What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-04-29 compared with 2020-10-29 · 350 added, 555 removed, 1309 unchanged (41% of the section changed)

4 unchanged sentences

(In thousands)

September 30, 2020 (Unaudited) December 31, 2019 (Note)

March 31, 2021 (Unaudited) December 31, 2020 (Note)

Real estate investments:

33 unchanged sentences

Liabilities and equity

Unsecured credit facility and commercial paper

$ — $ 1,587,597

Senior unsecured notes

34 unchanged sentences

(In thousands, except per share data)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Three Months Ended

Resident fees and services

4 unchanged sentences

19,579 15,241

4,122 4,228 14,092 15,064

Total revenues

9 unchanged sentences

Loss (gain) on derivatives and financial instruments, net

1,395 1,244 10,480 670

Loss (gain) on extinguishment of debt, net

33,004 65,824 33,253 81,543

Provision for loan losses

2,857 — 11,351 18,690

Impairment of assets

1 unchanged sentence

Other expenses

11,544 6,186 37,247 36,570

Total expenses

7 unchanged sentences

Net income (loss) attributable to noncontrolling interests (1)

69,393 58,056 68,459 82,166

Net income (loss) attributable to common stockholders $ 71,546 $ 310,284

18 unchanged sentences

(In thousands)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Three Months Ended

Net income $ 72,192 $ 329,380

13 unchanged sentences

(In thousands)

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Stock Capital in

4 unchanged sentences

Comprehensive

Income (Loss) Other

Equity Noncontrolling

Income (Loss) Noncontrolling

Interests Total

Balances at January 1, 2021 $ 418,691 $ 20,823,145 $ ( 104,490 ) $ 8,327,598 $ ( 13,343,721 ) $ ( 148,504 ) $ 908,853 $ 16,881,572

Cumulative change in accounting principle (Note 2) ( 5,212 ) ( 5,212 )

Balances at January 1, 2020 (as adjusted for change in accounting principle) 411,005 20,190,107 ( 78,955 ) 7,348,754 ( 12,223,534 ) ( 112,157 ) 12 966,183 16,501,415

Comprehensive income:

11 unchanged sentences

Balances at March 31, 2021 $ 418,866 $ 20,814,196 $ ( 106,519 ) $ 8,399,144 $ ( 13,598,673 ) $ ( 128,136 ) $ 892,139 $ 16,691,017

Comprehensive income:

Net income (loss)

179,246 18,659 197,905

Other comprehensive income (loss)

( 20,643 ) 6,298 ( 14,345 )

Total comprehensive income 183,560

Net change in noncontrolling interests 7,299 ( 70,124 ) ( 62,825 )

Amounts related to stock incentive plans, net of forfeitures 28 7,412 832 ( 8 ) 8,264

Net proceeds from issuance of common stock 89 3,604 3,693

Repurchase of common stock ( 7,656 ) ( 7,656 )

Dividends paid:

Common stock dividends

( 254,846 ) ( 254,846 )

Balances at June 30, 2020 $ 418,343 $ 20,836,545 $ ( 93,799 ) $ 7,838,284 $ ( 12,834,381 ) $ ( 116,856 ) $ 4 $ 888,387 $ 16,936,527

Comprehensive income:

Net income (loss)

325,585 67,650 393,235

Other comprehensive income

( 9,613 ) 7,338 ( 2,275 )

Total comprehensive income 390,960

Net change in noncontrolling interests ( 7,894 ) ( 110,147 ) ( 118,041 )

Amounts related to stock incentive plans, net of forfeitures 18 6,569 ( 223 ) 6,364

Proceeds from issuance of common stock ( 198 ) ( 198 )

Dividends paid:

Common stock dividends

( 254,510 ) ( 254,510 )

Balances at September 30, 2020 $ 418,361 $ 20,835,022 $ ( 94,022 ) $ 8,163,869 $ ( 13,088,891 ) $ ( 126,469 ) $ 4 $ 853,228 $ 16,961,102

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

WELLTOWER INC.

AND SUBSIDIARIES

(In thousands)

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Stock Capital in

4 unchanged sentences

Comprehensive

Income (Loss) Other

Equity Noncontrolling

Income (Loss) Noncontrolling

Interests Total

Balances at January 1, 2020 $ 411,005 $ 20,190,119 $ ( 78,955 ) $ 7,353,966 $ ( 12,223,534 ) $ ( 112,157 ) $ 966,183 $ 16,506,627

Cumulative change in accounting principle (Note 2) ( 5,212 ) ( 5,212 )

Balances at January 1, 2020 (as adjusted for change in accounting principle) 411,005 20,190,119 ( 78,955 ) 7,348,754 ( 12,223,534 ) ( 112,157 ) 966,183 16,501,415

Comprehensive income:

7 unchanged sentences

Net proceeds from issuance of common stock 6,975 583,890 590,865

Conversion of preferred stock ( 718,498 ) 12,712 705,786 —

Dividends paid:

2 unchanged sentences

Balances at March 31, 2020 $ 418,226 $ 20,818,242 $ ( 86,975 ) $ 7,659,038 $ ( 12,579,535 ) $ ( 96,213 ) $ 933,554 $ 17,066,337

Comprehensive income:

Net income (loss)

137,762 11,349 149,111

Other comprehensive income (loss)

43,996 2,387 46,383

Total comprehensive income 195,494

Net change in noncontrolling interests ( 23,672 ) ( 7,959 ) ( 31,631 )

Amounts related to stock incentive plans, net of forfeitures 18 7,959 450 ( 80 ) 8,347

Net proceeds from issuance of common stock 1,487 101,721 103,208

Dividends paid:

Common stock dividends

( 353,677 ) ( 353,677 )

Balances at June 30, 2019 $ — $ 406,014 $ 19,740,145 $ ( 74,042 ) $ 6,539,766 $ ( 11,516,994 ) $ ( 100,622 ) $ 188 $ 975,117 $ 15,969,572

Comprehensive income:

Net income (loss)

589,876 29,948 619,824

Other comprehensive income

( 17,054 ) ( 4,836 ) ( 21,890 )

Total comprehensive income 597,934

Net change in noncontrolling interests 13,038 ( 40,565 ) ( 27,527 )

Amounts related to stock incentive plans, net of forfeitures 4 5,100 ( 4,801 ) ( 176 ) 127

Proceeds from issuance of common stock 480 38,393 38,873

Dividends paid:

Common stock dividends

( 353,250 ) ( 353,250 )

Balances at September 30, 2019 $ — $ 406,498 $ 19,796,676 $ ( 78,843 ) $ 7,129,642 $ ( 11,870,244 ) $ ( 117,676 ) $ 12 $ 959,664 $ 16,225,729

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

2 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Operating activities:

5 unchanged sentences

Provision for loan losses

11,351 18,690

Impairment of assets

1 unchanged sentence

Stock-based compensation expense

20,938 20,501

Loss (gain) on derivatives and financial instruments, net

Loss (gain) on extinguishment of debt, net

33,253 81,543

Loss (income) from unconsolidated entities

( 13,049 ) 3,692

Rental income less than (in excess of) cash received

6 unchanged sentences

Increase (decrease) in accrued expenses and other liabilities

( 4,406 ) ( 30,030 )

Decrease (increase) in receivables and other assets

13 unchanged sentences

Principal collected on loans receivable

14,345 57,125

Other investments, net of payments

3 unchanged sentences

Distributions by unconsolidated entities

41,884 98,880

Proceeds from (payments on) derivatives

6 unchanged sentences

— ( 742,612 )

Proceeds from issuance of senior unsecured notes

1,588,549 3,253,516

Payments to extinguish senior unsecured notes

( 566,248 ) ( 3,107,500 )

Net proceeds from issuance of senior unsecured notes 713,907 —

Net proceeds from the issuance of secured debt

44,921 318,854

Payments on secured debt

1 unchanged sentence

Net proceeds from the issuance of common stock

595,313 686,105

Repurchase of common stock

Payments for deferred financing costs and prepayment penalties

1 unchanged sentence

Contributions by noncontrolling interests (1)

14,267 42,988

Distributions to noncontrolling interests (1)

27 unchanged sentences

In the opinion of management, all adjustments (such as normal recurring accruals) considered necessary for a fair presentation have been included.

Operating results for the nine months ended September 30, 2020 are not necessarily an indication of the results that may be expected for the year ending December 31, 2020.

Operating results for the three months ended March 31, 2021 are not necessarily an indication of the results that may be expected for the year ending December 31, 2021.

For further information, refer to the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020.

3 unchanged sentences

• Our Seniors Housing Operating revenues are dependent on occupancy.

Declines in occupancy are expected due to heightened move-in criteria and screening, as well as increased mortality rates among seniors.

Occupancy within our total Seniors Housing Operating portfolio has declined as follows:

February March April May June July August September

Spot occupancy has continued to decline since the beginning of the pandemic, dropping to 73.6 % as of March 31, 2021 compared to 75.9 % as of December 31, 2020.

Approximately 99 % of communities are currently accepting new residents, resulting in an acceleration in move-in activity and an increase in occupancy of approximately 60 basis points from a pandemic-low on March 12, 2021 to 73.8% on April 23, 2021.

Additionally, r apid distribution and a high acceptance rate of COVID-19 vaccinations by residents within assisted living and memory care facilities in the U.S.

has resulted in a significant decrease in total resident case counts since mid-January 2021 across the portfolio.

Spot occupancy rates from the start of the pandemic through March 31, 2021 are as follows:

February 2020 December 2020 January 2021 February 2021 March 2021

Spot occupancy (1)

1 unchanged sentence

Sequential occupancy change ( 1.5 ) % ( 0.8 ) % — %

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

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

Increased Seniors Housing Operating expenses are expected to continue until the pandemic subsides.

We experienced incremental operational costs, net of reimbursements, of $ 18,192,000 and $ 68,628,000 for the three and nine months ended September 30, 2020, respectively, included in property operating expenses.

Property-level operating expenses associated with the COVID-19 pandemic relating to our Seniors Housing Operating portfolio, net of reimbursements including Provider Relief Funds and similar programs in the U.K.

and Canada, resulted in a benefit of approximately $ 21,204,000 for the three months ended March 31, 2021 as compared to an expense of $ 7,294,000 during the three months ended March 31, 2020.

These expenses were incurred as a result of the introduction of public health measures and other regulations affecting our properties, as well as additional health and safety measures adopted by us and our operators related to the COVID-19 pandemic, including increases in labor and property cleaning expenses and expenditures related to our efforts to procure personal protective equipment ("PPE") and supplies, net of reimbursements.

Certain new expenses incurred since the start of the pandemic may continue on an ongoing basis as part of new health and safety protocols.

In September, applications were made for Provider Relief Funds related to our Seniors Housing Operating portfolio following the announcement from the Department of Health and Human Services that it expanded the eligibility of the Coronavirus Aid Relief, and Economic Security Act (“CARES Act”) Provider Relief Fund to include assisted living facilities.

Our share of the Phase 2 general distribution is expected to be approximately $ 46 million and we anticipate receiving and recognizing these funds as an offset to property operating expenses in the fourth quarter.

However, we continue to expect total portfolio expenses to remain elevated during the pandemic and potentially beyond as these additional health and safety measures become standard practice.

• Our Triple-net operators are experiencing similar occupancy declines and expense increases, however, long-term/post-acute care facilities are generally experiencing a higher degree of occupancy declines.

These factors may impact our Triple-net operators' ability to pay rent and contractual obligations.

Many of our Triple-net operators have received

In 2020 applications were made for amounts under Phase 2 and Phase 3 of the Provider Relief Fund related to our Seniors Housing Operating portfolio.

During the first quarter, we received total Provider Relief Funds of approximately $ 35,682,000 , which was recognized as a reduction to COVID-19 costs within property operating expenses.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

funds under the CARES Act Paycheck Protection Program.

In addition, operators of long-term/post-acute care facilities have generally received funds from Phase 1 of the Provider Relief Fund and operators of assisted living facilities are generally expecting funds from Phase 2 of the Provider Relief Fund.

Accordingly, collection of Triple-net rent due during the COVID-19 pandemic to date (from March to September) has generally been consistent with historical collection rates and no significant rent concessions or deferrals have been made.

