What changed in this filing

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Item 1. Financial Statements

2022-05-10 compared with 2021-11-05 · 217 added, 658 removed, 820 unchanged (52% of the section changed)

4 unchanged sentences

(In thousands)

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

March 31, 2022 (Unaudited) December 31, 2021 (Note)

Real estate investments:

47 unchanged sentences

(In thousands, except per share data)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Three Months Ended

Resident fees and services $ 994,335 $ 723,464

20 unchanged sentences

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

10,673 69,393 30,819 68,459

Net income (loss) attributable to common stockholders $ 61,925 $ 71,546

Average number of common shares outstanding:

Weighted average number of common shares outstanding:

Basic 447,379 417,241

13 unchanged sentences

(In thousands)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Three Months Ended

Net income $ 65,751 $ 72,192

6 unchanged sentences

to noncontrolling interests (1)

4,350 76,847 31,299 59,991

Total comprehensive income (loss) attributable to common stockholders $ 44,769 $ 91,914

4 unchanged sentences

(In thousands)

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Stock Capital in

17 unchanged sentences

Balances at March 31, 2022 $ 455,376 $ 23,620,112 $ ( 112,518 ) $ 8,725,661 $ ( 14,654,583 ) $ ( 138,472 ) $ 836,490 $ 18,732,066

Comprehensive income:

Net income (loss) 26,257 19,695 45,952

Other comprehensive income (loss) 188 2,919 3,107

Total comprehensive income 49,059

Net change in noncontrolling interests ( 17,377 ) 15,630 ( 1,747 )

Amounts related to stock incentive plans, net of forfeitures 51 4,504 ( 2,114 ) 2,441

Net proceeds from issuance of common stock 5,016 360,515 365,531

Dividends paid:

Common stock dividends ( 255,472 ) ( 255,472 )

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

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

Three Months Ended March 31, 2021

Stock Capital in

7 unchanged sentences

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 20,190,119 ( 78,955 ) 7,348,754 ( 12,223,534 ) ( 112,157 ) 966,183 16,501,415

Comprehensive income:

8 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 7,404 832 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 $ 20,836,549 $ ( 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)

Nine Months Ended

September 30,

Three Months Ended

Operating activities:

5 unchanged sentences

Provision for loan losses

Impairment of assets

( 804 ) 1,383

Impairment of assets

Stock-based compensation expense

14,868 20,938

Loss (gain) on derivatives and financial instruments, net

( 6,503 ) 10,480

Loss (gain) on extinguishment of debt, net

1 unchanged sentence

Loss (income) from unconsolidated entities

2,884 ( 13,049 )

Rental income less than (in excess of) cash received

22 unchanged sentences

Principal collected on loans receivable

250,415 14,345

Other investments, net of payments

( 10,885 ) ( 2,145 )

Contributions to unconsolidated entities

1 unchanged sentence

Distributions by unconsolidated entities

238,066 41,884

Proceeds from (payments on) derivatives

5 unchanged sentences

Net increase (decrease) under unsecured credit facility and commercial paper

290,996 ( 1,587,597 )

Net proceeds from issuance of senior unsecured notes 545,082 713,907

Payments to extinguish senior unsecured notes

( 1,533,752 ) ( 566,248 )

Net proceeds from the issuance of secured debt

2 unchanged sentences

Net proceeds from the issuance of common stock

1,366,464 595,313

Repurchase of common stock

Payments for deferred financing costs and prepayment penalties

1 unchanged sentence

Contributions by noncontrolling interests (1)

84,073 14,267

Distributions to noncontrolling interests (1)

15 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Welltower Inc.

(the "Company"), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure.

The Company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience.

Welltower Inc., an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure.

We invest with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience.

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

On March 7, 2022, we announced our intent to complete an UPREIT reorganization.

In February 2022, the company formerly known as Welltower Inc.

("Old Welltower") formed WELL Merger Holdco Inc.

("New Welltower") as a wholly owned subsidiary, and New Welltower formed WELL Merger Holdco Sub Inc.

("Merger Sub") as a wholly owned subsidiary.

On April 1, 2022, Merger Sub merged with and into Old Welltower, with Old Welltower continuing as the surviving corporation and a wholly owned subsidiary of New Welltower (the "Merger").

In connection with the Merger, Old Welltower's name was changed to "Welltower OP Inc.", and New Welltower inherited the name "Welltower Inc." This Quarterly Report on Form 10-Q pertains to the business and results of Old Welltower for its quarter ended March 31, 2022.

Forward-looking references to dates and periods occurring after April 1, 2022 are references to Welltower Inc.

(New Welltower).

We have elected to co-file this report to ensure continuity of information to investors.

For additional information on the UPREIT reorganization, please see our Current Reports on Form 8-K filed with the SEC on March 7, 2022 and April 1, 2022.

Accounting Policies and Related Matters

6 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, 2021 are not necessarily an indication of the results that may be expected for the year ending December 31, 2021.

Operating results for the three months ended March 31, 2022 are not necessarily an indication of the results that may be expected for the year ending December 31, 2022.

For further information, refer to the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.

2 unchanged sentences

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

Our Seniors Housing Operating revenues are dependent on occupancy.

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)

74.8 % 73.4 % 72.5 % 72.7 % 73.2 % 73.7 % 74.6 % 75.2 % 75.9 % 76.7 %

Sequential occupancy change (2)

( 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 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.

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 $ 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.

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

Our Seniors Housing Operating revenues are dependent on occupancy, which has steadily increased in recent months.

As of March 31, 2022, nearly all communities are open for new admissions and allowing visitors, in-person tours and communal dining and activities.

Average occupancy increased from 73.0 % to 77.5 % for the three months ended March 31, 2022 and 2021, respectively.

Occupancy metrics represent occupancy at our share for 543 properties in operation as of December 31, 2020, including unconsolidated properties but excluding acquisitions, executed dispositions, development conversions and four closed properties.

Property-level operating expenses associated with the COVID-19 pandemic related to our Seniors Housing Operating portfolio totaled $ 11,003,000 and $ 27,976,000 for the three months ended March 31, 2022 and 2021, respectively.

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

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.

