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.~~1934

For the quarterly period ended ~~March 31,~~September 30, 2021

ORor


☐			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 001-08895

Healthpeak Properties, Inc.

(Exact name of registrant as specified in its charter)



Maryland						33-0091377
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

5050 South Syracuse Street, Suite 800

Denver, CO 80237

(Address of principal executive offices) (Zip ~~code)~~Code)

(720) 428-5050

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading ~~symbol(s)~~Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	PEAK	New York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically 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 such files). Yes ☒ No ☐

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


Large ~~Accelerated Filer~~accelerated filer	☒	Accelerated ~~Filer~~filer	☐
Non-accelerated ~~Filer~~filer	☐	Smaller ~~Reporting Company~~reporting company	☐
		Emerging ~~Growth Company~~growth company	☐

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

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

As of ~~May 3,~~November 1, 2021, there were ~~538,930,065~~539,072,223 shares of the registrant’s $1.00 par value common stock outstanding.

Table of Contents

HEALTHPEAK PROPERTIES, INC.

INDEX

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Healthpeak Properties, Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Real estate:	Real estate:					Real estate:
Buildings and improvements	Buildings and improvements	$	11,149,249	$	11,048,433	Buildings and improvements	$	11,759,664	$	11,048,433
Development costs and construction in progress	Development costs and construction in progress	642,879		613,182		Development costs and construction in progress	845,382		613,182
Land	Land	1,865,806		1,867,278		Land	2,206,422		1,867,278
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(2,508,986)		(2,409,135)		Accumulated depreciation and amortization	(2,734,832)		(2,409,135)
Net real estate	Net real estate	11,148,948		11,119,758		Net real estate	12,076,636		11,119,758
Net investment in direct financing leases	Net investment in direct financing leases	44,706		44,706		Net investment in direct financing leases	44,706		44,706
Loans receivable, net of reserves of $14,134 and $10,280		740,142		195,375
Loans receivable, net of reserves of $2,727 and $10,280						Loans receivable, net of reserves of $2,727 and $10,280	411,062		195,375
Investments in and advances to unconsolidated joint ventures	Investments in and advances to unconsolidated joint ventures	399,841		402,871		Investments in and advances to unconsolidated joint ventures	389,095		402,871
Accounts receivable, net of allowance of $3,884 and $3,994		38,879		42,269
Accounts receivable, net of allowance of $3,690 and $3,994						Accounts receivable, net of allowance of $3,690 and $3,994	44,699		42,269
Cash and cash equivalents	Cash and cash equivalents	34,007		44,226		Cash and cash equivalents	201,099		44,226
Restricted cash	Restricted cash	68,033		67,206		Restricted cash	53,699		67,206
Intangible assets, net	Intangible assets, net	495,919		519,917		Intangible assets, net	520,335		519,917
Assets held for sale and discontinued operations, net	Assets held for sale and discontinued operations, net	1,374,507		2,626,306		Assets held for sale and discontinued operations, net	105,009		2,626,306
Right-of-use asset, net	Right-of-use asset, net	198,426		192,349		Right-of-use asset, net	218,524		192,349
Other assets, net	Other assets, net	650,518		665,106		Other assets, net	678,638		665,106
Total assets	Total assets	$	15,193,926	$	15,920,089	Total assets	$	14,743,502	$	15,920,089

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Bank line of credit and commercial paper	Bank line of credit and commercial paper	$	1,038,150	$	129,590	Bank line of credit and commercial paper	$	1,024,000	$	129,590
Term loan	Term loan	249,243		249,182		Term loan	—		249,182
Senior unsecured notes	Senior unsecured notes	4,255,697		5,697,586		Senior unsecured notes	4,157,834		5,697,586
Mortgage debt	Mortgage debt	219,959		221,621		Mortgage debt	356,570		221,621
Intangible liabilities, net	Intangible liabilities, net	138,617		144,199		Intangible liabilities, net	144,004		144,199
Liabilities related to assets held for sale and discontinued operations, net	Liabilities related to assets held for sale and discontinued operations, net	328,167		415,737		Liabilities related to assets held for sale and discontinued operations, net	18,910		415,737
Lease liability	Lease liability	184,425		179,895		Lease liability	191,444		179,895
Accounts payable, accrued liabilities, and other liabilities	Accounts payable, accrued liabilities, and other liabilities	697,040		763,391		Accounts payable, accrued liabilities, and other liabilities	729,939		760,617
Deferred revenue	Deferred revenue	765,946		774,316		Deferred revenue	782,413		774,316
Total liabilities	Total liabilities	7,877,244		8,575,517		Total liabilities	7,405,114		8,572,743

Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies	0		0

Common stock, $1.00 par value: 750,000,000 shares authorized; 538,885,793 and 538,405,393 shares issued and outstanding		538,886		538,405
Redeemable noncontrolling interests						Redeemable noncontrolling interests	119,591		57,396

Common stock, $1.00 par value: 750,000,000 shares authorized; 539,066,131 and 538,405,393 shares issued and outstanding						Common stock, $1.00 par value: 750,000,000 shares authorized; 539,066,131 and 538,405,393 shares issued and outstanding	539,066		538,405
Additional paid-in capital	Additional paid-in capital	10,223,711		10,229,857		Additional paid-in capital	10,122,112		10,175,235
Cumulative dividends in excess of earnings	Cumulative dividends in excess of earnings	(3,994,562)		(3,976,232)		Cumulative dividends in excess of earnings	(3,987,537)		(3,976,232)
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(3,497)		(3,685)		Accumulated other comprehensive income (loss)	(3,281)		(3,685)
Total stockholders’ equity	Total stockholders’ equity	6,764,538		6,788,345		Total stockholders’ equity	6,670,360		6,733,723
Joint venture partners	Joint venture partners	352,986		357,069		Joint venture partners	347,180		357,069
Non-managing member unitholders	Non-managing member unitholders	199,158		199,158		Non-managing member unitholders	201,257		199,158
Total noncontrolling interests	Total noncontrolling interests	552,144		556,227		Total noncontrolling interests	548,437		556,227
Total equity	Total equity	7,316,682		7,344,572		Total equity	7,218,797		7,289,950
Total liabilities and equity	Total liabilities and equity	$	15,193,926	$	15,920,089	Total liabilities and equity	$	14,743,502	$	15,920,089

See accompanying Notes to the Unaudited Consolidated Financial Statements.

Table of Contents

Healthpeak Properties, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020
Revenues:	Revenues:						Revenues:
Rental and related revenues	Rental and related revenues	$	327,972	$	282,317		Rental and related revenues	$	353,516	$	301,941	$	1,022,130	$	872,511
Resident fees and services	Resident fees and services	116,128		91,780			Resident fees and services	119,022		115,031		352,458		320,737
Income from direct financing leases	Income from direct financing leases	2,163		3,269			Income from direct financing leases	2,179		2,150		6,522		7,569
Interest income	Interest income	9,013		3,688			Interest income	6,748		4,443		31,869		12,361
Total revenues	Total revenues	455,276		381,054			Total revenues	481,465		423,565		1,412,979		1,213,178
Costs and expenses:	Costs and expenses:						Costs and expenses:
Interest expense	Interest expense	46,843		55,691			Interest expense	35,905		53,734		121,429		164,248
Depreciation and amortization	Depreciation and amortization	157,538		125,112			Depreciation and amortization	177,175		141,971		506,172		406,774
Operating	Operating	181,761		237,377			Operating	202,139		183,141		574,032		598,326
General and administrative	General and administrative	24,902		22,349			General and administrative	23,270		21,661		72,260		67,730
Transaction costs	Transaction costs	798		14,563			Transaction costs	—		1,984		1,417		16,920

Impairments and loan loss reserves (recoveries), net	Impairments and loan loss reserves (recoveries), net	3,242		11,107			Impairments and loan loss reserves (recoveries), net	285		(1,777)		4,458		16,167
Total costs and expenses	Total costs and expenses	415,084		466,199			Total costs and expenses	438,774		400,714		1,279,768		1,270,165
Other income (expense):	Other income (expense):						Other income (expense):
Gain (loss) on sales of real estate, net	Gain (loss) on sales of real estate, net	0		2,069			Gain (loss) on sales of real estate, net	14,635		2,283		189,873		85,636
Gain (loss) on debt extinguishments	Gain (loss) on debt extinguishments	(164,292)		833			Gain (loss) on debt extinguishments	(667)		(17,921)		(225,824)		(42,912)
Other income (expense), net	Other income (expense), net	2,200		210,653			Other income (expense), net	1,670		6,744		5,604		234,812
Total other income (expense), net	Total other income (expense), net	(162,092)		213,555			Total other income (expense), net	15,638		(8,894)		(30,347)		277,536
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	(121,900)		128,410			Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	58,329		13,957		102,864		220,549
Income tax benefit (expense)	Income tax benefit (expense)	(8)		29,868			Income tax benefit (expense)	649		(22,970)		1,404		6,792
Equity income (loss) from unconsolidated joint ventures	Equity income (loss) from unconsolidated joint ventures	1,323		(11,146)			Equity income (loss) from unconsolidated joint ventures	2,327		(18,749)		4,517		(47,630)
Income (loss) from continuing operations	Income (loss) from continuing operations	(120,585)		147,132			Income (loss) from continuing operations	61,305		(27,762)		108,785		179,711
Income (loss) from discontinued operations	Income (loss) from discontinued operations	270,008		135,408			Income (loss) from discontinued operations	601		(31,819)		384,569		98,297
Net income (loss)	Net income (loss)	149,423		282,540			Net income (loss)	61,906		(59,581)		493,354		278,008
Noncontrolling interests’ share in continuing operations	Noncontrolling interests’ share in continuing operations	(3,306)		(3,463)			Noncontrolling interests’ share in continuing operations	(7,195)		(3,616)		(14,036)		(10,565)
Noncontrolling interests’ share in discontinued operations	Noncontrolling interests’ share in discontinued operations	(329)		3			Noncontrolling interests’ share in discontinued operations	—		(220)		(2,539)		(274)
Net income (loss) attributable to Healthpeak Properties, Inc.	Net income (loss) attributable to Healthpeak Properties, Inc.	145,788		279,080			Net income (loss) attributable to Healthpeak Properties, Inc.	54,711		(63,417)		476,779		267,169

Participating securities’ share in earnings	Participating securities’ share in earnings	(2,451)		(1,616)			Participating securities’ share in earnings	(269)		(351)		(3,001)		(2,151)
Net income (loss) applicable to common shares	Net income (loss) applicable to common shares	$	143,337	$	277,464		Net income (loss) applicable to common shares	$	54,442	$	(63,768)	$	473,778	$	265,018

Basic earnings (loss) per common share:	Basic earnings (loss) per common share:						Basic earnings (loss) per common share:
Continuing operations	Continuing operations	$	(0.23)	$	0.28		Continuing operations	$	0.10	$	(0.06)	$	0.17	$	0.32
Discontinued operations	Discontinued operations	0.50		0.27			Discontinued operations	0.00		(0.06)		0.71		0.18
Net income (loss) applicable to common shares	Net income (loss) applicable to common shares	$	0.27	$	0.55		Net income (loss) applicable to common shares	$	0.10	$	(0.12)	$	0.88	$	0.50
Diluted earnings (loss) per common share:	Diluted earnings (loss) per common share:						Diluted earnings (loss) per common share:
Continuing operations	Continuing operations	$	(0.23)	$	0.28		Continuing operations	$	0.10	$	(0.06)	$	0.17	$	0.32
Discontinued operations	Discontinued operations	0.50		0.26			Discontinued operations	0.00		(0.06)		0.71		0.18
Net income (loss) applicable to common shares	Net income (loss) applicable to common shares	$	0.27	$	0.54		Net income (loss) applicable to common shares	$	0.10	$	(0.12)	$	0.88	$	0.50

Weighted average shares outstanding:	Weighted average shares outstanding:						Weighted average shares outstanding:
Basic	Basic	538,679		506,476			Basic	539,021		538,333		538,879		527,908
Diluted	Diluted	538,679		515,045			Diluted	539,388		538,333		539,159		528,455

See accompanying Notes to the Unaudited Consolidated Financial Statements.

Table of Contents

Healthpeak Properties, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020
Net income (loss)	Net income (loss)	$	149,423	$	282,540		Net income (loss)	$	61,906	$	(59,581)	$	493,354	$	278,008
Other comprehensive income (loss):	Other comprehensive income (loss):						Other comprehensive income (loss):

Net unrealized gains (losses) on derivatives	Net unrealized gains (losses) on derivatives	332		301			Net unrealized gains (losses) on derivatives	—		(942)		332		(651)
Change in Supplemental Executive Retirement Plan obligation and other	Change in Supplemental Executive Retirement Plan obligation and other	107		61			Change in Supplemental Executive Retirement Plan obligation and other	108		(108)		323		272

Reclassification adjustment realized in net income (loss)	Reclassification adjustment realized in net income (loss)	(251)		0			Reclassification adjustment realized in net income (loss)	—		—		(251)		—
Total other comprehensive income (loss)	Total other comprehensive income (loss)	188		362			Total other comprehensive income (loss)	108		(1,050)		404		(379)
Total comprehensive income (loss)	Total comprehensive income (loss)	149,611		282,902			Total comprehensive income (loss)	62,014		(60,631)		493,758		277,629
Total comprehensive (income) loss attributable to noncontrolling interests’ share in continuing operations	Total comprehensive (income) loss attributable to noncontrolling interests’ share in continuing operations	(3,306)		(3,463)			Total comprehensive (income) loss attributable to noncontrolling interests’ share in continuing operations	(7,195)		(3,616)		(14,036)		(10,565)
Total comprehensive (income) loss attributable to noncontrolling interests’ share in discontinued operations	Total comprehensive (income) loss attributable to noncontrolling interests’ share in discontinued operations	(329)		3			Total comprehensive (income) loss attributable to noncontrolling interests’ share in discontinued operations	—		(220)		(2,539)		(274)
Total comprehensive income (loss) attributable to Healthpeak Properties, Inc.	Total comprehensive income (loss) attributable to Healthpeak Properties, Inc.	$	145,976	$	279,442		Total comprehensive income (loss) attributable to Healthpeak Properties, Inc.	$	54,819	$	(64,467)	$	477,183	$	266,790

See accompanying Notes to the Unaudited Consolidated Financial Statements.

Table of Contents

Healthpeak Properties, Inc.

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

(In thousands, except per share data)

(Unaudited)

For the three months ended ~~March 31,~~September 30, 2021:


		Common Stock			Additional Paid-In Capital				Cumulative Dividends In Excess Of Earnings		Accumulated Other Comprehensive Income (Loss)					Total Stockholders’ Equity			Total Noncontrolling Interests				Total Equity			Common Stock				Additional Paid-In Capital				Cumulative Dividends In Excess Of Earnings				Accumulated Other Comprehensive Income (Loss)				Total Stockholders’ Equity				Total Noncontrolling Interests				Total Equity				Redeemable Noncontrolling Interests
		Shares	Amount												Shares						Amount

January 1, 2021		538,405	$	538,405			$	10,229,857					$	(3,976,232)				$	(3,685)			$	6,788,345			$	556,227	$	7,344,572
July 1, 2021																									July 1, 2021	538,955		$	538,955			$	10,147,230			$	(3,880,253)			$	(3,389)			$	6,802,543			$	548,867			$	7,351,410			$	85,367
Net income (loss)	Net income (loss)	—	—		—				145,788		—					145,788			3,635				149,423		Net income (loss)	—		—		—				54,711				—				54,711				7,172				61,883				23
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—				—		188					188			—				188		Other comprehensive income (loss)	—		—		—				—				108				108				—				108				—
Issuance of common stock		879	879		208				—		—					1,087			—				1,087
Issuance of common stock, net																									Issuance of common stock, net	20		20		358				—				—				378				—				378				—

Repurchase of common stock	Repurchase of common stock	(398)	(398)		(11,767)				—		—					(12,165)			—				(12,165)		Repurchase of common stock	(2)		(2)		(71)				—				—				(73)				—				(73)				—

Exercise of stock options																									Exercise of stock options	93		93		3,073				—				—				3,166				—				3,166				—
Amortization of stock-based compensation	Amortization of stock-based compensation	—	—		5,413				—		—					5,413			—				5,413		Amortization of stock-based compensation	—		—		5,666				—				—				5,666				—				5,666				—
Common dividends ($0.30 per share)	Common dividends ($0.30 per share)	—	—		—				(164,118)		—					(164,118)			—				(164,118)		Common dividends ($0.30 per share)	—		—		—				(161,995)				—				(161,995)				—				(161,995)				—
Distributions to noncontrolling interest		—	—		—				—		—					—			(7,718)				(7,718)
Distributions to noncontrolling interests																									Distributions to noncontrolling interests	—		—		—				—				—				—				(7,602)				(7,602)				(43)
Contributions from noncontrolling interests																									Contributions from noncontrolling interests	—		—		—				—				—				—				—				—				100
Adjustments to redemption value of redeemable noncontrolling interests																									Adjustments to redemption value of redeemable noncontrolling interests	—		—		(34,144)				—				—				(34,144)				—				(34,144)				34,144

March 31, 2021		538,886	$	538,886	$	10,223,711			$	(3,994,562)	$	(3,497)				$	6,764,538		$	552,144			$	7,316,682
September 30, 2021																									September 30, 2021	539,066		$	539,066	$	10,122,112			$	(3,987,537)			$	(3,281)			$	6,670,360			$	548,437			$	7,218,797			$	119,591

For the three months ended ~~March 31,~~September 30, 2020:

Common Stock Additional Paid-In Capital Cumulative Dividends In Excess Of Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Total Noncontrolling Interests Total
Equity
Shares Amount
December 31, 2019 505,222 $ 505,222 $ 9,183,892 $ (3,601,199) $ (2,857) $ 6,085,058 $ 582,416 $ 6,667,474
Impact of adoption of ASU No. 2016-13(1)
— — — (1,524) — (1,524) — (1,524)
January 1, 2020 505,222 $ 505,222 $ 9,183,892 $ (3,602,723) $ (2,857) $ 6,083,534 $ 582,416 $ 6,665,950
Net income (loss) — — — 279,080 — 279,080 3,460 282,540
Other comprehensive income (loss) — — — — 362 362 — 362
Issuance of common stock, net 33,104 33,104 1,031,518 — — 1,064,622 — 1,064,622
Conversion of DownREIT units to common stock 23 23 486 — — 509 (509) 0
Repurchase of common stock (268) (268) (9,469) — — (9,737) — (9,737)
Exercise of stock options 54 54 1,752 — — 1,806 — 1,806
Amortization of stock-based compensation — — 4,832 — — 4,832 — 4,832
Common dividends ($0.37 per share) — — — (188,500) — (188,500) — (188,500)
Distributions to noncontrolling interest — — — — — — (8,432) (8,432)
March 31, 2020 538,135 $ 538,135 $ 10,213,011 $ (3,512,143) $ (2,495) $ 7,236,508 $ 576,935 $ 7,813,443


	Common Stock			Additional Paid-In Capital		Cumulative Dividends In Excess Of Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity		Total Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
	Shares	Amount


July 1, 2020	538,318	$	538,318	$	10,191,263	$	(3,660,187)	$	(2,186)	$	7,067,208	$	570,048	$	7,637,256	$	34,054
Net income (loss)	—	—		—		(63,417)		—		(63,417)		3,836		(59,581)		—
Other comprehensive income (loss)	—	—		—		—		(1,050)		(1,050)		—		(1,050)		—
Issuance of common stock, net	47	47		464		—		—		511		—		511		—

Repurchase of common stock	(10)	(10)		(265)		—		—		(275)		—		(275)		—

Amortization of stock-based compensation	—	—		5,159		—		—		5,159		—		5,159		—
Common dividends ($0.37 per share)	—	—		—		(199,546)		—		(199,546)		—		(199,546)		—
Distributions to noncontrolling interests	—	—		—		—		—		—		(7,631)		(7,631)		(13)


Contributions from noncontrolling interests	—	—		—		—		—		—		—		—		157
Adjustments to redemption value of redeemable noncontrolling interests	—	—		(12,652)		—		—		(12,652)		—		(12,652)		12,652
September 30, 2020	538,355	$	538,355	$	10,183,969	$	(3,923,150)	$	(3,236)	$	6,795,938	$	566,253	$	7,362,191	$	46,850

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For the nine months ended September 30, 2021:


	Common Stock			Additional Paid-In Capital		Cumulative Dividends In Excess Of Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity		Total Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
	Shares	Amount


January 1, 2021	538,405	$	538,405	$	10,175,235	$	(3,976,232)	$	(3,685)	$	6,733,723	$	556,227	$	7,289,950	$	57,396
Net income (loss)	—	—		—		476,779		—		476,779		16,552		493,331		23
Other comprehensive income (loss)	—	—		—		—		404		404		—		404		—
Issuance of common stock, net	974	974		448		—		—		1,422		—		1,422		—

Repurchase of common stock	(410)	(410)		(12,143)		—		—		(12,553)		—		(12,553)		—
Exercise of stock options	97	97		3,194		—		—		3,291		—		3,291		—
Amortization of stock-based compensation	—	—		17,224		—		—		17,224		—		17,224		—
Common dividends ($0.90 per share)	—	—		—		(488,084)		—		(488,084)		—		(488,084)		—

Distributions to noncontrolling interests	—	—		—		—		—		—		(24,277)		(24,277)		(95)
Purchase of noncontrolling interests	—	—		(5)		—		—		(5)		(65)		(70)		—

Contributions from noncontrolling interests	—	—		—		—		—		—		—		—		426
Adjustments to redemption value of redeemable noncontrolling interests	—	—		(61,841)		—		—		(61,841)		—		(61,841)		61,841



September 30, 2021	539,066	$	539,066	$	10,122,112	$	(3,987,537)	$	(3,281)	$	6,670,360	$	548,437	$	7,218,797	$	119,591

For the nine months ended September 30, 2020:


	Common Stock			Additional Paid-In Capital		Cumulative Dividends In Excess Of Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity		Total Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
	Shares	Amount
December 31, 2019	505,222	$	505,222	$	9,175,277	$	(3,601,199)	$	(2,857)	$	6,076,443	$	582,416	$	6,658,859	$	11,106
Impact of adoption of ASU No. 2016-13(1)	—	—		—		(1,524)		—		(1,524)		—		(1,524)		—
January 1, 2020	505,222	505,222		9,175,277		(3,602,723)		(2,857)		6,074,919		582,416		6,657,335		11,106
Net income (loss)	—	—		—		267,169		—		267,169		10,839		278,008		—
Other comprehensive income (loss)	—	—		—		—		(379)		(379)		—		(379)		—
Issuance of common stock, net	33,248	33,248		1,032,652		—		—		1,065,900		—		1,065,900		—
Conversion of DownREIT units to common stock	120	120		3,957		—		—		4,077		(4,077)		—		—
Repurchase of common stock	(289)	(289)		(9,984)		—		—		(10,273)		—		(10,273)		—
Exercise of stock options	54	54		1,752		—		—		1,806		—		1,806		—
Amortization of stock-based compensation	—	—		15,817		—		—		15,817		—		15,817		—
Common dividends ($1.11 per share)	—	—		—		(587,596)		—		(587,596)		—		(587,596)		—

Distributions to noncontrolling interests	—	—		—		—		—		—		(22,925)		(22,925)		(32)

Contributions from noncontrolling interests	—	—		—		—		—		—		—		—		274

Adjustments to redemption value of redeemable noncontrolling interests	—	—		(35,502)		—		—		(35,502)		—		(35,502)		35,502


September 30, 2020	538,355	$	538,355	$	10,183,969	$	(3,923,150)	$	(3,236)	$	6,795,938	$	566,253	$	7,362,191	$	46,850

_______________________________________

(1)On January 1, 2020, the Company adopted a series of Accounting Standards Updates (“ASUs”) related to accounting for credit losses and recognized the cumulative-effect of adoption to beginning retained earnings. Refer to Note 2 for a detailed impact of adoption.

See accompanying Notes to the Unaudited Consolidated Financial Statements.

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Healthpeak Properties, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


		Three Months Ended March 31,					Nine Months Ended September 30,
		2021		2020			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)	Net income (loss)	$	149,423	$	282,540	Net income (loss)	$	493,354	$	278,008
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:					Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of real estate, in-place lease, and other intangibles	Depreciation and amortization of real estate, in-place lease, and other intangibles	157,538		189,276		Depreciation and amortization of real estate, in-place lease, and other intangibles	506,172		541,394

Amortization of stock-based compensation	Amortization of stock-based compensation	4,364		4,832		Amortization of stock-based compensation	13,895		13,392
Amortization of deferred financing costs	Amortization of deferred financing costs	2,213		2,582		Amortization of deferred financing costs	6,677		7,670
Straight-line rents	Straight-line rents	(9,135)		(6,229)		Straight-line rents	(23,627)		(24,086)

Amortization of nonrefundable entrance fees and above/below market lease intangibles	Amortization of nonrefundable entrance fees and above/below market lease intangibles	(23,764)		(15,943)		Amortization of nonrefundable entrance fees and above/below market lease intangibles	(68,854)		(58,849)
Equity loss (income) from unconsolidated joint ventures	Equity loss (income) from unconsolidated joint ventures	(1,008)		11,979		Equity loss (income) from unconsolidated joint ventures	(9,508)		48,545
Distributions of earnings from unconsolidated joint ventures	Distributions of earnings from unconsolidated joint ventures	237		9,513		Distributions of earnings from unconsolidated joint ventures	4,731		11,928

Loss (gain) on sale of real estate under direct financing leases	Loss (gain) on sale of real estate under direct financing leases	0		(41,707)		Loss (gain) on sale of real estate under direct financing leases	—		(41,670)
Deferred income tax expense (benefit)	Deferred income tax expense (benefit)	(1,148)		(24,911)		Deferred income tax expense (benefit)	(3,999)		(8,245)
Impairments and loan loss reserves (recoveries), net	Impairments and loan loss reserves (recoveries), net	3,242		39,123		Impairments and loan loss reserves (recoveries), net	37,194		97,723
Loss (gain) on debt extinguishments	Loss (gain) on debt extinguishments	164,292		(833)		Loss (gain) on debt extinguishments	225,824		42,912
Loss (gain) on sales of real estate, net	Loss (gain) on sales of real estate, net	(259,662)		(164,869)		Loss (gain) on sales of real estate, net	(598,531)		(247,881)
Loss (gain) upon change of control, net	Loss (gain) upon change of control, net	(1,042)		(167,434)		Loss (gain) upon change of control, net	(1,042)		(173,222)
Casualty-related loss (recoveries), net	Casualty-related loss (recoveries), net	859		0		Casualty-related loss (recoveries), net	1,632		469

Other non-cash items	Other non-cash items	(726)		502		Other non-cash items	(8,640)		653
Changes in:	Changes in:					Changes in:

Decrease (increase) in accounts receivable and other assets, net	Decrease (increase) in accounts receivable and other assets, net	11,567		(5,036)		Decrease (increase) in accounts receivable and other assets, net	27,576		22,503
Increase (decrease) in accounts payable, accrued liabilities, and deferred revenue	Increase (decrease) in accounts payable, accrued liabilities, and deferred revenue	(74,524)		(18,343)		Increase (decrease) in accounts payable, accrued liabilities, and deferred revenue	(31,519)		28,480
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	122,726		95,042		Net cash provided by (used in) operating activities	571,335		539,724
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:

Acquisitions of real estate	Acquisitions of real estate	(14,914)		(20,018)		Acquisitions of real estate	(978,473)		(340,405)
Development, redevelopment, and other major improvements of real estate	Development, redevelopment, and other major improvements of real estate	(135,339)		(209,418)		Development, redevelopment, and other major improvements of real estate	(430,510)		(577,524)
Leasing costs, tenant improvements, and recurring capital expenditures	Leasing costs, tenant improvements, and recurring capital expenditures	(20,710)		(21,791)		Leasing costs, tenant improvements, and recurring capital expenditures	(72,112)		(61,329)
Proceeds from sales of real estate, net	Proceeds from sales of real estate, net	937,492		419,381		Proceeds from sales of real estate, net	2,383,017		568,828
Acquisition of CCRC Portfolio	Acquisition of CCRC Portfolio	0		(396,352)		Acquisition of CCRC Portfolio	—		(394,177)
Contributions to unconsolidated joint ventures	Contributions to unconsolidated joint ventures	(5,924)		(1,722)		Contributions to unconsolidated joint ventures	(12,828)		(9,792)
Distributions in excess of earnings from unconsolidated joint ventures	Distributions in excess of earnings from unconsolidated joint ventures	10,825		2,639		Distributions in excess of earnings from unconsolidated joint ventures	37,139		6,200

Proceeds from sales/principal repayments on debt investments and direct financing leases		0		84,336
Proceeds from sales/principal repayments on loans receivable and direct financing leases						Proceeds from sales/principal repayments on loans receivable and direct financing leases	291,223		125,372
Investments in loans receivable and other	Investments in loans receivable and other	(3,704)		(8,066)		Investments in loans receivable and other	(13,781)		(83,651)

Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	767,726		(151,011)		Net cash provided by (used in) investing activities	1,203,675		(766,478)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Borrowings under bank line of credit and commercial paper	Borrowings under bank line of credit and commercial paper	3,437,200		2,025,600		Borrowings under bank line of credit and commercial paper	12,931,450		2,025,600
Repayments under bank line of credit and commercial paper	Repayments under bank line of credit and commercial paper	(2,528,640)		(2,118,600)		Repayments under bank line of credit and commercial paper	(12,037,040)		(2,118,600)

Issuance and borrowings of debt, excluding bank line of credit and commercial paper						Issuance and borrowings of debt, excluding bank line of credit and commercial paper	591,546		594,750
Repayments and repurchase of debt, excluding bank line of credit and commercial paper	Repayments and repurchase of debt, excluding bank line of credit and commercial paper	(1,491,754)		(5,338)		Repayments and repurchase of debt, excluding bank line of credit and commercial paper	(2,421,598)		(559,725)

Payments for debt extinguishment and deferred financing costs	Payments for debt extinguishment and deferred financing costs	(158,011)		0		Payments for debt extinguishment and deferred financing costs	(232,306)		(47,149)

Issuance of common stock and exercise of options	Issuance of common stock and exercise of options	1,087		1,066,428		Issuance of common stock and exercise of options	4,713		1,067,706
Repurchase of common stock	Repurchase of common stock	(12,165)		(9,737)		Repurchase of common stock	(12,553)		(10,273)
Dividends paid on common stock	Dividends paid on common stock	(164,118)		(188,500)		Dividends paid on common stock	(488,084)		(587,596)

Distributions to and purchase of noncontrolling interests	Distributions to and purchase of noncontrolling interests	(7,718)		(8,432)		Distributions to and purchase of noncontrolling interests	(24,443)		(22,925)
Contributions from and issuance of noncontrolling interests						Contributions from and issuance of noncontrolling interests	426		—
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(924,119)		761,421		Net cash provided by (used in) financing activities	(1,687,889)		341,788
Effect of foreign exchanges on cash, cash equivalents and restricted cash	Effect of foreign exchanges on cash, cash equivalents and restricted cash	0		(10)		Effect of foreign exchanges on cash, cash equivalents and restricted cash	—		(153)
Net increase (decrease) in cash, cash equivalents and restricted cash	Net increase (decrease) in cash, cash equivalents and restricted cash	(33,667)		705,442		Net increase (decrease) in cash, cash equivalents and restricted cash	87,121		114,881
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	181,685		184,657		Cash, cash equivalents and restricted cash, beginning of period	181,685		184,657
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	148,018	$	890,099	Cash, cash equivalents and restricted cash, end of period	$	268,806	$	299,538

See accompanying Notes to the Unaudited Consolidated Financial Statements.

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Healthpeak Properties, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. Business

Overview

Healthpeak Properties, Inc., a Standard & Poor’s 500 company, is a Maryland corporation that is organized to qualify as a real estate investment trust (“REIT”) ~~which,~~that, together with its consolidated entities (collectively, “Healthpeak” or the “Company”), invests primarily in real estate serving the healthcare industry in the United States (“U.S.”). ~~Healthpeak~~TMHealthpeak® acquires, develops, leases, owns, and manages healthcare real estate. The Company’s diverse portfolio is comprised of investments in the following reportable healthcare segments: (i) life science; (ii) medical office; and (iii) continuing care retirement community (“CCRC”).

The Company’s corporate headquarters are in Denver, Colorado and it has additional offices in Irvine, California and Franklin, Tennessee.

Senior Housing Triple-Net and Senior Housing Operating Portfolio Dispositions

During 2020, the Company established and began executing a plan to dispose of its senior housing triple-net and Senior Housing Operating (“SHOP”) properties. As of December 31, 2020, the Company concluded that the planned dispositions represented a strategic shift that has had and will have a major effect on the Company’s operations and financial results. Therefore, senior housing triple-net and SHOP assets meeting the held for sale criteria on or before ~~March 31,~~September 30, 2021are classified as discontinued operations in all periods presented herein. In September 2021, the Company successfully completed the disposition of the remaining senior housing triple-net and SHOP properties. See Note 5 for further information.

COVID-19 Update

~~While the Coronavirus~~The coronavirus (“COVID-19”) ~~continues to evolve daily and its ultimate outcome is uncertain, it~~pandemic has caused significant disruption to individuals, governments, financial markets, and businesses, including the Company. Global health concerns and increased efforts to reduce the spread of the COVID-19 pandemic prompted federal, state, and local governments to restrict normal daily activities, and resulted in travel bans, quarantines, school closings, “shelter-in-place” orders requiring individuals to remain in their homes other than to conduct essential services or activities, as well as business limitations and shutdowns, which resulted in closure of many businesses deemed to be non-essential. Although most of these restrictions have since been lifted or scaled back, certain restrictions remain in place or have been re-imposed and any future surges of COVID-19 may lead to other restrictions being re-implemented in response to efforts to reduce the spread. In addition, theThe Company’s tenants, operators, and borrowers have ~~faced~~experienced significant cost increases as a result of increased health and safety measures, ~~including~~staffing shortages, increased ~~staffing demands for patient care~~governmental regulation and ~~sanitation, as well as increased usage~~compliance, vaccine mandates, and ~~inventory of critical medical supplies and personal protective equipment. These health and safety measures, which have been in place since~~other operational changes necessitated either directly or indirectly by the ~~onset of the pandemic, continue to place a substantial strain on the business operations of many of the Company’s tenants, operators, and borrowers.~~COVID-19 pandemic. The Company evaluated the impacts of COVID-19 on its business thus far and incorporated information concerning the impact of COVID-19 into its assessments of liquidity, impairments, and collectibility from tenants, residents, and borrowers as of ~~March 31,~~September 30, 2021. The Company will continue to monitor such impacts and will adjust its estimates and assumptions based on the best available information.

NOTE 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Management is required to make estimates and assumptions in the preparation of financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from management’s estimates.

~~Table of Contents~~

The consolidated financial statements include the accounts of Healthpeak Properties, Inc., its wholly-owned subsidiaries, joint ventures (“JVs”), and variable interest entities (“VIEs”) that it controls through voting rights or other means. Intercompany transactions and balances have been eliminated upon consolidation. All adjustments (consisting of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations, and cash flows have been included. Operating results for the three and nine months ended ~~March 31,~~September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The accompanying unaudited interim financial information should be read in conjunction with the consolidated financial statements and notes thereto ~~for the year ended December 31, 2020~~ included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the U.S. Securities and Exchange Commission (“SEC”).

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Revision to Additional Paid-In Capital and Redeemable Noncontrolling Interests

During the third quarter of 2021, the Company identified and corrected immaterial errors in the classification and redemption value of redeemable noncontrolling interests of consolidated joint ventures in its Life Sciences segment. On the Consolidated Balance Sheet as of December 31, 2020, the Company corrected the classification of its redeemable noncontrolling interests and increased the balance to its estimated redemption value, with a corresponding decrease to additional paid-in capital (“APIC”) in accordance with ASC 480, Distinguishing Liabilities from Equity.

The increase in the unrealized value of the redeemable noncontrolling interests was largely attributable to rapidly rising rents and compressing capitalization rates in the market in which the entities operate, and was identified and corrected by management. The Company determined the impact of the adjustments to be immaterial, individually and in the aggregate, based on consideration of quantitative and qualitative factors. As such, the Company made these adjustments in its Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2021.

These adjustments had no impact on the Consolidated Statements of Cash Flows, Consolidated Statements of Operations, or any per share amounts. The following table provides the impact of the adjustment to the Company’s previously reported Consolidated Balance Sheet as of December 31, 2020 (in thousands):


	December 31, 2020
	Previously Reported		Adjustments		As Corrected
Consolidated Balance Sheet
Accounts payable, accrued liabilities, and other liabilities	$	763,391	$	(2,774)	$	760,617
Total liabilities	8,575,517		(2,774)		8,572,743

Redeemable noncontrolling interests	—		57,396		57,396

Additional paid-in capital	10,229,857		(54,622)		10,175,235
Total stockholders’ equity	6,788,345		(54,622)		6,733,723
Total equity	7,344,572		(54,622)		7,289,950
Total liabilities and equity	15,920,089		—		15,920,089

In addition to the changes made to reflect the impact of the correction described above, the Company made changes (all amounts in thousands) to the Consolidated Statements of Equity and Redeemable Noncontrolling Interests to decrease APIC, total stockholders’ equity, and total equity by $82,319, $44,117, and $31,465, as of July 1, 2021, September 30, 2020, and July 1, 2020, respectively, with a corresponding increase to redeemable noncontrolling interests of $85,367, $46,850, and $34,054, respectively, and a decrease to accounts payable, accrued liabilities, and other liabilities of $3,048, $2,733, and $2,589, respectively, on the Consolidated Balance Sheets.