We have either collected or approved short term deferrals for over 99 % of Outpatient Medical rent due in the third quarter, consisting of 97 % cash collections and 2 % of short term deferrals.

In most cases, unless local ordinances mandate otherwise, the deferred rent represents two months of rent with repayment expected by the end of the year.

Furthermore, collections of deferred rent due in the third quarter under executed deferrals was over 99 %.

To the extent that deferred rent is not repaid as expected, or the prolonged impact of the COVID-19 pandemic causes operators or tenants to seek further modifications of their lease agreements, we may recognize reductions in revenue and increases in uncollectible receivables.

• Assessing properties for potential impairment involves subjectivity in determining if impairment indicators are present and in estimating the future undiscounted cash flows or estimated fair value of the asset.

Key assumptions are made in these assessments including the estimation of future rental revenues, occupancy, operating expenses, capitalization rates and the ability and intent to hold the respective asset.

All of these assumptions are significantly affected by our expectations of future market or economic conditions and can be highly impacted by the uncertainty of the COVID-19 pandemic.

We will continue to evaluate the assumptions used in these analyses, changes to which may result in impairments in future periods.

• The determination of the allowance for credit losses is based on our evaluation of collectability of our loans receivable and includes review of factors such as delinquency status, historical loan charge-offs, financial strength of the borrower and guarantors and the value of the underlying collateral.

Reduced economic activity severely impacts our borrowers' businesses, financial conditions and liquidity and may hinder their ability to make contractual payments to us, leading to an increase in loans deemed to have deteriorated credit which could result in an increase in the provision for loan losses.

• Our Triple-net operators are experiencing similar occupancy declines and operating costs as described above with respect to our Seniors Housing Operating properties.

Additionally, long-term/post-acute care facilities are generally experiencing a higher degree of occupancy declines.

These factors may continue to impact the ability of our Triple-net operators to make contractual rent payments to us in the future.

Many of our Triple-net operators received funds under the Coronavirus Aid Relief and Economic Security Act (“CARES Act”) Paycheck Protection Program.

In addition, operators of long-term/post-acute care facilities have generally received funds from Phase 1 of the Provider Relief Fund and operators of assisted living facilities have generally received funds from Phases 2 and 3 of the Provider Relief Fund.

During the first quarter, we collected approximately 96 % of rent due from operators under Triple-net lease agreements (primarily seniors housing and post-acute care facilities).

No significant rent deferrals or rent concessions have been made.

In the Outpatient Medical segment we collected 99 % of rent due in the first quarter, with uncollected amounts primarily attributable to local jurisdictions with COVID-19 related ordinances providing temporary rent relief to tenants.

Virtually all rent subject to approved deferral agreements has been repaid in full.

For both our Triple-net operators and Outpatient Medical tenants, we evaluate leases individually and recognize rent on a cash basis if collectibility of substantially all contractual rent payments is not probable.

To the extent the prolonged impact of the COVID-19 pandemic causes operators or tenants to seek further modifications of their lease agreements, we may recognize reductions in revenue and increases in uncollectible receivables.

New Accounting Standards

• On January 1, 2020, we adopted ASU 2016-13, “Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13").

This standard requires a new forward-looking “expected loss” model to be used for receivables, held-to-maturity debt, loans, and other instruments.

In November 2018, the FASB issued an amendment excluding operating lease receivables accounted for under the new leases standard from the scope of the new credit losses standard.

ASU 2016-13 primarily impacts our measurement for credit losses related to our real estate and non-real estate loans receivable.

In conjunction with our adoption of ASU 2016-13 , we recorded a $ 5,212,000 increase to our allowance for credit losses on loans receivable (both real estate and non-real estate) with a corresponding adjustment to cumulative net income related to the change in accounting principle.

See Note 7 for further details.

• At the FASB's April 8, 2020 Board meeting, the staff acknowledged that the economics of lease concessions that result from a global pandemic may not be aligned with the underlying premise of the modification framework in ASC 842, under which the concession would be recognized over the remainder of the lease term.

In a Q&A document, the FASB provided entities with COVID-19 related lease concessions an option to either (1) apply the modification framework for these concessions in accordance with ASC 842 as applicable or (2) account for concessions as if they were made under the enforceable rights included in the original agreement as long as total cash flows resulting from the modified contract are substantially the same or less than cash flows in the original contract.

Due to the continuing adverse economic conditions caused by the COVID-19 pandemic, certain tenants and operators have requested rent relief, most often in the form of a short-term rent deferral.

Not all requests result in modification of agreements, nor do we intend to forgo our contractual rights under our lease agreements.

We evaluate each rent relief request on an individual basis.

To date, the majority of rent deferral agreements result in two months of full or partial rent relief to repaid by the end of the year and we generally expect this to continue to be the case unless local ordinances mandate otherwise.

We have elected to apply the accounting relief provided by the FASB to such short-term rent deferrals, and will account for such deferrals as if no change had been made to the original lease contract.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

• In August 2020, the FASB issued ASU 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”.

This ASU simplifies accounting for convertible instruments and removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception.

This ASU also simplifies the diluted earnings per share calculation in certain areas and provides updated disclosure requirements.

The ASU is effective for public business entities beginning after December 15, 2021 including interim periods within those fiscal years.

Early adoption is permitted.

We are currently evaluating the guidance and the impact it may have on our consolidated financial statements.

• In March 2020, the FASB issued an amendment to the reference rate reform standard which provides the option for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on contract modifications and hedge accounting.

An example of such reform is the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates.

Entities that make this optional expedient election would not have to remeasure the contracts at the modification date or reassess the accounting treatment if certain criteria are met and would continue applying hedge accounting for relationships affected by reference rate reform.

The new standard was effective for us upon issuance and elections can be made through December 31, 2022.

We are currently evaluating our options with regards to existing contracts and hedging relationships and the impact of adopting this update on our consolidated financial statements.

Real Property Acquisitions and Development

5 unchanged sentences

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

Nine Months Ended

September 30, 2020 September 30, 2019

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended

March 31, 2021 March 31, 2020

Seniors Housing Operating Triple-net Outpatient

4 unchanged sentences

Acquired lease intangibles 339 — 1,439 1,778 10,810 — 23,823 34,633

Construction in progress — — — — 36,174 — — 36,174

Real property held for sale — — — — 17,435 — — 17,435

Right of use assets, net — — — — — — 58,377 58,377

Total net real estate assets 159,049 765 238,705 398,519 1,361,201 139,935 1,674,358 3,175,494

Receivables and other assets 34 — — 34 257 — 139 396

1 unchanged sentence

5,104 194,516 14,282 213,902 159,305 765 236,266 396,336

Secured debt — — — — ( 43,209 ) — — ( 43,209 )

Lease liabilities — — — — — — ( 47,740 ) ( 47,740 )

Accrued expenses and other liabilities — ( 8,703 ) ( 36 ) ( 8,739 ) ( 671 ) — ( 2,036 ) ( 2,707 )

2 unchanged sentences

— ( 2,056 ) — ( 2,056 ) ( 2,827 ) — — ( 2,827 )

Non-cash acquisition related activity (3)

— — — — ( 11,889 ) — — ( 11,889 )

Cash disbursed for acquisitions 5,104 183,757 14,246 203,107 155,807 765 234,230 390,802

5 unchanged sentences

Total cash invested in real property, net of cash acquired $ 37,345 $ 240,337 $ 27,810 $ 305,492 $ 232,739 $ 17,001 $ 259,219 $ 508,959

(1) Excludes $ 580,000 and $ 1,910,000 of unrestricted and restricted cash acquired during the nine months ended September 30, 2020 and 2019, respectively.

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

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

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

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

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

Construction Activity

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended

September 30, 2020 September 30, 2019

Three Months Ended

March 31, 2021 March 31, 2020

Development projects:

Seniors Housing Operating

$ 93,188 $ 28,117

Outpatient Medical

Total development projects

195,882 28,117

Expansion projects

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

1 unchanged sentence

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

In place lease intangibles $ 1,411,060 $ 1,406,705

9 unchanged sentences

Weighted-average amortization period in years 8.2 8.3

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Rental income related to (above)/below market tenant leases, net $ 425 $ 524

9 unchanged sentences

Total $ 302,294 $ 34,909

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Dispositions and Assets Held for Sale

Dispositions, Real Property Held for Sale and Impairment

We periodically sell properties for various reasons, including favorable market conditions, the exercise of tenant purchase options or reduction of concentrations (i.e., property type, relationship or geography).

At September 30, 2020, eight Seniors Housing Operating, two Triple-net, and 11 Outpatient Medical properties with an aggregate real estate balance of $ 362,886,000 were classified as held for sale.

In addition to the real property balances held for sale, secured debt of $ 12,737,000 and net other assets and (liabilities) of $ 21,063,000 are included in the Consolidated Balance Sheet related to the held for sale properties.

At March 31, 2021, three Seniors Housing Operating, 61 Triple-net, and one Outpatient Medical properties with an aggregate real estate balance of $ 564,062,000 were classified as held for sale.

In addition to the real property balances held for sale, net other assets and (liabilities) of $ 37,389,000 are included in the Consolidated Balance Sheet related to the held for sale properties.

Expected gross sales proceeds related to the held for sale properties is approximately $ 716,835,000 .

During the nine months ended September 30, 2020, we recorded $ 79,905,000 of impairment charges related to 13 Seniors Housing Operating and one Triple-net properties which were disposed of or classified as held for sale for which the carrying value exceeded the estimated fair value less cost to sell.

Additionally, during the nine months ended September 30, 2020, we recorded $ 46,386,000 of impairment charges related to four Seniors Housing Operating and four Triple-net properties that were held for use in which the carrying value exceeded the estimated fair value.

During the three months ended March 31, 2021, we recorded $ 12,098,000 of impairment charges related to one Triple-net property which was classified as held for sale for which the carrying value exceeded the estimated fair value less cost to sell.

Additionally, during the three months ended March 31, 2021, we recorded $ 11,470,000 of impairment charges related to one Seniors Housing Operating property and two Triple-net properties that were held for use in which the carrying value exceeded the estimated fair value.

During the three months ended March 31, 2020, we recorded $ 3,495,000 of impairment charges related to one Seniors Housing Operating property which was classified as held for sale for which the carrying value exceeded the estimated fair value less cost to sell.

Additionally, during the three months ended March 31, 2020, we recorded $ 24,332,000 of impairment charges related to two Triple-net properties that were held for use in which the carrying value exceeded the estimated fair value.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Real estate dispositions:

Seniors Housing Operating

$ 1,093,477 $ 1,204,084

33,445 660,885

Outpatient Medical

4 unchanged sentences

Net other assets/liabilities disposed

98,065 ( 357 )

Proceeds from real estate dispositions $ 274,208 $ 801,392

1 unchanged sentence

The following represents the activity related to these properties for the periods presented (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31,

Total revenues

1 unchanged sentence

Interest expense

584 4,593 6,579 14,801

Property operating expenses

1 unchanged sentence

Provision for depreciation

5,907 23,627 37,254 94,694

Total expenses

28,976 97,068 160,902 415,093

Income (loss) from real estate dispositions, net $ 17,542 $ 47,623

3 unchanged sentences

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended

Classification September 30, 2020 September 30, 2019

Three Months Ended

Classification March 31, 2021 March 31, 2020

Operating lease cost:

8 unchanged sentences

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

Classification September 30, 2020 December 31, 2019

Classification March 31, 2021 December 31, 2020

Right of use assets:

11 unchanged sentences

Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period.

During the three and nine month periods ended September 30, 2020, we wrote off straight-line rent receivable balances of $ 112,398,000 and $ 146,508,000 , respectively, relating to leases for which collection of substantially all contractual lease payments was no longer deemed probable.

Included in such amounts was $ 91,025,000 relating to Genesis Healthcare whom noted substantial doubt as to their ability to continue as a going concern in August.

During the three months ended March 31, 2021 and 2020, we reserved for straight-line rent receivable balances of $ 49,241,000 and $ 32,268,000 through rental income, relating to leases for which collection of substantially all contractual lease payments was no longer deemed probable.

Leases in our Triple-net and Outpatient Medical portfolios typically include some form of operating expense reimbursement by the tenant.

For the nine months ended September 30, 2020, we recognized $ 1,061,311,000 of rental income related to operating leases, of which $ 153,217,000 was for variable lease payments which primarily represents the reimbursement of operating costs such as common area maintenance expenses, utilities, insurance and real estate taxes.

