Item 6. Selected Financial Data

The following selected financial data for the five years ended December 31, 2019 are derived from our audited consolidated financial statements (in thousands, except per share data):

		Year Ended December 31,
		2015				2016				2017				2018				2019
Operating Data
Total revenues		$	3,859,826			$	4,281,160			$	4,316,641			$	4,700,499			$	5,121,306
Total expenses		3,223,709				3,571,907				4,017,025				4,277,009				4,578,414
Income from continuing operations before income taxes and other items		636,117				709,253				299,616				423,490				542,892
Income tax (expense) benefit		(6,451		)		19,128				(20,128		)		(8,674		)		(2,957		)
Income (loss) from unconsolidated entities		(21,504		)		(10,357		)		(83,125		)		(641		)		42,434
Gain (loss) on real estate dispositions, net		280,387				364,046				344,250				415,575				748,041
Income from continuing operations		888,549				1,082,070				540,613				829,750				1,330,410
Net income		888,549				1,082,070				540,613				829,750				1,330,410
Preferred stock dividends		65,406				65,406				49,410				46,704				—
Preferred stock redemption charge		—				—				9,769				—				—
Net income (loss) attributable to noncontrolling interests		4,799				4,267				17,839				24,796				97,978
Net income attributable to common stockholders		$	818,344			$	1,012,397			$	463,595			$	758,250			$	1,232,432
Other Data
Average number of common shares outstanding:
Basic		348,240				358,275				367,237				373,620				401,845
Diluted		349,424				360,227				369,001				375,250				403,808
Per Share Data
Basic:
Income from continuing operations		$	2.55			$	3.02			$	1.47			$	2.22			$	3.31
Net income attributable to common stockholders		$	2.35			$	2.83			$	1.26			$	2.03			$	3.07
Diluted:
Income from continuing operations		$	2.54			$	3.00			$	1.47			$	2.21			$	3.29
Net income attributable to common stockholders		$	2.34			$	2.81			$	1.26			$	2.02			$	3.05
Cash distributions per common share		$	3.30			$	3.44			$	3.48			$	3.48			$	3.48
		December 31,
Balance Sheet Data		2015				2016				2017				2018				2019
Net real estate investments(1)		$	26,888,685			$	26,563,629			$	26,171,077			$	28,420,769			$	31,119,271
Total assets		29,023,845				28,865,184				27,944,445				30,342,072				33,380,751
Total debt and lease obligations(1)		12,967,686				12,358,245				11,731,936				13,297,144				15,388,765
Total liabilities		13,664,877				13,185,279				12,643,799				14,331,427				16,398,247
Total preferred stock		1,006,250				1,006,250				718,503				718,498				—
Total equity		15,175,885				15,281,472				14,925,452				15,586,599				16,506,627
(1) Effective January 1, 2019, we adopted new guidance on leases using the prospective method. See Note 2 to the consolidated financial statements for further details.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

EXECUTIVE SUMMARY
Company Overview	41
Business Strategy	41
Key Transactions	42
Key Performance Indicators, Trends and Uncertainties	43
Corporate Governance	44
LIQUIDITY AND CAPITAL RESOURCES
Sources and Uses of Cash	45
Off-Balance Sheet Arrangements	45
Contractual Obligations	46
Capital Structure	46
RESULTS OF OPERATIONS
Summary	47
Seniors Housing Operating	48
Triple-net	50
Outpatient Medical	51
Non-Segment/Corporate	53
OTHER
Non-GAAP Financial Measures	54
Critical Accounting Policies	57

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is based primarily on the consolidated financial statements of Welltower Inc. presented in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for the periods presented and should be read together with the notes thereto contained in this Annual Report on Form 10-K. Other important factors are identified in “Item 1 — Business” and “Item 1A — Risk Factors” above.

Executive Summary

Company Overview

Welltower Inc. (NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. Welltower™, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing and post-acute communities and outpatient medical properties. Our capital programs, when combined with comprehensive planning, development and property management services, make us a single-source solution for acquiring, planning, developing, managing, repositioning and monetizing real estate assets.

The following table summarizes our consolidated portfolio for the year ended December 31, 2019 (dollars in thousands):

						Percentage of			Number of
Type of Property		NOI(1)				NOI			Properties
Seniors Housing Operating		$	1,039,520			42.8	%		533
Triple-net		918,743				37.9	%		658
Outpatient Medical		469,035				19.3	%		387
Totals		$	2,427,298			100.0	%		1,578

(1) Represents consolidated net operating income ("NOI") and excludes our share of investments in unconsolidated entities. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount. See Non-GAAP Financial Measures for additional information and reconciliation.

Business Strategy

Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders as a result of annual increases in net operating income and portfolio growth. To meet these objectives, we invest across the full spectrum of seniors housing and health care real estate and diversify our investment portfolio by property type, relationship and geographic location.

Substantially all of our revenues are derived from operating lease rentals, resident fees/services and interest earned on outstanding loans receivable. These items represent our primary sources of liquidity to fund distributions and depend upon the continued ability of our obligors to make contractual rent and interest payments to us and the profitability of our operating properties. To the extent that our obligors/partners experience operating difficulties and become unable to generate sufficient cash to make payments or operating distributions to us, there could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. To mitigate this risk, we monitor our investments through a variety of methods determined by the type of property. Our asset management process for seniors housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral. Our internal property management division manages and monitors the outpatient medical portfolio with a comprehensive process including review of tenant relations, lease expirations, the mix of health service providers, hospital/health system relationships, property performance, capital improvement needs and market conditions among other things. We evaluate the operating environment in each property’s market to determine the likely trend in operating performance of the facility. When we identify unacceptable trends, we seek to mitigate, eliminate or transfer the risk. Through these efforts, we generally aim to intervene at an early stage to address any negative trends, and in so doing, support both the collectability of revenue and the value of our investment.

In addition to our asset management and research efforts, we also aim to structure our relevant investments to mitigate payment risk. Operating leases and loans are normally credit enhanced by guarantees and/or letters of credit. In addition, operating leases are typically structured as master leases and loans are generally cross-defaulted and cross-collateralized with other real estate loans, operating leases or agreements between us and the obligor and its affiliates.

