UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~September 30, 2020~~March 31, 2021


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

For the transition period from to

Commission file number 001-08895

Healthpeak Properties, Inc.

(Exact name of registrant as specified in its charter)



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

5050 South Syracuse Street, Suite 800

Denver, CO 80237

(Address of principal executive offices) (Zip code)

~~(949) 407-0700~~(720) 428-5050

(Registrant’s telephone number, including area code)

~~1920 Main Street, Suite 1200~~

~~Irvine, CA 92614~~

~~(Former name, former address and former fiscal year, if changed since last report)~~

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 30, 2020,~~May 3, 2021, there were ~~538,360,606~~538,930,065 shares of the registrant’s $1.00 par value common stock outstanding.

Table of Contents

HEALTHPEAK PROPERTIES, INC.

INDEX

Table of Contents

Healthpeak Properties, Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Real estate:	Real estate:					Real estate:
Buildings and improvements	Buildings and improvements	$	10,967,446	$	11,120,039	Buildings and improvements	$	11,149,249	$	11,048,433
Development costs and construction in progress	Development costs and construction in progress	684,979		692,336		Development costs and construction in progress	642,879		613,182
Land	Land	1,889,643		1,992,602		Land	1,865,806		1,867,278
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(2,507,881)		(2,771,922)		Accumulated depreciation and amortization	(2,508,986)		(2,409,135)
Net real estate	Net real estate	11,034,187		11,033,055		Net real estate	11,148,948		11,119,758
Net investment in direct financing leases	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 $11,547 and $0		231,162		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	Investments in and advances to unconsolidated joint ventures	436,271		825,515		Investments in and advances to unconsolidated joint ventures	399,841		402,871
Accounts receivable, net of allowance of $9,004 and $4,565		63,216		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	Cash and cash equivalents	197,119		144,232		Cash and cash equivalents	34,007		44,226
Restricted cash	Restricted cash	102,419		40,425		Restricted cash	68,033		67,206
Intangible assets, net	Intangible assets, net	501,583		331,693		Intangible assets, net	495,919		519,917
Assets held for sale, net		2,213,185		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	Right-of-use asset, net	190,875		172,486		Right-of-use asset, net	198,426		192,349
Other assets, net	Other assets, net	737,098		646,491		Other assets, net	650,518		665,106
Total assets	Total assets	$	15,751,821	$	14,032,891	Total assets	$	15,193,926	$	15,920,089
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Bank line of credit and commercial paper	Bank line of credit and commercial paper	$	0	$	93,000	Bank line of credit and commercial paper	$	1,038,150	$	129,590
Term loan	Term loan	249,122		248,942		Term loan	249,243		249,182

Senior unsecured notes	Senior unsecured notes	5,695,567		5,647,993		Senior unsecured notes	4,255,697		5,697,586
Mortgage debt	Mortgage debt	435,206		276,907		Mortgage debt	219,959		221,621

Intangible liabilities, net	Intangible liabilities, net	108,031		74,991		Intangible liabilities, net	138,617		144,199
Liabilities related to assets held for sale, net		93,046		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	Lease liability	175,002		156,611		Lease liability	184,425		179,895
Accounts payable, accrued liabilities, and other liabilities	Accounts payable, accrued liabilities, and other liabilities	834,518		540,924		Accounts payable, accrued liabilities, and other liabilities	697,040		763,391
Deferred revenue	Deferred revenue	755,021		289,680		Deferred revenue	765,946		774,316
Total liabilities	Total liabilities	8,345,513		7,365,417		Total liabilities	7,877,244		8,575,517
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies	0		0

Common stock, $1.00 par value: 750,000,000 shares authorized; 538,354,755 and 505,221,643 shares issued and outstanding		538,355		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	Additional paid-in capital	10,228,086		9,183,892		Additional paid-in capital	10,223,711		10,229,857
Cumulative dividends in excess of earnings	Cumulative dividends in excess of earnings	(3,923,150)		(3,601,199)		Cumulative dividends in excess of earnings	(3,994,562)		(3,976,232)
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(3,236)		(2,857)		Accumulated other comprehensive income (loss)	(3,497)		(3,685)
Total stockholders' equity		6,840,055		6,085,058
Total stockholders’ equity						Total stockholders’ equity	6,764,538		6,788,345
Joint venture partners	Joint venture partners	366,708		378,061		Joint venture partners	352,986		357,069
Non-managing member unitholders	Non-managing member unitholders	199,545		204,355		Non-managing member unitholders	199,158		199,158
Total noncontrolling interests	Total noncontrolling interests	566,253		582,416		Total noncontrolling interests	552,144		556,227
Total equity	Total equity	7,406,308		6,667,474		Total equity	7,316,682		7,344,572
Total liabilities and equity	Total liabilities and equity	$	15,751,821	$	14,032,891	Total liabilities and equity	$	15,193,926	$	15,920,089

See accompanying Notes to the Unaudited Consolidated Financial Statements.

Table of Contents

Healthpeak Properties, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Revenues:	Revenues:									Revenues:
Rental and related revenues	Rental and related revenues	$	326,530	$	312,600	$	953,581	$	908,019	Rental and related revenues	$	327,972	$	282,317
Resident fees and services	Resident fees and services	264,616		213,040		797,818		517,501		Resident fees and services	116,128		91,780
Income from direct financing leases	Income from direct financing leases	2,150		9,590		7,569		33,304		Income from direct financing leases	2,163		3,269
Interest income	Interest income	4,443		2,741		12,361		6,868		Interest income	9,013		3,688
Total revenues	Total revenues	597,739		537,971		1,771,329		1,465,692		Total revenues	455,276		381,054
Costs and expenses:	Costs and expenses:									Costs and expenses:
Interest expense	Interest expense	56,235		61,230		172,161		167,499		Interest expense	46,843		55,691
Depreciation and amortization	Depreciation and amortization	173,630		171,944		541,394		469,191		Depreciation and amortization	157,538		125,112
Operating	Operating	314,292		248,069		1,006,146		630,989		Operating	181,761		237,377
General and administrative	General and administrative	21,661		22,970		67,730		71,445		General and administrative	24,902		22,349
Transaction costs	Transaction costs	2,586		1,319		18,061		7,174		Transaction costs	798		14,563

Impairments and loan loss reserves (recoveries), net	Impairments and loan loss reserves (recoveries), net	34,550		38,257		97,723		115,653		Impairments and loan loss reserves (recoveries), net	3,242		11,107
Total costs and expenses	Total costs and expenses	602,954		543,789		1,903,215		1,461,951		Total costs and expenses	415,084		466,199
Other income (expense):	Other income (expense):									Other income (expense):
Gain (loss) on sales of real estate, net	Gain (loss) on sales of real estate, net	149		(784)		247,881		18,708		Gain (loss) on sales of real estate, net	0		2,069
Loss on debt extinguishments		(17,921)		(35,017)		(42,912)		(36,152)
Gain (loss) on debt extinguishments										Gain (loss) on debt extinguishments	(164,292)		833
Other income (expense), net	Other income (expense), net	7,060		693		237,254		24,834		Other income (expense), net	2,200		210,653
Total other income (expense), net	Total other income (expense), net	(10,712)		(35,108)		442,223		7,390		Total other income (expense), net	(162,092)		213,555
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	(15,927)		(40,926)		310,337		11,131		Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	(121,900)		128,410
Income tax benefit (expense)	Income tax benefit (expense)	(24,174)		6,261		16,216		11,583		Income tax benefit (expense)	(8)		29,868
Equity income (loss) from unconsolidated joint ventures	Equity income (loss) from unconsolidated joint ventures	(19,480)		(7,643)		(48,545)		(10,012)		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)	Net income (loss)	(59,581)		(42,308)		278,008		12,702		Net income (loss)	149,423		282,540
Noncontrolling interests' share in earnings		(3,836)		(3,555)		(10,839)		(10,692)
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.	Net income (loss) attributable to Healthpeak Properties, Inc.	(63,417)		(45,863)		267,169		2,010		Net income (loss) attributable to Healthpeak Properties, Inc.	145,788		279,080

Participating securities' share in earnings		(351)		(386)		(2,151)		(1,223)
Participating securities’ share in earnings										Participating securities’ share in earnings	(2,451)		(1,616)
Net income (loss) applicable to common shares										Net income (loss) applicable to common shares	$	143,337	$	277,464

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	$	(63,768)	$	(46,249)	$	265,018	$	787	Net income (loss) applicable to common shares	$	0.27	$	0.54

Earnings (loss) per common share:
Basic		$	(0.12)	$	(0.09)	$	0.50	$	0.00
Diluted		$	(0.12)	$	(0.09)	$	0.50	$	0.00
Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	538,333		491,203		527,908		482,595		Basic	538,679		506,476
Diluted	Diluted	538,333		491,203		528,455		484,792		Diluted	538,679		515,045

See accompanying Notes to the Unaudited Consolidated Financial Statements.

Table of Contents

Healthpeak Properties, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Net income (loss)	Net income (loss)	$	(59,581)	$	(42,308)	$	278,008	$	12,702	Net income (loss)	$	149,423	$	282,540

Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):

Net unrealized gains (losses) on derivatives	Net unrealized gains (losses) on derivatives	(942)		288		(651)		483		Net unrealized gains (losses) on derivatives	332		301
Change in Supplemental Executive Retirement Plan obligation and other	Change in Supplemental Executive Retirement Plan obligation and other	(108)		69		272		206		Change in Supplemental Executive Retirement Plan obligation and other	107		61
Foreign currency translation adjustment		0		(1,121)		0		(1,204)

Reclassification adjustment realized in net income (loss)										Reclassification adjustment realized in net income (loss)	(251)		0
Total other comprehensive income (loss)	Total other comprehensive income (loss)	(1,050)		(764)		(379)		(515)		Total other comprehensive income (loss)	188		362
Total comprehensive income (loss)	Total comprehensive income (loss)	(60,631)		(43,072)		277,629		12,187		Total comprehensive income (loss)	149,611		282,902
Total comprehensive income (loss) attributable to noncontrolling interests		(3,836)		(3,555)		(10,839)		(10,692)
Total comprehensive (income) loss attributable to noncontrolling interests’ share in continuing operations										Total comprehensive (income) loss attributable to noncontrolling interests’ share in continuing operations	(3,306)		(3,463)
Total comprehensive (income) loss attributable to noncontrolling interests’ share in discontinued operations										Total comprehensive (income) loss attributable to noncontrolling interests’ share in discontinued operations	(329)		3
Total comprehensive income (loss) attributable to Healthpeak Properties, Inc.	Total comprehensive income (loss) attributable to Healthpeak Properties, Inc.	$	(64,467)	$	(46,627)	$	266,790	$	1,495	Total comprehensive income (loss) attributable to Healthpeak Properties, Inc.	$	145,976	$	279,442

See accompanying Notes to the Unaudited Consolidated Financial Statements.

Table of Contents

Healthpeak Properties, Inc.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except per share data)

(Unaudited)

For the three months ended ~~September 30, 2020:~~March 31, 2021:

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
July 1, 2020 538,318 $ 538,318 $ 10,222,728 $ (3,660,187) $ (2,186) $ 7,098,673 $ 570,048 $ 7,668,721
Net income (loss) — — — (63,417) — (63,417) 3,836 (59,581)
Other comprehensive income (loss) — — — — (1,050) (1,050) — (1,050)
Issuance of common stock, net 47 47 464 — — 511 — 511
Repurchase of common stock (10) (10) (265) — — (275) — (275)
Amortization of deferred compensation — — 5,159 — — 5,159 — 5,159
Common dividends ($0.37 per share) — — — (199,546) — (199,546) — (199,546)
Distributions to noncontrolling interests — — — — — — (7,631) (7,631)
September 30, 2020 538,355 $ 538,355 $ 10,228,086 $ (3,923,150) $ (3,236) $ 6,840,055 $ 566,253 $ 7,406,308


	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

For the three months ended ~~September 30, 2019:~~

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
July 1, 2019 491,109 $ 491,109 $ 8,801,037 $ (3,233,283) $ (4,459) $ 6,054,404 $ 564,868 $ 6,619,272
Net income (loss) — — — (45,863) — (45,863) 3,555 (42,308)
Other comprehensive income (loss) — — — — (764) (764) — (764)
Issuance of common stock, net 3,703 3,703 98,726 — — 102,429 — 102,429
Repurchase of common stock (10) (10) (339) — — (349) — (349)
Exercise of stock options 46 46 1,170 — — 1,216 — 1,216
Amortization of deferred compensation — — 4,171 — — 4,171 — 4,171
Common dividends ($0.37 per share) — — — (182,110) — (182,110) — (182,110)
Distributions to noncontrolling interests — — — — — — (7,901) (7,901)
Issuances of noncontrolling interests — — — — — — 29,703 29,703
September 30, 2019 494,848 $ 494,848 $ 8,904,765 $ (3,461,256) $ (5,223) $ 5,933,134 $ 590,225 $ 6,523,359

~~Table of Contents~~

~~For the nine months ended September 30,~~March 31, 2020:

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
December 31, 2019 505,222 $ 505,222 $ 9,183,892 $ (3,601,199) $ (2,857) $ 6,085,058 $ 582,416 $ 6,667,474
Impact of adoption of ASU No. 2016-13(1)
— — — (1,524) — (1,524) — (1,524)
January 1, 2020 505,222 505,222 9,183,892 (3,602,723) (2,857) 6,083,534 582,416 6,665,950
Net income (loss) — — — 267,169 — 267,169 10,839 278,008
Other comprehensive income (loss) — — — — (379) (379) — (379)
Issuance of common stock, net 33,248 33,248 1,032,652 — — 1,065,900 — 1,065,900
Conversion of DownREIT units to common stock 120 120 3,957 — — 4,077 (4,077) 0
Repurchase of common stock (289) (289) (9,984) — — (10,273) — (10,273)
Exercise of stock options 54 54 1,752 — — 1,806 — 1,806
Amortization of deferred compensation — — 15,817 — — 15,817 — 15,817
Common dividends ($1.11 per share) — — — (587,596) — (587,596) — (587,596)
Distributions to noncontrolling interests — — — — — — (22,925) (22,925)
September 30, 2020 538,355 $ 538,355 $ 10,228,086 $ (3,923,150) $ (3,236) $ 6,840,055 $ 566,253 $ 7,406,308

~~For the nine months ended September 30, 2019:~~

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
December 31, 2018 477,496 $ 477,496 $ 8,398,847 $ (2,927,196) $ (4,708) $ 5,944,439 $ 568,152 $ 6,512,591
Impact of adoption of ASU No. 2016-02(2)
— — — 590 — 590 — 590
January 1, 2019 477,496 477,496 8,398,847 (2,926,606) (4,708) 5,945,029 568,152 6,513,181
Net income (loss) — — — 2,010 — 2,010 10,692 12,702
Other comprehensive income (loss) — — — — (515) (515) — (515)
Issuance of common stock, net 17,272 17,272 491,970 — — 509,242 — 509,242
Conversion of DownREIT units to common stock 184 184 3,890 — — 4,074 (4,074) 0
Repurchase of common stock (159) (159) (4,772) — — (4,931) — (4,931)
Exercise of stock options 55 55 1,380 — — 1,435 — 1,435
Amortization of deferred compensation — — 14,529 — — 14,529 — 14,529
Common dividends ($1.11 per share) — — — (536,660) — (536,660) — (536,660)
Distributions to noncontrolling interests — — — — — — (17,724) (17,724)
Issuances of noncontrolling interests — — — — — — 33,318 33,318
Purchase of noncontrolling interests — — (1,079) — — (1,079) (139) (1,218)
September 30, 2019 494,848 $ 494,848 $ 8,904,765 $ (3,461,256) $ (5,223) $ 5,933,134 $ 590,225 $ 6,523,359


	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
December 31, 2019	505,222	$	505,222	$	9,183,892	$	(3,601,199)	$	(2,857)	$	6,085,058	$	582,416	$	6,667,474
Impact of adoption of ASU No. 2016-13(1)	—	—		—		(1,524)		—		(1,524)		—		(1,524)
January 1, 2020	505,222	$	505,222	$	9,183,892	$	(3,602,723)	$	(2,857)	$	6,083,534	$	582,416	$	6,665,950
Net income (loss)	—	—		—		279,080		—		279,080		3,460		282,540
Other comprehensive income (loss)	—	—		—		—		362		362		—		362
Issuance of common stock, net	33,104	33,104		1,031,518		—		—		1,064,622		—		1,064,622
Conversion of DownREIT units to common stock	23	23		486		—		—		509		(509)		0
Repurchase of common stock	(268)	(268)		(9,469)		—		—		(9,737)		—		(9,737)
Exercise of stock options	54	54		1,752		—		—		1,806		—		1,806
Amortization of stock-based compensation	—	—		4,832		—		—		4,832		—		4,832
Common dividends ($0.37 per share)	—	—		—		(188,500)		—		(188,500)		—		(188,500)
Distributions to noncontrolling interest	—	—		—		—		—		—		(8,432)		(8,432)




March 31, 2020	538,135	$	538,135	$	10,213,011	$	(3,512,143)	$	(2,495)	$	7,236,508	$	576,935	$	7,813,443

(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,~~See accompanying Notes to the ~~Company adopted a series~~Unaudited Consolidated Financial Statements.

Table 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.~~Contents

Healthpeak Properties, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities:
Net income (loss)	$	149,423	$	282,540
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of real estate, in-place lease, and other intangibles	157,538		189,276


Amortization of stock-based compensation	4,364		4,832
Amortization of deferred financing costs	2,213		2,582
Straight-line rents	(9,135)		(6,229)



Amortization of nonrefundable entrance fees and above/below market lease intangibles	(23,764)		(15,943)
Equity loss (income) from unconsolidated joint ventures	(1,008)		11,979
Distributions of earnings from unconsolidated joint ventures	237		9,513


Loss (gain) on sale of real estate under direct financing leases	0		(41,707)
Deferred income tax expense (benefit)	(1,148)		(24,911)
Impairments and loan loss reserves (recoveries), net	3,242		39,123
Loss (gain) on debt extinguishments	164,292		(833)
Loss (gain) on sales of real estate, net	(259,662)		(164,869)
Loss (gain) upon change of control, net	(1,042)		(167,434)
Casualty-related loss (recoveries), net	859		0



Other non-cash items	(726)		502
Changes in:

Decrease (increase) in accounts receivable and other assets, net	11,567		(5,036)
Increase (decrease) in accounts payable, accrued liabilities, and deferred revenue	(74,524)		(18,343)
Net cash provided by (used in) operating activities	122,726		95,042
Cash flows from investing activities:


Acquisitions of real estate	(14,914)		(20,018)
Development, redevelopment, and other major improvements of real estate	(135,339)		(209,418)
Leasing costs, tenant improvements, and recurring capital expenditures	(20,710)		(21,791)
Proceeds from sales of real estate, net	937,492		419,381
Acquisition of CCRC Portfolio	0		(396,352)
Contributions to unconsolidated joint ventures	(5,924)		(1,722)
Distributions in excess of earnings from unconsolidated joint ventures	10,825		2,639






Proceeds from sales/principal repayments on debt investments and direct financing leases	0		84,336
Investments in loans receivable and other	(3,704)		(8,066)


Net cash provided by (used in) investing activities	767,726		(151,011)
Cash flows from financing activities:
Borrowings under bank line of credit and commercial paper	3,437,200		2,025,600
Repayments under bank line of credit and commercial paper	(2,528,640)		(2,118,600)

Repayments and repurchase of debt, excluding bank line of credit and commercial paper	(1,491,754)		(5,338)





Payments for debt extinguishment and deferred financing costs	(158,011)		0

Issuance of common stock and exercise of options	1,087		1,066,428
Repurchase of common stock	(12,165)		(9,737)
Dividends paid on common stock	(164,118)		(188,500)


Distributions to and purchase of noncontrolling interests	(7,718)		(8,432)
Net cash provided by (used in) financing activities	(924,119)		761,421
Effect of foreign exchanges on cash, cash equivalents and restricted cash	0		(10)
Net increase (decrease) in cash, cash equivalents and restricted cash	(33,667)		705,442
Cash, cash equivalents and restricted cash, beginning of period	181,685		184,657
Cash, cash equivalents and restricted cash, end of period	$	148,018	$	890,099

See accompanying Notes to the Unaudited Consolidated Financial Statements.

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Healthpeak Properties, Inc.

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(In thousands)~~

~~(Unaudited)~~

Nine Months Ended
September 30,
2020 2019
Cash flows from operating activities:
Net income (loss) $ 278,008 $ 12,702
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of real estate, in-place lease and other intangibles 541,394 469,191
Amortization of deferred compensation 13,392 14,529
Amortization of deferred financing costs 7,670 8,174
Straight-line rents (24,086) (16,220)
Amortization of nonrefundable entrance fees and above/below market lease intangibles (58,849) 0
Equity loss (income) from unconsolidated joint ventures 48,545 10,012
Distributions of earnings from unconsolidated joint ventures 11,928 12,001
Loss (gain) on sale of real estate under direct financing leases (41,670) 0
Deferred income tax expense (benefit) (8,245) (14,468)
Impairments and loan loss reserves (recoveries), net 97,723 115,653
Loss on debt extinguishments 42,912 36,152
Loss (gain) on sales of real estate, net (247,881) (18,708)
Loss (gain) upon change of control, net (173,222) (11,481)
Casualty-related loss (recoveries), net 469 (4,406)
Other non-cash items 653 (1,157)
Changes in:
Decrease (increase) in accounts receivable and other assets, net 22,503 (31,445)
Increase (decrease) in accounts payable, accrued liabilities and deferred revenue 28,480 48,072
Net cash provided by (used in) operating activities 539,724 628,601
Cash flows from investing activities:
Acquisitions of real estate (340,405) (1,315,168)
Development, redevelopment, and other major improvements of real estate (577,524) (441,416)
Leasing costs, tenant improvements, and recurring capital expenditures (61,329) (62,840)
Proceeds from sales of real estate, net 568,828 165,683
Acquisition of CCRC Portfolio (394,177) 0
Contributions to unconsolidated joint ventures (9,792) (14,067)
Distributions in excess of earnings from unconsolidated joint ventures 6,200 16,166
Proceeds from insurance recovery 0 9,359
Proceeds from sales/principal repayments on debt investments and direct financing leases 125,372 274,025
Investments in loans receivable, direct financing leases and other (83,651) (73,256)
Net cash provided by (used in) investing activities (766,478) (1,441,514)
Cash flows from financing activities:
Borrowings under bank line of credit and commercial paper 2,025,600 2,690,000
Repayments under bank line of credit and commercial paper (2,118,600) (2,030,000)
Issuance and borrowings of debt, excluding bank line of credit and commercial paper 594,750 1,296,607
Repayments and repurchase of debt, excluding bank line of credit and commercial paper (559,725) (1,308,596)
Borrowings under term loan 0 250,000
Payments for debt extinguishment and deferred financing costs (47,149) (53,225)
Issuance of common stock and exercise of options 1,067,706 510,677
Repurchase of common stock (10,273) (4,931)
Dividends paid on common stock (587,596) (536,660)
Issuance of noncontrolling interests 0 33,318
Distributions to and purchase of noncontrolling interests (22,925) (18,942)
Net cash provided by (used in) financing activities 341,788 828,248
Effect of foreign exchanges on cash, cash equivalents and restricted cash (153) (77)
Net increase (decrease) in cash, cash equivalents and restricted cash 114,881 15,258
Cash, cash equivalents and restricted cash, beginning of period 184,657 139,846
Cash, cash equivalents and restricted cash, end of period $ 299,538 $ 155,104

~~See accompanying Notes to the Unaudited Consolidated Financial Statements.~~

~~Table of Contents~~

~~Healthpeak Properties, Inc.~~

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. Business

Overview

Healthpeak Properties, Inc., a Standard & Poor’s 500 company, is a Maryland corporation that is organized to qualify as a real estate investment trust (“REIT”) which, together with its consolidated entities (collectively, “Healthpeak” or the “Company”), invests primarily in real estate serving the healthcare industry in the United States (“U.S.”). HealthpeakTM acquires, develops, leases, owns, and manages healthcare real estate. The Company’s diverse portfolio is comprised of investments in the following reportable healthcare segments: (i) ~~senior housing triple-net;~~life science; (ii) ~~senior housing operating portfolio (“SHOP”);~~medical office; and (iii) continuing care retirement community (“CCRC”)~~; (iv) life science;~~.

The Company’s corporate headquarters are in Denver, Colorado and ~~(v) medical office.~~it has additional offices in Irvine, California and Franklin, Tennessee.

~~New Corporate Headquarters~~Senior Housing Triple-Net and Senior Housing Operating Portfolio Dispositions

~~In November~~During 2020, the Company established and began executing a ~~new corporate headquarters~~plan to dispose of its senior housing triple-net and Senior Housing Operating (“SHOP”) properties. As of December 31, 2020, the Company concluded the planned dispositions represented a strategic shift that has and will have a major effect on the Company’s operations and financial results. Therefore, assets meeting the held for sale criteria on or before March 31, 2021 are classified as discontinued operations in Denver, CO. With properties in nearly every state, the new headquarters provides a favorable mix of affordability and a centralized geographic location. The Company’s Irvine, CA and Franklin, TN offices will continue to operate.all periods presented herein. See Note 5 for further information.

COVID-19 Update

~~In March 2020,~~While the ~~World Health Organization declared the outbreak caused by the coronavirus~~Coronavirus (“COVID-19”) ~~to be a global pandemic. While COVID-19~~ continues to evolve daily and its ultimate outcome is uncertain, it has caused significant disruption to individuals, governments, financial markets, and businesses, including the Company. Global health concerns and increased efforts to reduce the spread of the COVID-19 pandemic prompted federal, state, and local governments to restrict normal daily activities, and 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, certain restrictions remain in place or have been re-imposed and any future surges of COVID-19 may lead to other restrictions being re-implemented in response to efforts to reduce the spread. In addition, the Company’s 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 or be re-imposed from time to time,~~the pandemic, continue to place a substantial strain on the business operations of many of the Company’s tenants, operators, and borrowers. The Company evaluated the impacts of COVID-19 on its business thus far and incorporated information concerning the impact of COVID-19 into its assessments of liquidity, impairments, and collectibility from tenants, residents, and borrowers as of ~~September 30, 2020.~~March 31, 2021. The Company will continue to monitor such impacts and will adjust its estimates and assumptions based on the best available information.

NOTE 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Management is required to make estimates and assumptions in the preparation of financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from management’s estimates.

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The consolidated financial statements include the accounts of Healthpeak Properties, Inc., its wholly-owned subsidiaries, joint ventures (“JVs”), and variable interest entities (“VIEs”) that it controls through voting rights or other means. Intercompany transactions and balances have been eliminated upon consolidation. All adjustments (consisting of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations, and cash flows have been included. Operating results for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2020.~~2021. The accompanying unaudited interim financial information should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, ~~2019~~2020 included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”).

~~Table of Contents~~

Government Grant Income

On March 27, 2020, the federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) to provide financial aid to individuals, businesses, and state and local governments.During the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, the Company received government grants under the CARES Act primarily to cover increased expenses and lost revenue during the COVID-19 pandemic. Grant income is recognized when there is reasonable assurance that the grant will be received and the Company will comply with all conditions attached to the grant. Additionally, grants are recognized over the periods in which the Company recognizes the increased expenses and lost revenue the grants are intended to defray. As of ~~September 30, 2020,~~March 31, 2021, the amount of qualifying expenditures and lost revenue exceeded grant income recognized and the Company had complied or will continue to comply with all grant conditions.

The following table summarizes information related to government grant income received and recognized by the Company (in thousands):

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
Government grant income recorded in other income (expense), net $ 2,153 $ 0 $ 16,233 $ 0
Government grant income recorded in equity income (loss) from unconsolidated joint ventures 295 0 1,099 0
Total government grants received $ 2,448 $ 0 $ 17,332 $ 0

~~Segment Reporting~~

The Company’s reportable segments, based on how it evaluates its business and allocates resources, are as follows: (i) senior housing triple-net, (ii) SHOP, (iii) CCRC, (iv) life science, and (v) medical office. In January 2020, primarily as a result of: (i) consolidating 13 of 15 CCRCs previously held by a CCRC joint venture (see discussion of the Brookdale 2019 Master Transaction and Cooperation Agreement in Note 3) and (ii) deconsolidating 19 SHOP assets into a new joint venture in December 2019, the Company's chief operating decision makers (“CODMs”) began reviewing operating results of CCRCs on a stand-alone basis and financial information for each respective segment inclusive of the Company’s share of unconsolidated joint ventures and exclusive of noncontrolling interests’ share of consolidated joint ventures. Therefore, during the first quarter of 2020, the Company began reporting CCRCs as a separate segment and segment measures inclusive of the Company’s share of unconsolidated joint ventures and exclusive of noncontrolling interests’ share of consolidated joint ventures. Accordingly, all prior period segment information has been recast to conform to the current period presentation.


	Three Months Ended March 31,
	2021		2020
Government grant income recorded in other income (expense), net	$	1,310	$	0
Government grant income recorded in equity income (loss) from unconsolidated joint ventures	426		0
Government grant income recorded in income (loss) from discontinued operations	3,232		0
Total government grants received	$	4,968	$	0

Recent Accounting Pronouncements

Adopted

~~Leases.~~ ~~In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02,~~ ~~Leases~~ ~~(“ASU 2016-02”). ASU 2016-02 (codified under Accounting Standards Codification (“ASC”) 842,~~ ~~Leases~~) amends the previous accounting for leases to: (i) require lessees to put most leases on their balance sheets (not required for short-term leases with lease terms of 12 months or less), but continue recognizing expenses on their income statements in a manner similar to requirements under prior accounting guidance, (ii) eliminate real estate specific lease provisions, and (iii) modify the classification criteria and accounting for sales-type leases for lessors. Additionally, ASU 2016-02 provides a practical expedient, which the Company elected, that allows an entity to not reassess the following upon adoption (must be elected as a group): (i) whether an expired or existing contract contains a lease arrangement, (ii) lease classification related to expired or existing lease arrangements, or (iii) whether costs incurred on expired or existing leases qualify as initial direct costs.

~~As a result of adopting~~ ~~ASU 2016-02~~ on January 1, 2019 using the modified retrospective transition approach, the Company recognized a cumulative-effect adjustment to equity of $1 million as of January 1, 2019. Under ASU 2016-02, the Company began capitalizing fewer costs related to the drafting and negotiation of its lease agreements. Additionally, the Company began recognizing all of its significant operating leases for which it is the lessee, including corporate office leases, equipment leases, and ground leases, on its consolidated balance sheets as a lease liability and corresponding right-of-use asset. As such, the Company recognized a lease liability of $153 millionand right-of-use asset of $166 million on January 1, 2019. The aggregate lease liability was calculated as the present value of minimum lease payments, discounted using a rate that approximated the Company’s secured incremental borrowing rate at the time of adoption, adjusted for the noncancelable term of each lease. The right-of-use asset was calculated as the aggregate lease liability, adjusted for the existing accrued straight-line rent liability balance of $20 million and net unamortized above/below market ground lease intangible assets of $33 million.

