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What changed in Welltower's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Welltower's 2022 and 2023 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 2023 report.

+464 added−477 removedSource: 10-K (2024-02-15) vs 10-K (2023-02-21)

Top changes in Welltower's 2023 10-K

464 paragraphs added · 477 removed · 380 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

160 edited+14 added−29 removed278 unchanged
Biggest changeDepartment of Energy as an ENERGY STAR Partner of the Year for the fourth consecutive year and maintained the level of Sustained Excellence, the EPA’s highest recognition within the ENERGY STAR program; • Maintained top 30% (3rd decile) ISS Quality Score ranking for each Governance, Environment and Social; • Named to the Bloomberg Gender-Equality Index for the fourth consecutive year; • Maintained Prime status under the ISS-ESG Corporate rating for the fourth consecutive year; • Improved GRESB score and maintained GRESB Green Star status; • Named by S&P Global in the 2022 edition of The Sustainability Yearbook; • Recognized by Labrador as a 2022 Transparency Award winner in the real estate industry for our clear and concise disclosure of relevant information to stakeholders in our annual proxy statement, Form 10-K, and investor relations website • Named to the top 30 percent of Newsweek’s America’s Most Responsible Companies list for the fourth consecutive year; and • Named to Sustainalytics 2022 Top-Rated ESG Companies list.
Biggest changeDepartment of Energy as an ENERGY STAR Partner of the Year for the fifth consecutive year and maintained the level of Sustained Excellence, the EPA’s highest recognition within the ENERGY STAR program, for the third consecutive year; • Achieved the level of Executive Member in the EPA’s Certification Nation program; • Maintained top 30% (3rd decile) ISS Quality Score ranking for each of Environment and Social; • Listed in the FTSE4Good Index since 2012; • Named to the Bloomberg Gender-Equality Index for the fifth consecutive year; • Maintained Prime status under the ISS-ESG Corporate Rating for the fifth consecutive year; • Improved GRESB score and maintained GRESB Green Star status for the third consecutive year; 6 • Received the Labrador 2023 Transparency Award Top 3 in Real Estate for the second consecutive year; • Recognized for industry-leading governance practices, including #1 ranking from Green Street Advisors for Corporate Governance amongst all US REITs; and • Honored by the Women’s Forum of New York for the ratio of women on our Board being above the national average.
Moreover, in light of certain arrangements that Welltower may pursue with healthcare entities who are directly subject to laws and regulations pertaining to health care fraud and abuse, and, given that certain of our arrangements are structured under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 ("RIDEA"), certain health care fraud and abuse laws and data privacy laws could apply directly to Welltower.
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.
Further, no more than 20% of our total assets may be represented by securities of one or more taxable REIT subsidiaries (the “20% asset test”) and no more than 5% of the value of our total assets may be represented by securities of any non-governmental issuer other than a qualified REIT subsidiary (the “5% asset test”), another REIT or a taxable REIT subsidiary.
Further, no more than 20% of our total assets may be represented by securities of one or more taxable REIT subsidiaries (the “20% asset test”) and no more than 5% of the value of our total assets may be represented by securities of any non-governmental issuer (the “5% asset test”) other than a qualified REIT subsidiary, another REIT or a taxable REIT subsidiary.
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 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 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.
These rules are complex, and no attempt is made herein to provide more than a brief summary of such rules. Accordingly, the discussion does not address all aspects of U.S. federal income taxation and does not address other federal, state, local or non-U.S. tax consequences that may be relevant to a non-U.S. holder in light of its particular circumstances.
These rules are complex, and no attempt is made herein to provide more than a brief summary of such rules. Accordingly, the discussion does not address all aspects of U.S. federal income taxation and does not address other U.S. federal, state, local or non-U.S. tax consequences that may be relevant to a non-U.S. holder in light of its particular circumstances.
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 periods, we will be subject to a 4% excise tax on the excess of such required distribution over amounts actually distributed; and • We will be subject to a 100% tax on certain amounts from certain transactions involving our “taxable REIT subsidiaries” that are not conducted on an arm’s length basis.
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.
In addition, 25 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 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 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.
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.
Though we nonetheless expect that 14 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 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.
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 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 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.
Such distributions ordinarily will be subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty, unless the distributions are 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 21 dividends are attributable).
Such distributions ordinarily will be subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty, unless the distributions are 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).
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.
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.
Accordingly, there can be no assurance that payments under a government health care program are currently, or will be in the future, sufficient to fully reimburse the property operators for their operating and capital expenses. • Seniors Housing Facilities The majority of the revenues received by the operators of U.S. seniors housing facilities are from private pay sources.
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.
Moreover, such costs could have a material adverse effect on the ability of an operator to meet its obligations to us. Finally, data privacy and security laws and regulations continue to develop, including with regard to HIPAA and U.S. state privacy laws. The California Consumer Privacy Act has been amended by the California Privacy Rights Act.
Moreover, such costs could have a material adverse effect on the ability of an operator to meet its obligations to us. Finally, data privacy and security laws and regulations continue to develop, including with regard to HIPAA and U.S. state privacy laws. The California Consumer Privacy Act ("CCPA") has been amended by the California Privacy Rights Act.
In December 2022, ProMedica relinquished to Welltower its 15% interest in 147 skilled nursing facilities previously owned by the Welltower/ProMedica joint venture in exchange for a lease modification, which relieved ProMedica from its lease obligation on the 147 skilled nursing properties and amended the lease on the remaining 58 assisted living and memory care properties that 3 continue to be held by the Welltower/ProMedica joint venture.
In December 2022, ProMedica relinquished to Welltower its 15% interest in 147 skilled nursing facilities previously owned by the Welltower/ProMedica joint venture in exchange for a lease modification, which relieved ProMedica from its lease obligation on the 147 skilled nursing properties and amended the lease on the remaining 58 assisted living and memory care properties that continue to be held by the Welltower/ProMedica joint venture.
See “Investments in Taxable REIT Subsidiaries.” 13 We have acquired assets from “C” corporations in carryover basis transactions and may do so again in the future. A “C” corporation is generally defined as a corporation that is required to pay full corporate level U.S. federal income tax.
See “Investments in Taxable REIT Subsidiaries.” We have acquired assets from “C” corporations in carryover basis transactions and may do so again in the future. A “C” corporation is generally defined as a corporation that is required to pay full corporate level U.S. federal income tax.
Generally, Medicare reimburses physicians under the Physician Fee Schedule, while HOPDs and ASCs are reimbursed under prospective payment systems. The Physician Fee Schedule and the HOPD and ASC prospective payment 10 systems are updated annually by CMS. These annual Medicare payment regulations have resulted in lower net pay increases than providers of those services have often expected.
Generally, Medicare reimburses physicians under the Physician Fee Schedule, while HOPDs and ASCs are reimbursed under prospective payment systems. The Physician Fee Schedule and the HOPD and ASC prospective payment systems are updated annually by CMS. These annual Medicare payment regulations have resulted in lower net pay increases than providers of those services have often expected.
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.
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.
Any such dividends received by a non-U.S. holder that is a corporation may also be subject to an additional branch profits tax at a 30% rate (applicable after deducting U.S. federal income taxes paid on such effectively connected income) or such lower rate as may be specified by an applicable income tax treaty.
Any such 21 dividends received by a non-U.S. holder that is a corporation may also be subject to an additional branch profits tax at a 30% rate (applicable after deducting U.S. federal income taxes paid on such effectively connected income) or such lower rate as may be specified by an applicable income tax treaty.
We routinely post important information on our website at www.welltower.com in the “Investors” section, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with 28 our disclosure obligations under Regulation FD.
We routinely post important information on our website at www.welltower.com in the “Investors” section, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD.
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 11 paying any assessed fines, can be substantial.
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.
Certain items are excluded from the 10% value test, including: (1) straight debt securities meeting certain requirements; (2) any loan to an individual or an estate; (3) any rental agreement described in Section 467 of the Internal Revenue Code, other than with a “related person”; (4) any obligation to pay rents from real property; (5) certain securities issued by a state or any subdivision thereof, the District of Columbia, a non-U.S. government, or any political subdivision thereof, or the Commonwealth of Puerto Rico; (6) any security issued by a REIT; and (7) any other arrangement that, as determined by the Secretary of the Treasury, is excepted from the definition of security (“10% Value Excluded Securities”).
Certain items are excluded from the 10% value test, including: (1) straight debt securities meeting certain requirements; (2) any loan to an individual or an estate; (3) any rental agreement described in Section 467 of the Code, other than with a “related person”; (4) any obligation to pay rents from real property; (5) certain securities issued by a state or any subdivision thereof, the District of Columbia, a non-U.S. government, or any political subdivision thereof, or the Commonwealth of Puerto Rico; (6) any security issued by a REIT; and (7) any other arrangement that, as determined by the Secretary of the Treasury, is excepted from the definition of security (“10% Value Excluded Securities”).
Any taxable income allocated to, or deductible expenses allocated away, from a taxable REIT subsidiary would increase its tax liability. Further, certain amounts from certain transactions involving a REIT and its taxable REIT subsidiaries could be subject to a 100% tax if not conducted on an arm’s length basis.
Any taxable income allocated to, or deductible expenses allocated away, from a taxable REIT subsidiary would increase its tax liability. Further, redetermined amounts from certain transactions involving a REIT and its taxable REIT subsidiaries could be subject to a 100% tax if not conducted on an arm’s length basis.
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.
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.
Our support of diversity and inclusion through our Diversity 7 Council and ENGs, taken together with other employee initiatives, such as tailored messaging, training and discussions on equality and belonging, support our efforts to compete for and foster talent and inclusiveness in an ever-changing workforce.
Our support of diversity and inclusion through our Diversity Council and ENGs, taken together with other employee initiatives, such as tailored messaging, training and discussions on equality and belonging, support our efforts to compete for and foster talent and inclusiveness in an ever-changing workforce.
See “Redemption or Repurchase by Us” under “Taxation of Taxable U.S. Holders of Our Stock” above. Qualified shareholders and their owners may be subject to different rules, and should consult 23 their tax advisors regarding the application of such rules.
See “Redemption or Repurchase by Us” under “Taxation of Taxable U.S. Holders of Our Stock” above. Qualified shareholders and their owners may be subject to different rules, and should consult their tax advisors regarding the application of such rules.
Depending on the circumstances of a U.S. holder, the tax on the distribution may exceed the amount of the distribution received in cash, in which case such U.S. holder would 19 have to pay the tax using cash from other sources.
Depending on the circumstances of a U.S. holder, the tax on the distribution may exceed the amount of the distribution received in cash, in which case such U.S. holder would have to pay the tax using cash from other sources.
In addition to the relief described above under “Income Tests” and “Asset Tests,” statutory relief is available in the event that we violate a provision of the Internal Revenue Code that would result in our failure to qualify as a REIT if: (1) the violation is due to reasonable cause and not due to willful neglect; (2) we pay a penalty of $50,000 for each failure to satisfy the provision; and (3) the violation does not include a violation described under “Income Tests” or “Asset Tests” above.
In addition to the relief described above under “Income Tests” and “Asset Tests,” statutory relief is available in the event that we violate a provision of the Code that would result in our failure to qualify as a REIT if: (1) the violation is due to reasonable cause and not due to willful neglect; (2) we pay a penalty of $50,000 for each failure to satisfy the provision; and (3) the violation does not include a violation described under “Income Tests” or “Asset Tests” above.
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; • 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 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.
Due to the significant judgments and estimates inherent in payor settlement accounting, no assurance can be given as to the adequacy of any reserves maintained by our property operators to cover potential adjustments to reimbursements or to cover settlements made to payors. ◦ Medicare Reimbursement Generally, long-term/post-acute care facilities are reimbursed by Medicare under prospective payment systems, which generally provide reimbursement based upon a predetermined fixed amount per episode of care and are updated by CMS, an agency of the Department of Health and Human Services (“HHS”) annually.
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.
In December 2019, we issued our inaugural green bond of $500,000,000 of 2.700% senior unsecured notes due 2027 and in March 2022 we issued an additional green bond of $550,000,000 of 3.85% senior unsecured notes due 2032. The net proceeds from the offerings have been, and continue to be, used to fund energy efficiency, water conservation and green building projects.
In December 2019, we issued our inaugural green bond of $500,000,000 of 2.700% senior unsecured notes due 2027 and in March 2022 we issued an additional green bond of $550,000,000 of 3.85% senior unsecured notes due 2032. The net proceeds from the offerings have been used to fund energy efficiency, water conservation and green building projects.
Four of five, or 80%, of our Board committees are chaired by either a Female (2), Hispanic/Latino (1) or Black/African American (1) Director. Additional information regarding our ESG programs and initiatives is available in our 2021 Environmental, Social and Governance Report (located on our website at www.welltower.com).
Four of five, or 80%, of our Board committees are chaired by either a Female (2), Hispanic/Latino (1) or Black/African American (1) Director. Additional information regarding our ESG programs and initiatives is available in our 2022 Environmental, Social and Governance Report (located on our website at www.welltower.com).
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; 18 • 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.
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.
As of December 31, 2022, our ten Directors self-identified as follows: Board Composition Ethnicity Gender Asian 10 % Male 60 % Black or African American 20 % Female 40 % Hispanic or Latino 20 % 100 % White 50 % 100 % Nine of our ten Directors are independent and the independent Chair of our Board is held by a Black/African American male.
As of December 31, 2023, our ten Directors self-identified as follows: Board Composition Ethnicity Gender Asian 10 % Male 60 % Black or African American 20 % Female 40 % Hispanic or Latino 20 % 100 % White 50 % 100 % Nine of our ten Directors are independent, and the independent Chair of our Board is held by a Black/African American male.
Some properties focus on higher acuity patients and offer rehabilitation units specializing in cardiac, orthopedic, dialysis, neurological or pulmonary rehabilitation. Inpatient rehabilitation properties provide intensive inpatient services after illness, injury or surgery to patients able to tolerate and benefit from three hours of rehabilitation per day.
All properties offer some level of rehabilitation services. Some properties focus on higher acuity patients and offer rehabilitation units specializing in cardiac, orthopedic, dialysis, neurological or pulmonary rehabilitation. Inpatient rehabilitation properties provide intensive inpatient services after illness, injury or surgery to patients able to tolerate and benefit from three hours of rehabilitation per day.
Other health reform measures could be implemented as a result of political, legislative, regulatory and administrative developments and judicial proceedings.
Health reform measures could be implemented as a result of political, legislative, regulatory and administrative developments and judicial proceedings.
While interests in Welltower OP and Subsidiary Partnership will not be traded on an established securities market, they could possibly be deemed to be traded on a secondary market or its equivalent due to the redemption rights enabling the limited members to dispose of their interests.
While interests in Welltower OP and Subsidiary Partnerships will not be traded on an established securities market, they could possibly be deemed to be traded on a secondary market or its equivalent due to the redemption rights enabling the limited members to dispose of their interests.
Until further regulations and guidance from the IRS and Treasury are released, the impact of the Corporate AMT on our TRSs is uncertain and it is possible that our taxable REIT subsidiaries will be subject to material U.S. federal income taxes under the Corporate AMT.
Until further regulations and guidance from the IRS is released, the impact of the Corporate AMT on our TRSs is uncertain and it is possible that our taxable REIT subsidiaries will be subject to material U.S. federal income taxes under the Corporate AMT.
Long-term acute care properties provide inpatient services for patients with complex medical conditions that require more intensive care, monitoring or emergency support than is available in most skilled nursing/post-acute care properties. Our Triple-net segment accounted for 16%, 19% a nd 17% of total revenues for the years ended December 31, 2022, 2021 and 2020, respectively.
Long-term acute care properties provide inpatient services for patients with complex medical conditions that require more intensive care, monitoring or emergency support than is available in most skilled nursing/post-acute care properties. Our Triple-net segment accounted for 16% , 16% a nd 19% of total revenues for the years ended December 31, 2023, 2022 and 2021, respectively .
This may be a result of various factors, including, but not limited to: • the impact of the COVID-19 pandemic; • uncertainty regarding the implementation and impact of the CARES Act and future stimulus or other COVID-19 relief legislation; • status of the economy; • the status of capital markets, including availability and cost of capital; • issues facing the health care industry, including compliance with, and changes to, regulations and payment policies, responding to government investigations and punitive settlements and operators’/tenants’ difficulty in cost-effectively obtaining and maintaining adequate liability and other insurance; • changes in financing terms; • competition within the health care and seniors housing industries; • negative developments in the operating results or financial condition of operators/tenants, including, but not limited to, their ability to pay rent and repay loans; • our ability to transition or sell properties with profitable results; • the failure to make new investments or acquisitions as and when anticipated; • natural disasters and other acts of God affecting our properties; • our ability to re-lease space at similar rates as vacancies occur; • our ability to timely reinvest sale proceeds at similar rates to assets sold; • operator/tenant or joint venture partner bankruptcies or insolvencies; • the cooperation of joint venture partners; • government 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: • 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
Our properties include stand-alone properties that provide one level of service, combination properties that provide multiple levels of service and communities or campuses that provide a wide range of services. Properties are primarily held in joint venture entities with operating partners.
Our properties include stand-alone properties that provide one level of service, combination properties that provide multiple levels of service and communities or campuses that provide a wide range of services. Properties are often held in joint venture entities with operating partners.
