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What changed in Welltower's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Welltower's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+589 added−554 removedSource: 10-K (2025-02-12) vs 10-K (2024-02-15)

Top changes in Welltower's 2024 10-K

589 paragraphs added · 554 removed · 454 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

151 edited+47 added−42 removed259 unchanged
Biggest changeCapital Gain Dividends and Distributions Attributable to a Sale or Exchange of United States Real Property Interests Distributions to a non-U.S. holder that we properly designate as capital gain dividends, other than those arising from the disposition of a USRPI, generally should not be subject to U.S. federal income taxation, unless: (1) the investment in our stock is treated as effectively connected with the conduct by the non-U.S. holder of a trade or business within the United States (and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the United States to which such dividends are attributable), in which case the non-U.S. holder will be subject to the same treatment as U.S. holders with respect to such gain, except that a non-U.S. holder that is a corporation may also be subject to a branch profits tax of up to 30%, as discussed above; or (2) the non-U.S. holder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and certain other conditions are met, in which case the non-U.S. holder will be subject to U.S. federal income tax at a rate of 30% on the non-U.S. holder’s capital gains (or such lower rate specified by an applicable income tax treaty), which may be offset by U.S. source capital losses of such non-U.S. holder (even though the individual is not considered a resident of the United States), provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.
Biggest change(and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the U.S. to which such dividends are attributable), in which case the non-U.S. holder will be subject to the same treatment as U.S. holders with respect to such gain, except that a non-U.S. holder that is a corporation may also be subject to a branch profits tax of up to 30%, as discussed above; or (2) the non-U.S. holder is a nonresident alien individual who is present in the U.S. for 183 days or more during the taxable year and certain other conditions are met, in which case the non-U.S. holder will be subject to U.S. federal income tax at a rate of 30% on the non-U.S. holder’s capital gains (or such lower rate specified by an applicable income tax treaty), which may be offset by U.S. source capital losses of such non-U.S. holder (even though the individual is not considered a resident of the United States), provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.
Within each province, there are different categories for senior living residences that are generally based on the level of care sought and/or required by a resident (e.g. assisted or retirement living, senior living residences, residential care, long-term care).
Within each province, there are different categories for senior living residences that are generally based on the level of care sought and/or required by a resident (e.g. assisted or retirement living, senior living residences, residential care or long-term care).
For purposes of this discussion, a “U.S. holder” is a beneficial owner of stock of the Company or debt securities of the Company or Welltower OP that, for U.S. federal income tax purposes, is or is treated as: • an individual who is a citizen or resident of the United States; • an entity classified as a corporation for U.S. federal income tax purposes and created or organized under the laws of the United States, any state thereof or the District of Columbia; • an estate the income of which is subject to U.S. federal income tax regardless of its source; or • a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code) or (2) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.
For purposes of this discussion, a “U.S. holder” is a beneficial owner of stock of the Company or debt securities of the Company or Welltower OP that, for U.S. federal income tax purposes, is or is treated as: • an individual who is a citizen or resident of the U.S.; • an entity classified as a corporation for U.S. federal income tax purposes and created or organized under the laws of the U.S., any state thereof or the District of Columbia; • an estate the income of which is subject to U.S. federal income tax regardless of its source; or • a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code) or (2) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.
Despite qualifying as a REIT, we may be subject to U.S. federal income and excise tax as follows: • To the extent that we do not distribute all of our net capital gain or distribute at least 90%, but less than 100%, of our “REIT taxable income,” as adjusted, we will be subject to tax on the undistributed amount at regular corporate tax rates; • If we have net income from the sale or other disposition of “foreclosure property” that is held primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, such income will be taxed at the highest corporate rate; • Any net income from prohibited transactions (which are, in general, sales or other dispositions of property held primarily for sale to customers in the ordinary course of business, other than dispositions of foreclosure property) will be subject to a 100% tax; • If we fail to satisfy either the 75% or 95% gross income tests (as discussed below), but nonetheless maintain our qualification as a REIT because certain other requirements are met, we will be subject to a 100% tax on an amount equal to (1) the gross income attributable to the greater of (i) 75% of our gross income over the amount of qualifying gross income for purposes of the 75% gross income test (discussed below) or (ii) 95% of our gross income over the amount of qualifying gross income for purposes of the 95% gross income test (discussed below) multiplied by (2) a fraction intended to reflect our profitability; • If we fail to distribute during each year at least the sum of (1) 85% of our REIT ordinary income for the year, (2) 95% of our REIT capital gain net income for such year (other than capital gain that we elect to retain and pay tax on) and (3) any undistributed taxable income from preceding years, we will be subject to a 4% excise tax on the excess of such required distribution over amounts actually distributed and; • We will be subject to a 100% tax on certain amounts from certain transactions involving our “taxable REIT subsidiaries” that are not conducted on an arm’s length basis.
Despite qualifying as a REIT, we may be subject to U.S. federal income and excise tax as follows: • To the extent that we do not distribute all of our net capital gain or distribute at least 90%, but less than 100%, of our “REIT taxable income,” as adjusted, we will be subject to tax on the undistributed amount at regular corporate tax rates; • If we have net income from the sale or other disposition of “foreclosure property” that is held primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, such income will be taxed at the highest corporate rate; • Any net income from prohibited transactions (which are, in general, sales or other dispositions of property held primarily for sale to customers in the ordinary course of business, other than dispositions of foreclosure property) will be subject to a 100% tax; • If we fail to satisfy either the 75% or 95% gross income tests (as discussed below), but nonetheless maintain our qualification as a REIT because certain other requirements are met, we will be subject to a 100% tax on an amount equal to (1) the gross income attributable to the greater of (i) 75% of our gross income over the amount of qualifying gross income for purposes of the 75% gross income test (discussed below) or (ii) 95% of our gross income over the amount of qualifying gross income for purposes of the 95% gross income test (discussed below) multiplied by (2) a fraction intended to reflect our profitability; • If we fail to distribute during each year at least the sum of (1) 85% of our REIT ordinary income for the year, (2) 95% of our REIT capital gain net income for such year (other than capital gain that we elect to retain and pay tax on) and (3) any undistributed taxable income from preceding years, we will be subject to a 4% excise tax on the excess of such required distribution over amounts actually distributed; and 12 • We will be subject to a 100% tax on certain amounts from certain transactions involving our “taxable REIT subsidiaries” that are not conducted on an arm’s length basis.
Specifically, a 30% withholding tax may be imposed on dividends on stock of the Company, interest on debt securities of the Company or Welltower OP, in each case paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Code), unless (1) the foreign financial institution undertakes certain diligence and reporting obligations, (2) the non-financial foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code) or furnishes identifying information regarding each substantial United States owner, or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules.
Specifically, a 30% withholding tax may be imposed on dividends on stock of the Company, 24 interest on debt securities of the Company or Welltower OP, in each case paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Code), unless (1) the foreign financial institution undertakes certain diligence and reporting obligations, (2) the non-financial foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code) or furnishes identifying information regarding each substantial United States owner, or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules.
In particular, these forward-looking statements include, but are not limited to, those relating to our opportunities to acquire, develop or sell properties; our ability to close our 28 anticipated acquisitions, investments or dispositions on currently anticipated terms, or within currently anticipated timeframes; the expected performance of our operators/tenants and properties; our expected occupancy rates; our ability to declare and to make distributions to stockholders; our investment and financing opportunities and plans; our continued qualification as a REIT; and our ability to access capital markets or other sources of funds.
In particular, these forward-looking statements include, but are not limited to, those relating to our opportunities to acquire, develop or sell properties; our ability to close our anticipated acquisitions, investments or dispositions on currently anticipated terms, or within currently anticipated timeframes; the expected performance of our operators/tenants and properties; our expected occupancy rates; our ability to declare and to make distributions to stockholders; our investment and financing opportunities and plans; our continued qualification as a REIT; and our ability to access capital markets or other sources of funds.
Though we nonetheless expect that all such Subsidiary Partnerships will be required to operate in a manner consistent with the requirements for our qualification as a REIT, if a Subsidiary Partnership in which we own an interest but do not have control takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity.
Though we nonetheless expect that 13 all such Subsidiary Partnerships will be required to operate in a manner consistent with the requirements for our qualification as a REIT, if a Subsidiary Partnership in which we own an interest but do not have control takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity.
Interest paid on a debt security to a non-U.S. holder that is not effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States generally will not be subject to U.S. federal income tax or withholding, provided that: • the non-U.S. holder does not, actually or constructively, own 10% or more of the total combined voting power of all classes of our voting stock or 10% or more of the profits or capital in Welltower OP; • the non-U.S. holder is not a controlled foreign corporation related to us through actual or constructive stock ownership; and • either (1) the non-U.S. holder certifies in a statement provided to the applicable withholding agent under penalties of perjury that it is not a United States person and provides its name and address; (2) a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business and holds the debt security on behalf of the non-U.S. holder certifies to the applicable withholding agent under penalties of perjury that it, or the financial institution between it and the non-U.S. holder, has received from the non-U.S. holder a statement under penalties of perjury that such holder is not a United States person and provides the applicable withholding agent with a copy of such statement; or (3) the non-U.S. holder holds its debt security directly through a “qualified intermediary” (within the meaning of the applicable Treasury Regulations) and certain conditions are satisfied.
Interest paid on a debt security to a non-U.S. holder that is not effectively connected with the non-U.S. holder’s conduct of a trade or business within the U.S. generally will not be subject to U.S. federal income tax or withholding, provided that: • the non-U.S. holder does not, actually or constructively, own 10% or more of the total combined voting power of all classes of our voting stock or 10% or more of the profits or capital in Welltower OP; • the non-U.S. holder is not a controlled foreign corporation related to us through actual or constructive stock ownership; and • either (1) the non-U.S. holder certifies in a statement provided to the applicable withholding agent under penalties of perjury that it is not a U.S. person and provides its name and address; (2) a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business and holds the debt security on behalf of the non-U.S. holder certifies to the applicable withholding agent under penalties of perjury that it, or the financial institution between it and the non-U.S. holder, has received from the non-U.S. holder a statement under penalties of perjury that such holder is not a U.S. person and provides the applicable withholding agent with a copy of such statement; or (3) the non-U.S. holder holds its debt security directly through a “qualified intermediary” (within the meaning of the applicable Treasury Regulations) and certain conditions are satisfied.
Item 1. Business General Welltower Inc. (NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience.
Item 1. Business General Welltower Inc. (NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of healthcare infrastructure. The company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall healthcare experience.
There is a risk under these payment systems that costs will exceed the fixed payments, or that payments may be set below the costs to provide certain items and services. The HHS Office of Inspector General has released recommendations to address skilled nursing facility ("SNF") billing practices and Medicare payment rates, which may impact our tenants and operators.
There is a risk under these payment systems that costs will exceed the fixed payments, or that payments may be set below the costs to provide certain items and services. The HHS Office of Inspector General ("OIG") has released recommendations to address skilled nursing facility ("SNF") billing practices and Medicare payment rates, which may impact our tenants and operators.
If the redemption or repurchase of shares is not treated as a distribution, it will be treated as a taxable sale or exchange in the manner described above under “- Sale of Our Stock.” 23 Taxation of Holders of Debt Securities of the Company or Welltower OP The following summary describes the material U.S. federal income tax consequences of acquiring, owning and disposing of debt securities of the Company or Welltower OP.
If the redemption or repurchase of shares is not treated as a distribution, it will be treated as a taxable sale or exchange in the manner described above under “- Sale of Our Stock.” Taxation of Holders of Debt Securities of the Company or Welltower OP The following summary describes the material U.S. federal income tax consequences of acquiring, owning and disposing of debt securities of the Company or Welltower OP.
Geographic Concentrations Please see “Item 2 – Properties” below and Note 18 to our consolidated financial statements. 8 Certain Government Regulations United States Health Law Matters — Generally Typically, operators of seniors housing facilities do not receive significant funding from government programs and are largely subject to state laws, as opposed to federal laws.
Geographic Concentrations Please see “Item 2 – Properties” below and Note 18 to our consolidated financial statements. Certain Government Regulations United States Health Law Matters — Generally Typically, operators of seniors housing facilities do not receive significant funding from government programs and are largely subject to state laws, as opposed to federal laws.
A publicly traded partnership will not, however, be treated as a corporation for any taxable year if 90% or more of the partnership’s gross income for such year consists of certain passive-type income, including (as may be relevant here) real property rents, gains from the sale or other disposition of real property, interest, and dividends (the “90% Passive Income Exception”).
A publicly traded partnership will not, however, be treated as a corporation for any taxable year if 90% or more of the partnership’s gross 25 income for such year consists of certain passive-type income, including (as may be relevant here) real property rents, gains from the sale or other disposition of real property, interest and dividends (the “90% Passive Income Exception”).
Rents received by us will qualify as “rents from real property” for purposes of satisfying the gross income tests for a REIT only if several conditions are met: • The amount of rent must not be based in whole or in part on the income or profits of any person, although rents generally will not be excluded merely because they are based on a fixed percentage or percentages of receipts or sales. • Rents received from a tenant will not qualify as rents from real property if the REIT, or an owner of 10% or more of the REIT, directly or constructively owns 10% or more of the tenant, unless the tenant is our taxable REIT subsidiary and certain other requirements are met with respect to the real property being rented. • If rent attributable to personal property leased in connection with a lease of real property is greater than 15% of the total rent received under the lease, then the portion of rent attributable to such personal property will not qualify as “rents from real property.” • For rents to qualify as rents from real property, we generally must not furnish or render services to tenants, other than through a taxable REIT subsidiary or an “independent contractor” from whom we derive no income, except that we may directly provide services that are usually or customarily rendered in the geographic area in which the property is located in connection with the rental of real property for occupancy only or are not otherwise considered rendered to the occupant for the occupant’s convenience. • We may lease “qualified health care properties” on an arm’s-length basis to a taxable REIT subsidiary if the property is operated on behalf of such subsidiary by a person that qualifies as an “independent contractor” and that is, or is related to a person that is, actively engaged in the trade or business of operating health care facilities for any person unrelated to us or our taxable REIT subsidiary (such person, an “eligible independent contractor”).
Rents received by us will qualify as “rents from real property” for purposes of satisfying the gross income tests for a REIT only if several conditions are met: • The amount of rent must not be based in whole or in part on the income or profits of any person, although rents generally will not be excluded merely because they are based on a fixed percentage or percentages of receipts or sales. • Rents received from a tenant will not qualify as rents from real property if the REIT, or an owner of 10% or more of the REIT, directly or constructively owns 10% or more of the tenant, unless the tenant is our taxable REIT subsidiary and certain other requirements are met with respect to the real property being rented. • If rent attributable to personal property leased in connection with a lease of real property is greater than 15% of the total rent received under the lease, then the portion of rent attributable to such personal property will not qualify as “rents from real property.” • For rents to qualify as rents from real property, we generally must not furnish or render services to tenants, other than through a taxable REIT subsidiary or an “independent contractor” from whom we derive no income, except that we may directly provide services that are usually or customarily rendered in the geographic area in which the property is located in connection with the rental of real property for occupancy only or are not otherwise considered rendered to the occupant for the occupant’s convenience. • We may lease “qualified healthcare properties” on an arm’s-length basis to a taxable REIT subsidiary if the property is operated on behalf of such subsidiary by a person that qualifies as an “independent contractor” and that is, or is related to a person that is, actively engaged in the trade or business of operating healthcare facilities for any person unrelated to us or our taxable REIT subsidiary (such person, an “eligible independent contractor”).
In addition, this discussion is limited to persons purchasing the debt securities for cash at original issue and at their original “issue price” within the meaning of Section 1273 of the Code (i.e., the first price at which a substantial amount of the debt securities is sold to the public for cash). U.S. Holders Payments of Interest.
In addition, this discussion is limited to persons purchasing the debt securities for cash at original issue and at their original “issue price” within the meaning of Section 1273 of the Code (i.e., the first price at which a substantial amount of the debt securities is sold to the public for cash). 22 U.S. Holders Payments of Interest.
See “Distributions Generally.” A U.S. holder’s adjusted tax basis in the redeemed or repurchased shares generally will be transferred to the holder’s remaining shares 20 of our stock, if any. If a U.S. holder owns no other shares of our stock, under certain circumstances, such basis may be transferred to a related person or it may be lost entirely.
See “Distributions Generally.” A U.S. holder’s adjusted tax basis in the redeemed or repurchased shares generally will be transferred to the holder’s remaining shares of our stock, if any. If a U.S. holder owns no other shares of our stock, under certain circumstances, such basis may be transferred to a related person or it may be lost entirely.
Seniors apartments generally do not offer other additional services such as meals. 2 Independent Living and Independent Supportive Living (Canada) Independent living and independent supportive living generally refers to age-restricted, multifamily properties with central dining that provide residents access to meals and other services such as housekeeping, linen service, transportation and social and recreational activities.
Seniors apartments generally do not offer other additional services such as meals. Independent Living and Independent Supportive Living (Canada) Independent living and independent supportive living generally refers to age-restricted, multifamily properties with central dining that provide residents access to meals and other services such as housekeeping, linen service, transportation, social and recreational activities.
Thus, we may be able to avoid being disqualified as a REIT and/or taxed on amounts distributed as deficiency dividends; however, we will be required to pay applicable penalties and interest based upon the amount of any deduction taken for deficiency dividend distributions.
Thus, we may be able to avoid being disqualified as a REIT and/or taxed on amounts distributed as deficiency dividends; however, we will be required to pay applicable penalties and interest based on the amount of any deduction taken for deficiency dividend distributions.
We believe this bundling feature benefits us because the tenant cannot limit the purchase or renewal to better performing properties and terminate the leasing arrangement with respect to poorer performing properties. This spreads our risk among the entire group of 4 properties within the master lease.
We believe this bundling feature benefits us because the tenant cannot limit the purchase or renewal to better performing properties and terminate the leasing arrangement with respect to poorer performing properties. This spreads our risk among the entire group of properties within the master lease.
Due to the significant judgments and estimates inherent in payor settlement accounting, no assurance can be given as to the adequacy of any reserves maintained by our property operators to cover potential adjustments to reimbursements or to cover settlements made to payors. ◦ Medicare Reimbursement Generally, long-term/post-acute care facilities are reimbursed by Medicare under prospective payment systems, which generally provide reimbursement based upon a predetermined fixed amount per episode of care and are updated by the Centers for Medicare and Medicaid Services ("CMS"), an agency of the Department of Health and Human Services (“HHS”) annually.
Due to the significant judgments and estimates inherent in payor settlement accounting, no assurance can be given as to the adequacy of any reserves maintained by our property operators to cover potential adjustments to reimbursements or to cover settlements made to payors. ◦ Medicare Reimbursement Generally, long-term/post-acute care facilities are reimbursed by Medicare under prospective payment systems, which generally provide reimbursement based on a predetermined fixed amount per episode of care and are updated by the Centers for Medicare and Medicaid Services ("CMS"), an agency of the Department of Health and Human Services (“HHS”) annually.
The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest inclusive of transaction costs. We evaluate our equity method investments for impairment based upon a comparison of the estimated fair value of the equity method investment to its carrying value.
The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest, inclusive of transaction costs. We evaluate our equity method investments for impairment based on a comparison of the estimated fair value of the equity method investment to its carrying value.
This summary does not address all aspects of taxation that may be relevant to certain types of holders of stock or securities (including, but not limited to, insurance companies, tax-exempt entities, financial institutions or broker-dealers, persons holding shares of common stock as part of a hedging, integrated conversion, or constructive sale transaction or a straddle, traders in securities that use a mark-to-market method of accounting for their securities, investors in pass-through entities and non-U.S. corporations and persons who are not citizens or residents of the United States).
This summary does not address all aspects of taxation that may be relevant to certain types of holders of stock or securities (including, but not limited to, insurance companies, tax-exempt entities, financial institutions or broker-dealers, persons holding shares of common stock as part of a hedging, integrated conversion, or constructive sale transaction or a straddle, traders in securities that use a mark-to-market method of accounting for their securities, investors in pass-through entities and non-U.S. corporations and persons who are not citizens or residents of the U.S.).
A U.S. holder that receives common stock pursuant to such distribution generally has a tax basis in such common stock equal to the amount of cash that could have been received instead of such common stock as described above, and has a holding period in such common stock that begins on the day immediately following the payment date for the distribution. 19 Capital Gain Dividends Dividends that we properly designate as capital gain dividends will be taxable to our taxable U.S. holders as a gain from the sale or disposition of a capital asset held for more than one year, to the extent that such gain does not exceed our actual net capital gain for the taxable year.
A U.S. holder that receives common stock pursuant to such distribution generally has a tax basis in such common stock equal to the amount of cash that could have been received instead of such common stock as described above, and has a holding period in such common stock that begins on the day immediately following the payment date for the distribution. 18 Capital Gain Dividends Dividends that we properly designate as capital gain dividends will be taxable to our taxable U.S. holders as a gain from the sale or disposition of a capital asset held for more than one year, to the extent that such gain does not exceed our actual net capital gain for the taxable year.
In addition, except where specifically noted, it does not address consequences relevant to holders subject to special rules, including, without limitation: • U.S. expatriates and former citizens or long-term residents of the United States; • U.S. holders (as defined below) whose functional currency is not the U.S. dollar; • persons holding stock or debt securities as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment; • banks, insurance companies, and other financial institutions; • REITs or regulated investment companies; • brokers, dealers or traders in securities; • “controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax; • S corporations, partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein); • tax-exempt organizations or governmental organizations; • persons subject to special tax accounting rules as a result of any item of gross income with respect to stock or debt securities being taken into account in an applicable financial statement; • persons deemed to sell stock or debt securities under the constructive sale provisions of the Code; and • persons who hold or receive our stock pursuant to the exercise of any employee stock option or otherwise as compensation. 18 THIS DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED AS TAX ADVICE.
In addition, except where specifically noted, it does not address consequences relevant to holders subject to special rules, including, without limitation: • U.S. expatriates and former citizens or long-term residents of the U.S.; • U.S. holders (as defined below) whose functional currency is not the U.S. dollar; • persons holding stock or debt securities as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment; • banks, insurance companies and other financial institutions; • REITs or regulated investment companies; • brokers, dealers or traders in securities; • “controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax; • S corporations, partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein); • tax-exempt organizations or governmental organizations; • persons subject to special tax accounting rules as a result of any item of gross income with respect to stock or debt securities being taken into account in an applicable financial statement; • persons deemed to sell stock or debt securities under the constructive sale provisions of the Code; and • persons who hold or receive our stock pursuant to the exercise of any employee stock option or otherwise as compensation. 17 THIS DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED AS TAX ADVICE.
If this is the case, the rent that the REIT receives from the taxable REIT subsidiary generally will be treated as “rents from real property.” A “qualified health care property” includes any real property and any personal property that is, or is necessary or incidental to the use of, a hospital, nursing facility, assisted living facility, congregate care facility, qualified continuing care facility, or other licensed facility that extends medical or nursing or ancillary services to patients and is operated by a provider of such services that is eligible for participation in the Medicare program with respect to such facility.
If this is the case, the rent that the REIT receives from the taxable REIT subsidiary generally will be treated as “rents from real property.” A “qualified healthcare property” includes any real property and any personal property that is, or is necessary or incidental to the use of, a hospital, nursing facility, assisted living facility, congregate care facility, qualified continuing care facility, or other licensed facility that extends medical or nursing or ancillary services to patients and is operated by a provider of such services that is eligible for participation in the Medicare program with respect to such facility.
A non-U.S. holder described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on gain realized upon the sale or other taxable disposition of a debt security, which may be offset by U.S. source capital losses of the non-U.S. holder (even though the individual is not considered a resident of the United States), provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.
A non-U.S. holder described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on gain realized upon the sale or other taxable disposition of a debt security, which may be offset by U.S. source capital losses of the non-U.S. holder (even though the individual is not considered a resident of the U.S.), provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.
If gain on the sale, exchange or other taxable disposition of our stock were subject to taxation under FIRPTA or otherwise as a result of being effectively connected with the conduct by the non-U.S. holder of a trade or business within the United States, the non-U.S. holder would be required to file a U.S. federal income tax return and would be subject to regular U.S. federal income tax with respect to such gain in the same manner as a taxable U.S. holder (subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals).
If gain on the sale, exchange or other taxable disposition of our stock were subject to taxation under FIRPTA or otherwise as a result of being effectively connected with the conduct by the non-U.S. holder of a trade or business within the U.S., the non-U.S. holder would be required to file a U.S. federal income tax return and would be subject to regular U.S. federal income tax with respect to such gain in the same manner as a taxable U.S. holder (subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals).
In addition, proceeds of the sale or other taxable disposition of such stock or debt securities (including a retirement or redemption of a debt security) within the United States or conducted through certain U.S.-related brokers generally will not be subject to backup withholding or information reporting if the applicable withholding agent receives the certification described above and does not have actual knowledge or reason to know that such holder is a United States person, or the holder otherwise establishes an exemption.
In addition, proceeds of the sale or other taxable disposition of such stock or debt securities (including a retirement or redemption of a debt security) within the U.S. or conducted through certain U.S.-related brokers generally will not be subject to backup withholding or information reporting if the applicable withholding agent receives the certification described above and does not have actual knowledge or reason to know that such holder is a U.S. person, or the holder otherwise establishes an exemption.
Holders Payments of dividends on stock of the Company or interest on debt securities of the Company or Welltower OP generally will not be subject to backup withholding, provided the applicable withholding agent does not have actual knowledge or reason to know the holder is a United States person and the holder either certifies its non-U.S. status, such as by furnishing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI, or otherwise establishes an exemption.
Holders Payments of dividends on stock of the Company or interest on debt securities of the Company or Welltower OP generally will not be subject to backup withholding, provided the applicable withholding agent does not have actual knowledge or reason to know the holder is a U.S. person and the holder either certifies its non-U.S. status, such as by furnishing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI, or otherwise establishes an exemption.
However, any distribution with respect to any class of stock that is “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market located in the United States is not subject to FIRPTA, and therefore, not subject to the 21% U.S. withholding tax described above, if the non-U.S. holder did not own more than 10% of such class of stock at any time during the one-year period ending on the date of the distribution.
However, any distribution with respect to any class of stock that is “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market located in the U.S. is not subject to FIRPTA, and therefore, not subject to the 21% U.S. withholding tax described above, if the non-U.S. holder did not own more than 10% of such class of stock at any time during the one-year period ending on the date of the distribution.
We are not involved in property management. Long-Term/Post-Acute Care Facilities Post-acute care is at the leading edge of reducing health care costs while improving quality. These high-impact centers help patients recover from illness or surgery with the goals of getting the patient home and healed faster and reducing hospital readmission rates.
We are not involved in property management. Long-Term/Post-Acute Care Facilities Post-acute care is at the leading edge of reducing healthcare costs while improving quality. These high-impact centers help patients recover from illness or surgery with the goals of getting the patient home and healed faster and reducing hospital readmission rates.
To claim such entitlement, the non-U.S. holder must provide the applicable withholding agent with a properly executed IRS Form W-8BEN or W-8BEN-E (or other applicable documentation) claiming a reduction in or exemption from withholding tax under the benefit of an income tax treaty between the United States and the country in which the non-U.S. holder resides or is established.
To claim such entitlement, the non-U.S. holder must provide the applicable withholding agent with a properly executed IRS Form W-8BEN or W-8BEN-E (or other applicable documentation) claiming a reduction in or exemption from withholding tax under the benefit of an income tax treaty between the U.S. and the country in which the non-U.S. holder resides or is established.
In certain circumstances, violation of these rules (such as those prohibiting abusive and fraudulent behavior) with respect to one property may subject other facilities under common control or ownership to sanctions, including exclusion from participation in the Medicare and Medicaid programs, as well as other government health care programs, and revocation of healthcare licenses.
In certain circumstances, violation of these rules (such as those prohibiting abusive and fraudulent behavior) with respect to one property may subject other facilities under common control or ownership to sanctions, including exclusion from participation in the Medicare and Medicaid programs, as well as other government healthcare programs and revocation of healthcare licenses.
Our corporate responsibility and sustainability strategy is focused on adopting leading ESG practices across our business and we were recognized for our leadership in this space over the past year in the following ways: • Achieved a MSCI ESG rating of AA; • Recognized by the U.S. Environmental Protection Agency (EPA) and U.S.
Our corporate responsibility and sustainability strategy is focused on adopting leading sustainability practices across our business and we were recognized for our leadership in this space over the past year in the following ways: • Achieved a MSCI ESG ("Environmental, Social and Governance") rating of AA; • Recognized by the U.S. Environmental Protection Agency (EPA) and U.S.
To claim the exemption, the non-U.S. holder must furnish to the applicable withholding agent a valid IRS Form W-8ECI, certifying that interest paid on a debt security is not subject to withholding tax because it is effectively connected with the conduct by the non-U.S. holder of a trade or business within the United States.
To claim the exemption, the non-U.S. holder must furnish to the applicable withholding agent a valid IRS Form W-8ECI, certifying that interest paid on a debt security is not subject to withholding tax because it is effectively connected with the conduct by the non-U.S. holder of a trade or business within the U.S.
Fraud & Abuse Enforcement Long-term/post-acute care facilities (and seniors housing facilities that receive Medicaid payments) are subject to federal, state, and local laws, regulations, and applicable guidance that govern the operations and financial and other arrangements that may be entered into by health care providers.
