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

~~(2)~~

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


~~(3)~~	~~During the six months ended June 30, 2020 and year ended December 31, 2019, there were no material transfers of financial assets or liabilities within the fair value hierarchy.~~

~~NOTE 17. Derivative Financial Instruments~~

~~The following table summarizes the Company’s outstanding swap contracts as of June 30, 2020 (dollars in thousands):~~

Date Entered Maturity Date Hedge Designation Notional Pay Rate Receive Rate
Fair Value⁽¹⁾
Interest rate:

July 2005⁽²⁾
July 2020 Cash Flow $ 41,305
3.82% BMA Swap Index $ (64 )

~~______________________________________~~


~~(1)~~	~~Derivative liabilities are recorded in accounts payable, accrued liabilities, and other liabilities in the consolidated balance sheets.~~


~~(2)~~	~~Represents 3 interest-rate swap contracts, which hedge fluctuations in interest payments on variable-rate secured debt due to overall changes in hedged cash flows.~~

The Company uses derivative instruments to mitigate the effects of interest rate fluctuations on specific forecasted transactions as well as recognized financial obligations or assets. Utilizing derivative instruments allows the Company to manage the risk of fluctuations in interest rates related to the potential impact these changes could have on future earnings and forecasted cash flows. The Company does not use derivative instruments for speculative or trading purposes. ~~Assuming a one percentage point shift in the underlying interest rate curve, the estimated change in fair value of each of the underlying derivative instruments would not exceed $1 million.~~

In ~~August 2020,~~March 2021, the Company ~~replaced~~repaid $39 million of variable rate secured debt on 2 SHOP assets classified as discontinued operations as of March 31, 2021 and terminated the ~~swap contracts in the table above with 3 new~~2 remaining related interest-rate swap ~~contracts totaling $41 million~~contracts. Therefore, at March 31, 2021, the Company had 0 remaining interest-rate swap contracts.

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

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


	March 31, 2021		December 31, 2020
Refundable entrance fees	$	311,410	$	317,444
Construction related accrued liabilities	107,798		95,293
Accrued interest	36,013		78,735
Other accounts payable and accrued liabilities	241,819		271,919
Accounts payable, accrued liabilities, and other liabilities	$	697,040	$	763,391

Table of ~~notional, which mature in August 2025 and are designated as an effective cash flow hedge.~~Contents

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

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

Cautionary Language Regarding Forward-Looking Statements

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

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

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

~~the severity and duration of the COVID-19 pandemic;~~

~~actions that have been taken and may continue to be taken by governmental authorities to contain the COVID-19 outbreak or to treat its impact;~~

~~the impact of~~ •the COVID-19 pandemic and health and safety measures ~~taken~~intended to ~~slow~~reduce its spread;

•operational risks associated with third party management contracts, including the additional regulation and liabilities of our RIDEA lease structures;

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

~~the imposition of laws or regulations prohibiting eviction of~~•increased competition, operating costs and market changes affecting our tenants, or operators ~~including new governmental efforts in response to COVID-19;~~and borrowers;

•the financial condition of our ~~existing and future~~ tenants, operators and borrowers, including potential bankruptcies and downturns in their businesses, and their legal and regulatory ~~proceedings, which may result in uncertainties regarding our ability to continue to realize the full benefit of such tenants’ and operators’ leases and borrowers’ loans;~~proceedings;

•our concentration of investments in the healthcare property sector, ~~particularly in senior housing, life sciences and medical office buildings,~~ which makes ~~our profitability more~~us vulnerable to a downturn in a specific sector than if we ~~were investing~~invested in multiple industries;

the effect on us and our tenants and operators of legislation, executive orders and other legal requirements, including compliance with the Americans with Disabilities Act, fire, safety and health regulations, environmental laws, the Affordable Care Act, licensure, certification and inspection requirements, and laws addressing entitlement programs and related services, including Medicare and Medicaid, which may result in future reductions in reimbursements or fines for noncompliance;

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

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

•changes within the ~~potential impact~~life science industry;

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

•the ability of the hospitals on whose campuses our MOBs are located and their affiliated healthcare systems to remain competitive or financially viable;

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

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

•uninsured or underinsured losses, ~~including as a~~which could result ~~of hurricanes, earthquakes and other natural disasters, pandemics such as COVID-19, acts of war and/or terrorism and other events that may cause such~~in significant losses and/or performance declines by us or our tenants and operators;

~~the risks associated with~~

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

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

•competition for ~~the acquisition and financing of~~ suitable healthcare properties ~~as well as competition for tenants and operators, including with respect~~ to ~~new leases and mortgages and the renewal or rollover of existing leases;~~grow our investment portfolio;

our, or our counterparties’, ability to fulfill obligations, such as financing conditions and/or regulatory approval requirements, required to successfully consummate acquisitions, dispositions, transitions, developments, redevelopments, joint venture transactions or other transactions;

•our ability to ~~achieve the benefits of~~make material acquisitions ~~or other investments within expected time frames or at all, or within expected cost projections;~~and successfully integrate them;

•the potential impact on us and our tenants, operators and borrowers from ~~current and future~~ litigation matters, including ~~the possibility of larger than expected litigation costs, adverse results~~rising liability and ~~related developments;~~insurance costs;

changes in federal, state or local laws and regulations, including those affecting the healthcare industry that affect our costs of compliance or increase the costs, or otherwise affect the operations, of our tenants and operators;

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

•laws or regulations prohibiting eviction of our tenants;

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

•required regulatory approvals to transfer our healthcare properties;

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

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

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

•our participation in the CARES Act Provider Relief Program and other COVID-19 related stimulus and relief programs;

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

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

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

•changes in global, national and local economic and other ~~conditions, including the ongoing economic downturn, volatility~~conditions;

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

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

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

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

•calculating non-REIT tax earnings and profits;

•ownership limits in ~~the terms of such indebtedness;~~our charter that restrict ownership in our stock;

~~competition for skilled management and other key personnel;~~

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

•unfavorable litigation resolution or disputes; and

•the loss or limited availability of our ~~ability to maintain our qualification as a real estate investment trust (“REIT”).~~key personnel.

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

COVID-19 Infection Information

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

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Overview

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

•Executive Summary

•COVID-19 Update

~~2020~~•2021 Transaction Overview

•Dividends

•Results of Operations

•Liquidity and Capital Resources

•Contractual Obligations and Off-Balance Sheet Arrangements

•Non-GAAP Financial Measures Reconciliations

•Critical Accounting Policies and Recent Accounting Pronouncements

Executive Summary

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

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

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

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At ~~June 30, 2020,~~March 31, 2021, our portfolio of investments, including properties in our unconsolidated joint ventures and excluding investments classified as discontinued operations, consisted of interests in ~~633~~463 properties. The following table summarizes information for our reportable segments, excluding discontinued operations, for the three months ended ~~June 30, 2020~~March 31, 2021 (dollars in thousands):


Segment	Total Portfolio Adjusted NOI⁽¹⁾		Percentage of Total Portfolio Adjusted NOI⁽¹⁾		Number of Properties	Segment	Total Portfolio Adjusted NOI(1)(2)		Percentage of Total Portfolio Adjusted NOI(1)		Number of Properties
Senior housing triple-net	$	24,104	9	%	62
SHOP	26,288		9	%	139
CCRC	32,056		11	%	17
Life science	101,473		36	%	135	Life science	$	119,530	48	%	141
Medical office	85,911		31	%	269	Medical office	101,156		40	%	286
CCRC						CCRC	26,221		10	%	17
Other non-reportable	10,749		4	%	11	Other non-reportable	4,497		2	%	19
Totals	$	280,581	100	%	633	Totals	$	251,404	100	%	463

(1)Total Portfolio metrics include results of operations from disposed properties ~~and properties that transferred segments~~ through the disposition ~~or transfer~~ date. See ~~Item~~“Item 2, Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations–~~Operations—Non-GAAP Financial ~~Measures~~Measures” for additional information regarding Adjusted NOI and see Note 1314 to the Consolidated Financial Statements for a reconciliation of Adjusted NOI by segment to net income (loss).

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

For a description of our significant activities during ~~2020,~~2021, see “Item 2, Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations–2020~~Operations—2021 Transaction Overview” in this report.