In 2021 and 2022, we received government grants under the CARES Act primarily to cover increased expenses and lost revenue during the COVID-19 pandemic, as well as under similar programs in the U.K.

For the three months ended March 31, 2022 and 2021, we recognized $ 5,760,000 and $ 49,180,000 , respectively, of government grant income as a reduction to property operating expenses in our Consolidated Statements of Comprehensive Income.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 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.

Our Triple-net operators have experienced similar occupancy declines and operating costs as 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 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 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.

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

New Accounting Standards

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.

• 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.

The adoption of this standard did not have a significant impact 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.

9 unchanged sentences

Transaction costs related to asset acquisitions are capitalized as a component of purchase price and all other non-capitalizable costs are reflected in other expenses on our Consolidated Statements of Comprehensive Income.

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended

September 30, 2021 September 30, 2020

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

Three Months Ended

March 31, 2022 March 31, 2021

Seniors Housing Operating Triple-net Outpatient

8 unchanged sentences

Total assets acquired 479,235 171 152,482 631,888 5,104 194,516 14,282 213,902

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

Lease liabilities — — ( 3,852 ) ( 3,852 ) — — — —

3 unchanged sentences

( 20,348 ) ( 4 ) — ( 20,352 ) — ( 2,056 ) — ( 2,056 )

Non-cash acquisition related activity (2)

( 2,120 ) — — ( 2,120 ) — — — —

Cash disbursed for acquisitions 452,613 167 148,630 601,410 5,104 183,757 14,246 203,107

5 unchanged sentences

Total cash invested in real property, net of cash acquired $ 628,490 $ 28,128 $ 173,162 $ 829,780 $ 37,345 $ 240,337 $ 27,810 $ 305,492

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

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

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

(3) 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 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.

Effective on April 1, 2022, our leasehold interest relating to the master lease with National Health Investors, Inc.

(“NHI”) for 17 properties assumed in conjunction with the Holiday Retirement acquisition was terminated as a result of the transition or sale of the properties by NHI.

The lease termination was part of an agreement to resolve outstanding litigation with NHI.

In conjunction with the agreement, a wholly owned subsidiary and the lessee on the master lease agreed to release $ 6,883,000 of cash to the landlord, which represents the net cash flow generated from the properties since we assumed the leasehold interest.

As of March 31, 2022, a right of use asset of $ 77,080,000 and a related lease liability of $ 135,701,000 were recorded on the Consolidated Balance Sheet.

Construction Activity

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

Nine Months Ended

September 30, 2021 September 30, 2020

Three Months Ended

March 31, 2022 March 31, 2021

Development projects:

Seniors Housing Operating

$ 58,844 $ 93,188

22,990 59,201

Outpatient Medical

116,612 43,493

Total development projects

198,446 195,882

Expansion projects

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

3 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):

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

In place lease intangibles $ 1,732,980 $ 1,681,533

10 unchanged sentences

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,

2021 2020 2021 2020

Three Months Ended March 31,

Rental income related to (above)/below market tenant leases, net $ 385 $ 425

11 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 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.

At March 31, 2022, three Seniors Housing Operating, 11 Triple-net, and one Outpatient Medical properties with an aggregate real estate balance of $ 199,490,000 were classified as held for sale.

In addition to the real property balances held for sale, lease liabilities of $ 66,893,000 and net other assets and (liabilities) of $ 2,462,000 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 $ 273,165,000 .

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.

During the three months ended March 31, 2021, we recorded $ 12,098,000 of impairment charges related to 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 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.

WELLTOWER INC.

1 unchanged sentence

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

$ 112,837 $ 1,093,477

439,974 33,445

Outpatient Medical

159,000 1,394,971

Total dispositions

5 unchanged sentences

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,

2021 2020 2021 2020

Three Months Ended March 31,

Total revenues

$ 4,958 $ 30,414

$ 58,302 $ 262,951

Interest expense

32 1,737 1,471 10,039

Property operating expenses

925 33,330 7,942 150,501

Provision for depreciation

440 18,085 8,665 72,877

Total expenses

1,397 53,152 18,078 233,417

Income (loss) from real estate dispositions, net $ 2,103 $ 19,355

(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.

1 unchanged sentence

Renewal options that we are reasonably certain to exercise are recognized in our right-of-use assets and lease liabilities.

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

Nine Months Ended

Classification September 30, 2021 September 30, 2020

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

Three Months Ended

Classification March 31, 2022 March 31, 2021

Operating lease cost:

10 unchanged sentences

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

Classification September 30, 2021 December 31, 2020

Classification March 31, 2022 December 31, 2021

Right of use assets:

3 unchanged sentences

Operating leases - non-real estate investments Receivables and other assets 9,430 9,627

Finance leases - held for sale (1)

Real property held for sale, net of accumulated depreciation 119,733 —

Total right of use assets, net $ 533,852 $ 532,423

3 unchanged sentences

Total $ 548,999 $ 545,944

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

Substantially all of our operating leases in which we are the lessor contain escalating rent structures.

1 unchanged sentence

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 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.

During the three months ended March 31, 2021, we reserved for previously recognized straight-line rent receivable balances of $ 49,241,000 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, 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.

For the three months ended March 31, 2022, we recognized $ 356,390,000 of rental income related to operating leases, of whi ch $ 48,074,000 w as for variable lease payments that primarily represents the reimbursement of operating costs such as common area maintenance expenses, utilities, insurance and real estate taxes.

For the three months ended March 31, 2021, we recognized $ 302,843,000 of rental income related to operating leases, of which $ 46,026,000 was for variable lease payments.

For the majority of our Seniors Housing Operating segment, revenue from resident fees and services is predominantly service-based, and as such, resident agreements are accounted for under ASU 2014-09, "Revenue from Contracts with Customers" (ASC 606).

Within that reportable segment, we also recognize revenue from residential seniors apartment leases in accordance with ASC 842, "Leases." The amount of revenue related to these leases was $ 94,827,000 and $ 15,771,000 for the three months ended March 31, 2022 and March 31, 2021, respectively.

Loans Receivable

Loans receivable are recorded on our Consolidated Balance Sheets in real estate loans receivable, net of allowance for credit losses, or for non-real estate loans receivable, in receivables and other assets, net of allowance for credit losses.

