VENTAS, INC. Unless otherwise indicated or except where the context otherwise requires, the terms "we," "us" and "our" and other similar terms in Item 2 of this Quarterly Report on Form 10-Q refer toVentas, Inc. and its consolidated subsidiaries. Cautionary Statements Forward-Looking Statements This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements include, among others, statements of expectations, beliefs, future plans and strategies, anticipated results from operations and developments and other matters that are not historical facts. The forward-looking statements are based on management's beliefs as well as on a number of assumptions concerning future events. You should not put undue reliance on these forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied by the forward-looking statements. We do not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made.
Certain factors that could prevent the Company from achieving its stated goals include but are not limited to:
•The effects of the ongoing COVID-19 pandemic and measures intended to manage the pandemic on our business, results of operations, cash flows and financial condition, including declines in revenues and increases in operating costs in our senior housing operating portfolio, deterioration in the financial condition of our tenants and their ability to satisfy their payment obligations to us; constraints in our ability to access capital and other sources of financing; increased risk of claims, litigation and regulatory proceedings that may adversely affect us; and the ability of federal, state and local governments to respond to and manage the COVID-19 pandemic effectively; •The ability and willingness of our tenants, operators, borrowers, managers and other third parties to satisfy their obligations under their respective contractual arrangements with us, including, in some cases, their obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities;
•The ability of our tenants, operators, borrowers and managers to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to third parties, including without limitation obligations under their existing credit facilities and other indebtedness;
•Our ability to implement our business strategy;
•A disruption of or lack of access to the capital markets, changes in the debt rating onU.S. government securities, default or delay in payment bythe United States of its obligation, and changes in federal or state budgets resulting in the reduction or nonpayment of Medicare or Medicaid reimbursement rates;
•The nature and extent of future competition, including new construction in the markets in which our senior housing communities and office buildings are located;
•The extent and effect of the results of the Presidential election on, and more broadly, future or pending healthcare reform and regulation, including cost containment measures and changes in reimbursement policies, procedures and rates;
•Increases in our borrowing costs as a result of changes in interest rates and
other factors, including the potential phasing out of London Inter-bank Offered
Rate ("LIBOR") after 2021;
•The ability of our tenants, operators and managers, as applicable, to comply
with laws, rules and regulations in the operation of our senior housing
properties, to deliver high-quality services, to attract and retain qualified
personnel and to attract residents and patients;
•Changes in general economic conditions or economic conditions in the markets in
which we may, from time to time, compete, and the effect of those changes on our
revenues, earnings and funding sources;
34
--------------------------------------------------------------------------------•Our level of indebtedness and ability to pay down, refinance, restructure or extend our indebtedness as it becomes due;
•Our ability and willingness to maintain our qualification as a REIT in light of economic, market, legal, tax and other considerations;
•Final determination of our taxable net income for the year ending
•The ability and willingness of our tenants to renew their leases with us upon expiration of the leases, our ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant; •Risks associated with our senior living operating portfolio, such as factors that can cause volatility in our operating income and earnings generated by those properties, including without limitation national and regional economic conditions, development of new competing properties, costs of food, materials, energy, labor and services, employee benefit costs, insurance costs and professional and general liability claims, and the timely delivery of accurate property-level financial results for those properties;
•Changes in exchange rates for any foreign currency in which we may, from time to time, conduct business;
•Year-over-year changes in the Consumer Price Index or theU.K. Retail Price Index and the effect of those changes on the rent escalators contained in our leases and on our earnings; •Our ability and the ability of our tenants, operators, borrowers and managers to obtain and maintain adequate property, liability and other insurance from reputable, financially stable providers;
•The impact of damage to our properties from catastrophic weather and other natural events and the physical effects of climate change;
•The impact of increased operating costs and uninsured professional liability
claims on our liquidity, financial condition and results of operations or that
of our tenants, operators, borrowers and managers and our ability and the
ability of our tenants, operators, borrowers and managers to accurately estimate
the magnitude of those claims;
•Risks associated with our office building portfolio and operations, including
our ability to successfully design, develop and manage office buildings and to
retain key personnel;
•The ability of the hospitals on or near whose campuses our medical office
buildings ("MOBs") are located and their affiliated health systems to remain
competitive and financially viable and to attract physicians and physician
groups;
•Risks associated with our investments in joint ventures and unconsolidated
entities, including our lack of sole decision-making authority and our reliance
on our joint venture partners' financial condition;
•Our ability to obtain the financial results expected from our development and redevelopment projects;
•The impact of market or issuer events on the liquidity or value of our investments in marketable securities;
•Consolidation in the senior housing and healthcare industries resulting in a change of control of, or a competitor's investment in, one or more of our tenants, operators, borrowers or managers or significant changes in the senior management of our tenants, operators, borrowers or managers;
•The impact of litigation or any financial, accounting, legal or regulatory issues that may affect us or our tenants, operators, borrowers or managers;
•Changes in accounting principles, or their application or interpretation, and our ability to make estimates and the assumptions underlying the estimates, which could have an effect on our earnings; and
•Other factors set forth in our periodic filings with the
35
--------------------------------------------------------------------------------Many of these factors are beyond our control and the control of our management.
Brookdale Senior Living, Kindred, Atria, Sunrise and Ardent Information
Brookdale Senior Living Inc. (together with its subsidiaries, "Brookdale Senior Living") is subject to the reporting requirements of theSEC and is required to file with theSEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. The information related to Brookdale Senior Living contained or referred to in this Quarterly Report on Form 10-Q has been derived fromSEC filings made by Brookdale Senior Living or other publicly available information, or was provided to us by Brookdale Senior Living, and we have not verified this information through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you of its accuracy. We are providing this data for informational purposes only, and you are encouraged to obtain Brookdale Senior Living's publicly available filings, which can be found on theSEC's website at www.sec.gov.Kindred Healthcare, LLC (together with its subsidiaries, "Kindred"),Atria Senior Living, Inc. ("Atria"),Sunrise Senior Living, LLC (together with its subsidiaries, "Sunrise") andArdent Health Partners, LLC (together with its subsidiaries, "Ardent") are not currently subject to the reporting requirements of theSEC . The information related to Kindred, Atria, Sunrise and Ardent contained or referred to in this Quarterly Report on Form 10-Q has been derived from publicly available information or was provided to us by Kindred, Atria, Sunrise or Ardent, as the case may be, and we have not verified this information through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you of its accuracy.
Company Overview
We are a REIT with a highly diversified portfolio of senior housing, research and innovation, and healthcare properties located throughoutthe United States ,Canada and theUnited Kingdom . As ofSeptember 30, 2020 , we owned or managed through unconsolidated joint ventures approximately 1,200 properties (including properties classified as held for sale), consisting of senior housing communities, MOBs, research and innovation centers, inpatient rehabilitation facilities ("IRFs") and long-term acute care facilities ("LTACs"), and health systems. We also had 19 properties under development, including one property that is owned by an unconsolidated real estate entity. We are an S&P 500 company headquartered inChicago, Illinois . We primarily invest in senior housing, research and innovation, and healthcare properties through acquisitions and lease our properties to unaffiliated tenants or operate them through independent third-party managers. As ofSeptember 30, 2020 , we leased a total of 377 properties (excluding properties within our office operations reportable business segment) to various healthcare operating companies under "triple-net" or "absolute-net" leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures. Our three largest tenants, Brookdale Senior Living, Ardent and Kindred leased from us 121 properties (excluding seven properties managed by Brookdale Senior Living pursuant to long-term management agreements), 11 properties and 32 properties, respectively, as ofSeptember 30, 2020 .
As of
Through ourLillibridge Healthcare Services, Inc. subsidiary and our ownership interest inPMB Real Estate Services LLC , we also provide MOB management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughoutthe United States . In addition, from time to time, we make secured and non-mortgage loans and other investments relating to senior housing and healthcare operators or properties. We aim to enhance shareholder value by delivering consistent, superior total returns through a strategy of: (1) generating reliable and growing cash flows; (2) maintaining a balanced, diversified portfolio of high-quality assets; and (3) preserving our financial strength, flexibility and liquidity. Our ability to access capital in a timely and cost effective manner is critical to the success of our business strategy because it affects our ability to satisfy existing obligations, including the repayment of maturing indebtedness, and to make future investments. Factors such as general market conditions, interest rates, credit ratings on our securities, expectations of our potential future earnings and cash distributions, and the trading price of our common stock that are beyond our control and fluctuate over time all impact our access to and cost of external capital. For that reason, we generally attempt to match the 36 --------------------------------------------------------------------------------
long-term duration of our investments in real property with long-term financing through the issuance of shares of our common stock or the incurrence of long-term fixed rate debt.
COVID-19 Update
The novel coronavirus ("COVID-19") pandemic and actions taken to prevent its spread continue to affect our business in a number of differing ways.
In our senior living operating portfolio, leading indicators in senior housing,
including leads, tours and move-ins, showed consistent improvement from July
through September, but occupancy continued to decline and operating costs
related to COVID-19 remained elevated in the third quarter. Recent COVID-19
clinical trends remain dynamic and create significant uncertainty.
Our NNN senior housing tenants' performance has also been affected by COVID-19.