For the year ended December 31, 2019, resident fees/services and rental income represented 67% and 31%, respectively, of total revenues. Substantially all of our operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. Our yield on loans receivable depends upon a number of factors, including the stated interest rate, the average principal amount outstanding during the term of the loan and any interest rate adjustments.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our primary sources of cash include resident fees and services, rent and interest receipts, borrowings under our unsecured revolving credit facility and commercial paper program, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses and general and administrative expenses. Depending upon the availability and cost of external capital, we believe our liquidity is sufficient to fund these uses of cash.

We also continuously evaluate opportunities to finance future investments. New investments are generally funded from temporary borrowings under our unsecured revolving credit facility and commercial paper program, internally generated cash and the proceeds from investment dispositions. Our investments generate cash from NOI and principal payments on loans receivable. Permanent financing for future investments, which replaces funds drawn under our unsecured revolving credit facility and commercial paper program, has historically been provided through a combination of the issuance of public debt and equity securities and the incurrence or assumption of secured debt.

Depending upon market conditions, we believe that new investments will be available in the future with spreads over our cost of capital that will generate appropriate returns to our stockholders. It is also likely that investment dispositions may occur in the future. To the extent that investment dispositions exceed new investments, our revenues and cash flows from operations could be adversely affected. We expect to reinvest the proceeds from any investment dispositions in new investments. To the extent that new investment requirements exceed our available cash on-hand, we expect to borrow under our unsecured revolving credit facility and commercial paper program. At December 31, 2019, we had $284,917,000 of cash and cash equivalents, $100,849,000 of restricted cash and $1,411,400,000 of available borrowing capacity under our unsecured revolving credit facility.

Key Transactions

Capital The following summarizes key capital transactions that occurred and supported new investments made during the year ended December 31, 2019:

•	In January 2019, we established an unsecured commercial paper program. Under the terms of the program, we may issue, from time to time, unsecured commercial paper with maturities that vary, but do not exceed 397 days from the date of issue, up to a maximum aggregate principal amount outstanding at any time of $1,000,000,000.

•	In February 2019, we elected to effect the mandatory conversion of all of the outstanding 6.50% Series I Cumulative Convertible Preferred Stock. Each share of convertible stock was converted into 0.8857 shares of common stock.

•

In February 2019, we entered into an amended and restated Equity Shelf Program (as defined below) pursuant to which we may offer and sell up to $1,500,000,000 of common stock from time to time. We sold 18,591,000 shares of common stock under our current and previous Equity Shelf Programs and DRIP (as defined below), via both cash settle and forward sale agreements, generating expected gross proceeds of approximately $1,498,731,000.

•	In February 2019, we completed the issuance of $500,000,000 of 3.625% senior unsecured notes due 2024 and $550,000,000 of 4.125% senior unsecured notes due 2029 for net proceeds of approximately $1,036,964,000.

•	In March 2019 we repaid our $600,000,000 of 4.125% senior unsecured notes due 2019 and $450,000,000 of 6.125% senior unsecured notes due 2020.

•	In August 2019, we completed the issuance of $750,000,000 of 3.10% senior unsecured notes due 2030 and a follow-on issuance of $450,000,000 of 3.625% senior unsecured notes due 2024 priced to yield 2.494%, for net proceeds of approximately $1,209,328,000.

•	In September 2019, we repaid our $450,000,000 of 4.95% senior unsecured notes due 2021 and $600,000,000 of 5.25% senior unsecured notes due 2022.

•

In December 2019, we completed the issuance of $500,000,000 of 2.70% senior unsecured notes due 2027. The net proceeds of approximately $495,066,000 will be used to fund renewable energy, water conservation, energy efficiency and green building projects. Additionally, we completed the issuance of $300,000,000 of 2.95% Canadian-denominated senior unsecured notes due 2027 generating net proceeds of approximately CAD $297,668,000.

•	In December 2019, we redeemed all of the outstanding $300,000,000 Canadian-denominated 3.35% senior unsecured notes due 2020.

•	We extinguished $230,108,000 of secured debt at a blended average interest rate of 4.35% throughout 2019.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Investments The following summarizes property acquisitions and joint venture investments made during the year ended December 31, 2019 (dollars in thousands):

		Properties			Investment Amount(1)				Capitalization Rates(2)		Book Amount(3)
Seniors Housing Operating		62			$	1,459,254			5.1%		$	1,802,836
Triple-net		10			217,658				6.5%		227,379
Outpatient Medical		105			2,396,642				5.6%		2,491,159
Totals		177			$	4,073,554			5.4%		$	4,521,374

(1) Represents stated pro rata purchase price including cash and any assumed debt but excludes fair value adjustments pursuant to U.S. GAAP.

(2) Represents annualized contractual or projected NOI to be received in cash divided by investment amounts.

(3) Represents amounts recorded in real property including fair value adjustments pursuant to U.S. GAAP. See Note 3 to our consolidated financial statements for additional information.

Dispositions The following summarizes property dispositions made during the year ended December 31, 2019 (dollars in thousands):

		Properties			Proceeds(1)				Capitalization Rates(2)		Book Amount(3)
Seniors Housing Operating(4)		55			$	1,803,413			5.4%		$	1,232,816
Triple-net		57			902,731				7.9%		667,632
Outpatient Medical(5)		1			8,500				10.5%		482
Totals		113			$	2,714,644			6.3%		$	1,900,930

(1) Represents pro rata proceeds received upon disposition.

(2) Represents annualized contractual net operating income that was being received in cash at date of disposition divided by disposition proceeds.

(3) Represents carrying value of assets at time of disposition. See Note 5 to our consolidated financial statements for additional information.

(4) Includes the disposition of an unconsolidated real estate investment.

(5) Reflects the disposition of an excess land parcel.

Dividends Our Board of Directors announced the 2020 annual cash dividend of $3.48 per common share ($0.87 per share quarterly), consistent with 2019, beginning in February 2020. The dividend declared for the quarter ended December 31, 2019 represents the 195th consecutive quarterly dividend payment.

Key Performance Indicators, Trends and Uncertainties

We utilize several key performance indicators to evaluate the various aspects of our business. These indicators are discussed below and relate to operating performance, credit strength and concentration risk. Management uses these key performance indicators to facilitate internal and external comparisons to our historical operating results, in making operating decisions, and for budget planning purposes.

