Item 1. CONSOLIDATED FINANCIAL STATEMENTS

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Item 1. CONSOLIDATED FINANCIAL STATEMENTS

VENTAS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts, unaudited)


	As of September 30, 2022		As of December 31, 2021


Assets
Real estate investments:
Land and improvements	$	2,421,114	$	2,432,065
Buildings and improvements	25,975,744		25,778,490
Construction in progress	258,281		269,315
Acquired lease intangibles	1,341,483		1,369,747
Operating lease assets	312,902		317,858
	30,309,524		30,167,475
Accumulated depreciation and amortization	(9,031,591)		(8,350,637)
Net real estate property	21,277,933		21,816,838
Secured loans receivable and investments, net	529,317		530,126
Investments in unconsolidated real estate entities	547,766		523,465
Net real estate investments	22,355,016		22,870,429
Cash and cash equivalents	145,146		149,725
Escrow deposits and restricted cash	50,492		46,872
Goodwill	1,043,289		1,046,140
Assets held for sale	99,450		28,399
Deferred income tax assets, net	13,614		11,152
Other assets	593,404		565,069
Total assets	$	24,300,411	$	24,717,786
Liabilities and equity
Liabilities:
Senior notes payable and other debt	$	12,210,984	$	12,027,544
Accrued interest	92,663		106,602
Operating lease liabilities	191,880		197,234
Accounts payable and other liabilities	1,063,969		1,090,254
Liabilities related to assets held for sale	9,491		10,850
Deferred income tax liabilities	40,717		59,259
Total liabilities	13,609,704		13,491,743
Redeemable OP unitholder and noncontrolling interests	258,795		280,283
Commitments and contingencies
Equity:
Ventas stockholders’ equity:
Preferred stock, $1.00 par value; 10,000 shares authorized, unissued	—		—
Common stock, $0.25 par value; 600,000 shares authorized, 399,725 and 399,420 shares issued at September 30, 2022 and December 31, 2021, respectively	99,914		99,838
Capital in excess of par value	15,533,203		15,498,956
Accumulated other comprehensive loss	(47,309)		(64,520)
Retained earnings (deficit)	(5,223,902)		(4,679,889)
Treasury stock, 10 and 0 shares issued at September 30, 2022 and December 31, 2021, respectively	(547)		—
Total Ventas stockholders’ equity	10,361,359		10,854,385
Noncontrolling interests	70,553		91,375
Total equity	10,431,912		10,945,760
Total liabilities and equity	$	24,300,411	$	24,717,786

See accompanying notes.

VENTAS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts, unaudited)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues
Rental income:
Triple-net leased	$	150,115	$	181,379	$	451,073	$	500,487
Office	200,867		201,673		600,648		599,516
	350,982		383,052		1,051,721		1,100,003
Resident fees and services	668,583		558,039		1,977,760		1,622,641
Office building and other services revenue	4,550		5,841		12,825		16,172
Income from loans and investments	12,672		28,729		33,271		65,404
Interest and other income	489		417		2,191		1,343
Total revenues	1,037,276		976,078		3,077,768		2,805,563
Expenses
Interest	119,413		108,816		344,158		329,634
Depreciation and amortization	301,481		313,596		873,620		878,444
Property-level operating expenses:
Senior housing	499,972		453,659		1,482,948		1,296,301
Office	66,098		66,401		192,609		195,297
Triple-net leased	3,756		3,268		11,349		12,525
	569,826		523,328		1,686,906		1,504,123
Office building and other services costs	1,750		522		4,473		1,798
General, administrative and professional fees	35,421		30,259		111,334		101,156
Loss on extinguishment of debt, net	574		29,792		581		56,808

Transaction expenses and deal costs	4,782		22,662		37,852		28,000
Allowance on loans receivable and investments	(63)		(60)		(179)		(9,021)
Other	9,162		33,673		30,088		10,755
Total expenses	1,042,346		1,062,588		3,088,833		2,901,697
Loss before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests	(5,070)		(86,510)		(11,065)		(96,134)
Income (loss) from unconsolidated entities	1,970		2,772		(3,346)		7,289
Gain on real estate dispositions	136		150,292		2,557		194,083
Income tax benefit (expense)	6,027		(3,780)		14,307		(9,574)
Income from continuing operations	3,063		62,774		2,453		95,664
Net income	3,063		62,774		2,453		95,664
Net income attributable to noncontrolling interests	1,807		2,094		4,881		5,802
Net income (loss) attributable to common stockholders	$	1,256	$	60,680	$	(2,428)	$	89,862
Earnings per common share
Basic:
Income from continuing operations	$	0.01	$	0.16	$	0.01	$	0.25

Net income (loss) attributable to common stockholders	0.00		0.16		(0.01)		0.24
Diluted:1
Income from continuing operations	$	0.01	$	0.16	$	0.01	$	0.25

Net income (loss) attributable to common stockholders	0.00		0.16		(0.01)		0.24

1 Potential common shares are not included in the computation of diluted earnings per share when a loss from continuing operations exists as the effect would be an antidilutive per share amount.

See accompanying notes.

VENTAS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, unaudited)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Net income	$	3,063	$	62,774	$	2,453	$	95,664
Other comprehensive income (loss):
Foreign currency translation loss	(3,685)		(2,763)		(24,427)		(3,795)
Unrealized loss on available for sale securities	(1,252)		(13,638)		(3,371)		(20,918)
Unrealized gain on derivative instruments	7,870		4,578		41,013		13,389
Total other comprehensive income (loss)	2,933		(11,823)		13,215		(11,324)
Comprehensive income	5,996		50,951		15,668		84,340
Comprehensive (loss) income attributable to noncontrolling interests	(4,308)		(418)		885		7,724
Comprehensive income attributable to common stockholders	$	10,304	$	51,369	$	14,783	$	76,616

See accompanying notes.

VENTAS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended September 30, 2022 and 2021

(In thousands, except per share amounts, unaudited)


2019	Common Stock Par Value		Capital in Excess of Par Value		Accumulated Other Comprehensive (Loss) Income		Retained Earnings (Deficit)		Treasury Stock		Total Ventas Stockholders’ Equity		Noncontrolling Interests		Total Equity
Balance at July 1, 2022	$	99,913	$	15,514,015	$	(56,355)	$	(5,044,569)	$	(408)	$	10,512,596	$	90,798	$	10,603,394
Net income	—		—		—		1,256		—		1,256		1,807		3,063
Other comprehensive income (loss)	—		—		9,046		—		—		9,046		(6,113)		2,933

Net change in noncontrolling interests	—		(14,645)		—		—		—		(14,645)		(15,939)		(30,584)
Dividends to common stockholders—$0.45 per share	—		—		—		(180,589)		—		(180,589)		—		(180,589)


Issuance of common stock for stock plans, restricted stock grants and other	1		6,101		—		—		(139)		5,963		—		5,963
Adjust redeemable OP unitholder interests to current fair value	—		27,746		—		—		—		27,746		—		27,746

Redemption of OP Units	—		(14)		—		—		—		(14)		—		(14)
Balance at September 30, 2022	$	99,914	$	15,533,203	$	(47,309)	$	(5,223,902)	$	(547)	$	10,361,359	$	70,553	$	10,431,912

Balance at July 1, 2021	$	93,784	$	14,187,577	$	(58,290)	$	(4,340,052)	$	(320)	$	9,882,699	$	101,205	$	9,983,904
Net income	—		—		—		60,680		—		60,680		2,094		62,774
Other comprehensive loss	—		—		(9,311)		—		—		(9,311)		(2,512)		(11,823)
Acquisition-related activity	3,332		747,916		—		—		—		751,248		—		751,248
Net change in noncontrolling interests	—		(41,248)		—		—		—		(41,248)		(10,358)		(51,606)
Dividends to common stockholders—$0.45 per share	—		—		—		(180,258)		—		(180,258)		—		(180,258)

Issuance of common stock for stock plans, restricted stock grants and other	2,661		606,620		—		—		204		609,485		—		609,485

Adjust redeemable OP unitholder interests to current fair value	—		3,386		—		—		—		3,386		—		3,386
Redemption of OP Units	—		(41)		—		—		76		35		—		35


Balance at September 30, 2021	$	99,777	$	15,504,210	$	(67,601)	$	(4,459,630)	$	(40)	$	11,076,716	$	90,429	$	11,167,145

See accompanying notes.

VENTAS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

For the Nine Months Ended September 30, 2022 and 2021

(In thousands, except per share amounts, unaudited)


2019	Common Stock Par Value		Capital in Excess of Par Value		Accumulated Other Comprehensive (Loss) Income		Retained Earnings (Deficit)		Treasury Stock		Total Ventas Stockholders’ Equity		Noncontrolling Interests		Total Equity
Balance at January 1, 2022	$	99,838	$	15,498,956	$	(64,520)	$	(4,679,889)	$	—	$	10,854,385	$	91,375	$	10,945,760
Net (loss) income	—		—		—		(2,428)		—		(2,428)		4,881		2,453
Other comprehensive income (loss)	—		—		17,211		—		—		17,211		(3,996)		13,215

Net change in noncontrolling interests	—		(21,166)		—		—		—		(21,166)		(21,707)		(42,873)
Dividends to common stockholders—$1.35 per share	—		—		—		(541,585)		—		(541,585)		—		(541,585)

Issuance of common stock for stock plans, restricted stock grants and other	76		31,273		—		—		(547)		30,802		—		30,802

Adjust redeemable OP unitholder interests to current fair value	—		24,154		—		—		—		24,154		—		24,154
Redemption of OP Units	—		(14)		—		—		—		(14)		—		(14)

Balance at September 30, 2022	$	99,914	$	15,533,203	$	(47,309)	$	(5,223,902)	$	(547)	$	10,361,359	$	70,553	$	10,431,912

Balance at January 1, 2021	$	93,635	$	14,171,262	$	(54,354)	$	(4,030,376)	$	—	$	10,180,167	$	98,024	$	10,278,191
Net income	—		—		—		89,862		—		89,862		5,802		95,664
Other comprehensive (loss) income	—		—		(13,247)		—		—		(13,247)		1,923		(11,324)
Acquisition-related activity	3,332		747,916		—		—		—		751,248		—		751,248
Net change in noncontrolling interests	—		(35,009)		—		—		—		(35,009)		(15,320)		(50,329)
Dividends to common stockholders—$1.35 per share	—		—		—		(519,116)		—		(519,116)		—		(519,116)

Issuance of common stock for stock plans, restricted stock grants and other	2,810		642,054		—		—		(116)		644,748		—		644,748

Adjust redeemable OP unitholder interests to current fair value	—		(21,953)		—		—		—		(21,953)		—		(21,953)
Redemption of OP Units	—		(60)		—		—		76		16		—		16

Balance at September 30, 2021	$	99,777	$	15,504,210	$	(67,601)	$	(4,459,630)	$	(40)	$	11,076,716	$	90,429	$	11,167,145

See accompanying notes.

