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Ventas, Inc. - Annual Report: 2014 (Form 10-K)

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
(Mark One)
 
 
x
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2014
OR
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to          
Commission File Number 1-10989
 
VENTAS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
 
61-1055020
(IRS Employer
Identification No.)
353 N. Clark Street, Suite 3300, Chicago, Illinois
(Address of Principal Executive Offices)
 
60654
(Zip Code)
(877) 483-6827
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Name of Each Exchange on Which Registered
Common Stock, par value $0.25 per share
 
New York Stock Exchange
         Securities registered pursuant to Section 12(g) of the Act: None
 
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes x    No ¨
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes ¨ No x
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 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 x    No ¨
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).  Yes x    No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of this Form 10-K. x
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
 
Accelerated filer ¨
 
Non-accelerated filer ¨
 (Do not check if a smaller reporting company)
 
Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨    No x
The aggregate market value of shares of the Registrant’s common stock held by non-affiliates of the Registrant, computed by reference to the closing price of the common stock as reported on the New York Stock Exchange as of June 30, 2014, was $18.8 billion. For purposes of the foregoing calculation only, all directors, executive officers and 10% beneficial owners of the Registrant have been deemed affiliates.
As of February 10, 2015, 330,809,789 shares of the Registrant’s common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s definitive Proxy Statement for the Annual Meeting of Stockholders to be held on May 14, 2015 are incorporated by reference into Part III, Items 10 through 14 of this Annual Report on Form 10-K.
 




CAUTIONARY STATEMENTS
Unless otherwise indicated or except where the context otherwise requires, the terms “we,” “us” and “our” and other similar terms in this Annual Report on Form 10-K refer to Ventas, Inc. and its consolidated subsidiaries.
Forward-Looking Statements
This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements regarding our or our tenants’, operators’, borrowers’ or managers’ expected future financial condition, results of operations, cash flows, funds from operations, dividends and dividend plans, financing opportunities and plans, capital markets transactions, business strategy, budgets, projected costs, operating metrics, capital expenditures, competitive positions, acquisitions, investment opportunities, dispositions, merger integration, growth opportunities, expected lease income, continued qualification as a real estate investment trust (“REIT”), plans and objectives of management for future operations, and statements that include words such as “anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will,” and other similar expressions are forward-looking statements. These forward-looking statements are inherently uncertain, and actual results may differ from our expectations. We do not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made.
Our actual future results and trends may differ materially from expectations depending on a variety of factors discussed in our filings with the Securities and Exchange Commission (the “SEC”). These factors include without limitation:
The ability and willingness of our tenants, operators, borrowers, managers and other third parties to satisfy their obligations under their respective contractual arrangements with us, including, in some cases, their obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities;
The ability of our tenants, operators, borrowers and managers to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to third parties, including without limitation obligations under their existing credit facilities and other indebtedness;
Our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments, including investments in different asset types and outside the United States;
Macroeconomic conditions such as a disruption of or lack of access to the capital markets, changes in the debt rating on U.S. government securities, default or delay in payment by the United States of its obligations, and changes in the federal or state budgets resulting in the reduction or nonpayment of Medicare or Medicaid reimbursement rates;
The nature and extent of future competition, including new construction in the markets in which our seniors housing communities and medical office buildings (“MOBs”) are located;
The extent of future or pending healthcare reform and regulation, including cost containment measures and changes in reimbursement policies, procedures and rates;
Increases in our borrowing costs as a result of changes in interest rates and other factors;
The ability of our operators and managers, as applicable, to comply with laws, rules and regulations in the operation of our properties, to deliver high-quality services, to attract and retain qualified personnel and to attract residents and patients;
Changes in general economic conditions or economic conditions in the markets in which we may, from time to time, compete, and the effect of those changes on our revenues, earnings and capital sources;
Our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due;
Our ability and willingness to maintain our qualification as a REIT in light of economic, market, legal, tax and other considerations;
Final determination of our taxable net income for the year ended December 31, 2014 and for the year ending December 31, 2015;
The ability and willingness of our tenants to renew their leases with us upon expiration of the leases, our ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant;

