Item 8. Financial Statements and Supplementary Data

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Item 8. Financial Statements and Supplementary Data

Healthpeak Properties, Inc.

Index to Consolidated Financial Statements


Report of Independent Registered Public Accounting Firm			74

Consolidated Balance Sheets—December 31, 2020 and 2019			76
Consolidated Statements of Operations—for the years ended December 31, 2020, 2019, and 2018			77
Consolidated Statements of Comprehensive Income (Loss)—for the years ended December 31, 2020, 2019, and 2018			78
Consolidated Statements of Equity—for the years ended December 31, 2020, 2019, and 2018			79
Consolidated Statements of Cash Flows—for the years ended December 31, 2020, 2019, and 2018			80
Notes to Consolidated Financial Statements			81

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Healthpeak Properties, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Healthpeak Properties, Inc. and subsidiaries. (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 10, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Impairments – Real Estate — Refer to Notes 2 and 6 to the consolidated financial statements

Critical Audit Matter Description

The Company’s evaluation of impairment of real estate involves an assessment of the carrying value of real estate assets and related intangibles (“real estate assets”) when events or changes in circumstances indicate that the carrying value may not be recoverable. If a real estate asset is classified as held for sale, individually or as part of a disposal group, the long-lived asset or disposal group shall be measured at the lower of its carrying value or fair value less costs to sell. If a real estate asset is held for use and its carrying value is not recoverable, the real estate asset shall be measured at the lower of its carrying value or fair value.

The determination of the fair value of real estate assets involves significant judgment. The fair value of the impaired assets was based on forecasted sales prices of the long-lived asset or disposal group, which are considered to be Level 3 measurements within the fair value hierarchy. Disposal groups were determined based on management’s intent, as of the measurement date, to sell two or more real estate assets as a portfolio. Forecasted sales prices were determined using an income approach and/or a market approach (comparable sales model), which rely on certain assumptions by the Company, including: (i) market capitalization rates, (ii) market prices per unit, and (iii) forecasted cash flow streams (lease-up periods, lease revenue rates, expense rates, growth rates, etc.). There are inherent uncertainties in these assumptions.

Given the Company’s evaluation of the forecasted sales price of a long lived asset or disposal group requires management to make significant estimates and assumptions related to market capitalization rates, market prices per unit, and forecasted cash flow streams, performing audit procedures to evaluate the reasonableness of management’s forecasted sales price required a high degree of auditor judgment and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasted sales price for certain real estate assets or disposal groups included the following, among others:

We tested the effectiveness of controls over impairment of real estate, including those over the forecasted sales price for real estate assets.
We evaluated the forecasted sales prices for a sample of real estate assets, which may have included estimates of market capitalization rates, market prices per unit, and/or forecasted cash flow streams used in the determination of fair value for each selected real estate asset by (1) evaluating the source information and assumptions used by management and (2) testing the mathematical accuracy of the discounted cash flow or direct capitalization model.
We performed a retrospective review of impairment charges and real estate assets that were classified as held for sale to evaluate the changing facts and circumstances that led to the timing and recognition of impairment and/or change in classification during the period and how such facts compared to the facts that were considered in previous periods.


/s/ DELOITTE & TOUCHE LLP

Costa Mesa, California

February 10, 2021

We have served as the Company's auditor since 2010.

Healthpeak Properties, Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	December 31,
	2020		2019
ASSETS
Real estate:
Buildings and improvements	$	11,048,433	$	8,112,193
Development costs and construction in progress	613,182		654,792
Land	1,867,278		1,605,599
Accumulated depreciation and amortization	(2,409,135)		(2,141,960)
Net real estate	11,119,758		8,230,624
Net investment in direct financing leases	44,706		84,604
Loans receivable, net of reserves of $10,280 and $0	195,375		190,579
Investments in and advances to unconsolidated joint ventures	402,871		774,381
Accounts receivable, net of allowance of $3,994 and $387	42,269		44,842
Cash and cash equivalents	44,226		80,398
Restricted cash	67,206		13,385
Intangible assets, net	519,917		260,204
Assets held for sale and discontinued operations, net	2,626,306		3,648,265

Right-of-use asset, net	192,349		167,316
Other assets, net	665,106		538,293
Total assets	$	15,920,089	$	14,032,891
LIABILITIES AND EQUITY
Bank line of credit and commercial paper	$	129,590	$	93,000
Term loan	249,182		248,942

Senior unsecured notes	5,697,586		5,647,993
Mortgage debt	221,621		12,317

Intangible liabilities, net	144,199		74,991
Liabilities related to assets held for sale and discontinued operations, net	415,737		403,688
Lease liability	179,895		152,400
Accounts payable, accrued liabilities, and other liabilities	763,391		457,532
Deferred revenue	774,316		274,554
Total liabilities	8,575,517		7,365,417
Commitments and contingencies

Common stock, $1.00 par value: 750,000,000 shares authorized; 538,405,393 and 505,221,643 shares issued and outstanding	538,405		505,222
Additional paid-in capital	10,229,857		9,183,892
Cumulative dividends in excess of earnings	(3,976,232)		(3,601,199)
Accumulated other comprehensive income (loss)	(3,685)		(2,857)
Total stockholders' equity	6,788,345		6,085,058
Joint venture partners	357,069		378,061
Non-managing member unitholders	199,158		204,355
Total noncontrolling interests	556,227		582,416
Total equity	7,344,572		6,667,474
Total liabilities and equity	$	15,920,089	$	14,032,891

See accompanying Notes to Consolidated Financial Statements.

Healthpeak Properties, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)


	Year Ended December 31,
	2020		2019		2018
Revenues:
Rental and related revenues	$	1,182,108	$	1,069,502	$	1,020,348
Resident fees and services	436,494		144,327		144,217
Income from direct financing leases	9,720		16,666		16,349
Interest income	16,553		9,844		10,406
Total revenues	1,644,875		1,240,339		1,191,320
Costs and expenses:
Interest expense	218,336		217,612		261,280
Depreciation and amortization	553,949		435,191		404,681
Operating	782,541		405,244		378,657
General and administrative	93,237		92,966		96,702
Transaction costs	18,342		1,963		1,137

Impairments and loan loss reserves (recoveries), net	42,909		17,708		10,917
Total costs and expenses	1,709,314		1,170,684		1,153,374
Other income (expense):
Gain (loss) on sales of real estate, net	90,350		(40)		831,368
Loss on debt extinguishments	(42,912)		(58,364)		(44,162)
Other income (expense), net	234,684		165,069		13,425
Total other income (expense), net	282,122		106,665		800,631
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	217,683		176,320		838,577
Income tax benefit (expense)	9,423		5,479		4,396
Equity income (loss) from unconsolidated joint ventures	(66,599)		(6,330)		(5,755)

Income (loss) from continuing operations	160,507		175,469		837,218







Income (loss) from discontinued operations	267,746		(115,408)		236,256
Net income (loss)	428,253		60,061		1,073,474
Noncontrolling interests' share in continuing operations	(14,394)		(14,558)		(12,294)
Noncontrolling interests' share in discontinued operations	(296)		27		(87)
Net income (loss) attributable to Healthpeak Properties, Inc.	413,563		45,530		1,061,093

Participating securities' share in earnings	(2,416)		(1,543)		(2,669)

Net income (loss) applicable to common shares	$	411,147	$	43,987	$	1,058,424

Basic earnings (loss) per common share:
Continuing operations	$	0.27	$	0.33	$	1.75
Discontinued operations	0.50		(0.24)		0.50
Net income (loss) applicable to common shares	$	0.77	$	0.09	$	2.25
Diluted earnings (loss) per common share:
Continuing operations	$	0.27	$	0.33	$	1.74
Discontinued operations	0.50		(0.24)		0.50
Net income (loss) applicable to common shares	$	0.77	$	0.09	$	2.24



Weighted average shares outstanding:
Basic	530,555		486,255		470,551
Diluted	531,056		489,335		475,387

See accompanying Notes to Consolidated Financial Statements.

Healthpeak Properties, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)


	Year Ended December 31,
	2020		2019		2018
Net income (loss)	$	428,253	$	60,061	$	1,073,474
Other comprehensive income (loss):


Net unrealized gains (losses) on derivatives	(583)		758		6,025
Reclassification adjustment realized in net income (loss)	13		1,023		18,088
Change in Supplemental Executive Retirement Plan obligation and other	(258)		(590)		561
Foreign currency translation adjustment	—		660		(5,358)
Total other comprehensive income (loss)	(828)		1,851		19,316
Total comprehensive income (loss)	427,425		61,912		1,092,790
Total comprehensive (income) loss attributable to noncontrolling interests' share in continuing operations	(14,394)		(14,558)		(12,294)
Total comprehensive (income) loss attributable to noncontrolling interests' share in discontinued operations	(296)		27		(87)
Total comprehensive income (loss) attributable to Healthpeak Properties, Inc.	$	412,735	$	47,381	$	1,080,409

See accompanying Notes to Consolidated Financial Statements.

Healthpeak Properties, Inc.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except per share data)


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Cumulative Dividends In Excess Of Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
December 31, 2017	469,436	$	469,436	$	8,226,113	$	(3,370,520)	$	(24,024)	$	5,301,005	$	293,933	$	5,594,938
Impact of adoption of ASU No. 2017-05(1)	—	—		—		79,144		—		79,144		—		79,144
January 1, 2018	469,436	$	469,436	$	8,226,113	$	(3,291,376)	$	(24,024)	$	5,380,149	$	293,933	$	5,674,082
Net income (loss)	—	—		—		1,061,093		—		1,061,093		12,381		1,073,474
Other comprehensive income (loss)	—	—		—		—		19,316		19,316		—		19,316
Issuance of common stock, net	8,078	8,078		207,101		—		—		215,179		—		215,179
Conversion of DownREIT units to common stock	3	3		133		—		—		136		(136)		—
Repurchase of common stock	(141)	(141)		(3,291)		—		—		(3,432)		—		(3,432)
Exercise of stock options	120	120		2,357		—		—		2,477		—		2,477
Amortization of deferred compensation	—	—		16,563		—		—		16,563		—		16,563
Common dividends ($1.48 per share)	—	—		—		(696,913)		—		(696,913)		—		(696,913)

Distributions to noncontrolling interests	—	—		—		—		—		—		(18,415)		(18,415)
Issuances of noncontrolling interests	—	—		—		—		—		—		299,666		299,666

Purchase of noncontrolling interests	—	—		(50,129)		—		—		(50,129)		(19,277)		(69,406)

December 31, 2018	477,496	$	477,496	$	8,398,847	$	(2,927,196)	$	(4,708)	$	5,944,439	$	568,152	$	6,512,591
Impact of adoption of ASU No. 2016-02(2)	—	—		—		590		—		590		—		590
January 1, 2019	477,496	$	477,496	$	8,398,847	$	(2,926,606)	$	(4,708)	$	5,945,029	$	568,152	$	6,513,181
Net income (loss)	—	—		—		45,530		—		45,530		14,531		60,061
Other comprehensive income (loss)	—	—		—		—		1,851		1,851		—		1,851
Issuance of common stock, net	27,523	27,523		763,525		—		—		791,048		—		791,048
Conversion of DownREIT units to common stock	213	213		4,932		—		—		5,145		(5,145)		—
Repurchase of common stock	(162)	(162)		(4,881)		—		—		(5,043)		—		(5,043)
Exercise of stock options	152	152		4,386		—		—		4,538		—		4,538
Amortization of deferred compensation	—	—		18,162		—		—		18,162		—		18,162
Common dividends ($1.48 per share)	—	—		—		(720,123)		—		(720,123)		—		(720,123)

Distributions to noncontrolling interests	—	—		—		—		—		—		(28,301)		(28,301)
Issuances of noncontrolling interests	—	—		—		—		—		—		33,318		33,318

Purchase of noncontrolling interests	—	—		(1,079)		—		—		(1,079)		(139)		(1,218)

December 31, 2019	505,222	$	505,222	$	9,183,892	$	(3,601,199)	$	(2,857)	$	6,085,058	$	582,416	$	6,667,474
Impact of adoption of ASU No. 2016-13(3)	—	—		—		(1,524)		—		(1,524)		—		(1,524)
January 1, 2020	505,222	$	505,222	$	9,183,892	$	(3,602,723)	$	(2,857)	$	6,083,534	$	582,416	$	6,665,950
Net income (loss)	—	—		—		413,563		—		413,563		14,690		428,253
Other comprehensive income (loss)	—	—		—		—		(828)		(828)		—		(828)
Issuance of common stock, net	33,307	33,307		1,033,764		—		—		1,067,071		—		1,067,071
Conversion of DownREIT units to common stock	120	120		3,957		—		—		4,077		(4,077)		—
Repurchase of common stock	(298)	(298)		(10,231)		—		—		(10,529)		—		(10,529)
Exercise of stock options	54	54		1,752		—		—		1,806		—		1,806
Amortization of deferred compensation	—	—		20,534		—		—		20,534		—		20,534
Common dividends ($1.48 per share)	—	—		—		(787,072)		—		(787,072)		—		(787,072)

Distributions to noncontrolling interests	—	—		—		—		—		—		(36,994)		(36,994)


Purchase of noncontrolling interests	—	—		(3,811)		—		—		(3,811)		192		(3,619)

December 31, 2020	538,405	$	538,405	$	10,229,857	$	(3,976,232)	$	(3,685)	$	6,788,345	$	556,227	$	7,344,572

_______________________________________

(1)On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”), and recognized the cumulative-effect of adoption to beginning retained earnings. Refer to Note 2 for a detailed impact of adoption.

(2)On January 1, 2019, the Company adopted a series of ASUs related to accounting for leases, and recognized the cumulative-effect of adoption to beginning retained earnings. Refer to Note 2 for a detailed impact of adoption.

(3)On January 1, 2020, the Company adopted a series of ASUs related to accounting for credit losses and recognized the cumulative-effect of adoption to beginning retained earnings. Refer to Note 2 for a detailed impact of adoption.

See accompanying Notes to Consolidated Financial Statements.

Healthpeak Properties, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Year Ended December 31,
	2020		2019		2018
Cash flows from operating activities:
Net income (loss)	$	428,253	$	60,061	$	1,073,474
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of real estate, in-place lease and other intangibles	697,143		659,989		549,499


Amortization of deferred compensation	17,368		18,162		16,563
Amortization of deferred financing costs	10,157		10,863		12,612
Straight-line rents	(24,532)		(22,479)		(23,138)
Amortization of nonrefundable entrance fees and above/below market lease intangibles	(81,914)		—		—



Equity loss (income) from unconsolidated joint ventures	67,787		8,625		2,594
Distributions of earnings from unconsolidated joint ventures	12,294		20,114		22,467

Loss (gain) on sale of real estate under direct financing leases	(41,670)		—		—
Deferred income tax expense (benefit)	(14,573)		(18,253)		(18,525)
Impairments and loan loss reserves (recoveries), net	244,253		225,937		55,260
Loss on debt extinguishments	42,912		58,364		44,162
Loss (gain) on sales of real estate, net	(550,494)		(22,900)		(925,985)
Loss (gain) upon change of control, net	(159,973)		(168,023)		(9,154)
Casualty-related loss (recoveries), net	469		(3,706)		—

Other non-cash items	2,175		(2,569)		2,569
Changes in:
Decrease (increase) in accounts receivable and other assets, net	15,281		(49,771)		5,686
Increase (decrease) in accounts payable, accrued liabilities, and deferred revenue	93,495		71,659		40,625
Net cash provided by (used in) operating activities	758,431		846,073		848,709
Cash flows from investing activities:


Acquisitions of real estate	(1,170,651)		(1,604,285)		(426,080)
Development, redevelopment, and other major improvements of real estate	(791,566)		(626,904)		(503,643)


Leasing costs, tenant improvements, and recurring capital expenditures	(94,121)		(108,844)		(106,193)


Proceeds from sales of real estate, net	1,304,375		230,455		2,044,477
Acquisition of CCRC Portfolio	(394,177)		—		—
Contributions to unconsolidated joint ventures	(39,118)		(14,956)		(12,203)
Distributions in excess of earnings from unconsolidated joint ventures	18,555		27,072		26,472
Proceeds from insurance recovery	1,802		9,359		—
Proceeds from the RIDEA II transaction, net	—		—		335,709
Proceeds from the U.K. JV transaction, net	—		89,868		393,997
Proceeds from the Sovereign Wealth Fund Senior Housing JV transaction, net	—		354,774		—


Proceeds from sales/principal repayments on debt investments and direct financing leases	202,763		274,150		148,024
Investments in loans receivable, direct financing leases, and other	(45,562)		(79,467)		(71,281)


Net cash provided by (used in) investing activities	(1,007,700)		(1,448,778)		1,829,279
Cash flows from financing activities:
Borrowings under bank line of credit and commercial paper	4,742,600		7,607,788		1,823,000
Repayments under bank line of credit and commercial paper	(4,706,010)		(7,597,047)		(2,755,668)


Issuance and borrowings of debt, excluding bank line of credit and commercial paper	594,750		2,047,069		223,587
Repayments and repurchase of debt, excluding bank line of credit and commercial paper	(568,343)		(1,654,142)		(1,604,026)
Borrowings under term loan	—		250,000		—




Payments for debt extinguishment and deferred financing costs	(47,210)		(80,616)		(41,552)

Issuance of common stock and exercise of options	1,068,877		795,586		217,656
Repurchase of common stock	(10,529)		(5,043)		(3,432)
Dividends paid on common stock	(787,072)		(720,123)		(696,913)
Issuance of noncontrolling interests	—		33,318		299,666

Distributions to and purchase of noncontrolling interests	(40,613)		(29,519)		(82,854)
Net cash provided by (used in) financing activities	246,450		647,271		(2,620,536)
Effect of foreign exchanges on cash, cash equivalents and restricted cash	(153)		245		191
Net increase (decrease) in cash, cash equivalents and restricted cash	(2,972)		44,811		57,643
Cash, cash equivalents and restricted cash, beginning of year	184,657		139,846		82,203
Cash, cash equivalents and restricted cash, end of year	$	181,685	$	184,657	$	139,846
Less: cash, cash equivalents and restricted cash of discontinued operations	(70,253)		(90,874)		(78,701)
Cash, cash equivalents and restricted cash of continuing operations, end of year	$	111,432	$	93,783	$	61,145

See accompanying Notes to Consolidated Financial Statements.

Healthpeak Properties, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. Business

Overview

Healthpeak Properties, Inc., a Standard & Poor’s 500 company, is a Maryland corporation that is organized to qualify as a real estate investment trust (“REIT”) which, together with its consolidated entities (collectively, “Healthpeak” or the “Company”), invests primarily in real estate serving the healthcare industry in the United States (“U.S.”). HealthpeakTM acquires, develops, leases, owns, and manages healthcare real estate. The Company’s diverse portfolio is comprised of investments in the following reportable healthcare segments: (i) life science; (ii) medical office; and (iii) continuing care retirement community (“CCRC”).

New Corporate Headquarters

In November 2020, the Company established a new corporate headquarters in Denver, CO. With properties in nearly every state, the new headquarters provides a favorable mix of affordability and a centralized geographic location. The Company’s Irvine, CA and Franklin, TN offices will continue to operate.

Senior Housing Triple-Net and Senior Housing Operating Portfolio Dispositions

During 2020, the Company established and began executing a plan to dispose of its senior housing triple-net and Senior Housing Operating (“SHOP”) properties. The held for sale criteria for all such assets were met either on or before December 31, 2020. As of December 31, 2020, the Company concluded the planned dispositions represented a strategic shift and therefore, the assets are classified as discontinued operations in all periods presented herein. See Note 5 for further information.

COVID-19 Update

In March 2020, the World Health Organization declared the outbreak caused by the coronavirus (“COVID-19”) to be a global pandemic. While COVID-19 continues to evolve daily and its ultimate outcome is uncertain, it has caused significant disruption to individuals, governments, financial markets, and businesses, including the Company. Global health concerns and increased efforts to reduce the spread of the COVID-19 pandemic prompted federal, state, and local governments to restrict normal daily activities, and resulted in travel bans, quarantines, school closings, “shelter-in-place” orders requiring individuals to remain in their homes other than to conduct essential services or activities, as well as business limitations and shutdowns, which resulted in closure of many businesses deemed to be non-essential. Although some of these restrictions have since been lifted or scaled back, certain restrictions remain in place or have been re-imposed and any future surges of COVID-19 may lead to other restrictions being re-implemented in response to efforts to reduce the spread. In addition, the Company’s tenants, operators and borrowers are facing significant cost increases as a result of increased health and safety measures, including increased staffing demands for patient care and sanitation, as well as increased usage and inventory of critical medical supplies and personal protective equipment. These health and safety measures, which may remain in place for a significant amount of time or be re-imposed from time to time, continue to place a substantial strain on the business operations of many of the Company’s tenants, operators, and borrowers. The Company evaluated the impacts of COVID-19 on its business thus far and incorporated information concerning the impact of COVID-19 into its assessments of liquidity, impairments, and collectibility from tenants, residents, and borrowers as of December 31, 2020. The Company will continue to monitor such impacts and will adjust its estimates and assumptions based on the best available information.

NOTE 2. Summary of Significant Accounting Policies

Use of Estimates

Management is required to make estimates and assumptions in the preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”). These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from management’s estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of Healthpeak Properties, Inc., its wholly-owned subsidiaries, and joint ventures and variable interest entities that it controls through voting rights or other means. Intercompany transactions and balances have been eliminated upon consolidation.

The Company is required to continually evaluate its variable interest entity (“VIE”) relationships and consolidate these entities when it is determined to be the primary beneficiary of their operations. A VIE is broadly defined as an entity where either: (i) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support, (ii) substantially all of an entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights, or (iii) the equity investors as a group lack any of the following: (a) the power through voting or similar rights to direct the activities of an entity that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of an entity, or (c) the right to receive the expected residual returns of an entity. Criterion (iii) above is generally applied to limited partnerships and similarly structured entities by assessing whether a simple majority of the limited partners hold substantive rights to participate in the significant decisions of the entity or have the ability to remove the decision maker or liquidate the entity without cause. If neither of those criteria are met, the entity is a VIE.

The designation of an entity as a VIE is reassessed upon certain events, including, but not limited to: (i) a change to the contractual arrangements of the entity or in the ability of a party to exercise its participation or kick-out rights, (ii) a change to the capitalization structure of the entity, or (iii) acquisitions or sales of interests that constitute a change in control.

A variable interest holder is considered to be the primary beneficiary of a VIE if it has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and has the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. The Company qualitatively assesses whether it is (or is not) the primary beneficiary of a VIE. Consideration of various factors include, but is not limited to, its form of ownership interest, its representation on the VIE’s governing body, the size and seniority of its investment, its ability and the rights of other investors to participate in policy making decisions, its ability to manage its ownership interest relative to the other interest holders, and its ability to replace the VIE manager and/or liquidate the entity.

For its investments in joint ventures that are not considered to be VIEs, the Company evaluates the type of ownership rights held by the limited partner(s) that may preclude consolidation by the majority interest holder. The assessment of limited partners’ rights and their impact on the control of a joint venture should be made at inception of the joint venture and continually reassessed.

Revenue Recognition

Lease Classification

At the inception of a new lease arrangement, including new leases that arise from amendments, the Company assesses the terms and conditions to determine the proper lease classification. For leases entered into prior to January 1, 2019, a lease arrangement was classified as an operating lease if none of the following criteria were met: (i) transfer of ownership to the lessee prior to or shortly after the end of the lease term, (ii) lessee had a bargain purchase option during or at the end of the lease term, (iii) the lease term was equal to 75% or more of the underlying property’s economic life, or (iv) the present value of future minimum lease payments (excluding executory costs) was equal to 90% or more of the excess fair value (over retained tax credits) of the leased property. If one of the four criteria was met and the minimum lease payments were determined to be reasonably predictable and collectible, the lease arrangement was generally accounted for as a direct financing lease (“DFL”).

Concurrent with the Company's adoption of Accounting Standards Update ("ASU") No. 2016-02, Leases (“ASU 2016-02”) on January 1, 2019, the Company began classifying a lease entered into subsequent to adoption as an operating lease if none of the following criteria are met: (i) transfer of ownership to the lessee by the end of the lease term, (ii) lessee has a purchase option during or at the end of the lease term that it is reasonably certain to exercise, (iii) the lease term is for the major part of the remaining economic life of the underlying asset, (iv) the present value of future minimum lease payments is equal to substantially all of the fair value of the underlying asset, or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the Company at the end of the lease term.

Rental and Related Revenues

The Company commences recognition of rental revenue for operating lease arrangements when the tenant has taken possession or controls the physical use of a leased asset. The tenant is not considered to have taken physical possession or have control of the leased asset until the Company-owned tenant improvements are substantially complete. If a lease arrangement provides for tenant improvements, the Company determines whether the tenant improvements are owned by the tenant or the Company. When the Company is the owner of the tenant improvements, any tenant improvements funded by the tenant are treated as lease payments which are deferred and amortized into income over the lease term. When the tenant is the owner of the tenant improvements, any tenant improvement allowance that is funded by the Company is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Ownership of tenant improvements is determined based on various factors including, but not limited to, the following criteria:

lease stipulations of how and on what a tenant improvement allowance may be spent;
which party to the arrangement retains legal title to the tenant improvements upon lease expiration;
whether the tenant improvements are unique to the tenant or general purpose in nature;
if the tenant improvements are expected to have significant residual value at the end of the lease term;
the responsible party for construction cost overruns; and
which party constructs or directs the construction of the improvements.

Certain leases provide for additional rents that are contingent upon a percentage of the facility’s revenue in excess of specified base amounts or other thresholds. Such revenue is recognized when actual results reported by the tenant or estimates of tenant results, exceed the base amount or other thresholds, and only after any contingency has been removed (when the related thresholds are achieved). This may result in the recognition of rental revenue in periods subsequent to when such payments are received.

Tenant recoveries subject to operating leases generally relate to the reimbursement of real estate taxes, insurance, and repair and maintenance expense, and are recognized as both revenue (in rental and related revenues) and expense (in operating expenses) in the period the expense is incurred as the Company is the party paying the service provider.

For operating leases with minimum scheduled rent increases, the Company recognizes income on a straight line basis over the lease term when collectibility of future minimum lease payments is probable. Recognizing rental income on a straight line basis results in a difference in the timing of revenue amounts from what is contractually due from tenants. If the Company determines that collectibility of future minimum lease payments is not probable, the straight-line rent receivable balance is written off and recognized as a decrease in revenue in that period and future revenue recognition is limited to amounts contractually owed and paid.

Resident Fees and Services

Resident fee revenue is recorded when services are rendered and includes resident room and care charges, community fees and other resident charges. Residency agreements for SHOP and continuing care retirement community ("CCRC") facilities are generally for a term of 30 days to one year, with resident fees billed monthly, in advance. Revenue for certain care related services is recognized as services are provided and is billed monthly in arrears.

Certain of the Company's CCRCs are operated as entrance fee communities, which typically require a resident to pay an upfront entrance fee that includes both a refundable portion and non-refundable portion. When the Company receives a nonrefundable entrance fee, it is recorded in deferred revenue in the consolidated balance sheets and amortized into revenue over the estimated stay of the resident. The Company utilizes third-party actuarial experts in its determination of the estimated stay of residents. At December 31, 2020 and 2019, unamortized nonrefundable entrance fee liabilities were $484 million and $68 million, respectively.

Income from Direct Financing Leases

The Company utilizes the direct finance method of accounting to record DFL income. For a lease accounted for as a DFL, the net investment in the DFL represents receivables for the sum of future minimum lease payments and the estimated residual value of the leased property, less the unamortized unearned income. Unearned income is deferred and amortized to income over the lease term to provide a constant yield when collectibility of the lease payments is reasonably assured.

Interest Income

Loans receivable are classified as held-for-investment based on management’s intent and ability to hold the loans for the foreseeable future or to maturity. Loans held-for-investment are carried at amortized cost and reduced by a valuation allowance for estimated credit losses, as necessary. The Company recognizes interest income on loans, including the amortization of discounts and premiums, loan fees paid and received, using the interest method. The interest method is applied on a loan-by-loan basis when collectibility of the future payments is reasonably assured. Premiums and discounts are recognized as yield adjustments over the term of the related loans.

Gain (loss) on sales of real estate, net

The Company recognizes a gain (loss) on sale of real estate when the criteria for an asset to be derecognized are met, which include when: (i) a contract exists, (ii) the buyer obtains control of the asset, and (iii) it is probable that the Company will receive substantially all of the consideration to which it is entitled. These criteria are generally satisfied at the time of sale.

Government Grant Income

On March 27, 2020, the federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) to provide financial aid to individuals, businesses, and state and local governments. During the year ended December 31, 2020, the Company received government grants under the CARES Act primarily to cover increased expenses and lost revenue during the COVID-19 pandemic. Grant income is recognized when there is reasonable assurance that the grant will be received and the Company will comply with all conditions attached to the grant. Additionally, grants are recognized over the periods in which the Company recognizes the increased expenses and lost revenue the grants are intended to defray. As of December 31, 2020, the amount of qualifying expenditures and lost revenue exceeded grant income recognized and the Company had complied or will continue to comply with all grant conditions.

The following table summarizes information related to government grant income:


	Year Ended December 31,
		2020		2019		2018




Government grant income recorded in other income (expense), net		$	16,198	$	—	$	—
Government grant income recorded in equity income (loss) from unconsolidated joint ventures		1,279		—		—
Government grant income recorded in income (loss) from discontinued operations		15,436		—		—
Total government grants received		$	32,913	$	—	$	—

From January 1, 2021 through February 8, 2021, the Company received $3 million in government grants under the CARES Act, which will be recognized during the first quarter of 2021.

Credit Losses

The Company evaluates the liquidity and creditworthiness of its tenants, operators, and borrowers on a monthly and quarterly basis. The Company’s evaluation considers industry and economic conditions, individual and portfolio property performance, credit enhancements, liquidity, and other factors. The Company’s tenants, operators, and borrowers furnish property, portfolio, and guarantor/operator-level financial statements, among other information, on a monthly or quarterly basis; the Company utilizes this financial information to calculate the lease or debt service coverages that it uses as a primary credit quality indicator. Lease and debt service coverage information is evaluated together with other property, portfolio, and operator performance information, including revenue, expense, net operating income, occupancy, rental rate, reimbursement trends, capital expenditures, and EBITDA (defined as earnings before interest, tax, and depreciation and amortization), along with other liquidity measures. The Company evaluates, on a monthly basis or immediately upon a significant change in circumstance, its tenants’, operators’, and borrowers’ ability to service their obligations with the Company.

If it is no longer probable that substantially all future minimum lease payments under operating leases will be received, the straight-line rent receivable balance is written off and recognized as a decrease in revenue in that period.

In connection with the Company’s quarterly review process or upon the occurrence of a significant event, loans receivable and DFLs (collectively, “finance receivables”), are reviewed and assigned an internal rating of Performing, Watch List, or Workout. Finance receivables that are deemed Performing meet all present contractual obligations, and collection and timing, of all amounts owed is reasonably assured. Watch List finance receivables are defined as finance receivables that do not meet the definition of Performing or Workout. Workout finance receivables are defined as finance receivables in which the Company has determined, based on current information and events, that: (i) it is probable it will be unable to collect all amounts due according to the contractual terms of the agreement, (ii) the tenant, operator, or borrower is delinquent on making payments under the contractual terms of the agreement, and (iii) the Company has commenced action or anticipates pursuing action in the near term to seek recovery of its investment.

