of our capital stock and the credit ratings of our debt securities; the financial stability of our lenders, which might impair their ability to meet their commitments to us or their willingness to make additional loans to us; changes in the credit ratings on U.S. government debt securities; or default or delay in payment by the U.S. of its obligations. If our access to capital is limited by these factors or other factors, it could negatively impact our ability to acquire properties, repay or refinance our indebtedness, fund operations or make distributions to our stockholders.
Downgrades in our credit ratings could have a material adverse impact on our cost and availability of capital
We plan to manage the company to maintain a capital structure consistent with our current profile, but there can be no assurance that we will be able to maintain our current credit ratings. Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our results of operations, liquidity and/or financial condition.
Increases in interest rates could have a material adverse impact on our cost of capital
An increase in interest rates may increase interest cost on new and existing variable rate debt.  Such increases in the cost of capital could adversely impact our ability to finance operations, the acquisition and development of properties, and refinance existing debt. Additionally, increased interest rates may also result in less liquid property markets, limiting our ability to sell existing assets.
Fluctuations in the value of foreign currencies could adversely affect our results of operations and financial position
Currency exchange rate fluctuations could affect our results of operations and financial position, including exchange rate fluctuations resulting from Brexit. We generate a portion of our revenue and expenses in such foreign currencies as the Canadian dollar and the British pound sterling. Although we may enter into foreign exchange agreements with financial institutions and/or obtain local currency mortgage debt in order to reduce our exposure to fluctuations in the value of foreign currencies, we cannot assure you that foreign currency fluctuations will not have a material adverse effect on us.
Our entry into hedge agreements may not effectively reduce our exposure to changes in interest rates or foreign currency exchange rates 
We enter into hedge agreements from time to time to manage some of our exposure to interest rate and foreign currency exchange rate volatility. These agreements involve risks, such as the risk that counterparties may fail to honor their obligations under these arrangements. In addition, these arrangements may not be effective in reducing our exposure to changes in interest rates or foreign

32

currency exchange rates. When we use forward-starting interest rate swaps, there is a risk that we will not complete the long-term borrowing against which the swap is intended to hedge. If such events occur, our results of operations may be adversely affected. 
Risks Arising from Our Status as a REIT 
We might fail to qualify or remain qualified as a REIT 
We intend to operate as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), and believe we have and will continue to operate in such a manner. If we lose our status as a REIT, we will face serious income tax consequences that will substantially reduce the funds available for satisfying our obligations and for distribution to our stockholders because:
•
we would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates;
•
we could be subject to possibly increased state and local taxes; and
•
unless we are entitled to relief under statutory provisions, we could not elect to be subject to tax as a REIT for four taxable    years following the year during which we were disqualified. 
Since REIT qualification requires us to meet a number of complex requirements, it is possible that we may fail to fulfill them, and if we do, our earnings will be reduced by the amount of U.S. federal and other income taxes owed. A reduction in our earnings would affect the amount we could distribute to our stockholders. If we do not qualify as a REIT, we would not be required to make distributions to stockholders since a non-REIT is not required to pay dividends to stockholders in order to maintain REIT status or avoid an excise tax. In addition, if we fail to qualify as a REIT, all distributions to stockholders would continue to be treated as dividends to the extent of our current and accumulated earnings and profits, although corporate stockholders may be eligible for the dividends received deduction, and individual stockholders may be eligible for taxation at the rates generally applicable to long-term capital gains (currently at a maximum rate of 20%) with respect to distributions. 
As a result of all these factors, our failure to qualify as a REIT also could impair our ability to implement our business strategy and would adversely affect the value of our common stock. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to remain qualified as a REIT. Although we believe that we qualify as a REIT, we cannot assure you that we will remain qualified as a REIT for U.S. federal income tax purposes. 
Certain subsidiaries might fail to qualify or remain qualified as a REIT
We own interests in a number of entities which have elected to be taxed as REITs for U.S. federal income tax purposes, some of which we consolidate for financial reporting purposes but each of which is treated as a separate REIT for federal income tax purposes (each a “Subsidiary REIT”). To qualify as a REIT, each Subsidiary REIT must independently satisfy all of the REIT qualification requirements under the Code, together with all other rules applicable to REITs. Provided that each Subsidiary REIT qualifies as a REIT, our interests in the Subsidiary REITs will be treated as qualifying real estate assets for purposes of the REIT asset tests. If a Subsidiary REIT fails to qualify as a REIT in any taxable year, such Subsidiary REIT will be subject to federal and state income taxes and may not be able to qualify as a REIT for the four subsequent taxable years. Any such failure could have an adverse effect on our ability to comply with the REIT income and asset tests, and thus our ability to qualify as a REIT, unless we are able to avail ourselves of certain relief provisions. 
The 90% annual distribution requirement will decrease our liquidity and may limit our ability to engage in otherwise beneficial transactions 
To comply with the 90% distribution requirement applicable to REITs and to avoid the nondeductible excise tax, we must make distributions to our stockholders. Although we anticipate that we generally will have sufficient cash or liquid assets to enable us to satisfy the REIT distribution requirement, it is possible that, from time to time, we may not have sufficient cash or other liquid assets to meet the 90% distribution requirement, or we may decide to retain cash or distribute such greater amount as may be necessary to avoid income and excise taxation. This may be due to timing differences between the actual receipt of income and actual payment of deductible expenses, on the one hand, and the inclusion of that income and deduction of those expenses in arriving at our taxable income, on the other hand. In addition, non-deductible expenses such as principal amortization or repayments or capital expenditures in excess of non-cash deductions may cause us to fail to have sufficient cash or liquid assets to enable us to satisfy the 90% distribution requirement. In the event that timing differences occur, or we deem it appropriate to retain cash, we may borrow funds, issue additional equity securities (although we cannot assure you that we will be able to do so), pay taxable stock dividends, if possible, distribute other property or securities or engage in other transactions intended to enable us to meet the REIT distribution requirements. This may require us to raise additional capital to meet our obligations. 
The lease of qualified health care properties to a taxable REIT subsidiary is subject to special requirements

33

We lease certain qualified health care properties to taxable REIT subsidiaries (or limited liability companies of which the taxable REIT subsidiaries are members), which lessees contract with managers (or related parties) to manage the health care operations at these properties. The rents from this taxable REIT subsidiary lessee structure are treated as qualifying rents from real property if (1) they are paid pursuant to an arms-length lease of a qualified health care property with a taxable REIT subsidiary and (2) the manager qualifies as an eligible independent contractor (as defined in the Code). If any of these conditions are not satisfied, then the rents will not be qualifying rents. 
If certain sale-leaseback transactions are not characterized by the Internal Revenue Service (“IRS”) as “true leases,” we may be subject to adverse tax consequences 
We have purchased certain properties and leased them back to the sellers of such properties, and we may enter into similar transactions in the future. We intend for any such sale-leaseback transaction to be structured in such a manner that the lease will be characterized as a “true lease,” thereby allowing us to be treated as the owner of the property for U.S. federal income tax purposes. However, depending on the terms of any specific transaction, the IRS might take the position that the transaction is not a “true lease” but is more properly treated in some other manner. In the event any sale-leaseback transaction is challenged and successfully re-characterized by the IRS, we would not be entitled to claim the deductions for depreciation and cost recovery generally available to an owner of property. Furthermore, if a sale-leaseback transaction were so re-characterized, we might fail to satisfy the REIT asset tests or income tests and, consequently, could lose our REIT status effective with the year of re-characterization. Alternatively, the amount of our REIT taxable income could be recalculated, which may cause us to fail to meet the REIT annual distribution requirements for a taxable year. 
We could be subject to changes in our tax rates, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities 
We are subject to taxes in the U.S. and foreign jurisdictions.  Our analysis of the Tax Act may be impacted by any corrective legislation and any guidance provided by the U.S. Treasury and the IRS.  Our effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation.  We are also subject to the examination of our tax returns and other tax matters by the IRS and other tax authorities and governmental bodies.  We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes.  There can be no assurance as to the outcome of these examinations.  If we were subject to review or examination by the IRS or applicable foreign jurisdiction as the result of any new tax law changes (including the recently enacted Tax Act) the ultimate determination of which may change our taxes owed for an amount in excess of amounts previously accrued or recorded, our financial condition, operating results, and cash flows could be adversely affected.

Item 1B.  Unresolved Staff Comments
None.

34

Item 2.  Properties 
We lease our corporate headquarters located at 4500 Dorr Street, Toledo, Ohio 43615. We also lease corporate offices throughout the U.S., Canada, the United Kingdom and Luxembourg and have ground leases relating to certain of our properties. The following table sets forth certain information regarding the properties that comprise our consolidated real property and real estate loan investments as of December 31, 2018 (dollars in thousands):
 
 
Seniors Housing Operating
 
Triple-net
 
Outpatient Medical
Property Location
 
Number of Properties
Total Investment
Annualized Revenues(1)
 
Number of Properties
Total Investment
Annualized Revenues(1)
 
Number of Properties
Total Investment
Annualized Revenues(1)
Alaska
 
—

$
—

$
—

 
—

$
—

$
—

 
2

$
28,820

$
3,628

Alabama
 
—

—

—

 
4

33,434

3,356

 
7

80,968

7,782

Arkansas
 
—

—

—

 
—

—

—

 
1

22,949

2,228

Arizona
 
3

52,715

20,712

 
3

34,957

2,192

 
4

61,618

8,539

California
 
84

2,762,952

715,203

 
16

390,915

40,140

 
34

877,181

89,356

Colorado
 
4

114,217

32,053

 
13

331,738

29,536

 
2

31,643

5,947

Connecticut
 
18

443,781

148,458

 
13

145,985

16,087

 
1

41,820

4,746

District Of Columbia
 
1

61,763

14,680

 
—

—

—

 
—

—

—

Delaware
 
4

85,736

28,372

 
6

101,096

16,269

 
—

19,687

340

Florida
 
11

820,940

138,385

 
51

580,495

54,033

 
38

465,835

54,695

Georgia
 
6

110,534

29,961

 
6

59,190

6,874

 
10

164,211

27,547

Iowa
 
1

31,059

11,937

 
10

105,633

10,551

 
1

6,435

1,438

Idaho
 
—

—

—

 
1

4,096

1,098

 
—

—

—

Illinois
 
14

428,803

113,909

 
27

399,815

35,118

 
7

106,276

10,514

Indiana
 
—

—

—

 
30

385,372

41,623

 
9

156,095

19,261

Kansas
 
2

29,458

10,668

 
28

300,665

28,286

 
5

61,037

13,562

Kentucky
 
2

37,556

14,754

 
7

59,124

13,121

 
1

6,872

797

Louisiana
 
2

48,893

11,173

 
3

18,177

2,717

 
—

—

—

Massachusetts
 
40

1,103,287

261,207

 
18

152,967

13,766

 
—

—

—

Maryland
 
6

250,315

74,605

 
24

306,394

17,290

 
6

175,587

18,271

Maine
 
2

48,130

19,155

 
—

—

—

 
1

18,293

2,404

Michigan
 
5

105,899

23,987

 
24

281,423

30,649

 
2

29,874

6,221

Minnesota
 
4

108,830

21,491

 
10

218,152

18,909

 
8

159,033

30,553

Missouri
 
5

142,202

23,278

 
1

12,376

968

 
8

137,216

19,352

Mississippi
 
—

—

—

 
3

25,835

1,057

 
—

—

—

Montana
 
1

5,710

4,302

 
1

6,281

752

 
—

—

—

North Carolina
 
2

119,188

20,243

 
50

362,777

60,081

 
11

103,708

8,906

Nebraska
 
—

—

—

 
4

30,897

4,067

 
2

32,719

5,310

New Hampshire
 
4

114,495

32,511

 
4

49,700

4,136

 
1

12,705

1,770

New Jersey
 
26

693,703

201,450

 
46

815,490

60,776

 
9

268,927

43,281

New Mexico
 
1

17,772

1,793

 
—

—

—

 
3

30,344

3,796

Nevada
 
2

35,225

11,279

 
3

32,315

4,309

 
5

42,113

3,263

New York
 
12

428,241

111,700

 
4

42,201

5,795

 
9

162,066

10,114

Ohio
 
6

299,653

41,009

 
42

363,009

34,429

 
5

49,245

8,985

Oklahoma
 
2

38,951

2,576

 
21

208,973

20,907

 
2

22,695

3,591

Oregon
 
—

—

—

 
1

2,914

804

 
1

9,330

1,562

Pennsylvania
 
9

155,558

61,400

 
77

1,012,532

99,319

 
1

35,687

1,386

Rhode Island
 
3

59,381

20,945

 
—

—

—

 
—

—

—

South Carolina
 
2

7,101

10,190

 
8

49,243

4,889

 
1

23,837

2,364

Tennessee
 
2

48,089

15,482

 
4

38,684

4,536

 
6

62,239

10,622

Texas
 
28

820,461

192,066

 
41

483,016

55,358

 
62

973,590

101,286

Utah
 
2

20,765

12,356

 
2

26,538

2,775

 
—

—

—

Virginia
 
5

243,676

60,168

 
28

299,224

34,530

 
4

58,476

6,337

Vermont
 
1

25,536

7,160

 
—

—

—

 
—

—

—

Washington
 
14

474,394

90,927

 
14

195,075

21,038

 
9

225,029

23,975

Wisconsin
 
—

—

—

 
7

105,832

11,694

 
2

29,513

2,197

West Virginia
 
—

—

—

 
4

65,116

8,866

 
—

—

—

Total domestic
 
336

10,394,969

2,611,545

 
659

8,137,656

822,701

 
280

4,793,673

565,926

 
 
 
 
 
 
 
 
 
 
 
 
 
Canada
 
110

2,101,067

451,347

 
6

143,362

9,944

 
—

—

—

United Kingdom
 
54

1,475,141

321,623

 
61

1,111,086

113,498

 
4

263,815

24,742

Total international
 
164

3,576,208

772,970

 
67

1,254,448

123,442

 
4

263,815

24,742

 
 
 
 
 
 
 
 
 
 
 
 
 
Grand total
 
500

$
13,971,177

$
3,384,515

 
726

$
9,392,104

$
946,143

 
284

$
5,057,488

$
590,668

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

35

The following table sets forth occupancy, coverages and average annualized revenues for certain property types (excluding investments in unconsolidated entities):
 
 
Occupancy(1)
 
Coverages(1,2)
 
Average Annualized Revenues(3)
 
 
 
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
 
 
Seniors Housing Operating(4)
 
87.5%
 
86.5%
 
n/a
 
n/a
 
$
60,635

 
$
60,828

 
per unit
Triple-net(5)
 
84.9%
 
85.8%
 
1.39x
 
1.34x  
 
12,831

 
15,663

 
per bed/unit
Outpatient Medical(6)
 
93.1%
 
93.7%
 
n/a
 
n/a
 
34

 
33

 
per sq. ft.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) We use unaudited, periodic financial information provided solely by tenants/borrowers to calculate occupancy and coverages for properties other than outpatient medical buildings and have not independently verified the information.
(2) Represents the ratio of our triple-net customers' earnings before interest, taxes, depreciation, amortization, rent and management fees to contractual rent or interest due us. Data reflects the twelve months ended September 30 for the periods presented.
(3) Represents annualized revenues divided by total beds, units or square feet as presented in the tables above.
(4) Occupancy represents average occupancy for the three months ended December 31.
(5) Occupancy represents average quarterly operating occupancy based on the quarters ended September 30 and excludes properties that are unstabilized, closed or for which data is not available or meaningful.
(6) Occupancy represents the percentage of total rentable square feet leased and occupied (including month-to-month and holdover leases and excluding terminations) as of December 31.

The following table sets forth information regarding lease expirations for certain portions of our portfolio as of December 31, 2018 (dollars in thousands):
 
 
Expiration Year(1)
 
 
2019
 
2020
 
2021
 
2022
 
2023
 
2024
 
2025
 
2026
 
2027
 
2028
 
Thereafter
Triple-net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties
 
67

 
—

 
8

 
12

 
—

 
4

 
55

 
95

 
19

 
33

 
410

Base rent(2)
 
$
58,718

 
$
—

 
$
13,691

 
$
8,272

 
$
—

 
$
11,096

 
$
62,108

 
$
123,694

 
$
35,006

 
$
49,075

 
$
452,444

% of base rent
 
7.2
%
 
—
%
 
1.7
%
 
1.0
%
 
—
%
 
1.4
%
 
7.6
%
 
15.2
%
 
4.3
%
 
6.0
%
 
55.6
%
Units
 
8,401

 
—

 
1,416

 
1,245

 
—

 
692

 
4,140

 
7,717

 
2,401

 
2,840

 
43,019

% of units
 
11.7
%
 
—
%
 
2.0
%
 
1.7
%
 
—
%
 
1.0
%
 
5.8
%
 
10.7
%
 
3.3
%
 
4.0
%
 
59.9
%
Outpatient Medical:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Square feet
 
1,232,245

 
1,346,567

 
1,630,750

 
1,769,937

 
1,398,798

 
1,404,470

 
834,530

 
1,327,844

 
579,397

 
763,969

 
4,660,901

Base rent(2)
 
$
34,810

 
$
38,060

 
$
45,882

 
$
47,951

 
$
38,075

 
$
41,464

 
$
22,411

 
$
33,712

 
$
14,550

 
$
20,441

 
$
95,301

% of base rent
 
8.0
%
 
8.8
%
 
10.6
%
 
11.1
%
 
8.8
%
 
9.6
%
 
5.2
%
 
7.8
%
 
3.4
%
 
4.7
%
 
22.0
%
Leases
 
350

 
332

 
323

 
313

 
312

 
181

 
134

 
154

 
86

 
88

 
171

% of leases
 
14.3
%
 
13.6
%
 
13.2
%
 
12.8
%
 
12.8
%
 
7.4
%
 
5.5
%
 
6.3
%
 
3.5
%
 
3.6
%
 
7.0
%
 
(1) Excludes investments in unconsolidated entities. Investments classified as held for sale are included in 2019.
(2) The most recent monthly cash base rent annualized. Base rent does not include tenant recoveries or amortization of above and below market lease intangibles or other non cash income.
Item 3.  Legal Proceedings
From time to time, there are various legal proceedings pending against us that arise in the ordinary course of our business.  Management does not believe that the resolution of any of these legal proceedings either individually or in the aggregate will have a material adverse effect on our business, results of operations or financial condition. Further, from time to time, we are party to certain legal proceedings for which third parties, such as tenants, operators and/or managers are contractually obligated to indemnify, defend and hold us harmless. In some of these matters, the indemnitors have insurance for the potential damages.  In other matters, we are being defended by tenants and other obligated third parties and these indemnitors may not have sufficient insurance, assets, income or resources to satisfy their defense and indemnification obligations to us. The unfavorable resolution of such legal proceedings could, individually or in the aggregate, materially adversely affect the indemnitors’ ability to satisfy their respective obligations to us, which, in turn, could have a material adverse effect on our business, results of operations or financial condition.  It is management’s opinion that there are currently no such legal proceedings pending that will, individually or in the aggregate, have such a material adverse effect. Despite management’s view of the ultimate resolution of these legal proceedings, we may have significant legal expenses and costs associated with the defense of such matters. Further, management cannot predict the outcome of these legal proceedings and if management’s expectation regarding such matters is not correct, such proceedings could have a material adverse effect on our business, results of operations or financial condition.
Item 4.  Mine Safety Disclosures
None.

36

PART II
Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 
Our common stock trades on the New York Stock Exchange (NYSE:WELL). There were 3,668 stockholders of record as of January 31, 2019.

Stockholder Return Performance Presentation 
Set forth below is a line graph comparing the yearly percentage change and the cumulative total stockholder return on our shares of common stock against the cumulative total return of the S & P Composite-500 Stock Index and the FTSE NAREIT Equity Index. As of December 31, 2018, 161 companies comprised the FTSE NAREIT Equity Index, which consists of REITs identified by NAREIT as equity (those REITs which have at least 75% of their investments in real property). The data are based on the closing prices as of December 31 for each of the five years. 2013 equals $100 and dividends are assumed to be reinvested.
chart-6efd936e8c2b57b4bd9.jpg
 
 
12/31/2013

 
12/31/2014

 
12/31/2015

 
12/31/2016

 
12/31/2017

 
12/31/2018

S & P 500
 
$
100.00

 
$
113.69

 
$
115.26

 
$
129.05

 
$
157.22

 
$
150.33

Welltower Inc.
 
100.00

 
148.51

 
140.01

 
144.73

 
145.02

 
167.21

FTSE NAREIT Equity
 
100.00

 
130.14

 
134.30

 
145.74

 
153.36

 
146.27

 
Except to the extent that we specifically incorporate this information by reference, the foregoing Stockholder Return Performance Presentation shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended. This information shall not otherwise be deemed filed under such Acts.  
Issuer Purchases of Equity Securities
Period
 
Total Number of Shares Purchased(1)
 
Average Price Paid Per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)
 
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1, 2018 through October 31, 2018
 
1,739

 
$
62.01

 
 
 
 
November 1, 2018 through November 30, 2018
 
416

 
69.17

 
 
 
 
December 1, 2018 through December 31, 2018
 
—

 
—

 
 
 
 
Totals
 
2,155

 
$
63.39

 
 
 
 
(1) During the three months ended December 31, 2018, the company acquired shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations.
(2) No shares were purchased as part of publicly announced plans or programs.

37

Item 6.  Selected Financial Data
The following selected financial data for the five years ended December 31, 2018 are derived from our audited consolidated financial statements (in thousands, except per share data):
 
 
Year Ended December 31,
 
 
2014
 
2015
 
2016
 
2017
 
2018
Operating Data
 
 
 
 
 
 
 
 
 
 
Total revenues
 
$
3,343,546

 
$
3,859,826

 
$
4,281,160

 
$
4,316,641

 
$
4,700,499

Total expenses
 
2,959,333

 
3,223,709

 
3,571,907

 
4,017,025

 
4,277,009

 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations before income taxes and other items
 
384,213

 
636,117

 
709,253

 
299,616

 
423,490

Income tax (expense) benefit
 
1,267

 
(6,451
)
 
19,128

 
(20,128
)
 
(8,674
)
Income (loss) from unconsolidated entities
 
(27,426
)
 
(21,504
)
 
(10,357
)
 
(83,125
)
 
(641
)
Gain (loss) on real estate dispositions, net
 
147,111

 
280,387

 
364,046

 
344,250

 
415,575

Income from continuing operations
 
505,165

 
888,549

 
1,082,070

 
540,613

 
829,750

Income from discontinued operations, net
 
7,135

 
—

 
—

 
—

 
—

Net income
 
512,300

 
888,549

 
1,082,070

 
540,613

 
829,750

Preferred stock dividends
 
65,408

 
65,406

 
65,406

 
49,410

 
46,704

Preferred stock redemption charge
 
—

 
—

 
—

 
9,769

 
—

Net income (loss) attributable to noncontrolling interests
 
147

 
4,799

 
4,267

 
17,839

 
24,796

Net income attributable to common stockholders
 
$
446,745

 
$
818,344

 
$
1,012,397

 
$
463,595

 
$
758,250

 
 
 
 
 
 
 
 
 
 
 
Other Data
 
 
 
 
 
 
 
 
 
 
Average number of common shares outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
306,272

 
348,240

 
358,275

 
367,237

 
373,620

Diluted
 
307,747

 
349,424

 
360,227

 
369,001

 
375,250

 
 
 
 
 
 
 
 
 
 
 
Per Share Data
 
 
 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
1.65

 
$
2.55

 
$
3.02

 
$
1.47

 
$
2.22

Discontinued operations, net
 
$
0.02

 
$
—

 
$
—

 
$
—

 
$
—

Net income attributable to common stockholders
 
$
1.46

 
$
2.35

 
$
2.83

 
$
1.26

 
$
2.03

 
 
 
 
 
 
 
 
 
 
 
Diluted:
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
1.64

 
$
2.54

 
$
3.00

 
$
1.47

 
$
2.21

Discontinued operations, net
 
$
0.02

 
$
—

 
$
—

 
$
—

 
$
—

Net income attributable to common stockholders
 
$
1.45

 
$
2.34

 
$
2.81

 
$
1.26

 
$
2.02

 
 
 
 
 
 
 
 
 
 
 
Cash distributions per common share
 
$
3.18

 
$
3.30

 
$
3.44

 
$
3.48

 
$
3.48

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
Balance Sheet Data
 
2014
 
2015
 
2016
 
2017
 
2018
Net real estate investments
 
$
22,851,196

 
$
26,888,685

 
$
26,563,629

 
$
26,171,077

 
$
28,420,769

Total assets
 
24,962,923

 
29,023,845

 
28,865,184

 
27,944,445

 
30,342,072

Total long-term obligations
 
10,776,640

 
12,967,686

 
12,358,245

 
11,731,936

 
13,297,144

Total liabilities
 
11,403,465

 
13,664,877

 
13,185,279

 
12,643,799

 
14,331,427

Total preferred stock
 
1,006,250

 
1,006,250

 
1,006,250

 
718,503

 
718,498

Total equity
 
13,473,049

 
15,175,885

 
15,281,472

 
14,925,452

 
15,586,599

 
 
 
 
 
 
 
 
 
 
 

38
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

EXECUTIVE SUMMARY
 
 
Company Overview
40
Business Strategy
40
Key Transactions
41
Key Performance Indicators, Trends and Uncertainties
42
Corporate Governance
43
 
 
LIQUIDITY AND CAPITAL RESOURCES
 
 
Sources and Uses of Cash
43
Off-Balance Sheet Arrangements
44
Contractual Obligations
44
Capital Structure
45
 
 
RESULTS OF OPERATIONS
 
 
Summary
46
Seniors Housing Operating
47
Triple-net
48
Outpatient Medical
50
Non-Segment/Corporate
52
 
 
OTHER
 
 
Non-GAAP Financial Measures
53
Critical Accounting Policies
57
 

39
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is based primarily on the consolidated financial statements of Welltower Inc. presented in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for the periods presented and should be read together with the notes thereto contained in this Annual Report on Form 10-K. Other important factors are identified in “Item 1 — Business” and “Item 1A — Risk Factors” above.
Executive Summary
Company Overview
Welltower Inc. (NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. Welltower™, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing and post-acute communities and outpatient medical properties. Our capital programs, when combined with comprehensive planning, development and property management services, make us a single-source solution for acquiring, planning, developing, managing, repositioning and monetizing real estate assets.
The following table summarizes our consolidated portfolio for the year ended December 31, 2018 (dollars in thousands):
 
 
 
 
Percentage of
 
Number of
Type of Property
 
NOI(1)
 
NOI
 
Properties
Seniors Housing Operating
 
$
985,022

 
43.5
%
 
500

Triple-net
 
900,049

 
39.7
%
 
726

Outpatient Medical
 
380,136

 
16.8
%
 
284

Totals
 
$
2,265,207

 
100.0
%
 
1,510

(1) Represents consolidated NOI and excludes our share of investments in unconsolidated entities. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount. See Non-GAAP Financial Measures for additional information and reconciliation.
Business Strategy
Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders as a result of annual increases in net operating income and portfolio growth. To meet these objectives, we invest across the full spectrum of seniors housing and health care real estate and diversify our investment portfolio by property type, relationship and geographic location.
Substantially all of our revenues are derived from operating lease rentals, resident fees/services, and interest earned on outstanding loans receivable. These items represent our primary sources of liquidity to fund distributions and depend upon the continued ability of our obligors to make contractual rent and interest payments to us and the profitability of our operating properties. To the extent that our obligors/partners experience operating difficulties and become unable to generate sufficient cash to make payments or operating distributions to us, there could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. To mitigate this risk, we monitor our investments through a variety of methods determined by the type of property. Our asset management process for seniors housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections, and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral. Our internal property management division manages and monitors the outpatient medical portfolio with a comprehensive process including review of tenant relations, lease expirations, the mix of health service providers, hospital/health system relationships, property performance, capital improvement needs, and market conditions among other things. We evaluate the operating environment in each property’s market to determine the likely trend in operating performance of the facility. When we identify unacceptable trends, we seek to mitigate, eliminate or transfer the risk. Through these efforts, we generally aim to intervene at an early stage to address any negative trends, and in so doing, support both the collectability of revenue and the value of our investment.
In addition to our asset management and research efforts, we also aim to structure our relevant investments to mitigate payment risk. Operating leases and loans are normally credit enhanced by guaranties and/or letters of credit. In addition, operating leases are typically structured as master leases and loans are generally cross-defaulted and cross-collateralized with other real estate loans, operating leases or agreements between us and the obligor and its affiliates.
For the year ended December 31, 2018, resident fees/services and rental income represented 69% and 29%, respectively, of total revenues.  Substantially all of our operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. Our yield on loans receivable depends upon a number of factors, including the stated interest rate, the average principal amount outstanding during the term of the loan, and any interest rate adjustments.

40
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our primary sources of cash include resident fees/services, rent and interest receipts, borrowings under our primary unsecured credit facility, public issuances of debt and equity securities, our commercial paper program, proceeds from investment dispositions and principal payments on loans receivable. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses and general and administrative expenses. Depending upon the availability and cost of external capital, we believe our liquidity is sufficient to fund these uses of cash.
We also continuously evaluate opportunities to finance future investments. New investments are generally funded from temporary borrowings under our primary unsecured credit facility, internally generated cash and the proceeds from investment dispositions. Our investments generate cash from net operating income. Permanent financing for future investments, which replaces funds drawn under our primary unsecured credit facility, has historically been provided through a combination of the issuance of public debt and equity securities and the incurrence or assumption of secured debt.
Depending upon market conditions, we believe that new investments will be available in the future with spreads over our cost of capital that will generate appropriate returns to our stockholders. It is also likely that investment dispositions may occur in the future. To the extent that investment dispositions exceed new investments, our revenues and cash flows from operations could be adversely affected. We expect to reinvest the proceeds from any investment dispositions in new investments. To the extent that new investment requirements exceed our available cash on-hand, we expect to borrow under our primary unsecured credit facility. At December 31, 2018, we had $215,376,000 of cash and cash equivalents, $100,753,000 of restricted cash and $1,853,000,000 of available borrowing capacity under our primary unsecured credit facility.
Key Transactions
Capital  The following summarizes key capital transactions that occurred and supported new investments made during the year ended December 31, 2018:
•
In April 2018, we issued $550,000,000 of 4.25% senior unsecured notes due 2028 for net proceeds of approximately $545,074,000.
•
In connection with the QCP acquisition, in July 2018, we drew on a $1,000,000,000 term loan facility to fund a portion of the cash consideration and other expenses.
•
In August 2018, we issued $200,000,000 of 4.25% senior unsecured notes due 2028, $600,000,000 of 3.95% senior unsecured notes due 2023 and $500,000,000 of 4.95% senior unsecured notes due 2048 for aggregate net proceeds of approximately $1,283,226,000. Proceeds from these issuances were used to repay advances under the $1,000,000,000 term loan facility drawn on in July 2018 and the primary unsecured credit facility.
•
In July 2018, we closed on a new $3,700,000,000 unsecured credit facility with improved pricing across both our line of credit and term loan facility and terminated the existing unsecured credit facility. The credit facility includes a $3,000,000,000 revolving credit facility at a borrowing rate of 0.825% over LIBOR, a $500,000,000 USD unsecured term credit facility at a borrowing rate of 0.90% over LIBOR and a $250,000,000 CAD unsecured term credit facility at 0.90% over CDOR.
•
We extinguished $306,553,000 of secured debt at a blended average interest rate of 5.36%.
•
We repaid our $450,000,000 of 2.25% senior unsecured notes at par upon maturity on March 15, 2018. 
•
We raised $794,649,000 through our dividend reinvestment program and our Equity Shelf Program (as defined below).
Investments The following summarizes our property acquisitions and joint venture investments made during the year ended December 31, 2018 (dollars in thousands):
 
 
Properties
 
Investment Amount(1)
 
Capitalization Rates(2)
 
Book Amount(3)
Seniors Housing Operating
 
12

 
$
673,374

 
6.7%
 
$
742,675

Triple-net
 
246

 
2,438,899

 
6.9%
 
3,062,427

Outpatient Medical
 
30

 
605,866

 
5.8%
 
628,824

Totals
 
288

 
$
3,718,139

 
6.7%
 
$
4,433,926

 
(1) Represents stated pro rata purchase price including cash and any assumed debt but excludes fair value adjustments pursuant to U.S. GAAP.
(2) Represents annualized contractual or projected net operating income to be received in cash divided by investment amounts.
(3) Represents amounts recorded in real property including fair value adjustments pursuant to U.S. GAAP. See Note 3 to our consolidated financial statements for additional information.


41
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Dispositions The following summarizes property dispositions made during the year ended December 31, 2018 (dollars in thousands):
 
 
Properties
 
Proceeds(1)
 
Capitalization Rates(2)
 
Book Amount(3)
Seniors Housing Operating
 
4

 
$
40,073

 
7.5%
 
$
36,627

Triple-net
 
107

 
1,050,290

 
5.3%
 
835,093

Outpatient Medical
 
21

 
464,843

 
6.2%
 
253,397

Totals
 
132

 
$
1,555,206

 
5.6%
 
$
1,125,117

 
(1) Represents pro rata proceeds received upon disposition.
(2) Represents annualized contractual net operating income that was being received in cash at date of disposition divided by disposition proceeds.
(3) Represents carrying value of assets at time of disposition. See Note 5 to our consolidated financial statements for additional information.

     Dividends Our Board of Directors announced the 2019 annual cash dividend of $3.48 per common share ($0.87 per share quarterly), consistent with 2018, beginning in February 2019. The dividend declared for the quarter ended December 31, 2018 represents the 191st consecutive quarterly dividend payment.
Key Performance Indicators, Trends and Uncertainties
We utilize several key performance indicators to evaluate the various aspects of our business. These indicators are discussed below and relate to operating performance, credit strength and concentration risk. Management uses these key performance indicators to facilitate internal and external comparisons to our historical operating results, in making operating decisions, and for budget planning purposes.
Operating Performance We believe that net income and net income attributable to common stockholders (“NICS”) per the Statement of Comprehensive Income are the most appropriate earnings measures. Other useful supplemental measures of our operating performance include funds from operations attributable to common stockholders (“FFO”), consolidated net operating income (“NOI”) and same store NOI (“SSNOI”); however, these supplemental measures are not defined by U.S. GAAP. Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliations. These earnings measures are widely used by investors and analysts in the valuation, comparison, and investment recommendations of companies. The following table reflects the recent historical trends of our operating performance measures for the periods presented (in thousands):  
 
 
Year Ended December 31,
 
 
2016
 
2017
 
2018
Net income
 
$
1,082,070

 
$
540,613

 
$
829,750

Net income attributable to common stockholders
 
1,012,397

 
463,595

 
758,250

Funds from operations attributable to common stockholders
 
1,582,940

 
1,165,576

 
1,392,183

Consolidated net operating income
 
2,404,177

 
2,232,716

 
2,267,482

Same store net operating income
 
1,528,340

 
1,544,462

 
1,551,424

 
Credit Strength We measure our credit strength both in terms of leverage ratios and coverage ratios. The leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and Internal Revenue Code (“IRC”) section 1031 deposits. The coverage ratios indicate our ability to service interest and fixed charges (interest, secured debt principal amortization and preferred dividends). We expect to maintain capitalization ratios and coverage ratios sufficient to maintain a capital structure consistent with our current profile. The coverage ratios are based on adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliation of these measures. Leverage ratios and coverage ratios are widely used by investors, analysts and rating agencies in the valuation, comparison, investment recommendations, and rating of companies. The following table reflects the recent historical trends for our credit strength measures for the periods presented:  
 
 
Year Ended December 31,
 
 
2016
 
2017
 
2018
Net debt to book capitalization ratio
 
42.9%
 
42.9%
 
45.0%
Net debt to undepreciated book capitalization ratio
 
37.4%
 
36.3%
 
37.8%
Net debt to market capitalization ratio
 
31.1%
 
31.2%
 
31.3%
 
 
 
 
 
 
 
Adjusted interest coverage ratio
 
4.21x
 
4.36x
 
4.11x
Adjusted fixed charge coverage ratio
 
3.34x
 
3.54x
 
3.44x
 
Concentration Risk We evaluate our concentration risk in terms of NOI by property mix, relationship mix and geographic mix. Concentration risk is a valuable measure in understanding what portion of our NOI could be at risk if certain sectors were to experience downturns. Property mix measures the portion of our NOI that relates to our various property types. Relationship mix measures the portion of our NOI that relates to our top five relationships. Geographic mix measures the portion of our NOI that

42
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

relates to our top five states (or international equivalents). The following table reflects our recent historical trends of concentration risk by NOI for the years indicated below:
 
 
 
December 31,(1)
 
 
 
2016
 
2017
 
2018
Property mix:
 
 
 
 
 
 
 
Seniors Housing Operating
 
34%
 
40%
 
43%
 
Triple-net
 
50%
 
43%
 
40%
 
Outpatient Medical
 
16%
 
17%
 
17%
 
 
 
 
 
 
 
 
Relationship mix:
 
 
 
 
 
 
 
Sunrise Senior Living(2)
 
13%
 
14%
 
15%
 
Revera(2)
 
6%
 
7%
 
7%
 
Brookdale Senior Living
 
6%
 
7%
 
6%
 
Genesis HealthCare
 
16%
 
9%
 
6%
 
Benchmark Senior Living
 
4%
 
4%
 
4%
 
Remaining
 
55%
 
59%
 
62%
 
 
 
 
 
 
 
 
Geographic mix:
 
 
 
 
 
 
 
California
 
10%
 
13%
 
14%
 
United Kingdom
 
8%
 
9%
 
9%
 
Canada
 
7%
 
8%
 
8%
 
Texas
 
7%
 
7%
 
8%
 
New Jersey
 
8%
 
8%
 
7%
 
Remaining
 
60%
 
55%
 
54%
 
(1) Excludes our share of investments in unconsolidated entities and non-segment/corporate NOI. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount.
(2) Revera owns a controlling interest in Sunrise Senior Living.

We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results. Our expected results may not be achieved and actual results may differ materially from our expectations. Factors that may cause actual results to differ from expected results are described in more detail in “Item 1 — Business — Cautionary Statement Regarding Forward-Looking Statements” and “Item 1A — Risk Factors” and other sections of this Annual Report on Form 10-K. Management regularly monitors economic and other factors to develop strategic and tactical plans designed to improve performance and maximize our competitive position. Our ability to achieve our financial objectives is dependent upon our ability to effectively execute these plans and to appropriately respond to emerging economic and company-specific trends. Please refer to “Item 1 — Business,” “Item 1A — Risk Factors” in this Annual Report on Form 10-K for further discussion of these risk factors.
Corporate Governance
Maintaining investor confidence and trust is important in today’s business environment. Our Board of Directors and management are strongly committed to policies and procedures that reflect the highest level of ethical business practices. Our corporate governance guidelines provide the framework for our business operations and emphasize our commitment to increase stockholder value while meeting all applicable legal requirements. These guidelines meet the listing standards adopted by the New York Stock Exchange and are available on the Internet at www.welltower.com/investors/governance.  The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive textual reference only.
Liquidity and Capital Resources
Sources and Uses of Cash
Our primary sources of cash include resident fees/services, rent and interest receipts, borrowings under our primary unsecured credit facility, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses and general and administrative expenses. These sources and uses of cash are reflected in our Consolidated Statements of Cash Flows and are discussed in further detail below. The following is a summary of our sources and uses of cash flows for the periods presented (dollars in thousands):

43
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 
 
Year Ended
 
One Year Change
 
Year Ended
 
One Year Change
 
Two Year Change
 
 
December 31,
 
December 31,
 
 
 
 
 
December 31,
 
 
 
 
 
 
 
 
 
 
2016
 
2017
 
$
 
%
 
2018
 
$
 
%
 
$
 
%
Beginning cash, cash equivalents and restricted cash
 
$
422,690

 
$
607,220

 
$
184,530

 
44
 %
 
$
309,303

 
$
(297,917
)
 
-49
 %
 
$
(113,387
)
 
-27
 %
Net cash provided from (used in):
 
 
 
 
 

 


 
 
 

 


 

 


Operating activities
 
1,639,064

 
1,434,177

 
(204,887
)
 
-13
 %
 
1,583,944

 
149,767

 
10
 %
 
(55,120
)
 
-3
 %
Investing activities
 
(183,443
)
 
154,581

 
338,024

 
n/a

 
(2,386,471
)
 
(2,541,052
)
 
n/a

 
(2,203,028
)
 
1,201
 %
Financing activities
 
(1,250,817
)
 
(1,913,527
)
 
(662,710
)
 
53
 %
 
818,368

 
2,731,895

 
n/a

 
2,069,185

 
n/a

Effect of foreign currency translation
 
(20,274
)
 
26,852

 
47,126

 
n/a

 
(9,015
)
 
(35,867
)
 
n/a

 
11,259

 
-56
 %
Ending cash, cash equivalents and restricted cash
 
$
607,220

 
$
309,303

 
$
(297,917
)
 
-49
 %
 
$
316,129

 
$
6,826

 
2
 %
 
$
(291,091
)
 
-48
 %
 
Operating Activities The change in net cash provided from operating activities is attributable to changes in NOI, which is primarily due to acquisitions and annual rent increasers, partially offset to dispostions. Please see “Results of Operations” below for further discussion. For the years ended December 31, 2016, 2017 and 2018, cash flows from operations exceeded cash distributions to stockholders.
Investing Activities  The changes in net cash used in investing activities are primarily attributable to net changes in real property investments, real estate loans receivable, and investments in unconsolidated entities which are summarized above in “Key Transactions.” Please refer to Notes 3, 6, and 7 of our consolidated financial statements for additional information. The following is a summary of cash used in non-acquisition capital improvement activities for the periods presented (dollars in thousands):
 
 
Year Ended
 
One Year Change
 
Year Ended
 
One Year Change
 
Two Year Change
 
 
December 31,
 
December 31,
 
 
 
 
 
December 31,
 
 
 
 
 
 
 
 
 
 
2016
 
2017
 
$
 
%
 
2018
 
$
 
%
 
$
 
%
New development
 
$
403,131

 
$
232,715

 
$
(170,416
)
 
-42
 %
 
$
160,706

 
$
(72,009
)
 
-31
 %
 
$
(242,425
)
 
-60
 %
Recurring capital expenditures, tenant improvements and lease commissions
 
66,332

 
67,797

 
1,465

 
2
 %
 
90,190

 
22,393

 
33
 %
 
23,858

 
36
 %
Renovations, redevelopments and other capital improvements
 
152,814

 
182,479

 
29,665

 
19
 %
 
175,993

 
(6,486
)
 
-4
 %
 
23,179

 
15
 %
Total
 
$
622,277

 
$
482,991

 
$
(139,286
)
 
-22
 %
 
$
426,889

 
$
(56,102
)
 
-12
 %
 
$
(195,388
)
 
-31
 %
 
The change in new development is primarily due to the number and size of construction projects on-going during the relevant periods. Renovations, redevelopments and other capital improvements include expenditures to maximize property value, increase net operating income, maintain a market-competitive position, and/or achieve property stabilization. Generally, these expenditures have increased as a result of acquisitions, primarily in our Seniors Housing Operating segment.
Financing Activities The changes in net cash provided from financing activities are primarily attributable to changes related to our long-term debt arrangements, the issuance/redemptions of common and preferred stock and dividend payments which are summarized above in “Key Transactions.” Please refer to Notes 9, 10 and 13 of our consolidated financial statements for additional information.
Off-Balance Sheet Arrangements
At December 31, 2018, we had investments in unconsolidated entities with our ownership generally ranging from 10% to 50%. We use financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure. At December 31, 2018, we had fourteen outstanding letter of credit obligations. Please see Notes 7, 11 and 12 to our consolidated financial statements for additional information.
Contractual Obligations
The following table summarizes our payment requirements under contractual obligations as of December 31, 2018 (in thousands):

44
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 
 
Payments Due by Period
Contractual Obligations
 
Total
 
2019
 
2020-2021
 
2022-2023
 
Thereafter
Unsecured revolving credit facility(1)
 
$
1,147,000

 
$
—

 
$
—

 
$
1,147,000

 
$
—

Senior unsecured notes and term credit facilities:(2)
 


 
 

 
 

 
 

 
 

U.S. Dollar senior unsecured notes
 
7,450,000

 
600,000

 
900,000

 
1,700,000

 
4,250,000

     Canadian Dollar senior unsecured notes(3)
 
219,989

 
—

 
219,989

 
—

 
—

     Pounds Sterling senior unsecured notes(3)
 
1,339,170

 
—

 
—

 
—

 
1,339,170

U.S. Dollar term credit facility
 
507,500

 
—

 
7,500

 
500,000

 
—

     Canadian Dollar term credit facility(3)
 
183,325

 
—

 
—

 
183,325

 
—

Secured debt:(2,3)
 


 
 

 
 

 
 

 
 

Consolidated
 
2,485,711

 
508,899

 
507,412

 
605,789

 
863,611

     Unconsolidated  
 
790,643

 
51,614

 
88,024

 
39,495

 
611,510

Contractual interest obligations:(4)
 


 
 

 
 

 
 

 
 

Unsecured revolving credit facility
 
171,910

 
38,202

 
76,405

 
57,303

 
—

     Senior unsecured notes and term loans(3)
 
3,930,812

 
424,529

 
758,541

 
638,183

 
2,109,559

     Consolidated secured debt(3)
 
478,922

 
90,861

 
144,026

 
96,873

 
147,162

     Unconsolidated secured debt(3)
 
211,077

 
30,919

 
51,892

 
47,904

 
80,362

Capital lease obligations(5)
 
84,265

 
4,173

 
8,346

 
71,746

 
—

Operating lease obligations(5)
 
1,138,046

 
18,242

 
35,392

 
33,965

 
1,050,447

Purchase obligations(5)
 
1,704,293

 
1,599,477

 
104,816

 
—

 
—

Other long-term liabilities(6)
 
1,229

 
1,229

 
—

 
—

 
—

Total contractual obligations
 
$
21,843,892

 
$
3,368,145

 
$
2,902,343

 
$
5,121,583

 
$
10,451,821

(1) Relates to our unsecured revolving credit facility with an aggregate commitment of $3,000,000,000. See Note 9 to our consolidated financial statements.
(2) Amounts represent principal amounts due and do not reflect unamortized premiums/discounts or other fair value adjustments as reflected on the balance sheet.
(3) Based on foreign currency exchange rates in effect as of balance sheet date.
(4) Based on variable interest rates in effect as of December 31, 2018.
(5) See Note 12 to our consolidated financial statements for additional information.
(6) Primarily relates to payments to be made under a supplemental executive retirement plan for one former executive officer.

Capital Structure
Please refer to “Credit Strength” above for a discussion of our leverage and coverage ratio trends. Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As of December 31, 2018, we were in compliance with all of the covenants under our debt agreements. None of our debt agreements contain provisions for acceleration which could be triggered by our debt ratings. However, under our primary unsecured credit facility, the ratings on our senior unsecured notes are used to determine the fees and interest charged. We plan to manage the company to maintain compliance with our debt covenants and with a capital structure consistent with our current profile. Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.
On May 17, 2018, we filed with the Securities and Exchange Commission (1) an open-ended automatic or “universal” shelf registration statement covering an indeterminate amount of future offerings of debt securities, common stock, preferred stock, depositary shares, warrants and units and (2) a registration statement in connection with our enhanced dividend reinvestment plan (“DRIP”) under which we may issue up to 15,000,000 shares of common stock. As of February 13, 2019, 8,526,222 shares of common stock remained available for issuance under the DRIP registration statement. On August 3, 2018, we entered into separate amended and restated equity distribution agreements with each of Morgan Stanley & Co. LLC; Merrill Lynch, Pierce, Fenner & Smith Incorporated; Goldman Sachs & Co. LLC; UBS Securities LLC and Wells Fargo Securities, LLC relating to the offer and sale from time to time of up to $784,083,001 aggregate amount of our common stock (“Equity Shelf Program”). The Equity Shelf Program also allows us to enter into forward sale agreements. We expect that, if entered into, we will physically settle each forward sale agreement on one or more dates on or prior to the maturity date of that particular forward sale agreement, in which case we will expect to receive per share cash proceeds at settlement equal to the forward sale price under the relevant forward sale agreement.  However, we may elect to cash settle or net share settle a forward sale agreement. As of February 13, 2019, we had $227,958,000 of remaining capacity under the Equity Shelf Program and there were no outstanding forward sales agreements. Depending upon market conditions, we anticipate issuing securities under our registration statements to invest in additional properties and to repay borrowings under our primary unsecured credit facility.

45
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations
Summary
Our primary sources of revenue include resident fees/services,rent and interest income. Our primary expenses include interest expense, depreciation and amortization, property operating expenses, other expenses and general and administrative expenses.  We evaluate our business and make resource allocations on our three business segments: Seniors Housing Operating, Triple-net and Outpatient Medical. The primary performance measures for our properties are NOI and SSNOI and other supplemental measures include FFO and Adjusted EBITDA, which are further discussed below.  Please see Non-GAAP Financial Measures for additional information and reconciliations. The following is a summary of our results of operations for the periods presented (dollars in thousands, except per share amounts):
 
 
Year Ended
 
One Year Change
 
Year Ended
 
One Year Change
 
Two Year Change
 
 
December 31,
 
December 31,
 
 
 
 
 
December 31,
 
 
 
 
 
 
 
 
 
 
2016
 
2017
 
Amount
 
%
 
2018
 
Amount
 
%
 
Amount
 
%
Net income
 
$
1,082,070

 
$
540,613

 
$
(541,457
)
 
-50
 %
 
$
829,750

 
$
289,137

 
53
 %
 
$
(252,320
)
 
-23
 %
NICS
 
1,012,397

 
463,595

 
(548,802
)
 
-54
 %
 
758,250

 
294,655

 
64
 %
 
(254,147
)
 
-25
 %
FFO
 
1,582,940

 
1,165,576

 
(417,364
)
 
-26
 %
 
1,392,183

 
226,607

 
19
 %
 
(190,757
)
 
-12
 %
Adjusted EBITDA
 
2,256,864

 
2,128,429

 
(128,435
)
 
-6
 %
 
2,153,005

 
24,576

 
1
 %
 
(103,859
)
 
-5
 %
Consolidated NOI
 
2,404,177

 
2,232,716

 
(171,461
)
 
-7
 %
 
2,267,482

 
34,766

 
2
 %
 
(136,695
)
 
-6
 %
Same store NOI
 
1,528,340

 
1,544,462

 
16,122

 
1
 %
 
1,551,424

 
6,962

 
—
 %
 
23,084

 
2
 %
 
 
 
 
 
 
 
 

 
 
 
 
 


 
 
 


Per share data (fully diluted):
 
 
 
 
 
 
 

 
 
 
 
 


 
 
 


Net income attributable to common
stockholders
 
$
2.81

 
$
1.26

 
$
(1.55
)
 
-55
 %
 
$
2.02

 
$
0.76

 
60
 %
 
$
(0.79
)
 
-28
 %
Funds from operations attributable to
common stockholders
 
4.39

 
3.16

 
(1.23
)
 
-28
 %
 
3.71

 
0.55

 
17
 %
 
(0.68
)
 
-15
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted interest coverage ratio
 
4.21x

 
4.36x

 
0.15x

 
4
 %
 
4.11x

 
-0.25x

 
-6
 %
 
0.15x

 
4
 %
Adjusted fixed charge coverage ratio
 
3.34x

 
3.54x

 
0.20x

 
6
 %
 
3.44x

 
-0.10x

 
-3
 %
 
0.20x

 
6
 %
 
The following table represents the changes in outstanding common stock for the period from January 1, 2016 to December 31, 2018 (in thousands):
 
 
Year Ended
 
 
 
 
December 31, 2016
 
December 31, 2017
 
December 31, 2018
 
Totals
Beginning balance
 
354,778

 
362,602

 
371,732

 
354,778

Dividend reinvestment plan issuances
 
4,145

 
5,640

 
6,529

 
16,314

Preferred stock conversions
 
—

 
4

 
—

 
4

Redemption of equity membership units
 
—

 
91

 
—

 
91

Option exercises
 
141

 
253

 
57

 
451

Equity Shelf Program issuances
 
3,135

 
2,987

 
5,241

 
11,363

Other, net
 
403

 
155

 
116

 
674

Ending balance
 
362,602

 
371,732

 
383,675

 
383,675

 
 
 
 
 
 
 
 
 
Average number of shares outstanding:
 
 
 
 
 
 
Basic
 
358,275

 
367,237

 
373,620

 
 
Diluted
 
360,227

 
369,001

 
375,250

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

46
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Seniors Housing Operating 
The following is a summary of our NOI and SSNOI for the Seniors Housing Operating segment for the years presented (dollars in thousands):
 
 
Year Ended
 
One Year Change
 
Year Ended
 
One Year Change
 
Two Year Change
 
 
December 31,
 
December 31,
 
 
 
 
 
December 31,
 
 
 
 
 
 
 
 
 
 
2016
 
2017
 
$
 
%
 
2018
 
$
 
%
 
$
 
%
NOI
 
$
814,114

 
$
880,026

 
$
65,912

 
8
 %
 
$
985,022

 
$
104,996

 
12
 %
 
$
170,908

 
21
 %
Non-cash NOI attributable to same store properties(1)
 
1,990

 
1,242

 
(748
)
 
-38
 %
 
836

 
(406
)
 
-33
 %
 
(1,154
)
 
-58
 %
NOI attributable to non same store properties(2)
 
(77,334
)
 
(132,604
)
 
(55,270
)
 
71
 %
 
(251,803
)
 
(119,199
)
 
90
 %
 
(174,469
)
 
226
 %
SSNOI(1)
 
$
738,770

 
$
748,664

 
$
9,894

 
1
 %
 
$
734,055

 
$
(14,609
)
 
-2
 %
 
$
(4,715
)
 
-1
 %
 
(1) Relates to 348 same store properties.
(2) Primarily relates to the acquisition of 66 properties subsequent to January 1, 2016 and the transition of 69 properties from Triple-net to Seniors Housing Operating.

The following is a summary of our results of operations for the Seniors Housing Operating segment for the years presented (dollars in thousands):
 
 
 
 
Year Ended
 
One Year Change
 
Year Ended
 
One Year Change
 
Two Year Change
 
 
 
 
December 31,
 
December 31,
 
 
 
 
 
December 31,
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
2017
 
$
 
%
 
2018
 
$
 
%
 
$
 
%
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Resident fees and services
 
$
2,504,731

 
$
2,779,423

 
$
274,692

 
11
 %
 
$
3,234,852

 
$
455,429

 
16
 %
 
$
730,121

 
29
 %
 
 
Interest income
 
4,180

 
69

 
(4,111
)
 
-98
 %
 
578

 
509

 
738
 %
 
(3,602
)
 
-86
 %
 
 
Other income
 
17,085

 
5,127

 
(11,958
)
 
-70
 %
 
5,024

 
(103
)
 
-2
 %
 
(12,061
)
 
-71
 %
 
 
Total revenues
 
2,525,996

 
2,784,619

 
258,623

 
10
 %
 
3,240,454

 
455,835

 
16
 %
 
714,458

 
28
 %
Property operating expenses
 
1,711,882

 
1,904,593

 
192,711

 
11
 %
 
2,255,432

 
350,839

 
18
 %
 
543,550

 
32
 %
 
 
NOI(1)
 
814,114

 
880,026

 
65,912

 
8
 %
 
985,022

 
104,996

 
12
 %
 
170,908

 
21
 %
Other expenses:
 
 
 
 
 
 
 

 
 
 
 
 

 
 
 

 
 
Depreciation and amortization
 
415,429

 
484,796

 
69,367

 
17
 %
 
529,449

 
44,653

 
9
 %
 
114,020

 
27
 %
 
 
Interest expense
 
81,853

 
63,265

 
(18,588
)
 
-23
 %
 
69,060

 
5,795

 
9
 %
 
(12,793
)
 
-16
 %
 
 
Transaction costs(2)
 
29,207

 
—

 
(29,207
)
 
-100
 %
 
—

 
—

 
n/a

 
(29,207
)
 
-100
 %
 
 
Loss (gain) on extinguishment of debt, net
 
(88
)
 
3,785

 
3,873

 
-4,401
 %
 
110

 
(3,675
)
 
-97
 %
 
198

 
-225
 %
 
 
Impairment of assets
 
12,403

 
21,949

 
9,546

 
77
 %
 
7,599

 
(14,350
)
 
-65
 %
 
(4,804
)
 
-39
 %
 
 
Other expenses(2)
 
—

 
8,347

 
8,347

 
n/a

 
6,624

 
(1,723
)
 
-21
 %
 
6,624

 
n/a

 
 
 
 
538,804

 
582,142

 
43,338

 
8
 %
 
612,842

 
30,700

 
5
 %
 
74,038

 
14
 %
Income (loss) from continuing operations before income taxes and other items
 
275,310

 
297,884

 
22,574

 
8
 %
 
372,180

 
74,296

 
25
 %
 
96,870

 
35
 %
Income tax benefit (expense)
 
(3,762
)
 
(16,430
)
 
(12,668
)
 
337
 %
 
1,202

 
17,632

 
-107
 %
 
4,964

 
-132
 %
Income (loss) from unconsolidated entities
 
(20,442
)
 
(105,236
)
 
(84,794
)
 
415
 %
 
(28,142
)
 
77,094

 
-73
 %
 
(7,700
)
 
38
 %
Gain (loss) on real estate dispositions, net
 
9,880

 
56,295

 
46,415

 
470
 %
 
(2,245
)
 
(58,540
)
 
-104
 %
 
(12,125
)
 
-123
 %
Income from continuing operations
 
260,986

 
232,513

 
(28,473
)
 
-11
 %
 
342,995

 
110,482

 
48
 %
 
82,009

 
31
 %
Net income (loss)
 
260,986

 
232,513

 
(28,473
)
 
-11
 %
 
342,995

 
110,482

 
48
 %
 
82,009

 
31
 %
Less: Net income (loss) attributable to noncontrolling interests
 
2,292

 
8,472

 
6,180

 
270
 %
 
(660
)
 
(9,132
)
 
-108
 %
 
(2,952
)
 
-129
 %
Net income (loss) attributable to common stockholders
 
$
258,694

 
$
224,041

 
$
(34,653
)
 
-13
 %
 
$
343,655

 
$
119,614

 
53
 %
 
$
84,961

 
33
 %
 
(1) See Non-GAAP Financial Measures below.
(2) See Note 3 to our consolidated financial statements.

Fluctuations in resident fees/services and property operating expenses are primarily a result of acquisitions, segment transitions and the movement of U.S. and foreign currency exchange rates. The fluctuations in depreciation and amortization are due to acquisitions and variations in amortization of short-lived intangible assets. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly. The decrease in other income for the year ended December 31, 2018 is primarily a result of insurance proceeds received during 2017 relating to a property as well as a bargain purchase gain recognized in conjunction with a single property acquisition. 
During the three years presented, we recorded impairment charges on certain held for sale properties as the carrying value exceeded the estimated fair value less costs to sell. The fluctuations in gains (losses) on real estate dispositions are due to the volume of property sales and sales prices. Beginning January 1, 2017, transaction costs related to asset acquisitions are capitalized

47
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

as a component of purchase price. The increase in other expenses since 2016 are primarily due to noncapitalizable transaction costs from acquisitions.
During the year ended December 31, 2018, we completed two seniors housing operating construction projects representing $86,931,000 or $459,952 per unit and one expansion project totaling $2,672,000. The following is a summary of our Seniors Housing Operating construction projects, excluding expansions, pending as of December 31, 2018 (dollars in thousands):
Location
 
Units/Beds
 
Commitment
 
Balance
 
Est. Completion
Wandsworth, UK
 
98

 
$
75,185

 
$
41,833

 
1Q20
Potomac, MD
 
120

 
56,623

 
7,627

 
4Q20
 
 
218

 
$
131,808

 
49,460

 
 
Toronto, ON
 
Project in planning stage
 
39,898

 
 
 
 
 
 
 
 
$
89,358

 
 
 
Interest expense represents secured debt interest expense which fluctuates based on the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations. The fluctuations in loss (gain) on extinguishment of debt is primarily attributable the volume of extinguishments and terms of the related secured debt.  The following is a summary of our Seniors Housing Operating property secured debt principal activity (dollars in thousands):
 
 
Year Ended
 
Year Ended
 
Year Ended
 
 
December 31, 2016
 
December 31, 2017
 
December 31, 2018
 
 
 
 
Weighted Avg.
 
 
 
Weighted Avg.
 
 
 
Weighted Avg.
 