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Risks associated with our senior living operating portfolio, such as factors that can cause volatility in our operating income and earnings generated by those properties, including without limitation national and regional economic conditions, costs of food, materials, energy, labor and services, employee benefit costs, insurance costs and professional and general liability claims, and the timely delivery of accurate property-level financial results for those properties;
Changes in exchange rates for any foreign currency in which we may, from time to time, conduct business;
Year-over-year changes in the Consumer Price Index (“CPI”) or the UK Retail Price Index and the effect of those changes on the rent escalators contained in our leases and on our earnings;
Our ability and the ability of our tenants, operators, borrowers and managers to obtain and maintain adequate property, liability and other insurance from reputable, financially stable providers;
The impact of increased operating costs and uninsured professional liability claims on our liquidity, financial condition and results of operations or that of our tenants, operators, borrowers and managers and our ability and the ability of our tenants, operators, borrowers and managers to accurately estimate the magnitude of those claims;
Risks associated with our MOB portfolio and operations, including our ability to successfully design, develop and manage MOBs, to accurately estimate our costs in fixed fee-for-service projects and to retain key personnel;
The ability of the hospitals on or near whose campuses our MOBs are located and their affiliated health systems to remain competitive and financially viable and to attract physicians and physician groups;
Our ability to build, maintain and expand our relationships with existing and prospective hospital and health system clients;
Risks associated with our investments in joint ventures and unconsolidated entities, including our lack of sole decision-making authority and our reliance on our joint venture partners’ financial condition;
The impact of market or issuer events on the liquidity or value of our investments in marketable securities;
Merger and acquisition activity in the healthcare and seniors housing industries resulting in a change of control of, or a competitor’s investment in, one or more of our tenants, operators, borrowers or managers or significant changes in the senior management of our tenants, operators, borrowers or managers;
The impact of litigation or any financial, accounting, legal or regulatory issues that may affect us or our tenants, operators, borrowers or managers; and
Changes in accounting principles, or their application or interpretation, and our ability to make estimates and the assumptions underlying the estimates, which could have an effect on our earnings.
Many of these factors, some of which are described in greater detail under “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K, are beyond our control and the control of our management.
Brookdale Senior Living, Kindred, Atria and Sunrise Information
Each of Brookdale Senior Living Inc. (together with its subsidiaries, “Brookdale Senior Living”) and Kindred Healthcare, Inc. (together with its subsidiaries, “Kindred”) is subject to the reporting requirements of the SEC and is required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. The information related to Brookdale Senior Living and Kindred contained or referred to in this Annual Report on Form 10-K has been derived from SEC filings made by Brookdale Senior Living or Kindred, as the case may be, or other publicly available information or was provided to us by Brookdale Senior Living or Kindred, and we have not verified this information through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you of its accuracy. We are providing this data for informational purposes only, and you are encouraged to obtain Brookdale Senior Living’s and Kindred’s publicly available filings, which can be found on the SEC’s website at www.sec.gov.
Neither Atria Senior Living, Inc. (“Atria”) nor Sunrise Senior Living, LLC (together with its subsidiaries, “Sunrise”) is currently subject to the reporting requirements of the SEC. The information related to Atria and Sunrise contained or referred to in this Annual Report on Form 10-K has been derived from publicly available information or was provided to us by Atria or Sunrise, as the case may be, and we have not verified this information through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you of its accuracy.

