Item 6. [Reserved]

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

EXECUTIVE SUMMARY
Company Overview			51
Business Strategy			51
Key Transactions			52
Key Performance Indicators, Trends and Uncertainties			53
Corporate Governance			55
LIQUIDITY AND CAPITAL RESOURCES
Sources and Uses of Cash			55
Off-Balance Sheet Arrangements			56
Contractual Obligations			56
Capital Structure			56
Supplemental Guarantor Information			57
RESULTS OF OPERATIONS
Summary			58
Seniors Housing Operating			59
Triple-net			61
Outpatient Medical			63
Non-Segment/Corporate			64
OTHER
Non-GAAP Financial Measures			65
Critical Accounting Policies and Estimates			71

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.

On March 7, 2022, we announced our intent to complete an UPREIT reorganization. In February 2022, the company formerly known as Welltower Inc. ("Old Welltower") formed WELL Merger Holdco Inc. ("New Welltower") as a wholly owned subsidiary, and New Welltower formed WELL Merger Holdco Sub Inc. ("Merger Sub") as a wholly owned subsidiary. On April 1, 2022, Merger Sub merged with and into Old Welltower, with Old Welltower continuing as the surviving corporation and a wholly owned subsidiary of New Welltower (the "Merger"). In connection with the Merger, Old Welltower's name was changed to "Welltower OP Inc.", and New Welltower inherited the name "Welltower Inc." Effective May 24, 2022, Welltower OP Inc. ("Welltower OP") converted from a Delaware corporation into a Delaware limited liability company named Welltower OP LLC (the "LLC Conversion"). Following the LLC Conversion, New Welltower's business continues to be conducted through Welltower OP and New Welltower does not have substantial assets or liabilities, other than through its investment in Welltower OP.

Unless stated otherwise or the context otherwise requires, references to "Welltower" mean Welltower Inc. and references to "Welltower OP" mean Welltower OP LLC. References to "we," "us" and "our" mean collectively Welltower, Welltower OP and those entities/subsidiaries owned or controlled by Welltower and/or Welltower OP.

Executive Summary

Company Overview

Welltower Inc. (NYSE:WELL), a real estate investment trust ("REIT") and S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. Welltower invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. Welltower owns interests in properties concentrated in major, high-growth markets in the United States ("U.S."), Canada and the United Kingdom ("U.K."), consisting of seniors housing and post-acute communities and outpatient medical properties.

Welltower is the initial member and majority owner of Welltower OP, with an approximate ownership interest of 99.765% as of December 31, 2023. All of our property ownership, development and related business operations are conducted through Welltower OP and Welltower has no material assets or liabilities other than its investment in Welltower OP. Welltower issues equity from time to time, the net proceeds of which it is obligated to contribute as additional capital to Welltower OP. All debt including credit facilities, senior notes and secured debt is incurred by Welltower OP and its subsidiaries, and Welltower has fully and unconditionally guaranteed all existing senior unsecured notes.

The following table summarizes our consolidated portfolio for the year ended December 31, 2023 (dollars in thousands):

												Percentage of						Number of
Type of Property						NOI(1)						NOI						Properties
Seniors Housing Operating						$	1,118,135					42.4		%				918
Triple-net						1,001,135						37.9		%				614
Outpatient Medical						519,199						19.7		%				369
Totals						$	2,638,469					100.0		%				1,901

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

Business Strategy

Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders as a result of annual increases in NOI and portfolio growth. 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 and services, interest earned on outstanding loans receivable and interest earned on short-term deposits. 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

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

housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral. Our 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 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. Also, operating leases are typically structured as master leases and loans are generally cross-defaulted and cross-collateralized with other real estate loans, operating leases or agreements between us and the obligor and its affiliates.

For the year ended December 31, 2023, resident fees and services and rental income represented 72% and 23%, respectively, of total revenues. Substantially all of our operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. 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.

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

We 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. Given general economic conditions in 2023, investments were generally funded proactively via issuances of common stock.

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, 2023, we had $1,993,646,000 of cash and cash equivalents, $82,437,000 of restricted cash and $4,000,000,000 of available borrowing capacity under our unsecured revolving credit facility.

Key Transactions

Capital The following summarizes key capital transactions that occurred during the year ended December 31, 2023:

• In May 2023, we issued $1,035,000,000 aggregate principal amount of 2.75% exchangeable senior unsecured notes maturing May 15, 2028 unless earlier exchanged, purchased or redeemed.

• During the year ended December 31, 2023, we issued $385,115,000 of secured debt at a blended average interest rate of 5.13% and assumed $428,578,000 of secured debt at a blended average interest rate of 6.42%. We extinguished $687,780,000 of secured debt at a blended average interest rate of 6.21%.