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

~~(i)~~

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

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

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

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

~~Our~~ ~~real estate~~: Our portfolio is grounded in high-quality properties in desirable locations. We focus on three purposely selected private pay asset classes, senior housing, life science and medical office, to provide stability through inevitable market cycles.


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


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


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

COVID-19 Update

Beginning in late 2019, a novel strain of Coronavirus (“COVID-19”) began to spread throughout the world, including the United States, ultimately being declared a pandemic by the World Health Organization. Global health concerns and increased efforts to reduce the spread of the ~~COVID-19~~Coronavirus (“COVID-19”) pandemic have prompted federal, state, and local governments to restrict normal daily activities, and have resulted in travel bans, quarantines, school closings, “shelter-in-place” orders requiring individuals to remain in their homes other than to conduct essential services or activities, as well as business limitations and shutdowns, which resulted in closure of many businesses deemed to be non-essential. Although ~~some~~most of these restrictions have since been lifted or scaled back, ~~a recent surge~~certain restrictions remain in place and any future surges of COVID-19 ~~has resulted in the re-imposition of certain restrictions and~~or its variants may lead to other restrictions being re-implemented in response to efforts to reduce the ~~spread of COVID-19.~~spread. In addition, our tenants, operators and borrowers ~~are facing~~have faced significant cost increases as a result of increased health and safety measures, including increased staffing demands for patient care and sanitation, as well as increased usage and inventory of critical medical supplies and personal protective equipment. These health and safety measures ~~which may remain~~have been in place ~~for a significant amount~~since the onset of ~~time, are placing~~the pandemic, continue to place a substantial strain on the business operations of many of our tenants, operators, and borrowers.

~~SHOP, CCRC, and~~

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Senior Housing ~~Triple-Net~~

Within our SHOP and CCRC properties, occupancy rates have declined ~~quarter-over-quarter and we expect~~since the onset of the pandemic, a trend that ~~trend to~~may continue during the pandemic and for some period thereafter as a result of a reduction in, or in some cases prohibitions on, new tenant move-ins due to stricter move-in criteria, lower inquiry volumes, and reduced in-person tours, as well as incidences of COVID-19 outbreaks at our facilities or the perception that outbreaks may occur. Outbreaks, which directly affect our residents and the employees at our senior housing facilities, have and could continue to materially and adversely disrupt operations, as well as cause significant reputational harm to us, our operators, and our tenants.As of ~~July 31, 2020, we~~May 3, 2021, 55 of the remaining 62 senior housing properties in our portfolio had ~~confirmed~~ resident COVID-19 cases at ~~111~~some point during the pandemic, although cases have declined dramatically in those properties since the introduction of ~~our 218 senior housing properties.~~vaccines. Our senior housing property operators ~~are also facing~~have experienced significant cost increases as a result of higher staffing hours and compensation, the implementation of increased health and safety measures and protocols, and increased usage and inventory of critical medical supplies and personal protective equipment. We have seen some abatement in those costs as resident caseloads have declined, but this could change if there are new surges. At our SHOP and CCRC facilities, we bear these significant cost increases.

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

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

Medical Office Portfolio

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

We implemented a deferred rent program ~~for May~~during the second and ~~June~~third quarters of 2020 that was limited to certain non-health system and non-hospital tenants in good standing, which ~~has~~ reduced our cash collections during those months, although we ~~are requiring~~required that the deferred rent be repaid ratably by the end of 2020. Under this program, we agreed to defer approximately $6 million of rent through ~~June 30,~~December 31, 2020, all of which had been collected as of December 31, 2020. No such deferrals were granted during the three months ended March 31, 2021. We may also ~~determine to~~ implement a deferred rent program for future periods.

Life Science Portfolio

Within our life science portfolio, we have numerous tenants that are working tirelessly to address critical research and testing needs in the fight against COVID-19. We are focused on providing our tenants with the necessary space to complete their critical work and are in continuous contact with our tenants regarding how we can help them meet their needs. Through ~~June 30,~~December 31, 2020, we had provided approximately $1 million of rent deferrals to our life science tenants, all of which iswas required to be repaid by the end of 2020.

As of December 31, 2020, all of the deferred rent had been collected. No such deferrals were granted during the three months ended March 31, 2021.

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

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Liquidity

We believe that we are well positioned to manage the short-term and long-term impacts of the COVID-19 pandemic and the measures to slow its spread while working closely with our tenants, operators, and borrowers as they navigate the pandemic.We had approximately ~~$2.85~~$1.85 billion of liquidity available, including ~~$2.5~~$1.72 billion borrowing capacity under our ~~unsecured revolving~~bank line of credit facility and ~~$350~~$133 million of cash and cash equivalents, as of ~~July 31, 2020.~~May 3, 2021~~Additionally, after completing the July 2020 redemption of $300 million of senior unsecured notes due in 2022, we have no significant debt maturities until 2023.~~. While a future downgrade in our credit ratings would adversely impact our cost of borrowing, we believe we continue to have access to the unsecured debt markets. We could also seek to enter into one or more secured debt financings, issue additional securities, including under our 2020 ATM Program (as defined below), or dispose of certain additional assets to fund future operating costs, capital expenditures, or acquisitions, although no assurances can be made in this regard.

Future Rent Collections

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

Employee Update

We have taken, and will continue to take, proactive measures to provide for the well-being of our workforce. We have maximized our systems infrastructure as well as virtual and remote working technologies for our employees, including our executive team, to ensure productivity and connectivity internally, as well as with key third-party relationships.

The extent of the impact of the COVID-19 pandemic on our business and financial results will depend on future developments, including the duration, severity, and spread of COVID-19, health and safety actions taken to contain its spread, any ~~possible resurgence~~new surges of COVID-19, ~~that may occur after~~ the ~~initial~~severity of outbreak ~~subsides,~~of new strains of COVID-19, the timing and distribution of vaccines and other treatments, and how quickly and to what extent normal economic and operating conditions can resume within the markets in which we operate, each of which are highly uncertain at this time and outside of our control.

~~2020~~2021 Transaction Overview

~~The Post~~South San Francisco Land Site Acquisition

In ~~January~~October 2020, we ~~entered into~~executed a definitive ~~agreements~~agreement to acquire approximately 12 acres of land for $128 million. The acquisition site is located in South San Francisco, California, adjacent to two sites currently held by us as land for future development. We paid a ~~life science campus~~$10 million nonrefundable deposit upon completing due diligence in ~~Waltham, Massachusetts for $320 million. We~~November 2020. The first phase, with a purchase price of $61 million, closed ~~the acquisition~~ in April ~~2020.~~2021.

~~Master Transaction~~Westview Medical Plaza MOB Acquisition

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

Pinnacle at Ridgegate Acquisition

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

MOB Portfolio Acquisition

In April 2021, we acquired 14 MOBs for $371 million and ~~Cooperation Agreement~~issued $142 million of secured mortgage debt.

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Senior Housing Portfolio Sales

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

•In January 2021, we sold 24 senior housing assets under a triple-net lease with Brookdale for $510 million.

•In January 2020, Healthpeak and Brookdale Senior Living Inc. (“Brookdale”) completed certain of the transactions governed by the previously announced Master Transactions and Cooperation Agreement (the “2019 MTCA”), which includes2021, we sold a ~~series of transactions related to the previously jointly owned 15-campus CCRC portfolio (the “CCRC JV”) and the~~ portfolio of 16 SHOP assets for $230 million and provided the buyer with financing of $150 million.

•In February 2021, we sold eightsenior housing ~~properties that were triple-net leased to Brookdale. Specifically, the following transactions were completed on January 31, 2020:~~

~~We acquired Brookdale’s 51% interest~~assets in ~~13 of the 15 communities in the CCRC JV based on~~ a ~~valuation of $1.06 billion (the “CCRC Acquisition”) and transitioned management (under new management agreements) of those 13 communities to Life Care Services LLC (“LCS”);~~

~~We paid Brookdale $100 million to terminate the previous management agreements related to those 13 communities;~~

~~Brookdale acquired 18 of the~~ triple-net lease ~~properties (the “Brookdale Acquisition Assets”) from us~~with Harbor Retirement Associates for ~~cash proceeds~~$132 million.