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Credit Losses. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 is intended to improve financial reporting by requiring timelier recognition of credit losses on loans and other financial instruments held by financial institutions and other organizations. The amendments in ASU 2016-13 eliminate the “probable” initial threshold for recognition of credit losses in previous accounting guidance and, instead, reflect an entity’s current estimate of all expected credit losses over the life of the financial instrument. Historically, when credit losses were measured under previous accounting guidance, an entity generally only considered past events and current conditions in measuring the incurred loss. The amendments in ASU 2016-13 broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss.

As a result of adopting ASU 2016-13 on January 1, 2020 using the modified retrospective transition approach, the Company recognized a cumulative-effect adjustment to equity of $2 million as of January 1, 2020. Under ASU 2016-13, the Company began using a loss model that relies on future expected credit losses, rather than incurred losses, as was required under historical GAAP. Under the new model, the Company is required to recognize future credit losses expected to be incurred over the life of its ~~financing~~finance receivables, including loans receivable, direct financing leases (“DFLs”), and certain accounts receivable, at inception of those instruments. The model emphasizes historical experience and future market expectations to determine a loss to be recognized at inception. However, the model continues to be applied on an individual basis and rely on counter-party specific information to ensure the most accurate estimate is recognized. The Company ~~will reassess~~reassesses its reserves on ~~financing~~finance receivables at each balance sheet date to determine if an adjustment to the previous reserve is necessary.

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Accounting for Lease Concessions Related to COVID-19.In April 2020, the FASB staff issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under ASC 842, the Company would have to determine, on a lease-by-lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A allows the Company, if certain criteria have been met, to bypass the lease-by-lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. During the ~~three and nine months~~year ended ~~September 30,~~December 31, 2020, the Company provided rent deferrals (to be repaid before the end of 2020) to certain tenants in its life science and medical office segments that were impacted by COVID-19 (discussed in further detail in Note 5)6). No such rent deferrals were provided to tenants during the three months ended March 31, 2021 and 2020. As it relates to these deferrals, the Company elected to not assess them on a lease-by-lease basis and to continue recognizing rent revenue on a straight-line basis.

While the Company’s election for rent deferrals will be applied consistently to future deferrals of a similar nature, if the Company grants future lease concessions of a different type (such as rent abatements), it will make an election related to those concessions at that time.

NOTE 3. Master Transactions and Cooperation Agreement with Brookdale

2019 Master Transactions and Cooperation Agreement with Brookdale

In October 2019, the Company and Brookdale Senior Living Inc. (“Brookdale”) entered into a Master Transactions and Cooperation Agreement (the “2019 MTCA”), which includes a series of transactions related to its previously jointly owned 15-campus CCRC portfolio (the “CCRC JV”) and the portfolio of senior housing properties Brookdale triple-net leased from the Company, which, at the time, included 43 properties.

In connection with the 2019 MTCA, the Company and Brookdale, and certain of their respective subsidiaries, closed the following transactions related to the CCRC JV on January 31, 2020:

•The Company, which owned a 49% interest in the CCRC JV, purchased Brookdale’s 51% interest in 13 of the 15 communities in the CCRC JV based on a valuation of $1.06 billion (the “CCRC Acquisition”);

•The management agreements related to the CCRC Acquisition communities were terminated and management transitioned (under new management agreements) from Brookdale to Life Care Services LLC (“LCS”); and

•The Company paid a $100 million management termination fee to Brookdale.

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In addition, pursuant to the 2019 MTCA, the Company and Brookdale closed the following transactions related to properties Brookdale triple-net leased from the Company on January 31, 2020:

•Brookdale acquired 18 of the properties from the Company (the “Brookdale Acquisition Assets”) for cash proceeds of $385 million;

•The remaining 24 properties (excludes 1 property to be transitioned or sold to a third party, as discussed below) were restructured into a single master lease with 2.4% annual rent escalators and a maturity date 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.

As agreed to by the Company and Brookdale under the 2019 MTCA, in December 2020, the Company terminated the triple-net lease related to 1 property and converted it to a structure 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”). The 24 assets under the 2019 Amended Master Lease were sold in January 2021 (see Note 5).

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Additionally, under the 2019 MTCA, the Company and Brookdale agreed to the following transactions which have not yet ~~occurred:~~been completed:

•The CCRC JV will sell the remaining 2 CCRCs, which are being marketed for sale to third ~~parties.~~

•~~The Company will terminate the triple-net lease related to 1 property and convert it to a RIDEA structure or sell it to a third party;~~parties; and

•The Company will provide up to $35 million of capital investment in the 2019 Amended Master Lease properties over a five-year term, which will increase rent by 7% of the amount spent, per annum. As of ~~September 30,~~December 31, 2020, the Company had funded $4$5 million of this capital investment. Upon selling the 24 assets under the 2019 Amended Master Lease in January 2021, the remaining capital investment obligation was transferred to the buyer.

As a result of the above transactions, on January 31, 2020, the Company began consolidating the 13 CCRCs in which it acquired Brookdale’s interest. Accordingly, the Company derecognized its investment in the CCRC JV of $323 million and recognized a gain upon change of control of $170 million, which is included in other income (expense), net. In connection with consolidating the 13 CCRCs during the first quarter of 2020, the Company recognized real estate and intangible assets of $1.8 billion, refundable entrance fee liabilities of $308 million, contractual liabilities associated with previously collected non-refundable entrance fees of $436 million, debt assumed of $215 million, other net assets of $48 million, and cash paid of $396 million.

Upon sale of the 18 senior housing triple-net assets to Brookdale, the Company recognized an aggregate gain on sales of real estate of $164 ~~million.~~million, which is recorded within income (loss) from discontinued operations.

Fair Value Measurement Techniques and Quantitative Information

At January 31, 2020, the Company performed a fair value assessment of each of the 2019 MTCA components that provided measurable economic benefit or detriment to the Company. Each fair value calculation was based on an income or market approach and relied on historical and forecasted net operating income, actuarial assumptions about the expected resident length of stay, and market data, including, but not limited to, discount rates ranging from 10% to 12%, annual rent escalators ranging from 2% to 3%, and real estate capitalization rates ranging from 7% to 9%. All assumptions were ~~supported by independent market data and~~ considered to be Level 3 measurements within the fair value hierarchy.

~~2017 MTCA with Brookdale~~

In November 2017, the Company and Brookdale entered into a Master Transactions and Cooperation Agreement (the “2017 MTCA”) to provide the Company with the ability to significantly reduce its concentration of assets leased to and/or managed by Brookdale. In connection with the overall transaction pursuant to the 2017 MTCA, the Company and Brookdale, and certain of their respective subsidiaries, agreed to the following:

•The Company, which owned 90% of the interests in its RIDEA I and RIDEA III joint ventures with Brookdale at the time the 2017 MTCA was executed, agreed to purchase Brookdale’s 10% noncontrolling interest in each joint venture. At the time the 2017 MTCA was executed, these joint ventures collectively owned and operated 58 independent living, assisted living, memory care, and/or skilled nursing facilities (the “RIDEA Facilities”). The Company completed its acquisitions of the RIDEA III noncontrolling interest for $32 million~~in December 2017 and the RIDEA I noncontrolling interest for $63 million in March 2018;~~

•The Company received the right to sell, or transition to other operators, 32 of the 78 total assets under an Amended and Restated Master Lease and Security Agreement (the “2017 Amended Master Lease”) with Brookdale and 36 of the RIDEA Facilities (and terminate related management agreements with an affiliate of Brookdale without penalty), certain of which were sold during 2018 and 2019;

•~~The Company provided an aggregate $5 million annual reduction in rent on 3 assets, effective January 1, 2018; and~~

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•~~Brookdale agreed to purchase 2 of the assets under the 2017 Amended Master Lease for $35 million and 4 of the RIDEA Facilities for $240 million, all of which were sold in 2018.~~

During 2018, the Company terminated the previous management agreements or leases with Brookdale on 37 assets contemplated under the 2017 MTCA and completed the transition of 20 SHOP assets and 17 senior housing triple-net assets to other managers.

NOTE 4. Real Estate Transactions

~~2020~~2021 Real Estate Investments

~~The Post Acquisition~~

~~In April 2020, the Company acquired a life science campus in Waltham, Massachusetts for $320 million.~~

~~Scottsdale Gateway Acquisition~~

~~In July 2020, the Company acquired 1 medical office building (“MOB”) in Scottsdale, Arizona for $27 million.~~

~~Midwest MOB Portfolio Acquisition~~

In September 2020, the Company entered into definitive agreements to acquire a portfolio of 7 MOBs located in Indiana, Missouri, and Illinois for $169 million. The Company made a $9 million nonrefundable deposit upon completing due diligence in September 2020 and closed the transaction in October 2020.

~~Cambridge Discovery Park Acquisition~~

In October 2020, the Company entered into definitive agreements to acquire 3 life science facilities in Cambridge, Massachusetts for $610 million and a 49% joint venture interest in a fourth property on the same campus for $54 million. The Company made a $20 million nonrefundable deposit upon completing due diligence in October 2020 and expects to close the transaction during the fourth quarter of 2020.

South San Francisco Land Site Acquisition

In October 2020, the Company executed a definitive agreement to acquire approximately 12 acres of land for $128 million. The acquisition site is located in South San Francisco, California, adjacent to 2 sites currently held by the Company as land for future development. The Company ~~made~~paid a $10 million nonrefundable deposit upon completing due diligence in November ~~2020 and expects to close~~2020. The first phase, with a purchase price of $61 million, closed in April 2021.

Westview Medical Plaza Acquisition

In February 2021, the ~~transaction during~~Company acquired 1 medical office building (“MOB”) in Nashville, Tennessee for $13 million.

Pinnacle at Ridgegate Acquisition

In April 2021, the ~~first half~~Company acquired 1 MOB in Denver, Colorado for $38 million.

MOB Portfolio Acquisition

In April 2021, the Company acquired 14 MOBs for $371 million (the “MOB Portfolio”). In conjunction with the acquisition, the Company issued $142 million of ~~2021.~~secured mortgage debt.

~~2019~~2020 Real Estate Investments

~~Cambridge~~The Post Acquisition

~~During the first quarter of 2019,~~In April 2020, the Company acquired a life science ~~facility~~campus in Waltham, Massachusetts for ~~$71 million and development rights at an adjacent undeveloped land parcel~~$320 million.

Scottsdale Gateway Acquisition

In July 2020, the Company acquired 1 MOB in Scottsdale, Arizona for ~~consideration of up to~~ $27 million. ~~The existing facility and land parcel are located in Cambridge, Massachusetts.~~

~~Discovery~~Midwest MOB Portfolio Acquisition

In ~~April 2019,~~October 2020, the Company acquired a portfolio of ~~9 senior housing properties~~7 MOBs located in Indiana, Missouri, and Illinois for ~~$445 million. The properties are located across Florida, Georgia, and Texas and are operated by Discovery Senior Living, LLC.~~

~~Oakmont Portfolio Acquisitions~~

In May 2019, the Company acquired 3 senior housing communities in California for $113 million and in July 2019, the Company acquired an additional 5 senior housing communities for $284 million. Both portfolios were acquired from and continue to be operated by Oakmont Senior Living LLC (“Oakmont”). Each portfolio was contributed to a DownREIT joint venture in which the sellers received non-controlling interests in lieu of cash for a portion of the sales price. The Company consolidates each DownREIT joint venture.

As part of the May and July 2019 Oakmont transactions, the Company assumed $50 million and $112 million, respectively, of secured mortgage debt, both of which were recorded at their relative fair values through asset acquisition accounting.

~~Sierra Point Towers Acquisition~~

~~In June 2019, the Company acquired 2 life science buildings in South San Francisco, California, adjacent to the Company’s The Shore at Sierra Point development, for $245~~$169 million.

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~~Vintage~~Cambridge Discovery Park Acquisition

In December 2020, the Company acquired 3 life science facilities in Cambridge, Massachusetts for $610 million and a 49% unconsolidated joint venture interest in a fourth property on the same campus for $54 million. If the fourth property is sold in a taxable transaction, the Company is generally obligated to indemnify its joint venture partner for its federal and state income taxes associated with the gain that existed at the time of the contribution to the joint venture.

Waldwick JV Interest Purchase

In ~~June 2019,~~October 2020, the Company acquired the ~~outstanding~~remaining 15% equity ~~interests~~interest of a senior housing joint venture structure (which owned 1 senior housing facility), in which the Company previously held an unconsolidated equity investment, for ~~$24~~$4 million. Subsequent to acquisition, the Company owned 100% of the ~~equity. Upon~~equity, began consolidating the facility, ~~at acquisition, the Company derecognized the existing investment in the joint venture structure, marked the real estate to fair value (using a relative fair value allocation),~~ and recognized a gain upon change of control of ~~$12 million, net of a tax impact of $1 million. The gain upon change of control is recognized within other income (expense), net and the tax impact is recognized within income tax benefit (expense).~~

~~Hartwell Innovation Campus Acquisition~~

~~In July 2019, the Company acquired a life science campus in the suburban Boston submarket of Lexington, Massachusetts, for $228 million. The campus is comprised of 4 buildings.~~

~~West Cambridge Acquisition~~

~~In December 2019, the Company acquired 1 life science building, adjacent to the Company’s existing properties in Cambridge, Massachusetts, for $333 million.~~

~~Sovereign Wealth Fund Senior Housing Joint Venture~~

In December 2019, the Company formed a new joint venture (the “SWF SH JV”) with a sovereign wealth fund that owns 19 SHOP assets operated by Brookdale. The Company owns 53.5% of the SWF SH JV and contributed all 19 assets with a fair value of $790 million. The SWF SH JV partner owns the other 46.5% and purchased its interest for $367 million. Upon formation of the SWF SH JV, the Company recognized its retained equity method investment at fair value, deconsolidated the 19 SHOP assets, and recognized a gain upon change of control of $161$6 million, which is recorded in other income (expense), ~~net.~~net within income (loss) from discontinued operations. In December 2020, the Company sold the property as part of the Atria SHOP Portfolio disposition (see Note 5).

MBK JV Dissolution

In November 2020, as part of the dissolution of a senior housing joint venture, the Company was distributed 1 property, 1 land parcel, and $11 million in cash. Upon consolidating the property and land parcel at the time of distribution, the Company recognized a loss upon change of control of $16 million, which is recorded in other income (expense), net within income (loss) from discontinued operations. In conjunction with the distribution of the property, the Company assumed $36 million of secured mortgage debt, which was recorded at its fair value through asset acquisition accounting. The property is classified as discontinued operations as of March 31, 2021.

Other Real Estate Acquisitions

~~During the year ended~~In December ~~31, 2019,~~2020, the Company acquired 1 ~~MOB~~hospital in ~~Kansas for $15 million, 1 MOB in~~Dallas, Texas for ~~$9 million, and 1 life science building in the Sorrento Mesa submarket of San Diego, California for $16~~$34 million.

Development Activities

The Company’s commitments related to development and redevelopment projects increased by ~~$37~~$9 million, to ~~$398~~$315 million at ~~September 30, 2020,~~March 31, 2021, when compared to December 31, ~~2019,~~2020, primarily as a result of increased commitments on existing projects and new projects started during the ~~third~~first quarter of ~~2020.~~2021.

~~Held~~In March 2021, management reviewed the estimated useful lives of certain Life Science properties in connection with future plans of densification and related demolition. These changes in the planned use of the properties resulted in the Company updating their estimated useful lives, which differ from the Company’s previous estimates. The estimated useful lives of these assets was reduced from a weighted average remaining useful life of 15 years to 6 years to reflect the timing of the planned demolitions. This change in estimate increased depreciation expense by $3 million in the current quarter, resulting in a corresponding decrease to income (loss) from continuing operations and net income (loss) as well as a decrease of approximately $0.01 to basic and diluted earnings per share for ~~Sale~~the three months ended March 31, 2021.

~~At September 30, 2020, 33~~

NOTE 5. Dispositions of Real Estate and Discontinued Operations

2021 Dispositions of Real Estate

Sunrise Senior Housing Portfolio

In January 2021, the Company sold a portfolio of 32 SHOP assets (the “Sunrise Senior Housing Portfolio”) for $664 million, resulting in an immaterial loss on sale, which is recognized in income (loss) from discontinued operations, 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, NaN of which has been funded as of March 31, 2021 (see Note 7). Under the Company’s definitive agreement, there are 2 remaining senior housing triple-net ~~facilities, 5 MOBs, 97~~assets that are expected to be sold during the remainder of 2021, upon completion of the license transfer process.

Brookdale Triple-Net Portfolio

In January 2021, the Company sold 24 senior housing assets in a triple-net lease with Brookdale for $510 million, resulting in total gain on sale of $169 million, which is recognized in income (loss) from discontinued operations.

Additional SHOP ~~facilities, 1 property included~~Portfolio

In January 2021, the Company sold a portfolio of 16 SHOP assets for $230 million, resulting in total gain on sale of $59 million, which is recognized in income (loss) from discontinued operations, and provided the ~~Company’s other non-reportable segment, 5 loans receivable~~buyer with financing of $150 million (see Note ~~6), and 2 preferred equity investments (see Note 7) were classified as held for sale, with an aggregate carrying value~~7).

Table of $2.21 billion, primarily comprised of real estate assets of $2.15 billion (net of accumulated depreciation of $659 million) and loans receivable of $23 million. Liabilities related to assets held for sale were primarily comprised of mortgage debt of $77 million and other liabilities of $16 million at September 30, 2020.Contents

~~At December 31, 2019, 27~~HRA Triple-Net Portfolio

In February 2021, the Company sold 8 senior housing assets in a triple-net ~~facilities (inclusive~~lease with Harbor Retirement Associates for $132 million, resulting in total gain on sale of ~~18 facilities~~$33 million, which is recognized in income (loss) from discontinued operations.

2021 Other Dispositions

In addition to the sales discussed above, during the three months ended March 31, 2021, the Company sold ~~to Brookdale under the 2019 MTCA - see Note 3), 28~~1 SHOP ~~facilities, and 2 MOBs were classified as held~~asset for $5 million, resulting in an immaterial gain on sale, with an aggregate carrying value of $504 million, primarily comprised of real estate assets of $476 million (net of accumulated depreciation of $243 million). Liabilities related to assets held for sale were primarily comprised of mortgage debt of $32 million and other liabilities of $4 million at December 31, 2019.which is recognized in income (loss) from discontinued operations.

~~2020 Dispositions of Real Estate~~SLC SHOP Portfolio

In October 2020, the Company entered into a definitive agreement to sell 7 SHOP assets for $115 million. The Company received a $3 million nonrefundable deposit ~~upon completion~~and expects to close the transaction during the remainder of ~~due diligence in October 2020.~~2021.

Oakmont SHOP Portfolio

In ~~October and November 2020,~~April 2021, the Company sold 7a portfolio of 12 SHOP assets for $564 million.

Discovery SHOP Portfolio

In April 2021, the Company sold a portfolio of 10 SHOP assets for $334 million. Also included in this transaction was the sale of 2 mezzanine loans and 32 preferred equity investments for $21 million (collectively, “the Discovery SHOP Portfolio”).

Sonata SHOP Portfolio

In April 2021, the Company sold a portfolio of 5 SHOP assets for $64 million.

Other Subsequent Dispositions

In April 2021, the Company sold 2 SHOP assets for $13 million, 2 senior housing triple-net assets for ~~$88~~$7 million, and 1 MOB for $10 million.

~~Table~~2020 Dispositions of ~~Contents~~

Real Estate

During the three months ended ~~September 30,~~March 31, 2020, the Company sold 4 SHOP assets for $12 million, 4 MOBs for $14 million, 1 undeveloped MOB land parcel for $2 million, and 1 asset from the other non-reportable segment for $1 million, resulting in no material gain or loss on sales.

~~During the three months ended June 30, 2020, the Company sold 2 SHOP assets for $28 million, resulting in total gain on sales of $2 million.~~

Additionally, during the three months ended June 30, 2020, one of the Company’s tenants exercised its option to acquire 3 MOBs in San Diego, California for $106 million. The Company completed the sale in June 2020, resulting in total gain on sales of $81 million.

~~During the three months ended March 31, 2020,~~ the Company sold 7 SHOP assets for $36 million and 18 senior housing triple-net assets for $385 million (representative of the 18 facilities sold to Brookdale under the 2019 MTCA - see Note 3)3), resulting in total gain on sales of $165 ~~million.~~million, which is recognized in income (loss) from discontinued operations.

~~2019 Dispositions of Real Estate~~Aegis NNN Portfolio

~~During the three months ended September 30, 2019,~~In December 2020, the Company sold ~~1 MOB~~10 senior housing triple-net assets (the “Aegis NNN Portfolio”) for ~~$3 million and 1 SHOP asset for $7~~$358 million, resulting in ~~no material~~total gain ~~or loss~~ on ~~sales.~~sale of $228 million, which is recognized in income (loss) from discontinued operations.

~~During the nine months ended September 30, 2019,~~Atria SHOP Portfolio

In December 2020, the Company sold 1112 SHOP assets (the “Atria SHOP Portfolio”) for $312 million, resulting in total gain on sale of $39 million, which is recognized in income (loss) from discontinued operations. The Company provided the buyer with financing of $61 million on 4 of the assets sold (see Note 7).

2020 Other Dispositions

In addition to the sales discussed above, during the year ended December 31, 2020, the Company sold the following: (i) 23 SHOP assets for ~~$89~~$190 million, 2(ii) 21 senior housing triple-net assets for ~~$26~~$428 million 6(inclusive of the 18 facilities sold to Brookdale under the 2019 MTCA - see Note 3), (iii) 11 MOBs for ~~$18~~$136 million ~~1 life science asset~~(inclusive of the exercise of a purchase option by a tenant to acquire 3 MOBs in San Diego, California), (iv) 2 MOB land parcels for $7$3 million, and (v) 1 ~~undeveloped life science land parcel~~asset from other non-reportable segments for ~~$35~~$1 million, resulting in total gain on sales of ~~$19 million.~~$283 million ($193 million of which is reported in income (loss) from discontinued operations).

Held for Sale and Discontinued Operations

At March 31, 2021, 9 senior housing triple-net facilities, 8 MOBs, 48 SHOP facilities, and 1 SHOP joint venture were classified as held for sale and/or discontinued operations.

At December 31, 2020, 41 senior housing triple-net facilities, 6 MOBs, 97 SHOP facilities, and 1 SHOP joint venture were classified as held for sale and/or discontinued operations.

During 2020, the Company established and began executing a plan to dispose of its senior housing triple-net and SHOP properties. As of December 31, 2020, the Company concluded the planned dispositions represented a strategic shift that has and will have a major effect on the Company’s operations and financial results. Therefore, assets meeting the held for sale criteria on or before March 31, 2021 are classified as discontinued operations in all periods presented herein.

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The following summarizes the assets and liabilities classified as discontinued operations at March 31, 2021 and December 31, 2020, which are included in assets held for sale and discontinued operations, net and liabilities related to assets held for sale and discontinued operations, net, respectively, on the consolidated balance sheets (in thousands):


	March 31, 2021		December 31, 2020
ASSETS
Real estate:
Buildings and improvements	$	1,174,263	$	2,553,254
Development costs and construction in progress	11,136		21,509
Land	201,699		355,803
Accumulated depreciation and amortization	(221,246)		(615,708)
Net real estate	1,165,852		2,314,858
Investments in and advances to unconsolidated joint ventures	5,776		5,842
Accounts receivable, net of allowance of $5,132 and $5,873	13,976		20,500
Cash and cash equivalents	40,161		53,085
Restricted cash	5,817		17,168
Intangible assets, net	8,539		24,541
Right-of-use asset, net	937		4,109
Other assets, net(1)	43,224		103,965
Total assets of discontinued operations, net	1,284,282		2,544,068
Total medical office assets held for sale, net(2)	90,225		82,238
Assets held for sale and discontinued operations, net	$	1,374,507	$	2,626,306
LIABILITIES
Mortgage debt	278,172		318,876
Lease liability	935		3,189
Accounts payable, accrued liabilities, and other liabilities	41,977		79,411
Deferred revenue	3,985		11,442
Total liabilities of discontinued operations, net	325,069		412,918
Total liabilities related to medical office assets held for sale, net(2)	3,098		2,819
Liabilities related to assets held for sale and discontinued operations, net	$	328,167	$	415,737

(1)Includes goodwill of $29 million as of March 31, 2021 and December 31, 2020.

(2)Primarily comprised of 8 MOBs with net real estate assets of $81 million and deferred revenue of $2 million as of March 31, 2021 and 6 MOBs with net estate assets of $73 million and deferred revenue of $2 million as of December 31, 2020.

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The results of discontinued operations through March 31, 2021, or the disposal date of each asset or portfolio of assets if they have been sold, are included in the consolidated results for the three months ended March 31, 2021 and 2020. Summarized financial information for discontinued operations for the three months ended March 31, 2021 and 2020 are as follows (in thousands):


	Three Months Ended March 31,
	2021		2020
Revenues:
Rental and related revenues	$	5,228	$	32,371
Resident fees and services	72,998		171,726

Total revenues	78,226		204,097
Costs and expenses:
Interest expense	2,676		2,685
Depreciation and amortization	0		64,164
Operating	71,519		138,637
Transaction costs	76		285
Impairments and loan loss reserves (recoveries), net	0		28,016
Total costs and expenses	74,271		233,787
Other income (expense):
Gain (loss) on sales of real estate, net	259,662		162,800
Other income (expense), net	5,885		(45)
Total other income (expense), net	265,547		162,755
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	269,502		133,065
Income tax benefit (expense)	821		3,176
Equity income (loss) from unconsolidated joint ventures	(315)		(833)
Income (loss) from discontinued operations	$	270,008	$	135,408

Impairments of Real Estate

2021

During the three months ended March 31, 2021, the Company did not recognize any impairment charges.

2020

During the three months ended ~~September 30,~~March 31, 2020, the Company recognized an aggregate impairment charge of ~~$37~~$31 million ($28 million of which is reported in income (loss) from discontinued operations) related to 915 SHOP assets, 12 senior housing triple-net ~~asset,~~assets, and ~~1 MOB that are~~2 MOBs as a result of being classified as held for sale and wrote down their aggregate carrying value of $200 million to their aggregate fair value, less estimated costs to sell, of ~~$163 million.~~

During the nine months ended September 30, 2020, the Company recognized an aggregate impairment charge of $87 million related to 28 SHOP assets, 5 senior housing triple-net assets, 2 MOBs, and 1 undeveloped MOB land parcel as a result of being classified as held for sale and wrote down their aggregate carrying value of $424 million to their aggregate fair value, less estimated costs to sell, of $337$169 million.

The fair value of the impaired assets was based on forecasted sales prices, which are considered to be Level 3 measurements within the fair value hierarchy. Forecasted sales prices were determined using ~~a direct capitalization model~~an income approach and/or a market approach (comparable sales model), which rely on certain assumptions by management, including: (i) market capitalization rates, (ii) comparable market transactions, (iii) estimated prices per unit, (iv) negotiations with prospective buyers, and (v) forecasted cash flow streams (lease revenue rates, expense rates, growth rates, etc.). There are inherent uncertainties in making these assumptions. For the Company’s impairment calculations during and as of the nine months ended September 30, 2020, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit ranging from $33,000 to $300,000, with a weighted average price per unit of $136,000.

~~2019~~

~~During the~~ three months ended September 30, 2019, the Company recognized an aggregate impairment charge of $34 million related to 7 SHOP assets, 4 senior housing triple-net assets, 2 MOBs, and 1 other non-reportable asset that were classified as held for sale and wrote down their aggregate carrying value of $124 million to their aggregate fair value less estimated costs to sell of $90 million. Additionally, during the three months ended September 30, 2019, the Company recognized an impairment charge of $4 million related to 1 MOB that it intends to demolish.

During the nine months ended September 30, 2019, the Company recognized an aggregate impairment charge of $93 million related to 4 senior housing triple-net assets, 15 SHOP assets, 2 MOBs, and 1 other non-reportable asset that were classified as held for sale and wrote down their aggregate carrying value of $288 million to their aggregate fair value less estimated costs to sell of $195 million. During the nine months ended September 30, 2019, the Company also recognized an impairment charge of $4 million related to 1 MOB that it intends to demolish.

The fair value of the impaired assets was based on forecasted sales prices, which are considered to be Level 3 measurements within the fair value hierarchy. For the Company’s impairment calculations during the nine months ended September 30, 2019,March 31, 2020, the Company estimated the fair value of each asset using either (i) market capitalization rates ranging from ~~4.97%~~7.16% to ~~8.27%~~9.92%, with a weighted average rate of ~~6.09%~~9.32% or (ii) prices per unit ranging from ~~$46,000~~$38,000 to ~~$125,000,~~$95,000, with a weighted average price of ~~$71,000.~~

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Additionally, during the nine months ended September 30, 2019, the Company recognized a $5 million casualty-related gain, net of deferred tax impacts, as a result of insurance proceeds received for property damage and other associated costs related to hurricanes in 2017. The gain is recorded in other income (expense), net.

Lastly, during the nine months ended September 30, 2019, the Company determined the carrying value of 2 MOBs that were candidates for potential future sale were no longer recoverable due to the Company’s shortened intended hold period under the held-for-use impairment model. Accordingly, the Company wrote-down the carrying amount of these two assets to their respective fair value, which resulted in an aggregate impairment charge of $9 million. The fair value of the assets are considered to be Level 2 measurements within the fair value hierarchy.$68,000.

Deferred Tax Asset Valuation Allowance

In conjunction with the Company establishing a plan during the ~~third quarter of~~year ended December 31, 2020 to dispose of ~~a portion of~~all its SHOP ~~portfolio,~~assets and classifying such assets as discontinued operations, the Company concluded it was more likely than not that it would no longer realize the future value of certain deferred tax assets generated by the net operating losses of its taxable REIT ~~subsidiaries.~~subsidiary entities. Accordingly, the Company recognized a deferred tax asset valuation allowance ~~and corresponding income~~of $33 million as of December 31, 2020.

As of March 31, 2021, the Company had a deferred tax ~~expense~~asset valuation allowance of ~~$31 million during the three months ended September 30, 2020.~~$35 million.