For the nine months ended September 30, 2019, we recognized $ 1,178,817,000 of rental income related to operating leases, of which $ 147,815,000 was for variable lease payments.

For the three months ended March 31, 2021, we recognized $ 302,843,000 of rental income related to operating leases, of which $ 46,026,000 was for variable lease payments which primarily represents the reimbursement of operating costs such as common area maintenance expenses, utilities, insurance and real estate taxes.

For the three months ended March 31, 2020, we recognized $ 389,960,000 of rental income related to operating leases, of which $ 55,754,000 was for variable lease payments.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Loans Receivable

3 unchanged sentences

Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of the risk of credit loss.

Accrued interest receivable was $ 12,039,000 and $ 6,897,000 as of September 30, 2020 and December 31, 2019, respectively, and is included in receivables and other assets on the Consolidated Balance Sheets.

Accrued interest receivable was $ 15,981,000 and $ 15,615,000 as of March 31, 2021 and December 31, 2020, respectively, and is included in receivables and other assets on the Consolidated Balance Sheets.

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Mortgage loans $ 338,291 $ 299,430

6 unchanged sentences

Total loans receivable, net of credit allowance $ 730,602 $ 683,641

During the nine months ended September 30, 2020, the real estate collateral associated with one loan was released, therefore, the principal balance of $ 86,411,000 and related allowance for credit losses of $ 42,376,000 was reclassified to non-real estate loans.

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

Nine Months Ended

September 30, 2020 September 30, 2019

Three Months Ended

March 31, 2021 March 31, 2020

Advances on loans receivable:

Investments in new loans

$ 194,942 $ 36,024

Draws on existing loans

4 unchanged sentences

Principal payments on loans

14,345 19,439

Net cash receipts on loans receivable 2,852 10,045

14,345 57,125

Net cash advances (receipts) on loans receivable $ 40,296 $ 396

Subsequent to quarter end, we provided £ 540 million of senior loan financing and a £ 30 million delayed facility to affiliates of Safanad, a global real estate and private equity firm, as part of the recapitalization of its investment in HC-One Group.

The loan has a 5 -year term and is fully collateralized by the shares and assets of the HC-One Group, including its underlying property portfolio of owned assets across the U.K.

Additionally, we will have the ability to participate in the recovery in the U.K.

seniors housing sector through both warrants and a £ 55 million equity investment.

The allowance for credit loss on loans receivable is maintained at a level believed adequate to absorb potential losses in our loans receivable.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

Loan category Years of Origination Loan Carrying Value Allowance for Credit Loss Net Loan Balance No.

Deteriorated loans 2007 - 2018 $ 241,012 $ ( 211,191 ) $ 29,821 6

2007 - 2018 $ 249,314 $ ( 76,695 ) $ 172,619 7

Collective loan pool 2007-2016 259,913 ( 5,061 ) 254,852 18

5 unchanged sentences

Total loans $ 954,748 $ ( 224,146 ) $ 730,602 52

(1) During the three months ended September 30, 2020, two loans receivable originated in 2016 to Genesis Healthcare with an aggregate carrying value of $ 62,753,000 were transferred to the deteriorated loan pool.

The carrying value is exclusive of deferred gains of $ 62,819,000 recorded in accrued expenses and other liabilities on the Consolidated Balance Sheets.

In March 2019, we recognized a provision for loan losses of $ 18,690,000 to fully reserve for certain Triple-net real estate loans receivable that were no longer deemed collectible.

During the quarter ended June 30, 2019, these loans were written off.

During the nine months ended September 30, 2020, we recognized a provision for credit losses of $ 6,898,000 to fully reserve for one Triple-net non-real estate loan receivable and $ 1,303,000 to fully reserve for one Triple-net real estate loan receivable that were no longer deemed collectible.

In March 2020, we recognized a provision for loan losses of $ 6,898,000 to fully reserve for one Triple-net non-real estate loan receivable that was no longer deemed collectible.

The following is a summary of the allowance for credit losses on loans receivable for the periods presented (in thousands):

Nine Months Ended

September 30, 2020 September 30, 2019

Three Months Ended

March 31, 2021 March 31, 2020

Balance at beginning of period $ 224,036 $ 68,372

5 unchanged sentences

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

Nine Months Ended

September 30, 2020 September 30, 2019

Three Months Ended

March 31, 2021 March 31, 2020

Balance of deteriorated loans at end of period (1)

4 unchanged sentences

$ 3,079 $ 4,046

(1) Current year amounts include $ 10,686,000 and $ 2,534,000 of loans on non-accrual as of September 30, 2020 and December 31, 2019, respectively.

Prior year amounts include $ 2,534,000 and $ 2,567,000 as of September 30, 2019 and December 31, 2018, respectively.

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

Prior year amounts include $ 9,534,000 and $ 2,534,000 as of March 31, 2020 and December 31, 2019, respectively.

(2) Represents cash interest recognized in the period.

4 unchanged sentences

Percentage Ownership (1)

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Seniors Housing Operating 10 % to 65 %

4 unchanged sentences

Total $ 1,020,010 $ 946,234

(1) Excludes ownership of in substance real estate.

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

At March 31, 2021, the aggregate unamortized basis difference of our joint venture investments of $ 119,392,000 is primarily attributable to the difference between the amount for which we purchase our interest in the entity, including transaction costs, and the historical carrying value of the net assets of the joint venture.

This difference is being amortized over the remaining useful life of the related properties and included in the reported amount of income from unconsolidated entities.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

At September 30, 2020, the aggregate unamortized basis difference of our joint venture investments of $ 113,217,000 is primarily attributable to the difference between the amount for which we purchase our interest in the entity, including transaction costs, and the historical carrying value of the net assets of the joint venture.

This difference is being amortized over the remaining useful life of the related properties and included in the reported amount of income from unconsolidated entities.

We have made loans totaling $ 285,369,000 related to eight properties as of September 30, 2020 for the development and construction of certain properties which are classified as in substance real estate investments.

We have made loans totaling $ 365,488,000 related to eight properties as of March 31, 2021 for the development and construction of certain properties which are classified as in substance real estate investments.

We believe that such borrowers typically represent variable interest entities ("VIE" or "VIEs") in accordance with ASC 810 Consolidation.

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Based on these assessments, the arrangements have been classified as in substance real estate investments.

We expect to fund an additional $ 172,169,000 related to these investments.

We expect to fund an additional $ 36,059,000 during 2021 related to these investments.

Credit Concentration

1 unchanged sentence

See Note 18 for additional information and reconciliation.

The following table summarizes certain information about our credit concentration for the nine months ended September 30, 2020, excluding our share of NOI in unconsolidated entities (dollars in thousands):

The following table summarizes certain information about our credit concentration for the three months ended March 31, 2021, excluding our share of NOI in unconsolidated entities (dollars in thousands):

Concentration by relationship:

3 unchanged sentences

ProMedica 216 53,031 13 %

Genesis Healthcare 52 26,871 7 %

92 20,865 5 %

Avery Healthcare 61 20,623 5 %

Sagora Senior Living 31 50,539 3 %

Remaining portfolio 912 252,413 56 %

1 unchanged sentence

(1) Sunrise Senior Living and Revera are in our Seniors Housing Operating segment.

ProMedica is in our Triple-net segment.

Avery Healthcare and Sagora Senior Living are in both the Triple-net and Seniors Housing Operating segments.

Genesis Healthcare and ProMedica are in our Triple-net segment.

Avery Healthcare is in both the Triple-net and Seniors Housing Operating segments.

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

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

During the quarter ended March 31, 2021, we entered into definitive agreements to substantially exit our operating relationship with Genesis Healthcare ("Genesis").

In April 2021, we contributed nine Triple-net properties operated by Genesis into an 80 / 20 joint venture with ProMedica and such properties were added to the existing master lease with ProMedica.

Additionally, we have entered into definitive agreements to sell 35 Genesis properties for $ 496 million to a joint venture with Aurora Health Network and Peace Capital.

These property dispositions and the transfer of operations of these properties is expected to occur in the second and third quarters.

Additionally, we currently lease seven properties which we sublease to Genesis.

We have entered into an agreement to transition the operations of these properties into a new lease agreement with a regional operator.

To effectuate the transition of all 51 properties, we agreed to provide Genesis a lease termination fee of $ 86 million upon successful transition of all properties, which will be used to immediately repay indebtedness to Welltower.

Additionally, upon achievement of certain restructuring milestones, we will reduce Genesis' indebtedness by an additional $ 170 million in exchange for an equity interest in Genesis.

Upon conclusion of the aforementioned loan transactions, Genesis will have $ 167 million of indebtedness to Welltower, exclusive of additional PIK interest, which will carry a maturity date of January 1, 2024.

As of March 31, 2021, our total carrying value of Genesis loans receivable was $ 139,332,000 .

Borrowings Under Credit Facilities and Commercial Paper Program

At September 30, 2020, we had a primary unsecured credit facility with a consortium of 31 banks that includes a $ 3,000,000,000 unsecured revolving credit facility ( none outstanding at September 30, 2020), a $ 500,000,000 unsecured term credit facility and a $ 250,000,000 Canadian-denominated unsecured term credit facility.

At March 31, 2021, we had a primary unsecured credit facility with a consortium of 31 banks that includes a $ 3,000,000,000 unsecured revolving credit facility ( none outstanding at March 31, 2021), a $ 500,000,000 unsecured term credit facility and a $ 250,000,000 Canadian-denominated unsecured term credit facility.

We have an option, through an accordion feature, to upsize the unsecured revolving credit facility and the $ 500,000,000 unsecured term credit facility by up to an additional $ 1,000,000,000 , in the aggregate, and the $ 250,000,000 Canadian-denominated unsecured term credit facility by up to an additional $ 250,000,000 .

The primary unsecured credit facility also allows us to borrow up to $ 1,000,000,000 in alternate currencies ( none outstanding at September 30, 2020).

The primary unsecured credit facility also allows us to borrow up to $ 1,000,000,000 in alternate currencies ( none outstanding at March 31, 2021).

Borrowings under the unsecured revolving credit facility are subject to interest payable at the applicable margin over LIBOR interest rate.

The applicable margin is based on our debt ratings and was 0.825 % at September 30, 2020.

The applicable margin is based on our debt ratings and was 0.825 % at March 31, 2021.

In addition, we pay a facility fee quarterly to each bank based on the bank’s commitment amount.

The facility fee depends on our debt ratings and was 0.15 % at September 30, 2020.

The facility fee depends on our debt ratings and was 0.15 % at March 31, 2021.

The term credit facilities mature on July 19, 2023.

The revolving credit facility is scheduled to mature on July 19, 2022 and can be extended for two successive terms of six months each at our option.

In January 2019, we established an unsecured commercial paper program.

Under the terms of the program, we may issue unsecured commercial paper notes with maturities that vary, but do not exceed 397 days from the date of issue, up to a maximum aggregate face or principal amount outstanding at any time of $ 1,000,000,000 ( none outstanding at September 30, 2020).

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

In January 2019, we established an unsecured commercial paper program.

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

Three Months Ended March 31,

Balance outstanding at quarter end $ — $ 845,000

5 unchanged sentences

expense divided by average borrowings outstanding)

— % 2.82 % 2.09 % 3.02 %

Senior Unsecured Notes and Secured Debt

4 unchanged sentences

Redemptions and repurchases of debt, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

At September 30, 2020, the annual principal payments due on these debt obligations were as follows (in thousands):

At March 31, 2021, the annual principal payments due on these debt obligations were as follows (in thousands):

Unsecured Notes (1,2)

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(3) Annual interest rates range from 0.04 % to 7.93 %.

Carrying value of the properties securing the debt totaled $ 5,315,000 ,000 at September 30, 2020.

Carrying value of the properties securing the debt totaled $ 5,330,000,000 at March 31, 2021.

(4) Includes a $ 860,000,000 unsecured term credit facility.

The loan matures on April 1, 2022 and bears interest at LIBOR plus 1.20 % ( 1.34 % at September 30, 2020).

The loan matures on April 1, 2022 and bears interest at LIBOR plus 1.20 % ( 1.31 % at March 31, 2021).