The Company also made changes (all amounts in thousands) to the Consolidated Statement of Equity and Redeemable Noncontrolling Interests to decrease APIC, total stockholders’ equity, and total equity as of December 31, 2019 by $8,615 with a corresponding increase to redeemable noncontrolling interests of $11,106 and a decrease to accounts payable, accrued liabilities, and other liabilities as of December 31, 2019 of $2,491 on the Consolidated Balance Sheet.

Government Grant Income

On March 27, 2020, the federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) to provide financial aid to individuals, businesses, and state and local governments. During the three and nine months ended ~~March 31,~~September 30, 2021 and 2020, the Company received government grants under the CARES Act primarily to cover increased expenses and lost revenue during the COVID-19 pandemic. Grant income is recognized when there is reasonable assurance that the grant will be received and the Company will comply with all conditions attached to the grant. Additionally, grants are recognized over the periods in which the Company recognizes the increased expenses and lost revenue the grants are intended to defray. As of ~~March 31,~~September 30, 2021, the amount of qualifying expenditures and lost revenue exceeded grant income recognized and the Company ~~had~~believes it has complied orand will continue to comply with all grant conditions.

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The following table summarizes information related to government grant income received and recognized by the Company (in thousands):

Three Months Ended
March 31,
2021 2020
Government grant income recorded in other income (expense), net $ 1,310 $ 0
Government grant income recorded in equity income (loss) from unconsolidated joint ventures 426 0
Government grant income recorded in income (loss) from discontinued operations 3,232 0
Total government grants received $ 4,968 $ 0


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Government grant income recorded in other income (expense), net	$	15	$	1,761	$	1,412	$	13,632
Government grant income recorded in equity income (loss) from unconsolidated joint ventures	—		295		1,010		1,099
Government grant income recorded in income (loss) from discontinued operations	—		392		3,660		2,601
Total government grants received	$	15	$	2,448	$	6,082	$	17,332

Recent Accounting Pronouncements

Adopted

Credit Losses. In June 2016, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 is intended to improve financial reporting by requiring timelier recognition of credit losses on loans and other financial instruments held by financial institutions and other organizations. The amendments in ASU 2016-13 eliminate the “probable” initial threshold for recognition of credit losses in previous accounting guidance and, instead, reflect an entity’s current estimate of all expected credit losses over the life of the financial instrument. Historically, when credit losses were measured under previous accounting guidance, an entity generally only considered past events and current conditions in measuring the incurred loss. The amendments in ASU 2016-13 broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss.

As a result of adopting ASU 2016-13 on January 1, 2020 using the modified retrospective transition approach, the Company recognized a cumulative-effect adjustment to equity of $2 million as of January 1, 2020. Under ASU 2016-13, the Company began using a loss model that relies on future expected credit losses, rather than incurred losses, as was required under historical GAAP. Under the new model, the Company is required to recognize future credit losses expected to be incurred over the life of its finance receivables, including loans receivable, direct financing leases (“DFLs”), and certain accounts receivable, at inception of those instruments. The model emphasizes historical experience and future market expectations to determine a loss to be recognized at inception. However, the model continues to be applied on an individual basis and rely on counter-party specific information to ensure the most accurate estimate is recognized. The Company reassesses its reserves on finance receivables at each balance sheet date to determine if an adjustment to the previous reserve is necessary.

~~Table of Contents~~

Accounting for Lease Concessions Related to COVID-19. In April 2020, the FASB staff issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under ~~ASC~~Accounting Standards Codification (“ASC”) 842,Leases, the Company would have to determine, on a lease-by-lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A allows the Company, if certain criteria have been met, to bypass the lease-by-lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. During the ~~year~~three and nine months ended ~~December 31,~~September 30, 2020, the Company provided rent deferrals (to be repaid before the end of 2020) to certain tenants in its life science and medical office segments that were impacted by COVID-19 (discussed in further detail in Note 6). No such rent deferrals were provided to tenants during the three and nine months ended ~~March 31, 2021 and 2020. As it relates to these deferrals, the~~September 30, 2021. The Company elected to not assess ~~them~~these rent deferrals on a lease-by-lease basis and to continue recognizing rent revenue on a straight-line basis.

While the Company’s election for rent deferrals will be applied consistently to future deferrals ~~of a~~with similar ~~nature,~~characteristics and similar circumstances, if the Company grants future lease concessions of a different type (such as rent abatements), it will make an election related to those concessions at that time.

Table of Contents

Not Yet Adopted

Reference Rate Reform. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional guidance for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), which amends the scope of ASU 2020-04 to include derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The amendments in ASU 2020-04 and ASU 2021-01 are effective immediately and may be applied through December 31, 2022. The Company is evaluating: (i) how the transition away from LIBOR will impact the Company, (ii) whether the optional relief provided by these standards will be adopted, and (iii) the impact that adopting ASU 2020-04 or ASU 2021-01 will have on its consolidated financial position, results of operations, cash flows, or disclosures.

NOTE 3. Master Transactions and Cooperation Agreement with Brookdale

2019 Master Transactions and Cooperation Agreement with Brookdale

In October 2019, the Company and Brookdale Senior Living Inc. (“Brookdale”) entered into a Master Transactions and Cooperation Agreement (the “2019 MTCA”), which includes a series of transactions related to its previously jointly owned 15-campus CCRC portfolio (the “CCRC JV”) and the portfolio of senior housing properties Brookdale triple-net leased from the Company, which, at the time, included 43 properties.

In connection with the 2019 MTCA, the Company and Brookdale, and certain of their respective subsidiaries, closed the following transactions related to the CCRC JV on January 31, 2020:

•The Company, which owned a 49% interest in the CCRC JV, purchased Brookdale’s 51% interest in 13 of the 15 communities in the CCRC JV based on a valuation of $1.06 billion (the “CCRC Acquisition”);

•The management agreements related to the CCRC Acquisition communities were terminated and management transitioned (under new management agreements) from Brookdale to Life Care Services LLC (“LCS”); and

•The Company paid a $100 million management termination fee to Brookdale.

In addition, pursuant to the 2019 MTCA, the Company and Brookdale closed the following transactions related to properties Brookdale triple-net leased from the Company on January 31, 2020:

•Brookdale acquired 18 of the properties from the Company (the “Brookdale Acquisition Assets”) for cash proceeds of $385 million;

•The remaining 24 properties (excludes 1 property ~~to be~~ transitioned orand sold to a third party, as discussed below) were restructured into a single master lease with 2.4% annual rent escalators and a maturity date of December 31, 2027 (the “2019 Amended Master Lease”);

•A portion of annual rent (amount in excess of 6.5% of sales proceeds) related to 14 of the 18 Brookdale Acquisition Assets was reallocated to the remaining properties under the 2019 Amended Master Lease; and

•Brookdale paid down $20 million of future rent under the 2019 Amended Master Lease.

As agreed to by the Company and Brookdale under the 2019 MTCA, in December 2020, the Company terminated the triple-net lease related to 1 property and converted it to a structure permitted by the Housing and Economic Recovery Act of 2008, ~~and~~which includes most of the provisions previously proposed in the REIT Investment Diversification and Empowerment Act of 2007 (commonly referred to as “RIDEA”). ~~The 24 assets under~~During the ~~2019 Amended Master Lease were~~quarter ended September 30, 2021, the Company sold ~~in January 2021~~this property (see Note 5).

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~~Additionally, under the 2019 MTCA, the~~The Company and Brookdale also agreed tothat the ~~following transactions which have not yet been completed:~~

•~~The CCRC JV will sell the remaining 2 CCRCs, which are being marketed for sale to third parties; and~~

•~~The~~ Company ~~will~~would provide up to $35 million of capital investment in the 2019 Amended Master Lease properties over a five-year term, which ~~will~~would increase rent by 7% of the amount spent, per annum. As of December 31, 2020, the Company had funded $5 million of this capital investment. Upon ~~selling~~the Company’s sale of the 24 ~~assets~~properties under the 2019 Amended Master Lease in January 2021 (see Note 5), the remaining capital investment obligation was transferred to the buyer.

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As a result of the above transactions, on January 31, 2020, the Company began consolidating the 13 CCRCs in which it acquired Brookdale’s interest. Accordingly, the Company derecognized its investment in the CCRC JV of $323 million and recognized a gain upon change of control of $170 million, which is included in other income (expense), net. In connection with consolidating the 13 CCRCs during the first quarter of 2020, the Company recognized real estate and intangible assets of $1.8 billion, refundable entrance fee liabilities of $308 million, contractual liabilities associated with previously collected non-refundable entrance fees of $436 million, debt assumed of $215 million, other net assets of $48 million, and cash paid of $396 million.

Upon sale of the ~~18 senior housing triple-net assets to~~ Brookdale Acquisition Assets in January 2020, the Company recognized an aggregate gain on sales of real estate of $164 million, which is recorded within income (loss) from discontinued operations.

In May 2021, the CCRC JV sold the 2 remaining CCRCs subject to the 2019 MTCA for $38 million, $19 million of which represents the Company’s 49% interest in the CCRC JV, resulting in an immaterial gain on sale recorded within equity income (loss) from unconsolidated joint ventures (see Note 8).

Fair Value Measurement Techniques and Quantitative Information

At January 31, 2020, the Company performed a fair value assessment of each of the 2019 MTCA components that provided measurable economic benefit or detriment to the Company. Each fair value calculation was based on an income or market approach and relied on historical and forecasted net operating income (“NOI”), actuarial assumptions about the expected resident length of stay, and market data, including, but not limited to, discount rates ranging from 10% to 12%, annual rent escalators ranging from 2% to 3%, and real estate capitalization rates ranging from 7% to 9%. All assumptions were considered to be Level 3 measurements within the fair value hierarchy.

NOTE 4. Real Estate Transactions

2021 Real Estate Investments

South San Francisco Land Site Acquisition

In October 2020, the Company executed a definitive agreement to acquire approximately 12 acres of land for $128 million. The acquisition site is located in South San Francisco, California, adjacent to 2 sites currently held by the Company as land for future development. The Company paid a $10 million nonrefundable deposit upon completing due diligence in November 2020. The first phase of the acquisition, with a purchase price of $61 million, closed in April 2021. The second phase of the acquisition, with a purchase price of $24 million, closed in September 2021. The final phase of the acquisition, with a purchase price of $43 million, closed in October 2021.

Westview Medical Plaza Acquisition

In February 2021, the Company acquired 1 medical office building (“MOB”) in Nashville, Tennessee for $13 million.

Pinnacle at Ridgegate Acquisition

In April 2021, the Company acquired 1 MOB in Denver, Colorado for $38 million.

MOB Portfolio Acquisition

In April 2021, the Company acquired 14 MOBs for $371 million (the “MOB Portfolio”). In conjunction with the acquisition, the Company ~~issued~~originated $142 million of secured mortgage debt.

Westside Medical Plaza Acquisition

In June 2021, the Company acquired 1 MOB in Fort Lauderdale, Florida for $16 million.

Wesley Woodlawn Acquisition

In July 2021, the Company acquired 1 MOB in Wichita, Kansas for $50 million.

Atlantic Health Acquisition

In July 2021, the Company acquired 3 MOBs in Morristown, New Jersey for $155 million.

Baylor Centennial Acquisition

In September 2021, the Company acquired 2 MOBs in Dallas, Texas for $60 million.

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Concord Avenue Campus Acquisition

In September 2021, the Company acquired a life science campus, comprised of 3 buildings, in Cambridge, Massachusetts for $180 million.

10 Fawcett Acquisition

In October 2021, the Company closed a life science acquisition in Cambridge, Massachusetts for $73 million.

Vista Sorrento Phase 1 Acquisition

In October 2021, the Company closed a life science acquisition in San Diego, California for $20 million.

Swedish Medical Acquisition

In October 2021, the Company acquired 1 MOB in Seattle, Washington for $43 million.

Lakeview Medical Pavilion

In October 2021, the Company acquired 1 MOB in New Orleans, Louisiana for $34 million.

Mooney Street Parcels

In October 2021, the Company closed a life science acquisition in Cambridge, Massachusetts for $123 million.

725 Concord

In October 2021, the Company acquired an MOB and adjacent land parcel in Cambridge, Massachusetts for $80 million.

25 Spinelli

In October 2021, the Company closed a life science acquisition in Cambridge, Massachusetts for $34 million.

68 Moulton

In October 2021, the Company closed a life science acquisition in Cambridge, Massachusetts for $18 million.

2020 Real Estate Investments

The Post Acquisition

In April 2020, the Company acquired a life science campus in Waltham, Massachusetts for $320 million.

Scottsdale Gateway Acquisition

In July 2020, the Company acquired 1 MOB in Scottsdale, Arizona for $27 million.

Midwest MOB Portfolio Acquisition

In October 2020, the Company acquired a portfolio of 7 MOBs located in Indiana, Missouri, and Illinois for $169 million.

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Cambridge Discovery Park Acquisition

In December 2020, the Company acquired 3 life science facilities in Cambridge, Massachusetts for $610 million and a 49% unconsolidated joint venture interest in a fourth property on the same campus for $54 million. If the fourth property is sold in a taxable transaction, the Company is generally obligated to indemnify its joint venture partner for its federal and state income taxes associated with the gain that existed at the time of the contribution to the joint venture.

Waldwick JV Interest Purchase

In October 2020, the Company acquired the remaining 15% equity interest of a senior housing joint venture structure (which owned 1 senior housing facility), in which the Company previously held an unconsolidated equity investment, for $4 million. Subsequent to the acquisition, the Company owned 100% of the equity, began consolidating the facility, and recognized a gain upon change of control of $6 million, which is recorded in other income (expense), net within income (loss) from discontinued operations. In December 2020, the Company sold the property as part of the Atria SHOP Portfolio disposition (see Note 5).

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MBK JV Dissolution

In November 2020, as part of the dissolution of a senior housing joint venture, the Company was distributed 1 property, 1 land parcel, and $11 million in cash. Upon consolidating the property and land parcel at the time of distribution, the Company recognized a loss upon change of control of $16 million, which is recorded in other income (expense), net within income (loss) from discontinued operations. In conjunction with the distribution of the property, the Company assumed $36 million of secured mortgage debt (classified as liabilities related to assets held for sale and discontinued operations, net) maturing in 2025, which was recorded at its fair value through asset acquisition accounting. ~~The~~During the quarter ended September 30, 2021, the Company sold the property ~~is classified as discontinued operations as of March 31, 2021.~~and the related secured mortgage debt was assumed by the buyer (see Note 5).

Other Real Estate Acquisitions

In December 2020, the Company acquired 1 hospital in Dallas, Texas for $34 million.

Development Activities

The Company’s commitments, which are primarily related to development and redevelopment projects and tenant improvements, increased by $9$89 million, to ~~$315~~$395 million at ~~March 31,~~September 30, 2021, when compared to December 31, 2020, primarily as a result of increased commitments on existing projects and new projects started during ~~the first quarter of~~ 2021.

~~In March~~During the nine months ended September 30, 2021, management reviewed the estimated useful lives of certain ~~Life Science~~life science properties in connection with future plans of densification ~~and related demolition.~~on campuses where the Company has densification opportunities. These changes in the planned use of the properties resulted in the Company updating ~~their~~the estimated useful lives of the properties, which differ from the Company’s previous estimates. The estimated useful lives of these ~~assets~~properties was reduced from a weighted average remaining useful life of 15 years to 611 years to reflect the timing of the planned ~~demolitions. This change~~densification projects. For the three and nine months ended September 30, 2021, these changes in estimate increased depreciation expense by $3$9 million ~~in the current quarter,~~and $22 million, respectively, resulting in a corresponding decrease to income (loss) from continuing operations and net income (loss), as well as a decrease ~~of approximately $0.01~~ to both basic and diluted earnings per share ~~for the three months ended March 31, 2021.~~of approximately $0.02 and $0.04, respectively.

NOTE 5. Dispositions of Real Estate and Discontinued Operations

2021 Dispositions of Real Estate

Sunrise Senior Housing Portfolio

In January 2021, the Company sold a portfolio of 32 SHOP assets (the “Sunrise Senior Housing Portfolio”) for $664 million, resulting in an immaterial loss on sale, which is recognized in income (loss) from discontinued operations, and provided the buyer with: (i) financing of $410 million (see Note 7) and (ii) a commitment to finance up to $92 million of additional debt for capital expenditures. The commitment to finance additional debt for capital expenditures ~~NaN~~was subsequently reduced to $56 million during June 2021, $0.4 million of which ~~has~~had been funded as of ~~March 31,~~September 30, 2021 (see Note 7). ~~Under the Company’s definitive agreement, there are 2 remaining senior housing triple-net assets that are expected to be sold during the remainder of 2021, upon~~Upon completion of the license transfer ~~process.~~process in June 2021, the Company sold the 2 remaining Sunrise senior housing triple-net assets for $80 million, resulting in a gain on sale of $22 million, which is recognized in income (loss) from discontinued operations.

Brookdale Triple-Net Portfolio

In January 2021, the Company sold 24 senior housing assets in a triple-net lease with Brookdale for $510 million, resulting in total gain on sale of $169 million, which is recognized in income (loss) from discontinued operations.

Additional SHOP Portfolio

In January 2021, the Company sold a portfolio of 16 SHOP assets for $230 million, resulting in total gain on sale of $59 million, which is recognized in income (loss) from discontinued ~~operations, and~~operations. The Company provided the buyer with financing of $150 million (see Note 7).

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HRA Triple-Net Portfolio

In February 2021, the Company sold 8 senior housing assets in a triple-net lease with Harbor Retirement Associates for $132 million, resulting in total gain on sale of $33 million, which is recognized in income (loss) from discontinued operations.

~~2021 Other Dispositions~~

~~In addition to the sales discussed above, during the three months ended~~ ~~March 31, 2021,~~ ~~the Company sold~~ 1 ~~SHOP asset for $5 million, resulting in an immaterial gain on sale, which is recognized in income (loss) from discontinued operations.~~

~~SLC SHOP Portfolio~~

In October 2020, the Company entered into a definitive agreement to sell 7 SHOP assets for $115 million. The Company received a $3 million nonrefundable deposit and expects to close the transaction during the remainder of 2021.

Oakmont SHOP Portfolio

In April 2021, the Company sold a portfolio of 12 SHOP assets for $564 million. In conjunction with the sale, mortgage debt held on 2 properties with a carrying value of $64 million was repaid and the remaining mortgage debt held on 4 properties with a carrying value of $107 million was assumed by the buyer. The transaction resulted in total gain on sale of $80 million, which is recognized in income (loss) from discontinued operations.

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Discovery SHOP Portfolio

In April 2021, the Company sold a portfolio of 10 SHOP assets for $334 ~~million.~~million, resulting in total gain on sale of $9 million, which is recognized in income (loss) from discontinued operations. Also included in this transaction was the sale of 2 mezzanine loans and 2 preferred equity investments for $21 million, resulting in no gain or loss on sale of the investments (collectively, ~~“the Discovery~~the “Discovery SHOP Portfolio”).

Sonata SHOP Portfolio

In April 2021, the Company sold a portfolio of 5 SHOP assets for $64 ~~million.~~million, resulting in total gain on sale of $3 million, which is recognized in income (loss) from discontinued operations.

~~Other Subsequent Dispositions~~SLC SHOP Portfolio

In ~~April~~May 2021, the Company sold 27 SHOP assets for ~~$13~~$113 million 2and repaid $70 million of mortgage debt that was held on 6 of the assets, resulting in total gain on sale of $1 million, which is recognized in income (loss) from discontinued operations.

Hoag Hospital

In May 2021, the Company sold 1 hospital for $226 million through the exercise of a purchase option by a tenant, resulting in gain on sale of $172 million.

2021 Other Dispositions

During the three months ended September 30, 2021, the Company sold the following: (i) 8 SHOP assets for $120 million, (ii) 4 senior housing triple-net assets for $7$12 million, and (iii) 3 MOBs for $36 million, resulting in total gain on sales of $42 million($27 million of which is recognized in income (loss) from discontinued operations). In conjunction with 1 ~~MOB~~of the SHOP asset sales, mortgage debt held on the property with a carrying value of $36 million was assumed by the buyer.

In addition to the portfolio and individual sales discussed above, during the nine months ended September 30, 2021, the Company sold the following: (i) 15 SHOP assets for ~~$10 million.~~$169 million, (ii) 7 senior housing triple-net assets for $24 million, and (iii) 7 MOBs for $57 million, resulting in total gain on sales of$52 million ($34 millionof which is recognized in income (loss) from discontinued operations).

2020 Dispositions of Real Estate

During the three months ended ~~March 31,~~September 30, 2020, the Company sold the following: (i) 4 MOBs for $14 million, (ii) 1 undeveloped MOB land parcel for $2 million and (iii) 1 asset from other non-reportable segments for $1 million, resulting in total gain on sales of $2 million recognized in income (loss) from continuing operations. Additionally, during the three months ended September 30, 2020, the Company sold 4 SHOP assets for $12 million, resulting in total loss on sales of $2 million recognized in income (loss) from discontinued operations.

During the nine months ended September 30, 2020, the Company sold 7the following: (i) 13 SHOP assets for ~~$36~~$76 million, ~~and~~(ii) 18 senior housing triple-net assets for $385 million (representative of the 18 facilities sold to Brookdale under the 2019 MTCA - see Note 3), (iii) 7 MOBs for $120 million (inclusive of the exercise of a purchase option by a tenant to acquire 3 MOBs in San Diego, California), (iv) 1 undeveloped MOB land parcel for $2 million and (v) 1 asset from other non-reportable segments for $1 million, resulting in total gain on sales of ~~$165~~$248 million ($162 million of which is recognized in income (loss) from discontinued ~~operations.~~operations).

Aegis NNN Portfolio

In December 2020, the Company sold 10 senior housing triple-net assets (the “Aegis NNN Portfolio”) for $358 million and repaid $6 million of variable rate secured mortgage debt held on 1 asset, resulting in total gain on sale of $228 million, which is recognized in income (loss) from discontinued operations.

Atria SHOP Portfolio

In December 2020, the Company sold 12 SHOP assets (the “Atria SHOP Portfolio”) for $312 million, resulting in total gain on sale of $39 million, which is recognized in income (loss) from discontinued operations. The Company provided the buyer with financing of $61 million on 4 of the assets sold (see Note 7).

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2020 Other Dispositions

In addition to the portfolio sales discussed above, during the year ended December 31, 2020, the Company sold the following: (i) 23 SHOP assets for $190 million, (ii) 21 senior housing triple-net assets for $428 million (inclusive of the 18 facilities sold to Brookdale under the 2019 MTCA - see Note 3), (iii) 11 MOBs for $136 million (inclusive of the exercise of a purchase option by a tenant to acquire 3 MOBs in San Diego, California), (iv) 2 MOB land parcels for $3 million, and (v) 1 asset from other non-reportable segments for $1 million, resulting in total gain on sales of $283 million ($193 million of which is ~~reported~~recognized in income (loss) from discontinued operations).

Held for Sale and Discontinued Operations

~~At March 31, 2021, 9 senior housing triple-net facilities, 8 MOBs, 48 SHOP facilities, and 1 SHOP joint venture were classified as held for sale and/or discontinued operations.~~

~~At December 31, 2020, 41 senior housing triple-net facilities, 6 MOBs, 97 SHOP facilities, and 1 SHOP joint venture were classified as held for sale and/or discontinued operations.~~

During 2020, the Company established and began executing a plan to dispose of its senior housing triple-net and SHOP properties. As of December 31, 2020, the Company concluded that the planned dispositions represented a strategic shift that has had and will have a major effect on the Company’s operations and financial results. Therefore, senior housing triple-net and SHOP assets meeting the held for sale criteria on or before ~~March 31,~~September 30, 2021 are classified as discontinued operations in all periods presented herein. In September 2021, the Company successfully completed the disposition of the remaining senior housing triple-net and SHOP properties.

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The following summarizes the assets and liabilities classified as discontinued operations at ~~March 31,~~September 30, 2021 and December 31, 2020, which are included in assets held for sale and discontinued operations, net and liabilities related to assets held for sale and discontinued operations, net, respectively, on the ~~consolidated balance sheets~~Consolidated Balance Sheets (in thousands):


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Real estate:	Real estate:					Real estate:
Buildings and improvements	Buildings and improvements	$	1,174,263	$	2,553,254	Buildings and improvements	$	98	$	2,553,254
Development costs and construction in progress	Development costs and construction in progress	11,136		21,509		Development costs and construction in progress	54		21,509
Land	Land	201,699		355,803		Land	—		355,803
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(221,246)		(615,708)		Accumulated depreciation and amortization	—		(615,708)
Net real estate	Net real estate	1,165,852		2,314,858		Net real estate	152		2,314,858
Investments in and advances to unconsolidated joint ventures	Investments in and advances to unconsolidated joint ventures	5,776		5,842		Investments in and advances to unconsolidated joint ventures	—		5,842
Accounts receivable, net of allowance of $5,132 and $5,873		13,976		20,500
Accounts receivable, net of allowance of $4,583 and $5,873						Accounts receivable, net of allowance of $4,583 and $5,873	4,826		20,500
Cash and cash equivalents	Cash and cash equivalents	40,161		53,085		Cash and cash equivalents	14,005		53,085
Restricted cash	Restricted cash	5,817		17,168		Restricted cash	3		17,168
Intangible assets, net	Intangible assets, net	8,539		24,541		Intangible assets, net	—		24,541
Right-of-use asset, net	Right-of-use asset, net	937		4,109		Right-of-use asset, net	30		4,109
Other assets, net(1)	Other assets, net(1)	43,224		103,965		Other assets, net(1)	3,243		103,965
Total assets of discontinued operations, net(2)	Total assets of discontinued operations, net(2)	1,284,282		2,544,068		Total assets of discontinued operations, net(2)	22,259		2,544,068
Total medical office assets held for sale, net(2)		90,225		82,238
Assets held for sale, net(3)						Assets held for sale, net(3)	82,750		82,238
Assets held for sale and discontinued operations, net	Assets held for sale and discontinued operations, net	$	1,374,507	$	2,626,306	Assets held for sale and discontinued operations, net	$	105,009	$	2,626,306
LIABILITIES	LIABILITIES					LIABILITIES
Mortgage debt(4)	Mortgage debt(4)	278,172		318,876		Mortgage debt(4)	$	—	$	318,876
Lease liability	Lease liability	935		3,189		Lease liability	30		3,189
Accounts payable, accrued liabilities, and other liabilities	Accounts payable, accrued liabilities, and other liabilities	41,977		79,411		Accounts payable, accrued liabilities, and other liabilities	18,442		79,411
Deferred revenue	Deferred revenue	3,985		11,442		Deferred revenue	84		11,442
Total liabilities of discontinued operations, net(2)	Total liabilities of discontinued operations, net(2)	325,069		412,918		Total liabilities of discontinued operations, net(2)	18,556		412,918
Total liabilities related to medical office assets held for sale, net(2)		3,098		2,819
Liabilities related to assets held for sale, net(3)						Liabilities related to assets held for sale, net(3)	354		2,819
Liabilities related to assets held for sale and discontinued operations, net	Liabilities related to assets held for sale and discontinued operations, net	$	328,167	$	415,737	Liabilities related to assets held for sale and discontinued operations, net	$	18,910	$	415,737

(1)Includes goodwill of zero and $29 million as of ~~March 31,~~September 30, 2021 and December 31, ~~2020.~~2020, respectively.

(2)~~Primarily~~At September 30, 2021, there were no senior housing triple-net or SHOP facilities classified as held for sale and discontinued operations. At December 31, 2020, 41 senior housing triple-net facilities, 97 SHOP facilities, and 1 SHOP joint venture were classified as held for sale and discontinued operations.

(3)As of September 30, 2021, primarily comprised of 8the following: (i) 5 MOBsand 1 life science facility with net real estate assets of ~~$81~~$30 million and ~~deferred revenue~~right-of-use asset, net of $2$0.6 million asand (ii) 1 loan receivable with a total carrying value of ~~March~~$51 million. As ofDecember 31, ~~2021 and~~2020, primarily comprised of 6 MOBs with net real estate assets of $73 million and deferred revenue of $2 million.

(4)During the three months ended September 30, 2021 and 2020, the Company made full and partial repayments of mortgage debt classified as discontinued operations of $37 million and $1 million, respectively. During the nine months ended September 30, 2021 and 2020, the Company made full and partial repayments of mortgage debt classified as discontinued operations of ~~December 31, 2020.~~$318 million and $7 million, respectively.

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The results of discontinued operations through ~~March 31,~~September 30, 2021, or the disposal date of each asset or portfolio of assets if they have been sold, are included in the consolidated results for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020. Summarized financial information for discontinued operations for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 are as follows (in thousands):


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020			2021		2020		2021		2020
Revenues:	Revenues:					Revenues:
Rental and related revenues	Rental and related revenues	$	5,228	$	32,371	Rental and related revenues	$	694	$	24,589	$	7,535	$	81,070
Resident fees and services	Resident fees and services	72,998		171,726		Resident fees and services	8,507		149,585		111,777		477,081

Total revenues	Total revenues	78,226		204,097		Total revenues	9,201		174,174		119,312		558,151
Costs and expenses:	Costs and expenses:					Costs and expenses:
Interest expense	Interest expense	2,676		2,685		Interest expense	47		2,501		3,900		7,913
Depreciation and amortization	Depreciation and amortization	0		64,164		Depreciation and amortization	—		31,659		—		134,620
Operating	Operating	71,519		138,637		Operating	13,010		131,151		118,175		407,820
Transaction costs	Transaction costs	76		285		Transaction costs	—		602		76		1,141
Impairments and loan loss reserves (recoveries), net	Impairments and loan loss reserves (recoveries), net	0		28,016		Impairments and loan loss reserves (recoveries), net	21,740		36,327		32,736		81,556
Total costs and expenses	Total costs and expenses	74,271		233,787		Total costs and expenses	34,797		202,240		154,887		633,050
Other income (expense):	Other income (expense):					Other income (expense):
Gain (loss) on sales of real estate, net	Gain (loss) on sales of real estate, net	259,662		162,800		Gain (loss) on sales of real estate, net	26,758		(2,134)		408,658		162,245
Other income (expense), net	Other income (expense), net	5,885		(45)		Other income (expense), net	(863)		316		5,150		2,442
Total other income (expense), net	Total other income (expense), net	265,547		162,755		Total other income (expense), net	25,895		(1,818)		413,808		164,687
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	269,502		133,065		Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	299		(29,884)		378,233		89,788
Income tax benefit (expense)	Income tax benefit (expense)	821		3,176		Income tax benefit (expense)	221		(1,204)		1,345		9,424
Equity income (loss) from unconsolidated joint ventures	Equity income (loss) from unconsolidated joint ventures	(315)		(833)		Equity income (loss) from unconsolidated joint ventures	81		(731)		4,991		(915)

Income (loss) from discontinued operations	Income (loss) from discontinued operations	$	270,008	$	135,408	Income (loss) from discontinued operations	$	601	$	(31,819)	$	384,569	$	98,297

Impairments of Real Estate

2021

During the three and nine months ended ~~March 31,~~September 30, 2021, ~~the Company did not recognize any impairment charges.~~

~~2020~~

~~During the three months ended March 31, 2020,~~ the Company recognized an aggregate impairment charge of ~~$31~~$2 million, ~~($28 million of~~ which is reported in ~~income (loss) from discontinued operations)~~impairments and loan loss reserves (recoveries), net, related to ~~15 SHOP assets, 2 senior housing triple-net assets, and~~ 2 MOBs ~~as a result of being~~ classified as held for ~~sale and~~sale. The Company wrote down ~~their~~the 2 properties’ aggregate carrying value of ~~$200~~$13 million to their aggregate fair value, less estimated costs to sell, of ~~$169~~$11 million.

Additionally, during the nine months ended September 30, 2021, the Company recognized an impairment charge of $4 million related to 1 SHOP asset classified as held for sale, which is reported in income (loss) from discontinued operations. Following a reduction in the expected sales price of the SHOP asset occurring in the second quarter of 2021, the Company wrote down its carrying value of $20 million to its fair value, less estimated costs to sell, of $16 million.

The fair ~~value~~values of the impaired assets ~~was~~were based on forecasted sales prices, which are considered to be Level 3 measurements within the fair value hierarchy. ~~Forecasted~~The Company’s forecasted sales prices ~~were~~are typically determined using an income approach and/or a market approach (comparable sales model), which rely on certain assumptions by management, including: (i) market capitalization rates, (ii) comparable market transactions, (iii) estimated prices per unit, (iv) negotiations with prospective buyers, and (v) forecasted cash flow streams (lease revenue rates, expense rates, growth rates, etc.). There are inherent uncertainties in making these assumptions. For the Company’s impairment ~~calculations during~~calculation as of September 30, 2021, the Company’s fair value estimates primarily relied on a market approach and ~~as of~~utilized comparable market transactions and negotiations with prospective buyers.

2020

During the three months ended ~~March 31,~~September 30, 2020, the Company ~~estimated the~~recognized an aggregate impairment charge of $37 million ($36 millionof which is reported in income (loss) from discontinued operations) related to 9 SHOP assets, 1 senior housing triple-net asset and 1 MOB as a result of being classified as held for sale and wrote down their aggregate carrying value of $200 million to their aggregate fair value, less estimated costs to sell, of ~~each asset using either (i)~~$163 million.

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During the nine months ended September 30, 2020, the Company recognized an aggregate impairment charge of $87 million ($82 million of which is reported in income (loss) from discontinued operations) related to 28 SHOP assets, 5 senior housing triple-net assets, 2 MOBs, and 1 undeveloped MOB land parcel as a result of being classified as held for sale and wrote down their aggregate carrying value of $424 million to their aggregate fair value, less estimated costs to sell, of $337 million.

For the Company’s impairment calculations during the nine months ended and as of September 30, 2020, the Company’s fair value estimates primarily relied on a market ~~capitalization rates ranging from 7.16% to 9.92%, with a weighted average rate of 9.32% or (ii)~~approach and utilized prices per unit ranging from ~~$38,000~~$33,000 to ~~$95,000,~~$300,000, with a weighted average price based on relative fair value of ~~$68,000.~~$136,000.

Goodwill Impairment

When testing goodwill for impairment, if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company recognizes an impairment loss for the amount by which the carrying value, including goodwill, exceeds the reporting unit’s fair value.

Following the disposition of the Company’s remaining senior housing triple-net and SHOP assets in September 2021, the Company performed an impairment assessment to evaluate the fair value of its reporting units as of September 30, 2021. During the three months ended September 30, 2021, the Company recognized a $22 milliongoodwill impairment charge reported in income (loss) from discontinued operations to reduce the associated goodwill balance to zero as no assets remained in the reporting units associated with the senior housing triple-net and SHOP portfolios as of the assessment date.

During the nine months ended September 30, 2021, the Company recognized a $29 million goodwill impairment charge reported in income (loss) from discontinued operations, $7 million of which was recognized during the second quarter of 2021, as the fair value of the remaining assets based on forecasted sales prices was less than the carrying value of the assets, including the related goodwill as of the assessment date.

During the three and nine months ended September 30, 2021, the fair value of the assets within each of the Company’s other reporting units was greater than the respective carrying value of the assets and related goodwill, and as a result, no impairment loss was recognized with respect to the other reporting units. During the three and nine months ended September 30, 2020, no goodwill impairment loss was recognized.

These fair value estimates primarily relied on a market approach, utilizing comparable market transactions, forecasted sales prices, and negotiations with prospective buyers. These estimates are considered to be a Level 3 measurement within the fair value hierarchy, and are subject to inherent uncertainties.

Deferred Tax Asset Valuation Allowance

In conjunction with the Company establishing a plan during the year ended December 31, 2020 to dispose of all of its SHOP assets and classifying such assets as discontinued operations, the Company concluded it was more likely than not that it would no longer realize the future value of certain deferred tax assets generated by the net operating losses of its taxable REIT subsidiary entities. Accordingly, the Company recognized a deferred tax asset valuation allowance of $33 million as of December 31, 2020.

As of ~~March 31,~~September 30, 2021, the Company had a deferred tax asset valuation allowance of $3536 million.

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NOTE 6. Leases

Lease Income

The following table summarizes the Company’s lease income, excluding discontinued operations (in thousands):


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020

Fixed income from operating leases	Fixed income from operating leases	$	262,937	$	226,226		Fixed income from operating leases	$	276,430	$	239,715	$	807,677	$	697,510
Variable income from operating leases	Variable income from operating leases	65,035		56,091			Variable income from operating leases	77,086		62,226		214,453		175,001
Interest income from direct financing leases	Interest income from direct financing leases	2,163		3,269			Interest income from direct financing leases	2,179		2,150		6,522		7,569

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Direct Financing Leases

Net investment in DFLs consists of the following ~~(dollars in~~(in thousands):


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Present value of minimum lease payments receivable	Present value of minimum lease payments receivable	$	7,758	$	9,804	Present value of minimum lease payments receivable	$	3,399	$	9,804
Present value of estimated residual value	Present value of estimated residual value	44,706		44,706		Present value of estimated residual value	44,706		44,706
Less deferred selling profits	Less deferred selling profits	(7,758)		(9,804)		Less deferred selling profits	(3,399)		(9,804)

Net investment in direct financing leases	Net investment in direct financing leases	$	44,706	$	44,706	Net investment in direct financing leases	$	44,706	$	44,706
Properties subject to direct financing leases		1		1

Direct Financing Lease Internal Ratings

At ~~March~~September 30, 2021 and December 31, ~~2021,~~2020, the Company had 1 hospital under a DFL with a carrying amount of $45 million and an internal rating of ~~performing.~~“performing”.