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TABLE OF CONTENTS

Mine Safety Disclosures


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PART I
ITEM 1.    Business
BUSINESS
Overview
Ventas, Inc., an S&P 500 company, is a REIT with a highly diversified portfolio of seniors housing and healthcare properties located throughout the United States, Canada and the United Kingdom. As of December 31, 2014, we owned more than 1,500 properties (including properties classified as held for sale), consisting of seniors housing communities, MOBs, skilled nursing and other facilities, and hospitals, and we had one new property under development. Our company was originally founded in 1983 and is currently headquartered in Chicago, Illinois.
We primarily invest in seniors housing and healthcare properties through acquisitions and lease our properties to unaffiliated tenants or operate them through independent third-party managers. As of December 31, 2014, we leased a total of 922 properties (excluding MOBs and properties classified as held for sale) to various healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures, and we engaged independent operators, such as Atria and Sunrise, to manage 270 seniors housing communities for us pursuant to long-term management agreements.
Through our Lillibridge Healthcare Services, Inc. (“Lillibridge”) subsidiary and our ownership interest in PMB Real Estate Services LLC (“PMBRES”), we also provide MOB management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. In addition, from time to time, we make secured and unsecured loans and other investments relating to seniors housing and healthcare operators or properties.
We conduct our operations through three reportable business segments: triple-net leased properties; senior living operations; and MOB operations. See our Consolidated Financial Statements and the related notes, including “Note 2—Accounting Policies,” included in Part II, Item 8 of this Annual Report on Form 10-K.
Business Strategy
We aim to enhance shareholder value by delivering consistent, superior total returns through a strategy of: (1) generating reliable and growing cash flows; (2) maintaining a balanced, diversified portfolio of high-quality assets; and (3) preserving our financial strength, flexibility and liquidity.
Generating Reliable and Growing Cash Flows
Generating reliable and growing cash flows from our seniors housing and healthcare assets enables us to pay regular cash dividends to stockholders and creates opportunities to increase shareholder value through profitable investments. The combination of steady contractual growth from our long-term triple-net leases, steady, reliable cash flows from our loan investments and stable cash flows from our MOBs with the higher growth potential inherent in our seniors housing operating communities drives our ability to generate sustainable, growing cash flows that are resilient to economic downturns.
Maintaining a Balanced, Diversified Portfolio
We believe that maintaining a balanced portfolio of high-quality assets diversified by investment type, geographic location, asset type, tenant/operator, revenue source and operating model diminishes the risk that any single factor or event could materially harm our business. Portfolio diversification also enhances the reliability of our cash flows by reducing our exposure to any individual tenant, operator or manager and making us less susceptible to single-state regulatory or reimbursement changes, regional climate events and local economic downturns.
Preserving Our Financial Strength, Flexibility and Liquidity
A strong, flexible balance sheet and excellent liquidity position us favorably to capitalize on strategic growth opportunities in the seniors housing and healthcare industries through acquisitions, investments, and development and redevelopment projects. We maintain our financial strength to pursue profitable investment opportunities by actively managing our leverage, improving our cost of capital and preserving our access to multiple sources of liquidity, including unsecured bank debt, mortgage financings and public debt and equity markets.

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2014 Highlights and Other Recent Developments
In 2014, we paid an annual cash dividend on our common stock of $2.965 per share.
During 2014, we made investments totaling approximately $2.4 billion in seniors housing and healthcare assets, including 29 seniors housing communities located in Canada that we acquired from Holiday Retirement (the “Holiday Canada Acquisition”), three high-quality private hospitals located in the United Kingdom and a $425.0 million secured mezzanine loan investment that has a blended annual interest rate of 8.1% and has contractual maturities ranging between 2016 and 2019.
In January 2015, we acquired publicly traded American Realty Capital Healthcare Trust, Inc. (“HCT”) in a stock and cash transaction (the “HCT Acquisition”), which added 152 properties (some of which are located on the same campus) to our portfolio. We funded the transaction through the issuance of approximately 28.4 million shares of our common stock, 1.1 million limited partnership units that are redeemable for shares of our common stock, cash and the assumption of debt.  
In 2015, we made other investments totaling approximately $320 million, including the acquisition of five triple-net leased properties in the United Kingdom and 12 skilled nursing facilities.
In April 2014, we issued and sold $700 million aggregate principal amount of senior notes with a weighted average interest rate of 2.75% and a weighted average maturity of seven years.
In September 2014, we issued and sold CAD 650.0 million aggregate principal amount of senior notes, with an effective weighted average interest rate of 3.5% and a weighted average maturity of 6.9 years, on a private placement basis in Canada. We used the net proceeds from the sale to repay a portion of the CAD 791.0 million unsecured term loan we incurred to initially fund the Holiday Canada Acquisition.
In January 2015, we issued and sold $900 million aggregate principal amount of senior notes, with a weighted average interest rate of 3.8% and a weighted average maturity of 16.7 years, and we issued and sold CAD 250.0 million aggregate principal amount of senior notes, with an interest rate of 3.3% and a maturity of seven years, on a private placement basis in Canada.
Under our “at-the-market” equity offering program, during 2014 and 2015 we issued and sold a total of approximately 7.1 million shares of our common stock at a weighted average price of $75.18 per share for aggregate net proceeds (after sales agent commissions) of $528.1 million.
During 2014, we sold 22 properties for $118.2 million and received loans receivable repayments of $55.9 million.
In 2015, we sold 17 properties for $275.1 million, including $5.5 million of lease termination fees.
By the end of 2014, we had re-leased to Kindred, transitioned to new operators or sold 107 of the 108 licensed healthcare assets whose lease terms with Kindred were scheduled to expire on September 30, 2014, and we expect to sell the remaining asset during 2015. See “Triple-Net Lease Expirations.”