Our leases typically include increasers and some form of operating expense reimbursement by the tenant. As of December 31, 2022, 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, 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 investments in unconsolidated entities generally represent interests ranging from 10% to 88% in real estate assets. Under the equity method of accounting, our share of the investee’s earnings or losses is included in our consolidated results of operations.
Our investments in unconsolidated entities generally represent interests ranging from 10% to 95% in real estate assets. Under the equity method of accounting, our share of the investee’s earnings or losses is included in our consolidated results of operations.
Generally, these properties are licensed for various national and local reimbursement programs. Unlike the U.S., care homes with nursing in the U.K. generally do not provide post-acute care. Our Seniors Housing Operating segment accounted for 72%, 68% and 67% of total revenues for the years ended December 31, 2022, 2021 and 2020, respectively.
Generally, these properties are licensed for various national and local reimbursement programs. Unlike the U.S., care homes with nursing in the U.K. generally do not provide post-acute care. Our Seniors Housing Operating segment accounted for 72% , 72% and 68% of total revenues for the years ended December 31, 2023, 2022 and 2021, respectively.
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 Internal Revenue Service 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 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.
Except as otherwise provided below, we expect to withhold U.S. federal income tax at the rate of 30% on any distributions made to a non-U.S. holder unless: (1) a lower treaty rate applies and the non-U.S. holder furnishes an Internal Revenue Service Form W-8BEN or W-8BEN-E (or other applicable documentation) evidencing eligibility for that reduced treaty rate; or (2) the non-U.S. holder furnishes an Internal Revenue Service Form W-8ECI (or other applicable documentation) claiming that the distribution is income effectively connected with the non-U.S. holder’s trade or business.
Except as otherwise provided below, we expect to withhold U.S. federal income tax at the rate of 30% on any distributions made to a non-U.S. holder unless: (1) a lower treaty rate applies and the non-U.S. holder furnishes an IRS Form W-8BEN or W-8BEN-E (or other applicable documentation) evidencing eligibility for that reduced treaty rate; or (2) the non-U.S. holder furnishes an IRS Form W-8ECI (or other applicable documentation) claiming that the distribution is income effectively connected with the non-U.S. holder’s trade or business.
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, 2022.
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.
A U.S. holder will be subject to backup withholding if such holder is not otherwise exempt and: • the holder fails to furnish the holder’s taxpayer identification number, which for an individual is ordinarily his or her social security number; • the holder furnishes an incorrect taxpayer identification number; • the applicable withholding agent is notified by the Internal Revenue Service that the holder previously failed to properly report payments of interest or dividends; or • the holder fails to certify under penalties of perjury that the holder has furnished a correct taxpayer identification number and that the Internal Revenue Service has not notified the holder that the holder is subject to backup withholding.
A U.S. holder will be subject to backup withholding if such holder is not otherwise exempt and: • the holder fails to furnish the holder’s taxpayer identification number, which for an individual is ordinarily his or her social security number; • the holder furnishes an incorrect taxpayer identification number; • the applicable withholding agent is notified by the IRS that the holder previously failed to properly report payments of interest or dividends; or • the holder fails to certify under penalties of perjury that the holder has furnished a correct taxpayer identification number and that the IRS has not notified the holder that the holder is subject to backup withholding.
We are committed to the success of our people and the unique combination of skills and experiences they bring to achieving our mission. Employee Engagement High employee engagement and satisfaction are critical to attracting and retaining top talent.
We are committed to the success of o ur people and the unique combination of skills and experiences they bring to achieving our mission. Employee Engagement High employee engagement and satisfaction are critical to attracting and retaining top talent.
Treasury has issued regulations requiring partnerships to use a “reasonable method” for allocating items affected by Section 704(c) of the Code and outlining several reasonable allocation methods.
The IRS has issued regulations requiring partnerships to use a “reasonable method” for allocating items affected by Section 704(c) of the Code and outlining several reasonable allocation methods.
Seniors Apartments Seniors apartments generally refer to age-restricted multi-unit housing with self-contained living units for older adults, usually aged 55+ who are able to care for themselves.
Seniors Apartments Seniors apartments generally refer to age-restricted or age-targeted multi-unit housing with self-contained living units for older adults, usually aged 55+ who are able to care for themselves.
Welltower Inc. issues equity from time to time, the net proceeds of which it is obligated to contribute as additional capital to Welltower OP. All debt including credit facilities, senior notes and secured debt is incurred by Welltower OP, and Welltower Inc. has fully and unconditionally guaranteed all existing and future senior unsecured notes.
Welltower Inc. issues equity from time to time, the net proceeds of which it is obligated to contribute as additional capital to Welltower OP. All debt including credit facilities, senior notes and secured debt is incurred by Welltower OP or its subsidiaries, and Welltower Inc. has fully and unconditionally guaranteed all existing and future senior unsecured notes.
A REIT is permitted to render a de minimis amount of impermissible services to tenants of a property and still treat amounts received with respect to that property as rent from real property.
A REIT is permitted to render a de minimis amount of impermissible services to tenants of a property and still treat rents received with respect to that property as rent from real property.
If a Subsidiary REIT were to fail to qualify as a REIT, then (i) that Subsidiary REIT would become subject to U.S. federal income tax and (ii) the Subsidiary REIT’s failure to qualify 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.
If a Subsidiary REIT were to fail to qualify as a REIT, then (i) that Subsidiary REIT would become subject to U.S. federal income tax and (ii) the Subsidiary REIT’s failure to qualify 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.
To claim such entitlement, the non-U.S. holder must provide the applicable withholding agent with a properly executed Internal Revenue Service 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 United States and the country in which the non-U.S. holder resides or is established.
Following the LLC Conversion, New Welltower's business continues to be conducted through Welltower OP and New Welltower does not have substantial assets or liabilities, other than through its investment in Welltower OP. Welltower Inc. is the initial member and majority owner of Welltower OP, with an approximate ownership interest of 99.751% as of December 31, 2022.
Following the LLC Conversion, New Welltower's business continues to be conducted through Welltower OP and New Welltower does not have substantial assets or liabilities, other than through its investment in Welltower OP. Welltower Inc. is the initial member and majority owner of Welltower OP, with an approximate ownership interest of 99.765% as of December 31, 2023.
Our Outpatient Medical segment accounted for 12%, 13% and 16% of total revenues for each of the years ended December 31, 2022, 2021 and 2020, respectively. No single tenant exceeds 20% of segment revenues. Investments Providing high-quality and affordable health care to an aging global population requires vast investments and infrastructure development.
Our Outpatient Medical segment accounted for 11% , 12% and 13% of total revenues for each of the years ended December 31, 2023, 2022 and 2021, respectively. No single tenant exceeds 20% of segment revenues. Investments Providing high-quality and affordable health care to an aging global population requires vast investments and infrastructure development.
As we use data to better inform our investments and the efficacy of care in our communities, these developments may add potential uncertainty and costs towards compliance obligations, business operations or transactions that depend on data. These new privacy laws may create restrictions or requirements in our, our operators' and other business partners' use, sharing and securing of data.
As we use data to better inform our investments and the efficacy of care in our communities, these developments may add potential uncertainty and costs towards compliance obligations, business operations or transactions that depend on data. These evolving privacy laws may create restrictions or requirements in our, our operators' and other business partners' use, sharing and retention of data.
We also will be required to withhold and to remit to the Internal Revenue Service 21% of any distribution to non-U.S. holders attributable to gain from sales or exchanges by us of USRPIs. Distributions subject to FIRPTA may also be subject to a 30% branch profits tax in the hands of a non-U.S. holder that is a corporation.
We also will be required to withhold and to remit to the IRS 21% of any distribution to non-U.S. holders attributable to gain from sales or exchanges by us of USRPIs. Distributions subject to FIRPTA may also be subject to a 30% branch profits tax in the hands of a non-U.S. holder that is a corporation.
In addition, if the sale, exchange or other taxable disposition of our stock were subject to taxation under FIRPTA, and if shares of the applicable class of our stock were not “regularly traded” on an established securities market, the purchaser of such stock generally would be required to withhold and remit to the Internal Revenue Service 15% of the purchase price.
In addition, if the sale, exchange or other taxable disposition of our stock were subject to taxation under FIRPTA, and if shares of the applicable class of our stock were not “regularly traded” on an established securities market, the purchaser of such stock generally would be required to withhold and remit to the IRS 15% of the purchase price.
Subsequent developments in U.S. federal income tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income tax consequences of purchasing, owning and disposing of our securities as set forth in this summary.
This summary is based on current U.S. federal income tax laws. Subsequent developments in U.S. federal income tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income tax consequences of purchasing, owning and disposing of our securities as set forth in this summary.
The taxes to which our taxable REIT subsidiaries are subject will reduce the cash available for such taxable REIT subsidiaries to distribute as dividends to us. The Internal Revenue Service may redetermine amounts from transactions between a REIT and its taxable REIT subsidiary where there is a lack of arm’s-length dealing between the parties.
The taxes to which our taxable REIT subsidiaries are subject will reduce the cash available for such taxable REIT subsidiaries to distribute as dividends to us. The IRS may redetermine amounts from transactions between a REIT and its taxable REIT subsidiary where there is a lack of arm’s-length dealing between the parties.
Non-U.S. holders that do not timely provide the applicable withholding agent with the required certification, but that qualify for a reduced rate under an applicable income tax treaty, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the Internal Revenue Service.
Non-U.S. holders that do not timely provide the applicable withholding agent with the required certification, but that qualify for a reduced rate under an applicable income tax treaty, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS.
However, information returns are required to be filed with the Internal Revenue Service in connection with any distributions on stock of the Company or interest on debt securities of the Company or Welltower OP paid to the non-U.S. holder, regardless of whether such distributions constitute a dividend or whether any tax was actually withheld.
However, information returns are required to be filed with the IRS in connection with any distributions on stock of the Company or interest on debt securities of the Company or Welltower OP paid to the non-U.S. holder, regardless of whether such distributions constitute a dividend or whether any tax was actually withheld.
See Human Capital section below for additional information regarding employee initiatives and programs. Governance Our commitment to diversity starts at the top with a highly knowledgeable, skilled and diverse Board of Directors.
See the Human Capital section below for additional information regarding employee initiatives and programs. 7 Governance Our commitment to diversity starts at the top with a highly knowledgeable, skilled and diverse Board.
The loans outstanding at December 31, 2022 are generally subject to one to 15-year terms with principal amortization schedules and/or balloon payments of the outstanding principal balances at the end of the term.
The loans outstanding as of December 31, 2023 are generally subject to one to 15-year terms with principal amortization schedules and/or balloon payments of the outstanding principal balances at the end of the term.
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.
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.
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 U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished to the Internal Revenue Service.
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 U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
Under this approach, the non-U.S. holders may be able to offset as a credit against their U.S. federal income tax liability their proportionate share of the tax paid by us on such retained net capital gains and to receive from the Internal 22 Revenue Service a refund to the extent their proportionate share of such tax paid by us exceeds their actual U.S. federal income tax liability.
Under this approach, the non-U.S. holders may be able to offset as a credit against their U.S. federal income tax liability their proportionate share of the tax paid by us on such retained net capital gains and to receive from the IRS a refund to the extent their proportionate share of such tax paid by us exceeds their actual U.S. federal income tax liability.
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.
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.
As of December 31, 2022, we had relationships wit h 43 operators to manage our Seniors Housing Operating properties. In each instance, our partner provides management services to the properties pursuant to an incentive-based management contract. We rely on our partners to effectively and efficiently manage these properties.
As of December 31, 2023, we had relationships wit h 51 partners to manage our Seniors Housing Operating properties. In each instance, our partner provides management services to the properties pursuant to an incentive-based management contract. We rely on our partners to effectively and efficiently manage these properties.
The amendments will go into effect in three stages: (i) a few provisions on September 22, 2022, (ii) most provisions on September 22, 2023 (including the new enforcement scheme), and (iii) one provision on September 23, 2024.
The amendments take effect in three stages: (i) a few provisions on September 22, 2022, (ii) most provisions on September 22, 2023 (including the new enforcement scheme), and (iii) one provision on September 23, 2024.
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). 12 This summary does not discuss all of the aspects of U.S. federal income taxation that may be relevant to you in light of your particular investment or other circumstances.
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).
During 2022, we conducted an employee engagement survey through an independent third party, measuring our progress on important employee issues such as manager relationships, employee empowerment, performance management and resources and support, and identifying opportunities for growth and improvement.
Annually, we conduct an employee engagement survey through an independent third party, measuring our progress on important employee issues such as manager relationships, employee empowerment, performance management and resources and support, and identifying opportunities for growth and improvement.
The Internal Revenue Service has issued regulations providing details on many of these provisions, but it is still not entirely clear how all of these rules will be implemented.
The IRS has issued regulations providing details on many of these provisions, but it is still not entirely clear how all of these rules will be implemented.
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 16 sentence, a REIT can avoid disqualification as a REIT after the close of a taxable quarter by taking certain steps, including disposition of sufficient assets within the six month period described above to meet the applicable asset test, paying a tax equal to the greater of $50,000 or the highest corporate tax rate multiplied by the net income generated by the non-qualifying assets during the period of time that the assets were held as non-qualifying assets and filing a schedule with the Internal Revenue Service that describes the non-qualifying assets.
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.
As of December 31, 2022, our relationship with Genesis was comprised of one property owned 100% by us and leased to Genesis, a loan balance net of allowance for credit losses of $168,949,000, approximately 9.5 million shares of GEN Series A common stock and a 25% ownership stake in an unconsolidated joint venture that includes two master leases for 28 properties operated by Genesis.
As of December 31, 2023, our relationship with Genesis was comprised of one property owned 100% by us and leased to Genesis, a loan balance net of allowance for credit loss es of $191,105,000, approximately 9.5 million shares of GEN Series A common stock and a 25% ownership stake in an unconsolidated joint venture that includes two master leases for 28 properties operated by Genesis.
Information on our website, including our Environmental, Social and Governance Report or sections thereof, is not incorporated by reference into this Annual Report. Human Capital Our employees are our greatest as set. As of December 31, 2022, we had 514 employees (491 located in United States, 14 in the United Kingdom, eight in Canada and one in Luxembourg).
Information on our website, including our Environmental, Social and Governance Report or sections thereof, is not incorporated by reference into this Annual Report. Human Capital Our employees are our greatest as set. As of December 31, 2023, we had 533 employees (511 located in United States, 14 in the United Kingdom and eight in Canada).
As of December 31, 2022, our U.S. employees self-identified as follows: Ethnicity Male Female Asian 7 % 9 % Black or African American 4 % 8 % Hispanic or Latino 8 % 7 % Native Hawaiian or Other Pacific Islander — % 1 % Two or More Races 1 % 2 % White 80 % 73 % 100 % 100 % Gender 51 % 49 % We have reinforced our already strong commitment to diversity and inclusion through our Diversity Council and support of our eight employee network groups ("ENGs").
As of December 31, 2023, our U.S. employees self-identified as follows: Ethnicity Male Female Asian 8 % 13 % Black or African American 5 % 7 % Hispanic or Latino 9 % 10 % Native Hawaiian or Other Pacific Islander — % — % Two or More Races 1 % 2 % White 77 % 68 % 100 % 100 % Gender 51 % 49 % We have reinforced our already strong commitment to diversity and inclusion through our Diversity Council and support of our seven employee network groups ("ENGs").
Skilled nursing/post-acute care refers to licensed daily rate or rental properties where most individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed for Medicaid and/or Medicare reimbursement in the U.S. or provincial reimbursement in Canada. All properties offer some level of rehabilitation services.
Our long-term/post-acute care properties generally offer skilled nursing/post-acute care, inpatient rehabilitation and long-term acute care services. Skilled nursing/post-acute care refers to licensed daily rate or rental properties where most individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed for Medicaid and/or Medicare reimbursement in the U.S. or provincial reimbursement in Canada.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe COVID-19 pandemic has had adverse effects on our business, operations and financial condition, including: • a decline in spot occupancy in our Seniors Housing Operating portfolio from 85.8% at February 29, 2020 to the pandemic-low of 72.6% on March 12, 2021 and a possibility of continued decline, which could affect the net operating income of our Seniors Housing Operating properties and the ability of our Triple-net operators to make contractual payments to us; • 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 the COVID-19 pandemic including labor shortages resulting from macroeconomic trends, decreased employee morale and productivity as a result of difficult conditions and stress related to the COVID-19 pandemic, and higher operator and tenant cost of insurance and such insurance may not cover certain claims related to COVID-19; and • 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 adversely impact employee productivity and morale and introduce additional operations risk, including cybersecurity risks.
Biggest changeThe 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.
Unfavorable resolution of pending and future litigation matters and disputes could have a material adverse effect on our financial condition From time to time, we are directly involved or named as a party in in legal proceedings, lawsuits and other claims that involve class actions, disputes regarding property damage, care matters and other issues.
Unfavorable resolution of pending and future litigation matters and disputes could have a material adverse effect on our financial condition From time to time, we are directly involved or named as a party in legal proceedings, lawsuits and other claims that involve class actions, disputes regarding property damage, care matters and other issues.
