Cover and table of contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

or

☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-8923

WELLTOWER INC.

(Exact name of registrant as specified in its charter*)*

Delaware												34-1096634
(State or other jurisdiction of Incorporation)												(IRS Employer Identification No.)
4500 Dorr Street			Toledo,			Ohio						43615
(Address of principal executive office)												(Zip Code)
(419) -												247-2800
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act
Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common stock, $1.00 par value per share			WELL			New York Stock Exchange
Guarantee of 4.800% Notes due 2028 issued by Welltower OP LLC			WELL/28			New York Stock Exchange
Guarantee of 4.500% Notes due 2034 issued by Welltower OP LLC			WELL/34			New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer			þ			Accelerated filer			¨			Non-accelerated filer			¨			Smaller reporting company			☐			Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of October 25, 2024, Welltower Inc. had 622,689,523 shares of common stock outstanding.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION						Page
Item 1. Financial Statements (Unaudited)						3
			Consolidated Balance Sheets			3
			Consolidated Statements of Comprehensive Income			4
			Consolidated Statements of Equity			6
			Consolidated Statements of Cash Flows			8
			Notes to Unaudited Consolidated Financial Statements			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						31
Item 3. Quantitative and Qualitative Disclosures About Market Risk						56
Item 4. Controls and Procedures						57
PART II. OTHER INFORMATION
Item 1. Legal Proceedings						58
Item 1A. Risk Factors						58
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						58
Item 5. Other Information						58
Item 6. Exhibits						59
Signatures						60

PART I. FINANCIAL INFORMATION

CONSOLIDATED BALANCE SHEETS

WELLTOWER INC. AND SUBSIDIARIES

(In thousands)

						September 30, 2024 (Unaudited)						December 31, 2023 (Note)
Assets:
Real estate investments:
Real property owned:
Land and land improvements						$	5,075,391					$	4,697,824
Buildings and improvements						40,646,767						37,796,553
Acquired lease intangibles						2,268,889						2,166,470
Real property held for sale, net of accumulated depreciation						110,689						372,883
Construction in progress						1,374,996						1,304,441
Less accumulated depreciation and amortization						(10,276,509)						(9,274,814)
Net real property owned						39,200,223						37,063,357
Right of use assets, net						358,160						350,969
Investments in sales-type leases, net						469,260						—
Real estate loans receivable, net of credit allowance						1,840,453						1,361,587
Net real estate investments						41,868,096						38,775,913
Other assets:
Investments in unconsolidated entities						1,742,836						1,636,531
Goodwill						68,321						68,321
Cash and cash equivalents						3,564,942						1,993,646
Restricted cash						219,466						82,437
Straight-line rent receivable						518,387						443,800
Receivables and other assets						971,650						1,011,518
Total other assets						7,085,602						5,236,253
Total assets						$	48,953,698					$	44,012,166
Liabilities and equity
Liabilities:
Unsecured credit facility and commercial paper						$	—					$	—
Senior unsecured notes						13,295,096						13,552,222
Secured debt						2,468,527						2,183,327
Lease liabilities						392,360						383,230
Accrued expenses and other liabilities						1,733,712						1,521,660
Total liabilities						17,889,695						17,640,439
Redeemable noncontrolling interests						270,182						290,605
Equity:
Common stock						620,107						565,894
Capital in excess of par value						37,949,035						32,741,949
Treasury stock						(114,876)						(111,578)
Cumulative net income						9,976,753						9,145,044
Cumulative dividends						(17,901,600)						(16,773,773)
Accumulated other comprehensive income (loss)						(195,138)						(163,160)
Total Welltower Inc. stockholders' equity						30,334,281						25,404,376
Noncontrolling interests						459,540						676,746
Total equity						30,793,821						26,081,122
Total liabilities and equity						$	48,953,698					$	44,012,166

Note: The consolidated balance sheet at December 31, 2023 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

WELLTOWER INC. AND SUBSIDIARIES

(In thousands, except per share data)

						Three Months Ended												Nine Months Ended
						September 30,												September 30,
						2024						2023						2024						2023
Revenues:
Resident fees and services						$	1,511,524					$	1,199,808					$	4,265,271					$	3,490,942
Rental income						430,486						384,507						1,183,949						1,152,005
Interest income						69,046						42,220						185,163						117,335
Other income						44,607						35,478						105,905						127,938
Total revenues						2,055,663						1,662,013						5,740,288						4,888,220
Expenses:
Property operating expenses						1,212,701						995,273						3,420,911						2,911,698
Depreciation and amortization						403,779						339,314						1,151,687						1,020,371
Interest expense						139,050						156,532						419,792						453,272
General and administrative expenses						77,901						46,106						186,784						134,764
Loss (gain) on derivatives and financial instruments, net						(9,906)						2,885						(18,785)						5,095
Loss (gain) on extinguishment of debt, net						419						1						2,130						7
Provision for loan losses, net						4,193						4,059						10,370						7,292
Impairment of assets						23,421						7,388						69,146						21,103
Other expenses						20,239						38,220						83,054						72,034
Total expenses						1,871,797						1,589,778						5,325,089						4,625,636
Income (loss) from continuing operations before income taxes and other items						183,866						72,235						415,199						262,584
Income tax (expense) benefit						4,706						(4,584)						(2,586)						(11,132)
Income (loss) from unconsolidated entities						(4,038)						(4,031)						(6,925)						(51,434)
Gain (loss) on real estate dispositions and acquisitions of controlling interests, net						272,266						71,102						443,416						69,681
Income (loss) from continuing operations						456,800						134,722						849,104						269,699
Net income (loss)						456,800						134,722						849,104						269,699
Less: Net income (loss) attributable to noncontrolling interests(1)						6,951						7,252						17,395						13,516
Net income (loss) attributable to common stockholders						$	449,849					$	127,470					$	831,709					$	256,183
Weighted average number of common shares outstanding:
Basic						611,290						521,848						595,353						504,420
Diluted						618,306						525,138						600,191						507,353
Earnings per share:
Basic:
Income (loss) from continuing operations						$	0.75					$	0.26					$	1.43					$	0.53
Net income (loss) attributable to common stockholders						$	0.74					$	0.24					$	1.40					$	0.51
Diluted:
Income (loss) from continuing operations						$	0.74					$	0.26					$	1.41					$	0.53
Net income (loss) attributable to common stockholders(2)						$	0.73					$	0.24					$	1.39					$	0.50
Dividends declared and paid per common share						$	0.67					$	0.61					$	1.89					$	1.83

(1) Includes amounts attributable to redeemable noncontrolling interests.

(2) Includes adjustment to the numerator for income (loss) attributable to OP Units and DownREIT Units.

STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

WELLTOWER INC. AND SUBSIDIARIES

(In thousands)

						Three Months Ended												Nine Months Ended
						September 30,												September 30,
						2024						2023						2024						2023
Net income (loss)						$	456,800					$	134,722					$	849,104					$	269,699
Other comprehensive income (loss):
Foreign currency translation gain (loss)						247,194						(165,186)						133,024						35,098
Derivative and financial instruments designated as hedges gain (loss)						(194,988)						106,449						(125,277)						(49,173)
Total other comprehensive income (loss)						52,206						(58,737)						7,747						(14,075)
Total comprehensive income (loss)						509,006						75,985						856,851						255,624
Less: Total comprehensive income (loss) attributable to noncontrolling interests(1)						7,730						2,283						9,938						16,410
Total comprehensive income (loss) attributable to common stockholders						$	501,276					$	73,702					$	846,913					$	239,214
(1) Includes amounts attributable to redeemable noncontrolling interests.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

WELLTOWER INC. AND SUBSIDIARIES

(In thousands)

						Nine Months Ended September 30, 2024
						Common Stock						Capital in Excess of Par Value						Treasury Stock						Cumulative Net Income						Cumulative Dividends						Accumulated Other Comprehensive Income (Loss)						Noncontrolling Interests						Total
Balances at January 1, 2024						$	565,894					$	32,741,949					$	(111,578)					$	9,145,044					$	(16,773,773)					$	(163,160)					$	676,746					$	26,081,122
Comprehensive income:
Net income (loss)																								127,146																		4,180						131,326
Other comprehensive income (loss)																																				(17,677)						(6,075)						(23,752)
Total comprehensive income																																																107,574
Net change in noncontrolling interests												(19,282)																														6,191						(13,091)
Adjustment to members' interest from change in ownership in Welltower OP												(18,852)																														18,852						—
Redemption of OP Units and DownREIT Units						19						825																														(844)						—
Amounts related to stock incentive plans, net of forfeitures						112						11,936						(3,264)																														8,784
Net proceeds from issuance of common stock						26,612						2,388,521																																				2,415,133
Dividends paid:
Common stock dividends																														(352,529)																		(352,529)
Balances at March 31, 2024						$	592,637					$	35,105,097					$	(114,842)					$	9,272,190					$	(17,126,302)					$	(180,837)					$	699,050					$	28,246,993
Comprehensive income:
Net income (loss)																								254,714																		5,806						260,520
Other comprehensive income (loss)																																				(18,656)						(95)						(18,751)
Total comprehensive income																																																241,769
Net change in noncontrolling interests												(49,943)																								(46,969)						(256,613)						(353,525)
Adjustment to members' interest from change in ownership in Welltower OP												(1,833)																														1,833						—
Redemption of OP Units and DownREIT Units						476						42,636																														(101)						43,011
Amounts related to stock incentive plans, net of forfeitures						36						11,028						168																														11,232
Net proceeds from issuance of common stock						16,710						1,586,298																																				1,603,008
Dividends paid:
Common stock dividends																														(366,182)																		(366,182)
Balances at June 30, 2024						$	609,859					$	36,693,283					$	(114,674)					$	9,526,904					$	(17,492,484)					$	(246,462)					$	449,880					$	29,426,306
Comprehensive income:
Net income (loss)																								449,849																		5,874						455,723
Other comprehensive income (loss)																																				51,324						87						51,411
Total comprehensive income																																																507,134
Net change in noncontrolling interests												(19,175)																														7,365						(11,810)
Adjustment to members' interest from change in ownership in Welltower OP												3,666																														(3,666)						—
Amounts related to stock incentive plans, net of forfeitures						6						39,912						(202)																														39,716
Net proceeds from issuance of common stock						10,242						1,231,349																																				1,241,591
Dividends paid:
Common stock dividends																														(409,116)																		(409,116)
Balances at September 30, 2024						$	620,107					$	37,949,035					$	(114,876)					$	9,976,753					$	(17,901,600)					$	(195,138)					$	459,540					$	30,793,821

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

WELLTOWER INC. AND SUBSIDIARIES

(In thousands)

						Nine Months Ended September 30, 2023
						Common Stock						Capital in Excess of Par Value						Treasury Stock						Cumulative Net Income						Cumulative Dividends						Accumulated Other Comprehensive Income (Loss)						Noncontrolling Interests						Total
Balances at January 1, 2023						$	491,919					$	26,742,750					$	(111,001)					$	8,804,950					$	(15,514,097)					$	(119,707)					$	714,739					$	21,009,553
Comprehensive income:
Net income (loss)																								25,673																		2,688						28,361
Other comprehensive income (loss)																																				8,148						3,023						11,171
Total comprehensive income																																																39,532
Net change in noncontrolling interests												(8,304)																														29,648						21,344
Adjustment to members' interest from change in ownership in Welltower OP												(6,139)																														6,139						—
Redemption of OP Units and DownREIT Units						272						17,515																														(432)						17,355
Amounts related to stock incentive plans, net of forfeitures						134						9,330						(1,924)																														7,540
Net proceeds from issuance of common stock						5,603						404,862																																				410,465
Dividends paid:
Common stock dividends																														(301,829)																		(301,829)
Balances at March 31, 2023						$	497,928					$	27,160,014					$	(112,925)					$	8,830,623					$	(15,815,926)					$	(111,559)					$	755,805					$	21,203,960
Comprehensive income:
Net income (loss)																								103,040																		3,505						106,545
Other comprehensive income (loss)																																				28,651						4,410						33,061
Total comprehensive income																																																139,606
Net change in noncontrolling interests												8,579																								(12,686)						(149,013)						(153,120)
Adjustment to members' interest from change in ownership in Welltower OP												(4,794)																														4,794						—
Redemption of OP Units and DownREIT Units						1						18																														(19)						—
Amounts related to stock incentive plans, net of forfeitures						43						11,088						893																														12,024
Net proceeds from issuance of common stock						11,833						910,392																																				922,225
Dividends paid:
Common stock dividends																														(300,772)																		(300,772)
Balances at June 30, 2023						$	509,805					$	28,085,297					$	(112,032)					$	8,933,663					$	(16,116,698)					$	(95,594)					$	619,482					$	21,823,923
Comprehensive income:
Net income (loss)																								127,470																		6,586						134,056
Other comprehensive income (loss)																																				(53,768)						(4,330)						(58,098)
Total comprehensive income																																																75,958
Net change in noncontrolling interests												56,824																														(2,829)						53,995
Adjustment to members' interest from change in ownership in Welltower OP												(3,431)																														3,431						—
Redemption of OP Units and DownREIT Units						62						2,488																														(2,550)						—
Amounts related to stock incentive plans, net of forfeitures						8						8,810						(281)																														8,537
Net proceeds from issuance of common stock						24,043						1,906,088																																				1,930,131
Dividends paid:
Common stock dividends																														(318,718)																		(318,718)
Balances at September 30, 2023						$	533,918					$	30,056,076					$	(112,313)					$	9,061,133					$	(16,435,416)					$	(149,362)					$	619,790					$	23,573,826

