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HEALTHPEAK PROPERTIES, INC. - Quarter Report: 2022 March (Form 10-Q)

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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 March 31, 2022
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 001-08895
Healthpeak Properties, Inc.
(Exact name of registrant as specified in its charter)
Maryland 33-0091377
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
5050 South Syracuse Street, Suite 800
Denver, CO 80237
(Address of principal executive offices) (Zip Code)
(720) 428-5050
(Registrant’s telephone number, including area code)
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 valuePEAKNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
  Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No 
As of May 2, 2022, there were 539,557,153 shares of the registrant’s $1.00 par value common stock outstanding.


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HEALTHPEAK PROPERTIES, INC.
INDEX

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PART I. FINANCIAL INFORMATION
Item 1.  Financial Statements (Unaudited)
Healthpeak Properties, Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
 March 31,
2022
December 31,
2021
ASSETS  
Real estate:  
Buildings and improvements$12,368,124 $12,025,271 
Development costs and construction in progress739,451 877,423 
Land2,706,909 2,603,964 
Accumulated depreciation and amortization(2,975,337)(2,839,229)
Net real estate12,839,147 12,667,429 
Net investment in direct financing leases— 44,706 
Loans receivable, net of reserves of $1,944 and $1,813
409,753 415,811 
Investments in and advances to unconsolidated joint ventures403,159 403,634 
Accounts receivable, net of allowance of $2,068 and $1,870
54,106 48,691 
Cash and cash equivalents89,066 158,287 
Restricted cash52,103 53,454 
Intangible assets, net497,104 519,760 
Assets held for sale and discontinued operations, net33,812 37,190 
Right-of-use asset, net232,457 233,942 
Other assets, net676,543 674,615 
Total assets$15,287,250 $15,257,519 
LIABILITIES AND EQUITY  
Bank line of credit and commercial paper$1,330,813 $1,165,975 
Senior unsecured notes4,654,056 4,651,933 
Mortgage debt350,713 352,081 
Intangible liabilities, net175,355 177,232 
Liabilities related to assets held for sale and discontinued operations, net14,318 15,056 
Lease liability203,988 204,547 
Accounts payable, accrued liabilities, and other liabilities695,373 755,384 
Deferred revenue817,022 789,207 
Total liabilities8,241,638 8,111,415 
Commitments and contingencies (Note 10)
Redeemable noncontrolling interests97,890 87,344 
Common stock, $1.00 par value: 750,000,000 shares authorized; 539,523,537 and 539,096,879 shares issued and outstanding
539,524 539,097 
Additional paid-in capital10,084,687 10,100,294 
Cumulative dividends in excess of earnings(4,212,941)(4,120,774)
Accumulated other comprehensive income (loss)(3,047)(3,147)
Total stockholders’ equity6,408,223 6,515,470 
Joint venture partners338,443 342,234 
Non-managing member unitholders201,056 201,056 
Total noncontrolling interests539,499 543,290 
Total equity6,947,722 7,058,760 
Total liabilities and equity$15,287,250 $15,257,519 
See accompanying Notes to the Unaudited Consolidated Financial Statements.

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Healthpeak Properties, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Three Months Ended
March 31,
 20222021
Revenues:  
Rental and related revenues$370,150 $327,972 
Resident fees and services121,560 116,128 
Income from direct financing leases1,168 2,163 
Interest income5,494 9,013 
Total revenues498,372 455,276 
Costs and expenses:  
Interest expense37,586 46,843 
Depreciation and amortization177,733 157,538 
Operating207,247 181,761 
General and administrative23,831 24,902 
Transaction costs296 798 
Impairments and loan loss reserves (recoveries), net132 3,242 
Total costs and expenses446,825 415,084 
Other income (expense):  
Gain (loss) on sales of real estate, net3,856 — 
Gain (loss) on debt extinguishments— (164,292)
Other income (expense), net18,316 2,200 
Total other income (expense), net22,172 (162,092)
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures73,719 (121,900)
Income tax benefit (expense)(777)(8)
Equity income (loss) from unconsolidated joint ventures2,084 1,323 
Income (loss) from continuing operations75,026 (120,585)
Income (loss) from discontinued operations317 270,008 
Net income (loss)75,343 149,423 
Noncontrolling interests’ share in continuing operations(3,730)(3,306)
Noncontrolling interests’ share in discontinued operations— (329)
Net income (loss) attributable to Healthpeak Properties, Inc.71,613 145,788 
Participating securities’ share in earnings(1,976)(2,451)
Net income (loss) applicable to common shares$69,637 $143,337 
Basic earnings (loss) per common share:
Continuing operations$0.13 $(0.23)
Discontinued operations0.00 0.50 
Net income (loss) applicable to common shares$0.13 $0.27 
Diluted earnings (loss) per common share:
Continuing operations$0.13 $(0.23)
Discontinued operations0.00 0.50 
Net income (loss) applicable to common shares$0.13 $0.27 
Weighted average shares outstanding:
Basic539,352 538,679 
Diluted539,586 538,679 
See accompanying Notes to the Unaudited Consolidated Financial Statements.

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Healthpeak Properties, Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
 Three Months Ended
March 31,
 20222021
Net income (loss)$75,343 $149,423 
Other comprehensive income (loss):
Net unrealized gains (losses) on derivatives— 332 
Change in Supplemental Executive Retirement Plan obligation and other100 107 
Reclassification adjustment realized in net income (loss)— (251)
Total other comprehensive income (loss)100 188 
Total comprehensive income (loss)75,443 149,611 
Total comprehensive (income) loss attributable to noncontrolling interests’ share in continuing operations(3,730)(3,306)
Total comprehensive (income) loss attributable to noncontrolling interests’ share in discontinued operations— (329)
Total comprehensive income (loss) attributable to Healthpeak Properties, Inc.$71,713 $145,976 
See accompanying Notes to the Unaudited Consolidated Financial Statements.

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Healthpeak Properties, Inc.
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS
(In thousands, except per share data)
(Unaudited)

For the three months ended March 31, 2022:
 Common StockAdditional Paid-In CapitalCumulative Dividends In Excess Of EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders’ EquityTotal Noncontrolling InterestsTotal
Equity
Redeemable Noncontrolling Interests
 SharesAmount
January 1, 2022539,097 $539,097 $10,100,294 $(4,120,774)$(3,147)$6,515,470 $543,290 $7,058,760 $87,344 
Net income (loss) — — — 71,613 — 71,613 3,718 75,331 12 
Other comprehensive income (loss) — — — — 100 100 — 100 — 
Issuance of common stock, net 766 766 (437)— — 329 — 329 — 
Repurchase of common stock (339)(339)(11,013)— — (11,352)— (11,352)— 
Amortization of stock-based compensation — — 6,144 — — 6,144 — 6,144 — 
Common dividends ($0.30 per share)
— — — (163,780)— (163,780)— (163,780)— 
Distributions to noncontrolling interests— — — — — — (7,509)(7,509)— 
Contributions from noncontrolling interests— — — — — — — — 233 
Adjustments to redemption value of redeemable noncontrolling interests— — (10,301)— — (10,301)— (10,301)10,301 
March 31, 2022539,524 $539,524 $10,084,687 $(4,212,941)$(3,047)$6,408,223 $539,499 $6,947,722 $97,890 

For the three months ended March 31, 2021:
 Common StockAdditional Paid-In CapitalCumulative Dividends In Excess Of EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders’ EquityTotal Noncontrolling InterestsTotal
Equity
Redeemable Noncontrolling Interests
 SharesAmount
January 1, 2021538,405 $538,405 $10,175,235 $(3,976,232)$(3,685)$6,733,723 $556,227 $7,289,950 $57,396 
Net income (loss)— — — 145,788 — 145,788 3,635 149,423 — 
Other comprehensive income (loss)— — — — 188 188 — 188 — 
Issuance of common stock, net879 879 208 — — 1,087 — 1,087 — 
Repurchase of common stock(398)(398)(11,767)— — (12,165)— (12,165)— 
Amortization of stock-based compensation— — 5,413 — — 5,413 — 5,413 — 
Common dividends ($0.30 per share)
— — — (164,118)— (164,118)— (164,118)— 
Distributions to noncontrolling interests— — — — — — (7,718)(7,718)(52)
Contributions from noncontrolling interests— — — — — — — — 148 
Adjustments to redemption value of redeemable noncontrolling interests — — (20,921)— — (20,921)— (20,921)20,921 
March 31, 2021538,886 $538,886 $10,148,168 $(3,994,562)$(3,497)$6,688,995 $552,144 $7,241,139 $78,413 
See accompanying Notes to the Unaudited Consolidated Financial Statements.
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Healthpeak Properties, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Three Months Ended
March 31,
 20222021
Cash flows from operating activities:
Net income (loss)$75,343 $149,423 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of real estate, in-place lease, and other intangibles177,733 157,538 
Amortization of stock-based compensation4,721 4,364 
Amortization of deferred financing costs2,689 2,213 
Straight-line rents(11,158)(9,135)
Amortization of nonrefundable entrance fees and above/below market lease intangibles(24,725)(23,764)
Equity loss (income) from unconsolidated joint ventures(2,148)(1,008)
Distributions of earnings from unconsolidated joint ventures237 237 
Loss (gain) on sale of real estate under direct financing leases(22,693)— 
Deferred income tax expense (benefit)(79)(1,148)
Impairments and loan loss reserves (recoveries), net132 3,242 
Loss (gain) on debt extinguishments— 164,292 
Loss (gain) on sales of real estate, net(3,785)(259,662)
Loss (gain) upon change of control, net— (1,042)
Casualty-related loss (recoveries), net— 859 
Other non-cash items(1,593)(726)
Changes in:
Decrease (increase) in accounts receivable and other assets, net(4,144)11,567 
Increase (decrease) in accounts payable, accrued liabilities, and deferred revenue3,653 (74,524)
Net cash provided by (used in) operating activities194,183 122,726 
Cash flows from investing activities:
Acquisitions of real estate(134,067)(14,914)
Development, redevelopment, and other major improvements of real estate(178,285)(135,339)
Leasing costs, tenant improvements, and recurring capital expenditures(22,839)(20,710)
Proceeds from sales of real estate, net13,265 937,492 
Contributions to unconsolidated joint ventures(1,486)(5,924)
Distributions in excess of earnings from unconsolidated joint ventures3,875 10,825 
Proceeds from sales/principal repayments on loans receivable and direct financing leases75,435 — 
Investments in loans receivable and other(1,860)(3,704)
Net cash provided by (used in) investing activities(245,962)767,726 
Cash flows from financing activities:
Borrowings under bank line of credit and commercial paper3,732,668 3,437,200 
Repayments under bank line of credit and commercial paper(3,567,830)(2,528,640)
Repayments and repurchase of debt, excluding bank line of credit and commercial paper(1,270)(1,491,754)
Payments for debt extinguishment and deferred financing costs— (158,011)
Issuance of common stock and exercise of options, net of offering costs(4)1,087 
Repurchase of common stock(11,352)(12,165)
Dividends paid on common stock(163,447)(164,118)
Distributions to and purchase of noncontrolling interests(7,509)(7,718)
Contributions from and issuance of noncontrolling interests233 — 
Net cash provided by (used in) financing activities(18,511)(924,119)
Net increase (decrease) in cash, cash equivalents and restricted cash(70,290)(33,667)
Cash, cash equivalents and restricted cash, beginning of period219,448 181,685 
Cash, cash equivalents and restricted cash, end of period$149,158 $148,018 
See accompanying Notes to the Unaudited Consolidated Financial Statements.
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Healthpeak Properties, Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 
NOTE 1.  Business
Overview
Healthpeak Properties, Inc., a Standard & Poor’s 500 company, is a Maryland corporation that is organized to qualify as a real estate investment trust (“REIT”) that, together with its consolidated entities (collectively, “Healthpeak” or the “Company”), invests primarily in real estate serving the healthcare industry in the United States (“U.S.”). Healthpeak® acquires, develops, leases, owns, and manages healthcare real estate. The Company’s diverse portfolio is comprised of investments in the following reportable healthcare segments: (i) life science; (ii) medical office; and (iii) continuing care retirement community (“CCRC”).
The Company’s corporate headquarters are in Denver, Colorado and it has additional offices in California, Tennessee, and Massachusetts.
Covid Update
The coronavirus (“Covid”) pandemic has caused significant disruption to individuals, governments, financial markets, and businesses, including the Company. The Company’s tenants, operators, and borrowers have experienced significant cost increases as a result of increased health and safety measures, staffing shortages, increased governmental regulation and compliance, vaccine mandates, and other operational changes necessitated either directly or indirectly by the Covid pandemic. The Company evaluated the impacts of Covid on its business thus far and incorporated information concerning the impact of Covid into its assessments of liquidity, impairments, and collectibility from tenants, residents, and borrowers as of March 31, 2022. The Company will continue to monitor such impacts and will adjust its estimates and assumptions based on the best available information.
NOTE 2.  Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Management is required to make estimates and assumptions in the preparation of financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from management’s estimates.
The consolidated financial statements include the accounts of Healthpeak Properties, Inc., its wholly-owned subsidiaries, joint ventures (“JVs”), and variable interest entities (“VIEs”) that it controls through voting rights or other means. Intercompany transactions and balances have been eliminated upon consolidation. All adjustments (consisting of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations, and cash flows have been included. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The accompanying unaudited interim financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the U.S. Securities and Exchange Commission (“SEC”).
Revision to Additional Paid-In Capital and Redeemable Noncontrolling Interests
During the third quarter of 2021, the Company identified and corrected immaterial errors in the classification and redemption value of redeemable noncontrolling interests of consolidated joint ventures in its life science segment. The Company corrected the classification of its redeemable noncontrolling interests and increased the balance to its estimated redemption value, with a corresponding decrease to additional paid-in capital (“APIC”) in accordance with Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity.
The increase in the unrealized value of the redeemable noncontrolling interests was largely attributable to rapidly rising rents and compressing capitalization rates in the market in which the entities operate, and was identified and corrected by management. The Company determined the impact of the adjustments to be immaterial, individually and in the aggregate, based on consideration of quantitative and qualitative factors. As such, these adjustments are reflected in this Quarterly Report on Form 10-Q for the three months ended March 31, 2021.
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These adjustments had no impact on the Consolidated Statements of Cash Flows, Consolidated Statements of Operations, or any per share amounts. The Company made changes (all amounts in thousands) to the Consolidated Statements of Equity and Redeemable Noncontrolling Interests to decrease APIC, total stockholders’ equity, and total equity as of March 31, 2021 by $75,543 with a corresponding increase to redeemable noncontrolling interests of $78,413 and a decrease to accounts payable, accrued liabilities, and other liabilities as of March 31, 2021 of $2,870 on the Consolidated Balance Sheet.
Government Grant Income
On March 27, 2020, the federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) to provide financial aid to individuals, businesses, and state and local governments. During the three months ended March 31, 2022 and 2021, the Company received government grants under the CARES Act primarily to cover increased expenses and lost revenue during the Covid pandemic. Grant income is recognized when there is reasonable assurance that the grant will be received and the Company will comply with all conditions attached to the grant. Additionally, grants are recognized over the periods in which the Company recognizes the increased expenses and lost revenue the grants are intended to defray. As of March 31, 2022, the amount of qualifying expenditures and lost revenue exceeded grant income recognized and the Company believes it has complied and will continue to comply with all grant conditions. In the event of non-compliance, all such amounts received are subject to recapture.
The following table summarizes information related to government grant income received and recognized by the Company (in thousands):
Three Months Ended
March 31,
20222021
Government grant income recorded in other income (expense), net$6,552 $1,310 
Government grant income recorded in equity income (loss) from unconsolidated joint ventures648 426 
Government grant income recorded in income (loss) from discontinued operations206 3,232 
Total government grants received$7,406 $4,968 
Discontinued Operations
Senior Housing Triple-Net and Senior Housing Operating Portfolio Dispositions
During 2020, the Company established and began executing a plan to dispose of its senior housing triple-net and Senior Housing Operating Property (“SHOP”) properties and concluded that the planned dispositions represented a strategic shift that had and will have a major effect on the Company’s operations and financial results. Therefore, senior housing triple-net and SHOP assets meeting the held for sale criteria are classified as discontinued operations in all periods presented herein. In September 2021, the Company successfully completed the disposition of the remaining senior housing triple-net and SHOP properties. See Note 4 for further information.
Recent Accounting Pronouncements
Adopted
Government Assistance. In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance (“ASU 2021-10”), which increases the transparency of government assistance including the disclosure of the types of assistance, an entity’s accounting for assistance, and the effect of the assistance on an entity’s financial statements. The adoption of ASU 2021-10 on January 1, 2022 did not have a material impact on the Company’s consolidated financial position, results of operations, cash flows, or disclosures.
Not Yet Adopted
Reference Rate Reform. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional guidance for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), which amends the scope of ASU 2020-04 to include derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The amendments in ASU 2020-04 and ASU 2021-01 were effective immediately and may be applied through December 31, 2022. The Company is evaluating whether the optional relief provided by ASU 2020-04 or ASU 2021-01 will be adopted but does not expect the adoption of these standards to have a material impact on its consolidated financial position, results of operations, cash flows, or disclosures.
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NOTE 3.  Real Estate Transactions
2022 Real Estate Investment Acquisitions
67 Smith Place
In January 2022, the Company closed a life science acquisition in Cambridge, Massachusetts for $72 million.
Vista Sorrento Phase II
In January 2022, the Company closed a life science acquisition in San Diego, California for $24 million.
Webster MOB Portfolio
In March 2022, the Company acquired a portfolio of two medical office buildings (“MOBs”) in Houston, Texas for $43 million.
2021 Real Estate Investment Acquisitions
In 2021, the Company closed the following life science acquisitions: (i) eight acquisitions in Cambridge, Massachusetts for $498 million, (ii) one life science acquisition in San Diego, California for $20 million, and (iii) 12 acres of land for $128 million in South San Francisco, California.
Also during 2021, the Company closed the following MOB acquisitions: (i) one MOB in Nashville, Tennessee for $13 million, (ii) one MOB in Denver, Colorado for $38 million, (iii) a portfolio of 14 MOBs for $371 million (the “MOB Portfolio”), (iv) one MOB in Fort Lauderdale, Florida for $16 million; (v) one MOB in Wichita, Kansas for $50 million, (vi) three MOBs in Morristown, New Jersey for $155 million, (vii) two MOBs in Dallas, Texas for $60 million, (viii) one MOB in Seattle, Washington for $43 million, (ix) one MOB in New Orleans, Louisiana for $34 million, and (x) one MOB in Cambridge, Massachusetts for $55 million. In conjunction with the acquisition of the MOB Portfolio, the Company originated $142 million of secured mortgage debt.
Development Activities
The Company’s commitments, which are primarily related to development and redevelopment projects and tenant improvements, decreased by $52 million, to $418 million at March 31, 2022, when compared to December 31, 2021, primarily as a result of actual spend on existing projects in the first quarter of 2022.
NOTE 4.  Dispositions of Real Estate and Discontinued Operations
2022 Dispositions of Real Estate
In January 2022, the Company sold one life science facility in Salt Lake City, Utah for $14 million, resulting in a gain on sale of $4 million.
In April 2022, the Company sold one MOB in San Antonio, Texas for $13 million.
2021 Dispositions of Real Estate
Sunrise Senior Housing Portfolio
In January 2021, the Company sold a portfolio of 32 SHOP assets (the “Sunrise Senior Housing Portfolio”) for $664 million, resulting in an immaterial loss on sale, which is recognized in income (loss) from discontinued operations, and provided the buyer with: (i) financing of $410 million (see Note 6) and (ii) a commitment to finance up to $92 million of additional debt for capital expenditures. The commitment to finance additional debt for capital expenditures was subsequently reduced to $56 million in June 2021 and $47 million in February 2022, $0.4 million of which had been funded as of March 31, 2022 (see Note 6). Upon completion of the license transfer process in June 2021, the Company sold the two remaining Sunrise senior housing triple-net assets for $80 million, resulting in a gain on sale of $22 million, which is recognized in income (loss) from discontinued operations.
Brookdale Triple-Net Portfolio
In January 2021, the Company sold 24 senior housing assets in a triple-net lease with Brookdale Senior Living Inc. for $510 million, resulting in total gain on sale of $169 million, which is recognized in income (loss) from discontinued operations.
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Additional SHOP Portfolio
In January 2021, the Company sold a portfolio of 16 SHOP assets for $230 million, resulting in total gain on sale of $59 million, which is recognized in income (loss) from discontinued operations. The Company provided the buyer with financing of $150 million (see Note 6).
HRA Triple-Net Portfolio
In February 2021, the Company sold eight senior housing assets in a triple-net lease with Harbor Retirement Associates for $132 million, resulting in total gain on sale of $33 million, which is recognized in income (loss) from discontinued operations.
Oakmont SHOP Portfolio
In April 2021, the Company sold a portfolio of 12 SHOP assets for $564 million. In conjunction with the sale, mortgage debt held on two properties with a carrying value of $64 million was repaid and the remaining mortgage debt held on four properties with a carrying value of $107 million was assumed by the buyer. The transaction resulted in total gain on sale of $80 million, which is recognized in income (loss) from discontinued operations.
Discovery SHOP Portfolio
In April 2021, the Company sold a portfolio of 10 SHOP assets for $334 million, resulting in total gain on sale of $9 million, which is recognized in income (loss) from discontinued operations. Also included in this transaction was the sale of two mezzanine loans and two preferred equity investments for $21 million, resulting in no gain or loss on sale of the investments (collectively, the “Discovery SHOP Portfolio”).
Sonata SHOP Portfolio
In April 2021, the Company sold a portfolio of five SHOP assets for $64 million, resulting in total gain on sale of $3 million, which is recognized in income (loss) from discontinued operations.
SLC SHOP Portfolio
In May 2021, the Company sold seven SHOP assets for $113 million and repaid $70 million of mortgage debt that was held on six of the assets, resulting in total gain on sale of $1 million, which is recognized in income (loss) from discontinued operations.
Hoag Hospital
In May 2021, the Company sold one hospital for $226 million through the exercise of a purchase option by a tenant, resulting in gain on sale of $172 million.
2021 Other Dispositions
In addition to the portfolio and individual sales discussed above, during the year ended December 31, 2021, the Company sold the following: (i) 15 SHOP assets for $169 million, (ii) 7 senior housing triple-net assets for $24 million, and (iii) 10 MOBs and a portion of 1 MOB land parcel for $68 million, resulting in total gain on sales of $58 million ($39 million of which is recognized in income (loss) from discontinued operations). In conjunction with one of the SHOP asset sales, mortgage debt held on the property with a carrying value of $36 million was assumed by the buyer. Of these sales, one SHOP asset was sold during the three months ended March 31, 2021 for $5 million resulting in an immaterial gain on sale, which is recognized in income (loss) from discontinued operations.
Held for Sale and Discontinued Operations
During 2020, the Company established and began executing a plan to dispose of its senior housing triple-net and SHOP properties. As of December 31, 2020, the Company concluded that the planned dispositions represented a strategic shift that had and will have a major effect on the Company’s operations and financial results. Therefore, senior housing triple-net and SHOP assets meeting the held for sale criteria are classified as discontinued operations in all periods presented herein. In September 2021, the Company successfully completed the disposition of the remaining senior housing triple-net and SHOP properties.
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The following summarizes the assets and liabilities classified as held for sale or as discontinued operations at March 31, 2022 and December 31, 2021, which are included in assets held for sale and discontinued operations, net and liabilities related to assets held for sale and discontinued operations, net, respectively, on the Consolidated Balance Sheets (in thousands):
March 31,
2022
December 31,
2021
ASSETS
Accounts receivable, net of allowance of $4,146 and $4,138
$2,764 $2,446 
Cash and cash equivalents7,989 7,707 
Right-of-use asset, net23 26 
Other assets, net1,976 3,237 
Total assets of discontinued operations, net12,75213,416
Assets held for sale, net(1)
21,060 23,774 
Assets held for sale and discontinued operations, net$33,812 $37,190 
LIABILITIES
Lease liability$23 $26 
Accounts payable, accrued liabilities, and other liabilities14,072 14,843 
Deferred revenue139 92 
Total liabilities of discontinued operations, net14,234 14,961 
Liabilities related to assets held for sale, net(1)
84 95 
Liabilities related to assets held for sale and discontinued operations, net$14,318 $15,056 
_______________________________________
(1)As of March 31, 2022, primarily comprised of five MOBs with net real estate assets of $20 million and right-of-use asset, net of $1 million. As of December 31, 2021, primarily comprised of four MOBs and one life science facility with net real estate assets of $23 million and right-of-use asset, net of $1 million.

