What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-10 compared with 2021-11-05 · 427 added, 285 removed, 494 unchanged (59% of the section changed)

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

On May 4, 2021, we filed with the Securities and Exchange Commission (the “SEC”) (1) an open-ended automatic or “universal” shelf registration statement on Form S-3 covering an indeterminate amount of future offerings of debt securities, common stock, preferred stock, depositary shares, warrants and units to replace our existing “universal” shelf registration statement filed with the SEC on May 17, 2018, and (2) a registration statement in connection with our enhanced dividend reinvestment plan (“DRIP”) under which we may issue up to 15,000,000 shares of common stock to replace our existing DRIP registration statement on Form S-3 filed with the SEC on May 17, 2018.

As of October 29, 2021, 15,000,000 shares of common stock remained available for issuance under the DRIP registration stateme nt.

On July 30, 2021, we entered into (i) an amended and restated equity distribution agreement (the “EDA”) with each of Robert W.

Business Strategy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

For the three months ended March 31, 2022, resident fees and services and rental income represented 71% and 26%, respectively, of total revenues.

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

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

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

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

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

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

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

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 f acility and commercial paper program.

At March 31, 2022, we had $301,089,000 of cash and cash equivalents, $65,954,000 of restricted cash and $3,700,000,000 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 three months ended March 31, 2022:

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

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

During the three months ended March 31, 2022, we settled 6,605,191 shares of common stock that were sold under our ATM Program via forward sale agreements resulting in $558,790,000 of gross proceeds.

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

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

Properties Book Amount (1)

Capitalization Rates (2)

Seniors Housing Operating 10 $ 477,605 3.8 %

Triple-net — 171 — %

Outpatient Medical 4 152,482 5.5 %

Totals 14 $ 630,258 4.2 %

(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 three months ended March 31, 2022 (dollars in thousands):

Properties Proceeds (1)

Book Amount (2)

Capitalization Rates (3)

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

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

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

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

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

Dividends Our Board of Directors declared a cash dividend for th e quarter ended March 31, 2022 of $0.61 per share.

On May 31, 2022, we will pay our 204 th consecutive quarterly cash dividend to stockholders of record on May 24, 2022.

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

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

2022 2021 2021 2021 2021

Net income (loss) $ 65,751 $ 66,194 $ 190,336 $ 45,757 $ 72,192

NICS 61,925 58,672 179,663 26,257 71,546

FFO 347,635 338,976 345,739 248,840 287,167

NOI 542,035 524,085 510,397 498,335 434,736

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

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

The leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and restricted cash.

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

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

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

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

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

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

Three Months Ended

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

2022 2021 2021 2021 2021

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

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

Net debt to market capitalization ratio 24% 26% 27% 26% 28%

Interest coverage ratio 4.03x 3.89x 4.81x 3.30x 3.56x

Fixed charge coverage ratio 3.57x 3.42x 4.22x 2.93x 3.16x

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

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

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

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

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

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

Three Months Ended

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

2022 2021 2021 2021 2021

Property mix:

Seniors Housing Operating 38% 34% 34% 32% 39%

Triple-net 41% 44% 45% 45% 36%

Outpatient Medical 21% 22% 21% 23% 25%

Relationship mix:

ProMedica 11% 11% 11% 12% 12%

Sunrise Senior Living 6% 7% 9% 10% 14%

Atria Senior Living 5% 4% 3% —% —%

HC-One Group 4% 5% 5% 3% —%

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

Remaining relationships 70% 69% 68% 71% 69%

Geographic mix:

California 13% 13% 12% 12% 15%

United Kingdom 11% 13% 14% 13% 10%

Texas 8% 9% 9% 9% 7%

New Jersey 5% 5% 5% 5% 7%

Canada 5% 5% 6% 7% 7%

Remaining geographic areas 58% 55% 54% 54% 54%

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

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

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

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

Expiration Year (1)

2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Thereafter

Properties 22 2 4 27 66 4 14 4 21 9 390

Base rent (2)

$ 4,194 $ 840 $ 12,110 $ 6,612 $ 68,008 $ 15,191 $ 19,383 $ 3,972 $ 43,322 $ 21,203 $ 430,445

% of base rent 0.7 % 0.1 % 1.9 % 1.1 % 10.9 % 2.4 % 3.1 % 0.6 % 6.9 % 3.4 % 68.9 %

Units/beds 3,285 222 692 1,725 5,016 633 1,474 219 2,279 896 39,542

% of Units/beds 5.9 % 0.4 % 1.2 % 3.1 % 9.0 % 1.1 % 2.6 % 0.4 % 4.1 % 1.6 % 70.6 %

Outpatient Medical:

Square feet 1,376,952 1,709,614 1,922,175 1,070,893 1,390,852 1,252,589 949,513 790,651 1,492,484 1,399,206 4,358,806

Base rent (2)

$ 41,025 $ 48,971 $ 59,039 $ 30,385 $ 38,274 $ 33,066 $ 25,750 $ 22,763 $ 38,835 $ 38,270 $ 94,228

% of base rent 8.7 % 10.4 % 12.5 % 6.5 % 8.1 % 7.0 % 5.5 % 4.8 % 8.3 % 8.1 % 20.1 %

Leases 312 363 355 233 258 204 133 90 104 79 185

% of Leases 13.5 % 15.7 % 15.3 % 10.1 % 11.1 % 8.8 % 5.7 % 3.9 % 4.5 % 3.4 % 8.0 %

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

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

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

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

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

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

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

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

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

Please refer to our Annual Report on Form 10-K for the year ended December 31, 2021, under the headings “Business,” “Risk Factors” and “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):

Three Months Ended Change

March 31, 2022 March 31, 2021 $ %

Cash, cash equivalents and restricted cash at beginning of period $ 346,755 $ 2,021,043 $ (1,674,288) (83) %

Cash provided from (used in) operating activities 324,520 303,658 20,862 7 %

Cash provided from (used in) investing activities (808,547) (139,140) (669,407) (481) %

Cash provided from (used in) financing activities 505,105 371,903 133,202 36 %

Effect of foreign currency translation (790) 1,358 (2,148) (158) %

Cash, cash equivalents and restricted cash at end of period $ 367,043 $ 2,558,822 $ (2,191,779) (86) %

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

Operating Activities The changes in net cash provided from operating activities was immaterial.

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

For the three months ended March 31, 2022 and 2021, cash flows provided from operations exceeded cash distributions to stockholders.

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

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

Three Months Ended Change

March 31, 2022 March 31, 2021 $

New development $ 138,141 $ 73,605 $ 64,536

Recurring capital expenditures, tenant improvements and lease commissions 32,835 10,754 22,081

Renovations, redevelopments and other capital improvements 57,394 18,026 39,368

Total $ 228,370 $ 102,385 $ 125,985

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

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

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

In March 2022, we completed the issuance of $550,000,000 senior unsecured notes with a maturity date of June 2032.