VENTAS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)


	For the Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net income	$	2,453	$	95,664
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	873,620		878,444
Amortization of deferred revenue and lease intangibles, net	(48,462)		(71,620)
Other non-cash amortization	9,483		14,686
Allowance on loans receivable and investments	(179)		(9,021)
Stock-based compensation	28,786		26,165
Straight-lining of rental income	(10,131)		(10,166)
Loss on extinguishment of debt, net	581		56,808
Gain on real estate dispositions	(2,557)		(194,083)

Gain on real estate loan investments	—		(2,006)

Income tax (benefit) expense	(16,961)		4,656
Loss (income) and other from unconsolidated entities	3,352		(7,279)

Distributions from unconsolidated entities	15,467		9,466

Other	36,422		(830)
Changes in operating assets and liabilities:
Increase in other assets	(53,433)		(49,051)
Decrease in accrued interest	(12,772)		(22,414)
Increase in accounts payable and other liabilities	27,241		40,896
Net cash provided by operating activities	852,910		760,315
Cash flows from investing activities:
Net investment in real estate property	(439,299)		(1,103,210)


Investment in loans receivable	(5,337)		(384)
Proceeds from real estate disposals	12,481		497,303
Proceeds from loans receivable	692		302,700




Development project expenditures	(126,988)		(204,649)
Capital expenditures	(154,761)		(119,311)
Distributions from unconsolidated entities	28,311		17,847
Investment in unconsolidated entities	(50,402)		(107,140)
Insurance proceeds for property damage claims	9,982		501
Net cash used in investing activities	(725,321)		(716,343)
Cash flows from financing activities:
Net change in borrowings under revolving credit facilities	(19,442)		(144,065)
Net change in borrowings under commercial paper program	97,066		369,943
Proceeds from debt	888,927		914,879
Repayment of debt	(513,606)		(1,499,036)
Purchase of noncontrolling interests	(170)		(11,485)
Payment of deferred financing costs	(7,664)		(23,608)
Issuance of common stock, net	—		617,438
Cash distribution to common stockholders	(540,205)		(506,972)
Cash distribution to redeemable OP unitholders	(4,732)		(5,400)
Cash issued for redemption of OP Units	(328)		(96)
Contributions from noncontrolling interests	51		35
Distributions to noncontrolling interests	(27,152)		(11,785)
Proceeds from stock option exercises	8,691		5,668
Other	(6,392)		(5,128)
Net cash used in financing activities	(124,956)		(299,612)
Net increase (decrease) in cash, cash equivalents and restricted cash	2,633		(255,640)
Effect of foreign currency translation	(3,592)		522
Cash, cash equivalents and restricted cash at beginning of period	196,597		451,640
Cash, cash equivalents and restricted cash at end of period	$	195,638	$	196,522

See accompanying notes.

VENTAS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In thousands, unaudited)


	For the Nine Months Ended September 30,
	2022		2021
Supplemental schedule of non-cash activities:
Assets acquired and liabilities assumed from acquisitions and other:
Real estate investments	$	16,599	$	1,317,617

Other assets	856		16,132
Debt	—		484,073
Other liabilities	7,747		97,960
Deferred income tax liability	960		—
Noncontrolling interests	3,351		468
Equity issued	—		751,248
Equity issued for redemption of OP Units	—		76
Investment in unconsolidated entities	8,100		—

See accompanying notes.

VENTAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—DESCRIPTION OF BUSINESS

Ventas, Inc. (together with its consolidated subsidiaries, unless otherwise indicated or except where the context otherwise requires, “we,” “us,” “our,” “Company” and other similar terms), an S&P 500 company, is a real estate investment trust (“REIT”) operating at the intersection of healthcare and real estate. We hold a highly diversified portfolio of senior housing communities, medical office buildings (“MOBs”), life science, research and innovation centers, hospitals and other healthcare facilities, which we generally refer to as “healthcare real estate,” located throughout the United States, Canada and the United Kingdom. As of September 30, 2022, we owned or had investments in approximately 1,300 properties (including properties classified as held for sale). Our company was originally founded in 1983 and is headquartered in Chicago, Illinois with additional corporate offices in Louisville, Kentucky and New York, New York.

We primarily invest in a diversified portfolio of healthcare real estate assets through wholly owned subsidiaries and other co-investment entities. We operate through three reportable business segments: triple-net leased properties, senior housing operating portfolio, which we also refer to as “SHOP” and is formerly known as senior living operations, and office operations. See “Note 2 – Accounting Policies” and “Note 16 – Segment Information.” Our senior housing communities are either subject to triple-net leases, in which case they are included in our triple-net leased properties reportable business segment, or operated by independent third-party managers, in which case they are included in our SHOP reportable business segment.

As of September 30, 2022, we leased a total of 331 properties (excluding properties within our office operations reportable business segment) to various healthcare operating companies under triple-net or absolute-net leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures. Our three largest tenants, Brookdale Senior Living Inc. (together with its subsidiaries, “Brookdale Senior Living”), Ardent Health Partners, LLC (together with its subsidiaries, “Ardent”) and Kindred Healthcare, LLC (together with its subsidiaries, “Kindred”) leased from us 121 properties, 30 properties and 29 properties, respectively, as of September 30, 2022.

As of September 30, 2022, pursuant to long-term management agreements, we engaged independent operators, such as Atria Senior Living, Inc. (together with its subsidiaries, including Holiday Retirement (“Holiday”), “Atria”) and Sunrise Senior Living, LLC (together with its subsidiaries, “Sunrise”), to manage 558 senior housing communities for us.

Through our Lillibridge Healthcare Services, Inc. subsidiary and our ownership interest in PMB Real Estate Services LLC, we also provide MOB management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. In addition, from time to time, we make secured and non-mortgage loans and other investments relating to senior housing and healthcare operators or properties.

Continuing Impact of and Response to COVID-19 and Its Extended Consequences

During fiscal 2020 and 2021 and continuing into fiscal 2022, our business has been and is expected to continue to be impacted by COVID-19 and its extended consequences.

Accounting Considerations. We have not identified COVID-19, on its own, as a “triggering event” for purposes of evaluating impairment of real estate assets, goodwill and other intangibles, investments in unconsolidated entities and financial instruments. However, as of September 30, 2022, we considered the effect of COVID-19 on certain of our assets and our ability to recover the respective carrying values of these assets. We applied our considerations to existing critical accounting policies that require us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities. We based our estimates on our experience and on assumptions we believe to be reasonable under the circumstances. For both the nine months ended September 30, 2022 and 2021, we recognized no COVID-19 related charges in our Consolidated Statements of Income.

Provider Relief Grants. We applied for grants under the Provider Relief Fund administered by the U.S. Department of Health & Human Services (“HHS”) on behalf of the assisted living communities in our SHOP reportable business segment to partially mitigate losses attributable to COVID-19. These grants are intended to reimburse eligible providers for expenses incurred to prevent, prepare for and respond to COVID-19 and lost revenues attributable to COVID-19. Recipients are not required to repay distributions from the Provider Relief Fund, provided that they attest to and comply with certain terms and conditions.

VENTAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We received $20.2 million and $54.2 million during the three and nine months ended September 30, 2022, respectively, as compared to zero and $13.6 million during the three and nine months ended September 30, 2021, respectively. We recognized these grants within property-level operating expenses in our Consolidated Statements of Income in the period in which they were received.

Continuing Impact. The trajectory and future impact of COVID-19 and its extended consequences remain highly uncertain and will depend on a variety of factors, including the impact of new variants of the virus and the effectiveness of available vaccines against those variants; ongoing clinical experience, which may differ considerably across governmental and regulatory bodies and regions and fluctuate over time; and other future developments, including the ultimate duration, spread and intensity of the outbreak, the availability of testing, the extent to which governments impose, roll-back or re-impose preventative restrictions and the availability of ongoing government financial support to our business, tenants and operators. Due to these uncertainties, we are not able at this time to estimate the ultimate impact of COVID-19 on our business, results of operations, financial condition and cash flows.

NOTE 2—ACCOUNTING POLICIES

The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”), and with the Securities and Exchange Commission (“SEC”) instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The accompanying Consolidated Financial Statements and related notes should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”). Certain prior period amounts have been reclassified to conform to the current period presentation.

Principles of Consolidation

The accompanying Consolidated Financial Statements include our accounts and the accounts of our wholly owned subsidiaries and the joint venture entities over which we exercise control. All intercompany transactions and balances have been eliminated in consolidation, and our net earnings are reduced by the portion of net earnings attributable to noncontrolling interests.

GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; and (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. We consolidate our investment in a VIE when we determine that we are its primary beneficiary. We may change our original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affects the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary.

We identify the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. We perform this analysis on an ongoing basis.