Finance receivables are placed on nonaccrual status when management determines that the collectibility of contractual amounts is not reasonably assured (the asset will have an internal rating of either Watch List or Workout). Further, the Company performs a credit analysis to support the tenant’s, operator’s, borrower’s, and/or guarantor’s repayment capacity and the underlying collateral values. The Company uses the cash basis method of accounting for finance receivables placed on nonaccrual status unless one of the following conditions exist whereby it utilizes the cost recovery method of accounting if: (i) the Company determines that it is probable that it will only recover the recorded investment in the finance receivable, net of associated allowances or charge-offs (if any), or (ii) the Company cannot reasonably estimate the amount of an impaired finance receivable. For cash basis method of accounting, the Company applies payments received, excluding principal paydowns, to interest income so long as that amount does not exceed the amount that would have been earned under the original contractual terms. For cost recovery method of accounting, any payment received is applied to reduce the recorded investment. Generally, the Company returns a finance receivable to accrual status when all delinquent payments become current under the terms of the loan or lease agreements and collectibility of the remaining contractual loan or lease payments is reasonably assured.

Prior to the adoption of ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) on January 1, 2020, allowances were established for finance receivables on an individual basis utilizing an estimate of probable losses, if they were determined to be impaired. Finance receivables were impaired when it was deemed probable that the Company would be unable to collect all amounts due in accordance with the contractual terms of the finance receivable. An allowance was based upon the Company’s assessment of the borrower’s overall financial condition, economic resources, payment record, the prospects for support from any financially responsible guarantors and, if appropriate, the net realizable value of any collateral. These estimates considered all available evidence, including the expected future cash flows discounted at the finance receivable’s effective interest rate, fair value of collateral, general economic conditions and trends, historical and industry loss experience, and other relevant factors, as appropriate. If a finance receivable was deemed partially or wholly uncollectible, the uncollectible balance was charged off against the allowance in the period in which the uncollectible determination was made.

Subsequent to adopting ASU 2016-13 on January 1, 2020, the Company began using a loss model that relies on future expected credit losses, rather than incurred losses, as was required under historical U.S. GAAP. Under the new model, the Company is required to recognize future credit losses expected to be incurred over the life of a finance receivable at inception of that instrument. The model emphasizes historical experience and future market expectations to determine a loss to be recognized at inception. However, the model continues to be applied on an individual basis and to rely on counter-party specific information to ensure the most accurate estimate is recognized.

Real Estate

The Company’s real estate acquisitions are generally classified as asset acquisitions for which the Company records identifiable assets acquired, liabilities assumed, and any associated noncontrolling interests at cost on a relative fair value basis. In addition, for such asset acquisitions, no goodwill is recognized, third party transaction costs are capitalized and any associated contingent consideration is generally recorded when the amount of consideration is reasonably estimable and probable of being paid.

The Company assesses fair value based on available market information, such as capitalization and discount rates, comparable sale transactions, and relevant per square foot or unit cost information. A real estate asset’s fair value may be determined utilizing cash flow projections that incorporate such market information. Estimates of future cash flows are based on a number of factors including historical operating results, known and anticipated trends, as well as market and economic conditions. The fair value of tangible assets of an acquired property is based on the value of the property as if it is vacant.

The Company recognizes acquired “above and below market” leases at their relative fair value (for asset acquisitions) using discount rates which reflect the risks associated with the leases acquired. The fair value is based on the present value of the difference between (i) the contractual amounts paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each in-place lease, measured over a period equal to the remaining term of the lease for above market leases and the initial term plus the extended term for any leases with renewal options that are reasonably certain to be exercised. Other intangible assets acquired include amounts for in-place lease values that are based on an evaluation of the specific characteristics of each property and the acquired tenant lease(s). Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, market conditions, and costs to execute similar leases. In estimating carrying costs, the Company includes estimates of lost rents at market rates during the hypothetical expected lease-up periods, which are dependent on local market conditions and expected trends. In estimating costs to execute similar leases, the Company considers leasing commissions, legal, and other related costs.

Certain of the Company's acquisitions involve the assumption of contract liabilities. The Company typically estimates the fair value of contract liabilities by applying a reasonable profit margin to the total discounted estimated future costs associated with servicing the contract. A variety of market and contract-specific conditions are considered when making assumptions that impact the estimated fair value of the contract liability.

The Company capitalizes direct construction and development costs, including predevelopment costs, interest, property taxes, insurance, and other costs directly related and essential to the development or construction of a real estate asset. The Company capitalizes construction and development costs while substantive activities are ongoing to prepare an asset for its intended use. The Company considers a construction project as substantially complete and held available for occupancy upon the completion of Company-owned tenant improvements, but no later than one year from cessation of significant construction activity. Costs incurred after a project is substantially complete and ready for its intended use, or after development activities have ceased, are expensed as incurred. For redevelopment of existing operating properties, the Company capitalizes the cost for the construction and improvement incurred in connection with the redevelopment.

Costs previously capitalized related to abandoned developments/redevelopments are charged to earnings. Expenditures for repairs and maintenance are expensed as incurred. The Company considers costs incurred in conjunction with re-leasing properties, including tenant improvements and lease commissions, to represent the acquisition of productive assets and such costs are reflected as investing activities in the Company’s consolidated statement of cash flows.

The Company computes depreciation on properties using the straight-line method over the assets’ estimated useful lives. Depreciation is discontinued when a property is identified as held for sale. Buildings and improvements are depreciated over useful lives ranging up to 60 years. Above and below market lease intangibles are amortized to revenue over the remaining noncancellable lease terms and renewal periods that are reasonably certain to be exercised, if any. In-place lease intangibles are amortized to expense over the remaining noncancellable lease term and renewal periods that are reasonably certain to be exercised, if any.

Concurrent with the Company's adoption of ASU 2016-02 on January 1, 2019, the Company elected to recognize expense associated with short-term leases (those with a noncancellable lease term of 12 months or less) under which the Company is the lessee on a straight-line basis and not recognize those leases on its consolidated balance sheets.

For leases other than short-term operating leases under which the Company is the lessee, such as ground leases and corporate office leases, the Company recognizes a right-of-use asset and related lease liability on its consolidated balance sheet at inception of the lease. The lease liability is calculated as the sum of: (i) the present value of minimum lease payments at lease commencement (discounted using the Company's secured incremental borrowing rate) and (ii) the present value of amounts probable of being paid under any residual value guarantees. The right-of-use asset is calculated as the lease liability, adjusted for the following: (i) any lease payments made to the lessor at or before the commencement date, minus any lease incentives received and (ii) any initial direct costs incurred by the Company.

Impairment of Long-Lived Assets and Goodwill

The Company assesses the carrying value of real estate assets and related intangibles (“real estate assets”) when events or changes in circumstances indicate that the carrying value may not be recoverable. The Company tests its real estate assets for impairment by comparing the sum of the expected future undiscounted cash flows to the carrying value of the real estate assets. The expected future undiscounted cash flows reflect external market factors and are probability-weighted to reflect multiple possible cash-flow scenarios, including selling the assets at various points in the future. Further, the analysis considers the impact, if any, of master lease agreements on cash flows, which are calculated utilizing the lowest level of identifiable cash flows that are largely independent of the cash flows of other assets and liabilities. If the carrying value exceeds the expected future undiscounted cash flows, an impairment loss will be recognized to the extent that the carrying value of the real estate assets exceeds their fair value.

Determining the fair value of real estate assets, including assets classified as held-for-sale, involves significant judgment and generally utilizes market capitalization rates, comparable market transactions, estimated per unit or per square foot prices, negotiations with prospective buyers, and forecasted cash flows (lease revenue rates, expense rates, growth rates, etc.).

When testing goodwill for impairment, if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company recognizes an impairment loss for the amount by which the carrying value, including goodwill, exceeds the reporting unit’s fair value.

Assets Held for Sale and Discontinued Operations

The Company classifies a real estate property as held for sale when: (i) management has approved the disposal, (ii) the property is available for sale in its present condition, (iii) an active program to locate a buyer has been initiated, (iv) it is probable that the property will be disposed of within one year, (v) the property is being marketed at a reasonable price relative to its fair value, and (vi) it is unlikely that the disposal plan will significantly change or be withdrawn. If a real estate property is classified as held for sale, it is reported at the lower of its carrying value or fair value less costs to sell and no longer depreciated.

The Company classifies a loan receivable as held for sale when management no longer has the intent and ability to hold the loan receivable for the foreseeable future or until maturity. If a loan receivable is classified as held for sale, it is reported at the lower of amortized cost or fair value.

A discontinued operation represents: (i) a component of the Company or group of components that has been disposed of or is classified as held for sale in a single transaction and represents a strategic shift that has or will have a major effect on the Company’s operations and financial results or (ii) an acquired business that is classified as held for sale on the date of acquisition. Examples of a strategic shift may include disposing of: (i) a separate major line of business, (ii) a separate major geographic area of operations, or (iii) other major parts of the Company.

Investments in Unconsolidated Joint Ventures

Investments in entities the Company does not consolidate, but over which the Company has the ability to exercise significant influence over operating and financial policies, are reported under the equity method of accounting. Under the equity method of accounting, the Company’s share of the investee’s earnings or losses is included in equity income (loss) from unconsolidated joint ventures within the Company’s consolidated statements of operations.

The initial carrying value of investments in unconsolidated joint ventures is based on the amount paid to purchase the joint venture interest, the fair value of assets contributed to the joint venture, or the fair value of the assets prior to the sale of interests in the joint venture. To the extent that the Company’s cost basis is different from the basis reflected at the joint venture level, the basis difference is generally amortized over the lives of the related assets and liabilities, and such amortization is included in the Company’s share of equity in earnings of the joint venture. The Company evaluates its equity method investments for impairment based on a comparison of the fair value of the equity method investment to its carrying value. When the Company determines a decline in fair value below carrying value of an investment in an unconsolidated joint venture is other-than-temporary, an impairment is recorded. The Company recognizes gains on the sale of interests in joint ventures to the extent the economic substance of the transaction is a sale.

The Company’s fair values of its equity method investments are determined based on discounted cash flow models that include all estimated cash inflows and outflows over a specified holding period and, where applicable, any estimated debt premiums or discounts. Capitalization rates, discount rates, and credit spreads utilized in these valuation models are based on assumptions that the Company believes to be within a reasonable range of current market rates for the respective investments.

Share-Based Compensation

Compensation expense for share-based awards granted to employees with graded vesting schedules is generally recognized on a straight-line basis over the vesting period. Forfeitures of share-based awards are recognized as they occur.

Cash and Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash on hand and short-term investments with original maturities of three months or less when purchased. Restricted cash primarily consists of amounts held by mortgage lenders to provide for: (i) real estate tax expenditures, (ii) tenant improvements, and (iii) capital expenditures, as well as security deposits and net proceeds from property sales that were executed as tax-deferred dispositions.

Derivatives and Hedging

During its normal course of business, the Company uses certain types of derivative instruments for the purpose of managing interest rate and foreign currency risk. To qualify for hedge accounting, derivative instruments used for risk management purposes must effectively reduce the risk exposure that they are designed to hedge. In addition, at inception of a qualifying cash flow hedging relationship, the underlying transaction or transactions, must be, and are expected to remain, probable of occurring in accordance with the Company’s related assertions.

The Company recognizes all derivative instruments, including embedded derivatives that are required to be bifurcated, as assets or liabilities to the consolidated balance sheets at fair value. Changes in fair value of derivative instruments that are not designated in hedging relationships or that do not meet the criteria of hedge accounting are recognized in earnings. For derivative instruments designated in qualifying cash flow hedging relationships, changes in fair value related to the effective portion of the derivative instruments are recognized in accumulated other comprehensive income (loss), whereas changes in fair value of the ineffective portion are recognized in earnings.

If it is determined that a derivative instrument ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, the Company discontinues its cash flow hedge accounting prospectively and records the appropriate adjustment to earnings based on the current fair value of the derivative instrument. For net investment hedge accounting, upon sale or liquidation of the hedged investment, the cumulative balance of the remeasurement value is reclassified to earnings.

Income Taxes

Healthpeak Properties, Inc. has elected REIT status and believes it has always operated so as to continue to qualify as a REIT under Sections 856 to 860 of the Internal Revenue Code of 1986, as amended (the “Code”). Accordingly, Healthpeak Properties, Inc. will generally not be subject to U.S. federal income tax, provided that it continues to qualify as a REIT and makes distributions to stockholders equal to or in excess of its taxable income. In addition, the Company has formed several consolidated subsidiaries that have elected REIT status. Healthpeak Properties, Inc. and its consolidated REIT subsidiaries are each subject to the REIT qualification requirements under the Code. If any REIT fails to qualify as a REIT in any taxable year, it will be subject to federal income taxes at regular corporate rates and may be ineligible to qualify as a REIT for four subsequent tax years.

Healthpeak Properties, Inc. and its consolidated REIT subsidiaries are subject to state, local, and/or foreign income taxes in some jurisdictions. In certain circumstances each REIT may also be subject to federal excise taxes on undistributed income. In addition, certain activities that the Company undertakes may be conducted by entities that have elected to be treated as taxable REIT subsidiaries (“TRSs”). TRSs are subject to federal, state, and local income taxes. The Company recognizes tax penalties relating to unrecognized tax benefits as additional income tax expense. Interest relating to unrecognized tax benefits is recognized as interest expense.

The Company is required to evaluate its deferred tax assets for realizability and recognize a valuation allowance, which is recorded against its deferred tax assets, if it is more likely than not that the deferred tax assets will not be realized. The Company considers all available evidence in its determination of whether a valuation allowance for deferred tax assets is required.

Advertising Costs

All advertising costs are expensed as incurred and reported within operating expenses. During the years ended December 31, 2020, 2019, and 2018, total advertising expense was $18 million, $13 million, and $9 million, respectively ($12 million, $13 million, and $9 million, respectively, of which is reported in income (loss) from discontinued operations).

Capital Raising Issuance Costs

Costs incurred in connection with the issuance of common shares are recorded as a reduction of additional paid-in capital. Debt issuance costs related to debt instruments, excluding line of credit arrangements and commercial paper, are deferred, recorded as a reduction of the related debt liability, and amortized to interest expense over the remaining term of the related debt liability utilizing the effective interest method. Debt issuance costs related to line of credit arrangements and commercial paper are deferred, included in other assets, and amortized to interest expense on a straight-line basis over the remaining term of the related line of credit arrangement. Commercial paper are unsecured short-term debt securities with varying maturities. A line of credit serves as a liquidity backstop for repayment of commercial paper borrowings.

Penalties incurred to extinguish debt and any remaining unamortized debt issuance costs, discounts, and premiums are recognized as income or expense in the consolidated statements of operations at the time of extinguishment.

Segment Reporting

The Company’s reportable segments, based on how it evaluates its business and allocates resources, are as follows: (i) life science, (ii) medical office, and (iii) CCRC.

In conjunction with establishing and beginning execution of a plan to dispose of the Company’s senior housing triple-net and SHOP portfolios during 2020, both of these previously reportable segments are now classified as discontinued operations in all periods presented herein. See Notes 1 and 5 for further information.

In December 2020, as a result of a change in how operating results are reported to the Company's chief operating decision makers (“CODMs”) for the purpose of evaluating performance and allocating resources, the Company’s hospitals were reclassified from other non-reportable segments to the medical office segment and the Company’s one remaining unconsolidated investment in a senior housing joint venture was reclassified from the SHOP segment to other non-reportable segments.

Additionally, in January 2020, primarily as a result of: (i) consolidating 13 of 15 CCRCs previously held by a CCRC joint venture (see discussion of the Brookdale 2019 Master Transaction and Cooperation Agreement in Note 3) and (ii) deconsolidating 19 SHOP assets into a new joint venture in December 2019, the Company's CODMs began reviewing operating results of CCRCs on a stand-alone basis and financial information for each respective segment inclusive of the Company’s share of unconsolidated joint ventures and exclusive of noncontrolling interests’ share of consolidated joint ventures. Therefore, during the first quarter of 2020, the Company began reporting CCRCs as a separate segment and segment measures inclusive of the Company’s share of unconsolidated joint ventures and exclusive of noncontrolling interests’ share of consolidated joint ventures.

All prior period segment information has been recast to conform to the current period presentation.

Noncontrolling Interests

Arrangements with noncontrolling interest holders are assessed for appropriate balance sheet classification based on the redemption and other rights held by the noncontrolling interest holder. Net income (loss) attributable to a noncontrolling interest is included in net income (loss) on the consolidated statements of operations and, upon a gain or loss of control, the interest purchased or sold, and any interest retained, is recorded at fair value with any gain or loss recognized in earnings. The Company accounts for purchases or sales of equity interests that do not result in a change in control as equity transactions.

The Company consolidates non-managing member limited liability companies (“DownREITs”) because it exercises control, and the noncontrolling interests in these entities are carried at cost. The non-managing member limited liability company (“LLC”) units (“DownREIT units”) are exchangeable for an amount of cash approximating the then-current market value of shares of the Company’s common stock or, at the Company’s option, shares of the Company’s common stock (subject to certain adjustments, such as stock splits and reclassifications). Upon exchange of DownREIT units for the Company’s common stock, the carrying amount of the DownREIT units is reclassified to stockholders’ equity.

Foreign Currency Translation and Transactions

Assets and liabilities denominated in foreign currencies that are translated into U.S. dollars use exchange rates in effect at the end of the period, and revenues and expenses denominated in foreign currencies that are translated into U.S. dollars use average rates of exchange in effect during the related period. Gains or losses resulting from translation are included in accumulated other comprehensive income (loss). Gains or losses resulting from foreign currency transactions are translated into U.S. dollars at the rates of exchange prevailing at the dates of the transactions. The effects of transaction gains or losses are included in other income (expense), net in the consolidated statements of operations.

Fair Value Measurement

The Company measures and discloses the fair value of nonfinancial and financial assets and liabilities utilizing a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These inputs have created the following fair value hierarchy:

*•*Level 1—quoted prices for identical instruments in active markets;

*•*Level 2—quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

*•*Level 3—fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The Company measures fair value using a set of standardized procedures that are outlined herein for all assets and liabilities that are required to be measured at fair value. When available, the Company utilizes quoted market prices to determine fair value and classifies such items in Level 1. In instances where a market price is available, but the instrument is in an inactive or over-the-counter market, the Company consistently applies the dealer (market maker) pricing estimate and classifies the asset or liability in Level 2.

If quoted market prices or inputs are not available, fair value measurements are based on valuation models that utilize current market or independently sourced market inputs, such as interest rates, option volatilities, credit spreads, and/or market capitalization rates. Items valued using such internally-generated valuation techniques are classified according to the lowest level input that is significant to the fair value measurement. As a result, the asset or liability could be classified in either Level 2 or Level 3 even though there may be some significant inputs that are readily observable. Internal fair value models and techniques used by the Company include discounted cash flow models. The Company also considers its counterparty’s and own credit risk for derivative instruments and other liabilities measured at fair value. The Company has elected the mid-market pricing expedient when determining fair value.

Earnings per Share

Basic earnings per common share is computed by dividing net income (loss) applicable to common shares by the weighted average number of shares of common stock outstanding during the period. The Company accounts for unvested share-based payment awards that contain non-forfeitable dividend rights or dividend equivalents (whether paid or unpaid) as participating securities, which are included in the computation of earnings per share pursuant to the two-class method. Diluted earnings per common share is calculated by including the effect of dilutive securities, such as the impact of forward equity sales agreements using the treasury stock method and common shares issuable from the assumed conversion of DownREIT units, stock options, certain performance restricted stock units, and unvested restricted stock units.

Recent Accounting Pronouncements

Adopted

Revenue Recognition. Between May 2014 and February 2017, the Financial Accounting Standards Board (“FASB”) issued four ASUs changing the requirements for recognizing and reporting revenue (together, herein referred to as the “Revenue ASUs”): (i) ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), (ii) ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”), (iii) ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), and (iv) ASU No. 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”). ASU 2014-09 provides guidance for revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2016-08 is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. ASU 2016-12 provides practical expedients and improvements on the previously narrow scope of ASU 2014-09. ASU 2017-05 clarifies the scope of the FASB’s guidance on nonfinancial asset derecognition and aligns the accounting for partial sales of nonfinancial assets and in-substance nonfinancial assets with the guidance in ASU 2014-09. The Company adopted the Revenue ASUs effective January 1, 2018 and utilized a modified retrospective adoption approach, resulting in a cumulative-effect adjustment to equity of $79 million as of January 1, 2018. Under the Revenue ASUs, the Company also elected to utilize a practical expedient which allowed the Company to only reassess contracts that were not completed as of the adoption date, rather than all historical contracts.

As the timing and recognition of the majority of the Company's revenue is the same whether accounted for under the Revenue ASUs or lease accounting guidance (see discussion below), the impact of the Revenue ASUs, upon and subsequent to adoption, is generally limited to the following:

Prior to the adoption of the Revenue ASUs, the Company recognized a gain on sale of real estate using the full accrual method when collectibility of the sales price was reasonably assured, the Company was not obligated to perform additional activities that may be considered significant, the initial investment from the buyer was sufficient, and other profit recognition criteria had been satisfied. The Company deferred all or a portion of a gain on sale of real estate if the requirements for gain recognition were not met at the time of sale. Subsequent to adopting the Revenue ASUs on January 1, 2018, the Company began recognizing a gain on sale of real estate upon transferring control of the asset to the purchaser, which is generally satisfied at the time of sale. In conjunction with its adoption of the Revenue ASUs, the Company reassessed its historical partial sale of real estate transactions to determine which transactions, if any, were not completed contracts (i.e., the transaction did not qualify for sale treatment under previous guidance). The Company concluded that it had one such material transaction, its partial sale of RIDEA II in the first quarter of 2017 (which was not a completed sale under historical guidance as of the Company's adoption date due to a minor obligation related to the interest sold). In accordance with the Revenue ASUs, the Company recorded its retained 40% equity investment at fair value as of the sale date. As a result, the Company recorded an adjustment to equity as of January 1, 2018 (under the modified retrospective transition approach) representing a step-up in the fair value of its equity investment in RIDEA II of $107 million (to a carrying value of $121 million as of January 1, 2018) and a $30 million impairment charge to decrease the carrying value to the sales price of the investment (see Note 5). The Company completed the sale of its equity investment in June 2018 and no longer holds an economic interest in RIDEA II.
The Company generally expects that the Revenue ASUs will result in certain transactions qualifying as sales of real estate at an earlier date than under historical accounting guidance.

Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 (codified under Accounting Standards Codification (“ASC”) 842, Leases) amends the previous accounting for leases to: (i) require lessees to put most leases on their balance sheets (not required for short-term leases with lease terms of 12 months or less), but continue recognizing expenses on their income statements in a manner similar to requirements under prior accounting guidance, (ii) eliminate real estate specific lease provisions, and (iii) modify the classification criteria and accounting for sales-type leases for lessors. Additionally, ASU 2016-02 provides a practical expedient, which the Company elected, that allows an entity to not reassess the following upon adoption (must be elected as a group): (i) whether an expired or existing contract contains a lease arrangement, (ii) lease classification related to expired or existing lease arrangements, or (iii) whether costs incurred on expired or existing leases qualify as initial direct costs.

As a result of adopting ASU 2016-02 on January 1, 2019 using the modified retrospective transition approach, the Company recognized a cumulative-effect adjustment to equity of $1 million as of January 1, 2019. Under ASU 2016-02, the Company began capitalizing fewer costs related to the drafting and negotiation of its lease agreements. Additionally, the Company began recognizing all of its significant operating leases for which it is the lessee, including corporate office leases, equipment leases, and ground leases, on its consolidated balance sheets as a lease liability and corresponding right-of-use asset. As such, the Company recognized a lease liability of $153 million and right-of-use asset of $166 million on January 1, 2019. The aggregate lease liability was calculated as the present value of minimum lease payments, discounted using a rate that approximated the Company's secured incremental borrowing rate at the time of adoption, adjusted for the noncancelable term of each lease. The right-of-use asset was calculated as the aggregate lease liability, adjusted for the existing accrued straight-line rent liability balance of $20 million and net unamortized above/below market ground lease intangible assets of $33 million.

Under ASU 2016-02, a practical expedient was offered to lessees to make a policy election, which the Company elected, to not separate lease and nonlease components, but rather account for the combined components as a single lease component under ASC 842. In July 2018, the FASB issued ASU No. 2018-11, Leases - Targeted Improvements (“ASU 2018-11”), which provides lessors with a similar option to elect a practical expedient allowing them to not separate lease and nonlease components in a contract for the purpose of revenue recognition and disclosure. This practical expedient is limited to circumstances in which: (i) the timing and pattern of transfer are the same for the nonlease component and the related lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease. This practical expedient causes an entity to assess whether a contract is predominantly lease or service based and recognize the entire contract under the relevant accounting guidance (i.e., predominantly lease-based would be accounted for under ASU 2016-02 and predominantly service-based would be accounted for under the Revenue ASUs). The Company elected this practical expedient as well and, as a result, beginning January 1, 2019, the Company recognizes revenue from its senior housing triple-net, medical office, and life science properties under ASC 842 and revenue from its SHOP and CCRC properties under the Revenue ASUs (codified under ASC 606, Revenue from Contracts with Customers).

In December 2018, the FASB issued ASU No. 2018-20, Narrow Scope Improvements for Lessors (“ASU 2018-20”), which requires that a lessor: (i) exclude certain lessor costs paid directly by a lessee to third parties on behalf of the lessor from a lessor's measurement of variable lease revenue and associated expense (i.e., no gross up of revenue and expense for these costs,) and (ii) include lessor costs that are paid by the lessor and reimbursed by the lessee in the measurement of variable lease revenue and the associated expense (i.e., gross up revenue and expense for these costs). This is consistent with the Company’s historical presentation and did not require a change on January 1, 2019.

Credit Losses. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 is intended to improve financial reporting by requiring timelier recognition of credit losses on loans and other financial instruments held by financial institutions and other organizations. The amendments in ASU 2016-13 eliminate the “probable” initial threshold for recognition of credit losses in previous accounting guidance and, instead, reflect an entity’s current estimate of all expected credit losses over the life of the financial instrument. Historically, when credit losses were measured under previous accounting guidance, an entity generally only considered past events and current conditions in measuring the incurred loss. The amendments in ASU 2016-13 broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss.

As a result of adopting ASU 2016-13 on January 1, 2020 using the modified retrospective transition approach, the Company recognized a cumulative-effect adjustment to equity of $2 million as of January 1, 2020. Under ASU 2016-13, the Company began using a loss model that relies on future expected credit losses, rather than incurred losses, as was required under historical GAAP. Under the new model, the Company is required to recognize future credit losses expected to be incurred over the life of its finance receivables, including loans receivable, direct financing leases (“DFLs”), and certain accounts receivable, at inception of those instruments. The model emphasizes historical experience and future market expectations to determine a loss to be recognized at inception. However, the model continues to be applied on an individual basis and rely on counter-party specific information to ensure the most accurate estimate is recognized. The Company will reassess its reserves on finance receivables at each balance sheet date to determine if an adjustment to the previous reserve is necessary.

Accounting for Lease Concessions Related to COVID-19. In April 2020, the FASB staff issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under ASC 842, the Company would have to determine, on a lease-by-lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A allows the Company, if certain criteria have been met, to bypass the lease-by-lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. During the year ended December 31, 2020, the Company provided rent deferrals (to be repaid before the end of 2020) to certain tenants in its life science and medical office segments that were impacted by COVID-19 (discussed in further detail in Note 7). As it relates to these deferrals, the Company elected to not assess them on a lease-by-lease basis and to continue recognizing rent revenue on a straight-line basis.

While the Company’s election for rent deferrals will be applied consistently to future deferrals of a similar nature, if the Company grants future lease concessions of a different type (such as rent abatements), it will make an election related to those concessions at that time.

NOTE 3. Master Transactions and Cooperation Agreement with Brookdale

2019 Master Transactions and Cooperation Agreement with Brookdale

In October 2019, the Company and Brookdale Senior Living Inc. (“Brookdale”) entered into a Master Transactions and Cooperation Agreement (the “2019 MTCA”), which includes a series of transactions related to its previously jointly owned 15-campus CCRC portfolio (the “CCRC JV”) and the portfolio of senior housing properties Brookdale triple-net leased from the Company, which, at the time, included 43 properties.

In connection with the 2019 MTCA, the Company and Brookdale, and certain of their respective subsidiaries, closed the following transactions related to the CCRC JV on January 31, 2020:

The Company, which owned a 49% interest in the CCRC JV, purchased Brookdale’s 51% interest in 13 of the 15 communities in the CCRC JV based on a valuation of $1.06 billion (the “CCRC Acquisition”);
The management agreements related to the CCRC Acquisition communities were terminated and management transitioned (under new management agreements) from Brookdale to Life Care Services LLC (“LCS”); and
The Company paid a $100 million management termination fee to Brookdale.

In addition, pursuant to the 2019 MTCA, the Company and Brookdale closed the following transactions related to properties Brookdale triple-net leased from the Company on January 31, 2020:

Brookdale acquired 18 of the properties from the Company (the “Brookdale Acquisition Assets”) for cash proceeds of $385 million;
The remaining 24 properties (excludes one property to be transitioned or sold to a third party, as discussed below) were restructured into a single master lease with 2.4% annual rent escalators and a maturity date of December 31, 2027 (the “2019 Amended Master Lease”);
A portion of annual rent (amount in excess of 6.5% of sales proceeds) related to 14 of the 18 Brookdale Acquisition Assets was reallocated to the remaining properties under the 2019 Amended Master Lease; and
Brookdale paid down $20 million of future rent under the 2019 Amended Master Lease.

As agreed to by the Company and Brookdale under the 2019 MTCA, in December 2020, the Company terminated the triple-net lease related to one property and converted it to a RIDEA structure. The 24 assets under the 2019 Amended Master Lease were sold in January 2021 (see Note 5).

Additionally, under the 2019 MTCA, the Company and Brookdale agreed to the following transactions which have not yet been completed:

The CCRC JV will sell the remaining two CCRCs, which are being marketed for sale to third parties;
The Company will provide up to $35 million of capital investment in the 2019 Amended Master Lease properties over a five-year term, which will increase rent by 7% of the amount spent, per annum. As of December 31, 2020, the Company had funded $5 million of this capital investment. Upon selling the 24 assets under the 2019 Amended Master Lease in January 2021, the remaining capital investment obligation was transferred to the buyer.

As a result of the above transactions, on January 31, 2020, the Company began consolidating the 13 CCRCs in which it acquired Brookdale’s interest. Accordingly, the Company derecognized its investment in the CCRC JV of $323 million and recognized a gain upon change of control of $170 million, which is included in other income (expense), net. In connection with consolidating the 13 CCRCs during the first quarter of 2020, the Company recognized real estate and intangible assets of $1.8 billion, refundable entrance fee liabilities of $308 million, contractual liabilities associated with previously collected non-refundable entrance fees of $436 million, debt assumed of $215 million, other net assets of $48 million, and cash paid of $396 million.

Upon sale of the 18 senior housing triple-net assets to Brookdale, the Company recognized an aggregate gain on sales of real estate of $164 million, which is recorded within income (loss) from discontinued operations.

Fair Value Measurement Techniques and Quantitative Information

At January 31, 2020, the Company performed a fair value assessment of each of the 2019 MTCA components that provided measurable economic benefit or detriment to the Company. Each fair value calculation was based on an income or market approach and relied on historical and forecasted net operating income, actuarial assumptions about the expected resident length of stay, and market data, including, but not limited to, discount rates ranging from 10% to 12%, annual rent escalators ranging from 2% to 3%, and real estate capitalization rates ranging from 7% to 9%. All assumptions were considered to be Level 3 measurements within the fair value hierarchy.

2017 MTCA with Brookdale

In November 2017, the Company and Brookdale entered into a Master Transactions and Cooperation Agreement (the “2017 MTCA”) to provide the Company with the ability to significantly reduce its concentration of assets leased to and/or managed by Brookdale. In connection with the overall transaction pursuant to the 2017 MTCA, the Company and Brookdale, and certain of their respective subsidiaries, agreed to the following:

The Company, which owned 90% of the interests in its RIDEA I and RIDEA III joint ventures with Brookdale at the time the 2017 MTCA was executed, agreed to purchase Brookdale’s 10% noncontrolling interest in each joint venture. At the time the 2017 MTCA was executed, these joint ventures collectively owned and operated 58 independent living, assisted living, memory care, and/or skilled nursing facilities (the “RIDEA Facilities”). The Company completed its acquisitions of the RIDEA III noncontrolling interest for $32 million in December 2017 and the RIDEA I noncontrolling interest for $63 million in March 2018;
The Company received the right to sell, or transition to other operators, 32 of the 78 total assets under an Amended and Restated Master Lease and Security Agreement (the “2017 Amended Master Lease”) with Brookdale and 36 of the RIDEA Facilities (and terminate related management agreements with an affiliate of Brookdale without penalty), certain of which were sold during 2018 and 2019;
The Company provided an aggregate $5 million annual reduction in rent on three assets, effective January 1, 2018; and
Brookdale agreed to purchase two of the assets under the 2017 Amended Master Lease for $35 million and four of the RIDEA Facilities for $240 million, all of which were sold in 2018.

