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

Outpatient Medical

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

									Year Ended												One Year Change												Year Ended						One Year Change												Two Year Change
									December 31,						December 31,																		December 31,
									2023						2022						$						%						2021						$						%						$						%
Revenues:
			Rental income						$	741,322					$	669,457					$	71,865					11		%				$	613,254					$	56,203					9		%				$	128,068					21		%
			Interest income						666						302						364						121		%				8,792						(8,490)						-97		%				(8,126)						-92		%
			Other income						9,167						8,998						169						2		%				13,243						(4,245)						-32		%				(4,076)						-31		%
			Total revenues						751,155						678,757						72,398						11		%				635,289						43,468						7		%				115,866						18		%
Property operating expenses									231,956						205,997						25,959						13		%				186,939						19,058						10		%				45,017						24		%
			NOI(1)						519,199						472,760						46,439						10		%				448,350						24,410						5		%				70,849						16		%
Other expenses:
			Depreciation and amortization						263,302						239,681						23,621						10		%				223,302						16,379						7		%				40,000						18		%
			Interest expense						10,543						18,078						(7,535)						-42		%				17,506						572						3		%				(6,963)						-40		%
			Loss (gain) on extinguishment of debt, net						7						15						(8)						-53		%				(4)						19						475		%				11						275		%
			Provision for loan losses, net						264						(8)						272						n/a						(3,463)						3,455						100		%				3,727						108		%
			Impairment of assets						—						761						(761)						-100		%				2,211						(1,450)						-66		%				(2,211)						-100		%
			Other expenses						2,289						2,537						(248)						-10		%				2,523						14						1		%				(234)						-9		%
									276,405						261,064						15,341						6		%				242,075						18,989						8		%				34,330						14		%
Income (loss) from continuing operations before income taxes and other item									242,794						211,696						31,098						15		%				206,275						5,421						3		%				36,519						18		%
Income (loss) from unconsolidated entities									(307)						(2,467)						2,160						88		%				(4,395)						1,928						44		%				4,088						93		%
Gain (loss) on real estate dispositions, net									(651)						(6,399)						5,748						90		%				93,348						(99,747)						-107		%				(93,999)						-101		%
Income (loss) from continuing operations									241,836						202,830						39,006						19		%				295,228						(92,398)						-31		%				(53,392)						-18		%
Net income (loss)									241,836						202,830						39,006						19		%				295,228						(92,398)						-31		%				(53,392)						-18		%
Less: Net income (loss) attributable to noncontrolling interests									1,910						7,180						(5,270)						-73		%				4,916						2,264						46		%				(3,006)						-61		%
Net income (loss) attributable to common stockholders									$	239,926					$	195,650					$	44,276					23		%				$	290,312					$	(94,662)					-33		%				$	(50,386)					-17		%

(1) See Non-GAAP Financial Measures below.

Rental income has increased due primarily to acquisitions and construction conversions that occurred during 2022 and 2023. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index. These 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 Consumer Price Index does not increase, a portion of our revenues may not continue to increase. Our leases could renew above or below current rental rates, resulting in an increase or decrease in rental income. For the year ended December 31, 2023, our consolidated Outpatient Medical portfolio signed 512,694 square feet of new leases and 2,255,492 square feet of renewals. The weighted-average term of these leases was seven years, with a rate of $37.52 per square foot and tenant improvement and lease commission costs of $28.00 per square foot. Substantially all of these leases contain an annual fixed or contingent escalation rent structure ranging from 1.0% to 28.0%.

The fluctuation in property operating expenses and depreciation and amortization are primarily attributable to acquisitions and construction conversions that occurred during 2022 and 2023. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly.

The following is a summary of our SSNOI at Welltower share for the Outpatient Medical segment (dollars in thousands):

						QTD Pool																								YTD Pool
						Three Months Ended												Change												Year Ended												Change
						December 31, 2023						December 31, 2022						$						%						December 31, 2023						December 31, 2022						$						%
SSNOI(1)						$	119,706					$	115,180					$	4,526					3.9		%				$	451,959					$	441,664					$	10,295					2.3		%

(1) Relates to 377 properties for the QTD Pool and 366 properties for the YTD Pool. Please see Non-GAAP Financial Measures for additional information and reconciliations.

During the year ended December 31, 2023, no impairment charge was recorded. During the year ended December 31, 2022, we recognized an impairment charge of $761,000 related to one held for use property. Transaction costs related to asset acquisitions are capitalized as a component of purchase price. The fluctuation in other expenses is primarily due to noncapitalizable transaction costs. Changes in gains/losses on sales of properties are related to volume of property sales and the sales prices.