•In April 2021, we sold a portfolio of ~~$385 million;~~12 SHOP assets for $564 million.

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

~~The remaining 24 triple-net lease properties were restructured into~~•In April 2021, we sold a ~~single master lease with 2.4% annual rent escalators and a maturity date~~portfolio of ~~December 31, 2027 (the “2019 Amended Master Lease”);~~

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

~~Brookdale paid down $20 million of future rent under the 2019 Amended Master Lease.~~five SHOP assets for $64 million.

Other Real Estate Transactions

•During the ~~first quarter of 2020,~~three months ended March 31, 2021, we sold ~~seven~~one SHOP asset for $5 million.

•In April 2021, we sold two SHOP assets for ~~$36~~$13 million, ~~and a hospital under a direct financing lease (“DFL”) for $82 million.~~


•	~~During the second quarter of 2020, we sold twoSHOP assets for $28 million and three MOBs in San Diego, California for $106 million (through exercise of a purchase option by one of our tenants).~~

During the first half of 2020, we converted: (i) six senior housing triple-net assets with Capital Senior Living Corporation (“CSL”) into a RIDEA structure, with CSL remaining as the manager, (ii) one senior housing triple-net asset with CSL into a RIDEA structure with Discovery Senior Living, LLC as the operator, and (iii) two senior housing triple-net assets ~~with HRA Senior Living (“HRA”) into a RIDEA structure, with HRA remaining as~~for $7 million, and one MOB for $10 million.

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

Financing Activities

During the six months ended June 30, 2020, we utilized the forward provisions under the at-the-market equity offering program established in February 2019 (the “2019 ATM Program”) to allow for the sale of up to an aggregate of 2 million shares of our common stock at an initial weighted average net price of $35.23 per share, after commissions.

During the six months ended June 30, 2020, we settled all 32.5 million shares previously outstanding under (i) ATM forward contracts and (ii) a 2019 forward equity sales agreement at a weighted average net price of $32.73 per share, after commissions, resulting in net proceeds of $1.06 billion.

•In ~~June 2020, we completed a public offering of $600 million aggregate principal amount of 2.875% senior unsecured notes due 2031 (the “2031 Notes”).~~

~~In June 2020, using a portion of the net proceeds from the 2031 Notes offering,~~January 2021, we repurchased ~~$250~~$112 million aggregate principal amount of our ~~4.250%~~4.25% senior unsecured notes due in ~~2023.~~

~~In July 2020, using an additional portion of the net proceeds from the 2031 Notes offering, we redeemed all $300~~2023, $201 million aggregate principal amount of our ~~3.150%~~4.20% senior unsecured notes due in ~~2022.~~2024, and $469 million aggregate principal amount of our 3.88% senior unsecured notes due in 2024.

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

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

Development Activities

•

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

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

•During the three months ended March 31, 2021, the remaining portion of one life science development project was placed in service with a total project cost of $151 million at completion.

~~As part of the development program with HCA Healthcare Inc., at June 30, 2020,we had seven MOB developments under contract, six of which will be on-campus, with an aggregate total estimated cost of $184 million.~~


•	~~At June 30, 2020, we had six life science development projects in process with an aggregate total estimated cost of approximately$855 million~~.

Dividends

The following table summarizes our common stock cash dividends declared in ~~2020:~~2021:

Declaration Date

Record Date

Amount
Per Share

Dividend
Payment Date

February 9

February 22

0.30

March 5

April 29

May 10

0.30

May 21

Declaration Date Record Date
Amount
Per Share

Dividend
Payment Date
January 30 February 18 $ 0.37
February 28
April 30 May 8 0.37
May 19
August 4 August 14 0.37
August 25

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Results of Operations

We evaluate our business and allocate resources among our reportable business segments: (i) ~~senior housing triple-net, (ii) SHOP, (iii) CCRC, (iv)~~ life science, (ii) medical office, and ~~(v) medical office.~~(iii) CCRC. ~~Our senior housing facilities, including CCRCs, are managed utilizing triple-net leases and RIDEA structures.~~ Under the life science and medical office segments, we invest through the acquisition and development of life science facilities, MOBs, and ~~MOBs,~~hospitals, which generally require a greater level of property management. Our CCRCs are operated through RIDEA structures. We have other non-reportable segments that are comprised primarily of ~~our~~the following investments: (i) an interest in an unconsolidated joint venture that owns 19 senior housing assets, (ii) debt investments, and ~~hospital properties.~~(iii) two preferred equity investments. We evaluate performance based upon property adjusted net operating income (“Adjusted NOI” or “Cash NOI”) in each segment. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 filed with the U.S. Securities and Exchange Commission (“SEC”), as updated by Note 2 to the Consolidated Financial Statements herein.

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

Non-GAAP Financial Measures

Net Operating Income

NOI and Adjusted NOI are non-U.S. generally accepted accounting principles (“GAAP”) supplemental financial measures used to evaluate the operating performance of real estate. NOI is defined as real estate revenues (inclusive of rental and related revenues, resident fees and services, income from direct financing leases, and government grant income and exclusive of interest income), less property level operating expenses (which exclude transition costs); NOI excludes all other financial statement amounts included in net income (loss) as presented in Note 1314 to the Consolidated Financial Statements. Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL non-cash interest, amortization of market lease intangibles, termination fees, actuarial reserves for insurance claims that have been incurred but not reported, and the impact of deferred community fee income and expense. NOI and Adjusted NOI include our share of income (loss) generated by unconsolidated joint ventures and exclude noncontrolling interests’ share of income (loss) generated by consolidated joint ventures. Adjusted NOI is oftentimes referred to as “Cash NOI.” Management believes NOI and Adjusted NOI are important supplemental measures because they provide relevant and useful information by reflecting only income and operating expense items that are incurred at the property level and present them on an unlevered basis. We use NOI and Adjusted NOI to make decisions about resource allocations, to assess and compare property level performance, and to evaluate our Same-Store (“SS”) performance, as described below. We believe that net income (loss) is the most directly comparable GAAP measure to NOI and Adjusted NOI. NOI and Adjusted NOI should not be viewed as alternative measures of operating performance to net income (loss) as defined by GAAP since they do not reflect various excluded items. Further, our definitions of NOI and Adjusted NOI may not be comparable to the definitions used by other REITs or real estate companies, as they may use different methodologies for calculating NOI and Adjusted NOI. For a reconciliation of NOI and Adjusted NOI to net income (loss) by segment, refer to Note 1314 to the Consolidated Financial Statements.

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

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Same-Store

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

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

Funds From Operations (“FFO”)

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

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

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

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

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

Adjusted FFO (“AFFO”)

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

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Comparison of the Three ~~and Six~~ Months Ended ~~June 30, 2020~~March 31, 2021 to the Three ~~and Six~~ Months Ended ~~June 30, 2019~~March 31, 2020

Overview

Three Months Ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~

The following table summarizes results for the three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (dollars in thousands):


										Three Months Ended March 31,
	Three Months Ended June 30,									2021		2020		Change
	2020		2019			Change
Net income (loss) applicable to common shares	$	51,131	$	(13,991	)	$	65,122		Net income (loss) applicable to common shares	$	143,337	$	277,464	$	(134,127)
NAREIT FFO	182,367		198,422			(16,055		)	NAREIT FFO	40,233		171,549		(131,316)
FFO as Adjusted	214,713		212,939			1,774			FFO as Adjusted	215,391		227,013		(11,622)
AFFO	191,926		195,067			(3,141		)	AFFO	184,798		207,576		(22,778)

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

~~an increase in net gain on sales of real estate during the second quarter of 2020;~~

~~a reduction in impairment charges related to depreciable real estate and assets underlying DFLs during the second quarter of 2020;~~

~~government grant income received under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) during the second quarter of 2020; and~~

NOI generated from: (i) 2019 and 2020 acquisitions of real estate, (ii) development and redevelopment projects placed in service during 2019 and 2020, and (iii) new leasing activity during 2019 and 2020.