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The results of discontinued operations during the three months ended March 31, 2022 and 2021, or through the disposal date of each asset or portfolio of assets if they have been sold during such periods, as applicable, are included in the consolidated results of operations for the three months ended March 31, 2022 and 2021. Summarized financial information for discontinued operations for the three months ended March 31, 2022 and 2021 are as follows (in thousands):
Three Months Ended
March 31,
20222021
Revenues:
Rental and related revenues$— $5,228 
Resident fees and services2,655 72,998 
Total revenues2,655 78,226 
Costs and expenses:
Interest expense— 2,676 
Operating2,674 71,519 
Transaction costs— 76 
Total costs and expenses2,674 74,271 
Other income (expense):
Gain (loss) on sales of real estate, net(71)259,662 
Other income (expense), net5,885 
Total other income (expense), net(68)265,547 
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures(87)269,502 
Income tax benefit (expense)340 821 
Equity income (loss) from unconsolidated joint ventures64 (315)
Income (loss) from discontinued operations$317 $270,008 
Impairments of Real Estate
During the three months ended March 31, 2022 and 2021, the Company did not recognize any impairment charges.
Other Losses
During the three months ended March 31, 2022, the Company recognized $14 million of expenses within other income (expense), net on the Consolidated Statements of Operations for tenant relocation and other costs associated with a planned MOB demolition.
NOTE 5.  Leases
Lease Income
The following table summarizes the Company’s lease income, excluding discontinued operations (in thousands):
Three Months Ended
March 31,
20222021
Fixed income from operating leases$287,292 $262,937 
Variable income from operating leases82,858 65,035 
Interest income from direct financing leases1,168 2,163 
Direct Financing Leases
2022 Direct Financing Lease Sale
During the first quarter of 2022, the Company sold its remaining hospital classified as a direct financing lease (“DFL”) for $68 million and recognized a gain on sale of $23 million, which is included in other income (expense), net.
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Net investment in DFLs consists of the following (in thousands):
 March 31,
2022
December 31,
2021
Present value of minimum lease payments receivable$— $1,220 
Present value of estimated residual value— 44,706 
Less deferred selling profits— (1,220)
Net investment in direct financing leases$— $44,706 
Direct Financing Lease Internal Ratings
At March 31, 2022, the Company had no properties classified as a DFL. At December 31, 2021, the Company had one hospital classified as a DFL with a carrying amount of $45 million and an internal rating of “performing”.
NOTE 6.  Loans Receivable
The following table summarizes the Company’s loans receivable (in thousands):
 March 31,
2022
December 31, 2021
Secured loans(1)
$388,746 $396,281 
Mezzanine and other26,252 25,529 
Unamortized discounts, fees, and costs(3,301)(4,186)
Reserve for loan losses(1,944)(1,813)
Loans receivable, net$409,753 $415,811 
_______________________________________
(1)At March 31, 2022, the Company had $49 million remaining of commitments to fund additional loans for senior housing redevelopment and capital expenditure projects. At December 31, 2021, the Company had $58 million remaining of commitments to fund additional loans for senior housing redevelopment and capital expenditure projects.
SHOP Seller Financing
In conjunction with the sale of 32 SHOP facilities in the Sunrise Senior Housing Portfolio for $664 million in January 2021 (see Note 4), the Company provided the buyer with initial financing of $410 million. The remainder of the sales price was received in cash at the time of sale. Additionally, the Company agreed to provide up to $92 million of additional financing for capital expenditures (up to 65% of the estimated cost of capital expenditures). The additional financing was subsequently reduced to $56 million in June 2021 and $47 million in February 2022 in conjunction with the principal repayments discussed below. Through March 31, 2022, $0.4 million of the additional financing had been funded. The initial and additional financing is secured by the buyer's equity ownership in each property.
In June 2021, the Company received principal repayments of $246 million on the initial financing provided in conjunction with the sale of the Sunrise Senior Housing Portfolio. Additionally, in February 2022, the Company received principal repayments of $8 million in conjunction with the disposition of the underlying collateral. As of March 31, 2022 and December 31, 2021, this secured loan had an outstanding balance of $157 million and $165 million, respectively.
In conjunction with the sale of 16 additional SHOP facilities for $230 million in January 2021 (see Note 4), the Company provided the buyer with financing of $150 million. The remainder of the sales price was received in cash at the time of sale. The financing is secured by the buyer's equity ownership in each property.
During the first quarter of 2021, the Company reduced the consideration and reported gain on sales of real estate and recognized a mark-to-market discount of $16 million for certain transactions with seller financing. The Company’s discount is based on the difference between the stated interest rates (ranging from 3.50% to 4.50%) and corresponding prevailing market rates of approximately 5.25% as of the transaction dates. The discount is recognized as interest income over the term of the discounted loans (ranging from one to three years) using the effective interest rate method. During the three months ended March 31, 2022 and 2021, the Company recognized $1 million and $2 million, respectively, of non-cash interest income related to the amortization of its mark-to-market discounts.
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2021 Other Loans Receivable Transactions
The Company classifies a loan receivable as held for sale when management no longer has the intent or ability to hold the loan receivable for the foreseeable future or until maturity. If a loan receivable is classified as held for sale, previously recorded reserves for loan losses are reversed and the loan is reported at the lower of amortized cost or fair value. During the second quarter of 2021, two loans receivable with a total amortized cost of $64 million were classified as held for sale. Upon the transfer of these two loans to held for sale, the carrying value was decreased by $11 million to an estimated fair value of $53 million, $8 million of which was previously recognized as a reserve for loan losses. In 2021, the Company sold these two loans receivable previously classified as held for sale for their aggregate carrying value of $53 million.
These fair value estimates were made for each individual loan classified as held for sale and primarily relied on a market approach, utilizing comparable market transactions, forecasted sales prices, and negotiations with prospective buyers. These estimates are considered to be a Level 3 measurement within the fair value hierarchy, and are subject to inherent uncertainties.
Additionally, in April 2021, the Company sold two mezzanine loans as part of the Discovery SHOP Portfolio disposition (see Note 4), resulting in no gain or loss on sale of the mezzanine loans.
In May 2021, the Company received a $10 million principal repayment related to one of its secured loans. In September 2021, the Company received repayment of the remaining $15 million balance.
In July 2021, the Company received full repayment of the outstanding balance of an $8 million secured loan.
CCRC Resident Loans
For certain residents that qualify, CCRCs may offer to lend residents the necessary funds to satisfy the entrance fee requirements so that they are able to move into a community while still continuing the process of selling their previous home. The loans are due upon sale of the previous residence. At March 31, 2022 and December 31, 2021, the Company held $25 million and $24 million, respectively, of such notes receivable, which are included in mezzanine and other in the table above.
Loans Receivable Internal Ratings
In connection with the Company’s quarterly review process or upon the occurrence of a significant event, loans receivable are reviewed and assigned an internal rating of Performing, Watch List, or Workout. Loans that are deemed Performing meet all present contractual obligations, and collection and timing of all amounts owed is reasonably assured. Watch List Loans are defined as loans that do not meet the definition of Performing or Workout. Workout Loans are defined as loans in which the Company has determined, based on current information and events, that: (i) it is probable it will be unable to collect all amounts due according to the contractual terms of the agreement, (ii) the borrower is delinquent on making payments under the contractual terms of the agreement, and (iii) the Company has commenced action or anticipates pursuing action in the near term to seek recovery of its investment.
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The following table summarizes, by year of origination, the Company’s internal ratings for loans receivable, net of unamortized discounts, fees, and reserves for loan losses, as of March 31, 2022 (in thousands):
Investment TypeYear of OriginationTotal
20222021202020192018Prior
Secured loans
Risk rating:
Performing loans$— $301,796 $79,512 $2,199 $— $— $383,507 
Watch list loans— — — — — — — 
Workout loans— — — — — — — 
Total secured loans$— $301,796 $79,512 $2,199 $— $— $383,507 
Mezzanine and other
Risk rating:
Performing loans$12,521 $12,284 $1,441 $— $— $— $26,246 
Watch list loans— — — — — — — 
Workout loans— — — — — — — 
Total mezzanine and other$12,521 $12,284 $1,441 $— $— $— $26,246 
Reserve for Loan Losses
The Company evaluates the liquidity and creditworthiness of its borrowers on a quarterly basis to determine whether any updates to the future expected losses recognized upon inception are necessary. The Company’s evaluation considers industry and economic conditions, individual and portfolio property performance, credit enhancements, liquidity, and other factors. The determination of loan losses also considers concentration of credit risk associated with the senior housing industry to which its loans receivable relate. The Company’s borrowers furnish property, portfolio, and guarantor/operator-level financial statements, among other information, on a monthly or quarterly basis, which the Company utilizes to calculate the debt service coverages used in its assessment of internal ratings, which is a primary credit quality indicator. Debt service coverage information is evaluated together with other property, portfolio, and operator performance information, including revenue, expense, NOI, occupancy, rental rates, capital expenditures, and EBITDA (defined as earnings before interest, tax, and depreciation and amortization), along with other liquidity measures.
In its assessment of current expected credit losses for loans receivable and unfunded loan commitments, the Company utilizes past payment history of its borrowers, current economic conditions, and forecasted economic conditions through the maturity date of each loan to estimate a probability of default and a resulting loss for each loan receivable. Future economic conditions are based primarily on near-term economic forecasts from the Federal Reserve and reasonable assumptions for long-term economic trends.
The following table summarizes the Company’s reserve for loan losses (in thousands):
 March 31, 2022December 31, 2021
 Secured LoansMezzanine and OtherTotalSecured LoansMezzanine and OtherTotal
Reserve for loan losses, beginning of period$1,804 $$1,813 $3,152 $7,128 $10,280 
Provision for expected loan losses134 (3)131 793 896 1,689 
Expected loan losses related to loans sold or repaid(1)
— — — (2,141)(8,015)(10,156)
Reserve for loan losses, end of period$1,938 $$1,944 $1,804 $$1,813 
_______________________________________
(1)Includes six loans sold or repaid during the year ended December 31, 2021.
Additionally, at each of March 31, 2022 and December 31, 2021, a liability of $0.3 million related to expected credit losses for unfunded loan commitments was included in accounts payable, accrued liabilities, and other liabilities.
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NOTE 7.  Investments in and Advances to Unconsolidated Joint Ventures
The Company owns interests in the following entities that are accounted for under the equity method, excluding investments classified as discontinued operations (dollars in thousands): 
  Carrying Amount
   March 31,December 31,
Entity(1)
Segment
Property Count(2)
Ownership %(2)
20222021
SWF SH JVOther1954$353,268 $355,394 
Life Science JVLife science14926,572 25,605 
Needham Land Parcel JV(3)
Life science3814,346 13,566 
Medical Office JVs(4)
Medical office3
20 - 67
8,973 9,069 
  $403,159 $403,634 
_______________________________________
(1)These entities are not consolidated because the Company does not control, through voting rights or other means, the joint ventures.
(2)Property counts and ownership percentages are as of March 31, 2022.
(3)In December 2021, the Company acquired a 38% interest in a life science development joint venture in Needham, Massachusetts for $13 million. Land held for development is excluded from the property count as of March 31, 2022.
(4)Includes two unconsolidated medical office joint ventures in which the Company holds an ownership percentage as follows: (i) Ventures IV (20%) and (ii) Suburban Properties, LLC (67%). During 2021, the Company also held a 30% interest in Ventures III, which issued its final distribution and was dissolved.
In April 2021, the Company sold its two preferred equity investments for their carrying value as part of the Discovery SHOP Portfolio disposition (see Note 4). Prior to the sale, the Company’s ownership percentage in these two unconsolidated joint ventures was as follows: (i) Discovery Naples JV (41%) and (ii) Discovery Sarasota JV (47%).
In May 2021, the two remaining CCRCs in the CCRC JV were sold for $38 million, $19 million of which represents the Company’s 49% interest, resulting in an immaterial gain on sale recorded within equity income (loss) from unconsolidated joint ventures during the year ended December 31, 2021.
NOTE 8.  Intangibles
Intangible assets primarily consist of lease-up intangibles and above market tenant lease intangibles. The following table summarizes the Company’s intangible lease assets (dollars in thousands):
Intangible lease assetsMarch 31,
2022
December 31,
2021
Gross intangible lease assets$802,078 $797,675 
Accumulated depreciation and amortization(304,974)(277,915)
Intangible assets, net$497,104 $519,760 
Weighted average remaining amortization period in years66
Intangible liabilities consist of below market lease intangibles. The following table summarizes the Company’s intangible lease liabilities (dollars in thousands):
Intangible lease liabilitiesMarch 31,
2022
December 31,
2021
Gross intangible lease liabilities$239,677 $234,917 
Accumulated depreciation and amortization(64,322)(57,685)
Intangible liabilities, net$175,355 $177,232 
Weighted average remaining amortization period in years88
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During the three months ended March 31, 2022, in conjunction with the Company’s acquisitions of real estate, the Company acquired intangible assets of $4 million and intangible liabilities of $5 million. The intangible assets and liabilities acquired had a weighted average amortization period at acquisition of 9 years and 12 years, respectively.
During the year ended December 31, 2021, in conjunction with the Company’s acquisitions of real estate, the Company acquired intangible assets of $109 million and intangible liabilities of $57 million. The intangible assets and intangible liabilities acquired had a weighted average amortization period at acquisition of 9 years.
NOTE 9.  Debt
Bank Line of Credit and Term Loan
On May 23, 2019, the Company executed a $2.5 billion unsecured revolving line of credit facility, with a maturity date of May 23, 2023 and two six-month extension options, subject to certain customary conditions. Also in May 2019, the Company entered into a $250 million unsecured term loan facility, with a maturity date of May 23, 2024 (the “2019 Term Loan”). In July 2021, the Company repaid the $250 million 2019 Term Loan.
In September 2021, the Company executed an amended and restated unsecured revolving line of credit (the “Revolving Facility”) to increase total revolving commitments from $2.5 billion to $3.0 billion and extend the maturity date to January 20, 2026. This maturity date may be further extended pursuant to two six-month extension options, subject to certain customary conditions. Borrowings under the Revolving Facility accrue interest at LIBOR plus a margin that depends on the credit ratings of the Company’s senior unsecured long-term debt. The Company also pays a facility fee on the entire revolving commitment that depends on its credit ratings. Based on the Company’s credit ratings at March 31, 2022, the margin on the Revolving Facility was 0.78% and the facility fee was 0.15%. At March 31, 2022 and December 31, 2021, the Company had no balance outstanding under the Revolving Facility.
The Revolving Facility includes a feature that allows the Company to increase the borrowing capacity by an aggregate amount of up to $750 million, subject to securing additional commitments. Further, the Revolving Facility includes customary LIBOR replacement language, including, but not limited to, the use of rates based on the secured overnight financing rate administered by the Federal Reserve Bank of New York. The Revolving Facility also includes a sustainability-linked pricing component whereby the applicable margin may be reduced by up to 0.025% based on the Company’s achievement of specified sustainability-linked metrics, subject to certain conditions.
The Revolving Facility also contains certain financial restrictions and other customary requirements, including financial covenants and cross-default provisions to other indebtedness. Among other things, these covenants, using terms defined in the agreement: (i) limit the ratio of Enterprise Total Indebtedness to Enterprise Gross Asset Value to 60%; (ii) limit the ratio of Enterprise Secured Debt to Enterprise Gross Asset Value to 40%; (iii) limit the ratio of Enterprise Unsecured Debt to Enterprise Unencumbered Asset Value to 60%; (iv) require a minimum Fixed Charge Coverage ratio of 1.5 times; and (v) require a minimum Consolidated Tangible Net Worth of $7.7 billion. The Company believes it was in compliance with each of these covenants at March 31, 2022.
Commercial Paper Program
In September 2019, the Company established an unsecured commercial paper program (the “Commercial Paper Program”). Under the terms of the Commercial Paper Program, the Company may issue, from time to time, unsecured short-term debt securities with varying maturities. Amounts available under the Commercial Paper Program may be borrowed, repaid, and re-borrowed from time to time. During 2021, the Company increased the maximum aggregate face or principal amount that can be outstanding at any one time from $1.0 billion to $1.5 billion. Amounts borrowed under the Commercial Paper Program will be sold on terms that are customary for the U.S. commercial paper market and will be at least equal in right of payment with all of the Company’s other unsecured and unsubordinated indebtedness. The Company uses its Revolving Facility as a liquidity backstop for the repayment of unsecured short-term debt securities issued under the Commercial Paper Program. At March 31, 2022, the Company had $1.33 billion of securities outstanding under the Commercial Paper Program, with original maturities of approximately 45 days and a weighted average interest rate of 0.93%. At December 31, 2021, the Company had $1.17 billion of securities outstanding under the Commercial Paper Program, with original maturities of approximately two months and a weighted average interest rate of 0.32%.
Senior Unsecured Notes
At each of March 31, 2022 and December 31, 2021, the Company had senior unsecured notes outstanding with an aggregate principal balance of $4.7 billion. The senior unsecured notes contain certain covenants including limitations on debt, maintenance of unencumbered assets, cross-acceleration provisions and other customary terms. The Company believes it was in compliance with these covenants at March 31, 2022.
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During the three months ended March 31, 2022, the Company did not repurchase or redeem any senior unsecured notes.
The following table summarizes the Company’s senior unsecured notes repurchases and redemptions during the year ended December 31, 2021 (dollars in thousands):
Payoff DateAmountCoupon RateMaturity Year
May 19, 2021(1)
$251,806 3.40 %2025
May 19, 2021(1)
298,194 4.00 %2025
February 26, 2021(2)
188,000 4.25 %2023
February 26, 2021(2)
149,000 4.20 %2024
February 26, 2021(2)
331,000 3.88 %2024
January 28, 2021(2)
112,000 4.25 %2023
January 28, 2021(2)
201,000 4.20 %2024
January 28, 2021(2)
469,000 3.88 %2024
_______________________________________
(1)Upon repurchasing a portion of the 3.40% and 4.00% senior unsecured notes due 2025, the Company recognized a $61 million loss on debt extinguishment during the year ended December 31, 2021.
(2)Upon completing the repurchases and redemptions of all outstanding 4.25%, 4.20%, and 3.88% senior unsecured notes due 2023 and 2024, the Company recognized a $164 million loss on debt extinguishment during the three months ended March 31, 2021.
During the three months ended March 31, 2022, the Company did not issue any senior unsecured notes.
In 2021, the Company completed two green bond offerings. The net proceeds from both green bonds are or will be allocated to eligible green projects, and the Company may choose to allocate or re-allocate net proceeds from such offerings to one more other eligible green projects. The following table summarizes these senior unsecured note issuances for the year ended December 31, 2021 (dollars in thousands):
Issue DateAmountCoupon RateMaturity Year
November 24, 2021$500,000 2.13 %2028
July 12, 2021450,000 1.35 %2027
Mortgage Debt
At March 31, 2022 and December 31, 2021, the Company had $349 million and $350 million, respectively, in aggregate principal of mortgage debt outstanding, which was secured by 18 healthcare facilities, with an aggregate carrying value of $803 million and $811 million, respectively.
Mortgage debt generally requires monthly principal and interest payments, is collateralized by real estate assets, and is non-recourse. Mortgage debt typically restricts transfer of the encumbered assets, prohibits additional liens, restricts prepayment, requires payment of real estate taxes, requires maintenance of the assets in good condition, requires insurance on the assets, and includes conditions to obtain lender consent to enter into or terminate material leases. Some of the mortgage debt may require tenants or operators to maintain compliance with the applicable leases or operating agreements of such real estate assets.
During each of the three months ended March 31, 2022 and March 31, 2021, the Company made aggregate principal repayments of mortgage debt of $1 million (excluding mortgage debt on assets held for sale and discontinued operations).
In April 2021, in conjunction with the acquisition of the MOB Portfolio, the Company originated $142 million of secured mortgage debt (see Note 3) that matures in May 2026. In April 2022, the Company terminated its existing interest rate cap agreements associated with this variable rate mortgage debt and entered into two interest rate swap contracts that are designated as cash flow hedges and mature in May 2026 (see Note 17).
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Debt Maturities
The following table summarizes the Company’s stated debt maturities and scheduled principal repayments at March 31, 2022 (dollars in thousands):
Senior Unsecured
Notes(2)
Mortgage
Debt(3)
YearBank Line of
Credit
Commercial Paper(1)
AmountInterest RateAmountInterest RateTotal
2022$— $— $— — %$3,778 3.80 %$3,778 
2023— — — — %90,089 3.80 %90,089 
2024— — — — %7,024 3.81 %7,024 
2025— — 800,000 3.93 %3,209 3.80 %803,209 
2026— 1,330,813 650,000 3.39 %244,523 3.11 %2,225,336 
Thereafter— — 3,250,000 3.24 %366 5.91 %3,250,366 
 — 1,330,813 4,700,000 348,989 6,379,802 
(Discounts), premium and debt costs, net— — (45,944)1,724 (44,220)
$— $1,330,813 $4,654,056 $350,713 $6,335,582 
_______________________________________
(1)Commercial Paper Program borrowings are backstopped by the Revolving Facility. As such, the Company calculates the weighted average remaining term of its Commercial Paper Program borrowings using the maturity date of the Revolving Facility.
(2)Effective interest rates on the senior unsecured notes range from 1.54% to 6.91% with a weighted average effective interest rate of 3.39% and a weighted average maturity of 7 years.
(3)Effective interest rates on the mortgage debt range from 2.72% to 5.91% with a weighted average effective interest rate of 3.36% and a weighted average maturity of 4 years.
NOTE 10.  Commitments and Contingencies
Legal Proceedings
From time to time, the Company is a party to legal proceedings, lawsuits and other claims that arise in the ordinary course of the Company’s business. The Company is not aware of any legal proceedings or claims that it believes may have, individually or taken together, a material adverse effect on the Company’s financial condition, results of operations, or cash flows. The Company’s policy is to expense legal costs as they are incurred.
DownREITs and Other Partnerships
In connection with the formation of certain limited liability companies (“DownREITs”), members may contribute appreciated real estate to a DownREIT in exchange for DownREIT units. These contributions are generally tax-deferred, so that the pre-contribution gain related to the property is not taxed to the member. However, if a contributed property is later sold by the DownREIT, the unamortized pre-contribution gain that exists at the date of sale is specifically allocated and taxed to the contributing members. In many of the DownREITs, the Company has entered into indemnification agreements with those members who contributed appreciated property into the DownREIT. Under these indemnification agreements, if any of the appreciated real estate contributed by the members is sold by the DownREIT in a taxable transaction within a specified number of years, the Company will reimburse the affected members for the federal and state income taxes associated with the pre-contribution gain that is specially allocated to the affected member under the Internal Revenue Code (“make-whole payments”). These make-whole payments include a tax gross-up provision. These indemnification agreements have expirations terms that range through 2039 on a total of 29 properties.
Additionally, the Company owns a 49% interest in the Life Science JV (see Note 7). If the property in the joint venture is sold in a taxable transaction, the Company is generally obligated to indemnify its joint venture partner for its federal and state income taxes associated with the gain that existed at the time of the contribution to the joint venture.
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NOTE 11.  Equity and Redeemable Noncontrolling Interests
Dividends
On April 28, 2022, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.30 per share. The common stock cash dividend will be paid on May 20, 2022 to stockholders of record as of the close of business on May 9, 2022.
During the three months ended March 31, 2022 and 2021, the Company declared and paid common stock cash dividends of $0.30 per share.
At-The-Market Equity Offering Program
In February 2020, the Company established an at-the-market equity offering program (as amended from time to time, the “ATM Program”), which was most recently amended in May 2021 to increase the size of the program from $1.25 billion to $1.5 billion, pursuant to which shares of common stock having an aggregate gross sales price of up to $1.5 billion may be sold (i) by the Company through a consortium of banks acting as sales agents or directly to the banks acting as principals or (ii) by a consortium of banks acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement (each, an “ATM forward contract”). The use of ATM forward contracts allows the Company to lock in a share price on the sale of shares at the time the ATM forward contract is effective, but defer receiving the proceeds from the sale of shares until a later date.
ATM forward contracts generally have a one to two year term. At any time during the term, the Company may settle a forward sale by delivery of physical shares of common stock to the forward seller or, at the Company’s election, in cash or net shares. The forward sale price the Company expects to receive upon settlement of outstanding ATM forward contracts will be the initial forward price established upon the effective date, subject to adjustments for: (i) accrued interest, (ii) the forward purchasers’ stock borrowing costs, and (iii) certain fixed price reductions during the term of the ATM forward contract.
At March 31, 2022, $1.18 billion of the Company’s common stock remained available for sale under the ATM Program.
ATM Forward Contracts
During the year ended December 31, 2021, the Company utilized the forward provisions under the ATM Program to allow for the sale of an aggregate of 9.1 million shares of its common stock at an initial weighted average net price of $35.25 per share, after commissions. During the three months ended March 31, 2022, no shares were settled under ATM forward contracts. Therefore, at March 31, 2022, 9.1 million shares remained outstanding under ATM forward contracts.
During the three months ended March 31, 2021, the Company did not utilize the forward provisions under the ATM Program.
ATM Direct Issuances
During the three months ended March 31, 2022 and March 31, 2021, no shares of common stock were issued under the ATM Program.
Accumulated Other Comprehensive Income (Loss)
The following table summarizes the Company’s accumulated other comprehensive income (loss) (in thousands):
 March 31,
2022
December 31,
2021
Supplemental Executive Retirement Plan minimum liability$(3,047)$(3,147)
Total accumulated other comprehensive income (loss)$(3,047)$(3,147)
Redeemable Noncontrolling Interests
Arrangements with noncontrolling interest holders are assessed for appropriate balance sheet classification based on the redemption and other rights held by the noncontrolling interest holder. Certain of the Company’s noncontrolling interest holders have the ability to put their equity interests to the Company upon specified events or after the passage of a predetermined period of time. Each put option is payable in cash and subject to increases in redemption value in the event that the underlying property generates specified returns for the Company and meets certain promote thresholds pursuant to the respective agreements. Accordingly, the Company records redeemable noncontrolling interests outside of permanent equity and presents the redeemable noncontrolling interests at the greater of their carrying amount or redemption value at the end of each reporting period.
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During the year ended December 31, 2021, one of the redeemable noncontrolling interests met the conditions for redemption and the related put option was exercised during the year then ended. Accordingly, the Company made a cash payment for the redemption value of $60 million to the related noncontrolling interest holder during the year ended December 31, 2021 and acquired the redeemable noncontrolling interest associated with this entity. The remaining redeemable noncontrolling interests had not yet met the conditions for redemption as of March 31, 2022 or December 31, 2021. Three of the interests will become redeemable following the passage of a predetermined amount of time, one of which will occur in late 2022, and the remaining two in 2023 and 2024. The fourth interest will become redeemable at the earlier of a predetermined passage of time or stabilization of the underlying development property, which is expected to occur in 2023. The redemption values are subject to change based on the assessment of value at each redemption date.
NOTE 12.  Earnings Per Common Share
Basic income (loss) per common share (“EPS”) is computed based on the weighted average number of common shares outstanding. Diluted income (loss) per common share is computed based on the weighted average number of common shares outstanding plus the impact of forward equity sales agreements using the treasury stock method and common shares issuable from the assumed conversion of DownREIT units, stock options, certain performance restricted stock units, and unvested restricted stock units. Only those instruments having a dilutive impact on the Company’s basic income (loss) per share are included in diluted income (loss) per share during the periods presented.
Restricted stock and certain performance restricted stock units are considered participating securities, because dividend payments are not forfeited even if the underlying award does not vest, and require use of the two-class method when computing basic and diluted earnings per share.
Refer to Note 11 for a discussion of the sale of shares under and settlement of forward sales agreements during the periods presented. The Company considered the potential dilution resulting from the forward agreements to the calculation of earnings per share. At inception, the agreements do not have an effect on the computation of basic EPS as no shares are delivered until settlement. However, the Company uses the treasury stock method to calculate the dilution, if any, resulting from the forward sales agreements during the period of time prior to settlement. The aggregate effect on the Company’s diluted weighted-average common shares for the three months ended March 31, 2022 and 2021 was zero weighted-average incremental shares from the forward equity sales agreements. 
The following table illustrates the computation of basic and diluted earnings per share (in thousands, except per share amounts):
 Three Months Ended
March 31,
 20222021
Numerator
Income (loss) from continuing operations$75,026 $(120,585)
Noncontrolling interests' share in continuing operations(3,730)(3,306)
Income (loss) from continuing operations attributable to Healthpeak Properties, Inc.71,296 (123,891)
Less: Participating securities' share in continuing operations(1,976)(2,451)
Income (loss) from continuing operations applicable to common shares69,320 (126,342)
Income (loss) from discontinued operations317 270,008 
Noncontrolling interests' share in discontinued operations— (329)
Net income (loss) applicable to common shares$69,637 $143,337 
Denominator  
Basic weighted average shares outstanding539,352 538,679 
Dilutive potential common shares - equity awards(1)
234 — 
Diluted weighted average common shares539,586 538,679 
Basic earnings (loss) per common share
Continuing operations$0.13 $(0.23)
Discontinued operations0.00 0.50 
Net income (loss) applicable to common shares$0.13 $0.27 
Diluted earnings (loss) per common share  
Continuing operations$0.13 $(0.23)
Discontinued operations0.00 0.50 
Net income (loss) applicable to common shares$0.13 $0.27 
_______________________________________
(1)For all periods presented, represents the dilutive impact of 1 million outstanding equity awards (restricted stock units and stock options).
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For the three months ended March 31, 2022, the 9.1 million shares under forward sales agreements that have not been settled as of March 31, 2022 were anti-dilutive. For the three months ended March 31, 2021, forward sales agreements had no dilutive impact as no shares remained outstanding under ATM forward contracts during the period.
For the three months ended March 31, 2022 and 2021, all 7 million shares issuable upon conversion of DownREIT units were not included because they were anti-dilutive.
NOTE 13.  Segment Disclosures
The Company’s reportable segments, based on how its chief operating decision makers (“CODMs”) evaluate the business and allocate resources, are as follows: (i) life science, (ii) medical office, and (iii) CCRC. The Company has non-reportable segments that are comprised primarily of the Company’s interests in an unconsolidated JV that owns 19 senior housing assets (the “SWF SH JV”) and debt investments. The accounting policies of the segments are the same as those described in Note 2 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC, as updated by Note 2 herein.
The Company evaluates performance based on property Adjusted NOI. NOI is defined as real estate revenues (inclusive of rental and related revenues, resident fees and services, income from direct financing leases, and government grant income and exclusive of interest income), less property level operating expenses; NOI excludes all other financial statement amounts included in net income (loss). Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL non-cash interest, amortization of market lease intangibles, termination fees, actuarial reserves for insurance claims that have been incurred but not reported, and the impact of deferred community fee income and expense.
NOI and Adjusted NOI include the Company’s share of income (loss) from unconsolidated joint ventures and exclude noncontrolling interests’ share of income (loss) from consolidated joint ventures. Management believes that Adjusted NOI is an important supplemental measure because it provides relevant and useful information by reflecting only income and operating expense items that are incurred at the property level and presenting it on an unlevered basis. Additionally, management believes that net income (loss) is the most directly comparable GAAP measure to NOI and Adjusted NOI. NOI and Adjusted NOI should not be viewed as alternative measures of operating performance to net income (loss) as defined by GAAP since they do not reflect various excluded items.
Non-segment assets consist of assets in the Company’s other non-reportable segments and corporate non-segment assets. Corporate non-segment assets consist primarily of corporate assets, including cash and cash equivalents, restricted cash, accounts receivable, net, loans receivable, marketable equity securities, other assets, real estate assets held for sale and discontinued operations, and liabilities related to assets held for sale.
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The following tables summarize information for the reportable segments (in thousands):
For the three months ended March 31, 2022:
Life ScienceMedical OfficeCCRCOther Non-reportableCorporate Non-segmentTotal
Total revenues$194,055 $177,263 $121,560 $5,494 $— $498,372 
Government grant income(1)
— — 6,552 — — 6,552 
Less: Interest income— — — (5,494)— (5,494)
Healthpeak’s share of unconsolidated joint venture total revenues1,431 732 — 18,045 — 20,208 
Healthpeak’s share of unconsolidated joint venture government grant income— — 333 315 — 648 
Noncontrolling interests’ share of consolidated joint venture total revenues(57)(8,820)— — — (8,877)
Operating expenses(48,189)(61,170)(97,888)— — (207,247)
Healthpeak’s share of unconsolidated joint venture operating expenses(483)(299)— (14,055)— (14,837)
Noncontrolling interests’ share of consolidated joint venture operating expenses19 2,602 — — — 2,621 
Adjustments to NOI(2)
(14,112)(3,546)— (8)— (17,666)
Adjusted NOI132,664 106,762 30,557 4,297 — 274,280 
Plus: Adjustments to NOI(2)
14,112 3,546 — — 17,666 
Interest income— — — 5,494 — 5,494 
Interest expense— (1,036)(1,865)— (34,685)(37,586)
Depreciation and amortization(78,138)(67,773)(31,822)— — (177,733)
General and administrative— — — — (23,831)(23,831)
Transaction costs(292)(4)— — — (296)
Impairments and loan loss reserves— — — (132)— (132)
Gain (loss) on sales of real estate, net3,856 — — — — 3,856 
Other income (expense), net(9)10,937 6,511 (32)909 18,316 
Less: Government grant income— — (6,552)— — (6,552)
Less: Healthpeak’s share of unconsolidated joint venture NOI(948)(433)(333)(4,305)— (6,019)
Plus: Noncontrolling interests’ share of consolidated joint venture NOI38 6,218 — — — 6,256 
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures71,283 58,217 (3,504)5,330 (57,607)73,719 
Income tax benefit (expense)— — — — (777)(777)
Equity income (loss) from unconsolidated joint ventures966 200 539 379 — 2,084 
Income (loss) from continuing operations72,249 58,417 (2,965)5,709 (58,384)75,026 
Income (loss) from discontinued operations— — — — 317 317 
Net income (loss)$72,249 $58,417 $(2,965)$5,709 $(58,067)$75,343 
_______________________________________
(1)Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the Consolidated Statements of Operations (see Note 2).
(2)Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, and termination fees. Includes the Company’s share of income (loss) generated by unconsolidated joint ventures and excludes noncontrolling interests’ share of income (loss) generated by consolidated joint ventures.


