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(Exact Name of Registrant as Specified in Its Charter)
iDelaware
i61-1055020
(State
or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
i353 N. Clark Street, iSuite 3300
iChicago,
iIllinois
i60654
(Address of Principal Executive Offices)
(i877)
i483-6827
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Trading Symbol
Title
of Each Class
Name of Exchange on Which Registered
iVTR
iCommon Stock, $0.25 par value
iNew
York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.iYes☒ No ¨
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes¨iNo☒
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.iYes☒ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). iYes☒ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,”“accelerated filer,”“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
iLarge
accelerated filer
☒
Accelerated filer
¨
Non-accelerated filer
☐
Smaller reporting company
i☐
Emerging
growth company
i☐
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. i☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes i☐ No ☒
The
aggregate market value of shares of the registrant’s common stock held by non-affiliates of the registrant on June 30, 2020, based on a closing price of the common stock of $36.62 as reported on the New York Stock Exchange, was $i11.7 billion.
Portions of the
registrant’s definitive Proxy Statement for the Annual Meeting of Stockholders to be held on May 25, 2021 are incorporated by reference into Part III, Items 10 through 14 of this Annual Report on Form 10-K.
CAUTIONARY STATEMENTS
Unless otherwise indicated or except where the context otherwise requires, the terms “we,”“us” and “our” and other similar terms in this Annual Report on Form 10-K (the “Annual Report”) refer to Ventas, Inc. and its consolidated subsidiaries.
Forward-Looking
Statements
This Annual Report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements include, among others, statements of expectations, beliefs, future plans and strategies, anticipated results from operations and developments and other matters that are not historical facts. Forward-looking statements include, among other things, statements regarding our and our officers’ intent, belief or expectation as identified by the use of words such as “may,”“will,”“project,”“expect,”“believe,”“intend,”“anticipate,”“seek,”“target,”“forecast,”“plan,”“potential,”“estimate,”“could,”“would,”“should” and other comparable and derivative terms or the negatives thereof. The forward-looking statements are based on management’s beliefs as well as on a number of assumptions concerning future events. You should not put undue reliance on these forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied by the forward-looking statements. You are urged to carefully review the disclosures we make concerning risks and uncertainties that may affect our business and future financial performance, including those made below under “Summary Risk Factors” and in “Item 1A, Risk Factors” in this report.
We
do not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made.
Summary Risk Factors
COVID-19 Risks
•The ongoing COVID-19 pandemic and measures intended to prevent its spread have had and may continue to have a material adverse effect on our business;
•There is a high degree of uncertainty regarding the implementation and impact of the CARES Act and other pandemic-related legislation and any future COVID-19 relief measures;
Our Business Operations and Strategy Risks
•Market
and general economic conditions, including economic and financial market events and the actual and perceived state of the real estate markets and public capital markets, could negatively impact our business;
•Third parties must operate our non-Office assets, limiting our control and influence over operations and results;
•Our operating assets may expose us to various operational risks, liabilities and claims that could adversely affect our ability to generate revenues or increase our costs;
•Decreases in our tenants’, borrowers’ or managers’ revenues, or increases in their expenses, could affect their ability to meet their financial and other contractual obligations to us, which could adversely affect our business, financial condition and results of operations;
•Bankruptcy,
insolvency or financial deterioration of our tenants, borrowers, managers and other obligors may adversely affect us;
•A significant portion of our revenues and operating income is dependent on a limited number of tenants and managers;
•If we need to replace any of our tenants or managers, we may be unable to do so on as favorable terms or at all, and we could be subject to delays, limitations and expenses;
•Our success depends, in part, on our ability to attract and retain talented employees, and the loss of any one of our key personnel could adversely impact our business;
•Our investments are concentrated in a variety of asset classes within healthcare real estate, making us more vulnerable to
adverse changes in those asset classes and the real estate industry generally;
•Our investments may be unsuccessful or fail to meet our expectations;
•If we are unable to identify and consummate future investments and effectively manage our expansion opportunities and our investments in co-investment vehicles, joint ventures and minority interests, we may be adversely affected;
•Development, redevelopment and construction risks could affect our profitability and expose us to liability;
•In the event of borrower defaults, we may be unable to foreclose successfully on the collateral securing our loans and other investments or, if we are able to foreclose, realize the full value of the collateral;
i
•We
own certain properties subject to ground lease, air rights or other restrictive agreements that limit our uses of the properties and restrict our ability to sell or otherwise transfer the properties;
Environmental, Economic and Market Risks
•Increased construction and development in the markets in which our properties are located could adversely affect our profitability;
•General economic conditions and other events or occurrences that affect areas in which our properties are geographically concentrated may impact financial results;
•If we or our tenants, borrowers and managers are unable to navigate the trends impacting our or their businesses, such
as limits on demand for site-based activities, and the industries in which we or they operate, or if our tenants fail to remain competitive or financially viable, we may be adversely affected;
•Our life science, R&I tenants face unique levels of regulation, expense and uncertainty;
•Merger, acquisition and investment activity in our industries could adversely affect our business;
•Damage from catastrophic or extreme weather and other natural events and the physical effects of climate change could result in significant losses;
Our Capital Structure Risks
•We may become more leveraged, which could
impact our ability to obtain financing and to execute our business strategy;
•We are highly dependent on access to the capital markets. Limitations on our ability to access capital could have an adverse effect on us;
•We are exposed to increases in interest rates and fluctuations in currency exchange rates, which could affect our financial results;
•Changes in the method pursuant to which the LIBOR rates are determined and potential phasing out of LIBOR may affect our financial results;
•Covenants in the instruments governing our and our subsidiaries’ existing indebtedness limit our operational flexibility,
and a covenant breach could materially adversely affect our operations.
Our Legal, Compliance and Regulatory Risks
•Significant legal or regulatory proceedings could subject us or our tenants or managers to increased operating costs and substantial uninsured liabilities;
•We and our tenants, borrowers and managers may be adversely affected by regulation and enforcement;
•Our investments may expose us to unknown liabilities;
•We could incur substantial liabilities and costs if any of our properties are found to be contaminated with hazardous substances or we become involved in any environmental
disputes;
•The occurrence of cyber incidents could disrupt our operations, result in the loss of confidential information or damage our business relationships and reputation;
•The amount and scope of insurance coverage provided by our policies and policies maintained by our tenants, managers or other counterparties may not adequately insure against losses;
•Failure to maintain effective internal controls could harm our business;
Our REIT Status Risks
•We are subject to certain limitations and requirements as a result of our status as a REIT, which may affect our ability to
and impose limitations on the operation of our business and subject us to significant risk if we are not able to comply;
•Loss of our status as a REIT would have significant adverse consequences for us; and
•Ownership limits with respect to our capital stock may delay, defer or prevent a change of control of our company;
•Legislative or other actions affecting REITs could have a negative effect on our stockholders or us.
Many of these factors, some of which are described in greater detail under “Risk Factors” in Part I, Item 1A of this Annual Report, are beyond our control and the control
of our management.
ii
Note Regarding Third-Party Information
This Annual Report includes information that has been derived from SEC filings made by our publicly listed tenants or other publicly available information or was provided to us by our tenants and managers.We believe that such information is accurate and that the sources from which it has been obtained are reliable; however, we cannot guarantee the accuracy of such information and have not independently verified the assumptions on which such information is based.
Ventas,
Inc., an S&P 500 company, is a real estate investment trust (“REIT”) operating at the intersection of healthcare and real estate, with a highly diversified portfolio of senior housing; life science, research and innovation; and healthcare properties; which we generally refer to as “healthcare real estate,” located throughout the United States, Canada and the United Kingdom. As of December 31, 2020, we owned or managed through unconsolidated real estate entities approximately 1,200 properties (including properties classified as held for sale), consisting of senior housing communities, medical office buildings (“MOBs”), life science, research and innovation centers, inpatient rehabilitation facilities (“IRFs”) and long-term acute care facilities (“LTACs”), and health systems. Our company was originally
founded in 1983 and is headquartered in Chicago, Illinois with an additional office in Louisville, Kentucky.
We primarily invest in a diversified portfolio of healthcare real estate assets through wholly owned subsidiaries and other co-investment entities. We operate through three reportable business segments: triple-net leased properties, senior living operations, which we also refer to as SHOP, and office operations.See our Consolidated Financial Statements and the related notes, including “Note 2 – Accounting Policies” and “Note 19 – Segment Information,” included in Part II, Item 8 of this Annual Report on Form 10-K (the “Annual Report”).Our senior housing properties are
either operated under triple-net leases in our triple-net leased properties segment or through independent third-party managers in our senior living operations segment.
As of December 31, 2020, we leased a total of 366 properties (excluding properties within our office operations reportable business segment) to various healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures. Our three largest tenants, Brookdale Senior Living Inc. (together with its subsidiaries, “Brookdale Senior Living”), Ardent Health Partners, LLC (together with its subsidiaries,
“Ardent”) and Kindred Healthcare, LLC (together with its subsidiaries, “Kindred”) leased from us 121 properties (excluding eight properties managed by Brookdale Senior Living pursuant to long-term management agreements), 12 properties and 32 properties, respectively, as of December 31, 2020.
As of December 31, 2020, pursuant to long-term management agreements, we engaged independent operators, such as Atria Senior Living, Inc. (“Atria”) and Sunrise Senior Living, LLC (together with its subsidiaries, “Sunrise”), to manage 441 senior housing communities in our senior living operations
segment for us.
Through our Lillibridge Healthcare Services, Inc. (“Lillibridge”) subsidiary and our ownership interest in PMB Real Estate Services LLC (“PMBRES”), we also provide MOB management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. In addition, from time to time, we make secured and non-mortgage loans and other investments relating to senior housing and healthcare operators or properties.
During fiscal 2020 and continuing into fiscal 2021, the world has been, and continues to be, impacted by the novel coronavirus (“COVID-19”) pandemic. COVID-19 and actions taken to prevent its spread have negatively affected our businesses in a number of ways and are expected to continue to do so. See “Risk Factors”
in Part I, Item 1A, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7and “Consolidated Financial Statements and the related notes thereto” included in Part II, Item 8, in each case, of this Annual Report.
Business Strategy
We aim to enhance shareholder value by delivering consistent, superior total returns through a strategy of (1) generating reliable and growing cash flows, (2) maintaining a balanced, diversified portfolio of high-quality assets and (3) preserving our financial strength, flexibility and liquidity.
Generating Reliable and Growing Cash Flows
Generating
reliable and growing cash flows from our senior housing and healthcare assets enables us to pay regular cash dividends to stockholders and creates opportunities to increase stockholder value through profitable investments. The
1
combination of steady contractual growth from our long-term triple-net leases, steady, reliable cash flows from our loan investments and stable cash flows from our office buildings with the higher growth potential inherent in our senior housing operating communities drives our ability to generate sustainable, growing cash flows that are resilient to economic downturns.
Maintaining a Balanced, Diversified Portfolio of High-Quality Assets
We
believe that maintaining a balanced portfolio of high-quality assets diversified by investment type, geographic location, asset type, tenant or operator, revenue source and operating model diminishes the risk that any single factor or event could materially harm our business. Portfolio diversification also enhances the reliability of our cash flows by reducing our exposure to any particular asset class or market, or individual tenant, borrower or manager and making us less susceptible to certain risks, including risks related to regulatory changes, climate events and economic downturns or global health events.
Preserving Our Financial Strength, Flexibility and Liquidity
A strong, flexible balance sheet and excellent liquidity position us to capitalize on strategic growth opportunities in the senior housing and
healthcare industries through acquisitions, investments and development and redevelopment projects. We maintain our financial strength to pursue profitable investment opportunities by actively managing our leverage, improving our cost of capital and preserving our access to multiple sources of capital and liquidity, including unsecured bank debt, mortgage financings and public and private debt and equity markets.
Portfolio Summary
The following table summarizes our consolidated portfolio of properties and other investments, including construction in progress, as of and for the year ended December 31, 2020:
Real
Estate Property Investments
Revenues
Asset Type
# of
Properties (1)
# of Units/
Sq. Ft./ Beds(2)
Real Estate Property Investment, at Cost
Percent of Total Real Estate Property Investments
Real Estate Property Investment Per Unit/Bed/Sq. Ft.
Revenue
Percent
of Total Revenues
(Dollars in thousands)
Senior housing communities
730
71,629
$18,313,746
64.4
%
$
255.7
$2,589,991
68.4
%
MOBs(3)
343
19,591,131
5,704,700
20.1
0.3
597,229
15.7
Research
and innovation centers
31
5,451,703
2,031,666
7.1
0.4
216,624
5.7
IRFs and LTACs
37
3,139
496,259
1.7
158.1
164,239
4.3
Health
systems
13
2,064
1,522,287
5.4
737.5
121,179
3.2
SNFs
16
1,732
193,808
0.7
111.9
17,011
0.4
Development
properties and other
10
165,234
0.6
Total real estate investments, at cost
1,180
$
28,427,700
100.0
%
Income
from loans and investments
80,505
2.1
Interest and other income
7,609
0.2
Revenues
related to assets classified as held for sale
2
970
0.0
Total revenues
$
3,795,357
100.0
%
(1)As
of December 31, 2020, we also owned nine senior housing communities, nine research and innovation centers and two MOBs through investments in unconsolidated real estate entities. Our consolidated properties were located in 45 states, the District of Columbia, seven Canadian provinces and the United Kingdom and were operated or managed by 82 unaffiliated healthcare operating companies.
(2)Senior housing communities are generally measured in units; MOBs and research and innovation centers are measured by square footage; and IRFs and LTACs, health systems and skilled nursing facilities (“SNFs”) are generally measured by licensed bed count.
(3)As of December 31, 2020, we leased 66 of our consolidated MOBs pursuant to triple-net
leases, Lillibridge or PMBRES managed 268 of our consolidated MOBs and nine of our consolidated MOBs were managed by five unaffiliated managers. Through Lillibridge, we also provided management and leasing services for 73 MOBs owned by third parties as of December 31, 2020.
Senior Housing Communities
Our senior housing communities include independent and assisted living communities, continuing care retirement communities and communities providing care for individuals with Alzheimer’s disease and other forms of dementia or memory loss. These communities offer studio, one- and two-bedroom residential units on a month-to-month basis primarily to elderly individuals requiring various levels of assistance. Basic services for residents of these communities
include housekeeping,
2
meals in a central dining area and group activities organized by the staff with input from the residents. More extensive care and personal supervision, at additional fees, are also available for such needs as eating, bathing, grooming, transportation, limited therapeutic programs and medication administration, which allow residents certain conveniences and enable them to live as independently as possible according to their abilities. These services are often met by home health providers and through close coordination with the resident’s physician and SNFs. Charges for room, board and services are generally paid from private sources.
Medical Office Buildings
Typically,
our MOBs are multi-tenant properties leased to several unrelated medical practices, although in many cases they may be associated with a large single specialty or multi-specialty group. Tenants include physicians, dentists, psychologists, therapists and other healthcare providers, who require space devoted to patient examination and treatment, diagnostic imaging, outpatient surgery and other outpatient services. MOBs are similar to commercial office buildings, although they require greater plumbing, electrical and mechanical systems to accommodate physicians’ requirements such as sinks in every room, brighter lights and specialized medical equipment. As of December 31, 2020, we owned or managed through unconsolidated real estate entities for third parties approximately 21 million square feet of MOBs that are predominantly located on or near a health system.
Research
and Innovation Centers, Life Science
Our life science, research and innovation centers contain laboratory and office space primarily for universities, academic medical centers, technology, biotechnology, medical device and pharmaceutical companies and other organizations involved in the life science, research and innovation industry. While these properties have characteristics similar to commercial office buildings, they generally contain more advanced electrical, mechanical, and heating, ventilating and air conditioning systems. The facilities generally have specialty equipment including emergency generators, fume hoods, lab bench tops and related amenities. In many instances, research and innovation center tenants make significant investments to improve their leased space, in addition to landlord improvements, to accommodate biology, chemistry or medical device research initiatives. Our
research and innovation centers are often located on or contiguous to university and academic medical campuses. As of December 31, 2020, we own or have investments in nearly 9 million square feet spanning 40 operating properties and three in progress ground-up development properties, including a presence in the top two life sciences clusters, South San Francisco, California and Cambridge, Massachusetts.
Inpatient Rehabilitation and Long-Term Acute Care Facilities
We have 29 properties that are operated as LTACs. LTACs have a Medicare average length of stay of greater than 25 days and serve medically complex, chronically ill patients who require a high level of monitoring and specialized care, but whose conditions do not necessitate the continued services of an intensive care
unit. The operators of these LTACs have the capability to treat patients who suffer from multiple systemic failures or conditions such as neurological disorders, head injuries, brain stem and spinal cord trauma, cerebral vascular accidents, chemical brain injuries, central nervous system disorders, developmental anomalies and cardiopulmonary disorders. Chronic patients often depend on technology for continued life support, such as mechanical ventilators, total parenteral nutrition, respiration or cardiac monitors and dialysis machines, and, due to their severe medical conditions, generally are not clinically appropriate for admission to a nursing facility or rehabilitation hospital. We do not own any “hospitals within hospitals.” We also own eight IRFs devoted to the rehabilitation of patients with various neurological, musculoskeletal, orthopedic and other medical conditions following stabilization of their acute medical issues.
Health
Systems
We have 13 properties that are operated as health systems. Health systems provide medical and surgical services, including inpatient care, intensive care, cardiac care, diagnostic services and emergency services. These health systems also provide outpatient services such as outpatient surgery, laboratory, radiology, respiratory therapy, cardiology and physical therapy. In the United States, these health systems receive payments for patient services from the federal government primarily
3
under the Medicare program, state governments under their respective Medicaid or similar programs, health maintenance organizations, preferred provider organizations, other private insurers and directly
from patients.
Skilled Nursing Facilities
We have 16 properties that are operated as SNFs. SNFs provide rehabilitative, restorative, skilled nursing and medical treatment for patients and residents who do not require the high technology, care-intensive, high-cost setting of an acute care or rehabilitation hospital. Treatment programs include physical, occupational, speech, respiratory and other therapies, including sub-acute clinical protocols such as wound care and intravenous drug treatment. Charges for these services are generally paid from a combination of government reimbursement and private sources.
Geographic Diversification of Properties
Our portfolio of assets is broadly diversified
by geographic location throughout the United States, Canada and the United Kingdom, with properties in only one state (California) accounting for more than 10% of our total continuing revenues and net operating income (“NOI,” which is defined as total revenues, excluding interest and other income, less property-level operating expenses and office building services costs) for the year ended December 31, 2020.
Loans and Investments
As of December 31, 2020, we had $0.9 billion of net loans receivable and investments relating to senior housing and healthcare operators or properties. Our loans receivable and investments provide us with interest income, principal amortization and transaction fees and are typically secured by mortgage
liens or leasehold mortgages on the underlying properties and corporate or personal guarantees by affiliates of the borrowing entity. In some cases, the loans are secured by a pledge of ownership interests in the entity or entities that own the related properties. From time to time, we also make investments in mezzanine loans, which are subordinated to senior secured loans held by other investors that encumber the same real estate. See “Note 6 – Loans Receivable and Investments” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
Development and Redevelopment Projects
We are party to certain agreements that obligate us to develop properties funded through capital that we and, in certain circumstances, our joint venture partners provide. As of December
31, 2020, we had 13 properties under development pursuant to these agreements, including three properties that are owned through unconsolidated real estate entities. In addition, from time to time, we engage in redevelopment projects with respect to our existing properties to maximize the value, increase NOI, maintain a market-competitive position, achieve property stabilization or change the primary use of the property.
Segment Information
We operate through three reportable business segments: triple-net leased properties, senior living operations and office operations. Non-segment assets, classified as “all other,” consist primarily of corporate assets, including cash, restricted cash, loans receivable and investments, and miscellaneous accounts receivable. Our chief operating decision makers evaluate performance of the
combined properties in each reportable business segment and determine how to allocate resources to these segments, in significant part, based on segment NOI and related measures. For further information regarding our business segments and a discussion of our definition of segment NOI, see “Note 19 – Segment Information” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
Triple-Net Leased Properties
In our triple-net leased properties segment, we invest in and own senior housing and healthcare properties throughout the United States and the United Kingdom and lease those properties to healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs,
taxes, insurance and capital expenditures, and to comply with the terms of the mortgage financing documents, if any, affecting the properties.
Senior Living Operations
In our senior living operations segment, we invest in senior housing communities throughout the United States and Canada and engage independent managers, such as Atria and Sunrise, to manage those communities. The REIT Investment
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Diversification and Empowerment Act of 2007 (“RIDEA”) permits us to own or partially own qualified healthcare properties in a structure through which we can participate directly in the cash flow of the properties’ operations (as compared
to receiving only contractual rent payments under a triple-net lease) in compliance with REIT requirements. In a RIDEA structure, we are required to rely on a third-party manager to manage and operate the property, including procuring supplies, hiring and training all employees, entering into all third-party contracts for the benefit of the property, including resident/patient agreements, complying with laws, including but not limited to healthcare laws, and providing resident care, in exchange for a management fee. As a result, we must rely on our managers’ personnel, expertise, technical resources and information systems, risk management processes, proprietary information, good faith and judgment to manage our senior living operations efficiently and effectively. We also rely on our managers to set appropriate resident fees, to provide accurate property-level financial results
in a timely manner and otherwise operate our senior housing communities in compliance with the terms of our management agreements and all applicable laws and regulations.
Office Operations
In our office operations segment, we primarily acquire, own, develop, lease and manage MOBs and research and innovation centers throughout the United States.
Significant Tenants and Managers
The following table summarizes certain information regarding our tenant and manager concentration as of and for the year ended December 31, 2020 (excluding properties classified as held for sale and properties owned by investments in unconsolidated real estate entities as of
December 31, 2020):
Number of Properties Leased or Managed
Percent of Total Real Estate Investments (1)
Percent of Total Revenues
Percent
of NOI
Senior Living Operations
432
47.9
%
58.0
%
29.4
%
Brookdale Senior Living (2)
121
8.2
4.4
9.0
Ardent
12
4.9
3.2
6.6
Kindred
32
1.1
3.5
7.1
(1)Based
on gross book value.
(2)Excludes eight properties managed by Brookdale Senior Living pursuant to long-term management agreements and included in the senior living operations reportable business segment.
Triple-Net Leased Properties
Each of our leases with Brookdale Senior Living, Ardent and Kindred is a triple-net lease. In addition, each of our Brookdale Senior Living, Ardent and Kindred leases has a corporate guaranty.
The properties we lease to Brookdale Senior Living, Ardent and Kindred accounted for a significant portion of our triple-net leased properties segment revenues and NOI for the year ended December 31, 2020. See “Risk
Factors—Our Business Operations and Strategy Risks—A significant portion of our revenues and operating income is dependent on a limited number of tenants and managers, including Brookdale Senior Living, Ardent, Kindred, Atria and Sunrise.” included in Part I, Item 1A of this Annual Report.
Brookdale Senior Living Leases
As of December 31, 2020, we leased 121 consolidated properties (excluding eight properties managed by Brookdale Senior Living pursuant to long-term management agreements and included in the senior living operations reportable business segment) to Brookdale Senior Living.
In July 2020, we entered into a revised master lease agreement (the “Brookdale Lease”) and
certain other agreements (together with the Brookdale Lease, the “Agreements”) with Brookdale Senior Living.
In connection with the revised Brookdale Lease, we received up-front consideration approximating $235 million, which will be amortized over the remaining lease term and consisted of: (a) $162 million in cash including $47 million from the transfer to Ventas of deposits under the Brookdale Lease; (b) a $45 million cash pay note (the “Note”), which has an initial interest rate of 9.0%, increasing 50 basis points per annum, and matures on December 31, 2025; (c) warrants for 16.3 million
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shares of Brookdale Senior Living common stock, which
are exercisable at any time prior to December 31, 2025 and have an exercise price of $3.00 per share.
Base cash rent under the Brookdale Lease is set at $100 million per annum starting in July 2020, with three percent annual escalators commencing on January 1, 2022. The Brookdale Lease is guaranteed by, and the Note is a direct obligation of, Brookdale Senior Living.
The warrants are classified within other assets on our Consolidated Balance Sheets. These warrants are measured at fair value with changes in fair value being recognized within other expense in our Consolidated Statements of Income.
As of December
31, 2020, the aggregate 2021 contractual cash rent due to us from Brookdale Senior Living was approximately $100.3 million, and the current aggregate contractual base rent (computed in accordance with U.S. generally accepted accounting principles (“GAAP”)) was approximately $148.5 million.
Ardent Lease
As of December 31, 2020, we leased 11 properties (excluding one MOB leased to Ardent under a separate lease) to Ardent pursuant to a single, triple-net master lease agreement. Per our master lease agreement, Ardent is obligated to pay base rent, which escalates annually by the lesser of four times the increase in the Consumer Price Index (“CPI”) for the relevant period and 2.5%. The initial term of the master lease expires on August 31,
2035 and Ardent has one ten-year renewal option.
As of December 31, 2020, the aggregate 2021 contractual cash rent due to us from Ardent was approximately $125.9 million, and the current aggregate contractual base rent (computed in accordance with GAAP) was approximately $126.0 million.
We also hold a 9.8% ownership interest in Ardent, which entitles us to customary minority rights and protections, as well as the right to appoint one of 11 members on the Ardent Board of Directors.
Kindred Master Leases
As of December 31, 2020, we leased 29 properties to Kindred
pursuant to a master lease agreement. In November 2016, Kindred extended the lease term to 2025 for all of our LTACs operated by Kindred that were scheduled to mature in 2018 and 2020, at the current rent level.
The aggregate annual rent we receive under each Kindred master lease is referred to as “base rent.” Base rent escalates annually at a specified rate over the prior period base rent, contingent, in some cases, upon the satisfaction of specified facility revenue parameters. The annual rent escalator under the Kindred master lease for 25 properties is based on year-over-year changes in CPI, subject to a floor and cap, and is 2.7% for four properties. As of December 31, 2020, the aggregate 2021 contractual cash rent due to us from Kindred was approximately $130.4 million, and the current aggregate contractual base rent (computed
in accordance with GAAP) was approximately $132.4 million.
Senior Living Operations
As of December 31, 2020, Atria and Sunrise, collectively, provided comprehensive property management and accounting services with respect to 258 of the senior housing communities in our senior living operations segment. Under these management agreements, the operators receive annual base management fees ranging from 4.5% to 7% of revenues generated by the applicable properties and, in some cases, additional management fees based on the achievement of specified performance targets. Our management agreements with Atria have initial terms expiring between 2024 and 2027, and our management agreements with Sunrise have terms expiring between 2030 and 2038. In some cases, our management agreements include
renewal provisions.
Because Atria and Sunrise manage our properties in exchange for the receipt of a management fee from us, we are not directly exposed to the credit risk of our managers in the same manner or to the same extent as our triple-net tenants. See “Risk Factors—Our Business Operations and Strategy Risk—A significant portion of our revenues and operating income is dependent on a limited number of tenants and managers, including Brookdale Senior Living, Ardent, Kindred, Atria and Sunrise.” and included in Part I, Item 1A of this Annual Report.
We hold a 34% ownership interest in Atria, which entitles us to customary minority rights and protections, as well as the right to appoint two of the six members on the Atria Board of Directors.
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Competition
We
generally compete for investments in healthcare real estate assets with publicly traded, private and non-listed healthcare REITs, real estate partnerships, healthcare providers, healthcare 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. Increased competition challenges our ability to identify and successfully capitalize on opportunities that meet our objectives, which is affected by, among other factors, the availability of suitable acquisition or investment targets, our ability to negotiate acceptable transaction terms and our access to and cost of capital. See “Risk Factors—Our Business Operations and Strategy Risk—Our ongoing strategy depends, in part, upon identifying and consummating future investments and effectively managing our expansion opportunities” included in
Part I, Item 1A of this Annual Report and “Note 10 – Senior Notes Payable and Other Debt” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
Our tenants and managers also compete on a local and regional basis with other healthcare operating companies that provide comparable services. Senior housing community, SNF and health systems operators compete to attract and retain residents and patients to our properties based on scope and quality of care, reputation and financial condition, price, location and physical appearance of the properties, services offered, qualified personnel, physician referrals and family preferences. With respect to MOBs and research and innovation centers, we and our third-party managers compete to attract and retain tenants based on many of the same factors, in addition to quality of the affiliated health system,
physician preferences and proximity to hospital or university campuses or life science centers and quality of lab space. The ability of our tenants, operators and managers to compete successfully could be affected by private, federal and state reimbursement programs and other laws and regulations. See “Risk Factors—Our Legal, Compliance and Regulatory Risks—We and our tenants, borrowers and managers may be adversely affected by regulation and enforcement.” included in Part I, Item 1A of this Annual Report.
Human Capital Management
At Ventas, our experienced team drives our success and creates value. As of December 31, 2020, we had 448 employees, none of which are subject to a collective bargaining agreement.
We
provide a unique environment that offers opportunities for our team to use their professional skills, develop their talents and learn from each other as they build successful careers. We are committed to upholding human dignity and equal opportunity under the principles outlined in the United Nations’ Universal Declaration of Human Rights. Our Global Code of Ethics and Business Conduct, Vendor Code of Conduct and Human Rights Policy embed the responsibility to respect human rights in business functions across our operations as well as our supply chain.
The Executive Compensation Committee of our Board of Directors provides oversight on certain human capital matters, including our DE&I efforts, goals and framework. We report on human capital matters at each regularly scheduled meeting of our Board of Directors. The most significant human capital measures and objectives that we focus on include
the topics described below.
Talent Attraction and Retention
We strive to foster a culture that attracts and retains individuals who share a passion for integrity, flawless execution, collaborative problem-solving and, above all, excellence. A key component of our ability to attract and retain the top talent in our industry is our investment in our people and their continuous development by providing expansive professional opportunities, best-in-class leadership development and a broad array of workshops and training. Ventas also prides itself in offering an industry-leading compensation and benefits package.
DE&I
Ventas has a long-standing commitment to Diversity, Equity and Inclusion (“DE&I”). We
have established a DE&I framework centered around five key pillars of people, culture, investment and financial, changing our society and improving our communities and celebrating our commitments. Development and execution of the DE&I framework is a core component of our 2021 short-term incentive program. Additionally, we incorporated a metric focused on improving the Company’s representation of women employees into our 2020-2022 long-term equity incentive program, to further drive progress and accountability. As of December 31, 2020, our workforce is. As of December 31, 2020, our workforce is 52% male and 48% female, with our Board of Directors being 36% female.
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Health
& Safety
Ventas is committed to the health and safety of its employees. The responsibility is shared with each Ventas employee, helping to make our workplaces secure and hazard-free to protect against accidents, personal injury/illness and property damage. Our commitment to health and safety is maintained by effective administration, training and education, and we expect our operating and development partners to comply with applicable company or legal requirements, whichever is more stringent. In response to the COVID-19 pandemic, we seamlessly shifted to a remote work environment ahead of mandatory stay-at-home orders.
Sustainability
Ventas recognizes that sustainable practices and resilience are essential to delivering superior long-term results. Our integrated
approach to Environment, Social and Governance (“ESG”) principles animates our actions, decisions and processes. In 2018, we conducted an in-depth ESG prioritization (a “materiality assessment”) using the Global Reporting Initiative (GRI) framework, from which we organized the eight topics identified into three strategic pillars: People, Performance, and Planet. This approach integrates ESG principles throughout our business, ensures focus and reporting on key issues and motivates our daily efforts.
Ventas has an established cross-functional ESG Steering Committee, led by our Chairman and CEO and overseen by our Director of Sustainability, which provides oversight and monitoring of our ESG strategy, with reporting to our Board of Directors. Among other things, Ventas has set ambitious goals to reduce our greenhouse gas emissions, energy, water and waste, and to limit high
flood risk properties in our portfolio.
For additional information regarding our ESG efforts, please visit our website at www.ventasreit.com
Insurance
We maintain or require in our lease, management and other agreements that our tenants, managers or other counterparties 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 each industry and we frequently review our insurance programs
and requirements. The insurance that we maintain or require may take the form of commercial insurance, captive insurance or self-insurance.
We maintain the property insurance for substantially all properties in our office and senior living operations segment. We also maintain liability insurance for certain office properties, as well as the general and professional liability insurance for certain senior housing communities and related operations in our senior living operations segment. However, some senior housing managers maintain the general and professional liability insurance for our senior housing communities and related operations that they manage in accordance with the terms of our management agreements.
Through our office operations, we provide engineering, construction and architectural services
in connection with new development projects, and we maintain and cause tenants, contractors, design professionals and other parties involved with such services to maintain property and liability insurance with respect to those activities.
In May 2020, the Company formed a wholly owned captive insurance company, which provides insurance coverage for losses below the deductible and within the self-insured retention of the commercial property, general and professional liability insurance that we maintain for certain of our Office and senior living operations locations. The Company created this captive as part of its overall risk management program and to stabilize insurance costs.
We make available, free of charge, through our website our Annual Report, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. In addition, our Guidelines on Governance, our Global Code of Ethics and Business Conduct (including waivers from and amendments to that
8
document) and the charters for each of our Audit and Compliance, Nominating and Corporate Governance and Executive Compensation Committees are available on our website, and we will mail copies of the foregoing documents to stockholders, free of charge, upon request to our Corporate
Secretary at Ventas, Inc., 353 North Clark Street, Suite 3300, Chicago, Illinois60654.
GOVERNMENT REGULATION
Governmental Response to the COVID-19 Pandemic
In response to the COVID-19 pandemic, in 2020, Congress enacted a series of economic stimulus and relief measures through the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), the Paycheck Protection Program and Health Care Enhancement Act (the “PPPHCE Act”) and the Consolidated Appropriations Act, 2021
(“CAA”). In total, the CARES Act, the PPPHCE Act and the CAA authorize approximately $175 billion to be distributed to healthcare providers through the Public Health and Social Services Emergency Fund (“Provider Relief Fund”), which is administered by the U.S. Department of Health & Human Services (“HHS”). These grants are intended to reimburse eligible providers for expenses incurred to prevent, prepare for and respond to COVID-19 and lost revenues attributable to COVID-19. Recipients are not required to repay distributions from the Provider Relief Fund, provided that they attest to and comply with certain terms and conditions, including, not using grants received from the Provider Relief Fund to reimburse expenses or losses that other sources are obligated to reimburse, reporting and record keeping requirements and cooperating with any government audits.
HHS began distributing
Provider Relief Fund grants in April 2020 and has made grants available to various provider groups in phases. We applied for and received grants under Phase 2 and Phase 3 of the Provider Relief Fund on behalf of the assisted living communities in our senior living operations segment and may apply for additional grants in the future. Many of our senior housing, hospital, health system, medical office and other tenants also received grants from the Provider Relief Fund. HHS continues to evaluate and provide allocations of, and issue regulations and guidance regarding, grants made under the CARES Act and related legislation. We continue to monitor and evaluate the terms and conditions associated with payments received under the Provider Relief Fund.
The CARES Act and related legislation also make other forms of financial assistance available to healthcare providers, which has benefited our tenants
and our senior living operations segment to varying degrees. This assistance includes Medicare and Medicaid payment adjustments and an expansion of the Medicare Accelerated and Advance Payment Program, which made available accelerated payments of Medicare funds in order to increase cash flow to providers. These payments are loans that providers must repay. Effective October 2020, the Centers for Medicare & Medicaid Services (“CMS”) is no longer accepting applications for accelerated or advance payments. The Cares Act and related legislation also suspended Medicare sequestration payment adjustments, which would have otherwise reduced payments to Medicare providers by 2%, from May 1, 2020 through March 31, 2021, but also extended sequestration through 2030. These laws also include provisions intended to expand coverage of COVID-19 testing and preventive services,
address healthcare workforce needs and ease other legal and regulatory burdens on healthcare providers. Due to the recent enactment of the CARES Act, the PPPHCE Act, and the CAA, there is a high degree of uncertainty surrounding their implementation, and the public health emergency continues to evolve. See “Risk Factors—COVID-19 Risks—There is a high degree of uncertainty regarding the implementation and impact of the CARES Act and other pandemic-related legislation and any future COVID-19 relief measures. There can be no assurance as to the total amount of financial assistance we or our tenants or borrowers will receive or that we will be able to benefit from provisions intended to increase access to resources and ease regulatory burdens for healthcare providers.” included in Part I, Item 1A of this Annual Report.
Federal, state and local governments and agencies have implemented or announced
other programs to provide financial and other support to businesses affected by the COVID-19 pandemic, some of which have benefited our tenants, borrowers, managers and our senior living operations segment, but that impose significant regulatory and compliance obligations.
United States Healthcare Regulation, Licensing and Enforcement
Overview
We, along with our tenants, borrowers, and managers in the United States, are subject to or impacted by extensive and complex federal, state and local healthcare laws and regulations, including laws and regulations relating to quality of care, licensure and certificates of need (“CON”), conduct of operations, government reimbursement, such as Medicare and Medicaid, fraud and abuse, qualifications of personnel, appropriateness
and classification of care, adequacy of plant and equipment, and data security and privacy. Although the effects of these laws and regulations on our business are typically indirect, some of these laws and regulations apply directly to us and the senior housing communities in our senior living operations segment,
9
where we generally hold the applicable healthcare licenses and enroll in applicable reimbursement programs. Healthcare laws and regulations are wide-ranging, and noncompliance may result in the imposition of civil, criminal, and administrative penalties, including: the loss or suspension of accreditation, licenses or CONs; suspension of or non-payment for new admissions; denial of reimbursement; fines; suspension, decertification, or exclusion from federal and state healthcare
programs; or facility closure. Changes in laws or regulations, reimbursement policies, enforcement activity and regulatory non-compliance by us or our tenants, borrowers or managers could have a significant effect on our and their operations and financial condition, which in turn may adversely impact us, as detailed below and set forth under “Risk Factors” in Part I, Item 1A of this Annual Report.
Licensure, Certification and CONs
Regulation of senior housing communities consists primarily of state and local laws that may require licenses, certifications and permits, and may vary greatly from one jurisdiction to another.Our senior housing communities that receive Medicaid payments are also subject to extensive federal laws and regulation.Inpatient
rehabilitation and long-term acute care facilities, health systems, and skilled nursing facilities, which we do not directly operate, are typically subject to extensive federal and state regulation and must hold various licenses, certifications, and permits.Licensure and certification may be conditioned on requirements related to, among other things, the quality of medical care provided by an operator, qualifications of the operator’s administrative personnel and clinical staff, adequacy of the physical plant and equipment and continuing compliance with applicable laws and regulations.Federal and state government agencies have issued additional requirements in connection with the COVID-19 pandemic.For example, CMS is requiring testing of skilled nursing facility staff and residents for COVID-19 and reporting of COVID-19 data
to the Centers for Disease Control and Prevention (“CDC”).
Sanctions for failure to comply with licensure and certification laws and regulations include loss of licensure or certification and ability to participate in or receive payments from the Medicare and Medicaid programs, suspension of or non-payment for new admissions, fines, and potential criminal penalties.Even if we are not the operator of a facility, imposition of such sanctions could adversely affect the healthcare facility operator’s ability to satisfy its obligations to us.Further, if we have to replace a tenant, we may experience difficulties in finding a replacement and effectively and efficiently transitioning the property to a new tenant.See “Risk Factors—Our Business Operations
and Strategy Risks—If we need to replace any of our tenants or managers, we may be unable to do so on as favorable terms, or at all, and we could be subject to delays, limitations and expenses, which could adversely affect our business, financial condition and results of operations.” included in Part I, Item 1A of this Annual Report.
In addition, many of our licensed facilities and tenants are subject to state CON laws, which require governmental approval prior to the development or expansion of licensed facilities and services.The approval process in states with CON laws generally requires a facility to demonstrate the need for additional or expanded licensed facilities or services.CONs, where applicable, are also sometimes necessary for changes in ownership or control of licensed facilities,
addition of beds, investment in major capital equipment, introduction of new services or termination of services previously approved through the CON process.CON laws and regulations may restrict our or our tenants’ ability to expand and grow in certain circumstances, which could have an adverse effect on our or their revenues.
Fraud and Abuse Enforcement
Participants in the U.S. healthcare industry are subject to complex federal and state civil and criminal laws and regulations governing healthcare provider referrals, relationships and arrangements.These laws include: (i) federal and state false claims acts, which generally prohibit providers from filing false claims or making false statements to receive payment from Medicare, Medicaid
or other federal or state healthcare programs; (ii) federal and state anti-kickback and fee-splitting statutes, including the federal Anti-Kickback Statute, which prohibits the payment or receipt of remuneration to induce referrals or generate business involving healthcare items or services payable by Medicare or Medicaid; (iii) federal and state physician self-referral laws, which generally prohibit referrals of certain services by physicians to entities with which the physician or an immediate family member has a financial relationship; and (iv) the federal Civil Monetary Penalties Law, which requires a lower burden of proof than other fraud and abuse laws and prohibits, among other things, the knowing presentation of a false or fraudulent claim for certain healthcare services.
Violating these healthcare fraud and abuse laws and regulations may result in criminal and civil penalties, such as
punitive sanctions, damage assessments, monetary penalties, imprisonment, denial of Medicare and Medicaid payments, and exclusion from the Medicare and Medicaid programs. These laws and regulations are enforced by a variety of federal, state and
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local governmental agencies, and many can also be enforced by private litigants through federal and state false claims acts and other laws that allow private individuals to bring whistleblower suits known as qui tam actions.
Reimbursement
Sources of revenue for us and some of our tenants include, among others, governmental healthcare programs, such as the
federal Medicare programs and state Medicaid programs, and non-governmental third-party payors, such as insurance carriers and health maintenance organizations.Medicare is a federal health insurance program for persons age 65 and over, some disabled persons and persons with end-stage renal disease.Medicaid is a medical assistance program for eligible needy persons that is funded jointly by federal and state governments and administered by the states.Medicaid eligibility requirements and benefits vary by state.The Medicare and Medicaid programs are highly regulated and subject to frequent and substantial changes resulting from legislation, regulations and administrative and judicial interpretations of existing law.
As
federal and state governments face significant budgetary pressures, they continue efforts to reduce Medicare and Medicaid spending through methods such as reductions in reimbursement rates and increased enrollment in managed care programs.Private payors are typically for-profit companies and are continuously seeking opportunities to control healthcare costs.In some cases, private payors rely on government reimbursement systems to determine reimbursement rates, such that reductions in Medicare and Medicaid payment rates may negatively impact payments from private payors.These changes may result in reduced or slower growth in reimbursement for certain services provided by some of our tenants and managers.Additionally, the U.S. Congress and certain state legislatures have introduced
and passed a large number of proposals and legislation designed to make major changes in the healthcare system, including changes that directly or indirectly affect reimbursement.Several of these laws, including the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”), have promoted shifting from traditional fee-for-service reimbursement models to alternative payment models that tie reimbursement to quality and cost of care, such as accountable care organizations and bundled payments.It is difficult to predict the nature and success of future financial or delivery system reforms, but changes to reimbursement rates and related policies could adversely impact our and our tenants’ results of operations.
For
the year ended December 31, 2020, approximately 7.2% of our total revenues and 15.0% of our total NOI were attributable to acute and post-acute healthcare facilities in which our third-party tenants receive reimbursement for their services under governmental healthcare programs, such as Medicare and Medicaid.We are neither a participant in, nor a direct recipient of, any reimbursement under these programs with respect to those leased facilities.
Data Privacy and Security
Privacy and security regulations issued pursuant to the Health Insurance Portability and Accountability Act of 1996, as amended ( “HIPAA”), restrict the use and disclosure of individually identifiable health information (“protected health information” or
“PHI”), provide for individual rights, and require safeguards for PHI and notification of breaches of unsecure PHI. Entities subject to HIPAA include most healthcare providers, including some of our tenants and borrowers. These covered entities are required to implement administrative, physical and technical practices to protect the security of individually identifiable health information that is electronically maintained or transmitted. Business associates of covered entities who create, receive, maintain or transmit PHI are also subject to certain HIPAA provisions. Violations of HIPAA may result in substantial civil and/or criminal fines and penalties.
There are several other laws and legislative and regulatory initiatives at the federal and state levels addressing privacy and security of personal information. For example, the Federal Trade Commission uses its consumer protection authority
to initiate enforcement actions in response to data breaches. In most cases, we depend on our tenants and managers to fulfill any compliance obligations with respect to HIPAA and other privacy and security laws and regulations.
International Healthcare Regulation
We own senior housing communities in Canada and the United Kingdom. Senior living residences in Canada are provincially regulated. Within each province, there are different categories for senior living residences that are generally based on the level of care sought or required by a resident (e.g., assisted or retirement living, senior living residences, residential care, long-term care). In some of these categories and depending on the province, residences may be government funded, or the individual residents may be eligible for a government subsidy, while other residences are
exclusively private-pay. The
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governing legislation and regulations vary by province, but generally impose licensing requirements and minimum standards of care for senior living residences. These laws empower regulators in each province to take a variety of steps to ensure compliance, conduct inspections, issue reports and generally regulate the industry. Our communities in Canada are also subject to privacy legislation, including, in certain provinces, privacy laws specifically related to personal health information. Although the obligations of senior living residences in the various provinces differ, they all include the obligation to protect personal information. The powers of privacy regulators and penalties for violations of privacy law vary according to the applicable law
or are left to the courts. Our senior living residences in Canada are also subject to a variety of other laws and regulations, including minimum wage standards and other employment laws.
In the United Kingdom, our senior housing communities are principally regulated as “care home services” under the Health and Social Care Act 2008. This legislation subjects service providers to standards of care and requires, among other things, that all persons carrying out such activities, and the managers of such persons, be registered. Providers of care home services are also subject (as data controllers) to laws and regulations governing their use of personal data (including in relation to their employees, clients and recipients of their services). These laws take the form of the U.K.’s Data Protection Act 2018. The Data Protection Act imposes a significant number of obligations on controllers with
the potential for fines of up to 4% of annual worldwide turnover or €20 million, whichever is greater. Our business operations in the United Kingdom are also subject to a range of other regulations, such as the U.K. Bribery Act 2010, minimum wage standards and other employment laws.
The United Kingdom exited from the EU on January 31, 2020. The impact of Brexit on the healthcare industry will depend on a variety of factors, including the evolution of healthcare regulatory and immigration policy and the broader economic outlook in the United Kingdom.
Regulation Impacting Life Science, Research and Innovation Centers
We lease a number of our assets to tenants in the life science, research and innovation sector. These
tenants consist of university-affiliated organizations and other private sector companies. These tenants may be dependent on private investors, the federal government or other sources of funding to support their activities. Creating a new pharmaceutical product or medical device requires substantial investments of time and capital, in part because of the extensive regulation of the healthcare industry; it also entails considerable risk of failure in demonstrating that the product is safe and effective and in gaining regulatory approval and market acceptance. Therefore, our tenants in the life science, research and innovation industry face high levels of regulation, expense and uncertainty. See “Risk Factors—Environmental, Economic and Market Risks—Our life science, R&I tenants face unique levels of regulation, expense and uncertainty.” included in Part I, Item 1A of this Annual Report.
Our
tenants with marketable products may be adversely affected by healthcare reform and government reimbursement policies, including changes under the current presidential administration or by private healthcare payors.
Tax Regulation
We elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code (the “Code”), commencing with our taxable year ended December 31, 1999. Provided we qualify for taxation as a REIT, we generally will not be required to pay U.S. federal corporate income taxes on our REIT taxable income that is currently distributed to our stockholders. This treatment substantially eliminates the “double taxation” that ordinarily results from investment in a C corporation. We will, however, be required to pay U.S. federal income tax in
certain circumstances.
The Code defines a REIT as a corporation, trust or association:
(1) that is managed by one or more trustees or directors;
(2) that issues transferable shares or transferable certificates to evidence its beneficial ownership;
(3) that would be taxable as a domestic corporation, but for Sections 856 through 860 of the Code;
(4) that is not a financial institution or an insurance company within the meaning of certain provisions of the Code;
(5) that
is beneficially owned by 100 or more persons;
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(6) not more than 50% in value of the outstanding stock of which is owned, actually or constructively, by five or fewer individuals, including certain specified entities, during the last half of each taxable year; and
(7) that meets other tests, regarding the nature of its income and assets and the amount of its distributions.
We believe that we have been organized and have operated in a manner that has allowed us, and will continue to allow us, to satisfy conditions (1) through (7) inclusive, during the relevant
time periods, and we intend to continue to be organized and operate in this manner. However, qualification and taxation as a REIT depend upon our ability to meet the various qualification tests imposed under the Code, including through actual operating results, asset composition, distribution levels and diversity of stock ownership. Accordingly, no assurance can be given that we will be organized or will be able to operate in a manner so as to qualify or remain qualified as a REIT.
If we lose our status as a REIT (currently or with respect to any tax years for which the statute of limitations has not expired), we will face serious tax consequences that will substantially reduce the funds available to satisfy our obligations, to implement our business strategy and to make distributions to our stockholders for each of the years involved because:
•We
would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to regular U.S. federal corporate income tax;
•We could be subject to increased state and local taxes; and
•Unless we are entitled to relief under statutory provisions, we could not elect to be subject to tax as a REIT for four taxable years following the year during which we were disqualified.
In addition, in such event we would no longer be required to pay dividends to maintain REIT status, which could adversely affect the value of our common stock. See “Risk Factors—Our REIT Status Risks”.
Environmental Regulation
A
wide variety of federal, state and local environmental and occupational health and safety laws and regulations affect our assets. We are committed to not only meeting these requirements of these laws and regulations, but exceeding them through our Environmental, Social and Governance activities.See “—Sustainability.”
However, these complex federal and state statutes, and their enforcement, involve a myriad of regulations, many of which involve strict liability on the part of the potential offender. Some of these federal and state statutes may directly impact us. Under various federal, state and local environmental laws, ordinances and regulations, an owner of real property or a secured lender, such as us, may be liable for the costs of removal or remediation of hazardous or toxic substances at, under or disposed of in connection with such
property, as well as other potential costs relating to hazardous or toxic substances (including government fines and damages for injuries to persons and adjacent property).
With respect to our properties that are operated or managed by third parties, we may be held primarily or jointly and severally liable for costs relating to the investigation and cleanup of any property from which there is or has been an actual or threatened release of a regulated material and any other affected properties, regardless of whether we knew of or caused the release. Such costs typically are not limited by law or regulation and could exceed the property’s value. In addition, we may be liable for certain other costs, such as governmental fines and injuries to persons, property or natural resources, as a result of any such actual or threatened release. See “Risk Factors—Our Business Operations and Strategy
Risks—Our operating assets may expose us to various operational risks, liabilities and claims that could adversely affect our ability to generate revenues or increase our costs and could adversely affect our business, financial condition and results of operations.” included in Part I, Item 1A of this Annual Report.
Under the terms of our lease, management and other agreements, we generally have a right to indemnification by the tenants and managers of our properties for any contamination caused by them.
In general, we have also agreed to indemnify our tenants and managers against any environmental claims (including penalties and cleanup costs) resulting from any condition arising in, on or under, or relating to, the leased properties at any time before the applicable lease commencement date. With respect to our senior
living operating portfolio, we have agreed to indemnify our managers against any environmental claims (including penalties and cleanup costs) resulting from any condition on those properties, unless the manager caused or contributed to that condition.
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ITEM 1A. Risk Factors
This section discusses material 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, or any other risks and uncertainties that are
not addressed below or that we have not yet identified, actually occur, we could be materially adversely affected and the value of our securities could decline.
As set forth below, we believe that the risks we face generally fall into the following categories:
•COVID-19 Risks
•Our Business Operations and Strategy Risks
•Environmental, Economic and Market Risks
•Our Capital Structure Risks
•Our Legal, Compliance and Regulatory Risks
•Our REIT Status Risks
COVID-19
Risks
The ongoing COVID-19 pandemic and measures intended to prevent its spread have had and may continue to have a material adverse effect on our business, financial condition and results of operations.
The COVID-19 pandemic and measures to prevent its spread have materially negatively impacted our businesses in a number of ways and is expected to continue to do so. For instance, operating costs at our senior housing communities have increased as a result of the introduction of public health measures and other operational and regulatory changes affecting our properties and our operations, while occupancy and revenue have decreased. Certain of our tenants and managers have incurred significant costs or losses as a result of the pandemic, and may continue to do so, which could adversely affect our results of operations.
Although
we continue to undertake extensive efforts to ensure the safety of our properties, employees and residents and to provide operator support in this regard, the impact of the COVID-19 pandemic on our facilities could result in additional operational costs. The effects of shelter-in-place and stay-at-home orders, including remote work arrangements for an extended period of time, could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business. Further, we have and may continue to implement mitigation and other measures to support and protect our employees, which could result in increased labor costs.
Senior housing facilities have been disproportionately impacted by COVID-19. The ongoing COVID-19 pandemic has, to varying degrees during the course of the pandemic, prevented
prospective occupants and their families from visiting our senior housing communities and limited the ability of new occupants to move into our senior housing communities due to heightened move-in criteria and screening.Although the ongoing impact of the pandemic and vaccine deployment on occupancy remain uncertain, occupancy of our senior housing and triple-net properties could further decrease, and the effects of the COVID-19 pandemic could adversely affect demand for senior housing for an extended period.Such a decrease could affect the net operating income of our senior housing properties and the ability of our triple-net tenants to make contractual payments to us, which in turn, could adversely affect our financial condition, including our ability to pay dividend distributions at expected levels or at all.
Additionally,
across our property types, the impact of the COVID-19 pandemic creates a heightened risk of tenant, borrower, manager or other obligor bankruptcy or insolvency due to factors such as decreased occupancy, medical practice disruptions resulting from stay-at-home orders, increased health and safety and labor expenses or litigation resulting from developments related to the COVID-19 pandemic. In addition to the risks associated with such events elsewhere in these risk factors, various federal, state and local governments have enacted, and may continue to enact, laws regulations and moratoriums or take other actions that could limit our ability to evict tenants as a result of the COVID-19 pandemic. Although many of these moratoriums are expected to be temporary in nature, they may be in place for a significant period of time until the COVID-19 pandemic subsides. While we generally have arrangements and other agreements that give us the right under specified circumstances
to terminate a lease or evict a tenant for nonpayment, such laws, regulations and moratoriums will generally prohibit our ability to begin eviction proceedings even where no rent or only partial rent is being paid for so long as such law, regulation or moratorium remains in effect. We may incur significant costs and it may take a significant amount of time to ultimately evict any tenant who is not meeting its contractual rent obligations. If we cannot transition a leased property to a
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new tenant due to the effects of the COVID-19 pandemic or for other reasons, we may take possession of that property, which may expose us to certain successor liabilities.
The COVID-19 pandemic and reactions to it have
also adversely affected the U.S. economy and global financial markets and, in the longer term, could result in a global economic downturn and a recession, or inflation, which may, in turn negatively impact our results of operations. The COVID-19 pandemic has increased, and may continue to increase, the magnitude of many of the other risks described herein.
The trajectory and future impact of the COVID-19 pandemic remains highly uncertain. The extent of the pandemic’s continuing and ultimate effect on our operational and financial performance will depend on a variety of factors, including the speed at which available vaccines can be successfully deployed; the rate of acceptance of available vaccines, particularly among the residents and staff in our senior housing communities; the impact of new variants of the virus and the effectiveness of available vaccines against those variants; ongoing clinical
experience, which may differ considerably across regions and fluctuate over time; and on other future developments, including the ultimate duration, spread and intensity of the outbreak, the availability of testing, the extent to which governments impose, rollback or re-impose preventative restrictions and the availability of ongoing government financial support to our business, tenants and operators. Due to these uncertainties, we are not able at this time to estimate the ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows.
There is a high degree of uncertainty regarding the implementation and impact of the CARES Act and other pandemic-related legislation and any future COVID-19 relief measures. There can be no assurance as to the total amount of financial assistance we or our tenants or borrowers will receive or that we will be able to benefit
from provisions intended to increase access to resources and ease regulatory burdens for healthcare providers.
In response to the COVID-19 pandemic, the CARES Act, the PPPHCE Act, and the CAA authorize a total of $178 billion to be distributed to healthcare providers through the Provider Relief Fund, which is administered by HHS. These grants are intended to reimburse eligible providers for healthcare-related expenses or lost revenues attributable to COVID-19. Recipients are not required to repay distributions from the Provider Relief Fund, provided that they attest to and comply with certain terms and conditions, including reporting requirements, limitations on balance billing, and not using grants received from the Provider Relief Fund to reimburse expenses or losses that other sources are obligated to reimburse maintaining records, and cooperating with any government audits.
HHS
began distributing Provider Relief Fund grants in April 2020 and has made grants available to various provider groups in phases. We applied for grants under Phase 2 and Phase 3 of the Provider Relief Fund on behalf of the assisted living communities in our senior living operations segment and may apply for additional grants in the future. While we have received all amounts under our Phase 2 applications, and have begun to receive amounts under our Phase 3 applications, there can be no assurance that all our remaining applications will be approved or that additional grants will ultimately be received in full or in part. Any grants that are ultimately received and retained by us are not expected to fully offset the losses incurred in our senior living operating portfolio that are attributable to COVID-19. Further, although we continue to monitor and evaluate the terms and conditions associated with the Provider Relief Fund distributions, we cannot assure you that we
will be in compliance with all requirements related to the payments received under the Provider Relief Fund. If we or any of our tenants fail to comply with all of the terms and conditions, we or they may be required to repay some or all of the grants received and may be subject to other enforcement action, which could have a material adverse impact on our business and financial condition.
The CARES Act and related legislation also make other forms of financial assistance available to healthcare providers, including through Medicare and Medicaid payment adjustments and an expansion of the Medicare Accelerated and Advance Payment Program, which makes available accelerated payments of Medicare funds in order to increase cash flow to providers in the form of loans that must be repaid. In addition to financial assistance, the CARES Act and related legislation include provisions intended to increase
access to medical supplies and equipment and ease legal and regulatory burdens on healthcare providers. Many of these measures are effective only for the duration of the federal public health emergency that was declared as a result of the COVID-19 pandemic. The current public health emergency determination expires April 21, 2021, and HHS has indicated that it likely will be extended but the duration of the extension is unclear. The HHS Secretary may choose to renew the declaration for successive 90-day periods for as long as the emergency continues to exist and may terminate the declaration whenever he determines that the public health emergency no longer exists.
Due to the recent enactment of the CARES Act, and other enacted legislation, there is still a high degree of uncertainty surrounding their implementation. Further, the federal government
is considering additional financial measures, federal agencies continue to issue related regulations and guidance, and the public health emergency continues to evolve. It is difficult to predict the extent to which anticipated ongoing negative effects of the COVID-19 pandemic on us and our tenants and
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borrowers will be offset by benefits which we may recognize or receive in the future under existing or future financial measures. Further, there can be no assurance that the terms and conditions of the Provider Relief Fund grants or other programs will not change or be interpreted in ways that affect our ability to comply with such terms and conditions (which could affect our ability to retain any grants that we receive), the amount of total financial grants we may ultimately receive
or our eligibility to participate in any future funding. We continue to assess the potential impact of the COVID-19 pandemic and government responses to the pandemic on our business, financial condition and results of operations.
Our Business Operations and Strategy Risks
Market conditions, including, but not limited to, economic and financial market events or conditions and the actual and perceived state of the real estate markets and public capital markets generally could negatively impact our business, financial condition and results of operations.
We are dependent on the capital markets and any disruption to the capital markets or our ability to access such markets could impair our ability to fulfill our dividend requirements, make payments to our security holders or
otherwise finance our business operations. The markets in which we operate are affected by a number of factors that are largely beyond our control but may nevertheless have a significant negative impact on us. Adverse developments affecting economies throughout the world, including a general tightening of availability of credit (including the price, terms and conditions under which it can be obtained), the state of the public capital markets, decreased liquidity in certain financial markets, increased interest rates, foreign exchange fluctuations, declining consumer confidence, the actual or perceived state of the real estate market, sustained high levels of unemployment or significant declines in stock markets, as well as concerns regarding pandemics, epidemics and the spread of contagious diseases, could impact our business, financial condition and results of operations. For example, unfavorable changes in general economic conditions, including recessions, economic
slowdowns, high unemployment and rising prices or the perception by consumers of weak or weakening economic conditions may reduce disposable income and impact consumer spending in healthcare or seniors housing, for example, which could adversely affect our financial results.
In addition, increased inflation may have a pronounced negative impact on the interest expense we pay in connection with our outstanding indebtedness, in our general and administrative expenses, as these costs could increase at a rate higher than our rents, or in the wages that our managers or tenants are obligated to pay. Conversely, deflation may result in a decline in general price levels, often caused by a decrease in the supply of money or credit. The predominant effects of deflation are high unemployment, credit contraction and weakened consumer demand. Restricted lending practices may impact our ability to obtain
financing for our properties, which could adversely impact our growth and profitability.
To the extent there is turmoil in the global financial markets, this turmoil has the potential to adversely affect (i) the value of our properties; (ii) the availability or the terms of financing that we have or may be able to obtain; (iii) our ability to make principal and interest payments on, or refinance when due, any outstanding debt; (iv) our ability to pay a dividend and (v) the ability of our tenants to enter into new leasing transactions or satisfy rental payments under existing leases. Disruptions in the capital and credit markets may also adversely affect the market price of our securities.
Third parties must operate our non-Office assets, limiting our control and influence over operations and results.
Although
we often have certain general oversight approval rights (e.g., with respect to budgets, material contracts, etc.) and the right to review operational and financial reporting information with respect to a majority of our portfolio, our third-party managers and tenants are ultimately in control of the day-to-day business of the property. As a result, we have limited rights to direct or influence the business or operations of the properties in our portfolio and we depend on third parties to operate these properties in a manner that complies with applicable law, minimizes legal risk and maximizes the value of our investment. The failure by such third parties to operate these properties efficiently and effectively and adequately manage the related risks could adversely affect our business, financial condition and results of operations.
Our
operating assets may expose us to various operational risks, liabilities and claims that could adversely affect our ability to generate revenues or increase our costs and could adversely affect our business, financial condition and results of operations.
Despite our limited rights to direct or influence the business or operations of the properties in our senior living operations segment, as the owner and operator of senior housing operating properties, we are ultimately responsible for all operational risks and other liabilities of such properties, other than those arising out of certain actions by our managers, such as gross negligence or willful misconduct. These risks include, and our resulting revenues are impacted by, among other things, fluctuations in occupancy levels, the inability to achieve economic resident fees (including anticipated increases in those fees), increases in the cost
of food, materials, energy, labor (as a result of unionization or otherwise) or other services, rent control
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regulations, national and regional economic conditions, the imposition of new or increased taxes, capital expenditure requirements, changes in management or equity, accounting misstatements, professional and general liability claims, and the availability and cost of insurance. Any one or a combination of these factors could result in deficiencies in our senior living operations segment, which could adversely affect our business, financial condition and results of operations. Such operational risks could also arise as a result of our ownership of office buildings, and which could also adversely affect our business, financial condition and results of operations.
Further,
we generally hold the applicable healthcare license and enroll in applicable government healthcare programs on behalf of the properties in our senior living operations segment. This subjects us to potential liability under various healthcare laws and regulations. Healthcare laws and regulations are wide-ranging, and noncompliance may result in the imposition of civil, criminal, and administrative penalties, including: the loss or suspension of accreditation, licenses or CONs; suspension of or non-payment for new admissions; denial of reimbursement; fines; suspension, decertification, or exclusion from federal and state healthcare programs; or facility closure.
Decreases in our tenants’, borrowers’ or managers’ revenues, or increases in their expenses, could affect their ability to meet their financial and other contractual obligations to us, which could adversely affect our business, financial condition
and results of operations.
We have limited control over the success or failure of our tenants’, borrowers’ and managers’ businesses, regardless of whether our relationship is structured as a triple-net lease, a management contract or as a lender to our tenants. While we do not expressly take on liability on the properties in our triple-net leased or office operations segments, our business, financial condition and results of operations could suffer as a result of the risks outlined below. Any of our tenants, borrowers or managers may experience a downturn in their business that materially weakens their financial condition.For example, many of our tenants, borrowers and managers have
experienced significant downturns in their businesses due to the COVID-19 pandemic, including as a result of interruptions in their operations, lost revenues, increased costs, financing difficulties and labor shortages.As a result, they may be unable or unwilling to make payments or perform their obligations when due.Although we generally have arrangements and other agreements that give us the right under specified circumstances to terminate a lease, evict a tenant or terminate our management agreements, or demand immediate repayment of outstanding loan amounts or other obligations to us, we may not be able to enforce such rights or we may determine not to do so if we believe that enforcement of our rights would be more detrimental to our business than seeking alternative approaches.
Our senior housing
tenants and managers primarily depend on private pay sources consisting of the income or assets of residents or their family members to pay fees. Costs associated with independent and assisted living services generally are not reimbursable under government reimbursement programs, such as Medicare and Medicaid. Accordingly, our tenants and managers of our senior housing business depend on attracting seniors with appropriate levels of income and assets, which may be affected by many factors, including: (i) prevailing economic and market trends, including the ongoing economic downturn and high unemployment rates; (ii) consumer confidence; (iii) demographics; (iv) property condition and safety, including as a result of a severe cold and flu season, an epidemic or any other widespread illness, such as seen throughout the COVID-19 pandemic; (v) public perception
about such properties; and (vi) social and environmental factors.Consequently, if our tenants or managers on our behalf fail to effectively conduct their operations, or to maintain and improve our properties, it could adversely affect our business reputation as the owner of the properties, as well as the business reputation of our tenants or managers and their ability to attract and retain patients and residents in our properties, which could have an adverse effect on our and our tenant’s or manager’s business, financial condition and results of operations.Further, if widespread default or nonpayment of outstanding obligations from a large number of tenants or managers occurs at a time when terminating such agreement or replacing such tenants or managers may be extremely difficult or impossible, including as a result of the COVID-19 pandemic, we may elect instead to amend
such agreements with such tenants or managers.However, such amendment may be on terms that are less favorable to us than the original agreement and may have a material adverse effect on our results of operations and financial condition.
Our senior housing tenants and managers may also rely on reimbursements from governmental programs for a portion of the revenues from certain properties. Changes in reimbursement policies and other governmental regulation, that may result from actions by Congress or executive orders, may result in reductions in our tenants’ or managers’ revenues, operations and cash flows and affect our tenants’ or managers’ ability to meet their obligations to us. In addition, failure to comply with reimbursement regulations or other laws applicable to healthcare providers could result in penalties, fines,
litigation costs, lost revenue or other consequences, which could adversely impact our tenants’ ability to make contractual rent payments to us under a triple-net lease or our cash flows from operations under a management arrangement.
Our tenants and managers have, and may continue to seek to, offset losses by obtaining funds under the recently adopted CARES Act or other similar legislative initiatives at the state and local level. It is indeterminable when or if these
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government funds will ultimately be received by our tenants and managers or whether these funds may materially offset the cash flow disruptions experienced by them. If they are unable to obtain these funds within a reasonable time period
or at all, or the conditions precedent to receiving these funds are overly burdensome or not feasible, it may substantially affect their ability to make payments or perform their obligations when due to us.