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

During the year ended December 31, 2023, we completed four Outpatient Medical construction conversions representing $190,770,000 or $582 per square foot. The following is a summary of our consolidated Outpatient Medical construction projects in process, excluding expansions (dollars in thousands):

As of December 31, 2023
Expected Conversion Year						Properties						Square Feet						Anticipated Remaining Funding						Construction in Progress Balance
2024						10						788,925						$	277,333					$	174,476
2025						2						149,290						93,663						7,249
TBD(1)						1																		33,369
Total						13																		$	215,094
(1) Represents projects for which a final budget or expected conversion date are not yet known.

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 following is a summary of our Outpatient Medical secured debt principal activity (dollars in thousands):

						Year Ended December 31,
						2023						2022						2021
Beginning balance						$	388,836					$	530,254					$	548,229
Debt assumed						46,741			—			—						—
Debt extinguished						(200,955)						(131,582)						(7,670)
Principal payments						(5,485)						(9,836)						(10,305)
Ending balance						$	229,137					$	388,836					$	530,254
Ending weighted average interest						5.42		%				4.38		%				3.49		%

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

Non-Segment/Corporate

The following is a summary of our results of operations for the Non-Segment/Corporate activities for the periods presented (dollars in thousands):

									Year Ended												One Year Change												Year Ended						One Year Change												Two Year Change
									December 31,						December 31,																		December 31,
									2023						2022						$						%						2021						$						%						$						%
Revenues:
			Other income						$	69,868					$	4,934					$	64,934					n/a						$	2,992					$	1,942					65		%				$	66,876					n/a
			Total revenues						69,868						4,934						64,934						n/a						2,992						1,942						65		%				66,876						n/a
Property operating expenses									18,118						16,245						1,873						12		%				8,817						7,428						84		%				9,301						105		%
			NOI(1)						51,750						(11,311)						63,061						558		%				(5,825)						(5,486)						-94		%				57,575						988		%
Other expenses:
			Interest expense						540,859						475,645						65,214						14		%				426,644						49,001						11		%				114,215						27		%
			General and administrative expenses						179,091						150,390						28,701						19		%				126,727						23,663						19		%				52,364						41		%
			Loss (gain) on extinguishments of debt, net						—						199						(199)						-100		%				52,506						(52,307)						-100		%				(52,506)						-100		%
			Other expenses						4,020						20,064						(16,044)						-80		%				7,895						12,169						154		%				(3,875)						-49		%
			Total expenses						723,970						646,298						77,672						12		%				613,772						32,526						5		%				110,198						18		%
Loss from continuing operations before income taxes and other items									(672,220)						(657,609)						(14,611)						-2		%				(619,597)						(38,012)						-6		%				(52,623)						-8		%
Income tax (expense) benefit									(6,364)						(7,247)						883						12		%				(8,713)						1,466						17		%				2,349						27		%
Loss from continuing operations									(678,584)						(664,856)						(13,728)						-2		%				(628,310)						(36,546)						-6		%				(50,274)						-8		%
Net income (loss)									(678,584)						(664,856)						(13,728)						-2		%				(628,310)						(36,546)						-6		%				(50,274)						-8		%
Less: Net income (loss) attributable to noncontrolling interests									(1,172)						(526)						(646)						-123		%				(4)						(522)						n/a						(1,168)						n/a
Net loss attributable to common stockholders									$	(677,412)					$	(664,330)					$	(13,082)					-2		%				$	(628,306)					$	(36,024)					-6		%				$	(49,106)					-8		%

(1) See Non-GAAP Financial Measures below.

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

The increase in other income for the year ended December 31, 2023 is primarily due to interest earned on deposits. Property operating expenses represent insurance costs related to our captive insurance company, which acts as a direct insurer of property level insurance coverage for our portfolio.

The following is a summary of our Non-Segment/Corporate interest expense for the periods presented (dollars in thousands):

						Year Ended												One Year Change												Year Ended						One Year Change												Two Year Change
						December 31,						December 31,																		December 31,
						2023						2022						$						%						2021						$						%						$						%
Senior unsecured notes						$	508,681					$	436,185					$	72,496					17		%				$	401,247					$	34,938					9		%				$	107,434					27		%
Unsecured credit facility and commercial paper program						6,977						19,576						(12,599)						-64		%				6,759						12,817						190		%				218						3		%
Loan expense						25,201						19,884						5,317						27		%				18,638						1,246						7		%				6,563						35		%
Totals						$	540,859					$	475,645					$	65,214					14		%				$	426,644					$	49,001					11		%				$	114,215					27		%

The change in interest expense on senior unsecured notes is due to the net effect of issuances and extinguishments, as well as the movement in foreign exchange rates and related hedge activity. Please refer to Note 11 to the consolidated financial statements for additional information. The change in interest expense on our unsecured revolving credit facility and commercial paper program is due primarily to the net effect and timing of draws, paydowns and variable interest rate changes. Please refer to Note 10 of our consolidated financial statements for additional information regarding our unsecured revolving credit facility and commercial paper program. Loan expenses represent the amortization of costs incurred in connection with senior unsecured notes issuances.