Real estate loans receivable consists of mortgage loans and other real estate loans which are primarily collateralized by a first, second or third mortgage lien, a leasehold mortgage on, or an assignment of the partnership interest in, the related properties, corporate guarantees and/or personal guarantees.

1 unchanged sentence

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 $ 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.

Accrued interest receivable was $ 26,215,000 and $ 26,659,000 as of March 31, 2022 and December 31, 2021, respectively, and is included in receivables and other assets on the Consolidated Balance Sheets.

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Mortgage loans $ 833,070 $ 889,556

9 unchanged sentences

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

Nine Months Ended

September 30, 2021 September 30, 2020

Three Months Ended

March 31, 2022 March 31, 2021

Advances on loans receivable $ 39,201 $ 43,148

Investments in new loans

$ 935,594 $ 194,942

Draws on existing loans

17,412 21,365

Net cash advances on loans receivable

953,006 216,307

Receipts on loans receivable ( 89,207 ) ( 2,852 )

Principal payments on loans

70,588 14,345

Net cash receipts on loans receivable 250,415 14,345

Net cash advances (receipts) on loans receivable $ ( 50,006 ) $ 40,296

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.

The loan has a five-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.

As part of the transaction, we received equity warrants which provide us the right to participate in the capital appreciation of HC-One Group above a designated price upon liquidation.

See Note 12 for additional details.

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

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

September 30, 2021

March 31, 2022

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

7 unchanged sentences

Total loans $ 1,407,852 $ ( 165,693 ) $ 1,242,159 55

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.

Aside from this specific reserve, the remainder of the provision for loan losses relates to the application of the historical loss experience on the collective loan pools.

The total allowance for credit losses balance is deemed sufficient to absorb expected losses relating to our loan portfolio.

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended

September 30, 2021 September 30, 2020

Three Months Ended

March 31, 2022 March 31, 2021

Balance at beginning of period $ 166,785 $ 224,036

Adoption of ASU 2016-13 — 5,212

Provision for loan losses ( 804 ) 1,383

2 unchanged sentences

Balance at end of period $ 165,693 $ 224,146

(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):

Nine Months Ended

September 30, 2021 September 30, 2020

Three Months Ended

March 31, 2022 March 31, 2021

Balance of deteriorated loans at end of period (1)

3 unchanged sentences

Interest recognized on deteriorated loans (2)

$ 3,171 $ 13,847

(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.

( 1) Current year amounts include $ 2,157,000 and $ 2,157,000 of loans on non-accrual as of March 31, 2022 and December 31, 2021, respectively.

Prior year amounts include $ 2,250,000 and $ 3,623,000 as of March 31, 2021 and December 31, 2020, respectively.

(2) Represents cash interest recognized in the period.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Investments in Unconsolidated Entities

3 unchanged sentences

Percentage Ownership (1)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Seniors Housing Operating 10 % to 65 %

1 unchanged sentence

Triple-net 10 % to 88 %

68,643 44,814

Outpatient Medical 15 % to 50 %

2 unchanged sentences

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

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.

At March 31, 2022, the aggregate unamortized basis difference of our joint venture investments of $ 147,598,000 is primarily attributable to the difference between the amount for which we purchased our interest in the entity, including transaction costs, and the historical carrying value of the net assets of the joint venture.

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

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 have made loans related to 16 p roperties as of March 31, 2022 for the development and construction of certain properties which are classified as in substance real estate investments and have a carrying value of $ 371,061,000 .

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

VIEs are required to be consolidated by their primary beneficiary ("PB") which is the enterprise that has both:

VIEs are required to be consolidated by their primary beneficiary which is the enterprise that has both:

(i) the power to direct the activities of the VIE that most significantly impacts the entity's economic performance;

and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity.

We have concluded that we are not the PB of such borrowers, therefore, the loan arrangements were assessed based on among other factors, the amount and timing of expected residual profits, the estimated fair value of the collateral and the significance of the borrower's equity in the project.

We have concluded that we are not the primary beneficiary of such borrowers, therefore, the loan arrangements were assessed based on among other factors, the amount and timing of expected residual profits, the estimated fair value of the collateral and the significance of the borrower's equity in the project.

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

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

We expect to fund an additional $ 184,926,000 r elated to these investments.

Credit Concentration

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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, 2021, 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, 2022, excluding our share of NOI in unconsolidated entities (dollars in thousands):

Concentration by relationship:

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ProMedica (3)

Sunrise Senior Living (3)

205 $ 61,084 11 %

85 71,139 5 %

Sunrise Senior Living 110 30,467 6 %

Atria Senior Living 96 28,745 5 %

HC-One Group (4)

Avery Healthcare 61 19,901 4 %

Belmont Village 21 45,475 4 %

Remaining portfolio 1,190 377,966 70 %

Totals 1,663 $ 542,035 100 %

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

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

(1) ProMedica and HC-One Group are in our Triple-net segment.

Sunrise Senior Living and Atria Senior Living are in our Seniors Housing Operating segment.

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

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

(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").

The status of these transactions is as follows:

• 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.

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.

We have transitioned the operations of these properties into a new lease agreement with a regional operator during the quarter ended June 30, 2021.

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

(3) During the quarter ended March 31, 2022, we purchased an additional 5 % ownership interest in the consolidated ProMedica joint ventures for $ 137,437,000 .

(4) In addition to the one property, HC-One Group is the borrower on a £ 540,000,000 loan.

Borrowings Under Credit Facilities and Commercial Paper Program

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).

At March 31, 2022, 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 March 31, 2022) and a $ 3,000,000,000 tranche that matures on June 4, 2025 ($ 110,000 ,000 outstanding at March 31, 2022).

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

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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 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 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 September 30, 2021.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 .

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.

unsecured credit facility also allows us to borrow up to $ 1,000,000,000 in alternate currencies ( none outstanding at March 31, 2022).

Borrowings under the unsecured revolving credit facility are subject to interest payable at the applicable margin over LIBOR interest rate ( 1.23 % at March 31, 2022).

The applicable margin is based on our debt ratings and was 0.775 % at March 31, 2022.

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

The facility fee depends on our debt ratings and was 0.15 % at March 31, 2022.