During 2018, the Company terminated the previous management agreements or leases with Brookdale on 37 assets contemplated under the 2017 MTCA and completed the transition of 20 SHOP assets and 17 senior housing triple-net assets to other managers.

NOTE 4. Real Estate Transactions

2020 Real Estate Investments

The Post Acquisition

In April 2020, the Company acquired a life science campus in Waltham, Massachusetts for $320 million.

Scottsdale Gateway Acquisition

In July 2020, the Company acquired one medical office building (“MOB”) in Scottsdale, Arizona for $27 million.

Midwest MOB Portfolio Acquisition

In October 2020, the Company acquired a portfolio of seven MOBs located in Indiana, Missouri, and Illinois for $169 million.

Cambridge Discovery Park Acquisition

In December 2020, the Company acquired three life science facilities in Cambridge, Massachusetts for $610 million and a 49% unconsolidated joint venture interest in a fourth property on the same campus for $54 million. If the fourth property is sold in a taxable transaction, the Company is generally obligated to indemnify its joint venture partner for its federal and state income taxes associated with the gain that existed at the time of the contribution to the joint venture.

South San Francisco Land Site Acquisition

In October 2020, the Company executed a definitive agreement to acquire approximately 12 acres of land for $128 million. The acquisition site is located in South San Francisco, California, adjacent to two sites currently held by the Company as land for future development. The Company made a $10 million nonrefundable deposit upon completing due diligence in November 2020 and expects to close the transaction in 2021.

Waldwick JV Interest Purchase

In October 2020, the Company acquired the remaining 15% equity interest of a senior housing joint venture structure (which owned one senior housing facility), in which the Company previously held an unconsolidated equity investment, for $4 million. Subsequent to acquisition, the Company owned 100% of the equity, began consolidating the facility, and recognized a gain upon change of control of $6 million, which is recorded in other income (expense), net within income (loss) from discontinued operations. In December 2020, the Company sold the property as part of the Atria SHOP Portfolio disposition discussed in Note 5.

MBK JV Dissolution

In November 2020, as part of the dissolution of a senior housing joint venture, the Company was distributed one property, one land parcel, and $11 million in cash. Upon consolidating the property and land parcel at the time of distribution, the Company recognized a loss upon change of control of $16 million, which is recorded in other income (expense), net within income (loss) from discontinued operations. The property is classified as held-for-sale as of December 31, 2020.

In conjunction with the distribution of the property, the Company assumed $36 million of secured mortgage debt which was recorded at its fair value through asset acquisition accounting.

Other Real Estate Acquisitions

In December 2020, the Company acquired one hospital in Dallas, Texas for $34 million.

2019 Real Estate Investments

Cambridge Acquisition

During the first quarter of 2019, the Company acquired a life science facility for $71 million and development rights at an adjacent undeveloped land parcel for consideration of up to $27 million. The existing facility and land parcel are located in Cambridge, Massachusetts.

Discovery Portfolio Acquisition

In April 2019, the Company acquired a portfolio of nine senior housing properties for $445 million. The properties are located across Florida, Georgia, and Texas and are operated by Discovery Senior Living, LLC.

Oakmont Portfolio Acquisitions

In May 2019, the Company acquired three senior housing communities in California for $113 million and in July 2019, the Company acquired an additional five senior housing communities for $284 million. Both portfolios were acquired from and continue to be operated by Oakmont Senior Living LLC (“Oakmont”). Each portfolio was contributed to a DownREIT joint venture in which the sellers received non-controlling interests in lieu of cash for a portion of the sales price. The Company consolidates each DownREIT joint venture.

As part of the May and July 2019 Oakmont transactions, the Company assumed $50 million and $112 million, respectively, of secured mortgage debt, both of which were recorded at their relative fair values through asset acquisition accounting.

Sierra Point Towers Acquisition

In June 2019, the Company acquired two life science buildings in South San Francisco, California adjacent to the Company’s The Shore at Sierra Point development, for $245 million.

Vintage Park JV Interest Purchase

In June 2019, the Company acquired the outstanding equity interests of a senior housing joint venture structure (which owned one senior housing facility), in which the Company previously held an unconsolidated equity investment, for $24 million. Subsequent to acquisition, the Company owned 100% of the equity. Upon consolidating the facility at acquisition, the Company derecognized the existing investment in the joint venture structure, marked the real estate to fair value (using a relative fair value allocation), and recognized a gain upon change of control of $12 million, net of a tax impact of $1 million. The gain upon change of control is recognized within other income (expense), net and the tax impact is recognized within income tax benefit (expense).

Hartwell Innovation Campus Acquisition

In July 2019, the Company acquired a life science campus in the suburban Boston submarket of Lexington, Massachusetts, for $228 million. The campus is comprised of four buildings.

West Cambridge Acquisition

In December 2019, the Company acquired one life science building, adjacent to the Company’s existing properties in Cambridge, Massachusetts, for $333 million.

Sovereign Wealth Fund Senior Housing Joint Venture

In December 2019, the Company formed a new joint venture (the “SWF SH JV”) with a sovereign wealth fund that owns 19 SHOP assets operated by Brookdale. The Company owns 53.5% of the SWF SH JV and contributed all 19 assets with a fair value of $790 million. The SWF SH JV partner owns the other 46.5% and purchased its interest for $367 million. Upon formation of the SWF SH JV, the Company recognized its retained equity method investment at fair value, deconsolidated the 19 SHOP assets, and recognized a gain upon change of control of $161 million, which is recorded in other income (expense), net.

Other Real Estate Acquisitions

During the year ended December 31, 2019, the Company acquired one MOB in Kansas for $15 million, one MOB in Texas for $9 million, and one life science building in the Sorrento Mesa submarket of San Diego, California for $16 million.

Construction, Tenant, and Other Capital Improvements

The following table summarizes the Company’s expenditures for construction, tenant and other capital improvements, excluding expenditures related to properties classified as discontinued operations (in thousands):


	Year Ended December 31,
Segment	2020		2019		2018
Life science	$	573,999	$	499,956	$	396,431
Medical office	173,672		146,466		146,087
CCRC	41,224		—		—
Other	—		30,852		18,357
	$	788,895	$	677,274	$	560,875

NOTE 5. Dispositions of Real Estate and Discontinued Operations

2020 Dispositions of Real Estate

Aegis NNN Portfolio

In December 2020, the Company sold 10 senior housing triple-net assets (the “Aegis NNN Portfolio”) for $358 million, resulting in total gain on sales of $228 million, which is recognized in income (loss) from discontinued operations.

Atria SHOP Portfolio

In November 2020, the Company entered into definitive agreements to sell a portfolio of 13 SHOP assets (the “Atria SHOP Portfolio”) for $334 million. In December 2020, the Company sold 12 of those assets for $312 million, resulting in total gain on sales of $39 million, which is recognized in income (loss) from discontinued operations. The Company provided the buyer with financing of $61 million on four of the assets sold (see Note 8). The final asset is expected to be sold during the first half of 2021, upon completion of the license transfer process.

Sunrise Senior Housing Portfolio

In November 2020, the Company entered into a definitive agreement to sell 32 SHOP and 2 senior housing triple-net assets for $744 million (the “Sunrise Senior Housing Portfolio”). The Company received a $35 million nonrefundable deposit upon completion of due diligence in December 2020, sold the 32 SHOP assets in January 2021 for $664 million, and provided the buyer with financing of $410 million (see Note 8). The two remaining senior housing triple-net assets are expected to be sold during the first half of 2021, upon completion of the license transfer process.

SLC SHOP Portfolio

In October 2020, the Company entered into a definitive agreement to sell seven SHOP assets for $115 million. The Company received a $3 million nonrefundable deposit and expects to close the transaction during the first half of 2021.

Brookdale Triple-Net Portfolio

In January 2021, the Company sold 24 senior housing assets in a triple-net lease with Brookdale for $510 million.

Additional SHOP Portfolio

In January 2021, the Company sold a portfolio of 16 SHOP assets for $230 million and provided the buyer with financing of $150 million (see Note 8).

HRA Triple-Net Portfolio

In February 2021, the Company sold eight senior housing assets in a triple-net lease with Harbor Retirement Associates for $132 million.

2020 Other Dispositions

In addition to the sales discussed above, during the year ended December 31, 2020, the Company sold the following: (i) 23 SHOP assets for $190 million, (ii) 21 senior housing triple-net assets for $428 million (inclusive of the 18 facilities sold to Brookdale under the 2019 MTCA - see Note 3), (iii) 11 MOBs for $136 million (inclusive of the exercise of a purchase option by a tenant to acquire 3 MOBs in San Diego, California), (iv) two MOB land parcels for $3 million, and (v) 1 asset from other non-reportable segments for $1 million, resulting in total gain on sales of $283 million ($193 million of which is reported in income (loss) from discontinued operations).

2019 Dispositions of Real Estate

During the year ended December 31, 2019, the Company sold the following: (i) 18 SHOP assets for $181 million, (ii) 2 senior housing triple-net assets for $26 million, (iii) 11 MOBs for $28 million, (vi) 1 life science asset for $7 million, (v) 1 undeveloped life science land parcel for $35 million, and (vi) 1 facility from the other non-reportable segment for $15 million, resulting in total gain on sales of $30 million ($23 million of which is reported in income (loss) from discontinued operations).

2018 Dispositions of Real Estate

Shoreline Technology Center

In November 2018, the Company sold its Shoreline Technology Center life science campus located in Mountain View, California for $1.0 billion and recognized a gain on sale of $726 million.

Brookdale MTCA Dispositions

As discussed in Note 3, during the fourth quarter of 2018, the Company sold 19 assets (11 senior housing triple-net assets and 8 SHOP assets) to a third-party for $377 million and recognized a gain on sale of $40 million, which is reported in income (loss) from discontinued operations. Refer to Note 3 for further detail on the Brookdale transactions.

RIDEA II Sale Transaction

In January 2017, the Company completed the contribution of its ownership interest in RIDEA II to an unconsolidated joint venture owned by Healthpeak and an investor group led by Columbia Pacific Advisors, LLC (“CPA”) (the “Healthpeak/CPA JV”). Also in January 2017, RIDEA II was recapitalized with $602 million of debt, of which $360 million was provided by a third-party and $242 million was provided by the Company. In return for both transaction elements, the Company received combined proceeds of $480 million from the Healthpeak/CPA JV and $242 million in loans receivable and retained an approximately 40% ownership interest in RIDEA II. This transaction resulted in the Company deconsolidating the net assets of RIDEA II and recognizing a net gain on sale of $99 million. Refer to Note 2 for the impact of adopting the Revenue ASUs on January 1, 2018 to the Company’s partial sale of RIDEA II in the first quarter of 2017.

In June 2018, the Company sold its remaining 40% ownership interest in RIDEA II to an investor group led by CPA for $91 million. Additionally, CPA refinanced the Company’s $242 million of loans receivable from RIDEA II, resulting in total proceeds of $332 million. The Company no longer holds an economic interest in RIDEA II.

U.K. Portfolio

In June 2018, the Company entered into a joint venture with an institutional investor (the “U.K. JV”) through which the Company sold a 51% interest in substantially all United Kingdom (“U.K.”) assets previously owned by the Company (the “U.K. Portfolio”) based on a total value of £382 million ($507 million). The Company retained a 49% noncontrolling interest in the U.K. JV and received gross proceeds of $402 million, including proceeds from the refinancing of the Company’s previously held intercompany loans. Upon closing the U.K. JV, the Company deconsolidated the U.K. Portfolio, recognized its retained noncontrolling interest investment at fair value ($105 million) and recognized a gain on sale of $11 million, net of $17 million of cumulative foreign currency translation reclassified from other comprehensive income recorded in gain (loss) on sales of real estate, net (see Note 22 for the reclassification impact of the Company’s hedge of its net investment in the U.K.). The U.K. JV provides numerous mechanisms by which the joint venture partner can acquire the Company’s remaining interest in the U.K. JV. The fair value of the Company’s retained noncontrolling interest investment was based on Level 2 measurements within the fair value hierarchy. Additionally, in August 2018, the Company sold its remaining £11 million U.K. development loan at par. In December 2019, the Company sold its remaining 49% interest in the U.K. JV (see Note 9).

2018 Other Dispositions

Additionally, during the year ended December 31, 2018, the Company sold the following: (i) 4 life science assets for $269 million, (ii) 1 undeveloped land parcel for $3 million, (iii) 2 senior housing triple-net assets for $35 million, (iv) 23 SHOP facilities for $394 million, and (v) 4 MOBs for $25 million, resulting in total gain on sales of $141 million ($55 million of which is reported in income (loss) from discontinued operations).

Held for Sale and Discontinued Operations

At December 31, 2020, 41 senior housing triple-net facilities, 6 MOBs, 97 SHOP facilities, and 1 SHOP joint venture were classified as held for sale and/or discontinued operations.

At December 31, 2019, 90 senior housing triple-net facilities (inclusive of 18 facilities sold to Brookdale under the 2019 MTCA - see Note 3), 115 SHOP facilities, 2 MOBs, and 4 SHOP joint ventures were classified as held for sale and/or discontinued operations.

During 2020, the Company established and began executing a plan to dispose of all the assets in its senior housing triple-net and SHOP portfolios. The held for sale criteria for all such assets were met either on or before December 31, 2020 and the Company concluded the dispositions met the requirements to be classified as discontinued operations.

The following summarizes the assets and liabilities classified as discontinued operations at December 31, 2020 and 2019, which are included in assets held for sale and discontinued operations, net and liabilities related to assets held for sale and discontinued operations, net, respectively, on the consolidated balance sheets (in thousands):


	December 31,
	2020		2019
ASSETS
Real estate:
Buildings and improvements	$	2,553,254	$	3,626,665
Development costs and construction in progress	21,509		38,728
Land	355,803		467,956
Accumulated depreciation and amortization	(615,708)		(861,557)
Net real estate	2,314,858		3,271,792

Investments in and advances to unconsolidated joint ventures	5,842		51,134
Accounts receivable, net of allowance of $5,873 and $4,178	20,500		14,575
Cash and cash equivalents	53,085		63,834
Restricted cash	17,168		27,040
Intangible assets, net	24,541		82,071
Right-of-use asset, net	4,109		5,701
Other assets, net(1)	103,965		125,502
Total assets of discontinued operations, net	2,544,068		3,641,649
Total medical office assets held for sale, net(2)	82,238		6,616
Assets held for sale and discontinued operations, net	$	2,626,306	$	3,648,265
LIABILITIES
Mortgage debt	318,876		296,879

Lease liability	3,189		4,871
Accounts payable, accrued liabilities, and other liabilities	79,411		83,392
Deferred revenue	11,442		18,520
Total liabilities of discontinued operations, net	412,918		403,662
Total liabilities related to medical office assets held for sale, net	2,819		26
Liabilities related to assets held for sale and discontinued operations, net	$	415,737	$	403,688

_______________________________________

(1)Includes goodwill of $29 million and $30 million as of December 31, 2020 and 2019, respectively.

(2)Primarily comprised of six MOBs with net real estate assets of $73 million and two MOBs with net real estate assets of $7 million as of December 31, 2020 and 2019, respectively.

The results of discontinued operations through December 31, 2020, or the disposal date of each asset or portfolio of assets if they have been sold, are included in the consolidated results for the years ended December 31, 2020, 2019, and 2018. Summarized financial information for discontinued operations for the years ended December 31, 2020, 2019, and 2018 is as follows (in thousands):


	Year Ended December 31,
	2020		2019		2018
Revenues:
Rental and related revenues	$	97,877	$	152,576	$	216,887
Resident fees and services	621,253		583,653		400,557
Income from direct financing leases	—		20,815		37,926
Total revenues	719,130		757,044		655,370
Costs and expenses:
Interest expense	10,538		8,007		5,062
Depreciation and amortization	143,194		224,798		144,819
Operating	550,226		474,126		326,381
Transaction costs	20,426		6,780		9,635
Impairments and loan loss reserves (recoveries), net	201,344		208,229		44,343
Total costs and expenses	925,728		921,940		530,240
Other income (expense):
Gain (loss) on sales of real estate, net	460,144		22,940		94,618
Other income (expense), net	5,475		17,060		(110)
Total other income (expense), net	465,619		40,000		94,508
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	259,021		(124,896)		219,638
Income tax benefit (expense)	9,913		11,783		13,459
Equity income (loss) from unconsolidated joint ventures	(1,188)		(2,295)		3,159

Income (loss) from discontinued operations	$	267,746	$	(115,408)	$	236,256

NOTE 6. Impairments

Real Estate

During the year ended December 31, 2020, the Company recognized an aggregate impairment charge of $210 million ($201 million of which is reported in income (loss) from discontinued operations) related to 42 SHOP assets, 5 senior housing triple-net assets, 5 MOBs, and 1 undeveloped MOB land parcel as a result of being classified as held for sale and wrote down their aggregate carrying value of $960 million to their aggregate fair value, less estimated costs to sell, of $750 million. Additionally, during the year ended December 31, 2020, the Company recognized an impairment charge of $15 million related to one life science facility that it intends to demolish for a future development project.

The fair value of the impaired assets was based on forecasted sales prices, which are considered to be Level 3 measurements within the fair value hierarchy. Forecasted sales prices were determined using an income approach and/or a market approach (comparable sales model), which rely on certain assumptions by management, including: (i) market capitalization rates, (ii) comparable market transactions, (iii) estimated prices per unit, (iv) negotiations with prospective buyers, and (v) forecasted cash flow streams (lease revenue rates, expense rates, growth rates, etc.). There are inherent uncertainties in making these assumptions. For the Company’s impairment calculations during and as of the year ended December 31, 2020, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit ranging from $13,000 to $300,000, with a weighted average price per unit of $164,000. When utilizing the income approach, assumptions include, but are not limited to, terminal capitalization rates ranging from 5.5% to 7.5% and discount rates ranging from 8.0% to 9.5%.

During the year ended December 31, 2019, the Company recognized an aggregate impairment charge of $194 million ($189 million of which is reported in income (loss) from discontinued operations) related to 8 senior housing triple-net assets, 27 SHOP assets, 3 MOBs, and 1 other non-reportable asset as a result of being classified as held for sale and wrote down their aggregate carrying value of $416 million to their aggregate fair value, less estimated costs to sell, of $223 million. During the year ended December 31, 2019, the Company also recognized an impairment charge of $4 million related to one MOB that it intends to demolish for a future development project.

The fair value of the impaired assets was based on forecasted sales prices, which are considered to be Level 3 measurements within the fair value hierarchy. For the Company’s impairment calculations during and as of the year ended December 31, 2019, the Company estimated the fair value of each asset using either (i) market capitalization rates ranging from 4.97% to 8.27%, with a weighted average rate of 6.22% or (ii) prices per unit ranging from $24,000 to $125,000, with a weighted average price of $73,000.

Additionally, during the year ended December 31, 2019, the Company determined the carrying value of two MOBs and one SHOP asset that were candidates for potential future sale were no longer recoverable due to the Company’s shortened intended hold period under the held-for-use impairment model. Accordingly, the Company wrote-down the carrying amount of these three assets to their respective fair value, which resulted in an aggregate impairment charge of $18 million ($9 million of which is reported in income (loss) from discontinued operations). The fair value of the assets are considered to be Level 2 measurements within the fair value hierarchy.

During the year ended December 31, 2018, in conjunction with classifying the assets as held for sale, the Company determined that 17 underperforming SHOP assets and one undeveloped life science land parcel were impaired. Additionally, the Company determined that three additional underperforming SHOP assets that were candidates for potential future sale were impaired under the held-for-use impairment model. Accordingly, the Company recognized total impairment charges of $52 million ($44 million of which is reported in income (loss) from discontinued operations), during the year ended December 31, 2018 to write-down the carrying value of the assets to their respective fair values (less estimated costs to sell for assets classified as held for sale). The fair value of the assets was based on contracted or forecasted sales prices and expected future cash flows, which are considered to be Level 2 measurements within the fair value hierarchy.

Casualty-Related

During the year ended December 31, 2019, the Company recognized a $5 million casualty-related gain, net of deferred tax impacts, as a result of insurance proceeds received for property damage and other associated costs related to hurricanes in 2017. Of the total $5 million, $2 million is recorded in other income (expense), net, and $3 million is recorded in income (loss) from discontinued operations.

Other

See Note 7 for information on the impairment charge related to the write-down of a DFL portfolio to its fair value. See Note 8 for information related to the Company's reserve for loan losses. See Note 9 for information on the impairment charge related to an asset classified as held-for-sale within the CCRC JV.

NOTE 7. Leases

Lease Income

The following table summarizes the Company’s lease income, excluding discontinued operations (in thousands):


	Year Ended December 31,
	2020		2019		2018
Fixed income from operating leases	$	943,638	$	853,545	$	829,774
Variable income from operating leases	238,470		215,957		190,574
Interest income from direct financing leases	9,720		16,666		16,349

Direct Financing Leases

Net investment in DFLs consists of the following (dollars in thousands):


	December 31,
	2020		2019
Present value of minimum lease payments receivable	$	9,804	$	19,138
Present value of estimated residual value	44,706		84,604
Less deferred selling profits	(9,804)		(19,138)


Net investment in direct financing leases	$	44,706	$	84,604
Properties subject to direct financing leases	1		2

Direct Financing Lease Internal Ratings

The following table summarizes the Company’s internal ratings for DFLs at December 31, 2020 (dollars in thousands):


				Internal Ratings
Segment	Carrying Amount		Percentage of DFL Portfolio	Performing DFLs		Watch List DFLs		Workout DFLs

Medical office	$	44,706	100	$	44,706	—		—
	$	44,706	100	$	44,706	$	—	$	—

2020 Direct Financing Lease Sale

During the first quarter of 2020, the Company sold a hospital under a DFL for $82 million and recognized a gain on sale of $42 million, which is included in other income (expense), net.

2019 Direct Financing Lease Conversion

During the first quarter of 2019, the Company converted a DFL portfolio of 14 senior housing triple-net properties, previously on “Watch List” status, to a RIDEA structure, requiring the Company to recognize net assets equal to the lower of the net assets’ fair value or the carrying value of the net investment in the DFL. As a result, the Company derecognized the $351 million carrying value of the net investment in DFL related to the 14 properties and recognized a combination of net real estate ($331 million) and net intangibles assets ($20 million) for the same aggregate amount, with no gain or loss recognized. As a result of the transaction, the 14 properties were transferred from the senior housing triple-net segment to the SHOP segment during the first quarter of 2019.

2019 Direct Financing Lease Sale

During the second quarter of 2019, the Company entered into agreements to sell 13 senior housing facilities under DFLs (the “DFL Sale Portfolio”) for $274 million. Upon entering into the agreements, the Company recognized an allowance for DFL losses and related impairment charge of $10 million (recognized in income (loss) from discontinued operations) to write-down the carrying value of the DFL Sale Portfolio to its fair value. The fair value of the DFL Sale Portfolio was based upon the agreed upon sale price, less estimated costs to sell, which was considered to be a Level 2 measurement within the fair value hierarchy. In conjunction with the entering into agreements to sell the DFL Sale Portfolio, the Company placed the portfolio on nonaccrual status and began recognizing income equal to the amount of cash received.

The Company completed the sale of the DFL Sale Portfolio in September 2019.

For the DFL Sale Portfolio, during the years ended December 31, 2019 and 2018, income from DFLs was $17 million and $24 million (recognized in income (loss) from discontinued operations), respectively, and cash payments received were $16 million and $20 million, respectively.

Direct Financing Lease Receivable Maturities

The following table summarizes future minimum lease payments contractually due under DFLs at December 31, 2020 (in thousands):


Year	Amount
2021	$	8,601
2022	1,203
2023	—
2024	—
2025	—
Thereafter	—
Undiscounted minimum lease payments receivable	9,804
Less: imputed interest	—
Present value of minimum lease payments receivable	$	9,804

Residual Value Risk

Quarterly, the Company reviews the estimated unguaranteed residual value of assets under DFLs to determine if there have been any material changes compared to the prior quarter. As needed, the Company and/or the related tenants will invest necessary funds to maintain the residual value of each asset.

Operating Leases

Future Minimum Rents

The following table summarizes future minimum lease payments to be received, excluding future minimum lease payments from assets classified as discontinued operations, from tenants under non-cancelable operating leases as of December 31, 2020 (in thousands):


Year	Amount(1)
2021	$	969,519
2022	929,437
2023	869,628
2024	774,641
2025	669,289
Thereafter	2,431,032
	$	6,643,546

_______________________________________

(1)Excludes future minimum lease payments from assets classified as discontinued operations.

Tenant Purchase Options

Certain leases, including DFLs, contain purchase options whereby the tenant may elect to acquire the underlying real estate. Annualized base rent from leases subject to purchase options, summarized by the year the purchase options are exercisable, excluding leases related to assets classified as discontinued operations, are as follows (dollars in thousands):


Year	Annualized Base Rent(1)(2)		Number of Properties
2021	$	29,394	12
2022	11,187		3
2023	—		—
2024	3,190		1
2025	9,065		13
Thereafter	5,815		2
	$	58,651	31

_______________________________________

(1)Represents the most recent month’s base rent including additional rent floors and cash income from DFLs annualized for 12 months. Base rent does not include tenant recoveries, additional rents in excess of floors, and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, DFL non-cash interest and deferred revenues).

(2)Excludes tenant purchase options related to assets classified as discontinued operations.

During the fourth quarter of 2019, one of the Company's tenants exercised its option to acquire from the Company an acute care hospital and adjacent land parcel located in Irvine, California for $226 million. The sale is scheduled to close during the first half of 2021. The annualized base rent associated with the assets covered by this purchase option is included in the table above for 2021.

Lease Costs

The following tables provide information regarding the Company’s leases to which it is the lessee, such as corporate offices and ground leases, excluding lease costs related to assets classified as discontinued operations (dollars in thousands):


	Year Ended December 31,
Lease Expense Information:	2020		2019		2018




Total lease expense(1)	$	13,601	$	11,852	$	10,569

_______________________________________

(1)Lease expense related to corporate assets is included in general and administrative expenses and lease expense related to ground leases is included within operating expenses in the Company’s consolidated statements of operations.


	Year Ended December 31,
Supplemental Cash Flow Information:	2020		2019		2018
Cash paid for amounts included in the measurement of lease liability:
Operating cash flows for operating leases	$	9,940	$	8,158	$	7,326

Right-of-use asset obtained in exchange for new lease liability:
Operating leases	$	32,208	$	5,733	$	—


Weighted Average Lease Term and Discount Rate:	December 31, 2020		December 31, 2019
Weighted average remaining lease term (years):
Operating leases	57		51

Weighted average discount rate:
Operating leases	4.26	%	4.36	%

The following table summarizes future minimum lease payments under non-cancelable ground and other operating leases included in the Company’s lease liability, excluding future minimum lease payments related to assets classified as held for sale or discontinued operations, as of December 31, 2020 (in thousands):


Year	Amount(1)
2021	$	11,106
2022	11,262
2023	11,445
2024	10,246
2025	8,886
Thereafter	469,453
Undiscounted minimum lease payments included in the lease liability	522,398
Less: imputed interest	(342,503)
Present value of lease liability	$	179,895

_______________________________________

(1)Excludes future minimum lease payments under non-cancelable ground and other operating leases from assets classified as discontinued operations.

Depreciation Expense

While the Company leases the majority of its property, plant, and equipment to various tenants under operating leases and DFLs, in certain situations, the Company owns and operates certain property, plant, and equipment for general corporate purposes. Corporate assets are recorded within other assets, net within the Company’s consolidated balance sheets and depreciation expense for those assets is recorded in general and administrative expenses in the Company’s consolidated statements of operations. Included within other assets, net as of December 31, 2020 and December 31, 2019 is $6 million and $4 million, respectively, of accumulated depreciation related to corporate assets. Included within general and administrative expenses for the years ended December 31, 2020, 2019, and 2018 is $2 million, $2 million and $4 million, respectively, of depreciation expense related to corporate assets.

COVID-19 Rent Deferrals

During the second and third quarters of 2020, the Company agreed to defer rent from certain tenants in the medical office segment, with the requirement that all deferred rent be repaid by the end of 2020. Under this program, through December 31, 2020, approximately $6 million of rent was deferred for the medical office segment, substantially all of which had been collected as of December 31, 2020.

Additionally, through December 31, 2020, the Company granted approximately $1 million of rent deferrals to certain tenants in the life science segment, all of which had been collected as of December 31, 2020.

The rent deferrals granted do not impact the pattern of revenue recognition or amount of revenue recognized (refer to Note 2 for additional information).

NOTE 8. Loans Receivable

The following table summarizes the Company’s loans receivable (in thousands):


	December 31,
	2020		2019
Secured mortgage loans(1)	$	161,530	$	161,964
Mezzanine and other	44,347		27,752
Unamortized discounts, fees, and costs	(222)		863
Reserve for loan losses	(10,280)		—


Loans receivable, net	$	195,375	$	190,579

_______________________________________

(1)At December 31, 2020, the Company had $11 million remaining of commitments to fund $81 million of senior housing development and redevelopment projects. At December 31, 2019, the Company had $25 million remaining of commitments to fund $174 million of senior housing development and redevelopment projects.

2020 Loans Receivable Transactions

For certain residents that qualify, CCRCs may offer to lend residents the necessary funds to satisfy the entrance fee requirements so that they are able to move into a community while still continuing the process of selling their previous home. The loans are due upon sale of the previous residence. Upon completing the CCRC Acquisition (see Note 3) in January 2020, the Company began consolidating 13 CCRCs, which held approximately $30 million of such notes receivable from various community residents at the time of acquisition. At December 31, 2020, the Company held $23 million of such receivables, which are included in mezzanine and other in the table above.

In November 2020, the Company sold one mezzanine loan with a $10 million principal balance for $8 million, resulting in a $2 million loss.

In December 2020, the Company sold one secured mortgage loan with a $115 million principal balance for $109 million, resulting in a $6 million loss.

SHOP Seller Financing

In December 2020, in conjunction with the sale of four SHOP facilities in the Atria SHOP Portfolio for $94 million (see Note 5), the Company provided the buyer with financing of $61 million. The remainder of the sales price was received in cash at the time of sale. The financing is secured by the buyer's equity ownership in the four properties.

In conjunction with the sale of 32 SHOP facilities in the Sunrise Senior Housing Portfolio for $664 million in January 2021 (see Note 5), the Company provided the buyer with financing of $410 million. The remainder of the sales price was received in cash at the time of sale. The financing is secured by the buyer's equity ownership in each property.

In conjunction with the sale of 16 additional SHOP facilities for $230 million in January 2021 (see Note 5), the Company provided the buyer with financing of $150 million. The remainder of the sales price was received in cash at the time of sale. The financing is secured by the buyer's equity ownership in each property.

In December 2019, the Company sold two SHOP facilities in Florida for $56 million and provided the buyer with initial financing of $45 million. The remainder of the sales price was received in cash at the time of sale. Additionally, the Company agreed to provide up to $10 million of redevelopment funding (80% of the estimated cost of redevelopment), $7 million of which has been funded as of December 31, 2020. The initial and redevelopment financings are secured by the buyer's equity ownership in the property.