As it relates to investments in joint ventures, GAAP may preclude consolidation by the sole general partner in certain circumstances based on the type of rights held by the limited partner or partners. We assess limited partners’ rights and their impact on our consolidation conclusions, and we reassess if there is a change to the terms or in the exercisability of the rights of the limited partners, the sole general partner increases or decreases its ownership of limited partnership (“LP”) interests or there is an increase or decrease in the number of outstanding LP interests. We also apply this guidance to managing member interests in limited liability companies (“LLCs”).

VENTAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We consolidate several VIEs that share the following common characteristics:

the VIE is in the legal form of an LP or LLC;
the VIE was designed to own and manage its underlying real estate investments;
we are the general partner or managing member of the VIE;
we own a majority of the voting interests in the VIE;
a minority of voting interests in the VIE are owned by external third parties, unrelated to us;
the minority owners do not have substantive kick-out or participating rights in the VIE; and
we are the primary beneficiary of the VIE.

We have separately identified certain special purpose entities that were established to allow investments in life science, research and innovation projects by tax credit investors (“TCIs”). We have determined that these special purpose entities are VIEs, we are a holder of variable interests and we are the primary beneficiary of the VIEs, and therefore, we consolidate these special purpose entities. Our primary beneficiary determination is based upon several factors, including but not limited to, the rights we have in directing the activities which most significantly impact the VIEs’ economic performance as well as certain guarantees which protect the TCIs from losses should a tax credit recapture event occur.

In general, the assets of consolidated VIEs are available only for the settlement of the obligations of the respective entities. Unless otherwise required by the LP or LLC agreement, any mortgage loans of the consolidated VIEs are non-recourse to us. The table below summarizes the total assets and liabilities of our consolidated VIEs as reported on our Consolidated Balance Sheets (dollars in thousands):


	As of September 30, 2022				As of December 31, 2021
	Total Assets		Total Liabilities		Total Assets		Total Liabilities
NHP/PMB L.P.	$	750,667	$	259,720	$	749,834	$	251,352
Other identified VIEs	3,616,590		1,489,250		3,805,567		1,552,237
Tax credit VIEs	260,742		38,525		458,953		103,992

Investments in Unconsolidated Entities

We report investments in unconsolidated entities over whose operating and financial policies we have the ability to exercise significant influence under the equity method of accounting. We adjust our investment in unconsolidated entities for additional contributions made, distributions received as well as our share of the investee’s earnings or losses, which is included in loss from unconsolidated entities in our Consolidated Statements of Income.

We base the initial carrying value of investments in unconsolidated entities on the fair value of the assets at the time we acquired the joint venture interest. We estimate fair values for our equity method investments based on discounted cash flow models that include all estimated cash inflows and outflows over a specified holding period and, where applicable, any estimated debt premiums or discounts. The capitalization rates, discount rates and credit spreads we use in these models are based upon assumptions that we believe to be within a reasonable range of current market rates for the respective investments.

We generally amortize any difference between our cost basis and the basis reflected at the joint venture level, if any, over the lives of the related assets and liabilities and include that amortization in our share of income or loss from unconsolidated entities. For earnings of equity method investments with pro rata distribution allocations, net income or loss is allocated between the partners in the joint venture based on their respective stated ownership percentages. In other instances, net income or loss may be allocated between the partners in the joint venture based on the hypothetical liquidation at book value method (the “HLBV method”). Under the HLBV method, net income or loss is allocated between the partners based on the difference between each partner’s claim on the net assets of the joint venture at the end and beginning of the period, after taking into account contributions and distributions. Each partner’s share of the net assets of the joint venture is calculated as the amount that the partner would receive if the joint venture were to liquidate all of its assets at net book value and distribute the resulting cash to creditors and partners in accordance with their respective priorities. Under the HLBV method, in any given period, we could record more or less income than the joint venture has generated, than actual cash distributions we receive or than the amount we may receive in the event of an actual liquidation.

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Redeemable OP Unitholder and Noncontrolling Interests

We own a majority interest in NHP/PMB L.P. (“NHP/PMB”), a limited partnership formed in 2008, to acquire properties from entities affiliated with Pacific Medical Buildings LLC (“PMB”). Given our wholly owned subsidiary is the general partner and the primary beneficiary of NHP/PMB, we consolidate NHP/PMB as a VIE. As of September 30, 2022, third party investors owned 3.9 million Class A limited partnership units in NHP/PMB (“OP Units”), which represented 34% of the total units then outstanding, and we owned 7.5 million Class B limited partnership units in NHP/PMB, representing the remaining 66%. The OP Units may be redeemed at any time at the election of the holder for cash or, at our option, 0.9051 shares of our common stock per OP Unit, subject to adjustment in certain circumstances. We are party by assumption to a registration rights agreement with the holders of the OP Units that requires us, subject to the terms and conditions and certain exceptions set forth therein, to file and maintain a registration statement relating to the issuance of shares of our common stock upon redemption of OP Units.

The OP Units are classified outside of permanent equity on our Consolidated Balance Sheets because they may be redeemed by third parties under circumstances that are outside of our control. We reflect the OP Units at the greater of cost or redemption value. As of September 30, 2022 and December 31, 2021, the fair value of the OP Units was $152.9 million and $182.1 million, respectively. We recognize changes in fair value through capital in excess of par value, net of cash distributions paid and purchases by us of any OP Units. Our diluted earnings per share includes the effect of any potential shares outstanding from redemption of the OP Units.

Certain noncontrolling interests of other consolidated joint ventures were also classified as redeemable at September 30, 2022 and December 31, 2021. We record the carrying amount of these noncontrolling interests at the greater of their initial carrying amount (increased or decreased for the noncontrolling interests’ share of net income or loss and distributions) or the redemption value, which is primarily based on the fair value of the underlying real estate asset. Our joint venture partners have certain redemption rights with respect to their noncontrolling interests in these joint ventures that are outside of our control, and the redeemable noncontrolling interests are classified outside of permanent equity on our Consolidated Balance Sheets. We recognize changes in the carrying value of redeemable noncontrolling interests through capital in excess of par value on our Consolidated Balance Sheets.

Noncontrolling Interests

Excluding the redeemable noncontrolling interests described above, we present the portion of any equity that we do not own in entities that we control (and thus consolidate) as noncontrolling interests and classify those interests as a component of consolidated equity, separate from total Ventas stockholders’ equity, on our Consolidated Balance Sheets. For consolidated joint ventures with pro rata distribution allocations, net income or loss, and comprehensive income, is allocated between the joint venture partners based on their respective stated ownership percentages. In other cases, net income or loss is allocated between the joint venture partners based on the HLBV method. We account for purchases or sales of equity interests that do not result in a change of control as equity transactions, through capital in excess of par value. We include net income attributable to the noncontrolling interests in net income in our Consolidated Statements of Income and we include the noncontrolling interests’ share of comprehensive income in our Consolidated Statements of Comprehensive Income.

Accounting for Historic and New Markets Tax Credits

For certain of our life science, research and innovation centers, we are party to contractual arrangements with TCIs that were established to enable the TCIs to receive benefits of historic tax credits (“HTCs”), new markets tax credits (“NMTCs”) or both. As of September 30, 2022, we owned four properties that had syndicated HTCs or NMTCs, or both, to TCIs.

In general, TCIs invest cash into special purpose entities that invest in entities that own the subject property and generate the tax credits. The TCIs receive substantially all of the tax credits and hold only a nominal interest in the economic risk and benefits of the special purpose entities.

HTCs are delivered to the TCIs upon substantial completion of the project. NMTCs are allowed for up to 39% of a qualified investment and are delivered to the TCIs after the investment has been funded and spent on a qualified business. HTCs are subject to recapture within five years of substantial completion. The amount of the recapture is equal to 100% of the HTCs during the first year after the completion of the historic rehabilitation and is reduced by 20% each year during the subsequent five year period. NMTCs are subject to recapture until the end of the seventh year following the qualifying

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investment. We have provided the TCIs with certain guarantees which protect the TCIs from losses should a tax credit recapture event occur. The contractual arrangements with the TCIs include a put/call provision whereby we may be obligated or entitled to repurchase the interest of the TCIs in the special purpose entities at the end of the tax credit recapture period. We anticipate that either the TCIs will exercise their put rights or we will exercise our call rights prior to the applicable tax credit recapture periods.

The portion of the TCI’s investment that is attributed to the put is recorded at fair value at inception in accounts payable and other liabilities on our Consolidated Balance Sheets, and is accreted to the expected put price as interest expense in our Consolidated Statements of Income over the recapture period. The remaining balance of the TCI’s investment is initially recorded in accounts payable and other liabilities on our Consolidated Balance Sheets and will be relieved upon delivery of the tax credit to the TCI, as a reduction in the carrying value of the subject property, net of allocated expenses. Direct and incremental costs incurred in structuring the transaction are deferred and will be recognized as an increase in the cost basis of the subject property upon the recognition of the related tax credit as discussed above.

Accounting for Real Estate Acquisitions

When we acquire real estate, we first make reasonable judgments about whether the transaction involves an asset or a business. Our real estate acquisitions are generally accounted for as asset acquisitions as substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. Regardless of whether an acquisition is considered a business combination or an asset acquisition, we record the cost of the businesses or assets acquired as tangible and intangible assets and liabilities based upon their estimated fair values as of the acquisition date.

We estimate the fair value of buildings acquired on an as-if-vacant basis or replacement cost basis and depreciate the building value over the estimated remaining life of the building, generally not to exceed 35 years. We determine the fair value of other fixed assets, such as site improvements and furniture, fixtures and equipment, based upon the replacement cost and depreciate such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. We determine the value of land either by considering the sales prices of similar properties in recent transactions or based on internal analyses of recently acquired and existing comparable properties within our portfolio. We generally determine the value of construction in progress based upon the replacement cost. However, for certain acquired properties that are part of a ground-up development, we determine fair value by using the same valuation approach as for all other properties and deducting the estimated cost to complete the development. During the remaining construction period, we capitalize project costs until the development has reached substantial completion. Construction in progress, including capitalized interest, is not depreciated until the development has reached substantial completion.