Effective with the Merger on April 1, 2022, Old Welltower remains the borrower under the credit facility and New Welltower will guarantee Old Welltower's obligations under the agreement.

Under the terms of our commercial paper program, we may issue unsecured commercial paper notes with maturities that vary, but do not exceed 397 days from the date of issue, up to a maximum aggregate face or principal amount outstanding at any time of $ 1,000,000,000 .

As of March 31, 2022, there was a balance of $ 189,968,000 outstanding on the commercial paper program ($ 190,000,000 in principal outstanding, net of an unamortized discount of $ 32,000 ), which reduces the borrowing capacity of the unsecured revolving credit facility.

The notes bear interest at various floating rates with a weighted average of 0.94 % as of March 31, 2022 and a weighted average maturity of seven days as of March 31, 2022.

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

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

2021 2020 2021 2020

Three Months Ended March 31,

Balance outstanding at quarter end $ 300,000 $ —

5 unchanged sentences

expense divided by average borrowings outstanding)

0.21 % — % 0.42 % 2.09 %

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

At March 31, 2022, the annual principal payments due on these debt obligations were as follows (in thousands):

Unsecured Notes (1,2)

7 unchanged sentences

Totals $ 12,231,595 $ 2,115,641 $ 14,347,236

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

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

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

(3) Annual interest rates range from 0.32 % to 6.67 %.

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

Carrying value of the properties securing the debt totaled $ 4,882,090,000 at March 31, 2022.

(4) Includes a $ 250,000,000 Canadian-denominated unsecured term credit facility (approximately $ 200,288,000 based on the Canadian/U.S.

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).

Dollar exchange rate on March 31, 2022).

The loan matures on July 19, 2023 and bears interest at the Canadian Dealer Offered Rate plus 0.90 % ( 1.83 % at March 31, 2022).

(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 % ( 0.98 % at September 30, 2021).

The loan matures on July 19, 2023 and bears interest at LIBOR plus 0.90 % ( 1.36 % at March 31, 2022).

(6) Includes a $ 300,000,000 Canadian-denominated 2.95 % senior unsecured notes due 2027 (approximately $ 240,347,000 based on the Canadian/U.S.

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 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 September 30, 2021).

Dollar exchange rate on March 31, 2022).

(7) Includes a £ 550,000,000 4.80 % senior unsecured notes due 2028 (approximately $ 723,360,000 based on the Pounds Sterling/U.S.

Dollar exchange rate in effect on March 31, 2022).

(8) Includes a £ 500,000,000 4.50 % senior unsecured notes due 2034 (approximately $ 657,600,000 based on the Pounds Sterling/U.S.

Dollar exchange rate in effect on March 31, 2022).

WELLTOWER INC.

1 unchanged sentence

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

Nine Months Ended

September 30, 2021 September 30, 2020

Three Months Ended

March 31, 2022 March 31, 2021

Weighted Avg.

3 unchanged sentences

Debt issued 550,000 3.85 % 750,000 2.80 %

Debt extinguished ( 1,533,752 ) 2.42 % ( 566,248 ) 3.26 %

Foreign currency ( 26,366 ) 4.14 % 20,059 3.90 %

1 unchanged sentence

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

Nine Months Ended

September 30, 2021 September 30, 2020

Three Months Ended

March 31, 2022 March 31, 2021

Weighted Avg.

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

As of March 31, 2022, we were in compliance in all material respects with the covenants under our debt agreements.

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

Derivative Instruments

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Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in earnings.

Cash Flow Hedges of Interest Rate Risk

Cash Flow Hedges and Fair Value Hedges of Interest Rate Risk

We enter into interest rate swaps in order to maintain a capital structure containing targeted amounts of fixed and floating-rate debt and manage interest rate risk.

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for our fixed-rate payments.

These interest rate swap agreements were used to hedge the variable cash flows associated with variable-rate debt.

These interest rate swap agreements are used to hedge the variable cash flows associated with variable-rate debt.

Interest rate swaps designated as fair value hedges involve the receipt of fixed amounts from a counterparty in exchange for our variable-rate payments.

These interest rate swap agreements hedge the exposure to changes in the fair value of fixed-rate debt attributable to changes in the designated benchmark interest rate.

For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in earnings.

We record the gain or loss on the hedged items in interest expense, the same line item as the offsetting loss or gain on the related interest rate swaps.

During the quarter ended March 31, 2022, we entered into a $ 550,000,000 fixed to floating swap in connection with our March senior note issuance.

The carrying amount of

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

the notes, exclusive of the hedge, is $ 545,082,000 .

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

Periodically, we enter into and designate interest rate locks to partially hedge the risk of changes in interest payments attributable to increases in the benchmark interest rate during the period leading up to the probable issuance of fixed-rate debt.

We designate our interest rate locks as cash flow hedges.

Gains and losses when we settle our interest rate locks are amortized into income over the life of the related debt, except where a material amount is deemed to be ineffective, which would be immediately reclassified to the Consolidated Statements of Comprehensive Income.

Gains and losses when we settle our interest rate locks are amortized into earnings over the life of the related debt, except where a material amount is deemed to be ineffective, which would be immediately recognized in the Consolidated Statements of Comprehensive Income.

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

2 unchanged sentences

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

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.

During the three months ended March 31, 2022, we settled certain net investment hedges generating cash proceeds of $ 10,169,000 .

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

5 unchanged sentences

Equity Warrants

We received equity warrants through our lending activities further described in Note 7, which were accounted for as loan origination fees.

The warrants provide us the right to participate in the capital appreciation of the underlying company above a designated price upon liquidation and contain net settlement terms qualifying as derivatives under ASC Topic 815.

We received equity warrants through our lending activities, which were accounted for as loan origination fees.

The warrants provide us the right to participate in the capital appreciation of the underlying HC-One Group real estate portfolio above a designated price upon liquidation and contain net settlement terms qualifying as derivatives under ASC Topic 815.

The warrants are classified within receivables and other assets on our Consolidated Balance Sheets.

1 unchanged sentence

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Derivatives designated as net investment hedges:

7 unchanged sentences

$ 25,000 $ 25,000

Interest rate swaps designated as fair value hedges:

Denominated in U.S Dollars $ 550,000 $ —

Derivative instruments not designated:

2 unchanged sentences

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

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

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

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Three Months Ended March 31,

Description Location 2022 2021

3 unchanged sentences

Gain (loss) on derivative and financial instruments designated as hedges recognized in OCI OCI $ 51,940 $ ( 20,037 )

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).