While we received substantially all NNN senior housing rent we expected to
receive in the third quarter, we have modified certain NNN senior housing leases
to reset rent and have provided other modest financial accommodations to certain
NNN senior housing tenants who need it as a result of COVID-19.
The Company's NNN healthcare tenants have benefitted from significant government
financial support that was deployed early and has partially offset the direct
financial impact of the pandemic. Substantially all expected rent was paid by
the Company's NNN healthcare tenants in the third quarter.
Our office operations segment delivered steady performance in the third quarter,
growing net operating income ("NOI", which is defined as total revenues,
excluding interest and other income, less property-level operating expenses and
office building services costs) modestly compared to the second quarter. In the
third quarter, we received 99% of contractual rents in the office segment.
The federal government, as well as state and local governments, have implemented
or announced programs to provide financial and other support to businesses
affected by the COVID-19 pandemic, some of which have benefitted or could
benefit our company, tenants, operators, borrowers and managers. In particular,
in early September, the Department of Health and Human Services ("HHS")
announced that assisted living communities are eligible to apply for funding
under the Phase II General Distribution allocation ("Phase II") of the Public
Health and Social Services Emergency Fund (the "Provider Relief Fund ")
established pursuant to the Coronavirus Aid, Relief and Economic Security Act
(the "CARES Act") and the Paycheck Protection Program and Health Care
Enhancement Act (the "PPPHCE Act"). Distributions under Phase II are expected to
equal 2% of annual revenues from patient care, and to benefit the assisted
living communities in the Company's senior living operating business, as well as
its NNN senior housing tenants. While the guidance from HHS is subject to
change, under current guidance, distributions from the Provider Relief Fund are
not subject to repayment, provided that the recipient uses the funds first for
expenses attributable to COVID-19 and then for lost revenue attributable to
COVID-19, and is able to attest to and comply with certain terms and conditions,
including not using funds received from the Provider Relief Fund to reimburse
expenses or losses that other sources are obligated to reimburse, providing
detailed reporting to HHS, maintaining records in accordance with law and
submitting to government audit and investigation.
We have applied for approximately $35 million in grants under Phase II of the
Provider Relief Fund on behalf of the assisted living communities in our senior
living operating business. Although we have begun to receive amounts under some
of those applications, there can be no assurance that all our applications will
be approved or that additional funds will ultimately be received in full or in
part. The Company continues to evaluate the terms, conditions and permitted uses
associated with the grants, including the requirements and restrictions imposed
by HHS, and is in the process of determining what portions of these grants the
Company will be able to retain and use. Any funds that are ultimately received
and retained by us are not expected to fully offset the losses incurred in the
Company's senior living operating portfolio that are attributable to COVID-19.
We believe that substantially all our NNN senior housing tenants have also
applied for funding under Phase II to partially mitigate the losses they have
incurred as a direct result of COVID-19.
HHS recently announced a new $20 billion Phase III General Distribution
allocation ("Phase III") of the Provider Relief Fund , which will be made
available to all healthcare providers, including assisted living communities,
who have previously received distributions from the Provider Relief Fund . Phase
III is expected to be distributed (i) first, to ensure that eligible providers
have received funding equal to at least 2% of their annual patient care revenues
and (ii) second, to provide an additional payment that considers providers'
overall financial losses caused by the COVID-19 pandemic. The actual amount paid
to providers will depend in part on how many providers apply in Phase III and
will be determined after all applications have been received. While we have
applied for funding under Phase III on behalf of the assisted living communities
in our
37
--------------------------------------------------------------------------------senior living operating business, there can be no assurance that we will receive funding under Phase III or the amount of any such funding.
HHS and theDepartment of Defense (the "DOD") have announced agreements with CVS and Walgreens to provide and administer COVID-19 vaccines to residents of long-term care facilities nationwide (including assisted living and independent living communities) with no out-of-pocket costs to residents or the communities where they live. HHS andDOD also announced a program for the delivery of COVID-19 rapid point-of-care diagnostic tests to certain qualified assisted living facilities. While we expect both of these programs to benefit our senior living operating portfolio, as well as our NNN senior housing tenants, there can be no assurance these programs will ultimately be implemented, will be implemented on the same terms as have been currently announced or will continue once implemented. Since the start of the COVID-19 pandemic, we have taken precautionary steps to increase liquidity and preserve financial flexibility in light of the resulting uncertainty. See "-Liquidity and Capital Resources; Recent Capital Conservation Actions." As ofNovember 5, 2020 , we had approximately$3.2 billion in liquidity, including availability under our revolving credit facility and cash and cash equivalents on hand, with no borrowings outstanding under our commercial paper program and negligible near-term debt maturing. The trajectory and future impact of the COVID-19 pandemic remains highly uncertain. COVID-19 clinical trends have worsened in recent weeks; and multiple jurisdictions have recently imposed or are re-imposing heightened preventative measures. The extent of the COVID-19 pandemic's continuing and ultimate effect on our operational and financial performance will depend on the clinical experience, which may differ considerably across regions and fluctuate over time, and on other future developments, including the ultimate duration, spread and intensity of the outbreak; the availability and effective distribution of testing and, eventually, a vaccine; the extent to which governments across the country impose or re-impose preventative restrictions and the extent and duration of any rollback of those restrictions; and the availability of government financial support to our business, tenants and operators. Due to these uncertainties, we are not able at this time to estimate the impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows, either in the short or long-term, but it could be material. See "Note 1 - Description Of Business - COVID-19 Update" for a description of charges recognized during the three and nine months endedSeptember 30, 2020 as a result of the COVID-19 pandemic.
2020 Highlights
Investments and Dispositions
•InMarch 2020 , we formed and sponsored theVentas Life Science and Healthcare Real Estate Fund, L.P. (the "Fund"), a perpetual life vehicle that focuses on investments in life science, medical office and senior housing real estate.
We
are the sponsor and general partner of the Fund and, as ofSeptember 30, 2020 , have a 21% interest in the Fund. To seed the Fund, we contributed six (two of which are on the same campus) stabilized research and innovation and medical office properties comprising 1.2 million square feet of space. We received cash consideration of$620 million and recognized a gain on the transactions of$224.6 million . InOctober 2020 , the Fund acquired a portfolio of three life science properties in theSouth San Francisco life science cluster for$1.0 billion , which increased assets under management to$1.8 billion . The acquisition was financed with a$415 million mortgage loan bearing interest at a fixed rate of 2.6% per annum. •InOctober 2020 , we formed a joint venture (the "JV") with GIC. To seed the JV, we contributed our controlling ownership interest in four in-progress university-based research and innovation development projects (the "Initial R&I JV Projects"). At closing, GIC reimbursed us for its share of costs incurred to-date. We will own an over 50 percent interest and GIC will own a 45 percent interest in the Initial R&I JV Projects. We will act as manager of the JV, with customary rights and obligations, and will receive customary fees and incentives. Our exclusive development partner, Wexford Science & Technology, remains the developer of, and a minority partner in, all of the projects. We will account for our investment in the JV under the equity method of accounting. •During the nine months endedSeptember 30, 2020 , we received aggregate proceeds of$106.1 million for the full repayment of the principal balances of various loans receivable with a weighted average interest rate of 8.3% that were due to mature between 2020 and 2025, resulting in total gains of$1.4 million . 38 -------------------------------------------------------------------------------- •During the nine months endedSeptember 30, 2020 , we sold 15 properties for aggregate consideration of$67.7 million and we recognized a gain on the sale of these assets of$15.5 million .
Liquidity
•In
•InOctober 2020 , we redeemed, pursuant to a cash tender offer,$236.3 million aggregate principal amount then outstanding of our 3.25% senior notes due 2022 at 104.14% of par value, plus accrued and unpaid interest to the payment date. •For the nine months endedSeptember 30, 2020 , we sold an aggregate of 0.8 million shares of common stock under our "at-the-market" equity offering program ("ATM program") for gross proceeds of$45.07 per share. InOctober 2020 , we sold 0.7 million shares of common stock under our ATM program for gross proceeds of$44.65 per share. Portfolio •InJuly 2020 , we entered into a revised master lease agreement (the "Brookdale Lease") and certain other agreements (together with the Brookdale Lease, the "Agreements") with Brookdale Senior Living. The Agreements modify our current arrangements with Brookdale Senior Living as follows: We received up-front consideration approximating$235 million dollars , which will be amortized over the remaining lease term and consisted of: (a)$162 million in cash including$47 million from the transfer to Ventas of deposits under the Brookdale Lease; (b) a$45 million cash pay note (the "Note") from Brookdale, which has an initial interest rate of 9.0%, increasing 50 basis points per annum, and matures onDecember 31, 2025 ; (c)$28 million warrants exercisable for 16.3 million shares of Brookdale Senior Living common stock, which are exercisable at any time prior toDecember 31, 2025 and have an exercise price of$3.00 per share.