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NOTE 5.6. Leases

Lease Income

The following table summarizes the Company’s lease income, ~~(dollars in~~excluding discontinued operations (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020

Fixed income from operating leases	Fixed income from operating leases	$	262,558	$	255,447	$	770,327	$	730,277	Fixed income from operating leases	$	262,937	$	226,226
Variable income from operating leases	Variable income from operating leases	63,972		57,153		183,254		177,742		Variable income from operating leases	65,035		56,091
Interest income from direct financing leases	Interest income from direct financing leases	2,150		9,590		7,569		33,304		Interest income from direct financing leases	2,163		3,269

Direct Financing Leases

Net investment in DFLs consists of the following (dollars in thousands):


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Present value of minimum lease payments receivable	Present value of minimum lease payments receivable	$	11,955	$	19,138	Present value of minimum lease payments receivable	$	7,758	$	9,804
Present value of estimated residual value	Present value of estimated residual value	44,706		84,604		Present value of estimated residual value	44,706		44,706
Less deferred selling profits	Less deferred selling profits	(11,955)		(19,138)		Less deferred selling profits	(7,758)		(9,804)

Net investment in direct financing leases	Net investment in direct financing leases	$	44,706	$	84,604	Net investment in direct financing leases	$	44,706	$	44,706
Properties subject to direct financing leases	Properties subject to direct financing leases	1		2		Properties subject to direct financing leases	1		1

Direct Financing Lease Internal Ratings

~~The following table summarizes~~At March 31, 2021, the ~~Company’s~~Company had 1 hospital under a DFL with a carrying amount of $45 million and an internal ~~ratings for DFLs at September 30, 2020 (dollars in thousands):~~

Carrying
Amount Percentage of
DFL Portfolio Internal Ratings
Segment Performing DFLs Watch List DFLs Workout DFLs
Other non-reportable segments $ 44,706 100 $ 44,706 $ 0 $ 0
$ 44,706 100 $ 44,706 $ 0 $ 0
rating of performing.

2020 Direct Financing Lease Sale

During the first quarter of 2020, the Company sold a hospital under a DFL for $82 million and recognized a gain on sale of $42 million, which is included in other income (expense), net.

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~~2019 Direct Financing Lease Conversion~~

During the first quarter of 2019, the Company converted a DFL portfolio of 14 senior housing triple-net properties, previously on “Watch List” status, to a RIDEA structure, requiring the Company to recognize net assets equal to the lower of the net assets’ fair value or the carrying value of the net investment in the DFL. As a result, the Company derecognized the $351 million carrying value of the net investment in DFL related to the 14 properties and recognized a combination of net real estate ($331 million) and net intangibles assets ($20 million) for the same aggregate amount, with 0 gain or loss recognized. As a result of the transaction, the 14 properties were transferred from the senior housing triple-net segment to the SHOP segment during the first quarter of 2019.

~~2019 Direct Financing Lease Sale~~

During the second quarter of 2019, the Company entered into agreements to sell 13 senior housing facilities under DFLs (the “DFL Sale Portfolio”) for $274 million. Upon entering into the agreements, the Company recognized an allowance for DFL losses and related impairment charge of $10 million to write-down the carrying value of the DFL Sale Portfolio to its fair value. The fair value of the DFL Sale Portfolio was based upon the agreed upon sale price, less estimated costs to sell, which was considered to be a Level 2 measurement within the fair value hierarchy. In conjunction with the entering into agreements to sell the DFL Sale Portfolio, the Company placed the portfolio on nonaccrual status and began recognizing income equal to the amount of cash received.

~~The Company completed the sale of the DFL Sale Portfolio in September 2019.~~

For the DFL Sale Portfolio, during the three and nine months ended September 30, 2019, income from DFLs was $5 million and $17 million, respectively, and cash payments received were $5 million and $16 million, respectively.

Lease Costs

The following table provides supplemental cash flow information regarding the Company’s leases for which it is the lessee, such as ground leases (dollars in thousands):


		Nine Months Ended September 30,					Three Months Ended March 31,
Supplemental Cash Flow Information:	Supplemental Cash Flow Information:	2020		2019		Supplemental Cash Flow Information:	2021		2020

Right-of-use asset obtained in exchange for new lease liability:	Right-of-use asset obtained in exchange for new lease liability:					Right-of-use asset obtained in exchange for new lease liability:
Operating leases	Operating leases	$	24,984	$	4,084	Operating leases	$	5,020	$	0

COVID-19 Rent Deferrals

During the second and third quarters of 2020, the Company agreed to defer rent from certain tenants in the medical office segment, with the requirement that all deferred rent be repaid by the end of 2020. Under this program, through ~~September 30,~~December 31, 2020, approximately $6 million of rent was deferred for the medical office segment, all of which ~~$3 million remained outstanding~~had been collected as of ~~September 30,~~December 31, 2020.

Additionally, through ~~September 30,~~December 31, 2020, the Company granted approximately $1 million of rent deferrals to certain tenants in the life science segment, ~~an immaterial amount~~all of which ~~remained outstanding~~had been collected as of ~~September 30,~~December 31, 2020.

NaN such deferrals were granted during the three months ended March 31, 2021 and 2020.

The rent deferrals granted ~~are probable of collection and~~ do not impact the pattern of revenue recognition or amount of revenue recognized (refer to Note 2 for additional information).

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NOTE 6.7. Loans Receivable

The following table summarizes the Company’s loans receivable (in thousands):


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Secured mortgage loans(1)		$	212,393	$	161,964
Secured loans(1)						Secured loans(1)	$	724,389	$	161,530
Mezzanine and other	Mezzanine and other	52,052		27,752		Mezzanine and other	44,513		44,347

Unamortized discounts, fees, and costs	Unamortized discounts, fees, and costs	887		863		Unamortized discounts, fees, and costs	(14,626)		(222)
Reserve for loan losses	Reserve for loan losses	(11,547)		0		Reserve for loan losses	(14,134)		(10,280)
Loans receivable including loans receivable held for sale		253,785		190,579
Loans receivable held for sale		(22,623)		0
Loans receivable, net	Loans receivable, net	$	231,162	$	190,579	Loans receivable, net	$	740,142	$	195,375

(1)At ~~September 30, 2020,~~March 31, 2021, the Company had ~~$14~~$100 million remaining of commitments to fund ~~$196 million of~~ senior housing ~~development~~redevelopment and ~~redevelopment~~capital expenditure projects. At December 31, ~~2019,~~2020, the Company had ~~$25~~$11 million remaining of commitments to fund ~~$174 million of~~ senior housing ~~development~~redevelopment and ~~redevelopment~~capital expenditure projects.

2021 Loans Receivable ~~Held~~Transactions

In April 2021, the Company sold 2 mezzanine loans for ~~Sale~~

~~At September 30, 2020, 2 secured mortgage loans with an aggregate~~ carrying value as part of ~~$11 million and 3 mezzanine loans with an aggregate carrying value of $12 million were classified as assets held for sale.~~the Discovery SHOP Portfolio disposition (see Note 5).

2020 Loans Receivable Transactions

For certain residents that qualify, CCRCs may offer to lend residents the necessary funds to satisfy the entrance fee requirements so that they are able to move into a community while still continuing the process of selling their previous home. The loans are due upon sale of the previous residence. Upon completing the CCRC Acquisition (see Note 3) in January 2020, the Company began consolidating 13 CCRCs, which held approximately $30 million of such notes receivable from various community residents at the time of acquisition. At ~~September 30,~~March 31, 2021 and December 31, 2020, the Company held ~~$21~~$24 million and $23 million of such receivables, respectively, which isare included in mezzanine and other in the table above.

In November 2020, the Company sold 1 mezzanine loan with a $10 million principal balance for $8 million, resulting in a $2 million loss recognized in impairments and loan loss reserves (recoveries), net.

In December 2020, the Company sold 1 secured loan with a $115 million principal balance for $109 million, resulting in a $6 million loss recognized in impairments and loan loss reserves (recoveries), net.

SHOP Seller Financing

In conjunction with the sale of 32 SHOP facilities in the Sunrise Senior Housing Portfolio for $664 million in January 2021 (see Note 5), the Company provided the buyer with initial financing of $410 million. The remainder of the sales price was received in cash at the time of sale. Additionally, the Company agreed to provide up to $92 million of additional financing for capital expenditures (up to 65% of the estimated cost of capital expenditures), NaN of which has been funded as of March 31, 2021. The initial and additional financing is secured by the buyer's equity ownership in each property.

In conjunction with the sale of 16 additional SHOP facilities for $230 million in January 2021 (see Note 5), the Company provided the buyer with financing of $150 million. The remainder of the sales price was received in cash at the time of sale. The financing is secured by the buyer's equity ownership in each property.

In December 2020, in conjunction with the sale of 4 of the 12 SHOP facilities in the Atria SHOP Portfolio for $94 million (see Note 5), the Company provided the buyer with financing of $61 million. The remainder of the sales price was received in cash at the time of sale. The financing is secured by the buyer's equity ownership in the 4 properties.

During the three months ended March 31, 2021, the Company reduced the consideration and reported gain on sales of real estate and recognized a mark-to-market discount of $16 million for certain transactions with seller financing. The Company’s discount is based on the difference between the stated interest rates (ranging from 3.50% to 4.50%) and corresponding prevailing market rates of approximately 5.25% as of the transaction dates.The discount is recognized as interest income over the term of the discounted loans (ranging from one to three years) using the effective interest rate method. During the three months ended March 31, 2021, the Company recognized $2 million of non-cash interest income related to the amortization of its mark-to-market discounts. The Company did 0t recognize any non-cash interest income associated with seller financing notes receivable during the three months ended March 31, 2020.

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Loans Receivable Internal Ratings

In connection with the Company’s quarterly review process or upon the occurrence of a significant event, loans receivable are reviewed and assigned an internal rating of Performing, Watch List, or Workout. Loans that are deemed Performing meet all present contractual obligations, and collection and timing of all amounts owed is reasonably assured. Watch List Loans are defined as loans that do not meet the definition of Performing or Workout. Workout Loans are defined as loans in which the Company has determined, based on current information and events, that: (i) it is probable it will be unable to collect all amounts due according to the contractual terms of the agreement, (ii) the borrower is delinquent on making payments under the contractual terms of the agreement, and (iii) the Company has commenced action or anticipates pursuing action in the near term to seek recovery of its investment.

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The following table summarizes, by year of origination, the Company’s internal ratings for loans ~~receivables,~~receivable, net of unamortized discounts, fees, and costs and reserves for loan losses, as of ~~September 30, 2020~~March 31, 2021 (dollars in thousands):

Investment Type Year of Origination Total
2020 2019 2018 2017 2016
Secured mortgage loans(1)
Risk rating:
Performing loans $ 36,805 $ 58,998 $ 0 $ 114,459 $ 0 $ 210,262
Watch list loans 0 0 0 0 0 0
Workout loans 0 0 0 0 0 0
Total secured mortgage loans $ 36,805 $ 58,998 $ 0 $ 114,459 $ 0 $ 210,262
Mezzanine and other(1)
Risk rating:
Performing loans $ 18,966 $ 14,243 $ 0 $ 0 $ 8,453 $ 41,662
Watch list loans 0 0 0 1,861 0 1,861
Workout loans 0 0 0 0 0 0
Total mezzanine and other $ 18,966 $ 14,243 $ 0 $ 1,861 $ 8,453 $ 43,523

~~(1)Includes loans receivable held for sale.~~


Investment Type	Year of Origination												Total
	2021		2020		2019		2018		2017		Prior
Secured loans
Risk rating:
Performing loans	$	543,310	$	96,665	$	63,381	$	0	$	0	$	0	$	703,356
Watch list loans	0		0		0		0		0		0		0
Workout loans	0		0		0		0		0		0		0
Total secured loans	$	543,310	$	96,665	$	63,381	$	0	$	0	$	0	$	703,356



Mezzanine and other
Risk rating:
Performing loans	$	12,274	$	12,113	$	10,535	$	0	$	0	$	0	$	34,922
Watch list loans	0		0		0		0		0		1,864		1,864
Workout loans	0		0		0		0		0		0		0
Total mezzanine and other	$	12,274	$	12,113	$	10,535	$	0	$	0	$	1,864	$	36,786

Reserve for Loan Losses

The Company evaluates the liquidity and creditworthiness of its borrowers on a quarterly basis. The Company’s evaluation considers industry and economic conditions, individual and portfolio property performance, credit enhancements, liquidity, and other factors. The Company’s borrowers furnish property, portfolio, and guarantor/operator-level financial statements, among other information, on a monthly or quarterly basis, which the Company utilizes to calculate the debt service coverages used in its assessment of internal ratings, which is a primary credit quality indicator. Debt service coverage information is evaluated together with other property, portfolio, and operator performance information, including revenue, expense, net operating income, occupancy, rental rates, capital expenditures, and EBITDA (defined as earnings before interest, tax, and depreciation and amortization), along with other liquidity measures.

In its assessment of current expected credit losses for loans receivable and unfunded loan commitments, the Company utilizes past payment history of its borrowers, current economic conditions, and forecasted economic conditions through the maturity date of each loan to estimate a probability of default and a resulting loss for each loan receivable. Future economic conditions are based primarily on near-term economic forecasts from the Federal Reserve and reasonable assumptions for long-term economic trends.

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The following table summarizes the Company’s reserve for loan losses ~~at September 30, 2020~~ (in thousands):


		September 30, 2020							March 31, 2021						December 31, 2020
		Secured Mortgage Loans		Mezzanine and Other		Total			Secured Loans		Mezzanine and Other		Total		Secured Loans		Mezzanine and Other		Total
Reserve for loan losses, December 31, 2019		$	0	$	0	$	0
Reserve for loan losses, beginning of period								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	Cumulative-effect of adopting of ASU 2016-13 to beginning retained earnings	513		907		1,420		Cumulative-effect of adopting of ASU 2016-13 to beginning retained earnings	0		0		0		513		907		1,420
Provision for expected loan losses	Provision for expected loan losses	1,851		8,276		10,127		Provision for expected loan losses	2,740		1,114		3,854		2,639		6,221		8,860

Reserve for loan losses, September 30, 2020		$	2,364	$	9,183	$	11,547
Reserve for loan losses, end of period								Reserve for loan losses, end of period	$	5,892	$	8,242	$	14,134	$	3,152	$	7,128	$	10,280

Additionally, at ~~September 30,~~March 31, 2021 and December 31, 2020, a liability of ~~$111,000~~$0.4 million and $1 million, respectively, related to expected credit losses for unfunded loan commitments was included in accounts payable, accrued liabilities, and other liabilities.

Credit loss expenses and recoveries are recorded in impairments and loan loss reserves (recoveries), net. During the three months ended ~~September 30, 2020, the net credit loss recovery was $3 million,~~March 31, 2021 and ~~during the nine months ended September 30,~~ 2020, the net credit loss expense was ~~$10 million.~~$3 millionand $8 million, respectively. The change in the provision for expected loan losses during the three months ended ~~September 30, 2020~~March 31, 2021 is primarily due to ~~a more positive economic outlook and classifying certain loans as held for sale at September 30, 2020.~~

new seller financing.

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NOTE 7.8. Investments in and Advances to Unconsolidated Joint Ventures

The Company owns interests in the following entities that are accounted for under the equity method, excluding investments classified as discontinued operations (dollars in thousands):


					Carrying Amount								Carrying Amount
					September 30,		December 31,						March 31,		December 31,
Entity(1)(2)	Entity(1)(2)	Segment	Property Count(3)	Ownership %(3)	2020		2019		Entity(1)(2)	Segment	Property Count(3)	Ownership %(3)	2021		2020
SWF SH JV(4)	SWF SH JV(4)	SHOP	19	54	$	374,198	$	428,258	SWF SH JV(4)	Other	19	54	$	349,804	$	357,581
MBK JV		SHOP	5	50	36,034		33,415
Other SHOP JVs(5)		SHOP	2	50 - 90	15,973		17,719
Life Science JV(5)									Life Science JV(5)	Life science	1	49	24,786		24,879
Medical Office JVs(6)	Medical Office JVs(6)	MOB	3	20 - 67	9,719		9,845		Medical Office JVs(6)	Medical office	3	20 - 67	9,613		9,673
Other JVs(7)									Other JVs(7)	Other	0	41 - 47	9,157		9,157
CCRC JV~~(7)~~(8)	CCRC JV~~(7)~~(8)	CCRC	2	49	347		325,830		CCRC JV~~(7)~~(8)	CCRC	2	49	6,481		1,581
Other JVs(8)		Other	0	—	0		10,372
Advances to unconsolidated joint ventures, net					0		76
					$	436,271	$	825,515
													$	399,841	$	402,871

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

(2)~~The property count,~~Excludes the Otay Ranch JV (90% ownership ~~percentage, and carrying amount at September 30, 2020 exclude the Discovery Naples JV (41%) and Discovery Sarasota JV (47%)~~percentage), which ~~are~~is classified as ~~assets held for sale~~discontinued operations and had an aggregate carrying value of $9$6 million at ~~September 30, 2020. At~~March 31, 2021 and December 31, ~~2019,~~2020 (see Note 5). In April 2021, the ~~carrying value~~Company sold its share of the SHOP property in the Otay Ranch JV for both investments is included in Other JVs. The Discovery Naples JV and Discovery Sarasota JV are joint ventures that are developing senior housing facilities and the Company’s investments in those joint ventures are preferred equity investments earning a 10% per annum fixed-rate return.$32 million.

(3)Property count and ownership percentage are as of ~~September 30, 2020.~~March 31, 2021.

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

(5)~~Unconsolidated other SHOP~~In December 2020, the Company acquired a joint ~~ventures (and the Company’s ownership percentage) include: (i) Waldwick JV (85%); (ii) Otay Ranch JV (90%); and (iii) MBK Development JV (50%)~~venture interest in a life science facility in Cambridge, Massachusetts (see Note 4).

(6)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%).

(7)Includes 2 unconsolidated other joint ventures (and the Company’s ownership percentage): (i) Discovery Naples JV (41%) and (ii) Discovery Sarasota JV (47%). The Discovery Naples JV and Discovery Sarasota JV are joint ventures that have developed or are developing senior housing facilities and the Company’s investments in those joint ventures are preferred equity investments earning a 10% per annum fixed-rate return. In April 2021, the Company sold these 2 preferred equity investments for carrying value as part of the Discovery SHOP Portfolio disposition (see Note 5).

(8)See Note 3 for discussion of the 2019 MTCA with Brookdale, including the acquisition of Brookdale’s interest in 13 of the 15 communities in the CCRC JV in January 2020.

~~(8)~~In January 2020, the Company sold its interest in the remaining K&Y joint venture for $12 million. At December 31, 2019, the K&Y joint venture includes an ownership percentage of 80% and 1 unconsolidated joint venture. In October 2019, the Company sold its interest in 1 of the K&Y joint ventures for $4 million.

~~Waldwick JV.~~ In October 2020, the Company acquired the remaining 15% equity interest in the Waldwick JV for $4 million. Subsequent to acquisition, the Company owned 100% of the equity and began consolidating the real estate held by the venture.

~~CCRC JV.~~ During 2019, the CCRC JV classified 1 property that Brookdale and the Company committed to sell to a third party as held for sale in the joint venture’s stand-alone financial statements. In conjunction with classifying the property as held for sale, the CCRC JV recognized an impairment charge of $12 million to reflect the write-down of the property’s previous carrying value to the estimated selling price, less costs to sell. The Company recognized its 49% share of the impairment charge ($6 million) through equity income (loss) from unconsolidated joint ventures during the quarter ended September 30, 2019.

Additionally, in January 2020, the Company acquired Brookdale’s 51% interest in 13 of the 15 communities held by the CCRC JV. Refer to Note 3 for a detailed discussion of the 2019 MTCA with Brookdale.

2019

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NOTE 8.9. Intangibles

Intangible assets primarily consist of lease-up intangibles and above market tenant lease intangibles. The following table summarizes the Company’s intangible lease assets (dollars in thousands):


Intangible lease assets	Intangible lease assets	September 30, 2020		December 31, 2019		Intangible lease assets	March 31, 2021		December 31, 2020
Gross intangible lease assets	Gross intangible lease assets	$	722,259	$	615,538	Gross intangible lease assets	$	758,424	$	761,328
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(220,676)		(283,845)		Accumulated depreciation and amortization	(262,505)		(241,411)
Intangible assets, net(1)	Intangible assets, net(1)	$	501,583	$	331,693	Intangible assets, net(1)	$	495,919	$	519,917

Weighted average remaining amortization period in years	Weighted average remaining amortization period in years	6		5		Weighted average remaining amortization period in years	6		5

(1)Excludes intangible assets reported in assets held for sale and discontinued operations, net of ~~$14~~$9 million and ~~$11~~$25 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

Intangible liabilities consist of below market lease intangibles. The following table summarizes the Company’s intangible lease liabilities (dollars in thousands):


Intangible lease liabilities	Intangible lease liabilities	September 30, 2020		December 31, 2019		Intangible lease liabilities	March 31, 2021		December 31, 2020
Gross intangible lease liabilities	Gross intangible lease liabilities	$	153,624	$	113,213	Gross intangible lease liabilities	$	193,140	$	194,565
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(45,593)		(38,222)		Accumulated depreciation and amortization	(54,523)		(50,366)
Intangible liabilities, net	Intangible liabilities, net	$	108,031	$	74,991	Intangible liabilities, net	$	138,617	$	144,199

Weighted average remaining amortization period in years	Weighted average remaining amortization period in years	8		7		Weighted average remaining amortization period in years	8		8

During the ~~nine~~three months ended ~~September 30,~~March 31, 2021, in conjunction with the Company’s acquisitions of real estate, the Company acquired intangible assets of $1 million and intangible liabilities of $0.2 million. The intangible assets and liabilities acquired each had a weighted average amortization period at acquisition of 4 years.

During the year ended December 31, 2020, in conjunction with the Company’s acquisitions of real estate, ~~(including the consolidation of 13 CCRCs in which the Company acquired Brookdale’s interest as part of the 2019 Brookdale MTCA - see Note 3),~~ the Company acquired intangible assets of ~~$298~~$352 million and intangible liabilities of ~~$42~~$83 million. The intangible assets and intangible liabilities acquired ~~have~~had a weighted average amortization period at acquisition of 7 years and 109 years, respectively.

On January 1, 2019, in conjunction with the adoption of ASU 2016-12 (see Note 2), the Company reclassified $39 million of intangible assets, net and $6 million of intangible liabilities, net related to above and below market ground leases to right-of-use asset, net.

NOTE 9.10. Debt

Bank Line of Credit and Term ~~Loans~~Loan

On May 23, 2019, the Company executed a $2.5 billion unsecured revolving line of credit facility (the “Revolving Facility”), which matures on May 23, 2023 and contains 2 ~~six month~~six-month extension options, subject to certain customary conditions. Borrowings under the Revolving Facility accrue interest at LIBOR plus a margin that depends on credit ratings of the Company’s senior unsecured long-term debt. The Company pays a facility fee on the entire revolving commitment that depends on its credit ratings. Based on those credit ratings at ~~September 30, 2020,~~March 31, 2021, the margin on the Revolving Facility was 0.83% and the facility fee was 0.15%. At ~~September 30, 2020,~~March 31, 2021, the Company had ~~0 balance~~$110 million outstanding under the Revolving ~~Facility.~~Facility, with a weighted average interest rate of 1.23%.

In May 2019, the Company also entered into a $250 million unsecured term loan facility, which the Company fully drew down ~~on June 20,~~during the second quarter of 2019 (the “2019 Term Loan” and, together with the Revolving Facility, the “Facilities”). The 2019 Term Loan matures on May 23, 2024. Based on credit ratings for the Company’s senior unsecured long-term debt at ~~September 30, 2020,~~March 31, 2021, the 2019 Term Loan accrues interest at a rate of LIBOR plus 0.90%, with a weighted average effective interest rate of ~~1.14%~~1.10%.

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The Facilities include a feature that allows the Company to increase the borrowing capacity by an aggregate amount of up to $750 million, subject to securing additional commitments. The Facilities also contain certain financial restrictions and other customary requirements, including cross-default provisions to other indebtedness. Among other things, these covenants, using terms defined in the agreements: (i) limit the ratio of Enterprise Total Indebtedness to Enterprise Gross Asset Value to 60%; (ii) limit the ratio of Enterprise Secured Debt to Enterprise Gross Asset Value to 40%; (iii) limit the ratio of Enterprise Unsecured Debt to Enterprise Unencumbered Asset Value to 60%; (iv) require a minimum Fixed Charge Coverage ratio of 1.5 times; and (v) require a minimum Consolidated Tangible Net Worth of $7.0 billion. At ~~September 30, 2020,~~March 31, 2021, the Company believes it was in compliance with each of these restrictions and requirements of the Facilities.

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Commercial Paper Program

In September 2019, the Company established an unsecured commercial paper program (the “Commercial Paper Program”). Under the terms of the Commercial Paper Program, the Company may issue, from time to time, unsecured short-term debt securities with varying maturities. Amounts available under the Commercial Paper Program may be borrowed, repaid, and re-borrowed from time to time, with the maximum aggregate face or principal amount outstanding at any one time not exceeding $1.0 billion. Amounts borrowed under the Commercial Paper Program will be sold on terms that are customary for the U.S. commercial paper market and will be at least equal in right of payment with all of the Company’s other unsecured and unsubordinated indebtedness. The Company ~~intends to use~~uses its Revolving Facility as a liquidity backstop for the repayment of unsecured short-term debt securities issued under the Commercial Paper Program. At ~~September 30, 2020,~~March 31, 2021, the Company had ~~0 balance~~$928 million of securities outstanding under the Commercial Paper ~~Program.~~Program, with original maturities of one month and a weighted average interest rate of 0.26%. At December 31, 2020, the Company had $130 million of securities outstanding under the Commercial Paper Program, with original maturities of one month and a weighted average interest rate of 0.30%.

In April 2021, the Company increased the maximum aggregate face or principal amount outstanding at any one time for the Commercial Paper Program from $1.0 billion to $1.25 billion.

Senior Unsecured Notes

At ~~September 30, 2020,~~March 31, 2021, the Company had senior unsecured notes outstanding with an aggregate principal balance of ~~$5.75~~$4.30 billion. The senior unsecured notes contain certain covenants including limitations on debt, maintenance of unencumbered assets, cross-acceleration provisions and other customary terms. The Company believes it was in compliance with these covenants at ~~September 30, 2020.~~March 31, 2021.

During the three months ended March 31, 2021, the Company had 0 senior unsecured note issuances.

The following table summarizes the Company’s senior unsecured notes repurchases and redemptions during the three months ended March 31, 2021 (dollars in thousands):


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

(1)Upon completing the repurchases and redemptions of all outstanding 4.25%, 4.20%, and 3.88% senior unsecured notes due in 2023 and 2024, the Company recognized a $164 million loss on debt extinguishment.

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

The following table summarizes the Company’s senior unsecured notes issuances during the ~~nine months~~year ended ~~September 30,~~December 31, 2020 (dollars in thousands):


Issue Date	Issue Date	Amount		Coupon Rate		Maturity Date	Issue Date	Amount		Coupon Rate		Maturity Year
Year ended December 31, 2020:							Year ended December 31, 2020:
June 23, 2020	June 23, 2020	$	600,000	2.88	%	2031	June 23, 2020	$	600,000	2.88	%	2031

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The following table summarizes the Company’s senior unsecured notes ~~payoffs~~repurchases and ~~repurchases~~redemptions during the ~~nine months~~year ended ~~September 30,~~December 31, 2020 (dollars in thousands):


Payoff Date	Payoff Date	Amount		Coupon Rate		Maturity Date	Payoff Date	Amount		Coupon Rate		Maturity Year
Year ended December 31, 2020:							Year ended December 31, 2020:
July 9, 2020(1)	July 9, 2020(1)	$	300,000	3.15	%	2022	July 9, 2020(1)	$	300,000	3.15	%	2022
June 24, 2020(2)	June 24, 2020(2)	$	250,000	4.25	%	2023	June 24, 2020(2)	$	250,000	4.25	%	2023

(1)Upon completing the redemption of ~~the~~all outstanding 3.15% senior unsecured notes due in 2022, the Company recognized an $18 million loss on debt extinguishment.

(2)Upon repurchasing a portion of the 4.25% senior unsecured notes due in 2023, the Company recognized a $26 million loss on debt extinguishment.

~~The following table summarizes the Company’s senior unsecured notes issuances during the year ended December 31, 2019 (dollars in thousands):~~

Issue Date Amount Coupon Rate Maturity Date
November 21, 2019 $ 750,000 3.00 % 2030
July 5, 2019 $ 650,000 3.25 % 2026
July 5, 2019 $ 650,000 3.50 % 2029

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~~The following table summarizes the Company’s senior unsecured notes payoffs and repurchases during the year ended December 31, 2019 (dollars in thousands):~~

Payoff Date Amount Coupon Rate Maturity Date
November 21, 2019(1)
$ 350,000 4.00 % 2022
July 22, 2019(2)
$ 800,000 2.63 % 2020
July 8, 2019(2)
$ 250,000 4.00 % 2022
July 8, 2019(2)
$ 250,000 4.25 % 2023

~~(1)Upon repurchasing the 4.00% senior unsecured notes due in 2022, the Company recognized a $22 million loss on debt extinguishment.~~

~~(2)~~Upon completing the redemption of the 2.63% senior unsecured notes due in 2020 and repurchasing a portion of the 4.25% senior unsecured notes due in 2023 and the 4.00% senior unsecured notes due in 2022, the Company recognized a $35 million loss on debt extinguishment.

Mortgage Debt

At ~~September 30,~~March 31, 2021 and December 31, 2020, the Company had ~~$421~~$215 million and $217 million, respectively, in aggregate principal of mortgage debt outstanding (excluding mortgage debt on assets held for ~~sale)~~sale and discontinued operations), which is secured by 146 healthcare facilities, with an aggregate carrying value of ~~$856 million.~~

~~During the three and nine months ended September 30, 2020, the Company made aggregate principal repayments of mortgage debt of $2~~$511 million and ~~$10 million, respectively. During the three and nine months ended September 30, 2019, the Company made aggregate principal repayments of mortgage debt of $1 million and $3~~$517 million, respectively.

Mortgage debt generally requires monthly principal and interest payments, is collateralized by real estate assets, and is ~~generally~~ non-recourse. Mortgage debt typically restricts transfer of the encumbered assets, prohibits additional liens, restricts prepayment, requires payment of real estate taxes, requires maintenance of the assets in good condition, requires insurance on the assets, and includes conditions to obtain lender consent to enter into or terminate material leases. Some of the mortgage debt may require tenants or operators to maintain compliance with the applicable leases or operating agreements of such real estate assets.

~~In May 2019, upon acquiring 3 senior housing assets from Oakmont,~~During the three months ended March 31, 2021 and 2020, the Company ~~assumed $50~~made aggregate principal repayments of mortgage debt of $42 million and $5 million, respectively. The amount of repayments during the three months ended March 31, 2021 includes the repayment of $39 million of variable rate secured debt on 2 SHOP assets classified as discontinued operations and $1 million of scheduled repayments on mortgage debt classified as discontinued operations. During the three months ended March 31, 2020, $4 million of the repayments were associated with mortgage debt classified as discontinued operations.

