UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended March 31, ~~2021~~2022



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

For the transition period from to

Commission file number: 1-8923 (Welltower Inc.) 333-264093-01 (Welltower OP Inc.)

WELLTOWER INC.

WELLTOWER OP INC.

(Exact name of registrant as specified in its charter)

Delaware (Welltower Inc.)

34-1096634

Delaware (Welltower OP Inc.)

88-1538732

(State or other jurisdiction
of Incorporation)

(IRS Employer
Identification No.)

4500 Dorr Street

Toledo,

Ohio

43615

(Address of principal executive offices)

(Zip Code)

(419) -

247-2800

(~~Registrant’s~~Registrants' telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)


Securities registered pursuant to Section 12(b) of the Act
	Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Welltower Inc.	Common stock, $1.00 par value per share	WELL	New York Stock Exchange
Welltower OP Inc.	4.800% Notes due 2028	~~WELL28~~WELL/28	New York Stock Exchange
Welltower OP Inc.	4.500% Notes due 2034	~~WELL34~~WELL/34	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Welltower Inc. Yes þ No ¨

Welltower OP Inc. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Welltower Inc. Yes þ No ¨

Welltower OP Inc. Yes þ No ¨

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

Welltower Inc.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

~~(Do not check if a smaller reporting company)~~

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

Welltower OP Inc.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Welltower Inc. Yes ☐ No þ

AsWelltower OP Inc. Yes ☐ No þ

As of April ~~23, 2021, th~~29, 2022,~~e registrant h~~ Welltower Inc. ~~ad 417,520,500~~had ~~share~~453,967,774 shares of common stock outstanding.

EXPLANATORY NOTE

On March 7, 2022, Welltower Inc. issued a press release announcing that it intends to implement a corporate reorganization into an Umbrella Partnership Real Estate Investment Trust ("UPREIT"). Through March 31, 2022, the business of the registrant was conducted by an entity known as Welltower Inc., a Delaware corporation and real estate investment trust ("Old Welltower"). In February 2022, Old Welltower formed WELL Merger Holdco Inc., a Delaware corporation ("New Welltower"), as a wholly owned subsidiary and New Welltower formed WELL Merger Holdco Sub Inc., a Delaware corporation ("Merger Sub"), as a wholly owned subsidiary. On April 1, 2022, Merger Sub merged with and into Old Welltower, with Old Welltower continuing as the surviving corporation (the "Merger"). As a result, New Welltower became the publicly traded parent company of Old Welltower and Old Welltower's subsidiaries and inherited the name "Welltower Inc." In conjunction with the Merger, Old Welltower changed its name to "Welltower OP Inc." and, subject to approval of New Welltower's shareholders at the 2022 annual meeting, Old Welltower will convert to a Delaware limited liability company ("Welltower OP LLC"). At the effective time of the Merger, each outstanding capital share of Old Welltower was converted into one equivalent capital share of New Welltower. Following the UPREIT reorganization, Welltower Inc. expects its business to be conducted through Welltower OP LLC and does not expect to have substantial assets or liabilities, other than through its investment in Welltower OP LLC.

As a result of the Merger, New Welltower became the successor issuer to Old Welltower pursuant to Rule 12g-3(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as a result, New Welltower's common shares were deemed registered under Section 12(b) of the Exchange Act. This Quarterly Report on Form 10-Q pertains to the business and results of operations of Welltower OP Inc. (Old Welltower) for its quarter ended March 31, 2022, and all data, discussions or references to other periods prior to the effectiveness of the Merger pertain to Old Welltower. At the effective time of the Merger, both Old Welltower and New Welltower were, and remain, public registrants and New Welltower began to conducts its operations through Old Welltower. As such, we have elected to co-file this Quarterly Report on Form 10-Q to ensure continuity of information to investors. For additional information on our UPREIT reorganization, please see our Current Reports on Form 8-K filed on March 7, 2022 and April 1, 2022.

Throughout this Quarterly Report on Form 10-Q, unless the context requires otherwise, "the Company", "we", "us" and "our" refer to Welltower OP Inc. (Old Welltower) through March 31, 2022. Forward-looking references to dates and periods occurring after April 1, 2022 are references to Welltower Inc. (New Welltower).

TABLE OF CONTENTS


			~~Page~~
PART I. FINANCIAL INFORMATION			Page

Item 1. Financial Statements (Unaudited)			35

Consolidated Balance Sheets			35

Consolidated Statements of Comprehensive Income			46

Consolidated Statements of Equity			68

Consolidated Statements of Cash Flows			79

Notes to Unaudited Consolidated Financial Statements			810

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2629

Item 3. Quantitative and Qualitative Disclosures About Market Risk			4851

Item 4. Controls and Procedures			4952

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			5053

Item 1A. Risk Factors			5053

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			5053

Item 5. Other Information			5053

Item 6. Exhibits			5154

Signatures			5155

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS

WELLTOWER INC. AND SUBSIDIARIES

(In thousands)


		March 31, 2021 (Unaudited)		December 31, 2020 (Note)			March 31, 2022 (Unaudited)		December 31, 2021 (Note)
Assets:	Assets:					Assets:
Real estate investments:	Real estate investments:					Real estate investments:
Real property owned:	Real property owned:					Real property owned:
Land and land improvements	Land and land improvements	$	3,397,055	$	3,440,650	Land and land improvements	$	4,030,150	$	3,968,430
Buildings and improvements	Buildings and improvements	27,667,188		28,024,971		Buildings and improvements	31,724,328		31,062,203
Acquired lease intangibles	Acquired lease intangibles	1,506,823		1,500,030		Acquired lease intangibles	1,844,780		1,789,628
Real property held for sale, net of accumulated depreciation	Real property held for sale, net of accumulated depreciation	564,062		216,613		Real property held for sale, net of accumulated depreciation	199,490		134,097
Construction in progress	Construction in progress	542,302		487,742		Construction in progress	717,657		651,389
Less accumulated depreciation and amortization	Less accumulated depreciation and amortization	(6,212,432)		(6,104,297)		Less accumulated depreciation and amortization	(7,215,622)		(6,910,114)
Net real property owned	Net real property owned	27,464,998		27,565,709		Net real property owned	31,300,783		30,695,633
Right of use assets, net	Right of use assets, net	454,787		465,866		Right of use assets, net	404,689		522,796
Real estate loans receivable, net of credit allowance	Real estate loans receivable, net of credit allowance	487,674		443,372		Real estate loans receivable, net of credit allowance	1,003,136		1,068,681
Net real estate investments	Net real estate investments	28,407,459		28,474,947		Net real estate investments	32,708,608		32,287,110
Other assets:	Other assets:					Other assets:
Investments in unconsolidated entities	Investments in unconsolidated entities	1,020,010		946,234		Investments in unconsolidated entities	1,138,526		1,039,043
Goodwill	Goodwill	68,321		68,321		Goodwill	68,321		68,321
Cash and cash equivalents	Cash and cash equivalents	2,131,846		1,545,046		Cash and cash equivalents	301,089		269,265
Restricted cash	Restricted cash	426,976		475,997		Restricted cash	65,954		77,490
Straight-line rent receivable	Straight-line rent receivable	312,721		344,066		Straight-line rent receivable	385,639		365,643
Receivables and other assets	Receivables and other assets	624,918		629,031		Receivables and other assets	804,316		803,453
Total other assets	Total other assets	4,584,792		4,008,695		Total other assets	2,763,845		2,623,215
Total assets	Total assets	$	32,992,251	$	32,483,642	Total assets	$	35,472,453	$	34,910,325

Liabilities and equity	Liabilities and equity					Liabilities and equity
Liabilities:	Liabilities:					Liabilities:

Unsecured credit facility and commercial paper						Unsecured credit facility and commercial paper	$	299,968	$	324,935
Senior unsecured notes	Senior unsecured notes	$	12,183,710	$	11,420,790	Senior unsecured notes	12,136,760		11,613,758
Secured debt	Secured debt	2,329,474		2,377,930		Secured debt	2,104,945		2,192,261
Lease liabilities	Lease liabilities	408,916		418,266		Lease liabilities	548,999		545,944
Accrued expenses and other liabilities	Accrued expenses and other liabilities	1,023,219		1,041,594		Accrued expenses and other liabilities	1,203,755		1,235,554
Total liabilities	Total liabilities	15,945,319		15,258,580		Total liabilities	16,294,427		15,912,452
Redeemable noncontrolling interests	Redeemable noncontrolling interests	355,915		343,490		Redeemable noncontrolling interests	445,960		401,294
Equity:	Equity:					Equity:
Common stock	Common stock	418,866		418,691		Common stock	455,376		448,605
Capital in excess of par value	Capital in excess of par value	20,814,196		20,823,145		Capital in excess of par value	23,620,112		23,133,641
Treasury stock	Treasury stock	(106,519)		(104,490)		Treasury stock	(112,518)		(107,750)
Cumulative net income	Cumulative net income	8,399,144		8,327,598		Cumulative net income	8,725,661		8,663,736
Cumulative dividends	Cumulative dividends	(13,598,673)		(13,343,721)		Cumulative dividends	(14,654,583)		(14,380,915)
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(128,136)		(148,504)		Accumulated other comprehensive income (loss)	(138,472)		(121,316)
Total Welltower Inc. stockholders’ equity	Total Welltower Inc. stockholders’ equity	15,798,878		15,972,719		Total Welltower Inc. stockholders’ equity	17,895,576		17,636,001
Noncontrolling interests	Noncontrolling interests	892,139		908,853		Noncontrolling interests	836,490		960,578
Total equity	Total equity	16,691,017		16,881,572		Total equity	18,732,066		18,596,579
Total liabilities and equity	Total liabilities and equity	$	32,992,251	$	32,483,642	Total liabilities and equity	$	35,472,453	$	34,910,325

Note: The consolidated balance sheet at December 31, ~~2020~~2021 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

WELLTOWER INC. AND SUBSIDIARIES

(In thousands, except per share data)


		Three Months Ended				Three Months Ended
		March 31,				March 31,
		2021		2020				2022		2021
Revenues:	Revenues:						Revenues:
Resident fees and services	Resident fees and services	$	723,464	$	849,972		Resident fees and services	$	994,335	$	723,464
Rental income	Rental income	302,843		389,960			Rental income	356,390		302,843
Interest income	Interest income	19,579		15,241			Interest income	38,994		19,579
Other income	Other income	6,176		3,429			Other income	5,985		6,176
Total revenues	Total revenues	1,052,062		1,258,602			Total revenues	1,395,704		1,052,062

Expenses:	Expenses:						Expenses:
Property operating expenses	Property operating expenses	617,326		681,781			Property operating expenses	853,669		617,326
Depreciation and amortization	Depreciation and amortization	244,426		274,801			Depreciation and amortization	304,088		244,426
Interest expense	Interest expense	123,142		142,007			Interest expense	121,696		123,142
General and administrative expenses	General and administrative expenses	29,926		35,481			General and administrative expenses	37,706		29,926
Loss (gain) on derivatives and financial instruments, net	Loss (gain) on derivatives and financial instruments, net	1,934		7,651			Loss (gain) on derivatives and financial instruments, net	2,578		1,934
Loss (gain) on extinguishment of debt, net	Loss (gain) on extinguishment of debt, net	(4,643)		0			Loss (gain) on extinguishment of debt, net	(12)		(4,643)
Provision for loan losses		1,383		7,072
Provision for loan losses, net							Provision for loan losses, net	(804)		1,383
Impairment of assets	Impairment of assets	23,568		27,827			Impairment of assets	—		23,568
Other expenses	Other expenses	10,994		6,292			Other expenses	26,069		10,994
Total expenses	Total expenses	1,048,056		1,182,912			Total expenses	1,344,990		1,048,056

Income (loss) from continuing operations before income taxes and other items	Income (loss) from continuing operations before income taxes and other items	4,006		75,690			Income (loss) from continuing operations before income taxes and other items	50,714		4,006
Income tax (expense) benefit	Income tax (expense) benefit	(3,943)		(5,442)			Income tax (expense) benefit	(5,013)		(3,943)
Income (loss) from unconsolidated entities	Income (loss) from unconsolidated entities	13,049		(3,692)			Income (loss) from unconsolidated entities	(2,884)		13,049
Gain (loss) on real estate dispositions, net	Gain (loss) on real estate dispositions, net	59,080		262,824			Gain (loss) on real estate dispositions, net	22,934		59,080
Income (loss) from continuing operations	Income (loss) from continuing operations	72,192		329,380			Income (loss) from continuing operations	65,751		72,192

Net income	Net income	72,192		329,380			Net income	65,751		72,192
Less: Net income (loss) attributable to noncontrolling interests(1)	Less: Net income (loss) attributable to noncontrolling interests(1)	646		19,096			Less: Net income (loss) attributable to noncontrolling interests(1)	3,826		646
Net income (loss) attributable to common stockholders	Net income (loss) attributable to common stockholders	$	71,546	$	310,284		Net income (loss) attributable to common stockholders	$	61,925	$	71,546

Average number of common shares outstanding:
Weighted average number of common shares outstanding:							Weighted average number of common shares outstanding:
Basic	Basic	417,241		410,306			Basic	447,379		417,241
Diluted	Diluted	419,079		412,420			Diluted	449,802		419,079

Earnings per share:	Earnings per share:						Earnings per share:
Basic:	Basic:						Basic:
Income (loss) from continuing operations	Income (loss) from continuing operations	$	0.17	$	0.80		Income (loss) from continuing operations	$	0.15	$	0.17
Net income (loss) attributable to common stockholders	Net income (loss) attributable to common stockholders	$	0.17	$	0.76		Net income (loss) attributable to common stockholders	$	0.14	$	0.17

Diluted:	Diluted:						Diluted:
Income (loss) from continuing operations	Income (loss) from continuing operations	$	0.17	$	0.80		Income (loss) from continuing operations	$	0.15	$	0.17
Net income (loss) attributable to common stockholders(2)	Net income (loss) attributable to common stockholders(2)	$	0.17	$	0.75		Net income (loss) attributable to common stockholders(2)	$	0.14	$	0.17

Dividends declared and paid per common share	Dividends declared and paid per common share	$	0.61	$	0.87		Dividends declared and paid per common share	$	0.61	$	0.61

(1) Includes amounts attributable to redeemable noncontrolling interests.

(2) Includes adjustment to the numerator for income (loss) attributable to OP unitholders.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

WELLTOWER INC. AND SUBSIDIARIES

(In thousands)


		Three Months Ended				Three Months Ended
		March 31,				March 31,
		2021		2020				2022		2021
Net income	Net income	$	72,192	$	329,380		Net income	$	65,751	$	72,192

Other comprehensive income (loss):	Other comprehensive income (loss):						Other comprehensive income (loss):
Foreign currency translation gain (loss)	Foreign currency translation gain (loss)	44,210		(265,577)			Foreign currency translation gain (loss)	(66,948)		44,210
Derivative and financial instruments designated as hedges gain (loss)	Derivative and financial instruments designated as hedges gain (loss)	(20,037)		259,112			Derivative and financial instruments designated as hedges gain (loss)	51,940		(20,037)
Total other comprehensive income (loss)	Total other comprehensive income (loss)	24,173		(6,465)			Total other comprehensive income (loss)	(15,008)		24,173

Total comprehensive income (loss)	Total comprehensive income (loss)	96,365		322,915			Total comprehensive income (loss)	50,743		96,365
Less: Total comprehensive income (loss) attributable to noncontrolling interests(1)	Less: Total comprehensive income (loss) attributable to noncontrolling interests(1)	4,451		(3,313)			Less: Total comprehensive income (loss) attributable to noncontrolling interests(1)	5,974		4,451
Total comprehensive income (loss) attributable to common stockholders	Total comprehensive income (loss) attributable to common stockholders	$	91,914	$	326,228		Total comprehensive income (loss) attributable to common stockholders	$	44,769	$	91,914

(1) Includes amounts attributable to redeemable noncontrolling interests.	(1) Includes amounts attributable to redeemable noncontrolling interests.						(1) Includes amounts attributable to redeemable noncontrolling interests.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

WELLTOWER INC. AND SUBSIDIARIES

(In thousands)


		Three Months Ended March 31, 2021																	Three Months Ended March 31, 2022
		Common Stock		Capital in Excess of Par Value		Treasury Stock		Cumulative Net Income		Cumulative Dividends		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total			Common Stock		Capital in Excess of Par Value		Treasury Stock		Cumulative Net Income		Cumulative Dividends		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total
Balances at January 1, 2021		$	418,691	$	20,823,145	$	(104,490)	$	8,327,598	$	(13,343,721)	$	(148,504)	$	908,853	$	16,881,572
Balances at January 1, 2022																		Balances at January 1, 2022	$	448,605	$	23,133,641	$	(107,750)	$	8,663,736	$	(14,380,915)	$	(121,316)	$	960,578	$	18,596,579
Comprehensive income:	Comprehensive income:																	Comprehensive income:
Net income (loss)	Net income (loss)							71,546						(177)		71,369		Net income (loss)							61,925						2,752		64,677
Other comprehensive income (loss)	Other comprehensive income (loss)											20,368		3,729		24,097		Other comprehensive income (loss)											(17,156)		1,465		(15,691)
Total comprehensive income	Total comprehensive income															95,466		Total comprehensive income															48,986
Net change in noncontrolling interests	Net change in noncontrolling interests			(14,250)										(20,266)		(34,516)		Net change in noncontrolling interests			(63,026)										(128,305)		(191,331)
Amounts related to stock incentive plans, net of forfeitures	Amounts related to stock incentive plans, net of forfeitures	175		5,393		(2,029)										3,539		Amounts related to stock incentive plans, net of forfeitures	166		7,279		(4,768)										2,677
Net proceeds from issuance of common stock	Net proceeds from issuance of common stock	0		(92)												(92)		Net proceeds from issuance of common stock	6,605		542,218												548,823
Dividends paid:	Dividends paid:																	Dividends paid:
Common stock dividends	Common stock dividends									(254,952)						(254,952)		Common stock dividends									(273,668)						(273,668)
Balances at March 31, 2021		$	418,866	$	20,814,196	$	(106,519)	$	8,399,144	$	(13,598,673)	$	(128,136)	$	892,139	$	16,691,017
Balances at March 31, 2022																		Balances at March 31, 2022	$	455,376	$	23,620,112	$	(112,518)	$	8,725,661	$	(14,654,583)	$	(138,472)	$	836,490	$	18,732,066


		Three Months Ended March 31, 2020																	Three Months Ended March 31, 2021
		Common Stock		Capital in Excess of Par Value		Treasury Stock		Cumulative Net Income		Cumulative Dividends		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total			Common Stock		Capital in Excess of Par Value		Treasury Stock		Cumulative Net Income		Cumulative Dividends		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total
Balances at January 1, 2020		$	411,005	$	20,190,119	$	(78,955)	$	7,353,966	$	(12,223,534)	$	(112,157)	$	966,183	$	16,506,627
Cumulative change in accounting principle (Note 2)								(5,212)								(5,212)
Balances at January 1, 2020 (as adjusted for change in accounting principle)		411,005		20,190,119		(78,955)		7,348,754		(12,223,534)		(112,157)		966,183		16,501,415
Balances at January 1, 2021																		Balances at January 1, 2021	$	418,691	$	20,823,145	$	(104,490)	$	8,327,598	$	(13,343,721)	$	(148,504)	$	908,853	$	16,881,572
Comprehensive income:	Comprehensive income:																	Comprehensive income:
Net income (loss)	Net income (loss)							310,284						18,988		329,272		Net income (loss)							71,546						(177)		71,369
Other comprehensive income (loss)	Other comprehensive income (loss)											15,944		(21,955)		(6,011)		Other comprehensive income (loss)											20,368		3,729		24,097
Total comprehensive income	Total comprehensive income															323,261		Total comprehensive income															95,466
Net change in noncontrolling interests	Net change in noncontrolling interests			37,625										(29,662)		7,963		Net change in noncontrolling interests			(14,250)										(20,266)		(34,516)
Amounts related to stock incentive plans, net of forfeitures	Amounts related to stock incentive plans, net of forfeitures	246		6,608		(8,020)										(1,166)		Amounts related to stock incentive plans, net of forfeitures	175		5,393		(2,029)										3,539
Net proceeds from issuance of common stock	Net proceeds from issuance of common stock	6,975		583,890												590,865		Net proceeds from issuance of common stock	0		(92)												(92)

Dividends paid:	Dividends paid:																	Dividends paid:
Common stock dividends	Common stock dividends									(356,001)						(356,001)		Common stock dividends									(254,952)						(254,952)
Balances at March 31, 2020		$	418,226	$	20,818,242	$	(86,975)	$	7,659,038	$	(12,579,535)	$	(96,213)	$	933,554	$	17,066,337
Balances at March 31, 2021																		Balances at March 31, 2021	$	418,866	$	20,814,196	$	(106,519)	$	8,399,144	$	(13,598,673)	$	(128,136)	$	892,139	$	16,691,017

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

WELLTOWER INC. AND SUBSIDIARIES

(In thousands)


		Three Months Ended					Three Months Ended
		March 31,					March 31,
		2021		2020			2022		2021
Operating activities:	Operating activities:					Operating activities:
Net income	Net income	$	72,192	$	329,380	Net income	$	65,751	$	72,192
Adjustments to reconcile net income to net cash provided from (used in) operating activities:	Adjustments to reconcile net income to net cash provided from (used in) operating activities:					Adjustments to reconcile net income to net cash provided from (used in) operating activities:
Depreciation and amortization	Depreciation and amortization	244,426		274,801		Depreciation and amortization	304,088		244,426
Other amortization expenses	Other amortization expenses	4,197		3,220		Other amortization expenses	5,592		4,197
Provision for loan losses	Provision for loan losses	1,383		7,072		Provision for loan losses	(804)		1,383
Impairment of assets	Impairment of assets	23,568		27,827		Impairment of assets	—		23,568
Stock-based compensation expense	Stock-based compensation expense	5,576		7,083		Stock-based compensation expense	7,445		5,576
Loss (gain) on derivatives and financial instruments, net	Loss (gain) on derivatives and financial instruments, net	1,934		7,651		Loss (gain) on derivatives and financial instruments, net	2,578		1,934
Loss (gain) on extinguishment of debt, net	Loss (gain) on extinguishment of debt, net	(4,643)		0		Loss (gain) on extinguishment of debt, net	(12)		(4,643)
Loss (income) from unconsolidated entities	Loss (income) from unconsolidated entities	(13,049)		3,692		Loss (income) from unconsolidated entities	2,884		(13,049)
Rental income less than (in excess of) cash received	Rental income less than (in excess of) cash received	30,563		(2,119)		Rental income less than (in excess of) cash received	(22,215)		30,563
Amortization related to above (below) market leases, net	Amortization related to above (below) market leases, net	(460)		(565)		Amortization related to above (below) market leases, net	(419)		(460)
Loss (gain) on real estate dispositions, net	Loss (gain) on real estate dispositions, net	(59,080)		(262,824)		Loss (gain) on real estate dispositions, net	(22,934)		(59,080)
Distributions by unconsolidated entities	Distributions by unconsolidated entities	3,036		3,385		Distributions by unconsolidated entities	6,982		3,036
Increase (decrease) in accrued expenses and other liabilities	Increase (decrease) in accrued expenses and other liabilities	(4,406)		(30,030)		Increase (decrease) in accrued expenses and other liabilities	(23,416)		(4,406)
Decrease (increase) in receivables and other assets	Decrease (increase) in receivables and other assets	(1,579)		43,284		Decrease (increase) in receivables and other assets	(1,000)		(1,579)
Net cash provided from (used in) operating activities	Net cash provided from (used in) operating activities	303,658		411,857		Net cash provided from (used in) operating activities	324,520		303,658

Investing activities:	Investing activities:					Investing activities:
Cash disbursed for acquisitions, net of cash acquired	Cash disbursed for acquisitions, net of cash acquired	(203,107)		(390,802)		Cash disbursed for acquisitions, net of cash acquired	(601,410)		(203,107)
Cash disbursed for capital improvements to existing properties	Cash disbursed for capital improvements to existing properties	(28,780)		(69,382)		Cash disbursed for capital improvements to existing properties	(90,229)		(28,780)
Cash disbursed for construction in progress	Cash disbursed for construction in progress	(73,605)		(48,775)		Cash disbursed for construction in progress	(138,141)		(73,605)
Capitalized interest	Capitalized interest	(4,496)		(4,746)		Capitalized interest	(5,479)		(4,496)
Investment in loans receivable	Investment in loans receivable	(43,148)		(10,441)		Investment in loans receivable	(39,201)		(43,148)
Principal collected on loans receivable	Principal collected on loans receivable	2,852		10,045		Principal collected on loans receivable	89,207		2,852
Other investments, net of payments	Other investments, net of payments	664		(3,612)		Other investments, net of payments	2,401		664
Contributions to unconsolidated entities	Contributions to unconsolidated entities	(94,095)		(137,129)		Contributions to unconsolidated entities	(115,249)		(94,095)
Distributions by unconsolidated entities	Distributions by unconsolidated entities	36,934		3,555		Distributions by unconsolidated entities	5,882		36,934
Proceeds from (payments on) derivatives	Proceeds from (payments on) derivatives	(6,567)		(357)		Proceeds from (payments on) derivatives	10,104		(6,567)
Proceeds from sales of real property	Proceeds from sales of real property	274,208		801,392		Proceeds from sales of real property	73,568		274,208
Net cash provided from (used in) investing activities	Net cash provided from (used in) investing activities	(139,140)		149,748		Net cash provided from (used in) investing activities	(808,547)		(139,140)

Financing activities:	Financing activities:					Financing activities:
Net increase (decrease) under unsecured credit facility and commercial paper	Net increase (decrease) under unsecured credit facility and commercial paper	0		(742,612)		Net increase (decrease) under unsecured credit facility and commercial paper	(24,967)		—
Net proceeds from issuance of senior unsecured notes	Net proceeds from issuance of senior unsecured notes	713,907		0		Net proceeds from issuance of senior unsecured notes	545,082		713,907

Net proceeds from the issuance of secured debt	Net proceeds from the issuance of secured debt	0		44,921		Net proceeds from the issuance of secured debt	5,385		—
Payments on secured debt	Payments on secured debt	(57,888)		(31,566)		Payments on secured debt	(116,789)		(57,888)
Net proceeds from the issuance of common stock	Net proceeds from the issuance of common stock	0		591,001		Net proceeds from the issuance of common stock	549,346		—

Payments for deferred financing costs and prepayment penalties	Payments for deferred financing costs and prepayment penalties	(1,221)		(722)		Payments for deferred financing costs and prepayment penalties	(69)		(1,221)
Contributions by noncontrolling interests(1)	Contributions by noncontrolling interests(1)	5,073		9,084		Contributions by noncontrolling interests(1)	4,101		5,073
Distributions to noncontrolling interests(1)	Distributions to noncontrolling interests(1)	(30,117)		(50,124)		Distributions to noncontrolling interests(1)	(177,979)		(30,117)

Cash distributions to stockholders	Cash distributions to stockholders	(254,915)		(354,678)		Cash distributions to stockholders	(273,045)		(254,915)
Other financing activities	Other financing activities	(2,936)		(9,599)		Other financing activities	(5,960)		(2,936)
Net cash provided from (used in) financing activities	Net cash provided from (used in) financing activities	371,903		(544,295)		Net cash provided from (used in) financing activities	505,105		371,903
Effect of foreign currency translation on cash and cash equivalents and restricted cash	Effect of foreign currency translation on cash and cash equivalents and restricted cash	1,358		(10,010)		Effect of foreign currency translation on cash and cash equivalents and restricted cash	(790)		1,358
Increase (decrease) in cash, cash equivalents and restricted cash	Increase (decrease) in cash, cash equivalents and restricted cash	537,779		7,300		Increase (decrease) in cash, cash equivalents and restricted cash	20,288		537,779
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	2,021,043		385,766		Cash, cash equivalents and restricted cash at beginning of period	346,755		2,021,043
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	2,558,822	$	393,066	Cash, cash equivalents and restricted cash at end of period	$	367,043	$	2,558,822

Supplemental cash flow information:	Supplemental cash flow information:					Supplemental cash flow information:
Interest paid	Interest paid	$	135,947	$	140,216	Interest paid	$	123,012	$	135,947
Income taxes paid (received), net	Income taxes paid (received), net	(852)		471		Income taxes paid (received), net	631		(852)

(1) Includes amounts attributable to redeemable noncontrolling interests.	(1) Includes amounts attributable to redeemable noncontrolling interests.					(1) Includes amounts attributable to redeemable noncontrolling interests.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Business

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

On March 7, 2022, we announced our intent to complete an UPREIT reorganization. In February 2022, the company formerly known as Welltower Inc. ("Old Welltower") formed WELL Merger Holdco Inc. ("New Welltower") as a wholly owned subsidiary, and New Welltower formed WELL Merger Holdco Sub Inc. ("Merger Sub") as a wholly owned subsidiary. On April 1, 2022, Merger Sub merged with and into Old Welltower, with Old Welltower continuing as the surviving corporation and a wholly owned subsidiary of New Welltower (the "Merger"). In connection with the Merger, Old Welltower's name was changed to "Welltower OP Inc.", and New Welltower inherited the name "Welltower Inc." This Quarterly Report on Form 10-Q pertains to the business and results of Old Welltower for its quarter ended March 31, 2022. Forward-looking references to dates and periods occurring after April 1, 2022 are references to Welltower Inc. (New Welltower). We have elected to co-file this report to ensure continuity of information to investors. For additional information on the UPREIT reorganization, please see our Current Reports on Form 8-K filed with the SEC on March 7, 2022 and April 1, 2022.