General and administrative expenses as a percentage of consolidated revenues for the years ended December 31, 2023, 2022 and 2021 were 2.70%, 2.57% and 2.67%, respectively. The increase during the year ended December 31, 2023 is primarily driven by compensation costs associated with increased employee headcount. Other expenses includes non-capitalizable legal expenses, including related to our umbrella partnership REIT reorganization during 2022. The provision for income taxes primarily relates to state taxes, foreign taxes and taxes based on income generated by entities that are structured as taxable REIT subsidiaries.

Other

Non-GAAP Financial Measures

We believe that net income and net income attributable to common stockholders, as defined by U.S. GAAP, are the most appropriate earnings measurements. However, we consider FFO, NOI, SSNOI, EBITDA and Adjusted EBITDA to be useful supplemental measures of our operating performance. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation. However, since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient. In response, the National Association of Real Estate Investment Trusts (“NAREIT”) created funds from operations attributable to common stockholders (“FFO”) as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO, as defined by NAREIT, means NICS, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairment of depreciable assets, plus depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests.

NOI is used to evaluate the operating performance of our properties. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. Property operating expenses represent costs associated with managing, maintaining and servicing tenants for our properties. These expenses include, but are not limited to, property-related payroll and benefits, property management fees paid to managers, marketing, housekeeping, food service, maintenance, utilities, property taxes and insurance. General and administrative expenses represent general overhead costs that are unrelated to property operations and unallocable to the properties. These expenses include, but are not limited to, payroll and benefits related to corporate employees, professional services, office expenses and depreciation of corporate fixed assets. Same store NOI (“SSNOI”) is used to evaluate the operating performance of our properties using a consistent population which controls for changes in the composition of our portfolio. We believe the drivers of property level NOI for both consolidated properties and unconsolidated properties are generally the same and therefore, we evaluate SSNOI based on our ownership interest in each property ("Welltower Share"). To arrive at Welltower's Share, NOI is adjusted by adding our minority ownership share related to unconsolidated properties and by subtracting the minority partners' noncontrolling ownership interests for consolidated properties. We do not control investments in unconsolidated properties and while we consider disclosures at Welltower Share to be useful, they may not accurately depict the legal and economic implications of our joint venture arrangements and should be used with caution. As used herein, same store is generally defined as those revenue-generating properties in the portfolio for the relevant year-over-year reporting periods. Acquisitions and development conversions are included in SSNOI five full quarters or eight full quarters after acquisition or being placed into service for the QTD Pool and the YTD Pool, respectively. Land parcels, loans and sub-leases, as well as any properties sold or classified as held for sale during the respective periods are excluded from SSNOI. Redeveloped properties (including major refurbishments of a Seniors Housing Operating property

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

where 20% or more of units are simultaneously taken out of commission for 30 days or more or Outpatient Medical properties undergoing a change in intended use) are excluded from SSNOI until five full quarters or eight full quarters post completion of the redevelopment for the QTD Pool and YTD Pool, respectively. Properties undergoing operator transitions and/or segment transitions are also excluded from SSNOI until five full quarters or eight full quarters post completion of the transition for the QTD Pool and YTD Pool, respectively. In addition, properties significantly impacted by force majeure, acts of God, or other extraordinary adverse events are excluded from SSNOI until five full quarters or eight full quarters after the properties are placed back into service for the QTD Pool and YTD Pool, respectively. SSNOI excludes non-cash NOI and includes adjustments to present consistent ownership percentages and to translate Canadian properties and U.K. properties using a consistent exchange rate. We believe NOI and SSNOI provide investors relevant and useful information because they measure the operating performance of our properties at the property level on an unleveraged basis. We use NOI and SSNOI to make decisions about resource allocations and to assess the property level performance of our properties.