(5) Includes a $ 250,000,000 Canadian-denominated unsecured term credit facility (approximately $ 198,850,000 based on the Canadian/U.S.

Dollar exchange rate on September 30, 2020).

The loan matures on July 19, 2023 and bears interest at the Canadian Dealer Offered Rate plus 0.9 % ( 1.38 % at September 30, 2020).

Dollar exchange rate on March 31, 2021).

The loan matures on July 19, 2023 and bears interest at the Canadian Dealer Offered Rate plus 0.9 % ( 1.31 % at March 31, 2021).

(6) Includes a $ 500,000,000 unsecured term credit facility.

The loan matures on July 19, 2023 and bears interest at LIBOR plus 0.9 % ( 1.06 % at September 30, 2020).

The loan matures on July 19, 2023 and bears interest at LIBOR plus 0.9 % ( 1.01 % at March 31, 2021).

(7) Includes a $ 300,000,000 Canadian-denominated 2.95 % senior unsecured notes due 2027 (approximately $ 238,620,000 based on the Canadian/U.S.

Dollar exchange rate on September 30, 2020).

Dollar exchange rate on March 31, 2021).

(8) Includes a £ 550,000,000 4.80 % senior unsecured notes due 2028 (approximately $ 758,670,000 based on the Sterling/U.S.

Dollar exchange rate in effect on September 30, 2020).

Dollar exchange rate in effect on March 31, 2021).

(9) Includes a £ 500,000,000 4.50 % senior unsecured notes due 2034 (approximately $ 689,700,000 based on the Sterling/U.S.

Dollar exchange rate in effect on September 30, 2020).

Dollar exchange rate in effect on March 31, 2021).

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

Nine Months Ended

September 30, 2020 September 30, 2019

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended

March 31, 2021 March 31, 2020

Weighted Avg.

3 unchanged sentences

Debt issued 750,000 2.80 % — — %

Debt extinguished ( 566,248 ) 3.26 % ( 3,107,500 ) 4.47 %

Foreign currency 20,059 3.90 % ( 120,689 ) 4.15 %

Ending balance $ 12,279,592 3.62 % $ 10,306,873 3.97 %

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

Nine Months Ended

September 30, 2020 September 30, 2019

Three Months Ended

March 31, 2021 March 31, 2020

Weighted Avg.

3 unchanged sentences

Debt issued — — % 44,921 2.58 %

Debt assumed — — % 42,000 4.62 %

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

2 unchanged sentences

Ending balance $ 2,336,172 3.14 % $ 2,904,638 3.63 %

In October of 2020, we extinguished $ 20,790,000 of secured bonds due 2038, $ 17,640,000 of secured bonds due 2040 and $ 73,140,000 of secured bonds due 2041 that were defeased in September of 2020.

We recognized a loss on extinguishment of $ 12,204,000 in conjunction with the transaction.

On March 25, 2021, we completed the issuance of $ 750,000,000 senior unsecured notes bearing interest at 2.80 % with a maturity date of June 2031.

On April 15, 2021 net proceeds were used to redeem $ 339,128,000 of our 3.75 % senior unsecured notes due March 2023 and $ 334,624,000 of our 3.95 % senior unsecured notes due September 2023.

We expect to recognize a loss on extinguishment of approximately $ 51 million in April in conjunction with the transaction.

Our debt agreements contain various covenants, restrictions and events of default.

Certain agreements require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions.

As of September 30, 2020, we were in compliance with all of the covenants under our debt agreements.

As of March 31, 2021, we were in compliance with all of the covenants under our debt agreements.

Derivative Instruments

13 unchanged sentences

Approximately $ 2,562,000 of losses, which are included in OCI, are expected to be reclassified into earnings in the next 12 months.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

2 unchanged sentences

Dollar of the instrument is recorded as a cumulative translation adjustment component of OCI.

During the nine months ended September 30, 2020 and 2019, we settled certain net investment hedges generating cash proceeds of $ 3,485,000 and $ 6,716,000 , respectively.

The balance of the cumulative translation adjustment will be reclassified to earnings if the hedged investment is sold or substantially liquidated.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Derivative Contracts Undesignated

4 unchanged sentences

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Derivatives designated as net investment hedges:

12 unchanged sentences

Forward purchase contracts denominated in Pound Sterling £ ( 32,157 ) £ —

Forward sales contracts denominated in Pound Sterling £ — £ 125,000

(1) At September 30, 2020 the maximum maturity date was July 15, 2021.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Description Location 2021 2020

3 unchanged sentences

Commitments and Contingencies

At September 30, 2020, we had 8 outstanding letter of credit obligations totaling $ 14,200,000 and expiring between 2020 and 2024.

At September 30, 2020, we had outstanding construction in progress of $ 414,833,000 and were committed to providing additional funds of approximately $ 342,232,000 to complete construction.

Additionally, at September 30, 2020, we had outstanding investments classified as in substance real estate of $ 285,369,000 and were committed to provide additional funds of $ 172,169,000 (see Note 8 for additional information).

Purchase obligations at September 30, 2020 also include $ 18,488,000 of contingent purchase obligations to fund capital improvements.

At March 31, 2021, we had 10 outstanding letter of credit obligations totaling $ 20,288,000 and expiring between 2021 and 2024.

At March 31, 2021, we had outstanding construction in progress of $ 542,302,000 and were committed to providing additional funds of approximately $ 715,955,000 to complete construction.

Additionally, at March 31, 2021, we had outstanding investments classified as in substance real estate of $ 365,488,000 and were committed to provide additional funds of $ 36,059,000 (see Note 8 for additional information).

Purchase obligations at March 31, 2021 also include $ 40,815,000 of contingent purchase obligations to fund capital improvements.

Rents due from the tenant are increased to reflect the additional investment in the property.

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Preferred Stock:

6 unchanged sentences

Outstanding shares 417,520,420 417,400,602

Preferred Stock The following is a summary of our preferred stock activity during the periods indicated:

Nine Months Ended

September 30, 2020 September 30, 2019

Weighted Avg.

Shares Dividend Rate Shares Dividend Rate

Beginning balance — — % 14,369,965 6.50 %

Shares converted — — % ( 14,369,965 ) 6.50 %

Ending balance — — % — — %

During the nine months ended September 30, 2019, we converted all of the outstanding Series I Preferred Stock.

Each share was converted into 0.8857 shares of common stock.

Common Stock In February 2019, we entered into an amended and restated equity distribution agreement whereby we can offer and sell up to $ 1,500,000,000 aggregate amount of our common stock ("Equity Shelf Program").

The Equity Shelf Program also allows us to enter into forward sale agreements.

During the nine months ended September 30, 2020, we physically settled all of our outstanding forward sales agreements for cash proceeds of $ 576,196,000 .

As of September 30, 2020, we h ad $ 499,341,000 of remaining capacity under the Equity Shelf Program.

As of March 31, 2021 , we had $ 499,341,000 of r emaining capacity under the Equity Shelf Program, which excludes forward sales agreements outstanding for the sale of 2,214,760 shares with maturity dates in 2022.

We expect to physically settle the forward sales for cash proceeds.

On May 1, 2020, our Board of Directors authorized a share repurchase program whereby we may repurchase up to $ 1 billion of common stock through December 31, 2021 (the "Repurchase Program").

1 unchanged sentence

We expect to finance any share repurchases under the Repurchase Program using available cash and may use proceeds from borrowings or debt offerings.

During the nine months ended September 30, 2020, we repurchase d 201,947 shares at an average price of $ 37.89 per share.

The following is a summary of our common stock issuances during the nine months ended September 30, 2020 and 2019 (dollars in thousands, except shares and average price amounts):

We did not repurchase any shares of our common stock during the three months ended March 31, 2021.

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

Shares Issued Average Price Gross Proceeds Net Proceeds

2020 Dividend reinvestment plan issuances 175,129 $ 84.54 $ 14,805 $ 14,805

2019 Option exercises 10,736 51.32 551 551

2020 Equity shelf program issuances 6,799,978 86.48 588,072 576,196

2019 Preferred stock conversions 12,712,452 — —

2020 Stock incentive plans, net of forfeitures 158,818 — —

2020 Totals 7,133,925 $ 602,877 $ 591,001

2020 Dividend reinvestment plan issuances 264,153 $ 72.33 $ 19,105 $ 19,105

2020 Option exercises 251 47.81 12 12

2020 Equity shelf program issuances 6,799,978 86.48 588,072 576,196

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

2021 Totals 119,818 $ — $ —

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Nine Months Ended

September 30, 2020 September 30, 2019

Three Months Ended

March 31, 2021 March 31, 2020

Per Share Amount Per Share Amount

1 unchanged sentence

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Foreign currency translation $ ( 581,387 ) $ ( 621,792 )

1 unchanged sentence

Total accumulated other comprehensive income (loss) $ ( 128,136 ) $ ( 148,504 )

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Stock Incentive Plans

4 unchanged sentences

Options expire ten years from the date of grant.

Stock-based compensation expense totaled $ 6,565,000 and $ 20,938,000 for the three and nine months ended September 30, 2020, respectfully, and $ 5,309,000 and $ 20,501,000 for the same periods in 2019.

Stock-based compensation expense totaled $ 5,576,000 and $ 7,083,000 for the three months ended March 31, 2021 and 2020, respectfully.

Earnings Per Share

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Numerator for basic earnings per share - net income (loss) attributable to common stockholders

7 unchanged sentences

Non-vested restricted shares

542 757 620 860

Redeemable OP units

1,396 1,096 1,396 1,096

Employee stock purchase program

4 unchanged sentences

Diluted earnings per share $ 0.17 $ 0.75

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

Disclosure about Fair Value of Financial Instruments

4 unchanged sentences

The three levels are defined below:

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

3 unchanged sentences

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

9 unchanged sentences

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Carrying Amount Fair Value Carrying Amount Fair Value

8 unchanged sentences

Financial liabilities:

Borrowings under unsecured credit facility and commercial paper program $ — $ — $ 1,587,597 $ 1,587,597

Senior unsecured notes $ 12,183,710 $ 13,377,367 $ 11,420,790 $ 13,093,926

6 unchanged sentences

The following summarizes items measured at fair value on a recurring basis (in thousands):

Fair Value Measurements as of September 30, 2020

Fair Value Measurements as of March 31, 2021

Total Level 1 Level 2 Level 3

4 unchanged sentences

(1) Please see Note 12 for additional information.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Items Measured at Fair Value on a Nonrecurring Basis

9 unchanged sentences

We estimate the fair value of secured debt assumed in asset acquisitions using current interest rates at which similar borrowings could be obtained on the transaction date.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Segment Reporting

16 unchanged sentences

The results of operations for all acquisitions described in Note 3 are included in our consolidated results of operations from the acquisition dates and are components of the appropriate segments.

All intersegment transactions are eliminated.

All inter-segment transactions are eliminated.

WELLTOWER INC.