2. Accounting Policies and Related Matters

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (such as normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, ~~2021~~2022 are not necessarily an indication of the results that may be expected for the year ending December 31, ~~2021.~~2022. For further information, refer to the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Impact of COVID-19 Pandemic

The extent to which the COVID-19 pandemic impacts our operations and those of our operators and tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, ~~and~~ the direct and indirect economic effects of the pandemic and containment measures, the impact of new variants, the effectiveness of vaccines, the overall pace of recovery, among others. The COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations and cash flows in the ~~future, including but not limited to, the following:~~future.

•Our Seniors Housing Operating revenues are dependent on ~~occupancy. Spot~~ occupancy, which has ~~continued to decline since the beginning of the pandemic, dropping to 73.6% as~~steadily increased in recent months. As of March 31, ~~2021 compared to 75.9% as of December 31, 2020. Approximately 99% of~~2022, nearly all communities are ~~currently accepting~~open for new ~~residents, resulting in an acceleration in move-in activity~~ admissions and ~~an increase in~~allowing visitors, in-person tours and communal dining and activities. Average occupancy ~~of approximately 60 basis points~~increased from ~~a pandemic-low on March 12, 2021~~73.0% to ~~73.8% on April 23, 2021. Additionally, rapid distribution and a high acceptance rate of COVID-19 vaccinations by residents within assisted living and memory care facilities in~~77.5% for the ~~U.S. and U.K. has resulted in a significant decrease in total resident case counts since mid-January 2021 across the portfolio.~~ ~~Spot occupancy rates from the start of the pandemic through~~three months ended March 31, 2022 and 2021, ~~are as follows:~~

February 2020 December 2020 January 2021 February 2021 March 2021
Spot occupancy (1)
85.4 % 75.9 % 74.4 % 73.6 % 73.6 %
Sequential occupancy change (1.5) % (0.8) % 0 %

~~(1)~~ ~~Spot occupancy represents approximate month end~~respectively. Occupancy metrics represent occupancy at our share for 543 properties in operation as of ~~February 29,~~December 31, 2020, including unconsolidated properties but excluding acquisitions, executed dispositions, ~~and~~ development conversions ~~since this date.~~and 4 closed properties.

~~Increased Seniors Housing Operating expenses are expected to continue until the pandemic subsides.~~ Property-level operating expenses associated with the COVID-19 pandemic ~~relating~~related to our Seniors Housing Operating portfolio ~~net of reimbursements including Provider Relief Funds~~totaled $11,003,000 and ~~similar programs in the U.K. and Canada, resulted in a benefit of approximately $21,204,000~~$27,976,000 for the three months ended March 31, 2022 and 2021, ~~as compared to an expense of $7,294,000 during the three months ended March 31, 2020.~~ respectively. These expenses were incurred as a result ~~of the introduction~~ of public health measures and other regulations affecting our properties, as well as additional health and safety measures adopted by us and our operators related to the COVID-19 pandemic, including increases in labor and property cleaning expenses and expenditures related to our efforts to procure personal protective equipment ~~("PPE")~~ and supplies, net of reimbursements. ~~Certain new~~We expect total Seniors Housing Operating expenses ~~incurred since the start of~~to remain elevated during the pandemic ~~may continue on an ongoing basis~~and potentially beyond as ~~part of new~~these additional health and safety ~~protocols.~~measures become standard practice.

In ~~2020 applications were made for amounts under Phase 2~~2021 and ~~Phase 3 of the Provider Relief Fund related to our Seniors Housing Operating portfolio. During the first quarter,~~2022, we received ~~total Provider Relief Funds~~government grants under the CARES Act primarily to cover increased expenses and lost revenue during the COVID-19 pandemic, as well as under similar programs in the U.K. and Canada. For the three months ended March 31, 2022 and 2021, we recognized $5,760,000 and $49,180,000, respectively, of ~~approximately $35,682,000, which was recognized~~government grant income as a reduction to ~~COVID-19 costs within~~ property operating ~~expenses.~~expenses in our Consolidated Statements of Comprehensive Income.

810

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

•Our Triple-net operators ~~are experiencing~~have experienced similar occupancy declines and operating costs as ~~described above with respect to~~ our Seniors Housing Operating properties. Additionally, long-term/post-acute care facilities are generally experiencing a higher degree of occupancy declines. These factors may continue to impact the ability of our Triple-net operators to make contractual rent payments to us in the future. Many of our Triple-net operators received funds under the ~~Coronavirus Aid Relief and Economic Security~~CARES Act ~~(“CARES Act”)~~ Paycheck Protection ~~Program. In addition, operators of long-term/post-acute care facilities have generally received funds from Phase 1 of the~~Program and Provider Relief ~~Fund and operators of assisted living facilities have generally received funds from Phases 2 and 3 of the Provider Relief~~ Fund.

During the first quarter, we collected approximately 96% of rent due from operators under Triple-net lease agreements (primarily seniors housing and post-acute care facilities). No significant rent deferrals or rent concessions have been made. In the Outpatient Medical segment we collected 99% of rent due in the first quarter, with uncollected amounts primarily attributable to local jurisdictions with COVID-19 related ordinances providing temporary rent relief to tenants. Virtually all rent subject to approved deferral agreements has been repaid in full. For both our Triple-net operators and Outpatient Medical tenants, we evaluate leases individually and recognize rent on a cash basis if collectibility of substantially all contractual rent payments is not probable. To the extent the prolonged impact of the COVID-19 pandemic causes operators or tenants to seek further modifications of their lease agreements, we may recognize reductions in revenue and increases in uncollectible receivables.

New Accounting Standards

•In August 2020, the FASB issued ASU 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) Accounting for Convertible Instruments and Contracts in an Entity’s Own ~~Equity”.~~Equity.” This ASU simplifies accounting for convertible instruments and removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception. This ASU also simplifies the diluted earnings per share calculation in certain areas and provides updated disclosure requirements. The ASU is effective for public business entities beginning after December 15, 2021 including interim periods within those fiscal years. ~~Early~~The adoption ~~is permitted. We are currently evaluating the guidance and the~~of this standard did not have a significant impact ~~it may have~~ on our consolidated financial statements.

•In March 2020, the FASB issued an amendment to the reference rate reform standard, which provides the option for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on contract modifications and hedge accounting. An example of such reform is the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. Entities that make this optional expedient election would not have to remeasure the contracts at the modification date or reassess the accounting treatment if certain criteria are met and would continue applying hedge accounting for relationships affected by reference rate reform. The new standard was effective for us upon issuance and elections can be made through December 31, 2022. We are currently evaluating our options with regards to existing contracts and hedging relationships and the impact of adopting this update on our consolidated financial statements.

3. Real Property Acquisitions and Development

The total purchase price for all properties acquired has been allocated to the tangible and identifiable intangible assets and liabilities at cost on a relative fair value basis. Liabilities assumed and any associated noncontrolling interests are reflected at fair value. The results of operations for these acquisitions have been included in our consolidated results of operations since the date of acquisition and are a component of the appropriate segments. Transaction costs primarily represent costs incurred with acquisitions, including due diligence costs, fees for legal and valuation services, termination of pre-existing relationships computed based on the fair value of the assets acquired, lease termination fees and other acquisition-related costs. Transaction costs related to asset acquisitions are capitalized as a component of purchase price and all other non-capitalizable costs are reflected in other expenses on our Consolidated Statements of Comprehensive Income.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

~~WELLTOWER INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~


		Three Months Ended																	Three Months Ended
		March 31, 2021								March 31, 2020									March 31, 2022								March 31, 2021
		Seniors Housing Operating		Triple-net		Outpatient Medical		Totals		Seniors Housing Operating		Triple-net		Outpatient Medical		Totals			Seniors Housing Operating		Triple-net		Outpatient Medical		Totals		Seniors Housing Operating		Triple-net		Outpatient Medical		Totals
Land and land improvements	Land and land improvements	$	1,240	$	24,154	$	2,273	$	27,667	$	15,758	$	0	$	40,847	$	56,605	Land and land improvements	$	43,897	$	—	$	240	$	44,137	$	1,240	$	24,154	$	2,273	$	27,667
Buildings and improvements	Buildings and improvements	3,491		170,362		10,570		184,423		132,480		765		171,457		304,702		Buildings and improvements	402,342		171		131,412		533,925		3,491		170,362		10,570		184,423
Acquired lease intangibles	Acquired lease intangibles	339		0		1,439		1,778		10,810		0		23,823		34,633		Acquired lease intangibles	31,366		—		16,978		48,344		339		—		1,439		1,778

Right of use assets, net																		Right of use assets, net	—		—		3,852		3,852		—		—		—		—
Total net real estate assets																		Total net real estate assets	477,605		171		152,482		630,258		5,070		194,516		14,282		213,868
Receivables and other assets	Receivables and other assets	34		0		0		34		257		0		139		396		Receivables and other assets	1,630		—		—		1,630		34		—		—		34
Total assets acquired ~~(1)~~	Total assets acquired ~~(1)~~	5,104		194,516		14,282		213,902		159,305		765		236,266		396,336		Total assets acquired ~~(1)~~	479,235		171		152,482		631,888		5,104		194,516		14,282		213,902

Lease liabilities																		Lease liabilities	—		—		(3,852)		(3,852)		—		—		—		—
Accrued expenses and other liabilities	Accrued expenses and other liabilities	0		(8,703)		(36)		(8,739)		(671)		0		(2,036)		(2,707)		Accrued expenses and other liabilities	(4,154)		—		—		(4,154)		—		(8,703)		(36)		(8,739)
Total liabilities acquired	Total liabilities acquired	0		(8,703)		(36)		(8,739)		(671)		0		(2,036)		(2,707)		Total liabilities acquired	(4,154)		—		(3,852)		(8,006)		—		(8,703)		(36)		(8,739)
Noncontrolling interests ~~(2)~~(1)	Noncontrolling interests ~~(2)~~(1)	0		(2,056)		0		(2,056)		(2,827)		0		0		(2,827)		Noncontrolling interests ~~(2)~~(1)	(20,348)		(4)		—		(20,352)		—		(2,056)		—		(2,056)

Non-cash acquisition related activity(2)																		Non-cash acquisition related activity(2)	(2,120)		—		—		(2,120)		—		—		—		—
Cash disbursed for acquisitions	Cash disbursed for acquisitions	5,104		183,757		14,246		203,107		155,807		765		234,230		390,802		Cash disbursed for acquisitions	452,613		167		148,630		601,410		5,104		183,757		14,246		203,107
Construction in progress additions	Construction in progress additions	38,373		31,809		7,601		77,783		29,841		13,929		13,645		57,415		Construction in progress additions	113,407		20,756		9,642		143,805		38,373		31,809		7,601		77,783
Less: Capitalized interest	Less: Capitalized interest	(2,980)		(524)		(992)		(4,496)		(2,812)		(941)		(993)		(4,746)		Less: Capitalized interest	(4,179)		(1,089)		(211)		(5,479)		(2,980)		(524)		(992)		(4,496)
Accruals (3)	Accruals (3)	7		0		311		318		(2,600)		0		(1,294)		(3,894)		Accruals (3)	(1,963)		—		1,778		(185)		7		—		311		318
Cash disbursed for construction in progress	Cash disbursed for construction in progress	35,400		31,285		6,920		73,605		24,429		12,988		11,358		48,775		Cash disbursed for construction in progress	107,265		19,667		11,209		138,141		35,400		31,285		6,920		73,605
Capital improvements to existing properties	Capital improvements to existing properties	(3,159)		25,295		6,644		28,780		52,503		3,248		13,631		69,382		Capital improvements to existing properties	68,612		8,294		13,323		90,229		(3,159)		25,295		6,644		28,780
Total cash invested in real property, net of cash acquired	Total cash invested in real property, net of cash acquired	$	37,345	$	240,337	$	27,810	$	305,492	$	232,739	$	17,001	$	259,219	$	508,959	Total cash invested in real property, net of cash acquired	$	628,490	$	28,128	$	173,162	$	829,780	$	37,345	$	240,337	$	27,810	$	305,492

(1) ~~Excludes $580,000 of unrestricted and restricted cash acquired during the three months ended March 31, 2020.~~

~~(2)~~ Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests.

(2) Relates to the acquisition of assets previously recognized as investments in unconsolidated entities.

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

Effective on April 1, 2022, our leasehold interest relating to the master lease with National Health Investors, Inc. (“NHI”) for 17 properties assumed in conjunction with the Holiday Retirement acquisition was terminated as a result of the transition or sale of the properties by NHI. The lease termination was part of an agreement to resolve outstanding litigation with NHI. In conjunction with the agreement, a wholly owned subsidiary and the lessee on the master lease agreed to release $6,883,000 of cash to the landlord, which represents the net cash flow generated from the properties since we assumed the leasehold interest. As of March 31, 2022, a right of use asset of $77,080,000 and a related lease liability of $135,701,000 were recorded on the Consolidated Balance Sheet.

Construction Activity

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


		Three Months Ended					Three Months Ended
		March 31, 2021		March 31, 2020			March 31, 2022		March 31, 2021
Development projects:	Development projects:					Development projects:
Seniors Housing Operating	Seniors Housing Operating	$	0	$	93,188	Seniors Housing Operating	$	73,458	$	—
Triple-net	Triple-net	22,990		0		Triple-net	—		22,990
Outpatient Medical		0		19,369

Total construction in progress conversions	Total construction in progress conversions	$	22,990	$	112,557	Total construction in progress conversions	$	73,458	$	22,990

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

4. Real Estate Intangibles

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

March 31, 2021 December 31, 2020
Assets:
In place lease intangibles $ 1,411,060 $ 1,406,705
Above market tenant leases 53,066 52,621
Lease commissions 42,697 40,704
Gross historical cost 1,506,823 1,500,030
Accumulated amortization (1,204,529) (1,177,513)
Net book value $ 302,294 $ 322,517
Weighted-average amortization period in years 10.7 10.5
Liabilities:
Below market tenant leases $ 75,451 $ 77,851
Accumulated amortization (40,542) (40,871)
Net book value $ 34,909 $ 36,980
Weighted-average amortization period in years 8.2 8.3

~~WELLTOWER INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~


	March 31, 2022		December 31, 2021
Assets:
In place lease intangibles	$	1,732,980	$	1,681,533
Above market tenant leases	53,988		53,964
Lease commissions	57,812		54,131
Gross historical cost	1,844,780		1,789,628
Accumulated amortization	(1,338,046)		(1,286,259)
Net book value	$	506,734	$	503,369

Weighted-average amortization period in years	7.2		5.5

Liabilities:
Below market tenant leases	$	74,910	$	74,909
Accumulated amortization	(47,174)		(45,291)
Net book value	$	27,736	$	29,618

Weighted-average amortization period in years	8.3		8.2

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


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Rental income related to (above)/below market tenant leases, net	Rental income related to (above)/below market tenant leases, net	$	425	$	524		Rental income related to (above)/below market tenant leases, net	$	385	$	425
Amortization related to in place lease intangibles and lease commissions	Amortization related to in place lease intangibles and lease commissions	(22,779)		(35,976)			Amortization related to in place lease intangibles and lease commissions	(47,994)		(22,779)

The future estimated aggregate amortization of intangible assets and liabilities is as follows for the periods presented (in thousands):


		Assets		Liabilities			Assets		Liabilities
2021		$	55,162	$	5,945
2022	2022	44,266		7,304		2022	$	138,363	$	5,482
2023	2023	34,588		5,153		2023	132,163		5,262
2024	2024	26,981		3,047		2024	63,179		3,117
2025	2025	21,712		2,482		2025	26,311		2,588
2026						2026	22,718		2,077
Thereafter	Thereafter	119,585		10,978		Thereafter	124,000		9,210
Total	Total	$	302,294	$	34,909	Total	$	506,734	$	27,736

5. Dispositions, Real Property Held for Sale and Impairment

We periodically sell properties for various reasons, including favorable market conditions, the exercise of tenant purchase options or reduction of concentrations (i.e., property type, relationship or geography). At March 31, ~~2021,~~2022, 3 Seniors Housing Operating, 6111 Triple-net, and 1 Outpatient Medical properties with an aggregate real estate balance of ~~$564,062,000~~$199,490,000 were classified as held for sale. In addition to the real property balances held for sale, lease liabilities of $66,893,000 and net other assets and (liabilities) of ~~$37,389,000~~$2,462,000 are included in the Consolidated Balance ~~Sheet~~Sheets related to the held for sale properties. Expected gross sales proceeds related to the held for sale properties is approximately ~~$716,835,000.~~$273,165,000.

During the three months ended March 31, 2021, we recorded $12,098,000 of impairment charges related to 1 Triple-net property ~~which was~~ classified as held for sale for which the carrying value exceeded the estimated fair value less cost to sell. Additionally, during the three months ended March 31, 2021, we recorded $11,470,000 of impairment charges related to 1 Seniors Housing Operating property and 2 Triple-net properties that were held for use in which the carrying value exceeded the estimated fair value. During the three months ended March 31, 2020, we recorded $3,495,000 of impairment charges related to 1 Seniors Housing Operating property which was classified as held for sale for which the carrying value exceeded the estimated fair value less cost to sell. Additionally, during the three months ended March 31, 2020, we recorded $24,332,000 of impairment charges related to 2 Triple-net properties that were held for use in which the carrying value exceeded the estimated fair value.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
Real estate dispositions:	Real estate dispositions:					Real estate dispositions:
Seniors Housing Operating	Seniors Housing Operating	$	74,326	$	0	Seniors Housing Operating	$	—	$	74,326
Triple-net	Triple-net	0		33,445		Triple-net	52,661		—
Outpatient Medical	Outpatient Medical	137,890		495,003		Outpatient Medical	—		137,890
Total dispositions	Total dispositions	212,216		528,448		Total dispositions	52,661		212,216
Gain (loss) on real estate dispositions, net	Gain (loss) on real estate dispositions, net	59,080		262,824		Gain (loss) on real estate dispositions, net	22,934		59,080
Net other assets/liabilities disposed		2,912		10,120
Net other assets/(liabilities) disposed						Net other assets/(liabilities) disposed	(2,027)		2,912
Proceeds from real estate dispositions	Proceeds from real estate dispositions	$	274,208	$	801,392	Proceeds from real estate dispositions	$	73,568	$	274,208

Operating results attributable to properties sold or classified as held for sale, which do not meet the definition of discontinued operations are not reclassified on our Consolidated Statements of Comprehensive Income. The following represents the activity related to these properties for the periods presented (in thousands):

~~WELLTOWER INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Revenues:	Revenues:						Revenues:
Total revenues	Total revenues	$	21,024	$	136,452		Total revenues	$	4,958	$	30,414
Expenses:	Expenses:						Expenses:
Interest expense	Interest expense	17		3,806			Interest expense	871		1,115
Property operating expenses	Property operating expenses	(1,102)		61,315			Property operating expenses	1,971		3,576
Provision for depreciation	Provision for depreciation	4,567		23,708			Provision for depreciation	13		6,368
Total expenses	Total expenses	3,482		88,829			Total expenses	2,855		11,059
Income (loss) from real estate dispositions, net	Income (loss) from real estate dispositions, net	$	17,542	$	47,623		Income (loss) from real estate dispositions, net	$	2,103	$	19,355

6. Leases

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

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


			Three Months Ended						Three Months Ended
		Classification	March 31, 2021		March 31, 2020			Classification	March 31, 2022		March 31, 2021
Operating lease cost: (1)	Operating lease cost: (1)						Operating lease cost: (1)
Real estate lease expense	Real estate lease expense	Property operating expenses	$	5,358	$	6,492	Real estate lease expense	Property operating expenses	$	5,816	$	5,358
Non-real estate investment lease expense	Non-real estate investment lease expense	General and administrative expenses	1,185		1,267		Non-real estate investment lease expense	General and administrative expenses	978		1,185
Finance lease cost:	Finance lease cost:						Finance lease cost:
Amortization of leased assets	Amortization of leased assets	Property operating expenses	2,035		2,243		Amortization of leased assets	Property operating expenses	1,156		2,035
Interest on lease liabilities	Interest on lease liabilities	Interest expense	1,663		1,379		Interest on lease liabilities	Interest expense	1,618		1,663
Sublease income	Sublease income	Rental income	(1,043)		(1,043)		Sublease income	Rental income	(2,715)		(1,043)
Total	Total		$	9,198	$	10,338	Total		$	6,853	$	9,198

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Supplemental balance sheet information related to leases is as follows (in thousands):


		Classification	March 31, 2021		December 31, 2020			Classification	March 31, 2022		December 31, 2021
Right of use assets:	Right of use assets:						Right of use assets:
Operating leases - real estate	Operating leases - real estate	Right of use assets, net	$	301,505	$	310,017	Operating leases - real estate	Right of use assets, net	$	370,740	$	367,068
Finance leases - real estate	Finance leases - real estate	Right of use assets, net	153,282		155,849		Finance leases - real estate	Right of use assets, net	33,949		155,728
Real estate right of use assets, net	Real estate right of use assets, net		454,787		465,866		Real estate right of use assets, net		404,689		522,796
Operating leases - non-real estate investments	Operating leases - non-real estate investments	Receivables and other assets	7,886		9,624		Operating leases - non-real estate investments	Receivables and other assets	9,430		9,627
Finance leases - held for sale (1)							Finance leases - held for sale (1)	Real property held for sale, net of accumulated depreciation	119,733		—
Total right of use assets, net	Total right of use assets, net		$	462,673	$	475,490	Total right of use assets, net		$	533,852	$	532,423

Lease liabilities:	Lease liabilities:						Lease liabilities:
Operating leases	Operating leases		$	303,387	$	311,164	Operating leases		$	438,175	$	434,261
Financing leases	Financing leases		105,529		107,102		Financing leases		110,824		111,683
Total	Total		$	408,916	$	418,266	Total		$	548,999	$	545,944

(1) At March 31, 2022 finance leases at 7 properties were classified as held for sale.							(1) At March 31, 2022 finance leases at 7 properties were classified as held for sale.

Substantially all of our operating leases in which we are the lessor contain escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. During the three months ended March 31, 2021, ~~and 2020,~~ we reserved for previously recognized straight-line rent receivable balances of $49,241,000 ~~and $32,268,000~~ through rental income relating to leases for which collection of substantially all contractual lease payments was no longer deemed probable.

Leases in our Triple-net and Outpatient Medical portfolios typically include some form of operating expense reimbursement by the tenant. For the three months ended March 31, ~~2021,~~2022, we recognized ~~$302,843,000~~$356,390,000 of rental income related to operating leases, of ~~which $46,026,000 was~~which $48,074,000 was for variable lease payments ~~which~~that primarily represents the reimbursement of operating costs such as common area maintenance expenses, utilities, insurance and real estate taxes. For the three months ended March 31, ~~2020,~~2021, we recognized ~~$389,960,000~~$302,843,000 of rental income related to operating leases, of which ~~$55,754,000~~$46,026,000 was for variable lease payments.

For the majority of our Seniors Housing Operating segment, revenue from resident fees and services is predominantly service-based, and as such, resident agreements are accounted for under ASU 2014-09, "Revenue from Contracts with Customers" (ASC 606). Within that reportable segment, we also recognize revenue from residential seniors apartment leases in accordance with ASC 842, "Leases." The amount of revenue related to these leases was $94,827,000 and $15,771,000 for the three months ended March 31, 2022 and March 31, 2021, respectively.

~~WELLTOWER INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

7. Loans Receivable

Loans receivable are recorded on our Consolidated Balance Sheets in real estate loans receivable, net of allowance for credit losses, or for non-real estate loans receivable, in receivables and other ~~assets, net of allowance for credit losses.~~assets. Real estate loans receivable consists of mortgage loans and other real estate loans which are primarily collateralized by a first, second or third mortgage lien, a leasehold mortgage on, or an assignment of the partnership interest in, the related properties, corporate guarantees and/or personal guarantees. Non-real estate loans are generally corporate loans with no real estate backing. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of the risk of credit loss. Accrued interest receivable was ~~$15,981,000~~$26,215,000 and ~~$15,615,000~~ $26,659,000 as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, and is included in receivables and other assets on the Consolidated Balance Sheets. The following is a summary of our loans receivable (in thousands):


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Mortgage loans	Mortgage loans	$	338,291	$	299,430	Mortgage loans	$	833,070	$	889,556
Other real estate loans	Other real estate loans	158,066		152,739		Other real estate loans	184,223		194,477
Allowance for credit losses on real estate loans receivable	Allowance for credit losses on real estate loans receivable	(8,683)		(8,797)		Allowance for credit losses on real estate loans receivable	(14,157)		(15,352)
Real estate loans receivable, net of credit allowance	Real estate loans receivable, net of credit allowance	487,674		443,372		Real estate loans receivable, net of credit allowance	1,003,136		1,068,681
Non-real estate loans	Non-real estate loans	458,391		455,508		Non-real estate loans	390,559		375,060
Allowance for credit losses on non-real estate loans receivable	Allowance for credit losses on non-real estate loans receivable	(215,463)		(215,239)		Allowance for credit losses on non-real estate loans receivable	(151,536)		(151,433)
Non-real estate loans receivable, net of credit allowance	Non-real estate loans receivable, net of credit allowance	242,928		240,269		Non-real estate loans receivable, net of credit allowance	239,023		223,627
Total loans receivable, net of credit allowance	Total loans receivable, net of credit allowance	$	730,602	$	683,641	Total loans receivable, net of credit allowance	$	1,242,159	$	1,292,308

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended
March 31, 2021 March 31, 2020
Advances on loans receivable:
Investments in new loans $ 30,999 $ 0
Draws on existing loans 12,149 10,441
Net cash advances on loans receivable 43,148 10,441
Receipts on loans receivable:
Loan payoffs 1,620 0
Principal payments on loans 1,232 10,045
Net cash receipts on loans receivable 2,852 10,045
Net cash advances (receipts) on loans receivable $ 40,296 $ 396

Subsequent to quarter end, we provided £540 million of senior loan financing and a £30 million delayed facility to affiliates of Safanad, a global real estate and private equity firm, as part of the recapitalization of its investment in HC-One Group. The loan has a 5-year term and is fully collateralized by the shares and assets of the HC-One Group, including its underlying property portfolio of owned assets across the U.K. Additionally, we will have the ability to participate in the recovery in the U.K. seniors housing sector through both warrants and a £55 million equity investment.


	Three Months Ended
	March 31, 2022		March 31, 2021
Advances on loans receivable	$	39,201	$	43,148
Receipts on loans receivable	(89,207)		(2,852)
Net cash advances (receipts) on loans receivable	$	(50,006)	$	40,296

The allowance for credit ~~loss~~losses on loans receivable is maintained at a level believed adequate to absorb potential losses in our loans receivable. The determination of the credit allowance is based on a quarterly evaluation of each of these loans, including general economic conditions and estimated collectability of loan payments. We evaluate the collectability of our loans receivable based on a combination of credit quality indicators, including, but not limited to, payment status, historical loan charge-offs, financial strength of the borrower and guarantors, and nature, extent, and value of the underlying collateral.

A loan is considered to have deteriorated credit quality when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreement. For those loans we identified as having deteriorated credit quality, we determine the amount of credit loss on an individual basis. Placement on non-accrual status may be required. Consistent with this definition, all loans on non-accrual are deemed to have deteriorated credit quality. To the extent circumstances improve and the risk of collectability is diminished, we will return these loans to income accrual status. While a loan is on non-accrual status, any cash receipts are applied against the outstanding principal balance.