In April 2021, in conjunction with the acquisition of the MOB Portfolio, the Company issued $142 million of secured mortgage debt ~~maturing~~(see Note 4).

In conjunction with the sale of the Aegis NNN Portfolio (see Note 5) in ~~2028 and having~~December 2020, the Company repaid $6 million of variable rate secured mortgage debt on 1 SHOP asset classified as discontinued operations as of December 31, 2020.

In November 2020, upon consolidating 1 property as part of a ~~weighted average interest rate of 4.83%. In July 2019, upon acquiring 5 additional senior housing assets from Oakmont,~~joint venture dissolution, the Company assumed ~~an additional $112~~$36 million of secured mortgage debt ~~with maturity dates ranging from 2027~~(classified as liabilities related to ~~2033~~assets held for sale and ~~a weighted average interest rate of 4.89%~~discontinued operations, net) maturing in 2025 (see Note 4).

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Debt Maturities

The following table summarizes the Company’s stated debt maturities and scheduled principal repayments at ~~September 30, 2020~~March 31, 2021 (in thousands):


																					Senior Unsecured Notes(2)				Mortgage Debt(3)
Year	Year	Bank Line of Credit		Commercial Paper		Term Loan		Senior Unsecured Notes(1)		Mortgage Debt(2)		Total		Year	Bank Line of Credit		Commercial Paper(1)		Term Loan		Amount		Interest Rate		Amount		Interest Rate		Total
2020 (three months)		$	0	$	0	$	0	$	0	$	1,884	$	1,884
2021		0		0		0		0		15,004		15,004
2021 (nine months)														2021 (nine months)	$	0	$	0	$	0	$	0	0	%	$	11,572	4.86	%	$	11,572
2022	2022	0		0		0		0		7,215		7,215		2022	0		0		0		0		0	%	4,843		3.80	%	4,843
2023	2023	0		0		0		300,000		92,365		392,365		2023	110,000		928,150		0		0		0	%	89,874		3.80	%	1,128,024
2024	2024	0		0		250,000		1,150,000		5,652		1,405,652		2024	0		0		250,000		0		0	%	3,050		3.80	%	253,050
2025														2025	0		0		0		1,350,000		3.93	%	3,209		3.80	%	1,353,209
Thereafter	Thereafter	0		0		0		4,300,000		298,672		4,598,672		Thereafter	0		0		0		2,950,000		3.68	%	102,789		3.54	%	3,052,789
		0		0		250,000		5,750,000		420,792		6,420,792			110,000		928,150		250,000		4,300,000				215,337				5,803,487
(Discounts), premium and debt costs, net	(Discounts), premium and debt costs, net	0		0		(878)		(54,433)		14,414		(40,897)		(Discounts), premium and debt costs, net	0		0		(757)		(44,303)				4,622				(40,438)
		0		0		249,122		5,695,567		435,206		6,379,895			110,000		928,150		249,243		4,255,697				219,959				5,763,049
Debt on assets held for sale(3)		0		0		0		0		77,222		77,222
Debt on assets held for sale and discontinued operations(4)														Debt on assets held for sale and discontinued operations(4)	0		0		0		0				278,172				278,172
		$	0	$	0	$	249,122	$	5,695,567	$	512,428	$	6,457,117		$	110,000	$	928,150	$	249,243	$	4,255,697			$	498,131			$	6,041,221

(1)Commercial Paper Program borrowings are backstopped by the Revolving Facility. As such, we calculate the weighted average remaining term of our Commercial Paper Program borrowings using the maturity date of our Revolving Facility.

(2)Effective interest rates on the senior notes range from ~~3.08%~~3.10% to ~~6.87%~~6.91% with a weighted average effective interest rate of ~~3.86%~~3.77% and a weighted average maturity of 78 years.

~~(2)~~(3)Excluding mortgage debt on assets classified as held for sale and discontinued operations, effective interest rates on the mortgage debt range from ~~1.23%~~3.42% to 5.91% with a weighted average effective interest rate of ~~3.62%~~3.73% and a weighted average maturity of 74 years.

~~(3)~~(4)Represents mortgage debt on assets held for sale and discontinued operations with interest rates ~~of 1.23% and~~ranging from 3.45% to 5.88% that mature ~~in 2027~~between 2025 and ~~2044, respectively.~~2044.

NOTE ~~10.~~11. Commitments and Contingencies

Legal Proceedings

From time to time, the Company is a party to, or has a significant relationship to, legal proceedings, lawsuits and other claims. Except as described below, the Company is not aware of any legal proceedings or claims that it believes may have, individually or taken together, a material adverse effect on the Company’s financial condition, results of operations, or cash flows. The Company’s policy is to expense legal costs as they are incurred.

Class Action. On May 9, 2016, a purported stockholder of the Company filed a putative class action complaint, Boynton Beach Firefighters’ Pension Fund v. HCP, Inc., et al., Case No. 3:16-cv-01106-JJH, in the U.S. District Court for the Northern District of Ohio against the Company, certain of its officers, HCR ManorCare, Inc. (“HCRMC”), and certain of its officers, asserting violations of the federal securities laws. The suit ~~asserts~~asserted claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and ~~alleges~~alleged that the Company made certain false or misleading statements relating to the value of and risks concerning its investment in HCRMC by allegedly failing to disclose that HCRMC had engaged in billing fraud, as alleged by the U.S. Department of Justice (“DoJ”) in a suit against HCRMC arising from the False Claims Act that the DoJ voluntarily dismissed with prejudice. The plaintiff in the class action suit demands compensatory damages (in an unspecified amount), costs and expenses (including attorneys’ fees and expert fees), and equitable, injunctive, or other relief as the Court deems just and proper. On November 28, 2017, the Court appointed Societe Generale Securities GmbH (SGSS Germany) and the City of Birmingham Retirement and Relief Systems (Birmingham) as Co-Lead Plaintiffs in the class action. The motion to dismiss was fully briefed on May 21, 2018 and oral arguments were held on October 23, 2018. Subsequently, on December 6, 2018, HCRMC and its officers were voluntarily dismissed from the class action lawsuit without prejudice to such claims being refiled. On November 22, 2019, the Court granted the class action motion to dismiss. On December 20, 2019, Co-Lead Plaintiffs filed a motion to amend the Court's ~~judgment. Defendants' opposition brief was filed on February 18, 2020, and Co-Lead Plaintiffs' reply brief was filed on April 2, 2020. On May 18, 2020, Defendants filed a motion seeking leave~~judgment to ~~file a sur-reply, on May 21, 2020, Co-Lead Plaintiffs filed an opposition brief,~~permit amendment of the complaint, and on ~~May 28, 2020, Defendants filed a reply in support of the motion. On September~~November 30, 2020, the Court denied Co-Lead Plaintiffs’ motion. Co-Lead Plaintiffs have not appealed the ~~Defendants’ motion seeking~~dismissal and denial of leave to ~~file a sur-reply. Co-Lead Plaintiffs’ motion to~~ amend ~~the Court’s judgment remains pending with the Court. The Company believes the suit to be without merit and intends to vigorously defend against it.~~their compliant.

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Derivative Actions. On June 16, 2016 and July 5, 2016, purported stockholders of the Company filed two derivative actions, Subodh v. HCR ManorCare Inc., et al., Case No. 30-2016-00858497-CU-PT-CXC and Stearns v. HCR ManorCare, Inc., et al., Case No. 30-2016-00861646-CU-MC-CJC, in the Superior Court of California, County of Orange, against certain of the Company’s current and former directors and officers and HCRMC. The Company iswas named as a nominal defendant. As both derivative actions contained substantially the same allegations, they ~~have been~~were consolidated into a single action (the ~~“California~~“California derivative ~~action”~~action”). The consolidated action ~~alleges~~alleged that the defendants engaged in various acts of wrongdoing, including, among other things, breaching fiduciary duties by publicly making false or misleading statements of fact regarding HCRMC’s finances and prospects, and failing to maintain adequate internal controls. On ~~April 18, 2017,~~February 11, 2021, the Court ~~approved~~dismissed the ~~parties’ stipulation to stay the case pending disposition of the motion to dismiss the class action litigation.~~California derivative actions without prejudice.

On April 10, 2017, a purported stockholder of the Company filed a derivative action, Weldon v. Martin et al., Case No. 3:17-cv-755, in federal court in the Northern District of Ohio, Western Division, against certain of the Company’s current and former directors and officers and HCRMC. The Company iswas named as a nominal defendant. The Weldon complaint ~~asserts~~asserted similar claims to those asserted in the California derivative action. In addition, the complaint ~~asserts~~asserted a claim under Section 14(a) of the Exchange Act, alleging that the Company made false statements in its 2016 proxy statement by not disclosing that the Company’s performance issues in 2015 were the direct result of alleged billing fraud at HCRMC. On ~~April 18, 2017,~~January 5, 2021, the Court ~~re-assigned and transferred this action to~~dismissed the ~~judge presiding over the related federal securities class action. On July 11, 2017, the Court approved a stipulation by the parties to stay the~~Weldon case ~~pending disposition of the motion to dismiss the class action.~~without prejudice.

On July 21, 2017, a purported stockholder of the Company filed another derivative action, Kelley v. HCR ManorCare, Inc., et al., Case No. 8:17-cv-01259, in federal court in the Central District of California, against certain of the Company’s current and former directors and officers and HCRMC. The Company iswas named as a nominal defendant. The~~Kelley~~ Kelley complaint ~~asserts~~asserted similar claims to those asserted in Weldon and in the California derivative action. LikeWeldon, the Kelley complaint also additionally ~~alleges~~alleged that the Company made false statements in its 2016 proxy statement, and ~~asserts~~asserted a claim for a violation of Section 14(a) of the Exchange Act. On November 28, 2017, the federal court in the Central District of California granted Defendants’ motion to transfer the action to the Northern District of Ohio (i.e., the court where the class action and other federal derivative action are pending). ~~The~~On January 5, 2021, the Court indismissed the ~~Northern District of Ohio is currently considering whether to consolidate the~~ ~~Weldon~~ ~~and~~ Kelley ~~actions, appointment of lead plaintiffs and counsel, and whether the stay in~~ ~~Weldon~~ ~~should continue as to either or both actions.~~case with prejudice.

The Company’s Board of Directors received letters dated August 17, 2016, April 19, 2017, and April 20, 2017 from private law firms acting on behalf of clients who are purported stockholders of the Company, each asserting allegations similar to those made in the California derivative action matters discussed above. Each letter demands that the Board of Directors take action to assert the Company’s rights. The Board of Directors completed its evaluation and rejected the demand letters in December of 2017. One of the law firms ~~has more recently~~ requested that the Board of Directors reconsider its determination after a ruling on the motion to dismiss in the class action litigation. In February 2021, the Board of Directors reaffirmed its rejection of the demand letters.

The Company believes that the ~~plaintiffs lack standing or the lawsuits and~~ demands are without merit, but cannot predict ~~the~~their outcome ~~of these proceedings~~ or reasonably estimate any potential loss at this time. Accordingly, 0 loss contingency has been recorded for these matters as of ~~September 30, 2020,~~March 31, 2021, as the likelihood of loss is not considered probable or estimable.

~~Credit Enhancement Guarantee~~

As of September 30, 2020, certain of the Company’s senior housing facilities served as collateral for $57 million of debt (maturing May 1, 2025) that is owed by a previous owner of the facilities. This indebtedness is guaranteed by the previous owner who has an investment grade credit rating. These senior housing facilities had a carrying value of $323 million as of September 30, 2020.

In conjunction with certain of the Company’s planned dispositions of SHOP assets, during October 2020, the debt to which the Company’s assets served as collateral was defeased. As part of that defeasance, the Company paid approximately $11 million of the defeasance premium, which will be recognized as a transaction cost expense during the fourth quarter of 2020.

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DownREIT LLCs

In connection with the formation of certain DownREIT LLCs, members may contribute appreciated real estate to a DownREIT LLC in exchange for DownREIT units. These contributions are generally tax-deferred, so that the pre-contribution gain related to the property is not taxed to the member. However, if a contributed property is later sold by the DownREIT LLC, the unamortized pre-contribution gain that exists at the date of sale is specifically allocated and taxed to the contributing members. In many of the DownREITs, the Company has entered into indemnification agreements with those members who contributed appreciated property into the DownREIT LLC. Under these indemnification agreements, if any of the appreciated real estate contributed by the members is sold by the DownREIT LLC in a taxable transaction within a specified number of years, the Company will reimburse the affected members for the federal and state income taxes associated with the pre-contribution gain that is specially allocated to the affected member under the Code (“make-whole payments”). These make-whole payments include a tax gross-up provision. These indemnification agreements have expirations terms that range through 2039 on a total of 2523 properties.

NOTE ~~11.~~12. Equity

Dividends

On April 29, 2021, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.30 per share. The common stock cash dividend will be paid on May 21, 2021 to stockholders of record as of the close of business on May 10, 2021.

During the three months ended March 31, 2021 and 2020, the Company declared and paid common stock cash dividends of $0.30 per share and $0.37 per share, respectively.

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At-The-Market Equity Offering Program

In June 2015, the Company established an at-the-market equity offering program (“ATM Program”) to sell shares of its common stock from time to time through a consortium of banks acting as sales agents or directly to the banks acting as principals. In February 2020, the Company terminated its previous ATM Program (the “2019 ATM Program”) and established a new ATM Program (the “2020 ATM Program”) pursuant to which shares of common stock having an aggregate gross sales price of up to approximately $1.25 billion may be sold (i) by the Company through a consortium of banks acting as sales agents or directly to the banks acting as principals or (ii) by a consortium of banks acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement. The use of a forward sale agreement allows the Company to lock in a share price on the sale of shares at the time the forward sales agreement is effective, but defer receiving the proceeds from the sale of shares until a later date.

ATM forward sale agreements generally have a one year term. At any time during the term, the Company may settle a forward sale by delivery of physical shares of common stock to the forward seller or, at the Company’s election, in cash or net shares. The forward sale price the Company expects to receive upon settlement of outstanding forward contracts will be the initial forward price established upon the effective date, subject to adjustments for: (i) accrued interest, (ii) the forward purchasers’ stock borrowing costs, and (iii) certain fixed price reductions during the term of the forward sale agreement.

ATM Forward Contracts

During the three months ended ~~September 30, 2020,~~March 31, 2021, the Company did not utilize the forward provisions under the 2020 ATM Program. During the ~~nine~~three months ended ~~September 30,~~March 31, 2020, the Company utilized the forward provisions under the 2019 ATM Program to allow for the sale of up to an aggregate of ~~2.0~~2 million shares of its common stock at an initial weighted average net price of $35.23 per share, after commissions. During the three and nine months ended September 30, 2019, the Company utilized the forward provisions under the 2019 ATM Program to allow for the sale of up to an aggregate of 1.2 million and 14.8 million shares of its common stock, respectively, at an initial weighted average net price of $31.10 and $31.23 per share, after commissions, respectively.

During the three months ended March 31, 2020, the Company settled all 16.8 million shares previously outstanding under ATM forward contracts at a weighted average net price of $31.38 per share, after commissions, resulting in net proceeds of $528 million. NaN shares were settled ~~during the three months ended September 30,~~subsequent to March 31, 2020 and therefore, at ~~September 30, 2020,~~March 31, 2021, 0 shares remained outstanding under ATM forward contracts. During the nine months ended September 30, 2019, the Company settled 5.5 million shares at a weighted average net price of $30.91 per share, after commissions, resulting in net proceeds of $171 million. The Company did not settle any ATM forward contracts during the three months ended September 30, 2019.

At ~~September 30, 2020,~~March 31, 2021, approximately $1.25 billionof the Company’s common stock remained available for sale under the 2020 ATM Program.

ATM Direct Issuances

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, 0 shares of common stock were issued under the 2019 ATM Program or 2020 ATM Program. During the nine months ended September 30, 2019, the Company issued 5.9 million shares of common stock under the 2019 ATM Program at a weighted average net price of $31.84 per share, after commissions, resulting in net proceeds of $189 million. The Company did not issue any shares of its common stock under the 2019 ATM Program during the three months ended September 30, 2019.

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Forward Equity Offerings

November 2019 Offering. In November 2019, the Company entered into a forward equity sales agreement (the "2019 forward equity sales agreement") to sell an aggregate of 15.6 million shares of its common stock (including shares sold through the exercise of underwriters’ options) at an initial net price of $34.46 per share, after underwriting discounts and commissions, which was subject to adjustments for: (i) accrued interest, (ii) the forward purchasers’ stock borrowing costs, and (iii) certain fixed price reductions during the term of the agreement. During the ~~year ended December 31, 2019, 0 shares were settled under the 2019 forward equity sales agreement.During the~~ three months ended March 31, 2020, the Company settled all 15.6 million shares under the 2019 forward equity sales agreement at a weighted average net price of $34.18 per share, resulting in net proceeds of $534 million (total net proceeds of $1.06 billion, when aggregated with the net proceeds from settling ATM forward contracts, as discussed above). Therefore, at ~~September 30, 2020,~~March 31, 2021, 0 shares remained outstanding under the 2019 ~~forward equity sales agreement.~~

~~December 2018 Offering.~~ In December 2018, the Company entered into a forward equity sales agreement (the “2018 forward equity sales agreement”) to sell an aggregate of 15.3 million shares of its common stock (including shares sold through the exercise of underwriters’ options) at an initial net price of $28.60 per share, after underwriting discounts and commissions.The 2018 forward equity sales agreement had a one year term that expired on December 13, 2019 during which time the Company could settle the forward sales agreement by delivery of physical shares of common stock to the forward seller or, at the Company’s election, settle in cash or net shares. During the three and nine months ended September 30, 2019, the Company settled 3.6 million and 5.1 million shares, respectively, under the forward sales agreement at a weighted average net price of $27.85 and $27.93 per share, respectively, resulting in net proceeds of $100 million and $142 million, respectively. During the year ended December 31, 2019, the Company settled all 15.3 million shares under the 2018 forward equity sales agreement at a weighted average net price of $27.66 per share, resulting in net proceeds of $422 million. Therefore, at December 31, 2019, 0 shares remained outstanding under the 2018 forward equity sales agreement.

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the Company’s accumulated other comprehensive income (loss) (in thousands):


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Cumulative foreign currency translation adjustment		$	0	$	(1,023)

Unrealized gains (losses) on derivatives, net	Unrealized gains (losses) on derivatives, net	(162)		1,314		Unrealized gains (losses) on derivatives, net	$	0	$	(81)
Supplemental Executive Retirement Plan minimum liability and other		(3,074)		(3,148)
Supplemental Executive Retirement Plan minimum liability						Supplemental Executive Retirement Plan minimum liability	(3,497)		(3,604)

Total accumulated other comprehensive income (loss)	Total accumulated other comprehensive income (loss)	$	(3,236)	$	(2,857)	Total accumulated other comprehensive income (loss)	$	(3,497)	$	(3,685)

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NOTE ~~12.~~13. Earnings Per Common Share

Basic income (loss) per common share (“EPS”) is computed based on the weighted average number of common shares outstanding. Diluted income (loss) per common share is computed based on the weighted average number of common shares outstanding plus the impact of forward equity sales agreements using the treasury stock method and common shares issuable from the assumed conversion of DownREIT units, stock options, certain performance restricted stock units, and unvested restricted stock units. Only those instruments having a dilutive impact on the Company’s basic income (loss) per share are included in diluted income (loss) per share during the periods presented.

Restricted stock and certain performance restricted stock units are considered participating securities, because dividend payments are not forfeited even if the underlying award does not vest, and require use of the two-class method when computing basic and diluted earnings per share.

Refer to Note 1112 for a discussion of the sale of shares under and settlement of forward sales agreements during the periods presented. The Company considered the potential dilution resulting from the forward agreements to the calculation of earnings per share. At inception, the agreements do not have an effect on the computation of basic EPS as no shares are delivered until settlement. However, the Company uses the treasury stock method to calculate the dilution, if any, resulting from the forward sales agreements during the period of time prior to settlement. The aggregate effect on the Company’s diluted weighted-average common shares for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 was 0 and ~~2019 was 0.3 million and 1.9~~0.8 million weighted-average incremental shares, respectively, from the forward equity sales agreements.

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The following table illustrates the computation of basic and diluted earnings per share (in thousands, except per share amounts):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Numerator	Numerator									Numerator
Net income (loss)		$	(59,581)	$	(42,308)	$	278,008	$	12,702
Noncontrolling interests' share in earnings		(3,836)		(3,555)		(10,839)		(10,692)
Net income (loss) attributable to Healthpeak Properties, Inc.		(63,417)		(45,863)		267,169		2,010
Less: Participating securities' share in earnings		(351)		(386)		(2,151)		(1,223)

Income (loss) from continuing operations										Income (loss) from continuing operations	$	(120,585)	$	147,132
Noncontrolling interests' share in continuing operations										Noncontrolling interests' share in continuing operations	(3,306)		(3,463)
Income (loss) from continuing operations attributable to Healthpeak Properties, Inc.										Income (loss) from continuing operations attributable to Healthpeak Properties, Inc.	(123,891)		143,669
Less: Participating securities' share in continuing operations										Less: Participating securities' share in continuing operations	(2,451)		(1,616)
Income (loss) from continuing operations applicable to common shares										Income (loss) from continuing operations applicable to common shares	(126,342)		142,053
Income (loss) from discontinued operations										Income (loss) from discontinued operations	270,008		135,408
Noncontrolling interests' share in discontinued operations										Noncontrolling interests' share in discontinued operations	(329)		3
Net income (loss) applicable to common shares										Net income (loss) applicable to common shares	$	143,337	$	277,464
Numerator - Dilutive										Numerator - Dilutive
Net income (loss) applicable to common shares										Net income (loss) applicable to common shares	$	143,337	$	277,464
Add: distributions on dilutive convertible units and other										Add: distributions on dilutive convertible units and other	0		2,515
Dilutive net income (loss) available to common shares										Dilutive net income (loss) available to common shares	$	143,337	$	279,979
Denominator										Denominator
Basic weighted average shares outstanding										Basic weighted average shares outstanding	538,679		506,476
Dilutive potential common shares - equity awards(1)										Dilutive potential common shares - equity awards(1)	0		318
Dilutive potential common shares - forward equity agreements(2)										Dilutive potential common shares - forward equity agreements(2)	0		808
Dilutive potential common shares - DownREIT conversions										Dilutive potential common shares - DownREIT conversions	0		7,443
Diluted weighted average common shares										Diluted weighted average common shares	538,679		515,045
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	$	(63,768)	$	(46,249)	$	265,018	$	787	Net income (loss) applicable to common shares	$	0.27	$	0.54

Denominator
Basic weighted average shares outstanding		538,333		491,203		527,908		482,595
Dilutive potential common shares - equity awards(1)		0		0		279		296
Dilutive potential common shares - forward equity agreements(2)		0		0		268		1,901

Diluted weighted average common shares		538,333		491,203		528,455		484,792

Earnings (loss) per common share:
Basic		$	(0.12)	$	(0.09)	$	0.50	$	0.00
Diluted		$	(0.12)	$	(0.09)	$	0.50	$	0.00

(1)For all periods presented, represents the dilutive impact of 1 million outstanding equity awards (restricted stock units and stock options).

(2)For the nine months ended September 30, 2020, represents the dilutive impact of 32 million shares that were settled during the nine months then ended. For the nine months ended September 30, 2019, represents the dilutive impact of 11 million shares that were settled during the nine months then ended and 19 million shares of common stock under forward sales agreements that had not been settled as of September 30, 2019. For the three months ended ~~September 30, 2020,~~March 31, 2021, forward sales agreements had no0 dilutive impact as all agreements were settled prior to the start of the period. For the three months ended ~~September 30,~~March 31, 2020, ~~and September 30, 2019,~~represents the dilutive impact of 32 million shares that were settled during the three months then ended. For the three months ended March 31, 2021, diluted loss per common share is calculated using the weighted average common shares outstanding as a result of the Company generating a ~~net~~ loss ~~applicable to common shares~~from continuing operations for the period.

For ~~all periods presented in~~ the ~~table above,~~three months ended March 31, 2021, all 7 million shares issuable upon conversion of DownREIT units were not included because they are anti-dilutive. For the three months ended March 31, 2020, all 7 million DownREIT shares were dilutive.

NOTE ~~13.~~14. Segment Disclosures

The ~~Company~~Company’s reportable segments, based on how its chief operating decision makers (“CODMs”) evaluates its business and allocates resources, ~~based on its reportable business segments:~~are as follows: (i) ~~senior housing triple-net, (ii) SHOP, (iii) CCRC, (iv)~~ life science, (ii) medical office, and ~~(v) medical office.~~(iii) CCRC. The Company has non-reportable segments that are comprised primarily of the Company’s ~~hospital properties~~interests in an unconsolidated senior housing joint venture and debt investments. The accounting policies of the segments are the same as those in Note 2 to the Consolidated Financial Statements in the Company’s ~~2019~~2020 Annual Report on Form 10-K filed with the SEC, as updated by Note 2 herein.

~~During~~In December 2020, the ~~first quarter~~Company’s senior housing triple-net and SHOP portfolios were classified as discontinued operations and are no longer reportable segments. See Notes 1 and 5 for further information.

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In December 2020, ~~primarily~~ as a result ~~of: (i) acquiring 100% ownership interest~~of a change in ~~13 of 15 CCRCs previously held by a CCRC joint venture (see discussion of the 2019 MTCA with Brookdale in Note 3) and (ii) deconsolidating 19 SHOP assets into a new joint venture in December 2019,~~how operating results are reported to the Company's CODMs, ~~began reviewing operating results of CCRCs on a stand-alone basis and financial information for each respective segment inclusive of~~ the Company’s ~~share of unconsolidated joint ventures and exclusive of noncontrolling interests’ share on consolidated joint ventures. Therefore, during~~hospitals were reclassified from other non-reportable segments to the ~~first quarter of 2020, the Company began reporting CCRCs as a separate~~medical office segment and ~~began reporting segment measures inclusive of~~ the Company’s ~~share of~~1 remaining unconsolidated investment in a senior housing joint ~~ventures and exclusive of noncontrolling interests’ share of consolidated joint ventures. Accordingly, all~~venture was reclassified from the SHOP segment to other non-reportable segments.

All prior period segment information has been recast to conform to the current period presentation.

~~During the nine months ended September 30, 2020, 9senior housing triple-net facilities were transferred to the Company’s SHOP segment~~as a result of terminating the triple-net leases and converting the assets to a RIDEA structure. There were no transfers of senior housing triple-net facilities to the Company’s SHOP segment during the three months ended September 30, 2020. During the nine months ended September 30, 2019, 39 senior housing triple-net facilities were transferred to the Company’s SHOP segment as a result of terminating the triple-net leases and converting the assets to a RIDEA structure. There were no transfers of senior housing triple-net facilities to the Company’s SHOP segment during the three months ended September 30, 2019. When an asset is transferred from one segment to another, the results associated with that asset are included in the original segment until the date of transfer. Results generated after the transfer date are included in the new segment.

~~Table of Contents~~

The Company evaluates performance based on property Adjusted NOI. 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). 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 the Company’s share of income (loss) from unconsolidated joint ventures and exclude noncontrolling interests’ share of income (loss) from consolidated joint ventures. Management believes Adjusted NOI is an important supplemental measure because it provides relevant and useful information by reflecting only income and operating expense items that are incurred at the property level and presenting it on an unlevered basis. Additionally, management believes 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.

Non-segment assets consist of assets in the Company's other non-reportable segments and corporate non-segment assets. Corporate non-segment assets consist primarily of corporate assets, including cash and cash equivalents, restricted cash, accounts receivable, net, loans receivable, marketable equity securities, other assets, real estate assets held for sale and discontinued operations, and liabilities related to assets held for sale.