Loans Receivable Internal Ratings

In connection with the Company’s quarterly review process or upon the occurrence of a significant event, loans receivable are reviewed and assigned an internal rating of Performing, Watch List, or Workout. Loans that are deemed Performing meet all present contractual obligations, and collection and timing of all amounts owed is reasonably assured. Watch List Loans are defined as loans that do not meet the definition of Performing or Workout. Workout Loans are defined as loans in which the Company has determined, based on current information and events, that: (i) it is probable it will be unable to collect all amounts due according to the contractual terms of the agreement, (ii) the borrower is delinquent on making payments under the contractual terms of the agreement, and (iii) the Company has commenced action or anticipates pursuing action in the near term to seek recovery of its investment.

The following table summarizes, by year of origination, the Company’s internal ratings for loans receivables, net of reserves for loan losses, as of December 31, 2020 (dollars in thousands):


Investment Type		Year of Origination														Total
	2020			2019			2018			2017			2016
Secured mortgage loans
Risk rating:
Performing loans		$	95,800		$	61,772		$	—		$	—		$	—	$	157,572
Watch list loans		—			—			—			—			—		—
Workout loans		—			—			—			—			—		—
Total secured mortgage loans		$	95,800		$	61,772		$	—		$	—		$	—	$	157,572



Mezzanine and other
Risk rating:
Performing loans		$	23,263		$	12,252		$	—		$	—		$	—	$	35,515
Watch list loans		—			—			—			—			2,288		2,288
Workout loans		—			—			—			—			—		—
Total mezzanine and other		$	23,263		$	12,252		$	—		$	—		$	2,288	$	37,803

Real Estate Secured Loans

The following table summarizes the Company’s loans receivable secured by real estate at December 31, 2020 (dollars in thousands):


Final Maturity Date	Number of Loans	Payment Terms	Principal Amount(1)		Carrying Amount
2021	1	Monthly interest-only payments, accrues interest at 7.5% and secured by a senior housing facility under development in Texas	$	2,250	$	2,250
2021	1	Monthly interest-only payments, accrues interest at 7.5% and secured by a senior housing facility under development in Florida	8,289		8,289
2021	4	Monthly interest-only payments, accrues interest at 3.5% and secured by senior housing facilities in Florida and California	61,018		57,861
2022	1	Monthly interest-only payments, accrues interest at 5.5% and secured by equity interests in 11 senior housing facilities in California	25,000		24,462
2026	1	Monthly interest-only payments, accrues interest at the greater of 2% or LIBOR, plus 4.25% and secured by a senior housing facility under development in Florida	51,716		51,233
2026	1	Monthly interest-only payments, accrues interest at the greater of 2% or LIBOR, plus 4.25% and secured by a senior housing facility under development in California	13,257		13,477
	9		$	161,530	$	157,572

_______________________________________

(1)Represents future contractual principal payments to be received on loans receivable secured by real estate.

During the years ended December 31, 2020, 2019, and 2018, the Company recognized $13 million, $6 million, and $5 million, respectively, of interest income related to loans secured by real estate.

Reserve for Loan Losses

The Company evaluates the liquidity and creditworthiness of its borrowers on a quarterly basis. The Company’s evaluation considers industry and economic conditions, individual and portfolio property performance, credit enhancements, liquidity, and other factors. The Company’s borrowers furnish property, portfolio, and guarantor/operator-level financial statements, among other information, on a monthly or quarterly basis, which the Company utilizes to calculate the debt service coverages used in its assessment of internal ratings, which is a primary credit quality indicator. Debt service coverage information is evaluated together with other property, portfolio, and operator performance information, including revenue, expense, net operating income, occupancy, rental rates, capital expenditures, and EBITDA (defined as earnings before interest, tax, and depreciation and amortization), along with other liquidity measures.

In its assessment of current expected credit losses for loans receivable and unfunded loan commitments, the Company utilizes past payment history of its borrowers, current economic conditions, and forecasted economic conditions through the maturity date of each loan to estimate a probability of default and a resulting loss for each loan receivable. Future economic conditions are based primarily on near-term economic forecasts from the Federal Reserve and reasonable assumptions for long-term economic trends.

The following table summarizes the Company’s reserve for loan losses at December 31, 2020 (in thousands):


	December 31, 2020
	Secured Mortgage Loans		Mezzanine and Other		Total
Reserve for loan losses, December 31, 2019	$	—	$	—	$	—
Cumulative-effect of adopting of ASU 2016-13 to beginning retained earnings	513		907		1,420
Provision for expected loan losses	2,639		6,221		8,860


Reserve for loan losses, December 31, 2020	$	3,152	$	7,128	$	10,280

Additionally, at December 31, 2020, a liability of $1 million related to expected credit losses for unfunded loan commitments was included in accounts payable, accrued liabilities, and other liabilities.

Credit loss expenses and recoveries are recorded in impairments and loan loss reserves (recoveries), net. During the year ended December 31, 2020, the net credit loss expense was $18 million. The change in the provision for expected loan losses during the year ended December 31, 2020 is primarily due to the current and anticipated economic impact of COVID-19.

Other Secured Loans

Tandem Health Care Loan

From July 2012 through May 2015, the Company funded, in aggregate, $257 million under a collateralized mezzanine loan facility (the “Mezzanine Loan”) to certain affiliates of Tandem Health Care (together with is affiliates, “Tandem”).

In March 2018, the Company sold the Mezzanine Loan to a third party for approximately $112 million, which resulted in an impairment recovery, net of transaction costs and fees, of $3 million included in other income (expense), net. The Company holds no further economic interest in the operations of Tandem.

U.K. Bridge Loan

In 2016, the Company provided a £105 million ($131 million at closing) bridge loan (the “U.K. Bridge Loan”) to Maria Mallaband Care Group Ltd. ("MMCG") to fund the acquisition of a portfolio of seven care homes in the U.K. Under the U.K. Bridge Loan, the Company retained a three-year call option to acquire those seven care homes at a future date for £105 million, subject to certain conditions precedent being met. In March 2018, upon resolution of all conditions precedent, the Company began the process of exercising its call option to acquire the seven care homes and concluded that it should consolidate the real estate. As a result, the Company derecognized the outstanding loan receivable of £105 million and recognized a £29 million ($41 million) loss on consolidation. Refer to Note 19 for further discussion regarding impact of consolidating the seven care homes during the first quarter of 2018.

In June 2018, the Company completed the process of exercising the above-mentioned call option. The seven care homes acquired through the call option were included in the U.K. JV transaction (see Note 5).

NOTE 9. Investments in and Advances to Unconsolidated Joint Ventures

The Company owns interests in the following entities that are accounted for under the equity method, excluding investments classified as discontinued operations (dollars in thousands):


				Carrying Amount
				December 31,
Entity(1)(2)	Segment	Property Count(3)	Ownership %(3)	2020		2019
SWF SH JV(4)	Other	19	54	$	357,581	$	428,258
Life Science JV(5)	LS	1	49	24,879		—
Medical Office JVs(6)	MOB	3	20 - 67	9,673		9,845
Other JVs(7)	Other	—	41 - 47	9,157		10,372
CCRC JV(8)	CCRC	2	49	1,581		325,830
Advances to unconsolidated joint ventures, net				—		76
				$	402,871	$	774,381

_______________________________________

(1)These entities are not consolidated because the Company does not control, through voting rights or other means, the joint ventures.

(2)The property count, ownership percentage, and carrying amount at December 31, 2020 excludes the Otay Ranch JV, which is classified as discontinued operations and has an aggregate carrying value of $6 million at December 31, 2020. The carrying amount at December 31, 2019 excludes the Otay Ranch JV, Waldwick JV, MBK JV, and MBK Development JV, which are classified as discontinued operations and had an aggregate carrying value of $51 million at December 31, 2019. The Otay Ranch JV (90% ownership percentage) is the only one of these joint ventures that remains outstanding at December 31, 2020.

(3)Property count and ownership percentage are as of December 31, 2020.

(4)In December 2019, the Company formed the SWF SH JV with a sovereign wealth fund (see Note 4).

(5)In December 2020, the Company acquired a joint venture interest in a life science facility in Cambridge, Massachusetts (see Note 4).

(6)Includes three unconsolidated medical office joint ventures (and the Company’s ownership percentage): (i) Ventures IV (20%); (ii) Ventures III (30%); and (iii) Suburban Properties, LLC (67%).

(7)Unconsolidated other joint ventures (and the Company’s ownership percentage) include: (i) Discovery Naples JV (41%) and (ii) Discovery Sarasota JV (47%). The Discovery Naples JV and Discovery Sarasota JV are joint ventures that are developing senior housing facilities and the Company’s investments in those joint ventures are preferred equity investments earning a 10% per annum fixed-rate return. In January 2020, the Company sold its interest in the remaining K&Y joint venture for $12 million. At December 31, 2019, the K&Y joint venture includes an ownership percentage of 80% and one unconsolidated joint venture. In October 2019, the Company sold its interest in one of the K&Y joint ventures for $4 million.

(8)See Note 3 for a discussion of the 2019 MTCA with Brookdale, including the acquisition of Brookdale’s interest in 13 of the 15 communities in the CCRC JV in January 2020.

At December 31, 2020 and 2019, the aggregate unamortized basis difference of the Company's investments in unconsolidated joint ventures of $33 million and $(63) million, respectively, is primarily attributable to the difference between the amount for which the Company purchased its interest in the entity and the historical carrying value of the net assets of the entity. The difference is being amortized over the remaining useful life of the related assets and is included in equity income (loss) from unconsolidated joint ventures.

CCRC JV. In January 2020, the Company, which owned a 49% interest in the CCRC JV, purchased Brookdale’s 51% interest in and began consolidating 13 of the 15 communities in the CCRC JV. Refer to Note 3 for a detailed discussion of the 2019 MTCA with Brookdale. During 2019, the CCRC JV recognized an impairment charge of $12 million. Accordingly, the Company recognized its 49% share of the impairment charge ($6 million) through equity income (loss) from unconsolidated joint ventures during the year ended December 31, 2019.

U.K. JV. In December 2019, the Company sold its remaining 49% interest in the U.K. JV for proceeds of £70 million ($91 million) and recognized a loss on sale of $7 million (based on exchange rates at the time the transaction was completed), including $1 million of loss in accumulated other comprehensive income (loss) that was reclassified to gain (loss) on sales of real estate. As of December 31, 2019, the Company no longer owned real estate in the U.K.

NOTE 10. Intangibles

Intangible assets primarily consist of lease-up intangibles and above market tenant lease intangibles. The following table summarizes the Company’s intangible lease assets (dollars in thousands):


	December 31,
Intangible lease assets	2020		2019



Gross intangible lease assets	$	761,328	$	426,967
Accumulated depreciation and amortization	(241,411)		(166,763)
Intangible assets, net(1)	$	519,917	$	260,204

Weighted average remaining amortization period in years	5		5

_______________________________________

(1)Excludes intangible assets reported in assets held for sale and discontinued operations, net of $25 million and $82 million as of December 31, 2020 and December 31, 2019, respectively.

Intangible liabilities consist of below market lease intangibles. The following table summarizes the Company’s intangible lease liabilities (dollars in thousands):


	December 31,
Intangible lease liabilities	2020		2019


Gross intangible lease liabilities	$	194,565	$	113,213
Accumulated depreciation and amortization	(50,366)		(38,222)
Intangible liabilities, net	$	144,199	$	74,991

Weighted average remaining amortization period in years	8		7

The following table sets forth amortization related to intangible assets, net and intangible liabilities, net (in thousands):


	Year Ended December 31,
	2020		2019		2018
Depreciation and amortization expense related to amortization of lease-up intangibles(1)	$	89,301	$	46,828	$	43,933
Rental and related revenues related to amortization of net below market lease liabilities(1)	11,717		6,319		5,341

_______________________________________

(1)Excludes amortization related to assets classified as discontinued operations.

During the year ended December 31, 2020, in conjunction with the Company’s acquisitions of real estate (including the consolidation of 13 CCRCs in which the Company acquired Brookdale’s interest as part of the 2019 Brookdale MTCA - see Note 3), the Company acquired intangible assets of $352 million and intangible liabilities of $83 million. The intangible assets and intangible liabilities acquired have a weighted average amortization period of 7 years and 9 years, respectively.

On January 1, 2019, in conjunction with the adoption of ASU 2016-02 (see Note 2), the Company reclassified $39 million of intangible assets, net and $6 million of intangible liabilities, net related to above and below market ground leases to right-of-use asset, net.

The following table summarizes the estimated annual amortization for each of the five succeeding fiscal years and thereafter, excluding assets classified as discontinued operations (in thousands):


	Rental and Related Revenues(1)(3)		Depreciation and Amortization(2)(3)
2021	$	18,093	$	96,094
2022	17,841		89,217
2023	17,119		85,484
2024	16,159		82,647
2025	15,370		72,373
Thereafter	50,514		84,999
	$	135,096	$	510,814

_______________________________________

(1)The amortization of net below market lease intangibles is recorded as an increase to rental and related revenues.

(2)The amortization of lease-up intangibles is recorded to depreciation and amortization expense.

(3)Excludes estimated annual amortization from assets classified as discontinued operations.

NOTE 11. Debt

Bank Line of Credit and Term Loans

On May 23, 2019, the Company executed a $2.5 billion unsecured revolving line of credit facility (the “Revolving Facility”), which matures on May 23, 2023 and contains two six month extension options, subject to certain customary conditions. Borrowings under the Revolving Facility accrue interest at LIBOR plus a margin that depends on credit ratings of the Company's senior unsecured long-term debt. The Company pays a facility fee on the entire revolving commitment that depends on its credit ratings. Based on those credit ratings at December 31, 2020, the margin on the Revolving Facility was 0.83% and the facility fee was 0.15%.

In May 2019, the Company also entered into a $250 million unsecured term loan facility, which the Company fully drew down during the second quarter of 2019 (the “2019 Term Loan” and, together with the Revolving Facility, the “Facilities”). The 2019 Term Loan matures on May 23, 2024. Based on credit ratings for the Company’s senior unsecured long-term debt at December 31, 2020, the 2019 Term Loan accrues interest at a rate of LIBOR plus 0.90%, with a weighted average effective interest rate of 1.14%.

The Facilities include a feature that allows the Company to increase the borrowing capacity by an aggregate amount of up to $750 million, subject to securing additional commitments. The Facilities also contain certain financial restrictions and other customary requirements, including cross-default provisions to other indebtedness. Among other things, these covenants, using terms defined in the agreements: (i) limit the ratio of Enterprise Total Indebtedness to Enterprise Gross Asset Value to 60%; (ii) limit the ratio of Enterprise Secured Debt to Enterprise Gross Asset Value to 40%; (iii) limit the ratio of Enterprise Unsecured Debt to Enterprise Unencumbered Asset Value to 60%; (iv) require a minimum Fixed Charge Coverage ratio of 1.5 times; and (v) require a minimum Consolidated Tangible Net Worth of $7.0 billion. At December 31, 2020, the Company believes it was in compliance with each of these restrictions and requirements of the Facilities.

Commercial Paper Program

In September 2019, the Company established an unsecured commercial paper program (the “Commercial Paper Program”). Under the terms of the Commercial Paper Program, the Company may issue, from time to time, unsecured short-term debt securities with varying maturities. Amounts available under the Commercial Paper Program may be borrowed, repaid, and re-borrowed from time to time, with the maximum aggregate face or principal amount outstanding at any one time not exceeding $1.0 billion. Amounts borrowed under the Commercial Paper Program will be sold on terms that are customary for the U.S. commercial paper market and will be at least equal in right of payment with all of the Company’s other unsecured and unsubordinated indebtedness. The Company intends to use its Revolving Facility as a liquidity backstop for the repayment of unsecured short term debt securities issued under the Commercial Paper Program. At December 31, 2020, the Company had $130 million of notes outstanding under the Commercial Paper Program, with original maturities of one month and a weighted average interest rate of 0.30%. At December 31, 2019, the Company had $93 million of notes outstanding under the Commercial Paper Program, with original maturities of one month and a weighted average interest rate of 2.04%.

Senior Unsecured Notes

At December 31, 2020, the Company had senior unsecured notes outstanding with an aggregate principal balance of $5.75 billion. The senior unsecured notes contain certain covenants including limitations on debt, maintenance of unencumbered assets, cross-acceleration provisions, and other customary terms. The Company believes it was in compliance with these covenants at December 31, 2020.

The following table summarizes the Company’s senior unsecured notes issuances for the periods presented (dollars in thousands):


Issue Date	Amount		Coupon Rate		Maturity Date
Year ended December 31, 2020:
June 23, 2020	$	600,000	2.88	%	2031
Year ended December 31, 2019:
November 21, 2019	$	750,000	3.00	%	2030
July 5, 2019	$	650,000	3.25	%	2026
July 5, 2019	$	650,000	3.50	%	2029

There were no senior unsecured notes issuances for the year ended December 31, 2018.

The following table summarizes the Company’s senior unsecured notes payoffs and repurchases for the periods presented (dollars in thousands):


Payoff Date	Amount		Coupon Rate		Maturity Date
Year ended December 31, 2020:
July 9, 2020(1)	$	300,000	3.15	%	2022
June 24, 2020(2)	$	250,000	4.25	%	2023
Year ended December 31, 2019:
November 21, 2019(3)	$	350,000	4.00	%	2022
July 22, 2019(4)	$	800,000	2.63	%	2020
July 8, 2019(4)	$	250,000	4.00	%	2022
July 8, 2019(4)	$	250,000	4.25	%	2023
Year ended December 31, 2018:
November 8, 2018	$	450,000	3.75	%	2019
July 16, 2018(5)	$	700,000	5.38	%	2021

_______________________________________

(1)Upon completing the redemption of the 3.15% senior unsecured notes due in 2022, the Company recognized an $18 million loss on debt extinguishment.

(2)Upon repurchasing a portion of the 4.25% senior unsecured notes due in 2023, the Company recognized a $26 million loss on debt extinguishment.

(3)Upon repurchasing the 4.00% senior unsecured notes due in 2022, the Company recognized a $22 million loss on debt extinguishment.

(4)Upon completing the redemption of the 2.63% senior unsecured notes due in 2020 and repurchasing a portion of the 4.25% senior unsecured notes due in 2023 and the 4.00% senior unsecured notes due in 2022, the Company recognized a $35 million loss on debt extinguishment.

(5)Upon repurchasing the 5.38% senior unsecured notes due in 2021, the Company recognized a $44 million loss on debt extinguishment.

From January 1, 2021 through February 8, 2021, the Company repurchased $112 million aggregate principal amount of its 4.25% senior unsecured notes due in 2023, $201 million aggregate principal amount of its 4.20% senior unsecured notes due in 2024, and $469 million aggregate principal amount of its 3.88% senior unsecured notes due in 2024. Upon completing that repayment, the Company will recognize a $90 million loss on debt extinguishment during the first quarter of 2021.

Mortgage Debt

At December 31, 2020 and 2019, the Company had $217 million and $12 million, respectively, in aggregate principal of mortgage debt outstanding (excluding mortgage debt on assets held for sale and discontinued operations), which is secured by six and four healthcare facilities, respectively, with an aggregate carrying value of $517 million and $38 million, respectively.

During the year ended December 31, 2020, 2019, and 2018 the Company made aggregate principal repayments of mortgage debt of $18 million, $4 million, and $5 million, respectively.

Mortgage debt generally requires monthly principal and interest payments, is collateralized by real estate assets, and is generally non-recourse. Mortgage debt typically restricts the transfer of the encumbered assets, prohibits additional liens, restricts prepayment, requires payment of real estate taxes, requires maintenance of the assets in good condition, requires insurance on the assets, and includes conditions to obtain lender consent to enter into or terminate material leases. Some of the mortgage debt may require tenants or operators to maintain compliance with the applicable leases or operating agreements of such real estate assets.

In November 2020, upon consolidating one property as part of a joint venture dissolution, the Company assumed $36 million of secured mortgage debt (classified as liabilities related to assets held for sale and discontinued operations, net) maturing in 2025 and having a weighted averaged interest rate of 3.87% (see Note 4).

In May 2019, upon acquiring three senior housing assets from Oakmont, the Company assumed $50 million of secured mortgage debt (classified as liabilities related to assets held for sale and discontinued operations, net) maturing in 2028 and having a weighted average interest rate of 4.83%. In July 2019, upon acquiring five additional senior housing assets from Oakmont, the Company assumed an additional $112 million of secured mortgage debt with maturity dates ranging from 2027 to 2033 and a weighted average interest rate of 4.89% (see Note 4).

Debt Maturities

The following table summarizes the Company’s stated debt maturities and scheduled principal repayments at December 31, 2020 (in thousands):


							Senior Unsecured Notes(1)				Mortgage Debt(2)
Year	Bank Line of Credit		Commercial Paper		Term Loan		Amount		Interest Rate		Amount		Interest Rate		Total
2021	$	—	$	129,590	$	—	$	—	—	%	$	13,015	5.26	%	$	142,605
2022	—		—		—		—		—	%	4,843		—	%	4,843
2023	—		—		—		300,000		4.37	%	89,874		3.80	%	389,874
2024	—		—		250,000		1,150,000		4.17	%	3,050		—	%	1,403,050
2025	—		—		—		1,350,000		3.93	%	3,209		—	%	1,353,209
Thereafter	—		—		—		2,950,000		3.67	%	102,789		3.57	%	3,052,789
	—		129,590		250,000		5,750,000				216,780				6,346,370
(Discounts), premium and debt costs, net	—		—		(818)		(52,414)				4,841				(48,391)
	—		129,590		249,182		5,697,586				221,621				6,297,979
Debt on assets held for sale and discontinued operations(3)	—		—		—		—				318,876				318,876
	$	—	$	129,590	$	249,182	$	5,697,586			$	540,497			$	6,616,855

_______________________________________

(1)Effective interest rates on the senior notes range from 3.08% to 6.87% with a weighted average effective interest rate of 3.86% and a weighted average maturity of 7 years.

(2)Excluding mortgage debt on assets classified as held for sale and discontinued operations, effective interest rates on the mortgage debt range from 3.42% to 5.91% with a weighted average effective interest rate of 3.73% and a weighted average maturity of 5 years.

(3)Represents mortgage debt on assets held for sale and discontinued operations with interest rates of 1.34% to 5.13% that mature between 2025 and 2044.

NOTE 12. Commitments and Contingencies

Legal Proceedings

From time to time, the Company is a party to, or has a significant relationship to, legal proceedings, lawsuits, and other claims. Except as described below, the Company is not aware of any legal proceedings or claims that it believes may have, individually or taken together, a material adverse effect on the Company’s financial condition, results of operations, or cash flows. The Company’s policy is to expense legal costs as they are incurred.

Class Action. On May 9, 2016, a purported stockholder of the Company filed a putative class action complaint, Boynton Beach Firefighters’ Pension Fund v. HCP, Inc., et al., Case No. 3:16-cv-01106-JJH, in the U.S. District Court for the Northern District of Ohio against the Company, certain of its officers, HCR ManorCare, Inc. (“HCRMC”), and certain of its officers, asserting violations of the federal securities laws. The suit asserted claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and alleged that the Company made certain false or misleading statements relating to the value of and risks concerning its investment in HCRMC by allegedly failing to disclose that HCRMC had engaged in billing fraud, as alleged by the U.S. Department of Justice (“DoJ”) in a suit against HCRMC arising from the False Claims Act that the DoJ voluntarily dismissed with prejudice. On November 22, 2019, the Court granted the class action motion to dismiss. On December 20, 2019, Co-Lead Plaintiffs filed a motion to amend the Court's judgment to permit amendment of the complaint, and on November 30, 2020, the Court denied Co-Lead Plantiff’s motion. Co-Lead Plantiffs have not appealed the dismissal and denial of leave to amend their compliant.

Derivative Actions. On June 16, 2016 and July 5, 2016, purported stockholders of the Company filed two derivative actions, Subodh v. HCR ManorCare Inc., et al., Case No. 30-2016-00858497-CU-PT-CXC and Stearns v. HCR ManorCare, Inc., et al., Case No. 30-2016-00861646-CU-MC-CJC, in the Superior Court of California, County of Orange, against certain of the Company’s current and former directors and officers and HCC. The Company is named as a nominal defendant. As both derivative actions contained substantially the same allegations, were consolidated into a single action (the “California derivative action”). The consolidated action alleges that the defendants engaged in various acts of wrongdoing, including, among other things, breaching fiduciary duties by publicly making false or misleading statements of fact regarding HCRMC’s finances and prospects, and failing to maintain adequate internal controls. On April 18, 2017, the Court approved the parties’ stipulation to stay the case pending disposition of the motion to dismiss the class action litigation. As of February 8, 2021, the California derivative action remained outstanding.

On April 10, 2017, a purported stockholder of the Company filed a derivative action, Weldon v. Martin et al., Case No. 3:17-cv-755, in federal court in the Northern District of Ohio, Western Division, against certain of the Company’s current and former directors and officers and HCRMC. The Company was named as a nominal defendant. The Weldon complaint asserted similar claims to those asserted in the California derivative action. In addition, the complaint asserted a claim under Section 14(a) of the Exchange Act, alleging that the Company made false statements in its 2016 proxy statement by not disclosing that the Company’s performance issues in 2015 were the direct result of alleged billing fraud at HCRMC. On January 5, 2021, the Court dismissed the Weldon case without prejudice.

On July 21, 2017, a purported stockholder of the Company filed another derivative action, Kelley v. HCR ManorCare, Inc., et al., Case No. 8:17-cv-01259, in federal court in the Central District of California, against certain of the Company’s current and former directors and officers and HCRMC. The Company was named as a nominal defendant. The Kelley complaint asserted similar claims to those asserted in Weldon and in the California derivative action. Like Weldon, the Kelley complaint also additionally alleged that the Company made false statements in its 2016 proxy statement, and asserted a claim for a violation of Section 14(a) of the Exchange Act. On November 28, 2017, the federal court in the Central District of California granted Defendants’ motion to transfer the action to the Northern District of Ohio (i.e., the court where the class action and other federal derivative action are pending). On January 5, 2021, the Court dismissed the Kelley case with prejudice.

The Company’s Board of Directors received letters dated August 17, 2016, April 19, 2017, and April 20, 2017 from private law firms acting on behalf of clients who are purported stockholders of the Company, each asserting allegations similar to those made in the California derivative action matters discussed above. Each letter demands that the Board of Directors take action to assert the Company’s rights. The Board of Directors completed its evaluation and rejected the demand letters in December of 2017. One of the law firms has more recently requested that the Board of Directors reconsider its determination after a ruling on the motion to dismiss in the class action litigation. In February 2021, the Board of Directors reaffirmed its rejection of the demand letters.

The Company believes that the plaintiffs lack standing or the lawsuits and demands are without merit, but cannot predict the outcome of these proceedings or reasonably estimate any potential loss at this time. Accordingly, no loss contingency has been recorded for these matters as of December 31, 2020, as the likelihood of loss is not considered probable or estimable.

DownREIT LLCs

In connection with the formation of certain DownREIT LLCs, members may contribute appreciated real estate to a DownREIT LLC in exchange for DownREIT units. These contributions are generally tax-deferred, so that the pre-contribution gain related to the property is not taxed to the member. However, if a contributed property is later sold by the DownREIT LLC, the unamortized pre-contribution gain that exists at the date of sale is specifically allocated and taxed to the contributing members. In many of the DownREITs, the Company has entered into indemnification agreements with those members who contributed appreciated property into the DownREIT LLC. Under these indemnification agreements, if any of the appreciated real estate contributed by the members is sold by the DownREIT LLC in a taxable transaction within a specified number of years, the Company will reimburse the affected members for the federal and state income taxes associated with the pre-contribution gain that is specially allocated to the affected member under the Code (“make-whole payments”). These make-whole payments include a tax gross-up provision. These indemnification agreements have expirations terms that range through 2039 on a total of 24 properties.

Commitments

The following table summarizes the Company’s material commitments, excluding debt service obligations (see Note 11), obligations as the lessee under operating leases (see Note 7), and commitments related to assets classified as discontinued operations, at December 31, 2020 (in thousands):


	Amount
Construction loan commitments(1)	$	11,137
Lease and other contractual commitments(2)	109,126
Development commitments(3)	196,749
Total	$	317,012

_______________________________________

(1)Represents loan commitments to finance development and redevelopment projects.

(2)Represents the Company's commitments, as lessor, under signed leases and contracts for operating properties and includes allowances for tenant improvements and leasing commissions. Excludes allowances for tenant improvements related to developments in progress for which the Company has executed an agreement with a general contractor to complete the tenant improvements (recognized in the “Development commitments” line).

(3)Represents construction and other commitments for developments in progress and includes allowances for tenant improvements of $28 million that the Company has provided as a lessor. Excludes $4 million of commitments related to assets classified as discontinued operations.

Credit Enhancement Guarantee

Prior to December 31, 2020, certain of the Company’s senior housing facilities served as collateral for debt that was owed by a previous owner of the facilities. This indebtedness was guaranteed by the previous owner who has an investment grade credit rating.

In conjunction with certain of the Company’s planned dispositions of SHOP assets, during October 2020, the debt to which the Company’s assets served as collateral was defeased. As part of that defeasance, the Company paid approximately $11 million of the defeasance premium, which was recognized as a transaction cost expense and reported in income (loss) from discontinued operations.

Environmental Costs

Various environmental laws govern certain aspects of the ongoing management and operation of our facilities, including those related to presence of asbestos-containing materials. The presence of, or the failure to manage and/or remediate, such materials may adversely affect the occupancy and performance of the Company's facilities. The Company monitors its properties for the presence of such hazardous or toxic substances and is not aware of any environmental liability with respect to the properties that would have a material adverse effect on the Company’s business, financial condition, or results of operations. The Company carries environmental insurance and believes that the policy terms, conditions, limitations, and deductibles are adequate and appropriate under the circumstances, given the relative risk of loss, the cost of such coverage, and current industry practice.

General Uninsured Losses

The Company obtains various types of insurance to mitigate the impact of property, business interruption, liability, workers’ compensation, flood, windstorm, earthquake, environmental, cyber, and terrorism related losses. The Company attempts to obtain appropriate policy terms, conditions, limits, and deductibles considering the relative risk of loss, the cost of such coverage, and current industry practice. There are, however, certain types of extraordinary losses, such as those due to acts of war or other events that may be either uninsurable or not economically insurable. In addition, the Company has a large number of properties that are exposed to earthquake, flood, and windstorm occurrences for which the related insurances carry high deductibles and have limits.

NOTE 13. Equity

Dividends

On February 9, 2021, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.30 per share. The common stock cash dividend will be paid on March 5, 2021 to stockholders of record as of the close of business on February 22, 2021.

During the years ended December 31, 2020, 2019, and 2018, the Company declared and paid common stock cash dividends of $1.48 per share.

At-The-Market Equity Offering Program

In June 2015, the Company established an at-the-market equity offering program (“ATM Program”) to sell shares of its common stock from time to time through a consortium of banks acting as sales agents or directly to the banks acting as principals. In February 2020, the Company terminated its previous ATM Program (the “2019 ATM Program”) and established a new ATM Program (the “2020 ATM Program”) pursuant to which shares of common stock having an aggregate gross sales price of up to approximately $1.25 billion may be sold (i) by the Company through a consortium of banks acting as sales agents or directly to the banks acting as principals or (ii) by a consortium of banks acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement. The use of a forward sale agreement allows the Company to lock in a share price on the sale of shares at the time the forward sales agreement is effective, but defer receiving the proceeds from the sale of shares until a later date.

ATM forward sale agreements generally have a one year term. At any time during the term, the Company may settle a forward sale by delivery of physical shares of common stock to the forward seller or, at the Company’s election, in cash or net shares. The forward sale price the Company expects to receive upon settlement of outstanding forward contracts will be the initial forward price established upon the effective date, subject to adjustments for: (i) accrued interest, (ii) the forward purchasers’ stock borrowing costs, and (iii) certain fixed price reductions during the term of the forward sale agreement.