*•*In August 2023, Welltower and Welltower OP entered into the ATM Program (as defined below) pursuant to which we may offer and sell up to $4,000,000,000 of common stock of Welltower from time to time. During the twelve months ended December 31, 2023, we sold 53,300,874 shares of common stock under our current and previous ATM Programs generating gross proceeds of approximately $4,313,007,000.

*•*In November 2023, we issued 20,125,000 shares of common stock generating gross proceeds of approximately $1,772,216,000.

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

Investments

Inve**stments The following summarizes our property acquisitions and joint venture investments completed during the year ended December 31, 2023 (dollars in thousands):

						Properties						Book Amount(1)						Capitalization Rates(2)
Seniors Housing Operating						52						$	2,655,913					5.4%
Triple-net						66						1,097,004						9.4%
Outpatient Medical						35						474,058						6.9%
Totals						153						$	4,226,975					6.6%

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

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

Dispositions The following summarizes property dispositions completed during the year ended December 31, 2023 (dollars in thousands):

						Properties						Proceeds(1)						Book Amount(2)						Capitalization Rates(3)
Seniors Housing Operating						23						$	453,983					$	385,128					2.1%
Triple-net						2						6,954						6,391						5.0%
Totals						25						$	460,937					$	391,519					2.1%

(1) Represents pro rata proceeds received upon disposition including non-cash consideration.

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

(3) Represents annualized contractual income that was being received in cash at date of disposition divided by stated purchase price. Excludes properties sold that were recent development conversions.

Strategic Dissolution of Revera Joint Ventures During 2023, we entered into definitive agreements to dissolve our existing Revera joint venture relationships across the U.S., U.K. and Canada. The transactions include acquiring the remaining interests in 110 properties from Revera while simultaneously selling interest in 31 properties to Revera. See Note 5 to our consolidated financial statement for further information regarding the transaction.

Dividends Our Board of Directors declared a cash dividend for the quarter ended December 31, 2023 of $0.61 per share. On March 7, 2024, we will pay our 211th consecutive quarterly cash dividend to stockholders of record on February 23, 2024.

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 Consolidated Statements 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,
						2023						2022						2021
Net income						$	358,139					$	160,568					$	374,479
Net income attributable to common stockholders						340,094						141,214						336,138
Funds from operations attributable to common stockholders						1,763,227						1,478,072						1,220,722
Consolidated net operating income						2,690,219						2,301,845						1,967,553

Credit Strength We measure our credit strength both in terms of leverage ratios and coverage ratios. The leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and restricted cash. The coverage ratios indicate our ability to service interest and fixed charges (interest and secured debt principal amortization). We expect to maintain capitalization ratios and coverage ratios sufficient to maintain a capital structure consistent with our current profile.

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

The coverage ratios are based on earnings before interest, taxes, depreciation and amortization ("EBITDA") and 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:

						Year Ended December 31,
						2023						2022						2021
Net debt to book capitalization ratio						34.3%						39.5%						42.2%
Net debt to undepreciated book capitalization ratio						27.8%						32.1%						34.9%
Net debt to market capitalization ratio						20.9%						29.5%						25.9%
Interest coverage ratio						3.74x						3.73x						3.89x
Fixed charge coverage ratio						3.44x						3.37x						3.43x
Adjusted interest coverage ratio						3.95x						3.94x						3.89x
Adjusted fixed charge coverage ratio						3.64x						3.56x						3.43x

Concentration Risk We evaluate our concentration risk in terms of NOI by property mix, relationship mix and geographic mix. 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 countries).

The following table reflects our recent historical trends of concentration risk by NOI for the years indicated below:

									Year Ended December 31,(1)
									2023						2022						2021
Property mix:
			Seniors Housing Operating						42%						41%						35%
			Triple-net						38%						38%						43%
			Outpatient Medical						20%						21%						22%
Relationship mix:
			Integra Healthcare Properties						8%						—%						—%
			Sunrise Senior Living						6%						7%						10%
			Cogir Management Corporation						4%						3%						2%
			Avery Healthcare						4%						3%						4%
			Oakmont Management Group						4%						2%						1%
			Remaining						74%						85%						83%
Geographic mix:
			California						12%						14%						13%
			United Kingdom						9%						10%						13%
			Texas						8%						8%						8%
			Canada						6%						6%						6%
			Florida						6%						6%						4%
			Remaining						59%						56%						56%

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

We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results. Our expected results may not be achieved and actual results may differ materially from our expectations. 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.

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

Corporate Governance

Maintaining investor confidence and trust is important in today’s business environment. 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.