2020 Direct Financing Lease Sale

During the first quarter of 2020, the Company sold a hospital under a DFL for $82 million and recognized a gain on sale of $42 million, which is included in other income (expense), net.

~~Lease Costs~~

~~The following table provides supplemental cash flow information regarding the Company’s leases for which it is the lessee, such as ground leases (dollars in thousands):~~

Three Months Ended
March 31,
Supplemental Cash Flow Information: 2021 2020
Right-of-use asset obtained in exchange for new lease liability:
Operating leases $ 5,020 $ 0

COVID-19 Rent Deferrals

During the second and third quarters of 2020, the Company agreed to defer rent from certain tenants in the medical office segment that were impacted by COVID-19, with the requirement that all deferred rent be repaid by the end of 2020. Under this program, through ~~December 31,~~September 30, 2020, approximately $6 million of rent was deferred for the medical office segment, all of which had been collected as of December 31, 2020.

Additionally, through ~~December 31,~~September 30, 2020, the Company granted approximately $1 million of rent deferrals to certain tenants in the life science segment that were impacted by COVID-19, all of which had been collected as of December 31, 2020.

~~NaN~~No such deferrals were granted during the three and nine months ended ~~March 31, 2021 and 2020.~~September 30, 2021.

The rent deferrals granted do not impact the pattern of revenue recognition or amount of revenue recognized (refer to Note 2 for additional information).

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NOTE 7. Loans Receivable

The following table summarizes the Company’s loans receivable (in thousands):


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Secured loans(1)	Secured loans(1)	$	724,389	$	161,530	Secured loans(1)	$	395,303	$	161,530
Mezzanine and other	Mezzanine and other	44,513		44,347		Mezzanine and other	23,701		44,347
Unamortized discounts, fees, and costs	Unamortized discounts, fees, and costs	(14,626)		(222)		Unamortized discounts, fees, and costs	(5,215)		(222)
Reserve for loan losses	Reserve for loan losses	(14,134)		(10,280)		Reserve for loan losses	(2,727)		(10,280)
Loans receivable, net	Loans receivable, net	$	740,142	$	195,375	Loans receivable, net	$	411,062	$	195,375

(1)At ~~March 31,~~September 30, 2021, the Company had ~~$100~~$59 million remaining of commitments to fund senior housing redevelopment and capital expenditure projects. At December 31, 2020, the Company had $11 million remaining of commitments to fund senior housing redevelopment and capital expenditure projects.

~~2021 Loans Receivable Transactions~~

~~In April 2021, the Company sold 2 mezzanine loans for carrying value as part of the Discovery SHOP Portfolio disposition (see Note 5).~~

~~2020 Loans Receivable Transactions~~

For certain residents that qualify, CCRCs may offer to lend residents the necessary funds to satisfy the entrance fee requirements so that they are able to move into a community while still continuing the process of selling their previous home. The loans are due upon sale of the previous residence. Upon completing the CCRC Acquisition (see Note 3) in January 2020, the Company began consolidating 13 CCRCs, which held approximately $30 million of such notes receivable from various community residents at the time of acquisition. At March 31, 2021 and December 31, 2020, the Company held $24 million and $23 million~~of such receivables, respectively, which are included in mezzanine and other in the table above.~~

In November 2020, the Company sold 1 mezzanine loan with a $10 million principal balance for $8 million, resulting in a $2 million loss recognized in impairments and loan loss reserves (recoveries), net.

In December 2020, the Company sold 1 secured loan with a $115 million principal balance for $109 million, resulting in a $6 million loss recognized in impairments and loan loss reserves (recoveries), net.

SHOP Seller Financing

In conjunction with the sale of 32 SHOP facilities in the Sunrise Senior Housing Portfolio for $664 million in January 2021 (see Note 5), the Company provided the buyer with initial financing of $410 million. The remainder of the sales price was received in cash at the time of sale. Additionally, the Company agreed to provide up to $92 million of additional financing for capital expenditures (up to 65% of the estimated cost of capital expenditures)~~, NaN~~. The additional financing was subsequently reduced to $56 million in conjunction with the principal repayments discussed below,$0.4 million of which ~~has~~had been funded as of ~~March 31,~~September 30, 2021. The initial and additional financing is secured by the buyer's equity ownership in each property.

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In June 2021, the Company received principal repayments of $246 million on the initial financing provided in conjunction with the sale of the Sunrise Senior Housing Portfolio in January 2021. The Company accelerated recognition of $7 million of the related mark-to-market discount, which is included in interest income in the Consolidated Statements of Operations for the nine months ended September 30, 2021.

In conjunction with the sale of 16 additional SHOP facilities for $230 million in January 2021 (see Note 5), the Company provided the buyer with financing of $150 million. The remainder of the sales price was received in cash at the time of sale. The financing is secured by the buyer's equity ownership in each property.

In December 2020, in conjunction with the sale of 4 of the 12 SHOP facilities in the Atria SHOP Portfolio for $94 million (see Note 5), the Company provided the buyer with financing of $61 million. The remainder of the sales price was received in cash at the time of sale. The financing is secured by the buyer's equity ownership in each of the 4 properties.

During the ~~three months ended March 31,~~first quarter of 2021, the Company reduced the consideration and reported gain on sales of real estate and recognized a mark-to-market discount of ~~$16~~$16 million for certain transactions with seller financing. The Company’s discount is based on the difference between the stated interest rates (ranging from 3.50% to 4.50%) and corresponding prevailing market rates of approximately 5.25% as of the transaction dates. The discount is recognized as interest income over the term of the discounted loans (ranging from one to three years) using the effective interest rate method. During the three and nine months ended ~~March 31,~~September 30, 2021, the Company recognized $2$1 million and $12 million, respectively, of non-cash interest income related to the amortization of its mark-to-market ~~discounts.~~discounts, of which $7 million was recognized during the nine months ended September 30, 2021 as a result of the accelerated recognition discussed above related to the Sunrise Senior Housing Portfolio. The Company did 0tnot recognize any non-cash interest income associated with seller financing notes receivable during the three and nine months ended ~~March 31,~~September 30, 2020.

2021 Other Loans Receivable Transactions

The Company classifies a loan receivable as held for sale when management no longer has the intent or ability to hold the loan receivable for the foreseeable future or until maturity. If a loan receivable is classified as held for sale, previously recorded reserves for loan losses are reversed and the loan is reported at the lower of amortized cost or fair value. During the second quarter of 2021, 2 loans receivable with a total amortized cost of $64 million were classified as held for sale. Upon the transfer of these 2 loans to held for sale, the carrying value was decreased by $11 million to an estimated fair value of $53 million, $8 million of which was previously recognized as a reserve for loan losses. As a result, a $3 million net loss was recognized in impairments and loan loss reserves (recoveries), net during the nine months ended September 30, 2021.

These fair value estimates were made for each individual loan classified as held for sale and primarily relied on a market approach, utilizing comparable market transactions, forecasted sales prices, and negotiations with prospective buyers. These estimates are considered to be a Level 3 measurement within the fair value hierarchy, and are subject to inherent uncertainties.

In April 2021, the Company sold 2 mezzanine loans as part of the Discovery SHOP Portfolio disposition (see Note 5), resulting in no gain or loss on sale of the mezzanine loans.

In May 2021, the Company received a $10 million principal repayment related to 1 of its secured loans. In September 2021, the Company received repayment of the remaining $15 million balance.

In July 2021, the Company received full repayment of the outstanding balance of an $8 million secured loan.

In September 2021, the Company sold 1 of the loans previously classified as held for sale for its carrying value of $2 million. As of September 30, 2021, the Company had 1 loan receivable classified as held for sale with a carrying value of $51 million.

2020 Other Loans Receivable Transactions

For certain residents that qualify, CCRCs may offer to lend residents the necessary funds to satisfy the entrance fee requirements so that they are able to move into a community while still continuing the process of selling their previous home. The loans are due upon sale of the previous residence. Upon completing the CCRC Acquisition (see Note 3) in January 2020, the Company began consolidating 13 CCRCs, which held approximately $30 million of such notes receivable from various community residents at the time of acquisition. At September 30, 2021 and December 31, 2020, the Company held$23 million of such notes receivable, which are included in mezzanine and other in the table above.

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Loans Receivable Internal Ratings

In connection with the Company’s quarterly review process or upon the occurrence of a significant event, loans receivable are reviewed and assigned an internal rating of Performing, Watch List, or Workout. Loans that are deemed Performing meet all present contractual obligations, and collection and timing of all amounts owed is reasonably assured. Watch List Loans are defined as loans that do not meet the definition of Performing or Workout. Workout Loans are defined as loans in which the Company has determined, based on current information and events, that: (i) it is probable it will be unable to collect all amounts due according to the contractual terms of the agreement, (ii) the borrower is delinquent on making payments under the contractual terms of the agreement, and (iii) the Company has commenced action or anticipates pursuing action in the near term to seek recovery of its investment.

The following table summarizes, by year of origination, the Company’s internal ratings for loans receivable, net of unamortized discounts, fees, and costs and reserves for loan losses, as of ~~March 31,~~September 30, 2021 ~~(dollars in~~(in thousands):


Investment Type	Investment Type	Year of Origination												Total		Investment Type	Year of Origination												Total
		2021		2020		2019		2018		2017		Prior					2021		2020		2019		2018		2017		Prior
Secured loans	Secured loans															Secured loans
Risk rating:	Risk rating:															Risk rating:
Performing loans	Performing loans	$	543,310	$	96,665	$	63,381	$	0	$	0	$	0	$	703,356	Performing loans	$	308,504	$	76,749	$	2,122	$	—	$	—	$	—	$	387,375
Watch list loans	Watch list loans	0		0		0		0		0		0		0		Watch list loans	—		—		—		—		—		—		—
Workout loans	Workout loans	0		0		0		0		0		0		0		Workout loans	—		—		—		—		—		—		—
Total secured loans	Total secured loans	$	543,310	$	96,665	$	63,381	$	0	$	0	$	0	$	703,356	Total secured loans	$	308,504	$	76,749	$	2,122	$	—	$	—	$	—	$	387,375

Mezzanine and other	Mezzanine and other															Mezzanine and other
Risk rating:	Risk rating:															Risk rating:
Performing loans	Performing loans	$	12,274	$	12,113	$	10,535	$	0	$	0	$	0	$	34,922	Performing loans	$	21,808	$	1,777	$	102	$	—	$	—	$	—	$	23,687
Watch list loans	Watch list loans	0		0		0		0		0		1,864		1,864		Watch list loans	—		—		—		—		—		—		—
Workout loans	Workout loans	0		0		0		0		0		0		0		Workout loans	—		—		—		—		—		—		—
Total mezzanine and other	Total mezzanine and other	$	12,274	$	12,113	$	10,535	$	0	$	0	$	1,864	$	36,786	Total mezzanine and other	$	21,808	$	1,777	$	102	$	—	$	—	$	—	$	23,687

Reserve for Loan Losses

The Company evaluates the liquidity and creditworthiness of its borrowers on a quarterly basis. The Company’s evaluation considers industry and economic conditions, individual and portfolio property performance, credit enhancements, liquidity, and other factors. The Company’s borrowers furnish property, portfolio, and guarantor/operator-level financial statements, among other information, on a monthly or quarterly basis, which the Company utilizes to calculate the debt service coverages used in its assessment of internal ratings, which is a primary credit quality indicator. Debt service coverage information is evaluated together with other property, portfolio, and operator performance information, including revenue, expense, ~~net operating income,~~NOI, occupancy, rental rates, capital expenditures, and EBITDA (defined as earnings before interest, tax, and depreciation and amortization), along with other liquidity measures.

In its assessment of current expected credit losses for loans receivable and unfunded loan commitments, the Company utilizes past payment history of its borrowers, current economic conditions, and forecasted economic conditions through the maturity date of each loan to estimate a probability of default and a resulting loss for each loan receivable. Future economic conditions are based primarily on near-term economic forecasts from the Federal Reserve and reasonable assumptions for long-term economic trends.

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The following table summarizes the Company’s reserve for loan losses (in thousands):


		March 31, 2021						December 31, 2020							September 30, 2021						December 31, 2020
		Secured Loans		Mezzanine and Other		Total		Secured Loans		Mezzanine and Other		Total			Secured Loans		Mezzanine and Other		Total		Secured Loans		Mezzanine and Other		Total
Reserve for loan losses, beginning of period	Reserve for loan losses, beginning of period	$	3,152	$	7,128	$	10,280	$	0	$	0	$	0	Reserve for loan losses, beginning of period	$	3,152	$	7,128	$	10,280	$	—	$	—	$	—
Cumulative-effect of adopting of ASU 2016-13 to beginning retained earnings	Cumulative-effect of adopting of ASU 2016-13 to beginning retained earnings	0		0		0		513		907		1,420		Cumulative-effect of adopting of ASU 2016-13 to beginning retained earnings	—		—		—		513		907		1,420
Expected loan losses related to loans sold or repaid(1)														Expected loan losses related to loans sold or repaid(1)	(1,643)		(8,015)		(9,658)		(259)		(8,135)		(8,394)
Expected loan losses related to loans transferred to held for sale(2)														Expected loan losses related to loans transferred to held for sale(2)	(498)		—		(498)		—		—		—
Provision for expected loan losses	Provision for expected loan losses	2,740		1,114		3,854		2,639		6,221		8,860		Provision for expected loan losses	1,702		901		2,603		2,898		14,356		17,254

Reserve for loan losses, end of period	Reserve for loan losses, end of period	$	5,892	$	8,242	$	14,134	$	3,152	$	7,128	$	10,280	Reserve for loan losses, end of period	$	2,713	$	14	$	2,727	$	3,152	$	7,128	$	10,280

(1)Includes 5 loans sold or repaid during the nine months ended September 30, 2021 and 3 loans sold or repaid during the year ended December 31, 2020.

(2)Includes 1 loan held for sale at September 30, 2021.

Additionally, at ~~March 31,~~September 30, 2021 and December 31, 2020, a liability of ~~$0.4~~$0.3 million and $1 million, respectively, related to expected credit losses for unfunded loan commitments was included in accounts payable, accrued liabilities, and other liabilities.

Credit loss expenses and recoveries are recorded in impairments and loan loss reserves (recoveries), net. During the three months ended ~~March 31,~~September 30, 2021 and 2020, the net credit loss recovery was $2 million and $3 million, respectively. During the nine months ended September 30, 2021 and 2020, the net credit loss expense was$3 $3 million and $8$10 million, respectively. The change in the ~~provision~~reserve for expected loan losses during the three months ended ~~March 31,~~September 30, 2021 is primarily due to ~~new seller financing.~~the following: (i) principal repayments on loans receivable, (ii) loans receivable sales, and (iii) a more positive economic outlook. Additionally, the change in the reserve for expected loan losses during the nine months ended September 30, 2021 is further impacted by (i) transfers of loans receivable held for investment to loans receivable held for sale and (ii) the sale of 2 mezzanine loans as part of the Discovery SHOP Portfolio disposition (see Note 5).

NOTE 8. Investments in and Advances to Unconsolidated Joint Ventures

The Company owns interests in the following entities that are accounted for under the equity method, excluding investments classified as discontinued operations (dollars in thousands):


					Carrying Amount								Carrying Amount
					March 31,		December 31,						September 30,		December 31,
Entity(1)(2)	Entity(1)(2)	Segment	Property Count(3)	Ownership %(3)	2021		2020		Entity(1)(2)	Segment	Property Count(3)	Ownership %(3)	2021		2020
SWF SH JV~~(4)~~	SWF SH JV~~(4)~~	Other	19	54	$	349,804	$	357,581	SWF SH JV~~(4)~~	Other	19	54	$	354,534	$	357,581
Life Science JV~~(5)~~	Life Science JV~~(5)~~	Life science	1	49	24,786		24,879		Life Science JV~~(5)~~	Life science	1	49	25,135		24,879
Medical Office JVs~~(6)~~(4)	Medical Office JVs~~(6)~~(4)	Medical office	3	20 - 67	9,613		9,673		Medical Office JVs~~(6)~~(4)	Medical office	3	20 - 67	9,426		9,673
Other JVs~~(7)~~(5)	Other JVs~~(7)~~(5)	Other	0	41 - 47	9,157		9,157		Other JVs~~(7)~~(5)	Other	—	—	—		9,157
CCRC JV~~(8)~~(6)	CCRC JV~~(8)~~(6)	CCRC	2	49	6,481		1,581		CCRC JV~~(8)~~(6)	CCRC	—	—	—		1,581

					$	399,841	$	402,871
													$	389,095	$	402,871

(1)These entities are not consolidated because the Company does not control, through voting rights or other means, the joint ventures.

(2)Excludes the Otay Ranch JV (90% ownership percentage), which iswas classified as discontinued operations and had an aggregate carrying value of $6 million at ~~March 31, 2021 and~~ December 31, 2020 (see Note 5). In April 2021, the ~~Company sold its share of the~~ SHOP property in the Otay Ranch JV was sold, resulting in the Company’s share of proceeds of $32 million and a gain on sale of $5 million recognized in equity income (loss) from unconsolidated joint ventures within income (loss) from discontinued operations for ~~$32 million.~~the nine months ended September 30, 2021.

(3)Property count and ownership percentage are as of ~~March 31,~~September 30, 2021.

(4)~~In December 2019, the Company formed the SWF SH JV with a sovereign wealth fund.~~

~~(5)In December 2020, the Company acquired a joint venture interest in a life science facility in Cambridge, Massachusetts (see Note 4).~~

~~(6)~~Includes 3 unconsolidated medical office joint ventures ~~(and~~in which the ~~Company’s~~Company holds an ownership ~~percentage):~~percentage as follows: (i) Ventures IV (20%); (ii) Ventures III (30%); and (iii) Suburban Properties, LLC (67%).

~~(7)~~(5)Includes 2 unconsolidated other joint ventures (and the Company’s ownership percentage): (i) Discovery Naples JV (41%) and (ii) Discovery Sarasota JV (47%). The Discovery Naples JV and Discovery Sarasota JV are joint ventures that have developed or are developing senior housing facilities and the Company’s investments in those joint ventures are preferred equity investments earning a 10% per annum fixed-rate return. In April 2021, the Company sold ~~these~~its 2 preferred equity investments for their carrying value as part of the Discovery SHOP Portfolio disposition (see Note 5). At December 31, 2020, includes 2 unconsolidated other joint ventures in which the Company’s ownership percentage is as follows: (i) Discovery Naples JV (41%) and (ii) Discovery Sarasota JV (47%).

~~(8)~~(6)See Note 3 for a discussion of the 2019 MTCA with Brookdale, including the acquisition of Brookdale’s interest in 13 of the 15 communities in the CCRC JV in January 2020. In May 2021, the 2 remaining CCRCs were sold for $38 million, $19 million of which represents the Company’s 49% interest, resulting in an immaterial gain on sale recorded within equity income (loss) from unconsolidated joint ventures for the nine months ended September 30, 2021.

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NOTE 9. Intangibles

Intangible assets primarily consist of lease-up intangibles and above market tenant lease intangibles. The following table summarizes the Company’s intangible lease assets (dollars in thousands):


Intangible lease assets	Intangible lease assets	March 31, 2021		December 31, 2020		Intangible lease assets	September 30, 2021		December 31, 2020
Gross intangible lease assets	Gross intangible lease assets	$	758,424	$	761,328	Gross intangible lease assets	$	823,362	$	761,328
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(262,505)		(241,411)		Accumulated depreciation and amortization	(303,027)		(241,411)
Intangible assets, net(1)	Intangible assets, net(1)	$	495,919	$	519,917	Intangible assets, net(1)	$	520,335	$	519,917

Weighted average remaining amortization period in years	Weighted average remaining amortization period in years	6		5		Weighted average remaining amortization period in years	6		5

(1)Excludes intangible assets reported in assets held for sale and discontinued operations, net of ~~$9 million and $25~~$25 million as of ~~March 31, 2021 and~~ December 31, ~~2020, respectively.~~2020.

Intangible liabilities consist of below market lease intangibles. The following table summarizes the Company’s intangible lease liabilities (dollars in thousands):


Intangible lease liabilities	Intangible lease liabilities	March 31, 2021		December 31, 2020		Intangible lease liabilities	September 30, 2021		December 31, 2020
Gross intangible lease liabilities	Gross intangible lease liabilities	$	193,140	$	194,565	Gross intangible lease liabilities	$	208,031	$	194,565
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(54,523)		(50,366)		Accumulated depreciation and amortization	(64,027)		(50,366)
Intangible liabilities, net	Intangible liabilities, net	$	138,617	$	144,199	Intangible liabilities, net	$	144,004	$	144,199

Weighted average remaining amortization period in years	Weighted average remaining amortization period in years	8		8		Weighted average remaining amortization period in years	8		8

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, in conjunction with the Company’s acquisitions of real estate, the Company acquired intangible assets of $1$81 million and intangible liabilities of ~~$0.2~~$17 million. The intangible assets and liabilities acquired ~~each~~ had a weighted average amortization period at acquisition of ~~4 years.~~9 years and 8 years, respectively.

During the year ended December 31, 2020, in conjunction with the Company’s acquisitions of real estate, the Company acquired intangible assets of $352 million and intangible liabilities of $83 million. The intangible assets and intangible liabilities acquired had a weighted average amortization period at acquisition of 7 years and 9 years, respectively.

NOTE 10. Debt

Bank Line of Credit and Term Loan

On May 23, 2019, the Company executed a $2.5 billion unsecured revolving line of credit facility, ~~(the “Revolving Facility”), which matures on~~with a maturity date of May 23, 2023 and ~~contains~~2 six-month extension options, subject to certain customary conditions. Also in May 2019, the Company entered into a $250 million unsecured term loan facility, with a maturity date of May 23, 2024 (the “2019 Term Loan”). In July 2021, the Company repaid the $250 million 2019 Term Loan; therefore, at September 30, 2021, there was no outstanding balance. The outstanding balance on the 2019 Term Loan at December 31, 2020 was $250 million.

In September 2021, the Company executed an amended and restated unsecured revolving line of credit (the “Revolving Facility”) to increase total revolving commitments from $2.5 billion to $3.0 billion and extend the maturity date to January 20, 2026. This maturity date may be further extended pursuant to 2 six-month extension options, subject to certain customary conditions. Borrowings under the Revolving Facility accrue interest at the base rate or LIBOR (or other applicable rate with respect to non-dollar borrowings) plus a margin that depends on the credit ratings of the Company’s senior unsecured long-term debt. The Company also pays a facility fee on the entire revolving commitment that depends on its credit ratings. Based on ~~those~~the Company’s credit ratings at ~~March 31,~~September 30, 2021, the margin on the Revolving Facility was ~~0.83%~~0.78% and the facility fee was 0.15%. At ~~March~~September 30, 2021 and December 31, ~~2021,~~2020, the Company had ~~$110 million~~no balance outstanding under the Revolving ~~Facility, with a weighted average interest rate of 1.23%.~~Facility.

In May 2019, the Company also entered into a $250 million unsecured term loan facility, which the Company fully drew down during the second quarter of 2019 (the “2019 Term Loan” and, together with theThe Revolving Facility the “Facilities”). The 2019 Term Loan matures on May 23, 2024. Based on credit ratings for the Company’s senior unsecured long-term debt at March 31, 2021, the 2019 Term Loan accrues interest at a rate of LIBOR plus 0.90%, with a weighted average effective interest rate of 1.10%.

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~~The Facilities include~~includes a feature that allows the Company to increase the borrowing capacity by an aggregate amount of up to $750 million, subject to securing additional commitments. Further, the Revolving Facility includes customary LIBOR replacement language, including, but not limited to, the use of rates based on the secured overnight financing rate administered by the Federal Reserve Bank of New York. The ~~Facilities~~Revolving Facility also ~~contain~~includes a sustainability-linked pricing component whereby the applicable margin may be reduced by up to 0.025% based on the Company’s achievement of specified sustainability-linked metrics, subject to certain conditions.

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The Revolving Facility also contains certain financial restrictions and other customary requirements, including financial covenants and cross-default provisions to other indebtedness. Among other things, these covenants, using terms defined in the ~~agreements:~~agreement: (i) limit the ratio of Enterprise Total Indebtedness to Enterprise Gross Asset Value to 60%; (ii) limit the ratio of Enterprise Secured Debt to Enterprise Gross Asset Value to 40%; (iii) limit the ratio of Enterprise Unsecured Debt to Enterprise Unencumbered Asset Value to 60%; (iv) require a minimum Fixed Charge Coverage ratio of 1.5 times; and (v) require a minimum Consolidated Tangible Net Worth of ~~$7.0~~$7.7 billion. ~~At March 31, 2021, the~~The Company believes it was in compliance with each of these ~~restrictions and requirements of the Facilities.~~covenants at September 30, 2021.

Commercial Paper Program

In September 2019, the Company established an unsecured commercial paper program (the “Commercial Paper Program”). Under the terms of the Commercial Paper Program, the Company may issue, from time to time, unsecured short-term debt securities with varying maturities. Amounts available under the Commercial Paper Program may be borrowed, repaid, and re-borrowed from time to ~~time, with~~time. During 2021, the Company increased the maximum aggregate face or principal amount that can be outstanding at any one time ~~not exceeding~~from $1.0 billion to $1.5 billion. Amounts borrowed under the Commercial Paper Program will be sold on terms that are customary for the U.S. commercial paper market and will be at least equal in right of payment with all of the Company’s other unsecured and unsubordinated indebtedness. The Company uses its Revolving Facility as a liquidity backstop for the repayment of unsecured short-term debt securities issued under the Commercial Paper Program. At ~~March 31,~~September 30, 2021, the Company had ~~$928 million~~$1.02 billion of securities outstanding under the Commercial Paper Program, with original maturities of approximately one month and a weighted average interest rate of ~~0.26%~~0.22%. At December 31, 2020, the Company had $130 million of securities outstanding under the Commercial Paper Program, with original maturities of approximately one month and a weighted average interest rate of 0.30%.

~~In April 2021, the Company increased the maximum aggregate face or principal amount outstanding at any one time for the Commercial Paper Program from $1.0 billion to $1.25 billion.~~

Senior Unsecured Notes

At ~~March 31,~~September 30, 2021, the Company had senior unsecured notes outstanding with an aggregate principal balance of ~~$4.30~~$4.2 billion. The senior unsecured notes contain certain covenants including limitations on debt, maintenance of unencumbered assets, cross-acceleration provisions and other customary terms. The Company believes it was in compliance with these covenants at ~~March 31,~~September 30, 2021.

~~During the three months ended March 31, 2021, the Company had 0 senior unsecured note issuances.~~

The following table summarizes the Company’s senior unsecured notes repurchases and redemptions during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 (dollars in thousands):

Payoff Date(1)
Amount Coupon Rate Maturity Year
January 28, 2021 $ 112,000 4.25 % 2023
January 28, 2021 $ 201,000 4.20 % 2024
January 28, 2021 $ 469,000 3.88 % 2024
February 26, 2021 $ 188,000 4.25 % 2023
February 26, 2021 $ 149,000 4.20 % 2024
February 26, 2021 $ 331,000 3.88 % 2024


Payoff Date	Amount		Coupon Rate		Maturity Year
May 19, 2021(1)	$	251,806	3.40	%	2025
May 19, 2021(1)	298,194		4.00	%	2025
February 26, 2021(2)	188,000		4.25	%	2023
February 26, 2021(2)	149,000		4.20	%	2024
February 26, 2021(2)	331,000		3.88	%	2024
January 28, 2021(2)	112,000		4.25	%	2023
January 28, 2021(2)	201,000		4.20	%	2024
January 28, 2021(2)	469,000		3.88	%	2024

(1)Upon repurchasing a portion of the 3.40% and 4.00% senior unsecured notes due 2025, the Company recognized a $61 million loss on debt extinguishment during the nine months ended September 30, 2021.

(2)Upon completing the repurchases and redemptions of all outstanding 4.25%, 4.20%, and 3.88% senior unsecured notes due in 2023 and 2024, the Company recognized a $164 million loss on debt ~~extinguishment.~~extinguishment during the nine months ended September 30, 2021.

~~On May 4,~~In July 2021, the Company ~~announced~~completed its inaugural green bond offering. The net proceeds from the ~~commencement of tender offers~~offering were allocated to ~~purchase up to an aggregate principal amount of $550 million for cash, targeting (i) $250 million of~~ the Company’s ~~3.40%~~previous acquisition of Cambridge Discovery Park, completed in December 2020 (see Note 4), which has received LEED Gold certification and qualifies as an eligible green project. However, the Company may choose to allocate or re-allocate net proceeds to one more other eligible green projects. The senior unsecured notes ~~due in 2025~~were issued and ~~(ii) $300 million of~~ the ~~Company’s 4.00% senior unsecured notes due in 2025.~~

~~The following table summarizes the Company’s senior unsecured notes issuances during the year ended December 31, 2020~~proceeds were received on July 12, 2021 as follows (dollars in thousands):

Issue Date Amount Coupon Rate Maturity Year
Year ended December 31, 2020:
June 23, 2020 $ 600,000 2.88 % 2031


Issue Date	Amount		Coupon Rate		Maturity Year
July 12, 2021	$	450,000	1.35	%	2027

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The following table summarizes the Company’s senior unsecured notes repurchases and redemptions during the year ended December 31, 2020 (dollars in thousands):


Payoff Date	Payoff Date	Amount		Coupon Rate		Maturity Year	Payoff Date	Amount		Coupon Rate		Maturity Year
Year ended December 31, 2020:
July 9, 2020(1)	July 9, 2020(1)	$	300,000	3.15	%	2022	July 9, 2020(1)	$	300,000	3.15	%	2022
June 24, 2020(2)	June 24, 2020(2)	$	250,000	4.25	%	2023	June 24, 2020(2)	250,000		4.25	%	2023

(1)Upon completing the redemption of all outstanding 3.15% senior unsecured notes due in 2022, the Company recognized an $18 million loss on debt ~~extinguishment.~~extinguishment during the three and nine months ended September 30, 2020.

(2)Upon repurchasing a portion of the 4.25% senior unsecured notes due in 2023, the Company recognized a $26 million loss on debt ~~extinguishment.~~extinguishment during the nine months ended September 30, 2020.

The following table summarizes the Company’s senior unsecured notes issuances during the year ended December 31, 2020 (dollars in thousands):


Issue Date	Amount		Coupon Rate		Maturity Year
June 23, 2020	$	600,000	2.88	%	2031

Mortgage Debt

At ~~March 31,~~September 30, 2021 and December 31, 2020, the Company had ~~$215~~$355 million and $217 million, respectively, in aggregate principal of mortgage debt outstanding (excluding mortgage debt on assets held for sale and discontinued operations), which iswas secured by 19 and6 healthcare facilities, respectively, with an aggregate carrying value of ~~$511~~$835 million and $517 million, respectively.

Mortgage debt generally requires monthly principal and interest payments, is collateralized by real estate assets, and is non-recourse. Mortgage debt typically restricts transfer of the encumbered assets, prohibits additional liens, restricts prepayment, requires payment of real estate taxes, requires maintenance of the assets in good condition, requires insurance on the assets, and includes conditions to obtain lender consent to enter into or terminate material leases. Some of the mortgage debt may require tenants or operators to maintain compliance with the applicable leases or operating agreements of such real estate assets.

During the three and nine months ended ~~March 31,~~September 30, 2021, the Company made aggregate principal repayments of mortgage debt of $1 million and $4 million, respectively (excluding mortgage debt on assets held for sale and discontinued operations). During the three and nine months ended September 30, 2020, the Company made aggregate principal repayments of mortgage debt of ~~$42~~$1 million and $5$4 million, ~~respectively. The amount of repayments during the three months ended March 31, 2021 includes the repayment of $39 million of variable rate secured~~respectively (excluding mortgage debt on ~~2 SHOP~~ assets ~~classified as~~held for sale and discontinued operations and $1 million of scheduled repayments on mortgage debt classified as discontinued operations. During the three months ended March 31, 2020, $4 million of the repayments were associated with mortgage debt classified as discontinued operations.operations).

In April 2021, in conjunction with the acquisition of the MOB Portfolio, the Company ~~issued~~originated $142 million of secured mortgage debt (see Note 4).

~~In conjunction with the sale~~ that matures in May 2026 and has a weighted average effective interest rate of ~~the Aegis NNN Portfolio (see Note 5) in December 2020, the Company repaid $6 million of variable rate secured mortgage debt on 1 SHOP asset classified as discontinued operations~~2.68% as of ~~December 31, 2020.~~

In November 2020, upon consolidating 1 property as part of a joint venture dissolution, the Company assumed $36 million of secured mortgage debt (classified as liabilities related to assets held for sale and discontinued operations, net) maturing in 2025 (see Note 4).September 30, 2021.

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Debt Maturities

The following table summarizes the Company’s stated debt maturities and scheduled principal repayments at ~~March 31,~~September 30, 2021 ~~(in~~(dollars in thousands):


								Senior Unsecured Notes(2)				Mortgage Debt(3)											Senior Unsecured Notes(2)				Mortgage Debt(3)
Year	Year	Bank Line of Credit		Commercial Paper(1)		Term Loan		Amount		Interest Rate		Amount		Interest Rate		Total		Year	Bank Line of Credit		Commercial Paper(1)		Amount		Interest Rate		Amount		Interest Rate		Total
2021 (nine months)		$	0	$	0	$	0	$	0	0	%	$	11,572	4.86	%	$	11,572
2021																		2021	$	—	$	—	$	—	—	%	$	8,731	4.86	%	$	8,731
2022	2022	0		0		0		0		0	%	4,843		3.80	%	4,843		2022	—		—		—		—	%	4,843		3.80	%	4,843
2023	2023	110,000		928,150		0		0		0	%	89,874		3.80	%	1,128,024		2023	—		—		—		—	%	89,874		3.80	%	89,874
2024	2024	0		0		250,000		0		0	%	3,050		3.80	%	253,050		2024	—		—		—		—	%	3,050		3.80	%	3,050
2025	2025	0		0		0		1,350,000		3.93	%	3,209		3.80	%	1,353,209		2025	—		—		800,000		3.93	%	3,209		3.80	%	803,209
Thereafter	Thereafter	0		0		0		2,950,000		3.68	%	102,789		3.54	%	3,052,789		Thereafter	—		1,024,000		3,400,000		3.39	%	244,889		3.12	%	4,668,889
		110,000		928,150		250,000		4,300,000				215,337				5,803,487			—		1,024,000		4,200,000				354,596				5,578,596
(Discounts), premium and debt costs, net	(Discounts), premium and debt costs, net	0		0		(757)		(44,303)				4,622				(40,438)		(Discounts), premium and debt costs, net	—		—		(42,166)				1,974				(40,192)
		110,000		928,150		249,243		4,255,697				219,959				5,763,049
Debt on assets held for sale and discontinued operations(4)		0		0		0		0				278,172				278,172
		$	110,000	$	928,150	$	249,243	$	4,255,697			$	498,131			$	6,041,221
																			$	—	$	1,024,000	$	4,157,834			$	356,570			$	5,538,404

(1)Commercial Paper Program borrowings are backstopped by the Revolving Facility. As such, ~~we calculate~~the Company calculates the weighted average remaining term of ~~our~~its Commercial Paper Program borrowings using the maturity date of ~~our~~the Revolving Facility.

(2)Effective interest rates on the senior unsecured notes range from ~~3.10%~~1.54% to 6.91% with a weighted average effective interest rate of ~~3.77%~~3.51% and a weighted average maturity of 87 years.

(3)~~Excluding mortgage debt on assets classified as held for sale and discontinued operations, effective~~Effective interest rates on the mortgage debt range from ~~3.42%~~ 2.50%to 5.91%with a weighted average effective interest rate of ~~3.73%~~3.31% and a weighted average maturity of4 years.

~~(4)Represents mortgage debt on assets held for sale and discontinued operations with interest rates ranging from 3.45% to 5.88% that mature between 2025 and 2044.~~

NOTE 11. Commitments and Contingencies

Legal Proceedings

From time to time, the Company is a party to ~~or has a significant relationship to,~~ legal proceedings, lawsuits and other ~~claims. Except as described below,~~claims that arise in the ordinary course of the Company’s business. The Company is not aware of any legal proceedings or claims that it believes may have, individually or taken together, a material adverse effect on the Company’s financial condition, results of operations, or cash flows. The Company’s policy is to expense legal costs as they are incurred.