ATM Forward Contracts

During the year ended December 31, 2020, the Company did not utilize the forward provisions under the 2020 ATM Program. During the year ended December 31, 2020, the Company utilized the forward provisions under the 2019 ATM Program to allow for the sale of up to an aggregate of 2.0 million shares of its common stock at an initial weighted average net price of $35.23 per share, after commissions. During the year ended December 31, 2019, the Company utilized the forward provisions under the 2019 ATM Program to allow for the sale of up to an aggregate of 20.3 million shares of its common stock at an initial weighted average net price of $31.44 per share, after commissions.

During the three months ended March 31, 2020, the Company settled all 16.8 million shares previously outstanding under ATM forward contracts at a weighted average net price of $31.38 per share, after commissions, resulting in net proceeds of $528 million. No shares were settled subsequent to March 31, 2020 and therefore, at December 31, 2020, no shares remained outstanding under ATM forward contracts. During the year ended December 31, 2019, the Company settled 5.5 million shares at a weighted average net price of $30.91 per share, after commissions, resulting in net proceeds of $171 million.

At December 31, 2020, approximately $1.25 billion of the Company’s common stock remained available for sale under the 2020 ATM Program.

ATM Direct Issuances

During the year ended December 31, 2020, no shares of common stock were issued under the 2019 ATM Program or 2020 ATM Program. During the year ended December 31, 2019, the Company issued 5.9 million shares of common stock under the 2019 ATM Program at a weighted average net price of $31.84 per share, after commissions, resulting in net proceeds of $189 million. During the year ended December 31, 2018, the Company issued 5.4 million shares of common stock under a previous ATM Program at a weighted average net price of $28.27 per share, after commissions, resulting in net proceeds of $154 million.

Forward Equity Offerings

November 2019 Offering. In November 2019, the Company entered into a forward equity sales agreement (the “2019 forward equity sales agreement”) to sell an aggregate of 15.6 million shares of its common stock (including shares sold through the exercise of underwriters’ options) at an initial net price of $34.46 per share, after underwriting discounts and commissions, which was subject to adjustments for: (i) accrued interest, (ii) the forward purchasers’ stock borrowing costs, and (iii) certain fixed price reductions during the term of the agreement. During the year ended December 31, 2019, no shares were settled under the 2019 forward equity sales agreement. During the three months ended March 31, 2020, the Company settled all 15.6 million shares under the 2019 forward equity sales agreement at a weighted average net price of $34.18 per share, resulting in net proceeds of $534 million (total net proceeds of $1.06 billion, when aggregated with the net proceeds from settling ATM forward contracts, as discussed above). Therefore, at December 31, 2020, no shares remained outstanding under the 2019 forward equity sales agreement.

December 2018 Offering. In December 2018, the Company entered into a forward equity sales agreement (the “2018 forward equity sales agreement”) to sell an aggregate of 15.3 million shares of its common stock (including shares sold through the exercise of underwriters’ options) at an initial net price of $28.60 per share, after underwriting discounts and commissions. The 2018 forward equity sales agreement had a one year term that expired on December 13, 2019 during which time the Company could settle the forward sales agreement by delivery of physical shares of common stock to the forward seller or, at the Company’s election, settle in cash or net shares. During the year ended December 31, 2019, the Company settled all 15.3 million shares under the 2018 forward equity sales agreement at a weighted average net price of $27.66 per share resulting in net proceeds of $422 million. Therefore, at December 31, 2019, no shares remained outstanding under the 2018 forward equity sales agreement.

During the year ended December 31, 2018, contemporaneous with the forward equity offering discussed above, the Company completed an offering of 2.0 million shares of common stock at a net price of $28.60 per share, resulting in net proceeds of $57 million.

The following table summarizes the Company’s other common stock activities (in thousands):


	Year Ended December 31,
	2020	2019	2018
Dividend Reinvestment and Stock Purchase Plan	181	336	237
Conversion of DownREIT units	120	213	3
Exercise of stock options	54	152	120
Vesting of restricted stock units	668	468	401
Repurchase of common stock	298	162	141

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the Company’s accumulated other comprehensive Income (loss) (in thousands):


	December 31,
	2020		2019
Cumulative foreign currency translation adjustment(1)	$	—	$	(1,023)
Unrealized gains (losses) on derivatives, net	(81)		1,314
Supplemental Executive Retirement Plan minimum liability and other	(3,604)		(3,148)

Total accumulated other comprehensive income (loss)	$	(3,685)	$	(2,857)

_______________________________________

(1)See Notes 5, 9, and 22 for a discussion of the U.K. JV transactions.

Noncontrolling Interests

The non-managing member units of the Company’s DownREITs are exchangeable for an amount of cash approximating the then-current market value of shares of the Company’s common stock or, at the Company’s option, shares of the Company’s common stock (subject to certain adjustments, such as stock splits and reclassifications). Upon exchange of DownREIT units for the Company’s common stock, the carrying amount of the DownREIT units is reclassified to stockholders’ equity. At December 31, 2020, there were five million DownREIT units (seven million shares of Healthpeak common stock are issuable upon conversion) outstanding in seven DownREIT LLCs, all of which the Company is the managing member of. At December 31, 2020, the carrying and market values of the five million DownREIT units were $199 million and $221 million, respectively.

See Notes 3, 4, and 5 for transactions involving noncontrolling interests.

NOTE 14. Earnings Per Common Share

Basic income (loss) per common share (“EPS”) is computed based on the weighted average number of common shares outstanding. Diluted income (loss) per common share is computed based on the weighted average number of common shares outstanding plus the impact of forward equity sales agreements using the treasury stock method and common shares issuable from the assumed conversion of DownREIT units, stock options, certain performance restricted stock units, and unvested restricted stock units. Only those instruments having a dilutive impact on the Company’s basic income (loss) per share are included in diluted income (loss) per share during the periods presented.

Restricted stock and certain performance restricted stock units are considered participating securities, because dividend payments are not forfeited even if the underlying award does not vest, and require use of the two-class method when computing basic and diluted earnings per share.

Refer to Note 13 for a discussion of the sale of shares under and settlement of forward sales agreements during the periods presented. The Company considered the potential dilution resulting from the forward agreements to the calculation of earnings per share. At inception, the agreements do not have an effect on the computation of basic EPS as no shares are delivered until settlement. However, the Company uses the treasury stock method to calculate the dilution, if any, resulting from the forward sales agreements during the period of time prior to settlement. The aggregate effect on the Company’s diluted weighted-average common shares for the year ended December 31, 2020 and 2019 was 0.2 million and 2.8 million weighted-average incremental shares, respectively, from the forward equity sales agreements.

The following table illustrates the computation of basic and diluted earnings per share (in thousands, except per share amounts):


	Year Ended December 31,
	2020		2019		2018
Numerator
Income from continuing operations	$	160,507	$	175,469	$	837,218
Noncontrolling interests' share in continuing operations	(14,394)		(14,558)		(12,294)
Income (loss) from continuing operations attributable to Healthpeak Properties, Inc.	146,113		160,911		824,924
Less: Participating securities' share in continuing operations	(2,416)		(1,543)		(2,669)
Income (loss) from continuing operations applicable to common shares	143,697		159,368		822,255
Income (loss) from discontinued operations	267,746		(115,408)		236,256
Noncontrolling interests' share in discontinued operations	(296)		27		(87)
Net income (loss) applicable to common shares	$	411,147	$	43,987	$	1,058,424
Numerator - Dilutive
Net income (loss) applicable to common shares	$	411,147	$	43,987	$	1,058,424
Add: distributions on dilutive convertible units and other	—		—		6,919
Dilutive net income (loss) available to common shares	$	411,147	$	43,987	$	1,065,343
Denominator
Basic weighted average shares outstanding	530,555		486,255		470,551
Dilutive potential common shares - equity awards(1)	300		309		168
Dilutive potential common shares - forward equity agreements(2)	201		2,771		—
Dilutive potential common shares - DownREIT conversions	—		—		4,668
Diluted weighted average common shares	531,056		489,335		475,387
Earnings (loss) per common share
Continuing operations	$	0.27	$	0.33	$	1.75
Discontinued operations	0.50		(0.24)		0.50
Net income (loss) applicable to common shares	$	0.77	$	0.09	$	2.25
Diluted earnings per common share:
Continuing operations	$	0.27	$	0.33	$	1.74
Discontinued operations	0.50		(0.24)		0.50
Net income (loss) applicable to common shares	$	0.77	$	0.09	$	2.24

(1)For all periods presented, represents the dilutive impact of 1 million outstanding equity awards (restricted stock units and stock options).

(2)For the year ended December 31, 2020, represents the dilutive impact of 32 million shares that were settled during the year then ended. For the year ended December 31, 2019, represents the dilutive impact of 21 million shares that were settled during the year then ended and 30 million shares of common stock under forward sales agreements that had not been settled as of December 31, 2019.

For the years ended December 31, 2020, 2019, and 2018, 7 million, 7 million, and 2 million shares, respectively, issuable upon conversion of DownREIT units were not included because they are anti-dilutive.

NOTE 15. Compensation Plans

Stock Based Compensation

On May 11, 2006, the Company’s stockholders approved the 2006 Performance Incentive Plan, which was amended and restated in 2009 (“the 2006 Plan”). On May 1, 2014, the Company’s stockholders approved the 2014 Performance Incentive Plan (“the 2014 Plan”) (collectively, the “Plans”). Following the adoption of the 2014 Plan, no new awards will be issued under the 2006 Plan. The Plans provide for the granting of stock-based compensation, including stock options, restricted stock, and restricted stock units to officers, employees, and directors in connection with their employment with or services provided to the Company. The maximum number of shares reserved for awards under the 2014 Plan is 33 million shares, and, as of December 31, 2020, 27 million of the reserved shares under the 2014 Plan are available for future awards, of which 18 million shares may be issued as restricted stock or restricted stock units.

Total share-based compensation expense recognized during the years ended December 31, 2020, 2019, and 2018 was $21 million, $18 million, and $15 million, respectively. The year ended December 31, 2019 includes a $1 million charge recognized in general and administrative expenses primarily resulting from accelerated vesting of restricted stock units related to the departure of the Company's former Executive Vice President – Senior Housing. The year ended December 31, 2018 includes a $2 million charge recognized in general and administrative expenses primarily resulting from accelerated vesting of restricted stock units related to the departure of the Company's Executive Chairman. As of December 31, 2020, there was $29 million of future expense related to unvested share-based compensation arrangements granted under the Company’s incentive plans, which is expected to be recognized over a weighted average period of two years associated with future employee service.

Stock Options

There have been no grants of stock options since 2014. Stock options outstanding and exercisable were 0.5 million at December 31, 2020 and 0.6 million at December 31, 2019. Proceeds received from stock options exercised under the Plans for the years ended December 31, 2020, 2019, and 2018 were $2 million, $5 million, and $2 million, respectively. Compensation expense related to stock options was immaterial for all periods presented.

Restricted Stock Awards

Under the Plans, restricted stock awards, including restricted stock units and performance stock units are granted subject to certain restrictions. Conditions of vesting are determined at the time of grant. Restrictions on certain awards generally lapse, as provided in the Plans or in the applicable award agreement, upon retirement, a change in control or other specified events. The fair market value of restricted stock awards, both time vesting and those subject to specific performance criteria, are expensed over the period of vesting. Restricted stock units, which vest based solely upon passage of time generally vest over a period of three to six years. The fair value of restricted stock units is determined based on the closing market price of the Company's shares on the grant date. Performance stock units, which are restricted stock awards that vest dependent upon attainment of various levels of performance that equal or exceed threshold levels, generally vest in their entirety at the end of a three year performance period. The number of shares that ultimately vest can vary from 0% to 200% of target depending on the level of achievement of the performance criteria. The fair value of performance stock units is determined based on the Monte Carlo valuation model. The compensation expense recognized for all restricted stock awards is net of actual forfeitures.

Upon vesting of restricted stock awards, the participant is required to pay the related tax withholding obligation. Participants can generally elect to have the Company reduce the number of common stock shares delivered to pay the employee tax withholding obligation. The value of the shares withheld is dependent on the closing market price of the Company’s common stock on the trading date prior to the relevant transaction occurring. During the years ended December 31, 2020, 2019, and 2018, the Company withheld 298,000, 162,000, and 141,000 shares, respectively, to offset tax withholding obligations with respect to the vesting of the restricted stock and performance restricted stock unit awards.

Holders of restricted stock awards, including restricted stock units and performance stock units, are generally entitled to receive dividends equal to the amount that would be paid on an equivalent number of shares of common stock.

The following table summarizes restricted stock award activity, including performance stock units, for the year ended December 31, 2020 (units in thousands):


	Restricted Stock Units	Weighted Average Grant Date Fair Value
Unvested at January 1, 2020	1,700	$	28.56
Granted	693	39.79
Vested	(668)	31.30
Forfeited	(42)	31.55
Unvested at December 31, 2020	1,683	32.02

At December 31, 2020, the weighted average remaining vesting period of restricted stock and performance based units was two years. The total fair value (at vesting) of restricted stock and performance based units which vested for the years ended December 31, 2020, 2019, and 2018 was $20 million, $14 million, and $10 million, respectively.

NOTE 16. Segment Disclosures

The Company evaluates its business and allocates resources based on its reportable business segments: (i) life science, (ii) medical office, and (iii) CCRC. The Company has non-reportable segments that are comprised primarily of the Company’s interests in an unconsolidated senior housing joint venture and debt investments. The accounting policies of the segments are the same as those described under Summary of Significant Accounting Policies (see Note 2).

During the first quarter of 2020, primarily as a result of: (i) acquiring 100% ownership interest in 13 of 15 CCRCs previously held by a CCRC joint venture (see discussion of the 2019 MTCA with Brookdale in Note 3) and (ii) deconsolidating 19 SHOP assets into a new joint venture in December 2019, the Company's CODMs began reviewing operating results of CCRCs on a stand-alone basis and financial information for each respective segment inclusive of the Company’s share of unconsolidated joint ventures and exclusive of noncontrolling interests’ share on consolidated joint ventures. Therefore, during the first quarter of 2020, the Company began reporting CCRCs as a separate segment and began reporting segment measures inclusive of the Company’s share of unconsolidated joint ventures and exclusive of noncontrolling interests’ share of consolidated joint ventures. All prior period segment information has been recast to conform to the current period presentation.

In December 2020, as a result of a change in how operating results are reported to the Company's CODMs, the Company’s hospitals were reclassified from other non-reportable segments to the medical office segment and the Company’s one remaining unconsolidated investment in a senior housing joint venture was reclassified from the SHOP segment to other non-reportable segments.

The Company evaluates performance based on property Adjusted NOI. NOI is defined as real estate revenues (inclusive of rental and related revenues, resident fees and services, income from direct financing leases, and government grant income and exclusive of interest income), less property level operating expenses (which exclude transition costs); NOI excludes all other financial statement amounts included in net income (loss). Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL non-cash interest, amortization of market lease intangibles, termination fees, actuarial reserves for insurance claims that have been incurred but not reported, and the impact of deferred community fee income and expense.

NOI and Adjusted NOI include the Company’s share of income (loss) from unconsolidated joint ventures and exclude noncontrolling interests’ share of income (loss) from consolidated joint ventures. Management believes Adjusted NOI is an important supplemental measure because it provides relevant and useful information by reflecting only income and operating expense items that are incurred at the property level and presenting it on an unlevered basis. Additionally, management believes that net income (loss) is the most directly comparable GAAP measure to NOI and Adjusted NOI. NOI and Adjusted NOI should not be viewed as alternative measures of operating performance to net income (loss) as defined by GAAP since they do not reflect various excluded items.

Non-segment assets consist of assets in the Company's other non-reportable segments and corporate non-segment assets. Corporate non-segment assets consist primarily of corporate assets, including cash and cash equivalents, restricted cash, accounts receivable, net, loans receivable, marketable equity securities, other assets, real estate assets held for sale and discontinued operations, and liabilities related to assets held for sale.

The following tables summarize information for the reportable segments (in thousands):

For the year ended December 31, 2020:


	Life Science		Medical Office		CCRC		Other Non-reportable		Corporate Non-segment		Total
Total revenues	$	569,296	$	622,398	$	436,494	$	16,687	$	—	$	1,644,875
Government grant income(1)	—		—		16,198		—		—		16,198
Less: Interest income	—		—		—		(16,553)		—		(16,553)
Healthpeak's share of unconsolidated joint venture total revenues	448		2,772		35,392		74,023		—		112,635
Healthpeak's share of unconsolidated joint venture government grant income	—		—		920		359		—		1,279
Noncontrolling interests' share of consolidated joint venture total revenues	(239)		(34,597)		—		—		—		(34,836)

Operating expenses	(138,005)		(204,008)		(440,528)		—		—		(782,541)
Healthpeak's share of unconsolidated joint venture operating expenses	(137)		(1,129)		(32,125)		(53,779)		—		(87,170)
Noncontrolling interests' share of consolidated joint venture operating expenses	72		10,282		—		—		—		10,354

Adjustments to NOI(2)	(20,133)		(5,544)		97,072		433		—		71,828
Adjusted NOI	411,302		390,174		113,423		21,170		—		936,069
Plus: Adjustments to NOI(2)	20,133		5,544		(97,072)		(433)		—		(71,828)
Interest income	—		—		—		16,553		—		16,553
Interest expense	(234)		(400)		(7,227)		—		(210,475)		(218,336)
Depreciation and amortization	(217,921)		(222,165)		(113,851)		(12)		—		(553,949)
General and administrative	—		—		—		—		(93,237)		(93,237)
Transaction costs	(236)		—		(17,994)		(112)		—		(18,342)
Impairments and loan loss reserves (recoveries), net	(14,671)		(10,208)		—		(18,030)		—		(42,909)
Gain (loss) on sales of real estate, net	—		90,390		—		(40)		—		90,350
Loss on debt extinguishments	—		—		—		—		(42,912)		(42,912)
Other income (expense), net	—		—		187,844		41,707		5,133		234,684
Less: Government grant income	—		—		(16,198)		—		—		(16,198)
Less: Healthpeak's share of unconsolidated joint venture NOI	(311)		(1,643)		(4,187)		(20,603)		—		(26,744)
Plus: Noncontrolling interests' share of consolidated joint venture NOI	167		24,315		—		—		—		24,482
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	198,229		276,007		44,738		40,200		(341,491)		217,683
Income tax benefit (expense)(3)	—		—		—		—		9,423		9,423
Equity income (loss) from unconsolidated joint ventures	(40)		798		(1,547)		(65,810)		—		(66,599)

Income (loss) from continuing operations	198,189		276,805		43,191		(25,610)		(332,068)		160,507
Income (loss) from discontinued operations	—		—		—		—		267,746		267,746
Net income (loss)	$	198,189	$	276,805	$	43,191	$	(25,610)	$	(64,322)	$	428,253

_______________________________________

(1)Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the consolidated statements of operations.

(2)Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, and termination fees. Includes the Company’s share of income (loss) generated by unconsolidated joint ventures and excludes noncontrolling interests’ share of income (loss) generated by consolidated joint ventures.

(3)Income tax benefit (expense) for the year ended December 31, 2020 includes: (i) a $51 million tax benefit recognized in conjunction with internal restructuring activities, which resulted in the transfer of assets subject to certain deferred tax liabilities from taxable REIT subsidiaries to the REIT in connection with the 2019 MTCA (see Note 3), (ii) a $33 million income tax expense related to the valuation allowance on deferred tax assets that are no longer expected to be realized (see Note 17), and (iii) a $3.7 million net tax benefit recognized due to changes under the CARES Act, which resulted in net operating losses being utilized at a higher income tax rate than previously available.

For the year ended December 31, 2019:


	Life Science		Medical Office		CCRC		Other Non-reportable		Corporate Non-segment		Total
Total revenues	$	440,784	$	621,171	$	3,010	$	175,374	$	—	$	1,240,339
Less: Interest income	—		—		—		(9,844)		—		(9,844)
Healthpeak's share of unconsolidated joint venture total revenues	—		2,810		211,377		23,834		—		238,021
Noncontrolling interests' share of consolidated joint venture total revenues	(187)		(33,998)		—		2,355		—		(31,830)
Operating expenses	(107,472)		(201,620)		(2,215)		(93,937)		—		(405,244)
Healthpeak's share of unconsolidated joint venture operating expenses	—		(1,107)		(170,473)		(1,996)		—		(173,576)
Noncontrolling interests' share of consolidated joint venture operating expenses	59		10,109		—		(1,536)		—		8,632

Adjustments to NOI(1)	(22,103)		(4,602)		16,985		(5,449)		—		(15,169)
Adjusted NOI	311,081		392,763		58,684		88,801		—		851,329
Plus: Adjustments to NOI(1)	22,103		4,602		(16,985)		5,449		—		15,169
Interest income	—		—		—		9,844		—		9,844
Interest expense	(277)		(434)		—		—		(216,901)		(217,612)
Depreciation and amortization	(168,339)		(221,175)		—		(45,677)		—		(435,191)
General and administrative	—		—		—		—		(92,966)		(92,966)
Transaction costs	—		—		—		—		(1,963)		(1,963)
Impairments and loan loss reserves (recoveries), net	—		(17,332)		—		(376)		—		(17,708)
Gain (loss) on sales of real estate, net	3,651		3,139		—		(6,830)		—		(40)
Loss on debt extinguishments	—		—		—		—		(58,364)		(58,364)
Other income (expense), net	—		—		(5,665)		161,886		8,848		165,069
Less: Healthpeak's share of unconsolidated joint venture NOI	—		(1,703)		(40,904)		(21,838)		—		(64,445)
Plus: Noncontrolling interests' share of consolidated joint venture NOI	128		23,889		—		(819)		—		23,198
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	168,347		183,749		(4,870)		190,440		(361,346)		176,320
Income tax benefit (expense)	—		—		—		—		5,479		5,479
Equity income (loss) from unconsolidated joint ventures	—		858		(16,313)		9,125		—		(6,330)

Income (loss) from continuing operations	168,347		184,607		(21,183)		199,565		(355,867)		175,469
Income (loss) from discontinued operations	—		—		—		—		(115,408)		(115,408)
Net income (loss)	$	168,347	$	184,607	$	(21,183)	$	199,565	$	(471,275)	$	60,061

_______________________________________

(1)Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, and termination fees. Includes the Company’s share of income (loss) generated by unconsolidated joint ventures and excludes noncontrolling interests’ share of income (loss) generated by consolidated joint ventures.

For the year ended December 31, 2018:


	Life Science		Medical Office		CCRC		Other Non-reportable		Corporate Non-segment		Total
Total revenues	$	395,064	$	596,399	$	—	$	199,857	$	—	$	1,191,320
Less: Interest income	—		—		—		(10,406)		—		(10,406)
Healthpeak's share of unconsolidated joint venture total revenues	4,328		2,695		206,221		11,812		—		225,056
Noncontrolling interests' share of consolidated joint venture total revenues	(117)		(18,042)		—		3,927		—		(14,232)
Operating expenses	(91,742)		(195,362)		—		(91,553)		—		(378,657)
Healthpeak's share of unconsolidated joint venture operating expenses	(1,131)		(1,053)		(166,414)		(77)		—		(168,675)
Noncontrolling interests' share of consolidated joint venture operating expenses	44		4,591		—		(3,020)		—		1,615

Adjustments to NOI(1)	(9,718)		(5,953)		15,504		(5,458)		—		(5,625)
Adjusted NOI	296,728		383,275		55,311		105,082		—		840,396
Plus: Adjustments to NOI(1)	9,718		5,953		(15,504)		5,458		—		5,625
Interest income	—		—		—		10,406		—		10,406
Interest expense	(316)		(474)		—		—		(260,490)		(261,280)
Depreciation and amortization	(140,480)		(206,731)		—		(57,464)		(6)		(404,681)
General and administrative	—		—		—		—		(96,702)		(96,702)
Transaction costs	—		—		—		—		(1,137)		(1,137)
Impairments and loan loss reserves (recoveries), net	(7,639)		(553)		—		(2,725)		—		(10,917)
Gain (loss) on sales of real estate, net	806,184		4,428		—		20,756		—		831,368
Loss on debt extinguishments	—		—		—		—		(44,162)		(44,162)
Other income (expense), net	—		—		—		9,604		3,821		13,425
Less: Healthpeak's share of unconsolidated joint venture NOI	(3,197)		(1,642)		(39,807)		(11,735)		—		(56,381)
Plus: Noncontrolling interests' share of consolidated joint venture NOI	73		13,451		—		(907)		—		12,617
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	961,071		197,707		—		78,475		(398,676)		838,577
Income tax benefit (expense)	—		—		—		—		4,396		4,396
Equity income (loss) from unconsolidated joint ventures	575		824		(10,847)		3,693		—		(5,755)

Income (loss) from continuing operations	961,646		198,531		(10,847)		82,168		(394,280)		837,218
Income (loss) from discontinued operations	—		—		—		—		236,256		236,256
Net income (loss)	$	961,646	$	198,531	$	(10,847)	$	82,168	$	(158,024)	$	1,073,474

_______________________________________

The following table summarizes the Company’s revenues by segment (in thousands):


	Year Ended
	December 31,
Segments	2020		2019		2018
Life science	$	569,296	$	440,784	$	395,064
Medical office	622,398		621,171		596,399
CCRC	436,494		3,010		—
Other Non-reportable	16,687		175,374		199,857
Total revenues	$	1,644,875	$	1,240,339	$	1,191,320

The following table summarizes the Company’s total assets by segment (in thousands):


	December 31,
Segment	2020		2019
Life science	$	7,205,949	$	5,688,659
Medical office	5,197,777		5,061,351
CCRC	2,179,294		652,114
Reportable segment assets	14,583,020		11,402,124
Accumulated depreciation and amortization	(2,658,890)		(2,316,724)
Net reportable segment assets	11,924,130		9,085,400
Other non-reportable segment assets	584,432		653,746
Assets held for sale and discontinued operations, net	2,626,306		3,648,265
Other non-segment assets	785,221		645,480
Total assets	$	15,920,089	$	14,032,891

See Notes 3, 4, 5, 6, 7 and 8 for significant transactions impacting the Company's segment assets during the periods presented.

The Company completed the required annual goodwill impairment test during the fourth quarter of 2020, 2019, and 2018, and no impairment was recognized.

At December 31, 2019, goodwill of $17 million was allocated as follows: (i) medical office—$13 million and (ii) other—$4 million.

During the year ended December 31, 2020, as a result of reporting CCRCs as a separate segment, the Company reallocated $2 million of goodwill from other non-reportable segments to the CCRC segment. Additionally, during the year ended December 31, 2020, as a result of reporting hospitals in the medical office segment and reporting a senior housing joint venture in other non-reportable segments, the Company reallocated $1 million of goodwill from other non-reportable segments to the medical office segment and $1 million of goodwill from senior housing properties to other non-reportable segments.

At December 31, 2020, goodwill of $18 million was allocated to the Company’s segment assets as follows: (i) medical office—$14 million, (ii) CCRC—$2 million, and (iii) other—$2 million.

NOTE 17. Income Taxes

The Company has elected to be taxed as a REIT under the applicable provisions of the Code for every year beginning with the year ended December 31, 1985. The Company has also elected for certain of its subsidiaries to be treated as TRSs (the “TRS entities”) which are subject to federal and state income taxes. All entities other than the TRS entities are collectively referred to as the “REIT” within this Note 17. Certain REIT entities are also subject to state, local and foreign income taxes.

Distributions with respect to the Company’s common stock can be characterized for federal income tax purposes as ordinary dividends, capital gains, nondividend distributions or a combination thereof. The following table shows the characterization of the Company’s annual common stock distributions per share:


	Year Ended December 31,
	2020		2019		2018
Ordinary dividends(1)	$	0.7139	$	0.7633	$	0.9578
Capital gains(2)	0.5298		0.2714		0.5222
Nondividend distributions	0.2363		0.4453		—
	$	1.4800	$	1.4800	$	1.4800

_______________________________________

(1)For the year ended December 31, 2020 all $0.7139 of ordinary dividends qualified as business income for purposes of Code Section 199A. For the year ended December 31, 2019 all $0.7633 of ordinary dividends qualified as business income for purposes of Code Section 199A. For the year ended December 31, 2018 the amount includes $0.9414 of qualified business income for purposes of Code Section 199A and $0.0164 of qualified dividend income for purposes of Code Section 1(h)(11).

(2)Pursuant to Treasury Regulation §1.1061-6(c), the Company is disclosing additional information related to the capital gain dividends for purposes of Section 1061 of the Internal Revenue Code (IRC). IRC Section 1061 is generally applicable to direct and indirect holders of “applicable partnership interests.” The “One Year Amounts” and “Three Year Amounts” required to be disclosed are both zero with respect to the 2020 distributions, since all capital gains relate to IRC Section 1231 gains.

The Company’s pretax income (loss) from continuing operations was $151 million, $170 million, and $833 million for the years ended December 31, 2020, 2019, and 2018, respectively, of which $80 million, $200 million, and $852 million was attributable to the REIT entities for the years then ended. The TRS entities subject to tax reported income (losses) before income taxes from continuing operations of $71 million, $(30) million, and $(8) million for the years ended December 31, 2020, 2019, and 2018, respectively. The REIT’s loss from continuing operations before income taxes from the U.K. prior to deconsolidation in June 2018 was $11 million for the year ended December 31, 2018.

The total income tax expense (benefit) from continuing operations consists of the following components (in thousands):


	Year Ended December 31,
	2020		2019		2018
Current
Federal	$	(9,164)	$	104	$	973
State	1,431		445		3,883
Foreign	—		—		84
Total current	$	(7,733)	$	549	$	4,940

Deferred
Federal	$	(2,849)	$	(5,920)	$	(2,681)
State	1,159		(108)		(1,776)
Foreign	—		—		(4,879)
Total deferred	$	(1,690)	$	(6,028)	$	(9,336)

Total income tax expense (benefit) from continuing operations	$	(9,423)	$	(5,479)	$	(4,396)

The Company’s income tax benefit from discontinued operations was $10 million, $12 million, and $13 million for the years ended December 31, 2020, 2019, and 2018, respectively (see Note 5).

The following table reconciles income tax expense (benefit) from continuing operations at statutory rates to actual income tax expense (benefit) recorded (in thousands):


	Year Ended December 31,
	2020		2019		2018
Tax expense (benefit) at U.S. federal statutory income tax rate on income or loss subject to tax	$	15,016	$	(6,169)	$	(7,027)
State income tax expense (benefit), net of federal tax	4,211		(1,830)		1,209
Gross receipts and margin taxes	980		1,108		1,173
Foreign rate differential	—		—		301
Effect of permanent differences	—		20		(55)
Return to provision adjustments	707		54		258

Valuation allowance for deferred tax assets	24,051		22		(255)
Tax rate differential ─ NOL carryback under the CARES Act	(3,732)		—		—
Change in tax status of TRS	(50,656)		1,316		—

Total income tax expense (benefit) from continuing operations	$	(9,423)	$	(5,479)	$	(4,396)

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table summarizes the significant components of the Company’s deferred tax assets and liabilities from continuing operations (in thousands):


	December 31,
	2020		2019		2018
Gross deferred tax assets:
Investment in unconsolidated joint ventures	$	2,333	$	40,466	$	31,034
Real estate	3,895		—		—
Net operating loss carryforward	68,444		33,771		20,559
Expense accruals	15,478		3,258		2,424
Deferred revenue	103,713		—		—
Total gross deferred tax assets	193,863		77,495		54,017
Valuation allowance	(33,519)		(4,878)		(295)
Gross deferred tax assets, net of valuation allowance	$	160,344	$	72,617	$	53,722
Gross deferred tax liabilities:
Real estate	$	72,059	$	—	$	—
Other	1,094		—		—
Gross deferred tax liabilities	$	73,153	$	—	$	—

Net deferred tax assets	$	87,191	$	72,617	$	53,722

Net deferred tax assets are included in other assets.

The Company records a valuation allowance against deferred tax assets in certain jurisdictions when it cannot sustain a conclusion that it is more likely than not that it can realize the deferred tax assets during the periods in which these temporary differences become deductible. The deferred tax asset valuation allowance is adequate to reduce the total deferred tax assets to an amount that the Company estimates will “more-likely-than-not” be realized.