For the remaining loans we assess credit loss on a collective pool basis and use our historical loss experience for similar loans to determine the reserve for credit losses. The following is a summary of our loans by credit loss category (in thousands):

~~WELLTOWER INC.~~


	March 31, 2022
Loan category	Years of Origination	Loan Carrying Value		Allowance for Credit Loss		Net Loan Balance		No. of Loans
Deteriorated loans	2007 - 2018	$	174,841	$	(148,438)	$	26,403	3
Collective loan pool	2007-2017	209,774		(2,982)		206,792		15
Collective loan pool	2018	22,800		(325)		22,475		2
Collective loan pool	2019	22,084		(315)		21,769		4
Collective loan pool	2020	50,563		(721)		49,842		6
Collective loan pool	2021	894,186		(12,433)		881,753		20
Collective loan pool	2022	33,604		(479)		33,125		5
Total loans		$	1,407,852	$	(165,693)	$	1,242,159	55

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

March 31, 2021
Loan category Years of Origination Loan Carrying Value Allowance for Credit Loss Net Loan Balance No. of Loans
Deteriorated loans 2007 - 2018 $ 241,012 $ (211,191) $ 29,821 6
Collective loan pool 2007-2016 259,913 (5,061) 254,852 18
Collective loan pool 2017 126,746 (1,488) 125,258 7
Collective loan pool 2018 20,620 (404) 20,216 1
Collective loan pool 2019 47,045 (923) 46,122 7
Collective loan pool 2020 229,219 (4,488) 224,731 11
Collective loan pool 2021 30,193 (591) 29,602 2
Total loans $ 954,748 $ (224,146) $ 730,602 52

~~In March 2020, we recognized a provision~~The total allowance for credit losses balance is deemed sufficient to absorb expected losses relating to our loan ~~losses of $6,898,000 to fully reserve for 1 Triple-net non-real estate loan receivable that was no longer deemed collectible.~~portfolio. The following is a summary of the allowance for credit losses on loans receivable for the periods presented (in thousands):


		Three Months Ended					Three Months Ended
		March 31, 2021		March 31, 2020			March 31, 2022		March 31, 2021
Balance at beginning of period	Balance at beginning of period	$	224,036	$	68,372	Balance at beginning of period	$	166,785	$	224,036
Adoption of ASU 2016-13		—		5,212
Provision for loan losses	Provision for loan losses	1,383		7,072		Provision for loan losses	(804)		1,383
Loan write-offs	Loan write-offs	(1,322)		0		Loan write-offs	—		(1,322)
Foreign currency translation	Foreign currency translation	49		(85)		Foreign currency translation	(288)		49
Balance at end of period	Balance at end of period	$	224,146	$	80,571	Balance at end of period	$	165,693	$	224,146

The following is a summary of our deteriorated loans (in thousands):


		Three Months Ended					Three Months Ended
		March 31, 2021		March 31, 2020			March 31, 2022		March 31, 2021
Balance of deteriorated loans at end of period (1)	Balance of deteriorated loans at end of period (1)	$	241,012	$	185,982	Balance of deteriorated loans at end of period (1)	$	174,841	$	241,012
Allowance for credit losses	Allowance for credit losses	(211,191)		(75,372)		Allowance for credit losses	(148,438)		(211,191)
Balance of deteriorated loans not reserved	Balance of deteriorated loans not reserved	$	29,821	$	110,610	Balance of deteriorated loans not reserved	$	26,403	$	29,821
Interest recognized on deteriorated loans (2)	Interest recognized on deteriorated loans (2)	$	3,079	$	4,046	Interest recognized on deteriorated loans (2)	$	—	$	3,079

~~(1)~~(1) Current year amounts include ~~$2,250,000~~$2,157,000 and ~~$3,623,000~~$2,157,000 of loans on non-accrual as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Prior year amounts include ~~$9,534,000~~$2,250,000 and ~~$2,534,000~~$3,623,000 as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

(2) Represents cash interest recognized in the period.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

8. Investments in Unconsolidated Entities

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


		Percentage Ownership (1)	March 31, 2021		December 31, 2020			Percentage Ownership (1)	March 31, 2022		December 31, 2021
Seniors Housing Operating	Seniors Housing Operating	10% to 65%	$	709,727	$	653,057	Seniors Housing Operating	10% to 65%	$	897,769	$	830,647
Triple-net	Triple-net	10% to 25%	5,575		5,629		Triple-net	10% to 88%	68,643		44,814
Outpatient Medical	Outpatient Medical	15% to 50%	304,708		287,548		Outpatient Medical	15% to 50%	172,114		163,582
Total	Total		$	1,020,010	$	946,234	Total		$	1,138,526	$	1,039,043

(1) Includes ownership of investments classified as liabilities and excludes ownership of in substance real estate.

At March 31, ~~2021,~~2022, the aggregate unamortized basis difference of our joint venture investments of ~~$119,392,000~~$147,598,000 is primarily attributable to the difference between the amount for which we ~~purchase~~purchased our interest in the entity, including transaction costs, and the historical carrying value of the net assets of the joint venture. This difference is being amortized over the remaining useful life of the related properties and included in the reported amount of income from unconsolidated entities.

~~WELLTOWER INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

We have made loans ~~totaling $365,488,000~~ related to ~~8 properties~~16 properties as of March 31, ~~2021~~2022 for the development and construction of certain properties which are classified as in substance real estate ~~investments.~~investments and have a carrying value of $371,061,000. We believe that such borrowers typically represent variable interest entities ("VIE" or "VIEs") in accordance with ASC 810 Consolidation. VIEs are required to be consolidated by their primary beneficiary ~~("PB")~~ which is the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impacts the entity's economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. We have concluded that we are not the PBprimary beneficiary of such borrowers, therefore, the loan arrangements were assessed based on among other factors, the amount and timing of expected residual profits, the estimated fair value of the collateral and the significance of the borrower's equity in the project. Based on these assessments, the arrangements have been classified as in substance real estate investments. We expect to fund an additional ~~$36,059,000 during 2021 related~~$184,926,000 related to these investments.

9. Credit Concentration

We use consolidated net operating income (“NOI”) as our credit concentration metric. See Note 18 for additional information and reconciliation. The following table summarizes certain information about our credit concentration for the three months ended March 31, ~~2021,~~2022, excluding our share of NOI in unconsolidated entities (dollars in thousands):


Concentration by relationship: (1)	Concentration by relationship: (1)	Number of Properties	Total NOI		Percent of NOI (2)	Concentration by relationship: (1)	Number of Properties	Total NOI		Percent of NOI (2)
Sunrise Senior Living (3)		165	$	60,933	14%
ProMedica		216	53,031		13%
Genesis Healthcare		52	26,871		7%
Revera (3)		92	20,865		5%
ProMedica (3)						ProMedica (3)	205	$	61,084	11%
Sunrise Senior Living						Sunrise Senior Living	110	30,467		6%
Atria Senior Living						Atria Senior Living	96	28,745		5%
HC-One Group (4)						HC-One Group (4)	1	23,872		4%
Avery Healthcare	Avery Healthcare	61	20,623		5%	Avery Healthcare	61	19,901		4%
Remaining portfolio	Remaining portfolio	912	252,413		56%	Remaining portfolio	1,190	377,966		70%
Totals	Totals	1,498	$	434,736	100%	Totals	1,663	$	542,035	100%

(1) ProMedica and HC-One Group are in our Triple-net segment. Sunrise Senior Living and ~~Revera~~Atria Senior Living are in our Seniors Housing Operating ~~segment. Genesis Healthcare and ProMedica are in our Triple-net~~ segment. Avery Healthcare is in both the Triple-net and Seniors Housing Operating segments.

(2) NOI with our top five relationships comprised ~~36%~~34% of total NOI for the year ended December 31, ~~2020.~~2021.

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

During the quarter ended March 31, ~~2021,~~2022, we ~~entered into definitive agreements to substantially exit our operating relationship with Genesis Healthcare ("Genesis").~~purchased an additional 5% ownership interest in the consolidated ProMedica joint ventures for $137,437,000.

(4) In ~~April 2021, we contributed 9 Triple-net properties operated by Genesis into an 80/20 joint venture with ProMedica and such properties were added~~addition to the ~~existing master lease with ProMedica. Additionally, we have entered into definitive agreements to sell 35 Genesis properties for $496 million to~~1 property, HC-One Group is the borrower on a joint venture with Aurora Health Network and Peace Capital. These property dispositions and the transfer of operations of these properties is expected to occur in the second and third quarters. Additionally, we currently lease 7 properties which we sublease to Genesis. We have entered into an agreement to transition the operations of these properties into a new lease agreement with a regional operator. To effectuate the transition of all 51 properties, we agreed to provide Genesis a lease termination fee of $86 million upon successful transition of all properties, which will be used to immediately repay indebtedness to Welltower. Additionally, upon achievement of certain restructuring milestones, we will reduce Genesis' indebtedness by an additional $170 million in exchange for an equity interest in Genesis. Upon conclusion of the aforementioned loan transactions, Genesis will have $167 million of indebtedness to Welltower, exclusive of additional PIK interest, which will carry a maturity date of January 1, 2024. As of March 31, 2021, our total carrying value of Genesis loans receivable was $139,332,000.£540,000,000 loan.

10. Borrowings Under Credit Facilities and Commercial Paper Program

At March 31, ~~2021,~~2022, we had a primary unsecured credit facility with a consortium of 3134 banks that ~~includes~~included a ~~$3,000,000,000~~$4,000,000,000 unsecured revolving credit facility, ~~(NaN outstanding at March 31, 2021),~~ a $500,000,000 unsecured term credit facility and a $250,000,000 Canadian-denominated unsecured term credit facility. The unsecured revolving credit facility is comprised of a $1,000,000,000 tranche that matures on June 4, 2023 (none outstanding at March 31, 2022) and a $3,000,000,000 tranche that matures on June 4, 2025 ($110,000,000 outstanding at March 31, 2022). Both tranches may be extended for 2 successive terms of six months at our option. The term credit facilities mature on July 19, 2023. We have an option, through an accordion feature, to upsize the unsecured revolving credit facility and the $500,000,000 unsecured term credit facility by up to an additional ~~$1,000,000,000,~~$1,250,000,000, in the aggregate, and the $250,000,000 Canadian-denominated unsecured term credit facility by up to an additional $250,000,000. The primary

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

unsecured credit facility also allows us to borrow up to $1,000,000,000 in alternate currencies ~~(NaN~~(none outstanding at March 31, ~~2021)~~2022). Borrowings under the unsecured revolving credit facility are subject to interest payable at the applicable margin over LIBOR interest ~~rate.~~rate (1.23% at March 31, 2022). The applicable margin is based on our debt ratings and was ~~0.825%~~0.775% at March 31, ~~2021.~~2022. In addition, we pay a facility fee quarterly to each bank based on the bank’s commitment amount. The facility fee depends on our debt ratings and was 0.15% at March 31, ~~2021. The term credit facilities mature~~2022. Effective with the Merger on ~~July 19, 2023. The revolving~~April 1, 2022, Old Welltower remains the borrower under the credit facility ~~is scheduled to mature on July 19, 2022~~ and ~~can be extended for 2 successive terms of six months each at our option.~~New Welltower will guarantee Old Welltower's obligations under the agreement.

~~WELLTOWER INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~In January 2019, we established an unsecured commercial paper program.~~ Under the terms of ~~the~~our commercial paper program, we may issue unsecured commercial paper notes with maturities that vary, but do not exceed 397 days from the date of issue, up to a maximum aggregate face or principal amount outstanding at any time of ~~$1,000,000,000 (NaN outstanding at~~$1,000,000,000. As of March 31, ~~2021).~~2022, there was a balance of $189,968,000 outstanding on the commercial paper program ($190,000,000 in principal outstanding, net of an unamortized discount of $32,000), which reduces the borrowing capacity of the unsecured revolving credit facility. The notes bear interest at various floating rates with a weighted average of 0.94% as of March 31, 2022 and a weighted average maturity of seven days as of March 31, 2022.

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


		Three Months Ended March 31,						Three Months Ended March 31,
		2021			2020					2022			2021
Balance outstanding at quarter end	Balance outstanding at quarter end	$	0		$	845,000			Balance outstanding at quarter end	$	300,000		$	—
Maximum amount outstanding at any month end	Maximum amount outstanding at any month end	$	0		$	2,100,000			Maximum amount outstanding at any month end	$	995,660		$	—
Average amount outstanding (total of daily	Average amount outstanding (total of daily								Average amount outstanding (total of daily
principal balances divided by days in period)	principal balances divided by days in period)	$	0		$	1,593,816			principal balances divided by days in period)	$	961,463		$	—
Weighted average interest rate (actual interest	Weighted average interest rate (actual interest								Weighted average interest rate (actual interest
expense divided by average borrowings outstanding)	expense divided by average borrowings outstanding)	0		%	2.21		%		expense divided by average borrowings outstanding)	0.53		%	—		%

11. Senior Unsecured Notes and Secured Debt

We may repurchase, redeem or refinance senior unsecured notes from time to time, taking advantage of favorable market conditions when available. We may purchase senior notes for cash through open market purchases, privately negotiated transactions, a tender offer or, in some cases, through the early redemption of such securities pursuant to their terms. The senior unsecured notes are redeemable at our option, at any time in whole or from time to time in part, at a redemption price equal to the sum of: (i) the principal amount of the notes (or portion of such notes) being redeemed plus accrued and unpaid interest thereon up to the redemption date and (ii) any “make-whole” amount due under the terms of the notes in connection with early redemptions. Redemptions and repurchases of debt, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. At March 31, ~~2021,~~2022, the annual principal payments due on these debt obligations were as follows (in thousands):

Senior
Unsecured Notes (1,2)
Secured
Debt (1,3)
Totals
2021 $ 0 $ 438,772 $ 438,772
2022 (4)
870,000 463,891 1,333,891
2023 (5,6)
1,372,602 373,613 1,746,215
2024 1,350,000 183,982 1,533,982
2025 1,250,000 180,595 1,430,595
Thereafter (7,8,9)
7,436,990 695,319 8,132,309
Totals $ 12,279,592 $ 2,336,172 $ 14,615,764


	Senior Unsecured Notes (1,2)		Secured Debt (1,3)		Totals
2022	$	—	$	575,737	$	575,737
2023 (4, 5)	700,288		448,580		1,148,868
2024	1,350,000		184,770		1,534,770
2025	1,260,000		167,506		1,427,506
2026	700,000		109,782		809,782
Thereafter (6, 7, 8)	8,221,307		629,266		8,850,573
Totals	$	12,231,595	$	2,115,641	$	14,347,236

(1) Amounts represent principal amounts due and do not include unamortized premiums/discounts, debt issuance costs, or other fair value adjustments as reflected on the Consolidated Balance ~~Sheet.~~Sheets.

(2) Annual interest rates range from ~~0.81%~~0.93% to 6.50%.

(3) Annual interest rates range from ~~0.04%~~0.32% to ~~7.93%~~6.67%. Carrying value of the properties securing the debt totaled ~~$5,330,000,000~~ $4,882,090,000 at March 31, ~~2021.~~2022.

(4) ~~Includes a $860,000,000 unsecured term credit facility. The loan matures on April 1, 2022 and bears interest at LIBOR plus 1.20% (1.31% at March 31, 2021).~~

~~(5)~~ Includes a $250,000,000 Canadian-denominated unsecured term credit facility (approximately ~~$198,850,000~~$200,288,000 based on the Canadian/U.S. Dollar exchange rate on March 31, ~~2021)~~2022). The loan matures on July 19, 2023 and bears interest at the Canadian Dealer Offered Rate plus ~~0.9% (1.31%~~0.90% (1.83% at March 31, ~~2021)~~2022).

~~(6)~~(5) Includes a $500,000,000 unsecured term credit facility. The loan matures on July 19, 2023 and bears interest at LIBOR plus ~~0.9% (1.01%~~0.90% (1.36% at March 31, ~~2021)~~2022).

~~(7)~~(6) Includes a $300,000,000 Canadian-denominated 2.95% senior unsecured notes due 2027 (approximately ~~$238,620,000~~$240,347,000 based on the Canadian/U.S. Dollar exchange rate on March 31, ~~2021)~~2022).

~~(8)~~(7) Includes a £550,000,000 4.80% senior unsecured notes due 2028 (approximately ~~$758,670,000~~$723,360,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on March 31, ~~2021)~~2022).

~~(9)~~(8) Includes a £500,000,000 4.50% senior unsecured notes due 2034 (approximately ~~$689,700,000~~$657,600,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on March 31, ~~2021)~~2022).

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

~~WELLTOWER INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~


		Three Months Ended							Three Months Ended
		March 31, 2021			March 31, 2020				March 31, 2022			March 31, 2021
				Weighted Avg.			Weighted Avg.				Weighted Avg.			Weighted Avg.
		Amount		Interest Rate	Amount		Interest Rate		Amount		Interest Rate	Amount		Interest Rate
Beginning balance	Beginning balance	$	11,509,533	3.67%	$	10,427,562	4.03%	Beginning balance	$	11,707,961	3.67%	$	11,509,533	3.67%
Debt issued	Debt issued	750,000		2.80%	0		0%	Debt issued	550,000		3.85%	750,000		2.80%

Foreign currency	Foreign currency	20,059		3.90%	(120,689)		4.15%	Foreign currency	(26,366)		4.14%	20,059		3.90%
Ending balance	Ending balance	$	12,279,592	3.62%	$	10,306,873	3.97%	Ending balance	$	12,231,595	3.69%	$	12,279,592	3.62%

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


		Three Months Ended							Three Months Ended
		March 31, 2021			March 31, 2020				March 31, 2022			March 31, 2021
				Weighted Avg.			Weighted Avg.				Weighted Avg.			Weighted Avg.
		Amount		Interest Rate	Amount		Interest Rate		Amount		Interest Rate	Amount		Interest Rate
Beginning balance	Beginning balance	$	2,378,073	3.27%	$	2,993,342	3.63%	Beginning balance	$	2,202,312	3.03%	$	2,378,073	3.27%

Debt issued	Debt issued	0		0%	44,921		2.58%	Debt issued	5,385		3.08%	—		—%

Debt extinguished	Debt extinguished	(41,933)		7.60%	(16,040)		4.51%	Debt extinguished	(100,821)		4.21%	(41,933)		7.60%

Principal payments	Principal payments	(15,955)		3.59%	(15,526)		3.78%	Principal payments	(15,968)		3.19%	(15,955)		3.59%
Foreign currency	Foreign currency	15,987		2.92%	(102,059)		3.27%	Foreign currency	24,733		2.73%	15,987		2.92%
Ending balance	Ending balance	$	2,336,172	3.14%	$	2,904,638	3.63%	Ending balance	$	2,115,641	3.02%	$	2,336,172	3.14%

On March 25, 2021, we completed the issuance of $750,000,000 senior unsecured notes bearing interest at 2.80% with a maturity date of June 2031. On April 15, 2021 net proceeds were used to redeem $339,128,000 of our 3.75% senior unsecured notes due March 2023 and $334,624,000 of our 3.95% senior unsecured notes due September 2023. We expect to recognize a loss on extinguishment of approximately $51 million in April in conjunction with the transaction.

Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As of March 31, ~~2021,~~2022, we were in compliance ~~with~~in all ofmaterial respects with the covenants under our debt agreements.

In connection with the Merger on April 1, 2022, senior unsecured notes will continue to be obligations of Old Welltower and New Welltower has fully and unconditionally guaranteed all existing and future senior unsecured notes.

12. Derivative Instruments

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

Foreign Currency Forward Contracts Designated as Cash Flow Hedges

For instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is deferred as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same period or periods, during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in earnings.

Cash Flow Hedges and Fair Value Hedges of Interest Rate Risk

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

Interest rate swaps designated as fair value hedges involve the receipt of fixed amounts from a counterparty in exchange for our variable-rate payments. These interest rate swap agreements hedge the exposure to changes in the fair value of fixed-rate debt attributable to changes in the designated benchmark interest rate. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in earnings. We record the gain or loss on the hedged items in interest expense, the same line item as the offsetting loss or gain on the related interest rate swaps. During the quarter ended March 31, 2022, we entered into a $550,000,000 fixed to floating swap in connection with our March senior note issuance. The carrying amount of

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

the notes, exclusive of the hedge, is $545,082,000. The fair value of the swap as of March 31, 2022 was $1,413,000 and was recorded as a derivative asset with an offset to senior unsecured notes on our Consolidated Balance Sheet.

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

~~WELLTOWER INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

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

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

During the three months ended March 31, 2022, we settled certain net investment hedges generating cash proceeds of $10,169,000. The balance of the cumulative translation adjustment will be reclassified to earnings if the hedged investment is sold or substantially liquidated.

Derivative Contracts Undesignated

We use foreign currency exchange contracts to manage existing exposures to foreign currency exchange risk. Gains and losses resulting from the changes in fair value of these instruments are recorded in interest expense on the Consolidated Statements of Comprehensive Income and are substantially offset by net revaluation impacts on foreign currency denominated balance sheet exposures. In addition, we have several interest rate cap contracts related to variable rate secured debt agreements. Gains and losses resulting from the changes in fair values of these instruments are also recorded in interest expense.

Equity Warrants

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

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


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Derivatives designated as net investment hedges:	Derivatives designated as net investment hedges:					Derivatives designated as net investment hedges:
Denominated in Canadian Dollars	Denominated in Canadian Dollars	$	625,000	$	625,000	Denominated in Canadian Dollars	$	1,075,000	$	675,000
Denominated in Pound Sterling	Denominated in Pound Sterling	£	1,340,708	£	1,340,708	Denominated in Pound Sterling	£	1,890,708	£	1,904,708

Financial instruments designated as net investment hedges:	Financial instruments designated as net investment hedges:					Financial instruments designated as net investment hedges:
Denominated in Canadian Dollars	Denominated in Canadian Dollars	$	250,000	$	250,000	Denominated in Canadian Dollars	$	250,000	$	250,000
Denominated in Pound Sterling	Denominated in Pound Sterling	£	1,050,000	£	1,050,000	Denominated in Pound Sterling	£	1,050,000	£	1,050,000

Interest rate swaps designated as cash flow hedges:	Interest rate swaps designated as cash flow hedges:					Interest rate swaps designated as cash flow hedges:
Denominated in U.S Dollars (1)	Denominated in U.S Dollars (1)	$	25,000	$	450,000	Denominated in U.S Dollars (1)	$	25,000	$	25,000

Interest rate swaps designated as fair value hedges:						Interest rate swaps designated as fair value hedges:
Denominated in U.S Dollars						Denominated in U.S Dollars	$	550,000	$	—

Derivative instruments not designated:	Derivative instruments not designated:					Derivative instruments not designated:
Interest rate caps denominated in U.S. Dollars	Interest rate caps denominated in U.S. Dollars	$	26,137	$	26,137	Interest rate caps denominated in U.S. Dollars	$	26,137	$	26,137

Forward sales contracts denominated in Canadian Dollars	Forward sales contracts denominated in Canadian Dollars	$	80,000	$	80,000	Forward sales contracts denominated in Canadian Dollars	$	80,000	$	80,000
Forward purchase contracts denominated in Pound Sterling		£	(32,157)	£	0

(1) At March 31, ~~2021~~2022 the maximum maturity date was November 1, 2023.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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


			Three Months Ended March 31,					Three Months Ended March 31,
Description	Description	Location	2021		2020		Description	Location	2022		2021
Gain (loss) on derivative instruments designated as hedges recognized in income	Gain (loss) on derivative instruments designated as hedges recognized in income	Interest expense	$	6,024	$	6,644	Gain (loss) on derivative instruments designated as hedges recognized in income	Interest expense	$	5,984	$	6,024
Gain (loss) on derivative instruments not designated as hedges recognized in income	Gain (loss) on derivative instruments not designated as hedges recognized in income	Interest expense	$	(719)	$	(95)	Gain (loss) on derivative instruments not designated as hedges recognized in income	Interest expense	$	(693)	$	(719)
Gain (loss) on equity warrants recognized in income							Gain (loss) on equity warrants recognized in income	Gain (loss) on derivatives and financial instruments	$	(2,423)	$	—
Gain (loss) on derivative and financial instruments designated as hedges recognized in OCI	Gain (loss) on derivative and financial instruments designated as hedges recognized in OCI	OCI	$	(20,037)	$	259,112	Gain (loss) on derivative and financial instruments designated as hedges recognized in OCI	OCI	$	51,940	$	(20,037)

13. Commitments and Contingencies

At March 31, ~~2021,~~2022, we had 1017 outstanding letter of credit obligations totaling ~~$20,288,000~~$39,594,000 and expiring between ~~2021~~2022 and ~~2024.~~2023. At March 31, ~~2021,~~2022, we had outstanding construction in progress of ~~$542,302,000~~$717,657,000 and were committed to providing additional funds of approximately ~~$715,955,000~~$1,573,677,000 to complete construction. Additionally, at March 31, ~~2021,~~2022, we had outstanding investments classified as in substance real estate of ~~$365,488,000~~$371,061,000 and were committed to provide additional funds of ~~$36,059,000~~$184,926,000 (see Note 8 for additional information). Purchase obligations ~~at March 31, 2021 also~~ include ~~$40,815,000~~$86,601,000 of contingent purchase obligations to fund capital improvements. Rents due from the tenant are increased to reflect the additional investment in the property.

~~WELLTOWER INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

14. Stockholders’ Equity

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


		March 31, 2021	December 31, 2020		March 31, 2022	December 31, 2021
Preferred Stock:
Preferred Stock, $1.00 par value:				Preferred Stock, $1.00 par value:
Authorized shares	Authorized shares	50,000,000	50,000,000	Authorized shares	50,000,000	50,000,000
Issued shares	Issued shares	0	0	Issued shares	—	—
Outstanding shares	Outstanding shares	0	0	Outstanding shares	—	—

Common Stock, $1.00 par value:	Common Stock, $1.00 par value:			Common Stock, $1.00 par value:
Authorized shares	Authorized shares	700,000,000	700,000,000	Authorized shares	700,000,000	700,000,000
Issued shares	Issued shares	419,306,453	419,124,469	Issued shares	455,763,781	448,998,438
Outstanding shares	Outstanding shares	417,520,420	417,400,602	Outstanding shares	453,948,046	447,239,477

Common Stock

In ~~February 2019,~~July 2021, we entered into an amended and restated equity distribution agreement whereby we can offer and sell up to ~~$1,500,000,000~~ $2,500,000,000 aggregate amount of our common stock ("~~Equity Shelf~~ATM Program"). The ~~Equity Shelf~~ATM Program also allows us to enter into forward sale agreements. As of March 31, ~~2021~~,2022, we had ~~$499,341,000~~$1,317,295,000 of r~~emaining~~remaining capacity under the ~~Equity Shelf~~ATM Program, which excludes forward sales agreements outstanding for the sale of ~~2,214,760~~ 14,297,958 shares with maturity dates in ~~2022. We~~2023, which we expect to physically settle ~~the forward sales~~ for cash ~~proceeds.~~

~~On May 1, 2020, our Board~~proceeds of Directors authorized a share repurchase program whereby we may repurchase up to $1 billion of common stock through December 31, 2021 (the "Repurchase Program"). Under this authorization, we are not required to purchase shares but may choose to do so in the open market or through private transactions at times and amounts based on our evaluation of market conditions and other factors. We expect to finance any share repurchases under the Repurchase Program using available cash and may use proceeds from borrowings or debt offerings. We did not repurchase any shares of our common stock during the three months ended March 31, 2021.

$1,253,955,000.

The following is a summary of our common stock issuances during the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 (dollars in thousands, except shares and average price amounts):

Shares Issued Average Price Gross Proceeds Net Proceeds
2020 Dividend reinvestment plan issuances 175,129 $ 84.54 $ 14,805 $ 14,805
2020 Equity shelf program issuances 6,799,978 86.48 588,072 576,196
2020 Stock incentive plans, net of forfeitures 158,818 — —
2020 Totals 7,133,925 $ 602,877 $ 591,001
2021 Stock incentive plans, net of forfeitures 119,818 — —
2021 Totals 119,818 $ 0 $ 0


	Shares Issued	Average Price		Gross Proceeds		Net Proceeds




2021 Stock incentive plans, net of forfeitures	119,818			$	—	$	—



2022 ATM Program issuances	6,605,191	$	84.60	$	558,790	$	549,326
2022 Option exercises	299	66.89		20		20

2022 Stock incentive plans, net of forfeitures	103,079			—		—
2022 Totals	6,708,569			$	558,810	$	549,346

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Dividends ~~The decrease in dividends is attributable to the declaration of a reduced cash dividend beginning with the quarter ending March 31, 2020.~~

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

Three Months Ended
March 31, 2021 March 31, 2020
Per Share Amount Per Share Amount
Common stock $ 0.61 $ 254,952 $ 0.87 $ 356,001


	Three Months Ended
	March 31, 2022				March 31, 2021
	Per Share		Amount		Per Share		Amount
Common stock	$	0.61	$	273,668	$	0.61	$	254,952

Accumulated Other Comprehensive Income

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


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Foreign currency translation	Foreign currency translation	$	(581,387)	$	(621,792)	Foreign currency translation	$	(743,402)	$	(674,306)
Derivative and financial instruments designated as hedges	Derivative and financial instruments designated as hedges	453,251		473,288		Derivative and financial instruments designated as hedges	604,930		552,990

Total accumulated other comprehensive income (loss)	Total accumulated other comprehensive income (loss)	$	(128,136)	$	(148,504)	Total accumulated other comprehensive income (loss)	$	(138,472)	$	(121,316)

~~WELLTOWER INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

15. Stock Incentive Plans

~~Our 2016~~In March 2022, our Board of Directors approved the 2022 Long-Term Incentive Plan (“~~2016~~2022 Plan”), which authorizes up to 10,000,000 shares of common stock to be issued at the discretion of the Compensation Committee of the Board of Directors. Awards granted after March 28, 2022 will be issued out of the 2022 Plan. The awards granted under the 2016 Long-Term Incentive Plan continue to vest and options expire ten years from the date of grant. Our non-employee directors, officers and key employees are eligible to participate in the ~~2016~~2022 Plan. The ~~2016~~2022 Plan allows for the issuance of, among other things, stock options, stock appreciation rights, restricted stock, deferred stock units, performance units and dividend equivalent rights. Vesting periods for options, deferred stock units and restricted shares generally range from three to ~~five~~four years. Options expire ten years from the date of grant. Stock-based compensation expense totaled $7,445,000 and $5,576,000 ~~and~~ ~~$7,083,000~~ for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectfully.