Intangibles primarily include the value of in-place leases and acquired lease contracts. We include all lease-related intangible assets and liabilities within acquired lease intangibles and accounts payable and other liabilities, respectively, on our Consolidated Balance Sheets.

The fair value of acquired lease-related intangibles, if any, reflects: (i) the estimated value of any above or below market leases, determined by discounting the difference between the estimated market rent and in-place lease rent; and (ii) the estimated value of in-place leases related to the cost to obtain tenants, including leasing commissions, and an estimated value of the absorption period to reflect the value of the rent and recovery costs foregone during a reasonable lease-up period as if the acquired space was vacant. We amortize any acquired lease-related intangibles to revenue or amortization expense over the remaining life of the associated lease plus any assumed bargain renewal periods. If a lease is terminated prior to its stated expiration or not renewed upon expiration, we recognize all unamortized amounts of lease-related intangibles associated with that lease in operations over the shortened lease term.

We estimate the fair value of purchase option intangible assets and liabilities, if any, by discounting the difference between the applicable property’s acquisition date fair value and an estimate of its future option price. We do not amortize the resulting intangible asset or liability over the term of the lease, but rather adjust the recognized value of the asset or liability upon sale.

In connection with an acquisition, we may assume rights and obligations under certain lease agreements pursuant to which we become the lessee of a given property. We generally assume the lease classification previously determined by the prior lessee absent a modification in the assumed lease agreement. We assess assumed operating leases, including ground leases, to determine whether the lease terms are favorable or unfavorable to us given current market conditions on the acquisition date. To the extent the lease terms are favorable or unfavorable to us relative to market conditions on the acquisition

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date, we recognize an intangible asset or liability at fair value and amortize that asset or liability to interest or rental expense in our Consolidated Statements of Income over the applicable lease term. Where we are the lessee, we record the acquisition date values of leases, including any above or below market value, within operating lease assets and operating lease liabilities on our Consolidated Balance Sheets.

We estimate the fair value of noncontrolling interests assumed consistent with the manner in which we value all of the underlying assets and liabilities.

We calculate the fair value of long-term assumed debt by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which we approximate based on the rate at which we would expect to incur a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument.

Fair Values of Financial Instruments

Fair value is a market-based measurement, not an entity-specific measurement, and we determine fair value based on the assumptions that we expect market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within levels one and two of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within level three of the hierarchy).

Level one inputs utilize unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access. Level two inputs are inputs other than quoted prices included in level one that are directly or indirectly observable for the asset or liability. Level two inputs may include quoted prices for similar assets and liabilities in active markets and other inputs for the asset or liability that are observable at commonly quoted intervals, such as interest rates, foreign exchange rates and yield curves. Level three inputs are unobservable inputs for the asset or liability, which typically are based on our own assumptions, because there is little, if any, related market activity. If the determination of the fair value measurement is based on inputs from different levels of the hierarchy, the level within which the entire fair value measurement falls is the lowest level input that is significant to the fair value measurement in its entirety. If the volume and level of market activity for an asset or liability has decreased significantly relative to the normal market activity for such asset or liability (or similar assets or liabilities), then transactions or quoted prices may not accurately reflect fair value. In addition, if there is evidence that a transaction for an asset or liability is not orderly, little, if any, weight is placed on that transaction price as an indicator of fair value. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

We use the following methods and assumptions in estimating the fair value of our financial instruments whose fair value is determined on a recurring basis.

Cash and cash equivalents - The carrying amount of unrestricted cash and cash equivalents reported on our Consolidated Balance Sheets approximates fair value due to the short maturity of these instruments.
Escrow deposits and restricted cash - The carrying amount of escrow deposits and restricted cash reported on our Consolidated Balance Sheets approximates fair value due to the short maturity of these instruments.
Loans receivable - We estimate the fair value of loans receivable using level two and level three inputs, including underlying asset performance and credit quality. We discount future cash flows using current interest rates at which similar loans with the same terms and length to maturity would be made to borrowers with similar credit ratings.
Available for sale securities - We estimate the fair value of marketable debt securities using level two inputs. We observe quoted prices for similar assets or liabilities in active markets that we have the ability to access. We estimate the fair value of certain government-sponsored pooled loan investments using level three inputs. We consider credit spreads, underlying asset performance and credit quality, and default rates.
Derivative instruments - With the assistance of a third party, we estimate the fair value of derivative instruments, including interest rate caps, interest rate swaps, and foreign currency forward contracts, using level two inputs.

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◦Interest rate caps - We observe forward yield curves and other relevant information.

◦Interest rate swaps - We observe alternative financing rates derived from market-based financing rates, forward yield curves and discount rates.

◦Foreign currency forward contracts - We estimate the future values of the two currency tranches using forward exchange rates that are based on traded forward points and calculate a present value of the net amount using a discount factor based on observable traded interest rates.

Stock warrants - We estimate the fair value of stock warrants using level two inputs that are obtained from public sources. Inputs include equity spot price, dividend yield, volatility and risk-free rate.
Senior notes payable and other debt - We estimate the fair value of senior notes payable and other debt using level two inputs. We discount the future cash flows using current interest rates at which we could obtain similar borrowings. For mortgage debt, we may estimate fair value using level three inputs, similar to those used in determining fair value of loans receivable (above).
Redeemable OP unitholder interests - We estimate the fair value of our redeemable OP unitholder interests using level one inputs. We base fair value on the closing price of our common stock, as OP Units may be redeemed at the election of the holder for cash or, at our option, shares of our common stock, subject to adjustment in certain circumstances.

Impairment of Long-Lived and Intangible Assets

We periodically evaluate our long-lived assets, primarily consisting of investments in real estate, for impairment indicators. If indicators of impairment are present, we evaluate the carrying value of the related real estate investments in relation to the future undiscounted cash flows of the underlying operations. In performing this evaluation, we consider market conditions and our current intentions with respect to holding or disposing of the asset. We adjust the net book value of properties and other long-lived assets to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. We recognize an impairment loss at the time we make any such determination.

If impairment indicators arise with respect to intangible assets with finite useful lives, we evaluate impairment by comparing the carrying amount of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset. If estimated future undiscounted net cash flows are less than the carrying amount of the asset, then we estimate the fair value of the asset and compare the estimated fair value to the intangible asset’s carrying value. We recognize any shortfall from carrying value as an impairment loss in the current period.

We evaluate our investments in unconsolidated entities for impairment at least annually, and whenever events or changes in circumstances indicate that the carrying value of our investment may exceed its fair value. If we determine that a decline in the fair value of our investment in an unconsolidated entity is other-than-temporary, and if such reduced fair value is below the carrying value, we record an impairment.

We test goodwill for impairment at least annually, and more frequently if indicators of impairment arise. We first assess qualitative factors, such as current macroeconomic conditions, state of the equity and capital markets and our overall financial and operating performance, to determine the likelihood that the fair value of a reporting unit is less than its carrying amount. If we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we proceed with estimating the fair value of the reporting unit. A goodwill impairment, if any, will be recognized in the period it is determined and is measured as the amount by which a reporting unit’s carrying value exceeds its fair value.

Estimates of fair value used in our evaluation of goodwill (if necessary, based on our qualitative assessment), investments in real estate, investments in unconsolidated entities and intangible assets are based upon discounted future cash flow projections or other acceptable valuation techniques that are based, in turn, upon all available evidence including level three inputs, such as revenue and expense growth rates, estimates of future cash flows, capitalization rates, discount rates, general economic conditions and trends, or other available market data such as replacement cost or comparable sales. Our ability to accurately predict future operating results and cash flows and to estimate and determine fair values impacts the timing

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and recognition of impairments. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our financial results.

Revenue Recognition

Triple-Net Leased Properties and Office Operations

Certain of our triple-net leases and most of our MOB and life science, research and innovation centers’ (collectively, “office operations”) leases provide for periodic and determinable increases in base rent. We recognize base rental revenues under these leases on a straight-line basis over the applicable lease term when collectability of substantially all rents is probable. Recognizing rental income on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a straight-line rent receivable that is included in other assets on our Consolidated Balance Sheets. At September 30, 2022 and December 31, 2021, this cumulative excess totaled $182.3 million and $176.9 million, respectively (excluding properties classified as held for sale).

Certain of our leases provide for periodic increases in base rent only if certain revenue parameters or other substantive contingencies are met. We recognize the increased rental revenue under these leases as the related parameters or contingencies are met, rather than on a straight-line basis over the applicable lease term.

We assess the probability of collecting substantially all rents under our leases based on several factors, including, among other things, payment history, the financial strength of the tenant and any guarantors, the historical operations and operating trends of the property, the historical payment pattern of the tenant, the type of property, the value of the underlying collateral, if any, expected future performance of the property and current economic conditions. If our evaluation of these factors indicates it is not probable that we will be able to collect substantially all rents under the lease, we record a charge to rental income. If we change our conclusions regarding the probability of collecting rent payments required by a lease, we may recognize adjustments to rental income in the period we make such change in our conclusions.

Senior Housing Operating Portfolio

Our resident agreements are accounted for as leases and we recognize resident fees and services, other than move-in fees, monthly as services are provided. We recognize move-in fees on a straight-line basis over the average resident stay.

Other

We recognize interest income from loans and investments, including discounts and premiums, using the effective interest method when collectability is reasonably assured. We apply the effective interest method on a loan-by-loan basis and recognize discounts and premiums as yield adjustments over the related loan term. We evaluate collectability of accrued interest receivables separate from the amortized cost basis of our loans. As such, we recognize interest income on an impaired loan to the extent we believe accrued contractual interest payments are collectable. Otherwise interest income is recognized on a cash basis.