Fraud & Abuse Enforcement Long-term/post-acute care facilities (and seniors housing facilities that receive Medicaid payments) are subject to federal, state and local laws, regulations and applicable guidance that govern the operations and financial and other arrangements that may be entered into by healthcare providers.
In addition, the Medicare and Children’s Health Insurance Program Reauthorization Act of 2015 (“MACRA”) includes payment reductions for providers who do not meet 10 government quality standards. The implementation of pay-for-quality models like those required under MACRA has the potential to produce funding disparities that could adversely impact some provider tenants in outpatient medical buildings and other health care properties.
In addition, the Medicare and Children’s Health Insurance Program Reauthorization Act of 2015 (“MACRA”) includes payment reductions for providers who do not meet government quality standards. The implementation of pay-for-quality models like those required under MACRA, has the potential to produce funding disparities that could adversely impact some provider tenants in outpatient medical buildings and other healthcare properties.
We work with our stakeholders, including employees, vendors, operators, residents, and tenants, in an effort to meet these objectives by encouraging and following evolving practices of environmental sustainability, including benchmarking our portfolio in ENERGY STAR Portfolio Manager, obtaining green building certifications, implementing green technologies, and performing portfolio-wide physical and transition risk analysis to identify opportunities to help mitigate these risks.
We work with our stakeholders, including employees, vendors, operators, residents and tenants, in an effort to meet these objectives by encouraging and following evolving practices of environmental sustainability, including benchmarking our portfolio in ENERGY STAR Portfolio Manager, obtaining green building certifications, implementing energy efficient technologies and performing portfolio-wide physical and transition risk analyses to identify opportunities to help mitigate these risks.
This legislation subjects service providers to a number of legally binding “Fundamental Standards” and requires, amongst other things, that all persons carrying out “Regulated Activities” in the U.K., and the managers of such persons, be registered.
This legislation subjects service providers to a number of legally binding “Fundamental Standards” and requires, among other things, that all persons carrying out “Regulated Activities” in the U.K., and the managers of such persons, be registered.
The failure of a subsidiary of ours to qualify as a taxable REIT subsidiary as a result of operating a lodging facility or a health care facility could have an adverse effect on the Company’s ability to comply with the REIT income and asset tests, and thus could impair the Company’s ability to qualify as a REIT unless the Company could avail itself of certain relief provisions under the Code and pay any tax resulting therefrom.
The failure of a subsidiary of ours to qualify as a taxable REIT subsidiary as a result of operating a lodging facility or a healthcare facility could have an adverse effect on the Company’s ability to comply with the REIT income and asset tests, and thus could impair the Company’s ability to qualify as a REIT unless the Company could avail itself of certain relief provisions under the Code and pay any tax resulting therefrom.
In addition, states may also have separate false claims acts, which, among other things, generally prohibit health care providers from filing false claims or making false statements to receive payments. Federal and state FCAs contain "whistleblower" provisions that permit private individuals to bring health care fraud enforcement claims on behalf of the government.
In addition, states may also have separate false claims acts, which, among other things, generally prohibit healthcare providers from filing false claims or making false statements to receive payments. Federal and state FCAs contain "whistleblower" provisions that permit private individuals to bring healthcare fraud enforcement claims on behalf of the government.
Except as noted below with respect to a corporate entity that operates a health care or lodging facility, we and any taxable corporate entity in which we own an interest, directly or indirectly, are allowed to jointly elect to treat such entity as a “taxable REIT subsidiary.” Certain of our subsidiaries have elected or will elect taxable REIT subsidiary status.
Except as noted below with respect to a corporate entity that operates a healthcare or lodging facility, we and any taxable corporate entity in which we own an interest, directly or indirectly, are allowed to jointly elect to treat such entity as a “taxable REIT subsidiary.” Certain of our subsidiaries have elected or will elect taxable REIT subsidiary status.
Portfolio of Properties Please see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operation – Executive Summary – Company Overview” for a table that summarizes our portfolio as of December 31, 2023.
Portfolio of Properties Please see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operation – Executive Summary – Company Overview” for a table that summarizes our portfolio as of December 31, 2024.
Competition We compete with other real estate investment trusts, real estate partnerships, private equity and hedge fund investors, banks, insurance companies, finance/investment companies, government-sponsored agencies, taxable and tax-exempt bond funds, health care operators, developers and other investors in the acquisition, development, leasing and financing of health care and seniors housing properties.
Competition We compete with other real estate investment trusts, real estate partnerships, private equity and hedge fund investors, banks, insurance companies, finance/investment companies, government-sponsored agencies, taxable and tax-exempt bond funds, healthcare operators, developers and other investors in the acquisition, development, leasing and financing of healthcare and seniors housing properties.
In addition, as described below, operators of these facilities are subject to extensive laws and regulations pertaining to health care fraud and abuse, including, but not limited to, the federal Anti-Kickback Statute (“AKS”), the federal Stark Law (“Stark Law”), and the federal False Claims Act (“FCA”), as well as comparable state laws.
In addition, as described below, operators of these facilities are subject to extensive laws and regulations pertaining to healthcare fraud and abuse, including, but not limited to, the federal Anti-Kickback Statute (“AKS”), the federal Stark Law (“Stark Law”) and the federal False Claims Act (“FCA”), as well as comparable state laws.
Federal and state authorities have considered and implemented and may continue seeking to implement new or modified reimbursement methodologies, including value-based reimbursement methodologies that may negatively impact health care property operations. Likewise, third-party payors may continue imposing greater controls on operators, including through changes in reimbursement rates and fee structures.
Federal and state authorities have considered and implemented and may continue seeking to implement new or modified reimbursement methodologies, including value-based reimbursement methodologies that may negatively impact healthcare property operations. Likewise, third-party payors may continue imposing greater controls on operators, including through changes in reimbursement rates and fee structures.
Hospitals, physician group practice clinics, and other health care providers that operate in our portfolio are subject to extensive federal, state, and local licensure, registration, certification, and inspection laws, regulations, and industry standards, as well as other conditions of participation in federal and state government programs such as Medicare and Medicaid.
Hospitals, physician group practice clinics and other healthcare providers that operate in our portfolio are subject to extensive federal, state and local licensure, registration, certification and inspection laws, regulations and industry standards, as well as other conditions of participation in federal and state government programs such as Medicare and Medicaid.
The costs to a business such as ours or to an operator of a health care property associated with developing and maintaining programs and systems to comply with data privacy and security laws, defending against privacy and security related claims or enforcement actions and paying any assessed fines, can be substantial.
The costs to a business such as ours or to an operator of a healthcare property associated with developing and maintaining programs and systems to comply with data privacy and security laws, defending against privacy and security related claims or enforcement actions and paying any assessed fines, can be substantial.
Our stock will not, however, constitute a USRPI so long as we are a “domestically controlled qualified investment entity.” A “domestically controlled qualified investment entity” includes a REIT in which at all times during a five-year testing period less than 50% in value of its stock is held directly or indirectly by non-United States persons, subject to certain rules.
Our stock will not, however, constitute a USRPI so long as we are a “domestically controlled qualified investment entity.” A “domestically controlled qualified investment entity” includes a REIT in which at all times during a five-year testing period less than 50% in value of its stock is held directly or indirectly by non-U.S. persons, subject to certain rules.
Sanctions for violations of these laws, regulations and other applicable guidance may include, but are not limited to, criminal and/or civil penalties and fines, loss of licensure, immediate termination of government payments, exclusion from any government health care program, damage assessments and imprisonment.
Sanctions for violations of these laws, regulations and other applicable guidance may include, but are not limited to, criminal and/or civil penalties and fines, loss of licensure, immediate termination of government payments, exclusion from any government healthcare program, damage assessments and imprisonment.
Distributions Generally Distributions (including any taxable stock distributions) that are neither attributable to gains from sales or exchanges by us of United States real property interests (“USRPIs”) nor designated by us as capital gain dividends (except as described below) will be treated as dividends of ordinary income to the extent that they are made out of our current or accumulated earnings and profits.
Distributions Generally Distributions (including any taxable stock distributions) that are neither attributable to gains from sales or exchanges by us of U.S. real property interests (“USRPIs”) nor designated by us as capital gain dividends (except as described below) will be treated as dividends of ordinary income to the extent that they are made out of our current or accumulated earnings and profits.
Our tenants’ failure to comply with applicable laws and regulations could result in, among other things: loss of accreditation; denial of reimbursement; imposition of fines; suspension, decertification, or exclusion from federal and state health care programs; loss of license; or closure of the facility.
Our tenants’ failure to comply with applicable laws and regulations could result in, among other things: loss of accreditation; denial of reimbursement; imposition of fines; suspension, decertification or exclusion from federal and state healthcare programs; loss of license; or closure of the facility.
The costs for an operator of a health care property associated with both defending such enforcement actions and the undertakings in settling these actions can be substantial and could have a material adverse effect on the ability of an operator to meet its obligations to us.
The costs for an operator of a healthcare property associated with both defending such enforcement actions and the undertakings in settling these actions can be substantial and could have a material adverse effect on the ability of an operator to meet its obligations to us.
A taxable REIT subsidiary does not include any corporation that directly or indirectly operates or manages a lodging facility or a health care facility unless such facility is operated on behalf of such subsidiary by a person that is an independent contractor and certain other requirements are met.
A taxable REIT subsidiary does not include any corporation that directly or indirectly operates or manages a lodging facility or a healthcare facility unless such facility is operated on behalf of such subsidiary by a person that is an independent contractor, and certain other requirements are met.
Property Types We invest in seniors housing and health care real estate and evaluate our business through three reportable segments: Seniors Housing Operating, Triple-net and Outpatient Medical. For additional information regarding our segments, please see Note 18 to our consolidated financial statements.
Property Types We invest in seniors housing and healthcare real estate and evaluate our business through three reportable segments: Seniors Housing Operating, Triple-net and Outpatient Medical. For additional information regarding our segments, please see Note 18 to our consolidated financial statements.
Our operators and tenants that receive payments from federal health care programs, such as Medicare and Medicaid, are subject to substantial financial penalties under the Civil Monetary Penalties Act and the FCA upon a finding of noncompliance with such laws.
Our operators and tenants that receive payments from federal healthcare programs, such as Medicare and Medicaid, are subject to substantial financial penalties under the Civil Monetary Penalties Act and the FCA upon a finding of noncompliance with such laws.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules. Under the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of dividends on stock of the Company or interest on debt securities of the Company or Welltower OP.
Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the U.S. governing FATCA may be subject to different rules. Under the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of dividends on stock of the Company or interest on debt securities of the Company or Welltower OP.
Our entities are named on licenses for nearly all of the RIDEA portfolio and the loss of a license for one facility can require reporting in other jurisdictions. Reimbursement The reimbursement methodologies applied to health care facilities continue to evolve.
Our entities are named on licenses for nearly all of the RIDEA portfolio and the loss of a license for one facility can require reporting in other jurisdictions. Reimbursement The reimbursement methodologies applied to healthcare facilities continue to evolve.
Environmental We are committed to operating in a sustainable manner that helps to reduce the Company’s environmental impact. Our goal is prudent environmental stewardship with a focus on reducing our greenhouse gas emissions, energy consumption, water usage, and waste production; mitigating climate change risks; and implementing energy efficiency, water efficiency, and renewable energy technologies across our portfolio.
We are committed to operating in a sustainable manner that helps to reduce our environmental impact. Our goal is prudent environmental stewardship with a focus on reducing our greenhouse gas emissions, energy consumption, water usage and waste production; mitigating climate-related risks; and implementing energy efficiency, water efficiency and renewable energy technologies across our portfolio.
Certain of these laws, such as the AKS and Stark Law, prohibit direct or indirect payments of any kind for the purpose of inducing or encouraging the referral of patients for medical products or services reimbursable by government health care programs.
Certain of these laws, such as the AKS and Stark Law, prohibit direct or indirect payments of any kind for the purpose of inducing or encouraging the referral of patients for medical products or services reimbursable by government healthcare programs.
We also face competition from other health care facilities for tenants, such as physicians and other health care providers that provide comparable facilities and services. For additional information on the risks associated with our business, please see “Item 1A — Risk Factors” of this Annual Report on Form 10-K.
We also face competition from other healthcare facilities for tenants, such as physicians and other healthcare providers that provide comparable facilities and services. 5 For additional information on the risks associated with our business, please see “Item 1A — Risk Factors” of this Annual Report on Form 10-K.
Accordingly, there can be no assurance that payments under a government health care program are currently, or will be in the future, sufficient to fully reimburse the property operators for their operating and capital expenses. 9 • Seniors Housing Facilities The majority of the revenues received by the operators of U.S. seniors housing facilities are from private pay sources.
Accordingly, there can be no assurance that 8 payments under a government healthcare program are currently, or will be in the future, sufficient to fully reimburse the property operators for their operating and capital expenses. • Seniors Housing Facilities The majority of the revenues received by the operators of U.S. seniors housing facilities are from private pay sources.
This information will make it easier for stakeholders (such as state licensing officials, state and federal law enforcement and researchers) and the public to identify common owners of nursing homes across different nursing home locations. The information will also allow for greater accessibility to information regarding facilities' performance and any common ownership links among facilities with poor performance.
This information makes it easier for stakeholders (such as state licensing officials, state and federal law enforcement and researchers) and the public to identify common owners of nursing homes across different nursing home locations. The information also allows for greater accessibility to information regarding facilities' performance and any common ownership links among facilities with poor performance.
In September 2021, the province of Quebec adopted significant amendments to its privacy legislation, including a new enforcement scheme with significant penalties and fines: up to CAD $10 million or 2% of global turnover (whichever is greater) for administrative monetary penalties and up to CAD $25 million or 4% of global turnover for penal fines.
In September 2021, the province of Quebec adopted significant amendments to its privacy legislation (each of which are now in effect), including a new enforcement scheme with significant penalties and fines: up to CAD $10 million or 2% of global turnover (whichever is greater) for administrative monetary penalties and up to CAD $25 million or 4% of global turnover for penal fines.
See Note 19 to our consolidated financial statements for additional information regarding the built-in gains tax. 13 Qualification as a REIT A REIT is defined as a corporation, trust or association: (1) which is managed by one or more trustees or directors; (2) the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest; (3) which would be taxable as a domestic corporation but for the U.S. federal income tax law relating to REITs; (4) which is neither a financial institution nor an insurance company; (5) the beneficial ownership of which is held by 100 or more persons in each taxable year of the REIT except for its first taxable year; (6) not more than 50% in value of the outstanding stock of which is owned during the last half of each taxable year, excluding its first taxable year, directly, indirectly or constructively, by or for five or fewer individuals (which includes certain entities) (the “Five or Fewer Requirement”); and (7) which meets certain income and asset tests described below.
Qualification as a REIT A REIT is defined as a corporation, trust or association: (1) which is managed by one or more trustees or directors; (2) the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest; (3) which would be taxable as a domestic corporation but for the U.S. federal income tax law relating to REITs; (4) which is neither a financial institution nor an insurance company; (5) the beneficial ownership of which is held by 100 or more persons in each taxable year of the REIT except for its first taxable year; (6) not more than 50% in value of the outstanding stock of which is owned during the last half of each taxable year, excluding its first taxable year, directly, indirectly or constructively, by or for five or fewer individuals (which includes certain entities) (the “Five or Fewer Requirement”); and (7) which meets certain income and asset tests described below.
For purposes of determining whether a REIT is a “domestically controlled qualified investment entity,” a person who at all applicable times holds less than 5% of a class of stock that is “regularly traded” is treated as a United States person unless the REIT has actual knowledge that such person is not a United States person.
For purposes of determining whether a REIT is a 21 “domestically controlled qualified investment entity,” a person who at all applicable times holds less than 5% of a class of stock that is “regularly traded” is treated as a U.S. person unless the REIT has actual knowledge that such person is not a U.S. person.
In addition, government investigations and enforcement actions brought against the health care industry have increased dramatically over the past several years and are expected to continue.
In addition, government investigations and enforcement actions brought against the healthcare industry have increased dramatically over the past several years and are expected to continue.
Environmental, Social and Governance Environmental, Social and Governance ("ESG") Approach We strive to operate in a responsible, transparent and sustainable manner. Our leadership, through the cross-functional ESG Steering Committee and the Board of Directors (the "Board"), through the Nominating Corporate/Governance Committee, oversees and advances our ESG initiatives.
Sustainability Sustainability Approach We strive to operate in a responsible, transparent and sustainable manner. Our leadership, through the cross-functional Sustainability Steering Committee and the Board of Directors (the "Board"), through the Nominating Corporate/Governance Committee, oversees and advances our sustainability initiatives.
Our leases typically include increasers and some form of operating expense reimbursement by the tenant. As of December 31, 2023, 62% of our portfolio included leases with full pass through, 31% with a partial expense reimbursement (modified gross) and 7% with no expense reimbursement (gross).
Our leases typically include increasers and some form of operating expense reimbursement by the tenant. As of December 31, 2024, 63% of our portfolio included leases with full pass through, 30% with a partial expense reimbursement (modified gross) and 7% with no expense reimbursement (gross).
For example, certain health care facilities are subject to a variety of licensure and certificate of need (“CON”) laws and regulations.
For example, certain healthcare facilities are subject to a variety of licensure and certificate of need (“CON”) laws and regulations.
For violations of any of the REIT asset tests due to reasonable cause and not willful neglect that exceed the thresholds described in the preceding sentence, a REIT can avoid disqualification as a REIT after the close of a taxable quarter by taking certain steps, including disposition of sufficient assets within the six month period described above to meet the applicable asset test, paying a tax equal to the greater of $50,000 or the highest corporate tax rate multiplied by the net income generated by the non-qualifying assets during the period of time that the assets were held as non-qualifying assets and filing a schedule with the Internal Revenue Service ("IRS") that describes the non-qualifying assets. 16 Investments in Taxable REIT Subsidiaries REITs may own more than 10% of the voting power and value of securities in taxable REIT subsidiaries.
For violations of any of the REIT asset tests due to reasonable cause and not willful neglect that exceed the thresholds described in the preceding sentence, a REIT can avoid disqualification as a REIT after the close of a taxable quarter by taking certain steps, including 15 disposition of sufficient assets within the six month period described above to meet the applicable asset test, paying a tax equal to the greater of $50,000 or the highest corporate tax rate multiplied by the net income generated by the non-qualifying assets during the period of time that the assets were held as non-qualifying assets and filing a schedule with the Internal Revenue Service ("IRS") that describes the non-qualifying assets.
If a redemption or repurchase of shares of our stock is not treated as a distribution, it will be treated as a taxable sale or exchange in the manner described under “Dispositions of Our Stock.” Tax Rates Currently, the maximum tax rate for non-corporate taxpayers for (1) long-term capital gains, including certain “capital gain dividends,” generally is 20% (although depending on the characteristics of the assets which produced these gains and on designations which we may make, certain capital gain dividends may be taxed at a 25% rate) and (2) “qualified dividend income” generally is 20%.
Prospective investors should consult their tax advisors regarding the U.S. federal income tax consequences of a redemption or repurchase of our stock. 19 If a redemption or repurchase of shares of our stock is not treated as a distribution, it will be treated as a taxable sale or exchange in the manner described under “Dispositions of Our Stock.” Tax Rates Currently, the maximum tax rate for non-corporate taxpayers for (1) long-term capital gains, including certain “capital gain dividends,” generally is 20% (although depending on the characteristics of the assets which produced these gains and on designations which we may make, certain capital gain dividends may be taxed at a 25% rate) and (2) “qualified dividend income” generally is 20%.
In addition, we may obtain secured financing for unleveraged properties in which we have invested or may refinance properties acquired on a leveraged basis. In certain agreements with our lenders, we are subject to restrictions with respect to secured and unsecured indebtedness.
When terms are deemed favorable, we may invest in properties subject to existing mortgage indebtedness. In addition, we may obtain secured financing for unleveraged properties in which we have invested or may refinance properties acquired on a leveraged basis. In certain agreements with our lenders, we are subject to restrictions with respect to secured and unsecured indebtedness.
This may be a result of various factors, including, but not limited to: • status of the economy; • the status of capital markets, including availability and cost of capital; • issues facing the health care industry, including compliance with, and changes to, regulations and payment policies, responding to government investigations and punitive settlements and operators’/tenants’ difficulty in cost-effectively obtaining and maintaining adequate liability and other insurance; • changes in financing terms; • competition within the health care and seniors housing industries; • negative developments in the operating results or financial condition of operators/tenants, including, but not limited to, their ability to pay rent and repay loans; • our ability to transition or sell properties with profitable results; • the failure to make new investments or acquisitions as and when anticipated; • natural disasters, health emergencies (such as the COVID-19 pandemic) and other acts of God affecting our properties; • our ability to re-lease space at similar rates as vacancies occur; • our ability to timely reinvest sale proceeds at similar rates to assets sold; • operator/tenant or joint venture partner bankruptcies or insolvencies; • the cooperation of joint venture partners; • government regulations affecting Medicare and Medicaid reimbursement rates and operational requirements; • liability or contract claims by or against operators/tenants; • unanticipated difficulties and/or expenditures relating to future investments or acquisitions; • environmental laws affecting our properties; • changes in rules or practices governing our financial reporting; • the movement of U.S. and foreign currency exchange rates; • our ability to maintain our qualification as a REIT; • key management personnel recruitment and retention; and • the risks described under “Item 1A — Risk Factors.” We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise. 29
This may be a result of various factors, including, but not limited to: • the impact of macroeconomic and geopolitical developments, including economic downturns, elevated inflation and interest rates, political or social conflict, unrest or violence or similar events; • the status of capital markets, including availability and cost of capital; • issues facing the healthcare industry, including compliance with, and changes to, regulations and payment policies, responding to government investigations and punitive settlements, public perception of the healthcare industry and operators’/tenants’ difficulty in cost-effectively obtaining and maintaining adequate liability and other insurance; • changes in financing terms; • competition within the healthcare and seniors housing industries; 27 • negative developments in the operating results or financial condition of operators/tenants, including, but not limited to, their ability to pay rent and repay loans; • our ability to transition or sell properties with profitable results; • the failure to make new investments or acquisitions as and when anticipated; • natural disasters, public health emergencies and extreme weather affecting our properties; • our ability to re-lease space at similar rates as vacancies occur; • our ability to timely reinvest sale proceeds at similar rates to assets sold; • operator/tenant or joint venture partner bankruptcies or insolvencies; • the cooperation of joint venture partners; • government regulations affecting Medicare and Medicaid reimbursement rates and operational requirements; • liability or contract claims by or against operators/tenants; • unanticipated difficulties and/or expenditures relating to future investments or acquisitions; • environmental laws affecting our properties; • changes in rules or practices governing our financial reporting; • the movement of U.S. and foreign currency exchange rates and changes to U.S. and global monetary, fiscal or trade policies; • our approach to artificial intelligence ("AI"); • our ability to maintain our qualification as a REIT; • key management personnel recruitment and retention; and • the other risks and uncertainties described under “Item 1A — Risk Factors.” We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise. 28
Notwithstanding the foregoing, gain from the sale, exchange or other taxable disposition of our stock not otherwise subject to FIRPTA will be taxable to a non-U.S. holder if either (a) the investment in our stock is treated as effectively connected with the conduct by the non-U.S. holder of a trade or business within the United States (and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the United States to which such gain is attributable), in which case the non-U.S. holder will be subject to the same treatment as U.S. holders with respect to such gain, except that a non-U.S. holder that is a corporation may also be subject to the 30% branch profits tax (or such lower rate as may be specified by an applicable income tax treaty) on such gain, as adjusted for certain items, or (b) the non-U.S. holder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and certain other conditions are met, in which case the non-U.S. holder will be subject to a 30% tax on the non-U.S. holder’s capital gains (or such lower rate specified by an applicable income tax treaty), which may be offset by U.S. source capital losses of the non-U.S. holder (even though the individual is not considered a resident of the United States), provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.
(and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the U.S. to which such gain is attributable), in which case the non-U.S. holder will be subject to the same treatment as U.S. holders with respect to such gain, except that a non-U.S. holder that is a corporation may also be subject to the 30% branch profits tax (or such lower rate as may be specified by an applicable income tax treaty) on such gain, as adjusted for certain items, or (b) the non-U.S. holder is a nonresident alien individual who is present in the U.S. for 183 days or more during the taxable year and certain other conditions are met, in which case the non-U.S. holder will be subject to a 30% tax on the non-U.S. holder’s capital gains (or such lower rate specified by an applicable income tax treaty), which may be offset by U.S. source capital losses of the non-U.S. holder (even though the individual is not considered a resident of the U.S.), provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.
GDPR imposes obligations on controllers with the potential for fines of up to 4% of annual worldwide turnover or €20 million, whichever is greater. The U.K. DP Laws may be subject to change with the introduction of the Data Protection and Digital Information ("DPDI") Bill in 2023.
GDPR imposes obligations on controllers with the potential for fines of up to 4% of annual worldwide turnover or €20 million, whichever is greater. The U.K. DP Laws may be subject to change with the introduction of the Data Use and Access ("DUA") Bill in 2024.
As of December 31, 2023, we had outstanding construction investments of $1,304,441,000 and were committed to provide additional funds of approximately $ 966,829,000 to complete construction for consolidated investment properties. We also provide for construction loans which, depending on the terms and conditions, could be treated as loans or investments in unconsolidated entities.
As of December 31, 2024, we had outstanding construction investments of $1,219,720,000 and were committed to provide additional funds of approximately $540,297,000 to complete construction for consolidated investment properties. We also provide for construction loans which, depending on the terms and conditions, could be treated as loans or investments in unconsolidated entities.
As of December 31, 2023, we had outstanding loans, net of allowances, of $1,691,706,000 with an interest yield of approximately 10.5% per annum. Our yield on loans depends upon a number of factors, including the stated interest rate, average principal amount outstanding during the term of the loan and any interest rate adjustments.
As of December 31, 2024, we had outstanding loans, net of allowances, of $2,027,586,000 with an interest yield of approximately 10.3% per annum. Our yield on loans depends upon a number of factors, including the stated interest rate, average principal amount outstanding during the term of the loan and any interest rate adjustments.
Moreover, in light of certain arrangements that Welltower may pursue with healthcare entities who are directly subject to laws and regulations pertaining to health care, and, given that certain of our arrangements are structured under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 ("RIDEA"), certain health care fraud and abuse laws and data privacy laws could apply directly to Welltower.
Moreover, in light of certain arrangements that we may pursue with healthcare entities who are directly subject to laws and regulations pertaining to healthcare, and, given that certain of our arrangements are structured under the provisions of RIDEA, certain healthcare fraud and abuse laws and data privacy laws could apply directly to Welltower.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Arising from Our Business: Our business model and the operations of our business involve risks, including those related to: • investments in and acquisitions of health care and seniors housing properties; • unknown liability exposure related to acquired properties; • competition for acquisitions may result in increased prices; • our joint venture partners; • Seniors Housing Operating properties operational risks; • our ability to terminate our management agreements with Seniors Housing Operating managers; • operational and legal risks with respect to our properties managed in RIDEA structures; • the ability of operators and tenants to make payments to us; • the impacts of severe cold and flu seasons or other widespread illnesses on occupancy; • the insolvency or bankruptcy of our tenants, operators, borrowers, managers and other obligors; • our ability to timely reinvest our sale proceeds on terms acceptable to us; • any adverse developments in the business or financial condition of Sunrise and Integra; • any failure, inability or unwillingness by Integra to satisfy obligations under their agreements with us; • ownership of property outside the U.S.; • our ability to lease or sell properties on favorable terms; • tenant, operator and manager insurance coverage; • loss of properties owned through ground leases upon breach or termination of the ground leases; • requirements of, or changes to governmental reimbursement programs, such as Medicare, Medicaid or government funding; • controls imposed on certain of our tenants who provide health care services that are reimbursed by Medicare, Medicaid and other third-party payors to reduce admissions and length of stay; • our operators’ or tenants’ failure to comply with federal, state, province, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards; • development, redevelopment and construction; • bank failures or other events affecting financial institutions; • losses caused by severe weather conditions, natural disasters or the physical effects of climate change; • costs incurred to remediate environmental contamination at our properties; • our reliance on data and technology systems and the increasing risks of cybersecurity incidents; • evolving privacy regulations; • ESG-related commitments and expectations; • our dependence on key personnel; and • Welltower's holding company status.
Biggest changeRisks Arising from Our Business: Our business model and the operations of our business involve risks, including those related to: • operational and legal risks with respect to our properties; • the ability of operators and tenants to make payments to us; • investments in and acquisitions of healthcare and seniors housing properties; • unknown liability exposure related to acquired properties; • competition for acquisitions may result in increased prices; • our joint venture partners; • our ability to replace our managers on a timely and successful basis; • the impacts of severe cold and flu seasons or other widespread illnesses or public health crises and government reaction thereto, on occupancy; • the insolvency or bankruptcy of our tenants, operators, borrowers, managers and other obligors; • ownership of property outside the U.S.; • our ability to lease or sell properties on favorable terms; • tenant, operator and manager insurance coverage; • loss of properties owned through ground leases upon breach or termination of the ground leases; • requirements of, or changes to governmental reimbursement programs, such as Medicare, Medicaid or government funding; • controls imposed on certain of our tenants who provide healthcare services that are reimbursed by Medicare, Medicaid and other third-party payors to reduce admissions and length of stay; • our operators’ or tenants’ failure to comply with federal, state, province, local and industry-regulated licensure, certification and inspection laws, regulations and standards; • unfavorable resolution of pending and future litigation matters and disputes; • development, redevelopment and construction; • bank failures or other events affecting financial institutions; • losses caused by severe weather conditions, natural disasters or the physical effects of climate change; • costs incurred to remediate environmental contamination at our properties; • our reliance on data and technology systems and the increasing risks of cybersecurity incidents; 29 • evolving privacy regulations; • Sustainability-related laws, regulations, commitments and stakeholder expectations; • our approach to AI; • negative publicity regarding the healthcare industry; • our dependence on key personnel; and • Welltower's holding company status.