 
Amount
 
Interest Rate
 
Amount
 
Interest Rate
 
Amount
 
Interest Rate
Beginning balance
 
$
2,290,552

 
3.96%
 
$
2,463,249

 
3.94%
 
$
1,988,700

 
3.66%
Debt transferred in
 
—

 
—%
 
—

 
—%
 
35,830

 
3.84%
Debt issued
 
293,860

 
2.90%
 
228,772

 
2.72%
 
45,447

 
3.40%
Debt assumed
 
60,898

 
4.30%
 
—

 
—%
 
121,612

 
5.55%
Debt extinguished
 
(159,498
)
 
3.66%
 
(668,804
)
 
4.81%
 
(240,095
)
 
4.83%
Debt deconsolidated
 
—

 
—%
 
(60,000
)
 
3.80%
 
—

 
0.00%
Principal payments
 
(49,112
)
 
3.89%
 
(47,153
)
 
3.60%
 
(47,886
)
 
3.59%
Foreign currency
 
26,549

 
3.48%
 
72,636

 
3.23%
 
(93,021
)
 
3.31%
Ending balance
 
$
2,463,249

 
3.94%
 
$
1,988,700

 
3.66%
 
$
1,810,587

 
3.87%
 
 
 
 
 
 
 
 
 
 
 
 
 
Monthly averages
 
$
2,391,706

 
3.93%
 
$
2,065,477

 
3.66%
 
$
1,915,663

 
3.74%
The majority of our seniors housing operating properties are formed through partnership interests. The fluctuations in income (loss) from unconsolidated entities are largely due to the recognition of impairments related to one of our investments in unconsolidated entities during the year ended December 31, 2017. Losses are also attributable to depreciation and amortization of short-lived intangible assets related to certain investments in unconsolidated joint ventures. Net income attributable to noncontrolling interests represents our partners’ share of net income (loss) related to joint ventures.
Triple-net 
The following is a summary of our NOI and SSNOI for the Triple-net segment for the periods presented (dollars in thousands):
 
 
Year Ended
 
One Year Change
 
Year Ended
 
One Year Change
 
Two Year Change
 
 
December 31,
 
December 31,
 
 
 
 
 
December 31,
 
 
 
 
 
 
 
 
 
 
2016
 
2017
 
$
 
%
 
2018
 
$
 
%
 
$
 
%
NOI
 
$
1,208,860

 
$
967,084

 
$
(241,776
)
 
-20
 %
 
$
900,049

 
$
(67,035
)
 
-7
 %
 
$
(308,811
)
 
-26
 %
Non-cash NOI attributable to same store properties(1)
 
(28,538
)
 
(23,764
)
 
4,774

 
-17
 %
 
(17,093
)
 
6,671

 
-28
 %
 
11,445

 
-40
 %
NOI attributable to non same store properties(2)
 
(709,606
)
 
(465,820
)
 
243,786

 
-34
 %
 
(401,878
)
 
63,942

 
-14
 %
 
307,728

 
-43
 %
SSNOI(1)
 
$
470,716

 
$
477,500

 
$
6,784

 
1
 %
 
$
481,078

 
$
3,578

 
1
 %
 
$
10,362

 
2
 %
 
(1) Relates to 364 same store properties.
(2) Primarily relates to the acquisition of 264 properties and 40 properties sold or held for sale at December 31, 2018.

The following is a summary of our results of operations for the Triple-net segment for the years presented (dollars in thousands):

48
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 
 
 
Year Ended
 
One Year Change
 
Year Ended
 
One Year Change
 
Two Year Change
 
 
 
December 31,
 
December 31,
 
 
 
 
 
December 31,
 
 
 
 
 
 
 
 
 
 
 
2016
 
2017
 
$
 
%
 
2018
 
$
 
%
 
$
 
%
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
1,112,325

 
$
885,811

 
$
(226,514
)
 
-20
 %
 
$
828,865

 
$
(56,946
)
 
-6
 %
 
$
(283,460
)
 
-25
 %
 
Interest income
 
90,476

 
73,742

 
(16,734
)
 
-18
 %
 
54,926

 
(18,816
)
 
-26
 %
 
(35,550
)
 
-39
 %
 
Other income
 
6,059

 
7,531

 
1,472

 
24
 %
 
17,173

 
9,642

 
128
 %
 
11,114

 
183
 %
 
Total revenues
 
1,208,860

 
967,084

 
(241,776
)
 
-20
 %
 
900,964

 
(66,120
)
 
-7
 %
 
(307,896
)
 
-25
 %
 
Property operating expenses
 
—

 
—

 
—

 
n/a

 
915

 
915

 
n/a

 
(915
)
 
n/a

 
NOI(1)
 
1,208,860

 
967,084

 
(241,776
)
 
-20
 %
 
900,049

 
(67,035
)
 
-7
 %
 
(306,981
)
 
-25
 %
Other expenses:
 
 
 
 
 
 
 
 

 
 
 
 
 


 
 
 


 
Depreciation and amortization
 
297,197

 
243,830

 
(53,367
)
 
-18
 %
 
235,480

 
(8,350
)
 
-3
 %
 
(61,717
)
 
-21
 %
 
Interest expense
 
21,370

 
15,194

 
(6,176
)
 
-29
 %
 
14,225

 
(969
)
 
-6
 %
 
(7,145
)
 
-33
 %
 
Loss (gain) on derivatives and financial instruments, net
 
68

 
2,284

 
2,216

 
3,259
 %
 
(4,016
)
 
(6,300
)
 
-276
 %
 
(4,084
)
 
-6,006
 %
 
Transaction costs(2)
 
10,016

 
—

 
(10,016
)
 
-100
 %
 
—

 
—

 
n/a

 
(10,016
)
 
-100
 %
 
Loss (gain) on extinguishment of debt, net
 
863

 
29,083

 
28,220

 
3,270
 %
 
(32
)
 
(29,115
)
 
-100
 %
 
(895
)
 
-104
 %
 
Provision for loan losses
 
6,935

 
62,966

 
56,031

 
808
 %
 
—

 
(62,966
)
 
-100
 %
 
(6,935
)
 
-100
 %
 
Impairment of assets
 
20,169

 
96,909

 
76,740

 
380
 %
 
107,980

 
11,071

 
11
 %
 
87,811

 
435
 %
 
Other expenses(2)
 
—

 
116,689

 
116,689

 
n/a

 
90,975

 
(25,714
)
 
-22
 %
 
90,975

 
n/a

 
 
 
356,618

 
566,955

 
210,337

 
59
 %
 
444,612

 
(122,343
)
 
-22
 %
 
87,994

 
25
 %
Income from continuing operations before income taxes and other items
 
852,242

 
400,129

 
(452,113
)
 
-53
 %
 
455,437

 
55,308

 
14
 %
 
(396,805
)
 
-47
 %
Income tax benefit (expense)
 
(1,087
)
 
(4,291
)
 
(3,204
)
 
295
 %
 
1,611

 
5,902

 
-138
 %
 
2,698

 
-248
 %
Income (loss) from unconsolidated entities
 
9,767

 
19,428

 
9,661

 
99
 %
 
21,938

 
2,510

 
13
 %
 
12,171

 
125
 %
Gain (loss) on real estate dispositions, net
 
355,394

 
286,325

 
(69,069
)
 
-19
 %
 
196,589

 
(89,736
)
 
-31
 %
 
(158,805
)
 
-45
 %
Income from continuing operations
 
1,216,316

 
701,591

 
(514,725
)
 
-42
 %
 
675,575

 
(26,016
)
 
-4
 %
 
(540,741
)
 
-44
 %
Net income
 
1,216,316

 
701,591

 
(514,725
)
 
-42
 %
 
675,575

 
(26,016
)
 
-4
 %
 
(540,741
)
 
-44
 %
Less: Net income attributable to noncontrolling interests
 
1,221

 
4,603

 
3,382

 
277
 %
 
19,306

 
14,703

 
319
 %
 
18,085

 
1,481
 %
Net income attributable to common stockholders
 
$
1,215,095

 
$
696,988

 
$
(518,107
)
 
-43
 %
 
$
656,269

 
$
(40,719
)
 
-6
 %
 
$
(558,826
)
 
-46
 %
 
(1) See Non-GAAP Financial Measures below.
(2) See Note 3 to our consolidated financial statements.

The 2017 and 2018 decreases in rental income are primarily attributable to the disposition of properties exceeding new acquisitions, segment transitions and the reduction in the Genesis HealthCare ("Genesis") annual cash rent obligation due to the restructuring of the master lease as of January 1, 2018. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index (“CPI”) and/or changes in the gross operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If gross operating revenues at our facilities and/or the CPI do not increase, a portion of our revenues may not continue to increase. Our leases could renew above or below current rent rates, resulting in an increase or decrease in rental income.  For the three months ended December 31, 2018, we had 17 leases with rental rate increasers ranging from 0.18% to 0.76% in our triple-net portfolio. The decrease in interest income is primarily attributable to the volume of loan payoffs during the three years presented. The increase in other income for the year ended December 31, 2018 is primarily due to $10,805,000 of net lease termination fees recognized.
Depreciation and amortization decreased primarily as a result of the disposition of triple-net properties exceeding acquisition and segment transitions. To the extent we acquire or dispose of additional properties in the future, our provision for depreciation and amortization will change accordingly.
The provision for loan losses is related to our critical accounting estimate for the allowance for loan losses and is discussed in “Critical Accounting Policies” below and Note 6 to our consolidated financial statements. During the years ended December 31, 2017 and 2016, we recorded provision for loan losses related to certain first mortgage loans to Genesis of $62,966,000 and $6,935,000, respectively.
During the three years presented, we recorded impairment charges on certain held for sale properties as the carrying value exceeded the estimated fair value less costs to sell. The fluctuations in gains on real estate dispositions are due to the volume of property sales and sales prices. Beginning January 1, 2017, transaction costs related to asset acquisitions are capitalized as a component of purchase price.

49
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Other expenses primarily represents noncapitalizable transaction costs from acquisitions, segment transitions and the termination/restructuring of pre-existing relationships. In addition, during the year ended December 31, 2017, we recognized an other than temporary charge of $18,294,000 in other expenses on the Genesis available-for-sale equity investment.
During the year ended December 31, 2018, we completed two triple-net construction projects totaling $90,055,000 or $283,472 per bed/unit and two expansion projects totaling $17,357,000. The following is a summary of triple-net construction projects, excluding expansions, pending as of December 31, 2018 (dollars in thousands):
Location
 
Units/Beds
 
Commitment
 
Balance
 
Est. Completion
Westerville, OH
 
90

 
$
22,800

 
$
8,160

 
3Q19
Union, KY
 
162

 
34,600

 
9,848

 
1Q20
Droitwich , UK
 
70

 
16,153

 
4,573

 
4Q20
Total
 
322

 
$
73,553

 
$
22,581

 
 
 
Total interest expense represents secured debt interest expense and related fees.  The change in secured debt interest expense is due to the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations. The fluctuations in loss (gain) on extinguishment of debt is primarily attributable to the volume of extinguishments and terms of the related secured debt. The fluctuation in loss (gain) on derivatives and financial instruments, net is primarily attributable to the mark-to-market adjustment recorded on the Genesis available-for-sale investment in accordance with the adoption of Accounting Standards Update 2016-01 described in Note 2 to our consolidated financial statements. The following is a summary of our Triple-net secured debt principal activity for the periods presented (dollars in thousands):
 
 
Year Ended
 
Year Ended
 
Year Ended
 
 
December 31, 2016
 
December 31, 2017
 
December 31, 2018
 
 
 
 
Weighted Avg.
 
 
 
Weighted Avg.
 
 
 
Weighted Avg.
 
 
Amount
 
Interest Rate
 
Amount
 
Interest Rate
 
Amount
 
Interest Rate
Beginning balance
 
$
554,014

 
5.49%
 
$
594,199

 
4.58%
 
$
347,474

 
3.55%
Debt issued
 
166,155

 
2.21%
 
13,000

 
4.57%
 
—

 
—%
Debt extinguished
 
(118,500
)
 
5.56%
 
(274,048
)
 
5.95%
 
(4,107
)
 
4.94%
Debt transferred out
 
—

 
—%
 
—

 
—%
 
(35,830
)
 
3.84%
Principal payments
 
(10,627
)
 
5.68%
 
(5,863
)
 
5.66%
 
(3,982
)
 
5.38%
Foreign currency
 
3,157

 
5.25%
 
20,186

 
2.91%
 
(15,169
)
 
3.44%
Ending balance
 
$
594,199

 
4.58%
 
$
347,474

 
3.55%
 
$
288,386

 
3.63%
 
 
 
 
 
 
 
 
 
 
 
 
 
Monthly averages
 
$
497,213

 
5.41%
 
$
408,688

 
3.91%
 
$
321,730

 
3.51%
 
A portion of our triple-net properties were formed through partnerships. Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. Net income attributable to noncontrolling interests represents our partners’ share of net income relating to those partnerships where we are the controlling partner.
Outpatient Medical 
The following is a summary of our NOI and SSNOI for the Outpatient Medical segment for the periods presented (dollars in thousands):
 
 
Year Ended
 
One Year Change
 
Year Ended
 
One Year Change
 
Two Year Change
 
 
December 31,
 
December 31,
 
 
 
 
 
December 31,
 
 
 
 
 
 
 
 
 
 
2016
 
2017
 
$
 
%
 
2018
 
$
 
%
 
$
 
%
NOI
 
$
380,264

 
$
384,068

 
$
3,804

 
1
 %
 
$
380,136

 
$
(3,932
)
 
-1
 %
 
$
(128
)
 
—
 %
Non-cash NOI attributable to same store properties(1)
 
(8,190
)
 
(7,694
)
 
496

 
-6
 %
 
(8,226
)
 
(532
)
 
7
 %
 
(36
)
 
—
 %
NOI attributable to non same store properties(2)
 
(53,220
)
 
(58,076
)
 
(4,856
)
 
9
 %
 
(35,619
)
 
22,457

 
-39
 %
 
17,601

 
-33
 %
SSNOI(1)
 
$
318,854

 
$
318,298

 
$
(556
)
 
—
 %
 
$
336,291

 
$
17,993

 
6
 %
 
$
17,437

 
5
 %
(1) Relates to 212 same store properties.
(2) Primarily relates to the acquisition of 48 properties and the conversion of 15 construction projects into revenue-generating properties subsequent to January 1, 2016.

The following is a summary of our results of operations for the Outpatient Medical segment for the periods presented (dollars in thousands): 

50
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 
 
 
Year Ended
 
One Year Change
 
Year Ended
 
One Year Change
 
Two Year Change
 
 
 
December 31,
 
December 31,
 
 
 
 
 
December 31,
 
 
 
 
 
 
 
 
 
 
 
2016
 
2017
 
$
 
%
 
2018
 
$
 
%
 
$
 
%
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
536,490

 
$
560,060

 
$
23,570

 
4
 %
 
$
551,557

 
$
(8,503
)
 
-2
 %
 
$
15,067

 
3
 %
 
Interest income
 
3,307

 
—

 
(3,307
)
 
-100
 %
 
310

 
310

 
n/a

 
(2,997
)
 
-91
 %
 
Other income
 
5,568

 
3,340

 
(2,228
)
 
-40
 %
 
4,939

 
1,599

 
48
 %
 
(629
)
 
-11
 %
 
Total revenues
 
545,365

 
563,400

 
18,035

 
3
 %
 
556,806

 
(6,594
)
 
-1
 %
 
11,441

 
2
 %
Property operating expenses
 
165,101

 
179,332

 
14,231

 
9
 %
 
176,670

 
(2,662
)
 
-1
 %
 
11,569

 
7
 %
 
NOI(1)
 
380,264

 
384,068

 
3,804

 
1
 %
 
380,136

 
(3,932
)
 
-1
 %
 
(128
)
 
—
 %
Other expenses:
 
 
 
 
 
 
 


 
 
 
 
 


 
 
 


 
Depreciation and amortization
 
188,616

 
193,094

 
4,478

 
2
 %
 
185,530

 
(7,564
)
 
-4
 %
 
(3,086
)
 
-2
 %
 
Interest expense
 
19,087

 
10,015

 
(9,072
)
 
-48
 %
 
7,051

 
(2,964
)
 
-30
 %
 
(12,036
)
 
-63
 %
 
Transaction costs(2)
 
3,687

 
—

 
(3,687
)
 
-100
 %
 
—

 
—

 
n/a

 
(3,687
)
 
-100
 %
 
Loss (gain) on extinguishment of debt, net
 
—

 
4,373

 
4,373

 
n/a

 
11,928

 
7,555

 
173
 %
 
11,928

 
n/a

 
Provision for loan losses.
 
3,280

 
—

 
(3,280
)
 
-100
 %
 
—

 
—

 
n/a

 
(3,280
)
 
-100
 %
 
Impairment of assets
 
4,635

 
5,625

 
990

 
21
 %
 
—

 
(5,625
)
 
-100
 %
 
(4,635
)
 
-100
 %
 
Other expenses(2)
 
—

 
1,911

 
1,911

 
n/a

 
7,570

 
5,659

 
296
 %
 
7,570

 
n/a

 
 
 
219,305

 
215,018

 
(4,287
)
 
-2
 %
 
212,079

 
(2,939
)
 
-1
 %
 
(7,226
)
 
-3
 %
Income from continuing operations before income taxes and other item
 
160,959

 
169,050

 
8,091

 
5
 %
 
168,057

 
(993
)
 
-1
 %
 
7,098

 
4
 %
Income tax benefit (expense)
 
(511
)
 
(1,477
)
 
(966
)
 
189
 %
 
(125
)
 
1,352

 
-92
 %
 
386

 
-76
 %
Income (loss) from unconsolidated entities
 
318

 
2,683

 
2,365

 
744
 %
 
5,563

 
2,880

 
107
 %
 
5,245

 
1,649
 %
Gain (loss) on real estate dispositions, net
 
(1,228
)
 
1,630

 
2,858

 
n/a

 
221,231

 
219,601

 
13,472
 %
 
222,459

 
n/a

Income from continuing operations
 
159,538

 
171,886

 
9,490

 
6
 %
 
394,726

 
3,239

 
2
 %
 
12,729

 
8
 %
Net income (loss)
 
159,538

 
171,886

 
12,348

 
8
 %
 
394,726

 
222,840

 
130
 %
 
235,188

 
147
 %
Less: Net income (loss) attributable to noncontrolling interests
 
768

 
4,765

 
3,997

 
520
 %
 
6,150

 
1,385

 
29
 %
 
5,382

 
701
 %
Net income (loss) attributable to common stockholders
 
$
158,770

 
$
167,121

 
$
8,351

 
5
 %
 
$
388,576

 
$
221,455

 
133
 %
 
$
229,806

 
145
 %
 
(1) See Non-GAAP Financial Measures below.
(2) See Note 3 to our consolidated financial statements.

The fluctuations in rental income are primarily attributable to the acquisitions of new properties and the conversion of newly constructed outpatient medical properties, offset by dispositions. Certain of our leases contain annual rental escalators that are contingent upon changes in the CPI. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If the CPI does not increase, a portion of our revenues may not continue to increase. Our leases could renew above or below current rent rates, resulting in an increase or decrease in rental income. For the three months ended December 31, 2018, our consolidated outpatient medical portfolio signed 77,850 square feet of new leases and 184,349 square feet of renewals. The weighted-average term of these leases was seven years, with a rate of $36.23 per square foot and tenant improvement and lease commission costs of $21.90 per square foot. Substantially all of these leases contain an annual fixed or contingent escalation rent structure ranging from 2.0% to 3.9%.
The fluctuation in property operating expenses and depreciation and amortization are primarily attributable to acquisitions and construction conversions of new outpatient medical facilities, offset by dispositions. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly. During 2016 and 2017, we recognized impairment charges related to certain held-for-sale properties as the carrying values exceeded the estimated fair values less costs to sell. Changes in gains/losses on sales of properties are related to volume of property sales and the sales prices. 
During the year ended December 31, 2018, we completed one outpatient medical construction project representing $11,358,000 or $296 per square foot. The following is a summary of outpatient medical construction projects pending as of December 31, 2018 (dollars in thousands):
Location
 
Square Feet
 
Commitment
 
Balance
 
Est. Completion
Brooklyn, NY
 
140,955

 
$
105,306

 
$
58,390

 
3Q19
Houston, TX
 
73,500

 
23,455

 
5,097

 
4Q19
Porter, TX
 
55,000

 
20,800

 
4,198

 
4Q19
Total
 
269,455

 
$
149,561

 
$
67,685

 
 
 
Total interest expense represents secured debt interest expense. The change in secured debt interest expense is primarily due to the net effect and timing of assumptions, extinguishments and principal amortizations. The fluctuations in loss (gain) on

51
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

extinguishment of debt is primarily attributable the volume of extinguishments and terms of the related secured debt. The following is a summary of our Outpatient Medical secured debt principal activity for the periods presented (dollars in thousands):
 
 
Year Ended
 
Year Ended
 
Year Ended
 
 
December 31, 2016
 
December 31, 2017
 
December 31, 2018
 
 
 
 
Weighted Avg.
 
 
 
Weighted Avg.
 
 
 
Weighted Avg.
 
 
Amount
 
Interest Rate
 
Amount
 
Interest Rate
 
Amount
 
Interest Rate
Beginning balance
 
$
627,689

 
5.18%
 
$
404,079

 
4.85%
 
$
279,951

 
4.72%
Debt assumed
 
—

 
—%
 
23,094

 
6.67%
 
171,275

 
3.99%
Debt extinguished
 
(210,115
)
 
5.97%
 
(137,416
)
 
5.99%
 
(61,291
)
 
7.43%
Principal payments
 
(13,495
)
 
6.55%
 
(9,806
)
 
6.85%
 
(3,197
)
 
5.91%
Ending balance
 
$
404,079

 
4.85%
 
$
279,951

 
4.72%
 
$
386,738

 
4.20%
 
 
 
 
 
 
 
 
 
 
 
 
 
Monthly averages
 
$
536,774

 
5.11%
 
$
294,694

 
4.62%
 
$
238,214

 
4.25%
 
A portion of our outpatient medical properties were formed through partnerships. Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. Net income attributable to noncontrolling interests represents our partners’ share of net income or loss relating to those partnerships where we are the controlling partner. 
Non-Segment/Corporate
The following is a summary of our results of operations for the non-segment/corporate activities (dollars in thousands):
 
 
 
Year Ended
 
One Year Change
 
Year Ended
 
One Year Change
 
Two Year Change
 
 
 
December 31,
 
December 31,
 
 
 
 
 
December 31,
 
 
 
 
 
 
 
 
 
 
 
2016
 
2017
 
$
 
%
 
2018
 
$
 
%
 
$
 
%
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income
 
$
939

 
$
1,538

 
$
599

 
64
 %
 
$
2,275

 
$
737

 
48
 %
 
$
1,336

 
142
 %
Expenses:
 
 
 
 
 

 


 
 
 

 


 

 


 
Interest expense
 
399,035

 
396,148

 
(2,887
)
 
-1
 %
 
436,256

 
40,108

 
10
 %
 
37,221

 
9
 %
 
General and administrative expenses
 
155,241

 
122,008

 
(33,233
)
 
-21
 %
 
126,383

 
4,375

 
4
 %
 
(28,858
)
 
-19
 %
 
Loss (gain) on derivatives and financial instruments, net
 
(2,516
)
 
—

 
2,516

 
-100
 %
 
—

 
—

 
n/a

 
2,516

 
-100
 %
 
Loss (gain) on extinguishments of debt, net
 
16,439

 
—

 
(16,439
)
 
-100
 %
 
4,091

 
4,091

 
n/a

 
(12,348
)
 
-75
 %
 
Other expenses
 
11,998

 
50,829

 
38,831

 
324
 %
 
7,729

 
(43,100
)
 
-85
 %
 
(4,269
)
 
-36
 %
 
Total expenses
 
580,197

 
568,985

 
(11,212
)
 
-2
 %
 
574,459

 
5,474

 
1
 %
 
(5,738
)
 
-1
 %
Loss from continuing operations before income taxes
 
(579,258
)
 
(567,447
)
 
11,811

 
-2
 %
 
(572,184
)
 
(4,737
)
 
1
 %
 
7,074

 
-1
 %
Income tax benefit (expense)
 
24,488

 
2,070

 
(22,418
)
 
-92
 %
 
(11,362
)
 
(13,432
)
 
n/a

 
(35,850
)
 
n/a

Net loss
 
(554,770
)
 
(565,377
)
 
(10,607
)
 
2
 %
 
(583,546
)
 
(18,169
)
 
3
 %
 
(28,776
)
 
5
 %
Preferred stock dividends
 
65,406

 
49,410

 
(15,996
)
 
-24
 %
 
46,704

 
(2,706
)
 
-5
 %
 
(18,702
)
 
-29
 %
Preferred stock redemption charge
 
—

 
9,769

 
9,769

 
n/a

 
—

 
(9,769
)
 
-100
 %
 
—

 
n/a

Net loss attributable to common stockholders
 
$
(620,176
)
 
$
(624,556
)
 
$
(4,380
)
 
1
 %
 
$
(630,250
)
 
$
(5,694
)
 
1
 %
 
$
(10,074
)
 
2
 %
The following is a summary of our non-segment/corporate interest expense for the periods presented (dollars in thousands):
 
 
Year Ended
 
One Year Change
 
Year Ended
 
One Year Change
 
Two Year Change
 
 
December 31,
 
December 31,
 
 
 
 
 
December 31,
 
 
 
 
 
 
 
 
 
 
2016
 
2017
 
$
 
%
 
2018
 
$
 
%
 
$
 
%
Senior unsecured notes
 
$
368,775

 
$
364,773

 
$
(4,002
)
 
-1
 %
 
$
387,955

 
$
23,182

 
6
 %
 
$
19,180

 
5
 %
Secured debt
 
310

 
127

 
(183
)
 
-59
 %
 
115

 
(12
)
 
-9
 %
 
(195
)
 
-63
 %
Primary unsecured credit facility
 
16,811

 
17,863

 
1,052

 
6
 %
 
34,626

 
16,763

 
94
 %
 
17,815

 
106
 %
Loan expense
 
13,139

 
13,385

 
246

 
2
 %
 
13,560

 
175

 
1
 %
 
421

 
3
 %
Totals
 
$
399,035

 
$
396,148

 
$
(2,887
)
 
-1
 %
 
$
436,256

 
$
40,108

 
10
 %
 
$
37,221

 
9
 %
 
The change in interest expense on senior unsecured notes is due to the net effect of issuances and extinguishments. Please refer to Note 10 to consolidated financial statements for additional information. The change in interest expense on our primary unsecured credit facility is due primarily to the net effect and timing of draws, paydowns and variable interest rate changes. Please refer to Note 9 of our consolidated financial statements for additional information regarding our primary unsecured credit facility. Loan expenses represent the amortization of costs incurred in connection with senior unsecured notes issuances. The loss on extinguishment of debt in 2016 is due to the early extinguishment of the 2017 senior unsecured notes. The loss on extinguishment of debt in 2018 is due to the term loan facility drawn on in July 2018 and paid off in August 2018.

52
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General and administrative expenses as a percentage of consolidated revenues for the years ended December 31, 2018, 2017 and 2016 were 2.69%, 2.83% and 3.63%, respectively. The decrease in general and administrative expenses since 2016 is primarily related to a reduction in professional service fees for tax and legal consulting and compensation costs as a result of execution of our strategic initiatives.  
Other expenses for 2017 primarily represents $40,730,000 of costs related to finalization of an agreement with the University of Toledo Foundation to transfer our corporate headquarters as a donation. Other expenses for all years also includes severance-related costs associated with the departure of certain executive officers and key employees. 
The fluctuations in income taxes are primarily due to benefits recognized in the year ended December 31, 2016 related to the release of a valuation allowance reserve on a taxable subsidiary and the restructuring of an unconsolidated investment. The decrease in preferred dividends and the preferred stock redemption charge are due to the redemption of our 6.5% Series J preferred stock during the three months ended March 31, 2017.
Other
Non-GAAP Financial Measures
We believe that net income and net income attributable to common stockholders (“NICS”), as defined by U.S. GAAP, are the most appropriate earnings measurements. However, we consider FFO, NOI, SSNOI, EBITDA and Adjusted EBITDA to be useful supplemental measures of our operating performance. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation. However, since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient. In response, the National Association of Real Estate Investment Trusts (“NAREIT”) created funds from operations attributable to common stockholders (“FFO”) as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO, as defined by NAREIT, means NICS, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairment of depreciable assets, plus depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests.
Consolidated net operating income (“NOI”) is used to evaluate the operating performance of our properties. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. Property operating expenses represent costs associated with managing, maintaining and servicing tenants for our seniors housing operating and outpatient medical facility properties. These expenses include, but are not limited to, property-related payroll and benefits, property management fees paid to operators, marketing, housekeeping, food service, maintenance, utilities, property taxes and insurance. General and administrative expenses represent costs unrelated to property operations. These expenses include, but are not limited to, payroll and benefits, professional services, office expenses, and depreciation of corporate fixed assets. Same store NOI (“SSNOI”) is used to evaluate the operating performance of our properties using a consistent population which controls for changes in the composition of our portfolio. As used herein, same store is generally defined as those revenue-generating properties in the portfolio for the reporting period subsequent to January 1, 2016. Land parcels, loans and sub-leases, as well as any properties acquired, developed /redeveloped, transitioned, sold or classified as held for sale during that period are excluded from the same store amounts. We believe NOI and SSNOI provide investors relevant and useful information because they measure the operating performance of our properties at the property level on an unleveraged basis. We use NOI and SSNOI to make decisions about resource allocations and to assess the property level performance of our properties.
EBITDA stands for earnings (net income) before interest, taxes, depreciation and amortization. We believe that EBITDA, along with net income and cash flow provided from operating activities, is an important supplemental measure because it provides additional information to assess and evaluate the performance of our operations. We primarily utilize EBITDA to measure our interest coverage ratio, which represents EBITDA divided by total interest, and our fixed charge coverage ratio, which represents EBITDA divided by fixed charges. Fixed charges include total interest, secured debt principal amortization, and preferred dividends. Covenants in our senior unsecured notes and primary unsecured credit facility contain financial ratios based on a definition of EBITDA that is specific to those agreements. Failure to satisfy these covenants could result in an event of default that could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. Due to the materiality of these debt agreements and the financial covenants, we have disclosed Adjusted EBITDA, which represents EBITDA as defined above excluding unconsolidated entities and adjusted for items per our covenant. We use Adjusted EBITDA to measure our adjusted fixed charge coverage ratio, which represents Adjusted EBITDA divided by fixed charges on a trailing twelve months basis. Fixed charges include total interest (excluding capitalized interest and non-cash interest expenses), secured debt principal amortization and preferred dividends. Our covenant requires an adjusted fixed charge coverage ratio of at least 1.50 times.

53
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and rating agencies in the valuation, comparison, rating and investment recommendations of companies. Management uses these financial measures to facilitate internal and external comparisons to our historical operating results and in making operating decisions. Additionally, these measures are utilized by the Board of Directors to evaluate management. None of our supplemental measures represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, the supplemental measures, as defined by us, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies.
The table below reflects the reconciliation of FFO to NICS, the most directly comparable U.S. GAAP measure, for the periods presented. Noncontrolling interest and unconsolidated entity amounts represent adjustments to reflect our share of depreciation and amortization, gains/loss on real estate dispositions and impairments of assets.  Amounts are in thousands except for per share data.
 
 
Year Ended December 31,
FFO Reconciliation:
 
2016
 
2017
 
2018
Net income attributable to common stockholders
 
$
1,012,397

 
$
463,595

 
$
758,250

Depreciation and amortization
 
901,242

 
921,720

 
950,459

Impairment of assets
 
37,207

 
124,483

 
115,579

Loss (gain) on real estate dispositions, net
 
(364,046
)
 
(344,250
)
 
(415,575
)
Noncontrolling interests
 
(71,527
)
 
(60,018
)
 
(69,193
)
Unconsolidated entities
 
67,667

 
60,046

 
52,663

Funds from operations attributable to common stockholders
 
$
1,582,940

 
$
1,165,576

 
$
1,392,183

 
 
 
 
 
 
 
Average common shares outstanding:
 
 
 
 
 
 
Basic
 
358,275

 
367,237

 
373,620

Diluted
 
360,227

 
369,001

 
375,250

 
 
 
 
 
 
 
Per share data:
 
 
 
 
 
 
Net income attributable to common stockholders
 
 
 
 
 
 
Basic
 
$
2.83

 
$
1.26

 
$
2.03

Diluted
 
2.81

 
1.26

 
2.02

 
 
 
 
 
 
 
Funds from operations attributable to common stockholders
 
 
 
 
 
 
Basic
 
$
4.42

 
$
3.17

 
$
3.73

Diluted
 
4.39


3.16


3.71

 

54
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The table below reflects the reconciliation of EBITDA and Adjusted EBITDA to net income, the most directly comparable U.S. GAAP measure, for the periods presented.  Dollars are in thousands.
 
 
Year Ended December 31,
Adjusted EBITDA Reconciliation:
 
2016
 
2017
 
2018
Net income
 
$
1,082,070

 
$
540,613

 
$
829,750

Interest expense
 
521,345

 
484,622

 
526,592

Income tax expense (benefit)
 
(19,128
)
 
20,128

 
8,674

Depreciation and amortization
 
901,242

 
921,720

 
950,459

EBITDA
 
2,485,529


1,967,083


2,315,475

Loss (income) from unconsolidated entities
 
10,357

 
83,125

 
641

Transaction costs
 
42,910

 
—

 
—

Stock-based compensation expense(1)
 
28,869

 
19,102

 
27,646

Loss (gain) on extinguishment of debt, net
 
17,214

 
37,241

 
16,097

Loss (gain) on real estate dispositions, net
 
(364,046
)
 
(344,250
)
 
(415,575
)
Impairment of assets
 
37,207

 
124,483

 
115,579

Provision for loan losses
 
10,215

 
62,966

 
—

Loss (gain) on derivatives and financial instruments, net
 
(2,448
)
 
2,284

 
(4,016
)
Other expenses(1)
 
7,721

 
176,395

 
111,990

Additional other income
 
(16,664
)
 
—

 
(14,832
)
Adjusted EBITDA
 
$
2,256,864


$
2,128,429


$
2,153,005

 
 
 
 
 
 
 
Adjusted Interest Coverage Ratio:
 
 
 
 
 
 
Interest expense
 
$
521,345

 
$
484,622

 
$
526,592

Capitalized interest
 
16,943

 
13,489

 
7,905

Non-cash interest expense
 
(1,681
)
 
(10,359
)
 
(10,860
)
Total interest
 
536,607


487,752


523,637

Adjusted EBITDA
 
$
2,256,864


$
2,128,429


$
2,153,005

Adjusted interest coverage ratio
 
4.21x


4.36x


4.11x

 
 
 
 
 
 
 
Adjusted Fixed Charge Coverage Ratio:
 
 
 
 
 
 
Total interest
 
$
536,607

 
$
487,752

 
$
523,637

Secured debt principal payments
 
74,466

 
64,078

 
56,288

Preferred dividends
 
65,406

 
49,410

 
46,704

Total fixed charges
 
676,479


601,240


626,629

Adjusted EBITDA
 
$
2,256,864


$
2,128,429


$
2,153,005

Adjusted fixed charge coverage ratio
 
3.34x


3.54x


3.44x

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

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

55
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 
 
 
 
Year Ended December 31,
 
 
 
 
2016
 
2017
 
2018
Book capitalization:
 
 
 
 
 
 
Borrowings under primary unsecured credit facility
 
$
645,000

 
$
719,000

 
$
1,147,000

Long-term debt obligations(1)
 
11,713,245

 
11,012,936

 
12,150,144

Cash and cash equivalents(2)
 
(557,659
)
 
(249,620
)
 
(215,376
)
Total net debt
 
11,800,586


11,482,316


13,081,768

Total equity and noncontrolling interests(3)
 
15,679,905

 
15,300,646

 
16,010,645

Book capitalization
 
$
27,480,491


$
26,782,962


$
29,092,413

 
 
Net debt to book capitalization ratio
 
42.9
%

42.9
%

45.0
%
 
 
 
 
 
 
 
 
 
Undepreciated book capitalization:
 
 
 
 
 
 
Total net debt
 
$
11,800,586

 
$
11,482,316

 
$
13,081,768

Accumulated depreciation and amortization
 
4,093,494

 
4,838,370

 
5,499,958

Total equity and noncontrolling interests(3)
 
15,679,905

 
15,300,646

 
16,010,645

Undepreciated book capitalization
 
$
31,573,985


$
31,621,332


$
34,592,371

 
 
Net debt to undepreciated book capitalization ratio
 
37.4
%

36.3
%

37.8
%
 
 
 
 
 
 
 
 
 
Market capitalization:
 
 
 
 
 
 
Common shares outstanding
 
362,602

 
371,732

 
383,675

Period end share price
 
$
66.93

 
$
63.77

 
$
69.41

Common equity market capitalization
 
$
24,268,952

 
$
23,705,350

 
$
26,630,882

Total net debt
 
11,800,586

 
11,482,316

 
13,081,768

Noncontrolling interests(3)
 
873,512

 
877,499

 
1,378,311

Preferred stock
 
1,006,250

 
718,503

 
718,498

Market capitalization:
 
$
37,949,300


$
36,783,668


$
41,809,459

 
 
Net debt to market capitalization ratio
 
31.1
%

31.2
%

31.3
%
 
(1) Amounts include senior unsecured notes, secured debt and capital lease obligations as reflected on our Consolidated Balance Sheet.
(2) Inclusive of IRC section 1031 deposits, if any.
(3) Includes all noncontrolling interests (redeemable and permanent) as reflected on our Consolidated Balance Sheet.

The following tables reflect the reconciliation of NOI and SSNOI to net income, the most directly comparable U.S. GAAP measure, for the years presented.  Dollar amounts are in thousands.
 
 
 
 
 
 
Year Ended December 31,
NOI Reconciliation:
 
2016
 
2017
 
2018
Net income
 
$
1,082,070

 
$
540,613

 
$
829,750

Loss (gain) on real estate dispositions, net
 
(364,046
)
 
(344,250
)
 
(415,575
)
Loss (income) from unconsolidated entities
 
10,357

 
83,125

 
641

Income tax expense (benefit)
 
(19,128
)
 
20,128

 
8,674

Other expenses
 
11,998

 
177,776

 
112,898

Impairment of assets
 
37,207

 
124,483

 
115,579

Provision for loan losses
 
10,215

 
62,966

 
—

Loss (gain) on extinguishment of debt, net
 
17,214

 
37,241

 
16,097

Loss (gain) on derivatives and financial instruments, net
 
(2,448
)
 
2,284

 
(4,016
)
Transaction costs
 
42,910

 
—

 
—

General and administrative expenses
 
155,241

 
122,008

 
126,383

Depreciation and amortization
 
901,242

 
921,720

 
950,459

Interest expense
 
521,345

 
484,622

 
526,592

Consolidated net operating income (NOI)
 
$
2,404,177


$
2,232,716


$
2,267,482

 
 
 
 
 
 
 
NOI by segment:
 
 
 
 
 
 
 
 
Seniors Housing Operating
 
$
814,114

 
$
880,026

 
$
985,022

 
 
Triple-net
 
1,208,860

 
967,084

 
900,049

 
 
Outpatient Medical
 
380,264

 
384,068

 
380,136

 
 
Non-segment/corporate
 
939

 
1,538

 
2,275

 
 
 
 
Total NOI
 
$
2,404,177


$
2,232,716


$
2,267,482


56
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 
 
Year Ended December 31,
SSNOI Reconciliation:
 
2016
 
2017
 
2018
NOI:
 
 
 
 
 
 
Seniors Housing Operating
 
$
814,114

 
$
880,026

 
$
985,022

Triple-net
 
1,208,860

 
967,084

 
900,049

Outpatient Medical
 
380,264

 
384,068

 
380,136

Total
 
2,403,238


2,231,178


2,265,207

Adjustments:
 
 
 
 
 
 
Seniors Housing Operating:
 
 
 
 
 
 
Non-cash NOI on same store properties
 
1,990

 
1,242

 
836

NOI attributable to non same store properties
 
(77,334
)
 
(132,604
)
 
(251,803
)
Subtotal
 
(75,344
)

(131,362
)

(250,967
)
Triple-net:
 
 
 
 
 
 
Non-cash NOI on same store properties
 
(28,538
)
 
(23,764
)
 
(17,093
)
NOI attributable to non same store properties
 
(709,606
)
 
(465,820
)
 
(401,878
)
Subtotal
 
(738,144
)

(489,584
)

(418,971
)
Outpatient Medical:
 
 
 
 
 
 
Non-cash NOI on same store properties
 
(8,190
)
 
(7,694
)
 
(8,226
)
NOI attributable to non same store properties
 
(53,220
)
 
(58,076
)
 
(35,619
)
Subtotal
 
(61,410
)

(65,770
)

(43,845
)
Total
 
(874,898
)
 
(686,716
)
 
(713,783
)
SSNOI by segment:
 
 
 
 
 
 
Seniors Housing Operating
 
738,770

 
748,664

 
734,055

Triple-net
 
470,716

 
477,500

 
481,078

Outpatient Medical
 
318,854

 
318,298

 
336,291

Total
 
$
1,528,340


$
1,544,462


$
1,551,424

SSNOI Property Reconciliation:
 
 
 
 
 
 
Total properties
 
1,510

 
 
 
 
Acquisitions
 
(378
)
 
 
 
 
Developments
 
(32
)
 
 
 
 
Disposals/Held-for-sale
 
(55
)
 
 
 
 
Segment transitions
 
(113
)
 
 
 
 
Other(1)
 
(8
)
 
 
 
 
Same store properties
 
924

 
 
 
 
(1) Includes seven land parcels and one loan.

Critical Accounting Policies
Our consolidated financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions. Management considers accounting estimates or assumptions critical if:
•
the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and
•
the impact of the estimates and assumptions on financial condition or operating performance is material.
Management has discussed the development and selection of its critical accounting policies with the Audit Committee of the Board of Directors and the Audit Committee has reviewed the disclosure presented below relating to them. Management believes the current assumptions and other considerations used to estimate amounts reflected in our consolidated financial statements are appropriate and are not reasonably likely to change in the future. However, since these estimates require assumptions to be made that were uncertain at the time the estimate was made, they bear the risk of change. If actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our consolidated financial statements, the resulting changes could have a material adverse effect on our consolidated results of operations, liquidity and/or financial condition. Please refer to Note 2 to our consolidated financial statements for further information on significant accounting policies that impact us and for the impact of new accounting standards, including accounting pronouncements that were issued but not yet adopted by us.
The following table presents information about our critical accounting policies, as well as the material assumptions used to develop each estimate:

57
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Nature of Critical
Accounting Estimate
Assumptions/Approach
Used
Principles of Consolidation

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

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

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

 

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

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


58
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Nature of Critical
Accounting Estimate
Assumptions/Approach
Used
Allowance for Loan Losses

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

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

Revenue is recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of collectability risk. Substantially all of our operating leases contain fixed and/or contingent escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. We recognize resident fees and services, other than move-in fees, monthly as services are provided. Lease agreements with residents generally have a term of one year and are cancelable by the resident with 30 days’ notice.
 

We evaluate the collectability of our revenues and related receivables on an on-going basis. We evaluate collectability based on assumptions and other considerations including, but not limited to, the certainty of payment, payment history, the financial strength of the investment’s underlying operations as measured by cash flows and payment coverages, the value of the underlying collateral and guaranties, and current economic conditions.

If our evaluation indicates that collectability is not reasonably assured, we may place an investment on non-accrual or reserve against all or a portion of current income as an offset to revenue.
Impairment of Long-Lived Assets

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

The net book value of long-lived assets is reviewed quarterly on a property by property basis to determine if there are indicators of impairment. These indicators may include anticipated operating losses at the property level, the tenant’s inability to make rent payments, a decision to dispose of an asset before the end of its estimated useful life, and changes in the market that may permanently reduce the value of the property. If indicators of impairment exist, then the undiscounted future cash flows from the most likely uses of the property are compared to the current net book value. This analysis requires us to determine if indicators of impairment exist and to estimate the most likely stream of cash flows to be generated from the property during the period the property is expected to be held. Properties that meet the held-for-sale criteria are recorded at the lesser of fair value less costs to sell or carrying value.


59

Item 7A.Quantitative and Qualitative Disclosures About Market Risk
We are exposed to various market risks, including the potential loss arising from adverse changes in interest rates and foreign currency exchange rates. We seek to mitigate the underlying foreign currency exposures with gains and losses on derivative contracts hedging these exposures. We seek to mitigate the effects of fluctuations in interest rates by matching the terms of new investments with new long-term fixed rate borrowings to the extent possible. We may or may not elect to use financial derivative instruments to hedge interest rate exposure. These decisions are principally based on our policy to match our variable rate investments with comparable borrowings, but are also based on the general trend in interest rates at the applicable dates and our perception of the future volatility of interest rates. This section is presented to provide a discussion of the risks associated with potential fluctuations in interest rates and foreign currency exchange rates. For more information, see Notes 11 and 16 to our consolidated financial statements.
We historically borrow on our primary unsecured credit facility to acquire, construct or make loans relating to health care and seniors housing properties. Then, as market conditions dictate, we will issue equity or long-term fixed rate debt to repay the borrowings under our primary unsecured credit facility and new commercial paper program. We are subject to risks associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the terms of refinancing may not be as favorable as the terms of current indebtedness. The majority of our borrowings were completed under indentures or contractual agreements that limit the amount of indebtedness we may incur. Accordingly, in the event that we are unable to raise additional equity or borrow money because of these limitations, our ability to acquire additional properties may be limited.
A change in interest rates will not affect the interest expense associated with our fixed rate debt. Interest rate changes, however, will affect the fair value of our fixed rate debt. Changes in the interest rate environment upon maturity of this fixed rate debt could have an effect on our future cash flows and earnings, depending on whether the debt is replaced with other fixed rate debt, variable rate debt or equity or repaid by the sale of assets. To illustrate the impact of changes in the interest rate markets, we performed a sensitivity analysis on our fixed rate debt instruments whereby we modeled the change in net present values arising from a hypothetical 1% increase in interest rates to determine the instruments’ change in fair value. The following table summarizes the analysis performed as of the dates indicated (in thousands):  
 
 
December 31, 2018
 
December 31, 2017
 
 
Principal balance
 
Fair value change
 
Principal balance
 
Fair value change
Senior unsecured notes
 
$
9,009,159

 
$
(548,558
)
 
$
7,710,219

 
$
(500,951
)
Secured debt
 
1,639,983

 
(59,522
)
 
1,749,958

 
(63,492
)
Totals
 
$
10,649,142


$
(608,080
)

$
9,460,177


$
(564,443
)
 
Our variable rate debt, including our primary unsecured credit facility, is reflected at fair value. At December 31, 2018, we had $2,683,553,000 outstanding related to our variable rate debt. Assuming no changes in outstanding balances, a 1% increase in interest rates would result in increased annual interest expense of $26,836,000. At December 31, 2017, we had $2,294,678,000 outstanding under our variable rate debt. Assuming no changes in outstanding balances, a 1% increase in interest rates would have resulted in increased annual interest expense of $22,947,000.
We are subject to currency fluctuations that may, from time to time, affect our financial condition and results of operations. Increases or decreases in the value of the Canadian Dollar or British Pounds Sterling relative to the U.S. Dollar impact the amount of net income we earn from our investments in Canada and the United Kingdom. Based solely on our results for the year ended December 31, 2018, including the impact of existing hedging arrangements, if these exchange rates were to increase or decrease by 10%, our net income from these investments would increase or decrease, as applicable, by less than $10,000,000. We will continue to mitigate these underlying foreign currency exposures with non-U.S. denominated borrowings and gains and losses on derivative contracts. If we increase our international presence through investments in, or acquisitions or development of, seniors housing and health care properties outside the U.S., we may also decide to transact additional business or borrow funds in currencies other than U.S. Dollars, Canadian Dollars or British Pounds Sterling. To illustrate the impact of changes in foreign currency markets, we performed a sensitivity analysis on our derivative portfolio whereby we modeled the change in net present values arising from a hypothetical 1% increase in foreign currency exchange rates to determine the instruments’ change in fair value.  The following table summarizes the results of the analysis performed, excluding cross currency hedge activity (dollars in thousands):
 
 
December 31, 2018
 
December 31, 2017
 
 
Carrying value
 
Fair value change
 
Carrying value
 
Fair value change
Foreign currency exchange contracts
 
$
23,620

 
$
16,163

 
$
23,238

 
$
12,929

Debt designated as hedges
 
1,559,159

 
15,592

 
1,620,273

 
16,203

Totals
 
$
1,582,779


$
31,755


$
1,643,511


$
29,132


60

Item 8.  Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 
The Shareholders and the Board of Directors of Welltower Inc. 
Opinion on the Financial Statements 
We have audited the accompanying consolidated balance sheets of Welltower Inc. and subsidiaries (the Company) as of December 31, 2018 and 2017, the related consolidated statements of comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2018 and 2017 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles. 
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 25, 2019 expressed an unqualified opinion thereon. 
Basis for Opinion 
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/  Ernst & Young LLP

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

61

CONSOLIDATED BALANCE SHEETS
WELLTOWER INC. AND SUBSIDIARIES
(in thousands)
 
 
December 31,
2018
 
December 31,
2017
Assets
 
 
Real estate investments:
 
 
 
 
Real property owned:
 
 
 
 
Land and land improvements
 
$
3,205,091

 
$
2,734,467

Buildings and improvements
 
28,019,502

 
25,373,117

Acquired lease intangibles
 
1,581,159

 
1,502,471

Real property held for sale, net of accumulated depreciation
 
590,271

 
734,147

Construction in progress
 
194,365

 
237,746

Gross real property owned
 
33,590,388

 
30,581,948

Less accumulated depreciation and amortization
 
(5,499,958
)
 
(4,838,370
)
Net real property owned
 
28,090,430

 
25,743,578

Real estate loans receivable
 
398,711

 
495,871

Less allowance for losses on loans receivable
 
(68,372
)
 
(68,372
)
Net real estate loans receivable
 
330,339

 
427,499

Net real estate investments
 
28,420,769

 
26,171,077

Other assets:
 
 
 
 
Investments in unconsolidated entities
 
482,914

 
445,585

Goodwill
 
68,321

 
68,321

Cash and cash equivalents
 
215,376

 
243,777

Restricted cash
 
100,753

 
65,526

Straight-line receivable
 
367,093

 
389,168

Receivables and other assets
 
686,846

 
560,991

Total other assets
 
1,921,303

 
1,773,368

Total assets
 
$
30,342,072

 
$
27,944,445

 
 
 
 
 
Liabilities and equity
 
 
 
 
Liabilities:
 
 
 
 
Borrowings under primary unsecured credit facility
 
$
1,147,000

 
$
719,000

Senior unsecured notes
 
9,603,299

 
8,331,722

Secured debt
 
2,476,177

 
2,608,976

Capital lease obligations
 
70,668

 
72,238

Accrued expenses and other liabilities
 
1,034,283

 
911,863

Total liabilities
 
14,331,427

 
12,643,799

 
 
 
 
 
Redeemable noncontrolling interests
 
424,046

 
375,194

 
 
 
 
 
Equity:
 
 
 
 
Preferred stock
 
718,498

 
718,503

Common stock
 
384,465

 
372,449

Capital in excess of par value
 
18,424,368

 
17,662,681

Treasury stock
 
(68,499
)
 
(64,559
)
Cumulative net income
 
6,121,534

 
5,316,580

Cumulative dividends
 
(10,818,557
)
 
(9,471,712
)
Accumulated other comprehensive income (loss)
 
(129,769
)
 
(111,465
)
Other equity
 
294

 
670

Total Welltower Inc. stockholders’ equity
 
14,632,334

 
14,423,147

Noncontrolling interests
 
954,265

 
502,305

Total equity
 
15,586,599

 
14,925,452

Total liabilities and equity
 
$
30,342,072

 
$
27,944,445

 
See accompanying notes

62

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
WELLTOWER INC. AND SUBSIDIARIES
(In thousands, except per share data)
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Revenues:
 
 
 
 
 
 
Resident fees and services
 
$
3,234,852

 
$
2,779,423

 
$
2,504,731

Rental income
 
1,380,422

 
1,445,871

 
1,648,815

Interest income
 
55,814

 
73,811

 
97,963

Other income
 
29,411

 
17,536

 
29,651

Total revenues
 
4,700,499

 
4,316,641

 
4,281,160

Expenses:
 
 
 
 
 
 
Property operating expenses
 
2,433,017

 
2,083,925

 
1,876,983

Depreciation and amortization
 
950,459

 
921,720

 
901,242

Interest expense
 
526,592

 
484,622

 
521,345

General and administrative expenses
 
126,383

 
122,008

 
155,241

Transaction costs
 
—

 
—

 
42,910

Loss (gain) on derivatives and financial instruments, net
 
(4,016
)
 
2,284

 
(2,448
)
Loss (gain) on extinguishment of debt, net
 
16,097

 
37,241

 
17,214

Provision for loan losses
 
—

 
62,966

 
10,215

Impairment of assets
 
115,579

 
124,483

 
37,207

Other expenses
 
112,898

 
177,776

 
11,998

Total expenses
 
4,277,009

 
4,017,025

 
3,571,907

 
 
 
 
 
 
 
Income from continuing operations before income taxes and other items
 
423,490

 
299,616

 
709,253

Income tax (expense) benefit
 
(8,674
)
 
(20,128
)
 
19,128

Income (loss) from unconsolidated entities
 
(641
)
 
(83,125
)
 
(10,357
)
Gain (loss) on real estate dispositions, net
 
415,575

 
344,250

 
364,046

Income from continuing operations
 
829,750

 
540,613

 
1,082,070

 
 
 
 
 
 
 
Net income
 
829,750

 
540,613

 
1,082,070

Less:  Preferred stock dividends
 
46,704

 
49,410

 
65,406

Less:  Preferred stock redemption charge
 
—

 
9,769

 
—

Less:  Net income (loss) attributable to noncontrolling interests(1)
 
24,796

 
17,839

 
4,267

Net income attributable to common stockholders
 
$
758,250

 
$
463,595

 
$
1,012,397

 
 
 
 
 
 
 
Average number of common shares outstanding:
 
 
 
 
 
 
Basic
 
373,620

 
367,237

 
358,275

Diluted
 
375,250

 
369,001

 
360,227

 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
Income from continuing operations
 
$
2.22

 
$
1.47

 
$
3.02

Net income attributable to common stockholders
 
$
2.03

 
$
1.26

 
$
2.83

 
 
 
 
 
 
 
Diluted:
 
 
 
 
 
 
Income from continuing operations
 
$
2.21

 
$
1.47

 
$
3.00

Net income attributable to common stockholders
 
$
2.02

 
$
1.26

 
$
2.81

(1) Includes amounts attributable to redeemable noncontrolling interests
See accompanying notes

63

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED)
WELLTOWER INC. AND SUBSIDIARIES
(In thousands)
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Net income
 
$
829,750

 
$
540,613

 
$
1,082,070

 
 
 
 
 
 
 
Other comprehensive income (loss):
 
 
 
 
 
 
Unrecognized gain (loss) on equity investments
 
—

 
—

 
5,120

Reclassification adjustment for write down of equity investment
 
—

 
(5,120
)
 
—

Unrecognized gain (loss) on cash flow hedges
 
—

 
2

 
1,414

Unrecognized actuarial gain (loss)
 
344

 
269

 
190

Foreign currency translation gain (loss)
 
(41,632
)
 
85,263

 
(85,557
)
Total other comprehensive income (loss)
 
(41,288
)
 
80,414

 
(78,833
)
 
 
 
 
 
 
 
Total comprehensive income
 
788,462

 
621,027

 
1,003,237

Less: Total comprehensive income (loss) attributable to
noncontrolling interests(1)
 
1,812

 
40,187

 
6,722

Total comprehensive income attributable to stockholders
 
$
786,650

 
$
580,840

 
$
996,515

(1) Includes amounts attributable to redeemable noncontrolling interests.
See accompanying notes

64

CONSOLIDATED STATEMENTS OF EQUITY
WELLTOWER INC. AND SUBSIDIARIES
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
 
 
 
Capital in
 
 
 
 
 
 
 
Other
 
 
 
 
 
 
 
 
Preferred
 
Common
 
Excess of
 
Treasury
 
Cumulative
 
Cumulative
 
Comprehensive
 
Other
 
Noncontrolling
 
 
 
 
Stock
 
Stock
 
Par Value
 
Stock
 
Net Income
 
Dividends
 
Income (Loss)
 
Equity
 
Interests
 
Total
Balances at December 31, 2015
 
$
1,006,250

 
$
354,811

 
$
16,478,300

 
$
(44,372
)
 
$
3,725,772

 
$
(6,846,056
)
 
$
(88,243
)
 
$
4,098

 
$
585,325

 
$
15,175,885

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 
 
 
 
 
 
 
 
1,077,803

 
 
 
 
 
 
 
9,277

 
1,087,080

Other comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
(81,288
)
 
 
 
2,455

 
(78,833
)
Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,008,247

Net change in noncontrolling interests
 
 
 
 
 
(51,478
)
 
 
 
 
 
 
 
 
 
 
 
(121,978
)
 
(173,456
)
Amounts related to issuance of common stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

from dividend reinvestment and stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

incentive plans, net of forfeitures
 
 
 
839

 
46,938

 
(10,369
)
 
 
 
 
 
 
 
(1,305
)
 
 
 
36,103

Net proceeds from issuance of common stock
 
 
 
7,421

 
525,931

 
 
 
 
 
 
 
 
 
 
 
 
 
533,352

Option compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
266

 
 
 
266

Dividends paid:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Common stock dividends
 
 
 
 
 
 
 
 
 
 
 
(1,233,519
)
 
 
 
 
 
 
 
(1,233,519
)
Preferred stock dividends
 
 
 
 
 
 
 
 
 
 
 
(65,406
)
 
 
 
 
 
 
 
(65,406
)
Balances at December 31, 2016
 
1,006,250

 
363,071

 
16,999,691

 
(54,741
)
 
4,803,575

 
(8,144,981
)
 
(169,531
)
 
3,059

 
475,079

 
15,281,472

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 
 
 
 
 
 
 
 
522,774

 
 
 
 
 
 
 
20,819

 
543,593

Other comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
58,066

 
 
 
22,348

 
80,414

Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
624,007

Net change in noncontrolling interests
 
 
 
 
 
13,473

 
 
 
 
 
 
 
 
 
 
 
(15,941
)
 
(2,468
)
Amounts related to issuance of common stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
from dividend reinvestment and stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
incentive plans, net of forfeitures
 
 
 
402

 
21,494

 
(9,807
)
 
 
 
 
 
 
 
(2,399
)
 
 
 
9,690

Net proceeds from issuance of common stock
 
 
 
8,881

 
612,555

 
 
 
 
 
 
 
 
 
 
 
 
 
621,436

Redemption of equity membership units
 
 
 
91

 
5,465

 
(11
)
 
 
 
 
 
 
 
 
 
 
 
5,545

Redemption of preferred stock
 
(287,500
)
 
 
 
9,760

 
 
 
(9,769
)
 
 
 
 
 
 
 
 
 
(287,509
)
Conversion of preferred stock
 
(247
)
 
4

 
243

 
 
 
 
 
 
 
 
 
 
 
 
 
—

Option compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10

 
 
 
10

Dividends paid:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock dividends
 
 
 
 
 
 
 
 
 
 
 
(1,277,321
)
 
 
 
 
 
 
 
(1,277,321
)
Preferred stock dividends
 
 
 
 
 
 
 
 
 
 
 
(49,410
)
 
 
 
 
 
 
 
(49,410
)
Balances at December 31, 2017
 
718,503

 
372,449

 
17,662,681

 
(64,559
)
 
5,316,580

 
(9,471,712
)
 
(111,465
)
 
670

 
502,305

 
14,925,452

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 
 
 
 
 
 
 
 
804,954

 
 
 
 
 
 
 
25,065

 
830,019

Other comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
(18,304
)
 
 
 
(22,984
)
 
(41,288
)
Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
788,731

Net change in noncontrolling interests
 
 
 
 
 
(43,101
)
 
 
 
 
 
 
 
 
 
 
 
449,879

 
406,778

Amounts related to issuance of common stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
from dividend reinvestment and stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
incentive plans, net of forfeitures
 
 
 
188

 
28,277

 
(3,940
)
 
 
 
 
 
 
 
(376
)
 
 
 
24,149

Net proceeds from issuance of common stock
 
 
 
11,828

 
776,506

 
 
 
 
 
 
 
 
 
 
 
 
 
788,334

Conversion of preferred stock
 
(5
)
 
 
 
5

 
 
 
 
 
 
 
 
 
 
 
 
 
—

Dividends paid:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock dividends
 
 
 
 
 
 
 
 
 
 
 
(1,300,141
)
 
 
 
 
 
 
 
(1,300,141
)
Preferred stock dividends
 
 
 
 
 
 
 
 
 
 
 
(46,704
)
 
 
 
 
 
 
 
(46,704
)
Balances at December 31, 2018
 
$
718,498

 
$
384,465

 
$
18,424,368

 
$
(68,499
)
 
$
6,121,534

 
$
(10,818,557
)
 
$
(129,769
)
 
$
294

 
$
954,265

 
$
15,586,599

 
See accompanying notes

65

CONSOLIDATED STATEMENTS OF CASH FLOWS
WELLTOWER INC. AND SUBSIDIARIES
(in thousands)
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Operating activities:
 
 
 
 
 
 
Net income
 
$
829,750

 
$
540,613

 
$
1,082,070

Adjustments to reconcile net income to net cash provided from (used in) operating
 
 
 
 
 
 
activities:
 
 
 
 
 
 
Depreciation and amortization
 
950,459

 
921,720

 
901,242

Other amortization expenses
 
17,000

 
16,521

 
8,822

Provision for loan losses
 
—

 
62,966

 
10,215

Impairment of assets
 
115,579

 
124,483

 
37,207

Stock-based compensation expense
 
27,646

 
19,102

 
28,869

Loss (gain) on derivatives and financial instruments, net
 
(4,016
)
 
2,284

 
(2,448
)
Loss (gain) on extinguishment of debt, net
 
16,097

 
37,241

 
17,214

Loss (income) from unconsolidated entities
 
641

 
83,125

 
10,357

Rental income in excess of cash received
 
(32,857
)
 
(80,398
)
 
(83,233
)
Amortization related to above (below) market leases, net
 
2,608

 
357

 
322

Loss (gain) on real estate dispositions, net
 
(415,575
)
 
(344,250
)
 
(364,046
)
Other (income) expense, net
 
—

 
2

 
(4,853
)
Distributions by unconsolidated entities
 
21

 
116

 
1,065

Increase (decrease) in accrued expenses and other liabilities
 
70,762

 
26,809

 
14,298

Decrease (increase) in receivables and other assets
 
5,829

 
23,486

 
(18,037
)
Net cash provided from (used in) operating activities
 
1,583,944

 
1,434,177

 
1,639,064

 
 
 
 
 
 
 
Investing activities:
 
 
 
 
 
 
Cash disbursed for acquisitions, net of cash acquired
 
(3,560,360
)
 
(805,264
)
 
(2,145,374
)
Cash disbursed for capital improvements to existing properties
 
(266,183
)
 
(250,276
)
 
(219,146
)
Cash disbursed for construction in progress
 
(160,706
)
 
(232,715
)
 
(403,131
)
Capitalized interest
 
(7,905
)
 
(13,489
)
 
(16,943
)
Investment in real estate loans receivable
 
(83,048
)
 
(83,738
)
 
(129,884
)
Principal collected on real estate loans receivable
 
180,830

 
96,023

 
249,552

Other investments, net of payments
 
(50,430
)
 
57,385

 
4,760

Contributions to unconsolidated entities
 
(136,854
)
 
(114,365
)
 
(101,415
)
Distributions by unconsolidated entities
 
90,916

 
70,287

 
119,723

Proceeds from (payments on) derivatives
 
65,399

 
52,719

 
108,347

Proceeds from sales of real property
 
1,541,870

 
1,378,014

 
2,350,068

Net cash provided from (used in) investing activities
 
(2,386,471
)
 
154,581

 
(183,443
)
 
 
 
 
 
 
 
Financing activities:
 
 
 
 
 
 
Net increase (decrease) under unsecured credit facilities
 
428,000

 
74,000

 
(190,000
)
Proceeds from issuance of senior unsecured notes
 
2,824,176

 
7,500

 
693,560

Payments to extinguish senior unsecured notes
 
(1,450,000
)
 
(5,000
)
 
(865,863
)
Net proceeds from the issuance of secured debt
 
45,447

 
241,772

 
460,015

Payments on secured debt
 
(362,841
)
 
(1,144,346
)
 
(563,759
)
Net proceeds from the issuance of common stock
 
789,575

 
621,987

 
534,194

Redemption of preferred stock
 
—

 
(287,500
)
 
—

Payments for deferred financing costs and prepayment penalties
 
(29,691
)
 
(54,333
)
 
(22,196
)
Contributions by noncontrolling interests(1)
 
39,207

 
56,560

 
148,666

Distributions to noncontrolling interests(1)
 
(109,871
)
 
(87,711
)
 
(134,578
)
Cash distributions to stockholders
 
(1,348,863
)
 
(1,325,617
)
 
(1,298,925
)
Other financing activities
 
(6,771
)
 
(10,839
)
 
(11,931
)
Net cash provided from (used in) financing activities
 
818,368

 
(1,913,527
)
 
(1,250,817
)
Effect of foreign currency translation on cash and cash equivalents and restricted cash
 
(9,015
)
 
26,852

 
(20,274
)
Increase (decrease) in cash, cash equivalents and restricted cash
 
6,826

 
(297,917
)
 
184,530

Cash, cash equivalents and restricted cash at beginning of period
 
309,303

 
607,220

 
422,690

Cash, cash equivalents and restricted cash at end of period
 
$
316,129

 
$
309,303

 
$
607,220

 
 
 
 
 
 
 
Supplemental cash flow information:
 
 
 
 
 
 
Interest paid
 
$
501,404

 
$
488,265

 
$
541,545

Income taxes paid
 
2,250

 
10,410

 
8,011

(1) Includes amounts attributable to redeemable noncontrolling interests.
See accompanying notes.