Base cash rent under the Brookdale Lease is set at
Brookdale Senior Living transferred fee ownership of five senior living
communities to us, in full satisfaction and repayment of a
•InApril 2020 , we completed a transaction with affiliates of Holiday Retirement (collectively, "Holiday"), including (a) entry into a new, terminable management agreement withHoliday Management Company for our 26 independent living assets previously subject to a triple-net lease (the "Holiday Lease") with Holiday; (b) termination of the Holiday Lease; and (c) our receipt from Holiday of$33.8 million in cash from the transfer to us of deposits under the Holiday Lease and$66 million in principal amount of secured notes. As a result of the Holiday Lease termination, we recognized net income of$50.2 million , composed of$99.8 million of cash and notes received less$49.6 million from the write-off of accumulated straight-line receivable. 39 --------------------------------------------------------------------------------
Concentration Risk
We use concentration ratios to identify, understand and evaluate the potential
impact of economic downturns and other adverse events that may affect our asset
types, geographic locations, business models, and tenants, operators and
managers. We evaluate concentration risk in terms of investment mix and
operations mix. Investment mix measures the percentage of our investments that
is concentrated in a specific asset type or that is operated or managed by a
particular tenant, operator or manager. Operations mix measures the percentage
of our operating results that is attributed to a particular tenant, operator or
manager, geographic location or business model. The following tables reflect our
concentration risk as of the dates and for the periods presented:
As of September 30, 2020 As of December 31, 2019
Investment mix by asset type(1):
Senior housing communities 63.7 % 62.2 %
MOBs 18.9 19.3
Research and innovation centers 7.7 8.7
Health systems 5.2 5.1
IRFs and LTACs 1.7 1.6
Skilled nursing facilities ("SNFs") 0.7 0.7
Secured loans receivable and investments, net 2.1 2.4
Investment mix by tenant, operator and manager(1):
Atria 20.6 % 20.4 %
Sunrise 10.4 10.3
Brookdale Senior Living 8.1 7.7
Ardent 4.9 4.7
Kindred 1.1 1.0
All other 54.9 55.9
(1)Ratios are based on the gross book value of consolidated real estate investments (excluding properties classified as held for sale) as of each reporting date.
40
--------------------------------------------------------------------------------
For the Three Months Ended September
30, For the Nine Months Ended September 30,
2020 2019 2020 2019
Operations mix by tenant and operator and business
model:
Revenues(1):
Senior living operations 59.1 % 55.8 % 58.1 % 55.3 %
Brookdale Senior Living(2) 4.0 4.6 4.5 4.7
Ardent 3.3 3.0 3.2 3.1
Kindred 3.6 3.3 3.4 3.3
All others 30.0 33.3 30.8 33.6
Adjusted EBITDA:
Senior living operations 28.6 % 32.3 % 29.9 % 32.2 %
Brookdale Senior Living(2) 8.9 8.2 9.6 8.1
Ardent 7.4 5.5 6.8 5.3
Kindred 7.9 6.0 7.3 5.8
All others 47.2 48.0 46.4 48.6
NOI:
Senior living operations 28.4 % 30.8 % 29.1 % 30.9 %
Brookdale Senior Living(2) 8.8 8.6 9.3 8.7
Ardent 7.2 5.7 6.5 5.8
Kindred 7.8 6.2 7.1 6.3
All others 47.8 48.7 48.0 48.3
Operations mix by geographic location(3):
California 15.8 % 15.8 % 15.7 % 16.1 %
New York 8.0 8.7 8.2 8.9
Texas 6.0 5.9 6.1 6.1
Pennsylvania 4.2 4.7 4.6 4.7
Illinois 4.0 4.1 4.1 4.2
All others 61.9 60.8 61.2 60.0
(1)Total revenues include office building and other services revenue, revenue
from loans and investments and interest and other income (excluding amounts in
discontinued operations and including amounts related to assets classified as
held for sale).
(2)Excludes seven senior housing communities which are included in the senior
living operations reportable business segment.
(3)Ratios are based on total revenues (including amounts related to assets
classified as held for sale) for each period presented.
See "Non-GAAP Financial Measures" included elsewhere in this Quarterly Report
on Form 10-Q for additional disclosure and reconciliations of net income
attributable to common stockholders, as computed in accordance with GAAP, to
Adjusted EBITDA and NOI, respectively.
Triple-Net Lease Expirations
If our tenants are not able or willing to renew our triple-net leases upon expiration, we may be unable to reposition the applicable properties on a timely basis or on the same or better economic terms, if at all. Although our lease expirations are staggered, the non-renewal of some or all of our triple-net leases that expire in any given year could have a material adverse effect on our business, financial condition, results of operations and liquidity, our ability to service our indebtedness and other obligations and our ability to make distributions to our stockholders, as required for us to continue to qualify as a REIT (a "Material Adverse Effect"). During the nine months endedSeptember 30, 2020 , we had no triple-net lease renewals or expirations without renewal that, in the aggregate, had a material impact on our financial condition or results of operations for that period. 41 --------------------------------------------------------------------------------
Critical Accounting Policies and Estimates
Our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q have been prepared in accordance withU.S. generally accepted accounting principles ("GAAP") for interim financial information set forth in the Accounting Standards Codification ("ASC"), as published by theFinancial Accounting Standards Board ("FASB"), and with theSEC instructions to Form 10-Q and Article 10 of Regulation S-X. GAAP requires us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We base these estimates on our experience and assumptions we believe to be reasonable under the circumstances. However, if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, we may have applied a different accounting treatment, resulting in a different presentation of our financial statements. We periodically reevaluate our estimates and assumptions, and in the event they prove to be different from actual results, we make adjustments in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Our Annual Report on Form 10-K for the year endedDecember 31, 2019 , filed with theSEC onFebruary 24, 2020 , contains further information regarding the critical accounting policies that affect our more significant estimates and judgments used in the preparation of our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. There have been no material changes to these policies in 2020. Please refer to "Note 2 - Accounting Policies" of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for information regarding recently adopted accounting standards.
Results of Operations
As ofSeptember 30, 2020 , we operated through three reportable business segments: triple-net leased properties, senior living operations and office operations. In our triple-net leased properties segment, we invest in and own senior housing and healthcare properties throughoutthe United States and theUnited Kingdom and lease those properties to healthcare operating companies under "triple-net" or "absolute-net" leases that obligate the tenants to pay all property-related expenses. In our senior living operations segment, we invest in senior housing communities throughoutthe United States andCanada and engage independent operators, such as Atria and Sunrise, to manage those communities. In our office operations segment, we primarily acquire, own, develop, lease and manage MOBs and research and innovation centers throughout theUnited States. Information provided for "all other" includes income from loans and investments and other miscellaneous income and various corporate-level expenses not directly attributable to any of our three reportable business segments. Assets included in "all other" consist primarily of corporate assets, including cash, restricted cash, loans receivable and investments, and miscellaneous accounts receivable. Our chief operating decision makers evaluate performance of the combined properties in each reportable business segment and determine how to allocate resources to those segments, in significant part, based on segment NOI and related measures. For further information regarding our reportable business segments and a discussion of our definition of segment NOI, see "Note 15 - Segment Information" of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. See "Non-GAAP Financial Measures" included elsewhere in this Quarterly Report on Form 10-Q for additional disclosure and reconciliations of net income attributable to common stockholders, as computed in accordance with GAAP, to NOI. 42 --------------------------------------------------------------------------------
Three Months Ended
The table below shows our results of operations for the three months ended
For the Three Months Ended (Decrease) Increase
September 30, to Net Income
2020 2019 $ %
(Dollars in thousands)
Segment NOI:
Triple-net leased properties $ 150,738 $ 187,045 $ (36,307) (19.4) %
Senior living operations 118,669 153,079 (34,410) (22.5)
Office operations 133,325 149,227 (15,902) (10.7)
All other 20,094 31,064 (10,970) (35.3)
Total segment NOI 422,826 520,415 (97,589) (18.8)
Interest and other income 572 620 (48) (7.7)
Interest expense (115,505) (113,967) (1,538) (1.3)
Depreciation and amortization (249,366) (234,603) (14,763) (6.3)General, administrative and professional fees (34,228) (40,530)
6,302 15.5
Loss on extinguishment of debt, net (7,386) (37,434) 30,048 80.3
Merger-related expenses and deal costs (11,325) (4,304) (7,021) nm
Allowance on loans receivable and investments (4,999) - (4,999) nm
Other (3,534) (2,164) (1,370) (63.3)
(Loss) income before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests
(2,945) 88,033 (90,978) nm
Income from unconsolidated entities 865 854 11 1.3
Gain on real estate dispositions 12,622 36 12,586 nm
Income tax benefit (expense) 3,195 (2,005) 5,200 nm
Income from continuing operations 13,737 86,918 (73,181) (84.2)
Net income 13,737 86,918 (73,181) (84.2)
Net income attributable to noncontrolling
interests 986 1,659 673 40.6
Net income attributable to common stockholders
(72,508) (85.0)
nm - not meaningful
The following table summarizes results of operations in our triple-net leased properties reportable business segment, including assets sold or classified as held for sale as ofSeptember 30, 2020 . For the Three Months Ended (Decrease) Increase September 30, to Segment NOI 2020 2019 $ % (Dollars in thousands)Segment NOI-Triple-Net Leased Properties : Rental income$ 156,136 $ 193,383 $ (37,247) (19.3) % Less: Property-level operating expenses (5,398) (6,338) 940 14.8 Segment NOI$ 150,738 $ 187,045 (36,307) (19.4) In our triple-net leased properties reportable business segment, our revenues generally consist of fixed rental amounts (subject to annual contractual escalations) received from our tenants in accordance with the applicable lease terms. We report revenues and property-level operating expenses within our triple-net leased properties reportable business segment for real estate tax and insurance expenses that are paid from escrows collected from our tenants. 43 -------------------------------------------------------------------------------- The segment NOI decrease in our triple-net leased portfolio was primarily driven by a$15.6 million reduction for the removal of 26 Holiday communities at the start of the second quarter 2020 from our triple-net portfolio, the COVID-19 related write-off of previously accrued straight-line rental income during the third quarter of 2020 of$14.3 million , and$7.7 million for lower rental income on the Brookdale lease that was modified at the start of the third quarter of 2020. We will continue to try to collect rent on a contractual basis for the tenants where straight-line rent has been written off, but we have determined that collectability is not probable due to COVID-19. Occupancy rates may affect the profitability of our tenants' operations. For senior housing communities and post-acute properties in our triple-net leased properties reportable business segment, occupancy generally reflects average operator-reported unit and bed occupancy, respectively, for the reporting period. Because triple-net financials are delivered to us following the reporting period, occupancy is reported in arrears. The following table sets forth average continuing occupancy rates related to the triple-net leased properties we owned atSeptember 30, 2020 and 2019 for the second quarter of 2020 and 2019, respectively. The table excludes non-stabilized properties, properties owned through investments in unconsolidated entities, certain properties for which we do not receive occupancy information and properties acquired or properties that transitioned operators for which we do not have a full quarter of occupancy results. Number of Average Occupancy Number of Average Occupancy Properties Owned for the Three Properties Owned for the Three at September 30, Months Ended June at September 30, Months Ended June 2020 30, 2020 2019 30, 2019 Senior housing communities 303 80.6% 345 84.1% SNFs 16 78.9 16 87.1 IRFs and LTACs 35 56.9 36 54.9
The following table compares results of operations for our 375 same-store triple-net leased properties. See "Non-GAAP Financial Measures-NOI" included elsewhere in this Quarterly Report on Form 10-Q for additional disclosure regarding same-store NOI.