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

~~a reduction in income related to assets sold during 2019 and 2020;~~

~~an increase in loss on debt extinguishment, resulting from the repurchase of senior unsecured notes in the second quarter of 2020;~~

•a reduction in other income, net as a result ~~of a gain upon change of control related to the acquisition of the outstanding equity interests in a senior housing joint venture in the second quarter of 2019;~~

~~additional expenses and decreased occupancy in our SHOP and CCRC segments related to COVID-19;~~

~~increased depreciation and amortization expense as a result~~ of: (i) assets acquired during 2019 and 2020, (ii) the acquisition of Brookdale’s interest in and consolidation of 13 CCRCs during the first quarter of 2020, and (iii) development and redevelopment projects placed into service during 2019 and 2020, partially offset by dispositions of real estate throughout 2019 and 2020 and intangible assets that were fully depreciated in 2019 and 2020; and


•	~~increased credit losses related to loans receivable as a result of: (i) adopting the current expected credit losses model required under Accounting Standards Update No. 2016-13,~~ ~~Measurement of Credit Losses on Financial Instruments~~ ~~(“ASU 2016-13”), (ii) new loans funded during the second quarter of 2020, and (iii) the impact of COVID-19 on expected credit losses.~~

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

~~impairments of depreciable real estate;~~

~~net gain on sales depreciable of real estate;~~

~~the gain upon change of control related to the acquisition of the outstanding equity interests in a senior housing joint venture in the second quarter of 2019; and~~

~~depreciation and amortization expense.~~

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

~~net gain on sales of assets underlying DFLs and non-depreciable assets, such as land;~~

~~the loss on debt extinguishment; and~~

~~the increase in credit losses.~~

AFFO decreased primarily as a result of the aforementioned events impacting FFO as Adjusted, except for the impact of straight-line rents, which is excluded from AFFO. The decrease in AFFO was partially offset by decreased capital expenditures during the period that are not otherwise deducted from AFFO and the increase in deferred tax benefit.

~~Six Months Ended June 30, 2020 and 2019~~

~~The following table summarizes results for the six months ended June 30, 2020 and 2019 (dollars in thousands):~~

Six Months Ended June 30,
2020 2019 Change
Net income (loss) applicable to common shares $ 328,786
$ 47,036
$ 281,750
NAREIT FFO 353,917
404,455
(50,538 )
FFO as Adjusted 441,727
424,961
16,766
AFFO 399,528
386,536
12,992

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

~~an increase in other income, net as a result of~~ (i) a gain upon change of control related to the acquisition of the outstanding equity ~~interests~~interest in 13 CCRCs from Brookdale during the first quarter of 2020 and (ii) a gain on sale related to the sale of a hospital underlying a DFL during the first quarter of 2020;

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

•an increase in depreciation, primarily as a result of: (i) 2020 and ~~(iii) government grant income received under~~2021 acquisitions of real estate and (ii) the ~~CARES Act~~above-mentioned acquisition of the outstanding equity interest and consolidation of 13 CCRCs from Brookdale during the ~~second~~first quarter of 2020;

~~an increase in net gain on sales of real estate during the first half of 2020;~~

•a ~~reduction in impairment charges related to depreciable real estate and assets underlying DFLs during the first half of 2020;~~

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

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

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

•an increase in income (loss) from discontinued operations, primarily due to an increase in gain on sales of real estate and lower impairments of depreciable real estate;

•NOI generated from our life science and medical office segments related to: (i) 2020 and ~~(ii) the extension of the net operating loss carryback period provided by the CARES Act; and~~

~~NOI generated from: (i) 2019 and 2020~~2021 acquisitions of real estate, (ii) development and redevelopment projects placed in service during ~~2019~~2020 and ~~2020,~~2021, and (iii) new leasing activity during ~~2019~~2020 and ~~2020.~~2021 (including the impact to straight-line rents);

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

•a reduction in ~~income related to assets sold during 2019 and 2020;~~

~~an increase in loss on debt extinguishment, resulting from repurchase of senior unsecured notes in the second quarter of 2020;~~

~~increased depreciation and amortization expense~~operating expenses primarily as a result ~~of: (i) assets acquired during 2019 and 2020, (ii)~~of the ~~acquisition of Brookdale’s interest~~management termination fee paid to Brookdale in ~~and consolidation~~connection with transitioning management of 13 CCRCs to LCS during the first quarter of ~~2020, and (iii) development and redevelopment projects placed into service during 2019 and 2020, partially offset by dispositions~~2020;

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

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

•a reduction in impairment charges related to depreciable real ~~estate throughout 2019 and 2020;~~estate;

~~increased~~•a reduction in interest expense, primarily as a result of senior unsecured notes ~~issuances and assumed mortgage debt in conjunction with real estate acquisitions, partially offset by senior unsecured notes redemptions,~~ repurchases and ~~repayments;~~redemptions in 2021; and

~~increased credit losses related to loans receivable~~•an increase in interest income, primarily as a result ~~of: (i) adopting the current expected credit losses model required under ASU 2016-13, (ii) new loans funded during 2020, and (iii) the impact~~ of ~~COVID-19 on expected credit losses.~~seller financing.

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

~~impairments of depreciable real estate;~~

~~net gain on sales of depreciable real estate;~~

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

•depreciation and amortization ~~expense.~~expense; and

•impairment charges related to depreciable real estate.

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

•the loss on debt extinguishment;

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

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

•net gain on sales of assets underlying ~~DFLs and non-depreciable assets, such as land;~~

~~the loss on debt extinguishment; and~~

~~the increase in credit losses.~~DFLs.

AFFO ~~increased~~decreased primarily as a result of the aforementioned events impacting FFO as Adjusted, except for the impact of straight-line rents, ~~and the increase in deferred tax benefit,~~ which ~~are~~is excluded ~~from AFFO. The increase in AFFO was partially offset by increased capital expenditures during the period that are not otherwise deducted~~ from AFFO.

Segment Analysis

The following tables provide selected operating information for our Same-Store and total property portfolio for each of our reportable segments. For the three months ended ~~June 30, 2020,~~March 31, 2021, our Same-Store consists of 468 properties representing properties acquired or placed in service and stabilized on or prior to April 1, 2019 and that remained in operations under a consistent reporting structure through June 30, 2020. For the six months ended June 30, 2020, our Same-Store consists of 442361 properties representing properties acquired or placed in service and stabilized on or prior to January 1, ~~2019~~2020 and that remained in operations under a consistent reporting structure through ~~June 30, 2020.~~March 31, 2021. Our total property portfolio consisted of ~~633~~463 and ~~676~~449 properties at ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively.

~~Senior Housing Triple-Net~~

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Life Science

The following table summarizes results at and for the three months ended ~~June 30, 2020 and 2019 (dollars in thousands, except per unit data):~~

SS
Total Portfolio⁽¹⁾
Three Months Ended June 30, Three Months Ended June 30,
2020 2019 Change 2020 2019 Change
Rental and related revenues $ 20,590
$ 19,254
$ 1,336
$ 24,589
$ 43,792
$ (19,203 )
Income from direct financing leases —
—
—
—
6,013
(6,013 )
Noncontrolling interests' share of consolidated joint venture total revenues —
—
—
—
1
(1 )
Operating expenses (49 ) (44 ) (5 ) (526 ) (866 ) 340
Adjustments to NOI (260 ) 433
(693 ) 41
4,806
(4,765 )
Adjusted NOI $ 20,281
$ 19,643
$ 638
24,104
53,746
(29,642 )
Less: non-SS adjusted NOI

(3,823 ) (34,103 ) 30,280
SS adjusted NOI

$ 20,281
$ 19,643
$ 638
Adjusted NOI % change

3.2 %

Property count⁽²⁾
47
47

62
104

Average capacity (units)⁽³⁾
4,364
4,366

5,906
12,474

Average annual rent per unit $ 18,634
$ 18,037

$ 16,681
$ 17,512

~~_______________________________________~~


~~(1)~~	~~Total Portfolio includes results of operations from disposed properties and properties that transferred segments through the disposition or transfer date.~~


~~(2)~~	From our 2019 presentation of Same-Store, we removed 31 senior housing triple-net properties that were sold, 12 senior housing triple-net properties that were converted, or we agreed to convert, to SHOP, 12 senior housing triple-net properties that were classified as held for sale, and 1 senior housing triple-net property that was transferred to other non-reportable.