66
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. Business 
Welltower Inc., an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure.  The company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience.  Welltower™, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing and post-acute communities and outpatient medical properties. 
2. Accounting Policies and Related Matters
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of our wholly-owned subsidiaries and joint venture (“JV”) entities that we control, through voting rights or other means. All material intercompany transactions and balances have been eliminated in consolidation. At inception of JV transactions, we identify entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and determine which business enterprise is the primary beneficiary of its operations. A VIE is broadly defined as an entity where either (i) the equity investors as a group, if any, do not have a controlling financial interest, or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. We consolidate investments in VIEs when we are determined to be the primary beneficiary. Accounting Standards Codification Topic 810, Consolidations (“ASC 810”), requires enterprises to perform a qualitative approach to determining whether or not a VIE will need to be consolidated. This evaluation is based on an enterprise’s ability to direct and influence the activities of a VIE that most significantly impact that entity’s economic performance. For investments in JVs, U.S. GAAP may preclude consolidation by the sole general partner in certain circumstances based on the type of rights held by the limited partner(s).  We assess the limited partners’ rights and their impact on our consolidation conclusions, and we reassess if there is a change to the terms or in the exercisability of the rights of the limited partners, the sole general partner increases or decreases its ownership of limited partnership interests, or there is an increase or decrease in the number of outstanding limited partnership interests. We similarly evaluate the rights of managing members of limited liability companies.
Revenue Recognition
On January 1, 2018 we adopted Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (ASC 606)," which is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. We adopted ASC 606 using the modified retrospective method.
We have evaluated our various revenue streams to identify whether they would be subject the provisions of ASC 606 and any differences in timing, measurement or presentation of revenue recognition. A significant source of our revenue is generated through leasing arrangements, which are specifically excluded from ASC 606. Substantially all of our operating leases contain escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. Leases in our outpatient medical portfolio typically include some form of operating expense reimbursement by the tenant. Certain payments made to operators are treated as lease incentives and amortized as a reduction of revenue over the lease term. 
We recognize resident fees and services, other than move-in fees, monthly as services are provided. Lease agreements with residents generally have a term of one year and are cancelable by the resident with 30 days’ notice. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of collectability risk. Management contracts are present in some of our joint venture agreements to provide asset and property management, leasing, marketing and other services. Under ASC 606, the pattern and timing of recognition of income from these contracts is consistent with the prior accounting model.
Cash and Cash Equivalents
Cash and cash equivalents consist of all highly liquid investments with an original maturity of three months or less.



67
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Restricted Cash
Restricted cash primarily consists of amounts held by lenders to provide future payments for real estate taxes, insurance, tenant and capital improvements, amounts held in escrow relating to transactions we are entitled to receive over a period of time as outlined in the escrow agreement and net proceeds from property sales that were executed as tax-deferred dispositions under Internal Revenue Code (“IRC”) section 1031.
Deferred Loan Expenses
Deferred loan expenses are costs incurred by us in connection with the issuance, assumption and amendments of debt arrangements. Deferred loan expenses related to debt instruments, excluding the primary unsecured credit facility, are recorded as a reduction of the related debt liability. Deferred loan expenses related to the primary unsecured credit facility are included in other assets. We amortize these costs over the term of the debt using the straight-line method, which approximates the effective interest method.
Investments in Unconsolidated Entities
Investments in entities that we do not consolidate but have the ability to exercise significant influence over operating and financial policies are reported under the equity method of accounting. Under the equity method, our share of the investee’s earnings or losses is included in our consolidated results of operations. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest inclusive of transaction costs. To the extent that our cost basis is different from the basis reflected at the entity level, the basis difference is generally amortized over the lives of the related assets and liabilities, and such amortization is included in our share of equity in earnings of the entity. We evaluate our equity method investments for impairment based upon a comparison of the estimated fair value of the equity method investment to its carrying value. When we determine a decline in the estimated fair value of such an investment below its carrying value is other-than-temporary, an impairment is recorded.
Equity Securities
In 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-01 "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Liabilities," which requires entities to measure their investments at fair value and recognize any changes in fair value in net income rather than through accumulated other comprehensive income. During the year ended December 31, 2018, we recognized a gain of $4,016,000 related to our equity securities in loss (gain) on derivatives and financial instruments, net on the Consolidated Statement of Comprehensive Income. There was no adjustment to accumulated other comprehensive income upon adoption at January 1, 2018 as accumulated losses of $18,294,000 were recognized as other-than-temporary impairment during the year ended December 31, 2017.
Redeemable Noncontrolling Interests
Certain noncontrolling interests are redeemable at fair value. Accordingly, we record the carrying amount of the noncontrolling interests at the greater of (i) the initial carrying amount, increased or decreased for the noncontrolling interest’s share of net income or loss and its share of other comprehensive income or loss, and dividends or (ii) the redemption value. If it is probable that the interests will be redeemed in the future, we accrete the carrying value to the redemption value over the period until expected redemption, currently a weighted-average period of approximately one year. In accordance with ASC 810, the redeemable noncontrolling interests are classified outside of permanent equity, as a mezzanine item, in the balance sheet. At December 31, 2018, the current redemption value of redeemable noncontrolling interests exceeded the carrying value of $424,046,000 by $18,891,000.
During 2014 and 2015, we entered into DownREIT partnerships which give a real estate seller the ability to exchange its property on a tax deferred basis for equity membership interests (“OP units”). The OP units may be redeemed any time following the first anniversary of the date of issuance at the election of the holders for one share of our common stock per unit or, at our option, cash.
Real Property Owned
On January 1, 2017, we adopted ASU 2017-01, Clarifying the Definition of a Business (“ASU 2017-01”) which narrows the FASB's definition of a business and provides a framework that gives entities a basis for making reasonable judgments about whether a transaction involves an asset or a business. ASU 2017-01 states that when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the acquired asset is not a business. If this initial test is not met, an acquired asset cannot be considered a business unless it includes an input and a substantive process that together significantly contribute to the ability to create output. The primary differences between business combinations and asset acquisitions include recording the asset acquisition at relative fair value, capitalizing transaction costs, and the elimination of the measurement period in which to record adjustments to the transaction. We believe that substantially all our real estate acquisitions are considered asset acquisitions. We are applying ASU 2017-01 prospectively for acquisitions after January 1, 2017. Real property developed by us is recorded at cost, including the capitalization of construction period interest. Expenditures for repairs and maintenance are expensed as incurred.

68
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Regardless of whether an acquisition is considered an asset acquisition or a business combination, the cost of real property acquired, which represents substantially all of the purchase price, is allocated to net tangible and identifiable intangible assets based on their relative fair values. These properties are depreciated on a straight-line basis over their estimated useful lives which range from 15 to 40 years for buildings and 5 to 15 years for improvements. Tangible assets primarily consist of land, buildings and improvements, including those related to capital leases. We consider costs incurred in conjunction with re-leasing properties, including tenant improvements and lease commissions, to represent the acquisition of productive assets and, accordingly, such costs are reflected as investment activities in our consolidated statement of cash flows.
The remaining purchase price is allocated among identifiable intangible assets primarily consisting of the above or below market component of in-place leases and the value associated with the presence of in-place leases. The value allocable to the above or below market component of the acquired in-place lease is determined based upon the present value (using a discount rate which reflects the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term, and (ii) management’s estimate of the amounts that would be paid using fair market rates over the remaining term of the lease. The amounts allocated to above market leases are included in acquired lease intangibles and below market leases are included in other liabilities in the balance sheet and are amortized to rental income over the remaining terms of the respective leases or lease-up period.
The total amount of other intangible assets acquired is further allocated to in-place lease values and customer relationship values for in-place tenants based on management’s evaluation of the specific characteristics of each tenant’s lease and our overall relationship with that respective tenant. Characteristics considered by management in allocating these values include the nature and extent of our existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors. The total amount of other intangible assets acquired is further allocated to in-place lease values for in-place residents with such value representing (i) value associated with lost revenue related to tenant reimbursable operating costs that would be incurred in an assumed re-leasing period, and (ii) value associated with lost rental revenue from existing leases during an assumed re-leasing period. This intangible asset will be amortized over the remaining life of the lease or the assumed re-leasing period.
The net book value of long-lived assets is reviewed quarterly on a property by property basis to determine if facts and circumstances suggest that the assets may be impaired or that the depreciable life may need to be changed. We consider external factors relating to each asset and the existence of a master lease which may link the cash flows of an individual asset to a larger portfolio of assets leased to the same tenant. If these factors and the projected undiscounted cash flows of the assets over the remaining depreciation period indicate that the assets will not be recoverable, the carrying value is reduced to the estimated fair market value. In addition, we are exposed to the risks inherent in concentrating investments in real estate, and in particular, the seniors housing and health care industries. A downturn in the real estate industry could adversely affect the value of our properties and our ability to sell properties for a price or on terms acceptable to us. Additionally, properties that meet the held-for-sale criteria are recorded at the lessor of fair value less costs to sell or the carrying value.
Capitalization of Construction Period Interest
We capitalize interest costs associated with funds used for the construction of properties owned directly by us. The amount capitalized is based upon the balance outstanding during the construction period using the rate of interest which approximates our company-wide cost of financing. Our interest expense reflected in the consolidated statements of comprehensive income has been reduced by the amounts capitalized.
Gain on Real Estate Dispositions
In 2017, the FASB issued ASU 2017-05, “Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.” The standard clarifies that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The standard also defines the term "in substance nonfinancial asset" and clarifies that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control over it. We adopted Subtopic 610-20 using a modified retrospective approach on January 1, 2018 and it did not have a material impact on our consolidated financial statements.
Prior to the adoption of Subtopic 610-20, we recognized sales of real estate assets only upon the closing of the transaction with the purchaser. Payments received from purchasers prior to closing were recorded as deposits and classified as other assets on our consolidated balance sheets. Gains on real estate assets sold were recognized using the full accrual method upon closing when (i) the collectability of the sales price was reasonably assured, (ii) we were not obligated to perform significant activities after the sale to earn the profit, (iii) we have received adequate initial investment from the purchaser, and (iv) other profit recognition criteria have been satisfied. Gains may have been deferred in whole or in part until the sales satisfy the requirements of gain recognition on sales of real estate.


69
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Real Estate Loans Receivable
Real estate loans receivable consist of mortgage loans and other real estate loans. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of collectability risks. The loans are primarily collateralized by a first, second or third mortgage lien, a leasehold mortgage on, or an assignment of the partnership interest in, the related properties, corporate guaranties and/or personal guaranties.
Allowance for Losses on Loans Receivable
The allowance for losses on loans receivable is maintained at a level believed adequate to absorb potential losses in our loans receivable. The determination of the allowance is based on a quarterly evaluation of these loans, including general economic conditions and estimated collectability of loan payments. We evaluate the collectability of our loans receivable based on a combination of factors, including, but not limited to, delinquency status, historical loan charge-offs, financial strength of the borrower and guarantors, and value of the underlying collateral. If such factors indicate that there is greater risk of loan charge-offs, additional allowances or placement on non-accrual status may be required. A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the original loan agreement. Consistent with this definition, all loans on non-accrual are deemed impaired. To the extent circumstances improve and the risk of collectability is diminished, we will return these loans to income accrual status. While a loan is on non-accrual status, any cash receipts are applied against the outstanding principal balance. Any loans with collectability concerns are subjected to a projected payoff valuation. The valuation is based on the expected future cash flows and/or the estimated fair value of the underlying collateral. The valuation is compared to the outstanding balance to determine the reserve needed for each loan. We may base our valuation on a loan’s observable market price, if any, or the fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the collateral.
Goodwill
Goodwill is tested annually for impairment and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount, including goodwill, exceeds the reporting unit’s fair value and the implied fair value of goodwill is less than the carrying amount of that goodwill. We have not had any goodwill impairments.
 Fair Value of Derivative Instruments
Derivatives are recorded at fair value on the balance sheet as assets or liabilities. The valuation of derivative instruments requires us to make estimates and judgments that affect the fair value of the instruments. Fair values of our derivatives are estimated by pricing models that consider the forward yield curves and discount rates. The fair value of our forward exchange contracts are estimated by pricing models that consider foreign currency spot rates, forward trade rates and discount rates. Such amounts and the recognition of such amounts are subject to significant estimates that may change in the future. See Note 11 for additional information.
Federal Income Tax
We have elected to be treated as a REIT under the applicable provisions of the IRC, commencing with our first taxable year, and made no provision for U.S. federal income tax purposes prior to our acquisition of our taxable REIT subsidiaries (“TRSs”). As a result of these as well as subsequent acquisitions, we now record income tax expense or benefit with respect to certain of our entities that are taxed as TRSs under provisions similar to those applicable to regular corporations and not under the REIT provisions. We account for deferred income taxes using the asset and liability method and recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our consolidated financial statements or tax returns. Under this method, we determine deferred tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Any increase or decrease in the deferred tax liability that results from a change in circumstances, and that causes a change in our judgment about expected future tax consequences of events, is included in the tax provision when such changes occur. Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards. A valuation allowance is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will not be realized. Any increase or decrease in the valuation allowance that results from a change in circumstances, and that causes a change in our judgment about the realizability of the related deferred tax asset, is included in the tax provision when such changes occur. See Note 18 for additional information.
Foreign Currency
Certain of our subsidiaries’ functional currencies are the local currencies of their respective countries. We translate the results of operations of our foreign subsidiaries into U.S. Dollars using average rates of exchange in effect during the period, and we translate balance sheet accounts using exchange rates in effect at the end of the period. We record resulting currency translation adjustments in accumulated other comprehensive income, a component of stockholders’ equity, on our consolidated balance sheets.


70
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Earnings Per Share
Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares outstanding for the period adjusted for non-vested shares of restricted stock. The computation of diluted earnings per share is similar to basic earnings per share, except that the number of shares is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.
Reclassifications
Certain amounts in prior years have been reclassified to conform to current year presentation.
New Accounting Standards
During the year ended December 31, 2018, we adopted the following additional accounting standard, which did not have a material impact on our consolidated financial statements:

•
In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities," which expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. It also includes certain targeted improvements to simplify the application of current guidance related to hedge accounting. The early adoption of this standard on April 1, 2018, did not result in a cumulative effect adjustment and all applicable changes for the company were prospectively made. Please refer to Note 11 of the consolidated financial statements for additional detail on this adoption.
The following ASUs have been issued but not yet adopted:    
•
In 2017, the FASB issued ASU 2016-02, “Leases (codified under ASC 842),” which requires lessees to recognize assets and liabilities on their consolidated balance sheet related to the rights and obligations created by most leases, while continuing to recognize expenses on their consolidated statements of comprehensive income over the lease term.  It will also require disclosures designed to give financial statement users information regarding amount, timing, and uncertainty of cash flows arising from leases. While we are currently evaluating the impact of this adoption, we believe it will likely have a material impact to our consolidated financial statements for the recognition of certain operating leases as right-of-use assets and lease liabilities where we are the lessee. Specifically, we believe the impact to our consolidated financial statements will primarily be attributable to the approximately 139 ground leases and various office and equipment leases which are currently accounted for under ASC 840, "Leases," as operating leases. Future lease payments under these leases total $1,138,046,000.
The FASB also issued ASU 2018-20 "Leases (Topic 842) - Narrow-scope Improvements for Lessors" in December 2018, which provides lessors the ability to make an accounting policy election not to evaluate whether certain sales taxes and other similar taxes imposed by a governmental authority on a specific lease revenue-producing transaction are the primary obligation of the lessor as owner of the underlying leased asset. A lessor that makes this election will exclude these taxes from the measurement of lease revenue and the associated expense. We expect to utilize the practical expedient in ASU 2018-20 as part of our adoption of this guidance.
Upon adoption of ASU 2016-02, lessors are required to separately recognize and measure the lease component of a contract with a customer utilizing the provisions of ASC 842 and the non-lease components utilizing the provisions of ASC 606. To separately account for the components, transaction price is allocated based upon the estimated stand-alone selling prices of the components. Additionally, certain components of a contract which were previously included within the lease element and recognized in accordance with ASC 840 prior to the adoption of ASC 2016-02 (such as common area maintenance services, other basic services and executory costs), are recognized as non-lease components subject to the provisions of ASC 606 subsequent to the adoption of ASC 2016-02. Entities are required to recognize a cumulative effect adjustment to beginning retained earnings as of the initial application of ASU 2016-02 for changes to amounts recognized for these certain components for the transition from ASC 840 to ASC 606.
The FASB issued ASU 2018-11, "Leases (Topic 842) Targeted Improvements" in July 2018, which provides lessors with a practical expedient, allowing them to not separate lease and non-lease components in a contract, and instead to account for as a single lease component, if certain criteria are met. This practical expedient causes an entity to assess whether a contract is predominantly lease or service-based and recognize the entire contract under the relevant accounting guidance (i.e., predominantly lease-based would be accounted for under ASC 842 and predominantly service-based would be accounted for under ASC 606). Entities that elect to utilize this practical expedient upon initial application of ASC 842 are required to apply to all new and existing transactions as of the initial application date with a cumulative effect adjustment to beginning retained earnings for any changes to amounts recognized related to existing transactions. For the year ended December 31, 2018, we recognized revenue for our Seniors Housing Operating segment in accordance with the provisions of ASC 840. Upon adoption of ASU 2016-02, we will elect the lessor practical expedient and will recognize the revenue

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for our Seniors Housing Operating segment based upon the predominant component, which we have determined to be the non-lease component, and therefore, will account for these contracts under ASC 606. After the adoption of ASU 2016-02, we expect the timing and pattern of revenue recognition will be substantially the same as that prior to the adoption of the standard.
•
In 2017, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” This standard requires a new forward-looking “expected loss” model to be used for receivables, held-to-maturity debt, loans, and other instruments.  ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, and early adoption is permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact that the standard will have on our consolidated financial statements. 
3. Real Property Acquisitions and Development 
The total purchase price for all properties acquired has been allocated to the tangible and identifiable intangible assets, liabilities and noncontrolling interests based upon their relative fair values in accordance with our accounting policies. The results of operations for these acquisitions have been included in our consolidated results of operations since the date of acquisition and are a component of the appropriate segments.  Transaction costs primarily represent costs incurred with property acquisitions, including due diligence costs, fees for legal and valuation services, termination of pre-existing relationships computed based on the fair value of the assets acquired, lease termination fees, and other acquisition-related costs. Effective January 1, 2017, with our adoption of ASU 2017-01, transaction costs related to asset acquisitions are capitalized as a component of purchase price and all other non-capitalizable costs are reflected in "Other expenses" on our Consolidated Statement of Comprehensive Income. Acquisitions that occurred prior to January 1, 2017 were accounted for as business combinations. Certain of our subsidiaries' functional currencies are the local currencies of their respective countries.
Acquisition of Quality Care Properties
On July 26, 2018, we completed the acquisition of Quality Care Properties Inc. ("QCP"), with QCP shareholders receiving $20.75 of cash for each share of QCP common stock and all existing QCP debt was repaid upon closing. Prior to the acquisition, ProMedica Health System ("ProMedica") completed the acquisition of HCR ManorCare. Immediately following the acquisition of QCP, we formed an 80/20 joint venture with ProMedica to own the real estate associated with the 218 seniors housing properties leased to ProMedica under a lease agreement with the following key terms: (i) 15-year absolute triple-net master lease with three five-year renewal options; (ii) initial annual cash rent of $179 million with a year one escalator of 1.375% and 2.75% annual escalators thereafter; and (iii) full corporate guarantee of ProMedica. Additionally, we acquired 59 seniors housing properties classified as held for sale and leased to ProMedica under a non-yielding lease, 12 seniors housing properties and one surgery center classified as held for sale and leased to operators under existing triple-net leases, 14 seniors housing properties leased to operators under existing triple-net leases and one multi-tenant medical office building leased to various tenants.

We drew on a $1.0 billion term loan facility to fund a portion of the acquisition cash consideration and other related expenses. The term loan facility matures two years from the closing. In addition to the term loan facility draw, we drew on our unsecured credit facility described in Note 9, in order to fund the acquisition. The aggregate consideration to acquire the QCP shares and repay outstanding QCP debt was approximately $3.5 billion.

We concluded that the QCP acquisition met the definition of an asset acquisition under ASU 2017-01, "Clarifying the Definition of a Business". The following table presents the purchase price calculation and the allocation to assets acquired and liabilities assumed based upon their relative fair value:
(In thousands)
 
 
 
Land and land improvements
 
$
417,983

 
Buildings and improvements
 
2,253,451

 
Acquired lease intangibles
 
12,820

 
Real property held for sale
 
418,297

 
Cash and cash equivalents
 
381,913

 
Restricted cash
 
4,981

 
Receivables and other assets
 
1,354

 
 
Total assets acquired
 
3,490,799

 
Accrued expenses and other liabilities  
 
(13,199
)
 
 
Total liabilities assumed
 
(13,199
)
 
Noncontrolling interests
 
(512,741
)
 
 
Net assets acquired
 
$
2,964,859

 


Net assets acquired in the QCP acquisition detailed above are included in the respective segment tables below.


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Seniors Housing Operating Activity
Acquisitions of seniors housing operating properties are structured under RIDEA, which is described in Note 18. This structure results in the inclusion of all resident revenues and related property operating expenses from the operation of these qualified health care properties in our consolidated statements of comprehensive income. The following is a summary of our Seniors Housing Operating real property investment activity for the periods presented (in thousands):
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Land and land improvements  
 
$
51,440

 
$
42,525

 
$
164,653

Buildings and improvements  
 
621,731

 
428,777

 
1,518,472

Acquired lease intangibles  
 
69,504

 
63,912

 
115,643

Receivables and other assets  
 
1,492

 
3,959

 
2,462

Total assets acquired(1)
 
744,167

 
539,173

 
1,801,230

Secured debt  
 
(134,752
)
 
—

 
(63,732
)
Accrued expenses and other liabilities
 
(18,463
)
 
(46,301
)
 
(23,681
)
Total liabilities assumed
 
(153,215
)
 
(46,301
)
 
(87,413
)
Noncontrolling interests
 
(14,390
)
 
(4,701
)
 
(6,007
)
Non-cash acquisition related activity(2)
—

 
(67,633
)
 
(47,065
)
 Cash disbursed for acquisitions
 
576,562

 
420,538

 
1,660,745

Construction in progress additions
 
82,621

 
84,874

 
157,845

Capitalized interest
 
(3,190
)
 
(9,106
)
 
(5,793
)
Foreign currency translation
 
3,934

 
(6,830
)
 
(8,500
)
Cash disbursed for construction in progress
 
83,365

 
68,938

 
143,552

Capital improvements to existing properties
 
201,001

 
185,473

 
138,673

Total cash invested in real property, net of cash acquired  
 
$
860,928

 
$
674,949

 
$
1,942,970

(1) Excludes $5,784,000, $6,273,000 and $351,000 of cash and restricted cash acquired during the years ended December 31, 2018, 2017 and 2016, respectively.
(2) For the year ended December 31, 2017, includes $59,665,000 related to the acquisition of assets previously financed as investments in unconsolidated entities and $6,349,000 related to the acquisition of assets previously financed as real estate loans receivable. For the year ended December 31, 2016, includes $43,372,000 related to the acquisition of assets previously financed as investments in unconsolidated entities.

Triple-net Activity 
The following provides our purchase price allocations and other Triple-net real property investment activity for the periods presented (in thousands):
 
 
 
Year Ended December 31,
 
 
 
 
2018
 
2017
 
2016
 
Land and land improvements  
 
$
413,588

 
$
33,416

 
$
104,754

 
Buildings and improvements  
 
2,242,884

 
248,459

 
418,633

 
Acquired lease intangibles  
 
9,690

 
—

 
2,876

 
Real property held for sale
 
396,265

 
—

 
—

 
Receivables and other assets  
 
1,354

 
—

 
551

 
 
Total assets acquired(1)
 
3,063,781


281,875


526,814

 
Accrued expenses and other liabilities
 
(13,199
)
 
(21,236
)
 
(3,384
)
 
 
Total liabilities assumed
 
(13,199
)

(21,236
)

(3,384
)
 
Noncontrolling interests
 
(512,741
)
 
(7,275
)
 
(26,771
)
 
Non-cash acquisition related activity(2)
 
—

 
(54,901
)
 
(51,733
)
 
 
Cash disbursed for acquisitions
 
2,537,841


198,463


444,926

 
Construction in progress additions
 
55,558

 
120,797

 
181,084

 
Capitalized interest
 
(2,238
)
 
(4,713
)
 
(8,729
)
 
Foreign currency translation
 
272

 
(610
)
 
(3,665
)
 
Cash disbursed for construction in progress
 
53,592


115,474


168,690

 
Capital improvements to existing properties
 
10,046

 
19,989

 
32,603

 
 
Total cash invested in real property, net of cash acquired  
 
$
2,601,479


$
333,926


$
646,219

 
(1) Excludes $386,894,000, $318,000 and $682,000 of cash and restricted cash acquired during the years ended December 31, 2018, 2017 and 2016, respectively.

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(2) For the year ended December 31, 2017, $54,901,000 is related to the acquisition of assets previously financed as real estate loans receivable.  For the year ended December 31, 2016, primarily relates to $45,044,000 for the acquisition of assets previously financed as real estate loans receivable and $6,630,000 previously financed as equity investments.
Outpatient Medical Activity 
The following is a summary of our Outpatient Medical real property investment activity for the periods presented (in thousands):
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
 
Land and land improvements  
 
$
77,239

 
$
40,565

 
$
5,738

 
Buildings and improvements  
 
478,740

 
159,643

 
46,056

 
Acquired lease intangibles  
 
50,813

 
24,014

 
4,592

 
Real property held for sale
 
22,032

 
—

 
—

 
Receivables and other assets  
 
1,185

 
10

 
—

 
Total assets acquired(1)
 
630,009

 
224,232

 
56,386

 
Secured debt  
 
(169,156
)
 
(25,708
)
 
—

 
Accrued expenses and other liabilities
 
(14,896
)
 
(3,181
)
 
(1,670
)
 
Total liabilities assumed
 
(184,052
)
 
(28,889
)
 
(1,670
)
 
Noncontrolling interests
 
—

 
(9,080
)
 
—

 
Non-cash acquisition related activity(2)
 
—

 
—

 
(15,013
)
 
Cash disbursed for acquisitions
 
445,957

 
186,263

 
39,703

 
Construction in progress additions
 
26,565

 
37,094

 
113,933

 
Capitalized interest
 
(2,477
)
 
(2,406
)
 
(3,723
)
 
Accruals(3)
 
(339
)
 
13,615

 
(19,321
)
 
Cash disbursed for construction in progress
 
23,749

 
48,303

 
90,889

 
Capital improvements to existing properties
 
55,136

 
44,814

 
47,870

 
Total cash invested in real property, net of cash acquired  
 
$
524,842

 
$
279,380

 
$
178,462

 
(1) Excludes $2,719,000 of unrestricted and restricted cash acquired during the year ended December 31, 2018.
(2) Relates to the acquisition of assets previously financed as real estate loans. Please refer to Note 6 for additional information.
(3) Represents non-cash accruals for amounts to be paid in future periods for properties that converted, off-set by amounts paid in the current period.
Construction Activity 
The following is a summary of the construction projects that were placed into service and began generating revenues during the periods presented (in thousands):
 
 
Year Ended
 
 
December 31, 2018
 
December 31, 2017
 
December 31, 2016
Development projects:
 
 
 
 
 
 
Seniors Housing Operating
 
$
86,931

 
$
3,634

 
$
18,979

Triple-net
 
90,055

 
283,472

 
46,094

Outpatient Medical
 
11,358

 
63,036

 
108,001

Total development projects
 
188,344

 
350,142

 
173,074

Expansion projects
 
20,029

 
10,336

 
11,363

Total construction in progress conversions
 
$
208,373

 
$
360,478

 
$
184,437

 
At December 31, 2018, future minimum lease payments receivable under operating leases (excluding properties in our Seniors Housing Operating partnerships and excluding any operating expense reimbursements) are as follows (in thousands):
2019
 
$
1,309,186

2020
 
1,275,683

2021
 
1,245,611

2022
 
1,222,519

2023
 
1,171,081

Thereafter
 
9,359,018

Totals
 
$
15,583,098



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4. Real Estate Intangibles 
     The following is a summary of our real estate intangibles, excluding those classified as held for sale, as of the dates indicated (dollars in thousands):
 
 
December 31, 2018
 
December 31, 2017
Assets:
 
 
 
 
In place lease intangibles
 
$
1,410,725

 
$
1,352,139

Above market tenant leases
 
63,935

 
58,443

Below market ground leases
 
64,513

 
58,784

Lease commissions
 
41,986

 
33,105

Gross historical cost
 
1,581,159

 
1,502,471

Accumulated amortization
 
(1,197,336
)
 
(1,125,437
)
Net book value
 
$
383,823

 
$
377,034

 
 
 
 
 
Weighted-average amortization period in years
 
16.0

 
15.1

 
 
 
 
 
Liabilities:
 
 
 
 
Below market tenant leases
 
$
81,676

 
$
60,430

Above market ground leases
 
8,540

 
8,540

Gross historical cost
 
90,216

 
68,970

Accumulated amortization
 
(44,266
)
 
(39,629
)
Net book value
 
$
45,950

 
$
29,341

 
 
 
 
 
Weighted-average amortization period in years
 
14.7

 
20.1


   
  The following is a summary of real estate intangible amortization income (expense) for the periods presented (in thousands):
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Rental income related to (above)/below market tenant leases, net
 
$
(1,269
)
 
$
875

 
$
919

Property operating expenses related to above/(below) market ground leases, net
 
(1,339
)
 
(1,231
)
 
(1,241
)
Depreciation and amortization related to in place lease intangibles and lease commissions
 
(122,515
)
 
(145,132
)
 
(132,141
)

     The future estimated aggregate amortization of intangible assets and liabilities is as follows for the periods presented (in thousands):
 
 
Assets
 
Liabilities
2019
 
$
97,199

 
$
7,005

2020
 
62,641

 
6,475

2021
 
29,855

 
5,838

2022
 
24,270

 
5,300

2023
 
20,304

 
3,440

Thereafter
 
149,554

 
17,892

Totals
 
$
383,823

 
$
45,950

 
5. Dispositions and Assets Held for Sale
We periodically sell properties for various reasons, including favorable market conditions, the exercise of tenant purchase options or reduction of concentrations (e.g. property type, relationship or geography). At December 31, 2018, 13 seniors housing operating, 40 triple-net and two outpatient medical properties with an aggregate net real estate balance of $590,271,000 were classified as held for sale. Impairment of assets, as reflected in our Consolidated Statements of Comprehensive Income, primarily represents the charges necessary to adjust the carrying values of certain properties to estimated fair values less costs to sell. The following is a summary of our real property disposition activity for the periods presented (in thousands):

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Year Ended
 
 
December 31, 2018
 
December 31, 2017
 
December 31, 2016
Real property dispositions:
 
 
 
 
 
 
Seniors Housing Operating
 
$
36,627

 
$
74,832

 
$
—

Triple-net
 
835,093

 
916,689

 
1,773,614

Outpatient Medical
 
253,397

 
19,697

 
78,786

Total dispositions
 
1,125,117

 
1,011,218

 
1,852,400

Gain (loss) on sales of real property, net
 
415,575

 
344,250

 
364,046

Net other assets (liabilities) disposed
 
1,178

 
22,546

 
133,622

Proceeds from real property sales
 
$
1,541,870

 
$
1,378,014

 
$
2,350,068



During the year ended December 31, 2016, we completed two portfolio dispositions of properties leased to Genesis HealthCare (“Genesis”) for which we received loans in the amount of $74,445,000 for termination fees relating to the properties sold under the master lease. The related termination fee income has been deferred and will be recognized as the principal balance of the loans are repaid. At December 31, 2018, $61,994,000 of principal is outstanding on the loans. 
Dispositions and Assets Held for Sale 
Pursuant to our adoption of ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (ASU 2014-08”), operating results attributable to properties sold subsequent to or classified as held for sale after January 1, 2014 and which do not meet the definition of discontinued operations are no longer reclassified on our consolidated statements of comprehensive income. The following represents the activity related to these properties for the periods presented (in thousands):
 
 
Year Ended
December 31,
 
 
2018
 
2017
 
2016
Revenues:
 
 
 
 
 
 
Total revenues
 
$
148,725

 
$
275,087

 
$
565,450

Expenses:
 
 
 
 
 
 
Interest expense
 
294

 
6,655

 
52,675

Property operating expenses
 
81,698

 
81,182

 
89,666

Provision for depreciation
 
16,900

 
55,294

 
122,153

Total expenses
 
98,892

 
143,131

 
264,494

Income (loss) from real estate dispositions, net
 
$
49,833

 
$
131,956

 
$
300,956

 
6. Real Estate Loans Receivable
The following is a summary of our real estate loans receivable (in thousands):
 
 
December 31,
 
 
2018
 
2017
Mortgage loans
 
$
317,443

 
$
374,492

Other real estate loans
 
81,268

 
121,379

Totals
 
$
398,711

 
$
495,871


The following is a summary of our real estate loan activity for the periods presented (in thousands):

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Year Ended
 
 
December 31, 2018
 
December 31, 2017
 
December 31, 2016
 
 
Seniors
Housing
Operating
 
Triple-net
 
Outpatient
Medical
 
Totals
 
Triple-net
 
Outpatient
Medical
 
Totals
 
Triple-net
 
Outpatient
Medical
 
Totals
Advances on real estate loans receivable:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in new loans
 
$
11,806

 
$
13,062

 
$
23,421

 
$
48,289

 
$
12,091

 
$
—

 
$
12,091

 
$
8,445

 
$
—

 
$
8,445

Draws on existing loans
 
—

 
34,759

 
—

 
34,759

 
71,647

 
—

 
71,647

 
118,788

 
2,651

 
121,439

Net cash advances on real estate loans
 
11,806

 
47,822

 
23,421

 
83,048

 
83,738

 
—

 
83,738

 
127,233

 
2,651

 
129,884

Receipts on real estate loans receivable:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan payoffs
 
15,000

 
116,161

 
—

 
131,161

 
157,912

 
60,500

 
218,412

 
275,439

 
27,303

 
302,742

Principal payments on loans
 
—

 
49,669

 
—

 
49,669

 
1,219

 
—

 
1,219

 
6,867

 
—

 
6,867

Sub-total
 
15,000

 
165,830

 
—

 
180,830

 
159,131

 
60,500

 
219,631

 
282,306

 
27,303

 
309,609

Less: Non-cash activity(1)
 
—

 
—

 
—

 
—

 
(63,108
)
 
(60,500
)
 
(123,608
)
 
(45,044
)
 
(15,013
)
 
(60,057
)
Net cash receipts on real estate loans
 
15,000

 
165,830

 
—

 
180,830

 
96,023

 
—

 
96,023

 
237,262

 
12,290

 
249,552

Net cash advances (receipts) on real estate loans
 
$
(3,194
)
 
$
(118,008
)
 
$
23,421

 
$
(97,781
)
 
$
(12,285
)
 
$
—

 
$
(12,285
)
 
$
(110,029
)
 
$
(9,639
)
 
$
(119,668
)
(1) Triple-net primarily represents acquisitions of assets previously financed as real estate loans. Please see Note 3 for further information. Outpatient Medical represents a deed in lieu of foreclosure on a previously financed first mortgage property for the year ended December 31, 2017 and acquisition of assets previously financed as real estate loans for the year ended December 31, 2016.

In 2016, we restructured two triple-net real estate loans with Genesis. The existing loans, with a combined principal balance of $317,000,000, were scheduled to mature in 2017 and 2018. These loans were restructured into four separate loans effective October 1, 2016, one of which was repaid during 2017. Each loan had a five year term, a 10% interest rate and 25 basis point annual escalator. We recorded a loan loss charge in the amount of $6,935,000 on one of the loans as the present value of expected future cash flows was less than the carrying value of the loan. During 2017, we recorded a provision for loan loss of $62,966,000 relating to three real estate loans receivable from Genesis. During 2018, aggregate principal payments of $85,289,000 were received on the loans. The allowance for losses on loans receivable totals $68,372,000 and is deemed to be sufficient to absorb expected losses relating to the loans. Such allowance was based on an estimation of expected future cash flows discounted at the effective interest rate for each loan. In addition, at December 31, 2018, we had one real estate loan with an outstanding balance of $2,567,000 on non-accrual status. No provision for loan loss has been recorded for this loan given the underlying collateral value.
The following is a summary of the allowance for losses on loans receivable for the periods presented (in thousands):
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Balance at beginning of year
 
$
68,372

 
$
6,563

 
$
—

Provision for loan losses(1)
 
—

 
62,966

 
6,935

Change in present value
 
—

 
(1,157
)
 
(372
)
Balance at end of  year
 
$
68,372

 
$
68,372

 
$
6,563

(1) Excludes direct write down of an impaired loan receivable in 2016. 

The following is a summary of our impaired loans (in thousands):
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Balance of impaired loans at end of  year
 
$
189,272

 
$
282,882

 
$
377,549

Allowance for loan losses
 
68,372

 
68,372

 
6,563

Balance of impaired loans not reserved
 
$
120,900

 
$
214,510

 
$
370,986

Average impaired loans for the year
 
$
236,077

 
$
330,216

 
$
188,775

Interest recognized on impaired loans(1)
 
17,241

 
27,793

 
8,707

 (1) Represents cash interest recognized in the period since loans were identified as impaired.
7. Investments in Unconsolidated Entities 
We participate in a number of joint ventures, which generally invest in seniors housing and health care real estate. The results of operations for these properties have been included in our consolidated results of operations from the date of acquisition by the joint ventures and are reflected in our Consolidated Statements of Comprehensive Income as income or loss from unconsolidated entities. The following is a summary of our investments in unconsolidated entities (dollars in thousands):
 
 
Percentage Ownership(1)
 
December 31, 2018
 
December 31, 2017
Seniors Housing Operating
 
10% to 50%
 
$
344,982

 
$
352,430

Triple-net
 
10% to 49%
 
34,284

 
22,856

Outpatient Medical
 
43% to 50%
 
103,648

 
70,299

Total
 
 
 
$
482,914

 
$
445,585

(1) Excludes ownership of in substance real estate.
During the year ended December 31, 2017, we increased our ownership in Sunrise Senior Living Management, Inc. (“Sunrise”) from 24% to 34%. Sunrise provides comprehensive property management and accounting services with respect to certain of our seniors housing operating properties that Sunrise operates, for which we pay annual management fees pursuant to long-term management agreements. Our management agreements with Sunrise have initial terms expiring through December 2032 plus, if applicable, optional renewal periods ranging from an additional 5 to 15 years depending on the property. The management fees payable to Sunrise under the management agreements include a fee based on a percentage of revenues generated by the applicable properties plus, if applicable, positive or negative adjustments based on specified performance targets. For the years ended December 31, 2018, 2017 and 2016, we recognized fees to Sunrise of $36,378,000, $37,573,000, and $37,751,000, respectively, which are reflected within property operating expenses in our Consolidated Statements of Comprehensive Income. 
At December 31, 2018, the aggregate unamortized basis difference of our joint venture investments of $105,471,000 is primarily attributable to the difference between the amount for which we purchased our interest in the entity, including transaction costs, and the historical carrying value of the net assets of the entity. This difference is being amortized over the remaining useful life of the related assets and included in the reported amount of income from unconsolidated entities.
8. Credit Concentration
We use consolidated net operating income (“NOI”) as our credit concentration metric. See Note 17 for additional information and reconciliation. The following table summarizes certain information about our credit concentration for the year ended December 31, 2018, excluding our share of NOI in unconsolidated entities (dollars in thousands):
 
 
Number of
 
Total
 
Percent of
Concentration by relationship:(1)
 
Properties
 
NOI
 
NOI(2)
Sunrise Senior Living(3)
 
161

 
$
335,456

 
15%
Revera(3)
 
98

 
154,194

 
7%
Brookdale Senior Living
 
102

 
142,768

 
6%
Genesis HealthCare
 
87

 
137,054

 
6%
Benchmark Senior Living
 
48

 
99,439

 
4%
Remaining portfolio
 
1,014

 
1,398,571

 
62%
Totals
 
1,510

 
$
2,267,482

 
100%
(1) Genesis is in our Triple-net segment. Sunrise Senior Living and Revera are in our Seniors Housing Operating segment.  Brookdale Senior Living and Benchmark Senior Living are in both our Triple-net and Seniors Housing Operating segments.
(2) NOI with our top five relationships comprised 41% of total NOI for the year ending December 31, 2017.
(3) Revera owns a controlling interest in Sunrise Senior Living. For the year ended December 31, 2018, we recognized $1,154,025,000 of revenue from properties managed by Sunrise Senior Living.
9. Borrowings Under Credit Facilities and Related Items
At December 31, 2018, we had a primary unsecured credit facility with a consortium of 31 banks that includes a $3,000,000,000 unsecured revolving credit facility, a $500,000,000 unsecured term credit facility, and a $250,000,000 Canadian-denominated unsecured term credit facility. We have an option, through an accordion feature, to upsize the unsecured revolving credit facility and the $500,000,000 unsecured term credit facility by up to an additional $1,000,000,000, in the aggregate, and the $250,000,000 Canadian-denominated unsecured term credit facility by up to an additional $250,000,000. The primary unsecured credit facility also allows us to borrow up to $1,000,000,000 in alternate currencies (none outstanding at December 31, 2018). Borrowings under the unsecured revolving credit facility are subject to interest payable at the applicable margin over LIBOR interest rate (3.33% at December 31, 2018). The applicable margin is based on our debt ratings and was 0.825% at December 31, 2018. In addition, we pay a facility fee quarterly to each bank based on the bank’s commitment amount. The facility fee depends on our debt ratings and

77
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


was 0.15% at December 31, 2018. The term credit facilities mature on July 19, 2023. The revolving credit facility is scheduled to mature on July 19, 2022 and can be extended for two successive terms of six months each at our option.
The following information relates to aggregate borrowings under the primary unsecured revolving credit facility for the periods presented (dollars in thousands):
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Balance outstanding at year end
 
$
1,147,000

 
$
719,000

 
$
645,000

Maximum amount outstanding at any month end
 
$
2,148,000

 
$
1,010,000

 
$
1,560,000

Average amount outstanding (total of daily principal balances
 
 
 
 
 
 
divided by days in period)
 
$
950,581

 
$
597,422

 
$
762,896

Weighted-average interest rate (actual interest expense divided
 
 
 
 
 
 
by average borrowings outstanding)
 
3.07
%
 
2.02
%
 
1.39
%
 
10. Senior Unsecured Notes and Secured Debt
We may repurchase, redeem or refinance senior unsecured notes from time to time, taking advantage of favorable market conditions when available. We may purchase senior notes for cash through open market purchases, privately negotiated transactions, a tender offer or, in some cases, through the early redemption of such securities pursuant to their terms. The senior unsecured notes are redeemable at our option, at any time in whole or from time to time in part, at a redemption price equal to the sum of (1) the principal amount of the notes (or portion of such notes) being redeemed plus accrued and unpaid interest thereon up to the redemption date and (2) any “make-whole” amount due under the terms of the notes in connection with early redemptions. Redemptions and repurchases of debt, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. At December 31, 2018, the annual principal payments due on these debt obligations were as follows (in thousands):
 
 
Senior
Unsecured Notes(1,2)
 
Secured
Debt (1,3)
 
Totals
2019
 
$
600,000

 
$
508,899

 
$
1,108,899

2020(4)
 
677,489

 
138,288

 
815,777

2021
 
450,000

 
369,124

 
819,124

2022
 
600,000

 
280,418

 
880,418

2023(5,6)
 
1,783,325

 
325,371

 
2,108,696

Thereafter(7,8)
 
5,589,170

 
863,611

 
6,452,781

Totals
 
$
9,699,984

 
$
2,485,711

 
$
12,185,695

(1) Amounts represent principal amounts due and do not include unamortized premiums/discounts, debt issuance costs, or other fair value adjustments as reflected on the Consolidated Balance Sheet.
(2) Annual interest rates range from 3.05% to 6.50%.
(3) Annual interest rates range from 1.69% to 12.00%. Carrying value of the properties securing the debt totaled $5,347,428,000 at December 31, 2018.
(4) Includes a $300,000,000 Canadian-denominated 3.35% senior unsecured notes due 2020 (approximately $219,989,000 based on the Canadian/U.S. Dollar exchange rate on December 31, 2018).
(5) Includes a $250,000,000 Canadian-denominated unsecured term credit facility (approximately $183,325,000 based on the Canadian/U.S. Dollar exchange rate on December 31, 2018). The loan matures on July 19, 2023 and bears interest at the Canadian Dealer Offered Rate plus 0.9% (3.15% at December 31, 2018).
(6) Includes a $500,000,000 unsecured term credit facility. The loan matures on July 19, 2023 and bears interest at LIBOR plus 0.9% (3.37% at December 31, 2018).
(7) Includes a £550,000,000 4.80% senior unsecured notes due 2028 (approximately $701,470,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on December 31, 2018).
(8) Includes a £500,000,000 4.50% senior unsecured notes due 2034 (approximately $637,700,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on December 31, 2018).

The following is a summary of our senior unsecured note principal activity during the periods presented (dollars in thousands):
 
 
Year Ended
 
 
December 31, 2018
 
December 31, 2017
 
December 31, 2016
 
 
 
 
Weighted Avg.
 
 
 
Weighted Avg.
 
 
 
Weighted Avg.
 
 
Amount
 
Interest Rate
 
Amount
 
Interest Rate
 
Amount
 
Interest Rate
Beginning balance
 
$
8,417,447

 
4.31%
 
$
8,260,038

 
4.25%
 
$
8,645,758

 
4.24%
Debt issued
 
2,850,000

 
4.57%
 
7,500

 
1.97%
 
705,000

 
4.23%
Debt extinguished
 
(1,450,000
)
 
3.46%
 
(5,000
)
 
1.83%
 
(850,000
)
 
4.19%
Foreign currency
 
(117,463
)
 
4.16%
 
154,909

 
4.29%
 
(240,720
)
 
4.57%
Ending balance
 
$
9,699,984

 
4.48%
 
$
8,417,447

 
4.31%
 
$
8,260,038

 
4.25%
 

78
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The following is a summary of our secured debt principal activity for the periods presented (dollars in thousands):
 
 
Year Ended
 
 
December 31, 2018
 
December 31, 2017
 
December 31, 2016
 
 
 
 
Weighted Avg.
 
 
 
Weighted Avg.
 
 
 
Weighted Avg.
 
 
Amount
 
Interest Rate
 
Amount
 
Interest Rate
 
Amount
 
Interest Rate
Beginning balance
 
$
2,618,408

 
3.76%
 
$
3,465,066

 
4.09%
 
$
3,478,207

 
4.44%
Debt issued
 
45,447

 
3.40%
 
241,772

 
2.82%
 
460,015

 
2.65%
Debt assumed
 
292,887

 
4.64%
 
23,094

 
6.67%
 
60,898

 
4.30%
Debt extinguished
 
(306,553
)
 
5.36%
 
(1,080,268
)
 
5.25%
 
(489,293
)
 
5.11%
Debt deconsolidated
 
—

 
—%
 
(60,000
)
 
3.80%
 
—

 
—%
Principal payments
 
(56,288
)
 
3.91%
 
(64,078
)
 
4.34%
 
(74,466
)
 
4.66%
Foreign currency
 
(108,190
)
 
3.33%
 
92,822

 
3.16%
 
29,705

 
3.67%
Ending balance
 
$
2,485,711

 
3.90%
 
$
2,618,408

 
3.76%
 
$
3,465,066

 
4.09%

Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As of December 31, 2018, we were in compliance with all of the covenants under our debt agreements.
11. Derivative Instruments
We are exposed to, among other risks, the impact of changes in foreign currency exchange rates as a result of our non-U.S. investments. Our risk management program is designed to manage the exposure and volatility arising from these risks, and utilizes derivative financial instruments and debt issued in foreign currencies to offset a portion of these risks.
Foreign Currency Forward Contracts Designated as Cash Flow Hedges
For instruments that are designated as and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is deferred as a component of other comprehensive income (“OCI”), and reclassified into earnings in the same period, or periods, during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in earnings. 
Foreign Currency Forward Contracts and Cross Currency Swap Contracts Designated as Net Investment Hedges
We use foreign currency forward and cross currency forward swap contracts to hedge a portion of the net investment in foreign subsidiaries against fluctuations in foreign exchange rates. For instruments that are designated and qualify as net investment hedges, the variability in the foreign currency to U.S. Dollar of the instrument is recorded as a cumulative translation adjustment component of OCI. 
In the second quarter of 2018, we redesignated these derivative financial instruments that qualify as hedges of net investments in foreign operations using the spot method in order to more closely align the underlying economics of the hedged transactions. The changes in fair values and the excluded components of derivative instruments designated as net investment hedges are recognized as a cumulative translation adjustment component of OCI. The cross currency basis spread is recognized in interest expense on the Consolidated Statement of Comprehensive Income using the swap accrual process. Prior to the adoption of ASU 2017-12, all settlements and changes in the fair values of these instruments were recognized as a cumulative translation adjustment component of OCI and there had been no ineffectiveness on these hedging relationships.
During the years ended December 31, 2018 and 2017, we settled certain net investment hedges generating cash proceeds of $70,897,000 and $52,719,000, respectively.  The balance of the cumulative translation adjustment will be reclassified to earnings when the hedged investment is sold or substantially liquidated.
Derivative Contracts Undesignated
We use foreign currency exchange contracts to manage existing exposures to foreign currency exchange risk. Gains and losses resulting from changes in the fair value of these instruments are recorded in interest expense on the Consolidated Statement of Comprehensive Income, and are substantially offset by net revaluation impacts on foreign currency denominated balance sheet exposures. In addition, we have several interest rate cap contracts related to variable rate secured debt agreements. Gains and losses resulting from the changes in the fair values of these instruments are also recorded in interest expense.

The following presents the notional amount of derivatives and other financial instruments as of the dates indicated (in thousands):

79
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 
 
December 31, 2018
 
December 31, 2017
Derivatives designated as net investment hedges:
 
 
 
 
Denominated in Canadian Dollars
 
$
575,000

 
$
575,000

Denominated in Pounds Sterling
 
£
890,708

 
£
550,000

 
 
 
 
 
Financial instruments designated as net investment hedges:
 
 
 
 
Denominated in Canadian Dollars
 
$
250,000

 
$
250,000

Denominated in Pounds Sterling
 
£
1,050,000

 
£
1,050,000

 
 
 
 
 
Derivatives designated as cash flow hedges:
 
 
 
 
Denominated in Canadian Dollars
 
$
—

 
$
36,000

 
 
 
 
 
Derivative instruments not designated:
 
 
 
 
Interest rate caps denominated in U.S. Dollars
 
$
405,819

 
$
408,007

Forward purchase contracts denominated in Canadian Dollars
 
$
(325,000
)
 
$
—

Forward sales contracts denominated in Canadian Dollars
 
$
405,000

 
$
80,000

Forward purchase contracts denominated in Pounds Sterling
 
£
(350,000
)
 
£
—

Forward sales contracts denominated in Pounds Sterling
 
£
350,000

 
£
—

The following presents the impact of derivative instruments on the Consolidated Statements of Comprehensive Income for the periods presented (in thousands):
 
 
 
 
Year Ended
 
 
Location
 
December 31, 2018
 
December 31, 2017
 
December 31, 2016
Gain (loss) on derivative instruments designated as hedges recognized in income
 
Interest expense
 
$
12,271

 
$
(2,476
)
 
$
7,871

Gain (loss) on derivative instruments not designated as hedges recognized in income
 
Interest expense
 
$
5,233

 
$
(49
)
 
$
673

Gain on release of cumulative translation adjustment related to ineffectiveness on net investment hedge
 
Loss (gain) on derivatives, net
 
$
—

 
$
—

 
$
(2,516
)
Gain (loss) on foreign exchange contracts and term loans designated as net investment hedge recognized in OCI
 
OCI
 
$
211,390

 
$
(252,168
)
 
$
357,021


12. Commitments and Contingencies
At December 31, 2018, we had 14 outstanding letter of credit obligations totaling $50,805,000 and expiring between 2019 and 2024. At December 31, 2018, we had outstanding construction in process of $194,365,000 for leased properties and were committed to providing additional funds of approximately $436,984,000 to complete construction. Purchase obligations at December 31, 2018, include $1,250,000,000 representing a definitive agreement to acquire outpatient medical facilities in 2019. Purchase obligations also include contingent purchase obligations totaling $17,309,000. These contingent purchase obligations relate to unfunded capital improvement obligations and contingent obligations on acquisitions. Rents due from the tenant are increased to reflect the additional investment in the property. During the year ended December 31, 2017, we finalized an agreement with the University of Toledo Foundation to transfer our corporate headquarters as a gift and recognized an expense of $40,730,000.
We evaluate our leases for operating versus capital lease treatment in accordance with ASC 840. A lease is classified as a capital lease if it provides for transfer of ownership of the leased asset at the end of the lease term, contains a bargain purchase option, has a lease term greater than 75% of the economic life of the leased asset, or if the net present value of the future minimum lease payments are in excess of 90% of the fair value of the leased asset. Certain leases contain bargain purchase options and have been classified as capital leases. At December 31, 2018, we had operating lease obligations of $1,138,046,000 relating to certain ground leases and company office space. Regarding the ground leases, we have sublease agreements with certain of our operators that require the operators to reimburse us for our monthly operating lease obligations. At December 31, 2018, aggregate future minimum rentals to be received under these noncancelable subleases totaled $72,789,000.
At December 31, 2018, future minimum lease payments due under operating and capital leases are as follows (in thousands):

80
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 
 
Operating Leases
 
Capital Leases(1)
2019
 
$
18,242

 
$
4,173

2020
 
17,785

 
4,173

2021
 
17,607

 
4,173

2022
 
16,961

 
4,173

2023
 
17,004

 
67,573

Thereafter
 
1,050,447

 
—

Totals
 
$
1,138,046

 
$
84,265

(1) Amounts above represent principal and interest obligations under capital lease arrangements. Related assets with a gross value of $167,324,000 and accumulated depreciation of $33,676,000 are recorded in real property.
13. Stockholders’ Equity 
The following is a summary of our stockholders’ equity capital accounts as of the dates indicated:
 
 
December 31, 2018
 
December 31, 2017
Preferred Stock, $1.00 par value:
 
 
 
 
Authorized shares
 
50,000,000

 
50,000,000

Issued shares
 
14,375,000

 
14,375,000

Outstanding shares
 
14,369,965

 
14,370,060

Common Stock, $1.00 par value:
 
 
 
 
Authorized shares
 
700,000,000

 
700,000,000

Issued shares
 
384,849,236

 
372,852,311

Outstanding shares
 
383,674,603

 
371,731,551

Preferred Stock.  The following is a summary of our preferred stock activity during the periods presented:
 
 
Year Ended
 
 
December 31, 2018
 
December 31, 2017
 
December 31, 2016
 
 
 
 
Weighted Avg.
 
 
 
Weighted Avg.
 
 
 
Weighted Avg.
 