~~Class Action.~~ ~~On May 9, 2016, a purported stockholder of the Company filed a putative class action complaint,~~ ~~Boynton Beach Firefighters’ Pension Fund v. HCP, Inc., et al.~~, Case No. 3:16-cv-01106-JJH, in the U.S. District Court for the Northern District of Ohio against the Company, certain of its officers, HCR ManorCare, Inc. (“HCRMC”), and certain of its officers, asserting violations of the federal securities laws. The suit asserted claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and alleged that the Company made certain false or misleading statements relating to the value of and risks concerning its investment in HCRMC by allegedly failing to disclose that HCRMC had engaged in billing fraud, as alleged by the U.S. Department of Justice (“DoJ”) in a suit against HCRMC arising from the False Claims Act that the DoJ voluntarily dismissed with prejudice. On November 22, 2019, the Court granted the class action motion to dismiss. On December 20, 2019, Co-Lead Plaintiffs filed a motion to amend the Court's judgment to permit amendment of the complaint, and on November 30, 2020, the Court denied Co-Lead Plaintiffs’ motion. Co-Lead Plaintiffs have not appealed the dismissal and denial of leave to amend their compliant.

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~~Derivative Actions.~~ ~~On June 16, 2016 and July 5, 2016, purported stockholders of the Company filed two derivative actions,~~ ~~Subodh v. HCR ManorCare Inc., et al., Case No. 30-2016-00858497-CU-PT-CXC and~~ ~~Stearns v. HCR ManorCare, Inc., et al.~~, Case No. 30-2016-00861646-CU-MC-CJC, in the Superior Court of California, County of Orange, against certain of the Company’s current and former directors and officers and HCRMC. The Company was named as a nominal defendant. As both derivative actions contained substantially the same allegations, they were consolidated into a single action (the “~~California derivative action~~”). The consolidated action alleged that the defendants engaged in various acts of wrongdoing, including, among other things, breaching fiduciary duties by publicly making false or misleading statements of fact regarding HCRMC’s finances and prospects, and failing to maintain adequate internal controls. On February 11, 2021, the Court dismissed the ~~California derivative actions~~ ~~without prejudice.~~

~~On April 10, 2017, a purported stockholder of the Company filed a derivative action,~~ ~~Weldon v. Martin et al.~~, Case No. 3:17-cv-755, in federal court in the Northern District of Ohio, Western Division, against certain of the Company’s current and former directors and officers and HCRMC. The Company was named as a nominal defendant. The ~~Weldon~~ complaint asserted similar claims to those asserted in the California derivative action. In addition, the complaint asserted a claim under Section 14(a) of the Exchange Act, alleging that the Company made false statements in its 2016 proxy statement by not disclosing that the Company’s performance issues in 2015 were the direct result of alleged billing fraud at HCRMC. On January 5, 2021, the Court dismissed the ~~Weldon~~ ~~case without prejudice.~~

~~On July 21, 2017, a purported stockholder of the Company filed another derivative action,~~ ~~Kelley v. HCR ManorCare, Inc., et al.~~, Case No. 8:17-cv-01259, in federal court in the Central District of California, against certain of the Company’s current and former directors and officers and HCRMC. The Company was named as a nominal defendant. The ~~Kelley~~ ~~complaint asserted similar claims to those asserted in~~ ~~Weldon~~ ~~and in the California derivative action. Like~~ ~~Weldon, the~~ ~~Kelley~~ complaint also additionally alleged that the Company made false statements in its 2016 proxy statement, and asserted a claim for a violation of Section 14(a) of the Exchange Act. On November 28, 2017, the federal court in the Central District of California granted Defendants’ motion to transfer the action to the Northern District of Ohio (i.e., the court where the class action and other federal derivative action are pending). On January 5, 2021, the Court dismissed the ~~Kelley~~ ~~case with prejudice.~~

The Company’s Board of Directors received letters dated August 17, 2016, April 19, 2017, and April 20, 2017 from private law firms acting on behalf of clients who are purported stockholders of the Company, each asserting allegations similar to those made in the California derivative action matters discussed above. Each letter demands that the Board of Directors take action to assert the Company’s rights. The Board of Directors completed its evaluation and rejected the demand letters in December of 2017. One of the law firms requested that the Board of Directors reconsider its determination after a ruling on the motion to dismiss in the class action litigation. In February 2021, the Board of Directors reaffirmed its rejection of the demand letters.

The Company believes that the demands are without merit, but cannot predict their outcome or reasonably estimate any potential loss at this time. Accordingly, 0 loss contingency has been recorded for these matters as of March 31, 2021, as the likelihood of loss is not considered probable or estimable.

~~DownREIT LLCs~~DownREITs

In connection with the formation of certain ~~DownREIT LLCs,~~limited liability companies (“DownREITs”), members may contribute appreciated real estate to a DownREIT ~~LLC~~ in exchange for DownREIT units. These contributions are generally tax-deferred, so that the pre-contribution gain related to the property is not taxed to the member. However, if a contributed property is later sold by the DownREIT, ~~LLC,~~ the unamortized pre-contribution gain that exists at the date of sale is specifically allocated and taxed to the contributing members. In many of the DownREITs, the Company has entered into indemnification agreements with those members who contributed appreciated property into the ~~DownREIT LLC.~~DownREIT. Under these indemnification agreements, if any of the appreciated real estate contributed by the members is sold by the DownREIT ~~LLC~~ in a taxable transaction within a specified number of years, the Company will reimburse the affected members for the federal and state income taxes associated with the pre-contribution gain that is specially allocated to the affected member under the Code (“make-whole payments”). These make-whole payments include a tax gross-up provision. These indemnification agreements have expirations terms that range through 2039 on a total of 2329 properties.

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NOTE 12. Equity and Redeemable Noncontrolling Interests

Dividends

On ~~April 29,~~October 27, 2021, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.30 per share. The common stock cash dividend will be paid on ~~May 21,~~November 19, 2021 to stockholders of record as of the close of business on ~~May 10,~~November 8, 2021.

During the three months ended ~~March 31,~~September 30, 2021 and 2020, the Company declared and paid common stock cash dividends of $0.30per share and $0.37 per share, respectively.

~~Table~~ During the nine months ended September 30, 2021 and 2020, the Company declared and paid common stock cash dividends of ~~Contents~~$0.90 and $1.11 per share, respectively.

At-The-Market Equity Offering Program

~~In June 2015, the~~The Company previously established an at-the-market equity offering program (“ATM Program”) ~~to sell shares of its common stock from time to time through a consortium of banks acting as sales agents or directly to~~, which was most recently amended in May 2021 (as amended, the ~~banks acting as principals. In February 2020, the Company terminated its previous ATM Program (the “2019~~“2020 ATM Program”) ~~and established a new ATM Program (the “2020 ATM Program”)~~to increase the size of the program from $1.25 billion to $1.5 billion, pursuant to which shares of common stock having an aggregate gross sales price of up to ~~approximately $1.25~~$1.5 billion may be sold (i) by the Company through a consortium of banks acting as sales agents or directly to the banks acting as principals or (ii) by a consortium of banks acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale ~~agreement.~~agreement (each, an “ATM forward contract”). The use of aATM forward ~~sale agreement~~contracts allows the Company to lock in a share price on the sale of shares at the time the ATM forward ~~sales agreement~~contract is effective, but defer receiving the proceeds from the sale of shares until a later date.

ATM forward ~~sale agreements~~contracts generally have a one to two year term. At any time during the term, the Company may settle a forward sale by delivery of physical shares of common stock to the forward seller or, at the Company’s election, in cash or net shares. The forward sale price the Company expects to receive upon settlement of outstanding ATM forward contracts will be the initial forward price established upon the effective date, subject to adjustments for: (i) accrued interest, (ii) the forward purchasers’ stock borrowing costs, and (iii) certain fixed price reductions during the term of the ATM forward contract.

At September 30, 2021, $1.18 billion of the Company’s common stock remained available for sale ~~agreement.~~under the 2020 ATM Program.

ATM Forward Contracts

During the three and nine months ended September 30, 2021, the Company utilized the forward provisions under the 2020 ATM Program to allow for the sale of an aggregate of 9.1 million shares of its common stock at an initial weighted average net price of $35.25 per share, after commissions.

During the three and nine months ended September 30, 2021, no shares were settled under ATM forward contracts. Therefore, at September 30, 2021, 9.1 million shares remained outstanding under ATM forward contracts.

During the three months ended ~~March 31, 2021,~~September 30, 2020, the Company did not utilize the forward provisions under ~~the 2020~~any previous ATM Program. During the ~~three~~nine months ended ~~March 31,~~September 30, 2020, the Company utilized the forward provisions under ~~the 2019~~a previous ATM Program established in 2019 to allow for the sale of ~~up to~~ an aggregate of 22.0 million shares of its common stock at an initial weighted average net price of $35.23 per share, after commissions.

During the three months ended March 31, 2020, the Company settled all 16.8 million shares previously outstanding under ATM forward contracts at a weighted average net price of $31.38 per share, after commissions, resulting in net proceeds of $528 million. ~~NaN~~No shares were settled subsequent to March 31, 2020. At September 30, 2020, ~~and therefore, at March 31, 2021, 0~~no shares remained outstanding under these prior ATM forward contracts.

~~At March 31, 2021, approximately $1.25 billion of the Company’s common stock remained available for sale under the 2020 ATM Program.~~

ATM Direct Issuances

During the three and nine months ended ~~March 31,~~September 30, 2021 and September 30, 2020, 0no shares of common stock were issued under ~~the 2019~~any ATM ~~Program or 2020 ATM~~ Program.

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Forward Equity Offerings

November 2019 Offering. In November 2019, the Company entered into a forward equity sales agreement (the "2019 forward equity sales agreement") to sell an aggregate of 15.6 million shares of its common stock (including shares sold through the exercise of underwriters’ options) at an initial net price of $34.46 per share, after underwriting discounts and commissions, which was subject to adjustments for: (i) accrued interest, (ii) the forward purchasers’ stock borrowing costs, and (iii) certain fixed price reductions during the term of the agreement. During the three months ended March 31, 2020, the Company settled all 15.6 million shares under the 2019 forward equity sales agreement at a weighted average net price of $34.18 per share, resulting in net proceeds of $534 million (total net proceeds of $1.06 billion, when aggregated with the net proceeds from settling ATM forward contracts, as discussed above). Therefore, at ~~March 31,~~September 30, 2021 0and September 30, 2020, no shares remained outstanding under the 2019 forward equity sales agreement.

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the Company’s accumulated other comprehensive income (loss) (in thousands):


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020

Unrealized gains (losses) on derivatives, net	Unrealized gains (losses) on derivatives, net	$	0	$	(81)	Unrealized gains (losses) on derivatives, net	$	—	$	(81)
Supplemental Executive Retirement Plan minimum liability	Supplemental Executive Retirement Plan minimum liability	(3,497)		(3,604)		Supplemental Executive Retirement Plan minimum liability	(3,281)		(3,604)

Total accumulated other comprehensive income (loss)	Total accumulated other comprehensive income (loss)	$	(3,497)	$	(3,685)	Total accumulated other comprehensive income (loss)	$	(3,281)	$	(3,685)

Redeemable Noncontrolling Interests

Arrangements with noncontrolling interest holders are assessed for appropriate balance sheet classification based on the redemption and other rights held by the noncontrolling interest holder. Certain of the Company’s noncontrolling interest holders have the ability to put their equity interests to the Company upon specified events or after the passage of a predetermined period of time. Each put option is payable in cash and subject to increases in redemption value in the event that the underlying property generates specified returns for the Company and meets certain promote thresholds pursuant to the respective agreements. Accordingly, the Company records redeemable noncontrolling interests outside of permanent equity and presents the redeemable noncontrolling interests at the greater of their carrying amount or redemption value at the end of each reporting period.

As of September 30, 2021, the put option related to $54 million of the redeemable noncontrolling interests balance was currently exercisable. The remaining redeemable noncontrolling interests had not yet met the conditions for redemption. NaN of the interests will become redeemable following the passage of a predetermined amount of time, which will occur in 2022, 2023, and 2024. The fourth interest will become redeemable at the earlier of a predetermined passage of time or stabilization, which is expected to occur in 2023. The redemption values are subject to change based on the assessment of value at each redemption date. As of December 31, 2020, none of the redeemable noncontrolling interests were exercisable.

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NOTE 13. Earnings Per Common Share

Basic income (loss) per common share (“EPS”) is computed based on the weighted average number of common shares outstanding. Diluted income (loss) per common share is computed based on the weighted average number of common shares outstanding plus the impact of forward equity sales agreements using the treasury stock method and common shares issuable from the assumed conversion of DownREIT units, stock options, certain performance restricted stock units, and unvested restricted stock units. Only those instruments having a dilutive impact on the Company’s basic income (loss) per share are included in diluted income (loss) per share during the periods presented.

Restricted stock and certain performance restricted stock units are considered participating securities, because dividend payments are not forfeited even if the underlying award does not vest, and require use of the two-class method when computing basic and diluted earnings per share.

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Refer to Note 12 for a discussion of the sale of shares under and settlement of forward sales agreements during the periods presented. The Company considered the potential dilution resulting from the forward agreements to the calculation of earnings per share. At inception, the agreements do not have an effect on the computation of basic EPS as no shares are delivered until settlement. However, the Company uses the treasury stock method to calculate the dilution, if any, resulting from the forward sales agreements during the period of time prior to settlement. The aggregate effect on the Company’s diluted weighted-average common shares for the three months ended ~~March 31,~~September 30, 2021 and 2020 was 0zero weighted-average incremental shares from the forward equity sales agreements. The aggregate effect on the Company’s diluted weighted-average common shares for the nine months ended September 30, 2021 and ~~0.8~~2020 was zero and 0.3 million weighted-average incremental shares, respectively, from the forward equity sales agreements.

~~Table of Contents~~

The following table illustrates the computation of basic and diluted earnings per share (in thousands, except per share amounts):


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020
Numerator	Numerator						Numerator
Income (loss) from continuing operations	Income (loss) from continuing operations	$	(120,585)	$	147,132		Income (loss) from continuing operations	$	61,305	$	(27,762)	$	108,785	$	179,711
Noncontrolling interests' share in continuing operations	Noncontrolling interests' share in continuing operations	(3,306)		(3,463)			Noncontrolling interests' share in continuing operations	(7,195)		(3,616)		(14,036)		(10,565)
Income (loss) from continuing operations attributable to Healthpeak Properties, Inc.	Income (loss) from continuing operations attributable to Healthpeak Properties, Inc.	(123,891)		143,669			Income (loss) from continuing operations attributable to Healthpeak Properties, Inc.	54,110		(31,378)		94,749		169,146
Less: Participating securities' share in continuing operations	Less: Participating securities' share in continuing operations	(2,451)		(1,616)			Less: Participating securities' share in continuing operations	(269)		(351)		(3,001)		(2,151)
Income (loss) from continuing operations applicable to common shares	Income (loss) from continuing operations applicable to common shares	(126,342)		142,053			Income (loss) from continuing operations applicable to common shares	53,841		(31,729)		91,748		166,995
Income (loss) from discontinued operations	Income (loss) from discontinued operations	270,008		135,408			Income (loss) from discontinued operations	601		(31,819)		384,569		98,297
Noncontrolling interests' share in discontinued operations	Noncontrolling interests' share in discontinued operations	(329)		3			Noncontrolling interests' share in discontinued operations	—		(220)		(2,539)		(274)
Net income (loss) applicable to common shares	Net income (loss) applicable to common shares	$	143,337	$	277,464		Net income (loss) applicable to common shares	$	54,442	$	(63,768)	$	473,778	$	265,018
Numerator - Dilutive
Net income (loss) applicable to common shares		$	143,337	$	277,464
Add: distributions on dilutive convertible units and other		0		2,515
Dilutive net income (loss) available to common shares		$	143,337	$	279,979

Denominator	Denominator						Denominator
Basic weighted average shares outstanding	Basic weighted average shares outstanding	538,679		506,476			Basic weighted average shares outstanding	539,021		538,333		538,879		527,908
Dilutive potential common shares - equity awards(1)	Dilutive potential common shares - equity awards(1)	0		318			Dilutive potential common shares - equity awards(1)	367		—		280		279
Dilutive potential common shares - forward equity agreements(2)	Dilutive potential common shares - forward equity agreements(2)	0		808			Dilutive potential common shares - forward equity agreements(2)	—		—		—		268
Dilutive potential common shares - DownREIT conversions		0		7,443

Diluted weighted average common shares	Diluted weighted average common shares	538,679		515,045			Diluted weighted average common shares	539,388		538,333		539,159		528,455
Basic earnings (loss) per common share	Basic earnings (loss) per common share						Basic earnings (loss) per common share
Continuing operations	Continuing operations	$	(0.23)	$	0.28		Continuing operations	$	0.10	$	(0.06)	$	0.17	$	0.32
Discontinued operations	Discontinued operations	0.50		0.27			Discontinued operations	0.00		(0.06)		0.71		0.18
Net income (loss) applicable to common shares	Net income (loss) applicable to common shares	$	0.27	$	0.55		Net income (loss) applicable to common shares	$	0.10	$	(0.12)	$	0.88	$	0.50
Diluted earnings (loss) per common share	Diluted earnings (loss) per common share						Diluted earnings (loss) per common share
Continuing operations	Continuing operations	$	(0.23)	$	0.28		Continuing operations	$	0.10	$	(0.06)	$	0.17	$	0.32
Discontinued operations	Discontinued operations	0.50		0.26			Discontinued operations	0.00		(0.06)		0.71		0.18
Net income (loss) applicable to common shares	Net income (loss) applicable to common shares	$	0.27	$	0.54		Net income (loss) applicable to common shares	$	0.10	$	(0.12)	$	0.88	$	0.50

(1)For all periods presented, represents the dilutive impact of 1 million outstanding equity awards (restricted stock units and stock options).

(2)For the three and nine months ended ~~March 31,~~September 30, 2021, all 9 millionshares that have not been settled as of September 30, 2021 were anti-dilutive. For the nine months ended September 30, 2020, represents the dilutive impact of 32 million shares that were settled during the nine months then ended. For the three months ended September 30, 2020, forward sales agreements had 0no dilutive impact as all agreements were settled prior to the start of the period.For the three months ended March 31, 2020, represents the dilutive impact of 32 million shares that were settled during the three months then ended. For the three months ended March 31, 2021, diluted loss per common share is calculated using the weighted average common shares outstanding as a result of the Company generating a loss from continuing operations for the period.

For all periods presented in the ~~three months ended March 31, 2021,~~table above, all 7 million shares issuable upon conversion of DownREIT units were not included because they ~~are~~were anti-dilutive. ~~For the three months ended March~~

31 ~~2020, all 7 million DownREIT shares were dilutive.~~

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NOTE 14. Segment Disclosures

The Company’s reportable segments, based on how its chief operating decision makers (“CODMs”) evaluates its business and allocates resources, are as follows: (i) life science, (ii) medical office, and (iii) CCRC. The Company has non-reportable segments that are comprised primarily of the Company’s interests in an unconsolidated senior housing joint venture and debt investments. The accounting policies of the segments are the same as those in Note 2 to the Consolidated Financial Statements in the Company’s ~~2020~~ Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC, as updated by Note 2 herein.

In December 2020, the Company’s senior housing triple-net and SHOP portfolios were classified as discontinued operations and are no longer reportable segments. See Notes 1 and 5 for further information.

~~Table of Contents~~

In December 2020, as a result of a change in how operating results are reported to the ~~Company's~~Company’s CODMs, the Company’s hospitals were reclassified from other non-reportable segments to the medical office segment and the Company’s 1 remaining unconsolidated investment in a senior housing joint venture was reclassified from the SHOP segment to other non-reportable segments.

All prior period segment information has been recast to conform to the current period presentation.

The Company evaluates performance based on property Adjusted NOI. NOI is defined as real estate revenues (inclusive of rental and related revenues, resident fees and services, income from direct financing leases, and government grant income and exclusive of interest income), less property level operating expenses (which exclude transition costs); NOI excludes all other financial statement amounts included in net income (loss). Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL non-cash interest, amortization of market lease intangibles, termination fees, actuarial reserves for insurance claims that have been incurred but not reported, and the impact of deferred community fee income and expense.

NOI and Adjusted NOI include the Company’s share of income (loss) from unconsolidated joint ventures and exclude noncontrolling interests’ share of income (loss) from consolidated joint ventures. Management believes that Adjusted NOI is an important supplemental measure because it provides relevant and useful information by reflecting only income and operating expense items that are incurred at the property level and presenting it on an unlevered basis. Additionally, management believes that net income (loss) is the most directly comparable GAAP measure to NOI and Adjusted NOI. NOI and Adjusted NOI should not be viewed as alternative measures of operating performance to net income (loss) as defined by GAAP since they do not reflect various excluded items.

Non-segment assets consist of assets in the ~~Company's~~Company’s other non-reportable segments and corporate non-segment assets. Corporate non-segment assets consist primarily of corporate assets, including cash and cash equivalents, restricted cash, accounts receivable, net, loans receivable, marketable equity securities, other assets, real estate assets held for sale and discontinued operations, and liabilities related to assets held for sale.

2832

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The following tables summarize information for the reportable segments (in thousands):

For the three months ended ~~March 31,~~September 30, 2021:


		Life Science		Medical Office		CCRC		Other Non-reportable		Corporate Non-segment		Total			Life Science		Medical Office		CCRC		Other Non-reportable		Corporate Non-segment		Total
Total revenues	Total revenues	$	169,934	$	160,201	$	116,128	$	9,013	$	0	$	455,276	Total revenues	$	184,213	$	171,482	$	119,022	$	6,748	$	—	$	481,465
Government grant income(1)	Government grant income(1)	0		0		1,310		0		0		1,310		Government grant income(1)	—		—		15		—		—		15
Less: Interest income	Less: Interest income	0		0		0		(9,013)		0		(9,013)		Less: Interest income	—		—		—		(6,748)		—		(6,748)
Healthpeak's share of unconsolidated joint venture total revenues		1,337		715		4,488		16,753		0		23,293
Healthpeak's share of unconsolidated joint venture government grant income		0		0		199		227		0		426
Noncontrolling interests' share of consolidated joint venture total revenues		(65)		(8,926)		0		0		0		(8,991)
Healthpeak’s share of unconsolidated joint venture total revenues														Healthpeak’s share of unconsolidated joint venture total revenues	1,521		737		—		17,109		—		19,367
Healthpeak’s share of unconsolidated joint venture government grant income														Healthpeak’s share of unconsolidated joint venture government grant income	—		—		—		—		—		—
Noncontrolling interests’ share of consolidated joint venture total revenues														Noncontrolling interests’ share of consolidated joint venture total revenues	(82)		(8,954)		—		—		—		(9,036)
Operating expenses	Operating expenses	(39,461)		(51,121)		(91,179)		0		0		(181,761)		Operating expenses	(44,923)		(58,430)		(98,799)		13		—		(202,139)
Healthpeak's share of unconsolidated joint venture operating expenses		(425)		(294)		(4,745)		(12,595)		0		(18,059)
Noncontrolling interests' share of consolidated joint venture operating expenses		20		2,504		0		0		0		2,524
Healthpeak’s share of unconsolidated joint venture operating expenses														Healthpeak’s share of unconsolidated joint venture operating expenses	(463)		(305)		(32)		(13,450)		—		(14,250)
Noncontrolling interests’ share of consolidated joint venture operating expenses														Noncontrolling interests’ share of consolidated joint venture operating expenses	25		2,659		—		—		—		2,684

Adjustments to NOI(2)	Adjustments to NOI(2)	(11,810)		(1,923)		20		112		0		(13,601)		Adjustments to NOI(2)	(11,021)		(3,626)		724		(100)		—		(14,023)
Adjusted NOI	Adjusted NOI	119,530		101,156		26,221		4,497		0		251,404		Adjusted NOI	129,270		103,563		20,930		3,572		—		257,335
Plus: Adjustments to NOI(2)	Plus: Adjustments to NOI(2)	11,810		1,923		(20)		(112)		0		13,601		Plus: Adjustments to NOI(2)	11,021		3,626		(724)		100		—		14,023
Interest income	Interest income	0		0		0		9,013		0		9,013		Interest income	—		—		—		6,748		—		6,748
Interest expense	Interest expense	(102)		(95)		(1,918)		0		(44,728)		(46,843)		Interest expense	(46)		(1,104)		(1,936)		—		(32,819)		(35,905)
Depreciation and amortization	Depreciation and amortization	(68,434)		(57,954)		(31,150)		0		0		(157,538)		Depreciation and amortization	(79,570)		(66,189)		(31,416)		—		—		(177,175)
General and administrative	General and administrative	0		0		0		0		(24,902)		(24,902)		General and administrative	—		—		—		—		(23,270)		(23,270)
Transaction costs	Transaction costs	(32)		(330)		(432)		(4)		0		(798)		Transaction costs	—		—		—		—		—		—
Impairments and loan loss reserves	Impairments and loan loss reserves	0		0		0		(3,242)		0		(3,242)		Impairments and loan loss reserves	—		(1,952)		—		1,667		—		(285)

Gain (loss) on sales of real estate, net														Gain (loss) on sales of real estate, net	—		14,635		—		—		—		14,635
Gain (loss) on debt extinguishments	Gain (loss) on debt extinguishments	0		0		0		0		(164,292)		(164,292)		Gain (loss) on debt extinguishments	—		—		—		—		(667)		(667)
Other income (expense), net	Other income (expense), net	4		(2,279)		2,176		482		1,817		2,200		Other income (expense), net	22		(30)		114		1		1,563		1,670
Less: Government grant income	Less: Government grant income	0		0		(1,310)		0		0		(1,310)		Less: Government grant income	—		—		(15)		—		—		(15)
Less: Healthpeak's share of unconsolidated joint venture NOI		(912)		(421)		58		(4,385)		0		(5,660)
Plus: Noncontrolling interests' share of consolidated joint venture NOI		45		6,422		0		0		0		6,467
Less: Healthpeak’s share of unconsolidated joint venture NOI														Less: Healthpeak’s share of unconsolidated joint venture NOI	(1,058)		(432)		32		(3,659)		—		(5,117)
Plus: Noncontrolling interests’ share of consolidated joint venture NOI														Plus: Noncontrolling interests’ share of consolidated joint venture NOI	57		6,295		—		—		—		6,352
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	61,909		48,422		(6,375)		6,249		(232,105)		(121,900)		Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	59,696		58,412		(13,015)		8,429		(55,193)		58,329
Income tax benefit (expense)	Income tax benefit (expense)	0		0		0		0		(8)		(8)		Income tax benefit (expense)	—		—		—		—		649		649
Equity income (loss) from unconsolidated joint ventures	Equity income (loss) from unconsolidated joint ventures	(93)		192		0		1,224		0		1,323		Equity income (loss) from unconsolidated joint ventures	630		220		845		632		—		2,327

Income (loss) from continuing operations	Income (loss) from continuing operations	61,816		48,614		(6,375)		7,473		(232,113)		(120,585)		Income (loss) from continuing operations	60,326		58,632		(12,170)		9,061		(54,544)		61,305
Income (loss) from discontinued operations	Income (loss) from discontinued operations	0		0		0		0		270,008		270,008		Income (loss) from discontinued operations	—		—		—		—		601		601
Net income (loss)	Net income (loss)	$	61,816	$	48,614	$	(6,375)	$	7,473	$	37,895	$	149,423	Net income (loss)	$	60,326	$	58,632	$	(12,170)	$	9,061	$	(53,943)	$	61,906

(1)Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the Consolidated Statements of ~~Operations.~~Operations (see Note 2).

(2)Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, and termination fees. Includes the Company’s share of income (loss) generated by unconsolidated joint ventures and excludes noncontrolling interests’ share of income (loss) generated by consolidated joint ventures.

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For the three months ended ~~March 31,~~September 30, 2020:


		Life Science		Medical Office		CCRC		Other Non-reportable		Corporate Non-segment		Total			Life Science		Medical Office		CCRC		Other Non-reportable		Corporate Non-segment		Total
Total revenues	Total revenues	$	128,883	$	156,641	$	91,780	$	3,750	$	0	$	381,054	Total revenues	$	148,702	$	155,381	$	115,031	$	4,451	$	—	$	423,565
Government grant income(1)														Government grant income(1)	—		—		1,761		—		—		1,761
Less: Interest income														Less: Interest income	—		—		—		(4,443)		—		(4,443)
Healthpeak’s share of unconsolidated joint venture total revenues														Healthpeak’s share of unconsolidated joint venture total revenues	—		699		4,295		17,853		—		22,847
Healthpeak’s share of unconsolidated joint venture government grant income														Healthpeak’s share of unconsolidated joint venture government grant income	—		—		246		49		—		295
Noncontrolling interests’ share of consolidated joint venture total revenues														Noncontrolling interests’ share of consolidated joint venture total revenues	(66)		(8,788)		—		—		—		(8,854)
Operating expenses														Operating expenses	(36,714)		(51,435)		(94,992)		—		—		(183,141)
Healthpeak’s share of unconsolidated joint venture operating expenses														Healthpeak’s share of unconsolidated joint venture operating expenses	—		(296)		(4,797)		(13,485)		—		(18,578)
Noncontrolling interests’ share of consolidated joint venture operating expenses														Noncontrolling interests’ share of consolidated joint venture operating expenses	18		2,630		—		—		—		2,648

Less: Interest income		0		0		0		(3,688)		0		(3,688)
Healthpeak's share of unconsolidated joint venture total revenues		0		695		21,647		20,194		0		42,536
Noncontrolling interests' share of consolidated joint venture total revenues		(52)		(8,640)		0		0		0		(8,692)
Operating expenses		(30,201)		(50,694)		(156,482)		0		0		(237,377)
Healthpeak's share of unconsolidated joint venture operating expenses		0		(275)		(18,037)		(13,278)		0		(31,590)
Noncontrolling interests' share of consolidated joint venture operating expenses		17		2,600		0		0		0		2,617

Adjustments to NOI(1)		(4,280)		(994)		91,561		(48)		0		86,239
Adjustments to NOI(2)														Adjustments to NOI(2)	(8,330)		(1,729)		1,684		63		—		(8,312)
Adjusted NOI	Adjusted NOI	94,367		99,333		30,469		6,930		0		231,099		Adjusted NOI	103,610		96,462		23,228		4,488		—		227,788
Plus: Adjustments to NOI(1)		4,280		994		(91,561)		48		0		(86,239)
Plus: Adjustments to NOI(2)														Plus: Adjustments to NOI(2)	8,330		1,729		(1,684)		(63)		—		8,312
Interest income	Interest income	0		0		0		3,688		0		3,688		Interest income	—		—		—		4,443		—		4,443
Interest expense	Interest expense	(63)		(102)		(1,304)		0		(54,222)		(55,691)		Interest expense	(57)		(100)		(1,983)		—		(51,594)		(53,734)
Depreciation and amortization	Depreciation and amortization	(50,211)		(54,667)		(20,229)		(5)		0		(125,112)		Depreciation and amortization	(57,170)		(54,693)		(30,106)		(2)		—		(141,971)
General and administrative	General and administrative	0		0		0		0		(22,349)		(22,349)		General and administrative	—		—		—		—		(21,661)		(21,661)
Transaction costs	Transaction costs	0		0		(14,474)		(89)		0		(14,563)		Transaction costs	(79)		—		(1,897)		(8)		—		(1,984)
Impairments and loan loss reserves	Impairments and loan loss reserves	0		(2,706)		0		(8,401)		0		(11,107)		Impairments and loan loss reserves	—		(1,208)		—		2,985		—		1,777
Gain (loss) on sales of real estate, net	Gain (loss) on sales of real estate, net	0		2,109		0		(40)		0		2,069		Gain (loss) on sales of real estate, net	—		2,283		—		—		—		2,283
Gain (loss) on debt extinguishments	Gain (loss) on debt extinguishments	0		0		0		0		833		833		Gain (loss) on debt extinguishments	—		—		—		—		(17,921)		(17,921)
Other income (expense), net	Other income (expense), net	0		0		170,332		41,707		(1,386)		210,653		Other income (expense), net	—		—		3,903		—		2,841		6,744
Less: Healthpeak's share of unconsolidated joint venture NOI		0		(420)		(3,610)		(6,916)		0		(10,946)
Plus: Noncontrolling interests' share of consolidated joint venture NOI		35		6,040		0		0		0		6,075
Less: Government grant income														Less: Government grant income	—		—		(1,761)		—		—		(1,761)
Less: Healthpeak’s share of unconsolidated joint venture NOI														Less: Healthpeak’s share of unconsolidated joint venture NOI	—		(403)		256		(4,417)		—		(4,564)
Plus: Noncontrolling interests’ share of consolidated joint venture NOI														Plus: Noncontrolling interests’ share of consolidated joint venture NOI	48		6,158		—		—		—		6,206
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	48,408		50,581		69,623		36,922		(77,124)		128,410		Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	54,682		50,228		(10,044)		7,426		(88,335)		13,957
Income tax benefit (expense)(2)		0		0		0		0		29,868		29,868
Income tax benefit (expense)(3)														Income tax benefit (expense)(3)	—		—		—		—		(22,970)		(22,970)
Equity income (loss) from unconsolidated joint ventures	Equity income (loss) from unconsolidated joint ventures	0		197		(1,880)		(9,463)		0		(11,146)		Equity income (loss) from unconsolidated joint ventures	—		198		(322)		(18,625)		—		(18,749)

Income (loss) from continuing operations	Income (loss) from continuing operations	48,408		50,778		67,743		27,459		(47,256)		147,132		Income (loss) from continuing operations	54,682		50,426		(10,366)		(11,199)		(111,305)		(27,762)
Income (loss) from discontinued operations	Income (loss) from discontinued operations	0		0		0		0		135,408		135,408		Income (loss) from discontinued operations	—		—		—		—		(31,819)		(31,819)
Net income (loss)	Net income (loss)	$	48,408	$	50,778	$	67,743	$	27,459	$	88,152	$	282,540	Net income (loss)	$	54,682	$	50,426	$	(10,366)	$	(11,199)	$	(143,124)	$	(59,581)

______________________________________________________________________________

(1)Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the Consolidated Statements of Operations (see Note 2).

~~(2)~~(3)Income tax benefit (expense) for the ~~quarter~~three months ended ~~March 31,~~September 30, 2020 includes a $31 million income tax expense related to the valuation allowance on deferred tax assets that are no longer expected to be realized (see Note 5).

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For the nine months ended September 30, 2021:


	Life Science		Medical Office		CCRC		Other Non-reportable		Corporate Non-segment		Total
Total revenues	$	531,674	$	496,978	$	352,458	$	31,869	$	—	$	1,412,979
Government grant income(1)	—		—		1,412		—		—		1,412
Less: Interest income	—		—		—		(31,869)		—		(31,869)
Healthpeak’s share of unconsolidated joint venture total revenues	4,270		2,162		6,903		50,602		—		63,937
Healthpeak’s share of unconsolidated joint venture government grant income	—		—		200		810		—		1,010
Noncontrolling interests’ share of consolidated joint venture total revenues	(222)		(26,704)		—		—		—		(26,926)
Operating expenses	(125,108)		(164,198)		(284,739)		13		—		(574,032)
Healthpeak’s share of unconsolidated joint venture operating expenses	(1,316)		(915)		(6,985)		(38,496)		—		(47,712)
Noncontrolling interests’ share of consolidated joint venture operating expenses	66		7,714		—		—		—		7,780

Adjustments to NOI(2)	(35,197)		(7,553)		1,971		(15)		—		(40,794)
Adjusted NOI	374,167		307,484		71,220		12,914		—		765,785
Plus: Adjustments to NOI(2)	35,197		7,553		(1,971)		15		—		40,794
Interest income	—		—		—		31,869		—		31,869
Interest expense	(196)		(1,985)		(5,778)		—		(113,470)		(121,429)
Depreciation and amortization	(224,958)		(187,512)		(93,702)		—		—		(506,172)
General and administrative	—		—		—		—		(72,260)		(72,260)
Transaction costs	(11)		(295)		(1,090)		(21)		—		(1,417)
Impairments and loan loss reserves	—		(1,952)		—		(2,506)		—		(4,458)
Gain (loss) on sales of real estate, net	—		189,873		—		—		—		189,873
Gain (loss) on debt extinguishments	—		—		—		—		(225,824)		(225,824)
Other income (expense), net	54		(2,483)		2,456		482		5,095		5,604
Less: Government grant income	—		—		(1,412)		—		—		(1,412)
Less: Healthpeak’s share of unconsolidated joint venture NOI	(2,954)		(1,247)		(118)		(12,916)		—		(17,235)
Plus: Noncontrolling interests’ share of consolidated joint venture NOI	156		18,990		—		—		—		19,146
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	181,455		328,426		(30,395)		29,837		(406,459)		102,864
Income tax benefit (expense)	—		—		—		—		1,404		1,404
Equity income (loss) from unconsolidated joint ventures	648		549		1,484		1,836		—		4,517

Income (loss) from continuing operations	182,103		328,975		(28,911)		31,673		(405,055)		108,785
Income (loss) from discontinued operations	—		—		—		—		384,569		384,569
Net income (loss)	$	182,103	$	328,975	$	(28,911)	$	31,673	$	(20,486)	$	493,354

______________________________________________________________________________

(1)Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the Consolidated Statements of Operations (see Note 2).