At March 31, 2022, we had 17 outstanding letter of credit obligations totaling $ 39,594,000 and expiring between 2022 and 2023.

At March 31, 2022, we had outstanding construction in progress of $ 717,657,000 and were committed to providing additional funds of approximately $ 1,573,677,000 to complete construction.

Additionally, at March 31, 2022, we had outstanding investments classified as in substance real estate of $ 371,061,000 and were committed to provide additional funds of $ 184,926,000 (see Note 8 for additional information).

Purchase obligations include $ 86,601,000 of contingent purchase obligations to fund capital improvements.

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

September 30, 2021 December 31, 2020

Preferred Stock:

March 31, 2022 December 31, 2021

Preferred Stock, $1.00 par value:

Authorized shares 50,000,000 50,000,000

5 unchanged sentences

Outstanding shares 453,948,046 447,239,477

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").

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").

Under this authorization, we are not required to purchase shares but may choose to do so in the open market or through private transactions at times and amounts based on our evaluation of market conditions and other factors.

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

We did not repurchase any shares of our common stock during the 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):

As of March 31, 2022, we had $ 1,317,295,000 of remaining capacity under the ATM Program, which excludes forward sales agreements outstanding for the sale of 14,297,958 shares with maturity dates in 2023, which we expect to physically settle for cash proceeds of $ 1,253,955,000 .

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

Shares Issued Average Price Gross Proceeds Net Proceeds

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

2020 Option exercises 251 47.81 12 12

2020 ATM Program issuances 6,799,978 86.48 588,072 576,196

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

2020 Totals 7,250,376 $ 607,189 $ 595,313

2022 ATM Program issuances 6,605,191 $ 84.60 $ 558,790 $ 549,326

2022 Option exercises 299 66.89 20 20

2022 Stock incentive plans, net of forfeitures 103,079 — —

2022 Totals 6,708,569 $ 558,810 $ 549,346

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

Nine Months Ended

September 30, 2021 September 30, 2020

Three Months Ended

March 31, 2022 March 31, 2021

Per Share Amount Per Share Amount

Common stock $ 0.61 $ 273,668 $ 0.61 $ 254,952

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):

September 30, 2021 December 31, 2020

Accumulated Other Comprehensive Income

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

March 31, 2022 December 31, 2021

Foreign currency translation $ ( 743,402 ) $ ( 674,306 )

2 unchanged sentences

Stock Incentive Plans

Our 2016 Long-Term Incentive Plan (“2016 Plan”) authorizes up to 10,000,000 shares of common stock to be issued at the discretion of the Compensation Committee of the Board of Directors.

In March 2022, our Board of Directors approved the 2022 Long-Term Incentive Plan (“2022 Plan”), which authorizes up to 10,000,000 shares of common stock to be issued at the discretion of the Compensation Committee of the Board of Directors.

Awards granted after March 28, 2022 will be issued out of the 2022 Plan.

The awards granted under the 2016 Long-Term Incentive Plan continue to vest and options expire ten years from the date of grant.

Our non-employee directors, officers and key employees are eligible to participate in the 2022 Plan.

2 unchanged sentences

Options expire ten years from the date of grant.

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.

Stock-based compensation expense totaled $ 7,445,000 and $ 5,576,000 for the three months ended March 31, 2022 and 2021, 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,

2021 2020 2021 2020

Three Months Ended March 31,

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

6 unchanged sentences

Effect of dilutive securities:

Employee stock options

Non-vested restricted shares

537 542 465 620

Redeemable OP units

1,396 1,396 1,396 1,396

Employee stock purchase program

4 unchanged sentences

Diluted earnings per share $ 0.14 $ 0.17

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.

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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.

15 unchanged sentences

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

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Carrying Amount Fair Value Carrying Amount Fair Value

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

Fair Value Measurements as of September 30, 2021

Fair Value Measurements as of March 31, 2022

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

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

Three Months Ended

March 31, 2022 March 31, 2021

Beginning balance $ 41,909 $ —

Warrants acquired 32,419

Mark-to-market adjustment ( 2,425 ) —

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Items Measured at Fair Value on a Nonrecurring Basis

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We have determined that the fair value measurements included in each of these assets and liabilities rely primarily on company-specific inputs and our assumptions about the use of the assets and settlement of liabilities, as observable inputs are not available.

As such, we have determined that each of these fair value measurements generally resides within Level 3 of the fair value hierarchy.

As such, we have determined that each of these fair value measurements

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

generally resides within Level 3 of the fair value hierarchy.

We estimate the fair value of real estate and related intangibles using the income approach and unobservable data such as net operating income and estimated capitalization and discount rates.

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

Three Months Ended September 30, 2021:

Three Months Ended March 31, 2022:

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

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Property operating expenses 789,928 11,211 49,915 2,615 853,669

Consolidated net operating income 172,909 228,321 111,431 ( 2,264 ) 510,397

Consolidated net operating income (loss) 206,684 223,952 113,408 ( 2,009 ) 542,035

Depreciation and amortization 192,793 53,504 57,791 — 304,088

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Provision for loan losses, net 267 ( 1,065 ) ( 6 ) — ( 804 )

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

Other expenses 8,191 11,044 789 6,045 26,069

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Total assets $ 19,986,904 $ 8,986,422 $ 6,333,821 $ 165,306 $ 35,472,453

Three Months Ended September 30, 2020:

Three Months Ended March 31, 2021:

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

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Property operating expenses 555,968 12,841 46,863 1,654 617,326

Consolidated net operating income 174,361 108,361 119,976 ( 541 ) 402,157

Consolidated net operating income (loss) 170,434 155,641 109,360 ( 699 ) 434,736

Depreciation and amortization 132,586 56,667 55,173 — 244,426

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

Rental income — 557,829 457,721 — 1,015,550

Interest income 3,110 86,040 8,741 — 97,891

Other income 5,388 3,539 8,336 2,175 19,438

Total revenues 2,308,470 647,408 474,798 2,175 3,432,851

Property operating expenses 1,804,939 37,132 140,430 6,882 1,989,383

Consolidated net operating income 503,531 610,276 334,368 ( 4,707 ) 1,443,468

Depreciation and amortization 420,797 165,299 166,969 — 753,065

Interest expense 31,331 5,134 12,733 318,807 368,005

General and administrative expenses — — — 93,618 93,618

Loss (gain) on derivatives and financial instruments, net — ( 6,503 ) — — ( 6,503 )