 
Shares
 
Dividend Rate
 
Shares
 
Dividend Rate
 
Shares
 
Dividend Rate
Beginning balance
 
14,370,060

 
6.50%
 
25,875,000

 
6.50%
 
25,875,000

 
6.50%
Shares redeemed
 
—

 
—%
 
(11,500,000
)
 
6.50%
 
—

 
—%
Shares converted
 
(95
)
 
6.50%
 
(4,940
)
 
6.50%
 
—

 
—%
Ending balance
 
14,369,965

 
6.50%
 
14,370,060

 
6.50%
 
25,875,000

 
6.50%

During the three months ended March 31, 2011, we issued 14,375,000 of 6.50% Series I Cumulative Convertible Perpetual Preferred Stock (the "Series I Preferred Stock"). These shares have a liquidation value of $50.00 per share. Dividends are payable quarterly in arrears. The Series I Preferred Stock is not redeemable by us and are convertible, at the holder’s option, into 0.8460 shares of common stock (equal to an initial conversion price of approximately $59.10). On or after April 30, 2018, we may at our option cause all outstanding shares of the Series I Preferred Stock to be automatically converted into a number of shares of common stock equal to the then-prevailing conversion rate if the daily volume-weighted average prices of our common stock for each day equals or exceeds 130% of the then-prevailing conversion price for at least 20 trading days in a period of 30 consecutive trading days.
During the three months ended March 31, 2012, we issued 11,500,000 of 6.50% Series J Cumulative Redeemable Preferred Stock. During the year ended December 31, 2017, we recognized a charge of $9,769,000 in connection with the redemption of the Series J preferred stock.
Common Stock. The following is a summary of our common stock activity during the periods indicated (dollars in thousands, except average price amounts):

81
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 
 
Shares Issued
 
Average Price
 
Gross Proceeds
 
Net Proceeds
2016 Dividend reinvestment plan issuances
 
4,145,457

 
$70.40
 
$
291,852

 
$
291,571

2016 Option exercises
 
141,405

 
47.13
 
6,664

 
6,664

2016 Equity Shelf Program issuances
 
3,134,901

 
76.01
 
238,286

 
235,959

2016 Stock incentive plans, net of forfeitures
 
402,740

 
 
 
—

 
—

2016 Totals
 
7,824,503

 
 
 
$
536,802

 
$
534,194

 
 
 
 
 
 
 
 
 
2017 Dividend reinvestment plan issuances
 
5,640,008

 
$70.13
 
$
395,526

 
$
394,639

2017 Option exercises
 
252,979

 
51.16
 
12,942

 
12,942

2017 Equity Shelf Program issuances
 
2,986,574

 
72.30
 
215,917

 
214,406

2017 Preferred stock conversions
 
4,300

 
 
 
—

 
—

2017 Redemption of equity membership units
 
91,180

 
 
 
—

 
—

2017 Stock incentive plans, net of forfeitures
 
154,337

 
 
 
—

 
—

2017 Totals
 
9,129,378

 
 
 
$
624,385

 
$
621,987

 
 
 
 
 
 
 
 
 
2018 Dividend reinvestment plan issuances
 
6,529,417

 
$65.55
 
$
428,009

 
$
423,075

2018 Option exercises
 
56,960

 
42.66
 
2,430

 
2,430

2018 Equity Shelf Program issuances
 
5,241,349

 
69.95
 
366,640

 
364,070

2018 Preferred stock conversions
 
83

 
 
 
—

 
—

2018 Stock incentive plans, net of forfeitures
 
115,243

 
 
 
—

 
—

2018 Totals
 
11,943,052

 
 
 
$
797,079

 
$
789,575


Dividends.  The increase in dividends is primarily attributable to increases in our common shares outstanding, offset by the redemption of the Series J preferred stock, as described above. Please refer to Note 18 for information related to federal income tax of dividends. The following is a summary of our dividend payments (in thousands, except per share amounts):
 
 
Year Ended
 
 
December 31, 2018
 
December 31, 2017
 
December 31, 2016
  
 
Per Share
 
Amount
 
Per Share
 
Amount
 
Per Share
 
Amount
Common Stock
 
$
3.4800

 
$
1,300,141

 
$
3.4800

 
$
1,277,321

 
$
3.4400

 
$
1,233,519

Series I Preferred Stock
 
3.2500

 
46,704

 
3.2500

 
46,711

 
3.2500

 
46,719

Series J Preferred Stock
 
—

 
—

 
0.2347

 
2,699

 
1.6251

 
18,687

Totals
 
 
 
$
1,346,845

 
 
 
$
1,326,731

 
 
 
$
1,298,925


Accumulated Other Comprehensive Income. The following is a summary of accumulated other comprehensive income/(loss) for the periods presented (in thousands):
 
 
Unrecognized gains (losses) related to:
 
 
 
 
Foreign Currency Translation
 
Available for Sale Securities
 
Actuarial losses
 
Cash Flow Hedges
 
Total
Balance at December 31, 2017
 
$
(110,581
)
 
$
—

 
$
(884
)
 
$
—

 
$
(111,465
)
Other comprehensive income (loss)
 
(18,648
)
 
—

 
344

 
—

 
(18,304
)
 
 
 
 
 
 
 
 
 
 
 
Net current-period other comprehensive income (loss)
 
(18,648
)
 
—

 
344

 
—

 
(18,304
)
Balance at December 31, 2018
 
$
(129,229
)
 
$
—

 
$
(540
)
 
$
—

 
$
(129,769
)
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2016
 
$
(173,496
)
 
$
5,120

 
$
(1,153
)
 
$
(2
)
 
$
(169,531
)
Other comprehensive income (loss) before reclassification adjustments
 
62,915

 
—

 
269

 
2

 
63,186

Reclassification adjustment for write down of equity investment
 
—

 
(5,120
)
 
—

 
—

 
(5,120
)
 
 
 
 
 
 
 
 
 
 
 
Net current-period other comprehensive income (loss)
 
62,915

 
(5,120
)
 
269

 
2

 
58,066

Balance at December 31, 2017
 
$
(110,581
)
 
$
—

 
$
(884
)
 
$
—

 
$
(111,465
)


82
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


14. Stock Incentive Plans
In May 2016, our shareholders approved the 2016 Long-Term Incentive Plan (“2016 Plan”), which authorizes up to 10,000,000 shares of common stock to be issued at the discretion of the Compensation Committee of the Board of Directors. Awards granted after May 5, 2016 are issued out of the 2016 Plan. The awards granted under the Amended and Restated 2005 Long-Term Incentive Plan continue to vest and options expire ten years from the date of grant. Our non-employee directors, officers and key employees are eligible to participate in the 2016 Plan. The 2016 Plan allows for the issuance of, among other things, stock options, stock appreciation rights, restricted stock, deferred stock units, and dividend equivalent rights. Vesting periods for options, deferred stock units, and restricted shares generally range from three to five years.
Under our long-term incentive plan, certain restricted stock awards are market, performance and time-based. For market and performance based awards, we will grant a target number of restricted stock units, with the ultimate award determined by the total shareholder return and operating performance metrics, measured in each case over a measurement period of two to three years. Generally awards vest over two to three years after the end of the performance period with a portion vesting immediately at the end of the performance periods. The expected term represents the period from the grant date to the end of the performance period. Compensation expense for these performance grants is measured based on the probability of achievement of certain performance goals and is recognized over both the performance period and vesting period. For the portion of the grant for which the award is determined by the operating performance metrics, the compensation cost is based on the grant date closing price and management’s estimate of corporate achievement of the financial metrics. If the estimated number of performance based restricted stock to be earned changes, an adjustment will be recorded to recognize the accumulated difference between the revised and previous estimates. For the portion of the grant determined by the total shareholder return, management used a Monte Carlo model to assess the fair value and compensation cost. Forfeitures are accounted for as they occur.
The following table summarizes compensation expense (a component of general and administrative expenses and property operating expenses) recognized for the periods presented (in thousands):
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Stock options
 
$
—

 
$
10

 
$
266

Restricted stock
 
27,646

 
19,092

 
28,603

 
 
$
27,646

 
$
19,102

 
$
28,869


Restricted Stock
The fair value of the restricted stock is equal to the market price of the company’s common stock on the date of grant and is amortized over the vesting periods. As of December 31, 2018, there was $35,834,000 of total unrecognized compensation expense related to unvested restricted stock that is expected to be recognized over a weighted-average period of two years. The following table summarizes information about non-vested restricted stock incentive awards as of and for the year ended December 31, 2018: 
 
 
Restricted Stock
 
 
Number of
Shares
(000's)
 
Weighted-Average
Grant Date
Fair Value
Non-vested at December 31, 2017
 
698

 
$
61.00

Vested
 
(166
)
 
63.88

Granted
 
723

 
54.16

Terminated
 
(35
)
 
60.90

Non-vested at December 31, 2018
 
1,220

 
$
62.56

 

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WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


15. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Numerator for basic and diluted earnings per share -
 
 
 
 
 
 
net income attributable to common stockholders
 
$
758,250

 
$
463,595

 
$
1,012,397

 
 
 
 
 
 
 
Denominator for basic earnings per
 
 
 
 
 
 
share: weighted-average shares
 
373,620

 
367,237

 
358,275

Effect of dilutive securities:
 
 
 
 
 
 
Employee stock options
 
9

 
47

 
110

Non-vested restricted shares
 
512

 
482

 
449

Redeemable shares
 
1,096

 
1,235

 
1,393

Employee stock purchase program
 
13

 
—

 
—

Dilutive potential common shares
 
1,630

 
1,764

 
1,952

Denominator for diluted earnings per
 
 
 
 
 
 
share: adjusted-weighted average shares
 
375,250

 
369,001

 
360,227

 
 
 
 
 
 
 
Basic earnings per share
 
$
2.03

 
$
1.26

 
$
2.83

Diluted earnings per share
 
$
2.02

 
$
1.26

 
$
2.81


The Series I Cumulative Convertible Perpetual Preferred Stock were excluded from the calculations as the effect of the conversions were anti-dilutive.
16. Disclosure about Fair Value of Financial Instruments 
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level valuation hierarchy exists for disclosures of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined below:
•Level 1 - Quoted prices in active markets for identical assets or liabilities.
•
Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. 
•
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. 
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: 
Mortgage Loans and Other Real Estate Loans Receivable — The carrying value of mortgage loans and other real estate loans receivable is net of related reserves. The fair value is generally estimated by using Level 2 and Level 3 inputs such as discounting the estimated future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. 
Cash and Cash Equivalents and Restricted Cash — The carrying amount approximates fair value. 
Equity Securities — Equity securities are recorded at their fair value based on Level 1 publicly available trading prices. 
Borrowings Under Primary Unsecured Credit Facility — The carrying amount of the primary unsecured credit facility approximates fair value because the borrowings are interest rate adjustable. 
Senior Unsecured Notes — The fair value of the senior unsecured notes payable was estimated based on Level 1 publicly available trading prices. The carrying amount of the variable rate senior unsecured notes approximates fair value because they are interest rate adjustable. 
Secured Debt — The fair value of fixed rate secured debt is estimated using Level 2 inputs by discounting the estimated future cash flows using the current rates at which similar loans would be made with similar credit ratings and for the same remaining

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


maturities. The carrying amount of variable rate secured debt approximates fair value because the borrowings are interest rate adjustable. 
Foreign Currency Forward Contracts and Cross Currency Swaps — Foreign currency forward contracts and cross currency swaps are recorded in other assets or other liabilities on the balance sheet at fair market value. Fair market value is determined using Level 2 inputs by estimating the future value of the currency pair based on existing exchange rates, comprised of current spot and traded forward points, and calculating a present value of the net amount using a discount factor based on observable traded interest rates. 
Redeemable OP Unitholder Interests — Our redeemable OP unitholder interests are recorded on the balance sheet at fair value using Level 2 inputs. The fair value is measured using the closing price of our common stock, as units may be redeemed at the election of the holder for cash or, at our option, one share of our common stock per unit, subject to adjustment in certain circumstances. 
The carrying amounts and estimated fair values of our financial instruments are as follows as of the dates presented (in thousands):
 
 
December 31, 2018
 
December 31, 2017
 
 
Carrying
 
Fair
 
Carrying
 
Fair
 
 
Amount
 
Value
 
Amount
 
Value
Financial assets:
 
 
 
 
 
 
 
 
Mortgage loans receivable
 
$
249,071

 
$
257,337

 
$
306,120

 
$
332,508

Other real estate loans receivable
 
81,268

 
82,742

 
121,379

 
125,480

Equity securities
 
11,286

 
11,286

 
7,269

 
7,269

Cash and cash equivalents
 
215,376

 
215,376

 
243,777

 
243,777

Restricted cash
 
100,753

 
100,753

 
65,526

 
65,526

Foreign currency forward contracts and cross currency swaps
 
94,729

 
94,729

 
15,604

 
15,604

 
 
 
 
 
 
 
 
 
Financial liabilities:
 
 
 
 
 
 
 
 
Borrowings under unsecured credit facilities
 
$
1,147,000

 
$
1,147,000

 
$
719,000

 
$
719,000

Senior unsecured notes
 
9,603,299

 
10,043,797

 
8,331,722

 
9,168,432

Secured debt
 
2,476,177

 
2,499,130

 
2,608,976

 
2,641,997

Foreign currency forward contracts and cross currency swaps
 
71,109

 
71,109

 
38,654

 
38,654

 
 
 
 
 
 
 
 
 
Redeemable OP unitholder interests
 
$
103,071

 
$
103,071

 
$
97,476

 
$
97,476



Items Measured at Fair Value on a Recurring Basis 
The market approach is utilized to measure fair value for our financial assets and liabilities reported at fair value on a recurring basis. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The following summarizes items measured at fair value on a recurring basis (in thousands):
 
 
Fair Value Measurements as of December 31, 2018
 
 
Total
 
Level 1
 
Level 2
 
Level 3
Equity securities
 
$
11,286

 
$
11,286

 
$
—

 
$
—

Foreign currency forward contracts and cross currency swaps, net asset (liability)(1)
 
23,620

 
—

 
23,620

 
—

Redeemable OP unitholder interests
 
103,071

 
—

 
103,071

 
—

Totals 
 
$
137,977

 
$
11,286

 
$
126,691

 
$
—


(1) Please see Note 11 for additional information.
Items Measured at Fair Value on a Nonrecurring Basis 
In addition to items that are measured at fair value on a recurring basis, we have assets and liabilities that are measured at fair value on a nonrecurring basis that are not included in the tables above. Assets, liabilities and noncontrolling interests that are measured at fair value on a nonrecurring basis include those acquired or assumed. Asset impairments (if applicable, see Note 5 for impairments of real property and Note 6 for impairments of real estate loans receivable) are also measured at fair value on a nonrecurring basis. We have determined that the fair value measurements included in each of these assets and liabilities rely primarily on company-specific inputs and our assumptions about the use of the assets and settlement of liabilities, as observable

85
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


inputs are not available. As such, we have determined that each of these fair value measurements generally resides within Level 3 of the fair value hierarchy. We estimate the fair value of real estate and related intangibles using the income approach using unobservable data such as net operating income, estimated capitalization and discount rates.  We also consider local and national industry market data including comparable sales, and commonly engage an external real estate appraiser to assist us in our estimation of fair value. We estimate the fair value of assets held for sale based on current sales price expectations or, in the absence of such price expectations, Level 3 inputs described above. We estimate the fair value of loans receivable using projected payoff valuations based on the expected future cash flows and/or the estimated fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the collateral. We estimate the fair value of secured debt assumed in business combinations and asset acquisitions using current interest rates at which similar borrowings could be obtained on the transaction date. 
17. Segment Reporting
We invest in seniors housing and health care real estate. We evaluate our business and make resource allocations on our three operating segments: Seniors Housing Operating, Triple-net and Outpatient Medical.  Our seniors housing operating properties include assisted living, independent living/continuing care retirement communities, independent support living (Canada), care homes with and without nursing (U.K.), and combinations thereof that are owned and/or operated through RIDEA structures (see Note 18). Our triple-net properties include the property types described above as well as long-term/post-acute care. Under the Triple-net segment, we invest in seniors housing and health care real estate through acquisition and financing of primarily single tenant properties. Properties acquired are primarily leased under triple-net leases and we are not involved in the management of the property. Our outpatient medical properties include outpatient medical buildings which are typically leased to multiple tenants and generally require a certain level of property management by us.
We evaluate performance based upon NOI of each segment. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. We believe NOI provides investors relevant and useful information because it measures the operating performance of our properties at the property level on an unleveraged basis. We use NOI to make decisions about resource allocations and to assess the property level performance of our properties.
Non-segment revenue consists mainly of interest income on certain non-real estate investments and other income. Non-segment assets consist of corporate assets including cash, deferred loan expenses and corporate offices and equipment among others. Non-property specific revenues and expenses are not allocated to individual segments in determining NOI.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 2). The results of operations for all acquisitions described in Note 3 are included in our consolidated results of operations from the acquisition dates and are components of the appropriate segments. There are no intersegment sales or transfers.
Summary information for the reportable segments (which excludes unconsolidated entities) during the years ended December 31, 2018, 2017 and 2016 is as follows (in thousands):

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WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Year Ended December 31, 2018:
 
Seniors Housing Operating
 
Triple-net
 
Outpatient Medical
 
Non-segment / Corporate
 
Total
Resident fees and services
 
$
3,234,852

 
$
—

 
$
—

 
$
—

 
$
3,234,852

Rental income
 
—

 
828,865

 
551,557

 
—

 
1,380,422

Interest income
 
578

 
54,926

 
310

 
—

 
55,814

Other income
 
5,024

 
17,173

 
4,939

 
2,275

 
29,411

Total revenues
 
3,240,454

 
900,964

 
556,806

 
2,275

 
4,700,499

 
 
 
 
 
 
 
 
 
 


Property operating expenses
 
2,255,432

 
915

 
176,670

 
—

 
2,433,017

Consolidated net operating income
 
985,022

 
900,049

 
380,136

 
2,275

 
2,267,482

 
 
 
 
 
 
 
 
 
 


Depreciation and amortization
 
529,449

 
235,480

 
185,530

 
—

 
950,459

Interest expense
 
69,060

 
14,225

 
7,051

 
436,256

 
526,592

General and administrative
 
—

 
—

 
—

 
126,383

 
126,383

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

 
(4,016
)
 
—

 
—

 
(4,016
)
Loss (gain) on extinguishment of debt, net
 
110

 
(32
)
 
11,928

 
4,091

 
16,097

Impairment of assets
 
7,599

 
107,980

 
—

 
—

 
115,579

Other expenses
 
6,624

 
90,975

(1) 
7,570

 
7,729

 
112,898

Income (loss) from continuing operations before income taxes and other items
 
372,180

 
455,437

 
168,057

 
(572,184
)
 
423,490

Income tax benefit (expense)
 
1,202

 
1,611

 
(125
)
 
(11,362
)
 
(8,674
)
(Loss) income from unconsolidated entities
 
(28,142
)
 
21,938

 
5,563

 
—

 
(641
)
Gain (loss) on real estate dispositions, net
 
(2,245
)
 
196,589

 
221,231

 
—

 
415,575

Income (loss) from continuing operations
 
342,995

 
675,575

 
394,726

 
(583,546
)
 
829,750

Net income (loss)
 
$
342,995

 
$
675,575

 
$
394,726

 
$
(583,546
)
 
$
829,750

 
 
 
 
 
 
 
 
 
 


Total assets
 
$
14,607,127

 
$
10,111,227

 
$
5,426,810

 
$
196,908

 
$
30,342,072


(1) Represents non-capitalizable transaction costs of $81,116,000 primarily related to a joint venture transaction with an existing seniors housing operator including the conversion of properties from Triple-net to Seniors Housing Operating and termination/restructuring of pre-existing relationships.

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WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Year Ended December 31, 2017:
 
Seniors Housing Operating
 
Triple-net
 
Outpatient Medical
 
Non-segment / Corporate
 
Total
Resident fees and services
 
$
2,779,423

 
$
—

 
$
—

 
$
—

 
$
2,779,423

Rental income
 
—

 
885,811

 
560,060

 
—

 
1,445,871

Interest income
 
69

 
73,742

 
—

 
—

 
73,811

Other income
 
5,127

 
7,531

 
3,340

 
1,538

 
17,536

Total revenues
 
2,784,619


967,084

 
563,400

 
1,538

 
4,316,641

 
 
 
 
 
 
 
 
 
 


Property operating expenses
 
1,904,593

 
—

 
179,332

 
—

 
2,083,925

Consolidated net operating income
 
880,026


967,084

 
384,068

 
1,538

 
2,232,716

 
 
 
 
 
 
 
 
 
 


Depreciation and amortization
 
484,796

 
243,830

 
193,094

 
—

 
921,720

Interest expense
 
63,265

 
15,194

 
10,015

 
396,148

 
484,622

General and administrative
 
—

 
—

 
—

 
122,008

 
122,008

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

 
2,284

 
—

 
—

 
2,284

Loss (gain) on extinguishment of debt, net
 
3,785

 
29,083

 
4,373

 
—

 
37,241

Provision for loan losses
 
—

 
62,966

 
—

 
—

 
62,966

Impairment of assets
 
21,949

 
96,909

 
5,625

 
—

 
124,483

Other expenses
 
8,347

 
116,689

(1) 
1,911

 
50,829

(2) 
177,776

Income (loss) from continuing operations before income taxes and other items
 
297,884


400,129

 
169,050

 
(567,447
)
 
299,616

Income tax benefit (expense)
 
(16,430
)
 
(4,291
)
 
(1,477
)
 
2,070

 
(20,128
)
(Loss) income from unconsolidated entities
 
(105,236
)
 
19,428

 
2,683

 
—

 
(83,125
)
Gain (loss) on real estate dispositions, net
 
56,295

 
286,325

 
1,630

 
—

 
344,250

Income (loss) from continuing operations
 
232,513


701,591

 
171,886

 
(565,377
)
 
540,613

Net income (loss)
 
$
232,513


$
701,591

 
$
171,886

 
$
(565,377
)
 
$
540,613

 
 
 
 
 
 
 
 
 
 


Total assets
 
$
13,432,001

 
$
9,325,344

 
$
5,082,145

 
$
104,955

 
$
27,944,445

(1) Primarily represents non-capitalizable transaction costs, including $88,316,000 due to a joint venture transaction with an existing seniors housing operator which converted a portfolio of properties from Triple-net to Seniors Housing Operating and termination/restructuring of pre-existing relationships. In addition, includes $18,294,000 other-than-temporary impairment charge on the Genesis available-for-sale equity investment.
(2) Primarily related to $40,730,000 recognized for the donation of the corporate headquarters.

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WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Year Ended December 31, 2016:
 
Seniors Housing Operating
 
Triple-net
 
Outpatient Medical
 
Non-segment / Corporate
 
Total
Resident fees and services
 
$
2,504,731

 
$
—

 
$
—

 
$
—

 
$
2,504,731

Rental income
 
—

 
1,112,325

 
536,490

 
—

 
1,648,815

Interest income
 
4,180

 
90,476

 
3,307

 
—

 
97,963

Other income
 
17,085

 
6,059

 
5,568

 
939

 
29,651

Total revenues
 
2,525,996


1,208,860

 
545,365

 
939

 
4,281,160

 
 
 
 
 
 
 
 
 
 


Property operating expenses
 
1,711,882

 
—

 
165,101

 
—

 
1,876,983

Consolidated net operating income
 
814,114


1,208,860

 
380,264

 
939

 
2,404,177

 
 
 
 
 
 
 
 
 
 


Depreciation and amortization
 
415,429

 
297,197

 
188,616

 
—

 
901,242

Interest expense
 
81,853

 
21,370

 
19,087

 
399,035

 
521,345

General and administrative
 
—

 
—

 
—

 
155,241

 
155,241

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

 
68

 
—

 
(2,516
)
 
(2,448
)
Transaction costs
 
29,207

 
10,016

 
3,687

 
—

 
42,910

Loss (gain) on extinguishment of debt, net
 
(88
)
 
863

 
—

 
16,439

 
17,214

Provision for loan losses
 
—

 
6,935

 
3,280

 
—

 
10,215

Impairment of assets
 
12,403

 
20,169

 
4,635

 
—

 
37,207

Other expenses
 
—

 
—

 
—

 
11,998

 
11,998

Income (loss) from continuing operations before income taxes and other items
 
275,310


852,242

 
160,959

 
(579,258
)
 
709,253

Income tax benefit (expense)
 
(3,762
)
 
(1,087
)
 
(511
)
 
24,488

 
19,128

(Loss) income from unconsolidated entities
 
(20,442
)
 
9,767

 
318

 
—

 
(10,357
)
Gain (loss) on real estate dispositions, net
 
9,880

 
355,394

 
(1,228
)
 
—

 
364,046

Income from continuing operations
 
260,986


1,216,316

 
159,538

 
(554,770
)
 
1,082,070

Net income (loss)
 
$
260,986


$
1,216,316

 
$
159,538

 
$
(554,770
)
 
$
1,082,070


Our portfolio of properties and other investments are located in the U.S., the U.K. and Canada. Revenues and assets are attributed to the country in which the property is physically located. The following is a summary of geographic information for the periods presented (dollars in thousands):
 
 
Year Ended
 
 
December 31, 2018
 
December 31, 2017
 
December 31, 2016
Revenues:
 
Amount
 
%
 
Amount
 
%
 
Amount
 
%
United States
 
$
3,777,960

 
80.4
%
 
$
3,464,527

 
80.3
%
 
$
3,453,485

 
80.6
%
United Kingdom
 
452,956

 
9.6
%
 
407,351

 
9.4
%
 
388,383

 
9.1
%
Canada
 
469,583

 
10.0
%
 
444,763

 
10.3
%
 
439,292

 
10.3
%
Total
 
$
4,700,499

 
100.0
%
 
$
4,316,641

 
100.0
%
 
$
4,281,160

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of
 
 
 
 
 
 
December 31, 2018
 
December 31, 2017
 
 
 
 
Assets:
 
Amount
 
%
 
Amount
 
%
 
 
 
 
United States
 
$
24,884,292

 
82.0
%
 
$
22,274,443

 
79.7
%
 
 
 
 
United Kingdom
 
3,078,994

 
10.1
%
 
3,239,039

 
11.6
%
 
 
 
 
Canada
 
2,378,786

 
7.9
%
 
2,430,963

 
8.7
%
 
 
 
 
Total
 
$
30,342,072

 
100.0
%
 
$
27,944,445

 
100.0
%
 
 
 
 
 
18. Income Taxes and Distributions 
We elected to be taxed as a REIT commencing with our first taxable year. To qualify as a REIT for federal income tax purposes, at least 90% of taxable income (excluding net capital gains) must be distributed to stockholders. REITs that do not distribute a

89
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


certain amount of current year taxable income are also subject to a 4% federal excise tax. The main differences between net income for federal income tax purposes and consolidated financial statement purposes are the recognition of straight-line rent for reporting purposes, basis differences in acquisitions, recording of impairments, differing useful lives and depreciation and amortization methods for real property and the provision for loan losses for reporting purposes versus bad debt expense for tax purposes. 
Cash distributions paid to common stockholders, for federal income tax purposes, are as follows for the periods presented:
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Per share:
 
 
 
 
 
 
Ordinary dividend(1)
 
$
2.1988

 
$
1.8117

 
$
2.5067

Long-term capital gain/(loss)(2)
 
1.1153

 
1.5755

 
0.8760

Return of capital
 
0.1659

 
0.0928

 
0.0573

Totals
 
$
3.4800

 
$
3.4800

 
$
3.4400

(1) For the year ended December 31, 2018, includes Section 199A dividends of $2.1988. For the years ended December 31, 2017 and 2016, includes Qualified Dividend of $0.0038 and $0.0047, respectively.
(2) For the years ended December 31, 2018, 2017 and 2016, includes Unrecaptured SEC. 1250 Gains of $0.3822, $0.3557 and $0.4120, respectively.

Our consolidated provision for income tax expense (benefit) is as follows for the periods presented (in thousands):
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Current
 
$
15,850

 
$
7,633

 
$
14,944

Deferred
 
(7,176
)
 
12,495

 
(34,072
)
Totals
 
$
8,674

 
$
20,128

 
$
(19,128
)

REITs generally are not subject to U.S. federal income taxes on that portion of REIT taxable income or capital gain that is distributed to stockholders. For the tax year ended December 31, 2018, as a result of ownership of investments in Canada and the U.K., we were subject to foreign income taxes under the respective tax laws of these jurisdictions. 
The provision for income taxes for the year ended December 31, 2018 primarily relates to state taxes, foreign taxes, and taxes based on income generated by entities that are structured as TRSs. For the tax years ended December 31, 2018, 2017 and 2016, the foreign tax provision/(benefit) amount included in the consolidated provision for income taxes was $9,804,000, $4,806,000 and $(3,315,000), respectively.
A reconciliation of income taxes, which is computed by applying the federal corporate tax rate for the years ended December 31, 2018, 2017 and 2016, to the income tax expense/(benefit) is as follows for the periods presented (in thousands):
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Tax at statutory rate on earnings from continuing operations before unconsolidated entities, noncontrolling interests and income taxes
 
$
176,069

 
$
199,588

 
$
372,030

Increase (decrease) in valuation allowance(1)
 
28,309

 
30,445

 
(2,128
)
Tax at statutory rate on earnings not subject to federal income taxes
 
(206,937
)
 
(234,468
)
 
(399,571
)
Foreign permanent depreciation
 
8,110

 
10,065

 
9,205

Other differences
 
3,123

 
14,498

 
1,336

Totals
 
$
8,674

 
$
20,128

 
$
(19,128
)
(1) Excluding purchase price accounting.
Each TRS and foreign entity subject to income taxes is a tax paying component for purposes of classifying deferred tax assets and liabilities. The tax effects of taxable and deductible temporary differences, as well as tax asset/(liability) attributes, are summarized as follows for the periods presented (in thousands):

90
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Investments and property, primarily differences in investment basis, depreciation and amortization, the basis of land assets and the treatment of interests and certain costs
 
$
(2,533
)
 
$
(11,812
)
 
$
(7,089
)
Operating loss and interest deduction carryforwards
 
98,713

 
94,654

 
82,469

Expense accruals and other
 
48,804

 
25,146

 
15,978

Valuation allowance
 
(155,592
)
 
(127,283
)
 
(96,838
)
Net deferred tax assets (liabilities)
 
$
(10,608
)
 
$
(19,295
)
 
$
(5,480
)

We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. We apply the concepts on an entity-by-entity, jurisdiction-by-jurisdiction basis. With respect to the analysis of certain entities in multiple jurisdictions, a significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2018. Such objective evidence limits the ability to consider other subjective evidence such as our projections for future growth. 
On the basis of the evaluations performed as required by the codification, valuation allowances totaling $155,592,000 were recorded on U.S. taxable REIT subsidiaries as well as entities in other jurisdictions to limit the deferred tax assets to the amount that we believe is more likely that not realizable. However, the amount of the deferred tax asset considered realizable could be adjusted if (i) estimates of future taxable income during the carryforward period are reduced or increased or (ii) objective negative evidence in the form of cumulative losses is no longer present (and additional weight may be given to subjective evidence such as our projections for growth). The valuation allowance rollforward is summarized as follows for the periods presented (in thousands):
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Beginning balance
 
$
127,283

 
$
96,838

 
$
98,966

Expense (benefit)
 
28,309

 
30,445

 
(2,128
)
Ending balance
 
$
155,592

 
$
127,283

 
$
96,838


As a result of certain acquisitions, we are subject to corporate level taxes for any related asset dispositions that may occur during the five-year period immediately after such assets were owned by a C corporation (“built-in gains tax”). The amount of income potentially subject to this special corporate level tax is generally equal to the lesser of (a) the excess of the fair value of the asset over its adjusted tax basis as of the date it became a REIT asset, or (b) the actual amount of gain. Some but not all gains recognized during this period of time could be offset by available net operating losses and capital loss carryforwards. During the year ended December 31, 2017, we acquired certain additional assets with built-in gains as of the date of acquisition that could be subject to the built-in gains tax if disposed of prior to the expiration of the applicable five-year period. We have not recorded a deferred tax liability as a result of the potential built-in gains tax based on our intentions with respect to such properties and available tax planning strategies. 
Under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”), the REIT may lease “qualified health care properties” on an arm’s-length basis to a TRS if the property is operated on behalf of such subsidiary by a person who qualifies as an “eligible independent contractor.” Generally, the rent received from the TRS will meet the related party rent exception and will be treated as “rents from real property.” A “qualified health care property” includes real property and any personal property that is, or is necessary or incidental to the use of, a hospital, nursing facility, assisted living facility, congregate care facility, qualified continuing care facility, or other licensed facility which extends medical or nursing or ancillary services to patients. We have entered into various joint ventures that were structured under RIDEA. Resident level rents and related operating expenses for these facilities are reported in the consolidated financial statements and are subject to federal, state and foreign income taxes as the operations of such facilities are included in a TRS. Certain net operating loss carryforwards could be utilized to offset taxable income in future years. 
Given the applicable statute of limitations, we generally are subject to audit by the Internal Revenue Service (“IRS”) for the year ended December 31, 2015 and subsequent years. The statute of limitations may vary in the states in which we own properties or conduct business. We do not expect to be subject to audit by state taxing authorities for any year prior to the year ended December 31, 2012. We are also subject to audit by the Canada Revenue Agency and provincial authorities generally for periods subsequent to May 2013 related to entities acquired or formed in connection with acquisitions, and by the U.K.’s HM Revenue & Customs for periods subsequent to August 2013 related to entities acquired or formed in connection with acquisitions. 
At December 31, 2018, we had a net operating loss (“NOL”) carryforward related to the REIT of $348,031,000. Due to our uncertainty regarding the realization of certain deferred tax assets, we have not recorded a deferred tax asset related to NOLs generated by the REIT. These amounts can be used to offset future taxable income (and/or taxable income for prior years if an

91
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


audit determines that tax is owed), if any. The REIT will be entitled to utilize NOLs and tax credit carryforwards only to the extent that REIT taxable income exceeds our deduction for dividends paid. The NOL carryforwards generated through December 31, 2017 will expire through 2037. Beginning with tax years after December 31, 2017, the Tax Cuts and Jobs Act eliminates the carryback period, limits the NOLs to 80% of taxable income and replaces the 20-year carryforward period with an indefinite carryforward period. 
At December 31, 2018 and 2017, we had an NOL carryforward related to Canadian entities of $154,029,000, and $134,552,000, respectively. These Canadian losses have a 20-year carryforward period. At December 31, 2018 and 2017, we had an NOL carryforward related to U.K. entities of $242,377,000 and $183,712,000, respectively. These U.K. losses do not have a finite carryforward period. 
19. Quarterly Results of Operations (Unaudited) 
The following is a summary of our unaudited quarterly results of operations for the years ended December 31, 2018 and 2017 (in thousands, except per share data). The sum of individual quarterly amounts may not agree to the annual amounts included in the Consolidated Statements of Comprehensive Income due to rounding.
 
 
Year Ended December 31, 2018
 
 
1st Quarter
 
2nd Quarter
 
3rd Quarter
 
4th Quarter
Revenues
 
$
1,096,965

 
$
1,125,912

 
$
1,236,379

 
$
1,241,243

Net income (loss) attributable to common stockholders
 
437,671

 
154,432

 
64,384

 
101,763

Net income (loss) attributable to common stockholders per share:
 
 
 
 
 
 
 
 
Basic
 
$
1.18

 
$
0.42

 
$
0.17

 
$
0.27

Diluted
 
$
1.17

 
$
0.41

 
$
0.17

 
$
0.27

 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2017
 
 
1st Quarter
 
2nd Quarter
 
3rd Quarter
 
4th Quarter(1)
Revenues
 
$
1,062,298

 
$
1,058,602

 
$
1,091,483

 
$
1,104,257

Net income attributable to common stockholders
 
312,639

 
188,429

 
74,043

 
(111,523
)
Net income attributable to common stockholders per share:
 
 
 
 
 
 
 
 
Basic
 
$
0.86

 
$
0.51

 
$
0.20

 
$
(0.31
)
Diluted
 
$
0.86

 
$
0.51

 
$
0.20

 
$
(0.31
)
(1) The decrease in net income (loss) and amounts per share are primarily attributable to $99,821,100 impairment of assets and $62,966,000 provision for loan losses recognized in the fourth quarter.

20. Variable Interest Entities 
We have entered into joint ventures to own certain seniors housing and outpatient medical assets which are deemed to be variable interest entities (“VIEs”).  We have concluded that we are the primary beneficiary of these VIEs based on a combination of operational control of the joint venture and the rights to receive residual returns or the obligation to absorb losses arising from the joint ventures. Except for capital contributions associated with the initial joint venture formations, the joint ventures have been and are expected to be funded from the ongoing operations of the underlying properties. Accordingly, such joint ventures have been consolidated, and the table below summarizes the balance sheets of consolidated VIEs in the aggregate (in thousands):
 
 
December 31, 2018
 
December 31, 2017
Assets:
 
 
 
 
Net real property owned
 
$
973,813

 
$
1,002,137

Cash and cash equivalents
 
18,678

 
12,308

Receivables and other assets
 
14,600

 
16,330

Total assets(1)
 
$
1,007,091

 
$
1,030,775

Liabilities and equity:
 
 
 
 
Secured debt
 
$
465,433

 
$
471,103

Accrued expenses and other liabilities
 
18,229

 
14,832

Total equity
 
523,429

 
544,840

Total liabilities and equity
 
$
1,007,091

 
$
1,030,775

 
(1) Note that assets of the consolidated VIEs can only be used to settle obligations relating to such VIEs. Liabilities of the consolidated VIEs represent claims against the specific assets of the VIEs.

92
WELLTOWER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


21. Subsequent Events 
Senior Notes Activity
On February 15, 2019, we completed the issuance of $500 million of 3.625% senior unsecured notes due 2024 and $550 million of 4.125% senior unsecured notes due 2029.
On February 15, 2019, we also announced the redemption of $600 million of 4.125% senior unsecured notes due 2019 and $450 million of 6.125% senior unsecured notes due 2020.
Preferred Stock Activity
On February 21, 2019, we announced that we elected to effect the conversion of all of the outstanding Series I Preferred Stock. Each share of convertible preferred stock will be converted into 0.8857 shares of common stock on February 28, 2019.

93

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A.  Controls and Procedures
Disclosure Controls and Procedures
An evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, as amended). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018 based on the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) in a report entitled Internal Control — Integrated Framework.
Based on this assessment, using the criteria above, management concluded that the Company’s system of internal control over financial reporting was effective as of December 31, 2018.
The independent registered public accounting firm of Ernst & Young LLP, as auditors of the Company’s consolidated financial statements, has issued an attestation report on the Company’s internal control over financial reporting.
Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, as amended) occurred during the fourth quarter of the one-year period covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

94

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 
The Shareholders and Board of Directors of Welltower Inc. 
Opinion on Internal Control over Financial reporting
We have audited Welltower Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the “COSO Criteria”). In our opinion, Welltower Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on the COSO Criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Welltower Inc. and subsidiaries as of December 31, 2018 and 2017, the related consolidated statements of comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedules listed in the index at Item 15(a) and our report dated February 25, 2019 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting 
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
/s/  Ernst & Young LLP
 
Toledo, Ohio
February 25, 2019
Item 9B. Other Information
None.

95

PART III 
Item 10.  Directors, Executive Officers and Corporate Governance 
The information required by this Item is incorporated herein by reference to the information under the headings “Election of Directors,” “Corporate Governance,” “Executive Officers,” and “Security Ownership of Directors and Management and Certain Beneficial Owners — Section 16(a) Beneficial Ownership Reporting Compliance” in our definitive proxy statement, which will be filed with the Securities and Exchange Commission (the “Commission”) prior to May 1, 2019. 
We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and employees. The code is posted on the Internet at www.welltower.com/investors/governance. Any amendment to, or waivers from, the code that relate to any officer or director of the company will be promptly disclosed on the Internet at www.welltower.com. 
In addition, the Board has adopted charters for the Audit, Compensation and Nominating/Corporate Governance Committees. These charters are posted on the Internet at www.welltower.com/investors/governance.  Please refer to “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive Summary – Corporate Governance” in the Annual Report on Form 10-K for further discussion of corporate governance. 
The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive textual reference only. 
Item 11.  Executive Compensation 
The information required by this Item is incorporated herein by reference to the information under the headings “Executive Compensation” and “Director Compensation” in our definitive proxy statement, which will be filed with the Commission prior to May 1, 2019.
Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 
The information required by this Item is incorporated herein by reference to the information under the headings “Security Ownership of Directors and Management and Certain Beneficial Owners” and “Equity Compensation Plan Information” in our definitive proxy statement, which will be filed with the Commission prior to May 1, 2019.
Item 13.  Certain Relationships and Related Transactions and Director Independence
The information required by this Item is incorporated herein by reference to the information under the headings “Corporate Governance — Independence and Meetings” and “Security Ownership of Directors and Management and Certain Beneficial Owners — Certain Relationships and Related Transactions” in our definitive proxy statement, which will be filed with the Commission prior to May 1, 2019.
Item 14.  Principal Accounting Fees and Services
The information required by this Item is incorporated herein by reference to the information under the heading “Ratification of the Appointment of the Independent Registered Public Accounting Firm” in our definitive proxy statement, which will be filed with the Commission prior to May 1, 2019.

96

PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)1.
Our Consolidated Financial Statements are included in Part II, Item 8:  
Report of Independent Registered Public Accounting Firm
61
Consolidated Balance Sheets – December 31, 2018 and 2017
62
Consolidated Statements of  Comprehensive Income — Years ended  December 31, 2018, 2017 and  2016
63
Consolidated Statements of  Equity — Years ended  December 31, 2018, 2017 and  2016
65
Consolidated Statements of  Cash Flows — Years ended  December 31, 2018, 2017 and  2016
66
Notes to Consolidated Financial Statements
67
 
2.
The following Financial Statement Schedules are included beginning on page 105: 
III – Real Estate and Accumulated Depreciation
IV – Mortgage Loans on Real Estate 
The financial statement schedule required by Item15(a) (Schedule II, Valuation and Qualifying Accounts) is included in Item 8 of this Annual Report on Form 10-K. 
(b)
Exhibits:
The exhibits listed below are either filed with this Form 10-K or incorporated by reference in accordance with Rule 12b-32 of the Securities Exchange Act of 1934.




















97

2.1
Agreement and Plan of Merger, dated as of April 25, 2018, by and among the Company, Potomac Acquisition LLC, Quality Care Properties, Inc. and certain subsidiaries of Quality Care Properties, Inc. (filed with the Commission as Exhibit 2.1 to the Company’s Form 8-K filed April 26, 2018 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(a)     Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(b)     Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(c)      Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed June 13, 2003 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(d)     Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.9 to the Company’s Form 10-Q filed August 9, 2007 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(e)      Certificate of Change of Location of Registered Office and of Registered Agent of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-Q filed August 6, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(f)      Certificate of Designation of 6.50% Series I Cumulative Convertible Perpetual Preferred Stock of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed March 7, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(g)      Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed May 10, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(h)     Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed May 6, 2014 (File No. 001-08923), and incorporated herein by reference thereto).
3.1(i)       Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed September 30, 2015 (File No. 001-08923), and incorporated herein by reference thereto).
3.2
Sixth Amended and Restated By-laws of the Company (filed with the Commission as Exhibit 3.2 to the Company’s Form 8-K filed December 4, 2018 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(a)     Indenture, dated as of March 15, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed March 15, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(b)     Supplemental Indenture No. 1, dated as of March 15, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 15, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(c)      Amendment No. 1 to Supplemental Indenture No. 1, dated as of June 18, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed June 18, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(d)     Supplemental Indenture No. 2, dated as of April 7, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed April 7, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(e)      Amendment No. 1 to Supplemental Indenture No. 2, dated as of June 8, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed June 8, 2010 (File No. 001-08923), and incorporated herein by reference thereto).

98

4.1(f)      Supplemental Indenture No. 3, dated as of September 10, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed September 13, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(g)      Supplemental Indenture No. 4, dated as of November 16, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed November 16, 2010 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(h)     Supplemental Indenture No. 5, dated as of March 14, 2011, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 14, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(i)       Supplemental Indenture No. 6, dated as of April 3, 2012, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed April 4, 2012 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(j)      Supplemental Indenture No. 7, dated as of December 6, 2012, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed December 11, 2012 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(k)     Supplemental Indenture No. 8, dated as of October 7, 2013, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed October 9, 2013 (File No. 001-08923), and incorporated herein by reference thereto).  
4.1(l)       Supplemental Indenture No. 9, dated as of November 20, 2013, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed November 20, 2013 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(m)    Supplemental Indenture No. 10, dated as of November 25, 2014, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed November 25, 2014 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(n)     Supplemental Indenture No. 11, dated as of May 26, 2015, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed May 27, 2015 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(o)     Amendment No. 1 to Supplemental Indenture No. 11, dated as of October 19, 2015, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed October 20, 2015 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(p)     Supplemental Indenture No. 12, dated as of March 1, 2016, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 3, 2016 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(q)
Supplemental Indenture No. 13, dated as of April 10, 2018, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed April 10, 2018 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(r)
Supplemental Indenture No. 14, dated as of August 16, 2018, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed August 16, 2018 (File No. 001-08923), and incorporated herein by reference thereto).
4.1(s)
Supplemental Indenture No. 15, dated as of February 15, 2019 between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company's Form 8-K filed February 15, 2019 (File No. 001-08923), and incorporated herein by reference thereto).
4.2          Form of Indenture for Senior Subordinated Debt Securities (filed with the Commission as Exhibit 4.2 to the Company’s Form S-3 (File No. 333-2250004) filed May 17, 2018, and incorporated herein by reference thereto).
4.3          Form of Indenture for Junior Subordinated Debt Securities (filed with the Commission as Exhibit 4.3 to the Company’s Form S-3 (File No. 333-2250004) filed May 17, 2018, and incorporated herein by reference thereto).

99

4.4(a)     Indenture, dated as of November 25, 2015, by and among HCN Canadian Holdings-1 LP, the Company and BNY Trust Company of Canada (filed with the Commission as Exhibit 4.5(a) to the Company’s Form 10-K  filed February 18, 2016 (File No. 001-08923), and incorporated herein by reference thereto).
4.4(b)     First Supplemental Indenture, dated as of November 25, 2015, by and among HCN Canadian Holdings-1 LP, the Company and BNY Trust Company of Canada (filed with the Commission as Exhibit 4.5(b) to the Company’s Form 10-K filed February 18, 2016 (File No. 001-08923), and incorporated herein by reference thereto).
10.1
Credit Agreement dated as of July 19, 2018 by and among the Company; the lenders listed therein; KeyBank National Association, as administrative agent, L/C issuer and a swingline lender; Bank of America, N.A. and JPMorgan Chase Bank, N.A., as co-syndication agents; Deutsche Bank Securities Inc., as documentation agent; Merrill Lynch, Pierce, Fenner & Smith Incorporated, JPMorgan Chase Bank, N.A., KeyBanc Capital Markets Inc. and Deutsche Bank Securities Inc., as U.S. joint lead arrangers; Merrill Lynch, Pierce, Fenner & Smith Incorporated, JPMorgan Chase Bank, N.A., KeyBanc Capital Markets Inc. and RBC Capital Markets, as Canadian joint lead arrangers; and Merrill Lynch, Pierce, Fenner & Smith Incorporated and JPMorgan Chase Bank, N.A., as joint book runners (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed July 24, 2018 (File No. 001-08923), and incorporated herein by reference thereto).
10.2        Equity Purchase Agreement, dated as of February 28, 2011, by and among the Company, FC-GEN Investment, LLC and FC-GEN Operations Investment, LLC (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed February 28, 2011 (File No. 001-08923), and incorporated herein by reference thereto).
10.3(a)   Amended and Restated Health Care REIT, Inc. 2005 Long-Term Incentive Plan (filed with the Commission as Appendix A to the Company’s Proxy Statement for the 2009 Annual Meeting of Stockholders, filed March 25, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*
10.3(b)   Form of Stock Option Agreement (with Dividend Equivalent Rights) for Executive Officers under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.9 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*
10.3(c)   Form of Stock Option Agreement (without Dividend Equivalent Rights) for Executive Officers under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*
10.3(d)   Form of Restricted Stock Agreement for the Chief Executive Officer under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*
10.3(e)   Form of Restricted Stock Agreement for Executive Officers under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.4 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*
10.4(a)   Amended and Restated Employment Agreement, dated January 3, 2017, between the Company and Thomas J. DeRosa (filed with the Commission as Exhibit 10.4(a) to the Company’s Form 10-K filed February 22, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*
10.4(b)   Performance-Based Restricted Stock Unit Grant Agreement, dated effective as of July 30, 2014, between the Company and Thomas J. DeRosa (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed November 4, 2014 (File No. 001-08923), and incorporated herein by reference thereto).*
10.5(a)
Transfer Letter, dated August 17, 2018, by and between John A. Goodey and the Company (filed with the Commission as Exhibit 10.1 to the Company’s Form 10-Q filed October 30, 2018 (File No. 001-08923), and incorporated herein by reference thereto).
10.5(b)
Letter Agreement, dated January 30, 2019, by and between John A. Goodey and the Company.*
10.6       Amended and Restated Employment Agreement, dated June 16, 2017, by and between the Company and Mercedes T. Kerr (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed July 28, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*

100

10.7      Form of Indemnification Agreement between the Company and each director, executive officer and officer of the Company (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed February 18, 2005 (File No. 001-08923), and incorporated herein by reference thereto).*
10.8      Summary of Director Compensation.*
10.9(a) Health Care REIT, Inc. 2015-2017 Long-Term Incentive Program (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed August 4, 2015 (File No. 001-08923), and incorporated herein by reference thereto).*
10.9(b) Form of Performance Restricted Stock Unit Award Agreement under the 2015-2017 Long-Term Incentive Program (filed with the Commission as Exhibit 10.4 to the Company’s Form 10-Q filed August 4, 2015 (File No. 001-08923), and incorporated herein by reference thereto).*
10.10(a) Welltower Inc. 2016 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed May 10, 2016 (File No. 001-08923), and incorporated herein by reference thereto).*
10.10(b) Form of Restricted Stock Grant Notice for Executive Officers under the 2016 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.14(b) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.10(c) Form of Restricted Stock Grant Notice for Senior Vice Presidents under the 2016 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.14(c) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.10(d) Form of Deferred Stock Unit Grant Agreement for Non-Employee Directors under the 2016 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.14(d) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.11(a) Welltower Inc. 2016-2018 Long-Term Incentive Program (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed August 2, 2016 (File No. 001-08923), and incorporated herein by reference thereto).*
10.11(b) Form of Performance Restricted Stock Unit Award Agreement under the 2016-2018 Long-Term Incentive Program (filed with the Commission as Exhibit 10.15(b) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.12(a) Welltower Inc. 2017-2019 Long-Term Incentive Program (filed with the Commission as Exhibit 10.4 to the Company’s Form 10-Q filed May 5, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*
10.12(b) Form of Award Notice under the 2017-2019 Long-Term Incentive Program (filed with the Commission as Exhibit 10.16(b) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.12(c) Welltower Inc. 2017-2019 Long-Term Incentive Program – Bridge 1 (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed November 7, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*
10.12(d) Form of Award Notice under the 2017-2019 Long Term Incentive Program - Bridge 1 (filed with the Commission as Exhibit 10.16(d) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.12(e) Welltower Inc. 2017-2019 Long-Term Incentive Program – Bridge 2 (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed November 7, 2017 (File No. 001-08923), and incorporated herein by reference thereto).*
10.12(f) Form of Award Notice under the 2017-2019 Long Term Incentive Program - Bridge 2 (filed with the Commission as Exhibit 10.16(f) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.13(a) Welltower Inc. 2018-2020 Long-Term Incentive Program (filed with the Commission as Exhibit 10.17(a) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*
10.13(b) Form of Restricted Stock Unit Award Agreement under the 2018-2020 Long-Term Incentive Program (filed with the Commission as Exhibit 10.17(b) to the Company’s Form 10-K filed February 28, 2018 (File No. 001-08923), and incorporated herein by reference thereto).*

101

10.14(a)
Welltower Inc. 2019-2021 Long-Term Incentive Program.*
10.14(b) Form of Restricted Stock Unit Award Agreement under the 2019-2021 Long-Term Incentive Program.*
21           Subsidiaries of the Company.
23           Consent of Ernst & Young LLP, independent registered public accounting firm.
24           Powers of Attorney.
31.1        Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2        Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1        Certification pursuant to 18 U.S.C. Section 1350 by Chief Executive Officer.
32.2        Certification pursuant to 18 U.S.C. Section 1350 by Chief Financial Officer.
101.INS     XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
101.PRE    XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF    XBRL Taxonomy Extension Definition Linkbase Document
                           
 
*
 
Management Contract or Compensatory Plan or Arrangement.
Item 16.  Form 10-K Summary
None.

102

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 
Date:  February 25, 2019
WELLTOWER INC. 
By: /s/  Thomas J. DeRosa                                             
Thomas J. DeRosa,
Chief Executive Officer and Director 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 25, 2019 by the following persons on behalf of the Registrant and in the capacities indicated. 
/s/  Jeffrey H. Donahue **
 
/s/  Johnese Spisso **
Jeffrey H. Donahue, Chairman of the Board
 
Johnese Spisso, Director
 
 
 
/s/  Kenneth J. Bacon **
 
/s/  R. Scott Trumbull **
Kenneth J. Bacon, Director
 
R. Scott Trumbull, Director
 
 
 
/s/  Karen DeSalvo **
 
/s/  Gary Whitelaw **
Karen DeSalvo, Director
 
Gary Whitelaw, Director
 
 
 
/s/  Geoffrey G. Meyers  **
 
/s/  Thomas J. DeRosa **
Geoffrey G. Meyers, Director
 
Thomas J. DeRosa, Chief Executive Officer and Director
 
 
(Principal Executive Officer)
 
 
 
/s/  Timothy J. Naughton  **
 
/s/  John A. Goodey **
Timothy J. Naughton, Director
 
John A. Goodey, Executive Vice President and Chief
 
 
           Financial Officer (Principal Financial Officer)
 
 
 
/s/  Sharon M. Oster **
 
/s/  Joshua T. Fieweger**
Sharon M. Oster, Director
 
Joshua T. Fieweger, Vice President and
 
 
Controller (Principal Accounting Officer)
 
 
 
/s/  Judith C. Pelham **
 
**By:     /s/  Thomas J. DeRosa          
Judith C. Pelham, Director
 
                           Thomas J. DeRosa, Attorney-in-Fact
 
 
 
/s/  Sergio D. Rivera **
 
 
Sergio D. Rivera, Director
 
 

103

Welltower Inc.
 
 
Schedule III
 
 
Real Estate and Accumulated Depreciation
 
 
December 31, 2018
 
 
(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Seniors Housing Operating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acton, MA
 
$
—

 
$
—

 
$
31,346

 
$
1,691

 
$
24

 
$
33,013

 
$
6,127

 
2013
 
2000
 
10 Devon Drive
Adderbury, UK
 
—

 
2,144

 
12,549

 
—

 
2,144

 
12,549

 
621

 
2015
 
2017
 
Banbury Road
Albuquerque, NM
 
—

 
1,270

 
20,837

 
2,139

 
1,354

 
22,892

 
6,475

 
2010
 
1984
 
500 Paisano St NE
Alexandria, VA
 
—

 
8,280

 
50,914

 
—

 
8,280

 
50,914

 
1,055

 
2016
 
2018
 
5550 Cardinal Place
Alhambra, CA
 
—

 
600

 
6,305

 
9,067

 
600

 
15,372

 
2,124

 
2011
 
1923
 
1118 N. Stoneman Ave.
Altrincham, UK
 
—

 
4,244

 
25,187

 
1,700

 
4,388

 
26,743

 
5,790

 
2012
 
2009
 
295 Hale Road
Amherstview, ON
 
486

 
473

 
4,446

 
508

 
493

 
4,934

 
799

 
2015
 
1974
 
4567 Bath Road
Anderson, SC
 
—

 
710

 
6,290

 
456

 
710

 
6,746

 
3,524

 
2003
 
1986
 
311 Simpson Rd.
Apple Valley, CA
 
—

 
480

 
16,639

 
262

 
486

 
16,895

 
4,633

 
2010
 
1999
 
11825 Apple Valley Rd.
Arlington, VA
 
—

 
8,385

 
31,198

 
14,030

 
8,385

 
45,228

 
6,530

 
2017
 
1992
 
900 N Taylor Street
Arlington, VA
 
—

 
—

 
2,338

 
—

 
—

 
2,338

 
89

 
2018
 
1992
 
900 N Taylor Street
Arnprior, ON
 
147

 
788

 
6,283

 
422

 
810

 
6,683

 
1,505

 
2013
 
1991
 
15 Arthur Street
Atlanta, GA
 
—

 
2,100

 
20,603

 
1,532

 
2,197

 
22,038

 
4,140

 
2014
 
2000
 
1000 Lenox Park Blvd NE
Austin, TX
 
—

 
1,560

 
21,413

 
511

 
1,560

 
21,924

 
2,984

 
2014
 
2013
 
11330 Farrah Lane
Austin, TX
 
—

 
4,200

 
74,850

 
746

 
4,200

 
75,596

 
8,063

 
2015
 
2014
 
4310 Bee Caves Road
Avon, CT
 
—

 
1,550

 
30,571

 
4,211

 
1,590

 
34,742

 
10,488

 
2011
 
1998
 
101 Bickford Extension
Azusa, CA
 
—

 
570

 
3,141

 
7,872

 
570

 
11,013

 
3,286

 
1998
 
1953
 
125 W. Sierra Madre Ave.
Bagshot, UK
 
—

 
4,960

 
29,881

 
2,920

 
5,133

 
32,628

 
7,189

 
2012
 
2009
 
14 - 16 London Road
Banstead, UK
 
—

 
6,695

 
55,113

 
4,444

 
6,956

 
59,296

 
12,237

 
2012
 
2005
 
Croydon Lane
Basingstoke, UK
 
—

 
3,420

 
18,853

 
1,014

 
3,535

 
19,752

 
2,578

 
2014
 
2012
 
Grove Road
Basking Ridge, NJ
 
—

 
2,356

 
37,710

 
1,623

 
2,395

 
39,294

 
8,040

 
2013
 
2002
 
404 King George Road
Bassett, UK
 
—

 
4,874

 
32,304

 
4,413

 
5,051

 
36,540

 
8,138

 
2013
 
2006
 
111 Burgess Road
Bath, UK
 
—

 
2,696

 
11,876

 
—

 
2,696

 
11,876

 
571

 
2015
 
2017
 
Clarks Way, Rush Hill
Baton Rouge, LA
 
8,838

 
790

 
29,436

 
1,139

 
842

 
30,523

 
6,086

 
2013
 
2009
 
9351 Siegen Lane
Beaconsfield, UK
 
—

 
5,566

 
50,952

 
2,287

 
5,765

 
53,040

 
10,591

 
2013
 
2009
 
30-34 Station Road
Beaconsfield, QC
 
—

 
1,149

 
17,484

 
641

 
1,225

 
18,049

 
4,937

 
2013
 
2008
 
505 Elm Avenue
Bedford, NH
 
—

 
2,527

 
28,748

 
2,299

 
2,551

 
31,023

 
5,760

 
2011
 
2012
 
5 Corporate Drive
Bee Cave, TX
 
—

 
1,820

 
21,084

 
819

 
1,820

 
21,903

 
2,369

 
2016
 
2014
 
14058 A Bee Cave Parkway
Bellevue, WA
 
—

 
2,800

 
19,004

 
2,183

 
2,816

 
21,171

 
5,325

 
2013
 
1998
 
15928 NE 8th Street
Belmont, CA
 
—

 
3,000

 
23,526

 
2,395

 
3,000

 
25,921

 
6,832

 
2011
 
1971
 
1301 Ralston Avenue
Belmont, CA
 
—

 
—

 
35,300

 
2,308

 
157

 
37,451

 
8,026

 
2013
 
2002
 
1010 Alameda de Las Pulgas
Berkeley, CA
 
12,195

 
3,050

 
32,677

 
5,086

 
3,050

 
37,763

 
4,759

 
2016
 
1966
 
2235 Sacramento Street
Bethesda, MD
 
—

 
—

 
45,309

 
677

 
3

 
45,983

 
9,551

 
2013
 
2009
 
8300 Burdett Road
Bethesda, MD
 
—

 
—

 
45

 
682

 
—

 
727

 
136

 
2013
 
2009
 
8300 Burdett Road
Bethesda, MD
 
—

 
—

 
212

 
907

 
—

 
1,119

 
319

 
2013
 
2009
 
8300 Burdett Road
Billerica, MA
 
—

 
1,619

 
21,381

 
867

 
1,624

 
22,243

 
3,170

 
2015
 
2000
 
20 Charnstaffe Lane
Birmingham, UK
 
—

 
1,480

 
13,014

 
654

 
1,530

 
13,618

 
776

 
2015
 
2016
 
47 Bristol Road South


(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Seniors Housing Operating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Birmingham, UK
 