A significant portion of our revenues and operating income is dependent on a limited number of tenants and managers, including Brookdale Senior Living, Ardent, Kindred, Atria and Sunrise.
As of December 31, 2020, Atria and Sunrise, collectively, managed 258 of our consolidated senior housing communities pursuant to long-term management agreements. Additionally, as of December 31, 2020, our three largest tenants, Brookdale Senior Living, Ardent and Kindred leased from us 121 properties, 12 properties and 32 properties
respectively. These properties represent a substantial portion of our portfolio, based on their gross book value, and account for a significant portion of our revenues and NOI.
We depend on Brookdale Senior Living, Ardent and Kindred to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures, and to comply with the terms of the mortgage financing documents, if any, affecting the properties they lease from us. We cannot assure you that they will have sufficient assets, income and access to financing to enable them to satisfy their obligations to us, and any failure, inability or unwillingness by them to do so could adversely affect our business, financial condition and results of operations. In addition, any failure by any one of Brookdale Senior Living, Ardent or Kindred to conduct effectively its operations or to maintain
and improve the properties it leases from us could adversely affect its business reputation and its ability to attract and retain patients or residents in such properties, which could in turn adversely affect our business, financial condition and results of operations. These tenants have agreed to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with their respective businesses. We cannot assure you that they will have sufficient assets, income, access to financing and insurance coverage to enable them to satisfy those obligations.
We rely on a relatively small number of third-party managers, including Atria and Sunrise, to manage a significant number of the properties in our senior living operations segment and to set appropriate resident fees, provide accurate property-level financial results for our properties in a timely
manner and otherwise operate our senior housing communities in compliance with the terms of our management agreements and all applicable laws and regulations. Any adverse developments in such managers’ business and affairs or financial condition could impair their ability to manage our properties efficiently and effectively and could adversely affect the financial performance of our properties and our business, financial condition and results of operations. If any one of our managers experience financial, legal, accounting or regulatory difficulties, such difficulties could result in, among other adverse events, impacts to its financial stability, acceleration of its indebtedness, impairment of its continued access to capital, the enforcement of default remedies by its counterparties, or the commencement of insolvency proceedings by or against it, any one or a combination of which could adversely affect our business, financial condition and results of operations.
In
the event that any of our tenants or managers merge with one another, our dependence on a small group of significant third parties would increase, as would our exposure to the risks described above.
If we need to replace any of our tenants or managers, we may be unable to do so on as favorable terms, or at all, and we could be subject to delays, limitations and expenses, which could adversely affect our business, financial condition and results of operations.
Our tenants may not renew their leases with us, and our managers may not renew their management agreements with us, beyond their current terms. Our leases and management agreements also provide us, our tenants and our managers with termination rights in certain circumstances. If our leases or management agreements are not renewed or are otherwise terminated, we would attempt
to reposition those properties with another tenant or manager, as applicable. We may not be successful in identifying suitable replacements or entering into leases, management agreements or other arrangements with new tenants or managers on a timely basis or on terms as favorable to us as our current leases or management agreements, if at all, and we may be required to fund certain expenses and obligations (e.g., real estate taxes, debt costs and maintenance expenses) to preserve the value of, and avoid the imposition of liens on, our properties while they are being repositioned.
During transition periods to new tenants or managers, the attention of existing tenants or operators may be diverted from the performance of the properties, which could cause the financial and operational performance at those properties to decline. Our ability to reposition our properties with a suitable replacement
tenant or manager could be significantly delayed or limited by state licensing, receivership, certificates of need (“CON”) or other laws, as well as by the Medicare and Medicaid
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change-of-ownership rules, and we could incur substantial additional expenses in connection with any licensing, receivership or change-of-ownership proceedings.
In the case of our leased properties, following expiration of a lease term or if we exercise our right to replace a tenant in default, rental payments on the related properties could decline or cease altogether while we reposition the properties with a suitable replacement tenant. This risk could be exacerbated by new laws and regulations enacted during the COVID-19
pandemic that limit our ability to take remedial action against defaulted tenants. Further, our competitors may offer space at rental rates below current market rates or below the rental rates we currently charge, we may lose potential tenants, and we may be pressured to reduce our rental rates below those we currently charge to retain tenants when leases expire. Our ability to locate and attract suitable replacement tenants also could be impaired by the specialized healthcare uses or contractual restrictions on use of the properties, and we may be forced to spend substantial amounts to adapt the properties to other uses.
In the event of borrower defaults, we may be unable to foreclose successfully on the collateral securing our loans and other investments, and even if we are successful in our foreclosure efforts, we may be unable to sell successfully any acquired equity interests or reposition any acquired
properties, which could adversely affect our ability to recover our investments.
If a borrower defaults under mortgage or other loans for which we are the lender, we may attempt to foreclose on the collateral securing those loans, including by acquiring any pledged equity interests or acquiring title to the subject properties, to protect our investment. In response, the defaulting borrower may contest our enforcement of foreclosure or other available remedies, seek bankruptcy protection against our exercise of enforcement or other available remedies, or bring claims against us for lender liability. Any such delay or limit on our ability to pursue our rights or remedies could adversely affect our business, financial condition and results of operations.
Even if we successfully foreclose on the collateral securing our mortgage
loans and other investments, costs related to enforcement of our remedies, high loan-to-value ratios or declines in the value of the collateral could prevent us from realizing the full amount of our loans, and we could be required to record a valuation allowance for such losses. Moreover, the collateral may include equity interests that may have incurred unexpected liabilities or other limiting characteristics that may result in us not having full recourse to assets within that entity’s subsidiary structure. For example, our mezzanine loan investments are subordinate to senior secured loans held by other investors that encumber the same real estate, and, in certain circumstances, affords them the ability to extinguish our rights in the collateral, subject to our rights under market and customary co-lender contractual arrangements. In addition, we may not be able to sell the acquired assets or equity interests due to securities law restrictions or otherwise. We may
be unable to reposition the properties with new tenants, borrowers or managers on a timely basis, if at all, or without making improvements or repairs. Any delay or costs incurred in selling or repositioning acquired collateral could adversely affect our ability to recover our investments.
Our success depends, in part, on our ability to attract and retain talented employees, and the loss of any one of our key personnel could adversely impact our business.
The success of our business depends, in part, on the leadership and performance of our executive management team and key employees. Failure to attract, retain and motivate highly qualified employees, or failure to develop and implement a viable succession plan, could result in inadequate depth of institutional knowledge, an ineffective culture or lack of certain skill sets, significantly
impacting our future performance and adversely affecting our business. Competition for talented employees is intense, and we cannot assure you that we will retain our key officers and employees or that we will be able to attract and retain other highly qualified individuals in the future. COVID-19 could also negatively affect the health, availability and productivity of our current personnel and could impact our ability to recruit and attract new employees and retain current employees, particularly as remote work arrangements and their impact on the market for talent remains uncertain. In addition, while we have long-term compensation plans designed to retain our senior executives, if our retention and succession plans are not effective, or if we lose any one or more of our key officers and employees, our business could be adversely affected.
Our investments are concentrated across a variety of assets
classes within healthcare real estate, making us more vulnerable to adverse changes in those asset classes and the real estate industry generally.
We invest in a variety of assets classes in healthcare real estate, including senior housing, R&I and healthcare properties. While we endeavor to invest in a diversified portfolio, there can be no assurance that in a particular economic or operational environment that all assets will perform equally well or that our balance sheet will be appropriately balanced. Each of our asset classes are subject to their own dynamics and their own specific operational, financial, compliance, regulatory and market risks.
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Additionally,
a broad downturn or slowdown in the healthcare real estate sector could have a greater adverse impact on our business than if we had investments in multiple industries and could negatively impact the ability of our tenants, borrowers and managers to meet their obligations to us. A downturn or slowdown in any one of our asset classes could adversely affect the value of our properties in such asset class and our ability to sell such properties at prices or on terms acceptable or favorable to us.
In addition, we are exposed to the risks inherent in concentrating our investments in real estate. Real estate investments are relatively illiquid, and our ability to quickly sell or exchange our properties in response to changes in economic or other conditions is limited. In the event we market any of our properties for sale, the value of those properties
and our ability to sell at prices or on terms acceptable to us could be adversely affected by a downturn in the real estate industry. In addition, transfers of healthcare real estate may be subject to regulatory approvals that are not required for transfers of other types of commercial real estate. We cannot assure you that we will recognize the full value of any property that we sell for liquidity or other reasons, and the inability to respond quickly to changes in the performance of our investments could adversely affect our business, financial condition and results of operations.
Our investments in and acquisitions of properties may be unsuccessful or fail to meet our expectations.
We have made and expect to continue to make significant acquisitions and investments as part of our overall business strategy. Investments in and acquisitions
of healthcare real estate 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 a tenant, borrower or manager will fail to meet performance expectations. Investments outside the United States raise legal, economic and market risks associated with doing business in foreign countries, such as currency exchange fluctuations, costly regulatory requirements and foreign tax risks. Domestic and international real estate development and redevelopment projects present additional risks, including construction delays or cost overruns that increase expenses, the inability to obtain required zoning, occupancy and other governmental approvals and permits on a timely basis, and the incurrence of significant costs prior to completion of the project. Furthermore, healthcare real estate properties are often highly
customized, and the development or redevelopment of such properties may require costly tenant-specific improvements. As a result, we cannot assure you that we will achieve the economic benefit we expect from acquisition, investment, development and redevelopment opportunities. Our significant acquisition and investment activity presents certain risks to our business and operations, including, among other things, that:
•We may be unable to integrate successfully the operations, personnel or systems of acquired companies, maintain consistent standards, controls, policies and procedures, or realize the anticipated benefits of acquisitions and other investments within the anticipated time frame, or at all;
•We may be unable to monitor and manage our expanded portfolio of properties
effectively, retain key employees or attract highly qualified new employees;
•Projections of estimated future revenues, costs savings or operating metrics that we develop during the due diligence and integration planning process might be inaccurate;
•Our leverage could increase or our per share financial results could decline if we incur additional debt or issue equity securities to finance acquisitions and investments;
•Acquisitions and other new investments could divert management’s attention from our existing assets; or
•The value of acquired assets or the market price of our common
stock may decline.
We cannot assure you that our acquisitions, developments, redevelopments and other investments will be successful or meet our expectations without encountering difficulties or that any such difficulties will not adversely affect our business, financial condition and results of operations.
Our ongoing strategy depends, in part, upon identifying and consummating future investments and effectively managing our expansion opportunities.
An important part of our business strategy is to continue to expand and diversify our portfolio, directly or indirectly with third parties, through accretive acquisition, investment, development and redevelopment activities in domestic and international healthcare real estate. Our execution of this strategy by successfully
identifying, securing and consummating beneficial transactions is made more challenging by increased competition and can be affected by many factors, including our
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relationships with current and prospective clients and partners, our ability to obtain debt and equity capital at costs comparable to or better than our competitors and lower than the yield we earn on our acquisitions or investments, and our ability to negotiate favorable terms with property owners seeking to sell and other contractual counterparties. We compete for these opportunities with a broad variety of potential investors, including other healthcare REITs, real estate partnerships, healthcare providers, healthcare 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. See “Business—Competition” included in Part I, Item 1 of this Annual Report. If we are unsuccessful at identifying and capitalizing on investment, acquisition, development and redevelopment opportunities and otherwise expanding and diversifying our portfolio, our growth and profitability may be adversely affected.
For example, we recently expanded into R&I and life sciences. When expanding into areas that are new to us, we face numerous risks and uncertainties, including risks associated with (i) the required investment of capital and other resources; (ii) the possibility that we have insufficient expertise to engage in such activities profitably or without incurring inappropriate amounts of risk; (iii) the diversion of management’s attention from our other
businesses; (iv) the increasing demands on or issues related to operational and management systems and controls; (v) compliance with additional legal or regulatory requirements with which we are not familiar; and (vi) the broadening of our geographic footprint, including the risks associated with conducting operations in non-U.S. jurisdictions. We cannot assure you that any new strategies, markets or businesses that we enter into will be successful or meet our expectations without encountering difficulties or that any such difficulties will not adversely affect our business, financial condition and results of operations.
Our investments in co-investment vehicles, joint ventures and minority interests may subject us to risks and liabilities that we would not otherwise face.
We have and may continue to develop
and acquire properties in joint ventures with other persons or entities when circumstances warrant the use of these structures. In 2020, we formed the Ventas Investment Management Platform to consolidate our private capital management capabilities, which includes our Ventas Life Science and Healthcare Real Estate Fund, L.P. (the “Ventas Fund”), our joint venture with GIC and other partnerships with institutional capital vehicles, under a single platform. As of December 31, 2020, we had over $3 billion in assets under management in this platform. In the future, we may enter into additional co-investments, partnerships and joint ventures, either through the Ventas Investment Management Platform or otherwise. We also own minority investments in properties and unconsolidated operating entities which entitle us to rights and protections typical of minority investments, but that inherently
involve a lesser degree of control over business operations.
There can be no assurance that we will be able to form new co-investment vehicles or attract third-party investment through additional investments or otherwise. Further, there can be no assurance that we are able to realize value from such investments.
These ventures involve risks not present with respect to our wholly owned properties, including the following:
•We may be unable to take actions that are opposed by our partners under arrangements that require us to share decision-making authority over major decisions;
•For ventures in which we have a noncontrolling interest, our partners may take
actions that we oppose;
•If our partners become bankrupt or otherwise fail to fund their share of required capital contributions, we may choose to or be required to contribute such capital;
•We may be subject to transfer restrictions that apply to our interest in the venture;
•Our partners may have business interests or goals that conflict with our business interests and goals, including the timing, terms and strategies for any investments, and what levels of debt to incur or carry;
•Our partners may have competing interests in our markets that could create conflicts of interest;
•We
could experience an impasse on certain decisions where we do not have sole decision-making authority, which could require us to expend additional resources on resolving such impasses or potential disputes;
•Disagreements with our partners could result in litigation or arbitration;
•Our partners might become insolvent, fail to fund their share of required capital contributions or fail to fulfill their obligations as a partner, which may require us to infuse our own capital into the venture on behalf of the partner despite other competing uses for such capital; and
•We may suffer other losses as a result of actions taken by our partners with respect to our venture investments.
In
some instances, our partners may have the right to 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 will be limited
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if we do not have sufficient cash, available borrowing capacity or other capital resources.This would require us to sell our interest in the venture when we would otherwise prefer to retain it.
Additionally, certain ventures require Ventas to assume the role of managing member with increased duties to the partnership. In the event of
certain events or conflicts, our partners may have recourse against Ventas, including monetary penalties, the ability to force a sale or exit the venture, as well as other remedies.
Development, redevelopment and construction risks could affect our profitability.
We invest in various development and redevelopment projects. In deciding whether to make an investment in a project, we make certain assumptions regarding the expected future performance of the property. Our assumptions are subject to risks generally associated with development and redevelopment projects, including, among others, that:
•Tenants may not lease space at the quantity or rental rate levels or on the schedule projected, including due to increased competition in the
market and other market and economic conditions;
•We may not complete the project on schedule or within budgeted amounts;
•We may not be able to recognize rental revenue in some cases although cash rent is being paid and the lease has commenced;
•We may encounter delays in obtaining or we may fail to obtain all necessary zoning, land use, building, occupancy, environmental and other governmental permits and authorizations, or underestimate the costs necessary to develop or redevelop the property to market standards;
•We may be unable to obtain financing for the project on favorable terms or at all, including at the maturity of an applicable construction loan;
•Construction
or other delays may provide tenants or residents the right to terminate preconstruction leases or cause us to incur additional costs, including through rent abatement;
•Volatility in the price of construction materials or labor may increase our project costs;
•In the case of our MOB and R&I developments, hospitals, health systems, or university partners may maintain significant decision-making authority with respect to the development schedule;
•Our builders or development managers may fail to perform or satisfy the expectations of our clients or prospective clients; and
•We may incorrectly forecast risks associated with development in new geographic regions, including new markets where we may
not have sufficient depth of market knowledge.
If any of the risks described above occur, our development and redevelopment projects may not yield anticipated returns, which could adversely affect our business, financial condition and results of operations.
We face potential adverse consequences from the bankruptcy, insolvency or financial deterioration of our tenants, borrowers, managers and other obligors.
We lease our properties to unaffiliated tenants or operate them through independent third-party managers. We are also a direct or indirect lender to various tenants and managers. We have limited control over the success or failure of our tenants’, borrowers’ and managers’ businesses, and, at any time, a tenant, borrower or manager may experience a downturn
in its business that weakens its financial condition. If that happens, the tenant, borrower or manager may fail to make its payments to us when due. Although our lease, loan and management agreements give us the right to exercise certain remedies in the event of default on the obligations owing to us, we may decide not to exercise those remedies if we believe that enforcement of our rights would be more detrimental to our business than seeking alternative approaches. We may also decide not to enforce other contractual protections, such as annual rent escalators, or the properties may not generate sufficient revenue to achieve the specified rent escalation parameters, which would adversely affect our business, financial condition and results of operations. This risk could be exacerbated by new laws and regulations enacted during the COVID-19 pandemic that limit our ability to enforce contractual escalators against tenants affected by the COVID-19 pandemic.
A
downturn in any one of our tenants’, borrowers’ or managers’ businesses could ultimately lead to its bankruptcy if it is unable to timely resolve the underlying causes, which may be largely outside of its control. Bankruptcy and insolvency laws afford certain rights to a party that has filed for bankruptcy or reorganization that may render certain of our rights and remedies unenforceable, or, at the least, delay our ability to pursue such rights and remedies and realize any recoveries in connection therewith. For example, we cannot evict a tenant solely because of its bankruptcy filing. Additionally, a debtor-lessee may reject our lease in a bankruptcy proceeding, and any claim we have for unpaid rent might not be paid in full. We also may be required to fund certain expenses and obligations (e.g., real estate taxes, debt costs and maintenance expenses) to preserve the value of our properties, avoid the imposition of liens on our properties or transition our properties
to a new tenant or manager.
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Bankruptcy or insolvency proceedings may result in increased costs and significant management distraction. If we are unable to transition affected properties efficiently and effectively, such properties could experience prolonged operational disruption, leading to lower occupancy rates and further depressed revenues. Publicity about a tenant’s, borrowers’ or manager’s financial condition and insolvency proceedings may also negatively impact their and our reputations, which could result in decreased customer demand and revenues. Any or all of these risks could adversely affect our business, financial condition and results of operations. These risks would be magnified where we lease multiple properties to a single
third party under a master lease, as a failure or default under a master lease would expose us to these risks across multiple properties.
We own certain properties subject to ground lease, air rights or other restrictive agreements that limit our uses of the properties, restrict our ability to sell or otherwise transfer the properties and expose us to loss of the properties if such agreements are breached by us or terminated.
Our investments in MOBs, R&I buildings and facilities as well as other properties may be made through leasehold interests in the land on which the buildings are located, leases of air rights for the space above the land on which the buildings are located, or other similar restrictive arrangements. Many of these ground lease, air rights and other restrictive agreements impose significant limitations on our
uses of the subject properties, restrict our ability to sell or otherwise transfer our interests in the properties or restrict the leasing of the properties. These restrictions may limit our ability to timely sell or exchange the properties, impair the properties’ value or negatively impact our ability to find suitable tenants for the properties. In addition, we could lose our interests in the subject properties if the ground lease, air rights or other restrictive agreements are breached by us or terminated.
Environmental, Economic and Market Risks
Increased construction and development in the markets in which our properties are located could adversely affect our future occupancy rates, operating margins and profitability.
The oversupply of healthcare real estate could
adversely affect our business. In many jurisdictions, limited barriers to entry could lead to the development of new properties that outpaces demand across our various asset classes. If existing supply and development collectively outpaces demand for those assets in the markets in which our properties are located, those markets may become saturated and we could experience decreased occupancy, reduced operating margins and lower profitability, which could adversely affect our business, financial condition and results of operations.
General economic conditions and other events or occurrences that affect areas in which our properties are geographically concentrated may impact financial results.
We are exposed to general economic conditions, local, regional, national and international economic conditions and other events and occurrences
that affect the markets in which we own properties. Our operating performance is impacted by the economic conditions of the specific markets in which we have concentrations of properties and could be adversely affected if conditions become less favorable in any such markets. For example, a shortage of skilled workers in a particular region, including nurses or other trained personnel, may force our third-party managers to enhance their pay and benefits package to compete effectively for such personnel, but such managers may not be able to offset these added costs by increasing the rates charged to residents, which may result in less revenue to our business.
A substantial portion of our value is derived from properties in California, New York, Texas, Pennsylvania and Illinois, and as a result, we are subject to increased exposure to adverse conditions affecting these regions, including downturns
in the local economies or changes in local real estate conditions, changing demographics, increased construction and competition or decreased demand for our properties, regional climate events and changes in state-specific legislation, which could adversely affect our business, financial condition and results of operations.
To the extent that we or our tenants, borrowers and managers are unable to navigate successfully the trends impacting our or their businesses and the industries in which we or they operate, we may be adversely affected.
Our tenants, borrowers and managers include senior housing operators, hospitals, post-acute facilities and other healthcare systems, medical offices and life sciences and technology companies that are subject to a complex set of trends affecting their businesses and the industries in which they operate. If
we or they are unable to successfully navigate such trends, our business, financial condition and results of operators could be adversely affected.
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There have been, and could be additional, advances or changes in technology, payment models, healthcare delivery models, regulation or consumer behavior or perception that could over time reduce demand for on-site activities provided at our properties. For example, the effects of shelter-in-place and stay-at-home orders, including remote work arrangements for an extended period of time, could broadly impact market demand for real estate and could cause long term structural changes in the marketplace. If our tenants and managers are not able to adapt to long-term changes in demand, their financial
condition could be materially impacted, and our business could suffer. In addition, our tenants, borrowers and managers face an increasingly competitive labor market, which has been compounded by the COVID-19 pandemic. An inability to attract and retain trained personnel could negatively impact the ability of our tenants, borrowers and managers to meet their obligations to us. A shortage of care givers or other trained personnel, union activities, minimum wage laws, or general inflationary pressures on wages may force tenants, borrowers and managers to enhance pay and benefits packages to compete effectively for skilled personnel, or to use more expensive contract personnel, but they may be unable to offset these added costs by increasing the rates charged to residents.
Additionally, controls imposed by
Medicare, Medicaid and commercial third-party payors designed to reduce admissions and lengths of stay, commonly referred to as “utilization reviews,” have affected and are expected to continue to affect certain of our tenants, specifically acute care hospitals and post-acute facilities. Telehealth and increased use of home healthcare may also reduce demand for activities at our properties. The U.S. Congress and certain state legislatures have introduced and passed a number of proposals and legislation designed to make major changes in the healthcare system, including changes that directly or indirectly affect reimbursement. Several of these laws, including the Affordable Care Act, have promoted shifting from traditional fee-for-service reimbursement models to alternative payment models that tie reimbursement to quality and cost of care, such as accountable care organizations and bundled payments. See “Government Regulation—United States Healthcare Regulation,
Licensing and Enforcement” included in Part I, Item 1 of this Annual Report. These and other trends could significantly and adversely affect the profitability of these tenants, which could affect their ability to make rental payments to us or their willingness to renew their leases on terms that are as favorable to us, or at all.
The hospitals on or near the campuses where our MOBs are located and their affiliated health systems could fail to remain competitive or financially viable, which could adversely impact their ability to attract physicians and physician groups to our MOBs and our other properties that serve the healthcare industry.
Our MOBs and other properties that serve the healthcare industry depend on the competitiveness and financial viability of the hospitals on or near the campuses where our properties are located
and their ability to attract physicians and other healthcare-related clients to our properties. The viability of these hospitals, in turn, depends on factors such as the quality and mix of healthcare services provided, competition for patients, physicians and physician groups, demographic trends in the surrounding community, market position and growth potential as well as the ability of the affiliated health systems to provide economies of scale and access to capital. If a hospital on or near the campus where one of our properties is located fails or becomes unable to meet its financial obligations, and if an affiliated health system is unable to support that hospital, that hospital may be unable to compete successfully or could be forced to close or relocate, which could adversely impact its ability to attract physicians and other healthcare-related clients. Because we rely on proximity to and affiliations with hospitals to create leasing demand in our properties,
a hospital’s inability to remain competitive or financially viable, or to attract physicians and physician groups, could adversely affect our properties and our business, financial condition and results of operations.
Our life science, R&I tenants face unique levels of regulation, expense and uncertainty.
Our life science, R&I tenants develop and sell products and services in an industry that is characterized by rapid and significant changes, evolving industry standards and uncertainty over the implementation of new healthcare reform legislation, which may cause them to lose competitive positions and adversely affect their operation. These tenants, particularly those involved in developing and marketing pharmaceutical products, require significant outlays of funds for the research and development, clinical testing, manufacture
and commercialization of their products and technologies, as well as to fund their obligations, including rent payments due to us, and our tenants’ ability to raise capital depends on the viability of their products and technologies, their financial and operating condition and outlook, and the overall financial, banking and economic environment. If private investors, the federal government, universities, public markets or other sources of funding are unavailable to support such development, including as a result of general economic conditions, adverse market conditions or government shutdowns that limit our tenants’ ability to raise capital, such as those resulting from the current COVID-19 pandemic, a tenant may not be able to pay rent on the terms agreed or at all, its business may fail and in certain cases, its lease may automatically terminate without any further obligation to pay us rent.
Additionally,
the research and development, clinical testing, manufacture and marketing of some of our tenants’ products require federal, state and foreign regulatory approvals. The approval process is typically long, expensive and uncertain. Even if our tenants have sufficient funds to seek approvals, one or all of their products may fail to obtain the
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required regulatory approvals on a timely basis or at all. Furthermore, our tenants may only have a small number of products under development. If one product fails to receive the required approvals at any stage of development, it could significantly adversely affect such tenant’s entire business and its ability to pay rent. Our tenants depend on the commercial success of certain products, and they may be unable to manufacture their products
successfully or economically; may be unable to adapt to the rapid technological advances in the industry and to adequately protect their intellectual property under patent, copyright or trade secret laws or may face expiration of patent protection; may be faced with later discovery of safety concerns; may face competition from new products; or may not receive acceptance of their products.
We cannot assure you that any of our life science, R&I tenants will be successful in their businesses. Any tenant that is unable to avoid, or sufficiently mitigate, the risks described above may have difficulty making rental payments or satisfying its other lease obligations to us or may have difficulty maintaining the value of our investment, which could materially adversely affect our business, financial condition and results of operations.
Merger,
acquisition and investment activity in our industries resulting in a change of control of, or a competitor’s investment in, one or more of our tenants, borrowers or managers could adversely affect our business, financial condition and results of operations.
The seniors housing and healthcare industries have experienced and may continue to experience consolidation, including among owners of real estate, tenants and care providers. In connection with any change of control of a tenant, borrower or manager, such tenant’s, borrower’s or manager’s strategy, financial condition, management team or real estate needs may change, any of which could adversely affect our relationship with such party and our revenues and results of operations. In addition, a competitor’s investment in one of our tenants, borrowers or managers could enable our competitor to directly or indirectly influence that tenant’s, borrower’s
or manager’s business and strategy in a manner that impairs our relationship with the tenant, borrower or manager or is otherwise adverse to our interests. Depending on our contractual agreements and the specific facts and circumstances, we may not have the right to consent to a competitor’s investment in, a change of control of, or other transactions impacting a tenant, borrower or manager.
Damage from catastrophic or extreme weather and other natural events and the physical effects of climate change could result in losses to the Company.
Certain of our properties are in areas particularly susceptible to revenue loss, cost increase or damage caused by catastrophic or extreme weather and other natural events, including fires, snow or ice storms, windstorms
or hurricanes, earthquakes, flooding or other severe weather. These adverse weather and natural events could cause substantial damages or losses to our properties which could exceed our or our tenants’, borrowers’ or managers’ property insurance coverage. Operationally, such events could cause a major power outage, leading to a disruption of our systems and operations. In the event of a loss in excess of insured limits, we could lose our capital invested in the affected property, as well as anticipated future revenue from that property. Any such loss could materially and adversely affect our business, financial condition and results of operations. Climate change may also have indirect effects on our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable.
To the extent that significant changes in the climate occur in areas where our properties
are located, we may experience extreme weather and changes in precipitation and temperature, all of which may result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions. Should the impact of climate change be material in nature, including destruction of our properties, or occur for lengthy periods of time, our business, financial condition or results of operations may be adversely affected.
In addition, changes in federal and state legislation and regulation on climate change could result in increased capital expenditures to improve the energy efficiency of our existing properties and could also require us to spend more on our new development properties without a corresponding increase in revenue.
Our Capital Structure Risks
We
may become more leveraged.
As of December 31, 2020, we had approximately $11.9 billion of outstanding indebtedness. The instruments governing our existing indebtedness permit us to incur substantial additional debt, including secured debt, and we may satisfy our capital and liquidity needs through additional borrowings. A high level of indebtedness would require us to dedicate a substantial portion of our cash flow from operations to the payment of debt service, thereby reducing the funds available to
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implement our business strategy and make distributions to stockholders. A high level of indebtedness on an absolute basis or as a ratio to our cash flow
could also have the following consequences:
•Potential limits on our ability to adjust rapidly to changing market conditions and vulnerability in the event of a downturn in general economic conditions or in the real estate or healthcare industries;
•Potential impairment of our ability to obtain additional financing to execute on our business strategy; and
•Potential downgrade in the rating of our debt securities by one or more rating agencies, which could have the effect of, among other things, limiting our access to capital and increasing our cost of borrowing.
In addition, from time to time, we mortgage
certain of our properties to secure payment of indebtedness. If we are unable to meet our mortgage payments, then the encumbered properties could be foreclosed upon or transferred to the mortgagee with a resulting loss of income and asset value.
We are highly dependent on access to the capital markets. Limitations on our ability to access capital could have an adverse effect on us, including our ability to make required payments on our debt obligations, make distributions to our stockholders or make future investments necessary to implement our business strategy.
We cannot assure you that we will be able to raise the capital necessary to meet our debt service obligations, make distributions to our stockholders or make future investments necessary to implement our business strategy, if our cash flow from operations is insufficient to
satisfy these needs, and the failure to do so could adversely affect our business. We cannot assure you that conditions in the capital markets will not deteriorate or that our access to capital and other sources of funding will not become constrained, which could adversely affect the availability and terms of future borrowings, renewals or refinancings and our results of operations and financial condition. If we cannot access capital at an acceptable cost or at all, we may be required to liquidate one or more investments in properties at times that may not permit us to maximize the return on those investments or that could result in adverse tax consequences to us.
As a public company, our access to debt and equity capital depends, in part, on the trading prices of our senior notes and common stock, which, in turn, depend upon market conditions that change from time to time, such as the market’s
perception of our financial condition, our growth potential and our current and expected future earnings and cash distributions. Our failure to meet the market’s expectation regarding future earnings and cash distributions or a significant downgrade in the ratings assigned to our long-term debt could impact our ability to access capital or increase our borrowing costs.
The COVID-19 pandemic has also caused, and is likely to continue to cause, severe economic, market and other disruptions worldwide. We cannot assure you that conditions in the bank lending, capital and other financial markets will not continue to deteriorate as a result of the pandemic, or that our access to capital and other sources of funding will not become constrained, which could adversely affect the availability and terms of future borrowings, renewals or refinancings. The continuance of decreased revenue and NOI as a result
of the COVID-19 pandemic could lead to downgrades of our long-term credit rating. Such future downgrades could increase our borrowing costs, which would make it more difficult or expensive to obtain additional financing or refinance existing obligations and commitments. In addition, the deterioration of global economic conditions as a result of the pandemic has decreased occupancy levels and pricing across our portfolio as senior residents and tenants reduce or defer their spending.
We also rely on the financial institutions that are parties to our revolving credit facilities. If these institutions become capital constrained, tighten their lending standards or become insolvent or if they experience excessive volumes of borrowing requests from other borrowers within a short period of time, they may be unable or unwilling to honor their funding commitments to us, which would adversely affect our
ability to draw on our revolving credit facilities and, over time, could negatively impact our ability to consummate acquisitions, repay indebtedness as it matures, fund capital expenditures or make distributions to our stockholders.
We may be adversely affected by fluctuations in currency exchange rates.
Our ownership of properties in Canada and the United Kingdom currently subjects us to fluctuations in the exchange rates between U.S. dollars and Canadian dollars or the British pound, which may, from time to time, impact our financial condition and results of operations. If we continue to expand our international presence through investments in, or acquisitions or development of, senior housing or healthcare assets outside the United States, Canada or the United Kingdom, we may transact business in other foreign currencies. Although
we may pursue hedging alternatives, including borrowing in local
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currencies, to protect against foreign currency fluctuations, we cannot assure you that such fluctuations will not adversely affect our business, financial condition and results of operations.
We are exposed to increases in interest rates, which could reduce our profitability and adversely impact our ability to refinance existing debt, sell assets or engage in acquisition, investment, development and redevelopment activity, and our decision to hedge against interest rate risk might not be effective.
We receive a significant portion of our revenues by leasing assets under long-term
triple-net leases that generally provide for fixed rental rates subject to annual escalations, while certain of our debt obligations are floating rate obligations with interest and related payments that vary with the movement of LIBOR, Bankers’ Acceptance or other indexes. The generally fixed rate nature of a significant portion of our revenues and the variable rate nature of certain of our debt obligations create interest rate risk. Although our operating assets provide a partial hedge against interest rate fluctuations, if interest rates rise, the costs of our existing floating rate debt and any new debt that we incur would increase. These increased costs could reduce our profitability, impair our ability to meet our debt obligations, or increase the cost of financing our acquisition, investment, development and redevelopment activity. An increase in interest rates also could limit our ability to refinance existing debt upon maturity or cause us to pay higher rates
upon refinancing, as well as decrease the amount that third parties are willing to pay for our assets, thereby limiting our ability to promptly reposition our portfolio in response to changes in economic or other conditions.
We may seek to manage our exposure to interest rate volatility with hedging arrangements that involve additional risks, including the risks that counterparties may fail to honor their obligations under these arrangements, that these arrangements may not be effective in reducing our exposure to interest rate changes, that the amount of income we earn from hedging transactions may be limited by federal tax provisions governing REITs, and that these arrangements may cause us to pay higher interest rates on our debt obligations than otherwise would be the case. Moreover, no amount of hedging activity can fully insulate us from the risks associated with changes in interest rates. Failure
to hedge effectively against interest rate risk, if we choose to engage in such activities, could adversely affect our business, financial condition and results of operations.
Changes in the method pursuant to which the LIBOR rates are determined and potential phasing out of LIBOR may affect our financial results.
LIBOR and certain other interest “benchmarks” may be subject to regulatory guidance and/or reform that could cause interest rates under our current or future debt agreements to perform differently than in the past or cause other unanticipated consequences. The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has announced that it intends to stop encouraging or requiring banks to submit rates for the calculation of LIBOR rates after 2021. While there is no consensus on what rate or rates may become
accepted alternatives to LIBOR, the Alternative Reference Rates Committee, a steering committee comprised of U.S. financial market participants, selected the Secured Overnight Finance Rate (“SOFR”) as an alternative to LIBOR. SOFR is a broad measure of the cost of borrowing cash in the overnight U.S. treasury repo market, and the Federal Reserve Bank of New York started to publish the SOFR in May 2018. At this time, it is impossible to predict whether the SOFR or another reference rate will become an accepted alternative to LIBOR. The discontinuation, reform or replacement of LIBOR or any other benchmark rates may have an unpredictable impact on contractual mechanics in the credit markets or cause disruption to the broader financial markets, and could have an adverse effect on LIBOR-based interest rates on our current or future debt obligations.
Covenants in the instruments governing our and our
subsidiaries’ existing indebtedness limit our operational flexibility, and a covenant breach could materially adversely affect our operations.
The terms of the instruments governing our existing indebtedness require us to comply with certain customary financial and other covenants, such as maintaining debt service coverage, leverage ratios and minimum net worth requirements. Our continued ability to incur additional debt and to conduct business in general is subject to our compliance with these covenants, which limit our operational flexibility. Breaches of these covenants could result in defaults under the applicable debt instruments and could trigger defaults under any of our other indebtedness that is cross-defaulted against such instruments, even if we satisfy our payment obligations. In addition,
covenants contained in the instruments governing our subsidiaries’ outstanding mortgage indebtedness may restrict our ability to obtain cash distributions from such subsidiaries for the purpose of meeting our debt service obligations. Financial and other covenants that limit our operational flexibility, as well as defaults resulting from our breach of any of these covenants, could adversely affect our business, financial condition and results of operations.
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Our Legal, Compliance and Regulatory Risks
Significant
legal or regulatory proceedings could subject us or our tenants or managers to increased operating costs and substantial uninsured liabilities, which could materially adversely affect our or their liquidity, financial condition and results of operations.
From time to time, we or our tenants or managers may be subject to lawsuits, investigations, claims and other legal or regulatory proceedings arising out of our alleged actions or the alleged actions of our tenants and managers. These claims may include, among other things, professional liability and general liability claims, commercial liability claims, unfair business practices claims and employment claims, as well as regulatory proceedings, including proceedings related to our senior living operations, where we are typically the holder of the applicable healthcare license.
In
our operating assets, including those in our senior living operations and office segments, we are generally responsible for all liabilities of such properties, including any lawsuits, investigations, claims and other legal or regulatory proceedings, other than those arising out of certain actions by our managers, such as those caused by gross negligence or willful misconduct. As a result, we have exposure to, among other things, professional and general liability claims, employment law claims and the associated litigation and other costs related to defending and resolving such claims. In our senior living operations in particular, if one of our managers fails to comply with applicable law or regulation, we may be deemed responsible, which could subject us to the imposition of civil, criminal and administrative penalties, including: the loss or suspension of accreditation, licenses or CONs; suspension of or non-payment for new admissions; denial of reimbursement; fines;
suspension, decertification, or exclusion from federal and state healthcare programs; or facility closure.
In certain circumstances, our tenants or managers may be contractually obligated to indemnify, defend and hold us harmless in whole or in part with respect to certain actions, legal or regulatory proceedings. In addition, third parties from whom we acquired certain of our assets and, in some cases, their affiliates may be required by the terms of the related conveyance documents to indemnify, defend and hold us harmless against certain actions, investigations and claims related to the acquired assets and arising prior to our ownership or related to excluded assets and liabilities. In some cases, a portion of the purchase price consideration is held in escrow for a specified period of time as collateral for these indemnification obligations. We cannot assure you that these third parties will
be able to satisfy their defense and indemnification obligations to us or that any purchase price consideration held in escrow will be sufficient to satisfy claims for which we are entitled to indemnification.
An unfavorable resolution of any such lawsuit, investigation, claims or other legal or regulatory proceeding could materially adversely affect our or our tenants’ or managers’ liquidity, financial condition and results of operations, and may not be subject to sufficient insurance coverage. In addition, even with a favorable resolution of any such litigation or proceeding, the effect of litigation and other potential litigation and proceedings may materially increase operating costs incurred by us or our tenants or managers. Negative publicity with respect to any lawsuits, claims or other legal or regulatory proceedings may also negatively impact their or our or the properties’ reputation.
The COVID-19 pandemic may cause our senior housing and healthcare business to face increased exposure to lawsuits or other legal or regulatory proceedings filed at the same time across multiple jurisdictions, such as professional or general liability litigation alleging wrongful death and negligence claims, some of which may result in large damage awards and not be indemnified or subject to sufficient insurance coverage, may require our support as a result of our indemnification agreements or may result in restrictions in the operations of our or our tenants’ or managers’ business.
We and our tenants, borrowers and managers may be adversely affected by regulation and enforcement.
We and our tenants, borrowers and managers are subject
to or impacted by extensive and frequently changing federal, state, local and international laws and regulations. For example, the healthcare industry is subject to laws and regulations that relate to, among other things, licensure and CON, conduct of operations, ownership of facilities, construction of new facilities and addition of equipment, governmental reimbursement programs, such as Medicare and Medicaid, allowable costs, services, prices for services, qualified beneficiaries, appropriateness and classification of care, patient rights, resident health and safety, data privacy and security laws, wage and hour laws, fraud and abuse and financial and other arrangements that may be entered into by healthcare providers. We generally hold the applicable healthcare licenses and enroll in applicable government healthcare programs on behalf of the properties in our senior living operations segment, which subjects us to potential liability under certain of such related
healthcare laws and regulations. See “Government Regulation—United States Healthcare Regulation, Licensing and Enforcement” included in Part I, Item 1 of this Annual Report. In addition, many of our R&I tenants
28
are subject to laws and regulations that govern the research, development, clinical testing, manufacture and marketing of drugs, medical devices and similar products.
The laws and regulations that apply to us and our tenants, borrowers and managers are complex and may change rapidly, and efforts to comply and keep up with them require significant resources. Any changes in scope, interpretation or enforcement of the regulatory framework could require us or our tenants, borrowers or managers
to invest significant resources responding to such changes. If we or our tenants, borrowers or managers fail to comply with the extensive laws, regulations and other requirements applicable to our or their businesses and the operation of our or their properties, we or they could face a number of remedial actions, including forced closure, loss of accreditation, bans on admissions of new patients or residents, imposition of fines, ineligibility to receive reimbursement from governmental and private third-party payor programs or civil or criminal penalties. In any such event, our and our tenants’, borrowers’ and managers’ respective businesses, results of operations (including results of properties) and financial condition could be adversely affected.
Our investments may expose us to unknown liabilities.
We may acquire or invest in
properties or businesses that are subject to liabilities and without any recourse, or with only limited recourse, against the prior owners or other third parties with respect to unknown liabilities. As a result, if a liability were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle or contest it, which could adversely affect our results of operations and cash flow.
We may assume or incur liabilities, including, in some cases, contingent liabilities, and be exposed to actual or potential claims in connection with our acquisitions that adversely affect us, such as:
•Liabilities relating to the clean-up or remediation of environmental conditions;
•Unasserted
claims of vendors or other persons dealing with the sellers;
•Liabilities, claims and litigation, including indemnification obligations, whether incurred in the ordinary course of business, relating to periods prior to or following our acquisition;
•Claims for indemnification by general partners, directors, officers and others indemnified by the sellers; and
•Liabilities for taxes relating to periods prior to our acquisition.
If the liabilities we assume in connection with acquisitions are greater than expected, or if we discover obligations relating to the acquired properties or businesses of which we were
not aware at the time of acquisition, our business and results of operations could be materially adversely affected.
We could incur substantial liabilities and costs if any of our properties are found to be contaminated with hazardous substances or we become involved in any environmental disputes.
Under federal and state environmental laws and regulations, a current or former owner of real property may be liable for costs related to the investigation, removal and remediation of hazardous or toxic substances or petroleum that are released from or are present at or under, or that are disposed of in connection with such property. Owners of real property may also face other environmental liabilities, including government fines and penalties imposed by regulatory authorities and damages for injuries to persons, property or natural resources. Environmental
laws and regulations often impose liability without regard to whether the owner was aware of, or was responsible for, the presence, release or disposal of hazardous or toxic substances or petroleum. In certain circumstances, environmental liability may result from the activities of a current or former operator of the property. Although we generally have indemnification rights against the current tenants of our properties for contamination caused by them, such indemnification may not adequately cover all environmental costs. See “Government Regulation—Environmental Regulation” included in Part I, Item 1 of this Annual Report.
The occurrence of cyber incidents could disrupt our operations, result in the loss of confidential information or damage our business relationships and reputation.
Cybersecurity incidents and cyber-attacks
have been occurring globally at a more frequent and severe level and will likely continue to increase in frequency in the future. As our reliance on technology has increased, our business is subject to greater risk from cyber incidents, including attempts to gain unauthorized access to our or our managers’ or venture partners’ systems to disrupt operations, corrupt data or steal confidential information, and other electronic security breaches. While we,
29
our managers and our business partners have implemented measures to help mitigate these threats, such measures cannot guarantee that we or they will be successful in preventing a cyber incident. Our information technology networks and related systems are essential to our ability to perform day-to-day operations of our business
and the occurrence of a cyber incident could result in a data center outage, disrupting our systems and operations, or the operations of our managers or business partners, compromise the confidential information of our employees, partners or the residents in our senior housing communities, and damage our business relationships and reputation. Although we have implemented various measures to manage risks relating to these types of events, such systems could prove to be inadequate and, if compromised, could become inoperable for extended periods of time, cease to function properly or fail to adequately secure private information. We do not control the cybersecurity plans and systems put in place by third-party providers, and such third-party providers may have limited indemnification obligations to us, which could cause us to be negatively impacted as a result. Breaches such as those involving covertly introduced malware, impersonation of authorized users and industrial
or other espionage may not be identified even with sophisticated prevention and detection systems, potentially resulting in further harm and preventing them from being addressed appropriately. The failure of these systems or of disaster recovery plans for any reason could cause significant interruptions in our operations and result in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information, material nonpublic information and intellectual property and trade secrets and other sensitive information in our possession. We could be required to make a significant investment to remedy the effects of any such failures, including but not limited to harm to our reputation, legal claims that we and our partners may be subjected to, regulatory or enforcement action arising out of applicable privacy and other laws, adverse publicity, or other events that may affect our business and financial performance.
The
amount and scope of insurance coverage provided by our policies and policies maintained by our tenants, managers or other counterparties may not adequately insure against losses.
We maintain or require in our lease, management and other agreements that our tenants, managers or other counterparties 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 each industry. Although we frequently review our insurance programs and requirements, we cannot assure you that we or our tenants, managers or other counterparties, will be able to procure or maintain adequate levels of insurance. As a result of the COVID-19 pandemic, the cost of insurance is expected to increase, and such insurance may not cover certain claims related to COVID-19. We also cannot assure you
that we or our tenants, managers or other counterparties will maintain the insurance coverage required under our lease, management and other agreements, that we will continue to require the same levels of insurance under our lease, management and other agreements, that such insurance will be available at a reasonable cost in the future or at all or that the policies maintained will fully cover all losses on our properties upon the occurrence of a catastrophic event. Furthermore, we cannot make any guaranty as to the future financial viability of the insurers that underwrite our policies and the policies maintained by our tenants, managers and other counterparties. If we sustain losses in excess of our insurance coverage, we may be required to pay the difference and we could lose our investment in, or experience reduced profits and cash flows from our operations.
In certain cases, we and our tenants
and managers may be subject to professional liability, general liability, employment, premise, privacy, environmental, unfair business practice and contracts claims brought by plaintiffs’ attorneys seeking significant damages and attorneys’ fees, some of which may not be insured or indemnified and some of which may result in significant damage awards. Due to the historically high frequency and severity of professional liability claims against senior housing and healthcare providers, the availability of professional liability insurance has decreased and the premiums on such insurance coverage remain costly. In addition, insurance for other claims such as wage and hour, certain environmental, privacy and unfair business practices may no longer be available, and the premiums on such insurance coverage, to the extent it is available, remain costly. As a result, insurance protection
against such claims may not be sufficient to cover all claims against us or our tenants or managers and may not be available at a reasonable cost or otherwise on terms that provide adequate coverage. If we or our tenants and managers are unable to maintain adequate insurance coverage or are required to pay damages, we or they may be exposed to substantial liabilities and the adverse impact on our or our tenants’ and managers’ respective financial condition, results of operations and cash flows could be material, and could adversely affect our tenants’ and managers’ ability to meet their obligations to us.
Additionally, we and those of our tenants and managers who self-insure or who transfer risk of losses to a wholly owned captive insurance company could incur large funded and unfunded property and liability expenses, which could materially adversely affect theirs or our liquidity, financial condition
and results of operations.
Failure to maintain effective internal controls could harm our business, results of operations and financial condition.
30
Pursuant to the Sarbanes-Oxley Act of 2002, we are required to provide a report by management on internal control over financial reporting, including management’s assessment of the effectiveness of such control. Because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud, effective internal controls over financial reporting may not prevent or detect misstatement and can provide only reasonable assurance with respect to the preparation
and fair presentation of financial statements. If we fail to maintain the adequacy of our internal controls over financial reporting and our operating internal controls, including any failure to implement required new or improved controls as a result of changes to our business or otherwise, or if we experience difficulties in their implementation, our business, financial condition and results of operations could be adversely affected and we could fail to meet our reporting obligations.
Our REIT Status Risks
Loss of our status as a REIT would have significant adverse consequences for us and the value of our common stock.
If we lose our status as a REIT (currently or with respect to any tax years for which the statute of limitations has not expired), we will face serious
tax consequences that will substantially reduce the funds available to satisfy our obligations, to implement our business strategy and to make distributions to our stockholders for each of the years involved because:
•We would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to regular U.S. federal corporate income tax;
•We could be subject to increased state and local taxes; and
•Unless we are entitled to relief under statutory provisions, we could not elect to be subject to tax as a REIT for four taxable years following the year during which we were disqualified.
In
addition, in such event we would no longer be required to pay dividends to maintain REIT status, which could adversely affect the value of our common stock.
Qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, as amended (the “Code”) for which there are only limited judicial and administrative interpretations. The determination of factual matters and circumstances not entirely within our control, as well as new legislation, regulations, administrative interpretations or court decisions, may adversely affect our investors or our ability to remain qualified as a REIT for tax purposes. In order to maintain our qualification as a REIT, we must satisfy a number of requirements, generally including requirements regarding the ownership of our stock, requirements regarding the composition of our assets, a requirement
that at least 95% of our gross income in any year must be derived from qualifying sources, and we must make distributions to our stockholders aggregating annually at least 90% of our net taxable income, excluding capital gains. Although we believe that we currently qualify as a REIT, we cannot assure you that we will continue to qualify for all future periods.
The 90% 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. Such distributions reduce the funds we have available to finance our investment, acquisition, development and redevelopment activity and may limit our ability to engage in transactions
that are otherwise in the best interests of our stockholders.
From time to time, we may not have sufficient cash or other liquid assets to satisfy the REIT distribution requirements. For example, 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, or non-deductible expenses such as principal amortization or repayments or capital expenditures in excess of non-cash deductions may prevent us from having sufficient cash or liquid assets to satisfy the 90% distribution requirement.
In the event that timing differences occur or we decide to retain cash or to distribute such greater amount as may be necessary to avoid income and excise taxation, we
may seek to borrow funds, issue additional equity securities, pay taxable stock dividends, distribute other property or securities or engage in a transaction intended to enable us to meet the REIT distribution requirements. Any of these actions may require us to raise additional capital to meet our obligations; however, see “—Our Capital Structure Risks—We are highly dependent on access to the capital markets. Limitations on our ability to access capital could have an adverse effect on us, including our ability to make required payments on our debt obligations, make
31
distributions to our stockholders or make future investments necessary to implement our business strategy.” The terms of the instruments governing our existing
indebtedness restrict our ability to engage in certain of these transactions.
To preserve our qualification as a REIT, our certificate of incorporation contains ownership limits with respect to our capital stock that may delay, defer or prevent a change of control of our company.
To assist us in preserving our qualification as a REIT, our certificate of incorporation provides that if a person acquires beneficial ownership of more than 9.0% of our outstanding common stock or more than 9.9% of our outstanding preferred stock, the shares that are beneficially owned in excess of
the applicable limit are considered “excess shares” and are automatically deemed transferred to a trust for the benefit of a charitable institution or other qualifying organization selected by our Board of Directors. The trust is entitled to all dividends with respect to the excess shares and the trustee may exercise all voting power over the excess shares. In addition, we have the right to purchase the excess shares for a price equal to the lesser of (i) the price per share in the transaction that created the excess shares or (ii) the market price on the day we purchase the shares. If we do not purchase the excess shares, the trustee of the trust is required to transfer the shares at the direction of our Board of Directors. These ownership limits could delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or might otherwise be in the best interests of our stockholders.
Our
use of TRSs is limited under the Code.
Under the Code, no more than 20% of the value of the gross assets of a REIT may be represented by securities of one or more TRSs. This limitation may affect our ability to increase the size of our TRSs’ operations and assets, and there can be no assurance that we will be able to comply with the applicable limitation, or that such compliance will not adversely affect our business. Also, our TRSs may not, among other things, operate or manage certain healthcare facilities, which may cause us to forgo investments we might otherwise make. Finally, we may be subject to a 100% excise tax on the income derived from certain transactions with our TRSs that are not on an arm's-length basis. We believe our arrangements with our TRSs are on arm's-length terms and intend to continue to operate in a manner that allows us to avoid incurring the 100% excise tax described
above, but there can be no assurance that we will be able to avoid application of that tax.
Complying with REIT requirements may cause us to forego otherwise attractive opportunities (including investing in our tenants) or liquidate otherwise attractive investments.
To qualify as a REIT for federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our common stock. In order to meet these tests, we may be required to forego investments we might otherwise make (including investments in our tenants) or to liquidate otherwise attractive investments. This limited investment scope could also lead to financial risks or limit our flexibility during times of operating
instability.
The lease of qualified healthcare properties to a TRS is subject to special requirements.
We lease certain healthcare properties to TRSs, which lessees contract with third-party managers to manage the healthcare operations at these properties. The rents we receive from a TRS pursuant to this arrangement are treated as qualifying rents from real property if the healthcare property is a qualified healthcare property (as defined in the Code), the rents are paid pursuant to an arm’s-length lease with a TRS and the manager qualifies as an eligible independent contractor (as defined in the Code). We have structured the applicable leases and related arrangements in a manner intended to meet these requirements, but there can be no assurance
that these conditions will be satisfied. If any of these conditions is not satisfied with respect to a particular lease, then the rents we receive with respect to such lease will not be qualifying rents, which could have an adverse effect on our ability to comply with REIT income tests and thus on our ability to qualify as a REIT unless we are able to avail ourselves of certain relief provisions.
The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for federal income tax purposes.
A REIT’s net income from prohibited transactions is subject to a 100% penalty tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of
business, unless certain safe harbor exceptions apply. Although we do not intend to hold any properties that would be characterized as held for sale to customers in the ordinary course of our business, such characterization is a factual determination and no guarantee can be given that the IRS would agree with our characterization of our properties or that we will always be able to make use of the available safe harbors.
32
Legislative or other actions affecting REITs could have a negative effect on our stockholders or us.
The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS
and the U.S. Treasury Department. Changes to the tax laws, with or without retroactive application, could adversely affect our investors or us. New legislation, U.S. Treasury Department regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT, the federal income tax consequences of such qualification, or the federal income tax consequences of an investment in us. Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT.
The Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) significantly changed the U.S. federal income taxation of U.S. businesses and their owners, including REITs and their stockholders. The 2017
Tax Act is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementing regulations by the U.S. Treasury Department and IRS, any of which could lessen or increase the impact of the 2017 Tax Act. In addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation, which often use federal taxable income as a starting point for computing state and local tax liabilities.
ITEM 1B. Unresolved Staff Comments
None.
ITEM
2. Properties
Senior Housing and Healthcare Properties
As of December 31, 2020, we owned or managed through unconsolidated real estate entities approximately 1,200 properties (including properties classified as held for sale), consisting of senior housing communities, medical office buildings (“MOBs”), life science, research and innovation centers, inpatient rehabilitation facilities (“IRFs”) and long-term acute care facilities (“LTACs”), and health systems. We had 13 properties under development, three of which are owned by unconsolidated real estate entities. We believe that maintaining a balanced portfolio of high-quality assets diversified by investment type, geographic location, asset type, tenant/operator, revenue source and operating
model makes us less susceptible to single-state regulatory or reimbursement changes, regional climate events and local economic downturns and diminishes the risk that any single factor or event could materially harm our business.
As of December 31, 2020, we had $2.2 billion aggregate principal amount of mortgage loan and secured revolving construction credit facility indebtedness outstanding, secured by 80 of our properties. Excluding the portion of such indebtedness attributable to our joint venture partners, our share of mortgage loan and secured revolving construction credit facility indebtedness outstanding was $2.0 billion.
The following table provides additional information regarding the geographic diversification of our consolidated portfolio of properties as of December
31, 2020 (excluding properties owned through investments in unconsolidated real estate entities and properties classified as held for sale).
33
Senior
Housing Communities
SNFs
MOBs
Research and Innovation Centers
IRFs and LTACs
Health Systems
Geographic Location
# of Properties
Units
# of Properties
Licensed Beds
#
of Properties
Square Feet(1)
# of Properties
Square Feet(1)
# of Properties
Licensed Beds
# of Properties
Licensed Beds
Alabama
5
324
—
—
4
469
—
—
—
—
—
—
Arkansas
4
302
—
—
1
5
—
—
—
—
—
—
Arizona
26
2,256
—
—
15
962
1
227
1
60
—
—
California
84
9,494
—
—
30
2,491
3
784
6
503
—
—
Colorado
15
1,257
1
82
13
896
—
—
1
68
—
—
Connecticut
13
1,587
—
—
—
—
2
1,032
—
—
—
—
District
of Columbia
—
—
—
—
2
102
—
—
—
—
—
—
Florida
46
4,561
—
—
11
223
1
252
6
508
—
—
Georgia
19
1,695
—
—
14
1,187
—
—
—
—
—
—
Idaho
1
70
—
—
—
—
—
—
—
—
—
—
Illinois
25
2,955
1
82
35
1,424
1
129
4
430
—
—
Indiana
5
402
—
—
23
1,603
—
—
1
59
—
—
Kansas
8
515
—
—
—
—
—
—
—
—
—
—
Kentucky
9
805
—
—
3
120
—
—
1
384
—
—
Louisiana
1
58
—
—
5
362
—
—
—
—
—
—
Massachusetts
15
1,838
—
—
—
—
1
78
—
—
—
—
Maryland
5
352
—
—
2
83
5
467
—
—
—
—
Maine
6
452
—
—
—
—
—
—
—
—
—
—
Michigan
21
1,345
—
—
13
589
—
—
—
—
—
—
Minnesota
14
856
—
—
4
241
—
—
—
—
—
—
Missouri
2
154
—
—
21
1,168
5
818
1
60
—
—
Mississippi
—
—
—
—
1
51
—
—
—
—
—
—
Montana
3
222
—
—
—
—
—
—
—
—
—
—
North
Carolina
22
1,666
—
—
17
831
10
1,712
1
124
—
—
North
Dakota
2
115
—
—
1
114
—
—
—
—
—
—
Nebraska
1
133
—
—
—
—
—
—
—
—
—
—
New
Hampshire
1
126
—
—
—
—
—
—
—
—
—
—
New
Jersey
14
1,301
1
153
3
37
—
—
—
—
—
—
New
Mexico
4
451
—
—
—
—
—
—
2
123
4
544
Nevada
3
326
—
—
5
416
—
—
1
52
—
—
New
York
41
4,729
—
—
4
244
—
—
—
—
—
—
Ohio
24
1,664
—
—
28
1,226
—
—
1
50
—
—
Oklahoma
7
439
—
—
1
80
—
—
—
—
4
954
Oregon
23
2,109
—
—
1
105
—
—
—
—
—
—
Pennsylvania
31
2,326
4
620
9
713
5
953
1
52
—
—
Rhode
Island
4
399
—
—
—
—
3
580
—
—
—
—
South
Carolina
6
494
—
—
20
1,093
—
—
—
—
—
—
South
Dakota
4
182
—
—
—
—
—
—
—
—
—
—
Tennessee
17
1,247
—
—
7
278
—
—
1
49
—
—
Texas
45
3,588
—
—
16
837
—
—
9
617
2
445
Utah
3
321
—
—
—
—
—
—
—
—
—
—
Virginia
8
655
—
—
5
231
3
453
—
—
—
—
Washington
19
1,909
5
469
10
579
—
—
—
—
—
—
Wisconsin
45
2,218
—
—
21
1,105
—
—
—
—
—
—
West
Virginia
2
123
4
326
—
—
—
—
—
—
—
—
Wyoming
2
169
—
—
—
—
—
—
—
—
—
—
Total
U.S.
655
58,190
16
1,732
345
19,860
40
7,487
37
3,139
10
1,943
Canada
74
13,943
—
—
—
—
—
—
—
—
—
—
United
Kingdom
12
776
—
—
—
—
—
—
—
—
3
121
Total
741
72,909
16
1,732
345
19,860
40
7,487
37
3,139
13
2,064
(1)Square
Feet are in thousands. Totals may not foot due to rounding.
34
Corporate Offices
Our headquarters are located in Chicago, Illinois and we have an additional corporate office in Louisville, Kentucky. We lease all of our corporate offices.
ITEM 3. Legal Proceedings
The information contained in “Note 14 – Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual
Report is incorporated by reference into this Item 3. Except as set forth therein, we are not a party to, nor is any of our property the subject of, any material pending legal proceedings.
ITEM 4. Mine Safety Disclosures
Not applicable.
35
PART II
ITEM
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock, par value $0.25 per share, is listed and traded on the New York Stock Exchange (the “NYSE”) under the symbol “VTR.” As of February 18, 2021, there were 374.7 million shares of our common stock outstanding, held by approximately 3,802 stockholders of record.
Dividends and Distributions
We pay regular quarterly dividends to holders of our common stock to comply with the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), governing REITs. In
order to maintain our qualification as a REIT, we are required under the Code, among other things, to distribute annually at least 90% of our REIT taxable income, determined without regard to any net capital gain. In addition, we will be subject to income tax at the regular corporate rate to the extent we distribute less than 100% of our REIT taxable income, including any net capital gains. We expect to distribute at least 100% of our taxable net income, after the use of any net operating loss carryforwards, to our stockholders for 2021.
In general, our Board of Directors makes decisions regarding the nature, frequency and amount of our dividends on a quarterly basis. Because the Board considers many factors when making these decisions, including our present and future liquidity needs, our current and projected financial condition and results of operations and the performance and credit quality
of our tenants, borrowers and managers, we cannot assure you that we will maintain the practice of paying regular quarterly dividends to continue to qualify as a REIT. Please see “Cautionary Statements” and the risk factors included in Part I, Item 1A of this Annual Report for a description of other factors that may affect our distribution policy.
Director and Employee Stock Sales
Certain of our directors, executive officers and other employees have adopted or, from time to time in the future, may adopt non-discretionary, written trading plans that comply with Rule 10b5-1 under the Exchange Act, or otherwise monetize, gift or transfer their equity-based compensation. These transactions typically are conducted for estate, tax and financial planning purposes and are subject to compliance with our Amended and Restated Securities
Trading Policy and Procedures (“Securities Trading Policy”), the minimum stock ownership requirements contained in our Guidelines on Governance and all applicable laws and regulations.
Our Securities Trading Policy expressly prohibits our directors, executive officers and employees from buying or selling derivatives with respect to our securities or other financial instruments that are designed to hedge or offset a decrease in the market value of our securities and from engaging in short sales with respect to our securities. In addition, our Securities Trading Policy prohibits our directors and executive officers from holding our securities in margin accounts or pledging our securities to secure loans without the prior approval of our Audit and Compliance Committee. Each of our directors and executive officers has advised us that he or she is in compliance with the Securities Trading Policy
and has not pledged any of our equity securities to secure margin or other loans.
Stock Repurchases
The table below summarizes repurchases of our common stock made during the quarter ended December 31, 2020:
Number
of Shares
Repurchased (1)
Average Price Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs
October 1 through October 31
158
$
42.19
—
—
November 1
through November 30
138
46.52
—
—
December 1 through December 31
226
48.79
—
—
Total
522
$
46.19
—
—
(1)Repurchases
represent shares withheld to pay taxes on the vesting of restricted stock granted to employees under our 2006 Incentive Plan or 2012
36
Incentive Plan or restricted stock units granted to employees under the Nationwide Health Properties, Inc. (“NHP”) 2005 Performance Incentive Plan and assumed by us in connection with our acquisition of NHP. The value of the shares withheld is the closing price of our common stock on the date the vesting or exercise occurred (or, if not a trading day, the immediately preceding trading day) or the fair market value of our common stock at the time of the exercise, as the case may be.
Stock Performance Graph
The
following performance graph compares the cumulative total return (including dividends) to the holders of our common stock from December 31, 2015 through December 31, 2020, with the cumulative total returns of the NYSE Composite Index, the FTSE Nareit Composite REIT Index (the “Composite REIT Index”) and the S&P 500 Index over the same period. The comparison assumes $100 was invested on December 31, 2015 in our common stock and in each of the foregoing indexes and assumes reinvestment of dividends, as applicable. We have included the NYSE Composite Index in the performance graph because our common stock is listed on the NYSE, and we have included the S&P 500 Index because we are a member of the S&P 500. We have included the Composite REIT Index because we believe that it is most representative of the
industries in which we compete, or otherwise provides a fair basis for comparison with us, and is therefore particularly relevant to an assessment of our performance. The figures in the table below are rounded to the nearest dollar.
12/31/2015
12/31/2016
12/31/2017
12/31/2018
12/31/2019
12/31/2020
Ventas
$
100
$
116
$
117
$
121
$
125
$
113
NYSE
Composite Index
$
100
$
112
$
133
$
122
$
153
$
164
Composite REIT Index
$
100
$
109
$
120
$
115
$
147
$
138
S&P 500
Index
$
100
$
112
$
136
$
130
$
171
$
203
37
ITEM
6. Selected Financial Data
The selected financial data has been derived from our audited Consolidated Financial Statements included in Part II, Item 8 of this Annual Report and previous Annual Reports. You should read the following selected financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 of this Annual Report and our Consolidated Financial Statements and the notes thereto included in Part II, Item 8 of this Annual Report, as acquisitions, dispositions, changes in accounting policies and other items may impact the comparability of the financial data.
Net cash provided by (used in) investing activities
154,295
(1,585,299)
324,496
(937,107)
(1,214,280)
Net
cash (used in) provided by financing activities
(1,300,021)
160,674
(1,761,937)
(671,327)
96,838
FFO attributable to common stockholders(1)
1,269,255
1,436,049
1,308,149
1,512,885
1,440,544
Normalized
FFO attributable to common stockholders (1)
1,249,972
1,423,047
1,462,055
1,491,241
1,438,643
Balance Sheet Data
Real
estate property, gross
$
28,427,700
$
28,826,816
$
26,476,938
$
26,260,553
$
25,380,524
Cash and cash equivalents
413,327
106,363
72,277
81,355
286,707
Total
assets
23,929,404
24,692,208
22,584,555
23,954,541
23,166,600
Senior notes payable and other debt
11,895,412
12,158,773
10,733,699
11,276,062
11,127,326
(1)We
consider Funds From Operations attributable to common stockholders (“FFO”) and normalized FFO attributable to common stockholders to be appropriate supplemental measures of operating performance of an equity REIT. In particular, we believe that normalized FFO is useful because it allows investors, analysts and our management to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by non-recurring items and other non-operational events such as transactions and litigation. In some cases, we provide information about identified non-cash components of FFO and normalized FFO because it allows investors, analysts and our management to assess the impact of those items on our financial results.
38
FFO
and normalized FFO presented in this Annual Report, or otherwise disclosed by us, may not be comparable to FFO and normalized FFO presented by other real estate companies due to the fact that not all real estate companies use the same definitions. FFO and normalized FFO should not be considered as alternatives to net income attributable to common stockholders (determined in accordance with U.S. generally accepted accounting principles (“GAAP”)) as indicators of our financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of our liquidity, nor are FFO and normalized FFO necessarily indicative of sufficient cash flow to fund all of our needs.