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

WELLTOWER INC. AND SUBSIDIARIES

(In thousands)

						Nine Months Ended
						September 30,
						2024						2023
Operating activities:
Net income						$	849,104					$	269,699
Adjustments to reconcile net income to net cash provided from (used in) operating activities:
Depreciation and amortization						1,151,687						1,020,371
Other amortization expenses						43,165						31,002
Provision for loan losses, net						10,370						7,292
Impairment of assets						69,146						21,103
Stock-based compensation expense						62,308						28,781
Loss (gain) on derivatives and financial instruments, net						(18,785)						5,095
Loss (gain) on extinguishment of debt, net						2,130						7
Loss (income) from unconsolidated entities						6,925						51,434
Rental income less than (in excess of) cash received						(31,805)						(96,345)
Amortization related to above (below) market leases, net						166						(436)
Loss (gain) on real estate dispositions and acquisitions of controlling interests, net						(443,416)						(69,681)
Proceeds from (payments on) interest rate swap settlements						(59,555)						(65,485)
Distributions by unconsolidated entities						12,845						9,055
Increase (decrease) in accrued expenses and other liabilities						135,926						95,695
Decrease (increase) in receivables and other assets						(93,002)						(76,228)
Net cash provided from (used in) operating activities						1,697,209						1,231,359
Investing activities:
Cash disbursed for acquisitions, net of cash acquired						(1,669,106)						(1,073,627)
Cash disbursed for capital improvements to existing properties						(538,752)						(334,090)
Cash disbursed for construction in progress						(632,511)						(730,712)
Capitalized interest						(43,955)						(36,152)
Investment in loans receivable						(603,619)						(328,554)
Principal collected on loans receivable						250,791						68,404
Other investments, net of payments						(49,271)						(95,366)
Contributions to unconsolidated entities						(218,974)						(267,359)
Distributions by unconsolidated entities						39,693						145,985
Net proceeds from net investment hedge settlements						10,712						3,933
Proceeds from sales of real property						145,774						83,984
Net cash provided from (used in) investing activities						(3,309,218)						(2,563,554)
Financing activities:
Net increase (decrease) under unsecured credit facility and commercial paper						—						—
Net proceeds from issuance of senior unsecured notes						1,015,063						1,011,780
Payments to extinguish senior unsecured notes						(1,350,000)						—
Net proceeds from the issuance of secured debt						3,708						381,369
Payments on secured debt						(356,216)						(439,027)
Net proceeds from the issuance of common stock						5,262,364						3,265,056
Payments for deferred financing costs and prepayment penalties						(23,460)						(7,619)
Contributions by noncontrolling interests(1)						29,009						211,071
Distributions to noncontrolling interests(1)						(104,268)						(179,476)
Cash distributions to stockholders						(1,127,046)						(922,288)
Other financing activities						(33,867)						(9,763)
Net cash provided from (used in) financing activities						3,315,287						3,311,103
Effect of foreign currency translation on cash and cash equivalents and restricted cash						5,047						(14,489)
Increase (decrease) in cash, cash equivalents and restricted cash						1,708,325						1,964,419
Cash, cash equivalents and restricted cash at beginning of period						2,076,083						722,292
Cash, cash equivalents and restricted cash at end of period						$	3,784,408					$	2,686,711
Supplemental cash flow information:
Interest paid						$	390,649					$	422,327
Income taxes paid (received), net						8,383						4,092
(1) Includes amounts attributable to redeemable noncontrolling interests.

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Business

Welltower Inc., an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. We invest 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 Inc., a real estate investment trust ("REIT"), owns interests in properties concentrated in major, high-growth markets in the United States ("U.S."), Canada and the United Kingdom ("U.K."), consisting of seniors housing and post-acute communities and outpatient medical properties.

We are structured as an umbrella partnership REIT under which substantially all of our business is conducted through Welltower OP LLC, the day-to-day management of which is exclusively controlled by Welltower Inc. 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. Welltower's weighted average ownership in Welltower OP was 99.730% for the nine months ended September 30, 2024. As of September 30, 2024, Welltower owned 99.701% of the issued and outstanding units of Welltower OP, with other investors owning the remaining 0.299% of outstanding units. We adjust the noncontrolling members' interest at the end of each period to reflect their interest in the net assets of Welltower OP.

2. Accounting Policies and Related Matters

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (such as normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2024 are not necessarily an indication of the results that may be expected for the year ending December 31, 2024. For further information, refer to the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023.

New Accounting Standards

In November 2023, the FASB issued Accounting Standards Update No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" ("ASU 2023-07"), which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The guidance is to be applied retrospectively to all periods presented in the financial statements. We are currently evaluating the impact that the adoption of ASU 2023-07 will have on our consolidated financial statements and disclosures. We currently expect to provide the required significant segment expense disclosures, with no other changes to our consolidated financial statements, as a result of the new standard.

In December 2023, the FASB issued Accounting Standards Update No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09")," which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and disclosures.

3. Real Property Acquisitions and Development

The total purchase price for all properties acquired has been allocated to the tangible 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. The results of operations for these acquisitions have been included in our consolidated results of operations since the date of acquisition and are a component of the appropriate segments. Transaction costs primarily represent costs incurred with acquisitions, including due diligence costs, fees for legal and valuation services, termination of pre-existing relationships computed based on the fair value of the assets acquired, lease termination fees and other acquisition-related costs. Transaction costs directly related to asset acquisitions are capitalized as a component of purchase price and all other non-capitalizable costs are reflected in other expenses on our Consolidated Statements of Comprehensive Income. Our acquisitions of properties are at times subject to earn out provisions based on the future operating performance of the acquired properties, which could result in incremental payments in the future. Our policy is to recognize such contingent consideration when the contingency is resolved

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

and the consideration becomes payable. In the fourth quarter of 2024, we expect to make earn out payments of approximately $150 million. We will capitalize any payments made as additional costs of the acquisitions.

The following is a summary of our real property investment activity by segment for the periods presented (in thousands):

			Nine Months Ended
			September 30, 2024																								September 30, 2023
			Seniors Housing Operating						Triple-net						Outpatient Medical						Totals						Seniors Housing Operating						Triple-net						Outpatient Medical						Totals
Land and land improvements			$	208,219					$	63,075					$	10,160					$	281,454					$	58,049					$	58,797					$	72,992					$	189,838
Buildings and improvements			1,446,475						621,378						34,481						2,102,334						411,273						430,041						314,892						1,156,206
Acquired lease intangibles			89,460						33,232						2,193						124,885						25,617						—						45,936						71,553
Construction in progress			45,983						—						—						45,983						165,934						—						—						165,934
Real property held for sale			—						297,000						—						297,000						—						—						—						—
Right of use assets, net			—						—						—						—						16,539						—						927						17,466
Total net real estate assets			1,790,137						1,014,685						46,834						2,851,656						677,412						488,838						434,747						1,600,997
Receivables and other assets			9,592						1,118						112						10,822						16,789						—						545						17,334
Total assets acquired(1)			1,799,729						1,015,803						46,946						2,862,478						694,201						488,838						435,292						1,618,331
Secured debt			(350,978)						(465,820)						—						(816,798)						(292,160)						—						(40,953)						(333,113)
Lease liabilities			—						—						—						—						(16,539)						—						(953)						(17,492)
Accrued expenses and other liabilities			(19,752)						(20,309)						(182)						(40,243)						(10,825)						—						(10,832)						(21,657)
Total liabilities acquired			(370,730)						(486,129)						(182)						(857,041)						(319,524)						—						(52,738)						(372,262)
Noncontrolling interests			(25,787)						—						—						(25,787)						—						—						(775)						(775)
Non-cash acquisition related activity(2)			(119,012)						(191,532)						—						(310,544)						(171,667)						—						—						(171,667)
Cash disbursed for acquisitions			1,284,200						338,142						46,764						1,669,106						203,010						488,838						381,779						1,073,627
Construction in progress additions			424,827						28						269,840						694,695						450,205						25,646						297,862						773,713
Less: Capitalized interest			(36,247)						—						(7,708)						(43,955)						(28,289)						(2,416)						(5,447)						(36,152)
Accruals(3)			1,217						126						(19,572)						(18,229)						3,447						(2,692)						(7,604)						(6,849)
Cash disbursed for construction in progress			389,797						154						242,560						632,511						425,363						20,538						284,811						730,712
Capital improvements to existing properties			448,144						19,870						70,738						538,752						261,935						17,933						54,222						334,090
Total cash invested in real property, net of cash acquired			$	2,122,141					$	358,166					$	360,062					$	2,840,369					$	890,308					$	527,309					$	720,812					$	2,138,429

(1) Excludes $33,577,000 and $6,431,000 of unrestricted and restricted cash acquired during the nine months ended September 30, 2024 and September 30, 2023, respectively.

(2) Primarily relates to the acquisition of assets previously financed as real estate loans receivable, the acquisition of assets previously recognized as investments in unconsolidated entities, the acquisition of assets for which consideration was only partially funded at close, and the $179,770,000 gain on acquisition of controlling interests described below.

(3) Represents non-cash accruals for amounts to be paid in future periods for properties that converted, offset by amounts paid in the current period.

Significant Joint Venture Transactions

During the three months ended September 30, 2023, we paid $69,606,000 to acquire the 45% redeemable noncontrolling ownership interest in two consolidated joint ventures with the Canadian Pension Plan Investment Board, which owned interests in ten medical office buildings. In conjunction with the transaction $118,256,000 was removed from redeemable noncontrolling interests with the difference recorded to capital in excess of par value on our Consolidated Balance Sheets. The transaction is excluded from the table above.

On September 30, 2024, the Company, which held a 25% minority interest in an existing equity method joint venture that owned 39 properties subject to triple-net leases with two tenants, acquired the remaining beneficial interest for $205,029,000 in cash, net of cash and restricted cash acquired. The properties were encumbered with secured debt with an aggregate principal balance of $532,575,000. We evaluated the acquisition and determined that the entity meets the criteria of a variable interest entity ("VIE") and that we are its primary beneficiary; therefore, upon consolidation we recognized a gain of $179,770,000 in gains (losses) on real estate dispositions and acquisitions of controlling interests, net in the Consolidated Statements of Comprehensive Income during the period ended September 30, 2024. The fair value of the assets acquired and liabilities assumed is included in the Triple-net segment in the table above.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Affinity Living Communities

In February 2024, we entered into a definitive agreement to acquire 25 Seniors Housing Operating properties for a total purchase price of approximately $969 million, which will be managed under the Affinity brand. During the three months ended September 30, 2024, we closed on the acquisition of 20 properties with a purchase price of $690,510,000 through a combination of cash, the issuance of 203,328 OP Units, and the assumption of $364,130,000 of secured debt. The acquisition of the remaining properties is expected to close by the end of the year, subject to customary closing conditions and lender consents.