As of March 31, 2022, we have total near-term available liquidity of approximately $4.1 billion.

Off-Balance Sheet Arrangements

At March 31, 2022, we had investments in unconsolidated entities with our ownership generally ranging from 10% to 88%.

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

At March 31, 2022, we had 17 outstanding letter of credit obligations.

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

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

Contractual Obligations

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

Payments Due by Period

Contractual Obligations Total 2022 2023-2024 2025-2026 Thereafter

Unsecured credit facility and commercial paper (1,3)

$ 300,000 $ — $ — $ 300,000 $ —

Senior unsecured notes and term credit facilities:

Dollar senior unsecured notes 9,900,000 — 1,350,000 1,950,000 6,600,000

Canadian Dollar senior unsecured notes (2)

240,347 — — — 240,347

Pounds Sterling senior unsecured notes (2)

1,380,960 — — — 1,380,960

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

Canadian Dollar term credit facility (2)

200,288 — 200,288 — —

Secured debt:

Consolidated 2,115,641 575,737 633,350 277,288 629,266

Unconsolidated 1,266,905 146,558 302,886 552,529 264,932

Contractual interest obligations:

Unsecured credit facility and commercial paper 12,821 2,263 6,033 4,525 —

Senior unsecured notes and term loans (2)

3,797,590 326,226 841,203 666,489 1,963,672

Consolidated secured debt (2)

212,912 45,628 75,365 43,926 47,993

Unconsolidated secured debt (2)

176,900 31,013 66,623 26,522 52,742

Financing lease liabilities (4)

208,588 6,429 71,634 3,354 127,171

Operating lease liabilities (4)

1,375,702 30,777 87,980 87,324 1,169,621

Purchase obligations (5)

1,845,205 914,297 883,699 47,202 7

Total contractual obligations $ 23,543,859 $ 2,078,928 $ 5,019,061 $ 3,969,159 $ 12,476,711

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

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

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

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

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

Capital Structure

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

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

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

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

N one of our debt agreements contain provisions for acceleration which could be triggered by our debt ratings.

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

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

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

On April 1, 2022, Welltower Inc.

and Welltower OP Inc.

jointly filed with the Securities and Exchange Commission (the “SEC”) an open-ended automatic or “universal” shelf registration statement on Form S-3 covering an indeterminate amount of future offerings of Welltower Inc.’s debt securities, common stock, preferred stock, depositary shares, guarantees of debt securities issued by Welltower OP Inc., warrants and units and Welltower OP Inc.’s debt securities and guarantees of debt securities issued by Welltower Inc.

to replace Old Welltower’s existing “universal” shelf registration statement filed with the SEC on May 4, 2021.

On April 1, 2022, Welltower Inc.

also filed with the SEC a registration statement in connection with its enhanced dividend reinvestment plan (“DRIP”) under which it may issue up to 15,000,000 shares of common stock to replace Old Welltower’s existing DRIP registration statement on Form S-3 filed with the SEC on May 4, 2021.

As of April 29, 2022, 15,000,000 shares of common stock remained available for issuance under the DRIP registration statement.

On April 4, 2022, Welltower Inc.

and Welltower OP Inc.

entered into (i) a second amended and restated equity distribution agreement (the “EDA”) with (i) Robert W.

Incorporated, Barclays Capital Inc., BMO Capital Markets Corp., BNP Paribas Securities Corp., BNY Mellon Capital Markets, LLC, BofA Securities, Inc., BOK Financial Securities, Inc., Capital One Securities Inc., Citigroup Global Markets Inc., Comerica Securities, Inc., Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., Fifth Third Securities, Inc., Goldman Sachs & Co.

LLC, Hancock Whitney Investment Services, Inc., Jefferies LLC, J.P.

LLC, Jefferies LLC, JMP Securities LLC, J.P.

Morgan Securities LLC, KeyBanc Capital Markets Inc., Loop Capital Markets LLC, Mizuho Securities USA LLC, Morgan Stanley & Co.

LLC, MUFG Securities Americas Inc., RBC Capital Markets, LLC, Regions Securities LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc., Stifel, Nicolaus & Company, Incorporated, Synovus Securities, Inc., TD Securities (USA) LLC, Truist Securities, Inc.

and Wells Fargo Securities, LLC relating to the offer and sale from time to time of up to $2,500,000,000 aggregate amount of our common stock and (ii) separate master forward sale confirmations with each of Bank of America, N.A., Bank of Montreal, The Bank of New York Mellon, Barclays Bank PLC, BNP Paribas, Citibank, N.A., Crédit Agricole Corporate and Investment Bank, Deutsche Bank AG, London Branch, Goldman Sachs & Co.

LLC, Jefferies LLC, JPMorgan Chase Bank, National Association, KeyBanc Capital Markets Inc., Mizuho Markets Americas LLC, Morgan Stanley & Co.

LLC, MUFG Securities EMEA plc, Royal Bank of Canada, The Bank of Nova Scotia, The Toronto-Dominion Bank, Truist Bank, London Branch and Wells Fargo Bank, National Association (together with the EDA, the “ATM Program”), amending and restating the ATM Program entered into on May 4, 2021 to, among other amendments, increase the total amount of shares of common stock that may be offered and sold under the ATM Program from $2,000,000,000 to $2,500,000,000, which amount excludes shares the Company has previously sold pursuant to the prior program.

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

As of October 29, 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 or approximately $993,881,000 with maturity dates in 2022.

LLC, MUFG Securities Americas Inc., RBC Capital Markets, LLC, Regions Securities LLC, Scotia Capital (USA) Inc.,

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

SMBC Nikko Securities America, Inc., Synovus Securities, Inc., TD Securities (USA) LLC, Truist Securities, Inc.

and Wells Fargo Securities, LLC as sales agents and forward sellers and (ii) the forward purchasers named therein relating to issuances, offers and sales from time to time of up to $3,000,000,000 aggregate amount of common stock of Welltower Inc.

(together with the existing master forward sale confirmations relating thereto, the “ATM Program”), amending and restating the ATM Program entered into on July 30, 2021 to, among other amendments, increase the total amount of shares of common stock that may be offered and sold under the ATM Program from $2,500,000,000 to $3,000,000,000, which amount excludes shares Old Welltower had previously sold pursuant to the prior program.

The ATM Program also allows Welltower Inc.

to enter into forward sale agreements.

As of April 29, 2022, we had $3,000,000,000 of remaining capacity under the ATM Program, which excludes forward sales agreements outstanding for the sale of 4,662,141 shares or approximately $450,291,000 with maturity dates in 2023.