EBITDA is defined as earnings (net income) before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding unconsolidated entities and including adjustments for stock-based compensation expense, provision for loan losses, gains/losses on extinguishment of debt, gains/loss/impairments on properties, gains/losses on derivatives and financial instruments, other expenses, other impairment charges and other adjustments as deemed appropriate. We believe that EBITDA and Adjusted EBITDA, along with net income, are important supplemental measures because they provide additional information to assess and evaluate the performance of our operations. We primarily use these measures to determine our interest coverage ratio, which represents EBITDA and Adjusted EBITDA divided by total interest, and our fixed charge coverage ratio, which represents EBITDA and Adjusted EBITDA divided by fixed charges. Fixed charges include total interest and secured debt principal amortization. Covenants in our unsecured senior notes and primary credit facility contain financial ratios based on a definition of EBITDA and Adjusted EBITDA that is specific to those agreements. Our leverage ratios are defined as the proportion of net debt to total capitalization and include book capitalization, undepreciated book capitalization and market capitalization. Book capitalization represents the sum of net debt (defined as total long-term debt, excluding operating lease liabilities, less cash and cash equivalents and restricted cash), total equity and redeemable noncontrolling interests. Undepreciated book capitalization represents book capitalization adjusted for accumulated depreciation and amortization. Market capitalization represents book capitalization adjusted for the fair market value of our common stock.

Our supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and rating agencies in the valuation, comparison, rating and investment recommendations of companies. Management uses these financial measures to facilitate internal and external comparisons to our historical operating results and in making operating decisions. Additionally, these measures are utilized by the Board of Directors to evaluate management. None of our supplemental measures represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, the supplemental measures, as defined by us, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies.

The table below reflects the reconciliation of FFO to NICS, the most directly comparable U.S. GAAP measure, for the periods presented. Noncontrolling interest and unconsolidated entity amounts represent adjustments to reflect our share of depreciation and amortization, gains/loss on real estate dispositions and impairment of assets. Amounts are in thousands except for per share data.

						Year Ended December 31,
FFO Reconciliation:						2023						2022						2021
Net income attributable to common stockholders						$	340,094					$	141,214					$	336,138
Depreciation and amortization						1,401,101						1,310,368						1,037,566
Impairment of assets						36,097						17,502						51,107
Loss (gain) on real estate dispositions, net						(67,898)						(16,043)						(235,375)
Noncontrolling interests						(46,393)						(56,529)						(54,190)
Unconsolidated entities						100,226						81,560						85,476
Funds from operations attributable to common stockholders						$	1,763,227					$	1,478,072					$	1,220,722
Average diluted shares outstanding:						518,701						465,158						426,841
Per diluted share data:
Net income attributable to common stockholders(1)						$	0.66					$	0.30					$	0.78
Funds from operations attributable to common stockholders						$	3.40					$	3.18					$	2.86
(1) Includes adjustment to the numerator for income (loss) attributable to OP Unitholders.

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

The tables below reflects the reconciliation of consolidated NOI to net income, the most directly comparable U.S. GAAP measure, for the years presented (dollars in thousands):

						Year Ended December 31,
NOI Reconciliation:						2023						2022						2021
Net income (loss)						$	358,139					$	160,568					$	374,479
Loss (gain) on real estate dispositions, net						(67,898)						(16,043)						(235,375)
Loss (income) from unconsolidated entities						53,442						21,290						22,933
Income tax expense (benefit)						6,364						7,247						8,713
Other expenses						108,341						101,670						41,739
Impairment of assets						36,097						17,502						51,107
Provision for loan losses, net						9,809						10,320						7,270
Loss (gain) on extinguishment of debt, net						7						680						49,874
Loss (gain) on derivatives and financial instruments, net						(2,120)						8,334						(7,333)
General and administrative expenses						179,091						150,390						126,727
Depreciation and amortization						1,401,101						1,310,368						1,037,566
Interest expense						607,846						529,519						489,853
Consolidated net operating income (NOI)						$	2,690,219					$	2,301,845					$	1,967,553
NOI by segment:
Seniors Housing Operating						$	1,118,135					$	953,372					$	683,906
Triple-net						1,001,135						887,024						841,122
Outpatient Medical						519,199						472,760						448,350
Non-segment/corporate						51,750						(11,311)						(5,825)
Total NOI						$	2,690,219					$	2,301,845					$	1,967,553