—

 
2,807

 
11,313

 
605

 
2,902

 
11,823

 
645

 
2015
 
2016
 
134 Jockey Road
Blainville, QC
 
—

 
2,077

 
8,902

 
429

 
2,156

 
9,252

 
2,925

 
2013
 
2008
 
50 des Chateaux Boulevard
Bloomfield Hills, MI
 
—

 
2,000

 
35,662

 
1,067

 
2,133

 
36,596

 
7,455

 
2013
 
2009
 
6790 Telegraph Road
Boca Raton, FL
 
—

 
6,565

 
111,247

 
18,834

 
6,565

 
130,081

 
7,491

 
2018
 
1994
 
6343 Via De Sonrise Del Sur
Borehamwood, UK
 
—

 
5,367

 
41,937

 
2,246

 
5,584

 
43,966

 
9,285

 
2012
 
2003
 
Edgwarebury Lane
Bothell, WA
 
—

 
1,350

 
13,439

 
6,074

 
1,798

 
19,065

 
2,344

 
2015
 
1988
 
10605 NE 185th Street
Boulder, CO
 
—

 
2,994

 
27,458

 
2,271

 
3,022

 
29,701

 
7,497

 
2013
 
2003
 
3955 28th Street
Bournemouth, UK
 
—

 
5,527

 
42,547

 
2,338

 
5,725

 
44,687

 
9,186

 
2013
 
2008
 
42 Belle Vue Road
Braintree, MA
 
—

 
—

 
41,290

 
1,079

 
100

 
42,269

 
8,961

 
2013
 
2007
 
618 Granite Street
Brampton, ON
 
40,685

 
10,196

 
59,989

 
—

 
10,196

 
59,989

 
10,075

 
2015
 
2009
 
100 Ken Whillans Drive
Brick, NJ
 
—

 
1,170

 
17,372

 
1,530

 
1,211

 
18,861

 
4,186

 
2010
 
1998
 
515 Jack Martin Blvd
Brick, NJ
 
—

 
690

 
17,125

 
5,610

 
695

 
22,730

 
4,152

 
2010
 
1999
 
1594 Route 88
Bridgewater, NJ
 
—

 
1,730

 
48,201

 
1,562

 
1,767

 
49,726

 
10,329

 
2010
 
1999
 
2005 Route 22 West
Brighton, MA
 
9,686

 
2,100

 
14,616

 
1,712

 
2,135

 
16,293

 
4,736

 
2011
 
1995
 
50 Sutherland Road 
Brockport, NY
 
—

 
1,500

 
23,496

 
582

 
1,705

 
23,873

 
3,890

 
2015
 
1999
 
90 West Avenue
Brockville, ON
 
4,288

 
484

 
7,445

 
432

 
498

 
7,863

 
1,170

 
2015
 
1996
 
1026 Bridlewood Drive
Brookfield, CT
 
—

 
2,250

 
30,180

 
3,337

 
2,271

 
33,496

 
9,272

 
2011
 
1999
 
246A Federal Road 
Broomfield, CO
 
—

 
4,140

 
44,547

 
11,976

 
10,135

 
50,528

 
16,614

 
2013
 
2009
 
400 Summit Blvd
Brossard, QC
 
10,432

 
5,499

 
31,854

 
285

 
5,427

 
32,211

 
5,560

 
2015
 
1989
 
2455 Boulevard Rome
Buckingham, UK
 
—

 
2,979

 
13,880

 
744

 
3,080

 
14,523

 
1,882

 
2014
 
1883
 
Church Street
Buffalo Grove, IL
 
—

 
2,850

 
49,129

 
3,154

 
2,850

 
52,283

 
10,571

 
2012
 
2003
 
500 McHenry Road
Burbank, CA
 
—

 
4,940

 
43,466

 
2,067

 
4,940

 
45,533

 
10,721

 
2012
 
2002
 
455 E. Angeleno Avenue
Burbank, CA
 
19,237

 
3,610

 
50,817

 
3,983

 
3,610

 
54,800

 
5,663

 
2016
 
1985
 
2721 Willow Street
Burleson, TX
 
—

 
3,150

 
10,437

 
659

 
3,150

 
11,096

 
1,354

 
2012
 
2014
 
621 Old Highway 1187
Burlingame, CA
 
—

 
—

 
62,786

 
85

 
—

 
62,871

 
4,858

 
2016
 
2015
 
1818 Trousdale Avenue
Burlington, ON
 
11,514

 
1,309

 
19,311

 
623

 
1,338

 
19,905

 
4,321

 
2013
 
1990
 
500 Appleby Line
Burlington, MA
 
—

 
2,443

 
34,354

 
1,388

 
2,522

 
35,663

 
8,007

 
2013
 
2005
 
24 Mall Road
Burlington, MA
 
—

 
2,750

 
57,488

 
3,304

 
2,750

 
60,792

 
6,120

 
2016
 
2011
 
50 Greenleaf Way
Bushey, UK
 
—

 
12,690

 
36,482

 
—

 
12,690

 
36,482

 
308

 
2015
 
2018
 
Elton House, Elton Way
Calgary, AB
 
11,323

 
2,252

 
37,415

 
1,286

 
2,298

 
38,655

 
8,580

 
2013
 
2003
 
20 Promenade Way SE
Calgary, AB
 
12,909

 
2,793

 
41,179

 
1,065

 
2,843

 
42,194

 
9,176

 
2013
 
1998
 
80 Edenwold Drive NW
Calgary, AB
 
10,237

 
3,122

 
38,971

 
1,241

 
3,184

 
40,150

 
8,632

 
2013
 
1998
 
150 Scotia Landing NW
Calgary, AB
 
21,247

 
3,431

 
28,983

 
1,676

 
3,498

 
30,592

 
5,754

 
2013
 
1989
 
9229 16th Street SW
Calgary, AB
 
24,199

 
2,385

 
36,776

 
1,152

 
2,427

 
37,886

 
5,774

 
2015
 
2006
 
2220-162nd Avenue SW
Camberley, UK
 
—

 
2,654

 
5,736

 
21,500

 
8,150

 
21,937

 
1,230

 
2014
 
2016
 
Fernhill Road
Cardiff, UK
 
—

 
3,191

 
12,566

 
884

 
3,307

 
13,334

 
3,647

 
2013
 
2007
 
127 Cyncoed Road
Cardiff by the Sea, CA
 
37,025

 
5,880

 
64,711

 
4,243

 
5,880

 
68,954

 
15,985

 
2011
 
2009
 
3535 Manchester Avenue
Carol Stream, IL
 
—

 
1,730

 
55,048

 
2,104

 
1,730

 
57,152

 
12,748

 
2012
 
2001
 
545 Belmont Lane
Carrollton, TX
 
—

 
4,280

 
31,444

 
1,041

 
4,280

 
32,485

 
4,207

 
2013
 
2010
 
2105 North Josey Lane
Cary, NC
 
—

 
740

 
45,240

 
744

 
740

 
45,984

 
8,360

 
2013
 
2009
 
1206 West Chatham Street
Cary, NC
 
—

 
6,112

 
70,008

 
8,355

 
6,112

 
78,363

 
3,652

 
2018
 
1999
 
300 Kildaire Woods Drive
Cedar Park, TX
 
—

 
1,750

 
15,664

 
1,162

 
1,750

 
16,826

 
1,215

 
2016
 
2015
 
800 C-Bar Ranch Trail
Cerritos, CA
 
—

 
—

 
27,494

 
6,570

 
—

 
34,064

 
6,011

 
2016
 
2002
 
11000 New Falcon Way

(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Seniors Housing Operating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charlottesville, VA
 
—

 
4,651

 
91,468

 
11,276

 
4,651

 
102,744

 
6,952

 
2018
 
1991
 
2610 Barracks Road
Chatham, ON
 
895

 
1,098

 
12,462

 
1,809

 
1,193

 
14,176

 
3,167

 
2015
 
1965
 
25 Keil Drive North
Chelmsford, MA
 
—

 
1,040

 
10,951

 
1,525

 
1,040

 
12,476

 
4,625

 
2003
 
1997
 
4 Technology Dr.
Chelmsford, MA
 
—

 
1,589

 
26,432

 
1,301

 
1,656

 
27,666

 
3,882

 
2015
 
1997
 
199 Chelmsford Street
Chertsey, UK
 
—

 
9,566

 
25,886

 
—

 
9,566

 
25,886

 
743

 
2015
 
2018
 
Bittams Lane
Chesterfield, MO
 
—

 
1,857

 
48,366

 
1,462

 
1,917

 
49,768

 
9,624

 
2013
 
2001
 
1880 Clarkson Road
Chorleywood, UK
 
—

 
5,636

 
43,191

 
3,864

 
5,833

 
46,858

 
10,193

 
2013
 
2007
 
High View, Rickmansworth Road
Chula Vista, CA
 
—

 
2,072

 
22,163

 
1,201

 
2,162

 
23,274

 
4,942

 
2013
 
2003
 
3302 Bonita Road
Church Crookham, UK
 
—

 
2,591

 
14,215

 
835

 
2,691

 
14,950

 
2,596

 
2014
 
2014
 
Bourley Road
Cincinnati, OH
 
—

 
2,060

 
109,388

 
13,733

 
2,080

 
123,101

 
26,921

 
2007
 
2010
 
5445 Kenwood Road
Citrus Heights, CA
 
—

 
2,300

 
31,876

 
726

 
2,300

 
32,602

 
8,987

 
2010
 
1997
 
7418 Stock Ranch Rd.
Claremont, CA
 
—

 
2,430

 
9,928

 
1,479

 
2,483

 
11,354

 
2,806

 
2013
 
2001
 
2053 North Towne Avenue
Cohasset, MA
 
—

 
2,485

 
26,147

 
1,919

 
2,493

 
28,058

 
6,009

 
2013
 
1998
 
125 King Street (Rt 3A)
Colleyville, TX
 
—

 
1,050

 
17,082

 
47

 
1,050

 
17,129

 
921

 
2016
 
2013
 
8100 Precinct Line Road
Colorado Springs, CO
 
—

 
800

 
14,756

 
1,980

 
1,026

 
16,510

 
3,610

 
2013
 
2001
 
2105 University Park Boulevard
Colts Neck, NJ
 
—

 
780

 
14,733

 
1,759

 
1,092

 
16,180

 
3,628

 
2010
 
2002
 
3 Meridian Circle
Concord, NH
 
—

 
720

 
21,164

 
852

 
789

 
21,947

 
5,450

 
2011
 
2001
 
300 Pleasant Street 
Coquitlam, BC
 
9,139

 
3,047

 
24,567

 
775

 
3,098

 
25,291

 
6,583

 
2013
 
1990
 
1142 Dufferin Street
Costa Mesa, CA
 
—

 
2,050

 
19,969

 
1,404

 
2,050

 
21,373

 
5,647

 
2011
 
1965
 
350 West Bay St
Crystal Lake, IL
 
—

 
875

 
12,461

 
1,482

 
971

 
13,847

 
3,480

 
2013
 
2001
 
751 E Terra Cotta Avenue
Dallas, TX
 
—

 
6,330

 
114,794

 
1,613

 
6,330

 
116,407

 
13,498

 
2015
 
2013
 
3535 N Hall Street
Danvers, MA
 
—

 
1,120

 
14,557

 
1,505

 
1,145

 
16,037

 
4,429

 
2011
 
2000
 
1 Veronica Drive
Danvers, MA
 
—

 
2,203

 
28,761

 
342

 
2,257

 
29,049

 
4,487

 
2015
 
1997
 
9 Summer Street
Davenport, IA
 
—

 
1,403

 
35,893

 
4,269

 
1,480

 
40,085

 
10,506

 
2006
 
2009
 
4500 Elmore Ave.
Decatur, GA
 
—

 
1,946

 
26,575

 
2,504

 
1,946

 
29,079

 
6,609

 
2013
 
1998
 
920 Clairemont Avenue
Denver, CO
 
—

 
2,910

 
35,838

 
1,827

 
2,971

 
37,604

 
9,558

 
2012
 
2007
 
8101 E Mississippi Avenue
Dix Hills, NY
 
—

 
3,808

 
39,014

 
1,861

 
3,947

 
40,736

 
8,624

 
2013
 
2003
 
337 Deer Park Road
Dollard-Des-Ormeaux, QC
 
—

 
1,957

 
14,431

 
538

 
2,039

 
14,887

 
4,786

 
2013
 
2008
 
4377 St. Jean Blvd
Dresher, PA
 
—

 
1,900

 
10,664

 
1,151

 
1,914

 
11,801

 
3,660

 
2013
 
2006
 
1650 Susquehanna Road
Dublin, OH
 
—

 
1,680

 
43,423

 
6,837

 
1,850

 
50,090

 
14,301

 
2010
 
1990
 
6470 Post Rd
Dublin, OH
 
—

 
1,169

 
25,345

 
47

 
1,169

 
25,392

 
2,232

 
2016
 
2015
 
4175 Stoneridge Lane
East Haven, CT
 
—

 
2,660

 
35,533

 
3,458

 
2,685

 
38,966

 
12,649

 
2011
 
2000
 
111 South Shore Drive 
East Meadow, NY
 
—

 
69

 
45,991

 
1,471

 
124

 
47,407

 
9,848

 
2013
 
2002
 
1555 Glen Curtiss Boulevard
East Setauket, NY
 
—

 
4,920

 
37,354

 
1,647

 
4,975

 
38,946

 
8,143

 
2013
 
2002
 
1 Sunrise Drive
Eastbourne, UK
 
—

 
4,145

 
33,744

 
1,554

 
4,298

 
35,145

 
7,685

 
2013
 
2008
 
6 Upper Kings Drive
Edgbaston, UK
 
—

 
2,720

 
13,969

 
722

 
2,812

 
14,599

 
1,490

 
2014
 
2015
 
Pershore Road
Edgewater, NJ
 
—

 
4,561

 
25,047

 
1,518

 
4,564

 
26,562

 
5,889

 
2013
 
2000
 
351 River Road
Edison, NJ
 
—

 
1,892

 
32,314

 
2,249

 
1,905

 
34,550

 
9,486

 
2013
 
1996
 
1801 Oak Tree Road
Edmonds, WA
 
—

 
1,650

 
24,449

 
4,823

 
1,672

 
29,250

 
3,548

 
2015
 
1976
 
21500 72nd Avenue West
Edmonton, AB
 
8,239

 
1,589

 
29,819

 
1,093

 
1,632

 
30,869

 
6,909

 
2013
 
1999
 
103 Rabbit Hill Court NW
Edmonton, AB
 
10,728

 
2,063

 
37,293

 
1,514

 
2,094

 
38,776

 
10,602

 
2013
 
1968
 
10015 103rd Avenue NW
Encinitas, CA
 
—

 
1,460

 
7,721

 
2,662

 
1,460

 
10,383

 
4,496

 
2000
 
1988
 
335 Saxony Rd.
Encino, CA
 
—

 
5,040

 
46,255

 
2,211

 
5,040

 
48,466

 
11,067

 
2012
 
2003
 
15451 Ventura Boulevard

(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Seniors Housing Operating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Englishtown, NJ
 
—

 
690

 
12,520

 
1,873

 
834

 
14,249

 
3,230

 
2010
 
1997
 
49 Lasatta Ave
Escondido, CA
 
—

 
1,520

 
24,024

 
1,323

 
1,520

 
25,347

 
6,708

 
2011
 
1987
 
1500 Borden Rd
Esher, UK
 
—

 
5,783

 
48,361

 
2,365

 
5,999

 
50,510

 
9,941

 
2013
 
2006
 
42 Copsem Lane
Fairfax, VA
 
—

 
19

 
2,678

 
312

 
53

 
2,956

 
941

 
2013
 
1991
 
9207 Arlington Boulevard
Fairfield, NJ
 
—

 
3,120

 
43,868

 
1,373

 
3,175

 
45,186

 
9,629

 
2013
 
1998
 
47 Greenbrook Road
Fairfield, CA
 
—

 
1,460

 
14,040

 
1,565

 
1,460

 
15,605

 
6,635

 
2002
 
1998
 
3350 Cherry Hills St.
Fareham, UK
 
—

 
3,408

 
17,970

 
1,077

 
3,536

 
18,919

 
2,887

 
2014
 
2012
 
Redlands Lane
Flossmoor, IL
 
—

 
1,292

 
9,496

 
1,835

 
1,339

 
11,284

 
3,068

 
2013
 
2000
 
19715 Governors Highway
Folsom, CA
 
—

 
1,490

 
32,754

 
84

 
1,490

 
32,838

 
4,420

 
2015
 
2014
 
1574 Creekside Drive
Fort Worth, TX
 
—

 
1,740

 
19,799

 
1,089

 
1,740

 
20,888

 
2,265

 
2016
 
2014
 
7001 Bryant Irvin Road
Franklin, MA
 
—

 
2,430

 
30,597

 
2,564

 
2,467

 
33,124

 
6,623

 
2013
 
1999
 
4 Forge Hill Road
Fremont, CA
 
—

 
3,400

 
25,300

 
3,331

 
3,456

 
28,575

 
10,193

 
2005
 
1987
 
2860 Country Dr.
Frome, UK
 
—

 
2,720

 
14,813

 
832

 
2,812

 
15,553

 
2,122

 
2014
 
2012
 
Welshmill Lane
Fullerton, CA
 
—

 
1,964

 
19,989

 
883

 
1,998

 
20,838

 
4,718

 
2013
 
2008
 
2226 North Euclid Street
Gahanna, OH
 
—

 
772

 
11,214

 
1,609

 
787

 
12,808

 
2,765

 
2013
 
1998
 
775 East Johnstown Road
Gilbert, AZ
 
15,436

 
2,160

 
28,246

 
1,429

 
2,176

 
29,659

 
8,274

 
2013
 
2008
 
580 S. Gilbert Road
Gilroy, CA
 
—

 
760

 
13,880

 
24,966

 
1,588

 
38,018

 
11,161

 
2006
 
2007
 
7610 Isabella Way
Glen Cove, NY
 
—

 
4,594

 
35,236

 
1,877

 
4,643

 
37,064

 
9,193

 
2013
 
1998
 
39 Forest Avenue
Glenview, IL
 
—

 
2,090

 
69,288

 
3,353

 
2,090

 
72,641

 
15,745

 
2012
 
2001
 
2200 Golf Road
Golden Valley, MN
 
—

 
1,520

 
33,513

 
1,383

 
1,602

 
34,814

 
7,025

 
2013
 
2005
 
4950 Olson Memorial Highway
Granbury, TX
 
—

 
2,040

 
30,670

 
651

 
2,040

 
31,321

 
6,325

 
2011
 
2009
 
100 Watermark Boulevard
Greenville, SC
 
—

 
310

 
4,750

 
36

 
310

 
4,786

 
1,927

 
2004
 
1997
 
23 Southpointe Dr.
Grimsby, ON
 
—

 
636

 
5,617

 
271

 
649

 
5,875

 
990

 
2015
 
1991
 
84 Main Street East
Grosse Pointe Woods, MI
 
—

 
950

 
13,662

 
611

 
950

 
14,273

 
2,835

 
2013
 
2006
 
1850 Vernier Road
Grosse Pointe Woods, MI
 
—

 
1,430

 
31,777

 
1,118

 
1,435

 
32,890

 
6,544

 
2013
 
2005
 
21260 Mack Avenue
Grove City, OH
 
36,420

 
3,575

 
85,764

 
1,420

 
3,575

 
87,184

 
15

 
2018
 
2017
 
3717 Orders Road
Guelph, ON
 
3,985

 
1,190

 
7,597

 
407

 
1,224

 
7,970

 
1,551

 
2015
 
1978
 
165 Cole Road
Guildford, UK
 
—

 
5,361

 
56,494

 
2,457

 
5,542

 
58,770

 
11,811

 
2013
 
2006
 
Astolat Way, Peasmarsh
Gurnee, IL
 
—

 
890

 
27,931

 
2,110

 
935

 
29,996

 
5,768

 
2013
 
2002
 
500 North Hunt Club Road
Haddonfield, NJ
 
—

 
520

 
16,363

 
22

 
527

 
16,378

 
1,796

 
2011
 
2015
 
132 Warwick Road
Hamden, CT
 
—

 
1,460

 
24,093

 
1,912

 
1,493

 
25,972

 
7,593

 
2011
 
1999
 
35 Hamden Hills Drive 
Hampshire, UK
 
—

 
4,172

 
26,035

 
1,185

 
4,322

 
27,070

 
5,857

 
2013
 
2006
 
22-26 Church Road
Haverford, PA
 
—

 
1,880

 
33,993

 
1,305

 
1,885

 
35,293

 
7,263

 
2010
 
2000
 
731 Old Buck Lane
Haverhill, MA
 
—

 
1,720

 
50,046

 
1,165

 
1,729

 
51,202

 
7,876

 
2015
 
1997
 
254 Amesbury Road
Henderson, NV
 
—

 
880

 
29,809

 
994

 
897

 
30,786

 
6,451

 
2011
 
2009
 
1935 Paseo Verde Parkway
Henderson, NV
 
—

 
1,190

 
11,600

 
968

 
1,253

 
12,505

 
3,765

 
2013
 
2008
 
1555 West Horizon Ridge Parkway
High Wycombe, UK
 
—

 
3,567

 
13,422

 
—

 
3,567

 
13,422

 
622

 
2015
 
2017
 
The Row Lane End
Highland Park, IL
 
—

 
2,250

 
25,313

 
1,378

 
2,265

 
26,676

 
6,466

 
2013
 
2005
 
1601 Green Bay Road
Hingham, MA
 
—

 
1,440

 
32,292

 
269

 
1,444

 
32,557

 
4,511

 
2015
 
2012
 
1 Sgt. William B Terry Drive
Holbrook, NY
 
—

 
3,957

 
35,337

 
1,819

 
4,021

 
37,092

 
7,637

 
2013
 
2001
 
320 Patchogue Holbrook Road
Horley, UK
 
—

 
2,332

 
12,144

 
776

 
2,418

 
12,834

 
2,253

 
2014
 
2014
 
Court Lodge Road
Houston, TX
 
—

 
3,830

 
55,674

 
6,995

 
3,830

 
62,669

 
15,150

 
2012
 
1998
 
2929 West Holcombe Boulevard
Houston, TX
 
—

 
1,750

 
15,603

 
1,531

 
1,750

 
17,134

 
1,328

 
2016
 
2014
 
10120 Louetta Road

(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Seniors Housing Operating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Houston, TX
 
—

 
960

 
16,151

 
—

 
960

 
16,151

 
7,703

 
2011
 
1995
 
10225 Cypresswood Dr
Howell, NJ
 
8,493

 
1,066

 
21,577

 
936

 
1,077

 
22,502

 
4,782

 
2010
 
2007
 
100 Meridian Place
Huntington Beach, CA
 
—

 
3,808

 
31,172

 
2,573

 
3,886

 
33,667

 
8,390

 
2013
 
2004
 
7401 Yorktown Avenue
Hutchinson, KS
 
—

 
600

 
10,590

 
324

 
604

 
10,910

 
3,986

 
2004
 
1997
 
2416 Brentwood
Irving, TX
 
—

 
1,030

 
6,823

 
1,332

 
1,030

 
8,155

 
2,320

 
2007
 
1999
 
8855 West Valley Ranch Parkway
Johns Creek, GA
 
—

 
1,580

 
23,285

 
827

 
1,588

 
24,104

 
5,111

 
2013
 
2009
 
11405 Medlock Bridge Road
Kanata, ON
 
—

 
1,689

 
28,670

 
87

 
1,663

 
28,783

 
6,073

 
2012
 
2005
 
70 Stonehaven Drive
Kansas City, MO
 
—

 
1,820

 
34,898

 
5,057

 
1,856

 
39,919

 
11,822

 
2010
 
1980
 
12100 Wornall Road
Kansas City, MO
 
5,265

 
1,930

 
39,997

 
4,923

 
1,963

 
44,887

 
13,359

 
2010
 
1986
 
6500 North Cosby Ave
Kansas City, MO
 
—

 
541

 
23,962

 
274

 
548

 
24,229

 
3,142

 
2015
 
2014
 
6460 North Cosby Avenue
Kelowna, BC
 
5,190

 
2,688

 
13,647

 
1,125

 
2,739

 
14,721

 
3,777

 
2013
 
1999
 
863 Leon Avenue
Kennebunk, ME
 
—

 
2,700

 
30,204

 
5,353

 
3,200

 
35,057

 
12,239

 
2013
 
2006
 
One Huntington Common Drive
Kennett Square, PA
 
—

 
1,050

 
22,946

 
356

 
1,092

 
23,260

 
4,837

 
2010
 
2008
 
301 Victoria Gardens Dr.
Kingston, ON
 
4,202

 
1,030

 
11,416

 
844

 
1,060

 
12,230

 
1,768

 
2015
 
1983
 
181 Ontario Street
Kingwood, TX
 
—

 
480

 
9,777

 
1,096

 
480

 
10,873

 
2,698

 
2011
 
1999
 
22955 Eastex Freeway
Kingwood, TX
 
—

 
1,683

 
24,207

 
2,465

 
1,683

 
26,672

 
2,493

 
2017
 
2012
 
24025 Kingwood Place
Kirkland, WA
 
24,600

 
3,450

 
38,709

 
1,204

 
3,523

 
39,840

 
8,936

 
2011
 
2009
 
14 Main Street South
Kitchener, ON
 
1,327

 
708

 
2,744

 
111

 
650

 
2,913

 
764

 
2013
 
1979
 
164 - 168 Ferfus Avenue
Kitchener, ON
 
4,293

 
1,130

 
9,939

 
417

 
1,163

 
10,323

 
2,398

 
2013
 
1988
 
20 Fieldgate Street
Kitchener, ON
 
3,271

 
1,093

 
7,327

 
346

 
1,112

 
7,654

 
2,201

 
2013
 
1964
 
290 Queen Street South
Kitchener, ON
 
12,164

 
1,341

 
13,939

 
2,763

 
1,324

 
16,719

 
3,178

 
2016
 
2003
 
1250 Weber Street E
La Palma, CA
 
—

 
2,950

 
16,591

 
1,313

 
2,973

 
17,881

 
3,857

 
2013
 
2003
 
5321 La Palma Avenue
Lafayette Hill, PA
 
—

 
1,750

 
11,848

 
2,311

 
1,867

 
14,042

 
3,981

 
2013
 
1998
 
429 Ridge Pike
Laguna Hills, CA
 
—

 
12,820

 
75,926

 
17,135

 
12,820

 
93,061

 
12,877

 
2016
 
1988
 
24903 Moulton Parkway
Laguna Woods, CA
 
—

 
11,280

 
76,485

 
12,253

 
11,280

 
88,738

 
12,298

 
2016
 
1987
 
24441 Calle Sonora
Laguna Woods, CA
 
—

 
9,150

 
57,842

 
8,919

 
9,150

 
66,761

 
9,651

 
2016
 
1986
 
24962 Calle Aragon
Lake Zurich, IL
 
—

 
1,470

 
9,830

 
3,002

 
1,470

 
12,832

 
4,506

 
2011
 
2007
 
550 America Court
Lancaster, CA
 
—

 
700

 
15,295

 
781

 
712

 
16,064

 
4,731

 
2010
 
1999
 
43051 15th St. West
Laval, QC
 
21,982

 
2,105

 
32,161

 
3,051

 
2,105

 
35,212

 
721

 
2018
 
2005
 
269, boulevard Ste. Rose
Laval, QC
 
4,283

 
2,383

 
5,968

 
550

 
2,383

 
6,518

 
136

 
2018
 
1989
 
263, boulevard Ste. Rose
Lawrenceville, GA
 
—

 
1,500

 
29,003

 
741

 
1,529

 
29,715

 
6,432

 
2013
 
2008
 
1375 Webb Gin House Road
Leatherhead, UK
 
—

 
4,682

 
17,835

 
—

 
4,682

 
17,835

 
718

 
2015
 
2017
 
Rectory Lane
Lecanto, FL
 
—

 
200

 
6,900

 
371

 
200

 
7,271

 
2,705

 
2004
 
1986
 
2341 W. Norvell Bryant Hwy.
Lenexa, KS
 
—

 
826

 
26,251

 
1,285

 
922

 
27,440

 
6,432

 
2013
 
2006
 
15055 West 87th Street Parkway
Leominster, MA
 
—

 
944

 
23,164

 
688

 
995

 
23,801

 
3,687

 
2015
 
1999
 
1160 Main Street
Lincroft, NJ
 
—

 
9

 
19,958

 
1,706

 
79

 
21,594

 
4,667

 
2013
 
2002
 
734 Newman Springs Road
Linwood, NJ
 
—

 
800

 
21,984

 
1,168

 
861

 
23,091

 
5,012

 
2010
 
1997
 
432 Central Ave
Litchfield, CT
 
—

 
1,240

 
17,908

 
11,060

 
1,258

 
28,950

 
4,862

 
2010
 
1998
 
19 Constitution Way
Little Neck, NY
 
—

 
3,350

 
38,461

 
1,421

 
3,358

 
39,874

 
8,411

 
2010
 
2000
 
55-15 Little Neck Pkwy.
Livingston, NJ
 
—

 
8,000

 
44,424

 
160

 
8,000

 
44,584

 
2,119

 
2015
 
2017
 
369 E Mt Pleasant Avenue
Lombard, IL
 
15,975

 
2,130

 
59,943

 
1,474

 
2,147

 
61,400

 
12,455

 
2013
 
2009
 
2210 Fountain Square Dr
London, UK
 
—

 
3,121

 
10,027

 
934

 
3,231

 
10,851

 
1,465

 
2014
 
2012
 
71 Hatch Lane
London, UK
 
—

 
7,691

 
16,797

 
—

 
7,691

 
16,797

 
1,007

 
2015
 
2016
 
6 Victoria Drive

(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Seniors Housing Operating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
London, ON
 
34

 
987

 
8,228

 
628

 
1,030

 
8,813

 
1,477

 
2015
 
1989
 
760 Horizon Drive
London, ON
 
11,009

 
1,969

 
16,985

 
1,214

 
1,998

 
18,170

 
3,022

 
2015
 
1953
 
1486 Richmond Street North
London, ON
 
—

 
1,445

 
13,631

 
953

 
1,579

 
14,450

 
2,131

 
2015
 
1950
 
81 Grand Avenue
Longueuil, QC
 
9,064

 
3,992

 
23,711

 
1,778

 
4,102

 
25,379

 
4,144

 
2015
 
1989
 
70 Rue Levis
Los Angeles, CA
 
—

 
—

 
11,430

 
1,951

 
—

 
13,381

 
3,690

 
2008
 
1971
 
330 North Hayworth Avenue
Los Angeles, CA
 
60,018

 
—

 
114,438

 
2,355

 
—

 
116,793

 
28,628

 
2011
 
2009
 
10475 Wilshire Boulevard
Los Angeles, CA
 
—

 
3,540

 
19,007

 
2,583

 
3,540

 
21,590

 
4,919

 
2012
 
2001
 
2051 N. Highland Avenue
Los Angeles, CA
 
—

 
—

 
28,050

 
3,370

 
—

 
31,420

 
3,286

 
2016
 
2006
 
4061 Grand View Boulevard
Louisville, KY
 
—

 
2,420

 
20,816

 
1,863

 
2,420

 
22,679

 
5,317

 
2012
 
1999
 
4600 Bowling Boulevard
Louisville, KY
 
10,562

 
1,600

 
20,326

 
774

 
1,600

 
21,100

 
4,926

 
2013
 
2010
 
6700 Overlook Drive
Lynnfield, MA
 
—

 
3,165

 
45,200

 
2,580

 
3,507

 
47,438

 
10,225

 
2013
 
2006
 
55 Salem Street
Mahwah, NJ
 
—

 
1,605

 
27,249

 
17

 
1,605

 
27,266

 
2,539

 
2012
 
2015
 
15 Edison Road
Malvern, PA
 
—

 
1,651

 
17,194

 
2,128

 
1,739

 
19,234

 
5,499

 
2013
 
1998
 
324 Lancaster Avenue
Mansfield, MA
 
—

 
3,320

 
57,011

 
8,714

 
3,486

 
65,559

 
17,826

 
2011
 
1998
 
25 Cobb Street 
Manteca, CA
 
—

 
1,300

 
12,125

 
1,648

 
1,312

 
13,761

 
5,447

 
2005
 
1986
 
430 N. Union Rd.
Maple Ridge, BC
 
8,159

 
2,875

 
11,922

 
321

 
2,943

 
12,175

 
1,489

 
2015
 
2009
 
12241 224th Street
Marieville, QC
 
6,198

 
1,278

 
12,113

 
117

 
1,302

 
12,206

 
1,691

 
2015
 
2002
 
425 rue Claude de Ramezay
Markham, ON
 
36,530

 
3,727

 
48,939

 
1,429

 
3,825

 
50,270

 
13,999

 
2013
 
1981
 
7700 Bayview Avenue
Marlboro, NJ
 
—

 
2,222

 
14,888

 
1,395

 
2,250

 
16,255

 
3,791

 
2013
 
2002
 
3A South Main Street
Medicine Hat, AB
 
10,262

 
1,432

 
14,141

 
48

 
1,460

 
14,161

 
2,923

 
2015
 
1999
 
223 Park Meadows Drive SE
Melbourne, FL
 
—

 
7,070

 
48,257

 
31,652

 
7,070

 
79,909

 
19,642

 
2007
 
2009
 
7300 Watersong Lane
Melville, NY
 
—

 
4,280

 
73,283

 
4,916

 
4,313

 
78,166

 
15,980

 
2010
 
2001
 
70 Pinelawn Rd
Memphis, TN
 
—

 
1,800

 
17,744

 
1,919

 
1,800

 
19,663

 
5,597

 
2012
 
1999
 
6605 Quail Hollow Road
Meriden, CT
 
—

 
1,500

 
14,874

 
1,429

 
1,542

 
16,261

 
5,727

 
2011
 
2001
 
511 Kensington Avenue 
Metairie, LA
 
12,521

 
725

 
27,708

 
778

 
725

 
28,486

 
5,596

 
2013
 
2009
 
3732 West Esplanade Ave. S
Middletown, CT
 
—

 
1,430

 
24,242

 
1,986

 
1,460

 
26,198

 
7,799

 
2011
 
1999
 
645 Saybrook Road
Milford, CT
 
—

 
3,210

 
17,364

 
2,328

 
3,233

 
19,669

 
6,536

 
2011
 
1999
 
77 Plains Road 
Mill Creek, WA
 
—

 
10,150

 
60,274

 
1,320

 
10,179

 
61,565

 
18,700

 
2010
 
1998
 
14905 Bothell-Everett Hwy
Milton, ON
 
13,723

 
4,542

 
25,321

 
1,962

 
4,627

 
27,198

 
3,433

 
2015
 
2012
 
611 Farmstead Drive
Minnetonka, MN
 
—

 
2,080

 
24,360

 
2,571

 
2,450

 
26,561

 
6,303

 
2012
 
1999
 
500 Carlson Parkway
Minnetonka, MN
 
—

 
920

 
29,344

 
1,161

 
964

 
30,461

 
5,900

 
2013
 
2006
 
18605 Old Excelsior Blvd.
Mission Viejo, CA
 
13,850

 
6,600

 
52,118

 
7,758

 
6,600

 
59,876

 
7,475

 
2016
 
1998
 
27783 Center Drive
Mississauga, ON
 
8,358

 
1,602

 
17,996

 
621

 
1,626

 
18,593

 
4,140

 
2013
 
1984
 
1130 Bough Beeches Boulevard
Mississauga, ON
 
2,816

 
873

 
4,655

 
232

 
887

 
4,873

 
1,147

 
2013
 
1978
 
3051 Constitution Boulevard
Mississauga, ON
 
26,718

 
3,649

 
35,137

 
1,441

 
3,723

 
36,504

 
8,161

 
2015
 
1988
 
1490 Rathburn Road East
Mississauga, ON
 
5,916

 
2,548

 
15,158

 
1,751

 
2,589

 
16,868

 
3,177

 
2015
 
1989
 
85 King Street East
Missoula, MT
 
—

 
550

 
7,490

 
437

 
550

 
7,927

 
2,767

 
2005
 
1998
 
3620 American Way
Mobberley, UK
 
—

 
5,146

 
26,665

 
1,834

 
5,340

 
28,305

 
7,514

 
2013
 
2007
 
Barclay Park, Hall Lane
Monterey, CA
 
—

 
6,440

 
29,101

 
1,549

 
6,440

 
30,650

 
6,486

 
2013
 
2009
 
1110 Cass St.
Montgomery, MD
 
—

 
6,482

 
83,642

 
10,924

 
6,482

 
94,566

 
3,480

 
2018
 
1992
 
3701 International Dr
Montgomery Village, MD
 
—

 
3,530

 
18,246

 
6,745

 
4,279

 
24,242

 
9,021

 
2013
 
1993
 
19310 Club House Road
Montreal-Nord, QC
 
11,740

 
4,407

 
23,719

 
2,992

 
4,407

 
26,711

 
511

 
2018
 
1988
 
6700, boulevard Gouin Est

(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Seniors Housing Operating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Moorestown, NJ
 
—

 
2,060

 
51,628

 
1,982

 
2,083

 
53,587

 
11,069

 
2010
 
2000
 
1205 N. Church St
Moose Jaw, SK
 
2,076

 
582

 
12,973

 
906

 
590

 
13,871

 
3,039

 
2013
 
2001
 
425 4th Avenue NW
Murphy, TX
 
—

 
1,950

 
19,182

 
805

 
1,950

 
19,987

 
1,781

 
2015
 
2012
 
304 West FM 544
Naperville, IL
 
—

 
1,550

 
12,237

 
2,433

 
1,550

 
14,670

 
3,760

 
2012
 
2013
 
1936 Brookdale Road
Naperville, IL
 
—

 
1,540

 
28,204

 
1,392

 
1,573

 
29,563

 
6,517

 
2013
 
2002
 
535 West Ogden Avenue
Naples, FL
 
56,105

 
8,989

 
119,398

 
5,055

 
9,088

 
124,354

 
22,444

 
2015
 
2000
 
4800 Aston Gardens Way
Nashua, NH
 
—

 
1,264

 
43,026

 
1,373

 
1,264

 
44,399

 
5,491

 
2015
 
1999
 
674 West Hollis Street
Nashville, TN
 
—

 
3,900

 
35,788

 
2,848

 
3,900

 
38,636

 
10,313

 
2012
 
1999
 
4206 Stammer Place
Needham, MA
 
—

 
1,240

 
32,992

 
1,322

 
1,240

 
34,314

 
2,853

 
2016
 
2011
 
880 Greendale Avenue
Nepean, ON
 
5,387

 
1,575

 
5,770

 
528

 
1,613

 
6,260

 
1,447

 
2015
 
1988
 
1 Mill Hill Road
New Braunfels, TX
 
—

 
1,200

 
19,800

 
10,352

 
2,729

 
28,623

 
4,906

 
2011
 
2009
 
2294 East Common Street
Newark, DE
 
—

 
560

 
21,220

 
1,569

 
560

 
22,789

 
8,065

 
2004
 
1998
 
200 E. Village Rd.
Newbury, UK
 
—

 
2,850

 
12,796

 
672

 
2,946

 
13,372

 
810

 
2015
 
2016
 
370 London Road
Newburyport, MA
 
—

 
1,750

 
29,187

 
1,194

 
1,750

 
30,381

 
2,656

 
2016
 
2015
 
4 Wallace Bashaw Junior Way
Newmarket, UK
 
—

 
4,071

 
11,902

 
1,190

 
4,228

 
12,935

 
2,005

 
2014
 
2011
 
Jeddah Way
Newton, MA
 
—

 
2,250

 
43,614

 
1,253

 
2,263

 
44,854

 
11,966

 
2011
 
1996
 
2300 Washington Street
Newton, MA
 
14,881

 
2,500

 
30,681

 
3,183

 
2,574

 
33,790

 
9,409

 
2011
 
1996
 
280 Newtonville Avenue 
Newton, MA
 
—

 
3,360

 
25,099

 
1,820

 
3,385

 
26,894

 
8,053

 
2011
 
1994
 
430 Centre Street
Newtown Square, PA
 
—

 
1,930

 
14,420

 
1,161

 
1,946

 
15,565

 
4,577

 
2013
 
2004
 
333 S. Newtown Street Rd.
Niagara Falls, ON
 
6,335

 
1,225

 
7,963

 
466

 
1,242

 
8,412

 
1,457

 
2015
 
1991
 
7860 Lundy's Lane
North Andover, MA
 
—

 
1,960

 
34,976

 
2,116

 
2,111

 
36,941

 
10,087

 
2011
 
1995
 
700 Chickering Road 
North Chelmsford, MA
 
—

 
880

 
18,478

 
999

 
951

 
19,406

 
5,126

 
2011
 
1998
 
2 Technology Drive 
North Dartmouth, MA
 
—

 
1,700

 
35,337

 
1,723

 
1,700

 
37,060

 
3,374

 
2016
 
1997
 
239 Cross Road
North Tustin, CA
 
—

 
2,880

 
18,059

 
891

 
2,975

 
18,855

 
3,564

 
2013
 
2000
 
12291 Newport Avenue
Oak Park, IL
 
—

 
1,250

 
40,383

 
1,749

 
1,250

 
42,132

 
9,526

 
2012
 
2004
 
1035 Madison Street
Oakland, CA
 
—

 
3,877

 
47,508

 
3,252

 
4,036

 
50,601

 
10,954

 
2013
 
1999
 
11889 Skyline Boulevard
Oakton, VA
 
—

 
2,250

 
37,576

 
2,218

 
2,378

 
39,666

 
8,352

 
2013
 
1997
 
2863 Hunter Mill Road
Oakville, ON
 
5,499

 
1,252

 
7,382

 
373

 
1,278

 
7,729

 
1,795

 
2013
 
1982
 
289 and 299 Randall Street
Oakville, ON
 
9,164

 
2,134

 
29,963

 
1,107

 
2,165

 
31,039

 
7,349

 
2013
 
1994
 
25 Lakeshore Road West
Oakville, ON
 
4,797

 
1,271

 
13,754

 
606

 
1,289

 
14,342

 
2,929

 
2013
 
1988
 
345 Church Street
Oceanside, CA
 
—

 
2,160

 
18,352

 
4,094

 
2,243

 
22,363

 
6,097

 
2011
 
2005
 
3500 Lake Boulevard
Ogden, UT
 
—

 
360

 
6,700

 
731

 
360

 
7,431

 
2,689

 
2004
 
1998
 
1340 N. Washington Blv.
Okotoks, AB
 
17,892

 
714

 
20,943

 
557

 
728

 
21,486

 
3,640

 
2015
 
2010
 
51 Riverside Gate
Oshawa, ON
 
6,547

 
841

 
7,570

 
458

 
884

 
7,985

 
1,834

 
2013
 
1991
 
649 King Street East
Ottawa, ON
 
9,469

 
1,341

 
15,425

 
1,439

 
1,396

 
16,809

 
2,176

 
2015
 
2001
 
110 Berrigan Drive
Ottawa, ON
 
17,808

 
3,454

 
23,309

 
1,351

 
3,559

 
24,555

 
6,617

 
2015
 
1966
 
2370 Carling Avenue
Ottawa, ON
 
20,414

 
4,256

 
39,141

 
—

 
4,256

 
39,141

 
5,917

 
2015
 
2005
 
751 Peter Morand Crescent
Ottawa, ON
 
7,070

 
2,103

 
18,421

 
3,150

 
2,180

 
21,494

 
3,096

 
2015
 
1989
 
1 Eaton Street
Ottawa, ON
 
13,444

 
2,963

 
26,424

 
1,880

 
3,041

 
28,226

 
3,647

 
2015
 
2008
 
691 Valin Street
Ottawa, ON
 
10,161

 
1,561

 
18,170

 
1,336

 
1,647

 
19,420

 
2,412

 
2015
 
2006
 
22 Barnstone Drive
Ottawa, ON
 
13,568

 
3,403

 
31,090

 
1,941

 
3,467

 
32,967

 
4,134

 
2015
 
2009
 
990 Hunt Club Road
Ottawa, ON
 
17,204

 
3,411

 
28,335

 
4,152

 
3,502

 
32,396

 
5,257

 
2015
 
2009
 
2 Valley Stream Drive
Ottawa, ON
 
2,765

 
724

 
4,710

 
231

 
735

 
4,930

 
1,171

 
2013
 
1995
 
1345 Ogilvie Road

(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Seniors Housing Operating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ottawa, ON
 
2,012

 
818

 
2,165

 
1,192

 
691

 
3,484

 
888

 
2013
 
1993
 
370 Kennedy Lane
Ottawa, ON
 
9,559

 
2,809

 
27,299

 
1,253

 
2,880

 
28,481

 
7,177

 
2013
 
1998
 
43 Aylmer Avenue
Ottawa, ON
 
4,441

 
1,156

 
9,758

 
481

 
1,227

 
10,168

 
2,151

 
2013
 
1998
 
1351 Hunt Club Road
Ottawa, ON
 
5,778

 
746

 
7,800

 
541

 
763

 
8,324

 
1,805

 
2013
 
1999
 
140 Darlington Private
Ottawa, ON
 
8,729

 
1,176

 
12,764

 
778

 
1,231

 
13,487

 
1,876

 
2015
 
1987
 
10 Vaughan Street
Outremont, QC
 
17,544

 
6,746

 
45,981

 
5,133

 
6,746

 
51,114

 
1,007

 
2018
 
1976
 
1000, avenue Rockland
Palo Alto, CA
 
—

 
—

 
39,639

 
3,055

 
24

 
42,670

 
8,872

 
2013
 
2007
 
2701 El Camino Real
Paramus, NJ
 
—

 
2,840

 
35,728

 
1,729

 
2,947

 
37,350

 
7,659

 
2013
 
1998
 
567 Paramus Road
Parkland, FL
 
55,694

 
4,880

 
111,481

 
4,087

 
4,904

 
115,544

 
20,538

 
2015
 
2000
 
5999 University Drive
Paso Robles, CA
 
—

 
1,770

 
8,630

 
707

 
1,770

 
9,337

 
4,032

 
2002
 
1998
 
1919 Creston Rd.
Peabody, MA
 
6,012

 
2,250

 
16,071

 
1,099

 
2,324

 
17,096

 
2,858

 
2013
 
1994
 
73 Margin Street
Pembroke, ON
 
—

 
1,931

 
9,427

 
433

 
1,901

 
9,890

 
2,011

 
2012
 
1999
 
1111 Pembroke Street West
Pennington, NJ
 
—

 
1,380

 
27,620

 
1,115

 
1,491

 
28,624

 
5,562

 
2011
 
2000
 
143 West Franklin Avenue
Peoria, AZ
 
—

 
766

 
21,796

 
1,635

 
766

 
23,431

 
1,482

 
2018
 
2014
 
13391 N 94th Drive
Pittsburgh, PA
 
—

 
1,580

 
18,017

 
925

 
1,587

 
18,935

 
4,437

 
2013
 
2009
 
900 Lincoln Club Dr.
Placentia, CA
 
—

 
8,480

 
17,076

 
5,087

 
8,480

 
22,163

 
3,576

 
2016
 
1987
 
1180 N Bradford Avenue
Plainview, NY
 
—

 
3,066

 
19,901

 
1,018

 
3,182

 
20,803

 
4,124

 
2013
 
2001
 
1231 Old Country Road
Plano, TX
 
—

 
3,120

 
59,950

 
3,124

 
3,173

 
63,021

 
16,579

 
2013
 
2006
 
4800 West Parker Road
Plano, TX
 
—

 
1,750

 
15,390

 
1,954

 
1,750

 
17,344

 
1,626

 
2016
 
2014
 
3690 Mapleshade Lane
Playa Vista, CA
 
—

 
1,580

 
40,531

 
1,636

 
1,605

 
42,142

 
8,978

 
2013
 
2006
 
5555 Playa Vista Drive
Plymouth, MA
 
—

 
1,444

 
34,951

 
1,122

 
1,453

 
36,064

 
5,093

 
2015
 
1998
 
157 South Street
Plymouth, MA
 
13,169

 
2,550

 
35,055

 
2,256

 
2,550

 
37,311

 
3,895

 
2016
 
1970
 
60 Stafford Hill
Port Perry, ON
 
11,989

 
3,685

 
26,788

 
2,365

 
3,747

 
29,091

 
3,509

 
2015
 
2009
 
15987 Simcoe Street
Port St. Lucie, FL
 
—

 
8,700

 
47,230

 
20,478

 
8,700

 
67,708

 
15,304

 
2008
 
2010
 
10685 SW Stony Creek Way
Princeton, NJ
 
—

 
1,730

 
30,888

 
1,839

 
1,810

 
32,647

 
6,494

 
2011
 
2001
 
155 Raymond Road
Purley, UK
 
—

 
7,365

 
35,161

 
2,104

 
7,625

 
37,005

 
8,905

 
2012
 
2005
 
21 Russell Hill Road
Quebec City, QC
 
8,495

 
2,420

 
21,977

 
1,767

 
2,420

 
23,744

 
466

 
2018
 
2000
 
795, rue Alain
Quebec City, QC
 
12,067

 
3,300

 
28,325

 
2,207

 
3,300

 
30,532

 
605

 
2018
 
1987
 
650 and 700, avenue Murray
Queensbury, NY
 
—

 
1,260

 
21,744

 
1,014

 
1,264

 
22,754

 
3,140

 
2015
 
1999
 
27 Woodvale Road
Quincy, MA
 
—

 
1,350

 
12,584

 
981

 
1,428

 
13,487

 
4,083

 
2011
 
1998
 
2003 Falls Boulevard
Rancho Cucamonga, CA
 
—

 
1,480

 
10,055

 
1,848

 
2,073

 
11,310

 
2,978

 
2013
 
2001
 
9519 Baseline Road
Rancho Palos Verdes, CA
 
—

 
5,450

 
60,034

 
2,453

 
5,450

 
62,487

 
14,179

 
2012
 
2004
 
5701 Crestridge Road
Randolph, NJ
 
—

 
1,540

 
46,934

 
1,379

 
1,619

 
48,234

 
9,841

 
2013
 
2006
 
648 Route 10 West
Red Deer, AB
 
12,026

 
1,247

 
19,283

 
592

 
1,273

 
19,849

 
3,093

 
2015
 
2004
 
3100 - 22 Street
Red Deer, AB
 
14,153

 
1,199

 
22,339

 
632

 
1,219

 
22,951

 
3,655

 
2015
 
2004
 
10 Inglewood Drive
Redondo Beach, CA
 
—

 
—

 
9,557

 
913

 
—

 
10,470

 
6,436

 
2011
 
1957
 
514 North Prospect Ave
Regina, SK
 
6,224

 
1,485

 
21,148

 
638

 
1,525

 
21,746

 
5,280

 
2013
 
1999
 
3651 Albert Street
Regina, SK
 
6,158

 
1,244

 
21,036

 
716

 
1,267

 
21,729

 
4,579

 
2013
 
2004
 
3105 Hillsdale Street
Regina, SK
 
15,076

 
1,539

 
24,053

 
2,617

 
1,579

 
26,630

 
3,750

 
2015
 
1992
 
1801 McIntyre Street
Rehoboth Beach, DE
 
—

 
960

 
24,248

 
8,847

 
993

 
33,062

 
6,077

 
2010
 
1999
 
36101 Seaside Blvd
Renton, WA
 
20,790

 
3,080

 
51,824

 
1,999

 
3,124

 
53,779

 
11,898

 
2011
 
2007
 
104 Burnett Avenue South
Ridgefield, CT
 
—

 
3,100

 
80,614

 
5,250

 
3,152

 
85,812

 
13,614

 
2015
 
1998
 
640 Danbury Road

(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Seniors Housing Operating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Riviere-du-Loup, QC
 
2,892

 
592

 
7,601

 
761

 
590

 
8,364

 
1,150

 
2015
 
1956
 
35 des Cedres
Riviere-du-Loup, QC
 
11,905

 
1,454

 
16,848

 
3,500

 
1,563

 
20,239

 
3,453

 
2015
 
1993
 
230-235 rue Des Chenes
Rocky Hill, CT
 
—

 
1,090

 
6,710

 
1,534

 
1,090

 
8,244

 
3,089

 
2003
 
1996
 
60 Cold Spring Rd.
Rocky Hill, CT
 
—

 
810

 
16,351

 
833

 
926

 
17,068

 
4,679

 
2011
 
2000
 
1160 Elm Street
Rohnert Park, CA
 
—

 
6,500

 
18,700

 
2,205

 
6,556

 
20,849

 
7,644

 
2005
 
1986
 
4855 Snyder Lane
Romeoville, IL
 
—

 
854

 
12,646

 
61,135

 
6,197

 
68,438

 
16,480

 
2006
 
2010
 
605 S Edward Dr.
Roseville, MN
 
—

 
1,540

 
35,877

 
1,053

 
1,607

 
36,863

 
7,263

 
2013
 
2002
 
2555 Snelling Avenue, North
Roseville, CA
 
—

 
3,300

 
41,652

 
6,273

 
3,300

 
47,925

 
6,003

 
2016
 
2000
 
5161 Foothills Boulevard
Sacramento, CA
 
—

 
940

 
14,781

 
314

 
952

 
15,083

 
4,097

 
2010
 
1978
 
6350 Riverside Blvd
Sacramento, CA
 
—

 
1,300

 
23,394

 
1,402

 
1,369

 
24,727

 
5,105

 
2013
 
2004
 
345 Munroe Street
Saint-Lambert, QC
 
33,431

 
10,259

 
61,903

 
366

 
10,499

 
62,029

 
12,901

 
2015
 
1989
 
1705 Avenue Victoria
Salem, NH
 
—

 
980

 
32,721

 
4,326

 
1,054

 
36,973

 
8,805

 
2011
 
2000
 
242 Main Street
Salinas, CA
 
—

 
5,110

 
41,424

 
7,694

 
5,110

 
49,118

 
7,379

 
2016
 
1990
 
1320 Padre Drive
Salisbury, UK
 
—

 
2,720

 
15,269

 
719

 
2,812

 
15,896

 
2,011

 
2014
 
2013
 
Shapland Close
Salt Lake City, UT
 
—

 
1,360

 
19,691

 
1,601

 
1,360

 
21,292

 
6,988

 
2011
 
1986
 
1430 E. 4500 S.
San Angelo, TX
 
—

 
260

 
8,800

 
459

 
266

 
9,253

 
3,349

 
2004
 
1997
 
2695 Valleyview Blvd.
San Antonio, TX
 
—

 
6,120

 
28,169

 
2,590

 
6,120

 
30,759

 
6,071

 
2010
 
2011
 
2702 Cembalo Blvd
San Antonio, TX
 
—

 
5,045

 
58,048

 
3,228

 
5,045

 
61,276

 
3,306

 
2017
 
2015
 
11300 Wild Pine
San Diego, CA
 
—

 
4,200

 
30,707

 
731

 
4,243

 
31,395

 
5,825

 
2011
 
2011
 
2567 Second Avenue
San Diego, CA
 
—

 
5,810

 
63,078

 
2,808

 
5,810

 
65,886

 
17,092

 
2012
 
2001
 
13075 Evening Creek Drive S
San Diego, CA
 
—

 
3,000

 
27,164

 
881

 
3,016

 
28,029

 
5,495

 
2013
 
2003
 
810 Turquoise Street
San Francisco, CA
 
—

 
5,920

 
91,639

 
12,609

 
5,920

 
104,248

 
13,874

 
2016
 
1998
 
1550 Sutter Street
San Francisco, CA
 
—

 
11,800

 
77,214

 
9,969

 
11,800

 
87,183

 
11,932

 
2016
 
1923
 
1601 19th Avenue
San Gabriel, CA
 
—

 
3,120

 
15,566

 
948

 
3,138

 
16,496

 
3,797

 
2013
 
2005
 
8332 Huntington Drive
San Jose, CA
 
—

 
2,850

 
35,098

 
811

 
2,858

 
35,901

 
8,000

 
2011
 
2009
 
1420 Curvi Drive
San Jose, CA
 
—

 
3,280

 
46,823

 
3,149

 
3,280

 
49,972

 
11,218

 
2012
 
2002
 
500 S Winchester Boulevard
San Jose, CA
 
—

 
11,900

 
27,647

 
4,820

 
11,900

 
32,467

 
4,801

 
2016
 
2002
 
4855 San Felipe Road
San Juan Capistrano, CA
 
—

 
1,390

 
6,942

 
1,450

 
1,390

 
8,392

 
3,797

 
2000
 
2001
 
30311 Camino Capistrano
San Rafael, CA
 
—

 
1,620

 
27,392

 
2,858

 
1,832

 
30,038

 
3,412

 
2016
 
2001
 
111 Merrydale Road
San Ramon, CA
 
—

 
8,700

 
72,223

 
9,628

 
8,700

 
81,851

 
11,263

 
2016
 
1992
 
9199 Fircrest Lane
Sandy Springs, GA
 
—

 
2,214

 
8,360

 
1,307

 
2,220

 
9,661

 
2,733

 
2012
 
1997
 
5455 Glenridge Drive NE
Santa Maria, CA
 
—

 
6,050

 
50,658

 
3,231

 
6,089

 
53,850

 
14,846

 
2011
 
2001
 
1220 Suey Road
Santa Monica, CA
 
18,727

 
5,250

 
28,340

 
950

 
5,263

 
29,277

 
6,184

 
2013
 
2004
 
1312 15th Street
Santa Rosa, CA
 
—

 
2,250

 
26,273

 
3,303

 
2,250

 
29,576

 
3,623

 
2016
 
2001
 
4225 Wayvern Drive
Saskatoon, SK
 
3,840

 
981

 
13,905

 
501

 
995

 
14,392

 
2,916

 
2013
 
1999
 
220 24th Street East
Saskatoon, SK
 
13,125

 
1,382

 
17,609

 
766

 
1,403

 
18,354

 
3,632

 
2013
 
2004
 
1622 Acadia Drive
Schaumburg, IL
 
—

 
2,460

 
22,863

 
1,175

 
2,497

 
24,001

 
5,884

 
2013
 
2001
 
790 North Plum Grove Road
Scottsdale, AZ
 
—

 
2,500

 
3,890

 
1,664

 
2,500

 
5,554

 
1,614

 
2008
 
1998
 
9410 East Thunderbird Road
Seal Beach, CA
 
—

 
6,204

 
72,954

 
2,078

 
6,271

 
74,965

 
19,259

 
2013
 
2004
 
3850 Lampson Avenue
Seattle, WA
 
—

 
5,190

 
9,350

 
748

 
5,199

 
10,089

 
3,616

 
2010
 
1962
 
11501 15th Ave NE
Seattle, WA
 
27,180

 
10,670

 
37,291

 
1,094

 
10,700

 
38,355

 
12,353

 
2010
 
2005
 
805 4th Ave N
Seattle, WA
 
48,540

 
6,790

 
85,369

 
3,258

 
6,825

 
88,592

 
20,335

 
2011
 
2009
 
5300 24th Avenue NE
Seattle, WA
 
—

 
1,150

 
19,887

 
1,284

 
1,153

 
21,168

 
2,724

 
2015
 
1995
 
11039 17th Avenue

(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Seniors Housing Operating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selbyville, DE
 
—

 
750

 
25,912

 
508

 
769

 
26,401

 
5,564

 
2010
 
2008
 
21111 Arrington Dr
Sevenoaks, UK
 
—

 
6,181

 
40,240

 
4,176

 
6,390

 
44,207

 
10,318

 
2012
 
2009
 
64 - 70 Westerham Road
Severna Park, MD
 
—

 
—

 
67,623

 
5,574

 
24

 
73,173

 
8,947

 
2016
 
1997
 
43 W McKinsey Road
Shelburne, VT
 
—

 
720

 
31,041

 
1,966

 
777

 
32,950

 
8,191

 
2011
 
1988
 
687 Harbor Road
Shelby Township, MI
 
—

 
1,040

 
26,344

 
1,439

 
1,105

 
27,718

 
5,566

 
2013
 
2006
 
46471 Hayes Road
Shelton, CT
 
—

 
2,246

 
33,967

 
42

 
2,246

 
34,009

 
3,424

 
2013
 
2014
 
708A Bridgeport Avenue
Shrewsbury, NJ
 
—

 
2,120

 
38,116

 
1,244

 
2,138

 
39,342

 
8,247

 
2010
 
2000
 
5 Meridian Way
Shrewsbury, MA
 
—

 
950

 
26,824

 
1,397

 
956

 
28,215

 
4,209

 
2015
 
1997
 
3111 Main Street
Sidcup, UK
 
—

 
7,446

 
56,570

 
3,312

 
7,714

 
59,614

 
15,051

 
2012
 
2000
 
Frognal Avenue
Simi Valley, CA
 
—

 
3,200

 
16,664

 
1,092

 
3,298

 
17,658

 
4,909

 
2013
 
2009
 
190 Tierra Rejada Road
Simi Valley, CA
 
—

 
5,510

 
51,406

 
8,073

 
5,510

 
59,479

 
8,314

 
2016
 
2003
 
5300 E Los Angeles Avenue
Solihull, UK
 
—

 
5,070

 
43,297

 
4,211

 
5,241

 
47,337

 
10,579

 
2012
 
2009
 
1270 Warwick Road
Solihull, UK
 
—

 
3,571

 
26,053

 
1,429

 
3,692

 
27,361

 
6,320

 
2013
 
2007
 
1 Worcester Way
Solihull, UK
 
—

 
1,851

 
10,585

 
499

 
1,913

 
11,022

 
770

 
2015
 
2016
 
Warwick Road
Sonning, UK
 
—

 
5,644

 
42,155

 
2,660

 
5,853

 
44,606

 
9,317

 
2013
 
2009
 
Old Bath Rd.
Sonoma, CA
 
—

 
1,100

 
18,400

 
1,773

 
1,109

 
20,164

 
7,332

 
2005
 
1988
 
800 Oregon St.
Sonoma, CA
 
—

 
2,820

 
21,890

 
2,683

 
2,820

 
24,573

 
3,043

 
2016
 
2005
 
91 Napa Road
St. Albert, AB
 
7,432

 
1,145

 
17,863

 
1,854

 
1,185

 
19,677

 
5,098

 
2014
 
2005
 
78C McKenney Avenue
St. John's, NL
 
5,444

 
706

 
11,765

 
73

 
711

 
11,833

 
1,575

 
2015
 
2005
 
64 Portugal Cove Road
Stittsville, ON
 
4,237

 
1,175

 
17,397

 
753

 
1,192

 
18,133

 
3,630

 
2013
 
1996
 
1340 - 1354 Main Street
Stockport, UK
 
—

 
4,369

 
25,018

 
1,329

 
4,521

 
26,195

 
6,471

 
2013
 
2008
 
1 Dairyground Road
Stockton, CA
 
—

 
2,280

 
5,983

 
513

 
2,372

 
6,404

 
2,006

 
2010
 
1988
 
6725 Inglewood
Studio City, CA
 
—

 
4,006

 
25,307

 
1,151

 
4,109

 
26,355

 
6,453

 
2013
 
2004
 
4610 Coldwater Canyon Avenue
Sugar Land, TX
 
—

 
960

 
31,423

 
1,339

 
960

 
32,762

 
8,143

 
2011
 
1996
 
1221 Seventh St
Sugar Land, TX
 
—

 
4,272

 
60,493

 
6,530

 
4,272

 
67,023

 
4,864

 
2017
 
2015
 
744 Brooks Street
Sun City, FL
 
20,951

 
6,521

 
48,476

 
5,134

 
6,648

 
53,483

 
11,537

 
2015
 
1995
 
231 Courtyards
Sun City, FL
 
23,606

 
5,040

 
50,923

 
4,577

 
5,369

 
55,171

 
10,639

 
2015
 
1999
 
1311 Aston Gardens Court
Sunnyvale, CA
 
—

 
5,420

 
41,682

 
2,155

 
5,420

 
43,837

 
10,239

 
2012
 
2002
 
1039 East El Camino Real
Surrey, BC
 
6,323

 
3,605

 
18,818

 
1,018

 
3,658

 
19,783

 
5,725

 
2013
 
2000
 
16028 83rd Avenue
Surrey, BC
 
15,142

 
4,552

 
22,338

 
1,332

 
4,631

 
23,591

 
7,190

 
2013
 
1987
 
15501 16th Avenue
Sutton, UK
 
—

 
4,096

 
14,532

 
730

 
4,234

 
15,124

 
851

 
2015
 
2016
 
123 Westmead Road
Suwanee, GA
 
—

 
1,560

 
11,538

 
1,665

 
1,560

 
13,203

 
3,281

 
2012
 
2000
 
4315 Johns Creek Parkway
Sway, UK
 
—

 
4,145

 
15,508

 
1,113

 
4,334

 
16,432

 
3,004

 
2014
 
2008
 
Sway Place
Swift Current, SK
 
1,871

 
492

 
10,119

 
455

 
505

 
10,561

 
2,324

 
2013
 
2001
 
301 Macoun Drive
Tacoma, WA
 
17,640

 
2,400

 
35,053

 
1,276

 
2,493

 
36,236

 
8,057

 
2011
 
2008
 
7290 Rosemount Circle
Tacoma, WA
 
—

 
1,535

 
6,068

 
67

 
1,537

 
6,133

 
1,095

 
2015
 
2012
 
7290 Rosemount Circle
Tacoma, WA
 
—

 
4,170

 
73,377

 
12,917

 
4,170

 
86,294

 
11,797

 
2016
 
1987
 
8201 6th Avenue
Tampa, FL
 
69,330

 
4,910

 
114,148

 
5,229

 
4,996

 
119,291

 
20,181

 
2015
 
2001
 
12951 W Linebaugh Avenue
Tewksbury, MA
 
—

 
2,350

 
24,118

 
2,172

 
2,350

 
26,290

 
3,205

 
2016
 
2006
 
2000 Emerald Court
The Woodlands, TX
 
—

 
480

 
12,379

 
679

 
480

 
13,058

 
3,238

 
2011
 
1999
 
7950 Bay Branch Dr
Toledo, OH
 
—

 
2,040

 
47,129

 
3,722

 
2,144

 
50,747

 
15,040

 
2010
 
1985
 
3501 Executive Parkway
Toms River, NJ
 
—

 
1,610

 
34,627

 
1,077

 
1,681

 
35,633

 
7,529

 
2010
 
2005
 
1587 Old Freehold Rd
Toronto, ON
 
17,086

 
2,927

 
20,713

 
1,635

 
2,997

 
22,278

 
3,323

 
2015
 
1900
 
54 Foxbar Road
(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Seniors Housing Operating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Toronto, ON
 