We evaluate a current estimate of all expected credit losses over the life of a financial instrument, which may result in recognition of credit losses on loans and other financial instruments before an actual event of default. We establish reserves for any estimated credit losses with a corresponding charge to allowance on loans receivable and investments in our Consolidated Statements of Income. Subsequent changes in our estimate of credit losses may result in a corresponding increase or decrease to allowance on loans receivable and investments in our Consolidated Statements of Income.

Accounting for Leased Property

We lease real property, primarily land and corporate office space, and equipment, primarily vehicles at our senior housing communities. At lease inception, we establish an operating lease asset and operating lease liability calculated as the present value of future minimum lease payments on our Consolidated Balance Sheets. As our leases do not provide an implicit rate, we use a discount rate that approximates our incremental borrowing rate available at lease commencement to determine the present value. Our lease expense primarily consists of ground and corporate office leases. Ground lease expense is included in interest expense and corporate office lease expense is included in general, administrative and professional fees in our Consolidated Statements of Income.

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Recently Adopted Accounting Standards

In November 2021, the FASB issued Accounting Standards Update 2021-10, Disclosures by Business Entities about Government Assistance (“ASU 2022-10”), which requires expanded annual disclosures for transactions involving the receipt of government assistance. Required disclosures include a description of the nature of the transactions with government entities, our accounting policies for such transactions and their impact to our Consolidated Financial Statements. We adopted ASU 2021-10 on January 1, 2022 and the adoption of this standard is not expected to have a material impact on our Consolidated Financial Statements.

NOTE 3—CONCENTRATION OF CREDIT RISK

As of September 30, 2022, Atria, Sunrise, Brookdale Senior Living, Ardent and Kindred managed or operated approximately 26.7%, 9.8%, 7.8%, 5.3% and 0.8%, respectively, of our consolidated real estate investments based on gross book value (excluding properties classified as held for sale as of September 30, 2022). Because Atria and Sunrise manage our properties in exchange for a management fee from us, we are not directly exposed to their credit risk in the same manner or to the same extent as triple-net tenants like Brookdale Senior Living, Ardent and Kindred.

Based on gross book value, approximately 12.6% and 53.8% of our consolidated real estate investments were senior housing communities included in the triple-net leased properties and SHOP reportable business segments, respectively (excluding properties classified as held for sale as of September 30, 2022). MOBs, life science, research and innovation centers, inpatient rehabilitation facilities (“IRFs”) and long-term acute care facilities (“LTACs”), health systems, skilled nursing facilities (“SNFs”) and secured loans receivable and investments collectively comprised the remaining 33.6%. Our consolidated properties were located in 47 states, the District of Columbia, seven Canadian provinces and the United Kingdom as of September 30, 2022, with properties in one state (California) accounting for more than 10% of our total consolidated revenues and net operating income (“NOI”) for the three months then ended. NOI is defined as total revenues, less interest and other income, property-level operating expenses and office building and other services costs. See “Non-GAAP Financial Measures” included elsewhere in this Quarterly Report on Form 10-Q for additional disclosure and a reconciliation of net income attributable to common stockholders, as computed in accordance with GAAP, to NOI.

Triple-Net Leased Properties

The properties we lease to Brookdale Senior Living, Ardent and Kindred accounted for a significant portion of our triple-net leased properties segment revenues and NOI. The following table reflects the concentration risk related to our triple-net leased properties including assets held for sale for the periods presented:


	For the Three Months Ended September 30,
	2022		2021
Revenues (1):
Brookdale Senior Living	3.6	%	3.8	%
Ardent	3.1		3.3
Kindred	3.3		3.4
NOI (2):
Brookdale Senior Living	8.0	%	8.2	%
Ardent	7.0		7.1
Kindred	7.4		7.4

(1)Total revenues include office building and other services revenue, income from loans and investments and interest and other income.

(2)See “Non-GAAP Financial Measures” included elsewhere in this Quarterly Report on Form 10-Q for additional disclosure and a reconciliation of net income attributable to common stockholders, as computed in accordance with GAAP, to NOI.

Each of our leases with Brookdale Senior Living, Ardent and Kindred is a triple-net lease that obligates the tenant to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures, and to comply with the terms of the mortgage financing documents, if any, affecting the properties. In addition, each of our Brookdale Senior Living, Ardent and Kindred leases has a corporate guaranty.

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In December 2021, Kindred Healthcare, LLC was acquired and began operating under a new healthcare system called ScionHealth. As of September 30, 2022, we leased 29 LTACs to Kindred pursuant to a master lease agreement. Pursuant to the master lease, the 29 LTACs are divided into two renewal groups. The first renewal group is composed of 6 LTACs (“Group 1”) and the second renewal group is composed of 23 LTACs (“Group 2”). In the second quarter of 2022, we and Kindred amended the master lease to, among other things, extend the lease term of Group 1 through April 30, 2028. The lease term for Group 2 ends on April 30, 2025. Although Kindred has the right to renew each of Group 1 and Group 2 for additional lease terms, we cannot assure you that Kindred will exercise any renewal options for either pool, or if the lease term is renewed, amended or extended, the terms thereof.

Senior Housing Operating Portfolio

As of September 30, 2022, Atria and Sunrise, collectively, provided comprehensive property management and accounting services with respect to 347 of our 549 consolidated senior housing communities, for which we pay annual management fees pursuant to long-term management agreements.

On July 30, 2021, Atria acquired the management services division of Holiday, which at the time managed a pool of 26 communities for Ventas. As of September 30, 2022, Atria and its subsidiaries, including Holiday, managed a pool of 255 senior housing communities for Ventas. Ventas has the ongoing right to terminate the management contract for 91 of the communities with short term notice.

As of September 30, 2022, Sunrise managed a pool of 96 senior housing communities for Ventas. Subsequent to March 31, 2022, Ventas and Sunrise Senior Living entered into a revised management agreement for 92 communities with a term expiring May 31, 2035. Under the new management agreement, Sunrise will receive a management fee based on a percentage of revenue and net operating income generated by the applicable communities. Sunrise is also entitled to certain incentive fees if specified performance targets are met. Ventas has the right to freely terminate the management agreement as to all communities if certain performance metrics are not met and may freely terminate the management agreement as to certain specified communities at any time. In addition, Ventas may also terminate the management agreement as it relates to three communities per year subject to the payment of a fee and an aggregate cap on such terminations over the term of the agreement.

We successfully transitioned the operations of 90 senior living communities owned by us and operated under management agreements with Eclipse Senior Living, Inc. (“ESL”) to seven experienced managers on or before January 2, 2022. ESL ceased operation of its management business in early 2022 following completion of the transitions. We incurred certain one-time transition costs and expenses in connection with the transitions, which were recognized within transaction expenses and deal costs in our Consolidated Statements of Income.

We rely on our managers’ personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage our senior housing operating portfolio efficiently and effectively. We also rely on our managers to set appropriate resident fees, provide accurate property-level financial results in a timely manner and otherwise operate our senior housing communities in compliance with the terms of our management agreements and all applicable laws and regulations.

NOTE 4—ACQUISITIONS OF REAL ESTATE PROPERTY

We acquire and invest in senior housing, medical office buildings, life science, research and innovation centers and other healthcare properties primarily to achieve an expected yield on our investment, to grow and diversify our portfolio and revenue base, and to reduce our dependence on any single tenant, operator or manager, geographic location, asset type, business model or revenue source. Each of our acquisitions disclosed below was accounted for as an asset acquisition.

2022 Acquisitions

During the nine months ended September 30, 2022, we acquired 18 MOBs leased to affiliates of Ardent, one behavioral health center and one research and innovation center, all of which are reported within our office operations segment, and two senior housing communities, which are reported within our SHOP segment, for an aggregate purchase price of $445.9 million.

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NOTE 5—DISPOSITIONS AND IMPAIRMENTS

2022 Activity

During the nine months ended September 30, 2022, we sold one vacant land parcel and one vacant office building for aggregate consideration of $12.5 million and recognized a net gain on the sales of these assets of $2.6 million.

Assets Held for Sale

The table below summarizes our real estate assets classified as held for sale, including the amounts reported on our Consolidated Balance Sheets, which may include anticipated post-closing settlements of working capital for disposed properties (dollars in thousands):


	As of September 30, 2022					As of December 31, 2021
	Number of Properties Held for Sale	Assets Held for Sale		Liabilities Related to Assets Held for Sale		Number of Properties Held for Sale	Assets Held for Sale		Liabilities Related to Assets Held for Sale
Triple-net leased properties	1	$	62,463	$	1,456	—	$	—	$	—
SHOP	6	33,754		6,057		2	24,964		9,321
Office operations	2	3,233		1,978		2	3,435		1,529
Total	9	$	99,450	$	9,491	4	$	28,399	$	10,850

Real Estate Impairment

We recognized impairments of $28.1 million and $75.9 million for the three months ended September 30, 2022 and 2021, respectively, and $55.0 million and $173.0 million for the nine months ended September 30, 2022 and 2021, respectively, which are recorded primarily as a component of depreciation and amortization in our Consolidated Statements of Income. The impairments recorded were primarily the result of a change in our intent to hold or a change in the expected future cash flows of the impaired assets.