Quarterly NOI by Segment:
(in thousands)			Three Months Ended																																																Year Ended
			March 31,												June 30,												September 30,												December 31,												December 31,
			2023						2022						2023						2022						2023						2022						2023						2022						2023						2022
Seniors Housing Operating:
Total revenues			$	1,136,681					$	996,612					$	1,164,439					$	1,071,210					$	1,203,899					$	1,072,600					$	1,268,624					$	1,104,995					$	4,773,643					$	4,245,417
Property operating expenses			883,784						789,928						885,187						789,299						918,990						841,914						967,547						870,904						3,655,508						3,292,045
Consolidated NOI			$	252,897					$	206,684					$	279,252					$	281,911					$	284,909					$	230,686					$	301,077					$	234,091					$	1,118,135					$	953,372
Triple-net:
Total revenues			$	238,065					$	235,163					$	302,128					$	234,360					$	236,322					$	228,819					$	266,814					$	233,165					$	1,043,329					$	931,507
Property operating expenses			11,723						11,211						10,598						11,491						10,044						11,495						9,829						10,286						42,194						44,483
Consolidated NOI			$	226,342					$	223,952					$	291,530					$	222,869					$	226,278					$	217,324					$	256,985					$	222,879					$	1,001,135					$	887,024
Outpatient Medical:
Total revenues			$	184,831					$	163,323					$	186,192					$	166,322					$	191,958					$	172,178					$	188,174					$	176,934					$	751,155					$	678,757
Property operating expenses			58,365						49,915						58,697						50,648						62,204						52,921						52,690						52,513						231,956						205,997
Consolidated NOI			$	126,466					$	113,408					$	127,495					$	115,674					$	129,754					$	119,257					$	135,484					$	124,421					$	519,199					$	472,760
Corporate:
Total revenues			$	1,152					$	606					$	12,719					$	644					$	29,834					$	247					$	26,163					$	3,437					$	69,868					$	4,934
Property operating expenses			3,881						2,615						4,190						2,645						4,035						5,850						6,012						5,135						18,118						16,245
Consolidated NOI			$	(2,729)					$	(2,009)					$	8,529					$	(2,001)					$	25,799					$	(5,603)					$	20,151					$	(1,698)					$	51,750					$	(11,311)

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

The following is a reconciliation of the properties included in our QTD Pool and YTD Pool for SSNOI:

						QTD Pool																								YTD Pool
SSNOI Property Reconciliations:						Seniors Housing Operating						Triple-net						Outpatient Medical						Total						Seniors Housing Operating						Triple-net						Outpatient Medical						Total
Consolidated properties						918						614						369						1,901						918						614						369						1,901
Unconsolidated properties						82						39						78						199						82						39						78						199
Total properties						1,000						653						447						2,100						1,000						653						447						2,100
Recent acquisitions/development conversions(1)						(78)						(74)						(42)						(194)						(169)						(74)						(53)						(296)
Under development						(32)						—						(11)						(43)						(32)						—						(11)						(43)
Under redevelopment(2)						(5)						(4)						(2)						(11)						(5)						(4)						(2)						(11)
Current held for sale						(37)						(40)						(4)						(81)						(37)						(40)						(4)						(81)
Land parcels, loans and subleases						(19)						(5)						(8)						(32)						(19)						(5)						(8)						(32)
Transitions(3)						(168)						(162)						—						(330)						(168)						(162)						—						(330)
Other(4)						(14)						(4)						(3)						(21)						(14)						(4)						(3)						(21)
Same store properties						647						364						377						1,388						556						364						366						1,286
(1) Acquisitions and development conversions will enter the QTD Pool five full quarters and the YTD Pool eight full quarters after acquisition or certificate of occupancy.
(2) Redevelopment properties will enter the QTD Pool after five full quarters and the YTD Pool after eight full quarters of operations post redevelopment completion.
(3) Transitioned properties will enter the QTD Pool after five full quarters and the YTD Pool after eight full quarters of operations with the new operator in place or under the new structure.
(4) Represents properties that are either closed or being closed.

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

The following is a reconciliation of our consolidated NOI to same store NOI for the periods presented for the respective pools (dollars in thousands):

						QTD Pool												YTD Pool
						Three Months Ended												Twelve Months Ended
SSNOI Reconciliations:						December 31, 2023						December 31, 2022						December 31, 2023						December 31, 2022
Seniors Housing Operating:
Consolidated NOI						$	301,077					$	234,091					$	1,118,135					$	953,372
NOI attributable to unconsolidated investments						20,488						11,291						65,281						47,190
NOI attributable to noncontrolling interests						(15,976)						(16,718)						(63,867)						(122,874)
NOI attributable to non-same store properties						(67,994)						(35,860)						(330,696)						(223,436)
Non-cash NOI attributable to same store properties						(186)						(1,064)						(89)						(1,374)
Currency and ownership adjustments (1)						(416)						1,409						(159)						1,442
SSNOI at Welltower Share						236,993						193,149						788,605						654,320
Triple-net:
Consolidated NOI						256,985						222,879						1,001,135						887,024
NOI attributable to unconsolidated investments						5,711						8,947						27,574						29,516
NOI attributable to noncontrolling interests						(8,031)						(9,555)						(31,373)						(41,099)
NOI attributable to non-same store properties						(138,314)						(104,199)						(518,519)						(404,629)
Non-cash NOI attributable to same store properties						(5,551)						(10,800)						(39,949)						(42,090)
Currency and ownership adjustments (1)						(581)						355						(2,630)						(2,165)
SSNOI at Welltower Share						110,219						107,627						436,238						426,557
Outpatient Medical:
Consolidated NOI						135,484						124,421						519,199						472,760
NOI attributable to unconsolidated investments						4,586						4,712						18,925						19,233
NOI attributable to noncontrolling interests						(2,308)						(5,576)						(15,400)						(22,089)
NOI attributable to non-same store properties						(12,799)						(5,700)						(60,144)						(25,343)
Non-cash NOI attributable to same store properties						(5,262)						(5,369)						(16,566)						(14,831)
Currency and ownership adjustments (1)						5						2,692						5,945						11,934
SSNOI at Welltower Share						119,706						115,180						451,959						441,664
SSNOI at Welltower Share:
Seniors Housing Operating						236,993						193,149						788,605						654,320
Triple-net						110,219						107,627						436,238						426,557
Outpatient Medical						119,706						115,180						451,959						441,664
Total						$	466,918					$	415,956					$	1,676,802					$	1,522,541
(1) Includes adjustments to reflect consistent property ownership percentages, to translate Canadian properties at a USD/CAD rate of 1.37 and to translate U.K. properties at a GBP/USD rate of 1.20.