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Portfolio Summary
The following table summarizes our consolidated portfolio of properties and other investments (excluding properties included in discontinued operations during 2014 and properties classified as held for sale as of December 31, 2014) as of and for the year ended December 31, 2014:
 
 
 
 
 
 
Real Estate Property Investments
 
Revenues (3)
Asset Type
 
# of
Properties(1)
 
# of
Units/
Sq. Ft./Beds
(2)
 
Real Estate Property Investment, at Cost
 
Percent of
Total Real Estate Property Investments
 
Real Estate
Property
Investment Per Unit/Bed/Sq. Ft.
 
Revenue
 
Percent of Total Revenues
 
 
(Dollars in thousands)
Seniors housing communities
 
746

 
67,189

 
$
15,636,077

 
65.6
%
 
$
232.7

 
$2,029,003
 
66.6
%
MOBs (4)
 
275

 
15,246,181

 
3,766,871

 
15.8

 
0.2

 
438,610

 
15.4

Skilled nursing and other facilities
 
365

 
41,148

 
3,109,556

 
13.0

 
75.6

 
362,746

 
11.9

Hospitals
 
47

 
3,820

 
498,441

 
2.1

 
130.5

 
127,975

 
4.2

Total properties
 
1,433

 
 
 
23,010,945

 
96.5

 
 
 
2,958,334

 
98.1

Loans and investments
 
 
 
 
 
829,756

 
3.5

 
 
 
55,169

 
1.8

Other
 
 

 
 

 

 

 
 

 
4,267

 
0.1

Total
 
 

 
 

 
$
23,840,701

 
100.0
%
 
 

 
$3,017,770
 
100.0
%
(1)
As of December 31, 2014, we also owned 20 seniors housing communities, 17 MOBs and 14 skilled nursing facilities through investments in unconsolidated entities, and we classified five seniors housing communities, nine skilled nursing facilities, and 36 MOBs as held for sale. Our consolidated properties were located in 46 states, the District of Columbia, seven Canadian provinces and the United Kingdom and, excluding MOBs, were operated or managed by 94 unaffiliated healthcare operating companies, including the following publicly traded companies or their subsidiaries: Brookdale (161 properties) (excluding six properties owned through investments in unconsolidated entities); Kindred (83 properties); 21st Century Oncology Holdings, Inc. (12 properties); Capital Senior Living Corporation (12 properties); Spire Healthcare plc (three properties); and HealthSouth Corp. (two properties).
(2)
Seniors housing communities are measured in units; MOBs are measured by square footage; and skilled nursing and other facilities and hospitals are measured by bed count.
(3)
Total revenues exclude revenues attributable to properties included in discontinued operations during 2014 and properties classified as held for sale as of December 31, 2014.
(4)
As of December 31, 2014, we leased 30 of our consolidated MOBs pursuant to triple-net leases, Lillibridge or PMBRES managed 246 of our consolidated MOBs and 29 of our consolidated MOBs were managed by nine unaffiliated managers. Through Lillibridge and PMBRES, we also provided management and leasing services for 75 MOBs owned by third parties as of December 31, 2014.
Seniors Housing and Healthcare Properties
As of December 31, 2014, we owned a total of 1,484 seniors housing and healthcare properties (excluding properties classified as held for sale), including through our investments in unconsolidated entities, as follows:
 