Operating Performance We believe that net income and net income attributable to common stockholders (“NICS”) per the Statement of Comprehensive Income are the most appropriate earnings measures. Other useful supplemental measures of our operating performance include funds from operations attributable to common stockholders (“FFO”) and consolidated net operating income (“NOI”); however, these supplemental measures are not defined by U.S. GAAP. Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliations. These earnings measures are widely used by investors and analysts in the valuation, comparison and investment recommendations of companies. The following table reflects the recent historical trends of our operating performance measures for the periods presented (in thousands):

		Year Ended December 31,
		2019				2018				2017
Net income		$	1,330,410			$	829,750			$	540,613
Net income attributable to common stockholders		1,232,432				758,250				463,595
Funds from operations attributable to common stockholders		1,577,080				1,392,183				1,165,576
Consolidated net operating income		2,431,264				2,267,482				2,232,716

Credit Strength We measure our credit strength both in terms of leverage ratios and coverage ratios. The leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and Internal Revenue Code (“IRC”) section 1031 deposits. The coverage ratios indicate our ability to service interest and fixed charges (interest, secured debt principal amortization and preferred dividends). We expect to maintain capitalization ratios and coverage ratios sufficient to maintain a capital structure consistent with our current profile. The coverage ratios are based on adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliation of these measures. Leverage ratios and coverage ratios are widely used by investors, analysts and rating agencies in the valuation, comparison, investment recommendations and rating of companies. The following table reflects the recent historical trends for our credit strength measures for the periods presented:

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

		Year Ended December 31,
		2019		2018		2017
Net debt to book capitalization ratio		46.5%		45.0%		42.9%
Net debt to undepreciated book capitalization ratio		39.4%		37.8%		36.3%
Net debt to market capitalization ratio		29.6%		31.3%		31.2%
Adjusted interest coverage ratio		4.14x		4.11x		4.36x
Adjusted fixed charge coverage ratio		3.78x		3.44x		3.54x

Concentration Risk We evaluate our concentration risk in terms of NOI by property mix, relationship mix and geographic mix. Concentration risk is a valuable measure in understanding what portion of our NOI could be at risk if certain sectors were to experience downturns. Property mix measures the portion of our NOI that relates to our various property types. Relationship mix measures the portion of our NOI that relates to our current top five relationships. Geographic mix measures the portion of our NOI that relates to our current top five states (or international equivalents). The following table reflects our recent historical trends of concentration risk by NOI for the years indicated below:

			December 31,(1)
			2019		2018		2017
Property mix:
	Seniors Housing Operating		43%		43%		40%
	Triple-net		38%		40%		43%
	Outpatient Medical		19%		17%		17%
Relationship mix:
	Sunrise Senior Living(2)		14%		15%		14%
	ProMedica		9%		4%		—%
	Revera(2)		6%		7%		7%
	Genesis HealthCare		5%		6%		9%
	Belmont Village		3%		3%		3%
	Remaining		63%		65%		67%
Geographic mix:
	California		13%		14%		13%
	United Kingdom		8%		9%		9%
	Texas		8%		8%		7%
	New Jersey		7%		8%		8%
	Canada		7%		7%		8%
	Remaining		57%		54%		55%

(1) Excludes our share of investments in unconsolidated entities and non-segment/corporate NOI. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount.

(2) Revera owns a controlling interest in Sunrise Senior Living.

We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results. Our expected results may not be achieved and actual results may differ materially from our expectations. Factors that may cause actual results to differ from expected results are described in more detail in “Item 1 — Business — Cautionary Statement Regarding Forward-Looking Statements” and “Item 1A — Risk Factors” and other sections of this Annual Report on Form 10-K. Management regularly monitors economic and other factors to develop strategic and tactical plans designed to improve performance and maximize our competitive position. Our ability to achieve our financial objectives is dependent upon our ability to effectively execute these plans and to appropriately respond to emerging economic and company-specific trends. Please refer to “Item 1 — Business,” “Item 1A — Risk Factors” in this Annual Report on Form 10-K for further discussion of these risk factors.

Corporate Governance

Maintaining investor confidence and trust is important in today’s business environment. Our Board of Directors and management are strongly committed to policies and procedures that reflect the highest level of ethical business practices. Our corporate governance guidelines provide the framework for our business operations and emphasize our commitment to increase stockholder value while meeting all applicable legal requirements. These guidelines meet the listing standards adopted by the New York Stock Exchange and are available on the Internet at www.welltower.com/investors/governance. The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive textual reference only.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources

Sources and Uses of Cash

Our primary sources of cash include resident fees and services, rent and interest receipts, borrowings under our unsecured revolving credit facility and commercial paper program, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses and general and administrative expenses. These sources and uses of cash are reflected in our Consolidated Statements of Cash Flows and are discussed in further detail below. The following is a summary of our sources and uses of cash flows for the periods presented (dollars in thousands):

		Year Ended								One Year Change							Year Ended				One Year Change							Two Year Change
		December 31,				December 31,											December 31,
		2019				2018				$				%			2017				$				%			$				%
Cash, cash equivalents and restricted cash at beginning of period		$	316,129			$	309,303			$	6,826			2	%		$	607,220			$	(297,917	)		-49	%		$	(291,091	)		-48	%
Net cash provided from (used in):																																n/a
Operating activities		1,535,968				1,583,944				(47,976		)		-3	%		1,434,177				149,767				10	%		101,791				7	%
Investing activities		(2,048,791		)		(2,386,471		)		337,680				-14	%		154,581				(2,541,052		)		n/a			(2,203,372		)		n/a
Financing activities		577,150				818,368				(241,218		)		-29	%		(1,913,527		)		2,731,895				n/a			2,490,677				n/a
Effect of foreign currency translation		5,310				(9,015		)		14,325				n/a			26,852				(35,867		)		n/a			(21,542		)		-80	%
Cash, cash equivalents and restricted cash at end of period		$	385,766			$	316,129			$	69,637			22	%		$	309,303			$	6,826			2	%		$	76,463			25	%

Operating Activities The change in net cash provided from operating activities is attributable to changes in NOI, which is primarily due to acquisitions and annual rent increasers, partially offset by dispositions. Please see “Results of Operations” below for further discussion. For the years ended December 31, 2019, 2018 and 2017, cash flows from operations exceeded cash distributions to stockholders.