Announced Acquisitions

In July 2024, we entered into a definitive agreement to acquire a seniors housing portfolio of 136 properties and leasehold interests in the U.K. for approximately $1.0 billion of consideration. The transaction closed in October 2024.

Construction Activity

The following is a summary of the construction projects that were placed into service and began generating revenues during the periods presented (in thousands):

						Nine Months Ended
						September 30, 2024						September 30, 2023
Development projects:
Seniors Housing Operating						$	462,246					$	280,333
Triple-net						—						141,142
Outpatient Medical						162,699						30,071
Total development projects						624,945						451,546
Expansion projects						20,229						62,292
Total construction in progress conversions						$	645,174					$	513,838

4. Real Estate Intangibles

The following is a summary of our real estate intangibles, excluding those related to ground leases or classified as held for sale, as of the dates indicated (dollars in thousands):

						September 30, 2024						December 31, 2023
Assets:
In place lease intangibles						$	2,079,917					$	2,001,827
Above market tenant leases						71,892						66,663
Lease commissions						117,080						97,980
Gross historical cost						2,268,889						2,166,470
Accumulated amortization						(1,784,900)						(1,651,656)
Net book value						$	483,989					$	514,814
Liabilities:
Below market tenant leases						$	71,224					$	70,364
Accumulated amortization						(51,400)						(47,939)
Net book value						$	19,824					$	22,425

The following is a summary of real estate intangible amortization income (expense) for the periods presented (in thousands):

						Three Months Ended September 30,												Nine Months Ended September 30,
						2024						2023						2024						2023
Rental income related to (above)/below market tenant leases, net						$	(189)					$	152					$	(274)					$	327
Amortization related to in place lease intangibles and lease commissions						(61,872)						(47,556)						(169,539)						(157,481)

5. Dispositions, Real Property Held for Sale and Impairment

We periodically sell properties for various reasons, including favorable market conditions, the exercise of tenant purchase options or reduction of concentrations (i.e., property type, relationship or geography). At September 30, 2024, seven Seniors Housing Operating properties and ten Triple-net properties with an aggregate real estate balance of $110,689,000 were classified as held for sale. Expected gross sales proceeds related to these held for sale properties are approximately $131,558,000.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The net book value of real property owned is reviewed quarterly on a property by property basis to determine if facts and circumstances suggest that a property may be impaired. If the estimated undiscounted cash flows indicate that the carrying value of the property will not be recoverable, the carrying of the property is reduced to the estimated fair market value and an impairment charge is recognized. Properties that meet the held for sale criteria are recorded at the lesser of fair value less costs to sell or the carrying value. During the nine months ended September 30, 2024, we recorded impairment charges of $69,146,000 related to 14 Seniors Housing Operating properties and two Triple-net properties. During the nine months ended September 30, 2023, we recorded $21,103,000 of impairment charges related to six Seniors Housing Operating properties and two Triple-net properties.

Operating results attributable to properties sold or classified as held for sale which do not meet the definition of discontinued operations are not reclassified on our Consolidated Statements of Comprehensive Income. We recognized income (loss) from continuing operations before income taxes and other items from properties sold or classified as held for sale as of September 30, 2024 of $(15,905,000) and $(62,121,000) for the three and nine months ended September 30, 2024 and $(4,893,000) and $64,266,000 for the same periods in 2023, respectively.

The following is a summary of our real property disposition activity for the periods presented (in thousands):

						Nine Months Ended
						September 30, 2024						September 30, 2023
Real estate dispositions:(1)
Seniors Housing Operating						$	366,255					$	371,143
Triple-net(2)						170						6,391
Outpatient Medical						42,761						—
Total dispositions						409,186						377,534
Gain (loss) on real estate dispositions and acquisitions of controlling interests, net(3)						171,053						69,681
Net other assets/(liabilities) disposed						(139)						(1,401)
Non-cash consideration						(434,326)						(361,830)
Cash proceeds from real estate dispositions						$	145,774					$	83,984

(1) The nine months ended September 30, 2024 includes the disposition of unconsolidated equity method investments that owned six Seniors Housing Operating properties and one Outpatient Medical property.

(2) Excludes $376,695,000 of net real property derecognized related to 15 properties upon the reclassification of two leases from operating to sales-type (see Note 6 for additional details).

(3) Excludes the $179,770,000 gain recognized in conjunction with the joint venture consolidation (see Note 3 for additional details) and the $92,593,000 gain recognized as a result of the reclassification of two leases from operating to sales-type (see Note 6 for additional details).

Strategic Dissolution of Revera Joint Ventures

During the quarter ended June 30, 2023, we entered into definitive agreements to dissolve our existing Revera joint venture relationships across the U.S., U.K. and Canada. The transactions included acquiring the remaining interests in 110 properties from Revera, while simultaneously selling interests in 31 properties to Revera.

In June 2023, we closed the U.K. portfolio portion of the transaction through the acquisition of the remaining ownership interest in 29 properties previously held in two separate consolidated joint venture structures in which we owned 75% and 90% of the interests in exchange for the disposition to Revera of our interests in four properties. In addition, we received cash from Revera of $107,341,000 relating to the net settlement of loans previously made to the joint ventures. Operations for the 29 retained properties were transitioned to Avery Healthcare.

Total proceeds related to the four properties disposed were $222,521,000, which included non-cash consideration from Revera of $241,728,000, comprised of the fair value of interests received by us of $198,837,000 and an allocation of Revera's noncontrolling interests of $42,891,000, partially offset by $9,049,000 of transaction-related expenses as well as the $10,158,000 of cash paid to equalize the value exchanged between the parties. We disposed of net real property owned of $224,208,000, resulting in a loss of $1,687,000 recognized within gain (loss) on real estate dispositions and acquisitions of controlling interests, net within our Consolidated Statements of Comprehensive Income. Consideration transferred to acquire the additional interests in the 29 properties was comprised of the fair value of interests transferred by us of $198,837,000 and $5,776,000 of cash paid for transaction-related expenses. We derecognized $180,497,000 of noncontrolling interests and $22,270,000 of liabilities previously due to Revera with an adjustment of $1,846,000 recognized in capital in excess of par value.

We closed the portion of the transactions predominantly related to the U.S. portfolio during the third quarter of 2023 through (i) the acquisition of the remaining interests in ten properties currently under development or recently developed by Sunrise Senior Living that were previously held within an equity method joint venture owned 34% by us and 66% by Revera, (ii) the disposition of our minority interests in 12 U.S. properties and one Canadian development project and (iii) the disposition of our 34% interest in the Sunrise Senior Living management company. We recorded net real estate investments of $479,525,000

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

related to the ten acquired and now consolidated properties, which was comprised of $31,456,000 of cash consideration and $448,069,000 of non-cash consideration. Non-cash consideration primarily includes $270,486,000 of assumed mortgage debt secured by the acquired properties, which was subsequently repaid in full by us immediately following the transaction, $47,734,000 of carryover investment from our prior 34% equity method ownership interest and $119,258,000 of fair value interests in the 13 properties transferred by us to Revera. We also derecognized $56,905,000 of equity method investments related to the 13 properties retained by Revera and recorded a gain on real estate dispositions of $62,075,000. In conjunction with this transaction, operations for two of the now wholly-owned properties, along with operations for 26 existing wholly-owned properties, transitioned to Oakmont Management Group.

In April 2024, we closed the Canadian portfolio portion of the transaction through the acquisition of the remaining ownership interest in 71 properties previously held in consolidated joint venture structures in which we owned 75% of the interests, in exchange for the disposition to Revera of our interests in 14 properties. In addition, we received cash of $60,614,000 relating to the net settlement of loans previously made to Revera to fund its share of the pay-off of third party secured debt of the joint ventures. Operations for the 71 retained properties previously transitioned to Cogir Senior Living (53), Levante Living (12) and Optima Living (6) during 2023.

Total net proceeds related to the 14 properties disposed were $430,898,000, which included non-cash consideration from Revera of $434,326,000, comprised primarily of the net fair value of interests received by us of $219,940,000, debt which we were relieved of in the amount of $164,640,000 and an allocation of Revera's noncontrolling interests in the disposed properties of $53,174,000. We disposed of net real property owned of $293,257,000 and paid $3,428,000 of cash transaction-related expenses for the sale of the 14 properties, resulting in a gain of $137,641,000 recognized within gain (loss) on real estate dispositions and acquisitions of controlling interests, net within our Consolidated Statements of Comprehensive Income. Consideration transferred to acquire the additional interests in the 71 properties was primarily comprised of the fair value of interests transferred by us of $219,940,000, a cash payment of $51,986,000 to equalize the value exchanged between the parties and $17,258,000 of cash paid for transaction-related expenses. We derecognized $246,564,000 of Revera's noncontrolling interests in the acquired properties with an adjustment of $42,619,000 recognized in capital in excess of par value.

The non-cash investing activity with respect to the sale of the properties to Revera and non-cash financing activity with respect to the acquisition of Revera's interests have been excluded from our Consolidated Statement of Cash Flows.

Genesis HealthCare

As part of the substantial exit of the Genesis HealthCare ("Genesis") operating relationship, which we disclosed on March 2, 2021, we transitioned the sublease of a portfolio of seven facilities from Genesis 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 together 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 (excluded from the dispositions table above) 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.

6. Leases

Lessee

We lease land, buildings, office space and certain equipment. Many of our leases include a renewal option to extend the term from one to 25 years or more. Renewal options that we are reasonably certain to exercise are recognized in our right-of-use assets and lease liabilities.

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The components of lease expense were as follows for the periods presented (in thousands):

												Nine Months Ended
						Classification						September 30, 2024						September 30, 2023
Operating lease cost: (1)
Real estate lease expense						Property operating expenses						$	17,837					$	16,663
Non-real estate investment lease expense						General and administrative expenses						4,838						5,392
Finance lease cost:
Amortization of leased assets						Property operating expenses						3,278						4,774
Interest on lease liabilities						Interest expense						2,923						3,008
Sublease income						Rental income						—						(3,933)
Total												$	28,876					$	25,904

(1) Includes short-term leases which are immaterial.

Supplemental balance sheet information related to leases in which we are the lessee is as follows (in thousands):

						Classification						September 30, 2024						December 31, 2023
Right of use assets:
Operating leases - real estate						Right of use assets, net						$	280,295					$	283,293
Finance leases - real estate						Right of use assets, net						77,865						67,676
Real estate right of use assets, net												358,160						350,969
Operating leases - non-real estate investments						Receivables and other assets						8,734						11,338
Total right of use assets, net												$	366,894					$	362,307
Lease liabilities:
Operating leases												$	301,046					$	303,553
Finance leases												91,314						79,677
Total												$	392,360					$	383,230

Lessor

Substantially all of our operating leases in which we are the lessor contain 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. During the nine months ended September 30, 2024, we wrote off previously recognized straight-line rent receivable and unamortized lease incentive balances of $97,674,000 through a reduction of rental income, which related to leases for which the collection of substantially all contractual lease payments was no longer probable due primarily to agreements reached to convert Triple-net leased properties to Seniors Housing Operating RIDEA structures (see Note 19). During the nine months ended September 30, 2023, we wrote off previously recognized straight-line rent receivable and unamortized lease incentive balances of $12,309,000 for which collection was no longer deemed probable.

Leases in our Triple-net and Outpatient Medical portfolios recognized under ASC 842, "Leases" ("ASC 842"), typically include some form of operating expense reimbursement by the tenant. For the nine months ended September 30, 2024, we recognized $1,183,949,000 of rental income related to operating leases, of which $165,863,000 was for variable lease payments that primarily represents the reimbursement of operating costs such as common area maintenance expenses, utilities, insurance and real estate taxes. For the nine months ended September 30, 2023, we recognized $1,152,005,000 of rental income related to operating leases, of which $163,980,000 was for variable lease payments.

For the majority of our Seniors Housing Operating segment, revenue from resident fees and services is predominantly service-based, and as such, resident agreements are accounted for under ASC 606, "Revenue from Contracts with Customers." Within that reportable segment, we also recognize revenue from residential seniors apartment leases in accordance with ASC 842. The amount of revenue related to these leases was $417,490,000 and $341,172,000 for the nine months ended September 30, 2024 and 2023, respectively.