Consolidated
(100% interest)
 
Consolidated
(<100% interest)
 
Unconsolidated
(5-25% interest)
 
Total
Seniors housing communities
731

 
15

 
20

 
766

MOBs
247

 
28

 
17

 
292

Skilled nursing and other facilities
359

 
6

 
14

 
379

Hospitals
46

 
1

 

 
47

Total
1,383

 
50

 
51

 
1,484

Seniors Housing Communities
Our seniors housing communities include independent and assisted living communities, continuing care retirement communities and communities providing care for individuals with Alzheimer’s disease and other forms of dementia or memory loss. These communities offer studio, one bedroom and two bedroom residential units on a month-to-month basis primarily to elderly individuals requiring various levels of assistance. Basic services for residents of these communities include

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housekeeping, meals in a central dining area and group activities organized by the staff with input from the residents. More extensive care and personal supervision, at additional fees, are also available for such needs as eating, bathing, grooming, transportation, limited therapeutic programs and medication administration, which allow residents certain conveniences and enable them to live as independently as possible according to their abilities. These services are often met by home health providers, close coordination with the resident’s physician and skilled nursing facilities. Charges for room, board and services are generally paid from private sources.
Medical Office Buildings
Typically, our MOBs are multi-tenant properties leased to several unrelated medical practices, although in many cases they may be associated with a large single specialty or multi-specialty group. Tenants include physicians, dentists, psychologists, therapists and other healthcare providers, who require space devoted to patient examination and treatment, diagnostic imaging, outpatient surgery and other outpatient services. MOBs are similar to commercial office buildings, although they require greater plumbing, electrical and mechanical systems to accommodate physicians’ requirements such as sinks in every room, brighter lights and specialized medical equipment. As of December 31, 2014, we owned or managed for third parties approximately 21 million square feet of MOBs that are predominantly located on or near an acute care hospital campus (“on campus”).
Skilled Nursing and Other Facilities    
Our skilled nursing facilities provide rehabilitative, restorative, skilled nursing and medical treatment for patients and residents who do not require the high technology, care-intensive, high cost setting of an acute care or rehabilitation hospital. Treatment programs include physical, occupational, speech, respiratory and other therapies, including sub-acute clinical protocols such as wound care and intravenous drug treatment. Charges for these services are generally paid from a combination of government reimbursement and private sources.
Our personal care facilities provide specialized care, including supported living services, neurorehabilitation, neurobehavioral management and vocational programs, for persons with acquired or traumatic brain injury.
Hospitals 
Substantially all of our hospitals are operated as long-term acute care hospitals, which have a Medicare average length of stay of greater than 25 days and serve medically complex, chronically ill patients who require a high level of monitoring and specialized care, but whose conditions do not necessitate the continued services of an intensive care unit. The operators of these hospitals have the capability to treat patients who suffer from multiple systemic failures or conditions such as neurological disorders, head injuries, brain stem and spinal cord trauma, cerebral vascular accidents, chemical brain injuries, central nervous system disorders, developmental anomalies and cardiopulmonary disorders. Chronic patients often depend on technology for continued life support, such as mechanical ventilators, total parenteral nutrition, respiration or cardiac monitors and dialysis machines, and, due to their severe medical conditions, generally are not clinically appropriate for admission to a nursing facility or rehabilitation hospital. All of our long-term acute care hospitals are freestanding facilities, and we do not own any “hospitals within hospitals.” We also own two hospitals focused on providing children’s care and five rehabilitation hospitals devoted to the rehabilitation of patients with various neurological, musculoskeletal, orthopedic and other medical conditions following stabilization of their acute medical issues.
Geographic Diversification of Properties
Our portfolio of seniors housing and healthcare properties is broadly diversified by geographic location throughout the United States, Canada and the United Kingdom, with properties in only one state (California) accounting for more than 10% of our total revenues and total net operating income (“NOI,” which is defined as total revenues, excluding interest and other income, less property-level operating expenses and medical office building services costs) (in each case excluding amounts in discontinued operations) for the year ended December 31, 2014.