We use the National Association of Real Estate Investment Trusts (“Nareit”) definition of FFO. Nareit defines FFO as net income attributable to common stockholders
(computed in accordance with GAAP), excluding gains or losses from sales of real estate property, including gains or losses on remeasurement of equity method investments, and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. We define normalized FFO as FFO excluding the following income and expense items (which may be recurring in nature): (a) merger-related costs and expenses, including amortization of intangibles, transition and integration expenses, and deal costs and expenses, including expenses and recoveries relating to acquisition lawsuits; (b) the impact of any expenses related to asset impairment and valuation allowances, the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole
payments, penalties or premiums incurred as a result of early retirement or payment of our debt; (c) the non-cash effect of income tax benefits or expenses, the non-cash impact of changes to our executive equity compensation plan, derivative transactions that have non-cash mark-to-market impacts on our Consolidated Statements of Income and non-cash charges related to leases; (d) the financial impact of contingent consideration, severance-related costs and charitable donations made to the Ventas Charitable Foundation; (e) gains and losses for non-operational foreign currency hedge agreements and changes in the fair value of financial instruments; (f) gains and losses on non-real estate dispositions and other unusual items related to unconsolidated entities; (g) expenses related to the reaudit and re-review in 2014 of our historical financial statements and related matters; (h) net expenses or recoveries related to natural disasters; and (i) other incremental items set
forth in the normalized FFO reconciliation included herein.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” included in Part II, Item 7 of this Annual Report for a reconciliation of FFO and normalized FFO to our GAAP earnings.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion provides information that management believes is relevant to an understanding and assessment of the consolidated financial condition and results of operations of Ventas, Inc. You
should read this discussion in conjunction with our Consolidated Financial Statements and the notes thereto included in Part II, Item 8 of this Annual Report and our Risk Factors included in Part I, Item 1A of this Annual Report.
Business Summary and Overview of 2020
Ventas, Inc., an S&P 500 company, is a real estate investment trust (“REIT”) operating at the intersection of healthcare and real estate, with a highly diversified portfolio of senior housing; life science, research and innovation; and healthcare properties; which we generally refer to as “healthcare real estate,” located throughout the United States, Canada and the United Kingdom. As of December 31, 2020, we owned or managed through unconsolidated real estate entities approximately 1,200 properties (including
properties classified as held for sale), consisting of senior housing communities, medical office buildings (“MOBs”), life science, research and innovation centers, inpatient rehabilitation facilities (“IRFs”) and long-term acute care facilities (“LTACs”), and health systems. Our company was originally founded in 1983 and is headquartered in Chicago, Illinois with an additional office in Louisville, Kentucky.
We primarily invest in a diversified portfolio of healthcare real estate assets through wholly owned subsidiaries and other co-investment entities. We operate through three reportable business segments: triple-net leased properties, senior living operations, which we also refer to
as SHOP, and office operations. See our Consolidated Financial Statements and the related notes, including “Note 2 – Accounting Policies” and “Note 19 – Segment Information,” included in Part II, Item 8 of this Annual Report. Our senior housing properties are either operated under triple-net leases in our triple-net leased properties segment or through independent third-party managers in our senior living operations segment.
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We aim to enhance shareholder value by delivering consistent, superior total returns by (1) generating reliable and growing cash flows, (2) maintaining a balanced, diversified portfolio of high-quality assets and (3) preserving our financial strength, flexibility and liquidity.
Our
ability to access capital in a timely and cost-effective manner is critical to the success of our business strategy because it affects our ability to satisfy existing obligations, including the repayment of maturing indebtedness, and to make future investments. Factors such as general market conditions, interest rates, credit ratings on our securities, expectations of our potential future earnings and cash distributions, and the trading price of our common stock impact our access to and cost of external capital. For that reason, we generally attempt to match the long-term duration of our investments in real property with long-term financing through the issuance of shares of our common stock or the incurrence of long-term fixed rate debt.
COVID-19 Update
During fiscal 2020 and continuing into fiscal 2021, the COVID-19 pandemic has
negatively affected our businesses in a number of ways and is expected to continue to do so.
Operating Results.Our senior living operations segment, which we also refer to as SHOP, was significantly impacted by the COVID-19 pandemic. Occupancy decreased over the course of 2020, while operating expenses increased as our senior living communities responded to the pandemic, resulting in a significant decline in NOI compared to 2019. Our NNN senior housing tenants’ performance was similarly affected by COVID-19. During the course of 2020, we modified certain NNN senior housing leases to reset rent and provided other modest financial accommodations to certain NNN senior housing tenants who needed it as a result of COVID-19. We also wrote-off previously accrued straight-line rental income related to NNN senior housing tenants due to COVID-19.
However,
we benefited from our ongoing strategy of diversification, with our office and NNN healthcare businesses demonstrating resilience in the face of the pandemic. The Company’s NNN healthcare tenants benefited from significant government financial support that was deployed early and has partially offset the direct financial impact of the pandemic. Our office operations segment, which primarily serves MOB and research and innovation tenants that were less impacted by the pandemic, delivered steady performance throughout the year.
Provider Relief Grants.In the third and fourth quarter of 2020, we applied for grants under Phase 2 and Phase 3 of the Provider Relief Fund administered by the U.S. Department of Health & Human Services (“HHS”) on behalf of the
assisted living communities in our senior living operations segment to partially mitigate losses attributable to COVID-19. These grants are intended to reimburse eligible providers for expenses incurred to prevent, prepare for and respond to COVID-19 and lost revenues attributable to COVID-19. Recipients are not required to repay distributions from the Provider Relief Fund, provided that they attest to and comply with certain terms and conditions. See “Government Regulation—Governmental Response to the COVID-19 Pandemic” in Part I, Item 1 of this Annual Report.
During the fourth quarter of 2020, we received $34.3 million and $0.8 million in grants in connection with our Phase 2 and Phase 3 applications, respectively, and recognized these grants within property-level operating expenses in our Consolidated Statements of Income. Subsequent to December
31, 2020, we received $13.6 million in grants in connection with our Phase 3 applications, which we expect to recognize in 2021. While we have received all amounts under our Phase 2 applications and have begun to receive amounts under our Phase 3 applications, there can be no assurance that our remaining applications will be approved or that additional funds will ultimately be received. Any grants that are ultimately received and retained by us are not expected to fully offset the losses incurred in our senior living operating portfolio that are attributable to COVID-19. Further, although we continue to monitor and evaluate the terms and conditions associated with the Provider Relief Fund distributions, we cannot assure you that we will be in compliance with all requirements related to the payments received under the Provider Relief Fund.
Capital Conservation Actions. In
response to the COVID-19 pandemic, we took precautionary steps to increase liquidity and preserve financial flexibility in light of the resulting uncertainty.See “—Liquidity and Capital Resources; Recent Capital Conservation Actions.” As of February 16, 2021, we had approximately $3.0 billion in liquidity, including availability under our revolving credit facility and cash and cash equivalents on hand, with no borrowings outstanding under our commercial paper program and negligible near-term debt maturing.
Continuing Impact. The trajectory and future impact of the COVID-19 pandemic remains highly uncertain. The extent of the pandemic’s continuing and ultimate effect on our operational and financial performance will depend on a variety of factors, including the speed
at which available vaccines can be successfully deployed; the rate of acceptance of available vaccines, particularly among the residents and staff in our senior housing communities; the impact of new variants of the virus
40
and the effectiveness of available vaccines against those variants; ongoing clinical experience, which may differ considerably across regions and fluctuate over time; and on other future developments, including the ultimate duration, spread and intensity of the outbreak, the availability of testing, the extent to which governments impose, roll-back or re-impose preventative restrictions and the availability of ongoing government financial support to our business, tenants and operators. Due to these uncertainties, we are not able at this time to estimate the ultimate
impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows.
See “Note 1 - Description of Business - COVID-19 Update” for a description of charges recognized during the year ended December 31, 2020 as a result of the COVID-19 pandemic.
Select 2020 and Early 2021 Highlights
COVID-19 Response
•Since the start of the COVID-19 pandemic, in addition to actions described under “COVID-19 Update” above, we have consistently prioritized the health and safety of employees, residents, tenants and managers, serving as an important resource for information and best practices
and leading our industry in testing, including through an early arrangement with Mayo Clinic Laboratories.
•We executed on a multi-pronged capital conservation strategy to mitigate the impact of COVID-19, including reducing our planned capital expenditures, reducing capital commitments, establishing a quarterly dividend of $0.45 per share beginning in the second quarter and adjusting the Company’s corporate cost structure.
Ventas Investment Management
•We established a third party capital platform, Ventas Investment Management (“VIM”), bringing together our third party capital ventures under one umbrella, including
the Ventas Life Science and Healthcare Real Estate Fund, L.P. (the “Ventas Fund”) and our research and innovation (“R&I”) development joint venture with GIC (the “R&I Development JV”) described below. As of December 31, 2020, VIM had over $3 billion in assets under management.
•In March 2020, we formed the Ventas Fund, a perpetual life investment vehicle focused on investments in research and innovation centers, medical office buildings and senior housing communities in North America. We are the sponsor and general partner of the Ventas Fund. To seed the Ventas Fund, we contributed six stabilized research and innovation and medical office properties and received cash consideration of $620 million and a 21% interest in the Ventas Fund. In October 2020, the Ventas Fund acquired a portfolio of three
life science properties in the South San Francisco life science cluster for $1.0 billion.
•In October 2020, we formed the R&I Development JV with GIC. To seed the R&I Development JV, we contributed our controlling interest in four in-progress university-based research and innovation development projects whose total expected cost approximates $930 million.
Investments and Dispositions
•During the year ended December 31, 2020, we acquired 10 properties for an aggregate consideration of $249.5 million.
•During the year ended December
31, 2020, we recognized $262.2 million of gains on sale of real estate including 2020, including $225.1 million for the sale of six properties to the Ventas Fund, $13.7 million for the sale of four in-progress development projects to the R&I Development JV and and $23.4 million for the sale of 31 other properties.
•During the year ended December 31, 2020, we received aggregate proceeds of $106.1 million for the full repayment of the principal balances of various loans receivable with a weighted average interest rate of 8.3% that were due to mature between 2020 and 2025, resulting in total gains of $1.4 million.
41
Liquidity
and Capital
•As of December 31, 2020, we had approximately $3.3 billion in liquidity, including availability under our revolving credit facility and cash and cash equivalents on hand, with no borrowings outstanding under our commercial paper program and negligible near-term debt maturing.
•In April 2020, we raised $500.0 million through the issuance of 4.75% senior notes due 2030.
•In October 2020,we reduced near-term debt maturities by retiring $236.3 million aggregate principal amount then outstanding of our 3.25% senior notes due 2022 at 104.14% of par value, plus accrued and unpaid interest to the payment
date.
•During 2020, we sold an aggregate of 1.5 million shares of common stock under our “at-the-market” equity offering program for average gross proceeds of $44.88 per share.
•In January 2021, we entered into an amended and restated unsecured credit facility (the “New Credit Facility”) comprised of a $2.75 billion unsecured revolving credit facility initially priced at LIBOR plus 82.5 basis points.
•In February 2021, in order to reduce near-term maturities, we issued a make whole redemption for the entirety of the $400 million outstanding aggregate principal amount of 3.10% senior notes due January 2023. The redemption is expected to settle in March 2021, principally
using cash on hand.
Portfolio
•In July 2020, we entered into a revised master lease agreement (the “Brookdale Lease”) and certain other agreements (together with the Brookdale Lease, the “Agreements”) with Brookdale Senior Living.
•In April 2020, we completed a transaction with affiliates of Holiday Retirement (with its affiliates, collectively, “Holiday”), including entry into a new, terminable management agreement for our 26 independent living assets that were previously subject to a triple-net lease (the “Holiday Lease”) with Holiday.
Environmental, Social and Governance
•During
2020, we continued our leadership in ESG, receiving numerous accolades, including the 2020 Nareit Health Care “Leader in the Light” award for a fourth consecutive year, the 2020 Bloomberg Gender-Equality Index for the second consecutive year, the 2020 Dow Jones Sustainability World Index for the second consecutive year and maintaining our industry-leading position in GRESB.
Critical Accounting Policies and Estimates
Our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards
Board (“FASB”). GAAP requires us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We base these estimates on our experience and assumptions we believe to be reasonable under the circumstances. However, if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, we may have applied a different accounting treatment, resulting in a different presentation of our financial statements. We periodically reevaluate our estimates and assumptions, and in the event they prove to be different from actual results, we make adjustments in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. We believe
that the critical accounting policies described below, among others, affect our more significant estimates and judgments used in the preparation of our financial statements. For more information regarding our critical accounting policies, see “Note 2 – Accounting Policies” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
42
Principles of Consolidation
The Consolidated Financial Statements included in Part II, Item 8 of this Annual Report include our accounts and the accounts of our wholly owned subsidiaries and the joint venture entities
over which we exercise control. All intercompany transactions and balances have been eliminated in consolidation, and our net earnings are reduced by the portion of net earnings attributable to noncontrolling interests.
GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or
(iii) the right to receive the expected residual returns of the entity; and (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. We consolidate our investment in a VIE when we determine that we are its primary beneficiary. We may change our original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affects the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary.
We identify the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance;
and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. We perform this analysis on an ongoing basis.
Accounting for Real Estate Acquisitions
When we acquire real estate, we first make reasonable judgments about whether the transaction involves an asset or a business. Our real estate acquisitions are generally accounted for as asset acquisitions as substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. Regardless of whether an acquisition is considered a business combination or an asset acquisition, we record the cost of the businesses or assets acquired as tangible and intangible assets and liabilities based upon their estimated fair
values as of the acquisition date.
We estimate the fair value of buildings acquired on an as-if-vacant basis or replacement cost basis and depreciate the building value over the estimated remaining life of the building, generally not to exceed 35 years. We determine the fair value of other fixed assets, such as site improvements and furniture, fixtures and equipment, based upon the replacement cost and depreciate such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. We determine the value of land either by considering the sales prices of similar properties in recent transactions or based on internal analyses of recently acquired and existing comparable properties within our portfolio. We generally determine the value of construction in progress based upon the replacement cost. However, for certain acquired properties that are part of
a ground-up development, we determine fair value by using the same valuation approach as for all other properties and deducting the estimated cost to complete the development. During the remaining construction period, we capitalize project costs until the development has reached substantial completion. Construction in progress, including capitalized interest, is not depreciated until the development has reached substantial completion.
Intangibles primarily include the value of in-place leases and acquired lease contracts. We include all lease-related intangible assets and liabilities within acquired lease intangibles and accounts payable and other liabilities, respectively, on our Consolidated Balance Sheets.
The fair value of
acquired lease-related intangibles, if any, reflects: (i) the estimated value of any above or below market leases, determined by discounting the difference between the estimated market rent and in-place lease rent; and (ii) the estimated value of in-place leases related to the cost to obtain tenants, including leasing commissions, and an estimated value of the absorption period to reflect the value of the rent and recovery costs foregone during a reasonable lease-up period as if the acquired space was vacant. We amortize any acquired lease-related intangibles to revenue or amortization expense over the remaining life of the associated lease plus any assumed bargain renewal periods. If a lease is terminated prior to its stated expiration or not renewed upon expiration, we recognize all unamortized amounts of lease-related intangibles associated with that lease in operations over the shortened lease term.
We
estimate the fair value of purchase option intangible assets and liabilities, if any, by discounting the difference between the applicable property’s acquisition date fair value and an estimate of its future option price. We do not amortize the resulting intangible asset or liability over the term of the lease, but rather adjust the recognized value of the asset or liability
43
upon sale.
In connection with an acquisition, we may assume rights and obligations under certain lease agreements pursuant to which we become the lessee of a given property. We generally assume the lease classification previously determined by the prior lessee absent a modification in the assumed lease agreement. We assess assumed
operating leases, including ground leases, to determine whether the lease terms are favorable or unfavorable to us given current market conditions on the acquisition date. To the extent the lease terms are favorable or unfavorable to us relative to market conditions on the acquisition date, we recognize an intangible asset or liability at fair value and amortize that asset or liability to interest or rental expense in our Consolidated Statements of Income over the applicable lease term. Where we are the lessee, we record the acquisition date values of leases, including any above or below market value, within operating lease assets and operating lease liabilities on our Consolidated Balance Sheets.
We estimate the fair value of noncontrolling interests assumed consistent with the manner in which we value all of the underlying assets and liabilities.
We
calculate the fair value of long-term assumed debt by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which we approximate based on the rate at which we would expect to incur a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument.
Impairment of Long-Lived and Intangible Assets
We periodically evaluate our long-lived assets, primarily consisting of investments in real estate, for impairment indicators. If indicators of impairment are present, we evaluate the carrying value of the related real estate investments in relation to the future undiscounted cash flows of the underlying operations. In performing this evaluation, we consider
market conditions and our current intentions with respect to holding or disposing of the asset. We adjust the net book value of real estate properties and other long-lived assets to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. We recognize an impairment loss at the time we make any such determination.
Estimates of fair value used in our evaluation of investments in real estate are based upon discounted future cash flow projections, if necessary, or other acceptable valuation techniques that are based, in turn, upon all available evidence including level three inputs, such as revenue and expense growth rates, estimates of future cash flows, capitalization rates, discount rates, general economic conditions and trends, or other available market data such as replacement cost or comparable transactions. Our ability to
accurately predict future operating results and cash flows and to estimate and determine fair values impacts the timing and recognition of impairments. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our financial results.
Revenue Recognition
We recognize rental revenues under our leases on a straight-line basis over the applicable lease term when collectability of substantially all rents is probable. We assess the probability of collecting substantially all rents under our leases based on several factors, including, among other things, payment history, the financial strength of the tenant and any guarantors, the historical operations and operating trends of the property, the historical payment pattern of the tenant, the type of property, the
value of the underlying collateral, if any, expected future performance of the property and current economic conditions. If our evaluation of these factors indicates it is not probable that we will be able to collect substantially all rents under the lease, we record a charge to rental income. If we change our conclusions regarding the probability of collecting rent payments required by a lease, we may recognize adjustments to rental income in the period we make such change in our conclusions.
Federal Income Tax
We have elected to be treated as a REIT under the applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), for every year beginning with the year ended December 31, 1999. Accordingly, we generally are not subject to federal income
tax on net income that we distribute to our stockholders, provided that we continue to qualify as a REIT. However, with respect to certain of our subsidiaries that have elected to be treated as taxable REIT subsidiaries (“TRS” or “TRS entities”), we record income tax expense or benefit, as those entities are subject to federal income tax similar to regular corporations. Certain foreign subsidiaries are subject to foreign income tax, although they did not elect to be treated as TRSs.
44
We
account for deferred income taxes using the asset and liability method and recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our financial statements or tax returns. Under this method, we determine deferred tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Any increase or decrease in the deferred tax liability that results from a change in circumstances, and that causes us to change 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 us to change our judgment about the realizability of the related deferred tax asset, is included in the tax provision when such changes occur.
We recognize the tax benefit from an uncertain tax position claimed or expected to be claimed on a tax return only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. We recognize interest and penalties, if applicable, related to uncertain tax positions as part of income tax benefit or expense.
Recently
Issued or Adopted Accounting Standards
We adopted ASC Topic 842, Leases (“ASC 842”) on January 1, 2019, which introduced a lessee model that brings most leases on the balance sheet and, among other changes, eliminates the requirement in current GAAP for an entity to use bright-line tests in determining lease classification.
ASC 842 allows for several practical expedients which permit the following: no reassessment of lease classification or initial direct costs; use of the standard’s effective date as the date of initial application; and no separation of non-lease components from the related lease components and, instead, to account for those components as a single lease component if certain criteria are met. We elected
these practical expedients using the effective date as our date of initial application. Therefore, financial information and disclosures under ASC 842 are not provided for periods prior to January 1, 2019.
Upon adoption, we recognized both right of use assets and lease liabilities for leases in which we lease land, real property or other equipment. We now also report revenues and expenses within our triple-net leased properties reportable business segment for real estate taxes and insurance that are escrowed and obligations of the tenants in accordance with their respective leases with us. This reporting had no impact on our net income. Resident leases within our senior living operations reportable business segment and office leases also contain service elements. We elected the practical expedient to account for our resident and office leases
as a single lease component. Also, we now expense certain leasing costs, other than leasing commissions, as they are incurred. Prior to the adoption of ASC 842, GAAP provided for the deferral and amortization of such costs over the applicable lease term. We are continuing to amortize any unamortized deferred lease costs as of December 31, 2018 over their respective lease terms.
As of January 1, 2019 we recognized operating lease assets of $361.7 million on our Consolidated Balance Sheets which includes the present value of minimum lease payments as well as certain existing above and/or below market lease intangible values associated with such leases. Also upon adoption, we recognized operating lease liabilities of $216.9 million on our Consolidated Balance Sheets. The present value of minimum
lease payments was calculated on each lease using a discount rate that approximates our incremental borrowing rate primarily adjusted for the length of the individual lease terms. As of the January 1, 2019 adoption date, we utilized discount rates ranging from 6.15% to 7.60% for our ground leases.
Upon adoption, we recognized a cumulative effect adjustment to retained earnings of $0.6 million primarily relating to certain costs associated with unexecuted leases that were deferred as of December 31, 2018.
45
Results
of Operations
As of December 31, 2020, we operated through three reportable business segments: triple-net leased properties, senior living operations and office operations. In our triple-net leased properties segment, we invest in and own senior housing and healthcare properties throughout the United States and the United Kingdom and lease those properties to healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses. In our senior living operations segment, we invest in senior housing communities throughout the United States and Canada and engage independent operators, such as Atria and Sunrise, to manage those communities. In our office operations segment, we primarily acquire, own, develop, lease and manage MOBs and research and innovation centers
throughout the United States. Information provided for “all other” includes income from loans and investments and other miscellaneous income and various corporate-level expenses not directly attributable to any of our three reportable business segments. Assets included in “all other” consist primarily of corporate assets, including cash, restricted cash, loans receivable and investments, and miscellaneous accounts receivable.
Our chief operating decision makers evaluate performance of the combined properties in each reportable business segment and determine how to allocate resources to those segments, in significant part, based on segment net operating income (“NOI”) and related measures. In addition to the information presented below, see “Note 19 – Segment Information” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual
Report for further information regarding our business segments and a discussion of our definition of segment NOI. See “Non-GAAP Financial Measures” included elsewhere in this Annual Report for additional disclosure and reconciliations of net income attributable to common stockholders, as computed in accordance with GAAP, to NOI.
The table below shows our results of operations for the years ended December 31, 2020 and 2019 and the effect
of changes in those results from period to period on our net income attributable to common stockholders.
For the Years Ended December 31,
(Decrease) Increase to Net Income
2020
2019
$
%
(Dollars
in thousands)
Segment NOI:
Triple-net leased properties
$
673,105
$
754,337
$
(81,232)
(10.8
%)
Senior
living operations
538,489
630,135
(91,646)
(14.5)
Office operations
549,375
574,157
(24,782)
(4.3)
All
other
87,021
92,610
(5,589)
(6.0)
Total segment NOI
1,847,990
2,051,239
(203,249)
(9.9)
Interest
and other income
7,609
10,984
(3,375)
(30.7)
Interest expense
(469,541)
(451,662)
(17,879)
(4.0)
Depreciation
and amortization
(1,109,763)
(1,045,620)
(64,143)
(6.1)
General, administrative and professional fees
(130,158)
(158,726)
28,568
18.0
Loss
on extinguishment of debt, net
(10,791)
(41,900)
31,109
74.2
Merger-related expenses and deal costs
(29,812)
(15,235)
(14,577)
(95.7)
Allowance
on loans receivable and investments
(24,238)
—
(24,238)
nm
Other
(707)
10,339
(11,046)
nm
Income before unconsolidated
entities, real estate dispositions, income taxes, discontinued operations and noncontrolling interests
80,589
359,419
(278,830)
(77.6)
Income (loss) from unconsolidated entities
1,844
(2,454)
4,298
nm
Gain
on real estate dispositions
262,218
26,022
236,196
nm
Income tax benefit
96,534
56,310
40,224
71.4
Income
from continuing operations
441,185
439,297
1,888
0.4
Discontinued operations
—
—
—
nm
Net income
441,185
439,297
1,888
0.4
Net
income attributable to noncontrolling interests
2,036
6,281
4,245
67.6
Net income attributable to common stockholders
$
439,149
$
433,016
6,133
1.4
nm—not meaningful
Segment NOI—Triple-Net Leased Properties
The following table summarizes results of operations in our triple-net leased properties reportable business segment, including assets sold or classified as held for sale as of December 31, 2020, but excluding assets whose operations were classified as discontinued operations:
For
the Years Ended December 31,
(Decrease) Increase to Segment NOI
2020
2019
$
%
(Dollars in thousands)
Segment NOI—Triple-Net Leased Properties:
Rental
income
$
695,265
$
780,898
$
(85,633)
(11.0
%)
Less: Property-level operating expenses
(22,160)
(26,561)
4,401
16.6
Segment
NOI
$
673,105
$
754,337
(81,232)
(10.8)
nm—not meaningful
47
In our triple-net leased properties reportable business segment, our revenues generally consist of fixed rental amounts (subject to contractual escalations) received from our tenants in accordance
with the applicable lease terms. We report revenues and property-level operating expenses within our triple-net leased properties reportable business segment for real estate tax and insurance expenses that are paid from escrows collected from our tenants.
The Triple-net leased properties segment NOI decrease in 2020 over the prior year is attributable primarily to the transition of 26 independent living assets at the start of the second quarter 2020 operated by Holiday from our triple-net portfolio to our senior housing operating portfolio, lower rental income from the Brookdale lease modification at the start of the third quarter of 2020, and the COVID-19 related write-off of previously accrued straight-line rental income during 2020 of $67.6 million (non-Holiday assets), partially offset by the $50.2 million impact of terminating the Holiday Lease. We will continue to try to collect rent
on a contractual basis for the tenants where straight-line rent has been written off, but we have determined that collectability is not probable due to COVID-19.
Occupancy rates may affect the profitability of our tenants’ operations. The following table sets forth average continuing occupancy rates related to the triple-net leased properties we owned at December 31, 2020 and measured over the trailing 12 months ended September 30, 2020 (which is the most recent information available to us from our tenants) and average continuing occupancy rates related to the triple-net leased properties we owned at December 31, 2019 and measured over the 12 months ended September 30, 2019. The table excludes non-stabilized
properties, properties owned through investments in unconsolidated real estate entities, certain properties for which we do not receive occupancy information and properties acquired or properties that transitioned operators for which we do not have a full four quarters of occupancy results.
Declines
in occupancy are primarily the result of COVID-19 impacts to senior housing and SNF operations.
The following table compares results of operations for our 359 same-store triple-net leased properties. See “Non-GAAP Financial Measures—NOI” included elsewhere in this Annual Report on Form 10-K for additional disclosure regarding same-store NOI for each of our reportable business segments.
The decrease in our same-store triple-net leased properties rental income in 2020 over the prior year is attributable primarily to the COVID-19 related write-off of previously accrued straight-line rental income of $67.6 million during 2020 and lower rental income from the Brookdale lease modification at the start of the third quarter of 2020, partially
offset by rent increases due to contractual escalations pursuant to the terms of our leases. We will continue to try to collect rent on a contractual basis for the tenants where straight-line rent has been written off, but we have determined that collectability is not probable due to COVID-19.
48
Segment NOI—Senior Living Operations
The following table summarizes results of operations in our senior living operations reportable business segment, including assets sold or classified as held for sale as of December 31, 2020.
For
the Years Ended December 31,
Increase (Decrease) to Segment NOI
2020
2019
$
%
(Dollars in thousands)
Segment NOI—Senior Living Operations:
Resident
fees and services
$
2,197,160
$
2,151,533
$
45,627
2.1
%
Less: Property-level operating expenses
(1,658,671)
(1,521,398)
(137,273)
(9.0)
Segment
NOI
$
538,489
$
630,135
(91,646)
(14.5)
Number
of Properties at December 31,
Average Unit Occupancy for the Years Ended December 31,
Average Monthly Revenue Per Occupied Room for the Years Ended December 31,
2020
2019
2020
2019
2020
2019
Total
communities
432
401
81.7
%
86.6
%
$
4,766
$
5,451
Resident fees and services include all amounts earned from residents at our senior housing communities, such as rental fees
related to resident leases, extended healthcare fees and other ancillary service income. Property-level operating expenses related to our senior living operations segment include labor, food, utilities, marketing, management and other costs of operating the properties.
The decrease in our senior living operations segment NOI in 2020 over the prior year is primarily attributable to lower occupancy resulting from the COVID-19 pandemic. In addition, NOI has been negatively impacted by increased operating costs as a result of the COVID-19 pandemic, which is partially offset by the receipt of $35.1 million in grants during the fourth quarter 2020 from HHS under the Provider Relief Fund. We also had more properties in this segment because of the transition of 26 independent living assets at the start of the second quarter 2020 operated by Holiday from our triple-net portfolio to our senior housing
operating portfolio and the third quarter 2019 acquisition of 34 Canadian senior housing communities via an equity partnership with Le Groupe Maurice, which contributed to NOI.
The following table compares results of operations for our 335 same-store senior living operating communities.
For
the Years Ended December 31,
(Decrease) Increase to Segment NOI
2020
2019
$
%
(Dollars in thousands)
Same-Store Segment NOI—Senior Living Operations:
Resident
fees and services
$
1,796,135
$
1,967,402
$
(171,267)
(8.7
%)
Less: Property-level operating expenses
(1,385,316)
(1,376,587)
(8,729)
(0.6)
Segment
NOI
$
410,819
$
590,815
(179,996)
(30.5)
nm—not meaningful
Number
of Properties at December 31,
Average Unit Occupancy for the Years Ended December 31,
Average Monthly Revenue Per Occupied Room for the Years Ended December 31,
2020
2019
2020
2019
2020
2019
Same-store
communities
335
335
79.6
%
86.9
%
$
5,765
$
5,790
49
The
decrease in our same-store senior living operations segment NOI is primarily attributable to lower occupancy resulting from the COVID-19 pandemic. In addition, NOI has been negatively impacted by increased operating costs as a result of the COVID-19 pandemic, which is partially offset by the receipt of $31.9 million in grants from HHS under the Provider Relief Fund.
Segment NOI—Office Operations
The following table summarizes results of operations in our office operations reportable business segment, including assets sold or classified as held for sale as of December 31, 2020.
For
the Years Ended December 31,
(Decrease) Increase to Segment NOI
2020
2019
$
%
(Dollars in thousands)
Segment NOI—Office Operations:
Rental
income
$
799,627
$
828,978
$
(29,351)
(3.5
%)
Office building services revenue
8,675
7,747
928
12.0
Total
revenues
808,302
836,725
(28,423)
(3.4)
Less:
Property-level operating expenses
(256,612)
(260,249)
3,637
1.4
Office
building services costs
(2,315)
(2,319)
4
0.2
Segment NOI
$
549,375
$
574,157
(24,782)
(4.3)
Number
of Properties at December 31,
Occupancy at December 31,
Annualized Average Rent Per Occupied Square Foot for the Years Ended December 31,
2020
2019
2020
2019
2020
2019
Total office
buildings
374
382
89.7
%
90.3
%
$
34
$
34
The decrease in our office operations segment NOI in 2020 over the prior year is attributable to assets sold to the Ventas Fund in
the first quarter of 2020, lease termination fees received in 2019, and COVID-19 impacts including the write-off of previously accrued straight-line rental income during 2020 and reduced parking revenues. These reduction in NOI were partially offset by active leasing at recently developed and redeveloped properties, improved tenant retention, contractual rent escalators, acquisitions and business interruption insurance proceeds.
The following table compares results of operations for our 355 same-store office buildings.
For
the Years Ended December 31,
Increase (Decrease) to Segment NOI
2020
2019
$
%
(Dollars in thousands)
Same-Store Segment NOI—Office Operations:
Rental
income
$
743,563
$
733,482
$
10,081
1.4
%
Less: Property-level operating expenses
(235,789)
(231,946)
(3,843)
(1.7)
Segment
NOI
$
507,774
$
501,536
6,238
1.2
Number
of Properties at December 31,
Occupancy at December 31,
Annualized Average Rent Per Occupied Square Foot for the Years Ended December 31,
2020
2019
2020
2019
2020
2019
Same-store
office buildings
355
355
91.3
%
92.2
%
$
34
$
33
The increase in our same-store office operations segment NOI in 2020 over the prior year is attributable primarily
to successful leasing, enhanced tenant retention, continued strong collections through the COVID-19 pandemic and contractual rent escalations.
50
All Other
Information provided for all other segment NOI includes income from loans and investments and other miscellaneous income not directly attributable to any of our three reportable business segments. The $5.6 million decrease in all other segment NOI in 2020 over the prior year is primarily due to reduced interest income from our loans receivable investments from lower LIBOR-based interest rates, repayments of loans outstanding net of new issuances, partially offset by increased management fee revenues from
investments in unconsolidated real estate entities. See “Note 6 – Loans Receivable and Investments” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
Interest and Other Income
The $3.4 million decrease in interest and other income in 2020 over the prior year is primarily due to 2019 income from the exercise of warrants related to our research and innovation properties, partially offset by a 2020 reduction of a liability related to an acquisition and interest income on short-term investments.
Interest Expense
The $17.9 million increase in total interest expense in 2020 over the prior year is primarily
attributable to an increase of $53.0 million due to higher debt balances, partially offset by a decrease of $35.5 million due to a lower effective interest rate. Our weighted average effective interest rate was 3.5% for 2020, compared to 3.8% for 2019. Capitalized interest for 2020 and 2019 was $9.6 million and $9.0 million, respectively.
Depreciation and Amortization
Depreciation and amortization expense increased during 2020 compared to 2019, primarily due to an increase in real estate impairments during 2020 and asset acquisitions, including the 2019 acquisition of senior housing communities operated by LGM. This is partially offset by the impact of dispositions during 2020. See “Note 1 – Description of Business - COVID-19 Update” for information regarding 2020 real estate impairment charges.
General,
Administrative and Professional Fees
The $28.6 million decrease in general, administrative and professional fees in 2020 over the prior year is primarily a result of the capital conservation actions taken during 2020, including the June 2020 elimination of approximately 25% of corporate positions and a reduction in executives’ salaries for the second half of 2020. See “2020 Capital Conservation Actions” for information regarding these measures.
Loss on Extinguishment of Debt, Net
The loss on extinguishment of debt, net in 2020 is due primarily to the notice of redemption of $236.3 million of our 3.25% senior notes due 2022. The loss on extinguishment of debt, net in 2019 was due primarily to the redemption and
repayment of $600.0 million aggregate principal amounts then outstanding of our 4.25% senior notes due 2022. See “—Liquidity and Capital Resources”.
Merger-Related Expenses and Deal Costs
The $14.6 million increase in merger-related expenses and deal costs in 2020 over the prior year is due primarily to costs incurred as a result of the Brookdale transaction and 2020 expenses related to severance and operator transitions.
Allowance on Loans Receivable and Investments
The allowance on loans receivable and investments in 2020 is due to credit losses on certain of our non-mortgage loans receivable and government-sponsored pooled loan investments, less
recoveries received during the year. See “Note 1 – Description of Business - COVID-19 Update” for more information regarding these allowances.
51
Other
The $11.0 million change in other from income in 2019 to an expense in 2020 is primarily due to insurance recoveries received in 2019 and increased corporate-level insurance costs in 2020, partially offset by the change in fair value of stock warrants received in connection with the Brookdale transaction.
Income (Loss) from Unconsolidated Entities
The
$4.3 million increase in income (loss) from unconsolidated entities for 2020 over 2019 is primarily due to our share of financial results from our unconsolidated entities in 2020, offset by an impairment of our investment in an unconsolidated operating entity in 2020. See “Note 1 – Description of Business - COVID-19 Update” for information regarding 2020 impairment charges.
Gain on Real Estate Dispositions
The $236.2 million increase in gain on real estate dispositions for 2020 over 2019 is due primarily to our contribution of six properties to the Ventas Fund in 2020.
Income Tax Benefit
The $40.2 million increase in income
tax benefit related to continuing operations for 2020 over 2019 is primarily due to a $152.9 million deferred tax benefit related to the internal restructuring of certain U.S. taxable REIT subsidiaries completed within the first quarter of 2020, partially offset by changes in the valuation allowance against deferred tax assets of certain of our TRS entities. The restructuring benefit resulted from the transfer of assets subject to certain deferred tax liabilities from taxable REIT subsidiaries to the entities other than the TRS entities in this tax-free transaction.
Our Annual Report for the year ended December 31, 2019, filed with the SEC on February 24, 2020, contains information regarding our results of operations for the years ended December 31, 2019 and 2018 and the effect of changes in those results from period to period on our net income attributable to common stockholders.
Non-GAAP Financial Measures
We consider certain non-GAAP financial measures to be useful supplemental measures of our operating performance. A
non-GAAP financial measure is a measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are not so excluded from or included in the most directly comparable measure calculated and presented in accordance with GAAP. Described below are the non-GAAP financial measures used by management to evaluate our operating performance and that we consider most useful to investors, together with reconciliations of these measures to the most directly comparable GAAP measures.
The non-GAAP financial measures we present in this Annual Report may not be comparable to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. You should not consider these measures as alternatives to net income attributable to common stockholders (determined in accordance with GAAP) as indicators
of our financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of our liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. In order to facilitate a clear understanding of our consolidated historical operating results, you should examine these measures in conjunction with net income attributable to common stockholders as presented in our Consolidated Financial Statements and other financial data included elsewhere in this Annual Report.
52
Funds From Operations and Normalized Funds From Operations Attributable to Common Stockholders
Historical cost accounting
for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. However, since real estate values historically have risen or fallen with market conditions, many industry investors deem presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For that reason, we consider Funds From Operations attributable to common stockholders (“FFO”) and normalized FFO to be appropriate supplemental measures of operating performance of an equity REIT. In particular, we believe that normalized FFO is useful because it allows investors, analysts and our management to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by non-recurring items and other non-operational events such as transactions and litigation. In some cases,
we provide information about identified non-cash components of FFO and normalized FFO because it allows investors, analysts and our management to assess the impact of those items on our financial results.
We use the National Association of Real Estate Investment Trusts (“Nareit”) definition of FFO. Nareit defines FFO as net income attributable to common stockholders (computed in accordance with GAAP), excluding gains or losses from sales of real estate property, including gains or losses on remeasurement of equity method investments, and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and entities. Adjustments for unconsolidated partnerships and entities will be calculated to reflect FFO on the same basis. We define normalized FFO as FFO excluding the following income and expense items
(which may be recurring in nature): (a) merger-related costs and expenses, including amortization of intangibles, transition and integration expenses, and deal costs and expenses, including expenses and recoveries relating to acquisition lawsuits; (b) the impact of any expenses related to asset impairment and valuation allowances, the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of our debt; (c) the non-cash effect of income tax benefits or expenses, the non-cash impact of changes to our executive equity compensation plan, derivative transactions that have non-cash mark to market impacts on our Consolidated Statements of Income and non-cash charges related to leases; (d) the financial impact of contingent consideration, severance-related costs and charitable donations made to the Ventas Charitable Foundation; (e) gains and losses
for non-operational foreign currency hedge agreements and changes in the fair value of financial instruments; (f) gains and losses on non-real estate dispositions and other unusual items related to unconsolidated entities; (g) expenses related to the reaudit and re-review in 2014 of our historical financial statements and related matters; (h) net expenses or recoveries related to natural disasters; and (i) any other incremental items set forth in the normalized FFO reconciliation included herein.
The following table summarizes our FFO and normalized FFO for each of the five years ended December 31, 2020. The decrease in normalized FFO for the year ended December 31, 2020 over the prior year is due to the impact of COVID-19 on our senior housing business and increases in interest expense from
incremental borrowings arising as a consequence of the impact of COVID-19, partially offset by the positive impact of our third quarter 2019 acquisition of an interest in 34 Canadian senior housing communities via an equity partnership with Le Groupe Maurice.
Real estate depreciation related to noncontrolling interests
(16,767)
(9,762)
(6,926)
(7,565)
(7,785)
Real
estate depreciation related to unconsolidated entities
4,986
187
1,977
4,231
5,754
Gain on real estate dispositions related to unconsolidated entities
—
(1,263)
(875)
(1,057)
(439)
Gain
on re-measurement of equity interest upon acquisition, net
—
—
—
(3,027)
—
Impairment on equity method investment
—
—
35,708
—
—
(Loss)
gain on real estate dispositions related to noncontrolling interests
(9)
343
1,508
18
—
Gain on real estate dispositions
(262,218)
(26,022)
(46,247)
(717,273)
(98,203)
Discontinued
operations:
Loss on real estate dispositions
—
—
—
—
1
FFO
attributable to common stockholders
1,269,255
1,436,049
1,308,149
1,512,885
1,440,544
Adjustments:
Change
in fair value of financial instruments
(21,928)
(78)
(18)
(41)
62
Non-cash income tax benefit
(98,114)
(58,918)
(18,427)
(22,387)
(34,227)
Effect
of the 2017 Tax Act
—
—
(24,618)
(36,539)
—
Loss on extinguishment of debt, net
10,791
41,900
63,073
839
2,779
Gain
on non-real estate dispositions related to unconsolidated entities
(597)
(18)
(2)
(39)
(557)
Merger-related expenses, deal costs and re-audit costs
34,690
18,208
38,145
14,823
28,290
Amortization
of other intangibles
472
484
759
1,458
1,752
Other items related to unconsolidated entities
(614)
3,291
5,035
3,188
—
Non-cash
impact of changes to equity plan
(452)
7,812
4,830
5,453
—
Non-cash charges related to lease terminations
—
—
21,299
—
—
Natural
disaster expenses (recoveries), net
1,247
(25,683)
63,830
11,601
—
Impact of Holiday lease termination
(50,184)
—
—
—
—
Write-off
of straight-line rental income, net of noncontrolling interests
70,863
—
—
—
—
Allowance on loan investments and impairment of unconsolidated entities, net of noncontrolling interests
34,543
—
—
—
—
Normalized
FFO attributable to common stockholders
$
1,249,972
$
1,423,047
$
1,462,055
$
1,491,241
$
1,438,643
54
Adjusted EBITDA
We
consider Adjusted EBITDA an important supplemental measure because it provides another manner in which to evaluate our operating performance and serves as another indicator of our credit strength and our ability to service our debt obligations. We define Adjusted EBITDA as consolidated earnings before interest, taxes, depreciation and amortization (including non-cash stock-based compensation expense, asset impairment and valuation allowances), excluding gains or losses on extinguishment of debt, our partners’ share of EBITDA of consolidated entities, merger-related expenses and deal costs, expenses related to the reaudit and re-review in 2014 of our historical financial statements, net gains or losses on real estate activity, gains or losses on remeasurement of equity interest upon acquisition, changes in the fair value of financial instruments, unrealized foreign currency gains or losses, net expenses or recoveries related to natural disasters and non-cash charges
related to leases, and including Ventas’ share of EBITDA from unconsolidated entities and adjustments for other immaterial or identified items. The following table sets forth a reconciliation of net income attributable to common stockholders to Adjusted EBITDA:
Taxes (including amounts in general, administrative and professional fees)
(91,389)
(52,677)
(37,230)
Depreciation
and amortization
1,109,763
1,045,620
919,639
Non-cash stock-based compensation expense
21,487
33,923
29,963
Merger-related expenses, deal costs and re-audit costs
29,811
15,246
33,608
Net
income attributable to noncontrolling interests, adjusted for partners’ share of consolidated entity EBITDA
(24,381)
(16,396)
(10,420)
Loss from unconsolidated entities, adjusted for Ventas share of EBITDA from unconsolidated entities
59,631
32,462
86,278
Gain on real estate dispositions
(262,218)
(26,022)
(46,247)
Unrealized
foreign currency (gains) losses
(439)
(1,061)
138
Changes in fair value of financial instruments
(21,928)
(104)
(54)
Non-cash
charges related to lease terminations
—
—
21,299
Natural disaster expenses (recoveries), net
1,203
(25,981)
54,684
Write-off of straight-line rental income from Holiday lease termination
49,611
—
—
Write-off
of straight-line rental income, net of noncontrolling interests
70,863
—
—
Allowance on loan investments and impairment of unconsolidated entities, net of noncontrolling interests
23,879
—
—
—
Adjusted EBITDA
$
1,885,374
$
1,931,588
$
1,961,876
NOI
We
also consider NOI an important supplemental measure because it allows investors, analysts and our management to assess our unlevered property-level operating results and to compare our operating results with those of other real estate companies and between periods on a consistent basis. We define NOI as total revenues, less interest and other income,
55
property-level operating expenses and office building services costs. Cash receipts may differ due to straight-line recognition of certain rental income and the application of other GAAP policies.
The following table sets forth a reconciliation of net income attributable to common stockholders to NOI:
Net income attributable to noncontrolling interests
2,036
6,281
6,514
(Income)
loss from unconsolidated entities
(1,844)
2,454
55,034
Income tax benefit
(96,534)
(56,310)
(39,953)
Gain on real estate dispositions
(262,218)
(26,022)
(46,247)
NOI
$
1,847,990
$
2,051,239
$
2,029,620
See “Results of Operations” for discussions regarding both segment NOI and same-store segment NOI. We define same-store as properties owned, consolidated and operational for the full period in both comparison periods and are not otherwise excluded; provided, however, that we may include selected properties that otherwise meet the same-store criteria if they are included in substantially all of, but not a full, period for one or both of the comparison
periods, and in our judgment such inclusion provides a more meaningful presentation of our portfolio performance.
Newly acquired or recently developed or redeveloped properties in our senior living operations segment will be included in same-store once they are stabilized for the full period in both periods presented. These properties are considered stabilized upon the earlier of (a) the achievement of 80% sustained occupancy or (b) 24 months from the date of acquisition or substantial completion of work. Recently developed or redeveloped properties in our office operations and triple-net leased properties segments will be included in same-store once substantial completion of work has occurred for the full period in both periods presented. Our senior living operations and triple-net leased properties that have undergone operator or business model transitions will be included in
same-store once operating under consistent operating structures for the full period in both periods presented.
Properties are excluded from same-store if they are: (i) sold, classified as held for sale or properties whose operations were classified as discontinued operations in accordance with GAAP; (ii) impacted by materially disruptive events such as flood or fire; (iii) those properties that are currently undergoing a materially disruptive redevelopment; (iv) for our office operations, those properties for which management has an intention to institute a redevelopment plan because the properties may require major property-level expenditures to maximize value, increase NOI, or maintain a market-competitive position and/or achieve property stabilization; or (v) for the senior living operations and triple-net leased segments, those properties that are scheduled to undergo operator or business
model transitions, or have transitioned operators or business models after the start of the prior comparison period.
To eliminate the impact of exchange rate movements, all portfolio performance-based disclosures assume constant exchange rates across comparable periods, using the following methodology: the current period’s results are shown in actual reported USD, while prior comparison period’s results are adjusted and converted to USD based on the average exchange rate for the current period.
56
Asset/Liability Management
Asset/liability management, a key element of enterprise risk management, is designed
to support the achievement of our business strategy, while ensuring that we maintain appropriate and tolerable levels of market risk (primarily interest rate risk and foreign currency exchange risk) and credit risk. Effective management of these risks is a contributing factor to the absolute levels and variability of our FFO and net worth. The following discussion addresses our integrated management of assets and liabilities, including the use of derivative financial instruments.
Market Risk
We are exposed to market risk related to changes in interest rates with respect to borrowings under our unsecured revolving credit facility, our secured construction revolver and our unsecured term loans, certain of our mortgage loans that are floating rate obligations, mortgage loans receivable that bear interest at floating rates and available
for sale securities. These market risks result primarily from changes in LIBOR rates or prime rates. To manage these risks, we continuously monitor our level of floating rate debt with respect to total debt and other factors, including our assessment of current and future economic conditions.
57
The table below sets forth certain information with respect to our debt, excluding premiums and discounts.
The variable rate debt in the table above reflects, in part, the effect of $146.7 million notional amount of interest rate swaps with maturities ranging from March 2022 to May 2022, in each case that effectively convert
fixed rate debt to variable
58
rate debt. In addition, the fixed rate debt in the table above reflects, in part, the effect of $305.9 million and C$145.7 million notional amount of interest rate swaps with maturities ranging from January 2023 to December 2029, in each case that effectively convert variable rate debt to fixed rate debt. See “Note 10 – Senior Notes Payable and Other Debt” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
The decrease in our outstanding variable rate debt at December 31, 2020 compared to December 31, 2019 is primarily
attributable to reduced borrowings on our revolving credit facility and commercial paper program, partially offset by the change in presentation of the secured revolving construction credit facility to variable rate debt. The secured revolving construction credit facility was previously reflected as fixed rate debt due to an interest rate swap which had effectively converted the associated interest expense from variable to fixed until its expiration in August 2020.
Assuming a 100 basis point increase in the weighted average interest rate related to our variable rate debt and assuming no change in our variable rate debt outstanding as of December 31, 2020, interest expense on an annualized basis would increase by approximately $14.7 million, or $0.04 per diluted common share.
As
of December 31, 2020 and 2019, our joint venture partners’ aggregate share of total debt was $271.6 million and $228.2 million, respectively, with respect to certain properties we owned through consolidated joint ventures. Total debt does not include our portion of debt related to investments in unconsolidated real estate entities, which was $213.0 million and $60.6 million as of December 31, 2020 and 2019, respectively.
The fair value of our fixed rate debt is based on current market interest rates at which we could obtain similar borrowings. Increases in market interest rates typically result in a decrease in the fair value of fixed rate debt while decreases in market interest rates typically
result in an increase in the fair value of fixed rate date. While changes in market interest rates affect the fair value of our fixed rate debt, these changes do not affect the interest expense associated with our fixed rate debt. Therefore, interest rate risk does not have a significant impact on our fixed rate debt obligations until their maturity or earlier prepayment and refinancing. If interest rates have risen at the time we seek to refinance our fixed rate debt, whether at maturity or otherwise, our future earnings and cash flows could be adversely affected by additional borrowing costs. Conversely, lower interest rates at the time of refinancing may reduce our overall borrowing costs.
To highlight the sensitivity of our fixed rate debt to changes in interest rates, the following summary shows the effects of a hypothetical instantaneous change of 100 basis points in interest rates:
The change in fair value of our fixed rate debt from December 31, 2019 to December 31, 2020 was
due primarily to 2020 senior note issuances, net of repayments, partially offset by the change in presentation of the secured revolving construction credit facility to variable rate debt. The secured revolving construction credit facility was previously reflected as fixed rate debt due to an interest rate swap which had effectively converted the associated interest expense from variable to fixed until its expiration in August 2020.
As of December 31, 2020 and 2019, the fair value of our secured and non-mortgage loans receivable, based on our estimates of currently prevailing rates for comparable loans, was $565.7 million and $710.5 million, respectively. See “Note 6 – Loans Receivable and Investments” and “Note 11 – Fair Values of Financial Instruments” of the Notes to
Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
As a result of our Canadian and United Kingdom operations, we are subject to fluctuations in certain foreign currency exchange rates that may, from time to time, affect our financial condition and operating performance. Based solely on our results for the year ended December 31, 2020 (including the impact of existing hedging arrangements), if the value of the U.S. dollar relative to the British pound and Canadian dollar were to increase or decrease by one standard deviation compared to the average exchange rate during the year, our normalized FFO per share for the year ended December 31, 2020 would decrease or
59
increase,
as applicable, by less than $0.01 per share or 1%. We will continue to mitigate these risks through a layered approach to hedging looking out for the next year and continual assessment of our foreign operational capital structure. Nevertheless, we cannot assure you that any such fluctuations will not have an effect on our earnings.
Concentration and Credit Risk
We use concentration ratios to identify, understand and evaluate the potential impact of economic downturns and other adverse events that may affect our asset types, geographic locations, business models, and tenants, operators and managers. We evaluate concentration risk in terms of investment mix and operations mix. Investment mix measures the percentage
of our investments that is concentrated in a specific asset type or that is operated or managed by a particular tenant, operator or manager. Operations mix measures the percentage of our operating results that is attributed to a particular tenant, operator or manager, geographic location or business model. The following tables reflect our concentration risk as of the dates and for the periods presented:
Investment
mix by tenant, operator and manager(1):
Atria
20.8
%
20.4
%
Sunrise
10.4
10.3
Brookdale Senior Living
8.2
7.7
Ardent
4.9
4.7
Kindred
1.1
1.0
All
other
54.6
55.9
(1)Ratios are based on the gross book value of consolidated real estate investments (excluding properties classified as held for sale) as of each reporting date.
Operations mix by tenant and operator and business model:
Revenues(1):
Senior
living operations
58.0
%
55.8
%
55.3
%
Brookdale Senior Living(2)
4.4
4.7
4.3
Ardent
3.2
3.1
3.1
Kindred
3.5
3.3
3.5
All
others
30.9
33.1
33.8
Adjusted EBITDA:
Senior living operations
30.8
%
32.5
%
31.3
%
Brookdale
Senior Living(2)
9.5
8.1
6.7
Ardent
7.0
5.4
5.1
Kindred
7.5
5.8
5.6
All
others
45.2
48.2
51.3
NOI:
Senior living operations
29.4
%
31.1
%
30.7
%
Brookdale
Senior Living(2)
9.0
8.7
7.6
Ardent
6.6
5.8
5.7
Kindred
7.1
6.3
6.4
All
others
47.9
48.1
49.6
Operations mix by geographic location(3):
California
15.7
%
15.9
%
15.7
%
New
York
8.1
8.8
8.4
Texas
6.1
6.0
6.2
Pennsylvania
4.6
4.7
4.6
Illinois
4.1
4.0
4.4
All
others
61.4
60.6
60.7
(1)Total revenues include medical office building and other services revenue, revenue from loans and investments and interest and other income (including amounts related to assets classified as held for sale).
(2)Results exclude eight senior housing communities which are included in the senior living operations reportable business segment. 2018 results include the impact of a net non-cash charge of $21.3 million related to April 2018 lease extensions.
(3)Ratios
are based on total revenues (including amounts related to assets classified as held for sale) for each period presented.
See “Non-GAAP Financial Measures” included elsewhere in this Annual Report for additional disclosure and reconciliations of net income attributable to common stockholders, as computed in accordance with GAAP, to Adjusted EBITDA and NOI, respectively.
We derive a significant portion of our revenues by leasing assets under long-term triple-net leases in which the rental rate is generally fixed with escalators, subject to certain limitations. Some of our triple-net lease escalators are contingent upon the satisfaction of specified facility revenue parameters or based on increases in the Consumer Price Index (“CPI”), with caps, floors or collars. We also earn revenues directly from
individual residents in our senior housing communities that are managed by independent operators, such as Atria and Sunrise, and tenants in our office buildings. For the year ended December 31, 2020, 61.0% of our Adjusted EBITDA was derived from our senior living operations and office operations, for which rental rates may fluctuate more frequently upon lease rollovers and renewals due to shorter-term leases and changing economic or market conditions.
The concentration of our triple-net leased properties segment revenues and operating income that are attributed to Brookdale Senior Living, Ardent and Kindred creates credit risk. If any of Brookdale Senior Living, Ardent or Kindred becomes unable or unwilling to satisfy its obligations to us or to renew its leases with us upon expiration of the terms thereof, our financial condition and results
of operations could decline, and our ability to service our indebtedness and to make
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distributions to our stockholders could be impaired. See “Risk Factors—Our Business Operations and Strategy Risks—A significant portion of our revenues and operating income is dependent on a limited number of tenants and managers, including Brookdale Senior Living, Ardent, Kindred, Atria and Sunrise.” included in Part I, Item 1A of this Annual Report and “Note 3 – Concentration of Credit Risk” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
We regularly monitor and assess any changes in the relative credit risk of our significant tenants, and in particular
those tenants that have recourse obligations under our triple-net leases. The ratios and metrics we use to evaluate a significant tenant’s liquidity and creditworthiness depend on facts and circumstances specific to that tenant and the industry or industries in which it operates, including without limitation the tenant’s credit history and economic conditions related to the tenant, its operations and the markets in which the tenant operates, that may vary over time. Among other things, we may (i) review and analyze information regarding the real estate, senior housing and healthcare industries generally, publicly available information regarding the significant tenant, and information required to be provided by the tenant under the terms of its lease agreements with us, (ii) examine monthly or quarterly financial statements of the significant tenant to the extent publicly available or otherwise provided under the terms of our lease agreements, and (iii) participate
in periodic discussions and in-person meetings with representatives of the significant tenant. Using this information, we calculate multiple financial ratios (which may, but do not necessarily, include leverage, fixed charge coverage and tangible net worth), after making certain adjustments based on our judgment, and assess other metrics we deem relevant to an understanding of the significant tenant’s credit risk.
Because Atria and Sunrise manage our properties in exchange for the receipt of a management fee from us, we are not directly exposed to the credit risk of our managers in the same manner or to the same extent as our triple-net tenants. However, we rely on our managers’ personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage our senior living operations efficiently and effectively. We also rely on Atria and Sunrise
to set appropriate resident fees, to provide accurate property-level financials results in a timely manner and otherwise operate our senior housing communities in compliance with the terms of our management agreements and all applicable laws and regulations. Although we have various rights as the property owner under our management agreements, including various rights to terminate and exercise remedies under the agreements as provided therein, Atria’s or Sunrise’s failure, inability or unwillingness to satisfy its respective obligations under those agreements, to efficiently and effectively manage our properties or to provide timely and accurate accounting information with respect thereto could have a Material Adverse Effect on us. See “Risk Factors—Our Business Operations and Strategy Risks.” included in Part I, Item 1A of this Annual Report.
We hold a 34% ownership interest in Atria,
which entitles us to customary minority rights and protections, as well as the right to appoint two of the six members on the Atria Board of Directors.
Triple-Net Lease Performance and Expirations
Any failure, inability or unwillingness by our tenants to satisfy their obligations under our triple-net leases could have a material adverse effect on us. Also, if our tenants are not able or willing to renew our triple-net leases upon expiration, we may be unable to reposition the applicable properties on a timely basis or on the same or better economic terms, if at all. Although our lease expirations are staggered, the non-renewal of some or all of our triple-net leases that expire in any given year could have a material adverse effect on us. During the year ended December 31, 2020,
we had no triple-net lease renewals or expirations without renewal that, in the aggregate, had a material impact on our financial condition or results of operations for that period. See “Risk Factors—Our Business Operations and Strategy Risks—If we must replace any of our tenants or managers, we may be unable to do so on as favorable terms, or at all, and we could be subject to delays, limitations and expenses, which could adversely affect our business, financial condition and results of operations.” included in Part I, Item IA of this Annual Report.
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The following table summarizes our lease expirations in our triple-net leased properties segment currently scheduled to occur over the next 10 years as of December
31, 2020:
Number of
Properties(1)
2020 Annualized Base Rent (“ABR”)(2)
% of 2020 Total Triple-Net Leased Properties Segment Rental Income
(Dollars
in thousands)
2021
9
$
12,062
1.7
%
2022
8
5,799
0.8
2023(3)
6
31,240
4.5
2024
26
13,970
2.0
2025
179
234,549
33.7
2026
39
53,660
7.7
2027
4
8,784
1.3
2028
27
25,196
3.6
2029
21
22,788
3.3
2030
6
4,748
0.7
(1)Excludes
assets sold or classified as held for sale, unconsolidated entities development properties not yet operational, unconsolidated joint ventures and land parcels.
(2)ABR represents the annualized impact of the current period’s cash base rent at 100% share for consolidated entities. ABR does not include common area maintenance charges, the amortization of above/below market lease intangibles or other noncash items. ABR is used only for the purpose of determining lease expirations.
(3)Relates to 6 LTACs leased by Kindred. While the lease term expires in 2023, Kindred may extend the term for 5 years by delivering a renewal notice to the Company 12 to 18 months prior to expiration.
Liquidity
and Capital Resources
During 2020, our principal sources of liquidity were cash flows from operations, proceeds from the issuance of debt and equity securities, borrowings under our unsecured revolving credit facility, and proceeds from asset sales.
For the next 12 months, our principal liquidity needs are to: (i) fund operating expenses; (ii) meet our debt service requirements; (iii) repay maturing mortgage and other debt; (iv) fund acquisitions, investments and commitments and any development and redevelopment activities; (v) fund capital expenditures; and (vi) make distributions to our stockholders and unitholders, as required for us to continue to qualify as a REIT. Depending upon the availability of external capital, we believe our liquidity is sufficient to fund these uses of cash. We
expect that these liquidity needs generally will be satisfied by a combination of the following: cash flows from operations, cash on hand, debt assumptions and financings (including secured financings), issuances of debt and equity securities, dispositions of assets (in whole or in part through joint venture arrangements with third parties) and borrowings under our revolving credit facilities and commercial paper program. However, an inability to access liquidity through multiple capital sources concurrently could have a material adverse effect on us.
While continuing decreased revenue and net operating income as a result of the COVID-19 pandemic could lead to downgrades of our long-term credit rating and therefore adversely impact our cost of borrowing, we currently believe we will continue to have access to one or more debt markets during the duration of the pandemic and could seek to enter
into secured debt financings or issue debt and equity securities to satisfy our liquidity needs, although no assurances can be made in this regard. See “COVID-19 Update.” See “Risk Factors—Our Capital Structure Risks—We are highly dependent on access to the capital markets. Limitations on our ability to access capital could have an adverse effect on us, including our ability to make required payments on our debt obligations, make distributions to our stockholders or make future investments necessary to implement our business strategy.” included in Part I, Item 1A of this Annual Report.
2020 Capital Conservation Actions
In 2020, we executed on a multi-pronged capital conservation strategy to mitigate the impact of COVID-19, which included reducing our planned capital expenditures and capital commitments. We
also established a quarterly dividend of $0.45 per share beginning in the second quarter, which was a reduction from the first quarter dividend of $0.7925 per share. This action enabled us to conserve approximately $130 million of cash per quarter compared to the prior dividend level. Also, in June 2020, we eliminated roles representing over 25% of our corporate positions, excluding onsite field personnel. For the
63
second half of 2020, the base salaries of our CEO and other executive officers were voluntarily reduced by 20% and 10%, respectively. Primarily as a result of these capital conservation actions, our 2020 general and administrative expenses are $29 million lower than 2019.
See “Note
10 – Senior Notes Payable and Other Debt” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report for further information regarding our significant financing activities.
Credit Facilities, Commercial Paper and Unsecured Term Loans
As of December 31, 2020, our unsecured credit facility was comprised of a $3.0 billion unsecured revolving credit facility priced at LIBOR plus 0.875% based on the Company’s debt rating, which was scheduled to mature in 2021. In January 2021, we entered into an amended and restated unsecured credit facility (the “New Credit Facility”) comprised of a $2.75 billion unsecured
revolving credit facility initially priced at LIBOR plus 0.825% based on the Company’s debt rating. The New Credit Facility matures in 2025, but may be extended at our option subject to the satisfaction of certain conditions, for two additional periods of six months each. The New Credit Facility also includes an accordion feature that permits us to increase our aggregate borrowing capacity thereunder to up to $3.75 billion.
As of December 31, 2020, $39.4 million was outstanding under the unsecured revolving credit facility with an additional $24.9 million restricted to support outstanding letters of credit. In addition, we limit our utilization of the unsecured revolving credit facility, to the extent necessary, to support our commercial paper program when commercial
paper notes are outstanding. We had $2.9 billion in available liquidity under the unsecured revolving credit facility as of December 31, 2020. In connection with the New Credit Facility, we paid off all amounts outstanding under the existing unsecured revolving credit facility as of January 29, 2021 by drawing down the same amount on the New Credit Facility.
Our wholly owned subsidiary, Ventas Realty, Limited Partnership (“Ventas Realty”), may issue from time to time unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $1.0 billion. The notes are sold under customary terms in the United States commercial paper note market and are ranked pari passu with all of Ventas Realty’s other unsecured senior indebtedness. The notes are fully and unconditionally
guaranteed by Ventas, Inc. As of December 31, 2020, we had no borrowings outstanding under our commercial paper program.
As of December 31, 2020, we had a $200.0 million unsecured term loan priced at LIBOR plus 0.90% that matures in 2023. The term loan also includes an accordion feature that effectively permits us to increase our aggregate borrowings thereunder to up to $800.0 million.
As of December 31, 2020, we had a $400.0 million secured revolving construction credit facility with $154.1 million of borrowings outstanding. The secured revolving construction credit facility matures in 2022 and is primarily used to finance the development of research and innovation centers
and other construction projects.
As of December 31, 2020, we had a C$500 million unsecured term loan facility priced at Canadian Dollar Offered Rate (“CDOR”) plus 0.90% that matures in 2025.
Senior Notes
In April 2020, Ventas Realty issued and sold $500.0 million aggregate principal amount of 4.75% senior notes due 2030 at an amount equal to 97.86% of par.
In October 2020, we redeemed, pursuant to a cash tender offer, $236.3 million aggregate principal amount then outstanding of our 3.25% senior notes due 2022 at 104.14% of par value, plus accrued and unpaid interest to the payment date. As a result, we recognized a loss
on extinguishment of debt of $11.1 million during the year ended December 31, 2020.
As of December 31, 2020, we had outstanding $7.7 billion aggregate principal amount of senior notes issued by Ventas Realty ($263.7 million of which was co-issued by Ventas Realty’s wholly owned subsidiary, Ventas Capital Corporation), approximately $75.2 million aggregate principal amount of senior notes issued by Nationwide Health Properties, Inc. (“NHP”) and assumed by our subsidiary, Nationwide Health Properties, LLC (“NHP LLC”), as successor to NHP, in connection with our acquisition of NHP, and C$1.7 billion aggregate principal amount of senior notes issued by our subsidiary, Ventas Canada Finance Limited (“Ventas Canada”). All of the senior notes issued by Ventas Realty and Ventas Canada
are unconditionally guaranteed by Ventas, Inc.
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In February 2021, in order to reduce near-term maturities, we issued a make-whole redemption for the entirety of the $400 million outstanding aggregate principal amount of 3.10% senior notes due January 2023. The redemption is expected to settle in March 2021 and will be funded primarily with cash on hand.
We may, from time to time, seek to retire or purchase our outstanding senior notes for cash or in exchange for equity securities in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity
requirements, contractual restrictions, prospects for capital and other factors. The amounts involved may be material.
The indentures governing our outstanding senior notes require us to comply with various financial and other restrictive covenants. We were in compliance with all of these covenants at December 31, 2020.
Mortgages
At December 31, 2020 and 2019, our consolidated aggregate principal amount of mortgage debt outstanding was $2.1 billion and $2.0 billion, respectively, of which our share was $1.8 billion for both
years.
Under certain circumstances, contractual and legal restrictions, including those contained in the instruments governing our subsidiaries’ outstanding mortgage indebtedness, may restrict our ability to obtain cash from our subsidiaries for the purpose of meeting our debt service obligations, including our payment guarantees with respect to Ventas Realty’s and Ventas Canada Finance Limited’s senior notes.
Derivatives and Hedging
In the normal course of our business, interest rate fluctuations affect future cash flows under our variable rate debt obligations, loans receivable
and marketable debt securities, and foreign currency exchange rate fluctuations affect our operating results. We follow established risk management policies and procedures, including the use of derivative instruments, to mitigate the impact of these risks.