For sales-type leases, we record any selling profit or loss arising from leases at inception within gain (loss) on real estate dispositions and acquisitions of controlling interests, net in the Consolidated Statements of Comprehensive Income. The investments in sales-type leases, net represents the lease receivable, the components of which are the future lease payments and any guaranteed or unguaranteed residual value for the underlying assets expected at the end of the lease term, measured at the net present value discounted using a rate implicit in the lease. Interest income is recognized in the Consolidated Statements of Comprehensive Income over the lease term using the effective interest method.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On September 30, 2024, we reached agreements with our tenant to sell 15 properties, which are included in two master leases previously classified as operating leases. As a result of the agreement to sell the properties, the two leases were classified as sales-type leases in accordance with ASC 842 and a gain of $92,593,000 was recognized in gains (losses) on real estate dispositions and acquisitions of controlling interests, net in the Consolidated Statements of Comprehensive Income.

7. Loans Receivable

Loans receivable are recorded on our Consolidated Balance Sheets in real estate loans receivable, net of allowance for credit losses, or for non-real estate loans receivable, in receivables and other assets. Real estate loans receivable consists of mortgage loans and other real estate loans, which are primarily collateralized by a first, second or third mortgage lien, a leasehold mortgage on, or an assignment of the partnership interest in, the related properties, as well as corporate guarantees and/or personal guarantees. Non-real estate loans are generally corporate loans with no real estate backing. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of the risk of credit loss. Accrued interest receivable was $33,992,000 and $31,798,000 as of September 30, 2024 and December 31, 2023, respectively, and is included in receivables and other assets on the Consolidated Balance Sheets. The following is a summary of our loans receivable (in thousands):

						September 30, 2024						December 31, 2023
Mortgage loans						$	1,576,567					$	1,057,516
Other real estate loans						290,419						324,660
Allowance for credit losses on real estate loans receivable						(26,533)						(20,589)
Real estate loans receivable, net of credit allowance						1,840,453						1,361,587
Non-real estate loans						274,814						503,993
Allowance for credit losses on non-real estate loans receivable						(27,396)						(173,874)
Non-real estate loans receivable, net of credit allowance						247,418						330,119
Total loans receivable, net of credit allowance						$	2,087,871					$	1,691,706

The following is a summary of our loan activity for the periods presented (in thousands):

						Nine Months Ended
						September 30, 2024						September 30, 2023
Advances on loans receivable						$	603,619					$	328,554
Less: Receipts on loans receivable						250,791						68,404
Net cash advances (receipts) on loans receivable						$	352,828					$	260,150

During the nine months ended September 30, 2024, we provided a first mortgage loan collateralized by a portfolio of seniors housing communities for $456,199,000. The loan bears interest at 10% per annum.

In June 2024, certain secured and unsecured indebtedness payable by Genesis to us was modified to extend the maturity date to June 30, 2025, with no other changes to the terms. In September 2024, we sold the entirety of the unsecured notes receivable from Genesis for cash proceeds of $24,246,000, which was equal to the carrying value after application of the allowance for credit losses and unrecognized interest. In addition, we sold a portion of the secured notes receivable from Genesis for cash proceeds of $55,504,000. The cash proceeds from these sales are included in receipts on loans receivable in the summary of loan activity above. Additionally, the secured notes were modified to extend the maturity date to June 30, 2026, and to convert to cash-pay interest beginning January 1, 2025.

The allowance for credit losses on loans receivable 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 each of these loans, including general economic conditions and estimated collectability of loan payments. We evaluate the collectability of our loans receivable based on a combination of credit quality indicators, 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 will 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.

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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. The following is a summary of our loans by credit loss category (in thousands):

						September 30, 2024
Loan category						Years of Origination						Loan Carrying Value						Allowance for Credit Loss						Net Loan Balance						No. of Loans
Deteriorated loans						2007 - 2023						$	28,526					$	(26,370)					$	2,156					4
Collective loan pool						2010 - 2019						153,610						(1,991)						151,619						11
Collective loan pool						2020						33,534						(434)						33,100						5
Collective loan pool						2021						915,539						(12,040)						903,499						10
Collective loan pool						2022						105,701						(1,370)						104,331						14
Collective loan pool						2023						332,429						(4,307)						328,122						11
Collective loan pool						2024						572,461						(7,417)						565,044						10
Total loans												$	2,141,800					$	(53,929)					$	2,087,871					65

The total allowance for credit losses balance is deemed sufficient to absorb expected losses relating to our loan portfolio. The following is a summary of the allowance for credit losses on loans receivable for the periods presented (in thousands):

			Nine Months Ended
			September 30, 2024						September 30, 2023
Balance at beginning of period			$	194,463					$	164,249
Provision for loan losses, net(1)			10,370						6,280
Purchased deteriorated loan			—						19,077
Reserve for unrecognized interest added to principal			—						2,066
Loan write-offs			(151,406)						—
Foreign currency translation			502						92
Balance at end of period			$	53,929					$	191,764

(1) Excludes the provision for loan loss on held-to-maturity debt securities.

8. Investments in Unconsolidated Entities

We participate in a number of joint ventures, which generally invest in seniors housing and health care real estate. Our share of the results of operations for these properties has been included in our consolidated results of operations from the date of acquisition by the joint ventures and are reflected in our Consolidated Statements of Comprehensive Income as income or loss from unconsolidated entities. The following is a summary of our investments in unconsolidated entities (dollars in thousands):

						Percentage Ownership (1)						September 30, 2024						December 31, 2023
Seniors Housing Operating						10% to 95%						$	1,385,356					$	1,248,774
Triple-net						10% to 88%						111,278						147,679
Outpatient Medical						15% to 50%						246,202						240,078
Total												$	1,742,836					$	1,636,531

(1) As of September 30, 2024 and includes ownership of investments classified as liabilities and excludes ownership of in substance real estate.

At September 30, 2024, the aggregate unamortized basis difference of our joint venture investments of $190,830,000 is primarily attributable to the difference between the amount for which we purchased our interest in the entity, including transaction costs, and the historical carrying value of the net assets of the joint venture. This difference is being amortized over the remaining useful life of the related properties and included in the reported amount of income from unconsolidated entities.

We have made loans related to 25 properties as of September 30, 2024 for the development and construction of certain properties that have a carrying value of $901,777,000. We believe that such borrowers typically represent VIEs in accordance with ASC 810, "Consolidation." VIEs are required to be consolidated by their primary beneficiary, which is the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impacts the entity's economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. We have concluded that we are not the primary beneficiary of such borrowers, therefore, the loan arrangements were assessed based on, among other factors, the amount and timing of expected residual profits, the estimated fair value of the collateral and the significance of the borrower's equity in the project. Based on these assessments, the arrangements have been classified as in substance real estate investments. We are obligated to fund an additional $146,367,000 related to these investments.

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

9. Credit Concentration

We use consolidated net operating income (“NOI”) as our credit concentration metric. See Note 18 for additional information and reconciliation. The following table summarizes certain information about our credit concentration for the nine months ended September 30, 2024, excluding our share of NOI in unconsolidated entities (dollars in thousands):

Concentration by relationship: (1)						Number of Properties						Total NOI						Percent of NOI (2)
Cogir Management Corporation						125						$	173,822					7%
Integra Healthcare Properties						147						161,430						7%
Sunrise Senior Living						88						127,273						5%
Avery Healthcare						84						104,667						5%
Oakmont Management Group						66						101,703						4%
Remaining portfolio						1,475						1,650,482						72%
Totals						1,985						$	2,319,377					100%

(1) Cogir Management Corporation, Sunrise Senior Living and Oakmont Management Group are in our Seniors Housing Operating segment. Integra Healthcare Properties is in our Triple-net segment. Avery Healthcare operates assets in both our Seniors Housing Operating and Triple-net segments.

(2) NOI with our top five relationships comprised 26% of total NOI for the year ended December 31, 2023.

In April 2024, we reached an agreement to transition 89 Atria Senior Living properties to six of our existing operating partners. In conjunction with the termination of the property management agreements, we recognized $26 million within other expenses on our Consolidated Statements of Comprehensive Income during the second quarter in excess of amounts already accrued. As of September 30, 2024, we have transitioned operations for all 89 properties.

10. Borrowings Under Credit Facilities and Commercial Paper Program

At September 30, 2024, we had a primary unsecured credit facility with a consortium of 29 banks that included a $5,000,000,000 unsecured revolving credit facility, a $1,000,000,000 unsecured term credit facility and a $250,000,000 Canadian-denominated unsecured term credit facility. The unsecured revolving credit facility is comprised of a $2,000,000,000 tranche that matures on July 24, 2029 (none outstanding at September 30, 2024) and a $3,000,000,000 tranche that matures on July 24, 2028 (none outstanding at September 30, 2024). The term credit facilities mature on July 19, 2026. The $3,000,000,000 tranche of the revolving facility and term loans may be extended for two successive terms of six months at our option. We have an option, through an accordion feature, to upsize the $5,000,000,000 unsecured revolving credit facility and the $1,000,000,000 unsecured term credit facility by up to an additional $1,250,000,000, in the aggregate, and the $250,000,000 Canadian-denominated unsecured term credit facility by up to an additional $250,000,000. The primary unsecured credit facility also allows us to borrow up to $1,000,000,000 in alternate currencies (none outstanding at September 30, 2024). Borrowings under the unsecured revolving credit facility are subject to interest payable at the applicable margin over the secured overnight financing rate ("SOFR") interest rate. Based on our current credit ratings, the loans under the unsecured revolving credit facility currently bear interest at 0.725% over the adjusted SOFR rate at September 30, 2024. In addition, we pay a facility fee quarterly to each bank based on the bank’s commitment amount. The facility fee depends on our debt ratings and was 0.125% at September 30, 2024.

Under the terms of our commercial paper program, we may issue unsecured commercial paper notes with maturities that vary, but do not exceed 397 days from the date of issue, up to a maximum aggregate face or principal amount outstanding at any time of $2,000,000,000 (none outstanding at September 30, 2024).

The following information relates to aggregate borrowings under the unsecured revolving credit facility and commercial paper program for the periods presented (dollars in thousands):

						Three Months Ended September 30,												Nine Months Ended September 30,
						2024						2023						2024						2023
Balance outstanding at quarter end						$	—					$	—					$	—					$	—
Maximum amount outstanding at any month end						$	—					$	—					$	—					$	205,000
Average amount outstanding (total of daily principal balances divided by days in period)						$	—					$	—					$	—					$	21,703
Weighted average interest rate (actual interest expense divided by average borrowings outstanding)						—		%				—		%				—		%				5.05		%

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

11. Senior Unsecured Notes and Secured Debt

At September 30, 2024, the annual principal payments due on our debt obligations were as follows (in thousands):

						Senior Unsecured Notes (1,2)						Secured Debt (3)						Totals
2024						$	—					$	96,016					$	96,016
2025						1,260,000						279,372						1,539,372
2026						700,000						231,413						931,413
2027 (4,5)						1,906,945						448,710						2,355,655
2028 (6)						2,521,890						157,797						2,679,687
Thereafter (7)						7,054,900						1,368,570						8,423,470
Total principal balance						13,443,735						2,581,878						16,025,613
Unamortized discounts and premiums, net						(23,230)						—						(23,230)
Unamortized debt issuance costs, net						(80,736)						(16,747)						(97,483)
Fair value adjustments and other, net						(44,673)						(96,604)						(141,277)
Total carrying value of debt						$	13,295,096					$	2,468,527					$	15,763,623

(1) Annual interest rates range from 2.05% to 6.50%. The ending weighted average interest rate, after considering the effects of interest rate swaps, was 3.87% and 4.02% as of September 30, 2024 and September 30, 2023, respectively.

(2) All senior unsecured notes with the exception of the $300,000,000 Canadian-denominated 2.95% senior unsecured notes due 2027 have been issued by Welltower OP and are fully and unconditionally guaranteed by Welltower. The $300,000,000 Canadian-denominated 2.95% senior unsecured notes due 2027 have been issued through private placement by a wholly-owned subsidiary of Welltower OP and are fully and unconditionally guaranteed by Welltower OP.