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

The table below reflects the reconciliation of EBITDA and Adjusted EBITDA to net income, the most directly comparable U.S. GAAP measure, for the periods presented. Dollars are in thousands.

						Year Ended December 31,
Adjusted EBITDA Reconciliation:						2023						2022						2021
Net income (loss)						$	358,139					$	160,568					$	374,479
Interest expense						607,846						529,519						489,853
Income tax expense (benefit)						6,364						7,247						8,713
Depreciation and amortization						1,401,101						1,310,368						1,037,566
EBITDA						2,373,450						2,007,702						1,910,611
Loss (income) from unconsolidated entities						53,442						21,290						22,933
Stock-based compensation expense						36,611						26,027						16,933
Loss (gain) on extinguishment of debt, net						7						680						49,874
Loss (gain) on real estate dispositions, net						(67,898)						(16,043)						(235,375)
Impairment of assets						36,097						17,502						51,107
Provision for loan losses, net						9,809						10,320						7,270
Loss (gain) on derivatives and financial instruments, net						(2,120)						8,334						(7,333)
Other expenses						108,341						101,670						41,739
Lease termination and leasehold interest adjustment (1)						(65,485)						(64,854)						760
Casualty losses, net of recoveries						10,107						10,391						5,786
Other impairment, net (2)						16,642						(620)						49,241
Adjusted EBITDA						$	2,509,003					$	2,122,399					$	1,913,546
Adjusted Interest Coverage Ratio:
Interest expense						$	607,846					$	529,519					$	489,853
Capitalized interest						50,699						30,491						19,352
Non-cash interest expense						(23,494)						(21,754)						(17,506)
Total interest						635,051						538,256						491,699
EBITDA						$	2,373,450					$	2,007,702					$	1,910,611
Interest coverage ratio						3.74x						3.73x						3.89x
Adjusted EBITDA						$	2,509,003					$	2,122,399					$	1,913,546
Adjusted interest coverage ratio						3.95x						3.94x						3.89x
Adjusted Fixed Charge Coverage Ratio:
Total interest						$	635,051					$	538,256					$	491,699
Secured debt principal payments						54,076						58,114						65,587
Total fixed charges						689,127						596,370						557,286
EBITDA						$	2,373,450					$	2,007,702					$	1,910,611
Fixed charge coverage ratio						3.44x						3.37x						3.43x
Adjusted EBITDA						$	2,509,003					$	2,122,399					$	1,913,546
Adjusted fixed charge coverage ratio						3.64x						3.56x						3.43x

(1) Primarily relates to the derecognition of leasehold interests and the gain recognized in other income.

(2) Represents the write off or recovery of straight-line rent receivables balances relating to leases placed on cash recognition.

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

Our leverage ratios include book capitalization, undepreciated book capitalization and market capitalization. Book capitalization represents the sum of net debt (defined as total long-term debt excluding operating lease liabilities less cash and cash equivalents and restricted cash), total equity and redeemable noncontrolling interests. Undepreciated book capitalization represents book capitalization adjusted for accumulated depreciation and amortization. Market capitalization represents book capitalization adjusted for the fair market value of our common stock. Our leverage ratios are defined as the proportion of net debt to total capitalization. The table below reflects the reconciliation of our leverage ratios to our balance sheets for the periods presented. Amounts are in thousands, except share price.