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

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

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

Other expenses 12,617 4,845 2,450 6,344 26,256

Income (loss) from continuing operations before income taxes and other items 17,784 406,730 153,472 ( 475,982 ) 102,004

Income tax (expense) benefit — — — ( 6,662 ) ( 6,662 )

Income (loss) from unconsolidated entities ( 23,514 ) 14,822 ( 2,067 ) — ( 10,759 )

Gain (loss) on real estate dispositions, net 4,552 126,463 92,687 — 223,702

Income (loss) from continuing operations ( 1,178 ) 548,015 244,092 ( 482,644 ) 308,285

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

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, net 86 18.69 8,895 — 2,370 18.69 — 11,351

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

Other expenses 13,463 6,818 8,244 8,722 37,247

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Our portfolio of properties and other investments are located in the United States, the United Kingdom and Canada.

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

% Amount % Amount (1)

Three Months Ended

March 31, 2022 March 31, 2021

United States $ 1,139,016 81.6 % $ 825,648 78.5 %

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Total $ 1,395,704 100.0 % $ 1,052,062 100.0 %

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Amount % Amount %

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Total $ 35,472,453 100.0 % $ 34,910,325 100.0 %

(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.

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

Income Taxes and Distributions

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The main differences between undistributed net income for federal income tax purposes and financial statement purposes are the recognition of straight-line rent for reporting purposes, basis differences in acquisitions, recording of impairments, differing useful lives and depreciation and amortization methods for real property and the provision for loan losses for reporting purposes versus bad debt expense for tax purposes.

Generally, the rent received from the TRS will meet the related party rent exception and will be treated as “rents from real property”.

A “qualified health care property” includes real property and any personal property that is, or is necessary or incidental to the use of, a hospital, nursing facility, assisted living facility, congregate care facility, qualified continuing care facility, or other licensed facility which extends medical or nursing or ancillary services to patients.

Under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”), for taxable years beginning after July 30, 2008, a REIT may lease “qualified health care properties” on an arm’s-length basis to a taxable REIT subsidiary (“TRS”) if the property is operated on behalf of such TRS by a person who qualifies as an “eligible independent contractor.” Generally, the rent received from the TRS will meet the related party rent exception and will be treated as “rents from real property.” A “qualified health care property” includes real property and any personal property that is, or is necessary or incidental to the use of, a hospital, nursing facility, assisted living facility, congregate care facility, qualified continuing care facility, or other licensed facility which extends medical or nursing or ancillary services to patients.

We have entered into various joint ventures that were structured under RIDEA.

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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, 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 three months ended March 31, 2022 and 2021, was primarily due to operating income or losses, offset by certain discrete items at our TRS entities.

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

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

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

We have made a reasonable estimate of the tax impact to us of the CARES Act in our consolidated financial statements, and while we do not believe that there will be further material impacts to the consolidated financial statements related to the CARES Act tax provisions, we will continue to evaluate the impact of the CARES Act and any guidance provided by the U.S.

Treasury and the IRS on our consolidated financial statements.

It is possible our estimates could differ materially from the actual tax impact to us of the CARES Act.

Variable Interest Entities

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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, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Net real estate investments $ 445,561 $ 445,776

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Other important factors are identified in our Annual Report on Form 10-K for the year ended December 31, 2021, 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.

and its subsidiaries unless specifically noted otherwise.

On March 7, 2022, we announced our intent to complete an UPREIT reorganization.

In February 2022, the company formerly known as Welltower Inc.

("Old Welltower") formed WELL Merger Holdco Inc.

("New Welltower") as a wholly owned subsidiary, and New Welltower formed WELL Merger Holdco Sub Inc.

("Merger Sub") as a wholly owned subsidiary.

On April 1, 2022, Merger Sub merged with and into Old Welltower, with Old Welltower continuing as the surviving corporation and a wholly owned subsidiary of New Welltower (the "Merger").

We have elected to co-file this report to ensure continuity of information to investors.

Unless the context requires otherwise, references herein to "the Company", "we", "us" and "our" refer to Welltower OP Inc.

(Old Welltower) through March 31, 2022.

Forward-looking references to dates and periods occurring after April 1, 2022 are references to Welltower Inc.

(New Welltower).

Executive Summary

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(NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure.

As noted above, effective April 1, 2022, Welltower OP Inc.

became a wholly owned subsidiary of Welltower Inc.

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, 2021 (dollars in thousands):

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

Percentage of Number of

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

Our Seniors Housing Operating revenues are dependent on occupancy.

Spot occupancy 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.

Our Seniors Housing Operating revenues are dependent on occupancy, which has steadily increased in recent months.

As of March 31, 2022, nearly all communities are open for new admissions and allowing visitors, in-person tours and communal dining and activities.

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

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

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

Our Triple-net operators are experiencing similar trends related to occupancy and operating costs with respect to our Seniors Housing Operating properties.

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

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

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

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

Our primary objectives are to protect stockholder capital and enhance stockholder value.

We seek to pay consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders as a result of annual increases in NOI and portfolio growth.

To meet these objectives, we invest across the full spectrum of seniors housing and health care real estate and diversify our investment portfolio by property type, relationship and geographic location.

Substantially all of our revenues are derived from operating lease rentals, resident fees and services and interest earned on outstanding loans receivable.

These items represent our primary sources of liquidity to fund distributions and depend upon the continued ability of our obligors to make contractual rent and interest payments to us and the profitability of our operating properties.

To the extent that our obligors/partners experience operating difficulties and become unable to generate sufficient cash to make payments or operating distributions to us, there could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.

To mitigate this risk, we monitor our investments through a variety of methods determined by the type of property.

Our asset management process for seniors housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral.