(3) Annual interest rates range from 1.31% to 8.00%. The ending weighted average interest rate, after considering the effects of interest rate swaps and caps, was 4.34% and 4.83% as of September 30, 2024 and September 30, 2023, respectively. Gross real property value of the properties securing the debt totaled $6,460,936,000 at September 30, 2024.

(4) Includes a $1,000,000,000 unsecured term loan and a $250,000,000 Canadian-denominated unsecured term loan (approximately $184,975,000 based on the Canadian/U.S. Dollar exchange rate on September 30, 2024). Both term loans mature on July 19, 2026 and may be extended for two successive terms of six months at our option. The loans bear interest at adjusted SOFR plus 0.85% (6.05% at September 30, 2024) and adjusted Canadian Overnight Repo Rate Average plus 0.85% (5.44% at September 30, 2024), respectively.

(5) Includes $300,000,000 Canadian-denominated 2.95% senior unsecured notes due 2027 (approximately $221,970,000 based on the Canadian/U.S. Dollar exchange rate on September 30, 2024).

(6) Includes £550,000,000 4.80% senior unsecured notes due 2028 (approximately $736,890,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on September 30, 2024).

(7) Includes £500,000,000 4.50% senior unsecured notes due 2034 (approximately $669,900,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on September 30, 2024).

The following is a summary of our senior unsecured notes principal activity during the periods presented (dollars in thousands):

						Nine Months Ended
						September 30, 2024						September 30, 2023
Beginning balance						$	13,699,619					$	12,584,529
Debt issued						1,035,000						1,035,000
Debt extinguished						(1,350,000)						—
Foreign currency						59,116						14,295
Ending balance						$	13,443,735					$	13,633,824

Welltower, the parent entity that consolidates Welltower OP and all other subsidiaries, fully and unconditionally guarantees to each holder of all series of senior unsecured notes issued by Welltower OP that the principal of and premium, if any, and interest on the notes will be promptly paid in full when due, whether at the applicable maturity date, by acceleration or redemption or otherwise, and interest on the overdue principal of and interest on the notes, if any, if lawful, and all other obligations of Welltower OP to the holders of the notes will be promptly paid in full or performed. Welltower's guarantees of such notes are its senior unsecured obligation and rank equally with all of Welltower's other future unsecured senior indebtedness and guarantees from time to time outstanding. Welltower's guarantees of such notes are effectively subordinated to all liabilities of its subsidiaries and to its secured indebtedness to the extent of the assets securing such indebtedness. Because Welltower conducts substantially all of its business through its subsidiaries, Welltower's ability to make required payments with respect to the guarantees depends on the financial results and condition of its subsidiaries and its ability to receive funds from its subsidiaries, whether by dividends, loans, distributions or other payments.

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

We may repurchase, redeem or refinance senior unsecured notes from time to time, taking advantage of favorable market conditions when available. We may purchase senior notes for cash through open market purchases, privately negotiated transactions, a tender offer or, in some cases, through the early redemption of such securities pursuant to their terms. The senior unsecured notes are redeemable at our option, at any time in whole or from time to time in part, subject to certain contractual restrictions, at a redemption price equal to the sum of: (i) the principal amount of the notes (or portion of such notes) being redeemed plus accrued and unpaid interest thereon up to the redemption date and (ii) any "make-whole" amount due under the terms of the notes in connection with early redemptions. Redemptions and repurchases of debt, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

Exchangeable Senior Unsecured Notes

In May 2023, Welltower OP issued $1,035,000,000 aggregate principal amount of 2.750% exchangeable senior unsecured notes maturing May 15, 2028 (the "2028 Exchangeable Notes") unless earlier exchanged, purchased or redeemed. The 2028 Exchangeable Notes will pay interest semi-annually in arrears on May 15 and November 15 of each year. We recognized contractual interest expense on the 2028 Exchangeable Notes of approximately $7,116,000 and $21,348,000 for the three and nine months ended September 30, 2024, and $7,116,000 and $11,069,000 for the same periods in 2023, respectively. Additionally, amortization of related issuance costs were $1,168,000 and $3,500,000 for the three and nine ended September 30, 2024, and $1,117,000 and $1,810,000 for the same periods in 2023, respectively. Unamortized issuance costs were $16,790,000 as of September 30, 2024 and $20,245,000 as of December 31, 2023.

In July 2024, Welltower OP issued $1,035,000,000 aggregate principal amount of 3.125% exchangeable senior unsecured notes maturing July 15, 2029 (the "2029 Exchangeable Notes") unless earlier exchanged, purchased or redeemed. The 2029 Exchangeable Notes will pay interest semi-annually in arrears on January 15 and July 15 of each year. The net proceeds from the offering of the 2029 Exchangeable Notes were approximately $1,015,063,000 after deducting the underwriting fees and other expenses. During the quarter ended September 30, 2024, we recognized approximately $7,188,000 of contractual interest expense and amortization of issuance costs of $857,000 related to the 2029 Exchangeable Notes. Unamortized issuance costs were $19,079,000 as of September 30, 2024.

Prior to the close of business on the business day immediately preceding January 15, 2029, the 2029 Exchangeable Notes are exchangeable at the option of the holders only upon certain circumstances and during certain periods. On or after January 15, 2029, the 2029 Exchangeable Notes will be exchangeable at the option of the holders at any time prior to the close of business on the second scheduled trading day preceding the maturity date. Welltower OP will settle exchanges of the 2029 Exchangeable Notes by delivering cash up to the principal amount of the 2029 Exchangeable Notes exchanged and, in respect of the remainder of the exchanged value, if any, in excess thereof, cash or shares of Welltower's common stock, or a combination thereof, at the election of Welltower OP. The exchange rate initially equals 7.8177 shares of common stock per $1,000 principal amount of 2029 Exchangeable Notes (equivalent to an exchange price of approximately $127.91 per share of common stock). The exchange rate is subject to adjustment upon the occurrence of certain events, but will not be adjusted for any accrued and unpaid interest.

Welltower OP may redeem the 2029 Exchangeable Notes, at its option in whole or in part, on any business day on or after July 20, 2027, if the last reported sales price of the common stock has been at least 130% of the exchange price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which Welltower OP provides notice of redemption. The redemption price will be equal to 100% of the principal amount of the 2029 Exchangeable Notes to be redeemed, plus accrued and unpaid interest, if any, to but excluding the redemption date.

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

						Nine Months Ended
						September 30, 2024						September 30, 2023
Beginning balance						$	2,222,445					$	2,129,954
Debt issued						3,708						381,369
Debt assumed						896,705						344,023
Debt extinguished						(323,805)						(397,381)
Debt disposed(1)						(164,640)						—
Principal payments						(32,411)						(41,646)
Foreign currency						(20,124)						(188)
Ending balance						$	2,581,878					$	2,416,131
(1) Please see Note 5 for additional information.

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain certain 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 September 30, 2024, we were in compliance in all material respects with all of the covenants under our debt agreements.

12. Derivative Instruments

We are exposed to, among other risks, the impact of changes in foreign currency exchange rates as a result of our non-U.S. investments and interest rate risk related to our capital structure. Our risk management program is designed to manage the exposure and volatility arising from these risks, and utilizes foreign currency forward contracts, cross currency swap contracts, interest rate swaps, interest rate locks and debt issued in foreign currencies to offset a portion of these risks.

Cash Flow Hedges and Fair Value Hedges of Interest Rate Risk

We enter into interest rate swaps in order to maintain a capital structure containing targeted amounts of fixed and floating-rate debt and manage interest rate risk. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for our fixed-rate payments. These interest rate swap agreements are used to hedge the variable cash flows associated with variable-rate debt.

Interest rate swaps designated as fair value hedges involve the receipt of fixed amounts from a counterparty in exchange for our variable-rate payments. These interest rate swap agreements hedge the exposure to changes in the fair value of fixed-rate debt attributable to changes in the designated benchmark interest rate. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in earnings. We record the gain or loss on the hedged items in interest expense, the same line item as the offsetting loss or gain on the related interest rate swaps. In March 2022, we entered into a $550,000,000 fixed to floating swap in connection with our March 2022 senior note issuance. This swap was terminated in January 2024 resulting in a loss of $(59,555,000). As of September 30, 2024, the unamortized loss amount was $(54,720,000). In January 2024, we entered into a $550,000,000 forward-starting fixed to floating swap which converts a portion of cash flows on our $750,000,000 2.8% senior unsecured notes to floating rate. The swap is effective beginning in June 2025 and matures in December 2030. As of September 30, 2024, the carrying amount of the notes, exclusive of the hedge, is $743,393,000. The fair value of the swap as of September 30, 2024 was $10,047,000 and was recorded as a derivative asset with an offset to senior unsecured notes on our Consolidated Balance Sheets.

Periodically, we enter into and designate interest rate locks to partially hedge the risk of changes in interest payments attributable to increases in the benchmark interest rate during the period leading up to the probable issuance of fixed-rate debt. We designate our interest rate locks as cash flow hedges. Gains and losses when we settle our interest rate locks are amortized into earnings over the life of the related debt, except where a material amount is deemed to be ineffective, which would be immediately recognized in the Consolidated Statements of Comprehensive Income. Approximately $2,562,000 of losses, which are included in other comprehensive income ("OCI"), are expected to be reclassified into earnings in the next 12 months.

Cash flows from derivatives accounted for as a fair value or cash flow hedge are classified in the same category as the cash flows from the items being hedged in the Consolidated Statement of Cash Flows.

Foreign Currency Forward Contracts and Cross Currency Swap Contracts Designated as Net Investment Hedges

We use foreign currency forward and cross currency forward swap contracts to hedge a portion of the net investment in foreign subsidiaries against fluctuations in foreign exchange rates. For instruments that are designated and qualify as net investment hedges, the variability in the foreign currency to U.S. Dollar of the instrument is recorded as a cumulative translation adjustment component of OCI.

During the nine months ended September 30, 2024 and 2023, we settled certain net investment hedges generating cash proceeds of $9,213,000 and $1,994,000, respectively. The balance of the cumulative translation adjustment will be reclassified to earnings if the hedged investment is sold or substantially liquidated.

Derivative Contracts Undesignated

We use foreign currency exchange contracts to manage existing exposures to foreign currency exchange risk. Gains and losses resulting from the changes in fair value of these instruments are recorded in interest expense on the Consolidated Statements of Comprehensive Income and are substantially offset by net revaluation impacts on foreign currency denominated balance sheet exposures.

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Equity Warrants

We received equity warrants through our lending activities, which were accounted for as loan origination fees. The warrants provide us the right to participate in the capital appreciation of the underlying HC-One Group real estate portfolio above a designated price upon liquidation and contain net settlement terms qualifying as derivatives under ASC Topic 815. The warrants are classified within receivables and other assets on our Consolidated Balance Sheets. These warrants are measured at fair value with changes in fair value being recognized within loss (gain) on derivatives and financial instruments in our Consolidated Statements of Comprehensive Income.

The following presents the notional amount of derivatives and other financial instruments as of the dates indicated (in thousands):

						September 30, 2024						December 31, 2023
Derivatives designated as net investment hedges:
Denominated in Canadian Dollars						$	2,900,000					$	2,025,000
Denominated in Pound Sterling						£	1,660,708					£	1,660,708
Financial instruments designated as net investment hedges:
Denominated in Canadian Dollars						$	250,000					$	250,000
Denominated in Pound Sterling						£	1,050,000					£	1,050,000
Interest rate swaps and caps designated as cash flow hedges:
Denominated in U.S. Dollars (1)						$	522,601					$	872,601
Interest rate swaps designated as fair value hedges:
Denominated in U.S. Dollars						$	550,000					$	550,000
Derivative instruments not designated:
Foreign currency exchange contracts denominated in Canadian Dollars						$	80,000					$	80,000

(1) At September 30, 2024, the maximum maturity date was September 1, 2028.