In addition, we have forward sale agreements for the sale of 14,847,242 shares or approximately $1,307,384,000 with maturity dates in 2023 under the July 30, 2021 ATM Program.

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

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

In connection with the filing of the new “universal” shelf registration statement, the Company also filed with the SEC two prospectus supplements that will continue offerings that were previously covered by prospectus supplements and the accompanying prospectus to the prior registration statement relating to:

(i) the registration and possible issuance of up to 620,731 shares of the Company’s common stock (the “DownREIT Shares”), that may be issued from time to time if, and to the extent that, certain holders of Class A units (the “DownREIT Units”) of HCN G&L DownREIT, LLC, a Delaware limited liability company (the “DownREIT”), tender such DownREIT Units for redemption by the DownREIT, and HCN DownREIT Member, LLC, a majority-owned indirect subsidiary of the Company (including its permitted successors and assigns, the “Managing Member”), or a designated affiliate of the Managing Member, elects to assume the redemption obligations of the DownREIT and to satisfy all or a portion of the redemption consideration by issuing DownREIT Shares to the holders instead of or in addition to paying a cash amount;

and (ii) the registration and possible issuance of up to 475,327 shares common stock (the “DownREIT II Shares”), that may be issued from time to time if, and to the extent that, certain holders of Class A units (the “DownREIT II Units,” and collectively with the DownREIT Units, the “Units”) of HCN G&L DownREIT II LLC, a Delaware limited liability company (the “DownREIT II”), tender such DownREIT II Units for redemption by the DownREIT II, and the Managing Member, or a designated affiliate of the Managing Member, elects to assume the redemption obligations of the DownREIT II and to satisfy all or a portion of the redemption consideration by issuing DownREIT II Shares to the holders instead of or in addition to paying a cash amount.

In connection with the filing of the new “universal” shelf registration statement, Welltower Inc.

also filed with the SEC two prospectus supplements that will continue offerings that were previously covered by Old Welltower’s prospectus supplements and the accompanying prospectus to the prior registration statement relating to:

(i) the registration and possible issuance of up to 620,731 shares of common stock of Welltower Inc.

(the “DownREIT Shares”), that may be issued from time to time if, and to the extent that, certain holders of Class A units (the “DownREIT Units”) of HCN G&L DownREIT, LLC, a Delaware limited liability company (the “DownREIT”), tender such DownREIT Units for redemption by the DownREIT, and HCN DownREIT Member, LLC, a majority-owned indirect subsidiary of Welltower Inc.

(including its permitted successors and assigns, the “Managing Member”), or a designated affiliate of the Managing Member, elects to assume the redemption obligations of the DownREIT and to satisfy all or a portion of the redemption consideration by issuing DownREIT Shares to the holders instead of or in addition to paying a cash amount;

and (ii) the registration and possible issuance of up to 475,327 shares common stock of Welltower Inc.

(the “DownREIT II Shares”), that may be issued from time to time if, and to the extent that, certain holders of Class A units (the “DownREIT II Units,” and collectively with the DownREIT Units, the “Units”) of HCN G&L DownREIT II LLC, a Delaware limited liability company (the “DownREIT II”), tender such DownREIT II Units for redemption by the DownREIT II, and the Managing Member, or a designated affiliate of the Managing Member, elects to assume the redemption obligations of the DownREIT II and to satisfy all or a portion of the redemption consideration by issuing DownREIT II Shares to the holders instead of or in addition to paying a cash amount.

Results of Operations

3 unchanged sentences

Seniors Housing Operating, Triple-net and Outpatient Medical.

The primary performance measures for our properties are NOI and same store NOI ("SSNOI"), and other supplemental measures include FFO and EBITDA, which are further discussed below.

The primary performance measures for our properties are NOI and same store NOI ("SSNOI"), and other supplemental measures include Funds From Operations ("FFO") and EBITDA, which are further discussed below.

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

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

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended Change Nine Months Ended Change

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

2021 2020 Amount % 2021 2020 Amount %

Three Months Ended Change

March 31, March 31,

2022 2021 Amount %

Net income $ 65,751 $ 72,192 $ (6,441) (9) %

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FFO $ 0.77 $ 0.69 $ 0.08 12 %

Interest coverage ratio 4.81 x 6.23 x (1.42) x (23) % 3.89 x 5.31 x (1.42) x (27) %

Fixed charge coverage ratio 4.22 x 5.52 x (1.30) x (24) % 3.43 x 4.74 x (1.31) x (28) %

Interest coverage ratio 4.03 x 3.56 x 0.47 x 13 %

Fixed charge coverage ratio 3.57 x 3.16 x 0.41 x 13 %

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

Seniors Housing Operating

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

QTD Pool YTD Pool

Three Months Ended Change Nine Months Ended Change

September 30, 2021 September 30, 2020 $ % September 30, 2021 September 30, 2020 $ %

Three Months Ended Change

March 31, 2022 March 31, 2021 $ %

$ 143,572 $ 151,610 $ (8,038) (5.3) %

(1) For the QTD and YTD Pools, amounts relate to 527 and 515 same store properties, respectively.

(1) For the QTD Pool, amounts relate to 532 same store properties, respectively.

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

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

Three Months Ended Change Nine Months Ended Change

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

Three Months Ended Change

March 31, March 31,

2022 2021 $ %

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Interest expense 7,650 11,418 (3,768) (33) %

Loss (gain) on extinguishment of debt, net — — — n/a (1,537) (492) (1,045) (212) %

Loss (gain) on extinguishment of debt, net (15) (4,643) 4,628 100 %

Provision for loan losses, net 267 251 16 6 %

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(1) See Non-GAAP Financial Measures below.

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

The increases were partially offset by decreases due to property dispositions.

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

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

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

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

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

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

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

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

Resident fees and services and property operating expenses increased for the three month period ended September 30, 2021 compared to the same period in the prior year primarily due to acquisitions, including the acquisition of the Holiday Retirement portfolio on July 30, 2021 for a total purchase price of $1.6 billion.

These increases were partially offset by decreases in occupancy across the portfolio due to the COVID-19 pandemic and property dispositions.

Spot occupancy remains below pre-pandemic levels, reaching a low of 72.3% on March 12, 2021 before making meaningful recovery in recent months resulting in occupancy of 76.7% as of September 30, 2021.

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) % 0.2 % 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.

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.

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.

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

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

During the nine months ended September 30, 2021, we recorded impairment charges of $22,317,000 related to two held for use properties in which the carrying values exceeded the estimated fair value.

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

During the three months ended March 31, 2021, we recorded impairment charges of $4,604,000 related to one held for use property in which the carrying value exceeded the estimated fair value.