Investing Activities The changes in net cash used in investing activities are primarily attributable to net changes in real property investments, loans receivable and investments in unconsolidated entities which are summarized above in “Key Transactions.” Please refer to Notes 3, 7, and 8 of our consolidated financial statements for additional information. The following is a summary of cash used in non-acquisition capital improvement activities for the periods presented (dollars in thousands):

		Year Ended								One Year Change							Year Ended				One Year Change							Two Year Change
		December 31,				December 31,											December 31,
		2019				2018				$				%			2017				$				%			$				%
New development		$	323,488			$	160,706			$	162,782			101	%		$	232,715			$	(72,009	)		-31	%		$	90,773			39	%
Recurring capital expenditures, tenant improvements and lease commissions		136,535				90,190				46,345				51	%		67,797				22,393				33	%		68,738				101	%
Renovations, redevelopments and other capital improvements		192,289				175,993				16,296				9	%		182,479				(6,486		)		-4	%		9,810				5	%
Total		$	652,312			$	426,889			$	225,423			53	%		$	482,991			$	(56,102	)		-12	%		$	169,321			35	%

The change in new development is primarily due to the number and size of construction projects on-going during the relevant periods. Renovations, redevelopments and other capital improvements include expenditures to maximize property value, increase net operating income, maintain a market-competitive position and/or achieve property stabilization.

Financing Activities The changes in net cash provided from financing activities are primarily attributable to changes related to our long-term debt arrangements, the issuance/redemptions of common and preferred stock and dividend payments which are summarized above in “Key Transactions.” Please refer to Notes 10, 11 and 14 of our consolidated financial statements for additional information.

Off-Balance Sheet Arrangements

At December 31, 2019, we had investments in unconsolidated entities with our ownership generally ranging from 10% to 50%. We use financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure. At December 31, 2019, we had thirteen outstanding letter of credit obligations. Please see Notes 8, 12 and 13 to our consolidated financial statements for additional information.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Contractual Obligations

The following table summarizes our payment requirements under contractual obligations as of December 31, 2019 (in thousands):

		Payments Due by Period
Contractual Obligations		Total				2020				2021-2022				2023-2024				Thereafter
Unsecured revolving credit facility and commercial paper(1,2)		$	1,588,600			$	643,600			$	—			$	945,000			$	—
Senior unsecured notes and term credit facilities:(2)
U.S. Dollar senior unsecured notes		8,100,000				—				—				2,450,000				5,650,000
Canadian Dollar senior unsecured notes(3)		231,446				—				—				—				231,446
Pounds Sterling senior unsecured notes(3)		1,393,245				—				—				—				1,393,245
U.S. Dollar term credit facility		510,000				—				10,000				500,000				—
Canadian Dollar term credit facility(3)		192,871				—				—				192,871				—
Secured debt:(2,3)
Consolidated		2,993,342				354,329				861,052				771,911				1,006,050
Unconsolidated		826,396				57,728				52,172				95,783				620,713
Contractual interest obligations:(4)
Unsecured revolving credit facility and commercial paper		86,065				25,302				48,610				12,153				—
Senior unsecured notes and term loans(3)		4,144,774				410,322				838,436				735,197				2,160,819
Consolidated secured debt(3)		510,973				101,577				163,885				100,441				145,070
Unconsolidated secured debt(3)		179,382				28,056				52,130				39,623				59,573
Financing lease liabilities(5)		186,335				9,121				16,935				70,601				89,678
Operating lease obligations(5)		1,185,632				23,356				45,469				43,411				1,073,396
Purchase obligations(6)		727,558				536,105				150,656				27,787				13,010
Total contractual obligations		$	22,856,619			$	2,189,496			$	2,239,345			$	5,984,778			$	12,443,000

(1) Relates to our unsecured revolving credit facility and commercial paper with an aggregate commitment of $3,000,000,000. See Note 10 to our consolidated financial statements.

(2) Amounts represent principal amounts due and do not reflect unamortized premiums/discounts or other fair value adjustments as reflected on the balance sheet.

(3) Based on foreign currency exchange rates in effect as of balance sheet date.

(4) Based on variable interest rates in effect as of December 31, 2019.

(5) See Note 6 to our consolidated financial statements for additional information.

(6) See Note 13 to our consolidated financial statements for additional information.

Capital Structure

Please refer to “Credit Strength” above for a discussion of our leverage and coverage ratio trends. Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As of December 31, 2019, we were in compliance with all of the covenants under our debt agreements. None of our debt agreements contain provisions for acceleration which could be triggered by our debt ratings. However, under our primary unsecured credit facility, the ratings on our senior unsecured notes are used to determine the fees and interest charged. We plan to manage the company to maintain compliance with our debt covenants and with a capital structure consistent with our current profile. Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.

On May 17, 2018, we filed with the Securities and Exchange Commission (1) an open-ended automatic or “universal” shelf registration statement covering an indeterminate amount of future offerings of debt securities, common stock, preferred stock, depositary shares, warrants and units and (2) a registration statement in connection with our enhanced dividend reinvestment plan (“DRIP”) under which we may issue up to 15,000,000 shares of common stock. As of January 31, 2020, 2,728,696 shares of common stock remained available for issuance under the DRIP registration statement. On February 25, 2019, we entered into separate amended and restated equity distribution agreements with each of Barclays Capital Inc., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. LLC, MUFG Securities Americas Inc., RBC Capital Markets, LLC, UBS Securities LLC and Wells Fargo Securities, LLC relating to the offer and sale from time to time of up to $1,500,000,000 aggregate amount of our common stock (“Equity Shelf Program”), which replaced our existing equity shelf program entered into on August 3, 2018. The Equity Shelf Program also allows us to enter into forward sale agreements. As of January 31, 2020, we had $1,075,537,000 of remaining capacity under the Equity Shelf Program, which excludes

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

forward sales agreements outstanding for the sale of 6,799,978 shares with maturity dates in 2020 and 2021. We expect to physically settle the forward sales for cash proceeds. Depending upon market conditions, we anticipate issuing securities under our registration statements to invest in additional properties and to repay borrowings under our unsecured revolving credit facility and commercial paper program.

