What changed in this filing

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Item 1. Financial Statements

2021-11-05 compared with 2021-07-30 · 248 added, 193 removed, 1230 unchanged (26% of the section changed)

4 unchanged sentences

(In thousands)

June 30, 2021 (Unaudited) December 31, 2020 (Note)

September 30, 2021 (Unaudited) December 31, 2020 (Note)

Real estate investments:

47 unchanged sentences

(In thousands, except per share data)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

10 unchanged sentences

Loss (gain) on extinguishment of debt, net ( 5 ) 33,004 50,964 33,253

Provision for loan losses 6,197 1,422 7,580 8,494

Provision for loan losses, net ( 271 ) 2,857 7,309 11,351

Impairment of assets 1,490 23,313 48,750 126,291

26 unchanged sentences

(In thousands)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

14 unchanged sentences

(In thousands)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Stock Capital in

27 unchanged sentences

Balances at June 30, 2021 $ 423,933 $ 21,161,838 $ ( 108,633 ) $ 8,425,401 $ ( 13,854,145 ) $ ( 127,948 ) $ 930,383 $ 16,850,829

Six Months Ended June 30, 2020

Comprehensive income:

Net income (loss) 179,663 10,470 190,133

Other comprehensive income (loss) 24,771 ( 6,196 ) 18,575

Total comprehensive income 208,708

Net change in noncontrolling interests ( 4,013 ) ( 14,944 ) ( 18,957 )

Amounts related to stock incentive plans, net of forfeitures 3 4,932 155 5,090

Net proceeds from issuance of common stock 12,704 986,102 998,806

Dividends paid:

Common stock dividends ( 261,560 ) ( 261,560 )

Balances at September 30, 2021 $ 436,640 $ 22,148,859 $ ( 108,478 ) $ 8,605,064 $ ( 14,115,705 ) $ ( 103,177 ) $ 919,713 $ 17,782,916

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

WELLTOWER INC.

AND SUBSIDIARIES

(In thousands)

Nine Months Ended September 30, 2020

Stock Capital in

30 unchanged sentences

Balances at June 30, 2020 $ 418,343 $ 20,836,549 $ ( 93,799 ) $ 7,838,284 $ ( 12,834,381 ) $ ( 116,856 ) $ 888,387 $ 16,936,527

Comprehensive income:

Net income (loss) 325,585 67,650 393,235

Other comprehensive income (loss) ( 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

Net proceeds from issuance of common stock ( 198 ) ( 198 )

Dividends paid:

Common stock dividends ( 254,510 ) ( 254,510 )

Balances at September 30, 2020 $ 418,361 $ 20,835,026 $ ( 94,022 ) $ 8,163,869 $ ( 13,088,891 ) $ ( 126,469 ) $ 853,228 $ 16,961,102

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

2 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Operating activities:

10 unchanged sentences

Loss (gain) on derivatives and financial instruments, net

( 6,503 ) 10,480

Loss (gain) on extinguishment of debt, net

Loss (income) from unconsolidated entities

50,964 33,253

Loss (income) from unconsolidated entities

Rental income less than (in excess of) cash received

79 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 six months ended June 30, 2021 are not necessarily an indication of the results that may be expected for the year ending December 31, 2021.

Operating results for the nine months ended September 30, 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.

Spot occupancy declined since the beginning of the pandemic, reaching a low of 72.3 % on March 12, 2021.

As of June 30, 2021, virtually all communities are now accepting new residents, resulting in an increase in move-in activity and occupancy rates of approximately 230 basis points since the low point to 74.6 % on June 30, 2021.

Additionally, rapid 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 across the portfolio.

Monthly spot occupancy rates through June 30, 2021 are as follows:

December 2020 January 2021 February 2021 March 2021 April 2021 May 2021 June 2021

Spot occupancy has steadily increased in recent months, with 96 % of communities open for new admissions and nearly all communities allowing visitors, in-person tours and communal dining and activities.

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

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

As of September 30, 2021, occupancy has increased approximately 440 bps to 76.7 % since the pandemic-low of 72.3 % on March 12, 2021.

Monthly spot occupancy rates through September 30, 2021 are as follows:

December 2020 January 2021 February 2021 March 2021 April 2021 May 2021 June 2021 July 2021 August 2021 September 2021

Spot occupancy (1)

2 unchanged sentences

( 1.4 ) % ( 0.8 ) % 0.1 % 0.5 % 0.5 % 0.9 % 0.6 % 0.8 % 0.8 %

(1) Spot occupancy represents approximate month end occupancy at our share for 592 properties in operation as of December 31, 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 591 properties in operation as of December 31, 2020, including unconsolidated properties but excluding acquisitions, executed dispositions, development conversions since this date as well as one property closed for redevelopment.

(2) Sequential occupancy changes are based on actual spot occupancy and may not recalculate due to rounding.

On a month-to-date basis, as of July 23, 2021, Seniors Housing Operating occupancy has increased approximately 40 basis points.

Occupancy continued to strengthen in the U.S.

with gains of approximately 60 basis points and 30 basis points, respectively, while occupancy in Canada remained flat over the same period.

During the quarter ended September 30, 2021, the U.S.

portfolios reported spot occupancy gains of approximately 260 bps and 300 bps, respectively.

Canada reported a spot occupancy gain of approximately 70 bps.