In conjunction with the Company establishing a plan during the year ended December 31, 2020 to dispose of all of its SHOP assets and classifying such assets as discontinued operations (see Note 5), the Company concluded it was more likely than not that it would no longer realize the future value of certain deferred tax assets generated by the net operating losses of its TRS entities. Accordingly, the Company recognized a deferred tax asset valuation allowance and corresponding income tax expense of $33 million during the year ended December 31, 2020.

At December 31, 2020, the Company had a net operating loss (“NOL”) carryforward of $283 million related to the TRS entities. This amount can be used to offset future taxable income, if any. If unused, $22 million will begin to expire in 2035. The remainder, totaling $261 million, may be carried forward indefinitely.

The following table summarizes the Company’s unrecognized tax benefits (in thousands):


	December 31,
	2020		2019		2018
Total unrecognized tax benefits at January 1	$	469	$	—	$	—
Gross amount of increases for prior years' tax positions	—		469		—
Total unrecognized tax benefits at December 31	$	469	$	469	$	—

The Company had unrecognized tax benefits of $0.5 million at December 31, 2020 and 2019, that, if recognized, would reduce the annual effective tax rate. As of December 31, 2020, the Company accrued interest of $70 thousand related to the unrecognized tax benefits.

The Company files numerous U.S. federal, state and local income and franchise tax returns. With a few exceptions, the Company is no longer subject to U.S. federal, state, or local tax examinations by taxing authorities for years prior to 2017.

For the years ended December 31, 2020, 2019, and 2018 the tax basis of the Company’s net assets was less than the reported amounts by $1.5 billion, $1.2 billion, and $1.4 billion, respectively.

NOTE 18. Supplemental Cash Flow Information

The following table provides supplemental cash flow information (in thousands):


	Year Ended December 31,
	2020		2019		2018
Supplemental cash flow information:
Interest paid, net of capitalized interest	$	209,843	$	201,784	$	275,690
Income taxes paid (refunded)	(786)		1,426		4,480
Capitalized interest	27,041		30,459		21,056
Supplemental schedule of non-cash investing and financing activities:
Accrued construction costs	95,293		126,006		88,826


Retained equity method investment from U.K. JV transaction	—		—		104,922
Derecognition of U.K. Bridge Loan receivable	—		—		147,474
Consolidation of net assets related to U.K. Bridge Loan	—		—		106,457
Vesting of restricted stock units and conversion of non-managing member units into common stock	4,746		5,614		537
Net noncash impact from the consolidation of previously unconsolidated joint ventures	369,223		17,850		68,293


Mortgages assumed with real estate acquisitions	251,280		172,565		8,457
Refundable entrance fees assumed with real estate acquisitions	307,954		—		—
Conversion of DFLs to real estate	—		350,540		—
Retained investment in connection with SWF SH JV	—		427,328		—
Seller financing provided on disposition of real estate asset	73,498		44,812		—

See discussions related to: (i) the impact of the 2019 MTCA with Brookdale on the Company’s consolidated balance sheets and statements of operations in Note 3, (ii) the U.K. JV transaction in Notes 5 and 9, (iii) the U.K. Bridge Loan in Notes 8 and 19, (iv) the conversion of DFLs to real estate in Note 7, and (v) the consolidation of previously unconsolidated joint ventures in Note 4.

The following table summarizes certain cash flow information related to assets classified as discontinued operations (in thousands):


	Year Ended December 31,
	2020		2019		2018
Depreciation and amortization of real estate, in-place lease, and other intangibles	$	143,194	$	224,798	$	144,819
Development, redevelopment, and other major improvements of real estate	30,769		74,919		62,995
Leasing costs, tenant improvements, and recurring capital expenditures	12,695		22,617		1,705

The following table summarizes cash, cash equivalents, and restricted cash (in thousands):


	December 31,
	2020		2019
Cash and cash equivalents	$	44,226	$	80,398
Restricted cash	67,206		13,385
Cash, cash equivalents and restricted cash	$	111,432	$	93,783

NOTE 19. Variable Interest Entities

Unconsolidated Variable Interest Entities

At December 31, 2020, the Company had investments in: (i) two properties leased to a VIE tenant, (ii) four unconsolidated VIE joint ventures, (iii) marketable debt securities of one VIE, and (iv) one loan to a VIE borrower. The Company determined it is not the primary beneficiary of and therefore does not consolidate these VIEs because it does not have the ability to control the activities that most significantly impact their economic performance. Except for the Company’s equity interest in the unconsolidated joint ventures (CCRC OpCo, development investments, and the LLC investment discussed below), it has no formal involvement in these VIEs beyond its investments.

VIE Tenant. The Company leases two properties to one tenant that has been identified as a VIE (“VIE tenant”). The VIE tenant is a “thinly capitalized” entity that relies on the operating cash flows generated from the senior housing facilities to pay operating expenses, including the rent obligations under its leases.

CCRC OpCo. The Company holds a 49% ownership interest in CCRC OpCo, a joint venture entity formed in August 2014 that operates senior housing properties in a RIDEA structure and has been identified as a VIE. The equity members of CCRC OpCo “lack power” because they share certain operating rights with Brookdale, as manager of the CCRCs. The assets of CCRC OpCo primarily consist of the CCRCs that it owns and leases, resident fees receivable, notes receivable, and cash and cash equivalents; its obligations primarily consist of operating lease obligations to CCRC PropCo, debt service payments, capital expenditures, accounts payable, and expense accruals. Assets generated by the operations of CCRC OpCo (primarily rents from CCRC residents) of CCRC OpCo may only be used to settle its contractual obligations (primarily from debt service payments, capital expenditures, and rental costs and operating expenses incurred to manage such facilities). Refer to Note 3 for additional discussion related to transactions impacting CCRC OpCo.

LLC Investment. The Company holds a limited partner ownership interest in an unconsolidated LLC that has been identified as a VIE. The Company’s involvement in the entity is limited to its equity investment as a limited partner and it does not have any substantive participating rights or kick-out rights over the general partner. The assets and liabilities of the entity primarily consist of those associated with its senior housing real estate and development activities. Any assets generated by the entity may only be used to settle its contractual obligations (primarily development expenses and debt service payments).

Development Investments. The Company holds investments (consisting of mezzanine debt and/or preferred equity) in two senior housing development joint ventures. The joint ventures are also capitalized by senior loans from a third party and equity from the third party managing-member, but are considered to be “thinly capitalized” as there is insufficient equity investment at risk.

Debt Securities Investment. The Company holds commercial mortgage-backed securities (“CMBS”) issued by Federal Home Loan Mortgage Corporation (commonly referred to as Freddie MAC) through a special purpose entity that has been identified as a VIE because it is “thinly capitalized.” The CMBS issued by the VIE are backed by mortgage debt obligations on real estate assets.

Seller Financing Loan. The Company provided seller financing of $10 million related to its sale of seven senior housing triple-net facilities. The financing was provided in the form of a secured five-year mezzanine loan to a “thinly capitalized” borrower created to acquire the facilities.

The classification of the related assets and liabilities and the maximum loss exposure as a result of the Company’s involvement with these VIEs at December 31, 2020 was as follows (in thousands):


VIE Type	Asset/Liability Type	Maximum Loss Exposure and Carrying Amount(1)
Continuing operations:
Unconsolidated joint ventures	Loans receivable, net and Investments in unconsolidated joint ventures	$	22,113
Loan - Seller Financing	Loans receivable, net	2,288
CMBS and LLC investment	Marketable debt and LLC investment	35,453
Discontinued operations:
VIE tenant - operating leases(2)	Lease intangibles, net and straight-line rent receivables	$	186

_______________________________________

(1)The Company’s maximum loss exposure represents the aggregate carrying amount of such investments (including accrued interest).

(2)The Company’s maximum loss exposure may be mitigated by re-leasing the underlying properties to new tenants upon an event of default.

As of December 31, 2020, the Company had not provided, and is not required to provide, financial support through a liquidity arrangement or otherwise, to its unconsolidated VIEs, including under circumstances in which it could be exposed to further losses (e.g., cash shortfalls).

See Notes 3, 4, 5, 6, 7, 8, and 9 for additional descriptions of the nature, purpose, and operating activities of the Company’s unconsolidated VIEs and interests therein.

Consolidated Variable Interest Entities

The Company's consolidated total assets and total liabilities at December 31, 2020 and December 31, 2019 include certain assets of VIEs that can only be used to settle the liabilities of the related VIE. The VIE creditors do not have recourse to the Company. Total assets and total liabilities include VIE assets and liabilities as follows (in thousands):


	December 31,
	2020		2019
Assets
Buildings and improvements	$	2,988,599	$	2,498,524
Development costs and construction in progress	85,595		67,244
Land	433,574		410,903
Accumulated depreciation and amortization	(602,491)		(534,339)
Net real estate	2,905,277		2,442,332

Accounts receivable, net	12,009		9,508
Cash and cash equivalents	16,550		35,726
Restricted cash	7,977		9,895
Intangible assets, net	179,027		167,022
Assets held for sale and discontinued operations, net	704,966		880,362
Right-of-use asset, net	95,407		92,664
Other assets, net	59,063		48,119
Total assets	$	3,980,276	$	3,685,628
Liabilities
Mortgage debt	$	39,085	$	44,199

Intangible liabilities, net	56,467		39,545
Liabilities related to assets held for sale and discontinued operations, net	190,919		187,544
Lease liability	97,605		90,875
Accounts payable, accrued liabilities, and other liabilities	102,391		112,301
Deferred revenue	90,183		94,538
Total liabilities	$	576,650	$	569,002

Total assets and liabilities related to assets held for sale and discontinued operations include VIE assets and liabilities as follows (in thousands):


	December 31,
	2020		2019
Assets
Buildings and improvements	$	639,759	$	737,581
Development costs and construction in progress	68		41
Land	106,209		115,673
Accumulated depreciation and amortization	(57,235)		(34,235)
Net real estate	688,801		819,060
Accounts receivable, net	1,700		2,478
Cash and cash equivalents	6,306		11,301
Restricted cash	3,124		3,700
Intangible assets, net	—		39,817
Right-of-use asset, net	1,391		—
Other assets, net	3,644		4,006
Total assets	$	704,966	$	880,362
Liabilities
Mortgage debt	$	176,702	$	174,567

Lease liability	1,392		—
Accounts payable, accrued liabilities, and other liabilities	11,003		10,531
Deferred revenue	1,822		2,446
Total liabilities	$	190,919	$	187,544

Ventures V, LLC. The Company holds a 51% ownership interest in and is the managing member of a joint venture entity formed in October 2015 that owns and leases MOBs (“Ventures V”). The Company classifies Ventures V as a VIE due to the non-managing member lacking substantive participation rights in the management of Ventures V or kick-out rights over the managing member. The Company consolidates Ventures V as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of Ventures V primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of capital expenditures for the properties. Assets generated by Ventures V may only be used to settle its contractual obligations (primarily from capital expenditures).

Life Science JVs. The Company holds a 99% ownership interest in multiple joint venture entities that own and lease life science assets (the "Life Science JVs"). The Life Science JVs are VIEs as the members share in control of the entities, but substantially all of the activities are performed on behalf of the Company. The Company consolidates the Life Science JVs as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the Life Science JVs primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the Life Science JVs may only be used to settle their contractual obligations (primarily from capital expenditures).

MSREI MOB JV. The Company holds a 51% ownership interest in, and is the managing member of, a joint venture entity formed in August 2018 that owns and leases MOBs (the “MSREI JV”). The MSREI JV is a VIE due to the non-managing member lacking substantive participation rights in the management of the joint venture or kick-out rights over the managing member. The Company consolidates the MSREI JV as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of the MSREI JV primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of capital expenditures for the properties. Assets generated by the MSREI JV may only be used to settle its contractual obligations (primarily from capital expenditures).

Consolidated Lessees. The Company leases seven senior housing properties to lessee entities under cash flow leases through which the Company receives monthly rent equal to the residual cash flows of the properties. The lessee entities are classified as VIEs as they are "thinly capitalized" entities. The Company consolidates the lessee entities as it has the ability to control the activities that most significantly impact the economic performance of the lessee entities. The lessee entities’ assets primarily consist of leasehold interests in senior housing facilities (operating leases), resident fees receivable, and cash and cash equivalents; its obligations primarily consist of lease payments to the Company and operating expenses of the senior housing facilities (accounts payable and accrued expenses). Assets generated by the senior housing operations (primarily from senior housing resident rents) may only be used to settle contractual obligations (primarily from the rental costs, operating expenses incurred to manage such facility and debt costs).

DownREITs. The Company holds a controlling ownership interest in and is the managing member of seven DownREITs. The Company classifies the DownREITs as VIEs due to the non-managing members lacking substantive participation rights in the management of the DownREITs or kick-out rights over the managing member. The Company consolidates the DownREITs as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the DownREITs primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the DownREITs (primarily from resident rents) may only be used to settle their contractual obligations (primarily from debt service and capital expenditures).

Other Consolidated Real Estate Partnerships. The Company holds a controlling ownership interest in and is the general partner (or managing member) of multiple partnerships that own and lease real estate assets (the “Partnerships”). The Company classifies the Partnerships as VIEs due to the limited partners (non-managing members) lacking substantive participation rights in the management of the Partnerships or kick-out rights over the general partner (managing member). The Company consolidates the Partnerships as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the Partnerships primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the Partnerships (primarily from resident rents) may only be used to settle their contractual obligations (primarily from debt service and capital expenditures).

Exchange Accommodation Titleholder. During the year ended December 31, 2020, the Company acquired seven MOBs, one hospital, and three life science facilities (the "acquired properties") using reverse like-kind exchange structures pursuant to Section 1031 of the Code (a "reverse 1031 exchange"). As of December 31, 2020, the Company had not completed the reverse 1031 exchanges and as such, the acquired properties remained in the possession of Exchange Accommodation Titleholders ("EATs"). The EATs are classified as VIEs as they are “thinly capitalized” entities. The Company consolidates the EATs because it has the ability to control the activities that most significantly impact the economic performance of the EATs and is, therefore, the primary beneficiary of the EATs. The properties held by the EATs are reflected as real estate with a carrying value of $813 million as of December 31, 2020. The assets of the EATs primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of capital expenditures for the properties. Assets generated by the EATs may only be used to settle their contractual obligations (primarily from capital expenditures).

U.K. Bridge Loan. In 2016, the Company provided a £105 million ($131 million at closing) bridge loan to MMCG to fund the acquisition of a portfolio of seven care homes in the U.K. MMCG created a special purpose entity to acquire the portfolio and funded it entirely using the Company’s bridge loan. As such, the special purpose entity had historically been identified as a VIE because it was “thinly capitalized.” The Company retained a three-year call option to acquire all the shares of the special purpose entity, which it could only exercise upon the occurrence of certain events. During the quarter ended March 31, 2018, the Company concluded that the conditions required to exercise the call option had been met and initiated the call option process to acquire the special purpose entity. In conjunction with initiating the process to legally exercise its call option and the satisfaction of required contingencies, the Company concluded that it was the primary beneficiary of the special purpose entity and therefore, should consolidate the entity. As such, during the quarter ended March 31, 2018, the Company derecognized the previously outstanding loan receivable, recognized the special purpose entity’s assets and liabilities at their respective fair values, and recognized a £29 million ($41 million) loss on consolidation, net of a tax benefit of £2 million ($3 million), to account for the difference between the carrying value of the loan receivable and the fair value of net assets and liabilities assumed. The loss on consolidation was recognized within other income (expense), net and the tax benefit was recognized within income tax benefit (expense). The fair value of net assets and liabilities consolidated during the first quarter of 2018 consisted of £81 million ($114 million) of net real estate, £4 million ($5 million) of intangible assets, and £9 million ($13 million) of net deferred tax liabilities.

In June 2018, the Company completed the exercise of the above-mentioned call option and formally acquired full ownership of the special purpose entity. As such, the Company reconsidered whether the special purpose entity was a VIE and concluded that it was no longer “thinly capitalized” as the previously outstanding bridge loan converted to equity at risk and, therefore, was no longer a VIE. The real estate assets held by the special purpose entity were contributed to the U.K. JV formed by the Company in June 2018 (see Note 5). In December 2019, the Company sold its remaining interest in the U.K. JV (see Note 9).

NOTE 20. Concentration of Credit Risk

Concentrations of credit risk arise when one or more tenants, operators, or obligors related to the Company’s investments are engaged in similar business activities or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions. The Company regularly monitors various segments of its portfolio to assess potential concentrations of credit risks.

The following table provides information regarding the Company’s concentrations with respect to certain states; the information provided is presented for the gross assets and revenues that are associated with certain real estate assets as percentages of total Company’s total assets and revenues, excluding assets classified as discontinued operations:


	Percentage of Total Company Assets		Percentage of Total Company Revenues
	December 31,		Year Ended December 31,
State	2020	2019	2020	2019	2018
California	30	31	21	22	22
Florida	10	2	14	2	2

The following table provides information regarding the Company’s concentrations with respect to certain states from assets classified as discontinued operations:


	Percentage of Total Company Assets		Percentage of Total Company Revenues
	December 31,		Year Ended December 31,
State	2020	2019	2020	2019	2018
California	4	6	6	6	4
Florida	4	6	6	7	7

NOTE 21. Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets are immaterial at December 31, 2020.

The table below summarizes the carrying amounts and fair values of the Company’s financial instruments (in thousands):


	December 31,
	2020(3)				2019(3)
	Carrying Value		Fair Value		Carrying Value		Fair Value
Loans receivable, net(2)	$	195,375	$	201,228	$	190,579	$	190,579
Marketable debt securities(2)	20,355		20,355		19,756		19,756


Bank line of credit and commercial paper(2)	129,590		129,590		93,000		93,000
Term loan(2)	249,182		249,182		248,942		248,942
Senior unsecured notes(1)	5,697,586		6,517,650		5,647,993		6,076,150
Mortgage debt(2)(4)	221,621		221,181		12,317		12,201


Interest-rate swap liabilities(2)	81		81		553		553

_______________________________________

(1)Level 1: Fair value calculated based on quoted prices in active markets.

(2)Level 2: Fair value based on (i) for marketable debt securities, quoted prices for similar or identical instruments in active or inactive markets, respectively, or (ii) for loans receivable, net, mortgage debt, and swaps, standardized pricing models in which significant inputs or value drivers are observable in active markets. For bank line of credit, commercial paper, and term loans, the carrying values are a reasonable estimate of fair value because the borrowings are primarily based on market interest rates and the Company’s credit rating.

(3)During the years ended December 31, 2020 and 2019, there were no material transfers of financial assets or liabilities within the fair value hierarchy.

(4)For the years ended December 31, 2020 and 2019, excludes mortgage debt on assets held for sale and discontinued operations of $319 million and $297 million, respectively.

NOTE 22. Derivative Financial Instruments

The following table summarizes the Company’s outstanding swap contracts as of December 31, 2020 (dollars in thousands):


Date Entered	Maturity Date	Hedge Designation	Notional		Pay Rate	Receive Rate	Fair Value(1)
Interest rate:
August 2020(2)	August 2025	Cash Flow	$	35,627	0.33%	USD-SIFMA Municipal Swap Index	$	(81)

(1)Derivative liabilities are recorded in liabilities related to assets held for sale and discontinued operations, net on the consolidated balance sheets.

(2)Represents two interest-rate swap contracts, which hedge fluctuations in interest payments on variable-rate secured debt due to overall changes in hedged cash flows.

The Company uses derivative instruments to mitigate the effects of interest rate fluctuations on specific forecasted transactions as well as recognized financial obligations or assets. Utilizing derivative instruments allows the Company to manage the risk of fluctuations in interest rates related to the potential impact these changes could have on future earnings and forecasted cash flows. The Company does not use derivative instruments for speculative or trading purposes. Assuming a one percentage point shift in the underlying interest rate curve, the estimated change in fair value of each of the underlying derivative instruments would not exceed $1 million.

In conjunction with the sale of the Aegis NNN Portfolio (see Note 5) in December 2020, the Company paid off $6 million of variable rate secured debt and terminated the related interest-rate swap contract.

On June 29, 2018, concurrent with closing the U.K. JV transaction, the Company terminated a cross currency swap contract, which was designated as a hedge of the Company’s net investment in the U.K. As such, upon deconsolidation of the U.K. Portfolio, the Company reclassified the $6 million loss in other comprehensive income related to the cross currency swap through gain (loss) on sales of real estate, net.

Concurrent with the sale of its remaining interest in the U.K. JV in December 2019 (see Note 9), the Company paid-off the remainder of its GBP-denominated borrowings under the Revolving Facility and terminated its previously-designated net investment hedge.

NOTE 23. Accounts Payable, Accrued Liabilities, and Other Liabilities

The following table summarizes the Company’s accounts payable, accrued liabilities, and other liabilities, excluding accounts payable, accrued liabilities, and other liabilities related to assets classified as discontinued operations (in thousands):


	December 31,
	2020		2019
Accrued interest	$	78,735	$	69,960
Construction related accrued liabilities	95,293		117,048
Refundable entrance fees	317,444		—
Other accounts payable and accrued liabilities	271,919		270,524
Accounts payable, accrued liabilities, and other liabilities	$	763,391	$	457,532

NOTE 24. Selected Quarterly Financial Data (Unaudited)

The following table summarizes selected quarterly information for the years ended December 31, 2020 and 2019 (in thousands, except per share amounts):


	Three Months Ended 2020
	March 31		June 30		September 30		December 31
Total revenues	$	381,054	$	408,559	$	423,565	$	431,697
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	128,410		78,182		13,957		(2,866)
Income (loss) from continuing operations	147,132		60,341		(27,762)		(19,204)
Income (loss) from discontinued operations	135,408		(5,292)		(31,819)		169,449
Net income (loss)	282,540		55,049		(59,581)		150,245
Net income (loss) applicable to Healthpeak Properties, Inc.	279,080		51,506		(63,417)		146,394
Dividends paid per common share	0.37		0.37		0.37		0.37
Basic earnings (loss) per common share:
Continuing operations	0.28		0.10		(0.06)		(0.04)
Discontinued operations	0.27		(0.01)		(0.06)		0.31
Diluted earnings (loss) per common share:
Continuing operations	0.28		0.10		(0.06)		(0.04)
Discontinued operations	0.26		(0.01)		(0.06)		0.31


	Three Months Ended 2019
	March 31		June 30		September 30		December 31
Total revenues	$	293,303	$	307,037	$	321,079	$	318,920
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	20,345		25,708		(19,062)		149,329
Income (loss) from continuing operations	22,517		24,052		(24,420)		153,320
Income (loss) from discontinued operations	42,473		(34,032)		(17,888)		(105,961)
Net income (loss)	64,990		(9,980)		(42,308)		47,359
Net income (loss) applicable to Healthpeak Properties, Inc.	61,470		(13,597)		(45,863)		43,520
Dividends paid per common share	0.37		0.37		0.37		0.37
Basic earnings (loss) per common share:
Continuing operations	0.04		0.04		(0.06)		0.30
Discontinued operations	0.09		(0.07)		(0.03)		(0.21)
Diluted earnings (loss) per common share:
Continuing operations	0.04		0.04		(0.06)		0.30
Discontinued operations	0.09		(0.07)		(0.03)		(0.21)

Schedule II: Valuation and Qualifying Accounts

(Dollars in thousands)


Allowance Accounts(1)			Additions				Deductions
Year Ended December 31,	Balance at Beginning of Year		Amounts Charged Against Operations, net		Acquired Properties		Uncollectible Accounts Written-off		Dispositions		Balance at End of Year
Continuing operations:
2020	$	387	$	76	$	3,531	$	—	$	—	$	3,994
2019(2)	146		(146)		387		—		—		387
2018	142,940		3,366		—		(1,887)		(143,795)		624
Discontinued operations:
2020	$	4,178	$	1,026	$	175	$	—	$	494	$	5,873
2019(2)	2,255		1,695		928		—		(700)		4,178
2018	26,434		739		—		—		—		27,173

_______________________________________

(1)Includes allowance for doubtful accounts and straight-line rent reserves. Excludes reserves for loan losses which are disclosed in Note 8 to the Consolidated Financial Statements.

(2)In conjunction with adopting ASU 2016-02 (see Note 2 to the Consolidated Financial Statements) on January 1, 2019, the Company wrote-off certain previously reserved tenant receivables (accounts receivable and straight-line rent receivable). These amounts are included in the end of year balance for 2018, but removed from the beginning of the year balance for 2019.

Schedule III: Real Estate and Accumulated Depreciation

(Dollars in thousands)


			Encumbrances at December 31, 2020			Initial Cost to Company					Costs Capitalized Subsequent to Acquisition		Gross Amount at Which Carried As of December 31, 2020						Accumulated Depreciation(2)		Year Acquired/ Constructed
	City	State			Land			Buildings and Improvements			Land		Buildings and Improvements		Total(1)
Continuing operations:
Life science
1483	Brisbane	CA	$	—		$	8,498		$	500	$	34,889	$	8,498	$	35,389	$	43,887	$	—	2007
1484	Brisbane	CA	—			11,331			689		186,573		11,331		187,262		198,593		—		2007
1485	Brisbane	CA	—			11,331			600		12,287		11,331		12,886		24,217		—		2007
1486	Brisbane	CA	—			11,331			—		135,563		11,331		135,563		146,894		(5,144)		2020
1487	Brisbane	CA	—			8,498			—		76,313		8,498		76,313		84,811		—		2020
2874	Brisbane	CA	—			64,186			62,318		7,746		64,186		69,954		134,140		(4,177)		2019
2875	Brisbane	CA	—			58,410			56,623		2,320		58,410		58,933		117,343		(4,102)		2019
1401	Hayward	CA	—			900			7,100		2,054		1,244		7,957		9,201		(2,652)		2007
1402	Hayward	CA	—			1,500			6,400		4,305		1,719		6,812		8,531		(2,151)		2007
1403	Hayward	CA	—			1,900			7,100		10,343		1,900		15,738		17,638		(4,208)		2007
1404	Hayward	CA	—			2,200			17,200		3,872		2,200		21,072		23,272		(6,281)		2007
1405	Hayward	CA	—			1,000			3,200		8,110		1,000		3,837		4,837		(1,093)		2007
1549	Hayward	CA	—			1,006			4,259		4,494		1,055		6,463		7,518		(2,909)		2007
1550	Hayward	CA	—			677			2,761		5,837		710		3,057		3,767		(1,825)		2007
1551	Hayward	CA	—			661			1,995		4,632		693		2,408		3,101		(1,246)		2007
1552	Hayward	CA	—			1,187			7,139		2,543		1,222		8,539		9,761		(3,978)		2007
1553	Hayward	CA	—			1,189			9,465		7,361		1,225		16,229		17,454		(8,783)		2007
1554	Hayward	CA	—			1,246			5,179		3,560		1,283		6,942		8,225		(3,180)		2007
1555	Hayward	CA	—			1,521			13,546		6,982		1,566		20,423		21,989		(10,537)		2007
1556	Hayward	CA	—			1,212			5,120		4,666		1,249		6,797		8,046		(3,209)		2007
1424	La Jolla	CA	—			9,600			25,283		15,758		9,719		36,698		46,417		(10,356)		2007
1425	La Jolla	CA	—			6,200			19,883		1,661		6,276		21,376		27,652		(7,245)		2007
1426	La Jolla	CA	—			7,200			12,412		14,237		7,287		23,209		30,496		(9,536)		2007
1427	La Jolla	CA	—			8,700			16,983		8,261		8,767		22,714		31,481		(9,812)		2007
1949	La Jolla	CA	—			2,686			11,045		12,349		2,686		22,956		25,642		(3,873)		2011
2229	La Jolla	CA	—			8,753			32,528		10,295		8,777		42,351		51,128		(8,871)		2014
1470	Poway	CA	—			5,826			12,200		6,048		5,826		12,542		18,368		(4,146)		2007
1471	Poway	CA	—			5,978			14,200		4,253		5,978		14,200		20,178		(4,763)		2007
1472	Poway	CA	—			8,654			—		11,906		8,654		11,906		20,560		(2,504)		2007
1473	Poway	CA	—			11,024			2,405		26,607		11,024		29,013		40,037		(4,830)		2019
1474	Poway	CA	—			5,051			—		19,939		5,051		19,939		24,990		(866)		2019
1475	Poway	CA	—			5,655			—		10,302		5,655		10,302		15,957		(64)		2020
1478	Poway	CA	—			6,700			14,400		6,145		6,700		14,400		21,100		(4,830)		2007
1499	Redwood City	CA	—			3,400			5,500		2,326		3,407		6,200		9,607		(2,819)		2007
1500	Redwood City	CA	—			2,500			4,100		1,220		2,506		4,558		7,064		(1,949)		2007
1501	Redwood City	CA	—			3,600			4,600		1,783		3,607		5,940		9,547		(2,259)		2007
1502	Redwood City	CA	—			3,100			5,100		1,202		3,107		5,931		9,038		(2,464)		2007
1503	Redwood City	CA	—			4,800			17,300		4,341		4,818		19,908		24,726		(6,323)		2007
1504	Redwood City	CA	—			5,400			15,500		9,393		5,418		24,858		30,276		(7,213)		2007
1505	Redwood City	CA	—			3,000			3,500		1,318		3,006		4,410		7,416		(2,033)		2007
1506	Redwood City	CA	—			6,000			14,300		14,666		6,018		28,323		34,341		(10,101)		2007
1507	Redwood City	CA	—			1,900			12,800		17,586		1,912		26,081		27,993		(7,265)		2007
1508	Redwood City	CA	—			2,700			11,300		21,873		2,712		27,599		30,311		(4,771)		2007
1509	Redwood City	CA	—			2,700			10,900		10,476		2,712		16,114		18,826		(6,722)		2007
1510	Redwood City	CA	—			2,200			12,000		10,584		2,212		18,660		20,872		(5,030)		2007
1511	Redwood City	CA	—			2,600			9,300		21,480		2,612		30,156		32,768		(4,430)		2007
1512	Redwood City	CA	—			3,300			18,000		12,434		3,300		30,406		33,706		(13,158)		2007
1513	Redwood City	CA	—			3,300			17,900		15,663		3,326		29,671		32,997		(11,980)		2007
678	San Diego	CA	—			2,603			11,051		3,166		2,603		14,217		16,820		(5,740)		2002
679	San Diego	CA	—			5,269			23,566		29,989		5,669		49,855		55,524		(16,747)		2002
837	San Diego	CA	—			4,630			2,028		9,120		4,630		5,213		9,843		(1,809)		2006
838	San Diego	CA	—			2,040			903		5,253		2,040		4,203		6,243		(982)		2006
839	San Diego	CA	—			3,940			3,184		6,849		4,047		5,499		9,546		(1,645)		2006
840	San Diego	CA	—			5,690			4,579		789		5,830		4,802		10,632		(2,084)		2006
1418	San Diego	CA	—			11,700			31,243		23,331		11,700		48,212		59,912		(9,190)		2007
1419	San Diego	CA	—			2,324			—		13,394		2,324		13,394		15,718		—		2007
1420	San Diego	CA	—			4,200			—		19,143		4,200		19,143		23,343		—		2007
1421	San Diego	CA	—			7,000			33,779		1,209		7,000		34,988		41,988		(12,176)		2007
1422	San Diego	CA	—			7,179			3,687		5,090		7,336		8,581		15,917		(4,194)		2007
1423	San Diego	CA	—			8,400			33,144		31,897		8,400		65,033		73,433		(11,140)		2007
1514	San Diego	CA	—			5,200			—		—		5,200		—		5,200		—		2007
1558	San Diego	CA	—			7,740			22,654		5,742		7,888		12,308		20,196		(9,197)		2007
1947	San Diego	CA	—			2,581			10,534		4,231		2,581		14,765		17,346		(5,461)		2011
1948	San Diego	CA	—			5,879			25,305		8,843		5,879		31,843		37,722		(8,548)		2011
2197	San Diego	CA	—			7,621			3,913		8,711		7,626		11,328		18,954		(4,360)		2007
2476	San Diego	CA	—			7,661			9,918		13,740		7,661		23,659		31,320		(221)		2016
2477	San Diego	CA	—			9,207			14,613		6,558		9,207		21,171		30,378		(4,054)		2016
2478	San Diego	CA	—			6,000			—		2,738		6,000		2,738		8,738		—		2016
2617	San Diego	CA	—			2,734			5,195		16,693		2,734		21,889		24,623		(1,594)		2017
2618	San Diego	CA	—			4,100			12,395		22,736		4,100		35,131		39,231		(3,286)		2017
2622	San Diego(3)	CA	—			—			—		17,012		—		17,012		17,012		(359)		2020
2872	San Diego	CA	—			10,120			38,351		1,044		10,120		39,996		50,116		(3,835)		2018
2873	San Diego	CA	—			6,052			14,122		1,069		6,052		15,406		21,458		(1,405)		2018
3069	San Diego	CA	—			7,054			7,794		13,477		7,054		21,035		28,089		(305)		2019
1407	South San Francisco	CA	—			7,182			12,140		10,608		7,186		13,990		21,176		(4,990)		2007