These risks include, but are not limited to, any international currency gain or loss recognized with respect to changes in exchange rates, which may not qualify under the 75% gross income test or the 95% gross income test required for us to satisfy annually in order to qualify and maintain our status as a REIT; challenges with respect to the repatriation of foreign earnings and cash; impact from international trade disputes and the associated impact on our tenants' supply chain and consumer spending levels; changes in foreign political, regulatory, and economic conditions (regionally, nationally and locally) including, challenges in managing international operations; challenges of complying with a wide variety of foreign laws and regulations, including those relating to real estate, corporate governance, operations, taxes, employment and other civil and criminal legal proceedings; foreign ownership restrictions with respect to operations in foreign countries; local businesses and cultural factors that differ from our usual standards and practices; differences in lending practices and the willingness of domestic or foreign 35 lenders to provide financing; regional or country-specific business cycles and political and economic instability; and failure to comply with applicable laws and regulations in the U.S. that affect foreign operations, including, but not limited to, the U.S.
These risks include, but are not limited to, any international currency gain or loss recognized with respect to changes in exchange rates, which may not qualify under the 75% gross income test or the 95% gross income test required for us to satisfy annually in order to qualify and maintain our status as a REIT; challenges with respect to the repatriation of foreign earnings and cash; impact from international trade disputes and the associated impact on our tenants' supply chain and consumer spending levels; changes in foreign political, regulatory, and economic conditions (regionally, nationally and locally) including, challenges in managing international operations; challenges of complying with a wide variety of foreign laws and regulations, including those relating to real estate, corporate governance, operations, taxes, employment and other civil and criminal legal proceedings; foreign ownership restrictions with respect to operations in foreign countries; local businesses and cultural factors that differ from our usual standards and practices; differences in lending practices and the willingness of domestic or foreign lenders to provide financing; regional or country-specific business cycles and political and economic instability; and failure to comply with applicable laws and regulations in the U.S. that affect foreign operations, including, but not limited to, the U.S.
If we lose our status as a REIT, we will face serious income tax consequences that will substantially reduce the funds available for satisfying our obligations and for distribution to our stockholders because: 42 • Welltower would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates; • Welltower would be subject to increased state and local taxes; and • unless Welltower is entitled to relief under statutory provisions, it could not elect to be subject to tax as a REIT for four taxable years following the year during which it was disqualified.
If we lose our status as a REIT, we will face serious income tax consequences that will substantially reduce the funds available for satisfying our obligations and for distribution to our stockholders because: • Welltower would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates; • Welltower would be subject to increased state and local taxes; and • unless Welltower is entitled to relief under statutory provisions, it could not elect to be subject to tax as a REIT for four taxable years following the year during which it was disqualified.
In the event that timing differences occur, or we deem 43 it appropriate to retain cash, we may borrow funds, even if the then-prevailing market conditions are not favorable for these borrowings, issue additional equity securities (although we cannot assure you that we will be able to do so), pay taxable stock dividends, if possible, distribute other property or securities or engage in other transactions intended to enable us to meet the REIT distribution requirements.
In the event that timing differences occur, or we deem it appropriate to retain cash, we may borrow funds, even if the then-prevailing market conditions are not favorable for these borrowings, issue additional equity securities (although we cannot assure you that we will be able to do so), pay taxable stock dividends, if possible, distribute other property or securities or engage in other transactions intended to enable us to meet the REIT distribution requirements.
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 41 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 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.
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 and the necessary provider agreements or contracts.
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.
These laws and regulations include, among others: laws protecting consumers against deceptive practices; laws relating to the operation of our properties and how our tenants and operators conduct their business, such as fire, health and safety, data security and privacy laws; federal and state laws affecting hospitals, clinics and other health care communities that participate in both Medicare and Medicaid that specify reimbursement rates, pricing, reimbursement procedures and limitations, quality of services and care, background checks, food service and physical plants, and similar foreign laws regulating the health care industry; resident rights laws (including abuse and neglect laws) and fraud laws; anti-kickback and physician referral laws; the 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 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.
Although we have some general oversight approval rights and the right to review operational and financial reporting information, our operators are ultimately in control of the day-to-day business of the property, including clinical decision-making, and we rely on them to operate the properties in a manner that complies with applicable law.
Although we have some general oversight approval rights and the right to review operational and financial reporting information, our operators are 32 ultimately in control of the day-to-day business of the property, including clinical decision-making, and we rely on them to operate the properties in a manner that complies with applicable law.
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.
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.
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.
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.
Penalties for failure to comply with applicable laws may include loss or suspension of licenses and certificates of need, certification or accreditation, exclusion from government health care programs (e.g., Medicare and 32 Medicaid), administrative sanctions and civil monetary penalties.
Penalties for failure to comply with applicable laws may include loss or suspension of licenses and certificates of need, certification or accreditation, exclusion from government health care programs (e.g., Medicare and Medicaid), administrative sanctions and civil monetary penalties.
In addition, we may be directly subject to these laws, regulations and standards, as well as potential investigation or enforcement, as a result of our RIDEA-structured arrangements, and certain other arrangements we may pursue with healthcare entities who are directly subject to these laws.
In addition, we may be directly subject to these laws, regulations and standards, as well as potential investigation or enforcement and liability, as a result of our RIDEA-structured arrangements, and certain other arrangements we may pursue with healthcare entities who are directly subject to these laws.
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.
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.
These risks are magnified where we lease multiple properties to a 33 single operator or tenant under a master lease, as a failure or default under a master lease would expose us to these risks across multiple properties.
These risks are magnified where we lease multiple properties to a single operator or tenant under a master lease, as a failure or default under a master lease would expose us to these risks across multiple properties.
However, as the owner of the property under a RIDEA structure, we are responsible for operational and legal risks and liabilities of the property, including, those relating to employment matters of our operators, compliance with health care fraud and abuse and other laws, governmental reimbursement matters, compliance with federal, state, local and industry-related licensure, certification and inspection laws, regulations, and standards, and litigation involving our properties or residents/patients, even though we have limited ability to control or influence our operators’ management of these risks.
However, as the owner of the property under a RIDEA structure, we are responsible for operational and legal risks and liabilities of the property, including, those relating to employment matters of our operators, compliance with health care fraud and abuse and other laws, governmental reimbursement matters, data privacy and security laws, compliance with federal, state, local and industry-related licensure, certification and inspection laws, regulations, and standards, and litigation involving our properties or residents/patients, even though we have limited ability to control or influence our operators’ management of these risks.
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 9.5% and 7.9% 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 represent 9.1% and 7.7% of total Welltower revenues, respectively.
Our information technology networks, and those of our business partners are essential to our ability to perform day-to-day operations of our business. While we employ a number of measures to prevent, detect and mitigate these threats, there is no guarantee such efforts will be successful in preventing or detecting a cyber-attack.
Our information technology networks, and those of our business partners are important enablers to our ability to perform day-to-day operations of our business. While we employ a number of measures to prevent, detect and mitigate these threats, there is no guarantee such efforts will be successful in preventing or detecting a cyber-attack.
We assume operational and legal risks with respect to our properties managed in RIDEA structures that could have a material adverse effect on our business, results of operations and financial condition We have entered into various joint ventures that were structured under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”), which permits REITs to own or partially own “qualified health care properties” in a structure through which we can participate directly in the cash flow of the properties’ operations (as compared to receiving only contractual rent payments) in compliance with REIT requirements.
We assume operational and legal risks with respect to our properties managed in RIDEA structures that could have a material adverse effect on our business, results of operations and financial condition We have entered into various joint ventures that were structured under the provisions of RIDEA, which permits REITs to own or partially own “qualified health care properties” in a structure through which we can participate directly in the cash flow of the properties’ operations (as compared to receiving only contractual rent payments) in compliance with REIT requirements.
Risks 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 Senior Living, LLC; • 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; • 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; • our dependence on key personnel; and • Welltower's holding company status.
Risks 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.
Despite efforts to bring our practices into compliance with these laws, we 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.
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.
Any such failure could have an adverse effect on our ability to comply with the REIT income and asset tests, and thus our ability to qualify as a REIT, unless we are able to avail ourselves of certain relief provisions.
Any such failure could have an adverse effect on our ability to comply with the REIT income and asset tests, and thus our ability to qualify as a REIT, unless we are able to avail ourselves of certain relief provisions and pay any tax required by such relief provisions.
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 COVID-19.
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.
If certain sale-leaseback transactions are not characterized by the Internal Revenue Service (“IRS”) as “true leases,” we may be subject to adverse tax consequences We have purchased certain properties and leased them back to the sellers of such properties, and we may enter into similar transactions in the future.
If certain sale-leaseback transactions are not characterized by the IRS as “true leases,” we may be subject to adverse tax consequences We have purchased certain properties and leased them back to the sellers of such properties, and we may enter into similar transactions in the future.
In addition, changes in federal, state and local legislation and regulation based on concerns about climate change could result in increased capital expenditures on our existing properties and our new development properties without a corresponding increase in revenue, resulting in adverse impacts to our net income.
In addition, changes in federal, state and local legislation and regulation based on concerns about climate change could result in increased capital expenditures on our existing properties and our new development properties without a corresponding increase in revenue, resulting in adverse impacts to our 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 widespread illness.
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 investments in joint ventures could be adversely affected by our lack of exclusive control over these investments, our partners’ insolvency or failure to meet their obligations, and disputes between us and our partners We have entered into, and may continue in the future to enter into, partnerships or joint ventures with other persons or entities, including our 85/15 joint venture with Integra Healthcare Properties.
Our investments in joint ventures could be adversely affected by our lack of exclusive control over these investments, our partners’ insolvency or failure to meet their obligations, and disputes between us and our partners We have entered into, and may continue in the future to enter into, partnerships or joint ventures with other persons or entities.
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, 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, 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.
A severe cold and flu season, epidemics or any other widespread illnesses could adversely affect the occupancy of our Seniors Housing Operating and Triple-net properties Our business and operations were significantly impacted by the COVID-19 pandemic and are exposed to risks from COVID-19, severe cold and flu seasons or the occurrence of other epidemics or other widespread illnesses.
A severe cold and flu season, epidemics or any other widespread illnesses could adversely affect the occupancy of our Seniors Housing Operating and Triple-net properties Our business and operations are exposed to risks from COVID-19, severe cold and flu seasons or the occurrence of other epidemics, pandemics or other widespread illnesses.
Until further regulations and guidance from the IRS and Treasury are released, the impact of the Corporate AMT on our TRSs is uncertain and it is possible that our TRSs will be subject to material U.S. federal income taxes under the Corporate AMT.
Until further regulations and guidance from the IRS and Treasury are released, the impact of the Corporate AMT on our TRSs is uncertain and it is possible that our TRSs will be subject to material U.S. federal income taxes under the Corporate AMT. Item 1B. Unresolved Staff Comments None.
The federal government substantially funds the Medicaid expansion and as of December 2022, the number of states implementing expansion has grown to more than 75% of all states.
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.
However, a large number of our properties are located in areas particularly susceptible to revenue loss, cost increase or damage caused by severe weather conditions or natural disasters such as hurricanes, earthquakes, tornadoes and floods, as well as the effects of climate change.
However, a large number of our properties are located in areas particularly susceptible to revenue loss, cost increase or damage caused by severe weather conditions or natural disasters such as hurricanes, earthquakes, tornadoes and floods, as well as the effects of climate change. For example, in 2023, the weather phenomenon known as El Niño returned.
Further, there is a risk that compliance measures we undertake will not be implemented correctly or that individuals within our business or that of our business partners will not be fully compliant with the new procedures.
Further, there is a risk that compliance measures we undertake will not be implemented correctly or that individuals within our business or those of our business partners will not be fully compliant with legal obligations.
In addition to operational challenges that continue to impact us as a result of the COVID-19 pandemic, these risks include fluctuations in occupancy experienced during the normal course of business, Medicare and Medicaid reimbursement, if applicable, and private pay rates; economic conditions; the availability and increases in the cost of labor (as a result of unionization or otherwise); competition; federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards; the availability and increases in cost of general and professional liability insurance coverage; increases in property taxes; state regulation and rights of residents related to entrance fees; and federal and state housing laws and regulations, including rent and eviction restrictions imposed during the COVID-19 pandemic.
These risks include fluctuations in occupancy experienced during the normal course of business, Medicare and Medicaid reimbursement, if applicable, and private pay rates; economic conditions; the availability and increases in the cost of labor (as a result of unionization or otherwise); competition; federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards; the availability and increases in cost of general and professional liability insurance coverage; increases in property taxes; state regulation and rights of residents related to entrance fees; and federal and state housing laws and regulations.
The properties managed by Sunrise Senior Living, LLC (“Sunrise”) account for a significant portion of our revenues and net operating income and any adverse developments in its business or financial condition could adversely affect us As of December 31, 2022, Sunrise managed 109 of our Seniors Housing Operating properties.
The properties managed by Sunrise account for a significant portion of our revenues and net operating income and any adverse developments in its business or financial condition could adversely affect us As of December 31, 2023, Sunrise managed 88 of our Seniors Housing Operating properties. These properties account for a significant portion of our revenues and net operating income.
For example, shortages and fluctuations in the price of lumber or in other important raw materials have resulted in and could continue to result in delays in the start or completion of, or increase the cost of, developing one or more of our projects.
Our development/redevelopment and construction projects are vulnerable to the impact of material shortages and inflation. For example, shortages and fluctuations in the price of lumber or in other important raw materials have resulted in and could continue to result in delays in the start or completion of, or increase the cost of, developing one or more of our projects.
We regularly monitor and review our rights and remedies under our management agreements. When determining if we will take significant action under those agreements, including terminating a manager, we consider numerous legal, contractual, regulatory, business and other relevant factors.
When determining if we will take significant action under those agreements, including terminating a manager, we consider numerous legal, contractual, regulatory, business and other relevant factors.
We have the ability to terminate any of our management agreements upon the occurrence of certain events such as insolvency relating to such manager, and in some cases, the failure to meet specific NOI targets without curing, as well as the occurrence of other events or certain conditions.
We have the ability to terminate any of our management agreements upon the occurrence of certain events such as insolvency relating to such manager, and in some cases, upon the failure to meet specific NOI targets without curing (to the extent there is an ability to cure).
We are subject to numerous laws and regulations governing the protection of personal and confidential information of our clients or employees, including U.S. federal and state laws (including the State of California and HIPAA), and non- U.S. laws, such as the U.K.
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.
Non-compliance could result in proceedings against us by governmental entities, regulators, our business partners, residents of our communities, data subjects, suppliers, vendors or other parties.
Non-compliance or alleged non-compliance with laws, contractual agreements or industry standards could result in scrutiny or proceedings against us by governmental entities, regulators, our business partners, residents of our communities, data subjects, suppliers, vendors or other parties.
As the lessee under a ground lease, we are exposed to the possibility of losing the property upon termination of the ground lease or an earlier breach of the ground lease by us. 36 The requirements of, or changes to, governmental reimbursement programs, such as Medicare, Medicaid or government funding, could have a material adverse effect on our obligors’ liquidity, financial condition and results of operations, which could adversely affect our obligors’ ability to meet their obligations to us Some of our obligors’ businesses are affected by government reimbursement.
The requirements of, or changes to, governmental reimbursement programs, such as Medicare, Medicaid or government funding, could have a material adverse effect on our obligors’ liquidity, financial condition and results of operations, which could adversely affect our obligors’ ability to meet their obligations to us Some of our obligors’ businesses are affected by government reimbursement.
This may have implications for our cross-border data flows and may result in additional compliance costs. 40 Many jurisdictions assess fines, the magnitude of which may depend on the annual global revenue of the noncompliant company, the nature, gravity and duration of, and the violation.
This may have implications for our cross-border data flows and may result in additional compliance costs. Many jurisdictions assess fines, the magnitude of which may depend on the annual global revenue of the company and the nature, gravity and duration of, the violation. Additionally, in some jurisdictions, data subjects may have a right to compensation for financial or non-financial losses.
These properties account for a significant portion of our revenues and net operating income. Under our management agreements, we rely on Sunrise’s personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage our Seniors Housing Operating properties efficiently and effectively.
Under our management agreements, we rely on Sunrise’s personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage 34 our Seniors Housing Operating properties efficiently and effectively.
Health care properties are often highly customizable and the development or redevelopment of such properties may require costly tenant-specific improvements. We have experienced delays and disruptions to property redevelopment as a result of supply chain issues and construction material and labor shortages and may experience additional or more significant such delays in the future.
We have experienced delays and disruptions to property redevelopment as a result of supply chain issues and construction material and labor shortages and may experience additional or more significant such delays in the future.
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. Additionally, increased interest rates may also result in less liquid property markets, limiting our ability to sell existing assets.
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.
If so, this could adversely affect these tenants’ ability and willingness to comply with the terms of their leases with us and/or renew those leases upon expiration, which could have a material adverse effect on us. 37 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’ 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.
Therefore, in the event of a bankruptcy, insolvency, liquidation or reorganization of Welltower OP or its subsidiaries, assets of Welltower OP or the applicable subsidiary will be available to satisfy any claims of our stockholders only after such liabilities and obligations have been satisfied in full.