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

~~Same-Store Adjusted NOI increased primarily as a result of annual rent escalations.~~

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

~~the transfer of nine senior housing triple-net facilities to our SHOP segment during 2020;~~

~~the transfer of two senior housing triple-net facilities to our CCRC segment during 2020; and~~

~~senior housing triple-net facilities sold during 2019 and 2020.~~

~~The decrease in Total Portfolio Adjusted NOI is partially offset by the aforementioned increase to Same-Store.~~

~~The following table summarizes results at and for the six months ended June 30, 2020 and 2019 (dollars in thousands, except per unit data):~~

SS
Total Portfolio⁽¹⁾
Six Months Ended June 30, Six Months Ended June 30,
2020 2019 Change 2020 2019 Change
Rental and related revenues $ 41,118
$ 38,053
$ 3,065
$ 57,724
$ 93,232
$ (35,508 )
Income from direct financing leases —
—
—
—
15,405
(15,405 )
Noncontrolling interests' share of consolidated joint venture total revenues —
—
—
—
(1 ) 1
Operating expenses (98 ) (88 ) (10 ) (1,032 ) (1,860 ) 828
Adjustments to NOI (830 ) 1,069
(1,899 ) (3,333 ) 5,371
(8,704 )
Adjusted NOI $ 40,190
$ 39,034
$ 1,156
53,359
112,147
(58,788 )
Less: non-SS adjusted NOI

(13,169 ) (73,113 ) 59,944
SS adjusted NOI

$ 40,190
$ 39,034
$ 1,156
Adjusted NOI % change

3.0 %

Property count⁽²⁾
47
47

62
104

Average capacity (units)⁽³⁾
4,365
4,366

6,442
13,543

Average annual rent per unit $ 18,457
$ 17,921

$ 16,886
$ 16,836

~~_______________________________________~~


~~(1)~~	~~Total Portfolio includes results of operations from disposed properties and properties that transferred segments through the disposition or transfer date.~~


~~(2)~~	From our 2019 presentation of Same-Store, we removed 31 senior housing triple-net properties that were sold, 12 senior housing triple-net properties that were converted, or we agreed to convert, to SHOP, 12 senior housing triple-net properties that were classified as held for sale, and 1 senior housing triple-net property that was transferred to other non-reportable.


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

~~Same-Store Adjusted NOI increased primarily as a result of annual rent escalations.~~

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

~~the transfer of 39 and 9 senior housing triple-net facilities to our SHOP segment during 2019~~March 31, 2021 and 2020 ~~respectively;~~

~~the transfer of two senior housing triple-net facilities to our CCRC segment during 2020; and~~

~~senior housing triple-net facilities sold during 2019 and 2020.~~

~~The decrease in Total Portfolio Adjusted NOI is partially offset by the aforementioned increase to Same-Store.~~

~~Senior Housing Operating Portfolio~~

~~The following table summarizes results at and for the three months ended June 30, 2020 and 2019 (dollars in thousands, except per unit data):~~

SS
Total Portfolio⁽¹⁾
Three Months Ended June 30, Three Months Ended June 30,
2020 2019 Change 2020 2019 Change
Resident fees and services $ 73,086
$ 79,751
$ (6,665 ) $ 155,293
$ 177,001
$ (21,708 )
Government grant income⁽²⁾
1,889
—
1,889
2,209
—
2,209
Healthpeak’s share of unconsolidated joint venture total revenues 19,099
20,128
(1,029 ) 24,684
5,922
18,762
Healthpeak's share of unconsolidated joint venture government grant income —
—
—
270
—
270
Noncontrolling interests' share of consolidated joint venture total revenues (151 ) (160 ) 9
(504 ) (523 ) 19
Operating expenses (64,226 ) (60,685 ) (3,541 ) (137,507 ) (137,460 ) (47 )
Healthpeak's share of unconsolidated joint venture operating expenses (13,319 ) (12,408 ) (911 ) (18,686 ) (4,430 ) (14,256 )
Noncontrolling interests' share of consolidated joint venture operating expenses 113
106
7
411
320
91
Adjustments to NOI (66 ) 205
(271 ) 118
898
(780 )
Adjusted NOI $ 16,425
$ 26,937
$ (10,512 ) 26,288
41,728
(15,440 )
Less: non-SS adjusted NOI

(9,863 ) (14,791 ) 4,928
SS adjusted NOI

$ 16,425
$ 26,937
$ (10,512 )
Adjusted NOI % change

(39.0 )%

Property count⁽³⁾
71
71

139
144

Average occupancy 79.1 % 86.9 % 79.8 % 82.1 %
Average capacity (units)⁽⁴⁾
9,363
9,368

16,386
15,638

Average annual rent per unit $ 47,724
$ 51,863

$ 49,647
$ 48,179

~~_______________________________________~~


~~(1)~~	~~Total Portfolio includes results of operations from disposed properties and properties that transferred segments through the disposition or transfer date.~~


~~(2)~~	~~Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the consolidated statements of operations.~~


~~(3)~~	~~From our 2019 presentation of Same-Store, we removed four SHOP properties that were classified as held for sale and one SHOP property that was placed in redevelopment.~~


~~(4)~~	~~Represents average capacity as reported by the respective tenants or operators for the three-month period.~~

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

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

~~government grant income received under the CARES Act.~~

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

~~decreased NOI from assets sold in 2019 and 2020; partially offset by~~

~~increased NOI from (i) 2019 acquisitions and (ii) the transfer of 21 and 9 senior housing triple-net assets to our SHOP segment during 2019 and 2020, respectively.~~

~~The following table summarizes results at and for the six months ended June 30, 2020 and 2019 (dollars in thousands, except per unit data):~~

SS
Total Portfolio⁽¹⁾
Six Months Ended June 30, Six Months Ended June 30,
2020 2019 Change 2020 2019 Change
Resident fees and services $ 73,689
$ 75,607
$ (1,918 ) $ 326,254
$ 303,182
$ 23,072
Government grant income⁽²⁾
437
—
437
2,209
—
2,209
Healthpeak’s share of unconsolidated joint venture total revenues 39,200
40,348
(1,148 ) 50,449
11,571
38,878
Healthpeak's share of unconsolidated joint venture government grant income —
—
—
270
—
270
Noncontrolling interests' share of consolidated joint venture total revenues (190 ) (200 ) 10
(1,042 ) (995 ) (47 )
Operating expenses (56,767 ) (55,568 ) (1,199 ) (275,637 ) (234,407 ) (41,230 )
Healthpeak's share of unconsolidated joint venture operating expenses (25,978 ) (24,677 ) (1,301 ) (36,642 ) (8,591 ) (28,051 )
Noncontrolling interests' share of consolidated joint venture operating expenses 130
130
—
788
670
118
Adjustments to NOI (176 ) 505
(681 ) 649
2,080
(1,431 )
Adjusted NOI $ 30,345
$ 36,145
$ (5,800 ) 67,298
73,510
(6,212 )
Less: non-SS adjusted NOI

(36,953 ) (37,365 ) 412
SS adjusted NOI

$ 30,345
$ 36,145
$ (5,800 )
Adjusted NOI % change

(16.0 )%

Property count⁽³⁾
48
48

139
144

Average occupancy 83.2 % 87.0 % 83.4 % 82.4 %
Average capacity (units)⁽⁴⁾
6,466
6,468

16,340
14,714

Average annual rent per unit $ 46,740
$ 48,345

$ 51,701
$ 44,233

~~_______________________________________~~


~~(1)~~	~~Total Portfolio includes results of operations from disposed properties and properties that transferred segments through the disposition or transfer date.~~


~~(2)~~	~~Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the consolidated statements of operations.~~


~~(3)~~	~~From our 2019 presentation of Same-Store, we removed three SHOP properties that were classified as held for sale and one SHOP property that was placed in redevelopment.~~


~~(4)~~	~~Represents average capacity as reported by the respective tenants or operators for the six-month period.~~

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

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

~~government grant income received under the CARES Act.~~

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

~~decreased NOI from assets sold in 2019 and 2020; partially offset by~~

~~increased NOI from (i) 2019 acquisitions and (ii) the transfer of 39 and 9 senior housing triple-net assets to our SHOP segment during 2019 and 2020, respectively.~~