Our internal property management division manages and monitors the outpatient medical portfolio with a comprehensive process including review of tenant relations, lease expirations, the mix of health service providers, hospital/health system relationships, property performance, capital improvement needs and market conditions among other things.

We evaluate the operating environment in each property’s market to determine the likely trend in operating performance of the facility.

When we identify unacceptable trends, we seek to mitigate, eliminate or transfer the risk.

Through these efforts, we generally aim to intervene at an early stage to address any negative trends, and in so doing, support both the collectability of revenue and the value of our investment.

In addition to our asset management and research efforts, we also aim to structure our relevant investments to mitigate payment risk.

Operating leases and loans are normally credit enhanced by guarantees and/or letters of credit.

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

For the 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.

Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment.

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

Our yield on loans receivable depends upon a number of factors, including the stated interest rate, the average principal amount outstanding during the term of the loan and any interest rate adjustments.

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

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

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

We also continuously evaluate opportunities to finance future investments.

New investments are generally funded from temporary borrowings under our unsecured revolving credit facility and commercial paper program, internally generated cash and the proceeds from investment dispositions.

Our investments generate cash from NOI and principal payments on loans receivable.

Permanent financing for future investments, which replaces funds drawn under our unsecured revolving credit facility and commercial paper program, has historically been provided through a combination of the issuance of public debt and equity securities and the incurrence or assumption of secured debt.

Depending upon market conditions, we believe that new investments will be available in the future with spreads over our cost of capital that will generate appropriate returns to our stockholders.

It is also likely that investment dispositions may occur in the future.

To the extent that investment dispositions exceed new investments, our revenues and cash flows from operations could be adversely affected.

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

To the extent that new investment requirements exceed our available 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 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 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.

The credit facility includes $4,000,000,000 of revolving credit capacity at a borrowing rate of 77.5 basis points over LIBOR, $500,000,000 of USD term loan capacity at a borrowing rate of 90.0 basis points over LIBOR and $250,000,000 CAD term loan capacity at 90.0 basis points over CDOR.

• In June 2021, we repaid the remaining $845,000,000 of our term loan due April 2022.

• 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.

• 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)

Capitalization Rates (2)

Seniors Housing Operating 132 $ 2,139,667 5.4 %

Triple-net 22 484,927 6.3 %

Outpatient Medical 10 290,073 5.5 %

Totals 164 $ 2,914,667 5.6 %

(1) Represents amounts recorded in net real estate investments including fair value adjustments pursuant to U.S.

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

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

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

Properties Proceeds (1)

Book Amount (2)

Capitalization Rates (3)

Seniors Housing Operating 12 $ 118,590 $ 112,837 4.8 %

Triple-net 46 569,664 439,974 7.5 %

Outpatient Medical 10 253,454 159,000 5.0 %

Totals 68 $ 941,708 $ 711,811 6.5 %

(1) Represents net proceeds received upon disposition, including any seller financing.

(2) Represents carrying value of net real estate assets at time of disposition.

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

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

Dividends Our Board of Directors declared a cash dividend for the 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

Key Performance Indicators, Trends and Uncertainties

We utilize several key performance indicators to evaluate the various aspects of our business.

These indicators are discussed below and relate to operating performance, credit strength and concentration risk.

Management uses these key performance indicators to facilitate internal and external comparisons to our historical operating results, in making operating decisions and for budget planning purposes.

Operating Performance We believe that net income and net income attributable to common stockholders (“NICS”) per the Consolidated Statements of Comprehensive Income are the most appropriate earnings measures.

Other useful supplemental measures of our operating performance include funds from operations attributable to common stockholders (“FFO”) and consolidated net operating income (“NOI”);

however, these supplemental measures are not defined by U.S.

generally accepted accounting principles (“U.S.

Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliations.

These earnings measures are widely used by investors and analysts in the valuation, comparison and investment recommendations of companies.

The following table reflects the recent historical trends of our operating performance measures for the periods presented (in thousands):

Three Months Ended

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

2021 2021 2021 2020 2020 2020 2020

Net income (loss) $ 190,336 $ 45,757 $ 72,192 $ 155,278 $ 394,978 $ 159,216 $ 329,380

NICS 179,663 26,257 71,546 163,729 325,585 179,246 310,284

FFO 345,739 248,840 287,167 225,827 185,014 335,597 356,124

NOI 510,397 498,335 434,736 501,455 402,157 527,711 576,821

Credit Strength We measure our credit strength both in terms of leverage ratios and coverage ratios.

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

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

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

The coverage ratios are based on earnings before interest, taxes, depreciation and amortization (“EBITDA”).

Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliation of these measures.

Leverage ratios and coverage ratios are widely used by investors, analysts and rating agencies in the valuation, comparison, investment recommendations and rating of companies.

The following table reflects the recent historical trends for our credit strength measures for the periods presented:

Three Months Ended

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

2021 2021 2021 2020 2020 2020 2020

Net debt to book capitalization ratio 43% 43% 42% 41% 41% 43% 44%

Net debt to undepreciated book capitalization ratio 35% 35% 34% 34% 34% 35% 37%

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

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.

Concentration risk is a valuable measure in understanding what portion of our NOI could be at risk if certain sectors were to experience downturns.

Property mix measures the portion of our NOI that relates to our various property types.

Relationship mix measures the portion of our NOI that relates to our current top five relationships.

Geographic mix measures the portion of our NOI that relates to our current top five states (or international equivalents).

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

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,

2021 2021 2021 2020 2020 2020 2020

Property mix:

Seniors Housing Operating 34% 32% 39% 32% 43% 34% 42%

Triple-net 45% 45% 36% 45% 27% 42% 34%

Outpatient Medical 21% 23% 25% 23% 30% 24% 24%

Relationship mix:

ProMedica 11% 12% 12% 11% 13% 10% 9%

Sunrise Senior Living (3)

9% 10% 14% 12% 15% 10% 14%

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

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

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

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

Geographic mix:

United Kingdom 14% 13% 10% 11% 12% 8% 9%

California 12% 12% 15% 12% 17% 14% 15%

Texas 9% 9% 7% 10% 12% 10% 7%

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

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

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

(1) Excludes our share of investments in unconsolidated entities and non-segment/corporate NOI.