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For the three months ended March 31, 2021:
 Life ScienceMedical OfficeCCRCOther Non-reportableCorporate Non-segmentTotal
Total revenues$169,934 $160,201 $116,128 $9,013 $— $455,276 
Government grant income(1)
— — 1,310 — — 1,310 
Less: Interest income— — — (9,013)— (9,013)
Healthpeak’s share of unconsolidated joint venture total revenues1,337 715 4,488 16,753 — 23,293 
Healthpeak’s share of unconsolidated joint venture government grant income— — 199 227 — 426 
Noncontrolling interests’ share of consolidated joint venture total revenues(65)(8,926)— — — (8,991)
Operating expenses(39,461)(51,121)(91,179)— — (181,761)
Healthpeak’s share of unconsolidated joint venture operating expenses(425)(294)(4,745)(12,595)— (18,059)
Noncontrolling interests’ share of consolidated joint venture operating expenses20 2,504 — — — 2,524 
Adjustments to NOI(2)
(11,810)(1,923)20 112 — (13,601)
Adjusted NOI119,530 101,156 26,221 4,497 — 251,404 
Plus: Adjustments to NOI(2)
11,810 1,923 (20)(112)— 13,601 
Interest income— — — 9,013 — 9,013 
Interest expense(102)(95)(1,918)— (44,728)(46,843)
Depreciation and amortization(68,434)(57,954)(31,150)— — (157,538)
General and administrative— — — — (24,902)(24,902)
Transaction costs(32)(330)(432)(4)— (798)
Impairments and loan loss reserves— — — (3,242)— (3,242)
Gain (loss) on debt extinguishments— — — — (164,292)(164,292)
Other income (expense), net(2,279)2,176 482 1,817 2,200 
Less: Government grant income— — (1,310)— — (1,310)
Less: Healthpeak’s share of unconsolidated joint venture NOI(912)(421)58 (4,385)— (5,660)
Plus: Noncontrolling interests’ share of consolidated joint venture NOI45 6,422 — — — 6,467 
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures61,909 48,422 (6,375)6,249 (232,105)(121,900)
Income tax benefit (expense)— — — — (8)(8)
Equity income (loss) from unconsolidated joint ventures(93)192 — 1,224 — 1,323 
Income (loss) from continuing operations61,816 48,614 (6,375)7,473 (232,113)(120,585)
Income (loss) from discontinued operations— — — — 270,008 270,008 
Net income (loss)$61,816 $48,614 $(6,375)$7,473 $37,895 $149,423 
______________________________________________________________________________
(1)Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the Consolidated Statements of Operations (see Note 2).
(2)Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, and termination fees. Includes the Company’s share of income (loss) generated by unconsolidated joint ventures and excludes noncontrolling interests’ share of income (loss) generated by consolidated joint ventures.
See Notes 3, 4, and 5 for significant transactions impacting the Company’s segment assets during the periods presented.
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NOTE 14.  Supplemental Cash Flow Information
The following table provides supplemental cash flow information (in thousands):
 Three Months Ended March 31,
 20222021
Supplemental cash flow information:  
Interest paid, net of capitalized interest$58,487 $90,032 
Income taxes paid (refunded)(1,947)2,521 
Capitalized interest8,305 5,453 
Supplemental schedule of non-cash investing and financing activities:
Increase in ROU asset in exchange for new lease liability related to operating leases179 5,020 
Seller financing provided on disposition of real estate asset— 559,745 
Accrued construction costs163,277 107,798 
Vesting of restricted stock units and conversion of non-managing member units into common stock752 838 
The following table summarizes certain cash flow information related to assets classified as discontinued operations (in thousands):
Three Months Ended March 31,
20222021
Leasing costs, tenant improvements, and recurring capital expenditures$18 $1,873 
Development, redevelopment, and other major improvements of real estate— 3,861 
Depreciation and amortization of real estate, in-place lease, and other intangibles— — 