Results of Operations

Summary

Our primary sources of revenue include resident fees and services, rent and interest income. Our primary expenses include interest expense, depreciation and amortization, property operating expenses, other expenses and general and administrative expenses. We evaluate our business and make resource allocations on our three business segments: Seniors Housing Operating, Triple-net and Outpatient Medical. The primary performance measures for our properties are NOI and SSNOI and other supplemental measures include FFO and Adjusted EBITDA, which are further discussed below. Please see "Non-GAAP Financial Measures" for additional information and reconciliations related to these supplemental measures.

This section of this Form 10-K generally discusses 2019 and 2018 items and year-to-year comparisons between 2019 and 2018. Discussions of 2017 items and year-to-year comparisons between 2018 and 2017 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

The following is a summary of our results of operations for the periods presented (dollars in thousands, except per share amounts):

		Year Ended								One Year Change							Year Ended				One Year Change							Two Year Change
		December 31,				December 31,											December 31,
		2019				2018				Amount				%			2017				Amount				%			Amount				%
Net income		$	1,330,410			$	829,750			$	500,660			60	%		$	540,613			$	289,137			53	%		$	789,797			146	%
NICS		1,232,432				758,250				474,182				63	%		463,595				294,655				64	%		768,837				166	%
FFO		1,577,080				1,392,183				184,897				13	%		1,165,576				226,607				19	%		411,504				35	%
Adjusted EBITDA		2,328,202				2,153,005				175,197				8	%		2,128,429				24,576				1	%		199,773				9	%
Consolidated NOI		2,431,264				2,267,482				163,782				7	%		2,232,716				34,766				2	%		198,548				9	%
Per share data (fully diluted):
Net income attributable to common stockholders		$	3.05			$	2.02			$	1.03			51	%		$	1.26			$	0.76			60	%		$	1.79			142	%
Funds from operations attributable to common stockholders		$	3.91			$	3.71			$	0.20			5	%		$	3.16			$	0.55			17	%		$	0.75			24	%
Adjusted interest coverage ratio		4.14x				4.11x				0.03x				1	%		4.36x				-0.25x				-6	%		-0.22x				-5	%
Adjusted fixed charge coverage ratio		3.78x				3.44x				0.34x				10	%		3.54x				-0.10x				-3	%		0.24x				7	%

The following table represents the changes in outstanding common stock for the period from January 1, 2017 to December 31, 2019 (in thousands):

		Year Ended
		December 31, 2019			December 31, 2018			December 31, 2017			Totals
Beginning balance		383,675			371,732			362,602			362,602
Dividend reinvestment plan issuances		5,799			6,529			5,640			17,968
Preferred stock conversions		12,712			—			4			12,716
Redemption of equity membership units		—			—			91			91
Option exercises		11			57			253			321
Equity Shelf Program issuances		7,856			5,241			2,987			16,084
Other, net		204			116			155			475
Ending balance		410,257			383,675			371,732			410,257
Average number of shares outstanding:
Basic		401,845			373,620			367,237
Diluted		403,808			375,250			369,001

During the past three years, inflation has not significantly affected our earnings because of the moderate inflation rate. Additionally, a portion of our earnings are derived primarily from long-term investments with predictable rates of return. These investments are mainly financed with a combination of equity, senior unsecured notes, secured debt and borrowings under our primary unsecured credit facility. During inflationary periods, which generally are accompanied by rising interest rates, our ability to grow may be adversely affected because the yield on new investments may increase at a slower rate than new borrowing costs. Presuming the current inflation rate remains moderate and long-term interest rates do not increase significantly, we believe that inflation will not impact the availability of equity and debt financing for us.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Seniors Housing Operating

The following is a summary of our same store NOI ("SSNOI") for the Seniors Housing Operating segment for the years presented (dollars in thousands):

		2018 and 2019 Same Store Pool								One Year Change							2017 and 2018 Same Store Pool							One Year Change
		2019				2018				$				%			2018				2017			$				%
SSNOI(1)		$	699,867			$	701,493			$	(1,626	)		-0.2	%		$	816,416			824,415			$	(7,999	)		-1.0	%

(1) Relates to 341 properties for the 2018 and 2019 Same Store Pool and 390 properties for the 2017 and 2018 Same Store Pool.

The following is a summary of our results of operations for the Seniors Housing Operating segment for the years presented (dollars in thousands):

				Year Ended								One Year Change							Year Ended				One Year Change							Two Year Change
				December 31,				December 31,											December 31,
				2019				2018				$				%			2017				$				%			$				%
Revenues:
		Resident fees and services		$	3,448,175			$	3,234,852			$	213,323			7	%		$	2,779,423			$	455,429			16	%		$	668,752			24	%
		Interest income		36				578				(542		)		-94	%		69				509				738	%		(33		)		-48	%
		Other income		8,658				5,024				3,634				72	%		5,127				(103		)		-2	%		3,531				69	%
		Total revenues		3,456,869				3,240,454				216,415				7	%		2,784,619				455,835				16	%		672,250				24	%
Property operating expenses				2,417,349				2,255,432				161,917				7	%		1,904,593				350,839				18	%		512,756				27	%
		NOI(1)		1,039,520				985,022				54,498				6	%		880,026				104,996				12	%		159,494				18	%
Other expenses:
		Depreciation and amortization		553,189				529,449				23,740				4	%		484,796				44,653				9	%		68,393				14	%
		Interest expense		67,983				69,060				(1,077		)		-2	%		63,265				5,795				9	%		4,718				7	%
		Loss (gain) on extinguishment of debt, net		1,614				110				1,504				1,367	%		3,785				(3,675		)		-97	%		(2,171		)		-57	%
		Impairment of assets		2,145				7,599				(5,454		)		-72	%		21,949				(14,350		)		-65	%		(19,804		)		-90	%
		Other expenses		26,348				6,624				19,724				298	%		8,347				(1,723		)		-21	%		18,001				216	%
				651,279				612,842				38,437				6	%		582,142				30,700				5	%		69,137				12	%
Income (loss) from continuing operations before income taxes and other items				388,241				372,180				16,061				4	%		297,884				74,296				25	%		90,357				30	%
Income tax benefit (expense)				6,246				1,202				5,044				420	%		(16,430		)		17,632				107	%		22,676				138	%
Income (loss) from unconsolidated entities				12,388				(28,142		)		40,530				144	%		(105,236		)		77,094				73	%		117,624				112	%
Gain (loss) on real estate dispositions, net				528,747				(2,245		)		530,992				23,652	%		56,295				(58,540		)		-104	%		472,452				839	%
Income from continuing operations				935,622				342,995				592,627				173	%		232,513				110,482				48	%		703,109				302	%
Net income (loss)				935,622				342,995				592,627				173	%		232,513				110,482				48	%		703,109				302	%
Less: Net income (loss) attributable to noncontrolling interests				56,513				(660		)		57,173				8,663	%		8,472				(9,132		)		-108	%		48,041				567	%
Net income (loss) attributable to common stockholders				$	879,109			$	343,655			$	535,454			156	%		$	224,041			$	119,614			53	%		$	655,068			292	%