For the Three Months Ended
September 30, Decrease to Segment NOI
2020 2019 $ %
(Dollars in thousands)
$ 154,799 $ 172,357 $ (17,558) (10.2) % Less: Property-level operating expenses (5,397) (4,897) (500) (10.2) Segment NOI$ 149,402 $ 167,460 (18,058) (10.8) The segment NOI decrease in our same-store triple net leased portfolio was primarily driven by the COVID-19 related write-off of previously accrued straight-line rental income during the third quarter of 2020 and lower rental income from the Brookdale lease modification at the start of the third quarter of 2020, partially offset by rent increases due to contractual escalations pursuant to the terms of our leases. We will continue to try to collect rent on a contractual basis for the tenants where straight-line rent has been written off, but we have determined that collectability is not probable due to COVID-19.
Segment NOI-Senior Living Operations
The following table summarizes results of operations in our senior living operations reportable business segment, including assets sold or classified as held for sale as ofSeptember 30, 2020 . For senior housing communities in our senior living operations reportable business segment, occupancy generally reflects average operator-reported unit occupancy for the reporting period. 44 --------------------------------------------------------------------------------
For the Three Months Ended Increase (Decrease)
September 30, to Segment NOI
2020 2019 $ %
(Dollars in thousands)
Segment NOI-Senior Living Operations:
Resident fees and services $ 541,322 $ 541,090 $ 232 0.0 %
Less: Property-level operating expenses (422,653) (388,011) (34,642) (8.9)
Segment NOI $ 118,669 $ 153,079 (34,410) (22.5)
Average Monthly Revenue Per
Average Unit Occupancy for the Occupied Room For the Three
Number of Properties at September 30, Three Months Ended September 30, Months Ended September 30,
2020 2019 2020 2019 2020 2019
Total communities 431 395 79.8 % 86.6 % $ 4,708 $ 5,454
Resident fees and services include all amounts earned from residents at our
senior housing communities, such as rental fees related to resident leases,
extended health care fees and other ancillary service income. Property-level
operating expenses related to our senior living operations segment include
labor, food, utilities, marketing, management and other costs of operating the
properties.
The segment NOI decrease in our senior housing operating portfolio was
primarily driven by lower occupancy rates and increased operating costs
resulting from the COVID-19 pandemic. This is offset by the transition of 26
independent living assets at the start of the second quarter 2020, operated by
Holiday from our triple-net portfolio to our senior housing operating portfolio
and the third quarter 2019 acquisition of 34 Canadian senior housing communities
via an equity partnership with Le Groupe Maurice .
The following table compares results of operations for our 351 same-store senior living operating communities.
For the Three Months Ended Decrease
September 30, to Segment NOI
2020 2019 $ %
(Dollars in thousands)
Same-Store Segment NOI-Senior Living Operations:
Resident fees and services $ 445,034 $ 505,700 $ (60,666) (12.0) %
Less: Property-level operating expenses (361,232) (360,833) (399) (0.1)
Segment NOI $ 83,802 $ 144,867 (61,065) (42.2)
Average Monthly Revenue Per
Average Unit Occupancy for the Occupied Room For the Three
Number of Properties at September 30, Three Months Ended September 30, Months Ended September 30,
2020 2019 2020 2019 2020 2019
Same-store communities 351
351 76.6 % 86.4 % $ 5,709 $ 5,758
The segment NOI decrease in our same-store senior housing operating portfolio
was primarily driven by lower occupancy and increased operating costs resulting
from the COVID-19 pandemic.
45
--------------------------------------------------------------------------------Segment NOI-Office Operations
The following table summarizes results of operations in our office operations reportable business segment, including assets sold or classified as held for sale as ofSeptember 30, 2020 . For properties in our office operations reportable business segment, occupancy generally reflects occupied square footage divided by net rentable square footage as of the end of the reporting period. For the Three Months Ended (Decrease) Increase September 30, to Segment NOI 2020 2019 $ % (Dollars in thousands) Segment NOI-Office Operations: Rental income$ 198,376 $ 214,939 $ (16,563) (7.7) % Office building services costs 2,440 2,059 381 18.5 Total revenues 200,816 216,998 (16,182) (7.5)
Less:
Property-level operating expenses (66,934) (67,144) 210 0.3 Office building services costs (557) (627) 70 11.2 Segment NOI$ 133,325 $ 149,227 (15,902) (10.7) Annualized Average Rent Per Occupied Square Foot for the Three Months Ended Number of Properties at September 30, Occupancy at September 30, September 30, 2020 2019 2020 2019 2020 2019 Total office buildings 377 384 89.9 % 90.1 %$ 34 $ 35 The office segment NOI decrease was primarily driven by assets sold to the Fund in the first quarter of 2020, a lease termination fee received in the third quarter 2019, and COVID-19 impacts including the write-off of previously accrued straight-line rental income during the third quarter of 2020 and reduced parking revenues, partially offset by active leasing at recently developed properties, continued tenant retention and contractual rent increases. The following table compares results of operations for our 360 same-store office buildings. For the Three Months Ended Decrease September 30, to Segment NOI 2020 2019 $ % (Dollars in thousands) Same-Store Segment NOI-Office Operations: Rental income$ 187,451 $ 192,348 $ (4,897) (2.5) % Less: Property-level operating expenses (62,934) (59,617) (3,317) (5.6) Segment NOI$ 124,517 $ 132,731 (8,214) (6.2) Annualized Average Rent Per Occupied Square Foot for the Three Months Ended Number of Properties at September 30, Occupancy at September 30, September 30, 2020 2019 2020 2019 2020 2019 Same-store office buildings 360 360 91.1 % 90.6 %$ 33 $ 34 46
-------------------------------------------------------------------------------- Same-store operations decreases in the third quarter of 2020 over the same period in 2019 were driven by a lease termination fee received in the third quarter of 2019, COVID-19 impacts including the write-off of previously accrued straight-line rental income during the third quarter of 2020 and reduced parking revenues, partially offset by continued tenant retention, contractual rent escalators and increased occupancy primarily in our Research and Innovation centers.
All Other
Information provided for all other segment NOI includes income from loans and investments and other miscellaneous income not directly attributable to any of our three reportable business segments. The$11.0 million decrease in all other segment NOI for the three months endedSeptember 30, 2020 over the same period in 2019 is primarily due to reduced interest income from loans receivable investments as a result of the repayment of certain loans receivable. See "Note 5 - Loans Receivable And Investments" of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Interest Expense
The$1.5 million increase in total interest expense for the three months endedSeptember 30, 2020 compared to the same period in 2019 is primarily attributable to an increase of$7.3 million due to higher debt balances, partially offset by a decrease of$5.2 million due to a lower effective interest rate. Our weighted average effective interest rate was 3.6% and 3.8% for the three months endedSeptember 30, 2020 and 2019, respectively. Capitalized interest for the three months endedSeptember 30, 2020 and 2019 was$2.5 million and$1.8 million , respectively.
Depreciation and Amortization
Depreciation and amortization expense increased$14.8 million during the three months endedSeptember 30, 2020 compared to the same period in 2019 primarily due to incremental depreciation on asset acquisitions, primarily the acquisition of 34 Canadian senior housing communities via an equity partnership with LeGroupe Maurice , net of dispositions.