~~Continuing Care Retirement Community~~

~~The following table summarizes results at and for the three months ended June 30, 2020 and 2019 (dollars in thousands, except per unit data):~~

SS⁽¹⁾

Total Portfolio⁽²⁾
Three Months Ended June 30, Three Months Ended June 30,
2020 2019 Change 2020 2019 Change
Resident fees and services $ —
$ —
$ —
$ 113,926
$ —
$ 113,926
Government grant income⁽³⁾
—
—
—
11,871
—
11,871
Healthpeak’s share of unconsolidated joint venture total revenues —
—
—
4,781
52,835
(48,054 )
Healthpeak's share of unconsolidated joint venture government grant income —
—
—
534
—
534
Operating expenses —
—
—
(94,248 ) —
(94,248 )
Healthpeak's share of unconsolidated joint venture operating expenses —
—
—
(4,826 ) (42,456 ) 37,630
Adjustments to NOI —
—
—
18
4,745
(4,727 )
Adjusted NOI $ —
$ —
$ —
32,056
15,124
16,932
Less: non-SS adjusted NOI

(32,056 ) (15,124 ) (16,932 )
SS adjusted NOI

$ —
$ —
$ —
Adjusted NOI % change

— %

Property count —
—

17
15

Average Occupancy — % — % 80.4 % 85.7 %
Average capacity (units)⁽⁴⁾
—
—

8,321
7,269

Average annual rent per unit $ —
$ —

$ 65,682
$ 64,797

~~_______________________________________~~


~~(1)~~	All CCRC properties have been removed from the Same-Store population as they experienced a change in reporting structure, underwent an operator transition during the periods presented, or are classified as held for sale. As such, no Same-Store results are presented in the table above.


~~(2)~~	~~Total Portfolio includes results of operations from disposed properties and properties that transferred segments through the disposition or transfer date.~~


~~(3)~~	~~Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the consolidated statements of operations.~~


~~(4)~~	~~Represents average capacity as reported by the respective tenants or operators for the three-month period.~~

~~Total Portfolio Adjusted NOI increased primarily as a result of the following:~~

~~the acquisition of the remaining 51% interest in 13 communities previously held in a joint venture during the first quarter of 2020; and~~

~~the transfer of two CCRC properties that converted from senior housing triple-net to RIDEA structures during the fourth quarter of 2019.~~

~~The following table summarizes results at and for the six months ended June 30, 2020 and 2019 (dollars in thousands, except per unit data):~~

SS⁽¹⁾

Total Portfolio⁽²⁾
Six Months Ended June 30, Six Months Ended June 30,
2020 2019 Change 2020 2019 Change
Resident fees and services $ —
$ —
$ —
$ 205,706
$ —
$ 205,706
Government grant income⁽³⁾
—
—
—
11,871
—
11,871
Healthpeak’s share of unconsolidated joint venture total revenues —
—
—
26,428
105,073
(78,645 )
Healthpeak's share of unconsolidated joint venture government grant income —
—
—
534
—
534
Operating expenses —
—
—
(250,730 ) —
(250,730 )
Healthpeak's share of unconsolidated joint venture operating expenses —
—
—
(22,863 ) (83,833 ) 60,970
Adjustments to NOI —
—
—
91,579
8,197
83,382
Adjusted NOI $ —
$ —
$ —
62,525
29,437
33,088
Less: non-SS adjusted NOI

(62,525 ) (29,437 ) (33,088 )
SS adjusted NOI

$ —
$ —
$ —
Adjusted NOI % change

— %

Property count —
—

17
15

Average Occupancy — % — % 83.2 % 85.7 %
Average capacity (units)⁽⁴⁾
—
—

8,321
7,269

Average annual rent per unit $ —
$ —

$ 65,430
$ 63,698

~~_______________________________________~~


~~(1)~~	All CCRC properties have been removed from the Same-Store population as they experienced a change in reporting structure, underwent an operator transition during the periods presented, or are classified as held for sale. As such, no Same-Store results are presented in the table above.


~~(2)~~	~~Total Portfolio includes results of operations from disposed properties and properties that transferred segments through the disposition or transfer date.~~


~~(3)~~	~~Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the consolidated statements of operations.~~


~~(4)~~	~~Represents average capacity as reported by the respective tenants or operators for the six-month period.~~

~~Total Portfolio Adjusted NOI increased primarily as a result of the following:~~

~~the acquisition of the remaining 51% interest in 13 communities previously held in a joint venture during the first quarter of 2020; and~~

~~the transfer of two CCRC properties that converted from senior housing triple-net to RIDEA structures during the fourth quarter of 2019.~~

~~Life Science~~

~~The following table summarizes results at and for the three months ended June 30, 2020 and 2019~~ (dollars and square feet in thousands, except per square foot data):


	SS									Total Portfolio
	Three Months Ended March 31,									Three Months Ended March 31,
	2021			2020			Change			2021			2020			Change
Rental and related revenues	$	116,708		$	108,714		$	7,994		$	169,934		$	128,883		$	41,051
Healthpeak’s share of unconsolidated joint venture total revenues	—			—			—			1,337			—			1,337
Noncontrolling interests' share of consolidated joint venture total revenues	(53)			(46)			(7)			(65)			(52)			(13)
Operating expenses	(26,851)			(25,256)			(1,595)			(39,461)			(30,201)			(9,260)
Healthpeak's share of unconsolidated joint venture operating expenses	—			—			—			(425)			—			(425)
Noncontrolling interests' share of consolidated joint venture operating expenses	15			14			1			20			17			3

Adjustments to NOI(1)	(3,974)			(4,315)			341			(11,810)			(4,280)			(7,530)
Adjusted NOI	$	85,845		$	79,111		$	6,734		119,530			94,367			25,163
Less: non-SS Adjusted NOI										(33,685)			(15,256)			(18,429)
SS Adjusted NOI										$	85,845		$	79,111		$	6,734
Adjusted NOI % change							8.5		%
Property count	109			109						141			134
End of period occupancy	97.7		%	95.5		%				97.0		%	94.4		%
Average occupancy	97.2		%	95.6		%				96.6		%	95.0		%
Average occupied square feet	7,424			7,299						9,809			8,053
Average annual total revenues per occupied square foot(2)	$	61		$	57					$	65		$	62
Average annual base rent per occupied square foot(3)	$	49		$	46					$	51		$	50

SS
Total Portfolio⁽¹⁾
Three Months Ended June 30, Three Months Ended June 30,
2020 2019 Change 2020 2019 Change
Rental and related revenues $ 87,963
$ 84,841
$ 3,122
$ 138,496
$ 107,596
$ 30,900
Noncontrolling interests' share of consolidated joint venture total revenues (41 ) (41 ) —
(57 ) (42 ) (15 )
Operating expenses (20,775 ) (20,471 ) (304 ) (34,205 ) (25,480 ) (8,725 )
Noncontrolling interests' share of consolidated joint venture operating expenses 14
13
1
18
13
5
Adjustments to NOI (557 ) (2,265 ) 1,708
(2,779 ) (7,606 ) 4,827
Adjusted NOI $ 66,604
$ 62,077
$ 4,527
101,473
74,481
26,992
Less: non-SS adjusted NOI

(34,869 ) (12,404 ) (22,465 )
SS adjusted NOI

$ 66,604
$ 62,077
$ 4,527
Adjusted NOI % change

7.3 %

Property count⁽²⁾
97
97

135
126

Average occupancy 96.6 % 95.7 %
95.9 % 96.3 %
Average occupied square feet 5,948
5,895

8,757
7,010

Average annual total revenues per occupied square foot $ 59
$ 56

$ 62
$ 57

Average annual base rent per occupied square foot⁽³⁾
$ 56
$ 53

$ 49
$ 45

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



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



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



Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐


PART I. FINANCIAL INFORMATION

Item 1.			Financial Statements (Unaudited):