1 unchanged sentence

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

Three Months Ended September 30, 2020:

Three Months Ended March 31, 2021:

Seniors Housing Operating Triple-net Outpatient Medical Non-segment / Corporate Total

21 unchanged sentences

Total assets $ 16,032,225 $ 8,660,043 $ 6,380,835 $ 1,919,148 $ 32,992,251

Three Months Ended September 30, 2019:

Three Months Ended March 31, 2020:

Seniors Housing Operating Triple-net Outpatient Medical Non-segment / Corporate Total

10 unchanged sentences

Loss (gain) on derivatives and financial instruments, net — 7,651 — — 7,651

Loss (gain) on extinguishment of debt, net 1,450 — — 64,374 65,824

Impairment of assets 2,599 12,314 3,183 — 18,096

Other expenses 4,274 ( 2,496 )

524 3,884 6,186

Income (loss) from continuing operations before income taxes and other items 81,350 159,400 50,622 ( 212,984 ) 78,388

Income tax (expense) benefit — — — ( 3,968 ) ( 3,968 )

Income (loss) from unconsolidated entities ( 3,859 ) 5,276 1,845 — 3,262

Gain (loss) on real estate dispositions, net 519,203 51,529 ( 482 ) — 570,250

Income (loss) from continuing operations 596,694 216,205 51,985 ( 216,952 ) 647,932

Net income (loss) $ 596,694 $ 216,205 $ 51,985 $ ( 216,952 ) $ 647,932

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended September 30, 2020 Seniors Housing Operating Triple-net Outpatient Medical Non-segment / Corporate Total

Resident fees and services $ 2,360,488 $ — $ — $ — $ 2,360,488

Rental income — 512,815 548,496 — 1,061,311

Interest income 305 46,068 1,687 — 48,060

Other income 6,050 3,393 2,681 1,968 14,092

Total revenues 2,366,843 562,276 552,864 1,968 3,483,951

Property operating expenses 1,771,088 39,432 165,024 1,718 1,977,262

Consolidated net operating income 595,755 522,844 387,840 250 1,506,689

Depreciation and amortization 419,161 173,989 202,554 — 795,704

Interest expense 43,191 7,668 13,421 328,935 393,215

General and administrative expenses — — — 100,546 100,546

Loss (gain) on derivatives and financial instruments, net — 10,480 — — 10,480

Loss (gain) on extinguishment of debt, net ( 492 ) — 741 33,004 33,253

Provision for loan losses — 7,072 — — 7,072

1 unchanged sentence

Other expenses 2,989 513

Income (loss) from continuing operations before income taxes and other items 28,922 280,127 160,510 ( 470,957 ) ( 1,398 )

Income tax (expense) benefit — — — ( 9,678 ) ( 9,678 )

Income (loss) from unconsolidated entities ( 25,489 ) 11,776 5,372 — ( 8,341 )

Gain (loss) on real estate dispositions, net 327,635 51,166 524,190 — 902,991

Income (loss) from continuing operations 331,068 343,069 690,072 ( 480,635 ) 883,574

Net income (loss) $ 331,068 $ 343,069 $ 690,072 $ ( 480,635 ) $ 883,574

Nine Months Ended September 30, 2019 Seniors Housing Operating Triple-net Outpatient Medical Non-segment / Corporate Total

Resident fees and services $ 2,616,491 $ — $ — $ — $ 2,616,491

Rental income — 681,893 496,924 — 1,178,817

Interest income — 47,343 769 — 48,112

Other income 6,920 4,370 322 3,452 15,064

Total revenues 2,623,411 733,606 498,015 3,452 3,858,484

Property operating expenses 1,826,344 41,700 159,478 — 2,027,522

Consolidated net operating income 797,067 691,906 338,537 3,452 1,830,962

Depreciation and amortization 416,252 174,551 173,626 — 764,429

Interest expense 52,179 9,741 10,097 351,894 423,911

General and administrative expenses — — — 100,042 100,042

Loss (gain) on derivatives and financial

instruments, net — 670 — — 670

Loss (gain) on extinguishment of debt, net 1,450 — — 80,093 81,543

Provision for loan losses — 18.69 18,690 — — 18.69 — 18,690

Impairment of assets 2,599 11,374 14,062 — 28,035

Other expenses 19,077 6,093 1,274 10,126 36,570

1,007 1,783 6,292

Income (loss) from continuing operations before income taxes and other items 73,565 94,313 62,573 ( 154,761 ) 75,690

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The following is a summary of geographic information for the periods presented (dollars in thousands):

Three Months Ended Nine Months Ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

% Amount % Amount (1)

Three Months Ended

March 31, 2021 March 31, 2020

United States $ 825,648 78.5 % $ 1,027,781 81.6 %

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Total $ 1,052,062 100.0 % $ 1,258,602 100.0 %

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Amount % Amount %

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Total $ 32,992,251 100.0 % $ 32,483,642 100.0 %

(1) The United States, United Kingdom and Canada represent 76 %, 11 % and 13 %, respectively, of our resident fees and services revenue stream for the three and nine months ended September 30, 2020.

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

Income Taxes and Distributions

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income based or withholding taxes on certain investments located in jurisdictions outside the U.S.

The provision for income taxes for the nine months ended September 30, 2020 and 2019, was primarily due to operating income or losses, offset by certain discrete items at our TRS entities.

The provision for income taxes for the three months ended March 31, 2021 and 2020, was primarily due to operating income or losses, offset by certain discrete items at our TRS entities.

In 2014, we established certain wholly-owned direct and indirect subsidiaries in Luxembourg and Jersey and transferred interests in certain foreign investments into this holding company structure.

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Accordingly, such joint ventures have been consolidated, and the table below summarizes the balance sheets of consolidated VIEs in the aggregate (in thousands):

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Net real estate investments $ 451,975 $ 454,333

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for the periods presented and should be read together with the notes thereto contained in this Quarterly Report on Form 10-Q.

Other important factors are identified in our Annual Report on Form 10-K for the year ended December 31, 2019, including factors identified under the headings “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations" and updated risk factors in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

Other important factors are identified in our Annual Report on Form 10-K for the year ended December 31, 2020, including factors identified under the headings “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations".

References herein to “we,” “us,” “our,” or the “Company” refer to Welltower Inc.

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Welltower™, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (U.S.), Canada and the United Kingdom (U.K.), consisting of seniors housing and post-acute communities and outpatient medical properties.

The following table summarizes our consolidated portfolio for the three months ended September 30, 2020 (dollars in thousands):

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

Percentage of Number of

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See Non-GAAP Financial Measures for additional information and reconciliation.

The extent to which the COVID-19 pandemic impacts our operations and those of our operators and tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others.

The COVID-19 pandemic has had and may continue to have material and adverse effects on our financial condition, results of operations and cash flows in the future.

The extent to which the COVID-19 pandemic impacts our operations and those of our operators and tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the effectiveness of vaccines, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others.

Our Seniors Housing Operating revenues are dependent on occupancy.

While admission bans were lifted across our portfolio during the second quarter and in July, move-out activity continued to outpace move-ins, resulting in occupancy losses throughout the period.

Month-to-date, through October 23, 2020, total SHO portfolio occupancy declined by approximately 30 basis points.

Consequently, we anticipate total SHO portfolio spot occupancy to decline 75 to 125 basis points in the fourth quarter relative to September 30, 2020.

We have incurred increased operational costs as a result of the introduction of public health measures and other regulations affecting our properties, as well as additional health and safety measures adopted by us and our operators related to the COVID-19 pandemic, including increases in labor and property cleaning expenses and expenditures related to our efforts to procure PPE and supplies.

Spot occupancy has continued to decline since the beginning of the pandemic, dropping to 73.6 % as of March 31, 2021 compared to 75.9 % as of December 31, 2020.

Additionally, r apid distribution and a high acceptance rate of COVID-19 vaccinations by residents within assisted living and memory care facilities in the U.S.

has resulted in a significant decrease in total resident case counts since mid-January 2021 across the portfolio.

We expect total Seniors Housing Operating expenses to remain elevated during the pandemic and potentially beyond as these additional health and safety measures become standard practice.

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Many of our Triple-net operators received funds under the Coronavirus Aid Relief, and Economic Security Act (“CARES Act”) Paycheck Protection Program.

Our Outpatient Medical tenants are experiencing temporary medical practice closures or decreases in revenue due to government-imposed restrictions on elective medical procedures, stay at home orders or decisions by patients to delay

In addition, operators of long-term/post-acute care facilities have generally received funds from Phase 1 of the Provider Relief Fund and operators of assisted living facilities have generally received funds from Phase 2 and Phase 3 of the Provider Relief Fund.

Management's Discussion and Analysis of Financial Condition and Results of Operations

treatments which may continue to adversely affect their ability to make contractual rent payments.

These factors have and may continue to cause operators or tenants to seek modifications of such obligations, resulting in reductions in revenue and increases in uncollectible receivables.

We will evaluate each request on a case-by-case basis and determine if a form of rent relief is warranted following an examination of the tenant’s financial health, rent coverage, current operating situation and other factors.

We have either collected or approved short term deferrals for over 99 % of Outpatient Medical rent due in the third quarter, consisting of 97 % cash collections and 2% of short term deferrals.

In most cases, unless local ordinances mandate otherwise, the deferred rent represents two months of rent with expected repayment by the end of the year.

Furthermore, collections of deferred rent due in the third quarter under executed deferrals was over 99%.

As a result of uncertainty regarding the length and severity of the COVID-19 pandemic and the impact of the pandemic on our business and related industries, our investments in and acquisitions of senior housing and health care properties, as well as our ability to transition or sell properties with profitable results, may be limited.

We have a significant development portfolio as of September 30, 2020.

To date we have only experienced minor construction and licensing delays with respect to our development portfolio, but may experience more significant delays in the future.

Such disruptions to acquisition, disposition and development activity may negatively impact our long-term competitive position.

During the early stages of the pandemic in 2020, our Outpatient Medical tenants experienced temporary medical practice closures or decreases in revenue due to government-imposed restrictions on elective medical procedures, stay at home orders or decisions by patients to delay treatments.

These factors caused operators or tenants, in certain circumstances, to seek modifications of rent obligations.

We evaluated each request on a case-by-case basis to determine if a form of rent relief was warranted following an examination of the tenant’s financial health, rent coverage, current operating situation and other factors.

Virtually all deferred rent has been repaid as of March 31, 2021.

During the first quarter, we collected approximately 96% of rent due from operators under Triple-net lease agreements (primarily seniors housing and post-acute care facilities).

No significant rent deferrals or rent concessions have been made.

In the Outpatient Medical segment we collected 99% of rent due in the first quarter, with uncollected amounts primarily attributable to local jurisdictions with COVID-19 related ordinances providing temporary rent relief to tenants.

Business Strategy

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In addition, operating leases are typically structured as master leases and loans are generally cross-defaulted and cross-collateralized with other real estate loans, operating leases or agreements between us and the obligor and its affiliates.

For the nine months ended September 30, 2020, resident fees and services and rental income represented 68% and 30%, respectively, of total revenues.

For the three months ended March 31, 2021, resident fees and services and rental income represented 69% and 29%, respectively, of total revenues.

Substantially all of our operating leases are designed with escalating rent structures.

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Our primary sources of cash include resident fees and services, rent and interest receipts, borrowings under our unsecured revolving credit facility and commercial paper program, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable.

Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses and general and administrative

Management's Discussion and Analysis of Financial Condition and Results of Operations

Depending upon the availability and cost of external capital, we believe our liquidity is sufficient to fund these uses of cash.

Management's Discussion and Analysis of Financial Condition and Results of Operations

We also continuously evaluate opportunities to finance future investments.

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To the extent that new investment requirements exceed our avai lable cash on-hand, we expect to borrow under our unsecured revolving credit facility and commercial paper program.

At September 30, 2020, we had $1,603,740,000 of cash and cash equivalents, $551,593,000 of restricted cash and $3,000,000,000 of available borrowing capacity under our unsecured revolving credit facility.

At March 31, 2021, we had $2,131,846,000 of cash and cash equivalents, $426,976,000 of restricted cash and $3,000,000,000 of available borrowing capacity under our unsecured revolving credit facility.

Key Transactions

Capital The foll owing summarizes key capital transaction that occurred during the nine months ended September 30, 2020 and subsequent events:

• During the nine months ended September 30, 2020, we extinguished $491,506,000 of secured debt at a blended average interest rate of 2.61%.

• During the nine months ended September 30, 2020, we sold 2,128,000 shares of common stock under our ATM and DRIP programs, via both cash settle and forward sale agreements, generating gross proceeds of approximately $175,484,000.

The sale of these shares and settlement of previously outstanding forward sales resulted in gross proceeds of approximately $607,177,000 which were used to reduce borrowings under our unsecured revolving credit facility.

• In April, we closed on a $1.0 billion two-year unsecured term loan.

The term loan bears interest at a rate of 1-month LIBOR + 1.20%, based on our credit rating.

• On June 30, 2020, we completed the issuance of $600,000,000 senior unsecured notes bearing interest at 2.75% with a maturity date of January 2031.

Net proceeds were used to fund tender offers for $426,248,000 of our 3.75% senior unsecured notes due 2023 and our 3.95% senior unsecured notes due 2023 which settled on July 1, 2020.

The remaining proceeds were used to reduce borrowings under our term loan by $140 million.

Investments The following summarizes our property acquisitions and joint venture investments completed during the nine months ended September 30, 2020 (dollars in thousands):

Capital The following summarizes key capital transaction that occurred during the three months ended March 31, 2021 and subsequent events:

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

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

• On March 25, 2021, we completed the issuance of $750,000,000 senior unsecured notes bearing interest at 2.80% with a maturity date of June 2031.