Liquidity and Capital Resources

Sources and Uses of Cash

Our primary sources of cash include resident fees and services, rent and interest receipts, interest earned on short-term deposits, borrowings under our unsecured revolving credit facility and commercial paper program, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses, general and administrative expenses and other expenses. Depending upon the availability and cost of external capital, we believe our liquidity is sufficient to fund these uses of cash. 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,
			2023						2022						$						%						2021						$						%						$						%
Cash, cash equivalents and restricted cash at beginning of period			$	722,292					$	346,755					$	375,537					108		%				$	2,021,043					$	(1,674,288)					-83		%				$	(1,298,751)					-64		%
Net cash provided from (used in):
Operating activities			1,601,861						1,328,708						273,153						21		%				1,275,325						53,383						4		%				326,536						26		%
Investing activities			(5,707,742)						(3,703,815)						(2,003,927)						54		%				(4,516,268)						812,453						-18		%				(1,191,474)						26		%
Financing activities			5,448,647						2,761,277						2,687,370						97		%				1,567,664						1,193,613						76		%				3,880,983						248		%
Effect of foreign currency translation			11,025						(10,633)						21,658						n/a						(1,009)						(9,624)						954		%				12,034						n/a
Cash, cash equivalents and restricted cash at end of period			$	2,076,083					$	722,292					$	1,353,791					187		%				$	346,755					$	375,537					108		%				$	1,729,328					499		%

Operating Activities Please see “Results of Operations” for discussion of net income fluctuations. For the years ended December 31, 2023, 2022 and 2021, cash flows provided from operations exceeded cash distributions to stockholders.

Investing Activities The changes in net cash provided from/used in investing activities are primarily attributable to net changes in real property investments and dispositions, loans receivable and investments in unconsolidated entities, which are summarized above in “Key Transactions.” Please refer to Notes 3 and 5 of our consolidated financial statements for additional information. The following is a summary of cash used in non-acquisition capital improvement activities for the periods presented (dollars in thousands):

						Year Ended												One Year Change												Year Ended						One Year Change												Two Year Change
						December 31,						December 31,																		December 31,
						2023						2022						$						%						2021						$						%						$						%
New development						$	1,014,935					$	631,737					$	383,198					61		%				$	417,963					$	213,774					51		%				$	596,972					143		%
Recurring capital expenditures, tenant improvements and lease commissions						199,359						198,576						783						—		%				99,994						98,582						99		%				99,365						99		%
Renovations, redevelopments and other capital improvements						318,323						277,440						40,883						15		%				182,594						94,846						52		%				135,729						74		%
Total						$	1,532,617					$	1,107,753					$	424,864					38		%				$	700,551					$	407,202					58		%				$	832,066					119		%

The change in new development is primarily due to the number and size of construction projects on-going during the relevant periods. Renovations, redevelopments and other capital improvements include expenditures to maximize property value, increase net operating income, maintain a market-competitive position and/or achieve property stabilization. The increase in overall development and recurring capital expenditures, tenant improvements and lease commissions is due primarily to portfolio growth and increased spending after a contraction during the pandemic.

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

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

In April 2022, we closed on an amended $5,200,000,000 unsecured credit facility, increasing our term loan capacity by $500,000,000. In May 2023, we issued $1,035,000,000 aggregate principal amount of 2.75% exchangeable senior unsecured notes maturing May 15, 2028. During the twelve months ended December 31, 2023, we issued $385,115,000 of secured debt at a blended average interest rate of 5.13% and assumed $428,578,000 of secured debt at a blended average interest rate of 6.42%. As of December 31, 2023, we have total near-term available liquidity of approximately $6.1 billion.

Off-Balance Sheet Arrangements

At December 31, 2023, we had investments in unconsolidated entities with our ownership generally ranging from 10% to 95%. We use financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure. At December 31, 2023, we had 23 outstanding letter of credit obligations. Please see Notes 8, 12 and 13 to our consolidated financial statements for additional information.

Contractual Obligations

The following table summarizes our payment requirements under contractual obligations as of December 31, 2023 (in thousands):

						Payments Due by Period
Contractual Obligations						Total						2024						2025-2026						2027-2028						Thereafter
Senior unsecured notes and term credit facilities:(1)
U.S. Dollar senior unsecured notes						$	10,935,000					$	1,350,000					$	1,950,000					$	2,285,000					$	5,350,000
Canadian Dollar senior unsecured notes(2)						227,239						—						—						227,239						—
Pounds Sterling senior unsecured notes(2)						1,338,015						—						—						700,865						637,150
U.S. Dollar term credit facility						1,010,000						—						10,000						1,000,000						—
Canadian Dollar term credit facility(2)						189,365						—						—						189,365						—
Secured debt:(1,2)
Consolidated						2,222,445						400,258						584,321						317,637						920,229
Unconsolidated						1,111,216						229,175						557,721						139,840						184,480
Contractual interest obligations:(3)
Senior unsecured notes and term loans(2)						3,741,633						528,777						908,731						673,248						1,630,877
Consolidated secured debt(2)						454,513						99,336						123,873						95,763						135,541
Unconsolidated secured debt(2)						124,597						38,003						30,965						14,199						41,430
Finance lease liabilities(4)						391,388						5,547						8,010						7,939						369,892
Operating lease liabilities(4)						951,398						19,329						35,437						32,785						863,847
Purchase obligations(5)						2,171,304						1,923,419						244,794						2,561						530
Total contractual obligations						$	24,868,113					$	4,593,844					$	4,453,852					$	5,686,441					$	10,133,976

(1) Amounts represent principal amounts due and do not reflect unamortized premiums/discounts or other fair value adjustments as reflected on the Consolidated Balance Sheets.