Certain subsidiaries might fail to qualify or remain qualified as a REIT We own interests in a number of entities which intend to operate as REITs for U.S. federal income tax purposes, some of which we consolidate for financial reporting purposes but each of which is treated as a separate REIT for federal income tax purposes (each a “Subsidiary REIT”).
Certain subsidiaries might fail to qualify or remain qualified as a REIT We own interests in a number of entities which intend to operate as REITs for U.S. federal income tax purposes, some of which we consolidate for financial reporting purposes but each of which is treated as a separate REIT for U.S. federal income tax purposes (each a “Subsidiary REIT”).
To the extent that an operator/tenant receives a significant portion of its revenues from government payors, primarily Medicare and Medicaid, such revenues may be subject to statutory and regulatory changes, retroactive rate adjustments, recovery of program overpayments or set-offs, court decisions, administrative rulings, policy interpretations, payment or other delays by fiscal intermediaries or carriers, change-of-ownership rules, government funding restrictions (at a program level or with respect to specific facilities), any lapse in Congressional funding of the Centers for Medicare and Medicaid Services and interruption or delays in payments due to any ongoing government investigations and audits at such property.
To the extent that an operator, manager or tenant receives a significant portion of its revenues from government payors, primarily Medicare and Medicaid, such revenues may be subject to statutory and regulatory changes, retroactive rate adjustments, recovery of program overpayments or set-offs, court decisions, administrative rulings, policy interpretations, payment or other delays by fiscal intermediaries or carriers, change-of-ownership rules, government funding restrictions (at a program level or with respect to specific facilities), any lapse in Congressional funding of the Centers for Medicare and Medicaid Services and interruption or delays in payments due to any ongoing government investigations and audits at such property.
The impact to our TRSs of the Corporate Alternative Minimum Tax imposed by the Inflation Reduction Act of 2022 is uncertain and may be adverse For tax years beginning after December 31, 2022, the Inflation Reduction Act of 2022 ("IRA") imposes among other things, a 15% Corporate Alternative Minimum Tax ("Corporate AMT") on certain U.S. corporations with average adjusted financial statement income in excess of $1 billion.
The impact to our TRSs of the Corporate Alternative Minimum Tax imposed by the Inflation Reduction Act of 2022 is uncertain and may be adverse For tax years beginning after December 31, 2022, the Inflation Reduction Act of 2022 ("IRA") imposes among other things, a 15% Corporate Alternative Minimum Tax ("Corporate AMT") on certain U.S. corporations with average adjusted financial statement income (“AFSI”) in excess of $1 billion.
We cannot make any assessment as to the ultimate timing or effect any future legislative reforms may have on the financial condition of our obligors and properties. There can be no assurance that adequate reimbursement levels will be available for services provided by any property operator, whether the property receives reimbursement from Medicare, Medicaid or private payors.
We cannot make any assessment as to the ultimate timing or effect any future legislative reforms may have on the financial condition of our obligors and properties. There can be no assurance that adequate reimbursement levels will be available for services provided by any property operator or manager, whether the property receives reimbursement from Medicare, Medicaid or private payors.
All distributions are made at the discretion of our Board of Directors in accordance with Delaware law and depend on our earnings, our financial condition, debt and equity capital available to us, our expectation of our future capital requirements and operating performance, restrictive covenants in our financial and other contractual arrangements, maintenance of our REIT qualification, restrictions under Delaware law and other factors as our Board of Directors may deem relevant from time to time.
All distributions are made at the discretion of our Board in accordance with Delaware law and depend on our earnings, our financial condition, debt and equity capital available to us, our expectation of our future capital requirements and operating performance, restrictive covenants in our financial and other contractual arrangements, maintenance of our REIT qualification, restrictions under Delaware law and other factors as our Board may deem relevant from time to time.
Our tenants or borrowers are primarily responsible for the condition of the property. Moreover, we review environmental site assessments of the properties that we own or encumber prior to taking an interest in them. Those assessments are designed to meet the “all appropriate inquiry” standard, which we believe qualifies us for the innocent purchaser defense if environmental liabilities arise.
Our operators, tenants or borrowers are primarily responsible for the condition of the property. Moreover, we review environmental site assessments of the properties that we own or encumber prior to taking an interest in them. Those assessments are designed to meet the “all appropriate inquiry” standard, which we believe qualifies us for the innocent purchaser defense if environmental liabilities arise.
These laws and regulations include, among others: laws protecting consumers against deceptive practices; laws relating to the operation of our facilities and how our tenants and operators conduct their business, such as fire, health and safety, data security and privacy laws; federal and state laws affecting hospitals, clinics and other health care communities that participate in both Medicare and Medicaid that specify reimbursement rates, pricing, reimbursement procedures and limitations, quality of services and care, background checks, food service and physical plants, and similar foreign laws regulating the health care industry; resident rights laws (including abuse and neglect laws) and fraud laws; anti-kickback and physician referral laws; the Americans with Disabilities Act of 1990 and similar state and local laws; and safety and health standards set by the Occupational Safety and Health Administration or similar foreign agencies.
These laws and regulations include, among others: laws protecting consumers against deceptive practices; laws relating to the operation of our facilities and how our operators, managers and tenants conduct their business, such as fire, health and safety, data security and privacy laws; federal and state laws affecting hospitals, clinics and other healthcare communities that participate in both Medicare and Medicaid that specify reimbursement rates, pricing, reimbursement procedures and limitations, quality of services and care, background checks, food service and physical plants and similar foreign laws regulating the healthcare industry; resident rights laws (including abuse and neglect laws) and fraud laws; anti-kickback and physician referral laws; the Americans with Disabilities Act of 1990 and similar state and local laws; and safety and health standards set by the Occupational Safety and Health Administration or similar foreign agencies.
Based upon such assessments, we do not believe that any of our properties are subject to material environmental contamination. However, environmental liabilities may be present in our properties and we may incur costs to remediate contamination, which could have a material adverse effect on our business or financial condition or the business or financial condition of our obligors.
Based on such assessments, we do not believe that any of our properties are subject to material environmental contamination. However, environmental liabilities may be present in our properties and we may incur costs to remediate contamination, which could have a material adverse effect on our business or financial condition or the business or financial condition of our obligors.
Continued labor shortages or cost inflation may impact our operators' and tenants' abilities to comply with minimum staffing requirements under applicable federal and state regulations. Failure to comply with these requirements can, among other things, jeopardize a facility's compliance with the conditions of participation under relevant state and federal healthcare programs.
Labor shortages or cost inflation may impact our operators' and tenants' abilities to comply with minimum staffing requirements under applicable federal and state regulations. Failure to comply with these requirements can, among other things, jeopardize a facility's compliance with the conditions of participation under relevant state and federal healthcare programs.
To qualify as a REIT, each Subsidiary REIT must independently satisfy all of the REIT qualification requirements under the Code, together with all other rules applicable to REITs. Provided that each Subsidiary 43 REIT qualifies as a REIT, our interests in the Subsidiary REITs will be treated as qualifying real estate assets for purposes of the REIT asset tests.
To qualify as a REIT, each Subsidiary REIT must independently satisfy all of the REIT qualification requirements under the Code, together with all other rules applicable to REITs. Provided that each Subsidiary REIT qualifies as a REIT, our interests in the Subsidiary REITs will be treated as qualifying real estate assets for purposes of the REIT asset tests.
Unknown liabilities with respect to acquired properties might include: liabilities for clean-up of undisclosed environmental contamination, claims by tenants, vendors or other persons against the former owners of the properties, liabilities incurred in the ordinary course of business and claims for indemnification by general partners, directors and others indemnified by the former owners of the properties.
Unknown liabilities with respect to acquired properties might include, among others: liabilities for clean-up of undisclosed environmental contamination, claims by tenants, vendors or other persons against the former owners of the properties, liabilities incurred in the ordinary course of business and claims for indemnification by general partners, directors and others indemnified by the former owners of the properties.
Our tenants, operators and managers may not be able to maintain adequate levels of insurance and required coverages. Also, we may not be able to require the same levels of insurance coverage under our lease, management and other agreements, which could adversely affect us in the event of a significant uninsured loss.
Our tenants, operators and managers may not be able to maintain adequate levels of insurance and required coverages. Also, we may not be able to require 34 the same levels of insurance coverage under our lease, management, and other agreements, which could adversely affect us in the event of a significant uninsured loss.
In deciding whether to acquire or develop a particular property, we make assumptions regarding the expected future performance of that property. In particular, we estimate the return on our investment based on expected construction costs, lease up velocity, occupancy, rental rates, operating expenses, capital costs and future competition.
In deciding whether to acquire, develop or redevelop a particular property, we make assumptions regarding the expected future performance of that property. In particular, we estimate the return on our investment based on expected construction costs, lease up velocity, occupancy, rental rates, operating expenses, capital costs and future competition.
In the event such termination occurs mid-construction, we would likely need to engage a new service provider, which would likely result in additional costs and delays as the transition between providers occurs. The above-described factors could result in increased costs or our abandonment of these projects.
In the event such termination occurs mid-construction, we would likely need to engage a new service provider, which could result in additional costs and delays as the transition between providers occurs. 37 The above-described factors could result in increased costs or our abandonment of these projects.
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. We cannot predict how changes in the tax laws in the U.S. or foreign jurisdictions might affect our investors or 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. 44 We cannot predict how changes in the tax laws in the U.S. or foreign jurisdictions might affect our investors or us.
Despite efforts to bring our practices into compliance with these laws, we or our operators and managers may not be successful either due to internal or 40 external factors such as resource allocation limitations or a lack of cooperation among our business partners.
Despite efforts to bring our practices into compliance with these laws, we or our operators and managers may not be successful either due to internal or external factors such as resource allocation limitations or a lack of cooperation among our business partners.
A tenant, operator, borrower, manager or other obligor in bankruptcy or subject to insolvency proceedings may be able to limit or delay our ability to collect unpaid rent in the case of a lease or to receive unpaid principal and interest in the case of a loan, and to exercise other rights and remedies.
A tenant, operator, borrower, manager or other obligor in bankruptcy or subject to insolvency proceedings may be able to limit or 33 delay our ability to collect unpaid rent in the case of a lease or to receive unpaid principal and interest in the case of a loan, and to exercise other rights and remedies.
Significant limits on the scope of services reimbursed and on reimbursement rates and fees could have a material adverse effect on an obligor’s liquidity, financial condition and results of operations, which could adversely affect the ability of an obligor to meet its 36 obligations to us.
Significant limits on the scope of services reimbursed and on reimbursement rates and fees could have a material adverse effect on an obligor’s liquidity, financial condition and results of operations, which could adversely affect the ability of an obligor to meet its obligations to us.
Nevertheless, we are always subject to the risk that such insurance will not fully cover all losses and, depending on the severity of the event and the impact on our properties, such insurance may not cover a significant portion of the losses including the costs associated with evacuation.
We are always subject to the risk that such insurance will not fully cover all losses and depending on the severity of the event and the impact on our properties, such insurance may not cover a significant portion of the losses including the costs associated with evacuation.
Risks Arising from Our Capital Structure We may become more leveraged Permanent financing for our investments is typically provided through a combination of public offerings of debt and equity securities and the incurrence or assumption of secured debt.
Risks Arising from Our Capital Structure We may become more leveraged Permanent financing for our investments is typically provided through a combination of offerings of debt and equity securities and the incurrence or assumption of secured debt.
Joint venture investments involve risks that may not be present with other methods of ownership, including the possibility that our partner might become insolvent, refuse to make capital contributions when due or otherwise fail to meet its obligations, which may result in certain liabilities to us for guarantees and other commitments; that our partner might at any time have economic or other business interests or goals that are or become inconsistent with our interests or goals; that we could become engaged in a dispute with our partner, which could require us to expend additional resources to resolve such dispute and could have an adverse impact on the operations and profitability of the joint venture; that our partner may be in a position to take action or withhold consent contrary to our instructions or requests; and that our joint venture partners may be structured differently than us for tax purposes, which could create conflicts of interest and risks to our REIT status.
Joint venture investments involve risks that may not be present with other methods of ownership, including the possibility that our partner might become insolvent, refuse to make capital contributions when due or otherwise fail to meet its obligations, which may result in certain liabilities to us for guarantees and other commitments; that our partner might at any 32 time have economic or other business interests or goals that are or become inconsistent with our interests or goals; that we could become engaged in a dispute with our partner, which could require us to expend additional resources to resolve such dispute and could have an adverse impact on the operations and profitability of the joint venture; that our partner may be in a position to take action or withhold consent contrary to our instructions or requests; our joint venture partners may have competing interests in our markets that could create conflicts of interests; and that our joint venture partners may be structured differently than us for tax purposes, which could create conflicts of interest and risks to our REIT status.
If controls imposed on certain of our tenants who provide health care services that are reimbursed by Medicare, Medicaid and other third-party payors to reduce admissions and length of stay affect inpatient volumes at our health care facilities, the financial condition or results of operations of those tenants could be adversely affected Controls imposed by Medicare, Medicaid and commercial third-party payors designed to reduce admissions and lengths of stay, commonly referred to as “utilization reviews,” have affected and are expected to continue to affect certain of our health care facilities, specifically our acute care hospitals and post-acute facilities.
If controls imposed on certain of our tenants who provide healthcare services that are reimbursed by Medicare, Medicaid and other third-party payors to reduce admissions and length of stay affect inpatient volumes at our healthcare facilities, the financial condition or results of operations of those tenants could be adversely affected Controls imposed by Medicare, Medicaid and commercial third-party payors designed to reduce admissions and lengths of stay, commonly referred to as “utilization reviews,” have affected and are expected to continue to affect certain of our healthcare facilities, specifically our acute care hospitals and post-acute facilities.
Although we anticipate that we generally will have sufficient cash or liquid assets to enable us to satisfy the REIT distribution requirement, it is possible that, from time to time, we may not have sufficient cash or other liquid assets to meet the 90% distribution requirement.
Although we anticipate that we generally will have sufficient cash or liquid assets to enable us to satisfy the REIT distribution requirement, it is possible that, from time to time, we may not have sufficient cash or 43 other liquid assets to meet the 90% distribution requirement.
Our competitors may offer 35 space at rental rates below current market rates or below the rental rates we currently charge our customers, we may lose potential customers, and we may be pressured to reduce our rental rates below those we currently charge to retain customers when leases expire.
Our competitors may offer space at rental rates below current market rates or below the rental rates we currently charge our customers, we may lose potential customers and we may be pressured to reduce our rental rates below those we currently charge to retain customers when leases expire.
In the event that the operator is unable to obtain the necessary licensure, certification, provider agreements or contracts after the completion of construction, there is a risk that we will not be able to earn any revenues on the facility until either the initial operator obtains a license or certification to operate the new facility and the necessary provider agreements or contracts or we find and contract with a new operator that is able to obtain a license to operate the facility for its intended use 38 and the necessary provider agreements or contracts.
In the event that the operator or manager is unable to obtain the necessary licensure, certification, provider agreements or contracts after the completion of construction, there is a risk that we will not be able to earn any revenues on the facility until either the initial operator obtains a license or certification to operate the new facility and the necessary provider agreements or contracts, or we find and contract with a new operator or manager that is able to obtain a license to operate the facility for its intended use and the necessary provider agreements or contracts.
Such laws may be interpreted and applied differently depending on the jurisdiction and continue to evolve, making it difficult to predict how they may develop and apply to us.
Such laws may be 39 interpreted and applied differently depending on the jurisdiction and continue to evolve, making it difficult to predict how they may develop and apply to us.
Failure to obtain a license, registration, or CON, or loss of a required license, registration, or CON would prevent a facility from operating in the manner intended by the operators or tenants.
Failure to obtain a license, registration or CON, or loss of a required license, registration or CON would prevent a facility from operating in the manner intended by the operators, managers or tenants.
Operators of new facilities we construct may need to obtain Medicare and Medicaid certification and enter into Medicare and Medicaid provider agreements and/or third-party payor contracts.
Operators or managers of new facilities we construct may need to obtain Medicare and Medicaid certification and enter into Medicare and Medicaid provider agreements and/or third-party payor contracts.
The incurrence or assumption of indebtedness may cause us to become more leveraged, which could (1) require us to dedicate a greater portion of our cash flow to the payment of debt service, (2) make us more vulnerable to a downturn in the economy, (3) limit our ability to obtain additional financing, (4) negatively affect our credit ratings or outlook by one or more of the rating agencies or (5) make us more vulnerable to increases in interest rates because of the variable interest rates on some of our borrowings to the extent we have not entirely hedged such variable rate debt.
The incurrence or assumption of indebtedness may cause us to become more leveraged, which could (1) require us to dedicate a greater portion of our cash flow to the payment of debt service, (2) make us more vulnerable to a downturn in the economy, (3) limit our ability to obtain additional financing, (4) negatively affect our credit ratings or outlook by one or more of the rating agencies or (5) make us more vulnerable to elevated or increasing interest rates because of the variable interest rates on some of our borrowings to the extent we have not entirely hedged such variable-rate debt.
Our operators’ or tenants’ failure to comply with federal, state, province, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards could adversely affect such operators’ or tenants’ operations, which could adversely affect our operators’ and tenants’ ability to meet their obligations to us Our operators and tenants generally are subject to or impacted by varying levels of federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards.
Our operators’, managers' or tenants’ failure to comply with federal, state, province, local and industry-regulated licensure, certification and inspection laws, regulations and standards could adversely affect such operators’, managers' or tenants’ operations, which could adversely affect their ability to meet their obligations to us Our operators, managers and tenants generally are subject to or impacted by varying levels of federal, state, local and industry-regulated licensure, certification and inspection laws, regulations and standards.
Such actions may have an effect on our operators’ or tenants’ ability to make lease payments to us and, therefore, adversely impact us.
Such actions may have an effect on our operators’, managers' or tenants’ ability to make lease payments to us and, therefore, adversely impact us.
The impacts of such events could be severe and far-reaching, and may impact our operations in several ways, including: (i) operators and tenants could experience deteriorating financial conditions and be unable or unwilling to pay payments to us on time and in full; (ii) we may have to restructure operators' or tenants' obligations and may not be able to do so on terms that are favorable to us; (iii) we may experience increased operational challenges and costs resulting from logistical challenges such as supply chain interruptions, business closures, restrictions on the movement of people and remote or hybrid work schedules, which introduce additional operational risks including cybersecurity risks; (iv) increased operational costs incurred by us and our operators across all of our properties as a result of public health measures and other regulations affecting our properties and operations, as well as additional health and safety measures adopted by us and our operators and tenants, unique pressures on seniors housing and medical practice employees during pandemics like the COVID-19 pandemic including labor shortages resulting from macroeconomic trends; and (v) costs of development including expenditures for materials utilized in construction and labor essential to complete existing developments in progress, may increase substantially.
The impacts of such events could be severe and far-reaching, and may impact our operations in several ways, including: (i) operators and tenants could experience deteriorating financial conditions and be unable or unwilling to pay payments to us on time and in full; (ii) we may have to restructure operators' or tenants' obligations and may not be able to do so on terms that are favorable to us; (iii) we may experience increased operational challenges and costs resulting from logistical challenges such as supply chain interruptions, business closures, restrictions on the movement of people and remote or hybrid work schedules, which introduce additional operational risks including cybersecurity risks; (iv) increased operational costs incurred by us and our operators across all of our properties as a result of public health measures and other regulations affecting our properties and operations, as well as additional health and safety measures adopted by us and our operators and tenants, unique pressures on seniors housing and medical practice employees during periods of widespread illness like at the height of the COVID-19 pandemic including labor shortages resulting from macroeconomic trends; and (v) costs of development including expenditures for materials utilized in construction and labor essential to complete existing developments in progress, may increase substantially.
Utilization review entails the review of the admission and course of treatment of a patient by managed care plans. Inpatient utilization, average lengths of stay and occupancy rates continue to be negatively affected by payor-required pre-admission authorization and utilization review and by payor pressures to maximize outpatient and alternative health care delivery services for less acutely ill patients.
Utilization review entails the review of the admission and course of treatment of a patient by managed care plans. Inpatient utilization, average lengths of stay and occupancy rates continue to be negatively affected by payor-required pre-admission authorization and utilization review and by payor pressures to maximize outpatient and alternative healthcare delivery services for less acutely ill patients.
Failure to participate in certain of the third-party ratings systems, score well in third-party rating systems or provide certain ESG disclosures could result in reputational harm when investors compare us to other companies, and could cause certain investors to be unwilling to invest in our common stock, which could adversely affect our stock price.
Failure to participate in certain of the third-party ratings systems, score well in third-party rating systems or provide certain sustainability disclosures could result in reputational harm when investors compare us to other companies, and could cause certain investors to be unwilling to invest in our common stock, which could adversely affect our stock price.
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.
As a result, if a liability were asserted against us based on 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.
If our ESG practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our reputation, our ability to attract or retain employees, and our attractiveness as an investment or business partner could be negatively affected.
If our sustainability practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our reputation, our ability to attract or retain employees and our attractiveness as an investment or business partner could be negatively affected.
Higher interest rates may also lead purchasers of our common stock to demand a greater annual dividend yield, which could adversely affect the market price of our common stock and could result in increased capitalization rates, which may lead to reduced valuation of our assets.
Elevated interest rates may also lead purchasers of our common stock to demand a greater annual dividend yield, which could adversely affect the market price of our common stock and could result in increased capitalization rates, which may lead to reduced valuation of our assets.
Such cyber-attacks can range from individual attempts to gain unauthorized access to our or our business partners' information technology systems to more sophisticated security threats and may be specifically targeted to our business or more general industry wide risks.
Such cyber incidents can range from individual attempts to gain unauthorized access to our or our business partners' information technology systems to more sophisticated security threats and may be specifically targeted to our business or more general industry wide risks.
Similarly, our failure or perceived failure to pursue or fulfill our ESG goals, targets, and objectives, to comply with ethical, environmental, or other standards, regulations, or expectations, or to satisfy various reporting standards with respect to these matters, within the timelines we announce, or at all, could adversely affect our business or reputation, as well as expose us to government enforcement actions and private litigation.
Our failure or perceived failure to pursue or fulfill our sustainability goals, targets and objectives, to comply with ethical, environmental or other standards, regulations or expectations, or to satisfy various reporting standards with respect to these matters, within the timelines we announce, or at all, could adversely affect our business or reputation, as well as expose us to government enforcement actions and private litigation.
We believe, given current industry practice and analysis prepared by outside consultants, that our and our tenants’ insurance coverage is appropriate to cover reasonably anticipated losses that may be caused by hurricanes, earthquakes, tornadoes, floods, wildfires and other severe weather conditions and natural disasters, including the effects of climate change.
While we believe, given current industry practice and analysis prepared by outside consultants, that our and our tenants’ insurance coverage is appropriate to cover reasonably anticipated losses that may be caused by hurricanes, wildfires, freeze events, earthquakes, tornadoes, floods, wildfires and other severe weather conditions and natural disasters, including the effects of climate change.
If the operations, cash flows or financial condition of our operators and tenants are materially adversely impacted by the Health Reform Laws or future legislation, our revenue and operations may be adversely affected as well.
If the operations, cash flows 35 or financial condition of our operators, managers and tenants are materially adversely impacted by the Health Reform Laws or future legislation, our revenue and operations may be adversely affected as well.
State and local laws also may regulate the expansion, including the addition of new beds or services or acquisition of medical equipment, and the construction or renovation of health care facilities, by requiring a CON or other similar approval from a state agency. See “Item 1 — Business — Certain Government Regulations — United States — Licensing and Certification” above.
State and local laws also may regulate the expansion, including the addition of new beds or services or acquisition of medical equipment, and the construction or renovation of healthcare facilities, by requiring a CON or other similar approval from a state agency. See “Item 1 — Business — Certain Government Regulations — United States — Licensing and Certification” above.
Also, our TRSs may not, among other things, operate or manage certain health care facilities, which may cause us to forgo investments we might otherwise make. Finally, we may be subject to a 100% excise tax on the income derived from certain transactions with our TRSs that are not on an arm's-length basis.
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.
More generally, and because of the dynamic nature of the legislative and regulatory environment for health care products and services, and in light of existing federal deficit and budgetary concerns, we cannot predict the impact that broad-based, far-reaching legislative or regulatory changes could have on the U.S. economy, our business, or that of our operators and tenants.
More generally, and because of the dynamic nature of the legislative and regulatory environment for healthcare products and services, and in light of existing federal deficit and budgetary concerns, we cannot predict the impact that broad-based, far-reaching legislative or regulatory changes could have on the U.S. economy, our business or that of our operators and tenants.
Our business may also face increased scrutiny from investors and other stakeholders related to our ESG activities, including the goals, targets, and objectives that we announce, and our methodologies and timelines for pursuing them.
Our business may also face increased scrutiny from investors and other stakeholders related to our sustainability activities, including the goals, targets and objectives that we announce, and our methodologies and timelines for pursuing them.
Investments in and acquisitions of seniors housing and health care properties entail risks associated with real estate investments generally, including risks that the investment will not achieve expected returns, that the cost estimates for necessary property improvements will prove inaccurate or that the tenant, operator or manager will fail to meet performance expectations.
Investments in and acquisitions of seniors housing and healthcare properties entail risks associated with real estate investments generally, including risks that the investment will not achieve expected returns, that the cost estimates for necessary property improvements will prove inaccurate or that the tenant, operator or manager will fail to meet performance expectations.
Item 1A. Risk Factors Risk Factor Summary The following summarizes the principal factors that make an investment in our company speculative or risky, all of which are more fully described in the Risk Factors section below.
Risk Factor Summary The following summarizes the principal factors that make an investment in our company speculative or risky, all of which are more fully described in the Risk Factors section below.
Our operators’ or tenants’ failure to comply with any of these laws, regulations, or standards could result in loss of accreditation, denial of reimbursement, imposition of fines, suspension, decertification or exclusion from federal and state health care programs, civil liability, and in certain limited instances, criminal penalties, material restrictions on or loss of license, closure of the facility and/or the incurrence of considerable costs arising from an investigation or regulatory action.
Our operators’, managers' or tenants’ failure to comply with any of these laws, regulations or standards could result in loss of accreditation, denial of reimbursement, imposition of fines, suspension, decertification or exclusion from federal and state healthcare programs, civil liability and in certain limited instances, criminal penalties, material restrictions on or loss of license, closure of the facility and/or the incurrence of considerable costs arising from an investigation or regulatory action.
Federal and state authorities may continue seeking to implement new or modified reimbursement methodologies that may negatively impact health care property operations. See “Item 1 - Business - Certain Government Regulations - United States - Reimbursement” above for additional information. Health care reimbursement will likely continue to be of paramount importance to federal and state authorities.
Federal and state authorities may continue seeking to implement new or modified reimbursement methodologies that may negatively impact healthcare property operations. See “Item 1 - Business - Certain Government Regulations - United States - Reimbursement” above for additional information. Healthcare reimbursement will likely continue to be of paramount importance to federal and state authorities.
Further, our operations in the U.K. may be adversely impacted by global and local economic volatility experienced as a result of geopolitical tensions or conflicts, such as the ongoing conflict between Russia and Ukraine, rising inflation and interest rates, the energy crisis that has seen supply shortages and higher oil, gas and electricity prices, volatility in commodity prices, credit and capital markets, an increase in cybersecurity incidents, as well as labor market challenges affecting the recruitment and retention of employees.
Further, our operations in the U.K. may be adversely impacted by global and local economic volatility experienced as a result of geopolitical tensions or conflicts, such as the ongoing conflict between Russia and Ukraine and in the Middle East, elevated inflation and interest rates, the energy crisis that has seen supply shortages and higher oil, gas and electricity prices, volatility in commodity prices, credit and capital markets, an increase in cybersecurity incidents, as well as labor market challenges affecting the cost, recruitment and retention of employees.
The rents from this TRS lessee structure are treated as qualifying rents from real property if (1) they are paid pursuant to an arm's-length lease of a qualified health care property with a TRS and (2) the manager qualifies as an eligible independent contractor (as defined in the Code).
The rents from this TRS lessee structure are treated as qualifying rents from real property if (1) they are paid pursuant to an arm's-length lease of a qualified healthcare property with a TRS and (2) the manager qualifies as an eligible independent contractor (as defined in the Code).
Losing any key personnel could, at least temporarily, have a material adverse effect on our business and that of our operators and managers', financial position and results of operations.
Losing any key personnel could, at least temporarily, have a material adverse effect on our business and that of our operators' and managers' financial position and results of operations.
Our revenues and our operators' revenues are dependent on occupancy and the occupancy of our Seniors Housing Operating and Triple-net properties could significantly decrease in the event of a severe cold and flu season, a resurgence of COVID-19 or other epidemics, pandemics, widespread illness or public health crises.
Our revenues and our operators' revenues are dependent on occupancy and the occupancy of our Seniors Housing Operating and Triple-net properties could significantly decrease in the event of a severe cold and flu season, or other epidemics, pandemics, widespread illness or public health crises.