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 net benefit of approximately $ 1,535,000 and $ 22,792,000 for the three and six months ended June 30, 2021, respectively, as compared to a net expense of $ 40,127,000 and $ 47,421,000 during the three and six months ended June 30, 2020, respectively.

and Canada, resulted in a net benefit of approximately $ 2,092,000 and $ 24,883,000 for the three and nine months ended September 30, 2021, respectively, as compared to a net expense of $ 18,193,000 and $ 65,614,000 during the three and nine months ended September 30, 2020, respectively.

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

3 unchanged sentences

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 six months ended June 30, 2021, we received total Provider Relief Funds of approximately $ 40,976,000 , which was recognized as a reduction to COVID-19 costs within property operating expenses.

During the nine months ended September 30, 2021, we received total Provider Relief Funds of approximately $ 40,975,000 , which was recognized as a reduction to COVID-19 costs within property operating expenses.

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

3 unchanged sentences

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 six months ended June 30, 2021, we collected approximately 95 % of rent due from operators under Triple-net lease agreements (primarily seniors housing and post-acute care facilities).

During the nine months ended September 30, 2021, we collected approximately 94 % 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.

We evaluate leases individually and recognize rent on a cash basis if collectability 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.

During the nine months ended September 30, 2021, we have collected virtually all rent due from tenants in our Outpatient Medical portfolio, 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 collectability of substantially all contractual rent payments is not probable.

New Accounting Standards

19 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended

June 30, 2021 June 30, 2020

Nine Months Ended

September 30, 2021 September 30, 2020

Seniors Housing Operating Triple-net Outpatient

4 unchanged sentences

Acquired lease intangibles 142,439 — 17,333 159,772 10,810 — 23,823 34,633

Right of use assets, net 77,455 — — 77,455 — — — —

Total net real estate assets 2,139,667 484,927 290,073 2,914,667 159,049 765 238,705 398,519

Receivables and other assets 6,041 — 3,534 9,575 257 — 139 396

1 unchanged sentence

2,145,708 484,927 293,607 2,924,242 159,306 765 238,844 398,915

Lease liabilities ( 138,126 ) — — ( 138,126 ) — — — —

Accrued expenses and other liabilities ( 20,748 ) ( 8,703 ) ( 266 ) ( 29,717 ) ( 671 ) — ( 2,043 ) ( 2,714 )

9 unchanged sentences

Total cash invested in real property, net of cash acquired $ 2,280,404 $ 558,823 $ 324,995 $ 3,164,222 $ 352,754 $ 37,188 $ 313,455 $ 703,397

(1) Excludes $ 301,000 and $ 580,000 of unrestricted and restricted cash acquired during the six months ended June 30, 2021 and June 30, 2020, respectively.

(1) Excludes $ 301,000 and $ 580,000 of unrestricted and restricted cash acquired during the nine months ended September 30, 2021 and September 30, 2020, respectively.

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

(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.

On June 21, 2021, we entered into a definitive agreement to acquire a portfolio of 86 seniors housing properties owned by Holiday Retirement for a total purchase price of $ 1,576,800,000 , which will be included in our Seniors Housing Operating segment.

Atria Senior Living will assume operations of the portfolio following its acquisition of the Holiday Retirement management company pursuant to an incentive-based management agreement.

We expect to close the transaction during the third quarter.

On July 30, 2021, we acquired a portfolio of 85 seniors housing properties owned by Holiday Retirement for $ 1,576,600,000 , which are included in our Seniors Housing Operating segment.

Atria Senior Living assumed operations of the portfolio following its acquisition of the Holiday Retirement management company pursuant to an incentive-based management agreement.

As part of this transaction, a wholly owned subsidiary assumed the leasehold interest in a 26 property portfolio and subsequently purchased eight of the leased properties from the landlord.

The lease, identified as an operating lease, expires in 2035 and was recognized as a right of use asset, net of above market lease intangibles, and lease liability.

No rent will be paid in excess of net cash flow related to the remaining leasehold properties.

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):

Six Months Ended

June 30, 2021 June 30, 2020

Nine Months Ended

September 30, 2021 September 30, 2020

Development projects:

12 unchanged sentences

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

In place lease intangibles $ 1,549,294 $ 1,406,705

10 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

12 unchanged sentences

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 June 30, 2021, two Seniors Housing Operating, 54 Triple-net, and two Outpatient Medical properties with an aggregate real estate balance of $ 592,699,000 were classified as held for sale.

At September 30, 2021, two Seniors Housing Operating, 20 Triple-net, and two Outpatient Medical properties with an aggregate real estate balance of $ 251,152,000 were classified as held for sale.

In addition to the real property balances held for sale, net other assets and (liabilities) of $ 18,081,000 are included in the Consolidated Balance Sheets related to the held for sale properties.

Expected gross sales proceeds related to the held for sale properties is approximately $ 293,526,000 .

During the six months ended June 30, 2021, we recorded $ 18,077,000 of impairment charges related to three Triple-net properties and one Outpatient Medical property which were classified as held for sale for which the carrying value exceeded the estimated fair value less cost to sell.

Additionally, during the six months ended June 30, 2021, we recorded $ 29,183,000 of impairment charges related to two Seniors Housing Operating properties and two Triple-net properties that were held for use in which the carrying value exceeded the estimated fair value.

During the six months ended June 30, 2020, we recorded $ 75,151,000 of impairment charges related to 12 Seniors Housing Operating properties which were classified as held for sale for which the carrying value exceeded the estimated fair value less cost to sell.