The following presents the impact of derivative instruments on the Consolidated Statements of Comprehensive Income for the periods presented (in thousands):

												Three Months Ended September 30,												Nine Months Ended September 30,
Description						Location						2024						2023						2024						2023
Gain (loss) on derivative instruments designated as hedges recognized in income						Interest expense						$	6,394					$	4,833					$	17,045					$	14,211
Gain (loss) on derivative instruments not designated as hedges recognized in income						Interest expense						$	(678)					$	1,488					$	1,238					$	59
Gain (loss) on equity warrants recognized in income						Gain (loss) on derivatives and financial instruments, net						$	9,911					$	(2,876)					$	18,790					$	(5,003)
Gain (loss) on derivative and financial instruments designated as hedges recognized in OCI						OCI						$	(194,988)					$	106,449					$	(125,277)					$	(49,173)

13. Commitments and Contingencies

At September 30, 2024, we had 20 outstanding letter of credit obligations totaling $44,672,000 and expiring between 2024 and 2025. At September 30, 2024, we had outstanding construction in progress of $1,374,996,000 and were committed to providing additional funds of approximately $646,763,000 to complete construction. Additionally, at September 30, 2024, we had outstanding investments classified as in substance real estate of $901,777,000 and were committed to provide additional funds of $146,367,000 (see Note 8 for additional information). Purchase obligations at September 30, 2024 also include $75,074,000 of contingent purchase obligations to fund capital improvements. Rents due from the tenants are increased to reflect the additional investment in the property.

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

14. Stockholders' Equity

The following is a summary of our stockholders' equity capital accounts as of the dates indicated:

						September 30, 2024						December 31, 2023
Preferred Stock, $1.00 par value:
Authorized shares						50,000,000						50,000,000
Issued shares						—						—
Outstanding shares						—						—
Common Stock, $1.00 par value:
Authorized shares						1,400,000,000						700,000,000
Issued shares						620,180,281						566,001,632
Outstanding shares						618,395,510						564,241,181

Common Stock

In April 2024, we entered into an equity distribution agreement whereby we can offer and sell up to $3,500,000,000 aggregate amount of our common stock ("ATM Program"). Our prior equity distribution agreement dated February 15, 2024, allowing us to sell up to $3,500,000,000 aggregate amount of our common stock, was terminated as a result. The ATM Program allows us to enter into forward sale agreements (none outstanding at September 30, 2024). As of September 30, 2024, we had $1,222,550,000 of remaining capacity under the ATM Program. During October 2024, we sold 4,292,963 shares of common stock under our ATM Program.

The following is a summary of our common stock issuances during the nine months ended September 30, 2024 and 2023 (dollars in thousands, except shares and average price amounts):

						Shares Issued						Average Price						Gross Proceeds						Net Proceeds
2023 Option exercises						1,708						$	63.65					$	109					$	109
2023 ATM Program issuances						41,477,572						79.08						3,279,956						3,264,947
2023 Redemption of OP Units and DownREIT Units						334,582												—						—
2023 Stock incentive plans, net of forfeitures						(54,317)												—						—
2023 Totals						41,759,545												$	3,280,065					$	3,265,056
2024 Option exercises						16,578						$	65.57					$	1,087					$	1,087
2024 ATM Program issuances						53,547,363						98.76						5,288,418						5,261,277
2024 Redemption of OP Units and DownREIT Units						494,941												—						—
2024 Stock incentive plans, net of forfeitures						95,447												—						—
2024 Totals						54,154,329												$	5,289,505					$	5,262,364

Dividends

The following is a summary of our dividend payments (in thousands, except per share amounts):

			Nine Months Ended
			September 30, 2024												September 30, 2023
			Per Share						Amount						Per Share						Amount
Common stock			$	1.89					$	1,127,827					$	1.83					$	921,319

Accumulated Other Comprehensive Income

The following is a summary of accumulated other comprehensive income (loss) as of the dates presented (in thousands):

						September 30, 2024						December 31, 2023
Foreign currency translation						$	(820,376)					$	(913,675)
Derivative and financial instruments designated as hedges						625,238						750,515
Total accumulated other comprehensive income (loss)						$	(195,138)					$	(163,160)

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

15. Stock Incentive Plans

In March 2022, our Board of Directors approved the 2022 Long-Term Incentive Plan ("2022 Plan"), which authorizes up to 10,000,000 shares of common stock or units to be issued at the discretion of the Compensation Committee of the Board of Directors. Awards granted after March 28, 2022 are issued out of the 2022 Plan. The awards granted under the 2016 Long-Term Incentive Plan continue to vest and options expire ten years from the date of grant. Our non-employee directors, officers and key employees are eligible to participate in the 2022 Plan. The 2022 Plan allows for the issuance of, among other things, stock options, stock appreciation rights, restricted stock units, deferred stock units, performance units and dividend equivalent rights. Vesting periods for options, deferred stock units and restricted stock units generally range from three to five years. Options expire ten years from the date of grant. Stock-based compensation expense totaled $39,910,000 and $62,308,000 for the three and nine months ended September 30, 2024, and $8,821,000 and $28,781,000 for the same periods in 2023, respectively.

During December 2021 and January 2022, we granted special non-recurring performance-based stock option and restricted stock awards to executives and key employees. Since the grant dates, the likelihood of achievement of the performance goals related to these awards was deemed to be improbable and as a result no expense was recognized. During the quarter ended September 30, 2024, we determined that the performance goals were probable of being achieved, resulting in a cumulative catch up of stock compensation expense of $29,838,000 recognized in general and administrative expenses in the Consolidated Statements of Comprehensive Income in the current quarter.

16. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

						Three Months Ended September 30,												Nine Months Ended September 30,
						2024						2023						2024						2023
Numerator for basic earnings per share - net income (loss) attributable to common stockholders						$	449,849					$	127,470					$	831,709					$	256,183
Adjustment for net income (loss) attributable to OP Units and DownREIT Units						1,221						64						1,235						(103)
Numerator for diluted earnings per share						$	451,070					$	127,534					$	832,944					$	256,080
Denominator for basic earnings per share - weighted average shares						611,290						521,848						595,353						504,420
Effect of dilutive securities:
Employee stock options						370						39						181						24
Non-vested restricted shares and units						2,517						1,141						1,686						968
OP Units and DownREIT Units						2,123						2,085						2,192						1,914
Employee stock purchase program						22						25						22						27
2028 Exchangeable Notes						1,984						—						757						—
Dilutive potential common shares						7,016						3,290						4,838						2,933
Denominator for diluted earnings per share - adjusted weighted average shares						618,306						525,138						600,191						507,353
Basic earnings per share						$	0.74					$	0.24					$	1.40					$	0.51
Diluted earnings per share						$	0.73					$	0.24					$	1.39					$	0.50

The 2028 Exchangeable Notes were not included in the computation of diluted earnings per share for the three and nine months ended September 30, 2023 as they were anti-dilutive. The 2029 Exchangeable Notes issued in 2024 were not included in the computation of diluted earnings per share for the three and nine months ended September 30, 2024 as they were anti-dilutive.

17. Disclosure about Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level valuation hierarchy exists for disclosures of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Please see Note 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information. The three levels are defined below:

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

• Level 1 - Quoted prices in active markets for identical assets or liabilities.

• Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value.

Investments in Sales-Type Leases - The fair value of sales-type leases is generally estimated by using Level 2 and Level 3 inputs to discount the estimated future cash flows of the lease using rates implicit in the lease, and an estimate of the unguaranteed residual value.

Mortgage Loans, Other Real Estate Loans and Non-real Estate Loans Receivable — The fair value of mortgage loans, other real estate loans and non-real estate loans receivable is generally estimated by using Level 2 and Level 3 inputs such as discounting the estimated future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Cash and Cash Equivalents and Restricted Cash — The carrying amount approximates fair value.

Equity Warrants — The fair value of equity warrants is estimated using Level 3 inputs and includes data points such as enterprise value of the underlying HC-One Group real estate portfolio, marketability discount for private company warrants, dividend yield, volatility and risk-free rate. The enterprise value is driven by projected cash flows, weighted average cost of capital and a terminal capitalization rate.

Borrowings Under Primary Unsecured Credit Facility and Commercial Paper Program — The carrying amount of the primary unsecured credit facility and commercial paper program approximates fair value because the borrowings are interest rate adjustable.

Senior Unsecured Notes — The fair value of the senior unsecured notes payable is estimated based on Level 1 publicly available trading prices. The carrying amount of the variable rate senior unsecured notes approximates fair value because they are interest rate adjustable.

Secured Debt — The fair value of fixed rate secured debt is estimated using Level 2 inputs by discounting the estimated future cash flows using the current rates at which similar loans would be made with similar credit ratings and for the same remaining maturities. The carrying amount of variable rate secured debt approximates fair value because the borrowings are interest rate adjustable.

Foreign Currency Forward Contracts, Interest Rate Swaps and Cross Currency Swaps — Foreign currency forward contracts, interest rate swaps and cross currency swaps are recorded in other assets or other liabilities on the balance sheet at fair value that is derived from Level 2 observable market data, including yield curves and foreign exchange rates.

Redeemable DownREIT Unitholder Interests — Our redeemable DownREIT Unitholder interests are recorded on the balance sheet at fair value using Level 2 inputs unless the fair value is below the initial amount, in which case the redeemable DownREIT Unitholder interests are recorded at the initial amount adjusted for distributions to the unitholders and income or loss attributable to the unitholders. The fair value is measured using the closing price of our common stock, as units may be redeemed at the election of the holder for cash or, at our option, one share of our common stock per unit, subject to adjustment in certain circumstances.

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

						September 30, 2024												December 31, 2023
						Carrying Amount						Fair Value						Carrying Amount						Fair Value
Financial assets:
Investments in sales-type leases, net						$	469,260					$	469,260					$	—					$	—
Mortgage loans receivable						1,555,962						1,622,078						1,043,252						1,105,260
Other real estate loans receivable						284,491						281,644						318,335						319,905
Cash and cash equivalents						3,564,942						3,564,942						1,993,646						1,993,646
Restricted cash						219,466						219,466						82,437						82,437
Non-real estate loans receivable						247,418						247,911						330,119						312,985
Foreign currency forward contracts, interest rate swaps and cross currency swaps						15,332						15,332						37,118						37,118
Equity warrants						57,037						57,037						35,772						35,772
Financial liabilities:
Senior unsecured notes						$	13,295,096					$	13,670,516					$	13,552,222					$	13,249,247
Secured debt						2,468,527						2,466,269						2,183,327						2,144,059
Foreign currency forward contracts, interest rate swaps and cross currency swaps						86,801						86,801						96,023						96,023
Redeemable DownREIT Unitholder interests						$	50,007					$	50,007					$	77,928					$	77,928

Items Measured at Fair Value on a Recurring Basis

The market approach is utilized to measure fair value for our financial assets and liabilities reported at fair value on a recurring basis. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The following summarizes items measured at fair value on a recurring basis (in thousands):

						Fair Value Measurements as of September 30, 2024
						Total						Level 1						Level 2						Level 3
Equity warrants						$	57,037					$	—					$	—					$	57,037
Foreign currency forward contracts, interest rate swaps and cross currency swaps, net asset (liability) (1)						(71,469)						—						(71,469)						—
Totals						$	(14,432)					$	—					$	(71,469)					$	57,037

(1) Please see Note 12 for additional information.

The following table summarizes the change in fair value for equity warrants using unobservable Level 3 inputs for the periods presented (in thousands):

						Nine Months Ended
						September 30, 2024						September 30, 2023
Beginning balance						$	35,772					$	30,436
Mark-to-market adjustment						18,791						(5,003)
Foreign currency						2,474						423
Ending balance						$	57,037					$	25,856

The most significant assumptions utilized in the valuation of the equity warrants are the cash flows of the underlying HC-One Group enterprise, as well as the terminal capitalization rate which was 9.5% and 11.0% at September 30, 2024 and 2023, respectively.