Loss on Extinguishment of Debt, Net
Loss on extinguishment of debt, net for the three months endedSeptember 30, 2020 was due primarily to the notice of redemption of$236.3 million of our 3.25% senior notes due 2022. Loss on extinguishment of debt, net for the three months endedSeptember 30, 2019 was due primarily to the$600 million redemption and repayment of our 4.25% senior notes due 2022.
Merger-Related Expenses and Deal Costs
The$7.0 million increase in merger-related expenses and deal costs is primarily attributable to costs incurred as a result of the Brookdale transaction partially offset by 2019 operator transition costs. See "Note 3 - Concentration Of Credit Risk" of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Other
The$1.4 million change in other expenses is primarily attributable to the change in fair value of stock warrants received in connection with the Brookdale transaction. See "Note 3 - Concentration Of Credit Risk" of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Gain on Real Estate Dispositions
The
Income Tax Benefit (Expense)
The$5.2 million change from income tax expense to an income tax benefit related to continuing operations for the three months endedSeptember 30, 2020 compared to the same period in 2019 is primarily due to operating losses at our TRS entities. 47 --------------------------------------------------------------------------------
Nine Months Ended
The table below shows our results of operations for the nine months ended
For the Nine Months Ended (Decrease) Increase
September 30, to Net Income
2020 2019 $ %
(Dollars in thousands)
Segment NOI:
Triple-net leased properties $ 510,234 $ 569,741 $ (59,507) (10.4) %
Senior living operations 402,059 467,428 (65,369) (14.0)
Office operations 412,548 430,493 (17,945) (4.2)
All other 66,001 69,302 (3,301) (4.8)
Total segment NOI 1,390,842 1,536,964 (146,122) (9.5)
Interest and other income 6,965 10,109 (3,144) (31.1)
Interest expense (355,333) (334,955) (20,378) (6.1)
Depreciation and amortization (847,797) (696,710) (151,087) (21.7)
General, administrative and professional fees (106,747) (124,369) 17,622 14.2
Loss on extinguishment of debt, net (7,386) (41,861) 34,475 82.4
Merger-related expenses and deal costs (26,129) (11,084) (15,045) nm
Allowance on loans receivable and investments (34,654) - (34,654) nm
Other (10,624) 9,294 (19,918) nm
Income before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests
9,137 347,388 (338,251) (97.4)
Loss from unconsolidated entities (15,861) (2,621) (13,240) nm
Gain on real estate dispositions 240,101 24,633 215,468 nm
Income tax benefit 95,855 57,004 38,851 68.2
Income from continuing operations 329,232 426,404 (97,172) (22.8)
Net income 329,232 426,404 (97,172) (22.8)
Net income attributable to noncontrolling interests 534 4,831 4,297 88.9
Net income attributable to common stockholders
421,573 (92,875) (22.0) nm - not meaningful
The following table summarizes results of operations in our triple-net leased properties reportable business segment, including assets sold or classified as held for sale as ofSeptember 30, 2020 . For the Nine Months Ended (Decrease) Increase September 30, to Segment NOI 2020 2019 $ % (Dollars in thousands)Segment NOI-Triple-Net Leased Properties : Rental income$ 527,238 $ 589,833 $ (62,595) (10.6) % Less: Property-level operating expenses (17,004) (20,092) 3,088 15.4 % Segment NOI$ 510,234 $ 569,741 (59,507) (10.4) nm - not meaningful The decrease in our triple-net leased properties segment NOI for the nine months endedSeptember 30, 2020 over the same period in 2019 is attributable primarily to the COVID-19 related write-off of previously accrued straight-line rental income during the second quarter of 2020 of$53.3 million (non-Holiday assets), the additional write-off of previously accrued -------------------------------------------------------------------------------- straight-line rental income during the third quarter of 2020 of$14.3 million , lower rental income from the Brookdale lease modification at the start of the third quarter of 2020, and the transition of 26 independent living assets at the start of the second quarter 2020 operated by Holiday from our triple-net portfolio to our senior housing operating portfolio, partially offset by the$50.2 million impact of terminating the Holiday Lease. We will continue to try to collect rent on a contractual basis for the tenants where straight-line rent has been written off, but we have determined that collectability as not probable due to COVID-19.
The following table compares results of operations for our 371 same-store triple-net leased properties.
For the Nine Months Ended (Decrease) Increase
September 30, to Segment NOI
2020 2019 $ %
(Dollars in thousands)
$ 450,333 $ 515,788 $ (65,455) (12.7) % Less: Property-level operating expenses (15,226) (15,287) 61 0.4 Segment NOI$ 435,107 $ 500,501 (65,394) (13.1) nm - not meaningful The decrease in our same-store triple-net leased properties rental income for the nine months endedSeptember 30, 2020 over the same period in 2019 is attributable primarily to the COVID-19 related write-off of previously accrued straight-line rental income of$53.3 million during the second quarter of 2020, the additional write-off of previously accrued straight-line rental income during the third quarter of 2020 of$14.3 million and lower rental income from the Brookdale lease modification at the start of the third quarter of 2020, partially offset by rent increases due to contractual escalations pursuant to the terms of our leases. We will continue to try to collect rent on a contractual basis for the tenants where straight-line rent has been written off, but we have determined that collectability is not probable due to COVID-19.
Segment NOI-Senior Living Operations
The following table summarizes results of operations in our senior living
operations reportable business segment, including assets sold or classified as
held for sale as of
For the Nine Months Ended September Increase (Decrease)
30, to Segment NOI
2020 2019 $ %
(Dollars in thousands)
Segment NOI-Senior Living Operations:
Resident fees and services $ 1,667,421 $ 1,583,262 $ 84,159 5.3 %
Less: Property-level operating expenses (1,265,362) (1,115,834) (149,528) (13.4)
Segment NOI $ 402,059 $ 467,428 (65,369) (14.0)
Average Monthly Revenue Per
Average Unit Occupancy For the Nine Occupied Room For the Nine
Number of Properties at September 30, Months Ended September 30, Months Ended September 30,
2020 2019 2020 2019 2020 2019
Total communities 431
395 82.7 % 86.3 % $ 4,811 $ 5,665
The decrease in our senior living operations segment NOI was primarily
attributable to lower occupancy and increased operating costs resulting from the
COVID-19 pandemic. This is offset by the transition of 26 independent living
assets at the start of the second quarter 2020 operated by Holiday from our
triple-net portfolio to our senior housing operating portfolio and the third
quarter 2019 acquisition of 34 Canadian senior housing communities via an equity
partnership with Le Groupe Maurice .
--------------------------------------------------------------------------------The following table compares results of operations for our 336 same-store senior living operating communities.
For the Nine Months Ended September Decrease
30, to Segment NOI
2020 2019 $ %
(Dollars in thousands)
Same-Store Segment NOI-Senior Living Operations:
Resident fees and services $ 1,380,821 $ 1,483,433 $ (102,612) (6.9) %
Less: Property-level operating expenses (1,069,714) (1,030,446) (39,268) (3.8)
Segment NOI $ 311,107 $ 452,987 (141,880) (31.3)
Average Monthly Revenue Per
Average Unit Occupancy For the Nine Occupied Room For the Nine
Number of Properties at September 30, Months Ended September 30, Months Ended September 30,
2020 2019 2020 2019 2020 2019
Same-store communities 336
336 80.7 % 86.9 % $ 5,808 $ 5,800 The decrease in our same-store senior living operations segment NOI was primarily attributable to lower occupancy rates and increased operating costs resulting from the COVID-19 pandemic.
Segment NOI-Office Operations
The following table summarizes results of operations in our office operations reportable business segment, including assets sold or classified as held for sale as ofSeptember 30, 2020 . For the Nine Months Ended (Decrease) Increase September 30, to Segment NOI 2020 2019 $ % (Dollars in thousands) Segment NOI-Office Operations: Rental income$ 599,696 $ 618,555 $ (18,859) (3.0) % Office building services revenue 6,871 5,685 1,186 20.9 Total revenues 606,567 624,240 (17,673) (2.8)
Less:
Property-level operating expenses (192,192) (191,972) (220) (0.1) Office building services costs (1,827) (1,775) (52) (2.9) Segment NOI$ 412,548 $ 430,493 (17,945) (4.2) Annualized Average Rent Per Occupied Square Foot For the Nine Months Ended Number of Properties at September 30, Occupancy at September 30, September 30, 2020 2019 2020 2019 2020 2019 Total office buildings 377 384 89.9 % 90.1 %$ 33 $ 34 The decrease in our office operations segment NOI for the nine months endedSeptember 30, 2020 over the same period in 2019 is attributable primarily to assets sold to the Fund in the first quarter of 2020, lease termination fees received in 2019, and COVID-19 impacts including the write-off of previously accrued straight-line rental income during the third quarter of 2020 and reduced parking revenues, partially offset by active leasing at recently developed properties, continued tenant retention, contractual rent escalators, acquisitions and business interruption insurance proceeds. -------------------------------------------------------------------------------- The following table compares results of operations for our 358 same-store office buildings. For the Nine Months Ended Increase (Decrease) September 30, to Segment NOI 2020 2019 $ % (Dollars in thousands) Same-Store Segment NOI-Office Operations: Rental income$ 558,621 $ 550,760 $ 7,861 1.4 % Less: Property-level operating expenses (177,814) (173,658) (4,156) (2.4) Segment NOI$ 380,807 $ 377,102 3,705 1.0 Annualized Average Rent Per Occupied Square Foot For the Nine Months Ended Number of Properties at September 30, OccupancySeptember 30, September 30, 2020 2019 2020 2019 2020 2019 Same-store office buildings 358 358 91.3 % 90.9 %$ 33 $ 33 The increase in our same-store office operations segment NOI for the nine months endedSeptember 30, 2020 over the same period in 2019 is primarily due to strong tenant retention, contractual rent escalators and increasing occupancy, partially offset by COVID-19 impacts including the write-off of previously accrued straight-line rental income during the third quarter of 2020 and reduced parking revenues.