16. Earnings Per Share

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


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Numerator for basic earnings per share - net income (loss) attributable to common stockholders	Numerator for basic earnings per share - net income (loss) attributable to common stockholders	$	71,546	$	310,284		Numerator for basic earnings per share - net income (loss) attributable to common stockholders	$	61,925	$	71,546

Adjustment for net income (loss) attributable to OP units	Adjustment for net income (loss) attributable to OP units	(1,353)		(1,388)			Adjustment for net income (loss) attributable to OP units	(145)		(1,353)
Numerator for diluted earnings per share	Numerator for diluted earnings per share	$	70,193	$	308,896		Numerator for diluted earnings per share	$	61,780	$	70,193

Denominator for basic earnings per share - weighted average shares	Denominator for basic earnings per share - weighted average shares	417,241		410,306			Denominator for basic earnings per share - weighted average shares	447,379		417,241
Effect of dilutive securities:	Effect of dilutive securities:						Effect of dilutive securities:

Employee stock options							Employee stock options	31		—
Non-vested restricted shares	Non-vested restricted shares	421		702			Non-vested restricted shares	974		421
Redeemable OP units	Redeemable OP units	1,396		1,396			Redeemable OP units	1,396		1,396
Employee stock purchase program	Employee stock purchase program	21		16			Employee stock purchase program	22		21
Dilutive potential common shares	Dilutive potential common shares	1,838		2,114			Dilutive potential common shares	2,423		1,838
Denominator for diluted earnings per share - adjusted weighted average shares	Denominator for diluted earnings per share - adjusted weighted average shares	419,079		412,420			Denominator for diluted earnings per share - adjusted weighted average shares	449,802		419,079

Basic earnings per share	Basic earnings per share	$	0.17	$	0.76		Basic earnings per share	$	0.14	$	0.17
Diluted earnings per share	Diluted earnings per share	$	0.17	$	0.75		Diluted earnings per share	$	0.14	$	0.17

As of March 31, 2022, and March 31, 2021, outstanding forward sales agreements ~~outstanding~~ for the sale of 14,297,958 shares and 2,214,760 s~~hares of common stock~~shares, respectively, were not included in the computation of diluted earnings per share because such forward sales were anti-dilutive for the ~~period.~~periods.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

17. Disclosure about Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level valuation hierarchy exists for disclosures of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Please see Note 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for additional information. The three levels are defined below:

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

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

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

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

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

~~WELLTOWER INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

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

Equity Securities — Equity securities are recorded at their fair value based on Level 1 publicly available trading prices.

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

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

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

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

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

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

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

March 31, 2021 December 31, 2020
Carrying Amount Fair Value Carrying Amount Fair Value
Financial assets:
Mortgage loans receivable $ 331,648 $ 331,710 $ 293,752 $ 297,207
Other real estate loans receivable 156,026 157,310 149,620 152,211
Equity securities 2,702 2,702 4,636 4,636
Cash and cash equivalents 2,131,846 2,131,846 1,545,046 1,545,046
Restricted cash 426,976 426,976 475,997 475,997
Non-real estate loans receivable 242,928 260,351 240,269 255,724
Foreign currency forward contracts, interest rate swaps and cross currency swaps 753 753 4,668 4,668
Financial liabilities:
Senior unsecured notes $ 12,183,710 $ 13,377,367 $ 11,420,790 $ 13,093,926
Secured debt 2,329,474 2,410,790 2,377,930 2,451,782
Foreign currency forward contracts, interest rate swaps and cross currency swaps 84,985 84,985 118,054 118,054
Redeemable OP unitholder interests $ 127,859 $ 127,859 $ 116,240 $ 115,346

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


	March 31, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Mortgage loans receivable	$	821,509	$	909,533	$	877,102	$	932,552
Other real estate loans receivable	181,627		183,784		191,579		193,999
Equity securities	1,455		1,455		1,608		1,608
Cash and cash equivalents	301,089		301,089		269,265		269,265
Restricted cash	65,954		65,954		77,490		77,490
Non-real estate loans receivable	239,023		245,928		223,627		241,544
Foreign currency forward contracts, interest rate swaps and cross currency swaps	9,179		9,179		7,205		7,205
Equity warrants	38,416		38,416		41,909		41,909

Financial liabilities:
Borrowings under unsecured credit facility and commercial paper program	$	299,968	$	299,968	$	324,935	$	324,935
Senior unsecured notes	12,136,760		12,458,423		11,613,758		13,139,748
Secured debt	2,104,945		2,108,622		2,192,261		2,252,107
Foreign currency forward contracts, interest rate swaps and cross currency swaps	30,580		30,580		39,296		39,296

Redeemable OP unitholder interests	$	171,609	$	171,609	$	153,098	$	153,098

Items Measured at Fair Value on a Recurring Basis

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


		Fair Value Measurements as of March 31, 2021									Fair Value Measurements as of March 31, 2022
		Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3
Equity securities	Equity securities	$	2,702	$	2,702	$	0	$	0	Equity securities	$	1,455	$	1,455	$	—	$	—
Equity warrants										Equity warrants	38,416		—		—		38,416
Foreign currency forward contracts, interest rate swaps and cross currency swaps, net asset (liability) (1)	Foreign currency forward contracts, interest rate swaps and cross currency swaps, net asset (liability) (1)	(84,232)		0		(84,232)		0		Foreign currency forward contracts, interest rate swaps and cross currency swaps, net asset (liability) (1)	(21,401)		—		(21,401)		—
Totals	Totals	$	(81,530)	$	2,702	$	(84,232)	$	0	Totals	$	18,470	$	1,455	$	(21,401)	$	38,416

(1) Please see Note 12 for additional information.

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

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~


	Three Months Ended
	March 31, 2022		March 31, 2021
Beginning balance	$	41,909	$	—

Mark-to-market adjustment	(2,425)		—
Foreign currency	(1,068)		—
Ending balance	$	38,416	$	—

The most significant assumptions utilized in the valuation of the equity warrants are the cash flows of the underlying HC-One Group enterprise, as well as the terminal capitalization rate of 9.5%.

Items Measured at Fair Value on a Nonrecurring Basis

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

18. Segment Reporting

We invest in seniors housing and health care real estate. We evaluate our business and make resource allocations on our 3 operating segments: Seniors Housing Operating, Triple-net and Outpatient Medical. Our Seniors Housing Operating properties include seniors apartments, assisted living, independent living/continuing care retirement communities, independent supportive living communities (Canada), care homes with and without nursing (U.K.) and combinations thereof that are owned and/or operated through RIDEA structures (see Note 19). Our Triple-net properties include the property types described above as well as long-term/post-acute care facilities. Under the Triple-net segment, we invest in seniors housing and health care real estate through acquisition and financing of primarily single tenant properties. Properties acquired are primarily leased under triple-net leases and we are not involved in the management of the property. Our Outpatient Medical properties are typically leased to multiple tenants and generally require a certain level of property management by us.

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

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

The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2020)~~2021). The results of operations for all acquisitions described in Note 3 are included in our consolidated results of operations from the acquisition dates and are components of the appropriate segments. All inter-segment transactions are eliminated.

2225

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Summary information for the reportable segments (which excludes unconsolidated entities) is as follows (in thousands):


Three Months Ended March 31, 2021:		Seniors Housing Operating		Triple-net		Outpatient Medical		Non-segment / Corporate		Total
Three Months Ended March 31, 2022:												Three Months Ended March 31, 2022:	Seniors Housing Operating		Triple-net		Outpatient Medical		Non-segment / Corporate		Total
Resident fees and services	Resident fees and services	$	723,464	$	0	$	0	$	0	$	723,464	Resident fees and services	$	994,335	$	—	$	—	$	—	$	994,335
Rental income	Rental income	0		152,463		150,380		0		302,843		Rental income	—		196,001		160,389		—		356,390
Interest income	Interest income	1,119		14,922		3,538		0		19,579		Interest income	1,417		37,506		71		—		38,994
Other income	Other income	1,819		1,097		2,305		955		6,176		Other income	860		1,656		2,863		606		5,985
Total revenues	Total revenues	726,402		168,482		156,223		955		1,052,062		Total revenues	996,612		235,163		163,323		606		1,395,704

Property operating expenses	Property operating expenses	555,968		12,841		46,863		1,654		617,326		Property operating expenses	789,928		11,211		49,915		2,615		853,669
Consolidated net operating income		170,434		155,641		109,360		(699)		434,736
Consolidated net operating income (loss)												Consolidated net operating income (loss)	206,684		223,952		113,408		(2,009)		542,035

Depreciation and amortization	Depreciation and amortization	132,586		56,667		55,173		0		244,426		Depreciation and amortization	192,793		53,504		57,791		—		304,088
Interest expense	Interest expense	11,418		1,882		4,015		105,827		123,142		Interest expense	7,650		314		4,567		109,165		121,696
General and administrative expenses	General and administrative expenses	0		0		0		29,926		29,926		General and administrative expenses	—		—		—		37,706		37,706
Loss (gain) on derivatives and financial instruments, net	Loss (gain) on derivatives and financial instruments, net	0		1,934		0		0		1,934		Loss (gain) on derivatives and financial instruments, net	—		2,578		—		—		2,578
Loss (gain) on extinguishment of debt, net	Loss (gain) on extinguishment of debt, net	(4,643)		0		0		0		(4,643)		Loss (gain) on extinguishment of debt, net	(15)		—		3		—		(12)
Provision for loan losses		251		853		279		0		1,383
Impairment of assets		4,604		18,964		0		0		23,568
Provision for loan losses, net												Provision for loan losses, net	267		(1,065)		(6)		—		(804)

Other expenses	Other expenses	3,459		4,983		712		1,840		10,994		Other expenses	8,191		11,044		789		6,045		26,069
Income (loss) from continuing operations before income taxes and other items	Income (loss) from continuing operations before income taxes and other items	22,759		70,358		49,181		(138,292)		4,006		Income (loss) from continuing operations before income taxes and other items	(2,202)		157,577		50,264		(154,925)		50,714
Income tax (expense) benefit	Income tax (expense) benefit	0		0		0		(3,943)		(3,943)		Income tax (expense) benefit	—		—		—		(5,013)		(5,013)
Income (loss) from unconsolidated entities	Income (loss) from unconsolidated entities	5,234		4,907		2,908		0		13,049		Income (loss) from unconsolidated entities	(17,782)		15,543		(645)		—		(2,884)
Gain (loss) on real estate dispositions, net	Gain (loss) on real estate dispositions, net	5,195		2,042		51,843		0		59,080		Gain (loss) on real estate dispositions, net	2,701		20,449		(216)		—		22,934
Income (loss) from continuing operations	Income (loss) from continuing operations	33,188		77,307		103,932		(142,235)		72,192		Income (loss) from continuing operations	(17,283)		193,569		49,403		(159,938)		65,751
Net income (loss)	Net income (loss)	$	33,188	$	77,307	$	103,932	$	(142,235)	$	72,192	Net income (loss)	$	(17,283)	$	193,569	$	49,403	$	(159,938)	$	65,751

Total assets	Total assets	$	16,032,225	$	8,660,043	$	6,380,835	$	1,919,148	$	32,992,251	Total assets	$	19,986,904	$	8,986,422	$	6,333,821	$	165,306	$	35,472,453


Three Months Ended March 31, 2020:		Seniors Housing Operating		Triple-net		Outpatient Medical		Non-segment / Corporate		Total
Three Months Ended March 31, 2021:												Three Months Ended March 31, 2021:	Seniors Housing Operating		Triple-net		Outpatient Medical		Non-segment / Corporate		Total
Resident fees and services	Resident fees and services	$	849,972	$	0	$	0	$	0	$	849,972	Resident fees and services	$	723,464	$	—	$	—	$	—	$	723,464
Rental income	Rental income	0		191,385		198,575		0		389,960		Rental income	—		152,463		150,380		—		302,843
Interest income	Interest income	104		14,671		466		0		15,241		Interest income	1,119		14,922		3,538		—		19,579
Other income	Other income	1,052		1,673		288		416		3,429		Other income	1,819		1,097		2,305		955		6,176
Total revenues	Total revenues	851,128		207,729		199,329		416		1,258,602		Total revenues	726,402		168,482		156,223		955		1,052,062

Property operating expenses	Property operating expenses	607,871		13,302		60,608		0		681,781		Property operating expenses	555,968		12,841		46,863		1,654		617,326
Consolidated net operating income		243,257		194,427		138,721		416		576,821
Consolidated net operating income (loss)												Consolidated net operating income (loss)	170,434		155,641		109,360		(699)		434,736

Depreciation and amortization	Depreciation and amortization	146,774		57,694		70,333		0		274,801		Depreciation and amortization	132,586		56,667		55,173		—		244,426
Interest expense	Interest expense	16,434		2,852		4,808		117,913		142,007		Interest expense	11,418		1,882		4,015		105,827		123,142
General and administrative expenses	General and administrative expenses	0		0		0		35,481		35,481		General and administrative expenses	—		—		—		29,926		29,926
Loss (gain) on derivatives and financial instruments, net	Loss (gain) on derivatives and financial instruments, net	0		7,651		0		0		7,651		Loss (gain) on derivatives and financial instruments, net	—		1,934		—		—		1,934

Provision for loan losses		0		7,072		0		0		7,072
Loss (gain) on extinguishment of debt, net												Loss (gain) on extinguishment of debt, net	(4,643)		—		—		—		(4,643)
Provision for loan losses, net												Provision for loan losses, net	251		853		279		—		1,383
Impairment of assets	Impairment of assets	3,495		24,332		0		0		27,827		Impairment of assets	4,604		18,964		—		—		23,568
Other expenses	Other expenses	2,989		513		1,007		1,783		6,292		Other expenses	3,459		4,983		712		1,840		10,994
Income (loss) from continuing operations before income taxes and other items	Income (loss) from continuing operations before income taxes and other items	73,565		94,313		62,573		(154,761)		75,690		Income (loss) from continuing operations before income taxes and other items	22,759		70,358		49,181		(138,292)		4,006
Income tax (expense) benefit	Income tax (expense) benefit	0		0		0		(5,442)		(5,442)		Income tax (expense) benefit	—		—		—		(3,943)		(3,943)
Income (loss) from unconsolidated entities	Income (loss) from unconsolidated entities	(11,024)		5,796		1,536		0		(3,692)		Income (loss) from unconsolidated entities	5,234		4,907		2,908		—		13,049
Gain (loss) on real estate dispositions, net	Gain (loss) on real estate dispositions, net	(149)		49,637		213,336		0		262,824		Gain (loss) on real estate dispositions, net	5,195		2,042		51,843		—		59,080
Income (loss) from continuing operations	Income (loss) from continuing operations	62,392		149,746		277,445		(160,203)		329,380		Income (loss) from continuing operations	33,188		77,307		103,932		(142,235)		72,192
Net income (loss)	Net income (loss)	$	62,392	$	149,746	$	277,445	$	(160,203)	$	329,380	Net income (loss)	$	33,188	$	77,307	$	103,932	$	(142,235)	$	72,192

2326

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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


		Three Months Ended								Three Months Ended
		March 31, 2021				March 31, 2020					March 31, 2022		March 31, 2021
Revenues:	Revenues:	Amount(1)		%		Amount		%				Revenues:	Amount(1)		%		Amount		%
United States	United States	$	825,648	78.5	%	$	1,027,781	81.6	%			United States	$	1,139,016	81.6	%	$	825,648	78.5	%
United Kingdom	United Kingdom	118,874		11.3	%	117,882		9.4	%			United Kingdom	144,491		10.4	%	118,874		11.3	%
Canada	Canada	107,540		10.2	%	112,939		9.0	%			Canada	112,197		8.0	%	107,540		10.2	%
Total	Total	$	1,052,062	100.0	%	$	1,258,602	100.0	%			Total	$	1,395,704	100.0	%	$	1,052,062	100.0	%

		As of								As of
		March 31, 2021				December 31, 2020					March 31, 2022		December 31, 2021
Assets:	Assets:	Amount		%		Amount		%				Assets:	Amount		%		Amount		%
United States	United States	$	27,112,760	82.1	%	$	26,658,659	82.1	%			United States	$	28,821,624	81.2	%	$	28,595,703	81.9	%
United Kingdom	United Kingdom	3,415,851		10.4	%	3,352,549		10.3	%			United Kingdom	3,822,998		10.8	%	3,938,258		11.3	%
Canada	Canada	2,463,640		7.5	%	2,472,434		7.6	%			Canada	2,827,831		8.0	%	2,376,364		6.8	%
Total	Total	$	32,992,251	100.0	%	$	32,483,642	100.0	%			Total	$	35,472,453	100.0	%	$	34,910,325	100.0	%

(1) The United States, United Kingdom and Canada represent ~~72%~~79%, ~~14%~~10% and ~~14%, respectively,~~11% of our resident fees and services revenue ~~stream~~ for the three ~~months~~month period ended March 31, ~~2021.~~2022.

19. Income Taxes and Distributions

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

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

Income taxes reflected in the financial statements primarily represents U.S. federal, state and local income taxes as well as non-U.S. income based or withholding taxes on certain investments located in jurisdictions outside the U.S. The provision for income taxes for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, was primarily due to operating income or losses, offset by certain discrete items at our TRS entities. In 2014, we established certain wholly-owned direct and indirect subsidiaries in Luxembourg and Jersey and transferred interests in certain foreign investments into this holding company structure. The structure includes a property holding company that is tax resident in the United Kingdom. No material adverse current tax consequences in Luxembourg, Jersey or the United Kingdom resulted from the creation of this holding company structure and most of the subsidiary entities in the structure are treated as disregarded entities of the company for U.S. federal income tax purposes. Subsequent to 2014 we transferred certain subsidiaries to the United Kingdom, while some wholly-owned direct and indirect subsidiaries remain in Luxembourg and Jersey. The company reflects current and deferred tax liabilities for any such withholding taxes incurred from this holding company structure in its consolidated financial statements. Generally, given current statutes of limitations, we are subject to audit by the foreign, federal, state and local taxing authorities under applicable local laws.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The CARES Act, among its economic stimulus provisions, includes a number of tax provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carrybacks, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Certain of these provisions may impact the provision for taxes in our consolidated financial statements, including in particular the provision allowing for the carryback of net operating losses which would be applicable to our TRSs. We have made a reasonable estimate of the tax impact to us of the CARES Act in our consolidated financial statements, and while we do not believe that there will be further material impacts to the consolidated financial statements related to the CARES Act tax provisions, we will continue to evaluate the impact of the CARES Act and any guidance provided by the U.S. Treasury and the IRS on our consolidated financial statements. It is possible our estimates could differ materially from the actual tax impact to us of the CARES Act.

20. Variable Interest Entities

We have entered into joint ventures to own certain seniors housing and outpatient medical assets which are deemed to be VIEs. We have concluded that we are the primary beneficiary of these VIEs based on a combination of operational control of the joint venture and the rights to receive residual returns or the obligation to absorb losses arising from the joint ventures. Except for capital contributions associated with the initial joint venture formations, the joint ventures have been and are expected to be funded from the ongoing operations of the underlying properties. Accordingly, such joint ventures have been consolidated, and the table below summarizes the balance sheets of consolidated VIEs in the aggregate (in thousands):


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets:	Assets:					Assets:
Net real estate investments	Net real estate investments	$	451,975	$	454,333	Net real estate investments	$	445,561	$	445,776
Cash and cash equivalents	Cash and cash equivalents	13,760		15,547		Cash and cash equivalents	11,489		9,964
Receivables and other assets	Receivables and other assets	12,669		11,171		Receivables and other assets	8,100		7,617
Total assets (1)	Total assets (1)	$	478,404	$	481,051	Total assets (1)	$	465,150	$	463,357

Liabilities and equity:	Liabilities and equity:					Liabilities and equity:
Secured debt	Secured debt	$	165,225	$	165,671	Secured debt	$	163,021	$	163,519
Lease liabilities	Lease liabilities	1,325		1,325		Lease liabilities	1,324		1,324
Accrued expenses and other liabilities	Accrued expenses and other liabilities	16,860		14,997		Accrued expenses and other liabilities	13,067		12,394
Total equity	Total equity	294,994		299,058		Total equity	287,738		286,120
Total liabilities and equity	Total liabilities and equity	$	478,404	$	481,051	Total liabilities and equity	$	465,150	$	463,357

(1) Note that assets of the consolidated VIEs can only be used to settle obligations relating to such VIEs. Liabilities of the consolidated VIEs represent claims against the specific assets of the VIEs.

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


			EXECUTIVE SUMMARY

			Company Overview			2730
			Business Strategy			2831
			Key Transactions			2932
			Key Performance Indicators, Trends and Uncertainties			3032
			Corporate Governance			3234

			LIQUIDITY AND CAPITAL RESOURCES

			Sources and Uses of Cash			3234
			Off-Balance Sheet Arrangements			3335
			Contractual Obligations			3336
			Capital Structure			3336

			RESULTS OF OPERATIONS

			Summary			3437
			Seniors Housing Operating			3438
			Triple-net			3640
			Outpatient Medical			3842
			Non-Segment/Corporate			4043

			OTHER

			Non-GAAP Financial Measures			4144
			Critical Accounting Policies			4750
			Cautionary Statement Regarding Forward-Looking Statements			4851

2629

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

The following discussion and analysis is based primarily on the unaudited consolidated financial statements of Welltower Inc. for the periods presented and should be read together with the notes thereto contained in this Quarterly Report on Form 10-Q. Other important factors are identified in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, including factors identified under the headings “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations"~~Operations."

On March 7, 2022, we announced our intent to complete an UPREIT reorganization. In February 2022, the company formerly known as Welltower Inc. ("Old Welltower") formed WELL Merger Holdco Inc. ("New Welltower") as a wholly owned subsidiary, and New Welltower formed WELL Merger Holdco Sub Inc. ("Merger Sub") as a wholly owned subsidiary. On April 1, 2022, Merger Sub merged with and into Old Welltower, with Old Welltower continuing as the surviving corporation and a wholly owned subsidiary of New Welltower (the "Merger"). ~~References~~In connection with the Merger, Old Welltower's name was changed to "Welltower OP Inc.", and New Welltower inherited the name "Welltower Inc." This Quarterly Report on Form 10-Q pertains to the business and results of Old Welltower for its quarter ended March 31, 2022. We have elected to co-file this report to ensure continuity of information to investors.

Unless the context requires otherwise, references herein to ~~“we,” “us,” “our,” or the “Company”~~"the Company", "we", "us" and "our" refer to Welltower OP Inc. (Old Welltower) through March 31, 2022. Forward-looking references to dates and ~~its subsidiaries unless specifically noted otherwise.~~periods occurring after April 1, 2022 are references to Welltower Inc. (New Welltower).

Executive Summary

Company Overview

Welltower Inc. (NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. As noted above, effective April 1, 2022, Welltower OP Inc. became a wholly owned subsidiary of Welltower Inc. The Company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. Welltower™, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (U.S.), Canada and the United Kingdom (U.K.), consisting of seniors housing and post-acute communities and outpatient medical properties.

The following table summarizes our consolidated portfolio for the three months ended March 31, ~~2021~~2022 (dollars in thousands):


				Percentage of		Number of				Percentage of		Number of
Type of Property	Type of Property	NOI (1)		NOI		Properties	Type of Property	NOI (1)		NOI		Properties
Seniors Housing Operating	Seniors Housing Operating	$	170,434	39.2	%	559	Seniors Housing Operating	$	206,684	38.0	%	774
Triple-net	Triple-net	155,641		35.7	%	649	Triple-net	223,952		41.2	%	578
Outpatient Medical	Outpatient Medical	109,360		25.1	%	290	Outpatient Medical	113,408		20.8	%	311
Totals	Totals	$	435,435	100.0	%	1,498	Totals	$	544,044	100.0	%	1,663

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

The COVID-19 pandemic has had and may continue to have material and adverse effects on our financial condition, results of operations and cash flows in the future. The extent to which the COVID-19 pandemic impacts our operations and those of our operators and tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the effectiveness of vaccines, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, the overall pace of recovery, among others.

Our Seniors Housing Operating revenues are dependent on ~~occupancy. Spot~~ occupancy, which has ~~continued to decline since the beginning of the pandemic, dropping to 73.6% as~~steadily increased in recent months. As of March 31, ~~2021 compared to 75.9% as of December 31, 2020. Approximately 99% of~~2022, nearly all communities are ~~currently accepting~~open for new ~~residents, resulting in an acceleration in move-in activity~~ admissions and ~~an increase in occupancy of approximately 60 basis points from a pandemic-low on March 12, 2021 to 73.8% on April 23, 2021. Additionally, rapid distribution~~allowing visitors, in-person tours and ~~a high acceptance rate of COVID-19 vaccinations by residents within assisted living~~communal dining and ~~memory care facilities in the U.S. and U.K. has resulted in a significant decrease in total resident case counts since mid-January 2021 across the portfolio.~~activities.

We have incurred increased operational costs as a result ~~of the introduction~~ of public health measures and other regulations affecting our properties, as well as additional health and safety measures adopted by us and our operators related to the COVID-19 pandemic, including increases in labor, personal protective equipment and sanitation. We expect total Seniors Housing Operating expenses to remain elevated during the pandemic and potentially beyond as these additional health and safety measures become standard practice.

Our Triple-net operators are experiencing similar trends related to occupancy ~~declines~~ and operating costs ~~as described above~~ with respect to our Seniors Housing Operating properties. However, long-term/post-acute care facilities are generally experiencing a higher degree of occupancy declines. These factors may continue to impact the ability of our Triple-net operators to make contractual rent payments to us in the future. Many of our Triple-net operators received funds under the Coronavirus Aid Relief, and Economic Security Act (“CARES Act”) Paycheck Protection ~~Program. In addition, operators of long-term/post-acute care facilities have generally received funds from Phase 1 of the Provider Relief Fund~~Program and ~~operators of assisted living facilities have generally received funds from Phase 2 and Phase 3 of~~ the Provider Relief Fund.

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

During the early stages of the pandemic in 2020, our Outpatient Medical tenants experienced temporary medical practice closures or decreases in revenue due to government-imposed restrictions on elective medical procedures, stay at home orders or decisions by patients to delay treatments. These factors caused operators or tenants, in certain circumstances, to seek modifications of rent obligations. We evaluated each request on a case-by-case basis to determine if a form of rent relief was warranted following an examination of the tenant’s financial health, rent coverage, current operating situation and other factors. Virtually all deferred rent has been repaid as of March 31, 2021.

During the first quarter, we collected approximately 96% of rent due from operators under Triple-net lease agreements (primarily seniors housing and post-acute care facilities). No significant rent deferrals or rent concessions have been made. In the Outpatient Medical segment we collected 99% of rent due in the first quarter, with uncollected amounts primarily attributable to local jurisdictions with COVID-19 related ordinances providing temporary rent relief to tenants. For both our Triple-net operators and Outpatient Medical tenants, we evaluate leases individually and recognize rent on a cash basis if collectibility of substantially all contractual rent payments is not probable. To the extent the prolonged impact of the COVID-19 pandemic causes operators or tenants to seek further modifications of their lease agreements, we may recognize reductions in revenue and increases in uncollectible receivables.

Business Strategy

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

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

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

For the three months ended March 31, ~~2021,~~2022, resident fees and services and rental income represented ~~69%~~71% and ~~29%~~26%, respectively, of total revenues. Substantially all of our operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. Our yield on loans receivable depends upon a number of factors, including the stated interest rate, the average principal amount outstanding during the term of the loan and any interest rate adjustments.

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

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

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

Depending upon market conditions, we believe that new investments will be available in the future with spreads over our cost of capital that will generate appropriate returns to our stockholders. It is also likely that investment dispositions may occur in the future. To the extent that investment dispositions exceed new investments, our revenues and cash flows from operations could be adversely affected. We expect to reinvest the proceeds from any investment dispositions in new investments. To the extent that new investment requirements exceed our ~~available~~available cash on-hand, we expect to borrow under our unsecured revolving credit ~~facility~~facility and commercial paper program. At March 31, ~~2021,~~2022, we had ~~$2,131,846,000~~$301,089,000 of cash and cash equivalents, ~~$426,976,000~~$65,954,000 of restricted cash and ~~$3,000,000,000~~$3,700,000,000 of available borrowing capacity under our unsecured revolving credit facility.

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

Key Transactions

Capital The following summarizes key capital ~~transaction~~transactions that occurred during the three months ended March 31, 2022:

•In March 2022, we completed the issuance of $550,000,000 senior unsecured notes bearing interest at 3.85% with a maturity date of June 2032.