Therefore, in the event of a bankruptcy, insolvency, liquidation or reorganization of Welltower OP or its subsidiaries, assets of Welltower OP or the applicable subsidiary will be available to satisfy any claims of our stockholders only after such liabilities and obligations have been satisfied in full. 41 Welltower is the initial member and majority owner of Welltower OP, with an approximate ownership interest of 99.765% as of December 31, 2023.
Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse effect on our cost and availability of capital, which could in turn have a material adverse effect on our results of operations, liquidity, cash flows, the trading/redemption price of our securities and our ability to satisfy our debt service obligations and to pay dividends and distributions to our equity holders.
Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse effect on our cost and availability of capital, which could in turn have a material adverse effect on our results of operations, liquidity, cash flows, the trading/redemption price of our securities and our ability to satisfy our debt service obligations and to pay dividends and distributions to our equity holders. 42 Increases in interest rates could have a material adverse effect on our cost of capital, and our decision to hedge against interest rate risk might not be effective The current high interest rate environment has been increasing interest cost on new and existing variable rate debt.
The participation by states in the Medicaid expansion could have the dual effect of increasing our tenants’ revenues, through new patients, but further straining state budgets and their ability to pay our tenants.
The participation by states in the Medicaid expansion could have the dual effect of increasing our tenants’ revenues, through new patients, but further straining state budgets and their ability to pay our tenants. Health reform measures could be implemented as a result of political, legislative, regulatory, and administrative developments and judicial proceedings.
Welltower is the initial member and majority owner of Welltower OP, with an approximate ownership interest of 99.751% as of December 31, 2022. In connection with our future acquisition activities or otherwise, Welltower OP may issue additional Class A Common Units ("OP Units") to third parties and admit additional members. Such issuances would reduce Welltower's percentage ownership in Welltower OP.
In connection with our future acquisition activities or otherwise, Welltower OP may issue additional Class A Common Units ("OP Units") to third parties and admit additional members. Such issuances would reduce Welltower's percentage ownership in Welltower OP.
Revisions in tax laws and interpretations thereof could significantly and negatively affect our ability to qualify as a REIT, as well as the tax considerations relevant to an investment in us, could cause us to change our investments and commitments, and adversely affect our earnings and cash flow. 44 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 in excess of $1 billion.
The likelihood of these actions may increase due to the uncertainty of the long term effects of the COVID-19 pandemic. 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’ or tenants’ ability to make lease payments to us and, therefore, adversely impact us.
Increased competition and oversupply may affect our operators’ and managers' ability to meet their obligations to us The operators and managers of our properties compete on a local and regional basis with operators and managers of properties and other health care providers that provide comparable services for residents and patients, including on the basis of the scope and quality of care and services provided, reputation and financial condition, physical appearance of the properties, price, and location.
Although our lease agreements give us the right to exercise certain remedies in the event of default on the obligations owing to us, we may determine not to do so if we believe that enforcement of our rights would be more detrimental to our business than seeking alternative approaches. 33 Increased competition and oversupply may affect our operators’ and managers' ability to meet their obligations to us The operators and managers of our properties compete on a local and regional basis with operators and managers of properties and other health care providers that provide comparable services for residents and patients, including on the basis of the scope and quality of care and services provided, reputation and financial condition, physical appearance of the properties, price, and location.
Additionally, there remains uncertainty regarding the implementation and impact of COVID-19 relief legislation, such as the Coronavirus Aid Relief, and Economic Security Act and the Paycheck Protection Program and Health Care Enhancement Act, and possible government audits and investigations related to our receipt and use of such relief funds. 34 The insolvency or bankruptcy of our tenants, operators, borrowers, managers and other obligors may adversely affect our business, results of operations and financial condition We are exposed to the risk that our tenants, operators, borrowers, managers or other obligors may not be able to meet the rent, principal and interest or other payments due us, which may result in a tenant, operator, borrower, manager or other obligor bankruptcy or insolvency, or that a tenant, operator, borrower, manager or other obligor might become subject to bankruptcy or insolvency proceedings for other reasons.
The insolvency or bankruptcy of our tenants, operators, borrowers, managers and other obligors may adversely affect our business, results of operations and financial condition We are exposed to the risk that our tenants, operators, borrowers, managers or other obligors may not be able to meet the rent, principal and interest or other payments due us, which may result in a tenant, operator, borrower, manager or other obligor bankruptcy or insolvency, or that a tenant, operator, borrower, manager or other obligor might become subject to bankruptcy or insolvency proceedings for other reasons.
Failure to obtain a license, registration, or CON, or loss of a required license, registration, or CON would prevent a facility from operating in the manner intended by the operators or tenants. These events could materially adversely affect our operators’ or tenants’ ability to make rent or other obligatory payments to us.
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.
If our financial projections with respect to a new property are inaccurate, the property may fail to perform as we expected in analyzing our investment.
If our financial projections with respect to a new property are inaccurate, the property may fail to perform as we expected in analyzing our investment. Our estimate of the costs of repositioning or redeveloping an acquired property may prove to be inaccurate, which may result in our failure to meet our profitability goals.
Additionally, in some jurisdictions, data subjects may have a right to compensation for financial or non-financial losses. Complying with these laws may cause us to incur substantial operational and compliance costs or require us to change our business practices.
Complying with these laws may cause us or our operators and managers to incur substantial operational and compliance costs or require us to change our business practices.
General Data Protection Regulation and the EU General Data Protection Regulation, 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 including consent, detailed information and data removal and security requirements.
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.
Alternatively, the amount of our REIT taxable income could be recalculated, which may cause us to fail to meet the REIT annual distribution requirements for a taxable year.
Alternatively, the amount of our REIT taxable income could be recalculated, which may cause us to fail to meet the REIT annual distribution requirements for a taxable year. 44 We could be subject to changes in our tax rates, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities We are subject to taxes in the U.S. and foreign jurisdictions.
As of December 31, 2022, Revera managed 78 of our Seniors Housing Operating properties in Canada, representing a significant portion of our revenues in Canada, and also owned a controlling interest in Sunrise. International development, ownership, and operating activities involve risks that are different from those we face with respect to our domestic properties and operations.
International development, ownership, and operating activities involve risks that are different from those we face with respect to our domestic properties and operations.
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. We cannot predict how changes in the tax laws in the U.S. or foreign jurisdictions might affect our investors or us.
Department of the Treasury issued Notice 2023-7, indicating its intention to propose regulations and provide other guidance regarding the Corporate AMT and issuing certain interim rules on which taxpayers may rely.
Although, by its terms, the Corporate AMT is not applicable to REITs, it is not certain whether or how the Corporate AMT would apply to our TRSs. The IRS has issued a number of rulings indicating its intention to propose regulations providing guidance regarding the Corporate AMT and issuing certain interim rules on which taxpayers may rely.
We could be subject to changes in our tax rates, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities We are subject to taxes in the U.S. and foreign jurisdictions. Because the U.S. maintains a worldwide corporate tax system, the foreign and U.S. tax systems are somewhat interdependent.
Because the U.S. maintains a worldwide corporate tax system, the foreign and U.S. tax systems are somewhat interdependent.
Cybersecurity incidents could disrupt our or our critical business partners’ business, damage our reputation, cause us to incur significant remediation expense and have a materially adverse effect on our business, financial condition and results of operations.
Cybersecurity incidents could disrupt our or our critical business partners’ business, damage our reputation, cause us to incur significant remediation expense and expose us to legal or regulatory claims or proceedings, including enforcement actions under data privacy or disclosure regulations.
Due to the uncertainty of the long term effects of the COVID-19 pandemic, general and professional liability insurance coverage may be restricted or very costly, which may adversely affect the tenants’, operators’ and managers’ future operations, cash flows and financial conditions, and may have a material adverse effect on the tenants’, operators’ and managers’ ability to meet their obligations to us.
Any adverse effects to our tenants', operators' or borrowers' liquidity or financial performance could affect their ability to meet their financial and other contractual obligations to us, which could have a material adverse effect on our business, results of operations and financial condition.
Removed
Although our lease agreements give us the right to exercise certain remedies in the event of default on the obligations owing to us, we may determine not to do so if we believe that enforcement of our rights would be more detrimental to our business than seeking alternative approaches.
Added
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.
Removed
In particular, the ongoing COVID-19 pandemic may continue to adversely affect our business, results of operations, growth, reputation, prospects, financial condition, operating results, cash flows, liquidity, ability to pay dividends and stock price.
Added
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.
Removed
We remain subject to a number of other risks relating to COVID-19, including a decline in the rental income in our Outpatient Medical segment if our tenants do not renew leases or do not make timely or full lease payments as a result of medical practice closures or decreases in revenue due to government imposed restrictions on elective medical procedures or decisions by patients to delay treatments; concessions such as rent deferrals or rent abatements that we may offer certain tenants across our Triple-net and Outpatient Medical segments; and our increased exposure to COVID-19 related litigation and publicity risks if the operators or tenants of the relevant facilities are subject to bankruptcy or insolvency.
Added
In addition, many of our management agreements are terminable by us for no cause upon a reasonable notice period and in some cases, upon payment of a termination fee. We regularly monitor and review our rights and remedies under our management agreements.
Removed
Although the COVID-19 pandemic has subsided from its peaks, any resurgence of the pandemic, outbreaks of new variants, changes in the effectiveness of vaccines, boosters and treatments, and adoptions of new public health measures may reintroduce the risks relating to the potential impact of the COVID-19 pandemic on us.
Added
We depend on Integra for a significant portion of our revenues and any failure, inability or unwillingness by them to satisfy obligations under their agreements with us could adversely affect us As of December 31, 2023, we lease 147 properties to Integra under a triple-net master lease, which account for a significant portion of our revenues.
Removed
The status of the Health Reform Laws may be subject to change and other health reform measures could be implemented as a result of political, legislative, regulatory, and administrative developments and judicial proceedings.
Added
Integra subleases these properties to various regional operators who manage the property operations. We depend on Integra to pay all insurance, taxes, utilities and maintenance and repair expenses in connection with the leased properties.
Removed
Our estimate of the costs of repositioning or redeveloping an acquired property may prove to be inaccurate, which may result in our failure to meet our profitability goals. 38 Our development/redevelopment and construction projects are vulnerable to the impact of material shortages and inflation.
Added
We cannot assure you that Integra will have sufficient assets, income and access to financing to enable them to make rental payments to us or to otherwise satisfy their respective obligations under our lease, and any failure, inability or unwillingness by Integra to do so could have an adverse effect on our business, results of operations and financial condition.
Removed
Cybersecurity breaches that compromise proprietary, personal identifying or confidential information of our employees, operators, tenants and partners, or result in operational disruptions, could result in legal claims or proceedings, including enforcement actions by regulators under data privacy regulations.
Added
Integra has also agreed to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with the facilities, and we cannot assure you that Integra will have sufficient assets, income, access to financing and insurance coverage to enable them to satisfy their respective indemnification obligations.
Removed
Some jurisdictions impose the same requirements and restrictions on transfers of data from their jurisdictions to jurisdictions that they do not consider adequate.

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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, 2022 (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 $ 56,098 $ 14,082 3 $ 32,944 $ 4,831 6 $ 180,944 $ 12,759 Arkansas 1 28,634 4,636 — — — 1 21,101 4,126 Arizona 12 257,315 49,673 — — — 7 77,297 9,873 California 103 3,622,974 825,685 23 429,725 67,220 42 1,009,678 107,924 Colorado 16 492,334 113,236 8 223,886 22,444 — — — Connecticut 5 108,606 18,685 4 81,982 1,761 7 100,439 9,060 District Of Columbia 2 98,890 13,695 — — — — — — Delaware 7 82,287 28,654 4 108,537 15,983 — — — Florida 26 852,694 174,325 43 473,995 54,592 25 228,998 54,370 Georgia 15 242,060 55,073 3 37,748 3,726 12 206,707 33,173 Hawaii 1 72,197 19,207 — — — — — — Iowa 9 121,634 34,521 7 54,697 4,335 — — — Idaho 5 85,097 6,597 — — — 2 48,932 4,989 Illinois 36 593,381 156,924 23 329,716 28,257 7 106,322 15,205 Indiana 8 221,430 37,627 27 401,856 48,528 — — — Kansas 10 150,366 47,729 20 170,160 21,711 — — — Kentucky 4 59,775 15,604 3 50,596 5,491 — — — Louisiana 6 110,579 30,427 2 39,387 3,150 — — — Massachusetts 16 479,962 80,746 9 184,382 10,136 7 100,984 8,949 Maryland 10 485,082 98,579 21 258,479 31,931 12 245,700 24,302 Maine 1 22,821 11,759 — — — — — — Michigan 26 429,345 101,797 25 240,373 26,807 13 183,550 24,168 Minnesota 3 76,447 13,070 12 225,611 23,456 7 141,675 31,718 Missouri 9 169,720 22,413 — — — 12 183,171 22,980 Mississippi 3 28,617 12,272 — — — 1 33,951 2,342 Montana 2 24,572 7,874 — — — — — — North Carolina 10 308,638 52,360 51 479,391 58,461 25 622,716 52,683 North Dakota 1 13,012 1,385 — — — — — — Nebraska 9 125,203 20,149 — — — 1 10,693 2,285 New Hampshire 3 87,063 8,090 — — — — — — New Jersey 28 703,917 216,156 29 585,422 58,196 15 333,582 45,012 Nevada 7 126,258 33,248 — — — 8 125,313 10,184 New York 41 823,123 175,092 4 36,960 7,442 15 409,221 33,538 Ohio 47 892,834 162,312 41 402,434 43,100 7 97,408 2,566 Oklahoma 13 166,691 40,536 12 92,244 13,665 2 13,244 2,882 Oregon 14 158,195 45,605 1 2,428 886 1 41,946 3,155 Pennsylvania 24 386,404 100,825 56 574,040 94,479 5 84,040 6,147 South Carolina 5 82,791 19,669 7 32,595 5,261 2 9,556 1,940 Tennessee 10 199,251 43,621 6 60,628 7,551 3 64,860 9,078 Texas 76 1,541,846 337,768 23 338,227 39,233 59 1,069,580 107,365 Utah 4 72,461 23,859 1 21,749 1,887 — — — Virginia 9 366,086 102,450 29 374,359 55,165 6 106,869 13,916 Washington 34 893,930 201,840 7 86,874 7,994 8 178,104 27,753 Wisconsin 2 18,823 7,108 5 84,390 10,230 5 84,634 9,472 West Virginia — — — 1 6,208 1,050 — — — Total domestic 678 $ 15,939,443 $ 3,586,963 510 $ 6,522,023 $ 778,959 323 $ 6,121,215 $ 693,914 Canada 107 2,372,861 455,321 6 129,250 10,467 — — — United Kingdom 65 1,844,178 430,355 54 1,210,849 150,329 — — — Total international 172 $ 4,217,039 $ 885,676 60 $ 1,340,099 $ 160,796 — $ — $ — Grand total 850 $ 20,156,482 $ 4,472,639 570 $ 7,862,122 $ 939,755 323 $ 6,121,215 $ 693,914 (1) Represents revenue for the month ended December 31, 2022 annualized. 46 The following table sets forth occupancy and average annualized revenues for certain property types (excluding investments in unconsolidated entities): Occupancy (1) Average Annualized Revenues (2) 2022 2021 2022 2021 Seniors Housing Operating (3) 78.1% 76.4% $ 49,987 $ 48,300 per unit Triple-net (4) 76.2% 73.0% 17,330 19,675 per bed/unit Outpatient Medical (5) 95.2% 95.4% 38 37 per sq. ft.
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.
(1) We use unaudited, periodic financial information provided solely by tenants/borrowers to calculate occupancy for properties other than Outpatient Medical buildings and have not independently verified the information. (2) Represents December annualized revenues divided by total beds, units or square feet in service, as presented in the tables above.
(1) We use unaudited, periodic financial information provided solely by tenants/borrowers to calculate occupancy for properties other than Outpatient Medical buildings and have not independently verified the information. (2) Represents December annualized revenues as presented in the tables above, divided by total beds, units or square feet in service.
Investments classified as held for sale are included in 2023. (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 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.
The following table sets forth information regarding lease expirations for certain portions of our portfolio as of December 31, 2022 (dollars in thousands): Expiration Year (1) 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Thereafter Triple-net: Properties 3 4 15 50 2 4 4 34 6 88 337 Base rent (2) $ 5,169 $ 13,088 $ 6,612 $ 43,465 $ 1,182 $ 5,246 $ 4,001 $ 68,919 $ 12,773 $ 65,629 $ 393,268 % of base rent 0.8 % 2.1 % 1.1 % 7.0 % 0.2 % 0.8 % 0.6 % 11.1 % 2.1 % 10.6 % 63.6 % Units 388 692 451 3,489 180 440 219 3,669 542 4,314 37,320 % of units 0.8 % 1.3 % 0.9 % 6.7 % 0.3 % 0.9 % 0.4 % 7.1 % 1.0 % 8.3 % 72.3 % Outpatient Medical: Square feet 2,046,278 1,844,706 1,210,369 1,266,337 1,397,012 1,070,909 997,165 1,145,303 1,615,952 1,171,514 3,656,379 Base rent (2) $ 58,210 $ 56,157 $ 36,284 $ 36,568 $ 38,694 $ 28,656 $ 28,013 $ 31,524 $ 44,050 $ 34,704 $ 97,020 % of base rent 11.9 % 11.5 % 7.4 % 7.5 % 7.9 % 5.8 % 5.7 % 6.4 % 9.0 % 7.1 % 19.8 % Leases 436 319 241 209 201 145 76 83 63 124 421 % of leases 18.8 % 13.8 % 10.4 % 9.0 % 8.7 % 6.3 % 3.3 % 3.6 % 2.7 % 5.3 % 18.1 % (1) Excludes investments in unconsolidated entities, developments, land parcels, loans receivable and sub-leases.