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The following table shows our rental income and resident fees and services by geographic location for the year ended December 31, 2014:
 
Rental Income and
Resident Fees and
Services (1)
 
Percent of Total
Revenues (1)
 
 
(Dollars in thousands)
 
Geographic Location
 
 
 
 
California
$
462,467

 
15.0
%
 
New York
295,783

 
9.6

 
Texas
213,094

 
6.9

 
Illinois
139,138

 
4.5

 
Florida
124,374

 
4.0

 
Massachusetts
114,076

 
3.7

 
Pennsylvania
109,452

 
3.6

 
North Carolina
90,186

 
2.9

 
Colorado
89,555

 
2.9

 
New Jersey
89,275

 
2.9

 
Other (36 states and the District of Columbia)
1,119,438

 
36.5

 
Total U.S
2,846,838

 
92.5
%
 
Canada (seven provinces)
126,321

 
4.1

 
United Kingdom
13,787

 
0.5

 
Total
$
2,986,946

 
97.1
%
(2)
    
(1)
This presentation excludes revenues from properties included in discontinued operations during 2014.
(2)
The remainder of our total revenues is medical office building and other services revenue, income from loans and investments and interest and other income.

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The following table shows our NOI by geographic location for the year ended December 31, 2014:
 
NOI (1)
 
Percent of Total
NOI (1)
 
(Dollars in thousands)
Geographic Location
 
 
 
California
$
255,427

 
13.7
%
Texas
148,418

 
8.0

New York
125,707

 
6.8

Illinois
87,742

 
4.7

Florida
83,693

 
4.5

Massachusetts
73,847

 
4.0

Indiana
62,642

 
3.4

North Carolina
62,349

 
3.4

Pennsylvania
55,125

 
3.0

Ohio
52,317

 
2.8

Other (36 states and the District of Columbia)
774,613

 
41.6

Total U.S
1,781,880

 
95.9
%
Canada (seven provinces)
63,622

 
3.4

United Kingdom
13,787

 
0.7

Total
$
1,859,289

 
100.0
%
    
(1)
This presentation excludes NOI from properties included in discontinued operations during 2014.
See “Note 20—Segment Information” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information regarding the geographic diversification of our portfolio.
Certificates of Need
Our skilled nursing facilities and hospitals are generally subject to federal, state and local licensure statutes and statutes that may require regulatory approval, in the form of a certificate of need (“CON”) issued by a governmental agency with jurisdiction over healthcare facilities, prior to the expansion of existing facilities, construction of new facilities, addition of beds, acquisition of major equipment or introduction of new services. CON requirements, which are not uniform throughout the United States, may restrict our or our operators’ ability to expand our properties in certain circumstances.
The following table shows the percentages of our rental income (excluding amounts in discontinued operations) for the year ended December 31, 2014 that are derived by skilled nursing facilities and hospitals in states with and without CON requirements:
 
Skilled
Nursing
Facilities
 
Hospitals
 
Total
States with CON requirements
65.5
%
 
42.3
%
 
59.2
%
States without CON requirements
34.5

 
57.7

 
40.8

Total
100.0
%
 
100.0
%
 
100.0
%
Loans and Investments
As of December 31, 2014, we had $927.7 million of net loans receivable and investments relating to seniors housing and healthcare operators or properties. Our loans receivable and investments provide us with interest income, principal amortization and transaction fees and are typically secured by mortgage liens or leasehold mortgages on the underlying properties and corporate or personal guarantees by affiliates of the borrowing entity. In some cases, the loans are secured by a pledge of ownership interests in the entity or entities that own the related seniors housing or healthcare properties. From time to time, we also make investments in mezzanine loans, which are subordinated to senior secured loans held by other investors that