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

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

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

During the nine months ended September 30, 2021, we completed one Seniors Housing Operating construction project representing $58,844,000 or 490,367 per unit.

The following is a summary of our Seniors Housing Operating construction projects, excluding expansions, pending as of September 30, 2021 (dollars in thousands):

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

Location Units Commitment Balance Est.

Beckenham, UK 100 $ 63,444 $ 56,657 4Q21

Hendon, UK 102 74,759 64,138 1Q22

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

During the three months ended March 31, 2022, we completed one Seniors Housing Operating construction project representing $73,458,000 or $720,176 per unit.

The following is a summary of our Seniors Housing Operating construction projects, excluding expansions, pending as of March 31, 2022 (dollars in thousands):

Location Units/Beds Commitment Balance Est.

Barnet, UK 100 $ 68,127 $ 61,496 2Q22

Georgetown, TX 188 36,215 8,158 2Q22

New Rochelle, NY 72 42,669 11,113 3Q22

Pflugerville, TX 196 39,500 6,344 3Q22

Sachse, TX 193 38,054 18,639 3Q22

Lake Jackson, TX 130 32,020 3,154 3Q22

Princeton, NJ 80 29,780 27,932 3Q22

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Beaver, PA 116 14,184 9,813 3Q22

Weymouth, MA 165 77,545 9,125 3Q23

New Rochelle, NY 72 42,669 18,184 4Q22

Pflugerville, TX 196 39,500 15,542 4Q22

Georgetown, TX 188 36,215 18,897 4Q22

Denton, TX 65 20,194 7,293 4Q22

Brookline, MA 159 145,990 38,683 2Q23

Lake Jackson, TX 130 32,020 4,378 2Q23

Charlotte, NC 328 96,416 37,707 3Q23

White Marsh, MD 188 78,610 8,535 3Q23

Weymouth, MA 165 77,545 15,999 3Q23

Glendale, AZ 204 54,250 8,518 3Q23

Miami Twp, OH 122 18,206 2,179 4Q23

Gaithersburg, MD 302 173,548 32,770 2Q24

Leander, TX 72 26,761 3,705 2Q24

Temple, TX 245 65,569 5,574 4Q24

Kyle, TX 225 62,700 4,616 1Q25

3,389 $ 1,149,734 363,645

Toronto, ON Project in planning stage 49,828

Brookline, MA Project in planning stage 28,451

Washington, DC Project in planning stage 27,363

Columbus, OH Project in planning stage 12,629

Brookhaven, GA Project in planning stage 9,385

Raleigh, NC Project in planning stage 3,476

Boise, ID (1)

Brookhaven, GA (1)

Columbus, OH (1)

Kansas City, MO (1)

Raleigh, NC (1)

Toronto, ON (1)

Washington, DC (1)

Wellesley, MA (1)

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

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

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

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

Three Months Ended Nine Months Ended

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

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

Three Months Ended

March 31, 2022 March 31, 2021

Amount Weighted Average Interest Rate Amount Weighted Average Interest Rate

Beginning balance $ 1,599,522 2.81 % $ 1,706,189 3.05 %

Debt transferred 32,478 4.79 % — — %

Debt issued 5,385 3.08 % — — %

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

Income from unconsolidated entities recognized during the nine months ended September 30, 2021 includes a gain on sale recognized from the sale of a home health business owned by one of our unconsolidated entities, offset by losses from unconsolidated entities largely attributable to depreciation and amortization of short-lived intangible assets related to certain investments in unconsolidated joint ventures.

The fluctuation in income from unconsolidated entities is primarily due to a gain recognized from the sale of a home health business owned by one of our unconsolidated entities during the three months ended March 31, 2021.

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

The decrease during the three and nine month periods ended September 30, 2020 relates primarily to our partners' share of gains on real estate dispositions partially offset by impairment charges recognized.

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

QTD Pool YTD Pool

Three Months Ended Change Nine Months Ended Change

September 30, 2021 September 30, 2020 $ % September 30, 2021 September 30, 2020 $ %

Three Months Ended Change

March 31, 2022 March 31, 2021 $ %

$ 144,488 $ 137,314 $ 7,174 5.2 %

(1) For the QTD and YTD Pools, amounts relate to 548 and 547 same store properties, respectively.

(1) For the QTD Pool, amounts relate to 533 sa me store properties.

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

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

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

Three Months Ended Change Nine Months Ended Change

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

Three Months Ended Change

March 31, March 31,

2022 2021 $ %

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Income (loss) from continuing operations before income taxes and other items 157,577 70,358 87,219 124 %

Income (loss) from unconsolidated entities 5,038 (423) 5,461 n/a 14,822 11,776 3,046 26 %

Gain (loss) on real estate dispositions, net 81,712 (619) 82,331 n/a 126,463 51,166 75,297 147 %

Income (loss) from unconsolidated entities 15,543 4,907 10,636 217 %

Gain (loss) on real estate dispositions, net 20,449 2,042 18,407 901 %

Income from continuing operations 193,569 77,307 116,262 150 %

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Net income (loss) attributable to noncontrolling interests 7,065 3,400 3,665 108 %

Net income attributable to common stockholders $ 258,539 $ 23,388 $ 235,151 n/a $ 521,293 $ 306,794 $ 214,499 70 %

Net income attributable to common stockholders $ 186,504 $ 73,907 $ 112,597 152 %

(1) See Non-GAAP Financial Measures below.

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

Rental income has increased primarily due to the timing of the establishment of reserves for straight-line rent receivable balances relating to leases for which collection of substantially all contractual lease payments is no longer deemed probable.

During the three and nine months ended September 30, 2021, we recorded reserves for previously recognized straight-line receivables of $0 and $49,241,000, respectively.

During the three and nine month periods ended September 30, 2020, we recorded $112,398,000 and $146,508,000, respectively, which included $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 recorded reserves for previously recognized straight-line receivables of $49,241,000.

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

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

For the three months ended September 30, 2021, we had 16 leases with rental rate increases ranging from 1.75% to 7.34% in our Triple-net portfolio.

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

However, long-term/post-acute facilities are generally experienced a higher degree of occupancy declines which in some cases impacted the ability of our Triple-net operators to make contractual rent payments to us.

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

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

During the 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.

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

For the three months ended March 31, 2022, we had eight leases with rental rate increases ranging from 0.26% to 57.76% in our Triple-net portfolio.

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

Long-term/post-acute facilities have generally experienced a higher degree of occupancy declines, which in some cases impacted the ability of our Triple-net operators to make contractual rent payments to us.

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

Depreciation and amortization fluctuate as a result of the acquisitions, dispositions and segment transitions of Triple-net properties.