Dividends
During 2020, we declared four dividends totaling $2.1425 per share of our common stock, including a fourth quarter dividend of $0.45 per share. In order to continue to qualify as a REIT, we must make annual distributions to our stockholders of at least 90% of our REIT taxable income (excluding net capital gain). In addition, we will be subject to income tax at the regular corporate rate to the extent we distribute less than 100% of our REIT taxable income, including any net capital gains. We intend to pay dividends greater than 100% of our taxable income, after the use
of any net operating loss carryforwards, for 2021.
We expect that our cash flows will exceed our REIT taxable income due to depreciation and other non-cash deductions in computing REIT taxable income and that we will be able to satisfy the 90% distribution requirement. However, from time to time, we may not have sufficient cash on hand or other liquid assets to meet this requirement or we may decide to retain cash or distribute such greater amount as may be necessary to avoid income and excise taxation. If we do not have sufficient cash on hand or other liquid assets to enable us to satisfy the 90% distribution requirement, or if we desire to retain cash, we may borrow funds, issue additional equity securities, pay taxable stock dividends, if possible, distribute other property or securities or engage in a transaction intended to enable us to meet the REIT distribution requirements
or any combination of the foregoing.
Capital Expenditures
The terms of our triple-net leases generally obligate our tenants to pay all capital expenditures necessary to maintain and improve our triple-net leased properties. However, from time to time, we may fund the capital expenditures for our triple-net leased properties through loans or advances to the tenants, which may increase the amount of rent payable with respect to the properties in certain cases. We may also fund capital expenditures for which we may become responsible upon expiration of our triple-net leases or in the event that our tenants are unable or unwilling to meet their obligations under those leases. We also expect to fund capital expenditures related to our senior living operations and office operations reportable business segments with the cash flows from
the properties or through additional borrowings. We expect that these liquidity needs generally will be satisfied by a combination of the following: cash flows from operations, cash on hand, debt assumptions and financings (including secured financings), issuances of debt and equity securities, dispositions of assets (in whole or in part through joint venture arrangements with third parties) and borrowings under our revolving credit facilities.
65
To the extent that unanticipated capital expenditure needs arise or significant borrowings are required, our liquidity may be affected adversely. Our ability to borrow additional funds may be restricted in certain circumstances by the terms of the instruments governing our outstanding indebtedness.
We
are party to certain agreements that obligate us to develop senior housing or healthcare properties funded through capital that we and, in certain circumstances, our joint venture partners provide. As of December 31, 2020, we had 13 properties under development pursuant to these agreements, including three properties that are owned by unconsolidated real estate entities. In addition, from time to time, we engage in redevelopment projects with respect to our existing senior housing communities to maximize the value, increase NOI, maintain a market-competitive position, achieve property stabilization or change the primary use of the property.
Equity Offerings
From time to time, we may sell up to an aggregate of $1.0 billion of our common stock under an “at-the-market”
equity offering program (“ATM program”). As of December 31, 2020, we have $755.5 million remaining under our existing ATM program. During the years ended December 31, 2020 and 2019, we sold 1.5 million and 2.7 million shares of our common stock under our ATM program for gross proceeds of $44.88 and $66.75 per share, respectively. During the year ended December 31, 2018, we sold no shares of common stock under our ATM program.
In June 2019, we sold 12.7 million shares of our common stock under a registered public offering for gross proceeds of $62.75 per share. We used the majority of the net proceeds to fund our LGM Acquisition. See “Note 4 – Acquisitions of Real Estate Property”
of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report for additional information regarding the LGM Acquisition.
Cash Flows
The following table sets forth our sources and uses of cash flows for the years ended December 31, 2020 and 2019:
For
the Years Ended December 31,
(Decrease) Increase to Cash
2020
2019
$
%
(Dollars in thousands)
Cash, cash equivalents and restricted cash at beginning of year
$
146,102
$
131,464
$
14,638
11.1
%
Net
cash provided by operating activities
1,450,176
1,437,783
12,393
0.9
Net cash provided by (used in) investing activities
154,295
(1,585,299)
1,739,594
nm
Net
cash (used in) provided by financing activities
(1,300,021)
160,674
(1,460,695)
nm
Effect of foreign currency translation
1,088
1,480
(392)
(26.5)
Cash,
cash equivalents and restricted cash at end of year
$
451,640
$
146,102
305,538
nm
nm—not meaningful
Cash Flows from Operating Activities
Cash flows from operating activities increased $12.4 million during the year ended December 31, 2020 over the same period in 2019 primarily due
to the up-front consideration received in connection with the Brookdale transaction, partially offset by lower NOI.
Cash Flows from Investing Activities
Cash flows from investing activities increased $1.7 billion during 2020 over 2019 primarily due to decreased acquisition and investment activity together with increased proceeds from real estate dispositions.
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Cash Flows from Financing Activities
Cash flows from financing activities decreased $1.5 billion during 2020 over 2019 primarily due to lower issuances of common stock, decreased debt borrowings
during 2020, net of repayments, partially offset by lower dividends paid to common stockholders during 2020.
Contractual Obligations
The following table summarizes the effect that minimum debt (which includes principal and interest payments) and other material noncancelable commitments are expected to have on our cash flow in future periods as of December 31, 2020:
Total
Less
than 1 year(3)
1 - 3 years(4)
3 - 5 years(5)
More than 5
years(6)
(In thousands)
Long-term debt obligations (1) (2)
$
15,107,176
$
1,002,409
$
3,475,813
$
3,794,808
$
6,834,146
Operating
obligations, including ground lease obligations
726,410
26,968
43,352
36,413
619,677
Total
$
15,833,586
$
1,029,377
$
3,519,165
$
3,831,221
$
7,453,823
(1)Amounts
represent contractual amounts due, including interest.
(2)Interest on variable rate debt based on rates as of December 31, 2020.
(3)Includes $39.4 million of borrowings outstanding on our unsecured revolving credit facility and $235.7 million outstanding principal amount of our floating rate senior notes, Series F due 2021.
(4)Includes $154.1 million of borrowings outstanding on our secured revolving construction credit facility, $263.7 million outstanding principal amount of our 3.25% senior notes due 2022, $196.4 million outstanding principal amount of our 3.30% senior notes, Series C due 2022, $216.0 million outstanding principal amount of our 2.55% senior notes, Series D due 2023, $200.0 million of borrowings outstanding
on our unsecured term loan due 2023, $400.0 million outstanding principal amount of our 3.125% senior notes due 2023, and $400.0 million outstanding principal amount of our 3.10% senior notes due 2023.
(5)Includes $400.0 million outstanding principal amount of our 3.50% senior notes due 2024, $400.0 million outstanding principal amount of our 3.75% senior notes due 2024, $471.3 million outstanding principal amount of our 2.80% senior notes, Series E due 2024, $196.4 million outstanding principal amount of our 4.125% senior notes, Series B due 2024, $392.8 million of borrowings outstanding on our unsecured term loan due 2025, $450.0 million outstanding principal amount of our 2.65% senior notes due 2025, and $600.0 million outstanding principal amount of our 3.50% senior notes due 2025.
(6)Includes $4.8 billion aggregate principal amount
outstanding of our senior notes maturing between 2025 and 2049. $52.4 million aggregate principal amount outstanding of our 6.90% senior notes due 2037 are subject to repurchase, at the option of the holders, at par, on October 1, 2027, and $22.8 million aggregate principal amount outstanding of our 6.59% senior notes due 2038 are subject to repurchase, at the option of the holders, at par, on July 7 in each of 2023 and 2028.
As of December 31, 2020, we had $6.1 million of unrecognized tax benefits that are excluded from the table above, as we are unable to make a reasonably reliable estimate of the period of cash settlement, if any, with the respective tax authority.
Off-Balance Sheet Arrangements
We
own interests in certain unconsolidated entities as described in Note 7 – Investments in Unconsolidated Entities. Except in limited circumstances, our risk of loss is limited to our investment in the joint venture and any outstanding loans receivable. In addition, we have certain properties which serve as collateral for debt that is owed by a previous owner of certain of our facilities, as described under Note 10 – Senior Notes Payable and Other Debt to the Consolidated Financial Statements. Our risk of loss for these certain properties is limited to the outstanding debt balance plus penalties, if any. Further, we use financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure. Finally, at December 31, 2020, we had $24.9 million outstanding letter of credit obligations. We have no other material off-balance sheet arrangements that we expect would materially affect our liquidity
and capital resources except those described above under “Contractual Obligations.”
67
Guarantor and Issuer Financial Information
Ventas, Inc. has fully and unconditionally guaranteed the obligation to pay principal and interest with respect to the outstanding senior notes issued by our 100%-owned subsidiary, Ventas Realty, including the senior notes that were jointly issued with Ventas Capital Corporation. Ventas Capital Corporation is a direct, 100%-owned subsidiary of Ventas Realty that has no assets or operations, but was formed in 2002 solely to facilitate
offerings of senior notes by a limited partnership. None of our other subsidiaries (excluding Ventas Realty and Ventas Capital Corporation) is obligated with respect to Ventas Realty’s outstanding senior notes.
Ventas, Inc. has also fully and unconditionally guaranteed the obligation to pay principal and interest with respect to the outstanding senior notes issued by our 100%-owned subsidiary Ventas Canada Finance Limited (“Ventas Canada”). None of our other subsidiaries is obligated with respect to Ventas Canada’s outstanding senior notes, all of which were issued on a private placement basis in Canada.
In connection with the acquisition
of Nationwide Health Properties, Inc. (“NHP”), our 100%-owned subsidiary Nationwide Health Properties, LLC (“NHP LLC”), as successor to NHP, assumed the obligation to pay principal and interest with respect to the outstanding senior notes issued by NHP. Neither we nor any of our subsidiaries (other than NHP LLC) is obligated with respect to any of NHP LLC’s outstanding senior notes.
Under certain circumstances, contractual and legal restrictions, including those contained in the instruments governing our subsidiaries’ outstanding mortgage indebtedness, may restrict our ability to obtain cash from our subsidiaries
for the purpose of meeting our debt service obligations, including our payment guarantees with respect to Ventas Realty’s and Ventas Canada’s senior notes.
Income
(loss) before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests
400,349
(269,557)
Net
income (loss)
409,467
(269,557)
Net income (loss) attributable to common stockholders
409,467
(269,557)
69
ITEM
7A. Quantitative and Qualitative Disclosures About Market Risk
The information set forth in Part II, Item 7 of this Annual Report under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Asset/Liability Management” is incorporated by reference into this Item 7A.
70
ITEM 8. Financial Statements and Supplementary Data
Ventas, Inc.
Index to Consolidated
Financial Statements and Financial Statement Schedules
MANAGEMENT
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act of 1934, as amended. This system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. GAAP. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.
Management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer,
conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has concluded that our internal control over financial reporting was effective at the reasonable assurance level as of December 31, 2020.
The effectiveness of our internal control over financial reporting as of December 31, 2020 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their
report included herein.
72
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Ventas, Inc.:
Opinion on the Consolidated Financial Statements
We
have audited the accompanying consolidated balance sheets of Ventas, Inc. and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes and financial statement schedules III and IV (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, 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, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 23, 2021 expressed
an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Change in Accounting Principle
As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Financial Accounting Standards Board’s Accounting Standards Codification (ASC) Topic 842, Leases.
Basis for Opinion
These consolidated financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these consolidated 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 consolidated 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 consolidated 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 consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Probability of collection of substantially all triple-net rents
As discussed in Note 2 to the consolidated financial statements, the Company assesses the probability of collecting substantially all triple-net rents on a lease-by-lease basis. Whenever the results of that assessment, events, or
73
changes
in circumstances indicate that it is not probable the Company will collect substantially all triple-net rents under the lease, the Company records a charge to rental income.
We identified the evaluation of the probability of collection of substantially all triple-net rents as a critical audit matter. Complex auditor judgment was required to evaluate the various inputs and assumptions to the collectability assessment, including the financial strength of the tenant and any guarantors, and the operating performance of the leased property.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness
of certain internal controls over the Company’s evaluation of the inputs and assumptions used in the collectability assessment. To assess the Company’s assumptions about the financial strength of certain tenants and guarantors and the operating performance of the related leased properties, we identified and evaluated the relevance, reliability, and sufficiency of the tenant, guarantor and property financial information; tenant guarantees; the existence of outstanding accounts receivable; and the remaining term of the lease. We compared the Company’s historical determinations to actual collections to assess the Company’s ability to accurately
estimate probability of collections.
Impairment of real estate investments in the triple-net leased and senior living operations segments
As discussed in Notes 1, 2, and 5 to the consolidated financial statements, the Company periodically evaluates its long-lived assets, primarily consisting of investments in real estate, for impairment indicators. If indicators of impairment are present, the Company evaluates the carrying value of the related real estate investments in relation to the future undiscounted cash flows of the underlying operations. In performing this evaluation, the Company considers
market conditions and current intentions with respect to holding or disposing of the asset and adjusts the net book value of real estate properties to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. During the year, impairment indicators arose for certain real estate properties. As a result, recoverability assessments were performed, estimated fair values were determined, and impairment losses were recognized for certain properties.
We identified the evaluation of real estate investments within the triple-net leased and senior living operations segments for impairment as a critical audit matter. Subjective auditor judgment was required in evaluating the Company’s determination of the future undiscounted cash flows and estimated fair values of properties
where undiscounted cash flows were less than net book value. In particular, the undiscounted cash flows and fair value estimates were sensitive to significant assumptions, including capitalization rates, projected operating cash flows, and stabilization period. Additionally, subjective auditor judgment and specialized skills and knowledge were needed to evaluate comparable market transactions used by the Company to develop certain fair value estimates due to limited transactional volume.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the impairment process. This included controls related to the Company’s
impairment process and the significant assumptions and fair value estimates described above. To test certain of the Company’s undiscounted cash flow estimates, we evaluated the Company’s forecasts of projected operating cash flows by comparing actual results to the Company’s forecasts adjusted for current market trends. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:
● evaluating the Company’s significant assumptions by comparing the significant assumptions to publicly available market data, and
● developing
independent estimates of fair value for certain properties using comparable market transactions and discounted cash flows developed using the Company’s historical results and publicly available market data.
Report
of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors Ventas, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Ventas, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December
31, 2020, and the related notes and financial statement schedules III and IV (collectively, the consolidated financial statements), and our report dated February 23, 2021 expressed an unqualified opinion on those consolidated financial statements.
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 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 of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk. Our audit also included 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.
Interest paid including payments and receipts for derivative instruments
$
i429,636
$
i410,854
$
i406,907
Supplemental
schedule of non-cash activities:
Assets acquired and liabilities assumed from acquisitions and other:
Real estate investments
$
i170,484
$
i1,057,138
$
i94,280
Other
assets
i1,224
i11,140
i5,398
Debt
i55,368
i907,746
i30,508
Other
liabilities
i2,707
i47,121
i18,086
Deferred
income tax liability
i337
i95
i922
Noncontrolling
interests
i20,259
i113,316
i2,591
Equity
issued
i—
i—
i30,487
Equity
issued for redemption of OP Units
i—
i127
i907
See
accompanying notes.
81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
i
NOTE 1–DESCRIPTION OF BUSINESS
Ventas, Inc.
(together with its subsidiaries, unless otherwise indicated or except where the context otherwise requires, “we,”“us” or “our”), an S&P 500 company, is a real estate investment trust (“REIT”) operating at the intersection of healthcare and real estate, with a highly diversified portfolio of senior housing; life science, research and innovation; and healthcare properties; which we generally refer to as “healthcare real estate,” located throughout the United States, Canada and the United Kingdom. As of December 31, 2020, we owned or managed through unconsolidated real estate entities approximately i1,200
properties and properties classified as held for sale, consisting of senior housing communities, medical office buildings (“MOBs”), life science, research and innovation centers, inpatient rehabilitation facilities (“IRFs”) and long-term acute care facilities (“LTACs”), and health systems. Our company was originally founded in 1983 and is headquartered in Chicago, Illinois with an additional office in Louisville, Kentucky.
We primarily invest in a diversified portfolio of healthcare real estate asset through wholly owned subsidiaries and other co-investment entities. We operate through three reportable business segments: triple-net leased properties, senior living operations, which we also
refer to as SHOP, and office operations.See “Note 2 – Accounting Policies” and “Note 19 – Segment Information.”Our senior housing properties are either operated under triple-net leases in our triple-net leased properties segment or through independent third-party managers in our senior living operations segment.
As of December 31, 2020, we leased a total of i366
properties (excluding properties within our office operations reportable business segment) to various healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures. Our ithree largest tenants, Brookdale Senior Living Inc. (together with its subsidiaries, “Brookdale Senior Living”), Ardent Health
Partners, LLC (together with its subsidiaries, “Ardent”) and Kindred Healthcare, LLC (together with its subsidiaries, “Kindred”) leased from us i121 properties (excluding ieight
properties managed by Brookdale Senior Living pursuant to long-term management agreements), i12 properties and i32 properties, respectively, as of December 31, 2020.
As
of December 31, 2020, pursuant to long-term management agreements, we engaged independent managers, such as Atria Senior Living, Inc. (“Atria”) and Sunrise Senior Living, LLC (together with its subsidiaries, “Sunrise”), to manage the i441 senior housing communities in our senior living operations segment for us.
Through
our Lillibridge Healthcare Services, Inc. subsidiary and our ownership interest in PMB Real Estate Services LLC, we also provide MOB management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. In addition, from time to time, we make secured and non-mortgage loans and other investments relating to senior housing and healthcare operators or properties.
COVID-19 Update
During fiscal 2020 and continuing into fiscal 2021, the COVID-19 pandemic has negatively affected our businesses in a number of ways and is expected to continue to do so.
Operating Results.Our senior living operations segment
was significantly impacted by the COVID-19 pandemic. Occupancy decreased over the course of 2020, while operating expenses increased as our senior living communities responded to the pandemic, resulting in a significant decline in NOI compared to 2019. Our NNN senior housing tenants’ performance was similarly affected by COVID-19. During the course of 2020, we modified certain NNN senior housing leases to reset rent and provided other modest financial accommodations to certain NNN senior housing tenants who needed it as a result of COVID-19. We also wrote-off previously accrued straight-line rental income related to NNN senior housing tenants due to COVID-19.
However, we benefited from our ongoing strategy of diversification, with our office and NNN healthcare businesses demonstrating resilience in the face of the pandemic. The
Company’s NNN healthcare tenants benefited from significant government financial support that was deployed early and has partially offset the direct financial impact of the pandemic. Our office operations segment, which primarily serves MOB and research and innovation tenants that were less impacted by the pandemic, delivered steady performance throughout the year.
Provider Relief Grants.In the third and fourth quarter of 2020, we applied for grants under Phase 2 and Phase 3 of the Provider Relief Fund administered by the U.S. Department of Health & Human Services (“HHS”) on behalf of the assisted living communities in our senior living operations segment to partially mitigate losses attributable to COVID-19. These grants
/
82
are
intended to reimburse eligible providers for expenses incurred to prevent, prepare for and respond to COVID-19 and lost revenues attributable to COVID-19. Recipients are not required to repay distributions from the Provider Relief Fund, provided that they attest to and comply with certain terms and conditions. See “Government Regulation—Governmental Response to the COVID-19 Pandemic” in Part I, Item 1 of this Annual Report.
During the fourth quarter of 2020, we received $i34.3 million
and $i0.8 million in grants in connection with our Phase 2 and Phase 3 applications, respectively, and recognized these grants within property-level operating expenses in our Consolidated Statements of Income. Subsequent to December 31, 2020, we received $i13.6 million
in grants in connection with our Phase 3 applications, which we expect to recognize in 2021. While we have received all amounts under our Phase 2 applications and have begun to receive amounts under our Phase 3 applications, there can be no assurance that our remaining applications will be approved or that additional funds will ultimately be received. Any grants that are ultimately received and retained by us are not expected to fully offset the losses incurred in our senior living operating portfolio that are attributable to COVID-19. Further, although we continue to monitor and evaluate the terms and conditions associated with the Provider Relief Fund distributions, we cannot assure you that we will be in compliance with all requirements related to the payments received under the Provider Relief Fund.
Capital Conservation Actions. In response to the COVID-19
pandemic, we took precautionary steps to increase liquidity and preserve financial flexibility in light of the resulting uncertainty.See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources; Recent Capital Conservation Actions.” As of February 16, 2021, we had approximately $i3.0 billion in liquidity, including
availability under our revolving credit facility and cash and cash equivalents on hand, with ino borrowings outstanding under our commercial paper program and negligible near-term debt maturing.
Continuing Impact. The trajectory and future impact of the COVID-19 pandemic remains highly uncertain. The extent of the pandemic’s continuing and ultimate effect on our operational and financial performance will depend on a variety of factors, including the speed at which available vaccines can
be successfully deployed; the rate of acceptance of available vaccines, particularly among the residents and staff in our senior housing communities; the impact of new variants of the virus and the effectiveness of available vaccines against those variants; ongoing clinical experience, which may differ considerably across regions and fluctuate over time; and on other future developments, including the ultimate duration, spread and intensity of the outbreak, the availability of testing, the extent to which governments impose, roll back or re-impose preventative restrictions and the availability of ongoing government financial support to our business, tenants and operators. Due to these uncertainties, we are not able at this time to estimate the ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows.
We have not identified the
COVID-19 pandemic, on its own, as a “triggering event” for purposes of evaluating impairment of real estate assets, goodwill and other intangibles, investments in unconsolidated entities and financial instruments. However, as of December 31, 2020, we considered the effect of the pandemic on certain of our assets (described below) and our ability to recover the respective carrying values of these assets. We applied our considerations to existing critical accounting policies that require us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities. We based our estimates on our experience and on assumptions we believe to be reasonable under the circumstances. As a result, we have recognized the following charges for the year ended December 31, 2020:
•Adjustment
to rental income: As of December 31, 2020, we concluded that it is probable we will not collect substantially all rents from certain tenants, primarily within our triple-net leased properties segment. As a result, we recognized adjustments to rental income of $i74.6 million for the year ended December 31, 2020. Rental payments from these tenants will be recognized in rental income when received.
•Impairment
of real estate assets: During 2020, we compared our estimate of undiscounted cash flows, including a hypothetical terminal value, for certain real estate assets to the assets’ respective carrying values. During 2020 we recognized $i126.5 million of impairments representing the difference between the assets’ carrying value and the then-estimated fair value of $i239.9 million. The
impaired assets, primarily senior housing communities, represent approximately i1% of our consolidated net real estate property as of December 31, 2020. Impairments are recorded within depreciation and amortization in our Consolidated Statements of Income and are primarily related to our senior living operations reportable business segment.
•Loss on financial instruments and impairment of unconsolidated entities:
As of December 31, 2020, we concluded that credit losses exist within certain of our non-mortgage loans receivable and government-sponsored pooled loan investments. As a result, we recognized credit loss charges of $i34.7 million for the year ended December 31, 2020 within allowance on loans receivable and investments in our Consolidated Statements of Income. During the fourth
83
quarter
of 2020, we received $i10.5 million as a principal payment on previously reserved loans. No allowances are recorded within our portfolios of secured mortgage loans or marketable debt securities. In addition, during 2020 we recognized an impairment of $i10.7 million
in an equity investment in an unconsolidated entity also recorded within allowance on loans receivable and investments in our Consolidated Statements of Income.
•Deferred tax asset valuation allowance: During 2020, we concluded that it was not more likely than not that deferred tax assets (primarily US federal NOL carryforwards which begin to expire in 2032) would be realized based on our cumulative loss in recent years for certain of our taxable REIT subsidiaries. As a result, we recorded a valuation allowance of $i56.4 million
against these deferred tax assets on our Consolidated Balance Sheets with a corresponding charge to income tax benefit (expense) in our Consolidated Statements of Income. We maintained our conclusions regarding the realizability of deferred tax assets as of December 31, 2020.
i
NOTE 2–ACCOUNTING POLICIES
i
Principles
of Consolidation
The accompanying Consolidated Financial Statements include our accounts and the accounts of our wholly owned subsidiaries and the joint venture entities over which we exercise control. All intercompany transactions and balances have been eliminated in consolidation, and our net earnings are reduced by the portion of net earnings attributable to noncontrolling interests.
U.S. generally accepted accounting principles (“GAAP”) require us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). A VIE is broadly defined as an entity with one or more of the
following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; and (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. We consolidate our investment in a VIE when we determine that we are its primary beneficiary. We may change our original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affects the characteristics
or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary.
i
We identify the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. We perform this analysis on
an ongoing basis.
As it relates to investments in joint ventures, GAAP may preclude consolidation by the sole general partner in certain circumstances based on the type of rights held by the limited partner or partners. We assess 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 (“LP”) interests or there is an increase or decrease in the number of outstanding LP interests. We also apply this guidance to managing member interests in limited liability companies (“LLCs”).
We consolidate several VIEs that share the following common characteristics:
•the
VIE is in the legal form of an LP or LLC;
•the VIE was designed to own and manage its underlying real estate investments;
•we are the general partner or managing member of the VIE;
•we own a majority of the voting interests in the VIE;
•a minority of voting interests in the VIE are owned by external third parties, unrelated to us;
•the minority owners do not have substantive kick-out or participating rights in the VIE; and
•we are the primary beneficiary of the VIE.
We
have separately identified certain special purpose entities that were established to allow investments in research and innovation projects by tax credit investors (“TCIs”). We have determined that these special purpose entities are VIEs, we are a holder of variable interests and we are the primary beneficiary of the VIEs, and therefore we consolidate these special
/
84
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
purpose entities. Our primary beneficiary determination is based upon several factors, including but not limited to the rights we have in directing the activities
which most significantly impact the VIEs’ economic performance as well as certain guarantees which protect the TCIs from losses should a tax credit recapture event occur.
In general, the assets of the consolidated VIEs are available only for the settlement of the obligations of the respective entities. Unless otherwise required by the LP or LLC agreement, any mortgage loans of the consolidated VIEs are non-recourse to us. iThe table below summarizes the total assets and liabilities
of our consolidated VIEs as reported on our Consolidated Balance Sheets:
We report investments in unconsolidated entities over whose operating and financial policies we have the ability to exercise significant influence under the equity method of accounting. Under this method of accounting, our share of the investee’s earnings or losses is included in our Consolidated Statements of Income.
We base the initial carrying value of investments in unconsolidated entities on the fair value of the assets at the time we acquired the joint venture interest. We estimate fair values for our equity method investments based on discounted cash flow models that include all estimated cash inflows and outflows over a specified holding period and, where applicable, any estimated debt premiums or discounts. The capitalization rates, discount rates and credit spreads we use in these models
are based upon assumptions that we believe to be within a reasonable range of current market rates for the respective investments.
We generally amortize any difference between our cost basis and the basis reflected at the joint venture level, if any, over the lives of the related assets and liabilities and include that amortization in our share of income or loss from unconsolidated entities. For earnings of equity method investments with pro rata distribution allocations, net income or loss is allocated between the partners in the joint venture based on their respective stated ownership percentages. In other instances, net income or loss may be allocated between the partners in the joint venture based on the hypothetical liquidation at book value method (the “HLBV method”). Under the HLBV method, net income or loss is allocated between the partners based on the difference between
each partner’s claim on the net assets of the joint venture at the end and beginning of the period, after taking into account contributions and distributions. Each partner’s share of the net assets of the joint venture is calculated as the amount that the partner would receive if the joint venture were to liquidate all of its assets at net book value and distribute the resulting cash to creditors and partners in accordance with their respective priorities. Under the HLBV method, in any given period, we could record more or less income than the joint venture has generated, than actual cash distributions we receive or than the amount we may receive in the event of an actual liquidation.
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Redeemable
OP Unitholder and Noncontrolling Interests
We own a majority interest in NHP/PMB L.P. (“NHP/PMB”), a limited partnership formed in 2008 to acquire properties from entities affiliated with Pacific Medical Buildings LLC (“PMB”). Given our wholly owned subsidiary is the general partner and the primary beneficiary of NHP/PMB, we consolidate it as a VIE. As of December 31, 2020, third-party investors owned i3.3
million Class A limited partnership units in NHP/PMB (“OP Units”), which represented i31% of the total units then outstanding, and we owned i7.3
million Class B limited partnership units in NHP/PMB, representing the remaining i69%. At any time following the first anniversary of the date of their issuance, the OP Units may be redeemed at the election of the holder for cash or, at our option, i0.9051
shares of our common stock per OP Unit, subject to further adjustment in certain circumstances. We are party by assumption to a registration rights agreement with the holders of the OP Units that requires us, subject to the terms and conditions and certain exceptions set forth therein, to file and maintain a registration statement relating to the issuance of shares of our common stock upon redemption of OP Units.
As redemption rights are outside of our control, the redeemable OP Units are classified outside of permanent equity on our Consolidated Balance Sheets. We reflect the redeemable OP Units at the greater of cost or redemption value. As of December 31, 2020 and 2019, the fair value of the redeemable
OP Units was $i146.0 million and $i171.2 million, respectively.
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NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We recognize changes in fair value through capital in excess of par value, net of cash distributions paid and purchases by us of any OP Units. Our diluted earnings per share includes the effect of any potential shares outstanding from redemption of the OP Units.
Certain noncontrolling interests of other consolidated joint ventures were also classified as redeemable at December 31, 2020 and 2019. Accordingly, we record the carrying amount of these noncontrolling interests at the greater of their initial carrying amount (increased or decreased for the noncontrolling interests’ share of net income or loss and distributions) or the redemption value. Our joint
venture partners have certain redemption rights with respect to their noncontrolling interests in these joint ventures that are outside of our control, and the redeemable noncontrolling interests are classified outside of permanent equity on our Consolidated Balance Sheets. We recognize changes in the carrying value of redeemable noncontrolling interests through capital in excess of par value.
Noncontrolling Interests
Excluding the redeemable noncontrolling interests described above, we present the portion of any equity that we do not own in entities that we control (and thus consolidate) as noncontrolling interests and classify those interests as a component of consolidated equity, separate from total Ventas stockholders’ equity, on our Consolidated Balance Sheets. For consolidated
joint ventures with pro rata distribution allocations, net income or loss, and comprehensive income, is allocated between the joint venture partners based on their respective stated ownership percentages. In other cases, net income or loss is allocated between the joint venture partners based on the HLBV method. We account for purchases or sales of equity interests that do not result in a change of control as equity transactions, through capital in excess of par value. We include net income attributable to the noncontrolling interests in net income in our Consolidated Statements of Income and we include the noncontrolling interests share of comprehensive income in our Consolidated Statements of Comprehensive Income.
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Accounting
for Historic and New Markets Tax Credits
For certain of our research and innovation centers, we are party to certain contractual arrangements with TCIs that were established to enable the TCIs to receive benefits of historic tax credits (“HTCs”), new markets tax credits (“NMTCs”), or both. As of December 31, 2020, we owned ieight properties that had syndicated HTCs or NMTCs, or both, to TCIs.
In
general, TCIs invest cash into special purpose entities that invest in entities that own the subject property and generate the tax credits. The TCIs receive substantially all of the tax credits and hold only a nominal interest in the economic risk and benefits of the special purpose entities.
HTCs are delivered to the TCIs upon substantial completion of the project. NMTCs are allowed for up to i39% of a qualified investment and are delivered to the TCIs after
the investment has been funded and spent on a qualified business. HTCs are subject to i20% recapture per year beginning one year after the completion of the historic rehabilitation of the subject property. NMTCs are subject to i100%
recapture until the end of the seventh year following the qualifying investment. We have provided the TCIs with certain guarantees which protect the TCIs from losses should a tax credit recapture event occur. The contractual arrangements with the TCIs include a put/call provision whereby we may be obligated or entitled to repurchase the interest of the TCIs in the special purpose entities at the end of the tax credit recapture period. We anticipate that either the TCIs will exercise their put rights or we will exercise our call rights prior to the applicable tax credit recapture periods.
The portion of the TCI’s investment that is attributed to the put is recorded at fair value at inception in accounts payable and other liabilities on our Consolidated Balance Sheets, and is accreted to the expected put price as interest expense in our Consolidated Statements of Income over the recapture period. The
remaining balance of the TCI’s investment is initially recorded in accounts payable and other liabilities on our Consolidated Balance Sheets and will be relieved upon delivery of the tax credit to the TCI, as a reduction in the carrying value of the subject property, net of allocated expenses. Direct and incremental costs incurred in structuring the transaction are deferred and will be recognized as an increase in the cost basis of the subject property upon the recognition of the related tax credit as discussed above.
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Accounting
Estimates
The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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Accounting
for Real Estate Acquisitions
When we acquire real estate, we first make reasonable judgments about whether the transaction involves an asset or a business. Our real estate acquisitions are generally accounted for as asset acquisitions as substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. Regardless of whether an acquisition is considered a business combination or an asset acquisition, we record the cost of the businesses or assets acquired as tangible and intangible assets and liabilities based upon their estimated fair values as of the acquisition date.
We estimate the fair value of buildings acquired on an as-if-vacant basis or replacement cost basis and depreciate the building value over the estimated remaining life
of the building, generally not to exceed i35 years. We determine the fair value of other fixed assets, such as site improvements and furniture, fixtures and equipment, based upon the replacement cost and depreciate such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. We determine the value of land either by considering the sales prices of similar properties in recent transactions or based on internal analyses of recently acquired and existing comparable properties within our portfolio. We generally determine the value of construction in progress based
upon the replacement cost. However, for certain acquired properties that are part of a ground-up development, we determine fair value by using the same valuation approach as for all other properties and deducting the estimated cost to complete the development. During the remaining construction period, we capitalize project costs until the development has reached substantial completion. Construction in progress, including capitalized interest, is not depreciated until the development has reached substantial completion.
Intangibles primarily include the value of in-place leases and acquired lease contracts. We include all lease-related intangible assets and liabilities within acquired lease intangibles and accounts payable and other liabilities, respectively, on our Consolidated Balance Sheets.
The
fair value of acquired lease-related intangibles, if any, reflects: (i) the estimated value of any above or below market leases, determined by discounting the difference between the estimated market rent and in-place lease rent; and (ii) the estimated value of in-place leases related to the cost to obtain tenants, including leasing commissions, and an estimated value of the absorption period to reflect the value of the rent and recovery costs foregone during a reasonable lease-up period as if the acquired space was vacant. We amortize any acquired lease-related intangibles to revenue or amortization expense over the remaining life of the associated lease plus any assumed bargain renewal periods. If a lease is terminated prior to its stated expiration or not renewed upon expiration, we recognize all unamortized amounts of lease-related intangibles associated with that lease in operations over the shortened lease term.
We
estimate the fair value of purchase option intangible assets and liabilities, if any, by discounting the difference between the applicable property’s acquisition date fair value and an estimate of its future option price. We do not amortize the resulting intangible asset or liability over the term of the lease, but rather adjust the recognized value of the asset or liability upon sale.
In connection with an acquisition, we may assume rights and obligations under certain lease agreements pursuant to which we become the lessee of a given property. We generally assume the lease classification previously determined by the prior lessee absent a modification in the assumed lease agreement. We assess assumed operating leases, including ground leases, to determine whether the lease terms are favorable or unfavorable to us given current market conditions on the acquisition date. To the extent the lease
terms are favorable or unfavorable to us relative to market conditions on the acquisition date, we recognize an intangible asset or liability at fair value and amortize that asset or liability to interest or rental expense in our Consolidated Statements of Income over the applicable lease term. Where we are the lessee, we record the acquisition date values of leases, including any above or below market value, within operating lease assets and operating lease liabilities on our Consolidated Balance Sheets.
We estimate the fair value of noncontrolling interests assumed consistent with the manner in which we value all of the underlying assets and liabilities.
We calculate the fair value of long-term assumed debt by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings,
which we approximate based on the rate at which we would expect to incur a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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Impairment
of Long-Lived and Intangible Assets
We periodically evaluate our long-lived assets, primarily consisting of investments in real estate, for impairment indicators. If indicators of impairment are present, we evaluate the carrying value of the related real estate investments in relation to the future undiscounted cash flows of the underlying operations. In performing this evaluation, we consider market conditions and our current intentions with respect to holding or disposing of the asset. We adjust the net book value of real estate properties and other long-lived assets to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. We recognize an impairment loss at the time we make any such determination.
If impairment indicators arise with respect to intangible
assets with finite useful lives, we evaluate impairment by comparing the carrying amount of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset. If estimated future undiscounted net cash flows are less than the carrying amount of the asset, then we estimate the fair value of the asset and compare the estimated fair value to the intangible asset’s carrying value. We recognize any shortfall from carrying value as an impairment loss in the current period.
We evaluate our investments in unconsolidated entities for impairment at least annually, and whenever events or changes in circumstances indicate that the carrying value of our investment may exceed its fair value. If we determine that a decline in the fair value of our investment in an unconsolidated entity is other-than-temporary, and if such reduced fair value is below the carrying value, we
record an impairment.
We test goodwill for impairment at least annually, and more frequently if indicators arise. We first assess qualitative factors, such as current macroeconomic conditions, state of the equity and capital markets and our overall financial and operating performance, to determine the likelihood that the fair value of a reporting unit is less than its carrying amount. If we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we proceed with estimating the fair value of the reporting unit. On January 1, 2020, we adopted ASU 2017-04, Simplifying the Test for Goodwill Impairment, which removes the traditional “Step 2” of the goodwill impairment test that required a hypothetical purchase price allocation. A goodwill
impairment, if any, will be recognized in the period it is determined and is now measured as the amount by which a reporting unit’s carrying value exceeds its fair value.
Estimates of fair value used in our evaluation of goodwill (if necessary based on our qualitative assessment), investments in real estate, investments in unconsolidated entities and intangible assets are based upon discounted future cash flow projections or other acceptable valuation techniques that are based, in turn, upon all available evidence including level three inputs, such as revenue and expense growth rates, estimates of future cash flows, capitalization rates, discount rates, general economic conditions and trends, or other available market data such as replacement cost or comparable transactions. Our ability to accurately predict future operating results and cash flows and to estimate and determine fair values
impacts the timing and recognition of impairments. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our financial results.
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Assets Held for Sale and Discontinued Operations
We sell properties from time to time for various reasons, including favorable market conditions or the exercise of purchase options by tenants. We classify certain long-lived assets as held for sale once the criteria, as defined by GAAP, have been met. Long-lived
assets to be disposed of are reported at the lower of their carrying amount or fair value minus cost to sell and are no longer depreciated.
If at any time we determine that the criteria for classifying assets as held for sale are no longer met, we reclassify assets within net real estate investments on our Consolidated Balance Sheets for all periods presented. The carrying amount of these assets is adjusted (in the period in which a change in classification is determined) to reflect any depreciation expense that would have been recognized had the asset been continuously classified as net real estate investments.
We report discontinued operations when the following criteria are met: (1) a component of an entity or group of components that has been disposed of or classified as held for sale and represents a strategic shift
that has or will have a major effect on an entity’s operations and financial results; or (2) an acquired business is classified as held for sale on the acquisition date. The results of operations for assets meeting the definition of discontinued operations are reflected in our Consolidated Statements of Income as discontinued operations for all periods presented. We allocate estimated interest expense to discontinued operations based on property values and our weighted average interest rate or the property’s actual mortgage interest.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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Loans
Receivable
We record loans receivable, other than those acquired in connection with a business combination, on our Consolidated Balance Sheets (either in secured loans receivable and investments, net or other assets, in the case of non-mortgage loans receivable) at the unpaid principal balance, net of any deferred origination fees, purchase discounts or premiums and valuation allowances. We amortize net deferred origination fees, which are comprised of loan fees collected from the borrower net of certain direct costs, and purchase discounts or premiums over the contractual life of the loan using the effective interest method and immediately recognize in income any unamortized balances if the loan is repaid before its contractual maturity.
On January 1, we adopted ASU 2016-13, Measurement of
Credit Losses on Financial Instruments (“ASU 2016-13”). The amendments in ASU 2016-13 require us to evaluate a current estimate of all expected credit losses over the life of a financial instrument, which may result in earlier recognition of credit losses on loans and other financial instruments. Under prior guidance, we generally only considered past events and current conditions in measuring an incurred loss. We will establish a reserve for any estimated credit losses using this model with a corresponding charge to net income. We adopted ASU 2016-13 using the modified retrospective method and we established no reserve upon adoption. Our evaluation of credit losses of loans receivable is based on factors such as corporate and facility-level financial and operational reports, compliance with financial covenants set forth in the applicable loan agreement, the financial strength of the borrower and any guarantor, the payment history
of the borrower, current economic conditions and reasonable and supportable forecasts.
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Cash Equivalents
Cash equivalents consist of highly liquid investments with a maturity date of three months or less when purchased. These investments are stated at cost, which approximates fair value.
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Escrow
Deposits and Restricted Cash
Escrow deposits consist of amounts held by us or our lenders to provide for future real estate tax, insurance expenditures and tenant improvements related to our properties and operations. Restricted cash generally represents amounts paid to us for security deposits and other similar purposes.
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Deferred Financing Costs
We amortize deferred financing costs, which are reported within senior notes payable
and other debt on our Consolidated Balance Sheets, as a component of interest expense over the terms of the related borrowings using a method that approximates a level yield. Amortized costs of approximately $i23.0 million, $i20.2
million and $i18.1 million were included in interest expense for the years ended December 31, 2020, 2019 and 2018, respectively.
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Available
for Sale Securities
We classify available for sale securities as a component of other assets on our Consolidated Balance Sheets (other than our interests in government-sponsored pooled loan investments, which are classified as secured loans receivable and investments, net on our Consolidated Balance Sheets). We record these securities at fair value and include unrealized gains and losses recorded in stockholders’ equity as a component of accumulated other comprehensive income on our Consolidated Balance Sheets. If we determine that a credit loss exists with respect to individual investments, we will recognize an allowance against the amortized cost basis of the investment with a corresponding charge to net income. We report interest income, including discount or premium amortization, on available for sale securities and gains or losses on securities sold, which are based on the specific identification
method, in income from loans and investments in our Consolidated Statements of Income.
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Derivative Instruments
We recognize all derivative instruments in other assets or accounts payable and other liabilities on our Consolidated Balance Sheets at fair value as of the reporting date. We recognize changes in the fair value of derivative instruments in other expenses in our Consolidated Statements of Income or accumulated other comprehensive income on our
Consolidated Balance Sheets, depending on the intended use of the derivative and our designation of the instrument.
We do not use our derivative financial instruments, including interest rate caps, interest rate swaps and foreign currency forward contracts, for trading or speculative purposes. Our foreign currency forward contracts and certain of our interest rate swaps (including the interest rate swap contracts of consolidated and unconsolidated joint ventures) are designated as effectively hedging the variability of expected cash flows related to their underlying securities and, therefore, also are
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NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
recorded on our Consolidated Balance Sheets at fair value, with changes in the fair value of these instruments recognized in accumulated other comprehensive income on our Consolidated Balance Sheets. We recognize any noncontrolling interests’ proportionate share of the changes in fair value of swap contracts of our consolidated joint ventures in noncontrolling interests on our Consolidated Balance Sheets. We recognize our proportionate share of the change in fair value of swap contracts of our unconsolidated joint ventures in accumulated other comprehensive income on our Consolidated Balance Sheets. Certain of our other interest rate swaps and rate caps were not
designated as having a hedging relationship with the underlying securities and therefore do not meet the criteria for hedge accounting under GAAP. Accordingly, these interest rate swaps are recorded on our Consolidated Balance Sheets at fair value, and we recognize changes in the fair value of these instruments in current earnings (in other expenses) in our Consolidated Statements of Income.
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Fair Values of Financial Instruments
Fair
value is a market-based measurement, not an entity-specific measurement, and we determine fair value based on the assumptions that we expect market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within levels one and two of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within level three of the hierarchy).
Level one inputs utilize unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access. Level two inputs are inputs other than quoted prices included
in level one that are directly or indirectly observable for the asset or liability. Level two inputs may include quoted prices for similar assets and liabilities in active markets and other inputs for the asset or liability that are observable at commonly quoted intervals, such as interest rates, foreign exchange rates and yield curves. Level three inputs are unobservable inputs for the asset or liability, which typically are based on our own assumptions, because there is little, if any, related market activity. If the determination of the fair value measurement is based on inputs from different levels of the hierarchy, the level within which the entire fair value measurement falls is the lowest-level input that is significant to the fair value measurement in its entirety. If the volume and level of market activity for an asset or liability has decreased significantly relative to the normal market activity for such asset or liability (or similar assets or liabilities),
then transactions or quoted prices may not accurately reflect fair value. In addition, if there is evidence that a transaction for an asset or liability is not orderly, little, if any, weight is placed on that transaction price as an indicator of fair value. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
We use the following methods and assumptions in estimating the fair value of our financial instruments whose fair value is determined on a recurring basis.
•Cash and cash equivalents - The carrying amount of unrestricted cash and cash equivalents reported on our Consolidated Balance Sheets approximates fair value due to the short maturity of
these instruments.
•Escrow deposits and restricted cash - The carrying amount of escrow deposits and restricted cash reported on our Consolidated Balance Sheets approximates fair value due to the short maturity of these instruments.
•Loans receivable - We estimate the fair value of loans receivable using level two and level three inputs. We discount future cash flows using current interest rates at which similar loans with the same terms and length to maturity would be made to borrowers with similar credit ratings.
•Available for sale securities - We estimate the fair value
of marketable debt securities using level two inputs. We observe quoted prices for similar assets or liabilities in active markets that we have the ability to access. We estimate the fair value of certain government-sponsored pooled loan investments using level three inputs. We consider credit spreads, underlying asset performance and credit quality, and default rates.
•Derivative instruments - With the assistance of a third party, we estimate the fair value of derivative instruments, including interest rate caps, interest rate swaps, and foreign currency forward contracts, using level two inputs.
◦Interest rate caps - We observe
forward yield curves and other relevant information.
◦Interest rate swaps - We observe alternative financing rates derived from market-based financing rates, forward yield curves and discount rates.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
◦Foreign currency forward contracts - We estimate the future values of the two currency tranches using forward exchange rates that are based on traded forward points and calculate a present
value of the net amount using a discount factor based on observable traded interest rates.
•Stock warrants - We estimate the fair value of stock warrants using level two inputs that are obtained from public sources. Inputs include equity spot price, dividend yield, volatility and risk-free rate.
•Senior notes payable and other debt - We estimate the fair value of senior notes payable and other debt using level two inputs. We discount the future cash flows using current interest rates at which we could obtain similar borrowings. For mortgage debt, we may estimate fair value using level three inputs, similar to those used in determining fair value of loans receivable (above).
•Redeemable
OP unitholder interests - We estimate the fair value of our redeemable OP unitholder interests using level one inputs. We base fair value on the closing price of our common stock, as OP Units may be redeemed at the election of the holder for cash or, at our option, shares of our common stock, subject to adjustment in certain circumstances.
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Revenue Recognition
Triple-Net Leased
Properties and Office Operations
Certain of our triple-net leases and most of our MOB and research and innovation centers (collectively, “office operations”) leases provide for periodic and determinable increases in base rent. We recognize base rental revenues under these leases on a straight-line basis over the applicable lease term when collectability of substantially all rents is probable. Recognizing rental income on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a straight-line rent receivable that is included in other assets on our Consolidated Balance Sheets. At December 31, 2020 and 2019, this cumulative excess totaled $i169.7
million and $i278.8 million, respectively (excluding properties classified as held for sale).
Certain of our leases provide for periodic increases in base rent only if certain revenue parameters or other substantive contingencies are met. We recognize the increased rental revenue under these leases as the related parameters or contingencies are met, rather than on a straight-line basis over the applicable lease term.
We assess
the probability of collecting substantially all rents under our leases based on several factors, including, among other things, payment history, the financial strength of the tenant and any guarantors, the historical operations and operating trends of the property, the historical payment pattern of the tenant, the type of property, the value of the underlying collateral, if any, expected future performance of the property and current economic conditions. If our evaluation of these factors indicates it is not probable that we will be able to collect substantially all rents under the lease, we record a charge to rental income. If we change our conclusions regarding the probability of collecting rent payments required by a lease, we may recognize adjustments to rental income in the period we make such change in our conclusions.
Senior Living Operations
Our
resident agreements are accounted for as leases and we recognize resident fees and services, other than move-in fees, monthly as services are provided. We recognize move-in fees on a straight-line basis over the average resident stay.
Other
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We recognize interest income from loans and investments, including discounts and premiums, using the effective interest method when collectability is reasonably assured. We apply the effective interest method on a loan-by-loan basis and recognize discounts and premiums as yield adjustments over the related loan term. We evaluate collectability of accrued interest receivables separate from the amortized cost basis of our
loans. As such, we recognize interest income on an impaired loan to the extent we believe accrued contractual interest payments are collectable. Otherwise, interest income is recognized on a cash basis.
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Accounting for Leased Property
We lease real property, primarily land and corporate office space, and equipment, primarily vehicles at our senior housing communities. At lease inception, we establish an operating lease asset and operating lease liability
calculated as the
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
present value of future minimum lease payments. As our leases do not provide an implicit rate, we use a discount rate that approximates our incremental borrowing rate available at lease commencement to determine the present value. Our lease expense primarily consists of ground and corporate office leases. Ground lease expense is included in interest expense and corporate office lease expense is included in general, administrative and professional fees in the Company’s Consolidated Statements of Income.
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Stock-Based
Compensation
We recognize share-based payments to employees and directors, including grants of stock options and restricted stock, included in general, administrative and professional fees in our Consolidated Statements of Income generally on a straight-line basis over the requisite service period based on the grant date fair value of the award.
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Gain on Sale of Assets
On January
1, 2018, we adopted the provisions of Accounting Standards Codification (“ASC”) 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”). In accordance with ASC 610-20, we recognize any gains when we transfer control of a property and when it is probable that we will collect substantially all of the related consideration. We adopted ASC 610-20 using the modified retrospective method and recognized a cumulative effect adjustment to retained earnings of $i31.2
million relating to deferred gains on sales of real estate assets in 2015.
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Federal Income Tax
We have elected to be treated as a REIT under the applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), for every year beginning with the year ended December 31,
1999. Accordingly, we generally are not subject to federal income tax on net income that we distribute to our stockholders, provided that we continue to qualify as a REIT. However, with respect to certain of our subsidiaries that have elected to be treated as taxable REIT subsidiaries (“TRS” or “TRS entities”), we record income tax expense or benefit, as those entities are subject to federal income tax similar to regular corporations. Certain foreign subsidiaries are subject to foreign income tax, although they did not elect to be treated as TRSs.
We account for deferred income taxes using the asset and liability
method and recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our financial statements or tax returns. Under this method, we determine deferred tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Any increase or decrease in the deferred tax liability that results from a change in circumstances, and that causes us to change 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 us to change our judgment about the realizability of the related deferred tax asset, is included in the tax provision when such changes occur.
We recognize the tax benefit from an uncertain tax position claimed or expected to be claimed on a tax return only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. We recognize interest and penalties, if applicable, related to uncertain tax positions as part of income tax benefit or expense.
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Foreign
Currency
Certain of our subsidiaries’ functional currencies are the local currencies of their respective foreign jurisdictions. 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, and we record foreign currency transaction gains and losses in other expense in our Consolidated Statements of Income. We recognize any noncontrolling interests’ proportionate share
of currency translation adjustments of our foreign consolidated joint ventures in noncontrolling interests on our Consolidated Balance Sheets.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
iSegment Reporting
As
of December 31, 2020, 2019 and 2018, we operated through iiithree//
reportable business segments: triple-net leased properties, senior living operations and office operations. Under our triple-net leased properties segment, we invest in and own senior housing and healthcare properties throughout the United States and the United Kingdom and lease those properties to healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses. In our senior living operations segment, we invest in senior housing communities throughout the United States and Canada and engage independent operators, such as Atria and Sunrise, to manage those communities. In our office operations segment, we primarily acquire, own, develop, lease and manage MOBs and research and innovation centers throughout the United States. See “Note 19 – Segment Information.”
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Recently
Issued or Adopted Accounting Standards
We adopted ASC Topic 842, Leases (“ASC 842”) on January 1, 2019, which introduced a lessee model that brings most leases on the balance sheet and, among other changes, eliminates the requirement in current GAAP for an entity to use bright-line tests in determining lease classification. Upon adoption, we recognized both right of use assets and lease liabilities for leases in which we lease land, real property or other equipment. We now also report revenues and expenses within our triple-net leased properties reportable business segment for real estate taxes and insurance that are escrowed and obligations of the tenants in accordance with their respective leases with us. Also, we now expense certain leasing costs, other than leasing commissions, as they
are incurred. Prior to the adoption of ASC 842, GAAP provided for the deferral and amortization of such costs over the applicable lease term.
We used January 1, 2019 as the date of initial application. Therefore, financial information and disclosures under ASC 842 are not provided for periods prior to January 1, 2019. Upon adoption, we recognized a cumulative effect adjustment to retained earnings of $i0.6
million primarily relating to certain costs associated with unexecuted leases that were deferred as of December 31, 2018.
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i
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation. In 2020 and for all periods presented,
certain tax and insurance related expenses have been reclassified from general, administrative and professional fees to other expense in our Consolidated Statements of Income.
i
NOTE 3–CONCENTRATION OF CREDIT RISK
As of December 31, 2020, Atria, Sunrise, Brookdale
Senior Living, Ardent and Kindred managed or operated approximately i20.8%, i10.4%, i8.2%,
i4.9% and i1.1%, respectively, of our consolidated real estate investments based on gross book value (excluding properties classified as held for sale as of December
31, 2020). Because Atria and Sunrise manage our properties in exchange for the receipt of a management fee from us, we are not directly exposed to the credit risk of our managers in the same manner or to the same extent as our triple-net tenants.
Based on gross book value, approximately i15.6% and i47.9%
of our consolidated real estate investments were senior housing communities included in the triple-net leased properties and senior living operations reportable business segments, respectively (excluding properties classified as held for sale as of December 31, 2020). MOBs, research and innovation centers, IRFs and LTACs, health systems, skilled nursing facilities (“SNFs”) and secured loans receivable and investments collectively comprised the remaining i36.5%. Our consolidated properties were located in i45
states, the District of Columbia, seven Canadian provinces and the United Kingdom as of December 31, 2020, with properties in ione state (California) accounting for more than i10%
of our total continuing revenues and net operating income (“NOI,” which is defined as total revenues, excluding interest and other income, less property-level operating expenses and office building services costs) for each of the years ended December 31, 2020, 2019 and 2018.
/
93
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Triple-Net Leased Properties
i
The
following table reflects the concentration risk related to our triple-net leased properties for the periods presented:
(1)Total
revenues include office building and other services revenue, income from loans and investments and interest and other income.
(2)2020 results include $i21.3 million of amortization of up-front consideration received in 2020 from the Brookdale Lease. 2018 results include the impact of a net non-cash charge of $i21.3
million related to April 2018 lease extensions.
/
Each of our leases with Brookdale Senior Living, Ardent and Kindred is a triple-net lease that obligates the tenant to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures, and to comply with the terms of the mortgage financing documents, if any, affecting the properties. In addition, each of our Brookdale Senior Living, Ardent and Kindred leases has a corporate guaranty.
The properties we lease to Brookdale Senior Living, Ardent and Kindred accounted for a significant portion of our triple-net leased properties segment revenues and NOI for
the years ended December 31, 2020, 2019 and 2018. Refer to Item 1A. Risk Factors.
Brookdale Transactions
In July 2020, we entered into a revised master lease agreement (the “Brookdale Lease”) and certain other agreements (together with the Brookdale Lease, the “Agreements”) with Brookdale Senior Living. The Agreements modify our current arrangements with Brookdale Senior Living as follows:
We received up-front consideration approximating $i235 million,
which will be amortized over the remaining lease term and consisted of: (a) $i162 million in cash including $i47 million from
the transfer to Ventas of deposits under the Brookdale Lease; (b) a $i45 million cash pay note (the “Note”), which has an initial interest rate of i9.0%, increasing i50
basis points per annum, and matures on December 31, 2025; (c) $i28 million in warrants exercisable for i16.3 million
shares of Brookdale Senior Living common stock, which are exercisable at any time prior to December 31, 2025 and have an exercise price of $i3.00 per share.
Base cash rent under the Brookdale Lease is set at $i100 million
per annum starting in July 2020, with ithree percent annual escalators commencing on January 1, 2022. The Brookdale Lease is guaranteed by, and the Note is a direct obligation of, Brookdale Senior Living.
The warrants are classified within other assets on our Consolidated Balance Sheets. These warrants are measured at fair value with changes in fair value being recognized within other
expense in our Consolidated Statements of Income.
Brookdale Senior Living transferred fee ownership of ifive senior living communities to us, in full satisfaction and repayment of a $i78 million
loan to Brookdale Senior Living from us that was secured by the five communities. Brookdale Senior Living will now manage those communities for us under a terminable management agreement.
In April 2018, we entered into various agreements with Brookdale Senior Living that provide for, among other things: (a) a consolidation of substantially all of our multiple lease agreements with Brookdale Senior Living into ione master lease; (b) extension of the term for substantially all of our Brookdale Senior Living leased properties until
December 31, 2025, with
94
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Brookdale Senior Living retaining itwo successive i10-year
renewal options; and (c) the guarantee of all the Brookdale Senior Living obligations to us by Brookdale Senior Living Inc., including covenant protections for us. In connection with these agreements, we recognized a net non-cash expense of $i21.3 million for the acceleration of straight-line rent receivables, net unamortized market lease intangibles and deferred revenues, which is included in triple-net leased rental income in our Consolidated Statements of Income. We also received a fee of $i2.5
million that is being amortized over the new lease term.
Holiday Transaction
In April 2020, we completed a transaction with affiliates of Holiday Retirement (collectively, “Holiday”), including (a) entry into a new, terminable management agreement with Holiday Management Company for our i26 independent living assets previously subject to a triple-net lease (the “Holiday Lease”) with Holiday; (b) termination of the Holiday Lease; and (c) our
receipt from Holiday of $i33.8 million in cash from the transfer to us of deposits under the Holiday Lease and $i66 million in principal amount of secured
notes. As a result of the Holiday Lease termination, we recognized $i50.2 million within triple-net leased rental income, composed of $i99.8 million
of cash and notes received less $i49.6 million from the write-off of accumulated straight-line receivable.
2018 Kindred Transaction
In July 2018, Kindred closed transactions (the “Go Private Transactions”) pursuant to which (a) Kindred would be acquired by a consortium of TPG Capital (“TPG”), Welsh, Carson, Anderson & Stowe (“WCAS”) and Humana, Inc., and (b) immediately following the acquisition,
(i) Kindred’s home health, hospice and community care businesses would be separated from Kindred and operated as a standalone company owned by Humana, Inc., TPG and WCAS, and (ii) Kindred would be operated as a separate healthcare company owned by TPG and WCAS. In connection with the closing of the transactions, we received a payment from Kindred of $i12.3 million, which was recognized in interest and other income in our Consolidated Statements of Income during the third quarter of 2018.
Future Contractual
Rents
i
The following table sets forth the future contracted minimum rentals, excluding contingent rent escalations, but including straight-line rent adjustments where applicable, for all of our consolidated triple-net and office building leases as of December 31, 2020 (excluding properties classified as held for sale as of December 31, 2020):
Brookdale
Senior Living
Ardent
Kindred
Other
Total
(In thousands)
2021
$
i148,454
$
i127,505
$
i133,824
$
i759,135
$
i1,168,918
2022
i148,016
i127,505
i133,828
i680,952
i1,090,301
2023
i147,555
i127,505
i112,929
i617,589
i1,005,578
2024
i147,090
i127,505
i102,479
i567,525
i944,599
2025
i146,612
i127,505
i35,412
i483,069
i792,598
Thereafter
i—
i1,219,450
i4,228
i1,787,143
i3,010,821
Total
$
i737,727
$
i1,856,975
$
i522,700
$
i4,895,413
$
i8,012,815
/
Senior
Living Operations
As of December 31, 2020, Atria and Sunrise, collectively, provided comprehensive property management and accounting services with respect to i258 of our i432
consolidated senior housing communities, for which we pay annual management fees pursuant to long-term management agreements.
We rely on our managers’ personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage our senior living operations efficiently and effectively. We also rely on our managers to set appropriate resident fees, provide accurate property-level financial results in a timely manner and otherwise operate our senior housing communities in compliance with the terms of our management agreements and all applicable laws and regulations.
95
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
i
NOTE 4–ACQUISITIONS OF REAL ESTATE PROPERTY
The following summarizes our acquisition and development activities during 2020, 2019 and 2018. We acquire and invest in senior housing, medical office buildings, research and innovation centers and other healthcare properties primarily to achieve an expected yield on our investment, to grow and diversify our portfolio and revenue base, and to reduce our dependence on any single tenant,
operator or manager, geographic location, asset type, business model or revenue source.
2020 Acquisitions
During the year ended December 31, 2020, we acquired itwo research and innovation centers reported within our office operations reportable business segment, iseven
senior housing communities reported within our senior living operations reportable business segment and ione LTAC reported within our triple-net leased properties reportable business segment for an aggregate consideration of $i249.5 million. Each
of these acquisitions was accounted for as an asset acquisition.
2019 Acquisitions
In September 2019, we acquired an i87% interest in i34
Canadian senior housing communities (including ifive in-process developments) valued at $i1.8
billion through an equity partnership (the “LGM Acquisition”) with Le Groupe Maurice (“LGM”). The portfolio continues to be managed by LGM. We also have rights to fund and own all additional developments under an exclusive pipeline agreement with LGM.
During the year ended December 31, 2019, we also acquired itwo properties reported within our office operations reportable business segment (ione
research and innovation center and ione MOB), itwo senior housing communities reported within our senior living operations reportable business
segment and ione vacant land parcel for an aggregate purchase price of $i237.0 million.
Each
of our 2019 acquisitions was accounted for as an asset acquisition.
2018 Acquisitions
During the year ended December 31, 2018, we acquired ifive properties reported within our office operations reportable business segment (ifour
MOBs and ione research and innovation center) and ione senior housing community reported within our senior living
operations reportable business segment for an aggregate purchase price of $i311.3 million. Each of these acquisitions was accounted for as an asset acquisition.
/
i
NOTE
5–DISPOSITIONS AND IMPAIRMENTS
2020 Activity
We recognized $i262.2 million of gains on sale of real estate in 2020 as described below.
In March 2020, we formed the Ventas Life Science and Healthcare Real Estate Fund, L.P. (the “Ventas Fund”), a perpetual life vehicle that focuses on investments in research and innovation centers, medical office buildings
and senior housing communities in North America. To seed the Ventas Fund, we contributed isix (itwo of which are on the same campus) stabilized
research and innovation and medical office properties. We received cash consideration of $i620 million and a i21% interest
in the Ventas Fund. We recognized a gain on the transactions of $i225.1 million.
In October 2020, we formed a joint venture (the “R&I Development JV”) with GIC. To seed the R&I Development JV, we contributed our controlling ownership interest in four in-progress university-based research and innovation development projects (the “Initial R&I JV Projects”). At closing, GIC reimbursed Ventas for its share of costs incurred to date and we recognized
a gain of $i13.7 million. We own an over i50% interest and GIC owns a i45%
interest in the Initial R&I JV Projects. The R&I Development JV may be expanded in the future to include other pre-identified R&I development projects.
See “Note 7 - Investments in Unconsolidated Entities” for additional details on the Ventas Fund and the JV.
Also during 2020, we sold ifour MOBs, ifour
senior housing communities, i22 triple-net leased properties and ione land parcel for aggregate consideration of $i249.6 million,
and we recognized a gain on the sale of these assets of $i23.4 million.
/
96
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2019
Activity
During the year ended December 31, 2019, we sold iten triple-net leased properties, ieight
MOBs, isix senior housing assets and our leasehold interest in ione vacant land parcel for aggregate consideration of $i147.5 million,
and we recognized a gain on the sale of these assets of $i26.0 million.
2018 Activity
During the year ended December 31, 2018, we sold iseven
senior housing communities included in our senior living operations reportable business segment, ifive triple-net leased properties, i11 MOBs and itwo
vacant land parcels for aggregate consideration of $i348.6 million.We recognized a gain on the sale of these assets of $i46.2 million
for the year ended December 31, 2018.
Assets Held for Sale
i
The table below summarizes our real estate assets classified as held for sale as of December 31, 2020 and 2019, including the amounts reported within other assets and accounts payable and other liabilities on our Consolidated Balance Sheets:
(1)Balances
relate to anticipated post-closing settlements of working capital.
/
In September 2020, ione senior housing community no longer met the criteria as being classified as held for sale. As a result, we adjusted the carrying amount of the asset by recognizing depreciation expense of $i0.1
million and classified the asset within net real estate investments on our Consolidated Balance Sheets for all periods presented.
Real Estate Impairment
We recognized impairments of $i153.8 million, $i133.6
million and $i29.5 million for the years ended December 31, 2020, 2019 and 2018, respectively, which are recorded primarily as a component of depreciation and amortization in our Consolidated Statements of Income. A significant portion of our 2020 charges resulted from the impact of COVID-19 and others were primarily the result of a change in our intent to hold the impaired assets (See “Note 1 – Description of Business
- COVID-19 Update”). In most cases, we recognized an impairment in the periods in which our change in intent was made.
There were iino/
impairments recorded as a result of natural disasters for the years ended December 31, 2020 and 2019; however, we recognized impairments of $i52.5 million for the year ended December 31, 2018 as a result of natural disasters which are recorded as a component of other in our Consolidated Statements of Income.
97
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
i
NOTE 6–LOANS RECEIVABLE AND INVESTMENTS
As of December 31, 2020 and 2019, we had $i0.9
billion and $i1.0 billion, respectively, of net loans receivable and investments relating to senior housing and healthcare operators or properties. iThe
following is a summary of our loans receivable and investments, net, including amortized cost, fair value and unrealized gains or losses on available for sale investments:
Government-sponsored
pooled loan investments, net(1)
i52,178
i—
i6,888
i59,066
i59,066
Total
investments reported as secured loans receivable and investments, net
i697,724
i—
i6,888
i704,612
i705,991
Non-mortgage
loans receivable, net
i63,724
i—
i—
i63,724
i63,538
Marketable
debt securities (2)
i213,062
i—
i24,298
i237,360
i237,360
Total
loans receivable and investments, net
$
i974,510
$
i—
$
i31,186
$
i1,005,696
$
i1,006,889
(1)Investments
in government-sponsored pool loans have contractual maturity dates in 2021 and 2023.
(2)Investments in marketable debt securities have contractual maturity dates in 2024 and 2026.
2020 Activity
During the year ended December 31, 2020, we recognized $i34.7 million
in expense in establishing allowances on our loan and investment portfolio. See “Note 1 - Description Of Business - COVID-19 Update.” In December 2020, we received $i10.5 million for partial repayment of previously reserved loans which was recorded within allowance on loans receivables and investments in our Consolidated Statements of Income.
During the year ended December 31, 2020, we received
aggregate proceeds of $i106.1 million for the full repayment of the principal balances of various loans receivable with a weighted average interest rate of i8.3%
that were due to mature between 2020 and 2025, which resulted in total gains of $i1.4 million.