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encumber the same real estate. See “Note 6—Loans Receivable and Investments” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Development and Redevelopment Projects
We are party to certain agreements that obligate us to develop seniors housing or healthcare properties funded through capital that we and, in certain circumstances, our joint venture partners provide. As of December 31, 2014, we had one new property under development pursuant to these agreements. In addition, from time to time, we engage in redevelopment projects with respect to our existing seniors housing communities to maximize the value, increase NOI, maintain a market-competitive position, achieve property stabilization or change the primary use of the property.
Segment Information
We evaluate our operating performance and allocate resources based on three reportable business segments: triple-net leased properties; senior living operations; and MOB operations. Non-segment assets, classified as “all other,” consist primarily of corporate assets, including cash, restricted cash, deferred financing costs, loans receivable and investments, and miscellaneous accounts receivable. For further information regarding our business segments, see “Note 20—Segment Information” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Significant Tenants, Operators and Managers
The following table summarizes certain information regarding our tenant, operator and manager concentration as of and for the year ended December 31, 2014 (excluding properties included in discontinued operations during 2014 and properties owned through investments in unconsolidated entities):
 
Number of
Properties
Leased or
Managed
 
Percent of Total Real Estate Investments (1)
 
Percent of Total Revenues
 
Percent of NOI
Senior living operations
270

 
36.0
%
 
50.6
%
 
27.8
%
Brookdale Senior Living (2)
160

 
10.2

 
5.5

 
9.2

Kindred
83

 
2.1

 
6.2

 
10.2

    
(1)
Based on gross book value.
(2)
Excludes six properties owned through investments in unconsolidated entities and one property managed by Brookdale Senior Living pursuant to a long-term management agreement.
Triple-Net Leased Properties
Each of our leases with Brookdale Senior Living and Kindred is a triple-net lease that obligates the tenant to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures, and to comply with the terms of the mortgage financing documents, if any, affecting the properties. In addition, each of these leases has guaranty and cross-default provisions tied to other leases with the same tenant or its affiliates, as well as bundled lease renewals (as described in more detail below).
The properties we lease to Brookdale Senior Living and Kindred accounted for a significant portion of our triple-net leased properties segment revenues and NOI for the year ended December 31, 2014. If either Brookdale Senior Living or Kindred becomes unable or unwilling to satisfy its obligations to us or to renew its leases with us upon expiration of the terms thereof, our financial condition and results of operations could decline and our ability to service our indebtedness and to make distributions to our stockholders could be impaired. We cannot assure you that Brookdale Senior Living and Kindred will have sufficient assets, income and access to financing to enable them to satisfy their respective obligations to us, and any failure, inability or unwillingness by Brookdale Senior Living or Kindred to do so could have a material adverse effect on our business, financial condition, results of operations or liquidity and our ability to service our indebtedness and other obligations and to make distributions to our stockholders, as required for us to continue to qualify as a REIT (a “Material Adverse Effect”). We also cannot assure you that Brookdale Senior Living and Kindred will elect to renew their respective leases with us upon expiration of the leases or that we will be able to reposition any non-renewed properties on a timely basis or on the same or better economic terms, if at all. See “Risks Factors—Risks Arising from Our Business—Our leases with Brookdale Senior Living and Kindred account for a significant portion of our triple-net leased properties segment revenues and operating income; Any failure, inability or unwillingness by Brookdale Senior Living or Kindred to satisfy its obligations under our agreements could have a Material Adverse Effect on us” included in Item 1A of this Annual Report on Form 10-K.