Items Measured at Fair Value on a Nonrecurring Basis

In addition to items that are measured at fair value on a recurring basis, we also have assets and liabilities in our balance sheet that are measured at fair value on a nonrecurring basis that are not included in the tables above. Assets, liabilities and noncontrolling interests that are measured at fair value on a nonrecurring basis include those acquired, consolidated, exchanged or assumed. Asset impairments (if applicable, see Note 5 for impairments of real property and Note 7 for impairments of loans receivable) are also measured at fair value on a nonrecurring basis. We have determined that the fair value measurements included in each of these assets and liabilities rely primarily on company-specific inputs and our assumptions about the use of the assets and settlement of liabilities, as observable inputs are not available. As such, we have determined that each of these fair value measurements generally resides within Level 3 of the fair value hierarchy. We estimate the fair value of real estate

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

and related intangibles using the income approach and unobservable data such as net operating income and estimated capitalization and discount rates. We also consider local and national industry market data including comparable sales, and commonly engage an external real estate appraiser to assist us in our estimation of fair value. We estimate the fair value of assets held for sale based on current sales price expectations or, in the absence of such price expectations, Level 3 inputs described above. We estimate the fair value of loans receivable using projected payoff valuations based on the expected future cash flows and/or the estimated fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the collateral. We estimate the fair value of secured debt assumed in asset acquisitions using current interest rates at which similar borrowings could be obtained on the transaction date.

18. Segment Reporting

We invest in seniors housing and health care real estate. We evaluate our business and make resource allocations on our three operating segments: Seniors Housing Operating, Triple-net and Outpatient Medical. Our Seniors Housing Operating properties include seniors apartments, assisted living, independent living/continuing care retirement communities, independent supportive living communities (Canada), care homes with and without nursing (U.K.) and combinations thereof that are generally owned and/or operated through RIDEA structures (see Note 19). Our Triple-net properties include the property types described above as well as long-term/post-acute care facilities. Under the Triple-net segment, we invest in seniors housing and health care real estate through acquisition and financing of primarily single tenant properties. Properties acquired are primarily leased under triple-net leases and we are not involved in the management of the property. Our Outpatient Medical properties are typically leased to multiple tenants and generally require a certain level of property management by us.

We evaluate performance based upon consolidated NOI of each segment. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. We believe NOI provides investors relevant and useful information as it measures the operating performance of our properties at the property level on an unleveraged basis. We use NOI to make decisions about resource allocations and to assess the property level performance of our properties.

Non-segment revenue consists mainly of interest income on cash investments recorded in other income. Non-segment assets consist of corporate assets including cash, deferred loan expenses and corporate offices and equipment among others. Non-property specific revenues and expenses are not allocated to individual segments in determining NOI.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023). The results of operations for all acquisitions described in Note 3 are included in our consolidated results of operations from the acquisition dates and are components of the appropriate segments. All inter-segment transactions are eliminated.

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Summary information for the reportable segments is as follows (in thousands):

Three Months Ended September 30, 2024						Seniors Housing Operating						Triple-net						Outpatient Medical						Non-segment/Corporate						Total
Resident fees and services						$	1,511,524					$	—					$	—					$	—					$	1,511,524
Rental income						—						227,531						202,955						—						430,486
Interest income						16,328						51,866						852						—						69,046
Other income						2,498						1,118						2,040						38,951						44,607
Total revenues						1,530,350						280,515						205,847						38,951						2,055,663
Property operating expenses						1,135,887						9,345						62,778						4,691						1,212,701
Consolidated net operating income (loss)						394,463						271,170						143,069						34,260						842,962
Depreciation and amortization						279,693						57,583						66,503						—						403,779
Interest expense						8,742						90						(573)						130,791						139,050
General and administrative expenses						—						—						—						77,901						77,901
Loss (gain) on derivatives and financial instruments, net						—						(9,906)						—						—						(9,906)
Loss (gain) on extinguishment of debt, net						—						—						—						419						419
Provision for loan losses, net						5,543						(1,345)						(5)						—						4,193
Impairment of assets						20,887						2,534						—						—						23,421
Other expenses						17,914						2,445						(500)						380						20,239
Income (loss) from continuing operations before income taxes and other items						61,684						219,769						77,644						(175,231)						183,866
Income tax (expense) benefit						—						—						—						4,706						4,706
Income (loss) from unconsolidated entities						4,247						(8,680)						395						—						(4,038)
Gain (loss) on real estate dispositions and acquisitions of controlling interests, net						63						272,334						(131)						—						272,266
Income (loss) from continuing operations						65,994						483,423						77,908						(170,525)						456,800
Net income (loss)						$	65,994					$	483,423					$	77,908					$	(170,525)					$	456,800
Total assets						$	28,900,249					$	9,845,405					$	7,553,112					$	2,654,932					$	48,953,698

Three Months Ended September 30, 2023						Seniors Housing Operating						Triple-net						Outpatient Medical						Non-segment/Corporate						Total
Resident fees and services						$	1,199,808					$	—					$	—					$	—					$	1,199,808
Rental income						—						194,912						189,595						—						384,507
Interest income						2,194						39,928						98						—						42,220
Other income						1,897						1,482						2,265						29,834						35,478
Total revenues						1,203,899						236,322						191,958						29,834						1,662,013
Property operating expenses						918,990						10,044						62,204						4,035						995,273
Consolidated net operating income (loss)						284,909						226,278						129,754						25,799						666,740
Depreciation and amortization						215,195						58,196						65,923						—						339,314
Interest expense						14,358						374						2,313						139,487						156,532
General and administrative expenses						—						—						—						46,106						46,106
Loss (gain) on derivatives and financial instruments, net						—						2,885						—						—						2,885
Loss (gain) on extinguishment of debt, net						—						—						1						—						1
Provision for loan losses, net						384						3,675						—						—						4,059
Impairment of assets						2,400						4,988						—						—						7,388
Other expenses						34,865						1,627						1,117						611						38,220
Income (loss) from continuing operations before income taxes and other items						17,707						154,533						60,400						(160,405)						72,235
Income tax (expense) benefit						—						—						—						(4,584)						(4,584)
Income (loss) from unconsolidated entities						(6,021)						2,056						(66)						—						(4,031)
Gain (loss) on real estate dispositions and acquisitions of controlling interests, net						71,173						(12)						(59)						—						71,102
Income (loss) from continuing operations						82,859						156,577						60,275						(164,989)						134,722
Net income (loss)						$	82,859					$	156,577					$	60,275					$	(164,989)					$	134,722

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended September 30, 2024						Seniors Housing Operating						Triple-net						Outpatient Medical						Non-segment / Corporate						Total
Resident fees and services						$	4,265,271					$	—					$	—					$	—					$	4,265,271
Rental income						—						590,426						593,523						—						1,183,949
Interest income						37,428						145,183						2,552						—						185,163
Other income						5,861						3,248						7,019						89,777						105,905
Total revenues						4,308,560						738,857						603,094						89,777						5,740,288
Property operating expenses						3,190,140						30,657						186,426						13,688						3,420,911
Consolidated net operating income (loss)						1,118,420						708,200						416,668						76,089						2,319,377
Depreciation and amortization						770,020						181,884						199,783						—						1,151,687
Interest expense						27,254						800						2,455						389,283						419,792
General and administrative expenses						—						—						—						186,784						186,784
Loss (gain) on derivatives and financial instruments, net						—						(18,785)						—						—						(18,785)
Loss (gain) on extinguishment of debt, net						1,711						—						—						419						2,130
Provision for loan losses, net						13,253						(2,874)						(9)						—						10,370
Impairment of assets						65,996						3,150						—						—						69,146
Other expenses						64,395						12,070						440						6,149						83,054
Income (loss) from continuing operations before income taxes and other items						175,791						531,955						213,999						(506,546)						415,199
Income tax (expense) benefit						—						—						—						(2,586)						(2,586)
Income (loss) from unconsolidated entities						(2,546)						(9,219)						4,840						—						(6,925)
Gain (loss) on real estate dispositions and acquisitions of controlling interests, net						141,726						293,628						8,062						—						443,416
Income (loss) from continuing operations						314,971						816,364						226,901						(509,132)						849,104
Net income (loss)						$	314,971					$	816,364					$	226,901					$	(509,132)					$	849,104

Nine Months Ended September 30, 2023						Seniors Housing Operating						Triple-net						Outpatient Medical						Non-segment / Corporate						Total
Resident fees and services						$	3,490,942					$	—					$	—					$	—					$	3,490,942
Rental income						—						596,247						555,758						—						1,152,005
Interest income						6,840						110,211						284						—						117,335
Other income						7,237						70,057						6,939						43,705						127,938
Total revenues						3,505,019						776,515						562,981						43,705						4,888,220
Property operating expenses						2,687,961						32,365						179,266						12,106						2,911,698
Consolidated net operating income (loss)						817,058						744,150						383,715						31,599						1,976,522
Depreciation and amortization						656,030						167,958						196,383						—						1,020,371
Interest expense						41,981						(436)						9,569						402,158						453,272
General and administrative expenses						—						—						—						134,764						134,764
Loss (gain) on derivatives and financial instruments, net						—						5,095						—						—						5,095
Loss (gain) on extinguishment of debt, net						—						—						7						—						7
Provision for loan losses, net						2,178						5,116						(2)						—						7,292
Impairment of assets						15,029						6,074						—						—						21,103
Other expenses						60,504						4,912						2,311						4,307						72,034
Income (loss) from continuing operations before income taxes and other items						41,336						555,431						175,447						(509,630)						262,584
Income tax (expense) benefit						—						—						—						(11,132)						(11,132)
Income (loss) from unconsolidated entities						(61,055)						9,858						(237)						—						(51,434)
Gain (loss) on real estate dispositions and acquisitions of controlling interests, net						69,910						436						(665)						—						69,681
Income (loss) from continuing operations						50,191						565,725						174,545						(520,762)						269,699
Net income (loss)						$	50,191					$	565,725					$	174,545					$	(520,762)					$	269,699

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Our portfolio of properties and other investments are located in the United States, the United Kingdom and Canada. Revenues and assets are attributed to the country in which the property is physically located. The following is a summary of geographic information for the periods presented (dollars in thousands):

						Three Months Ended																								Nine Months Ended
						September 30, 2024												September 30, 2023												September 30, 2024												September 30, 2023
Revenues:						Amount						%						Amount						%						Amount(1)						%						Amount						%
United States						$	1,745,893					84.9		%				$	1,384,381					83.2		%				$	4,822,963					84.0		%				$	4,072,915					83.3		%
United Kingdom						174,337						8.5		%				153,765						9.3		%				499,109						8.7		%				455,669						9.3		%
Canada						135,433						6.6		%				123,867						7.5		%				418,216						7.3		%				359,636						7.4		%
Total						$	2,055,663					100.0		%				$	1,662,013					100.0		%				$	5,740,288					100.0		%				$	4,888,220					100.0		%
						Three Months Ended																								Nine Months Ended
						September 30, 2024												September 30, 2023												September 30, 2024												September 30, 2023
Resident Fees and Services:						Amount						%						Amount						%						Amount(1)						%						Amount						%
United States						$	1,255,020					83.0		%				$	967,360					80.7		%				$	3,501,168					82.1		%				$	2,806,301					80.4		%
United Kingdom						125,581						8.3		%				111,947						9.3		%				360,254						8.4		%				334,544						9.6		%
Canada						130,923						8.7		%				120,501						10.0		%				403,849						9.5		%				350,097						10.0		%
Total						$	1,511,524					100.0		%				$	1,199,808					100.0		%				$	4,265,271					100.0		%				$	3,490,942					100.0		%
						As of
						September 30, 2024												December 31, 2023
Assets:						Amount						%						Amount						%
United States						$	40,861,259					83.4		%				$	36,929,186					83.9		%
United Kingdom						4,930,587						10.1		%				3,587,230						8.2		%
Canada						3,161,852						6.5		%				3,495,750						7.9		%
Total						$	48,953,698					100.0		%				$	44,012,166					100.0		%

19. Income Taxes and Distributions

We elected to be taxed as a REIT commencing with our first taxable year. To qualify as a REIT for federal income tax purposes, at least 90% of taxable income (excluding 100% of net capital gains) must be distributed to stockholders. REITs that do not distribute a certain amount of taxable income in the current year are also subject to a 4% federal excise tax. The main differences between undistributed net income for federal income tax purposes and financial statement purposes are the recognition of straight-line rent for reporting purposes, basis differences in acquisitions, recording of impairments, differing useful lives and depreciation and amortization methods for real property and the provision for loan losses for reporting purposes versus bad debt expense for tax purposes.