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

During the nine months ended September 30, 2021, we recognized a provision for loan losses under the current expected credit losses accounting standard, primarily related to the initial recognition of the £540 million of senior loan financing to affiliates of Safanad as part of the recapitalization of its investment in HC-One Group during the second quarter.

The increase in interest income for the three and nine month periods ended September 30, 2021 is primarily driven by interest recognized on this loan funding.

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

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

During the nine months ended September 30, 2021, we recorded impairment charges of $24,222,000 related to four held for sale properties and two held for use properties.

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

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

The increase to interest income is primarily driven by the interest recognized on senior loan financings of £540,000,000 to affiliates of Safanad as part of the recapitalization of its investment in HC-One Group during the second quarter 2021.

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

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

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

During the nine months ended September 30, 2021, we completed one Triple-net construction project representing $22,990,000 or $280,366 per unit.

The following is a summary of Triple-net construction projects, excluding expansions, pending as of September 30, 2021 (dollars in thousands):

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

During the three months ended March 31, 2022, there were no Triple-net projects completed.

The following is a summary of our consolidated Triple-net construction projects, excluding expansions, pending as of March 31, 2022 (dollars in thousands):

Location Units/Beds Commitment Balance Est.

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551 $ 268,256 $ 136,352

During the three months ended September 30, 2021, loss (gain) on derivatives and financial instruments, net is primarily attributable to the mark-to-market of the equity warrants received as part of the Safanad/HC-One transaction that closed in the second quarter.

During the three months ended March 31, 2022, loss (gain) on derivatives and financial instruments, net is primarily attributable to the mark-to-market of the equity warrants received as part of the Safanad/HC-One transaction that closed in the second quarter of 2021.

In addition, the mark-to-market adjustment on our Genesis Healthcare available-for-sale investment is reflected in all periods.

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

Three Months Ended Nine Months Ended

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

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

Three Months Ended

March 31, 2022 March 31, 2021

Amount Weighted Average Interest Rate Amount Weighted Average Interest Rate

Beginning balance $ 72,536 4.57 % $ 123,652 4.91 %

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

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

Principal payments (221) 4.37 % (1,220) 5.15 %

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Monthly averages $ 39,914 4.39 % $ 123,126 4.96 %

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

A portion of our Triple-net properties were formed through partnerships.

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

The increase in income from unconsolidated entities during the three months ended September 30, 2021 is primarily related to the reserves established on straight-line receivable balances at unconsolidated Genesis Healthcare entities in the prior year.

The increase in income from unconsolidated entities during the three months ended March 31, 2022 is primarily related to the write off of straight-line rent payable balances on an unconsolidated joint venture that was restructured during the quarter.

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

The decrease during the nine months ended September 30, 2021, relates primarily to our partner's share of a gain on sale of certain properties in the prior year.

The increase for the three months ended March 31, 2022 compared to the same period in the prior year, is primarily due to a restructure and segment transition related to one of our partners.

Outpatient Medical

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

QTD Pool YTD Pool

Three Months Ended Change Nine Months Ended Change

September 30, 2021 September 30, 2020 $ % September 30, 2021 September 30, 2020 $ %

Three Months Ended Change

March 31, 2022 March 31, 2021 $ %

$ 103,168 $ 100,040 $ 3,128 3.1 %

(1) For the QTD and YTD Pools, amounts relate to 350 and 331 same store properties, respectively.

(1) For the QTD Pool, amounts relate to 351 same store properties.

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

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

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

Three Months Ended Change Nine Months Ended Change

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

Three Months Ended Change

March 31, March 31,

2022 2021 $ %

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Provision for loan losses, net (6) 279 (285) (102) %

Impairment of assets — — — n/a 2,211 — 2,211 n/a

Other expenses 789 712 77 11 %

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Net income (loss) 49,403 103,932 (54,529) (52) %

Net income (loss) attributable to noncontrolling interests 934 154 780 506 % 3,733 (370) 4,103 n/a

Net income (loss) attributable to noncontrolling interests 2,142 2,170 (28) (1) %

Net income (loss) attributable to common stockholders $ 47,261 $ 101,762 $ (54,501) (54) %

(1) See Non-GAAP Financial Measures.

Rental income has decreased due primarily to significant dispositions that closed during 2020.

Rental income has increased due primarily to acquisitions and construction conversions that occurred during 2021.

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

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

For the three months ended September 30, 2021, our consolidated outpatient medical portfolio signed 55,028 square feet of new leases and 326,222 square feet of renewals.

The weighted-average term of these leases was seven years, with a rate of $42.91 per square foot and tenant improvement and lease commission costs of $22.4 per square foot.

For the three months ended March 31, 2022, our consolidated outpatient medical portfolio signed 88,145 square feet of new leases and 418,329 square feet of renewals.

The weighted-average term of these leases was eight years, with a rate of $44.19 per square foot and tenant improvement and lease commission costs of $37.73 per square foot.

Substantially all of these leases contain an annual fixed or contingent escalation rent structure ranging from 1.5% to 5.0%.

We have collected virtually all rent due through the nine months ended September 30, 2021, 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.

The increase in interest income for the nine months ended September 30, 2021 is due primarily to a $178,207,000 first mortgage loan initiated in August 2020 which was subsequently repaid in full in June of 2021, resulting in the reversal of the previously established allowance for credit losses.

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

The decrease in interest income for the three months ended March 31, 2022 is due primarily to a $178,207,000 first mortgage loan which was repaid in full in June of 2021.

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

The fluctuation in property operating expenses and depreciation and amortization are primarily attributable to acquisitions and construction conversions that occurred during 2021.

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

During the nine months ended September 30, 2021, we recognized an impairment charge of $2,211,000 related to one held for sale property.

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

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

The fluctuation in other expenses is primarily due to noncapitalizable transaction costs.

During the nine months ended September 30, 2021, we completed two Outpatient Medical construction project representing $ 116,612,000 or $642 per square foot.

The following is a summary of the Outpatient Medical construction projects, excluding expansions, pending as of September 30, 2021 (dollars in thousands):

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

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

During the three months ended March 31, 2022, there were no Outpatient Medical projects completed.

T he following is a summary of the consolidated Outpatient Medical construction projects, excluding expansions, pending as of March 31, 2022 (dollars in thousands):

Location Square Feet Commitment Balance Est.

College Station, TX 25,200 $ 9,025 $ 5,581 4Q21

Norman, OK 47,082 21,792 2,308 3Q22

Tyler, TX 85,214 $ 35,369 $ 21,071 4Q22

Stafford, TX 36,788 18,031 6,172 4Q22

122,002 $ 53,400 27,243

Beaumont, TX (1)

Total $ 27,272

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

Total interest expense represents secured debt interest expense.