Additionally, during the six months ended June 30, 2020, we recorded $ 27,827,000 of impairment charges related to one Seniors Housing Operating property and one Triple-net property that were held for use in which the carrying value exceeded the estimated fair value.

During the nine months ended September 30, 2021, we recorded $ 19,567,000 of impairment charges related to four Triple-net properties and one Outpatient Medical property 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, 2021, we recorded $ 29,183,000 of impairment charges related to two Seniors Housing Operating properties and two Triple-net properties that were held for use in which the carrying value exceeded the estimated fair value.

During the nine months ended September 30, 2020, we recorded $ 79,905,000 of impairment charges related to 13 Seniors Housing Operating properties and one Triple-net property 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 properties and four Triple-net properties that were held for use in which the carrying value exceeded the estimated fair value.

WELLTOWER INC.

1 unchanged sentence

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

Six Months Ended June 30,

Nine Months Ended September 30,

Real estate dispositions:

11 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

1 unchanged sentence

$ 7,103 $ 7,471 (1)

$ 58,302 $ 262,951

Interest expense

7 unchanged sentences

Income (loss) from real estate dispositions, net $ 5,706 $ ( 45,681 ) $ 40,224 $ 29,534

(1) During the three months ended September 30, 2020, we reserved for straight-line rent receivable balances on properties operated by Genesis Healthcare.

See also Note 9 for additional information.

We lease land, buildings, office space and certain equipment.

2 unchanged sentences

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

Six Months Ended

Classification June 30, 2021 June 30, 2020

Nine Months Ended

Classification September 30, 2021 September 30, 2020

Operating lease cost:

10 unchanged sentences

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

Classification June 30, 2021 December 31, 2020

Classification September 30, 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 six months ended June 30, 2021 and 2020, we reserved for straight-line rent receivable balances of $ 49,241,000 and $ 34,110,000 through rental income, relating to leases for which collection of substantially all contractual lease payments was no longer deemed probable.

During the nine months ended September 30, 2021 and 2020, we reserved for previously recognized straight-line rent receivable balances of $ 49,241,000 and $ 146,508,000 through rental income, relating to leases for which collection of substantially all contractual lease payments was no longer deemed probable.

Included in the 2020 amount was $ 91,025,000 related to Genesis Healthcare, whom noted substantial doubt as to their ability to continue as a going concern.

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

For the six months ended June 30, 2021, we recognized $ 657,566,000 of rental income related to operating leases, of which $ 89,890,000 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 six months ended June 30, 2020, we recognized $ 786,265,000 of rental income related to operating leases, of which $ 104,605,000 was for variable lease payments.

For the nine months ended September 30, 2021, we recognized $ 1,015,550,000 of rental income related to operating leases, of which $ 134,632,000 wa s 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, 2020, we recognized $ 1,061,311,000 of rental income related to operating leases, of which $ 153,217,000 was for variable lease payments.

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 $ 21,938,000 and $ 15,615,000 as of June 30, 2021 and December 31, 2020, respectively, and is included in receivables and other assets on the Consolidated Balance Sheets.

Accrued interest receivable was $ 26,361,000 and $ 15,615,000 as of September 30, 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):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Mortgage loans $ 957,114 $ 299,430

9 unchanged sentences

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

Six Months Ended

June 30, 2021 June 30, 2020

Nine Months Ended

September 30, 2021 September 30, 2020

Advances on loans receivable:

26 unchanged sentences

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

June 30, 2021

September 30, 2021

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

12 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended

June 30, 2021 June 30, 2020

Nine Months Ended

September 30, 2021 September 30, 2020

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

4 unchanged sentences

Balance at end of period $ 166,802 $ 84,895

(1) Includes $ 62,753,000 related to the Genesis Healthcare lease terminations for the six months ended June 30, 2021.

(1) Include s $ 64,075,000 related t o the Genesis Healthcare lease terminations for the nine months ended September 30, 2021.

See Note 9 for further details.

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

Six Months Ended

June 30, 2021 June 30, 2020

Nine Months Ended

September 30, 2021 September 30, 2020

Balance of deteriorated loans at end of period (1)

4 unchanged sentences

$ 3,171 $ 13,847

(1) Current year amounts include $ 2,176,000 and $ 3,623,000 of loans on non-accrual as of June 30, 2021 and December 31, 2020, respectively.

Prior year amounts include $ 10,716,000 and $ 2,534,000 as of June 30, 2020 and December 31, 2019, respectively.

(1) Current year amounts include $ 2,157,000 and $ 3,623,000 of loans on non-accrual as of September 30, 2021 and December 31, 2020, respectively.

Prior year amounts include $ 10,686,000 and $ 2,534,000 as of September 30, 2020 and December 31, 2019, respectively.

(2) Represents cash interest recognized in the period.

4 unchanged sentences

Percentage Ownership (1)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Seniors Housing Operating 10 % to 65 %

5 unchanged sentences

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

At June 30, 2021, the aggregate unamortized basis difference of our joint venture investments of $ 118,278,000 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.

At September 30, 2021, the aggregate unamortized basis difference of our joint venture investments of $ 118,012,000 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 $ 270,164,000 related to seven properties as of June 30, 2021 for the development and construction of certain properties which are classified as in substance real estate investments.

As of September 30, 2021, we have made loans totaling $ 273,654,000 related to eight properties 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.