The following table summarizes cash, cash equivalents and restricted cash (in thousands):
Three Months Ended March 31,
202220212022202120222021
Continuing operationsDiscontinued operationsTotal
Beginning of period:
Cash and cash equivalents$158,287 $44,226 $7,707 $53,085 $165,994 $97,311 
Restricted cash53,454 67,206 — 17,168 53,454 84,374 
Cash, cash equivalents and restricted cash$211,741 $111,432 $7,707 $70,253 $219,448 $181,685 
End of period:
Cash and cash equivalents$89,066 $34,007 $7,989 $40,161 $97,055 $74,168 
Restricted cash52,103 68,033 — 5,817 52,103 73,850 
Cash, cash equivalents and restricted cash$141,169 $102,040 $7,989 $45,978 $149,158 $148,018 
NOTE 15.  Variable Interest Entities
Unconsolidated Variable Interest Entities
At March 31, 2022 and December 31, 2021, the Company had investments in: (i) two unconsolidated VIE joint ventures and (ii) marketable debt securities of one VIE. The Company determined it is not the primary beneficiary of and therefore does not consolidate these VIEs because it does not have the ability to control the activities that most significantly impact their economic performance. Except for the Company’s equity interest in the unconsolidated joint ventures (the LLC investment and Needham Land Parcel JV discussed below), it has no formal involvement in these VIEs beyond its investments.
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Debt Securities Investment. The Company holds commercial mortgage-backed securities (“CMBS”) issued by Federal Home Loan Mortgage Corporation (commonly referred to as Freddie MAC) through a special purpose entity that has been identified as a VIE because it is “thinly capitalized.” The CMBS issued by the VIE are backed by mortgage debt obligations on real estate assets. These securities are classified as held-to-maturity because the Company has the intent and ability to hold the securities until maturity.
LLC Investment. The Company holds a limited partner ownership interest in an unconsolidated LLC that has been identified as a VIE. The Company’s involvement in the entity is limited to its equity investment as a limited partner and it does not have any substantive participating rights or kick-out rights over the general partner. The assets and liabilities of the entity primarily consist of those associated with its senior housing real estate and development activities. Any assets generated by the entity may only be used to settle its contractual obligations (primarily development expenses and debt service payments).
Needham Land Parcel JV. In December 2021, the Company acquired a 38% interest in a life science development joint venture in Needham, Massachusetts for $13 million. Current equity at risk is not sufficient to finance the joint venture’s activities. The assets and liabilities of the entity primarily consist of real estate and debt service obligations. Any assets generated by the entity may only be used to settle its contractual obligations (primarily development expenses and debt service payments).
The classification of the related assets and liabilities and the maximum loss exposure as a result of the Company’s involvement with these VIEs at March 31, 2022 was as follows (in thousands):
VIE TypeAsset Type
Maximum Loss
Exposure
and Carrying
Amount(1)
Continuing operations:
CMBS and LLC investmentOther assets, net$36,492 
Needham Land Parcel JVInvestments in and advances to unconsolidated joint ventures14,346 
_______________________________________
(1)The Company’s maximum loss exposure represents the aggregate carrying amount of such investments (including accrued interest).
As of March 31, 2022, the Company had not provided, and is not required to provide, financial support through a liquidity arrangement or otherwise, to its unconsolidated VIEs, including under circumstances in which it could be exposed to further losses (e.g., cash shortfalls).
See Notes 3, 4, and 7 for additional descriptions of the nature, purpose, and operating activities of the Company’s unconsolidated VIEs and interests therein.
Consolidated Variable Interest Entities
The Company’s consolidated total assets and total liabilities at March 31, 2022 and December 31, 2021 include certain assets of VIEs that can only be used to settle the liabilities of the related VIE. The VIE creditors do not have recourse to the Company.
Ventures V, LLC.  The Company holds a 51% ownership interest in and is the managing member of a joint venture entity formed in October 2015 that owns and leases MOBs (“Ventures V”). The Company classifies Ventures V as a VIE due to the non-managing member lacking substantive participation rights in the management of Ventures V or kick-out rights over the managing member. The Company consolidates Ventures V as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of Ventures V primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of capital expenditures for the properties. Assets generated by Ventures V may only be used to settle its contractual obligations (primarily from capital expenditures).
Life Science JVs.  The Company holds a 99% ownership interest in multiple joint venture entities that own and lease life science assets (the “Life Science JVs”). The Life Science JVs are VIEs as the members share in control of the entities, but substantially all of the activities are performed on behalf of the Company. The Company consolidates the Life Science JVs as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the Life Science JVs primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the Life Science JVs may only be used to settle their contractual obligations (primarily from capital expenditures). Refer to Note 11 for a discussion of certain put options associated with the Life Science JVs.
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MSREI MOB JV. The Company holds a 51% ownership interest in, and is the managing member of, a joint venture entity formed in August 2018 that owns and leases MOBs (the “MSREI JV”). The MSREI JV is a VIE due to the non-managing member lacking substantive participation rights in the management of the joint venture or kick-out rights over the managing member. The Company consolidates the MSREI JV as the primary beneficiary because it has the ability to control the activities that most significantly impact the VIE’s economic performance. The assets of the MSREI JV primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; its obligations primarily consist of capital expenditures for the properties. Assets generated by the MSREI JV may only be used to settle its contractual obligations (primarily from capital expenditures).
DownREITs.  The Company holds a controlling ownership interest in and is the managing member of seven DownREITs. The Company classifies the DownREITs as VIEs due to the non-managing members lacking substantive participation rights in the management of the DownREITs or kick-out rights over the managing member. The Company consolidates the DownREITs as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the DownREITs primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the DownREITs (primarily from resident rents) may only be used to settle their contractual obligations (primarily from debt service and capital expenditures).
Other Consolidated Real Estate Partnerships. The Company holds a controlling ownership interest in and is the general partner (or managing member) of multiple partnerships that own and lease real estate assets (the “Partnerships”). The Company classifies the Partnerships as VIEs due to the limited partners (non-managing members) lacking substantive participation rights in the management of the Partnerships or kick-out rights over the general partner (managing member). The Company consolidates the Partnerships as the primary beneficiary because it has the ability to control the activities that most significantly impact these VIEs’ economic performance. The assets of the Partnerships primarily consist of leased properties (net real estate), rents receivable, and cash and cash equivalents; their obligations primarily consist of debt service payments and capital expenditures for the properties. Assets generated by the Partnerships (primarily from resident rents) may only be used to settle their contractual obligations (primarily from debt service and capital expenditures).
Exchange Accommodation Titleholder. During the three months ended March 31, 2022, the Company acquired two MOBs (the “acquired properties”) using a reverse like-kind exchange structure pursuant to Section 1031 of the Internal Revenue Code (a “reverse 1031 exchange”). As of March 31, 2022, the Company had not completed the reverse 1031 exchange and as such, the acquired properties remained in the possession of the Exchange Accommodation Titleholder (“EAT”). The EAT was classified as a VIE as it was a “thinly capitalized” entity. The Company consolidated the EAT because it had the ability to control the activities that most significantly impacted the economic performance of the EAT and was, therefore, the primary beneficiary of the EAT. The properties held by the EAT had a carrying value of $43 million as of March 31, 2022. The assets of the EAT primarily consisted of leased properties (net real estate, including intangibles), rents receivable, and cash and cash equivalents; their obligations primarily consisted of capital expenditures for the properties. Assets generated by the EAT may only be used to settle its contractual obligations (primarily from capital expenditures).
Additionally, during the year ended December 31, 2021, the Company acquired two MOBs using reverse 1031 exchanges. As of December 31, 2021, the Company had not completed the reverse 1031 exchanges and as such, the acquired properties remained in the possession of the EAT. These properties held by the EAT had a carrying value of $77 million as of December 31, 2021. These reverse 1031 exchanges were completed in February 2022.
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Total assets and total liabilities include VIE assets and liabilities as follows (in thousands):
 March 31,
2022
December 31,
2021
Assets  
Buildings and improvements$2,303,407 $2,303,920 
Development costs and construction in progress107,066 82,303 
Land509,678 548,168 
Accumulated depreciation and amortization(569,437)(551,097)
Net real estate2,350,714 2,383,294 
Accounts receivable, net4,854 5,455 
Cash and cash equivalents37,080 22,295 
Restricted cash162 114 
Intangible assets, net109,993 117,180 
Assets held for sale and discontinued operations, net288 754 
Right-of-use asset, net106,600 107,993 
Other assets, net65,201 62,886 
Total assets$2,674,892 $2,699,971 
Liabilities  
Mortgage debt$144,425 $144,350 
Intangible liabilities, net27,549 23,909 
Liabilities related to assets held for sale and discontinued operations, net1,677 1,677 
Lease liability98,474 99,213 
Accounts payable, accrued liabilities, and other liabilities56,712 58,440 
Deferred revenue24,405 21,546 
Total liabilities $353,242 $349,135 
Total assets and liabilities related to assets held for sale and discontinued operations include VIE assets and liabilities as follows (in thousands):
March 31,
2022
December 31,
2021
Assets
Accounts receivable, net$62 $62 
Cash and cash equivalents225 59 
Other assets, net633 
Total assets $288 $754 
Liabilities
Accounts payable, accrued liabilities, and other liabilities$1,677 $1,677 
Total liabilities $1,677 $1,677 
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NOTE 16.  Fair Value Measurements
Financial assets and liabilities measured at fair value on a recurring basis in the Consolidated Balance Sheets were immaterial at March 31, 2022 and December 31, 2021.
The table below summarizes the carrying amounts and fair values of the Company’s financial instruments (in thousands):
 