8,268

 
5,082

 
25,493

 
1,375

 
5,178

 
26,772

 
5,294

 
2015
 
1988
 
645 Castlefield Avenue
Toronto, ON
 
12,478

 
2,008

 
19,620

 
—

 
2,008

 
19,620

 
3,033

 
2015
 
1999
 
4251 Dundas Street West
Toronto, ON
 
36,296

 
5,132

 
41,657

 
2,931

 
5,209

 
44,511

 
10,383

 
2015
 
1964
 
10 William Morgan Drive
Toronto, ON
 
4,268

 
2,480

 
7,571

 
492

 
2,527

 
8,016

 
1,724

 
2015
 
1971
 
123 Spadina Road
Toronto, ON
 
1,217

 
1,079

 
5,364

 
269

 
1,095

 
5,617

 
1,246

 
2013
 
1982
 
25 Centennial Park Road
Toronto, ON
 
7,531

 
2,513

 
19,695

 
969

 
2,583

 
20,594

 
3,845

 
2013
 
2002
 
305 Balliol Street
Toronto, ON
 
17,407

 
3,400

 
32,757

 
1,488

 
3,456

 
34,189

 
7,774

 
2013
 
1973
 
1055 and 1057 Don Mills Road
Toronto, ON
 
751

 
1,361

 
2,915

 
303

 
1,414

 
3,165

 
1,155

 
2013
 
1985
 
3705 Bathurst Street
Toronto, ON
 
5,685

 
1,447

 
3,918

 
358

 
1,494

 
4,229

 
1,147

 
2013
 
1987
 
1340 York Mills Road
Toronto, ON
 
30,679

 
5,304

 
53,488

 
2,130

 
5,387

 
55,535

 
15,694

 
2013
 
1988
 
8 The Donway East
Torrance, CA
 
—

 
3,497

 
73,138

 
16

 
3,497

 
73,154

 
4,639

 
2016
 
2016
 
25525 Hawthorne Boulevard
Tulsa, OK
 
—

 
1,330

 
21,285

 
4,417

 
1,362

 
25,670

 
7,149

 
2010
 
1986
 
8887 South Lewis Ave
Tulsa, OK
 
—

 
1,500

 
20,861

 
3,934

 
1,581

 
24,714

 
7,228

 
2010
 
1984
 
9524 East 71st St
Tustin, CA
 
—

 
840

 
15,299

 
744

 
840

 
16,043

 
3,784

 
2011
 
1965
 
240 East 3rd St
Upland, CA
 
—

 
3,160

 
42,596

 
55

 
3,160

 
42,651

 
5,414

 
2015
 
2014
 
2419 North Euclid Avenue
Upper Providence, PA
 
—

 
1,900

 
28,195

 
37

 
1,900

 
28,232

 
2,719

 
2013
 
2015
 
1133 Black Rock Road
Upper St Claire, PA
 
—

 
1,102

 
13,455

 
1,396

 
1,125

 
14,828

 
3,714

 
2013
 
2005
 
500 Village Drive
Vacaville, CA
 
—

 
900

 
17,100

 
1,756

 
907

 
18,849

 
7,022

 
2005
 
1987
 
799 Yellowstone Dr.
Vallejo, CA
 
—

 
4,000

 
18,000

 
2,476

 
4,030

 
20,446

 
7,573

 
2005
 
1989
 
350 Locust Dr.
Vallejo, CA
 
—

 
2,330

 
15,407

 
390

 
2,330

 
15,797

 
4,505

 
2010
 
1990
 
2261 Tuolumne
Vancouver, WA
 
—

 
1,820

 
19,042

 
438

 
1,821

 
19,479

 
5,299

 
2010
 
2006
 
10011 NE 118th Ave
Vancouver, BC
 
—

 
7,282

 
6,572

 
—

 
7,282

 
6,572

 
5,332

 
2015
 
1974
 
2803 West 41st Avenue
Vankleek Hill, ON
 
750

 
389

 
2,960

 
293

 
400

 
3,242

 
820

 
2013
 
1987
 
48 Wall Street
Vaudreuil, QC
 
7,822

 
1,852

 
14,214

 
546

 
1,829

 
14,783

 
2,234

 
2015
 
1975
 
333 rue Querbes
Venice, FL
 
64,425

 
6,820

 
100,501

 
4,362

 
6,892

 
104,791

 
19,357

 
2015
 
2002
 
1000 Aston Gardens Drive
Vero Beach, FL
 
—

 
2,930

 
40,070

 
25,658

 
2,930

 
65,728

 
19,456

 
2007
 
2003
 
7955 16th Manor
Victoria, BC
 
6,833

 
2,856

 
18,038

 
565

 
2,898

 
18,561

 
4,657

 
2013
 
1974
 
3000 Shelbourne Street
Victoria, BC
 
6,299

 
3,681

 
15,774

 
555

 
3,736

 
16,274

 
4,244

 
2013
 
1988
 
3051 Shelbourne Street
Victoria, BC
 
7,064

 
2,476

 
15,379

 
1,020

 
2,516

 
16,359

 
2,115

 
2015
 
1990
 
3965 Shelbourne Street
Virginia Water, UK
 
—

 
7,106

 
29,937

 
5,937

 
5,629

 
37,351

 
8,494

 
2012
 
2002
 
Christ Church Road
Voorhees, NJ
 
—

 
3,700

 
24,312

 
1,821

 
3,854

 
25,979

 
4,025

 
2012
 
2013
 
311 Route 73
Wall, NJ
 
—

 
1,650

 
25,350

 
2,679

 
1,692

 
27,987

 
5,356

 
2011
 
2003
 
2021 Highway 35
Walnut Creek, CA
 
—

 
3,700

 
12,467

 
2,280

 
3,808

 
14,639

 
4,072

 
2013
 
1998
 
2175 Ygnacio Valley Road
Walnut Creek, CA
 
—

 
10,320

 
100,890

 
15,190

 
10,320

 
116,080

 
15,633

 
2016
 
1988
 
1580 Geary Road
Waltham, MA
 
—

 
2,462

 
40,062

 
1,457

 
2,551

 
41,430

 
6,700

 
2015
 
2000
 
126 Smith Street
Washington, DC
 
30,162

 
4,000

 
69,154

 
3,157

 
4,004

 
72,307

 
14,549

 
2013
 
2004
 
5111 Connecticut Avenue NW
Watchung, NJ
 
—

 
1,920

 
24,880

 
1,348

 
2,048

 
26,100

 
5,131

 
2011
 
2000
 
680 Mountain Boulevard
Wayland, MA
 
—

 
1,207

 
27,462

 
2,157

 
1,334

 
29,492

 
6,527

 
2013
 
1997
 
285 Commonwealth Road
Webster Groves, MO
 
—

 
1,790

 
15,425

 
2,391

 
1,793

 
17,813

 
4,543

 
2011
 
2012
 
45 E Lockwood Avenue
Welland, ON
 
6,041

 
983

 
7,530

 
94

 
969

 
7,638

 
1,060

 
2015
 
2006
 
110 First Street
Wellesley, MA
 
—

 
4,690

 
77,462

 
219

 
4,690

 
77,681

 
11,776

 
2015
 
2012
 
23 & 27 Washington Street
West Babylon, NY
 
—

 
3,960

 
47,085

 
2,224

 
3,960

 
49,309

 
9,640

 
2013
 
2003
 
580 Montauk Highway
West Bloomfield, MI
 
—

 
1,040

 
12,300

 
835

 
1,094

 
13,081

 
2,977

 
2013
 
2000
 
7005 Pontiac Trail


(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Seniors Housing Operating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
West Hills, CA
 
—

 
2,600

 
7,521

 
1,545

 
2,636

 
9,030

 
2,681

 
2013
 
2002
 
9012 Topanga Canyon Road
West Vancouver, BC
 
17,668

 
7,059

 
28,155

 
1,997

 
7,168

 
30,043

 
7,104

 
2013
 
1987
 
2095 Marine Drive
Westbourne, UK
 
—

 
5,441

 
41,420

 
3,300

 
5,627

 
44,534

 
9,612

 
2013
 
2006
 
16-18 Poole Road
Westford, MA
 
—

 
1,440

 
32,607

 
319

 
1,468

 
32,898

 
4,202

 
2015
 
2013
 
108 Littleton Road
Weston, MA
 
—

 
1,160

 
6,200

 
1,274

 
1,160

 
7,474

 
1,583

 
2013
 
1998
 
135 North Avenue
Westworth Village, TX
 
—

 
2,060

 
31,296

 
60

 
2,060

 
31,356

 
3,346

 
2014
 
2014
 
25 Leonard Trail
Weybridge, UK
 
—

 
7,899

 
48,240

 
2,386

 
8,166

 
50,359

 
12,363

 
2013
 
2008
 
Ellesmere Road
Weymouth, UK
 
—

 
2,591

 
16,551

 
880

 
2,714

 
17,308

 
2,114

 
2014
 
2013
 
Cross Road
White Oak, MD
 
—

 
2,304

 
24,768

 
1,936

 
2,316

 
26,692

 
5,465

 
2013
 
2002
 
11621 New Hampshire Avenue
Wilmington, DE
 
—

 
1,040

 
23,338

 
1,771

 
1,129

 
25,020

 
5,281

 
2013
 
2004
 
2215 Shipley Street
Winchester, UK
 
—

 
6,009

 
29,405

 
1,472

 
6,220

 
30,666

 
7,194

 
2012
 
2010
 
Stockbridge Road
Winnipeg, MB
 
11,756

 
1,960

 
38,612

 
2,244

 
2,058

 
40,758

 
12,275

 
2013
 
1999
 
857 Wilkes Avenue
Winnipeg, MB
 
14,961

 
1,276

 
21,732

 
1,083

 
1,419

 
22,672

 
4,820

 
2013
 
1988
 
3161 Grant Avenue
Winnipeg, MB
 
12,124

 
1,317

 
15,609

 
1,864

 
1,346

 
17,444

 
3,116

 
2015
 
1999
 
125 Portsmouth Boulevard
Woking, UK
 
—

 
2,990

 
12,523

 
—

 
2,990

 
12,523

 
363

 
2016
 
2017
 
12 Streets Heath, West End
Wolverhampton, UK
 
—

 
2,941

 
8,922

 
724

 
3,047

 
9,540

 
3,114

 
2013
 
2008
 
73 Wergs Road
Woodbridge, CT
 
—

 
1,370

 
14,219

 
1,594

 
1,426

 
15,757

 
5,754

 
2011
 
1998
 
21 Bradley Road
Woodland Hills, CA
 
—

 
3,400

 
20,478

 
1,079

 
3,447

 
21,510

 
5,278

 
2013
 
2005
 
20461 Ventura Boulevard
Worcester, MA
 
—

 
1,140

 
21,664

 
1,382

 
1,166

 
23,020

 
6,192

 
2011
 
1999
 
340 May Street 
Yarmouth, ME
 
—

 
450

 
27,711

 
1,410

 
484

 
29,087

 
7,458

 
2011
 
1999
 
27 Forest Falls Drive
Yonkers, NY
 
—

 
3,962

 
50,107

 
2,111

 
3,967

 
52,213

 
10,824

 
2013
 
2005
 
65 Crisfield Street
Yorkton, SK
 
3,085

 
463

 
8,760

 
340

 
473

 
9,090

 
2,004

 
2013
 
2001
 
94 Russell Drive
Seniors Housing Operating Total
 
$
1,810,587


$
1,331,171


$
14,047,033


$
1,206,757


$
1,373,258


$
15,211,900


$
2,962,334

 
 
 
 
 
 




104

Welltower Inc.
 
 
Schedule III
 
 
Real Estate and Accumulated Depreciation
 
 
December 31, 2018
 
 
(Dollars in thousands)
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Triple-net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Abilene, TX
 
$
—

 
$
950

 
$
20,987

 
$
11,660

 
$
950

 
$
32,647

 
$
2,632

 
2014
 
1998
 
6565 Central Park Boulevard
Abilene, TX
 
—

 
990

 
8,187

 
1,089

 
990

 
9,276

 
1,000

 
2014
 
1985
 
1250 East N 10th Street
Aboite Twp, IN
 
—

 
1,770

 
19,930

 
1,601

 
1,770

 
21,531

 
4,613

 
2010
 
2008
 
611 W County Line Rd South
Adelphi, MD
 
—

 
1,429

 
4,312

 
—

 
1,429

 
4,312

 
56

 
2018
 
1967
 
1801 Metzerott Road
Agawam, MA
 
—

 
880

 
16,112

 
2,134

 
880

 
18,246

 
8,048

 
2002
 
1993
 
1200 Suffield St.
Akron, OH
 
—

 
633

 
3,003

 
—

 
633

 
3,003

 
37

 
2018
 
1999
 
171 North Cleveland Massillon Road
Albertville, AL
 
—

 
170

 
6,203

 
353

 
176

 
6,550

 
1,796

 
2010
 
1999
 
151 Woodham Dr.
Alexandria, VA
 
—

 
2,452

 
6,829

 
—

 
2,452

 
6,829

 
81

 
2018
 
1964
 
1510 Collingwood Road
Allen Park, MI
 
—

 
1,767

 
5,027

 
—

 
1,767

 
5,027

 
60

 
2018
 
1960
 
9150 Allen Road
Allentown, PA
 
—

 
494

 
11,849

 
—

 
494

 
11,849

 
138

 
2018
 
1995
 
5151 Hamilton Boulevard
Allentown, PA
 
—

 
1,491

 
4,823

 
—

 
1,491

 
4,823

 
59

 
2018
 
1988
 
1265 Cedar Crest Boulevard
Ames, IA
 
—

 
330

 
8,870

 
—

 
330

 
8,870

 
2,075

 
2010
 
1999
 
1325 Coconino Rd.
Ankeny, IA
 
—

 
1,129

 
10,270

 
—

 
1,129

 
10,270

 
813

 
2016
 
2012
 
1275 SW State Street
Ann Arbor, MI
 
—

 
2,172

 
11,127

 
—

 
2,172

 
11,127

 
140

 
2018
 
1997
 
4701 East Huron River Drive
Annandale, VA
 
—

 
1,687

 
18,980

 
—

 
1,687

 
18,980

 
216

 
2018
 
2002
 
7104 Braddock Road
Arlington, TX
 
—

 
1,660

 
37,395

 
1,825

 
1,660

 
39,220

 
9,668

 
2012
 
2000
 
1250 West Pioneer Parkway
Arlington, VA
 
—

 
4,016

 
8,805

 
—

 
4,016

 
8,805

 
102

 
2018
 
1976
 
550 South Carlin Southprings Road
Asheboro, NC
 
—

 
290

 
5,032

 
165

 
290

 
5,197

 
2,142

 
2003
 
1998
 
514 Vision Dr.
Asheville, NC
 
—

 
204

 
3,489

 
—

 
204

 
3,489

 
1,858

 
1999
 
1999
 
4 Walden Ridge Dr.
Asheville, NC
 
—

 
280

 
1,955

 
351

 
280

 
2,306

 
1,034

 
2003
 
1992
 
308 Overlook Rd.
Atchison, KS
 
—

 
140

 
5,610

 
23

 
140

 
5,633

 
475

 
2015
 
2001
 
1301 N 4th St.
Atlanta, GA
 
—

 
2,058

 
14,914

 
1,214

 
2,080

 
16,106

 
11,826

 
1997
 
1999
 
1460 S Johnson Ferry Rd.
Aurora, OH
 
—

 
1,760

 
14,148

 
106

 
1,760

 
14,254

 
3,369

 
2011
 
2002
 
505 S. Chillicothe Rd
Aurora, CO
 
—

 
2,440

 
28,172

 
—

 
2,440

 
28,172

 
11,394

 
2006
 
2007
 
14211 E. Evans Ave.
Austin, TX
 
—

 
880

 
9,520

 
1,299

 
885

 
10,814

 
5,784

 
1999
 
1998
 
12429 Scofield Farms Dr.
Austin, TX
 
—

 
1,691

 
5,006

 
—

 
1,691

 
5,006

 
78

 
2018
 
2000
 
11630 Four Iron Drive
Avon, IN
 
—

 
1,830

 
14,470

 
—

 
1,830

 
14,470

 
3,534

 
2010
 
2004
 
182 S Country RD. 550E
Avon, IN
 
—

 
900

 
19,444

 
—

 
900

 
19,444

 
2,329

 
2014
 
2013
 
10307 E. CR 100 N
Avon, CT
 
—

 
2,132

 
7,627

 
—

 
2,132

 
7,627

 
109

 
2018
 
2000
 
100 Fisher Drive
Avon Lake, OH
 
—

 
790

 
10,421

 
5,822

 
790

 
16,243

 
3,136

 
2011
 
2001
 
345 Lear Rd.
Baldwin City, KS
 
—

 
190

 
4,810

 
55

 
190

 
4,865

 
420

 
2015
 
2000
 
321 Crimson Ave
Baltimore, MD
 
—

 
4,306

 
4,305

 
—

 
4,306

 
4,305

 
55

 
2018
 
1978
 
6600 Ridge Road
Baltimore, MD
 
—

 
3,069

 
3,150

 
—

 
3,069

 
3,150

 
43

 
2018
 
1996
 
4669 Falls Road
Barberton, OH
 
—

 
1,307

 
9,313

 
—

 
1,307

 
9,313

 
108

 
2018
 
1979
 
85 Third Street
Bartlesville, OK
 
—

 
100

 
1,380

 
—

 
100

 
1,380

 
828

 
1996
 
1995
 
5420 S.E. Adams Blvd.
Battle Creek, MI
 
—

 
857

 
1,822

 
—

 
857

 
1,822

 
30

 
2018
 
1965
 
200 Roosevelt Avenue East
Bay City, MI
 
—

 
633

 
2,620

 
—

 
633

 
2,620

 
35

 
2018
 
1968
 
800 Mulholland Street
Bedford, PA
 
—

 
637

 
4,434

 
—

 
637

 
4,434

 
61

 
2018
 
1965
 
136 Donahoe Manor Road
Bellingham, WA
 
—

 
1,500

 
19,861

 
396

 
1,507

 
20,250

 
5,450

 
2010
 
1996
 
4415 Columbine Dr.
Benbrook, TX
 
—

 
1,550

 
13,553

 
2,657

 
1,550

 
16,210

 
3,016

 
2011
 
1984
 
4242 Bryant Irvin Road


(Dollars in thousands)
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Triple-net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bethel Park, PA
 
—

 
1,700

 
16,007

 
—

 
1,700

 
16,007

 
4,274

 
2007
 
2009
 
5785 Baptist Road
Bethel Park, PA
 
—

 
1,008

 
6,742

 
—

 
1,008

 
6,742

 
83

 
2018
 
1986
 
60 Highland Road
Bethesda, MD
 
—

 
2,218

 
6,871

 
—

 
2,218

 
6,871

 
78

 
2018
 
1974
 
6530 Democracy Boulevard
Bethlehem, PA
 
—

 
1,191

 
16,892

 
—

 
1,191

 
16,892

 
187

 
2018
 
1979
 
2021 Westgate Drive
Bethlehem, PA
 
—

 
1,143

 
13,592

 
—

 
1,143

 
13,592

 
152

 
2018
 
1982
 
2029 Westgate Drive
Beverly Hills, CA
 
—

 
6,000

 
13,385

 
—

 
6,000

 
13,385

 
1,420

 
2014
 
2000
 
220 N Clark Drive
Bexleyheath, UK
 
—

 
3,750

 
10,807

 
493

 
3,877

 
11,173

 
1,210

 
2014
 
1996
 
35 West Street
Bingham Farms, MI
 
—

 
781

 
15,676

 
—

 
781

 
15,676

 
180

 
2018
 
1999
 
24005 West 13 Mile Road
Birmingham, UK
 
—

 
1,647

 
14,853

 
558

 
1,703

 
15,355

 
1,491

 
2015
 
2010
 
Clinton Street, Winson Green
Birmingham, UK
 
—

 
1,591

 
19,092

 
700

 
1,645

 
19,738

 
1,888

 
2015
 
2010
 
Braymoor Road, Tile Cross
Birmingham, UK
 
—

 
1,462

 
9,056

 
355

 
1,511

 
9,362

 
923

 
2015
 
2010
 
Clinton Street, Winson Green
Birmingham, UK
 
—

 
1,184

 
10,085

 
381

 
1,224

 
10,426

 
1,005

 
2015
 
1997
 
122 Tile Cross Road, Garretts Green
Bloomington, IN
 
—

 
670

 
17,423

 
—

 
670

 
17,423

 
1,651

 
2015
 
2015
 
363 S. Fieldstone Boulevard
Boardman, OH
 
—

 
1,200

 
12,800

 
—

 
1,200

 
12,800

 
4,308

 
2008
 
2008
 
8049 South Ave.
Boca Raton, FL
 
—

 
2,200

 
4,976

 
—

 
2,200

 
4,976

 
74

 
2018
 
1994
 
7225 Boca Del Mar Drive
Boca Raton, FL
 
—

 
2,826

 
4,063

 
—

 
2,826

 
4,063

 
54

 
2018
 
1984
 
375 Northwest 51st Street
Boulder, CO
 
—

 
3,601

 
21,371

 
—

 
3,601

 
21,371

 
263

 
2018
 
1990
 
2800 Palo Parkway
Bowling Green, KY
 
—

 
3,800

 
26,700

 
149

 
3,800

 
26,849

 
7,094

 
2008
 
1992
 
1300 Campbell Lane
Boynton Beach, FL
 
—

 
2,138

 
10,204

 
—

 
2,138

 
10,204

 
128

 
2018
 
1991
 
3600 Old Boynton Road
Boynton Beach, FL
 
—

 
2,804

 
14,226

 
—

 
2,804

 
14,226

 
163

 
2018
 
1984
 
3001 South Congress Avenue
Bracknell, UK
 
—

 
4,081

 
11,470

 
—

 
4,081

 
11,470

 
405

 
2014
 
2017
 
Bagshot Road
Bradenton, FL
 
—

 
252

 
3,298

 
—

 
252

 
3,298

 
1,991

 
1996
 
1995
 
6101 Pointe W. Blvd.
Bradenton, FL
 
—

 
480

 
9,953

 
—

 
480

 
9,953

 
1,714

 
2012
 
2000
 
2800 60th Avenue West
Braintree, MA
 
—

 
170

 
7,157

 
1,290

 
170

 
8,447

 
8,433

 
1997
 
1968
 
1102 Washington St.
Braintree, UK
 
—

 
—

 
13,296

 
450

 
—

 
13,746

 
1,570

 
2014
 
2009
 
Meadow Park Tortoiseshell Way
Brandon, MS
 
—

 
1,220

 
10,241

 
8

 
1,220

 
10,249

 
2,291

 
2010
 
1999
 
140 Castlewoods Blvd
Brecksville, OH
 
—

 
990

 
19,353

 
—

 
990

 
19,353

 
2,309

 
2014
 
2011
 
8757 Brecksville Road
Brentwood, UK
 
36,589

 
8,537

 
45,869

 
1,998

 
8,826

 
47,578

 
2,534

 
2016
 
2013
 
London Road
Brick, NJ
 
—

 
1,290

 
25,247

 
996

 
1,290

 
26,243

 
5,086

 
2011
 
2000
 
458 Jack Martin Blvd.
Bridgewater, NJ
 
—

 
1,800

 
31,810

 
1,397

 
1,800

 
33,207

 
6,365

 
2011
 
2001
 
680 US-202/206 North
Brookfield, WI
 
—

 
1,300

 
12,830

 
—

 
1,300

 
12,830

 
1,779

 
2012
 
2013
 
1105 Davidson Road
Brooks, AB
 
1,757

 
376

 
4,951

 
80

 
381

 
5,026

 
586

 
2014
 
2000
 
951 Cassils Road West
Bucyrus, OH
 
—

 
1,119

 
2,612

 
—

 
1,119

 
2,612

 
37

 
2018
 
1976
 
1170 West Mansfield Street
Burleson, TX
 
—

 
670

 
13,985

 
2,105

 
670

 
16,090

 
3,142

 
2011
 
1988
 
300 Huguley Boulevard
Burlington, NC
 
—

 
280

 
4,297

 
707

 
280

 
5,004

 
2,037

 
2003
 
2000
 
3619 S. Mebane St.
Burlington, NC
 
—

 
460

 
5,467

 
—

 
460

 
5,467

 
2,271

 
2003
 
1997
 
3615 S. Mebane St.
Burlington, NJ
 
—

 
1,700

 
12,554

 
501

 
1,700

 
13,055

 
3,231

 
2011
 
1965
 
115 Sunset Road
Burlington, NJ
 
—

 
1,170

 
19,205

 
172

 
1,170

 
19,377

 
4,109

 
2011
 
1994
 
2305 Rancocas Road
Burnaby, BC
 
7,326

 
7,623

 
13,844

 
320

 
7,736

 
14,051

 
1,664

 
2014
 
2006
 
7195 Canada Way
Calgary, AB
 
14,921

 
2,341

 
42,768

 
726

 
2,376

 
43,459

 
4,882

 
2014
 
1971
 
1729-90th Avenue SW
Calgary, AB
 
24,745

 
4,569

 
70,199

 
1,109

 
4,636

 
71,241

 
7,933

 
2014
 
2001
 
500 Midpark Way SE
Camberley, UK
 
—

 
9,974

 
39,168

 
—

 
9,974

 
39,168

 
1,574

 
2016
 
2017
 
Pembroke Broadway
Camp Hill, PA
 
—

 
517

 
3,597

 
—

 
517

 
3,597

 
43

 
2018
 
1970
 
1700 Market Street
Canonsburg, PA
 
—

 
911

 
4,830

 
—

 
911

 
4,830

 
63

 
2018
 
1986
 
113 West McMurray Road
Canton, OH
 
—

 
300

 
2,098

 
—

 
300

 
2,098

 
1,115

 
1998
 
1998
 
1119 Perry Dr., N.W.


(Dollars in thousands)
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Triple-net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Canton, MI
 
—

 
1,399

 
16,971

 
—

 
1,399

 
16,971

 
195

 
2018
 
2005
 
7025 Lilley Road
Cape Coral, FL
 
—

 
530

 
3,281

 
—

 
530

 
3,281

 
1,473

 
2002
 
2000
 
911 Santa Barbara Blvd.
Cape Coral, FL
 
8,337

 
760

 
18,868

 
—

 
760

 
18,868

 
3,282

 
2012
 
2009
 
831 Santa Barbara Boulevard
Cape May Court House, NJ
 
—

 
1,440

 
17,002

 
1,775

 
1,440

 
18,777

 
2,265

 
2014
 
1990
 
144 Magnolia Drive
Carlisle, PA
 
—

 
978

 
8,207

 
—

 
978

 
8,207

 
100

 
2018
 
1987
 
940 Walnut Bottom Road
Carmel, IN
 
—

 
1,700

 
19,491

 
1

 
1,700

 
19,492

 
1,971

 
2015
 
2015
 
12315 Pennsylvania Street
Carmel, IN
 
—

 
1,583

 
6,071

 
—

 
1,583

 
6,071

 
80

 
2018
 
1985
 
12999 North Pennsylvania Street
Carmel, IN
 
—

 
—

 
2,296

 
—

 
—

 
2,296

 
25

 
2018
 
1985
 
12999 North Pennsylvania Street
Carrollton, TX
 
—

 
2,010

 
19,549

 
—

 
2,010

 
19,549

 
1,194

 
2014
 
2016
 
2645 East Trinity Mills Road
Cary, NC
 
—

 
1,500

 
4,350

 
986

 
1,500

 
5,336

 
2,698

 
1998
 
1996
 
111 MacArthur
Castleton, IN
 
—

 
920

 
15,137

 
—

 
920

 
15,137

 
1,885

 
2014
 
2013
 
8405 Clearvista Lake
Cedar Grove, NJ
 
—

 
2,850

 
27,737

 
20

 
2,850

 
27,757

 
5,981

 
2011
 
1970
 
536 Ridge Road
Cedar Rapids, IA
 
—

 
596

 
9,354

 
—

 
596

 
9,354

 
105

 
2018
 
1965
 
1940 1st Avenue Northeast
Centerville, OH
 
—

 
920

 
3,960

 
—

 
920

 
3,960

 
69

 
2018
 
1997
 
1001 E. Alex Bell Road
Centreville, MD
 
—

 
600

 
14,602

 
241

 
600

 
14,843

 
3,242

 
2011
 
1978
 
205 Armstrong Avenue
Chagrin Falls, OH
 
—

 
832

 
10,841

 
—

 
832

 
10,841

 
130

 
2018
 
1999
 
8100 East Washington Street
Chambersburg, PA
 
—

 
1,373

 
8,864

 
—

 
1,373

 
8,864

 
112

 
2018
 
1976
 
1070 Stouffer Avenue
Chapel Hill, NC
 
—

 
354

 
2,646

 
783

 
354

 
3,429

 
1,508

 
2002
 
1997
 
100 Lanark Rd.
Charleston, SC
 
—

 
1,333

 
5,556

 
—

 
1,333

 
5,556

 
67

 
2018
 
1982
 
1137 Sam Rittenberg Boulevard
Charleston, WV
 
—

 
440

 
17,575

 
306

 
440

 
17,881

 
3,680

 
2011
 
1998
 
1000 Association Drive, North Gate Business Park
Chatham, VA
 
—

 
320

 
14,039

 
—

 
320

 
14,039

 
1,814

 
2014
 
2009
 
100 Rorer Street
Cherry Hill, NJ
 
—

 
1,416

 
9,874

 
—

 
1,416

 
9,874

 
123

 
2018
 
1997
 
2700 Chapel Avenue West
Chester, VA
 
—

 
1,320

 
18,127

 
—

 
1,320

 
18,127

 
2,292

 
2014
 
2009
 
12001 Iron Bridge Road
Chevy Chase, MD
 
—

 
4,515

 
8,688

 
—

 
4,515

 
8,688

 
102

 
2018
 
1964
 
8700 Jones Mill Road
Chickasha, OK
 
—

 
85

 
1,395

 
—

 
85

 
1,395

 
831

 
1996
 
1996
 
801 Country Club Rd.
Chillicothe, OH
 
—

 
1,145

 
8,997

 
—

 
1,145

 
8,997

 
105

 
2018
 
1977
 
1058 Columbus Street
Cincinnati, OH
 
—

 
912

 
14,014

 
—

 
912

 
14,014

 
166

 
2018
 
2000
 
6870 Clough Pike
Citrus Heights, CA
 
—

 
5,207

 
31,725

 
—

 
5,207

 
31,725

 
354

 
2018
 
1988
 
7807 Upland Way
Claremore, OK
 
—

 
155

 
1,427

 
6,130

 
155

 
7,557

 
1,597

 
1996
 
1996
 
1605 N. Hwy. 88
Clarksville, TN
 
—

 
330

 
2,292

 
—

 
330

 
2,292

 
1,213

 
1998
 
1998
 
2183 Memorial Dr.
Clayton, NC
 
—

 
520

 
15,733

 
—

 
520

 
15,733

 
1,771

 
2014
 
2013
 
84 Johnson Estate Road
Cleburne, TX
 
—

 
520

 
5,369

 
—

 
520

 
5,369

 
1,669

 
2006
 
2007
 
402 S Colonial Drive
Clevedon, UK
 
—

 
2,838

 
16,927

 
667

 
2,933

 
17,499

 
1,998

 
2014
 
1994
 
18/19 Elton Road
Cobham, UK
 
—

 
9,808

 
24,991

 
1,176

 
10,139

 
25,836

 
3,657

 
2013
 
2013
 
Redhill Road
Colchester, CT
 
—

 
980

 
4,860

 
544

 
980

 
5,404

 
1,444

 
2011
 
1986
 
59 Harrington Court
Colorado Springs, CO
 
—

 
4,280

 
62,168

 
—

 
4,280

 
62,168

 
5,328

 
2015
 
2008
 
1605 Elm Creek View
Colorado Springs, CO
 
—

 
1,730

 
25,493

 
693

 
1,730

 
26,186

 
1,972

 
2016
 
2016
 
2818 Grand Vista Circle
Columbia, TN
 
—

 
341

 
2,295

 
—

 
341

 
2,295

 
1,218

 
1999
 
1999
 
5011 Trotwood Ave.
Columbia, SC
 
—

 
1,699

 
2,320

 
—

 
1,699

 
2,320

 
30

 
2018
 
1968
 
2601 Forest Drive
Columbia Heights, MN
 
—

 
825

 
14,175

 
163

 
825

 
14,338

 
2,738

 
2011
 
2009
 
3807 Hart Boulevard
Columbus, IN
 
—

 
610

 
3,190

 
—

 
610

 
3,190

 
764

 
2010
 
1998
 
2564 Foxpointe Dr.
Concord, NC
 
—

 
550

 
3,921

 
55

 
550

 
3,976

 
1,782

 
2003
 
1997
 
2452 Rock Hill Church Rd.
Concord, NH
 
—

 
1,760

 
43,179

 
634

 
1,760

 
43,813

 
9,027

 
2011
 
1994
 
239 Pleasant Street
Congleton, UK
 
—

 
2,036

 
5,120

 
241

 
2,104

 
5,293

 
575

 
2014
 
1994
 
Rood Hill
Conroe, TX
 
—

 
980

 
7,771

 
—

 
980

 
7,771

 
1,965

 
2009
 
2010
 
903 Longmire Road

(Dollars in thousands)
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Triple-net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Coppell, TX
 
—

 
1,550

 
8,386

 
100

 
1,550

 
8,486

 
1,347

 
2012
 
2013
 
1530 East Sandy Lake Road
Corby, UK
 
—

 
1,228

 
5,144

 
398

 
1,157

 
5,613

 
248

 
2017
 
1997
 
25 Rockingham Road
Coventry, UK
 
—

 
1,962

 
13,830

 
533

 
2,028

 
14,297

 
1,430

 
2015
 
2014
 
Banner Lane, Tile Hill
Crawfordsville, IN
 
—

 
720

 
17,239

 
1,426

 
720

 
18,665

 
2,245

 
2014
 
2013
 
517 Concord Road
Dallastown, PA
 
—

 
1,377

 
16,802

 
—

 
1,377

 
16,802

 
200

 
2018
 
1979
 
100 West Queen Street
Danville, VA
 
—

 
410

 
3,954

 
722

 
410

 
4,676

 
1,963

 
2003
 
1998
 
149 Executive Ct.
Danville, VA
 
—

 
240

 
8,436

 
—

 
240

 
8,436

 
1,087

 
2014
 
1996
 
508 Rison Street
Daphne, AL
 
—

 
2,880

 
8,670

 
384

 
2,880

 
9,054

 
1,625

 
2012
 
2001
 
27440 County Road 13
Davenport, IA
 
—

 
566

 
2,017

 
—

 
566

 
2,017

 
25

 
2018
 
1966
 
815 East Locust Street
Davenport, IA
 
—

 
910

 
20,043

 
—

 
910

 
20,043

 
231

 
2018
 
2008
 
3800 Commerce Blvd.
Dayton, OH
 
—

 
1,188

 
5,414

 
—

 
1,188

 
5,414

 
69

 
2018
 
1977
 
1974 North Fairfield Road
Dearborn Heights, MI
 
—

 
1,197

 
3,396

 
—

 
1,197

 
3,396

 
47

 
2018
 
1964
 
26001 Ford Road
Decatur, GA
 
—

 
1,413

 
13,800

 
—

 
1,413

 
13,800

 
152

 
2018
 
1977
 
2722 North Decatur Road
Delray Beach, FL
 
—

 
1,158

 
13,576

 
—

 
1,158

 
13,576

 
162

 
2018
 
1998
 
16150 Jog Road
Delray Beach, FL
 
—

 
2,125

 
11,844

 
—

 
2,125

 
11,844

 
146

 
2018
 
1998
 
16200 Jog Road
Denton, TX
 
—

 
1,760

 
8,305

 
100

 
1,760

 
8,405

 
1,799

 
2010
 
2011
 
2125 Brinker Rd
Denver, CO
 
—

 
1,450

 
19,389

 
3,133

 
1,450

 
22,522

 
4,292

 
2012
 
1997
 
4901 South Monaco Street
Denver, CO
 
—

 
3,222

 
24,811

 
—

 
3,222

 
24,811

 
275

 
2018
 
1988
 
290 South Monaco Parkway
Derby, UK
 
—

 
2,359

 
8,539

 
—

 
2,359

 
8,539

 
712

 
2014
 
2015
 
Rykneld Road
Dover, DE
 
—

 
600

 
22,266

 
141

 
600

 
22,407

 
4,718

 
2011
 
1984
 
1080 Silver Lake Blvd.
Dublin, OH
 
—

 
1,393

 
2,912

 
—

 
1,393

 
2,912

 
42

 
2018
 
2014
 
4075 W. Dublin-Granville Road
Dubuque, IA
 
—

 
568

 
8,904

 
—

 
568

 
8,904

 
100

 
2018
 
1971
 
901 West Third Street
Dundalk, MD
 
—

 
1,770

 
32,047

 
784

 
1,770

 
32,831

 
6,877

 
2011
 
1978
 
7232 German Hill Road
Dunedin, FL
 
—

 
1,883

 
13,329

 
—

 
1,883

 
13,329

 
151

 
2018
 
1983
 
870 Patricia Avenue
Durham, NC
 
—

 
1,476

 
10,659

 
2,196

 
1,476

 
12,855

 
11,898

 
1997
 
1999
 
4434 Ben Franklin Blvd.
Eagan, MN
 
16,470

 
2,260

 
31,643

 
300

 
2,260

 
31,943

 
2,737

 
2015
 
2004
 
3810 Alder Avenue
East Brunswick, NJ
 
—

 
1,380

 
34,229

 
849

 
1,380

 
35,078

 
6,708

 
2011
 
1998
 
606 Cranbury Rd.
Eastbourne, UK
 
—

 
4,071

 
24,438

 
964

 
4,209

 
25,264

 
2,847

 
2014
 
1999
 
Carew Road
Easton, PA
 
—

 
1,109

 
7,502

 
—

 
1,109

 
7,502

 
116

 
2018
 
2015
 
4100 Freemansburg Avenue
Easton, PA
 
—

 
1,430

 
13,400

 
—

 
1,430

 
13,400

 
160

 
2018
 
1981
 
2600 Northampton Street
Easton, PA
 
—

 
1,620

 
10,052

 
—

 
1,620

 
10,052

 
142

 
2018
 
2000
 
4100 Freemansburg Avenue
Eden, NC
 
—

 
390

 
4,877

 
—

 
390

 
4,877

 
2,046

 
2003
 
1998
 
314 W. Kings Hwy.
Edmond, OK
 
—

 
410

 
8,388

 
—

 
410

 
8,388

 
1,543

 
2012
 
2001
 
15401 North Pennsylvania Avenue
Edmond, OK
 
—

 
1,810

 
14,849

 
2,630

 
1,810

 
17,479

 
2,118

 
2014
 
1985
 
1225 Lakeshore Drive
Edmond, OK
 
—

 
1,650

 
25,167

 
—

 
1,650

 
25,167

 
1,300

 
2014
 
2017
 
2709 East Danforth Road
Elizabeth City, NC
 
—

 
200

 
2,760

 
2,011

 
200

 
4,771

 
2,264

 
1998
 
1999
 
400 Hastings Lane
Elk Grove Village, IL
 
—

 
1,344

 
7,076

 
—

 
1,344

 
7,076

 
88

 
2018
 
1995
 
1940 Nerge Road Elk
Elk Grove Village, IL
 
—

 
3,733

 
18,751

 
—

 
3,733

 
18,751

 
207

 
2018
 
1988
 
1920 Nerge Road
Emeryville, CA
 
—

 
2,560

 
57,491

 
641

 
2,560

 
58,132

 
6,734

 
2014
 
2010
 
1440 40th Street
Englewood, NJ
 
—

 
930

 
4,514

 
26

 
930

 
4,540

 
1,075

 
2011
 
1966
 
333 Grand Avenue
Epsom, UK
 
36,932

 
20,159

 
34,803

 
2,053

 
20,840

 
36,175

 
1,933

 
2016
 
2014
 
450-458 Reigate Road
Eureka, KS
 
—

 
50

 
3,950

 
71

 
50

 
4,021

 
339

 
2015
 
1994
 
1820 E River St
Everett, WA
 
—

 
1,400

 
5,476

 
—

 
1,400

 
5,476

 
2,819

 
1999
 
1999
 
2015 Lake Heights Dr.
Exton, PA
 
—

 
3,600

 
27,267

 
—

 
3,600

 
27,267

 
299

 
2017
 
2018
 
501 Thomas Jones Way
Fairfax, VA
 
—

 
1,827

 
17,309

 
—

 
1,827

 
17,309

 
208

 
2018
 
1997
 
12469 Lee Jackson Mem Highway


(Dollars in thousands)
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Triple-net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fairfax, VA
 
—

 
4,099

 
17,620

 
—

 
4,099

 
17,620

 
208

 
2018
 
1990
 
12475 Lee Jackson Memorial Highway
Fairhope, AL
 
—

 
570

 
9,119

 
112

 
570

 
9,231

 
1,656

 
2012
 
1987
 
50 Spring Run Road
Fall River, MA
 
—

 
620

 
5,829

 
4,856

 
620

 
10,685

 
5,463

 
1996
 
1973
 
1748 Highland Ave.
Fanwood, NJ
 
—

 
2,850

 
55,175

 
1,123

 
2,850

 
56,298

 
10,633

 
2011
 
1982
 
295 South Ave.
Faribault, MN
 
—

 
780

 
11,539

 
300

 
780

 
11,839

 
964

 
2015
 
2003
 
828 1st Street NE
Farmington, CT
 
—

 
1,693

 
10,459

 
—

 
1,693

 
10,459

 
128

 
2018
 
1997
 
45 South Road
Farnborough, UK
 
—

 
2,036

 
5,737

 
262

 
2,104

 
5,931

 
626

 
2014
 
1980
 
Bruntile Close, Reading Road
Fayetteville, PA
 
—

 
2,150

 
32,951

 
2,013

 
2,150

 
34,964

 
3,114

 
2015
 
1991
 
6375 Chambersburg Road
Fayetteville, NY
 
—

 
410

 
3,962

 
500

 
410

 
4,462

 
1,973

 
2001
 
1997
 
5125 Highbridge St.
Findlay, OH
 
—

 
200

 
1,800

 
—

 
200

 
1,800

 
1,019

 
1997
 
1997
 
725 Fox Run Rd.
Fishers, IN
 
—

 
1,500

 
14,500

 
—

 
1,500

 
14,500

 
3,540

 
2010
 
2000
 
9745 Olympia Dr.
Fishersville, VA
 
—

 
788

 
2,101

 
—

 
788

 
2,101

 
437

 
2018
 
1998
 
83 Cross Rd Ln
Flint, MI
 
—

 
1,271

 
18,056

 
—

 
1,271

 
18,056

 
202

 
2018
 
1969
 
3011 North Center Road
Florence, NJ
 
—

 
300

 
2,978

 
—

 
300

 
2,978

 
1,332

 
2002
 
1999
 
901 Broad St.
Florence, AL
 
—

 
353

 
13,049

 
223

 
385

 
13,240

 
3,575

 
2010
 
1999
 
3275 County Road 47
Flourtown, PA
 
—

 
1,800

 
14,830

 
266

 
1,800

 
15,096

 
3,297

 
2011
 
1908
 
350 Haws Lane
Flower Mound, TX
 
—

 
1,800

 
8,414

 
100

 
1,800

 
8,514

 
1,539

 
2011
 
2012
 
4141 Long Prairie Road
Floyd, VA
 
—

 
680

 
3,618

 
—

 
680

 
3,618

 
247

 
2018
 
1979
 
237 Franklin Pike Rd SE
Flushing, MI
 
—

 
690

 
1,702

 
—

 
690

 
1,702

 
32

 
2018
 
1999
 
640 Sunnyside Drive
Flushing, MI
 
—

 
1,415

 
8,536

 
—

 
1,415

 
8,536

 
105

 
2018
 
1967
 
540 Sunnyside Drive
Folsom, CA
 
—

 
—

 
33,600

 
—

 
1,582

 
32,018

 
5,004

 
2013
 
2009
 
330 Montrose Drive
Forest City, NC
 
—

 
320

 
4,497

 
—

 
320

 
4,497

 
1,902

 
2003
 
1999
 
493 Piney Ridge Rd.
Fort Ashby, WV
 
—

 
330

 
19,566

 
356

 
330

 
19,922

 
4,054

 
2011
 
1980
 
Diane Drive, Box 686
Fort Collins, CO
 
—

 
3,680

 
58,608

 
—

 
3,680

 
58,608

 
5,006

 
2015
 
2007
 
4750 Pleasant Oak Drive
Fort Collins, CO
 
—

 
890

 
4,532

 
—

 
890

 
4,532

 
89

 
2018
 
1965
 
1005 East Elizabeth
Fort Wayne, IN
 
—

 
170

 
8,232

 
—

 
170

 
8,232

 
2,649

 
2006
 
2006
 
2626 Fairfield Ave.
Fort Worth, TX
 
—

 
450

 
13,615

 
5,086

 
450

 
18,701

 
4,213

 
2010
 
2011
 
425 Alabama Ave.
Fort Worth, TX
 
—

 
2,080

 
27,888

 
2,401

 
2,080

 
30,289

 
7,355

 
2012
 
2001
 
2151 Green Oaks Road
Fountain Valley, CA
 
—

 
5,259

 
9,379

 
—

 
5,259

 
9,379

 
110

 
2018
 
1988
 
11680 Warner Avenue
Franconia, NH
 
—

 
360

 
11,320

 
70

 
360

 
11,390

 
2,433

 
2011
 
1971
 
93 Main Street
Fredericksburg, VA
 
—

 
1,000

 
20,000

 
1,200

 
1,000

 
21,200

 
7,399

 
2005
 
1999
 
3500 Meekins Dr.
Fredericksburg, VA
 
—

 
1,130

 
23,202

 
—

 
1,130

 
23,202

 
2,704

 
2014
 
2010
 
140 Brimley Drive
Fresno, CA
 
—

 
2,500

 
35,800

 
118

 
2,500

 
35,918

 
9,497

 
2008
 
1991
 
7173 North Sharon Avenue
Ft. Myers, FL
 
—

 
1,110

 
10,562

 
—

 
1,110

 
10,562

 
128

 
2018
 
1999
 
15950 McGregor Boulevard
Ft. Myers, FL
 
—

 
2,139

 
18,240

 
—

 
2,139

 
18,240

 
215

 
2018
 
1990
 
1600 Matthew Drive
Ft. Myers, FL
 
—

 
2,502

 
9,744

 
—

 
2,502

 
9,744

 
139

 
2018
 
2000
 
13881 Eagle Ridge Drive
Galesburg, IL
 
—

 
1,708

 
3,841

 
—

 
1,708

 
3,841

 
46

 
2018
 
1964
 
280 East Losey Street
Gardner, KS
 
—

 
200

 
2,800

 
93

 
200

 
2,893

 
259

 
2015
 
2000
 
869 Juniper Terrace
Gardnerville, NV
 
—

 
1,143

 
10,831

 
1,118

 
1,164

 
11,928

 
8,904

 
1998
 
1999
 
1565-A Virginia Ranch Rd.
Gastonia, NC
 
—

 
470

 
6,129

 
—

 
470

 
6,129

 
2,535

 
2003
 
1998
 
1680 S. New Hope Rd.
Gastonia, NC
 
—

 
310

 
3,096

 
22

 
310

 
3,118

 
1,355

 
2003
 
1994
 
1717 Union Rd.
Gastonia, NC
 
—

 
400

 
5,029

 
120

 
400

 
5,149

 
2,143

 
2003
 
1996
 
1750 Robinwood Rd.
Geneva, IL
 
—

 
1,502

 
16,198

 
—

 
1,502

 
16,198

 
191

 
2018
 
2000
 
2388 Bricher Road
Georgetown, TX
 
—

 
200

 
2,100

 
—

 
200

 
2,100

 
1,177

 
1997
 
1997
 
2600 University Dr., E.
Gig Harbor, WA
 
—

 
1,560

 
15,947

 
275

 
1,583

 
16,199

 
4,269

 
2010
 
1994
 
3213 45th St. Court NW


(Dollars in thousands)
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Triple-net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gig Harbor, WA
 
—

 
3,000

 
4,463

 
—

 
3,000

 
4,463

 
64

 
2018
 
1990
 
3309 45th Street Court Northwest
Glen Ellyn, IL
 
—

 
1,496

 
6,636

 
—

 
1,496

 
6,636

 
87

 
2018
 
2001
 
2S706 Park Boulevard
Granbury, TX
 
—

 
2,550

 
2,940

 
777

 
2,550

 
3,717

 
737

 
2012
 
1996
 
916 East Highway 377
Grand Ledge, MI
 
—

 
1,150

 
16,286

 
5,119

 
1,150

 
21,405

 
4,313

 
2010
 
1999
 
4775 Village Dr
Granger, IN
 
—

 
1,670

 
21,280

 
2,401

 
1,670

 
23,681

 
5,011

 
2010
 
2009
 
6330 North Fir Rd
Grapevine, TX
 
—

 
2,220

 
17,648

 
—

 
2,220

 
17,648

 
1,554

 
2013
 
2014
 
4545 Merlot Drive
Great Falls, MT
 
—

 
630

 
6,007

 
—

 
630

 
6,007

 
357

 
2018
 
2001
 
1801 9th Street South
Greeley, CO
 
—

 
1,077

 
18,051

 
—

 
1,077

 
18,051

 
806

 
2017
 
2009
 
5300 West 29th Street
Greenfield, WI
 
—

 
—

 
15,204

 
—

 
890

 
14,314

 
2,085

 
2013
 
1983
 
5017 South 110th Street
Greensboro, NC
 
—

 
330

 
2,970

 
554

 
330

 
3,524

 
1,506

 
2003
 
1996
 
5809 Old Oak Ridge Rd.
Greensboro, NC
 
—

 
560

 
5,507

 
1,013

 
560

 
6,520

 
2,770

 
2003
 
1997
 
4400 Lawndale Dr.
Greenville, SC
 
—

 
1,751

 
8,774

 
—

 
1,751

 
8,774

 
106

 
2018
 
1966
 
600 Sulphur Springs Road
Greenville, SC
 
—

 
947

 
1,445

 
—

 
947

 
1,445

 
29

 
2018
 
1976
 
601 Sulphur Springs Road
Greenville, NC
 
—

 
290

 
4,393

 
168

 
290

 
4,561

 
1,882

 
2003
 
1998
 
2715 Dickinson Ave.
Greenwood, IN
 
—

 
1,550

 
22,770

 
81

 
1,550

 
22,851

 
4,932

 
2010
 
2007
 
2339 South SR 135
Grosse Pointe, MI
 
—

 
867

 
2,386

 
—

 
867

 
2,386

 
30

 
2018
 
1964
 
21401 Mack Avenue
Groton, CT
 
—

 
2,430

 
19,941

 
968

 
2,430

 
20,909

 
4,784

 
2011
 
1975
 
1145 Poquonnock Road
Hamilton, NJ
 
—

 
440

 
4,469

 
—

 
440

 
4,469

 
1,990

 
2001
 
1998
 
1645 Whitehorse-Mercerville Rd.
Hanahan, SC
 
—

 
1,944

 
3,988

 
—

 
1,944

 
3,988

 
57

 
2018
 
1989
 
1800 Eagle Landing Boulevard
Hanford, UK
 
—

 
1,382

 
9,829

 
378

 
1,428

 
10,161

 
1,453

 
2013
 
2012
 
Bankhouse Road
Harrisburg, PA
 
—

 
569

 
12,826

 
—

 
569

 
12,826

 
150

 
2018
 
2000
 
2625 Ailanthus Lane
Harrow, UK
 
—

 
7,402

 
8,266

 
529

 
7,652

 
8,545

 
964

 
2014
 
2001
 
177 Preston Hill
Hatboro, PA
 
—

 
—

 
28,112

 
1,771

 
—

 
29,883

 
6,096

 
2011
 
1996
 
3485 Davisville Road
Hatboro, PA
 
—

 
1,192

 
7,611

 
—

 
1,192

 
7,611

 
122

 
2018
 
2000
 
779 West County Line Road
Hatfield, UK
 
—

 
2,924

 
7,527

 
353

 
3,023

 
7,781

 
1,121

 
2013
 
2012
 
St Albans Road East
Hattiesburg, MS
 
—

 
450

 
13,469

 
—

 
450

 
13,469

 
2,732

 
2010
 
2009
 
217 Methodist Hospital Blvd
Hemet, CA
 
—

 
6,224

 
8,414

 
—

 
6,224

 
8,414

 
102

 
2018
 
1989
 
1717 West Stetson Avenue
Henry, IL
 
—

 
1,860

 
3,689

 
—

 
1,860

 
3,689

 
43

 
2018
 
1987
 
1650 Old Indian Town Road
Hermitage, TN
 
—

 
1,500

 
9,943

 
188

 
1,500

 
10,131

 
1,953

 
2011
 
2006
 
4131 Andrew Jackson Parkway
Herne Bay, UK
 
—

 
1,900

 
24,353

 
1,602

 
1,964

 
25,891

 
3,934

 
2013
 
2011
 
165 Reculver Road
Hiawatha, KS
 
—

 
40

 
4,210

 
29

 
40

 
4,239

 
371

 
2015
 
1996
 
400 Kansas Ave
Hickory, NC
 
—

 
290

 
987

 
232

 
290

 
1,219

 
650

 
2003
 
1994
 
2530 16th St. N.E.
High Point, NC
 
—

 
560

 
4,443

 
793

 
560

 
5,236

 
2,205

 
2003
 
2000
 
1568 Skeet Club Rd.
High Point, NC
 
—

 
370

 
2,185

 
410

 
370

 
2,595

 
1,149

 
2003
 
1999
 
1564 Skeet Club Rd.
High Point, NC
 
—

 
330

 
3,395

 
28

 
330

 
3,423

 
1,450

 
2003
 
1994
 
201 W. Hartley Dr.
High Point, NC
 
—

 
430

 
4,143

 
—

 
430

 
4,143

 
1,743

 
2003
 
1998
 
1560 Skeet Club Rd.
Highland Park, IL
 
—

 
2,820

 
15,832

 
189

 
2,820

 
16,021

 
2,557

 
2011
 
2012
 
1651 Richfield Avenue
Highlands Ranch, CO
 
—

 
940

 
3,721

 
4,983

 
940

 
8,704

 
2,303

 
2002
 
1999
 
9160 S. University Blvd.
Hillsboro, OH
 
—

 
1,792

 
6,341

 
—

 
1,792

 
6,341

 
105

 
2018
 
1983
 
1141 Northview Drive
Hinckley, UK
 
—

 
2,159

 
4,194

 
215

 
2,232

 
4,336

 
684

 
2013
 
2013
 
Tudor Road
Hindhead, UK
 
44,662

 
17,852

 
48,645

 
2,466

 
18,455

 
50,508

 
2,649

 
2016
 
2012
 
Portsmouth Road
Hinsdale, IL
 
—

 
4,033

 
24,287

 
—

 
4,033

 
24,287

 
270

 
2018
 
1971
 
600 W Ogden Avenue
Hockessin, DE
 
—

 
1,120

 
6,308

 
1,247

 
1,120

 
7,555

 
941

 
2014
 
1992
 
100 Saint Claire Drive
Holton, KS
 
—

 
40

 
7,460

 
13

 
40

 
7,473

 
611

 
2015
 
1996
 
410 Juniper Dr
Homewood, IL
 
—

 
2,395

 
7,652

 
—

 
2,395

 
7,652

 
87

 
2018
 
1989
 
940 Maple Avenue


(Dollars in thousands)
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Triple-net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Houston, TX
 
—

 
1,040

 
31,965

 
4,969

 
1,040

 
36,934

 
7,493

 
2012
 
1999
 
505 Bering Drive
Howard, WI
 
—

 
579

 
32,122

 
10

 
579

 
32,132

 
1,099

 
2017
 
2016
 
2790 Elm Tree Hill
Huntingdon Valley, PA
 
—

 
1,150

 
3,730

 
—

 
1,150

 
3,730

 
63

 
2018
 
1993
 
3430 Huntingdon Pike
Hyattsville, MD
 
—

 
4,017

 
2,298

 
—

 
4,017

 
2,298

 
33

 
2018
 
1964
 
6500 Riggs Road
Independence, VA
 
—

 
1,082

 
6,767

 
—

 
1,082

 
6,767

 
438

 
2018
 
1998
 
400 S Independence Ave
Indianapolis, IN
 
—

 
870

 
14,688

 
—

 
870

 
14,688

 
1,837

 
2014
 
2014
 
1635 N Arlington Avenue
Indianapolis, IN
 
—

 
1,105

 
6,645

 
—

 
1,105

 
6,645

 
76

 
2018
 
1979
 
8549 South Madison Avenue
Jackson, NJ
 
—

 
6,500

 
26,405

 
3,107

 
6,500

 
29,512

 
4,577

 
2012
 
2001
 
2 Kathleen Drive
Jacksonville, FL
 
—

 
750

 
25,231

 
—

 
750

 
25,231

 
1,645

 
2013
 
2014
 
5939 Roosevelt Boulevard
Jacksonville, FL
 
—

 
—

 
26,381

 
1,691

 
1,691

 
26,381

 
1,716

 
2013
 
2014
 
4000 San Pablo Parkway
Jacksonville, FL
 
—

 
1,752

 
2,553

 
—

 
1,752

 
2,553

 
31

 
2018
 
1989
 
8495 Normandy Boulevard Jacksonville
Jacksonville, FL
 
—

 
2,182

 
9,491

 
—

 
2,182

 
9,491

 
123

 
2018
 
1980
 
3648 University Boulevard South
Jefferson Hills, PA
 
—

 
2,265

 
13,618

 
—

 
2,265

 
13,618

 
233

 
2018
 
1997
 
380 Wray Large Road
Jersey Shore, PA
 
—

 
600

 
8,107

 
—

 
600

 
8,107

 
89

 
2018
 
1973
 
1008 Thompson Street
Kansas City, KS
 
—

 
700

 
20,115

 
—

 
700

 
20,115

 
1,646

 
2015
 
2015
 
8900 Parallel Parkway
Katy, TX
 
—

 
1,778

 
22,622

 
—

 
1,778

 
22,622

 
1,047

 
2017
 
2015
 
24802 Kingsland Boulevard
Kenner, LA
 
—

 
1,100

 
10,036

 
349

 
1,100

 
10,385

 
9,529

 
1998
 
2000
 
1600 Joe Yenni Blvd
Kensington, MD
 
—

 
1,753

 
18,626

 
—

 
1,753

 
18,626

 
211

 
2018
 
2002
 
4301 Knowles Avenue
Kenwood, OH
 
—

 
821

 
11,043

 
—

 
821

 
11,043

 
129

 
2018
 
2000
 
4580 East Galbraith Road
Kettering, OH
 
—

 
1,229

 
4,703

 
—

 
1,229

 
4,703

 
63

 
2018
 
1977
 
3313 Wilmington Pike
King of Prussia, PA
 
—

 
720

 
14,780

 
—

 
720

 
14,780

 
180

 
2018
 
1995
 
620 West Valley Forge Road
King of Prussia, PA
 
—

 
1,205

 
4,727

 
—

 
1,205

 
4,727

 
68

 
2018
 
1990
 
600 West Valley Forge Road
Kingsford, MI
 
—

 
1,362

 
10,598

 
—

 
1,362

 
10,598

 
129

 
2018
 
1968
 
1225 Woodward Avenue
Kingston, PA
 
—

 
986

 
5,711

 
—

 
986

 
5,711

 
68

 
2018
 
1974
 
200 Second Avenue
Kingston upon Thames, UK
 
53,595

 
33,063

 
46,696

 
2,926

 
34,181

 
48,504

 
2,573

 
2016
 
2014
 
Coombe Lane West
Kirkland, WA
 
—

 
1,880

 
4,315

 
683

 
1,880

 
4,998

 
1,911

 
2003
 
1996
 
6505 Lakeview Dr.
Kirkstall, UK
 
—

 
2,437

 
9,414

 
401

 
2,519

 
9,733

 
1,396

 
2013
 
2009
 
29 Broad Lane
Kokomo, IN
 
—

 
710

 
16,044

 
—

 
710

 
16,044

 
2,001

 
2014
 
2014
 
2200 S. Dixon Rd
Lacey, WA
 
—

 
2,582

 
18,180

 
—

 
2,582

 
18,180

 
209

 
2018
 
2012
 
4524 Intelco Loop SE
Lafayette, LA
 
—

 
1,928

 
10,483

 
26

 
1,928

 
10,509

 
4,581

 
2006
 
1993
 
204 Energy Parkway
Lafayette, CO
 
—

 
1,420

 
20,192

 
—

 
1,420

 
20,192

 
2,001

 
2015
 
2015
 
329 Exempla Circle
Lafayette, IN
 
—

 
670

 
16,833

 
1

 
670

 
16,834

 
1,870

 
2015
 
2014
 
2402 South Street
Lakeway, TX
 
—

 
5,142

 
23,203

 
—

 
5,142

 
23,203

 
3,272

 
2007
 
2011
 
2000 Medical Dr
Lakewood, CO
 
—

 
2,160

 
28,091

 
62

 
2,160

 
28,153

 
3,561

 
2014
 
2010
 
7395 West Eastman Place
Lakewood Ranch, FL
 
—

 
650

 
6,714

 
1,988

 
650

 
8,702

 
1,484

 
2011
 
2012
 
8230 Nature's Way
Lakewood Ranch, FL
 
—

 
1,000

 
22,388

 
—

 
1,000

 
22,388

 
3,822

 
2012
 
2005
 
8220 Natures Way
Lancaster, PA
 
—

 
1,680

 
14,039

 
—

 
1,680

 
14,039

 
761

 
2015
 
2017
 
31 Millersville Road
Lancaster, PA
 
—

 
1,011

 
7,504

 
—

 
1,011

 
7,504

 
89

 
2018
 
1966
 
100 Abbeyville Road
LaPlata, MD
 
—

 
700

 
19,068

 
466

 
700

 
19,534

 
4,198

 
2011
 
1984
 
One Magnolia Drive
Largo, MD
 
—

 
3,361

 
3,623

 
—

 
3,361

 
3,623

 
50

 
2018
 
1978
 
600 Largo Road
Largo, FL
 
—

 
1,166

 
3,427

 
—

 
1,166

 
3,427

 
53

 
2018
 
1997
 
300 Highland Avenue Northeast
Las Vegas, NV
 
—

 
580

 
23,420

 
—

 
580

 
23,420

 
4,594

 
2011
 
2002
 
2500 North Tenaya Way
Laureldale, PA
 
—

 
1,171

 
14,424

 
—

 
1,171

 
14,424

 
166

 
2018
 
1980
 
2125 Elizabeth Avenue
Lawrence, KS
 
—

 
250

 
8,716

 
—

 
250

 
8,716

 
1,471

 
2012
 
1996
 
3220 Peterson Road
Leawood, KS
 
—

 
2,490

 
32,493

 
2,209

 
5,610

 
31,582

 
7,303

 
2012
 
1999
 
4400 West 115th Street


(Dollars in thousands)
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Triple-net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lebanon, PA
 