On April 15, 2021, net proceeds were used to redeem $339,128,000 of our 3.75% senior unsecured notes due March 2023 and $334,624,000 of our 3.95% senior unsecured notes due September 2023.

We expect to recognize a loss on extinguishment of approximately $51 million in April in conjunction with the transaction.

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

Properties Investment Amount (1)

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See Note 3 to our unaudited consolidated financial statements for additional information.

(4) Represents the acquisition of a condo unit at a previously acquired property.

Dispositions The following summarizes property dispositions completed during the nine months ended September 30, 2020 (dollars in thousands):

Management's Discussion and Analysis of Financial Condition and Results of Operations

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

Properties Proceeds (1)

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Seniors Housing Operating 4 $ 57,501 6.1 % $ 74,326

Triple-net 6 78,439 6.5 % 33,445

Outpatient Medical 8 158,878 5.2 % 137,890

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See Note 5 to our unaudited consolidated financial statements for additional information.

Dividends Our Board of Directors declared a cash dividend for the quarter ended September 30, 2020 of $0.61 per share.

On November 19, 2020, we will pay our 198 th consecutive quarterly cash dividend to stockholders of record on November 10, 2020.

Dividends Our Board of Directors declared a cash dividend for the quarter ended March 31, 2021 of $0.61 per share.

On May 20, 2021, we will pay our 200 th consecutive quarterly cash dividend to stockholders of record on May 11, 2021.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Key Performance Indicators, Trends and Uncertainties

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Three Months Ended

September 30, June 30, March 31, December 31, September 30, June 30, March 31,

March 31, December 31, September 30, June 30, March 31,

2021 2020 2020 2020 2020

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The leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and Internal Revenue Code Section 1031 deposits.

The coverage ratios indicate our ability to service interest and fixed charges (interest, secured debt principal amortization and preferred dividends).

The coverage ratios indicate our ability to service interest and fixed charges (interest and secured debt principal amortization).

We expect to maintain capitalization ratios and coverage ratios sufficient to maintain a capital structure consistent with our current profile.

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Three Months Ended

September 30, June 30, March 31, December 31, September 30, June 30, March 31,

March 31, December 31, September 30, June 30, March 31,

2021 2020 2020 2020 2020

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Net debt to market capitalization ratio 28% 30% 33% 36% 40%

Interest coverage ratio 6.23x 4.29x 5.42x 4.64x 7.61x 3.74x 4.80x

Fixed charge coverage ratio 5.52x 3.84x 4.88x 4.20x 6.96x 3.42x 4.38x

Management's Discussion and Analysis of Financial Condition and Results of Operations

Interest coverage ratio 3.56x 4.20x 6.23x 4.29x 5.42x

Fixed charge coverage ratio 3.16x 3.72x 5.52x 3.84x 4.88x

Concentration Risk We evaluate our concentration risk in terms of NOI by property mix, relationship mix and geographic mix.

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The following table reflects our recent historical trends of concentration risk by NOI for the periods indicated below:

Management's Discussion and Analysis of Financial Condition and Results of Operations

Three Months Ended

September 30, June 30, March 31, December 31, September 30, June 30, March 31,

March 31, December 31, September 30, June 30, March 31,

2021 2020 2020 2020 2020

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ProMedica 12% 11% 13% 10% 9%

Genesis Healthcare (3)

6% 6% (16)% 6% 5%

5% 4% 6% 5% 6%

Avery Healthcare 5% 4% 5% 3% 3%

Sagora Senior Living 4% 3% 3% 3% 3% 3% 3%

Remaining relationships 58% 63% 77% 66% 63%

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United Kingdom 10% 11% 12% 8% 9%

New Jersey (3)

7% 7% (5)% 7% 8%

Texas 7% 10% 12% 10% 7%

Canada 7% 5% 8% 6% 7%

Florida 6% 5% 6% 6% 5% 5% 5%

Remaining geographic areas 54% 55% 56% 55% 54%

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

Lease Expirations The following table sets forth information regarding lease expirations for certain portions of our portfolio as of September 30, 2020 (dollars in thousands):

(3) During the three months ended September 30, 2020, we reserved for straight-line rent receivable balances of $91,025,000 relating to Genesis Healthcare.

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

Expiration Year (1)

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Factors that may cause actual results to differ from expected results are described in more detail in “Cautionary Statement Regarding Forward-Looking Statements” and other sections of this Quarterly Report on Form 10-Q.

Management's Discussion and Analysis of Financial Condition and Results of Operations

regularly monitors economic and other factors to develop strategic and tactical plans designed to improve performance and maximize our competitive position.

Management regularly monitors economic and other factors to develop strategic and tactical plans designed to improve performance and maximize our competitive position.

Our ability to achieve our financial objectives is dependent upon our ability to effectively execute these plans and to appropriately respond to emerging economic and company-specific trends.

Please refer to our Annual Report on Form 10-K for the year ended December 31, 2019, under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 for updated risk factors.

Please refer to our Annual Report on Form 10-K for the year ended December 31, 2020, under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Corporate Governance

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The following is a summary of our sources and uses of cash flows for the periods presented (dollars in thousands):

Nine Months Ended Change

September 30, 2020 September 30, 2019 $ %

Three Months Ended Change

March 31, 2021 March 31, 2020 $ %

Cash, cash equivalents and restricted cash at beginning of period $ 2,021,043 $ 385,766 $ 1,635,277 424 %

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Cash, cash equivalents and restricted cash at end of period $ 2,558,822 $ 393,066 $ 2,165,756 551 %

Operating Activities The changes in net cash provided from operating activities are primarily attributable to declines in revenue and increases in property operating expenses, as well as the impact of short-term rent deferrals granted as a result of the COVID-19 pandemic in 2020.

Operating Activities The changes in net cash provided from operating activities are primarily attributable to declines in revenue as a result of decreased occupancy at our Seniors Housing Operating properties, straight-line receivable reserves related to Triple-net leases during the three months ended March 31, 2021 and dispositions.

Please see “Results of Operations” for discussion of net income fluctuations.

For the nine months ended September 30, 2020 and 2019 , cash flows provided from operations exceeded cash distributions to stockholders.

For the three months ended March 31, 2021 and 2020 , cash flows provided from operations exceeded cash distributions to stockholders.

Investing Activities The changes in net cash provided from/used in investing activities are primarily attributable to net changes in real property investments and dispositions, loans receivable and investments in unconsolidated entities, which are summarized above in “Key Transactions” and Notes 3 and 5 of our unaudited consolidated financial statements.

The following is a summary of cash used in non-acquisition capital improvement activities for the periods presented (dollars in thousands):

Nine Months Ended Change

September 30, 2020 September 30, 2019 $

Three Months Ended Change

March 31, 2021 March 31, 2020 $

New development $ 73,605 $ 48,775 $ 24,830

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Total $ 102,385 $ 118,157 $ (15,772)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The change in new development is primarily due to the number and size of construction projects on-going during the relevant periods.

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Please refer to Notes 10, 11 and 14 of our unaudited consolidated financial statements for additional information.

On April 1, 2020, in response to uncertain financial market conditions arising from the COVID-19 pandemic, we undertook steps to strengthen our balance sheet and to enhance our liquidity by entering into a $1.0 billion two-year unsecured term loan.

Additionally, on June 30, 2020, we completed the issuance of $600 million senior unsecured notes with a maturity date of January 2031.

Net proceeds were used to fund tender offers for $426 million of our 3.75% senior unsecured notes due 2023 and our 3.95% senior unsecured notes due 2023, which settled on July 1, 2020.

The remaining proceeds were used to reduce borrowings under the term loan by $140 million.

As of September 30, 2020, we have total near-term available liquidity of approximately $4.6 billion.

Risk Factors in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

Management's Discussion and Analysis of Financial Condition and Results of Operations

On March 25, 2021, we completed the issuance of $750,000,000 senior unsecured notes with a maturity date of June 2031.

On April 15, 2021, net proceeds were used to redeem the remaining $339,128,000 of our 3.75% senior unsecured notes due 2023 and $334,624,000 of our 3.95% senior unsecured notes due 2023.

As of March 31, 2021, we have total near-term available liquidity of approximately $5.1 billion.

However, we are unable to accurately predict the full impact that the pandemic will have on our results from operations, financial condition, liquidity and cash flows due to numerous factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2020, including factors identified under the heading “Risk Factors" .

Off-Balance Sheet Arrangements

At September 30, 2020, we had investments in unconsolidated entities with our ownership generally ranging from 10% to 65%.

At March 31, 2021, we had investments in unconsolidated entities with our ownership generally ranging from 10% to 65%.

We use financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure.

At September 30, 2020, we had 8 outstanding letter of credit obligations.

At March 31, 2021, we had 10 outstanding letter of credit obligations.

Please see Notes 8, 12 and 13 to our unaudited consolidated financial statements for additional information.

Contractual Obligations

The following table summarizes our payment requirements under contractual obligations as of September 30, 2020 (in thousands):

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

Payments Due by Period

Contractual Obligations Total 2021 2022-2023 2024-2025 Thereafter

Unsecured credit facility and commercial paper (1,2)

$ — $ — $ — $ — $ —

Senior unsecured notes and term credit facilities:

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Contractual interest obligations:

Unsecured credit facility and commercial paper — — — — —

Senior unsecured notes and term loans (2)

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Total contractual obligations $ 22,203,308 $ 1,241,508 $ 4,836,777 $ 4,457,912 $ 11,667,111

(1) Relates to our unsecured credit facility and commercial paper with an aggregate commitment of $3,000,000,000.

See Note 10 to our unaudited consolidated financial statements for additional information.

(1) Amounts represent principal amounts due and do not reflect unamortized premiums/discounts or other fair value adjustments as reflected on the balance sheet.

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(5) See Note 13 to our unaudited consolidated financial statements for additional information.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Capital Structure

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Certain agreements require us to maintain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions.

As of September 30, 2020, we were in compliance with all of the covenants under our debt agreements.

As of March 31, 2021, we were in compliance with all covenants under our primary unsecured credit facilities and senior note agreements.

None of our debt agreements contain provisions for acceleration which could be triggered by our debt ratings.

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Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse impact on our cost and availability of capital, which could have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.

Management's Discussion and Analysis of Financial Condition and Results of Operations

On May 17, 2018, we filed with the Securities and Exchange Commission (1) an open-ended automatic or “universal” shelf registration statement covering an indeterminate amount of future offerings of debt securities, common stock, preferred stock, depositary shares, warrants and units and (2) a registration statement in connection with our enhanced dividend reinvestment plan (“DRIP”) under which we may issue up to 15,000,000 shares of common stock.

As o f October 23, 2020, 2,541,750 shares of common stock remained available for issuance under the DRIP registration statement.

As o f April 23, 2021, 2,541,750 shares of common stock remained available for issuance under the DRIP registration statement.

On February 25, 2019, we entered into separate amended and restated equity distribution agreements with each of Barclays Capital Inc., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co.

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The Equity Shelf Program also allows us to enter into forward sale agreements.

As of October 23, 2020, we had $499,341,000 of remaining capacity under the Equity Shelf Program and there were no outstanding forward sales agreements.

As of April 23, 2021, we had $499,341,000 of remaining capacity under the Equity Shelf Program, which excludes forward sales agreements outstanding for the sale of 3,704,787 s hares or approximately $ 272,059,000 with maturity dates in 2022.

We expect to physically settle the forward sales for cash proceeds.

Depending upon market conditions, we anticipate issuing securities under our registration statements to invest in additional properties and to repay borrowings under our unsecured revolving credit facility and commercial paper program.