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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed5 unchanged
Biggest changeFurther, management cannot predict the outcome of these legal proceedings and if management’s expectation regarding such matters is not correct, such proceedings could have a material adverse effect on our business, results of operations or financial condition. Item 4. Mine Safety Disclosures None. 47 PART II
Biggest changeFurther, management cannot predict the outcome of these legal proceedings and if management’s expectation regarding such matters is not correct, such proceedings could have a material adverse effect on our business, results of operations or financial condition. Item 4. Mine Safety Disclosures None. 48 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

94 edited+27 added−42 removed33 unchanged
Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations Year Ended One Year Change Year Ended One Year Change Two Year Change December 31, December 31, December 31, 2022 2021 $ % 2020 $ % $ % Revenues: Resident fees and services $ 4,173,711 $ 3,197,223 $ 976,488 31 % $ 3,074,022 $ 123,201 4 % $ 1,099,689 36 % Interest income 7,867 4,231 3,636 86 % 618 3,613 585 % 7,249 n/a Other income 63,839 11,796 52,043 441 % 7,223 4,573 63 % 56,616 784 % Total revenues 4,245,417 3,213,250 1,032,167 32 % 3,081,863 131,387 4 % 1,163,554 38 % Property operating expenses 3,292,045 2,529,344 762,701 30 % 2,326,311 203,033 9 % 965,734 42 % NOI (1) 953,372 683,906 269,466 39 % 755,552 (71,646) -9 % 197,820 26 % Other expenses: Depreciation and amortization 854,800 593,565 261,235 44 % 544,462 49,103 9 % 310,338 57 % Interest expense 34,833 39,327 (4,494) -11 % 54,901 (15,574) -28 % (20,068) -37 % Loss (gain) on extinguishment of debt, net 386 (2,628) 3,014 115 % 12,659 (15,287) -121 % (12,273) -97 % Provision for loan losses, net 1,039 394 645 164 % 671 (277) -41 % 368 55 % Impairment of assets 13,146 22,317 (9,171) -41 % 100,741 (78,424) -78 % (87,595) -87 % Other expenses 66,026 27,132 38,894 143 % 14,265 12,867 90 % 51,761 363 % 970,230 680,107 290,123 43 % 727,699 (47,592) -7 % 242,531 33 % Income (loss) from continuing operations before income taxes and other items (16,858) 3,799 (20,657) -544 % 27,853 (24,054) -86 % (44,711) -161 % Income (loss) from unconsolidated entities (53,318) (39,225) (14,093) -36 % (33,857) (5,368) -16 % (19,461) -57 % Gain (loss) on real estate dispositions, net 5,794 6,146 (352) -6 % 328,249 (322,103) -98 % (322,455) -98 % Income from continuing operations (64,382) (29,280) (35,102) -120 % 322,245 (351,525) -109 % (386,627) -120 % Net income (loss) (64,382) (29,280) (35,102) -120 % 322,245 (351,525) -109 % (386,627) -120 % Less: Net income (loss) attributable to noncontrolling interests (16,258) (2,224) (14,034) -631 % 20,301 (22,525) -111 % (36,559) -180 % Net income (loss) attributable to common stockholders $ (48,124) $ (27,056) $ (21,068) -78 % $ 301,944 $ (329,000) -109 % $ (350,068) -116 % (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, 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.
("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.
("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").
On July 22, 2022, Welltower Inc. filed with the SEC a prospectus supplement relating to the registration of up to 300,026 shares of common stock of Welltower Inc. that may be issued from time to time if, and to the extent that, certain holders of Class A Common Units (the "OP Units") of Welltower OP tender the OP Units for redemption by Welltower OP, and Welltower Inc. elects to assume the redemption obligations of Welltower OP and to satisfy all or a portion of the redemption consideration by issuing shares of its common stock to the holders instead of or in addition to paying a cash amount.
On July 22, 2022, Welltower filed with the SEC a prospectus supplement relating to the registration of up to 300,026 shares of common stock of Welltower Inc. that may be issued from time to time if, and to the extent that, certain holders of Class A Common Units (the "OP Units") of Welltower OP tender the OP Units for redemption by Welltower OP, and Welltower Inc. elects to assume the redemption obligations of Welltower OP and to satisfy all or a portion of the redemption consideration by issuing shares of its common stock to the holders instead of or in addition to paying a cash amount.
On April 1, 2022, Welltower Inc. 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 to replace Old Welltower’s existing DRIP registration statement on Form S-3 filed with the SEC on May 4, 2021.
Through these efforts, we generally aim to intervene at an early stage to address any negative trends, and in so doing, support both the collectability of revenue and the value of our investment. In addition to our asset management and research efforts, we also aim to structure our relevant investments to mitigate payment risk.
Through these efforts, we generally aim to intervene at an early stage to address any negative trends, and in so doing, support both the collectability of revenue and the value of our investment. In addition to our asset management and research efforts, we aim to structure our relevant investments to mitigate payment risk.
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.
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").
As of December 31, 2022, 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.
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.
This information shall not otherwise be deemed filed under such Acts. During the three months ended December 31, 2022, 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, 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.
(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, 2022. (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 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.
Additionally, in conjunction with the lease termination, during the year ended December 31, 2022 we recognized $58,621,000 in other income on our Consolidated Statements of Comprehensive Income, from the derecognition of the right of use asset and related lease liability.
Additionally, in connection with the lease termination, during the year ended December 31, 2022 we recognized $58,621,000 in other income on our Consolidated Statements of Comprehensive Income, from the derecognition of the right of use asset and related lease liability.
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.
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.
The Company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience.
Welltower 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.
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.
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.
Please see Non-GAAP Financial Measures for additional information and reconciliations. Depreciation and amortization fluctuate as a result of the acquisitions, dispositions and 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 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.
Operating leases and loans are normally credit enhanced by guarantees and/or letters of credit. In addition, operating leases are typically structured as master leases and loans are generally cross-defaulted and cross-collateralized with other real estate loans, operating leases or agreements between us and the obligor and its affiliates.
Operating leases and loans are normally credit enhanced by guarantees and/or letters of credit. Also, operating leases are typically structured as master leases and loans are generally cross-defaulted and cross-collateralized with other real estate loans, operating leases or agreements between us and the obligor and its affiliates.
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.
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.
Liquidity and Capital Resources Sources and Uses of Cash Our primary sources of cash include resident fees and services, rent and interest receipts, borrowings under our unsecured revolving credit facility and commercial paper program, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable.
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.
Our primary sources of cash include resident fees and services, rent and interest receipts, borrowings under our unsecured revolving credit facility and commercial paper program, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable.
Our primary 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.
Depending upon market c onditions, we anticipate issuing securities under our registration statements to invest in additional properties and to repay borrowings under our unsecured revolving credit facility and commercial paper program.
Depending upon market conditions, we anticipate issuing securities under our registration statements to invest in additional properties and to repay borrowings under our unsecured revolving credit facility and commercial paper program.
Geographic mix measures the portion of our NOI that relates to our current top five states (or international equivalents).
Geographic mix measures the portion of our NOI that relates to our current top five states (or international countries).
Management’s Discussion and Analysis of Financial Condition and Results of Operations EXECUTIVE SUMMARY Company Overview 51 Business Strategy 52 Key Transactions 53 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 57 Capital Structure 57 RESULTS OF OPERATIONS Summary 58 Seniors Housing Operating 59 Triple-net 63 Outpatient Medical 65 Non-Segment/Corporate 67 OTHER Non-GAAP Financial Measures 67 Critical Accounting Policies and Estimates 73 50 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.
We did not repurchase any shares of our common stock through the Stock Repurchase Program during the three months ended December 31, 2022. 48 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, 2023. Item 6. [Reserved] 49 Item 7.
For the year ended December 31, 2022, resident fees and services and rental income represented 71% and 25%, 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, 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.
Financing Activities The changes in net cash provided from/used in financing activities are primarily attributable to changes related to our long-term debt arrangements, the issuances of common stock and dividend payments which are summarized above in “Key Transactions.” Please refer to Notes 10, 11 and 14 of our consolidated financial statements for additional information.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Financing Activities The changes in net cash provided from/used in financing activities are primarily attributable to changes related to our long-term debt arrangements, the issuances of common stock and dividend payments which are summarized above in “Key Transactions.” Please refer to Notes 10, 11 and 14 to our consolidated financial statements for additional information.
Off-Balance Sheet Arrangements At December 31, 2022 , we had investments in unconsolidated entities with our ownership generally ranging from 10% to 88%. We use financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure. At December 31, 2022 , we had 21 outstanding letter of credit obligations.
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.
These earnings measures are widely used by investors and analysts in the valuation, comparison and investment recommendations of companies. 53 Item 7.
These earnings measures are widely used by investors and analysts in the valuation, comparison and investment recommendations of companies.
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), an 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 health care infrastructure.
On April 1, 2022, Welltower Inc. and Welltower OP LLC jointly filed with the Securities and Exchange Commission (the “SEC”) an open-ended automatic or “universal” shelf registration statement on Form S-3 covering an indeterminate amount of future offerings of Welltower Inc.’s debt securities, common stock, preferred stock, depositary shares, guarantees of debt securities issued by Welltower OP LLC, warrants and units and Welltower OP LLC’s debt securities and guarantees of debt securities issued by Welltower Inc. to replace Old Welltower’s existing “universal” shelf registration statement filed with the SEC on May 4, 2021.
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.
The following table reflects the recent historical trends for our credit strength measures for the periods presented: Year Ended December 31, 2022 2021 2020 Net debt to book capitalization ratio 39.5% 42.2% 40.8% Net debt to undepreciated book capitalization ratio 32.1% 34.9% 33.8% Net debt to market capitalization ratio 29.5% 25.9% 29.6% Interest coverage ratio 3.73x 3.89x 5.04x Fixed charge coverage ratio 3.37x 3.43x 4.49x Adjusted interest coverage ratio 3.94x 3.89x 3.97x Adjusted fixed charge coverage ratio 3.56x 3.43x 3.54x 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, 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.
Our asset management process for seniors housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral.
Our 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.
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.
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.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the New York Stock Exchange (NYSE:WELL). There were 3,002 stockholders of record as of February 16, 2023.
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.
Average occupancy is as follows: Three Months Ended (1) March 31, June 30, September 30, December 31, 2021 72.7% 73.0% 74.9% 76.3% 2022 76.3% 77.1% 78.0% 78.3% (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, 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.
(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,” and collectively with the DownREIT Units, the “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 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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations 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, 2021.
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.
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.
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 following table reflects our recent historical trends of concentration risk by NOI for the years indicated below: December 31, (1) 2022 2021 2020 Property mix: Seniors Housing Operating 41% 35% 38% Triple-net 38% 43% 37% Outpatient Medical 21% 22% 25% Relationship mix: ProMedica 10% 12% 11% Sunrise Senior Living 7% 10% 13% Atria Senior Living (2) 6% 2% —% HC-One Group 4% 3% —% Cogir Management Corporation 3% 2% 2% Remaining 70% 71% 74% Geographic mix: California 14% 13% 14% United Kingdom 10% 13% 10% Texas 8% 8% 9% Canada 6% 6% 6% New Jersey 6% 6% 5% Remaining 56% 54% 56% (1) Excludes our share of investments in unconsolidated entities and non-segment/corporate NOI.
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.
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.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following table reflects the recent historical trends of our operating performance measures for the periods presented (in thousands): Year Ended December 31, 2022 2021 2020 Net income $ 160,568 $ 374,479 $ 1,038,852 Net income attributable to common stockholders 141,214 336,138 978,844 Funds from operations attributable to common stockholders 1,478,072 1,220,722 1,102,562 Consolidated net operating income 2,301,845 1,967,553 2,008,144 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, 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.
We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results. Our expected results may not be achieved and actual results may differ materially from our expectations.
Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount. We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results. Our expected results may not be achieved and actual results may differ materially from our expectations.
The following table represents the changes in outstanding common stock for the period from January 1, 2020 to December 31, 2022 (in thousands): Year Ended December 31, 2022 December 31, 2021 December 31, 2020 Totals Beginning balance 447,239 417,401 410,257 410,257 Dividend reinvestment plan issuances — — 264 264 Redemption of OP Units and DownREIT Units 5 — — 5 Option exercises 2 — — 2 ATM Program issuances 43,093 29,667 6,800 79,560 Repurchase of common stock — — (202) (202) Other, net 169 171 282 622 Ending balance 490,508 447,239 417,401 490,508 Weighted average number of shares outstanding: Basic 462,185 424,976 415,451 Diluted 465,158 426,841 417,387 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, 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.
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.
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.
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, 2022 (in thousands): Payments Due by Period Contractual Obligations Total 2023 2024-2025 2026-2027 Thereafter Senior unsecured notes and term credit facilities: (1) U.S.
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.
The ATM Program also allows Welltower Inc. to enter into forward sale agreements. As of February 16, 2023, we had $1,150,202,853 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 9, 2024, we had $1,451,479,501 of remaining capacity under the ATM Program and there were no outstanding forward sales agreements.
The data are based on the closing prices as of December 31 for each of the five years presented. 2017 equals $100 and dividends are assumed to be reinvested. 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 S & P 500 $ 100.00 $ 95.62 $ 125.72 $ 148.85 $ 191.58 $ 156.88 Welltower Inc. 100.00 115.30 141.86 117.05 160.34 126.40 FTSE NAREIT Equity 100.00 95.38 120.17 110.56 158.36 119.78 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. 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.
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, 2022 are 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, 2022 through October 31, 2022 285 $ 64.32 — $ — November 1, 2022 through November 30, 2022 — — — 3,000,000,000 December 1, 2022 through December 31, 2022 — — — 3,000,000,000 Totals 285 $ 64.32 — $ 3,000,000,000 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").
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.
Dividends Our Board of Directors declared a cash dividend for the quarter ended December 31, 2022 of $0.61 per share. On March 8, 2023, we will pay our 207th consecutive quarterly dividend payment to stockholders of record on February 28, 2023.
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 .
Inve stments The following summarizes property acquisitions and joint venture investments completed during the year ended December 31, 2022 (dollars in thousands): Properties Book Amount (1) Capitalization Rates (2) Seniors Housing Operating 77 $ 2,511,408 4.7% Triple-net 5 66,784 0.2% Outpatient Medical 12 360,905 5.4% Totals 94 $ 2,939,097 4.6% (1) Represents amounts recorded in net real estate investments including fair value adjustments pursuant to U.S.
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.
These investments are mainly financed with a combination of equity, senior unsecured notes, secured debt and borrowings under our primary unsecured credit facility. During inflationary periods, which generally are accompanied by rising interest rates, our ability to grow may be adversely affected because the yield on new investments may increase at a slower rate than new borrowing costs.
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.
At December 31, 2022, we had $631,681,000 of cash and cash equivalents, $90,611,000 of restricted cash and $4,000,000,000 of available borrowing capacity under our unsecured revolving credit facility. 52 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.
In connection with the filing of the new “universal” shelf registration statement, Welltower Inc. also filed with the SEC two prospectus supplements that will continue offerings that were previously covered by Old Welltower's prospectus supplements and the accompanying prospectus to the prior registration statement relating to: (i) the registration of up to 620,731 shares 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 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.
(2) Estimated completion ranges relate to projects to be delivered in phases. 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 foreign currency rates, extinguishments and principal amortizations.
In addition, the mark-to-market adjustment on our Genesis Healthcare available-for-sale investment is reflected in all periods. Interest expense represents secured debt interest expense and related fees. The change in secured debt interest expense is due to the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations.
The 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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Americas Inc., RBC Capital Markets, LLC, Regions Securities LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc., Synovus Securities, Inc., TD Securities (USA) LLC, Truist Securities, Inc. and Wells Fargo Securities, LLC as sales agents and forward sellers and (ii) the forward purchasers named therein relating to issuances, offers and sales from time to time of up to $3,000,000,000 aggregate amount of common stock of Welltower Inc.
Incorporated, Scotia Capital (USA) Inc., Synovus Securities, Inc., TD Securities (USA) LLC, Truist Securities, Inc. and Wells Fargo Securities, LLC as sales agents and forward sellers and (ii) the forward purchasers named therein relating to issuances, offers and sales from time to time of up to $4,000,000,000 aggregate amount of common stock of Welltower (together with the existing master forward sale confirmations relating thereto, the “ATM Program”).
Please see Non-GAAP Financial Measures for additional information and reconciliations. During the year ended December 31, 2022, we recorded impairment charges of $13,146,000 related to one held for sale property in which the carrying value exceeded the estimated fair value less costs to sell.
During the year ended December 31, 2023, we recorded impairment charges of $1,086,000 for one held for sale property for which the carrying value exceeded the estimated fair value less costs to sell and $10,012,000 related to two held for use properties for which the carrying value exceeded the estimated fair value.