March 31, 2022(3)
December 31, 2021(3)
 Carrying
Value
Fair ValueCarrying
Value
Fair Value
Loans receivable, net(2)
$409,753 $424,346 $415,811 $437,607 
Marketable debt securities(2)
21,172 21,172 21,003 21,003 
Interest rate cap assets(2)
2,391 2,391 397 397 
Bank line of credit and commercial paper(2)
1,330,813 1,330,813 1,165,975 1,165,975 
Senior unsecured notes(1)
4,654,056 4,669,414 4,651,933 5,054,747 
Mortgage debt(2)
350,713 344,995 352,081 352,800 
_______________________________________
(1)Level 1: Fair value calculated based on quoted prices in active markets.
(2)Level 2: Fair value based on (i) for marketable debt securities, quoted prices for similar or identical instruments in active or inactive markets, respectively, or (ii) for loans receivable, net, mortgage debt, and caps, standardized pricing models in which significant inputs or value drivers are observable in active markets. For bank line of credit and commercial paper, the carrying values are a reasonable estimate of fair value because the borrowings are primarily based on market interest rates and the Company’s credit rating.
(3)During the three months ended March 31, 2022 and year ended December 31, 2021, there were no material transfers of financial assets or liabilities within the fair value hierarchy.
NOTE 17.  Derivative Financial Instruments
The Company uses derivative instruments to mitigate the effects of interest rate fluctuations on specific forecasted transactions as well as recognized financial obligations or assets. Utilizing derivative instruments allows the Company to manage the risk of fluctuations in interest rates related to the potential impact these changes could have on future earnings and forecasted cash flows. The Company does not use derivative instruments for speculative or trading purposes.
In March 2021, the Company repaid $39 million of variable rate secured debt on two SHOP assets and terminated the two remaining related interest rate swap contracts. Therefore, at March 31, 2022 and December 31, 2021, the Company had no remaining interest rate swap contracts.
In April 2021, the Company executed two interest rate cap agreements on its mortgage debt issued in conjunction with the acquisition of the MOB Portfolio (see Note 3).
The following table summarizes the Company’s outstanding interest rate cap agreements as of March 31, 2022 (in thousands):
Date EnteredMaturity DateHedge DesignationNotionalStrike RateIndex
Fair Value(1)
April 2021(2)
May 2024Non-designated$142,100 2.00 %1 mo. USD-LIBOR-BBA$2,391 
_____________________________
(1)Derivative assets are recorded in other assets, net in the Consolidated Balance Sheets.
(2)Represents two interest rate cap agreements that manage the Company’s exposure to variable cash flows on certain mortgage debt borrowings by limiting interest rates.
During the three months ended March 31, 2022, the Company recognized a $2 million increase in the fair value of the interest rate cap agreements within other income (expense), net.
In April 2022, the Company terminated its existing interest rate cap agreements associated with $142 million of variable rate mortgage debt and entered into two interest rate swap contracts that are designated as cash flow hedges and mature in May 2026.
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NOTE 18.    Accounts Payable, Accrued Liabilities, and Other Liabilities
The following table summarizes the Company’s accounts payable, accrued liabilities, and other liabilities, excluding accounts payable, accrued liabilities, and other liabilities related to assets classified as discontinued operations (in thousands):
 March 31,
2022
December 31,
2021
Refundable entrance fees(1)
$281,242 $288,409 
Accrued construction costs163,277 179,995 
Accrued interest35,753 59,342 
Other accounts payable and accrued liabilities215,101 227,638 
Accounts payable, accrued liabilities, and other liabilities$695,373 $755,384 
_______________________________________
(1)At March 31, 2022 and December 31, 2021, unamortized nonrefundable entrance fee liabilities were $498 million and $496 million, respectively, which are recorded within deferred revenue on the Consolidated Balance Sheets. During the three months ended March 31, 2022, the Company collected nonrefundable entrance fees of $21 million and recognized amortization of $19 million. During the three months ended March 31, 2021, the Company collected nonrefundable entrance fees of $15 million and recognized amortization of $20 million. The amortization of nonrefundable entrance fees is included within resident fees and services on the Consolidated Statements of Operations.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
All references in this report to “Healthpeak,” the “Company,” “we,” “us” or “our” mean Healthpeak Properties, Inc., together with its consolidated subsidiaries. Unless the context suggests otherwise, references to “Healthpeak Properties, Inc.” mean the parent company without its subsidiaries.
Cautionary Language Regarding Forward-Looking Statements
Statements in this Quarterly Report on Form 10-Q that are not historical factual statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include, among other things, statements regarding our and our officers’ intent, belief or expectation as identified by the use of words such as “may,” “will,” “project,” “expect,” “believe,” “intend,” “anticipate,” “seek,” “target,” “forecast,” “plan,” “potential,” “estimate,” “could,” “would,” “should” and other comparable and derivative terms or the negatives thereof. Forward-looking statements reflect our current expectations and views about future events and are subject to risks and uncertainties that could cause actual results, including our future financial condition and results of operations, to differ materially from those expressed or implied by any forward-looking statements. You are urged to carefully review the disclosures we make concerning risks and uncertainties that may affect our business and future financial performance.
Forward-looking statements are based on certain assumptions and analysis made in light of our experience and perception of historical trends, current conditions and expected future developments as well as other factors that we believe are appropriate under the circumstances. While forward-looking statements reflect our good faith belief and assumptions we believe to be reasonable based upon current information, we can give no assurance that our expectations or forecasts will be attained. Further, we cannot guarantee the accuracy of any such forward-looking statement contained in this Quarterly Report.
As more fully set forth under Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, risks and uncertainties that may cause our actual results to differ materially from the expectations contained in the forward-looking statements include, among other things:
the coronavirus (“Covid”) pandemic and health and safety measures intended to reduce its spread, the availability, effectiveness and public usage and acceptance of vaccines, and how quickly and to what extent normal economic and operating conditions can resume within the markets in which we operate;
the ability of our existing and future tenants, operators, and borrowers to conduct their respective businesses in a manner sufficient to maintain or increase their revenues and manage their expenses in order to generate sufficient income to make rent and loan payments to us and our ability to recover investments made, if applicable, in their operations;
increased competition, operating costs, and market changes affecting our tenants, operators, and borrowers;
the financial condition of our tenants, operators, and borrowers, including potential bankruptcies and downturns in their businesses, and their legal and regulatory proceedings;
our concentration of real estate investments in the healthcare property sector, which makes us more vulnerable to a downturn in a specific sector than if we invested in multiple industries and exposes us to the risks inherent in illiquid investments;
our ability to identify and secure replacement tenants and operators and the potential renovation costs and regulatory approvals associated therewith;
our property development, redevelopment, and tenant improvement activity risks, including project abandonments, project delays, and lower profits than expected;
changes within the life science industry;
high levels of regulation, funding requirements, expense and uncertainty faced by our life science tenants;
the ability of the hospitals on whose campuses our medical office buildings (“MOBs”) are located and their affiliated healthcare systems to remain competitive or financially viable;
our ability to maintain or expand our hospital and health system client relationships;
operational risks associated with third party management contracts, including the additional regulation and liabilities of our properties operated through structures permitted by the Housing and Economic Recovery Act of 2008, which includes most of the provisions previously proposed in the REIT Investment Diversification and Empowerment Act of 2007 (commonly referred to as “RIDEA”);
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economic and other conditions that negatively affect geographic areas from which we recognize a greater percentage of our revenue;
uninsured or underinsured losses, which could result in significant losses and/or performance declines by us or our tenants and operators;
our investments in joint ventures and unconsolidated entities, including our lack of sole decision making authority and our reliance on our partners’ financial condition and continued cooperation;
our use of fixed rent escalators, contingent rent provisions and/or rent escalators based on the Consumer Price Index;
competition for suitable healthcare properties to grow our investment portfolio;
our ability to foreclose on collateral securing our real estate-related loans;
our ability to make material acquisitions and successfully integrate them;
the potential impact on us and our tenants, operators, and borrowers from litigation matters, including rising liability and insurance costs;
an increase in our borrowing costs, including due to higher interest rates;
the availability of external capital on acceptable terms or at all, including due to rising interest rates, changes in our credit ratings and the value of our common stock, volatility or uncertainty in the capital markets, and other factors;
cash available for distribution to stockholders and our ability to make dividend distributions at expected levels;
our ability to manage our indebtedness level and covenants in and changes to the terms of such indebtedness;
changes in global, national and local economic and other conditions;
laws or regulations prohibiting eviction of our tenants;
the failure of our tenants, operators, and borrowers to comply with federal, state and local laws and regulations, including resident health and safety requirements, as well as licensure, certification, and inspection requirements;
required regulatory approvals to transfer our senior housing properties;
compliance with the Americans with Disabilities Act and fire, safety and other regulations;
the requirements of, or changes to, governmental reimbursement programs such as Medicare or Medicaid;
legislation to address federal government operations and administration decisions affecting the Centers for Medicare and Medicaid Services;
our participation in the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) Provider Relief Fund and other Covid-related stimulus and relief programs;
provisions of Maryland law and our charter that could prevent a transaction that may otherwise be in the interest of our stockholders;
environmental compliance costs and liabilities associated with our real estate investments;
our ability to maintain our qualification as a real estate investment trust (“REIT”);
changes to U.S. federal income tax laws, and potential deferred and contingent tax liabilities from corporate acquisitions;
calculating non-REIT tax earnings and profits distributions;
ownership limits in our charter that restrict ownership in our stock;
the loss or limited availability of our key personnel; and
our reliance on information technology systems and the potential impact of system failures, disruptions or breaches.
Except as required by law, we do not undertake, and hereby disclaim, any obligation to update any forward-looking statements, which speak only as of the date on which they are made.
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Overview
The information set forth in this Item 2 is intended to provide readers with an understanding of our financial condition, changes in financial condition and results of operations. We will discuss and provide our analysis in the following order:
Executive Summary
Covid Update
Overview of Transactions
Dividends
Results of Operations
Liquidity and Capital Resources
Non-GAAP Financial Measures Reconciliations
Critical Accounting Estimates and Recent Accounting Pronouncements
Executive Summary
Healthpeak Properties, Inc. is a Standard & Poor’s (“S&P”) 500 company that acquires, develops, owns, leases and manages healthcare real estate across the United States (“U.S.”). Our company was originally founded in 1985. We are a Maryland corporation and qualify as a self-administered REIT. Our corporate headquarters are located in Denver, Colorado and we have additional offices in California, Tennessee, and Massachusetts.
During 2020, we began the process of disposing of our senior housing triple-net and senior housing operating property (“SHOP”) portfolios. As of December 31, 2020, we concluded that the planned dispositions represented a strategic shift that had and will have a major effect on our operations and financial results and, therefore, the assets are classified as discontinued operations in all periods presented herein. In September 2021, we successfully completed the disposition of both portfolios. See Note 4 to the Consolidated Financial Statements for further information regarding discontinued operations.
In conjunction with the disposal of our senior housing triple-net and SHOP portfolios, we focused our strategy on investing in a diversified portfolio of high-quality healthcare properties across our three core asset classes of life science, medical office, and continuing care retirement community (“CCRC”) real estate. Under the life science and medical office segments, we invest through the acquisition, development and management of life science facilities, MOBs, and hospitals. Under the CCRC segment, our properties are operated through RIDEA structures. We have other non-reportable segments that are comprised primarily of debt investments and an interest in an unconsolidated joint venture that owns 19 senior housing assets (our “SWF SH JV”).
At March 31, 2022, our portfolio of investments, including properties in our unconsolidated joint ventures, consisted of interests in 483 properties. The following table summarizes information for our reportable and other non-reportable segments, excluding discontinued operations, for the three months ended March 31, 2022 (dollars in thousands):
Segment
Total Portfolio Adjusted NOI(1)
Percentage of Total Portfolio Adjusted NOINumber of Properties
Life science$132,664 48 %149 
Medical office106,762 39 %300 
CCRC30,557 11 %15 
Other non-reportable4,297 %19 
Totals$274,280 100 %483 
_______________________________________
(1)Total Portfolio metrics include results of operations from disposed properties through the disposition date. See “Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for additional information regarding Adjusted NOI and see Note 13 to the Consolidated Financial Statements for a reconciliation of Adjusted NOI by segment to net income (loss).
For a description of our significant activities during 2022, see “Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview of Transactions” in this report.
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We invest in and manage our real estate portfolio for the long-term to maximize benefit to our stockholders and support the growth of our dividends. Our strategy consists of four core elements:
(i)Our real estate: Our portfolio is grounded in high-quality properties in desirable locations. We focus on three purposely selected private pay asset classes—life science, medical office, and continuing care retirement community—to provide stability through inevitable market cycles.
(ii)Our financials: We maintain a strong investment-grade balance sheet with ample liquidity as well as long-term fixed-rate debt financing with staggered maturities to reduce our exposure to interest rate volatility and refinancing risk.
(iii)Our partnerships: We work with leading healthcare companies, operators, and service providers and are responsive to their space and capital needs. We provide high-quality property management services to encourage tenants to renew, expand, and relocate into our properties, which drives increased occupancy, rental rates, and property values.
(iv)Our platform: We have a people-first culture that we believe attracts, develops and retains top talent. We continually strive to create and maintain an industry-leading platform, with systems and tools that allow us to effectively and efficiently manage our assets and investment activity.
Covid Update
Our tenants, operators, and borrowers have experienced significant cost increases as a result of increased health and safety measures, staffing shortages, increased governmental regulation and compliance, vaccine mandates, and other operational changes necessitated either directly or indirectly by the Covid pandemic. We anticipate that many of these expenses will remain at these higher levels even after the pandemic passes, and may reduce margins in the business. In addition, the pandemic, including labor and supply chain disruptions and/or other economic conditions caused by the pandemic, could adversely impact the scheduled completion and/or cost of our development, redevelopment and tenant improvement projects.
Senior housing facilities have been disproportionately impacted by Covid and Covid-related fatalities compared to our life science and medical office segments. Although the wide availability of the vaccine has reduced the negative impacts of the pandemic in our CCRC communities and the senior housing facilities owned by our SWF SH JV, we do not yet know the full, long-term economic impact of the Covid pandemic and whether or when occupancy and revenue will return to pre-pandemic levels. Labor costs in particular have increased as a result of higher staffing hours, increased hourly wages and bonuses, greater overtime, and increased usage of contract labor. In addition, the pandemic has resulted in some potentially long-term changes in traditional economic patterns and arrangements, including that (i) seniors may not seek out senior housing at the same level that they did pre-pandemic; (ii) recent legislation that favors delivery of services at home rather than in an institutional setting could negatively impact the segment; (iii) qualified employees may view employment at senior housing facilities less attractively than they did pre-pandemic; (iv) the number of people who have not returned to the workforce could create long-term staffing shortages; (v) changing expectations around the protection required for residents in senior housing facilities may increase costs; (vi) senior housing operators are undertaking numerous adaptations in response to these changes, the success of which adaptations is uncertain; and (vii) the inflationary environment could permanently alter behavior in unpredictable ways.
We believe we remain well-positioned to navigate economic changes resulting from the pandemic, with approximately $2.12 billion of liquidity available, including $1.69 billion of borrowing capacity under our Revolving Facility (as defined below), $313 million of net proceeds expected from the future settlement of shares issued through our ATM forward contracts (as defined below), and approximately $124 million of cash and cash equivalents as of May 2, 2022.
See Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for additional discussion of the risks posed by the Covid pandemic and uncertainties we and our tenants, operators, and borrowers may face as a result.
Overview of Transactions
67 Smith Place
In January 2022, we closed a life science acquisition in Cambridge, Massachusetts for $72 million.
Vista Sorrento Phase II
In January 2022, we closed a life science acquisition in San Diego, California for $24 million.
Webster MOB Portfolio
In March 2022, we acquired a portfolio of two MOBs in Houston, Texas for $43 million.
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Other Real Estate Transactions
During the three months ended March 31, 2022, we sold one life science facility in Utah for $14 million.
Also during the three months ended March 31, 2022, we sold our remaining hospital classified as a direct financing lease (“DFL”) for $68 million.
In April 2022, we sold one MOB in San Antonio, Texas for $13 million.
Financing Activities
In April 2022, we terminated our existing interest rate cap agreements associated with $142 million of variable rate mortgage debt and entered into two interest rate swap contracts that are designated as cash flow hedges and mature in May 2026.
Development Activities
At March 31, 2022, we had seven life science development projects in process with an aggregate total estimated cost of approximately $1.3 billion.
During the three months ended March 31, 2022, the following projects were placed in service: (i) three MOB development projects with total costs incurred of $58 million, (ii) one life science development project with total costs incurred of $36 million, (iii) one life science redevelopment project with total costs incurred of $60 million, and (iv) a portion of one life science development project with total costs incurred of $40 million.
Dividends
The following table summarizes our common stock cash dividends declared in 2022:
Declaration DateRecord DateAmount
Per Share
Dividend
Payment Date
January 27February 11$0.30 February 22
April 28May 90.30 May 20
Results of Operations
We evaluate our business and allocate resources among our reportable business segments: (i) life science, (ii) medical office, and (iii) CCRC. Under the life science and medical office segments, we invest through the acquisition, development, and management of life science facilities, MOBs, and hospitals, which generally requires a greater level of property management. Our CCRCs are operated through RIDEA structures. We have other non-reportable segments that are comprised primarily of: (i) an interest in our unconsolidated SWF SH JV and (ii) debt investments. We evaluate performance based upon property adjusted net operating income (“Adjusted NOI” or “Cash NOI”) in each segment. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the U.S. Securities and Exchange Commission (“SEC”), as updated by Note 2 to the Consolidated Financial Statements herein.
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Non-GAAP Financial Measures
Net Operating Income