			Encumbrances at December 31, 2020			Initial Cost to Company					Costs Capitalized Subsequent to Acquisition		Gross Amount at Which Carried As of December 31, 2020						Accumulated Depreciation(2)		Year Acquired/ Constructed
	City	State			Land			Buildings and Improvements			Land		Buildings and Improvements		Total(1)
1408	South San Francisco	CA	—			9,000			17,800		1,498		9,000		18,275		27,275		(6,241)		2007
1409	South San Francisco	CA	—			18,000			38,043		4,703		18,000		42,746		60,746		(15,096)		2007
1410	South San Francisco	CA	—			4,900			18,100		12,945		4,900		30,956		35,856		(8,433)		2007
1411	South San Francisco	CA	—			8,000			27,700		34,398		8,000		62,014		70,014		(11,551)		2007
1412	South San Francisco	CA	—			10,100			22,521		4,128		10,100		26,409		36,509		(8,962)		2007
1413	South San Francisco	CA	—			8,000			28,299		8,561		8,000		36,860		44,860		(11,742)		2007
1414	South San Francisco	CA	—			3,700			20,800		2,248		3,700		22,845		26,545		(8,714)		2007
1430	South San Francisco	CA	—			10,700			23,621		23,711		10,700		44,738		55,438		(7,870)		2007
1431	South San Francisco	CA	—			7,000			15,500		10,057		7,000		25,497		32,497		(6,667)		2007
1435	South San Francisco	CA	—			13,800			42,500		37,058		13,800		79,558		93,358		(28,093)		2008
1436	South San Francisco	CA	—			14,500			45,300		36,935		14,500		82,235		96,735		(28,489)		2008
1437	South San Francisco	CA	—			9,400			24,800		50,146		9,400		73,376		82,776		(26,463)		2008
1439	South San Francisco	CA	—			11,900			68,848		444		11,900		69,291		81,191		(23,126)		2007
1440	South San Francisco	CA	—			10,000			57,954		400		10,000		58,354		68,354		(19,474)		2007
1441	South San Francisco	CA	—			9,300			43,549		8		9,300		43,557		52,857		(14,611)		2007
1442	South San Francisco	CA	—			11,000			47,289		91		11,000		47,380		58,380		(15,940)		2007
1443	South San Francisco	CA	—			13,200			60,932		2,642		13,200		63,574		76,774		(21,733)		2007
1444	South San Francisco	CA	—			10,500			33,776		923		10,500		34,699		45,199		(11,675)		2007
1445	South San Francisco	CA	—			10,600			34,083		9		10,600		34,092		44,692		(11,436)		2007
1458	South San Francisco	CA	—			10,900			20,900		8,917		10,909		21,689		32,598		(7,305)		2007
1459	South San Francisco	CA	—			3,600			100		5,533		3,600		5,633		9,233		(94)		2007
1460	South San Francisco	CA	—			2,300			100		440		2,300		539		2,839		(100)		2007
1461	South San Francisco	CA	—			3,900			200		745		3,900		945		4,845		(200)		2007
1462	South San Francisco	CA	—			7,117			600		5,877		7,117		4,692		11,809		(1,286)		2007
1463	South San Francisco	CA	—			10,381			2,300		20,929		10,381		20,881		31,262		(5,922)		2007
1464	South San Francisco	CA	—			7,403			700		11,638		7,403		7,987		15,390		(2,053)		2007
1468	South San Francisco	CA	—			10,100			24,013		15,570		10,100		35,828		45,928		(9,801)		2007
1480	South San Francisco	CA	—			32,210			3,110		28,414		32,210		31,523		63,733		—		2007
1559	South San Francisco	CA	—			5,666			5,773		12,970		5,695		18,645		24,340		(15,958)		2007
1560	South San Francisco	CA	—			1,204			1,293		2,888		1,210		3,970		5,180		(1,868)		2007
1983	South San Francisco	CA	—			8,648			—		96,095		8,648		96,095		104,743		(20,291)		2016
1984	South San Francisco	CA	—			7,845			—		90,445		7,844		90,069		97,913		(16,677)		2017
1985	South San Francisco	CA	—			6,708			—		122,721		6,708		122,721		129,429		(19,127)		2017
1986	South San Francisco	CA	—			6,708			—		108,425		6,708		108,425		115,133		(13,457)		2018
1987	South San Francisco	CA	—			8,544			—		100,645		8,544		100,645		109,189		(8,701)		2019
1988	South San Francisco	CA	—			10,120			—		119,965		10,120		119,965		130,085		(10,610)		2019
1989	South San Francisco	CA	—			9,169			—		99,636		9,169		99,636		108,805		(3,904)		2020
2553	South San Francisco	CA	—			2,897			8,691		4,663		2,897		13,354		16,251		(2,511)		2015
2554	South San Francisco	CA	—			995			2,754		2,209		995		4,963		5,958		(1,040)		2015
2555	South San Francisco	CA	—			2,202			10,776		895		2,202		11,604		13,806		(1,735)		2015
2556	South San Francisco	CA	—			2,962			15,108		1,009		2,962		16,117		19,079		(2,371)		2015
2557	South San Francisco	CA	—			2,453			13,063		3,616		2,453		16,679		19,132		(3,187)		2015
2558	South San Francisco	CA	—			1,163			5,925		338		1,163		6,263		7,426		(881)		2015
2614	South San Francisco	CA	—			5,079			8,584		1,731		5,083		9,662		14,745		(3,763)		2007
2615	South San Francisco	CA	—			7,984			13,495		3,243		7,988		14,809		22,797		(6,010)		2007
2616	South San Francisco	CA	—			8,355			14,121		2,368		8,358		15,057		23,415		(5,642)		2007
2624	South San Francisco	CA	—			25,502			42,910		12,736		25,502		55,517		81,019		(6,378)		2017
2870	South San Francisco	CA	—			23,297			41,797		29,221		23,297		71,019		94,316		(4,879)		2018
2871	South San Francisco	CA	—			20,293			41,262		21,431		20,293		62,693		82,986		(7,051)		2018
9999	Denton	TX	—			100			—		—		100		—		100		—		2016
2705	Cambridge	MA	—			24,389			128,586		—		24,389		128,586		152,975		(359)		2020
2706	Cambridge	MA	—			15,381			148,307		—		15,381		148,307		163,688		(454)		2020
2707	Cambridge	MA	—			25,664			230,509		—		25,664		230,509		256,173		(642)		2020
2708	Cambridge	MA	—			—			17,764		—		—		17,764		17,764		(37)		2020
2709	Cambridge	MA	—			—			15,459		—		—		15,459		15,459		(32)		2020
2928	Cambridge	MA	—			44,215			24,120		—		44,215		24,120		68,335		(2,263)		2019
2929	Cambridge	MA	—			20,517			—		18,209		20,517		18,209		38,726		—		2019
3074	Cambridge	MA	—			78,762			252,153		8,945		78,762		261,098		339,860		(8,142)		2019
2630	Lexington	MA	—			16,411			49,681		484		16,411		50,165		66,576		(7,144)		2017
2631	Lexington	MA	—			7,759			142,081		22,777		7,759		163,137		170,896		(14,152)		2017
2632	Lexington	MA	—			—			21,390		111,746		—		133,136		133,136		(379)		2020
3070	Lexington	MA	—			14,013			17,083		—		14,013		17,083		31,096		(938)		2019
3071	Lexington	MA	—			14,930			16,677		—		14,930		16,677		31,607		(1,190)		2019
3072	Lexington	MA	—			35,469			43,903		—		35,469		43,903		79,372		(2,685)		2019
3073	Lexington	MA	—			37,050			44,647		—		37,050		44,647		81,697		(2,578)		2019
3093	Waltham	MA	—			47,791			275,556		16,204		47,791		291,760		339,551		(6,212)		2020
2011	Durham	NC	3,777			448			6,152		22,643		448		23,136		23,584		(5,112)		2011
2030	Durham	NC	—			1,920			5,661		34,804		1,920		40,465		42,385		(12,823)		2012
464	Salt Lake City	UT	—			630			6,921		2,562		630		9,484		10,114		(4,468)		2001
465	Salt Lake City	UT	—			125			6,368		68		125		6,436		6,561		(2,823)		2001
466	Salt Lake City	UT	—			—			14,614		73		—		14,688		14,688		(5,855)		2001
799	Salt Lake City	UT	—			—			14,600		90		—		14,690		14,690		(5,078)		2005
1593	Salt Lake City	UT	—			—			23,998		—		—		23,998		23,998		(7,575)		2010
			$	3,777		$	1,321,296		$	3,313,951	$	2,505,811	$	1,323,724	$	5,639,944	$	6,963,668	$	(899,069)


			Encumbrances at December 31, 2020			Initial Cost to Company					Costs Capitalized Subsequent to Acquisition		Gross Amount at Which Carried As of December 31, 2020						Accumulated Depreciation(2)		Year Acquired/ Constructed
	City	State			Land			Buildings and Improvements			Land		Buildings and Improvements		Total(1)
Medical office
638	Anchorage	AK	$	—		$	1,456		$	10,650	$	12,635	$	1,456	$	22,369	$	23,825	$	(9,319)	2006
126	Sherwood	AR	—			709			9,604		—		709		9,599		10,308		(6,284)		1989
2572	Springdale	AR	—			—			27,714		—		—		27,714		27,714		(3,665)		2016
520	Chandler	AZ	—			3,669			13,503		7,404		3,799		19,499		23,298		(7,178)		2002
113	Glendale	AZ	—			1,565			7,050		20		1,565		7,225		8,790		(4,795)		1988
2040	Mesa	AZ	—			—			17,314		1,728		—		18,425		18,425		(3,842)		2012



1066	Scottsdale	AZ	—			5,115			14,064		5,245		4,839		17,731		22,570		(6,795)		2006
2021	Scottsdale	AZ	—			—			12,312		5,116		—		16,679		16,679		(6,441)		2012
2022	Scottsdale	AZ	—			—			9,179		2,487		—		11,462		11,462		(5,038)		2012
2023	Scottsdale	AZ	—			—			6,398		2,195		—		8,336		8,336		(3,448)		2012
2024	Scottsdale	AZ	—			—			9,522		1,048		32		10,473		10,505		(3,929)		2012
2025	Scottsdale	AZ	—			—			4,102		2,355		—		6,193		6,193		(2,815)		2012
2026	Scottsdale	AZ	—			—			3,655		2,213		—		5,614		5,614		(1,922)		2012
2027	Scottsdale	AZ	—			—			7,168		2,960		—		9,758		9,758		(3,647)		2012
2028	Scottsdale	AZ	—			—			6,659		4,834		—		11,084		11,084		(3,392)		2012
2696	Scottsdale	AZ	—			10,151			14,925		567		10,151		15,492		25,643		(553)		2020


1041	Brentwood	CA	—			—			30,864		3,135		310		32,826		33,136		(12,367)		2006
1200	Encino	CA	—			6,151			10,438		6,933		6,757		14,895		21,652		(6,286)		2006
1038	Fresno	CA	—			3,652			29,113		21,935		3,652		51,048		54,700		(19,960)		2006
423	Irvine	CA	—			18,000			70,800		—		18,001		70,800		88,801		(41,643)		1999
436	Murrieta	CA	—			400			9,266		5,089		749		12,116		12,865		(7,182)		1999
239	Poway	CA	—			2,700			10,839		5,485		3,013		13,421		16,434		(8,020)		1997
2654	Riverside	CA	—			2,758			9,908		448		2,758		10,319		13,077		(1,373)		2017
318	Sacramento	CA	—			2,860			37,566		27,514		2,911		63,537		66,448		(18,888)		1998
2404	Sacramento	CA	—			1,268			5,109		1,067		1,299		6,005		7,304		(1,592)		2015



421	San Diego	CA	—			2,910			19,984		16,414		2,964		35,025		37,989		(13,073)		1999
564	San Jose	CA	—			1,935			1,728		3,248		1,935		3,255		5,190		(1,448)		2003
565	San Jose	CA	—			1,460			7,672		1,046		1,460		8,207		9,667		(3,677)		2003
659	Los Gatos	CA	—			1,718			3,124		693		1,758		3,363		5,121		(1,471)		2000
439	Valencia	CA	—			2,300			6,967		4,278		2,404		9,029		11,433		(5,022)		1999
1211	Valencia	CA	—			1,344			7,507		940		1,384		6,124		7,508		(2,878)		2006
440	West Hills	CA	—			2,100			11,595		5,355		2,259		12,506		14,765		(7,017)		1999
728	Aurora	CO	—			—			8,764		3,913		—		9,480		9,480		(4,048)		2005
1196	Aurora	CO	—			210			12,362		7,836		210		19,185		19,395		(6,296)		2006
1197	Aurora	CO	—			200			8,414		6,651		285		14,229		14,514		(5,141)		2006
127	Colorado Springs	CO	—			690			8,338		—		690		8,415		9,105		(5,502)		1989
882	Colorado Springs	CO	—			—			12,933		11,426		—		20,122		20,122		(7,719)		2006
1199	Denver	CO	—			493			7,897		2,705		622		9,497		10,119		(3,959)		2006
808	Englewood	CO	—			—			8,616		9,877		11		16,236		16,247		(8,467)		2005
809	Englewood	CO	—			—			8,449		6,786		—		13,041		13,041		(5,225)		2005
810	Englewood	CO	—			—			8,040		13,800		—		19,134		19,134		(7,689)		2005
811	Englewood	CO	—			—			8,472		13,212		—		19,841		19,841		(6,893)		2005
2658	Highlands Ranch	CO	—			1,637			10,063		—		1,637		10,063		11,700		(1,161)		2017
812	Littleton	CO	—			—			4,562		3,236		257		6,045		6,302		(2,645)		2005
813	Littleton	CO	—			—			4,926		2,696		106		6,395		6,501		(2,611)		2005
570	Lone Tree(3)	CO	—			—			—		21,686		—		20,401		20,401		(8,334)		2003
666	Lone Tree	CO	—			—			23,274		5,098		17		25,916		25,933		(9,728)		2000
2233	Lone Tree	CO	—			—			6,734		31,910		—		38,533		38,533		(8,962)		2014
1076	Parker	CO	—			—			13,388		1,534		8		14,548		14,556		(5,657)		2006
510	Thornton	CO	—			236			10,206		4,656		463		13,101		13,564		(6,096)		2002
434	Atlantis	FL	—			—			2,027		512		5		2,314		2,319		(1,328)		1999
435	Atlantis	FL	—			—			2,000		1,206		—		2,539		2,539		(1,440)		1999
602	Atlantis	FL	—			455			2,231		1,024		455		2,828		3,283		(1,345)		2000
2963	Brooksville(3)	FL	—			—			—		10,300		—		10,300		10,300		(4)		2019
604	Englewood	FL	—			170			1,134		840		226		1,578		1,804		(567)		2000
2962	Jacksonville(3)	FL	—			—			—		964		—		964		964		—		2019
609	Kissimmee	FL	—			788			174		1,242		788		1,250		2,038		(373)		2000
610	Kissimmee	FL	—			481			347		790		494		752		1,246		(469)		2000
671	Kissimmee	FL	—			—			7,574		2,690		—		8,367		8,367		(3,495)		2000
603	Lake Worth	FL	—			1,507			2,894		1,807		1,507		4,529		6,036		(2,686)		2000
612	Margate	FL	—			1,553			6,898		2,527		1,553		8,675		10,228		(3,423)		2000
613	Miami	FL	—			4,392			11,841		13,457		4,392		22,161		26,553		(6,122)		2000
2202	Miami	FL	—			—			13,123		10,093		—		22,766		22,766		(5,882)		2014
2203	Miami	FL	—			—			8,877		4,126		—		12,813		12,813		(3,562)		2014
1067	Milton	FL	—			—			8,566		1,044		—		9,533		9,533		(3,204)		2006
2577	Naples	FL	—			—			29,186		1,504		—		30,691		30,691		(3,763)		2016
2578	Naples	FL	—			—			18,819		766		—		19,585		19,585		(2,035)		2016
2964	Okeechobee(3)	FL	—			—			—		3,483		—		3,483		3,483		—		2019
563	Orlando	FL	—			2,144			5,136		16,334		12,268		7,980		20,248		(4,936)		2003
833	Pace	FL	—			—			10,309		3,938		54		11,900		11,954		(4,131)		2006
834	Pensacola	FL	—			—			11,166		669		—		11,369		11,369		(3,712)		2006
673	Plantation	FL	—			1,091			7,176		2,352		1,091		8,915		10,006		(3,608)		2002
2579	Punta Gorda	FL	—			—			9,379		—		—		9,379		9,379		(1,118)		2016
2833	St. Petersburg	FL	—			—			13,754		14,054		—		24,373		24,373		(8,319)		2006
2836	Tampa	FL	—			1,967			6,618		8,213		2,709		10,644		13,353		(5,996)		2006
887	Atlanta	GA	—			4,300			13,690		—		4,300		11,890		16,190		(8,224)		2007
1058	Blue Ridge	GA	—			—			3,231		260		—		3,094		3,094		(1,262)		2006
2576	Statesboro	GA	—			—			10,234		439		—		10,673		10,673		(1,680)		2016
2702	Bolingbrook	IL	—			—			21,237		—		—		21,237		21,237		(145)		2020
1065	Marion	IL	—			99			11,538		2,192		100		13,255		13,355		(4,673)		2006

2697	Indianapolis	IN	—			—			61,893		—		—		61,893		61,893		(313)		2020


			Encumbrances at December 31, 2020		Initial Cost to Company			Costs Capitalized Subsequent to Acquisition	Gross Amount at Which Carried As of December 31, 2020			Accumulated Depreciation(2)	Year Acquired/ Constructed
	City	State		Land		Buildings and Improvements		Land	Buildings and Improvements	Total(1)
2699	Indianapolis	IN	—		—		23,211	—	—	23,211	23,211	(117)	2020
2701	Indianapolis	IN	—		478		1,637	—	478	1,637	2,115	(18)	2020
2698	Mooresville	IN	—		—		20,646	—	—	20,646	20,646	(105)	2020
1057	Newburgh	IN	—		—		14,019	5,295	—	19,301	19,301	(7,603)	2006
2700	Zionsville	IN	—		2,969		7,707	—	2,969	7,707	10,676	(60)	2020
2039	Kansas City	KS	—		440		2,173	17	448	2,137	2,585	(522)	2012
112	Overland Park	KS	—		2,316		10,681	24	2,316	10,797	13,113	(7,421)	1988
2043	Overland Park	KS	—		—		7,668	1,392	—	8,796	8,796	(2,204)	2012
3062	Overland Park	KS	—		872		11,813	197	978	11,887	12,865	(994)	2019
483	Wichita	KS	—		530		3,341	713	530	3,617	4,147	(1,543)	2001
1064	Lexington	KY	—		—		12,726	2,244	—	14,092	14,092	(5,171)	2006
735	Louisville	KY	—		936		8,426	18,432	936	24,069	25,005	(11,809)	2005
737	Louisville	KY	—		835		27,627	10,632	878	35,531	36,409	(14,236)	2005
738	Louisville	KY	—		780		8,582	6,843	851	12,736	13,587	(9,506)	2005
739	Louisville	KY	—		826		13,814	3,079	832	15,330	16,162	(6,054)	2005
2834	Louisville	KY	—		2,983		13,171	8,108	2,991	19,655	22,646	(9,483)	2005

1945	Louisville	KY	—		3,255		28,644	2,010	3,291	30,119	33,410	(10,166)	2010
1946	Louisville	KY	—		430		6,125	276	430	6,401	6,831	(2,131)	2010
2237	Louisville	KY	—		1,519		15,386	4,010	1,648	19,262	20,910	(5,288)	2014
2238	Louisville	KY	—		1,334		12,172	2,411	1,511	14,162	15,673	(4,064)	2014
2239	Louisville	KY	—		1,644		10,832	5,865	2,041	16,207	18,248	(5,149)	2014
1324	Haverhill	MA	—		800		8,537	2,386	870	7,028	7,898	(3,130)	2007
1213	Ellicott City	MD	—		1,115		3,206	3,563	1,336	5,104	6,440	(2,341)	2006
1052	Towson	MD	—		—		14,233	4,619	—	13,549	13,549	(4,645)	2006
2650	Biddeford	ME	—		1,949		12,244	—	1,949	12,244	14,193	(1,375)	2017
240	Minneapolis	MN	—		117		13,213	5,824	117	17,714	17,831	(9,917)	1997
300	Minneapolis	MN	—		160		10,131	5,392	214	12,898	13,112	(7,400)	1997
2703	Columbia	MO	—		4,141		20,364	—	4,141	20,364	24,505	(142)	2020
2032	Independence	MO	—		—		48,025	2,982	—	49,902	49,902	(9,751)	2012
2863	Lee's Summit(3)	MO	—		—		—	15,878	—	15,878	15,878	(372)	2019
1078	Flowood	MS	—		—		8,413	1,284	—	9,029	9,029	(3,061)	2006
1059	Jackson	MS	—		—		8,868	299	—	9,159	9,159	(3,243)	2006
1060	Jackson	MS	—		—		7,187	2,764	—	8,872	8,872	(2,936)	2006
1068	Omaha	NE	—		—		16,243	1,725	33	17,350	17,383	(6,551)	2006
2651	Charlotte	NC	—		1,032		6,196	130	1,032	6,222	7,254	(582)	2017
2695	Charlotte	NC	—		844		5,021	18	844	5,001	5,845	(463)	2017
2655	Wilmington	NC	—		1,341		17,376	—	1,341	17,376	18,717	(2,112)	2017
2656	Wilmington	NC	—		2,071		11,592	—	2,071	11,592	13,663	(1,288)	2017
2657	Shallotte	NC	—		918		3,609	—	918	3,609	4,527	(553)	2017
2647	Concord	NH	—		1,961		23,516	240	1,961	23,541	25,502	(2,444)	2017
2648	Concord	NH	—		815		8,902	423	815	9,325	10,140	(1,235)	2017
2649	Epsom	NH	—		919		5,868	49	919	5,910	6,829	(958)	2017
729	Albuquerque	NM	—		—		5,380	896	—	5,738	5,738	(2,105)	2005
571	Las Vegas(3)	NV	—		—		—	20,823	—	18,666	18,666	(7,656)	2003
660	Las Vegas	NV	—		1,121		4,363	9,852	1,328	10,258	11,586	(3,364)	2000
661	Las Vegas	NV	—		2,305		4,829	6,276	2,447	4,892	7,339	(4,980)	2000
662	Las Vegas	NV	—		3,480		12,305	6,755	3,480	15,180	18,660	(6,542)	2000
663	Las Vegas	NV	—		1,717		3,597	12,595	1,724	13,621	15,345	(4,427)	2000
664	Las Vegas	NV	—		1,172		—	633	1,805	—	1,805	(243)	2000
691	Las Vegas	NV	—		3,244		18,339	8,598	3,338	25,273	28,611	(12,874)	2004
2037	Mesquite	NV	—		—		5,559	942	34	6,347	6,381	(1,398)	2012
400	Harrison	OH	—		—		4,561	300	—	4,861	4,861	(3,058)	1999
1054	Durant	OK	—		619		9,256	2,415	659	11,525	12,184	(4,084)	2006
817	Owasso	OK	—		—		6,582	1,703	—	5,761	5,761	(2,097)	2005
404	Roseburg	OR	—		—		5,707	763	—	5,770	5,770	(3,396)	1999
2570	Limerick	PA	—		925		20,072	51	925	19,953	20,878	(2,899)	2016
2234	Philadelphia	PA	—		24,264		99,904	45,229	24,288	144,972	169,260	(23,702)	2014
2403	Philadelphia	PA	—		26,063		97,646	31,903	26,134	129,479	155,613	(26,925)	2015
2571	Wilkes-Barre	PA	—		—		9,138	—	—	9,138	9,138	(1,457)	2016
2694	Anderson	SC	—		405		1,211	—	405	1,212	1,617	(50)	2020
2573	Florence	SC	—		—		12,090	91	—	12,181	12,181	(1,546)	2016
2574	Florence	SC	—		—		12,190	88	—	12,278	12,278	(1,556)	2016
2575	Florence	SC	—		—		11,243	56	—	11,299	11,299	(1,755)	2016
2841	Greenville	SC	—		634		38,386	1,008	647	39,380	40,027	(4,502)	2018
2842	Greenville	SC	—		794		41,293	445	794	41,737	42,531	(4,769)	2018
2843	Greenville	SC	—		626		22,210	—	626	22,210	22,836	(2,640)	2018
2844	Greenville	SC	—		806		18,889	377	806	19,266	20,072	(2,370)	2018
2845	Greenville	SC	—		932		40,879	—	932	40,879	41,811	(4,296)	2018
2846	Greenville	SC	—		896		38,486	—	896	38,485	39,381	(4,101)	2018
2847	Greenville	SC	—		600		26,472	1,076	600	27,548	28,148	(3,737)	2018
2848	Greenville	SC	—		318		5,816	—	318	5,816	6,134	(675)	2018
2849	Greenville	SC	—		319		5,836	—	319	5,836	6,155	(751)	2018
2850	Greenville	SC	—		211		6,503	15	211	6,518	6,729	(848)	2018
2853	Greenville	SC	—		534		6,430	180	534	6,609	7,143	(1,355)	2018
2854	Greenville	SC	—		824		13,645	109	824	13,755	14,579	(2,076)	2018
2851	Travelers Rest	SC	—		498		1,015	—	498	1,015	1,513	(381)	2018
2862	Myrtle Beach(3)	SC	—		—		—	24,830	—	24,830	24,830	(1,400)	2018
2865	Brentwood(3)	TN	—		—		—	28,094	—	28,094	28,094	(177)	2019
624	Hendersonville	TN	—		256		1,530	2,822	256	3,403	3,659	(1,523)	2000
559	Hermitage	TN	—		830		5,036	13,187	851	16,033	16,884	(5,090)	2003
561	Hermitage	TN	—		596		9,698	7,868	596	15,066	15,662	(7,303)	2003
562	Hermitage	TN	—		317		6,528	4,265	317	8,802	9,119	(4,064)	2003


			Encumbrances at December 31, 2020		Initial Cost to Company			Costs Capitalized Subsequent to Acquisition	Gross Amount at Which Carried As of December 31, 2020			Accumulated Depreciation(2)	Year Acquired/ Constructed
	City	State		Land		Buildings and Improvements		Land	Buildings and Improvements	Total(1)
154	Knoxville	TN	—		700		4,559	5,088	730	8,778	9,508	(5,491)	1994
625	Nashville	TN	—		955		14,289	6,424	955	18,249	19,204	(7,257)	2000
626	Nashville	TN	—		2,050		5,211	5,415	2,055	8,896	10,951	(4,145)	2000
627	Nashville	TN	—		1,007		181	1,443	1,113	1,241	2,354	(460)	2000
628	Nashville	TN	—		2,980		7,164	4,523	2,980	10,601	13,581	(5,071)	2000
630	Nashville	TN	—		515		848	450	528	1,057	1,585	(466)	2000
631	Nashville	TN	—		266		1,305	2,009	266	2,645	2,911	(1,205)	2000
632	Nashville	TN	—		827		7,642	5,728	827	10,856	11,683	(4,677)	2000
633	Nashville	TN	—		5,425		12,577	9,010	5,425	18,192	23,617	(7,879)	2000
634	Nashville	TN	—		3,818		15,185	11,751	3,818	23,621	27,439	(11,772)	2000
636	Nashville	TN	—		583		450	420	604	756	1,360	(347)	2000
2967	Nashville(3)	TN	—		—		—	14,058	—	14,058	14,058	—	2019
2611	Allen	TX	—		1,330		5,960	778	1,374	6,694	8,068	(999)	2016
2612	Allen	TX	—		1,310		4,165	810	1,310	4,953	6,263	(864)	2016
573	Arlington	TX	—		769		12,355	5,018	769	15,438	16,207	(7,008)	2003
2621	Cedar Park	TX	—		1,617		11,640	308	1,617	11,948	13,565	(1,006)	2017
576	Conroe	TX	—		324		4,842	3,990	324	7,307	7,631	(2,922)	2000
577	Conroe	TX	—		397		7,966	3,868	397	10,584	10,981	(4,221)	2000
578	Conroe	TX	—		388		7,975	4,669	388	10,613	11,001	(4,562)	2006
579	Conroe	TX	—		188		3,618	1,469	188	4,477	4,665	(1,925)	2000
581	Corpus Christi	TX	—		717		8,181	6,501	717	12,086	12,803	(5,884)	2000
600	Corpus Christi	TX	—		328		3,210	4,579	328	5,733	6,061	(2,810)	2000
601	Corpus Christi	TX	—		313		1,771	2,127	325	3,059	3,384	(1,505)	2000
2839	Cypress(3)	TX	—		—		—	36,830	11	36,819	36,830	(7,977)	2015
582	Dallas	TX	—		1,664		6,785	5,685	1,747	10,251	11,998	(4,505)	2000
886	Dallas	TX	—		1,820		8,508	26	1,820	7,454	9,274	(2,578)	2007
1314	Dallas	TX	—		15,230		162,970	46,250	24,102	195,017	219,119	(73,745)	2006
1319	Dallas	TX	—		18,840		155,659	5,873	18,840	161,208	180,048	(62,128)	2007
2721	Dallas	TX	—		31,707		2,000	—	31,707	2,000	33,707	—	2020