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

(3) Based on variable interest rates in effect as of December 31, 2023.

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

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

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, 2023, we were in compliance in all material respects with the covenants under our debt agreements. None of our debt agreements contain provisions for acceleration which could be triggered by our debt ratings. However, under our primary unsecured credit facility, the ratings on our senior unsecured notes are used to determine the fees and interest charged. 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 have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.

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

On April 1, 2022, Welltower and Welltower OP jointly filed with the Securities and Exchange Commission (the “SEC”) an open-ended automatic or “universal” shelf registration statement on Form S-3 (the "Shelf Form S-3") covering an indeterminate amount of future offerings of Welltower’s debt securities, common stock, preferred stock, depositary shares, guarantees of debt securities issued by Welltower OP, warrants and units and Welltower OP’s debt securities and guarantees of debt securities issued by Welltower to replace Old Welltower’s existing “universal” shelf registration statement filed with the SEC on May 4, 2021. On April 1, 2022, Welltower also filed with the SEC a registration statement in connection with its enhanced dividend reinvestment plan (“DRIP”) under which it may issue up to 15,000,000 shares of common stock to replace Old Welltower’s existing DRIP registration statement on Form S-3 filed with the SEC on May 4, 2021. On May 3, 2023, Welltower and Welltower OP filed post-effective amendment no. 1 to the Shelf Form S-3 pursuant to which Welltower OP expressly adopted the Shelf Form S-3 as its own registration statement following its statutory conversion from a corporation to a limited liability company. As of February 9, 2024, 15,000,000 shares of common stock remained available for issuance under the DRIP registration statement. On August 1, 2023, Welltower and Welltower OP entered into an equity distribution agreement (the “EDA”) with (i) Barclays Capital Inc., BMO Capital Markets Corp., BNP Paribas Securities Corp., BNY Mellon Capital Markets, LLC, BofA Securities, Inc., BOK Financial Securities, Inc., Capital One Securities Inc., Citigroup Global Markets Inc., Citizens JMP Securities, LLC, Comerica Securities, Inc., Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., Fifth Third Securities, Inc., Goldman Sachs & Co. LLC, Jefferies LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc., Loop Capital Markets LLC, Mizuho Securities USA LLC, Morgan Stanley & Co. LLC, MUFG Securities Americas Inc., RBC Capital Markets, LLC, Regions Securities LLC, Robert W. Baird & Co. Incorporated, Scotia Capital (USA) Inc., Synovus Securities, Inc., TD Securities (USA) LLC, Truist Securities, Inc. and Wells Fargo Securities, LLC as sales agents and forward sellers and (ii) the forward purchasers named therein relating to issuances, offers and sales from time to time of up to $4,000,000,000 aggregate amount of common stock of Welltower (together with the existing master forward sale confirmations relating thereto, the “ATM Program”). The ATM Program also allows Welltower to enter into forward sale agreements. As of February 9, 2024, we had $1,451,479,501 of remaining capacity under the ATM Program and there were no outstanding forward sales agreements. 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.

In connection with the filing of the Shelf Form S-3, Welltower also filed with the SEC a prospectus supplement that will continue an offering that was previously covered by Old Welltower's prospectus supplement and the accompanying prospectus to the prior registration statement relating to the registration of up to 475,327 shares of common stock of Welltower Inc. (the “DownREIT II Shares”) that may be issued from time to time if, and to the extent that, certain holders of Class A units (the “DownREIT II Units”) of HCN G&L DownREIT II LLC, a Delaware limited liability company (the “DownREIT II”), tender such DownREIT II Units for redemption by the DownREIT II, and HCN DownREIT Member, LLC, a majority-owned indirect subsidiary of Welltower (including its permitted successors and assigns, the “Managing Member”), or a designated affiliate of the Managing Member, elects to assume the redemption obligations of the DownREIT II and to satisfy all or a portion of the redemption consideration by issuing DownREIT II Shares to the holders instead of or in addition to paying a cash amount. On July 22, 2022, Welltower filed with the SEC a prospectus supplement relating to the registration of up to 300,026 shares of common stock of Welltower Inc. that may be issued from time to time if, and to the extent that, certain holders of Class A Common Units (the "OP Units") of Welltower OP tender the OP Units for redemption by Welltower OP, and Welltower Inc. elects to assume the redemption obligations of Welltower OP and to satisfy all or a portion of the redemption consideration by issuing shares of its common stock to the holders instead of or in addition to paying a cash amount. On August 9, 2023, Welltower filed with the SEC a prospectus supplement relating to the registration of up to 13,559,535 shares of common stock of Welltower Inc. (the "Exchanged Shares") that may, under certain circumstances, be issuable upon exchange of 2.750% exchangeable senior notes due 2028 of Welltower OP and the resale from time to time by the recipients of the Exchanged Shares.