5 unchanged sentences

We expect to fund an additional $ 16,667,000 related to these investments.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 six months ended June 30, 2021, excluding our share of NOI in unconsolidated entities (dollars in thousands):

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes certain information about our credit concentration for the nine months ended September 30, 2021, excluding our share of NOI in unconsolidated entities (dollars in thousands):

Concentration by relationship:

5 unchanged sentences

Avery Healthcare 61 62,325 5 %

Genesis Healthcare 15 36,677 4 %

Belmont Village 21 45,475 4 %

Remaining portfolio 1,079 938,441 63 %

Totals 1,606 $ 1,443,468 100 %

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

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

(1) ProMedica is in our Triple-net segment.

Sunrise Senior Living, Revera and Belmont Village are in our Seniors Housing Operating segment.

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

4 unchanged sentences

• 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.

• As of September 30, 2021, operations have transitioned for 39 of the remaining properties, with three additional properties expected to transition before year end.

• 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 properties are classified as held for sale as of June 30, 2021, with dispositions expected to occur in the second half of 2021.

As of June 30, 2021, we have transferred operations of 28 properties to new operators.

• Additionally, we currently lease seven properties which we previously subleased to Genesis.

As of September 30, 2021, we have closed on the sale of 21 of these properties for proceeds of $ 331 million and the remaining 14 are classified as held for sale.

• We currently lease seven properties which we previously subleased to Genesis.

We have entered into a forward sales agreement with Aurora Health Network that is intended to close simultaneously with the purchase option exercise in April 2023.

1 unchanged sentence

• 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 us.

The debt reduction associated with the lease termination fee was previously reserved for as an allowance for credit losses on loans receivable.

The debt reduction associated with the lease termination fee was previously reserved as an allowance for credit losses on loans receivable.

• 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 us, exclusive of additional paid in kind interest, which will carry a maturity date of January 1, 2024.

As of June 30, 2021, our total carrying value of Genesis loans receivable, net of allowances for credit losses, w as $ 144,667,000 .

As of September 30, 2021, our total carrying value of Genesis loans receivable, net of allowances for credit losses, was $ 149,574,000 .

Borrowings Under Credit Facilities and Commercial Paper Program

At June 30, 2021, we had a primary unsecured credit facility with a consortium of 34 banks that includes a $ 4,000,000,000 unsecured revolving credit facility ( none outstanding at June 30, 2021), a $ 500,000,000 unsecured term credit facility and a $ 250,000,000 Canadian-denominated unsecured term credit facility.

The unsecured revolving credit facility is comprised of a $ 1,000,000,000 tranche that matures on June 4, 2023 and a $ 3,000,000,000 tranche that matures on June 4, 2025.

Both tranches may be extended for two successive terms of six month at our option.

At September 30, 2021, we had a primary unsecured credit facility with a consortium of 34 banks that included a $ 4,000,000,000 unsecured revolving credit facility, a $ 500,000,000 unsecured term credit facility and a $ 250,000,000 Canadian-denominated unsecured term credit facility.

The unsecured revolving credit facility is comprised of a $ 1,000,000,000 tranche that matures on June 4, 2023 ( none outstanding at September 30, 2021) and a $ 3,000,000,000 tranche that matures on June 4, 2025 ($ 51,000 ,000 outstanding at September 30, 2021).

Both tranches may be extended for two successive terms of six months at our option.

The term credit facilities mature on July 19, 2023.

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

The primary unsecured credit facility also allows us to borrow up to $ 1,000,000,000 in alternate currencies ( none outstanding at June 30, 2021).

The primary unsecured credit facility also allows us to borrow up to $ 1,000,000,000 in alternate currencies ( none outstanding at September 30, 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 0.775 % at June 30, 2021.

The applicable margin is based on our debt ratings and was 0.775 % at September 30, 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 June 30, 2021.

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 June 30, 2021).

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

The facility fee depends on our debt ratings and was 0.15 % at September 30, 2021.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended June 30, Six Months Ended June 30,

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

As of September 30, 2021, there was a balance of $ 239,996,000 outstanding on the commercial paper program ($ 240,000,000 in principal outstanding net of an unamortized discount of $ 4,000 ), which reduces the borrowing capacity of the unsecured revolving credit facility.

The notes bear interest at various floating rates with a weighted average of 0.19 % as of September 30, 2021 and a weighted average maturity of four days as of September 30, 2021.

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

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

2021 2020 2021 2020

13 unchanged sentences

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

At June 30, 2021, the annual principal payments due on these debt obligations were as follows (in thousands):

At September 30, 2021, the annual principal payments due on these debt obligations were as follows (in thousands):

Unsecured Notes (1,2)

10 unchanged sentences

(3) Annual interest rates range from 0.02 % to 7.93 %.

Carrying value of the properties securing the debt totaled $ 5,312,000,000 at June 30, 2021.

Carrying value of the properties securing the debt totaled $ 5,261,000,000 at September 30, 2021.

(4) Includes a $ 250,000,000 Canadian-denominated unsecured term credit facility (approximately $ 197,270,000 based on the Canadian/U.S.

Dollar exchange rate on June 30, 2021).

The loan matures on July 19, 2023 and bears interest at the Canadian Dealer Offered Rate plus 0.90 % ( 1.31 % at June 30, 2021).

Dollar exchange rate on September 30, 2021).

The loan matures on July 19, 2023 and bears interest at the Canadian Dealer Offered Rate plus 0.90 % ( 1.33 % at September 30, 2021).

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

The loan matures on July 19, 2023 and bears interest at LIBOR plus 0.90 % ( 1.00 % at June 30, 2021).