In April 2020, we received as consideration $i66 million
of notes secured by equity pledges on real estate assets with an effective interest rate of i9.2% in connection with the termination of the Holiday Lease. See “Note 3 – Concentration of Credit Risk.”
In July 2020, we entered into a $i45 million
Note from Brookdale Senior Living in connection with certain revised Agreements, which is included above in Non-mortgage loans receivable, net. The Note has an initial interest rate of i9.0%, increasing i50
basis points per annum, and matures on December 31, 2025. In addition, Brookdale transferred fee ownership of ifive senior living communities to us, in full satisfaction and repayment of a $i78 million
loan to Brookdale Senior Living from us that was secured by the five communities. See “Note 3 – Concentration of Credit Risk.”
/
98
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2019 Activity
In April 2019, we purchased $i5.0
million and $i10.5 million of senior secured notes issued by a healthcare company which mature in 2024 and 2026, respectively. The 2024 and 2026 notes were purchased at a price of i102% and i98%
of par, respectively, and have an effective interest rate of i8.1% and i8.3%, respectively. These marketable debt securities are classified as available for sale and are reflected on our Consolidated Balance Sheets at fair value.
In
June 2019, we provided new secured debt financing of $i490 million to certain subsidiaries of Colony Capital, Inc. The London Inter-bank Offered Rate (“LIBOR”) based debt financing has a five-year term (inclusive of ithree
one-year extension options). In connection with this transaction, our previous secured loan to certain subsidiaries of Colony Capital, Inc. of $i282 million was paid in full and we recognized a gain of $i0.5
million in income from loans and investments in our Consolidated Statements of Income.
In July 2019, we closed the first phase of the LGM Acquisition by funding C$i947 million (US $i723
million) to LGM as a bridge loan to enable LGM to buy out its former partner. The bridge loan and all outstanding interest was fully repaid in September 2019 upon the closing of the LGM Acquisition. See “Note 4 – Acquisitions of Real Estate Property.”
i
NOTE 7–INVESTMENTS IN UNCONSOLIDATED ENTITIES
We report investments in unconsolidated entities over whose operating and financial policies we have the ability to exercise significant influence under the equity method of accounting. We are not required to consolidate these entities because our joint venture partners have significant participating rights, nor are these entities considered VIEs, as they are controlled by equity holders with sufficient capital. We invest in both real estate entities and operating entities which are described further below.
Investments in Unconsolidated Real Estate Entities
Through our newly formed Ventas Investment Management Platform, we partner with third-party institutional investors to invest in healthcare real estate through various joint ventures and other co-investment vehicles. Below is a summary of our investment
in unconsolidated real estate entities as of December 31, 2020 and 2019, respectively:
Carrying Amount
As
of December 31,
Ownership(1)
2020
2019
(In thousands)
Investment in unconsolidated real estate entities:
Ventas Life Science & Healthcare Real Estate Fund
i22.9%
$
i279,983
$
i—
Pension
Fund Joint Venture
i22.8%
i34,690
i41,739
Research
& Innovation Development Joint Venture
i50.3%
i123,445
i—
Ventas
Investment Management Platform
i438,118
i41,739
All
other(2)
i34.0%-i50.0%
i5,570
i3,283
Total
investment unconsolidated real estate entities
$
i443,688
$
i45,022
(1)
The entities in which we have an ownership interest may have less than a 100% interest in the underlying real estate. The ownership percentages in the table reflect Ventas’ interest in the underlying real estate.
(2) Includes investments in land parcels, parking structures and other de minimis investments in unconsolidated real estate entities.
In March 2020, we formed the Ventas Fund, in which we are the sponsor and general partner. See “Note 5 – Dispositions and Impairments.” In October 2020, the Ventas Fund acquired a portfolio of ithree
life science properties in the South San Francisco life science cluster for $i1.0 billion, which increased assets under management to $i1.8 billion
as of December 31, 2020. The acquisition was financed with a $i415 million mortgage loan bearing interest at a fixed rate of i2.6% per annum.
/
99
In
October 2020, we formed the R&I Development JV. See “Note 5 – Dispositions and Impairments.” We own an over i50% interest and GIC owns a i45%
interest in the Initial R&I JV Projects. We act as manager of the R&I Develoment JV, with customary rights and obligations, and will receive customary fees and incentives. Our exclusive development partner, Wexford Science & Technology, remains the developer of, and a minority partner in, all of the projects. The R&I Development JV may be expanded in the future to include other pre-identified R&I development projects.
In March 2018, we recognized an impairment charge of $i35.7 million
relating to ione of our equity investments in an unconsolidated real estate joint venture consisting principally of SNFs, which is recorded in loss from unconsolidated entities in our Consolidated Statements of Income. We completed the sale of our i25%
interest to our joint venture partner in July 2018 and received $i57.5 million at closing.
We provide various services to our unconsolidated real estate entities in exchange for fees and reimbursements. Total management fees earned in connection with these services were $i6.7
million, $i3.4 million and $i5.8 million
for the years ended December 31, 2020, 2019 and 2018, respectively, which is included in office building and other services revenue in our Consolidated Statements of Income.
Investments in Unconsolidated Operating Entities
We own investments in unconsolidated operating entities such as Ardent, Atria and Eclipse Senior Living, Inc. (“ESL”), which are included within other assets on our Consolidated Balance Sheets. Our i34%
ownership interest in Atria entitles us to customary minority rights and protections, including the right to appoint itwo of isix members to the Atria Board of Directors. Our
i34% ownership interest in ESL entitles us to customary minority rights and protections, including the right to appoint itwo of isix
members to the ESL Board of Directors. ESL management owns the i66% controlling interest. Our i9.8% ownership interest in Ardent entitles us to customary minority rights and protections,
as well as the right to appoint ione of i11 members on the Ardent Board of Directors.
In June 2020, as a result of COVID-19, we
recognized an impairment charge of $i10.7 million related to our investment in an unconsolidated operating entity. See “Note 1 – Description of Business - COVID-19 Update.”
Remaining Weighted Average Amortization Period in Years
Balance
Remaining Weighted Average Amortization Period in Years
(Dollars in thousands)
Intangible assets:
Above
market lease intangibles
$
i140,096
i6.4
$
i145,891
i6.9
In-place
and other lease intangibles
i1,090,790
i10.7
i1,162,187
i10.6
Goodwill
i1,051,650
N/A
i1,051,161
N/A
Other
intangibles
i35,870
i10.0
i35,837
i10.9
Accumulated
amortization
(i941,462)
N/A
(i922,668)
N/A
Net
intangible assets
$
i1,376,944
i10.3
$
i1,472,408
i10.2
Intangible
liabilities:
Below market lease intangibles
$
i339,265
i14.3
$
i349,357
i14.5
Other
lease intangibles
i13,498
N/A
i13,498
N/A
Accumulated
amortization
(i212,655)
N/A
(i203,834)
N/A
Purchase
option intangibles
i3,568
N/A
i3,568
N/A
Net
intangible liabilities
$
i143,676
i14.3
$
i162,589
i14.5
/
N/A—Not
Applicable
/
100
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Above-market lease intangibles and in-place and other lease intangibles are included in acquired lease intangibles within real estate investments on our Consolidated Balance Sheets. Other intangibles (including non-compete agreements, trade names and trademarks) are included in other assets on our Consolidated Balance Sheets. Below market lease intangibles, other lease intangibles and purchase option intangibles are included in accounts payable and other liabilities on
our Consolidated Balance Sheets. For the years ended December 31, 2020, 2019 and 2018, our net amortization related to these intangibles was $i45.7 million, $i59.2
million and $i49.2 million, respectively. iThe
following is a summary of the estimated net amortization related to these intangibles for each of the next five years:
Estimated Net Amortization
(In thousands)
2021
$
i50,421
2022
i42,787
2023
i31,343
2024
i16,932
2025
i8,977
i
The
table below reflects the carrying amount of goodwill, by segment, as of December 31, 2020:
Secured
revolving construction credit facility due 2022
i154,098
i160,492
Floating
Rate Senior Notes, Series F due 2021 (2)
i235,664
i231,018
3.25%
Senior Notes due 2022
i263,687
i500,000
3.30%
Senior Notes, Series C due 2022 (2)
i196,386
i192,515
Unsecured
term loan due 2023
i200,000
i200,000
3.125%
Senior Notes due 2023
i400,000
i400,000
3.10%
Senior Notes due 2023
i400,000
i400,000
2.55%
Senior Notes, Series D due 2023 (2)
i216,025
i211,767
3.50%
Senior Notes due 2024
i400,000
i400,000
3.75%
Senior Notes due 2024
i400,000
i400,000
4.125%
Senior Notes, Series B due 2024 (2)
i196,386
i192,515
2.80%
Senior Notes, Series E due 2024 (2)
i471,328
i462,036
Unsecured
term loan due 2025 (2)
i392,773
i385,030
3.50%
Senior Notes due 2025
i600,000
i600,000
2.65%
Senior Notes due 2025
i450,000
i450,000
4.125%
Senior Notes due 2026
i500,000
i500,000
3.25%
Senior Notes due 2026
i450,000
i450,000
3.85%
Senior Notes due 2027
i400,000
i400,000
4.00%
Senior Notes due 2028
i650,000
i650,000
4.40%
Senior Notes due 2029
i750,000
i750,000
3.00%
Senior Notes due 2030
i650,000
i650,000
4.75%
Senior Notes due 2030
i500,000
i—
6.90%
Senior Notes due 2037
i52,400
i52,400
6.59%
Senior Notes due 2038
i22,823
i22,823
5.70%
Senior Notes due 2043
i300,000
i300,000
4.375%
Senior Notes due 2045
i300,000
i300,000
4.875%
Senior Notes due 2049
i300,000
i300,000
Mortgage
loans and other
i2,092,106
i1,996,969
Total
i11,983,071
i12,245,802
Deferred
financing costs, net
(i68,343)
(i79,939)
Unamortized
fair value adjustment
i12,618
i20,056
Unamortized
discounts
(i31,934)
(i27,146)
Senior
notes payable and other debt
$
i11,895,412
$
i12,158,773
(1)As
of December 31, 2020 and 2019, respectively, $i12.2 million and $i26.2
million of aggregate borrowings were denominated in Canadian dollars. Aggregate borrowings of $i27.2 million and $i27.6 million were denominated in British
pounds as of December 31, 2020 and 2019, respectively.
(2)Canadian Dollar debt obligations shown in US Dollars.
//
102
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Credit Facilities, Commercial Paper and Unsecured Term Loans
As
of December 31, 2020, our unsecured credit facility was comprised of a $i3.0 billion unsecured revolving credit facility priced at LIBOR plus i0.875%
based on the Company’s debt ratings, which was scheduled to mature in 2021. Following December 31, 2020, we entered into an amended and restated unsecured credit facility (the “New Credit Facility”) comprised of a $i2.75 billion unsecured revolving credit facility initially priced at LIBOR plus i0.825%
based on the Company’s debt ratings. The New Credit Facility matures in 2025, but may be extended at our option subject to the satisfaction of certain conditions, for itwo additional periods of isix
months each. The New Credit Facility also includes an accordion feature that permits us to increase our aggregate borrowing capacity thereunder to up to $i3.75 billion.
Our unsecured credit facility imposed certain customary restrictions on us, including restrictions pertaining to: (i) liens; (ii) investments; (iii) the incurrence of additional indebtedness; (iv) mergers and dissolutions; (v) certain dividend, distribution and other payments; (vi) permitted businesses; (vii) transactions with affiliates; (viii) agreements
limiting certain liens; and (ix) the maintenance of certain consolidated total leverage, secured debt leverage, unsecured debt leverage and fixed charge coverage ratios and minimum consolidated adjusted net worth, and contains customary events of default. The New Credit Facility imposes similar restrictions.
As of December 31, 2020, $i39.4 million was outstanding under the unsecured revolving credit
facility with an additional $i24.9 million restricted to support outstanding letters of credit. In addition, we limit our utilization of the unsecured revolving credit facility, to the extent necessary, to support our commercial paper program when commercial paper notes are outstanding. We had $i2.9
billion in available liquidity under the unsecured revolving credit facility as of December 31, 2020. In connection with the New Credit Facility, we paid off all amounts outstanding under the existing unsecured revolving credit facility as of January 29, 2021 by drawing down the same amount under the New Credit Facility.
Our wholly owned subsidiary, Ventas Realty, Limited Partnership (“Ventas Realty”), may issue from time to time unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $i1.0 billion. The
notes are sold under customary terms in the United States commercial paper note market and are ranked pari passu with all of Ventas Realty’s other unsecured senior indebtedness. The notes are fully and unconditionally guaranteed by Ventas, Inc. As of December 31, 2020, we had ino borrowings outstanding under our commercial paper program.
As of December 31, 2020, we had a $i200.0
million unsecured term loan priced at LIBOR plus i0.90% that matures in 2023. The term loan also includes an accordion feature that effectively permits us to increase our aggregate borrowings thereunder to up to $i800.0
million.
As of December 31, 2020, we had a $i400.0 million secured revolving construction credit facility with $i154.1
million of borrowings outstanding. The secured revolving construction credit facility matures in 2022 and is primarily used to finance the development of research and innovation centers and other construction projects.
In September 2019, we entered into a new C$i500 million unsecured term loan facility priced at Canadian Dollar Offered Rate (“CDOR”) plus i0.90%
that matures in 2025.
In June 2019, we repaid $i100.0 million of the balance outstanding on the $i300.0 million unsecured term loan that matures
in 2023 and repaid in full the $i600.0 million unsecured term loan that was set to mature in 2024 and, as a result, we recognized a non-cash charge to loss on extinguishment of debt of $i3.2
million during the second quarter of 2019.
Senior Notes
As of December 31, 2020, we had outstanding $i7.7 billion aggregate principal amount of senior notes issued by Ventas Realty ($i263.7 million
of which was co-issued by Ventas Realty’s wholly owned subsidiary, Ventas Capital Corporation), approximately $i75.2 million aggregate principal amount of senior notes issued by Nationwide Health Properties, Inc. (“NHP”) and assumed by our subsidiary, Nationwide Health Properties, LLC (“NHP LLC”), as successor to NHP, in connection with our acquisition of NHP, and C$i1.7
billion aggregate principal amount of senior notes issued by our subsidiary, Ventas Canada Finance Limited (“Ventas Canada”). All of the senior notes issued by Ventas Realty and Ventas Canada are unconditionally guaranteed by Ventas, Inc.
Ventas Realty’s senior notes are part of our and Ventas Realty’s general unsecured obligations, ranking equal in right of payment with all of our and Ventas Realty’s existing and future senior obligations and ranking senior in right of payment to all of our and Ventas Realty’s existing and future subordinated indebtedness. However, Ventas Realty’s senior notes are effectively subordinated to our and Ventas Realty’s secured indebtedness, if any, to the extent of the value of the assets securing
103
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
that indebtedness. Ventas Realty’s senior notes are also structurally subordinated to the preferred equity and indebtedness, whether secured or unsecured, of our subsidiaries (other than Ventas Realty and, with respect to those senior notes co-issued by Ventas Capital Corporation, Ventas Capital Corporation).
Ventas Canada’s senior notes are part of our and Ventas Canada’s general unsecured obligations, ranking equal in right of payment with all of Ventas Canada’s existing and future subordinated indebtedness. However, Ventas Canada’s senior notes are effectively subordinated to our and Ventas Canada’s secured indebtedness, if any, to the extent of the value of the assets securing
that indebtedness. Ventas Canada’s senior notes are also structurally subordinated to the preferred equity and indebtedness, whether secured or unsecured, of our subsidiaries (other than Ventas Canada).
NHP LLC’s senior notes are part of NHP LLC’s general unsecured obligations, ranking equal in right of payment with all of NHP LLC’s existing and future senior obligations and ranking senior to all of NHP LLC’s existing and future subordinated indebtedness. However, NHP LLC’s senior notes are effectively subordinated to NHP LLC’s secured indebtedness, if any, to the extent of the value of the assets securing that indebtedness. NHP LLC’s senior notes are also structurally subordinated to the preferred equity and indebtedness, whether secured or unsecured, of its subsidiaries.
Ventas
Realty and Ventas Canada may redeem each series of their respective senior notes in whole at any time or in part from time to time, prior to maturity at the redemption prices set forth in the applicable indenture (which include, in many instances, a make-whole premium), plus, in each case, accrued and unpaid interest thereon to the redemption date.
NHP LLC’s i6.90% senior notes due 2037 are subject to repurchase
at the option of the holders, at par, on October 1, 2027, and its i6.59% senior notes due 2038 are subject to repurchase at the option of the holders, at par, on July 7 in each of 2023 and 2028.
2021 Senior Notes Activity
In February 2021, in order to reduce near-term maturities, we issued a make whole redemption for the entirety of the $400 million outstanding aggregate principal amount
of 3.10% senior notes due January 2023. The redemption is expected to settle in March 2021 and will be funded primarily with cash on hand.
2020 Senior Notes Activity
In April 2020, Ventas Realty issued and sold $i500.0 million aggregate principal amount of i4.75%
senior notes due 2030 at an amount equal to i97.86% of par.
In October 2020, we redeemed, pursuant to a cash tender offer, $i236.3 million
aggregate principal amount then outstanding of our i3.25% senior notes due 2022 at i104.14% of par value, plus accrued and unpaid interest to the payment date. As a result, we recognized a loss on extinguishment
of debt of $i11.1 million during the year ended December 31, 2020.
2019 Senior Notes Activity
In January 2019, we redeemed $i258.8
million aggregate principal amount then outstanding of our i5.45% senior notes due 2043 at a public offering price at par, plus accrued and unpaid interest to the redemption date. Notice of the redemption was given in November 2018 and, as a result, we recognized a non-cash charge to loss on extinguishment of debt of $i7.1
million during the year ended December 31, 2018 and $i0.4 million during the first quarter of 2019.
In February 2019, Ventas Realty issued and sold $i400.0
million aggregate principal amount of i3.50% senior notes due 2024 at a public offering price equal to i99.88% of par and $i300.0
million aggregate principal amount of i4.875% senior notes due 2049 at a public offering price equal to i99.77% of par.
In
June 2019, Ventas Realty issued $i450.0 million aggregate principal amount of i2.65% senior notes due 2025 at a public offering price equal to i99.45%
of par. The notes were settled and proceeds were received in July 2019.
In July 2019, in connection with an announced cash tender offer for such notes, we tendered $i397.1 million principal amount then outstanding of our i2.70%
senior notes due 2020 for a tender offer consideration of i100.37% of par value, plus accrued and unpaid interest to the payment date. In August 2019, we repaid the remaining balance then outstanding of our i2.70%
senior notes due 2020 of $i102.9 million. As a result of the redemption and repayment, we recognized a total loss on extinguishment of debt of $i2.4
million.
104
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In August 2019, Ventas Realty issued and sold $i650.0 million aggregate principal amount of i3.00%
senior notes due 2030 at a public offering price equal to i99.51% of par.
In August 2019, in connection with an announced cash tender offer for such notes, we tendered $i395.7
million principal amount then outstanding of our i4.25% senior notes due 2022 for a tender offer consideration of i105.46% of par value, plus accrued and unpaid interest to the payment date. In
September 2019, we repaid the remaining balance then outstanding of our i4.25% senior notes due 2022 of $i204.3 million. As a result of the redemption and repayment,
we recognized a loss on extinguishment of debt of $i35.9 million.
In September 2019, we repaid in full, at par, C$i400.0
million principal amount then outstanding of our i3.00% senior notes, Series A due 2019 upon maturity.
In November 2019, Ventas Canada issued and sold C$i600
million aggregate principal amount of i2.80% senior notes, Series E due 2024 and C$i300 million aggregate principal amount of floating rate senior notes, Series F due 2021, at a public
offering price equal to i99.99% and i100.00%, respectively, of par.
Mortgages
At
December 31, 2020, we had i89 mortgage loans outstanding in the aggregate principal amount of $i2.1 billion which is secured by 78 of our properties. Of
these loans, i66 loans in the aggregate principal amount of $i1.4 billion bear interest at fixed rates ranging from i1.5%
to i13.0% per annum, and i23 loans in the aggregate principal amount of $i702.9
million bear interest at variable rates ranging from i0.1% to i2.9% per annum as of December
31, 2020. At December 31, 2020, the weighted average annual rate on our fixed rate mortgage loans was i3.5%, and the weighted average annual rate on our variable rate mortgage loans was i1.9%. Our
mortgage loans had a weighted average maturity of i3.9 years as of December 31, 2020.
During the years ended December 31, 2020 and 2019, we repaid in full mortgage loans in the aggregate principal amount of $i60.9
million and $i97.7 million, respectively.
In September 2019, we assumed C$i1.2 billion mortgage debt (included in the $i2.1
billion above), including a fair value premium of C$i16.6 million, in connection with the LGM Acquisition. See “Note 4 – Acquisitions of Real Estate Property.”
Scheduled Maturities of Borrowing Arrangements and Other Provisions
i
The
following summarizes the maturities of our senior notes payable and other debt as of December 31, 2020:
Principal Amount Due at Maturity
Unsecured Revolving
Credit
Facility
and Commercial Paper Notes (1)
Scheduled Periodic Amortization
Total Maturities
(In thousands)
2021
$
i511,971
$
i39,395
$
i44,651
$
i596,017
2022
i1,070,861
i—
i38,602
i1,109,463
2023
i1,609,373
i—
i24,821
i1,634,194
2024
i1,610,581
i—
i18,587
i1,629,168
2025
i1,619,872
i—
i14,894
i1,634,766
Thereafter
i5,285,913
i—
i93,550
i5,379,463
Total
maturities
$
i11,708,571
$
i39,395
$
i235,105
$
i11,983,071
/
(1)At
December 31, 2020, we had unrestricted cash and cash equivalents of $i413.3 million, which exceeds the borrowings outstanding under our unsecured revolving credit facility and commercial paper program.
The instruments governing our outstanding indebtedness contain covenants that limit our ability and the ability of certain of our subsidiaries
to, among other things: (i) incur debt; (ii) make certain dividends, distributions and investments; (iii) enter into certain transactions; and/or (iv) merge, consolidate or sell certain assets. Ventas Realty’s and Ventas Canada’s senior notes also require us and our subsidiaries to maintain total unencumbered assets of at least i150% of our unsecured debt.
105
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Our credit facilities also require us to maintain certain financial covenants pertaining to, among other things, our consolidated total leverage, secured debt, unsecured debt, fixed charge coverage and net worth.
As of December 31, 2020, we were in compliance with all of these covenants.
Derivatives and Hedging
In the normal course of our business, interest rate fluctuations affect future cash flows under our variable rate debt obligations, loans receivable and marketable debt securities, and foreign currency exchange rate fluctuations affect our operating results. We follow established
risk management policies and procedures, including the use of derivative instruments, to mitigate the impact of these risks.
We do not use derivative instruments for trading or speculative purposes, and we have a policy of entering into contracts only with major financial institutions based upon their credit ratings and other factors. When considered together with the underlying exposure that the derivative is designed to hedge, we do not expect that the use of derivatives in this manner would have any material adverse effect on our future financial condition or results of operations.
As of December 31, 2020, our variable rate debt obligations of $i1.5
billion reflect, in part, the effect of $i146.7 million notional amount of interest rate swaps with maturities ranging from March 2022 to May 2022 that effectively convert fixed rate debt to variable rate debt. As of December 31, 2020, our fixed rate debt obligations of $i10.5
billion reflect, in part, the effect of $i305.9 million and C$i145.7 million notional amount of interest rate swaps with maturities ranging from January 2023 to December 2029, in each case
that effectively convert variable rate debt to fixed rate debt.
i
NOTE 11–FAIR VALUES OF FINANCIAL INSTRUMENTS
i
The
carrying amounts and fair values of our financial instruments were as follows:
For
a discussion of the assumptions considered, refer to “Note 2 – Accounting Policies.” The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts. Accordingly, the estimates presented above are not necessarily indicative of the amounts we would realize in a current market exchange.
/
i
NOTE
12–STOCK- BASED COMPENSATION
Compensation Plans
We currently have: ithree plans under which outstanding options to purchase common stock, shares of restricted stock or restricted stock units have been, or may in the future be, granted to our officers, employees and non-employee
directors (the
/
106
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2006 Incentive Plan, the 2006 Stock Plan for Directors, and the 2012 Incentive Plan); ione
plan under which executive officers may receive deferred common stock in lieu of compensation (the Executive Deferred Stock Compensation Plan); and ione plan under which certain non-employee directors have received or may receive deferred common stock in lieu of director fees (the Nonemployee Directors’ Deferred Stock Compensation Plan). These plans are referred to collectively as the “Plans.”
During
the year ended December 31, 2020, we were permitted to issue shares and grant options, restricted stock and restricted stock units only under the Executive Deferred Stock Compensation Plan, the Nonemployee Directors’ Deferred Stock Compensation Plan and the 2012 Incentive Plan. The 2006 Incentive Plan and the 2006 Stock Plan for Directors (collectively, the “2006 Plans”) expired on December 31, 2012, and ino
additional grants were permitted under those Plans after that date.
The number of shares initially reserved for issuance and the number of shares available for future grants or issuance under these Plans as of December 31, 2020 were as follows:
•Executive Deferred Stock Compensation Plan—i0.6
million shares were reserved initially for issuance to our executive officers in lieu of the payment of all or a portion of their salary, at their option, and i0.6 million shares were available for future issuance as of December 31, 2020.
•Nonemployee Directors’ Deferred
Stock Compensation Plan—i0.6 million shares were reserved initially for issuance to nonemployee directors in lieu of the payment of all or a portion of their retainer and meeting fees, at their option, and i0.4
million shares were available for future issuance as of December 31, 2020.
•2012 Incentive Plan—i10.7 million shares (plus the number of shares or options outstanding under the 2006 Plans as of December 31, 2012 that were or are subsequently
forfeited or expire unexercised) were reserved initially for grants or issuance to employees and non-employee directors, and i2.7 million shares (plus the number of shares or options outstanding under the 2006 Plans as of December 31, 2020 that were or are subsequently forfeited or expire unexercised) were available for future issuance as of December
31, 2020.
Outstanding options issued under the Plans are exercisable at the market price on the date of grant, expire iten years from the date of grant, and vest or have vested over periods of two or ithree
years. If provided in the applicable Plan or award agreement, the vesting of stock options may accelerate upon a change of control (as defined in the applicable Plan) of Ventas, Inc. and other specified events.
Stock Options
i
The following is a summary of stock option activity in 2020:
Shares
(000’s)
Weighted Average Exercise Price
Weighted Average Remaining Contractual Life (years)
Compensation
costs for all share-based awards are based on the grant date fair value and are recognized on a straight-line basis during the requisite service periods, with charges recorded in general, administrative and professional fees. As of December 31, 2020 there was ino unrecognized compensation expense relating to stock options. Compensation costs related to stock options for the years ended December 31, 2019 and 2018
were $i0.3 million and $i2.6 million, respectively.
Aggregate
proceeds received from options exercised under the Plans for the years ended December 31, 2020, 2019 and 2018 were $i5.1 million, $i36.1
million and $i8.8 million, respectively. The total intrinsic value at exercise of options exercised during the years ended December 31, 2020, 2019 and 2018 was $i1.3
million, $i12.3 million and $i3.1
million, respectively. There was ino deferred income tax benefit for stock options exercised.
107
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Restricted Stock and Restricted Stock Units
We
recognize the fair value of shares of restricted stock and restricted stock units (including time-based and performance-based awards) on the grant date of the award as stock-based compensation expense over the requisite service period, with charges to general, administrative and professional fees of $i21.4 million, $i33.6
million and $i27.3 million in 2020, 2019 and 2018, respectively. Restricted stock and restricted stock units generally vest over periods ranging from two to ifive
years. If provided in the applicable Plan or award agreement, the vesting of restricted stock and restricted stock units may accelerate upon a change of control (as defined in the applicable Plan) of Ventas and other specified events. In addition to customary change in control vesting provisions, awards for executive officers will also generally vest to the executives if at a future termination date, they have attained a combined number of age and years of service of at least 75, with a minimum age of 62.
i
A
summary of the status of our non-vested restricted stock and restricted stock units (including time-based and performance-based awards) as of December 31, 2020, and changes during the year ended December 31, 2020, follows:
As
of December 31, 2020, we had $i19.8 million of unrecognized compensation cost related to non-vested restricted stock and restricted stock units under the Plans. We expect to recognize that cost over a weighted average period of i1.80 years. The
total fair value at the vesting date for restricted stock and restricted stock units that vested during the years ended December 31, 2020, 2019 and 2018 was $i19.8 million, $i31.6
million and $i15.5 million, respectively.
Employee and Director Stock Purchase Plan
We have in effect an Employee and Director Stock Purchase Plan (“ESPP”) under which our employees and directors may purchase shares of our common stock at a discount. Pursuant to the terms of the ESPP,
on each purchase date, participants may purchase shares of common stock at a price not less than i90% of the market price on that date (with respect to the employee tax-favored portion of the plan) and not less than i95%
of the market price on that date (with respect to the additional employee and director portion of the plan). We initially reserved i3.0 million shares for issuance under the ESPP. As of December 31, 2020, i0.2
million shares had been purchased under the ESPP and i2.8 million shares were available for future issuance.
Employee Benefit Plan
We maintain a 401(k) plan that allows eligible employees to defer compensation subject to certain limitations imposed by the
Code. In 2020, we made contributions for each qualifying employee of up to i3.5% of his or her salary, subject to certain limitations. During 2020, 2019 and 2018, our aggregate contributions were approximately $i1.6
million, $i1.5 million and $i1.5 million, respectively.
i
NOTE
13–INCOME TAXES
We have elected to be taxed as a REIT under the applicable provisions of the Code, as amended, for every year beginning with the year ended December 31, 1999. We have also elected for certain of our subsidiaries to be treated as TRS entities, which are subject to federal, state and foreign income taxes. All entities other than the TRS entities are collectively referred to as the “REIT” within this note. Certain REIT entities are subject to foreign income tax.
108
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Although
we intend to continue to operate in a manner that will enable us to qualify as a REIT, such qualification depends upon our ability to meet, on a continuing basis, various distribution, stock ownership and other tests. iOur tax treatment of distributions per common share was as follows:
Add:
Dividend declared in current year and taxable in following year
i0.45000
ii0.79250/
ii0.79250/
Less:
Dividend declared in prior year and taxable in current year
(ii0.79250/)
(ii0.79250/)
(i0.79000)
Distribution
declared per common share outstanding
$
i2.14250
$
i3.17000
$
i3.16250
We
believe we have met the annual REIT distribution requirement by payment of at least iii90//%
of our estimated taxable income for 2020, 2019 and 2018. iOur consolidated benefit for income taxes was as follows:
The
2020 income tax benefit is primarily due to a $i95.9 million net deferred tax benefit from an internal restructuring of certain US taxable REIT subsidiaries completed in the first quarter, partially offset by a valuation allowance recorded against certain deferred tax assets in the second quarter.During the second quarter of 2020, we determined that the future tax benefits
of certain deferred tax assets (primarily US federal NOL carryforwards which begin to expire in 2031) were not more likely than not to be realized.The 2019 income tax benefit was primarily due to the $i57.7 million reversal of valuation allowances recorded against the net deferred tax assets of certain of our TRS entities.
Although the TRS entities and
certain other foreign entities have paid minimal cash federal, state and foreign income taxes for the year ended December 31, 2020, their income tax liabilities may increase in future years as we exhaust net operating loss (“NOL”) carryforwards and as our senior living and other operations grow. Such increases could be significant.
109
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
i
A
reconciliation of income tax expense and benefit, which is computed by applying the federal corporate tax rate for the years ended December 31, 2020, 2019 and 2018, to the income tax benefit is as follows:
Tax at statutory rate on earnings from continuing operations before unconsolidated entities, noncontrolling interest and income taxes
$
i27,132
$
i77,803
$
i80,811
State
income taxes, net of federal benefit
(i1,967)
i2,341
(i253)
Change
in valuation allowance from ordinary operations
i86,359
(i47,227)
(i5,451)
Decrease
in ASC 740 income tax liability
i—
i—
(i4,347)
Tax
at statutory rate on earnings not subject to federal income taxes
(i53,808)
(i90,862)
(i89,947)
Foreign
rate differential and foreign taxes
i3,342
i1,407
i1,924
Change
in tax status of TRS
(i150,287)
(i52)
i359
Effect
of the 2017 Tax Act
i—
i—
(i23,160)
Other
differences
(i7,305)
i280
i111
Income
tax benefit
$
(i96,534)
$
(i56,310)
$
(i39,953)
/
Each
TRS is a tax-paying component for purposes of classifying deferred tax assets and liabilities. iThe tax effects of temporary differences and carryforwards included in the net deferred tax liabilities are summarized as follows:
Property, primarily differences in depreciation and amortization, the tax basis of land assets and the treatment of interests and certain costs
$
(i60,494)
$
(i257,373)
$
(i269,758)
Operating
loss and interest deduction carryforwards
i124,606
i136,771
i133,243
Expense
accruals and other
i10,516
i7,380
i11,910
Valuation
allowance
(i127,279)
(i40,114)
(i80,614)
Net
deferred tax liabilities
$
(i52,651)
$
(i153,336)
$
(i205,219)
Our
net deferred tax liability decreased $i100.7 million during 2020 primarily due to a change in the tax status of certain of our TRS entities. This was offset by the recording of valuation allowances against $i54.4 million
of other deferred tax assets. Our net deferred tax liability decreased $i51.9 million during 2019 primarily due to the $i57.7
million reversal of valuation allowances recorded against the net deferred tax assets of certain of our TRS entities. Our net deferred tax liability decreased $i44.8 million during 2018 primarily due to accounting for IRS guidance issued subsequent to the enactment of the 2017 Tax Act, specifically a $i23.2
million benefit for the reversal of a valuation allowance on deferred interest carryforwards, and tax losses of certain TRS entities.
Due to uncertainty regarding the realization of certain deferred tax assets, we have established valuation allowances, primarily in connection with the NOL carryforwards related to certain TRSs. The amounts related to NOLs at the TRS entities for 2020, 2019 and 2018 are $i83.2 million, $i21.2
million and $i55.1 million, respectively.
We are subject to corporate-level taxes (“built-in gains tax”) for any asset dispositions during the five year period immediately after the assets were owned by a C corporation (either prior to our REIT election, through stock acquisition or merger). The amount of income potentially subject to built-in gains tax is generally equal to the lesser of the excess of the fair value of the asset
over its adjusted tax basis as of the date it became a REIT asset or the actual amount of gain. Some, but not all, future gains could be offset by available NOL carryforwards.
At December 31, 2020, 2019 and 2018, the REIT had NOL carryforwards of $i896.4 million, $i858.6
million and $i910.7 million, respectively. Additionally, the REIT has $i10.8 million of federal income tax credits that were carried
over from acquisitions. These amounts can be used to offset future taxable income (or taxable income for prior years if an audit determines that tax is owed), if any. The REIT will be entitled to utilize NOLs and tax credit carryforwards only to the extent that REIT taxable income exceeds our deduction for dividends paid. Certain NOL and credit carryforwards are limited as to their utilization by Section 382 of the Code. The remaining REIT carryforwards begin to expire in 2020.
110
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 2020 and 2019, the
net difference between tax bases and the reported amount of REIT assets and liabilities for federal income tax purposes was approximately $i3.6 billion and $i3.5
billion, respectively, less than the book bases of those assets and liabilities for financial reporting purposes.
Generally, we are subject to audit under the statute of limitations by the Internal Revenue Service (“IRS”) for the year ended December 31, 2017 and subsequent years and are subject to audit by state taxing authorities for the year ended December 31, 2016 and subsequent years. We are subject to audit generally under the statutes of limitation by the Canada Revenue Agency and provincial authorities with respect to the Canadian entities for the year ended December 31, 2016 and subsequent years. We are also subject to audit in Canada for periods subsequent to the acquisition, and certain prior periods, with respect to entities acquired
in 2014 from Holiday Retirement. We are subject to audit in the United Kingdom generally for the periods ended in and subsequent to 2019.
i
The following table summarizes the activity related to our unrecognized tax benefits:
2020
2019
(In
thousands)
Balance as of January 1
$
i12,127
$
i12,344
Additions
to tax positions related to prior years
i74
i178
Subtractions
to tax positions related to prior years
(i6,144)
(i395)
Balance
as of December 31
$
i6,057
$
i12,127
/
Included
in these unrecognized tax benefits of $i6.1 million and $i12.1 million at December 31, 2020 and 2019,
respectively, were $i5.3 million and $i10.7
million of tax benefits at December 31, 2020 and 2019, respectively, that, if recognized, would reduce our annual effective tax rate. We accrued ino interest or penalties related to the unrecognized tax benefits during 2020. We do not expect our unrecognized tax benefits to increase or decrease materially in 2021.
As a part of
the transfer pricing structure in the normal course of business, the REIT enters into transactions with certain TRSs, such as leasing transactions, other capital financing and allocation of general and administrative costs, which transactions are intended to comply with Internal Revenue Service and foreign tax authority transfer pricing rules.
i
NOTE 14–COMMITMENTS AND CONTINGENCIES
From time to time, we are party to various lawsuits, investigations, claims and other legal and regulatory proceedings arising in connection with our business. In certain circumstances, regardless of whether we are a named party in a lawsuit, investigation, claim or other legal or regulatory proceeding, we may be contractually obligated to indemnify, defend and hold harmless our tenants, operators, managers or other third parties against, or may otherwise be responsible for, such actions, proceedings or claims. These claims may include, among other things, professional liability and general liability claims, commercial liability claims, unfair business practices claims and employment claims, as well as regulatory proceedings, including proceedings related to our senior living operations, where we are typically the holder of the applicable healthcare license. These claims may not be fully insured
and some may allege large damage amounts.
It is the opinion of management, that the disposition of any such lawsuits, investigations, claims and other legal and regulatory proceedings that are currently pending will not, individually or in the aggregate, have a material adverse effect on us. However, regardless of the merits of a particular action, investigation or claim, we may be forced to expend significant financial resources to defend and resolve these matters. We are unable to predict the ultimate outcome of these lawsuits, investigations, claims and other legal and regulatory proceedings, and if management’s assessment of our liability with respect thereto is incorrect, such actions, investigations and claims could have a material adverse effect on us.
Operating Leases
We
lease land, equipment and corporate office space. At inception, we establish an operating lease asset and operating lease liability represented as the present value of future minimum lease payments. As our leases do not provide an implicit rate, we use a discount rate that approximates our incremental borrowing rate available at lease commencement to determine the present value of lease payments. The incremental borrowing rates were adjusted for the length of the individual lease term. The weighted average discount rate and remaining lease term of our leases are i7.25%
and i36.7 years, respectively. Operating lease assets and liabilities are not recognized for leases with an initial term of 12 months or less, as these short-term leases are accounted for similar to previous guidance.
/
111
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Our
lease expense primarily consists of ground and corporate office leases. Ground lease expense is included in interest expense and corporate office lease expense is included in general and administrative expenses in the Company’s Consolidated Statements of Operation. For the years ended December 31, 2020 and 2019, we recognized $i32.1 million and $i32.6
million of expense relating to our leases. For the years ended December 31, 2020 and 2019, cash paid for leases was $i25.4 million and $i25.8
million, respectively as reported within operating cash outflows in our Consolidated Statements of Cash Flow.
i
The following table summarizes future minimum lease obligations under non-cancelable ground and other operating leases as of December 31, 2020 (in thousands):
2021
$
i24,363
2022
i20,041
2023
i19,725
2024
i18,866
2025
i16,708
Thereafter
i654,060
Total
undiscounted minimum lease payments
i753,763
Less: imputed interest
(i543,846)
Operating
lease liabilities
$
i209,917
/
i
NOTE
15–EARNINGS PER SHARE
i
The following table shows the amounts used in computing our basic and diluted earnings per common share:
Numerator for basic and diluted earnings per share:
Income from continuing operations
$
i441,185
$
i439,297
$
i415,991
Discontinued
operations
i—
i—
(i10)
Net
income
i441,185
i439,297
i415,981
Net
income attributable to noncontrolling interests
i2,036
i6,281
i6,514
Net
income attributable to common stockholders
$
i439,149
$
i433,016
$
i409,467
Denominator:
Denominator
for basic earnings per share—weighted average shares
i373,368
i365,977
i356,265
Effect
of dilutive securities:
Stock options
i—
i391
i174
Restricted
stock awards
i171
i527
i331
OP
unitholder interests
i2,964
i2,991
i2,531
Denominator
for diluted earnings per share—adjusted weighted average shares
i376,503
i369,886
i359,301
Basic
earnings per share:
Income from continuing operations
$
i1.18
$
i1.20
$
i1.17
Net
income attributable to common stockholders
i1.18
i1.18
i1.15
Diluted
earnings per share:
Income from continuing operations
$
i1.17
$
i1.19
$
i1.16
Net
income attributable to common stockholders
i1.17
i1.17
i1.14
/
There
were i4.0 million, i1.1
million and i3.5 million anti-dilutive options outstanding for the years ended December 31, 2020, 2019 and 2018, respectively.
/
112
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
i
NOTE 16–PERMANENT AND TEMPORARY EQUITY
Capital Stock
From time to time, we may sell up to an aggregate of $i1.0
billion of our common stock under an “at-the-market” equity offering program (“ATM program”). As of December 31, 2020, we have $i755.5 million remaining under our existing ATM program. During the years ended December 31, 2020 and 2019, we sold i1.5
million and i2.7 million shares of our common stock under our ATM program for gross proceeds of $i44.88 and $i66.75
per share, respectively. During the year ended December 31, 2018, we sold ino shares of common stock under our ATM program.
In June 2019, we sold i12.7
million shares of our common stock under a registered public offering for gross proceeds of $i62.75 per share. We used the majority of the net proceeds to fund our LGM Acquisition. See “Note 4 – Acquisitions of Real Estate Property” and “Note 6 – Loans Receivable and Investments” for additional information regarding the LGM Acquisition.
Excess Share Provision
In order to preserve our ability to maintain REIT status, our Amended and Restated
Certificate of Incorporation (our “Charter”) provides that if a person acquires beneficial ownership of more than i9% of our outstanding common stock or i9.9%
of our outstanding preferred stock, the shares that are beneficially owned in excess of such limit are deemed to be excess shares. These shares are automatically deemed transferred to a trust for the benefit of a charitable institution or other qualifying organization selected by our Board of Directors. The trust is entitled to all dividends with respect to the shares, and the trustee may exercise all voting power over the shares.
We have the right to buy the excess shares for a purchase price equal to the lesser of the price per share in the transaction that created the excess shares or the market price on the date we buy the shares, and we may defer payment of the purchase price for the excess shares for up to ifive
years. If we do not purchase the excess shares, the trustee of the trust is required to transfer the excess shares at the direction of the Board of Directors. The owner of the excess shares is entitled to receive the lesser of the proceeds from the sale or the original purchase price for such excess shares, and any additional amounts are payable to the beneficiary of the trust. As of December 31, 2020, there were ino shares in the trust.
Our
Board of Directors is empowered to grant waivers from the excess share provisions of our Charter.
Accumulated Other Comprehensive Loss
i
The following is a summary of our accumulated other comprehensive loss:
Atria provides comprehensive property management and accounting services with respect to our senior housing communities that Atria operates, for which we pay annual management fees pursuant to long-term management agreements. For the years ended December 31, 2020, 2019 and 2018, we incurred fees to Atria of $i55.2 million, $i62.1
million and $i60.1 million, respectively, the majority of which are recorded within property-level operating expenses in our Consolidated Statements of Income.
We hold a i34%
ownership interest in Atria, which entitles us to customary minority rights and protections, as well as the right to appoint itwo of the isix members on the Atria Board of
Directors.
As of December 31, 2020, we leased i11 hospital campuses to Ardent pursuant to a single, triple-net master lease agreement. For the years ended December 31, 2020, 2019 and 2018, we recognized rental income from Ardent of $i122.6
million, $i118.8 million and $i114.8 million, respectively, relating to the Ardent master lease.
In
June 2018, we made a $i200.0 million investment in senior unsecured notes issued by a subsidiary of Ardent at a price of i98.6% of par value. The notes have an effective interest rate of i10.0%
and mature in 2026. These marketable debt securities are classified as available for sale and are reflected on our Consolidated Balance Sheets at fair value.
We hold a i9.8% ownership interest in Ardent, which entitles us to customary minority rights and protections, as well as the right to appoint ione
of the i11 members on the Ardent Board of Directors.
In January 2018, we transitioned the management of i76 private-pay senior housing communities to ESL. These
assets, substantially all of which were previously leased by Elmcroft Senior Living (“Elmcroft”) under triple-net leases, are now operated by ESL under a management contract with us and are included in the senior living operations reportable business segment. Upon termination of our lease with Elmcroft, we derecognized our accumulated straight-line receivable balance and offsetting reserve of $i75.2 million. For the years ended December
31, 2020, 2019 and 2018, we incurred $i5.2 million, $i8.2
million and $i23.6 million respectively of transaction and integration costs relating to this transaction, net of property-level net assets assumed for ino
consideration, primarily included in merger-related expenses and deal costs in our Consolidated Statements of Income.
In January 2018, we acquired a i34% ownership interest in ESL, which entitles us to customary minority rights and protections, as well as the right to appoint itwo
of the isix members of the ESL Board of Directors. ESL management owns the i66% controlling interest.
ESL provides
comprehensive property management and accounting services with respect to our senior housing communities that ESL operates, for which we pay annual management fees pursuant to a management agreement. For the years ended December 31, 2020, 2019 and 2018, we incurred fees to ESL of $i15.1 million, $i14.6
million and $i12.9 million,
/
114
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
respectively, the majority of which are recorded within property-level operating expenses in our Consolidated
Statements of Income.
i
NOTE 18–QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
i
Summarized
unaudited consolidated quarterly information is provided below:
Net
income (loss) attributable to noncontrolling interests
i1,613
(i2,065)
i986
i1,502
Net
income (loss) attributable to common stockholders
$
i473,117
$
(i157,170)
$
i12,751
$
i110,451
Basic
earnings per share:
Income (loss) from continuing operations
$
i1.27
$
(i0.43)
$
i0.04
$
i0.30
Net
income (loss) attributable to common stockholders
i1.27
(i0.42)
i0.03
i0.29
Diluted
earnings per share(1):
Income (loss) from continuing operations
$
i1.26
$
(i0.43)
$
i0.04
$
i0.30
Net
income (loss) attributable to common stockholders
i1.26
(i0.42)
i0.03
i0.29
Dividends
declared per common share
$
i0.7925
$
i0.4500
$
i0.4500
$
i0.4500
(1)
Potential common shares are not included in the computation of diluted earnings per share when a loss from continuing operations exists, as the effect would be an antidilutive per share amount.
Net
income attributable to noncontrolling interests
i1,803
i1,369
i1,659
i1,450
Net
income attributable to common stockholders
$
i125,785
$
i210,529
$
i85,259
$
i11,443
Basic
earnings per share:
Income from continuing operations
$
i0.36
$
i0.59
$
i0.23
$
i0.03
Net
income attributable to common stockholders
i0.35
i0.58
i0.23
i0.03
Diluted
earnings per share:
Income from continuing operations
$
i0.35
$
i0.58
$
i0.23
$
i0.03
Net
income attributable to common stockholders
i0.35
i0.58
i0.23
i0.03
Dividends
declared per common share
$
i0.7925
$
i0.7925
$
i0.7925
$
i0.7925
//
115
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
i
NOTE 19–SEGMENT INFORMATION
As of December 31, 2020, we operated through ithree
reportable business segments: triple-net leased properties, senior living operations and office operations. In our triple-net leased properties segment, we invest in and own senior housing and healthcare properties throughout the United States and the United Kingdom and lease those properties to healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses. In our senior living operations segment, we invest in senior housing communities throughout the United States and Canada and engage independent operators, such as Atria and Sunrise, to manage those communities. In our office operations segment, we primarily acquire, own, develop, lease and manage MOBs and research and innovation centers throughout the United States. Information provided for “all other” includes income from loans and investments and other miscellaneous income and various corporate-level expenses not
directly attributable to any of our ithree reportable business segments. Assets included in “all other” consist primarily of corporate assets, including cash, restricted cash, loans receivable and investments, and miscellaneous accounts receivable.
Our chief operating decision makers evaluate performance of the combined properties in each reportable business segment and determine how to allocate resources to those segments, in significant part, based on segment NOI and related
measures. We define segment NOI as total revenues, less interest and other income, property-level operating expenses and office building services costs. We consider segment NOI useful because it allows investors, analysts and our management to measure unlevered property-level operating results and to compare our operating results to the operating results of other real estate companies between periods on a consistent basis. In order to facilitate a clear understanding of our historical consolidated operating results, segment NOI should be examined in conjunction with net income attributable to common stockholders as presented in our Consolidated Financial Statements and other financial data included elsewhere in this Annual Report on Form 10-K.
Interest expense, depreciation and amortization, general, administrative and professional fees, income tax expense and other non-property-specific revenues
and expenses are not allocated to individual reportable business segments for purposes of assessing segment performance. There are ino intersegment sales or transfers.