Employment related class action lawsuits have increased in recent years, including class action lawsuits brought against our operators in certain states regarding employee and government requirements regarding wage and hour claims and fair housing complaints, as well as class action lawsuits related to staffing and care.
Employment related class action lawsuits have increased in recent years, including class action lawsuits brought against our operators and managers in certain states regarding employee and 36 government requirements concerning wage and hour claims and fair housing complaints, as well as class action lawsuits related to staffing and care.
We supplement our participation in ratings systems with published disclosures of our ESG activities, but some investors may desire other disclosures that we do not provide.
We supplement our participation in ratings systems with published disclosures of our sustainability activities, but some investors may desire other disclosures that we do not provide.
In many geographic areas the scarcity of specialized medical personnel, experienced senior care professionals and other workers has been a significant operating issue affecting a wide range of healthcare providers and senior care and housing facilities. Such shortages have and may continue to impact the operations of our operators and tenants, resulting in increased labor and operating costs.
In some geographic areas, the scarcity of specialized medical personnel, experienced senior care professionals and other workers has been an operating issue affecting a wide range of healthcare providers and senior care and housing facilities. Such shortages have and may continue to impact the operations of our operators and tenants, resulting in increased labor and operating costs.
Our inability to respond rapidly to changes in the performance of our investments could adversely affect our financial condition and results of operations. In addition, we are exposed to the risks inherent in concentrating investments in real estate, and in particular, the seniors housing and health care industries.
Our inability to respond rapidly to changes in the performance of our investments could adversely affect our financial condition and results of operations. In addition, we are exposed to the risks inherent in concentrating investments in real estate, and in particular, the seniors housing and healthcare industries.
The federal government substantially funds the Medicaid expansion and as of December 2023, the number of states implementing expansion has grown to more than 80% of all states.
The federal government substantially funds the Medicaid expansion and as of December 2024, the number of states implementing expansion has grown to more than 80% of all states.
Additional conditions and risks affecting our development/redevelopment and construction projects include: (i) liability if our communities are not constructed in compliance with the accessibility provisions of the Americans with Disabilities Acts, the Fair Housing Act or other federal, state or local requirements, which noncompliance could result in imposition of fines, an award of damage to private litigants and a requirement that we undertake structural modifications to remedy the noncompliance; (ii) cost overruns, especially in the current inflationary environment, and untimely completion of construction (including risks beyond our control, such as weather or labor conditions, material shortages or supply chain delays); (iii) the potential for fluctuation of occupancy rates and rents at redeveloped properties, which may result in our investment not being profitable; (iv) the potential that we may expend funds and management time, or fail to recover expenses already incurred, if we do not complete projects already started or abandon development or redevelopment opportunities after we begin to explore them; (v) the inability to complete leasing of a property on schedule or at all, resulting in an increase in carrying or development or redevelopment costs; (vi) the possibility that properties will be leased at below expected rental rates and (vii) to the extent the development or redevelopment activities are conducted in partnership with third parties, the possibility of disputes with our joint venture partners and the potential that we miss certain project management deadlines.
Additional conditions and risks affecting our development, redevelopment and construction projects include: (i) liability if our communities are not constructed in compliance with the accessibility provisions of the Americans with Disabilities Acts, the Fair Housing Act or other federal, state or local requirements, which noncompliance could result in imposition of fines, an award of damage to private litigants and a requirement that we undertake structural modifications to remedy the noncompliance; (ii) cost overruns, especially in the current geopolitical transition environment regarding tariffs, and untimely completion of construction (including risks beyond our control, such as weather or labor conditions, material shortages or supply chain delays); (iii) the potential for fluctuation of occupancy rates and rents at redeveloped properties, which may result in our investment not being profitable; (iv) the potential that we may expend funds and management time, or fail to recover expenses already incurred, if we do not complete projects already started or abandon development or redevelopment opportunities after we begin to explore them; (v) the inability to complete leasing of a property on schedule or at all, resulting in an increase in carrying or development or redevelopment costs; (vi) the possibility that properties will be leased at below expected rental rates, (vii) to the extent the development or redevelopment activities are conducted in partnership with third parties, the possibility of disputes with our joint venture partners and the potential that we miss certain project management deadlines and (ix) changing technologies and cultural trends that may negatively impact future demand for our properties.
In addition, we cannot assure you that future changes in government regulation will not adversely affect the health care industry, including our tenants and operators, nor can we be certain that our tenants and operators will achieve and maintain occupancy and rate levels or labor cost levels that will enable them to satisfy their obligations to us.
In addition, we cannot assure you that future changes in government regulation will not adversely affect the healthcare industry, including our operators, managers or tenants, nor can we be certain that our operators, managers or tenants will achieve and maintain occupancy and rate levels or labor cost levels that will enable them to satisfy their obligations to us.
Efforts to impose more stringent cost controls and reductions are expected to continue, which could negatively impact the financial condition of our tenants who provide health care services in our hospitals and post-acute facilities.
Efforts to impose more stringent cost controls and reductions are expected to continue, which could negatively impact the financial condition of our tenants who provide healthcare services in our hospitals and post-acute facilities.
These events could materially adversely affect our operators’ or tenants’ ability to make a profit or our 37 operators' or tenants' ability to make rent or other obligatory payments to us.
These events could materially adversely affect our operators’, managers' or tenants’ ability to make a profit or our operators', managers' or tenants' ability to make rent or other obligatory payments to us.
In addition, in light of labor shortages for medical and non-medical workers in many geographic areas, our operators and tenants increasingly compete to attract qualified and experienced employees. Our operators and managers are expected to encounter increased competition in the future that could limit their ability to attract residents and employees or expand their businesses.
In addition, in light of labor shortages for medical and non-medical workers in many geographic areas, our operators and tenants may increasingly compete to attract qualified and experienced 31 employees. Our operators and managers could encounter increased competition in the future that could limit their ability to attract residents and employees or expand their businesses.
See “Item 1 - Business - Certain Government Regulations - United States - Fraud & Abuse Enforcement” and “Item 1 - Business - Certain Government Regulations - United States - Health Care Matters - Generally” above. Many of our properties may require a license, registration, and/or CON to operate.
See “Item 1 - Business - Certain Government Regulations - United States - Fraud & Abuse Enforcement” and “Item 1 - Business - Certain Government Regulations - United States - Healthcare Matters - Generally” above. Many of our properties may require a license, registration and/or CON to operate.
These losses may lead to an increase of our and our tenants’ cost of insurance, a decrease in our anticipated revenues from an affected property and a loss of all or a portion of the capital we have invested in an affected property.
These factors may lead to an increase of our and our operators' or tenants’ cost of insurance, a decrease in our anticipated revenues from an affected property and a loss of all or a portion of the capital we have invested in an affected property.
The lease of qualified health care properties to a TRS is subject to special requirements We lease certain qualified health care properties to TRSs (or subsidiaries of TRSs), which lessees contract with managers (or related parties) to manage the health care operations at these properties.
The lease of qualified healthcare properties to a TRS is subject to special requirements We lease certain qualified healthcare properties to TRSs (or subsidiaries of TRSs), which lessees contract with managers (or related parties) to manage the healthcare operations at these properties.
GDPR, which impose a number of obligations on us. These obligations vary from state to state and country to country, but generally have accountability and transparency requirements. Some jurisdictions (including the EU and U.K.) impose restrictions on transfers of data from their jurisdictions to jurisdictions that they do not consider adequate.
GDPR, which impose a number of obligations on us. These obligations vary from state to state and country to country, but generally include accountability and transparency requirements. Some jurisdictions (including the E.U. and U.K.) impose restrictions on transfers of data from their jurisdictions to jurisdictions that they do not consider adequate.
Although our properties are less affected by the commercial real estate market trends, this limitation could be exacerbated by the current decline of commercial real estate as a result of high interest rates, inflation and declining property values across sectors. No assurances can be given that we will recognize full value for any property that we are required to sell.
Although our properties are less affected by the commercial real estate market trends, this limitation could be exacerbated by the decline of commercial real estate as a result of elevated interest rates, inflation and depressed property values across sectors. No assurances can be given that we will recognize full value for any property that we are required to sell.
Additionally, increased interest rates may also result in less liquid property markets, limiting our ability to sell existing assets.
Additionally, elevated interest rates may also result in less liquid property markets, limiting our ability to sell existing assets.
Health care properties are often highly customizable, and the development or redevelopment of such properties may require costly tenant-specific improvements. The actual costs of development or redevelopment may be greater than our estimates.
Healthcare properties are often highly customizable, and the development or redevelopment of such properties may require costly tenant-specific improvements. The actual costs of development or redevelopment may be greater than our estimates.
Such increases in the cost of capital, and any further increases resulting from future interest rate hikes, could adversely impact our ability to finance operations, acquire and develop properties, and refinance existing debt.
Such increases in the cost of capital, and any further increases resulting from future elevated interest rates, could adversely impact our ability to finance operations, acquire and develop properties and refinance existing debt.
Cybersecurity incidents could disrupt our business and result in the loss of confidential information and legal liability Our business is at risk from and may be impacted by cybersecurity attacks, including attempts to gain unauthorized access to our confidential data through phishing or other malicious activity, attempts to interrupt our access to, or use of information technology systems through distributed denial-of-service or ransomware attacks, breaches related to our increased receipt and use of data from multiple sources, and other electronic security breaches or other cybersecurity incidents within our environment or our business partners' environments, including those resulting from human error, product defects and technology failures.
Cybersecurity incidents could disrupt our business and result in the loss of confidential information and legal liability Our business is at risk from and may be impacted by cybersecurity incidents, including attempts to gain unauthorized access to our confidential data through social engineering attacks or other malicious activity, attempts to interrupt our access to, or use of information technology systems through distributed denial-of-service or ransomware attacks, data extortion attempts, insider threats, incidents related to our increased receipt and use of data from multiple sources and other cybersecurity incidents within our environment or our business partners' environments, including those resulting from human error, product defects and technology failures.
Insurance may not be available at a reasonable cost in the future or policies may not be maintained at a level that will fully cover all losses on our properties upon the occurrence of a catastrophic event. This may be especially the case due to increases in property insurance costs.
Insurance may not be available at a reasonable cost in the future or policies may not be maintained at a level that will fully cover all losses on our properties upon the occurrence of a catastrophic event. This may be especially the case due to increases in property insurance costs as a result of extreme weather events or otherwise.
We face competition for acquisition opportunities from other well-capitalized investors, including publicly traded and privately held REITs, private real estate funds, domestic and foreign financial institutions, life insurance companies, sovereign wealth funds, pension trusts, partnerships and individual investors. In addition, limited development during the COVID-19 pandemic has reduced the number of new properties becoming available.
We face competition for acquisition opportunities from other well-capitalized investors, including publicly traded and privately held REITs, private real estate funds, domestic and foreign financial institutions, life insurance companies, sovereign wealth funds, pension trusts, developers, partnerships and individual investors. In addition, the limited development occurring during the COVID-19 pandemic continues to depress the number of new properties available.
We and our operators and managers are subject to numerous laws and regulations governing the protection of personal and confidential information of our clients, residents and/or employees, including U.S. federal and state laws (including the CCPA and HIPAA), and non-U.S. laws, such as the U.K. General Data Protection Regulation and the E.U.
We and our operators and managers are subject to numerous such laws and regulations governing the protection of personal and confidential information of our clients, residents and/or employees, including U.S. federal and state laws (including the California Consumer Privacy Act and HIPAA) and non-U.S. laws, such as the U.K. General Data Protection Regulation ("GDPR") and the E.U.
Ownership of property outside the U.S. may subject us to different or greater risks than those associated with our domestic operations We have operations in the U.K. and Canada which represent 9.1% and 7.7% of total Welltower revenues, respectively.
Ownership of property outside the U.S. may subject us to different or greater risks than those associated with our domestic operations We have operations in the U.K. and Canada, which rep resent 10.9% and 7.0% of total Welltower revenues, respectively.
The criteria used in these rating systems may conflict and change frequently, and we cannot predict how these third parties will score us, nor can we have any assurance that they score us or other companies accurately.
The criteria used in these rating systems may conflict and change frequently, and we cannot predict how these third parties will score us, nor can we have any assurance that they score us or other companies accurately or that we will be able to score well as such criteria change.
Acquired properties may be located in new markets, either within or outside the United States, where we may face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area, costs associated with opening a new regional office and unfamiliarity with local governmental and permitting procedures.
Acquired properties may be located in new markets, either within or outside the U.S., where we may face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area, costs associated with opening a new regional office, hiring and retaining key personnel and unfamiliarity with local governmental and permitting procedures.
These risks may be exacerbated by the volume and complexity of such activity, as well as geopolitical tension or instability, inflationary pressures, interest rate fluctuations and supply chain disruptions.
These risks may be exacerbated by the volume and complexity of such activity, as well as by geopolitical tension or instability, political and social conditions, inflationary pressures, interest rate fluctuations, climate and weather-related risks and supply chain disruptions.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis report may cover a variety of relevant topics, potentially including recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends and information security considerations related to our 45 operators, managers and third parties. The scope and focus of each report are determined based on current priorities and emerging issues in cybersecurity.
Biggest changeAt least annually, the Audit Committee receives a cybersecurity report from the Chief Technology Officer and the information security team. This report may cover a variety of relevant topics, potentially including recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends and information security considerations related to our operators, managers and third parties.
This team comprises individuals with relevant educational and technical experience, many having held similar positions with responsibility for various aspects of cybersecurity at large organizations. This team works closely with the Legal department to oversee compliance and regulatory and contractual security requirements.
This information security team comprises individuals with relevant educational and technical experience, many having held similar positions with responsibility for various aspects of cybersecurity at large organizations. This team works closely with the Legal department to oversee compliance and regulatory and contractual security requirements.
We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats. Our cybersecurity program includes several safeguards such as access controls, multi-factor authentication, continuous monitoring and alerting systems for internal and external threats and penetration testing.
Item 1C. Cybersecurity We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats. Our cybersecurity program includes several safeguards such as access controls, multi-factor authentication, continuous monitoring and alerting systems for internal and external threats and penetration testing.
Management and Cybersecurity Working Group Reporting to the Chief Operating Officer, our Chief Technology Officer, with extensive cybersecurity knowledge and skills from over 20 years of relevant work experience at Welltower and elsewhere, leads the team responsible for developing and implementing our information security program across our business.
Management and Cybersecurity Working Group Reporting to the Chief Operating Officer, our Chief Technology Officer, with extensive cybersecurity knowledge and skills from years of relevant work experience at Welltower and elsewhere, leads the team responsible for developing and implementing our information security program across our business.
The objectives of the incident response plan are to reduce the number of systems and users affected by security incidents, reduce the time a threat actor spends within our network, reduce the damage caused by the breach and reduce the time required to restore normal operations.
The objectives of the incident response plan are to reduce the number of systems and users affected by security incidents, reduce the time a threat actor spends within our network, reduce the damage caused by an incident and reduce the time required to restore normal operations.
The Chief Technology Officer is responsible for reporting on cybersecurity and information technology to the Audit Committee. Information Security Program The information security team provides regular reports to the Chief Technology Officer and other relevant teams on various cybersecurity threats, assessments and findings.
The Chief Technology Officer is responsible for reporting on cybersecurity and information technology to the Audit Committee and Board. 45 Information Security Program The information security team provides regular reports to the Chief Technology Officer and other relevant teams on various cybersecurity threats, assessments and findings.
Incident Response The Cybersecurity Working Group maintains and oversees an incident response plan that applies in the event of a cybersecurity threat or incident to provide a standardized framework for responding to cybersecurity incidents.
Incident Response The Cybersecurity Working Group maintains and oversees an incident response plan that applies in the event of a cybersecurity threat or incident and is designed to provide a standardized framework for responding to cybersecurity incidents.
The incident response plan sets out a coordinated approach to investigating, containing, documenting and mitigating incidents, including reporting findings and keeping senior management and other key stakeholders informed and involved as appropriate.
The incident response plan sets out a coordinated approach to investigating, containing, documenting and mitigating incidents, including reporting findings and keeping senior management and other key stakeholders (including the Board for certain incidents) informed and involved as appropriate.
While we are not aware of any cybersecurity incidents that have materially affected us to date, there can be no guarantee that we will not be the subject of future attacks, threats or incidents, that may have a material impact on our business strategy, results of operations or financial condition.
While we are not aware of any cybersecurity incidents that have materially affected us within the prior fiscal year, there can be no guarantee that we will not be the subject of future attacks, threats or incidents, that may have a material impact on our business strategy, results of operations or financial condition.
The Audit Committee's responsibilities include reviewing cybersecurity strategies with management, assessing processes and controls pertaining to the management of our information technology operations and their effectiveness, and seeking to confirm that management's response to potential cybersecurity incidents is timely and effective. At least annually, the Audit Committee receives a cybersecurity report from management.
The Board has delegated primary responsibility of overseeing cybersecurity risks to the Audit Committee. The Audit Committee's responsibilities include reviewing cybersecurity strategies with management, assessing processes and controls pertaining to the management of our information technology operations and their effectiveness and seeking to confirm that management's response to potential cybersecurity incidents is timely and effective.
We also employ systems and processes designed to oversee, identify and reduce the potential impact of a security incident at a third-party vendor, service provider or otherwise implicating the third-party technology and systems we use. Additionally, we maintain cybersecurity insurance providing coverage for certain costs related to cybersecurity-related incidents that impact our cybersecurity and information technology infrastructure.
We also employ systems and processes designed to oversee, identify and reduce the potential impact of a security incident at a third-party vendor, service provider or otherwise implicating the third-party technology and systems we use.
To ensure that cybersecurity is an organization-wide effort, we provide mandatory cybersecurity training at least annually for all employees with network access, including training designed to simulate and help prevent phishing and other social engineering attacks.
We provide mandatory cybersecurity training at least annually to our personnel with network access, including training designed to simulate and help prevent phishing and other social engineering attacks.
Additionally, we conduct regular evaluation of our cybersecurity program, encompassing internal reviews and third-party assessments to ensure its effectiveness and resilience. Governance The Board of Directors (the "Board") retains ultimate oversight of cybersecurity risk, which it manages through our enterprise risk management program. The Board has delegated primary responsibility of overseeing cybersecurity risks to the Audit Committee.
Additionally, we conduct regular evaluations of our cybersecurity program, which may include internal reviews and third-party assessments to validates the program's effectiveness and resilience. Governance The Board of Directors (the "Board") retains ultimate oversight of cybersecurity risk, which it manages as part of our enterprise risk management program.
The Audit Committee and management also report to the Board at least annually on data protection and cybersecurity matters.
The scope and focus of each report are determined based on current priorities and emerging issues in cybersecurity. The Audit Committee, along with the Chief Technology Officer and the information security team, also report to the Board at least annually on data protection and cybersecurity matters.
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Item 1C. Cybersecurity Our information technology networks, those of our operators and managers, and those of third parties on whom we rely, are important enablers to our ability to perform day-to-day operations of our business. Our business operations depend on the secure collection, storage, transmission and other processing of proprietary, confidential or sensitive data.
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These systems and processes are designed to the third party's risk level and may include, for example, conducting upfront diligence of the third party's certifications and security program, using contractual provisions that address cybersecurity risks and conducting additional monitoring of the third party's security practices.
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Additionally, we maintain cybersecurity insurance providing coverage for certain costs related to cybersecurity-related incidents that impact our cybersecurity and information technology infrastructure. However, our insurance coverage may not sufficiently cover all types of losses or claims that arise or be subject to exclusions.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table sets forth certain information regarding the properties that comprise our consolidated real property and real estate loan investments as of December 31, 2023 (dollars in thousands): Seniors Housing Operating Triple-net Outpatient Medical Property Location Number of Properties Total Investment Annualized Revenues (1) Number of Properties Total Investment Annualized Revenues (1) Number of Properties Total Investment Annualized Revenues (1) Alabama 5 $ 54,058 $ 14,606 3 $ 32,442 $ 4,607 6 $ 174,961 $ 13,091 Arkansas 1 26,758 5,445 — — — 1 19,716 2,281 Arizona 13 313,573 52,852 — — 144 8 89,447 12,199 California 107 3,794,605 901,464 23 418,370 55,870 43 1,027,948 127,911 Colorado 17 504,482 116,561 8 217,215 19,361 1 2,024 — Connecticut 6 156,876 32,735 4 81,453 7,976 7 96,464 9,218 District Of Columbia 2 139,124 14,689 — — — 1 77,112 8,216 Delaware 6 61,488 31,023 4 117,409 15,337 — — — Florida 31 1,071,179 221,843 101 1,443,056 177,880 25 221,349 43,078 Georgia 18 334,750 61,823 3 36,712 3,545 18 223,381 34,297 Hawaii 1 69,929 22,187 — — — — — — Iowa 10 128,726 40,965 6 45,419 3,281 — — — Idaho 6 112,082 10,520 — — — 2 47,782 4,306 Illinois 37 667,524 184,586 21 250,640 20,458 10 128,916 19,448 Indiana 17 418,024 65,395 19 227,652 19,343 3 29,264 4,353 Kansas 10 146,406 49,970 20 164,611 23,131 — — — Kentucky 4 58,878 17,954 3 48,918 5,440 — — — Louisiana 9 195,341 50,681 1 6,934 720 1 22,123 815 Massachusetts 19 658,548 107,353 8 160,657 9,662 9 154,718 14,423 Maryland 10 548,701 108,441 16 171,336 41,146 12 237,668 28,319 Maine 1 23,061 12,457 — — — — — — Michigan 29 477,490 119,763 25 233,157 22,438 13 176,348 19,536 Minnesota 3 74,761 14,334 12 221,642 23,023 7 138,393 30,263 Missouri 13 319,790 57,700 — — — 16 222,901 29,368 Mississippi 5 88,753 20,338 — — — 2 46,752 3,784 Montana 2 22,858 8,547 — — — — — — North Carolina 14 581,410 94,097 50 496,773 78,361 25 607,853 48,794 North Dakota 1 12,690 1,400 — — — — — — Nebraska 8 103,184 20,837 — — — 1 10,505 2,322 New Hampshire 3 82,391 8,722 — — — — — — New Jersey 28 696,855 233,930 27 741,750 85,879 16 334,280 43,903 New Mexico — — — — — — 1 31,061 — Nevada 7 122,711 35,922 — — — 8 122,566 10,700 New York 41 809,833 195,804 3 34,025 1,513 15 397,615 34,233 Ohio 49 940,675 201,115 41 448,950 52,953 8 125,836 14,937 Oklahoma 14 182,051 52,514 12 87,550 13,789 5 25,054 3,626 Oregon 14 158,472 48,307 1 2,306 909 1 41,995 3,104 Pennsylvania 26 447,525 117,573 56 558,164 101,308 6 92,175 6,812 South Carolina 8 223,789 30,853 7 31,428 7,215 2 9,452 1,566 Tennessee 9 186,340 44,327 6 56,410 7,849 3 64,268 5,717 Texas 83 1,790,432 397,246 23 321,329 35,221 71 1,463,494 109,352 Utah 4 71,291 25,368 1 21,144 2,100 1 10,556 1,108 Virginia 13 538,467 128,187 29 323,151 61,466 7 109,708 7,124 Washington 33 917,452 218,974 7 85,367 12,142 9 194,660 33,384 Wisconsin 2 18,136 6,696 5 81,547 10,214 5 81,127 8,817 West Virginia — — — 1 6,134 999 — — — Total domestic 739 $ 18,351,469 $ 4,206,104 546 $ 7,173,651 $ 925,280 369 $ 6,859,472 $ 740,405 Canada 119 3,132,032 598,856 6 128,881 10,334 — — — United Kingdom 60 1,667,483 473,615 62 1,462,925 110,168 — — — Total international 179 $ 4,799,515 $ 1,072,471 68 $ 1,591,806 $ 120,502 — $ — $ — Grand total 918 $ 23,150,984 $ 5,278,575 614 $ 8,765,457 $ 1,045,782 369 $ 6,859,472 $ 740,405 (1) Represents revenue for the month ended December 31, 2023 annualized. 47 The following table sets forth occupancy and average annualized revenues for certain property types (excluding investments in unconsolidated entities): Occupancy (1) Average Annualized Revenues (2) 2023 2022 2023 2022 Seniors Housing Operating (3) 81.8% 78.1% $ 52,709 $ 49,987 per unit Triple-net (4) 78.6% 76.2% 19,124 17,330 per bed/unit Outpatient Medical (5) 94.8% 95.2% 37 38 per sq. ft.
Biggest changeThe following table sets forth certain information regarding the properties that comprise our consolidated net real estate investments, exclusive of real estate loan investments designated as non-segment/corporate as of December 31, 2024 (dollars in thousands): Seniors Housing Operating Triple-net Outpatient Medical Property Location Number of Properties Total Investment Annualized Revenues (1) Number of Properties Total Investment Annualized Revenues (1) Number of Properties Total Investment Annualized Revenues (1) Alabama 6 $ 70,927 $ 18,271 2 $ 18,022 $ 385 6 $ 169,360 $ 13,344 Arkansas 1 25,545 4,868 — — — 1 18,320 2,611 Arizona 13 353,231 61,592 — — — 8 87,263 11,286 California 112 3,987,826 1,030,440 23 406,802 71,317 42 1,029,428 119,696 Colorado 21 635,303 148,328 8 217,480 19,551 1 19,068 — Connecticut 6 154,776 36,368 6 125,484 15,404 7 92,361 8,893 District Of Columbia 2 183,971 16,994 — — — 1 74,277 8,852 Delaware 6 60,073 32,313 6 87,353 9,096 — — — Florida 40 1,346,085 283,142 96 1,289,285 165,371 25 215,587 41,986 Georgia 21 468,637 79,301 3 35,712 3,506 18 220,188 39,695 Hawaii 1 71,823 25,052 — — — — — — Iowa 10 112,438 42,910 6 45,738 3,332 — — — Idaho 8 167,188 17,804 — — — 2 47,623 2,768 Illinois 38 648,491 233,483 19 227,164 21,638 10 124,368 21,747 Indiana 18 439,178 114,285 18 189,123 29,432 3 27,019 4,092 Kansas 9 126,145 47,740 20 205,038 22,400 — — — Kentucky 6 99,901 28,041 1 6,724 1,423 — — — Louisiana 9 186,740 56,447 1 4,200 720 1 20,503 1,705 Massachusetts 20 754,815 147,336 7 150,917 11,743 9 151,733 20,134 Maryland 10 560,067 130,493 16 167,220 41,040 12 233,680 30,496 Maine 1 24,400 12,277 — — — — — — Michigan 44 660,638 200,365 14 143,481 14,577 13 171,092 21,076 Minnesota 17 359,361 97,311 — — — 7 135,042 29,880 Missouri 13 397,498 63,440 — — — 16 215,293 34,196 Mississippi 5 85,513 29,708 — — — 2 44,130 3,795 Montana 3 55,184 13,760 — — — — — — North Carolina 15 703,881 114,184 49 450,906 75,726 25 589,518 52,973 North Dakota 1 12,375 1,539 — — — — — — Nebraska 8 90,982 19,154 — — — 1 10,185 2,627 New Hampshire 3 80,503 9,395 7 93,771 9,719 — — — New Jersey 28 697,240 240,412 33 684,668 74,977 16 327,846 49,508 New Mexico 1 32,931 3,691 — — — 1 55,607 4,290 Nevada 7 121,090 37,292 — — — 7 116,628 11,149 New York 41 799,988 215,392 3 33,229 2,754 15 384,321 37,758 Ohio 58 1,193,289 265,542 35 263,420 41,335 8 103,597 11,052 Oklahoma 13 166,746 59,372 12 94,143 4,376 5 25,378 4,460 Oregon 14 153,221 48,937 1 2,279 943 1 43,201 3,114 Pennsylvania 33 693,196 186,203 49 502,298 66,296 6 89,319 10,487 Rhode Island — — — 3 30,884 3,522 — — — South Carolina 9 265,638 48,401 6 22,325 5,960 2 8,910 1,242 Tennessee 10 208,748 56,260 4 55,530 5,493 3 61,962 5,950 Texas 99 2,201,964 469,623 18 224,828 8,444 75 1,694,313 141,790 Utah 4 75,541 26,574 1 20,503 2,111 1 10,311 1,099 Virginia 14 588,908 147,765 31 313,397 56,422 7 107,191 14,568 Vermont 3 103,389 42,086 2 23,617 2,550 — — — Washington 43 1,286,841 280,050 7 84,293 15,158 9 190,600 31,473 Wisconsin 6 94,552 41,292 1 2,693 863 5 77,992 8,447 West Virginia — — — 7 203,330 21,016 — — — Total domestic 850 21,606,777 5,285,233 515 6,425,857 828,600 371 6,993,214 808,239 Canada 103 2,534,558 521,924 6 114,835 9,711 — — — United Kingdom 203 3,529,318 1,302,782 71 842,074 91,012 — — — Total international 306 6,063,876 1,824,706 77 956,909 100,723 — — — Grand total 1,156 $ 27,670,653 $ 7,109,939 592 $ 7,382,766 $ 929,323 371 $ 6,993,214 $ 808,239 (1) Represents revenue for the month ended December 31, 2024 annualized. 47 The following table sets forth occupancy and average annualized revenues for certain property types (excluding investments in unconsolidated entities): Occupancy (1) Average Annualized Revenues (2) 2024 2023 2024 2023 Seniors Housing Operating (3) 84.7% 81.8% $ 58,519 $ 52,709 per unit Triple-net (4) 83.3% 78.6% 16,600 15,492 per bed/unit Outpatient Medical (5) 94.6% 94.8% 39 37 per sq. ft.