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, 2022 2021 $ % 2020 $ % $ % New development $ 631,737 $ 417,963 $ 213,774 51 % $ 201,336 $ 216,627 108 % $ 430,401 214 % Recurring capital expenditures, tenant improvements and lease commissions 198,576 99,994 98,582 99 % 83,146 16,848 20 % 115,430 139 % Renovations, redevelopments and other capital improvements 277,440 182,594 94,846 52 % 161,843 20,751 13 % 115,597 71 % Total $ 1,107,753 $ 700,551 $ 407,202 58 % $ 446,325 $ 254,226 57 % $ 661,428 148 % 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, 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.
Incorporated, Barclays Capital Inc., BMO Capital Markets Corp., BNP Paribas Securities Corp., BNY Mellon Capital Markets, LLC, BofA Securities, Inc., BOK Financial Securities, Inc., Capital One Securities Inc., Citigroup Global Markets Inc., Comerica Securities, Inc., Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., Fifth Third Securities, Inc., Goldman Sachs & Co. LLC, Jefferies LLC, JMP Securities LLC, J.P.
On August 1, 2023, Welltower and Welltower OP entered into an equity distribution agreement (the “EDA”) with (i) Barclays Capital Inc., BMO Capital Markets Corp., BNP Paribas Securities Corp., BNY Mellon Capital Markets, LLC, BofA Securities, Inc., BOK Financial Securities, Inc., Capital One Securities Inc., Citigroup Global Markets Inc., Citizens JMP Securities, LLC, Comerica Securities, Inc., Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., Fifth Third Securities, Inc., Goldman Sachs & Co.
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 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.
Triple-net The following is a summary of our results of operations for the Triple-net 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, 2022 2021 $ % 2020 $ % $ % Revenues: Rental income $ 782,329 $ 761,441 $ 20,888 3 % $ 733,776 $ 27,665 4 % $ 48,553 7 % Interest income 142,402 124,540 17,862 14 % 62,625 61,915 99 % 79,777 127 % Other income 6,776 4,603 2,173 47 % 4,903 (300) -6 % 1,873 38 % Total revenues 931,507 890,584 40,923 5 % 801,304 89,280 11 % 130,203 16 % Property operating expenses 44,483 49,462 (4,979) -10 % 53,183 (3,721) -7 % (8,700) -16 % NOI (1) 887,024 841,122 45,902 5 % 748,121 93,001 12 % 138,903 19 % Other expenses: Depreciation and amortization 215,887 220,699 (4,812) -2 % 232,604 (11,905) -5 % (16,717) -7 % Interest expense 963 6,376 (5,413) -85 % 9,477 (3,101) -33 % (8,514) -90 % Loss (gain) on derivatives and financial instruments, net 8,334 (7,333) 15,667 214 % 11,049 (18,382) -166 % (2,715) -25 % Loss (gain) on extinguishment of debt, net 80 — 80 n/a — — n/a 80 n/a Provision for loan losses, net 9,289 10,339 (1,050) -10 % 90,563 (80,224) -89 % (81,274) -90 % Impairment of assets 3,595 26,579 (22,984) -86 % 34,867 (8,288) -24 % (31,272) -90 % Other expenses 13,043 4,189 8,854 211 % 22,923 (18,734) -82 % (9,880) -43 % 251,191 260,849 (9,658) -4 % 401,483 (140,634) -35 % (150,292) -37 % Income from continuing operations before income taxes and other items 635,833 580,273 55,560 10 % 346,638 233,635 67 % 289,195 83 % Income (loss) from unconsolidated entities 34,495 20,687 13,808 67 % 18,462 2,225 12 % 16,033 87 % Gain (loss) on real estate dispositions, net 16,648 135,881 (119,233) -88 % 64,288 71,593 111 % (47,640) -74 % Income from continuing operations 686,976 736,841 (49,865) -7 % 429,388 307,453 72 % 257,588 60 % Net income 686,976 736,841 (49,865) -7 % 429,388 307,453 72 % 257,588 60 % Less: Net income attributable to noncontrolling interests 28,958 35,653 (6,695) -19 % 39,985 (4,332) -11 % (11,027) -28 % Net income attributable to common stockholders $ 658,018 $ 701,188 $ (43,170) -6 % $ 389,403 $ 311,785 80 % $ 268,615 69 % (1) See Non-GAAP Financial Measures below.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Triple-net The following is a summary of our results of operations for the Triple-net 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: Rental income $ 814,751 $ 782,329 $ 32,422 4 % $ 761,441 $ 20,888 3 % $ 53,310 7 % Interest income 157,592 142,402 15,190 11 % 124,540 17,862 14 % 33,052 27 % Other income 70,986 6,776 64,210 948 % 4,603 2,173 47 % 66,383 n/a Total revenues 1,043,329 931,507 111,822 12 % 890,584 40,923 5 % 152,745 17 % Property operating expenses 42,194 44,483 (2,289) -5 % 49,462 (4,979) -10 % (7,268) -15 % NOI (1) 1,001,135 887,024 114,111 13 % 841,122 45,902 5 % 160,013 19 % Other expenses: Depreciation and amortization 231,028 215,887 15,141 7 % 220,699 (4,812) -2 % 10,329 5 % Interest expense (65) 963 (1,028) -107 % 6,376 (5,413) -85 % (6,441) -101 % Loss (gain) on derivatives and financial instruments, net (2,120) 8,334 (10,454) -125 % (7,333) 15,667 214 % 5,213 71 % Loss (gain) on extinguishment of debt, net — 80 (80) -100 % — 80 n/a — n/a Provision for loan losses, net 6,348 9,289 (2,941) -32 % 10,339 (1,050) -10 % (3,991) -39 % Impairment of assets 11,098 3,595 7,503 209 % 26,579 (22,984) -86 % (15,481) -58 % Other expenses 5,060 13,043 (7,983) -61 % 4,189 8,854 211 % 871 21 % 251,349 251,191 158 — % 260,849 (9,658) -4 % (9,500) -4 % Income (loss) from continuing operations before income taxes and other items 749,786 635,833 113,953 18 % 580,273 55,560 10 % 169,513 29 % Income (loss) from unconsolidated entities 16,700 34,495 (17,795) -52 % 20,687 13,808 67 % (3,987) -19 % Gain (loss) on real estate dispositions, net 259 16,648 (16,389) -98 % 135,881 (119,233) -88 % (135,622) -100 % Income (loss) from continuing operations 766,745 686,976 79,769 12 % 736,841 (49,865) -7 % 29,904 4 % Net income (loss) 766,745 686,976 79,769 12 % 736,841 (49,865) -7 % 29,904 4 % Less: Net income (loss) attributable to noncontrolling interests 23,698 28,958 (5,260) -18 % 35,653 (6,695) -19 % (11,955) -34 % Net income (loss) attributable to common stockholders $ 743,047 $ 658,018 $ 85,029 13 % $ 701,188 $ (43,170) -6 % $ 41,859 6 % (1) See Non-GAAP Financial Measures below.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Certain 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.
Rental income has increased primarily due to acquisitions and annual rent increases. 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.
The following is a summary of our results of operations for the periods presented (dollars in thousands, except per share amounts): Year Ended One Year Change Year Ended One Year Change Two Year Change December 31, December 31, December 31, 2022 2021 Amount % 2020 Amount % Amount % Net income $ 160,568 $ 374,479 $ (213,911) -57 % $ 1,038,852 $ (664,373) -64 % $ (878,284) -85 % NICS 141,214 336,138 (194,924) -58 % 978,844 (642,706) -66 % (837,630) -86 % FFO 1,478,072 1,220,722 257,350 21 % 1,102,562 118,160 11 % 375,510 34 % EBITDA 2,007,702 1,910,611 97,091 5 % 2,601,645 (691,034) -27 % (593,943) -23 % Adjusted EBITDA 2,122,399 1,913,546 208,853 11 % 2,048,412 (134,866) -7 % 73,987 4 % NOI 2,301,845 1,967,553 334,292 17 % 2,008,144 (40,591) -2 % 293,701 15 % Per share data (fully diluted): Net income attributable to common stockholders (1) $ 0.30 $ 0.78 $ (0.48) -62 % $ 2.33 $ (1.55) -67 % $ (2.03) -87 % Funds from operations attributable to common stockholders $ 3.18 $ 2.86 $ 0.32 11 % $ 2.64 $ 0.22 8 % $ 0.54 20 % Interest coverage ratio 3.73x 3.89x -0.16x -4 % 5.04x -1.15x -23 % -1.31x -26 % Fixed charge coverage ratio 3.37x 3.43x -0.06x -2 % 4.49x -1.06x -24 % -1.12x -25 % Adjusted interest coverage ratio 3.94x 3.89x 0.05x 1 % 3.97x -0.08x -2 % -0.03x -1 % Adjusted fixed charge coverage ratio 3.56x 3.43x 0.13x 4 % 3.54x -0.11x -3 % 0.02x 1 % (1) Includes adjustment to the numerator for income (loss) attributable to OP unitholders.
The following is a summary of our results of operations for the periods presented (dollars in thousands, except per share amounts): Year Ended One Year Change Year Ended One Year Change Two Year Change December 31, December 31, December 31, 2023 2022 Amount % 2021 Amount % Amount % Net income $ 358,139 $ 160,568 $ 197,571 123 % $ 374,479 $ (213,911) -57 % $ (16,340) -4 % NICS 340,094 141,214 198,880 141 % 336,138 (194,924) -58 % 3,956 1 % FFO 1,763,227 1,478,072 285,155 19 % 1,220,722 257,350 21 % 542,505 44 % EBITDA 2,373,450 2,007,702 365,748 18 % 1,910,611 97,091 5 % 462,839 24 % Adjusted EBITDA 2,509,003 2,122,399 386,604 18 % 1,913,546 208,853 11 % 595,457 31 % NOI 2,690,219 2,301,845 388,374 17 % 1,967,553 334,292 17 % 722,666 37 % Per share data (fully diluted): Net income attributable to common stockholders (1) $ 0.66 $ 0.30 $ 0.36 120 % $ 0.78 $ (0.48) -62 % $ (0.12) -15 % Funds from operations attributable to common stockholders $ 3.40 $ 3.18 $ 0.22 7 % $ 2.86 $ 0.32 11 % $ 0.54 19 % Interest coverage ratio 3.74x 3.73x 0.01x — % 3.89x -0.16x -4 % -0.15x -4 % Fixed charge coverage ratio 3.44x 3.37x 0.07x 2 % 3.43x -0.06x -2 % 0.01x — % Adjusted interest coverage ratio 3.95x 3.94x 0.01x — % 3.89x 0.05x 1 % 0.06x 2 % Adjusted fixed charge coverage ratio 3.64x 3.56x 0.08x 2 % 3.43x 0.13x 4 % 0.21x 6 % (1) Includes adjustment to the numerator for income (loss) attributable to OP unitholders.
The fluctuations in loss (gain) on extinguishment of debt is primarily attributable to the volume of extinguishments and terms of the related secured debt. The following is a summary of our Seniors Housing Operating segment property secured debt principal activity (dollars in thousands): 62 Item 7.
The fluctuations in loss (gain) on extinguishment of debt is primarily attributable to the volume of extinguishments and terms of the related secured debt.
The following is a summary of our sources and uses of cash flows 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, 2022 2021 $ % 2020 $ % $ % Cash, cash equivalents and restricted cash at beginning of period $ 346,755 $ 2,021,043 $ (1,674,288) -83 % $ 385,766 $ 1,635,277 424 % $ (39,011) -10 % Net cash provided from (used in): Operating activities 1,328,708 1,275,325 53,383 4 % 1,364,756 (89,431) -7 % (36,048) -3 % Investing activities (3,703,815) (4,516,268) 812,453 -18 % 2,347,928 (6,864,196) n/a (6,051,743) n/a Financing activities 2,761,277 1,567,664 1,193,613 76 % (2,080,858) 3,648,522 n/a 4,842,135 n/a Effect of foreign currency translation (10,633) (1,009) (9,624) 954 % 3,451 (4,460) n/a (14,084) n/a Cash, cash equivalents and restricted cash at end of period $ 722,292 $ 346,755 $ 375,537 108 % $ 2,021,043 $ (1,674,288) -83 % $ (1,298,751) -64 % 55 Item 7.
The following is a summary of our sources and uses of cash flows for the periods presented (dollars in thousands): Year Ended One Year Change Year Ended One Year Change Two Year Change December 31, December 31, December 31, 2023 2022 $ % 2021 $ % $ % Cash, cash equivalents and restricted cash at beginning of period $ 722,292 $ 346,755 $ 375,537 108 % $ 2,021,043 $ (1,674,288) -83 % $ (1,298,751) -64 % Net cash provided from (used in): Operating activities 1,601,861 1,328,708 273,153 21 % 1,275,325 53,383 4 % 326,536 26 % Investing activities (5,707,742) (3,703,815) (2,003,927) 54 % (4,516,268) 812,453 -18 % (1,191,474) 26 % Financing activities 5,448,647 2,761,277 2,687,370 97 % 1,567,664 1,193,613 76 % 3,880,983 248 % Effect of foreign currency translation 11,025 (10,633) 21,658 n/a (1,009) (9,624) 954 % 12,034 n/a Cash, cash equivalents and restricted cash at end of period $ 2,076,083 $ 722,292 $ 1,353,791 187 % $ 346,755 $ 375,537 108 % $ 1,729,328 499 % Operating Activities Please see “Results of Operations” for discussion of net income fluctuations.
Welltower Inc., a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States ("U.S."), Canada and the United Kingdom ("U.K."), consisting of seniors housing and post-acute communities and outpatient medical properties.
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.
The following table summarizes our consolidated portfolio for the year ended December 31, 2022 (dollars in thousands): Percentage of Number of Type of Property NOI (1) NOI Properties Seniors Housing Operating $ 953,372 41.2 % 850 Triple-net 887,024 38.3 % 570 Outpatient Medical 472,760 20.5 % 323 Totals $ 2,313,156 100.0 % 1,743 (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, 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.
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. The COVID-19 pandemic has had and may continue to have material and adverse effects on our financial condition, results of operations and cash flows in the future.
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.
During the year ended December 31, 2021, we recorded impairment charges of $22,317,000 related to two held for use properties in which the carrying value exceeded the estimated fair value. Transaction costs related to asset acquisitions are capitalized as a component of the purchase price.
Duri ng the year ended December 31, 2022, we recorded impairment charges of $3,595,000 related to two held for use properties. 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 from acquisitions and segment transitions.
Results of Operations Summary Our primary sources of revenue include resident fees and services, rent and interest income. Our primary expenses include property operating expenses, depreciation and amortization, interest expense, general and administrative expenses, and other expenses. We evaluate our business and make resource allocations on our three business segments: Seniors Housing Operating, Triple-net and Outpatient Medical.
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.
Morgan Securities LLC, KeyBanc Capital Markets Inc., Loop Capital Markets LLC, Mizuho Securities USA LLC, Morgan Stanley & Co. LLC, MUFG Securities 57 Item 7.
LLC, Jefferies LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc., Loop Capital Markets LLC, Mizuho Securities USA LLC, Morgan Stanley & Co. LLC, MUFG Securities Americas Inc., RBC Capital Markets, LLC, Regions Securities LLC, Robert W. Baird & Co.
Welltower Inc. is the initial member and majority owner of Welltower OP, with an approximate ownership interest of 99.751% as of December 31, 2022. All of our property ownership, development and related business operations are conducted through Welltower OP and Welltower Inc. has no material assets or liabilities other than its investment in Welltower OP.
All of our property ownership, development and related business operations are conducted through Welltower OP and Welltower has no material assets or liabilities other than its investment in Welltower OP. Welltower issues equity from time to time, the net proceeds of which it is obligated to contribute as additional capital to Welltower OP.
Effective January 4, 2021, the SEC adopted amendments to the financial disclosure requirements applicable to registered debt offerings that include certain credit enhancements.
All unsecured notes are fully and unconditionally guaranteed by Welltower, and Welltower OP is 99.765% owned by Welltower as of December 31, 2023. Effective January 4, 2021, the SEC adopted amendments to the financial disclosure requirements applicable to registered debt offerings that include certain credit enhancements.
The following is a summary of our SSNOI at Welltower's Share for the Triple-net segment (dollars in thousands): QTD Pool YTD Pool Three Months Ended Change Year Ended Change December 31, 2022 December 31, 2021 $ % December 31, 2022 December 31, 2021 $ % SSNOI (1) $ 127,296 $ 122,059 $ 5,237 4.3 % $ 455,823 $ 433,826 $ 21,997 5.1 % (1) Relate s to 427 properties for the QTD Pool and 398 properties for the YTD Pool.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following is a summary of our SSNOI at Welltower's share for the Triple-net 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) $ 110,219 $ 107,627 $ 2,592 2.4 % $ 436,238 $ 426,557 $ 9,681 2.3 % (1) Relate s to 364 properties for the QTD Pool and 364 properties for the YTD Pool.
The fluctuation in other expenses is primarily due to the timing of noncapitalizable transaction costs associated with acquisitions and operator transitions. 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.
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.
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 from acquisitions and segment transitions. Changes in the gain on sales of properties are related to the volume and timing of property sales and the sales prices.