Table of Contents

For the nine months ended September 30, 2020:


	Life Science		Medical Office		CCRC		Other Non-reportable		Corporate Non-segment		Total
Total revenues	$	416,081	$	463,866	$	320,737	$	12,494	$	—	$	1,213,178
Government grant income(1)	—		—		13,632		—		—		13,632
Less: Interest income	—		—		—		(12,361)		—		(12,361)
Healthpeak’s share of unconsolidated joint venture total revenues	—		2,085		30,723		56,729		—		89,537
Healthpeak’s share of unconsolidated joint venture government grant income	—		—		780		319		—		1,099
Noncontrolling interests’ share of consolidated joint venture total revenues	(175)		(25,775)		—		—		—		(25,950)
Operating expenses	(101,120)		(151,484)		(345,722)		—		—		(598,326)
Healthpeak’s share of unconsolidated joint venture operating expenses	—		(846)		(27,660)		(40,444)		—		(68,950)
Noncontrolling interests’ share of consolidated joint venture operating expenses	53		7,737		—		—		—		7,790

Adjustments to NOI(2)	(15,389)		(3,188)		93,263		114		—		74,800
Adjusted NOI	299,450		292,395		85,753		16,851		—		694,449
Plus: Adjustments to NOI(2)	15,389		3,188		(93,263)		(114)		—		(74,800)
Interest income	—		—		—		12,361		—		12,361
Interest expense	(180)		(302)		(5,256)		—		(158,510)		(164,248)
Depreciation and amortization	(159,737)		(165,265)		(81,760)		(12)		—		(406,774)
General and administrative	—		—		—		—		(67,730)		(67,730)
Transaction costs	(80)		—		(16,739)		(101)		—		(16,920)
Impairments and loan loss reserves	—		(6,033)		—		(10,134)		—		(16,167)
Gain (loss) on sales of real estate, net	—		85,676		—		(40)		—		85,636
Gain (loss) on debt extinguishments	—		—		—		—		(42,912)		(42,912)
Other income (expense), net	—		—		188,377		41,707		4,728		234,812
Less: Government grant income	—		—		(13,632)		—		—		(13,632)
Less: Healthpeak’s share of unconsolidated joint venture NOI	—		(1,239)		(3,843)		(16,604)		—		(21,686)
Plus: Noncontrolling interests’ share of consolidated joint venture NOI	122		18,038		—		—		—		18,160
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	154,964		226,458		59,637		43,914		(264,424)		220,549
Income tax benefit (expense)(3)	—		—		—		—		6,792		6,792
Equity income (loss) from unconsolidated joint ventures	—		604		(1,801)		(46,433)		—		(47,630)

Income (loss) from continuing operations	154,964		227,062		57,836		(2,519)		(257,632)		179,711
Income (loss) from discontinued operations	—		—		—		—		98,297		98,297
Net income (loss)	$	154,964	$	227,062	$	57,836	$	(2,519)	$	(159,335)	$	278,008

______________________________________________________________________________

(1)Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the Consolidated Statements of Operations (see Note 2).

(3)Income tax benefit (expense) for the nine months ended September 30, 2020 includes: (i) a ~~$52~~$51 million tax benefit recognized in conjunction with internal restructuring activities, which resulted in the transfer of assets subject to certain deferred tax liabilities from taxable REIT subsidiaries to the REIT in connection with the 2019 MTCA (see Note 3) ~~and~~, (ii) a ~~$2.9~~$31 million income tax expense related to the valuation allowance on deferred tax assets that are no longer expected to be realized (see Note 5), and (iii) a $3.6 million net tax benefit recognized due to changes under the CARES Act, which resulted in net operating losses being utilized at a higher income tax rate than previously available.

Table of Contents

The following table summarizes the Company’s revenues by segment (in thousands):


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
Segment	Segment	2021		2020			Segment	2021		2020		2021		2020

Life science	Life science	$	169,934	$	128,883		Life science	$	184,213	$	148,702	$	531,674	$	416,081
Medical office	Medical office	160,201		156,641			Medical office	171,482		155,381		496,978		463,866
CCRC	CCRC	116,128		91,780			CCRC	119,022		115,031		352,458		320,737
Other non-reportable	Other non-reportable	9,013		3,750			Other non-reportable	6,748		4,451		31,869		12,494
Total revenues	Total revenues	$	455,276	$	381,054		Total revenues	$	481,465	$	423,565	$	1,412,979	$	1,213,178

See Notes 3, 4, and 5 for significant transactions impacting the Company’s segment assets during the periods presented.

~~Table of Contents~~

NOTE 15. Supplemental Cash Flow Information

The following table provides supplemental cash flow information (in thousands):


		Three Months Ended March 31,					Nine Months Ended September 30,
		2021		2020			2021		2020
Supplemental cash flow information:	Supplemental cash flow information:					Supplemental cash flow information:
Interest paid, net of capitalized interest	Interest paid, net of capitalized interest	$	90,032	$	71,621	Interest paid, net of capitalized interest	$	167,062	$	187,569
Income taxes paid (refunded)	Income taxes paid (refunded)	2,521		(1,673)		Income taxes paid (refunded)	4,258		261
Capitalized interest	Capitalized interest	5,453		6,970		Capitalized interest	17,022		20,570
Supplemental schedule of non-cash investing and financing activities:	Supplemental schedule of non-cash investing and financing activities:					Supplemental schedule of non-cash investing and financing activities:
Accrued construction costs	Accrued construction costs	107,798		126,185		Accrued construction costs	150,204		114,979
Vesting of restricted stock units and conversion of non-managing member units into common stock	Vesting of restricted stock units and conversion of non-managing member units into common stock	838		1,077		Vesting of restricted stock units and conversion of non-managing member units into common stock	907		4,729
Net noncash impact from the consolidation of previously unconsolidated joint ventures	Net noncash impact from the consolidation of previously unconsolidated joint ventures	0		323,138		Net noncash impact from the consolidation of previously unconsolidated joint ventures	—		323,138
Mortgages assumed with real estate acquisitions	Mortgages assumed with real estate acquisitions	0		215,335		Mortgages assumed with real estate acquisitions	—		215,335
Carrying value of mortgages assumed by buyer in real estate dispositions						Carrying value of mortgages assumed by buyer in real estate dispositions	143,676		—
Refundable entrance fees assumed with real estate acquisitions	Refundable entrance fees assumed with real estate acquisitions	0		307,954		Refundable entrance fees assumed with real estate acquisitions	—		307,954
Seller financing provided on disposition of real estate asset	Seller financing provided on disposition of real estate asset	559,745		0		Seller financing provided on disposition of real estate asset	559,745		12,480
Increase in ROU asset in exchange for new lease liability related to operating leases						Increase in ROU asset in exchange for new lease liability related to operating leases	15,329		24,984
Decrease in ROU asset with corresponding change in lease liability related to operating leases						Decrease in ROU asset with corresponding change in lease liability related to operating leases	8,410		—

See Note 3 for a discussion of the impact of the 2019 MTCA with Brookdale on the Company’s ~~consolidated balance sheets~~Consolidated Balance Sheets and statements of operations.

The following table summarizes certain cash flow information related to assets classified as discontinued operations (in thousands):


		Three Months Ended March 31,					Nine Months Ended September 30,
		2021		2020			2021		2020
Depreciation and amortization of real estate, in-place lease, and other intangibles	Depreciation and amortization of real estate, in-place lease, and other intangibles	$	0	$	64,164	Depreciation and amortization of real estate, in-place lease, and other intangibles	$	—	$	134,620
Development, redevelopment, and other major improvements of real estate	Development, redevelopment, and other major improvements of real estate	3,861		11,252		Development, redevelopment, and other major improvements of real estate	5,361		26,879
Leasing costs, tenant improvements, and recurring capital expenditures	Leasing costs, tenant improvements, and recurring capital expenditures	1,873		3,427		Leasing costs, tenant improvements, and recurring capital expenditures	2,609		9,137

Table of Contents

The following table summarizes cash, cash equivalents and restricted cash (in thousands):

Three Months Ended March 31,
2021 2020 2021 2020 2021 2020
Continuing operations Discontinued operations Total
Beginning of period:
Cash and cash equivalents $ 44,226 $ 80,398 $ 53,085 $ 63,834 $ 97,311 $ 144,232
Restricted cash 67,206 13,385 17,168 27,040 84,374 40,425
Cash, cash equivalents and restricted cash $ 111,432 $ 93,783 $ 70,253 $ 90,874 $ 181,685 $ 184,657
End of period:
Cash and cash equivalents $ 34,007 $ 716,750 $ 40,161 $ 66,791 $ 74,168 $ 783,541
Restricted cash 68,033 84,982 5,817 21,576 73,850 106,558
Cash, cash equivalents and restricted cash $ 102,040 $ 801,732 $ 45,978 $ 88,367 $ 148,018 $ 890,099


	Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020
	Continuing operations				Discontinued operations				Total
Beginning of period:
Cash and cash equivalents	$	44,226	$	80,398	$	53,085	$	63,834	$	97,311	$	144,232
Restricted cash	67,206		13,385		17,168		27,040		84,374		40,425
Cash, cash equivalents and restricted cash	$	111,432	$	93,783	$	70,253	$	90,874	$	181,685	$	184,657
End of period:
Cash and cash equivalents	$	201,099	$	139,797	$	14,005	$	57,322	$	215,104	$	197,119
Restricted cash	53,699		83,156		3		19,263		53,702		102,419
Cash, cash equivalents and restricted cash	$	254,798	$	222,953	$	14,008	$	76,585	$	268,806	$	299,538

~~Table of Contents~~

NOTE 16. Variable Interest Entities

Unconsolidated Variable Interest Entities

At ~~March~~September 30, 2021, the Company had investments in: (i) 1 unconsolidated VIE joint venture and (ii) marketable debt securities of 1 VIE. At December 31, ~~2021,~~2020, the Company had investments in: (i) 2 properties leased to a VIE tenant, (ii) 4 unconsolidated VIE joint ventures, (iii) marketable debt securities of 1 VIE, and (iv) 1 loan to a VIE borrower. The Company determined it is not the primary beneficiary of and therefore does not consolidate these VIEs because it does not have the ability to control the activities that most significantly impact their economic performance. Except for the Company’s equity interest in the unconsolidated joint ventures ~~(CCRC OpCo, development investments, and the~~(the LLC investment discussed below), it has no formal involvement in these VIEs beyond its investments.

VIE Tenant. ~~The~~As ofDecember 31, 2020, the Company ~~leases~~leased 2 properties to 1 tenant that ~~has been~~was identified as a VIE ~~(“VIE~~(the “VIE tenant”). The VIE tenant iswas a “thinly capitalized” entity that ~~relies~~relied on the operating cash flows generated from the senior housing facilities to pay operating expenses, including the rent obligations under its leases. In June 2021, the Company sold these 2 properties as part of the Sunrise Senior Housing Portfolio (see Note 5).

CCRC OpCo.~~The~~ As of December 31, 2020, the Company ~~holds~~held a 49% ownership interest in CCRC OpCo, a joint venture entity formed in August 2014 that ~~operates~~operated senior housing properties ~~in a RIDEA structure~~ and ~~has~~had been identified as a VIE. The equity members of CCRC OpCo ~~“lack~~“lacked power” because they ~~share~~shared certain operating rights with Brookdale, as manager of the CCRCs. The assets of CCRC OpCo primarily ~~consist~~consisted of the CCRCs that it ~~owns~~owned and ~~leases,~~leased, resident fees receivable, notes receivable, and cash and cash equivalents; its obligations primarily ~~consist~~consisted of operating lease obligations to CCRC PropCo, debt service payments, capital expenditures, accounts payable, and expense accruals. Assets generated by the operations of CCRC OpCo (primarily rents from CCRC residents) of CCRC OpCo may only be used to settle its contractual obligations (primarily from debt service payments, capital expenditures, and rental costs and operating expenses incurred to manage such facilities). Refer to Note 3 for additional discussion related to transactions impacting CCRC OpCo. In May 2021, the CCRC JV sold the 2 remaining CCRCs.

LLC Investment. The Company holds a limited partner ownership interest in an unconsolidated LLC that has been identified as a VIE. The Company’s involvement in the entity is limited to its equity investment as a limited partner and it does not have any substantive participating rights or kick-out rights over the general partner. The assets and liabilities of the entity primarily consist of those associated with its senior housing real estate and development activities. Any assets generated by the entity may only be used to settle its contractual obligations (primarily development expenses and debt service payments).

Development Investments. ~~The~~As ofDecember 31, 2020, the Company ~~holds~~held investments (consisting of mezzanine debt and/or preferred equity) in 2 senior housing development joint ventures. The joint ventures ~~are~~were also capitalized by senior loans from a third party and equity from the third party managing-member, but ~~are~~were considered to be “thinly capitalized” as there iswas insufficient equity investment at risk. In April 2021, the Company sold 2 mezzanine loans and 2 preferred equity investments as part of the Discovery SHOP Portfolio disposition (see Note 5).

Debt Securities Investment. The Company holds commercial mortgage-backed securities (“CMBS”) issued by Federal Home Loan Mortgage Corporation (commonly referred to as Freddie MAC) through a special purpose entity that has been identified as a VIE because it is “thinly capitalized.” The CMBS issued by the VIE are backed by mortgage debt obligations on real estate assets. These securities are classified as held-to-maturity because the Company has the intent and ability to hold the securities until maturity.

~~Seller Financing Loan.~~Table of Contents

Loan Receivable. The Company provided seller financing related to its sale of 7 senior housing triple-net facilities. The financing was provided in the form of a secured ~~five–year~~five-year mezzanine loan to a “thinly capitalized” borrower created to acquire the facilities. In September 2021, the Company sold this loan receivable (see Note 7).

~~Table of Contents~~

The classification of the related assets and liabilities and the maximum loss exposure as a result of the Company’s involvement with these VIEs at ~~March 31,~~September 30, 2021 was as follows (in thousands):

VIE Type

~~Asset/Liability~~Asset Type

Maximum Loss

Exposure

and Carrying

Amount(1)

Continuing operations:

~~Loans receivable and unconsolidated joint ventures~~

~~Loans receivable, net and Investments in unconsolidated joint ventures~~

~~21,970~~

~~Loan - seller financing~~

~~Loans receivable, net~~

~~1,865~~

CMBS and LLC investment

~~Marketable debt and LLC investment~~Other assets, net

~~35,610~~$

36,088

~~Discontinued operations:~~

~~VIE tenant - operating leases(2)~~

~~Lease intangibles, net and straight-line rent receivables~~

(1)The Company’s maximum loss exposure represents the aggregate carrying amount of such investments (including accrued interest).

~~(2)The Company’s maximum loss exposure may be mitigated by re-leasing the underlying properties to new tenants upon an event of default.~~

As of ~~March 31,~~September 30, 2021, the Company had not provided, and is not required to provide, financial support through a liquidity arrangement or otherwise, to its unconsolidated VIEs, including under circumstances in which it could be exposed to further losses (e.g., cash shortfalls).

See Notes 3, 7, and 8 for additional descriptions of the nature, purpose, and operating activities of the Company’s unconsolidated VIEs and interests therein.

Consolidated Variable Interest Entities

The Company’s consolidated total assets and total liabilities at ~~March 31,~~September 30, 2021 and December 31, 2020 include certain assets of VIEs that can only be used to settle the liabilities of the related VIE. The VIE creditors do not have recourse to the Company.

Ventures V, LLC. The Company holds a 51% ownership interest in and is the managing member of a joint venture entity formed in October 2015 that owns and leases MOBs (“Ventures V”). The Company classifies Ventures V as a VIE due to the non-managing member lacking substantive participation rights in the management of Ventures V or kick-out rights over the managing member. The Company consolidates Ventures V as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of Ventures V primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of capital expenditures for the properties. Assets generated by Ventures V may only be used to settle its contractual obligations (primarily from capital expenditures).

Life Science JVs. The Company holds a 99% ownership interest in multiple joint venture entities that own and lease life science assets (the “Life Science JVs”). The Life Science JVs are VIEs as the members share in control of the entities, but substantially all of the activities are performed on behalf of the Company. The Company consolidates the Life Science JVs as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the Life Science JVs primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the Life Science JVs may only be used to settle their contractual obligations (primarily from capital expenditures). Refer to Note 12 for a discussion of certain put options associated with the Life Science JVs.

MSREI MOB JV. The Company holds a 51% ownership interest in, and is the managing member of, a joint venture entity formed in August 2018 that owns and leases MOBs (the “MSREI JV”). The MSREI JV is a VIE due to the non-managing member lacking substantive participation rights in the management of the joint venture or kick-out rights over the managing member. The Company consolidates the MSREI JV as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of the MSREI JV primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of capital expenditures for the properties. Assets generated by the MSREI JV may only be used to settle its contractual obligations (primarily from capital expenditures).

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Consolidated Lessees. ~~The~~As of December 31, 2020, the Company ~~leases 4~~leased7 senior housing properties to lessee entities under cash flow leases through which the Company ~~receives~~received monthly rent equal to the residual cash flows of the properties. The lessee entities ~~are~~were classified as VIEs as they ~~are~~were "thinly capitalized" entities. The Company ~~consolidates~~consolidated the lessee entities as it ~~has~~had the ability to control the activities that most significantly ~~impact~~impacted the economic performance of the lessee entities. The lessee entities’ assets primarily ~~consist~~consisted of leasehold interests in senior housing facilities (operating leases), resident fees receivable, and cash and cash equivalents; its obligations primarily ~~consist~~consisted of lease payments to the Company and operating expenses of the senior housing facilities (accounts payable and accrued expenses). Assets generated by the senior housing operations (primarily from senior housing resident rents) ~~may~~could only be used to settle contractual obligations (primarily from the rental costs, operating expenses incurred to manage such facility and debt costs). During the nine months ended September 30, 2021, the Company sold these 7 senior housing properties.

DownREITs. The Company holds a controlling ownership interest in and is the managing member of 7 DownREITs. The Company classifies the DownREITs as VIEs due to the non-managing members lacking substantive participation rights in the management of the DownREITs or kick-out rights over the managing member. The Company consolidates the DownREITs as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the DownREITs primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the DownREITs (primarily from resident rents) may only be used to settle their contractual obligations (primarily from debt service and capital expenditures).

Other Consolidated Real Estate Partnerships. The Company holds a controlling ownership interest in and is the general partner (or managing member) of multiple partnerships that own and lease real estate assets (the “Partnerships”). The Company classifies the Partnerships as VIEs due to the limited partners (non-managing members) lacking substantive participation rights in the management of the Partnerships or kick-out rights over the general partner (managing member). The Company consolidates the Partnerships as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the Partnerships primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the Partnerships (primarily from resident rents) may only be used to settle their contractual obligations (primarily from debt service and capital expenditures).

Exchange Accommodation Titleholder. During the year ended December 31, 2020, the Company acquired 7 MOBs, 1 hospital, and 3 life science ~~facility~~facilities (the ~~"acquired property"~~“acquired properties”) using a reverse like-kind exchange ~~structure~~structures pursuant to Section 1031 of the Code (a ~~"reverse~~“reverse 1031 ~~exchange"~~exchange”) ~~and as~~. As of ~~March~~December 31, ~~2021,~~2020, the Company had not completed the reverse 1031 ~~exchange. As~~exchanges and as such, the acquired ~~property~~properties remained in the possession of an Exchange Accommodation ~~Titleholder ("EAT"~~Titleholders (“EATs”) ~~as of March 31, 2021.~~. The ~~EAT is~~EATs were classified as ~~a VIE~~VIEs as ~~it is a~~they were “thinly capitalized” ~~entity.~~entities. The Company ~~consolidates~~consolidated the ~~EAT~~EATs because it ~~has~~had the ability to control the activities that most significantly ~~impact~~impacted the economic performance of the ~~EAT~~EATs and ~~is,~~was, therefore, the primary beneficiary of the ~~EAT.~~EATs. The ~~property~~properties held by the ~~EAT is~~EATs were reflected as real estate with a carrying value of $~~417~~813 million as of ~~March~~December 31, ~~2021.~~2020. The assets of the ~~EAT~~EATs primarily ~~consist~~consisted of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily ~~consist~~consisted of capital expenditures for the properties. Assets generated by the ~~EAT~~EATs may only be used to settle its contractual obligations (primarily from capital expenditures). The reverse 1031 exchanges described above were completed during the three months ended June 30, 2021. Therefore, as of September 30, 2021, no properties remained in possession of an EAT.

In October 2021, the Company acquired 2 MOBs in reverse 1031 exchange structures. As of November 1, 2021, the Company had not completed the reverse 1031 exchanges and as such, the acquired properties remain in the possession of EATs and are classified as VIEs.

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Total assets and total liabilities include VIE assets and liabilities as follows (in thousands):

March 31,
2021 December 31,
2020
Assets
Buildings and improvements $ 2,487,025 $ 2,988,599
Development costs and construction in progress 48,600 85,595
Land 341,842 433,574
Accumulated depreciation and amortization (533,328) (602,491)
Net real estate 2,344,139 2,905,277
Accounts receivable, net 5,095 12,009
Cash and cash equivalents 16,464 16,550
Restricted cash 6 7,977
Intangible assets, net 89,692 179,027
Assets held for sale and discontinued operations, net 698,318 704,966
Right-of-use asset, net 89,017 95,407
Other assets, net 61,470 59,063
Total assets $ 3,304,201 $ 3,980,276
Liabilities
Mortgage debt 4,537 39,085
Intangible liabilities, net 33,714 56,467
Liabilities related to assets held for sale and discontinued operations, net 186,562 190,919
Lease liability 90,397 97,605
Accounts payable, accrued liabilities, and other liabilities 53,438 102,391
Deferred revenue 31,279 90,183
Total liabilities $ 399,927 $ 576,650

~~Table of Contents~~


	September 30, 2021		December 31, 2020
Assets
Buildings and improvements	$	2,419,928	$	2,988,599
Development costs and construction in progress	62,400		85,595
Land	459,425		433,574
Accumulated depreciation and amortization	(541,890)		(602,491)
Net real estate	2,399,863		2,905,277

Accounts receivable, net	7,950		12,009
Cash and cash equivalents	31,670		16,550
Restricted cash	86		7,977
Intangible assets, net	117,073		179,027
Assets held for sale and discontinued operations, net	3,480		704,966
Right-of-use asset, net	107,492		95,407
Other assets, net	67,268		59,063
Total assets	$	2,734,882	$	3,980,276
Liabilities
Mortgage debt	$	144,333	$	39,085

Intangible liabilities, net	24,863		56,467
Liabilities related to assets held for sale and discontinued operations, net	3,032		190,919
Lease liability	98,042		97,605
Accounts payable, accrued liabilities, and other liabilities	58,025		102,391
Deferred revenue	33,474		90,183
Total liabilities	$	361,769	$	576,650

Total assets and liabilities related to assets held for sale and discontinued operations include VIE assets and liabilities as follows (in thousands):


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Assets	Assets					Assets
Buildings and improvements	Buildings and improvements	$	633,243	$	639,759	Buildings and improvements	$	—	$	639,759
Development costs and construction in progress	Development costs and construction in progress	103		68		Development costs and construction in progress	—		68
Land	Land	105,769		106,209		Land	—		106,209
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(55,021)		(57,235)		Accumulated depreciation and amortization	—		(57,235)
Net real estate	Net real estate	684,094		688,801		Net real estate	—		688,801
Accounts receivable, net	Accounts receivable, net	1,885		1,700		Accounts receivable, net	1,298		1,700
Cash and cash equivalents	Cash and cash equivalents	6,516		6,306		Cash and cash equivalents	1,419		6,306
Restricted cash	Restricted cash	1,388		3,124		Restricted cash	—		3,124

Right-of-use asset, net	Right-of-use asset, net	1,387		1,391		Right-of-use asset, net	—		1,391
Other assets, net	Other assets, net	3,048		3,644		Other assets, net	763		3,644
Total assets	Total assets	$	698,318	$	704,966	Total assets	$	3,480	$	704,966
Liabilities	Liabilities					Liabilities
Mortgage debt	Mortgage debt	$	171,085	$	176,702	Mortgage debt	$	—	$	176,702

Lease liability	Lease liability	1,387		1,392		Lease liability	—		1,392
Accounts payable, accrued liabilities, and other liabilities	Accounts payable, accrued liabilities, and other liabilities	12,119		11,003		Accounts payable, accrued liabilities, and other liabilities	3,032		11,003
Deferred revenue	Deferred revenue	1,971		1,822		Deferred revenue	—		1,822
Total liabilities	Total liabilities	$	186,562	$	190,919	Total liabilities	$	3,032	$	190,919

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NOTE 17. Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis in the ~~consolidated balance sheets are~~Consolidated Balance Sheets were immaterial at ~~March 31,~~September 30, 2021 and December 31, 2020.

The table below summarizes the carrying amounts and fair values of the Company’s financial instruments (in thousands):


		March 31, 2021(3)				December 31, 2020(3)					September 30, 2021(3)				December 31, 2020(3)
		Carrying Value		Fair Value		Carrying Value		Fair Value			Carrying Value		Fair Value		Carrying Value		Fair Value
Loans receivable, net(2)	Loans receivable, net(2)	$	740,142	$	743,465	$	195,375	$	201,228	Loans receivable, net(2)	$	411,062	$	411,082	$	195,375	$	201,228
Marketable debt securities(2)	Marketable debt securities(2)	20,512		20,512		20,355		20,355		Marketable debt securities(2)	20,836		20,836		20,355		20,355
Interest rate cap assets(2)										Interest rate cap assets(2)	196		196		—		—

Bank line of credit and commercial paper(2)	Bank line of credit and commercial paper(2)	1,038,150		1,038,150		129,590		129,590		Bank line of credit and commercial paper(2)	1,024,000		1,024,000		129,590		129,590
Term loan(2)	Term loan(2)	249,243		249,243		249,182		249,182		Term loan(2)	—		—		249,182		249,182
Senior unsecured notes(1)	Senior unsecured notes(1)	4,255,697		4,664,075		5,697,586		6,517,650		Senior unsecured notes(1)	4,157,834		4,606,692		5,697,586		6,517,650
Mortgage debt(2)(4)	Mortgage debt(2)(4)	219,959		219,510		221,621		221,181		Mortgage debt(2)(4)	356,570		359,274		221,621		221,181

Interest-rate swap liabilities(2)		0		0		81		81
Interest rate swap liabilities(2)										Interest rate swap liabilities(2)	—		—		81		81

(1)Level 1: Fair value calculated based on quoted prices in active markets.

(2)Level 2: Fair value based on (i) for marketable debt securities, quoted prices for similar or identical instruments in active or inactive markets, respectively, or (ii) for loans receivable, net, mortgage debt, swaps, and ~~swaps,~~caps, standardized pricing models in which significant inputs or value drivers are observable in active markets. For bank line of credit, commercial paper, and term loan, the carrying values are a reasonable estimate of fair value because the borrowings are primarily based on market interest rates and the Company’s credit rating.

(3)During the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and year ended December 31, 2020, there were no material transfers of financial assets or liabilities within the fair value hierarchy.

(4)For the ~~three months ended March 31, 2021 and~~ year ended December 31, 2020, excludes mortgage debt on assets held for sale and discontinued operations of ~~$278 million and~~ $319 ~~million, respectively.~~million.

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NOTE 18. Derivative Financial Instruments

The Company uses derivative instruments to mitigate the effects of interest rate fluctuations on specific forecasted transactions as well as recognized financial obligations or assets. Utilizing derivative instruments allows the Company to manage the risk of fluctuations in interest rates related to the potential impact these changes could have on future earnings and forecasted cash flows. The Company does not use derivative instruments for speculative or trading purposes.

In March 2021, the Company repaid $39 million of variable rate secured debt on 2 SHOP assets ~~classified as discontinued operations as of March 31, 2021~~ and terminated the 2 remaining related ~~interest-rate~~interest rate swap contracts. Therefore, at ~~March 31,~~September 30, 2021, the Company had 0no remaining ~~interest-rate~~interest rate swap contracts.

In April 2021, the Company executed 2 interest rate cap agreements on its mortgage debt issued in conjunction with the acquisition of the MOB Portfolio (see Note 4). The following table summarizes the Company’s outstanding interest rate cap agreements as of September 30, 2021 (dollars in thousands):

Date Entered

Maturity Date

Hedge Designation

Notional

Strike Rate

Index

Fair Value(1)

Interest rate:

April 2021(2)

May 2024

Non-designated

142,100

2.00 %

1 mo. USD-LIBOR-BBA

196

_____________________________

(1)Derivative assets are recorded in other assets, net in the Consolidated Balance Sheets.

(2)Represents 2 interest rate cap agreements that manage the Company’s exposure to variable cash flows on certain mortgage debt borrowings by limiting interest rates.

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NOTE 19. Accounts Payable, Accrued Liabilities, and Other Liabilities

The following table summarizes the Company’s accounts payable, accrued liabilities, and other liabilities, excluding accounts payable, accrued liabilities, and other liabilities related to assets classified as discontinued operations (in thousands):


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Refundable entrance fees(1)	Refundable entrance fees(1)	$	311,410	$	317,444	Refundable entrance fees(1)	$	296,278	$	317,444
Construction related accrued liabilities		107,798		95,293
Accrued construction costs						Accrued construction costs	150,204		95,293
Accrued interest	Accrued interest	36,013		78,735		Accrued interest	31,313		78,735
Other accounts payable and accrued liabilities	Other accounts payable and accrued liabilities	241,819		271,919		Other accounts payable and accrued liabilities	252,144		269,145
Accounts payable, accrued liabilities, and other liabilities	Accounts payable, accrued liabilities, and other liabilities	$	697,040	$	763,391	Accounts payable, accrued liabilities, and other liabilities	$	729,939	$	760,617

(1)At September 30, 2021 and December 31, 2020, unamortized nonrefundable entrance fee liabilities were $491 million and $484 million, respectively, which are recorded within deferred revenue on the Consolidated Balance Sheets.

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

All references in this report to “Healthpeak,” the “Company,” “we,” “us” or “our” mean Healthpeak Properties, Inc., together with its consolidated subsidiaries. Unless the context suggests otherwise, references to “Healthpeak Properties, Inc.” mean the parent company without its subsidiaries.

Cautionary Language Regarding Forward-Looking Statements

Statements in this Quarterly Report on Form 10-Q that are not historical factual statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include, among other things, statements regarding our and our officers’ intent, belief or expectation as identified by the use of words such as “may,” “will,” “project,” “expect,” “believe,” “intend,” “anticipate,” “seek,” “target,” “forecast,” “plan,” “potential,” “estimate,” “could,” “would,” “should” and other comparable and derivative terms or the negatives thereof. Forward-looking statements reflect our current expectations and views about future events and are subject to risks and uncertainties that could cause actual results, including our future financial condition and results of operations, to differ materially from those expressed or implied by any forward-looking statements. You are urged to carefully review the disclosures we make concerning risks and uncertainties that may affect our business and future financial performance.

Forward-looking statements are based on certain assumptions and analysis made in light of our experience and perception of historical trends, current conditions and expected future developments as well as other factors that we believe are appropriate under the circumstances. While forward-looking statements reflect our good faith belief and assumptions we believe to be reasonable based upon current information, we can give no assurance that our expectations or forecasts will be attained. Further, we cannot guarantee the accuracy of any such forward-looking statement contained in this Quarterly Report.

As more fully set forth under Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, risks and uncertainties that may cause our actual results to differ materially from the expectations contained in the forward-looking statements include, among other things:

•the ~~COVID-19~~coronavirus (“COVID-19”) pandemic and health and safety measures intended to reduce its ~~spread;~~spread, the availability, effectiveness and public usage and acceptance of vaccines, and how quickly and to what extent normal economic and operating conditions can resume within the markets in which we operate;

•operational risks associated with third party management contracts, including the additional regulation and liabilities of our ~~RIDEA lease structures;~~properties operated through structures permitted by the Housing and Economic Recovery Act of 2008, which includes most of the provisions previously proposed in the REIT Investment Diversification and Empowerment Act of 2007 (commonly referred to as “RIDEA”);

•the ability of our existing and future tenants, operators and borrowers to conduct their respective businesses in a manner sufficient to maintain or increase their revenues and manage their expenses in order to generate sufficient income to make rent and loan payments to us and our ability to recover investments made, if applicable, in their operations;

•increased competition, operating costs and market changes affecting our tenants, operators and borrowers;

•the financial condition of our tenants, operators and borrowers, including potential bankruptcies and downturns in their businesses, and their legal and regulatory proceedings;

•our concentration of investments in the healthcare property sector, which makes us more vulnerable to a downturn in a specific sector than if we invested in multiple industries;

•our ability to identify replacement tenants and operators and the potential renovation costs and regulatory approvals associated therewith;

•our property development and redevelopment activity risks, including costs above original estimates, project delays and lower occupancy rates and rents than expected;

•changes within the life science industry;

•high levels of regulation, funding requirements, expense and uncertainty faced by our life science tenants;

•the ability of the hospitals on whose campuses our ~~MOBs~~medical office buildings (“MOBs”) are located and their affiliated healthcare systems to remain competitive or financially viable;

•our ability to maintain ~~our~~ or expand our hospital and health system client relationships;

•economic and other conditions that negatively affect geographic areas from which we recognize a greater percentage of our revenue;

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•uninsured or underinsured losses, which could result in significant losses and/or performance declines by us or our tenants and operators;

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•our investments in joint ventures and unconsolidated entities, including our lack of sole decision making authority and our reliance on our partners’ financial condition and continued cooperation;

•our use of contingent rent provisions and/or rent escalators based on the Consumer Price Index;

•competition for suitable healthcare properties to grow our investment portfolio;

•our ability to make material acquisitions and successfully integrate them;

•the potential impact on us and our tenants, operators and borrowers from litigation matters, including rising liability and insurance costs;

•our ability to foreclose on collateral securing our real estate-related loans;

•laws or regulations prohibiting eviction of our tenants;

•the failure of our tenants and operators to comply with federal, state and local laws and regulations, including resident health and safety ~~requirement,~~requirements, as well as licensure, certification and inspection requirements;

•required regulatory approvals to transfer our healthcare properties;

•compliance with the Americans with Disabilities Act and fire, safety and other health regulations;

•the requirements of, or changes to, governmental reimbursement programs such as Medicare or Medicaid;

•legislation to address federal government operations and administration decisions affecting the Centers for Medicare and Medicaid Services;

•our participation in the Coronavirus Aid, Relief, and Economic Security Act (“CARES ~~Act~~Act”) Provider Relief Program and other COVID-19 related stimulus and relief programs;

•volatility or uncertainty in the capital markets, the availability and cost of capital as impacted by interest rates, changes in our credit ratings and the value of our common stock, and other conditions that may adversely impact our ability to fund our obligations or consummate transactions, or reduce the earnings from potential transactions;

•cash available for distribution to stockholders and our ability to make dividend distributions at expected levels;

•our ability to manage our indebtedness level and covenants in and changes to the terms of such indebtedness;

•changes in global, national and local economic and other conditions;

•provisions of Maryland law and our charter that could prevent a transaction that may otherwise be in the interest of our stockholders;

•environmental compliance costs and liabilities associated with our ~~real-estate~~real estate investments;

•our ability to maintain our qualification as a real estate investment trust (“REIT”);

•changes to U.S. federal income tax laws, and potential deferred and contingent tax liabilities from corporate acquisitions;

•calculating non-REIT tax earnings and ~~profits;~~profits distributions;

•ownership limits in our charter that restrict ownership in our stock;

•our reliance on information technology systems and the potential impact of system failures, disruptions or breaches;

•unfavorable litigation resolution or disputes; and

•the loss or limited availability of our key personnel.

Except as required by law, we do not undertake, and hereby disclaim, any obligation to update any forward-looking statements, which speak only as of the date on which they are made.

~~COVID-19 Infection Information~~

Information related to the number of our senior housing facilities with confirmed resident COVID-19 cases was provided to us by our operators, but has not been independently verified by us. We have no reason to believe that this information is inaccurate in any material respect, but cannot assure you it is accurate.

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Overview

The information set forth in this Item 2 is intended to provide readers with an understanding of our financial condition, changes in financial condition and results of operations. We will discuss and provide our analysis in the following order:

•Executive Summary

•COVID-19 Update

•2021 Transaction Overview

•Dividends

•Results of Operations

•Liquidity and Capital Resources

•Contractual Obligations and Off-Balance Sheet Arrangements

•Non-GAAP Financial Measures Reconciliations

•Critical Accounting Policies and Recent Accounting Pronouncements

Executive Summary

Healthpeak Properties, Inc. is a Standard & Poor’s (“S&P”) 500 company that acquires, develops, owns, leases and manages healthcare real estate across the United States (“U.S.”). Our company was originally founded in 1985. We are a Maryland corporation and qualify as a self-administered REIT. In November 2020, we moved our corporate headquarters from Irvine, California to Denver, Colorado. With properties in nearly every state, the new headquarters provides a favorable mix of affordability and a centralized geographic location. ~~Our~~We also operate offices in Irvine, California and Franklin, ~~Tennessee offices will continue to operate.~~Tennessee.

During 2020, we began the process of disposing of our senior housing triple-net portfolio and senior housing operating ~~portfolio~~ (“SHOP”)~~. We have~~ portfolio. In September 2021, we successfully ~~disposed of a significant portion~~completed the disposition of both ~~portfolios and will continue that process during the remainder of 2021.~~portfolios. Refer to a discussion of recent ~~and upcoming~~ dispositions in “Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations—2021 Transaction Overview” ~~for the current status of transactions.~~. As of December 31, 2020, we concluded that the planned dispositions represented a strategic shift that has had and will have a major effect on our operations and financial results and, therefore, the assets are classified as discontinued operations in all periods presented ~~herein and prior~~herein. Prior periods have been recast to conform to the current period presentation. See Note 5 to the Consolidated Financial Statements for further information regarding discontinued operations.