Investments classified as held for sale are included in 2024. (2) The most recent monthly cash base rent annualized. Base rent does not include tenant recoveries or amortization of above and below market lease intangibles or other non-cash income.
Investments classified as held for sale are included in 2025. (2) The most recent monthly cash base rent annualized. Base rent does not include tenant recoveries or amortization of above and below market lease intangibles or other non-cash income.
Item 2. Properties We lease our corporate headquarters located at 4500 Dorr Street, Toledo, Ohio 43615. We also lease corporate offices throughout the U.S., Canada and the United Kingdom and have ground leases relating to certain of our properties.
Item 2. Properties We lease corporate offices throughout the U.S., the U.K. and Canada and have ground leases relating to certain of our properties.
Removed
The following table sets forth information regarding lease expirations for certain portions of our portfolio as of December 31, 2023 (dollars in thousands): Expiration Year (1) 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Thereafter Triple-net: Properties 7 16 13 1 5 4 34 5 127 42 348 Base rent (2) $ 13,495 $ 7,803 $ 12,855 $ 1,232 $ 6,404 $ 1,035 $ 70,998 $ 10,762 $ 99,472 $ 54,813 $ 459,973 % of base rent 1.8 % 1.1 % 1.7 % 0.2 % 0.9 % 0.1 % 9.6 % 1.5 % 13.5 % 7.4 % 62.2 % Units 1,182 521 1,695 80 616 219 3,669 423 6,163 3,267 39,419 % of units 2.1 % 0.9 % 3.0 % 0.1 % 1.1 % 0.4 % 6.4 % 0.7 % 10.8 % 5.7 % 68.8 % Outpatient Medical: we may experiences losses Square feet 2,108,859 1,296,491 1,635,726 1,524,274 1,552,764 1,314,461 1,254,813 1,780,700 1,470,798 1,195,919 4,469,245 Base rent (2) $ 62,546 $ 38,352 $ 45,124 $ 39,534 $ 43,408 $ 37,184 $ 35,361 $ 49,581 $ 42,971 $ 31,045 $ 127,189 % of base rent 11.3 % 6.9 % 8.2 % 7.2 % 7.9 % 6.7 % 6.4 % 9.0 % 7.8 % 5.6 % 23.0 % Leases 464 263 266 234 260 147 113 84 157 104 183 % of leases 20.4 % 11.6 % 11.7 % 10.3 % 11.4 % 6.5 % 5.0 % 3.7 % 6.9 % 4.6 % 7.9 % (1) Excludes investments in unconsolidated entities, developments, land parcels, loans receivable and sub-leases.
Added
The following table sets forth information regarding operating lease expirations for certain portions of our portfolio as of December 31, 2024 (dollars in thousands): Expiration Year (1) 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Thereafter Triple-net: Properties 16 7 4 4 4 19 5 155 43 1 318 Base rent (2) $ 8,016 $ 12,144 $ 1,259 $ 6,484 $ 1,083 $ 41,630 $ 11,074 $ 155,183 $ 59,086 $ 420 $ 435,346 % of base rent 1.1 % 1.7 % 0.2 % 0.9 % 0.1 % 5.7 % 1.5 % 21.2 % 8.1 % 0.1 % 59.4 % Units 521 1,068 569 541 219 2,043 423 9,226 3,331 81 37,683 % of units 0.9 % 1.9 % 1.0 % 1.0 % 0.4 % 3.7 % 0.8 % 16.6 % 6.0 % 0.1 % 67.6 % Outpatient Medical: Square feet 1,802,090 1,369,289 1,510,905 1,514,614 1,533,640 1,433,223 1,603,821 1,718,261 1,192,200 1,683,489 4,383,571 Base rent (2) $ 55,955 $ 39,062 $ 46,537 $ 43,463 $ 45,366 $ 41,934 $ 47,096 $ 52,093 $ 31,821 $ 51,161 $ 129,452 % of base rent 9.6 % 6.7 % 8.0 % 7.4 % 7.8 % 7.2 % 8.1 % 8.9 % 5.4 % 8.8 % 22.1 % Leases 425 239 267 267 210 146 105 179 101 127 140 % of leases 19.3 % 10.8 % 12.1 % 12.1 % 9.5 % 6.6 % 4.8 % 8.1 % 4.6 % 5.8 % 6.3 % (1) Excludes investments in unconsolidated entities, developments, redevelopments, properties subject to sales-type leases, land parcels, loans receivable and sub-leases.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

102 edited+23 added−19 removed33 unchanged
Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations Seniors Housing Operating The following is a summary of our results of operations for the Seniors Housing Operating segment for the years presented (dollars in thousands): Year Ended One Year Change Year Ended One Year Change Two Year Change December 31, December 31, December 31, 2023 2022 $ % 2021 $ % $ % Revenues: Resident fees and services $ 4,753,804 $ 4,173,711 $ 580,093 14 % $ 3,197,223 $ 976,488 31 % $ 1,556,581 49 % Interest income 10,096 7,867 2,229 28 % 4,231 3,636 86 % 5,865 139 % Other income 9,743 63,839 (54,096) -85 % 11,796 52,043 441 % (2,053) -17 % Total revenues 4,773,643 4,245,417 528,226 12 % 3,213,250 1,032,167 32 % 1,560,393 49 % Property operating expenses 3,655,508 3,292,045 363,463 11 % 2,529,344 762,701 30 % 1,126,164 45 % NOI (1) 1,118,135 953,372 164,763 17 % 683,906 269,466 39 % 434,229 63 % Other expenses: Depreciation and amortization 906,771 854,800 51,971 6 % 593,565 261,235 44 % 313,206 53 % Interest expense 56,509 34,833 21,676 62 % 39,327 (4,494) -11 % 17,182 44 % Loss (gain) on extinguishment of debt, net — 386 (386) -100 % (2,628) 3,014 115 % 2,628 100 % Provision for loan losses, net 3,197 1,039 2,158 208 % 394 645 164 % 2,803 711 % Impairment of assets 24,999 13,146 11,853 90 % 22,317 (9,171) -41 % 2,682 12 % Other expenses 96,972 66,026 30,946 47 % 27,132 38,894 143 % 69,840 257 % 1,088,448 970,230 118,218 12 % 680,107 290,123 43 % 408,341 60 % Income (loss) from continuing operations before income taxes and other items 29,687 (16,858) 46,545 276 % 3,799 (20,657) -544 % 25,888 681 % Income (loss) from unconsolidated entities (69,835) (53,318) (16,517) -31 % (39,225) (14,093) -36 % (30,610) -78 % Gain (loss) on real estate dispositions, net 68,290 5,794 62,496 n/a 6,146 (352) -6 % 62,144 n/a Income (loss) from continuing operations 28,142 (64,382) 92,524 144 % (29,280) (35,102) -120 % 57,422 196 % Net income (loss) 28,142 (64,382) 92,524 144 % (29,280) (35,102) -120 % 57,422 196 % Less: Net income (loss) attributable to noncontrolling interests (6,391) (16,258) 9,867 61 % (2,224) (14,034) -631 % (4,167) -187 % Net income (loss) attributable to common stockholders $ 34,533 $ (48,124) $ 82,657 172 % $ (27,056) $ (21,068) -78 % $ 61,589 228 % (1) See Non-GAAP Financial Measures below.
Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations Seniors Housing Operating The following is a summary of our results of operations for the Seniors Housing Operating segment for the years presented (dollars in thousands): Year Ended One Year Change Year Ended One Year Change Two Year Change December 31, December 31, December 31, 2024 2023 $ % 2022 $ % $ % Revenues: Resident fees and services $ 6,027,149 $ 4,753,804 $ 1,273,345 27 % $ 4,173,711 $ 580,093 14 % $ 1,853,438 44 % Other income 8,312 9,743 (1,431) -15 % 63,839 (54,096) -85 % (55,527) -87 % Total revenues 6,035,461 4,763,547 1,271,914 27 % 4,237,550 525,997 12 % 1,797,911 42 % Property operating expenses 4,523,780 3,655,508 868,272 24 % 3,292,045 363,463 11 % 1,231,735 37 % NOI (1) 1,511,681 1,108,039 403,642 36 % 945,505 162,534 17 % 566,176 60 % Other expenses: Depreciation and amortization 1,107,116 906,771 200,345 22 % 854,800 51,971 6 % 252,316 30 % Interest expense 42,949 56,509 (13,560) -24 % 34,833 21,676 62 % 8,116 23 % Loss (gain) on extinguishment of debt, net 1,711 — 1,711 n/a 386 (386) -100 % 1,325 343 % Impairment of assets 85,564 24,999 60,565 242 % 13,146 11,853 90 % 72,418 551 % Other expenses 96,435 96,972 (537) -1 % 66,026 30,946 47 % 30,409 46 % 1,333,775 1,085,251 248,524 23 % 969,191 116,060 12 % 364,584 38 % Income (loss) from continuing operations before income taxes and other items 177,906 22,788 155,118 681 % (23,686) 46,474 196 % 201,592 851 % Income (loss) from unconsolidated entities 1,376 (70,940) 72,316 102 % (53,507) (17,433) -33 % 54,883 103 % Gain (loss) on real estate dispositions and acquisitions of controlling interests, net 134,082 68,290 65,792 96 % 5,794 62,496 n/a 128,288 n/a Income (loss) from continuing operations 313,364 20,138 293,226 n/a (71,399) 91,537 128 % 384,763 539 % Net income (loss) 313,364 20,138 293,226 n/a (71,399) 91,537 128 % 384,763 539 % Less: Net income (loss) attributable to noncontrolling interests (2,694) (5,975) 3,281 55 % (15,689) 9,714 62 % 12,995 83 % Net income (loss) attributable to common stockholders $ 316,058 $ 26,113 $ 289,945 n/a $ (55,710) $ 81,823 147 % $ 371,768 667 % (1) See Non-GAAP Financial Measures below.
Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses, general and administrative expenses and other expenses. Depending upon the availability and cost of external capital, we believe our liquidity is sufficient to fund these uses of cash.
Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses, general and administrative expenses and other expenses. Depending upon the availability and cost of external capital, we believe our liquidity is sufficient to fund these uses of cash.
We evaluate our business and make resource allocations on our three business segments: Seniors Housing Operating, Triple-net and Outpatient Medical. The primary performance measures for our properties are NOI and same store NOI ("SSNOI") and other supplemental measures include FFO and Adjusted EBITDA, which are further discussed below.
We evaluate our business and make resource allocations on our three operating segments: Seniors Housing Operating, Triple-net and Outpatient Medical. The primary performance measures for our properties are NOI and same store NOI ("SSNOI") and other supplemental measures include FFO and Adjusted EBITDA, which are further discussed below.
Liquidity and Capital Resources Sources and Uses of Cash Our primary sources of cash include resident fees and services, rent and interest receipts, interest earned on short-term deposits, borrowings under our unsecured revolving credit facility and commercial paper program, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable.
Liquidity and Capital Resources Sources and Uses of Cash Our primary sources of cash include resident fees and services, rent and interest receipts, interest earned on short-term deposits, borrowings under our unsecured revolving credit facility and commercial paper program, issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable.
On May 1, 2023, we executed a series of transactions that included the assignment of the leasehold interest to a newly formed tri-party unconsolidated joint venture with Aurora Health Network, Peace Capital (an affiliate of Complete Care Management) and us, and culminated with the closing of the purchase option by the joint venture.
On May 1, 2023, we executed a series of transactions that included the assignment of the leasehold interest to a newly formed tri-party unconsolidated joint venture comprised of Aurora Health Network, Peace Capital (an affiliate of Complete Care Management) and us, and culminated with the closing of the purchase option by the joint venture.
In connection with the Merger, Old Welltower's name was changed to "Welltower OP Inc.", and New Welltower inherited the name "Welltower Inc." Effective May 24, 2022, Welltower OP Inc. ("Welltower OP") converted from a Delaware corporation into a Delaware limited liability company named Welltower OP LLC (the "LLC Conversion").
In connection with the Merger, Old Welltower's name was changed to "Welltower OP Inc.", and New Welltower inherited the name "Welltower Inc." Effective May 24, 2022, Welltower OP Inc. converted from a Delaware corporation into Welltower OP, a Delaware limited liability company (the "LLC Conversion").
Welltower invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience.
Welltower invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall healthcare experience.
The transactions resulted in net cash proceeds to us of $104,240,000 after our retained interest of $11,571,000 in the joint venture and a gain from the loss of control and derecognition of the leasehold interest of $65,485,000, which we recorded in other income within our Consolidated Statements of Comprehensive Income during the year ended December 31, 2023. 61 Item 7.
The transactions resulted in net cash proceeds to us of $104,240,000 after our retained interest of $11,571,000 in the joint venture and a gain from the loss of control and derecognition of the leasehold interest of $65,485,000, which we recorded in other income within our Consolidated Statements of Comprehensive Income during the year ended December 31, 2023. 63 Item 7.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
This information shall not otherwise be deemed filed under such Acts. During the three months ended December 31, 2023 , we acquired shares of our common stock held by employees who tendered shares to satisfy tax withholding obligations upon the vesting of previously issued restricted stock awards.
This information shall not otherwise be deemed filed under such Acts. During the three months ended December 31, 2024 , we acquired shares of our common stock held by employees who tendered shares to satisfy tax withholding obligations upon the vesting of previously issued restricted stock awards.
(2) Represents projects for which a final budget or expected conversion date are not yet known. Interest expense represents secured debt interest expense, which fluctuates based on the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations.
(2) Represents projects for which a final budget or expected conversion date are not yet known. Interest expense represents secured debt interest expense, which fluctuates based on the net effect and timing of assumptions, segment transitions, fluctuations in interest rates, extinguishments and principal amortizations.
Please see Non-GAAP Financial Measures for additional information and reconciliations. Depreciation and amortization fluctuates as a result of the acquisitions, dispositions and segment transitions of Triple-net properties. To the extent we acquire or dispose of additional properties in the future, our provision for depreciation and amortization will change accordingly.
Please see Non-GAAP Financial Measures for additional information and reconciliations. Depreciation and amortization fluctuate as a result of the acquisitions, dispositions and segment transitions of Triple-net properties. To the extent we acquire or dispose of additional properties in the future, our provision for depreciation and amortization will change accordingly.
During inflationary periods, which generally are accompanied by rising interest rates, our ability to grow may be adversely affected because the yield on new investments may increase at a slower rate than new borrowing costs. 58 Item 7.
During inflationary periods, which generally are accompanied by rising interest rates, our ability to grow may be adversely affected because the yield on new investments may increase at a slower rate than new borrowing costs. 60 Item 7.
Accordingly, separate consolidated financial statements of Welltower OP have not been presented. Furthermore, Welltower and Welltower OP have no material assets, liabilities, or operations other than financing activities and their investments in non-guarantor subsidiaries. Therefore, we meet the criteria in Rule 13-01 of Regulation S-X to omit the summarized financial information from our disclosures. 57 Item 7.
Accordingly, separate consolidated financial statements of Welltower OP have not been presented. Furthermore, Welltower and Welltower OP have no material assets, liabilities or operations other than financing activities and their investments in non-guarantor subsidiaries. Therefore, we meet the criteria in Rule 13-01 of Regulation S-X to omit the summarized financial information from our disclosures.
References to "we," "us" and "our" mean collectively Welltower, Welltower OP and those entities/subsidiaries owned or controlled by Welltower and/or Welltower OP. Executive Summary Company Overview Welltower Inc. (NYSE:WELL), a real estate investment trust ("REIT") and S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure.
References to "we," "us" and "our" mean collectively Welltower, Welltower OP and those entities/subsidiaries owned or controlled by Welltower and/or Welltower OP. Executive Summary Company Overview Welltower Inc. (NYSE:WELL), a real estate investment trust ("REIT") and S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of healthcare infrastructure.
Please see Non-GAAP Financial Measures for additional information and reconciliations related to these supplemental measures. This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Please see Non-GAAP Financial Measures for additional information and reconciliations related to these supplemental measures. This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Investing Activities The changes in net cash provided from/used in investing activities are primarily attributable to net changes in real property investments and dispositions, loans receivable and investments in unconsolidated entities, which are summarized above in “Key Transactions.” Please refer to Notes 3 and 5 of our consolidated financial statements for additional information.
Investing Activities The changes in net cash provided from/used in investing activities are primarily attributable to net changes in real property investments and dispositions, loans receivable and investments in unconsolidated entities, which are summarized above in "Key Transactions." Please refer to Notes 3 and 5 of our consolidated financial statements for additional information.
(2) Based on foreign currency exchange rates in effect as of balance sheet date. (3) Based on variable interest rates in effect as of December 31, 2023. (4) See Note 6 to our consolidated financial statements for additional information. (5) See Note 13 to our consolidated financial statements for additional information.
(2) Based on foreign currency exchange rates in effect as of the balance sheet date. (3) Based on variable interest rates in effect as of December 31, 2024. (4) See Note 6 to our consolidated financial statements for additional information. (5) See Note 13 to our consolidated financial statements for additional information.
Welltower owns interests in properties concentrated in major, high-growth markets in the United States ("U.S."), Canada and the United Kingdom ("U.K."), consisting of seniors housing and post-acute communities and outpatient medical properties. Welltower is the initial member and majority owner of Welltower OP, with an approximate ownership interest of 99.765% as of December 31, 2023.
Welltower owns interests in properties concentrated in major, high-growth markets in the United States ("U.S."), Canada and the United Kingdom ("U.K."), consisting of seniors housing and post-acute communities and outpatient medical properties. Welltower is the initial member and majority owner of Welltower OP, with an approximate ownership interest of 99.707% as of December 31, 2024.
Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse impact on our cost and availability of capital, which could have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. 56 Item 7.
Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse impact on our cost and availability of capital, which could have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.
(the “DownREIT II Shares”) that may be issued from time to time if, and to the extent that, certain holders of Class A units (the “DownREIT II Units”) of HCN G&L DownREIT II LLC, a Delaware limited liability company (the “DownREIT II”), tender such DownREIT II Units for redemption by the DownREIT II, and HCN DownREIT Member, LLC, a majority-owned indirect subsidiary of Welltower (including its permitted successors and assigns, the “Managing Member”), or a designated affiliate of the Managing Member, elects to assume the redemption obligations of the DownREIT II and to satisfy all or a portion of the redemption consideration by issuing DownREIT II Shares to the holders instead of or in addition to paying a cash amount.
(the "DownREIT II Shares") that may be issued from time to time if, and to the extent that, certain holders of Class A units (the "DownREIT II Units") of HCN G&L DownREIT II LLC, a Delaware limited liability company (the "DownREIT II"), tender such DownREIT II Units for redemption by the DownREIT II, and HCN DownREIT Member, LLC, a majority-owned indirect subsidiary of Welltower (including its permitted successors and assigns, the "Managing Member"), or a designated affiliate of the Managing Member, elects to assume the redemption obligations of the DownREIT II and to satisfy all or a portion of the redemption consideration by issuing DownREIT II Shares to the holders instead of or in addition to paying a cash amount.
Off-Balance Sheet Arrangements At December 31, 2023 , we had investments in unconsolidated entities with our ownership generally ranging from 10% to 95%. We use financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure. At December 31, 2023 , we had 23 outstanding letter of credit obligations.
Off-Balance Sheet Arrangements At December 31, 2024 , we had investments in unconsolidated entities with our ownership generally ranging from 10% to 95%. We use financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure. At December 31, 2024 , we had 20 outstanding letter of credit obligations.
In connection with the filing of the Shelf Form S-3, Welltower also filed with the SEC a prospectus supplement that will continue an offering that was previously covered by Old Welltower's prospectus supplement and the accompanying prospectus to the prior registration statement relating to the registration of up to 475,327 sh ares of common stock of Welltower Inc.
In connection with the filing of the Shelf Form S-3, Welltower also filed with the SEC a prospectus supplement that will continue an offering that was previously covered by a prior registration statement relating to the registration of up to 475,327 sh ares of common stock of Welltower Inc.
For the years ended December 31, 2023, 2022 and 2021, cash flows provided from operations exceeded cash distributions to stockholders.
For the years ended December 31, 2024, 2023 and 2022, cash flows provided from operations exceeded cash distributions to stockholders.
Net income attributable to noncontrolling interests represents our partners’ share of net income (loss) related to joint ventures. 60 Item 7.
Net income attributable to noncontrolling interests represents our partners’ share of net income (loss) related to joint ventures. 62 Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations EXECUTIVE SUMMARY Company Overview 51 Business Strategy 51 Key Transactions 52 Key Performance Indicators, Trends and Uncertainties 53 Corporate Governance 55 LIQUIDITY AND CAPITAL RESOURCES Sources and Uses of Cash 55 Off-Balance Sheet Arrangements 56 Contractual Obligations 56 Capital Structure 56 Supplemental Guarantor Information 57 RESULTS OF OPERATIONS Summary 58 Seniors Housing Operating 59 Triple-net 61 Outpatient Medical 63 Non-Segment/Corporate 64 OTHER Non-GAAP Financial Measures 65 Critical Accounting Policies and Estimates 71 50 Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations EXECUTIVE SUMMARY Company Overview 52 Business Strategy 52 Key Transactions 53 Key Performance Indicators, Trends and Uncertainties 54 Corporate Governance 56 LIQUIDITY AND CAPITAL RESOURCES Sources and Uses of Cash 56 Off-Balance Sheet Arrangements 57 Contractual Obligations 58 Capital Structure 58 Supplemental Guarantor Information 59 RESULTS OF OPERATIONS Summary 59 Seniors Housing Operating 61 Triple-net 63 Outpatient Medical 65 Non-Segment/Corporate 66 OTHER Non-GAAP Financial Measures 67 Critical Accounting Policies and Estimates 74 51 Item 7.
Management uses these key performance indicators to facilitate internal and external comparisons to our historical operating results, in making operating decisions, and for budget planning purposes. Operating Performance We believe that net income and net income attributable to common stockholders (“NICS”) per the Consolidated Statements of Comprehensive Income are the most appropriate earnings measures.
Management uses these key performance indicators to facilitate internal and external comparisons to our historical operating results, in making operating decisions and for budget planning purposes. Operating Performance We believe that net income and net income attributable to common stockholders ("NICS") as reflected in the Consolidated Statements of Comprehensive Income are the most appropriate earnings measures.
We did not repurchase any shares of our common stock through the Stock Repurchase Program during the three months ended December 31, 2023. Item 6. [Reserved] 49 Item 7.
We did not repurchase any shares of our common stock through the Stock Repurchase Program during the three months ended December 31, 2024. 49 Item 6. [Reserved] 50 Item 7.
For the year ended December 31, 2023, resident fees and services and rental income represented 72% and 23% , respectively, of total revenues. Substantially all of our operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment.
For the year ended December 31, 2024, resident fees and services and rental income represented 75% and 20% of total revenues, respectively. Substantially all of our operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment.
Factors that may cause actual results to differ from expected results are described in more detail in “Item 1 — Business — Cautionary Statement Regarding Forward-Looking Statements” and “Item 1A — Risk Factors” and other sections of this Annual Report on Form 10-K.
Factors that may cause actual results to differ from expected results are described in more detail in "Item 1 — Business — Cautionary Statement Regarding Forward-Looking Statements" and "Item 1A — Risk Factors" and other sections of this Annual Report on Form 10-K.
We seek to pay consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders as a result of annual increases in NOI and portfolio growth. To meet these objectives, we invest across the full spectrum of seniors housing and health care real estate and diversify our investment portfolio by property type, relationship and geographic location.
We seek to pay consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders through annual increases in NOI and portfolio growth. To meet these objectives, we invest across the full spectrum of seniors housing and healthcare real estate and diversify our investment portfolio by property type, relationship and geographic location.
("New Welltower") as a wholly owned subsidiary, and New Welltower formed WELL Merger Holdco Sub Inc. ("Merger Sub") as a wholly owned subsidiary. On April 1, 2022, Merger Sub merged with and into Old Welltower, with Old Welltower continuing as the surviving corporation and a wholly owned subsidiary of New Welltower (the "Merger").
("Merger Sub") as a wholly owned subsidiary. On April 1, 2022, Merger Sub merged with and into Old Welltower, with Old Welltower continuing as the surviving corporation and a wholly owned subsidiary of New Welltower (the "Merger").
(2) Represents carrying value of net real estate assets at time of disposition. See Note 5 to our consolidated financial statements for additional information. (3) Represents annualized contractual income that was being received in cash at date of disposition divided by stated purchase price. Excludes properties sold that were recent development conversions.
(2) Represents carrying value of net real estate assets at time of disposition. See Note 5 to our consolidated financial statements for additional information. (3) Represents annualized contractual income that was being received in cash at date of disposition divided by stated purchase price.
During the three months ended December 31, 2023 , we redeemed 980 OP Units for common shares. On November 7, 2022, our Board of Directors approved a share repurchase program for up to $3,000,000,000 of common stock (the "Stock Repurchase Program").
During the three months ended December 31, 2024 , no OP Units were redeemed for common shares. On November 7, 2022, our Board of Directors approved a share repurchase program for up to $3,000,000,000 of common stock (the "Stock Repurchase Program").
Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount. See Non-GAAP Financial Measures for additional information and reconciliation. Business Strategy Our primary objectives are to protect stockholder capital and enhance stockholder value.
Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount. Non-segment/Corporate NOI, which includes the loan portfolio, is excluded. See Non-GAAP Financial Measures for additional information and reconciliation. Business Strategy Our primary objectives are to protect stockholder capital and enhance stockholder value.
The change in secured debt interest expense is due to the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations.
Interest expense represents secured debt interest expense and related fees. The change in secured debt interest expense is due to the net effect and timing of assumptions, segment transitions, fluctuations in interest rates, extinguishments and principal amortizations.
Average occupancy is as follows: Three Months Ended (1) March 31, June 30, September 30, December 31, 2022 76.3% 77.1% 78.0% 78.3% 2023 79.0% 79.6% 80.7% 82.2% (1) Average occupancy includes our minority ownership share related to unconsolidated properties and excludes the minority partners' noncontrolling ownership share related to consolidated properties. Also excludes land parcels and properties under development.
Average occupancy is as follows: Three Months Ended (1) March 31, June 30, September 30, December 31, 2023 79.0% 79.6% 80.7% 82.2% 2024 82.5% 82.8% 83.8% 84.8% (1) Average occupancy includes our minority ownership share related to unconsolidated properties and excludes the minority partners' noncontrolling ownership share related to consolidated properties. Also excludes land parcels and properties under development.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Summary Our primary sources of revenue include resident fees and services, rent, interest income and interest earned on short-term deposits. Our primary expenses include property operating expenses, depreciation and amortization, interest expense, general and administrative expenses, and other expenses.
Results of Operations Summary Our primary sources of revenue include resident fees and services revenue, rental income, interest income and interest earned on short-term deposits. Our primary expenses include property operating expenses, depreciation and amortization, interest expense, general and administrative expenses and other expenses.
Our asset management process for seniors 51 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral.
Our asset management process for seniors housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral.
Specifically, the number of shares of common stock acquired from employees and the average prices paid per share for each month in the fourth quarter ended December 31, 2023 are as shown in the table below: Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program Maximum Dollar Value of Shares that May Yet Be Purchased Under the Repurchase Program October 1, 2023 through October 31, 2023 834 $ 84.16 — $ 3,000,000,000 November 1, 2023 through November 30, 2023 541 85.15 — 3,000,000,000 December 1, 2023 through December 31, 2023 — — — 3,000,000,000 Totals 1,375 $ 84.55 — $ 3,000,000,000 Under the terms of various partnership agreements of certain of our affiliated limited partnerships, the interest of limited partners may be redeemed, subject to certain conditions, for cash or common shares, at our option.
Specifically, the number of shares of common stock acquired from employees and the average prices paid per share for each month in the fourth quarter ended December 31, 2024 are as shown in the table below: Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program Maximum Dollar Value of Shares that May Yet Be Purchased Under the Repurchase Program October 1, 2024 through October 31, 2024 247 $ 129.29 — $ 3,000,000,000 November 1, 2024 through November 30, 2024 210 134.88 — 3,000,000,000 December 1, 2024 through December 31, 2024 383 134.88 — 3,000,000,000 Totals 840 $ 133.24 — $ 3,000,000,000 Under the terms of various partnership agreements of certain of our affiliated limited partnerships, the interest of limited partners may be redeemed, subject to certain conditions, for cash or common shares, at our option.
During the twelve months ended December 31, 2023 , we sold 53,300,874 shares of common stock under our current and previous ATM Programs generating gross proceeds of approximately $4,313,007,000. • In November 2023, we issued 20,125,000 shares of common stock generating gross proceeds of approximately $1,772,216,000 . 52 Item 7.
During the year ended December 31, 2023, we sold 53,300,874 shares of common stock under our ATM Programs generating gross proceeds of approximately $4,313,007,000. In November 2023, we issued 20,125,000 shares of common stock generating gross proceeds of approximately $1,772,216,000.