Under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 ("RIDEA"), for taxable years beginning after July 30, 2008, a REIT may lease "qualified health care properties" on an arm's-length basis to a taxable REIT subsidiary ("TRS") if the property is operated on behalf of such TRS by a person who qualifies as an "eligible independent contractor." Generally, the rent received from the TRS will meet the related party rent exception and will be treated as “rents from real property.” A "qualified health care property" includes real property and any personal property that is, or is necessary or incidental to the use of, a hospital, nursing facility, assisted living facility, congregate care facility, qualified continuing care facility, or other licensed facility which extends medical or nursing or ancillary services to patients. We have entered into various joint ventures that were structured under RIDEA. Resident level rents and related operating expenses for these facilities are reported in the unaudited consolidated financial statements and are subject to federal and state income taxes as the operations of such facilities are included in TRS entities. Certain net operating loss carryforwards could be utilized to offset taxable income in future years.

Income taxes reflected in the financial statements primarily represents U.S. federal, state and local income taxes as well as non-U.S. income based or withholding taxes on certain investments located in jurisdictions outside the U.S. The provision for income taxes for the nine months ended September 30, 2024 and 2023 was primarily due to operating income or losses, offset by certain discrete items at our TRS entities. In 2014, we established certain wholly-owned direct and indirect subsidiaries in Luxembourg and Jersey and transferred interests in certain foreign investments into this holding company structure. The structure includes a property holding company that is tax resident in the United Kingdom. No material adverse current tax consequences in Luxembourg, Jersey or the United Kingdom resulted from the creation of this holding company structure and most of the subsidiary entities in the structure are treated as disregarded entities of the company for U.S. federal income tax purposes. Subsequent to 2014, we transferred certain subsidiaries to the United Kingdom, while some wholly-owned direct and indirect subsidiaries remain in Luxembourg and Jersey. We reflect current and deferred tax liabilities for any such withholding

WELLTOWER INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

taxes incurred from this holding company structure in its consolidated financial statements. Generally, given current statutes of limitations, we are subject to audit by the foreign, federal, state and local taxing authorities under applicable local laws.

The Organization for Economic Co-operation and Development has proposed a global minimum tax of 15% of reported profits ("Pillar 2") that has been agreed upon in principle by over 140 countries. During 2023, many countries incorporated Pillar 2 model rules into their laws and will continue to do so in 2024. The model rules provide a framework for applying the minimum tax and some countries have adopted Pillar 2 effective January 1, 2024; however, countries must individually enact Pillar 2 which may result in variation in the application of the model rules and timelines. We continue to evaluate the potential consequences of Pillar 2 on our longer-term financial position.

20. Variable Interest Entities

We have entered into joint ventures and have certain subsidiaries that are either wholly owned by us or by consolidated joint ventures which own real estate investments and are deemed to be VIEs. Our VIEs primarily hold real estate assets within our Seniors Housing Operating and Triple-net portfolios, the nature and risk of which are consistent with our overall portfolio. We have concluded that we are the primary beneficiary of these VIEs based on a combination of operational control of the entities and the rights to receive residual returns or the obligation to absorb losses arising from the entities. Except for capital contributions associated with the initial entity formations, the entities have been and are expected to be funded from the ongoing operations of the underlying properties. Accordingly, such entities have been consolidated, and the table below summarizes the balance sheets of consolidated VIEs in the aggregate (in thousands):

						September 30, 2024						December 31, 2023
Assets:
Net real estate investments						$	3,881,149					$	3,277,741
Cash and cash equivalents						15,986						19,529
Receivables and other assets						118,179						43,513
Total assets (1)						$	4,015,314					$	3,340,783
Liabilities and equity:
Secured debt						$	513,724					$	76,507
Lease liabilities						2,537						2,539
Accrued expenses and other liabilities						20,555						13,850
Total equity						3,478,498						3,247,887
Total liabilities and equity						$	4,015,314					$	3,340,783

(1) Note that assets of the consolidated VIEs can only be used to settle obligations relating to such VIEs. Liabilities of the consolidated VIEs represent claims against the specific assets of the VIEs and the VIE's creditors do not have recourse to Welltower.

We recognized revenues from consolidated VIEs in the aggregate of $100,951,000 and $297,866,000 for the three and nine months ended September 30, 2024, and $48,885,000 and $139,619,000 for the same periods in 2023, respectively.

In addition, we have certain entities that qualify as unconsolidated VIEs including borrowers of loans receivable and in substance real estate investments. Our maximum exposure on these entities is limited to the net carrying value of the investments. Refer to Note 7 and Note 8 for additional details.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

			EXECUTIVE SUMMARY
			Company Overview			32
			Business Strategy			32
			Key Transactions			33
			Key Performance Indicators, Trends and Uncertainties			34
			Corporate Governance			37
			LIQUIDITY AND CAPITAL RESOURCES
			Sources and Uses of Cash			37
			Off-Balance Sheet Arrangements			38
			Contractual Obligations			38
			Capital Structure			38
			Supplemental Guarantor Information			39
			RESULTS OF OPERATIONS
			Summary			40
			Seniors Housing Operating			41
			Triple-net			43
			Outpatient Medical			45
			Non-Segment/Corporate			47
			OTHER
			Non-GAAP Financial Measures			48
			Critical Accounting Policies and Estimates			55
			Cautionary Statement Regarding Forward-Looking Statements			56

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read together with the Consolidated Financial Statements and related Notes thereto included in Item 1 of this Quarterly Report on Form 10-Q. Other important factors are identified in our Annual Report on Form 10-K for the year ended December 31, 2023, including factors identified under the headings "Business," "Risk Factors," and "Management’s Discussion and Analysis of Financial Condition and Results of Operations."

We are structured as an umbrella partnership REIT under which substantially all of our business is conducted through Welltower OP LLC, the day-to-day management of which is exclusively controlled by Welltower Inc. Welltower Inc. has no material assets or liabilities other than its investment in Welltower OP LLC. Welltower OP LLC is the borrower under, and Welltower Inc. is the guarantor of, all of the unsecured notes described in Note 11 to our unaudited consolidated financial statements.

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 99.701% as of September 30, 2024. 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 three months ended September 30, 2024 (dollars in thousands):

												Percentage of						Number of
Type of Property						NOI (1)						NOI						Properties
Seniors Housing Operating						$	394,463					48.8		%				1,008
Triple-net						271,170						33.5		%				606
Outpatient Medical						143,069						17.7		%				371
Totals						$	808,702					100.0		%				1,985
(1) Represents consolidated 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" below 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 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,

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

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 nine months ended September 30, 2024, resident fees and services and rental income represented 74% and 21%, 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 the general economic conditions during 2023 and into 2024, 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 September 30, 2024, we had $3,564,942,000 of cash and cash equivalents, $219,466,000 of restricted cash and $5,000,000,000 of available borrowing capacity under our unsecured revolving credit facility.

Key Transactions

Capital The following summarizes key capital transactions that occurred during the nine months ended September 30, 2024:

• In April 2024, we entered into the ATM Program (as defined below) pursuant to which we may offer and sell up to $3,500,000,000 of common stock of Welltower from time to time. Our prior equity distribution agreement dated February 15, 2024, allowing us to sell up to $3,500,000,000 aggregate amount of our common stock, was terminated. During the nine months ended September 30, 2024, we sold 53,547,363 shares of common stock under our current and previous ATM Programs generating gross proceeds of approximately $5,288,418,000.

• In January 2024, we repaid our $400,000,000 4.5% senior unsecured notes at maturity. In March 2024, we repaid our $950,000,000 3.625% senior unsecured notes at maturity.

• In July 2024, we closed on an expanded $5,000,000,000 unsecured revolving credit facility, which replaced our $4,000,000,000 existing line of credit. The new facility is comprised of a $3,000,000,000 revolving line of credit maturing in June 2028 that can be extended for an additional year and a $2,000,000,000 revolving line of credit maturing in June 2029. The revolving lines of credit will bear interest at a borrowing rate of 0.725% over the adjusted SOFR rate and includes an annual facility fee of 0.125%.

• In July 2024, Welltower OP issued $1,035,000,000 aggregate principal amount of 3.125% exchangeable senior unsecured notes maturing July 15, 2029 (the "2029 Exchangeable Notes") unless earlier exchanged, purchased or redeemed. The 2029 Exchangeable Notes will pay interest semi-annually in arrears on January 15 and July 15 of each year.

• In August 2024, we increased the size of the commercial paper program to $2,000,000,000.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

• During the nine months ended September 30, 2024, we extinguished $323,805,000 of secured debt at a blended average interest rate of 6.69% and disposed $164,640,000 of secured debt at a blended average interest rate of 4.64%.

• During the three months ended September 30, 2024, we assumed $896,705,000 of secured debt at a blended average interest rate of 4.01%.

Investments The following summarizes our property acquisitions and joint venture investments completed during the nine months ended September 30, 2024 (dollars in thousands):

						Properties						Book Amount (1)						Capitalization Rates (2)
Seniors Housing Operating						53						$	1,790,137					5.6		%
Triple-net						46						1,014,685						11.9		%
Outpatient Medical						1						46,834						7.7		%
Totals						100						$	2,851,656					5.8		%
(1) Represents amounts recorded in net real estate investments including fair value adjustments pursuant to U.S. GAAP. See Note 3 to our unaudited 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 nine months ended September 30, 2024 (dollars in thousands):

						Properties						Proceeds (1)						Book Amount (2)						Capitalization Rates (3)
Seniors Housing Operating(4)						27						$	508,774					$	366,255					4.4		%
Triple-net(5)						1						21,509						170						—		%
Outpatient Medical(4)						3						49,817						42,761						6.8		%
Totals						31						$	580,100					$	409,186					4.5		%
(1) Represents net proceeds received upon disposition, excluding non-cash consideration.
(2) Represents carrying value of net real estate assets at time of disposition. See Note 5 to our unaudited 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.
(4) Includes the disposition of unconsolidated equity method investments that owned six Seniors Housing Operating properties and one Outpatient Medical property.
(5) Excludes $376,695,000 of net real property derecognized related to 15 properties upon the reclassification of two leases from operating to sales-type (see Note 6 for additional details).

Strategic Dissolution of Revera Joint Ventures

During the second quarter of 2023, we entered into definitive agreements to dissolve our existing Revera joint venture relationships across the U.S., U.K. and Canada. The transactions included acquiring the remaining interests in 110 properties from Revera while simultaneously selling interests in 31 properties to Revera. See Note 5 to our unaudited consolidated financial statements for additional information regarding the transactions.

Dividend**s Our Board of Directors declared a cash dividend for the quarter ended September 30, 2024 of $0.67 per share. On November 21, 2024, we will pay our 214th consecutive quarterly cash dividend to stockholders of record on November 13, 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.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following table reflects the recent historical trends of our operating performance measures for the periods presented (in thousands):

						Three Months Ended
						September 30,						June 30,						March 31,						December 31,						September 30,						June 30,						March 31,
						2024						2024						2024						2023						2023						2023						2023
Net income (loss)						$	456,800					$	260,670					$	131,634					$	88,440					$	134,722					$	106,342					$	28,635
NICS						449,849						254,714						127,146						83,911						127,470						103,040						25,673
FFO						635,817						493,773						556,703						491,859						419,124						466,182						386,062
NOI						842,962						713,587						762,828						713,697						666,740						706,806						602,976

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. 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:

						Three Months Ended
						September 30,						June 30,						March 31,						December 31,						September 30,						June 30,						March 31,
						2024						2024						2024						2023						2023						2023						2023
Net debt to book capitalization ratio						28%						27%						29%						34%						36%						38%						40%
Net debt to undepreciated book capitalization ratio						23%						22%						24%						28%						29%						31%						32%
Net debt to enterprise value ratio						13%						15%						17%						21%						23%						25%						28%
Interest coverage ratio						6.83x						5.59x						4.29x						3.79x						3.88x						3.81x						3.44x
Fixed charge coverage ratio						6.37x						5.21x						3.98x						3.52x						3.60x						3.51x						3.13x

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 countries outside the United States).