(1) See Non-GAAP Financial Measures below.

Fluctuations in resident fees and services and property operating expenses are primarily a result of acquisitions, segment transitions and the movement of U.S. and foreign currency exchange rates. The fluctuations in depreciation and amortization are due to acquisitions and variations in amortization of short-lived intangible assets. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly.

During the three years presented, we recorded impairment charges on certain held for sale and held for use properties as the carrying value exceeded the estimated fair values. The fluctuations in gains (losses) on real estate dispositions are due to the volume of property sales and sales prices. The significant gain on real estate dispositions recognized during the year ended December 31, 2019 is related to the sale of the Benchmark Senior Living portfolio. Transaction costs related to asset acquisitions are capitalized as a component of the purchase price. The increase in other expenses during the year ended December 31, 2019 is primarily due to additional noncapitalizable transaction costs associated with acquisitions and operator transitions.

During the year ended December 31, 2019, we completed two Seniors Housing Operating construction projects representing $28,117,000 or $109,405 per unit. The following is a summary of our Seniors Housing Operating construction projects, excluding expansions, pending as of December 31, 2019 (dollars in thousands):

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Location		Units/Beds			Commitment				Balance				Est. Completion
Wandsworth, UK		97			$	78,221			$	69,877			1Q20
Taylor, PA		113			14,272				12,405				1Q20
Beavercreek, OH		100			12,032				11,561				1Q20
Potomac, MD		120			56,720				23,145				4Q20
Beckenham, UK		100			62,497				27,423				3Q21
Hendon, UK		102			74,041				33,698				4Q21
Barnet, UK		100			68,335				28,499				4Q21
		732			$	366,118			206,608
Toronto, ON		Project in planning stage							43,854
Washington, DC		Project in planning stage							18,394
Brookline, MA		Project in planning stage							17,382
									$	268,873

Interest expense represents secured debt interest expense which fluctuates based on the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations. The fluctuations in loss (gain) on extinguishment of debt is primarily attributable to the volume of extinguishments and terms of the related secured debt. The following is a summary of our Seniors Housing Operating property secured debt principal activity (dollars in thousands):

		Year Ended						Year Ended						Year Ended
		December 31, 2019						December 31, 2018						December 31, 2017
						Weighted Avg.						Weighted Avg.						Weighted Avg.
		Amount				Interest Rate		Amount				Interest Rate		Amount				Interest Rate
Beginning balance		$	1,810,587			3.87%		$	1,988,700			3.66%		$	2,463,249			3.94%
Debt transferred in		—				—%		35,830				3.84%		—				—%
Debt issued		343,696				3.11%		45,447				3.40%		228,772				2.72%
Debt assumed		183,061				4.58%		121,612				5.55%		—				—%
Debt extinguished		(219,864		)		4.28%		(240,095		)		4.83%		(668,804		)		4.81%
Debt transferred out		(12,072		)		3.89%		—				—%		—				—%
Debt deconsolidated		—				—%		—				—%		(60,000		)		3.80%
Principal payments		(43,997		)		3.45%		(47,886		)		3.59%		(47,153		)		3.60%
Foreign currency		53,626				3.33%		(93,021		)		3.31%		72,636				3.23%
Ending balance		$	2,115,037			3.54%		$	1,810,587			3.87%		$	1,988,700			3.66%
Monthly averages		$	1,966,892			3.70%		$	1,915,663			3.74%		$	2,065,477			3.66%

The majority of our Seniors Housing Operating properties are formed through partnership interests. The increase in income (loss) from unconsolidated entities are largely due to a gain on the disposition of an unconsolidated entity during the year ended December 31, 2019. Net income attributable to noncontrolling interests represents our partners’ share of net income (loss) related to joint ventures. The increase during the year ended December 31, 2019 relates primarily to our partner's share of the gain recognized on the sale of the Benchmark Senior Living portfolio.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Triple-net

The following is a summary of our SSNOI for the Triple-net segment for the periods presented (dollars in thousands):

		2018 and 2019 Same Store Pool								One Year Change							2017 and 2018 Same Store Pool								One Year Change
		2019				2018				$				%			2018				2017				$				%
SSNOI(1)		$	516,340			$	508,897			$	7,443			1.5	%		$	516,008			$	508,257			$	7,751			1.5	%

(1) Relates to 368 properties for the 2018 and 2019 Same Store Pool and 366 properties for the 2017 and 2018 Same Store Pool.