During the year ended December 31, 2022, we recorded impairment charges of $13,146,000 related to one held for sale property. Transaction costs related to asset acquisitions are capitalized as a component of the purchase price. The fluctuation in other expenses is primarily due to the timing of noncapitalizable transaction costs associated with acquisitions and operator transitions.
The following is a summary of our SSNOI at Welltower's Share for the Seniors Housing Operating segment (dollars in thousands): QTD Pool YTD Pool Three Months Ended Change Year Ended Change December 31, 2022 December 31, 2021 $ % December 31, 2022 December 31, 2021 $ % SSNOI (1) $ 184,716 $ 155,608 $ 29,108 18.7 % $ 610,724 $ 548,872 $ 61,852 11.3 % (1) Rel ates to 654 properties for the QTD Pool and 514 properties for the YTD Pool.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following is a summary of our SSNOI at Welltower's share for the Seniors Housing Operating 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) $ 236,993 $ 193,149 $ 43,844 22.7 % $ 788,605 $ 654,320 $ 134,285 20.5 % (1) Rel ates to 647 properties for the QTD Pool and 556 properties for the YTD Pool.
Dispositions The following summarizes property dispositions completed during the year ended December 31, 2022 (dollars in thousands): Properties Proceeds (1) Book Amount (2) Capitalization Rates (3) Seniors Housing Operating 5 $ 88,815 $ 85,413 —% Triple-net 11 109,917 89,827 3.8% Outpatient Medical — 764 393 —% Totals 16 $ 199,496 $ 175,633 3.8% (1) Represents pro rata proceeds received upon disposition including any seller financing.
Dispositions The following summarizes property dispositions completed during the year ended December 31, 2023 (dollars in thousands): Properties Proceeds (1) Book Amount (2) Capitalization Rates (3) Seniors Housing Operating 23 $ 453,983 $ 385,128 2.1% Triple-net 2 6,954 6,391 5.0% Totals 25 $ 460,937 $ 391,519 2.1% (1) Represents pro rata proceeds received upon disposition including non-cash consideration.
We expect total Seniors Housing Operating expenses to remain elevated as certain of these additional health and safety measures have become standard practice. We received government grants under the CARES Act primarily to cover increased expenses and lost revenue during the COVID-19 pandemic, as well as under similar programs in the U.K. and Canada.
We received government grants under the CARES Act primarily to cover increased expenses and lost revenue during the COVID-19 pandemic, as well as under similar programs in the U.K. and Canada. We recognized $21,220,000 and $38,607,000 during the years ended December 31, 2023 and 2022, respectively.
During the year ended December 31, 2022, we recorded impairment charges of $3,595,000 related to two held for use properties. During the year ended December 31, 2021, we recorded impairment charges of $26,579,000 related to four held for sale or sold properties and two held for use properties.
During the year ended December 31, 2023, we recorded impairment charges of $14,315,000 related to four held for sale properties for which the carrying value exceeded the estimated fair value less costs to sell and $10,684,000 related to three held for use properties for which the carrying value exceeded the estimated fair value .
Business Strategy Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders as a result of annual increases in NOI and portfolio growth.
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.
Welltower Inc. issues equity from time to time, the net proceeds of which it is obligated to contribute as additional capital to Welltower OP. All debt including credit facilities, senior notes and secured debt is incurred by Welltower OP, and Welltower Inc. has fully and conditionally guaranteed all existing and future senior unsecured notes.
All debt including credit facilities, senior notes and secured debt is incurred by Welltower OP and its subsidiaries, and Welltower has fully and unconditionally guaranteed all existing senior unsecured notes.

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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 Quarterly NOI by Segment: (in thousands) Three Months Ended Year Ended March 31, June 30, September 30, December 31, December 31, 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Seniors Housing Operating: Total revenues $ 996,612 $ 726,402 $ 1,071,210 $ 742,549 $ 1,072,600 $ 839,519 $ 1,104,995 $ 904,780 $ 4,245,417 $ 3,213,250 Property operating expenses 789,928 555,968 789,299 582,361 841,914 666,610 870,904 724,405 3,292,045 2,529,344 Consolidated NOI $ 206,684 $ 170,434 $ 281,911 $ 160,188 $ 230,686 $ 172,909 $ 234,091 $ 180,375 $ 953,372 $ 683,906 Triple-net: Total revenues $ 235,163 $ 168,482 $ 234,360 $ 238,941 $ 228,819 $ 239,985 $ 233,165 $ 243,176 $ 931,507 $ 890,584 Property operating expenses 11,211 12,841 11,491 12,627 11,495 11,664 10,286 12,330 44,483 49,462 Consolidated NOI $ 223,952 $ 155,641 $ 222,869 $ 226,314 $ 217,324 $ 228,321 $ 222,879 $ 230,846 $ 887,024 $ 841,122 Outpatient Medical: Total revenues $ 163,323 $ 156,223 $ 166,322 $ 159,072 $ 172,178 $ 159,503 $ 176,934 $ 160,491 $ 678,757 $ 635,289 Property operating expenses 49,915 46,863 50,648 45,495 52,921 48,072 52,513 46,509 205,997 186,939 Consolidated NOI $ 113,408 $ 109,360 $ 115,674 $ 113,577 $ 119,257 $ 111,431 $ 124,421 $ 113,982 $ 472,760 $ 448,350 Corporate: Total revenues $ 606 $ 955 $ 644 $ 430 $ 247 $ 790 $ 3,437 $ 817 $ 4,934 $ 2,992 Property operating expenses 2,615 1,654 2,645 2,174 5,850 3,054 5,135 1,935 16,245 8,817 Consolidated NOI $ (2,009) $ (699) $ (2,001) $ (1,744) $ (5,603) $ (2,264) $ (1,698) $ (1,118) $ (11,311) $ (5,825) 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 850 570 323 1,743 850 570 323 1,743 Unconsolidated properties 104 39 79 222 104 39 79 222 Total properties 954 609 402 1,965 954 609 402 1,965 Recent acquisitions/development conversions (1) (114) (11) (24) (149) (254) (40) (36) (330) Under development (40) — (5) (45) (40) — (5) (45) Under redevelopment (2) (4) (3) (4) (11) (4) (3) (4) (11) Current held for sale (3) (7) (1) (11) (3) (7) (1) (11) Land parcels, loans and subleases (24) (8) (7) (39) (24) (8) (7) (39) Transitions (3) (108) (150) — (258) (108) (150) — (258) Other (4) (7) (3) — (10) (7) (3) — (10) Same store properties 654 427 361 1,442 514 398 349 1,261 (1) Acquisitions and development conversions will enter the QTD Pool and YTD Pool five full quarters and eight full quarters after acquisition or certificate of occupancy, respectively.
Biggest changeGAAP 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.
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 & 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 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.
Please refer to Note 11 to the consolidated financial statements for additional information. The change in interest expense on our unsecured revolving credit facility and commercial paper program is due primarily to the net effect and timing of draws, paydowns and variable interest rate changes. Please refer to Note 10 of our consolidated financial statements for additional information.
Please refer to Note 11 to the consolidated financial statements for additional information. The change in interest expense on our unsecured revolving credit facility and commercial paper program is due primarily to the net effect and timing of draws, paydowns and variable interest rate changes.
(2) Redevelopment properties will enter the QTD Pool and YTD Pool after five full quarters and eight full quarters of operations post redevelopment completion, respectively. (3) Transitioned properties will enter the QTD Pool and YTD Pool after five full quarters and eight full quarters of operations with the new operator in place or under the new structure, respectively.
(2) Redevelopment properties will enter the QTD Pool after five full quarters and the YTD Pool after eight full quarters of operations post redevelopment completion. (3) Transitioned properties will enter the QTD Pool after five full quarters and the YTD Pool after eight full quarters of operations with the new operator in place or under the new structure.
If indicators of impairment exist, an undiscounted cash flow analysis will be prepared to determine if the value of the real property will be recoverable.
If indicators of impairment exist, an undiscounted cash flow analysis will be prepared to determine if the value of the property will be recoverable.
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. 73 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. 71 Item 7.
The fluctuation in property operating expenses and depreciation and amortization are primarily attributable to acquisitions and construction conversions that occurred during 2021 and 2022. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly.
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.
Rental income has increased due primarily to acquisitions and construction conversions that occurred during 2021 and 2022. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index.
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.
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. 74 Item 7.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following table presents information about our critical accounting policies and estimates: Nature of Critical Accounting Estimate Assumptions/Approach Used Impairment of Real Property Assessing impairment of real property involves subjectivity in determining if indicators of impairment are present and in estimating the future undiscounted cash flows or estimated fair value of an asset.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following table presents information about our critical accounting policies and estimates: Nature of Critical Accounting Estimate Assumptions/Approach Used Impairment of Real Property Owned and Investments in Unconsolidated Entities Assessing impairment of real property owned and investments in unconsolidated entities involves subjectivity in determining if indicators of impairment are present and in estimating the future undiscounted cash flows or estimated fair value of an asset.
Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. Net income attributable to noncontrolling interests represents our partners’ share of net income or loss relating to those partnerships where we are the controlling partner. 66 Item 7.
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.
Book capitalization represents the sum of net debt (defined as total long-term debt 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. Market capitalization represents book capitalization adjusted for the fair market value of our common stock.
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.
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.
The allocation of the purchase price to the related real estate acquired (tangible assets and intangible assets and liabilities) involves subjectivity as such allocations are based on a relative fair value analysis.
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.
If the real 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 reduce to its estimated fair value and an impairment charge is recognized for the difference between the carrying value and the fair value.
The weighted-average term of these leases was seven years, with a rate of $38.19 per square foot and tenant improvement and lease commission costs of $26.77 per square foot. Substantially all of these leases contain an annual fixed or contingent escalation rent structure ranging from 1.0% to 7.0%. 65 Item 7.
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%.
(2) Represents the changes in the reserve for straight-line rent receivables balances relating to leases placed on cash recognition. 72 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. 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.
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, 2022, our consolidated Outpatient Medical portfolio signed 435,000 square feet of new leases and 1,826,000 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, 2023, our consolidated Outpatient Medical portfolio signed 512,694 square feet of new leases and 2,255,492 square feet of renewals.
We define NOI as total revenues, including tenant reimbursements, less property operating expenses. Property operating expenses represent costs associated with managing, maintaining and servicing tenants for our properties. These expenses include, but are not limited to, property-related payroll and benefits, property management fees paid to operators, marketing, housekeeping, food service, maintenance, utilities, property taxes and insurance.
Property operating expenses represent costs associated with managing, maintaining and servicing tenants for our properties. These expenses include, but are not limited to, property-related payroll and benefits, property management fees paid to managers, marketing, housekeeping, food service, maintenance, utilities, property taxes and insurance.
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.
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.
Real Estate Acquisitions We believe that substantially all of our real estate acquisitions are considered asset acquisitions for which we record the related real estate acquired (tangible assets and identifiable intangible assets and liabilities) at cost on a relative fair value basis. Liabilities assumed and any associated noncontrolling interests are reflected at fair value.
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.
Tangible assets consist primarily of land, building and improvements. Identifiable intangible assets and liabilities primarily consist of the above or below market component of in-place leases and the value of in-place leases.
Liabilities assumed and any associated noncontrolling interests are reflected at fair value. Tangible assets consist primarily of land, building and improvements. Identifiable intangible assets and liabilities primarily consist of the above or below market component of in-place leases and the value of in-place leases.
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, 2022, we completed $2,306,020,000 of 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. During the year ended December 31, 2023, we disbursed $3,558,266,000 of cash related to real estate acquisitions.
Year Ended December 31, 2022 2021 2020 Book capitalization: Unsecured credit facility and commercial paper $ — $ 324,935 $ — Long-term debt obligations (1) 14,661,552 13,917,702 13,905,822 Cash and cash equivalents and restricted cash (722,292) (346,755) (2,021,043) Total net debt 13,939,260 13,895,882 11,884,779 Total equity and noncontrolling interests (2) 21,393,996 18,997,873 17,225,062 Book capitalization $ 35,333,256 $ 32,893,755 $ 29,109,841 Net debt to book capitalization ratio 39.5 % 42.2 % 40.8 % Undepreciated book capitalization: Total net debt $ 13,939,260 $ 13,895,882 $ 11,884,779 Accumulated depreciation and amortization 8,075,733 6,910,114 6,104,297 Total equity and noncontrolling interests (2) 21,393,996 18,997,873 17,225,062 Undepreciated book capitalization $ 43,408,989 $ 39,803,869 $ 35,214,138 Net debt to undepreciated book capitalization ratio 32.1 % 34.9 % 33.8 % Market capitalization: Common shares outstanding 490,509 447,239 417,401 Period end share price $ 65.55 $ 85.77 $ 64.62 Common equity market capitalization $ 32,152,865 $ 38,359,689 $ 26,972,453 Total net debt 13,939,260 13,895,882 11,884,779 Noncontrolling interests (2) 1,099,182 1,361,872 1,252,343 Market capitalization: $ 47,191,307 $ 53,617,443 $ 40,109,575 Net debt to market capitalization ratio 29.5 % 25.9 % 29.6 % (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, 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.
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. Changes in gains/losses on sales of properties are related to volume of property sales and the sales prices.
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.
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.
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.
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.
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.
Year Ended December 31, FFO Reconciliation: 2022 2021 2020 Net income attributable to common stockholders $ 141,214 $ 336,138 $ 978,844 Depreciation and amortization 1,310,368 1,037,566 1,038,437 Impairment of assets 17,502 51,107 135,608 Loss (gain) on real estate dispositions, net (16,043) (235,375) (1,088,455) Noncontrolling interests (56,529) (54,190) (23,968) Unconsolidated entities 81,560 85,476 62,096 Funds from operations attributable to common stockholders $ 1,478,072 $ 1,220,722 $ 1,102,562 Average diluted shares outstanding: 465,158 426,841 417,387 Per diluted share data: Net income attributable to common stockholders (1) $ 0.30 $ 0.78 $ 2.33 Funds from operations attributable to common stockholders $ 3.18 $ 2.86 $ 2.64 (1) Includes adjustment to the numerator for income (loss) attributable to OP unitholders.
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.
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.
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.
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.
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.
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, 2022 2021 $ % 2020 $ % $ % Senior unsecured notes $ 436,185 $ 401,247 $ 34,938 9 % $ 400,014 $ 1,233 — % $ 36,171 9 % Unsecured credit facility and commercial paper program 19,576 6,759 12,817 190 % 15,313 (8,554) -56 % 4,263 28 % Loan expense 19,884 18,638 1,246 7 % 17,104 1,534 9 % 2,780 16 % Totals $ 475,645 $ 426,644 $ 49,001 11 % $ 432,431 $ (5,787) -1 % $ 43,214 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.
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.
Please see Non-GAAP Financial Measures for additional information and reconciliations. During the year ended December 31, 2022, we recognized an impairment charge of $761,000 related to one held for use property. During the year ended December 31, 2021, we recognized an impairment charge of $2,211,000 related to one held for sale property.
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.
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 67 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations excludes historical cost depreciation from net income.
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.
These indicators may include expected operational performance, the tenant's ability to make rent payments, a decision to dispose of an asset before the end of its estimated useful life and changes in the market that may permanently reduce the value of the property.
These indicators may include expected operational performance, the tenant's ability to make rent payments, a change in management's intent to hold and operate the property and changes in the market that may permanently reduce the value of the property.
At December 31, 2022, our net real property owned was approximately $32,925,033,000. During the year ended December 31, 2022, we recorded impairment charges of $13,146,000 related to one Seniors Housing Operating property which was classified as held for sale for which the carrying values exceeded the fair values less costs to sell.
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.
FFO, as defined by NAREIT, means NICS, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairment of depreciable assets, plus depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests. NOI is used to evaluate the operating performance of our properties.
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.
Year Ended December 31, Adjusted EBITDA Reconciliation: 2022 2021 2020 Net income (loss) $ 160,568 $ 374,479 $ 1,038,852 Interest expense 529,519 489,853 514,388 Income tax expense (benefit) 7,247 8,713 9,968 Depreciation and amortization 1,310,368 1,037,566 1,038,437 EBITDA 2,007,702 1,910,611 2,601,645 Loss (income) from unconsolidated entities 21,290 22,933 8,083 Stock-based compensation expense 26,027 16,933 22,154 Loss (gain) on extinguishment of debt, net 680 49,874 47,049 Loss (gain) on real estate dispositions, net (16,043) (235,375) (1,088,455) Impairment of assets 17,502 51,107 135,608 Provision for loan losses, net 10,320 7,270 94,436 Loss (gain) on derivatives and financial instruments, net 8,334 (7,333) 11,049 Other expenses 101,670 41,739 70,335 Lease termination and leasehold interest adjustment (1) (64,854) 760 — Casualty losses, net of recoveries 10,391 5,786 — Other impairment, net (2) (620) 49,241 146,508 Adjusted EBITDA $ 2,122,399 $ 1,913,546 $ 2,048,412 Adjusted Interest Coverage Ratio: Interest expense $ 529,519 $ 489,853 $ 514,388 Capitalized interest 30,491 19,352 17,472 Non-cash interest expense (21,754) (17,506) (15,751) Total interest 538,256 491,699 516,109 EBITDA $ 2,007,702 $ 1,910,611 $ 2,601,645 Interest coverage ratio 3.73x 3.89x 5.04x Adjusted EBITDA $ 2,122,399 $ 1,913,546 $ 2,048,412 Adjusted interest coverage ratio 3.94x 3.89x 3.97x Adjusted Fixed Charge Coverage Ratio: Total interest $ 538,256 $ 491,699 $ 516,109 Secured debt principal payments 58,114 65,587 62,707 Total fixed charges 596,370 557,286 578,816 EBITDA $ 2,007,702 $ 1,910,611 $ 2,601,645 Fixed charge coverage ratio 3.37x 3.43x 4.49x Adjusted EBITDA $ 2,122,399 $ 1,913,546 $ 2,048,412 Adjusted fixed charge coverage ratio 3.56x 3.43x 3.54x (1) Represents revenues and property operating expenses associated with a leasehold portfolio interest relating to 26 properties assumed by a wholly-owned affiliate in conjunction with the Holiday Retirement transaction.