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

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

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

(3) 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, 2021 (dollars in thousands):

Expiration Year (1)

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Thereafter

Properties 55 36 2 14 28 48 17 14 15 12 356

Base rent (2)

$ 7,903 $ 2,913 $ 2,482 $ 11,431 $ 6,147 $ 71,469 $ 32,526 $ 16,953 $ 32,248 $ 42,651 $ 380,526

% of base rent 1.3 % 0.5 % 0.4 % 1.9 % 1.0 % 11.8 % 5.4 % 2.8 % 5.3 % 7.0 % 62.6 %

Units/beds 4,422 4,260 173 1,372 2,911 4,919 2,047 1,053 1,129 1,438 36,664

% of Units/beds 7.3 % 7.1 % 0.3 % 2.3 % 4.8 % 8.1 % 3.4 % 1.7 % 1.9 % 2.4 % 60.7 %

Outpatient Medical:

Square feet 777,444 1,923,922 2,031,094 2,489,076 1,335,888 1,711,598 1,209,061 1,100,135 1,010,734 1,666,832 5,602,883

Base rent (2)

$ 22,724 $ 55,467 $ 56,329 $ 74,928 $ 36,998 $ 46,928 $ 31,962 $ 29,909 $ 27,547 $ 43,544 $ 122,274

% of base rent 4.1 % 10.1 % 10.3 % 13.7 % 6.7 % 8.6 % 5.8 % 5.5 % 5.0 % 7.9 % 22.3 %

Leases 136 428 442 424 276 285 184 148 136 116 243

% of Leases 4.8 % 15.2 % 15.7 % 15.0 % 9.8 % 10.1 % 6.5 % 5.3 % 4.8 % 4.1 % 8.7 %

(1) Excludes investments in unconsolidated entities, developments, land parcels, loans receivable and sub-leases.

Investments classified as held for sale are included in the current year.

(2) The most recent monthly cash base rent annualized.

Base rent does not include tenant recoveries or amortization of above and below market lease intangibles or other non-cash income.

We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results.

Our expected results may not be achieved and actual results may differ materially from our expectations.

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

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

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

Please refer to our Annual Report on Form 10-K for the year ended December 31, 2020, 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

Maintaining investor confidence and trust is important in today’s business environment.

Our Board of Directors and management are strongly committed to policies and procedures that reflect the highest level of ethical business practices.

Our corporate governance guidelines provide the framework for our business operations and emphasize our commitment to increase stockholder value while meeting all applicable legal requirements.

These guidelines meet the listing standards adopted by the New York Stock Exchange and are available on the Internet at www.welltower.com/investors/governance.

The information on our website is not incorporated by reference in this Quarterly Report on Form 10-Q, and our web address is included as an inactive textual reference only.

Liquidity and Capital Resources

Sources and Uses of Cash

These sources and uses of cash are reflected in our Consolidated Statements of Cash Flows and are discussed in further detail below.

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

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 %

Cash provided from (used in) operating activities 991,995 1,109,584 (117,589) (11) %

Cash provided from (used in) investing activities (2,988,472) 2,329,745 (5,318,217) (228) %

Cash provided from (used in) financing activities 338,919 (1,666,195) 2,005,114 120 %

Effect of foreign currency translation (840) (3,566) 2,726 76 %

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 nine months ended September 30, 2021 and dispositions.

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

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):

Nine Months Ended Change

September 30, 2021 September 30, 2020 $

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

Recurring capital expenditures, tenant improvements and lease commissions 53,471 61,047 (7,576)

Renovations, redevelopments and other capital improvements 112,220 122,277 (10,057)

Total $ 429,016 $ 310,023 $ 118,993

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

Renovations, redevelopments and other capital improvements include expenditures to maximize property value, increase net operating income, maintain a market-competitive position and/or achieve property stabilization.

Financing Activities The changes in net cash provided from/used in financing activities are primarily attributable to changes related to our long-term debt arrangements, the issuances of common stock and dividend payments which are summarized above in "Key Transactions".

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

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

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

In June 2021, we completed the issuance of $500,000,000 senior unsecured notes with a maturity date of January 2029.

Net proceeds from these debt issuances were used to redeem the remaining $339,128,000 of our 3.75% senior unsecured notes due 2023, $334,624,000 of our 3.95% senior unsecured notes due 2023, and $860,000,000 remaining on our term loan due April 2022.

In June 2021, we closed on a new $4,700,000,000 unsecured credit facility.

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

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 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 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 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:

Dollar senior unsecured notes 8,850,000 — — 2,600,000 6,250,000

Canadian Dollar senior unsecured notes (2)

236,724 — — — 236,724

Pounds Sterling senior unsecured notes (2)

1,414,350 — — — 1,414,350

Dollar term credit facility 510,000 — 500,000 10,000 —

Canadian Dollar term credit facility (2)

197,270 — 197,270 — —

Secured debt:

Consolidated 2,269,781 211,978 986,557 361,736 709,510

Unconsolidated 1,204,775 37,622 254,876 633,778 278,499

Contractual interest obligations:

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

Senior unsecured notes and term loans (2)

3,804,876 133,915 831,409 712,190 2,127,362

Consolidated secured debt (2)

257,041 17,305 99,855 57,554 82,327

Unconsolidated secured debt (2)

189,468 9,990 72,687 45,504 61,287

Financing lease liabilities (4)

208,905 3,828 77,946 3,255 123,876

Operating lease liabilities (4)

1,405,385 16,018 91,491 89,495 1,208,381

Purchase obligations (5)

1,190,293 200,892 840,308 134,346 14,747

Total contractual obligations $ 22,037,624 $ 871,970 $ 3,955,714 $ 4,651,173 $ 12,558,767

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

(2) Based on foreign currency exchange rates in effect as of balance sheet date.

(3) Based on variable interest rates in effect as of balance sheet date.

(4) See Note 6 to our unaudited consolidated financial statements for additional information.

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

Capital Structure

Please refer to “Credit Strength” above for a discussion of our leverage and coverage ratio trends.

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

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

As of 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.

However, under our primary unsecured credit facility, the ratings on our senior unsecured notes are used to determine the fees and interest charged.

We plan to manage the company to maintain compliance with our debt covenants and with a capital structure consistent with our current profile.

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

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

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