The following is a summary of our results of operations for the Triple-net segment for the years presented (dollars in thousands):

			Year Ended								One Year Change							Year Ended				One Year Change							Two Year Change
			December 31,				December 31,											December 31,
			2019				2018				$				%			2017				$				%			$				%
Revenues:
	Rental income		$	903,798			$	828,865			$	74,933			9	%		$	885,811			$	(56,946	)		-6	%		$	17,987			2	%
	Interest income		62,599				54,926				7,673				14	%		73,742				(18,816		)		-26	%		(11,143		)		-15	%
	Other income		6,246				17,173				(10,927		)		-64	%		7,531				9,642				128	%		(1,285		)		-17	%
	Total revenues		972,643				900,964				71,679				8	%		967,084				(66,120		)		-7	%		5,559				1	%
	Property operating expenses		53,900				915				52,985				5,791	%		—				915				n/a			53,900				n/a
	NOI(1)		918,743				900,049				18,694				2	%		967,084				(67,035		)		-7	%		(48,341		)		-5	%
Other expenses:
	Depreciation and amortization		232,626				235,480				(2,854		)		-1	%		243,830				(8,350		)		-3	%		(11,204		)		-5	%
	Interest expense		12,892				14,225				(1,333		)		-9	%		15,194				(969		)		-6	%		(2,302		)		-15	%
	Loss (gain) on derivatives and financial instruments, net		(4,399		)		(4,016		)		(383		)		-10	%		2,284				(6,300		)		-276	%		(6,683		)		-293	%
	Loss (gain) on extinguishment of debt, net		—				(32		)		32				100	%		29,083				(29,115		)		-100	%		(29,083		)		-100	%
	Provision for loan losses		18,690				—				18,690				n/a			62,966				(62,966		)		-100	%		(44,276		)		-70	%
	Impairment of assets		11,926				107,980				(96,054		)		-89	%		96,909				11,071				11	%		(84,983		)		-88	%
	Other expenses(2)		13,771				90,975				(77,204		)		-85	%		116,689				(25,714		)		-22	%		(102,918		)		-88	%
			285,506				444,612				(159,106		)		-36	%		566,955				(122,343		)		-22	%		(281,449		)		-50	%
Income from continuing operations before income taxes and other items			633,237				455,437				177,800				39	%		400,129				55,308				14	%		233,108				58	%
Income tax benefit (expense)			(4,209		)		1,611				(5,820		)		-361	%		(4,291		)		5,902				138	%		82				2	%
Income (loss) from unconsolidated entities			22,985				21,938				1,047				5	%		19,428				2,510				13	%		3,557				18	%
Gain (loss) on real estate dispositions, net			218,322				196,589				21,733				11	%		286,325				(89,736		)		-31	%		(68,003		)		-24	%
Income from continuing operations			870,335				675,575				194,760				29	%		701,591				(26,016		)		-4	%		168,744				24	%
Net income			870,335				675,575				194,760				29	%		701,591				(26,016		)		-4	%		168,744				24	%
Less: Net income attributable to noncontrolling interests			36,271				19,306				16,965				88	%		4,603				14,703				319	%		31,668				688	%
Net income attributable to common stockholders			$	834,064			$	656,269			$	177,795			27	%		$	696,988			$	(40,719	)		-6	%		$	137,076			20	%

(1) See Non-GAAP Financial Measures below.

(2) See Note 18 to our consolidated financial statements.

The increase to rental income for the year ended December 31, 2019 is primarily attributable to acquisitions including Quality Care Properties ("QCP") in July 2018. In addition, we have recorded certain real estate property taxes on a gross basis, with the offset to property operating expenses, as a result of our ASC 842 adoption on January 1, 2019. These increases are partially offset by the disposition or segment transition of various properties. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index (“CPI”) and/or changes in the gross operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If gross operating revenues at our facilities and/or the CPI do not increase, a portion of our revenues may not continue to increase. Our leases could renew above or below current rent rates, resulting in an increase or decrease in rental income. For the three months ended December 31, 2019, we had 20 leases with rental rate increasers ranging from 0.12% to 0.76% in our Triple-net portfolio. The increase in other income for the year ended December 31, 2018 is primarily due to $10,805,000 of net lease termination fees recognized.

Depreciation and amortization decreased primarily as a result of the disposition of triple-net properties exceeding acquisition and segment transitions. To the extent we acquire or dispose of additional properties in the future, our provision for depreciation and amortization will change accordingly.

During the year ended December 31, 2019, we recognized a provision for loan loss of $18,690,000 to fully reserve for and eventually wrote off certain real estate loans receivable that are no longer deemed collectible.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

During the years presented, we recorded impairment charges on certain held for sale and held for use properties as the carrying value exceeded the estimated fair values. The fluctuations in gains on real estate dispositions are due to the volume of property sales and sales prices. Transaction costs related to asset acquisitions are capitalized as a component of purchase price. The fluctuations in other expenses is primarily due noncapitalizable transaction costs from acquisitions, segment transitions and the termination/restructuring of preexisting relationships. During the year ended December 31, 2018, we recognized $79,576,000 related to a joint venture transaction, including the conversion of properties from Triple-net to Seniors Housing Operating and termination/restructuring of preexisting relationships.

During the year ended December 31, 2019, there were no construction projects completed. The following is a summary of Triple-net construction projects, excluding expansions, pending as of December 31, 2019 (dollars in thousands):

Location		Units/Beds			Commitment				Balance				Est. Completion
Union, KY		162			$	34,600			$	25,649			1Q20
Westerville, OH		102			22,800				19,922				1Q20
Droitwich, UK		70			16,805				11,730				2Q20
Thousand Oaks, CA		82			24,763				9,971				4Q20
Redhill, UK		76			21,098				6,287				1Q21
Leicester, UK		60			14,861				3,505				1Q21
Wombourne, UK		66			15,923				3,515				2Q21
Total		618			$	150,850			$	80,579

Total interest expense represents secured debt interest expense and related fees. The change in secured debt interest expense is due to the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations. The fluctuations in loss (gain) on extinguishment of debt is primarily attributable to the volume of extinguishments and terms of the related secured debt. The fluctuation in loss (gain) on derivatives and financial instruments, net is primarily attributable to the mark-to-market adjustment recorded on our Genesis HealthCare available-for-sale investment. The following is a summary of our Triple-net secured debt principal activity for the periods presented (dollars in thousands):

		Year Ended						Year Ended						Year Ended
		December 31, 2019						December 31, 2018						December 31, 2017
						Weighted Avg.						Weighted Avg.						Weighted Avg.
		Amount				Interest Rate		Amount				Interest Rate		Amount				Interest Rate
Beginning balance		$	288,386			3.63%		$	347,474			3.55%		$	594,199			4.58%
Debt transferred in		12,072				3.89%		—				—%		—				—%
Debt issued		—				—%		—				—%		13,000				4.57%
Debt extinguished		—				—%		(4,107		)		4.94%		(274,048		)		5.95%
Debt transferred out		—				—%		(35,830		)		3.84%		—				—%
Principal payments		(4,017		)		5.21%		(3,982		)		5.38%		(5,863		)		5.66%
Foreign currency		9,597				2.99%		(15,169		)		3.44%		20,186				2.91%
Ending balance		$	306,038			3.60%		$	288,386			3.63%		$	347,474			3.55%
Monthly averages		$	294,080			3.63%		$	321,730			3.51%		$	408,688			3.91%

A portion of our triple-net properties were formed through partnerships. Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. Net income attributable to noncontrolling interests represents our partners’ share of net income relating to those partnerships where we are the controlling partner.