•In July 2021, we entered into an amended and ~~subsequent events:~~restated ATM Program (as defined below) pursuant to which we may offer and sell up to $2,500,000,000 of common stock from time to time. During the three months ended March 31, 2022, we settled 6,605,191 shares of common stock that were sold under our ATM Program via forward sale agreements resulting in $558,790,000 of gross proceeds.

•During the three months ended March 31, ~~2021,~~2022, we extinguished ~~$41,933,000~~$100,821,000 of secured debt at a blended average interest rate of ~~7.60%~~4.21%.

•During the three months ended March 31, 2021, we sold 2,214,760 shares of common stock under our ATM program via forward sale agreements, generating future expected gross proceeds of approximately $160,375,000.

•On March 25, 2021, we completed the issuance of $750,000,000 senior unsecured notes bearing interest at 2.80% with a maturity date of June 2031. On April 15, 2021, net proceeds were used to redeem $339,128,000 of our 3.75% senior unsecured notes due March 2023 and $334,624,000 of our 3.95% senior unsecured notes due September 2023. We expect to recognize a loss on extinguishment of approximately $51 million in April in conjunction with the transaction.

Investments The following summarizes our property acquisitions and joint venture investments completed during the three months ended March 31, ~~2021~~2022 (dollars in thousands):


		Properties	Investment Amount (1)		Capitalization Rates (2)		Book Amount (3)			Properties	Book Amount (1)		Capitalization Rates (2)
Seniors Housing Operating	Seniors Housing Operating	1	$	5,000	9.6	%	$	5,070	Seniors Housing Operating	10	$	477,605	3.8	%
Triple-net	Triple-net	11	190,416		6.1	%	194,516		Triple-net	—	171		—	%
Outpatient Medical	Outpatient Medical	1	13,997		5.9	%	14,282		Outpatient Medical	4	152,482		5.5	%
Totals	Totals	13	$	209,413	6.2	%	$	213,868	Totals	14	$	630,258	4.2	%

(1) Represents stated pro rata purchase price including cash and any assumed debt but excludes fair value adjustments pursuant to U.S. GAAP.
(1) Represents amounts recorded in net real estate investments including fair value adjustments pursuant to U.S. GAAP. See Note 3 to our unaudited consolidated financial statements for additional information.									(1) Represents amounts recorded in net real estate investments including fair value adjustments pursuant to U.S. GAAP. See Note 3 to our unaudited consolidated financial statements for additional information.
(2) Represents annualized contractual or projected net operating income to be received in cash divided by investment amounts.	(2) Represents annualized contractual or projected net operating income to be received in cash divided by investment amounts.								(2) Represents annualized contractual or projected net operating income to be received in cash divided by investment amounts.
(3) Represents amounts recorded in net real estate investments including fair value adjustments pursuant to U.S. GAAP. See Note 3 to our unaudited consolidated financial statements for additional information.

Dispositions The following summarizes property dispositions completed during the three months ended March 31, ~~2021~~2022 (dollars in thousands):

Properties
Proceeds (1)
Capitalization Rates (2)
Book Amount (3)
Seniors Housing Operating 4 $ 57,501 6.1 % $ 74,326
Outpatient Medical 8 158,878 5.2 % 137,890
Totals 12 $ 216,379 5.5 % $ 212,216
(1) Represents pro rata proceeds received upon disposition including any seller financing.
(2) Represents annualized contractual income that was being received in cash at date of disposition divided by disposition proceeds.
(3) Represents carrying value of net real estate assets at time of disposition. See Note 5 to our unaudited consolidated financial statements for additional information.


	Properties	Proceeds (1)		Book Amount (2)		Capitalization Rates (3)

Triple-net	7	$	73,568	$	52,661	7.4	%



(1) Represents net proceeds received upon disposition, including any seller financing.
(2) Represents carrying value of net real estate assets at time of disposition. See Note 5 to our unaudited consolidated financial statements for additional information.
(3) Represents annualized contractual income that was being received in cash at date of disposition divided by stated purchase price.

Dividends Our Board of Directors declared a cash dividend for ~~the~~the quarter ended March 31, ~~2021~~2022 of $0.61 per share. On May ~~20, 2021,~~31, 2022, we will pay our ~~200~~204th consecutive quarterly cash dividend to stockholders of record on May ~~11, 2021.~~24, 2022.

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

Key Performance Indicators, Trends and Uncertainties

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

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


		Three Months Ended											Three Months Ended
		March 31,		December 31,		September 30,		June 30,		March 31,			March 31,		December 31,		September 30,		June 30,		March 31,
		2021		2020		2020		2020		2020			2022		2021		2021		2021		2021
Net income (loss)	Net income (loss)	$	72,192	$	155,278	$	394,978	$	159,216	$	329,380	Net income (loss)	$	65,751	$	66,194	$	190,336	$	45,757	$	72,192
NICS	NICS	71,546		163,729		325,585		179,246		310,284		NICS	61,925		58,672		179,663		26,257		71,546
FFO	FFO	287,167		225,827		185,014		335,597		356,124		FFO	347,635		338,976		345,739		248,840		287,167
NOI	NOI	434,736		501,455		402,157		527,711		576,821		NOI	542,035		524,085		510,397		498,335		434,736

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

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


		Three Months Ended						Three Months Ended
		March 31,	December 31,	September 30,	June 30,	March 31,		March 31,	December 31,	September 30,	June 30,	March 31,
		2021	2020	2020	2020	2020		2022	2021	2021	2021	2021

Net debt to book capitalization ratio	Net debt to book capitalization ratio	42%	41%	41%	43%	44%	Net debt to book capitalization ratio	43%	42%	42%	43%	41%
Net debt to undepreciated book capitalization ratio	Net debt to undepreciated book capitalization ratio	34%	34%	34%	35%	37%	Net debt to undepreciated book capitalization ratio	35%	35%	35%	35%	34%
Net debt to market capitalization ratio	Net debt to market capitalization ratio	28%	30%	33%	36%	40%	Net debt to market capitalization ratio	24%	26%	27%	26%	28%

Interest coverage ratio	Interest coverage ratio	3.56x	4.20x	6.23x	4.29x	5.42x	Interest coverage ratio	4.03x	3.89x	4.81x	3.30x	3.56x
Fixed charge coverage ratio	Fixed charge coverage ratio	3.16x	3.72x	5.52x	3.84x	4.88x	Fixed charge coverage ratio	3.57x	3.42x	4.22x	2.93x	3.16x

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

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


		Three Months Ended							Three Months Ended
		March 31,	December 31,		September 30,	June 30,	March 31,		March 31,	December 31,	September 30,	June 30,	March 31,
		2021	2020		2020	2020	2020		2022	2021	2021	2021	2021
Property mix:(1)	Property mix:(1)							Property mix:(1)
Seniors Housing Operating	Seniors Housing Operating	39%	32%		43%	34%	42%	Seniors Housing Operating	38%	34%	34%	32%	39%
Triple-net	Triple-net	36%	45%		27%	42%	34%	Triple-net	41%	44%	45%	45%	36%
Outpatient Medical	Outpatient Medical	25%	23%		30%	24%	24%	Outpatient Medical	21%	22%	21%	23%	25%

Relationship mix: (1)	Relationship mix: (1)							Relationship mix: (1)
Sunrise Senior Living (2)		14%	12%		15%	10%	14%
ProMedica	ProMedica	12%	11%		13%	10%	9%	ProMedica	11%	11%	11%	12%	12%
Genesis Healthcare (3)		6%	6%		(16)%	6%	5%
Revera (2)		5%	4%		6%	5%	6%
Sunrise Senior Living								Sunrise Senior Living	6%	7%	9%	10%	14%
Atria Senior Living								Atria Senior Living	5%	4%	3%	—%	—%
HC-One Group								HC-One Group	4%	5%	5%	3%	—%
Avery Healthcare	Avery Healthcare	5%	4%		5%	3%	3%	Avery Healthcare	4%	4%	4%	4%	5%
Remaining relationships	Remaining relationships	58%	63%		77%	66%	63%	Remaining relationships	70%	69%	68%	71%	69%

Geographic mix:(1)	Geographic mix:(1)							Geographic mix:(1)
California	California	15%	12%		17%	14%	15%	California	13%	13%	12%	12%	15%
United Kingdom	United Kingdom	10%	11%		12%	8%	9%	United Kingdom	11%	13%	14%	13%	10%
New Jersey(3)		7%	7%		(5)%	7%	8%
Texas	Texas	7%	10%		12%	10%	7%	Texas	8%	9%	9%	9%	7%
New Jersey								New Jersey	5%	5%	5%	5%	7%
Canada	Canada	7%	5%		8%	6%	7%	Canada	5%	5%	6%	7%	7%
Remaining geographic areas	Remaining geographic areas	54%	55%		56%	55%	54%	Remaining geographic areas	58%	55%	54%	54%	54%

(1) Excludes our share of investments in unconsolidated entities and non-segment/corporate NOI. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount.	(1) Excludes our share of investments in unconsolidated entities and non-segment/corporate NOI. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount.			(1) Excludes our share of investments in unconsolidated entities and non-segment/corporate NOI. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount.
(2) Revera owns a controlling interest in Sunrise Senior Living.
(3) During the three months ended September 30, 2020, we reserved for straight-line rent receivable balances of $91,025,000 relating to Genesis Healthcare.

Lease Expirations The following table sets forth information regarding lease expirations for certain portions of our portfolio as of March 31, ~~2021~~2022 (dollars in thousands):

Expiration Year (1)
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Thereafter
Triple-net:
Properties 67 8 10 4 28 66 18 15 14 23 385
Base rent (2)
$ — $ 2,913 $ 2,482 $ 11,431 $ 6,147 $ 75,872 $ 32,044 $ 16,797 $ 31,393 $ 42,135 $ 342,413
% of base rent — % 0.5 % 0.4 % 2.0 % 1.1 % 13.5 % 5.7 % 3.0 % 5.6 % 7.5 % 60.7 %
Units/beds 8,858 862 1,419 777 1,759 5,032 2,350 1,633 1,214 2,439 38,128
% of Units/beds 13.7 % 1.3 % 2.2 % 1.2 % 2.7 % 7.8 % 3.6 % 2.5 % 1.9 % 3.8 % 59.3 %
Outpatient Medical:
Square feet 1,099,300 1,588,578 1,749,388 1,944,154 1,025,052 1,212,424 993,193 897,601 718,767 1,391,512 3,848,566
Base rent (2)
$ 33,421 $ 47,751 $ 49,075 $ 59,119 $ 28,696 $ 32,311 $ 25,537 $ 23,587 $ 20,824 $ 34,873 $ 83,241
% of base rent 7.6 % 10.9 % 11.2 % 13.5 % 6.5 % 7.4 % 5.8 % 5.4 % 4.7 % 8.0 % 19.0 %
Leases 280 335 362 308 213 203 129 113 71 90 144
% of Leases 12.5 % 14.9 % 16.1 % 13.7 % 9.5 % 9.0 % 5.7 % 5.0 % 3.2 % 4.0 % 6.4 %
(1) Excludes investments in unconsolidated entities, developments, land parcels, loans receivable and sub-leases. Investments classified as held for sale are included in the current year.
(2) The most recent monthly cash base rent annualized. Base rent does not include tenant recoveries or amortization of above and below market lease intangibles or other non-cash income.

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


	Expiration Year (1)
	2022			2023			2024			2025			2026			2027			2028			2029			2030			2031			Thereafter
Triple-net:
Properties	22			2			4			27			66			4			14			4			21			9			390
Base rent (2)	$	4,194		$	840		$	12,110		$	6,612		$	68,008		$	15,191		$	19,383		$	3,972		$	43,322		$	21,203		$	430,445
% of base rent	0.7		%	0.1		%	1.9		%	1.1		%	10.9		%	2.4		%	3.1		%	0.6		%	6.9		%	3.4		%	68.9		%
Units/beds	3,285			222			692			1,725			5,016			633			1,474			219			2,279			896			39,542
% of Units/beds	5.9		%	0.4		%	1.2		%	3.1		%	9.0		%	1.1		%	2.6		%	0.4		%	4.1		%	1.6		%	70.6		%

Outpatient Medical:
Square feet	1,376,952			1,709,614			1,922,175			1,070,893			1,390,852			1,252,589			949,513			790,651			1,492,484			1,399,206			4,358,806
Base rent (2)	$	41,025		$	48,971		$	59,039		$	30,385		$	38,274		$	33,066		$	25,750		$	22,763		$	38,835		$	38,270		$	94,228
% of base rent	8.7		%	10.4		%	12.5		%	6.5		%	8.1		%	7.0		%	5.5		%	4.8		%	8.3		%	8.1		%	20.1		%
Leases	312			363			355			233			258			204			133			90			104			79			185
% of Leases	13.5		%	15.7		%	15.3		%	10.1		%	11.1		%	8.8		%	5.7		%	3.9		%	4.5		%	3.4		%	8.0		%

(1) Excludes our share of investments in unconsolidated entities, developments, land parcels, loans receivable and sub-leases. Investments classified as held for sale are included in the current year.
(2) The most recent monthly cash base rent annualized. Base rent does not include tenant recoveries or amortization of above and below market lease intangibles or other non-cash income.

We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results. Our expected results may not be achieved, and actual results may differ materially from our expectations. Factors that may cause actual results to differ from expected results are described in more detail in “Cautionary Statement Regarding Forward-Looking Statements” and other sections of this Quarterly Report on Form 10-Q. Management regularly monitors economic and other factors to develop strategic and tactical plans designed to improve performance and maximize our competitive position. Our ability to achieve our financial objectives is dependent upon our ability to effectively execute these plans and to appropriately respond to emerging economic and company-specific trends. Please refer to our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations”.~~Operations.”

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

Corporate Governance

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

Liquidity and Capital Resources

Sources and Uses of Cash

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


		Three Months Ended				Change					Three Months Ended				Change
		March 31, 2021		March 31, 2020		$		%			March 31, 2022		March 31, 2021		$		%
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	$	2,021,043	$	385,766	$	1,635,277	424	%	Cash, cash equivalents and restricted cash at beginning of period	$	346,755	$	2,021,043	$	(1,674,288)	(83)	%
Cash provided from (used in) operating activities	Cash provided from (used in) operating activities	303,658		411,857		(108,199)		(26)	%	Cash provided from (used in) operating activities	324,520		303,658		20,862		7	%
Cash provided from (used in) investing activities	Cash provided from (used in) investing activities	(139,140)		149,748		(288,888)		(193)	%	Cash provided from (used in) investing activities	(808,547)		(139,140)		(669,407)		(481)	%
Cash provided from (used in) financing activities	Cash provided from (used in) financing activities	371,903		(544,295)		916,198		168	%	Cash provided from (used in) financing activities	505,105		371,903		133,202		36	%
Effect of foreign currency translation	Effect of foreign currency translation	1,358		(10,010)		11,368		114	%	Effect of foreign currency translation	(790)		1,358		(2,148)		(158)	%
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	2,558,822	$	393,066	$	2,165,756	551	%	Cash, cash equivalents and restricted cash at end of period	$	367,043	$	2,558,822	$	(2,191,779)	(86)	%

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

Operating Activities The changes in net cash provided from operating activities are primarily attributable to declines in revenue as a result of decreased occupancy at our Seniors Housing Operating properties, straight-line receivable reserves related to Triple-net leases during the three months ended March 31, 2021 and dispositions.was immaterial. Please see “Results of Operations” for discussion of net income fluctuations. For the three months ended March 31, ~~2021~~2022 and ~~2020~~,2021, cash flows provided from operations exceeded cash distributions to stockholders.

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


		Three Months Ended				Change		Three Months Ended				Change
		March 31, 2021		March 31, 2020		$				March 31, 2022		March 31, 2021		$
New development	New development	$	73,605	$	48,775	$	24,830		New development	$	138,141	$	73,605	$	64,536
Recurring capital expenditures, tenant improvements and lease commissions	Recurring capital expenditures, tenant improvements and lease commissions	10,754		22,566		(11,812)			Recurring capital expenditures, tenant improvements and lease commissions	32,835		10,754		22,081
Renovations, redevelopments and other capital improvements	Renovations, redevelopments and other capital improvements	18,026		46,816		(28,790)			Renovations, redevelopments and other capital improvements	57,394		18,026		39,368
Total	Total	$	102,385	$	118,157	$	(15,772)		Total	$	228,370	$	102,385	$	125,985

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

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

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

OnIn March ~~25, 2021,~~2022, we completed the issuance of ~~$750,000,000~~$550,000,000 senior unsecured notes with a maturity date of June ~~2031. On April 15, 2021, net proceeds were used to redeem the remaining $339,128,000 of our 3.75% senior unsecured notes due 2023 and $334,624,000 of our 3.95% senior unsecured notes due 2023.~~2032. As of March 31, ~~2021,~~2022, we have total near-term available liquidity of approximately ~~$5.1~~$4.1 billion. However, we are unable to accurately predict the full impact that the pandemic will have on our results from operations, financial condition, liquidity and cash flows due to numerous factors discussed in ~~our Annual Report on Form 10-K for the year ended December 31, 2020, including factors identified under the heading “Risk Factors"~~.

Off-Balance Sheet Arrangements

At March 31, ~~2021,~~2022, we had investments in unconsolidated entities with our ownership generally ranging from 10% to ~~65%~~88%. We use financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure. At March 31, ~~2021,~~2022, we had 1017 outstanding letter of credit obligations. Please see Notes 8, 12 and 13 to our unaudited consolidated financial statements for additional information.

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

Contractual Obligations

The following table summarizes our payment requirements under contractual obligations as of March 31, ~~2021~~2022 (in thousands):


		Payments Due by Period											Payments Due by Period
Contractual Obligations	Contractual Obligations	Total		2021		2022-2023		2024-2025		Thereafter		Contractual Obligations	Total		2022		2023-2024		2025-2026		Thereafter

Unsecured credit facility and commercial paper (1,3)												Unsecured credit facility and commercial paper (1,3)	$	300,000	$	—	$	—	$	300,000	$	—
Senior unsecured notes and term credit facilities: (1)	Senior unsecured notes and term credit facilities: (1)											Senior unsecured notes and term credit facilities: (1)
U.S. Dollar senior unsecured notes	U.S. Dollar senior unsecured notes	$	9,023,752	$	—	$	673,752	$	2,600,000	$	5,750,000	U.S. Dollar senior unsecured notes	9,900,000		—		1,350,000		1,950,000		6,600,000
Canadian Dollar senior unsecured notes (2)	Canadian Dollar senior unsecured notes (2)	238,620		—		—		—		238,620		Canadian Dollar senior unsecured notes (2)	240,347		—		—		—		240,347
Pounds Sterling senior unsecured notes (2)	Pounds Sterling senior unsecured notes (2)	1,448,370		—		—		—		1,448,370		Pounds Sterling senior unsecured notes (2)	1,380,960		—		—		—		1,380,960
U.S. Dollar term credit facility	U.S. Dollar term credit facility	1,370,000		—		1,370,000		—		—		U.S. Dollar term credit facility	510,000		—		500,000		10,000		—
Canadian Dollar term credit facility (2)	Canadian Dollar term credit facility (2)	198,850		—		198,850		—		—		Canadian Dollar term credit facility (2)	200,288		—		200,288		—		—
Secured debt: (1,2)	Secured debt: (1,2)											Secured debt: (1,2)
Consolidated	Consolidated	2,336,172		438,772		837,504		364,577		695,319		Consolidated	2,115,641		575,737		633,350		277,288		629,266
Unconsolidated	Unconsolidated	1,139,839		16,407		238,886		608,952		275,594		Unconsolidated	1,266,905		146,558		302,886		552,529		264,932
Contractual interest obligations: (3)	Contractual interest obligations: (3)											Contractual interest obligations: (3)

Unsecured credit facility and commercial paper												Unsecured credit facility and commercial paper	12,821		2,263		6,033		4,525		—
Senior unsecured notes and term loans (2)	Senior unsecured notes and term loans (2)	3,977,707		320,376		862,041		694,592		2,100,698		Senior unsecured notes and term loans (2)	3,797,590		326,226		841,203		666,489		1,963,672
Consolidated secured debt (2)	Consolidated secured debt (2)	296,984		52,586		97,575		58,678		88,145		Consolidated secured debt (2)	212,912		45,628		75,365		43,926		47,993
Unconsolidated secured debt (2)	Unconsolidated secured debt (2)	204,961		28,292		70,570		45,104		60,995		Unconsolidated secured debt (2)	176,900		31,013		66,623		26,522		52,742
Financing lease liabilities (4)	Financing lease liabilities (4)	193,288		6,551		77,850		2,864		106,023		Financing lease liabilities (4)	208,588		6,429		71,634		3,354		127,171
Operating lease liabilities (4)	Operating lease liabilities (4)	981,936		14,985		37,538		33,341		896,072		Operating lease liabilities (4)	1,375,702		30,777		87,980		87,324		1,169,621
Purchase obligations (5)	Purchase obligations (5)	792,829		363,539		372,211		49,804		7,275		Purchase obligations (5)	1,845,205		914,297		883,699		47,202		7

Total contractual obligations	Total contractual obligations	$	22,203,308	$	1,241,508	$	4,836,777	$	4,457,912	$	11,667,111	Total contractual obligations	$	23,543,859	$	2,078,928	$	5,019,061	$	3,969,159	$	12,476,711

(1) Amounts represent principal amounts due and do not reflect unamortized premiums/discounts or other fair value adjustments as reflected on the balance sheet.	(1) Amounts represent principal amounts due and do not reflect unamortized premiums/discounts or other fair value adjustments as reflected on the balance sheet.											(1) Amounts represent principal amounts due and do not reflect unamortized premiums/discounts or other fair value adjustments as reflected on the balance sheet.
(2) Based on foreign currency exchange rates in effect as of balance sheet date.	(2) Based on foreign currency exchange rates in effect as of balance sheet date.											(2) Based on foreign currency exchange rates in effect as of balance sheet date.
(3) Based on variable interest rates in effect as of balance sheet date.
(3) Based on variable interest rates in effect as of the balance sheet date.												(3) Based on variable interest rates in effect as of the balance sheet date.
(4) See Note 6 to our unaudited consolidated financial statements for additional information.	(4) See Note 6 to our unaudited consolidated financial statements for additional information.											(4) See Note 6 to our unaudited consolidated financial statements for additional information.
(5) See Note 13 to our unaudited consolidated financial statements for additional information.	(5) See Note 13 to our unaudited consolidated financial statements for additional information.											(5) See Note 13 to our unaudited consolidated financial statements for additional information.

Capital Structure

Please refer to “Credit Strength” above for a discussion of our leverage and coverage ratio trends. Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As of March 31, ~~2021,~~2022, we were in compliance in all material respects with ~~all~~the covenants under our ~~primary unsecured credit facilities and senior note~~debt agreements. ~~None~~None of our debt agreements contain provisions for acceleration which could be triggered by our debt ratings. However, under our primary unsecured credit facility, the ratings on our senior unsecured notes are used to determine the fees and interest charged. We plan to manage the company to maintain compliance with our debt covenants and with a capital structure consistent with our current profile. Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse impact on our cost and availability of capital, which could have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.

On April 1, 2022, Welltower Inc. and Welltower OP Inc. jointly filed with the Securities and Exchange Commission (the “SEC”) an open-ended automatic or “universal” shelf registration statement on Form S-3 covering an indeterminate amount of future offerings of Welltower Inc.’s debt securities, common stock, preferred stock, depositary shares, guarantees of debt securities issued by Welltower OP Inc., warrants and units and Welltower OP Inc.’s debt securities and guarantees of debt securities issued by Welltower Inc. to replace Old Welltower’s existing “universal” shelf registration statement filed with the SEC on May 4, 2021. On April 1, 2022, Welltower Inc. also filed with the SEC a registration statement in connection with its enhanced dividend reinvestment plan (“DRIP”) under which it may issue up to 15,000,000 shares of common stock to replace Old Welltower’s existing DRIP registration statement on Form S-3 filed with the SEC on May 4, 2021. As of April 29, 2022, 15,000,000 shares of common stock remained available for issuance under the DRIP registration statement. On April 4, 2022, Welltower Inc. and Welltower OP Inc. entered into (i) a second amended and restated equity distribution agreement (the “EDA”) with (i) Robert W. Baird & Co. Incorporated, Barclays Capital Inc., BMO Capital Markets Corp., BNP Paribas Securities Corp., BNY Mellon Capital Markets, LLC, BofA Securities, Inc., BOK Financial Securities, Inc., Capital One Securities Inc., Citigroup Global Markets Inc., Comerica Securities, Inc., Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., Fifth Third Securities, Inc., Goldman Sachs & Co. LLC, Jefferies LLC, JMP Securities LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc., Loop Capital Markets LLC, Mizuho Securities USA LLC, Morgan Stanley & Co. LLC, MUFG Securities Americas Inc., RBC Capital Markets, LLC, Regions Securities LLC, Scotia Capital (USA) Inc.,

3336

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

~~On May 17, 2018, we filed with the~~SMBC Nikko Securities and Exchange Commission (1) an open-ended automatic or “universal” shelf registration statement covering an indeterminate amount of future offerings of debt securities, common stock, preferred stock, depositary shares, warrants and units and (2) a registration statement in connection with our enhanced dividend reinvestment plan (“DRIP”) under which we may issue up to 15,000,000 shares of common stock. As of April 23, 2021, 2,541,750 shares of common stock remained available for issuance under the DRIP registration statement. On February 25, 2019, we entered into separate amended and restated equity distribution agreements with each of Barclays CapitalAmerica, Inc., ~~Citigroup Global Markets~~Synovus Securities, Inc., ~~Credit Agricole~~TD Securities (USA) ~~Inc., Deutsche Bank~~LLC, Truist Securities, Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. LLC, MUFG Securities Americas Inc., RBC Capital Markets, LLC, UBS Securities LLC and Wells Fargo Securities, LLC as sales agents and forward sellers and (ii) the forward purchasers named therein relating to ~~the offer~~issuances, offers and ~~sale~~sales from time to time of up to ~~$1,500,000,000~~$3,000,000,000 aggregate amount of ~~our~~ common stock ~~(“Equity Shelf~~of Welltower Inc. (together with the existing master forward sale confirmations relating thereto, the “ATM Program”)., amending and restating the ATM Program entered into on July 30, 2021 to, among other amendments, increase the total amount of shares of common stock that may be offered and sold under the ATM Program from $2,500,000,000 to $3,000,000,000, which amount excludes shares Old Welltower had previously sold pursuant to the prior program. The ~~Equity Shelf~~ATM Program also allows usWelltower Inc. to enter into forward sale agreements. As of April ~~23, 2021,~~29, 2022, we had ~~$499,341,000~~ $3,000,000,000 of remaining capacity under the ~~Equity Shelf~~ATM Program, which excludes forward sales agreements outstanding for the sale of ~~3,704,787 shares~~4,662,141 shares or approximately $~~272,059,000~~$450,291,000 with maturity dates in ~~2022.~~2023. In addition, we have forward sale agreements for the sale of 14,847,242 shares or approximately $1,307,384,000 with maturity dates in 2023 under the July 30, 2021 ATM Program. We expect to physically settle the forward sales for cash proceeds. Depending upon market conditions, we anticipate issuing securities under our registration statements to invest in additional properties and to repay borrowings under our unsecured revolving credit facility and commercial paper program.

In connection with the filing of the new “universal” shelf registration statement, Welltower Inc. also filed with the SEC two prospectus supplements that will continue offerings that were previously covered by Old Welltower’s prospectus supplements and the accompanying prospectus to the prior registration statement relating to: (i) the registration and possible issuance of up to 620,731 shares of common stock of Welltower Inc. (the “DownREIT Shares”), that may be issued from time to time if, and to the extent that, certain holders of Class A units (the “DownREIT Units”) of HCN G&L DownREIT, LLC, a Delaware limited liability company (the “DownREIT”), tender such DownREIT Units for redemption by the DownREIT, and HCN DownREIT Member, LLC, a majority-owned indirect subsidiary of Welltower Inc. (including its permitted successors and assigns, the “Managing Member”), or a designated affiliate of the Managing Member, elects to assume the redemption obligations of the DownREIT and to satisfy all or a portion of the redemption consideration by issuing DownREIT Shares to the holders instead of or in addition to paying a cash amount; and (ii) the registration and possible issuance of up to 475,327 shares common stock of Welltower Inc. (the “DownREIT II Shares”), that may be issued from time to time if, and to the extent that, certain holders of Class A units (the “DownREIT II Units,” and collectively with the DownREIT Units, the “Units”) of HCN G&L DownREIT II LLC, a Delaware limited liability company (the “DownREIT II”), tender such DownREIT II Units for redemption by the DownREIT II, and the Managing Member, or a designated affiliate of the Managing Member, elects to assume the redemption obligations of the DownREIT II and to satisfy all or a portion of the redemption consideration by issuing DownREIT II Shares to the holders instead of or in addition to paying a cash amount.