The loan matures on July 19, 2023 and bears interest at LIBOR plus 0.90 % ( 0.98 % at September 30, 2021).

(6) Includes a $ 300,000,000 Canadian-denominated 2.95 % senior unsecured notes due 2027 (approximately $ 236,724,000 based on the Canadian/U.S.

Dollar exchange rate on June 30, 2021).

Dollar exchange rate on September 30, 2021).

(7) Includes a £ 550,000,000 4.80 % senior unsecured notes due 2028 (approximately $ 740,850,000 based on the Sterling/U.S.

Dollar exchange rate in effect on June 30, 2021).

Dollar exchange rate in effect on September 30, 2021).

(8) Includes a £ 500,000,000 4.50 % senior unsecured notes due 2034 (approximately $ 673,500,000 based on the Sterling/U.S.

Dollar exchange rate in effect on June 30, 2021).

Dollar exchange rate in effect on September 30, 2021).

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

Six Months Ended

June 30, 2021 June 30, 2020

Nine Months Ended

September 30, 2021 September 30, 2020

Weighted Avg.

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended

June 30, 2021 June 30, 2020

Nine Months Ended

September 30, 2021 September 30, 2020

Weighted Avg.

9 unchanged sentences

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 June 30, 2021, we were in compliance in all material respects with the covenants under our debt agreements.

As of September 30, 2021, we were in compliance in all material respects with the covenants under our debt agreements.

Derivative Instruments

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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 six months ended June 30, 2021 and 2020, we settled certain net investment hedges necessitating cash payments of $ 7,196,000 and generating cash proceeds of $ 3,485,000 , respectively.

During the nine months ended September 30, 2021 and 2020, we settled certain net investment hedges generating cash proceeds of $ 8,879,000 and $ 3,485,000 , respectively.

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

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Gains and losses resulting from the changes in fair values of these instruments are also recorded in interest expense.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Equity Warrants

4 unchanged sentences

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Derivatives designated as net investment hedges:

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Forward sales contracts denominated in Canadian Dollars $ 80,000 $ 80,000

(1) At June 30, 2021 the maximum maturity date was November 1, 2023.

Forward purchase contracts denominated in Pound Sterling £ ( 37,408 ) £ —

(1) At September 30, 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 June 30, Six Months Ended June 30,

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

Description Location 2021 2020 2021 2020

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Gain (loss) on derivative instruments not designated as hedges recognized in income Interest expense $ 241 $ ( 1,159 ) $ ( 1,415 ) $ ( 3,207 )

Gain (loss) on equity warrants recognized in income Gain (loss) on derivatives and financial instruments $ 9,216 $ — $ 9,216 $ —

Gain (loss) on derivative and financial instruments designated as hedges recognized in OCI OCI $ 130,711 $ ( 145,512 ) $ 100,866 $ 86,429

Commitments and Contingencies

At June 30, 2021, we had 12 outstanding letter of credit obligations totaling $ 22,404,000 and expiring between 2021 and 2024.

At June 30, 2021, we had outstanding construction in progress of $ 458,844,000 and were committed to providing additional funds of approximately $ 819,168,000 to complete construction.

Additionally, at June 30, 2021, we had outstanding investments classified as in substance real estate of $ 270,164,000 and were committed to provide additional funds of $ 20,209,000 (see Note 8 for additional information).

Purchase obligations at June 30, 2021, include $ 1,576,800,000 representing a definitive agreement to acquire 86 seniors housing properties from Holiday Retirement, expected to close during the third quarter.

Purchase obligations also include $ 58,673,000 of contingent purchase obligations to fund capital improvements.

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Commitments and Contingencies

At September 30, 2021, we had 13 outstanding letter of credit obligations totaling $ 28,366,000 and expiring between 2021 and 2022.

At September 30, 2021, we had outstanding construction in progress of $ 562,487,000 and were committed to providing additional funds of approximately $ 1,072,343,000 to complete construction.

Additionally, at September 30, 2021, we had outstanding investments classified as in substance real estate of $ 273,654,000 and were committed to provide additional funds of $ 16,667,000 (see Note 8 for additional information).

Purchase obligations include $ 101,284,000 of contingent purchase obligations to fund capital improvements.

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

Stockholders’ Equity

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Preferred Stock:

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Outstanding shares 435,273,885 417,400,602

Common Stock In May 2021, we entered into an amended and restated equity distribution agreement whereby we can offer and sell up to $ 2,000,000,000 a ggregate amount of our common stock ("ATM Program").

The ATM Program also allows us to enter into forward sale agreement s.

As of June 30, 2021, we had $ 1,905,854,000 of remaining capacity under the ATM Program, which excludes forward sales agreements outstanding for the sale of 13,052,375 shares with maturity dates in 2022 which we expect to physically settle for cash proceeds of $ 1,036,503,000 .

Common Stock In July 2021, we entered into an amended and restated equity distribution agreement whereby we can offer and sell up to $ 2,500,000,000 aggregate amount of our common stock ("ATM Program").

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

As of September 30, 2021, we had $ 2,491,418,000 of remaining capacity under the ATM Program, which excludes forward sales agreements outstanding for the sale of 11,798,154 shares with maturity dates in 2022 which we expect to physically settle for cash proceeds of $ 993,881,000 .

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").

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

We did not repurchase any shares of our common stock during the six months ended June 30, 2021.

The following is a summary of our common stock issuances during the six months ended June 30, 2021 and 2020 (dollars in thousands, except shares and average price amounts):

We did not repurchase any shares of our common stock during the nine months ended September 30, 2021.