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.
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.
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.
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, 2022 2021 $ % 2020 $ % $ % Revenues: Rental income $ 669,457 $ 613,254 $ 56,203 9 % $ 709,584 $ (96,330) -14 % $ (40,127) -6 % Interest income 302 8,792 (8,490) -97 % 5,913 2,879 49 % (5,611) -95 % Other income 8,998 13,243 (4,245) -32 % 4,522 8,721 193 % 4,476 99 % Total revenues 678,757 635,289 43,468 7 % 720,019 (84,730) -12 % (41,262) -6 % Property operating expenses 205,997 186,939 19,058 10 % 214,948 (28,009) -13 % (8,951) -4 % NOI (1) 472,760 448,350 24,410 5 % 505,071 (56,721) -11 % (32,311) -6 % Other expenses: Depreciation and amortization 239,681 223,302 16,379 7 % 261,371 (38,069) -15 % (21,690) -8 % Interest expense 18,078 17,506 572 3 % 17,579 (73) — % 499 3 % Loss (gain) on extinguishment of debt, net 15 (4) 19 475 % 1,046 (1,050) -100 % (1,031) -99 % Provision for loan losses, net (8) (3,463) 3,455 100 % 3,202 (6,665) -208 % (3,210) -100 % Impairment of assets 761 2,211 (1,450) -66 % — 2,211 n/a 761 n/a Other expenses 2,537 2,523 14 1 % 8,218 (5,695) -69 % (5,681) -69 % 261,064 242,075 18,989 8 % 291,416 (49,341) -17 % (30,352) -10 % Income from continuing operations before income taxes and other item 211,696 206,275 5,421 3 % 213,655 (7,380) -3 % (1,959) -1 % Income (loss) from unconsolidated entities (2,467) (4,395) 1,928 44 % 7,312 (11,707) -160 % (9,779) -134 % Gain (loss) on real estate dispositions, net (6,399) 93,348 (99,747) -107 % 695,918 (602,570) -87 % (702,317) -101 % Income from continuing operations 202,830 295,228 (92,398) -31 % 916,885 (621,657) -68 % (714,055) -78 % Net income (loss) 202,830 295,228 (92,398) -31 % 916,885 (621,657) -68 % (714,055) -78 % Less: Net income (loss) attributable to noncontrolling interests 7,180 4,916 2,264 46 % (278) 5,194 n/a 7,458 n/a Net income (loss) attributable to common stockholders $ 195,650 $ 290,312 $ (94,662) -33 % $ 917,163 $ (626,851) -68 % $ (721,513) -79 % (1) See Non-GAAP Financial Measures below.
Management’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.
Additionally, we recorded $4,356,000 of impairment charges related to two Triple-net properties and one Outpatient Medical property that were held for use in which the carrying values exceeded the estimated fair values.
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.
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.
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
Management’s Discussion and Analysis of Financial Condition and Results of Operations Non-Segment/Corporate The following is a summary of our results of operations for the Non-Segment/Corporate activities 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, 2022 2021 $ % 2020 $ % $ % Revenues: Other income $ 4,934 $ 2,992 $ 1,942 65 % $ 2,781 $ 211 8 % $ 2,153 77 % Total revenues 4,934 2,992 1,942 65 % 2,781 211 8 % 2,153 77 % Property operating expenses 16,245 8,817 7,428 84 % 3,381 5,436 161 % 12,864 380 % NOI (1) (11,311) (5,825) (5,486) -94 % (600) (5,225) -871 % (10,711) n/a Other expenses: Interest expense 475,645 426,644 49,001 11 % 432,431 (5,787) -1 % 43,214 10 % General and administrative expenses 150,390 126,727 23,663 19 % 128,394 (1,667) -1 % 21,996 17 % Loss (gain) on extinguishments of debt, net 199 52,506 (52,307) -100 % 33,344 19,162 57 % (33,145) -99 % Other expenses 20,064 7,895 12,169 154 % 24,929 (17,034) -68 % (4,865) -20 % Total expenses 646,298 613,772 32,526 5 % 619,098 (5,326) -1 % 27,200 4 % Loss from continuing operations before income taxes and other items (657,609) (619,597) (38,012) -6 % (619,698) 101 — % (37,911) -6 % Income tax (expense) benefit (7,247) (8,713) 1,466 17 % (9,968) 1,255 13 % 2,721 27 % Loss from continuing operations (664,856) (628,310) (36,546) -6 % (629,666) 1,356 — % (35,190) -6 % Net loss attributable to common stockholders $ (664,856) $ (628,310) $ (36,546) -6 % $ (629,666) $ 1,356 — % $ (35,190) -6 % (1) See Non-GAAP Financial Measures below.
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.
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, 2022 December 31, 2021 $ % December 31, 2022 December 31, 2021 $ % SSNOI (1) $ 107,867 $ 105,260 $ 2,607 2.5 % $ 403,520 $ 395,379 $ 8,141 2.1 % (1) Rel ates to 361 properties for the QTD Pool and 349 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, 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 change in secured debt interest expense is primarily due to the net effect and timing of assumptions, extinguishments and principal amortizations. The following is a summary of our Outpatient Medical secured debt principal activity for the periods presented (dollars in thousands): Year Ended Year Ended Year Ended December 31, 2022 December 31, 2021 December 31, 2020 Weighted Avg.
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.
General and administrative expenses as a percentage of consolidated revenues for the years ended December 31, 2022, 2021 and 2020 were 2.57%, 2.67% and 2.79%, respectively. Other expenses includes non-capitalizable legal expenses, including related to our umbrella partnership REIT reorganization during 2022.
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.
Amount Interest Rate Amount Interest Rate Amount Interest Rate Beginning balance $ 530,254 3.49% $ 548,229 3.55% $ 572,267 3.97% Debt extinguished (131,582) 4.26% (7,670) 5.64% (14,205) 5.34% Principal payments (9,836) 4.45% (10,305) 4.43% (9,833) 4.60% Ending balance $ 388,836 4.38% $ 530,254 3.49% $ 548,229 3.55% Monthly averages $ 485,161 3.89% $ 540,947 3.52% $ 562,017 3.72% 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, 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.
Property operating expenses represent insurance costs related to our captive insurance company formed as of July 1, 2020, which acts as a direct insurer of property level insurance coverage for our portfolio.
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.
The provision for income taxes primarily relates to state taxes, foreign taxes and taxes based on income generated by entities that are structured as TRSs. 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.
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.
The following tables reflect the reconciliation of consolidated NOI to net income, the most directly comparable U.S. GAAP measure, for the years presented. Dollar amounts are in thousands.
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.
These estimates can have a significant impact on the undiscounted cash flows or estimated fair value of an asset. Quarterly, we evaluate our real estate investments on a property by property basis to determine if there are indicators of impairment.
If an indicator of impairment of the property is identified, management estimates whether the carrying value is recoverable using observable and unobservable inputs such as historical and forecasted cash flows and estimated capitalization rates, all of which are affected by our expectations of future market or economic conditions. These inputs can have a significant impact on the undiscounted cash flows.
Removed
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Year Ended Year Ended Year Ended December 31, 2022 December 31, 2021 December 31, 2020 Weighted Avg. Weighted Avg. Weighted Avg.
Added
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.
Removed
Amount Interest Rate Amount Interest Rate Amount Interest Rate Beginning balance $ 72,536 4.57% $ 123,652 4.91% $ 306,038 3.60% Debt assumed 39,574 16.68% — —% — —% Debt extinguished (39,574) 16.68% (46,402) 5.43% (176,875) 2.03% Debt transferred out (32,478) 4.79% — —% — —% Principal payments (879) 4.37% (4,679) 5.14% (4,376) 5.16% Foreign currency — —% (35) 5.43% (1,135) 2.97% Ending balance $ 39,179 4.39% $ 72,536 4.57% $ 123,652 4.91% Monthly averages $ 39,584 4.39% $ 117,966 4.90% $ 215,796 3.85% A portion of our Triple-net properties were formed through partnerships.
Added
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.
Removed
Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner.
Added
Please refer to Note 10 of our consolidated financial statements for additional information regarding our unsecured revolving credit facility and commercial paper program. Loan expenses represent the amortization of costs incurred in connection with senior unsecured notes issuances.
Removed
The increase in income from unconsolidated entities during the year ended December 31, 2022 is primarily related to the write off of a right of use asset and related lease liability on an unconsolidated joint venture that was restructured during the year.
Added
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.
Removed
Net income attributable to noncontrolling interests represents our partners’ share of net income relating to those partnerships where we are the controlling partner. The decrease in net income attributable to noncontrolling interests for the year ended December 31, 2022 compared to 2021 is related to the increase in ownership in existing Triple-net joint ventures.
Added
(4) Represents properties that are either closed or being closed. 68 Item 7.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations The decrease in interest income for the year ended December 31, 2022 is due primarily to a $178,207,000 first mortgage initiated in August 2020, which was subsequently repaid in full in June of 2021, resulting in the reversal of the previously established allowance for credit losses.
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, 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.
Removed
During the year ended December 31, 2022, we completed two Outpatient Medical construction projects representing $44,778,000 or $383 per square foot. The following is a summary of our consolidated Outpatient Medical construction projects, excluding expansions, pending as of December 31, 2022 (dollars in thousands): Location Square Feet Commitment Balance Est.
Added
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.
Removed
Completion Houston 16,835 $ 9,935 $ 5,796 1Q23 Beaumont-Port Arthur, TX 33,000 11,822 5,525 2Q23 Houston 16,830 9,077 4,328 2Q23 66,665 $ 30,834 15,649 Charlotte, NC (1) 33,376 $ 49,025 (1) Final square feet, commitment amount and expected conversion date not yet known. Total interest expense represents secured debt interest expense.
Added
The evaluation of indicators of impairment of investments in unconsolidated entities is dependent on a number of factors including the performance of each investment, a change in market conditions or a change in management's investment strategy.
Removed
Loan expenses represent the amortization of costs incurred in connection with senior unsecured notes issuances. The loss on extinguishment recognized during the year ended December 31, 2021 is due primarily to the early extinguishment of $339,128,000 of our 3.75% senior unsecured notes due March 2023 and $334,624,000 of our 3.95% senior unsecured notes due September 2023.
Added
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.
Removed
Year Ended December 31, NOI Reconciliation: 2022 2021 2020 Net income (loss) $ 160,568 $ 374,479 $ 1,038,852 Loss (gain) on real estate dispositions, net (16,043) (235,375) (1,088,455) Loss (income) from unconsolidated entities 21,290 22,933 8,083 Income tax expense (benefit) 7,247 8,713 9,968 Other expenses 101,670 41,739 70,335 Impairment of assets 17,502 51,107 135,608 Provision for loan losses, net 10,320 7,270 94,436 Loss (gain) on extinguishment of debt, net 680 49,874 47,049 Loss (gain) on derivatives and financial instruments, net 8,334 (7,333) 11,049 General and administrative expenses 150,390 126,727 128,394 Depreciation and amortization 1,310,368 1,037,566 1,038,437 Interest expense 529,519 489,853 514,388 Consolidated net operating income (NOI) $ 2,301,845 $ 1,967,553 $ 2,008,144 NOI by segment: Seniors Housing Operating $ 953,372 $ 683,906 $ 755,552 Triple-net 887,024 841,122 748,121 Outpatient Medical 472,760 448,350 505,071 Non-segment/corporate (11,311) (5,825) (600) Total NOI $ 2,301,845 $ 1,967,553 $ 2,008,144 69 Item 7.
Added
Quarterly, we review our real property owned on a property by property basis to determine if facts and circumstances suggest the property may be impaired.
Removed
(4) Represents properties that are either closed or being closed. 70 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following is a reconciliation of our consolidated NOI to same store NOI for the periods presented for the respective pools. Dollar amounts are in thousands.
Added
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.
Removed
QTD Pool YTD Pool Three Months Ended Twelve Months Ended SSNOI Reconciliations: December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Seniors Housing Operating: Consolidated NOI $ 234,091 $ 180,375 $ 953,372 $ 683,906 NOI attributable to unconsolidated investments 11,291 10,713 47,190 44,470 NOI attributable to noncontrolling interests (16,718) (12,125) (122,874) (65,747) Non-cash NOI attributable to same store properties (196) (662) (747) 10,878 NOI attributable to non-same store properties (46,511) (22,024) (270,363) (121,779) Currency and ownership adjustments (1) 2,759 (669) 4,146 (2,856) SSNOI at Welltower Share 184,716 155,608 610,724 548,872 Triple-net: Consolidated NOI 222,879 230,846 887,024 841,122 NOI attributable to unconsolidated investments 8,947 4,893 29,516 19,559 NOI attributable to noncontrolling interests (9,555) (13,600) (41,099) (48,892) Non-cash NOI attributable to same store properties (11,592) (8,310) (37,190) (27,000) NOI attributable to non-same store properties (86,076) (92,708) (389,905) (352,792) Currency and ownership adjustments (1) 2,693 938 7,477 1,829 SSNOI at Welltower Share 127,296 122,059 455,823 433,826 Outpatient Medical: Consolidated NOI 124,421 113,982 472,760 448,350 NOI attributable to unconsolidated investments 4,712 4,682 19,233 18,998 NOI attributable to noncontrolling interests (5,576) (4,896) (22,089) (18,645) Non-cash NOI attributable to same store properties (4,287) (3,523) (10,323) (10,384) NOI attributable to non-same store properties (11,250) (5,298) (56,001) (42,089) Currency and ownership adjustments (1) (153) 313 (60) (851) SSNOI at Welltower Share 107,867 105,260 403,520 395,379 SSNOI at Welltower Share: Seniors Housing Operating 184,716 155,608 610,724 548,872 Triple-net 127,296 122,059 455,823 433,826 Outpatient Medical 107,867 105,260 403,520 395,379 Total $ 419,879 $ 382,927 $ 1,470,067 $ 1,378,077 (1) Includes adjustments to reflect consistent property ownership percentages, to translate Canadian properties at a USD/CAD rate of 1.2738 and to translate U.K. properties at a GBP/USD rate of 1.3501. 71 Item 7.
Added
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.
Removed
Subsequent to the initial transaction, we purchased eight of the leased properties and one of the properties was sold by the landlord and removed from the lease. No rent was paid in excess of net cash flow relating to the leasehold properties and therefore, the net impact has been excluded from Adjusted EBITDA.
Removed
Additionally, in conjunction with the lease termination, during the year ended December 31, 2022, we recognized $58,621,000 in other income from the derecognition of the right of use asset and related lease liability which has also been excluded from Adjusted EBITDA.
Removed
In estimating the undiscounted cash flows or fair value, key assumptions that would be made are the estimation of future rental revenues, operating expenses, capitalization rates and the ability and intent to hold the respective asset, all of which are affected by our expectations of future market or economic conditions.
Removed
During the year ended December 31, 2022, we recognized provision for loan losses of $10,320,000, which includes a specific reserve for a Triple-net held to maturity debt security, offset by changes in the reserve based on our historical loss experience. 75

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−0 removed11 unchanged
Biggest changeAssuming no changes in outstanding balances, a 1% increase in interest rates would have resulted in increased annual interest expense of $17,423,000. 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.
Biggest changeAssuming 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.
Based solely on our results for the year ended December 31, 2022, 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 $8,000,000.
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.
At December 31, 2022, we had $2,426,134,000 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 $24,261,000. At December 31, 2021, we had $1,742,268,000 of outstanding variable rate debt.
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.
The following table summarizes the analysis performed as of the dates indicated (in thousands): December 31, 2022 December 31, 2021 Principal balance Change in fair value Principal balance Change in fair value Senior unsecured notes $ 10,839,782 $ (488,159) $ 11,002,297 $ (1,059,031) Secured debt 1,448,567 (36,654) 1,490,708 (44,222) Totals $ 12,288,349 $ (524,813) $ 12,493,005 $ (1,103,253) 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, 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.
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 United Kingdom.
The following table summarizes the results of the analysis performed (dollars in thousands): December 31, 2022 December 31, 2021 Carrying value Change in fair value Carrying value Change in fair value Foreign currency exchange contracts $ 190,418 $ 14,238 $ 32,280 $ 19,740 Debt designated as hedges 1,452,832 14,528 1,613,164 16,132 Totals $ 1,643,250 $ 28,766 $ 1,645,444 $ 35,872 76
The 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

Other WELL 10-K year-over-year comparisons