In conjunction with the ~~planned~~ disposal of our senior housing triple-net and SHOP portfolios, we focused our strategy on investing in a diversified portfolio of high-quality healthcare properties across our three core asset classes of life science, medical office, and continuing care retirement community (“CCRC”) real estate. Under the life science and medical office segments, we invest through the acquisition, development and management of life science buildings, ~~medical office buildings (“MOBs”),~~MOBs, and hospitals. Under the CCRC segment, our properties are operated through structures permitted by the Housing and Economic Recovery Act of 2008, and includes most of the provisions previously proposed in the REIT Investment Diversification and Empowerment Act of 2007 (commonly referred to as “RIDEA”).RIDEA structures. We have other non-reportable segments that are comprised primarily of ~~the following investments: (i)~~debt investments and an interest in an unconsolidated joint venture that owns 19 senior housing ~~assets, (ii) debt investments, and (iii) two preferred equity investments.~~

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assets.

At ~~March 31,~~September 30, 2021, our portfolio of investments, including properties in our unconsolidated joint ventures and excluding investments classified as discontinued operations, consisted of interests in ~~463~~480 properties. The following table summarizes information for our reportable segments, excluding discontinued operations, for the three months ended ~~March 31,~~September 30, 2021 (dollars in thousands):


Segment	Segment	Total Portfolio Adjusted NOI(1)(2)		Percentage of Total Portfolio Adjusted NOI(1)		Number of Properties	Segment	Total Portfolio Adjusted NOI(1)(2)		Percentage of Total Portfolio Adjusted NOI(1)		Number of Properties
Life science	Life science	$	119,530	48	%	141	Life science	$	129,270	50	%	146
Medical office	Medical office	101,156		40	%	286	Medical office	103,563		40	%	300
CCRC	CCRC	26,221		10	%	17	CCRC	20,930		8	%	15
Other non-reportable	Other non-reportable	4,497		2	%	19	Other non-reportable	3,572		2	%	19
Totals	Totals	$	251,404	100	%	463	Totals	$	257,335	100	%	480

(1)Total Portfolio metrics include results of operations from disposed properties through the disposition date. See “Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for additional information regarding Adjusted NOI and see Note 14 to the Consolidated Financial Statements for a reconciliation of Adjusted NOI by segment to net income (loss).

(2)For the three months ended ~~March 31,~~September 30, 2021, Adjusted NOI for our senior housing triple-net and SHOP portfolios was $5$1 million and $8$(3) million, respectively. Operating results for these portfolios are reported as discontinued operations for all periods presented herein.

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For a description of our significant activities during 2021, see “Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations—2021 Transaction Overview” in this report.

We invest in and manage our real estate portfolio for the long-term to maximize benefit to our stockholders and support the growth of our dividends. Our strategy consists of four core elements:

(i)Our real estate: Our portfolio is grounded in high-quality properties in desirable locations. We focus on three purposely selected private pay asset classes, life science, medical office, and continuing care retirement community, to provide stability through inevitable market cycles.

(ii)Our financials: We maintain a strong investment-grade balance sheet with ample liquidity as well as long-term fixed-rate debt financing with staggered maturities to reduce our exposure to ~~interest-rate~~interest rate volatility and refinancing risk.

(iii)Our partnerships: We work with leading healthcare companies, operators and service providers and are responsive to their space and capital needs. We provide high-quality management services to encourage tenants to renew, expand and relocate into our properties, which drives increased occupancy, rental rates, and property values.

(iv)Our platform: We have a people-first culture that we believe attracts, develops and retains top talent. We continually strive to create and maintain an industry-leading platform, with systems and tools that allow us to effectively and efficiently manage our assets and investment activity.

COVID-19 Update

Global health concerns and increased efforts to reduce the spread of the Coronavirus (“COVID-19”) pandemic have prompted federal, state, and local governments to restrict normal daily activities, and have resulted in travel bans, quarantines, school closings, “shelter-in-place” orders requiring individuals to remain in their homes other than to conduct essential services or activities, as well as business limitations and shutdowns, which resulted in closure of many businesses deemed to be non-essential. Although most of these restrictions have since been lifted or scaled back, certain restrictions remain in place and any future surges of COVID-19 or its variants may lead to other restrictions being re-implemented in response to efforts to reduce the spread. In addition, ourOur tenants, operators, and borrowers have ~~faced~~experienced significant cost increases as a result of increased health and safety measures, ~~including~~staffing shortages, increased ~~staffing demands for patient care~~governmental regulation and ~~sanitation, as well as~~compliance, vaccine mandates, and other operational changes necessitated either directly or indirectly by the COVID-19 pandemic. Labor costs in particular have increased usage and inventory of critical medical supplies and personal protective equipment. These health and safety measures have been in place since the onset of the pandemic, continue to place a substantial strain on the business operations of many of our tenants, operators, and borrowers.

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~~Senior Housing~~

Within our SHOP and CCRC properties, occupancy rates have declined since the onset of the pandemic, a trend that may continue during the pandemic and for some period thereafter as a result of a reduction in, or in some cases prohibitions on, new tenant move-ins due to stricter move-in criteria, lower inquiry volumes, and reduced in-person tours, as well as incidences of COVID-19 outbreaks at our facilities or the perception that outbreaks may occur. Outbreaks, which directly affect our residents and the employees at our senior housing facilities, have and could continue to materially and adversely disrupt operations, as well as cause significant reputational harm to us, our operators, and our tenants. As of ~~May 3, 2021~~, 55 of the remaining 62 senior housing properties in our portfolio had resident COVID-19 cases at some point during the pandemic, although cases have declined dramatically in those properties since the introduction of vaccines. Our senior housing property operators have experienced significant cost increases as a result of higher staffing hours, increased hourly wages and ~~compensation, the implementation of increased health and safety measures and protocols,~~bonuses, greater overtime, and increased usage ~~and inventory~~ of ~~critical medical supplies and personal protective equipment.~~ contract labor.We ~~have seen some abatement in those costs as resident caseloads have declined, but this could change if there are new surges. At our SHOP and CCRC facilities, we bear these significant cost increases.~~

We and/or our operators temporarily suspended redevelopment across our senior housing portfolio due to “shelter-in-place” orders and local, state, and federal directives except for certain life safety and essential projects. Although someanticipate that many of these ~~projects have been allowed to restart with infection control protocols in place, future local, state, or federal orders could cause us to re-suspend the work. Other projects~~expenses will remain suspended and we do not know when we will be able to restart construction. In locations where construction continues, construction workers are following applicable guidelines, including appropriate social distancing, limitations on large group gatherings in close proximity, and increased sanitation efforts, which has slowed the pace of construction. These protective actions do not, however, eliminate the risk that outbreaks caused or spread by such activities may occur and impact our tenants, operators and residents. In addition, our planned dispositions may not occur within the expected time or at ~~all because of buyer terminations or withdrawals related to~~these higher levels even after the pandemic ~~capital constraints, inability to tour properties, or other factors relating to the pandemic.~~

~~The ultimate impact of the pandemic on senior housing generally~~passes, and the public perception of senior housing as a desirable residential setting depend on a number of factors that are unknown at this time, including, but not limited to: (i) the course and severity of the pandemic; (ii) responses of public and private health authorities; and (iii) long-term efficacy and public acceptances of approved vaccinations, potential supply disruptions, timing of vaccine delivery, and health effects of vaccines and other treatments.

~~Medical Office Portfolio~~

Within our medical office portfolio, many physician practices and affiliated hospitals initially delayed or discontinued nonessential surgeries and procedures due to “shelter-in-place” orders and other health and safety measures, which negatively impacted their cash flows during part of 2020. These restrictions have now been liftedmay reduce margins in the majority of our markets and operations are at or near pre-pandemic levels. However, we expect that planned move-outs will be delayed during the COVID-19 pandemic, which is expected to slightly increase short-term retention in this portfolio.

We implemented a deferred rent program during the second and third quarters of 2020 that was limited to certain non-health system and non-hospital tenants in good standing, which reduced our cash collections during those months, although we required that the deferred rent be repaid ratably by the end of 2020. Under this program, we agreed to defer approximately $6 million of rent through December 31, 2020, all of which had been collected as of December 31, 2020. No such deferrals were granted during the three months ended March 31, 2021. We may also implement a deferred rent program for future periods.

~~Life Science Portfolio~~

Within our life science portfolio, we have numerous tenants that are working tirelessly to address critical research and testing needs in the fight against COVID-19. We are focused on providing our tenants with the necessary space to complete their critical work and are in continuous contact with our tenants regarding how we can help them meet their needs. Through December 31, 2020, we had provided approximately $1 million of rent deferrals to our life science tenants, all of which was required to be repaid by the end of 2020. As of December 31, 2020, all of the deferred rent had been collected. No such deferrals were granted during the three months ended March 31, 2021.

However, within our life science portfolio, we may experience a decline in leasing activity at certain points during the COVID-19 pandemic. As a result of governmental restrictions on business activities in the greater San Francisco and Boston areas, we temporarily suspended development, redevelopment, and tenant improvement projects at many of our life science properties, resulting in delayed deliveries and project completions. Though we have been able to continue or re-start these projects, we remain subject to future governmental restrictions that may again suspend these projects. Even when these projects continue, we have been experiencing losses in efficiency as a result of the implementation of health and safety protocols related to social distancing and proper hygiene and sanitization.

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~~Liquidity~~

We believe that we are well positioned to manage the short-term and long-term impacts of the COVID-19 pandemic and the measures to slow its spread while working closely with our tenants, operators, and borrowers as they navigate the pandemic. We had approximately $1.85 billion of liquidity available, including $1.72 billion borrowing capacity under our bank line of credit facility and $133 million of cash and cash equivalents, as of ~~May 3, 2021~~. While a future downgrade in our credit ratings would adversely impact our cost of borrowing, we believe we continue to have access to the unsecured debt markets. We could also seek to enter into one or more secured debt financings, issue additional securities, including under our 2020 ATM Program (as defined below), or dispose of certain additional assets to fund future operating costs, capital expenditures, or acquisitions, although no assurances can be made in this regard.

~~Future Rent Collections~~

The impact of COVID-19 on the ability of our tenants to pay rent in the future is currently unknown. We have monitored, and will continue to monitor, the credit quality of each of our tenants and ~~write-off~~write off straight-line rent and accounts receivable, as necessary. In the event we conclude that substantially all of a tenant’s straight-line rent or accounts receivable is not probable of collection in the future, such amounts will be written off, which could have a material impact on our future results of operations.

~~Employee Update~~All development, redevelopment, and tenant improvement projects that were previously delayed have been allowed to restart with infection control protocols in place, although future local, state, or federal orders could cause work to be suspended, and individual projects may be affected by outbreaks.

We remain well-positioned to navigate economic changes resulting from the pandemic, with approximately $2.1 billion of liquidity available, including $1.65 billion of borrowing capacity under our bank line of credit facility, $319 million of net proceeds expected from the future settlement of shares issued through our ATM forward contracts, and approximately $124 million of cash and cash equivalents as of November 1, 2021.

We have taken, and will continue to take, proactive measures to provide for the well-being of our ~~workforce.~~employees. We have ~~maximized our~~implemented systems ~~infrastructure as well as virtual~~ and processes that have allowed us to work effectively and efficiently in the remote ~~working technologies for~~environment. The steps taken to protect our employees ~~including~~and afford them a safe working environment continue to evolve along with authoritative guidance on best practices.

Although the wide availability of the vaccine has reduced the negative impacts of the pandemic in our ~~executive team, to ensure productivity~~CCRC communities and ~~connectivity internally, as well as with key third-party relationships.~~

~~The extent of~~senior housing facilities, we do not yet know the full, long-term economic impact of the COVID-19 pandemic ~~on our business~~or when occupancy and ~~financial results~~revenue will ~~depend on future developments, including~~return to pre-pandemic levels. The increase in cases caused by recent variants has evidenced the ~~duration, severity, and spread~~fact that the course of ~~COVID-19, health and safety actions taken to contain its spread, any new surges of COVID-19,~~ the severity of outbreak of new strains of COVID-19, the timing and distribution of vaccines and other treatments, and how quickly and to what extent normal economic and operating conditions can resume within the markets in which we operate, each of which arepandemic is highly uncertain ~~at this time~~ and ~~outside~~that unexpected surges or other factors could materially impact recovery from the pandemic, adversely disrupt operations, and/or cause significant reputational harm to us, our tenants, our operators, or our borrowers.

See Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 for additional discussion of the risks posed by the COVID-19 pandemic and uncertainties we and our ~~control.~~tenants, operators, and borrowers may face as a result.

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2021 Transaction Overview

South San Francisco Land Site Acquisition

In October 2020, we executed a definitive agreement to acquire approximately 12 acres of land for $128 million. The acquisition site is located in South San Francisco, California, adjacent to two sites currently held by us as land for future development. We paid a $10 million nonrefundable deposit upon completing due diligence in November 2020. The first phase of the acquisition, with a purchase price of $61 million, closed in April 2021. The second phase of the acquisition, with a purchase price of $24 million, closed in September 2021.The final phase of the acquisition, with a purchase price of $43 million, closed in October 2021.

Westview Medical Plaza ~~MOB~~ Acquisition

In February 2021, we acquired one MOB in Nashville, Tennessee for $13 million.

Pinnacle at Ridgegate Acquisition

In April 2021, we acquired one MOB in Denver, Colorado for $38 million.

MOB Portfolio Acquisition

In April 2021, we acquired 14 MOBs for $371 million and ~~issued~~originated $142 million of secured mortgage ~~debt.~~debt (the “MOB Portfolio”).

Westside Medical Plaza Acquisition

In June 2021, we acquired one MOB in Fort Lauderdale, Florida for $16 million.

Wesley Woodlawn Acquisition

In July 2021, we acquired one MOB in Wichita, Kansas for $50 million.

Atlantic Health Acquisition

In July 2021, we acquired three MOBs in Morristown, New Jersey for $155 million.

Baylor Centennial Acquisitions

In September 2021, we acquired two MOBs in Dallas, Texas for $60 million.

Concord Avenue Campus Acquisition

In September 2021, we acquired a life science campus, comprised of three buildings, in Cambridge, Massachusetts for $180 million.

10 Fawcett Acquisition

In October 2021, we closed a life science acquisition in Cambridge, Massachusetts for $73 million.

Vista Sorrento Phase 1 Acquisition

In October 2021, we closed a life science acquisition in San Diego, California for $20 million.

Swedish Medical Acquisition

In October 2021, we acquired one MOB in Seattle, Washington for $43 million.

Lakeview Medical Pavilion

In October 2021, we acquired one MOB in New Orleans, Louisiana for $34 million.

Mooney Street Parcels

In October 2021, we closed a life science acquisition in Cambridge, Massachusetts for $123 million.

725 Concord

In October 2021, we acquired an MOB and adjacent land parcel in Cambridge, Massachusetts for $80 million.

25 Spinelli

In October 2021, we closed a life science acquisition in Cambridge, Massachusetts for $34 million.

68 Moulton

In October 2021, we closed a life science acquisition in Cambridge, Massachusetts for $18 million.

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Senior Housing Portfolio Sales

•In January 2021, we sold a portfolio of 32 SHOP assets ~~(“the Sunrise~~(the “Sunrise Senior Housing Portfolio”) for $664 million and provided the buyer with: (i) financing of $410 million and (ii) a commitment to finance up to $92 million of additional debt for capital expenditures. In June 2021, we received principal repayments of $246 million on the January 2021 financing. As a result of this repayment, the commitment to finance additional debt for capital expenditures ~~none~~was reduced to $56 million, $0.4 million of which ~~has~~had been funded as of ~~March 31, 2021. Under our definitive agreement, there are~~ ~~two~~September 30, 2021 ~~remaining senior housing triple-net assets that are expected to sell during the remainder of 2021, upon completion of the license transfer process.~~.

•In January 2021, we sold 24 senior housing assets under a triple-net lease with Brookdale Senior Living Inc. (“Brookdale”) for $510 million.

•In January 2021, we sold a portfolio of 16 SHOP assets for $230 million and provided the buyer with financing of $150 million.

•In February 2021, we sold eight senior housing assets in a triple-net lease with Harbor Retirement Associates for $132 million.

•In April 2021, we sold a portfolio of 12 SHOP assets for $564 million.

•In April 2021, we sold: (i) a portfolio of 10 SHOP assets for $334 million and (ii) 2 mezzanine loans and 2 preferred equity investments for $21 million.

•In April 2021, we sold a portfolio of five SHOP assets for $64 million.

•In May 2021, we sold a portfolio of seven SHOP assets for $113 million.

•In June 2021, upon completion of the license transfer process, we sold the two remaining Sunrise senior housing triple-net assets for $80 million.

•In addition to the transactions above, during the nine months ended September 30, 2021, we sold 15 SHOP assets for $169 million and 7 senior housing triple-net assets for $24 million. Therefore, as of September 30, 2021, we had successfully completed the disposition of our remaining senior housing triple-net and SHOP properties classified as discontinued operations.

Other Real Estate Transactions

•~~During the three months ended March 31, 2021, we sold one SHOP asset for~~ ~~$5 million~~.

•In April 2021, ~~we sold two SHOP assets for $13 million, two senior housing triple-net assets for $7 million, and one MOB for $10 million.~~

•~~In April 2021, we sold our share of~~ the SHOP property in the Otay Ranch JV ~~for~~was sold, resulting in our share of proceeds of $32 million.

•In May 2021, the CCRC JV sold the remaining two CCRCs for $38 million, $19 million of which represents our 49% interest.

•In addition to the transactions above, during the nine months ended September 30, 2021, we sold seven MOBs for $57 million and one hospital for $226 million (through the exercise of a purchase option by a tenant).

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Financing Activities

•In January 2021, we repurchased $112 million aggregate principal amount of our 4.25% senior unsecured notes due in 2023, $201 million aggregate principal amount of our 4.20% senior unsecured notes due in 2024, and $469 million aggregate principal amount of our 3.88% senior unsecured notes due in 2024.

•In February 2021, we used optional redemption provisions to redeem the remaining $188 million of our 4.25% senior unsecured notes due in 2023, $149 million of our 4.20% senior unsecured notes due in 2024, and $331 million of our 3.88% senior unsecured notes due in 2024.

•OnIn May 4, 2021, we ~~announced the commencement of tender offers to purchase up to an aggregate principal amount of $550 million for cash, targeting (i) $250~~repurchased $252 million of our 3.40% senior unsecured notes due in 2025 and ~~(ii) $300~~$298 million of our 4.00% senior unsecured notes due in 2025.

•In July 2021, we completed our inaugural green bond offering, issuing $450 million aggregate principal amount of 1.35% senior unsecured notes due 2027.

•In July 2021, we repaid the $250 million outstanding balance on our unsecured term loan facility (“2019 Term Loan”).

•In September 2021, we amended and restated our bank line of credit facility to increase total revolving commitments from $2.5 billion to $3.0 billion and extend the maturity date to January 20, 2026. This maturity date may be further extended pursuant to two six-month extension options, subject to certain customary conditions.

•During the three months ended September 30, 2021, we utilized the forward provisions under the 2020 ATM Program (as defined below) to allow for the sale of an aggregate of 9.1 million shares of our common stock at an initial weighted average net price of $35.25 per share, after commissions.

•In 2021, we increased the maximum aggregate face or principal amount that can be outstanding at any one time under our commercial paper program from $1.0 billion to $1.5 billion.

Development Activities

•At ~~March 31,~~September 30, 2021,we had five on-campus MOB developments ~~all of which are on-campus,~~ in process with an aggregate total estimated cost of $122 million.

•At ~~March 31,~~September 30, 2021, we had ~~five~~seven life science development projects in process with an aggregate total estimated cost of approximately $~~927 million.~~1.2 billion.

•During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, the ~~remaining portion of~~following projects were placed in service: (i) one life science development project ~~was placed in service~~ with a total project cost of $151 million at completion, (ii) one life science redevelopment project with a total project cost of $19 millionat completion, and (iii) two redevelopment assets in an unconsolidated joint venture owning 19 SHOP assets with our aggregate share of total project costs of $23 million at completion.

Dividends

The following table summarizes our common stock cash dividends declared in 2021:

Declaration Date

Record Date

Amount
Per Share

Dividend
Payment Date

February 9

February 22

0.30

March 5

April 29

May 10

0.30

May 21

July 29

August 9

0.30

August 20

October 27

November 8

0.30

November 19

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Results of Operations

We evaluate our business and allocate resources among our reportable business segments: (i) life science, (ii) medical office, and (iii) CCRC. Under the life science and medical office segments, we invest through the acquisition and development of life science facilities, MOBs, and hospitals, which generally require a greater level of property management. Our CCRCs are operated through RIDEA structures. We have other non-reportable segments that are comprised primarily ~~of the following investments:~~of: (i) an interest in an unconsolidated joint venture that owns 19 senior housing assets and (ii) debt ~~investments, and (iii) two preferred equity~~ investments. We evaluate performance based upon property adjusted net operating income (“Adjusted NOI” or “Cash NOI”) in each segment. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the U.S. Securities and Exchange Commission (“SEC”), as updated by Note 2 to the Consolidated Financial Statements herein.

In conjunction with classifying our senior housing triple-net and SHOP portfolios as discontinued operations as of December 31, 2020, the results of operations related to those portfolios are no longer presented in reportable business segments. Accordingly, results of operations of those portfolios are not included in the reportable business segment analysis below. Refer to Note 5 to the Consolidated Financial Statements for further information regarding discontinued operations.

Non-GAAP Financial Measures

Net Operating Income

NOI and Adjusted NOI are non-U.S. generally accepted accounting principles (“GAAP”) supplemental financial measures used to evaluate the operating performance of real estate. NOI is defined as real estate revenues (inclusive of rental and related revenues, resident fees and services, income from direct financing leases, and government grant income and exclusive of interest income), less property level operating expenses (which exclude transition costs); NOI excludes all other financial statement amounts included in net income (loss) as presented in Note 14 to the Consolidated Financial Statements. Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL non-cash interest, amortization of market lease intangibles, termination fees, actuarial reserves for insurance claims that have been incurred but not reported, and the impact of deferred community fee income and expense. NOI and Adjusted NOI include our share of income (loss) generated by unconsolidated joint ventures and exclude noncontrolling interests’ share of income (loss) generated by consolidated joint ventures. Adjusted NOI is oftentimes referred to as “Cash NOI.” Management believes NOI and Adjusted NOI are important supplemental measures because they provide relevant and useful information by reflecting only income and operating expense items that are incurred at the property level and present them on an unlevered basis. We use NOI and Adjusted NOI to make decisions about resource allocations, to assess and compare property level performance, and to evaluate our Same-Store (“SS”) performance, as described below. We believe that net income (loss) is the most directly comparable GAAP measure to NOI and Adjusted NOI. NOI and Adjusted NOI should not be viewed as alternative measures of operating performance to net income (loss) as defined by GAAP since they do not reflect various excluded items. Further, our definitions of NOI and Adjusted NOI may not be comparable to the definitions used by other REITs or real estate companies, as they may use different methodologies for calculating NOI and Adjusted NOI. For a reconciliation of NOI and Adjusted NOI to net income (loss) by segment, refer to Note 14 to the Consolidated Financial Statements.

Operating expenses generally relate to leased medical office and life science properties, as well as SHOP and CCRC facilities. We generally recover all or a portion of our leased medical office and life science property expenses through tenant recoveries. We present expenses as operating or general and administrative based on the underlying nature of the expense.

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Same-Store

Same-Store NOI and Adjusted (Cash) NOI information allows us to evaluate the performance of our property portfolio under a consistent population by eliminating changes in the composition of our consolidated portfolio of properties. Same-Store Adjusted NOI excludes amortization of deferred revenue from tenant-funded improvements and certain non-property specific operating expenses that are allocated to each operating segment on a consolidated basis.

Properties are included in Same-Store once they are stabilized for the full period in both comparison periods. Newly acquired operating assets are generally considered stabilized at the earlier of lease-up (typically when the tenant(s) control(s) the physical use of at least 80% of the ~~space)~~space and rental payments have commenced) or 12 months from the acquisition date. Newly completed developments and redevelopments are considered stabilized at the earlier of lease-up or 24 months from the date the property is placed in service. Properties that experience a change in ~~reporting structure, such as a conversion from a triple-net lease to a RIDEA~~ reporting structure are considered stabilized after 12 months in operations under a consistent reporting structure. A property is removed from Same-Store when it is classified as held for sale, sold, placed into redevelopment, experiences a casualty event that significantly impacts operations, a change in reporting structure or operator transition has been agreed to, or a significant tenant relocates from a Same-Store property to a non Same-Store property and that change results in a corresponding increase in revenue. We do not report Same-Store metrics for our other non-reportable segments. For a reconciliation of Same-Store to total portfolio Adjusted NOI and other relevant disclosures by segment, refer to our Segment Analysis below.

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Funds From Operations (“FFO”)

FFO encompasses ~~NAREIT~~Nareit FFO and FFO as Adjusted, each of which is described in detail below. We believe FFO applicable to common shares, diluted FFO applicable to common shares, and diluted FFO per common share are important supplemental non-GAAP measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets utilizes straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. The term FFO was designed by the REIT industry to address this issue.

~~NAREIT~~Nareit FFO. FFO, as defined by the National Association of Real Estate Investment Trusts (“~~NAREIT”~~Nareit”), is net income (loss) applicable to common shares (computed in accordance with GAAP), excluding gains or losses from sales of depreciable property, including any current and deferred taxes directly associated with sales of depreciable property, impairments of, or related to, depreciable real estate, plus real estate and other real estate-related depreciation and amortization, and adjustments to compute our share of ~~NAREIT~~Nareit FFO and FFO as Adjusted (see below) from joint ventures. Adjustments for joint ventures are calculated to reflect our pro-rata share of both our consolidated and unconsolidated joint ventures. We reflect our share of ~~NAREIT~~Nareit FFO for unconsolidated joint ventures by applying our actual ownership percentage for the period to the applicable reconciling items on an entity by entity basis. For consolidated joint ventures in which we do not own 100%, we reflect our share of the equity by adjusting our ~~NAREIT~~Nareit FFO to remove the third party ownership share of the applicable reconciling items based on actual ownership percentage for the applicable periods. Our pro-rata share information is prepared on a basis consistent with the comparable consolidated amounts, is intended to reflect our proportionate economic interest in the operating results of properties in our portfolio and is calculated by applying our actual ownership percentage for the period. We do not control the unconsolidated joint ventures, and the pro-rata presentations of reconciling items included in ~~NAREIT~~Nareit FFO do not represent our legal claim to such items. The joint venture members or partners are entitled to profit or loss allocations and distributions of cash flows according to the joint venture agreements, which provide for such allocations generally according to their invested capital.

The presentation of pro-rata information has limitations, which include, but are not limited to, the following: (i) the amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage determined when applying the equity method of accounting and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses and (ii) other companies in our industry may calculate their pro-rata interest differently, limiting the usefulness as a comparative measure. Because of these limitations, the pro-rata financial information should not be considered independently or as a substitute for our financial statements as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP financial statements, using the pro-rata financial information as a supplement.

~~NAREIT~~Nareit FFO does not represent cash generated from operating activities in accordance with GAAP, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income (loss). We compute ~~NAREIT~~Nareit FFO in accordance with the current ~~NAREIT~~Nareit definition; however, other REITs may report ~~NAREIT~~Nareit FFO differently or have a different interpretation of the current ~~NAREIT~~Nareit definition from ours.

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FFO as Adjusted. In addition, we present ~~NAREIT~~Nareit FFO on an adjusted basis before the impact of non-comparable items including, but not limited to, transaction-related items, other impairments (recoveries) and other losses (gains), ~~losses (gains) from the sale of non-depreciable assets,~~ restructuring and severance related charges, prepayment costs (benefits) associated with early retirement or payment of debt, litigation costs (recoveries), casualty-related charges (recoveries), foreign currency remeasurement losses (gains), deferred tax asset valuation allowances, and changes in tax legislation (“FFO as Adjusted”). Transaction-related items include transaction expenses and gains/charges incurred as a result of mergers and acquisitions and lease amendment or termination activities. Prepayment costs (benefits) associated with early retirement of debt include the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of debt. Other impairments (recoveries) and other losses (gains) include interest income associated with early and partial repayments of loans receivable and other losses or gains associated with non-depreciable assets including goodwill, DFLs, undeveloped land parcels, and loans receivable. Management believes that FFO as Adjusted provides a meaningful supplemental measurement of our FFO run-rate and is frequently used by analysts, investors, and other interested parties in the evaluation of our performance as a REIT. At the same time that ~~NAREIT~~Nareit created and defined its FFO measure for the REIT industry, it also recognized that “management of each of its member companies has the responsibility and authority to publish financial information that it regards as useful to the financial community.” We believe stockholders, potential investors, and financial analysts who review our operating performance are best served by an FFO run-rate earnings measure that includes certain other adjustments to net income (loss), in addition to adjustments made to arrive at the ~~NAREIT~~Nareit defined measure of FFO. FFO as Adjusted is used by management in analyzing our business and the performance of our properties and we believe it is important that stockholders, potential investors, and financial analysts understand this measure used by management. We use FFO as Adjusted to: (i) evaluate our performance in comparison with expected results and results of previous periods, relative to resource allocation decisions, (ii) evaluate the performance of our management, (iii) budget and forecast future results to assist in the allocation of resources, (iv) assess our performance as compared with similar real estate companies and the industry in general, and (v) evaluate how a specific potential investment will impact our future results. Other REITs or real estate companies may use different methodologies for calculating an adjusted FFO measure, and accordingly, our FFO as Adjusted may not be comparable to those reported by other REITs. For a reconciliation of net income (loss) to ~~NAREIT~~Nareit FFO and FFO as Adjusted and other relevant disclosure, refer to “Non-GAAP Financial Measures Reconciliations” below.

Adjusted FFO (“AFFO”)

. AFFO is defined as FFO as Adjusted after excluding the impact of the following: (i) amortization of stock-based compensation, (ii) amortization of deferred financing costs, net, (iii) straight-line rents, (iv) deferred income taxes, and (v) other AFFO adjustments which includes: (a) amortization of acquired market lease intangibles, net, (b) non-cash interest related to DFLs and lease incentive amortization (reduction of straight-line rents), (c) actuarial reserves for insurance claims that have been incurred but not reported, and (d) amortization of deferred revenues, excluding amounts amortized into rental income that are associated with tenant funded improvements owned/recognized by us and up-front cash payments made by tenants to reduce their contractual rents. Also, ~~AFFO: (i)~~AFFO is computed after deducting recurring capital expenditures, including second generation leasing costs and second generation tenant and capital improvements, and ~~(ii)~~ includes ~~lease restructure payments and~~ adjustments to compute our share of AFFO from our unconsolidated joint ventures. More specifically, recurring capital expenditures, including second generation leasing costs and second generation tenant and capital improvements ("AFFO capital expenditures") excludes our share from unconsolidated joint ventures (reported in “other AFFO adjustments”). Adjustments for joint ventures are calculated to reflect our pro-rata share of both our consolidated and unconsolidated joint ventures. We reflect our share of AFFO for unconsolidated joint ventures by applying our actual ownership percentage for the period to the applicable reconciling items on an entity by entity basis. We reflect our share for consolidated joint ventures in which we do not own 100% of the equity by adjusting our AFFO to remove the third party ownership share of the applicable reconciling items based on actual ownership percentage for the applicable periods (reported in “other AFFO adjustments”). See FFO for further disclosure regarding our use of pro-rata share information and its limitations. Other REITs or real estate companies may use different methodologies for calculating AFFO, and accordingly, our AFFO may not be comparable to those reported by other REITs. Although our AFFO computation may not be comparable to that of other REITs, management believes AFFO provides a meaningful supplemental measure of our performance and is frequently used by analysts, investors, and other interested parties in the evaluation of our performance as a REIT. We believe AFFO is an alternative run-rate earnings measure that improves the understanding of our operating results among investors and makes comparisons with: (i) expected results, (ii) results of previous periods, and (iii) results among REITs more meaningful. AFFO does not represent cash generated from operating activities determined in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs as it excludes the following items which generally flow through our cash flows from operating activities: (i) adjustments for changes in working capital or the actual timing of the payment of income or expense items that are accrued in the period, (ii) transaction-related costs, (iii) litigation settlement expenses, (iv) restructuring and severance-related charges, and (v) actual cash receipts from interest income recognized on loans receivable (in contrast to our AFFO adjustment to exclude non-cash interest and depreciation related to our investments in direct financing leases). Furthermore, AFFO is adjusted for recurring capital expenditures, which are generally not considered when determining cash flows from operations or liquidity. AFFO is a non-GAAP supplemental financial measure and should not be considered as an alternative to net income (loss) determined in accordance with GAAP. For a reconciliation of net income (loss) to AFFO and other relevant disclosure, refer to “Non-GAAP Financial Measures Reconciliations” below.

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Comparison of the Three and Nine Months Ended ~~March 31,~~September 30, 2021 to the Three and Nine Months Ended ~~March 31,~~September 30, 2020

Overview

Three Months Ended ~~March 31,~~September 30, 2021 and 2020

The following table summarizes results for the three months ended ~~March 31,~~September 30, 2021 and 2020 ~~(dollars in~~(in thousands):


		Three Months Ended March 31,						Three Months Ended September 30,
		2021		2020		Change				2021		2020		Change

Net income (loss) applicable to common shares	Net income (loss) applicable to common shares	$	143,337	$	277,464	$	(134,127)		Net income (loss) applicable to common shares	$	54,442	$	(63,768)	$	118,210
NAREIT FFO		40,233		171,549		(131,316)
Nareit FFO									Nareit FFO	194,914		164,603		30,311
FFO as Adjusted	FFO as Adjusted	215,391		227,013		(11,622)			FFO as Adjusted	217,471		213,529		3,942
AFFO	AFFO	184,798		207,576		(22,778)			AFFO	179,739		183,791		(4,052)

Net income (loss) applicable to common shares ~~decreased~~increased primarily as a result of the following:

•~~a reduction in other income, net as a result of: (i) a gain upon change of control~~NOI generated from our life science and medical office segments related to the acquisition of the outstanding equity interest in 13 CCRCs from Brookdale during the first quarter of 2020 and (ii) a gain on sale related to the sale of a hospital underlying a DFL during the first quarter of 2020;

•~~an increase in loss on debt extinguishments related to our repurchase and redemption of certain outstanding senior notes in the first quarter of 2021;~~

•~~an increase in depreciation, primarily as a result of:~~to: (i) 2020 and 2021 acquisitions of real estate, (ii) development and ~~(ii)~~redevelopment projects placed in service during 2020 and 2021, and (iii) new leasing activity during 2020 and 2021 (including the ~~above-mentioned acquisition of the outstanding equity interest and consolidation of 13 CCRCs from Brookdale during the first quarter of 2020;~~

•~~a decrease in income tax benefit, primarily as a result of the tax benefits recognized in the first quarter of 2020 related~~impact to the above-mentioned acquisition of the outstanding equity interest in 13 CCRCs from Brookdale and the management termination fee expense fee paid to Brookdale in connection with transitioning management to Life Care Services LLC (“LCS”)straight-line rents); ~~and~~

•~~additional expenses and decreased occupancy in our CCRCs related to COVID-19.~~

~~The decrease in net income (loss) applicable to common shares was partially offset by:~~

•an increase in income ~~(loss)~~ from discontinued operations, primarily due to an increase in gain on sales of real estate and lower impairments of depreciable real estate, partially offset by a goodwill impairment charge related to our senior housing triple-net and SHOP asset sales;

•an increase in income tax benefit, primarily as a result of the income tax expense recognized during the third quarter of 2020 from the establishment of a deferred tax asset valuation allowance related to deferred tax assets that were no longer expected to be realized as a result of our plan to dispose of our SHOP portfolio;

•an increase in our share of net income from an unconsolidated joint venture owning 19 SHOP assets;

•a reduction in interest expense, primarily as a result of: (i) senior unsecured notes repurchases and redemptions in 2021 and (ii) repayment of the 2019 Term Loan in the third quarter of 2021;

•a decrease in loss on debt extinguishments related to our redemption of certain outstanding senior notes in the third quarter of 2020;

•an increase in gains on sale of depreciable real estate related to MOB asset sales during the third quarter of 2021;

•a reduction in COVID-19 related expenses and increased rates for resident fees at our CCRCs; and

•an increase in interest income, primarily as a result of seller financing, partially offset by principal repayments on loans receivable.

The increase in net income (loss) applicable to common shares was partially offset by:

•an increase in depreciation, primarily as a result of: (i) 2020 and 2021 acquisitions of real estate, (ii) accelerated depreciation related to the change in estimated useful lives on certain of our densification projects, and (iii) development and redevelopment projects placed into service during 2020 and 2021; and

•a reduction in other income, net as a result of a decline in government grant income received under the CARES Act.

Nareit FFO increased primarily as a result of the aforementioned events impacting net income (loss) applicable to common shares, except for the following, which are excluded from Nareit FFO:

•net gain on sales of depreciable real estate;

•impairment charges related to depreciable real estate; and

•depreciation and amortization expense.