The following table reflects the recent historical trends for our credit strength measures for the periods presented: Year Ended December 31, 2023 2022 2021 Net debt to book capitalization ratio 34.3% 39.5% 42.2% Net debt to undepreciated book capitalization ratio 27.8% 32.1% 34.9% Net debt to market capitalization ratio 20.9% 29.5% 25.9% Interest coverage ratio 3.74x 3.73x 3.89x Fixed charge coverage ratio 3.44x 3.37x 3.43x Adjusted interest coverage ratio 3.95x 3.94x 3.89x Adjusted fixed charge coverage ratio 3.64x 3.56x 3.43x Concentration Risk We evaluate our concentration risk in terms of NOI by property mix, relationship mix and geographic mix.
The following table reflects the recent historical trends for our credit strength measures for the periods presented: Year Ended December 31, 2024 2023 2022 Net debt to book capitalization ratio 26.8% 34.3% 39.5% Net debt to undepreciated book capitalization ratio 21.6% 27.8% 32.1% Net debt to enterprise ratio 12.9% 20.9% 29.5% Interest coverage ratio 5.39x 3.74x 3.73x Fixed charge coverage ratio 4.99x 3.44x 3.37x Adjusted interest coverage ratio 5.34x 3.95x 3.94x Adjusted fixed charge coverage ratio 4.95x 3.64x 3.56x Concentration Risk We evaluate our concentration risk in terms of NOI by property mix, relationship mix and geographic mix.
Our primary sources of cash include resident fees and services, rent and interest receipts, interest earned on short-term deposits, borrowings under our unsecured revolving credit facility and commercial paper program, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable.
Our primary sources of cash include resident fees and services revenue, rental income and interest receipts, interest earned on short-term deposits, borrowings under our unsecured revolving credit facility and commercial paper program, issuances of debt and equity securities including through our ATM Program (as defined below), proceeds from investment dispositions and principal payments on loans receivable.
On April 1, 2022, Welltower also filed with the SEC a registration statement in connection with its enhanced dividend reinvestment plan (“DRIP”) under which it may issue up to 15,000,000 shares of common stock to replace Old Welltower’s existing DRIP registration statement on Form S-3 filed with the SEC on May 4, 2021.
On April 1, 2022, Welltower also filed with the SEC a registration statement in connection with its enhanced dividend reinvestment plan ("DRIP") under which it may issue up to 15,000,000 shares of common stock.
The following table reflects the recent historical trends of our operating performance measures for the periods presented (in thousands): Year Ended December 31, 2023 2022 2021 Net income $ 358,139 $ 160,568 $ 374,479 Net income attributable to common stockholders 340,094 141,214 336,138 Funds from operations attributable to common stockholders 1,763,227 1,478,072 1,220,722 Consolidated net operating income 2,690,219 2,301,845 1,967,553 Credit Strength We measure our credit strength both in terms of leverage ratios and coverage ratios.
The following table reflects the recent historical trends of our operating performance measures for the periods presented (in thousands): Year Ended December 31, 2024 2023 2022 Net income $ 972,857 $ 358,139 $ 160,568 Net income attributable to common stockholders 951,680 340,094 141,214 Funds from operations attributable to common stockholders 2,323,433 1,763,227 1,478,072 Consolidated net operating income 3,160,907 2,690,219 2,301,845 Credit Strength We measure our credit strength both in terms of leverage ratios and coverage ratios.
Please refer to “Item 1 — Business,” “Item 1A — Risk Factors” in this Annual Report on Form 10-K for further discussion of these risk factors. 54 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Corporate Governance Maintaining investor confidence and trust is important in today’s business environment.
Please refer to "Item 1 — Business," "Item 1A — Risk Factors" in this Annual Report on Form 10-K for further discussion of these risk factors. Corporate Governance Maintaining investor confidence and trust is important in today's business environment.
As part of the substantial exit of the Genesis HealthCare operating relationship, which we disclosed on March 2, 2021, we transitioned the sublease of a portfolio of seven facilities from Genesis HealthCare to Complete Care Management in the second quarter of 2021.
Interest income primarily related to leases that were classified as sales-type leases in 2024. As part of the substantial exit of the Genesis HealthCare operating relationship, which we disclosed on March 2, 2021, we transitioned the sublease of a portfolio of seven facilities from Genesis HealthCare to Complete Care Management in the second quarter of 2021.
The leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and restricted cash. The coverage ratios indicate our ability to service interest and fixed charges (interest and secured debt principal amortization).
The leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and restricted cash. The coverage ratios indicate our ability to service interest and fixed charges (interest and secured debt principal amortization). We expect to maintain capitalization ratios and coverage ratios sufficient to maintain a capital structure consistent with our current profile.
A portion of our Triple-net properties were formed through partnerships. Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner.
Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner.
The following table reflects our recent historical trends of concentration risk by NOI for the years indicated below: Year Ended December 31, (1) 2023 2022 2021 Property mix: Seniors Housing Operating 42% 41% 35% Triple-net 38% 38% 43% Outpatient Medical 20% 21% 22% Relationship mix: Integra Healthcare Properties 8% —% —% Sunrise Senior Living 6% 7% 10% Cogir Management Corporation 4% 3% 2% Avery Healthcare 4% 3% 4% Oakmont Management Group 4% 2% 1% Remaining 74% 85% 83% Geographic mix: California 12% 14% 13% United Kingdom 9% 10% 13% Texas 8% 8% 8% Canada 6% 6% 6% Florida 6% 6% 4% Remaining 59% 56% 56% (1) Excludes our share of investments in unconsolidated entities and non-segment/corporate NOI.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following table reflects our recent historical trends of concentration risk by NOI for the years indicated below: Year Ended December 31, (1) 2024 2023 2022 Property mix: Seniors Housing Operating 54% 45% 45% Triple-net 27% 34% 34% Outpatient Medical 19% 21% 21% Relationship mix: Cogir Management Corporation 7% 4% 3% Integra Healthcare Properties 7% 8% —% Sunrise Senior Living 5% 6% 7% Avery Healthcare 4% 4% 3% Oakmont Management Group 4% 4% 2% Remaining 73% 74% 85% Geographic mix: California 11% 12% 14% United Kingdom 11% 9% 10% Florida 8% 6% 6% Texas 8% 8% 8% Canada 6% 6% 6% Remaining 56% 59% 56% (1) Excludes our share of investments in unconsolidated entities.
As of December 31, 2023, we were in compliance in all material respects with the covenants under our debt agreements. None of our debt agreements contain provisions for acceleration which could be triggered by our debt ratings. However, under our primary unsecured credit facility, the ratings on our senior unsecured notes are used to determine the fees and interest charged.
None of our debt agreements contain provisions for acceleration which could be triggered by our debt ratings. However, under our primary unsecured credit facility, the ratings on our senior unsecured notes are used to determine the fees and interest charged.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the New York Stock Exchange (NYSE:WELL). There were 2,758 stockholders of record as of February 9, 2024.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the New York Stock Exchange (NYSE:WELL). There wer e 2,156 sto ckholders of record as of February 7, 2025.
The following table represents the changes in outstanding common stock for the period from January 1, 2021 to December 31, 2023 (in thousands): Year Ended December 31, December 31, 2023 December 31, 2022 December 31, 2021 Totals Beginning balance 490,508 447,239 417,401 417,401 Redemption of OP Units and DownREIT Units 336 5 — 341 Option exercises 4 2 — 6 ATM Program issuances 53,301 43,093 29,667 126,061 Equity issuances 20,125 — — 20,125 Other, net (33) 169 171 307 Ending balance 564,241 490,508 447,239 564,241 Weighted average number of shares outstanding: Basic 515,629 462,185 424,976 Diluted 518,701 465,158 426,841 A portion of our earnings are derived primarily from long-term investments with predictable rates of return.
The following table represents the changes in outstanding common stock for the period from January 1, 2022 to December 31, 2024 (in thousands): Year Ended December 31, 2024 2023 2022 Totals Beginning balance 564,241 490,508 447,239 447,239 Redemption of OP Units and DownREIT Units 495 336 5 836 Option exercises 18 4 2 24 ATM Program issuances 70,420 53,301 43,093 166,814 Equity issuances — 20,125 — 20,125 Other, net 115 (33) 169 251 Ending balance 635,289 564,241 490,508 635,289 Weighted average number of shares outstanding: Basic 602,975 515,629 462,185 Diluted 608,750 518,701 465,158 A portion of our earnings is derived primarily from long-term investments with predictable rates of return.
Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliation of these measures. Leverage ratios and coverage ratios are widely used by investors, analysts and rating agencies in the valuation, comparison, investment recommendations and rating of companies.
Please refer to the section entitled "Non-GAAP Financial Measures" for further discussion and reconciliations. These earnings measures are widely used by investors and analysts in the valuation, comparison and investment recommendations of companies.
Permanent financing for future investments, which replaces funds drawn under our unsecured revolving credit facility and commercial paper program, has historically been provided through a combination of the issuance of public debt and equity securities and the incurrence or assumption of secured debt. Given general economic conditions in 2023, investments were generally funded proactively via issuances of common stock.
Permanent financing for future investments, which replaces funds drawn under our unsecured revolving credit facility and commercial paper program, has historically been provided through a combination of the issuance of debt and equity securities and the incurrence or assumption of secured debt.
As of February 9, 2024, 15,000,000 share s of common stock remained available for issuance under the DRIP registration statement.
As of February 7, 2025, 15,000,000 shares of common stock remained available for issuance under the DRIP registration statement.
Management’s Discussion and Analysis of Financial Condition and Results of Operations On April 1, 2022, Welltower and Welltower OP jointly filed with the Securities and Exchange Commission (the “SEC”) an open-ended automatic or “universal” shelf registration statement on Form S-3 (the "Shelf Form S-3") covering an indeterminate amount of future offerings of Welltower’s debt securities, common stock, preferred stock, depositary shares, guarantees of debt securities issued by Welltower OP, warrants and units and Welltower OP’s debt securities and guarantees of debt securities issued by Welltower to replace Old Welltower’s existing “universal” shelf registration statement filed with the SEC on May 4, 2021.
On April 1, 2022, Welltower and Welltower OP jointly filed with the SEC an open-ended automatic or "universal" shelf registration statement on Form S-3 (the "Shelf Form S-3") covering an indeterminate amount of future offerings of Welltower's debt securities, common stock, preferred stock, depositary shares, guarantees of debt securities issued by Welltower OP, warrants and units and Welltower OP’s debt securities and guarantees of debt securities issued by Welltower.
To the extent that our obligors/partners experience operating difficulties and become unable to generate sufficient cash to make payments or operating distributions to us, there could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. To mitigate this risk, we monitor our investments through a variety of methods determined by the type of property.
To the extent that our obligors/partners experience operating difficulties and become unable to generate sufficient cash to make payments or operating distributions to us, there could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. 52 Item 7.
The following is a summary of our Seniors Housing Operating segment property secured debt principal activity (dollars in thousands): Year Ended December 31, 2023 2022 2021 Beginning balance $ 1,701,939 $ 1,599,522 $ 1,706,189 Debt transferred in — 32,478 — Debt issued 385,115 113,183 23,569 Debt assumed 381,837 288,522 — Debt extinguished (486,825) (227,910) (77,959) Principal payments (47,672) (47,399) (50,603) Foreign currency 20,654 (56,457) (1,674) Ending balance $ 1,955,048 $ 1,701,939 $ 1,599,522 Ending weighted average interest 4.68 % 4.32 % 2.81 % The majority of our Seniors Housing Operating properties are formed through partnership interests.
The following is a summary of our Seniors Housing Operating segment property secured debt principal activity (dollars in thousands): Year Ended December 31, 2024 2023 2022 Beginning balance $ 1,955,048 $ 1,701,939 $ 1,599,522 Debt transferred 27,084 — 32,478 Debt issued 197,930 385,115 113,183 Debt assumed 427,725 381,837 288,522 Debt extinguished (303,081) (486,825) (227,910) Debt disposed (164,640) — — Principal payments (41,220) (47,672) (47,399) Foreign currency (56,263) 20,654 (56,457) Ending balance $ 2,042,583 $ 1,955,048 $ 1,701,939 Ending weighted average interest 4.29 % 4.68 % 4.32 % A portion of our Seniors Housing Operating property investments are formed through partnership interests.
Strategic Dissolution of Revera Joint Ventures During 2023, we entered into definitive agreements to dissolve our existing Revera joint venture relationships across the U.S., U.K. and Canada. The transactions include acquiring the remaining interests in 110 properties from Revera while simultaneously selling interest in 31 properties to Revera.
During 2023, we entered into definitive agreements to dissolve our existing Revera joint venture relationships across the U.S., U.K. and Canada. The transactions included acquiring the remaining interests in 110 properties from Revera while simultaneously selling interest in 31 properties to Revera. See Note 5 to our consolidated financial statements for further information regarding the transactions.
Renovations, redevelopments and other capital improvements include expenditures to maximize property value, increase net operating income, maintain a market-competitive position and/or achieve property stabilization. The increase in overall development and recurring capital expenditures, tenant improvements and lease commissions is due primarily to portfolio growth and increased spending after a contraction during the pandemic. 55 Item 7.
Renovations, redevelopments and other capital improvements include expenditures to maximize property value, increase net operating income, maintain a market-competitive position and/or achieve property stabilization. The increase in renovations, redevelopments and other capital improvements is due primarily to portfolio growth.
Please see Notes 8, 12 and 13 to our consolidated financial statements for additional information. Contractual Obligations The following table summarizes our payment requirements under contractual obligations as of December 31, 2023 (in thousands): Payments Due by Period Contractual Obligations Total 2024 2025-2026 2027-2028 Thereafter Senior unsecured notes and term credit facilities: (1) U.S.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Contractual Obligations The following table summarizes our payment requirements under contractual obligations as of December 31, 2024 (in thousands): Payments Due by Period Contractual Obligations Total 2025 2026-2027 2028-2029 Thereafter Senior unsecured notes and term credit facilities: (1) U.S.
The data are based on the closing prices as of December 31 for each of the five years presented. 2018 equals $100 and dividends are assumed to be reinvested. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 S & P 500 $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 Welltower Inc. 100.00 123.03 101.52 139.06 109.62 155.40 FTSE NAREIT Equity 100.00 126.00 115.92 166.04 125.58 142.83 Except to the extent that we specifically incorporate this information by reference, the foregoing Stockholder Return Performance Presentation shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended.
The data are based on the closing prices as of December 31 for each of the five years presented. 2019 equals $100 and dividends are assumed to be reinvested. 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 S & P 500 $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 Welltower Inc. 100.00 82.51 113.03 110.90 126.31 180.71 FTSE NAREIT Equity 100.00 94.12 131.68 98.62 109.95 114.71 Except to the extent that we specifically incorporate this information by reference, the foregoing Stockholder Return Performance Presentation shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended.
Geographic mix measures the portion of our NOI that relates to our current top five states (or international countries).
Relationship mix measures the portion of our NOI that relates to our current top five relationships. Geographic mix measures the portion of our NOI that relates to our current top five states (or countries outside the U.S.). 55 Item 7.
These earnings measures are widely used by investors and analysts in the valuation, comparison and investment recommendations of companies.
Leverage ratios and coverage ratios are widely used by investors, analysts and rating agencies in the valuation, comparison, investment recommendations and rating of companies.
Other important factors are identified in “Item 1 — Business” and “Item 1A — Risk Factors” above. On March 7, 2022, we announced our intent to complete an UPREIT reorganization. In February 2022, the company formerly known as Welltower Inc. ("Old Welltower") formed WELL Merger Holdco Inc.
Other important factors are identified in “Item 1 — Business” and “Item 1A — Risk Factors” above. We are organized in an UPREIT structure. In February 2022, the company formerly known as Welltower Inc. ("Old Welltower") formed WELL Merger Holdco Inc. ("New Welltower") as a wholly owned subsidiary, and New Welltower formed WELL Merger Holdco Sub Inc.
Concentration risk is a valuable measure in understanding what portion of our NOI could be at risk if certain sectors were to experience downturns. Property mix measures the portion of our NOI that relates to our various property types. Relationship mix measures the portion of our NOI that relates to our current top five relationships.
Concentration risk is a valuable measure in understanding what portion of our NOI could be at risk if certain sectors were to experience downturns. Property mix measures the portion of our NOI that relates to our various property types and excludes interest income earned on our loan portfolio, which is classified as Non-segment/Corporate.
(the "Exchanged Shares") that may, under certain circumstances, be issuable upon exchange of 2.750% exchangeable senior notes due 2028 of Welltower OP and the resale from time to time by the recipients of the Exchanged Shares. Supplemental Guarantor Information Welltower OP has issued the unsecured notes described in Note 11 to our Consolidated Financial Statements.
(the "Exchanged Shares") that may, under certain circumstances, be issuable upon exchange of 2.750% exchangeable senior notes due 2028 or 3.125% exchangeable senior notes due 2029 of Welltower OP and the resale from time to time by the recipients of the Exchanged Shares.
These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If gross operating revenues at our facilities and/or the Consumer Price Index do not increase, a portion of our revenues may not continue to increase.
Cert ain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index and/or changes in the gross operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period.
See Note 5 to our consolidated financial statement for further information regarding the transaction. Dividends Our Board of Directors declared a cash dividend for the quarter ended December 31, 2023 of $0.61 per share. On March 7, 2024 , we will pay our 211th consecutive quarterly cash dividend to stockholders of record on February 23, 2024 .
Dividends Our Board of Directors declared a cash dividend for the quarter ended December 31, 2024 of $0.67 per share. On March 6, 2025, we will pay our 215th consecutive quarterly cash dividend to stockholders of record on February 25, 2025.
On August 9, 2023, Welltower filed with the SEC a prospectus supplement relating to the registration of up to 13,559,535 shares of common stock of Welltower Inc.
On October 8, 2024, Welltower filed with the SEC a prospectus supplement relating to the registration of up to 23,471,419 shares of common stock of Welltower Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Investments Inve stments The following summarizes our property acquisitions and joint venture investments completed during the year ended December 31, 2023 (dollars in thousands): Properties Book Amount (1) Capitalization Rates (2) Seniors Housing Operating 52 $ 2,655,913 5.4% Triple-net 66 1,097,004 9.4% Outpatient Medical 35 474,058 6.9% Totals 153 $ 4,226,975 6.6% (1) Represents amounts recorded in net real estate investments including fair value adjustments pursuant to U.S.
Inve stments The following summarizes our property acquisitions and joint venture investments completed during the year ended December 31, 2024 (dollars in thousands): Properties Book Amount (1) Capitalization Rates (2) Seniors Housing Operating 198 $ 4,542,752 7.2% Triple-net 52 1,126,492 8.4% Outpatient Medical 1 46,854 7.7% Totals 251 $ 5,716,098 7.5% (1) Represents amounts recorded in net real estate investments including fair value adjustments pursuant to U.S.
Other useful supplemental measures of our operating performance include funds from operations attributable to common stockholders (“FFO”) and consolidated net operating income (“NOI”); however, these supplemental measures are not defined by U.S. GAAP. Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliations.
Other useful supplemental measures of our operating performance include funds from operations attributable to common stockholders ("FFO") and consolidated net operating income ("NOI"); however, these supplemental measures are not defined by U.S. 54 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations GAAP.
Changes in the gain on sales of properties are related to the volume and timing of property sales and the sales prices. Depreciation and amortization fluctuates as a result of acquisitions, disposition and transitions. To the extent we acquire or dispose of additional properties in the future, our provision for depreciation and amortization will change accordingly.
Depreciation and amortization has increased as a result of acquisitions and segment transitions. To the extent we acquire or dispose of additional properties in the future, our provision for depreciation and amortization will change accordingly. 61 Item 7.
At December 31, 2023, we had $1,993,646,000 of cash and cash equivalents, $82,437,000 of restricted cash and $4,000,000,000 of available borrowing capacity under our unsecured revolving credit facility.
At December 31, 2024, we had $3,506,586,000 of cash and cash equivalents, $204,871,000 of restricted cash and $5,000,000,000 of available borrowing capacity under our unsecured revolving credit facility.
The following table summarizes our consolidated portfolio for the year ended December 31, 2023 (dollars in thousands): Percentage of Number of Type of Property NOI (1) NOI Properties Seniors Housing Operating $ 1,118,135 42.4 % 918 Triple-net 1,001,135 37.9 % 614 Outpatient Medical 519,199 19.7 % 369 Totals $ 2,638,469 100.0 % 1,901 (1) Represents consolidated net operating income ("NOI") and excludes our share of investments in unconsolidated entities.
The following table summarizes our consolidated portfolio for the year ended December 31, 2024 (dollars in thousands): Percentage of Number of Type of Property NOI (1) NOI Properties Seniors Housing Operating $ 1,511,681 53.7 % 1,156 Triple-net 748,049 26.6 % 592 Outpatient Medical 556,477 19.7 % 371 Totals $ 2,816,207 100.0 % 2,119 (1) Represents consolidated net operating income ("NOI") and excludes our share of investments in unconsolidated entities.
These sources and uses of cash are reflected in our Consolidated Statements of Cash Flows and are discussed in further detail below.
These sources and uses of cash are reflected in our Consolidated Statements of Cash Flows and are discussed in further detail below. The following is a summary of our sources and uses of cash flows for the periods presented (dollars in thousands): 56 Item 7.
To the extent that investment dispositions exceed new investments, our revenues and cash flows from operations could be adversely affected. We expect to reinvest the proceeds from any investment dispositions in new investments. To the extent that new investment requirements exceed our available cash on-hand, we expect to borrow under our unsecured revolving credit facility and commercial paper program.
It is also likely that investment dispositions may occur in the future. To the extent that investment dispositions exceed new investments, our revenues and cash flows from operations could be adversely affected. We expect to reinvest the proceeds from any investment dispositions in new investments.
The following is a summary of cash used in non-acquisition capital improvement activities for the periods presented (dollars in thousands): Year Ended One Year Change Year Ended One Year Change Two Year Change December 31, December 31, December 31, 2023 2022 $ % 2021 $ % $ % New development $ 1,014,935 $ 631,737 $ 383,198 61 % $ 417,963 $ 213,774 51 % $ 596,972 143 % Recurring capital expenditures, tenant improvements and lease commissions 199,359 198,576 783 — % 99,994 98,582 99 % 99,365 99 % Renovations, redevelopments and other capital improvements 318,323 277,440 40,883 15 % 182,594 94,846 52 % 135,729 74 % Total $ 1,532,617 $ 1,107,753 $ 424,864 38 % $ 700,551 $ 407,202 58 % $ 832,066 119 % The change in new development is primarily due to the number and size of construction projects on-going during the relevant periods.
The following is a summary of cash used in non-acquisition capital improvement activities for the periods presented (dollars in thousands): Year Ended One Year Change Year Ended One Year Change Two Year Change December 31, December 31, December 31, 2024 2023 $ % 2022 $ % $ % New development $ 827,900 $ 1,014,935 $ (187,035) -18 % $ 631,737 $ 383,198 61 % $ 196,163 31 % Recurring capital expenditures, tenant improvements and lease commissions 290,832 199,359 91,473 46 % 198,576 783 — % 92,256 46 % Renovations, redevelopments and other capital improvements 566,714 318,323 248,391 78 % 277,440 40,883 15 % 289,274 104 % Total $ 1,685,446 $ 1,532,617 $ 152,829 10 % $ 1,107,753 $ 424,864 38 % $ 577,693 52 % The change in new development is primarily due to the number and size of construction projects ongoing during the relevant periods.
The ATM Program also allows Welltower to enter into forward sale agreements. A s of February 9, 2024, we had $1,451,479,501 of remaining capacity under the ATM Program and there were no outstanding forward sales agreements.
The ATM Program also allows Welltower to enter into forward sale agreements. A s of February 7, 2025, we had $2,697,834,000 of remaining capacity under the ATM Program and there were no 58 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations outstanding forward sales agreements.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations Outpatient Medical The following is a summary of our results of operations for the Outpatient Medical segment for the periods presented (dollars in thousands): Year Ended One Year Change Year Ended One Year Change Two Year Change December 31, December 31, December 31, 2023 2022 $ % 2021 $ % $ % Revenues: Rental income $ 741,322 $ 669,457 $ 71,865 11 % $ 613,254 $ 56,203 9 % $ 128,068 21 % Interest income 666 302 364 121 % 8,792 (8,490) -97 % (8,126) -92 % Other income 9,167 8,998 169 2 % 13,243 (4,245) -32 % (4,076) -31 % Total revenues 751,155 678,757 72,398 11 % 635,289 43,468 7 % 115,866 18 % Property operating expenses 231,956 205,997 25,959 13 % 186,939 19,058 10 % 45,017 24 % NOI (1) 519,199 472,760 46,439 10 % 448,350 24,410 5 % 70,849 16 % Other expenses: Depreciation and amortization 263,302 239,681 23,621 10 % 223,302 16,379 7 % 40,000 18 % Interest expense 10,543 18,078 (7,535) -42 % 17,506 572 3 % (6,963) -40 % Loss (gain) on extinguishment of debt, net 7 15 (8) -53 % (4) 19 475 % 11 275 % Provision for loan losses, net 264 (8) 272 n/a (3,463) 3,455 100 % 3,727 108 % Impairment of assets — 761 (761) -100 % 2,211 (1,450) -66 % (2,211) -100 % Other expenses 2,289 2,537 (248) -10 % 2,523 14 1 % (234) -9 % 276,405 261,064 15,341 6 % 242,075 18,989 8 % 34,330 14 % Income (loss) from continuing operations before income taxes and other item 242,794 211,696 31,098 15 % 206,275 5,421 3 % 36,519 18 % Income (loss) from unconsolidated entities (307) (2,467) 2,160 88 % (4,395) 1,928 44 % 4,088 93 % Gain (loss) on real estate dispositions, net (651) (6,399) 5,748 90 % 93,348 (99,747) -107 % (93,999) -101 % Income (loss) from continuing operations 241,836 202,830 39,006 19 % 295,228 (92,398) -31 % (53,392) -18 % Net income (loss) 241,836 202,830 39,006 19 % 295,228 (92,398) -31 % (53,392) -18 % Less: Net income (loss) attributable to noncontrolling interests 1,910 7,180 (5,270) -73 % 4,916 2,264 46 % (3,006) -61 % Net income (loss) attributable to common stockholders $ 239,926 $ 195,650 $ 44,276 23 % $ 290,312 $ (94,662) -33 % $ (50,386) -17 % (1) See Non-GAAP Financial Measures below.
Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations Outpatient Medical The following is a summary of our results of operations for the Outpatient Medical segment for the periods presented (dollars in thousands): Year Ended One Year Change Year Ended One Year Change Two Year Change December 31, December 31, December 31, 2024 2023 $ % 2022 $ % $ % Revenues: Rental income $ 792,981 $ 741,322 $ 51,659 7 % $ 669,457 $ 71,865 11 % $ 123,524 18 % Other income 9,132 9,167 (35) — % 8,998 169 2 % 134 1 % Total revenues 802,113 750,489 51,624 7 % 678,455 72,034 11 % 123,658 18 % Property operating expenses 245,636 231,956 13,680 6 % 205,997 25,959 13 % 39,639 19 % NOI (1) 556,477 518,533 37,944 7 % 472,458 46,075 10 % 84,019 18 % Other expenses: Depreciation and amortization 266,147 263,302 2,845 1 % 239,681 23,621 10 % 26,466 11 % Interest expense 1,150 10,543 (9,393) -89 % 18,078 (7,535) -42 % (16,928) -94 % Loss (gain) on extinguishment of debt, net — 7 (7) -100 % 15 (8) -53 % (15) -100 % Impairment of assets 1,571 — 1,571 n/a 761 (761) -100 % 810 106 % Other expenses 648 2,289 (1,641) -72 % 2,537 (248) -10 % (1,889) -74 % 269,516 276,141 (6,625) -2 % 261,072 15,069 6 % 8,444 3 % Income (loss) from continuing operations before income taxes and other item 286,961 242,392 44,569 18 % 211,386 31,006 15 % 75,575 36 % Income (loss) from unconsolidated entities 5,046 (549) 5,595 n/a (2,626) 2,077 79 % 7,672 292 % Gain (loss) on real estate dispositions and acquisitions of controlling interests, net 8,076 (651) 8,727 n/a (6,399) 5,748 90 % 14,475 226 % Income (loss) from continuing operations 300,083 241,192 58,891 24 % 202,361 38,831 19 % 97,722 48 % Net income (loss) 300,083 241,192 58,891 24 % 202,361 38,831 19 % 97,722 48 % Less: Net income (loss) attributable to noncontrolling interests 1,307 1,309 (2) — % 6,919 (5,610) -81 % (5,612) -81 % Net income (loss) attributable to common stockholders $ 298,776 $ 239,883 $ 58,893 25 % $ 195,442 $ 44,441 23 % $ 103,334 53 % (1) See Non-GAAP Financial Measures below.
This analysis requires us to use judgment in determining whether indicators of impairment exist and to estimate the expected future undiscounted cash flows or estimated fair values of the property. Properties that meet the held for sale criteria are recorded at the lesser of the fair value less costs to sell or carrying value.
The analysis requires us to use judgment in determining whether indicators of impairment exist and to estimate the expected future undiscounted cash flows or estimated fair values of the property. Properties that meet the held for sale criteria are recorded at the lesser of the fair value less costs to sell or carrying value.
Book capitalization represents the sum of net debt (defined as total long-term debt, excluding operating lease liabilities, less cash and cash equivalents and restricted cash), total equity and redeemable noncontrolling interests. Undepreciated book capitalization represents book capitalization adjusted for accumulated depreciation and amortization. Market capitalization represents book capitalization adjusted for the fair market value of our common stock.