The following is a summary of our common stock issuances during the nine months ended September 30, 2021 and 2020 (dollars in thousands, except shares and average price amounts):

Shares Issued Average Price Gross Proceeds Net Proceeds

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

Six Months Ended

June 30, 2021 June 30, 2020

Nine Months Ended

September 30, 2021 September 30, 2020

Per Share Amount Per Share Amount

Common stock $ 1.83 $ 771,984 $ 2.09 $ 865,357

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Foreign currency translation $ ( 677,331 ) $ ( 621,792 )

1 unchanged sentence

Total accumulated other comprehensive income (loss) $ ( 103,177 ) $ ( 148,504 )

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Stock Incentive Plans

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Options expire ten years from the date of grant.

Stock-based compensation expense totaled $ 4,757,000 and $ 10,333,000 for the three and six months ended June 30, 2021 , respectfully, and $ 7,290,000 and $ 14,373,000 for the same periods in 2020.

Stock-based compensation expense totaled $ 4,535,000 and $ 14,868,000 for the three and nine months ended September 30, 2021, respectfully, and $ 6,565,000 and $ 20,938,000 for the same periods in 2020.

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 June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

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Diluted earnings per share $ 0.42 $ 0.77 $ 0.65 $ 1.94

As of June 30, 2021, forward sales agreements outstanding f or the sale of 13,052,375 s hares of common stock were not included in the computation of diluted earnings per share because such forward sales were anti-dilutive to the three and six month periods ended June 30, 2021.

As of September 30, 2021, forward sales agreements outstanding f or the sale of 11,798,154 s hares of common stock were not included in the computation of diluted earnings per share because such forward sales were anti-dilutive to the three and nine month periods ended September 30, 2021.

Disclosure about Fair Value of Financial Instruments

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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.

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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.

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

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

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

Equity Warrants — The fair value of equity warrants is estimated using Level 3 inputs and includes data points such as net equity of the underlying HC-One Group real estate portfolio, marketability discount for private company warrants, dividend yield, volatility and risk-free rate.

Equity Warrants — The fair value of equity warrants is estimated using Level 3 inputs and includes data points such as enterprise value of the underlying HC-One Group real estate portfolio, marketability discount for private company warrants, dividend yield, volatility and risk-free rate.

The enterprise value is driven by projected cash flows, weighted average cost of capital and a terminal capitalization rate.

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

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The fair value is measured using the closing price of our common stock, as units may be redeemed at the election of the holder for cash or, at our option, one share of our common stock per unit, subject to adjustment in certain circumstances.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Carrying Amount Fair Value Carrying Amount Fair Value

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Financial liabilities:

Borrowings under unsecured credit facility and commercial paper program $ 290,996 $ 290,996 $ — $ —

Senior unsecured notes 11,116,067 12,485,436 11,420,790 13,093,926

6 unchanged sentences

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurements as of June 30, 2021

Fair Value Measurements as of September 30, 2021

Total Level 1 Level 2 Level 3

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(1) Please see Note 12 for additional information.

The following table summarizes the change in fair value for equity warrants using unobservable Level 3 inputs for the nine months ended September 30, 2021 (in thousands):

Nine Months Ended

September 30, 2021

Beginning balance $ —

Warrants acquired 32,419

Mark-to-market adjustment 9,216

Foreign currency ( 977 )

Ending balance $ 40,658

The most significant assumptions utilized in the valuation of the equity warrants are the cash flows of the underlying HC-One Group enterprise, as well as the terminal capitalization rate of 11 %.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Items Measured at Fair Value on a Nonrecurring Basis

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We use NOI to make decisions about resource allocations and to assess the property level performance of our properties.

Non-segment revenue consists mainly of interest income on certain non-real estate investments and other income.

Non-segment revenue consists mainly of interest income on cash investments recorded in other income.

Non-segment assets consist of corporate assets including cash, deferred loan expenses and corporate offices and equipment among others.

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

Three Months Ended June 30, 2021:

Three Months Ended September 30, 2021:

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

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Loss (gain) on extinguishment of debt, net — — ( 5 ) — ( 5 )

Provision for loan losses ( 181 ) 10,019 ( 3,641 ) — 6,197

Provision for loan losses, net 152 ( 323 ) ( 100 ) — ( 271 )

Impairment of assets — 1,490 — — 1,490

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Total assets $ 17,741,955 $ 9,317,352 $ 6,247,215 $ 173,503 $ 33,480,025

Three Months Ended June 30, 2020:

Three Months Ended September 30, 2020:

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

11 unchanged sentences

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

Provision for loan losses — 1,451 ( 29 ) — 1,422

Provision for loan losses, net 86 372 2,399 — 2,857

Impairment of assets 12,778 10,535 — — 23,313

9 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended June 30, 2021 Seniors Housing Operating Triple-net Outpatient Medical Non-segment / Corporate Total

Nine Months Ended September 30, 2021 Seniors Housing Operating Triple-net Outpatient Medical Non-segment / Corporate Total

Resident fees and services $ 2,299,972 $ — $ — $ — $ 2,299,972

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Loss (gain) on extinguishment of debt, net ( 1,537 ) — ( 5 ) 52,506 50,964

Provision for loan losses 70 10,872 ( 3,362 ) — 7,580

Provision for loan losses, net 222 10,549 ( 3,462 ) — 7,309

Impairment of assets 22,317 24,222 2,211 — 48,750

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Net income (loss) $ ( 1,178 ) $ 548,015 $ 244,092 $ ( 482,644 ) $ 308,285