NOI and Adjusted NOI are non-U.S. generally accepted accounting principles (“GAAP”) supplemental financial measures used to evaluate the operating performance of real estate. NOI is defined as real estate revenues (inclusive of rental and related revenues, resident fees and services, income from direct financing leases, and government grant income and exclusive of interest income), less property level operating expenses; NOI excludes all other financial statement amounts included in net income (loss) as presented in Note 13 to the Consolidated Financial Statements. Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL non-cash interest, amortization of market lease intangibles, termination fees, actuarial reserves for insurance claims that have been incurred but not reported, and the impact of deferred community fee income and expense. NOI and Adjusted NOI include our share of income (loss) generated by unconsolidated joint ventures and exclude noncontrolling interests’ share of income (loss) generated by consolidated joint ventures. Adjusted NOI is oftentimes referred to as “Cash NOI.” Management believes NOI and Adjusted NOI are important supplemental measures because they provide relevant and useful information by reflecting only income and operating expense items that are incurred at the property level and present them on an unlevered basis. We use NOI and Adjusted NOI to make decisions about resource allocations, to assess and compare property level performance, and to evaluate our Same-Store (“SS”) performance, as described below. We believe that net income (loss) is the most directly comparable GAAP measure to NOI and Adjusted NOI. NOI and Adjusted NOI should not be viewed as alternative measures of operating performance to net income (loss) as defined by GAAP since they do not reflect various excluded items. Further, our definitions of NOI and Adjusted NOI may not be comparable to the definitions used by other REITs or real estate companies, as they may use different methodologies for calculating NOI and Adjusted NOI. For a reconciliation of NOI and Adjusted NOI to net income (loss) by segment, refer to Note 13 to the Consolidated Financial Statements.
Operating expenses generally relate to leased medical office and life science properties, as well as CCRC facilities. We generally recover all or a portion of our leased medical office and life science property expenses through tenant recoveries. We present expenses as operating or general and administrative based on the underlying nature of the expense.
Same-Store
Same-Store NOI and Adjusted (Cash) NOI information allows us to evaluate the performance of our property portfolio under a consistent population by eliminating changes in the composition of our consolidated portfolio of properties. Same-Store Adjusted NOI excludes amortization of deferred revenue from tenant-funded improvements and certain non-property specific operating expenses that are allocated to each operating segment on a consolidated basis.
Properties are included in Same-Store once they are stabilized for the full period in both comparison periods. Newly acquired operating assets are generally considered stabilized at the earlier of lease-up (typically when the tenant(s) control(s) the physical use of at least 80% of the space and rental payments have commenced) or 12 months from the acquisition date. Newly completed developments and redevelopments are considered stabilized at the earlier of lease-up or 24 months from the date the property is placed in service. Properties that experience a change in reporting structure are considered stabilized after 12 months in operations under a consistent reporting structure. A property is removed from Same-Store when it is classified as held for sale, sold, placed into redevelopment, experiences a casualty event that significantly impacts operations, a change in reporting structure or operator transition has been agreed to, or a significant tenant relocates from a Same-Store property to a non Same-Store property and that change results in a corresponding increase in revenue. We do not report Same-Store metrics for our other non-reportable segments. For a reconciliation of Same-Store to total portfolio Adjusted NOI and other relevant disclosures by segment, refer to our Segment Analysis below.
Funds From Operations (“FFO”)
FFO encompasses Nareit FFO and FFO as Adjusted, each of which is described in detail below. We believe FFO applicable to common shares, diluted FFO applicable to common shares, and diluted FFO per common share are important supplemental non-GAAP measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets utilizes straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. The term FFO was designed by the REIT industry to address this issue.
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Nareit FFO. FFO, as defined by the National Association of Real Estate Investment Trusts (“Nareit”), is net income (loss) applicable to common shares (computed in accordance with GAAP), excluding gains or losses from sales of depreciable property, including any current and deferred taxes directly associated with sales of depreciable property, impairments of, or related to, depreciable real estate, plus real estate and other real estate-related depreciation and amortization, and adjustments to compute our share of Nareit FFO and FFO as Adjusted (see below) from joint ventures. Adjustments for joint ventures are calculated to reflect our pro-rata share of both our consolidated and unconsolidated joint ventures. We reflect our share of Nareit FFO for unconsolidated joint ventures by applying our actual ownership percentage for the period to the applicable reconciling items on an entity by entity basis. For consolidated joint ventures in which we do not own 100%, we reflect our share of the equity by adjusting our Nareit FFO to remove the third party ownership share of the applicable reconciling items based on actual ownership percentage for the applicable periods. Our pro-rata share information is prepared on a basis consistent with the comparable consolidated amounts, is intended to reflect our proportionate economic interest in the operating results of properties in our portfolio and is calculated by applying our actual ownership percentage for the period. We do not control the unconsolidated joint ventures, and the pro-rata presentations of reconciling items included in Nareit FFO do not represent our legal claim to such items. The joint venture members or partners are entitled to profit or loss allocations and distributions of cash flows according to the joint venture agreements, which provide for such allocations generally according to their invested capital.
The presentation of pro-rata information has limitations, which include, but are not limited to, the following: (i) the amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage determined when applying the equity method of accounting and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses and (ii) other companies in our industry may calculate their pro-rata interest differently, limiting the usefulness as a comparative measure. Because of these limitations, the pro-rata financial information should not be considered independently or as a substitute for our financial statements as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP financial statements, using the pro-rata financial information as a supplement.
Nareit FFO does not represent cash generated from operating activities in accordance with GAAP, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income (loss). We compute Nareit FFO in accordance with the current Nareit definition; however, other REITs may report Nareit FFO differently or have a different interpretation of the current Nareit definition from ours.
FFO as Adjusted. In addition, we present Nareit FFO on an adjusted basis before the impact of non-comparable items including, but not limited to, transaction-related items, other impairments (recoveries) and other losses (gains), restructuring and severance related charges, prepayment costs (benefits) associated with early retirement or payment of debt, litigation costs (recoveries), casualty-related charges (recoveries), foreign currency remeasurement losses (gains), deferred tax asset valuation allowances, and changes in tax legislation (“FFO as Adjusted”). Transaction-related items include transaction expenses and gains/charges incurred as a result of mergers and acquisitions and lease amendment or termination activities. Prepayment costs (benefits) associated with early retirement of debt include the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of debt. Other impairments (recoveries) and other losses (gains) include interest income associated with early and partial repayments of loans receivable and other losses or gains associated with non-depreciable assets including goodwill, DFLs, undeveloped land parcels, and loans receivable. Management believes that FFO as Adjusted provides a meaningful supplemental measurement of our FFO run-rate and is frequently used by analysts, investors, and other interested parties in the evaluation of our performance as a REIT. At the same time that Nareit created and defined its FFO measure for the REIT industry, it also recognized that “management of each of its member companies has the responsibility and authority to publish financial information that it regards as useful to the financial community.” We believe stockholders, potential investors, and financial analysts who review our operating performance are best served by an FFO run-rate earnings measure that includes certain other adjustments to net income (loss), in addition to adjustments made to arrive at the Nareit defined measure of FFO. FFO as Adjusted is used by management in analyzing our business and the performance of our properties and we believe it is important that stockholders, potential investors, and financial analysts understand this measure used by management. We use FFO as Adjusted to: (i) evaluate our performance in comparison with expected results and results of previous periods, relative to resource allocation decisions, (ii) evaluate the performance of our management, (iii) budget and forecast future results to assist in the allocation of resources, (iv) assess our performance as compared with similar real estate companies and the industry in general, and (v) evaluate how a specific potential investment will impact our future results. Other REITs or real estate companies may use different methodologies for calculating an adjusted FFO measure, and accordingly, our FFO as Adjusted may not be comparable to those reported by other REITs. For a reconciliation of net income (loss) to Nareit FFO and FFO as Adjusted and other relevant disclosure, refer to “Non-GAAP Financial Measures Reconciliations” below.
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Adjusted FFO (“AFFO”). AFFO is defined as FFO as Adjusted after excluding the impact of the following: (i) amortization of stock-based compensation, (ii) amortization of deferred financing costs, net, (iii) straight-line rents, (iv) deferred income taxes, and (v) other AFFO adjustments, which include: (a) amortization of acquired market lease intangibles, net, (b) non-cash interest related to DFLs and lease incentive amortization (reduction of straight-line rents), (c) actuarial reserves for insurance claims that have been incurred but not reported, and (d) amortization of deferred revenues, excluding amounts amortized into rental income that are associated with tenant funded improvements owned/recognized by us and up-front cash payments made by tenants to reduce their contractual rents. Also, AFFO is computed after deducting recurring capital expenditures, including second generation leasing costs and second generation tenant and capital improvements, and includes adjustments to compute our share of AFFO from our unconsolidated joint ventures. More specifically, recurring capital expenditures, including second generation leasing costs and second generation tenant and capital improvements ("AFFO capital expenditures") excludes our share from unconsolidated joint ventures (reported in “other AFFO adjustments”). Adjustments for joint ventures are calculated to reflect our pro-rata share of both our consolidated and unconsolidated joint ventures. We reflect our share of AFFO for unconsolidated joint ventures by applying our actual ownership percentage for the period to the applicable reconciling items on an entity by entity basis. We reflect our share for consolidated joint ventures in which we do not own 100% of the equity by adjusting our AFFO to remove the third party ownership share of the applicable reconciling items based on actual ownership percentage for the applicable periods (reported in “other AFFO adjustments”). See FFO for further disclosure regarding our use of pro-rata share information and its limitations. Other REITs or real estate companies may use different methodologies for calculating AFFO, and accordingly, our AFFO may not be comparable to those reported by other REITs. Although our AFFO computation may not be comparable to that of other REITs, management believes AFFO provides a meaningful supplemental measure of our performance and is frequently used by analysts, investors, and other interested parties in the evaluation of our performance as a REIT. We believe AFFO is an alternative run-rate earnings measure that improves the understanding of our operating results among investors and makes comparisons with: (i) expected results, (ii) results of previous periods, and (iii) results among REITs more meaningful. AFFO does not represent cash generated from operating activities determined in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs as it excludes the following items which generally flow through our cash flows from operating activities: (i) adjustments for changes in working capital or the actual timing of the payment of income or expense items that are accrued in the period, (ii) transaction-related costs, (iii) litigation settlement expenses, and (iv) restructuring and severance-related charges. Furthermore, AFFO is adjusted for recurring capital expenditures, which are generally not considered when determining cash flows from operations or liquidity. AFFO is a non-GAAP supplemental financial measure and should not be considered as an alternative to net income (loss) determined in accordance with GAAP. For a reconciliation of net income (loss) to AFFO and other relevant disclosure, refer to “Non-GAAP Financial Measures Reconciliations” below.
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Comparison of the Three Months Ended March 31, 2022 to the Three Months Ended March 31, 2021
Overview
Three Months Ended March 31, 2022 and 2021
The following table summarizes results for the three months ended March 31, 2022 and 2021 (in thousands):
 Three Months Ended March 31,
 20222021Change
Net income (loss) applicable to common shares$69,637 $143,337 $(73,700)
Nareit FFO243,431 40,233 203,198 
FFO as Adjusted234,818 215,391 19,427 
AFFO202,033 184,798 17,235 
Net income (loss) applicable to common shares decreased primarily as a result of the following:
a decrease in income from discontinued operations, primarily as a result of: (i) a decrease in gain on sales of real estate from the completion of dispositions of our senior housing portfolios and (ii) decreased NOI from dispositions of our senior housing portfolios;
an increase in depreciation, primarily as a result of: (i) 2021 and 2022 acquisitions of real estate and (ii) development and redevelopment projects placed in service during 2021 and 2022;
expenses incurred for tenant relocation and other costs associated with a planned MOB demolition; and
a decrease in interest income primarily as a result of principal repayments on and sales of loans receivable in 2021 and 2022.
The decrease in net income (loss) applicable to common shares was partially offset by:
a decrease in loss on debt extinguishments related to our repurchase and redemption of certain outstanding senior notes in the first quarter of 2021;
an increase in NOI generated from our life science and medical office segments related to: (i) 2021 and 2022 acquisitions of real estate, (ii) development and redevelopment projects placed in service during 2021 and 2022, and (iii) new leasing activity during 2021 and 2022 (including the impact to straight-line rents);
a gain on sale of a hospital that was classified as a DFL;
a reduction in interest expense, primarily as a result of senior unsecured notes repurchases and redemptions in the first and second quarters of 2021;
an increase in government grant income received under the CARES Act in 2022;
an increase in gains on sale of depreciable real estate related to a life science facility sale in 2022; and
a reduction in loan loss reserves in 2022 primarily due to a lower loans receivable balance.
Nareit FFO increased primarily as a result of the aforementioned events impacting net income (loss) applicable to common shares, except for the following, which are excluded from Nareit FFO:
net gain on sales of depreciable real estate; and
depreciation and amortization expense.
FFO as Adjusted increased primarily as a result of the aforementioned events impacting Nareit FFO, except for the following, which are excluded from FFO as Adjusted:
the gain on sale of a hospital that was classified as a DFL;
the expenses for tenant relocation and other costs associated with an MOB that we intend to demolish; and
loan loss reserves.
AFFO increased primarily as a result of the aforementioned events impacting FFO as Adjusted, except for the impact of straight-line rents, which is excluded from AFFO. The increase was partially offset by higher AFFO capital expenditures during the period.
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Segment Analysis 
The following tables provide selected operating information for our Same-Store and total property portfolio for each of our reportable segments. For the three months ended March 31, 2022, our Same-Store consists of 385 properties representing properties acquired or placed in service and stabilized on or prior to January 1, 2021 and that remained in operations under a consistent reporting structure through March 31, 2022. Our total property portfolio consisted of 483 and 463 properties at March 31, 2022 and 2021, respectively.
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Life Science
The following table summarizes results at and for the three months ended March 31, 2022 and 2021 (dollars and square feet in thousands, except per square foot data):
 SS
Total Portfolio(1)
 Three Months Ended March 31,Three Months Ended March 31,
 20222021Change20222021Change
Rental and related revenues$156,735 $149,067 $7,668 $194,055 $169,934 $24,121 
Healthpeak’s share of unconsolidated joint venture total revenues1,431 1,337 94 1,431 1,337 94 
Noncontrolling interests’ share of consolidated joint venture total revenues(50)(53)(57)(65)
Operating expenses(38,200)(33,785)(4,415)(48,189)(39,461)(8,728)
Healthpeak’s share of unconsolidated joint venture operating expenses(483)(425)(58)(483)(425)(58)
Noncontrolling interests’ share of consolidated joint venture operating expenses17 14 19 20 (1)
Adjustments to NOI(2)
(7,230)(9,448)2,218 (14,112)(11,810)(2,302)
Adjusted NOI$112,220 $106,707 $5,513 132,664 119,530 13,134 
Less: non-SS Adjusted NOI   (20,444)(12,823)(7,621)
SS Adjusted NOI   $112,220 $106,707 $5,513 
Adjusted NOI % change  5.2 %   
Property count(3)
121 121  149 141  
End of period occupancy98.6 %98.3 %98.5 %97.0 %
Average occupancy98.4 %97.9 % 98.2 %96.6 % 
Average occupied square feet9,025 8,991  10,737 9,809  
Average annual total revenues per occupied square foot(4)
$67 $63  $68 $65  
Average annual base rent per occupied square foot(5)
$52 $50  $52 $51  
_______________________________________
(1)Total Portfolio includes results of operations from disposed properties through the disposition date.
(2)Represents adjustments to NOI in accordance with our definition of Adjusted NOI. Refer to “Non-GAAP Financial Measures” above for definitions of NOI and Adjusted NOI.
(3)From our first quarter 2021 presentation of Same-Store, we added: (i) six stabilized developments placed in service, (ii) five stabilized acquisitions, (iii) four stabilized redevelopments placed in service, and (iv) one stabilized property that previously experienced a casualty event, and we removed: (i) three life science facilities that were placed into development and (ii) one life science facility that was sold.
(4)Average annual total revenues does not include non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).
(5)Base rent does not include tenant recoveries, additional rents in excess of floors and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).
Same-Store Adjusted NOI increased primarily as a result of the following:
annual rent escalations;
new leasing activity; and
mark-to-market lease renewals.
Total Portfolio Adjusted NOI increased primarily as a result of the aforementioned impacts to Same-Store and the following Non-Same-Store impacts:
an increase in NOI from (i) increased occupancy in developments and redevelopments placed in service in 2021 and 2022 and (ii) acquisitions in 2021 and 2022.
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Medical Office
The following table summarizes results at and for the three months ended March 31, 2022 and 2021 (dollars and square feet in thousands, except per square foot data):
 SS
Total Portfolio(1)
 Three Months Ended March 31,Three Months Ended March 31,
 20222021Change20222021Change
Rental and related revenues$145,616 $139,553 $6,063 $176,095 $158,038 $18,057 
Income from direct financing leases— — — 1,168 2,163 (995)
Healthpeak’s share of unconsolidated joint venture total revenues709 693 16 732 715 17 
Noncontrolling interests’ share of consolidated joint venture total revenues(8,667)(8,586)(81)(8,820)(8,926)106 
Operating expenses(47,969)(44,332)(3,637)(61,170)(51,121)(10,049)
Healthpeak’s share of unconsolidated joint venture operating expenses(299)(294)(5)(299)(294)(5)
Noncontrolling interests’ share of consolidated joint venture operating expenses2,602 2,434 168 2,602 2,504 98 
Adjustments to NOI(2)
(1,893)(2,506)613 (3,546)(1,923)(1,623)
Adjusted NOI$90,099 $86,962 $3,137 106,762 101,156 5,606 
Less: non-SS Adjusted NOI   (16,663)(14,194)(2,469)
SS Adjusted NOI   $90,099 $86,962 $3,137 
Adjusted NOI % change  3.6 %   
Property count(3)
249 249  300 286  
End of period occupancy91.6 %91.4 %90.2 %90.3 %
Average occupancy91.5 %91.5 % 90.3 %90.3 % 
Average occupied square feet18,620 18,624  21,751 20,703  
Average annual total revenues per occupied square foot(4)
$32 $30  $33 $31  
Average annual base rent per occupied square foot(5)
$27 $26  $27 $27  
___________________________________
(1)Total Portfolio includes results of operations from disposed properties through the disposition date.
(2)Represents adjustments to NOI in accordance with our definition of Adjusted NOI. Refer to “Non-GAAP Financial Measures” above for definitions of NOI and Adjusted NOI.
(3)From our first quarter 2021 presentation of Same-Store, we added: (i) 10 stabilized acquisitions, (ii) 3 stabilized redevelopments placed in service, and (iii) 1 MOB that was removed from held for sale classification, and we removed: (i) 5 MOBs that were sold, (ii) 5 MOBs that were classified as held for sale, and (iii) 5 MOBs that were placed into redevelopment.
(4)Average annual total revenues does not include non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, DFL non-cash interest, and deferred revenues).
(5)Base rent does not include tenant recoveries, additional rents in excess of floors and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, DFL non-cash interest, and deferred revenues).
Same-Store Adjusted NOI increased primarily as a result of the following:
mark-to-market lease renewals;
annual rent escalations; and
higher parking income and percentage-based rents.
Total Portfolio Adjusted NOI increased primarily as a result of the aforementioned increases to Same-Store and the following Non-Same-Store impacts:
increased NOI from our 2021 and 2022 acquisitions;
increased occupancy in former redevelopment and development properties that have been placed in service; partially offset by
decreased NOI from our 2021 and 2022 dispositions.