All Other
The$3.3 million decrease in all other segment NOI for the nine months endedSeptember 30, 2020 over the same period in 2019 is primarily due to reduced interest income from our loans receivable investments, partially offset by increased management fee revenues from investments in unconsolidated real estate entities. See "Note 5 - Loans Receivable And Investments" and "Note 6 - Investments In Unconsolidated Entities" of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Interest and Other Income The$3.1 million decrease in interest and other income for the nine months endedSeptember 30, 2020 over the same period in 2019 is primarily due to 2019 income from the exercise of warrants related to our research and innovation properties offset by a 2020 reduction of a liability related to an acquisition and interest income on short term investments. Interest Expense The$20.4 million increase in total interest expense for the nine months endedSeptember 30, 2020 over the same period in 2019 is primarily attributable to an increase of$55.7 million due to higher debt balances, partially offset by a decrease of$33.7 million due to a lower effective interest rate. Our weighted average effective interest rate was 3.5% and 3.9% for the nine months endedSeptember 30, 2020 and 2019, respectively. Capitalized interest for the nine months endedSeptember 30, 2020 and 2019 was$8.1 million and$5.7 million , respectively. Depreciation and Amortization The$151.1 million increase in depreciation and amortization expense during the nine months endedSeptember 30, 2020 compared to the same period in 2019, is primarily due to an increase in real estate impairments during 2020 and asset acquisitions, net of dispositions. See "COVID-19 Update" for information regarding 2020 impairment charges. Loss on Extinguishment of Debt, Net Loss on extinguishment of debt, net for the nine months endedSeptember 30, 2020 was due primarily to the notice of redemption of$236.3 million of our 3.25% senior notes due 2022. Loss on extinguishment of debt, net for the nine months endedSeptember 30, 2019 was due primarily to the$600 million redemption and repayment of our 4.25% senior notes due 2022. --------------------------------------------------------------------------------
Merger-Related Expenses and Deal Costs
The$15.0 million increase in merger-related expenses and deal costs for the nine months endedSeptember 30, 2020 over the same period in 2019 was due primarily to costs incurred as a result of the Brookdale transaction and 2020 expenses related to severance and operator transitions offset by 2019 expenses relating to operator transitions.
Other
The$19.9 million change in other for the nine months endedSeptember 30, 2020 over the same period in 2019 is primarily due to increased corporate-level insurance costs in 2020, the change in fair value of stock warrants received in connection with the Brookdale transaction, and insurance recoveries received in 2019 related to natural disasters.
Loss from Unconsolidated Entities
The$13.2 million increase in loss from unconsolidated entities for the nine months endedSeptember 30, 2020 over the same period in 2019 is due to an impairment of our investment in an unconsolidated operating entity and our share of operating results from our unconsolidated entities. See "COVID-19 Update" for information regarding 2020 impairment charges.
Gain on Real Estate Dispositions
The
The$38.9 million increase in income tax benefit related to continuing operations for the nine months endedSeptember 30, 2020 compared to the same period in 2019 is primarily due to a$152.9 million deferred tax benefit related to the internal restructuring of certain US taxable REIT subsidiaries completed within the first quarter of 2020, offset by changes in the valuation allowance against deferred tax assets of certain of our TRS entities. The benefit resulted from the transfer of assets subject to certain deferred tax liabilities from taxable REIT subsidiaries to the entities other than the TRS entities in this tax-free transaction.
Non-GAAP Financial Measures
We consider certain non-GAAP financial measures to be useful supplemental measures of our operating performance. A non-GAAP financial measure is a measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are not so excluded from or included in the most directly comparable measure calculated and presented in accordance withU.S. Generally Accepted Accounting Principles ("GAAP"). Described below are the non-GAAP financial measures used by management to evaluate our operating performance and that we consider most useful to investors, together with reconciliations of these measures to the most directly comparable GAAP measures. The non-GAAP financial measures we present in this Quarterly Report on Form 10-Q may not be comparable to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. You should not consider these measures as alternatives to net income attributable to common stockholders (determined in accordance with GAAP) as indicators of our financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of our liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. In order to facilitate a clear understanding of our consolidated historical operating results, you should examine these measures in conjunction with net income attributable to common stockholders as presented in our Consolidated Financial Statements and other financial data included elsewhere in this Quarterly Report on Form 10-Q. --------------------------------------------------------------------------------
Funds From Operations and Normalized Funds From Operations
Historical cost accounting for real estate assets implicitly assumes that the
value of real estate assets diminishes predictably over time. However, since
real estate values historically have risen or fallen with market conditions,
many industry investors deem presentations of operating results for real estate
companies that use historical cost accounting to be insufficient by themselves.
For that reason, we consider Funds From Operations ("FFO") and normalized FFO to
be appropriate supplemental measures of operating performance of an equity REIT.
In particular, we believe that normalized FFO is useful because it allows
investors, analysts and our management to compare our operating performance to
the operating performance of other real estate companies and between periods on
a consistent basis without having to account for differences caused by
non-recurring items and other non-operational events such as transactions and
litigation. In some cases, we provide information about identified non-cash
components of FFO and normalized FFO because it allows investors, analysts and
our management to assess the impact of those items on our financial results.
We use the National Association of Real Estate Investment Trusts ("Nareit")
definition of FFO. Nareit defines FFO as net income attributable to common
stockholders (computed in accordance with GAAP), excluding gains or losses from
sales of real estate property, including gains or losses on re-measurement of
equity method investments, and impairment write-downs of depreciable real
estate, plus real estate depreciation and amortization, and after adjustments
for unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures will be calculated to reflect FFO
on the same basis. We define normalized FFO as FFO excluding the following
income and expense items (which may be recurring in nature): (a) merger-related
costs and expenses, including amortization of intangibles, transition and
integration expenses, and deal costs and expenses, including expenses and
recoveries relating to acquisition lawsuits; (b) the impact of any expenses
related to asset impairment and valuation allowances, the write-off of
unamortized deferred financing fees, or additional costs, expenses, discounts,
make-whole payments, penalties or premiums incurred as a result of early
retirement or payment of our debt; (c) the non-cash effect of income tax
benefits or expenses, the non-cash impact of changes to our executive equity
compensation plan, derivative transactions that have non-cash mark-to-market
impacts on our Consolidated Statements of Income and non-cash charges related to
leases; (d) the financial impact of contingent consideration, severance-related
costs and charitable donations made to the Ventas Charitable Foundation ;
(e) gains and losses for non-operational foreign currency hedge agreements and
changes in the fair value of financial instruments; (f) gains and losses on
non-real estate dispositions and other unusual items related to unconsolidated
entities; (g) expenses related to the re-audit and re-review in 2014 of our
historical financial statements and related matters; (h) net expenses or
recoveries related to natural disasters and (i) any other incremental items set
forth in the normalized FFO reconciliation included herein.
53
--------------------------------------------------------------------------------
The following table summarizes our FFO and normalized FFO for the three and
nine months ended September 30, 2020 and 2019. The decrease in normalized FFO
for the nine months ended September 30, 2020 over the same period in 2019 is
principally due to the impact of COVID-19 on our senior housing business and
increases in interest expense from incremental borrowings arising as a
consequence of the impact of COVID-19, partially offset by the positive impact
of our third quarter 2019 acquisition of an interest in 34 Canadian senior
housing communities via an equity partnership with Le Groupe Maurice . See
"COVID-19 Update".