FFO as Adjusted increased primarily as a result of the aforementioned events impacting Nareit FFO, except for the following, which are excluded from FFO as Adjusted:

•goodwill impairment charge related to our senior housing triple-net and SHOP asset sales; and

•the loss on debt extinguishment.

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AFFO decreased primarily as a result of the aforementioned events impacting FFO as Adjusted, except for the impact of straight-line rents, which is excluded from AFFO. The decrease was further impacted by higher AFFO capital expenditures during the period.

Nine Months Ended September 30, 2021 and 2020

The following table summarizes results for the nine months ended September 30, 2021 and 2020 (in thousands):


	Nine Months Ended September 30,
	2021		2020		Change

Net income (loss) applicable to common shares	$	473,778	$	265,018	$	208,760
Nareit FFO	384,877		518,519		(133,642)
FFO as Adjusted	650,166		655,255		(5,089)
AFFO	553,578		583,343		(29,765)

Net income (loss) applicable to common shares increased primarily as a result of the following:

•an increase in income from discontinued operations, primarily due to an increase in gain on sales of real estate and lower impairments of depreciable real estate, partially offset by a goodwill impairment charge related to our senior housing triple-net and SHOP asset sales;

•an increase in gains on sale of depreciable real estate related to MOB asset sales during 2021;

•NOI generated from our life science and medical office segments related to: (i) 2020 and 2021 acquisitions of real estate, (ii) development and redevelopment projects placed in service during 2020 and 2021, and (iii) new leasing activity during 2020 and 2021 (including the impact to straight-line rents);

•a reduction in operating expenses related to our CCRCs primarily as a result of the management termination fee paid to Brookdale in connection with transitioning management of 13 CCRCs to ~~LCS~~Life Care Services LLC (“LCS”) during the first quarter of 2020;

•an increase in our share of net income from an unconsolidated joint venture owning 19 SHOP assets;

•a reduction in interest expense, primarily as a result of: (i) senior unsecured notes repurchases and redemptions in 2021 and (ii) repayment of the 2019 Term Loan in the third quarter of 2021;

•an increase in interest income, primarily as a result of: (i) seller financing and (ii) the accelerated recognition of a mark-to-market discount resulting from prepayments on loans receivable, partially offset by principal repayments on loans receivable;

•a reduction in transaction costs, primarily as a result of costs associated with the transition of 13 CCRCs from Brookdale to LCS in the first quarter of 2020;

•~~an increase in our share of net income from an unconsolidated joint venture owning 19 SHOP assets;~~

•a reduction in impairment charges related toto: (i) depreciable real ~~estate;~~

•~~a reduction in interest expense,~~estate and (ii) loan loss reserves, primarily as a result of ~~senior unsecured notes repurchases~~principal repayments on loans receivable and ~~redemptions in 2021;~~loans receivable sales; and

•an increase in rates for resident fees at our CCRCs.

The increase in net income (loss) applicable to common shares was partially offset by:

•a reduction in other income, net as a result of: (i) a gain upon change of control related to the acquisition of the outstanding equity interest in 13 CCRCs from Brookdale during the first quarter of 2020, (ii) a gain on sale related to the sale of a hospital underlying a DFL during the first quarter of 2020, and (iii) a decline in government grant income received under the CARES Act;

•an increase in loss on debt extinguishments related to our repurchase and redemption of certain outstanding senior notes in the first and second quarters of 2021;

•an increase in depreciation, primarily as a result of: (i) 2020 and 2021 acquisitions of ~~seller financing.~~real estate, (ii) accelerated depreciation related to the change in estimated useful lives on certain of our densification projects, (iii) development and redevelopment projects placed into service during 2020 and 2021, and (iv) the above-mentioned acquisition of the outstanding equity interest and consolidation of 13 CCRCs from Brookdale during the first quarter of 2020; and

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~~NAREIT~~•a decrease in income tax benefit, primarily as a result of the tax benefits recognized in the first quarter of 2020 related to the above-mentioned acquisition of the outstanding equity interest in 13 CCRCs from Brookdale and the management termination fee expense fee paid to Brookdale in connection with transitioning management to LCS, partially offset by the income tax expense recognized during the third quarter of 2020 from the establishment of a deferred tax asset valuation allowance related to deferred tax assets that were no longer expected to be realized as a result of our plan to dispose of our SHOP portfolio.

Nareit FFO decreased primarily as a result of the aforementioned events impacting net income (loss) applicable to common shares, except for the following, which are excluded from ~~NAREIT~~Nareit FFO:

•net gain on sales of depreciable real estate;

•the gain upon change of control related to the acquisition of Brookdale’s interest in 13 CCRCs;

•depreciation and amortization expense; and

•impairment charges related to depreciable real estate.

FFO as Adjusted decreased primarily as a result of the aforementioned events impacting ~~NAREIT~~Nareit FFO, except for the following, which are excluded from FFO as Adjusted:

•the loss on debt extinguishment;

•the management termination fee paid to Brookdale in connection with our acquisition of their interest in 13 CCRCs;

•net gain on sales of assets underlying DFLs;

•the transaction costs associated with transition of 13 CCRCs from Brookdale to LCS;

•goodwill impairment charge related to senior housing triple-net and SHOP asset sales;

•loan loss reserves; and

•~~net gain~~the accelerated recognition of a mark-to-market discount resulting from prepayments on ~~sales of assets underlying DFLs.~~loans receivable.

Segment Analysis

The following tables provide selected operating information for our Same-Store and total property portfolio for each of our reportable segments. For the three months ended ~~March 31,~~September 30, 2021, our Same-Store consists of ~~361~~370 properties representing properties acquired or placed in service and stabilized on or prior to July 1, 2020 and that remained in operations under a consistent reporting structure through September 30, 2021. For the nine months ended September 30, 2021, our Same-Store consists of 351 properties representing properties acquired or placed in service and stabilized on or prior to January 1, 2020 and that remained in operations under a consistent reporting structure through ~~March 31,~~September 30, 2021. Our total property portfolio consisted of ~~463~~480 and ~~449~~448 properties at ~~March 31,~~September 30, 2021 and 2020, respectively.

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Life Science

The following table summarizes results at and for the three months ended ~~March 31,~~September 30, 2021 and 2020 (dollars and square feet in thousands, except per square foot data):


		SS									Total Portfolio									SS									Total Portfolio
		Three Months Ended March 31,									Three Months Ended March 31,									Three Months Ended September 30,									Three Months Ended September 30,
		2021			2020			Change			2021			2020			Change			2021			2020			Change			2021			2020			Change
Rental and related revenues	Rental and related revenues	$	116,708		$	108,714		$	7,994		$	169,934		$	128,883		$	41,051	Rental and related revenues	$	127,287		$	121,337		$	5,950		$	184,213		$	148,702		$	35,511
Healthpeak’s share of unconsolidated joint venture total revenues	Healthpeak’s share of unconsolidated joint venture total revenues	—			—			—			1,337			—			1,337		Healthpeak’s share of unconsolidated joint venture total revenues	—			—			—			1,521			—			1,521
Noncontrolling interests' share of consolidated joint venture total revenues		(53)			(46)			(7)			(65)			(52)			(13)
Noncontrolling interests’ share of consolidated joint venture total revenues																			Noncontrolling interests’ share of consolidated joint venture total revenues	(56)			(59)			3			(82)			(66)			(16)
Operating expenses	Operating expenses	(26,851)			(25,256)			(1,595)			(39,461)			(30,201)			(9,260)		Operating expenses	(31,340)			(29,534)			(1,806)			(44,923)			(36,714)			(8,209)
Healthpeak's share of unconsolidated joint venture operating expenses		—			—			—			(425)			—			(425)
Noncontrolling interests' share of consolidated joint venture operating expenses		15			14			1			20			17			3
Healthpeak’s share of unconsolidated joint venture operating expenses																			Healthpeak’s share of unconsolidated joint venture operating expenses	—			—			—			(463)			—			(463)
Noncontrolling interests’ share of consolidated joint venture operating expenses																			Noncontrolling interests’ share of consolidated joint venture operating expenses	17			16			1			25			18			7

Adjustments to NOI(1)	Adjustments to NOI(1)	(3,974)			(4,315)			341			(11,810)			(4,280)			(7,530)		Adjustments to NOI(1)	(3,468)			(5,177)			1,709			(11,021)			(8,330)			(2,691)
Adjusted NOI	Adjusted NOI	$	85,845		$	79,111		$	6,734		119,530			94,367			25,163		Adjusted NOI	$	92,440		$	86,583		$	5,857		129,270			103,610			25,660
Less: non-SS Adjusted NOI	Less: non-SS Adjusted NOI										(33,685)			(15,256)			(18,429)		Less: non-SS Adjusted NOI										(36,830)			(17,027)			(19,803)
SS Adjusted NOI	SS Adjusted NOI										$	85,845		$	79,111		$	6,734	SS Adjusted NOI										$	92,440		$	86,583		$	5,857
Adjusted NOI % change	Adjusted NOI % change							8.5		%									Adjusted NOI % change							6.8		%
Property count(2)	Property count(2)	109			109						141			134					Property count(2)	111			111						146			136
End of period occupancy	End of period occupancy	97.7		%	95.5		%				97.0		%	94.4		%			End of period occupancy	97.1		%	96.8		%				97.1		%	96.3		%
Average occupancy	Average occupancy	97.2		%	95.6		%				96.6		%	95.0		%			Average occupancy	97.1		%	97.2		%				97.1		%	96.4		%
Average occupied square feet	Average occupied square feet	7,424			7,299						9,809			8,053					Average occupied square feet	7,550			7,555						10,021			8,844
Average annual total revenues per occupied square foot~~(2)~~(3)	Average annual total revenues per occupied square foot~~(2)~~(3)	$	61		$	57					$	65		$	62				Average annual total revenues per occupied square foot~~(2)~~(3)	$	66		$	62					$	69		$	63
Average annual base rent per occupied square foot~~(3)~~(4)	Average annual base rent per occupied square foot~~(3)~~(4)	$	49		$	46					$	51		$	50				Average annual base rent per occupied square foot~~(3)~~(4)	$	51		$	48					$	54		$	50

(1)Represents adjustments to NOI in accordance with ~~the Company’s~~our definition of Adjusted NOI. Refer to “Non-GAAP Financial Measures” above for definitions of NOI and Adjusted NOI.

(2)From our third quarter 2020 presentation of Same-Store, we removed one life science facility that was classified as held for sale, one life science facility that was placed into development, and one life science facility related to a significant tenant relocation.

(3)Average annual total revenues does not include non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).

~~(3)~~(4)Base rent does not include tenant recoveries, additional rents in excess of floors and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).

Same-Store Adjusted NOI increased primarily as a result of the following:

•annual rent escalations;

•new leasing activity; and

•mark-to-market lease renewals.

Total Portfolio Adjusted NOI increased primarily as a result of the aforementioned impacts to Same-Store and the following Non-Same-Store impacts:

•NOI from (i) increased occupancy in developments and redevelopments placed into service in 2020 and 2021 and (ii) acquisitions in 2020.

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The following table summarizes results at and for the nine months ended September 30, 2021 and 2020 (dollars and square feet in thousands, except per square foot data):


	SS									Total Portfolio
	Nine Months Ended September 30,									Nine Months Ended September 30,
	2021			2020			Change			2021			2020			Change
Rental and related revenues	$	355,071		$	332,408		$	22,663		$	531,674		$	416,081		$	115,593
Healthpeak’s share of unconsolidated joint venture total revenues	—			—			—			4,270			—			4,270
Noncontrolling interests’ share of consolidated joint venture total revenues	(163)			(157)			(6)			(222)			(175)			(47)
Operating expenses	(82,754)			(78,479)			(4,275)			(125,108)			(101,120)			(23,988)
Healthpeak’s share of unconsolidated joint venture operating expenses	—			—			—			(1,316)			—			(1,316)
Noncontrolling interests’ share of consolidated joint venture operating expenses	47			47			—			66			53			13

Adjustments to NOI(1)	(11,814)			(11,967)			153			(35,197)			(15,389)			(19,808)
Adjusted NOI	$	260,387		$	241,852		$	18,535		374,167			299,450			74,717
Less: non-SS Adjusted NOI										(113,780)			(57,598)			(56,182)
SS Adjusted NOI										$	260,387		$	241,852		$	18,535
Adjusted NOI % change							7.7		%
Property count(2)	107			107						146			136
End of period occupancy	97.0		%	96.7		%				97.1		%	96.3		%
Average occupancy	97.3		%	96.6		%				96.9		%	95.8		%
Average occupied square feet	7,273			7,217						10,119			8,551
Average annual total revenues per occupied square foot(3)	$	63		$	59					$	66		$	62
Average annual base rent per occupied square foot(4)	$	50		$	47					$	52		$	50

(1)Represents adjustments to NOI in accordance with our definition of Adjusted NOI. Refer to “Non-GAAP Financial Measures” above for definitions of NOI and Adjusted NOI.

(2)From our third quarter 2020 presentation of Same-Store, we removed one life science facility that was classified as held for sale and one life science facility that was placed into development.

(3)Average annual total revenues does not include non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).

(4)Base rent does not include tenant recoveries, additional rents in excess of floors and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).

Same-Store Adjusted NOI increased primarily as a result of the following:

•annual rent escalations;

•new leasing activity; and

•mark-to-market lease renewals.

Total Portfolio Adjusted NOI increased primarily as a result of the aforementioned impacts to Same-Store and the following Non-Same-Store impacts:

•NOI from (i) increased occupancy in developments and redevelopments placed into service in 2020 and 2021 and (ii) acquisitions in 2020.

Table of Contents

Medical Office

The following table summarizes results at and for the three months ended ~~March 31,~~September 30, 2021 and 2020 (dollars and square feet in thousands, except per square foot data):


		SS									Total Portfolio(1)									SS									Total Portfolio(1)
		Three Months Ended March 31,									Three Months Ended March 31,									Three Months Ended September 30,									Three Months Ended September 30,
		2021			2020			Change			2021			2020			Change			2021			2020			Change			2021			2020			Change
Rental and related revenues	Rental and related revenues	$	137,018		$	135,073		$	1,945		$	158,038		$	153,372		$	4,666	Rental and related revenues	$	136,378		$	132,633		$	3,745		$	169,303		$	153,231		$	16,072
Income from direct financing leases	Income from direct financing leases	2,163			2,124			39			2,163			3,269			(1,106)		Income from direct financing leases	2,179			2,150			29			2,179			2,150			29
Healthpeak’s share of unconsolidated joint venture total revenues	Healthpeak’s share of unconsolidated joint venture total revenues	693			673			20			715			695			20		Healthpeak’s share of unconsolidated joint venture total revenues	713			677			36			737			699			38
Noncontrolling interests' share of consolidated joint venture total revenues		(8,766)			(8,528)			(238)			(8,926)			(8,640)			(286)
Noncontrolling interests’ share of consolidated joint venture total revenues																			Noncontrolling interests’ share of consolidated joint venture total revenues	(8,659)			(8,481)			(178)			(8,954)			(8,788)			(166)
Operating expenses	Operating expenses	(44,014)			(44,362)			348			(51,121)			(50,694)			(427)		Operating expenses	(45,436)			(43,732)			(1,704)			(58,430)			(51,435)			(6,995)
Healthpeak's share of unconsolidated joint venture operating expenses		(293)			(275)			(18)			(294)			(275)			(19)
Noncontrolling interests' share of consolidated joint venture operating expenses		2,504			2,600			(96)			2,504			2,600			(96)
Healthpeak’s share of unconsolidated joint venture operating expenses																			Healthpeak’s share of unconsolidated joint venture operating expenses	(304)			(297)			(7)			(305)			(296)			(9)
Noncontrolling interests’ share of consolidated joint venture operating expenses																			Noncontrolling interests’ share of consolidated joint venture operating expenses	2,592			2,556			36			2,659			2,630			29

Adjustments to NOI(2)	Adjustments to NOI(2)	(1,666)			(1,429)			(237)			(1,923)			(994)			(929)		Adjustments to NOI(2)	(1,727)			(2,190)			463			(3,626)			(1,729)			(1,897)
Adjusted NOI	Adjusted NOI	$	87,639		$	85,876		$	1,763		101,156			99,333			1,823		Adjusted NOI	$	85,736		$	83,316		$	2,420		103,563			96,462			7,101
Less: non-SS Adjusted NOI	Less: non-SS Adjusted NOI										(13,517)			(13,457)			(60)		Less: non-SS Adjusted NOI										(17,827)			(13,146)			(4,681)
SS Adjusted NOI	SS Adjusted NOI										$	87,639		$	85,876		$	1,763	SS Adjusted NOI										$	85,736		$	83,316		$	2,420
Adjusted NOI % change	Adjusted NOI % change							2.1		%									Adjusted NOI % change							2.9		%
Property count(3)	Property count(3)	250			250						286			279					Property count(3)	244			244						300			276
End of period occupancy	End of period occupancy	92.0		%	92.2		%				90.3		%	91.6		%			End of period occupancy	91.9		%	92.4		%				90.1		%	91.0		%
Average occupancy	Average occupancy	92.0		%	92.2		%				90.3		%	91.6		%			Average occupancy	91.8		%	92.4		%				89.9		%	91.3		%
Average occupied square feet	Average occupied square feet	18,577			18,597						20,703			20,399					Average occupied square feet	18,071			18,181						21,337			20,023
Average annual total revenues per occupied square foot(4)	Average annual total revenues per occupied square foot(4)	$	30		$	30					$	31		$	31				Average annual total revenues per occupied square foot(4)	$	31		$	30					$	31		$	31
Average annual base rent per occupied square foot(5)	Average annual base rent per occupied square foot(5)	$	26		$	26					$	27		$	27				Average annual base rent per occupied square foot(5)	$	26		$	25					$	27		$	27

(1)Total Portfolio includes results of operations from disposed properties through the disposition date.

(2)Represents adjustments to NOI in accordance with ~~the Company’s~~our definition of Adjusted NOI. Refer to “Non-GAAP Financial Measures” above for definitions of NOI and Adjusted NOI.

(3)From our ~~first~~third quarter 2020 presentation of Same-Store, we removed ~~nine~~six MOBs that were sold, ~~seven~~four MOBs that were classified as held for sale, and three MOBs that were placed into redevelopment.

(4)Average annual total revenues does not include non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, DFL non-cash interest, and deferred revenues).

(5)Base rent does not include tenant recoveries, additional rents in excess of floors and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, DFL non-cash interest, and deferred revenues).

Same-Store Adjusted NOI increased primarily as a result of the following:

•mark-to-market lease renewals; ~~and~~

•annual rent escalations; ~~partially offset by~~and

•~~lower~~higher parking ~~income.~~income and percentage-based rents.

Total Portfolio Adjusted NOI increased primarily as a result of the aforementioned increases to Same-Store and the following Non-Same-Store impacts:

•increased NOI from our 2020 and 2021 acquisitions;

•increased occupancy in former redevelopment and development properties that have been placed into service; partially offset by

•decreased NOI from our 2020 and 2021 dispositions.

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The following table summarizes results at and for the nine months ended September 30, 2021 and 2020 (dollars and square feet in thousands, except per square foot data):


	SS									Total Portfolio(1)
	Nine Months Ended September 30,									Nine Months Ended September 30,
	2021			2020			Change			2021			2020			Change
Rental and related revenues	$	400,668		$	389,359		$	11,309		$	490,456		$	456,297		$	34,159
Income from direct financing leases	6,522			6,424			98			6,522			7,569			(1,047)
Healthpeak’s share of unconsolidated joint venture total revenues	2,095			2,018			77			2,162			2,085			77
Noncontrolling interests’ share of consolidated joint venture total revenues	(25,728)			(24,865)			(863)			(26,704)			(25,775)			(929)
Operating expenses	(131,128)			(127,929)			(3,199)			(164,198)			(151,484)			(12,714)
Healthpeak’s share of unconsolidated joint venture operating expenses	(915)			(846)			(69)			(915)			(846)			(69)
Noncontrolling interests’ share of consolidated joint venture operating expenses	7,499			7,518			(19)			7,714			7,737			(23)

Adjustments to NOI(2)	(4,869)			(4,917)			48			(7,553)			(3,188)			(4,365)
Adjusted NOI	$	254,144		$	246,762		$	7,382		307,484			292,395			15,089
Less: non-SS Adjusted NOI										(53,340)			(45,633)			(7,707)
SS Adjusted NOI										$	254,144		$	246,762		$	7,382
Adjusted NOI % change							3.0		%
Property count(3)	242			242						300			276
End of period occupancy	91.9		%	92.4		%				90.1		%	91.0		%
Average occupancy	91.9		%	92.4		%				90.1		%	91.6		%
Average occupied square feet	18,018			18,091						20,827			19,936
Average annual total revenues per occupied square foot(4)	$	31		$	30					$	31		$	31
Average annual base rent per occupied square foot(5)	$	26		$	25					$	27		$	27

(1)Total Portfolio includes results of operations from disposed properties through the disposition date.

(2)Represents adjustments to NOI in accordance with our definition of Adjusted NOI. Refer to “Non-GAAP Financial Measures” above for definitions of NOI and Adjusted NOI.

(3)From our third quarter 2020 presentation of Same-Store, we removed six MOBs that were sold, four MOBs that were classified as held for sale, and three MOBs that were placed into redevelopment.

(4)Average annual total revenues does not include non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, DFL non-cash interest, and deferred revenues).

Same-Store Adjusted NOI increased primarily as a result of the following:

•mark-to-market lease renewals;

•annual rent escalations; and

•higher parking income and percentage-based rents.

Total Portfolio Adjusted NOI increased primarily as a result of the aforementioned increases to Same-Store and the following Non-Same-Store impacts:

•increased NOI from our 2020 and 2021 acquisitions;

•increased occupancy in former redevelopment and development properties that have been placed into service; partially offset by

•decreased NOI from our 2020 and 2021 dispositions.

Table of Contents

Continuing Care Retirement Community

The following table summarizes results at and for the three months ended ~~March 31,~~September 30, 2021 and 2020 (dollars in thousands, except per unit data):


		SS									Total Portfolio									SS									Total Portfolio
		Three Months Ended March 31,									Three Months Ended March 31,									Three Months Ended September 30,									Three Months Ended September 30,
		2021			2020			Change			2021			2020			Change			2021			2020			Change			2021			2020			Change
Resident fees and services	Resident fees and services	$	18,844		$	21,007		$	(2,163)		$	116,128		$	91,780		$	24,348	Resident fees and services	$	119,022		$	115,031		$	3,991		$	119,022		$	115,031		$	3,991
Government grant income(1)	Government grant income(1)	143			—			143			1,310			—			1,310		Government grant income(1)	15			1,761			(1,746)			15			1,761			(1,746)
Healthpeak’s share of unconsolidated joint venture total revenues	Healthpeak’s share of unconsolidated joint venture total revenues	—			—			—			4,488			21,647			(17,159)		Healthpeak’s share of unconsolidated joint venture total revenues	—			—			—			—			4,295			(4,295)
Healthpeak's share of unconsolidated joint venture government grant income		—			—			—			199			—			199
Healthpeak’s share of unconsolidated joint venture government grant income																			Healthpeak’s share of unconsolidated joint venture government grant income	—			—			—			—			246			(246)

Operating expenses	Operating expenses	(13,394)			(14,310)			916			(91,179)			(156,482)			65,303		Operating expenses	(98,405)			(94,992)			(3,413)			(98,799)			(94,992)			(3,807)
Healthpeak's share of unconsolidated joint venture operating expenses		—			—			—			(4,745)			(18,037)			13,292
Healthpeak’s share of unconsolidated joint venture operating expenses																			Healthpeak’s share of unconsolidated joint venture operating expenses	—			—			—			(32)			(4,797)			4,765

Adjustments to NOI(2)	Adjustments to NOI(2)	—			—			—			20			91,561			(91,541)		Adjustments to NOI(2)	724			1,678			(954)			724			1,684			(960)
Adjusted NOI	Adjusted NOI	$	5,593		$	6,697		$	(1,104)		26,221			30,469			(4,248)		Adjusted NOI	$	21,356		$	23,478		$	(2,122)		20,930			23,228			(2,298)
Less: non-SS Adjusted NOI	Less: non-SS Adjusted NOI										(20,628)			(23,772)			3,144		Less: non-SS Adjusted NOI										426			250			176
SS Adjusted NOI	SS Adjusted NOI										$	5,593		$	6,697		$	(1,104)	SS Adjusted NOI										$	21,356		$	23,478		$	(2,122)
Adjusted NOI % change	Adjusted NOI % change							(16.5)		%									Adjusted NOI % change							(9.0)		%
Property count	Property count	2			2						17			17					Property count	15			15						15			17
Average occupancy	Average occupancy	75.8		%	86.4		%				78.7		%	86.2		%			Average occupancy	79.5		%	79.5		%				79.5		%	79.5		%
Average capacity (units)(3)	Average capacity (units)(3)	1,052			1,052						8,326			8,322					Average capacity (units)(3)	7,437			7,434						7,437			8,324
Average annual rent per unit	Average annual rent per unit	$	71,651		$	79,875					$	61,024		$	65,179				Average annual rent per unit	$	64,016		$	61,895					$	64,021		$	60,600

(1)Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the Consolidated Statements of Operations.

(2)Represents adjustments to NOI in accordance with ~~the Company’s~~our definition of Adjusted NOI. Refer to “Non-GAAP Financial Measures” above for definitions of NOI and Adjusted NOI.

(3)Represents average capacity as reported by the respective tenants or operators for the three-month period.

Same-Store Adjusted NOI and Total Portfolio Adjusted NOI decreased primarily as a result of the following:

•~~additional expenses and~~ decreased ~~occupancy due to COVID-19; partially offset by~~

•government grant income received under the CARES ~~Act.~~Act; and

•higher labor costs; partially offset by

•lower COVID-19 related expenses; and

•increased rates for resident fees.

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The following table summarizes results at and for the nine months ended September 30, 2021 and 2020 (dollars in thousands, except per unit data):


	SS									Total Portfolio
	Nine Months Ended September 30,									Nine Months Ended September 30,
	2021			2020			Change			2021			2020			Change
Resident fees and services	$	55,484		$	57,032		$	(1,548)		$	352,458		$	320,737		$	31,721
Government grant income(1)	143			1,733			(1,590)			1,412			13,632			(12,220)
Healthpeak’s share of unconsolidated joint venture total revenues	—			—			—			6,903			30,723			(23,820)
Healthpeak’s share of unconsolidated joint venture government grant income	—			—			—			200			780			(580)


Operating expenses	(40,395)			(41,006)			611			(284,739)			(345,722)			60,983
Healthpeak’s share of unconsolidated joint venture operating expenses	—			—			—			(6,985)			(27,660)			20,675


Adjustments to NOI(2)	—			(1)			1			1,971			93,263			(91,292)
Adjusted NOI	$	15,232		$	17,758		$	(2,526)		71,220			85,753			(14,533)
Less: non-SS Adjusted NOI										(55,988)			(67,995)			12,007
SS Adjusted NOI										$	15,232		$	17,758		$	(2,526)
Adjusted NOI % change							(14.2)		%
Property count	2			2						15			17
Average occupancy	75.9		%	82.0		%				79.2		%	82.2		%
Average capacity (units)(3)	9,468			9,468						7,880			8,322
Average annual rent per unit	$	70,322		$	72,284					$	62,334		$	63,820

(1)Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the Consolidated Statements of Operations.

(2)Represents adjustments to NOI in accordance with our definition of Adjusted NOI. Refer to “Non-GAAP Financial Measures” above for definitions of NOI and Adjusted NOI.

(3)Represents average capacity as reported by the respective tenants or operators for the nine-month period.

Same-Store Adjusted NOI decreased primarily as a result of the following:

•lower occupancy due to COVID-19;

•decreased government grant income received under the CARES Act; and

•higher labor costs; partially offset by

•lower COVID-19 related expenses; and

•increased rates for resident fees.

Total Portfolio Adjusted NOI decreased primarily as a result of the aforementioned decreases to Same-Store, which are also applicable to ~~the Company’s~~our properties not yet included in Same-Store.

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Other Income and Expense Items

The following table summarizes the results of our other income and expense items for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 (in thousands):


		Three Months Ended March 31,						Three Months Ended September 30,				Nine months ended September 30,
		2021		2020		Change				2021		2020		Change		2021		2020		Change
Interest income	Interest income	$	9,013	$	3,688	$	5,325		Interest income	$	6,748	$	4,443	$	2,305	$	31,869	$	12,361	$	19,508
Interest expense	Interest expense	46,843		55,691		(8,848)			Interest expense	35,905		53,734		(17,829)		121,429		164,248		(42,819)
Depreciation and amortization	Depreciation and amortization	157,538		125,112		32,426			Depreciation and amortization	177,175		141,971		35,204		506,172		406,774		99,398
General and administrative	General and administrative	24,902		22,349		2,553			General and administrative	23,270		21,661		1,609		72,260		67,730		4,530
Transaction costs	Transaction costs	798		14,563		(13,765)			Transaction costs	—		1,984		(1,984)		1,417		16,920		(15,503)
Impairments and loan loss reserves (recoveries), net	Impairments and loan loss reserves (recoveries), net	3,242		11,107		(7,865)			Impairments and loan loss reserves (recoveries), net	285		(1,777)		2,062		4,458		16,167		(11,709)
Gain (loss) on sales of real estate, net	Gain (loss) on sales of real estate, net	—		2,069		(2,069)			Gain (loss) on sales of real estate, net	14,635		2,283		12,352		189,873		85,636		104,237
Gain (loss) on debt extinguishments	Gain (loss) on debt extinguishments	(164,292)		833		(165,125)			Gain (loss) on debt extinguishments	(667)		(17,921)		17,254		(225,824)		(42,912)		(182,912)
Other income (expense), net	Other income (expense), net	2,200		210,653		(208,453)			Other income (expense), net	1,670		6,744		(5,074)		5,604		234,812		(229,208)
Income tax benefit (expense)	Income tax benefit (expense)	(8)		29,868		(29,876)			Income tax benefit (expense)	649		(22,970)		23,619		1,404		6,792		(5,388)
Equity income (loss) from unconsolidated joint ventures	Equity income (loss) from unconsolidated joint ventures	1,323		(11,146)		12,469			Equity income (loss) from unconsolidated joint ventures	2,327		(18,749)		21,076		4,517		(47,630)		52,147
Income (loss) from discontinued operations	Income (loss) from discontinued operations	270,008		135,408		134,600			Income (loss) from discontinued operations	601		(31,819)		32,420		384,569		98,297		286,272
Noncontrolling interests’ share in continuing operations	Noncontrolling interests’ share in continuing operations	(3,306)		(3,463)		157			Noncontrolling interests’ share in continuing operations	(7,195)		(3,616)		(3,579)		(14,036)		(10,565)		(3,471)
Noncontrolling interests’ share in discontinued operations	Noncontrolling interests’ share in discontinued operations	(329)		3		(332)			Noncontrolling interests’ share in discontinued operations	—		(220)		220		(2,539)		(274)		(2,265)

Interest income

Interest income increased for the three and nine months ended ~~March 31,~~September 30, 2021 primarily as a result of seller ~~financing.~~financing, partially offset by principal repayments on loans receivable. Interest income for the nine months ended September 30, 2021 further increased as result of the accelerated recognition of a mark-to-market discount resulting from prepayments on loans receivable.

Interest expense

Interest expense decreased for the three and nine months ended ~~March 31,~~September 30, 2021 primarily as a result ofof: (i) senior unsecured notes repurchases and redemptions in the first and second quarters of 2021 and (ii) repayment of the 2019 Term Loan in the third quarter of 2021.

Depreciation and amortization expense

Depreciation and amortization expense increased for the three and nine months ended ~~March 31,~~September 30, 2021 primarily as a result of: (i) assets acquired during 2020 and 2021, (ii) the acquisition of Brookdale’s interest in and consolidation of 13 CCRCs during the first quarter of 2020, ~~and~~ (iii) development and redevelopment projects placed into service during 2020 and ~~2021.~~2021, and (iv) accelerated depreciation related to the change in estimated useful lives on certain of our densification projects. The increase was partially offset ~~by: (i)~~by dispositions of real estate throughout ~~2020 and (ii) an increase in the number of assets classified as held for sale during~~ 2020 and 2021.

General and administrative expense

General and administrative expenses increased for the three and nine months ended ~~March 31,~~September 30, 2021 primarily as a result of higher travel and compensation costs. General and administrative expenses further increased for the nine months ended September 30, 2021 primarily as a result of increased restructuring and severance related charges.

Transaction Costs

Transaction costs decreased for the three and nine months ended ~~March 31,~~September 30, 2021 primarily as a result of costs associated with the transition of 13 CCRCs from Brookdale to LCS in January 2020.

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Impairments and loan loss reserves (recoveries), net

The impairment charges recognized in each period vary depending on facts and circumstances related to each asset and are impacted by negotiations with potential buyers, current operations of the assets, and other factors. Impairments and loan loss reserves (recoveries), net ~~decreased~~increased for the three months ended ~~March 31,~~September 30, 2021 primarily as a result ~~of no~~of: (i) additional assets ~~being~~ impaired under the held for sale impairment model and (ii) a decrease in loan loss recoveries under the current expected credit losses model. Impairments and loan loss reserves (recoveries), net decreased for the nine months ended September 30, 2021 primarily as a result of: (i) fewer assets impaired under the held for sale impairment model and (ii) a decrease in loan loss reserves under the current expected credit losses ~~model.~~model, partially offset by impairment charges on loans classified as held for sale. The reduction in loan loss recoveries during the three months ended September 30, 2021 is primarily due to: (i) principal repayments on loans receivable during the third quarter of 2021, (ii) loans receivable sales, and (iii) a more positive economic outlook. The reduction in loan loss reserves during the nine months ended September 30, 2021 is ~~primarily due~~further impacted by: (i) loans receivable transferred from held for investment to held for sale during the ~~economic impact~~nine months ended September 30, 2021 and (ii) the sale of ~~COVID-19~~two mezzanine loans as part of the Discovery SHOP Portfolio disposition. The reduction in loan loss reserves during the nine months ended September 30, 2021 is partially offset by the loan loss reserve recognized related to new seller financing issued in the first quarter of ~~2020, partially offset by new seller financing in~~ 2021.

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Gain (loss) on sales of real estate, net

~~During~~Gain (loss) on sales of real estate, net increased during the three months ended ~~March 31,~~September 30, 2021 ~~and~~primarily as a result of the sale of three MOBs for $36 million during the three months ended September 30, 2021 resulting in total gain on sale of $15 million, compared to the sale of four MOBs for $14 million during the three months ended September 30, 2020 ~~there was no material~~resulting in total gain ~~or loss~~on sale of $2 million. Gain (loss) on sales of real estate, net increased during the nine months ended September 30, 2021 primarily as a result of the sale of seven MOBs for $57 million and one hospital for $226 million during the nine months ended September 30, 2021 resulting in ~~continuing operations.~~total gain on sale of $190 million, compared to the sale of seven MOBs for $120 million, one undeveloped MOB land parcel for $2 million, and one asset from other non-reportable segments for $1 million during the nine months ended September 30, 2020 resulting in total gain on sale of $86 million.

Gain (loss) on debt extinguishments

Refer to Note 10 to the Consolidated Financial Statements for information regarding senior unsecured note repurchases and redemptions and the associated loss on debt extinguishment recognized.

Other income (expense), net

Other income (expense), net decreased for the three months ended ~~March 31,~~September 30, 2021 primarily as a result of a decline in government grant income received under the CARES Act.

Other income (expense), net decreased for the nine months ended September 30, 2021 primarily as a result of: (i) a gain upon change of control related to the acquisition of the outstanding equity interest in 13 CCRCs from Brookdale during the first quarter of 2020, ~~and~~ (ii) a gain on sale related to the sale of a hospital underlying a DFL during the first quarter of ~~2020; partially offset by~~2020, and (iii) a decline in government grant income received under the CARES ~~Act during 2021.~~Act.

Income tax benefit (expense)

Income tax benefit ~~decreased~~increased for the three months ended ~~March 31,~~September 30, 2021 primarily as a result of the income tax expense recognized during the third quarter of 2020 from the establishment of a deferred tax asset valuation allowance related to deferred tax assets that were no longer expected to be realized as a result of our plan to dispose of our SHOP portfolio. Income tax benefit decreased for the nine months ended September 30, 2021 primarily as a result of the tax benefits recognized in the first quarter of 2020 related to the following: (i) the purchase of Brookdale’s interest in 13 of the 15 communities in the CCRC JV, including the management termination fee expense paid to Brookdale in connection with transitioning management of 13 CCRCs to LCS, and (ii) the extension of the net operating loss carryback period provided by the CARES Act. The decrease in income tax benefit during the nine months ended September 30, 2021 was partially offset by the aforementioned establishment of a deferred tax asset valuation allowance during the third quarter of 2020 related to deferred tax assets that were no longer expected to be realized as a result of our plan to dispose of our SHOP portfolio.

Equity income (loss) from unconsolidated joint ventures

Equity income from unconsolidated joint ventures increased for the three and nine months ended ~~March 31,~~September 30, 2021 as a result of a decrease in amortization expense due to fully amortized intangible assets related to an unconsolidated joint venture owning 19 SHOP assets. The increase in equity income from unconsolidated joint ventures for the nine months ended September 30, 2021 was partially offset by our share of a gain on sale of one asset in an unconsolidated joint venture during the first quarter of 2020.