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Continuing Care Retirement Community
The following table summarizes results at and for the three months ended March 31, 2022 and 2021 (dollars in thousands, except per unit data):
 SSTotal Portfolio
 Three Months Ended March 31,Three Months Ended March 31,
 20222021Change20222021Change
Resident fees and services$121,560 $116,128 $5,432 $121,560 $116,128 $5,432 
Government grant income(1)
6,552 1,310 5,242 6,552 1,310 5,242 
Healthpeak’s share of unconsolidated joint venture total revenues— — — — 4,488 (4,488)
Healthpeak’s share of unconsolidated joint venture government grant income— — — 333 199 134 
Operating expenses(97,398)(90,430)(6,968)(97,888)(91,179)(6,709)
Healthpeak’s share of unconsolidated joint venture operating expenses— — — — (4,745)4,745 
Adjustments to NOI(2)
— — — — 20 (20)
Adjusted NOI$30,714 $27,008 $3,706 30,557 26,221 4,336 
Less: non-SS Adjusted NOI   157 787 (630)
SS Adjusted NOI   $30,714 $27,008 $3,706 
Adjusted NOI % change  13.7  %   
Property count(3)
15 15  15 17  
Average occupancy80.9 %78.7 %80.9 %78.7 %
Average occupied units(4)
5,939 5,854  5,939 6,179  
Average annual rent per occupied unit$86,285 $80,245  $86,506 $79,059  
_______________________________________
(1)Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the Consolidated Statements of Operations.
(2)Represents adjustments to NOI in accordance with our definition of Adjusted NOI. Refer to “Non-GAAP Financial Measures” above for definitions of NOI and Adjusted NOI.
(3)From our first quarter 2021 presentation of Same-Store, we added 13 properties that previously experienced an operator transition.
(4)Represents average occupied units as reported by the operators for the three-month period.
Same-Store Adjusted NOI and Total Portfolio Adjusted NOI increased primarily as a result of the following:
increased rates for resident fees;
increased government grant income received under the CARES Act; and
lower Covid related expenses; partially offset by
higher labor costs.
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Other Income and Expense Items
The following table summarizes the results of our other income and expense items for the three months ended March 31, 2022 and 2021 (in thousands):
 Three Months Ended March 31,
 20222021Change
Interest income$5,494 $9,013 $(3,519)
Interest expense37,586 46,843 (9,257)
Depreciation and amortization177,733 157,538 20,195 
General and administrative23,831 24,902 (1,071)
Transaction costs296 798 (502)
Impairments and loan loss reserves (recoveries), net132 3,242 (3,110)
Gain (loss) on sales of real estate, net3,856 — 3,856 
Gain (loss) on debt extinguishments— (164,292)164,292 
Other income (expense), net18,316 2,200 16,116 
Income tax benefit (expense)(777)(8)(769)
Equity income (loss) from unconsolidated joint ventures2,084 1,323 761 
Income (loss) from discontinued operations317 270,008 (269,691)
Noncontrolling interests’ share in continuing operations(3,730)(3,306)(424)
Noncontrolling interests’ share in discontinued operations— (329)329 
Interest income
Interest income decreased for the three months ended March 31, 2022 primarily as a result of principal repayments on and sales of loans receivable in 2021 and 2022.
Interest expense
Interest expense decreased for the three months ended March 31, 2022 primarily as a result of senior unsecured notes repurchases and redemptions in the first and second quarters of 2021.
Depreciation and amortization expense
Depreciation and amortization expense increased for the three months ended March 31, 2022 primarily as a result of: (i) assets acquired during 2021 and 2022 and (ii) development and redevelopment projects placed in service during 2021 and 2022.
General and administrative expense
General and administrative expenses decreased for the three months ended March 31, 2022 primarily as a result of lower restructuring and severance related charges.
Impairments and loan loss reserves (recoveries), net
Impairments and loan loss reserves (recoveries), net decreased for the three months ended March 31, 2022 as a result of a decrease in loan loss reserves under the current expected credit losses model. The reduction in loan loss reserves for the three months ended March 31, 2022 is primarily due to a lower loans receivable balance.
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Gain (loss) on sales of real estate, net
Gain (loss) on sales of real estate, net increased during the three months ended March 31, 2022 primarily as a result of the sale of one life science facility for $14 million during the three months ended March 31, 2022 resulting in total gain on sale of $4 million. Other than dispositions related to our senior housing portfolios included in income (loss) from discontinued operations as discussed below, there were no real estate sales during the three months ended March 31, 2021.
Gain (loss) on debt extinguishments
Loss on debt extinguishments decreased for the three months ended March 31, 2022 as a result of no senior unsecured note repurchases or redemptions during the first quarter of 2022 as compared to the repurchase and redemption of certain outstanding senior notes in the first quarter of 2021.
Other income (expense), net
Other income (expense), net increased for the three months ended March 31, 2022 primarily as a result of: (i) a gain on sale of a hospital that was classified as a DFL and (ii) an increase in government grant income received under the CARES Act in 2022, partially offset by expenses incurred for tenant relocation and other costs associated with a planned MOB demolition.
Income tax benefit (expense)
Income tax expense increased for the three months ended March 31, 2022 primarily as a result of the tax impact of an increase in government grant income received under the CARES Act.
Equity income (loss) from unconsolidated joint ventures
Equity income from unconsolidated joint ventures increased for the three months ended March 31, 2022 as a result of our share of net income from the Life Science JV, partially offset by our share of decreased net income from the SWF SH JV.
Income (loss) from discontinued operations
Income from discontinued operations decreased for the three months ended March 31, 2022 primarily as a result of: (i) decreased gain on sales of real estate from the completion of dispositions of our senior housing portfolios, (ii) decreased NOI following the dispositions of our senior housing portfolios, and (iii) a decline in government grant income received under the CARES Act for the senior housing portfolio.
Liquidity and Capital Resources
We anticipate that our cash flow from operations, available cash balances, and cash from our various financing activities will be adequate for the next 12 months and for the foreseeable future for purposes of: (i) funding recurring operating expenses; (ii) meeting debt service requirements; and (iii) satisfying funding of distributions to our stockholders and non-controlling interest members. Distributions are made using a combination of cash flows from operations, funds available under our bank line of credit (the “Revolving Facility”) and commercial paper program, proceeds from the sale of properties, and other sources of cash available to us. 
In addition to funding the activities above, our principal liquidity needs for the next 12 months are to:
fund capital expenditures, including tenant improvements and leasing costs; and
fund future acquisition, transactional, and development and redevelopment activities.
Our longer term liquidity needs include the items listed above as well as meeting debt service requirements.
We anticipate satisfying these future needs using one or more of the following:
cash flow from operations;
sale of, or exchange of ownership interests in, properties or other investments;
borrowings under our Revolving Facility and commercial paper program;
issuance of additional debt, including unsecured notes, term loans, and mortgage debt; and/or
issuance of common or preferred stock or its equivalent, including the settlement of forward contracts or other sales of common stock under the ATM Program (as defined below).
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Our ability to access the capital markets impacts our cost of capital and ability to refinance maturing indebtedness, as well as our ability to fund future acquisitions and development through the issuance of additional securities or secured debt. Credit ratings impact our ability to access capital and directly impact our cost of capital as well. For example, our Revolving Facility accrues interest at a rate per annum equal to LIBOR plus a margin that depends upon our credit ratings for our senior unsecured long-term debt. Our Revolving Facility includes customary LIBOR replacement language, including, but not limited to, the use of rates based on the secured overnight financing rate administered by the Federal Reserve Bank of New York. We also pay a facility fee on the entire revolving commitment that depends upon our credit ratings. As of May 2, 2022, we had long-term credit ratings of Baa1 from Moody’s and BBB+ from S&P Global and Fitch, and short-term credit ratings of P-2, A-2, and F2 from Moody’s, S&P Global, and Fitch, respectively.
A downgrade in credit ratings by Moody’s, S&P Global, and Fitch may have a negative impact on the interest rates and facility fees for our Revolving Facility and may negatively impact the pricing of notes issued under our commercial paper program and senior unsecured notes. While a downgrade in our credit ratings would adversely impact our cost of borrowing, we believe we would continue to have access to the unsecured debt markets, and we could also seek to enter into one or more secured debt financings, issue additional securities, including under our ATM Program (as defined below), or dispose of certain assets to fund future operating costs, capital expenditures, or acquisitions, although no assurances can be made in this regard. Refer to “Covid Update” above for a more comprehensive discussion of the potential impact of Covid on our business.
Changes in Material Cash Requirements and Off-Balance Sheet Arrangements
Our material cash requirements related to debt increased by $166 million to $6.3 billion at March 31, 2022, when compared to December 31, 2021, primarily as a result of issuances of securities under our commercial paper program. As of March 31, 2022, we had $1.33 billion outstanding under our commercial paper program. See Note 9 to the Consolidated Financial Statements for additional information about our debt commitments.
Our material cash requirements related to development and redevelopment projects and tenant improvements decreased by $52 million, to $418 million at March 31, 2022, when compared to December 31, 2021, primarily as a result of actual spend on existing projects in the first quarter of 2022.
Our material cash requirements to provide additional funding for senior housing redevelopment and capital expenditure projects decreased by $9 million, to $49 million at March 31, 2022, when compared to December 31, 2021, primarily as a result of reduced commitments from current quarter principal repayments on our seller financing. See Note 6 to the Consolidated Financial Statements for additional information.
Certain of our noncontrolling interest holders have the ability to put their equity interests to us upon specified events or after the passage of a predetermined period of time. Each put option is subject to changes in redemption value in the event that the underlying property generates specified returns for us and meets certain promote thresholds pursuant to the respective agreements. As of March 31, 2022, we had $98 million of redeemable noncontrolling interests, none of which met the conditions for redemption as of the balance sheet date. See Note 11 to the Consolidated Financial Statements for additional information.
There have been no changes to our distribution and dividend requirements during the three months ended March 31, 2022.
We own interests in certain unconsolidated joint ventures as described in Note 7 to the Consolidated Financial Statements. Two of these joint ventures have mortgage debt of $87 million, of which our share is $40 million. Except in limited circumstances, our risk of loss is limited to our investment in the joint ventures.
There have been no other material changes, outside of the ordinary course of business, during the three months ended March 31, 2022 to the material cash requirements or material off-balance sheet arrangements disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021 under “Material Cash Requirements” and “Off-Balance Sheet Arrangements” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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Cash Flow Summary
The following summary discussion of our cash flows is based on the Consolidated Statements of Cash Flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.
The following table sets forth changes in cash flows (in thousands):
 Three Months Ended March 31,
 20222021Change
Net cash provided by (used in) operating activities$194,183 $122,726 $71,457 
Net cash provided by (used in) investing activities(245,962)767,726 (1,013,688)
Net cash provided by (used in) financing activities(18,511)(924,119)905,608 
Operating Cash Flows
The increase in operating cash flow is primarily the result of an increase in income related to: (i) 2021 and 2022 acquisitions, (ii) annual rent increases, (iii) new leasing and renewal activity, and (iv) developments and redevelopments placed in service during 2021 and 2022. The increase in operating cash flow is partially offset by a decrease in income related to assets sold during 2021 and 2022. Our cash flow from operations is dependent upon the occupancy levels of our buildings, rental rates on leases, our tenants’ performance on their lease obligations, the level of operating expenses, and other factors.
Investing Cash Flows
The following are significant investing activities for the three months ended March 31, 2022:
made investments of $339 million primarily related to the acquisition, development, and redevelopment of real estate; and
received net proceeds of $93 million primarily from sales of real estate assets and repayments on loans receivable and direct financing leases.
The following are significant investing activities for the three months ended March 31, 2021:
received net proceeds of $948 million primarily from sales of real estate assets; and
made investments of $181 million primarily related to the acquisition, development, and redevelopment of real estate and funding of new and existing loans.
Financing Cash Flows
The following are significant financing activities for the three months ended March 31, 2022:
made net borrowings of $165 million under our Revolving Facility and commercial paper program; and
paid cash dividends on common stock of $163 million.
The following are significant financing activities for the three months ended March 31, 2021:
made repayments of $1.6 billion under our senior unsecured notes (including debt extinguishment costs) and mortgage debt;
made net borrowings of $909 million under our Revolving Facility and commercial paper program; and
paid cash dividends on common stock of $164 million.
Discontinued Operations
Operating, investing, and financing cash flows in our Consolidated Statements of Cash Flows are reported inclusive of both cash flows from continuing operations and cash flows from discontinued operations. Certain significant cash flows from discontinued operations are disclosed in Note 14 to the Consolidated Financial Statements. The absence of future cash flows from discontinued operations is not expected to significantly impact our liquidity, as the proceeds from senior housing triple-net and SHOP dispositions were used to pay down debt and invest in additional real estate in our other business lines. Additionally, we have multiple other sources of liquidity that can be utilized in the future, as needed. Refer to the beginning of the Liquidity and Capital Resources section above for additional information regarding our liquidity.
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Debt
See Note 9 to the Consolidated Financial Statements for additional information about our outstanding debt.
Approximately 77% and 78% of our consolidated debt, excluding debt classified as liabilities related to assets held for sale and discontinued operations, net, was fixed rate debt as of March 31, 2022 and 2021, respectively. At March 31, 2022, our fixed rate debt and variable rate debt had weighted average interest rates of 3.40% and 1.13%, respectively. At March 31, 2021, our fixed rate debt and variable rate debt had weighted average interest rates of 3.77% and 0.51%, respectively. As of March 31, 2022 and 2021, we had $142 million and zero, respectively, of variable rate debt subject to interest rate cap agreements. In April 2022, we terminated these interest rate cap agreements and entered into two interest rate swap contracts that are designated as cash flow hedges and mature in May 2026. For a more detailed discussion of our interest rate risk, see “Quantitative and Qualitative Disclosures About Market Risk” in Item 3 below.
Equity
At March 31, 2022, we had 540 million shares of common stock outstanding, equity totaled $6.9 billion, and our equity securities had a market value of $18.8 billion.
At March 31, 2022, non-managing members held an aggregate of five million units in seven limited liability companies (“DownREITs”) for which we are the managing member. The DownREIT units are exchangeable for an amount of cash approximating the then-current market value of shares of our common stock or, at our option, shares of our common stock (subject to certain adjustments, such as stock splits and reclassifications). At March 31, 2022, the outstanding DownREIT units were convertible into approximately seven million shares of our common stock.
At-The-Market Program
Our at-the-market equity offering program (as amended from time to time, the “ATM Program”) has a capacity of $1.5 billion. In addition to the issuance and sale of shares of our common stock, we may also enter into one or more forward sales agreements (each, an “ATM forward contract”) with sales agents for the sale of our shares of common stock under our ATM Program.
During the three months ended March 31, 2022, no shares were settled under ATM forward contracts. Therefore, at March 31, 2022, 9.1 million shares remained outstanding under ATM forward contracts.
During the three months ended March 31, 2022, we did not issue any shares of our common stock under the ATM Program.
At March 31, 2022, $1.18 billion of our common stock remained available for sale under the ATM Program. Actual future sales of our common stock will depend upon a variety of factors, including but not limited to market conditions, the trading price of our common stock, and our capital needs. We have no obligation to sell any of the remaining shares under our ATM Program.
See Note 11 to the Consolidated Financial Statements for additional information about our ATM Program.
Shelf Registration
In May 2021, we filed a prospectus with the SEC as part of a registration statement on Form S-3, using an automatic shelf registration process. This shelf registration statement expires on May 13, 2024 and at or prior to such time, we expect to file a new shelf registration statement. Under the “shelf” process, we may sell any combination of the securities described in the prospectus through one or more offerings. The securities described in the prospectus include common stock, preferred stock, depositary shares, debt securities, and warrants.
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Non-GAAP Financial Measures Reconciliations
The following is a reconciliation from net income (loss) applicable to common shares, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Nareit FFO, FFO as Adjusted, and AFFO (in thousands, except per share data):
 Three Months Ended
March 31,
 20222021
Net income (loss) applicable to common shares$69,637 $143,337 
Real estate related depreciation and amortization177,733 157,538 
Healthpeak’s share of real estate related depreciation and amortization from unconsolidated joint ventures 5,135 4,453 
Noncontrolling interests’ share of real estate related depreciation and amortization(4,840)(4,881)
Loss (gain) on sales of depreciable real estate, net(1)
(3,785)(259,662)
Healthpeak’s share of loss (gain) on sales of depreciable real estate, net, from unconsolidated joint ventures (279)— 
Noncontrolling interests’ share of gain (loss) on sales of depreciable real estate, net12 — 
Loss (gain) upon change of control, net— (1,042)
Taxes associated with real estate dispositions(182)490 
Nareit FFO applicable to common shares243,431 40,233 
Distributions on dilutive convertible units and other2,352 — 
Diluted Nareit FFO applicable to common shares$245,783 $40,233 
Weighted average shares outstanding - diluted Nareit FFO546,903 539,016 
Impact of adjustments to Nareit FFO:  
Transaction-related items$296 $4,113 
Other impairments (recoveries) and other losses (gains), net(2)
(8,909)3,242 
Restructuring and severance related charges— 2,463 
Loss (gain) on debt extinguishments— 164,292 
Casualty-related charges (recoveries), net— 1,048 
Total adjustments$(8,613)$175,158 
FFO as Adjusted applicable to common shares$234,818 $215,391 
Distributions on dilutive convertible units and other2,368 1,940 
Diluted FFO as Adjusted applicable to common shares$237,186 $217,331 
Weighted average shares outstanding - diluted FFO as Adjusted546,903 546,342 
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 Three Months Ended
March 31,
 20222021
FFO as Adjusted applicable to common shares$234,818 $215,391 
Amortization of stock-based compensation4,721 4,364 
Amortization of deferred financing costs2,689 2,213 
Straight-line rents(11,158)(9,135)
AFFO capital expenditures(22,839)(20,710)
Deferred income taxes261 (1,723)
Other AFFO adjustments(6,459)(5,602)
AFFO applicable to common shares202,033 184,798 
Distributions on dilutive convertible units and other1,649 1,337 
Diluted AFFO applicable to common shares$203,682 $186,135 
Weighted average shares outstanding - diluted AFFO545,078 544,517 
 Three Months Ended
March 31,
 20222021
Diluted earnings per common share$0.13 $0.27 
Depreciation and amortization0.33 0.29 
Loss (gain) on sales of depreciable real estate, net(0.01)(0.48)
Loss (gain) upon change of control, net— (0.01)
Taxes associated with real estate dispositions0.00 0.00 
Diluted Nareit FFO per common share$0.45 $0.07 
Transaction-related items0.00 0.01 
Other impairments (recoveries) and other losses (gains), net(2)
(0.02)0.01 
Restructuring and severance related charges— 0.01 
Loss (gain) on debt extinguishments— 0.30 
Casualty-related charges (recoveries), net— 0.00 
Diluted FFO as Adjusted per common share$0.43 $0.40 
_______________________________________
(1)This amount can be reconciled by combining the balances from the corresponding line of the Consolidated Statements of Operations and the detailed financial information for discontinued operations in Note 4 to the Consolidated Financial Statements.
(2)The three months ended March 31, 2022 includes the following, which are included in other income (expense), net in the Consolidated Statements of Operations: (i) a $23 million gain on sale of a hospital that was in a direct financing lease and (ii) $14 million of expenses incurred for tenant relocation and other costs associated with a planned MOB demolition. The remaining activity for the three months ended March 31, 2022 and 2021 includes reserves for loan losses recognized in impairments and loan loss reserves (recoveries), net in the Consolidated Statements of Operations.