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

Three Months Ended Nine Months Ended

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

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

Three Months Ended

March 31, 2022 March 31, 2021

Amount Weighted Average Interest Rate Amount Weighted Average Interest Rate

Beginning balance $ 530,254 3.49 % $ 548,229 3.55 %

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

During the three months ended September 30, 2021, the loss from unconsolidated entities is largely attributable to depreciation and amortization of short-lived intangible assets related to certain investments in unconsolidated joint ventures.

During the three months ended March 31, 2021, the loss from unconsolidated entities is largely attributable to depreciation and amortization of short-lived intangible assets related to certain investments in unconsolidated joint ventures.

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

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

Three Months Ended Change Nine Months Ended Change

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

2021 2020 $ % 2021 2020 $ %

$ 790 $ 1,177 $ (387) (33) % $ 2,175 $ 1,968 $ 207 11 %

Total revenue

Three Months Ended Change

March 31, March 31,

2022 2021 $ %

Other income $ 606 $ 955 $ (349) (37) %

Total revenues 606 955 (349) (37) %

Property operating expenses 2,615 1,654 961 58 %

(2,264) (541) (1,723) (318) % (4,707) 250 (4,957) n/a

Interest expense

(2,009) (699) (1,310) (187) %

Interest expense 109,165 105,827 3,338 3 %

General and administrative expenses 37,706 29,926 7,780 26 %

32,256 31,003 1,253 4 % 93,618 100,546 (6,928) (7) %

Loss (gain) on extinguishment of debt, net

— 33,004 (33,004) (100) % 52,506 33,004 19,502 59 %

Other expenses 6,045 1,840 4,205 229 %

152,916 137,593 15,323 11 %

140,793 171,243 (30,450) (18) % 471,275 471,207 68 — %

Loss from continuing operations before income taxes and other items (154,925) (138,292) (16,633) (12) %

Income tax (expense) benefit (4,940) (2,003) (2,937) (147) % (6,662) (9,678) 3,016 31 %

Income tax benefit (expense) (5,013) (3,943) (1,070) (27) %

Loss from continuing operations (159,938) (142,235) (17,703) (12) %

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(1) See Non-GAAP Financial Measures.

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

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

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

Three Months Ended Change Nine Months Ended Change

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

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

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

Three Months Ended Change

March 31, March 31,

2022 2021 $ %

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Please refer to Note 10 for additional information regarding our unsecured revolving credit facility and commercial paper program.

The loss on extinguishment recognized during the nine months ended September 30, 2021 is due primarily to the early extinguishment of $339,128,000 of our 3.75% senior unsecured notes due March 2023 and $334,624,000 of our 3.95% senior unsecured notes due September 2023.

The loss on extinguishment recognized during the nine months ended September 30, 2020 is due primarily to the early extinguishment of $160,872,000 of our 3.75% senior unsecured notes due March 2023 and $265,376,000 of of our 3.95% senior unsecured notes due September 2023.

General and administrative expenses as a percentage of consolidated revenues for the three months ended September 30, 2021 and 2020 were 2.60% and 2.99%, respectively.

Loan expenses represent the amortization of costs incurred in connection with senior unsecured notes issuances.

General and administrative expenses as a percentage of consolidated revenues for the three months ended March 31, 2022 and 2021 were 2.70% and 2.84%, respectively.

Other expenses includes legal expenses related to the planned UPREIT merger and reorganization.

The provision for income taxes primarily relates to state taxes, foreign taxes and taxes based on income generated by entities that are structured as TRSs.

The fluctuation in the provision for income taxes is primarily related to a revaluation of deferred taxes due to a change in the U.K.

tax rate and an adjustment to a deferred tax liability due to the recognition of an impairment charge.

Non-GAAP Financial Measures

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As used herein, same store is generally defined as those revenue-generating properties in the portfolio for the relevant year-over-year reporting periods.

Acquisitions and development conversions are included in SSNOI five full quarters or seven full quarter after acquisition or being placed into service for the QTD Pool and YTD Pool, respectively.

Acquisitions and development conversions are included in SSNOI five full quarters after acquisition or being placed into service for the QTD Pool.

Land parcels, loans and sub-leases, as well as any properties sold or classified as held for sale during the respective periods, are excluded from SSNOI.

Redeveloped properties (including major refurbishments of a Seniors Housing Operating property where 20% or more of units are simultaneously taken out of

Redeveloped properties (including major refurbishments of a Seniors Housing Operating property where 20% or more of units are simultaneously taken out of commission for 30 days or more or Outpatient Medical properties undergoing a change in intended use) are excluded from SSNOI until five full quarters post completion of the redevelopment for the QTD Pool.

Properties undergoing operator transitions and/or segment transitions are also excluded from

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

commission for 30 days or more or Outpatient Medical properties undergoing a change in intended use) are excluded from SSNOI until five full quarters or seven full quarters post completion of the redevelopment for the QTD Pool and YTD Pool, respectively.

Properties undergoing operator transitions and/or segment transitions are also excluded from SSNOI until five full quarters or seven full quarters post completion of the transition for the QTD Pool and YTD Pool, respectively.

In addition, properties significantly impacted by force majeure, acts of God, or other extraordinary adverse events are excluded from SSNOI until five full quarters or seven full quarters after the properties are placed back into service for the QTD Pool and YTD Pool, respectively.

SSNOI until five full quarters post completion of the transition for the QTD Pool.

In addition, properties significantly impacted by force majeure, acts of God, or other extraordinary adverse events are excluded from SSNOI until five full quarters after the properties are placed back into service for the QTD Pool.

SSNOI excludes non-cash NOI and includes adjustments to present consistent ownership percentages and to translate Canadian properties and U.K.

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EBITDA is defined as earnings (net income) before interest, taxes, depreciation and amortization.

Adjusted EBITDA is defined as EBITDA excluding unconsolidated entities and including adjustments for stock-based compensation expense, provision for loan losses, gains/losses on extinguishment of debt, gains/loss/impairments on properties, gains/losses on derivatives and financial instruments, other expense, other impairment charges and other adjustments deemed appropriate.

Adjusted EBITDA is defined as EBITDA excluding unconsolidated entities and including adjustments for stock-based compensation expense, provision for loan losses, gains/losses on extinguishment of debt, gains/loss/impairments on properties, gains/losses on derivatives and financial instruments, other expenses, other impairment charges and other adjustments deemed appropriate.

We believe that EBITDA and Adjusted EBITDA, along with net income, are important supplemental measures because they provide additional information to assess and evaluate the performance of our operations.

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Our leverage ratios are defined as the proportion of net debt to total capitalization and include book capitalization, undepreciated book capitalization and market capitalization.

Book capitalization represents the sum of net debt (defined as total long-term debt, excluding operating lease liabilities, less cash and cash equivalents and any IRC Section 1031 deposits), total equity and redeemable noncontrolling interests.

Book capitalization represents the sum of net debt (defined as total long-term debt, excluding operating lease liabilities, less cash and cash equivalents and restricted cash), total equity and redeemable noncontrolling interests.

Undepreciated book capitalization represents book capitalization adjusted for accumulated depreciation and amortization.

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Three Months Ended

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

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

FFO Reconciliation:

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

Nine Months Ended

September 30, September 30,

FFO Reconciliations:

Net income attributable to common stockholders $ 277,466 $ 815,115

Depreciation and amortization 753,065 795,704

Impairment of assets 48,750 126,291

Loss (gain) on real estate dispositions, net (223,702) (902,991)

Noncontrolling interests (40,202) (3,389)

Unconsolidated entities 66,369 46,005

FFO $ 881,746 $ 876,735

Average diluted common shares outstanding:

422,835 416,860

Per diluted share data:

Net income attributable to common stockholders (1)

$ 0.65 $ 1.94

FFO $ 2.09 $ 2.10

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

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

The table below reflects the reconciliation of consolidated NOI to net income, the most directly comparable U.S.

GAAP measure, for the periods presented.

Dollar amounts are in thousands.

Three Months Ended

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

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

NOI Reconciliations:

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Total NOI $ 542,035 $ 524,085 $ 510,397 $ 498,335 $ 434,736

Nine Months Ended

September 30, 2021 September 30, 2020

NOI Reconciliations:

Net income (loss) $ 308,285 $ 883,574

Loss (gain) on real estate dispositions, net (223,702) (902,991)

Loss (income) from unconsolidated entities 10,759 8,341

Income tax expense (benefit) 6,662 9,678

Other expenses 26,256 37,247

Impairment of assets 48,750 126,291

Provision for loan losses, net 7,309 11,351

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

Loss (gain) on derivatives and financial instruments, net (6,503) 10,480

General and administrative expenses 93,618 100,546

Depreciation and amortization 753,065 795,704

Interest expense 368,005 393,215

Consolidated net operating income (NOI) $ 1,443,468 $ 1,506,689

NOI by segment:

Seniors Housing Operating $ 503,531 $ 595,755

Triple-net 610,276 522,844

Outpatient Medical 334,368 387,840

Non-segment/corporate (4,707) 250

Total NOI $ 1,443,468 $ 1,506,689

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

QTD Pool YTD Pool

The following is a reconciliation of the properties included in our QTD Pool for SSNOI:

SSNOI Property Reconciliations:

Seniors Housing Operating Triple-net Outpatient Medical Total Seniors Housing Operating Triple-net Outpatient Medical Total

Seniors Housing Operating Triple-net Outpatient Medical Total

Consolidated properties 774 578 311 1,663

690 619 297 1,606 690 619 297 1,606

Unconsolidated properties 95 39 79 213

91 39 79 209 91 39 79 209

Total properties 869 617 390 1,876

781 658 376 1,815 781 658 376 1,815

Recent acquisitions/development conversions (1)

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Under development (36) (5) (4) (45)

(33) (5) (3) (41) (33) (5) (3) (41)

Under redevelopment (2)

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Current held for sale (3) (13) (1) (17)

(2) (20) (2) (24) (2) (20) (2) (24)

Land parcels, loans and subleases (23) (11) (6) (40)

(11) (21) (6) (38) (11) (21) (6) (38)

Transitions (3)

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Same store properties 532 533 351 1,416

527 548 350 1,425 515 547 331 1,393

(1) Acquisitions and development conversions will enter the QTD Pool and YTD Pool after five full quarters and seven full quarters after acquisition or certificate of occupancy, respectively.

(2) Redevelopment properties will enter the QTD Pool and YTD Pool after five full quarters and seven full quarters of operations post redevelopment completion, respectively.

(3) Transitioned properties will enter the QTD Pool and YTD Pool after five full quarters and seven full quarters of operations with the new operator in place or under the new structure, respectively.

(1) Acquisition and development conversions will enter the QTD Pool five full quarters after acquisition or certificate of occupancy.

(2) Redevelopment properties will enter the QTD Pool five full quarters of operations post redevelopment completion.

(3) Transitioned properties will enter the QTD Pool five full quarters of operations with the new operator in place or under the new structure.

(4) Represents properties that are either closed or being closed.

QTD Pool YTD Pool

Three Months Ended Nine Months Ended

The following is a reconciliation of our consolidated NOI to same store NOI for the periods presented for the respective pools.

Dollar amounts are in thousands.

Three Months Ended

SSNOI Reconciliations:

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

March 31, 2022 March 31, 2021

Seniors Housing Operating:

Consolidated NOI $ 206,684 $ 170,434

$ 172,909 $ 174,361 $ 503,531 $ 595,755

NOI attributable to unconsolidated investments 12,751 17,324

10,548 12,323 33,757 40,554

NOI attributable to noncontrolling interests (24,392) (15,698)

(15,602) (11,306) (48,168) (40,803)

NOI attributable to non-same store properties (51,575) (19,399)

(23,506) (9,723) (52,643) (51,989)

Non-cash NOI attributable to same store properties (74) (865)

(85) (1,064) 11,332 (2,994)

Currency and ownership adjustments (1)

(220) 1,554 (1,856) 6,330

SSNOI at Welltower Share 143,572 151,610

Consolidated NOI 223,952 155,641

228,321 108,361 610,276 522,844

NOI attributable to unconsolidated investments 9,955 8,382

4,891 (1,288) 14,666 8,978

NOI attributable to noncontrolling interests (15,338) (11,531)

(13,204) (14,328) (35,253) (43,702)

NOI attributable to non-same store properties (63,557) (7,031)

(70,250) 32,109 (187,531) (56,754)

Non-cash NOI attributable to same store properties (11,356) (10,141)

(7,073) 16,160 22,807 (7,075)

Currency and ownership adjustments (1)

5 1,683 49 5,360

SSNOI at Welltower Share 144,488 137,314

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Consolidated NOI 113,408 109,360

111,431 119,976 334,368 387,840

NOI attributable to unconsolidated investments 4,830 4,724

4,604 3,006 14,316 6,530

NOI attributable to noncontrolling interests (5,240) (4,686)

(4,828) (4,561) (12,584) (11,923)

NOI attributable to non-same store properties (7,798) (5,562)

(8,623) (8,521) (40,300) (55,880)

Non-cash NOI attributable to same store properties (2,096) (2,656)

(1,892) (3,590) (5,993) (9,762)