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
(In thousands)
Net income attributable to common stockholders $ 12,751
247,969 233,078 843,409 692,179
Real estate depreciation related to noncontrolling interests
(4,475) (2,496) (12,386) (6,080)
Real estate depreciation related to unconsolidated entities
1,360 (456) 3,228 (124)
Gain on real estate dispositions related to unconsolidated entities
- (67) - (868)
(Loss) gain on real estate dispositions related to noncontrolling interests
- - (9) 354
Gain on real estate dispositions (12,622) (36) (240,101) (24,633)
FFO attributable to common stockholders 244,983 315,282 922,839 1,082,401
Adjustments:
Change in fair value of financial instruments 1,157 (7) 1,134 (56) Non-cash income tax (benefit) expense (4,763) 946 (90,153) (60,248) Loss on extinguishment of debt, net 7,386 37,434 7,386 41,861 Gain on non-real estate dispositions related to unconsolidated entities (244) (34) (5) (37)
Merger-related expenses, deal costs and re-audit costs 12,793
4,726 28,171 13,119
Amortization of other intangibles 118 121 354 363
Other items related to unconsolidated entities 290 502 (848) 2,917
Non-cash impact of changes to equity plan (1,923) 1,729 1,635 6,647
Natural disaster expenses (recoveries), net 125 (101) 1,318 (14,979)
Impact of Holiday lease termination - - (50,184) -
Write-off of straightline rental income, net of
noncontrolling interests 18,408 - 70,776 -
Allowance on loan investments and impairment of
unconsolidated entities, net of noncontrolling interests 4,635 - 44,955 -
Normalized FFO attributable to common stockholders
54
--------------------------------------------------------------------------------Adjusted EBITDA
We consider Adjusted EBITDA an important supplemental measure because it
provides another manner in which to evaluate our operating performance and
serves as another indicator of our credit strength and our ability to service
our debt obligations. We define Adjusted EBITDA as consolidated earnings before
interest, taxes, depreciation and amortization (including non-cash stock-based
compensation expense, asset impairment and valuation allowances), excluding
gains or losses on extinguishment of debt, our consolidated joint venture
partners' share of EBITDA, merger-related expenses and deal costs, expenses
related to the re-audit and re-review in 2014 of our historical financial
statements, net gains or losses on real estate activity, gains or losses on
re-measurement of equity interest upon acquisition, changes in the fair value of
financial instruments, unrealized foreign currency gains or losses, net expenses
or recoveries related to natural disasters and non-cash charges related to
leases, and including our share of EBITDA from unconsolidated entities and
adjustments for other immaterial or identified items. The following table sets
forth a reconciliation of net (loss) income attributable to common stockholders
to Adjusted EBITDA:
For the Three Months Ended For the Nine Months Ended September
September 30, 30,
2020 2019 2020 2019
(In thousands)
Net income attributable to common stockholders $ 12,751
115,505 113,967 355,333 334,955
Loss on extinguishment of debt, net 7,386 37,434 7,386 41,861
Taxes (including tax amounts in general, administrative and professional fees)
(1,849) 3,080 (92,056) (54,218)
Depreciation and amortization 249,366 234,603 847,797 696,710
Non-cash stock-based compensation expense 5,765 8,195 17,322 26,670
Merger-related expenses, deal costs and re-audit costs 11,325
4,304 26,128 11,095
Net income attributable to noncontrolling interests, adjusted for consolidated joint venture partners' share of EBITDA
(6,359) (4,136) (18,096) (10,209)
Loss from unconsolidated entities, adjusted for Ventas share of EBITDA from unconsolidated entities
11,811 8,120 39,983 24,887
Gain on real estate dispositions (12,622) (36) (240,100) (24,633)
Unrealized foreign currency gains (146) (233) (152) (925)
Change in fair value of financial instruments 1,155 (14) 1,133 (81)
Natural disaster expenses (recoveries), net 181 (93) 1,162 (15,050)
Impact of Holiday lease termination - - (50,184) -
Write-off of straightline rental income, net of
noncontrolling interests 18,408 - 70,776 -
Allowance on loan investments and impairment of
unconsolidated entities, net of noncontrolling interests 4,635 - 44,955 -
Adjusted EBITDA $ 417,312 $ 490,450 $ 1,340,085 $ 1,452,635
55--------------------------------------------------------------------------------
NOI
We also consider NOI an important supplemental measure because it allows
investors, analysts and our management to assess our unlevered property-level
operating results and to compare our operating results with those of other real
estate companies and between periods on a consistent basis. We define NOI as
total revenues, less interest and other income, property-level operating
expenses and office building services costs. Cash receipts may differ due to
straight-line recognition of certain rental income and the application of other
GAAP policies. The following table sets forth a reconciliation of net income
attributable to common stockholders to NOI:
For the Three Months Ended For the Nine Months Ended September
September 30, 30,
2020 2019 2020 2019
(In thousands)
Net income attributable to common stockholders $ 12,751 $ 85,259 $ 328,698 $ 421,573
Adjustments:
Interest and other income (572) (620) (6,965) (10,109)
Interest 115,505 113,967 355,333 334,955
Depreciation and amortization 249,366 234,603 847,797 696,710
General, administrative and professional fees 34,228 40,530 106,747 124,369
Loss on extinguishment of debt, net 7,386 37,434 7,386 41,861
Merger-related expenses and deal costs 11,325 4,304 26,129 11,084
Allowance on loans receivable and investments 4,999 - 34,654 -
Other 3,534 2,164 10,624 (9,294)
Net income attributable to noncontrolling interests 986 1,659 534 4,831
(Income) loss from unconsolidated entities (865) (854) 15,861 2,621
Income tax (benefit) expense (3,195) 2,005 (95,855) (57,004)
Gain on real estate dispositions (12,622) (36) (240,101) (24,633)
NOI $ 422,826 $ 520,415 $ 1,390,842 $ 1,536,964
See "Results of Operations" for discussions regarding both segment NOI and
same-store segment NOI. We define same-store as properties owned, consolidated
and operational for the full period in both comparison periods and are not
otherwise excluded; provided, however, that we may include selected properties
that otherwise meet the same-store criteria if they are included in
substantially all of, but not a full, period for one or both of the comparison
periods, and in our judgment such inclusion provides a more meaningful
presentation of our portfolio performance. Newly acquired or recently developed
or redeveloped properties in our senior living operations segment will be
included in same-store once they are stabilized for the full period in both
periods presented. These properties are considered stabilized upon the earlier
of (a) the achievement of 80% sustained occupancy or (b) 24 months from the date
of acquisition or substantial completion of work. Recently developed or
redeveloped properties in our office operations and triple-net leased properties
segments will be included in same-store once substantial completion of work has
occurred for the full period in both periods presented. Our senior living
operations and triple-net leased properties that have undergone operator or
business model transitions will be included in same-store once operating under
consistent operating structures for the full period in both periods presented.
Properties are excluded from same-store if they are: (i) sold, classified as
held for sale or properties whose operations were classified as discontinued
operations in accordance with GAAP; (ii) impacted by materially disruptive
events such as flood or fire; (iii) those properties that are currently
undergoing a materially disruptive redevelopment; (iv) for our office
operations, those properties for which management has an intention to institute
a redevelopment plan because the properties may require major property-level
expenditures to maximize value, increase NOI, or maintain a market-competitive
position and/or achieve property stabilization; or (v) for the senior living
operations and triple-net leased segments, those properties that are scheduled
to undergo operator or business model transitions, or have transitioned
operators or business models after the start of the prior comparison period.
To eliminate the impact of exchange rate movements, all same-store NOI
measures assume constant exchange rates across comparable periods, using the
following methodology: the current period's results are shown in actual reported
USD, while prior comparison period's results are adjusted and converted to USD
based on the average exchange rate for the current period.
56
--------------------------------------------------------------------------------Liquidity and Capital Resources
During the nine months endedSeptember 30, 2020 , our principal sources of liquidity were cash flows from operations, proceeds from the issuance of debt securities, borrowings under our unsecured revolving credit facility, proceeds from asset sales and cash on hand. For the next 12 months, our principal liquidity needs are to: (i) fund operating expenses; (ii) meet our debt service requirements; (iii) repay maturing mortgage and other debt; (iv) fund acquisitions, investments and commitments and any development and redevelopment activities; (v) fund capital expenditures; and (vi) make distributions to our stockholders and unitholders, as required for us to continue to qualify as a REIT. Depending upon the availability of external capital, we believe our liquidity is sufficient to fund these uses of cash. We expect that these liquidity needs generally will be satisfied by a combination of the following: cash flows from operations, cash on hand, debt assumptions and financings (including secured financings), issuances of debt and equity securities, dispositions of assets (in whole or in part through joint venture arrangements with third parties) and borrowings under our revolving credit facilities and commercial paper program. However, an inability to access liquidity through multiple capital sources concurrently could have a Material Adverse Effect on us. In addition, while continuing decreased revenue and net operating income as a result of the COVID-19 pandemic could lead to downgrades of our long-term credit rating and therefore adversely impact our cost of borrowing, we currently believe we will continue to have access to one or more debt markets during the duration of the pandemic and could seek to enter into secured debt financings or issue debt and equity securities to satisfy our liquidity needs, although no assurances can be made in this regard. See "COVID-19 Update."
Recent Capital Conservation Actions
InSeptember 2020 , our Board of Directors declared a third quarter 2020 dividend of$0.45 per share, which was paid in October. This was consistent with the second quarter dividend, which was a reduction from the first quarter dividend of$0.7925 per share. This measure enabled us to conserve approximately$130 million of cash per quarter compared to the prior dividend level. Also, in June, we eliminated roles representing over 25% of our corporate positions, excluding onsite field personnel. For the second half of 2020, the base salaries of our CEO and other executive officers were voluntarily reduced by 20% and 10%, respectively. As a result of these capital conservation actions, our third quarter 2020 annualized general and administrative expenses are approximately$29 million lower than our reported general and administrative expenses for full-year 2019. See "Note 9 - Senior Notes Payable And Other Debt" of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information regarding our significant financing activities.