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The following is a summary of our results of operations (dollars in thousands, except per share amounts):

Three Months Ended Change Nine Months Ended Change

September 30, September 30, September 30, September 30,

2020 2019 Amount % 2020 2019 Amount %

Three Months Ended Change

March 31, March 31,

2021 2020 Amount %

Net income $ 72,192 $ 329,380 $ (257,188) (78) %

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FFO $ 0.69 $ 0.86 $ (0.17) (20) %

Interest coverage ratio 6.23 x 7.61 x (1.38) x -18 % 5.31 x 5.36 x (0.05) x -1 %

Fixed charge coverage ratio 5.52 x 6.96 x (1.44) x -21 % 4.74 x 4.90 x (0.16) x -3 %

Management's Discussion and Analysis of Financial Condition and Results of Operations

Interest coverage ratio 3.56 x 5.42 x (1.86) x (34) %

Fixed charge coverage ratio 3.16 x 4.88 x (1.72) x (35) %

Seniors Housing Operating

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

QTD Pool YTD Pool

Three Months Ended Change Nine Months Ended Change

September 30, 2020 September 30, 2019 $ % September 30, 2020 September 30, 2019 $ %

Three Months Ended Change

March 31, 2021 March 31, 2020 $ %

$ 156,791 $ 219,756 $ (62,965) (28.7) %

(1) For the three and nine months ended September 30, 2020 and 2019, amounts relate to 512 and 402 same store properties, respectively.

(1) For the three months ended March 31, 2021 and 2020, amounts relate t o 526 same store properties, respectively.

Please see Non-GAAP Financial Measures for additional information and reconciliations.

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

Three Months Ended Change Nine Months Ended Change

September 30, September 30, September 30, September 30,

Management's Discussion and Analysis of Financial Condition and Results of Operations

Three Months Ended Change

March 31, March 31,

2021 2020 $ %

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Interest income

113 — 113 n/a 305 — 305 n/a

1,119 104 1,015 976 %

1,819 1,052 767 73 %

Total revenues

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Loss (gain) on extinguishment of debt, net

— 1,450 (1,450) -100 % (492) 1,450 (1,942) -134 %

Provision for loan losses 86 — 86 n/a 86 — 86 n/a

(4,643) — (4,643) n/a

Provision for loan losses 251 — 251 n/a

Impairment of assets

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Income (loss) from unconsolidated entities 5,234 (11,024) 16,258 147 %

Gain (loss) on real estate dispositions, net 313,319 519,203 (205,884) n/a 327,635 518,493 (190,858) n/a

Gain (loss) on real estate dispositions, net 5,195 (149) 5,344 n/a

Income from continuing operations 33,188 62,392 (29,204) (47) %

Net income (loss) 33,188 62,392 (29,204) (47) %

Net income (loss) attributable to noncontrolling interests 60,642 46,849 13,793 n/a 32,554 50,826 (18,272) n/a

Net income (loss) attributable to noncontrolling interests (4,924) (1,932) (2,992) n/a

Net income (loss) attributable to common stockholders $ 38,112 $ 64,324 $ (26,212) (41) %

(1) See Non-GAAP Financial Measures below.

Decreases in resident fees and services and property operating expenses are primarily a result of dispositions and decreases in occupancy across the portfolio due to the COVID-19 pandemic.

Occupancy within our Seniors Housing Operating portfolio has declined as follows:

February March April May June July August September

Decreases in resident fees and services and property operating expenses are primarily a result of decreases in occupancy across the portfolio due to the COVID-19 pandemic and property dispositions.

Spot occupancy has continued to decline since the beginning of the pandemic, dropping to 73.6% as of March 31, 2021 compared to 75.9% as of December 31, 2020.

Spot occupancy rates from the start of the pandemic through March 31, 2021 are as follows:

February 2020 December 2020 January 2021 February 2021 March 2021

Spot occupancy (1)

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Sequential occupancy change (1.5) % (0.8) % — %

In addition, we have experienced increased operational costs, net of reimbursements, of $18,192,000 and $68,327,000 during the three and nine months ended September 30, 2020, respectively, included in property operating expenses as a result of the introduction of public health measures and other regulations affecting our properties, as well as additional health and safety measures adopted by us and our operators related to the COVID-19 pandemic, including increases in labor and property cleaning expenses and expenditures related to our efforts to procure PPE and supplies, net of reimbursements.

Management's Discussion and Analysis of Financial Condition and Results of Operations

The fluctuations in depreciation and amortization are due to acquisitions and dispositions and variations in amortization of short-lived intangible assets.

and Canada, resulted in a benefit of approximately $21,204,000 for the three months ended March 31, 2021 as compared to an expense of $7,294,000 during the three months ended March 31, 2020.

These costs included higher labor expenses, coupled with expenditures related to procurement of personal protective equipment and other supplies, net of any reimbursements.

In 2020 applications were made for amounts under Phase 2 and Phase 3 of the Provider Relief Fund related to our Seniors Housing Operating portfolio.

During the first quarter, we received Provider Relief Funds of approximately $35,682,000, which was recognized as a reduction to COVID-19 costs within property operating expenses.

The fluctuations in depreciation and amortization are due to acquisitions, dispositions and transitions.

To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly.

During the nine months ended September 30, 2020, we recorded impairment charges of $91,424,000 related to 13 held for sale or sold properties and four held for use properties.

During the nine months ended September 30, 2019, we recorded impairment charges of $2,599,000 related to four held for use properties.

During the three months ended March 31, 2021 and 2020, we recorded impairment charges of $4,604,000 and $3,495,000, respectively, related to held for use properties in which the carrying values exceed the estimated fair value.

Transaction costs related to asset acquisitions are capitalized as a component of the purchase price.

Changes in the gain on sales of properties are related to the volume and timing of property sales and the sales prices.

During the three months ended September 30, 2020, we recognized a gain on real estate disposition of $313 million related to an 11 property U.S.

During the three months ended September 30, 2019 we recognized a gain on real estate disposition of $520 million related to the Benchmark portfolio.

During the three months ended March 31, 2021, we recognized a gain on real estate disposition of $5,195,000 related to four properties.

The fluctuation in other expenses is primarily due to the timing of noncapitalizable transaction costs associated with acquisitions and operator transitions.

During the nine months ended September 30, 2020, we completed three Seniors Housing Operating construction projects representing $93,188,000 or $300,606 per unit.

The following is a summary of our Seniors Housing Operating construction projects, excluding expansions, pending as of September 30, 2020 (dollars in thousands):

Management's Discussion and Analysis of Financial Condition and Results of Operations

During the three months ended March 31, 2021, there were no Seniors Housing Operating construction projects completed.

The following is a summary of our Seniors Housing Operating construction projects, excluding expansions, pending as of March 31, 2021 (dollars in thousands):

Location Units Commitment Balance Est.

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Hendon, UK 102 76,557 54,698 4Q21

Georgetown, TX 188 36,215 5,308 4Q21

Princeton, NJ 80 29,780 18,559 3Q22

Berea, OH 120 14,934 2,344 4Q22

Painesville, OH 119 14,462 1,857 4Q22

Beaver, PA 116 14,184 2,390 4Q22

1,045 $ 379,275 236,667

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Washington, DC Project in planning stage 24,467

Columbus, OH Project in planning stage 11,634

Brookhaven, GA Project in planning stage 6,804

Raleigh, NC Project in planning stage 3,407

Interest expense represents secured debt interest expense which fluctuates based on the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations.

The fluctuations in loss (gain) on extinguishment of debt is primarily attributable to the volume of extinguishments and terms of the related secured debt.

The following is a summary of our Seniors Housing Operating segment property secured debt principal activity (dollars in thousands):

Three Months Ended Nine Months Ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

Amount Interest Rate Amount Interest Rate Amount Interest Rate Amount Interest Rate

Three Months Ended

March 31, 2021 March 31, 2020

Amount Interest Rate Amount Interest Rate

Beginning balance $ 1,706,189 3.05 % $ 2,115,037 3.54 %

Debt issued — — % 44,921 2.58 %

Debt assumed — — % — — % — — % 42,000 4.62 %

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

Debt transferred — — % (12,072) 3.89 % — — % (12,072) 3.89 %

Principal payments (12,261) 3.26 % (12,174) 3.49 %

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The majority of our Seniors Housing Operating properties are formed through partnership interests.

Losses from unconsolidated entities are largely attributable to depreciation and amortization of short-lived intangible assets related to certain investments in unconsolidated joint ventures, as well as the disposal of an investment in an unconsolidated entity during the nine months ended September 30, 2019.

Income from unconsolidated entities recognized during the three months ended March 31, 2021 is primarily due to a gain on sale recognized from the sale of a home health business owned by one of our unconsolidated entities, offset by losses from unconsolidated entities largely attributable to depreciation and amortization of short-lived intangible assets related to certain investments in unconsolidated joint ventures.

Net income attributable to noncontrolling interests represents our partners’ share of net income (loss) related to joint ventures.

The increase during the three months ended September 30, 2020 and 2019, relates primarily to our partner's share of the gains recognized on the sale of the 11 property U.S.

portfolio and the sale of the Benchmark portfolio, respectively.

During the nine month period ended September 30, 2020, these gains in partners' share of gains on dispositions are partially offset by our partners' share of impairment charges recognized.

Management's Discussion and Analysis of Financial Condition and Results of Operations

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

QTD Pool YTD Pool

Three Months Ended Change Nine Months Ended Change

September 30, 2020 September 30, 2019 $ % September 30, 2020 September 30, 2019 $ %

Three Months Ended Change

March 31, 2021 March 31, 2020 $ %

$ 141,089 $ 147,527 $ (6,438) (4.4) %

(1) For the three and nine months ended September 30, 2020 and 2019, amounts relate to 649 and 630 same store properties, respectively.

(1) For the three months ended March 31, 2021 and 2020, amounts relate to 553 same store properties, respectively.

Please see Non-GAAP Financial Measures for additional information and reconciliations.

Management's Discussion and Analysis of Financial Condition and Results of Operations

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

Three Months Ended Change Nine Months Ended Change

September 30, September 30, September 30, September 30,

Three Months Ended Change

March 31, March 31,

2021 2020 $ %

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Loss (gain) on derivatives and financial instruments, net

1,395 1,244 151 12 % 10,480 670 9,810 n/a

1,934 7,651 (5,717) (75) %

Provision for loan losses

372 — 372 n/a 8,895 18,690 (9,795) -52 %

853 7,072 (6,219) (88) %

Impairment of assets

10,535 12,314 (1,779) -14 % 34,867 11,374 23,493 n/a

18,964 24,332 (5,368) (22) %

Other expenses

9 unchanged sentences

(1) See Non-GAAP Financial Measures below.

The decrease in rental income is primarily attributable to the write off of straight-line rent receivables balances of $112,398,000 and $146,508,000 during the three and nine month periods ended September 30, 2020, respectively, relating to leases for which collection of substantially all contractual lease payments was no longer deemed probable.

Included in such amounts was $91,025,000 relating to Genesis Healthcare whom noted substantial doubt as to their ability to continue as a going concern in August.

Continued decreases in rental income are primarily attributable to the reserve for straight-line rent receivables balances of $49,241,000 and $32,268,000 during the three month periods ended March 31, 2021 and 2020, respectively, relating to leases for which collection of substantially all contractual lease payments was no longer deemed probable.

Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index and/or changes in the gross operating revenues of the tenant’s properties.

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If gross operating revenues at our facilities and/or the Consumer Price Index do not increase, a portion of our revenues may not continue to increase.

For the three months ended September 30, 2020, we had 17 leases with rental rate increases ranging from 0.10% to 0.66% in our Triple-net portfolio.

For the three months ended March 31, 2021, we had 16 leases with rental rate increases ranging from 0.25% to 10.00% in our Triple-net portfolio.

Our Triple-net operators are experiencing similar impacts on occupancy and operating costs due to the COVID-19 pandemic as described above with respect to our Seniors Housing Operating properties.

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Many of our Triple-net operators received funds under the CARES Act Paycheck Protection Program.

In addition, operators of long-term/post-acute facilities have generally received funds from Phase 1 of the Provider Relief Fund and operators of assisted living facilities are generally expecting funds from Phase 2 of the Provider Relief Fund.

Accordingly, collection of rent due during the

Management's Discussion and Analysis of Financial Condition and Results of Operations

COVID-19 pandemic to date (from March to September) have generally been consistent with historical collection rates and no significant rent concessions or deferrals have been made to date.

In addition, operators of long-term/post-acute facilities have generally received funds from Phase 1 of the Provider Relief Fund and operators of assisted living facilities have received funds from Phase 2 and Phase 3 of the Provider Relief Fund.

During the first quarter, we collected approximately 96% of rent due from operators under Triple-net lease agreements (primarily seniors housing and post-acute care facilities).

No significant rent deferrals or rent concessions have been made.

We evaluate leases individually and recognize rent on a cash basis if collectibility of substantially all contractual rent payments is not probable.