			Year Ended December 31,
			2023						2022						2021
Book capitalization:
Unsecured credit facility and commercial paper			$	—					$	—					$	324,935
Long-term debt obligations(1)			15,815,226						14,661,552						13,917,702
Cash and cash equivalents and restricted cash			(2,076,083)						(722,292)						(346,755)
Total net debt			13,739,143						13,939,260						13,895,882
Total equity and noncontrolling interests(2)			26,371,727						21,393,996						18,997,873
Book capitalization			$	40,110,870					$	35,333,256					$	32,893,755
Net debt to book capitalization ratio			34.3		%				39.5		%				42.2		%
Undepreciated book capitalization:
Total net debt			$	13,739,143					$	13,939,260					$	13,895,882
Accumulated depreciation and amortization			9,274,814						8,075,733						6,910,114
Total equity and noncontrolling interests(2)			26,371,727						21,393,996						18,997,873
Undepreciated book capitalization			$	49,385,684					$	43,408,989					$	39,803,869
Net debt to undepreciated book capitalization ratio			27.8		%				32.1		%				34.9		%
Market capitalization:
Common shares outstanding			564,241						490,509						447,239
Period end share price			$	90.17					$	65.55					$	85.77
Common equity market capitalization			$	50,877,611					$	32,152,865					$	38,359,689
Total net debt			13,739,143						13,939,260						13,895,882
Noncontrolling interests(2)			967,351						1,099,182						1,361,872
Market capitalization:			$	65,584,105					$	47,191,307					$	53,617,443
Net debt to market capitalization ratio			20.9		%				29.5		%				25.9		%

(1) Amounts include senior unsecured notes, secured debt and lease liabilities related to finance leases, as reflected on our Consolidated Balance Sheets. Operating lease liabilities related to the ASC 842 adoption are excluded.

(2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests as reflected on our Consolidated Balance Sheets.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions. Management considers an accounting estimate or assumption critical if:

• the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and

• the impact of the estimates and assumptions on financial condition or operating performance is material.

Management has discussed the development and selection of its critical accounting policies and estimates with the Audit Committee of the Board of Directors. Management believes the current assumptions and other considerations used to estimate amounts reflected in our consolidated financial statements are appropriate and are not reasonably likely to change in the future. However, since these estimates require assumptions to be made that were uncertain at the time the estimate was made, they bear the risk of change. If actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our consolidated financial statements, the resulting changes could have a material adverse effect on our consolidated results of operations, liquidity and/or financial condition. Please refer to Note 2 to our consolidated financial statements for further information on significant accounting policies that impact us and for the impact of new accounting standards, including accounting pronouncements that were issued but not yet adopted by us.

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

The following table presents information about our critical accounting policies and estimates:

Nature of Critical Accounting Estimate			Assumptions/Approach Used
Impairment of Real Property Owned and Investments in Unconsolidated Entities Assessing impairment of real property owned and investments in unconsolidated entities involves subjectivity in determining if indicators of impairment are present and in estimating the future undiscounted cash flows or estimated fair value of an asset. This evaluation of indicators of impairment is dependent on a number of factors including when there is an event or adverse change in the operating performance of the property, or a change in management's intent to hold and operate the property. If an indicator of impairment of the property is identified, management estimates whether the carrying value is recoverable using observable and unobservable inputs such as historical and forecasted cash flows and estimated capitalization rates, all of which are affected by our expectations of future market or economic conditions. These inputs can have a significant impact on the undiscounted cash flows. The evaluation of indicators of impairment of investments in unconsolidated entities is dependent on a number of factors including the performance of each investment, a change in market conditions or a change in management's investment strategy. When required, we estimate the fair value of an investment and assess whether any impairment is other than temporary using observable and unobservable inputs such as historical and forecasted cash flows and estimated capitalization rates. These inputs can have a significant impact on the calculation of the fair value of the investment.			Quarterly, we review our real property owned on a property by property basis to determine if facts and circumstances suggest the property may be impaired. These indicators may include expected operational performance, the tenant's ability to make rent payments, a change in management's intent to hold and operate the property and changes in the market that may permanently reduce the value of the property. If indicators of impairment exist, an undiscounted cash flow analysis will be prepared to determine if the value of the property will be recoverable. If the estimated undiscounted cash flows indicate that the carrying value of the property will not be recoverable, the carrying value of the property is reduce to its estimated fair value and an impairment charge is recognized for the difference between the carrying value and the fair value. This analysis requires us to use judgment in determining whether indicators of impairment exist and to estimate the expected future undiscounted cash flows or estimated fair values of the property. Properties that meet the held for sale criteria are recorded at the lesser of the fair value less costs to sell or carrying value. We also evaluate investments in unconsolidated entities for indicators of impairment and, when present, record impairment charges based upon a comparison of the estimated fair value of the equity method investment to its carrying value if the decline in the estimated fair value of such an investment below its carrying value is other-than-temporary. At December 31, 2023, our net real property owned was approximately $37,063,357,000 and investments in unconsolidated entities totaled $1,636,531,000. During the year ended December 31, 2023, we recorded impairment charges of $15,401,000 related to two Seniors Housing Operating properties and one Triple-net property which were classified as held for sale for which the carrying values exceeded the fair values less costs to sell. Additionally, we recorded $20,696,000 of impairment charges related to three Seniors Housing Operating properties and two Triple-net properties that were held for use in which the carrying values exceeded the estimated fair values. We recorded $35,293,000 of impairment losses related to investments in unconsolidated entities.