Supplemental Guarantor Information

Welltower OP has issued the unsecured notes described in Note 11 to our Consolidated Financial Statements. All unsecured notes are fully and unconditionally guaranteed by Welltower, and Welltower OP is 99.765% owned by Welltower as of December 31, 2023. Effective January 4, 2021, the SEC adopted amendments to the financial disclosure requirements applicable to registered debt offerings that include certain credit enhancements. We have adopted these new rules, which permits subsidiary issuers of obligations guaranteed by the parent to omit separate financial statements if the consolidated financial statements of the parent company have been filed, the subsidiary obligor is a consolidated subsidiary of the parent company, the guaranteed security is debt or debt-like, and the security is guaranteed fully and unconditionally by the parent. Accordingly, separate consolidated financial statements of Welltower OP have not been presented. Furthermore, Welltower and Welltower OP have no material assets, liabilities, or operations other than financing activities and their investments in non-guarantor subsidiaries. Therefore, we meet the criteria in Rule 13-01 of Regulation S-X to omit the summarized financial information from our disclosures.

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

Results of Operations

Summary

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

This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

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

						Year Ended												One Year Change												Year Ended						One Year Change												Two Year Change
						December 31,						December 31,																		December 31,
						2023						2022						Amount						%						2021						Amount						%						Amount						%
Net income						$	358,139					$	160,568					$	197,571					123		%				$	374,479					$	(213,911)					-57		%				$	(16,340)					-4		%
NICS						340,094						141,214						198,880						141		%				336,138						(194,924)						-58		%				3,956						1		%
FFO						1,763,227						1,478,072						285,155						19		%				1,220,722						257,350						21		%				542,505						44		%
EBITDA						2,373,450						2,007,702						365,748						18		%				1,910,611						97,091						5		%				462,839						24		%
Adjusted EBITDA						2,509,003						2,122,399						386,604						18		%				1,913,546						208,853						11		%				595,457						31		%
NOI						2,690,219						2,301,845						388,374						17		%				1,967,553						334,292						17		%				722,666						37		%
Per share data (fully diluted):
Net income attributable to common stockholders (1)						$	0.66					$	0.30					$	0.36					120		%				$	0.78					$	(0.48)					-62		%				$	(0.12)					-15		%
Funds from operations attributable to common stockholders						$	3.40					$	3.18					$	0.22					7		%				$	2.86					$	0.32					11		%				$	0.54					19		%
Interest coverage ratio						3.74x						3.73x						0.01x						—		%				3.89x						-0.16x						-4		%				-0.15x						-4		%
Fixed charge coverage ratio						3.44x						3.37x						0.07x						2		%				3.43x						-0.06x						-2		%				0.01x						—		%
Adjusted interest coverage ratio						3.95x						3.94x						0.01x						—		%				3.89x						0.05x						1		%				0.06x						2		%
Adjusted fixed charge coverage ratio						3.64x						3.56x						0.08x						2		%				3.43x						0.13x						4		%				0.21x						6		%
(1) Includes adjustment to the numerator for income (loss) attributable to OP unitholders.

The following table represents the changes in outstanding common stock for the period from January 1, 2021 to December 31, 2023 (in thousands):

						Year Ended December 31,
						December 31, 2023						December 31, 2022						December 31, 2021						Totals
Beginning balance						490,508						447,239						417,401						417,401
Redemption of OP Units and DownREIT Units						336						5						—						341
Option exercises						4						2						—						6
ATM Program issuances						53,301						43,093						29,667						126,061
Equity issuances						20,125						—						—						20,125
Other, net						(33)						169						171						307
Ending balance						564,241						490,508						447,239						564,241
Weighted average number of shares outstanding:
Basic						515,629						462,185						424,976
Diluted						518,701						465,158						426,841

A portion of our earnings are derived primarily from long-term investments with predictable rates of return. 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.