/
116
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
i
Summary
information by reportable business segment is as follows:
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
i
Capital expenditures, including investments in real estate property and development project expenditures, by reportable business segment are as follows:
Our
portfolio of properties and mortgage loan and other investments are located in the United States, Canada and the United Kingdom. Revenues are attributed to an individual country based on the location of each property. iGeographic information regarding our operations is as follows:
Life on Which Depreciation in Income Statement Is Computed
SPECIALTY HOSPITALS
Rehabilitation
Hospital of Southern Arizona
Tucson
AZ
$
i—
$
i770
$
i25,589
$
i—
$
i770
$
i25,589
$
i26,359
$
i7,121
$
i19,238
1992
2011
i35
years
Kindred Hospital - Brea
Brea
CA
i—
i3,144
i2,611
i—
i3,144
i2,611
i5,755
i1,675
i4,080
1990
1995
i40
years
Kindred Hospital - Ontario
Ontario
CA
i—
i523
i2,988
i—
i523
i2,988
i3,511
i3,228
i283
1950
1994
i25
years
Kindred Hospital - San Diego
San Diego
CA
i—
i670
i11,764
i—
i670
i11,764
i12,434
i11,957
i477
1965
1994
i25
years
Kindred Hospital - San Francisco Bay Area
San Leandro
CA
i—
i2,735
i5,870
i—
i2,735
i5,870
i8,605
i6,205
i2,400
1962
1993
i25
years
Tustin Rehabilitation Hospital
Tustin
CA
i—
i2,810
i25,248
i—
i2,810
i25,248
i28,058
i7,162
i20,896
1991
2011
i35
years
Kindred Hospital - Westminster
Westminster
CA
i—
i727
i7,384
i—
i727
i7,384
i8,111
i7,562
i549
1973
1993
i20
years
Kindred Hospital - Denver
Denver
CO
i—
i896
i6,367
i—
i896
i6,367
i7,263
i6,712
i551
1963
1994
i20
years
Kindred Hospital - South Florida - Coral Gables
Coral Gables
FL
i—
i1,071
i5,348
(i1,000)
i71
i5,348
i5,419
i5,290
i129
1956
1992
i30
years
Kindred Hospital - South Florida Ft. Lauderdale
Fort Lauderdale
FL
i—
i1,758
i14,080
i—
i1,758
i14,080
i15,838
i14,171
i1,667
1969
1989
i30
years
Kindred Hospital - North Florida
Green Cove Springs
FL
i—
i145
i4,613
i—
i145
i4,613
i4,758
i4,683
i75
1956
1994
i20
years
Kindred Hospital - South Florida - Hollywood
Hollywood
FL
i—
i605
i5,229
i—
i605
i5,229
i5,834
i5,234
i600
1937
1995
i20
years
Kindred Hospital - Bay Area St. Petersburg
St. Petersburg
FL
i—
i1,401
i16,706
i—
i1,401
i16,706
i18,107
i15,181
i2,926
1968
1997
i40
years
Kindred Hospital - Central Tampa
Tampa
FL
i—
i2,732
i7,676
i—
i2,732
i7,676
i10,408
i5,824
i4,584
1970
1993
i40
years
Kindred Hospital - Chicago (North Campus)
Chicago
IL
i—
i1,583
i19,980
i—
i1,583
i19,980
i21,563
i20,142
i1,421
1949
1995
i25
years
Kindred - Chicago - Lakeshore
Chicago
IL
i—
i1,513
i9,525
i—
i1,513
i9,525
i11,038
i9,483
i1,555
1995
1976
i20
years
Kindred Hospital - Chicago (Northlake Campus)
Northlake
IL
i—
i850
i6,498
i—
i850
i6,498
i7,348
i6,726
i622
1960
1991
i30
years
Kindred Hospital - Sycamore
Sycamore
IL
i—
i77
i8,549
i—
i77
i8,549
i8,626
i8,456
i170
1949
1993
i20
years
Kindred Hospital - Indianapolis
Indianapolis
IN
i—
i985
i3,801
i—
i985
i3,801
i4,786
i3,880
i906
1955
1993
i30
years
Kindred Hospital - Louisville
Louisville
KY
i—
i3,041
i12,279
i—
i3,041
i12,279
i15,320
i12,600
i2,720
1964
1995
i20
years
Kindred Hospital - St. Louis
St. Louis
MO
i—
i1,126
i2,087
i—
i1,126
i2,087
i3,213
i2,057
i1,156
1984
1991
i40
years
Kindred Hospital - Las Vegas (Sahara)
Las Vegas
NV
i—
i1,110
i2,177
i—
i1,110
i2,177
i3,287
i1,590
i1,697
1980
1994
i40
years
Lovelace Rehabilitation Hospital
Albuquerque
NM
i—
i401
i17,796
i1,068
i401
i18,864
i19,265
i3,306
i15,959
1989
2015
i36
years
Kindred Hospital - Albuquerque
Albuquerque
NM
i—
i11
i4,253
i—
i11
i4,253
i4,264
i3,206
i1,058
1985
1993
i40
years
Kindred Hospital - Greensboro
Greensboro
NC
i—
i1,010
i7,586
i—
i1,010
i7,586
i8,596
i7,788
i808
1964
1994
i20
years
University Hospitals Rehabilitation Hospital
Beachwood
OH
i—
i1,800
i16,444
i—
i1,800
i16,444
i18,244
i3,646
i14,598
2013
2013
i35
years
Kindred Hospital - Philadelphia
Philadelphia
PA
i—
i135
i5,223
i—
i135
i5,223
i5,358
i3,953
i1,405
1960
1995
i35
years
Kindred Hospital - Chattanooga
Chattanooga
TN
i—
i756
i4,415
i—
i756
i4,415
i5,171
i4,344
i827
1975
1993
i22
years
Ardent Harrington Cancer Center
Amarillo
TX
i—
i974
i25,304
i—
i974
i25,304
i26,278
i120
i26,158
2020
2020
i35
years
122
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement Is Computed
Kindred Hospital - Arlington
Arlington
TX
i—
i458
i12,426
i—
i458
i12,426
i12,884
i172
i12,712
1970
2020
i35
years
Rehabilitation Hospital of Dallas
Dallas
TX
i—
i2,318
i38,702
i—
i2,318
i38,702
i41,020
i7,178
i33,842
2009
2015
i35
years
Baylor Institute for Rehabilitation - Ft. Worth TX
Fort Worth
TX
i—
i2,071
i16,018
i—
i2,071
i16,018
i18,089
i3,201
i14,888
2008
2015
i35
years
Kindred Hospital - Tarrant County (Fort Worth Southwest)
Fort Worth
TX
i—
i2,342
i7,458
i—
i2,342
i7,458
i9,800
i7,508
i2,292
1987
1986
i20
years
Rehabilitation Hospital The Vintage
Houston
TX
i—
i1,838
i34,832
i—
i1,838
i34,832
i36,670
i6,735
i29,935
2012
2015
i35
years
Kindred Hospital (Houston Northwest)
Houston
TX
i—
i1,699
i6,788
i—
i1,699
i6,788
i8,487
i6,231
i2,256
1986
1985
i40
years
Kindred Hospital - Houston
Houston
TX
i—
i33
i7,062
i—
i33
i7,062
i7,095
i6,756
i339
1972
1994
i20
years
Select Rehabilitation - San Antonio TX
San Antonio
TX
i—
i1,859
i18,301
i—
i1,859
i18,301
i20,160
i3,591
i16,569
2010
2015
i35
years
Kindred Hospital - San Antonio
San Antonio
TX
i—
i249
i11,413
i—
i249
i11,413
i11,662
i10,579
i1,083
1981
1993
i30
years
TOTAL FOR SPECIALTY HOSPITALS
i—
i48,226
i440,390
i68
i47,226
i441,458
i488,684
i245,253
i243,431
SKILLED
NURSING FACILITIES
Englewood Post Acute and Rehabilitation
Englewood
CO
i—
i241
i2,180
i194
i241
i2,374
i2,615
i2,206
i409
1960
1995
i30
years
Brookdale Lisle SNF
Lisle
IL
i—
i730
i9,270
i735
i910
i9,825
i10,735
i3,696
i7,039
1990
2009
i35
years
Lopatcong Center
Phillipsburg
NJ
i—
i1,490
i12,336
i—
i1,490
i12,336
i13,826
i7,207
i6,619
1982
2004
i30
years
The Belvedere
Chester
PA
i—
i822
i7,203
i—
i822
i7,203
i8,025
i4,200
i3,825
1899
2004
i30
years
Pennsburg Manor
Pennsburg
PA
i—
i1,091
i7,871
i—
i1,091
i7,871
i8,962
i4,631
i4,331
1982
2004
i30
years
Chapel Manor
Philadelphia
PA
i—
i1,595
i13,982
i1,358
i1,595
i15,340
i16,935
i9,511
i7,424
1948
2004
i30
years
Wayne Center
Strafford
PA
i—
i662
i6,872
i850
i662
i7,722
i8,384
i4,836
i3,548
1897
2004
i30
years
Everett Rehabilitation & Care
Everett
WA
i—
i2,750
i27,337
(i7,916)
i2,750
i19,421
i22,171
i7,707
i14,464
1995
2011
i35
years
Beacon Hill Rehabilitation
Longview
WA
i—
i145
i2,563
i171
i145
i2,734
i2,879
i2,670
i209
1955
1992
i29
years
Columbia Crest Care & Rehabilitation Center
Moses Lake
WA
i—
i660
i17,439
i—
i660
i17,439
i18,099
i5,080
i13,019
1972
2011
i35
years
Lake Ridge Solana Alzheimer's Care Center
Moses Lake
WA
i—
i660
i8,866
i—
i660
i8,866
i9,526
i2,669
i6,857
1988
2011
i35
years
Rainier Rehabilitation
Puyallup
WA
i—
i520
i4,780
i305
i520
i5,085
i5,605
i3,794
i1,811
1986
1991
i40
years
Logan Center
Logan
WV
i—
i300
i12,959
i—
i300
i12,959
i13,259
i3,717
i9,542
1987
2011
i35
years
Ravenswood Healthcare Center
Ravenswood
WV
i—
i320
i12,710
i—
i320
i12,710
i13,030
i3,661
i9,369
1987
2011
i35
years
Valley Center
South Charleston
WV
i—
i750
i24,115
i—
i750
i24,115
i24,865
i7,004
i17,861
1987
2011
i35
years
White Sulphur
White Sulphur Springs
WV
i—
i250
i13,055
i—
i250
i13,055
i13,305
i3,781
i9,524
1987
2011
i35
years
TOTAL FOR SKILLED NURSING FACILITIES
i—
i12,986
i183,538
(i4,303)
i13,166
i179,055
i192,221
i76,370
i115,851
GENERAL
ACUTE CARE
Lovelace Medical Center Downtown
Albuquerque
NM
i—
i9,840
i154,017
i9,763
i9,928
i163,692
i173,620
i30,465
i143,155
1968
2015
i33.5
years
Lovelace Westside Hospital
Albuquerque
NM
i—
i10,107
i13,576
i2,133
i10,107
i15,709
i25,816
i6,742
i19,074
1984
2015
i20.5
years
Lovelace Women's Hospital
Albuquerque
NM
i—
i7,236
i175,142
i20,075
i7,236
i195,217
i202,453
i24,062
i178,391
1983
2015
i47
years
Roswell Regional Hospital
Roswell
NM
i—
i2,560
i41,125
i2,186
i2,560
i43,311
i45,871
i5,825
i40,046
2007
2015
i47
years
Hillcrest Hospital Claremore
Claremore
OK
i—
i3,623
i23,864
i638
i3,623
i24,502
i28,125
i4,108
i24,017
1955
2015
i40
years
123
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement Is Computed
Bailey Medical Center
Owasso
OK
i—
i4,964
i7,059
i155
i4,964
i7,214
i12,178
i1,826
i10,352
2006
2015
i32.5
years
Hillcrest Medical Center
Tulsa
OK
i—
i28,319
i215,959
i12,718
i28,319
i228,677
i256,996
i40,988
i216,008
1928
2015
i34
years
Hillcrest Hospital South
Tulsa
OK
i—
i17,026
i112,231
i1,016
i17,026
i113,247
i130,273
i16,857
i113,416
1999
2015
i40
years
SouthCreek Medical Plaza
Tulsa
OK
i—
i2,943
i17,860
i600
i2,943
i18,460
i21,403
i1,451
i19,952
2003
2018
i35
years
Baptist St. Anthony's Hospital
Amarillo
TX
i—
i13,779
i357,733
i26,812
i13,015
i385,309
i398,324
i49,670
i348,654
1967
2015
i44.5
years
Spire Hull and East Riding Hospital
Anlaby
HUL
i—
i3,194
i81,613
(i10,348)
i2,804
i71,655
i74,459
i9,881
i64,578
2010
2014
i50
years
Spire Fylde Coast Hospital
Blackpool
LAN
i—
i2,446
i28,896
(i3,825)
i2,147
i25,370
i27,517
i3,550
i23,967
1980
2014
i50
years
Spire Clare Park Hospital
Farnham
SUR
i—
i6,263
i26,119
(i3,951)
i5,499
i22,932
i28,431
i3,336
i25,095
2009
2014
i50
years
TOTAL FOR GENERAL ACUTE CARE
i—
i112,300
i1,255,194
i57,972
i110,171
i1,315,295
i1,425,466
i198,761
i1,226,705
BROOKDALE
SENIOR HOUSING COMMUNITIES
Brookdale Chandler Ray Road
Chandler
AZ
i—
i2,000
i6,538
i178
i2,000
i6,716
i8,716
i2,070
i6,646
1998
2011
i35
years
Brookdale Springs Mesa
Mesa
AZ
i—
i2,747
i24,918
i2,720
i2,751
i27,634
i30,385
i13,025
i17,360
1986
2005
i35
years
Brookdale East Arbor
Mesa
AZ
i—
i655
i6,998
i489
i711
i7,431
i8,142
i3,582
i4,560
1998
2005
i35
years
Brookdale Oro Valley
Oro Valley
AZ
i—
i666
i6,169
i—
i666
i6,169
i6,835
i3,123
i3,712
1998
2005
i35
years
Brookdale Peoria
Peoria
AZ
i—
i598
i4,872
i723
i659
i5,534
i6,193
i2,603
i3,590
1998
2005
i35
years
Brookdale Tempe
Tempe
AZ
i—
i611
i4,066
i150
i611
i4,216
i4,827
i2,093
i2,734
1997
2005
i35
years
Brookdale East Tucson
Tucson
AZ
i—
i506
i4,745
i50
i556
i4,745
i5,301
i2,406
i2,895
1998
2005
i35
years
Brookdale Anaheim
Anaheim
CA
i—
i2,464
i7,908
i95
i2,464
i8,003
i10,467
i3,833
i6,634
1977
2005
i35
years
Brookdale Redwood City
Redwood City
CA
i—
i7,669
i66,691
i422
i7,719
i67,063
i74,782
i34,159
i40,623
1988
2005
i35
years
Brookdale San Jose
San Jose
CA
i—
i6,240
i66,329
i14,386
i6,250
i80,705
i86,955
i36,374
i50,581
1987
2005
i35
years
Brookdale San Marcos
San Marcos
CA
i—
i4,288
i36,204
i235
i4,314
i36,413
i40,727
i18,666
i22,061
1987
2005
i35
years
Brookdale Tracy
Tracy
CA
i—
i1,110
i13,296
i521
i1,110
i13,817
i14,927
i6,173
i8,754
1986
2005
i35
years
Brookdale Boulder Creek
Boulder
CO
i—
i1,290
i20,683
i782
i1,414
i21,341
i22,755
i6,152
i16,603
1985
2011
i35
years
Brookdale Vista Grande
Colorado Springs
CO
i—
i715
i9,279
i—
i715
i9,279
i9,994
i4,698
i5,296
1997
2005
i35
years
Brookdale El Camino
Pueblo
CO
i—
i840
i9,403
i76
i874
i9,445
i10,319
i4,773
i5,546
1997
2005
i35
years
Brookdale Farmington
Farmington
CT
i—
i3,995
i36,310
i958
i4,340
i36,923
i41,263
i18,531
i22,732
1984
2005
i35
years
Brookdale South Windsor
South Windsor
CT
i—
i2,187
i12,682
i88
i2,198
i12,759
i14,957
i6,097
i8,860
1999
2004
i35
years
Brookdale Chatfield
West Hartford
CT
i—
i2,493
i22,833
i23,729
i2,493
i46,562
i49,055
i15,041
i34,014
1989
2005
i35
years
Brookdale Bonita Springs
Bonita Springs
FL
i—
i1,540
i10,783
i1,275
i1,594
i12,004
i13,598
i5,518
i8,080
1989
2005
i35
years
Brookdale West Boynton Beach
Boynton Beach
FL
i—
i2,317
i16,218
i1,353
i2,347
i17,541
i19,888
i8,137
i11,751
1999
2005
i35
years
Brookdale Deer Creek AL/MC
Deerfield Beach
FL
i—
i1,399
i9,791
i18
i1,399
i9,809
i11,208
i5,091
i6,117
1999
2005
i35
years
Brookdale Fort Myers The Colony
Fort Myers
FL
i—
i1,510
i7,862
i398
i1,510
i8,260
i9,770
i2,333
i7,437
1996
2011
i35
years
Brookdale Avondale
Jacksonville
FL
i—
i860
i16,745
i140
i860
i16,885
i17,745
i4,762
i12,983
1997
2011
i35
years
Brookdale Crown Point
Jacksonville
FL
i—
i1,300
i9,659
i611
i1,300
i10,270
i11,570
i2,888
i8,682
1997
2011
i35
years
Brookdale Jensen Beach
Jensen Beach
FL
i—
i1,831
i12,820
i2,100
i1,831
i14,920
i16,751
i6,472
i10,279
1999
2005
i35
years
Brookdale Ormond Beach West
Ormond Beach
FL
i—
i1,660
i9,738
i27
i1,660
i9,765
i11,425
i2,820
i8,605
1997
2011
i35
years
Brookdale Palm Coast
Palm Coast
FL
i—
i470
i9,187
i235
i470
i9,422
i9,892
i2,669
i7,223
1997
2011
i35
years
124
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement Is Computed
Brookdale Pensacola
Pensacola
FL
i—
i633
i6,087
i11
i633
i6,098
i6,731
i3,086
i3,645
1998
2005
i35
years
Brookdale Rotonda
Rotonda West
FL
i—
i1,740
i4,331
i282
i1,740
i4,613
i6,353
i1,536
i4,817
1997
2011
i35
years
Brookdale Centre Pointe Boulevard
Tallahassee
FL
i—
i667
i6,168
i—
i667
i6,168
i6,835
i3,123
i3,712
1998
2005
i35
years
Brookdale Tavares
Tavares
FL
i—
i280
i15,980
i69
i280
i16,049
i16,329
i4,522
i11,807
1997
2011
i35
years
Brookdale West Melbourne MC
West Melbourne
FL
i—
i586
i5,481
i—
i586
i5,481
i6,067
i2,775
i3,292
2000
2005
i35
years
Brookdale West Palm Beach
West Palm Beach
FL
i—
i3,758
i33,072
i3,762
i3,935
i36,657
i40,592
i17,139
i23,453
1990
2005
i35
years
Brookdale Winter Haven MC
Winter Haven
FL
i—
i232
i3,006
i—
i232
i3,006
i3,238
i1,522
i1,716
1997
2005
i35
years
Brookdale Winter Haven AL
Winter Haven
FL
i—
i438
i5,549
i183
i438
i5,732
i6,170
i2,831
i3,339
1997
2005
i35
years
Brookdale Twin Falls
Twin Falls
ID
i—
i703
i6,153
i1,099
i718
i7,237
i7,955
i3,321
i4,634
1997
2005
i35
years
Brookdale Lake Shore Drive
Chicago
IL
i—
i11,057
i107,517
i7,721
i11,089
i115,206
i126,295
i56,926
i69,369
1990
2005
i35
years
Brookdale Lake View
Chicago
IL
i—
i3,072
i26,668
i—
i3,072
i26,668
i29,740
i13,650
i16,090
1950
2005
i35
years
Brookdale Des Plaines
Des Plaines
IL
i—
i6,871
i60,165
(i41)
i6,805
i60,190
i66,995
i30,777
i36,218
1993
2005
i35
years
Brookdale Hoffman Estates
Hoffman Estates
IL
i—
i3,886
i44,130
i4,702
i4,273
i48,445
i52,718
i22,773
i29,945
1987
2005
i35
years
Brookdale Lisle IL/AL
Lisle
IL
i33,000
i7,953
i70,400
i—
i7,953
i70,400
i78,353
i35,944
i42,409
1990
2005
i35
years
Brookdale Northbrook
Northbrook
IL
i—
i1,988
i39,762
i854
i2,076
i40,528
i42,604
i19,573
i23,031
1999
2004
i35
years
Brookdale Hawthorn Lakes IL/AL
Vernon Hills
IL
i—
i4,439
i35,044
i814
i4,480
i35,817
i40,297
i18,338
i21,959
1987
2005
i35
years
Brookdale Hawthorn Lakes AL
Vernon Hills
IL
i—
i1,147
i10,041
i401
i1,175
i10,414
i11,589
i5,163
i6,426
1999
2005
i35
years
Brookdale Richmond
Richmond
IN
i—
i495
i4,124
i359
i555
i4,423
i4,978
i2,158
i2,820
1998
2005
i35
years
Brookdale Derby
Derby
KS
i—
i440
i4,422
i—
i440
i4,422
i4,862
i1,299
i3,563
1994
2011
i35
years
Brookdale Leawood State Line
Leawood
KS
i—
i117
i5,127
i261
i117
i5,388
i5,505
i2,631
i2,874
2000
2005
i35
years
Brookdale Salina Fairdale
Salina
KS
i—
i300
i5,657
i150
i353
i5,754
i6,107
i1,681
i4,426
1996
2011
i35
years
Brookdale Topeka
Topeka
KS
i—
i370
i6,825
i—
i370
i6,825
i7,195
i3,455
i3,740
2000
2005
i35
years
Brookdale Cushing Park
Framingham
MA
i—
i5,819
i33,361
i3,996
i5,872
i37,304
i43,176
i17,179
i25,997
1999
2004
i35
years
Brookdale Cape Cod
Hyannis
MA
i—
i1,277
i9,063
i237
i1,277
i9,300
i10,577
i4,193
i6,384
1999
2005
i35
years
Brookdale Quincy Bay
Quincy
MA
i—
i6,101
i57,862
i3,713
i6,216
i61,460
i67,676
i29,724
i37,952
1986
2005
i35
years
Brookdale Delta MC
Delta Township
MI
i—
i730
i11,471
i119
i730
i11,590
i12,320
i3,298
i9,022
1998
2011
i35
years
Brookdale Delta AL
Delta Township
MI
i—
i820
i3,313
i30
i820
i3,343
i4,163
i1,327
i2,836
1998
2011
i35
years
Brookdale Farmington Hills North
Farmington Hills
MI
i—
i580
i10,497
i91
i580
i10,588
i11,168
i3,369
i7,799
1994
2011
i35
years
Brookdale Farmington Hills North II
Farmington Hills
MI
i—
i700
i10,246
i—
i700
i10,246
i10,946
i3,394
i7,552
1994
2011
i35
years
Brookdale Meridian AL
Haslett
MI
i—
i1,340
i6,134
i288
i1,367
i6,395
i7,762
i1,910
i5,852
1998
2011
i35
years
Brookdale Grand Blanc MC
Holly
MI
i—
i450
i12,373
i105
i450
i12,478
i12,928
i3,572
i9,356
1998
2011
i35
years
Brookdale Grand Blanc AL
Holly
MI
i—
i620
i14,627
i—
i620
i14,627
i15,247
i4,211
i11,036
1998
2011
i35
years
Brookdale Northville
Northville
MI
i—
i407
i6,068
i149
i407
i6,217
i6,624
i3,082
i3,542
1996
2005
i35
years
Brookdale Troy MC
Troy
MI
i—
i630
i17,178
i—
i630
i17,178
i17,808
i4,900
i12,908
1998
2011
i35
years
Brookdale Troy AL
Troy
MI
i—
i950
i12,503
i270
i950
i12,773
i13,723
i3,786
i9,937
1998
2011
i35
years
125
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Brookdale Utica AL
Utica
MI
i—
i1,142
i11,808
i691
i1,142
i12,499
i13,641
i6,096
i7,545
1996
2005
i35
years
Brookdale Utica MC
Utica
MI
i—
i700
i8,657
i351
i700
i9,008
i9,708
i2,712
i6,996
1995
2011
i35
years
Brookdale Eden Prairie
Eden Prairie
MN
i—
i301
i6,228
i874
i332
i7,071
i7,403
i3,299
i4,104
1998
2005
i35
years
Brookdale Faribault
Faribault
MN
i—
i530
i1,085
i—
i530
i1,085
i1,615
i378
i1,237
1997
2011
i35
years
Brookdale Inver Grove Heights
Inver Grove Heights
MN
i—
i253
i2,655
i—
i253
i2,655
i2,908
i1,344
i1,564
1997
2005
i35
years
Brookdale Mankato
Mankato
MN
i—
i490
i410
i—
i490
i410
i900
i262
i638
1996
2011
i35
years
Brookdale Edina
Minneapolis
MN
i15,040
i3,621
i33,141
i22,975
i3,621
i56,116
i59,737
i21,058
i38,679
1998
2005
i35
years
Brookdale North Oaks
North Oaks
MN
i—
i1,057
i8,296
i1,312
i1,122
i9,543
i10,665
i4,421
i6,244
1998
2005
i35
years
Brookdale Plymouth
Plymouth
MN
i—
i679
i8,675
i801
i823
i9,332
i10,155
i4,487
i5,668
1998
2005
i35
years
Brookdale Willmar
Wilmar
MN
i—
i470
i4,833
i—
i470
i4,833
i5,303
i1,396
i3,907
1997
2011
i35
years
Brookdale Winona
Winona
MN
i—
i800
i1,390
i—
i800
i1,390
i2,190
i803
i1,387
1997
2011
i35
years
Brookdale West County
Ballwin
MO
i—
i3,100
i35,074
i323
i3,113
i35,384
i38,497
i7,232
i31,265
2012
2014
i35
years
Brookdale Evesham
Voorhees Township
NJ
i—
i3,158
i29,909
i343
i3,158
i30,252
i33,410
i15,164
i18,246
1987
2005
i35
years
Brookdale Westampton
Westampton
NJ
i—
i881
i4,741
i829
i881
i5,570
i6,451
i2,563
i3,888
1997
2005
i35
years
Brookdale Santa Fe
Santa Fe
NM
i—
i—
i28,178
i—
i—
i28,178
i28,178
i14,060
i14,118
1986
2005
i35
years
Brookdale Kenmore
Buffalo
NY
i—
i1,487
i15,170
i1,117
i1,487
i16,287
i17,774
i7,774
i10,000
1995
2005
i35
years
Brookdale Clinton IL
Clinton
NY
i—
i947
i7,528
i643
i961
i8,157
i9,118
i3,911
i5,207
1991
2005
i35
years
Brookdale Manlius
Manlius
NY
i—
i890
i28,237
i658
i190
i29,595
i29,785
i8,172
i21,613
1994
2011
i35
years
Brookdale Pittsford
Pittsford
NY
i—
i611
i4,066
i16
i611
i4,082
i4,693
i2,064
i2,629
1997
2005
i35
years
Brookdale East Niskayuna
Schenectady
NY
i—
i1,021
i8,333
i715
i1,021
i9,048
i10,069
i4,374
i5,695
1997
2005
i35
years
Brookdale Niskayuna
Schenectady
NY
i—
i1,884
i16,103
i30
i1,884
i16,133
i18,017
i8,160
i9,857
1996
2005
i35
years
Brookdale Summerfield
Syracuse
NY
i—
i1,132
i11,434
i278
i1,246
i11,598
i12,844
i5,805
i7,039
1991
2005
i35
years
Brookdale Williamsville
Williamsville
NY
i—
i839
i3,841
i60
i839
i3,901
i4,740
i1,960
i2,780
1997
2005
i35
years
Brookdale Cary
Cary
NC
i—
i724
i6,466
i—
i724
i6,466
i7,190
i3,274
i3,916
1997
2005
i35
years
Brookdale Falling Creek
Hickory
NC
i—
i330
i10,981
i—
i330
i10,981
i11,311
i3,146
i8,165
1997
2011
i35
years
Brookdale Winston-Salem
Winston-Salem
NC
i—
i368
i3,497
i250
i368
i3,747
i4,115
i1,808
i2,307
1997
2005
i35
years
Brookdale Alliance
Alliance
OH
i—
i392
i6,283
i49
i435
i6,289
i6,724
i3,185
i3,539
1998
2005
i35
years
Brookdale Austintown
Austintown
OH
i—
i151
i3,087
i729
i181
i3,786
i3,967
i1,694
i2,273
1999
2005
i35
years
Brookdale Barberton
Barberton
OH
i—
i440
i10,884
i—
i440
i10,884
i11,324
i3,120
i8,204
1997
2011
i35
years
Brookdale Beavercreek
Beavercreek
OH
i—
i587
i5,381
i—
i587
i5,381
i5,968
i2,724
i3,244
1998
2005
i35
years
Brookdale Centennial Park
Clayton
OH
i—
i630
i6,477
i—
i630
i6,477
i7,107
i1,924
i5,183
1997
2011
i35
years
Brookdale Westerville
Columbus
OH
i—
i267
i3,600
i—
i267
i3,600
i3,867
i1,823
i2,044
1999
2005
i35
years
Brookdale Greenville AL/MC
Greenville
OH
i—
i490
i4,144
i55
i545
i4,144
i4,689
i1,376
i3,313
1997
2011
i35
years
Brookdale Lakeview Crossing
Groveport
OH
i—
i705
i11,103
i—
i705
i11,103
i11,808
i150
i11,658
1998
2020
i35
years
Brookdale Camelot Medina (North)
Medina
OH
i—
i263
i6,602
i—
i263
i6,602
i6,865
i108
i6,757
1995
2020
i35
years
Brookdale Medina South
Medina
OH
i—
i802
i22,124
i—
i802
i22,124
i22,926
i293
i
2000
2020
i35
years
Brookdale Mount Vernon
Mount Vernon
OH
i—
i854
i22,882
i—
i854
i22,882
i23,736
i298
i
2002
2020
i35
years
Brookdale Salem AL (OH)
Salem
OH
i—
i634
i4,659
i—
i634
i4,659
i5,293
i2,359
i2,934
1998
2005
i35
years
126
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Brookdale Springdale
Springdale
OH
i—
i1,140
i9,134
i656
i1,228
i9,702
i10,930
i2,702
i8,228
1997
2011
i35
years
Brookdale Zanesville
Zanesville
OH
i—
i833
i12,034
i—
i833
i12,034
i12,867
i166
i
1996
2020
i35
years
Brookdale Bartlesville South
Bartlesville
OK
i—
i250
i10,529
i35
i285
i10,529
i10,814
i2,995
i7,819
1997
2011
i35
years
Brookdale Broken Arrow
Broken Arrow
OK
i—
i940
i6,312
i6,435
i1,898
i11,789
i13,687
i3,851
i9,836
1996
2011
i35
years
Brookdale Forest Grove
Forest Grove
OR
i—
i2,320
i9,633
(i4,180)
i2,320
i5,453
i7,773
i2,913
i4,860
1994
2011
i35
years
Brookdale Mt. Hood
Gresham
OR
i—
i2,410
i9,093
(i1,356)
i319
i9,828
i10,147
i2,845
i7,302
1988
2011
i35
years
Brookdale McMinnville Town Center
McMinnville
OR
i119
i1,230
i7,561
i—
i1,230
i7,561
i8,791
i2,583
i6,208
1989
2011
i35
years
Brookdale Denton North
Denton
TX
i—
i1,750
i6,712
i43
i1,750
i6,755
i8,505
i1,974
i6,531
1996
2011
i35
years
Brookdale Ennis
Ennis
TX
i—
i460
i3,284
i—
i460
i3,284
i3,744
i1,026
i2,718
1996
2011
i35
years
Brookdale Kerrville
Kerrville
TX
i—
i460
i8,548
i120
i460
i8,668
i9,128
i2,459
i6,669
1997
2011
i35
years
Brookdale Medical Center Whitby
San Antonio
TX
i—
i1,400
i10,051
(i5,953)
i1,400
i4,098
i5,498
i2,794
i2,704
1997
2011
i35
years
Brookdale Western Hills
Temple
TX
i—
i330
i5,081
i230
i330
i5,311
i5,641
i1,568
i4,073
1997
2011
i35
years
Brookdale Salem AL (VA)
Salem
VA
i—
i1,900
i16,219
i—
i1,900
i16,219
i18,119
i8,097
i10,022
1998
2011
i35
years
Brookdale Alderwood
Lynnwood
WA
i—
i1,219
i9,573
i810
i1,239
i10,363
i11,602
i4,868
i6,734
1999
2005
i35
years
Brookdale Puyallup South
Puyallup
WA
i—
i1,055
i8,298
i686
i1,055
i8,984
i10,039
i4,201
i5,838
1998
2005
i35
years
Brookdale Richland
Richland
WA
i—
i960
i23,270
i370
i960
i23,640
i24,600
i6,839
i17,761
1990
2011
i35
years
Brookdale Park Place
Spokane
WA
i—
i1,622
i12,895
i910
i1,622
i13,805
i15,427
i6,700
i8,727
1915
2005
i35
years
Brookdale Allenmore AL
Tacoma
WA
i—
i620
i16,186
i971
i671
i17,106
i17,777
i4,804
i12,973
1997
2011
i35
years
Brookdale Allenmore - IL
Tacoma
WA
i—
i1,710
i3,326
(i622)
i307
i4,107
i4,414
i1,599
i2,815
1988
2011
i35
years
Brookdale Yakima
Yakima
WA
i—
i860
i15,276
i119
i891
i15,364
i16,255
i4,499
i11,756
1998
2011
i35
years
Brookdale Kenosha
Kenosha
WI
i—
i551
i5,431
i3,297
i608
i8,671
i9,279
i3,836
i5,443
2000
2005
i35
years
Brookdale LaCrosse MC
La Crosse
WI
i—
i621
i4,056
i1,126
i621
i5,182
i5,803
i2,452
i3,351
2004
2005
i35
years
Brookdale LaCrosse AL
La Crosse
WI
i—
i644
i5,831
i2,637
i644
i8,468
i9,112
i3,886
i5,226
1998
2005
i35
years
Brookdale Middleton Century Ave
Middleton
WI
i—
i360
i5,041
i—
i360
i5,041
i5,401
i1,462
i3,939
1997
2011
i35
years
Brookdale Onalaska
Onalaska
WI
i—
i250
i4,949
i—
i250
i4,949
i5,199
i1,427
i3,772
1995
2011
i35
years
Brookdale Sun Prairie
Sun Prairie
WI
i—
i350
i1,131
i—
i350
i1,131
i1,481
i391
i1,090
1994
2011
i35
years
TOTAL FOR BROOKDALE SENIOR HOUSING COMMUNITIES
i48,159
i185,432
i1,810,548
i120,817
i184,852
i1,931,945
i2,116,797
i799,971
i1,316,826
SUNRISE
SENIOR HOUSING COMMUNITIES
Sunrise of Chandler
Chandler
AZ
i—
i4,344
i14,455
i1,386
i4,459
i15,726
i20,185
i4,780
i15,405
2007
2012
i35
years
Sunrise of Scottsdale
Scottsdale
AZ
i—
i2,229
i27,575
i1,193
i2,255
i28,742
i30,997
i11,634
i19,363
2007
2007
i35
years
Sunrise at River Road
Tucson
AZ
i—
i2,971
i12,399
i970
i3,000
i13,340
i16,340
i3,823
i12,517
2008
2012
i35
years
Sunrise at La Costa
Carlsbad
CA
i—
i4,890
i20,590
i1,985
i5,030
i22,435
i27,465
i9,658
i17,807
1999
2007
i35
years
Sunrise of Carmichael
Carmichael
CA
i—
i1,269
i14,598
i1,274
i1,310
i15,831
i17,141
i4,526
i12,615
2009
2012
i35
years
Sunrise of Fair Oaks
Fair Oaks
CA
i—
i1,456
i23,679
i3,035
i2,557
i25,613
i28,170
i10,611
i17,559
2001
2007
i35
years
Sunrise of Mission Viejo
Mission Viejo
CA
i—
i3,802
i24,560
i2,297
i4,125
i26,534
i30,659
i11,130
i19,529
1998
2007
i35
years
Sunrise at Canyon Crest
Riverside
CA
i—
i5,486
i19,658
i2,418
i5,745
i21,817
i27,562
i9,280
i18,282
2006
2007
i35
years
Sunrise of Rocklin
Rocklin
CA
i—
i1,378
i23,565
i1,786
i1,525
i25,204
i26,729
i10,351
i16,378
2007
2007
i35
years
127
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Sunrise of San Mateo
San Mateo
CA
i—
i2,682
i35,335
i3,557
i2,742
i38,832
i41,574
i15,571
i26,003
1999
2007
i35
years
Sunrise of Sunnyvale
Sunnyvale
CA
i—
i2,933
i34,361
i2,256
i2,999
i36,551
i39,550
i14,743
i24,807
2000
2007
i35
years
Sunrise at Sterling Canyon
Valencia
CA
i—
i3,868
i29,293
i5,211
i4,108
i34,264
i38,372
i15,149
i23,223
1998
2007
i35
years
Sunrise of Westlake Village
Westlake Village
CA
i—
i4,935
i30,722
i2,239
i5,038
i32,858
i37,896
i13,353
i24,543
2004
2007
i35
years
Sunrise at Yorba Linda
Yorba Linda
CA
i—
i1,689
i25,240
i2,601
i1,780
i27,750
i29,530
i11,460
i18,070
2002
2007
i35
years
Sunrise at Cherry Creek
Denver
CO
i—
i1,621
i28,370
i3,697
i1,721
i31,967
i33,688
i12,825
i20,863
2000
2007
i35
years
Sunrise at Pinehurst
Denver
CO
i—
i1,417
i30,885
i2,301
i1,716
i32,887
i34,603
i13,870
i20,733
1998
2007
i35
years
Sunrise at Orchard
Littleton
CO
i—
i1,813
i22,183
i3,666
i1,853
i25,809
i27,662
i10,325
i17,337
1997
2007
i35
years
Sunrise of Westminster
Westminster
CO
i—
i2,649
i16,243
i2,548
i2,860
i18,580
i21,440
i7,928
i13,512
2000
2007
i35
years
Sunrise of Stamford
Stamford
CT
i—
i4,612
i28,533
i3,433
i5,029
i31,549
i36,578
i13,242
i23,336
1999
2007
i35
years
Sunrise of Jacksonville
Jacksonville
FL
i—
i2,390
i17,671
i652
i2,420
i18,293
i20,713
i4,912
i15,801
2009
2012
i35
years
Sunrise at Ivey Ridge
Alpharetta
GA
i—
i1,507
i18,516
i1,622
i1,517
i20,128
i21,645
i8,561
i13,084
1998
2007
i35
years
Sunrise of Huntcliff Summit I
Atlanta
GA
i—
i4,232
i66,161
i19,970
i4,201
i86,162
i90,363
i40,106
i50,257
1987
2007
i35
years
Sunrise at Huntcliff Summit II
Atlanta
GA
i—
i2,154
i17,137
i3,370
i2,160
i20,501
i22,661
i8,588
i14,073
1998
2007
i35
years
Sunrise at East Cobb
Marietta
GA
i—
i1,797
i23,420
i1,524
i1,806
i24,935
i26,741
i10,547
i16,194
1997
2007
i35
years
Sunrise of Barrington
Barrington
IL
i—
i859
i15,085
i844
i892
i15,896
i16,788
i4,636
i12,152
2007
2012
i35
years
Sunrise of Bloomingdale
Bloomingdale
IL
i—
i1,287
i38,625
i2,280
i1,382
i40,810
i42,192
i16,874
i25,318
2000
2007
i35
years
Sunrise of Buffalo Grove
Buffalo Grove
IL
i—
i2,154
i28,021
i1,893
i2,339
i29,729
i32,068
i12,351
i19,717
1999
2007
i35
years
Sunrise of Lincoln Park
Chicago
IL
i—
i3,485
i26,687
i4,622
i3,510
i31,284
i34,794
i12,107
i22,687
2003
2007
i35
years
Sunrise of Naperville
Naperville
IL
i—
i1,946
i28,538
i2,659
i2,624
i30,519
i33,143
i13,133
i20,010
1999
2007
i35
years
Sunrise of Palos Park
Palos Park
IL
i—
i2,363
i42,205
i1,371
i2,416
i43,523
i45,939
i17,862
i28,077
2001
2007
i35
years
Sunrise of Park Ridge
Park Ridge
IL
i—
i5,533
i39,557
i3,270
i5,707
i42,653
i48,360
i17,703
i30,657
1998
2007
i35
years
Sunrise of Willowbrook
Willowbrook
IL
i—
i1,454
i60,738
(i14,182)
i2,080
i45,930
i48,010
i24,031
i23,979
2000
2007
i35
years
Sunrise on Old Meridian
Carmel
IN
i—
i8,550
i31,746
i1,499
i8,581
i33,214
i41,795
i9,491
i32,304
2009
2012
i35
years
Sunrise of Leawood
Leawood
KS
i—
i651
i16,401
i1,421
i878
i17,595
i18,473
i4,962
i13,511
2006
2012
i35
years
Sunrise of Overland Park
Overland Park
KS
i—
i650
i11,015
i1,054
i807
i11,912
i12,719
i3,593
i9,126
2007
2012
i35
years
Sunrise of Baton Rouge
Baton Rouge
LA
i—
i1,212
i23,547
i2,197
i1,471
i25,485
i26,956
i10,537
i16,419
2000
2007
i35
years
Sunrise of Columbia
Columbia
MD
i—
i1,780
i23,083
i4,415
i1,918
i27,360
i29,278
i11,412
i17,866
1996
2007
i35
years
Sunrise of Rockville
Rockville
MD
i—
i1,039
i39,216
i2,945
i1,075
i42,125
i43,200
i17,150
i26,050
1997
2007
i35
years
Sunrise of Arlington
Arlington
MA
i—
i86
i34,393
i1,682
i107
i36,054
i36,161
i14,760
i21,401
2001
2007
i35
years
Sunrise of Norwood
Norwood
MA
i—
i2,230
i30,968
i2,383
i2,356
i33,225
i35,581
i13,628
i21,953
1997
2007
i35
years
Sunrise of Bloomfield
Bloomfield Hills
MI
i—
i3,736
i27,657
i2,414
i3,927
i29,880
i33,807
i12,145
i21,662
2006
2007
i35
years
Sunrise of Cascade
Grand Rapids
MI
i—
i1,273
i21,782
i1,013
i1,370
i22,698
i24,068
i6,378
i17,690
2007
2012
i35
years
Sunrise of Northville
Plymouth
MI
i—
i1,445
i26,090
i1,849
i1,525
i27,859
i29,384
i11,512
i17,872
1999
2007
i35
years
Sunrise of Rochester
Rochester
MI
i—
i2,774
i38,666
i1,951
i2,854
i40,537
i43,391
i16,650
i26,741
1998
2007
i35
years
Sunrise of Troy
Troy
MI
i—
i1,758
i23,727
i2,710
i1,860
i26,335
i28,195
i10,368
i17,827
2001
2007
i35
years
Sunrise of Edina
Edina
MN
i—
i3,181
i24,224
i1,362
i3,305
i25,462
i28,767
i11,412
i17,355
1999
2007
i35
years
Sunrise of East Brunswick
East Brunswick
NJ
i—
i2,784
i26,173
i2,582
i3,040
i28,499
i31,539
i12,190
i19,349
1999
2007
i35
years
128
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Sunrise of Jackson
Jackson
NJ
i—
i4,009
i15,029
i1,015
i4,037
i16,016
i20,053
i4,817
i15,236
2008
2012
i35
years
Sunrise of Morris Plains
Morris Plains
NJ
i—
i1,492
i32,052
i3,063
i1,601
i35,006
i36,607
i14,384
i22,223
1997
2007
i35
years
Sunrise of Old Tappan
Old Tappan
NJ
i—
i2,985
i36,795
i3,247
i3,177
i39,850
i43,027
i16,082
i26,945
1997
2007
i35
years
Sunrise of Wall
Wall Township
NJ
i—
i1,053
i19,101
i2,261
i1,088
i21,327
i22,415
i8,954
i13,461
1999
2007
i35
years
Sunrise of Wayne
Wayne
NJ
i—
i1,288
i24,990
i3,544
i1,373
i28,449
i29,822
i11,786
i18,036
1996
2007
i35
years
Sunrise of Westfield
Westfield
NJ
i—
i5,057
i23,803
i3,172
i5,185
i26,847
i32,032
i11,164
i20,868
1996
2007
i35
years
Sunrise of Woodcliff Lake
Woodcliff Lake
NJ
i—
i3,493
i30,801
i3,110
i3,692
i33,712
i37,404
i13,755
i23,649
2000
2007
i35
years
Sunrise of North Lynbrook
Lynbrook
NY
i—
i4,622
i38,087
i3,461
i4,700
i41,470
i46,170
i17,189
i28,981
1999
2007
i35
years
Sunrise at Fleetwood
Mount Vernon
NY
i—
i4,381
i28,434
i2,948
i4,723
i31,040
i35,763
i13,401
i22,362
1999
2007
i35
years
Sunrise of New City
New City
NY
i—
i1,906
i27,323
i2,871
i1,998
i30,102
i32,100
i12,413
i19,687
1999
2007
i35
years
Sunrise of Smithtown
Smithtown
NY
i—
i2,853
i25,621
i3,925
i3,040
i29,359
i32,399
i12,669
i19,730
1999
2007
i35
years
Sunrise of Staten Island
Staten Island
NY
i—
i7,237
i23,910
i2,044
i7,292
i25,899
i33,191
i13,668
i19,523
2006
2007
i35
years
Sunrise on Providence
Charlotte
NC
i—
i1,976
i19,472
i3,031
i2,004
i22,475
i24,479
i9,471
i15,008
1999
2007
i35
years
Sunrise at North Hills
Raleigh
NC
i—
i749
i37,091
i5,690
i849
i42,681
i43,530
i18,375
i25,155
2000
2007
i35
years
Sunrise at Parma
Cleveland
OH
i—
i695
i16,641
i1,613
i908
i18,041
i18,949
i7,663
i11,286
2000
2007
i35
years
Sunrise of Cuyahoga Falls
Cuyahoga Falls
OH
i—
i626
i10,239
i2,244
i862
i12,247
i13,109
i5,331
i7,778
2000
2007
i35
years
Sunrise of Abington
Abington
PA
i—
i1,838
i53,660
i6,462
i2,107
i59,853
i61,960
i24,719
i37,241
1997
2007
i35
years
Sunrise of Blue Bell
Blue Bell
PA
i—
i1,765
i23,920
i3,623
i1,928
i27,380
i29,308
i11,716
i17,592
2006
2007
i35
years
Sunrise of Exton
Exton
PA
i—
i1,123
i17,765
i2,518
i1,222
i20,184
i21,406
i8,570
i12,836
2000
2007
i35
years
Sunrise of Haverford
Haverford
PA
i—
i941
i25,872
i2,660
i990
i28,483
i29,473
i11,972
i17,501
1997
2007
i35
years
Sunrise of Granite Run
Media
PA
i—
i1,272
i31,781
i2,770
i1,441
i34,382
i35,823
i14,240
i21,583
1997
2007
i35
years
Sunrise of Lower Makefield
Morrisville
PA
i—
i3,165
i21,337
i923
i3,174
i22,251
i25,425
i6,507
i18,918
2008
2012
i35
years
Sunrise of Westtown
West Chester
PA
i—
i1,547
i22,996
i2,166
i1,625
i25,084
i26,709
i10,882
i15,827
1999
2007
i35
years
Sunrise of Hillcrest
Dallas
TX
i—
i2,616
i27,680
i1,468
i2,626
i29,138
i31,764
i11,942
i19,822
2006
2007
i35
years
Sunrise of Fort Worth
Fort Worth
TX
i—
i2,024
i18,587
i1,462
i2,178
i19,895
i22,073
i5,826
i16,247
2007
2012
i35
years
Sunrise of Frisco
Frisco
TX
i—
i2,523
i14,547
i987
i2,561
i15,496
i18,057
i4,262
i13,795
2009
2012
i35
years
Sunrise of Cinco Ranch
Katy
TX
i—
i2,512
i21,600
i1,702
i2,600
i23,214
i25,814
i6,712
i19,102
2007
2012
i35
years
Sunrise at Holladay
Holladay
UT
i—
i2,542
i44,771
i1,516
i2,596
i46,233
i48,829
i12,936
i35,893
2008
2012
i35
years
Sunrise of Sandy
Sandy
UT
i—
i2,576
i22,987
i522
i2,646
i23,439
i26,085
i9,660
i16,425
2007
2007
i35
years
Sunrise of Alexandria
Alexandria
VA
i—
i88
i14,811
i3,466
i244
i18,121
i18,365
i7,660
i10,705
1998
2007
i35
years
Sunrise of Richmond
Richmond
VA
i—
i1,120
i17,446
i1,325
i1,224
i18,667
i19,891
i8,079
i11,812
1999
2007
i35
years
Sunrise at Bon Air
Richmond
VA
i—
i2,047
i22,079
i1,270
i2,032
i23,364
i25,396
i6,779
i18,617
2008
2012
i35
years
Sunrise of Springfield
Springfield
VA
i—
i4,440
i18,834
i2,888
i4,545
i21,617
i26,162
i9,332
i16,830
1997
2007
i35
years
Sunrise of Lynn Valley
Vancouver
BC
i—
i11,759
i37,424
(i8,153)
i9,366
i31,664
i41,030
i12,957
i28,073
2002
2007
i35
years
Sunrise of Vancouver
Vancouver
BC
i—
i6,649
i31,937
i1,776
i6,662
i33,700
i40,362
i13,759
i26,603
2005
2007
i35
years
Sunrise of Victoria
Victoria
BC
i—
i8,332
i29,970
(i5,550)
i6,725
i26,027
i32,752
i10,806
i21,946
2001
2007
i35
years
Sunrise of Aurora
Aurora
ON
i—
i1,570
i36,113
(i6,537)
i1,347
i29,799
i31,146
i12,149
i18,997
2002
2007
i35
years
Sunrise of Burlington
Burlington
ON
i—
i1,173
i24,448
i1,535
i1,382
i25,774
i27,156
i10,712
i16,444
2001
2007
i35
years
129
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Sunrise of Unionville
Markham
ON
i—
i2,322
i41,140
(i7,103)
i2,022
i34,337
i36,359
i14,171
i22,188
2000
2007
i35
years
Sunrise of Mississauga
Mississauga
ON
i—
i3,554
i33,631
(i5,987)
i3,031
i28,167
i31,198
i11,767
i19,431
2000
2007
i35
years
Sunrise of Erin Mills
Mississauga
ON
i—
i1,957
i27,020
(i4,821)
i1,573
i22,583
i24,156
i9,287
i14,869
2007
2007
i35
years
Sunrise of Oakville
Oakville
ON
i—
i2,753
i37,489
i2,355
i2,955
i39,642
i42,597
i16,229
i26,368
2002
2007
i35
years
Sunrise of Richmond Hill
Richmond Hill
ON
i—
i2,155
i41,254
(i7,381)
i1,872
i34,156
i36,028
i14,052
i21,976
2002
2007
i35
years
Sunrise of Thornhill
Vaughan
ON
i—
i2,563
i57,513
(i8,900)
i1,507
i49,669
i51,176
i18,985
i32,191
2003
2007
i35
years
Sunrise of Windsor
Windsor
ON
i—
i1,813
i20,882
i2,034
i2,000
i22,729
i24,729
i9,411
i15,318
2001
2007
i35
years
TOTAL FOR SUNRISE SENIOR HOUSING COMMUNITIES
i—
i245,515
i2,532,176
i147,460
i250,690
i2,674,461
i2,925,151
i1,079,059
i1,846,092
ATRIA
SENIOR HOUSING COMMUNITIES
Atria Regency
Mobile
AL
i—
i950
i11,897
i1,945
i1,025
i13,767
i14,792
i5,356
i9,436
1996
2011
i35
years
Atria Chandler Villas
Chandler
AZ
i—
i3,650
i8,450
i2,668
i3,785
i10,983
i14,768
i5,063
i9,705
1988
2011
i35
years
Atria Park of Sierra Pointe
Scottsdale
AZ
i—
i10,930
i65,372
i5,786
i11,021
i71,067
i82,088
i16,386
i65,702
2000
2014
i35
years
Atria Campana del Rio
Tucson
AZ
i—
i5,861
i37,284
i3,478
i5,992
i40,631
i46,623
i14,693
i31,930
1964
2011
i35
years
Atria Valley Manor
Tucson
AZ
i—
i1,709
i60
i1,115
i1,815
i1,069
i2,884
i759
i2,125
1963
2011
i35
years
Atria Bell Court Gardens
Tucson
AZ
i—
i3,010
i30,969
i2,737
i3,063
i33,653
i36,716
i11,201
i25,515
1964
2011
i35
years
Atria Burlingame
Burlingame
CA
i—
i2,494
i12,373
i2,019
i2,601
i14,285
i16,886
i5,317
i11,569
1977
2011
i35
years
Atria Las Posas
Camarillo
CA
i—
i4,500
i28,436
i1,599
i4,541
i29,994
i34,535
i9,849
i24,686
1997
2011
i35
years
Atria Carmichael Oaks
Carmichael
CA
i—
i2,118
i49,694
i4,255
i2,356
i53,711
i56,067
i14,727
i41,340
1992
2013
i35
years
Atria El Camino Gardens
Carmichael
CA
i—
i6,930
i32,318
i16,026
i7,215
i48,059
i55,274
i19,289
i35,985
1984
2011
i35
years
Villa Bonita
Chula Vista
CA
i—
i2,700
i7,994
i1,449
i1,658
i10,485
i12,143
i3,023
i9,120
1989
2011
i35
years
Atria Covina
Covina
CA
i—
i170
i4,131
i1,029
i262
i5,068
i5,330
i2,205
i3,125
1977
2011
i35
years
Atria Daly City
Daly City
CA
i—
i3,090
i13,448
i1,369
i3,116
i14,791
i17,907
i5,313
i12,594
1975
2011
i35
years
Atria Covell Gardens
Davis
CA
i—
i2,163
i39,657
i13,087
i2,388
i52,519
i54,907
i20,532
i34,375
1987
2011
i35
years
Atria Encinitas
Encinitas
CA
i—
i5,880
i9,212
i3,046
i5,952
i12,186
i18,138
i4,620
i13,518
1984
2011
i35
years
Atria North Escondido
Escondido
CA
i—
i1,196
i7,155
i852
i1,215
i7,988
i9,203
i2,247
i6,956
2002
2014
i35
years
Atria Grass Valley
Grass Valley
CA
i—
i1,965
i28,414
i1,896
i2,059
i30,216
i32,275
i8,394
i23,881
2000
2013
i35
years
Atria Golden Creek
Irvine
CA
i—
i6,900
i23,544
i3,307
i6,946
i26,805
i33,751
i9,249
i24,502
1985
2011
i35
years
Atria Park of Lafayette
Lafayette
CA
i—
i5,679
i56,922
i2,442
i6,463
i58,580
i65,043
i15,427
i49,616
2007
2013
i35
years
Atria Del Sol
Mission Viejo
CA
i—
i3,500
i12,458
i8,907
i3,830
i21,035
i24,865
i10,019
i14,846
1985
2011
i35
years
Atria Newport Plaza
Newport Beach
CA
i—
i4,534
i32,912
i1,601
i4,569
i34,478
i39,047
i3,658
i35,389
1989
2017
i35
years
Atria Tamalpais Creek
Novato
CA
i—
i5,812
i24,703
i1,350
i5,838
i26,027
i31,865
i8,682
i23,183
1978
2011
i35
years
Atria Park of Pacific Palisades
Pacific Palisades
CA
i—
i4,458
i17,064
i1,542
i4,489
i18,575
i23,064
i8,177
i14,887
2001
2007
i35
years
Atria Palm Desert
Palm Desert
CA
i—
i2,887
i9,843
i1,760
i3,145
i11,345
i14,490
i6,211
i8,279
1988
2011
i35
years
Atria Hacienda
Palm Desert
CA
i—
i6,680
i85,900
i4,324
i6,876
i90,028
i96,904
i28,182
i68,722
1989
2011
i35
years
Atria Del Rey
Rancho Cucamonga
CA
i—
i3,290
i17,427
i5,978
i3,477
i23,218
i26,695
i10,257
i16,438
1987
2011
i35
years
Mission Hills
Rancho Mirage
CA
i—
i1,610
i9,169
i798
i6,800
i4,777
i11,577
i1,717
i9,860
1996
2014
i35
years
Atria Rocklin
Rocklin
CA
i17,864
i4,427
i52,064
i1,839
i4,507
i53,823
i58,330
i11,217
i47,113
2001
2015
i35
years
130
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Atria La Jolla
San Diego
CA
i—
i8,210
i46,315
(i1,070)
i8,216
i45,239
i53,455
i4,821
i48,634
1984
2017
i35
years
Atria Penasquitos
San Diego
CA
i—
i2,649
i24,067
i2,325
i2,711
i26,330
i29,041
i2,729
i26,312
1991
2017
i35
years
Atria Collwood
San Diego
CA
i—
i290
i10,650
i1,566
i348
i12,158
i12,506
i4,660
i7,846
1976
2011
i35
years
Atria Rancho Park
San Dimas
CA
i—
i4,066
i14,306
i2,273
i4,625
i16,020
i20,645
i6,545
i14,100
1975
2011
i35
years
Regency of Evergreen Valley
San Jose
CA
i—
i6,800
i3,637
i1,299
i2,707
i9,029
i11,736
i3,217
i8,519
1998
2011
i35
years
Atria Willow Glen
San Jose
CA
i—
i8,521
i43,168
i3,896
i8,627
i46,958
i55,585
i14,216
i41,369
1976
2011
i35
years
Atria San Juan
San Juan Capistrano
CA
i—
i5,110
i29,436
i9,287
i5,353
i38,480
i43,833
i17,013
i26,820
1985
2011
i35
years
Atria Hillsdale
San Mateo
CA
i—
i5,240
i15,956
i29,714
i7,042
i43,868
i50,910
i7,720
i43,190
1986
2011
i35
years
Atria Santa Clarita
Santa Clarita
CA
i—
i3,880
i38,366
i1,853
i3,890
i40,209
i44,099
i8,612
i35,487
2001
2015
i35
years
Atria Sunnyvale
Sunnyvale
CA
i—
i6,120
i30,068
i5,456
i6,247
i35,397
i41,644
i12,938
i28,706
1977
2011
i35
years
Atria Park of Tarzana
Tarzana
CA
i—
i960
i47,547
i6,714
i5,861
i49,360
i55,221
i12,761
i42,460
2008
2013
i35
years
Atria Park of Vintage Hills
Temecula
CA
i—
i4,674
i44,341
i3,582
i4,892
i47,705
i52,597
i13,486
i39,111
2000
2013
i35
years
Atria Park of Grand Oaks
Thousand Oaks
CA
i—
i5,994
i50,309
i1,691
i6,069
i51,925
i57,994
i14,147
i43,847
2002
2013
i35
years
Atria Hillcrest
Thousand Oaks
CA
i—
i6,020
i25,635
i10,655
i6,624
i35,686
i42,310
i16,628
i25,682
1987
2011
i35
years
Atria Walnut Creek
Walnut Creek
CA
i—
i6,910
i15,797
i17,635
i7,642
i32,700
i40,342
i17,960
i22,382
1978
2011
i35
years
Atria Valley View
Walnut Creek
CA
i—
i7,139
i53,914
i3,287
i7,193
i57,147
i64,340
i25,830
i38,510
1977
2011
i35
years
Atria Longmont
Longmont
CO
i—
i2,807
i24,877
i1,528
i2,874
i26,338
i29,212
i7,837
i21,375
2009
2012
i35
years
Atria Darien
Darien
CT
i—
i653
i37,587
i12,387
i1,202
i49,425
i50,627
i18,589
i32,038
1997
2011
i35
years
Atria Larson Place
Hamden
CT
i—
i1,850
i16,098
i2,741
i1,889
i18,800
i20,689
i6,806
i13,883
1999
2011
i35
years
Atria Greenridge Place
Rocky Hill
CT
i—
i2,170
i32,553
i2,898
i2,392
i35,229
i37,621
i11,351
i26,270
1998
2011
i35
years
Atria Stamford
Stamford
CT
i—
i1,200
i62,432
i20,362
i1,487
i82,507
i83,994
i26,793
i57,201
1975
2011
i35
years
Atria Crossroads Place
Waterford
CT
i—
i2,401
i36,495
i8,089
i2,577
i44,408
i46,985
i16,966
i30,019
2000
2011
i35
years
Atria Hamilton Heights
West Hartford
CT
i—
i3,120
i14,674
i4,118
i3,163
i18,749
i21,912
i8,054
i13,858
1904
2011
i35
years
Atria Windsor Woods
Hudson
FL
i—
i1,610
i32,432
i3,959
i1,744
i36,257
i38,001
i12,508
i25,493
1988
2011
i35
years
Atria Park of Baypoint Village
Hudson
FL
i—
i2,083
i28,841
i10,180
i2,369
i38,735
i41,104
i15,605
i25,499
1986
2011
i35
years
Atria Park of San Pablo
Jacksonville
FL
i—
i1,620
i14,920
i1,365
i1,660
i16,245
i17,905
i5,499
i12,406
1999
2011
i35
years
Atria Park of St. Joseph's
Jupiter
FL
i—
i5,520
i30,720
i2,309
i5,579
i32,970
i38,549
i9,286
i29,263
2007
2013
i35
years
Atria Lady Lake
Lady Lake
FL
i—
i3,752
i26,265
(i14,417)
i3,769
i11,831
i15,600
i5,622
i9,978
2010
2015
i35
years
Atria Park of Lake Forest
Sanford
FL
i—
i3,589
i32,586
i5,481
i4,104
i37,552
i41,656
i12,604
i29,052
2002
2011
i35
years
Atria Evergreen Woods
Spring Hill
FL
i—
i2,370
i28,371
i6,382
i2,574
i34,549
i37,123
i13,071
i24,052
1981
2011
i35
years
Atria North Point
Alpharetta
GA
i37,704
i4,830
i78,318
i3,689
i4,868
i81,969
i86,837
i19,856
i66,981
2007
2014
i35
years
Atria Buckhead
Atlanta
GA
i—
i3,660
i5,274
i1,501
i3,688
i6,747
i10,435
i3,021
i7,414
1996
2011
i35
years
Atria Park of Tucker
Tucker
GA
i—
i1,103
i20,679
i870
i1,120
i21,532
i22,652
i6,008
i16,644
2000
2013
i35
years
Atria Park of Glen Ellyn
Glen Ellyn
IL
i—
i2,455
i34,064
i270
i2,748
i34,041
i36,789
i15,538
i21,251
2000
2007
i35
years
Atria Newburgh
Newburgh
IN
i—
i1,150
i22,880
i1,700
i1,155
i24,575
i25,730
i7,703
i18,027
1998
2011
i35
years
Atria Hearthstone East
Topeka
KS
i—
i1,150
i20,544
i1,118
i1,241
i21,571
i22,812
i7,570
i15,242
1998
2011
i35
years
Atria Hearthstone West
Topeka
KS
i—
i1,230
i28,379
i2,668
i1,267
i31,010
i32,277
i11,155
i21,122
1987
2011
i35
years
Atria Highland Crossing
Covington
KY
i—
i1,677
i14,393
i1,859
i1,693
i16,236
i17,929
i6,272
i11,657
1988
2011
i35
years
131
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Atria Summit Hills
Crestview Hills
KY
i—
i1,780
i15,769
i1,369
i1,812
i17,106
i18,918
i6,037
i12,881
1998
2011
i35
years
Atria Elizabethtown
Elizabethtown
KY
i—
i850
i12,510
i1,038
i884
i13,514
i14,398
i4,589
i9,809
1996
2011
i35
years
Atria St. Matthews
Louisville
KY
i—
i939
i9,274
i1,461
i968
i10,706
i11,674
i4,610
i7,064
1998
2011
i35
years
Atria Stony Brook
Louisville
KY
i—
i1,860
i17,561
i1,526
i1,953
i18,994
i20,947
i6,627
i14,320
1999
2011
i35
years
Atria Springdale
Louisville
KY
i—
i1,410
i16,702
i1,724
i1,451
i18,385
i19,836
i6,372
i13,464
1999
2011
i35
years
Atria Kennebunk
Kennebunk
ME
i—
i1,090
i23,496
i1,745
i1,159
i25,172
i26,331
i8,496
i17,835
1998
2011
i35
years
Atria Manresa
Annapolis
MD
i—
i4,193
i19,000
i2,511
i4,465
i21,239
i25,704
i7,368
i18,336
1920
2011
i35
years
Atria Salisbury
Salisbury
MD
i—
i1,940
i24,500
(i3,220)
i1,979
i21,241
i23,220
i7,991
i15,229
1995
2011
i35
years
Atria Marland Place
Andover
MA
i—
i1,831
i34,592
i19,905
i1,996
i54,332
i56,328
i25,066
i31,262
1996
2011
i35
years
Atria Longmeadow Place
Burlington
MA
i—
i5,310
i58,021
i2,305
i5,387
i60,249
i65,636
i18,432
i47,204
1998
2011
i35
years
Atria Fairhaven
Fairhaven
MA
i—
i1,100
i16,093
i1,391
i1,157
i17,427
i18,584
i5,587
i12,997
1999
2011
i35
years
Atria Woodbriar Place
Falmouth
MA
i—
i4,630
i27,314
i5,936
i6,433
i31,447
i37,880
i9,746
i28,134
2013
2013
i35
years
Atria Woodbriar Park
Falmouth
MA
i—
i1,970
i43,693
i21,590
i2,711
i64,542
i67,253
i24,349
i42,904
1975
2011
i35
years
Atria Draper Place
Hopedale
MA
i—
i1,140
i17,794
i1,953
i1,234
i19,653
i20,887
i6,681
i14,206
1998
2011
i35
years
Atria Merrimack Place
Newburyport
MA
i—
i2,774
i40,645
i24,722
i4,319
i63,822
i68,141
i12,969
i55,172
2000
2011
i35
years
Atria Marina Place
Quincy
MA
i—
i2,590
i33,899
i2,202
i2,780
i35,911
i38,691
i11,634
i27,057
1999
2011
i35
years
Atria Park of Ann Arbor
Ann Arbor
MI
i—
i1,703
i15,857
i2,124
i1,837
i17,847
i19,684
i8,105
i11,579
2001
2007
i35
years
Atria Kinghaven
Riverview
MI
i—
i1,440
i26,260
i3,840
i1,614
i29,926
i31,540
i10,094
i21,446
1987
2011
i35
years
Atria Seville
Las Vegas
NV
i—
i—
i796
i2,085
i26
i2,855
i2,881
i2,097
i784
1999
2011
i35
years
Atria Summit Ridge
Reno
NV
i—
i4
i407
i878
i27
i1,262
i1,289
i939
i350
1997
2011
i35
years
Atria Cranford
Cranford
NJ
i—
i8,260
i61,411
i5,980
i8,420
i67,231
i75,651
i22,636
i53,015
1993
2011
i35
years
Atria Tinton Falls
Tinton Falls
NJ
i—
i6,580
i13,258
i1,966
i6,762
i15,042
i21,804
i6,133
i15,671
1999
2011
i35
years
Atria Shaker
Albany
NY
i—
i1,520
i29,667
i6,180
i1,652
i35,715
i37,367
i10,245
i27,122
1997
2011
i35
years
Atria Crossgate
Albany
NY
i—
i1,080
i20,599
i1,280
i1,100
i21,859
i22,959
i7,542
i15,417
1980
2011
i35
years
Atria Woodlands
Ardsley
NY
i43,744
i7,660
i65,581
i3,559
i7,718
i69,082
i76,800
i22,346
i54,454
2005
2011
i35
years
Atria Bay Shore
Bay Shore
NY
i15,275
i4,440
i31,983
i3,128
i4,453
i35,098
i39,551
i11,788
i27,763
1900
2011
i35
years
Atria Briarcliff Manor
Briarcliff Manor
NY
i—
i6,560
i33,885
i3,541
i6,725
i37,261
i43,986
i12,390
i31,596
1997
2011
i35
years
Atria Riverdale
Bronx
NY
i—
i1,020
i24,149
i16,674
i1,084
i40,759
i41,843
i18,224
i23,619
1999
2011
i35
years
Atria Delmar Place
Delmar
NY
i—
i1,201
i24,850
i1,249
i1,223
i26,077
i27,300
i6,450
i20,850
2004
2013
i35
years
Atria East Northport
East Northport
NY
i—
i9,960
i34,467
i20,194
i10,250
i54,371
i64,621
i19,574
i45,047
1996
2011
i35
years
Atria Glen Cove
Glen Cove
NY
i—
i2,035
i25,190
i1,594
i2,066
i26,753
i28,819
i14,990
i13,829
1997
2011
i35
years
Atria Great Neck
Great Neck
NY
i—
i3,390
i54,051
i28,881
i3,482
i82,840
i86,322
i25,162
i61,160
1998
2011
i35
years
Atria Cutter Mill
Great Neck
NY
i—
i2,750
i47,919
i3,865
i2,761
i51,773
i54,534
i16,113
i38,421
1999
2011
i35
years
Atria Huntington
Huntington Station
NY
i—
i8,190
i1,169
i2,943
i8,232
i4,070
i12,302
i3,231
i9,071
1987
2011
i35
years
Atria Hertlin Place
Lake Ronkonkoma
NY
i—
i7,886
i16,391
i2,622
i7,889
i19,010
i26,899
i6,071
i20,828
2002
2012
i35
years
Atria Lynbrook
Lynbrook
NY
i—
i3,145
i5,489
i15,273
i3,176
i20,731
i23,907
i3,144
i20,763
1996
2011
i35
years
Atria Tanglewood
Lynbrook
NY
i22,705
i4,120
i37,348
i1,516
i4,145
i38,839
i42,984
i12,123
i30,861
2005
2011
i35
years
Atria West 86
New York
NY
i—
i80
i73,685
i7,786
i167
i81,384
i81,551
i27,323
i54,228
1998
2011
i35
years
132
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Atria on the Hudson
Ossining
NY
i—
i8,123
i63,089
i5,583
i8,217
i68,578
i76,795
i23,548
i53,247
1972
2011
i35
years
Atria Plainview
Plainview
NY
i—
i2,480
i16,060
i2,445
i2,666
i18,319
i20,985
i6,496
i14,489
2000
2011
i35
years
Atria Rye Brook
Port Chester
NY
i—
i9,660
i74,936
i3,632
i9,751
i78,477
i88,228
i24,361
i63,867
2004
2011
i35
years
Atria Kew Gardens
Queens
NY
i—
i3,051
i66,013
i9,460
i3,081
i75,443
i78,524
i25,005
i53,519
1999
2011
i35
years
Atria Forest Hills
Queens
NY
i—
i2,050
i16,680
i2,312
i2,074
i18,968
i21,042
i6,487
i14,555
2001
2011
i35
years
Atria on Roslyn Harbor
Roslyn
NY
i65,000
i12,909
i72,720
i3,143
i12,974
i75,798
i88,772
i23,819
i64,953
2006
2011
i35
years
Atria Guilderland
Slingerlands
NY
i—
i1,170
i22,414
i1,027
i1,210
i23,401
i24,611
i7,540
i17,071
1950
2011
i35
years
Atria South Setauket
South Setauket
NY
i—
i8,450
i14,534
i2,347
i8,842
i16,489
i25,331
i7,528
i17,803
1967
2011
i35
years
Atria Southpoint Walk
Durham
NC
i—
i2,130
i25,920
i1,673
i2,135
i27,588
i29,723
i7,806
i21,917
2009
2013
i35
years
Atria Oakridge
Raleigh
NC
i—
i1,482
i28,838
i1,803
i1,519
i30,604
i32,123
i8,750
i23,373
2009
2013
i35
years
Atria Bethlehem
Bethlehem
PA
i—
i2,479
i22,870
i1,466
i2,500
i24,315
i26,815
i8,353
i18,462
1998
2011
i35
years
Atria Center City
Philadelphia
PA
i—
i3,460
i18,291
i18,490
i3,535
i36,706
i40,241
i13,623
i26,618
1964
2011
i35
years
Atria South Hills
Pittsburgh
PA
i—
i880
i10,884
i1,187
i940
i12,011
i12,951
i4,512
i8,439
1998
2011
i35
years
Atria Bay Spring Village
Barrington
RI
i—
i2,000
i33,400
i3,245
i2,103
i36,542
i38,645
i13,037
i25,608
2000
2011
i35
years
Atria Harborhill
East Greenwich
RI
i—
i2,089
i21,702
i2,003
i2,186
i23,608
i25,794
i8,175
i17,619
1835
2011
i35
years
Atria Lincoln Place
Lincoln
RI
i—
i1,440
i12,686
i1,615
i1,475
i14,266
i15,741
i5,461
i10,280
2000
2011
i35
years
Atria Aquidneck Place
Portsmouth
RI
i—
i2,810
i31,623
i1,358
i2,814
i32,977
i35,791
i10,251
i25,540
1999
2011
i35
years
Atria Forest Lake
Columbia
SC
i—
i670
i13,946
i1,211
i693
i15,134
i15,827
i4,988
i10,839
1999
2011
i35
years
Atria Weston Place
Knoxville
TN
i—
i793
i7,961
i1,655
i969
i9,440
i10,409
i3,559
i6,850
1993
2011
i35
years
Atria at the Arboretum
Austin
TX
i—
i8,280
i61,764
i3,715
i8,377
i65,382
i73,759
i18,129
i55,630
2009
2012
i35
years
Atria Carrollton
Carrollton
TX
i5,108
i360
i20,465
i1,882
i370
i22,337
i22,707
i7,588
i15,119
1998
2011
i35
years
Atria Grapevine
Grapevine
TX
i—
i2,070
i23,104
i2,109
i2,092
i25,191
i27,283
i8,020
i19,263
1999
2011
i35
years
Atria Westchase
Houston
TX
i—
i2,318
i22,278
i1,653
i2,347
i23,902
i26,249
i8,030
i18,219
1999
2011
i35
years
Atria Cinco Ranch
Katy
TX
i—
i3,171
i73,287
i2,195
i3,201
i75,452
i78,653
i14,713
i63,940
2010
2015
i35
years
Atria Kingwood
Kingwood
TX
i—
i1,170
i4,518
i1,141
i1,213
i5,616
i6,829
i2,397
i4,432
1998
2011
i35
years
Atria at Hometown
North Richland Hills
TX
i—
i1,932
i30,382
i3,130
i1,963
i33,481
i35,444
i9,642
i25,802
2007
2013
i35
years
Atria Canyon Creek
Plano
TX
i—
i3,110
i45,999
i3,932
i3,148
i49,893
i53,041
i14,590
i38,451
2009
2013
i35
years
Atria Cypresswood
Spring
TX
i—
i880
i9,192
i680
i984
i9,768
i10,752
i3,938
i6,814
1996
2011
i35
years