Book capitalization represents the sum of net debt (defined as total long-term debt, excluding operating lease liabilities, less cash and cash equivalents and restricted cash), total equity and redeemable noncontrolling interests. Undepreciated book capitalization represents book capitalization adjusted for accumulated depreciation and amortization. Enterprise value represents book capitalization adjusted for the fair market value of our common stock.
Book capitalization represents the sum of net debt (defined as total long-term debt excluding operating lease liabilities less cash and cash equivalents and restricted cash), total equity and redeemable noncontrolling interests. Undepreciated book capitalization represents book capitalization adjusted for accumulated depreciation and amortization. Market capitalization represents book capitalization adjusted for the fair market value of our common stock.
Book capitalization represents the sum of net debt (defined as total long-term debt excluding operating lease liabilities, less cash and cash equivalents and restricted cash), total equity and redeemable noncontrolling interests. Undepreciated book capitalization represents book capitalization adjusted for accumulated depreciation and amortization. Enterprise value represents book capitalization adjusted for the fair market value of our common stock.
GAAP, excluding gains (or losses) from sales of real estate and impairment of depreciable assets, plus depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests. NOI is used to evaluate the operating performance of our properties. We define NOI as total revenues, including tenant reimbursements, less property operating expenses.
GAAP, excluding gains (or losses) from sales of real estate and acquisitions of controlling interests, and impairment of depreciable assets, plus depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests. NOI is used to evaluate the operating performance of our properties. We define NOI as total revenues, including tenant reimbursements, less property operating expenses.
In response, the National Association of Real Estate Investment Trusts (“NAREIT”) created funds from operations attributable to common stockholders (“FFO”) as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO, as defined by NAREIT, means NICS, computed in accordance with U.S.
In response, the National Association of Real Estate Investment Trusts ("NAREIT") created funds from operations attributable to common stockholders ("FFO") as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO, as defined by NAREIT, means NICS, computed in accordance with U.S.
Operating lease liabilities related to the ASC 842 adoption are excluded. (2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests as reflected on our Consolidated Balance Sheets. Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions.
Operating lease liabilities related to ASC 842 are excluded. (2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests as reflected on our Consolidated Balance Sheets. Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions.
We also evaluate investments in unconsolidated entities for indicators of impairment and, when present, record impairment charges based upon a comparison of the estimated fair value of the equity method investment to its carrying value if the decline in the estimated fair value of such an investment below its carrying value is other-than-temporary.
We also evaluate investments in unconsolidated entities for indicators of impairment and, when present, record impairment charges based on a comparison of the estimated fair value of the equity method investment to its carrying value if the decline in the estimated fair value of such an investment below its carrying value is other-than-temporary.
Please refer to Note 2 to our consolidated financial statements for further information on significant accounting policies that impact us and for the impact of new accounting standards, including accounting pronouncements that were issued but not yet adopted by us. 71 Item 7.
Please refer to Note 2 to our consolidated financial statements for further information on significant accounting policies that impact us and for the impact of new accounting standards, including accounting pronouncements that were issued but not yet adopted by us. 74 Item 7.
If the estimated undiscounted cash flows indicate that the carrying value of the property will not be recoverable, the carrying value of the property is reduce to its estimated fair value and an impairment charge is recognized for the difference between the carrying value and the fair value.
If the estimated undiscounted cash flows indicate that the carrying value of the property will not be recoverable, the carrying value of the property is reduced to its estimated fair value and an impairment charge is recognized for the difference between the carrying value and the fair value.
When required, we estimate the fair value of an investment and assess whether any impairment is other than temporary using observable and unobservable inputs such as historical and forecasted cash flows and estimated capitalization rates. These inputs can have a significant impact on the calculation of the fair value of the investment.
When required, we estimate the fair value of an investment and, if such fair value is lower than carrying value, assess whether any impairment is other-than-temporary using observable and unobservable inputs such as historical and forecasted cash flows and estimated capitalization rates. These inputs can have a significant impact on the calculation of the fair value of the investment.
Covenants in our unsecured senior notes and primary credit facility contain financial ratios based on a definition of EBITDA and Adjusted EBITDA that is specific to those agreements. Our leverage ratios are defined as the proportion of net debt to total capitalization and include book capitalization, undepreciated book capitalization and market capitalization.
Covenants in our unsecured senior notes and primary credit facility contain financial ratios based on a definition of EBITDA and Adjusted EBITDA that is specific to those agreements. Our leverage ratios are defined as the proportion of net debt to total capitalization and include book capitalization, undepreciated book capitalization and enterprise value.
Same store NOI (“SSNOI”) is used to evaluate the operating performance of our properties using a consistent population which controls for changes in the composition of our portfolio.
Same store NOI ("SSNOI") is used to evaluate the operating performance of our properties using a consistent population which controls for changes in the composition of our portfolio.
The determination of the credit allowance is based on a quarterly evaluation of all outstanding loans, including general economic conditions and estimated collectability of loan payments. The determination of the allowance for credit losses is based on a quarterly evaluation of all outstanding loans, including general economic conditions and estimated collectability of loan payments.
The determination of the credit allowance is based on a quarterly evaluation of all outstanding loans, including general economic conditions and estimated collectability of loan payments.
Total interest expense represents secured debt interest expense. The change in secured debt interest expense is primarily due to the net effect and timing of assumptions, extinguishments and principal amortizations.
Total interest expense represents secured debt interest expense. The change in secured debt interest expense is primarily due to the net effect and timing of assumptions, fluctuations in interest rates, extinguishments and principal amortizations.
Rental income has increased due primarily to acquisitions and construction conversions that occurred during 2022 and 2023. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index.
Rental income increased due primarily to acquisitions and construction conversions that occurred during 2023 and 2024. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index.
General and administrative expenses as a percentage of consolidated revenues for the years ended December 31, 2023, 2022 and 2021 were 2.70%, 2.57% and 2.67%, respectively. The increase during the year ended December 31, 2023 is primarily driven by compensation costs associated with increased employee headcount.
General and administrative expenses as a percentage of consolidated revenues for the years ended December 31, 2024, 2023 and 2022 were 2.95% , 2.70% and 2.57%, respectively. The increase during the year ended December 31, 2024 is primarily driven by compensation costs associated with increased employee headcount.
The fluctuation in property operating expenses and depreciation and amortization are primarily attributable to acquisitions and construction conversions that occurred during 2022 and 2023. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly.
The fluctuations in property operating expenses and depreciation and amortization are primarily attributable to acquisitions and construction conversions that occurred during 2023 and 2024. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly.
Additionally, these measures are utilized by the Board of Directors to evaluate management. None of our supplemental measures represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity.
Additionally, the Board of Directors utilizes these measures to evaluate management performance. None of our supplemental measures represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity.
(2) Represents the write off or recovery of straight-line rent receivables balances relating to leases placed on cash recognition. 70 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Our leverage ratios include book capitalization, undepreciated book capitalization and market capitalization.
(2) Represents the write-off or recovery of straight-line rent receivables balances relating to leases placed on cash recognition. 73 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Our leverage ratios include book capitalization, undepreciated book capitalization and enterprise value.
In determining the fair values that drive such analysis, we estimate the fair value of each component of the real estate acquired which generally includes land, buildings and improvements, the above or below market component of in-place leases and the value of in-place leases using a number of sources including independent appraisals, our own analysis of recently acquired or developed and existing comparable properties in our portfolio and other market data.
In determining the fair values that drive the recorded tangible assets and identifiable intangible assets and liabilities, we estimate the fair value of each component of the real estate acquired, which generally includes land, buildings and improvements, the above or below market component of in-place leases and the value of in-place leases using a number of sources including independent appraisals, our own analysis of recently acquired or developed and existing comparable properties in our portfolio and other market data.
Noncontrolling interest and unconsolidated entity amounts represent adjustments to reflect our share of depreciation and amortization, gains/loss on real estate dispositions and impairment of assets. Amounts are in thousands except for per share data.
GAAP measure, for the periods presented. Noncontrolling interest and unconsolidated entity amounts represent adjustments to reflect our share of depreciation and amortization, gains/loss on real estate dispositions and impairment of assets. Amounts are in thousands except for per share data.
Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. Net income attributable to noncontrolling interests represents our partners’ share of net income or loss relating to those partnerships where we are the controlling partner.
Net income attributable to noncontrolling interests represents our partners’ share of net income or loss relating to those partnerships where we are the controlling partner.
(4) Represents properties that are either closed or being closed. 68 Item 7.
(4) Represents properties that are either closed or being closed. 71 Item 7.
For the remaining loans, we assess credit loss on a collective pool basis and use our historical loss experience for similar loans to determine the reserve for credit losses. During the year ended December 31, 2023, we recognized provision for loan losses of $9,809,000, which includes changes in the reserve based on our historical loss experience. 74
For the remaining loans, we assess credit loss on a collective pool basis and use our historical loss experience for similar loans to determine the reserve for credit losses. During the year ended December 31, 2024, we recognized provision for loan losses of $10,125,000, which includes changes in the reserve based on our historical loss experience.
Adjusted EBITDA is defined as EBITDA excluding unconsolidated entities and including adjustments for stock-based compensation expense, provision for loan losses, gains/losses on extinguishment of debt, gains/loss/impairments on properties, gains/losses on derivatives and financial instruments, other expenses, other impairment charges and other adjustments as deemed appropriate.
Adjusted EBITDA is defined as EBITDA excluding unconsolidated entities and including adjustments for stock-based compensation expense, provision for loan losses, gains/losses on extinguishment of debt, gains/losses on disposition of properties and acquisitions of controlling interests, impairment of assets, gains/losses on derivatives and financial instruments, other expenses, other impairment charges and other adjustments as deemed appropriate.
This evaluation of indicators of impairment is dependent on a number of factors including when there is an event or adverse change in the operating performance of the property, or a change in management's intent to hold and operate the property.
The evaluation of indicators of impairment is dependent on a number of factors, including when there is an unfavorable change in the operating performance of the property, a change in management's intent to hold and operate the property or a change in the property's use.
The following is a summary of our Outpatient Medical secured debt principal activity (dollars in thousands): Year Ended December 31, 2023 2022 2021 Beginning balance $ 388,836 $ 530,254 $ 548,229 Debt assumed 46,741 — — — Debt extinguished (200,955) (131,582) (7,670) Principal payments (5,485) (9,836) (10,305) Ending balance $ 229,137 $ 388,836 $ 530,254 Ending weighted average interest 5.42 % 4.38 % 3.49 % A portion of our Outpatient Medical properties were formed through partnerships.
The following is a summary of our Outpatient Medical secured debt principal activity (dollars in thousands): Year Ended December 31, 2024 2023 2022 Beginning balance $ 229,137 $ 388,836 $ 530,254 Debt assumed — 46,741 — Debt extinguished (137,011) (200,955) (131,582) Principal payments (3,038) (5,485) (9,836) Ending balance $ 89,088 $ 229,137 $ 388,836 Ending weighted average interest 4.19 % 5.42 % 4.38 % A portion of our Outpatient Medical property investments were formed through partnerships.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Real Estate Acquisitions We believe that substantially all of our real estate acquisitions are considered asset acquisitions for which we record the related real estate acquired (tangible assets and identifiable intangible assets and liabilities) at cost on a relative fair value basis.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Nature of Critical Accounting Estimate Assumptions/Approach Used Real Estate Acquisitions Most of our real estate acquisitions are considered asset acquisitions for which we record the related real estate acquired (tangible assets and identifiable intangible assets and liabilities) at cost on a relative fair value basis.
Our leases could renew above or below current rental rates, resulting in an increase or decrease in rental income. For the year ended December 31, 2023, our consolidated Outpatient Medical portfolio signed 512,694 square feet of new leases and 2,255,492 square feet of renewals.
Our leases could renew above or below current rental rates, resulting in an increase or decrease in rental income. For the year ended December 31, 2024, our consolidated Outpatient Medical portfolio signed 384,643 square feet of new leases and 1,992,131 square feet of renewals.
Management’s Discussion and Analysis of Financial Condition and Results of Operations where 20% or more of units are simultaneously taken out of commission for 30 days or more or Outpatient Medical properties undergoing a change in intended use) are excluded from SSNOI until five full quarters or eight full quarters post completion of the redevelopment for the QTD Pool and YTD Pool, respectively.
Redeveloped properties (including major refurbishments of a Seniors Housing Operating property where 20% or more of units are simultaneously taken out of commission for 30 days or more or Outpatient Medical properties undergoing a change in intended use) are excluded from SSNOI until five full quarters or eight full quarters post completion of the redevelopment for the QTD Pool and YTD Pool, respectively.
Please see Non-GAAP Financial Measures for additional information and reconciliations. During the year ended December 31, 2023, no impairment charge was recorded. During the year ended December 31, 2022, we recognized an impairment charge of $761,000 related to one held for use property. Transaction costs related to asset acquisitions are capitalized as a component of purchase price.
Please see Non-GAAP Financial Measures for additional information and reconciliations. During the year ended December 31, 2024, we recorded an impairment charge of $1,571,000 related to one property. No impairment was recorded in 2023. Transaction costs related to asset acquisitions are capitalized as a component of purchase price. The fluctuation in other expenses is primarily due to noncapitalizable transaction costs.
The weighted-average term of these leases was seven years, with a rate of $37.52 per square foot and tenant improvement and lease commission costs of $28.00 per square foot. Substantially all of these leases contain an annual fixed or contingent escalation rent structure ranging from 1.0% to 28.0%.
The weighted average term of these leases was eight years, with a rate of $42.22 per square foot and tenant improvement and lease commission costs of $30.50 per square foot. Substantially all of these leases contain an annual fixed or contingent escalation rent structure ranging from 2.0% to 6.5%.
GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation. However, since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient.
However, since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient.
Finally, the supplemental measures, as defined by us, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies. The table below reflects the reconciliation of FFO to NICS, the most directly comparable U.S. GAAP measure, for the periods presented.
Finally, the supplemental measures, as defined by us, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies. 68 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The table below reflects the reconciliation of FFO to NICS, the most directly comparable U.S.
Year Ended December 31, Adjusted EBITDA Reconciliation: 2023 2022 2021 Net income (loss) $ 358,139 $ 160,568 $ 374,479 Interest expense 607,846 529,519 489,853 Income tax expense (benefit) 6,364 7,247 8,713 Depreciation and amortization 1,401,101 1,310,368 1,037,566 EBITDA 2,373,450 2,007,702 1,910,611 Loss (income) from unconsolidated entities 53,442 21,290 22,933 Stock-based compensation expense 36,611 26,027 16,933 Loss (gain) on extinguishment of debt, net 7 680 49,874 Loss (gain) on real estate dispositions, net (67,898) (16,043) (235,375) Impairment of assets 36,097 17,502 51,107 Provision for loan losses, net 9,809 10,320 7,270 Loss (gain) on derivatives and financial instruments, net (2,120) 8,334 (7,333) Other expenses 108,341 101,670 41,739 Lease termination and leasehold interest adjustment (1) (65,485) (64,854) 760 Casualty losses, net of recoveries 10,107 10,391 5,786 Other impairment, net (2) 16,642 (620) 49,241 Adjusted EBITDA $ 2,509,003 $ 2,122,399 $ 1,913,546 Adjusted Interest Coverage Ratio: Interest expense $ 607,846 $ 529,519 $ 489,853 Capitalized interest 50,699 30,491 19,352 Non-cash interest expense (23,494) (21,754) (17,506) Total interest 635,051 538,256 491,699 EBITDA $ 2,373,450 $ 2,007,702 $ 1,910,611 Interest coverage ratio 3.74x 3.73x 3.89x Adjusted EBITDA $ 2,509,003 $ 2,122,399 $ 1,913,546 Adjusted interest coverage ratio 3.95x 3.94x 3.89x Adjusted Fixed Charge Coverage Ratio: Total interest $ 635,051 $ 538,256 $ 491,699 Secured debt principal payments 54,076 58,114 65,587 Total fixed charges 689,127 596,370 557,286 EBITDA $ 2,373,450 $ 2,007,702 $ 1,910,611 Fixed charge coverage ratio 3.44x 3.37x 3.43x Adjusted EBITDA $ 2,509,003 $ 2,122,399 $ 1,913,546 Adjusted fixed charge coverage ratio 3.64x 3.56x 3.43x (1) Primarily relates to the derecognition of leasehold interests and the gain recognized in other income.
Year Ended December 31, Adjusted EBITDA Reconciliation: 2024 2023 2022 Net income (loss) $ 972,857 $ 358,139 $ 160,568 Interest expense 574,261 607,846 529,519 Income tax expense (benefit) 2,700 6,364 7,247 Depreciation and amortization 1,632,093 1,401,101 1,310,368 EBITDA 3,181,911 2,373,450 2,007,702 Loss (income) from unconsolidated entities 496 53,442 21,290 Stock-based compensation expense 74,482 36,611 26,027 Loss (gain) on extinguishment of debt, net 2,130 7 680 Loss (gain) on real estate dispositions and acquisitions of controlling interests, net (451,611) (67,898) (16,043) Impairment of assets 92,793 36,097 17,502 Provision for loan losses, net 10,125 9,809 10,320 Loss (gain) on derivatives and financial instruments, net (27,887) (2,120) 8,334 Other expenses 117,459 108,341 101,670 Lease termination and leasehold interest adjustment (1) — (65,485) (64,854) Casualty losses, net of recoveries 12,261 10,107 10,391 Other impairment, net (2) 139,652 16,642 (620) Adjusted EBITDA $ 3,151,811 $ 2,509,003 $ 2,122,399 Adjusted Interest Coverage Ratio: Interest expense $ 574,261 $ 607,846 $ 529,519 Capitalized interest 58,115 50,699 30,491 Non-cash interest expense (42,388) (23,494) (21,754) Total interest 589,988 635,051 538,256 EBITDA $ 3,181,911 $ 2,373,450 $ 2,007,702 Interest coverage ratio 5.39x 3.74x 3.73x Adjusted EBITDA $ 3,151,811 $ 2,509,003 $ 2,122,399 Adjusted interest coverage ratio 5.34x 3.95x 3.94x Adjusted Fixed Charge Coverage Ratio: Total interest $ 589,988 $ 635,051 $ 538,256 Secured debt principal payments 47,329 54,076 58,114 Total fixed charges 637,317 689,127 596,370 EBITDA $ 3,181,911 $ 2,373,450 $ 2,007,702 Fixed charge coverage ratio 4.99x 3.44x 3.37x Adjusted EBITDA $ 3,151,811 $ 2,509,003 $ 2,122,399 Adjusted fixed charge coverage ratio 4.95x 3.64x 3.56x (1) Primarily relates to the derecognition of leasehold interests and the gain recognized in other income.
Year Ended December 31, FFO Reconciliation: 2023 2022 2021 Net income attributable to common stockholders $ 340,094 $ 141,214 $ 336,138 Depreciation and amortization 1,401,101 1,310,368 1,037,566 Impairment of assets 36,097 17,502 51,107 Loss (gain) on real estate dispositions, net (67,898) (16,043) (235,375) Noncontrolling interests (46,393) (56,529) (54,190) Unconsolidated entities 100,226 81,560 85,476 Funds from operations attributable to common stockholders $ 1,763,227 $ 1,478,072 $ 1,220,722 Average diluted shares outstanding: 518,701 465,158 426,841 Per diluted share data: Net income attributable to common stockholders (1) $ 0.66 $ 0.30 $ 0.78 Funds from operations attributable to common stockholders $ 3.40 $ 3.18 $ 2.86 (1) Includes adjustment to the numerator for income (loss) attributable to OP Unitholders. 66 Item 7.
Year Ended December 31, FFO Reconciliation: 2024 2023 2022 Net income attributable to common stockholders $ 951,680 $ 340,094 $ 141,214 Depreciation and amortization 1,632,093 1,401,101 1,310,368 Impairment of assets 92,793 36,097 17,502 Loss (gain) on real estate dispositions and acquisitions of controlling interests, net (451,611) (67,898) (16,043) Noncontrolling interests (30,812) (46,393) (56,529) Unconsolidated entities 129,290 100,226 81,560 Funds from operations attributable to common stockholders $ 2,323,433 $ 1,763,227 $ 1,478,072 Average diluted shares outstanding: 608,750 518,701 465,158 Per diluted share data: Net income attributable to common stockholders (1) $ 1.57 $ 0.66 $ 0.30 Funds from operations attributable to common stockholders $ 3.82 $ 3.40 $ 3.18 (1) Includes adjustment to the numerator for income (loss) attributable to OP Unitholders.
Year Ended December 31, 2023 2022 2021 Book capitalization: Unsecured credit facility and commercial paper $ — $ — $ 324,935 Long-term debt obligations (1) 15,815,226 14,661,552 13,917,702 Cash and cash equivalents and restricted cash (2,076,083) (722,292) (346,755) Total net debt 13,739,143 13,939,260 13,895,882 Total equity and noncontrolling interests (2) 26,371,727 21,393,996 18,997,873 Book capitalization $ 40,110,870 $ 35,333,256 $ 32,893,755 Net debt to book capitalization ratio 34.3 % 39.5 % 42.2 % Undepreciated book capitalization: Total net debt $ 13,739,143 $ 13,939,260 $ 13,895,882 Accumulated depreciation and amortization 9,274,814 8,075,733 6,910,114 Total equity and noncontrolling interests (2) 26,371,727 21,393,996 18,997,873 Undepreciated book capitalization $ 49,385,684 $ 43,408,989 $ 39,803,869 Net debt to undepreciated book capitalization ratio 27.8 % 32.1 % 34.9 % Market capitalization: Common shares outstanding 564,241 490,509 447,239 Period end share price $ 90.17 $ 65.55 $ 85.77 Common equity market capitalization $ 50,877,611 $ 32,152,865 $ 38,359,689 Total net debt 13,739,143 13,939,260 13,895,882 Noncontrolling interests (2) 967,351 1,099,182 1,361,872 Market capitalization: $ 65,584,105 $ 47,191,307 $ 53,617,443 Net debt to market capitalization ratio 20.9 % 29.5 % 25.9 % (1) Amounts include senior unsecured notes, secured debt and lease liabilities related to finance leases, as reflected on our Consolidated Balance Sheets.
Year Ended December 31, 2024 2023 2022 Book capitalization: Unsecured credit facility and commercial paper $ — $ — $ — Long-term debt obligations (1) 15,608,294 15,815,226 14,661,552 Cash and cash equivalents and restricted cash (3,711,457) (2,076,083) (722,292) Total net debt 11,896,837 13,739,143 13,939,260 Total equity and noncontrolling interests (2) 32,572,586 26,371,727 21,393,996 Book capitalization $ 44,469,423 $ 40,110,870 $ 35,333,256 Net debt to book capitalization ratio 26.8 % 34.3 % 39.5 % Undepreciated book capitalization: Total net debt $ 11,896,837 $ 13,739,143 $ 13,939,260 Accumulated depreciation and amortization 10,626,263 9,274,814 8,075,733 Total equity and noncontrolling interests (2) 32,572,586 26,371,727 21,393,996 Undepreciated book capitalization $ 55,095,686 $ 49,385,684 $ 43,408,989 Net debt to undepreciated book capitalization ratio 21.6 % 27.8 % 32.1 % Enterprise value: Common shares outstanding 635,289 564,241 490,509 Period end share price $ 126.03 $ 90.17 $ 65.55 Common equity market capitalization $ 80,065,473 $ 50,877,611 $ 32,152,865 Total net debt 11,896,837 13,739,143 13,939,260 Noncontrolling interests (2) 616,378 967,351 1,099,182 Consolidated enterprise value $ 92,578,688 $ 65,584,105 $ 47,191,307 Net debt to consolidated enterprise value ratio 12.9 % 20.9 % 29.5 % (1) Amounts include senior unsecured notes, secured debt and lease liabilities related to finance leases, as reflected on our Consolidated Balance Sheets.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The tables below reflects the reconciliation of consolidated NOI to net income, the most directly comparable U.S.
The tables below reflects the reconciliation of consolidated NOI to net income, the most directly comparable U.S.
The following is a summary of our Non-Segment/Corporate interest expense for the periods presented (dollars in thousands): Year Ended One Year Change Year Ended One Year Change Two Year Change December 31, December 31, December 31, 2023 2022 $ % 2021 $ % $ % Senior unsecured notes $ 508,681 $ 436,185 $ 72,496 17 % $ 401,247 $ 34,938 9 % $ 107,434 27 % Unsecured credit facility and commercial paper program 6,977 19,576 (12,599) -64 % 6,759 12,817 190 % 218 3 % Loan expense 25,201 19,884 5,317 27 % 18,638 1,246 7 % 6,563 35 % Totals $ 540,859 $ 475,645 $ 65,214 14 % $ 426,644 $ 49,001 11 % $ 114,215 27 % The change in interest expense on senior unsecured notes is due to the net effect of issuances and extinguishments, as well as the movement in foreign exchange rates and related hedge activity.
The following is a summary of our Non-segment/Corporate interest expense for the periods presented (dollars in thousands): Year Ended One Year Change Year Ended One Year Change Two Year Change December 31, December 31, December 31, 2024 2023 $ % 2022 $ % $ % Senior unsecured notes $ 497,223 $ 508,681 $ (11,458) -2 % $ 436,185 $ 72,496 17 % $ 61,038 14 % Unsecured credit facility and commercial paper program 6,239 6,977 (738) -11 % 19,576 (12,599) -64 % (13,337) -68 % Loan expense 19,782 25,201 (5,419) -22 % 19,884 5,317 27 % (102) -1 % Totals $ 523,244 $ 540,859 $ (17,615) -3 % $ 475,645 $ 65,214 14 % $ 47,599 10 % The change in interest expense on senior unsecured notes is due to the net effect of issuances and extinguishments, as well as the movement in foreign exchange rates and related hedge activity.
To arrive at Welltower's Share, NOI is adjusted by adding our minority ownership share related to unconsolidated properties and by subtracting the minority partners' noncontrolling ownership interests for consolidated properties.
To arrive at Welltower's Share, NOI is adjusted by adding our minority ownership share related to unconsolidated properties and by subtracting the minority partners' noncontrolling ownership interests for consolidated properties. We do not control investments in unconsolidated properties and while we consider disclosures at Welltower Share to 67 Item 7.
Other expenses includes non-capitalizable legal expenses, including related to our umbrella partnership REIT reorganization during 2022. The provision for income taxes primarily relates to state taxes, foreign taxes and taxes based on income generated by entities that are structured as taxable REIT subsidiaries.
Please refer to Note 15 for additional information related to these grants. Other expenses includes noncapitalizable legal expenses. The provision for income taxes primarily relates to state taxes, foreign taxes and taxes based on income generated by entities that are structured as taxable REIT subsidiaries.
Other Non-GAAP Financial Measures We believe that net income and net income attributable to common stockholders, as defined by U.S. GAAP, are the most appropriate earnings measurements. However, we consider FFO, NOI, SSNOI, EBITDA and Adjusted EBITDA to be useful supplemental measures of our operating performance. Historical cost accounting for real estate assets in accordance with U.S.
However, we consider FFO, NOI, SSNOI, EBITDA and Adjusted EBITDA to be useful supplemental measures of our operating performance. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation.
The following is a summary of our SSNOI at Welltower share for the Outpatient Medical segment (dollars in thousands): QTD Pool YTD Pool Three Months Ended Change Year Ended Change December 31, 2023 December 31, 2022 $ % December 31, 2023 December 31, 2022 $ % SSNOI (1) $ 119,706 $ 115,180 $ 4,526 3.9 % $ 451,959 $ 441,664 $ 10,295 2.3 % (1) Rel ates to 377 properties for the QTD Pool and 366 properties for the YTD Pool.
The following is a summary of our SSNOI at Welltower share for the Outpatient Medical segment (dollars in thousands): QTD Pool YTD Pool Three Months Ended Change Year Ended Change December 31, 2024 December 31, 2023 $ % December 31, 2024 December 31, 2023 $ % SSNOI (1) $ 129,752 $ 128,417 $ 1,335 1.0 % $ 481,635 $ 472,136 $ 9,499 2.0 % (1) Relates to 415 properties for the QTD Pool and 379 properties for the YTD Pool.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following is a reconciliation of the properties included in our QTD Pool and YTD Pool for SSNOI: QTD Pool YTD Pool SSNOI Property Reconciliations: Seniors Housing Operating Triple-net Outpatient Medical Total Seniors Housing Operating Triple-net Outpatient Medical Total Consolidated properties 918 614 369 1,901 918 614 369 1,901 Unconsolidated properties 82 39 78 199 82 39 78 199 Total properties 1,000 653 447 2,100 1,000 653 447 2,100 Recent acquisitions/development conversions (1) (78) (74) (42) (194) (169) (74) (53) (296) Under development (32) — (11) (43) (32) — (11) (43) Under redevelopment (2) (5) (4) (2) (11) (5) (4) (2) (11) Current held for sale (37) (40) (4) (81) (37) (40) (4) (81) Land parcels, loans and subleases (19) (5) (8) (32) (19) (5) (8) (32) Transitions (3) (168) (162) — (330) (168) (162) — (330) Other (4) (14) (4) (3) (21) (14) (4) (3) (21) Same store properties 647 364 377 1,388 556 364 366 1,286 (1) Acquisitions and development conversions will enter the QTD Pool five full quarters and the YTD Pool eight full quarters after acquisition or certificate of occupancy.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following is a reconciliation of the properties included in our QTD Pool and YTD Pool for SSNOI: QTD Pool YTD Pool SSNOI Property Reconciliations: Seniors Housing Operating Triple-net Outpatient Medical Total Seniors Housing Operating Triple-net Outpatient Medical Total Consolidated properties 1,156 592 371 2,119 1,156 592 371 2,119 Unconsolidated properties 76 — 76 152 76 — 76 152 Total properties 1,232 592 447 2,271 1,232 592 447 2,271 Recent acquisitions and development conversions (1) (167) (74) (12) (253) (282) (106) (48) (436) Under development (34) — (8) (42) (34) — (8) (42) Under redevelopment (2) (2) (4) (2) (8) (2) (4) (2) (8) Current held for sale (22) (1) — (23) (22) (1) — (23) Land parcels, loans and leased properties (105) (8) (9) (122) (105) (8) (9) (122) Transitions (3) (234) (19) — (253) (234) (19) — (253) Other (4) (8) (4) (1) (13) (8) (4) (1) (13) Same store properties 660 482 415 1,557 545 450 379 1,374 (1) Acquisitions and development conversions will enter the QTD Pool five full quarters and the YTD Pool eight full quarters after acquisition or certificate of occupancy.