Depreciation and amortization fluctuates as a result of the acquisitions, dispositions and transitions of triple-net properties.

To the extent we acquire or dispose of additional properties in the future, our provision for depreciation and amortization will change accordingly.

In March 2019, we recognized a provision for loan losses of $18,690,000 to fully reserve for certain real estate loans receivable that were no longer deemed collectible.

During the nine months ended September 30, 2020, we recognized a provision for loan losses of $8,201,000 to fully reserve for one real estate loan receivable and one non-real estate loan receivable that were no longer deemed collectible.

During the nine months ended September 30, 2020, we recorded impairment charges of $34,867,000 related to one held for sale and four held for use properties.

During the nine months ended September 30, 2019, we recorded impairment charges of $11,374,000 related to two properties.

In March 2020, we recognized a provision for loan losses of $6,898,000 to fully reserve for a non-real estate loans receivable that was no longer deemed collectible.

During the three months ended March 31, 2021, we recorded impairment charges of $18,964,000 related to one held for sale property and two held for use properties.

During the three months ended March 31, 2020, we recorded impairment charges of $24,332,000 related to two held for use properties.

Changes in the gain on sales of properties are related to the volume and timing of property sales and the sales prices.

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The fluctuation in other expenses is primarily due to noncapitalizable transaction costs from acquisitions and segment transitions.

During the nine months ended September 30, 2020, we completed two Triple-net construction project representing $59,201,000 or $224,246 per unit.

The following is a summary of Triple-net construction projects, excluding expansions, pending as of September 30, 2020 (dollars in thousands):

Management's Discussion and Analysis of Financial Condition and Results of Operations

During the three months ended March 31, 2021, we completed one Triple-net construction project representing $22,990,000 or $280,366 per unit.

The following is a summary of Triple-net construction projects, excluding expansions, pending as of March 31, 2021 (dollars in thousands):

Location Units/Beds Commitment Balance Est.

Thousand Oaks, CA 82 $ 24,870 $ 18,157 4Q20

Droitwich, UK 70 16,364 14,339 4Q20

Redhill, UK 76 $ 21,932 $ 12,097 2Q21

Leicester, UK 60 15,449 6,495 1Q22

London, UK 82 44,508 22,738 2Q22

Wombourne, UK 66 16,553 6,434 2Q22

Rugby, UK 76 21,123 3,782 4Q22

Raleigh, NC 191 154,256 20,185 2Q23

551 $ 273,821 $ 71,731

The fluctuation in loss (gain) on derivatives and financial instruments, net is primarily attributable to the mark-to-market adjustment recorded on our Genesis Healthcare available-for-sale investment.

Loss (gain) on derivatives and financial instruments, net is primarily attributable to the mark-to-market adjustment recorded on our Genesis Healthcare available-for-sale investment.

Interest expense represents secured debt interest expense and related fees.

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

Three Months Ended Nine Months Ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

Amount Interest Rate Amount Interest Rate Amount Interest Rate Amount Interest Rate

Three Months Ended

March 31, 2021 March 31, 2020

Amount Interest Rate Amount Interest Rate

Beginning balance $ 123,652 4.91 % $ 306,038 3.60 %

Debt extinguished (176,875) 2.03 % — — % (176,875) 2.03 % — — %

Debt transferred — — % 12,072 3.89 % — — % 12,072 3.89 %

Principal payments (1,220) 5.15 % (1,059) 5.17 %

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Ending balance $ 123,139 4.91 % $ 289,739 3.55 %

0.0355003165979432

Monthly averages $ 123,126 4.96 % $ 299,111 3.59 %

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Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner.

The decrease in income from unconsolidated entities during the three months ended September 30, 2020 is primarily related to the write-off of Genesis Healthcare straight-line rent receivable balances at unconsolidated entities.

Net income attributable to noncontrolling interests represents our partners’ share of net income relating to those partnerships where we are the controlling partner.

The increase during the nine months ended September 30, 2020, relates primarily to our partner's share of gains on disposal of properties.

Management's Discussion and Analysis of Financial Condition and Results of Operations

The decrease during the three months ended March 31, 2021, relates primarily to our partner's share of a gain on sale of certain properties in the prior year.

Outpatient Medical

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

QTD Pool YTD Pool

Three Months Ended Change Nine Months Ended Change

September 30, 2020 September 30, 2019 $ % September 30, 2020 September 30, 2019 $ %

Three Months Ended Change

March 31, 2021 March 31, 2020 $ %

$ 97,196 $ 94,208 $ 2,988 3.2 %

(1) For the three and nine months ended September 30, 2020 and 2019, amounts relate to 294 and 232 same store properties, respectively.

(1) For the three months ended March 31, 2021 and 2020, amounts relate to 334 same store properties, respectively.

Please see Non-GAAP Financial Measures for additional information and reconciliations.

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

Three Months Ended Change Nine Months Ended Change

September 30, September 30, September 30, September 30,

Management's Discussion and Analysis of Financial Condition and Results of Operations

Three Months Ended Change

March 31, March 31,

2021 2020 $ %

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Interest expense 4,015 4,808 (793) (16) %

Loss (gain) on extinguishment of debt, net — — — n/a 741 — 741 n/a

Provision for loan losses 2,399 — 2,399 n/a 2,370 — 2,370 n/a

Impairment of assets — 3,183 (3,183) -100 % — 14,062 (14,062) -100 %

Provision for loan losses 279 — 279 n/a

Other expenses 712 1,007 (295) (29) %

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Income (loss) from unconsolidated entities 2,908 1,536 1,372 89 %

Gain (loss) on real estate dispositions, net 171,604 (482) 172,086 n/a 524,190 (489) 524,679 n/a

Gain (loss) on real estate dispositions, net 51,843 213,336 (161,493) n/a

Income from continuing operations 103,932 277,445 (173,513) (63) %

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(1) See Non-GAAP Financial Measures.

Rental income has decreased for the three month period ending September 30, 2020 due primarily to significant dispositions that have closed during second and third quarters of the current year.

The increase in rental income for the nine months ended September 30, 2020 is primarily attributable to acquisitions of new properties and the conversion of newly constructed outpatient medical properties, particularly the $1.25 billion CNL Healthcare Properties portfolio acquisition that closed in May 2019, partially offset by 2020 dispositions.

Rental income has decreased for the three month period ending March 31, 2021 due primarily to significant dispositions that have closed subsequent to March 31, 2020.

Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index.

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Our leases could renew above or below current rental rates, resulting in an increase or decrease in rental income.

For the three months ended September 30, 2020, our consolidated outpatient medical portfolio signed 146,538 square feet of new leases and 411,113 square feet of renewals.

For the three months ended March 31, 2021, our consolidated outpatient medical portfolio signed 89,863 square feet of new leases and 541,434 square feet of renewals.

The weighted-average term of these leases was six years, with a rate of $36.84 per square foot and tenant improvement and lease commission costs of $12.57 per square foot.

Substantially all of these leases contain an annual fixed or contingent escalation rent structure ranging from 1.0% to 3.5%.

In addition, our Outpatient Medical tenants are experiencing temporary medical practice closures or decreases in revenue due to government imposed restrictions on elective medical procedures or decisions by patients to delay treatments which may adversely effect their ability to make contractual rent payments.

We have either collected or approved

Management's Discussion and Analysis of Financial Condition and Results of Operations

short term deferrals for over 99 % of rent due in the third quarter, consisting of 97% cash collections and 2% of short term deferrals.

In most cases, unless local ordinances mandate otherwise, the deferred rent represents two months of rent with expected repayment by the end of the year.

Furthermore, collections of deferred rent due in the third quarter under executed deferrals was over 99%.

The fluctuation in property operating expenses and depreciation and amortization are primarily attributable to acquisitions and construction conversions of outpatient medical facilities, offset by dispositions.

We have collected 99% of rent due in the first quarter, with uncollected amounts primarily attributable to local jurisdictions with COVID-19 related ordinances providing temporary rent relief to tenants.

We evaluate leases individually and recognize rent on a cash basis if collectibility of substantially all contractual rent payments is not probable.

The fluctuation in property operating expenses and depreciation and amortization are primarily attributable to the significant dispositions that occurred in 2020.

To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly.

During the nine months ended September 30, 2019, we recognized impairment charges $14,062,000 related to three held for sale properties as the carrying values exceeded the estimated fair values less costs to sell.

Changes in gains/losses on sales of properties are related to volume of property sales and the sales prices.

The increase in other expense during the nine months ended September 30, 2020 is primarily due to noncapitalizable transaction costs from acquisitions no longer expected to be consummated.

During the nine months ended September 30, 2020, we completed three Outpatient Medical construction projects representing $ 43,493,000 or $306 per square foot.

The following is a summary of the Outpatient Medical construction projects, excluding expansions, pending as of September 30, 2020 (dollars in thousands):

Transaction costs related to asset acquisitions are capitalized as a component of purchase price.

The fluctuation in other expenses is primarily due to noncapitalizable transaction costs from acquisitions and segment transitions.

During the three months ended March 31, 2021, there were no Outpatient Medical construction projects completed.

The following is a summary of the Outpatient Medical construction projects, excluding expansions, pending as of March 31, 2021 (dollars in thousands):

Location Square Feet Commitment Balance Est.

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Kalamazoo, MI 40,607 14,267 5,917 3Q21

College Station, TX 25,200 9,025 1,111 1Q22

206,762 $ 133,598 $ 113,720

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The following is a summary of our outpatient medical secured debt principal activity (dollars in thousands):

Three Months Ended Nine Months Ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

Amount Interest Rate Amount Interest Rate Amount Interest Rate Amount Interest Rate

Management's Discussion and Analysis of Financial Condition and Results of Operations

Three Months Ended

March 31, 2021 March 31, 2020

Amount Interest Rate Amount Interest Rate

Beginning balance $ 548,229 3.55 % $ 572,267 3.97 %

Debt extinguished — — % — — % (8,393) 4.40 % — — %

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

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Net income attributable to noncontrolling interests represents our partners’ share of net income or loss relating to those partnerships where we are the controlling partner.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Non-Segment/Corporate

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

Three Months Ended Change Nine Months Ended Change

September 30, September 30, September 30, September 30,

Three Months Ended Change

March 31, March 31,

2021 2020 $ %

2 unchanged sentences

955 416 539 130 %

Property operating expenses 1,718 — 1,718 n/a 1,718 — 1,718 n/a

Property operating expenses 1,654 — 1,654 n/a

(699) 416 (1,115) (268) %

3 unchanged sentences

29,926 35,481 (5,555) (16) %

Loss (gain) on extinguishment of debt, net

33,004 64,374 (31,370) -49 % 33,004 80,093 (47,089) -59 %

Other expenses

1 unchanged sentence

137,593 155,177 (17,584) (11) %

Loss from continuing operations before

income taxes and other items (171,784) (212,984) 41,200 19 % (470,957) (538,703) 67,746 13 %

Loss from continuing operations before income taxes and other items (138,292) (154,761) 16,469 11 %

Income tax (expense) benefit (3,943) (5,442) 1,499 28 %

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

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

Three Months Ended Change Nine Months Ended Change

September 30, September 30, September 30, September 30,

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

Three Months Ended Change

March 31, March 31,

2021 2020 $ %

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Please refer to Note 10 for additional information regarding our unsecured revolving credit facility and commercial paper program.

The loss on extinguishment recognized during the nine months ended September 30, 2020 is due primarily to the early extinguishment of $160,872,000 of our 3.75% senior unsecured notes due March 2023 and $265,376,000 of our 3.95% senior unsecured notes due September 2023.

The loss on extinguishment recognized during the nine months ended September 30, 2019 is due primarily to the early extinguishment of the $600,000,000 of 4.125% senior unsecured notes due 2019 and the $450,000,000 of 6.125% senior unsecured notes due 2020 in March 2019, and the early extinguishment of the $450,000,000 of 4.95% senior unsecured notes due 2021 and $600,000,000 of 5.25% senior unsecured notes due 2022 in September 2019.

General and administrative expenses as a percentage of consolidated revenues for the three months ended September 30, 2020 and 2019 we re 2.99% a nd 2.45%, respectively.

The provision for income taxes primarily relates to state taxes, foreign taxes and taxes based on income generated by entities that are structured as TRSs.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements