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WELL Welltower

Filed: 30 Jul 21, 8:35am

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 June 30, 2021
or
   
 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: 1-8923
WELLTOWER INC.
 
(Exact name of registrant as specified in its charter
Delaware34-1096634
(State or other jurisdiction
of Incorporation)
(IRS Employer
Identification No.)
4500 Dorr StreetToledo,Ohio43615
(Address of principal executive offices)(Zip Code)
(419)247-2800
(Registrant’s telephone number, including area code)  
Not Applicable
(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 classTrading Symbol(s)Name of each exchange on which registered
Common stock, $1.00 par value per shareWELLNew York Stock Exchange
4.800% Notes due 2028WELL28New York Stock Exchange
4.500% Notes due 2034WELL34New 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  þ  No  ¨
Indicate by check mark whether the registrant has submitted electronically, if any, 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 and post such files). Yes þ  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
 þ
 Accelerated filer
¨
 Non-accelerated filer
¨
 Smaller reporting company
Emerging growth company
(Do not check if a smaller reporting 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  þ
As of July 23, 2021, the registrant had 422,562,838 shares of common stock outstanding. 



TABLE OF CONTENTS
 
 Page
PART I. FINANCIAL INFORMATION 
  
Item 1. Financial Statements (Unaudited)
  
Consolidated Balance Sheets
  
Consolidated Statements of Comprehensive Income
  
Consolidated Statements of Equity
  
Consolidated Statements of Cash Flows
  
Notes to Unaudited Consolidated Financial Statements
  
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
  
Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
Item 4. Controls and Procedures
  
PART II. OTHER INFORMATION 
  
Item 1. Legal Proceedings
  
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
Item 5. Other Information
  
Item 6. Exhibits
  
Signatures



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 

CONSOLIDATED BALANCE SHEETS
WELLTOWER INC. AND SUBSIDIARIES
(In thousands) 
June 30, 2021 (Unaudited)December 31, 2020 (Note)
Assets:  
  
Real estate investments:  
  
Real property owned:  
Land and land improvements  $3,448,542 $3,440,650 
Buildings and improvements  28,124,236 28,024,971 
Acquired lease intangibles  1,516,971 1,500,030 
Real property held for sale, net of accumulated depreciation  592,699 216,613 
Construction in progress  458,844 487,742 
Less accumulated depreciation and amortization  (6,415,676)(6,104,297)
Net real property owned  27,725,616 27,565,709 
Right of use assets, net453,621 465,866 
Real estate loans receivable, net of credit allowance  1,097,299 443,372 
Net real estate investments  29,276,536 28,474,947 
Other assets:  
Investments in unconsolidated entities  1,020,112 946,234 
Goodwill  68,321 68,321 
Cash and cash equivalents  513,602 1,545,046 
Restricted cash  295,102 475,997 
Straight-line rent receivable331,381 344,066 
Receivables and other assets  671,062 629,031 
Total other assets  2,899,580 4,008,695 
Total assets  
$32,176,116 $32,483,642 
Liabilities and equity  
Liabilities:  
Unsecured credit facility and commercial paper$$
Senior unsecured notes  11,157,732 11,420,790 
Secured debt  2,304,178 2,377,930 
Lease liabilities409,628 418,266 
Accrued expenses and other liabilities  1,061,370 1,041,594 
Total liabilities  
14,932,908 15,258,580 
Redeemable noncontrolling interests  
392,379 343,490 
Equity:  
Common stock  423,933 418,691 
Capital in excess of par value  21,161,838 20,823,145 
Treasury stock  (108,633)(104,490)
Cumulative net income  8,425,401 8,327,598 
Cumulative dividends  (13,854,145)(13,343,721)
Accumulated other comprehensive income (loss)  (127,948)(148,504)
Total Welltower Inc. stockholders’ equity  15,920,446 15,972,719 
Noncontrolling interests  930,383 908,853 
Total equity  
16,850,829 16,881,572 
Total liabilities and equity  
$32,176,116 $32,483,642 
Note: The consolidated balance sheet at December 31, 2020 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

3


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
WELLTOWER INC. AND SUBSIDIARIES
(In thousands, except per share data) 
Three Months EndedSix Months Ended
June 30,June 30,
 2021202020212020
Revenues:  
Resident fees and services$740,891  $769,560 $1,464,355 $1,619,532 
Rental income  354,723 396,305 657,566 786,265 
Interest income38,448 16,069 58,027 31,310 
Other income6,930 6,541 13,106 9,970 
Total revenues1,140,992 1,188,475 2,193,054 2,447,077 
Expenses:
Property operating expenses642,657 660,764 1,259,983 1,342,545 
Depreciation and amortization240,885 265,371 485,311 540,172 
Interest expense122,341 126,357 245,483 268,364 
General and administrative expenses31,436 34,062 61,362 69,543 
Loss (gain) on derivatives and financial instruments, net(359)1,434 1,575 9,085 
Loss (gain) on extinguishment of debt, net55,612 249 50,969 249 
Provision for loan losses6,197 1,422 7,580 8,494 
Impairment of assets23,692 75,151 47,260 102,978 
Other expenses11,687 19,411 22,681 25,703 
Total expenses1,134,148 1,184,221 2,182,204 2,367,133 
Income (loss) from continuing operations before income taxes and other items6,844 4,254 10,850 79,944 
Income tax (expense) benefit2,221 (2,233)(1,722)(7,675)
Income (loss) from unconsolidated entities(7,976)1,332 5,073 (2,360)
Gain (loss) on real estate dispositions, net44,668 155,863 103,748 418,687 
Income (loss) from continuing operations45,757 159,216 117,949 488,596 
Net income45,757 159,216 117,949 488,596 
Less: Net income (loss) attributable to noncontrolling interests(1)
19,500 (20,030)20,146 (934)
Net income (loss) attributable to common stockholders$26,257 $179,246 $97,803 $489,530 
Average number of common shares outstanding:
Basic417,452 417,084 417,360 413,696 
Diluted419,305 419,121 419,205 415,775 
Earnings per share:
Basic:
Income (loss) from continuing operations$0.11 $0.38 $0.28 $1.18 
Net income (loss) attributable to common stockholders$0.06 $0.43 $0.23 $1.18 
Diluted:
Income (loss) from continuing operations$0.11 $0.38 $0.28 $1.18 
Net income (loss) attributable to common stockholders(2)
$0.06 $0.42 $0.23 $1.17 
Dividends declared and paid per common share$0.61 $0.61 $1.22 $1.48 
(1) Includes amounts attributable to redeemable noncontrolling interests.
(2) Includes adjustment to the numerator for income (loss) attributable to OP unitholders.


4


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
WELLTOWER INC. AND SUBSIDIARIES
(In thousands) 
 Three Months EndedSix Months Ended
June 30,June 30,
 2021202020212020
Net income$45,757 $159,216 $117,949 $488,596 
Other comprehensive income (loss):
Foreign currency translation gain (loss)12,994 13,015 57,204 (252,562)
Derivative and financial instruments designated as hedges gain (loss)(9,808)(27,171)(29,845)231,941 
Total other comprehensive income (loss)3,186 (14,156)27,359 (20,621)
Total comprehensive income (loss)48,943 145,060 145,308 467,975 
Less: Total comprehensive income (loss) attributable
to noncontrolling interests(1)
22,498 (13,543)26,949 (16,856)
Total comprehensive income (loss) attributable to common stockholders$26,445 $158,603 $118,359 $484,831 
(1) Includes amounts attributable to redeemable noncontrolling interests.

5


CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)
WELLTOWER INC. AND SUBSIDIARIES
(In thousands)
Six Months Ended June 30, 2021
Common
Stock
Capital in
Excess of
Par Value
Treasury
Stock
Cumulative
Net Income
Cumulative
Dividends
Accumulated Other
Comprehensive
Income (Loss)
Noncontrolling
Interests
Total
Balances at January 1, 2021$418,691 $20,823,145 $(104,490)$8,327,598 $(13,343,721)$(148,504)$908,853 $16,881,572 
Comprehensive income:
Net income (loss)71,546 (177)71,369 
Other comprehensive income (loss)20,368 3,729 24,097 
Total comprehensive income95,466 
Net change in noncontrolling interests(14,250)(20,266)(34,516)
Amounts related to stock incentive plans, net of forfeitures175 5,393 (2,029)3,539 
Net proceeds from issuance of common stock0(92)(92)
Dividends paid:
Common stock dividends(254,952)(254,952)
Balances at March 31, 2021$418,866 $20,814,196 $(106,519)$8,399,144 $(13,598,673)$(128,136)$892,139 $16,691,017 
Comprehensive income:
Net income (loss)26,257 19,695 45,952 
Other comprehensive income (loss)188 2,919 3,107 
Total comprehensive income49,059 
Net change in noncontrolling interests(17,377)15,630 (1,747)
Amounts related to stock incentive plans, net of forfeitures51 4,504 (2,114)2,441 
Net proceeds from issuance of common stock5,016 360,515 365,531 
Dividends paid:
Common stock dividends(255,472)(255,472)
Balances at June 30, 2021$423,933 $21,161,838 $(108,633)$8,425,401 $(13,854,145)$(127,948)$930,383 $16,850,829 
 Six Months Ended June 30, 2020
 Common
Stock
Capital in
Excess of
Par Value
Treasury
Stock
Cumulative
Net Income
Cumulative
Dividends
Accumulated Other
Comprehensive
Income (Loss)
Noncontrolling
Interests
Total
Balances at January 1, 2020$411,005 $20,190,119 $(78,955)$7,353,966 $(12,223,534)$(112,157)$966,183 $16,506,627 
Cumulative change in accounting principle (Note 2)(5,212)(5,212)
Balances at January 1, 2020 (as adjusted for change in accounting principle)411,005 20,190,119 (78,955)7,348,754 (12,223,534)(112,157)966,183 16,501,415 
Comprehensive income:
Net income (loss)310,284 18,988 329,272 
Other comprehensive income (loss)15,944 (21,955)(6,011)
Total comprehensive income323,261 
Net change in noncontrolling interests37,625 (29,662)7,963 
Amounts related to stock incentive plans, net of forfeitures246 6,608 (8,020)(1,166)
Net proceeds from issuance of common stock6,975 583,890 590,865 
Dividends paid:
Common stock dividends(356,001)(356,001)
Balances at March 31, 2020$418,226 $20,818,242 $(86,975)$7,659,038 $(12,579,535)$(96,213)$933,554 $17,066,337 
Comprehensive income:
Net income (loss)179,246 18,659 197,905 
Other comprehensive income (loss)(20,643)6,298 (14,345)
Total comprehensive income 183,560 
Net change in noncontrolling interests7,299 (70,124)(62,825)
Amounts related to stock incentive plans, net of forfeitures28 7,404 832 8,264 
Net proceeds from issuance of common stock89 3,604 3,693 
Repurchase of Common Stock(7,656)(7,656)
Dividends paid:
Common stock dividends(254,846)(254,846)
Balances at June 30, 2020$418,343 $20,836,549 $(93,799)$7,838,284 $(12,834,381)$(116,856)$888,387 $16,936,527 

6


CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
WELLTOWER INC. AND SUBSIDIARIES
(In thousands)
Six Months Ended
June 30,
 20212020
Operating activities:    
Net income  $117,949 $488,596 
Adjustments to reconcile net income to net cash provided from (used in) operating activities:  
Depreciation and amortization  485,311 540,172 
Other amortization expenses  8,854 6,947 
Provision for loan losses7,580 8,494 
Impairment of assets  47,260 102,978 
Stock-based compensation expense  10,333 14,373 
Loss (gain) on derivatives and financial instruments, net  1,575 9,085 
Loss (gain) on extinguishment of debt, net  50,969 249 
Loss (income) from unconsolidated entities(5,073)2,360 
Rental income less than (in excess of) cash received  9,688 (25,959)
Amortization related to above (below) market leases, net  (926)(1,008)
Loss (gain) on real estate dispositions, net  (103,748)(418,687)
Distributions by unconsolidated entities4,841 6,795 
Increase (decrease) in accrued expenses and other liabilities  18,569 22,348 
Decrease (increase) in receivables and other assets  (14,269)54,873 
Net cash provided from (used in) operating activities  638,913 811,616 
 
Investing activities:  
Cash disbursed for acquisitions, net of cash acquired(661,285)(390,802)
Cash disbursed for capital improvements to existing properties(94,483)(122,103)
Cash disbursed for construction in progress(144,344)(93,031)
Capitalized interest  (9,358)(9,287)
Investment in loans receivable(918,407)(19,538)
Principal collected on loans receivable  248,841 12,796 
Other investments, net of payments  3,030 (3,695)
Contributions to unconsolidated entities  (233,296)(225,739)
Distributions by unconsolidated entities  171,250 8,811 
Proceeds from (payments on) derivatives  (13,762)(13,319)
Proceeds from sales of real property  446,680 1,998,087 
Net cash provided from (used in) investing activities  (1,205,134)1,142,180 
Financing activities:  
Net increase (decrease) under unsecured credit facility and commercial paper(1,587,597)
Net proceeds from issuance of senior unsecured notes1,208,241 1,588,549 
Payments to extinguish senior unsecured notes  (1,533,752)
Net proceeds from the issuance of secured debt  44,921 
Payments on secured debt  (98,263)(345,340)
Net proceeds from the issuance of common stock  366,464 595,313 
Repurchase of common stock(7,656)
Payments for deferred financing costs and prepayment penalties  (72,251)(4,725)
Contributions by noncontrolling interests(1)
65,982 13,764 
Distributions to noncontrolling interests(1)
(67,242)(180,875)
Cash distributions to stockholders  (509,665)(610,847)
Other financing activities(7,628)(9,816)
Net cash provided from (used in) financing activities  (648,114)(504,309)
Effect of foreign currency translation on cash and cash equivalents and restricted cash1,996 (9,010)
Increase (decrease) in cash, cash equivalents and restricted cash  (1,212,339)1,440,477 
Cash, cash equivalents and restricted cash at beginning of period  2,021,043 385,766 
Cash, cash equivalents and restricted cash at end of period  $808,704 $1,826,243 
Supplemental cash flow information:
Interest paid$221,294 $227,632 
Income taxes paid (received), net1,922 (1,142)
(1) Includes amounts attributable to redeemable noncontrolling interests.

7

WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Business
Welltower Inc. (the "Company"), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The Company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. Welltower™, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing and post-acute communities and outpatient medical properties. 
2. Accounting Policies and Related Matters
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (such as normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2021 are not necessarily an indication of the results that may be expected for the year ending December 31, 2021. For further information, refer to the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020.
Impact of COVID-19 Pandemic
The extent to which the COVID-19 pandemic impacts our operations and those of our operators and tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the direct and indirect economic effects of the pandemic and containment measures, the impact of new variants, the effectiveness of vaccines, the overall pace of recovery, among others. The COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations and cash flows in the future.
Our Seniors Housing Operating revenues are dependent on occupancy. Spot occupancy declined since the beginning of the pandemic, reaching a low of 72.3% on March 12, 2021. As of June 30, 2021, virtually all communities are now accepting new residents, resulting in an increase in move-in activity and occupancy rates of approximately 230 basis points since the low point to 74.6% on June 30, 2021. Additionally, rapid distribution and a high acceptance rate of COVID-19 vaccinations by residents within assisted living and memory care facilities in the U.S. and U.K. has resulted in a significant decrease in total resident case counts since mid-January across the portfolio. Monthly spot occupancy rates through June 30, 2021 are as follows:
December 2020January 2021February 2021March 2021April 2021May 2021June 2021
Spot occupancy (1)
74.7 %73.3 %72.5 %72.6 %73.2 %73.6 %74.6 %
Sequential occupancy change(2)
(1.4)%(0.8)%0.1 %0.5 %0.5 %0.9 %
(1) Spot occupancy represents approximate month end occupancy at our share for 592 properties in operation as of December 31, 2020, including unconsolidated properties but excluding acquisitions, dispositions and development conversions since this date.
(2) Sequential occupancy changes are based on actual spot occupancy and may not recalculate due to rounding.

On a month-to-date basis, as of July 23, 2021, Seniors Housing Operating occupancy has increased approximately 40 basis points. Occupancy continued to strengthen in the U.S. and U.K. with gains of approximately 60 basis points and 30 basis points, respectively, while occupancy in Canada remained flat over the same period.
Property-level operating expenses associated with the COVID-19 pandemic relating to our Seniors Housing Operating portfolio, net of reimbursements including Provider Relief Funds and similar programs in the U.K. and Canada, resulted in a net benefit of approximately $1,535,000 and $22,792,000 for the three and six months ended June 30, 2021, respectively, as compared to a net expense of $40,127,000 and $47,421,000 during the three and six months ended June 30, 2020, respectively. These expenses were incurred as a result of the introduction of public health measures and other regulations affecting our properties, as well as additional health and safety measures adopted by us and our operators related to the COVID-19 pandemic, including increases in labor and property cleaning expenses and expenditures related to our efforts to procure personal protective equipment ("PPE") and supplies, net of reimbursements. Certain new expenses incurred since the start of the pandemic may continue on an ongoing basis as part of new health and safety protocols.
8

WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
In 2020 applications were made for amounts under Phase 2 and Phase 3 of the Provider Relief Fund related to our Seniors Housing Operating portfolio. During the six months ended June 30, 2021, we received total Provider Relief Funds of approximately $40,976,000, which was recognized as a reduction to COVID-19 costs within property operating expenses.
Our Triple-net operators have experienced similar occupancy declines and operating costs as described above with respect to our Seniors Housing Operating properties. Additionally, long-term/post-acute care facilities are generally experiencing a higher degree of occupancy declines. These factors may continue to impact the ability of our Triple-net operators to make contractual rent payments to us in the future. Many of our Triple-net operators received funds under the Coronavirus Aid Relief and Economic Security Act (“CARES Act”) Paycheck Protection Program. In addition, operators of long-term/post-acute care facilities have generally received funds from Phase 1 of the Provider Relief Fund and operators of assisted living facilities have generally received funds from Phases 2 and 3 of the Provider Relief Fund.
During the six months ended June 30, 2021, we collected approximately 95% of rent due from operators under Triple-net lease agreements (primarily seniors housing and post-acute care facilities). No significant rent deferrals or rent concessions have been made. We evaluate leases individually and recognize rent on a cash basis if collectibility of substantially all contractual rent payments is not probable. To the extent the prolonged impact of the COVID-19 pandemic causes operators or tenants to seek further modifications of their lease agreements, we may recognize reductions in revenue and increases in uncollectible receivables.
New Accounting Standards   
In August 2020, the FASB issued ASU 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”. This ASU simplifies accounting for convertible instruments and removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception. This ASU also simplifies the diluted earnings per share calculation in certain areas and provides updated disclosure requirements. The ASU is effective for public business entities beginning after December 15, 2021 including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the guidance and the impact it may have on our consolidated financial statements.
In March 2020, the FASB issued an amendment to the reference rate reform standard which provides the option for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on contract modifications and hedge accounting. An example of such reform is the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. Entities that make this optional expedient election would not have to remeasure the contracts at the modification date or reassess the accounting treatment if certain criteria are met and would continue applying hedge accounting for relationships affected by reference rate reform. The new standard was effective for us upon issuance and elections can be made through December 31, 2022. We are currently evaluating our options with regards to existing contracts and hedging relationships and the impact of adopting this update on our consolidated financial statements.
3. Real Property Acquisitions and Development 
The total purchase price for all properties acquired has been allocated to the tangible and identifiable intangible assets and liabilities at cost on a relative fair value basis. Liabilities assumed and any associated noncontrolling interests are reflected at fair value. The results of operations for these acquisitions have been included in our consolidated results of operations since the date of acquisition and are a component of the appropriate segments. Transaction costs primarily represent costs incurred with acquisitions, including due diligence costs, fees for legal and valuation services, termination of pre-existing relationships computed based on the fair value of the assets acquired, lease termination fees and other acquisition-related costs. Transaction costs related to asset acquisitions are capitalized as a component of purchase price and all other non-capitalizable costs are reflected in other expenses on our Consolidated Statements of Comprehensive Income.
The following is a summary of our real property investment activity by segment for the periods presented (in thousands):
9

WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 Six Months Ended
 June 30, 2021June 30, 2020
Seniors Housing OperatingTriple-netOutpatient
Medical
TotalsSeniors Housing OperatingTriple-netOutpatient
Medical
Totals
Land and land improvements$25,636 $30,849 $29,735 $86,220 $15,758 $$40,847 $56,605 
Buildings and improvements167,791 268,210 152,737 588,738 132,480 765 171,457 304,702 
Acquired lease intangibles10,679 6,274 16,953 10,810 23,823 34,633 
Receivables and other assets634 642 257 139 396 
Total assets acquired (1)
204,740 299,059 188,754 692,553 159,305 765 236,266 396,336 
Accrued expenses and other liabilities(2,923)(8,703)(266)(11,892)(671)(2,036)(2,707)
Total liabilities acquired(2,923)(8,703)(266)(11,892)(671)(2,036)(2,707)
Noncontrolling interests (2)
(2,597)(2,056)(14,723)(19,376)(2,827)(2,827)
Cash disbursed for acquisitions199,220 288,300 173,765 661,285 155,807 765 234,230 390,802 
Construction in progress additions93,108 46,904 13,371 153,383 53,705 26,262 26,677 106,644 
Less: Capitalized interest(6,014)(1,238)(2,106)(9,358)(5,470)(1,826)(1,991)(9,287)
Accruals (3)
311 319 (1,343)(2,983)(4,326)
Cash disbursed for construction in progress87,102 45,666 11,576 144,344 46,892 24,436 21,703 93,031 
Capital improvements to existing properties64,438 15,568 14,477 94,483 87,002 4,700 30,401 122,103 
Total cash invested in real property, net of cash acquired$350,760 $349,534 $199,818 $900,112 $289,701 $29,901 $286,334 $605,936 
(1) Excludes $301,000 and $580,000 of unrestricted and restricted cash acquired during the six months ended June 30, 2021 and June 30, 2020, respectively.
(2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests.
(3) Represents non-cash accruals for amounts to be paid in future periods for properties that converted, off-set by amounts paid in the current period.
On June 21, 2021, we entered into a definitive agreement to acquire a portfolio of 86 seniors housing properties owned by Holiday Retirement for a total purchase price of $1,576,800,000, which will be included in our Seniors Housing Operating segment. Atria Senior Living will assume operations of the portfolio following its acquisition of the Holiday Retirement management company pursuant to an incentive-based management agreement. We expect to close the transaction during the third quarter.
Construction Activity 
The following is a summary of the construction projects that were placed into service and began generating revenues during the periods presented (in thousands):
 Six Months Ended
 June 30, 2021June 30, 2020
Development projects:
Seniors Housing Operating$58,844 $93,188 
Triple-net22,990 33,627 
Outpatient Medical101,867 43,493 
Total development projects183,701 170,308 
Expansion projects35,637 
Total construction in progress conversions$183,701 $205,945 







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WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
4. Real Estate Intangibles 
The following is a summary of our real estate intangibles, excluding those related to ground leases or classified as held for sale, as of the dates indicated (dollars in thousands):
 June 30, 2021December 31, 2020
Assets:
In place lease intangibles$1,416,212 $1,406,705 
Above market tenant leases53,066 52,621 
Lease commissions47,693 40,704 
Gross historical cost1,516,971 1,500,030 
Accumulated amortization(1,223,550)(1,177,513)
Net book value$293,421 $322,517 
Weighted-average amortization period in years10.710.5
Liabilities:
Below market tenant leases$74,183 $77,851 
Accumulated amortization(41,552)(40,871)
Net book value$32,631 $36,980 
Weighted-average amortization period in years8.38.3
The following is a summary of real estate intangible amortization income (expense) for the periods presented (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Rental income related to (above)/below market tenant leases, net$432 $402 $857 $925 
Amortization related to in place lease intangibles and lease commissions(20,432)(33,316)(43,211)(69,293)
The future estimated aggregate amortization of intangible assets and liabilities is as follows for the periods presented (in thousands):
 AssetsLiabilities
2021$40,278 $3,904 
202248,245 7,234 
202334,780 5,092 
202427,176 2,976 
202521,943 2,447 
Thereafter120,999 10,978 
Total$293,421 $32,631 
5. Dispositions, Real Property Held for Sale and Impairment
We periodically sell properties for various reasons, including favorable market conditions, the exercise of tenant purchase options or reduction of concentrations (i.e., property type, relationship or geography). At June 30, 2021, 2 Seniors Housing Operating, 54 Triple-net, and 2 Outpatient Medical properties with an aggregate real estate balance of $592,699,000 were classified as held for sale. In addition to the real property balances held for sale, net other assets and (liabilities) of $20,382,000 are included in the Consolidated Balance Sheets related to the held for sale properties. Expected gross sales proceeds related to the held for sale properties is approximately $747,153,000.
During the six months ended June 30, 2021, we recorded $18,077,000 of impairment charges related to 3 Triple-net properties and 1 Outpatient Medical property which were classified as held for sale for which the carrying value exceeded the estimated fair value less cost to sell. Additionally, during the six months ended June 30, 2021, we recorded $29,183,000 of impairment charges related to 2 Seniors Housing Operating properties and 2 Triple-net properties that were held for use in which the carrying value exceeded the estimated fair value. During the six months ended June 30, 2020, we recorded $75,151,000 of impairment charges related to 12 Seniors Housing Operating properties which were classified as held for sale for which the carrying value exceeded the estimated fair value less cost to sell. Additionally, during the six months ended June 30, 2020, we recorded $27,827,000 of impairment charges related to one Seniors Housing Operating property and 1 Triple-net property that were held for use in which the carrying value exceeded the estimated fair value.
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WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The following is a summary of our real property disposition activity for the periods presented (in thousands):
 Six Months Ended June 30,
 20212020
Real estate dispositions:
Seniors Housing Operating$112,809 $706,964 
Triple-net88,367 33,445 
Outpatient Medical137,890 808,992 
Total dispositions339,066 1,549,401 
Gain (loss) on real estate dispositions, net103,748 418,687 
Net other assets/liabilities disposed3,866 29,999 
Proceeds from real estate dispositions$446,680 $1,998,087 
Operating results attributable to properties sold or classified as held for sale which do not meet the definition of discontinued operations are not reclassified on our Consolidated Statements of Comprehensive Income. The following represents the activity related to these properties for the periods presented (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Revenues:
Total revenues$19,441 $107,997 $48,943 $253,500 
Expenses:
Interest expense323 3,395 1,438 8,302 
Property operating expenses3,034 50,297 6,203 116,515 
Provision for depreciation1,397 28,090 7,396 54,004 
Total expenses4,754 81,782 15,037 178,821 
Income (loss) from real estate dispositions, net$14,687 $26,215 $33,906 $74,679 
6. Leases
We lease land, buildings, office space and certain equipment. Many of our leases include a renewal option to extend the term from one to 25 years or more. Renewal options that we are reasonably certain to exercise are recognized in our right-of-use assets and lease liabilities.
The components of lease expense were as follows for the period presented (in thousands):
Six Months Ended
 ClassificationJune 30, 2021June 30, 2020
Operating lease cost: (1)
Real estate lease expenseProperty operating expenses$10,538 $12,516 
Non-real estate investment lease expenseGeneral and administrative expenses2,354 2,549 
Finance lease cost:
Amortization of leased assetsProperty operating expenses4,111 4,043 
Interest on lease liabilitiesInterest expense3,310 2,695 
Sublease incomeRental income(1,267)(2,087)
Total $19,046 $19,716 
(1) Includes short-term leases which are immaterial.










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WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Supplemental balance sheet information related to leases is as follows (in thousands):
 ClassificationJune 30, 2021December 31, 2020
Right of use assets:
Operating leases - real estateRight of use assets, net$296,150 $310,017 
Finance leases - real estateRight of use assets, net157,471 155,849 
Real estate right of use assets, net453,621 465,866 
Operating leases - non-real estate investmentsReceivables and other assets7,248 9,624 
Total right of use assets, net$460,869 $475,490 
Lease liabilities:
Operating leases$298,722 $311,164 
Financing leases110,906 107,102 
Total$409,628 $418,266 
Substantially all of our operating leases in which we are the lessor contain escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. During the six months ended June 30, 2021 and 2020, we reserved for straight-line rent receivable balances of $49,241,000 and $34,110,000 through rental income, relating to leases for which collection of substantially all contractual lease payments was no longer deemed probable.
Leases in our Triple-net and Outpatient Medical portfolios typically include some form of operating expense reimbursement by the tenant. For the six months ended June 30, 2021, we recognized $657,566,000 of rental income related to operating leases, of which $89,890,000 was for variable lease payments which primarily represents the reimbursement of operating costs such as common area maintenance expenses, utilities, insurance and real estate taxes. For the six months ended June 30, 2020, we recognized $786,265,000 of rental income related to operating leases, of which $104,605,000 was for variable lease payments.
7. Loans Receivable
Loans receivable are recorded on our Consolidated Balance Sheets in real estate loans receivable, net of allowance for credit losses, or for non-real estate loans receivable, in receivables and other assets, net of allowance for credit losses. Real estate loans receivable consists of mortgage loans and other real estate loans which are primarily collateralized by a first, second or third mortgage lien, a leasehold mortgage on, or an assignment of the partnership interest in, the related properties, corporate guarantees and/or personal guarantees. Non-real estate loans are generally corporate loans with no real estate backing. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of the risk of credit loss. Accrued interest receivable was $21,938,000 and $15,615,000 as of June 30, 2021 and December 31, 2020, respectively, and is included in receivables and other assets on the Consolidated Balance Sheets. The following is a summary of our loans receivable (in thousands):
 June 30, 2021December 31, 2020
Mortgage loans$935,572 $299,430 
Other real estate loans179,462 152,739 
Allowance for credit losses on real estate loans receivable(17,735)(8,797)
Real estate loans receivable, net of credit allowance1,097,299 443,372 
Non-real estate loans348,061 455,508 
Allowance for credit losses on non-real estate loans receivable(149,697)(215,239)
Non-real estate loans receivable, net of credit allowance198,364 240,269 
Total loans receivable, net of credit allowance$1,295,663 $683,641 

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WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The following is a summary of our loan activity for the periods presented (in thousands):    
 Six Months Ended
 June 30, 2021June 30, 2020
Advances on loans receivable:
Investments in new loans$902,189 $2,477 
Draws on existing loans16,218 17,061 
Net cash advances on loans receivable918,407 19,538 
Receipts on loans receivable:
Loan payoffs179,827 
Principal payments on loans69,014 12,796 
Net cash receipts on loans receivable248,841 12,796 
Net cash advances (receipts) on loans receivable$669,566 $6,742 
During the quarter ended June 30, 2021, we provided £540 million (approximately $750,330,000 based on the Sterling/ U.S. Dollar exchange rate as of the date of funding) of senior loan financing and a £30 million delayed facility for working capital and capital expenditures to affiliates of Safanad, a global real estate and private equity firm, as part of the recapitalization of its investment in HC-One Group. The loan has a five-year term and is fully collateralized by the shares and assets of the HC-One Group, including its underlying property portfolio of owned assets across the U.K. As part of the transaction, we received equity warrants which provide us the right to participate in the capital appreciation of HC-One Group above a designated price upon liquidation. See Note 12 for additional details.
The allowance for credit losses on loans receivable is maintained at a level believed adequate to absorb potential losses in our loans receivable. The determination of the credit allowance is based on a quarterly evaluation of each of these loans, including general economic conditions and estimated collectability of loan payments. We evaluate the collectability of our loans receivable based on a combination of credit quality indicators, including, but not limited to, payment status, historical loan charge-offs, financial strength of the borrower and guarantors, and nature, extent, and value of the underlying collateral.
A loan is considered to have deteriorated credit quality when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreement. For those loans we identified as having deteriorated credit quality we determine the amount of credit loss on an individual basis. Placement on non-accrual status may be required. Consistent with this definition, all loans on non-accrual are deemed to have deteriorated credit quality. To the extent circumstances improve and the risk of collectability is diminished, we will return these loans to income accrual status. While a loan is on non-accrual status, any cash receipts are applied against the outstanding principal balance.
For the remaining loans we assess credit loss on a collective pool basis and use our historical loss experience for similar loans to determine the reserve for credit losses. The following is a summary of our loans by credit loss category (in thousands):
June 30, 2021
Loan categoryYears of OriginationLoan Carrying ValueAllowance for Credit LossNet Loan BalanceNo. of Loans
Deteriorated loans2007 - 2018$178,253 $(148,438)$29,815 
Collective loan pool2007-2016198,975 (3,033)195,942 17 
Collective loan pool2017126,493 (1,182)125,311 
Collective loan pool201820,652 (324)20,328 
Collective loan pool201922,046 (347)21,699 
Collective loan pool202049,352 (770)48,582 
Collective loan pool2021867,324 (13,338)853,986 
Total loans$1,463,095 $(167,432)$1,295,663 49 
In March 2020, we recognized a provision for loan losses of $6,898,000 to fully reserve for 1 Triple-net non-real estate loan receivable that was no longer deemed collectible. Aside from this specific reserve, the remainder of the provision for loan losses relates to the application of the historical loss experience on the collective loan pools. The following is a summary of the allowance for credit losses on loans receivable for the periods presented (in thousands):                                    
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WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended
June 30, 2021June 30, 2020
Balance at beginning of period$224,036 $68,372 
Adoption of ASU 2016-13— 5,212 
Provision for loan losses7,580 8,494 
Loan write-offs (1)
(64,075)
Foreign currency translation(109)(93)
Balance at end of period$167,432 $81,985 
(1) Includes $62,753,000 related to the Genesis Healthcare lease terminations for the six months ended June 30, 2021. See Note 9 for further details.
The following is a summary of our deteriorated loans (in thousands):
 Six Months Ended
 June 30, 2021June 30, 2020
Balance of deteriorated loans at end of period (1)
$178,253 $186,584 
Allowance for credit losses(148,438)(76,695)
Balance of deteriorated loans not reserved$29,815 $109,889 
Interest recognized on deteriorated loans (2)
$3,122 $7,912 
(1) Current year amounts include $2,176,000 and $3,623,000 of loans on non-accrual as of June 30, 2021 and December 31, 2020, respectively. Prior year amounts include $10,716,000 and $2,534,000 as of June 30, 2020 and December 31, 2019, respectively.
(2) Represents cash interest recognized in the period.
8. Investments in Unconsolidated Entities
We participate in a number of joint ventures, which generally invest in seniors housing and health care real estate. Our share of the results of operations for these properties has been included in our consolidated results of operations from the date of acquisition by the joint ventures and are reflected in our Consolidated Statements of Comprehensive Income as income or loss from unconsolidated entities. The following is a summary of our investments in unconsolidated entities (dollars in thousands): 
 
Percentage Ownership (1)
June 30, 2021December 31, 2020
Seniors Housing Operating10% to 65%$766,273 $653,057 
Triple-net10% to 25%81,100 5,629 
Outpatient Medical15% to 50%172,739 287,548 
Total $1,020,112 $946,234 
(1) Includes ownership of investments classified as liabilities and excludes ownership of in substance real estate.
At June 30, 2021, the aggregate unamortized basis difference of our joint venture investments of $118,278,000 is primarily attributable to the difference between the amount for which we purchase our interest in the entity, including transaction costs, and the historical carrying value of the net assets of the joint venture. This difference is being amortized over the remaining useful life of the related properties and included in the reported amount of income from unconsolidated entities.
We have made loans totaling $270,164,000 related to 7 properties as of June 30, 2021 for the development and construction of certain properties which are classified as in substance real estate investments. We believe that such borrowers typically represent variable interest entities ("VIE" or "VIEs") in accordance with ASC 810 Consolidation. VIEs are required to be consolidated by their primary beneficiary ("PB") which is the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impacts the entity's economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. We have concluded that we are not the PB of such borrowers, therefore, the loan arrangements were assessed based on among other factors, the amount and timing of expected residual profits, the estimated fair value of the collateral and the significance of the borrower's equity in the project. Based on these assessments, the arrangements have been classified as in substance real estate investments. We expect to fund an additional $20,209,000 related to these investments.
9. Credit Concentration
We use consolidated net operating income (“NOI”) as our credit concentration metric. See Note 18 for additional information and reconciliation. The following table summarizes certain information about our credit concentration for the six months ended June 30, 2021, excluding our share of NOI in unconsolidated entities (dollars in thousands):
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WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Concentration by relationship: (1)
Number of PropertiesTotal NOI
Percent of NOI (2)
ProMedica217 $111,157 12%
Sunrise Senior Living (3)
166 109,494 12%
Revera (3)
85 45,928 5%
Avery Healthcare61 41,536 5%
Genesis Healthcare15 36,677 4%
Remaining portfolio972 588,279 62%
Totals1,516 $933,071 100%
(1) Sunrise Senior Living and Revera are in our Seniors Housing Operating segment. Genesis Healthcare and ProMedica are in our Triple-net segment. Avery Healthcare is in both the Triple-net and Seniors Housing Operating segments.
(2) NOI with our top five relationships comprised 36% of total NOI for the year ended December 31, 2020.
(3) Revera owns a controlling interest in Sunrise Senior Living.

During the quarter ended March 31, 2021, we entered into definitive agreements to substantially exit our operating relationship with Genesis Healthcare ("Genesis"). The status of these transactions is as follows:
In April 2021, we contributed 9 Triple-net properties operated by Genesis into an 80/20 joint venture with ProMedica and such properties were added to the existing master lease with ProMedica.
We have entered into definitive agreements to sell 35 Genesis properties for $496 million to a joint venture with Aurora Health Network and Peace Capital. These properties are classified as held for sale as of June 30, 2021, with dispositions expected to occur in the second half of 2021. As of June 30, 2021, we have transferred operations of 28 properties to new operators.
Additionally, we currently lease 7 properties which we previously subleased to Genesis. We have entered into a forward sales agreement with Aurora Health Network that is intended to close simultaneously with the purchase option exercise in April 2023. We have transitioned the operations of these properties into a new lease agreement with a regional operator during the quarter ended June 30, 2021.
To effectuate the transition of all 51 properties, we agreed to provide Genesis a lease termination fee of $86 million upon successful transition of all properties, which will be used to immediately repay indebtedness to us. The debt reduction associated with the lease termination fee was previously reserved for as an allowance for credit losses on loans receivable.
Additionally, upon achievement of certain restructuring milestones, we will reduce Genesis' indebtedness by an additional $170 million in exchange for an equity interest in Genesis. Upon conclusion of the aforementioned loan transactions, Genesis will have $167 million of indebtedness to us, exclusive of additional paid in kind interest, which will carry a maturity date of January 1, 2024. As of June 30, 2021, our total carrying value of Genesis loans receivable, net of allowances for credit losses, was $144,667,000.
10. Borrowings Under Credit Facilities and Commercial Paper Program 
At June 30, 2021, we had a primary unsecured credit facility with a consortium of 34 banks that includes a $4,000,000,000 unsecured revolving credit facility (NaN outstanding at June 30, 2021), a $500,000,000 unsecured term credit facility and a $250,000,000 Canadian-denominated unsecured term credit facility. The unsecured revolving credit facility is comprised of a $1,000,000,000 tranche that matures on June 4, 2023 and a $3,000,000,000 tranche that matures on June 4, 2025. Both tranches may be extended for 2 successive terms of six month at our option. The term credit facilities mature on July 19, 2023. We have an option, through an accordion feature, to upsize the unsecured revolving credit facility and the $500,000,000 unsecured term credit facility by up to an additional $1,250,000,000, in the aggregate, and the $250,000,000 Canadian-denominated unsecured term credit facility by up to an additional $250,000,000. The primary unsecured credit facility also allows us to borrow up to $1,000,000,000 in alternate currencies (NaN outstanding at June 30, 2021). Borrowings under the unsecured revolving credit facility are subject to interest payable at the applicable margin over LIBOR interest rate. The applicable margin is based on our debt ratings and was 0.775% at June 30, 2021. In addition, we pay a facility fee quarterly to each bank based on the bank’s commitment amount. The facility fee depends on our debt ratings and was 0.15% at June 30, 2021. 
In January 2019, we established an unsecured commercial paper program. Under the terms of the program, we may issue unsecured commercial paper notes with maturities that vary, but do not exceed 397 days from the date of issue, up to a maximum aggregate face or principal amount outstanding at any time of $1,000,000,000 (NaN outstanding at June 30, 2021).
The following information relates to aggregate borrowings under the unsecured revolving credit facility and commercial paper program for the periods presented (dollars in thousands):
16

WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Balance outstanding at quarter end$$$$
Maximum amount outstanding at any month end$195,000 $685,000 $195,000 $2,100,000 
Average amount outstanding (total of daily
principal balances divided by days in period)$289,231 $405,165 $145,414 $999,490 
Weighted average interest rate (actual interest
expense divided by average borrowings outstanding)0.76 %1.57 %0.76 %2.08 %
 
11. Senior Unsecured Notes and Secured Debt 
We may repurchase, redeem or refinance senior unsecured notes from time to time, taking advantage of favorable market conditions when available. We may purchase senior notes for cash through open market purchases, privately negotiated transactions, a tender offer or, in some cases, through the early redemption of such securities pursuant to their terms. The senior unsecured notes are redeemable at our option, at any time in whole or from time to time in part, at a redemption price equal to the sum of: (i) the principal amount of the notes (or portion of such notes) being redeemed plus accrued and unpaid interest thereon up to the redemption date and (ii) any “make-whole” amount due under the terms of the notes in connection with early redemptions. Redemptions and repurchases of debt, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. At June 30, 2021, the annual principal payments due on these debt obligations were as follows (in thousands):
Senior
Unsecured Notes (1,2)
Secured
Debt (1,3)
Totals
2021$$253,459 $253,459 
202210,000 486,699 496,699 
2023 (4, 5)
701,525 489,409 1,190,934 
20241,350,000 185,318 1,535,318 
20251,250,000 181,449 1,431,449 
Thereafter (6, 7, 8)
7,941,460 714,794 8,656,254 
Totals$11,252,985 $2,311,128 $13,564,113 
(1) Amounts represent principal amounts due and do not include unamortized premiums/discounts, debt issuance costs, or other fair value adjustments as reflected on the Consolidated Balance Sheet.
(2) Annual interest rates range from 0.79% to 6.50%.
(3) Annual interest rates range from 0.03% to 7.93%. Carrying value of the properties securing the debt totaled $5,312,000,000 at June 30, 2021.
(4) Includes a $250,000,000 Canadian-denominated unsecured term credit facility (approximately $201,525,000 based on the Canadian/U.S. Dollar exchange rate on June 30, 2021). The loan matures on July 19, 2023 and bears interest at the Canadian Dealer Offered Rate plus 0.90% (1.31% at June 30, 2021).
(5) Includes a $500,000,000 unsecured term credit facility. The loan matures on July 19, 2023 and bears interest at LIBOR plus 0.90% (1.00% at June 30, 2021).
(6) Includes a $300,000,000 Canadian-denominated 2.95% senior unsecured notes due 2027 (approximately $241,830,000 based on the Canadian/U.S. Dollar exchange rate on June 30, 2021).
(7) Includes a £550,000,000 4.80% senior unsecured notes due 2028 (approximately $759,330,000 based on the Sterling/U.S. Dollar exchange rate in effect on June 30, 2021).
(8) Includes a £500,000,000 4.50% senior unsecured notes due 2034 (approximately $690,300,000 based on the Sterling/U.S. Dollar exchange rate in effect on June 30, 2021).
The following is a summary of our senior unsecured notes principal activity during the periods presented (dollars in thousands):
 Six Months Ended
 June 30, 2021June 30, 2020
 Weighted Avg.Weighted Avg.
 AmountInterest RateAmountInterest Rate
Beginning balance$11,509,533 3.67%$10,427,562 4.03%
Debt issued1,250,000 2.50%1,600,000 1.89%
Debt extinguished(1,533,752)2.42%0%
Foreign currency27,204 3.57%(114,851)4.30%
Ending balance$11,252,985 3.71%$11,912,711 3.65%
The following is a summary of our secured debt principal activity for the periods presented (dollars in thousands): 

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WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 Six Months Ended
 June 30, 2021June 30, 2020
 Weighted Avg.Weighted Avg.
 AmountInterest RateAmountInterest Rate
Beginning balance$2,378,073 3.27%$2,993,342 3.63%
Debt issued0%44,921 2.58%
Debt extinguished(66,593)6.01%(314,631)2.94%
Principal payments(31,670)3.48%(30,709)3.55%
Foreign currency31,318 2.89%(64,934)3.13%
Ending balance$2,311,128 3.10%$2,627,989 3.09%
Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As of June 30, 2021, we were in compliance in all material respects with the covenants under our debt agreements. 
12. Derivative Instruments
We are exposed to, among other risks, the impact of changes in foreign currency exchange rates as a result of our non-U.S. investments and interest rate risk related to our capital structure. Our risk management program is designed to manage the exposure and volatility arising from these risks, and utilizes foreign currency forward contracts, cross currency swap contracts, interest rate swaps, interest rate locks and debt issued in foreign currencies to offset a portion of these risks.
Foreign Currency Forward Contracts Designated as Cash Flow Hedges
For instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is deferred as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in earnings. 
Cash Flow Hedges of Interest Rate Risk
We enter into interest rate swaps in order to maintain a capital structure containing targeted amounts of fixed and floating-rate debt and manage interest rate risk. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for our fixed-rate payments. These interest rate swap agreements were used to hedge the variable cash flows associated with variable-rate debt.
Periodically, we enter into and designate interest rate locks to partially hedge the risk of changes in interest payments attributable to increases in the benchmark interest rate during the period leading up to the probable issuance of fixed-rate debt. We designate our interest rate locks as cash flow hedges. Gains and losses when we settle our interest rate locks are amortized into income over the life of the related debt, except where a material amount is deemed to be ineffective, which would be immediately reclassified to the Consolidated Statements of Comprehensive Income. Approximately $2,562,000 of losses, which are included in OCI, are expected to be reclassified into earnings in the next 12 months.
Foreign Currency Forward Contracts and Cross Currency Swap Contracts Designated as Net Investment Hedges
We use foreign currency forward and cross currency forward swap contracts to hedge a portion of the net investment in foreign subsidiaries against fluctuations in foreign exchange rates. For instruments that are designated and qualify as net investment hedges, the variability in the foreign currency to U.S. Dollar of the instrument is recorded as a cumulative translation adjustment component of OCI.
During the six months ended June 30, 2021 and 2020, we settled certain net investment hedges necessitating cash payments of $7,196,000 and generating cash proceeds of $3,485,000, respectively. The balance of the cumulative translation adjustment will be reclassified to earnings if the hedged investment is sold or substantially liquidated.
Derivative Contracts Undesignated
We use foreign currency exchange contracts to manage existing exposures to foreign currency exchange risk. Gains and losses resulting from the changes in fair value of these instruments are recorded in interest expense on the Consolidated Statements of Comprehensive Income and are substantially offset by net revaluation impacts on foreign currency denominated balance sheet exposures. In addition, we have several interest rate cap contracts related to variable rate secured debt agreements. Gains and losses resulting from the changes in fair values of these instruments are also recorded in interest expense.

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WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Equity Warrants
We received equity warrants through our lending activities further described in Note 7, which were accounted for as loan origination fees. The warrants provide us the right to participate in the capital appreciation of the underlying company above a designated price upon liquidation and contain net settlement terms qualifying as derivatives under ASC Topic 815. The warrants are classified within receivables and other assets on our Consolidated Balance Sheets. These warrants are measured at fair value with changes in fair value being recognized within gain (loss) on derivatives and financial instruments in our Consolidated Statements of Comprehensive Income.
The following presents the notional amount of derivatives and other financial instruments as of the dates indicated (in thousands): 
 June 30, 2021December 31, 2020
Derivatives designated as net investment hedges:
Denominated in Canadian Dollars$625,000 $625,000 
Denominated in Pound Sterling£1,880,708 £1,340,708 
Financial instruments designated as net investment hedges:
Denominated in Canadian Dollars$250,000 $250,000 
Denominated in Pound Sterling£1,050,000 £1,050,000 
Interest rate swaps designated as cash flow hedges:
Denominated in U.S Dollars (1)
$25,000 $450,000 
Derivative instruments not designated:
Interest rate caps denominated in U.S. Dollars$26,137 $26,137 
Forward sales contracts denominated in Canadian Dollars$80,000 $80,000 
(1) At June 30, 2021 the maximum maturity date was November 1, 2023.
The following presents the impact of derivative instruments on the Consolidated Statements of Comprehensive Income for the periods presented (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
DescriptionLocation2021202020212020
Gain (loss) on derivative instruments designated as hedges recognized in incomeInterest expense$5,544 $4,106 $11,567 $10,751 
Gain (loss) on derivative instruments not designated as hedges recognized in incomeInterest expense$(936)$(1,953)$(1,656)$(2,048)
Gain (loss) on derivative and financial instruments designated as hedges recognized in OCIOCI$(9,808)$(27,171)$(29,845)$231,941 
13. Commitments and Contingencies
At June 30, 2021, we had 12 outstanding letter of credit obligations totaling $22,404,000 and expiring between 2021 and 2024. At June 30, 2021, we had outstanding construction in progress of $458,844,000 and were committed to providing additional funds of approximately $819,168,000 to complete construction. Additionally, at June 30, 2021, we had outstanding investments classified as in substance real estate of $270,164,000 and were committed to provide additional funds of $20,209,000 (see Note 8 for additional information). Purchase obligations at June 30, 2021, include $1,576,800,000 representing a definitive agreement to acquire 86 seniors housing properties from Holiday Retirement, expected to close during the third quarter. Purchase obligations also include $58,673,000 of contingent purchase obligations to fund capital improvements. Rents due from the tenant are increased to reflect the additional investment in the property.






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 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
14. Stockholders’ Equity 
The following is a summary of our stockholders’ equity capital accounts as of the dates indicated: 
 June 30, 2021December 31, 2020
Preferred Stock:
Authorized shares50,000,000 50,000,000 
Issued shares
Outstanding shares
Common Stock, $1.00 par value:
Authorized shares700,000,000 700,000,000 
Issued shares424,339,944 419,124,469 
Outstanding shares422,561,863 417,400,602 
Common Stock In May 2021, we entered into an amended and restated equity distribution agreement whereby we can offer and sell up to $2,000,000,000 aggregate amount of our common stock ("ATM Program"). The ATM Program also allows us to enter into forward sale agreements. As of June 30, 2021, we had $1,905,854,000 of remaining capacity under the ATM Program, which excludes forward sales agreements outstanding for the sale of 13,052,375 shares with maturity dates in 2022 which we expect to physically settle for cash proceeds of $1,036,503,000.
On May 1, 2020, our Board of Directors authorized a share repurchase program whereby we may repurchase up to $1 billion of common stock through December 31, 2021 (the "Repurchase Program"). Under this authorization, we are not required to purchase shares but may choose to do so in the open market or through private transactions at times and amounts based on our evaluation of market conditions and other factors. We expect to finance any share repurchases under the Repurchase Program using available cash and may use proceeds from borrowings or debt offerings. We did not repurchase any shares of our common stock during the six months ended June 30, 2021.
The following is a summary of our common stock issuances during the six months ended June 30, 2021 and 2020 (dollars in thousands, except shares and average price amounts): 
 Shares IssuedAverage PriceGross ProceedsNet Proceeds
2020 Dividend reinvestment plan issuances264,153 $72.33 $19,105 $19,105 
2020 Option exercises251 47.81 12 12 
2020 ATM Program issuances6,799,978 86.48 588,072 576,196 
2020 Stock incentive plans, net of forfeitures183,398 — — 
2020 Totals7,247,780 $607,189 $595,313 
2021 ATM Program issuances5,015,673 74.15 371,937 366,464 
2021 Stock incentive plans, net of forfeitures145,588 — — 
2021 Totals5,161,261 $371,937 $366,464 
Dividends The decrease in dividends is attributable to the declaration of a reduced cash dividend beginning with the quarter ending March 31, 2020. The following is a summary of our dividend payments (in thousands, except per share amounts): 
 Six Months Ended
 June 30, 2021June 30, 2020
Per ShareAmountPer ShareAmount
Common stock$1.22 $510,424 $1.48 $610,847 
Accumulated Other Comprehensive Income The following is a summary of accumulated other comprehensive income (loss) for the periods presented (in thousands):
June 30, 2021December 31, 2020
Foreign currency translation$(571,391)$(621,792)
Derivative and financial instruments designated as hedges443,443 473,288 
Total accumulated other comprehensive income (loss)$(127,948)$(148,504)


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WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

15. Stock Incentive Plans
Our 2016 Long-Term Incentive Plan (“2016 Plan”) authorizes up to 10,000,000 shares of common stock to be issued at the discretion of the Compensation Committee of the Board of Directors. Our non-employee directors, officers and key employees are eligible to participate in the 2016 Plan. The 2016 Plan allows for the issuance of, among other things, stock options, stock appreciation rights, restricted stock, deferred stock units, performance units and dividend equivalent rights. Vesting periods for options, deferred stock units and restricted shares generally range from three to four years. Options expire ten years from the date of grant. Stock-based compensation expense totaled $4,757,000 and $10,333,000 for the three and six months ended June 30, 2021, respectfully, and $7,290,000 and $14,373,000 for the same periods in 2020.
16. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):
Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Numerator for basic earnings per share - net income (loss) attributable to common stockholders$26,257 $179,246 $97,803 $489,530 
Adjustment for net income (loss) attributable to OP units(873)(1,366)(2,225)(2,754)
Numerator for diluted earnings per share$25,384 $177,880 $95,578 $486,776 
Denominator for basic earnings per share - weighted average shares417,452 417,084 417,360 413,696 
Effect of dilutive securities:
Non-vested restricted shares438 619 430 661 
Redeemable OP units1,396 1,396 1,396 1,396 
Employee stock purchase program19 22 19 22 
Dilutive potential common shares1,853 2,037 1,845 2,079 
Denominator for diluted earnings per share - adjusted weighted average shares419,305 419,121 419,205 415,775 
Basic earnings per share$0.06 $0.43 $0.23 $1.18 
Diluted earnings per share$0.06 $0.42 $0.23 $1.17 
As of June 30, 2021, forward sales agreements outstanding for the sale of 13,052,375 shares of common stock were not included in the computation of diluted earnings per share because such forward sales were anti-dilutive to the three and six month periods ended June 30, 2021.
17. Disclosure about Fair Value of Financial Instruments 
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level valuation hierarchy exists for disclosures of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Please see Note 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 for additional information. The three levels are defined below: 
Level 1 - Quoted prices in active markets for identical assets or liabilities. 
Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value.                                         
Mortgage Loans, Other Real Estate Loans and Non-real Estate Loans Receivable — The fair value of mortgage loans, other real estate loans and non-real estate loans receivable is generally estimated by using Level 2 and Level 3 inputs such as

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WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
discounting the estimated future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.
Cash and Cash Equivalents and Restricted Cash — The carrying amount approximates fair value. 
Equity Securities — Equity securities are recorded at their fair value based on Level 1 publicly available trading prices. 
Equity Warrants The fair value of equity warrants is estimated using Level 3 inputs and includes data points such as net equity of the underlying HC-One Group real estate portfolio, marketability discount for private company warrants, dividend yield, volatility and risk-free rate.
Borrowings Under Primary Unsecured Credit Facility and Commercial Paper Program — The carrying amount of the primary unsecured credit facility and commercial paper program approximates fair value because the borrowings are interest rate adjustable. 
Senior Unsecured Notes — The fair value of the senior unsecured notes payable was estimated based on Level 1 publicly available trading prices. The carrying amount of the variable rate senior unsecured notes approximates fair value because they are interest rate adjustable. 
Secured Debt — The fair value of fixed rate secured debt is estimated using Level 2 inputs by discounting the estimated future cash flows using the current rates at which similar loans would be made with similar credit ratings and for the same remaining maturities. The carrying amount of variable rate secured debt approximates fair value because the borrowings are interest rate adjustable. 
Foreign Currency Forward Contracts, Interest Rate Swaps and Cross Currency Swaps — Foreign currency forward contracts, interest rate swaps and cross currency swaps are recorded in other assets or other liabilities on the balance sheet at fair value that is derived from observable market data, including yield curves and foreign exchange rates.
Redeemable OP Unitholder Interests — Our redeemable OP unitholder interests are recorded on the balance sheet at fair value using Level 2 inputs unless the fair value is below the initial amount in which case the redeemable OP unitholder interests are recorded at the initial amount adjusted for distributions to the unitholders and income or loss attributable to the unitholders. The fair value is measured using the closing price of our common stock, as units may be redeemed at the election of the holder for cash or, at our option, one share of our common stock per unit, subject to adjustment in certain circumstances. 
The carrying amounts and estimated fair values of our financial instruments are as follows (in thousands):
 June 30, 2021December 31, 2020
 Carrying AmountFair ValueCarrying AmountFair Value
Financial assets:
Mortgage loans receivable$919,812 $935,528 $293,752 $297,207 
Other real estate loans receivable177,487 173,889 149,620 152,211 
Equity securities3,061 3,061 4,636 4,636 
Cash and cash equivalents513,602 513,602 1,545,046 1,545,046 
Restricted cash295,102 295,102 475,997 475,997 
Non-real estate loans receivable198,364 202,877 240,269 255,724 
Foreign currency forward contracts, interest rate swaps and cross currency swaps6,256 6,256 4,668 4,668 
Equity warrants32,419 32,419 
Financial liabilities:
Senior unsecured notes$11,157,732 $12,544,312 $11,420,790 $13,093,926 
Secured debt2,304,178 2,364,951 2,377,930 2,451,782 
Foreign currency forward contracts, interest rate swaps and cross currency swaps89,929 89,929 118,054 118,054 
Redeemable OP unitholder interests$148,332 $148,332 $116,240 $115,346 
Items Measured at Fair Value on a Recurring Basis 
The market approach is utilized to measure fair value for our financial assets and liabilities reported at fair value on a recurring basis. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The following summarizes items measured at fair value on a recurring basis (in thousands):
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WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 Fair Value Measurements as of June 30, 2021
 TotalLevel 1Level 2Level 3
Equity securities$3,061 $3,061 $$
Equity warrants32,419 32,419 
Foreign currency forward contracts, interest rate swaps and cross currency swaps, net asset (liability) (1)
(83,673)(83,673)
Totals $(48,193)$3,061 $(83,673)$32,419 
(1) Please see Note 12 for additional information.
Items Measured at Fair Value on a Nonrecurring Basis 
In addition to items that are measured at fair value on a recurring basis, we also have assets and liabilities in our balance sheet that are measured at fair value on a nonrecurring basis that are not included in the tables above. Assets, liabilities and noncontrolling interests that are measured at fair value on a nonrecurring basis include those acquired or assumed. Asset impairments (if applicable, see Note 5 for impairments of real property and Note 7 for impairments of loans receivable) are also measured at fair value on a nonrecurring basis. We have determined that the fair value measurements included in each of these assets and liabilities rely primarily on company-specific inputs and our assumptions about the use of the assets and settlement of liabilities, as observable inputs are not available. As such, we have determined that each of these fair value measurements generally resides within Level 3 of the fair value hierarchy. We estimate the fair value of real estate and related intangibles using the income approach and unobservable data such as net operating income and estimated capitalization and discount rates. We also consider local and national industry market data including comparable sales, and commonly engage an external real estate appraiser to assist us in our estimation of fair value. We estimate the fair value of assets held for sale based on current sales price expectations or, in the absence of such price expectations, Level 3 inputs described above. We estimate the fair value of loans receivable using projected payoff valuations based on the expected future cash flows and/or the estimated fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the collateral. We estimate the fair value of secured debt assumed in asset acquisitions using current interest rates at which similar borrowings could be obtained on the transaction date. 
18. Segment Reporting
We invest in seniors housing and health care real estate. We evaluate our business and make resource allocations on our 3 operating segments: Seniors Housing Operating, Triple-net and Outpatient Medical. Our Seniors Housing Operating properties include seniors apartments, assisted living, independent living/continuing care retirement communities, independent supportive living communities (Canada), care homes with and without nursing (U.K.) and combinations thereof that are owned and/or operated through RIDEA structures (see Note 19). Our Triple-net properties include the property types described above as well as long-term/post-acute care facilities. Under the Triple-net segment, we invest in seniors housing and health care real estate through acquisition and financing of primarily single tenant properties. Properties acquired are primarily leased under triple-net leases and we are not involved in the management of the property. Our Outpatient Medical properties are typically leased to multiple tenants and generally require a certain level of property management by us.
We evaluate performance based upon consolidated NOI of each segment. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. We believe NOI provides investors relevant and useful information as it measures the operating performance of our properties at the property level on an unleveraged basis. We use NOI to make decisions about resource allocations and to assess the property level performance of our properties.  
Non-segment revenue consists mainly of interest income on certain non-real estate investments and other income. Non-segment assets consist of corporate assets including cash, deferred loan expenses and corporate offices and equipment among others. Non-property specific revenues and expenses are not allocated to individual segments in determining NOI.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020). The results of operations for all acquisitions described in Note 3 are included in our consolidated results of operations from the acquisition dates and are components of the appropriate segments. All inter-segment transactions are eliminated.
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WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Summary information for the reportable segments (which excludes unconsolidated entities) is as follows (in thousands): 
Three Months Ended June 30, 2021:Seniors Housing OperatingTriple-netOutpatient MedicalNon-segment / CorporateTotal
Resident fees and services$740,891 $$$$740,891 
Rental income204,725 149,998 354,723 
Interest income856 32,861 4,731 38,448 
Other income802 1,355 4,343 430 6,930 
Total revenues742,549 238,941 159,072 430 1,140,992 
Property operating expenses582,361 12,627 45,495 2,174 642,657 
Consolidated net operating income160,188 226,314 113,577 (1,744)498,335 
Depreciation and amortization131,035 54,406 55,444 240,885 
Interest expense10,553 1,704 3,907 106,177 122,341 
General and administrative expenses31,436 31,436 
Loss (gain) on derivatives and financial instruments, net(359)(359)
Loss (gain) on extinguishment of debt, net3,106 52,506 55,612 
Provision for loan losses(181)10,019 (3,641)6,197 
Impairment of assets17,713 3,768 2,211 23,692 
Other expenses3,709 4,110 1,098 2,770 11,687 
Income (loss) from continuing operations before income taxes and other items(5,747)152,666 54,558 (194,633)6,844 
Income tax (expense) benefit2,221 2,221 
Income (loss) from unconsolidated entities(12,938)4,877 85 (7,976)
Gain (loss) on real estate dispositions, net(28)42,709 1,987 44,668 
Income (loss) from continuing operations(18,713)200,252 56,630 (192,412)45,757 
Net income (loss)$(18,713)$200,252 $56,630 $(192,412)$45,757 
Total assets$16,129,367 $9,490,724 $6,212,491 $343,534 $32,176,116 
Three Months Ended June 30, 2020:Seniors Housing OperatingTriple-netOutpatient MedicalNon-segment / CorporateTotal
Resident fees and services$769,560 $$$$769,560 
Rental income217,492 178,813 396,305 
Interest income88 15,520 461 16,069 
Other income4,002 607 1,557 375 6,541 
Total revenues773,650 233,619 180,831 375 1,188,475 
Property operating expenses595,513 13,563 51,688 660,764 
Consolidated net operating income178,137 220,056 129,143 375 527,711 
Depreciation and amortization139,163 58,138 68,070 265,371 
Interest expense14,029 2,746 4,326 105,256 126,357 
General and administrative expenses34,062 34,062 
Loss (gain) on derivatives and financial instruments, net1,434 1,434 
Loss (gain) on extinguishment of debt, net(492)741 249 
Provision for loan losses1,451 (29)1,422 
Impairment of assets75,151 75,151 
Other expenses5,251 3,500 

6,456 4,204 19,411 
Income (loss) from continuing operations before income taxes and other items(54,965)152,787 49,579 (143,147)4,254 
Income tax (expense) benefit(2,233)(2,233)
Income (loss) from unconsolidated entities(6,787)6,403 1,716 1,332 
Gain (loss) on real estate dispositions, net14,465 2,148 139,250 155,863 
Income (loss) from continuing operations(47,287)161,338 190,545 (145,380)159,216 
Net income (loss)$(47,287)$161,338 $190,545 $(145,380)$159,216 


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WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 2021Seniors Housing OperatingTriple-netOutpatient MedicalNon-segment / CorporateTotal
Resident fees and services$1,464,355 $$$$1,464,355 
Rental income357,188 300,378 657,566 
Interest income1,975 47,783 8,269 58,027 
Other income2,621 2,452 6,648 1,385 13,106 
Total revenues1,468,951 407,423 315,295 1,385 2,193,054 
Property operating expenses1,138,329 25,468 92,358 3,828 1,259,983 
Consolidated net operating income330,622 381,955 222,937 (2,443)933,071 
Depreciation and amortization263,621 111,073 110,617 485,311 
Interest expense21,971 3,586 7,922 212,004 245,483 
General and administrative expenses61,362 61,362 
Loss (gain) on derivatives and financial instruments, net1,575 1,575 
Loss (gain) on extinguishment of debt, net(1,537)52,506 50,969 
Provision for loan losses70 10,872 (3,362)7,580 
Impairment of assets22,317 22,732 2,211 47,260 
Other expenses7,168 9,093 1,810 4,610 22,681 
Income (loss) from continuing operations before income taxes and other items17,012 223,024 103,739 (332,925)10,850 
Income tax (expense) benefit(1,722)(1,722)
Income (loss) from unconsolidated entities(7,704)9,784 2,993 5,073 
Gain (loss) on real estate dispositions, net5,167 44,751 53,830 103,748 
Income (loss) from continuing operations14,475 277,559 160,562 (334,647)117,949 
Net income (loss)$14,475 $277,559 $160,562 $(334,647)$117,949 

Six Months Ended June 30, 2020Seniors Housing OperatingTriple-netOutpatient MedicalNon-segment / CorporateTotal
Resident fees and services$1,619,532 $$$$1,619,532 
Rental income408,877 377,388 786,265 
Interest income192 30,191 927 31,310 
Other income5,054 2,280 1,845 791 9,970 
Total revenues1,624,778 441,348 380,160 791 2,447,077 
Property operating expenses1,203,384 26,865 112,296 1,342,545 
Consolidated net operating income421,394 414,483 267,864 791 1,104,532 
Depreciation and amortization285,937 115,832 138,403 540,172 
Interest expense30,463 5,598 9,134 223,169 268,364 
General and administrative expenses69,543 69,543 
Loss (gain) on derivatives and financial
instruments, net
9,085 9,085 
Loss (gain) on extinguishment of debt, net(492)741 249 
Provision for loan losses18.69 8,523 — (29)18.69 8,494 
Impairment of assets78,646 24,332 102,978 
Other expenses8,240 4,013 7,463 5,987 25,703 
Income (loss) from continuing operations before income taxes and other items18,600 247,100 112,152 (297,908)79,944 
Income tax (expense) benefit(7,675)(7,675)
Income (loss) from unconsolidated entities(17,811)12,199 3,252 (2,360)
Gain (loss) on real estate dispositions, net14,316 51,785 352,586 418,687 
Income (loss) from continuing operations15,105 311,084 467,990 (305,583)488,596 
Net income (loss)$15,105 $311,084 $467,990 $(305,583)$488,596 


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WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Our portfolio of properties and other investments are located in the United States, the United Kingdom and Canada. Revenues and assets are attributed to the country in which the property is physically located. The following is a summary of geographic information for the periods presented (dollars in thousands): 
 Three Months EndedSix Months Ended
 June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Revenues:
Amount(1)
%Amount%
Amount(1)
%Amount%
United States$893,672 78.4 %$973,772 81.9 %$1,719,320 78.4 %$2,001,553 81.8 %
United Kingdom140,756 12.3 %109,437 9.2 %259,630 11.8 %227,319 9.3 %
Canada106,564 9.3 %105,266 8.9 %214,104 9.8 %218,205 8.9 %
Total$1,140,992 100.0 %$1,188,475 100.0 %$2,193,054 100.0 %$2,447,077 100.0 %
 As of
 June 30, 2021December 31, 2020
Assets:Amount%Amount%
United States$25,673,854 79.8 %$26,658,659 82.1 %
United Kingdom4,075,693 12.7 %3,352,549 10.3 %
Canada2,426,569 7.5 %2,472,434 7.6 %
Total$32,176,116 100.0 %$32,483,642 100.0 %
(1) The United States, United Kingdom and Canada represent 73%, 13% and 14% of our resident fees and services revenue for the three and six month periods ended June 30, 2021, respectively.
19. Income Taxes and Distributions 
We elected to be taxed as a REIT commencing with our first taxable year. To qualify as a REIT for federal income tax purposes, at least 90% of taxable income (excluding 100% of net capital gains) must be distributed to stockholders. REITs that do not distribute a certain amount of taxable income in the current year are also subject to a 4% federal excise tax. The main differences between undistributed net income for federal income tax purposes and financial statement purposes are the recognition of straight-line rent for reporting purposes, basis differences in acquisitions, recording of impairments, differing useful lives and depreciation and amortization methods for real property and the provision for loan losses for reporting purposes versus bad debt expense for tax purposes. 
Under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”), for taxable years beginning after July 30, 2008, a REIT may lease “qualified health care properties” on an arm’s-length basis to a taxable REIT subsidiary (“TRS”) if the property is operated on behalf of such TRS by a person who qualifies as an “eligible independent contractor”. Generally, the rent received from the TRS will meet the related party rent exception and will be treated as “rents from real property”. A “qualified health care property” includes real property and any personal property that is, or is necessary or incidental to the use of, a hospital, nursing facility, assisted living facility, congregate care facility, qualified continuing care facility, or other licensed facility which extends medical or nursing or ancillary services to patients. We have entered into various joint ventures that were structured under RIDEA. Resident level rents and related operating expenses for these facilities are reported in the unaudited consolidated financial statements and are subject to federal and state income taxes as the operations of such facilities are included in TRS entities. Certain net operating loss carryforwards could be utilized to offset taxable income in future years. 
Income taxes reflected in the financial statements primarily represents U.S. federal, state and local income taxes as well as non-U.S. income based or withholding taxes on certain investments located in jurisdictions outside the U.S. The provision for income taxes for the six months ended June 30, 2021 and 2020, was primarily due to operating income or losses, offset by certain discrete items at our TRS entities. In 2014, we established certain wholly-owned direct and indirect subsidiaries in Luxembourg and Jersey and transferred interests in certain foreign investments into this holding company structure. The structure includes a property holding company that is tax resident in the United Kingdom. No material adverse current tax consequences in Luxembourg, Jersey or the United Kingdom resulted from the creation of this holding company structure and most of the subsidiary entities in the structure are treated as disregarded entities of the company for U.S. federal income tax purposes. Subsequent to 2014 we transferred certain subsidiaries to the United Kingdom, while some wholly-owned direct and indirect subsidiaries remain in Luxembourg and Jersey. The company reflects current and deferred tax liabilities for any such withholding taxes incurred from this holding company structure in its consolidated financial statements. Generally, given current statutes of limitations, we are subject to audit by the foreign, federal, state and local taxing authorities under applicable local laws.
The CARES Act, among its economic stimulus provisions, includes a number of tax provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carrybacks, alternative minimum tax credit
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WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Certain of these provisions may impact the provision for taxes in our consolidated financial statements, including in particular the provision allowing for the carryback of net operating losses which would be applicable to our TRSs. We have made a reasonable estimate of the tax impact to us of the CARES Act in our consolidated financial statements, and while we do not believe that there will be further material impacts to the consolidated financial statements related to the CARES Act tax provisions, we will continue to evaluate the impact of the CARES Act and any guidance provided by the U.S. Treasury and the IRS on our consolidated financial statements. It is possible our estimates could differ materially from the actual tax impact to us of the CARES Act.
20. Variable Interest Entities 
We have entered into joint ventures to own certain seniors housing and outpatient medical assets which are deemed to be VIEs. We have concluded that we are the primary beneficiary of these VIEs based on a combination of operational control of the joint venture and the rights to receive residual returns or the obligation to absorb losses arising from the joint ventures. Except for capital contributions associated with the initial joint venture formations, the joint ventures have been and are expected to be funded from the ongoing operations of the underlying properties. Accordingly, such joint ventures have been consolidated, and the table below summarizes the balance sheets of consolidated VIEs in the aggregate (in thousands):
June 30, 2021December 31, 2020
Assets:
Net real estate investments$449,437 $454,333 
Cash and cash equivalents12,469 15,547 
Receivables and other assets8,755 11,171 
Total assets (1)
$470,661 $481,051 
Liabilities and equity:
Secured debt$164,510 $165,671 
Lease liabilities1,324 1,325 
Accrued expenses and other liabilities11,368 14,997 
Total equity293,459 299,058 
Total liabilities and equity$470,661 $481,051 
(1) Note that assets of the consolidated VIEs can only be used to settle obligations relating to such VIEs. Liabilities of the consolidated VIEs represent claims against the specific assets of the VIEs.
27

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
EXECUTIVE SUMMARY
   
Company Overview
Business Strategy
Key Transactions
 Key Performance Indicators, Trends and Uncertainties
Corporate Governance
 LIQUIDITY AND CAPITAL RESOURCES
   
Sources and Uses of Cash
Off-Balance Sheet Arrangements
Contractual Obligations
Capital Structure
   
 RESULTS OF OPERATIONS
   
Summary
Seniors Housing Operating
Triple-net
Outpatient Medical
Non-Segment/Corporate
   
 OTHER
   
 Non-GAAP Financial Measures
 Critical Accounting Policies
 Cautionary Statement Regarding Forward-Looking Statements
28

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is based primarily on the unaudited consolidated financial statements of Welltower Inc. for the periods presented and should be read together with the notes thereto contained in this Quarterly Report on Form 10-Q. Other important factors are identified in our Annual Report on Form 10-K for the year ended December 31, 2020, including factors identified under the headings “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations". References herein to “we,” “us,” “our,” or the “Company” refer to Welltower Inc. and its subsidiaries unless specifically noted otherwise.
Executive Summary
Company Overview
Welltower Inc. (NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The Company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. Welltower™, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (U.S.), Canada and the United Kingdom (U.K.), consisting of seniors housing and post-acute communities and outpatient medical properties.
The following table summarizes our consolidated portfolio for the three months ended June 30, 2021 (dollars in thousands):
  Percentage ofNumber of
Type of Property
NOI (1)
NOIProperties
Seniors Housing Operating$160,188 32.0 %581 
Triple-net226,314 45.3 %643 
Outpatient Medical113,577 22.7 %292 
Totals$500,079 100.0 %1,516 
(1) Represents consolidated NOI and excludes our share of investments in unconsolidated entities. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount. See Non-GAAP Financial Measures for additional information and reconciliation.
The COVID-19 pandemic has had and may continue to have material and adverse effects on our financial condition, results of operations and cash flows in the future. The extent to which the COVID-19 pandemic impacts our operations and those of our operators and tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the effectiveness of vaccines, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, the overall pace of recovery, among others.
Our Seniors Housing Operating revenues are dependent on occupancy. Spot occupancy has declined since the beginning of the pandemic, reaching a low of 72.3% on March 12, 2021. Virtually all communities are now accepting new residents, resulting in an increase in move-in activity and occupancy rates of 230 basis points since the low point to 74.6% as of June 30, 2021. Additionally, rapid distribution and a high acceptance rate of COVID-19 vaccinations by residents within assisted living and memory care facilities in the U.S. and U.K. has resulted in a significant decrease in total resident case counts across the portfolio.
We have incurred increased operational costs as a result of the introduction of public health measures and other regulations affecting our properties, as well as additional health and safety measures adopted by us and our operators related to the COVID-19 pandemic, including increases in labor, personal protective equipment and sanitation. We expect total Seniors Housing Operating expenses to remain elevated during the pandemic and potentially beyond as these additional health and safety measures become standard practice.
Our Triple-net operators are experiencing similar trends related to occupancy and operating costs as described above with respect to our Seniors Housing Operating properties. However, long-term/post-acute care facilities are generally experiencing a higher degree of occupancy declines. These factors may continue to impact the ability of our Triple-net operators to make contractual rent payments to us in the future. Many of our Triple-net operators received funds under the Coronavirus Aid Relief, and Economic Security Act (“CARES Act”) Paycheck Protection Program. In addition, operators of long-term/post-acute care facilities have generally received funds from Phase 1 of the Provider Relief Fund and operators of assisted living facilities have generally received funds from Phase 2 and Phase 3 of the Provider Relief Fund.
During the six months ended June 30, 2021, we collected approximately 95% of rent due from operators under Triple-net lease agreements (primarily seniors housing and post-acute care facilities). No significant rent deferrals or rent concessions have been made during the six months ended June 30, 2021. We evaluate leases individually and recognize rent on a cash basis if collectibility of substantially all contractual rent payments is not probable. To the extent the prolonged impact of the COVID-19 pandemic causes operators or tenants to seek further modifications of their lease agreements, we may recognize reductions in revenue and increases in uncollectible receivables.
29

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Business Strategy
Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders as a result of annual increases in NOI and portfolio growth. To meet these objectives, we invest across the full spectrum of seniors housing and health care real estate and diversify our investment portfolio by property type, relationship and geographic location.
Substantially all of our revenues are derived from operating lease rentals, resident fees and services and interest earned on outstanding loans receivable. These items represent our primary sources of liquidity to fund distributions and depend upon the continued ability of our obligors to make contractual rent and interest payments to us and the profitability of our operating properties. To the extent that our obligors/partners experience operating difficulties and become unable to generate sufficient cash to make payments or operating distributions to us, there could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. To mitigate this risk, we monitor our investments through a variety of methods determined by the type of property. Our asset management process for seniors housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral. Our internal property management division manages and monitors the outpatient medical portfolio with a comprehensive process including review of tenant relations, lease expirations, the mix of health service providers, hospital/health system relationships, property performance, capital improvement needs and market conditions among other things. We evaluate the operating environment in each property’s market to determine the likely trend in operating performance of the facility. When we identify unacceptable trends, we seek to mitigate, eliminate or transfer the risk. Through these efforts, we generally aim to intervene at an early stage to address any negative trends, and in so doing, support both the collectability of revenue and the value of our investment.
In addition to our asset management and research efforts, we also aim to structure our relevant investments to mitigate payment risk. Operating leases and loans are normally credit enhanced by guarantees and/or letters of credit. In addition, operating leases are typically structured as master leases and loans are generally cross-defaulted and cross-collateralized with other real estate loans, operating leases or agreements between us and the obligor and its affiliates.
For the six months ended June 30, 2021, resident fees and services and rental income represented 67% and 30%, respectively, of total revenues. Substantially all of our operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. Our yield on loans receivable depends upon a number of factors, including the stated interest rate, the average principal amount outstanding during the term of the loan and any interest rate adjustments.
Our primary sources of cash include resident fees and services, rent and interest receipts, borrowings under our unsecured revolving credit facility and commercial paper program, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses and general and administrative expenses. Depending upon the availability and cost of external capital, we believe our liquidity is sufficient to fund these uses of cash.
We also continuously evaluate opportunities to finance future investments. New investments are generally funded from temporary borrowings under our unsecured revolving credit facility and commercial paper program, internally generated cash and the proceeds from investment dispositions. Our investments generate cash from NOI and principal payments on loans receivable. Permanent financing for future investments, which replaces funds drawn under our unsecured revolving credit facility and commercial paper program, has historically been provided through a combination of the issuance of public debt and equity securities and the incurrence or assumption of secured debt.
Depending upon market conditions, we believe that new investments will be available in the future with spreads over our cost of capital that will generate appropriate returns to our stockholders. It is also likely that investment dispositions may occur in the future. To the extent that investment dispositions exceed new investments, our revenues and cash flows from operations could be adversely affected. We expect to reinvest the proceeds from any investment dispositions in new investments. To the extent that new investment requirements exceed our available cash on-hand, we expect to borrow under our unsecured revolving credit facility and commercial paper program. At June 30, 2021, we had $513,602,000 of cash and cash equivalents, $295,102,000 of restricted cash and $4,000,000,000 of available borrowing capacity under our unsecured revolving credit facility.

30

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Key Transactions
Capital The following summarizes key capital transactions that occurred during the six months ended June 30, 2021 and subsequent events:
In March 2021, we completed the issuance of $750,000,000 senior unsecured notes bearing interest at 2.80% with a maturity date of June 2031.
In April 2021, we repaid our $339,128,000 of our 3.75% senior unsecured notes due March 2023, $334,624,000 of our 3.95% senior unsecured notes due September 2023, and $15,000,000 of our term loan due April 2022.
In May 2021, we entered into an amended and restated ATM Program (as defined below) pursuant to which we may offer and sell up to $2,000,000,000 of common stock from time to time. Since the beginning of the year, we sold 22,311,042 shares of common stock under our current and previous ATM Programs via forward sale agreements which are expected to generate gross proceeds of approximately $1,761,767,000, of which 5,015,673 shares have been settled resulting in $371,937,000 of gross proceeds during the six months ended June 30, 2021.
In June 2021, we closed on a new $4,700,000,000 unsecured credit facility with improved pricing across our line of credit and terminated the existing unsecured credit facility. The credit facility includes $4,000,000,000 of revolving credit capacity at a borrowing rate of 77.5 basis points over LIBOR, $500,000,000 of USD term loan capacity at a borrowing rate of 90.0 basis points over LIBOR and $250,000,000 CAD term loan capacity at 90.0 basis points over CDOR.
In June 2021, we repaid the remaining $845,000,000 of our term loan due April 2022.
In June 2021, we completed the issuance of $500,000,000 senior unsecured notes bearing interest at 2.05% with a maturity date of January 2029.
During the six months ended June 30, 2021, we extinguished $66,593,000 of secured debt at a blended average interest rate of 6.01%.
Investments The following summarizes our property acquisitions and joint venture investments completed during the six months ended June 30, 2021 (dollars in thousands): 
 Properties
Book Amount (1)
Capitalization Rates (2)
Seniors Housing Operating27$204,106 0.8 %
Triple-net14 299,059 6.2 %
Outpatient Medical188,746 5.7 %
Totals44 $691,911 4.5 %
(1) Represents amounts recorded in net real estate investments including fair value adjustments pursuant to U.S. GAAP. See Note 3 to our unaudited consolidated financial statements for additional information.
(2) Represents annualized contractual or projected net operating income to be received in cash divided by investment amounts.
Dispositions The following summarizes property dispositions completed during the six months ended June 30, 2021 (dollars in thousands): 
 Properties
Proceeds (1)
Book Amount (2)
Capitalization Rates (3)
Seniors Housing Operating12$118,590 $112,809 4.6 %
Triple-net11133,704 88,367 7.2 %
Outpatient Medical10194,386 137,890 5.2 %
Totals33 $446,680 $339,066 5.7 %
(1) Represents net proceeds received upon disposition, including any seller financing.
(2) Represents carrying value of net real estate assets at time of disposition. See Note 5 to our unaudited consolidated financial statements for additional information.
(3) Represents annualized contractual income that was being received in cash at date of disposition divided by stated purchase price.
Dividends Our Board of Directors declared a cash dividend for the quarter ended June 30, 2021 of $0.61 per share. On August 19, 2021, we will pay our 201st consecutive quarterly cash dividend to stockholders of record on August 12, 2021.


31

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Key Performance Indicators, Trends and Uncertainties
We utilize several key performance indicators to evaluate the various aspects of our business. These indicators are discussed below and relate to operating performance, credit strength and concentration risk. Management uses these key performance indicators to facilitate internal and external comparisons to our historical operating results, in making operating decisions and for budget planning purposes.
Operating Performance We believe that net income and net income attributable to common stockholders (“NICS”) per the Consolidated Statements of Comprehensive Income are the most appropriate earnings measures. Other useful supplemental measures of our operating performance include funds from operations attributable to common stockholders (“FFO”) and consolidated net operating income (“NOI”); however, these supplemental measures are not defined by U.S. generally accepted accounting principles (“U.S. GAAP”). Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliations. These earnings measures are widely used by investors and analysts in the valuation, comparison and investment recommendations of companies. The following table reflects the recent historical trends of our operating performance measures for the periods presented (in thousands):
 Three Months Ended
 June 30,March 31,December 31,September 30,June 30,March 31,
 202120212020202020202020
Net income (loss)$45,757 $72,192 $155,278 $394,978 $159,216 $329,380 
NICS26,257 71,546 163,729 325,585 179,246 310,284 
FFO248,840 287,167 225,827 185,014 335,597 356,124 
NOI498,335 434,736 501,455 402,157 527,711 576,821 
Credit Strength We measure our credit strength both in terms of leverage ratios and coverage ratios. The leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and Internal Revenue Code Section 1031 deposits. The coverage ratios indicate our ability to service interest and fixed charges (interest and secured debt principal amortization). We expect to maintain capitalization ratios and coverage ratios sufficient to maintain a capital structure consistent with our current profile. The coverage ratios are based on earnings before interest, taxes, depreciation and amortization (“EBITDA”). Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliation of these measures. Leverage ratios and coverage ratios are widely used by investors, analysts and rating agencies in the valuation, comparison, investment recommendations and rating of companies. The following table reflects the recent historical trends for our credit strength measures for the periods presented: 
 Three Months Ended
 June 30,March 31,December 31,September 30,June 30,March 31,
 202120212020202020202020
Net debt to book capitalization ratio43%42%41%41%43%44%
Net debt to undepreciated book capitalization ratio35%34%34%34%35%37%
Net debt to market capitalization ratio26%28%30%33%36%40%
Interest coverage ratio3.30x3.56x4.20x6.23x4.29x5.42x
Fixed charge coverage ratio2.93x3.16x3.72x5.52x3.84x4.88x
Concentration Risk We evaluate our concentration risk in terms of NOI by property mix, relationship mix and geographic mix. Concentration risk is a valuable measure in understanding what portion of our NOI could be at risk if certain sectors were to experience downturns. Property mix measures the portion of our NOI that relates to our various property types. Relationship mix measures the portion of our NOI that relates to our current top five relationships. Geographic mix measures the portion of our NOI that relates to our current top five states (or international equivalents). The following table reflects our recent historical trends of concentration risk by NOI for the periods indicated below: 
32

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
 Three Months Ended
 June 30,March 31,December 31,September 30,June 30,March 31,
 202120212020202020202020
Property mix:(1)
    
Seniors Housing Operating32%39%32%43%34%42%
Triple-net45%36%45%27%42%34%
Outpatient Medical23%25%23%30%24%24%
Relationship mix: (1)
 
ProMedica12%12%11%13%10%9%
Sunrise Senior Living (2)
10%14%12%15%10%14%
Revera (2)
5%5%4%6%5%6%
Avery Healthcare4%5%4%5%3%3%
Genesis Healthcare (3)
2%6%6%(16)%6%5%
Remaining relationships67%58%63%77%66%63%
Geographic mix:(1)
 
United Kingdom13%10%11%12%8%9%
California12%15%12%17%14%15%
Texas9%7%10%12%10%7%
Canada7%7%5%8%6%7%
Pennsylvania5%6%6%4%6%6%
Remaining geographic areas54%55%56%47%56%56%
(1) Excludes our share of investments in unconsolidated entities and non-segment/corporate NOI. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount.
(2) Revera owns a controlling interest in Sunrise Senior Living.
(3) During the three months ended September 30, 2020, we reserved for straight-line rent receivable balances of $91,025,000 relating to Genesis Healthcare.
Lease Expirations The following table sets forth information regarding lease expirations for certain portions of our portfolio as of June 30, 2021 (dollars in thousands):
 
Expiration Year (1)
 2021202220232024202520262027202820292030Thereafter
Triple-net:          
Properties79 35 28 66 18 14 14 23 399 
Base rent (2)
$19,970 $2,913 $2,482 $11,431 $6,147 $70,400 $32,044 $16,839 $31,393 $42,221 $379,642 
% of base rent3.2 %0.5 %0.4 %1.9 %1.0 %11.4 %5.2 %2.7 %5.1 %6.9 %61.7 %
Units/beds10,033 3,001 304 777 1,759 5,216 2,350 1,474 1,214 2,439 40,309 
% of Units/beds14.6 %4.4 %0.4 %1.1 %2.6 %7.6 %3.4 %2.1 %1.8 %3.5 %58.5 %
Outpatient Medical:          
Square feet716,895 1,632,054 1,750,297 1,986,690 993,235 1,423,668 1,011,592 947,862 727,697 1,423,987 4,415,518 
Base rent (2)
$21,867 $48,606 $49,071 $60,206 $28,076 $36,667 $26,413 $25,172 $20,538 $35,919 $102,903 
% of base rent4.8 %10.7 %10.8 %13.2 %6.2 %8.1 %5.8 %5.5 %4.5 %7.9 %22.5 %
Leases189 351 362 327 210 241 134 122 74 97 163 
% of Leases8.3 %15.5 %15.9 %14.4 %9.3 %10.6 %5.9 %5.4 %3.3 %4.3 %7.1 %
(1) Excludes investments in unconsolidated entities, developments, land parcels, loans receivable and sub-leases. Investments classified as held for sale are included in the current year.
(2) The most recent monthly cash base rent annualized. Base rent does not include tenant recoveries or amortization of above and below market lease intangibles or other non-cash income.
We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results. Our expected results may not be achieved and actual results may differ materially from our expectations. Factors that may cause actual results to differ from expected results are described in more detail in “Cautionary Statement Regarding Forward-Looking Statements” and other sections of this Quarterly Report on Form 10-Q. Management regularly monitors economic and other factors to develop strategic and tactical plans designed to improve performance and maximize our competitive position. Our ability to achieve our financial objectives is dependent upon our ability to effectively execute these plans and to appropriately respond to emerging economic and company-specific trends. Please refer to our Annual Report on Form 10-K for the year ended December 31, 2020, under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

33

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Corporate Governance
Maintaining investor confidence and trust is important in today’s business environment. Our Board of Directors and management are strongly committed to policies and procedures that reflect the highest level of ethical business practices. Our corporate governance guidelines provide the framework for our business operations and emphasize our commitment to increase stockholder value while meeting all applicable legal requirements. These guidelines meet the listing standards adopted by the New York Stock Exchange and are available on the Internet at www.welltower.com/investors/governance. The information on our website is not incorporated by reference in this Quarterly Report on Form 10-Q, and our web address is included as an inactive textual reference only.
Liquidity and Capital Resources
Sources and Uses of Cash
Our primary sources of cash include resident fees and services, rent and interest receipts, borrowings under our unsecured revolving credit facility and commercial paper program, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses and general and administrative expenses. These sources and uses of cash are reflected in our Consolidated Statements of Cash Flows and are discussed in further detail below. The following is a summary of our sources and uses of cash flows for the periods presented (dollars in thousands):
 Six Months EndedChange
June 30, 2021June 30, 2020$%
Cash, cash equivalents and restricted cash at beginning of period$2,021,043 $385,766 $1,635,277 424 %
Cash provided from (used in) operating activities638,913 811,616 (172,703)(21)%
Cash provided from (used in) investing activities(1,205,134)1,142,180 (2,347,314)(206)%
Cash provided from (used in) financing activities(648,114)(504,309)(143,805)(29)%
Effect of foreign currency translation1,996 (9,010)11,006 122 %
Cash, cash equivalents and restricted cash at end of period$808,704 $1,826,243 $(1,017,539)(56)%
Operating Activities The changes in net cash provided from operating activities are primarily attributable to declines in revenue as a result of decreased occupancy at our Seniors Housing Operating properties, straight-line receivable reserves related to Triple-net leases during the six months ended June 30, 2021 and dispositions. Please see “Results of Operations” for discussion of net income fluctuations. For the six months ended June 30, 2021 and 2020, cash flows provided from operations exceeded cash distributions to stockholders. 
Investing Activities The changes in net cash provided from/used in investing activities are primarily attributable to net changes in real property investments and dispositions, loans receivable and investments in unconsolidated entities, which are summarized above in “Key Transactions” and Notes 3 and 5 of our unaudited consolidated financial statements. The following is a summary of cash used in non-acquisition capital improvement activities for the periods presented (dollars in thousands): 
 Six Months EndedChange
 June 30, 2021June 30, 2020$
New development$144,344 $93,031 $51,313 
Recurring capital expenditures, tenant improvements and lease commissions30,171 40,939 (10,768)
Renovations, redevelopments and other capital improvements64,312 81,164 (16,852)
Total$238,827 $215,134 $23,693 
The change in new development is primarily due to the number and size of construction projects on-going during the relevant periods. Renovations, redevelopments and other capital improvements include expenditures to maximize property value, increase net operating income, maintain a market-competitive position and/or achieve property stabilization. 
Financing Activities The changes in net cash provided from/used in financing activities are primarily attributable to changes related to our long-term debt arrangements, the issuances of common stock and dividend payments which are summarized above in "Key Transactions". Please refer to Notes 10, 11 and 14 of our unaudited consolidated financial statements for additional information.
34

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
In March 2021, we completed the issuance of $750,000,000 senior unsecured notes with a maturity date of June 2031. In June 2021, we completed the issuance of $500,000,000 senior unsecured notes with a maturity date of January 2029. Net proceeds from these debt issuances were used to redeem the remaining $339,128,000 of our 3.75% senior unsecured notes due 2023, $334,624,000 of our 3.95% senior unsecured notes due 2023, and $860,000,000 remaining on our term loan due April 2022. In June 2021, we closed on a new $4,700,000,000 unsecured credit facility. The credit facility includes $4,000,000,000 of revolving credit capacity. As of June 30, 2021, we have total near-term available liquidity of approximately $4.5 billion. However, we are unable to accurately predict the full impact that the pandemic will have on our results from operations, financial condition, liquidity and cash flows due to numerous factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2020, including factors identified under the heading “Risk Factors".
Off-Balance Sheet Arrangements 
At June 30, 2021, we had investments in unconsolidated entities with our ownership generally ranging from 10% to 65%. We use financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure. At June 30, 2021, we had 12 outstanding letter of credit obligations. Please see Notes 8, 12 and 13 to our unaudited consolidated financial statements for additional information.
Contractual Obligations
The following table summarizes our payment requirements under contractual obligations as of June 30, 2021 (in thousands):
 Payments Due by Period
Contractual ObligationsTotal20212022-20232024-2025Thereafter
Senior unsecured notes and term credit facilities: (1)
U.S. Dollar senior unsecured notes$8,850,000 $— $— $2,600,000 $6,250,000 
Canadian Dollar senior unsecured notes (2)
241,830 — — — 241,830 
Pounds Sterling senior unsecured notes (2)
1,449,630 — — — 1,449,630 
U.S. Dollar term credit facility510,000 — 510,000 — — 
Canadian Dollar term credit facility (2)
201,525 — 201,525 — — 
Secured debt: (1,2)
Consolidated2,311,128 253,459 976,108 366,767 714,794 
Unconsolidated1,197,017 46,642 249,822 620,367 280,186 
Contractual interest obligations: (3)
Senior unsecured notes and term loans (2)
3,924,830 237,112 835,267 715,398 2,137,053 
Consolidated secured debt (2)
274,323 35,063 99,998 57,753 81,509 
Unconsolidated secured debt (2)
197,962 19,757 71,900 45,170 61,135 
Financing lease liabilities (4)
193,412 6,610 77,915 2,864 106,023 
Operating lease liabilities (4)
981,865 14,986 37,540 33,341 895,998 
Purchase obligations (5,6)
2,474,851 1,889,654 514,797 53,528 16,872 
Total contractual obligations$22,808,373 $2,503,283 $3,574,872 $4,495,188 $12,235,030 
(1) Amounts represent principal amounts due and do not reflect unamortized premiums/discounts or other fair value adjustments as reflected on the balance sheet.
(2) Based on foreign currency exchange rates in effect as of balance sheet date.
(3) Based on variable interest rates in effect as of balance sheet date.
(4) See Note 6 to our unaudited consolidated financial statements for additional information.
(5) See Note 13 to our unaudited consolidated financial statements for additional information.
(6) Purchase obligations at June 30, 2021, include $1,576,800,000 representing a definitive agreement to acquire 86 seniors housing properties from Holiday Retirement, expected to close during the third quarter.
Capital Structure
Please refer to “Credit Strength” above for a discussion of our leverage and coverage ratio trends. Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As of June 30, 2021, we were in compliance in all material respects with the covenants under our debt agreements. None of our debt agreements contain provisions for acceleration which could be triggered by our debt ratings. However, under our primary unsecured credit facility, the ratings on our senior unsecured notes are used to determine the fees and interest charged. We plan to manage the company to maintain compliance with our debt covenants and with a capital structure consistent with our current profile. Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse impact on our cost and availability of capital, which could have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.
35

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
On May 4, 2021, we filed with the Securities and Exchange Commission (the “SEC”) (1) an open-ended automatic or “universal” shelf registration statement on Form S-3 covering an indeterminate amount of future offerings of debt securities, common stock, preferred stock, depositary shares, warrants and units to replace our existing “universal” shelf registration statement filed with the SEC on May 17, 2018, and (2) a registration statement in connection with our enhanced dividend reinvestment plan (“DRIP”) under which we may issue up to 15,000,000 shares of common stock to replace our existing DRIP registration statement on Form S-3 filed with the SEC on May 17, 2018. As of July 23, 2021, 15,000,000 shares of common stock remained available for issuance under the DRIP registration statement. On May 4, 2021, we entered into (i) an equity distribution agreement (the “EDA”) with each of Robert W. Baird & Co. Incorporated, Barclays Capital Inc., BMO Capital Markets Corp., BNY Mellon Capital Markets, LLC, BofA Securities, Inc., BOK Financial Securities, Inc., Citigroup Global Markets Inc., Comerica Securities, Inc., Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., Fifth Third Securities, Inc., Goldman Sachs & Co. LLC, Jefferies LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc., Loop Capital Markets LLC, Mizuho Securities USA LLC, Morgan Stanley & Co. LLC, MUFG Securities Americas Inc., Raymond James & Associates, Inc., RBC Capital Markets, LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc., Stifel, Nicolaus & Company, Incorporated, TD Securities (USA) LLC, Truist Securities, Inc., UBS Securities LLC and Wells Fargo Securities, LLC relating to the offer and sale from time to time of up to $2,000,000,000 aggregate amount of our common stock and (ii) separate master forward sale confirmations with each of Bank of America, N.A., Bank of Montreal, The Bank of New York Mellon, Barclays Bank PLC, Citibank, N.A., Crédit Agricole Corporate and Investment Bank, Deutsche Bank AG, London Branch, Goldman Sachs & Co. LLC, Jefferies LLC, JPMorgan Chase Bank, National Association, KeyBanc Capital Markets Inc., Mizuho Markets Americas LLC, Morgan Stanley & Co. LLC, MUFG Securities EMEA plc, Raymond James & Associates, Inc., Royal Bank of Canada, The Bank of Nova Scotia, The Toronto-Dominion Bank, Truist Bank, UBS AG, London Branch and Wells Fargo Bank, National Association (together with the EDA, the “ATM Program”), replacing the ATM Program entered into on February 25, 2019. The ATM Program also allows us to enter into forward sale agreements. As of July 23, 2021, we had $1,905,854,000 of remaining capacity under the ATM Program, which excludes forward sales agreements outstanding for the sale of 17,295,369 shares or approximately $1,389,830,000 with maturity dates in 2022. We expect to physically settle the forward sales for cash proceeds. Depending upon market conditions, we anticipate issuing securities under our registration statements to invest in additional properties and to repay borrowings under our unsecured revolving credit facility and commercial paper program.
In connection with the filing of the new “universal” shelf registration statement, the Company also filed with the SEC two prospectus supplements that will continue offerings that were previously covered by prospectus supplements and the accompanying prospectus to the prior registration statement relating to: (i) the registration and possible issuance of up to 620,731 shares of the Company’s common stock (the “DownREIT Shares”), that may be issued from time to time if, and to the extent that, certain holders of Class A units (the “DownREIT Units”) of HCN G&L DownREIT, LLC, a Delaware limited liability company (the “DownREIT”), tender such DownREIT Units for redemption by the DownREIT, and HCN DownREIT Member, LLC, a majority-owned indirect subsidiary of the Company (including its permitted successors and assigns, the “Managing Member”), or a designated affiliate of the Managing Member, elects to assume the redemption obligations of the DownREIT and to satisfy all or a portion of the redemption consideration by issuing DownREIT Shares to the holders instead of or in addition to paying a cash amount; and (ii) the registration and possible issuance of up to 475,327 shares common stock (the “DownREIT II Shares”), that may be issued from time to time if, and to the extent that, certain holders of Class A units (the “DownREIT II Units,” and collectively with the DownREIT Units, the “Units”) of HCN G&L DownREIT II LLC, a Delaware limited liability company (the “DownREIT II”), tender such DownREIT II Units for redemption by the DownREIT II, and the Managing Member, or a designated affiliate of the Managing Member, elects to assume the redemption obligations of the DownREIT II and to satisfy all or a portion of the redemption consideration by issuing DownREIT II Shares to the holders instead of or in addition to paying a cash amount.
Results of Operations
Summary
Our primary sources of revenue include resident fees and services, rent and interest income. Our primary expenses include property operating expenses, depreciation and amortization, interest expense, general and administrative expenses and other expenses. We evaluate our business and make resource allocations on our three business segments: Seniors Housing Operating, Triple-net and Outpatient Medical. The primary performance measures for our properties are NOI and same store NOI ("SSNOI"), and other supplemental measures include FFO and EBITDA, which are further discussed below. Please see Non-GAAP Financial Measures for additional information and reconciliations. The following is a summary of our results of operations (dollars in thousands, except per share amounts):
36

WELLTOWER INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 Three Months EndedChangeSix Months EndedChange
 June 30,June 30,  June 30,June 30,
 20212020Amount%20212020Amount%
Net income$45,757 $159,216 $(113,459)(71)%$117,949 $488,596 $(370,647)(76)%
NICS26,257 179,246 (152,989)(85)%97,803 489,530 (391,727)(80)%
FFO248,840 335,597 (86,757)(26)%536,007 691,721 (155,714)(23)%
EBITDA406,762 553,177 (146,415)(26)%850,465 1,304,807 (454,342)(35)%
NOI498,335 527,711 (29,376)(6)%933,071 1,104,532 (171,461)(16)%
SSNOI391,695 410,232 (18,537)(5)%778,551 861,613 (83,062)(10)%
Per share data (fully diluted):    
NICS$0.06 $0.42 $(0.36)(86)%$0.23 $1.17 $(0.95)(81)%
FFO$0.59 $0.80 $(0.21)(26)%$1.28 $1.66 $(0.38)(23)%
Interest coverage ratio3.30 x4.29 x(0.99)x(23)%3.43 x4.88 x(1.45)x(30)%
Fixed charge coverage ratio2.93 x3.84 x(0.91)x(24)%3.04 x4.37 x(1.33)x(30)%
Seniors Housing Operating
The following is a summary of our SSNOI at Welltower's Share for the Seniors Housing Operating segment (dollars in thousands):
QTD PoolYTD Pool
 Three Months EndedChangeSix Months EndedChange
 June 30, 2021June 30, 2020$%June 30, 2021June 30, 2020$%
SSNOI (1)
$147,557 $170,005 $(22,448)(13.2)%$303,978 $388,474 $(84,496)(21.8)%
(1) For the QTD and YTD Pools, amounts relate to 528 and 519 same store properties, respectively. Please see Non-GAAP Financial Measures for additional information and reconciliations.
The following is a summary of our results of operations for the Seniors Housing Operating segment (dollars in thousands):
 Three Months EndedChangeSix Months EndedChange
 June 30,June 30,  June 30,June 30,
 20212020$%20212020$%
Revenues:    
Resident fees and services$740,891 $769,560 $(28,669)(4)%$1,464,355 $1,619,532 $(155,177)(10)%
Interest income856 88 768 873 %1,975 192 1,783 929 %
Other income802 4,002 (3,200)(80)%2,621 5,054 (2,433)(48)%
Total revenues742,549 773,650 (31,101)(4)%1,468,951 1,624,778 (155,827)(10)%
Property operating expenses582,361 595,513 (13,152)(2)%1,138,329 1,203,384 (65,055)(5)%
NOI (1)
160,188 178,137 (17,949)(10)%330,622 421,394 (90,772)(22)%
Other expenses:  
Depreciation and amortization131,035 139,163 (8,128)(6)%263,621 285,937 (22,316)(8)%
Interest expense10,553 14,029 (3,476)(25)%21,971 30,463 (8,492)(28)%
Loss (gain) on extinguishment of debt, net3,106 (492)3,598 731 %(1,537)(492)(1,045)(212)%
Provision for loan losses(181)— (181)n/a70 — 70 n/a
Impairment of assets17,713 75,151 (57,438)(76)%22,317 78,646 (56,329)(72)%
Other expenses3,709 5,251 (1,542)(29)%7,168 8,240 (1,072)(13)%
165,935 233,102 (67,167)(29)%313,610 402,794 (89,184)(22)%
Income (loss) from continuing operations before income taxes and other items(5,747)(54,965)49,218 90 %17,012 18,600 (1,588)(9)%
Income (loss) from unconsolidated entities(12,938)(6,787)(6,151)(91)%(7,704)(17,811)10,107 57 %
Gain (loss) on real estate dispositions, net(28)14,465 (14,493)(100)%5,167 14,316 (9,149)(64)%
Income from continuing operations(18,713)(47,287)28,574 60 %14,475 15,105 (630)(4)%
Net income (loss)(18,713)(47,287)28,574 60 %14,475 15,105 (630)(4)%
Less: Net income (loss) attributable to noncontrolling interests7,469 (26,156)33,625 129 %2,545 (28,088)30,633 109 %
Net income (loss) attributable to common stockholders$(26,182)$(21,131)$(5,051)(24)%$11,930 $43,193 $(31,263)(72)%
(1) See Non-GAAP Financial Measures below.

37

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Decreases in resident fees and services and property operating expenses are primarily a result of decreases in occupancy across the portfolio due to the COVID-19 pandemic and property dispositions. Spot occupancy has declined since the beginning of the pandemic, reaching a low of 72.3% on March 12, 2021 before beginning to recover resulting in occupancy of 74.6% as of June 30, 2021. Spot occupancy rates through June 30, 2021 are as follows:
December 2020January 2021February 2021March 2021April 2021May 2021June 2021
Spot occupancy (1)
74.7 %73.3 %72.5 %72.6 %73.2 %73.6 %74.6 %
Sequential occupancy change(2)
(1.4)%(0.8)%0.1 %0.5 %0.5 %0.9 %
(1) Spot occupancy represents approximate month end occupancy at our share for 592 properties in operation as of December 31, 2020, including unconsolidated properties but excluding acquisitions, dispositions and development conversions since this date.
(2) Sequential occupancy changes are based on actual spot occupancy and may not recalculate due to rounding.
On a month-to-date basis, as of July 23, 2021, Seniors Housing Operating occupancy has increased approximately 40 basis points. Occupancy continued to strengthen in the U.S. and U.K. with gains of approximately 60 basis points and 30 basis points, respectively while occupancy in Canada remained flat over the same period.
Property-level operating expenses associated with the COVID-19 pandemic relating to our Seniors Housing Operating portfolio, net of reimbursements including Provider Relief Funds and similar programs in the U.K. and Canada, resulted in a net benefit of approximately $1,535,000 and $22,792,000 during the three and six months ended June 30, 2021, respectively, as compared to a net expense of $40,127,000 and $47,421,000 during the three and six months ended June 30, 2020, respectively. These costs included higher labor expenses, coupled with expenditures related to procurement of personal protective equipment and other supplies, net of any reimbursements.
In 2020 applications were made for amounts under Phase 2 and Phase 3 of the Provider Relief Fund related to our Seniors Housing Operating portfolio. During the six months ended June 30, 2021, we received total Provider Relief Funds of approximately $40,976,000, which was recognized as a reduction to COVID-19 costs within property operating expenses.
The fluctuations in depreciation and amortization are due to acquisitions, dispositions and transitions. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly. 
During the six months ended June 30, 2021, we recorded impairment charges of $22,317,000 related to two held for use properties in which the carrying values exceeded the estimated fair value. During the six months ended June 30, 2020, we recorded impairment charges of $78,646,000 related to 12 held for sale properties and one held for use property. Transaction costs related to asset acquisitions are capitalized as a component of the purchase price. Changes in the gain on sales of properties are related to the volume and timing of property sales and the sales prices. The fluctuation in other expenses is primarily due to the timing of noncapitalizable transaction costs associated with acquisitions and operator transitions. 
During the six months ended June 30, 2021, we completed one Seniors Housing Operating construction project representing $58,844,000 or 490,367 per unit. The following is a summary of our Seniors Housing Operating construction projects, excluding expansions, pending as of June 30, 2021 (dollars in thousands):                     
38

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
LocationUnitsCommitmentBalanceEst. Completion
Hendon, UK102$76,623 $60,773 4Q21
Barnet, UK10071,51551,6214Q21
Beckenham, UK10065,02655,7124Q21
Georgetown, TX18836,2155,4012Q22
New Rochelle, NY7242,6698,8463Q22
Pflugerville, TX19639,5004,9443Q22
Sachse, TX18838,0545,8063Q22
Princeton, NJ8029,78021,6703Q22
Berea, OH12014,9344,2214Q22
Painesville, OH11914,4623,5634Q22
Beaver, PA11614,1843,5634Q22
 1,381 $442,962 226,120  
Toronto, ONProject in planning stage49,343 
Brookline, MAProject in planning stage26,845 
Washington, DCProject in planning stage26,295 
Columbus, OHProject in planning stage12,162 
Raleigh, NCProject in planning stage3,441 
Brookhaven, GAProject in planning stage7,808 
$352,014 
Interest expense represents secured debt interest expense which fluctuates based on the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations. The fluctuations in loss (gain) on extinguishment of debt is primarily attributable to the volume of extinguishments and terms of the related secured debt. The following is a summary of our Seniors Housing Operating segment property secured debt principal activity (dollars in thousands):
 Three Months EndedSix Months Ended
 June 30, 2021June 30, 2020June 30, 2021June 30, 2020
  Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
 AmountInterest RateAmountInterest RateAmountInterest RateAmountInterest Rate
Beginning balance$1,667,278 2.89 %$2,044,926 3.56 %$1,706,189 3.05 %$2,115,037 3.54 %
Debt issued— — %— — %— — %44,921 2.58 %
Debt extinguished(24,660)3.31 %(290,198)2.81 %(66,593)6.01 %(306,238)2.90 %
Principal payments(11,986)3.06 %(11,603)3.17 %(24,246)3.11 %(23,776)3.18 %
Foreign currency14,658 2.74 %36,500 3.01 %29,940 2.77 %(50,319)3.19 %
Ending balance$1,645,290 2.83 %$1,779,625 2.91 %$1,645,290 2.83 %$1,779,625 2.91 %
Monthly averages$1,670,234 2.86 %$2,009,523 3.17 %$1,679,223 2.94 %$2,044,995 3.33 %
The majority of our Seniors Housing Operating properties are formed through partnership interests. Income from unconsolidated entities recognized during the six months ended June 30, 2021 includes a gain on sale recognized from the sale of a home health business owned by one of our unconsolidated entities, offset by losses from unconsolidated entities largely attributable to depreciation and amortization of short-lived intangible assets related to certain investments in unconsolidated joint ventures. Net income attributable to noncontrolling interests represents our partners’ share of net income (loss) related to joint ventures. The decrease during the three and six month periods ended June 30, 2020 relates primarily to our partners' share of impairment charges recognized, offset by our partners' share of gains on real estate dispositions.
Triple-net
The following is a summary of our SSNOI at Welltower's Share for the Triple-net segment (dollars in thousands):
QTD PoolYTD Pool
 Three Months EndedChangeSix Months EndedChange
 June 30, 2021June 30, 2020$%June 30, 2021June 30, 2020$%
SSNOI (1)
$144,369 $142,383 $1,986 1.4 %$283,068 $287,755 $(4,687)(1.6)%
(1) For the QTD and YTD Pools, amounts relate to 549 and 549 same store properties, respectively. Please see Non-GAAP Financial Measures for additional information and reconciliations.
The following is a summary of our results of operations for the Triple-net segment (dollars in thousands):
39

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
 Three Months EndedChangeSix Months EndedChange
 June 30,June 30,  June 30,June 30,
 20212020$%20212020$%
Revenues:    
Rental income$204,725 $217,492 $(12,767)(6)%$357,188 $408,877 $(51,689)(13)%
Interest income32,861 15,520 17,341 112 %47,783 30,191 17,592 58 %
Other income1,355 607 748 123 %2,452 2,280 172 %
Total revenues238,941 233,619 5,322 %407,423 441,348 (33,925)(8)%
Property operating expenses12,627 13,563 (936)(7)%25,468 26,865 (1,397)(5)%
NOI (1)
226,314 220,056 6,258 %381,955 414,483 (32,528)(8)%
Other expenses:    
Depreciation and amortization54,406 58,138 (3,732)(6)%111,073 115,832 (4,759)(4)%
Interest expense1,704 2,746 (1,042)(38)%3,586 5,598 (2,012)(36)%
Loss (gain) on derivatives and financial instruments, net(359)1,434 (1,793)(125)%1,575 9,085 (7,510)(83)%
Provision for loan losses10,019 1,451 8,568 590 %10,872 8,523 2,349 28 %
Impairment of assets3,768 — 3,768 n/a22,732 24,332 (1,600)(7)%
Other expenses4,110 3,500 610 17 %9,093 4,013 5,080 127 %
73,648 67,269 6,379 %158,931 167,383 (8,452)(5)%
Income (loss) from continuing operations before income taxes and other items152,666 152,787 (121)— %223,024 247,100 (24,076)(10)%
Income (loss) from unconsolidated entities4,877 6,403 (1,526)(24)%9,784 12,199 (2,415)(20)%
Gain (loss) on real estate dispositions, net42,709 2,148 40,561 n/a44,751 51,785 (7,034)(14)%
Income from continuing operations200,252 161,338 38,914 24 %277,559 311,084 (33,525)(11)%
Net income200,252 161,338 38,914 24 %277,559 311,084 (33,525)(11)%
Less: Net income (loss) attributable to noncontrolling interests11,405 9,103 2,302 25 %14,805 27,678 (12,873)(47)%
Net income attributable to common stockholders$188,847 $152,235 $36,612 24 %$262,754 $283,406 $(20,652)(7)%
(1) See Non-GAAP Financial Measures below.
Continued decreases in rental income are primarily attributable to an increased number of leases on a cash basis of recognition due to substantially all contractual lease payments no longer deemed to be probable. Additionally, we recorded reserves for straight-line rent receivables balances of $49,241,000 and $34,110,000 during the six month periods ended June 30, 2021 and 2020, respectively. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index and/or changes in the gross operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If gross operating revenues at our facilities and/or the Consumer Price Index do not increase, a portion of our revenues may not continue to increase. For the three months ended June 30, 2021, we had 15 leases with rental rate increases ranging from 0.98% to 11.31% in our Triple-net portfolio. Our Triple-net operators are experiencing similar impacts on occupancy and operating costs due to the COVID-19 pandemic as described above with respect to our Seniors Housing Operating properties. However, long-term/post-acute facilities are generally experiencing a higher degree of occupancy declines which may impact the ability of our Triple-net operators to make contractual rent payments to us in the future. Many of our Triple-net operators received funds under the CARES Act Paycheck Protection Program. In addition, operators of long-term/post-acute facilities have generally received funds from Phase 1 of the Provider Relief Fund and operators of assisted living facilities have received funds from Phase 2 and Phase 3 of the Provider Relief Fund. During the six months ended June 30, 2021, we collected approximately 95% of rent due from operators under Triple-net lease agreements (primarily seniors housing and post-acute care facilities). No significant rent deferrals or rent concessions have been made. We evaluate leases individually and recognize rent on a cash basis if collectibility of substantially all contractual rent payments is not probable.
Depreciation and amortization fluctuates as a result of the acquisitions, dispositions and transitions of triple-net properties. To the extent we acquire or dispose of additional properties in the future, our provision for depreciation and amortization will change accordingly. 
During the six months ended June 30, 2021, we recognized a provision for loan losses under the current expected credit losses accounting standard, primarily related to the initial recognition of the £540 million of senior loan financing to affiliates of Safanad as part of the recapitalization of its investment in HC-One Group during the second quarter. The increase in interest income for the three and six month periods ended June 30, 2021 is due to the increased loan receivable balance driven primarily by the £540 million of senior loan financing to affiliates of Safanad. Additionally, during March 2020, we recognized a provision for loan losses of $6,898,000 to fully reserve for a non-real estate loans receivable that was no longer deemed collectible. During the six months ended June 30, 2021, we recorded impairment charges of $22,732,000 related to three held for sale properties and two held for use properties. During the six months ended June 30, 2020, we recorded impairment charges of $24,332,000 related to one held for use property. Changes in the gain on sales of properties are related to the volume and timing of property sales and the sales prices. Transaction costs related to asset acquisitions are capitalized as a component
40

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
of purchase price. The fluctuation in other expenses is primarily due to noncapitalizable transaction costs from acquisitions and segment transitions.
During the six months ended June 30, 2021, we completed one Triple-net construction project representing $22,990,000 or $280,366 per unit. The following is a summary of Triple-net construction projects, excluding expansions, pending as of June 30, 2021 (dollars in thousands): 
LocationUnits/BedsCommitmentBalanceEst. Completion
Redhill, UK76$21,952 $16,710 3Q21
Leicester, UK6015,4637,4571Q22
London, UK8244,54622,9742Q22
Wombourne, UK6616,5677,8382Q22
Rugby, UK7621,1415,5454Q22
Raleigh, NC191154,25626,3002Q23
 551 $273,925 $86,824  
Loss (gain) on derivatives and financial instruments, net is primarily attributable to the mark-to-market adjustment recorded on our Genesis Healthcare available for sale investment. Interest expense represents secured debt interest expense and related fees. The change in secured debt interest expense is due to the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations. The following is a summary of our Triple-net secured debt principal activity for the periods presented (dollars in thousands):
 Three Months EndedSix Months Ended
 June 30, 2021June 30, 2020June 30, 2021June 30, 2020
  Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
 AmountInterest RateAmountInterest RateAmountInterest RateAmountInterest Rate
Beginning balance$123,139 4.91 %$289,739 3.55 %$123,652 4.91 %$306,038 3.60 %
Principal payments(1,246)5.16 %(1,042)5.16 %(2,467)5.16 %(2,102)5.16 %
Foreign currency673 5.43 %624 4.12 %1,381 5.43 %(14,615)2.90 %
Ending balance$122,566 4.91 %$289,321 3.27 %$122,566 4.91 %$289,321 3.27 %
Monthly averages$123,570 4.92 %$286,599 3.36 %$123,348 4.92 %$293,300 3.47 %
A portion of our Triple-net properties were formed through partnerships. Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. Net income attributable to noncontrolling interests represents our partners’ share of net income relating to those partnerships where we are the controlling partner. The decrease during the six months ended June 30, 2021, relates primarily to our partner's share of a gain on sale of certain properties in the prior year.
Outpatient Medical
The following is a summary of our SSNOI at Welltower Share for the Outpatient Medical segment (dollars in thousands):
QTD PoolYTD Pool
 Three Months EndedChangeSix Months EndedChange
 June 30, 2021June 30, 2020$%June 30, 2021June 30, 2020$%
SSNOI (1)
$99,769 $97,844 $1,925 2.0 %$191,505 $185,384 $6,121 3.3 %
(1) For the QTD and YTD Pools, amounts relate to 350 and 333 same store properties, respectively. Please see Non-GAAP Financial Measures for additional information and reconciliations.
The following is a summary of our results of operations for the Outpatient Medical segment for the periods presented (dollars in thousands):
41

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
 Three Months EndedChangeSix Months EndedChange
 June 30,June 30,  June 30,June 30,
 20212020$%20212020$%
Revenues:    
Rental income$149,998 $178,813 $(28,815)(16)%$300,378 $377,388 $(77,010)(20)%
Interest income4,731 461 4,270 926 %8,269 927 7,342 792 %
Other income4,343 1,557 2,786 179 %6,648 1,845 4,803 260 %
Total revenues159,072 180,831 (21,759)(12)%315,295 380,160 (64,865)(17)%
Property operating expenses45,495 51,688 (6,193)(12)%92,358 112,296 (19,938)(18)%
NOI (1)
113,577 129,143 (15,566)(12)%222,937 267,864 (44,927)(17)%
Other expenses:    
Depreciation and amortization55,444 68,070 (12,626)(19)%110,617 138,403 (27,786)(20)%
Interest expense3,907 4,326 (419)(10)%7,922 9,134 (1,212)(13)%
Loss (gain) on extinguishment of debt, net— 741 (741)(100)%— 741 (741)(100)%
Provision for loan losses(3,641)(29)(3,612)n/a(3,362)(29)(3,333)n/a
Impairment of assets2,211 — 2,211 n/a2,211 — 2,211 n/a
Other expenses1,098 6,456 (5,358)(83)%1,810 7,463 (5,653)(76)%
59,019 79,564 (20,545)(26)%119,198 155,712 (36,514)(23)%
Income (loss) from continuing operations before income taxes and other items54,558 49,579 4,979 10 %103,739 112,152 (8,413)(8)%
Income (loss) from unconsolidated entities85 1,716 (1,631)(95)%2,993 3,252 (259)(8)%
Gain (loss) on real estate dispositions, net1,987 139,250 (137,263)(99)%53,830 352,586 (298,756)(85)%
Income from continuing operations56,630 190,545 (133,915)(70)%160,562 467,990 (307,428)(66)%
Net income (loss)56,630 190,545 (133,915)(70)%160,562 467,990 (307,428)(66)%
Less: Net income (loss) attributable to noncontrolling interests629 (2,977)3,606 121 %2,799 (524)3,323 634 %
Net income (loss) attributable to common stockholders$56,001 $193,522 $(137,521)(71)%$157,763 $468,514 $(310,751)(66)%
(1) See Non-GAAP Financial Measures.
Rental income has decreased due primarily to significant dispositions that have closed during 2020. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If the Consumer Price Index does not increase, a portion of our revenues may not continue to increase. Our leases could renew above or below current rental rates, resulting in an increase or decrease in rental income. For the three months ended June 30, 2021, our consolidated outpatient medical portfolio signed 117,954 square feet of new leases and 286,868 square feet of renewals. The weighted-average term of these leases was seven years, with a rate of $42.42 per square foot and tenant improvement and lease commission costs of $23.02 per square foot. Substantially all of these leases contain an annual fixed or contingent escalation rent structure ranging from 1.0% to 4.0%. 
We have collected virtually all rent due through the six months ended June 30, 2021, with uncollected amounts primarily attributable to local jurisdictions with COVID-19 related ordinances providing temporary rent relief to tenants. We evaluate leases individually and recognize rent on a cash basis if collectibility of substantially all contractual rent payments is not probable.
The increase in interest income for the three and six months ended June 30, 2021 is due primarily to a $178,207,000 first mortgage loan initiated in August 2020 which was subsequently repaid in full in June of 2021.
The fluctuation in property operating expenses and depreciation and amortization are primarily attributable to the significant dispositions that occurred in 2020. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly. During the three months ended June 30, 2021, we recognized an impairment charge of $2,211,000 related to one held for sale property. Changes in gains/losses on sales of properties are related to volume of property sales and the sales prices. Transaction costs related to asset acquisitions are capitalized as a component of purchase price. The fluctuation in other expenses is primarily due to noncapitalizable transaction costs recognized during the three months ended June 30, 2020 from acquisitions no longer expected to be consummated.
During the six months ended June 30, 2021, we completed one Outpatient Medical construction project representing $101,867,000 or $722 per square foot. The following is a summary of the Outpatient Medical construction projects, excluding expansions, pending as of June 30, 2021 (dollars in thousands):
42

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
LocationSquare FeetCommitmentBalanceEst. Completion
Kalamazoo, MI40,607$14,267 $9,709 3Q21
College Station, TX25,2009,0252,1891Q22
Norman, OK47,08221,7077453Q22
Tyler, TX85,21435,3693,7224Q22
198,103 $80,368 $16,365 
Total interest expense represents secured debt interest expense. The change in secured debt interest expense is primarily due to the net effect and timing of assumptions, extinguishments and principal amortizations. The following is a summary of our outpatient medical secured debt principal activity (dollars in thousands):
 Three Months EndedSix Months Ended
 June 30, 2021June 30, 2020June 30, 2021June 30, 2020
  Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
 AmountInterest RateAmountInterest RateAmountInterest RateAmountInterest Rate
Beginning balance$545,755 3.54 %$569,974 3.94 %$548,229 3.55 %$572,267 3.97 %
Debt extinguished— — %(8,393)4.40 %— — %(8,393)4.40 %
Principal payments(2,483)4.47 %(2,538)4.61 %(4,957)4.47 %(4,831)4.63 %
Ending balance$543,272 3.52 %$559,043 3.59 %$543,272 3.52 %$559,043 3.59 %
Monthly averages$544,109 3.53 %$566,608 3.75 %$545,361 3.54 %$568,751 3.85 %
A portion of our Outpatient Medical properties were formed through partnerships. Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. Net income attributable to noncontrolling interests represents our partners’ share of net income or loss relating to those partnerships where we are the controlling partner.
Non-Segment/Corporate
The following is a summary of our results of operations for the Non-Segment/Corporate activities for the periods presented (dollars in thousands):
 Three Months EndedChangeSix Months EndedChange
 June 30,June 30,  June 30,June 30,
 20212020$%20212020$%
Revenues:    
Other income$430 $375 $55 15 %$1,385 $791 $594 75 %
Total revenue430 375 55 15 %1,385 791 594 75 %
Property operating expenses2,174 — 2,174 n/a3,828 — 3,828 n/a
NOI (1)
(1,744)375 (2,119)(565)%(2,443)791 (3,234)(409)%
Expenses:   
Interest expense106,177 105,256 921 %212,004 223,169 (11,165)(5)%
General and administrative expenses31,436 34,062 (2,626)(8)%61,362 69,543 (8,181)(12)%
Loss (gain) on extinguishment of debt, net52,506 — 52,506 n/a52,506 — 52,506 n/a
Other expenses2,770 4,204 (1,434)(34)%4,610 5,987 (1,377)(23)%
192,889 143,522 49,367 34 %330,482 298,699 31,783 11 %
Loss from continuing operations before income taxes and other items(194,633)(143,147)(51,486)(36)%(332,925)(297,908)(35,017)(12)%
Income tax (expense) benefit2,221 (2,233)4,454 199 %(1,722)(7,675)5,953 78 %
Loss from continuing operations(192,412)(145,380)(47,032)(32)%(334,647)(305,583)(29,064)(10)%
Net loss attributable to common stockholders$(192,412)$(145,380)$(47,032)(32)%$(334,647)$(305,583)$(29,064)(10)%
(1) See Non-GAAP Financial Measures.
Property operating expenses represent insurance costs related to our captive insurance company formed as of July 1, 2020 which acts as a direct insurer of property level insurance coverage for our portfolio.
The following is a summary of our Non-Segment/Corporate interest expense for the periods presented (dollars in thousands):
43

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
 Three Months EndedChangeSix Months EndedChange
 June 30,June 30,  June 30,June 30,  
 20212020$%20212020$%
Senior unsecured notes$99,923 $98,141 $1,782 %$200,136 $201,675 $(1,539)(1)%
Unsecured credit facility and commercial paper program1,940 2,816 (876)(31)%3,120 12,984 (9,864)(76)%
Loan expense4,314 4,299 15 — %8,748 8,510 238 %
Totals$106,177 $105,256 $921 %$212,004 $223,169 $(11,165)(5)%
The change in interest expense on senior unsecured notes is due to the net effect of issuances and extinguishments, as well as the movement in foreign exchange rates and related hedge activity. Please refer to Note 11 for additional information. The change in interest expense on our unsecured revolving credit facility and commercial paper program is due primarily to the net effect and timing of draws, paydowns and variable interest rate changes. Please refer to Note 10 for additional information regarding our unsecured revolving credit facility and commercial paper program. The loss on extinguishment recognized during the six months ended June 30, 2021 is due primarily to the early extinguishment of $339,128,000 of our 3.75% senior unsecured notes due March 2023 and $334,624,000 of our 3.95% senior unsecured notes due September 2023.
General and administrative expenses as a percentage of consolidated revenues for the three months ended June 30, 2021 and 2020 were 2.76% and 2.87%, respectively. The provision for income taxes primarily relates to state taxes, foreign taxes and taxes based on income generated by entities that are structured as TRSs. The fluctuation in the provision for income taxes is primarily related to a revaluation of deferred taxes due to a change in the U.K. tax rate and an adjustment to a deferred tax liability due to the recognition of an impairment charge.
Other
Non-GAAP Financial Measures
We believe that net income and net income attributable to common stockholders (“NICS”), as defined by U.S. GAAP, are the most appropriate earnings measurements. However, we consider FFO, NOI, SSNOI, EBITDA and Adjusted EBITDA to be useful supplemental measures of our operating performance. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation. However, since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient. In response, the National Association of Real Estate Investment Trusts (“NAREIT”) created funds from operations attributable to common stockholders (“FFO”) as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO, as defined by NAREIT, means NICS, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairment of depreciable assets, plus depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests.
Consolidated net operating income (“NOI”) is used to evaluate the operating performance of our properties. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. Property operating expenses represent costs associated with managing, maintaining and servicing tenants for our properties. These expenses include, but are not limited to, property-related payroll and benefits, property management fees paid to operators, marketing, housekeeping, food service, maintenance, utilities, property taxes and insurance. General and administrative expenses represent costs unrelated to property operations. These expenses include, but are not limited to, payroll and benefits, professional services, office expenses and depreciation of corporate fixed assets. Same store NOI (“SSNOI”) is used to evaluate the operating performance of our properties using a consistent population which controls for changes in the composition of our portfolio. We believe the drivers of property level NOI for both consolidated properties and unconsolidated properties are generally the same and therefore, we evaluate SSNOI based on our ownership interest in each property ("Welltower Share"). To arrive at Welltower's Share, NOI is adjusted by adding our minority ownership share related to unconsolidated properties and by subtracting the minority partners' noncontrolling ownership interests for consolidated properties. We do not control investments in unconsolidated properties and while we consider disclosures at Welltower Share to be useful, they may not accurately depict the legal and economic implications of our joint venture arrangements and should be used with caution. As used herein, same store is generally defined as those revenue-generating properties in the portfolio for the relevant year-over-year reporting periods. Acquisitions and development conversions are included in SSNOI five full quarters or six full quarter after acquisition or being placed into service for the QTD Pool and YTD Pool, respectively. Land parcels, loans and sub-leases, as well as any properties sold or classified as held for sale during the respective periods are excluded from SSNOI. Redeveloped properties (including major refurbishments of a Seniors Housing Operating property where 20% or more of units are simultaneously taken out of commission for 30 days or more or Outpatient Medical properties undergoing a change in intended use) are excluded from SSNOI until five full quarters or six full quarters post completion of the redevelopment for the QTD Pool and YTD Pool, respectively. Properties undergoing operator transitions and/or segment transitions are also excluded from SSNOI until five full quarters or six full quarters post completion of the transition for the QTD Pool and YTD Pool, respectively. In addition,
44

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
properties significantly impacted by force majeure, acts of God, or other extraordinary adverse events are excluded from SSNOI until five full quarters or six full quarters after the properties are placed back into service for the QTD Pool and YTD Pool, respectively. SSNOI excludes non-cash NOI and includes adjustments to present consistent ownership percentages and to translate Canadian properties and U.K. properties using a consistent exchange rate. We believe NOI and SSNOI provide investors relevant and useful information because they measure the operating performance of our properties at the property level on an unleveraged basis. We use NOI and SSNOI to make decisions about resource allocations and to assess the property level performance of our properties.
EBITDA is defined as earnings (net income) before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding unconsolidated entities and including adjustments for stock-based compensation expense, provision for loan losses, gains/losses on extinguishment of debt, gains/loss/impairments on properties, gains/losses on derivatives and financial instruments, other expense, additional other income and other impairment charges. We believe that EBITDA and Adjusted EBITDA, along with net income, are important supplemental measures because they provide additional information to assess and evaluate the performance of our operations. We primarily use these measures to determine our interest coverage ratio, which represents EBITDA and Adjusted EBITDA divided by total interest, and our fixed charge coverage ratio, which represents EBITDA and Adjusted EBITDA divided by fixed charges. Fixed charges include total interest and secured debt principal amortization. Covenants in our unsecured senior notes and primary credit facility contain financial ratios based on a definition of EBITDA and Adjusted EBITDA that is specific to those agreements. Our leverage ratios are defined as the proportion of net debt to total capitalization and include book capitalization, undepreciated book capitalization and market capitalization. Book capitalization represents the sum of net debt (defined as total long-term debt, excluding operating lease liabilities, less cash and cash equivalents and any IRC Section 1031 deposits), total equity and redeemable noncontrolling interests. Undepreciated book capitalization represents book capitalization adjusted for accumulated depreciation and amortization. Market capitalization represents book capitalization adjusted for the fair market value of our common stock.
Our supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and rating agencies in the valuation, comparison, rating and investment recommendations of companies. Management uses these financial measures to facilitate internal and external comparisons to our historical operating results and in making operating decisions. Additionally, these measures are utilized by the Board of Directors to evaluate management. None of our supplemental measures represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, the supplemental measures, as defined by us, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies. 
The table below reflects the reconciliation of FFO to NICS, the most directly comparable U.S. GAAP measure, for the periods presented. Noncontrolling interest and unconsolidated entity amounts represent adjustments to reflect our share of depreciation and amortization, gains/loss on real estate dispositions and impairment of assets. Amounts are in thousands except for per share data.
 Three Months Ended
 June 30,March 31,December 31,September 30,June 30,March 31,
FFO Reconciliation:202120212020202020202020
Net income attributable to common stockholders$26,257 $71,546 $163,729 $325,585 $179,246 $310,284 
Depreciation and amortization240,885 244,426 242,733 255,532 265,371 274,801 
Impairment of assets23,692 23,568 9,317 23,313 75,151 27,827 
Loss (gain) on real estate dispositions, net(44,668)(59,080)(185,464)(484,304)(155,863)(262,824)
Noncontrolling interests(16,591)(12,516)(20,579)48,559 (42,539)(9,409)
Unconsolidated entities19,265 19,223 16,091 16,329 14,231 15,445 
FFO$248,840 $287,167 $225,827 $185,014 $335,597 $356,124 
Average diluted shares outstanding419,305 419,079 418,753 418,987 419,121 412,420 
Per diluted share data:    
Net income attributable to common stockholders(1)
$0.06 $0.17 $0.39 $0.77 $0.42 $0.75 
FFO$0.59 $0.69 $0.54 $0.44 $0.80 $0.86 
(1) Includes adjustment to the numerator for income (loss) attributable to OP unitholders.
45

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
 Six Months Ended
 June 30,June 30,
FFO Reconciliations:20212020
Net income attributable to common stockholders$97,803 $489,530 
Depreciation and amortization485,311 540,172 
Impairment of assets47,260 102,978 
Loss (gain) on real estate dispositions, net(103,748)(418,687)
Noncontrolling interests(29,107)(51,948)
Unconsolidated entities38,488 29,676 
FFO$536,007 $691,721 
Average diluted common shares outstanding:419,205 415,775
Per diluted share data:  
Net income attributable to common stockholders(1)
$0.23 $1.17 
FFO$1.28 $1.66 
(1) Includes adjustment to the numerator for income (loss) attributable to OP unitholders.

 Three Months Ended
 June 30,March 31,December 31,September 30,June 30,March 31,
NOI Reconciliations:202120212020202020202020
Net income (loss)$45,757 $72,192 $155,278 $394,978 $159,216 $329,380 
Loss (gain) on real estate dispositions, net(44,668)(59,080)(185,464)(484,304)(155,863)(262,824)
Loss (income) from unconsolidated entities7,976 (13,049)(258)5,981 (1,332)3,692 
Income tax expense (benefit)(2,221)3,943 290 2,003 2,233 5,442 
Other expenses11,687 10,994 33,088 11,544 19,411 6,292 
Impairment of assets23,692 23,568 9,317 23,313 75,151 27,827 
Provision for loan losses6,197 1,383 83,085 2,857 1,422 7,072 
Loss (gain) on extinguishment of debt, net55,612 (4,643)13,796 33,004 249 — 
Loss (gain) on derivatives and financial instruments, net(359)1,934 569 1,395 1,434 7,651 
General and administrative expenses31,436 29,926 27,848 31,003 34,062 35,481 
Depreciation and amortization240,885 244,426 242,733 255,532 265,371 274,801 
Interest expense122,341 123,142 121,173 124,851 126,357 142,007 
Consolidated net operating income (NOI)$498,335 $434,736 $501,455 $402,157 $527,711 $576,821 
NOI by segment:    
Seniors Housing Operating$160,188 $170,434 $159,797 $174,361 $178,137 $243,257 
Triple-net226,314 155,641 225,277 108,361 220,056 194,427 
Outpatient Medical113,577 109,360 117,231 119,976 129,143 138,721 
Non-segment/corporate(1,744)(699)(850)(541)375 416 
Total NOI$498,335 $434,736 $501,455 $402,157 $527,711 $576,821 

46

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
 Six Months Ended
June 30, 2021June 30, 2020
NOI Reconciliations:
Net income (loss)$117,949 $488,596 
Loss (gain) on real estate dispositions, net(103,748)(418,687)
Loss (income) from unconsolidated entities(5,073)2,360 
Income tax expense (benefit)1,722 7,675 
Other expenses22,681 25,703 
Impairment of assets47,260 102,978 
Provision for loan losses7,580 8,494 
Loss (gain) on extinguishment of debt, net50,969 249 
Loss (gain) on derivatives and financial instruments, net1,575 9,085 
General and administrative expenses61,362 69,543 
Depreciation and amortization485,311 540,172 
Interest expense245,483 268,364 
Consolidated net operating income (NOI)$933,071 $1,104,532 
NOI by segment:
Seniors Housing Operating$330,622 $421,394 
Triple-net381,955 414,483 
Outpatient Medical222,937 267,864 
Non-segment/corporate(2,443)791 
Total NOI$933,071 $1,104,532 

QTD PoolYTD Pool
SSNOI Property Reconciliations:Seniors Housing OperatingTriple-netOutpatient MedicalTotalSeniors Housing OperatingTriple-netOutpatient MedicalTotal
Consolidated properties581 643 292 1,516 581 643 292 1,516 
Unconsolidated properties91 39 79 209 91 39 79 209 
Total properties672 682 371 1,725 672 682 371 1,725 
Recent acquisitions/development conversions(1)
(56)(29)(7)(92)(64)(29)(24)(117)
Under development(30)(5)(4)(39)(30)(5)(4)(39)
Under redevelopment(2)
(10)(1)(2)(13)(11)(1)(2)(14)
Current held for sale(8)(54)(2)(64)(8)(54)(2)(64)
Land parcels, loans and subleases(11)(19)(6)(36)(11)(19)(6)(36)
Transitions(3)
(27)(23)— (50)(27)(23)— (50)
Other(4)
(2)(2)— (4)(2)(2)— (4)
Same store properties528 549 350 1,427 519 549 333 1,401 
(1) Acquisitions and development conversions will enter the QTD Pool and YTD Pool after five full quarters and six full quarters after acquisition or certificate of occupancy, respectively.
(2) Redevelopment properties will enter the QTD Pool and YTD Pool after five full quarters and six full quarters of operations post redevelopment completion, respectively.
(3) Transitioned properties will enter the QTD Pool and YTD Pool after five full quarters and six full quarters of operations with the new operator in place or under the new structure, respectively.
(4) Represents properties that are either closed or being closed.
47

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
QTD PoolYTD Pool
Three Months EndedSix Months Ended
SSNOI Reconciliations:June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Seniors Housing Operating: 
Consolidated NOI$160,188 $178,137 $330,622 $421,394 
NOI attributable to unconsolidated investments11,305 13,277 23,209 28,231 
NOI attributable to noncontrolling interests(27,742)(11,870)(35,787)(30,623)
NOI attributable to non-same store properties(7,405)(12,476)(24,548)(36,352)
Non-cash NOI attributable to same store properties12,338 (957)11,516 (1,835)
Currency and ownership adjustments (1)
(1,127)3,894 (1,034)7,659 
SSNOI at Welltower Share147,557 170,005 303,978 388,474 
Triple-net:
Consolidated NOI226,314 220,056 381,955 414,483 
NOI attributable to unconsolidated investments4,887 5,133 9,775 10,266 
NOI attributable to noncontrolling interests(14,051)(14,613)(22,040)(29,395)
NOI attributable to non-same store properties(64,857)(58,367)(115,541)(87,080)
Non-cash NOI attributable to same store properties(7,611)(11,829)29,443 (23,568)
Currency and ownership adjustments (1)
(313)2,003 (524)3,049 
SSNOI at Welltower Share144,369 142,383 283,068 287,755 
Outpatient Medical:
Consolidated NOI113,577 129,143 222,937 267,864 
NOI attributable to unconsolidated investments4,988 2,461 9,712 3,524 
NOI attributable to noncontrolling interests(4,235)(3,764)(7,977)(8,366)
NOI attributable to non-same store properties(11,961)(15,841)(27,793)(43,412)
Non-cash NOI attributable to same store properties(2,533)(3,486)(4,156)(6,336)
Currency and ownership adjustments (1)
(67)(10,669)(1,218)(27,890)
SSNOI at Welltower Share99,769 97,844 191,505 185,384 
SSNOI at Welltower Share:
Seniors Housing Operating147,557 170,005 303,978 388,474 
Triple-net144,369 142,383 283,068 287,755 
Outpatient Medical99,769 97,844 191,505 185,384 
Total$391,695 $410,232 $778,551 $861,613 
(1) Includes adjustments to reflect consistent property ownership percentages, to translate Canadian properties at a USD/CAD rate of 1.2658 and to translate U.K. properties at a GBP/USD rate of 1.38.
The tables below reflects the reconciliation of EBITDA to net income, the most directly comparable U.S. GAAP measure, for the periods presented. Dollars are in thousands.
48

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
 Three Months Ended
 June 30,March 31,December 31,September 30,June 30,March 31,
EBITDA Reconciliations:202120212020202020202020
Net income (loss)$45,757 $72,192 $155,278 $394,978 $159,216 $329,380 
Interest expense122,341 123,142 121,173 124,851 126,357 142,007 
Income tax expense (benefit)(2,221)3,943 290 2,003 2,233 5,442 
Depreciation and amortization240,885 244,426 242,733 255,532 265,371 274,801 
EBITDA$406,762 $443,703 $519,474 $777,364 $553,177 $751,630