Results of Operations

Summary

Our primary sources of revenue include resident fees and services, rent and interest income. Our primary expenses include property operating expenses, depreciation and amortization, interest expense, general and administrative expenses and other expenses. We evaluate our business and make resource allocations on our three business segments: Seniors Housing Operating, Triple-net and Outpatient Medical. The primary performance measures for our properties are NOI and same store NOI ("SSNOI"), and other supplemental measures include ~~FFO~~Funds From Operations ("FFO") and EBITDA, which are further discussed below. Please see Non-GAAP Financial Measures for additional information and reconciliations. The following is a summary of our results of operations (dollars in thousands, except per share amounts):


		Three Months Ended						Change					Three Months Ended		Change
		March 31,			March 31,										March 31,			March 31,
		2021			2020			Amount			%				2022			2021			Amount			%
Net income	Net income	$	72,192		$	329,380		$	(257,188)		(78)	%		Net income	$	65,751		$	72,192		$	(6,441)		(9)	%
NICS	NICS	71,546			310,284			(238,738)			(77)	%		NICS	61,925			71,546			(9,621)			(13)	%
FFO	FFO	287,167			356,124			(68,957)			(19)	%		FFO	347,635			287,167			60,468			21	%
EBITDA	EBITDA	443,703			751,630			(307,927)			(41)	%		EBITDA	496,548			443,703			52,845			12	%
NOI	NOI	434,736			576,821			(142,085)			(25)	%		NOI	542,035			434,736			107,299			25	%
SSNOI	SSNOI	395,076			461,491			(66,415)			(14)	%		SSNOI	391,228			388,964			2,264			1	%
Per share data (fully diluted):	Per share data (fully diluted):													Per share data (fully diluted):
NICS	NICS	$	0.17		$	0.75		$	(0.58)		(77)	%		NICS	$	0.14		$	0.17		$	(0.03)		(18)	%
FFO	FFO	$	0.69		$	0.86		$	(0.17)		(20)	%		FFO	$	0.77		$	0.69		$	0.08		12	%

Interest coverage ratio	Interest coverage ratio	3.56		x	5.42		x	(1.86)		x	(34)	%		Interest coverage ratio	4.03		x	3.56		x	0.47		x	13	%
Fixed charge coverage ratio	Fixed charge coverage ratio	3.16		x	4.88		x	(1.72)		x	(35)	%		Fixed charge coverage ratio	3.57		x	3.16		x	0.41		x	13	%

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

Seniors Housing Operating

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

QTD Pool
Three Months Ended Change
March 31, 2021 March 31, 2020 $ %
SSNOI (1)
$ 156,791 $ 219,756 $ (62,965) (28.7) %


	QTD Pool
	Three Months Ended				Change
	March 31, 2022		March 31, 2021		$		%
SSNOI (1)	$	143,572	$	151,610	$	(8,038)	(5.3)	%

(1) For the ~~three months ended March 31, 2021 and 2020,~~QTD Pool, amounts relate tto ~~o 526~~532 same store properties, respectively. Please see Non-GAAP Financial Measures for additional information and reconciliations.

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


	Three Months Ended				Change
	March 31,		March 31,
	2022		2021		$		%
Revenues:
Resident fees and services	$	994,335	$	723,464	$	270,871	37	%
Interest income	1,417		1,119		298		27	%
Other income	860		1,819		(959)		(53)	%
Total revenues	996,612		726,402		270,210		37	%
Property operating expenses	789,928		555,968		233,960		42	%
NOI (1)	206,684		170,434		36,250		21	%
Other expenses:
Depreciation and amortization	192,793		132,586		60,207		45	%
Interest expense	7,650		11,418		(3,768)		(33)	%
Loss (gain) on extinguishment of debt, net	(15)		(4,643)		4,628		100	%
Provision for loan losses, net	267		251		16		6	%
Impairment of assets	—		4,604		(4,604)		(100)	%
Other expenses	8,191		3,459		4,732		137	%
	208,886		147,675		61,211		41	%
Income (loss) from continuing operations before income taxes and other items	(2,202)		22,759		(24,961)		(110)	%
Income (loss) from unconsolidated entities	(17,782)		5,234		(23,016)		(440)	%
Gain (loss) on real estate dispositions, net	2,701		5,195		(2,494)		(48)	%
Income from continuing operations	(17,283)		33,188		(50,471)		(152)	%
Net income (loss)	(17,283)		33,188		(50,471)		(152)	%
Less: Net income (loss) attributable to noncontrolling interests	(5,381)		(4,924)		(457)		(9)	%
Net income (loss) attributable to common stockholders	$	(11,902)	$	38,112	$	(50,014)	(131)	%

(1) See Non-GAAP Financial Measures below.

Resident fees and services and property operating expenses increased for the three month period ended March 31, 2022 compared to the same period in the prior year primarily due to acquisitions, including the acquisition of the Holiday Retirement portfolio on July 30, 2021 for a total purchase price of $1.6 billion. The increases were partially offset by decreases due to property dispositions.

Our Seniors Housing Operating revenues are dependent on occupancy, which has steadily increased in recent months. As of March 31, 2022, nearly all communities are open for new admissions and allowing visitors, in-person tours and communal dining and activities. Average occupancy increased from 73.0% to 77.5% for the three months ended March 31, 2022 and 2021, respectively. Occupancy metrics represent occupancy at our share for 543 properties in operation as of December 31, 2020, including unconsolidated properties but excluding acquisitions, executed dispositions, development conversions and four closed properties.

Property-level operating expenses associated with the COVID-19 pandemic relating to our Seniors Housing Operating portfolio totaled $11,003,000 and $27,976,000 for the three months ended March 31, 2022 and 2021, respectively. These expenses were incurred as a result of the introduction of public health measures and other regulations affecting our properties, as well as additional health and safety measures adopted by us and our operators related to the COVID-19 pandemic, including increases in labor and property cleaning expenses and expenditures related to our efforts to procure personal protective equipment and supplies, net of reimbursements. Certain new expenses incurred since the start of the pandemic may continue on an ongoing basis as part of new health and safety protocols.

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

Three Months Ended Change
March 31, March 31,
2021 2020 $ %
Revenues:
Resident fees and services $ 723,464 $ 849,972 $ (126,508) (15) %
Interest income 1,119 104 1,015 976 %
Other income 1,819 1,052 767 73 %
Total revenues 726,402 851,128 (124,726) (15) %
Property operating expenses 555,968 607,871 (51,903) (9) %
NOI (1)
170,434 243,257 (72,823) (30) %
Other expenses:
Depreciation and amortization 132,586 146,774 (14,188) (10) %
Interest expense 11,418 16,434 (5,016) (31) %
Loss (gain) on extinguishment of debt, net (4,643) — (4,643) n/a
Provision for loan losses 251 — 251 n/a
Impairment of assets 4,604 3,495 1,109 32 %
Other expenses 3,459 2,989 470 16 %
147,675 169,692 (22,017) (13) %
Income (loss) from continuing operations before income taxes and other items 22,759 73,565 (50,806) (69) %
Income (loss) from unconsolidated entities 5,234 (11,024) 16,258 147 %
Gain (loss) on real estate dispositions, net 5,195 (149) 5,344 n/a
Income from continuing operations 33,188 62,392 (29,204) (47) %
Net income (loss) 33,188 62,392 (29,204) (47) %
Less: Net income (loss) attributable to noncontrolling interests (4,924) (1,932) (2,992) n/a
Net income (loss) attributable to common stockholders $ 38,112 $ 64,324 $ (26,212) (41) %
(1) See Non-GAAP Financial Measures below.

~~Decreases in resident fees~~In 2021 and ~~services~~2022, we received government grants under the CARES Act primarily to cover increased expenses and ~~property operating expenses are primarily a result of decreases in occupancy across the portfolio due to~~lost revenue during the COVID-19 pandemic, ~~and property dispositions. Spot occupancy has continued to decline since the beginning of the pandemic, dropping to 73.6%~~ as ~~of March 31, 2021 compared to 75.9%~~well as ~~of December 31, 2020.~~ ~~Spot occupancy rates from the start of the pandemic through March 31, 2021 are as follows:~~

February 2020 December 2020 January 2021 February 2021 March 2021
Spot occupancy (1)
85.4 % 75.9 % 74.4 % 73.6 % 73.6 %
Sequential occupancy change (1.5) % (0.8) % — %

~~(1)~~ Spot occupancy represents approximate month end occupancy at our share for properties in operation as of February 29, 2020, including unconsolidated properties but excluding acquisitions, dispositions and development conversions since this date.

~~Property-level operating expenses associated with the COVID-19 pandemic relating to our Seniors Housing Operating portfolio, net of reimbursements including Provider Relief Funds and~~under similar programs in the U.K. and ~~Canada, resulted in a benefit of approximately $21,204,000 for~~Canada. For the three months ended March 31, 2022 and 2021, ~~as compared to an expense~~we recognized $5,760,000 and $49,180,000, respectively, of $7,294,000 during the three months ended March 31, 2020. These costs included higher labor expenses, coupled with expenditures related to procurement of personal protective equipment and other supplies, net of any reimbursements.

In 2020 applications were made for amounts under Phase 2 and Phase 3 of the Provider Relief Fund related to our Seniors Housing Operating portfolio. During the first quarter, we received Provider Relief Funds of approximately $35,682,000, which was recognizedgovernment grant income as a reduction to ~~COVID-19 costs within~~ property operating ~~expenses.~~expenses in our Consolidated Statements of Comprehensive Income.

The fluctuations in depreciation and amortization are due to acquisitions, dispositions and transitions. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly.

During the three months ended March 31, 2021, ~~and 2020,~~ we recorded impairment charges of $4,604,000 ~~and $3,495,000, respectively,~~ related to one held for use ~~properties~~property in which the carrying ~~values exceed~~value exceeded the estimated fair value. Transaction costs related to asset acquisitions are capitalized as a component of the purchase price. Changes in the gain on sales of properties are related to the volume and timing of property sales and the sales prices. During the three months ended March 31, 2021, we recognized a gain on real estate disposition of $5,195,000 related to four properties. The fluctuation in other expenses is primarily due to the timing of noncapitalizable transaction costs associated with acquisitions and operator transitions. Changes in the gain on sales of properties are related to the volume and timing of property sales and the sales prices.

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

During the three months ended March 31, ~~2021, there were no~~2022, we completed one Seniors Housing Operating construction ~~projects completed.~~ project representing $73,458,000 or $720,176 per unit. The following is a summary of our Seniors Housing Operating construction projects, excluding expansions, pending as of March 31, ~~2021~~2022 (dollars in thousands):


Location	Location	Units	Commitment		Balance		Est. Completion	Location	Units/Beds	Commitment		Balance		Est. Completion
Potomac, MD		120	$	56,720	$	55,657	2Q21
Beckenham, UK		100	64,970		50,660		4Q21
Barnet, UK	Barnet, UK	100	71,453		45,194		4Q21	Barnet, UK	100	$	68,127	$	61,496	2Q22
Hendon, UK		102	76,557		54,698		4Q21
Georgetown, TX		188	36,215		5,308		4Q21
Sachse, TX								Sachse, TX	193	38,054		18,639		3Q22
Princeton, NJ	Princeton, NJ	80	29,780		18,559		3Q22	Princeton, NJ	80	29,780		27,932		3Q22
Berea, OH	Berea, OH	120	14,934		2,344		4Q22	Berea, OH	120	14,934		12,483		3Q22
Painesville, OH	Painesville, OH	119	14,462		1,857		4Q22	Painesville, OH	119	14,462		10,702		3Q22
Beaver, PA	Beaver, PA	116	14,184		2,390		4Q22	Beaver, PA	116	14,184		9,813		3Q22
New Rochelle, NY								New Rochelle, NY	72	42,669		18,184		4Q22
Pflugerville, TX								Pflugerville, TX	196	39,500		15,542		4Q22
Georgetown, TX								Georgetown, TX	188	36,215		18,897		4Q22
Denton, TX								Denton, TX	65	20,194		7,293		4Q22
Brookline, MA								Brookline, MA	159	145,990		38,683		2Q23
Lake Jackson, TX								Lake Jackson, TX	130	32,020		4,378		2Q23
Charlotte, NC								Charlotte, NC	328	96,416		37,707		3Q23
White Marsh, MD								White Marsh, MD	188	78,610		8,535		3Q23
Weymouth, MA								Weymouth, MA	165	77,545		15,999		3Q23
Glendale, AZ								Glendale, AZ	204	54,250		8,518		3Q23
Miami Twp, OH								Miami Twp, OH	122	18,206		2,179		4Q23
Gaithersburg, MD								Gaithersburg, MD	302	173,548		32,770		2Q24
Leander, TX								Leander, TX	72	26,761		3,705		2Q24
Temple, TX								Temple, TX	245	65,569		5,574		4Q24
Kyle, TX								Kyle, TX	225	62,700		4,616		1Q25
		1,045	$	379,275	236,667				3,389	$	1,149,734	363,645
Toronto, ON		Project in planning stage			47,970
Brookline, MA		Project in planning stage			24,632
Washington, DC		Project in planning stage			24,467
Columbus, OH		Project in planning stage			11,634
Brookhaven, GA		Project in planning stage			6,804
Raleigh, NC		Project in planning stage			3,407
Boise, ID(1)								Boise, ID(1)				33,639
Boise, ID(1)								Boise, ID(1)				12,326
Brookhaven, GA(1)								Brookhaven, GA(1)				10,943
Columbus, OH(1)								Columbus, OH(1)				14,067
Kansas City, MO(1)								Kansas City, MO(1)				12,404
Raleigh, NC(1)								Raleigh, NC(1)				3,544
Toronto, ON(1)								Toronto, ON(1)				51,600
Washington, DC(1)								Washington, DC(1)				32,554
Wellesley, MA(1)								Wellesley, MA(1)				9,500
					$	355,581						$	544,222

(1) Final units/beds, commitment amount and expected conversion date not yet known.								(1) Final units/beds, commitment amount and expected conversion date not yet known.

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

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


		Three Months Ended
		March 31, 2021				March 31, 2020				Three Months Ended
				Wtd. Avg.				Wtd. Avg.				March 31, 2022				March 31, 2021
		Amount		Interest Rate		Amount		Interest Rate				Amount		Weighted Average Interest Rate		Amount		Weighted Average Interest Rate
Beginning balance	Beginning balance	$	1,706,189	3.05	%	$	2,115,037	3.54	%		Beginning balance	$	1,599,522	2.81	%	$	1,706,189	3.05	%

Debt transferred											Debt transferred	32,478		4.79	%	—		—	%
Debt issued	Debt issued	—		—	%	44,921		2.58	%		Debt issued	5,385		3.08	%	—		—	%

Debt extinguished	Debt extinguished	(41,933)		7.60	%	(16,040)		4.51	%		Debt extinguished	(94,647)		4.21	%	(41,933)		7.60	%

Principal payments	Principal payments	(12,261)		3.26	%	(12,174)		3.49	%		Principal payments	(12,998)		2.92	%	(12,261)		3.26	%
Foreign currency	Foreign currency	15,283		2.81	%	(86,818)		3.25	%		Foreign currency	24,733		2.73	%	15,283		2.81	%
Ending balance	Ending balance	$	1,667,278	2.89	%	$	2,044,926	3.56	%		Ending balance	$	1,554,473	2.83	%	$	1,667,278	2.89	%

Monthly averages	Monthly averages	$	1,688,213	2.99	%	$	2,080,448	3.54	%		Monthly averages	$	1,606,723	2.84	%	$	1,688,213	2.99	%

The majority of our Seniors Housing Operating properties are formed through partnership interests. ~~Income~~The fluctuation in income from unconsolidated entities ~~recognized during the three months ended March 31, 2021~~ is primarily due to a gain ~~on sale~~ recognized from the sale of a home health business owned by one of our unconsolidated entities ~~offset by losses from unconsolidated entities largely attributable to depreciation and amortization of short-lived intangible assets related to certain investments in unconsolidated joint ventures.~~during the three months ended March 31, 2021. Net income attributable to noncontrolling interests represents our partners’ share of net income (loss) related to joint ventures.

Triple-net

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

QTD Pool
Three Months Ended Change
March 31, 2021 March 31, 2020 $ %
SSNOI (1)
$ 141,089 $ 147,527 $ (6,438) (4.4) %


	QTD Pool
	Three Months Ended				Change
	March 31, 2022		March 31, 2021		$		%



SSNOI (1)	$	144,488	$	137,314	$	7,174	5.2	%

(1) For the ~~three months ended March 31, 2021 and 2020,~~QTD Pool, amounts relate to 533 sa ~~553~~ ~~same~~me store ~~properties, respectively.~~properties. Please see Non-GAAP Financial Measures for additional information and reconciliations.

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


	Three Months Ended				Change
	March 31,		March 31,
	2022		2021		$		%
Revenues:
Rental income	$	196,001	$	152,463	$	43,538	29	%
Interest income	37,506		14,922		22,584		151	%
Other income	1,656		1,097		559		51	%
Total revenues	235,163		168,482		66,681		40	%
Property operating expenses	11,211		12,841		(1,630)		(13)	%
NOI (1)	223,952		155,641		68,311		44	%
Other expenses:
Depreciation and amortization	53,504		56,667		(3,163)		(6)	%
Interest expense	314		1,882		(1,568)		(83)	%
Loss (gain) on derivatives and financial instruments, net	2,578		1,934		644		33	%

Provision for loan losses, net	(1,065)		853		(1,918)		(225)	%
Impairment of assets	—		18,964		(18,964)		(100)	%
Other expenses	11,044		4,983		6,061		122	%
	66,375		85,283		(18,908)		(22)	%
Income (loss) from continuing operations before income taxes and other items	157,577		70,358		87,219		124	%
Income (loss) from unconsolidated entities	15,543		4,907		10,636		217	%
Gain (loss) on real estate dispositions, net	20,449		2,042		18,407		901	%
Income from continuing operations	193,569		77,307		116,262		150	%
Net income	193,569		77,307		116,262		150	%
Less: Net income (loss) attributable to noncontrolling interests	7,065		3,400		3,665		108	%
Net income attributable to common stockholders	$	186,504	$	73,907	$	112,597	152	%

(1) See Non-GAAP Financial Measures below.

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

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

Three Months Ended Change
March 31, March 31,
2021 2020 $ %
Revenues:
Rental income $ 152,463 $ 191,385 $ (38,922) (20) %
Interest income 14,922 14,671 251 2 %
Other income 1,097 1,673 (576) (34) %
Total revenues 168,482 207,729 (39,247) (19) %
Property operating expenses 12,841 13,302 (461) (3) %
NOI (1)
155,641 194,427 (38,786) (20) %
Other expenses:
Depreciation and amortization 56,667 57,694 (1,027) (2) %
Interest expense 1,882 2,852 (970) (34) %
Loss (gain) on derivatives and financial instruments, net 1,934 7,651 (5,717) (75) %
Provision for loan losses 853 7,072 (6,219) (88) %
Impairment of assets 18,964 24,332 (5,368) (22) %
Other expenses 4,983 513 4,470 871 %
85,283 100,114 (14,831) (15) %
Income (loss) from continuing operations before income taxes and other items 70,358 94,313 (23,955) (25) %
Income (loss) from unconsolidated entities 4,907 5,796 (889) (15) %
Gain (loss) on real estate dispositions, net 2,042 49,637 (47,595) (96) %
Income from continuing operations 77,307 149,746 (72,439) (48) %
Net income 77,307 149,746 (72,439) (48) %
Less: Net income (loss) attributable to noncontrolling interests 3,400 18,575 (15,175) (82) %
Net income attributable to common stockholders $ 73,907 $ 131,171 $ (57,264) (44) %
(1) See Non-GAAP Financial Measures below.

~~Continued decreases in rental~~Rental income ~~are~~has increased primarily ~~attributable~~due to the ~~reserve~~timing of the establishment of reserves for straight-line rent ~~receivables~~receivable balances ~~of $49,241,000 and $32,268,000 during the three month periods ended March 31, 2021 and 2020, respectively,~~ relating to leases for which collection of substantially all contractual lease payments ~~was~~is no longer deemed probable. During the three months ended March 31, 2021, we recorded reserves for previously recognized straight-line receivables of $49,241,000.

Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index and/or changes in the gross operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If gross operating revenues at our facilities and/or the Consumer Price Index do not increase, a portion of our revenues may not continue to increase. For the three months ended March 31, ~~2021,~~2022, we had 16eight leases with rental rate increases ranging from ~~0.25%~~0.26% to ~~10.00%~~57.76% in our Triple-net portfolio. Our Triple-net operators are experiencing similar impacts on occupancy and operating costs due to the COVID-19 pandemic as ~~described above with respect to~~ our Seniors Housing Operating properties. ~~However, long-term/~~Long-term/post-acute facilities ~~are~~have generally ~~experiencing~~experienced a higher degree of occupancy declines, which ~~may impact~~in some cases impacted the ability of our Triple-net operators to make contractual rent payments to ~~us in the future. Many~~us. However, many of our Triple-net operators received funds under the CARES Act Paycheck Protection ~~Program. In addition, operators of long-term/post-acute facilities have generally received funds from Phase 1 of~~Program and the Provider Relief ~~Fund and operators of assisted living facilities have received funds from Phase 2 and Phase 3 of the Provider Relief~~ Fund. During the first quarter, we collected approximately 96% of rent due from operators under Triple-net lease agreements (primarily seniors housing and post-acute care facilities). No significant rent deferrals or rent concessions have been made. We evaluate leases individually and recognize rent on a cash basis if collectibility of substantially all contractual rent payments is not probable.

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

~~In March 2020, we~~The increase to interest income is primarily driven by the interest recognized ~~a provision for~~on senior loan ~~losses~~financings of ~~$6,898,000~~£540,000,000 to ~~fully reserve for a non-real estate loans receivable that was no longer deemed collectible.~~ affiliates of Safanad as part of the recapitalization of its investment in HC-One Group during the second quarter 2021.

During the three months ended March 31, 2021, we recorded impairment charges of $18,964,000 related to one held for sale property and two held for use properties. During the three months ended March 31, 2020, we recorded impairment charges of $24,332,000 related to two held for use properties. Changes in the gain on sales of properties are related to the volume and timing of property sales and the sales prices. Transaction costs related to asset acquisitions are capitalized as a component of purchase price. The fluctuation in other expenses is primarily due to noncapitalizable transaction costs from acquisitions and segment transitions.

~~Item 2.~~ ~~Management's Discussion~~ Changes in the gain on sales of properties are related to the volume and ~~Analysis~~timing of ~~Financial Condition~~property sales and ~~Results of Operations~~

the sales prices.

During the three months ended March 31, ~~2021, we completed one~~2022, there were no Triple-net ~~construction project representing $22,990,000 or $280,366 per unit.~~projects completed. The following is a summary of our consolidated Triple-net construction projects, excluding expansions, pending as of March 31, ~~2021~~2022 (dollars in thousands):


Location	Location	Units/Beds	Commitment		Balance		Est. Completion	Location	Units/Beds	Commitment		Balance		Est. Completion
Redhill, UK	Redhill, UK	76	$	21,932	$	12,097	2Q21	Redhill, UK	76	$	20,912	$	18,471	2Q22
Leicester, UK		60	15,449		6,495		1Q22
London, UK	London, UK	82	44,508		22,738		2Q22	London, UK	82	42,436		22,650		3Q22
Wombourne, UK	Wombourne, UK	66	16,553		6,434		2Q22	Wombourne, UK	66	15,782		11,891		4Q22
Leicester, UK								Leicester, UK	60	14,730		10,186		4Q22
Rugby, UK	Rugby, UK	76	21,123		3,782		4Q22	Rugby, UK	76	20,140		10,460		1Q23
Raleigh, NC	Raleigh, NC	191	154,256		20,185		2Q23	Raleigh, NC	191	154,256		62,694		2Q23
		551	$	273,821	$	71,731			551	$	268,256	$	136,352

~~Loss~~During the three months ended March 31, 2022, loss (gain) on derivatives and financial instruments, net is primarily attributable to the mark-to-market of the equity warrants received as part of the Safanad/HC-One transaction that closed in the second quarter of 2021. In addition, the mark-to-market adjustment ~~recorded~~ on our Genesis Healthcare available-for-sale ~~investment.~~ investment is reflected in all periods.

Interest expense represents secured debt interest expense and related fees. The change in secured debt interest expense is due to the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations. The following is a summary of our Triple-net secured debt principal activity for the periods presented (dollars in thousands):


		Three Months Ended
		March 31, 2021				March 31, 2020				Three Months Ended
				Wtd. Avg.				Wtd. Avg.				March 31, 2022				March 31, 2021
		Amount		Interest Rate		Amount		Interest Rate				Amount		Weighted Average Interest Rate		Amount		Weighted Average Interest Rate
Beginning balance	Beginning balance	$	123,652	4.91	%	$	306,038	3.60	%		Beginning balance	$	72,536	4.57	%	$	123,652	4.91	%

Debt transferred											Debt transferred	(32,478)		4.79	%	—		—	%

Principal payments	Principal payments	(1,220)		5.15	%	(1,059)		5.17	%		Principal payments	(221)		4.37	%	(1,220)		5.15	%
Foreign currency	Foreign currency	707		5.43	%	(15,240)		3.40	%		Foreign currency	—		—	%	707		5.43	%
Ending balance	Ending balance	$	123,139	4.91	%	$	289,739	3.55	%		Ending balance	$	39,837	4.39	%	$	123,139	4.91	%

Monthly averages	Monthly averages	$	123,126	4.96	%	$	299,111	3.59	%		Monthly averages	$	39,914	4.39	%	$	123,126	4.96	%

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

A portion of our Triple-net properties were formed through partnerships. Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. The increase in income from unconsolidated entities during the three months ended March 31, 2022 is primarily related to the write off of straight-line rent payable balances on an unconsolidated joint venture that was restructured during the quarter. Net income attributable to noncontrolling interests represents our partners’ share of net income relating to those partnerships where we are the controlling partner. The ~~decrease during~~increase for the three months ended March 31, ~~2021, relates primarily~~2022 compared to ~~our partner's share of a gain on sale of certain properties~~the same period in the prior ~~year.~~year, is primarily due to a restructure and segment transition related to one of our partners.

Outpatient Medical

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

QTD Pool
Three Months Ended Change
March 31, 2021 March 31, 2020 $ %
SSNOI (1)
$ 97,196 $ 94,208 $ 2,988 3.2 %


	QTD Pool
	Three Months Ended				Change
	March 31, 2022		March 31, 2021		$		%
SSNOI (1)	$	103,168	$	100,040	$	3,128	3.1	%

(1) For the ~~three months ended March 31, 2021 and 2020,~~QTD Pool, amounts relate to ~~334~~ 351 same store ~~properties, respectively.~~properties. Please see Non-GAAP Financial Measures for additional information and reconciliations.

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

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


		Three Months Ended				Change				Three Months Ended		Change
		March 31,		March 31,								March 31,		March 31,
		2021		2020		$		%				2022		2021		$		%
Revenues:	Revenues:										Revenues:
Rental income	Rental income	$	150,380	$	198,575	$	(48,195)	(24)	%		Rental income	$	160,389	$	150,380	$	10,009	7	%
Interest income	Interest income	3,538		466		3,072		659	%		Interest income	71		3,538		(3,467)		(98)	%
Other income	Other income	2,305		288		2,017		700	%		Other income	2,863		2,305		558		24	%
Total revenues	Total revenues	156,223		199,329		(43,106)		(22)	%		Total revenues	163,323		156,223		7,100		5	%
Property operating expenses	Property operating expenses	46,863		60,608		(13,745)		(23)	%		Property operating expenses	49,915		46,863		3,052		7	%
NOI (1)	NOI (1)	109,360		138,721		(29,361)		(21)	%		NOI (1)	113,408		109,360		4,048		4	%
Other expenses:	Other expenses:										Other expenses:
Depreciation and amortization	Depreciation and amortization	55,173		70,333		(15,160)		(22)	%		Depreciation and amortization	57,791		55,173		2,618		5	%
Interest expense	Interest expense	4,015		4,808		(793)		(16)	%		Interest expense	4,567		4,015		552		14	%

Provision for loan losses		279		—		279		n/a
Loss (gain) on extinguishment of debt, net											Loss (gain) on extinguishment of debt, net	3		—		3		n/a
Provision for loan losses, net											Provision for loan losses, net	(6)		279		(285)		(102)	%

Other expenses	Other expenses	712		1,007		(295)		(29)	%		Other expenses	789		712		77		11	%
		60,179		76,148		(15,969)		(21)	%			63,144		60,179		2,965		5	%
Income (loss) from continuing operations before income taxes and other items	Income (loss) from continuing operations before income taxes and other items	49,181		62,573		(13,392)		(21)	%		Income (loss) from continuing operations before income taxes and other items	50,264		49,181		1,083		2	%

Income (loss) from unconsolidated entities	Income (loss) from unconsolidated entities	2,908		1,536		1,372		89	%		Income (loss) from unconsolidated entities	(645)		2,908		(3,553)		(122)	%
Gain (loss) on real estate dispositions, net	Gain (loss) on real estate dispositions, net	51,843		213,336		(161,493)		n/a			Gain (loss) on real estate dispositions, net	(216)		51,843		(52,059)		(100)	%
Income from continuing operations	Income from continuing operations	103,932		277,445		(173,513)		(63)	%		Income from continuing operations	49,403		103,932		(54,529)		(52)	%
Net income (loss)	Net income (loss)	103,932		277,445		(173,513)		(63)	%		Net income (loss)	49,403		103,932		(54,529)		(52)	%
Less: Net income (loss) attributable to noncontrolling interests	Less: Net income (loss) attributable to noncontrolling interests	2,170		2,453		(283)		(12)	%		Less: Net income (loss) attributable to noncontrolling interests	2,142		2,170		(28)		(1)	%
Net income (loss) attributable to common stockholders	Net income (loss) attributable to common stockholders	$	101,762	$	274,992	$	(173,230)	(63)	%		Net income (loss) attributable to common stockholders	$	47,261	$	101,762	$	(54,501)	(54)	%

(1) See Non-GAAP Financial Measures.	(1) See Non-GAAP Financial Measures.										(1) See Non-GAAP Financial Measures.