Outpatient Medical

The following is a summary of our SSNOI for the Outpatient Medical segment for the periods presented (dollars in thousands):

		2018 and 2019 Same Store Pool								One Year Change							2017 and 2018 Same Store Pool								One Year Change
		2019				2018				$				%			2018				2017				$				%
SSNOI(1)		$	311,612			$	308,139			$	3,473			1.1	%		$	343,059			$	336,990			$	6,069			1.8	%

(1) Relates to 197 properties for the 2018 and 2019 Same Store Pool and 224 properties for the 2017 and 2018 Same Store Pool.

The following is a summary of our results of operations for the Outpatient Medical segment for the periods presented (dollars in thousands):

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

			Year Ended								One Year Change							Year Ended				One Year Change							Two Year Change
			December 31,				December 31,											December 31,
			2019				2018				$				%			2017				$				%			$				%
Revenues:
	Rental income		$	684,602			$	551,557			$	133,045			24	%		$	560,060			$	(8,503	)		-2	%		$	124,542			22	%
	Interest income		1,195				310				885				285	%		—				310				n/a			1,195				n/a
	Other income		2,031				4,939				(2,908		)		-59	%		3,340				1,599				48	%		(1,309		)		-39	%
	Total revenues		687,828				556,806				131,022				24	%		563,400				(6,594		)		-1	%		124,428				22	%
Property operating expenses			218,793				176,670				42,123				24	%		179,332				(2,662		)		-1	%		39,461				22	%
	NOI(1)		469,035				380,136				88,899				23	%		384,068				(3,932		)		-1	%		84,967				22	%
Other expenses:
	Depreciation and amortization		241,258				185,530				55,728				30	%		193,094				(7,564		)		-4	%		48,164				25	%
	Interest expense		13,411				7,051				6,360				90	%		10,015				(2,964		)		-30	%		3,396				34	%
	Loss (gain) on extinguishment of debt, net		—				11,928				(11,928		)		-100	%		4,373				7,555				173	%		(4,373		)		-100	%
	Impairment of assets		14,062				—				14,062				n/a			5,625				(5,625		)		-100	%		8,437				150	%
	Other expenses		1,788				7,570				(5,782		)		-76	%		1,911				5,659				296	%		(123		)		-6	%
			270,519				212,079				58,440				28	%		215,018				(2,939		)		-1	%		55,501				26	%
Income from continuing operations before income taxes and other item			198,516				168,057				30,459				18	%		169,050				(993		)		-1	%		29,466				17	%
Income tax benefit (expense)			(2,710		)		(125		)		(2,585		)		-2,068	%		(1,477		)		1,352				92	%		(1,233		)		-83	%
Income (loss) from unconsolidated entities			7,061				5,563				1,498				27	%		2,683				2,880				107	%		4,378				163	%
Gain (loss) on real estate dispositions, net			972				221,231				(220,259		)		-100	%		1,630				219,601				13,472	%		(658		)		-40	%
Income from continuing operations			203,839				394,726				(190,887		)		-48	%		171,886				222,840				130	%		31,953				19	%
Net income (loss)			203,839				394,726				(190,887		)		-48	%		171,886				222,840				130	%		31,953				19	%
Less: Net income (loss) attributable to noncontrolling interests			5,194				6,150				(956		)		-16	%		4,765				1,385				29	%		429				9	%
Net income (loss) attributable to common stockholders			$	198,645			$	388,576			$	(189,931	)		-49	%		$	167,121			$	221,455			133	%		$	31,524			19	%

(1) See Non-GAAP Financial Measures below.

The fluctuations in rental income are primarily attributable to the acquisitions of new properties and the conversion of newly constructed outpatient medical properties, particularly the $1.25 billion CNL Healthcare Properties portfolio acquisition that closed in May 2019, partially offset by dispositions. Certain of our leases contain annual rental escalators that are contingent upon changes in the CPI. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If the CPI does not increase, a portion of our revenues may not continue to increase. Our leases could renew above or below current rent rates, resulting in an increase or decrease in rental income. For the three months ended December 31, 2019, our consolidated outpatient medical portfolio signed 193,173 square feet of new leases and 424,579 square feet of renewals. The weighted-average term of these leases was six years, with a rate of $31.95 per square foot and tenant improvement and lease commission costs of $23.59 per square foot. Substantially all of these leases contain an annual fixed or contingent escalation rent structure ranging from 2.0% to 3.5%.

The fluctuation in property operating expenses and depreciation and amortization are primarily attributable to acquisitions and construction conversions of new outpatient medical facilities, offset by dispositions. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly. We recognized impairment charges related to certain held for sale properties as the carrying values exceeded the estimated fair values less costs to sell. Changes in gains/losses on sales of properties are related to volume of property sales and the sales prices.

During the year ended December 31, 2019, we completed one Outpatient Medical construction project representing $21,006,000 or $286 per square foot. The following is a summary of Outpatient Medical construction projects pending as of December 31, 2019 (dollars in thousands):

Location		Square Feet			Commitment				Balance				Est. Completion
Porter, TX		55,000			$	20,800			$	16,124			1Q20
Lowell, MA		50,668			11,900				10,288				1Q20
Katy, TX		36,500			12,028				3,251				2Q20
Brooklyn, NY		140,955			105,306				80,799				3Q20
Total		283,123			$	150,034			$	110,462

Total interest expense represents secured debt interest expense. The change in secured debt interest expense is primarily due to the net effect and timing of assumptions, extinguishments and principal amortizations. The fluctuations in loss (gain) on extinguishment of debt is primarily attributable the volume of extinguishments and terms of the related secured debt. The following is a summary of our Outpatient Medical secured debt principal activity for the periods presented (dollars in thousands):