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The following tables summarize information for the reportable segments (in thousands):

For the three months ended ~~September 30, 2020:~~March 31, 2021:


		Senior Housing Triple-Net		SHOP		CCRC		Life Science		Medical Office		Other Non-reportable		Corporate Non-segment		Total			Life Science		Medical Office		CCRC		Other Non-reportable		Corporate Non-segment		Total
Total revenues	Total revenues	$	24,558	$	149,615	$	115,031	$	148,702	$	145,153	$	14,680	$	0	$	597,739	Total revenues	$	169,934	$	160,201	$	116,128	$	9,013	$	0	$	455,276
Government grant income(1)	Government grant income(1)	0		392		1,761		0		0		0		0		2,153		Government grant income(1)	0		0		1,310		0		0		1,310
Less: Interest income	Less: Interest income	0		0		0		0		0		(4,443)		0		(4,443)		Less: Interest income	0		0		0		(9,013)		0		(9,013)
Healthpeak's share of unconsolidated joint venture total revenues	Healthpeak's share of unconsolidated joint venture total revenues	0		23,800		4,295		0		699		0		0		28,794		Healthpeak's share of unconsolidated joint venture total revenues	1,337		715		4,488		16,753		0		23,293
Healthpeak's share of unconsolidated joint venture government grant income	Healthpeak's share of unconsolidated joint venture government grant income	0		49		246		0		0		0		0		295		Healthpeak's share of unconsolidated joint venture government grant income	0		0		199		227		0		426
Noncontrolling interests' share of consolidated joint venture total revenues	Noncontrolling interests' share of consolidated joint venture total revenues	0		(459)		0		(66)		(8,788)		0		0		(9,313)		Noncontrolling interests' share of consolidated joint venture total revenues	(65)		(8,926)		0		0		0		(8,991)

Operating expenses	Operating expenses	(421)		(130,729)		(94,992)		(36,714)		(51,430)		(6)		0		(314,292)		Operating expenses	(39,461)		(51,121)		(91,179)		0		0		(181,761)
Healthpeak's share of unconsolidated joint venture operating expenses	Healthpeak's share of unconsolidated joint venture operating expenses	0		(18,280)		(4,797)		0		(296)		0		0		(23,373)		Healthpeak's share of unconsolidated joint venture operating expenses	(425)		(294)		(4,745)		(12,595)		0		(18,059)
Noncontrolling interests' share of consolidated joint venture operating expenses	Noncontrolling interests' share of consolidated joint venture operating expenses	0		361		0		18		2,630		0		0		3,009		Noncontrolling interests' share of consolidated joint venture operating expenses	20		2,504		0		0		0		2,524

Adjustments to NOI(2)	Adjustments to NOI(2)	93		(1,228)		1,684		(8,330)		(2,287)		558		0		(9,510)		Adjustments to NOI(2)	(11,810)		(1,923)		20		112		0		(13,601)
Adjusted NOI	Adjusted NOI	24,230		23,521		23,228		103,610		85,681		10,789		0		271,059		Adjusted NOI	119,530		101,156		26,221		4,497		0		251,404
Plus: Adjustments to NOI(2)	Plus: Adjustments to NOI(2)	(93)		1,228		(1,684)		8,330		2,287		(558)		0		9,510		Plus: Adjustments to NOI(2)	11,810		1,923		(20)		(112)		0		13,601
Interest income	Interest income	0		0		0		0		0		4,443		0		4,443		Interest income	0		0		0		9,013		0		9,013
Interest expense	Interest expense	(45)		(2,649)		(1,983)		(57)		(100)		0		(51,401)		(56,235)		Interest expense	(102)		(95)		(1,918)		0		(44,728)		(46,843)
Depreciation and amortization	Depreciation and amortization	(6,694)		(24,966)		(30,106)		(57,170)		(53,688)		(1,006)		0		(173,630)		Depreciation and amortization	(68,434)		(57,954)		(31,150)		0		0		(157,538)
General and administrative	General and administrative	0		0		0		0		0		0		(21,661)		(21,661)		General and administrative	0		0		0		0		(24,902)		(24,902)
Transaction costs	Transaction costs	0		0		0		0		0		0		(2,586)		(2,586)		Transaction costs	(32)		(330)		(432)		(4)		0		(798)
Impairments and loan loss reserves (recoveries), net		(12,097)		(24,229)		0		0		(1,208)		2,984		0		(34,550)
Gain (loss) on sales of real estate, net		0		(2,134)		0		0		2,283		0		0		149
Loss on debt extinguishments		0		0		0		0		0		0		(17,921)		(17,921)
Impairments and loan loss reserves																		Impairments and loan loss reserves	0		0		0		(3,242)		0		(3,242)

Gain (loss) on debt extinguishments																		Gain (loss) on debt extinguishments	0		0		0		0		(164,292)		(164,292)
Other income (expense), net	Other income (expense), net	0		392		3,903		0		0		0		2,765		7,060		Other income (expense), net	4		(2,279)		2,176		482		1,817		2,200
Income tax benefit (expense)(3)		0		0		0		0		0		0		(24,174)		(24,174)
Less: Government grant income	Less: Government grant income	0		(392)		(1,761)		0		0		0		0		(2,153)		Less: Government grant income	0		0		(1,310)		0		0		(1,310)
Less: Healthpeak's share of unconsolidated joint venture NOI	Less: Healthpeak's share of unconsolidated joint venture NOI	0		(5,569)		256		0		(403)		0		0		(5,716)		Less: Healthpeak's share of unconsolidated joint venture NOI	(912)		(421)		58		(4,385)		0		(5,660)
Plus: Noncontrolling interests' share of consolidated joint venture NOI	Plus: Noncontrolling interests' share of consolidated joint venture NOI	0		98		0		48		6,158		0		0		6,304		Plus: Noncontrolling interests' share of consolidated joint venture NOI	45		6,422		0		0		0		6,467
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures																		Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	61,909		48,422		(6,375)		6,249		(232,105)		(121,900)
Income tax benefit (expense)																		Income tax benefit (expense)	0		0		0		0		(8)		(8)
Equity income (loss) from unconsolidated joint ventures	Equity income (loss) from unconsolidated joint ventures	0		(19,432)		(322)		0		198		76		0		(19,480)		Equity income (loss) from unconsolidated joint ventures	(93)		192		0		1,224		0		1,323

Income (loss) from continuing operations																		Income (loss) from continuing operations	61,816		48,614		(6,375)		7,473		(232,113)		(120,585)
Income (loss) from discontinued operations																		Income (loss) from discontinued operations	0		0		0		0		270,008		270,008
Net income (loss)	Net income (loss)	$	5,301	$	(54,132)	$	(8,469)	$	54,761	$	41,208	$	16,728	$	(114,978)	$	(59,581)	Net income (loss)	$	61,816	$	48,614	$	(6,375)	$	7,473	$	37,895	$	149,423

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

(2)Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, and termination fees. Includes the Company’s share of income (loss) generated by unconsolidated joint ventures and excludes noncontrolling interests’ share of income (loss) generated by consolidated joint ventures.

~~(3)~~Income tax benefit (expense) for the three months ended September 30, 2020 includes a $31 million income tax expense related to the valuation allowance on deferred tax assets that are no longer expected to be realized (see Note 4).

~~Table of Contents~~

~~For the three months ended September 30, 2019:~~

Senior Housing Triple-Net SHOP CCRC Life Science Medical Office Other Non-reportable Corporate Non-segment Total
Total revenues $ 47,956 $ 212,275 $ 0 $ 118,561 $ 143,639 $ 15,540 $ 0 $ 537,971
Less: Interest income 0 0 0 0 0 (2,741) 0 (2,741)
Healthpeak's share of unconsolidated joint venture total revenues 0 4,943 52,671 0 701 5,227 0 63,542
Noncontrolling interests' share of consolidated joint venture total revenues 0 (515) 0 (52) (8,605) 0 0 (9,172)
Operating expenses (865) (166,201) 0 (29,520) (51,472) (11) 0 (248,069)
Healthpeak's share of unconsolidated joint venture operating expenses 0 (3,816) (43,193) 0 (279) (23) 0 (47,311)
Noncontrolling interests' share of consolidated joint venture operating expenses 0 388 0 16 2,593 0 0 2,997
Adjustments to NOI(1)
(1,537) 739 5,635 (7,062) (1,609) 79 0 (3,755)
Adjusted NOI 45,554 47,813 15,113 81,943 84,968 18,071 0 293,462
Plus: Adjustments to NOI(1)
1,537 (739) (5,635) 7,062 1,609 (79) 0 3,755
Interest income 0 0 0 0 0 2,741 0 2,741
Interest expense (106) (2,637) 0 (68) (108) 0 (58,311) (61,230)
Depreciation and amortization (12,773) (58,152) 0 (45,028) (54,152) (1,839) 0 (171,944)
General and administrative 0 0 0 0 0 0 (22,970) (22,970)
Transaction costs 0 0 0 0 0 0 (1,319) (1,319)
Impairments and loan loss reserves (recoveries), net (7,430) (24,721) 0 0 (5,729) (377) 0 (38,257)
Gain (loss) on sales of real estate, net 0 (734) 0 (87) (7) 44 0 (784)
Loss on debt extinguishments 0 0 0 0 0 0 (35,017) (35,017)
Other income (expense), net 0 0 0 0 0 980 (287) 693
Income tax benefit (expense) 0 0 0 0 0 0 6,261 6,261
Less: Healthpeak's share of unconsolidated joint venture NOI 0 (1,127) (9,478) 0 (422) (5,204) 0 (16,231)
Plus: Noncontrolling interests' share of consolidated joint venture NOI 0 127 0 36 6,012 0 0 6,175
Equity income (loss) from unconsolidated joint ventures 0 (392) (9,194) 0 216 1,727 0 (7,643)
Net income (loss) $ 26,782 $ (40,562) $ (9,194) $ 43,858 $ 32,387 $ 16,064 $ (111,643) $ (42,308)

~~(1)~~Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, and termination fees. Includes the Company’s share of income (loss) generated by unconsolidated joint ventures and excludes noncontrolling interests’ share of income (loss) generated by consolidated joint ventures.

3129

Table of Contents

For the ~~nine~~three months ended ~~September 30,~~March 31, 2020:

Senior Housing Triple-Net SHOP CCRC Life Science Medical Office Other Non-reportable Corporate Non-segment Total
Total revenues $ 82,282 $ 475,869 $ 320,737 $ 416,081 $ 431,935 $ 44,425 $ 0 $ 1,771,329
Government grant income(1)
0 2,601 13,632 0 0 0 0 16,233
Less: Interest income 0 0 0 0 0 (12,361) 0 (12,361)
Healthpeak's share of unconsolidated joint venture total revenues 0 74,249 30,723 0 2,085 86 0 107,143
Healthpeak's share of unconsolidated joint venture government grant income 0 319 780 0 0 0 0 1,099
Noncontrolling interests' share of consolidated joint venture total revenues 0 (1,501) 0 (175) (25,775) 0 0 (27,451)
Operating expenses (1,453) (406,366) (345,722) (101,120) (151,467) (18) 0 (1,006,146)
Healthpeak's share of unconsolidated joint venture operating expenses 0 (54,922) (27,660) 0 (846) 1 0 (83,427)
Noncontrolling interests' share of consolidated joint venture operating expenses 0 1,149 0 53 7,737 0 0 8,939
Adjustments to NOI(2)
(3,240) (579) 93,263 (15,389) (4,695) 1,504 0 70,864
Adjusted NOI 77,589 90,819 85,753 299,450 258,974 33,637 0 846,222
Plus: Adjustments to NOI(2)
3,240 579 (93,263) 15,389 4,695 (1,504) 0 (70,864)
Interest income 0 0 0 0 0 12,361 0 12,361
Interest expense (199) (8,341) (5,256) (180) (302) 0 (157,883) (172,161)
Depreciation and amortization (21,031) (113,591) (81,760) (159,737) (161,408) (3,867) 0 (541,394)
General and administrative 0 0 0 0 0 0 (67,730) (67,730)
Transaction costs 0 0 0 0 0 0 (18,061) (18,061)
Impairments and loan loss reserves (recoveries), net (17,774) (63,672) 0 0 (6,033) (10,244) 0 (97,723)
Gain (loss) on sales of real estate, net 164,043 (1,798) 0 0 85,676 (40) 0 247,881
Loss on debt extinguishments 0 0 0 0 0 0 (42,912) (42,912)
Other income (expense), net 0 2,601 188,377 0 0 41,707 4,569 237,254
Income tax benefit (expense)(3)
0 0 0 0 0 0 16,216 16,216
Less: Government grant income 0 (2,601) (13,632) 0 0 0 0 (16,233)
Less: Healthpeak's share of unconsolidated joint venture NOI 0 (19,646) (3,843) 0 (1,239) (87) 0 (24,815)
Plus: Noncontrolling interests' share of consolidated joint venture NOI 0 352 0 122 18,038 0 0 18,512
Equity income (loss) from unconsolidated joint ventures 0 (55,360) (1,801) 0 604 8,012 0 (48,545)
Net income (loss) $ 205,868 $ (170,658) $ 74,575 $ 155,044 $ 199,005 $ 79,975 $ (265,801) $ 278,008

~~(1)Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the consolidated statements of operations.~~


	Life Science		Medical Office		CCRC		Other Non-reportable		Corporate Non-segment		Total
Total revenues	$	128,883	$	156,641	$	91,780	$	3,750	$	0	$	381,054

Less: Interest income	0		0		0		(3,688)		0		(3,688)
Healthpeak's share of unconsolidated joint venture total revenues	0		695		21,647		20,194		0		42,536
Noncontrolling interests' share of consolidated joint venture total revenues	(52)		(8,640)		0		0		0		(8,692)
Operating expenses	(30,201)		(50,694)		(156,482)		0		0		(237,377)
Healthpeak's share of unconsolidated joint venture operating expenses	0		(275)		(18,037)		(13,278)		0		(31,590)
Noncontrolling interests' share of consolidated joint venture operating expenses	17		2,600		0		0		0		2,617

Adjustments to NOI(1)	(4,280)		(994)		91,561		(48)		0		86,239
Adjusted NOI	94,367		99,333		30,469		6,930		0		231,099
Plus: Adjustments to NOI(1)	4,280		994		(91,561)		48		0		(86,239)
Interest income	0		0		0		3,688		0		3,688
Interest expense	(63)		(102)		(1,304)		0		(54,222)		(55,691)
Depreciation and amortization	(50,211)		(54,667)		(20,229)		(5)		0		(125,112)
General and administrative	0		0		0		0		(22,349)		(22,349)
Transaction costs	0		0		(14,474)		(89)		0		(14,563)
Impairments and loan loss reserves	0		(2,706)		0		(8,401)		0		(11,107)
Gain (loss) on sales of real estate, net	0		2,109		0		(40)		0		2,069
Gain (loss) on debt extinguishments	0		0		0		0		833		833
Other income (expense), net	0		0		170,332		41,707		(1,386)		210,653
Less: Healthpeak's share of unconsolidated joint venture NOI	0		(420)		(3,610)		(6,916)		0		(10,946)
Plus: Noncontrolling interests' share of consolidated joint venture NOI	35		6,040		0		0		0		6,075
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	48,408		50,581		69,623		36,922		(77,124)		128,410
Income tax benefit (expense)(2)	0		0		0		0		29,868		29,868
Equity income (loss) from unconsolidated joint ventures	0		197		(1,880)		(9,463)		0		(11,146)

Income (loss) from continuing operations	48,408		50,778		67,743		27,459		(47,256)		147,132
Income (loss) from discontinued operations	0		0		0		0		135,408		135,408
Net income (loss)	$	48,408	$	50,778	$	67,743	$	27,459	$	88,152	$	282,540

~~(2)~~______________________________________________________________________________Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, and termination fees. Includes the Company’s share of income (loss) generated by unconsolidated joint ventures and excludes noncontrolling interests’ share of income (loss) generated by consolidated joint ventures.

~~(3)~~Income tax benefit (expense) for the nine months ended September 30, 2020 includes: (i) a $51 million tax benefit recognized in conjunction with internal restructuring activities, which resulted in the transfer of assets subject to certain deferred tax liabilities from taxable REIT subsidiaries to the REIT in connection with the 2019 MTCA (see Note 3), (ii) a $31 million income tax expense related to the valuation allowance on deferred tax assets that are no longer expected to be realized (see Note 4), and (iii)~~a $3.6 million net tax benefit recognized due to changes under the CARES Act, which resulted in net operating losses being utilized at a higher income tax rate than previously available.~~

~~Table of Contents~~

~~For the nine months ended September 30, 2019:~~

Senior Housing Triple-Net SHOP CCRC Life Science Medical Office Other Non-reportable Corporate Non-segment Total
Total revenues $ 156,592 $ 515,457 $ 0 $ 320,630 $ 427,761 $ 45,252 $ 0 $ 1,465,692
Less: Interest income 0 0 0 0 0 (6,868) 0 (6,868)
Healthpeak's share of unconsolidated joint venture total revenues 0 16,514 157,744 0 2,115 16,241 0 192,614
Noncontrolling interests' share of consolidated joint venture total revenues (1) (1,510) 0 (134) (25,289) 0 0 (26,934)
Operating expenses (2,725) (400,608) 0 (76,992) (150,635) (29) 0 (630,989)
Healthpeak's share of unconsolidated joint venture operating expenses 0 (12,407) (127,026) 0 (837) (51) 0 (140,321)
Noncontrolling interests' share of consolidated joint venture operating expenses 0 1,058 0 42 7,513 0 0 8,613
Adjustments to NOI(1)
3,834 2,819 13,832 (17,146) (4,569) (413) 0 (1,643)
Adjusted NOI 157,700 121,323 44,550 226,400 256,059 54,132 0 860,164
Plus: Adjustments to NOI(1)
(3,834) (2,819) (13,832) 17,146 4,569 413 0 1,643
Interest income 0 0 0 0 0 6,868 0 6,868
Interest expense (901) (4,626) 0 (211) (328) 0 (161,433) (167,499)
Depreciation and amortization (45,138) (134,481) 0 (122,705) (161,350) (5,517) 0 (469,191)
General and administrative 0 0 0 0 0 0 (71,445) (71,445)
Transaction costs 0 0 0 0 0 0 (7,174) (7,174)
Impairments and loan loss reserves (recoveries), net (22,914) (77,685) 0 0 (14,677) (377) 0 (115,653)
Gain (loss) on sales of real estate, net 3,557 8,844 0 3,651 2,876 (220) 0 18,708
Loss on debt extinguishments 0 0 0 0 0 0 (36,152) (36,152)
Other income (expense), net 0 12,817 0 0 0 980 11,037 24,834
Income tax benefit (expense) 0 0 0 0 0 0 11,583 11,583
Less: Healthpeak's share of unconsolidated joint venture NOI 0 (4,107) (30,718) 0 (1,278) (16,190) 0 (52,293)
Plus: Noncontrolling interests' share of consolidated joint venture NOI 1 452 0 92 17,776 0 0 18,321
Equity income (loss) from unconsolidated joint ventures 0 (1,473) (13,858) 0 643 4,676 0 (10,012)
Net income (loss) $ 88,471 $ (81,755) $ (13,858) $ 124,373 $ 104,290 $ 44,765 $ (253,584) $ 12,702

(1)Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, and termination fees. Includes the Company’s share of income (loss) generated by unconsolidated joint ventures and excludes noncontrolling interests’ share of income (loss) generated by consolidated joint ventures.

33(2)Income tax benefit (expense) for the quarter ended March 31, 2020 includes: (i) a $52 million tax benefit recognized in conjunction with internal restructuring activities, which resulted in the transfer of assets subject to certain deferred tax liabilities from taxable REIT subsidiaries to the REIT in connection with the 2019 MTCA (see Note 3) and (ii) a $2.9 million net tax benefit recognized due to changes under the CARES Act, which resulted in net operating losses being utilized at a higher income tax rate than previously available.

~~Table of Contents~~

The following table summarizes the Company’s revenues by segment (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
Segment	Segment	2020		2019		2020		2019		Segment	2021		2020
Senior housing triple-net		$	24,558	$	47,956	$	82,282	$	156,592
SHOP		149,615		212,275		475,869		515,457
CCRC		115,031		0		320,737		0

Life science	Life science	148,702		118,561		416,081		320,630		Life science	$	169,934	$	128,883
Medical office	Medical office	145,153		143,639		431,935		427,761		Medical office	160,201		156,641
CCRC										CCRC	116,128		91,780
Other non-reportable	Other non-reportable	14,680		15,540		44,425		45,252		Other non-reportable	9,013		3,750
Total revenues	Total revenues	$	597,739	$	537,971	$	1,771,329	$	1,465,692	Total revenues	$	455,276	$	381,054

See Notes 3, 4, ~~5, 6,~~ and 75 for significant transactions impacting the Company’s segment assets during the periods presented.

Table of Contents

NOTE ~~14.~~15. Supplemental Cash Flow Information

The following table provides supplemental cash flow information (in thousands):


		Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019			2021		2020
Supplemental cash flow information:	Supplemental cash flow information:					Supplemental cash flow information:
Interest paid, net of capitalized interest	Interest paid, net of capitalized interest	$	187,569	$	164,761	Interest paid, net of capitalized interest	$	90,032	$	71,621
Income taxes paid (refunded)	Income taxes paid (refunded)	261		1,314		Income taxes paid (refunded)	2,521		(1,673)
Capitalized interest	Capitalized interest	20,570		22,768		Capitalized interest	5,453		6,970
Supplemental schedule of non-cash investing and financing activities:	Supplemental schedule of non-cash investing and financing activities:					Supplemental schedule of non-cash investing and financing activities:
Accrued construction costs	Accrued construction costs	114,979		113,936		Accrued construction costs	107,798		126,185

Vesting of restricted stock units and conversion of non-managing member units into common stock	Vesting of restricted stock units and conversion of non-managing member units into common stock	4,729		4,534		Vesting of restricted stock units and conversion of non-managing member units into common stock	838		1,077
Liabilities assumed with real estate acquisitions		523,289		172,565

Conversion of DFLs to real estate		0		350,540
Net noncash impact from the consolidation of previously unconsolidated joint ventures	Net noncash impact from the consolidation of previously unconsolidated joint ventures	323,138		17,850		Net noncash impact from the consolidation of previously unconsolidated joint ventures	0		323,138
Mortgages assumed with real estate acquisitions						Mortgages assumed with real estate acquisitions	0		215,335
Refundable entrance fees assumed with real estate acquisitions						Refundable entrance fees assumed with real estate acquisitions	0		307,954
Seller financing provided on disposition of real estate asset	Seller financing provided on disposition of real estate asset	12,480		0		Seller financing provided on disposition of real estate asset	559,745		0

See Note 3 for a discussion of the impact of the 2019 MTCA with Brookdale on the Company’s consolidated balance sheets and statements of operations. ~~See Note 5 for a discussion~~

The following table summarizes certain cash flow information related to ~~the conversion of a DFL to real estate.~~assets classified as discontinued operations (in thousands):


	Three Months Ended March 31,
	2021		2020
Depreciation and amortization of real estate, in-place lease, and other intangibles	$	0	$	64,164
Development, redevelopment, and other major improvements of real estate	3,861		11,252
Leasing costs, tenant improvements, and recurring capital expenditures	1,873		3,427

The following table summarizes cash, cash equivalents and restricted cash (in thousands):


		September 30,					Three Months Ended March 31,
		2020		2019			2021		2020		2021		2020		2021		2020
							Continuing operations				Discontinued operations				Total
Beginning of period:						Beginning of period:
Cash and cash equivalents	Cash and cash equivalents	$	197,119	$	124,990	Cash and cash equivalents	$	44,226	$	80,398	$	53,085	$	63,834	$	97,311	$	144,232
Restricted cash	Restricted cash	102,419		30,114		Restricted cash	67,206		13,385		17,168		27,040		84,374		40,425
Cash, cash equivalents and restricted cash	Cash, cash equivalents and restricted cash	$	299,538	$	155,104	Cash, cash equivalents and restricted cash	$	111,432	$	93,783	$	70,253	$	90,874	$	181,685	$	184,657
End of period:						End of period:
Cash and cash equivalents						Cash and cash equivalents	$	34,007	$	716,750	$	40,161	$	66,791	$	74,168	$	783,541
Restricted cash						Restricted cash	68,033		84,982		5,817		21,576		73,850		106,558
Cash, cash equivalents and restricted cash						Cash, cash equivalents and restricted cash	$	102,040	$	801,732	$	45,978	$	88,367	$	148,018	$	890,099

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NOTE ~~15.~~16. Variable Interest Entities

Unconsolidated Variable Interest Entities

At ~~September 30, 2020,~~March 31, 2021, the Company had investments in: (i) 2 properties leased to a VIE tenant, (ii) 54 unconsolidated VIE joint ventures, (iii) marketable debt securities of 1 VIE, and (iv) 1 loan to a VIE borrower. The Company determined it is not the primary beneficiary of and therefore does not consolidate these VIEs because it does not have the ability to control the activities that most significantly impact their economic performance. Except for the Company’s equity interest in the unconsolidated joint ventures (CCRC OpCo, development investments, ~~Waldwick JV,~~ and the LLC investment discussed below), it has no formal involvement in these VIEs beyond its investments.

VIE Tenant. The Company leases 2 properties to 1 tenant that has been identified as a VIE (“VIE tenant”). The VIE tenant is a “thinly capitalized” entity that relies on the operating cash flows generated from the senior housing facilities to pay operating expenses, including the rent obligations under its leases.

CCRC OpCo. The Company holds a 49% ownership interest in CCRC OpCo, a joint venture entity formed in August 2014 that operates senior housing properties in a RIDEA structure and has been identified as a VIE. The equity members of CCRC OpCo “lack power” because they share certain operating rights with Brookdale, as manager of the CCRCs. The assets of CCRC OpCo primarily consist of the CCRCs that it owns and leases, resident fees receivable, notes receivable, and cash and cash equivalents; its obligations primarily consist of operating lease obligations to CCRC PropCo, debt service payments, capital expenditures, accounts payable, and expense accruals. Assets generated by the operations of CCRC OpCo (primarily rents from CCRC residents) of CCRC OpCo may only be used to settle its contractual obligations (primarily from debt service payments, capital expenditures, and rental costs and operating expenses incurred to manage such facilities). Refer to Note 3 for additional discussion related to transactions impacting CCRC OpCo.

~~Waldwick Development JV.~~ The Company holds an 85% ownership interest in a joint venture (the “Waldwick JV”), which has been identified as a VIE as power is shared with a member that does not have a substantive equity investment at risk. The assets of the joint venture primarily consist of a senior housing facility that it owns and cash and cash equivalents; its obligations primarily consist of capital expenditures, accounts payable, and expense accruals. Any assets generated by the joint venture may only be used to settle its contractual obligations (primarily capital expenditures and rental costs and operating expenses incurred to manage such facilities). In October 2020, the Company purchased the remaining equity interests in the Waldwick Development JV and began consolidating the real estate held by the venture (see Note 7).

LLC Investment. The Company holds a limited partner ownership interest in an unconsolidated LLC that has been identified as a VIE. The Company’s involvement in the entity is limited to its equity investment as a limited partner and it does not have any substantive participating rights or kick-out rights over the general partner. The assets and liabilities of the entity primarily consist of those associated with its senior housing real estate and development activities. Any assets generated by the entity may only be used to settle its contractual obligations (primarily development expenses and debt service payments).

Development Investments. The Company holds investments (consisting of mezzanine debt and/or preferred equity) in 2 senior housing development joint ventures. The joint ventures are also capitalized by senior loans from a third party and equity from the third party managing-member, but are considered to be “thinly capitalized” as there is insufficient equity investment at risk.

Debt Securities Investment. The Company holds commercial mortgage-backed securities (“CMBS”) issued by Federal Home Loan Mortgage Corporation (commonly referred to as Freddie MAC) through a special purpose entity that has been identified as a VIE because it is “thinly capitalized.” The CMBS issued by the VIE are backed by mortgage debt obligations on real estate assets. These securities are classified as held-to-maturity because the Company has the intent and ability to hold the securities until maturity.

Seller Financing Loan. The Company provided seller financing ~~of $10 million~~ related to its sale of 7 senior housing triple-net facilities. The financing was provided in the form of a secured five–year mezzanine loan to a “thinly capitalized” borrower created to acquire the facilities.

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The classification of the related assets and liabilities and the maximum loss exposure as a result of the Company’s involvement with these VIEs at ~~September 30, 2020~~March 31, 2021 was as follows (in thousands):

VIE Type

Asset/Liability Type

Maximum Loss

Exposure

and Carrying

Amount(1)

Continuing operations:

Loans receivable and unconsolidated joint ventures

Loans receivable, net and Investments in unconsolidated joint ventures

21,970

Loan - seller financing

Loans receivable, net

1,865

CMBS and LLC investment

Marketable debt and LLC investment

35,610

Discontinued operations:

VIE tenant - operating leases(2)

Lease intangibles, net and straight-line rent receivables

~~1,950~~0

~~Unconsolidated joint ventures~~

~~Loans receivable, net and Investments in unconsolidated joint ventures~~

~~28,879~~

~~Loan - seller financing~~

~~Loans receivable, net~~

~~8,453~~

~~CMBS and LLC investment~~

~~Marketable debt and LLC investment~~

~~35,302~~

(1)The Company’s maximum loss exposure represents the aggregate carrying amount of such investments (including accrued interest).

(2)The Company’s maximum loss exposure may be mitigated by re-leasing the underlying properties to new tenants upon an event of default.

As of ~~September 30, 2020,~~March 31, 2021, the Company had not provided, and is not required to provide, financial support through a liquidity arrangement or otherwise, to its unconsolidated VIEs, including under circumstances in which it could be exposed to further losses (e.g., cash shortfalls).

See Notes 3 ~~4, 5, 6,~~ and 78 for additional descriptions of the nature, purpose, and operating activities of the Company’s unconsolidated VIEs and interests therein.

Consolidated Variable Interest Entities

The Company’s consolidated total assets and total liabilities at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 include certain assets of VIEs that can only be used to settle the liabilities of the related VIE. The VIE creditors do not have recourse to the Company. ~~Total assets and total liabilities include VIE assets and liabilities as follows (in thousands):~~

September 30, 2020 December 31, 2019
Assets
Buildings and improvements $ 2,977,513 $ 3,236,105
Development costs and construction in progress 114,929 67,285
Land 445,578 526,576
Accumulated depreciation and amortization (634,028) (568,574)
Net real estate 2,903,992 3,261,392
Accounts receivable, net 8,397 11,986
Cash and cash equivalents 51,532 47,027
Restricted cash 14,894 13,596
Intangible assets, net 134,147 206,840
Right-of-use asset, net 91,444 92,664
Other assets, net 55,342 52,124
Total assets $ 3,259,748 $ 3,685,629
Liabilities
Mortgage debt 216,594 218,767
Intangible liabilities, net 17,361 39,545
Lease liability 91,582 90,875
Accounts payable, accrued liabilities, and other liabilities 115,514 122,832
Deferred revenue 89,587 96,985
Total liabilities $ 530,638 $ 569,004

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Ventures V, LLC. The Company holds a 51% ownership interest in and is the managing member of a joint venture entity formed in October 2015 that owns and leases MOBs (“Ventures V”). The Company classifies Ventures V as a VIE due to the non-managing member lacking substantive participation rights in the management of Ventures V or kick-out rights over the managing member. The Company consolidates Ventures V as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of Ventures V primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of capital expenditures for the properties. Assets generated by Ventures V may only be used to settle its contractual obligations (primarily from capital expenditures).

~~Watertown JV~~. The Company holds a 95% ownership interest in and is the managing member of joint venture entities formed in November 2017 that own and operate a senior housing property in a RIDEA structure (“Watertown JV”). Watertown PropCo is a VIE as the Company and the non-managing member share in control of the entity, but substantially all of the entity's activities are performed on behalf of the Company. Watertown OpCo is a VIE as the non-managing member, through its equity interest, lacks substantive participation rights in the management of Watertown OpCo or kick-out rights over the managing member. The Company consolidates Watertown PropCo and Watertown OpCo as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of Watertown PropCo primarily consist of a leased property (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of notes payable to a non-VIE consolidated subsidiary of the Company. The assets of Watertown OpCo primarily consist of leasehold interests in a senior housing facility (operating lease), resident fees receivable, and cash and cash equivalents; its obligations primarily consist of lease payments to Watertown PropCo and operating expenses of its senior housing facilities (accounts payable and accrued expenses). Assets generated by the senior housing operations (primarily from senior housing resident rents) of the Watertown structure may only be used to settle its contractual obligations (primarily from the rental costs, operating expenses incurred to manage such facilities, and debt costs).

Life Science JVs. The Company holds a 99% ownership interest in multiple joint venture entities that own and lease life science assets (the “Life Science JVs”). The Life Science JVs are VIEs as the members share in control of the entities, but substantially all of the activities are performed on behalf of the Company. The Company consolidates the Life Science JVs as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the Life Science JVs primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the Life Science JVs may only be used to settle their contractual obligations (primarily from capital expenditures).

MSREI MOB JV. The Company holds a 51% ownership interest in, and is the managing member of, a joint venture entity formed in August 2018 that owns and leases MOBs (the “MSREI JV”). The MSREI JV is a VIE due to the non-managing member lacking substantive participation rights in the management of the joint venture or kick-out rights over the managing member. The Company consolidates the MSREI JV as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of the MSREI JV primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of capital expenditures for the properties. Assets generated by the MSREI JV may only be used to settle its contractual obligations (primarily from capital expenditures).