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

Real Estate Acquisitions We believe that substantially all of our real estate acquisitions are considered asset acquisitions for which we record the related real estate acquired (tangible assets and identifiable intangible assets and liabilities) at cost on a relative fair value basis. Liabilities assumed and any associated noncontrolling interests are reflected at fair value. Tangible assets consist primarily of land, building and improvements. Identifiable intangible assets and liabilities primarily consist of the above or below market component of in-place leases and the value of in-place leases. The total amount of other intangible assets acquired is further allocated to in-place lease values and customer relationship values based on management's evaluation of the specific characteristics of each tenant's lease and our overall relationship with respect to that tenant.			The allocation of the purchase price to the related real estate acquired (tangible assets and intangible assets and liabilities) are based on a relative fair value analysis. In determining the fair values that drive such analysis, we estimate the fair value of each component of the real estate acquired which generally includes land, buildings and improvements, the above or below market component of in-place leases and the value of in-place leases using a number of sources including independent appraisals, our own analysis of recently acquired or developed and existing comparable properties in our portfolio and other market data. Significant assumptions used to determine such fair values include comparable land sales, capitalization rates, discount rates, market rental rates and property operating data, all of which can be impacted by expectations about future market or economic conditions. Our estimates of the values of these components affect the amount of depreciation and amortization we record over the estimated useful life of the property or the term of the lease. During the year ended December 31, 2023, we disbursed $3,558,266,000 of cash related to real estate acquisitions. These transactions were accounted for as asset acquisitions and the purchase price of each was allocated based on the relative fair values of the assets acquired and liabilities assumed.

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

Nature of Critical Accounting Estimate			Assumptions/Approach Used
Principles of Consolidation The consolidated financial statements include our accounts, the accounts of our wholly owned subsidiaries, and the accounts of joint venture entities in which we own a majority voting interest with the ability to control operations and where no substantive participating rights or substantive kick out rights have been granted to the noncontrolling interests. In addition, we consolidate those entities deemed to be variable interest entities (“VIEs”) in which we are determined to be the primary beneficiary. All material intercompany transactions and balances have been eliminated in consolidation.			We make judgments about which entities are VIEs based on an assessment of whether (i) the equity investors as a group, if any, do not have a controlling financial interest, or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. We make judgments with respect to our level of influence or control of an entity and whether we are (or are not) the primary beneficiary of a VIE. Consideration of various factors include, but is not limited to, our ability to direct the activities that most significantly impact the entity's economic performance, our form of ownership interest, our representation on the entity's governing body, the size and seniority of our investment, our ability and the rights of other investors to participate in policy making decisions, replace the manager and/or liquidate the entity, if applicable. Our ability to correctly assess our influence or control over an entity at inception of our involvement or on a continuous basis when determining the primary beneficiary of a VIE affects the presentation of these entities in our consolidated financial statements. If we perform a primary beneficiary analysis at a date other than at inception of the VIE, our assumptions may be different and may result in the identification of a different primary beneficiary.
Allowance for Credit Losses on Loans Receivable The allowance for credit losses is maintained at a level believed adequate to absorb potential losses in our loans receivable. The determination of the credit allowance is based on a quarterly evaluation of all outstanding loans, including general economic conditions and estimated collectability of loan payments.			The determination of the allowance for credit losses is based on a quarterly evaluation of all outstanding loans, including general economic conditions and estimated collectability of loan payments. We evaluate the collectability of our loans receivable based on a combination of factors, including, but not limited to, payment status, historical loan charge-offs, financial strength of the borrower and guarantors, and nature, extent and value of the underlying collateral. A loan is considered to have deteriorated credit quality when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreement. For those loans we identified as having deteriorated credit quality, we determine the amount of credit loss on an individual basis. Placement on non-accrual status may be required. Consistent with this definition, all loans on non-accrual are deemed to have deteriorated credit quality. To the extent circumstances improve and the risk of collectability is diminished, we may return these loans to income accrual status. While a loan is on non-accrual status, any cash receipts are applied against the outstanding principal balance. For the remaining loans, we assess credit loss on a collective pool basis and use our historical loss experience for similar loans to determine the reserve for credit losses. During the year ended December 31, 2023, we recognized provision for loan losses of $9,809,000, which includes changes in the reserve based on our historical loss experience.