~~PART I. FINANCIAL INFORMATION~~

~~Item 1.~~	~~Financial Statements (Unaudited):~~

	Consolidated Balance Sheets	3

			Consolidated Statements of Operations	4

			Consolidated Statements of Comprehensive Income (Loss)	5

			Consolidated Statements of Equity	6

			Consolidated Statements of Cash Flows	87

			Notes to the Consolidated Financial Statements	98

Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations	38

Item 3.			Quantitative and Qualitative Disclosures About Market Risk	6860

Item 4.			Controls and Procedures	6961

PART II. OTHER INFORMATION

Item 1.			Legal Proceedings	7062

Item 1A.			Risk Factors	7062

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	7362



Item 6.			Exhibits	7463

Signatures				64


	June 30, 2020			December 31, 2019				March 31, 2021		December 31, 2020
ASSETS							ASSETS
Real estate:							Real estate:
Buildings and improvements	$	12,841,242		$	11,120,039		Buildings and improvements	$	11,149,249	$	11,048,433
Development costs and construction in progress	678,146			692,336			Development costs and construction in progress	642,879		613,182
Land	2,113,871			1,992,602			Land	1,865,806		1,867,278
Accumulated depreciation and amortization	(2,846,260		)	(2,771,922		)	Accumulated depreciation and amortization	(2,508,986)		(2,409,135)
Net real estate	12,786,999			11,033,055			Net real estate	11,148,948		11,119,758
Net investment in direct financing leases	44,706			84,604			Net investment in direct financing leases	44,706		44,706
Loans receivable, net of reserves of $14,115 and $0	253,774			190,579
Loans receivable, net of reserves of $14,134 and $10,280							Loans receivable, net of reserves of $14,134 and $10,280	740,142		195,375
Investments in and advances to unconsolidated joint ventures	460,386			825,515			Investments in and advances to unconsolidated joint ventures	399,841		402,871
Accounts receivable, net of allowance of $9,487 and $4,565	73,432			59,417
Accounts receivable, net of allowance of $3,884 and $3,994							Accounts receivable, net of allowance of $3,884 and $3,994	38,879		42,269
Cash and cash equivalents	730,957			144,232			Cash and cash equivalents	34,007		44,226
Restricted cash	105,684			40,425			Restricted cash	68,033		67,206
Intangible assets, net	537,555			331,693			Intangible assets, net	495,919		519,917
Assets held for sale, net	378,708			504,394
Assets held for sale and discontinued operations, net							Assets held for sale and discontinued operations, net	1,374,507		2,626,306
Right-of-use asset, net	193,729			172,486			Right-of-use asset, net	198,426		192,349
Other assets, net	750,510			646,491			Other assets, net	650,518		665,106
Total assets	$	16,316,440		$	14,032,891		Total assets	$	15,193,926	$	15,920,089
LIABILITIES AND EQUITY							LIABILITIES AND EQUITY
Bank line of credit and commercial paper	$	—		$	93,000		Bank line of credit and commercial paper	$	1,038,150	$	129,590
Term loan	249,062			248,942			Term loan	249,243		249,182
Senior unsecured notes	5,992,193			5,647,993			Senior unsecured notes	4,255,697		5,697,586
Mortgage debt	487,532			276,907			Mortgage debt	219,959		221,621
Intangible liabilities, net	110,732			74,991			Intangible liabilities, net	138,617		144,199
Liabilities of assets held for sale, net	32,648			36,369
Liabilities related to assets held for sale and discontinued operations, net							Liabilities related to assets held for sale and discontinued operations, net	328,167		415,737
Lease liability	177,029			156,611			Lease liability	184,425		179,895
Accounts payable, accrued liabilities, and other liabilities	847,080			540,924			Accounts payable, accrued liabilities, and other liabilities	697,040		763,391
Deferred revenue	751,443			289,680			Deferred revenue	765,946		774,316
Total liabilities	8,647,719			7,365,417			Total liabilities	7,877,244		8,575,517
Commitments and contingencies							Commitments and contingencies	0		0
Common stock, $1.00 par value: 750,000,000 shares authorized; 538,317,896 and 505,221,643 shares issued and outstanding	538,318			505,222

Common stock, $1.00 par value: 750,000,000 shares authorized; 538,885,793 and 538,405,393 shares issued and outstanding							Common stock, $1.00 par value: 750,000,000 shares authorized; 538,885,793 and 538,405,393 shares issued and outstanding	538,886		538,405
Additional paid-in capital	10,222,728			9,183,892			Additional paid-in capital	10,223,711		10,229,857
Cumulative dividends in excess of earnings	(3,660,187		)	(3,601,199		)	Cumulative dividends in excess of earnings	(3,994,562)		(3,976,232)
Accumulated other comprehensive income (loss)	(2,186		)	(2,857		)	Accumulated other comprehensive income (loss)	(3,497)		(3,685)
Total stockholders' equity	7,098,673			6,085,058
Total stockholders’ equity							Total stockholders’ equity	6,764,538		6,788,345
Joint venture partners	370,347			378,061			Joint venture partners	352,986		357,069
Non-managing member unitholders	199,701			204,355			Non-managing member unitholders	199,158		199,158
Total noncontrolling interests	570,048			582,416			Total noncontrolling interests	552,144		556,227
Total equity	7,668,721			6,667,474			Total equity	7,316,682		7,344,572
Total liabilities and equity	$	16,316,440		$	14,032,891		Total liabilities and equity	$	15,193,926	$	15,920,089



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
	2020			2019			2020			2019				2021		2020
Revenues:													Revenues:
Rental and related revenues	$	312,363		$	301,197		$	627,051		$	595,419		Rental and related revenues	$	327,972	$	282,317
Resident fees and services	269,697			177,766			533,202			304,461			Resident fees and services	116,128		91,780
Income from direct financing leases	2,150			10,190			5,419			23,714			Income from direct financing leases	2,163		3,269
Interest income	4,230			2,414			7,918			4,127			Interest income	9,013		3,688
Total revenues	588,440			491,567			1,173,590			927,721			Total revenues	455,276		381,054
Costs and expenses:													Costs and expenses:
Interest expense	57,550			56,942			115,926			106,269			Interest expense	46,843		55,691
Depreciation and amortization	178,488			165,296			367,764			297,247			Depreciation and amortization	157,538		125,112
Operating	315,841			213,993			691,854			382,920			Operating	181,761		237,377
General and administrative	23,720			27,120			46,069			48,475			General and administrative	24,902		22,349
Transaction costs	627			1,337			15,475			5,855			Transaction costs	798		14,563

Impairments and loan loss reserves (recoveries), net	24,050			68,538			63,173			77,396			Impairments and loan loss reserves (recoveries), net	3,242		11,107
Total costs and expenses	600,276			533,226			1,300,261			918,162			Total costs and expenses	415,084		466,199
Other income (expense):													Other income (expense):
Gain (loss) on sales of real estate, net	82,863			11,448			247,732			19,492			Gain (loss) on sales of real estate, net	0		2,069
Loss on debt extinguishments	(25,824		)	(1,135		)	(24,991		)	(1,135		)
Gain (loss) on debt extinguishments													Gain (loss) on debt extinguishments	(164,292)		833
Other income (expense), net	19,586			21,008			230,194			24,141			Other income (expense), net	2,200		210,653
Total other income (expense), net	76,625			31,321			452,935			42,498			Total other income (expense), net	(162,092)		213,555
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	64,789			(10,338		)	326,264			52,057			Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	(121,900)		128,410
Income tax benefit (expense)	7,346			1,864			40,390			5,322			Income tax benefit (expense)	(8)		29,868
Equity income (loss) from unconsolidated joint ventures	(17,086		)	(1,506		)	(29,065		)	(2,369		)	Equity income (loss) from unconsolidated joint ventures	1,323		(11,146)
Income (loss) from continuing operations													Income (loss) from continuing operations	(120,585)		147,132
Income (loss) from discontinued operations													Income (loss) from discontinued operations	270,008		135,408
Net income (loss)	55,049			(9,980		)	337,589			55,010			Net income (loss)	149,423		282,540
Noncontrolling interests' share in earnings	(3,543		)	(3,617		)	(7,003		)	(7,137		)
Noncontrolling interests’ share in continuing operations													Noncontrolling interests’ share in continuing operations	(3,306)		(3,463)
Noncontrolling interests’ share in discontinued operations													Noncontrolling interests’ share in discontinued operations	(329)		3
Net income (loss) attributable to Healthpeak Properties, Inc.	51,506			(13,597		)	330,586			47,873			Net income (loss) attributable to Healthpeak Properties, Inc.	145,788		279,080
Participating securities' share in earnings	(375		)	(394		)	(1,800		)	(837		)