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

Seniors Housing Operating

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

						Year Ended												One Year Change												Year Ended						One Year Change												Two Year Change
						December 31,						December 31,																		December 31,
						2023						2022						$						%						2021						$						%						$						%
Revenues:
Resident fees and services						$	4,753,804					$	4,173,711					$	580,093					14		%				$	3,197,223					$	976,488					31		%				$	1,556,581					49		%
Interest income						10,096						7,867						2,229						28		%				4,231						3,636						86		%				5,865						139		%
Other income						9,743						63,839						(54,096)						-85		%				11,796						52,043						441		%				(2,053)						-17		%
Total revenues						4,773,643						4,245,417						528,226						12		%				3,213,250						1,032,167						32		%				1,560,393						49		%
Property operating expenses						3,655,508						3,292,045						363,463						11		%				2,529,344						762,701						30		%				1,126,164						45		%
NOI(1)						1,118,135						953,372						164,763						17		%				683,906						269,466						39		%				434,229						63		%
Other expenses:
Depreciation and amortization						906,771						854,800						51,971						6		%				593,565						261,235						44		%				313,206						53		%
Interest expense						56,509						34,833						21,676						62		%				39,327						(4,494)						-11		%				17,182						44		%
Loss (gain) on extinguishment of debt, net						—						386						(386)						-100		%				(2,628)						3,014						115		%				2,628						100		%
Provision for loan losses, net						3,197						1,039						2,158						208		%				394						645						164		%				2,803						711		%
Impairment of assets						24,999						13,146						11,853						90		%				22,317						(9,171)						-41		%				2,682						12		%
Other expenses						96,972						66,026						30,946						47		%				27,132						38,894						143		%				69,840						257		%
						1,088,448						970,230						118,218						12		%				680,107						290,123						43		%				408,341						60		%
Income (loss) from continuing operations before income taxes and other items						29,687						(16,858)						46,545						276		%				3,799						(20,657)						-544		%				25,888						681		%
Income (loss) from unconsolidated entities						(69,835)						(53,318)						(16,517)						-31		%				(39,225)						(14,093)						-36		%				(30,610)						-78		%
Gain (loss) on real estate dispositions, net						68,290						5,794						62,496						n/a						6,146						(352)						-6		%				62,144						n/a
Income (loss) from continuing operations						28,142						(64,382)						92,524						144		%				(29,280)						(35,102)						-120		%				57,422						196		%
Net income (loss)						28,142						(64,382)						92,524						144		%				(29,280)						(35,102)						-120		%				57,422						196		%
Less: Net income (loss) attributable to noncontrolling interests						(6,391)						(16,258)						9,867						61		%				(2,224)						(14,034)						-631		%				(4,167)						-187		%
Net income (loss) attributable to common stockholders						$	34,533					$	(48,124)					$	82,657					172		%				$	(27,056)					$	(21,068)					-78		%				$	61,589					228		%

(1) See Non-GAAP Financial Measures below.

Resident fees and services and property operating expenses for the year ended December 31, 2023 increased compared to the prior year primarily due to acquisitions outpacing dispositions. Additionally, our Seniors Housing Operating revenues are dependent on occupancy and rate growth, both of which have continued to steadily increase during 2023. Average occupancy is as follows:

						Three Months Ended(1)
						March 31,						June 30,						September 30,						December 31,
2022						76.3%						77.1%						78.0%						78.3%
2023						79.0%						79.6%						80.7%						82.2%

(1) Average occupancy includes our minority ownership share related to unconsolidated properties and excludes the minority partners' noncontrolling ownership share related to consolidated properties. Also excludes land parcels and properties under development.

Effective on April 1, 2022, our leasehold interest relating to the master lease with National Health Investors, Inc. ("NHI") for 17 properties assumed in conjunction with the Holiday Retirement acquisition was terminated as a result of the transition or sale of the properties by NHI. The lease termination was part of an agreement to resolve outstanding litigation with NHI. In conjunction with the agreement, a wholly owned subsidiary and the lessee on the master lease agreed to release $6,883,000 of cash to the landlord, which represents the net cash flow generated from the properties since we assumed the leasehold interest. Additionally, in connection with the lease termination, during the year ended December 31, 2022 we recognized $58,621,000 in other income on our Consolidated Statements of Comprehensive Income, from the derecognition of the right of use asset and related lease liability.

We received government grants under the CARES Act primarily to cover increased expenses and lost revenue during the COVID-19 pandemic, as well as under similar programs in the U.K. and Canada. We recognized $21,220,000 and $38,607,000 during the years ended December 31, 2023 and 2022, respectively. These grants represent a reduction to property operating expenses in our Consolidated Statements of Comprehensive Income.

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

The following is a summary of our SSNOI at Welltower's share for the Seniors Housing Operating segment (dollars in thousands):

						QTD Pool																								YTD Pool
						Three Months Ended												Change												Year Ended												Change
						December 31, 2023						December 31, 2022						$						%						December 31, 2023						December 31, 2022						$						%
SSNOI(1)						$	236,993					$	193,149					$	43,844					22.7		%				$	788,605					$	654,320					$	134,285					20.5		%

(1) Relates to 647 properties for the QTD Pool and 556 properties for the YTD Pool. Please see Non-GAAP Financial Measures for additional information and reconciliations.

During the year ended December 31, 2023, we recorded impairment charges of $14,315,000 related to four held for sale properties for which the carrying value exceeded the estimated fair value less costs to sell and $10,684,000 related to three held for use properties for which the carrying value exceeded the estimated fair value. During the year ended December 31, 2022, we recorded impairment charges of $13,146,000 related to one held for sale property. Transaction costs related to asset acquisitions are capitalized as a component of the purchase price. The fluctuation in other expenses is primarily due to the timing of noncapitalizable transaction costs associated with acquisitions and operator transitions. Changes in the gain on sales of properties are related to the volume and timing of property sales and the sales prices.