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Consolidated Lessees. The Company leases 24 senior housing properties to a lessee ~~entity~~entities under a cash flow ~~lease~~leases through which the Company receives monthly rent equal to the residual cash flows of the ~~property.~~properties. The lessee ~~entity is~~entities are classified as ~~a VIE~~VIEs as ~~it is a~~they are "thinly capitalized" ~~entity.~~entities. The Company consolidates the lessee ~~entity~~entities as it has the ability to control the activities that most significantly impact the economic performance of the lessee ~~entity.~~entities. The lessee ~~entity’s~~entities’ assets primarily consist of leasehold interests in a senior housing ~~facility~~facilities (operating leases), resident fees receivable, and cash and cash equivalents; its obligations primarily consist of lease payments to the Company and operating expenses of the senior housing ~~facility~~facilities (accounts payable and accrued expenses). Assets generated by the senior housing operations (primarily from senior housing resident rents) may only be used to settle ~~its~~ contractual obligations (primarily from the rental costs, operating expenses incurred to manage such ~~facilities,~~facility and debt costs).

DownREITs. The Company holds a controlling ownership interest in and is the managing member of 7 ~~limited liability companies (“DownREITs”).~~DownREITs. The Company classifies the DownREITs as VIEs due to the non-managing members lacking substantive participation rights in the management of the DownREITs or kick-out rights over the managing member. The Company consolidates the DownREITs as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the DownREITs primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the DownREITs (primarily from resident rents) may only be used to settle their contractual obligations (primarily from debt service and capital expenditures).

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Other Consolidated Real Estate Partnerships. The Company holds a controlling ownership interest in and is the general partner (or managing member) of multiple partnerships that own and lease real estate assets (the “Partnerships”). The Company classifies the Partnerships as VIEs due to the limited partners (non-managing members) lacking substantive participation rights in the management of the Partnerships or kick-out rights over the general partner (managing member). The Company consolidates the Partnerships as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the Partnerships primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the Partnerships (primarily from resident rents) may only be used to settle their contractual obligations (primarily from debt service and capital expenditures).

~~Other consolidated VIEs.~~Exchange Accommodation Titleholder ~~The~~. During the year ended December 31, 2020, the Company ~~made~~acquired 1 life science facility (the "acquired property") using a ~~loan~~reverse like-kind exchange structure pursuant to ~~an entity that entered into a tax credit structure (“Tax Credit Subsidiary”~~Section 1031 of the Code (a "reverse 1031 exchange") and as of March 31, 2021, the Company had not completed the reverse 1031 exchange. As such, the acquired property remained in the possession of an Exchange Accommodation Titleholder ("EAT") as of March 31, 2021. The EAT is classified as a ~~loan to an entity that made an investment in~~VIE as it is a ~~development joint venture (“Development JV”) both of which are considered VIEs.~~“thinly capitalized” entity. The Company consolidates the ~~Tax Credit Subsidiary and Development JV as the primary beneficiary~~EAT because it has the ability to control the activities that most significantly impact the ~~VIEs’~~ economic ~~performance.~~performance of the EAT and is, therefore, the primary beneficiary of the EAT. The property held by the EAT is reflected as real estate with a carrying value of$417 million as of March 31, 2021. The assets ~~and liabilities~~ of the ~~Tax Credit Subsidiary and Development JV substantially~~EAT primarily consist of ~~a development in progress, notes~~leased properties (net real estate), rents receivable, ~~prepaid expenses, notes payable,~~ and ~~accounts payable~~cash and ~~accrued liabilities generated from~~cash equivalents; their ~~operating activities. Any assets~~obligations primarily consist of capital expenditures for the properties. Assets generated by the ~~operating activities of the Tax Credit Subsidiary and Development JV~~EAT may only be used to settle ~~their~~its contractual ~~obligations.~~obligations (primarily from capital expenditures).

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Total assets and total liabilities include VIE assets and liabilities as follows (in thousands):


	March 31, 2021		December 31, 2020
Assets
Buildings and improvements	$	2,487,025	$	2,988,599
Development costs and construction in progress	48,600		85,595
Land	341,842		433,574
Accumulated depreciation and amortization	(533,328)		(602,491)
Net real estate	2,344,139		2,905,277

Accounts receivable, net	5,095		12,009
Cash and cash equivalents	16,464		16,550
Restricted cash	6		7,977
Intangible assets, net	89,692		179,027
Assets held for sale and discontinued operations, net	698,318		704,966
Right-of-use asset, net	89,017		95,407
Other assets, net	61,470		59,063
Total assets	$	3,304,201	$	3,980,276
Liabilities
Mortgage debt	4,537		39,085

Intangible liabilities, net	33,714		56,467
Liabilities related to assets held for sale and discontinued operations, net	186,562		190,919
Lease liability	90,397		97,605
Accounts payable, accrued liabilities, and other liabilities	53,438		102,391
Deferred revenue	31,279		90,183
Total liabilities	$	399,927	$	576,650

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Total assets and liabilities related to assets held for sale and discontinued operations include VIE assets and liabilities as follows (in thousands):


	March 31, 2021		December 31, 2020
Assets
Buildings and improvements	$	633,243	$	639,759
Development costs and construction in progress	103		68
Land	105,769		106,209
Accumulated depreciation and amortization	(55,021)		(57,235)
Net real estate	684,094		688,801
Accounts receivable, net	1,885		1,700
Cash and cash equivalents	6,516		6,306
Restricted cash	1,388		3,124

Right-of-use asset, net	1,387		1,391
Other assets, net	3,048		3,644
Total assets	$	698,318	$	704,966
Liabilities
Mortgage debt	$	171,085	$	176,702

Lease liability	1,387		1,392
Accounts payable, accrued liabilities, and other liabilities	12,119		11,003
Deferred revenue	1,971		1,822
Total liabilities	$	186,562	$	190,919

NOTE ~~16.~~17. Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets are immaterial at ~~September 30,~~March 31, 2021 and December 31, 2020.

The table below summarizes the carrying amounts and fair values of the Company’s financial instruments (in thousands):


		September 30, 2020(3)				December 31, 2019(3)					March 31, 2021(3)				December 31, 2020(3)
		Carrying Value		Fair Value		Carrying Value		Fair Value			Carrying Value		Fair Value		Carrying Value		Fair Value
Loans receivable, net(2)	Loans receivable, net(2)	$	231,162	$	238,100	$	190,579	$	190,579	Loans receivable, net(2)	$	740,142	$	743,465	$	195,375	$	201,228
Marketable debt securities(2)	Marketable debt securities(2)	20,201		20,201		19,756		19,756		Marketable debt securities(2)	20,512		20,512		20,355		20,355

Bank line of credit and commercial paper(2)	Bank line of credit and commercial paper(2)	0		0		93,000		93,000		Bank line of credit and commercial paper(2)	1,038,150		1,038,150		129,590		129,590
Term loan(2)	Term loan(2)	249,122		249,122		248,942		248,942		Term loan(2)	249,243		249,243		249,182		249,182
Senior unsecured notes(1)	Senior unsecured notes(1)	5,695,567		6,438,400		5,647,993		6,076,150		Senior unsecured notes(1)	4,255,697		4,664,075		5,697,586		6,517,650
Mortgage debt~~(2)~~(4)	Mortgage debt~~(2)~~(4)	435,206		430,669		276,907		280,373		Mortgage debt~~(2)~~(4)	219,959		219,510		221,621		221,181

Interest-rate swap liabilities(2)	Interest-rate swap liabilities(2)	162		162		553		553		Interest-rate swap liabilities(2)	0		0		81		81

(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,~~loan, 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 ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and year ended December 31, ~~2019,~~2020, there were no material transfers of financial assets or liabilities within the fair value hierarchy.

(4)For the three months ended March 31, 2021 and year ended December 31, 2020, excludes mortgage debt on assets held for sale and discontinued operations of $278 million and $319 million, respectively.

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NOTE ~~17.~~18. Derivative Financial Instruments

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

Date Entered Maturity Date Hedge Designation Notional Pay Rate Receive Rate
Fair Value(1)
Interest rate:
August 2020(2)
August 2025 Cash Flow $ 41,305 0.33% USD-SIFMA Municipal Swap Index $ (162)

~~(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.~~

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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~~

In March 2021, the ~~underlying interest~~Company repaid $39 million of variable rate ~~curve,~~secured debt on 2 SHOP assets classified as discontinued operations as of March 31, 2021 and terminated the ~~estimated change in fair value of each of~~2 remaining related interest-rate swap contracts. Therefore, at March 31, 2021, the ~~underlying derivative instruments would not exceed $2 million.~~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

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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 our ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K for the ~~quarters~~fiscal year ended ~~March~~December 31, ~~2020 and June 30,~~ 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;

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•~~the risks associated with~~ 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;

~~Table~~•our use of ~~Contents~~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 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;investment portfolio;

•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;~~

•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;insurance costs;

•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;

•~~changes in global, national~~cash available for distribution to stockholders and ~~local economic and other conditions, including the ongoing economic downturn, volatility in the financial markets and high unemployment rates;~~our ability to make dividend distributions at expected levels;

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

•~~competition for skilled management~~changes in global, national and local economic and other ~~key personnel;~~conditions;

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

•environmental compliance costs and liabilities associated with our real-estate investments;

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

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

•calculating non-REIT tax earnings and profits;

•ownership limits in our charter that restrict ownership in our stock;

•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

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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. In November 2020, we moved our corporate headquarters from Irvine, CACalifornia to Denver, ~~CO.~~Colorado. With properties in nearly every state, the new headquarters provides a favorable mix of affordability and a centralized geographic location. Our Irvine, CACalifornia and Franklin, TNTennessee offices 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 ~~September 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 ~~626~~463 properties. The following table summarizes information for our reportable segments, excluding discontinued operations, for the three months ended ~~September 30, 2020~~March 31, 2021 (dollars in thousands):


Segment	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		$	24,230	9	%	62
SHOP		23,521		9	%	135
CCRC		23,228		8	%	17
Life science	Life science	103,610		38	%	136	Life science	$	119,530	48	%	141
Medical office	Medical office	85,681		32	%	266	Medical office	101,156		40	%	286
CCRC							CCRC	26,221		10	%	17
Other non-reportable	Other non-reportable	10,789		4	%	10	Other non-reportable	4,497		2	%	19
Totals	Totals	$	271,059	100	%	626	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)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, 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.

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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, certain restrictions remain in place and any future surges of COVID-19 or its variants may lead to other restrictions being re-implemented in response to efforts to reduce the 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 or be re-imposed from time to time,~~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 since the onset of the pandemic, a trend that 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 ~~October 30, 2020~~May 3, 2021, we55 of the remaining 62 senior housing properties in our portfolio had ~~confirmed~~ resident COVID-19 cases at ~~130~~some point during the pandemic, although cases have declined dramatically in those properties since the introduction of ~~our 208 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 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) ~~the~~long-term efficacy and public acceptances of approved vaccinations, potential supply disruptions, timing ~~distribution,~~of vaccine delivery, and health effects of vaccines and other treatments.

Medical Office Portfolio

Within our medical office portfolio, many physician practices and affiliated hospitals initially delayed or discontinued nonessential surgeries and procedures due to “shelter-in-place” orders and other health and safety measures, which negatively impacted their cash flows during ~~the second quarter~~part of 2020. These restrictions have now been lifted in the majority of 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~~ during ~~May~~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 ~~September 30,~~December 31, 2020, ~~$3 million~~all of which ~~remains outstanding~~had been collected as of ~~September 30,~~December 31, 2020. No such deferrals were granted during the three months ended March 31, 2021. We may also implement a deferred rent program for future periods.

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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 ~~September 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 ~~September 30,~~December 31, 2020, ~~an immaterial amount remained outstanding.~~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 ~~$2.57~~$1.85 billion of liquidity available, including ~~$2.43~~$1.72 billion borrowing capacity under our bank line of credit facility and ~~$140~~$133 million of cash and cash equivalents, as of ~~October 30, 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 new surges of COVID-19, the severity of outbreak 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

South San Francisco Land Site Acquisition

In October 2020, we executed a definitive 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 ~~made~~paid a $10 million nonrefundable deposit upon completing due diligence in November ~~2020 and expect to close the transaction during the~~2020. The first ~~half~~phase, with a purchase price of $61 million, closed in April 2021.

~~Cambridge Discovery Park~~Westview Medical Plaza MOB Acquisition

In ~~October 2020,~~February 2021, we ~~entered into definitive agreements to acquire three life science facilities~~acquired one MOB in ~~Cambridge, Massachusetts~~Nashville, Tennessee for ~~$610~~$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 ~~a 49% joint venture interest in a fourth property on the same campus for $54 million. We made a $20~~issued $142 million ~~nonrefundable deposit upon completing due diligence in October 2020 and expect to close the transaction during the fourth quarter~~ of ~~2020.~~secured mortgage debt.

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~~Midwest MOB Acquisition~~Senior Housing Portfolio Sales

•In ~~September 2020,~~January 2021, we ~~entered into definitive agreements to acquire~~sold a portfolio of ~~seven MOBs located in Indiana, Missouri,~~32 SHOP assets (“the Sunrise Senior Housing Portfolio”) for $664 million and ~~Illinois,~~provided the buyer with: (i) financing of $410 million and (ii) a commitment to finance up to $92 million of additional debt for ~~$169 million. We made a $9 million nonrefundable deposit~~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 ~~completing due diligence in September 2020 and closed the transaction in October 2020.~~

~~Scottsdale Gateway Acquisition~~

~~In July 2020, we acquired a MOB in Scottsdale, Arizona, for $27 million.~~

~~The Post Acquisition~~

~~In April 2020, we acquired a life science campus in Waltham, Massachusetts for $320 million.~~

~~Master Transaction and Cooperation Agreement with Brookdale~~

~~In January 2020, Healthpeak and Brookdale Senior Living Inc. (“Brookdale”) completed certain~~completion of the transactions governed by the previously announced Master Transactions and Cooperation Agreement (the “2019 MTCA”), which includes a series of transactions related to the previously jointly owned 15-campus CCRC portfolio (the “CCRC JV”) and the portfolio of senior 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 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”);license transfer process.

•~~We paid~~In January 2021, we sold 24 senior housing assets under a triple-net lease with Brookdale ~~$100~~for $510 million ~~to terminate the previous management agreements related to those 13 communities;~~.

•~~Brookdale acquired 18~~In January 2021, we sold a portfolio of 16 SHOP assets for $230 million and provided the ~~triple-net lease properties (the “Brookdale Acquisition Assets”) from us for cash proceeds~~buyer with financing of ~~$385 million;~~$150 million.

•~~The remaining 24~~In February 2021, we sold eight senior housing assets in a triple-net lease ~~properties were restructured into a single master lease~~ with ~~2.4% annual rent escalators and a maturity date of December 31, 2027 (the “2019 Amended Master Lease”);~~Harbor Retirement Associates for $132 million.

•~~A portion~~In April 2021, we sold a portfolio 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~~12 SHOP assets for $564 million.

•~~Brookdale paid down $20~~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.

•In April 2021, we sold a portfolio 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 ~~assets~~asset for ~~$36~~$5 million ~~and a hospital under a direct financing lease (“DFL”) for $82 million.~~.

•~~During the second quarter of 2020,~~In April 2021, we sold two SHOP assets for ~~$28~~$13 million, ~~and three MOBs in San Diego, California for $106 million (through exercise of a purchase option by one of our tenants).~~

•~~During the third quarter of 2020, we sold~~ ~~four SHOP~~two senior housing triple-net assets for ~~$12 million, four MOBs for $14 million, one undeveloped MOB land parcel for $2~~$7 million, and one ~~asset from the other non-reportable segment~~MOB for $1$10 million.

•In ~~October and November 2020,~~April 2021, we sold ~~seven~~our share of the SHOP ~~assets and three senior housing triple-net assets~~property in the Otay Ranch JV for ~~$88~~$32 million.

•~~In October 2020, we entered into a definitive agreement to sell seven SHOP assets for $115 million. We received a $3 million nonrefundable deposit upon completion of due diligence in October 2020.~~

•~~In October 2020, we acquired the remaining~~ ~~15%~~ ~~equity interest in a previously unconsolidated senior housing joint venture for~~ ~~$4 million and began consolidating the real estate held by the venture~~.

•During the nine months ended September 30, 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 the manager.

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Financing Activities

•During the nine months ended September 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 nine months ended September 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 2.88% senior unsecured notes due in 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 4.25% 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 ~~3.15%~~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

•~~As part of the development program with HCA Healthcare Inc., at September 30, 2020,~~At March 31, 2021, we had five ~~on-campus~~ MOB developments, ~~under contract~~all of which are on-campus, in process with an aggregate total estimated cost of ~~$129~~$122 million.

•At ~~September 30, 2020,~~March 31, 2021, we had ~~seven~~five life science development projects in process with an aggregate total estimated cost of approximately $~~1.03 billion.~~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.

Dividends

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

Declaration Date

Record Date

Amount
Per Share

Dividend
Payment Date

~~January 30~~February 9

February 1822

~~0.37~~0.30

~~February 28~~March 5

April 3029

May 810

~~0.37~~0.30

May 1921

~~August 4~~

~~August 14~~

~~0.37~~

~~August 25~~

~~November 2~~

~~November 12~~

~~0.37~~

~~November 23~~

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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.

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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.

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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.

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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 Nine~~ Months Ended ~~September 30, 2020~~March 31, 2021 to the Three ~~and Nine~~ Months Ended ~~September 30, 2019~~March 31, 2020

Overview

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

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

Three Months Ended September 30,
2020 2019 Change
Net income (loss) applicable to common shares $ (63,768) $ (46,249) $ (17,519)
NAREIT FFO 164,603 181,591 (16,988)
FFO as Adjusted 213,529 220,572 (7,043)
AFFO 183,791 190,247 (6,456)

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	Three Months Ended March 31,
	2021		2020		Change

Net income (loss) applicable to common shares	$	143,337	$	277,464	$	(134,127)
NAREIT FFO	40,233		171,549		(131,316)
FFO as Adjusted	215,391		227,013		(11,622)
AFFO	184,798		207,576		(22,778)

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

•a ~~deferred tax asset valuation allowance and corresponding income tax expense recognized during the third quarter of 2020;~~

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

•a reduction in equity income (loss) from unconsolidated joint ventures during 2020 primarily due to our share of net losses from an unconsolidated joint venture owning 19 SHOP assets that was formed in December 2019; and

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

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

•~~a decrease in loss on debt extinguishments;~~

•~~a reduction in impairment charges related to depreciable real estate and assets underlying DFLs during the third 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.

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

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

•~~the deferred tax asset valuation allowance; and~~

•~~the loss on debt extinguishment.~~

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 was further impacted by decreased AFFO capital expenditures during the period.

~~Nine Months Ended September 30, 2020 and 2019~~

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

Nine Months Ended September 30,
2020 2019 Change
Net income (loss) applicable to common shares $ 265,018 $ 787 $ 264,231
NAREIT FFO 518,519 586,052 (67,533)
FFO as Adjusted 655,255 645,538 9,717
AFFO 583,343 576,784 6,559

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

•an increase in ~~net gain~~loss on ~~sales of real estate during the nine months ended September 30, 2020;~~

•~~a reduction in impairment charges~~debt extinguishments related to ~~depreciable real estate~~our repurchase and ~~assets underlying DFLs during~~redemption of certain outstanding senior notes in the ~~nine months ended September 30, 2020;~~first quarter of 2021;

•an increase in depreciation, primarily as a result of: (i) 2020 and 2021 acquisitions of real estate and (ii) the above-mentioned acquisition of the outstanding equity interest and consolidation of 13 CCRCs from Brookdale during the first quarter of 2020;

•a decrease in income tax benefit, primarily as a result of ~~new loans and additional funding~~the tax benefits recognized in the first quarter of ~~existing loans;~~

•~~an increase in income tax benefit as a result of (i)~~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 of 2020 and (ii) the extension of the net operating loss carryback period provided by the CARES Act; partially offset by additional income tax expense due to a deferred tax asset valuation allowance and corresponding income tax expense recognized during the third quarter of 2020;Life Care Services LLC (“LCS”); and

•~~NOI generated from: (i) 2019~~additional expenses and ~~2020 acquisitions of real estate, (ii) development and redevelopment projects placed~~decreased occupancy in ~~service during 2019 and 2020, and (iii) new leasing activity during 2019 and 2020.~~our CCRCs related to COVID-19.

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

•~~A reduction~~an increase in income ~~related~~(loss) from discontinued operations, primarily due to ~~assets sold during 2019~~an increase in gain on sales of real estate and ~~2020;~~lower impairments of depreciable real estate;

•~~an increase~~NOI generated from our life science and medical office segments related to: (i) 2020 and 2021 acquisitions of real estate, (ii) development and redevelopment projects placed in ~~loss on debt extinguishments;~~service during 2020 and 2021, and (iii) new leasing activity during 2020 and 2021 (including the impact to straight-line rents);

•~~increased expense related to~~a reduction in operating expenses primarily as a result of the management termination fee paid to Brookdale in connection with transitioning management of 13 CCRCs to LCS during the first quarter of 2020;

•a reduction in ~~equity income (loss)~~transaction costs, primarily as a result of costs associated with the transition of 13 CCRCs from ~~unconsolidated joint ventures during 2020 primarily due~~Brookdale to LCS in the first quarter of 2020;

•an increase in our share of net ~~losses~~income from an unconsolidated joint venture owning 19 SHOP ~~assets that was formed in December 2019;~~assets;

•~~increased depreciation and amortization~~a reduction in impairment charges related to depreciable real estate;

•a reduction in interest expense, primarily as a result ~~of: (i) assets acquired during 2019~~of senior unsecured notes repurchases and ~~2020, (ii) the acquisition of Brookdale’s interest~~redemptions 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;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 ~~deferred tax asset valuation allowance;~~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.

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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 ~~September 30, 2020,~~March 31, 2021, our Same-Store consists of 407 properties representing properties acquired or placed in service and stabilized on or prior to July 1, 2019 and that remained in operations under a consistent reporting structure through September 30, 2020. For the nine months ended September 30, 2020, our Same-Store consists of 394361 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 ~~September 30, 2020.~~March 31, 2021. Our total property portfolio consisted of ~~626~~463 and ~~740~~449 properties at ~~September 30, 2020 and 2019, respectively.~~

~~Senior Housing Triple-Net~~

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

SS
Total Portfolio(1)
Three Months Ended September 30, Three Months Ended September 30,
2020 2019 Change 2020 2019 Change
Rental and related revenues $ 10,561 $ 11,074 $ (513) $ 24,558 $ 42,543 $ (17,985)
Income from direct financing leases — — — — 5,413 (5,413)
Operating expenses (40) (38) (2) (421) (865) 444
Adjustments to NOI(2)
955 (43) 998 93 (1,537) 1,630
Adjusted NOI $ 11,476 $ 10,993 $ 483 24,230 45,554 (21,324)
Less: non-SS adjusted NOI (12,754) (34,561) 21,807
SS adjusted NOI $ 11,476 $ 10,993 $ 483
Adjusted NOI % change 4.4 %
Property count(3)
28 28 62 92
Average capacity (units)(4)
2,756 2,756 5,848 11,161
Average annual rent per unit $ 16,714 $ 16,010 $ 16,861 $ 16,636

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

~~(2)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.~~

~~(3)~~From our 2019 presentation of Same-Store, we removed 10 senior housing triple-net properties that were converted, or we agreed to convert, to SHOP, 33 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.

~~(4)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 and increased rent associated with capital improvements.~~

~~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.~~

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

SS
Total Portfolio(1)
Nine Months Ended September 30, Nine Months Ended September 30,
2020 2019 Change 2020 2019 Change
Rental and related revenues $ 31,922 $ 33,199 $ (1,277) $ 82,282 $ 135,775 $ (53,493)
Income from direct financing leases — — — — 20,817 (20,817)
Noncontrolling interests' share of consolidated joint venture total revenues — — — — (1) 1
Operating expenses (123) (111) (12) (1,453) (2,725) 1,272
Adjustments to NOI(2)
2,236 (175) 2,411 (3,240) 3,834 (7,074)
Adjusted NOI $ 34,035 $ 32,913 $ 1,122 77,589 157,700 (80,111)
Less: non-SS adjusted NOI (43,554) (124,787) 81,233
SS adjusted NOI $ 34,035 $ 32,913 $ 1,122
Adjusted NOI % change 3.4 %
Property count(3)
28 28 62 92
Average capacity (units)(4)
2,756 2,755 6,242 12,736
Average annual rent per unit $ 16,525 $ 15,980 $ 16,884 $ 16,795

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

~~(2)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.~~

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

~~Same-Store Adjusted NOI increased primarily as a result of annual rent escalations and increased rent associated with capital improvements.~~

~~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 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.~~

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~~Senior Housing Operating Portfolio~~

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

SS
Total Portfolio(1)
Three Months Ended September 30, Three Months Ended September 30,
2020 2019 Change 2020 2019 Change
Resident fees and services $ 14,094 $ 14,099 $ (5) $ 149,615 $ 212,275 $ (62,660)
Government grant income(2)
— — — 392 — 392
Healthpeak’s share of unconsolidated joint venture total revenues 18,392 20,139 (1,747) 23,800 4,943 18,857
Healthpeak's share of unconsolidated joint venture government grant income — — — 49 — 49
Noncontrolling interests' share of consolidated joint venture total revenues — — — (459) (515) 56
Operating expenses (9,168) (9,035) (133) (130,729) (166,201) 35,472
Healthpeak's share of unconsolidated joint venture operating expenses (13,096) (12,927) (169) (18,280) (3,816) (14,464)
Noncontrolling interests' share of consolidated joint venture operating expenses — — — 361 388 (27)
Adjustments to NOI(3)
41 (81) 122 (1,228) 739 (1,967)
Adjusted NOI $ 10,263 $ 12,195 $ (1,932) 23,521 47,813 (24,292)
Less: non-SS adjusted NOI (13,258) (35,618) 22,360
SS adjusted NOI $ 10,263 $ 12,195 $ (1,932)
Adjusted NOI % change (15.8) %
Property count(4)
29 29 135 148
Average occupancy 83.4 % 90.5 % 82.8 % 83.4 %
Average capacity (units)(5)
4,167 4,167 16,142 17,153
Average annual rent per unit $ 51,685 $ 54,420 $ 47,933 $ 51,854

~~(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)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.~~

~~(4)From our 2019 presentation of Same-Store, we removed 32 SHOP properties that were classified as held for sale.~~

~~(5)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 additional expenses and decreased occupancy related to COVID-19.~~

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

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

SS
Total Portfolio(1)
Nine months ended September 30, Nine months ended September 30,
2020 2019 Change 2020 2019 Change
Resident fees and services $ — $ — $ — $ 475,869 $ 515,457 $ (39,588)
Government grant income(2)
— — — 2,601 — 2,601
Healthpeak’s share of unconsolidated joint venture total revenues 57,592 60,488 (2,896) 74,249 16,514 57,735
Healthpeak's share of unconsolidated joint venture government grant income — — — 319 — 319
Noncontrolling interests' share of consolidated joint venture total revenues — — — (1,501) (1,510) 9
Operating expenses — — — (406,366) (400,608) (5,758)
Healthpeak's share of unconsolidated joint venture operating expenses (39,075) (37,603) (1,472) (54,922) (12,407) (42,515)
Noncontrolling interests' share of consolidated joint venture operating expenses — — — 1,149 1,058 91
Adjustments to NOI(3)
100 90 10 (579) 2,819 (3,398)
Adjusted NOI $ 18,617 $ 22,975 $ (4,358) 90,819 121,323 (30,504)
Less: non-SS adjusted NOI (72,202) (98,348) 26,146
SS adjusted NOI $ 18,617 $ 22,975 $ (4,358)
Adjusted NOI % change (19.0) %
Property count(4)
22 22 135 148
Average occupancy 83.6 % 88.9 % 83.2 % 82.8 %
Average capacity (units)(5)
3,498 3,498 16,273 15,434
Average annual rent per unit $ 41,562 $ 43,834 $ 50,458 $ 47,323

~~(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)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.~~

~~(4)From our 2019 presentation of Same-Store, we removed 32 SHOP properties that were classified as held for sale.~~

~~(5)Represents average capacity as reported by the respective tenants or operators for the nine-month period.~~

~~Same Store Adjusted NOI decreased primarily as a result of additional expenses and decreased occupancy related to COVID-19.~~

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

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~~Continuing Care Retirement Community~~

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

SS(1)
Total Portfolio(2)
Three Months Ended September 30, Three Months Ended September 30,
2020 2019 Change 2020 2019 Change
Resident fees and services $ — $ — $ — $ 115,031 $ — $ 115,031
Government grant income(3)
— — — 1,761 — 1,761
Healthpeak’s share of unconsolidated joint venture total revenues — — — 4,295 52,671 (48,376)
Healthpeak's share of unconsolidated joint venture government grant income — — — 246 — 246
Operating expenses — — — (94,992) — (94,992)
Healthpeak's share of unconsolidated joint venture operating expenses — — — (4,797) (43,193) 38,396
Adjustments to NOI(4)
— — — 1,684 5,635 (3,951)
Adjusted NOI $ — $ — $ — 23,228 15,113 8,115
Less: non-SS adjusted NOI (23,228) (15,113) (8,115)
SS adjusted NOI $ — $ — $ —
Adjusted NOI % change — %
Property count — — 17 15
Average Occupancy — % — % 79.5 % 85.1 %
Average capacity (units)(5)
— — 8,324 7,271
Average annual rent per unit $ — $ — $ 60,600 $ 65,590

~~(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 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.~~

~~(5)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.~~

~~Table of Contents~~

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

SS(1)
Total Portfolio(2)
Nine months ended September 30, Nine months ended September 30,
2020 2019 Change 2020 2019 Change
Resident fees and services $ — $ — $ — $ 320,737 $ — $ 320,737
Government grant income(3)
— — — 13,632 — 13,632
Healthpeak’s share of unconsolidated joint venture total revenues — — — 30,723 157,744 (127,021)
Healthpeak's share of unconsolidated joint venture government grant income — — — 780 — 780
Operating expenses — — — (345,722) — (345,722)
Healthpeak's share of unconsolidated joint venture operating expenses — — — (27,660) (127,026) 99,366
Adjustments to NOI(4)
— — — 93,263 13,832 79,431
Adjusted NOI $ — $ — $ — 85,753 44,550 41,203
Less: non-SS adjusted NOI (85,753) (44,550) (41,203)
SS adjusted NOI $ — $ — $ —
Adjusted NOI % change — %
Property count — — 17 15
Average Occupancy — % — % 82.2 % 73.7 %
Average capacity (units)(5)
— — 8,322 7,270
Average annual rent per unit $ — $ — $ 63,820 $ 64,329

~~(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 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.~~

~~(5)Represents average capacity as reported by the respective tenants or operators for the nine-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.~~

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Life Science

The following table summarizes results at and for the three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (dollars and square feet in thousands, except per square foot data):


		SS									Total Portfolio(1)									SS									Total Portfolio
		Three Months Ended September 30,									Three Months Ended September 30,									Three Months Ended March 31,									Three Months Ended March 31,
		2020			2019			Change			2020			2019			Change			2021			2020			Change			2021			2020			Change
Rental and related revenues	Rental and related revenues	$	98,533		$	93,119		$	5,414		$	148,702		$	118,561		$	30,141	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																			Healthpeak’s share of unconsolidated joint venture total revenues	—			—			—			1,337			—			1,337
Noncontrolling interests' share of consolidated joint venture total revenues	Noncontrolling interests' share of consolidated joint venture total revenues	(49)			(41)			(8)			(66)			(52)			(14)		Noncontrolling interests' share of consolidated joint venture total revenues	(53)			(46)			(7)			(65)			(52)			(13)
Operating expenses	Operating expenses	(24,186)			(23,352)			(834)			(36,714)			(29,520)			(7,194)		Operating expenses	(26,851)			(25,256)			(1,595)			(39,461)			(30,201)			(9,260)

Healthpeak's share of unconsolidated joint venture operating expenses																			Healthpeak's share of unconsolidated joint venture operating expenses	—			—			—			(425)			—			(425)
Noncontrolling interests' share of consolidated joint venture operating expenses	Noncontrolling interests' share of consolidated joint venture operating expenses	14			14			—			18			16			2		Noncontrolling interests' share of consolidated joint venture operating expenses	15			14			1			20			17			3

Adjustments to NOI~~(2)~~(1)	Adjustments to NOI~~(2)~~(1)	(3,864)			(2,976)			(888)			(8,330)			(7,062)			(1,268)		Adjustments to NOI~~(2)~~(1)	(3,974)			(4,315)			341			(11,810)			(4,280)			(7,530)
Adjusted NOI	Adjusted NOI	$	70,448		$	66,764		$	3,684		103,610			81,943			21,667		Adjusted NOI	$	85,845		$	79,111		$	6,734		119,530			94,367			25,163
Less: non-SS adjusted NOI											(33,162)			(15,179)			(17,983)
SS adjusted NOI											$	70,448		$	66,764		$	3,684
Less: non-SS Adjusted NOI																			Less: non-SS Adjusted NOI										(33,685)			(15,256)			(18,429)
SS Adjusted NOI																			SS Adjusted NOI										$	85,845		$	79,111		$	6,734
Adjusted NOI % change	Adjusted NOI % change							5.5		%									Adjusted NOI % change							8.5		%
Property count~~(3)~~	Property count~~(3)~~	99			99						136			131					Property count~~(3)~~	109			109						141			134
End of period occupancy																			End of period occupancy	97.7		%	95.5		%				97.0		%	94.4		%
Average occupancy	Average occupancy	96.4		%	97.1		%				96.4		%	97.2		%			Average occupancy	97.2		%	95.6		%				96.6		%	95.0		%
Average occupied square feet	Average occupied square feet	6,348			6,394						8,844			7,690					Average occupied square feet	7,424			7,299						9,809			8,053
Average annual total revenues per occupied square foot		$	60		$	56					$	63		$	58
Average annual base rent per occupied square foot(4)		$	47		$	44					$	50		$	45
Average annual total revenues per occupied square foot(2)																			Average annual total revenues per occupied square foot(2)	$	61		$	57					$	65		$	62
Average annual base rent per occupied square foot(3)																			Average annual base rent per occupied square foot(3)	$	49		$	46					$	51		$	50

(1)~~Total Portfolio includes results of operations from disposed properties through the disposition date.~~

~~(2)~~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.