—

 
728

 
10,370

 
—

 
728

 
10,370

 
130

 
2018
 
1998
 
100 Tuck Court
Lebanon, PA
 
—

 
1,214

 
5,962

 
—

 
1,214

 
5,962

 
84

 
2018
 
1980
 
900 Tuck Street
Lee, MA
 
—

 
290

 
18,135

 
926

 
290

 
19,061

 
8,404

 
2002
 
1998
 
600 & 620 Laurel St.
Leeds, UK
 
—

 
1,974

 
13,239

 
515

 
2,041

 
13,687

 
1,305

 
2015
 
2013
 
100 Grove Lane
Leicester, UK
 
—

 
3,060

 
24,410

 
928

 
3,163

 
25,235

 
3,953

 
2012
 
2010
 
307 London Road
Lenoir, NC
 
—

 
190

 
3,748

 
641

 
190

 
4,389

 
1,842

 
2003
 
1998
 
1145 Powell Rd., N.E.
Lethbridge, AB
 
1,312

 
1,214

 
2,750

 
61

 
1,232

 
2,793

 
422

 
2014
 
2003
 
785 Columbia Boulevard West
Lexana, KS
 
—

 
480

 
1,770

 
152

 
480

 
1,922

 
184

 
2015
 
1994
 
8710 Caenen Lake Rd
Lexington, NC
 
—

 
200

 
3,900

 
1,015

 
200

 
4,915

 
2,127

 
2002
 
1997
 
161 Young Dr.
Libertyville, IL
 
—

 
6,500

 
40,024

 
—

 
6,500

 
40,024

 
8,481

 
2011
 
2001
 
901 Florsheim Dr
Libertyville, IL
 
—

 
2,993

 
11,550

 
—

 
2,993

 
11,550

 
130

 
2018
 
1988
 
1500 South Milwaukee
Lichfield, UK
 
—

 
1,382

 
30,324

 
1,071

 
1,428

 
31,349

 
3,020

 
2015
 
2012
 
Wissage Road
Lillington, NC
 
—

 
470

 
17,579

 
—

 
470

 
17,579

 
2,112

 
2014
 
2013
 
54 Red Mulberry Way
Lillington, NC
 
—

 
500

 
16,451

 
—

 
500

 
16,451

 
1,855

 
2014
 
1999
 
2041 NC-210 N
Lincoln, NE
 
—

 
390

 
13,807

 
95

 
390

 
13,902

 
3,154

 
2010
 
2000
 
7208 Van Dorn St.
Lititz, PA
 
—

 
1,200

 
13,836

 
—

 
1,200

 
13,836

 
752

 
2015
 
2016
 
80 West Millport Road
Livermore, CA
 
—

 
4,100

 
24,996

 
—

 
4,100

 
24,996

 
2,642

 
2014
 
1974
 
35 Fenton Street
Livonia, MI
 
—

 
985

 
13,558

 
—

 
985

 
13,558

 
164

 
2018
 
1999
 
32500 Seven Mile Road
Livonia, MI
 
—

 
1,836

 
2,278

 
—

 
1,836

 
2,278

 
33

 
2018
 
1960
 
28550 Five Mile Road
Longview, TX
 
—

 
610

 
5,520

 
—

 
610

 
5,520

 
1,725

 
2006
 
2007
 
311 E Hawkins Pkwy
Longwood, FL
 
—

 
1,260

 
6,445

 
—

 
1,260

 
6,445

 
1,362

 
2011
 
2011
 
425 South Ronald Reagan Boulevard
Louisburg, KS
 
—

 
280

 
4,320

 
44

 
280

 
4,364

 
360

 
2015
 
1996
 
202 Rogers St
Louisville, KY
 
—

 
490

 
10,010

 
2,768

 
490

 
12,778

 
4,869

 
2005
 
1978
 
4604 Lowe Rd
Loxley, UK
 
—

 
1,369

 
15,668

 
577

 
1,416

 
16,198

 
2,474

 
2013
 
2008
 
Loxley Road
Lutherville, MD
 
—

 
1,100

 
19,786

 
1,744

 
1,100

 
21,530

 
4,472

 
2011
 
1988
 
515 Brightfield Road
Lynchburg, VA
 
—

 
340

 
16,114

 
—

 
340

 
16,114

 
1,964

 
2014
 
2013
 
189 Monica Blvd
Lynchburg, VA
 
—

 
2,904

 
3,697

 
—

 
2,904

 
3,697

 
43

 
2018
 
1978
 
2200 Landover Place
Lynnwood, WA
 
—

 
2,308

 
5,634

 
—

 
2,308

 
5,634

 
67

 
2018
 
1987
 
3701 188th Street
Macomb, IL
 
—

 
1,586

 
4,059

 
—

 
1,586

 
4,059

 
46

 
2018
 
1966
 
8 Doctors Lane
Macungie, PA
 
—

 
960

 
29,033

 
84

 
960

 
29,117

 
6,047

 
2011
 
1994
 
1718 Spring Creek Road
Manalapan, NJ
 
—

 
900

 
22,624

 
622

 
900

 
23,246

 
4,447

 
2011
 
2001
 
445 Route 9 South
Manassas, VA
 
—

 
750

 
7,446

 
530

 
750

 
7,976

 
3,092

 
2003
 
1996
 
8341 Barrett Dr.
Mankato, MN
 
—

 
1,460

 
32,104

 
300

 
1,460

 
32,404

 
2,620

 
2015
 
2006
 
100 Dublin Road
Mansfield, TX
 
—

 
660

 
5,251

 
—

 
660

 
5,251

 
1,659

 
2006
 
2007
 
2281 Country Club Dr
Marietta, OH
 
—

 
1,149

 
9,376

 
—

 
1,149

 
9,376

 
109

 
2018
 
1977
 
5001 State Route 60
Marietta, GA
 
—

 
2,406

 
12,233

 
—

 
2,406

 
12,233

 
140

 
2018
 
1980
 
4360 Johnson Ferry Place
Marietta, PA
 
—

 
1,050

 
13,633

 
270

 
1,050

 
13,903

 
1,226

 
2015
 
1999
 
2760 Maytown Road
Marion, IN
 
—

 
720

 
12,750

 
1,136

 
720

 
13,886

 
1,675

 
2014
 
2012
 
614 W. 14th Street
Marion, IN
 
—

 
990

 
9,190

 
824

 
990

 
10,014

 
1,432

 
2014
 
1976
 
505 N. Bradner Avenue
Marion, OH
 
—

 
2,768

 
17,420

 
—

 
2,768

 
17,420

 
259

 
2018
 
2004
 
400 Barks Road West
Marlborough, UK
 
—

 
2,677

 
6,822

 
322

 
2,768

 
7,053

 
777

 
2014
 
1999
 
The Common
Marlow, UK
 
—

 
9,068

 
39,720

 
—

 
9,068

 
39,720

 
2,869

 
2013
 
2014
 
210 Little Marlow Road
Martinsville, VA
 
—

 
349

 
—

 
—

 
349

 
—

 
—

 
2003
 
1900
 
Rolling Hills Rd. & US Hwy. 58
Marysville, WA
 
—

 
620

 
4,780

 
969

 
620

 
5,749

 
2,233

 
2003
 
1998
 
9802 48th Dr. N.E.
Matawan, NJ
 
—

 
1,830

 
20,618

 
166

 
1,830

 
20,784

 
4,158

 
2011
 
1965
 
625 State Highway 34


(Dollars in thousands)
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Triple-net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Matthews, NC
 
—

 
560

 
4,738

 
—

 
560

 
4,738

 
2,031

 
2003
 
1998
 
2404 Plantation Center Dr.
McHenry, IL
 
—

 
1,576

 
—

 
—

 
1,576

 
—

 
—

 
2006
 
1900
 
5200 Block of Bull Valley Road
McKinney, TX
 
—

 
1,570

 
7,389

 
—

 
1,570

 
7,389

 
1,881

 
2009
 
2010
 
2701 Alma Rd.
McMurray, PA
 
—

 
1,440

 
15,805

 
3,894

 
1,440

 
19,699

 
3,641

 
2010
 
2011
 
240 Cedar Hill Dr
Mechanicsburg, PA
 
—

 
1,350

 
16,650

 
—

 
1,350

 
16,650

 
3,344

 
2011
 
1971
 
4950 Wilson Lane
Medicine Hat, AB
 
2,156

 
932

 
5,566

 
98

 
946

 
5,650

 
679

 
2014
 
1999
 
65 Valleyview Drive SW
Menomonee Falls, WI
 
—

 
1,020

 
6,984

 
1,652

 
1,020

 
8,636

 
2,285

 
2006
 
2007
 
W128 N6900 Northfield Drive
Mentor, OH
 
—

 
1,827

 
9,941

 
—

 
1,827

 
9,941

 
117

 
2018
 
1985
 
8200 Mentor Hills Drive
Mercerville, NJ
 
—

 
860

 
9,929

 
173

 
860

 
10,102

 
2,315

 
2011
 
1967
 
2240 White Horse- Merceville Road
Meriden, CT
 
—

 
1,300

 
1,472

 
233

 
1,300

 
1,705

 
736

 
2011
 
1968
 
845 Paddock Ave
Merrillville, IN
 
—

 
700

 
11,699

 
154

 
700

 
11,853

 
3,430

 
2007
 
2008
 
9509 Georgia St.
Mesa, AZ
 
—

 
950

 
9,087

 
1,971

 
950

 
11,058

 
5,022

 
1999
 
2000
 
7231 E. Broadway
Miamisburg, OH
 
—

 
786

 
3,233

 
—

 
786

 
3,233

 
54

 
2018
 
1983
 
450 Oak Ridge Boulevard
Middleburg Heights, OH
 
—

 
960

 
7,780

 
—

 
960

 
7,780

 
2,946

 
2004
 
1998
 
15435 Bagley Rd.
Middleton, WI
 
—

 
420

 
4,006

 
600

 
420

 
4,606

 
1,915

 
2001
 
1991
 
6701 Stonefield Rd.
Midland, MI
 
—

 
200

 
11,025

 
5,522

 
200

 
16,547

 
2,992

 
2010
 
1994
 
2325 Rockwell Dr
Milton Keynes, UK
 
—

 
1,826

 
18,654

 
692

 
1,888

 
19,284

 
1,913

 
2015
 
2007
 
Tunbridge Grove, Kents Hill
Mishawaka, IN
 
—

 
740

 
16,113

 
—

 
740

 
16,113

 
2,067

 
2014
 
2013
 
60257 Bodnar Blvd
Moline, IL
 
—

 
2,946

 
18,677

 
—

 
2,946

 
18,677

 
206

 
2018
 
1964
 
833 Sixteenth Avenue
Monmouth Junction, NJ
 
—

 
720

 
6,209

 
86

 
720

 
6,295

 
1,522

 
2011
 
1996
 
2 Deer Park Drive
Monroe, NC
 
—

 
470

 
3,681

 
648

 
470

 
4,329

 
1,850

 
2003
 
2001
 
918 Fitzgerald St.
Monroe, NC
 
—

 
310

 
4,799

 
857

 
310

 
5,656

 
2,316

 
2003
 
2000
 
919 Fitzgerald St.
Monroe, NC
 
—

 
450

 
4,021

 
114

 
450

 
4,135

 
1,764

 
2003
 
1997
 
1316 Patterson Ave.
Monroe Township, NJ
 
—

 
3,250

 
27,771

 
270

 
3,250

 
28,041

 
2,200

 
2015
 
1996
 
319 Forsgate Drive
Monroeville, PA
 
—

 
1,216

 
12,753

 
—

 
1,216

 
12,753

 
179

 
2018
 
1997
 
120 Wyngate Drive
Monroeville, PA
 
—

 
1,237

 
3,642

 
—

 
1,237

 
3,642

 
68

 
2018
 
1996
 
885 MacBeth Drive
Montgomeryville, PA
 
—

 
1,176

 
9,827

 
—

 
1,176

 
9,827

 
122

 
2018
 
1989
 
640 Bethlehem Pike
Montville, NJ
 
—

 
3,500

 
31,002

 
1,171

 
3,500

 
32,173

 
6,238

 
2011
 
1988
 
165 Changebridge Rd.
Moorestown, NJ
 
—

 
6,400

 
23,875

 
27

 
6,400

 
23,902

 
3,239

 
2012
 
2014
 
250 Marter Avenue
Morehead City, NC
 
—

 
200

 
3,104

 
1,648

 
200

 
4,752

 
2,260

 
1999
 
1999
 
107 Bryan St.
Morrison, CO
 
—

 
2,720

 
16,261

 
—

 
2,720

 
16,261

 
311

 
2018
 
1974
 
150 Spring Street
Morton Grove, IL
 
—

 
1,900

 
19,374

 
159

 
1,900

 
19,533

 
3,728

 
2010
 
2011
 
5520 N. Lincoln Ave.
Moulton, UK
 
—

 
1,695

 
12,510

 
997

 
1,597

 
13,605

 
568

 
2017
 
1995
 
Northampton Lane North
Mount Pleasant, SC
 
—

 
—

 
17,200

 
1

 
4,052

 
13,149

 
3,228

 
2013
 
1985
 
1200 Hospital Drive
Mountainside, NJ
 
—

 
3,097

 
7,810

 
—

 
3,097

 
7,810

 
93

 
2018
 
1988
 
1180 Route 22
Nacogdoches, TX
 
—

 
390

 
5,754

 
—

 
390

 
5,754

 
1,792

 
2006
 
2007
 
5902 North St
Naperville, IL
 
—

 
3,470

 
29,547

 
—

 
3,470

 
29,547

 
6,382

 
2011
 
2001
 
504 North River Road
Naples, FL
 
—

 
1,222

 
10,642

 
—

 
1,222

 
10,642

 
133

 
2018
 
1998
 
6125 Rattlesnake Hammock Road
Naples, FL
 
—

 
1,672

 
26,170

 
—

 
1,672

 
26,170

 
344

 
2018
 
1993
 
1000 Lely Palms Drive
Naples, FL
 
—

 
1,854

 
12,402

 
—

 
1,854

 
12,402

 
140

 
2018
 
1987
 
3601 Lakewood Boulevard
Nashville, TN
 
—

 
4,910

 
29,590

 
—

 
4,910

 
29,590

 
8,321

 
2008
 
2007
 
15 Burton Hills Boulevard
Naugatuck, CT
 
—

 
1,200

 
15,826

 
199

 
1,200

 
16,025

 
3,479

 
2011
 
1980
 
4 Hazel Avenue
Needham, MA
 
—

 
1,610

 
12,667

 
—

 
1,610

 
12,667

 
5,327

 
2002
 
1994
 
100 West St.
New Moston, UK
 
—

 
1,480

 
4,378

 
198

 
1,530

 
4,526

 
676

 
2013
 
2010
 
90a Broadway
Newcastle Under Lyme, UK
 
—

 
1,110

 
5,655

 
229

 
1,148

 
5,846

 
834

 
2013
 
2010
 
Hempstalls Lane


(Dollars in thousands)
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Triple-net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Newcastle-under-Lyme, UK
 
—

 
1,125

 
5,537

 
225

 
1,163

 
5,724

 
631

 
2014
 
1999
 
Silverdale Road
Newport News, VA
 
—

 
839

 
6,077

 
—

 
839

 
6,077

 
407

 
2018
 
1998
 
12997 Nettles Dr
Norman, OK
 
—

 
55

 
1,484

 
—

 
55

 
1,484

 
938

 
1995
 
1995
 
1701 Alameda Dr.
Norman, OK
 
—

 
1,480

 
33,330

 
—

 
1,480

 
33,330

 
5,571

 
2012
 
1985
 
800 Canadian Trails Drive
North Augusta, SC
 
—

 
332

 
2,558

 
—

 
332

 
2,558

 
1,348

 
1999
 
1998
 
105 North Hills Dr.
Northampton, UK
 
—

 
5,182

 
17,348

 
762

 
5,357

 
17,935

 
2,659

 
2013
 
2011
 
Cliftonville Road
Northampton, UK
 
—

 
2,013

 
6,257

 
280

 
2,081

 
6,469

 
674

 
2014
 
2014
 
Cliftonville Road
Northbrook, IL
 
—

 
1,298

 
13,341

 
—

 
1,298

 
13,341

 
154

 
2018
 
1999
 
3240 Milwaukee Avenue
Nuneaton, UK
 
—

 
3,325

 
8,983

 
415

 
3,437

 
9,286

 
1,326

 
2013
 
2011
 
132 Coventry Road
Nuthall, UK
 
—

 
1,628

 
6,263

 
268

 
1,684

 
6,475

 
661

 
2014
 
2014
 
172A Nottingham Road
Nuthall, UK
 
—

 
2,498

 
10,436

 
438

 
2,583

 
10,789

 
1,556

 
2013
 
2011
 
172 Nottingham Road
Oak Lawn, IL
 
—

 
2,418

 
5,428

 
—

 
2,418

 
5,428

 
62

 
2018
 
1977
 
9401 South Kostner Avenue
Oak Lawn, IL
 
—

 
3,876

 
7,988

 
—

 
3,876

 
7,988

 
95

 
2018
 
1960
 
6300 W 95th Street
Oakland, CA
 
—

 
4,760

 
16,143

 
109

 
4,760

 
16,252

 
1,936

 
2014
 
2002
 
468 Perkins Street
Ocala, FL
 
—

 
1,340

 
10,564

 
—

 
1,340

 
10,564

 
2,767

 
2008
 
2009
 
2650 SE 18TH Avenue
Ogden, UT
 
—

 
384

 
2,228

 
—

 
384

 
2,228

 
310

 
2018
 
1987
 
400 East 5350 South
Oklahoma City, OK
 
—

 
590

 
7,513

 
—

 
590

 
7,513

 
2,175

 
2007
 
2008
 
13200 S. May Ave
Oklahoma City, OK
 
—

 
760

 
7,017

 
—

 
760

 
7,017

 
1,993

 
2007
 
2009
 
11320 N. Council Road
Olathe, KS
 
—

 
1,930

 
19,765

 
553

 
1,930

 
20,318

 
1,758

 
2016
 
2015
 
21250 W 151 Street
Omaha, NE
 
—

 
370

 
10,230

 
—

 
370

 
10,230

 
2,369

 
2010
 
1998
 
11909 Miracle Hills Dr.
Omaha, NE
 
—

 
380

 
8,769

 
—

 
380

 
8,769

 
2,144

 
2010
 
1999
 
5728 South 108th St.
Ona, WV
 
—

 
950

 
15,998

 
222

 
950

 
16,220

 
1,400

 
2015
 
2007
 
100 Weatherholt Drive
Oneonta, NY
 
—

 
80

 
5,020

 
—

 
80

 
5,020

 
1,442

 
2007
 
1996
 
1846 County Highway 48
Orange Park, FL
 
—

 
2,201

 
4,018

 
—

 
2,201

 
4,018

 
64

 
2018
 
1990
 
570 Wells Road
Orem, UT
 
—

 
2,150

 
24,107

 
—

 
2,150

 
24,107

 
2,021

 
2015
 
2014
 
250 East Center Street
Osage City, KS
 
—

 
50

 
1,700

 
142

 
50

 
1,842

 
183

 
2015
 
1996
 
1403 Laing St
Osawatomie, KS
 
—

 
130

 
2,970

 
136

 
130

 
3,106

 
283

 
2015
 
2003
 
1520 Parker Ave
Ottawa, KS
 
—

 
160

 
6,590

 
44

 
160

 
6,634

 
556

 
2015
 
2007
 
2250 S Elm St
Overland Park, KS
 
—

 
4,500

 
29,105

 
38,441

 
8,230

 
63,816

 
15,377

 
2010
 
1988
 
6101 W 119th St
Overland Park, KS
 
—

 
1,540

 
16,269

 
943

 
1,670

 
17,082

 
3,342

 
2012
 
1998
 
9201 Foster
Overland Park, KS
 
—

 
410

 
2,840

 
92

 
410

 
2,932

 
279

 
2015
 
2004
 
14430 Metcalf Ave
Overland Park, KS
 
—

 
1,300

 
25,311

 
677

 
1,300

 
25,988

 
2,229

 
2016
 
2015
 
7600 Antioch Road
Owasso, OK
 
—

 
215

 
1,380

 
—

 
215

 
1,380

 
801

 
1996
 
1996
 
12807 E. 86th Place N.
Owensboro, KY
 
—

 
225

 
13,275

 
—

 
225

 
13,275

 
5,120

 
2005
 
1964
 
1205 Leitchfield Rd.
Owenton, KY
 
—

 
100

 
2,400

 
—

 
100

 
2,400

 
1,108

 
2005
 
1979
 
905 Hwy. 127 N.
Oxford, MI
 
—

 
1,430

 
15,791

 
—

 
1,430

 
15,791

 
3,625

 
2010
 
2001
 
701 Market St
Palestine, TX
 
—

 
180

 
4,320

 
1,300

 
180

 
5,620

 
1,814

 
2006
 
2005
 
1625 W. Spring St.
Palm Beach Gardens, FL
 
—

 
2,082

 
6,624

 
—

 
2,082

 
6,624

 
87

 
2018
 
1991
 
11375 Prosperity Farms Road
Palm Coast, FL
 
—

 
870

 
10,957

 
—

 
870

 
10,957

 
2,730

 
2008
 
2010
 
50 Town Ct.
Palm Desert, CA
 
—

 
6,195

 
8,922

 
—

 
6,195

 
8,922

 
107

 
2018
 
1989
 
74350 Country Club Drive
Palm Harbor, FL
 
—

 
1,306

 
13,811

 
—

 
1,306

 
13,811

 
171

 
2018
 
1997
 
2895 Tampa Road
Palm Harbor, FL
 
—

 
3,281

 
22,457

 
—

 
3,281

 
22,457

 
273

 
2018
 
1990
 
2851 Tampa Road
Palos Heights, IL
 
—

 
1,225

 
12,457

 
—

 
1,225

 
12,457

 
141

 
2018
 
1999
 
7880 West College Drive
Palos Heights, IL
 
—

 
3,431

 
28,812

 
—

 
3,431

 
28,812

 
316

 
2018
 
1987
 
7850 West College Drive
Palos Heights, IL
 
—

 
2,590

 
7,647

 
—

 
2,590

 
7,647

 
87

 
2018
 
1996
 
11860 Southwest Hwy


(Dollars in thousands)
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Triple-net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Panama City Beach, FL
 
—

 
900

 
6,402

 
620

 
900

 
7,022

 
1,161

 
2011
 
2005
 
6012 Magnolia Beach Road
Paola, KS
 
—

 
190

 
5,610

 
59

 
190

 
5,669

 
483

 
2015
 
2000
 
601 N. East Street
Paris, TX
 
—

 
490

 
5,452

 
—

 
490

 
5,452

 
4,421

 
2005
 
2006
 
750 N Collegiate Dr
Parma, OH
 
—

 
960

 
12,722

 
—

 
960

 
12,722

 
155

 
2018
 
1998
 
9205 Sprague Road
Parma, OH
 
—

 
1,833

 
10,318

 
—

 
1,833

 
10,318

 
141

 
2018
 
2006
 
9055 West Sprague Road
Paulsboro, NJ
 
—

 
3,264

 
8,026

 
—

 
3,264

 
8,026

 
99

 
2018
 
1987
 
550 Jessup Road
Pella, IA
 
—

 
870

 
6,716

 
89

 
870

 
6,805

 
1,135

 
2012
 
2002
 
2602 Fifield Road
Perrysburg, OH
 
—

 
1,456

 
5,433

 
—

 
1,456

 
5,433

 
68

 
2018
 
1973
 
10540 Fremont Pike
Perrysburg, OH
 
—

 
1,213

 
7,110

 
—

 
1,213

 
7,110

 
82

 
2018
 
1978
 
10542 Fremont Pike
Petoskey, MI
 
—

 
860

 
14,452

 
—

 
860

 
14,452

 
3,152

 
2011
 
1997
 
965 Hager Dr
Philadelphia, PA
 
—

 
2,930

 
10,433

 
3,536

 
2,930

 
13,969

 
3,206

 
2011
 
1952
 
1526 Lombard Street
Phillipsburg, NJ
 
—

 
800

 
21,175

 
238

 
800

 
21,413

 
4,650

 
2011
 
1992
 
290 Red School Lane
Phillipsburg, NJ
 
—

 
300

 
8,114

 
101

 
300

 
8,215

 
1,780

 
2011
 
1905
 
843 Wilbur Avenue
Pikesville, MD
 
—

 
—

 
2,488

 
—

 
—

 
2,488

 
27

 
2018
 
1998
 
8911 Reisterstown Road
Pikesville, MD
 
—

 
4,247

 
8,383

 
—

 
4,247

 
8,383

 
108

 
2018
 
1996
 
8909 Reisterstown Road
Pinehurst, NC
 
—

 
290

 
2,690

 
484

 
290

 
3,174

 
1,392

 
2003
 
1998
 
17 Regional Dr.
Piqua, OH
 
—

 
204

 
1,885

 
—

 
204

 
1,885

 
1,024

 
1997
 
1997
 
1744 W. High St.
Piscataway, NJ
 
—

 
3,100

 
33,501

 
—

 
3,100

 
33,501

 
1,423

 
2013
 
2017
 
10 Sterling Drive
Pittsburgh, PA
 
—

 
603

 
11,357

 
—

 
603

 
11,357

 
137

 
2018
 
1998
 
1125 Perry Highway
Pittsburgh, PA
 
—

 
1,005

 
15,164

 
—

 
1,005

 
15,164

 
177

 
2018
 
1997
 
505 Weyman Road
Pittsburgh, PA
 
—

 
1,140

 
3,166

 
—

 
1,140

 
3,166

 
37

 
2018
 
1962
 
550 South Negley Avenue
Pittsburgh, PA
 
—

 
994

 
3,790

 
—

 
994

 
3,790

 
63

 
2018
 
1986
 
2170 Rhine Street
Pittsburgh, PA
 
—

 
761

 
4,214

 
—

 
761

 
4,214

 
47

 
2018
 
1965
 
5609 Fifth Avenue
Pittsburgh, PA
 
—

 
1,480

 
9,715

 
—

 
1,480

 
9,715

 
128

 
2018
 
1986
 
1105 Perry Highway
Pittsburgh, PA
 
—

 
1,139

 
5,846

 
—

 
1,139

 
5,846

 
75

 
2018
 
1986
 
1848 Greentree Road
Pittsburgh, PA
 
—

 
1,750

 
8,572

 
6,322

 
1,750

 
14,894

 
3,340

 
2005
 
1998
 
100 Knoedler Rd.
Plainview, NY
 
—

 
3,990

 
11,969

 
1,186

 
3,990

 
13,155

 
2,774

 
2011
 
1963
 
150 Sunnyside Blvd
Plano, TX
 
—

 
1,840

 
20,152

 
560

 
1,840

 
20,712

 
1,579

 
2016
 
2016
 
3325 W Plano Parkway
Plattsmouth, NE
 
—

 
250

 
5,650

 
—

 
250

 
5,650

 
1,377

 
2010
 
1999
 
1913 E. Highway 34
Plymouth, MI
 
—

 
1,490

 
19,990

 
330

 
1,490

 
20,320

 
4,431

 
2010
 
1972
 
14707 Northville Rd
Potomac, MD
 
—

 
1,448

 
14,626

 
—

 
1,448

 
14,626

 
167

 
2018
 
1994
 
10718 Potomac Tennis Lane
Potomac, MD
 
—

 
4,119

 
14,921

 
—

 
4,119

 
14,921

 
176

 
2018
 
1988
 
10714 Potomac Tennis Lane
Pottstown, PA
 
—

 
984

 
4,565

 
—

 
984

 
4,565

 
58

 
2018
 
1907
 
724 North Charlotte Street
Pottsville, PA
 
—

 
171

 
3,560

 
—

 
171

 
3,560

 
42

 
2018
 
1976
 
420 Pulaski Drive
Prior Lake, MN
 
13,806

 
1,870

 
29,849

 
300

 
1,870

 
30,149

 
2,435

 
2015
 
2003
 
4685 Park Nicollet Avenue
Puyallup, WA
 
—

 
1,150

 
20,776

 
505

 
1,156

 
21,275

 
5,775

 
2010
 
1985
 
123 Fourth Ave. NW
Raleigh, NC
 
—

 
7,598

 
88,870

 
—

 
7,598

 
88,870

 
4,212

 
2008
 
2017
 
4030 Cardinal at North Hills St
Raleigh, NC
 
—

 
3,530

 
59,589

 
—

 
3,530

 
59,589

 
9,825

 
2012
 
2002
 
5301 Creedmoor Road
Raleigh, NC
 
—

 
2,580

 
16,837

 
—

 
2,580

 
16,837

 
2,965

 
2012
 
1988
 
7900 Creedmoor Road
Reading, PA
 
—

 
980

 
19,906

 
140

 
980

 
20,046

 
4,293

 
2011
 
1994
 
5501 Perkiomen Ave
Red Bank, NJ
 
—

 
1,050

 
21,275

 
586

 
1,050

 
21,861

 
4,176

 
2011
 
1997
 
One Hartford Dr.
Reidsville, NC
 
—

 
170

 
3,830

 
857

 
170

 
4,687

 
2,045

 
2002
 
1998
 
2931 Vance St.
Reno, NV
 
—

 
1,060

 
11,440

 
659

 
1,060

 
12,099

 
4,440

 
2004
 
1998
 
5165 Summit Ridge Road
Rexburg, ID
 
—

 
1,267

 
3,213

 
—

 
1,267

 
3,213

 
383

 
2018
 
1988
 
660 South 2nd West
Richardson, TX
 
—

 
1,468

 
12,979

 
—

 
1,468

 
12,979

 
154

 
2018
 
1999
 
410 Buckingham Road


(Dollars in thousands)
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Triple-net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Richmond, IN
 
—

 
700

 
14,222

 
393

 
700

 
14,615

 
1,256

 
2016
 
2015
 
400 Industries Road
Richmond, VA
 
—

 
—

 
12,000

 
—

 
250

 
11,750

 
2,018

 
2013
 
1989
 
2220 Edward Holland Drive
Richmond, VA
 
—

 
3,261

 
17,980

 
—

 
3,261

 
17,980

 
203

 
2018
 
1990
 
1719 Bellevue Avenue
Richmond, VA
 
—

 
1,046

 
8,235

 
—

 
1,046

 
8,235

 
100

 
2018
 
1966
 
2125 Hilliard Road
Ridgeland, MS
 
—

 
520

 
7,675

 
437

 
520

 
8,112

 
3,162

 
2003
 
1997
 
410 Orchard Park
Roanoke, VA
 
—

 
748

 
4,483

 
—

 
748

 
4,483

 
435

 
2018
 
1997
 
4355 Pheasant Ridge Rd
Rochdale, MA
 
—

 
—

 
7,100

 
—

 
690

 
6,410

 
1,039

 
2013
 
1994
 
111 Huntoon Memorial Highway
Rockville Centre, NY
 
—

 
4,290

 
20,310

 
932

 
4,290

 
21,242

 
4,259

 
2011
 
2002
 
260 Maple Ave
Rockwall, TX
 
—

 
2,220

 
17,650

 
—

 
2,220

 
17,650

 
1,590

 
2012
 
2014
 
720 E Ralph Hall Parkway
Romeoville, IL
 
—

 
1,895

 
—

 
—

 
1,895

 
—

 
—

 
2006
 
1900
 
Grand Haven Circle
Roseville, MN
 
—

 
2,140

 
24,679

 
100

 
2,140

 
24,779

 
2,037

 
2015
 
1989
 
2750 North Victoria Street
Roswell, GA
 
—

 
1,107

 
9,627

 
1,127

 
1,114

 
10,747

 
8,139

 
1997
 
1999
 
655 Mansell Rd.
Roswell, GA
 
—

 
2,080

 
6,486

 
1,130

 
2,380

 
7,316

 
1,645

 
2012
 
1997
 
75 Magnolia Street
Rugeley, UK
 
—

 
1,900

 
10,262

 
411

 
1,964

 
10,609

 
1,603

 
2013
 
2010
 
Horse Fair
Ruston, LA
 
—

 
710

 
9,790

 
—

 
710

 
9,790

 
2,133

 
2011
 
1988
 
1401 Ezelle St
S Holland, IL
 
—

 
1,423

 
8,910

 
—

 
1,423

 
8,910

 
108

 
2018
 
1997
 
2045 East 170th Street
Salem, OR
 
—

 
449

 
5,171

 
1

 
449

 
5,172

 
2,706

 
1999
 
1998
 
1355 Boone Rd. S.E.
Salisbury, NC
 
—

 
370

 
5,697

 
168

 
370

 
5,865

 
2,422

 
2003
 
1997
 
2201 Statesville Blvd.
San Angelo, TX
 
—

 
1,050

 
24,689

 
1,221

 
1,050

 
25,910

 
3,073

 
2014
 
1999
 
6101 Grand Court Road
San Antonio, TX
 
—

 
1,499

 
12,662

 
—

 
1,499

 
12,662

 
149

 
2018
 
2000
 
15290 Huebner Road
San Antonio, TX
 
—

 
—

 
17,303

 
—

 
—

 
17,303

 
7,781

 
2007
 
2007
 
8902 Floyd Curl Dr.
San Bernardino, CA
 
—

 
3,700

 
14,300

 
687

 
3,700

 
14,987

 
3,865

 
2008
 
1993
 
1760 W. 16th St.
San Diego, CA
 
—

 
—

 
22,003

 
1,845

 
—

 
23,848

 
6,068

 
2008
 
1992
 
555 Washington St.
Sand Springs, OK
 
—

 
910

 
19,654

 
—

 
910

 
19,654

 
3,346

 
2012
 
2002
 
4402 South 129th Avenue West
Sarasota, FL
 
—

 
475

 
3,175

 
—

 
475

 
3,175

 
1,917

 
1996
 
1995
 
8450 McIntosh Rd.
Sarasota, FL
 
—

 
4,101

 
11,208

 
—

 
4,101

 
11,208

 
212

 
2018
 
1993
 
5401 Sawyer Road
Sarasota, FL
 
—

 
1,370

 
4,084

 
—

 
1,370

 
4,084

 
49

 
2018
 
1968
 
3250 12th Street
Sarasota, FL
 
—

 
2,792

 
11,177

 
—

 
2,792

 
11,177

 
131

 
2018
 
1993
 
5511 Swift Road
Sarasota, FL
 
—

 
3,360

 
19,140

 
—

 
3,360

 
19,140

 
3,681

 
2011
 
2006
 
6150 Edgelake Drive
Sarasota, FL
 
—

 
443

 
9,699

 
—

 
443

 
9,699

 
120

 
2018
 
1998
 
5509 Swift Road
Scranton, PA
 
—

 
440

 
17,609

 
—

 
440

 
17,609

 
2,032

 
2014
 
2005
 
2741 Blvd. Ave
Scranton, PA
 
—

 
320

 
12,144

 
1

 
320

 
12,145

 
1,400

 
2014
 
2013
 
2751 Boulevard Ave
Seminole, FL
 
—

 
1,165

 
8,977

 
—

 
1,165

 
8,977

 
113

 
2018
 
1998
 
9300 Antilles Drive
Seven Fields, PA
 
—

 
484

 
4,663

 
59

 
484

 
4,722

 
2,475

 
1999
 
1999
 
500 Seven Fields Blvd.
Severna Park, MD
 
—

 
2,120

 
31,273

 
808

 
2,120

 
32,081

 
6,616

 
2011
 
1981
 
24 Truckhouse Road
Sewell, NJ
 
—

 
3,127

 
14,095

 
—

 
3,127

 
14,095

 
188

 
2018
 
2010
 
378 Fries Mill Road
Shawnee, OK
 
—

 
80

 
1,400

 
—

 
80

 
1,400

 
837

 
1996
 
1995
 
3947 Kickapoo
Shelbyville, KY
 
—

 
630

 
3,870

 
630

 
630

 
4,500

 
1,579

 
2005
 
1965
 
1871 Midland Trail
Sherman, TX
 
—

 
700

 
5,221

 
—

 
700

 
5,221

 
1,696

 
2005
 
2006
 
1011 E. Pecan Grove Rd.
Silver Spring, MD
 
—

 
1,469

 
10,395

 
—

 
1,469

 
10,395

 
122

 
2018
 
1995
 
2505 Musgrove Road
Silver Spring, MD
 
—

 
4,678

 
11,683

 
—

 
4,678

 
11,683

 
146

 
2018
 
1990
 
2501 Musgrove Road
Silvis, IL
 
—

 
880

 
16,420

 
139

 
880

 
16,559

 
3,691

 
2010
 
2005
 
1900 10th St.
Sinking Spring, PA
 
—

 
1,393

 
19,848

 
—

 
1,393

 
19,848

 
231

 
2018
 
1982
 
3000 Windmill Road
Sittingbourne, UK
 
—

 
1,357

 
6,539

 
267

 
1,403

 
6,760

 
715

 
2014
 
1997
 
200 London Road
Smithfield, NC
 
—

 
290

 
5,680

 
—

 
290

 
5,680

 
2,363

 
2003
 
1998
 
830 Berkshire Rd.


(Dollars in thousands)
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Triple-net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Smithfield, NC
 
—

 
360

 
8,216

 
—

 
360

 
8,216

 
946

 
2014
 
1999
 
250 Highway 210 West
South Bend, IN
 
—

 
670

 
17,770

 
—

 
670

 
17,770

 
2,128

 
2014
 
2014
 
52565 State Road 933
South Point, OH
 
—

 
1,135

 
9,390

 
—

 
1,135

 
9,390

 
109

 
2018
 
1984
 
7743 County Road 1
Southampton, UK
 
—

 
1,519

 
16,041

 
—

 
1,519

 
16,041

 
541

 
2017
 
2013
 
Botley Road, Park Gate
Southbury, CT
 
—

 
1,860

 
23,613

 
958

 
1,860

 
24,571

 
4,939

 
2011
 
2001
 
655 Main St
Spokane, WA
 
—

 
3,200

 
25,064

 
284

 
3,200

 
25,348

 
6,895

 
2013
 
2001
 
3117 E. Chaser Lane
Spokane, WA
 
—

 
2,580

 
25,342

 
195

 
2,580

 
25,537

 
5,958

 
2013
 
1999
 
1110 E. Westview Ct.
Spokane, WA
 
—

 
2,649

 
11,703

 
—

 
2,649

 
11,703

 
138

 
2018
 
1985
 
6025 North Assembly Street
Springfield, IL
 
—

 
—

 
10,100

 
—

 
768

 
9,332

 
2,107

 
2013
 
2010
 
701 North Walnut Street
Springfield, IL
 
—

 
990

 
13,378

 
1,085

 
990

 
14,463

 
1,707

 
2014
 
2013
 
3089 Old Jacksonville Road
St. Louis, MO
 
—

 
1,890

 
12,390

 
787

 
1,890

 
13,177

 
2,691

 
2010
 
1963
 
6543 Chippewa St
St. Paul, MN
 
—

 
2,100

 
33,019

 
100

 
2,100

 
33,119

 
2,698

 
2015
 
1996
 
750 Mississippi River
Stafford, UK
 
—

 
2,009

 
8,238

 
—

 
2,009

 
8,238

 
499

 
2014
 
2016
 
Stone Road
Stamford, UK
 
—

 
1,820

 
3,238

 
171

 
1,881

 
3,348

 
378

 
2014
 
1998
 
Priory Road
Statesville, NC
 
—

 
150

 
1,447

 
266

 
150

 
1,713

 
749

 
2003
 
1990
 
2441 E. Broad St.
Statesville, NC
 
—

 
310

 
6,183

 
8

 
310

 
6,191

 
2,514

 
2003
 
1996
 
2806 Peachtree Place
Statesville, NC
 
—

 
140

 
3,627

 
—

 
140

 
3,627

 
1,503

 
2003
 
1999
 
2814 Peachtree Rd.
Staunton, VA
 
—

 
899

 
6,391

 
—

 
899

 
6,391

 
432

 
2018
 
1999
 
1410 N Augusta St
Sterling Heights, MI
 
—

 
790

 
10,787

 
—

 
790

 
10,787

 
128

 
2018
 
1996
 
11095 East Fourteen Mile Road
Sterling Heights, MI
 
—

 
1,583

 
15,639

 
—

 
1,583

 
15,639

 
188

 
2018
 
2013
 
38200 Schoenherr Road
Stillwater, OK
 
—

 
80

 
1,400

 
—

 
80

 
1,400

 
839

 
1995
 
1995
 
1616 McElroy Rd.
Stratford-upon-Avon, UK
 
—

 
790

 
14,508

 
517

 
816

 
14,999

 
1,443

 
2015
 
2012
 
Scholars Lane
Stroudsburg, PA
 
—

 
340

 
16,313

 
—

 
340

 
16,313

 
2,096

 
2014
 
2011
 
370 Whitestone Corner Road
Summit, NJ
 
—

 
3,080

 
14,152

 
—

 
3,080

 
14,152

 
3,027

 
2011
 
2001
 
41 Springfield Avenue
Sun City West, AZ
 
—

 
1,250

 
21,778

 
600

 
1,250

 
22,378

 
4,357

 
2012
 
1998
 
13810 West Sandridge Drive
Sunbury, PA
 
—

 
695

 
7,246

 
—

 
695

 
7,246

 
82

 
2018
 
1981
 
800 Court Street Circle
Sunninghill, UK
 
—

 
11,632

 
42,233

 
—

 
11,632

 
42,233

 
1,689

 
2014
 
2017
 
Bagshot Road
Sunnyvale, CA
 
—

 
4,946

 
22,131

 
—

 
4,946

 
22,131

 
251

 
2018
 
1990
 
1150 Tilton Drive
Superior, WI
 
—

 
1,020

 
13,735

 
6,159

 
1,020

 
19,894

 
2,909

 
2009
 
2010
 
1915 North 34th Street
Tacoma, WA
 
—

 
2,522

 
8,576

 
—

 
2,522

 
8,576

 
99

 
2018
 
1984
 
5601 South Orchard Southtreet
Tampa, FL
 
—

 
1,315

 
6,913

 
—

 
1,315

 
6,913

 
94

 
2018
 
1999
 
14950 Casey Road
Terre Haute, IN
 
—

 
1,370

 
18,016

 
—

 
1,370

 
18,016

 
1,936

 
2015
 
2015
 
395 8th Avenue
Texarkana, TX
 
—

 
192

 
1,403

 
—

 
192

 
1,403

 
814

 
1996
 
1996
 
4204 Moores Lane
The Villages, FL
 
—

 
1,035

 
7,446

 
—

 
1,035

 
7,446

 
1,103

 
2013
 
2014
 
2450 Parr Drive
Thomasville, GA
 
—

 
530

 
12,520

 
540

 
530

 
13,060

 
2,093

 
2011
 
2006
 
423 Covington Avenue
Three Rivers, MI
 
—

 
1,258

 
2,761

 
—

 
1,258

 
2,761

 
43

 
2018
 
1976
 
517 South Erie Southtreet
Tomball, TX
 
—

 
1,050

 
13,300

 
840

 
1,050

 
14,140

 
2,805

 
2011
 
2001
 
1221 Graham Dr
Tonganoxie, KS
 
—

 
310

 
3,690

 
76

 
310

 
3,766

 
353

 
2015
 
2009
 
120 W 8th St
Topeka, KS
 
—

 
260

 
12,712

 
—

 
260

 
12,712

 
2,236

 
2012
 
2011
 
1931 Southwest Arvonia Place
Towson, MD
 
—

 
1,180

 
13,280

 
195

 
1,180

 
13,475

 
2,974

 
2011
 
1973
 
7700 York Road
Towson, MD
 
—

 
1,715

 
13,115

 
—

 
1,715

 
13,115

 
154

 
2018
 
2000
 
8101 Bellona Avenue
Towson, MD
 
—

 
3,100

 
6,468

 
—

 
3,100

 
6,468

 
73

 
2018
 
1960
 
509 East Joppa Road
Towson, MD
 
—

 
4,527

 
3,128

 
—

 
4,527

 
3,128

 
44

 
2018
 
1970
 
7001 North Charles Street
Troy, MI
 
—

 
1,381

 
24,452

 
—

 
1,381

 
24,452

 
275

 
2018
 
2006
 
925 West South Boulevard
Troy, OH
 
—

 
200

 
2,000

 
4,254

 
200

 
6,254

 
2,177

 
1997
 
1997
 
81 S. Stanfield Rd.

(Dollars in thousands)
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Triple-net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trumbull, CT
 
—

 
4,440

 
43,384

 
—

 
4,440

 
43,384

 
8,857

 
2011
 
2001
 
6949 Main Street
Tucson, AZ
 
—

 
830

 
6,179

 
3,370

 
830

 
9,549

 
1,678

 
2012
 
1997
 
5660 N. Kolb Road
Tulsa, OK
 
—

 
3,003

 
6,025

 
20

 
3,003

 
6,045

 
3,553

 
2006
 
1992
 
3219 S. 79th E. Ave.
Tulsa, OK
 
—

 
1,390

 
7,110

 
1,102

 
1,390

 
8,212

 
1,986

 
2010
 
1998
 
7220 S. Yale Ave.
Tulsa, OK
 
—

 
1,320

 
10,087

 
—

 
1,320

 
10,087

 
1,825

 
2011
 
2012
 
7902 South Mingo Road East
Tulsa, OK
 
—

 
1,100

 
27,007

 
—

 
1,100

 
27,007

 
1,388

 
2015
 
2017
 
18001 East 51st Street
Tulsa, OK
 
13,000

 
1,752

 
28,421

 
—

 
1,752

 
28,421

 
1,215

 
2017
 
2014
 
701 W 71st Street South
Tulsa, OK
 
—

 
890

 
9,410

 
—

 
890

 
9,410

 
308

 
2017
 
2009
 
7210 South Yale Avenue
Twinsburg, OH
 
—

 
1,446

 
5,921

 
—

 
1,446

 
5,921

 
77

 
2018
 
2014
 
8551 Darrow Road
Tyler, TX
 
—

 
650

 
5,268

 
—

 
650

 
5,268

 
1,651

 
2006
 
2007
 
5550 Old Jacksonville Hwy.
Union, SC
 
—

 
1,932

 
2,374

 
—

 
1,932

 
2,374

 
43

 
2018
 
1981
 
709 Rice Avenue
Valparaiso, IN
 
—

 
112

 
2,558

 
—

 
112

 
2,558

 
1,206

 
2001
 
1998
 
2601 Valparaiso St.
Valparaiso, IN
 
—

 
108

 
2,962

 
—

 
108

 
2,962

 
1,379

 
2001
 
1999
 
2501 Valparaiso St.
Vancouver, WA
 
—

 
2,503

 
28,401

 
—

 
2,503

 
28,401

 
316

 
2018
 
2011
 
2811 N.E. 139th Street
Venice, FL
 
—

 
1,150

 
10,674

 
—

 
1,150

 
10,674

 
2,717

 
2008
 
2009
 
1600 Center Rd.
Venice, FL
 
—

 
2,246

 
10,097

 
—

 
2,246

 
10,097

 
126

 
2018
 
1997
 
1450 East Venice Avenue
Vero Beach, FL
 
—

 
263

 
3,187

 
—

 
263

 
3,187

 
1,474

 
2001
 
1999
 
420 4th Ct.
Vero Beach, FL
 
—

 
297

 
3,263

 
—

 
297

 
3,263

 
1,518

 
2001
 
1996
 
410 4th Ct.
Virginia Beach, VA
 
—

 
1,540

 
22,593

 
—

 
1,540

 
22,593

 
2,639

 
2014
 
1993
 
5520 Indian River Rd
Voorhees, NJ
 
—

 
1,800

 
37,299

 
671

 
1,800

 
37,970

 
8,097

 
2011
 
1965
 
2601 Evesham Road
Voorhees, NJ
 
—

 
1,900

 
26,040

 
894

 
1,900

 
26,934

 
5,768

 
2011
 
1985
 
3001 Evesham Road
Voorhees, NJ
 
—

 
3,100

 
25,950

 
26

 
3,100

 
25,976

 
4,484

 
2011
 
2013
 
113 South Route 73
Voorhees, NJ
 
—

 
2,193

 
6,992

 
—

 
2,193

 
6,992

 
91

 
2018
 
2006
 
1086 Dumont Circle
W Palm Beach, FL
 
—

 
1,175

 
8,297

 
—

 
1,175

 
8,297

 
106

 
2018
 
1996
 
2330 Village Boulevard
W Palm Beach, FL
 
—

 
1,921

 
5,733

 
—

 
1,921

 
5,733

 
71

 
2018
 
1996
 
2300 Village Boulevard
Wabash, IN
 
—

 
670

 
14,588

 
1

 
670

 
14,589

 
1,825

 
2014
 
2013
 
20 John Kissinger Drive
Waconia, MN
 
—

 
890

 
14,726

 
4,495

 
890

 
19,221

 
3,580

 
2011
 
2005
 
500 Cherry Street
Wake Forest, NC
 
—

 
200

 
3,003

 
1,742

 
200

 
4,745

 
2,308

 
1998
 
1999
 
611 S. Brooks St.
Wallingford, PA
 
—

 
1,356

 
6,489

 
—

 
1,356

 
6,489

 
86

 
2018
 
1930
 
115 South Providence Road
Walnut Creek, CA
 
—

 
4,358

 
18,413

 
—

 
4,358

 
18,413

 
214

 
2018
 
1997
 
1975 Tice Valley Boulevard
Walnut Creek, CA
 
—

 
5,394

 
39,096

 
—

 
5,394

 
39,096

 
432

 
2018
 
1990
 
1226 Rossmoor Parkway
Walsall, UK
 
—

 
1,184

 
8,562

 
329

 
1,224

 
8,851

 
902

 
2015
 
2015
 
Little Aston Road
Wamego, KS
 
—

 
40

 
2,510

 
57

 
40

 
2,567

 
223

 
2015
 
1996
 
1607 4th St
Wareham, MA
 
—

 
875

 
10,313

 
1,701

 
875

 
12,014

 
5,527

 
2002
 
1989
 
50 Indian Neck Rd.
Warren, NJ
 
—

 
2,000

 
30,810

 
1,073

 
2,000

 
31,883

 
6,023

 
2011
 
1999
 
274 King George Rd
Waterloo, IA
 
—

 
605

 
3,031

 
—

 
605

 
3,031

 
39

 
2018
 
1964
 
201 West Ridgeway Avenue
Waukee, IA
 
—

 
1,870

 
31,878

 
1,075

 
1,870

 
32,953

 
5,402

 
2012
 
2007
 
1650 SE Holiday Crest Circle
Waxahachie, TX
 
—

 
650

 
5,763

 
—

 
650

 
5,763

 
1,680

 
2007
 
2008
 
1329 Brown St.
Wayne, NJ
 
—

 
1,427

 
16,751

 
—

 
1,427

 
16,751

 
237

 
2018
 
1998
 
800 Hamburg Turnpike
Weatherford, TX
 
—

 
660

 
5,261

 
—

 
660

 
5,261

 
1,662

 
2006
 
2007
 
1818 Martin Drive
Wellingborough, UK
 
—

 
1,480

 
5,724

 
243

 
1,530

 
5,917

 
681

 
2015
 
2015
 
159 Northampton
West Bend, WI
 
—

 
620

 
17,790

 
38

 
620

 
17,828

 
3,310

 
2010
 
2011
 
2130 Continental Dr
West Des Moines, IA
 
—

 
828

 
5,104

 
—

 
828

 
5,104

 
66

 
2018
 
2006
 
5010 Grand Ridge Drive
West Orange, NJ
 
—

 
1,347

 
20,467

 
—

 
1,347

 
20,467

 
274

 
2018
 
1998
 
510 Prospect Avenue
West Reading, PA
 
—

 
890

 
12,122

 
—

 
890

 
12,122

 
133

 
2018
 
1975
 
425 Buttonwood Street

(Dollars in thousands)
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Triple-net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westerville, OH
 
—

 
740

 
8,287

 
3,105

 
740

 
11,392

 
9,722

 
1998
 
2001
 
690 Cooper Rd.
Westerville, OH
 
—

 
1,420

 
5,373

 
—

 
1,420

 
5,373

 
66

 
2018
 
1982
 
1060 Eastwind Drive
Westerville, OH
 
—

 
1,582

 
10,282

 
—

 
1,582

 
10,282

 
128

 
2018
 
1980
 
215 Huber Village Boulevard
Westfield, IN
 
—

 
890

 
15,964

 
1

 
890

 
15,965

 
1,981

 
2014
 
2013
 
937 E. 186th Street
Westfield, NJ
 
—

 
2,270

 
16,589

 
497

 
2,270

 
17,086

 
4,001

 
2011
 
1970
 
1515 Lamberts Mill Road
Westlake, OH
 
—

 
855

 
11,966

 
—

 
855

 
11,966

 
143

 
2018
 
1997
 
28400 Center Ridge Road
Weston Super Mare, UK
 
—

 
2,517

 
7,054

 
324

 
2,602

 
7,293

 
1,047

 
2013
 
2011
 
141b Milton Road
Wheaton, MD
 
—

 
3,864

 
3,790

 
—

 
3,864

 
3,790

 
48

 
2018
 
1961
 
11901 Georgia Avenue
Whippany, NJ
 
—

 
1,571

 
14,982

 
—

 
1,571

 
14,982

 
180

 
2018
 
2000
 
18 Eden Lane
White Lake, MI
 
—

 
2,920

 
20,179

 
92

 
2,920

 
20,271

 
4,516

 
2010
 
2000
 
935 Union Lake Rd
Wichita, KS
 
—

 
1,400

 
11,000

 
—

 
1,400

 
11,000

 
4,844

 
2006
 
1997
 
505 North Maize Road
Wichita, KS
 
—

 
860

 
8,873

 
—

 
860

 
8,873

 
1,792

 
2011
 
2012
 
10604 E 13th Street North
Wichita, KS
 
12,779

 
630

 
19,747

 
—

 
630

 
19,747

 
3,328

 
2012
 
2009
 
2050 North Webb Road
Wichita, KS
 
—

 
260

 
2,240

 
129

 
260

 
2,369

 
207

 
2015
 
1992
 
900 N Bayshore Dr
Wichita, KS
 
—

 
900

 
10,134

 
—

 
900

 
10,134

 
1,932

 
2011
 
2012
 
10600 E 13th Street North
Wilkes-Barre, PA
 
—

 
753

 
3,457

 
—

 
753

 
3,457

 
48

 
2018
 
1970
 
1548 Sans Souci Parkway
Williamsburg, VA
 
—

 
1,187

 
5,728

 
—

 
1,187

 
5,728

 
375

 
2018
 
2000
 
1811 Jamestown Rd
Williamsport, PA
 
—

 
919

 
6,926

 
—

 
919

 
6,926

 
83

 
2018
 
1976
 
300 Leader Drive
Williamsport, PA
 
—

 
780

 
1,899

 
—

 
780

 
1,899

 
30

 
2018
 
1972
 
101 Leader Drive
Williamstown, KY
 
—

 
70

 
6,430

 
—

 
70

 
6,430

 
2,501

 
2005
 
1987
 
201 Kimberly Lane
Willoughby, OH
 
—

 
1,774

 
8,655

 
—

 
1,774

 
8,655

 
105

 
2018
 
1974
 
37603 Euclid Avenue
Wilmington, DE
 
—

 
800

 
9,494

 
114

 
800

 
9,608

 
2,193

 
2011
 
1970
 
810 S Broom Street
Wilmington, DE
 
—

 
1,376

 
13,454

 
—

 
1,376

 
13,454

 
159

 
2018
 
1998
 
700 1/2 Foulk Road
Wilmington, DE
 
—

 
2,843

 
36,959

 
—

 
2,843

 
36,959

 
419

 
2018
 
1988
 
5651 Limestone Road
Wilmington, DE
 
—

 
2,266

 
9,503

 
—

 
2,266

 
9,503

 
115

 
2018
 
1984
 
700 Foulk Road
Wilmington, NC
 
—

 
210

 
2,991

 
—

 
210

 
2,991

 
1,560

 
1999
 
1999
 
3501 Converse Dr.
Wilmington, NC
 
—

 
400

 
15,355

 
—

 
400

 
15,355

 
1,854

 
2014
 
2012
 
3828 Independence Blvd
Windsor, VA
 
—

 
1,148

 
6,514

 
—

 
1,148

 
6,514

 
443

 
2018
 
1999
 
23352 Courthouse Hwy
Winston-Salem, NC
 
—

 
360

 
2,514

 
459

 
360

 
2,973

 
1,268

 
2003
 
1996
 
2980 Reynolda Rd.
Winter Garden, FL
 
—

 
1,110

 
7,937

 
—

 
1,110

 
7,937

 
1,382

 
2012
 
2013
 
720 Roper Road
Winter Springs, FL
 
—

 
1,152

 
14,826

 
—

 
1,152

 
14,826

 
173

 
2018
 
1999
 
1057 Willa Springs Drive
Witherwack, UK
 
—

 
944

 
6,915

 
266

 
976

 
7,149

 
1,027

 
2013
 
2009
 
Whitchurch Road
Wolverhampton, UK
 
—

 
1,573

 
6,678

 
279

 
1,626

 
6,904

 
1,000

 
2013
 
2011
 
378 Prestonwood Road
Woodbury, MN
 
—

 
1,317

 
20,935

 
298

 
1,317

 
21,233

 
1,057

 
2017
 
2015
 
2195 Century Avenue South
Woodstock, VA
 
—

 
594

 
5,108

 
—

 
594

 
5,108

 
338

 
2018
 
2001
 
803 S Main St
Worcester, MA
 
—

 
3,500

 
54,099

 
—

 
3,500

 
54,099

 
13,035

 
2007
 
2009
 
101 Barry Road
Worcester, MA
 
—

 
2,300

 
9,060

 
6,000

 
2,300

 
15,060

 
4,007

 
2008
 
1993
 
378 Plantation St.
Yardley, PA
 
—

 
773

 
14,918

 
—

 
773

 
14,918

 
184

 
2018
 
1995
 
493 Stony Hill Road
Yardley, PA
 
—

 
1,561

 
9,442

 
—

 
1,561

 
9,442

 
139

 
2018
 
1990
 
1480 Oxford Valley Road
Yeadon, PA
 
—

 
1,075

 
10,694

 
—

 
1,075

 
10,694

 
121

 
2018
 
1963
 
14 Lincoln Avenue
York, PA
 
—

 
976

 
9,357

 
—

 
976

 
9,357

 
112

 
2018
 
1972
 
200 Pauline Drive
York, PA
 
—

 
1,050

 
4,212

 
—

 
1,050

 
4,212

 
60

 
2018
 
1983
 
2400 Kingston Court
York, PA
 
—

 
1,121

 
7,586

 
—

 
1,121

 
7,586

 
97

 
2018
 
1979
 
1770 Barley Road
York, UK
 
—

 
2,961

 
8,266

 
379

 
3,061

 
8,545

 
946

 
2014
 
2006
 
Rosetta Way, Boroughbridge Road
Youngsville, NC
 
—

 
380

 
10,689

 
—

 
380

 
10,689

 
1,256

 
2014
 
2013
 
100 Sunset Drive
Zephyrhills, FL
 
—

 
2,131

 
6,671

 
—

 
2,131

 
6,671

 
90

 
2018
 
1987
 
38220 Henry Drive
Zionsville, IN
 
—

 
1,610

 
22,400

 
1,686

 
1,610

 
24,086

 
5,158

 
2010
 
2009
 
11755 N Michigan Rd
Triple-net Total
 
$
288,387


$
1,096,169


$
8,585,481


$
301,960


$
1,119,576


$
8,864,034


$
1,261,486

 
 
 
 
 
 


105

Welltower Inc.
 