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Income (loss) from discontinued operations

Income from discontinued operations increased for the three and nine months ended ~~March 31,~~September 30, 2021 primarily as a result of: (i) increased gain on sales of real estate from the disposal of multiple senior housing portfolios during 2021; (ii) decreased depreciation and amortization expense due to assets being ~~disposed of or~~ classified as held for sale throughout ~~2020~~2020; and ~~assets that were fully depreciated in 2020 and 2021;~~ (iii) decreased impairments of depreciable real estate as a result of nofewer assets being impaired under the held for sale impairment ~~model, and (iv) government grant income received under the CARES Act during 2021.~~model. The increase in income (loss) from discontinued operations during the three and nine months ended September 30, 2021 was partially offset ~~by: (i)~~by decreased NOI from dispositions of real estate during 2020 and ~~2021 and (ii) increased expenses and decreased occupancy related to COVID-19.~~2021.

Liquidity and Capital Resources

We anticipate that our cash flow from operations, available cash balances and cash from our various financing activities will be adequate for at least the next 12 months for purposes of: (i) funding recurring operating expenses; (ii) meeting debt service requirements; and (iii) satisfying our obligations to make distributions to our stockholders and non-controlling interest members. ~~During the three months ended March 31, 2021, distributions to common shareholders and noncontrolling interest holders exceeded cash flows from operations by approximately $49 million.~~ Distributions were made using a combination of cash flows from operations, funds available under our bank line of credit and commercial paper program, proceeds from the sale of properties, and other sources of cash available to us.

Our principal investing liquidity needs for the next 12 months are to:

•fund capital expenditures, including tenant improvements and leasing costs; and

•fund future acquisition, transactional and development and redevelopment activities.

We anticipate satisfying these future investing needs using one or more of the following:

•cash flow from operations;

•sale of, or exchange of ownership interests in, properties or other investments;

•borrowings under our bank line of credit and commercial paper program;

•issuance of additional debt, including unsecured notes, term loans and mortgage debt; and/or

•issuance of common or preferred stock or its equivalent.

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Our ability to access the capital markets impacts our cost of capital and ability to refinance maturing indebtedness, as well as our ability to fund future acquisitions and development through the issuance of additional securities or secured debt. Credit ratings impact our ability to access capital and directly impact our cost of capital as well. For example, our bank line of credit ~~and term loan accrue~~accrues interest at a rate per annum equal to the base rate or LIBOR (or other applicable rate with respect to non-dollar borrowings) plus a margin that depends upon the Company’s credit ratings ~~of our~~for its senior unsecured long-term debt. We also pay a facility fee on the entire revolving commitment that depends upon our credit ratings. As of ~~May 3,~~November 1, 2021, we had long-term credit ratings of Baa1 from Moody’s and BBB+ from S&P Global and Fitch, and short-term credit ratings of P-2, A-2, and F2 from Moody’s, S&P Global, and Fitch, respectively.

A downgrade in credit ratings by Moody’s, S&P Global, and Fitch may have a negative impact on the interest rates and facility fees for our bank line of credit and ~~term loan and~~ may negatively impact the pricing of notes issued under our commercial paper program and senior unsecured notes. While a downgrade in our credit ratings would adversely impact our cost of borrowing, we believe we would continue to have access to the unsecured debt markets, and we could also seek to enter into one or more secured debt financings, issue additional securities, including under our 2020 ATM Program (as defined below), or dispose of certain assets to fund future operating costs, capital expenditures, or acquisitions, although no assurances can be made in this regard. Refer to “COVID-19 Update” above for a more comprehensive discussion of the potential impact of COVID-19 on our business.

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Cash Flow Summary

The following summary discussion of our cash flows is based on the Consolidated Statements of Cash Flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

The following table sets forth changes in cash flows (in thousands):


		Three Months Ended March 31,							Nine Months Ended September 30,
		2021		2020		Change			2021		2020		Change
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$	122,726	$	95,042	$	27,684	Net cash provided by (used in) operating activities	$	571,335	$	539,724	$	31,611
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	767,726		(151,011)		918,737		Net cash provided by (used in) investing activities	1,203,675		(766,478)		1,970,153
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(924,119)		761,421		(1,685,540)		Net cash provided by (used in) financing activities	(1,687,889)		341,788		(2,029,677)

Operating Cash Flows

The increase in operating cash flow is primarily the result of an increase in income related to: (i) 2020 and 2021 acquisitions, (ii) annual rent increases, (iii) new leasing activity, and (iv) developments and redevelopments placed in service during 2020 and 2021. The increase in operating cash flow is partially offset ~~by: (i)~~by a decrease in income related to assets sold during 2020 and ~~2021 and (ii) occupancy declines and additional expenses within our SHOP and CCRC portfolios related to COVID-19.~~2021. Our cash flow from operations is dependent upon the occupancy levels of our buildings, rental rates on leases, our tenants’ performance on their lease obligations, the level of operating expenses, and other factors.

Investing Cash Flows

The following are significant investing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2021:

•made investments of ~~$181 million~~$1.5 billion primarily related to the acquisition, development, and redevelopment of real estate and funding of a new and existing loans; and

•received net proceeds of ~~$948 million~~$2.7 billion primarily from sales of real estate ~~assets.~~assets and repayments on loans receivable.

The following are significant investing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2020:

•made investments of ~~$657 million~~$1.47 billion primarily related to the acquisition, development, and redevelopment of real estate and funding of ~~a participating development loan;~~new and existing loans; and

•received net proceeds of ~~$506~~$700 million primarily from sales of real estate ~~assets.~~

~~Table~~assets, repayments on loans receivable, and the sale of ~~Contents~~a hospital under a DFL.

Financing Cash Flows

The following are significant financing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2021:

•made net borrowings of ~~$909~~$894 million under our bank line of credit and commercial paper program;

•made net repayments of ~~$1.6~~$2.1 billion under our senior unsecured notes (including debt extinguishment costs) and mortgage debt; and

•paid cash dividends on common stock of ~~$164~~$488 million.

The following are significant financing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2020:

•made net repayments of ~~$98~~$105 million ~~primarily~~ under our bank line of credit, ~~and~~ commercial paper ~~program;~~program, senior unsecured notes (including debt extinguishment costs) and mortgage debt;

•issued common stock of ~~$1.1~~$1.07 billion; and

•paid cash dividends on common stock of ~~$189~~$588 million.

Discontinued Operations

Operating, investing, and financing cash flows in our Consolidated Statements of Cash Flows are reported inclusive of both cash flows from continuing operations and cash flows from discontinued operations. Certain significant cash flows from discontinued operations are disclosed in Note 15 to the Consolidated Financial Statements. The absence of future cash flows from discontinued operations is not expected to significantly impact our liquidity, as the proceeds from senior housing triple-net and SHOP dispositions are expected to be used to pay down debt and invest in additional real estate in our other business lines. Additionally, we have multiple other sources of liquidity that can be utilized in the future, as needed. Refer to the Liquidity and Capital Resources section above for additional information regarding our liquidity.

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Debt

In January 2021, we repurchased $112 million aggregate principal amount of our 4.25% senior unsecured notes due in 2023, $201 million aggregate principal amount of our 4.20% senior unsecured notes due in 2024, and $469 million aggregate principal amount of our 3.88% senior unsecured notes due in 2024.

In February 2021, we used optional redemption provisions to redeem the remaining $188 million of our 4.25% senior unsecured notes due in 2023, $149 million of our 4.20% senior unsecured notes due in 2024, and $331 million of our 3.88% senior unsecured notes due in 2024.

In ~~March~~April 2021, in conjunction with the acquisition of the MOB Portfolio, we originated $142 million of secured mortgage debt. Additionally, we executed two interest rate cap agreements on the mortgage debt.

In May 2021, we ~~repaid $39~~repurchased $252 million ~~of variable rate secured debt on two SHOP assets classified as discontinued operations as of March 31, 2021.~~

~~On May 4, 2021, we announced the commencement of tender offers to purchase up to an~~ aggregate principal amount ~~of $550 million for cash, targeting (i) $250 million~~ of our 3.40% senior unsecured notes due in 2025 and ~~(ii) $300~~$298 million aggregate principal amount of our 4.00% senior unsecured notes due in 2025.

In July 2021, we completed our inaugural green bond offering, issuing $450 million aggregate principal amount of 1.35% senior unsecured notes due 2027.

In July 2021, we repaid the $250 million outstanding balance on the 2019 Term Loan.

In September 2021, we amended our bank line of credit facility to increase total revolving commitments from $2.5 billion to $3.0 billion and extended the maturity date to January 20, 2026.

In 2021, we increased the maximum aggregate face or principal amount that can be outstanding at any one time under our commercial paper program from $1.0 billion to $1.5 billion.

See Note 10 to the Consolidated Financial Statements for additional information about our outstanding debt.

Approximately ~~78%~~79% and 96% of our consolidated debt, excluding debt classified as liabilities related to assets held for sale and discontinued operations, net, was fixed rate debt as of ~~March 31,~~September 30, 2021 and 2020, respectively. At ~~March 31,~~September 30, 2021, our fixed rate debt and variable rate debt had weighted average interest rates of ~~3.77%~~3.52% and ~~0.51%~~0.52%, respectively. At ~~March 31,~~September 30, 2020, our fixed rate debt and variable rate debt had weighted average interest rates of ~~3.95%~~3.87% and ~~1.98%~~1.14%, respectively. WeAs of September 30, 2021 and 2020, we had zeroand~~$42~~ $41 million, respectively, of variable rate debt swapped to fixed through interest rate swaps, aswhich is reported in liabilities related to assets held for sale and discontinued operations, net. As of ~~March 31,~~September 30, 2021 and ~~2020.~~2020, we had $142 million and zero, respectively, of variable rate debt subject to interest rate cap agreements. For a more detailed discussion of our interest rate risk, see “Quantitative and Qualitative Disclosures About Market Risk” in Item 3 below.

Equity

At ~~March 31,~~September 30, 2021, we had 539 million shares of common stock outstanding, equity totaled ~~$7.32~~$7.22 billion, and our equity securities had a market value of ~~$17.34~~$18.29 billion. At June 30, 2021, March 31, 2021, December 31, 2020 and December 31, 2019, our equity totaled $7.35 billion, $7.24 billion, $7.29 billion and $6.66 billion, respectively.

At ~~March 31,~~September 30, 2021, non-managing members held an aggregate of five million units in seven limited liability companies (“DownREITs”) for which we are the managing member. The DownREIT units are exchangeable for an amount of cash approximating the then-current market value of shares of our common stock or, at our option, shares of our common stock (subject to certain adjustments, such as stock splits and reclassifications). At ~~March 31,~~September 30, 2021, the outstanding DownREIT units were convertible into approximately seven million shares of our common stock.

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At-The-Market Program

In February 2020, we terminated our previous at-the-market equity offering program and concurrently established a new at-the-market equity offering program ~~(the~~(as amended from time to time, the “2020 ATM Program”). In May 2021, we amended the 2020 ATM Program to increase the size of the program from $1.25 billion to $1.5 billion. In addition to the issuance and sale of shares of our common stock, we may also enter into one or more forward sales agreements (each, an “ATM forward contract”) with sales agents for the sale of our shares of common stock under our 2020 ATM Program.

During the three and nine months ended ~~March 31,~~September 30, 2021, we utilized the forward provisions under the 2020 ATM Program to allow for the sale of an aggregate of 9.1 million shares of our common stock at an initial weighted average net price of $35.25 per share, after commissions.

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During the three and nine months ended September 30, 2021, we did not issue any shares of our common stock under any ATM Program.

At ~~March 31,~~September 30, 2021, ~~approximately $1.25~~$1.18 billion of our common stock remained available for sale under the 2020 ATM Program. Actual future sales of our common stock will depend upon a variety of factors, including but not limited to market conditions, the trading price of our common stock, and our capital needs. We have no obligation to sell any of the remaining shares under our 2020 ATM Program.

~~During the three months ended March 31, 2021, we did not issue any shares of our common stock under our 2020 ATM Program.~~

See Note 12 to the Consolidated Financial Statements for additional information about our 2020 ATM Program.

Shelf Registration

In May ~~2018,~~2021, we filed a prospectus with the SEC as part of a registration statement on Form S-3, using an automatic shelf registration process. This shelf registration statement expires on May ~~31, 2021~~13, 2024 and at or prior to such time, we expect to file a new shelf registration statement. Under the “shelf” process, we may sell any combination of the securities described in the prospectus through one or more offerings. The securities described in the prospectus include common stock, preferred stock, depositary shares, debt securities, and warrants.

Contractual Obligations and Off-Balance Sheet Arrangements

Our commitments, which are primarily related to development and redevelopment projects and tenant improvements, increased by $9$89 million, to ~~$315~~$395 million at ~~March 31,~~September 30, 2021, when compared to December 31, 2020, primarily as a result of increased commitments on existing projects and new projects started during ~~the first quarter of~~ 2021.

Our commitments to fund senior housing redevelopment and capital expenditures increased by ~~$89~~$48 million, to ~~$100~~$59 million at ~~March 31,~~September 30, 2021, when compared to December 31, 2020, primarily as a result of a commitment to finance additional debt for capital expenditures on the Sunrise Senior Housing Portfolio sold during the ~~three~~nine months ended ~~March 31,~~September 30, 2021.

Our commitments related to debt have materially changed since December 31, 2020 as a result of ~~draws on our bank line of credit and~~ issuances of securities under our commercial paper program, the repurchase and redemption of senior unsecured notes in January, February and May 2021, repayments on mortgage debt, the issuance of $450 million 1.35% senior unsecured notes due 2027 in July 2021, the repayment of our 2019 Term Loan in July 2021, and the ~~redemption~~amendment and restatement of ~~senior unsecured notes in February 2021. As of March 31, 2021, we had an aggregate $1.04 billion balance outstanding under~~ our bank line of credit orfacility in September 2021. As of September 30, 2021, we had $1.02 billion outstanding under our commercial paper program. See Note 10 to the Consolidated Financial Statements for additional information about our debt commitments.

There have been no other material changes, outside of the ordinary course of business, to these contractual obligations during the ~~three~~nine months ended ~~March 31,~~September 30, 2021.

We own interests in certain unconsolidated joint ventures as described in Note 8 to the Consolidated Financial Statements. Except in limited circumstances, our risk of loss is limited to our investment in the joint ~~ventures~~ventures.

As described in Note 12 to the Consolidated Financial Statements, certain of our noncontrolling interest holders have the ability to put their equity interests to us upon specified events or after the passage of a predetermined period of time. Each put option is subject to changes in redemption value in the event that the underlying property generates specified returns for us and ~~any outstanding loans receivable.~~ meets certain promote thresholds pursuant to the respective agreements.

We have no other material off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources except for commitments included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 in “Contractual Obligations” under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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Non-GAAP Financial Measures Reconciliations

The following is a reconciliation from net income (loss) applicable to common shares, the most directly comparable financial measure calculated and presented in accordance with GAAP, to ~~NAREIT~~Nareit FFO, FFO as Adjusted, and AFFO (in thousands, except per share data):


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020
Net income (loss) applicable to common shares	Net income (loss) applicable to common shares	$	143,337	$	277,464		Net income (loss) applicable to common shares	$	54,442	$	(63,768)	$	473,778	$	265,018
Real estate related depreciation and amortization(1)	Real estate related depreciation and amortization(1)	157,538		189,276			Real estate related depreciation and amortization(1)	177,175		173,630		506,172		541,394
Healthpeak's share of real estate related depreciation and amortization from unconsolidated joint ventures		4,453		29,610
Noncontrolling interests' share of real estate related depreciation and amortization		(4,881)		(4,852)
Healthpeak’s share of real estate related depreciation and amortization from unconsolidated joint ventures							Healthpeak’s share of real estate related depreciation and amortization from unconsolidated joint ventures	4,722		24,822		12,044		80,050
Noncontrolling interests’ share of real estate related depreciation and amortization							Noncontrolling interests’ share of real estate related depreciation and amortization	(4,849)		(5,020)		(14,599)		(15,043)
Other real estate-related depreciation and amortization	Other real estate-related depreciation and amortization	—		1,237			Other real estate-related depreciation and amortization	—		319		—		2,447
Loss (gain) on sales of depreciable real estate, net(1)	Loss (gain) on sales of depreciable real estate, net(1)	(259,662)		(164,869)			Loss (gain) on sales of depreciable real estate, net(1)	(41,393)		(149)		(598,531)		(247,881)
Healthpeak's share of loss (gain) on sales of depreciable real estate, net, from unconsolidated joint ventures		—		(7,729)

Healthpeak’s share of loss (gain) on sales of depreciable real estate, net, from unconsolidated joint ventures							Healthpeak’s share of loss (gain) on sales of depreciable real estate, net, from unconsolidated joint ventures	(1,068)		—		(6,934)		(9,248)
Noncontrolling interests’ share of gain (loss) on sales of depreciable real estate, net							Noncontrolling interests’ share of gain (loss) on sales of depreciable real estate, net	3,450		—		5,628		(3)
Loss (gain) upon change of control, net(2)	Loss (gain) upon change of control, net(2)	(1,042)		(167,434)			Loss (gain) upon change of control, net(2)	—		(3,259)		(1,042)		(173,222)
Taxes associated with real estate dispositions	Taxes associated with real estate dispositions	490		(11,876)			Taxes associated with real estate dispositions	483		551		2,666		(10,989)
Impairments (recoveries) of depreciable real estate, net~~(1)~~	Impairments (recoveries) of depreciable real estate, net~~(1)~~	—		30,722			Impairments (recoveries) of depreciable real estate, net~~(1)~~	1,952		37,477		5,695		85,996
Nareit FFO applicable to common shares							Nareit FFO applicable to common shares	194,914		164,603		384,877		518,519
Distributions on dilutive convertible units and other							Distributions on dilutive convertible units and other	1,651		—		—		5,380
Diluted Nareit FFO applicable to common shares							Diluted Nareit FFO applicable to common shares	$	196,565	$	164,603	$	384,877	$	523,899

Weighted average shares outstanding - diluted Nareit FFO							Weighted average shares outstanding - diluted Nareit FFO	544,889		538,645		539,159		533,963

NAREIT FFO applicable to common shares		40,233		171,549
Distributions on dilutive convertible units and other		—		1,637
Diluted NAREIT FFO applicable to common shares		$	40,233	$	173,186

Weighted average shares outstanding - diluted NAREIT FFO		539,016		513,123

Impact of adjustments to NAREIT FFO:
Impact of adjustments to Nareit FFO:							Impact of adjustments to Nareit FFO:
Transaction-related items(3)	Transaction-related items(3)	$	4,113	$	92,379		Transaction-related items(3)	$	1,259	$	2,276	$	6,638	$	95,342
Other impairments (recoveries) and other losses (gains), net(4)	Other impairments (recoveries) and other losses (gains), net(4)	3,242		(33,306)			Other impairments (recoveries) and other losses (gains), net(4)	20,073		(2,927)		25,161		(29,943)
Restructuring and severance related charges	Restructuring and severance related charges	2,463		—			Restructuring and severance related charges	—		—		2,463		—
Loss (gain) on debt extinguishments	Loss (gain) on debt extinguishments	164,292		(833)			Loss (gain) on debt extinguishments	667		17,921		225,824		42,912

Litigation costs (recoveries)	Litigation costs (recoveries)	—		106			Litigation costs (recoveries)	—		26		—		232
Casualty-related charges (recoveries), net	Casualty-related charges (recoveries), net	1,048		—			Casualty-related charges (recoveries), net	558		469		5,203		469
Foreign currency remeasurement losses (gains)	Foreign currency remeasurement losses (gains)	—		10			Foreign currency remeasurement losses (gains)	—		—		—		153

Tax rate legislation impact(5)		—		(2,892)
Valuation allowance on deferred tax assets(5)							Valuation allowance on deferred tax assets(5)	—		31,161		—		31,161
Tax rate legislation impact(6)							Tax rate legislation impact(6)	—		—		—		(3,590)
Total adjustments	Total adjustments	$	175,158	$	55,464		Total adjustments	$	22,557	$	48,926	$	265,289	$	136,736

FFO as Adjusted applicable to common shares	FFO as Adjusted applicable to common shares	$	215,391	$	227,013		FFO as Adjusted applicable to common shares	$	217,471	$	213,529	$	650,166	$	655,255
Distributions on dilutive convertible units and other	Distributions on dilutive convertible units and other	1,940		1,549			Distributions on dilutive convertible units and other	2,313		1,852		6,323		5,244
Diluted FFO as Adjusted applicable to common shares	Diluted FFO as Adjusted applicable to common shares	$	217,331	$	228,562		Diluted FFO as Adjusted applicable to common shares	$	219,784	$	215,381	$	656,489	$	660,499

Weighted average shares outstanding - diluted FFO as Adjusted	Weighted average shares outstanding - diluted FFO as Adjusted	546,342		513,123			Weighted average shares outstanding - diluted FFO as Adjusted	546,714		544,146		546,485		533,963

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		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020
FFO as Adjusted applicable to common shares	FFO as Adjusted applicable to common shares	$	215,391	$	227,013		FFO as Adjusted applicable to common shares	$	217,471	$	213,529	$	650,166	$	655,255
Amortization of stock-based compensation	Amortization of stock-based compensation	4,364		3,987			Amortization of stock-based compensation	4,436		4,420		13,895		13,392
Amortization of deferred financing costs	Amortization of deferred financing costs	2,213		2,582			Amortization of deferred financing costs	2,343		2,554		6,677		7,670
Straight-line rents	Straight-line rents	(9,135)		(6,229)			Straight-line rents	(8,290)		(9,542)		(23,627)		(24,086)
AFFO capital expenditures	AFFO capital expenditures	(20,710)		(21,791)			AFFO capital expenditures	(28,980)		(20,756)		(72,112)		(61,329)
Lease restructure payments		377		291

Deferred income taxes	Deferred income taxes	(1,723)		4,787			Deferred income taxes	(1,747)		(7,300)		(6,240)		(9,200)
Other AFFO adjustments	Other AFFO adjustments	(5,979)		(3,064)			Other AFFO adjustments	(5,494)		886		(15,181)		1,641
AFFO applicable to common shares	AFFO applicable to common shares	184,798		207,576			AFFO applicable to common shares	179,739		183,791		553,578		583,343
Distributions on dilutive convertible units and other	Distributions on dilutive convertible units and other	1,337		1,638			Distributions on dilutive convertible units and other	1,650		—		4,512		5,380
Diluted AFFO applicable to common shares	Diluted AFFO applicable to common shares	$	186,135	$	209,214		Diluted AFFO applicable to common shares	$	181,389	$	183,791	$	558,090	$	588,723

Weighted average shares outstanding - diluted AFFO	Weighted average shares outstanding - diluted AFFO	544,517		513,123			Weighted average shares outstanding - diluted AFFO	544,889		538,645		544,660		533,963

Three Months Ended
March 31,
2021 2020
Diluted earnings per common share $ 0.27 $ 0.54
Depreciation and amortization 0.29 0.42
Loss (gain) on sales of depreciable real estate, net (0.48) (0.33)
Loss (gain) upon change of control, net(2)
(0.01) (0.33)
Taxes associated with real estate dispositions 0.00 (0.02)
Impairments (recoveries) of depreciable real estate, net — 0.06
Diluted NAREIT FFO per common share $ 0.07 $ 0.34
Transaction-related items(3)
0.01 0.18
Other impairments (recoveries) and other losses (gains), net(4)
0.01 (0.06)
Restructuring and severance related charges 0.01 —
Loss (gain) on debt extinguishments 0.30 0.00
Tax rate legislation impact(5)
— (0.01)
Diluted FFO as Adjusted per common share $ 0.40 $ 0.45

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Diluted earnings per common share	$	0.10	$	(0.12)	$	0.88	$	0.50
Depreciation and amortization	0.33		0.37		0.93		1.14
Loss (gain) on sales of depreciable real estate, net	(0.07)		0.00		(1.11)		(0.48)
Loss (gain) upon change of control, net(2)	—		(0.01)		0.00		(0.32)
Taxes associated with real estate dispositions	0.00		0.00		0.00		(0.02)
Impairments (recoveries) of depreciable real estate, net	0.00		0.07		0.01		0.16
Diluted Nareit FFO per common share	$	0.36	$	0.31	$	0.71	$	0.98
Transaction-related items(3)	0.00		0.01		0.01		0.18
Other impairments (recoveries) and other losses (gains), net(4)	0.04		(0.01)		0.05		(0.06)
Restructuring and severance related charges	—		—		0.00		—
Loss (gain) on debt extinguishments	0.00		0.03		0.42		0.09

Litigation costs (recoveries)	—		0.00		—		0.00
Casualty-related charges (recoveries), net	0.00		0.00		0.01		0.00
Foreign currency remeasurement losses (gains)	—		—		—		0.00
Valuation allowance on deferred tax assets(5)	—		0.06		—		0.06
Tax rate legislation impact(6)	—		—		—		(0.01)
Diluted FFO as Adjusted per common share	$	0.40	$	0.40	$	1.20	$	1.24

(1)This amount can be reconciled by combining the balances from the corresponding line of the Consolidated Statements of ~~operations~~Operations and the detailed financial information for discontinued operations in Note 5 to the Consolidated Financial Statements.

(2)For the ~~three~~nine months ended ~~March 31,~~September 30, 2020, includes a $170 million gain upon consolidation of 13 continuing care retirement communities ("CCRCs") in which we acquired Brookdale's interest and began consolidating during the first quarter of 2020. Gains and losses upon change of control are included in other income (expense), net in the Consolidated Statements of Operations.

(3)For the ~~three~~nine months ended ~~March 31,~~September 30, 2020, includes the termination fee and transition fee expenses related to terminating the management agreements with Brookdale for 13 CCRCs and transitioning those communities to Life Care Services, LLC, partially offset by the tax benefit recognized related to those expenses. The expenses related to terminating management agreements are included in operating expenses in the Consolidated Statements of Operations.

(4)For the three and nine months ended ~~March 31,~~September 30, 2021, includes a $22 million and $29 million goodwill impairment charge, respectively, in connection with our senior housing triple-net and SHOP asset sales which are reported in income (loss) from discontinued operations in the Consolidated Statements of Operations. The nine months ended September 30, 2021 also includes $6 million of accelerated recognition of a mark-to-market discount, less loan fees, resulting from prepayments on loans receivable which is included in interest income in the Consolidated Statements of Operations. For the nine months ended September 30, 2020, includes ~~reserves for loan losses under the current expected credit losses accounting standard in accordance with Accounting Standards Codification 326,~~ ~~Financial Instruments – Credit Losses ("ASC 326"). The three months ended March 31, 2020 also includes~~ a $42 million gain on sale of a hospital that was in a direct financing lease ("DFL") which is included in other income (expense), net in the Consolidated Statements of Operations. The remaining activity for the three and nine months ended September 30, 2021 and 2020 includes reserves for loan losses and land impairments recognized in impairments and loan loss reserves (recoveries), net in the Consolidated Statements of Operations.

(5)For the three and nine months ended ~~March 31,~~September 30, 2020, represents the valuation allowance and corresponding income tax expense related to deferred tax assets that are no longer expected to be realized as a result of our plan to dispose of our SHOP portfolio. We determined we were unlikely to hold the assets long enough to realize the future value of certain deferred tax assets generated by the net operating losses of our taxable REIT subsidiaries.

(6)For the nine months ended September 30, 2020, represents the tax benefit from the CARES Act, which extended the net operating loss carryback period to five years.

For a reconciliation of Adjusted NOI to net income (loss), refer to Note 14 to the Consolidated Financial Statements. For a reconciliation of Same-Store Adjusted NOI to total portfolio Adjusted NOI by segment, refer to the analysis of each segment in “Results of Operations” above.

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Critical Accounting Policies and Recent Accounting Pronouncements

The preparation of financial statements in conformity with U.S. GAAP requires our management to use judgment in the application of accounting policies, including making estimates and assumptions. We base estimates on the best information available to us at the time, our experience and on various other assumptions believed to be reasonable under the circumstances. These estimates affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of our consolidated financial statements. From time to time, we re-evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2 to the Consolidated Financial Statements. There have been no significant changes to our critical accounting policies during the three and nine months ended ~~March 31,~~September 30, 2021.

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. We use derivative and other financial instruments in the normal course of business to mitigate interest rate risk. We do not use derivative financial instruments for speculative or trading purposes. Derivatives are recorded on the ~~consolidated balance sheets~~Consolidated Balance Sheets at fair value (see Note 18 to the Consolidated Financial Statements). ~~During the three months ended March 31, 2021, we repaid our remaining variable rate secured debt and terminated the two remaining related interest-rate swap contracts.~~

Interest Rate Risk. At ~~March 31,~~September 30, 2021, our exposure to interest rate risk is primarily on our variable rate debt. At September 30, 2021, $142 million of our variable-rate debt was subject to interest rate cap agreements. The interest rate caps are non-designated hedges and manage our exposure to variable cash flows on certain mortgage debt borrowings by limiting interest rates. At September 30, 2021, both the fair value and carrying value of the interest rate caps were$0.2 million.

Our remaining variable rate debt isat September 30, 2021 was comprised of our bank line of credit, commercial paper program, and certain of our ~~term loan.~~mortgage debt. Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed rate debt and assets until their maturity or earlier prepayment and refinancing. If interest rates have risen at the time we seek to refinance our fixed rate debt, whether at maturity or otherwise, our future earnings and cash flows could be adversely affected by additional borrowing costs. Conversely, lower interest rates at the time of refinancing may reduce our overall borrowing costs. However, interest rate changes will affect the fair value of our fixed rate instruments. At ~~March 31,~~September 30, 2021, a one percentage point increase or decrease in interest rates would change the fair value of our fixed rate debt by approximately ~~$298~~$291 million and ~~$324~~$317 million, respectively, and would not materially impact earnings or cash flows. Conversely, changes in interest rates on variable rate debt and investments would change our future earnings and cash flows, but not materially impact the fair value of those instruments. Assuming a one percentage point change in the interest rate related to our variable-rate debt and variable-rate investments, and assuming no other changes in the outstanding balance at ~~March 31,~~September 30, 2021, our annual interest expense ~~and interest income~~ would ~~increase~~change by up to approximately ~~$13 million and $1 million, respectively.~~$12 million.

Market Risk. We have investments in marketable debt securities classified as held-to-maturity because we have the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are recorded at amortized cost and adjusted for the amortization of premiums and discounts through maturity. We consider a variety of factors in evaluating an other-than-temporary decline in value, such as: the length of time and the extent to which the market value has been less than our current adjusted carrying value; the issuer’s financial condition, capital strength, and near-term prospects; any recent events specific to that issuer and economic conditions of its industry; and our investment horizon in relationship to an anticipated near-term recovery in the market value, if any. At ~~March 31,~~September 30, 2021, both the fair value and carrying value of marketable debt securities was $21 million.

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Item 4. Controls and Procedures

Disclosure Controls and Procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~March 31,~~September 30, 2021. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of ~~March 31,~~September 30, 2021.

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

~~Item 1. Legal Proceedings~~

~~See the “Legal Proceedings” section of Note 11 to the Consolidated Financial Statements for information regarding legal proceedings, which information is incorporated by reference in this Item 1.~~

Item 1A. Risk Factors

There are no material changes to the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

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

(a)

None.

(b)

None.

(c)

The following table sets forth information with respect to purchases of our common stock made by us or on our behalf during the three months ended ~~March 31,~~September 30, 2021.

Period Covered
Total Number
Of Shares
Purchased(1)
Average
Price
Paid Per
Share Total Number Of Shares
(Or Units) Purchased As
Part Of Publicly
Announced Plans Or
Programs Maximum Number (Or
Approximate Dollar Value)
Of Shares (Or Units) That
May Yet Be Purchased
Under The Plans Or
Programs
January 1-31, 2021 976 $ 30.16 — —
February 1-28, 2021 372,141 30.69 — —
March 1-31, 2021 24,611 29.09 — —
Total 397,728 $ 30.59 — —


Period Covered	Total Number Of Shares Purchased(1)	Average Price Paid Per Share		Total Number Of Shares (Or Units) Purchased As Part Of Publicly Announced Plans Or Programs	Maximum Number (Or Approximate Dollar Value) Of Shares (Or Units) That May Yet Be Purchased Under The Plans Or Programs
July 1-31, 2021	172	$	33.29	—	—
August 1-31, 2021	—	—		—	—
September 1-30, 2021	1,865	35.87		—	—
Total	2,037	$	35.65	—	—

(1)Represents shares of our common stock withheld under our equity incentive plans to offset tax withholding obligations that occur upon vesting of restricted shares. The value of the shares withheld is based on the closing price of our common stock on the last trading day prior to the date the relevant transaction occurred.

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Item 6. Exhibits


3.1						Articles of Restatement of Healthpeak Properties, Inc. (formerly HCP, Inc.) dated June 1, 2012, as supplemented by the Articles Supplementary, dated July 31, 2017, and as amended by the Articles of Amendment, dated October 30, 2019 (incorporated herein by reference to Exhibit 3.1 to Healthpeak’s Annual Report on Form 10-K filed February 13, 2020).

3.2						Articles of Amendment to Articles of Restatement of Healthpeak Properties, Inc. (formerly HCP, Inc.), dated October 30, 2019 (incorporated herein by reference to Exhibit 3.1 to Healthpeak’s Current Report on Form 8-K filed October 30, 2019).

3.3						Sixth Amended and Restated Bylaws of Healthpeak Properties, Inc., dated October 30, 2019 (incorporated herein by reference to Exhibit 3.2 to Healthpeak’s Current Report on Form 8-K filed October 30, 2019).

4.1						Eleventh Supplemental Indenture, dated July 12, 2021, between Healthpeak Properties, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.1 to Healthpeak’s Current Report on Form 8-K filed July 12, 2021).

~~31.1~~4.2						Form of 1.350% Senior Notes due 2027 (included in Exhibit 4.1).

10.1						Second Amended and Restated Credit Agreement, dated as of September 20, 2021, by and among the Company, as borrower, the lenders referred to therein, and Bank of America, N.A., as administrative agent (incorporated herein by reference to Exhibit 10.1 to Healthpeak’s Current Report on Form 8-K filed September 20, 2021).

10.2*						Amendment No. 1 to Amended and Restated Limited Liability Company Agreement of HCP DR California III, LLC, dated as of April 30, 2021.

10.3*						Amendment No. 1 to Second Amended and Restated Limited Liability Company Agreement of SH DR California IV, LLC, dated as of April 30, 2021.

31.1*						Certification by Thomas M. Herzog, Healthpeak’s Principal Executive Officer, Pursuant to Securities Exchange Act Rule 13a-14(a).*

~~31.2~~31.2*						Certification by Peter A. Scott, Healthpeak’s Principal Financial Officer, Pursuant to Securities Exchange Act Rule 13a-14(a).*

~~32.1~~32.1**						Certification by Thomas M. Herzog, Healthpeak’s Principal Executive Officer, Pursuant to Securities Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350.**

~~32.2~~32.2**						Certification by Peter A. Scott, Healthpeak’s Principal Financial Officer, Pursuant to Securities Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350.**

~~101.INS~~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~~101.SCH*						XBRL Taxonomy Extension Schema Document.*

~~101.CAL~~101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document.*

~~101.DEF~~101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document.*

~~101.LAB~~101.LAB*						XBRL Taxonomy Extension Labels Linkbase Document.*

~~101.PRE~~101.PRE*						XBRL Taxonomy Extension Presentation Linkbase Document.*

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith.

** Furnished herewith.

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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 thereunto duly authorized.


Date: ~~May 5,~~November 3, 2021			Healthpeak Properties, Inc.

			(Registrant)

			/s/ THOMAS M. HERZOG
			Thomas M. Herzog
			Chief Executive Officer
			(Principal Executive Officer)

			/s/ PETER A. SCOTT
			Peter A. Scott
			~~Executive Vice President and~~
			Chief Financial Officer
			(Principal Financial Officer)

			/s/ SHAWN G. JOHNSTON
			Shawn G. Johnston
			Executive Vice President and
			Chief Accounting Officer
			(Principal Accounting Officer)

6476


PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited):	3

	Consolidated Balance Sheets	3

	Consolidated Statements of Operations	4

	Consolidated Statements of Comprehensive Income (Loss)	5

	Consolidated Statements of Equity and Redeemable Noncontrolling Interests	6

	Consolidated Statements of Cash Flows	78

	Notes to the Consolidated Financial Statements	89

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3844

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6072

Item 4.	Controls and Procedures	6173

PART II. OTHER INFORMATION

~~Item 1.~~	~~Legal Proceedings~~	62

Item 1A.	Risk Factors	6274

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6274



Item 6.	Exhibits	6375

Signatures		6476


Payoff Date(1)	Amount		Coupon Rate		Maturity Year
January 28, 2021	$	112,000	4.25	%	2023
January 28, 2021	$	201,000	4.20	%	2024
January 28, 2021	$	469,000	3.88	%	2024
February 26, 2021	$	188,000	4.25	%	2023
February 26, 2021	$	149,000	4.20	%	2024
February 26, 2021	$	331,000	3.88	%	2024