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

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

11 unchanged sentences

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

Provision for loan losses — 18.69 8,523 — ( 29 ) 18.69 — 8,494

Provision for loan losses, net 86 18.69 8,895 — 2,370 18.69 — 11,351

Impairment of assets 91,424 34,867 — — 126,291

11 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

% Amount % Amount (1)

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Total $ 1,239,797 100.0 % $ 1,036,874 100.0 % $ 3,432,851 100.0 % $ 3,483,951 100.0 %

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Amount % Amount %

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Total $ 33,480,025 100.0 % $ 32,483,642 100.0 %

(1) The United States, United Kingdom and Canada represent 73 %, 13 % and 14 % of our resident fees and services revenue for the three and six month periods ended June 30, 2021, respectively.

(1) The United States, United Kingdom and Canada represent 74 %, 13 % and 13 % of our resident fees and services revenue for the three and nine month periods ended September 30, 2021, respectively.

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 six months ended June 30, 2021 and 2020, was primarily due to operating income or losses, offset by certain discrete items at our TRS entities.

The provision for income taxes for the nine months ended September 30, 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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Generally, given current statutes of limitations, we are subject to audit by the foreign, federal, state and local taxing authorities under applicable local laws.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.

The CARES Act, among its economic stimulus provisions, includes a number of tax provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carrybacks, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.

Certain of these provisions may impact the provision for taxes in our consolidated financial statements, including in particular the provision allowing for the carryback of net operating losses which would be applicable to our TRSs.

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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):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Net real estate investments $ 451,723 $ 454,333

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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 June 30, 2021 (dollars in thousands):

The following table summarizes our consolidated portfolio for the three months ended September 30, 2021 (dollars in thousands):

Percentage of Number of

11 unchanged sentences

Our Seniors Housing Operating revenues are dependent on occupancy.

Spot occupancy has declined since the beginning of the pandemic, reaching a low of 72.3% on March 12, 2021.

Virtually all communities are now accepting new residents, resulting in an increase in move-in activity and occupancy rates of 230 basis points since the low point to 74.6% as of June 30, 2021.

Additionally, rapid 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 across the portfolio.

Spot occupancy has steadily increased in recent months, with 96% of communities open for new admissions and nearly all communities allowing visitors, in-person tours and communal dining and activities.

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

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

We have incurred increased operational costs as a result of the introduction of public health measures and other regulations affecting our properties, as well as additional health and safety measures adopted by us and our operators related to the COVID-19 pandemic, including increases in labor, personal protective equipment and sanitation.

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During the six months ended June 30, 2021, we collected approximately 95% 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 during the six months ended June 30, 2021.

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

During the nine months ended September 30, 2021, we collected approximately 94% 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 during the nine months ended September 30, 2021.

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

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

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

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 six months ended June 30, 2021, resident fees and services and rental income represented 67% and 30%, respectively, of total revenues.

For the nine months ended September 30, 2021, resident fees and services and rental income represented 67% and 30%, respectively, of total revenues.

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

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We expect to reinvest the proceeds from any investment dispositions in new investments.

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 June 30, 2021, we had $513,602,000 of cash and cash equivalents, $295,102,000 of restricted cash and $4,000,000,000 of available borrowin g capacity under our unsecured revolving credit facility.

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

At September 30, 2021, we had $303,982,000 of cash and cash equivalents, $58,663,000 of restricted cash a nd $3,709,000,000 of available borrowing capacity under our unsecured revolving credit facility.

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

Key Transactions

Capital The following summarizes key capital transactions that occurred during the six months ended June 30, 2021 and subsequent events:

Capital The following summarizes key capital transactions that occurred during the nine months ended September 30, 2021:

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

• In April 2021, we repaid our $339,128,000 of our 3.75% senior unsecured notes due March 2023, $334,624,000 of our 3.95% senior unsecured notes due September 2023, and $15,000,000 of our term loan due April 2022.

• In May 2021, we entered into an amended and restated ATM Program (as defined below) pursuant to which we may offer and sell up to $2,000,000,000 of common stock from time to time.

Since the beginning of the year, we sold 22,311,042 shares of common stock under our current and previous ATM Programs via forward sale agreements which are expected to generate gross proceeds of approximately $1,761,767,000, of which 5,015,673 shares have been settled resulting in $371,937,000 of gross proceeds during the six months ended June 30, 2021.

• In June 2021, we closed on a new $4,700,000,000 unsecured credit facility with improved pricing across our line of credit and terminated the existing unsecured credit facility.

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• In June 2021, we completed the issuance of $500,000,000 senior unsecured notes bearing interest at 2.05% with a maturity date of January 2029.

• During the six months ended June 30, 2021, we extinguished $66,593,000 of secured debt at a blended average interest rate of 6.01%.

Investments The following summarizes our property acquisitions and joint venture investments completed during the six months ended June 30, 2021 (dollars in thousands):

• In July 2021, we entered into an amended and restated ATM Program (as defined below) pursuant to which we may offer and sell up to $2,500,000,000 of common stock from time to time.

Since the beginning of the year, we sold 29,518,162 shares of common stock under our current and previous ATM Programs via forward sale agreements which are expected to generate gross proceeds of approximately $2,374,401,000, of which 17,720,008 shares have been settled resulting in $1,380,519,000 of gross proceeds during the nine mon ths ended September 30, 2021 .