Participating securities’ share in earnings													Participating securities’ share in earnings	(2,451)		(1,616)
Net income (loss) applicable to common shares	$	51,131		$	(13,991	)	$	328,786		$	47,036		Net income (loss) applicable to common shares	$	143,337	$	277,464
Earnings (loss) per common share:
Basic	$	0.09		$	(0.03	)	$	0.63		$	0.10
Diluted	$	0.09		$	(0.03	)	$	0.63		$	0.10

Basic earnings (loss) per common share:													Basic earnings (loss) per common share:
Continuing operations													Continuing operations	$	(0.23)	$	0.28
Discontinued operations													Discontinued operations	0.50		0.27
Net income (loss) applicable to common shares													Net income (loss) applicable to common shares	$	0.27	$	0.55
Diluted earnings (loss) per common share:													Diluted earnings (loss) per common share:
Continuing operations													Continuing operations	$	(0.23)	$	0.28
Discontinued operations													Discontinued operations	0.50		0.26
Net income (loss) applicable to common shares													Net income (loss) applicable to common shares	$	0.27	$	0.54

Weighted average shares outstanding:													Weighted average shares outstanding:
Basic	538,262			478,739			522,427			478,260			Basic	538,679		506,476
Diluted	538,517			478,739			523,498			479,885			Diluted	538,679		515,045


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


January 1, 2021	538,405	$	538,405	$	10,229,857	$	(3,976,232)	$	(3,685)	$	6,788,345	$	556,227	$	7,344,572
Net income (loss)	—	—		—		145,788		—		145,788		3,635		149,423
Other comprehensive income (loss)	—	—		—		—		188		188		—		188
Issuance of common stock	879	879		208		—		—		1,087		—		1,087

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

Amortization of stock-based compensation	—	—		5,413		—		—		5,413		—		5,413
Common dividends ($0.30 per share)	—	—		—		(164,118)		—		(164,118)		—		(164,118)
Distributions to noncontrolling interest	—	—		—		—		—		—		(7,718)		(7,718)




March 31, 2021	538,886	$	538,886	$	10,223,711	$	(3,994,562)	$	(3,497)	$	6,764,538	$	552,144	$	7,316,682


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


~~(2)~~	On January 1, 2019, the Company adopted a series of ASUs related to accounting for leases and recognized the cumulative-effect of adoption to beginning retained earnings. Refer to Note 2 for a detailed impact of adoption.



	June 30, 2020			December 31, 2019
Present value of minimum lease payments receivable	$	14,105		$	19,138
Present value of estimated residual value	44,706			84,604
Less deferred selling profits	(14,105		)	(19,138		)
Net investment in direct financing leases	$	44,706		$	84,604
Properties subject to direct financing leases	1			2



	Carrying Amount		Percentage of DFL Portfolio	Internal Ratings
Segment	Carrying Amount		Percentage of DFL Portfolio	Performing DFLs		Watch List DFLs		Workout DFLs
Other non-reportable segments	$	44,706	100	$	44,706	—		—
	$	44,706	100	$	44,706	$	—	$	—



	Six Months Ended June 30,
Supplemental Cash Flow Information:	2020		2019
Right-of-use asset obtained in exchange for new lease liability:
Operating leases	$	23,962	$	4,084


	March 31, 2021		December 31, 2020
Secured loans(1)	$	724,389	$	161,530
Mezzanine and other	44,513		44,347
Unamortized discounts, fees, and costs	(14,626)		(222)
Reserve for loan losses	(14,134)		(10,280)
Loans receivable, net	$	740,142	$	195,375



	June 30, 2020			December 31, 2019
Secured mortgage loans⁽¹⁾	$	208,762		$	161,964
Mezzanine and other	58,405			27,752
Unamortized discounts, fees, and costs	722			863
Reserve for loan losses	(14,115		)	—
	$	253,774		$	190,579


~~(1)~~	At June 30, 2020, the Company had $9 million remaining of commitments to fund $174 million of senior housing development and redevelopment projects. At December 31, 2019, the Company had $25 million remaining of commitments to fund $174 million of senior housing development and redevelopment projects.



Investment Type	Year of Origination										Total
Investment Type	2020		2019		2018		2017		2016		Total
Secured mortgage loans
Risk rating:
Performing loans	$	36,037	$	53,826	$	—	$	112,248	$	—	$	202,111
Watch list loans	—		—		—		—		—		—
Workout loans	—		—		—		—		—		—
Total secured mortgage loans	$	36,037	$	53,826	$	—	$	112,248	$	—	$	202,111
Mezzanine and other
Risk rating:
Performing loans	$	17,860	$	19,684	$	—	$	7,898	$	6,221	$	51,663
Watch list loans	—		—		—		—		—		—
Workout loans	—		—		—		—		—		—
Total mezzanine and other	$	17,860	$	19,684	$	—	$	7,898	$	6,221	$	51,663


	March 31, 2021						December 31, 2020
	Secured Loans		Mezzanine and Other		Total		Secured Loans		Mezzanine and Other		Total
Reserve for loan losses, beginning of period	$	3,152	$	7,128	$	10,280	$	0	$	0	$	0
Cumulative-effect of adopting of ASU 2016-13 to beginning retained earnings	0		0		0		513		907		1,420
Provision for expected loan losses	2,740		1,114		3,854		2,639		6,221		8,860


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


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

				$	399,841	$	402,871



				Carrying Amount
				June 30,		December 31,
Entity⁽¹⁾	Segment	Property Count⁽²⁾	Ownership %⁽²⁾	2020		2019
SWF SH JV⁽³⁾	SHOP	19	54	$	392,765	$	428,258
MBK JV	SHOP	5	50	31,826		33,415
Other SHOP JVs⁽⁴⁾	SHOP	2	50 - 90	16,430		17,719
Medical Office JVs⁽⁵⁾	MOB	3	20 - 67	9,817		9,845
Other JVs⁽⁶⁾	Other	—	41 - 47	9,369		10,372
CCRC JV⁽⁷⁾	CCRC	2	49	179		325,830
Advances to unconsolidated joint ventures, net				—		76
				$	460,386	$	825,515


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


~~(2)~~	~~Property count and ownership percentage are as of June 30, 2020.~~


~~(3)~~	~~In December 2019, the Company formed the SWF SH JV with a sovereign wealth fund (see Note 4).~~


~~(4)~~	~~Unconsolidated other SHOP joint ventures (and the Company’s ownership percentage) include: (i) Waldwick JV (85%); (ii) Otay Ranch JV (90%); and (iii) MBK Development JV (50%).~~


~~(5)~~	~~Includes 3 unconsolidated medical office joint ventures (and the Company’s ownership percentage): (i) Ventures IV (20%); (ii) Ventures III (30%); and (iii) Suburban Properties, LLC (67%).~~


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

Weighted average remaining amortization period in years	6		5



Intangible lease liabilities	June 30, 2020			December 31, 2019
Gross intangible lease liabilities	$	154,378		$	113,213
Accumulated depreciation and amortization	(43,646		)	(38,222		)
Intangible liabilities, net	$	110,732		$	74,991


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



Issue Date	Amount		Coupon Rate		Maturity Date
June 23, 2020	$	600,000	2.875	%	2031



Payoff Date	Amount		Coupon Rate		Maturity Date
June 24, 2020⁽¹⁾	$	250,000	4.250	%	2023


~~(1)~~	~~Upon repurchasing a portion~~repurchases and redemptions of ~~the 4.250% senior unsecured notes due 2023, the Company recognized a $26 million loss on debt extinguishment.~~


~~(1)~~	~~The Company recognized a $22 million loss on debt extinguishment related to the repurchase of senior notes.~~


~~(2)~~	Upon completing the redemption of the 2.625% senior unsecured notes due February 2020 and repurchasing a portion of the 4.250% senior unsecured notes due 2023 and the 4.000% senior unsecured notes due 2022, the Company recognized a $35 million loss on debt extinguishment.


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