Rental income has ~~decreased for the three month period ending March 31, 2021~~increased due primarily to ~~significant dispositions~~acquisitions and construction conversions that ~~have closed subsequent to March 31, 2020.~~occurred during 2021. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If the Consumer Price Index does not increase, a portion of our revenues may not continue to increase. Our leases could renew above or below current rental rates, resulting in an increase or decrease in rental income. For the three months ended March 31, ~~2021,~~2022, our consolidated outpatient medical portfolio signed ~~89,863~~88,145 square feet of new leases and ~~541,434~~418,329 square feet of renewals. The weighted-average term of these leases was ~~six~~eight years, with a rate of ~~$36.84~~$44.19 per square foot and tenant improvement and lease commission costs of ~~$12.57~~$37.73 per square foot. Substantially all of these leases contain an annual fixed or contingent escalation rent structure ranging from ~~1.0%~~1.5% to ~~3.5%~~5.0%.

~~We have collected 99%~~The decrease in interest income for the three months ended March 31, 2022 is due primarily to a $178,207,000 first mortgage loan which was repaid in full in June of rent due in the first quarter, with uncollected amounts primarily attributable to local jurisdictions with COVID-19 related ordinances providing temporary rent relief to tenants. We evaluate leases individually2021.

Item 2. Management's Discussion and ~~recognize rent on a cash basis if collectibility~~Analysis of ~~substantially all contractual rent payments is not probable.~~Financial Condition and Results of Operations

The fluctuation in property operating expenses and depreciation and amortization are primarily attributable to ~~the significant dispositions~~acquisitions and construction conversions that occurred ~~in 2020.~~during 2021. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly. ~~Changes in gains/losses on sales of properties are related to volume of property sales and the sales prices.~~ Transaction costs related to asset acquisitions are capitalized as a component of purchase price. The fluctuation in other expenses is primarily due to noncapitalizable transaction ~~costs from acquisitions~~costs. Changes in gains/losses on sales of properties are related to volume of property sales and ~~segment transitions.~~the sales prices.

During the three months ended March 31, ~~2021,~~2022, there were no Outpatient Medical ~~construction~~ projects completed. ~~The~~The following is a summary of the consolidated Outpatient Medical construction projects, excluding expansions, pending as of March 31, ~~2021~~2022 (dollars in thousands):

Location Square Feet Commitment Balance Est. Completion
Brooklyn, NY 140,955 $ 110,306 $ 106,692 2Q21
Kalamazoo, MI 40,607 14,267 5,917 3Q21
College Station, TX 25,200 9,025 1,111 1Q22
206,762 $ 133,598 $ 113,720


Location	Square Feet	Commitment		Balance		Est. Completion
Tyler, TX	85,214	$	35,369	$	21,071	4Q22
Stafford, TX	36,788	18,031		6,172		4Q22

	122,002	$	53,400	27,243
Beaumont, TX(1)				29

Total				$	27,272

(1) Final units/beds, commitment amount and expected conversion date not yet known.

Total interest expense represents secured debt interest expense. The change in secured debt interest expense is primarily due to the net effect and timing of assumptions, extinguishments and principal amortizations. The following is a summary of our outpatient medical secured debt principal activity (dollars in thousands):

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


		Three Months Ended
		March 31, 2021				March 31, 2020				Three Months Ended
				Wtd. Ave				Wtd. Ave				March 31, 2022				March 31, 2021
		Amount		Interest Rate		Amount		Interest Rate				Amount		Weighted Average Interest Rate		Amount		Weighted Average Interest Rate
Beginning balance	Beginning balance	$	548,229	3.55	%	$	572,267	3.97	%		Beginning balance	$	530,254	3.49	%	$	548,229	3.55	%

Debt extinguished											Debt extinguished	(6,174)		4.17	%	—		—	%

Principal payments	Principal payments	(2,474)		4.46	%	(2,293)		4.65	%		Principal payments	(2,749)		4.38	%	(2,474)		4.46	%

Ending balance	Ending balance	$	545,755	3.54	%	$	569,974	3.94	%		Ending balance	$	521,331	3.51	%	$	545,755	3.54	%

Monthly averages	Monthly averages	$	546,613	3.54	%	$	571,200	3.97	%		Monthly averages	$	526,392	3.49	%	$	546,613	3.54	%

A portion of our Outpatient Medical properties were formed through partnerships. Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. During the three months ended March 31, 2021, the loss from unconsolidated entities is largely attributable to depreciation and amortization of short-lived intangible assets related to certain investments in unconsolidated joint ventures. Net income attributable to noncontrolling interests represents our partners’ share of net income or loss relating to those partnerships where we are the controlling partner.

Non-Segment/Corporate

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


		Three Months Ended				Change				Three Months Ended		Change
		March 31,		March 31,								March 31,		March 31,
		2021		2020		$		%				2022		2021		$		%
Revenues:	Revenues:										Revenues:

Other income	Other income	$	955	$	416	$	539	130	%		Other income	$	606	$	955	$	(349)	(37)	%
Total revenue		955		416		539		130	%
Total revenues											Total revenues	606		955		(349)		(37)	%
Property operating expenses	Property operating expenses	1,654		—		1,654		n/a			Property operating expenses	2,615		1,654		961		58	%
NOI (1)	NOI (1)	(699)		416		(1,115)		(268)	%		NOI (1)	(2,009)		(699)		(1,310)		(187)	%
Expenses:	Expenses:										Expenses:
Interest expense	Interest expense	105,827		117,913		(12,086)		(10)	%		Interest expense	109,165		105,827		3,338		3	%
General and administrative expenses	General and administrative expenses	29,926		35,481		(5,555)		(16)	%		General and administrative expenses	37,706		29,926		7,780		26	%

Other expenses	Other expenses	1,840		1,783		57		3	%		Other expenses	6,045		1,840		4,205		229	%
		137,593		155,177		(17,584)		(11)	%			152,916		137,593		15,323		11	%
Loss from continuing operations before income taxes and other items	Loss from continuing operations before income taxes and other items	(138,292)		(154,761)		16,469		11	%		Loss from continuing operations before income taxes and other items	(154,925)		(138,292)		(16,633)		(12)	%
Income tax (expense) benefit		(3,943)		(5,442)		1,499		28	%
Income tax benefit (expense)											Income tax benefit (expense)	(5,013)		(3,943)		(1,070)		(27)	%

Loss from continuing operations	Loss from continuing operations	(142,235)		(160,203)		17,968		11	%		Loss from continuing operations	(159,938)		(142,235)		(17,703)		(12)	%

Net loss attributable to common stockholders	Net loss attributable to common stockholders	$	(142,235)	$	(160,203)	$	17,968	11	%		Net loss attributable to common stockholders	$	(159,938)	$	(142,235)	$	(17,703)	(12)	%

(1) See Non-GAAP Financial Measures.	(1) See Non-GAAP Financial Measures.										(1) See Non-GAAP Financial Measures.

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

Property operating expenses represent insurance costs related to our captive insurance company, ~~formed as of July 1, 2020~~ which acts as a direct insurer of property level insurance coverage for our portfolio.

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


		Three Months Ended				Change				Three Months Ended		Change
		March 31,		March 31,								March 31,		March 31,
		2021		2020		$		%				2022		2021		$		%
Senior unsecured notes	Senior unsecured notes	$	100,213	$	103,533	$	(3,320)	(3)	%		Senior unsecured notes	$	101,239	$	100,213	$	1,026	1	%

Unsecured credit facility and commercial paper program	Unsecured credit facility and commercial paper program	1,180		10,169		(8,989)		(88)	%		Unsecured credit facility and commercial paper program	2,779		1,180		1,599		136	%
Loan expense	Loan expense	4,434		4,211		223		5	%		Loan expense	5,147		4,434		713		16	%
Totals	Totals	$	105,827	$	117,913	$	(12,086)	(10)	%		Totals	$	109,165	$	105,827	$	3,338	3	%

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

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

General and administrative expenses as a percentage of consolidated revenues for the three months ended March 31, 2022 and 2021 were 2.70% and ~~2020 were~~ 2.84% ~~and~~ ~~2.82%~~, respectively. Other expenses includes legal expenses related to the planned UPREIT merger and reorganization. The provision for income taxes primarily relates to state taxes, foreign taxes and taxes based on income generated by entities that are structured as TRSs.

Other

Non-GAAP Financial Measures

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

Consolidated net operating income (“NOI”) is used to evaluate the operating performance of our properties. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. Property operating expenses represent costs associated with managing, maintaining and servicing tenants for our properties. These expenses include, but are not limited to, property-related payroll and benefits, property management fees paid to operators, marketing, housekeeping, food service, maintenance, utilities, property taxes and insurance. General and administrative expenses represent costs unrelated to property operations. These expenses include, but are not limited to, payroll and benefits, professional services, office expenses and depreciation of corporate fixed assets. Same store NOI (“SSNOI”) is used to evaluate the operating performance of our properties using a consistent population, which controls for changes in the composition of our portfolio. We believe the drivers of property level NOI for both consolidated properties and unconsolidated properties are generally the same and therefore, we evaluate SSNOI based on our ownership interest in each property ("Welltower Share"). To arrive at Welltower's Share, NOI is adjusted by adding our minority ownership share related to unconsolidated properties and by subtracting the minority partners' noncontrolling ownership interests for consolidated properties. We do not control investments in unconsolidated properties, and while we consider disclosures at Welltower Share to be useful, they may not accurately depict the legal and economic implications of our joint venture arrangements and should be used with caution. As used herein, same store is generally defined as those revenue-generating properties in the portfolio for the relevant year-over-year reporting periods. Acquisitions and development conversions are included in SSNOI five full quarters after acquisition or being placed into service for the QTD Pool. Land parcels, loans and sub-leases, as well as any properties sold or classified as held for sale during the respective periods, are excluded from SSNOI. Redeveloped properties (including major refurbishments of a Seniors Housing Operating property where 20% or more of units are simultaneously taken out of commission for 30 days or more or Outpatient Medical properties undergoing a change in intended use) are excluded from SSNOI until five full quarters post completion of the redevelopment for the QTD Pool. Properties undergoing operator transitions and/or segment transitions are also excluded from

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

SSNOI until five full quarters post completion of the transition for the QTD Pool. In addition, properties significantly impacted by force majeure, acts of God, or other extraordinary adverse events are excluded from SSNOI until five full quarters after the properties are placed back into service for the QTD Pool. SSNOI excludes non-cash NOI and includes adjustments to present consistent ownership percentages and to translate Canadian properties and UKU.K. properties using a consistent exchange rate. We believe NOI and SSNOI provide investors relevant and useful information because they measure the operating performance of our properties at the property level on an unleveraged basis. We use NOI and SSNOI to make decisions about resource allocations and to assess the property level performance of our properties.

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

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

liabilities, less cash and cash equivalents and ~~any IRC Section 1031 deposits)~~restricted cash), total equity and redeemable noncontrolling interests. Undepreciated book capitalization represents book capitalization adjusted for accumulated depreciation and amortization. Market capitalization represents book capitalization adjusted for the fair market value of our common stock.

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

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

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


														Three Months Ended
		March 31,		December 31,		September 30,			June 30,		March 31,			March 31,		December 31,		September 30,		June 30,		March 31,
FFO Reconciliation:	FFO Reconciliation:	2021		2020		2020			2020		2020		FFO Reconciliation:	2022		2021		2021		2021		2021
Net income attributable to common stockholders	Net income attributable to common stockholders	$	71,546	$	163,729	$	325,585		$	179,246	$	310,284	Net income attributable to common stockholders	$	61,925	$	58,672	$	179,663	$	26,257	$	71,546
Depreciation and amortization	Depreciation and amortization	244,426		242,733		255,532			265,371		274,801		Depreciation and amortization	304,088		284,501		267,754		240,885		244,426
Impairment of assets	Impairment of assets	23,568		9,317		23,313			75,151		27,827		Impairment of assets	—		2,357		1,490		23,692		23,568
Loss (gain) on real estate dispositions, net	Loss (gain) on real estate dispositions, net	(59,080)		(185,464)		(484,304)			(155,863)		(262,824)		Loss (gain) on real estate dispositions, net	(22,934)		(11,673)		(119,954)		(44,668)		(59,080)
Noncontrolling interests	Noncontrolling interests	(12,516)		(20,579)		48,559			(42,539)		(9,409)		Noncontrolling interests	(14,753)		(13,988)		(11,095)		(16,591)		(12,516)
Unconsolidated entities	Unconsolidated entities	19,223		16,091		16,329			14,231		15,445		Unconsolidated entities	19,309		19,107		27,881		19,265		19,223
FFO	FFO	$	287,167	$	225,827	$	185,014		$	335,597	$	356,124	FFO	$	347,635	$	338,976	$	345,739	$	248,840	$	287,167

Average diluted shares outstanding	Average diluted shares outstanding	419,079		418,753		418,987			419,121		412,420		Average diluted shares outstanding	449,802		438,719		429,983		419,305		419,079

Per diluted share data:	Per diluted share data:												Per diluted share data:
Net income attributable to common stockholders(1)	Net income attributable to common stockholders(1)	$	0.17	$	0.39	$	0.77		$	0.42	$	0.75	Net income attributable to common stockholders(1)	$	0.14	$	0.13	$	0.42	$	0.06	$	0.17
FFO	FFO	$	0.69	$	0.54	$	0.44		$	0.80	$	0.86	FFO	$	0.77	$	0.77	$	0.80	$	0.59	$	0.69

(1) Includes adjustment to the numerator for income (loss) attributable to OP unitholders.	(1) Includes adjustment to the numerator for income (loss) attributable to OP unitholders.							(1) Includes adjustment to the numerator for income (loss) attributable to OP unitholders.

The table below reflects the reconciliation of consolidated NOI to net income, the most directly comparable U.S. GAAP measure, for the periods presented. Dollar amounts are in thousands.


	Three Months Ended
	March 31,		December 31,		September 30,		June 30,		March 31,
NOI Reconciliations:	2022		2021		2021		2021		2021
Net income (loss)	$	65,751	$	66,194	$	190,336	$	45,757	$	72,192
Loss (gain) on real estate dispositions, net	(22,934)		(11,673)		(119,954)		(44,668)		(59,080)
Loss (income) from unconsolidated entities	2,884		12,174		15,832		7,976		(13,049)
Income tax expense (benefit)	5,013		2,051		4,940		(2,221)		3,943
Other expenses	26,069		15,483		3,575		11,687		10,994
Impairment of assets	—		2,357		1,490		23,692		23,568
Provision for loan losses, net	(804)		(39)		(271)		6,197		1,383
Loss (gain) on extinguishment of debt, net	(12)		(1,090)		(5)		55,612		(4,643)
Loss (gain) on derivatives and financial instruments, net	2,578		(830)		(8,078)		(359)		1,934
General and administrative expenses	37,706		33,109		32,256		31,436		29,926
Depreciation and amortization	304,088		284,501		267,754		240,885		244,426
Interest expense	121,696		121,848		122,522		122,341		123,142
Consolidated net operating income (NOI)	$	542,035	$	524,085	$	510,397	$	498,335	$	434,736

NOI by segment:
Seniors Housing Operating	$	206,684	$	180,375	$	172,909	$	160,188	$	170,434
Triple-net	223,952		230,846		228,321		226,314		155,641
Outpatient Medical	113,408		113,982		111,431		113,577		109,360
Non-segment/corporate	(2,009)		(1,118)		(2,264)		(1,744)		(699)
Total NOI	$	542,035	$	524,085	$	510,397	$	498,335	$	434,736

4246

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

Three Months Ended
March 31, December 31, September 30, June 30, March 31,
NOI Reconciliations: 2021 2020 2020 2020 2020
Net income (loss) $ 72,192 $ 155,278 $ 394,978 $ 159,216 $ 329,380
Loss (gain) on real estate dispositions, net (59,080) (185,464) (484,304) (155,863) (262,824)
Loss (income) from unconsolidated entities (13,049) (258) 5,981 (1,332) 3,692
Income tax expense (benefit) 3,943 290 2,003 2,233 5,442
Other expenses 10,994 33,088 11,544 19,411 6,292
Impairment of assets 23,568 9,317 23,313 75,151 27,827
Provision for loan losses 1,383 83,085 2,857 1,422 7,072
Loss (gain) on extinguishment of debt, net (4,643) 13,796 33,004 249 —
Loss (gain) on derivatives and financial instruments, net 1,934 569 1,395 1,434 7,651
General and administrative expenses 29,926 27,848 31,003 34,062 35,481
Depreciation and amortization 244,426 242,733 255,532 265,371 274,801
Interest expense 123,142 121,173 124,851 126,357 142,007
Consolidated net operating income (NOI) $ 434,736 $ 501,455 $ 402,157 $ 527,711 $ 576,821
NOI by segment:
Seniors Housing Operating $ 170,434 $ 159,797 $ 174,361 $ 178,137 $ 243,257
Triple-net 155,641 225,277 108,361 220,056 194,427
Outpatient Medical 109,360 117,231 119,976 129,143 138,721
Non-segment/corporate (699) (850) (541) 375 416
Total NOI $ 434,736 $ 501,455 $ 402,157 $ 527,711 $ 576,821
The following is a reconciliation of the properties included in our QTD Pool for SSNOI:


	QTD Pool
SSNOI Property Reconciliations:	Seniors Housing Operating	Triple-net	Outpatient Medical	Total
Consolidated properties	774	578	311	1,663
Unconsolidated properties	95	39	79	213
Total properties	869	617	390	1,876
Recent acquisitions/development conversions(1)	(172)	(30)	(26)	(228)
Under development	(36)	(5)	(4)	(45)
Under redevelopment(2)	(4)	(3)	(2)	(9)
Current held for sale	(3)	(13)	(1)	(17)
Land parcels, loans and subleases	(23)	(11)	(6)	(40)
Transitions(3)	(97)	(19)	—	(116)
Other(4)	(2)	(3)	—	(5)
Same store properties	532	533	351	1,416

(1) Acquisition and development conversions will enter the QTD Pool five full quarters after acquisition or certificate of occupancy.
(2) Redevelopment properties will enter the QTD Pool five full quarters of operations post redevelopment completion.
(3) Transitioned properties will enter the QTD Pool five full quarters of operations with the new operator in place or under the new structure.
(4) Represents properties that are either closed or being closed.

QTD Pool
SSNOI Property Reconciliations: Seniors Housing Operating Triple-net Outpatient Medical Total
Consolidated properties 559 649 290 1,498
Unconsolidated properties 90 39 79 208
Total properties 649 688 369 1,706
Recent acquisitions/development conversions(1)
(34) (26) (21) (81)
Under development (28) (5) (3) (36)
Under redevelopment(2)
(11) (1) (2) (14)
Current held for sale (9) (61) (1) (71)
Land parcels, loans and subleases (12) (17) (8) (37)
Transitions(3)
(27) (23) — (50)
Other(4)
(2) (2) — (4)
Same store properties 526 553 334 1,413
(1) Acquisitions and development conversions will enter the QTD Pool five full quarters after acquisition or certificate of occupancy, respectively.
(2) Redevelopment properties will enter the QTD Pool five full quarters of operations post redevelopment completion, respectively.
(3) Transitioned properties will enter the QTD Pool five full quarters of operations with the new operator in place or under the new structure, respectively.
(4) Represents properties that are either closed or being closed.
The following is a reconciliation of our consolidated NOI to same store NOI for the periods presented for the respective pools. Dollar amounts are in thousands.

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

QTD Pool
Three Months Ended
SSNOI Reconciliations: March 31, 2021 March 31, 2020
Seniors Housing Operating:
Consolidated NOI $ 170,434 $ 243,257
NOI attributable to unconsolidated investments 11,904 14,954
NOI attributable to noncontrolling interests (10,278) (18,754)
NOI attributable to non-same store properties (14,428) (22,515)
Non-cash NOI attributable to same store properties (822) (879)
Currency and ownership adjustments (1)
(19) 3,693
SSNOI at Welltower Share 156,791 219,756
Triple-net:
Consolidated NOI 155,641 194,427
NOI attributable to unconsolidated investments 4,888 5,133
NOI attributable to noncontrolling interests (8,037) (14,783)
NOI attributable to non-same store properties (48,126) (26,394)
Non-cash NOI attributable to same store properties 36,711 (12,257)
Currency and ownership adjustments (1)
12 1,401
SSNOI at Welltower Share 141,089 147,527
Outpatient Medical:
Consolidated NOI 109,360 138,721
NOI attributable to unconsolidated investments 4,724 1,063
NOI attributable to noncontrolling interests (4,686) (4,358)
NOI attributable to non-same store properties (8,604) (20,235)
Non-cash NOI attributable to same store properties (2,447) (3,762)
Currency and ownership adjustments (1)
(1,151) (17,221)
SSNOI at Welltower Share 97,196 94,208
SSNOI at Welltower Share:
Seniors Housing Operating 156,791 219,756
Triple-net 141,089 147,527
Outpatient Medical 97,196 94,208
Total $ 395,076 $ 461,491
(1) Includes adjustments to reflect consistent property ownership percentages, to translate Canadian properties at a USD/CAD rate of 1.2658 and to translate UK properties at a GBP/USD rate of 1.38.


	QTD Pool
	Three Months Ended
SSNOI Reconciliations:	March 31, 2022		March 31, 2021

Seniors Housing Operating:
Consolidated NOI	$	206,684	$	170,434
NOI attributable to unconsolidated investments	12,751		17,324
NOI attributable to noncontrolling interests	(24,392)		(15,698)

NOI attributable to non-same store properties	(51,575)		(19,399)
Non-cash NOI attributable to same store properties	(74)		(865)
Currency and ownership adjustments (1)	178		(186)
SSNOI at Welltower Share	143,572		151,610

Triple-net:
Consolidated NOI	223,952		155,641
NOI attributable to unconsolidated investments	9,955		8,382
NOI attributable to noncontrolling interests	(15,338)		(11,531)

NOI attributable to non-same store properties	(63,557)		(7,031)
Non-cash NOI attributable to same store properties	(11,356)		(10,141)
Currency and ownership adjustments (1)	832		1,994
SSNOI at Welltower Share	144,488		137,314

Outpatient Medical:
Consolidated NOI	113,408		109,360
NOI attributable to unconsolidated investments	4,830		4,724
NOI attributable to noncontrolling interests	(5,240)		(4,686)

NOI attributable to non-same store properties	(7,798)		(5,562)
Non-cash NOI attributable to same store properties	(2,096)		(2,656)
Currency and ownership adjustments (1)	64		(1,140)
SSNOI at Welltower Share	103,168		100,040

SSNOI at Welltower Share:
Seniors Housing Operating	143,572		151,610
Triple-net	144,488		137,314
Outpatient Medical	103,168		100,040
Total	$	391,228	$	388,964

(1) Includes adjustments to reflect consistent property ownership percentages, to translate Canadian properties at a USD/CAD rate of 1.2739 and to translate U.K. properties at a GBP/USD rate of 1.35.

4447

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

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


		Three Months Ended																Three Months Ended
		March 31,			December 31,			September 30,			June 30,			March 31,				March 31,			December 31,			September 30,			June 30,			March 31,
EBITDA Reconciliations:	EBITDA Reconciliations:	2021			2020			2020			2020			2020			EBITDA Reconciliations:	2022			2021			2021			2021			2021
Net income (loss)	Net income (loss)	$	72,192		$	155,278		$	394,978		$	159,216		$	329,380		Net income (loss)	$	65,751		$	66,194		$	190,336		$	45,757		$	72,192
Interest expense	Interest expense	123,142			121,173			124,851			126,357			142,007			Interest expense	121,696			121,848			122,522			122,341			123,142
Income tax expense (benefit)	Income tax expense (benefit)	3,943			290			2,003			2,233			5,442			Income tax expense (benefit)	5,013			2,051			4,940			(2,221)			3,943
Depreciation and amortization	Depreciation and amortization	244,426			242,733			255,532			265,371			274,801			Depreciation and amortization	304,088			284,501			267,754			240,885			244,426
EBITDA	EBITDA	$	443,703		$	519,474		$	777,364		$	553,177		$	751,630		EBITDA	$	496,548		$	474,594		$	585,552		$	406,762		$	443,703

Interest Coverage Ratio:	Interest Coverage Ratio:																Interest Coverage Ratio:
Interest expense	Interest expense	$	123,142		$	121,173		$	124,851		$	126,357		$	142,007		Interest expense	$	121,696		$	121,848		$	122,522		$	122,341		$	123,142
Non-cash interest expense	Non-cash interest expense	(2,991)			(1,739)			(3,973)			(1,914)			(8,125)			Non-cash interest expense	(4,109)			(5,082)			(5,461)			(3,972)			(2,991)
Capitalized interest	Capitalized interest	4,496			4,238			3,947			4,541			4,746			Capitalized interest	5,479			5,325			4,669			4,862			4,496
Total interest	Total interest	124,647			123,672			124,825			128,984			138,628			Total interest	123,066			122,091			121,730			123,231			124,647
EBITDA	EBITDA	$	443,703		$	519,474		$	777,364		$	553,177		$	751,630		EBITDA	$	496,548		$	474,594		$	585,552		$	406,762		$	443,703
Interest coverage ratio	Interest coverage ratio	3.56		x	4.20		x	6.23		x	4.29		x	5.42		x	Interest coverage ratio	4.03		x	3.89		x	4.81		x	3.30		x	3.56		x

Fixed Charge Coverage Ratio:	Fixed Charge Coverage Ratio:																Fixed Charge Coverage Ratio:
Total interest	Total interest	$	124,647		$	123,672		$	124,825		$	128,984		$	138,628		Total interest	$	123,066		$	122,091		$	121,730		$	123,231		$	124,647
Secured debt principal payments	Secured debt principal payments	15,955			16,122			15,876			15,183			15,526			Secured debt principal payments	15,968			16,877			17,040			15,715			15,955

Total fixed charges	Total fixed charges	140,602			139,794			140,701			144,167			154,154			Total fixed charges	139,034			138,968			138,770			138,946			140,602
EBITDA	EBITDA	$	443,703		$	519,474		$	777,364		$	553,177		$	751,630		EBITDA	$	496,548		$	474,594		$	585,552		$	406,762		$	443,703
Fixed charge coverage ratio	Fixed charge coverage ratio	3.16		x	3.72		x	5.52		x	3.84		x	4.88		x	Fixed charge coverage ratio	3.57		x	3.42		x	4.22		x	2.93		x	3.16		x

4548

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

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


		Twelve Months Ended																	Twelve Months Ended
		March 31,			December 31,			September 30,				June 30,			March 31,				March 31,			December 31,			September 30,			June 30,			March 31,
Adjusted EBITDA Reconciliations:	Adjusted EBITDA Reconciliations:	2021			2020			2020				2020			2020			Adjusted EBITDA Reconciliations:	2022			2021			2021			2021			2021
Net income	Net income	$	781,664		$	1,038,852		$	1,123,710			$	1,376,664		$	1,367,488		Net income	$	368,038		$	374,479		$	463,563		$	668,205		$	781,664
Interest expense	Interest expense	495,523			514,388			524,863				537,355			552,334			Interest expense	488,407			489,853			489,178			491,507			495,523
Income tax expense (benefit)	Income tax expense (benefit)	8,469			9,968			4,846				6,811			6,177			Income tax expense (benefit)	9,783			8,713			6,952			4,015			8,469
Depreciation and amortization	Depreciation and amortization	1,008,062			1,038,437			1,058,348				1,075,261			1,057,942			Depreciation and amortization	1,097,228			1,037,566			995,798			983,576			1,008,062
EBITDA	EBITDA	2,293,718			2,601,645			2,711,767				2,996,091			2,983,941			EBITDA	1,963,456			1,910,611			1,955,491			2,147,303			2,293,718
Loss (income) from unconsolidated entities	Loss (income) from unconsolidated entities	(8,658)			8,083			(49,079)				(58,322)			(47,941)			Loss (income) from unconsolidated entities	38,866			22,933			10,501			650			(8,658)
Stock-based compensation expense (1)	Stock-based compensation expense (1)	26,811			28,318			25,485				24,229			24,601			Stock-based compensation expense (1)	19,681			17,812			22,248			24,278			26,811
Loss (gain) on extinguishment of debt, net	Loss (gain) on extinguishment of debt, net	42,406			47,049			35,865				68,685			68,436			Loss (gain) on extinguishment of debt, net	54,505			49,874			64,760			97,769			42,406
Loss (gain) on real estate dispositions, net	Loss (gain) on real estate dispositions, net	(884,711)			(1,088,455)			(915,055)				(1,001,001)			(843,456)			Loss (gain) on real estate dispositions, net	(199,229)			(235,375)			(409,166)			(773,516)			(884,711)
Impairment of assets	Impairment of assets	131,349			135,608			126,389				121,172			55,960			Impairment of assets	27,539			51,107			58,067			79,890			131,349
Provision for loan losses		88,747			94,436			11,351				8,494			7,072
Provision for loan losses, net																		Provision for loan losses, net	5,083			7,270			90,394			93,522			88,747
Loss (gain) on derivatives and financial instruments, net	Loss (gain) on derivatives and financial instruments, net	5,332			11,049			5,411				5,260			5,739			Loss (gain) on derivatives and financial instruments, net	(6,689)			(7,333)			(5,934)			3,539			5,332
Other expenses (1)	Other expenses (1)	68,939			64,171			52,630				46,971			48,327			Other expenses (1)	56,127			40,860			52,960			60,985			68,939
Other impairment (2)		163,481			146,508			146,508				34,110			32,268