Atria Sugar Land
Sugar Land
TX
i—
i970
i17,542
i1,110
i980
i18,642
i19,622
i6,211
i13,411
1999
2011
i35
years
Atria Copeland
Tyler
TX
i—
i1,879
i17,901
i2,239
i1,913
i20,106
i22,019
i6,642
i15,377
1997
2011
i35
years
Atria Willow Park
Tyler
TX
i—
i920
i31,271
i2,041
i986
i33,246
i34,232
i11,078
i23,154
1985
2011
i35
years
Atria Virginia Beach
Virginia Beach
VA
i—
i1,749
i33,004
i1,162
i1,815
i34,100
i35,915
i11,130
i24,785
1998
2011
i35
years
Arbour Lake
Calgary
AB
i—
i2,512
i39,188
(i2,110)
i2,304
i37,286
i39,590
i8,334
i31,256
2003
2014
i35
years
Canyon Meadows
Calgary
AB
i—
i1,617
i30,803
(i1,473)
i1,483
i29,464
i30,947
i6,879
i24,068
1995
2014
i35
years
Churchill Manor
Edmonton
AB
i—
i2,865
i30,482
(i1,423)
i2,627
i29,297
i31,924
i6,693
i25,231
1999
2014
i35
years
The View at Lethbridge
Lethbridge
AB
i—
i2,503
i24,770
(i1,135)
i2,306
i23,832
i26,138
i5,791
i20,347
2007
2014
i35
years
Victoria Park
Red Deer
AB
i—
i1,188
i22,554
(i268)
i1,087
i22,387
i23,474
i5,565
i17,909
1999
2014
i35
years
Ironwood Estates
St. Albert
AB
i—
i3,639
i22,519
(i462)
i3,360
i22,336
i25,696
i5,574
i20,122
1998
2014
i35
years
133
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Longlake Chateau
Nanaimo
BC
i—
i1,874
i22,910
(i761)
i1,717
i22,306
i24,023
i5,661
i18,362
1990
2014
i35
years
Prince George Chateau
Prince George
BC
i—
i2,066
i22,761
(i786)
i1,891
i22,150
i24,041
i5,493
i18,548
2005
2014
i35
years
The Victorian
Victoria
BC
i—
i3,419
i16,351
(i132)
i3,162
i16,476
i19,638
i4,406
i15,232
1988
2014
i35
years
The Victorian at McKenzie
Victoria
BC
i—
i4,801
i25,712
(i709)
i4,394
i25,410
i29,804
i6,251
i23,553
2003
2014
i35
years
Riverheights Terrace
Brandon
MB
i—
i799
i27,708
(i750)
i735
i27,022
i27,757
i6,492
i21,265
2001
2014
i35
years
Amber Meadow
Winnipeg
MB
i—
i3,047
i17,821
(i22)
i2,789
i18,057
i20,846
i5,118
i15,728
2000
2014
i35
years
The Westhaven
Winnipeg
MB
i—
i871
i23,162
(i222)
i829
i22,982
i23,811
i5,611
i18,200
1988
2014
i35
years
Ste. Anne's Court
Fredericton
NB
i—
i1,221
i29,626
(i1,216)
i1,129
i28,502
i29,631
i6,787
i22,844
2002
2014
i35
years
Chateau de Champlain
St. John
NB
i—
i796
i24,577
(i324)
i746
i24,303
i25,049
i6,121
i18,928
2002
2014
i35
years
The Court at Brooklin
Brooklin
ON
i—
i2,515
i35,602
(i1,118)
i2,539
i34,460
i36,999
i7,905
i29,094
2004
2014
i35
years
Burlington Gardens
Burlington
ON
i—
i7,560
i50,744
(i3,211)
i6,925
i48,168
i55,093
i10,423
i44,670
2008
2014
i35
years
The Court at Rushdale
Hamilton
ON
i—
i1,799
i34,633
(i1,486)
i1,643
i33,303
i34,946
i7,735
i27,211
2004
2014
i35
years
Kingsdale Chateau
Kingston
ON
i—
i2,221
i36,272
(i1,440)
i2,097
i34,956
i37,053
i8,044
i29,009
2000
2014
i35
years
The Court at Barrhaven
Nepean
ON
i—
i1,778
i33,922
(i1,241)
i1,685
i32,774
i34,459
i7,818
i26,641
2004
2014
i35
years
Crystal View Lodge
Nepean
ON
i—
i1,587
i37,243
(i799)
i1,669
i36,362
i38,031
i8,277
i29,754
2000
2014
i35
years
Stamford Estates
Niagara Falls
ON
i—
i1,414
i29,439
(i1,145)
i1,291
i28,417
i29,708
i6,498
i23,210
2005
2014
i35
years
Sherbrooke Heights
Peterborough
ON
i—
i2,485
i33,747
(i1,250)
i2,277
i32,705
i34,982
i7,745
i27,237
2001
2014
i35
years
Anchor Pointe
St. Catharines
ON
i—
i8,214
i24,056
(i349)
i7,544
i24,377
i31,921
i6,128
i25,793
2000
2014
i35
years
The Court at Pringle Creek
Whitby
ON
i—
i2,965
i39,206
(i2,347)
i2,780
i37,044
i39,824
i8,495
i31,329
2002
2014
i35
years
La Residence Steger
Saint-Laurent
QC
i—
i1,995
i10,926
i1,542
i1,926
i12,537
i14,463
i3,906
i10,557
1999
2014
i35
years
Mulberry Estates
Moose Jaw
SK
i—
i2,173
i31,791
(i1,371)
i2,094
i30,499
i32,593
i7,219
i25,374
2003
2014
i35
years
Queen Victoria Estates
Regina
SK
i—
i3,018
i34,109
(i1,523)
i2,770
i32,834
i35,604
i7,644
i27,960
2000
2014
i35
years
Primrose Chateau
Saskatoon
SK
i—
i2,611
i32,729
(i899)
i2,459
i31,982
i34,441
i7,458
i26,983
1996
2014
i35
years
Amberwood
Port Richey
Florida
i—
i1,320
i—
i—
i1,320
i—
i1,320
i—
i1,320
N/A
2011
N/A
Atria Development & Construction Fees
i—
i—
i163
i—
i—
i163
i163
i—
i163
CIP
CIP
CIP
TOTAL
FOR ATRIA SENIOR HOUSING COMMUNITIES
i207,400
i535,915
i4,731,839
i568,954
i556,362
i5,280,346
i5,836,708
i1,657,519
i4,179,189
OTHER
SENIOR HOUSING COMMUNITIES
Elmcroft of Grayson Valley
Birmingham
AL
i—
i1,040
i19,145
(i4,072)
i1,046
i15,067
i16,113
i6,102
i10,011
2000
2011
i35
years
Elmcroft of Byrd Springs
Hunstville
AL
i—
i1,720
i11,270
i1,443
i1,729
i12,704
i14,433
i4,253
i10,180
1999
2011
i35
years
Elmcroft of Heritage Woods
Mobile
AL
i—
i1,020
i10,241
i1,217
i1,027
i11,451
i12,478
i3,814
i8,664
2000
2011
i35
years
Rosewood Manor
Scottsboro
AL
i—
i680
i4,038
i—
i680
i4,038
i4,718
i1,202
i3,516
1998
2011
i35
years
Chandler Memory Care Community
Chandler
AZ
i—
i2,910
i8,882
i184
i3,094
i8,882
i11,976
i2,681
i9,295
2012
2012
i35
years
Silver Creek Inn Memory Care Community
Gilbert
AZ
i—
i890
i5,918
i—
i890
i5,918
i6,808
i1,664
i5,144
2012
2012
i35
years
Prestige Assisted Living at Green Valley
Green Valley
AZ
i—
i1,227
i13,977
i—
i1,227
i13,977
i15,204
i2,779
i12,425
1998
2014
i35
years
134
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Prestige Assisted Living at Lake Havasu City
Lake Havasu
AZ
i—
i594
i14,792
i—
i594
i14,792
i15,386
i2,925
i12,461
1999
2014
i35
years
Arbor Rose
Mesa
AZ
i—
i1,100
i11,880
i2,434
i1,100
i14,314
i15,414
i5,874
i9,540
1999
2011
i35
years
The Stratford
Phoenix
AZ
i—
i1,931
i33,576
i1,221
i1,931
i34,797
i36,728
i6,765
i29,963
2001
2014
i35
years
Amber Creek Inn Memory Care
Scottsdale
AZ
i—
i2,310
i6,322
i677
i2,185
i7,124
i9,309
i1,236
i8,073
1986
2011
i35
years
Prestige Assisted Living at Sierra Vista
Sierra Vista
AZ
i—
i295
i13,224
i—
i295
i13,224
i13,519
i2,610
i10,909
1999
2014
i35
years
Rock Creek Memory Care Community
Surprise
AZ
i9,687
i826
i16,353
i3
i826
i16,356
i17,182
i1,666
i15,516
2017
2017
i35
years
Elmcroft of Tempe
Tempe
AZ
i—
i1,090
i12,942
i1,846
i1,098
i14,780
i15,878
i4,861
i11,017
1999
2011
i35
years
Elmcroft of River Centre
Tucson
AZ
i—
i1,940
i5,195
i1,374
i1,940
i6,569
i8,509
i2,549
i5,960
1999
2011
i35
years
West Shores
Hot Springs
AR
i—
i1,326
i10,904
i2,091
i1,326
i12,995
i14,321
i5,572
i8,749
1988
2005
i35
years
Elmcroft of Maumelle
Maumelle
AR
i—
i1,252
i7,601
i682
i1,359
i8,176
i9,535
i3,346
i6,189
1997
2006
i35
years
Elmcroft of Mountain Home
Mountain Home
AR
i—
i204
i8,971
i521
i204
i9,492
i9,696
i3,889
i5,807
1997
2006
i35
years
Elmcroft of Sherwood
Sherwood
AR
i—
i1,320
i5,693
i623
i1,323
i6,313
i7,636
i2,603
i5,033
1997
2006
i35
years
Sierra Ridge Memory Care
Auburn
CA
i—
i681
i6,071
i—
i681
i6,071
i6,752
i1,211
i5,541
2011
2014
i35
years
Careage Banning
Banning
CA
i—
i2,970
i16,037
i—
i2,970
i16,037
i19,007
i5,038
i13,969
2004
2011
i35
years
Las Villas Del Carlsbad
Carlsbad
CA
i—
i1,760
i30,469
i5,561
i1,890
i35,900
i37,790
i13,124
i24,666
1987
2006
i35
years
Prestige Assisted Living at Chico
Chico
CA
i—
i1,069
i14,929
i—
i1,069
i14,929
i15,998
i2,962
i13,036
1998
2014
i35
years
The Meadows Senior Living
Elk Grove
CA
i—
i1,308
i19,667
i—
i1,308
i19,667
i20,975
i3,868
i17,107
2003
2014
i35
years
Alder Bay Assisted Living
Eureka
CA
i—
i1,170
i5,228
(i70)
i1,170
i5,158
i6,328
i1,729
i4,599
1997
2011
i35
years
Cedarbrook
Fresno
CA
i—
i1,652
i12,613
i—
i1,652
i12,613
i14,265
i1,625
i12,640
2014
2017
i35
years
Elmcroft of La Mesa
La Mesa
CA
i—
i2,431
i6,101
(i1,369)
i2,431
i4,732
i7,163
i2,536
i4,627
1997
2006
i35
years
Grossmont Gardens
La Mesa
CA
i—
i9,104
i59,349
i3,631
i9,115
i62,969
i72,084
i25,444
i46,640
1964
2006
i35
years
Palms, The
La Mirada
CA
i—
i2,700
i43,919
(i260)
i2,700
i43,659
i46,359
i9,321
i37,038
1990
2013
i35
years
Prestige Assisted Living at Lancaster
Lancaster
CA
i—
i718
i10,459
i—
i718
i10,459
i11,177
i2,075
i9,102
1999
2014
i35
years
Prestige Assisted Living at Marysville
Marysville
CA
i—
i741
i7,467
i—
i741
i7,467
i8,208
i1,487
i6,721
1999
2014
i35
years
Mountview Retirement Residence
Montrose
CA
i—
i1,089
i15,449
i3,208
i1,089
i18,657
i19,746
i6,603
i13,143
1974
2006
i35
years
Redwood Retirement
Napa
CA
i—
i2,798
i12,639
i133
i2,798
i12,772
i15,570
i2,711
i12,859
1986
2013
i35
years
Prestige Assisted Living at Oroville
Oroville
CA
i—
i638
i8,079
i—
i638
i8,079
i8,717
i1,605
i7,112
1999
2014
i35
years
Valencia Commons
Rancho Cucamonga
CA
i—
i1,439
i36,363
(i418)
i1,439
i35,945
i37,384
i7,687
i29,697
2002
2013
i35
years
Shasta Estates
Redding
CA
i—
i1,180
i23,463
(i58)
i1,180
i23,405
i24,585
i4,983
i19,602
2009
2013
i35
years
The Vistas
Redding
CA
i—
i1,290
i22,033
i—
i1,290
i22,033
i23,323
i6,561
i16,762
2007
2011
i35
years
Elmcroft of Point Loma
San Diego
CA
i—
i2,117
i6,865
(i1,416)
i16
i7,550
i7,566
i2,935
i4,631
1999
2006
i35
years
Villa Santa Barbara
Santa Barbara
CA
i—
i1,219
i12,426
i5,357
i1,219
i17,783
i19,002
i6,522
i12,480
1977
2005
i35
years
Oak Terrace Memory Care
Soulsbyville
CA
i—
i1,146
i5,275
i—
i1,146
i5,275
i6,421
i1,067
i5,354
1999
2014
i35
years
Skyline Place Senior Living
Sonora
CA
i—
i1,815
i28,472
i—
i1,815
i28,472
i30,287
i5,620
i24,667
1996
2014
i35
years
Eagle Lake Village
Susanville
CA
i—
i1,165
i6,719
i—
i1,165
i6,719
i7,884
i1,778
i6,106
2006
2012
i35
years
Bonaventure, The
Ventura
CA
i—
i5,294
i32,747
(i496)
i5,294
i32,251
i37,545
i6,936
i30,609
2005
2013
i35
years
Sterling Inn
Victorville
CA
i12,558
i733
i18,564
i6,925
i733
i25,489
i26,222
i2,514
i23,708
1992
2017
i35
years
135
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Sterling Commons
Victorville
CA
i5,850
i768
i13,124
i—
i768
i13,124
i13,892
i1,632
i12,260
1994
2017
i35
years
Prestige Assisted Living at Visalia
Visalia
CA
i—
i1,300
i8,378
i—
i1,300
i8,378
i9,678
i1,679
i7,999
1998
2014
i35
years
Highland Trail
Broomfield
CO
i—
i2,511
i26,431
(i370)
i2,511
i26,061
i28,572
i5,596
i22,976
2009
2013
i35
years
Caley Ridge
Englewood
CO
i—
i1,157
i13,133
i—
i1,157
i13,133
i14,290
i3,476
i10,814
1999
2012
i35
years
Garden Square at Westlake
Greeley
CO
i—
i630
i8,211
i—
i630
i8,211
i8,841
i2,530
i6,311
1998
2011
i35
years
Garden Square of Greeley
Greeley
CO
i—
i330
i2,735
i—
i330
i2,735
i3,065
i848
i2,217
1995
2011
i35
years
Lakewood Estates
Lakewood
CO
i—
i1,306
i21,137
(i2)
i1,306
i21,135
i22,441
i4,508
i17,933
1988
2013
i35
years
Sugar Valley Estates
Loveland
CO
i—
i1,255
i21,837
(i240)
i1,255
i21,597
i22,852
i4,627
i18,225
2009
2013
i35
years
Devonshire Acres
Sterling
CO
i—
i950
i10,092
i555
i965
i10,632
i11,597
i3,481
i8,116
1979
2011
i35
years
The Hearth at Gardenside
Branford
CT
i—
i7,000
i31,518
i—
i7,000
i31,518
i38,518
i9,377
i29,141
1999
2011
i35
years
The Hearth at Tuxis Pond
Madison
CT
i—
i1,610
i44,322
i—
i1,610
i44,322
i45,932
i12,695
i33,237
2002
2011
i35
years
White Oaks
Manchester
CT
i—
i2,584
i34,507
(i474)
i2,584
i34,033
i36,617
i7,302
i29,315
2007
2013
i35
years
Hampton Manor Belleview
Belleview
FL
i—
i390
i8,337
i100
i390
i8,437
i8,827
i2,539
i6,288
1988
2011
i35
years
Sabal House
Cantonment
FL
i—
i430
i5,902
i—
i430
i5,902
i6,332
i1,760
i4,572
1999
2011
i35
years
Bristol Park of Coral Springs
Coral Springs
FL
i—
i3,280
i11,877
i2,372
i3,280
i14,249
i17,529
i4,077
i13,452
1999
2011
i35
years
Stanley House
Defuniak Springs
FL
i—
i410
i5,659
i—
i410
i5,659
i6,069
i1,685
i4,384
1999
2011
i35
years
Barrington Terrace of Ft. Myers
Fort Myers
FL
i—
i2,105
i18,190
i1,659
i2,110
i19,844
i21,954
i4,860
i17,094
2001
2015
i35
years
The Peninsula
Hollywood
FL
i—
i3,660
i9,122
i1,416
i3,660
i10,538
i14,198
i3,499
i10,699
1972
2011
i35
years
Elmcroft of Timberlin Parc
Jacksonville
FL
i—
i455
i5,905
i641
i455
i6,546
i7,001
i2,714
i4,287
1998
2006
i35
years
Forsyth House
Milton
FL
i—
i610
i6,503
i—
i610
i6,503
i7,113
i1,923
i5,190
1999
2011
i35
years
Barrington Terrace of Naples
Naples
FL
i—
i2,596
i18,716
i1,750
i2,610
i20,452
i23,062
i4,535
i18,527
2004
2015
i35
years
The Carlisle Naples
Naples
FL
i—
i8,406
i78,091
i—
i8,406
i78,091
i86,497
i22,458
i64,039
1998
2011
i35
years
Naples ALZ Development
Naples
FL
i—
i2,983
i—
i—
i2,983
i—
i2,983
i—
i2,983
CIP
CIP
CIP
Hampton Manor at 24th Road
Ocala
FL
i—
i690
i8,767
i121
i690
i8,888
i9,578
i2,613
i6,965
1996
2011
i35
years
Hampton Manor at Deerwood
Ocala
FL
i—
i790
i5,605
i3,818
i983
i9,230
i10,213
i2,550
i7,663
2005
2011
i35
years
Las Palmas
Palm Coast
FL
i—
i984
i30,009
(i219)
i984
i29,790
i30,774
i6,358
i24,416
2009
2013
i35
years
Elmcroft of Pensacola
Pensacola
FL
i—
i2,230
i2,362
i997
i2,240
i3,349
i5,589
i1,143
i4,446
1999
2011
i35
years
Magnolia House
Quincy
FL
i—
i400
i5,190
i—
i400
i5,190
i5,590
i1,567
i4,023
1999
2011
i35
years
Elmcroft of Tallahassee
Tallahassee
FL
i—
i2,430
i17,745
i435
i2,448
i18,162
i20,610
i5,465
i15,145
1999
2011
i35
years
Tallahassee Memory Care
Tallahassee
FL
i—
i640
i8,013
(i5,473)
i653
i2,527
i3,180
i2,153
i1,027
1999
2011
i35
years
Bristol Park of Tamarac
Tamarac
FL
i—
i3,920
i14,130
i2,207
i3,920
i16,337
i20,257
i4,720
i15,537
2000
2011
i35
years
Elmcroft of Carrolwood
Tampa
FL
i—
i5,410
i20,944
(i7,544)
i5,417
i13,393
i18,810
i6,992
i11,818
2001
2011
i35
years
Arbor Terrace of Athens
Athens
GA
i—
i1,767
i16,442
i683
i1,777
i17,115
i18,892
i3,775
i15,117
1998
2015
i35
years
Arbor Terrace at Cascade
Atlanta
GA
i—
i3,052
i9,040
i956
i3,057
i9,991
i13,048
i3,089
i9,959
1999
2015
i35
years
Augusta Gardens
Augusta
GA
i—
i530
i10,262
i308
i543
i10,557
i11,100
i3,286
i7,814
1997
2011
i35
years
Benton House of Covington
Covington
GA
i—
i1,297
i11,397
i441
i1,298
i11,837
i13,135
i2,676
i10,459
2009
2015
i35
years
Arbor Terrace of Decatur
Decatur
GA
i—
i3,102
i19,599
(i403)
i1,298
i21,000
i22,298
i4,459
i17,839
1990
2015
i35
years
Benton House of Douglasville
Douglasville
GA
i—
i1,697
i15,542
i224
i1,697
i15,766
i17,463
i3,394
i14,069
2010
2015
i35
years
Elmcroft of Martinez
Martinez
GA
i—
i408
i6,764
i1,054
i408
i7,818
i8,226
i2,885
i5,341
1997
2007
i35
years
136
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Benton House of Newnan
Newnan
GA
i—
i1,474
i17,487
i319
i1,487
i17,793
i19,280
i3,766
i15,514
2010
2015
i35
years
Elmcroft of Roswell
Roswell
GA
i—
i1,867
i15,835
i806
i1,880
i16,628
i18,508
i3,357
i15,151
1997
2014
i35
years
Benton Village of Stockbridge
Stockbridge
GA
i—
i2,221
i21,989
i868
i2,232
i22,846
i25,078
i5,041
i20,037
2008
2015
i35
years
Benton House of Sugar Hill
Sugar Hill
GA
i—
i2,173
i14,937
i265
i2,183
i15,192
i17,375
i3,446
i13,929
2010
2015
i35
years
Villas of St. James - Breese, IL
Breese
IL
i—
i671
i6,849
i—
i671
i6,849
i7,520
i1,657
i5,863
2009
2015
i35
years
Villas of Holly Brook - Chatham, IL
Chatham
IL
i—
i1,185
i8,910
i—
i1,185
i8,910
i10,095
i2,240
i7,855
2012
2015
i35
years
Villas of Holly Brook - Effingham, IL
Effingham
IL
i—
i508
i6,624
i—
i508
i6,624
i7,132
i1,565
i5,567
2011
2015
i35
years
Villas of Holly Brook - Herrin, IL
Herrin
IL
i—
i2,175
i9,605
i—
i2,175
i9,605
i11,780
i2,798
i8,982
2012
2015
i35
years
Villas of Holly Brook - Marshall, IL
Marshall
IL
i—
i1,461
i4,881
i—
i1,461
i4,881
i6,342
i1,630
i4,712
2012
2015
i35
years
Villas of Holly Brook - Newton, IL
Newton
IL
i—
i458
i4,590
i—
i458
i4,590
i5,048
i1,197
i3,851
2011
2015
i35
years
Rochester Senior Living at Wyndcrest
Rochester
IL
i—
i570
i6,536
i249
i570
i6,785
i7,355
i1,642
i5,713
2005
2015
i35
years
Villas of Holly Brook, Shelbyville, IL
Shelbyville
IL
i—
i2,292
i3,351
i—
i2,292
i3,351
i5,643
i1,810
i3,833
2011
2015
i35
years
Elmcroft of Muncie
Muncie
IN
i—
i244
i11,218
i1,121
i324
i12,259
i12,583
i4,664
i7,919
1998
2007
i35
years
Wood Ridge
South Bend
IN
i—
i590
i4,850
(i35)
i590
i4,815
i5,405
i1,469
i3,936
1990
2011
i35
years
Elmcroft of Florence (KY)
Florence
KY
i—
i1,535
i21,826
i1,067
i1,581
i22,847
i24,428
i4,637
i19,791
2010
2014
i35
years
Hartland Hills
Lexington
KY
i—
i1,468
i23,929
(i368)
i1,468
i23,561
i25,029
i5,054
i19,975
2001
2013
i35
years
Elmcroft of Mount Washington
Mount Washington
KY
i—
i758
i12,048
i840
i758
i12,888
i13,646
i2,755
i10,891
2005
2014
i35
years
Clover Healthcare
Auburn
ME
i—
i1,400
i26,895
i876
i1,400
i27,771
i29,171
i8,731
i20,440
1982
2011
i35
years
Gorham House
Gorham
ME
i—
i1,360
i33,147
i1,472
i1,527
i34,452
i35,979
i9,873
i26,106
1990
2011
i35
years
Kittery Estates
Kittery
ME
i—
i1,531
i30,811
(i321)
i1,557
i30,464
i32,021
i6,525
i25,496
2009
2013
i35
years
Woods at Canco
Portland
ME
i—
i1,441
i45,578
(i676)
i1,474
i44,869
i46,343
i9,616
i36,727
2000
2013
i35
years
Sentry Inn at York Harbor
York Harbor
ME
i—
i3,490
i19,869
i—
i3,490
i19,869
i23,359
i5,806
i17,553
2000
2011
i35
years
Elmcroft of Hagerstown
Hagerstown
MD
i—
i2,010
i1,293
i561
i1,996
i1,868
i3,864
i734
i3,130
1999
2011
i35
years
Heritage Woods
Agawam
MA
i—
i1,249
i4,625
i—
i1,249
i4,625
i5,874
i2,818
i3,056
1997
2004
i30
years
Devonshire Estates
Lenox
MA
i—
i1,832
i31,124
(i332)
i1,832
i30,792
i32,624
i6,590
i26,034
1998
2013
i35
years
Elmcroft of Downriver
Brownstown Charter Township
MI
i—
i320
i32,652
i1,360
i371
i33,961
i34,332
i9,983
i24,349
2000
2011
i35
years
Independence Village of East Lansing
East Lansing
MI
i—
i1,956
i18,122
i423
i1,956
i18,545
i20,501
i4,880
i15,621
1989
2012
i35
years
Primrose Austin
Austin
MN
i—
i2,540
i11,707
i443
i2,540
i12,150
i14,690
i3,540
i11,150
2002
2011
i35
years
Primrose Duluth
Duluth
MN
i—
i6,190
i8,296
i257
i6,245
i8,498
i14,743
i2,774
i11,969
2003
2011
i35
years
Primrose Mankato
Mankato
MN
i—
i1,860
i8,920
i352
i1,860
i9,272
i11,132
i2,985
i8,147
1999
2011
i35
years
Lodge at White Bear
White Bear Lake
MN
i—
i732
i24,999
(i129)
i737
i24,865
i25,602
i5,304
i20,298
2002
2013
i35
years
Assisted Living at the Meadowlands - O'Fallon, MO
O'Fallon
MO
i—
i2,326
i14,158
i—
i2,326
i14,158
i16,484
i3,499
i12,985
1999
2015
i35
years
Canyon Creek Inn Memory Care
Billings
MT
i—
i420
i11,217
i7
i420
i11,224
i11,644
i3,193
i8,451
2011
2011
i35
years
Spring Creek Inn Alzheimer's Community
Bozeman
MT
i—
i1,345
i16,877
i—
i1,345
i16,877
i18,222
i2,162
i16,060
2010
2017
i35
years
The Springs at Missoula
Missoula
MT
i15,616
i1,975
i34,390
i2,076
i1,975
i36,466
i38,441
i9,733
i28,708
2004
2012
i35
years
Crown Pointe
Omaha
NE
i—
i1,316
i11,950
i3,118
i1,316
i15,068
i16,384
i6,042
i10,342
1985
2005
i35
years
Prestige Assisted Living at Mira Loma
Henderson
NV
i—
i1,279
i12,558
i—
i1,279
i12,558
i13,837
i2,006
i11,831
1998
2016
i35
years
Birch Heights
Derry
NH
i—
i1,413
i30,267
(i304)
i1,413
i29,963
i31,376
i6,414
i24,962
2009
2013
i35
years
137
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Bear Canyon Estates
Albuquerque
NM
i—
i1,879
i36,223
(i368)
i1,879
i35,855
i37,734
i7,664
i30,070
1997
2013
i35
years
The Woodmark at Uptown
Albuquerque
NM
i—
i2,439
i33,276
i2,081
i2,471
i35,325
i37,796
i7,231
i30,565
2000
2015
i35
years
Elmcroft of Quintessence
Albuquerque
NM
i—
i1,150
i26,527
i1,195
i1,184
i27,688
i28,872
i8,271
i20,601
1998
2011
i35
years
The Amberleigh
Buffalo
NY
i—
i3,498
i19,097
i7,269
i3,512
i26,352
i29,864
i9,858
i20,006
1988
2005
i35
years
Brookdale Battery Park City
New York
NY
i116,100
i2,903
i186,978
i1,490
i2,913
i188,458
i191,371
i14,043
i177,328
2000
2018
i35
years
The Hearth at Castle Gardens
Vestal
NY
i—
i1,830
i20,312
i2,230
i1,885
i22,487
i24,372
i8,251
i16,121
1994
2011
i35
years
Elmcroft of Asheboro
Asheboro
NC
i—
i680
i15,370
i522
i694
i15,878
i16,572
i4,329
i12,243
1998
2011
i35
years
Arbor Terrace of Asheville
Asheville
NC
i—
i1,365
i15,679
i924
i1,365
i16,603
i17,968
i3,754
i14,214
1998
2015
i35
years
Elmcroft of Little Avenue
Charlotte
NC
i—
i250
i5,077
i510
i250
i5,587
i5,837
i2,305
i3,532
1997
2006
i35
years
Elmcroft of Cramer Mountain
Cramerton
NC
i—
i530
i18,225
i225
i553
i18,427
i18,980
i5,049
i13,931
1999
2011
i35
years
Elmcroft of Harrisburg
Harrisburg
NC
i—
i1,660
i15,130
i711
i1,685
i15,816
i17,501
i4,310
i13,191
1997
2011
i35
years
Elmcroft of Hendersonville (NC)
Hendersonville
NC
i—
i2,210
i7,372
i336
i2,236
i7,682
i9,918
i2,187
i7,731
2005
2011
i35
years
Elmcroft of Hillsborough
Hillsborough
NC
i—
i1,450
i19,754
i383
i1,470
i20,117
i21,587
i5,533
i16,054
2005
2011
i35
years
Willow Grove
Matthews
NC
i—
i763
i27,544
(i274)
i763
i27,270
i28,033
i5,834
i22,199
2009
2013
i35
years
Elmcroft of Newton
Newton
NC
i—
i540
i14,935
i418
i544
i15,349
i15,893
i4,188
i11,705
2000
2011
i35
years
Independence Village of Olde Raleigh
Raleigh
NC
i—
i1,989
i18,648
i7
i1,989
i18,655
i20,644
i4,843
i15,801
1991
2012
i35
years
Elmcroft of Northridge
Raleigh
NC
i—
i184
i3,592
i2,357
i207
i5,926
i6,133
i2,113
i4,020
1984
2006
i35
years
Elmcroft of Salisbury
Salisbury
NC
i—
i1,580
i25,026
i394
i1,580
i25,420
i27,000
i6,939
i20,061
1999
2011
i35
years
Elmcroft of Shelby
Shelby
NC
i—
i660
i15,471
i488
i675
i15,944
i16,619
i4,334
i12,285
2000
2011
i35
years
Elmcroft of Southern Pines
Southern Pines
NC
i—
i1,196
i10,766
i966
i1,210
i11,718
i12,928
i3,674
i9,254
1998
2010
i35
years
Elmcroft of Southport
Southport
NC
i—
i1,330
i10,356
i253
i1,349
i10,590
i11,939
i2,984
i8,955
2005
2011
i35
years
Primrose Bismarck
Bismarck
ND
i—
i1,210
i9,768
i255
i1,210
i10,023
i11,233
i3,042
i8,191
1994
2011
i35
years
Wellington ALF - Minot ND
Minot
ND
i—
i3,241
i9,509
i—
i3,241
i9,509
i12,750
i2,745
i10,005
2005
2015
i35
years
Elmcroft of Lima
Lima
OH
i—
i490
i3,368
i553
i495
i3,916
i4,411
i1,623
i2,788
1998
2006
i35
years
Elmcroft of Ontario
Mansfield
OH
i—
i523
i7,968
i599
i524
i8,566
i9,090
i3,482
i5,608
1998
2006
i35
years
Elmcroft of Medina
Medina
OH
i—
i661
i9,788
i706
i661
i10,494
i11,155
i4,322
i6,833
1999
2006
i35
years
Elmcroft of Washington Township
Miamisburg
OH
i—
i1,235
i12,611
i743
i1,236
i13,353
i14,589
i5,479
i9,110
1998
2006
i35
years
Elmcroft of Sagamore Hills
Sagamore Hills
OH
i—
i980
i12,604
i995
i998
i13,581
i14,579
i5,569
i9,010
2000
2006
i35
years
Elmcroft of Lorain
Vermilion
OH
i—
i500
i15,461
i1,359
i578
i16,742
i17,320
i5,410
i11,910
2000
2011
i35
years
Gardens at Westlake Senior Living
Westlake
OH
i—
i2,401
i20,640
i690
i2,413
i21,318
i23,731
i4,874
i18,857
1987
2015
i35
years
Elmcroft of Xenia
Xenia
OH
i—
i653
i2,801
i1,052
i678
i3,828
i4,506
i1,550
i2,956
1999
2006
i35
years
Arbor House of Mustang
Mustang
OK
i—
i372
i3,587
i—
i372
i3,587
i3,959
i913
i3,046
1999
2012
i35
years
Arbor House of Norman
Norman
OK
i—
i444
i7,525
i—
i444
i7,525
i7,969
i1,907
i6,062
2000
2012
i35
years
Arbor House Reminisce Center
Norman
OK
i—
i438
i3,028
i—
i438
i3,028
i3,466
i773
i2,693
2004
2012
i35
years
Arbor House of Midwest City
Oklahoma City
OK
i—
i544
i9,133
i—
i544
i9,133
i9,677
i2,314
i7,363
2004
2012
i35
years
Mansion at Waterford
Oklahoma City
OK
i—
i2,077
i14,184
i—
i2,077
i14,184
i16,261
i3,754
i12,507
1999
2012
i35
years
Meadowbrook Place
Baker City
OR
i—
i1,430
i5,311
i—
i1,430
i5,311
i6,741
i1,066
i5,675
1965
2014
i35
years
Edgewood Downs
Beaverton
OR
i—
i2,356
i15,476
i328
i2,356
i15,804
i18,160
i3,352
i14,808
1978
2013
i35
years
Avamere at Hillsboro
Hillsboro
OR
i—
i4,400
i8,353
i1,413
i4,400
i9,766
i14,166
i3,296
i10,870
2000
2011
i35
years
138
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
The Springs at Tanasbourne
Hillsboro
OR
i30,947
i4,689
i55,035
i—
i4,689
i55,035
i59,724
i15,653
i44,071
2009
2013
i35
years
The Arbor at Avamere Court
Keizer
OR
i—
i922
i6,460
i110
i1,135
i6,357
i7,492
i1,549
i5,943
2012
2014
i35
years
The Stafford
Lake Oswego
OR
i—
i1,800
i16,122
i884
i1,806
i17,000
i18,806
i5,272
i13,534
2008
2011
i35
years
The Springs at Clackamas Woods
Milwaukie
OR
i13,965
i1,264
i22,429
i5,244
i1,381
i27,556
i28,937
i6,579
i22,358
1999
2012
i35
years
Clackamas Woods Assisted Living
Milwaukie
OR
i7,519
i681
i12,077
i—
i681
i12,077
i12,758
i3,181
i9,577
1999
2012
i35
years
Avamere at Newberg
Newberg
OR
i—
i1,320
i4,664
i641
i1,342
i5,283
i6,625
i2,007
i4,618
1999
2011
i35
years
Avamere Living at Berry Park
Oregon City
OR
i—
i1,910
i4,249
i2,316
i1,910
i6,565
i8,475
i2,493
i5,982
1972
2011
i35
years
McLoughlin Place Senior Living
Oregon City
OR
i—
i2,418
i26,819
i—
i2,418
i26,819
i29,237
i5,321
i23,916
1997
2014
i35
years
Avamere at Bethany
Portland
OR
i—
i3,150
i16,740
i257
i3,150
i16,997
i20,147
i5,236
i14,911
2002
2011
i35
years
Avamere at Sandy
Sandy
OR
i—
i1,000
i7,309
i345
i1,000
i7,654
i8,654
i2,580
i6,074
1999
2011
i35
years
Suzanne Elise ALF
Seaside
OR
i—
i1,940
i4,027
i631
i1,945
i4,653
i6,598
i1,695
i4,903
1998
2011
i35
years
Necanicum Village
Seaside
OR
i—
i2,212
i7,311
i273
i2,212
i7,584
i9,796
i1,668
i8,128
2001
2015
i35
years
Avamere at Sherwood
Sherwood
OR
i—
i1,010
i7,051
i1,454
i1,010
i8,505
i9,515
i2,518
i6,997
2000
2011
i35
years
Chateau Gardens
Springfield
OR
i—
i1,550
i4,197
i—
i1,550
i4,197
i5,747
i1,247
i4,500
1991
2011
i35
years
Avamere at St Helens
St. Helens
OR
i—
i1,410
i10,496
i502
i1,410
i10,998
i12,408
i3,580
i8,828
2000
2011
i35
years
Flagstone Senior Living
The Dalles
OR
i—
i1,631
i17,786
i—
i1,631
i17,786
i19,417
i3,523
i15,894
1991
2014
i35
years
Elmcroft of Allison Park
Allison Park
PA
i—
i1,171
i5,686
i565
i1,171
i6,251
i7,422
i2,509
i4,913
1986
2006
i35
years
Elmcroft of Chippewa
Beaver Falls
PA
i—
i1,394
i8,586
i658
i1,452
i9,186
i10,638
i3,713
i6,925
1998
2006
i35
years
Elmcroft of Berwick
Berwick
PA
i—
i111
i6,741
i481
i111
i7,222
i7,333
i2,913
i4,420
1998
2006
i35
years
Elmcroft of Bridgeville
Bridgeville
PA
i—
i1,660
i12,624
i1,157
i1,660
i13,781
i15,441
i3,888
i11,553
1999
2011
i35
years
Elmcroft of Dillsburg
Dillsburg
PA
i—
i432
i7,797
i1,152
i432
i8,949
i9,381
i3,445
i5,936
1998
2006
i35
years
Elmcroft of Altoona
Duncansville
PA
i—
i331
i4,729
i614
i331
i5,343
i5,674
i2,169
i3,505
1997
2006
i35
years
Elmcroft of Lebanon
Lebanon
PA
i—
i240
i7,336
i555
i249
i7,882
i8,131
i3,246
i4,885
1999
2006
i35
years
Elmcroft of Lewisburg
Lewisburg
PA
i—
i232
i5,666
i578
i238
i6,238
i6,476
i2,544
i3,932
1999
2006
i35
years
Lehigh Commons
Macungie
PA
i—
i420
i4,406
i450
i420
i4,856
i5,276
i3,034
i2,242
1997
2004
i30
years
Elmcroft of Loyalsock
Montoursville
PA
i—
i413
i3,412
i564
i429
i3,960
i4,389
i1,639
i2,750
1999
2006
i35
years
Highgate at Paoli Pointe
Paoli
PA
i—
i1,151
i9,079
i—
i1,151
i9,079
i10,230
i5,227
i5,003
1997
2004
i30
years
Elmcroft of Mid Valley
Peckville
PA
i—
i619
i11,662
i320
i619
i11,982
i12,601
i2,412
i10,189
1998
2014
i35
years
Sanatoga Court
Pottstown
PA
i—
i360
i3,233
i—
i360
i3,233
i3,593
i1,908
i1,685
1997
2004
i30
years
Berkshire Commons
Reading
PA
i—
i470
i4,301
i—
i470
i4,301
i4,771
i2,536
i2,235
1997
2004
i30
years
Mifflin Court
Reading
PA
i—
i689
i4,265
i351
i689
i4,616
i5,305
i2,485
i2,820
1997
2004
i35
years
Elmcroft of Reading
Reading
PA
i—
i638
i4,942
i573
i659
i5,494
i6,153
i2,216
i3,937
1998
2006
i35
years
Elmcroft of Reedsville
Reedsville
PA
i—
i189
i5,170
i513
i189
i5,683
i5,872
i2,324
i3,548
1998
2006
i35
years
Elmcroft of Shippensburg
Shippensburg
PA
i—
i203
i7,634
i696
i217
i8,316
i8,533
i3,343
i5,190
1999
2006
i35
years
Elmcroft of State College
State College
PA
i—
i320
i7,407
i470
i325
i7,872
i8,197
i3,211
i4,986
1997
2006
i35
years
Elmcroft of York
York
PA
i—
i1,260
i6,923
i460
i1,298
i7,345
i8,643
i2,115
i6,528
1999
2011
i35
years
The Garden House
Anderson
SC
i—
i969
i15,613
i326
i974
i15,934
i16,908
i3,493
i13,415
2000
2015
i35
years
Forest Pines
Columbia
SC
i—
i1,058
i27,471
(i392)
i1,058
i27,079
i28,137
i5,797
i22,340
1998
2013
i35
years
Elmcroft of Florence SC
Florence
SC
i—
i108
i7,620
i1,295
i122
i8,901
i9,023
i3,756
i5,267
1998
2006
i35
years
139
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Carolina Gardens at Garden City
Murrells Inlet
SC
i—
i1,095
i8,618
i91
i1,095
i8,709
i9,804
i328
i9,476
1999
2019
i35
years
Carolina Gardens at Rock Hill
Rock Hill
SC
i—
i790
i9,568
i109
i790
i9,677
i10,467
i359
i10,108
2008
2019
i35
years
Primrose Aberdeen
Aberdeen
SD
i—
i850
i659
i235
i850
i894
i1,744
i538
i1,206
1991
2011
i35
years
Primrose Place
Aberdeen
SD
i—
i310
i3,242
i53
i310
i3,295
i3,605
i1,017
i2,588
2000
2011
i35
years
Primrose Rapid City
Rapid City
SD
i—
i860
i8,722
i88
i860
i8,810
i9,670
i2,729
i6,941
1997
2011
i35
years
Primrose Sioux Falls
Sioux Falls
SD
i—
i2,180
i12,936
i315
i2,180
i13,251
i15,431
i4,172
i11,259
2002
2011
i35
years
Elmcroft of Bristol
Bristol
TN
i—
i470
i16,006
i753
i480
i16,749
i17,229
i4,634
i12,595
1999
2011
i35
years
Elmcroft of Hamilton Place
Chattanooga
TN
i—
i87
i4,248
i640
i87
i4,888
i4,975
i2,008
i2,967
1998
2006
i35
years
Elmcroft of Shallowford
Chattanooga
TN
i—
i580
i7,568
i1,554
i636
i9,066
i9,702
i3,203
i6,499
1999
2011
i35
years
Elmcroft of Hendersonville
Hendersonville
TN
i—
i600
i5,304
i900
i600
i6,204
i6,804
i1,335
i5,469
1999
2014
i35
years
Regency House
Hixson
TN
i—
i140
i6,611
i—
i140
i6,611
i6,751
i1,956
i4,795
2000
2011
i35
years
Elmcroft of Jackson
Jackson
TN
i—
i768
i16,840
i186
i797
i16,997
i17,794
i3,696
i14,098
1998
2014
i35
years
Elmcroft of Johnson City
Johnson City
TN
i—
i590
i10,043
i472
i610
i10,495
i11,105
i2,960
i8,145
1999
2011
i35
years
Elmcroft of Kingsport
Kingsport
TN
i—
i22
i7,815
i845
i22
i8,660
i8,682
i3,477
i5,205
2000
2006
i35
years
Arbor Terrace of Knoxville
Knoxville
TN
i—
i590
i15,862
i1,163
i590
i17,025
i17,615
i3,925
i13,690
1997
2015
i35
years
Elmcroft of West Knoxville
Knoxville
TN
i—
i439
i10,697
i1,077
i464
i11,749
i12,213
i4,832
i7,381
2000
2006
i35
years
Elmcroft of Halls
Knoxville
TN
i—
i387
i4,948
i665
i387
i5,613
i6,000
i1,207
i4,793
1998
2014
i35
years
Elmcroft of Lebanon
Lebanon
TN
i—
i180
i7,086
i1,371
i200
i8,437
i8,637
i3,530
i5,107
2000
2006
i35
years
Elmcroft of Bartlett
Memphis
TN
i—
i570
i25,552
(i8,580)
i594
i16,948
i17,542
i7,783
i9,759
1999
2011
i35
years
The Glenmary
Memphis
TN
i—
i510
i5,860
i3,124
i510
i8,984
i9,494
i3,373
i6,121
1964
2011
i35
years
Elmcroft of Murfreesboro
Murfreesboro
TN
i—
i940
i8,030
i481
i940
i8,511
i9,451
i2,398
i7,053
1999
2011
i35
years
Elmcroft of Brentwood
Nashville
TN
i—
i960
i22,020
i2,102
i977
i24,105
i25,082
i7,312
i17,770
1998
2011
i35
years
Elmcroft of Arlington
Arlington
TX
i—
i2,650
i14,060
i1,425
i2,660
i15,475
i18,135
i5,004
i13,131
1998
2011
i35
years
Meadowbrook ALZ
Arlington
TX
i—
i755
i4,677
i940
i755
i5,617
i6,372
i1,414
i4,958
2012
2012
i35
years
Elmcroft of Austin
Austin
TX
i—
i2,770
i25,820
i1,482
i2,776
i27,296
i30,072
i8,270
i21,802
2000
2011
i35
years
Elmcroft of Bedford
Bedford
TX
i—
i770
i19,691
i1,736
i776
i21,421
i22,197
i6,689
i15,508
1999
2011
i35
years
Highland Estates
Cedar Park
TX
i—
i1,679
i28,943
(i270)
i1,679
i28,673
i30,352
i6,137
i24,215
2009
2013
i35
years
Elmcroft of Rivershire
Conroe
TX
i—
i860
i32,671
i1,409
i860
i34,080
i34,940
i10,197
i24,743
1997
2011
i35
years
Flower Mound
Flower Mound
TX
i—
i900
i5,512
i—
i900
i5,512
i6,412
i1,664
i4,748
1995
2011
i35
years
Bridgewater Memory Care
Granbury
TX
i—
i390
i8,186
i—
i390
i8,186
i8,576
i2,072
i6,504
2007
2012
i35
years
Copperfield Estates
Houston
TX
i—
i1,216
i21,135
(i135)
i1,216
i21,000
i22,216
i4,480
i17,736
2009
2013
i35
years
Elmcroft of Braeswood
Houston
TX
i—
i3,970
i15,919
(i4,816)
i3,974
i11,099
i15,073
i5,492
i9,581
1999
2011
i35
years
Elmcroft of Cy-Fair
Houston
TX
i—
i1,580
i21,801
i1,449
i1,593
i23,237
i24,830
i7,054
i17,776
1998
2011
i35
years
Whitley Place
Keller
TX
i—
i—
i5,100
i773
i—
i5,873
i5,873
i2,127
i3,746
1998
2008
i35
years
Elmcroft of Lake Jackson
Lake Jackson
TX
i—
i710
i14,765
i1,346
i712
i16,109
i16,821
i5,089
i11,732
1998
2011
i35
years
Polo Park Estates
Midland
TX
i—
i765
i29,447
(i292)
i765
i29,155
i29,920
i6,238
i23,682
1996
2013
i35
years
Arbor Hills Memory Care Community
Plano
TX
i—
i1,014
i5,719
i—
i1,014
i5,719
i6,733
i1,373
i5,360
2013
2013
i35
years
Lakeshore Assisted Living and Memory Care
Rockwall
TX
i—
i1,537
i12,883
i—
i1,537
i12,883
i14,420
i3,282
i11,138
2009
2012
i35
years
140
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Elmcroft of Windcrest
San Antonio
TX
i—
i920
i13,011
(i164)
i932
i12,835
i13,767
i4,673
i9,094
1999
2011
i35
years
Paradise Springs
Spring
TX
i—
i1,488
i24,556
(i60)
i1,490
i24,494
i25,984
i5,204
i20,780
2008
2013
i35
years
Canyon Creek Memory Care
Temple
TX
i—
i473
i6,750
i—
i473
i6,750
i7,223
i1,712
i5,511
2008
2012
i35
years
Elmcroft of Cottonwood
Temple
TX
i—
i630
i17,515
i1,210
i630
i18,725
i19,355
i5,792
i13,563
1997
2011
i35
years
Elmcroft of Mainland
Texas City
TX
i—
i520
i14,849
i1,466
i574
i16,261
i16,835
i5,186
i11,649
1996
2011
i35
years
Elmcroft of Victoria
Victoria
TX
i—
i440
i13,040
i1,378
i448
i14,410
i14,858
i4,556
i10,302
1997
2011
i35
years
Windsor Court Senior Living
Weatherford
TX
i—
i233
i3,347
i—
i233
i3,347
i3,580
i849
i2,731
1994
2012
i35
years
Elmcroft of Wharton
Wharton
TX
i—
i320
i13,799
i1,252
i352
i15,019
i15,371
i4,890
i10,481
1996
2011
i35
years
Mountain Ridge
South Ogden
UT
i—
i1,243
i24,659
i99
i1,243
i24,758
i26,001
i4,857
i21,144
2001
2014
i35
years
Elmcroft of Chesterfield
Richmond
VA
i—
i829
i6,534
i837
i836
i7,364
i8,200
i2,958
i5,242
1999
2006
i35
years
Pheasant Ridge
Roanoke
VA
i—
i1,813
i9,027
i—
i1,813
i9,027
i10,840
i2,390
i8,450
1999
2012
i35
years
Cascade Valley Senior Living
Arlington
WA
i—
i1,413
i6,294
i—
i1,413
i6,294
i7,707
i1,243
i6,464
1995
2014
i35
years
Madison House
Kirkland
WA
i—
i4,291
i26,787
i1,391
i4,414
i28,055
i32,469
i3,680
i28,789
1978
2017
i35
years
Delaware Plaza
Longview
WA
i3,932
i620
i5,116
i136
i815
i5,057
i5,872
i815
i5,057
1972
2017
i35
years
Canterbury Gardens
Longview
WA
i5,351
i444
i13,715
i157
i444
i13,872
i14,316
i1,791
i12,525
1998
2017
i35
years
Canterbury Inn
Longview
WA
i14,568
i1,462
i34,664
i837
i1,462
i35,501
i36,963
i4,568
i32,395
1989
2017
i35
years
Canterbury Park
Longview
WA
i—
i969
i30,109
i—
i969
i30,109
i31,078
i3,837
i27,241
2000
2017
i35
years
Bishop Place Senior Living
Pullman
WA
i—
i1,780
i33,608
i—
i1,780
i33,608
i35,388
i6,539
i28,849
1998
2014
i35
years
Willow Gardens
Puyallup
WA
i—
i1,959
i35,492
(i285)
i1,980
i35,186
i37,166
i7,519
i29,647
1996
2013
i35
years
Cascade Inn
Vancouver
WA
i12,378
i3,201
i19,024
i2,321
i3,527
i21,019
i24,546
i3,329
i21,217
1979
2017
i35
years
The Hampton & Ashley Inn
Vancouver
WA
i—
i1,855
i21,047
i—
i1,855
i21,047
i22,902
i2,670
i20,232
1992
2017
i35
years
The Hampton at Salmon Creek
Vancouver
WA
i11,450
i1,256
i21,686
i—
i1,256
i21,686
i22,942
i2,569
i20,373
2013
2017
i35
years
Elmcroft of Teays Valley
Hurricane
WV
i—
i1,950
i14,489
i736
i2,041
i15,134
i17,175
i4,219
i12,956
1999
2011
i35
years
Elmcroft of Martinsburg
Martinsburg
WV
i—
i248
i8,320
i911
i253
i9,226
i9,479
i3,686
i5,793
1999
2006
i35
years
Matthews of Appleton I
Appleton
WI
i—
i130
i1,834
(i1,035)
i130
i799
i929
i567
i362
1996
2011
i35
years
Matthews of Appleton II
Appleton
WI
i—
i140
i2,016
(i1,085)
i140
i931
i1,071
i709
i362
1997
2011
i35
years
Hunters Ridge
Beaver Dam
WI
i—
i260
i2,380
i—
i260
i2,380
i2,640
i739
i1,901
1998
2011
i35
years
Azura Memory Care of Beloit
Beloit
WI
i—
i150
i4,356
i427
i191
i4,742
i4,933
i1,344
i3,589
1990
2011
i35
years
Azura Memory Care of Clinton
Clinton
WI
i—
i290
i4,390
i—
i290
i4,390
i4,680
i1,276
i3,404
1991
2011
i35
years
Creekside
Cudahy
WI
i—
i760
i1,693
i—
i760
i1,693
i2,453
i563
i1,890
2001
2011
i35
years
Azura Memory Care of Eau Claire
Eau Claire
WI
i—
i210
i6,259
i—
i210
i6,259
i6,469
i1,792
i4,677
1996
2011
i35
years
Azura Memory Care of Eau Claire II
Eau Claire
WI
i—
i1,188
i6,654
i68
i1,188
i6,722
i7,910
i542
i7,368
2019
2019
i35
years
Chapel Valley
Fitchburg
WI
i—
i450
i2,372
i—
i450
i2,372
i2,822
i747
i2,075
1998
2011
i35
years
Matthews of Milwaukee II
Fox Point
WI
i—
i1,810
i943
(i1,444)
i942
i367
i1,309
i440
i869
1999
2011
i35
years
Laurel Oaks
Glendale
WI
i—
i2,390
i43,587
i5,130
i2,510
i48,597
i51,107
i14,787
i36,320
1988
2011
i35
years
Layton Terrace
Greenfield
WI
i—
i3,490
i39,201
i566
i3,480
i39,777
i43,257
i11,809
i31,448
1999
2011
i35
years
Matthews of Hartland
Hartland
WI
i—
i640
i1,663
(i768)
i652
i883
i1,535
i665
i870
1985
2011
i35
years
Matthews of Horicon
Horicon
WI
i—
i340
i3,327
(i1,235)
i345
i2,087
i2,432
i1,127
i1,305
2002
2011
i35
years
Jefferson
Jefferson
WI
i—
i330
i2,384
i—
i330
i2,384
i2,714
i741
i1,973
1997
2011
i35
years
141
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Azura Memory Care of Kenosha
Kenosha
WI
i—
i710
i3,254
i3,765
i1,165
i6,564
i7,729
i1,951
i5,778
1996
2011
i35
years
Azura Memory Care of Manitowoc
Manitowoc
WI
i—
i140
i1,520
i—
i140
i1,520
i1,660
i465
i1,195
1997
2011
i35
years
The Arboretum
Menomonee Falls
WI
i—
i5,640
i49,083
i2,158
i5,640
i51,241
i56,881
i15,956
i40,925
1989
2011
i35
years
Matthews of Milwaukee I
Milwaukee
WI
i—
i1,800
i935
(i1,407)
i927
i401
i1,328
i458
i870
1999
2011
i35
years
Hart Park Square
Milwaukee
WI
i—
i1,900
i21,628
i69
i1,900
i21,697
i23,597
i6,395
i17,202
2005
2011
i35
years
Azura Memory Care of Monroe
Monroe
WI
i—
i490
i4,964
i—
i490
i4,964
i5,454
i1,455
i3,999
1990
2011
i35
years
Matthews of Neenah I
Neenah
WI
i—
i710
i1,157
(i597)
i713
i557
i1,270
i487
i783
2006
2011
i35
years
Matthews of Neenah II
Neenah
WI
i—
i720
i2,339
(i1,457)
i720
i882
i1,602
i820
i782
2007
2011
i35
years
Matthews of Irish Road
Neenah
WI
i—
i320
i1,036
(i74)
i320
i962
i1,282
i456
i826
2001
2011
i35
years
Matthews of Oak Creek
Oak Creek
WI
i—
i800
i2,167
(i1,373)
i812
i782
i1,594
i724
i870
1997
2011
i35
years
Azura Memory Care of Oak Creek
Oak Creek
WI
i—
i733
i6,248
i11
i733
i6,259
i6,992
i1,350
i5,642
2017
2017
i35
years
Azura Memory Care of Oconomowoc
Oconomowoc
WI
i—
i400
i1,596
i4,674
i709
i5,961
i6,670
i1,515
i5,155
2016
2015
i35
years
Wilkinson Woods of Oconomowoc
Oconomowoc
WI
i—
i1,100
i12,436
i157
i1,100
i12,593
i13,693
i3,734
i9,959
1992
2011
i35
years
Azura Memory Care of Oshkosh
Oshkosh
WI
i—
i190
i949
i—
i190
i949
i1,139
i351
i788
1993
2011
i35
years
Matthews of Pewaukee
Pewaukee
WI
i—
i1,180
i4,124
(i1,804)
i1,197
i2,303
i3,500
i1,499
i2,001
2001
2011
i35
years
Azura Memory Care of Sheboygan
Sheboygan
WI
i—
i1,060
i6,208
i1,905
i1,094
i8,079
i9,173
i1,978
i7,195
1995
2011
i35
years
Matthews of St. Francis I
St. Francis
WI
i—
i1,370
i1,428
(i1,428)
i937
i433
i1,370
i501
i869
2000
2011
i35
years
Matthews of St. Francis II
St. Francis
WI
i—
i1,370
i1,666
(i1,558)
i931
i547
i1,478
i608
i870
2000
2011
i35
years
Howard Village of St. Francis
St. Francis
WI
i—
i2,320
i17,232
i—
i2,320
i17,232
i19,552
i5,159
i14,393
2001
2011
i35
years
Azura Memory Care of Stoughton
Stoughton
WI
i—
i450
i3,191
i—
i450
i3,191
i3,641
i993
i2,648
1992
2011
i35
years
Oak Hill Terrace
Waukesha
WI
i—
i2,040
i40,298
i—
i2,040
i40,298
i42,338
i11,929
i30,409
1985
2011
i35
years
Azura Memory Care of Wausau
Wausau
WI
i—
i350
i3,413
i—
i350
i3,413
i3,763
i1,010
i2,753
1997
2011
i35
years
Library Square
West Allis
WI
i—
i1,160
i23,714
i—
i1,160
i23,714
i24,874
i6,925
i17,949
1996
2011
i35
years
Matthews of Wrightstown
Wrightstown
WI
i—
i140
i376
i12
i140
i388
i528
i199
i329
1999
2011
i35
years
Garden Square Assisted Living of Casper
Casper
WY
i—
i355
i3,197
i—
i355
i3,197
i3,552
i907
i2,645
1996
2011
i35
years
Whispering Chase
Cheyenne
WY
i—
i1,800
i20,354
(i202)
i1,800
i20,152
i21,952
i4,319
i17,633
2008
2013
i35
years
Ashridge Court
Bexhill-on-Sea
SXE
i—
i2,274
i4,791
(i510)
i2,110
i4,445
i6,555
i994
i5,561
2010
2015
i40
years
Inglewood Nursing Home
Eastbourne
SXE
i—
i1,908
i3,021
(i355)
i1,771
i2,803
i4,574
i717
i3,857
2010
2015
i40
years
Pentlow Nursing Home
Eastbourne
SXE
i—
i1,964
i2,462
(i320)
i1,822
i2,284
i4,106
i622
i3,484
2007
2015
i40
years
Willows Care Home
Romford
ESX
i—
i4,695
i6,983
(i843)
i4,356
i6,479
i10,835
i1,375
i9,460
1986
2015
i40
years
Cedars Care Home
Southend-on-Sea
ESX
i—
i2,649
i4,925
(i546)
i2,458
i4,570
i7,028
i997
i6,031
2014
2015
i40
years
Mayflower Care Home
Northfleet
GSD
i—
i4,330
i7,519
(i854)
i4,018
i6,977
i10,995
i1,508
i9,487
2012
2015
i40
years
Maples Care Home
Bexleyheath
KNT
i—
i5,042
i7,525
(i906)
i4,679
i6,982
i11,661
i1,495
i10,166
2007
2015
i40
years
Barty House Nursing Home
Maidstone
KNT
i—
i3,769
i3,089
(i494)
i3,497
i2,867
i6,364
i797
i5,567
2013
2015
i40
years
Tunbridge Wells Care Centre
Tunbridge Wells
KNT
i—
i4,323
i5,869
(i734)
i4,012
i5,446
i9,458
i1,164
i8,294
2010
2015
i40
years
Heathlands Care Home
Chingford
LON
i—
i5,398
i7,967
(i963)
i5,009
i7,393
i12,402
i1,613
i10,789
1980
2015
i40
years
Hampton Care
Hampton
MDX
i—
i4,119
i29,021
(i1,205)
i3,970
i27,965
i31,935
i3,012
i28,923
2007
2017
i40
years
Parkfield House Nursing Home
Uxbridge
MDX
i—
i1,974
i1,009
(i108)
i1,903
i972
i2,875
i133
i2,742
2000
2017
i40
years
142
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Princeton Village of Largo
Largo
FL
i—
i1,718
i10,438
(i4,205)
i1,718
i6,233
i7,951
i2,551
i5,400
2007
2015
i35
years
Boréa
Blainville
QC
i35,658
i2,678
i56,643
i1,430
i2,861
i57,890
i60,751
i1,838
i58,913
2016
2019
i57
years
Caléo
Boucherville
QC
i54,225
i6,009
i71,056
i1,664
i6,151
i72,578
i78,729
i2,154
i76,575
2018
2019
i59
years
L'Avantage
Brossard
QC
i20,086
i8,771
i44,920
i1,465
i8,950
i46,206
i55,156
i1,627
i53,529
2011
2019
i52
years
Sevä
Candiac
QC
i47,758
i4,030
i64,251
i1,570
i4,129
i65,722
i69,851
i2,126
i67,725
2018
2019
i59
years
L'Initial
Gatineau
QC
i49,215
i6,720
i62,928
i1,561
i6,861
i64,348
i71,209
i1,963
i69,246
2019
2019
i60
years
La Croisée de l'Est
Granby
QC
i15,335
i1,136
i40,998
i1,143
i1,159
i42,118
i43,277
i1,553
i41,724
2009
2019
i50
years
Ambiance
Ile-des-Soeurs,Verdun
QC
i20,512
i5,007
i51,624
i1,571
i5,108
i53,094
i58,202
i1,978
i56,224
2005
2019
i46
years
Le Savignon
Lachine
QC
i25,968
i5,271
i46,919
i1,335
i5,377
i48,148
i53,525
i1,607
i51,918
2013
2019
i54
years
Le Cavalier
Lasalle
QC
i14,908
i5,892
i38,926
i1,350
i6,010
i40,158
i46,168
i1,662
i44,506
2004
2019
i45
years
Quartier Sud
Lévis
QC
i29,712
i1,933
i47,731
i650
i1,931
i48,383
i50,314
i1,536
i48,778
2015
2019
i56
years
Margo
Lévis
QC
i40,060
i2,034
i63,523
i1,285
i2,078
i64,764
i66,842
i1,977
i64,865
2017
2019
i60
years
Les Promenades du Parc
Longueuil
QC
i21,495
i5,832
i47,101
i1,662
i5,950
i48,645
i54,595
i1,986
i52,609
2006
2019
i47
years
Elogia
Montréal
QC
i27,069
i2,808
i55,175
i26,181
i2,929
i81,235
i84,164
i1,974
i82,190
2007
2019
i48
years
Les Jardins Millen
Montréal
QC
i28,169
i4,325
i82,121
i1,972
i4,412
i84,006
i88,418
i2,593
i85,825
2012
2019
i53
years
Le 22
Montréal
QC
i38,776
i6,728
i70,601
i1,671
i6,863
i72,137
i79,000
i2,213
i76,787
2016
2019
i57
years
Station Est
Montréal
QC
i44,471
i4,660
i59,110
i1,351
i4,760
i60,361
i65,121
i1,919
i63,202
2017
2019
i58
years
Ora
Montréal
QC
i56,763
i10,282
i82,095
i3,171
i10,564
i84,984
i95,548
i2,370
i93,178
2019
2019
i60
years
Elogia II
Montréal
QC
i34,044
i2,627
i29,299
i—
i2,627
i29,299
i31,926
i—
i31,926
CIP
CIP
CIP
Le
Quartier Mont-St-Hilaire
Mont-Saint-Hilaire
QC
i14,140
i1,020
i32,554
i1,055
i1,041
i33,588
i34,629
i1,316
i33,313
2008
2019
i49
years
L'Image d'Outremont
Outremont
QC
i15,832
i4,565
i32,030
i1,251
i4,656
i33,190
i37,846
i1,196
i36,650
2008
2019
i49
years
Le Gibraltar
Québec
QC
i20,759
i1,191
i42,766
i1,071
i1,214
i43,814
i45,028
i1,446
i43,582
2013
2019
i54
years
Ékla
Québec
QC
i52,680
i2,256
i87,772
i1,948
i2,324
i89,652
i91,976
i2,671
i89,305
2017
2019
i57
years
Le Notre-Dame
Repentigny
QC
i13,751
i3,290
i41,474
i1,516
i3,357
i42,923
i46,280
i1,846
i44,434
2002
2019
i43
years
Vent de l'Ouest
Sainte-Geneviève
QC
i12,553
i4,713
i32,526
i1,241
i4,808
i33,672
i38,480
i1,475
i37,005
2007
2019
i48
years
Les Verrières du Golf
Saint-Laurent
QC
i24,201
i5,183
i44,363
i1,746
i5,312
i45,980
i51,292
i1,821
i49,471
2003
2019
i44
years
Les Jardins du Campanile
Shawinigan
QC
i11,621
i578
i16,580
i905
i590
i17,473
i18,063
i903
i17,160
2007
2019
i48
years
VÜ
Sherbrooke
QC
i35,443
i706
i58,073
i1,298
i720
i59,357
i60,077
i1,843
i58,234
2015
2019
i56
years
La Cité des Tours
St-Jean-sur-Richelieu
QC
i21,934
i1,744
i44,357
i1,101
i1,788
i45,414
i47,202
i1,624
i45,578
2012
2019
i53
years
IVVI
St-Laurent
QC
i53,183
i6,307
i64,131
i—
i6,307
i64,131
i70,438
i374
i70,064
2020
2020
i60
years
VAST
St-Laurent
QC
i41,809
i4,648
i62,521
i—
i4,648
i62,521
i67,169
i84
i67,085
2020
2020
i60
years
Cornelius
St-Laurent
QC
i9,853
i7,813
i25,026
i—
i7,813
i25,026
i32,839
i—
i32,839
CIP
CIP
CIP
Liz
St-Laurent
QC
i11,534
i11,937
i22,567
i—
i11,937
i22,567
i34,504
i—
i34,504
CIP
CIP
CIP
Floréa
Terrebonne
QC
i41,640
i3,275
i63,246
i1,421
i3,341
i64,601
i67,942
i2,057
i65,885
2016
2019
i57
years
Les Résidences du Marché
Ste-Thérèse
QC
i22,243
i2,124
i25,371
i—
i2,124
i25,371
i27,495
i713
i26,782
2000
2020
i40
Years
Lilo
Ile-Perrot
QC
i40,635
i5,324
i45,948
i—
i5,324
i45,948
i51,272
i868
i50,404
2017
2020
i57
years
143
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Le Félix Vaudreuil-Dorion
Vaudreuil-Dorion
QC
i25,803
i7,531
i34,624
i1,432
i7,682
i35,905
i43,587
i1,424
i42,163
2010
2019
i51
years
TOTAL FOR OTHER SENIOR HOUSING COMMUNITIES
i1,333,759
i617,774
i6,179,476
i188,514
i615,447
i6,370,317
i6,985,764
i1,242,978
i5,742,786
TOTAL
FOR SENIOR HOUSING COMMUNITIES
i1,589,318
i1,584,636
i15,254,039
i1,025,745
i1,607,351
i16,257,069
i17,864,420
i4,779,527
i13,084,893
MEDICAL
OFFICE BUILDINGS
St. Vincent's Medical Center East #46
Birmingham
AL
i—
i—
i25,298
i5,155
i—
i30,453
i30,453
i12,512
i17,941
2005
2010
i35
years
St. Vincent's Medical Center East #48
Birmingham
AL
i—
i—
i12,698
i1,308
i—
i14,006
i14,006
i5,020
i8,986
1989
2010
i35
years
St. Vincent's Medical Center East #52
Birmingham
AL
i—
i—
i7,608
i2,262
i—
i9,870
i9,870
i4,268
i5,602
1985
2010
i35
years
Crestwood Medical Pavilion
Huntsville
AL
i1,667
i625
i16,178
i732
i625
i16,910
i17,535
i5,431
i12,104
1994
2011
i35
years
West Valley Medical Center
Buckeye1
AZ
i—
i3,348
i5,233
i—
i3,348
i5,233
i8,581
i1,571
i7,010
2011
2015
i31
years
Canyon Springs Medical Plaza
Gilbert
AZ
i—
i—
i27,497
i1,106
i—
i28,603
i28,603
i8,491
i20,112
2007
2012
i35
years
Mercy Gilbert Medical Plaza 1
Gilbert
AZ
i—
i720
i11,277
i1,786
i772
i13,011
i13,783
i5,024
i8,759
2007
2011
i35
years
Mercy Gilbert Medical Plaza II
Gilbert
AZ
i16,520
i—
i18,610
i1,034
i—
i19,644
i19,644
i1,232
i18,412
2019
2019
i35
years
Thunderbird Paseo Medical Plaza
Glendale
AZ
i—
i—
i12,904
i1,352
i20
i14,236
i14,256
i4,451
i9,805
1997
2011
i35
years
Thunderbird Paseo Medical Plaza II
Glendale
AZ
i—
i—
i8,100
i999
i20
i9,079
i9,099
i2,872
i6,227
2001
2011
i35
years
Arrowhead Physicians Plaza
Glendale
AZ
i9,967
i308
i19,671
i548
i308
i20,219
i20,527
i1,454
i19,073
2004
2018
i35
years
1432 S Dobson
Mesa
AZ
i—
i—
i32,768
i1,658
i—
i34,426
i34,426
i8,240
i26,186
2003
2013
i35
years
1450 S Dobson
Mesa
AZ
i—
i—
i11,923
i2,063
i4
i13,982
i13,986
i3,990
i9,996
1977
2011
i35
years
1500 S Dobson
Mesa
AZ
i—
i—
i7,395
i2,412
i4
i9,803
i9,807
i2,886
i6,921
1980
2011
i35
years
1520 S Dobson
Mesa
AZ
i—
i—
i13,665
i4,285
i—
i17,950
i17,950
i5,080
i12,870
1986
2011
i35
years
Deer Valley Medical Office Building II
Phoenix
AZ
i—
i—
i22,663
i1,857
i14
i24,506
i24,520
i7,185
i17,335
2002
2011
i35
years
Deer Valley Medical Office Building III
Phoenix
AZ
i—
i—
i19,521
i1,467
i12
i20,976
i20,988
i6,222
i14,766
2009
2011
i35
years
Papago Medical Park
Phoenix
AZ
i—
i—
i12,172
i2,392
i—
i14,564
i14,564
i4,797
i9,767
1989
2011
i35
years
North Valley Orthopedic Surgery Center
Phoenix
AZ
i—
i2,800
i10,150
i—
i2,800
i10,150
i12,950
i2,284
i10,666
2006
2015
i35
years
Davita Dialysis - Marked Tree
Marked Tree
AR
i—
i179
i1,580
i—
i179
i1,580
i1,759
i386
i1,373
2009
2015
i35
years
Burbank Medical Plaza I
Burbank
CA
i—
i1,241
i23,322
i2,501
i1,268
i25,796
i27,064
i9,090
i17,974
2004
2011
i35
years
Burbank Medical Plaza II
Burbank
CA
i31,583
i491
i45,641
i1,256
i497
i46,891
i47,388
i14,074
i33,314
2008
2011
i35
years
Eden Medical Plaza
Castro Valley
CA
i—
i258
i2,455
i460
i328
i2,845
i3,173
i1,649
i1,524
1998
2011
i25
years
Sutter Medical Center
Castro Valley
CA
i—
i—
i25,088
i1,471
i—
i26,559
i26,559
i6,095
i20,464
2012
2012
i35
years
United Healthcare - Cypress
Cypress
CA
i—
i12,883
i38,309
i1,502
i12,883
i39,811
i52,694
i10,982
i41,712
1985
2015
i29
years
NorthBay Corporate Headquarters
Fairfield
CA
i—
i—
i19,187
i—
i—
i19,187
i19,187
i4,898
i14,289
2008
2012
i35
years
Gateway Medical Plaza
Fairfield
CA
i—
i—
i12,872
i797
i—
i13,669
i13,669
i3,331
i10,338
1986
2012
i35
years
Solano NorthBay Health Plaza
Fairfield
CA
i—
i—
i8,880
i39
i—
i8,919
i8,919
i2,257
i6,662
1990
2012
i35
years
NorthBay Healthcare MOB
Fairfield
CA
i—
i—
i8,507
i2,280
i—
i10,787
i10,787
i3,686
i7,101
2014
2013
i35
years
UC Davis Medical Group
Folsom
CA
i—
i1,873
i10,156
i260
i1,873
i10,416
i12,289
i2,515
i9,774
1995
2015
i35
years
Verdugo Hills Medical Bulding I
Glendale
CA
i—
i6,683
i9,589
i2,738
i6,768
i12,242
i19,010
i5,711
i13,299
1972
2012
i23
years
Verdugo Hills Medical Bulding II
Glendale
CA
i—
i4,464
i3,731
i3,042
i4,514
i6,723
i11,237
i4,062
i7,175
1987
2012
i19
years
Grossmont Medical Terrace
La Mesa
CA
i—
i88
i14,192
i376
i88
i14,568
i14,656
i2,418
i12,238
2008
2016
i35
years
144
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Los Alamitos Medical & Wellness Pavilion
Los Alamitos
CA
i11,586
i488
i31,720
i61
i488
i31,781
i32,269
i2,282
i29,987
2013
2018
i35
years
St. Francis Lynwood Medical
Lynwood
CA
i—
i688
i8,385
i1,965
i697
i10,341
i11,038
i4,968
i6,070
1993
2011
i32
years
Facey Mission Hills
Mission Hills
CA
i—
i15,468
i30,116
i4,729
i15,468
i34,845
i50,313
i8,073
i42,240
2012
2012
i35
years
Mission Medical Plaza
Mission Viejo
CA
i52,783
i1,916
i77,022
i2,723
i1,916
i79,745
i81,661
i25,025
i56,636
2007
2011
i35
years
St Joseph Medical Tower
Orange
CA
i42,170
i1,752
i61,647
i4,216
i1,761
i65,854
i67,615
i20,686
i46,929
2008
2011
i35
years
Huntington Pavilion
Pasadena
CA
i—
i3,138
i83,412
i11,894
i3,138
i95,306
i98,444
i35,881
i62,563
2009
2011
i35
years
Western University of Health Sciences Medical Pavilion
Pomona
CA
i—
i91
i31,523
i—
i91
i31,523
i31,614
i9,374
i22,240
2009
2011
i35
years
Pomerado Outpatient Pavilion
Poway
CA
i—
i3,233
i71,435
i3,298
i3,233
i74,733
i77,966
i25,646
i52,320
2007
2011
i35
years
San Bernardino Medical Plaza I
San Bernadino
CA
i—
i789
i11,133
i2,349
i797
i13,474
i14,271
i11,962
i2,309
1971
2011
i27
years
San Bernardino Medical Plaza II
San Bernadino
CA
i—
i416
i5,625
i1,204
i421
i6,824
i7,245
i4,050
i3,195
1988
2011
i26
years
Sutter Van Ness
San Francisco
CA
i104,794
i—
i157,404
i918
i—
i158,322
i158,322
i9,298
i149,024
2019
2019
i35
years
San Gabriel Valley Medical Plaza
San Gabriel
CA
i—
i914
i5,510
i1,314
i963
i6,775
i7,738
i3,330
i4,408
2004
2011
i35
years
Santa Clarita Valley Medical Plaza
Santa Clarita
CA
i20,909
i9,708
i20,020
i2,032
i9,782
i21,978
i31,760
i7,609
i24,151
2005
2011
i35
years
Kenneth E Watts Medical Plaza
Torrance
CA
i—
i262
i6,945
i3,924
i494
i10,637
i11,131
i5,507
i5,624
1989
2011
i23
years
Vaca Valley Health Plaza
Vacaville
CA
i—
i—
i9,634
i979
i—
i10,613
i10,613
i2,504
i8,109
1988
2012
i35