Critical Accounting Estimates and Recent Accounting Pronouncements
The preparation of financial statements in conformity with U.S. GAAP requires our management to use judgment in the application of critical accounting estimates and assumptions. We base estimates on the best information available to us at the time, our experience and on various other assumptions believed to be reasonable under the circumstances. These estimates affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of our consolidated financial statements. From time to time, we re-evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. A discussion of accounting estimates that we consider critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain is included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2 to the Consolidated Financial Statements. There have been no significant changes to our critical accounting estimates during the three months ended March 31, 2022.
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Item 3.  Quantitative and Qualitative Disclosures About Market Risk
We are exposed to various market risks, including the potential loss arising from adverse changes in interest rates. We use derivative and other financial instruments in the normal course of business to mitigate interest rate risk. We do not use derivative financial instruments for speculative or trading purposes. Derivatives are recorded on the Consolidated Balance Sheets at fair value (see Note 17 to the Consolidated Financial Statements).
Interest Rate Risk. At March 31, 2022, our exposure to interest rate risk was primarily on our variable rate debt. At March 31, 2022, $142 million of our variable-rate debt was subject to interest rate cap agreements. The interest rate caps are non-designated hedges and manage our exposure to variable cash flows on certain mortgage debt borrowings by limiting interest rates. At March 31, 2022, both the fair value and carrying value of the interest rate caps were $2 million. In April 2022, we terminated these interest rate cap agreements and entered into two interest rate swap contracts that mature in May 2026. The interest rate swaps are designated as cash flow hedges, with the objective of managing the exposure to interest rate risk by converting the interest rates on our variable-rate debt to fixed interest rates.
Our remaining variable rate debt at March 31, 2022 was comprised of our Revolving Facility, commercial paper program, and certain of our mortgage debt. Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed rate debt and assets until their maturity or earlier prepayment and refinancing. If interest rates have risen at the time we seek to refinance our fixed rate debt, whether at maturity or otherwise, our future earnings and cash flows could be adversely affected by additional borrowing costs. Conversely, lower interest rates at the time of refinancing may reduce our overall borrowing costs. However, interest rate changes will affect the fair value of our fixed rate instruments. At March 31, 2022, a one percentage point increase in interest rates would decrease the fair value of our fixed rate debt by approximately $270 million and a one percentage point decrease in interest rates would increase the fair value of our fixed rate debt by approximately $291 million. These changes would not materially impact earnings or cash flows. Conversely, changes in interest rates on variable rate debt and investments would change our future earnings and cash flows, but not materially impact the fair value of those instruments. Assuming a one percentage point increase in the interest rate related to our variable-rate debt and investments, and assuming no other changes in the outstanding balance at March 31, 2022, our annual interest expense would increase by approximately $15 million.
Market Risk.  We have investments in marketable debt securities classified as held-to-maturity because we have the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are recorded at amortized cost and adjusted for the amortization of premiums and discounts through maturity. We consider a variety of factors in evaluating an other-than-temporary decline in value, such as: the length of time and the extent to which the market value has been less than our current adjusted carrying value; the issuer’s financial condition, capital strength, and near-term prospects; any recent events specific to that issuer and economic conditions of its industry; and our investment horizon in relationship to an anticipated near-term recovery in the market value, if any. At March 31, 2022, both the fair value and carrying value of marketable debt securities was $21 million. These marketable debt securities mature in December 2022.
Item 4.  Controls and Procedures
Disclosure Controls and Procedures.  We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2022. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2022.
Changes in Internal Control Over Financial Reporting.  There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1A.  Risk Factors
There are no material changes to the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a)
None.
(b)
None.
(c)
The following table sets forth information with respect to purchases of our common stock made by us or on our behalf during the three months ended March 31, 2022.
Period Covered
Total Number
Of Shares
Purchased(1)
Average
Price
Paid Per
Share
Total Number Of Shares
(Or Units) Purchased As
Part Of Publicly
Announced Plans Or
Programs
Maximum Number (Or
Approximate Dollar Value)
Of Shares (Or Units) That
May Yet Be Purchased
Under The Plans Or
Programs
January 1-31, 2022182,247 $34.69 — — 
February 1-28, 2022132,962 32.35 — — 
March 1-31, 202223,469 31.06 — — 
Total338,678 $33.52 — — 
_______________________________________
(1)Represents shares of our common stock withheld under our equity incentive plans to offset tax withholding obligations that occur upon vesting of restricted shares. The value of the shares withheld is based on the closing price of our common stock on the last trading day prior to the date the relevant transaction occurred.
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Item 6. Exhibits
3.1
3.2
3.3
10.1*
31.1*
31.2*
32.1**
32.2**
101.INS*XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*XBRL Taxonomy Extension Schema Document.
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
_______________________________________
*       Filed herewith.
**     Furnished herewith.
†      Management Contract or Compensatory Plan or Arrangement.
    






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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 4, 2022Healthpeak Properties, Inc.
 (Registrant)
  
 /s/ THOMAS M. HERZOG
 Thomas M. Herzog
 Chief Executive Officer
 (Principal Executive Officer)
  
 /s/ PETER A. SCOTT
 Peter A. Scott
 Chief Financial Officer
 (Principal Financial Officer)
  
 /s/ SHAWN G. JOHNSTON
 Shawn G. Johnston
 Executive Vice President and
 Chief Accounting Officer
 (Principal Accounting Officer)

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