Credit Facilities, Commercial Paper and Unsecured Term Loans
Our unsecured credit facility is comprised of a$3.0 billion unsecured revolving credit facility priced at LIBOR plus 0.875%. The unsecured revolving credit facility matures inApril 2021 , but may be extended at our option subject to the satisfaction of certain conditions, including all representations and warranties being correct in all material respects with no existing defaults, for two additional periods of six months each, toApril 2022 . The unsecured revolving credit facility also includes an accordion feature that permits us to increase our aggregate borrowing capacity thereunder to up to$3.75 billion . Our wholly-owned subsidiary,Ventas Realty , may issue from time to time unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of$1.0 billion . The notes are sold under customary terms inthe United States commercial paper note market and are ranked pari passu with all ofVentas Realty's other unsecured senior indebtedness. The notes are fully and unconditionally guaranteed byVentas, Inc. As ofSeptember 30, 2020 , we had no borrowings outstanding under our commercial paper program. As ofSeptember 30, 2020 ,$41.5 million was outstanding under the unsecured revolving credit facility with an additional$24.9 million restricted to support outstanding letters of credit. In addition, we limit our utilization of the unsecured revolving credit facility, to the extent necessary, to support our commercial paper program when commercial paper notes are outstanding. We had$2.9 billion in available liquidity under the unsecured revolving credit facility as ofSeptember 30, 2020 .
As of
57
--------------------------------------------------------------------------------
As of
As ofSeptember 30, 2020 , we had a$400.0 million secured revolving construction credit facility with$164.6 million of borrowings outstanding. The secured revolving construction credit facility matures in 2022 and is primarily used to finance the development of research and innovation centers and other construction projects. Senior Notes
In
InOctober 2020 , we redeemed, pursuant to a cash tender offer,$236.3 million aggregate principal amount then outstanding of our 3.25% senior notes due 2022 at 104.14% of par value, plus accrued and unpaid interest to the payment date. Tender offer results were given inSeptember 2020 and, as a result, we recognized a non-cash charge to loss on extinguishment of debt of$7.4 million inSeptember 2020 and will recognize an additional loss of$3.5 million inOctober 2020 .
Equity Offerings
From time to time, we may sell up to an aggregate of$1.0 billion of our common stock under an "at-the-market" equity offering program ("ATM program"). During the nine months endedSeptember 30, 2020 , we sold 0.8 million shares of common stock under our ATM program for gross proceeds of$45.07 per share. As ofSeptember 30, 2020 ,$785.0 million of our common stock remained available for sale under our ATM program .
In
Derivatives and Hedging
In the normal course of our business, interest rate fluctuations affect future cash flows under our variable rate debt obligations, loans receivable and marketable debt securities, and foreign currency exchange rate fluctuations affect our operating results. We follow established risk management policies and procedures, including the use of derivative instruments, to mitigate the impact of these risks. Cash Flows
The following table sets forth our sources and uses of cash flows:
For the Nine Months Ended September
30, Increase (Decrease) to Cash
2020 2019 $ %
(Dollars in thousands)
Cash, cash equivalents and restricted cash at
beginning of period $ 146,102 $ 131,464 $ 14,638 11.1 %
Net cash provided by operating activities 1,154,413 1,083,548 70,865 6.5
Net cash provided by (used in) investing activities 186,625 (1,421,879)
1,608,504 nm
Net cash (used in) provided by financing activities (857,699)
415,067 (1,272,766) nm Effect of foreign currency translation (951) 396 (1,347) nm Cash, cash equivalents and restricted cash at end of period$ 628,490 $ 208,596 419,894 nm nm - not meaningful
Cash Flows from Operating Activities
Cash flows from operating activities increased$70.9 million during the nine months endedSeptember 30, 2020 over the same period in 2019 due primarily to an increase in accounts payable and other liabilities as a result of deferred revenue recorded in connection with the up-front consideration received with the Brookdale transaction, partially offset by lower NOI. 58 --------------------------------------------------------------------------------
Cash Flows from Investing Activities
Cash flows from investing activities increased$1.6 billion during the nine months endedSeptember 30, 2020 over the same period in 2019 primarily due to decreased acquisitions and investments activity in addition to increased proceeds from real estate dispositions.
Cash Flows from Financing Activities
Cash flows used in financing activities decreased$1.3 billion during the nine months endedSeptember 30, 2020 over the same period in 2019 primarily due to the issuance of common stock in 2019 and decreased debt borrowings during 2020, net of repayments. Capital Expenditures The terms of our triple-net leases generally obligate our tenants to pay all capital expenditures necessary to maintain and improve our triple-net leased properties. However, from time to time, we may fund the capital expenditures for our triple-net leased properties through loans or advances to the tenants, which may increase the amount of rent payable with respect to the properties in certain cases. We may also fund capital expenditures for which we may become responsible upon expiration of our triple-net leases or in the event that our tenants are unable or unwilling to meet their obligations under those leases. We also expect to fund capital expenditures related to our senior living operations and office operations reportable business segments with the cash flows from the properties or through additional borrowings. We expect that these liquidity needs generally will be satisfied by a combination of the following: cash flows from operations, cash on hand, debt assumptions and financings (including secured financings), issuances of debt and equity securities, dispositions of assets (in whole or in part through joint venture arrangements with third parties) and borrowings under our revolving credit facilities.
To the extent that unanticipated capital expenditure needs arise or significant borrowings are required, our liquidity may be affected adversely. Our ability to borrow additional funds may be restricted in certain circumstances by the terms of the instruments governing our outstanding indebtedness.
We are party to certain agreements that obligate us to develop senior housing or healthcare properties funded through capital that we and, in certain circumstances, our joint venture partners provide. As ofSeptember 30, 2020 , we had 19 properties under development pursuant to these agreements, including one property that is owned by an unconsolidated real estate entity. In addition, from time to time, we engage in redevelopment projects with respect to our existing senior housing communities to maximize the value, increase NOI, maintain a market-competitive position, achieve property stabilization or change the primary use of the property.
Guarantor and Issuer Financial Information
Ventas, Inc. has fully and unconditionally guaranteed the obligation to pay principal and interest with respect to the outstanding senior notes issued by our 100% owned subsidiary,Ventas Realty , including the senior notes that were jointly issued withVentas Capital Corporation .Ventas Capital Corporation is a direct 100% owned subsidiary ofVentas Realty that has no assets or operations, but was formed in 2002 solely to facilitate offerings of senior notes by a limited partnership. None of our other subsidiaries (excludingVentas Realty andVentas Capital Corporation ) is obligated with respect toVentas Realty's outstanding senior notes.Ventas, Inc. has also fully and unconditionally guaranteed the obligation to pay principal and interest with respect to the outstanding senior notes issued by our 100% owned subsidiary,Ventas Canada Finance Limited ("Ventas Canada"). None of our other subsidiaries is obligated with respect to Ventas Canada's outstanding senior notes, all of which were issued on a private placement basis inCanada . In connection with the acquisition ofNationwide Health Properties, Inc. ("NHP"), our 100% owned subsidiary,Nationwide Health Properties, LLC ("NHP LLC "), as successor to NHP, assumed the obligation to pay principal and interest with respect to the outstanding senior notes issued by NHP. Neither we nor any of our subsidiaries (other thanNHP LLC ) is obligated with respect to any ofNHP LLC's outstanding senior notes. Under certain circumstances, contractual and legal restrictions, including those contained in the instruments governing our subsidiaries' outstanding mortgage indebtedness, may restrict our ability to obtain cash from our subsidiaries for the purpose of meeting our debt service obligations, including our payment guarantees with respect toVentas Realty's and Ventas Canada's senior notes. 59 -------------------------------------------------------------------------------- The following summarizes our guarantor and issuer balance sheet and statement of income information as ofSeptember 30, 2020 andDecember 31, 2019 and for the three and nine months endedSeptember 30, 2020 and the year endedDecember 31, 2019 . Balance Sheet Information As of September 30, 2020 Guarantor Issuer (In thousands) Assets Investment in and advances to affiliates$ 16,288,715 $ 2,727,953 Total assets 16,895,222 2,846,246 Liabilities and equity Intercompany loans 10,550,563 (4,817,595) Total liabilities 10,764,265 3,527,320
Redeemable OP unitholder and noncontrolling interests 119,728
-
Total equity (deficit) 6,011,229
(681,073)
Total liabilities and equity 16,895,222 2,846,246
Balance Sheet Information
As of December 31, 2019
Guarantor Issuer
(In thousands)
Assets
Investment in and advances to affiliates $ 15,774,897 $ 2,728,110
Total assets 15,875,910 2,838,270
Liabilities and equity
Intercompany loans 8,789,600 (5,105,070)
Total liabilities 9,133,733 3,363,067Redeemable OP unitholder and noncontrolling interests 102,657
-
Total equity (deficit) 6,639,520
(524,797)
Total liabilities and equity 15,875,910 2,838,270
Statement of Income Information
For the
Nine Months Ended
Guarantor Issuer
(In thousands)
Equity earnings in affiliates $ 386,635 $ -
Total revenues 391,890 107,539
Income (loss) before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests
329,760 (163,747)
Net income (loss) 328,698 (151,106)
Net income (loss) attributable to common stockholders 328,698 (151,106)
60
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Statement of Income Information
For the
Year Ended
Guarantor Issuer
(In thousands)
Equity earnings in affiliates $ 362,143 $ -
Total revenues 366,243 142,754
Income (loss) before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests
432,020 (246,929) Net income (loss) 433,016 (246,841) Net income (loss) attributable to common stockholders 433,016 (246,841)
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