583	Fort Worth	TX	—		898		4,866	4,482	898	8,086	8,984	(3,163)	2000
805	Fort Worth	TX	—		—		2,481	1,785	45	3,518	3,563	(1,987)	2005
806	Fort Worth	TX	—		—		6,070	1,934	5	7,586	7,591	(2,747)	2005
2231	Fort Worth	TX	—		902		—	44	946	—	946	(26)	2014
2619	Fort Worth	TX	—		1,180		13,432	47	1,180	13,479	14,659	(1,073)	2017
2620	Fort Worth	TX	—		1,961		14,155	177	1,961	14,332	16,293	(1,189)	2017
2982	Fort Worth	TX	—		2,720		6,225	3,097	2,720	9,316	12,036	(573)	2019
1061	Granbury	TX	—		—		6,863	1,125	—	7,848	7,848	(2,850)	2006
430	Houston	TX	—		1,927		33,140	19,966	2,200	50,090	52,290	(25,389)	1999
446	Houston	TX	—		2,200		19,585	23,004	2,945	33,322	36,267	(22,145)	1999
589	Houston	TX	—		1,676		12,602	8,235	1,706	17,124	18,830	(7,357)	2000
670	Houston	TX	—		257		2,884	1,656	318	3,404	3,722	(1,469)	2000
702	Houston	TX	—		—		7,414	3,794	7	9,980	9,987	(4,137)	2004
1044	Houston	TX	—		—		4,838	5,260	1,320	6,896	8,216	(2,346)	2006
2542	Houston	TX	—		304		17,764	—	304	17,764	18,068	(3,000)	2015
2543	Houston	TX	—		116		6,555	—	116	6,555	6,671	(1,308)	2015
2544	Houston	TX	—		312		12,094	—	312	12,094	12,406	(2,432)	2015
2545	Houston	TX	—		316		13,931	—	316	13,931	14,247	(2,133)	2015
2546	Houston	TX	—		408		18,332	—	408	18,332	18,740	(4,407)	2015
2547	Houston	TX	—		470		18,197	—	470	18,197	18,667	(3,705)	2015
2548	Houston	TX	—		313		7,036	—	313	7,036	7,349	(1,835)	2015
2549	Houston	TX	—		530		22,711	—	530	22,711	23,241	(3,067)	2015
2966	Houston(3)	TX	—		—		—	7,741	—	7,741	7,741	—	2020
590	Irving	TX	—		828		6,160	3,911	828	9,070	9,898	(4,215)	2000
700	Irving	TX	—		—		8,550	4,566	8	9,672	9,680	(3,923)	2006
1207	Irving	TX	—		1,955		12,793	2,455	1,986	14,537	16,523	(5,576)	2006
2840	Kingwood	TX	—		3,035		28,373	1,585	3,422	29,570	32,992	(4,569)	2016
591	Lewisville	TX	—		561		8,043	2,470	561	9,554	10,115	(4,343)	2000
144	Longview	TX	—		102		7,998	1,168	102	8,716	8,818	(4,917)	1992
143	Lufkin	TX	—		338		2,383	299	338	2,602	2,940	(1,423)	1992
568	McKinney	TX	—		541		6,217	4,057	541	9,067	9,608	(3,972)	2003
569	McKinney	TX	—		—		636	9,391	—	9,123	9,123	(3,622)	2003
1079	Nassau Bay	TX	—		—		8,942	1,818	—	9,842	9,842	(3,768)	2006
596	N Richland Hills	TX	—		812		8,883	3,656	812	11,208	12,020	(4,816)	2000
2048	North Richland Hills	TX	—		1,385		10,213	2,290	1,400	12,204	13,604	(4,237)	2012
2835	Pearland	TX	—		—		4,014	4,917	—	7,450	7,450	(2,747)	2006
2838	Pearland(3)	TX	—		—		—	19,949	—	19,756	19,756	(3,567)	2014
447	Plano	TX	—		1,700		7,810	6,859	1,792	12,884	14,676	(7,562)	1999
597	Plano	TX	—		1,210		9,588	7,069	1,225	14,902	16,127	(6,131)	2000
672	Plano	TX	—		1,389		12,768	4,365	1,389	14,871	16,260	(5,749)	2002
1284	Plano	TX	—		2,049		18,793	2,465	2,163	13,481	15,644	(7,527)	2006

1384	Plano	TX	—		6,290		22,686	5,707	6,290	28,203	34,493	(18,910)	2007
2653	Rockwall	TX	—		788		9,020	—	788	9,020	9,808	(945)	2017
815	San Antonio	TX	—		—		9,193	3,290	87	11,352	11,439	(4,958)	2006
816	San Antonio	TX	2,544		—		8,699	4,165	175	11,677	11,852	(5,190)	2006
1591	San Antonio	TX	—		—		7,309	864	43	7,810	7,853	(2,857)	2010
2837	San Antonio	TX	—		—		26,191	3,315	—	28,952	28,952	(10,009)	2011
2852	Shenandoah(3)	TX	—		—		—	29,870	—	29,870	29,870	(3,953)	2016
598	Sugarland	TX	—		1,078		5,158	3,877	1,170	7,408	8,578	(3,299)	2000
599	Texas City	TX	—		—		9,519	1,128	—	10,490	10,490	(3,925)	2000
152	Victoria	TX	—		125		8,977	519	125	9,102	9,227	(5,200)	1994
2198	Webster	TX	—		2,220		9,602	462	2,220	9,744	11,964	(2,708)	2013
2550	The Woodlands	TX	—		115		5,141	—	115	5,141	5,256	(887)	2015


			Encumbrances at December 31, 2020			Initial Cost to Company					Costs Capitalized Subsequent to Acquisition		Gross Amount at Which Carried As of December 31, 2020						Accumulated Depreciation(2)		Year Acquired/ Constructed
	City	State			Land			Buildings and Improvements			Land		Buildings and Improvements		Total(1)
2551	The Woodlands	TX	—			296			18,282		—		296		18,282		18,578		(2,717)		2015
2552	The Woodlands	TX	—			374			25,125		—		374		25,125		25,499		(3,328)		2015
1592	Bountiful	UT	—			999			7,426		1,195		1,019		8,431		9,450		(2,993)		2010
169	Bountiful	UT	—			276			5,237		2,565		487		6,769		7,256		(3,401)		1995
346	Castle Dale	UT	—			50			1,818		163		50		1,918		1,968		(1,162)		1998
347	Centerville	UT	—			300			1,288		274		300		1,392		1,692		(866)		1999
2035	Draper	UT	4,583			—			10,803		781		—		11,447		11,447		(2,465)		2012
469	Kaysville	UT	—			530			4,493		226		530		4,639		5,169		(2,076)		2001
456	Layton	UT	—			371			7,073		1,540		389		8,091		8,480		(4,604)		2001
2042	Layton	UT	—			—			10,975		963		27		11,677		11,704		(2,334)		2012
2864	Ogden(3)	UT	—			—			—		17,582		—		17,582		17,582		(229)		2019
357	Orem	UT	—			337			8,744		3,364		306		9,329		9,635		(5,364)		1999
353	Salt Lake City	UT	—			190			779		251		273		886		1,159		(582)		1999
354	Salt Lake City	UT	—			220			10,732		3,534		220		13,172		13,392		(7,764)		1999
355	Salt Lake City	UT	—			180			14,792		3,092		180		16,799		16,979		(10,426)		1999
467	Salt Lake City	UT	—			3,000			7,541		3,014		3,145		9,854		12,999		(4,920)		2001
566	Salt Lake City	UT	—			509			4,044		3,925		509		7,011		7,520		(3,196)		2003
2041	Salt Lake City	UT	—			—			12,326		1,000		—		13,031		13,031		(2,578)		2012
2033	Sandy	UT	—			867			3,513		1,861		1,343		4,752		6,095		(2,053)		2012
482	Stansbury	UT	—			450			3,201		1,210		529		3,922		4,451		(1,697)		2001
351	Washington Terrace	UT	—			—			4,573		3,048		17		5,818		5,835		(3,373)		1999
352	Washington Terrace	UT	—			—			2,692		1,774		15		3,685		3,700		(2,160)		1999
2034	West Jordan	UT	—			—			12,021		323		—		12,142		12,142		(2,441)		2012
2036	West Jordan	UT	—			—			1,383		1,654		—		2,880		2,880		(1,176)		2012
495	West Valley City	UT	—			410			8,266		1,002		410		8,255		8,665		(4,363)		2002
1208	Fairfax	VA	—			8,396			16,710		14,570		8,840		29,326		38,166		(13,080)		2006
2230	Fredericksburg	VA	—			1,101			8,570		—		1,101		8,570		9,671		(1,571)		2014
572	Reston	VA	—			—			11,902		1,287		—		12,225		12,225		(5,623)		2003
448	Renton	WA	—			—			18,724		4,967		—		21,859		21,859		(13,233)		1999
781	Seattle	WA	—			—			52,703		18,839		—		65,797		65,797		(30,230)		2004
782	Seattle	WA	—			—			24,382		14,226		126		34,266		34,392		(18,085)		2004
783	Seattle	WA	—			—			5,625		2,113		183		6,867		7,050		(6,234)		2004
785	Seattle	WA	—			—			7,293		6,153		—		11,505		11,505		(7,342)		2004
1385	Seattle	WA	—			—			45,027		11,123		—		55,172		55,172		(21,409)		2007
2038	Evanston	WY	—			—			4,601		1,023		—		5,548		5,548		(1,247)		2012
			$	7,127		$	370,205		$	3,453,072	$	1,304,180	$	401,228	$	4,457,929	$	4,859,157	$	(1,428,797)


			Encumbrances at December 31, 2020			Initial Cost to Company					Costs Capitalized Subsequent to Acquisition		Gross Amount at Which Carried As of December 31, 2020						Accumulated Depreciation(2)		Year Acquired/ Constructed
	City	State			Land			Buildings and Improvements			Land		Buildings and Improvements		Total(1)
Continuing care retirement community
3089	Birmingham	AL	$	—		$	6,218		$	32,146	$	875	$	6,369	$	32,870	$	39,239	$	(1,594)	2020
3090	Bradenton	FL	—			5,496			95,671		4,378		5,766		99,779		105,545		(4,488)		2020
2997	Clearwater	FL	72,137			6,680			132,521		3,416		6,707		135,910		142,617		(4,588)		2020
3086	Jacksonville	FL	—			19,660			167,860		4,416		20,002		171,935		191,937		(6,512)		2020
2996	Leesburg	FL	—			8,941			65,698		3,908		9,556		68,991		78,547		(3,046)		2020
2995	Port Charlotte	FL	—			5,344			159,612		2,902		5,503		162,354		167,857		(5,269)		2020
2998	Seminole	FL	47,141			14,080			77,485		2,068		14,584		79,049		93,633		(2,350)		2020
3085	Seminole	FL	—			13,915			125,796		4,428		14,162		129,978		144,140		(5,016)		2020
3092	Sun City Center	FL	91,439			25,254			175,535		4,434		25,512		179,711		205,223		(7,994)		2020
3087	The Villages	FL	—			7,091			120,493		4,238		7,101		124,721		131,822		(4,562)		2020
3084	Holland	MI	—			1,572			88,960		2,435		1,630		91,336		92,966		(3,313)		2020
2991	Coatesville	PA	—			16,443			126,243		3,216		16,547		129,357		145,904		(4,407)		2020
3080	Haverford	PA	—			16,461			108,816		21,643		16,461		122,831		139,292		(44,723)		1989
3088	Spring	TX	—			3,210			30,085		1,085		3,245		31,135		34,380		(1,177)		2020
3081	Ft Belvoir	VA	—			11,594			99,528		19,155		11,594		114,152		125,746		(42,423)		1998
			$	210,717		$	161,959		$	1,606,449	$	82,597	$	164,739	$	1,674,109	$	1,838,848	$	(141,462)

Total medical office assets held for sale			—			(22,193)			(117,810)		(7,870)		(22,413)		(110,367)		(132,780)		60,193
Total continuing operations, excluding held for sale			$	221,621		$	1,831,267		$	8,255,662	$	3,884,718	$	1,867,278	$	11,661,615	$	13,528,893	$	(2,409,135)


			Encumbrances at December 31, 2020			Initial Cost to Company					Costs Capitalized Subsequent to Acquisition		Gross Amount at Which Carried As of December 31, 2020						Accumulated Depreciation(2)		Year Acquired/ Constructed
	City	State			Land			Buildings and Improvements			Land		Buildings and Improvements		Total(1)
Discontinued operations:
Senior housing triple-net
1107	Huntsville	AL	$	—		$	307		$	5,813	$	574	$	307	$	6,027	$	6,334	$	(1,956)	2006

518	Tucson	AZ	—			2,350			24,037		280		2,350		24,318		26,668		(13,837)		2005




226	Murrieta	CA	—			435			5,729		36		435		5,765		6,200		(3,586)		1997





2467	Ft Myers	FL	—			2,782			21,827		—		2,782		9,730		12,512		(3,840)		2016
1095	Gainesville	FL	—			1,221			12,226		300		1,221		12,301		13,522		(4,221)		2006
490	Jacksonville	FL	—			3,250			25,936		7,117		3,250		33,053		36,303		(15,873)		2002
1096	Jacksonville	FL	—			1,587			15,616		359		1,587		15,657		17,244		(5,377)		2006
1017	Palm Harbor	FL	—			1,462			16,774		1,127		1,462		17,515		18,977		(6,089)		2006
1097	Tallahassee	FL	—			1,331			19,039		570		1,331		19,265		20,596		(6,578)		2006
1605	Vero Beach	FL	—			700			16,234		206		700		15,691		16,391		(4,323)		2010
1257	Vero Beach	FL	—			2,035			34,993		1,877		2,035		35,310		37,345		(11,867)		2006
1162	Orland Park	IL	—			2,623			23,154		2,180		2,623		24,559		27,182		(9,204)		2006
546	Cape Elizabeth	ME	—			630			3,524		433		630		3,617		4,247		(1,564)		2003
545	Saco	ME	—			80			2,363		325		80		2,518		2,598		(1,086)		2003

734	Hillsborough	NJ	—			1,042			10,042		926		1,042		10,502		11,544		(4,262)		2005

1252	Brooklyn	NY	—			8,117			23,627		1,474		8,117		23,774		31,891		(8,342)		2006
1256	Brooklyn	NY	—			5,215			39,052		1,709		5,215		39,227		44,442		(13,760)		2006
2089	Newberg	OR	—			1,889			16,855		936		1,889		17,791		19,680		(4,230)		2012
2050	Redmond	OR	—			1,229			21,921		980		1,229		22,900		24,129		(4,931)		2012
2084	Roseburg	OR	—			1,042			12,090		287		1,042		12,376		13,418		(3,089)		2012
2134	Scappoose	OR	—			353			1,258		30		353		1,288		1,641		(424)		2012
2153	Scappoose	OR	—			971			7,116		240		971		6,888		7,859		(1,659)		2012
2088	Tualatin	OR	—			—			6,326		786		—		7,112		7,112		(2,325)		2012
2063	Selinsgrove	PA	—			529			9,111		285		529		9,396		9,925		(2,671)		2012
306	Georgetown	SC	—			239			3,008		—		239		3,008		3,247		(1,436)		1998
305	Lancaster	SC	—			84			2,982		—		84		2,982		3,066		(1,340)		1998
312	Rock Hill	SC	—			203			2,671		—		203		2,671		2,874		(1,254)		1998
1113	Rock Hill	SC	—			695			4,119		481		795		4,233		5,028		(1,668)		2006
313	Sumter	SC	—			196			2,623		—		196		2,623		2,819		(1,252)		1998
2073	Kingsport	TN	—			1,113			8,625		397		1,113		9,022		10,135		(2,367)		2012

2107	Amarillo	TX	—			1,315			26,838		1,034		1,315		27,873		29,188		(6,395)		2012
511	Austin	TX	—			2,960			41,645		391		2,959		42,035		44,994		(23,967)		2002
2075	Bedford	TX	—			1,204			26,845		1,991		1,204		28,837		30,041		(7,133)		2012


1106	Houston	TX	—			1,008			15,333		258		1,020		15,030		16,050		(5,360)		2006


2162	Portland	TX	—			1,233			14,001		3,187		1,233		17,188		18,421		(5,497)		2012
2116	Sherman	TX	—			209			3,492		298		209		3,790		3,999		(1,089)		2012


225	Woodbridge	VA	—			950			6,983		1,895		950		8,702		9,652		(4,731)		1997

2096	Poulsbo	WA	—			1,801			18,068		278		1,801		18,346		20,147		(4,403)		2012
2102	Richland	WA	—			249			5,067		192		249		5,259		5,508		(1,254)		2012


2061	Vancouver	WA	—			513			4,556		346		513		4,784		5,297		(1,388)		2012
2062	Vancouver	WA	—			1,498			9,997		427		1,498		10,424		11,922		(2,422)		2012
			$	—		$	56,650		$	571,516	$	34,212	$	56,761	$	583,387	$	640,148	$	(208,050)


			Encumbrances at December 31, 2020			Initial Cost to Company					Costs Capitalized Subsequent to Acquisition		Gross Amount at Which Carried As of December 31, 2020						Accumulated Depreciation(2)		Year Acquired/ Constructed
	City	State			Land			Buildings and Improvements			Land		Buildings and Improvements		Total(1)
Senior housing operating portfolio



2935	Alameda	CA	$	19,578		$	6,225		$	20,194	$	(10)	$	6,225	$	20,184	$	26,409	$	(1,211)	2019
2911	Beverly Hills	CA	—			9,872			32,590		12,464		9,872		42,066		51,938		(15,306)		2019
2933	Chino Hills	CA	—			3,720			41,183		790		3,720		40,743		44,463		(7,595)		1998
2953	Concord	CA	31,332			5,386			45,883		140		5,386		46,023		51,409		(2,409)		2019
2931	Concord	CA	25,000			6,010			39,615		701		6,010		39,016		45,026		(14,851)		1998
2932	Escondido	CA	14,340			5,090			24,253		524		5,090		23,877		28,967		(9,071)		1998
2937	Fair Oaks	CA	33,381			3,972			51,073		(94)		3,972		50,979		54,951		(3,154)		2019

2959	Huntington Beach	CA	—			12,365			36,517		36		12,365		36,553		48,918		(2,308)		2019

2723	Northridge	CA	—			6,718			26,309		2,826		6,752		27,898		34,650		(11,086)		2006
2934	Roseville	CA	—			3,844			33,527		126		3,844		33,382		37,226		(6,987)		2014
2952	San Jose	CA	28,159			10,658			34,669		135		10,658		34,804		45,462		(1,791)		2019
2951	Santa Clarita	CA	33,512			16,896			38,559		154		16,896		38,713		55,609		(2,198)		2019
3998	Santa Rosa	CA	—			2,871			—		—		2,871		—		2,871		—		2020
3999	Santa Rosa	CA	37,223			7,529			32,772		—		7,529		32,361		39,890		—		2020


2958	Valencia	CA	25,903			12,699			49,996		9		12,699		50,005		62,704		(3,292)		2019
2936	Whittier	CA	—			3,355			24,639		36		3,355		24,675		28,030		(1,486)		2019
2603	Boca Raton	FL	—			2,415			17,923		2,407		2,415		17,437		19,852		(6,391)		2019
3064	Boca Raton	FL	—			4,730			17,532		5,934		4,730		20,230		24,960		(9,806)		2019
2602	Boynton Beach	FL	—			1,270			4,773		4,448		1,270		7,447		8,717		(2,596)		2019
3042	Bradenton	FL	—			1,720			30,799		167		1,720		26,400		28,120		(1,754)		2019

2604	Coconut Creek	FL	—			2,461			16,006		3,521		2,461		17,370		19,831		(6,003)		2019
2601	Delray Beach	FL	—			850			6,637		3,588		850		9,311		10,161		(3,493)		2019
3043	Fort Myers	FL	—			1,806			37,392		268		1,806		32,141		33,947		(2,081)		2019
3044	Fort Myers	FL	—			3,177			55,693		191		3,173		47,632		50,805		(3,153)		2019
2517	Ft Lauderdale	FL	—			2,867			43,126		17,295		2,867		22,435		25,302		(9,217)		2019

3039	Melbourne	FL	—			2,212			54,716		374		2,212		47,127		49,339		(3,194)		2019
3040	Naples	FL	—			7,444			33,728		228		7,444		28,148		35,592		(2,051)		2019

3041	Palm Beach Gardens	FL	—			4,249			33,732		181		4,249		28,562		32,811		(1,910)		2019


2904	Tampa	FL	—			1,994			24,493		881		1,994		7,414		9,408		(1,381)		2019
3045	Tampa	FL	—			1,419			25,622		100		1,419		21,937		23,356		(1,497)		2019
2527	Vero Beach	FL	—			1,048			17,392		3,633		1,048		19,130		20,178		(3,600)		2019
2896	Atlanta	GA	—			3,957			5,378		262		3,957		5,639		9,596		(477)		2019
2914	Lilburn	GA	—			907			17,340		654		907		17,306		18,213		(6,048)		2019
3046	Suwanee	GA	—			3,708			35,864		252		3,708		30,532		34,240		(1,994)		2019
1961	Olympia Fields	IL	—			4,120			29,400		5,443		4,120		33,580		37,700		(11,992)		2019
2903	St. Charles	IL	—			1,000			22,747		606		1,000		23,353		24,353		(1,132)		2019
2906	Wheaton	IL	—			1,599			13,268		522		1,599		13,790		15,389		(807)		2019
2899	Prairie Village	KS	—			2,554			6,994		331		2,554		2,413		4,967		(643)		2019
2787	Plymouth	MA	—			2,434			9,027		2,539		2,438		10,765		13,203		(3,341)		2019

2894	Columbia	MD	—			1,947			29,201		545		1,947		29,746		31,693		(1,345)		2019
2583	Ellicott City	MD	17,983			3,607			31,720		2,003		3,607		23,606		27,213		(4,560)		2019
2921	Frederick	MD	—			609			9,158		1,502		609		10,026		10,635		(3,609)		2019
2584	Hanover	MD	8,373			4,513			25,625		1,646		4,513		26,100		30,613		(3,636)		2019
2585	Laurel	MD	5,431			3,895			13,331		1,668		3,895		10,876		14,771		(2,720)		2019
2902	North Bethesda	MD	—			3,798			21,430		437		3,798		21,867		25,665		(1,219)		2019
2586	Parkville	MD	19,405			3,854			29,061		1,413		3,854		9,878		13,732		(3,375)		2016
2587	Waldorf	MD	7,852			392			20,514		1,044		392		6,228		6,620		(1,983)		2016
2788	Westminster	MD	—			768			5,251		2,309		768		4,503		5,271		(3,177)		2018
2920	Farmington Hills	MI	—			1,013			12,119		1,145		1,013		12,463		13,476		(4,499)		2019
2900	Plymouth Township	MI	—			1,494			16,060		768		1,494		16,828		18,322		(921)		2019
2908	Des Peres	MO	—			4,361			20,664		2,708		4,361		21,420		25,781		(7,481)		2019
2909	Richmond Heights	MO	—			1,744			24,232		1,512		1,744		17,891		19,635		(8,312)		2019
3130	Charlotte	NC	—			710			9,559		—		710		9,159		9,869		(2,997)		2006
2776	Mooresville	NC	—			2,538			37,617		2,598		2,538		40,216		42,754		(9,039)		2019
2898	Greensboro	NC	—			1,272			29,249		586		1,272		29,835		31,107		(1,401)		2019
2926	Raleigh	NC	—			1,191			11,532		1,415		1,191		12,297		13,488		(4,307)		2019
2901	Omaha	NE	—			2,864			30,793		414		2,864		31,207		34,071		(1,587)		2019

2912	Cresskill	NJ	—			4,684			53,927		2,728		4,684		55,445		60,129		(18,949)		2019
2897	Florham Park	NJ	—			8,587			30,666		1,396		8,587		32,062		40,649		(1,563)		2019
2915	Madison	NJ	—			3,157			19,909		1,180		3,157		20,436		23,593		(6,924)		2019

2907	Saddle River	NJ	—			1,784			15,625		1,539		1,784		16,382		18,166		(5,601)		2019

2905	West Orange	NJ	—			5,231			33,395		1,245		5,231		34,640		39,871		(1,627)		2019
2589	Albuquerque	NM	—			767			9,324		1,830		767		10,656		11,423		(4,984)		2019
2895	Dayton	OH	—			848			15,095		289		848		15,384		16,232		(809)		2019
2893	Westlake	OH	—			1,908			13,039		253		1,908		13,291		15,199		(752)		2019
2789	Portland	OR	—			—			16,087		771		—		9,587		9,587		(2,983)		2012

1962	Warwick	RI	—			1,050			17,388		6,699		1,050		8,805		9,855		(8,092)		2006
2755	Aiken	SC	—			357			14,832		178		363		5,858		6,221		(4,630)		2006
2756	Columbia	SC	—			408			7,527		157		412		3,104		3,516		(2,407)		2006
3131	Greenville	SC	—			1,090			12,558		—		1,090		5,323		6,413		(3,944)		2006
3132	Myrtle Beach	SC	—			900			10,913		5		900		4,487		5,387		(3,438)		2006
3063	Abilene	TX	—			300			2,830		35		300		2,388		2,688		(955)		2019
2784	Arlington	TX	—			2,494			12,192		1,371		2,540		12,807		15,347		(4,347)		2019
3054	Burleson	TX	—			1,050			5,242		42		1,050		3,229		4,279		(1,727)		2019
3068	Cedar Hill	TX	—			1,070			11,554		127		1,070		11,231		12,301		(3,911)		2019
3135	Cedar Hill	TX	—			440			7,494		13		440		6,987		7,427		(2,223)		2007
2786	Friendswood	TX	—			400			7,354		1,222		400		8,255		8,655		(3,215)		2019
2529	Grand Prairie	TX	—			865			10,650		1,737		865		12,386		13,251		(2,783)		2019
2785	Houston	TX	—			835			7,195		1,133		835		8,328		9,163		(4,110)		2019


			Encumbrances at December 31, 2020			Initial Cost to Company					Costs Capitalized Subsequent to Acquisition		Gross Amount at Which Carried As of December 31, 2020						Accumulated Depreciation(2)		Year Acquired/ Constructed
	City	State			Land			Buildings and Improvements			Land		Buildings and Improvements		Total(1)
3047	Lewisville	TX	—			4,228			35,818		982		4,228		31,065		35,293		(2,176)		2019
3065	North Richland Hills	TX	—			520			5,117		79		520		3,702		4,222		(1,694)		2019
3066	North Richland Hills	TX	—			870			9,259		46		870		8,864		9,734		(3,549)		2019
2510	Temple	TX	—			2,354			52,859		2,143		2,354		53,799		56,153		(6,850)		2019
2400	Victoria	TX	—			1,032			7,743		2,109		1,032		8,525		9,557		(2,584)		2019
2605	Victoria	TX	—			175			4,290		4,898		175		7,733		7,908		(4,450)		2019
3067	Waxahachie	TX	—			390			3,879		74		390		2,650		3,040		(1,290)		2019
2916	Arlington	VA	—			3,833			7,076		1,027		3,833		3,336		7,169		(2,743)		2006
2917	Arlington	VA	—			7,278			37,407		4,252		7,278		40,266		47,544		(14,902)		2019
3133	Chesapeake	VA	—			1,090			12,444		—		1,090		11,944		13,034		(4,056)		2006
2919	Falls Church	VA	—			2,228			8,887		1,268		2,228		9,430		11,658		(3,306)		2019

2582	Fredericksburg	VA	—			2,370			19,725		555		2,370		19,103		21,473		(2,331)		2019
2581	Leesburg	VA	11,404			1,340			17,605		1,701		1,340		18,158		19,498		(2,595)		2019
2514	Richmond	VA	—			2,981			54,203		7,276		2,981		61,479		64,460		(8,399)		2019
2777	Sterling	VA	—			1,046			15,788		966		1,046		5,278		6,324		(3,246)		2006
2918	Sterling	VA	—			2,360			22,932		1,495		2,360		13,438		15,798		(7,821)		2006
2913	Edmonds	WA	—			1,418			16,502		1,528		1,418		17,481		18,899		(5,745)		2019
2791	Kenmore	WA	—			3,284			16,641		1,456		3,284		4,350		7,634		(3,627)		2018
2923	Mercer Island	WA	—			4,209			8,123		889		4,209		4,180		8,389		(2,846)		2006
			$	318,876		$	298,952		$	2,159,571	$	152,069	$	299,042	$	1,991,376	$	2,290,418	$	(407,658)

Total discontinued operations			$	318,876		$	355,602		$	2,731,087	$	186,281	$	355,803	$	2,574,763	$	2,930,566	$	(615,708)

_______________________________________

(1)At December 31, 2020, the tax basis of the Company’s net real estate assets is less than the reported amounts by $844 million (unaudited).

(2)Buildings and improvements are depreciated over useful lives ranging up to 60 years.

(3)Assets with no initial cost to the Company represent development projects in process or completed on land that the Company leases from a third party.

A summary of activity for real estate and accumulated depreciation, excluding assets classified as discontinued operations, is as follows (in thousands):


	Year ended December 31,
	2020		2019		2018
Real estate:
Balances at beginning of year	$	10,372,584	$	9,707,488	$	9,460,973
Acquisition of real estate and development and improvements	3,460,556		1,621,739		1,047,312
Sales and/or transfers to assets held for sale	(203,687)		(852,480)		(386,770)
Deconsolidation of real estate	—		—		(325,580)

Impairments	(23,991)		(19,067)		(5,609)
Other(1)	(76,569)		(85,096)		(82,838)
Balances at end of year	$	13,528,893	$	10,372,584	$	9,707,488
Accumulated depreciation:
Balances at beginning of year	$	2,141,960	$	2,054,888	$	1,912,628
Depreciation expense	438,735		365,319		340,600
Sales and/or transfers to assets held for sale	(93,220)		(190,877)		(82,139)

Real estate held for sale	—		—		(43,525)
Other(1)	(78,340)		(87,370)		(72,676)
Balances at end of year	$	2,409,135	$	2,141,960	$	2,054,888

_______________________________________

(1)Represents real estate and accumulated depreciation related to fully depreciated assets, foreign exchange translation, or changes in lease classification.

A summary of activity for real estate and accumulated depreciation for assets classified as discontinued operations is as follows (in thousands):


	Year ended December 31,
	2020		2019		2018
Real estate:
Balances at beginning of year	$	4,133,349	$	3,440,706	$	4,257,599
Acquisition of real estate and development and improvements	119,333		812,827		46,591
Sales and/or transfers to assets classified as discontinued operations	(1,114,792)		(245,291)		(814,577)


Impairments	(198,048)		(200,546)		(44,120)
Other(1)	(9,276)		325,653		(4,787)
Balances at end of year	$	2,930,566	$	4,133,349	$	3,440,706
Accumulated depreciation:
Balances at beginning of year	$	861,557	$	817,931	$	863,602
Depreciation expense	91,726		122,792		121,064
Sales and/or transfers to assets classified as discontinued operations	(333,654)		(68,391)		(161,755)


Other(1)	(3,921)		(10,775)		(4,980)
Balances at end of year	$	615,708	$	861,557	$	817,931

_______________________________________

(1)Represents real estate and accumulated depreciation related to fully depreciated assets, foreign exchange translation, or changes in lease classification.

Schedule IV: Mortgage Loans on Real Estate

(Dollars in thousands)


Location	Segment	Interest Rate		Fixed / Variable	Maturity Date	Prior Liens		Monthly Debt Service		Face Amount of Mortgages		Carrying Amount of Mortgages		Principal Amount Subject to Delinquent Principal or Interest
First mortgages relating to one property located in:
Texas	Other	7.5	%	Fixed	04/01/2021	$	—	$	15	$	2,250	$	2,250	$	—
Florida	Other	7.5	%	Fixed	04/01/2021	—		54		8,289		8,289		—
Florida	Other	> of 2% or Libor + 4.25%		Variable	01/01/2026	—		276		51,716		51,233		—
California	Other	> of 2% or Libor + 4.25%		Variable	05/07/2026	—		70		13,257		13,477		—
Florida	Other	3.5	%	Fixed	12/17/2021	—		23		7,798		6,397		—
Florida	Other	3.5	%	Fixed	12/17/2021	—		11		3,912		3,137		—
Florida	Other	3.5	%	Fixed	12/17/2021	—		41		14,208		13,968		—
California	Other	3.5	%	Fixed	12/16/2021	—		102		35,100		34,359		—
First mortgage relating to 11 properties located in:
California	Other	5.5	%	Fixed	04/06/2022	—		118		25,000		24,462		—
						$	—	$	710	$	161,530	$	157,572	$	—


	Year Ended December 31,
	2020		2019		2018
Reconciliation of mortgage loans
Balance at beginning of year	$	161,964	$	42,037	$	188,418
Additions:
New mortgage loans	98,469		59,552		—
Draws on existing mortgage loans	19,182		60,375		42,398
Total additions	117,651		119,927		42,398

Deductions:
Principal repayments and conversions to equity ownership(1)	(113,200)		—		(188,779)
Reserve for loan losses(2)	(8,843)		—		—
Total deductions	(122,043)		—		(188,779)

Balance at end of year	$	157,572	$	161,964	$	42,037

_______________________________________

(1)Includes the conversion of loans into equity ownership in real estate.

(2)The year ended 2020 includes current expected credit loss reserves recognized under ASU 2016-13, which was adopted on January 1, 2020 (see Note 2 to the Consolidated Financial Statements). The year ended 2020 also includes an immaterial amount related to the cumulative-effect of adoption of ASU 2016-13. Refer to Note 7 for additional information on the Company’s reserve for loan losses.

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