 
Schedule III
 
 
Real Estate and Accumulated Depreciation
 
 
December 31, 2018
 
 
(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Outpatient Medical:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Addison, IL
 
$
6,052

 
$
102

 
$
19,089

 
$
—

 
$
102

 
$
19,089

 
$
—

 
2018
 
2012
 
303 West Lake Street
Akron, OH
 
—

 
821

 
12,105

 
1

 
821

 
12,106

 
2,993

 
2012
 
2010
 
701 White Pond Drive
Allen, TX
 
—

 
726

 
14,196

 
1,221

 
726

 
15,417

 
4,722

 
2012
 
2006
 
1105 N Central Expressway
Alpharetta, GA
 
—

 
476

 
14,757

 
448

 
476

 
15,205

 
5,141

 
2011
 
2003
 
11975 Morris Road
Alpharetta, GA
 
—

 
1,862

 
—

 
—

 
1,862

 
—

 
—

 
2011
 
1900
 
940 North Point Parkway
Alpharetta, GA
 
—

 
548

 
17,103

 
548

 
548

 
17,651

 
6,275

 
2011
 
2007
 
3300 Old Milton Parkway
Alpharetta, GA
 
—

 
773

 
18,902

 
1,640

 
773

 
20,542

 
6,627

 
2011
 
1993
 
3400-A Old Milton Parkway
Alpharetta, GA
 
—

 
1,769

 
36,152

 
1,805

 
1,769

 
37,957

 
13,445

 
2011
 
1999
 
3400-C Old Milton Parkway
Anderson, IN
 
—

 
584

 
21,077

 
—

 
584

 
21,077

 
1,300

 
2017
 
2016
 
3125 S. Scatterfield Rd.
Arcadia, CA
 
—

 
5,408

 
23,219

 
4,567

 
5,618

 
27,576

 
10,909

 
2006
 
1984
 
301 W. Huntington Drive
Arlington, TX
 
—

 
82

 
18,243

 
402

 
82

 
18,645

 
3,550

 
2012
 
2012
 
902 W. Randol Mill Road
Atlanta, GA
 
—

 
4,931

 
18,720

 
7,068

 
5,387

 
25,332

 
11,504

 
2006
 
1991
 
755 Mt. Vernon Hwy.
Atlanta, GA
 
—

 
1,947

 
24,248

 
1,973

 
2,184

 
25,984

 
7,822

 
2012
 
1984
 
975 Johnson Ferry Road
Atlanta, GA
 
—

 
—

 
43,425

 
1,972

 
—

 
45,397

 
12,796

 
2012
 
2006
 
5670 Peachtree-Dunwoody Road
Austin, TX
 
—

 
1,066

 
10,112

 
—

 
1,066

 
10,112

 
499

 
2017
 
2017
 
5301-B Davis Lane
Bardstown, KY
 
—

 
273

 
7,966

 
42

 
274

 
8,007

 
1,409

 
2010
 
2006
 
4359 New Shepherdsville Rd
Bartlett, TN
 
—

 
187

 
15,015

 
2,225

 
187

 
17,240

 
6,860

 
2007
 
2004
 
2996 Kate Bond Rd.
Bel Air, MD
 
—

 
—

 
24,769

 
49

 
—

 
24,818

 
1,724

 
2014
 
2016
 
12 Medstar Boulevard
Bellevue, NE
 
—

 
—

 
16,680

 
2

 
—

 
16,682

 
5,283

 
2010
 
2010
 
2510 Bellevue Medical Center Drive
Bettendorf, IA
 
—

 
—

 
7,110

 
73

 
—

 
7,183

 
748

 
2013
 
2014
 
2140 53rd Avenue
Beverly Hills, CA
 
—

 
20,766

 
40,730

 
3,400

 
20,766

 
44,130

 
6,159

 
2015
 
1946
 
9675 Brighton Way
Beverly Hills, CA
 
—

 
18,863

 
1,192

 
208

 
18,885

 
1,378

 
684

 
2015
 
1955
 
415 North Bedford
Beverly Hills, CA
 
—

 
19,863

 
31,690

 
1,058

 
19,863

 
32,748

 
4,403

 
2015
 
1946
 
416 North Bedford
Beverly Hills, CA
 
33,729

 
32,603

 
28,639

 
812

 
32,603

 
29,451

 
5,043

 
2015
 
1950
 
435 North Bedford
Beverly Hills, CA
 
78,271

 
52,772

 
87,366

 
510

 
52,772

 
87,876

 
11,291

 
2015
 
1989
 
436 North Bedford
Birmingham, AL
 
—

 
52

 
10,201

 
639

 
52

 
10,840

 
4,243

 
2006
 
1971
 
801 Princeton Avenue SW
Birmingham, AL
 
—

 
124

 
11,733

 
2,047

 
124

 
13,780

 
4,905

 
2006
 
1985
 
817 Princeton Avenue SW
Birmingham, AL
 
—

 
476

 
18,726

 
2,196

 
476

 
20,922

 
7,981

 
2006
 
1989
 
833 Princeton Avenue SW
Birmingham, AL
 
8,626

 
896

 
13,755

 
—

 
896

 
13,755

 
—

 
2018
 
1985
 
3485 Independence Drive
Boardman, OH
 
—

 
80

 
12,161

 
40

 
80

 
12,201

 
4,585

 
2010
 
2007
 
8423 Market St
Boca Raton, FL
 
—

 
31

 
12,312

 
896

 
251

 
12,988

 
3,622

 
2012
 
1993
 
9960 S. Central Park Boulevard
Boca Raton, FL
 
—

 
109

 
34,002

 
3,823

 
214

 
37,720

 
14,246

 
2006
 
1995
 
9970 S. Central Park Blvd.
Boerne, TX
 
—

 
50

 
12,951

 
454

 
86

 
13,369

 
3,535

 
2011
 
2007
 
134 Menger Springs Road
Boynton Beach, FL
 
—

 
2,048

 
7,692

 
1,374

 
2,185

 
8,929

 
3,798

 
2006
 
1995
 
8188 Jog Rd.
Boynton Beach, FL
 
—

 
2,048

 
7,403

 
1,631

 
2,185

 
8,897

 
3,902

 
2006
 
1997
 
8200 Jog Road
Boynton Beach, FL
 
—

 
214

 
5,611

 
8,423

 
320

 
13,928

 
5,714

 
2007
 
1996
 
10075 Jog Rd.
Boynton Beach, FL
 
—

 
13,324

 
40,369

 
2,925

 
14,049

 
42,569

 
11,591

 
2013
 
1995
 
10301 Hagen Ranch Road


(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Outpatient Medical:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bradenton, FL
 
—

 
1,184

 
9,799

 
417

 
1,184

 
10,216

 
1,896

 
2014
 
1975
 
315 75th Street West
Bradenton, FL
 
—

 
1,035

 
4,298

 
17

 
1,035

 
4,315

 
889

 
2014
 
2006
 
7005 Cortez Road West
Brandon, FL
 
—

 
1,437

 
7,006

 
—

 
1,437

 
7,006

 
182

 
2018
 
2016
 
2020 Town Center Boulevard
Bridgeton, MO
 
—

 
1,701

 
6,228

 
193

 
1,501

 
6,621

 
649

 
2017
 
2008
 
3440 De Paul Ln.
Bridgeton, MO
 
—

 
450

 
21,221

 
265

 
450

 
21,486

 
6,906

 
2010
 
2006
 
12266 DePaul Dr
Buckhurst Hill, UK
 
—

 
11,989

 
50,907

 
—

 
11,989

 
50,907

 
4,885

 
2015
 
2013
 
High Road
Burleson, TX
 
—

 
10

 
12,611

 
731

 
10

 
13,342

 
4,177

 
2011
 
2007
 
12001 South Freeway
Burnsville, MN
 
—

 
—

 
31,596

 
1,463

 
—

 
33,059

 
8,685

 
2013
 
2014
 
14101 Fairview Dr
Carmel, IN
 
—

 
2,280

 
19,238

 
944

 
2,475

 
19,987

 
7,581

 
2011
 
2005
 
12188-A North Meridian Street
Carmel, IN
 
—

 
2,026

 
21,559

 
186

 
2,186

 
21,585

 
8,691

 
2011
 
2007
 
12188-B North Meridian Street
Castle Rock, CO
 
—

 
80

 
13,004

 
586

 
79

 
13,591

 
3,008

 
2014
 
2013
 
2352 Meadows Boulevard
Castle Rock, CO
 
—

 
—

 
11,795

 
165

 
—

 
11,960

 
483

 
2016
 
2017
 
Meadows Boulevard
Cedar Park, TX
 
—

 
132

 
23,753

 
—

 
132

 
23,753

 
1,819

 
2017
 
2014
 
1401 Medical Parkway, Building 2
Chapel Hill, NC
 
5,259

 
1,970

 
8,874

 
—

 
1,970

 
8,874

 
—

 
2018
 
2007
 
6011 Farrington Road
Chapel Hill, NC
 
5,259

 
1,970

 
8,925

 
—

 
1,970

 
8,925

 
—

 
2018
 
2007
 
6013 Farrington Road
Chapel Hill, NC
 
14,949

 
5,681

 
25,035

 
—

 
5,681

 
25,035

 
—

 
2018
 
2006
 
2226 North Carolina Highway 54
Charleston, SC
 
—

 
2,773

 
25,928

 
124

 
2,815

 
26,010

 
4,988

 
2014
 
2009
 
325 Folly Road
Cincinnati, OH
 
—

 
—

 
17,880

 
250

 
2

 
18,128

 
3,561

 
2012
 
2013
 
3301 Mercy Health Boulevard
Claremore, OK
 
—

 
132

 
11,173

 
76

 
132

 
11,249

 
3,318

 
2007
 
2005
 
1501 N. Florence Ave.
Clarkson Valley, MO
 
—

 
—

 
35,592

 
—

 
—

 
35,592

 
12,590

 
2009
 
2010
 
15945 Clayton Rd
Clear Lake, TX
 
—

 
—

 
13,882

 
20

 
—

 
13,902

 
1,504

 
2013
 
2014
 
1010 South Ponds Drive
Columbia, MD
 
—

 
23

 
33,885

 
1,766

 
9,353

 
26,321

 
6,522

 
2015
 
1982
 
5450 & 5500 Knoll N Dr.
Columbia, MD
 
—

 
12,159

 
72,636

 
—

 
12,159

 
72,636

 
249

 
2018
 
2009
 
10710 Charter Drive
Columbia, MD
 
—

 
2,333

 
19,232

 
1,567

 
2,333

 
20,799

 
4,971

 
2012
 
2002
 
10700 Charter Drive
Coon Rapids, MN
 
—

 
—

 
26,679

 
1,123

 
—

 
27,802

 
5,356

 
2013
 
2014
 
11850 Blackfoot Street NW
Costa Mesa, CA
 
22,020

 
22,033

 
24,332

 
179

 
22,033

 
24,511

 
3,664

 
2017
 
2007
 
1640 Newport Boulevard
Cypress, TX
 
—

 
1,287

 
—

 
—

 
1,287

 
—

 
—

 
2016
 
1900
 
14940 Mueschke Road
Dade City, FL
 
—

 
1,211

 
5,511

 
—

 
1,211

 
5,511

 
1,476

 
2011
 
1998
 
13413 US Hwy 301
Dallas, TX
 
—

 
122

 
15,418

 
—

 
122

 
15,418

 
1,681

 
2013
 
2014
 
8196 Walnut Hill Lane
Dallas, TX
 
—

 
137

 
28,690

 
3,836

 
137

 
32,526

 
13,032

 
2006
 
1995
 
9330 Poppy Dr.
Dallas, TX
 
—

 
462

 
52,488

 
2,070

 
462

 
54,558

 
11,436

 
2012
 
2004
 
7115 Greenville Avenue
Dallas, TX
 
—

 
6,086

 
18,007

 
—

 
6,086

 
18,007

 
373

 
2018
 
2010
 
10740 North Central Expressway
Dayton, OH
 
—

 
730

 
6,919

 
362

 
730

 
7,281

 
3,039

 
2011
 
1988
 
1530 Needmore Road
Deerfield Beach, FL
 
—

 
2,408

 
7,809

 
793

 
2,540

 
8,470

 
3,356

 
2011
 
2001
 
1192 East Newport Center Drive
Delray Beach, FL
 
—

 
1,882

 
34,767

 
7,280

 
2,449

 
41,480

 
18,890

 
2006
 
1985
 
5130-5150 Linton Blvd.
Durham, NC
 
—

 
1,212

 
22,858

 
2

 
1,212

 
22,860

 
3,958

 
2013
 
2012
 
1823 Hillandale Road
Edina, MN
 
—

 
310

 
15,132

 
989

 
310

 
16,121

 
4,820

 
2010
 
2003
 
8100 W 78th St
El Paso, TX
 
—

 
677

 
17,075

 
2,457

 
677

 
19,532

 
8,868

 
2006
 
1997
 
2400 Trawood Dr.
Elmhurst, IL
 
—

 
41

 
39,562

 
—

 
41

 
39,562

 
—

 
2018
 
2011
 
133 E Brush Hill Road
Everett, WA
 
—

 
4,842

 
26,010

 
1

 
4,842

 
26,011

 
7,650

 
2010
 
2011
 
13020 Meridian Ave. S.
Fenton, MO
 
10,559

 
958

 
27,485

 
439

 
958

 
27,924

 
7,480

 
2013
 
2009
 
1011 Bowles Avenue
Fenton, MO
 
—

 
369

 
13,911

 
357

 
369

 
14,268

 
2,793

 
2013
 
2009
 
1055 Bowles Avenue
Florham Park, NJ
 
—

 
8,578

 
61,779

 
—

 
8,578

 
61,779

 
1,953

 
2017
 
2017
 
150 Park Avenue


(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Outpatient Medical:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Flower Mound, TX
 
—

 
737

 
9,276

 
—

 
737

 
9,276

 
1,475

 
2015
 
2014
 
2560 Central Park Avenue
Flower Mound, TX
 
—

 
4,164

 
27,027

 
962

 
4,164

 
27,989

 
4,930

 
2014
 
2012
 
4370 Medical Arts Drive
Flower Mound, TX
 
—

 
4,620

 
—

 
—

 
4,620

 
—

 
—

 
2014
 
1900
 
Medical Arts Drive
Fort Wayne, IN
 
—

 
1,105

 
22,836

 
—

 
1,105

 
22,836

 
5,324

 
2012
 
2004
 
7916 Jefferson Boulevard
Fort Worth, TX
 
—

 
462

 
26,020

 
373

 
462

 
26,393

 
5,128

 
2012
 
2012
 
10840 Texas Health Trail
Fort Worth, TX
 
—

 
401

 
6,099

 
1

 
401

 
6,100

 
1,227

 
2014
 
2007
 
7200 Oakmont Boulevard
Franklin, TN
 
—

 
2,338

 
12,138

 
2,821

 
2,338

 
14,959

 
6,092

 
2007
 
1988
 
100 Covey Drive
Frisco, TX
 
—

 
—

 
18,635

 
1,534

 
—

 
20,169

 
7,805

 
2007
 
2004
 
4401 Coit Road
Frisco, TX
 
—

 
—

 
15,309

 
2,549

 
—

 
17,858

 
7,344

 
2007
 
2004
 
4461 Coit Road
Fullerton, CA
 
—

 
5,477

 
53,890

 
433

 
5,477

 
54,323

 
3,694

 
2014
 
2007
 
1950 Sunny Crest Drive
Gallatin, TN
 
—

 
20

 
21,801

 
1,868

 
44

 
23,645

 
8,066

 
2010
 
1997
 
300 Steam Plant Rd
Gardendale, AL
 
4,300

 
1,150

 
8,162

 
—

 
1,150

 
8,162

 
—

 
2018
 
2005
 
2217 Decatur Highway
Gig Harbor, WA
 
—

 
80

 
30,810

 
982

 
80

 
31,792

 
3,944

 
2010
 
2009
 
11511 Canterwood Blvd. NW
Glendale, CA
 
—

 
37

 
18,398

 
1,651

 
37

 
20,049

 
6,951

 
2007
 
2002
 
222 W. Eulalia St.
Gloucester, VA
 
—

 
2,128

 
9,169

 
—

 
2,128

 
9,169

 
—

 
2018
 
2008
 
5659 Parkway Drive
Grand Prairie, TX
 
—

 
981

 
6,086

 
—

 
981

 
6,086

 
2,096

 
2012
 
2009
 
2740 N State Hwy 360
Grapevine, TX
 
—

 
—

 
5,943

 
4,778

 
2,081

 
8,640

 
1,603

 
2014
 
2002
 
2040 W State Hwy 114
Grapevine, TX
 
—

 
3,365

 
15,669

 
1,661

 
3,365

 
17,330

 
3,778

 
2014
 
2002
 
2020 W State Hwy 114
Greeneville, TN
 
—

 
970

 
10,104

 
74

 
970

 
10,178

 
3,880

 
2010
 
2005
 
438 East Vann Rd
Greenwood, IN
 
—

 
8,316

 
26,384

 
—

 
8,316

 
26,384

 
6,879

 
2012
 
2010
 
1260 Innovation Parkway
Greenwood, IN
 
—

 
2,098

 
21,538

 
638

 
2,098

 
22,176

 
3,486

 
2014
 
2013
 
3000 S State Road 135
Greenwood, IN
 
—

 
1,262

 
7,045

 
8

 
1,262

 
7,053

 
1,589

 
2014
 
2010
 
333 E County Line Road
High Point, NC
 
—

 
2,659

 
29,069

 
165

 
2,659

 
29,234

 
6,581

 
2012
 
2010
 
4515 Premier Drive
Highland, IL
 
—

 
—

 
8,834

 
—

 
—

 
8,834

 
1,598

 
2012
 
2013
 
12860 Troxler Avenue
Houston, TX
 
—

 
10,403

 
—

 
—

 
10,403

 
—

 
6

 
2011
 
1900
 
F.M. 1960 & Northgate Forest Dr.
Houston, TX
 
—

 
5,837

 
33,128

 
150

 
5,837

 
33,278

 
11,293

 
2012
 
2005
 
15655 Cypress Woods Medical Dr.
Houston, TX
 
—

 
3,102

 
32,323

 
4,489

 
3,242

 
36,672

 
7,580

 
2014
 
2014
 
1900 N Loop W Freeway
Houston, TX
 
—

 
3,688

 
13,313

 
132

 
3,688

 
13,445

 
3,449

 
2012
 
2007
 
10701 Vintage Preserve Parkway
Houston, TX
 
—

 
1,099

 
1,604

 
80,605

 
12,815

 
70,493

 
14,163

 
2012
 
1998
 
2727 W Holcombe Boulevard
Houston, TX
 
3,899

 
377

 
13,726

 
—

 
377

 
13,726

 
—

 
2018
 
2011
 
20207 Chasewood Park Drive
Howell, MI
 
—

 
2,000

 
13,928

 
803

 
2,000

 
14,731

 
459

 
2016
 
2017
 
1225 South Latson Road
Hudson, OH
 
—

 
2,587

 
13,720

 
688

 
2,868

 
14,127

 
4,921

 
2012
 
2006
 
5655 Hudson Drive
Humble, TX
 
—

 
—

 
9,941

 
—

 
—

 
9,941

 
1,036

 
2013
 
2014
 
8233 N. Sam Houston Parkway E.
Jackson, MI
 
—

 
607

 
17,367

 
130

 
668

 
17,436

 
4,502

 
2013
 
2009
 
1201 E Michigan Avenue
Jupiter, FL
 
—

 
2,252

 
11,415

 
3,422

 
2,636

 
14,453

 
5,598

 
2006
 
2001
 
550 Heritage Dr.
Jupiter, FL
 
—

 
2,825

 
5,858

 
1,082

 
3,036

 
6,729

 
3,037

 
2007
 
2004
 
600 Heritage Dr.
Killeen, TX
 
—

 
—

 
3,756

 
—

 
—

 
3,756

 
325

 
2018
 
1990
 
2301 S. Clear Creek
Killeen, TX
 
—

 
760

 
22,878

 
305

 
795

 
23,148

 
7,882

 
2010
 
2010
 
2405 Clear Creek Rd
Killeen, TX
 
—

 
1,907

 
3,575

 
—

 
1,907

 
3,575

 
566

 
2011
 
2012
 
5702 E Central Texas Expressway
Kyle, TX
 
—

 
2,569

 
14,384

 
538

 
2,569

 
14,922

 
2,962

 
2014
 
2011
 
135 Bunton Creek Road
La Jolla, CA
 
—

 
12,855

 
32,658

 
705

 
12,855

 
33,363

 
5,946

 
2015
 
1989
 
4150 Regents Park Row
La Jolla, CA
 
—

 
9,425

 
26,525

 
542

 
9,425

 
27,067

 
3,912

 
2015
 
1988
 
4120 & 4130 La Jolla Village Drive


(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Outpatient Medical:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
La Quinta, CA
 
—

 
3,266

 
22,066

 
197

 
3,279

 
22,250

 
4,719

 
2014
 
2006
 
47647 Caleo Bay Drive
Lacey, WA
 
6,768

 
1,751

 
10,383

 
—

 
1,751

 
10,383

 
—

 
2018
 
1971
 
2555 Marvin Road Northeast
Lake St Louis, MO
 
—

 
240

 
14,249

 
204

 
240

 
14,453

 
5,048

 
2010
 
2008
 
400 Medical Dr
Lakeway, TX
 
—

 
2,801

 
—

 
—

 
2,801

 
—

 
—

 
2007
 
1900
 
Lohmans Crossing Road
Lakewood, CA
 
—

 
146

 
14,885

 
2,294

 
146

 
17,179

 
6,528

 
2006
 
1993
 
5750 Downey Ave.
Lakewood, WA
 
—

 
72

 
16,017

 
676

 
72

 
16,693

 
3,952

 
2012
 
2005
 
11307 Bridgeport Way SW
Land O Lakes, FL
 
—

 
3,025

 
26,249

 
—

 
3,025

 
26,249

 
1,096

 
2017
 
2009
 
2100 Via Bella
Land O Lakes, FL
 
—

 
1,376

 
6,750

 
—

 
1,376

 
6,750

 
313

 
2017
 
2011
 
2150 Via Bella
Las Vegas, NV
 
—

 
6,127

 
—

 
—

 
6,127

 
—

 
—

 
2007
 
1900
 
SW corner of Deer Springs Way and Riley Street
Las Vegas, NV
 
—

 
2,319

 
4,612

 
1,214

 
2,319

 
5,826

 
2,708

 
2006
 
1991
 
2870 S. Maryland Pkwy.
Las Vegas, NV
 
—

 
74

 
15,287

 
1,484

 
74

 
16,771

 
6,416

 
2006
 
2000
 
1815 E. Lake Mead Blvd.
Las Vegas, NV
 
—

 
433

 
6,921

 
214

 
433

 
7,135

 
3,196

 
2007
 
1997
 
1776 E. Warm Springs Rd.
Lenexa, KS
 
—

 
540

 
17,926

 
290

 
540

 
18,216

 
5,492

 
2010
 
2008
 
23401 Prairie Star Pkwy
Lenexa, KS
 
—

 
100

 
13,766

 
—

 
100

 
13,766

 
1,751

 
2013
 
2013
 
23351 Prairie Star Parkway
Lincoln, NE
 
—

 
1,420

 
29,723

 
1,052

 
1,420

 
30,775

 
10,875

 
2010
 
2003
 
575 South 70th St
London, UK
 
—

 
5,229

 
11,551

 
—

 
5,229

 
11,551

 
1,108

 
2015
 
2007
 
17-19 View Road
London, UK
 
—

 
17,983

 
157,802

 
—

 
17,983

 
157,802

 
15,142

 
2015
 
2010
 
53 Parkside
London, UK
 
—

 
4,081

 
28,107

 
—

 
4,081

 
28,107

 
2,697

 
2015
 
2003
 
49 Parkside
Los Alamitos, CA
 
—

 
39

 
18,635

 
1,114

 
39

 
19,749

 
7,389

 
2007
 
2003
 
3771 Katella Ave.
Los Gatos, CA
 
—

 
488

 
22,386

 
2,410

 
488

 
24,796

 
11,137

 
2006
 
1993
 
555 Knowles Dr.
Loxahatchee, FL
 
—

 
1,637

 
5,048

 
1,280

 
1,719

 
6,246

 
2,713

 
2006
 
1997
 
12977 Southern Blvd.
Loxahatchee, FL
 
—

 
1,340

 
6,509

 
1,464

 
1,440

 
7,873

 
3,144

 
2006
 
1993
 
12989 Southern Blvd.
Loxahatchee, FL
 
—

 
1,553

 
4,694

 
1,544

 
1,650

 
6,141

 
2,655

 
2006
 
1994
 
12983 Southern Blvd.
Lynbrook, NY
 
27,745

 
10,028

 
37,319

 
—

 
10,028

 
37,319

 
—

 
2018
 
1962
 
444 Merrick Road
Marietta, GA
 
—

 
2,682

 
20,053

 
1,409

 
2,703

 
21,441

 
2,224

 
2016
 
2016
 
4800 Olde Towne Parkway
Melbourne, FL
 
—

 
3,439

 
50,461

 
802

 
3,538

 
51,164

 
9,227

 
2014
 
2009
 
2222 South Harbor City Boulevard
Menasha, WI
 
—

 
1,374

 
13,861

 
2,940

 
1,345

 
16,830

 
2,099

 
2016
 
1994
 
1550 Midway Place
Merced, CA
 
—

 
—

 
13,772

 
815

 
—

 
14,587

 
5,015

 
2009
 
2010
 
315 Mercy Ave.
Merriam, KS
 
—

 
176

 
8,005

 
1,088

 
176

 
9,093

 
3,256

 
2011
 
1972
 
8800 West 75th Street
Merriam, KS
 
—

 
—

 
10,222

 
4,517

 
444

 
14,295

 
5,210

 
2011
 
1977
 
8901 West 74th Street
Merriam, KS
 
—

 
1,257

 
24,911

 
64

 
1,257

 
24,975

 
6,116

 
2013
 
2009
 
9301 West 74th Street
Merrillville, IN
 
—

 
—

 
22,134

 
915

 
—

 
23,049

 
7,183

 
2008
 
2006
 
101 E. 87th Ave.
Mesa, AZ
 
—

 
1,558

 
9,561

 
1,347

 
1,558

 
10,908

 
4,756

 
2008
 
1989
 
6424 East Broadway Road
Mesquite, TX
 
—

 
496

 
3,834

 
—

 
496

 
3,834

 
1,035

 
2012
 
2012
 
1575 I-30
Mission Hills, CA
 
23,835

 
—

 
42,276

 
6,672

 
4,791

 
44,157

 
8,540

 
2014
 
1986
 
11550 Indian Hills Road
Missouri City, TX
 
—

 
1,360

 
7,146

 
62

 
1,360

 
7,208

 
420

 
2015
 
2016
 
7010 Highway 6
Mobile, AL
 
16,028

 
2,759

 
25,180

 
—

 
2,759

 
25,180

 
—

 
2018
 
2003
 
6144 Airport Boulevard
Moline, IL
 
—

 
—

 
8,783

 
69

 
—

 
8,852

 
1,179

 
2012
 
2013
 
3900 28th Avenue Drive
Monticello, MN
 
6,976

 
61

 
18,489

 
131

 
61

 
18,620

 
3,986

 
2012
 
2008
 
1001 Hart Boulevard
Moorestown, NJ
 
—

 
6

 
50,896

 
694

 
362

 
51,234

 
12,506

 
2011
 
2012
 
401 Young Avenue
Morrow, GA
 
—

 
818

 
8,064

 
272

 
845

 
8,309

 
4,320

 
2007
 
1990
 
6635 Lake Drive
Mount Juliet, TN
 
—

 
1,566

 
11,697

 
1,734

 
1,601

 
13,396

 
5,609

 
2007
 
2005
 
5002 Crossings Circle


(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Outpatient Medical:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mount Vernon, IL
 
—

 
—

 
24,892

 
25

 
—

 
24,917

 
6,306

 
2011
 
2012
 
2 Good Samaritan Way
Murrieta, CA
 
—

 
—

 
47,190

 
63

 
—

 
47,253

 
18,061

 
2010
 
2011
 
28078 Baxter Rd.
Murrieta, CA
 
—

 
3,800

 
—

 
—

 
3,800

 
—

 
—

 
2014
 
1900
 
28078 Baxter Rd.
Nashville, TN
 
—

 
1,806

 
7,165

 
3,728

 
1,942

 
10,757

 
4,509

 
2006
 
1986
 
310 25th Ave. N.
Nassau Bay, TX
 
—

 
378

 
29,947

 
—

 
378

 
29,947

 
7,296

 
2012
 
1981
 
18100 St John Drive
Nassau Bay, TX
 
—

 
91

 
10,613

 
1,386

 
91

 
11,999

 
3,829

 
2012
 
1986
 
2060 Space Park Drive
New Albany, IN
 
—

 
2,411

 
16,494

 
30

 
2,411

 
16,524

 
2,981

 
2014
 
2001
 
2210 Green Valley Road
Niagara Falls, NY
 
—

 
1,433

 
10,891

 
441

 
1,721

 
11,044

 
5,761

 
2007
 
1995
 
6932 - 6934 Williams Rd
Niagara Falls, NY
 
—

 
454

 
8,362

 
310

 
454

 
8,672

 
3,298

 
2007
 
2004
 
6930 Williams Rd
Oklahoma City, OK
 
—

 
216

 
19,135

 
398

 
216

 
19,533

 
5,116

 
2013
 
2008
 
535 NW 9th Street
Oro Valley, AZ
 
—

 
89

 
18,339

 
1,052

 
89

 
19,391

 
6,798

 
2007
 
2004
 
1521 East Tangerine Rd.
Palmer, AK
 
—

 
283

 
8,335

 
—

 
283

 
8,335

 
171

 
2017
 
2018
 
2480 S Woodworth Loop
Palmer, AK
 
—

 
217

 
29,705

 
1,442

 
217

 
31,147

 
10,991

 
2007
 
2006
 
2490 South Woodworth Loop
Pasadena, TX
 
—

 
1,700

 
8,009

 
—

 
1,700

 
8,009

 
1,102

 
2012
 
2013
 
5001 E Sam Houston Parkway S
Pearland, TX
 
—

 
1,500

 
11,253

 
11

 
1,500

 
11,264

 
1,457

 
2012
 
2013
 
2515 Business Center Drive
Pearland, TX
 
—

 
9,594

 
32,753

 
191

 
9,807

 
32,731

 
5,033

 
2014
 
2013
 
11511 Shadow Creek Parkway
Pendleton, OR
 
—

 
—

 
10,312

 
380

 
—

 
10,692

 
1,362

 
2012
 
2013
 
3001 St. Anthony Way
Phoenix, AZ
 
—

 
1,149

 
48,018

 
13,128

 
1,149

 
61,146

 
25,399

 
2006
 
1998
 
2222 E. Highland Ave.
Pineville, NC
 
—

 
961

 
6,974

 
2,507

 
1,077

 
9,365

 
4,615

 
2006
 
1988
 
10512 Park Rd.
Plano, TX
 
—

 
5,423

 
20,698

 
554

 
5,423

 
21,252

 
12,431

 
2008
 
2007
 
6957 Plano Parkway
Plano, TX
 
—

 
793

 
83,209

 
2,668

 
793

 
85,877

 
20,969

 
2012
 
2005
 
6020 West Parker Road
Plantation, FL
 
—

 
8,563

 
10,666

 
4,461

 
8,575

 
15,115

 
7,703

 
2006
 
1997
 
851-865 SW 78th Ave.
Plantation, FL
 
—

 
8,848

 
9,262

 
1,442

 
8,908

 
10,644

 
6,782

 
2006
 
1996
 
600 Pine Island Rd.
Port Orchard, WA
 
10,172

 
2,810

 
22,716

 
—

 
2,810

 
22,716

 
—

 
2018
 
1995
 
450 South Kitsap Boulevard
Portland, ME
 
—

 
655

 
25,529

 
—

 
655

 
25,529

 
7,892

 
2011
 
2008
 
195 Fore River Parkway
Redmond, WA
 
—

 
5,015

 
26,697

 
1,080

 
5,015

 
27,777

 
8,340

 
2010
 
2011
 
18000 NE Union Hill Rd.
Reno, NV
 
—

 
1,117

 
21,972

 
2,068

 
1,117

 
24,040

 
9,409

 
2006
 
1991
 
343 Elm St.
Richmond, TX
 
—

 
2,000

 
9,118

 
7

 
2,000

 
9,125

 
627

 
2015
 
2016
 
22121 FM 1093 Road
Richmond, VA
 
—

 
2,969

 
26,697

 
882

 
3,059

 
27,489

 
8,796

 
2012
 
2008
 
7001 Forest Avenue
Rockwall, TX
 
—

 
132

 
17,197

 
143

 
132

 
17,340

 
4,240

 
2012
 
2008
 
3142 Horizon Road
Rogers, AR
 
—

 
1,062

 
28,680

 
3,206

 
1,062

 
31,886

 
9,999

 
2011
 
2008
 
2708 Rife Medical Lane
Rolla, MO
 
—

 
1,931

 
47,639

 
1

 
1,931

 
47,640

 
12,977

 
2011
 
2009
 
1605 Martin Spring Drive
Roswell, NM
 
—

 
183

 
5,850

 
—

 
183

 
5,850

 
1,870

 
2011
 
2004
 
601 West Country Club Road
Roswell, NM
 
—

 
883

 
15,984

 
41

 
883

 
16,025

 
4,578

 
2011
 
2006
 
350 West Country Club Road
Roswell, NM
 
—

 
762

 
17,171

 
—

 
762

 
17,171

 
4,082

 
2011
 
2009
 
300 West Country Club Road
Sacramento, CA
 
—

 
866

 
12,756

 
2,023

 
869

 
14,776

 
5,835

 
2006
 
1990
 
8120 Timberlake Way
Salem, NH
 
—

 
1,655

 
14,050

 
46

 
1,681

 
14,070

 
3,046

 
2014
 
2013
 
31 Stiles Road
San Antonio, TX
 
—

 
1,057

 
10,101

 
—

 
1,057

 
10,101

 
4,943

 
2006
 
1999
 
19016 Stone Oak Pkwy.
San Antonio, TX
 
—

 
1,038

 
9,173

 
1,758

 
1,096

 
10,873

 
5,389

 
2006
 
1999
 
540 Stone Oak Centre Drive
San Antonio, TX
 
—

 
4,518

 
31,041

 
4,087

 
4,593

 
35,053

 
10,558

 
2012
 
1986
 
5282 Medical Drive
San Antonio, TX
 
—

 
900

 
17,288

 
798

 
938

 
18,048

 
4,489

 
2014
 
2007
 
3903 Wiseman Boulevard
San Antonio, TX
 
—

 
3,050

 
12,073

 
—

 
3,050

 
12,073

 
47

 
2016
 
2017
 
5206 Research Drive


(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Outpatient Medical:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Santa Clarita, CA
 
—

 
—

 
2,338

 
20,485

 
5,304

 
17,519

 
3,177

 
2014
 
1976
 
23861 McBean Parkway
Santa Clarita, CA
 
—

 
—

 
28,384

 
1,866

 
5,277

 
24,973

 
4,346

 
2014
 
1998
 
23929 McBean Parkway
Santa Clarita, CA
 
—

 
278

 
185

 
11,594

 
11,872

 
185

 
151

 
2014
 
1996
 
23871 McBean Parkway
Santa Clarita, CA
 
25,000

 
295

 
40,257

 
60

 
295

 
40,317

 
5,184

 
2014
 
2013
 
23803 McBean Parkway
Santa Clarita, CA
 
—

 
—

 
20,618

 
919

 
4,407

 
17,130

 
3,150

 
2014
 
1989
 
24355 Lyons Avenue
Sarasota, FL
 
—

 
62

 
47,325

 
4,118

 
62

 
51,443

 
13,413

 
2012
 
1990
 
1921 Waldemere Street
Seattle, WA
 
—

 
4,410

 
38,428

 
392

 
4,410

 
38,820

 
15,744

 
2010
 
2010
 
5350 Tallman Ave
Sewell, NJ
 
—

 
60

 
57,929

 
846

 
164

 
58,671

 
23,914

 
2007
 
2009
 
239 Hurffville-Cross Keys Road
Sewell, NJ
 
—

 
1,242

 
11,616

 
—

 
1,242

 
11,616

 
—

 
2018
 
2007
 
556 Egg Harbor Road
Shakopee, MN
 
5,654

 
508

 
11,412

 
851

 
509

 
12,262

 
4,159

 
2010
 
1996
 
1515 St Francis Ave
Shakopee, MN
 
9,541

 
707

 
18,089

 
95

 
773

 
18,118

 
5,061

 
2010
 
2007
 
1601 St Francis Ave
Shenandoah, TX
 
—

 
—

 
21,135

 
62

 
24

 
21,173

 
2,117

 
2013
 
2014
 
106 Vision Park Boulevard
Sherman Oaks, CA
 
—

 
—

 
32,186

 
3,228

 
3,121

 
32,293

 
6,038

 
2014
 
1969
 
4955 Van Nuys Boulevard
Silverdale, WA
 
13,378

 
3,451

 
21,176

 
—

 
3,451

 
21,176

 
—

 
2018
 
2004
 
2200 NW Myhre Road
Somerville, NJ
 
—

 
3,400

 
22,244

 
2

 
3,400

 
22,246

 
5,793

 
2008
 
2007
 
30 Rehill Avenue
Southlake, TX
 
—

 
3,000

 
—

 
—

 
3,000

 
—

 
—

 
2014
 
1900
 
Central Avenue
Southlake, TX
 
—

 
592

 
18,243

 
1,821

 
592

 
20,064

 
5,076

 
2012
 
2004
 
1545 East Southlake Boulevard
Southlake, TX
 
—

 
698

 
30,549

 
3,915

 
698

 
34,464

 
7,578

 
2012
 
2004
 
1545 East Southlake Boulevard
Springfield, IL
 
—

 
1,569

 
10,350

 
—

 
1,568

 
10,351

 
1,244

 
2010
 
2011
 
1100 East Lincolnshire Blvd
Springfield, IL
 
—

 
177

 
3,519

 
31

 
177

 
3,550

 
440

 
2010
 
2011
 
2801 Mathers Rd.
St Paul, MN
 
—

 
49

 
37,695

 
348

 
49

 
38,043

 
5,050

 
2014
 
2006
 
225 Smith Avenue N.
St. Louis, MO
 
—

 
336

 
17,247

 
2,068

 
336

 
19,315

 
7,425

 
2007
 
2001
 
2325 Dougherty Rd.
St. Paul, MN
 
—

 
2,706

 
39,507

 
309

 
2,701

 
39,821

 
12,101

 
2011
 
2007
 
435 Phalen Boulevard
Stamford, CT
 
—

 
—

 
41,153

 
3,071

 
—

 
44,224

 
2,403

 
2015
 
2016
 
29 Hospital Plaza
Suffern, NY
 
—

 
653

 
37,255

 
283

 
698

 
37,493

 
11,886

 
2011
 
2007
 
257 Lafayette Avenue
Suffolk, VA
 
—

 
1,566

 
11,511

 
68

 
1,620

 
11,525

 
4,693

 
2010
 
2007
 
5838 Harbour View Blvd.
Sugar Land, TX
 
—

 
3,543

 
15,532

 
—

 
3,543

 
15,532

 
5,290

 
2012
 
2005
 
11555 University Boulevard
Tacoma, WA
 
—

 
—

 
64,307

 
—

 
—

 
64,307

 
17,445

 
2011
 
2013
 
1608 South J Street
Tallahassee, FL
 
—

 
—

 
17,449

 
—

 
—

 
17,449

 
5,855

 
2010
 
2011
 
One Healing Place
Tampa, FL
 
—

 
4,319

 
12,234

 
—

 
4,319

 
12,234

 
2,803

 
2011
 
2003
 
14547 Bruce B Downs Blvd
Tampa, FL
 
—

 
1,462

 
7,270

 
—

 
1,462

 
7,270

 
331

 
2017
 
1996
 
12500 N Dale Mabry
Temple, TX
 
—

 
2,900

 
9,954

 
26

 
2,900

 
9,980

 
1,628

 
2011
 
2012
 
2601 Thornton Lane
Timonium, MD
 
—

 
8,829

 
12,568

 
30

 
8,850

 
12,577

 
794

 
2015
 
2017
 
2118 Greenspring Drive
Tucson, AZ
 
—

 
1,302

 
4,925

 
990

 
1,325

 
5,892

 
2,886

 
2008
 
1995
 
2055 W. Hospital Dr.
Tustin, CA
 
—

 
3,345

 
541

 
325

 
3,345

 
866

 
290

 
2015
 
1976
 
14591 Newport Ave
Tustin, CA
 
—

 
3,361

 
12,039

 
1,880

 
3,361

 
13,919

 
2,891

 
2015
 
1985
 
14642 Newport Ave
Van Nuys, CA
 
—

 
—

 
36,187

 
—

 
—

 
36,187

 
9,842

 
2009
 
1991
 
6815 Noble Ave.
Voorhees, NJ
 
—

 
6,404

 
24,251

 
1,816

 
6,477

 
25,994

 
9,866

 
2006
 
1997
 
900 Centennial Blvd.
Voorhees, NJ
 
—

 
6

 
96,075

 
447

 
99

 
96,429

 
25,331

 
2010
 
2012
 
200 Bowman Drive
Waco, TX
 
—

 
601

 
2,594

 
—

 
601

 
2,594

 
—

 
2018
 
2000
 
6600 Fish Pond Rd
Waco, TX
 
14,930

 
2,250

 
28,632

 
—

 
2,250

 
28,632

 
—

 
2018
 
1981
 
601 Highway 6 West
Washington, PA
 
19,425

 
3,981

 
31,706

 
—

 
3,981

 
31,706

 
—

 
2018
 
2010
 
100 Trich Drive
Wausau, WI
 
—

 
2,050

 
12,175

 
—

 
2,050

 
12,175

 
788

 
2015
 
2017
 
1901 Westwood Center Boulevard
(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Building & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Building & Improvements
 
Accumulated Depreciation(1)
 
Year Acquired
 
Year Built
 
Address
Outpatient Medical:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Waxahachie, TX
 
—

 
—

 
18,784

 
230

 
303

 
18,711

 
1,749

 
2016
 
2014
 
2460 N I-35 East
Wellington, FL
 
—

 
107

 
16,933

 
2,705

 
326

 
19,419

 
7,051

 
2006
 
2000
 
10115 Forest Hill Blvd.
Wellington, FL
 
—

 
388

 
13,697

 
1,756

 
580

 
15,261

 
5,163

 
2007
 
2003
 
1395 State Rd. 7
West Seneca, NY
 
—

 
917

 
22,435

 
4,230

 
1,665

 
25,917

 
10,390

 
2007
 
1990
 
550 Orchard Park Rd
Westlake Village, CA
 
6,360

 
2,487

 
9,776

 
—

 
2,487

 
9,776

 
154

 
2018
 
1989
 
1220 La Venta Drive
Westlake Village, CA
 
8,002

 
2,553

 
15,851

 
—

 
2,553

 
15,851

 
214

 
2018
 
1975
 
1250 La Venta Drive
Woodbridge, VA
 
—

 
346

 
16,629

 
—

 
346

 
16,629

 
—

 
2018
 
2012
 
12825 Minnieville Road
Zephyrhills, FL
 
—

 
3,875

 
27,270

 
—

 
3,875

 
27,270

 
6,850

 
2011
 
1974
 
38135 Market Square Dr
Zephyrhills, FL
 
—

 
5,927

 
29,082

 
—

 
5,927

 
29,082

 
742

 
2018
 
2016
 
2352 Bruce B Downs Boulevard
Outpatient Medical Total
 
$
386,737


$
645,891


$
5,233,682


$
357,411


$
712,257


$
5,524,727


$
1,276,138

 
 
 
 
 
 



106

Welltower Inc.
 
 
Schedule III
 
 
Real Estate and Accumulated Depreciation
 
 
December 31, 2018
 
 
(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Buildings & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Buildings & Improvements
 
Accumulated Depreciation
 
Year Acquired
 
Year Built
 
Address
Assets Held For Sale:
 
 
Agawam, MA
 
$
—

 
$
880

 
$
10,044

 
$
—

 
$
—

 
$
8,696

 
$
—

 
2011
 
1996
 
153 Cardinal Drive
Agawam, MA
 
—

 
1,230

 
13,618

 
—

 
—

 
6,074

 
—

 
2011
 
1975
 
61 Cooper Street
Agawam, MA
 
—

 
930

 
15,304

 
—

 
—

 
6,511

 
—

 
2011
 
1970
 
55 Cooper Street
Agawam, MA
 
—

 
920

 
10,661

 
—

 
—

 
4,592

 
—

 
2011
 
1985
 
464 Main Street
Agawam, MA
 
—

 
920

 
10,562

 
—

 
—

 
4,537

 
—

 
2011
 
1967
 
65 Cooper Street
Ayer, MA
 
—

 
—

 
22,074

 
—

 
—

 
8,691

 
—

 
2011
 
1988
 
400 Groton Road
Beachwood, OH
 
—

 
1,260

 
23,478

 
—

 
—

 
10,503

 
—

 
2001
 
1990
 
3800 Park East Drive
Birmingham, UKG
 
—

 
4

 
21,321

 
—

 
—

 
13,200

 
—

 
2013
 
2006
 
5 Church Road, Edgbaston
Bridgewater, NJ
 
—

 
1,850

 
3,050

 
—

 
—

 
3,342

 
—

 
2004
 
1970
 
875 Route 202/206 North
Broadview Heights, OH
 
—

 
920

 
12,400

 
—

 
—

 
9,590

 
—

 
2001
 
1984
 
2801 E. Royalton Rd.
Canton, MA
 
—

 
820

 
8,201

 
—

 
—

 
2,626

 
—

 
2002
 
1993
 
One Meadowbrook Way
Centerville, MA
 
—

 
1,300

 
27,357

 
—

 
—

 
23,139

 
—

 
2011
 
1998
 
22 Richardson Road
Charles Town, WV
 
—

 
230

 
22,834

 
—

 
—

 
18,509

 
—

 
2011
 
1997
 
219 Prospect Ave
Cinnaminson, NJ
 
—

 
860

 
6,663

 
—

 
—

 
6,014

 
—

 
2011
 
1965
 
1700 Wynwood Drive
Cloquet, MN
 
—

 
340

 
4,660

 
—

 
—

 
4,285

 
—

 
2011
 
2006
 
705 Horizon Circle
Concord, NH
 
—

 
720

 
3,041

 
—

 
—

 
3,344

 
—

 
2011
 
1926
 
227 Pleasant Street
Dallas, TX
 
—

 
1,080

 
9,655

 
—

 
—

 
4,412

 
—

 
2011
 
1997
 
3611 Dickason Avenue
Gettysburg, PA
 
—

 
590

 
8,913

 
—

 
—

 
7,501

 
—

 
2011
 
1987
 
867 York Road
Glastonbury, CT
 
—

 
1,950

 
9,532

 
—

 
—

 
5,500

 
—

 
2011
 
1966
 
72 Salmon Brook Drive
Hamburg, PA
 
—

 
840

 
10,543

 
—

 
—

 
8,994

 
—

 
2011
 
1966
 
125 Holly Road
Houston, TX
 
—

 
5,090

 
9,471

 
—

 
—

 
7,840

 
—

 
2007
 
2009
 
15015 Cypress Woods Medical Drive
Lancaster, NH
 
—

 
160

 
434

 
—

 
—

 
493

 
—

 
2011
 
1905
 
63 Country Village Road
Langhorne, PA
 
—

 
1,350

 
24,881

 
—

 
—

 
3,551

 
—

 
2011
 
1979
 
262 Toll Gate Road
Lowell, MA
 
—

 
1,070

 
13,481

 
—

 
—

 
1,960

 
—

 
2011
 
1975
 
841 Merrimack Street
Lowell, MA
 
—

 
680

 
3,378

 
—

 
—

 
3,155

 
—

 
2011
 
1969
 
30 Princeton Blvd
Mendham, NJ
 
—

 
1,240

 
27,169

 
—

 
—

 
23,295

 
—

 
2011
 
1968
 
84 Cold Hill Road
Merriam, KS
 
—

 
—

 
1,996

 
—

 
—

 
—

 
—

 
2011
 
1980
 
7301 Frontage Street
Merriam, KS
 
—

 
—

 
5,862

 
—

 
—

 
—

 
—

 
2011
 
1985
 
9119 West 74th Street
Middletown, RI
 
—

 
2,480

 
24,628

 
—

 
—

 
21,727

 
—

 
2011
 
1998
 
303 Valley Road
Millville, NJ
 
—

 
840

 
29,944

 
—

 
—

 
24,559

 
—

 
2011
 
1986
 
54 Sharp Street
Monroe Twp, NJ
 
—

 
1,160

 
13,193

 
—

 
—

 
11,403

 
—

 
2011
 
1996
 
292 Applegarth Road
Mystic, CT
 
—

 
1,400

 
18,274

 
—

 
—

 
15,316

 
—

 
2011
 
2001
 
20 Academy Lane Mystic
Niantic, CT
 
—

 
1,320

 
25,986

 
—

 
—

 
25,167

 
—

 
2011
 
2001
 
417 Main Street
North Cape May, NJ
 
—

 
77

 
151

 
48

 
—

 
276

 
—

 
2015
 
1988
 
610 Town Bank Road
North Cape May, NJ
 
—

 
600

 
22,266

 
—

 
—

 
18,270

 
—

 
2011
 
1995
 
700 Townbank Road
Palm Springs, FL
 
—

 
739

 
4,066

 
—

 
—

 
2,061

 
—

 
2006
 
1993
 
1640 S. Congress Ave.
Palm Springs, FL
 
—

 
1,182

 
7,765

 
—

 
—

 
3,477

 
—

 
2006
 
1997
 
1630 S. Congress Ave.
(Dollars in thousands)
 
 
 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
 
 
 
 
Description
 
Encumbrances
 
Land
 
Buildings & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Buildings & Improvements
 
Accumulated Depreciation
 
Year Acquired
 
Year Built
 
Address
Assets Held For Sale:
 
 
Pennsauken, NJ
 
—

 
900

 
10,780

 
—

 
—

 
9,172

 
—

 
2011
 
1985
 
5101 North Park Drive
Providence, RI
 
—

 
2,655

 
21,910

 
—

 
—

 
16,021

 
—

 
2011
 
1998
 
700 Smith Street
Rockville, CT
 
—

 
1,500

 
4,835

 
—

 
—

 
5,073

 
—

 
2011
 
1960
 
1253 Hartford Turnpike
Sanatoga, PA
 
—

 
980

 
30,695

 
—

 
—

 
14,166

 
—

 
2011
 
1993
 
225 Evergreen Road
South Boston, MA
 
—

 
385

 
2,002

 
1,525

 
—

 
3,912

 
—

 
1995
 
1961
 
804 E. Seventh St.
South Windsor, CT
 
—

 
3,000

 
29,295

 
—

 
—

 
26,338

 
—

 
2011
 
1999
 
432 Buckland Road
Swanton, OH
 
—

 
330

 
6,370

 
—

 
—

 
4,160

 
—

 
2004
 
1950
 
401 W. Airport Hwy.
Troy, OH
 
—

 
470

 
16,730

 
—

 
—

 
10,730

 
—

 
2004
 
1971
 
512 Crescent Drive
Trumbull, CT
 
—

 
2,850

 
37,685

 
—

 
—

 
32,020

 
—

 
2011
 
1998
 
2750 Reservoir Avenue 
Wallingford, CT
 
—

 
490

 
1,210

 
—

 
—

 
727

 
—

 
2011
 
1962
 
35 Marc Drive
Warwick, RI
 
—

 
2,400

 
24,635

 
—

 
—

 
21,633

 
—

 
2011
 
1998
 
75 Minnesota Avenue 
Waterbury, CT
 
—

 
2,460

 
39,547

 
—

 
—

 
30,909

 
—

 
2011
 
1998
 
180 Scott Road 
West Chester, PA
 
—

 
1,350

 
29,237

 
—

 
—

 
24,564

 
—

 
2011
 
1974
 
800 West Miner Street
West Orange, NJ
 
—

 
2,280

 
10,687

 
—

 
—

 
10,571

 
—

 
2011
 
1963
 
20 Summit Street
Westlake, OH
 
—

 
1,330

 
17,926

 
—

 
—

 
8,673

 
—

 
2001
 
1985
 
27601 Westchester Pkwy.
Wilbraham, MA
 
—

 
660

 
17,639

 
—

 
—

 
14,484

 
—

 
2011
 
2000
 
2387 Boston Road 
Wilkes-Barre, PA
 
—

 
570

 
2,301

 
—

 
—

 
1,176

 
—

 
2011
 
1992
 
300 Courtright Street
Windsor, CT
 
—

 
2,250

 
8,539

 
—

 
—

 
10,218

 
—

 
2011
 
1969
 
One Emerson Drive
Windsor, CT
 
—

 
1,800

 
600

 
424

 
—

 
2,824

 
—

 
2011
 
1974
 
One Emerson Drive
Wyncote, PA
 
—

 
2,700

 
22,244

 
—

 
—

 
20,290

 
—

 
2011
 
1960
 
1245 Church Road
Assets Held For Sale Total
 
$
—


$
68,392


$
821,723


$
1,997


$
—


$
590,271


$
—

 
 
 
 
 
 


107

 
 
 
 
Initial Cost to Company
 
 
 
Gross Amount at Which Carried at Close of Period
 
 
Encumbrances
 
Land
 
Buildings & Improvements
 
Cost Capitalized Subsequent to Acquisition
 
Land
 
Buildings & Improvements
 
Accumulated Depreciation
Summary:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Seniors Housing Operating
 
$
1,810,587

 
$
1,331,171

 
$
14,047,033

 
$
1,206,757

 
$
1,373,258

 
$
15,211,900

 
$
2,962,334

Triple-net
 
288,387

 
1,096,169

 
8,585,481

 
301,960

 
1,119,576

 
8,864,034

 
1,261,486

Outpatient Medical
 
386,737

 
645,891

 
5,233,682

 
357,411

 
712,257

 
5,524,727

 
1,276,138

Construction in progress
 
—

 
—

 
194,365

 
—

 
—

 
194,365

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total continuing operating properties
 
2,485,711


3,073,231


28,060,561


1,866,128


3,205,091


29,795,026


5,499,958

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets held for sale
 
—

 
68,392

 
821,723

 
1,997

 
—

 
590,271

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total investments in real property owned
 
$
2,485,711

 
$
3,141,623

 
$
28,882,284

 
$
1,868,125

 
$
3,205,091

 
$
30,385,297

 
$
5,499,958

(1) Please see Note 2 to our consolidated financial statements for information regarding lives used for depreciation and amortization.
(2) Represents real property asset associated with a capital lease.

108

 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
 
 
 
 
(in thousands)
 
 
Investment in real estate:
 
 
 
 
 
 
Beginning balance
 
$
30,581,948

 
$
30,041,058

 
$
29,865,490

Acquisitions and development
 
4,598,670

 
1,276,636

 
2,834,279

Improvements
 
266,183

 
250,276

 
219,146

Deconsolidation of previously consolidated venture
 
—

 
(144,897
)
 
—

Impairment of assets
 
(71,336
)
 
(101,527
)
 
(37,207
)
Dispositions
 
(1,330,679
)
 
(1,203,247
)
 
(2,411,219
)
Foreign currency translation
 
(454,398
)
 
415,879

 
(429,431
)
Other(1)
 
—

 
47,770

 
—

Ending balance(2)
 
$
33,590,388

 
$
30,581,948

 
$
30,041,058

 
 
 
 
 
 
 
Accumulated depreciation:
 
 
 
 
 
 
Beginning balance
 
$
4,838,370

 
$
4,093,494

 
$
3,796,297

Depreciation and amortization expenses
 
950,459

 
921,720

 
901,242

Amortization of above market leases
 
6,375

 
7,303

 
7,909

Disposition and other
 
(205,562
)
 
(192,029
)
 
(514,651
)
Foreign currency translation
 
(89,684
)
 
7,882

 
(97,303
)
Ending balance
 
$
5,499,958

 
$
4,838,370

 
$
4,093,494

 
 
 
 
 
 
 
(1) Primarily relates to the acquisition of an asset through foreclosure.
(2) The unaudited aggregate cost for tax purposes for real property equals $25,618,090,000 at December 31, 2018.

109

Welltower Inc.
Schedule IV - Mortgage Loans on Real Estate
December 31, 2018
 
 
 
 
 
 
 
 
(in thousands)
Location
 
Segment
 
Interest Rate
 
Final Maturity Date
 
Monthly Payment Terms
 
Prior Liens
 
Face Amount of Mortgages
 
Carrying Amount of Mortgages
 
Principal Amount of Loans Subject to Delinquent Principal or Interest
First mortgages relating to 1 property located in:
 
 
 
 
 
 
 
 
California
 
Triple-net
 
8.11%
 
12/15/2020
 
$
—

 
$
—

 
$
28,000

 
$
9,247

 
$
—

California
 
Triple-net
 
7.95%
 
1/1/2022
 
1

 
—

 
131,100

 
53,172

 
—

United Kingdom
 
Triple-net
 
8.54%
 
12/14/2018
 
—

 
—

 
2,678

 
1,284

 
—

United Kingdom
 
Triple-net
 
8.00%
 
8/24/2022
 
—

 
—

 
11,041

 
6,638

 
—

United Kingdom
 
Triple-net
 
8.55%
 
7/1/2019
 
—

 
—

 
14,600

 
14,599

 
—

United Kingdom
 
Triple-net
 
7.00%
 
3/15/2022
 
—

 
—

 
26,748

 
20,283

 
—

United Kingdom
 
Triple-net
 
8.28%
 
7/6/2019
 
—

 
—

 
19,131

 
19,131

 
—

Oklahoma
 
Triple-net
 
9.32%
 
11/1/2019
 
—

 
—

 
11,610

 
11,595

 
—

Pennsylvania
 
Triple-net
 
8.47%
 
3/1/2022
 
—

 
—

 
15,530

 
14,237

 
—

Florida
 
Triple-net
 
10.20%
 
6/23/2021
 
—

 
—

 
17,100

 
17,385

 
—

North Carolina
 
Triple-net
 
7.60%
 
12/18/2023
 
—

 
—

 
30,883

 
3,000

 
—

Texas
 
Outpatient medical
 
7.60%
 
1/19/2025
 
—

 
—

 
3,740

 
3,733

 
—

United Kingdom
 
Triple-net
 
8.50%
 
12/31/2021
 
—

 
—

 
19,104

 
6,505

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First mortgages relating to multiple properties:
 
 
 
 
 
 
 
 
4 properties in Texas
 
Triple-net
 
7.95%
 
1/1/2022
 
1

 
—

 
106,218

 
65,162

 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Second mortgages relating to 1 property located in:
 
 
 
 
 
 
 
 
Texas
 
Triple-net
 
12.17%
 
5/1/2019
 
—

 
11,367

 
3,100

 
3,100

 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Totals
 
 
 
 
 
 
 
 
 
$
11,367

 
$
440,583

 
$
249,071

 
$
—

 
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Reconciliation of mortgage loans:
 
(in thousands)
Balance at beginning of year
 
$
306,120

 
$
485,735

 
$
635,492

Additions:
 
 
 
 
 
 
New mortgage loans
 
25,290

 
6,706

 
8,223

Draws on existing loans
 
36,458

 
58,224

 
92,815

            Total Additions
 
61,748

 
64,930

 
101,038

 
 
 
 
 
 
 
Deductions:
 
 
 
 
 
 
Collections of principal
 
(116,905
)
 
(180,135
)
 
(191,134
)
Conversions to real property
 
—

 
—

 
(45,044
)
Change in allowance for loan losses and charge-offs
 
—

 
(71,535
)
 
(3,053
)
Total deductions
 
(116,905
)
 
(251,670
)
 
(239,231
)
Change in balance due to foreign currency translation
 
(1,892
)
 
7,125

 
(11,564
)
Balance at end of year
 
$
249,071

 
$
306,120

 
$
485,735




110

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