Depreciation and amortization fluctuates as a result of acquisitions, disposition and transitions. To the extent we acquire or dispose of additional properties in the future, our provision for depreciation and amortization will change accordingly.

During the year ended December 31, 2023, we completed ten Seniors Housing Operating construction conversions representing $463,644,000 or $306,846 per unit. The following is a summary of our consolidated Seniors Housing Operating construction projects in process, excluding expansions (dollars in thousands):

As of December 31, 2023
Expected Conversion Year(1)						Properties						Units/Beds						Anticipated Remaining Funding						Construction in Progress Balance
2024						21						3,389						$	296,186					$	756,968
2025						6						1,423						299,647						175,867
TBD(2)						10																		92,752
Total						37																		$	1,025,587
(1) Properties expected to be converted in phases over multiple years are reflected in the last expected year.
(2) Represents projects for which a final budget or expected conversion date are not yet known.

Interest expense represents secured debt interest expense, which fluctuates based on the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations. The fluctuations in loss (gain) on extinguishment of debt is primarily attributable to the volume of extinguishments and terms of the related secured debt.

The following is a summary of our Seniors Housing Operating segment property secured debt principal activity (dollars in thousands):

						Year Ended December 31,
						2023						2022						2021
Beginning balance						$	1,701,939					$	1,599,522					$	1,706,189
Debt transferred in						—						32,478						—
Debt issued						385,115						113,183						23,569
Debt assumed						381,837						288,522						—
Debt extinguished						(486,825)						(227,910)						(77,959)
Principal payments						(47,672)						(47,399)						(50,603)
Foreign currency						20,654						(56,457)						(1,674)
Ending balance						$	1,955,048					$	1,701,939					$	1,599,522
Ending weighted average interest						4.68		%				4.32		%				2.81		%

The majority of our Seniors Housing Operating properties are formed through partnership interests. Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. Income from unconsolidated entities during the year ended December 31, 2023 includes other than temporary impairment charges of $35,293,000, primarily related to unconsolidated management companies. Net income attributable to noncontrolling interests represents our partners’ share of net income (loss) related to joint ventures.

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

Triple-net

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

						Year Ended												One Year Change												Year Ended						One Year Change												Two Year Change
						December 31,						December 31,																		December 31,
						2023						2022						$						%						2021						$						%						$						%
Revenues:
Rental income						$	814,751					$	782,329					$	32,422					4		%				$	761,441					$	20,888					3		%				$	53,310					7		%
Interest income						157,592						142,402						15,190						11		%				124,540						17,862						14		%				33,052						27		%
Other income						70,986						6,776						64,210						948		%				4,603						2,173						47		%				66,383						n/a
Total revenues						1,043,329						931,507						111,822						12		%				890,584						40,923						5		%				152,745						17		%
Property operating expenses						42,194						44,483						(2,289)						-5		%				49,462						(4,979)						-10		%				(7,268)						-15		%
NOI(1)						1,001,135						887,024						114,111						13		%				841,122						45,902						5		%				160,013						19		%
Other expenses:
Depreciation and amortization						231,028						215,887						15,141						7		%				220,699						(4,812)						-2		%				10,329						5		%
Interest expense						(65)						963						(1,028)						-107		%				6,376						(5,413)						-85		%				(6,441)						-101		%
Loss (gain) on derivatives and financial instruments, net						(2,120)						8,334						(10,454)						-125		%				(7,333)						15,667						214		%				5,213						71		%
Loss (gain) on extinguishment of debt, net						—						80						(80)						-100		%				—						80						n/a						—						n/a
Provision for loan losses, net						6,348						9,289						(2,941)						-32		%				10,339						(1,050)						-10		%				(3,991)						-39		%
Impairment of assets						11,098						3,595						7,503						209		%				26,579						(22,984)						-86		%				(15,481)						-58		%
Other expenses						5,060						13,043						(7,983)						-61		%				4,189						8,854						211		%				871						21		%
						251,349						251,191						158						—		%				260,849						(9,658)						-4		%				(9,500)						-4		%
Income (loss) from continuing operations before income taxes and other items						749,786						635,833						113,953						18		%				580,273						55,560						10		%				169,513						29		%
Income (loss) from unconsolidated entities						16,700						34,495						(17,795)						-52		%				20,687						13,808						67		%				(3,987)						-19		%
Gain (loss) on real estate dispositions, net						259						16,648						(16,389)						-98		%				135,881						(119,233)						-88		%				(135,622)						-100		%
Income (loss) from continuing operations						766,745						686,976						79,769						12		%				736,841						(49,865)						-7		%				29,904						4		%
Net income (loss)						766,745						686,976						79,769						12		%				736,841						(49,865)						-7		%				29,904						4		%
Less: Net income (loss) attributable to noncontrolling interests						23,698						28,958						(5,260)						-18		%				35,653						(6,695)						-19		%				(11,955)						-34		%
Net income (loss) attributable to common stockholders						$	743,047					$	658,018					$	85,029					13		%				$	701,188					$	(43,170)					-6		%				$	41,859					6		%

(1) See Non-GAAP Financial Measures below.