• During the nine months ended September 30, 2021, we extinguished $70,144,000 of secured debt at a blended average interest rate of 6.02%.

Investments The following summarizes our property acquisitions and joint venture investments completed during the nine months ended September 30, 2021 (dollars in thousands):

Properties Book Amount (1)

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(2) Represents annualized contractual or projected net operating income to be received in cash divided by investment amounts.

Dispositions The following summarizes property dispositions completed during the six months ended June 30, 2021 (dollars in thousands):

Dispositions The following summarizes property dispositions completed during the nine months ended September 30, 2021 (dollars in thousands):

Properties Proceeds (1)

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(3) Represents annualized contractual income that was being received in cash at date of disposition divided by stated purchase price.

Dividends Our Board of Directors declared a cash dividend for the quarter ended June 30, 2021 of $0.61 per share.

On August 19, 2021, we will pay our 201 st consecutive quarterly cash dividend to stockholders of record on August 12, 2021.

Dividends Our Board of Directors declared a cash dividend for the quarter ended September 30, 2021 of $0.61 per share.

On November 23, 2021, we will pay our 202 nd consecutive quarterly cash dividend to stockholders of record on November 16, 2021.

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

11 unchanged sentences

Three Months Ended

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

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

2021 2021 2021 2020 2020 2020 2020

12 unchanged sentences

Three Months Ended

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

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

2021 2021 2021 2020 2020 2020 2020

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Net debt to market capitalization ratio 27% 26% 28% 30% 33% 36% 40%

Interest coverage ratio 3.30x 3.56x 4.20x 6.23x 4.29x 5.42x

Fixed charge coverage ratio 2.93x 3.16x 3.72x 5.52x 3.84x 4.88x

Interest coverage ratio 4.81x 3.30x 3.56x 4.20x 6.23x 4.29x 5.42x

Fixed charge coverage ratio 4.22x 2.93x 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.

6 unchanged sentences

Three Months Ended

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

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

2021 2021 2021 2020 2020 2020 2020

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

Genesis Healthcare (3)

2% 6% 6% (16)% 6% 5%

Belmont Village 3% 4% 2% 2% 3% 3% 3%

Remaining relationships 68% 65% 62% 67% 58% 69% 65%

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Canada 6% 7% 7% 5% 8% 6% 7%

Pennsylvania 5% 6% 6% 4% 6% 6%

New Jersey 5% 5% 7% 7% (5)% 7% 8%

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

1 unchanged sentence

Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount.

(2) During the quarter ended June 30, 2021, we provided £ 540 million (approximately $ 750,330,000 based on the Sterling/ U.S.

Dollar exchange rate as of the date of funding) of senior loan financing and a £ 30 million delayed facility for working capital and capital expenditures to affiliates of Safanad, a global real estate and private equity firm, as part of the recapitalization of its investment in HC-One Group.

NOI related to this investment for the quarter ended September 30, 2021 was 5%.

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

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

Lease Expirations The following table sets forth information regarding lease expirations for certain portions of our portfolio as of June 30, 2021 (dollars in thousands):

Lease Expirations The following table sets forth information regarding lease expirations for certain portions of our portfolio as of September 30, 2021 (dollars in thousands):

Expiration Year (1)

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

Six Months Ended Change

June 30, 2021 June 30, 2020 $ %

Nine Months Ended Change

September 30, 2021 September 30, 2020 $ %

Cash, cash equivalents and restricted cash at beginning of period $ 2,021,043 $ 385,765 $ 1,635,278 424 %

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Cash, cash equivalents and restricted cash at end of period $ 362,645 $ 2,155,333 $ (1,792,688) (83) %

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 six months ended June 30, 2021 and dispositions.

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

For the six months ended June 30, 2021 and 2020 , cash flows provided from operations exceeded cash distributions to stockholders.

For the nine months ended September 30, 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):

Six Months Ended Change

June 30, 2021 June 30, 2020 $

Nine Months Ended Change

September 30, 2021 September 30, 2020 $

New development $ 263,325 $ 126,699 $ 136,626

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The credit facility includes $4,000,000,000 of revolving credit capacity.

As of June 30, 2021, we have total near-term available liquidity of approximately $4.5 billion.

As of September 30, 2021, we have total near-term available liquidity of approximately $4.0 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 June 30, 2021, we had investments in unconsolidated entities with our ownership generally ranging from 10% to 65%.

At September 30, 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 June 30, 2021, we had 12 outstanding letter of credit obligations.

At September 30, 2021, we had 13 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 June 30, 2021 (in thousands):

The following table summarizes our payment requirements under contractual obligations as of September 30, 2021 (in thousands):

Payments Due by Period

Contractual Obligations Total 2021 2022-2023 2024-2025 Thereafter

Unsecured credit facility and commercial paper (1,2)

$ 291,000 $ 240,000 $ — $ — $ 51,000

Senior unsecured notes and term credit facilities:

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Contractual interest obligations:

Unsecured credit facility and commercial paper 7,756 422 3,315 3,315 704

Senior unsecured notes and term loans (2)

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

(6) Purchase obligations at June 30, 2021, include $1,576,800,000 representing a definitive agreement to acquire 86 seniors housing properties from Holiday Retirement, expected to close during the third quarter.

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 June 30, 2021, we were in compliance in all material respects with the covenants under our debt agreements.

As of September 30, 2021, we were in compliance in all material respects with the covenants under our debt agreements.

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

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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