years
NorthBay Center For Primary Care - Vacaville
Vacaville
CA
i—
i777
i5,632
i300
i777
i5,932
i6,709
i695
i6,014
1998
2017
i35
years
Potomac Medical Plaza
Aurora
CO
i—
i2,401
i9,118
i4,890
i2,865
i13,544
i16,409
i7,203
i9,206
1986
2007
i35
years
Briargate Medical Campus
Colorado Springs
CO
i—
i1,238
i12,301
i1,760
i1,310
i13,989
i15,299
i5,908
i9,391
2002
2007
i35
years
Printers Park Medical Plaza
Colorado Springs
CO
i—
i2,641
i47,507
i4,034
i3,642
i50,540
i54,182
i22,474
i31,708
1999
2007
i35
years
Green Valley Ranch MOB
Denver
CO
i—
i—
i12,139
i1,564
i259
i13,444
i13,703
i3,180
i10,523
2007
2012
i35
years
Community Physicians Pavilion
Lafayette
CO
i—
i—
i10,436
i2,018
i—
i12,454
i12,454
i4,979
i7,475
2004
2010
i35
years
Exempla Good Samaritan Medical Center
Lafayette
CO
i—
i—
i4,393
(i57)
i—
i4,336
i4,336
i874
i3,462
2013
2013
i35
years
Dakota Ridge
Littleton
CO
i—
i2,540
i12,901
i2,221
i2,562
i15,100
i17,662
i3,124
i14,538
2007
2015
i35
years
Avista Two Medical Plaza
Louisville
CO
i—
i—
i17,330
i2,232
i—
i19,562
i19,562
i7,907
i11,655
2003
2009
i35
years
The Sierra Medical Building
Parker
CO
i—
i1,444
i14,059
i3,509
i1,516
i17,496
i19,012
i8,609
i10,403
2009
2009
i35
years
Crown Point Healthcare Plaza
Parker
CO
i—
i852
i5,210
i715
i946
i5,831
i6,777
i1,470
i5,307
2008
2013
i35
years
Lutheran Medical Office Building II
Wheat Ridge
CO
i—
i—
i2,655
i1,330
i—
i3,985
i3,985
i2,065
i1,920
1976
2010
i35
years
Lutheran Medical Office Building IV
Wheat Ridge
CO
i—
i—
i7,266
i2,462
i—
i9,728
i9,728
i3,900
i5,828
1991
2010
i35
years
Lutheran Medical Office Building III
Wheat Ridge
CO
i—
i—
i11,947
i2,324
i—
i14,271
i14,271
i4,947
i9,324
2004
2010
i35
years
DePaul Professional Office Building
Washington
DC
i—
i—
i6,424
i3,064
i—
i9,488
i9,488
i4,754
i4,734
1987
2010
i35
years
Providence Medical Office Building
Washington
DC
i—
i—
i2,473
i1,344
i—
i3,817
i3,817
i2,074
i1,743
1975
2010
i35
years
RTS Cape Coral
Cape Coral
FL
i—
i368
i5,448
i—
i368
i5,448
i5,816
i1,761
i4,055
1984
2011
i34
years
RTS Ft. Myers
Fort Myers
FL
i—
i1,153
i4,127
i—
i1,153
i4,127
i5,280
i1,604
i3,676
1989
2011
i31
years
RTS Key West
Key West
FL
i—
i486
i4,380
i—
i486
i4,380
i4,866
i1,273
i3,593
1987
2011
i35
years
JFK Medical Plaza
Lake Worth
FL
i—
i453
i1,711
(i147)
i—
i2,017
i2,017
i982
i1,035
1999
2004
i35
years
East Pointe Medical Plaza
Lehigh Acres
FL
i—
i327
i11,816
i—
i327
i11,816
i12,143
i2,454
i9,689
1994
2015
i35
years
Palms West Building 6
Loxahatchee
FL
i—
i965
i2,678
(i622)
i—
i3,021
i3,021
i1,383
i1,638
2000
2004
i35
years
145
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Bay Medical Plaza
Lynn Haven
FL
i—
i4,215
i15,041
(i13,601)
i3,644
i2,011
i5,655
i2,374
i3,281
2003
2015
i35
years
RTS Naples
Naples
FL
i—
i1,152
i3,726
i—
i1,152
i3,726
i4,878
i1,221
i3,657
1999
2011
i35
years
Bay Medical Center
Panama City
FL
i—
i82
i17,400
i3,507
i25
i20,964
i20,989
i2,669
i18,320
1987
2015
i35
years
RTS Pt. Charlotte
Pt Charlotte
FL
i—
i966
i4,581
i—
i966
i4,581
i5,547
i1,569
i3,978
1985
2011
i34
years
RTS Sarasota
Sarasota
FL
i—
i1,914
i3,889
i—
i1,914
i3,889
i5,803
i1,405
i4,398
1996
2011
i35
years
Capital Regional MOB I
Tallahassee
FL
i—
i590
i8,773
(i324)
i193
i8,846
i9,039
i1,667
i7,372
1998
2015
i35
years
Athens Medical Complex
Athens
GA
i—
i2,826
i18,339
i109
i2,826
i18,448
i21,274
i3,942
i17,332
2011
2015
i35
years
Doctors Center at St. Joseph's Hospital
Atlanta
GA
i—
i545
i80,152
i24,683
i545
i104,835
i105,380
i26,230
i79,150
1978
2015
i20
years
Augusta POB I
Augusta
GA
i—
i233
i7,894
i2,512
i233
i10,406
i10,639
i6,961
i3,678
1978
2012
i14
years
Augusta POB II
Augusta
GA
i—
i735
i13,717
i6,831
i735
i20,548
i21,283
i7,882
i13,401
1987
2012
i23
years
Augusta POB III
Augusta
GA
i—
i535
i3,857
i960
i535
i4,817
i5,352
i2,679
i2,673
1994
2012
i22
years
Augusta POB IV
Augusta
GA
i—
i675
i2,182
i2,296
i691
i4,462
i5,153
i2,726
i2,427
1995
2012
i23
years
Cobb Physicians Center
Austell
GA
i—
i1,145
i16,805
i1,948
i1,145
i18,753
i19,898
i7,398
i12,500
1992
2011
i35
years
Summit Professional Plaza I
Brunswick
GA
i—
i1,821
i2,974
i376
i1,824
i3,347
i5,171
i3,601
i1,570
2004
2012
i31
years
Summit Professional Plaza II
Brunswick
GA
i—
i981
i13,818
i406
i981
i14,224
i15,205
i4,913
i10,292
1998
2012
i35
years
Fayette MOB
Fayetteville
GA
i—
i895
i20,669
i1,405
i895
i22,074
i22,969
i4,736
i18,233
2004
2015
i35
years
Woodlawn Commons 1121/1163
Marietta
GA
i—
i5,495
i16,028
i2,306
i5,586
i18,243
i23,829
i3,984
i19,845
1991
2015
i35
years
PAPP Clinic
Newnan
GA
i—
i2,167
i5,477
i68
i2,167
i5,545
i7,712
i1,736
i5,976
1994
2015
i30
years
Parkway Physicians Center
Ringgold
GA
i—
i476
i10,017
i1,381
i476
i11,398
i11,874
i4,383
i7,491
2004
2011
i35
years
Riverdale MOB
Riverdale
GA
i—
i1,025
i9,783
i355
i1,025
i10,138
i11,163
i2,429
i8,734
2005
2015
i35
years
Rush Copley POB I
Aurora
IL
i—
i120
i27,882
i1,369
i120
i29,251
i29,371
i6,175
i23,196
1996
2015
i34
years
Rush Copley POB II
Aurora
IL
i—
i49
i27,217
i522
i49
i27,739
i27,788
i5,557
i22,231
2009
2015
i35
years
Good Shepherd Physician Office Building I
Barrington
IL
i—
i152
i3,224
i835
i152
i4,059
i4,211
i1,028
i3,183
1979
2013
i35
years
Good Shepherd Physician Office Building II
Barrington
IL
i—
i512
i12,977
i1,235
i512
i14,212
i14,724
i3,731
i10,993
1996
2013
i35
years
Trinity Hospital Physician Office Building
Chicago
IL
i—
i139
i3,329
i1,587
i139
i4,916
i5,055
i1,631
i3,424
1971
2013
i35
years
Advocate Beverly Center
Chicago
IL
i—
i2,227
i10,140
i412
i2,231
i10,548
i12,779
i3,271
i9,508
1986
2015
i25
years
Crystal Lakes Medical Arts
Crystal Lake
IL
i—
i2,490
i19,504
i437
i2,535
i19,896
i22,431
i4,438
i17,993
2007
2015
i35
years
Advocate Good Shepherd
Crystal Lake
IL
i—
i2,444
i10,953
i949
i2,444
i11,902
i14,346
i3,017
i11,329
2008
2015
i33
years
Physicians Plaza East
Decatur
IL
i—
i—
i791
i2,558
i5
i3,344
i3,349
i1,453
i1,896
1976
2010
i35
years
Physicians Plaza West
Decatur
IL
i—
i—
i1,943
i1,207
i—
i3,150
i3,150
i1,474
i1,676
1987
2010
i35
years
SIU Family Practice
Decatur
IL
i—
i—
i3,900
i3,782
i—
i7,682
i7,682
i3,567
i4,115
1996
2010
i35
years
304 W Hay Building
Decatur
IL
i—
i—
i8,702
i2,447
i29
i11,120
i11,149
i4,233
i6,916
2002
2010
i35
years
302 W Hay Building
Decatur
IL
i—
i—
i3,467
i859
i—
i4,326
i4,326
i1,997
i2,329
1993
2010
i35
years
ENTA
Decatur
IL
i—
i—
i1,150
i16
i—
i1,166
i1,166
i511
i655
1996
2010
i35
years
301 W Hay Building
Decatur
IL
i—
i—
i640
i22
i—
i662
i662
i369
i293
1980
2010
i35
years
South Shore Medical Building
Decatur
IL
i—
i902
i129
i56
i958
i129
i1,087
i223
i864
1991
2010
i35
years
Kenwood Medical Center
Decatur
IL
i—
i—
i1,689
i1,520
i—
i3,209
i3,209
i1,376
i1,833
1997
2010
i35
years
DMH OCC Health & Wellness Partners
Decatur
IL
i—
i934
i1,386
i168
i943
i1,545
i2,488
i748
i1,740
1996
2010
i35
years
Rock Springs Medical
Decatur
IL
i—
i399
i495
i109
i399
i604
i1,003
i309
i694
1990
2010
i35
years
146
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
575 W Hay Building
Decatur
IL
i—
i111
i739
i24
i111
i763
i874
i358
i516
1984
2010
i35
years
Good Samaritan Physician Office Building I
Downers Grove
IL
i—
i407
i10,337
i1,397
i407
i11,734
i12,141
i3,211
i8,930
1976
2013
i35
years
Good Samaritan Physician Office Building II
Downers Grove
IL
i—
i1,013
i25,370
i1,101
i1,013
i26,471
i27,484
i6,780
i20,704
1995
2013
i35
years
Eberle Medical Office Building ("Eberle MOB")
Elk Grove Village
IL
i—
i—
i16,315
i1,017
i—
i17,332
i17,332
i7,872
i9,460
2005
2009
i35
years
1425 Hunt Club Road MOB
Gurnee
IL
i—
i249
i1,452
i976
i352
i2,325
i2,677
i1,086
i1,591
2005
2011
i34
years
1445 Hunt Club Drive
Gurnee
IL
i—
i216
i1,405
i609
i325
i1,905
i2,230
i1,039
i1,191
2002
2011
i31
years
Gurnee Imaging Center
Gurnee
IL
i—
i82
i2,731
i—
i82
i2,731
i2,813
i926
i1,887
2002
2011
i35
years
Gurnee Center Club
Gurnee
IL
i—
i627
i17,851
i—
i627
i17,851
i18,478
i6,169
i12,309
2001
2011
i35
years
South Suburban Hospital Physician Office Building
Hazel Crest
IL
i—
i191
i4,370
i997
i191
i5,367
i5,558
i1,608
i3,950
1989
2013
i35
years
755 Milwaukee MOB
Libertyville
IL
i—
i421
i3,716
i3,386
i630
i6,893
i7,523
i3,942
i3,581
1990
2011
i18
years
890 Professional MOB
Libertyville
IL
i—
i214
i2,630
i977
i214
i3,607
i3,821
i1,548
i2,273
1980
2011
i26
years
Libertyville Center Club
Libertyville
IL
i—
i1,020
i17,176
i—
i1,020
i17,176
i18,196
i6,301
i11,895
1988
2011
i35
years
Christ Medical Center Physician Office Building
Oak Lawn
IL
i—
i658
i16,421
i3,663
i658
i20,084
i20,742
i4,626
i16,116
1986
2013
i35
years
Methodist North MOB
Peoria
IL
i—
i1,025
i29,493
i31
i1,025
i29,524
i30,549
i6,238
i24,311
2010
2015
i35
years
Davita Dialysis - Rockford
Rockford
IL
i—
i256
i2,543
i—
i256
i2,543
i2,799
i634
i2,165
2009
2015
i35
years
Vernon Hills Acute Care Center
Vernon Hills
IL
i—
i3,376
i694
(i2,101)
i1,195
i774
i1,969
i921
i1,048
1986
2011
i15
years
Wilbur S. Roby Building
Anderson
IN
i—
i—
i2,653
i1,340
i—
i3,993
i3,993
i2,072
i1,921
1992
2010
i35
years
Ambulatory Services Building
Anderson
IN
i—
i—
i4,266
i2,129
i—
i6,395
i6,395
i3,297
i3,098
1995
2010
i35
years
St. John's Medical Arts Building
Anderson
IN
i—
i—
i2,281
i2,114
i—
i4,395
i4,395
i2,121
i2,274
1973
2010
i35
years
Carmel I
Carmel
IN
i—
i466
i5,954
i833
i466
i6,787
i7,253
i2,809
i4,444
1985
2012
i30
years
Carmel II
Carmel
IN
i—
i455
i5,976
i1,321
i455
i7,297
i7,752
i2,686
i5,066
1989
2012
i33
years
Carmel III
Carmel
IN
i—
i422
i6,194
i1,039
i422
i7,233
i7,655
i2,594
i5,061
2001
2012
i35
years
Elkhart
Elkhart
IN
i—
i1,256
i1,973
i—
i1,256
i1,973
i3,229
i1,595
i1,634
1994
2011
i32
years
Lutheran Medical Arts
Fort Wayne
IN
i—
i702
i13,576
i169
i714
i13,733
i14,447
i2,886
i11,561
2000
2015
i35
years
Dupont Road MOB
Fort Wayne
IN
i—
i633
i13,479
i507
i672
i13,947
i14,619
i3,164
i11,455
2001
2015
i35
years
Harcourt Professional Office Building
Indianapolis
IN
i—
i519
i28,951
i6,023
i519
i34,974
i35,493
i12,290
i23,203
1973
2012
i28
years
Cardiac Professional Office Building
Indianapolis
IN
i—
i498
i27,430
i3,048
i498
i30,478
i30,976
i8,997
i21,979
1995
2012
i35
years
Oncology Medical Office Building
Indianapolis
IN
i—
i470
i5,703
i2,598
i470
i8,301
i8,771
i2,328
i6,443
2003
2012
i35
years
CorVasc Medical Office Building
Indianapolis
IN
i—
i514
i9,617
i549
i871
i9,809
i10,680
i1,714
i8,966
2004
2016
i36
years
St. Francis South Medical Office Building
Indianapolis
IN
i—
i—
i20,649
i2,225
i7
i22,867
i22,874
i5,957
i16,917
1995
2013
i35
years
Methodist Professional Center I
Indianapolis
IN
i—
i61
i37,411
i7,415
i61
i44,826
i44,887
i16,914
i27,973
1985
2012
i25
years
Indiana Orthopedic Center of Excellence
Indianapolis
IN
i—
i967
i83,746
i3,106
i967
i86,852
i87,819
i15,254
i72,565
1997
2015
i35
years
United Healthcare - Indy
Indianapolis
IN
i—
i5,737
i32,116
i848
i5,737
i32,964
i38,701
i7,300
i31,401
1988
2015
i35
years
LaPorte
La Porte
IN
i—
i553
i1,309
i—
i553
i1,309
i1,862
i683
i1,179
1997
2011
i34
years
Mishawaka
Mishawaka
IN
i—
i3,787
i5,543
i—
i3,787
i5,543
i9,330
i4,657
i4,673
1993
2011
i35
years
Cancer Care Partners
Mishawaka
IN
i—
i3,162
i28,633
i220
i3,162
i28,853
i32,015
i5,901
i26,114
2010
2015
i35
years
Michiana Oncology
Mishawaka
IN
i—
i4,577
i20,939
i15
i4,581
i20,950
i25,531
i4,527
i21,004
2010
2015
i35
years
147
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
DaVita Dialysis - Paoli
Paoli
IN
i—
i396
i2,056
i—
i396
i2,056
i2,452
i524
i1,928
2011
2015
i35
years
South Bend
South Bend
IN
i—
i792
i2,530
i—
i792
i2,530
i3,322
i1,085
i2,237
1996
2011
i34
years
OLBH Same Day Surgery Center MOB
Ashland
KY
i—
i101
i19,066
i3,569
i101
i22,635
i22,736
i7,320
i15,416
1997
2012
i26
years
St. Elizabeth Covington
Covington
KY
i—
i345
i12,790
i166
i345
i12,956
i13,301
i4,413
i8,888
2009
2012
i35
years
Jefferson Clinic
Louisville
KY
i—
i—
i673
i2,018
i—
i2,691
i2,691
i493
i2,198
2013
2013
i35
years
East Jefferson Medical Plaza
Metairie
LA
i—
i168
i17,264
i3,162
i168
i20,426
i20,594
i8,520
i12,074
1996
2012
i32
years
East Jefferson MOB
Metairie
LA
i—
i107
i15,137
i4,016
i107
i19,153
i19,260
i7,311
i11,949
1985
2012
i28
years
East Jefferson MRI
Metairie
LA
i—
i—
i—
i—
i—
i—
i—
i—
i—
CIP
CIP
CIP
Lakeside
POB I
Metairie
LA
i—
i3,334
i4,974
i803
i342
i8,769
i9,111
i5,296
i3,815
1986
2011
i22
years
Lakeside POB II
Metairie
LA
i—
i1,046
i802
(i156)
i53
i1,639
i1,692
i1,316
i376
1980
2011
i7
years
Fresenius Medical
Metairie
LA
i—
i1,195
i3,797
i84
i1,269
i3,807
i5,076
i874
i4,202
2012
2015
i35
years
RTS Berlin
Berlin
MD
i—
i—
i2,216
i—
i—
i2,216
i2,216
i783
i1,433
1994
2011
i29
years
Charles O. Fisher Medical Building
Westminster
MD
i10,205
i—
i13,795
i1,888
i—
i15,683
i15,683
i8,018
i7,665
2009
2009
i35
years
Medical Specialties Building
Kalamazoo
MI
i—
i—
i19,242
i1,689
i—
i20,931
i20,931
i7,640
i13,291
1989
2010
i35
years
North Professional Building
Kalamazoo
MI
i—
i—
i7,228
i1,969
i—
i9,197
i9,197
i4,013
i5,184
1983
2010
i35
years
Borgess Navigation Center
Kalamazoo
MI
i—
i—
i2,391
i302
i—
i2,693
i2,693
i884
i1,809
1976
2010
i35
years
Borgess Health & Fitness Center
Kalamazoo
MI
i—
i—
i11,959
i655
i—
i12,614
i12,614
i4,667
i7,947
1984
2010
i35
years
Heart Center Building
Kalamazoo
MI
i—
i—
i8,420
i940
i176
i9,184
i9,360
i3,680
i5,680
1980
2010
i35
years
Medical Commons Building
Kalamazoo Township
MI
i—
i—
i661
i671
i—
i1,332
i1,332
i816
i516
1979
2010
i35
years
RTS Madison Heights
Madison Heights
MI
i—
i401
i2,946
i—
i401
i2,946
i3,347
i999
i2,348
2002
2011
i35
years
Bronson Lakeview OPC
Paw Paw
MI
i—
i3,835
i31,564
i—
i3,835
i31,564
i35,399
i7,361
i28,038
2006
2015
i35
years
Pro Med Center Plainwell
Plainwell
MI
i—
i—
i697
i28
i—
i725
i725
i282
i443
1991
2010
i35
years
Pro Med Center Richland
Richland
MI
i—
i233
i2,267
i334
i325
i2,509
i2,834
i880
i1,954
1996
2010
i35
years
Henry Ford Dialysis Center
Southfield
MI
i—
i589
i3,350
i—
i589
i3,350
i3,939
i773
i3,166
2002
2015
i35
years
Metro Health
Wyoming
MI
i—
i1,325
i5,479
i—
i1,325
i5,479
i6,804
i1,338
i5,466
2008
2015
i35
years
Spectrum Health
Wyoming
MI
i—
i2,463
i14,353
i—
i2,463
i14,353
i16,816
i3,504
i13,312
2006
2015
i35
years
Cogdell Duluth MOB
Duluth
MN
i—
i—
i33,406
(i19)
i—
i33,387
i33,387
i8,024
i25,363
2012
2012
i35
years
Allina Health
Elk River
MN
i—
i1,442
i7,742
i122
i1,455
i7,851
i9,306
i2,363
i6,943
2002
2015
i35
years
Unitron Hearing
Plymouth
MN
i—
i2,646
i8,962
i5
i2,646
i8,967
i11,613
i3,065
i8,548
2011
2015
i29
years
HealthPartners Medical & Dental Clinics
Sartell
MN
i—
i2,492
i15,694
i413
i2,503
i16,096
i18,599
i5,658
i12,941
2010
2012
i35
years
University Physicians - Grants Ferry
Flowood
MS
i—
i2,796
i12,125
(i12)
i2,796
i12,113
i14,909
i4,388
i10,521
2010
2012
i35
years
Arnold Urgent Care
Arnold
MO
i—
i1,058
i556
i413
i1,097
i930
i2,027
i663
i1,364
1999
2011
i35
years
DePaul Health Center North
Bridgeton
MO
i—
i996
i10,045
i3,681
i996
i13,726
i14,722
i7,113
i7,609
1976
2012
i21
years
DePaul Health Center South
Bridgeton
MO
i—
i910
i12,169
i2,838
i910
i15,007
i15,917
i5,977
i9,940
1992
2012
i30
years
St. Mary's Health Center MOB D
Clayton
MO
i—
i103
i2,780
i1,622
i106
i4,399
i4,505
i2,268
i2,237
1984
2012
i22
years
Fenton Urgent Care Center
Fenton
MO
i—
i183
i2,714
i404
i189
i3,112
i3,301
i1,456
i1,845
2003
2011
i35
years
Broadway Medical Office Building
Kansas City
MO
i—
i1,300
i12,602
i11,591
i1,385
i24,108
i25,493
i9,296
i16,197
1976
2007
i35
years
St. Joseph Medical Building
Kansas City
MO
i—
i305
i7,445
i2,750
i305
i10,195
i10,500
i3,178
i7,322
1988
2012
i32
years
148
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
St. Joseph Medical Mall
Kansas City
MO
i—
i530
i9,115
i773
i530
i9,888
i10,418
i3,549
i6,869
1995
2012
i33
years
Carondelet Medical Building
Kansas City
MO
i—
i745
i12,437
i3,967
i745
i16,404
i17,149
i6,521
i10,628
1979
2012
i29
years
St. Joseph Hospital West Medical Office Building II
Lake Saint Louis
MO
i—
i524
i3,229
i1,036
i524
i4,265
i4,789
i1,781
i3,008
2005
2012
i35
years
St. Joseph O'Fallon Medical Office Building
O'Fallon
MO
i—
i940
i5,556
i493
i1,060
i5,929
i6,989
i2,054
i4,935
1992
2012
i35
years
Sisters of Mercy Building
Springfield
MO
i—
i3,427
i8,697
i—
i3,427
i8,697
i12,124
i2,259
i9,865
2008
2015
i35
years
St. Joseph Health Center Medical Building 1
St. Charles
MO
i—
i503
i4,336
i1,865
i503
i6,201
i6,704
i3,336
i3,368
1987
2012
i20
years
St. Joseph Health Center Medical Building 2
St. Charles
MO
i—
i369
i2,963
i1,665
i369
i4,628
i4,997
i2,149
i2,848
1999
2012
i32
years
Physicians Office Center
St. Louis
MO
i—
i1,445
i13,825
i1,117
i1,445
i14,942
i16,387
i7,011
i9,376
2003
2011
i35
years
12700 Southford Road Medical Plaza
St. Louis
MO
i—
i595
i12,584
i3,039
i595
i15,623
i16,218
i6,734
i9,484
1993
2011
i32
years
Mercy South MOB A
St. Louis
MO
i—
i409
i4,687
i2,129
i409
i6,816
i7,225
i3,717
i3,508
1975
2011
i20
years
Mercy South MOB B
St. Louis
MO
i—
i350
i3,942
i1,502
i350
i5,444
i5,794
i3,147
i2,647
1980
2011
i21
years
Lemay Urgent Care Center
St. Louis
MO
i—
i2,317
i3,120
(i607)
i2,355
i2,475
i4,830
i2,418
i2,412
1983
2011
i22
years
St. Mary's Health Center MOB B
St. Louis
MO
i—
i119
i4,161
i12,660
i119
i16,821
i16,940
i4,312
i12,628
1979
2012
i23
years
St. Mary's Health Center MOB C
St. Louis
MO
i—
i136
i6,018
i4,390
i256
i10,288
i10,544
i3,700
i6,844
1969
2012
i20
years
Carson Tahoe Specialty Medical Center
Carson City
NV
i—
i2,748
i27,010
i4,297
i2,898
i31,157
i34,055
i7,100
i26,955
1981
2015
i35
years
Carson Tahoe MOB West
Carson City
NV
i—
i802
i11,855
i229
i703
i12,183
i12,886
i2,739
i10,147
2007
2015
i29
years
Del E Webb Medical Plaza
Henderson
NV
i—
i1,028
i16,993
i2,878
i1,028
i19,871
i20,899
i7,784
i13,115
1999
2011
i35
years
Durango Medical Plaza
Las Vegas
NV
i—
i3,787
i27,738
(i1,709)
i3,683
i26,133
i29,816
i5,644
i24,172
2008
2015
i35
years
The Terrace at South Meadows
Reno
NV
i6,270
i504
i9,966
i874
i517
i10,827
i11,344
i4,276
i7,068
2004
2011
i35
years
Cooper Health MOB I
Willingboro
NJ
i—
i1,389
i2,742
i134
i1,398
i2,867
i4,265
i828
i3,437
2010
2015
i35
years
Cooper Health MOB II
Willingboro
NJ
i—
i594
i5,638
i65
i594
i5,703
i6,297
i1,246
i5,051
2012
2015
i35
years
Salem Medical
Woodstown
NJ
i—
i275
i4,132
i23
i275
i4,155
i4,430
i894
i3,536
2010
2015
i35
years
Albany Medical Center MOB
Albany
NY
i—
i321
i18,389
i35
i356
i18,389
i18,745
i3,406
i15,339
2010
2015
i35
years
St. Peter's Recovery Center
Guilderland
NY
i—
i1,059
i9,156
i—
i1,059
i9,156
i10,215
i2,287
i7,928
1990
2015
i35
years
Central NY Medical Center
Syracuse
NY
i—
i1,786
i26,101
i5,075
i1,792
i31,170
i32,962
i10,709
i22,253
1997
2012
i33
years
Northcountry MOB
Watertown
NY
i—
i1,320
i10,799
i444
i1,364
i11,199
i12,563
i2,686
i9,877
2001
2015
i35
years
Randolph
Charlotte
NC
i—
i6,370
i2,929
i2,694
i6,442
i5,551
i11,993
i4,711
i7,282
1973
2012
i4
years
Mallard Crossing I
Charlotte
NC
i—
i3,229
i2,072
i944
i3,269
i2,976
i6,245
i2,313
i3,932
1997
2012
i25
years
Medical Arts Building
Concord
NC
i—
i701
i11,734
i1,977
i701
i13,711
i14,412
i5,602
i8,810
1997
2012
i31
years
Gateway Medical Office Building
Concord
NC
i—
i1,100
i9,904
i724
i1,100
i10,628
i11,728
i4,508
i7,220
2005
2012
i35
years
Copperfield Medical Mall
Concord
NC
i—
i1,980
i2,846
i664
i2,139
i3,351
i5,490
i2,116
i3,374
1989
2012
i25
years
Weddington Internal & Pediatric Medicine
Concord
NC
i—
i574
i688
i37
i574
i725
i1,299
i438
i861
2000
2012
i27
years
Rex Wellness Center
Garner
NC
i—
i1,348
i5,330
i444
i1,354
i5,768
i7,122
i1,670
i5,452
2003
2015
i34
years
Gaston Professional Center
Gastonia
NC
i—
i833
i24,885
i3,249
i863
i28,104
i28,967
i9,264
i19,703
1997
2012
i35
years
Harrisburg Family Physicians
Harrisburg
NC
i—
i679
i1,646
i73
i679
i1,719
i2,398
i710
i1,688
1996
2012
i35
years
Harrisburg Medical Mall
Harrisburg
NC
i—
i1,339
i2,292
i342
i1,339
i2,634
i3,973
i1,462
i2,511
1997
2012
i27
years
Northcross
Huntersville
NC
i—
i623
i278
i231
i623
i509
i1,132
i348
i784
1993
2012
i22
years
REX Knightdale MOB & Wellness Center
Knightdale
NC
i—
i—
i22,823
i1,003
i50
i23,776
i23,826
i6,077
i17,749
2009
2012
i35
years
149
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Midland Medical Park
Midland
NC
i—
i1,221
i847
i132
i1,233
i967
i2,200
i703
i1,497
1998
2012
i25
years
East Rocky Mount Kidney Center
Rocky Mount
NC
i—
i803
i998
i34
i805
i1,030
i1,835
i521
i1,314
2000
2012
i33
years
Rocky Mount Kidney Center
Rocky Mount
NC
i—
i479
i1,297
i60
i479
i1,357
i1,836
i711
i1,125
1990
2012
i25
years
Rocky Mount Medical Park
Rocky Mount
NC
i—
i2,552
i7,779
i2,774
i2,652
i10,453
i13,105
i4,587
i8,518
1991
2012
i30
years
Trinity Health Medical Arts Clinic
Minot
ND
i—
i935
i15,482
i715
i951
i16,181
i17,132
i4,707
i12,425
1995
2015
i26
years
Anderson Medical Arts Building I
Cincinnati
OH
i—
i—
i9,632
i2,366
i146
i11,852
i11,998
i5,811
i6,187
1984
2007
i35
years
Anderson Medical Arts Building II
Cincinnati
OH
i—
i—
i15,123
i3,930
i—
i19,053
i19,053
i8,521
i10,532
2007
2007
i35
years
Riverside North Medical Office Building
Columbus
OH
i—
i785
i8,519
i2,050
i785
i10,569
i11,354
i5,224
i6,130
1962
2012
i25
years
Riverside South Medical Office Building
Columbus
OH
i—
i586
i7,298
i997
i610
i8,271
i8,881
i3,880
i5,001
1985
2012
i27
years
340 East Town Medical Office Building
Columbus
OH
i—
i10
i9,443
i1,353
i10
i10,796
i10,806
i4,118
i6,688
1984
2012
i29
years
393 East Town Medical Office Building
Columbus
OH
i—
i61
i4,760
i780
i61
i5,540
i5,601
i2,637
i2,964
1970
2012
i20
years
141 South Sixth Medical Office Building
Columbus
OH
i—
i80
i1,113
i2,923
i80
i4,036
i4,116
i1,175
i2,941
1971
2012
i14
years
Doctors West Medical Office Building
Columbus
OH
i—
i414
i5,362
i884
i414
i6,246
i6,660
i2,475
i4,185
1998
2012
i35
years
Eastside Health Center
Columbus
OH
i—
i956
i3,472
(i2)
i956
i3,470
i4,426
i2,435
i1,991
1977
2012
i15
years
East Main Medical Office Building
Columbus
OH
i—
i440
i4,771
i72
i440
i4,843
i5,283
i1,859
i3,424
2006
2012
i35
years
Heart Center Medical Office Building
Columbus
OH
i—
i1,063
i12,140
i923
i1,063
i13,063
i14,126
i4,988
i9,138
2004
2012
i35
years
Wilkins Medical Office Building
Columbus
OH
i—
i123
i18,062
i2,302
i123
i20,364
i20,487
i5,639
i14,848
2002
2012
i35
years
Grady Medical Office Building
Delaware
OH
i—
i239
i2,263
i724
i239
i2,987
i3,226
i1,388
i1,838
1991
2012
i25
years
Dublin Northwest Medical Office Building
Dublin
OH
i—
i342
i3,278
i376
i354
i3,642
i3,996
i1,610
i2,386
2001
2012
i34
years
Preserve III Medical Office Building
Dublin
OH
i—
i2,449
i7,025
i1,211
i2,449
i8,236
i10,685
i3,581
i7,104
2006
2012
i35
years
Zanesville Surgery Center
Zanesville
OH
i—
i172
i9,403
i69
i241
i9,403
i9,644
i2,981
i6,663
2000
2011
i35
years
Dialysis Center
Zanesville
OH
i—
i534
i855
i138
i534
i993
i1,527
i706
i821
1960
2011
i21
years
Genesis Children's Center
Zanesville
OH
i—
i538
i3,781
i—
i538
i3,781
i4,319
i1,606
i2,713
2006
2011
i30
years
Medical Arts Building I
Zanesville
OH
i—
i429
i2,405
i674
i444
i3,064
i3,508
i1,774
i1,734
1970
2011
i20
years
Medical Arts Building II
Zanesville
OH
i—
i485
i6,013
i1,715
i545
i7,668
i8,213
i3,931
i4,282
1995
2011
i25
years
Medical Arts Building III
Zanesville
OH
i—
i94
i1,248
i—
i94
i1,248
i1,342
i659
i683
1970
2011
i25
years
Primecare Building
Zanesville
OH
i—
i130
i1,344
i648
i130
i1,992
i2,122
i1,197
i925
1978
2011
i20
years
Outpatient Rehabilitation Building
Zanesville
OH
i—
i82
i1,541
i—
i82
i1,541
i1,623
i704
i919
1985
2011
i28
years
Radiation Oncology Building
Zanesville
OH
i—
i105
i1,201
i952
i114
i2,144
i2,258
i661
i1,597
1988
2011
i25
years
Healthplex
Zanesville
OH
i—
i2,488
i15,849
i1,199
i2,649
i16,887
i19,536
i7,407
i12,129
1990
2011
i32
years
Physicians Pavilion
Zanesville
OH
i—
i422
i6,297
i1,722
i422
i8,019
i8,441
i4,022
i4,419
1990
2011
i25
years
Zanesville Northside Pharmacy
Zanesville
OH
i—
i42
i635
i—
i42
i635
i677
i299
i378
1985
2011
i28
years
Bethesda Campus MOB III
Zanesville
OH
i—
i188
i1,137
i308
i222
i1,411
i1,633
i700
i933
1978
2011
i25
years
Tuality 7th Avenue Medical Plaza
Hillsboro
OR
i17,194
i1,516
i24,638
i1,516
i1,546
i26,124
i27,670
i9,752
i17,918
2003
2011
i35
years
Professional Office Building I
Chester
PA
i—
i—
i6,283
i3,906
i—
i10,189
i10,189
i5,512
i4,677
1978
2004
i30
years
DCMH Medical Office Building
Drexel Hill
PA
i—
i—
i10,424
i3,268
i—
i13,692
i13,692
i7,630
i6,062
1984
2004
i30
years
Pinnacle Health
Harrisburg
PA
i—
i2,574
i16,767
i1,479
i2,901
i17,919
i20,820
i4,369
i16,451
2002
2015
i35
years
Lancaster Rehabilitation Hospital
Lancaster
PA
i—
i959
i16,610
(i16)
i959
i16,594
i17,553
i5,693
i11,860
2007
2012
i35
years
Lancaster ASC MOB
Lancaster
PA
i—
i593
i17,117
i526
i609
i17,627
i18,236
i6,638
i11,598
2007
2012
i35
years
150
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
St. Joseph Medical Office Building
Reading
PA
i—
i—
i10,823
i811
i—
i11,634
i11,634
i4,639
i6,995
2006
2010
i35
years
Crozer - Keystone MOB I
Springfield
PA
i—
i9,130
i47,078
i—
i9,130
i47,078
i56,208
i12,697
i43,511
1996
2015
i35
years
Crozer-Keystone MOB II
Springfield
PA
i—
i5,178
i6,523
i—
i5,178
i6,523
i11,701
i1,871
i9,830
1998
2015
i25
years
Doylestown Health & Wellness Center
Warrington
PA
i—
i4,452
i17,383
i1,310
i4,497
i18,648
i23,145
i6,971
i16,174
2001
2012
i34
years
Roper Medical Office Building
Charleston
SC
i—
i127
i14,737
i4,522
i138
i19,248
i19,386
i8,148
i11,238
1990
2012
i28
years
St. Francis Medical Plaza (Charleston)
Charleston
SC
i—
i447
i3,946
i870
i447
i4,816
i5,263
i2,162
i3,101
2003
2012
i35
years
Providence MOB I
Columbia
SC
i—
i225
i4,274
i1,308
i225
i5,582
i5,807
i3,135
i2,672
1979
2012
i18
years
Providence MOB II
Columbia
SC
i—
i122
i1,834
i1,212
i150
i3,018
i3,168
i1,310
i1,858
1985
2012
i18
years
Providence MOB III
Columbia
SC
i—
i766
i4,406
i1,632
i766
i6,038
i6,804
i2,467
i4,337
1990
2012
i23
years
One Medical Park
Columbia
SC
i—
i210
i7,939
i3,637
i228
i11,558
i11,786
i5,280
i6,506
1984
2012
i19
years
Three Medical Park
Columbia
SC
i—
i40
i10,650
i2,142
i40
i12,792
i12,832
i5,938
i6,894
1988
2012
i25
years
St. Francis Millennium Medical Office Building
Greenville
SC
i17,326
i—
i13,062
i10,807
i30
i23,839
i23,869
i12,878
i10,991
2009
2009
i35
years
200 Andrews
Greenville
SC
i—
i789
i2,014
i1,600
i810
i3,593
i4,403
i2,273
i2,130
1994
2012
i29
years
St. Francis CMOB
Greenville
SC
i—
i501
i7,661
i1,478
i501
i9,139
i9,640
i3,243
i6,397
2001
2012
i35
years
St. Francis Outpatient Surgery Center
Greenville
SC
i—
i1,007
i16,538
i1,083
i1,007
i17,621
i18,628
i6,991
i11,637
2001
2012
i35
years
St. Francis Professional Medical Center
Greenville
SC
i—
i342
i6,337
i2,447
i395
i8,731
i9,126
i3,880
i5,246
1984
2012
i24
years
St. Francis Women's
Greenville
SC
i—
i322
i4,877
i1,632
i322
i6,509
i6,831
i3,257
i3,574
1991
2012
i24
years
St. Francis Medical Plaza (Greenville)
Greenville
SC
i—
i88
i5,876
i2,409
i98
i8,275
i8,373
i3,356
i5,017
1998
2012
i24
years
River Hills Medical Plaza
Little River
SC
i—
i1,406
i1,813
i230
i1,417
i2,032
i3,449
i1,134
i2,315
1999
2012
i27
years
Mount Pleasant Medical Office Longpoint
Mount Pleasant
SC
i—
i670
i4,455
i1,392
i632
i5,885
i6,517
i2,757
i3,760
2001
2012
i34
years
Medical Arts Center of Orangeburg
Orangeburg
SC
i—
i823
i3,299
i588
i836
i3,874
i4,710
i1,648
i3,062
1984
2012
i28
years
Mary Black Westside Medical Office Bldg
Spartanburg
SC
i—
i291
i5,057
i626
i300
i5,674
i5,974
i2,426
i3,548
1991
2012
i31
years
Spartanburg ASC
Spartanburg
SC
i—
i1,333
i15,756
i—
i1,333
i15,756
i17,089
i3,085
i14,004
2002
2015
i35
years
Spartanburg Regional MOB
Spartanburg
SC
i—
i207
i17,963
i889
i290
i18,769
i19,059
i4,020
i15,039
1986
2015
i35
years
Wellmont Blue Ridge MOB
Bristol
TN
i—
i999
i5,027
i110
i1,032
i5,104
i6,136
i1,288
i4,848
2001
2015
i35
years
Health Park Medical Office Building
Chattanooga
TN
i—
i2,305
i8,949
i799
i2,385
i9,668
i12,053
i3,548
i8,505
2004
2012
i35
years
Peerless Crossing Medical Center
Cleveland
TN
i—
i1,217
i6,464
i77
i1,217
i6,541
i7,758
i2,350
i5,408
2006
2012
i35
years
St. Mary's Clinton Professional Office Building
Clinton
TN
i—
i298
i618
i121
i298
i739
i1,037
i321
i716
1988
2015
i39
years
St. Mary's Farragut MOB
Farragut
TN
i—
i221
i2,719
i257
i221
i2,976
i3,197
i881
i2,316
1997
2015
i39
years
Medical Center Physicians Tower
Jackson
TN
i12,346
i549
i27,074
i107
i598
i27,132
i27,730
i9,930
i17,800
2010
2012
i35
years
St. Mary's Ambulatory Surgery Center
Knoxville
TN
i—
i129
i1,012
i—
i129
i1,012
i1,141
i527
i614
1999
2015
i24
years
Texas Clinic at Arlington
Arlington
TX
i—
i2,781
i24,515
i909
i2,879
i25,326
i28,205
i5,291
i22,914
2010
2015
i35
years
Seton Medical Park Tower
Austin
TX
i—
i805
i41,527
i10,885
i1,329
i51,888
i53,217
i14,354
i38,863
1968
2012
i35
years
Seton Northwest Health Plaza
Austin
TX
i—
i444
i22,632
i3,980
i444
i26,612
i27,056
i8,464
i18,592
1988
2012
i35
years
Seton Southwest Health Plaza
Austin
TX
i—
i294
i5,311
i637
i294
i5,948
i6,242
i1,809
i4,433
2004
2012
i35
years
Seton Southwest Health Plaza II
Austin
TX
i—
i447
i10,154
i84
i447
i10,238
i10,685
i3,201
i7,484
2009
2012
i35
years
BioLife Sciences Building
Denton
TX
i—
i1,036
i6,576
i—
i1,036
i6,576
i7,612
i1,658
i5,954
2010
2015
i35
years
151
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
East Houston MOB, LLC
Houston
TX
i—
i356
i2,877
i1,242
i328
i4,147
i4,475
i3,245
i1,230
1982
2011
i15
years
East Houston Medical Plaza
Houston
TX
i—
i671
i426
i10
i237
i870
i1,107
i1,023
i84
1982
2011
i11
years
Memorial Hermann
Houston
TX
i—
i822
i14,307
i—
i822
i14,307
i15,129
i2,943
i12,186
2012
2015
i35
years
Scott & White Healthcare
Kingsland
TX
i—
i534
i5,104
i—
i534
i5,104
i5,638
i1,203
i4,435
2012
2015
i35
years
Lakeway Medical Plaza
Lakeway
TX
i8,969
i270
i20,169
i2,625
i270
i22,794
i23,064
i1,569
i21,495
2011
2018
i35
years
Odessa Regional MOB
Odessa
TX
i—
i121
i8,935
i—
i121
i8,935
i9,056
i1,911
i7,145
2008
2015
i35
years
Legacy Heart Center
Plano
TX
i—
i3,081
i8,890
i183
i3,081
i9,073
i12,154
i2,364
i9,790
2005
2015
i35
years
Seton Williamson Medical Plaza
Round Rock
TX
i—
i—
i15,074
i870
i—
i15,944
i15,944
i6,218
i9,726
2008
2010
i35
years
Sunnyvale Medical Plaza
Sunnyvale
TX
i—
i1,186
i15,397
i448
i1,243
i15,788
i17,031
i3,613
i13,418
2009
2015
i35
years
Texarkana ASC
Texarkana
TX
i—
i814
i5,903
i166
i814
i6,069
i6,883
i1,665
i5,218
1994
2015
i30
years
Spring Creek Medical Plaza
Tomball
TX
i—
i2,165
i8,212
i355
i2,165
i8,567
i10,732
i1,780
i8,952
2006
2015
i35
years
MRMC MOB I
Mechanicsville
VA
i—
i1,669
i7,024
i711
i1,669
i7,735
i9,404
i3,824
i5,580
1993
2012
i31
years
Henrico MOB
Richmond
VA
i—
i968
i6,189
i1,534
i359
i8,332
i8,691
i4,041
i4,650
1976
2011
i25
years
St. Mary's MOB North (Floors 6 & 7)
Richmond
VA
i—
i227
i2,961
i1,105
i227
i4,066
i4,293
i1,950
i2,343
1968
2012
i22
years
Stony Point Medical Center
Richmond
VA
i—
i3,822
i16,127
i807
i3,822
i16,934
i20,756
i3,537
i17,219
2004
2015
i35
years
St. Francis Cancer Center
Richmond
VA
i—
i654
i18,331
i2,385
i657
i20,713
i21,370
i4,327
i17,043
2006
2015
i35
years
Bonney Lake Medical Office Building
Bonney Lake
WA
i10,159
i5,176
i14,375
i321
i5,176
i14,696
i19,872
i5,659
i14,213
2011
2012
i35
years
Good Samaritan Medical Office Building
Puyallup
WA
i11,872
i781
i30,368
i3,233
i893
i33,489
i34,382
i10,513
i23,869
2011
2012
i35
years
Holy Family Hospital Central MOB
Spokane
WA
i—
i—
i19,085
i475
i—
i19,560
i19,560
i5,010
i14,550
2007
2012
i35
years
Physician's Pavilion
Vancouver
WA
i—
i1,411
i32,939
i1,388
i1,450
i34,288
i35,738
i12,059
i23,679
2001
2011
i35
years
Administration Building
Vancouver
WA
i—
i296
i7,856
i59
i317
i7,894
i8,211
i2,743
i5,468
1972
2011
i35
years
Medical Center Physician's Building
Vancouver
WA
i—
i1,225
i31,246
i4,257
i1,488
i35,240
i36,728
i12,541
i24,187
1980
2011
i35
years
Memorial MOB
Vancouver
WA
i—
i663
i12,626
i1,621
i690
i14,220
i14,910
i5,054
i9,856
1999
2011
i35
years
Salmon Creek MOB
Vancouver
WA
i—
i1,325
i9,238
i607
i1,325
i9,845
i11,170
i3,441
i7,729
1994
2011
i35
years
Fisher's Landing MOB
Vancouver
WA
i—
i1,590
i5,420
i457
i1,613
i5,854
i7,467
i2,415
i5,052
1995
2011
i34
years
Columbia Medical Plaza
Vancouver
WA
i—
i281
i5,266
i544
i331
i5,760
i6,091
i2,141
i3,950
1991
2011
i35
years
Appleton Heart Institute
Appleton
WI
i—
i—
i7,775
i46
i—
i7,821
i7,821
i2,691
i5,130
2003
2010
i39
years
Appleton Medical Offices West
Appleton
WI
i—
i—
i5,756
i1,146
i—
i6,902
i6,902
i2,283
i4,619
1989
2010
i39
years
Appleton Medical Offices South
Appleton
WI
i—
i—
i9,058
i537
i—
i9,595
i9,595
i3,416
i6,179
1983
2010
i39
years
Brookfield Clinic
Brookfield
WI
i—
i2,638
i4,093
(i2,198)
i440
i4,093
i4,533
i1,810
i2,723
1999
2011
i35
years
Lakeshore Medical Clinic - Franklin
Franklin
WI
i—
i1,973
i7,579
i149
i2,029
i7,672
i9,701
i1,947
i7,754
2008
2015
i34
years
Lakeshore Medical Clinic - Greenfield
Greenfield
WI
i—
i1,223
i13,387
i126
i1,223
i13,513
i14,736
i2,795
i11,941
2010
2015
i35
years
Aurora Health Care - Hartford
Hartford
WI
i—
i3,706
i22,019
i—
i3,706
i22,019
i25,725
i5,165
i20,560
2006
2015
i35
years
Hartland Clinic
Hartland
WI
i—
i321
i5,050
i—
i321
i5,050
i5,371
i1,919
i3,452
1994
2011
i35
years
Aurora Healthcare - Kenosha
Kenosha
WI
i—
i7,546
i19,155
i—
i7,546
i19,155
i26,701
i4,590
i22,111
2014
2015
i35
years
Univ of Wisconsin Health
Monona
WI
i—
i678
i8,017
i202
i678
i8,219
i8,897
i2,050
i6,847
2011
2015
i35
years
Theda Clark Medical Center Office Pavilion
Neenah
WI
i—
i—
i7,080
i1,216
i—
i8,296
i8,296
i2,861
i5,435
1993
2010
i39
years
Aylward Medical Building Condo Floors 3 & 4
Neenah
WI
i—
i—
i4,462
i250
i—
i4,712
i4,712
i1,762
i2,950
2006
2010
i39
years
152
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
Aurora Health Care - Neenah
Neenah
WI
i—
i2,033
i9,072
i—
i2,033
i9,072
i11,105
i2,284
i8,821
2006
2015
i35
years
New Berlin Clinic
New Berlin
WI
i—
i678
i7,121
i—
i678
i7,121
i7,799
i2,913
i4,886
1999
2011
i35
years
United Healthcare - Onalaska
Onalaska
WI
i—
i4,623
i5,527
i38
i4,623
i5,565
i10,188
i1,807
i8,381
1995
2015
i35
years
WestWood Health & Fitness
Pewaukee
WI
i—
i823
i11,649
i—
i823
i11,649
i12,472
i4,763
i7,709
1997
2011
i35
years
Aurora Health Care - Two Rivers
Two Rivers
WI
i—
i5,638
i25,308
i—
i5,638
i25,308
i30,946
i5,983
i24,963
2006
2015
i35
years
Watertown Clinic
Watertown
WI
i—
i166
i3,234
i—
i166
i3,234
i3,400
i1,184
i2,216
2003
2011
i35
years
Southside Clinic
Waukesha
WI
i—
i218
i5,273
i—
i218
i5,273
i5,491
i1,950
i3,541
1997
2011
i35
years
Rehabilitation Hospital
Waukesha
WI
i—
i372
i15,636
i—
i372
i15,636
i16,008
i5,114
i10,894
2008
2011
i35
years
United Healthcare - Wauwatosa
Wawatosa
WI
i—
i8,012
i15,992
i76
i8,012
i16,068
i24,080
i4,634
i19,446
1995
2015
i35
years
TOTAL FOR MEDICAL OFFICE BUILDINGS
i386,320
i376,960
i4,168,796
i461,561
i372,864
i4,634,453
i5,007,317
i1,477,051
i3,530,266
LIFE
SCIENCES OFFICE BUILDINGS
300 George Street
New Haven
CT
i—
i2,262
i122,144
i7,780
i2,582
i129,604
i132,186
i12,486
i119,700
2014
2016
i50
years
Univ. of Miami Life Science and Technology Park
Miami
FL
i—
i2,249
i87,019
i6,325
i2,253
i93,340
i95,593
i11,326
i84,267
2014
2016
i53
years
IIT
Chicago
IL
i—
i30
i55,620
i1,061
i30
i56,681
i56,711
i5,923
i50,788
2006
2016
i46
years
University of Maryland BioPark I Unit 1
Baltimore
MD
i—
i113
i25,199
i819
i113
i26,018
i26,131
i2,607
i23,524
2005
2016
i50
years
University of Maryland BioPark II
Baltimore
MD
i—
i61
i91,764
i5,363
i61
i97,127
i97,188
i10,331
i86,857
2007
2016
i50
years
University of Maryland BioPark Garage
Baltimore
MD
i—
i77
i4,677
i443
i77
i5,120
i5,197
i897
i4,300
2007
2016
i29
years
Tributary Street
Baltimore
MD
i—
i4,015
i15,905
i597
i4,015
i16,502
i20,517
i2,378
i18,139
1998
2016
i45
years
Beckley Street
Baltimore
MD
i—
i2,813
i13,481
i832
i2,813
i14,313
i17,126
i2,104
i15,022
1999
2016
i45
years
University of Maryland BioPark III
Baltimore
MD
i—
i1,067
i857
i—
i1,067
i857
i1,924
i6
i1,918
CIP
CIP
CIP
Heritage
at 4240
Saint Louis
MO
i—
i403
i47,125
i1,258
i452
i48,334
i48,786
i6,511
i42,275
2013
2016
i45
years
Cortex 1
Saint Louis
MO
i—
i631
i26,543
i1,172
i631
i27,715
i28,346
i3,758
i24,588
2005
2016
i50
years
BRDG Park
Saint Louis
MO
i—
i606
i37,083
i2,246
i606
i39,329
i39,935
i4,480
i35,455
2009
2016
i52
years
4220 Duncan Avenue
St Louis
MO
i—
i1,871
i35,044
i9,974
i1,871
i45,018
i46,889
i7,105
i39,784
2018
2018
i35
years
311 South Sarah Street
St. Louis
MO
i—
i5,154
i—
i—
i5,154
i—
i5,154
i314
i4,840
CIP
CIP
CIP
4300
Duncan
St. Louis
MO
i—
i2,818
i46,749
i18
i2,818
i46,767
i49,585
i4,830
i44,755
2008
2017
i35
years
Weston Parkway
Cary
NC
i—
i1,372
i6,535
i1,743
i1,372
i8,278
i9,650
i1,489
i8,161
1990
2016
i50
years
Patriot Drive
Durham
NC
i—
i1,960
i10,749
i378
i1,960
i11,127
i13,087
i1,364
i11,723
2010
2016
i50
years
Chesterfield
Durham
NC
i—
i3,594
i57,781
i5,558
i3,619
i63,314
i66,933
i14,396
i52,537
2017
2017
i60
years
Paramount Parkway
Morrisville
NC
i—
i1,016
i19,794
i617
i1,016
i20,411
i21,427
i2,824
i18,603
1999
2016
i45
years
Center for Technology & Innovation
Raleigh
NC
i—
i786
i50,674
i—
i786
i50,674
i51,460
i1,400
i50,060
2016
2020
i35
years
Keystone Science Center
Raleigh
NC
i—
i408
i25,841
i—
i408
i25,841
i26,249
i715
i25,534
2010
2020
i35
years
Wake 90
Winston-Salem
NC
i—
i2,752
i79,949
i1,757
i2,752
i81,706
i84,458
i10,584
i73,874
2013
2016
i40
years
Wake 60
Winston-Salem
NC
i15,000
i1,243
i83,414
i1,370
i1,243
i84,784
i86,027
i12,079
i73,948
2016
2016
i35
years
Bailey Power Plant
Winston-Salem
NC
i—
i1,930
i34,122
i249
i846
i35,455
i36,301
i4,359
i31,942
2017
2017
i35
years
Hershey Center Unit 1
Hummelstown
PA
i—
i813
i23,699
i965
i819
i24,658
i25,477
i2,882
i22,595
2007
2016
i50
years
153
Location
Initial
Cost to Company
Gross Amount Carried at Close of Period
Property Name
City
State / Province
Encumbrances
Land and Improvements
Buildings and Improvements
Costs
Capitalized
Subsequent
to Acquisition1
Land
and Improvements
Buildings and Improvements
Total
Accumulated Depreciation
NBV
Year of Construction
Year Acquired
Life on Which Depreciation in Income Statement is Computed
3737 Market Street
Philadelphia
PA
i66,108
i40
i141,981
i6,298
i40
i148,279
i148,319
i12,988
i135,331
2014
2016
i54
years
3711 Market Street
Philadelphia
PA
i—
i12,320
i69,278
i7,168
i12,320
i76,446
i88,766
i8,524
i80,242
2008
2016
i48
years
3675 Market Street
Philadelphia
PA
i116,166
i11,370
i109,846
i43,802
i11,370
i153,648
i165,018
i15,679
i149,339
2018
2018
i35
years
3701 Filbert Street
Philadelphia
PA
i—
i3,627
i—
i—
i3,627
i—
i3,627
i251
i3,376
CIP
CIP
CIP
115
North 38th Street
Philadelphia
PA
i—
i2,163
i—
i—
i2,163
i—
i2,163
i149
i2,014
CIP
CIP
CIP
225
North 38th Street
Philadelphia
PA
i—
i9,965
i5,387
i—
i9,965
i5,387
i15,352
i683
i14,669
CIP
CIP
CIP
3401
Market Street
Philadelphia
PA
i—
i4,500
i22,157
i307
i4,533
i22,431
i26,964
i1,574
i25,390
1923
2018
i35
years
75 N. 38th Street (6799)
Philadelphia
PA
i—
i9,432
i—
i—
i9,432
i—
i9,432
i—
i9,432
N/A
2019
N/A
South Street Landing
Providence
RI
i—
i6,358
i111,797
(i1,053)
i6,358
i110,744
i117,102
i6,067
i111,035
2017
2017
i45
years
2/3 Davol Square
Providence
RI
i—
i4,537
i6,886
i9,259
i4,656
i16,026
i20,682
i2,796
i17,886
2005
2017
i15
years
One Ship Street
Providence
RI
i—
i1,943
i1,734
(i29)
i1,943
i1,705
i3,648
i268
i3,380
1980
2017
i25
years
Brown Academic/R&D Building
Providence
RI
i47,294
i—
i68,335
(i8,713)
i—
i59,622
i59,622
i2,611
i57,011
2019
2019
i35
years
Providence Phase 2
Providence
RI
i—
i2,251
i—
i—
i2,251
i—
i2,251
i—
i2,251
CIP
CIP
CIP
Wexford
Biotech 8
Richmond
VA
i—
i2,615
i85,514
i5,564
i2,615
i91,078
i93,693
i11,713
i81,980
2012
2017
i35
years
VTR Pre Development Expense
i—
i—
i23,358
i—
i—
i23,358
i23,358
i—
i23,358
CIP
CIP
CIP
TOTAL
FOR LIFE SCIENCES OFFICE BUILDINGS
i244,568
i111,165
i1,648,041
i113,128
i110,637
i1,761,697
i1,872,334
i190,451
i1,681,883
TOTAL
FOR OFFICE
i630,888
i488,125
i5,816,837
i574,689
i483,501
i6,396,150
i6,879,651
i1,667,502
i5,212,149
TOTAL
FOR ALL PROPERTIES
$
i2,220,206
$
i2,246,273
$
i22,949,998
$
i1,654,171
$
i2,261,415
$
i24,589,027
$
i26,850,442
$
i6,967,413
$
i19,883,029
1
Adjustments to basis included provisions for asset impairments, partial dispositions, costs capitalized subsequent to acquisitions and foreign currency translation adjustments.
ITEM
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
ITEM 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2020. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that
our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of December 31, 2020, at the reasonable assurance level.
Internal Control over Financial Reporting
The information set forth under “Management Report on Internal Control over Financial Reporting” and “Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting” included in Part II, Item 8 of this Annual Report is incorporated by reference into this Item 9A.
Internal Control Changes
During the fourth quarter of 2020, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. Other Information
Not applicable.
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance
The
information required by this Item 10 is incorporated by reference to the material under the headings “Elections of Directors,”“Our Executive Officers,”“Securities Ownership,” and “Corporate Governance and Board Matters” in our definitive Proxy Statement for the 2021 Annual Meeting of Stockholders, which we will file with the SEC not later than April 30, 2021.
ITEM 11. Executive Compensation
The information required by this Item 11 is incorporated by reference to the material under the headings “Executive Compensation,”“Non-Employee Director Compensation” and “Corporate Governance and Board Matters” in our definitive Proxy Statement for the 2021 Annual Meeting of Stockholders, which we will file with the SEC not later than April 30, 2021.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item 12 is incorporated by reference to the material under the headings “Equity Compensation Plan Information” and “Securities Ownership” in our definitive Proxy Statement for the 2021 Annual Meeting of Stockholders,
which we will file with the SEC not later than April 30, 2021.
ITEM 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item 13 is incorporated by reference to the material under the heading “Corporate Governance and Board Matters,” in our definitive Proxy Statement for the 2021 Annual Meeting of Stockholders, which we will file with the SEC not later than April 30, 2021.
156
ITEM
14. Principal Accountant Fees and Services
The information required by this Item 14 is incorporated by reference to the material under the heading “Audit Matters” in our definitive Proxy Statement for the 2021 Annual Meeting of Stockholders, which we will file with the SEC not later than April 30, 2021.
157
PART IV
ITEM
15. Exhibits and Financial Statement Schedules
Financial Statements and Financial Statement Schedules
The following documents have been included in Part II, Item 8 of this Annual Report on Form 10-K:
All other schedules have been omitted because they are inapplicable or not required or the information is included elsewhere in the Consolidated Financial Statements or notes thereto.
Indenture
dated as of September 19, 2006 by and among Ventas, Inc., Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuer(s), the Guarantors named therein, as Guarantors, and U.S. Bank National Association, as Trustee.
Seventh
Supplemental Indenture dated as of August 3, 2012 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 3.250% Senior Notes due 2022.
Indenture
dated as of September 26, 2013 by and among Ventas, Inc., Ventas Realty, Limited Partnership, as Issuer, the Guarantors named therein, as Guarantors, and U.S. Bank National Association, as Trustee.
Second
Supplemental Indenture dated as of September 26, 2013 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 5.700% Senior Notes due 2043.
Fourth
Supplemental Indenture dated as of April 17, 2014 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 3.750% Senior Notes due 2024.
Fifth
Supplemental Indenture dated as of January 14, 2015 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 3.500% Senior Notes due 2025.
Sixth
Supplemental Indenture dated as of January 14, 2015 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 4.375% Senior Notes due 2045.
Indenture
dated as of August 19, 1997 by and between Nationwide Health Properties, Inc. and The Bank of New York, as Trustee, relating to the 6.90% Series C Medium-Term Notes due 2037 and the 6.59% Series C Medium-Term Notes due 2038.
Supplemental Indenture dated July 1, 2011 among Nationwide Health Properties, Inc., Needles Acquisition LLC, and The Bank of New York Mellon Trust Company, N.A., as successor Trustee, relating to the 6.90% Series C Medium-Term Notes due 2037 and the 6.59% Series C Medium-Term Notes due 2038.
Indenture
dated as September 24, 2014 by and among Ventas, Inc., Ventas Canadian Finance Limited, the Guarantors parties thereto from time to time and Computershare Trust Company of Canada, as Trustee.
Second
Supplemental Indenture dated as of September 24, 2014 by and among Ventas Canada Finance Limited, as Issuer, Ventas, Inc., as Guarantor, and Computershare Trust Company of Canada, as Trustee, relating to the 4.125% Senior Notes, Series B due 2024.
Third
Supplemental Indenture dated as of January 13, 2015 by and among Ventas Canada Finance Limited, as Issuer, Ventas, Inc., as Guarantor, and Computershare Trust Company of Canada, as Trustee, relating to the 3.30% Senior Notes, Series C due 2022.
Fourth
Supplemental Indenture dated as of June 1, 2017 by and among Ventas Canada Finance Limited, as Issuer, Ventas, Inc., as Guarantor, and Computershare Trust Company of Canada, as Trustee, relating to the 2.55% Senior Notes, Series D due 2023.
Fifth
Supplemental Indenture dated as of November 12, 2019 by and among Ventas Canada Finance Limited, as Issuer, Ventas, Inc., as Guarantor, and Computershare Trust Company of Canada, as Trustee, relating to the 2.80% Senior Notes, Series E due 2024.
Sixth
Supplemental Indenture dated as of November 12, 2019 by and among Ventas Canada Finance Limited, as Issuer, Ventas, Inc., as Guarantor, and Computershare Trust Company of Canada, as Trustee, relating to the Floating Rate Senior Notes, Series F due 2021.
Indenture
dated as of July 16, 2015 by and among Ventas, Inc., Ventas Realty, Limited Partnership, as Issuer, the Guarantors named therein as Guarantors, and U.S. Bank National Association, as Trustee.
First
Supplemental Indenture dated as of July 16, 2015 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 4.125% Senior Notes due 2026.
Second
Supplemental Indenture dated as of June 2, 2016 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 3.125% Senior Notes due 2023.
Third Supplemental Indenture dated as of September 21, 2016 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 3.250% Senior Notes due 2026.
Fourth Supplemental Indenture dated as of March
29, 2017 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 3.100% Senior Notes due 2023 and the 3.850% Senior Notes due 2027.
Indenture
dated February 23, 2018 among Ventas, Inc., Ventas Realty, Limited Partnership, the Guarantors named therein, and U.S. Bank National Association, as Trustee
First
Supplemental Indenture dated as of February 23, 2018 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor and U.S. Bank National Association, as Trustee relating to the 4.000% Senior Notes due 2028
Second
Supplemental Indenture dated as of August 15, 2018 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor and U.S. Bank National Association, as Trustee relating to the 4.400% Senior Notes due 2029
Third
Supplemental Indenture dated as of February 26, 2019 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor and U.S. Bank National Association, as Trustee relating to the 3.500% Senior Notes due 2024 and 4.875% Senior Notes due 2049
Fourth
Supplemental Indenture dated as of July 3, 2019 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor and U.S. Bank National Association, as Trustee relating to the 2.650% Senior Notes due 2025
Fifth
Supplemental Indenture dated as of August 21, 2019 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor and U.S. Bank National Association, as Trustee relating to the 3.000% Senior Notes due 2030
Sixth
Supplemental Indenture dated as of April 1, 2020 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor and U.S. Bank National Association, as Trustee relating to the 4.750% Senior Notes due 2030.
Credit and Guaranty Agreement dated July 26, 2018
among Ventas Realty, Limited Partnership, as Borrower, Ventas, Inc., as Guarantor, The Lenders party thereto from time to time, and Bank of America, N.A., as Administrative Agent.
First Amendment to the Credit and Guaranty Agreement, dated as of January 29, 2021, among Ventas Realty, Limited Partnership, as Borrower, Ventas, Inc., as Guarantor, the Lenders identified therein, and Bank of America, N.A., as Administrative Agent.
Second
Amended and Restated Credit and Guaranty Agreement, dated as of April 25, 2017, among Ventas Realty, Limited Partnership, Ventas SSL Ontario II, Inc., Ventas SSL Ontario III, Inc., Ventas Canada Finance Limited, Ventas UK Finance, Inc., and Ventas Euro Finance, LLC, as Borrowers, Ventas, Inc., as Guarantor, the Lenders identified therein, and Bank of America, N.A., as Administrative Agent, and Alternative Currency Fronting Lender, Bank of America, N.A. and JP Morgan Chase Bank, N.A., as Swing Line Lenders and L/C Issuers.
Third Amended and Restated Credit and Guaranty Agreement, dated as of January 29, 2021, among Ventas Realty, Limited Partnership, Ventas SSL Ontario II, Inc., Ventas SSL Ontario III, Inc., Ventas
Canada Finance Limited, Ventas UK Finance, Inc., and Ventas Euro Finance, LLC, as Borrowers, Ventas, Inc., as Guarantor, the Lenders identified therein, Bank of America, N.A., as Administrative Agent, and Bank of America, N.A. and JPMorgan Chase Bank, N.A., as L/C Issuers.
Amendment
dated December 8, 2017 to Employee Protection and Noncompetition Agreement dated as of October 21, 2013 between Ventas, Inc. and John D. Cobb.
Certification of Robert F. Probst,
Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. 1350.
The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Balance Sheets,
(ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Equity, (v) the Consolidated Statements of Cash Flows, (vi) Notes to the Consolidated Financial Statements and (vii) Schedule III and IV.
* Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(b) of Form 10-K.
165
ITEM 16. Form 10-K Summary
None.
166
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