~~(3)~~(2)~~From our 2019 presentation~~Average annual total revenues does not include non-cash revenue adjustments (i.e., straight-line rents, amortization of ~~Same-Store, we removed one life science facility that was placed in redevelopment~~market lease intangibles, and ~~two life science facilities related to a significant tenant relocation.~~deferred revenues).

~~(4)~~(3)Base rent does not include tenant recoveries, additional rents in excess of floors and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, ~~DFL non-cash interest,~~ and deferred revenues).

Same-Store Adjusted NOI increased primarily as a result of the following:

•annual rent escalations;

•new leasing activity; and

•mark-to-market lease renewals.

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

•NOI from (i) increased occupancy in developments and redevelopments placed into service in ~~2019~~2020 and ~~2020~~2021 and (ii) acquisitions in ~~2019 and 2020; partially offset by~~

•~~decreased NOI from the placement of facilities into redevelopment in 2019 and~~ 2020.

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Medical Office

The following table summarizes results at and for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (dollars and square feet in thousands, except per square foot data):


		SS									Total Portfolio(1)									SS									Total Portfolio(1)
		Nine Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended March 31,									Three Months Ended March 31,
		2020			2019			Change			2020			2019			Change			2021			2020			Change			2021			2020			Change
Rental and related revenues	Rental and related revenues	$	258,450		$	246,979		$	11,471		$	416,081		$	320,630		$	95,451	Rental and related revenues	$	137,018		$	135,073		$	1,945		$	158,038		$	153,372		$	4,666

Income from direct financing leases																			Income from direct financing leases	2,163			2,124			39			2,163			3,269			(1,106)
Healthpeak’s share of unconsolidated joint venture total revenues																			Healthpeak’s share of unconsolidated joint venture total revenues	693			673			20			715			695			20
Noncontrolling interests' share of consolidated joint venture total revenues	Noncontrolling interests' share of consolidated joint venture total revenues	(109)			(107)			(2)			(175)			(134)			(41)		Noncontrolling interests' share of consolidated joint venture total revenues	(8,766)			(8,528)			(238)			(8,926)			(8,640)			(286)
Operating expenses	Operating expenses	(60,845)			(58,896)			(1,949)			(101,120)			(76,992)			(24,128)		Operating expenses	(44,014)			(44,362)			348			(51,121)			(50,694)			(427)

Healthpeak's share of unconsolidated joint venture operating expenses																			Healthpeak's share of unconsolidated joint venture operating expenses	(293)			(275)			(18)			(294)			(275)			(19)
Noncontrolling interests' share of consolidated joint venture operating expenses	Noncontrolling interests' share of consolidated joint venture operating expenses	36			34			2			53			42			11		Noncontrolling interests' share of consolidated joint venture operating expenses	2,504			2,600			(96)			2,504			2,600			(96)

Adjustments to NOI(2)	Adjustments to NOI(2)	(4,543)			(5,396)			853			(15,389)			(17,146)			1,757		Adjustments to NOI(2)	(1,666)			(1,429)			(237)			(1,923)			(994)			(929)
Adjusted NOI	Adjusted NOI	$	192,989		$	182,614		$	10,375		299,450			226,400			73,050		Adjusted NOI	$	87,639		$	85,876		$	1,763		101,156			99,333			1,823
Less: non-SS adjusted NOI											(106,461)			(43,786)			(62,675)
SS adjusted NOI											$	192,989		$	182,614		$	10,375
Less: non-SS Adjusted NOI																			Less: non-SS Adjusted NOI										(13,517)			(13,457)			(60)
SS Adjusted NOI																			SS Adjusted NOI										$	87,639		$	85,876		$	1,763
Adjusted NOI % change	Adjusted NOI % change							5.7		%									Adjusted NOI % change							2.1		%
Property count(3)	Property count(3)	95			95						136			131					Property count(3)	250			250						286			279
End of period occupancy																			End of period occupancy	92.0		%	92.2		%				90.3		%	91.6		%
Average occupancy	Average occupancy	96.2		%	96.2		%				95.8		%	96.7		%			Average occupancy	92.0		%	92.2		%				90.3		%	91.6		%
Average occupied square feet	Average occupied square feet	5,815			5,820						8,551			7,118					Average occupied square feet	18,577			18,597						20,703			20,399
Average annual total revenues per occupied square foot		$	58		$	55					$	62		$	57
Average annual base rent per occupied square foot(4)		$	46		$	44					$	50		$	45
Average annual total revenues per occupied square foot(4)																			Average annual total revenues per occupied square foot(4)	$	30		$	30					$	31		$	31
Average annual base rent per occupied square foot(5)																			Average annual base rent per occupied square foot(5)	$	26		$	26					$	27		$	27

(1)Total Portfolio includes results of operations from disposed properties through the disposition date.

(2)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.

(3)From our ~~2019~~first quarter 2020 presentation of Same-Store, we removed ~~one life science facility~~nine MOBs that ~~was~~were sold, seven MOBs that were classified as held for sale, and three MOBs that were placed ~~in redevelopment and two life science facilities related to a significant tenant relocation.~~into redevelopment.

(4)~~Base rent~~Average annual total revenues does not include ~~tenant recoveries, additional rents in excess of floors and~~ non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, DFL non-cash interest, and deferred revenues).

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

•~~annual rent escalations;~~

•~~new leasing activity; and~~

•~~mark-to-market lease renewals.~~

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

•~~NOI from (i) increased occupancy in developments and redevelopments placed into service in 2019 and 2020 and (ii) acquisitions in 2019 and 2020; partially offset by~~

•~~decreased NOI from the placement of facilities into redevelopment in 2019 and 2020.~~

~~Table of Contents~~

~~Medical Office~~

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

SS
Total Portfolio(1)
Three Months Ended September 30, Three Months Ended September 30,
2020 2019 Change 2020 2019 Change
Rental and related revenues $ 132,991 $ 130,098 $ 2,893 $ 145,153 $ 143,639 $ 1,514
Healthpeak’s share of unconsolidated joint venture total revenues 677 678 (1) 699 701 (2)
Noncontrolling interests' share of consolidated joint venture total revenues (8,674) (8,504) (170) (8,788) (8,605) (183)
Operating expenses (45,477) (45,581) 104 (51,430) (51,472) 42
Healthpeak's share of unconsolidated joint venture operating expenses (296) (279) (17) (296) (279) (17)
Noncontrolling interests' share of consolidated joint venture operating expenses 2,630 2,578 52 2,630 2,593 37
Adjustments to NOI(2)
(2,138) (1,788) (350) (2,287) (1,609) (678)
Adjusted NOI $ 79,713 $ 77,202 $ 2,511 85,681 84,968 713
Less: non-SS adjusted NOI (5,968) (7,766) 1,798
SS adjusted NOI $ 79,713 $ 77,202 $ 2,511
Adjusted NOI % change 3.3 %
Property count(3)
242 242 266 270
Average occupancy 91.9 % 92.2 % 91.0 % 92.0 %
Average occupied square feet 17,820 17,862 19,077 19,265
Average annual total revenues per occupied square foot $ 30 $ 30 $ 30 $ 29
Average annual base rent per occupied square foot(4)
$ 26 $ 25 $ 25 $ 25

~~(1)Total Portfolio includes results of operations from disposed properties through the disposition date.~~

~~(2)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.~~

~~(3)From our 2019 presentation of Same-Store, we removed six MOBs that were sold, five MOBs that were classified as held for sale, and three MOBs that were placed into redevelopment.~~

~~(4)~~(5)Base rent does not include tenant recoveries, additional rents in excess of floors and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, DFL non-cash interest, and deferred revenues).

Same-Store Adjusted NOI increased primarily as a result of the following:

•mark-to-market lease renewals; and

•annual rent ~~escalations.~~escalations; partially offset by

•lower parking income.

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

•increased NOI from our ~~2019~~2020 and ~~2020~~2021 acquisitions; ~~and~~

•increased occupancy in former redevelopment and development properties that have been placed into service; partially offset by

•decreased NOI from ~~MOB sales during 2019 and 2020.~~our 2020 dispositions.

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Table of Contents

Continuing Care Retirement Community

The following table summarizes results at and for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (dollars ~~and square feet~~ in thousands, except per ~~square foot~~unit data):

SS
Total Portfolio(1)
Nine Months Ended September 30, Nine Months Ended September 30,
2020 2019 Change 2020 2019 Change
Rental and related revenues $ 387,094 $ 382,022 $ 5,072 $ 431,935 $ 427,761 $ 4,174
Healthpeak’s share of unconsolidated joint venture total revenues 2,018 2,047 (29) 2,085 2,115 (30)
Noncontrolling interests' share of consolidated joint venture total revenues (25,437) (24,886) (551) (25,775) (25,289) (486)
Operating expenses (131,599) (131,596) (3) (151,467) (150,635) (832)
Healthpeak's share of unconsolidated joint venture operating expenses (846) (837) (9) (846) (837) (9)
Noncontrolling interests' share of consolidated joint venture operating expenses 7,737 7,457 280 7,737 7,513 224
Adjustments to NOI(2)
(4,589) (5,090) 501 (4,695) (4,569) (126)
Adjusted NOI $ 234,378 $ 229,117 $ 5,261 258,974 256,059 2,915
Less: non-SS adjusted NOI (24,596) (26,942) 2,346
SS adjusted NOI $ 234,378 $ 229,117 $ 5,261
Adjusted NOI % change 2.3 %
Property count(3)
240 240 266 270
Average occupancy 92.0 % 92.2 % 91.1 % 91.8 %
Average occupied square feet 17,701 17,715 19,146 19,299
Average annual total revenues per occupied square foot $ 30 $ 29 $ 30 $ 29
Average annual base rent per occupied square foot(4)
$ 25 $ 25 $ 25 $ 25


	SS									Total Portfolio
	Three Months Ended March 31,									Three Months Ended March 31,
	2021			2020			Change			2021			2020			Change
Resident fees and services	$	18,844		$	21,007		$	(2,163)		$	116,128		$	91,780		$	24,348
Government grant income(1)	143			—			143			1,310			—			1,310
Healthpeak’s share of unconsolidated joint venture total revenues	—			—			—			4,488			21,647			(17,159)
Healthpeak's share of unconsolidated joint venture government grant income	—			—			—			199			—			199


Operating expenses	(13,394)			(14,310)			916			(91,179)			(156,482)			65,303
Healthpeak's share of unconsolidated joint venture operating expenses	—			—			—			(4,745)			(18,037)			13,292


Adjustments to NOI(2)	—			—			—			20			91,561			(91,541)
Adjusted NOI	$	5,593		$	6,697		$	(1,104)		26,221			30,469			(4,248)
Less: non-SS Adjusted NOI										(20,628)			(23,772)			3,144
SS Adjusted NOI										$	5,593		$	6,697		$	(1,104)
Adjusted NOI % change							(16.5)		%
Property count	2			2						17			17
Average occupancy	75.8		%	86.4		%				78.7		%	86.2		%
Average capacity (units)(3)	1,052			1,052						8,326			8,322
Average annual rent per unit	$	71,651		$	79,875					$	61,024		$	65,179

(1)~~Total Portfolio includes results~~Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the Consolidated Statements of ~~operations from disposed properties through the disposition date.~~Operations.

(2)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.

(3)~~From our 2019 presentation of Same-Store, we removed six MOBs that were sold, five MOBs that were classified~~Represents average capacity as ~~held~~reported by the respective tenants or operators for ~~sale, and three MOBs that were placed into redevelopment.~~

~~(4)~~Base rent does not include tenant recoveries, additional rents in excess of floors and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, DFL non-cash interest, and deferred revenues).the three-month period.

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

•~~mark-to-market lease renewals;~~additional expenses and decreased occupancy due to COVID-19; partially offset by

•~~annual rent escalations.~~government grant income received under the CARES Act.

Total Portfolio Adjusted NOI ~~increased~~decreased primarily as a result of the aforementioned ~~increases~~decreases to Same-Store, ~~and~~which are also applicable to the ~~following Non-Same-Store impacts:~~Company’s properties not yet included in Same-Store.

•~~NOI from our 2019 and 2020 acquisitions; and~~

•~~increased occupancy in former redevelopment and development properties that have been placed into service; partially offset by~~

•

~~decreased NOI from MOB sales during 2019 and 2020.~~

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Other Income and Expense Items

The following table summarizes the results of our other income and expense items for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (in thousands):


		Three Months Ended September 30,						Nine months ended September 30,							Three Months Ended March 31,
		2020		2019		Change		2020		2019		Change			2021		2020		Change
Interest income	Interest income	$	4,443	$	2,741	$	1,702	$	12,361	$	6,868	$	5,493	Interest income	$	9,013	$	3,688	$	5,325
Interest expense	Interest expense	56,235		61,230		(4,995)		172,161		167,499		4,662		Interest expense	46,843		55,691		(8,848)
Depreciation and amortization	Depreciation and amortization	173,630		171,944		1,686		541,394		469,191		72,203		Depreciation and amortization	157,538		125,112		32,426
General and administrative	General and administrative	21,661		22,970		(1,309)		67,730		71,445		(3,715)		General and administrative	24,902		22,349		2,553
Transaction costs	Transaction costs	2,586		1,319		1,267		18,061		7,174		10,887		Transaction costs	798		14,563		(13,765)
Impairments and loan loss reserves (recoveries), net	Impairments and loan loss reserves (recoveries), net	34,550		38,257		(3,707)		97,723		115,653		(17,930)		Impairments and loan loss reserves (recoveries), net	3,242		11,107		(7,865)
Gain (loss) on sales of real estate, net	Gain (loss) on sales of real estate, net	149		(784)		933		247,881		18,708		229,173		Gain (loss) on sales of real estate, net	—		2,069		(2,069)
Loss on debt extinguishments		(17,921)		(35,017)		17,096		(42,912)		(36,152)		(6,760)
Gain (loss) on debt extinguishments														Gain (loss) on debt extinguishments	(164,292)		833		(165,125)
Other income (expense), net	Other income (expense), net	7,060		693		6,367		237,254		24,834		212,420		Other income (expense), net	2,200		210,653		(208,453)
Income tax benefit (expense)	Income tax benefit (expense)	(24,174)		6,261		(30,435)		16,216		11,583		4,633		Income tax benefit (expense)	(8)		29,868		(29,876)
Equity income (loss) from unconsolidated joint ventures	Equity income (loss) from unconsolidated joint ventures	(19,480)		(7,643)		(11,837)		(48,545)		(10,012)		(38,533)		Equity income (loss) from unconsolidated joint ventures	1,323		(11,146)		12,469

Noncontrolling interests’ share in earnings		(3,836)		(3,555)		(281)		(10,839)		(10,692)		(147)
Income (loss) from discontinued operations														Income (loss) from discontinued operations	270,008		135,408		134,600
Noncontrolling interests’ share in continuing operations														Noncontrolling interests’ share in continuing operations	(3,306)		(3,463)		157
Noncontrolling interests’ share in discontinued operations														Noncontrolling interests’ share in discontinued operations	(329)		3		(332)

Interest income

Interest income increased for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 primarily as a result of ~~new loans and additional funding of existing loans.~~seller financing.

Interest expense

Interest expense decreased for the three months ended ~~September 30, 2020~~March 31, 2021 as a result of ~~decreased short-term borrowings under the bank line of credit during 2020, partially offset by assumed debt in conjunction with real estate transactions.~~

~~Interest expense increased for the nine months ended September 30, 2020 as a result of (i)~~ senior unsecured notes issued during 2020 and 2019, (ii) a term loan issued during 2019, and (iii) assumed debt in conjunction with real estate transactions. The increase in interest expense was partially offset by senior unsecured notes redemptions, repurchases and ~~repayments during 2019 and 2020 and decreased short-term borrowings under~~redemptions in the ~~bank line~~first quarter of ~~credit during 2020.~~2021.

Depreciation and amortization expense

Depreciation and amortization expense increased for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 primarily as a result of: (i) assets acquired during 2020 and 2021, (ii) the acquisition of Brookdale’s interest in and consolidation of 13 CCRCs during the first quarter of 2020, ~~(ii) assets acquired during 2019 and 2020,~~ and (iii) development and redevelopment projects placed into service during ~~2019~~2020 and ~~2020.~~2021. The increase was partially offset by: (i) dispositions of real estate throughout ~~2019 and 2020, (ii) assets that were fully depreciated in 2019 and~~ 2020 and ~~(iii)~~(ii) an increase in the number of assets classified as held for sale during ~~2020.~~2020 and 2021.

General and administrative expense

General and administrative expenses ~~decreased~~increased for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 primarily as a result of ~~decreased~~increased restructuring and severance ~~and~~ related charges.

Transaction Costs

Transaction costs ~~increased~~decreased for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 primarily as a result of costs associated with the transition of 13 CCRCs from Brookdale to LCS in January 2020.

Impairments and loan loss reserves (recoveries), net

The impairment charges recognized in each period vary depending on facts and circumstances related to each asset and are impacted by negotiations with potential buyers, current operations of the assets, and other factors. ~~Additionally, impairments~~Impairments and loan loss reserves (recoveries), net decreased for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 primarily as a result of ~~fewer~~no assets being impaired under the ~~held-for-sale~~held for sale impairment model and a decrease in loan loss reserves under the current expected credit losses model.

The reduction in loan loss reserves is primarily due to the economic impact of COVID-19 in the first quarter of 2020, partially offset by new seller financing in 2021.

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The decrease in impairment and loan loss reserves (recoveries) during the nine months ended September 30, 2020 is partially offset by an increase in credit losses (which are recorded in impairments and loan loss reserves (recoveries), net) under the current expected credit losses model (which we began using in conjunction with our adoption of ASU 2016-13 on January 1, 2020), primarily due to the current and anticipated economic impact of COVID-19.

Gain (loss) on sales of real estate, net

During the three months ended ~~September 30,~~March 31, 2021 and 2020,, we sold four SHOP assets for $12 million, four MOBs for $14 million, one undeveloped MOB land parcel for $2 million, and one asset from the other non-reportable segment for $1 million, resulting in an immaterial aggregate gain on sales. During the nine months ended September 30, 2020, we sold 13 SHOP assets for $76 million, 18 senior housing triple-net assets for $385 million, 7 MOBs for $120 million, 1 undeveloped MOB land parcel for $2 million, and 1 asset from the other non-reportable segment for $1 million, resulting in total gain on sales of $248 million.

~~During the three months ended September 30, 2019, we sold one MOB for $3 million and one SHOP asset for $7 million, resulting in~~ there was no material gain or loss on sales. During the nine months ended September 30, 2019, we sold 11 SHOP assets for $89 million, 2 senior housing triple-net assets for $26 million, 6 MOBs for $18 million, 1 life science asset for $7 million, and 1 undeveloped life science land parcel for $35 million, resultingsales in ~~total gain on sales of $19 million.~~continuing operations.

~~Loss~~Gain (loss) on debt extinguishments

Refer to Note 910 to the Consolidated Financial Statements for information regarding senior unsecured note repurchases ~~repayments,~~ and redemptions and the associated loss on debt ~~extinguishments~~extinguishment recognized.

Other income (expense), net

Other income (expense), net, ~~increased~~decreased for the three months ended ~~September 30, 2020 primarily as a result of (i) government grant income received under the CARES Act during 2020 and (ii) lower casualty-related charges during the period.~~

~~Other income (expense), net, increased for the nine months ended September 30, 2020~~March 31, 2021 primarily 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, and (iii)~~2020; partially offset by government grant income received under the CARES Act during 2020. The increase was partially offset by a gain upon change of control related to the acquisition of the outstanding equity interests in a senior housing joint venture and a casualty-related gain related to hurricanes in 2017, both of which were recognized during the nine months ended September 30, 2019.2021.

Income tax benefit (expense)

Income tax ~~expense increased~~benefit decreased for the three months ended ~~September 30, 2020~~March 31, 2021 primarily as result of the ~~deferred~~ tax ~~asset valuation allowance and corresponding income tax expense~~benefits recognized ~~during~~in the ~~third~~first quarter of 2020 ~~(see Note 4~~related to the ~~Consolidated Financial Statements).~~

~~Income tax benefit increased for the nine months ended September 30, 2020 primarily as a result of the tax benefits related to~~following: (i) the purchase of Brookdale’s interest in 13 of the 15 communities in the CCRC JV, including the management termination fee expense paid to Brookdale in connection with transitioning management of 13 CCRCs to LCS, and (ii) the extension of the net operating loss carryback period provided by the CARES ~~Act, partially offset by the deferred tax asset valuation allowance and corresponding income tax expense recognized during the third quarter of 2020.~~Act.

Equity income (loss) from unconsolidated joint ventures

Equity income ~~(loss)~~ from unconsolidated joint ventures ~~decreased~~increased for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 as a result of ~~our share of net losses from~~a decrease in amortization expense due to fully amortized intangible assets related to an unconsolidated joint venture owning 19 SHOP assets.

Income (loss) from discontinued operations

Income from discontinued operations increased for the three months ended March 31, 2021 primarily as a result of: (i) increased gain on sales of real estate from the disposal of multiple senior housing portfolios during 2021; (ii) decreased depreciation and amortization expense due to assets being disposed of or classified as held for sale throughout 2020 and assets that ~~was formed~~were fully depreciated in ~~December 2019, partially offset by~~2020 and 2021; (iii) decreased impairments of depreciable real estate as a result of no ~~longer recognizing~~assets being impaired under the ~~operating results of 13 CCRCs~~held for sale impairment model, and (iv) government grant income received under the CARES Act during 2021. The increase in ~~equity~~ income (loss) from ~~unconsolidated joint ventures as we acquired Brookdale’s interest~~discontinued operations was partially offset by: (i) decreased NOI from dispositions of real estate during 2020 and now consolidate those facilities. Additionally, during the nine months ended September 30, 2020, the decrease is further offset by our share of a gain on sale of one asset in an unconsolidated joint venture during the first quarter of 2020.2021 and (ii) increased expenses and decreased occupancy related to COVID-19.

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Liquidity and Capital Resources

We anticipate that our cash flow from operations, available cash balances and cash from our various financing activities will be adequate for at least the next 12 months for purposes of: (i) funding recurring operating expenses; (ii) meeting debt service requirements; and (iii) satisfying our obligations to make distributions to our stockholders and non-controlling interest members. During the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, distributions to common shareholders and noncontrolling interest holders exceeded cash flows from operations by approximately ~~$71~~$49 million. Distributions were made using a combination of cash flows from operations, funds available under our bank line of credit and commercial paper program, proceeds from the sale of properties, and other sources of cash available to us.

Our principal investing liquidity needs for the next 12 months are to:

•fund capital expenditures, including tenant improvements and leasing costs; and

•fund future acquisition, transactional and development activities.

We anticipate satisfying these future investing needs using one or more of the following:

•cash flow from operations;

•sale of, or exchange of ownership interests in, properties or other investments;

•borrowings under our bank line of credit ~~facility~~ and ~~unsecured~~ commercial paper program;

•issuance of additional debt, including unsecured notes, term loans and mortgage debt; and/or

•issuance of common or preferred stock or its equivalent.

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Our ability to access the capital markets impacts our cost of capital and ability to refinance maturing indebtedness, as well as our ability to fund future acquisitions and development through the issuance of additional securities or secured debt. Credit ratings impact our ability to access capital and directly impact our cost of capital as well. For example, our bank line of credit and term loan accrue interest at a rate per annum equal to LIBOR plus a margin that depends upon the credit ratings of our senior unsecured ~~long term~~long-term debt. We also pay a facility fee on the entire revolving commitment that depends upon our credit ratings. As of ~~October 30, 2020,~~May 3, 2021, we had long-term credit ratings of Baa1 from Moody’s and BBB+ from S&P Global and Fitch, and short-term credit ratings of P-2, A-2, and F2 from Moody’s, S&P Global, and Fitch, respectively.

A downgrade in credit ratings by Moody’s, S&P Global, and Fitch may have a negative impact on the interest rates and facility fees for our bank line of credit and term ~~loan.~~loan and may negatively impact the pricing of notes issued under our commercial paper program and senior unsecured notes. While a downgrade in our credit ratings would adversely impact our cost of borrowing, we believe we continue to have access to the unsecured debt markets, and 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 assets to fund future operating costs, capital expenditures, or acquisitions, although no assurances can be made in this regard. Refer to “COVID-19 Update” above for a more comprehensive discussion of the potential impact of COVID-19 on our business.

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Cash Flow Summary

The following summary discussion of our cash flows is based on the Consolidated Statements of Cash Flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

The following table sets forth changes in cash flows (in thousands):


		Nine Months Ended September 30,							Three Months Ended March 31,
		2020		2019		Change			2021		2020		Change
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$	539,724	$	628,601	$	(88,877)	Net cash provided by (used in) operating activities	$	122,726	$	95,042	$	27,684
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(766,478)		(1,441,514)		675,036		Net cash provided by (used in) investing activities	767,726		(151,011)		918,737
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	341,788		828,248		(486,460)		Net cash provided by (used in) financing activities	(924,119)		761,421		(1,685,540)

Operating Cash Flows

The ~~decrease~~increase in operating cash flow is primarily the result of ~~a reduction~~an increase in income related to: (i) ~~the termination fee paid to Brookdale in conjunction with the CCRC Acquisition, (ii) assets sold during 2019~~2020 and 2020, (iii) occupancy declines and additional expenses within our SHOP and CCRC segments related to COVID-19, and (iv) increased interest paid as a result of new debt issuances and debt assumed in conjunction with real estate acquisitions. The decrease in operating cash flow is partially offset by: (i) 2019 and 20202021 acquisitions, (ii) annual rent increases, (iii) new leasing activity, and (iv) developments and redevelopments placed in service during ~~2019~~2020 and ~~2020.~~ 2021. The increase in operating cash flow is partially offset by: (i) assets sold during 2020 and 2021 and (ii) occupancy declines and additional expenses within our SHOP and CCRC portfolios related to COVID-19.Our cash flow from operations is dependent upon the occupancy levels of our buildings, rental rates on leases, our tenants’ performance on their lease obligations, the level of operating expenses, and other factors.

Investing Cash Flows

The following are significant investing activities for the ~~nine~~three months ended ~~September 30, 2020:~~March 31, 2021:

•made investments of ~~$1.47 billion~~$181 million primarily related to the acquisition, development, and redevelopment of real estate and funding of a new and existing loans; and

•received net proceeds of ~~$700~~$948 million primarily from sales of real estate assets.

The following are significant investing activities for the ~~nine~~three months ended ~~September 30, 2019:~~March 31, 2020:

•made investments of ~~$1.91 billion~~$657 million primarily related to the acquisition, development, and redevelopment of real estate and funding of a participating development loan; and

•received net proceeds of ~~$465~~$506 million primarily from sales of real estate assets.

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Financing Cash Flows

The following are significant financing activities for the ~~nine~~three months ended ~~September 30, 2020:~~March 31, 2021:

•made net ~~repayments~~borrowings of ~~$105~~$909 million under our bank line of credit and commercial paper ~~program,~~program;

•made repayments of $1.6 billion under our senior unsecured notes (including debt extinguishment costs) and mortgage debt; and

•paid cash dividends on common stock of $164 million.