Leasehold interest adjustment (2)																		Leasehold interest adjustment (2)	(7,697)			760			(640)			—			—
Casualty losses, net of recoveries (3)																		Casualty losses, net of recoveries (3)	5,799			5,786			998			—			—
Other impairment (4)																		Other impairment (4)	—			49,241			49,241			161,639			163,481
Adjusted EBITDA	Adjusted EBITDA	$	1,927,414		$	2,048,412		$	2,151,272			$	2,245,689		$	2,334,947		Adjusted EBITDA	$	1,957,441		$	1,913,546		$	1,888,920		$	1,896,059		$	1,927,414

Adjusted Interest Coverage Ratio:	Adjusted Interest Coverage Ratio:																	Adjusted Interest Coverage Ratio:
Interest expense	Interest expense	$	495,523		$	514,388		$	524,863			$	537,355		$	552,334		Interest expense	$	488,407		$	489,853		$	489,178		$	491,507		$	495,523
Capitalized interest	Capitalized interest	17,222			17,472			18,102				18,303			17,691			Capitalized interest	20,335			19,352			18,265			17,543			17,222
Non-cash interest expense	Non-cash interest expense	(10,617)			(15,751)			(14,746)				(12,761)			(11,599)			Non-cash interest expense	(18,624)			(17,506)			(14,163)			(12,675)			(10,617)
Total interest	Total interest	502,128			516,109			528,219				542,897			558,426			Total interest	490,118			491,699			493,280			496,375			502,128
Adjusted EBITDA	Adjusted EBITDA	$	1,927,414		$	2,048,412		$	2,151,272			$	2,245,689		$	2,334,947		Adjusted EBITDA	$	1,957,441		$	1,913,546		$	1,888,920		$	1,896,059		$	1,927,414
Adjusted interest coverage ratio	Adjusted interest coverage ratio	3.84		x	3.97		x	4.07		x		4.14		x	4.18		x	Adjusted interest coverage ratio	3.99		x	3.89		x	3.83		x	3.82		x	3.84		x

Adjusted Fixed Charge Coverage Ratio:	Adjusted Fixed Charge Coverage Ratio:																	Adjusted Fixed Charge Coverage Ratio:
Total interest	Total interest	$	502,128		$	516,109		$	528,219			$	542,897		$	558,426		Total interest	$	490,118		$	491,699		$	493,280		$	496,375		$	502,128
Secured debt principal payments	Secured debt principal payments	63,136			62,707			60,562				57,807			56,308			Secured debt principal payments	65,600			65,587			64,832			63,668			63,136

Total fixed charges	Total fixed charges	565,264			578,816			588,781				600,704			614,734			Total fixed charges	555,718			557,286			558,112			560,043			565,264
Adjusted EBITDA	Adjusted EBITDA	$	1,927,414		$	2,048,412		$	2,151,272			$	2,245,689		$	2,334,947		Adjusted EBITDA	$	1,957,441		$	1,913,546		$	1,888,920		$	1,896,059		$	1,927,414
Adjusted fixed charge coverage ratio	Adjusted fixed charge coverage ratio	3.41		x	3.54		x	3.65		x		3.74		x	3.80		x	Adjusted fixed charge coverage ratio	3.52		x	3.43		x	3.38		x	3.39		x	3.41		x

(1) Certain severance-related costs are included in stock-based compensation and excluded from other expenses.	(1) Certain severance-related costs are included in stock-based compensation and excluded from other expenses.										(1) Certain severance-related costs are included in stock-based compensation and excluded from other expenses.
(2) Represents reserve for straight-line rent receivable balances relating to leases placed on cash recognition.
(2) Represents revenues and property operating expenses associated with a leasehold portfolio interest relating to 26 properties assumed by a wholly-owned affiliate in conjunction with the Holiday Retirement transaction. Subsequent to the initial transaction, we purchased eight of the leased properties and one of the properties was sold by the landlord and removed from the lease. No rent will be paid in excess of net cash flow relating to the leasehold properties and therefore, the net impact has been excluded from Adjusted EBITDA.																		(2) Represents revenues and property operating expenses associated with a leasehold portfolio interest relating to 26 properties assumed by a wholly-owned affiliate in conjunction with the Holiday Retirement transaction. Subsequent to the initial transaction, we purchased eight of the leased properties and one of the properties was sold by the landlord and removed from the lease. No rent will be paid in excess of net cash flow relating to the leasehold properties and therefore, the net impact has been excluded from Adjusted EBITDA.
(3) Represents casualty losses net of any insurance recoveries.																		(3) Represents casualty losses net of any insurance recoveries.
(4) Represents reserve for straight-line rent receivable balances relating to leases placed on cash recognition.																		(4) Represents reserve for straight-line rent receivable balances relating to leases placed on cash recognition.

Our leverage ratios include book capitalization, undepreciated book capitalization and market capitalization. Book capitalization represents the sum of net debt (defined as total long-term debt less cash and cash equivalents and ~~any IRC Section 1031 deposits)~~restricted cash), total equity and redeemable noncontrolling interests. Undepreciated book capitalization represents book capitalization adjusted for accumulated depreciation and amortization. Market capitalization represents book capitalization adjusted for the fair market value of our common stock. Our leverage ratios are defined as the proportion of net debt to total capitalization. The table below reflects the reconciliation of our leverage ratios to our balance sheets for the periods presented. Amounts are in thousands, except share price.

4649

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


		As of																	As of
		March 31,			December 31,			September 30,				June 30,			March 31,				March 31,		December 31,		September 30,		June 30,		March 31,
		2021			2020			2020				2020			2020				2022		2021		2021		2021		2021
Book capitalization:	Book capitalization:																	Book capitalization:
Unsecured credit facility and commercial paper	Unsecured credit facility and commercial paper	$	—		$	—		$	—			$	—		$	844,985		Unsecured credit facility and commercial paper	$	299,968	$	324,935	$	290,996	$	—	$	—
Long-term debt obligations (1)	Long-term debt obligations (1)	14,618,713			13,905,822			13,889,030				14,543,485			13,228,433			Long-term debt obligations (1)	14,352,529		13,917,702		13,488,656		13,572,816		14,618,713
Cash and cash equivalents (2)		(2,513,156)			(1,968,765)			(2,096,571)				(1,766,819)			(303,423)
Cash and cash equivalents and restricted cash																		Cash and cash equivalents and restricted cash	(367,043)		(346,755)		(362,645)		(808,705)		(2,558,822)
Total net debt	Total net debt	12,105,557			11,937,057			11,792,459				12,776,666			13,769,995			Total net debt	14,285,454		13,895,882		13,417,007		12,764,111		12,059,891
Total equity and noncontrolling interests(3)		17,046,932			17,225,062			17,291,155				17,263,672			17,495,696
Total equity and noncontrolling interests(2)																		Total equity and noncontrolling interests(2)	19,178,026		18,997,873		18,172,111		17,243,208		17,046,932
Book capitalization	Book capitalization	$	29,152,489		$	29,162,119		$	29,083,614			$	30,040,338		$	31,265,691		Book capitalization	$	33,463,480	$	32,893,755	$	31,589,118	$	30,007,319	$	29,106,823
Net debt to book capitalization ratio	Net debt to book capitalization ratio	42		%	41		%	41		%		43		%	44		%	Net debt to book capitalization ratio	43%		42%		42%		43%		41%

Undepreciated book capitalization:	Undepreciated book capitalization:																	Undepreciated book capitalization:
Total net debt	Total net debt	$	12,105,557		$	11,937,057		$	11,792,459			$	12,776,666		$	13,769,995		Total net debt	$	14,285,454	$	13,895,882	$	13,417,007	$	12,764,111	$	12,059,891
Accumulated depreciation and amortization	Accumulated depreciation and amortization	6,212,432			6,104,297			6,002,775				6,001,177			5,910,979			Accumulated depreciation and amortization	7,215,622		6,910,114		6,634,061		6,415,676		6,212,432
Total equity and noncontrolling interests(3)		17,046,932			17,225,062			17,291,155				17,263,672			17,495,696
Total equity and noncontrolling interests(2)																		Total equity and noncontrolling interests(2)	19,178,026		18,997,873		18,172,111		17,243,208		17,046,932
Undepreciated book capitalization	Undepreciated book capitalization	$	35,364,921		$	35,266,416		$	35,086,389			$	36,041,515		$	37,176,670		Undepreciated book capitalization	$	40,679,102	$	39,803,869	$	38,223,179	$	36,422,995	$	35,319,255
Net debt to undepreciated book capitalization ratio	Net debt to undepreciated book capitalization ratio	34		%	34		%	34		%		35		%	37		%	Net debt to undepreciated book capitalization ratio	35%		35%		35%		35%		34%

Market capitalization:	Market capitalization:																	Market capitalization:
Common shares outstanding	Common shares outstanding	417,520			417,401			417,305				417,302			417,391			Common shares outstanding	453,948		447,239		435,274		422,562		417,520
Period end share price	Period end share price	$	71.63		$	64.62		$	55.09			$	51.75		$	45.78		Period end share price	$	96.14	$	85.77	$	82.40	$	83.10	$	71.63
Common equity market capitalization	Common equity market capitalization	$	29,906,958		$	26,972,453		$	22,989,332			$	21,595,379		$	19,108,160		Common equity market capitalization	$	43,642,561	$	38,359,689	$	35,866,578	$	35,114,902	$	29,906,958
Total net debt	Total net debt	12,105,557			11,937,057			11,792,459				12,776,666			13,769,995			Total net debt	14,285,454		13,895,882		13,417,007		12,764,111		12,059,891
Noncontrolling interests(3)	Noncontrolling interests(3)	1,248,054			1,252,343			1,183,281				1,215,532			1,362,913			Noncontrolling interests(3)	1,282,450		1,361,872		1,308,908		1,322,762		1,248,054
Market capitalization	Market capitalization	$	43,260,569		$	40,161,853		$	35,965,072			$	35,587,577		$	34,241,068		Market capitalization	$	59,210,465	$	53,617,443	$	50,592,493	$	49,201,775	$	43,214,903
Net debt to market capitalization ratio	Net debt to market capitalization ratio	28		%	30		%	33		%		36		%	40		%	Net debt to market capitalization ratio	24%		26%		27%		26%		28%

(1) Amounts include senior unsecured notes, secured debt and lease liabilities related to financing leases, as reflected on our Consolidated Balance Sheets. Operating lease liabilities related to the ASC 842 adoption are excluded.	(1) Amounts include senior unsecured notes, secured debt and lease liabilities related to financing leases, as reflected on our Consolidated Balance Sheets. Operating lease liabilities related to the ASC 842 adoption are excluded.										(1) Amounts include senior unsecured notes, secured debt and lease liabilities related to financing leases, as reflected on our Consolidated Balance Sheets. Operating lease liabilities related to the ASC 842 adoption are excluded.
(2) Inclusive of IRC Section 1031 deposits, if any.
(3) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests as reflected on our Consolidated Balance Sheets.
(2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests as reflected on our Consolidated Balance Sheets.																		(2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests as reflected on our Consolidated Balance Sheets.

Critical Accounting Policies and Estimates

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

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

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

Management has discussed the development and selection of its critical accounting policies and estimates with the Audit Committee of the Board of Directors. Management believes the current assumptions and other considerations used to estimate amounts reflected in our unaudited consolidated financial statements are appropriate and are not reasonably likely to change in the future. However, since these estimates require assumptions to be made that were uncertain at the time the estimate was made, they bear the risk of change. If actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our unaudited consolidated financial statements, the resulting changes could have a material adverse effect on our consolidated results of operations, liquidity and/or financial condition. Please refer to Note 2 to ~~the~~our financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for further information ~~regarding~~on significant accounting policies that impact us. There have been no material changes to these policies in ~~2021.~~2022.

4750

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

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. When Welltower uses words such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “pro forma,” “estimate” or similar expressions that do not relate solely to historical matters, Welltower is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause Welltower’s actual results to differ materially from Welltower’s expectations discussed in the forward-looking statements. This may be a result of various factors, including, but not limited to: the duration and scope of the COVID-19 pandemic; uncertainty regarding the implementation and impact of the CARES Act and future stimulus or other COVID-19 relief legislation; the impact of the COVID-19 pandemic on occupancy rates and on the operations of Welltower and its operators/tenants; actions governments take in response to the COVID-19 pandemic, including the introduction of public health measures and other regulations affecting Welltower’s properties and the operations of Welltower and its operators/tenants; the effects of health and safety measures adopted by Welltower and its operators/tenants related to the COVID-19 pandemic; increased operational costs as a result of health and safety measures related to COVID-19; the impact of the COVID-19 pandemic on the business and financial condition of operators/tenants and their ability to make payments to Welltower; disruptions to Welltower's property acquisition and disposition activity due to economic uncertainty caused by COVID-19; general economic uncertainty in key markets as a result of the COVID-19 pandemic and a worsening of global economic conditions or low levels of economic growth; the status of capital markets, including availability and cost of capital; uncertainty from the expected discontinuance of LIBOR and the transition to any other interest rate benchmark; issues facing the health care industry, including compliance with, and changes to, regulations and payment policies, responding to government investigations and punitive settlements and operators’/tenants’ difficulty in cost effectively obtaining and maintaining adequate liability and other insurance; changes in financing terms; competition within the health care and seniors housing industries; negative developments in the operating results or financial condition of operators/tenants, including, but not limited to, their ability to pay rent and repay loans; Welltower’s ability to transition or sell properties with profitable results; the failure to make new investments or acquisitions as and when anticipated; natural disasters and other acts of God affecting Welltower’s properties; Welltower’s ability to re-lease space at similar rates as vacancies occur; Welltower’s ability to timely reinvest sale proceeds at similar rates to assets sold; operator/tenant or joint venture partner bankruptcies or insolvencies; the cooperation of joint venture partners; government regulations affecting Medicare and Medicaid reimbursement rates and operational requirements; liability or contract claims by or against operators/tenants; unanticipated difficulties and/or expenditures relating to future investments or acquisitions; environmental laws affecting Welltower’s properties; changes in rules or practices governing Welltower’s financial reporting; the movement of U.S. and foreign currency exchange rates; Welltower’s ability to maintain Welltower’s qualification as a REIT; key management personnel recruitment and retention; and other risks described in Welltower’s reports filed from time to time with the SEC. Other important factors are identified in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, including factors identified under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Finally, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, or to update the reasons why actual results could differ from those projected in any forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market risks, including the potential loss arising from adverse changes in interest rates and foreign currency exchange rates. We seek to mitigate the underlying foreign currency exposures with gains and losses on derivative contracts hedging these exposures. We seek to mitigate the effects of fluctuations in interest rates by matching the terms of new investments with new long-term fixed rate borrowings to the extent possible. We may or may not elect to use financial derivative instruments to hedge interest rate exposure. These decisions are principally based on our policy to match our variable rate investments with comparable borrowings, but are also based on the general trend in interest rates at the applicable dates and our perception of the future volatility of interest rates. This section is presented to provide a discussion of the risks associated with potential fluctuations in interest rates and foreign currency exchange rates.

We historically borrow on our unsecured revolving credit facility and commercial paper program to acquire, construct or make loans relating to health care and seniors housing properties. Then, as market conditions dictate, we will issue equity or long-term fixed rate debt to repay the borrowings under our unsecured revolving credit facility and commercial paper program. We are subject to risks associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the terms of refinancing may not be as favorable as the terms of current indebtedness. The majority of our borrowings were completed under indentures or contractual agreements that limit the amount of indebtedness we may incur. Accordingly, in the event that we are unable to raise additional equity or borrow money because of these limitations, our ability to acquire additional properties may be limited.

4851

Item 3. Quantitative and Qualitative Disclosures About Market Risk

A change in interest rates will not affect the interest expense associated with our fixed rate debt. Interest rate changes, however, will affect the fair value of our fixed rate debt. Changes in the interest rate environment upon maturity of this fixed rate debt could have an effect on our future cash flows and earnings, depending on whether the debt is replaced with other fixed rate debt, variable rate debt or equity or repaid by the sale of assets. To illustrate the impact of changes in the interest rate markets, we performed a sensitivity analysis on our fixed rate debt instruments after considering the effects of interest rate swaps, whereby we modeled the change in net present values arising from a hypothetical 1% increase in interest rates to determine the instruments’ change in fair value. The following table summarizes the analysis performed as of the dates indicated (in thousands):


		March 31, 2021				December 31, 2020					March 31, 2022				December 31, 2021
		Principal		Change in		Principal		Change in			Principal		Change in		Principal		Change in
		balance		fair value		balance		fair value			balance		fair value		balance		fair value
Senior unsecured notes	Senior unsecured notes	$	10,710,742	$	(760,313)	$	9,943,501	$	(761,581)	Senior unsecured notes	$	10,971,306	$	(676,613)	$	11,002,297	$	(1,059,031)
Secured debt	Secured debt	1,600,119		(53,176)		1,702,196		(57,756)		Secured debt	1,414,612		(39,742)		1,490,708		(44,222)
Totals	Totals	$	12,310,861	$	(813,489)	$	11,645,697	$	(819,337)	Totals	$	12,385,918	$	(716,355)	$	12,493,005	$	(1,103,253)

Our variable rate debt, including our unsecured revolving credit facility and commercial paper program, is reflected at fair value. At March 31, ~~2021,~~2022, we had~~$2,304,903,000~~ $2,261,318,000 outstanding related to our variable rate ~~debt.~~debt after considering the effects of interest rate swaps. Assuming no changes in outstanding balances, a 1% increase in interest rates would result in increased annual interest expense of ~~$23,050,000.~~$22,613,000. At December 31, ~~2020,~~2021, we had ~~$2,241,909,000~~$1,742,268,000 outstanding under our variable rate debt. Assuming no changes in outstanding balances, a 1% increase in interest rates would have resulted in increased annual interest expense of ~~$22,420,000.~~$17,423,000.

We are subject to currency fluctuations that may, from time to time, affect our financial condition and results of operations. Increases or decreases in the value of the Canadian Dollar or British Pounds Sterling relative to the U.S. Dollar impact the amount of net income we earn from our investments in Canada and the United Kingdom. Based solely on our results for the three months ended March 31, ~~2021,~~2022, including the impact of existing hedging arrangements, if these exchange rates were to increase or decrease by 10%, our net income from these investments would increase or decrease, as applicable, by less than ~~$2,000,000.~~$7,000,000. We will continue to mitigate these underlying foreign currency exposures with non-U.S. denominated borrowings and gains and losses on derivative contracts. If we increase our international presence through investments in, or acquisitions or development of, seniors housing and health care properties outside the U.S., we may also decide to transact additional business or borrow funds in currencies other than U.S. Dollars, Canadian Dollars or British Pounds Sterling. To illustrate the impact of changes in foreign currency markets, we performed a sensitivity analysis on our derivative portfolio whereby we modeled the change in net present values arising from a hypothetical 1% increase in foreign currency exchange rates to determine the instruments’ change in fair value. The following table summarizes the results of the analysis performed (dollars in thousands):


		March 31, 2021				December 31, 2020					March 31, 2022				December 31, 2021
		Carrying		Change in		Carrying		Change in			Carrying		Change in		Carrying		Change in
		Value		fair value		Value		fair value			Value		fair value		Value		fair value
Foreign currency exchange contracts	Foreign currency exchange contracts	$	84,219	$	12,367	$	61,851	$	12,731	Foreign currency exchange contracts	$	23,548	$	15,511	$	32,280	$	19,740
Debt designated as hedges	Debt designated as hedges	1,647,220		16,472		1,630,542		16,305		Debt designated as hedges	1,581,248		15,812		1,613,164		16,132
Totals	Totals	$	1,731,439	$	28,839	$	1,692,393	$	29,036	Totals	$	1,604,796	$	31,323	$	1,645,444	$	35,872

For additional information regarding fair values of financial instruments, see “Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” and Notes 12 and 17 to our unaudited consolidated financial statements.

Item 4. Controls and Procedures

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by us in the reports we file with or submit to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. No changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4952

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, there are various legal proceedings pending against us that arise in the ordinary course of our business. Management does not believe that the resolution of any of these legal proceedings either individually or in the aggregate will have a material adverse effect on our business, results of operations or financial condition. Further, from time to time, we are party to certain legal proceedings for which third parties, such as tenants, operators and/or managers are contractually obligated to indemnify, defend and hold us harmless. In some of these matters, the indemnitors have insurance for the potential damages. In other matters, we are being defended by tenants and other obligated third parties and these indemnitors may not have sufficient insurance, assets, income or resources to satisfy their defense and indemnification obligations to us. The unfavorable resolution of such legal proceedings could, individually or in the aggregate, materially adversely affect the indemnitors’ ability to satisfy their respective obligations to us, which, in turn, could have a material adverse effect on our business, results of operations or financial condition. It is management’s opinion that there are currently no such legal proceedings pending that will, individually or in the aggregate, have such a material adverse effect. Despite management’s view of the ultimate resolution of these legal proceedings, we may have significant legal expenses and costs associated with the defense of such matters. Further, management cannot predict the outcome of these legal proceedings and if management’s expectation regarding such matters is not correct, such proceedings could have a material adverse effect on our business, results of operations or financial condition.

Item 1A. Risk Factors

There have been no material changes from the risk factors identified under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended March 31, ~~2021,~~2022, we acquired shares of our common stock held by employees who tendered shares to satisfy tax withholding obligations upon the vesting of previously issued restricted stock awards. Specifically, the number of shares of common stock acquired from employees and the average prices paid per share for each month in the first quarter ended March 31, ~~2021~~2022 are as shown in the table below.

On May 1, 2020, our Board of Directors authorized a share repurchase program whereby we may repurchase up to $1 billion of common stock through December 31, 2021 (the "Repurchase Program"). Under this authorization, we are not required to purchase shares but may choose to do so in the open market or through private transactions at times and amounts based on our evaluation of market conditions and other factors. We expect to finance any share repurchases under the Repurchase Program using available cash and may use proceeds from borrowings or debt offerings. We did not repurchase any shares of our common stock during the three months ended March 31, 2021.


Issuer Purchases of Equity Securities	Issuer Purchases of Equity Securities							Issuer Purchases of Equity Securities
Period	Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Repurchase Program		Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Repurchase Program
January 1, 2021 through January 31, 2021		29,778	$	64.31	—	$	—
February 1, 2021 through February 28, 2021		24,080	67.30		—	—
March 1, 2021 through March 31, 2021		8,308	66.32		—	—
January 1, 2022 through January 31, 2022								January 1, 2022 through January 31, 2022	25,081	$	87.51	—	$	—
February 1, 2022 through February 28, 2022								February 1, 2022 through February 28, 2022	29,613	81.17		—	—
March 1, 2022 through March 31, 2022								March 1, 2022 through March 31, 2022	2,080	81.49		—	—
Totals	Totals	62,166	$	65.74	—	$	992,348,000	Totals	56,774	$	83.98	—	$	—

Item 5. Other Information

None.

5053

Item 6. Exhibits


2.1						Agreement and Plan of Merger, dated March 7, 2022, by and among Welltower Inc., WELL Merger Holdco Inc. and WELL Merger Holdco Sub Inc. (filed with the SEC as Exhibit 2.1 to Form 8-K filed March 7, 2022 and incorporated by reference herein).
3.1						Amended and Restated Certificate of Incorporation of Welltower Inc. (filed with the SEC as Exhibit 3.1 to the Form 8-K12B filed April 1, 2022 and incorporated by reference herein).
3.2						Amended and Restated Bylaws of Welltower Inc. (filed with the SEC as Exhibit 3.2 to Form 8-K12B filed on April 1, 2022 and incorporated by reference herein).
3.3						Certificate of Merger (filed with the SEC as Exhibit 3.3 to Form 8-K12B filed April 1, 2022 and incorporated by reference herein).
4.1						Supplemental Indenture No. ~~19,~~22, dated a sas of March ~~25, 2021,~~31, 2022, between Welltower Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (filed with the ~~Company and the Trustee (incorporated by reference to~~SEC as Exhibit 4.2 to Form 8-K filed on March ~~25, 2021)~~31, 2022 and incorporated by reference herein).
4.2						Supplemental Indenture No. 23, dated as o f April 1, 2022, among Welltower OP Inc., as issuer, Welltower Inc., as guarantor, and The Bank of New York Mellon Trust Company, N.A., as trustee (filed with the SEC as Exhibit 4.1 to Form 8-K12B filed April 1, 2022 and incorporated by reference herein).
10.1						Consent and Amendment No. 1 to Credit Agreement, dated April 1, 2022, by and among Welltower Inc., Welltower OP Inc., the lenders and other financial institutions listed therein and KeyBank National Association, as administrative agent (filed with the SEC as Exhibit 10 .1 to Form 8-K12B filed April 1, 2022 and incorporated by reference herein).
10.2						Welltower Inc. 2022 Long-Term Incentive Plan (filed with the SEC as Exhibit 10.2 to the Form 8-K12B filed April 1, 2022).*
10.3						Welltower Inc. 2022 Employee Stock Purchase Plan (filed with the SEC as Exhibit 10.3 to the Form 8-K12B filed April 1, 2022 and incorporated by reference herein).*
31.1						Rule 13a-14(a)/15d-14(a) Certification of Chief Executive ~~Officer.~~Officer - Welltower Inc .
31.2						Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.- Welltower Inc.
31.3						Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer - Welltower OP Inc.
31.4						Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer - Welltower OP Inc.
32.1						Certification pursuant to 18 U.S.C. Section 1350 by Chief Executive ~~Officer.~~Officer - Welltower I nc .
32.2						Certification pursuant to 18 U.S.C. Section 1350 by Chief Financial ~~Officer.~~Officer - Welltower I nc .
32.3						Certification pursuant to 18 U.S.C. Section 1350 by Chief Executive Officer - Welltower OP Inc.
32.4						Certification pursuant to 18 U.S.C. Section 1350 by Chief Financial Officer - Welltower OP Inc.
101.INS						XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						XBRL Taxonomy Extension Schema Document
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB						XBRL Taxonomy Extension Label Linkbase Document
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document
104						The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2021,~~2022, formatted in Inline XBRL

*						Management contract or Compensatory Plan or Arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the ~~undersigned~~under signed thereunto duly authorized.

WELLTOWER INC.

Date:

~~April 29, 2021~~May 10, 2022

By:

/s/ SHANKH MITRA

Shankh Mitra,

Chief Executive Officer and Chief Investment Officer
(Principal Executive Officer)

Date:

~~April 29, 2021~~May 10, 2022

By:

/s/ TIMOTHY G. MCHUGH

Timothy G. McHugh,

Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

Date:

~~April 29, 2021~~May 10, 2022

By:

/s/ JOSHUA T. FIEWEGER

Joshua T. Fieweger,

Chief Accounting Officer
(Principal Accounting Officer)

WELLTOWER OP INC.

Date:

May 10, 2022

By:

/s/ SHANKH MITRA

Shankh Mitra,

Chief Executive Officer and Chief Investment Officer
(Principal Executive Officer)

Date:

May 10, 2022

By:

/s/ TIMOTHY G. MCHUGH

Timothy G. McHugh,

Executive Vice President - Chief Financial Officer
(Principal Financial Officer)

Date:

May 10, 2022

By:

/s/ JOSHUA T. FIEWEGER

Joshua T. Fieweger,

Chief Accounting Officer
(Principal Accounting Officer)


	February 2020		December 2020		January 2021		February 2021		March 2021
Spot occupancy (1)	85.4	%	75.9	%	74.4	%	73.6	%	73.6	%
Sequential occupancy change					(1.5)	%	(0.8)	%	0	%