Currency and ownership adjustments (1)

296 (10,052) (899) (37,923)

SSNOI at Welltower Share 103,168 100,040

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Three Months Ended

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

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

EBITDA Reconciliations:

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Total interest 123,066 122,091 121,730 123,231 124,647

121,730 123,231 124,647 123,672 124,825 128,984 138,628

EBITDA $ 496,548 $ 474,594 $ 585,552 $ 406,762 $ 443,703

Interest coverage ratio

4.81 x 3.30 x 3.56 x 4.20 x 6.23 x 4.29 x 5.42 x

Fixed Charge Coverage Ratio:

Total interest $ 121,730 $ 123,231 $ 124,647 $ 123,672 $ 124,825 $ 128,984 $ 138,628

Secured debt principal payments 17,040 15,715 15,955 16,122 15,876 15,183 15,526

Total fixed charges

138,770 138,946 140,602 139,794 140,701 144,167 154,154

EBITDA $ 585,552 $ 406,762 $ 443,703 $ 519,474 $ 777,364 $ 553,177 $ 751,630

Fixed charge coverage ratio

4.22 x 2.93 x 3.16 x 3.72 x 5.52 x 3.84 x 4.88 x

Nine Months Ended

September 30, September 30,

EBITDA Reconciliations:

Net income (loss) $ 308,285 $ 883,574

Interest expense 368,005 393,215

Income tax expense (benefit) 6,662 9,678

Depreciation and amortization 753,065 795,704

EBITDA $ 1,436,017 $ 2,082,171

Interest Coverage Ratio:

Interest expense $ 368,005 $ 393,215

Non-cash interest expense (12,424) (14,012)

Capitalized interest 14,027 13,234

Total interest 369,608 392,437

EBITDA $ 1,436,017 $ 2,082,171

Interest coverage ratio 3.89 x 5.31 x

Interest coverage ratio 4.03 x 3.89 x 4.81 x 3.30 x 3.56 x

Fixed Charge Coverage Ratio:

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EBITDA $ 496,548 $ 474,594 $ 585,552 $ 406,762 $ 443,703

Fixed charge coverage ratio 3.43 x 4.74 x

Fixed charge coverage ratio 3.57 x 3.42 x 4.22 x 2.93 x 3.16 x

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

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Twelve Months Ended

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

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

Adjusted EBITDA Reconciliations:

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Depreciation and amortization 1,097,228 1,037,566 995,798 983,576 1,008,062

1,955,491 2,147,303 2,293,718 2,601,645 2,711,767 2,996,091 2,983,941

EBITDA 1,963,456 1,910,611 1,955,491 2,147,303 2,293,718

Loss (income) from unconsolidated entities 38,866 22,933 10,501 650 (8,658)

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Total interest 490,118 491,699 493,280 496,375 502,128

493,280 496,375 502,128 516,109 528,219 542,897 558,426

Adjusted EBITDA $ 1,957,441 $ 1,913,546 $ 1,888,920 $ 1,896,059 $ 1,927,414

Adjusted interest coverage ratio

3.83 x 3.82 x 3.84 x 3.97 x 4.07 x 4.14 x 4.18 x

Adjusted interest coverage ratio 3.99 x 3.89 x 3.83 x 3.82 x 3.84 x

Adjusted Fixed Charge Coverage Ratio:

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Total fixed charges 555,718 557,286 558,112 560,043 565,264

558,112 560,043 565,264 578,816 588,781 600,704 614,734

Adjusted EBITDA $ 1,957,441 $ 1,913,546 $ 1,888,920 $ 1,896,059 $ 1,927,414

Adjusted fixed charge coverage ratio

3.38 x 3.39 x 3.41 x 3.54 x 3.65 x 3.74 x 3.80 x

Adjusted fixed charge coverage ratio 3.52 x 3.43 x 3.38 x 3.39 x 3.41 x

(1) Certain severance-related costs are included in stock-based compensation and excluded from other expenses.

(2) Represents $13,214,000 of revenues and $12,574,000 of property operating expenses associated with a leasehold portfolio interest relating to 26 properties assumed by a wholly-owned affiliate in conjunction with the Holiday Retirement transaction.

(2) Represents revenues and property operating expenses associated with a leasehold portfolio interest relating to 26 properties assumed by a wholly-owned affiliate in conjunction with the Holiday Retirement transaction.

Subsequent to the initial transaction, we purchased eight of the leased properties and one of the properties was sold by the landlord and removed from the lease.

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Our leverage ratios include book capitalization, undepreciated book capitalization and market capitalization.

Book capitalization represents the sum of net debt (defined as total long-term debt less cash and cash equivalents and any IRC Section 1031 deposits), total equity and redeemable noncontrolling interests.

Book capitalization represents the sum of net debt (defined as total long-term debt less cash and cash equivalents and restricted cash), total equity and redeemable noncontrolling interests.

Undepreciated book capitalization represents book capitalization adjusted for accumulated depreciation and amortization.

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

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

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

2022 2021 2021 2021 2021

3 unchanged sentences

14,352,529 13,917,702 13,488,656 13,572,816 14,618,713

Cash and cash equivalents (2)

Cash and cash equivalents and restricted cash

(367,043) (346,755) (362,645) (808,705) (2,558,822)

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

43% 43% 42% 41% 41% 43% 44%

Undepreciated book capitalization:

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Net debt to market capitalization ratio 24% 26% 27% 26% 28%

27% 26% 28% 30% 33% 36% 40%

(1) Amounts include senior unsecured notes, secured debt and lease liabilities related to financing leases, as reflected on our Consolidated Balance Sheets.

Operating lease liabilities related to the ASC 842 adoption are excluded.

(2) Inclusive of IRC Section 1031 deposits, if any.

(2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests as reflected on our Consolidated Balance Sheets.

Critical Accounting Policies

Critical Accounting Policies and Estimates

Our unaudited consolidated financial statements are prepared in accordance with U.S.

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

Management has discussed the development and selection of its critical accounting policies with the Audit Committee of the Board of Directors.

Management has discussed the development and selection of its critical accounting policies and estimates with the Audit Committee of the Board of Directors.

Management believes the current assumptions and other considerations used to estimate amounts reflected in our unaudited consolidated financial statements are appropriate and are not reasonably likely to change in the future.

1 unchanged sentence

If actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our unaudited consolidated financial statements, the resulting changes could have a material adverse effect on our consolidated results of operations, liquidity and/or financial condition.

Please refer to Note 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 for further information regarding significant accounting policies that impact us.

Please refer to Note 2 to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 for further information on significant accounting policies that impact us.

There have been no material changes to these policies in 2022.

51 unchanged sentences

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 2. Management’s Discussion and Analysis