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NOTE 6—LOANS RECEIVABLE AND INVESTMENTS

As of September 30, 2022 and December 31, 2021, we had $553.6 million and $549.2 million, respectively, of net loans receivable and investments relating to senior housing and healthcare operators or properties. The following is a summary of our loans receivable and investments, net, including amortized cost, fair value and unrealized gains or losses on available for sale investments (dollars in thousands):


	Amortized Cost		Allowance		Unrealized (Loss) Gain		Carrying Amount		Fair Value
As of September 30, 2022:
Secured/mortgage loans and other, net (1)	$	488,515	$	—	$	—	$	488,515	$	451,781
Government-sponsored pooled loan investments, net (1)	42,335		—		(1,533)		40,802		40,802
Total investments reported as secured loans receivable and investments, net	530,850		—		(1,533)		529,317		492,583
Non-mortgage loans receivable, net (2)	28,942		(4,685)		—		24,257		23,366
Marketable debt securities (3)	—		—		—		—		—
Total loans receivable and investments, net	$	559,792	$	(4,685)	$	(1,533)	$	553,574	$	515,949

As of December 31, 2021:
Secured/mortgage loans and other, net (1)	$	488,913	$	—	$	—	$	488,913	$	478,931
Government-sponsored pooled loan investments, net (1)	39,376		—		1,836		41,213		41,213
Total investments reported as secured loans receivable and investments, net	528,289		—		1,836		530,126		520,144
Non-mortgage loans receivable, net (2)	24,418		(5,394)		—		19,024		19,039
Total loans receivable and investments, net	$	552,707	$	(5,394)	$	1,836	$	549,150	$	539,183

(1)Includes a $486.1 million cash-pay mezzanine loan priced at LIBOR + 6.42% and secured by a diverse pool of medical office, senior housing, skilled nursing and other healthcare assets. The loan has a scheduled maturity in June 2023, subject to the borrower’s right to extend for one year, provided certain conditions are met. The loan is currently prepayable in whole or in part subject to satisfaction of certain financial and non-financial terms and conditions. Other included investments have contractual maturities in 2023.

(2)Included in other assets on our Consolidated Balance Sheets.

NOTE 7—INVESTMENTS IN UNCONSOLIDATED ENTITIES

We report investments in unconsolidated entities over whose operating and financial policies we have the ability to exercise significant influence under the equity method of accounting. We are not required to consolidate these entities because our joint venture partners have significant participating rights, nor are these entities considered VIEs, as they are controlled by equity holders with sufficient capital. We invest in both real estate entities and operating entities, which are described further below.

Investments in Unconsolidated Real Estate Entities

Through our Ventas Investment Management Platform, which consolidates our extensive third-party capital ventures under a single brand and umbrella, we partner with third-party institutional investors to invest in healthcare real estate through various joint ventures and other co-investment vehicles where we are the sponsor or general partner.

VENTAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Below is a summary of our investments in unconsolidated real estate entities as of September 30, 2022 and December 31, 2021, respectively (dollars in thousands):


	Ownership as of (1)		Carrying Amount as of
	September 30, 2022	December 31, 2021	September 30, 2022		December 31, 2021
Investment in unconsolidated real estate entities:
Ventas Life Science & Healthcare Real Estate Fund	20.0%	21.1%	$	258,540	$	267,475
Pension Fund Joint Venture	22.9%	22.9%	26,422		29,192
Research & Innovation Development Joint Venture	51.5%	51.0%	261,725		221,363
Ventas Investment Management Platform			546,687		518,030
All other (2)	34.0%-38.0%	34.0%-50.0%	1,079		5,435
Total investments in unconsolidated real estate entities			$	547,766	$	523,465
______________________________
(1) The entities in which we have an ownership interest may have less than a 100% interest in the underlying real estate. The ownership percentages in the table reflect our interest in the underlying real estate. Joint venture members, including us in some instances, have equity participation rights based on the underlying performance of the investments which could result in non pro rata distributions.
(2) Includes investments in land parcels, parking structures and other de minimis investments in unconsolidated real estate entities.

We provide various services to our unconsolidated real estate entities in exchange for fees and reimbursements. Total management fees earned in connection with these services were $4.2 million and $3.2 million for the three months ended September 30, 2022 and 2021, respectively, and $11.5 million and $8.9 million for the nine months ended September 30, 2022 and 2021, respectively. Such amounts are included in office building and other services revenue in our Consolidated Statements of Income.

Investments in Unconsolidated Operating Entities

We own investments in unconsolidated operating entities such as Ardent and Atria, which are included within other assets on our Consolidated Balance Sheets. Our 34% ownership interest in Atria entitles us to customary minority rights and protections, including the right to appoint two members to the Atria Board of Directors. Our 9.8% ownership interest in Ardent entitles us to customary minority rights and protections, including the right to appoint one member of the Ardent Board of Directors.

VENTAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 8—INTANGIBLES

The following is a summary of our intangibles (dollars in thousands):


	As of September 30, 2022			As of December 31, 2021
	Balance		Weighted Average Remaining Amortization Period in Years	Balance		Weighted Average Remaining Amortization Period in Years
Intangible assets:
Above-market lease intangibles (1)	$	129,023	5.5	$	129,121	5.9
In-place and other lease intangibles (2)	1,212,460		7.7	1,240,626		7.2
Goodwill	1,043,289		N/A	1,046,140		N/A
Other intangibles (2)	34,372		5.8	34,517		6.5
Accumulated amortization	(1,024,659)		N/A	(944,403)		N/A
Net intangible assets	$	1,394,485	7.5	$	1,506,001	7.1
Intangible liabilities:
Below-market lease intangibles (1)	$	334,333	8.7	$	334,365	9.7
Other lease intangibles	13,498		N/A	13,608		N/A
Accumulated amortization	(255,544)		N/A	(244,975)		N/A
Purchase option intangibles	3,568		N/A	3,568		N/A
Net intangible liabilities	$	95,855	8.7	$	106,566	9.7

(1) Amortization of above- and below-market lease intangibles is recorded as a decrease and an increase to revenues, respectively, in our Consolidated Statements of Income.

(2) Amortization of lease intangibles is recorded in depreciation and amortization in our Consolidated Statements of Income.

N/A—Not Applicable.

Above-market lease intangibles and in-place and other lease intangibles are included in acquired lease intangibles within real estate investments on our Consolidated Balance Sheets. Other intangibles (including non-compete agreements, trade names and trademarks) are included in other assets on our Consolidated Balance Sheets. Below-market lease intangibles, other lease intangibles and purchase option intangibles are included in accounts payable and other liabilities on our Consolidated Balance Sheets.

NOTE 9—OTHER ASSETS

The following is a summary of our other assets (dollars in thousands):


	As of September 30, 2022		As of December 31, 2021
Straight-line rent receivables	$	182,251	$	176,877
Non-mortgage loans receivable, net	24,257		19,024
Stock warrants	38,187		48,884

Other intangibles, net	6,585		7,270
Investment in unconsolidated operating entities	58,399		73,602
Other	283,725		239,412
Total other assets	$	593,404	$	565,069

Stock warrants represent warrants exercisable at any time prior to December 31, 2025, in whole or in part, for 16.3 million shares of Brookdale Senior Living common stock at an exercise price of $3.00 per share. These warrants are measured at fair value with changes in fair value being recognized within other expense in our Consolidated Statements of Income.

VENTAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 10—SENIOR NOTES PAYABLE AND OTHER DEBT

The following is a summary of our senior notes payable and other debt (dollars in thousands):


	As of September 30, 2022		As of December 31, 2021
Unsecured revolving credit facility (1)	$	31,057	$	56,448
Commercial paper notes	377,400		280,000
Unsecured term loan due 2023	—		200,000
2.55% Senior Notes, Series D due 2023 (2)	198,901		217,667
3.50% Senior Notes due 2024	400,000		400,000
3.75% Senior Notes due 2024	400,000		400,000
4.125% Senior Notes, Series B due 2024 (2)	180,819		197,879
2.80% Senior Notes, Series E due 2024 (2)	433,965		474,909
Unsecured term loan due 2025 (2)	361,637		395,757
3.50% Senior Notes due 2025	600,000		600,000
2.65% Senior Notes due 2025	450,000		450,000
4.125% Senior Notes due 2026	500,000		500,000
3.25% Senior Notes due 2026	450,000		450,000
Unsecured term loan due 2027	500,000		—
2.45% Senior Notes, Series G due 2027 (2)	343,556		375,970
3.85% Senior Notes due 2027	400,000		400,000
4.00% Senior Notes due 2028	650,000		650,000
4.40% Senior Notes due 2029	750,000		750,000
3.00% Senior Notes due 2030	650,000		650,000
4.75% Senior Notes due 2030	500,000		500,000
2.50% Senior Notes due 2031	500,000		500,000
3.30% Senior Notes, Series H due 2031 (2)	216,982		237,454
6.90% Senior Notes due 2037 (3)	52,400		52,400
6.59% Senior Notes due 2038 (3)	22,823		22,823
5.70% Senior Notes due 2043	300,000		300,000
4.375% Senior Notes due 2045	300,000		300,000
4.875% Senior Notes due 2049	300,000		300,000
Mortgage loans and other	2,406,990		2,431,831
Total	12,276,530		12,093,138
Deferred financing costs, net	(65,663)		(69,925)
Unamortized fair value adjustment	25,745		32,888
Unamortized discounts	(25,628)		(28,557)
Senior notes payable and other debt	$	12,210,984	$	12,027,544

(1)As of September 30, 2022 and December 31, 2021, respectively, $10.8 million and $30.9 million of aggregate borrowings were denominated in Canadian dollars. Aggregate borrowings of $20.2 million and $25.6 million were denominated in British pounds as of September 30, 2022 and December 31, 2021, respectively.

(2)Canadian Dollar debt obligations shown in U.S. Dollars.

(3)Our 6.90% senior notes due 2037 are subject to repurchase at the option of the holders, at par, on October 1, 2027, and our 6.59% senior notes due 2038 are subject to repurchase at the option of the holders, at par, on July 7 in each of 2023 and 2028.

VENTAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Credit Facilities, Commercial Paper and Unsecured Term Loans

We have a $2.75 billion unsecured revolving credit facility initially priced at LIBOR plus 0.825% based on the Company’s debt rating. The unsecured revolving credit facility matures in January 2025, but may be extended at our option, subject to the satisfaction of certain conditions, for two additional periods of six months each. The unsecured revolving credit facility also includes an accordion feature that permits us to increase our aggregate borrowing capacity thereunder to up to $3.75 billion, subject to the satisfaction of certain conditions, including the receipt of additional commitments for such increase.

As of September 30, 2022, we had $2.7 billion of undrawn capacity on our unsecured revolving credit facility with $31.1 million borrowings outstanding and an additional $15.6 million restricted to support outstanding letters of credit. We limit our use of the unsecured revolving credit facility, to the extent necessary, to support our commercial paper program when commercial paper notes are outstanding.

Our wholly owned subsidiary, Ventas Realty, Limited Partnership (“Ventas Realty”), may issue from time to time unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $1.0 billion. The notes are sold under customary terms in the U.S. commercial paper note market and are ranked pari passu with all of Ventas Realty’s other unsecured senior indebtedness. The notes are fully and unconditionally guaranteed by Ventas, Inc. As of September 30, 2022, we had $377.4 million in borrowings outstanding under our commercial paper program.

In June 2022, we entered into a Credit and Guaranty Agreement (the “New Credit Agreement”) with Ventas Realty, as borrower. The New Credit Agreement replaces Ventas Realty’s previous $200.0 million unsecured term loan priced at LIBOR plus 0.90% that matured in 2023 with a new $500.0 million unsecured term loan that matures in 2027 and is initially priced at Term SOFR plus 0.95% based on Ventas Realty’s debt ratings. The New Credit Agreement also includes an accordion feature that permits us to increase our aggregate borrowings thereunder to up to $1.25 billion, subject to the satisfaction of certain conditions, including the receipt of additional commitments for such increase.

As of September 30, 2022, we had a C$500.0 million unsecured term loan facility priced at Canadian Dollar Offered Rate (“CDOR”) plus 0.90% that matures in 2025.

As of September 30, 2022, our indebtedness had the following maturities (dollars in thousands):


	Principal Amount Due at Maturity		Unsecured Revolving Credit Facility and Commercial Paper Notes (1)		Scheduled Periodic Amortization		Total Maturities
2022	$	95,179	$	377,400	$	13,047	$	485,626
2023	460,768		—		42,519		503,287
2024	1,611,331		—		37,698		1,649,029
2025	2,007,873		31,057		32,105		2,071,035
2026	1,048,586		—		25,453		1,074,039
Thereafter	6,348,949		—		144,565		6,493,514
Total maturities	$	11,572,686	$	408,457	$	295,387	$	12,276,530

(1)At September 30, 2022, we had $263.3 million of borrowings outstanding under our unsecured revolving credit facility and commercial paper program, net of $145.1 million of unrestricted cash and cash equivalents.

VENTAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 11—FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amounts and fair values of our financial instruments were as follows (dollars in thousands):


	As of September 30, 2022				As of December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and cash equivalents	$	145,146	$	145,146	$	149,725	$	149,725
Escrow deposits and restricted cash	50,492		50,492		46,872		46,872
Stock warrants	38,187		38,187		48,884		48,884
Secured mortgage loans and other, net	488,515		451,781		488,913		478,931
Non-mortgage loans receivable, net (1)	24,257		23,366		19,024		19,039

Government-sponsored pooled loan investments, net	40,802		40,802		41,213		41,213
Derivative instruments (1)	26,477		26,477		1,128		1,128
Liabilities:
Senior notes payable and other debt, gross	12,276,530		11,353,545		12,093,138		12,891,937
Derivative instruments (2)	—		—		12,290		12,290
Redeemable OP Units	152,886		152,886		182,112		182,112

(1)Included in other assets on our Consolidated Balance Sheets.

(2)Included in accounts payable and other liabilities on our Consolidated Balance Sheets.

For a discussion of the assumptions considered, refer to “Note 2 – Accounting Policies.” The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts. Accordingly, the estimates presented above are not necessarily indicative of the amounts we would realize in a current market exchange.

NOTE 12—COMMITMENTS AND CONTINGENCIES

From time to time, we are party to various lawsuits, investigations, claims and other legal and regulatory proceedings arising in connection with our business. These legal and regulatory matters may include, among other things, professional liability and general liability claims, commercial liability claims, unfair business practice claims and employment claims, as well as regulatory proceedings, including proceedings related to our senior housing operating portfolio, where we are typically the holder of the applicable healthcare license. In certain circumstances, regardless of whether we are a named party in a lawsuit, investigation, claim or other legal or regulatory proceeding, we may be contractually obligated to indemnify, defend and hold harmless our tenants, operators, managers or other third parties against, or may otherwise be responsible for, such actions, proceedings or claims. In other circumstances, certain of our tenants, operators, managers or other third parties may be obligated to indemnify, defend and hold us harmless in whole or in part with respect to certain actions, legal or regulatory proceedings. We cannot assure you that these third parties will be able to satisfy their defense and indemnification obligations to us. Legal and regulatory matters to which we are subject or for which we are otherwise responsible may not be fully insured and some may allege large damage amounts.

It is the opinion of management that the disposition of any such lawsuits, investigations, claims and other legal and regulatory proceedings that are currently pending will not, individually or in the aggregate, have a material adverse effect on us. However, regardless of the merits of a particular legal or regulatory matter, we may be forced to expend significant financial resources to defend and resolve these matters. We are unable to predict the ultimate outcome of these lawsuits, investigations, claims and other legal and regulatory proceedings, and if management’s assessment of our liability with respect thereto is incorrect, such legal or regulatory matters could have a material adverse effect on us.

VENTAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 14—STOCKHOLDERS' EQUITY

Capital Stock

We participate in an “at-the-market” equity offering program (“ATM program”), pursuant to which we may, from time to time, sell up to $1.0 billion aggregate gross sales price of shares of our common stock. There were no issuances under the ATM program for the nine months ended September 30, 2022. As of September 30, 2022, $1.0 billion aggregate gross sales price of shares of our common stock remains available for issuance under the ATM program.

Accumulated Other Comprehensive Loss

The following is a summary of our accumulated other comprehensive loss (dollars in thousands):


	As of September 30, 2022		As of December 31, 2021
Foreign currency translation loss	$	(70,858)	$	(56,227)
Unrealized (loss) gain on available for sale securities	(1,533)		1,836
Unrealized gain (loss) on derivative instruments	25,082		(10,129)
Total accumulated other comprehensive loss	$	(47,309)	$	(64,520)

NOTE 15—EARNINGS PER SHARE

The following table shows the amounts used in computing our basic and diluted earnings per share (in thousands, except per share amounts):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Numerator for basic and diluted earnings per share:
Income from continuing operations	$	3,063	$	62,774	$	2,453	$	95,664
Net income	3,063		62,774		2,453		95,664
Net income attributable to noncontrolling interests	1,807		2,094		4,881		5,802
Net income (loss) attributable to common stockholders	$	1,256	$	60,680	$	(2,428)	$	89,862
Denominator:
Denominator for basic earnings per share—weighted average shares	399,646		381,996		399,513		377,271
Effect of dilutive securities:
Stock options	—		72		11		45
Restricted stock awards	381		404		390		340
OP unitholder interests	3,516		3,051		3,517		2,987
Denominator for diluted earnings per share—adjusted weighted average shares	403,543		385,523		403,431		380,643
Basic earnings per share:
Income from continuing operations	$	0.01	$	0.16	$	0.01	$	0.25
Net income (loss) attributable to common stockholders	0.00		0.16		(0.01)		0.24
Diluted earnings per share: (1)
Income from continuing operations	$	0.01	$	0.16	$	0.01	$	0.25
Net income (loss) attributable to common stockholders	0.00		0.16		(0.01)		0.24

(1) Potential common shares are not included in the computation of diluted earnings per share when a loss from continuing operations exists as the effect would be an antidilutive per share amount.

VENTAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 13—INCOME TAXES

We have elected to be taxed as a REIT under the applicable provisions of the Internal Revenue Code of 1986, as amended, for every year beginning with the year ended December 31, 1999. We have also elected for certain of our subsidiaries to be treated as taxable REIT subsidiaries (“TRS” or “TRS entities”), which are subject to federal, state and foreign income taxes. All entities other than the TRS entities are collectively referred to as the “REIT” within this note. Certain REIT entities are subject to foreign income tax.

Although the TRS entities and certain other foreign entities have paid minimal federal, state and foreign income taxes for the nine months ended September 30, 2022, their income tax liabilities may increase in future periods as we exhaust net operating loss (“NOL”) carryforwards and as our senior living and other operations grow. Such increases could be significant.

Our consolidated provision for income taxes for the three months ended September 30, 2022 and 2021 was a benefit of $6.0 million and an expense of $3.8 million, respectively. Our consolidated provision for income taxes for the nine months ended September 30, 2022 and 2021 was a benefit of $14.3 million and an expense of $9.6 million, respectively. The income tax benefit for the three and nine months ended September 30, 2022 was primarily due to losses in certain of our TRS entities and a $2.0 million benefit from an internal restructuring of a U.S. taxable REIT subsidiary. The income tax expense for the three months ended September 30, 2021 was primarily due to a $3.7 million deferred tax expense related to the release of certain residual tax effects from marketable debt securities. The income tax expense for the nine months ended September 30, 2021 was primarily due to a $3.7 million deferred tax expense related to the release of certain residual tax effects from marketable debt securities, a $2.9 million net deferred tax expense related to an internal restructuring of certain U.S. taxable REIT subsidiaries, and a $3.4 million deferred tax expense related to the revaluation of certain deferred tax liabilities as a result of enacted tax rate changes in the United Kingdom.