Rental income has increased primarily due to acquisitions and annual rent increases. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index and/or changes in the gross operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If gross operating revenues at our facilities and/or the Consumer Price Index do not increase, a portion of our revenues may not continue to increase. For the year ended December 31, 2023, we had 87 leases with rental rate increases ranging from 0.58% to 549.38% in our Triple-net portfolio.

These increases are partially offset by the write off of straight-line rent receivable balances of $16,642,000 during the year ended December 31, 2023, which relate to leases for which the collection of substantially all contractual lease payments was no longer deemed probable.

The increase in interest income during the year ended December 31, 2023 is primarily driven by increased advances on loans receivable during the year.

As part of the substantial exit of the Genesis HealthCare operating relationship, which we disclosed on March 2, 2021, we transitioned the sublease of a portfolio of seven facilities from Genesis HealthCare to Complete Care Management in the second quarter of 2021. As part of the March 2021 transaction, we entered into a forward sale agreement for the seven properties valued at $182,618,000, which was expected to close when the Welltower-held purchase option became exercisable. As of March 31, 2023, the right of use assets related to the properties were $115,359,000 and were reflected as held for sale with the corresponding lease liabilities of $66,530,000 on our Consolidated Balance Sheet. On May 1, 2023, we executed a series of transactions that included the assignment of the leasehold interest to a newly formed tri-party unconsolidated joint venture with Aurora Health Network, Peace Capital (an affiliate of Complete Care Management) and us, and culminated with the closing of the purchase option by the joint venture. The transactions resulted in net cash proceeds to us of $104,240,000 after our retained interest of $11,571,000 in the joint venture and a gain from the loss of control and derecognition of the leasehold interest of $65,485,000, which we recorded in other income within our Consolidated Statements of Comprehensive Income during the year ended December 31, 2023.

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

The following is a summary of our SSNOI at Welltower's share for the Triple-net segment (dollars in thousands):

						QTD Pool																								YTD Pool
						Three Months Ended												Change												Year Ended												Change
						December 31, 2023						December 31, 2022						$						%						December 31, 2023						December 31, 2022						$						%
SSNOI(1)						$	110,219					$	107,627					$	2,592					2.4		%				$	436,238					$	426,557					$	9,681					2.3		%

(1) Relates to 364 properties for the QTD Pool and 364 properties for the YTD Pool. Please see Non-GAAP Financial Measures for additional information and reconciliations.

Depreciation and amortization fluctuates as a result of the acquisitions, dispositions and segment transitions of Triple-net properties. To the extent we acquire or dispose of additional properties in the future, our provision for depreciation and amortization will change accordingly.

During the year ended December 31, 2023, we recorded impairment charges of $1,086,000 for one held for sale property for which the carrying value exceeded the estimated fair value less costs to sell and $10,012,000 related to two held for use properties for which the carrying value exceeded the estimated fair value. During the year ended December 31, 2022, we recorded impairment charges of $3,595,000 related to two held for use properties. Transaction costs related to asset acquisitions are capitalized as a component of purchase price. The fluctuation in other expenses is primarily due to noncapitalizable transaction costs from acquisitions and segment transitions. Changes in the gain on sales of properties are related to the volume and timing of property sales and the sales prices.

During the year ended December 31, 2023, there was one Triple-net construction project completed representing $141,142,000 or $738,963 per unit.

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 following is a summary of our Triple-net secured debt principal activity for the periods presented (dollars in thousands):

						Year Ended December 31,
						2023						2022						2021
Beginning balance						$	39,179					$	72,536					$	123,652
Debt assumed						—						39,574						—
Debt extinguished						—						(39,574)						(46,402)
Debt transferred out						—						(32,478)						—
Principal payments						(919)						(879)						(4,679)
Foreign currency						—						—						(35)
Ending balance						$	38,260					$	39,179					$	72,536
Ending weighted average interest						4.39		%				4.39		%				4.57		%

Loss (gain) on derivatives and financial instruments, net is primarily attributable to the mark-to-market of the equity warrants received as part of the HC-One transactions that closed in 2021 and 2023.

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. The increase in income from unconsolidated entities during the year ended December 31, 2022 is primarily related to the write off of a right of use asset and related lease liability on an unconsolidated joint venture that was restructured during the year. Net income attributable to noncontrolling interests represents our partners’ share of net income relating to those partnerships where we are the controlling partner.