As used herein, same store is generally defined as those revenue-generating properties in the portfolio for the relevant year-over-year reporting periods. Acquisitions and development conversions are included in SSNOI five full quarters or eight full quarters after acquisition or being placed into service for the QTD Pool and the YTD Pool, respectively.
Acquisitions and development conversions are included in SSNOI five full quarters or eight full quarters after acquisition or being placed into service for the QTD Pool and the YTD Pool, respectively. Land parcels, loans and leased properties, as well as any properties sold or classified as held for sale during the respective periods are excluded from SSNOI.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The increase in other income for the year ended December 31, 2023 is primarily due to interest earned on deposits. Property operating expenses represent insurance costs related to our captive insurance company, which acts as a direct insurer of property level insurance coverage for our portfolio.
Property operating expenses represent insurance costs related to our captive insurance company, which acts as a direct insurer of property level insurance coverage for our portfolio.
Our estimates of the values of these components affect the amount of depreciation and amortization we record over the estimated useful life of the property or the term of the lease. During the year ended December 31, 2023, we disbursed $3,558,266,000 of cash related to real estate acquisitions.
Our estimates of the values of these components affect the amount of depreciation and amortization we record over the estimated useful life of the property or the term of the lease and the amount of goodwill recognized in an acquisition accounted for as a business combination.
The following is a summary of our consolidated Outpatient Medical construction projects in process, excluding expansions (dollars in thousands): As of December 31, 2023 Expected Conversion Year Properties Square Feet Anticipated Remaining Funding Construction in Progress Balance 2024 10 788,925 $ 277,333 $ 174,476 2025 2 149,290 93,663 7,249 TBD (1) 1 33,369 Total 13 $ 215,094 (1) Represents projects for which a final budget or expected conversion date are not yet known.
Management’s Discussion and Analysis of Financial Condition and Results of Operations As of December 31, 2024 Expected Conversion Year Properties Square Feet Anticipated Remaining Funding Construction in Progress Balance 2025 7 646,940 $ 110,664 $ 256,505 TBD (1) 1 34,132 Total 8 $ 290,637 (1) Represents projects for which a final budget or expected conversion date are not yet known.
Non-Segment/Corporate The following is a summary of our results of operations for the Non-Segment/Corporate activities for the periods presented (dollars in thousands): Year Ended One Year Change Year Ended One Year Change Two Year Change December 31, December 31, December 31, 2023 2022 $ % 2021 $ % $ % Revenues: Other income $ 69,868 $ 4,934 $ 64,934 n/a $ 2,992 $ 1,942 65 % $ 66,876 n/a Total revenues 69,868 4,934 64,934 n/a 2,992 1,942 65 % 66,876 n/a Property operating expenses 18,118 16,245 1,873 12 % 8,817 7,428 84 % 9,301 105 % NOI (1) 51,750 (11,311) 63,061 558 % (5,825) (5,486) -94 % 57,575 988 % Other expenses: Interest expense 540,859 475,645 65,214 14 % 426,644 49,001 11 % 114,215 27 % General and administrative expenses 179,091 150,390 28,701 19 % 126,727 23,663 19 % 52,364 41 % Loss (gain) on extinguishments of debt, net — 199 (199) -100 % 52,506 (52,307) -100 % (52,506) -100 % Other expenses 4,020 20,064 (16,044) -80 % 7,895 12,169 154 % (3,875) -49 % Total expenses 723,970 646,298 77,672 12 % 613,772 32,526 5 % 110,198 18 % Loss from continuing operations before income taxes and other items (672,220) (657,609) (14,611) -2 % (619,597) (38,012) -6 % (52,623) -8 % Income tax (expense) benefit (6,364) (7,247) 883 12 % (8,713) 1,466 17 % 2,349 27 % Loss from continuing operations (678,584) (664,856) (13,728) -2 % (628,310) (36,546) -6 % (50,274) -8 % Net income (loss) (678,584) (664,856) (13,728) -2 % (628,310) (36,546) -6 % (50,274) -8 % Less: Net income (loss) attributable to noncontrolling interests (1,172) (526) (646) -123 % (4) (522) n/a (1,168) n/a Net loss attributable to common stockholders $ (677,412) $ (664,330) $ (13,082) -2 % $ (628,306) $ (36,024) -6 % $ (49,106) -8 % (1) See Non-GAAP Financial Measures below. 64 Item 7.
Non-segment/Corporate The following is a summary of our results of operations for the Non-segment/Corporate activities for the periods presented (dollars in thousands): Year Ended One Year Change Year Ended One Year Change Two Year Change December 31, December 31, December 31, 2024 2023 $ % 2022 $ % $ % Revenues: Interest income $ 248,024 $ 166,985 $ 81,039 49 % $ 148,965 $ 18,020 12 % $ 99,059 66 % Other income 116,749 69,868 46,881 67 % 4,934 64,934 n/a 111,815 n/a Total revenues 364,773 236,853 127,920 54 % 153,899 82,954 54 % 210,874 137 % Property operating expenses 20,073 18,118 1,955 11 % 16,245 1,873 12 % 3,828 24 % NOI (1) 344,700 218,735 125,965 58 % 137,654 81,081 59 % 207,046 150 % Other expenses: Interest expense 523,244 540,859 (17,615) -3 % 475,645 65,214 14 % 47,599 10 % General and administrative expenses 235,491 179,091 56,400 31 % 150,390 28,701 19 % 85,101 57 % Loss (gain) on derivatives and financial instruments, net (27,899) (2,218) (25,681) n/a 6,835 (9,053) -132 % (34,734) -508 Loss (gain) on extinguishments of debt, net 419 — 419 n/a 199 (199) -100 % 220 111 % Provision for loan losses, net 10,125 9,512 613 6 % 10,320 (808) -8 % (195) -2 % Other expenses 9,583 4,020 5,563 138 % 20,064 (16,044) -80 % (10,481) -52 % Total expenses 750,963 731,264 19,699 3 % 663,453 67,811 10 % 87,510 13 % Loss from continuing operations before income taxes and other items (406,263) (512,529) 106,266 21 % (525,799) 13,270 3 % 119,536 23 % Income (loss) from unconsolidated entities 10,636 10,889 (253) -2 % 5,588 5,301 95 % 5,048 90 % Income tax (expense) benefit (2,700) (6,364) 3,664 58 % (7,247) 883 12 % 4,547 63 % Loss from continuing operations (398,327) (508,004) 109,677 22 % (527,458) 19,454 4 % 129,131 24 % Net income (loss) (398,327) (508,004) 109,677 22 % (527,458) 19,454 4 % 129,131 24 % Less: Net income (loss) attributable to noncontrolling interests 2,800 907 1,893 209 % (37) 944 n/a 2,837 n/a Net loss attributable to common stockholders $ (401,127) $ (508,911) $ 107,784 21 % $ (527,421) $ 18,510 4 % $ 126,294 24 % (1) See Non-GAAP Financial Measures below.
We do not control investments in unconsolidated properties and while we consider disclosures at Welltower Share to be useful, they may not accurately depict the legal and economic implications of our joint venture arrangements and should be used with caution.
Management’s Discussion and Analysis of Financial Condition and Results of Operations be useful, they may not accurately depict the legal and economic implications of our joint venture arrangements and should be used with caution. As used herein, same store is generally defined as those revenue-generating properties in the portfolio for the relevant year-over-year reporting periods.
During the year ended December 31, 2023, we recorded impairment charges of $15,401,000 related to two Seniors Housing Operating properties and one Triple-net property which were classified as held for sale for which the carrying values exceeded the fair values less costs to sell.
At December 31, 2024, our net real property owned was approximately $40,673,242,000 and investments in unconsolidated entities totaled $1,768,772,000. During the year ended December 31, 2024, we recorded impairment charges of $92,793,000 related to 18 Seniors Housing Operating properties, three Triple-net properties and one Outpatient Medical property.
Removed
The fluctuation in other expenses is primarily due to noncapitalizable transaction costs. Changes in gains/losses on sales of properties are related to volume of property sales and the sales prices. 63 Item 7.
Added
Changes in the gains/losses on sales of properties are related to the volume and timing of property sales and the sales pri ces, which are further discussed in Note 5 to our consolidated financial statements. During the year ended December 31, 2024, we completed construction conversions representing $228,515,000 or $1,563 per square foot.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations During the year ended December 31, 2023, we completed four Outpatient Medical construction conversions representing $190,770,000 or $582 per square foot.
Added
The following is a summary of our consolidated Outpatient Medical construction projects in process, excluding expansions, overhead and capitalized interest (dollars in thousands): 65 Item 7.
Removed
Land parcels, loans and sub-leases, as well as any properties sold or classified as held for sale during the respective periods are excluded from SSNOI. Redeveloped properties (including major refurbishments of a Seniors Housing Operating property 65 Item 7.
Added
Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. The increase from prior year is attribute to the gain recognized as part of the sale of one our unconsolidated properties.
Removed
GAAP measure, for the years presented (dollars in thousands): Year Ended December 31, NOI Reconciliation: 2023 2022 2021 Net income (loss) $ 358,139 $ 160,568 $ 374,479 Loss (gain) on real estate dispositions, net (67,898) (16,043) (235,375) Loss (income) from unconsolidated entities 53,442 21,290 22,933 Income tax expense (benefit) 6,364 7,247 8,713 Other expenses 108,341 101,670 41,739 Impairment of assets 36,097 17,502 51,107 Provision for loan losses, net 9,809 10,320 7,270 Loss (gain) on extinguishment of debt, net 7 680 49,874 Loss (gain) on derivatives and financial instruments, net (2,120) 8,334 (7,333) General and administrative expenses 179,091 150,390 126,727 Depreciation and amortization 1,401,101 1,310,368 1,037,566 Interest expense 607,846 529,519 489,853 Consolidated net operating income (NOI) $ 2,690,219 $ 2,301,845 $ 1,967,553 NOI by segment: Seniors Housing Operating $ 1,118,135 $ 953,372 $ 683,906 Triple-net 1,001,135 887,024 841,122 Outpatient Medical 519,199 472,760 448,350 Non-segment/corporate 51,750 (11,311) (5,825) Total NOI $ 2,690,219 $ 2,301,845 $ 1,967,553 Quarterly NOI by Segment: (in thousands) Three Months Ended Year Ended March 31, June 30, September 30, December 31, December 31, 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 Seniors Housing Operating: Total revenues $ 1,136,681 $ 996,612 $ 1,164,439 $ 1,071,210 $ 1,203,899 $ 1,072,600 $ 1,268,624 $ 1,104,995 $ 4,773,643 $ 4,245,417 Property operating expenses 883,784 789,928 885,187 789,299 918,990 841,914 967,547 870,904 3,655,508 3,292,045 Consolidated NOI $ 252,897 $ 206,684 $ 279,252 $ 281,911 $ 284,909 $ 230,686 $ 301,077 $ 234,091 $ 1,118,135 $ 953,372 Triple-net: Total revenues $ 238,065 $ 235,163 $ 302,128 $ 234,360 $ 236,322 $ 228,819 $ 266,814 $ 233,165 $ 1,043,329 $ 931,507 Property operating expenses 11,723 11,211 10,598 11,491 10,044 11,495 9,829 10,286 42,194 44,483 Consolidated NOI $ 226,342 $ 223,952 $ 291,530 $ 222,869 $ 226,278 $ 217,324 $ 256,985 $ 222,879 $ 1,001,135 $ 887,024 Outpatient Medical: Total revenues $ 184,831 $ 163,323 $ 186,192 $ 166,322 $ 191,958 $ 172,178 $ 188,174 $ 176,934 $ 751,155 $ 678,757 Property operating expenses 58,365 49,915 58,697 50,648 62,204 52,921 52,690 52,513 231,956 205,997 Consolidated NOI $ 126,466 $ 113,408 $ 127,495 $ 115,674 $ 129,754 $ 119,257 $ 135,484 $ 124,421 $ 519,199 $ 472,760 Corporate: Total revenues $ 1,152 $ 606 $ 12,719 $ 644 $ 29,834 $ 247 $ 26,163 $ 3,437 $ 69,868 $ 4,934 Property operating expenses 3,881 2,615 4,190 2,645 4,035 5,850 6,012 5,135 18,118 16,245 Consolidated NOI $ (2,729) $ (2,009) $ 8,529 $ (2,001) $ 25,799 $ (5,603) $ 20,151 $ (1,698) $ 51,750 $ (11,311) 67 Item 7.
Added
The increase in interest income during the year ended December 31, 2024 is primarily driven by increased advances on loans receivable during the year. 66 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The increase in other income for the year ended December 31, 2024 is primarily due to interest earned on deposits.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following is a reconciliation of our consolidated NOI to same store NOI for the periods presented for the respective pools (dollars in thousands): QTD Pool YTD Pool Three Months Ended Twelve Months Ended SSNOI Reconciliations: December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Seniors Housing Operating: Consolidated NOI $ 301,077 $ 234,091 $ 1,118,135 $ 953,372 NOI attributable to unconsolidated investments 20,488 11,291 65,281 47,190 NOI attributable to noncontrolling interests (15,976) (16,718) (63,867) (122,874) NOI attributable to non-same store properties (67,994) (35,860) (330,696) (223,436) Non-cash NOI attributable to same store properties (186) (1,064) (89) (1,374) Currency and ownership adjustments (1) (416) 1,409 (159) 1,442 SSNOI at Welltower Share 236,993 193,149 788,605 654,320 Triple-net: Consolidated NOI 256,985 222,879 1,001,135 887,024 NOI attributable to unconsolidated investments 5,711 8,947 27,574 29,516 NOI attributable to noncontrolling interests (8,031) (9,555) (31,373) (41,099) NOI attributable to non-same store properties (138,314) (104,199) (518,519) (404,629) Non-cash NOI attributable to same store properties (5,551) (10,800) (39,949) (42,090) Currency and ownership adjustments (1) (581) 355 (2,630) (2,165) SSNOI at Welltower Share 110,219 107,627 436,238 426,557 Outpatient Medical: Consolidated NOI 135,484 124,421 519,199 472,760 NOI attributable to unconsolidated investments 4,586 4,712 18,925 19,233 NOI attributable to noncontrolling interests (2,308) (5,576) (15,400) (22,089) NOI attributable to non-same store properties (12,799) (5,700) (60,144) (25,343) Non-cash NOI attributable to same store properties (5,262) (5,369) (16,566) (14,831) Currency and ownership adjustments (1) 5 2,692 5,945 11,934 SSNOI at Welltower Share 119,706 115,180 451,959 441,664 SSNOI at Welltower Share: Seniors Housing Operating 236,993 193,149 788,605 654,320 Triple-net 110,219 107,627 436,238 426,557 Outpatient Medical 119,706 115,180 451,959 441,664 Total $ 466,918 $ 415,956 $ 1,676,802 $ 1,522,541 (1) Includes adjustments to reflect consistent property ownership percentages, to translate Canadian properties at a USD/CAD rate of 1.37 and to translate U.K. properties at a GBP/USD rate of 1.20. 69 Item 7.
Added
During the three months ended September 30, 2024, we also recognized $29,838,000 as a cumulative catch up of stock compensation expense due to the change in the probability of achievement of specific performance goals related to special nonrecurring performance-based stock option and restricted stock awards granted in December 2021 and January 2022.
Removed
At December 31, 2023, our net real property owned was approximately $37,063,357,000 and investments in unconsolidated entities totaled $1,636,531,000.
Added
Loss (gain) on derivatives and financial instruments, net is primarily attributable to the mark-to-market of the equity warrants received as part of the HC-One Group transactions that closed in 2021 and 2023. Other Non-GAAP Financial Measures We believe that net income and net income attributable to common stockholders, as defined by U.S. GAAP, are the most appropriate earnings measurements.
Removed
Additionally, we recorded $20,696,000 of impairment charges related to three Seniors Housing Operating properties and two Triple-net properties that were held for use in which the carrying values exceeded the estimated fair values. We recorded $35,293,000 of impairment losses related to investments in unconsolidated entities. 72 Item 7.
Added
GAAP measure, for the years presented (dollars in thousands): Year Ended December 31, NOI Reconciliation: 2024 2023 2022 Net income (loss) $ 972,857 $ 358,139 $ 160,568 Loss (gain) on real estate dispositions and acquisitions of controlling interests, net (451,611) (67,898) (16,043) Loss (income) from unconsolidated entities 496 53,442 21,290 Income tax expense (benefit) 2,700 6,364 7,247 Other expenses 117,459 108,341 101,670 Impairment of assets 92,793 36,097 17,502 Provision for loan losses, net 10,125 9,809 10,320 Loss (gain) on extinguishment of debt, net 2,130 7 680 Loss (gain) on derivatives and financial instruments, net (27,887) (2,120) 8,334 General and administrative expenses 235,491 179,091 150,390 Depreciation and amortization 1,632,093 1,401,101 1,310,368 Interest expense 574,261 607,846 529,519 Consolidated net operating income (NOI) $ 3,160,907 $ 2,690,219 $ 2,301,845 NOI by segment: Seniors Housing Operating $ 1,511,681 $ 1,108,039 $ 945,505 Triple-net 748,049 844,912 746,228 Outpatient Medical 556,477 518,533 472,458 Non-segment/Corporate 344,700 218,735 137,654 Total NOI $ 3,160,907 $ 2,690,219 $ 2,301,845 69 Item 7.
Removed
The allocation of the purchase price to the related real estate acquired (tangible assets and intangible assets and liabilities) are based on a relative fair value analysis.
Added
Management’s Discussion and Analysis of Financial Condition and Results of Operations Quarterly NOI by Segment: (in thousands) Three Months Ended Year Ended March 31, June 30, September 30, December 31, December 31, 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 Seniors Housing Operating: Total revenues $ 1,361,737 $ 1,134,130 $ 1,395,373 $ 1,162,344 $ 1,514,022 $ 1,201,705 $ 1,764,329 $ 1,265,368 $ 6,035,461 $ 4,763,547 Property operating expenses 1,019,347 883,784 1,034,906 885,187 1,135,887 918,990 1,333,640 967,547 4,523,780 3,655,508 Consolidated NOI $ 342,390 $ 250,346 $ 360,467 $ 277,157 $ 378,135 $ 282,715 $ 430,689 $ 297,821 $ 1,511,681 $ 1,108,039 Triple-net: Total revenues $ 222,943 $ 204,709 $ 142,082 $ 266,015 $ 228,649 $ 196,809 $ 195,097 $ 219,573 $ 788,771 $ 887,106 Property operating expenses 10,817 11,723 10,495 10,598 9,345 10,044 10,065 9,829 40,722 42,194 Consolidated NOI $ 212,126 $ 192,986 $ 131,587 $ 255,417 $ 219,304 $ 186,765 $ 185,032 $ 209,744 $ 748,049 $ 844,912 Outpatient Medical: Total revenues $ 198,310 $ 184,740 $ 197,237 $ 186,097 $ 204,995 $ 191,860 $ 201,571 $ 187,792 $ 802,113 $ 750,489 Property operating expenses 62,463 58,365 61,185 58,697 62,778 62,204 59,210 52,690 245,636 231,956 Consolidated NOI $ 135,847 $ 126,375 $ 136,052 $ 127,400 $ 142,217 $ 129,656 $ 142,361 $ 135,102 $ 556,477 $ 518,533 Non-segment/Corporate: Total revenues $ 76,751 $ 37,150 $ 90,192 $ 51,022 $ 107,997 $ 71,639 $ 89,833 $ 77,042 $ 364,773 $ 236,853 Property operating expenses 4,286 3,881 4,711 4,190 4,691 4,035 6,385 6,012 20,073 18,118 Consolidated NOI $ 72,465 $ 33,269 $ 85,481 $ 46,832 $ 103,306 $ 67,604 $ 83,448 $ 71,030 $ 344,700 $ 218,735 70 Item 7.
Removed
These transactions were accounted for as asset acquisitions and the purchase price of each was allocated based on the relative fair values of the assets acquired and liabilities assumed. 73 Item 7.
Added
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following is a reconciliation of our consolidated NOI to same store NOI for the periods presented for the respective pools (dollars in thousands): QTD Pool YTD Pool Three Months Ended Twelve Months Ended SSNOI Reconciliations: December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 Seniors Housing Operating: Consolidated NOI $ 430,689 $ 297,821 $ 1,511,681 $ 1,108,039 NOI attributable to unconsolidated investments 23,282 20,488 90,812 65,281 NOI attributable to noncontrolling interests (12,369) (15,688) (52,437) (62,838) NOI attributable to non-same store properties (143,604) (62,817) (571,693) (294,139) Non-cash NOI attributable to same store properties (1,834) (2,757) (756) (2,328) Currency and ownership adjustments (1) (267) 1,500 (262) 3,569 SSNOI at Welltower Share 295,897 238,547 977,345 817,584 Triple-net: Consolidated NOI 185,032 209,744 748,049 844,912 NOI attributable to unconsolidated investments — 5,711 3,504 9,901 NOI attributable to noncontrolling interests (5,314) (12,584) (29,387) (31,361) NOI attributable to non-same store properties (56,108) (38,316) (172,633) (240,832) Non-cash NOI attributable to same store properties 23,533 (25,647) (23,865) (82,917) Currency and ownership adjustments (1) (279) 2,128 4,852 8,353 SSNOI at Welltower Share 146,864 141,036 530,520 508,056 Outpatient Medical: Consolidated NOI 142,361 135,102 556,477 518,533 NOI attributable to unconsolidated investments 4,099 4,586 17,244 18,925 NOI attributable to noncontrolling interests (2,491) (2,308) (9,898) (15,400) NOI attributable to non-same store properties (8,742) (3,607) (63,145) (35,787) Non-cash NOI attributable to same store properties (5,488) (5,433) (19,100) (20,404) Currency and ownership adjustments (1) 13 77 57 6,269 SSNOI at Welltower Share 129,752 128,417 481,635 472,136 SSNOI at Welltower Share: Seniors Housing Operating 295,897 238,547 977,345 817,584 Triple-net 146,864 141,036 530,520 508,056 Outpatient Medical 129,752 128,417 481,635 472,136 Total $ 572,513 $ 508,000 $ 1,989,500 $ 1,797,776 (1) Includes adjustments to reflect consistent property ownership percentages, to translate Canadian properties at a USD/CAD rate of 1.36 and to translate U.K. properties at a GBP/USD rate of 1.25. 72 Item 7.
Added
No impairment losses related to investments in unconsolidated entities were recorded during the year ended December 31, 2024. 75 Item 7.
Added
For real estate acquisitions accounted for as business combinations, we allocate the acquisition consideration to the assets acquired, liabilities assumed and noncontrolling interests at fair value as of the acquisition date. Any excess of the consideration transferred relative to the fair value of the net assets acquired is accounted for as goodwill.
Added
During the year ended December 31, 2024, we disbursed $3,525,449,000 of cash related to real estate asset acquisitions and business combinations. 76 Item 7.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+1 added−0 removed8 unchanged
Biggest changeThe following table summarizes the results of the analysis performed (dollars in thousands): December 31, 2023 December 31, 2022 Carrying value Change in fair value Carrying value Change in fair value Foreign currency exchange contracts $ 10,811 $ 5,087 $ 190,418 $ 14,238 Debt designated as hedges 1,527,380 15,274 1,452,832 14,528 Totals $ 1,538,191 $ 20,361 $ 1,643,250 $ 28,766 75
Biggest changeThe following table summarizes the results of the analysis performed (dollars in thousands): December 31, 2024 December 31, 2023 Carrying value Change in fair value Carrying value Change in fair value Foreign currency exchange contracts $ 99,931 $ 3,077 $ 10,811 $ 5,087 Debt designated as hedges 1,488,175 14,882 1,527,380 15,274 Totals $ 1,588,106 $ 17,959 $ 1,538,191 $ 20,361 The sensitivity analyses are of limited predictive value.
These decisions are principally based on our policy to match our variable rate investments with comparable borrowings, but are also based on the general trend in interest rates at the applicable dates and our perception of the future volatility of interest rates.
These decisions are principally based on our policy to match our variable-rate investments with comparable borrowings but are also based on the general trend in interest rates at the applicable 77 dates and our perception of the future volatility of interest rates.
We will continue to mitigate these underlying foreign currency exposures with non-U.S. denominated borrowings and gains and losses on derivative contracts. If we increase our international presence through investments in, or acquisitions or development of, seniors housing and health care properties outside the U.S., we may also decide to transact additional business or borrow funds in currencies other than U.S.
We will continue to mitigate these underlying foreign currency exposures with non-U.S. denominated borrowings and gains and losses on derivative contracts. If we increase our international presence through investments in, or acquisitions or development of, seniors housing and healthcare properties outside the U.S., we may also decide to transact additional business or borrow funds in currencies other than U.S.
We historically borrow on our unsecured revolving credit facility and commercial paper program to acquire, construct or make loans relating to health care and seniors housing properties. Then, as market conditions dictate, we will issue equity or long-term fixed rate debt to repay the borrowings under our unsecured revolving credit facility and commercial paper program.
We historically borrow on our unsecured revolving credit facility and commercial paper program to acquire, construct or make loans relating to healthcare and seniors housing properties. Then, as market conditions dictate, we will issue equity or long-term fixed-rate debt to repay the borrowings under our unsecured revolving credit facility and commercial paper program.
Based solely on our results for the year ended December 31, 2023, including the impact of existing hedging arrangements, if these exchange rates were to increase or decrease by 10%, our net income from these investments would increase or decrease, as applicable, by less than $9,000,000.
Based solely on our results for the year ended December 31, 2024, including the impact of existing hedging arrangements, if these exchange rates were to increase or decrease by 10%, our net income from these investments would increase or decrease, as applicable, by less than $15,000,000.
Assuming no changes in outstanding balances, a 1% increase in interest rates would have resulted in increased annual interest expense of $ 24,261,000 . We are subject to currency fluctuations that may, from time to time, affect our financial condition and results of operations.
Assuming no changes in outstanding balances, a 1% increase in interest rates would have resulted in increased annual interest expense of $ 14,964,000 . We are subject to currency fluctuations that may, from time to time, affect our financial condition and results of operations.
Increases or decreases in the value of the Canadian Dollar or British Pounds Sterling relative to the U.S. Dollar impact the amount of net income we earn from our investments in Canada and the United Kingdom.
Increases or decreases in the value of the Canadian Dollar or British Pounds Sterling relative to the U.S. Dollar impact the amount of net income we earn from our investments in Canada and the U.K.
At December 31, 2023, we had $1,496,447,000 outstanding related to our variable rate debt after considering the effects of interest rate swaps. Assuming no changes in outstanding balances, a 1% increase in interest rates would result in increased annual interest expense of $14,964,000. At December 31, 2022, we had $2,426,134,000 of outstanding variable rate debt.
At December 31, 2024, we had $1,425,256,000 outstanding related to our variable-rate debt after considering the effects of interest rate swaps. Assuming no changes in outstanding balances, a 1% increase in interest rates would result in increased annual interest expense of $14,253,000. At December 31, 2023, we had $1,496,447,000 of outstanding variable-rate debt.
The following table summarizes the analysis performed as of the dates indicated (in thousands): December 31, 2023 December 31, 2022 Principal balance Change in fair value Principal balance Change in fair value Senior unsecured notes $ 12,800,253 $ (515,723) $ 10,839,782 $ (488,159) Secured debt 1,625,364 (58,066) 1,448,567 (36,654) Totals $ 14,425,617 $ (573,789) $ 12,288,349 $ (524,813) Our variable rate debt, including our unsecured revolving credit facility and commercial paper program, is reflected at fair value.
The following table summarizes the analysis performed as of the dates indicated (in thousands): December 31, 2024 December 31, 2023 Principal balance Change in fair value Principal balance Change in fair value Senior unsecured notes $ 12,142,890 $ (471,517) $ 12,800,253 $ (515,723) Secured debt 2,225,542 (94,922) 1,625,364 (58,066) Totals $ 14,368,432 $ (566,439) $ 14,425,617 $ (573,789) Our variable-rate debt, including our unsecured revolving credit facility and commercial paper program, are reflected at fair value.
Added
As a result, revenues and expenses, as well as our ultimate realized gains or losses with respect to interest rate fluctuations and foreign currency exchange rates will depend on the exposures that arise during a future period and hedging strategies at the time. 78

Other WELL 10-K year-over-year comparisons