Each TRS is a tax paying component for purposes of classifying deferred tax assets and liabilities. Deferred tax liabilities with respect to our TRS entities totaled $40.7 million and $59.3 million as of September 30, 2022 and December 31, 2021, respectively, and related primarily to differences between the financial reporting and tax bases of fixed and intangible assets, net of loss carryforwards. Deferred tax assets with respect to our TRS entities totaled $13.6 million and $11.2 million as of September 30, 2022 and December 31, 2021, respectively, and related primarily to loss carryforwards.

Generally, we are subject to audit under the statute of limitations by the Internal Revenue Service for the year ended December 31, 2018 and subsequent years and are subject to audit by state taxing authorities for the year ended December 31, 2017 and subsequent years. We are subject to audit generally under the statutes of limitation by the Canada Revenue Agency and provincial authorities with respect to the Canadian entities for the year ended December 31, 2017 and subsequent years. We are subject to audit in the United Kingdom generally for periods ended in and subsequent to 2020.

NOTE 16—SEGMENT INFORMATION

As of September 30, 2022, we operated through three reportable business segments: triple-net leased properties, SHOP and office operations. In our triple-net leased properties reportable business segment, we invest in and own senior housing and healthcare properties throughout the United States and the United Kingdom and lease those properties to healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses. In our SHOP reportable business segment, we invest in senior housing communities throughout the United States and Canada and engage independent operators, such as Atria and Sunrise, to manage those communities. In our office operations reportable business segment, we primarily acquire, own, develop, lease and manage MOBs and life science, research and innovation centers throughout the United States. Information provided for “non-segment” includes income from loans and investments and other miscellaneous income and various corporate-level expenses not directly attributable to any of our three reportable business segments. Assets included in “non-segment” consist primarily of corporate assets, including cash, restricted cash, loans receivable and investments, and miscellaneous accounts receivable.

Our chief operating decision makers evaluate performance of the combined properties in each reportable business segment and determine how to allocate resources to those segments, in significant part, based on NOI and related measures. We define NOI as total revenues, less interest and other income, property-level operating expenses and office building and other services costs. We consider NOI useful because it allows investors, analysts and our management to measure unlevered property-level operating results and to compare our operating results to the operating results of other real estate companies between periods on a consistent basis. In order to facilitate a clear understanding of our historical consolidated operating results, NOI should be examined in conjunction with net income attributable to common stockholders as presented in our Consolidated

VENTAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Financial Statements and other financial data included elsewhere in this Quarterly Report on Form 10-Q. See “Non-GAAP Financial Measures” included elsewhere in this Quarterly Report on Form 10-Q for additional disclosure and reconciliations of net income attributable to common stockholders, as computed in accordance with GAAP, to NOI.

Interest expense, depreciation and amortization, general, administrative and professional fees, income tax expense and other non-property specific revenues and expenses are not allocated to individual reportable business segments for purposes of assessing segment performance. There are no intersegment sales or transfers.

Summary information by reportable business segment is as follows (dollars in thousands):


	For the Three Months Ended September 30, 2022
	SHOP		Office Operations		Triple-Net Leased Properties		Non-Segment		Total
Revenues:
Rental income	$	—	$	200,867	$	150,115	$	—	$	350,982
Resident fees and services	668,583		—		—		—		668,583
Office building and other services revenue	—		547		—		4,003		4,550
Income from loans and investments	—		—		—		12,672		12,672
Interest and other income	—		—		—		489		489
Total revenues	$	668,583	$	201,414	$	150,115	$	17,164	$	1,037,276

Total revenues	$	668,583	$	201,414	$	150,115	$	17,164	$	1,037,276
Less:
Interest and other income	—		—		—		489		489
Property-level operating expenses	499,972		66,098		3,756		—		569,826
Office building and other services costs	—		—		—		1,750		1,750
NOI	$	168,611	$	135,316	$	146,359	$	14,925	465,211
Interest and other income									489
Interest expense									(119,413)
Depreciation and amortization									(301,481)
General, administrative and professional fees									(35,421)
Loss on extinguishment of debt, net									(574)
Transaction expenses and deal costs									(4,782)
Allowance on loans receivable and investments									63
Other									(9,162)
Income from unconsolidated entities									1,970
Gain on real estate dispositions									136
Income tax benefit									6,027
Income from continuing operations									3,063
Net income									3,063
Net income attributable to noncontrolling interests									1,807
Net income attributable to common stockholders									$	1,256

VENTAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	For the Three Months Ended September 30, 2021
	SHOP		Office Operations		Triple-Net Leased Properties		Non-Segment		Total
Revenues:
Rental income	$	—	$	201,673	$	181,379	$	—	$	383,052
Resident fees and services	558,039		—		—		—		558,039
Office building and other services revenue	—		2,872		—		2,969		5,841
Income from loans and investments	—		—		—		28,729		28,729
Interest and other income	—		—		—		417		417
Total revenues	$	558,039	$	204,545	$	181,379	$	32,115	$	976,078

Total revenues	$	558,039	$	204,545	$	181,379	$	32,115	$	976,078
Less:
Interest and other income	—		—		—		417		417
Property-level operating expenses	453,659		66,401		3,268		—		523,328
Office building and other services costs	—		522		—		—		522
NOI	$	104,380	$	137,622	$	178,111	$	31,698	451,811
Interest and other income									417
Interest expense									(108,816)
Depreciation and amortization									(313,596)
General, administrative and professional fees									(30,259)
Loss on extinguishment of debt, net									(29,792)
Transaction expenses and deal costs									(22,662)
Allowance on loans receivable and investments									60
Other									(33,673)
Income from unconsolidated entities									2,772
Gain on real estate dispositions									150,292
Income tax expense									(3,780)
Income from continuing operations									62,774
Net income									62,774
Net income attributable to noncontrolling interests									2,094
Net income attributable to common stockholders									$	60,680

VENTAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	For the Nine Months Ended September 30, 2022
	SHOP		Office Operations		Triple-Net Leased Properties		Non-Segment		Total
Revenues:
Rental income	$	—	$	600,648	$	451,073	$	—	$	1,051,721
Resident fees and services	1,977,760		—		—		—		1,977,760
Office building and other services revenue	—		1,834		—		10,991		12,825
Income from loans and investments	—		—		—		33,271		33,271
Interest and other income	—		—		—		2,191		2,191
Total revenues	$	1,977,760	$	602,482	$	451,073	$	46,453	$	3,077,768

Total revenues	$	1,977,760	$	602,482	$	451,073	$	46,453	$	3,077,768
Less:
Interest and other income	—		—		—		2,191		2,191
Property-level operating expenses	1,482,948		192,609		11,349		—		1,686,906
Office building and other services costs	—		—		—		4,473		4,473
NOI	$	494,812	$	409,873	$	439,724	$	39,789	1,384,198
Interest and other income									2,191
Interest expense									(344,158)
Depreciation and amortization									(873,620)
General, administrative and professional fees									(111,334)
Loss on extinguishment of debt, net									(581)
Transaction expenses and deal costs									(37,852)
Allowance on loans receivable and investments									179
Other									(30,088)
Loss from unconsolidated entities									(3,346)
Gain on real estate dispositions									2,557
Income tax benefit									14,307
Income from continuing operations									2,453
Net income									2,453
Net income attributable to noncontrolling interests									4,881
Net loss attributable to common stockholders									$	(2,428)

VENTAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	For the Nine Months Ended September 30, 2021
	SHOP		Office Operations		Triple-Net Leased Properties		Non-Segment		Total
Revenues:
Rental income	$	—	$	599,516	$	500,487	$	—	$	1,100,003
Resident fees and services	1,622,641		—		—		—		1,622,641
Office building and other services revenue	—		7,756		—		8,416		16,172
Income from loans and investments	—		—		—		65,404		65,404
Interest and other income	—		—		—		1,343		1,343
Total revenues	$	1,622,641	$	607,272	$	500,487	$	75,163	$	2,805,563

Total revenues	$	1,622,641	$	607,272	$	500,487	$	75,163	$	2,805,563
Less:
Interest and other income	—		—		—		1,343		1,343
Property-level operating expenses	1,296,301		195,297		12,525		—		1,504,123
Office building and other services costs	—		1,798		—		—		1,798
NOI	$	326,340	$	410,177	$	487,962	$	73,820	1,298,299
Interest and other income									1,343
Interest expense									(329,634)
Depreciation and amortization									(878,444)
General, administrative and professional fees									(101,156)
Loss on extinguishment of debt, net									(56,808)
Transaction expenses and deal costs									(28,000)
Allowance on loans receivable and investments									9,021
Other									(10,755)
Income from unconsolidated entities									7,289
Gain on real estate dispositions									194,083
Income tax expense									(9,574)
Income from continuing operations									95,664
Net income									95,664
Net income attributable to noncontrolling interests									5,802
Net income attributable to common stockholders									$	89,862

Capital expenditures, including investments in real estate property and development project expenditures, by reportable business segment are as follows (dollars in thousands):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Capital Expenditures:
SHOP	$	114,453	$	1,093,773	$	313,396	$	1,193,646
Office operations	44,150		52,627		403,976		140,841
Triple-net leased properties	1,268		75,544		3,676		92,683
Total capital expenditures	$	159,871	$	1,221,944	$	721,048	$	1,427,170

VENTAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Our portfolio of properties and mortgage loan and other investments are located in the United States, Canada and the United Kingdom. Revenues are attributed to an individual country based on the location of each property. Geographic information regarding our operations is as follows (dollars in thousands):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues:
United States	$	918,106	$	859,524	$	2,719,097	$	2,460,534
Canada	112,550		109,046		337,503		322,422
United Kingdom	6,620		7,508		21,168		22,607
Total revenues	$	1,037,276	$	976,078	$	3,077,768	$	2,805,563


	As of September 30, 2022		As of December 31, 2021
Net Real Estate Property:
United States	$	18,345,417	$	18,562,738
Canada	2,736,339		3,007,008
United Kingdom	196,177		247,092
Total net real estate property	$	21,277,933	$	21,816,838

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