The following are significant financing activities for the three months ended March 31, 2020:

•made net repayments of $98 million primarily under our bank line of credit and commercial paper program;

•issued common stock of ~~$1.07~~$1.1 billion; and

•paid cash dividends on common stock of ~~$588~~$189 million.

Discontinued Operations

Operating, investing, and financing cash flows in our Consolidated Statements of Cash Flows are reported inclusive of both cash flows from continuing operations and cash flows from discontinued operations. Certain significant cash flows from discontinued operations are disclosed in Note 15 to the Consolidated Financial Statements. The ~~following~~absence of future cash flows from discontinued operations is not expected to significantly impact our liquidity, as the proceeds from senior housing triple-net and SHOP dispositions are ~~significant financing activities~~expected to be used to pay down debt and invest in additional real estate in our other business lines. Additionally, we have multiple other sources of liquidity that can be utilized in the future, as needed. Refer to the Liquidity and Capital Resources section above for ~~the nine months ended September 30, 2019:~~

•~~made net borrowings of $845 million under~~additional information regarding our ~~bank line of credit, term loan, senior unsecured notes (including debt extinguishment costs), and mortgage debt;~~

•~~issued common stock of $511 million; and~~

•~~paid cash dividends on common stock of $537 million.~~liquidity.

Debt

In ~~June 2020, we completed a public offering of $600 million in aggregate principal amount of our 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 4.25% senior unsecured notes due in ~~2023.~~

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~~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 ~~3.15%~~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.

In March 2021, we repaid $39 million of variable rate secured debt on two SHOP assets classified as discontinued operations as of March 31, 2021.

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.

See Note 910 to the Consolidated Financial Statements for additional information about our outstanding debt.

Approximately ~~96%~~78% and ~~85%~~96% of our consolidated debt, ~~inclusive of $41 millionand$42 millionof variable rate~~excluding debt ~~swapped~~classified as liabilities related to ~~fixed through interest rate swaps,~~assets held for sale and discontinued operations, net, was fixed rate debt as of ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. At ~~September 30,~~March 31, 2021, our fixed rate debt and variable rate debt had weighted average interest rates of 3.77% and 0.51%, respectively. At March 31, 2020, our fixed rate debt and variable rate debt had weighted average interest rates of ~~3.84%~~3.95% and ~~1.14%~~1.98%, respectively. ~~At September 30, 2019, our fixed rate debt~~ We had zeroand$42 million, respectively,of variable rate debt ~~had weighted average~~swapped to fixed through interest ~~rates~~rate swaps as of ~~4.07%~~March 31, 2021 and ~~3.04%, respectively.~~2020. For a more detailed discussion of our interest rate risk, see “Quantitative and Qualitative Disclosures About Market Risk” in Item 3 ~~below~~.below.

Equity

At ~~September 30, 2020,~~March 31, 2021, we had ~~538~~539 million shares of common stock outstanding, equity totaled ~~$7.41~~$7.32 billion, and our equity securities had a market value of ~~$14.82~~$17.34 billion.

At ~~September 30, 2020,~~March 31, 2021, non-managing members held an aggregate of five million units in seven limited liability companies (“DownREITs”) for which we are the managing member. The DownREIT units are exchangeable for an amount of cash approximating the then-current market value of shares of our common stock or, at our option, shares of our common stock (subject to certain adjustments, such as stock splits and reclassifications). At ~~September 30, 2020,~~March 31, 2021, the outstanding DownREIT units were convertible into approximately seven million shares of our common stock.

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At-The-Market Program

In February 2020, we terminated our previous at-the-market equity offering program and concurrently established a new at-the-market equity offering program (the “2020 ATM Program”). In addition to the issuance and sale of shares of our common stock, we may also enter into one or more forward sales agreements with sales agents for the sale of our shares of common stock under our 2020 ATM Program.

During the three months ended ~~September 30, 2020,~~March 31, 2021, no shares were settled under ATM forward contracts.

At ~~September 30, 2020,~~March 31, 2021, approximately $1.25 billion of our common stock remained available for sale under the 2020 ATM Program. Actual future sales of our common stock will depend upon a variety of factors, including but not limited to market conditions, the trading price of our common stock, and our capital needs. We have no obligation to sell any of the remaining shares under our 2020 ATM Program.

During the three months ended March 31, 2021, we did not issue any shares of our common stock under our 2020 ATM Program.

See Note 1112 to the Consolidated Financial Statements for additional information about our 2020 ATM ~~Program, including equity sales during the three and nine months ended September 30, 2020.~~Program.

Shelf Registration

In May 2018, we filed a prospectus with the SEC as part of a registration statement on Form S-3, using an automatic shelf registration process. This shelf registration statement expires inon May 31, 2021 and at or prior to such time, we expect to file a new shelf registration statement. Under the “shelf” process, we may sell any combination of the securities described in the prospectus through one or more offerings. The securities described in the prospectus include common stock, preferred stock, depositary shares, debt securities, and warrants.

Contractual Obligations and Off-Balance Sheet Arrangements

Our commitments related to development and redevelopment projects increased by ~~$37~~$9 million, to ~~$398~~$315 million at ~~September 30, 2020,~~March 31, 2021, when compared to December 31, ~~2019,~~2020, primarily as a result of increased commitments on existing projects and new projects started during the ~~third~~first quarter of ~~2020~~.2021.

Our commitments to fund senior housing redevelopment and capital expenditures increased by $89 million, to $100 million at March 31, 2021, when compared to December 31, 2020, primarily as a result of a commitment to finance additional debt for capital expenditures on the Sunrise Senior Housing Portfolio sold during the three months ended March 31, 2021.

Our commitments related to debt have materially changed since December 31, ~~2019~~2020 as a result of ~~paydowns~~draws on our bank line of credit and issuances of securities under our commercial paper program, the ~~issuance and~~ repurchase of senior unsecured notes in ~~June 2020,~~January 2021, and the redemption of senior unsecured notes in ~~July 2020.~~February 2021. As of ~~September 30, 2020,~~March 31, 2021, we had noan aggregate $1.04 billion balance outstanding under our bank line of credit or commercial paper program.See Note 910 to the Consolidated Financial Statements for additional information about our debt commitments.

There have been no other material changes, outside of the ordinary course of business, to these contractual obligations during the ~~nine~~three months ended ~~September 30, 2020.~~

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March 31, 2021.

We own interests in certain unconsolidated joint ventures as described in Note 78 to the Consolidated Financial Statements. Except in limited circumstances, our risk of loss is limited to our investment in the joint ventures and any outstanding loans receivable. In addition, we have certain properties which serve as collateral for debt that is owed by a previous owner of certain of our facilities (see Note 10 to the Consolidated Financial Statements). Our risk of loss for these certain properties is limited to the outstanding debt balance plus penalties, if any. We have no other material off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources except for commitments included in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 in “Contractual Obligations” under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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Non-GAAP Financial Measures Reconciliations

The following is a reconciliation from net income (loss) applicable to common shares, the most directly comparable financial measure calculated and presented in accordance with GAAP, to NAREIT FFO, FFO as Adjusted, and AFFO (in thousands, except per share data):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Net income (loss) applicable to common shares	Net income (loss) applicable to common shares	$	(63,768)	$	(46,249)	$	265,018	$	787	Net income (loss) applicable to common shares	$	143,337	$	277,464
Real estate related depreciation and amortization(1)	Real estate related depreciation and amortization(1)	173,630		171,944		541,394		469,191		Real estate related depreciation and amortization(1)	157,538		189,276
Healthpeak's share of real estate related depreciation and amortization from unconsolidated joint ventures	Healthpeak's share of real estate related depreciation and amortization from unconsolidated joint ventures	24,822		14,952		80,050		45,153		Healthpeak's share of real estate related depreciation and amortization from unconsolidated joint ventures	4,453		29,610
Noncontrolling interests' share of real estate related depreciation and amortization	Noncontrolling interests' share of real estate related depreciation and amortization	(5,020)		(4,999)		(15,043)		(14,927)		Noncontrolling interests' share of real estate related depreciation and amortization	(4,881)		(4,852)
Other real estate-related depreciation and amortization	Other real estate-related depreciation and amortization	319		1,357		2,447		4,798		Other real estate-related depreciation and amortization	—		1,237
Loss (gain) on sales of depreciable real estate, net(1)	Loss (gain) on sales of depreciable real estate, net(1)	(149)		784		(247,881)		(18,708)		Loss (gain) on sales of depreciable real estate, net(1)	(259,662)		(164,869)
Healthpeak's share of loss (gain) on sales of real estate, net, from unconsolidated joint ventures		—		—		(9,248)		—
Noncontrolling interests' share of gain (loss) on sales of real estate, net		—		(2)		(3)		206
Healthpeak's share of loss (gain) on sales of depreciable real estate, net, from unconsolidated joint ventures										Healthpeak's share of loss (gain) on sales of depreciable real estate, net, from unconsolidated joint ventures	—		(7,729)

Loss (gain) upon change of control, net~~(1)~~(2)	Loss (gain) upon change of control, net~~(1)~~(2)	(3,259)		20		(173,222)		(11,481)		Loss (gain) upon change of control, net~~(1)~~(2)	(1,042)		(167,434)
Taxes associated with real estate dispositions	Taxes associated with real estate dispositions	551		—		(10,989)		—		Taxes associated with real estate dispositions	490		(11,876)
Impairments (recoveries) of depreciable real estate, net~~(2)~~(1)	Impairments (recoveries) of depreciable real estate, net~~(2)~~(1)	37,477		43,784		85,996		111,033		Impairments (recoveries) of depreciable real estate, net~~(2)~~(1)	—		30,722

NAREIT FFO applicable to common shares	NAREIT FFO applicable to common shares	164,603		181,591		518,519		586,052		NAREIT FFO applicable to common shares	40,233		171,549
Distributions on dilutive convertible units and other	Distributions on dilutive convertible units and other	—		1,675		5,380		4,954		Distributions on dilutive convertible units and other	—		1,637
Diluted NAREIT FFO applicable to common shares	Diluted NAREIT FFO applicable to common shares	$	164,603	$	183,266	$	523,899	$	591,006	Diluted NAREIT FFO applicable to common shares	$	40,233	$	173,186

Weighted average shares outstanding - diluted NAREIT FFO	Weighted average shares outstanding - diluted NAREIT FFO	538,645		499,450		533,963		489,609		Weighted average shares outstanding - diluted NAREIT FFO	539,016		513,123

Impact of adjustments to NAREIT FFO:	Impact of adjustments to NAREIT FFO:									Impact of adjustments to NAREIT FFO:
Transaction-related items(3)	Transaction-related items(3)	$	2,276	$	1,335	$	95,342	$	13,659	Transaction-related items(3)	$	4,113	$	92,379

Other impairments (recoveries) and other losses (gains), net(4)	Other impairments (recoveries) and other losses (gains), net(4)	(2,927)		—		(29,943)		10,147		Other impairments (recoveries) and other losses (gains), net(4)	3,242		(33,306)
Severance and related charges		—		1,334		—		5,063
Loss on debt extinguishments		17,921		35,017		42,912		36,152
Restructuring and severance related charges										Restructuring and severance related charges	2,463		—
Loss (gain) on debt extinguishments										Loss (gain) on debt extinguishments	164,292		(833)
Litigation costs (recoveries)	Litigation costs (recoveries)	26		(150)		232		(549)		Litigation costs (recoveries)	—		106
Casualty-related charges (recoveries), net	Casualty-related charges (recoveries), net	469		1,607		469		(4,636)		Casualty-related charges (recoveries), net	1,048		—
Foreign currency remeasurement losses (gains)	Foreign currency remeasurement losses (gains)	—		(162)		153		(350)		Foreign currency remeasurement losses (gains)	—		10
Valuation allowance on deferred tax assets(5)		31,161		—		31,161		—
Tax rate legislation impact(6)		—		—		(3,590)		—

Tax rate legislation impact(5)										Tax rate legislation impact(5)	—		(2,892)
Total adjustments	Total adjustments	$	48,926	$	38,981	$	136,736	$	59,486	Total adjustments	$	175,158	$	55,464

FFO as Adjusted applicable to common shares	FFO as Adjusted applicable to common shares	$	213,529	$	220,572	$	655,255	$	645,538	FFO as Adjusted applicable to common shares	$	215,391	$	227,013
Distributions on dilutive convertible units and other	Distributions on dilutive convertible units and other	1,852		1,588		5,244		4,809		Distributions on dilutive convertible units and other	1,940		1,549
Diluted FFO as Adjusted applicable to common shares	Diluted FFO as Adjusted applicable to common shares	$	215,381	$	222,160	$	660,499	$	650,347	Diluted FFO as Adjusted applicable to common shares	$	217,331	$	228,562

Weighted average shares outstanding - diluted FFO as Adjusted	Weighted average shares outstanding - diluted FFO as Adjusted	544,146		499,450		533,963		489,609		Weighted average shares outstanding - diluted FFO as Adjusted	546,342		513,123

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		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
FFO as Adjusted applicable to common shares	FFO as Adjusted applicable to common shares	$	213,529	$	220,572	$	655,255	$	645,538	FFO as Adjusted applicable to common shares	$	215,391	$	227,013
Amortization of deferred compensation		4,420		3,715		13,392		11,613
Amortization of stock-based compensation										Amortization of stock-based compensation	4,364		3,987
Amortization of deferred financing costs	Amortization of deferred financing costs	2,554		2,735		7,670		8,174		Amortization of deferred financing costs	2,213		2,582
Straight-line rents	Straight-line rents	(9,542)		(10,252)		(24,086)		(22,192)		Straight-line rents	(9,135)		(6,229)

AFFO capital expenditures	AFFO capital expenditures	(20,756)		(24,107)		(61,329)		(62,840)		AFFO capital expenditures	(20,710)		(21,791)
Lease restructure payments	Lease restructure payments	347		289		966		870		Lease restructure payments	377		291
CCRC entrance fees(7)		—		5,731		—		14,071

Deferred income taxes	Deferred income taxes	(7,300)		(6,434)		(9,200)		(14,063)		Deferred income taxes	(1,723)		4,787
Other AFFO adjustments(8)		539		(2,002)		675		(4,387)
Other AFFO adjustments										Other AFFO adjustments	(5,979)		(3,064)
AFFO applicable to common shares	AFFO applicable to common shares	183,791		190,247		583,343		576,784		AFFO applicable to common shares	184,798		207,576
Distributions on dilutive convertible units and other	Distributions on dilutive convertible units and other	—		1,675		5,380		4,953		Distributions on dilutive convertible units and other	1,337		1,638
Diluted AFFO applicable to common shares	Diluted AFFO applicable to common shares	$	183,791	$	191,922	$	588,723	$	581,737	Diluted AFFO applicable to common shares	$	186,135	$	209,214

Weighted average shares outstanding - diluted AFFO	Weighted average shares outstanding - diluted AFFO	538,645		499,450		533,963		489,609		Weighted average shares outstanding - diluted AFFO	544,517		513,123

~~Table of Contents~~


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Diluted earnings per common share	Diluted earnings per common share	$	(0.12)	$	(0.09)	$	0.50	$	0.00	Diluted earnings per common share	$	0.27	$	0.54
Depreciation and amortization	Depreciation and amortization	0.37		0.37		1.14		1.03		Depreciation and amortization	0.29		0.42
Loss (gain) on sales of depreciable real estate, net	Loss (gain) on sales of depreciable real estate, net	—		—		(0.48)		(0.03)		Loss (gain) on sales of depreciable real estate, net	(0.48)		(0.33)
Loss (gain) upon change of control, net~~(1)~~(2)	Loss (gain) upon change of control, net~~(1)~~(2)	(0.01)		—		(0.32)		(0.02)		Loss (gain) upon change of control, net~~(1)~~(2)	(0.01)		(0.33)
Taxes associated with real estate dispositions	Taxes associated with real estate dispositions	—		—		(0.02)		—		Taxes associated with real estate dispositions	0.00		(0.02)
Impairments (recoveries) of depreciable real estate, net~~(2)~~	Impairments (recoveries) of depreciable real estate, net~~(2)~~	0.07		0.09		0.16		0.23		Impairments (recoveries) of depreciable real estate, net~~(2)~~	—		0.06
Diluted NAREIT FFO per common share	Diluted NAREIT FFO per common share	$	0.31	$	0.37	$	0.98	$	1.21	Diluted NAREIT FFO per common share	$	0.07	$	0.34
Transaction-related items(3)	Transaction-related items(3)	0.01		—		0.18		0.03		Transaction-related items(3)	0.01		0.18
Other impairments (recoveries) and other losses (gains), net(4)										Other impairments (recoveries) and other losses (gains), net(4)	0.01		(0.06)
Restructuring and severance related charges										Restructuring and severance related charges	0.01		—
Loss (gain) on debt extinguishments										Loss (gain) on debt extinguishments	0.30		0.00

Other impairments (recoveries) and other losses (gains), net(4)		(0.01)		—		(0.06)		0.02
Severance and related charges		—		—		—		0.01
Loss on debt extinguishments		0.03		0.07		0.09		0.07

Casualty-related charges (recoveries), net		—		—		—		(0.01)

Valuation allowance on deferred tax assets(5)		0.06		—		0.06		—
Tax rate legislation impact(6)		—		—		(0.01)		—

Tax rate legislation impact(5)										Tax rate legislation impact(5)	—		(0.01)
Diluted FFO as Adjusted per common share	Diluted FFO as Adjusted per common share	$	0.40	$	0.44	$	1.24	$	1.33	Diluted FFO as Adjusted per common share	$	0.40	$	0.45

(1)This amount can be reconciled by combining the balances from the corresponding line of the Consolidated Statements of operations and the detailed financial information for discontinued operations in Note 5 to the Consolidated Financial Statements.

(2)For the ~~nine~~three months ended ~~September 30,~~March 31, 2020, ~~relates to the~~includes a $170 million gain onupon consolidation of 13 continuing care retirement communities ("CCRCs") in which we acquired Brookdale's interest and began consolidating during the first quarter of 2020. ~~For the nine months ended September 30, 2019, represents the gain related to the acquisition of the outstanding equity interests in a previously unconsolidated senior housing joint venture.~~ Gains and losses upon change of control are included in other income (expense), net in the ~~consolidated statements~~Consolidated Statements of ~~operations.~~

~~(2)~~For the three and nine months ended September 30, 2019, includes a $6 million impairment charge related to depreciable real estate held by the CCRC JV, which is recognized in equity income (loss) from unconsolidated joint ventures in the consolidated statement of operations.Operations.

(3)For the ~~nine~~three months ended ~~September 30,~~March 31, 2020, includes the termination fee and transition fee expenses related to terminating the management agreements with Brookdale for 13 CCRCs and transitioning those communities to ~~LCS,~~Life Care Services, LLC, partially offset by the tax benefit recognized related to those expenses. The ~~expense~~expenses related to terminating ~~the CCRC~~ management agreements ~~with Brookdale is~~are included in operating expenses in the ~~consolidated statement~~Consolidated Statements of ~~operations for the nine months ended September 30, 2020.~~Operations.

(4)For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, includes reserves for loan losses under the current expected credit losses accounting standard in accordance with Accounting Standards Codification 326, Financial Instruments – Credit Losses ("ASC 326"). The ~~nine~~three months ended ~~September 30,~~March 31, 2020 also includes a gain on sale of a hospital that was in a direct financing lease ("DFL") which is included in other income (expense), ~~and~~net in the ~~impairment~~Consolidated Statements of an undeveloped MOB land parcel, which was sold during the third quarter. For the nine months ended September 30, 2019, represents the impairment of 13 senior housing triple-net facilities under DFLs recognized as a result of entering into sales agreements.Operations.

(5)For the three ~~and nine~~ months ended September 30, 2020, represents the valuation allowance and corresponding income tax expense related to deferred tax assets that are no longer expected to be realized as a result of our plan to dispose of a significant portion of our SHOP portfolio. We determined we were unlikely to hold the assets long enough to realize the future value of certain deferred tax assets generated by the net operating losses of its taxable REIT subsidiaries.

~~(6)For the nine months ended September 30,~~March 31, 2020, represents the tax benefit from the CARES Act, which extended the net operating loss carryback period to five years.

~~(7)~~In connection with the acquisition of the remaining 51% interest in the CCRC JV in January 2020, we consolidated the 13 communities in the CCRC JV and recorded the assets and liabilities at their acquisition date relative fair values, including the CCRC contract liabilities associated with previously collected non-refundable entrance fees. In conjunction with increasing those CCRC contract liabilities to their fair value, we concluded that we will no longer adjust for the timing difference between non-refundable entrance fees collected and amortized as we believe the amortization of these fees is a meaningful representation of how we satisfy the performance obligations of the fees. As such, upon consolidation of the CCRC assets, we no longer exclude the difference between CCRC entrance fees collected and amortized from the calculation of AFFO. For comparative periods presented, the adjustment continues to represent our 49% share of non-refundable entrance fees collected by the CCRC JV, net of reserves and net of CCRC JV entrance fee amortization.

~~(8)~~Primarily includes our share of AFFO capital expenditures from unconsolidated joint ventures, partially offset by noncontrolling interests' share of AFFO capital expenditures from consolidated joint ventures.

For a reconciliation of Adjusted NOI to net income (loss), refer to Note 1314 to the Consolidated Financial Statements. For a reconciliation of Same-Store Adjusted NOI to total portfolio Adjusted NOI by segment, refer to the analysis of each segment in “Results of Operations” above.

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Critical Accounting Policies and Recent Accounting Pronouncements

The preparation of financial statements in conformity with U.S. GAAP requires our management to use judgment in the application of accounting policies, including making estimates and assumptions. We base estimates on the best information available to us at the time, our experience and on various other assumptions believed to be reasonable under the circumstances. These estimates affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of our consolidated financial statements. From time to time, we re-evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2 to the Consolidated Financial Statements. There have been no significant changes to our critical accounting policies during ~~2020 other than those resulting from new accounting standards (see Note 2 to~~ the ~~Consolidated Financial Statements).~~three months ended March 31, 2021.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market risks, including the potential loss arising from adverse changes in interest rates. We use derivative and other financial instruments in the normal course of business to mitigate interest rate risk. We do not use derivative financial instruments for speculative or trading purposes. Derivatives are recorded on the consolidated balance sheets at fair value (see Note 1718 to the Consolidated Financial Statements).

~~To illustrate~~ During the ~~effect of movements in~~three months ended March 31, 2021, we repaid our remaining variable rate secured debt and terminated the interest rate markets, we performed a market sensitivity analysis on our hedging instruments. We applied various basis point spreads to the underlying interest rate curves of the derivative portfolio in order to determine the change in fair value. Assuming a one percentage point change in the underlying interest rate curve, the estimated change in fair value of each of the underlying derivative instruments would not be material.two remaining related interest-rate swap contracts.

Interest Rate Risk. At ~~September 30, 2020,~~March 31, 2021, our exposure to interest rate risk is primarily on our variable rate debt. ~~At September 30, 2020, $41 million~~Our variable rate debt is comprised of our ~~variable-rate debt was hedged by interest rate swap transactions. The interest rate swaps are designated as cash flow hedges, with the objective~~bank line of ~~managing the exposure to interest rate risk by converting the interest rates on~~credit, commercial paper program, and our ~~variable-rate debt to fixed interest rates.~~

term loan. Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed rate debt and assets until their maturity or earlier prepayment and refinancing. If interest rates have risen at the time we seek to refinance our fixed rate debt, whether at maturity or otherwise, our future earnings and cash flows could be adversely affected by additional borrowing costs. Conversely, lower interest rates at the time of refinancing may reduce our overall borrowing costs. However, interest rate changes will affect the fair value of our fixed rate instruments. AAt March 31, 2021, a one percentage point increase or decrease in interest rates would change the fair value of our fixed rate debt by approximately ~~$393~~$298 million and ~~$433~~$324 million, respectively, and would not materially impact earnings or cash flows. Conversely, changes in interest rates on variable rate debt and investments would change our future earnings and cash flows, but not materially impact the fair value of those instruments. Assuming a one percentage point change in ~~our~~the interest rate related to ~~the~~our variable-rate debt and variable-rate investments, and assuming no other changes in the outstanding balance at ~~September 30, 2020,~~March 31, 2021, our annual interest expense and interest income would increase by approximately $3$13 million and $1 million, respectively.

Market Risk. We have investments in marketable debt securities classified as held-to-maturity because we have the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are recorded at amortized cost and adjusted for the amortization of premiums and discounts through maturity. We consider a variety of factors in evaluating an other-than-temporary decline in value, such as: the length of time and the extent to which the market value has been less than our current adjusted carrying value; the issuer’s financial condition, capital strength, and near-term prospects; any recent events specific to that issuer and economic conditions of its industry; and our investment horizon in relationship to an anticipated near-term recovery in the market value, if any. At ~~September 30, 2020,~~March 31, 2021, both the fair value and carrying value of marketable debt securities was ~~$20~~$21 million.

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Item 4. Controls and Procedures

Disclosure Controls and Procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~September 30, 2020.~~March 31, 2021. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of ~~September 30, 2020.~~March 31, 2021.

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See the “Legal Proceedings” section of Note 1011 to the Consolidated Financial Statements for information regarding legal proceedings, which information is incorporated by reference in this Item 1.

Item 1A. Risk Factors

We have described in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and updated in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, the primary risks that could materially affect our business, financial condition, or future results. The risk factors described in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 updatedThere are no material changes to the risk factors we previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2019. There were no material changes to our risk factors during the quarter ended September 30,~~ 2020.

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

(a)

None.

(b)

None.

(c)

The following table sets forth information with respect to purchases of our common stock made by us or on our behalf during the three months ended ~~September 30, 2020.~~March 31, 2021.

Period Covered
Total Number
Of Shares
Purchased(1)
Average
Price
Paid Per
Share Total Number Of Shares
(Or Units) Purchased As
Part Of Publicly
Announced Plans Or
Programs Maximum Number (Or
Approximate Dollar Value)
Of Shares (Or Units) That
May Yet Be Purchased
Under The Plans Or
Programs
July 1-31, 2020 — $ — — —
August 1-31, 2020 8,855 27.61 — —
September 1-30, 2020 1,072 28.43 — —
Total 9,927 $ 27.70 — —


Period Covered	Total Number Of Shares Purchased(1)	Average Price Paid Per Share		Total Number Of Shares (Or Units) Purchased As Part Of Publicly Announced Plans Or Programs	Maximum Number (Or Approximate Dollar Value) Of Shares (Or Units) That May Yet Be Purchased Under The Plans Or Programs
January 1-31, 2021	976	$	30.16	—	—
February 1-28, 2021	372,141	30.69		—	—
March 1-31, 2021	24,611	29.09		—	—
Total	397,728	$	30.59	—	—

(1)Represents shares of our common stock withheld under our equity incentive plans to offset tax withholding obligations that occur upon vesting of restricted shares. The value of the shares withheld is based on the closing price of our common stock on the last trading day prior to the date the relevant transaction occurred.

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Item 6. Exhibits


3.1						Articles of Restatement of Healthpeak Properties, Inc. (formerly HCP, Inc.) dated June 1, 2012, as supplemented by the Articles Supplementary, dated July 31, 2017, and as amended by the Articles of Amendment, dated October 30, 2019 (incorporated herein by reference to Exhibit 3.1 to Healthpeak’s Annual Report on Form 10-K filed February 13, 2020).

3.2						Articles of Amendment to Articles of Restatement of Healthpeak Properties, Inc. (formerly HCP, Inc.), dated October 30, 2019 (incorporated herein by reference to Exhibit 3.1 to Healthpeak’s Current Report on Form 8-K filed October 30, 2019).

3.3						Sixth Amended and Restated Bylaws of Healthpeak Properties, Inc., dated October 30, 2019 (incorporated herein by reference to Exhibit 3.2 to Healthpeak’s Current Report on Form 8-K filed October 30, 2019).



31.1						Certification by Thomas M. Herzog, Healthpeak’s Principal Executive Officer, Pursuant to Securities Exchange Act Rule 13a-14(a).*

31.2						Certification by Peter A. Scott, Healthpeak’s Principal Financial Officer, Pursuant to Securities Exchange Act Rule 13a-14(a).*

32.1						Certification by Thomas M. Herzog, Healthpeak’s Principal Executive Officer, Pursuant to Securities Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350.**

32.2						Certification by Peter A. Scott, Healthpeak’s Principal Financial Officer, Pursuant to Securities Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350.**

101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.*

101.SCH						XBRL Taxonomy Extension Schema Document.*

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.*

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.*

101.LAB						XBRL Taxonomy Extension Labels Linkbase Document.*

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.*

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith.

** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: ~~November 3, 2020~~May 5, 2021			Healthpeak Properties, Inc.

			(Registrant)

			/s/ THOMAS M. HERZOG
			Thomas M. Herzog
			Chief Executive Officer
			(Principal Executive Officer)

			/s/ PETER A. SCOTT
			Peter A. Scott
			Executive Vice President and
			Chief Financial Officer
			(Principal Financial Officer)

			/s/ SHAWN G. JOHNSTON
			Shawn G. Johnston
			Executive Vice President and
			Chief Accounting Officer
			(Principal Accounting Officer)

7564


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	4038

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7160

Item 4.	Controls and Procedures	7261

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	7362

Item 1A.	Risk Factors	7362

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



Item 6.	Exhibits	7463

Signatures		64


	Carrying Amount		Percentage of DFL Portfolio	Internal Ratings
Segment				Performing DFLs		Watch List DFLs		Workout DFLs

Other non-reportable segments	$	44,706	100	$	44,706	$	0	$	0
	$	44,706	100	$	44,706	$	0	$	0


	SS(1)									Total Portfolio(2)
	Three Months Ended September 30,									Three Months Ended September 30,
	2020			2019			Change			2020			2019			Change
Resident fees and services	$	—		$	—		$	—		$	115,031		$	—		$	115,031
Government grant income(3)	—			—			—			1,761			—			1,761
Healthpeak’s share of unconsolidated joint venture total revenues	—			—			—			4,295			52,671			(48,376)
Healthpeak's share of unconsolidated joint venture government grant income	—			—			—			246			—			246


Operating expenses	—			—			—			(94,992)			—			(94,992)
Healthpeak's share of unconsolidated joint venture operating expenses	—			—			—			(4,797)			(43,193)			38,396


Adjustments to NOI(4)	—			—			—			1,684			5,635			(3,951)
Adjusted NOI	$	—		$	—		$	—		23,228			15,113			8,115
Less: non-SS adjusted NOI										(23,228)			(15,113)			(8,115)
SS adjusted NOI										$	—		$	—		$	—
Adjusted NOI % change							—		%
Property count	—			—						17			15
Average Occupancy	—		%	—		%				79.5		%	85.1		%
Average capacity (units)(5)	—			—						8,324			7,271
Average annual rent per unit	$	—		$	—					$	60,600		$	65,590