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Brookdale Senior Living Leases
As of December 31, 2014, after giving effect to Brookdale Senior Living’s acquisition of Emeritus Senior Living on July 31, 2014, we leased 160 properties (excluding six properties owned through investments in unconsolidated entities and one property managed by Brookdale Senior Living pursuant to a long-term management agreement) to Brookdale Senior Living pursuant to multiple lease agreements.
Pursuant to our lease agreements, Brookdale Senior Living is obligated to pay base rent, which escalates annually at a specified rate over the prior period base rent. As of December 31, 2014, the aggregate 2015 contractual cash rent due to us from Brookdale Senior Living, excluding variable interest that Brookdale Senior Living is obligated to pay as additional rent based on certain floating rate mortgage debt, was approximately $186.8 million, and the current aggregate contractual base rent (computed in accordance with U.S. generally accepted accounting principles (“GAAP”)) due to us from Brookdale Senior Living, excluding the variable interest, was approximately $182.5 million (in each case, excluding six properties owned through investments in unconsolidated entities as of December 31, 2014). See “Note 3—Concentration of Credit Risk” and “Note 14—Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Kindred Leases
As of December 31, 2014, we leased 83 properties to Kindred pursuant to multiple lease agreements. The properties leased pursuant to our Kindred master leases are grouped into bundles, or “renewal groups,” with each renewal group containing a varying number of geographically diversified properties. All properties within a single renewal group have the same current lease term of five to 12 years, and each renewal group is currently subject to one or more successive five-year renewal terms at Kindred’s option, provided certain conditions are satisfied. Kindred’s renewal option is “all or nothing” with respect to the properties contained in each renewal group.
The aggregate annual rent we receive under each Kindred master lease is referred to as “base rent.” Base rent escalates annually at a specified rate over the prior period base rent, contingent, in the case of the remaining three original Kindred master leases, upon the satisfaction of specified facility revenue parameters. The annual rent escalator under two Kindred master leases is 2.7%, and the annual rent escalator under the other two Kindred master leases is based on year-over-year changes in CPI, subject to floors and caps.
As of December 31, 2014, we had re-leased to Kindred, transitioned to new operators or sold 107 of the 108 licensed healthcare assets whose lease terms were scheduled to expire on September 30, 2014. We expect to sell the remaining asset during 2015; however, the transaction remains subject to customary due diligence conditions, and we cannot assure you that we will be able to successfully complete the sale on a timely basis or at all.
In December 2014, we entered into favorable agreements with Kindred to transition the operations of nine licensed healthcare assets, make certain modifications to the master leases governing 34 leased assets, and reimburse us for certain deferred capital expenditures at skilled nursing facilities previously transferred to new operators. In January 2015, Kindred paid us $37 million in connection with these agreements, which will be amortized over the remaining lease term for the 34 assets governed by the modified master leases.  We own or have the rights to all licenses and CONs at the nine properties to be transitioned, and Kindred has extensive and detailed obligations to cooperate and ensure an orderly transition of the properties to another operator.
Senior Living Operations
As of December 31, 2014, Atria and Sunrise, collectively, provided comprehensive property management and accounting services with respect to 269 seniors housing communities included in our senior living operations reportable business segment, for which we pay annual management fees pursuant to long-term management agreements. Most of our management agreements with Atria have initial terms expiring either July 31, 2024 or December 31, 2027, with successive automatic ten-year renewal periods. The management fees payable to Atria under most of the Atria management agreements range from 4.5% to 5% of revenues generated by the applicable properties, and Atria can earn up to an additional 1% of revenues based on the achievement of specified performance targets. Most of our management agreements with Sunrise have terms ranging from 25 to 30 years (which commenced as early as 2004 and as recently as 2012). The management fees payable to Sunrise under the Sunrise management agreements range from 5% to 7% of revenues generated by the applicable properties. For the year ended December 31, 2014, the management fees (including incentive fees) we paid pursuant to our Sunrise management agreements were equal to 6.5% of revenues generated by the applicable properties. See “Note 3—Concentration of Credit Risk” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Because Atria and Sunrise manage our properties in exchange for the receipt of a management fee from us, we are not directly exposed to the credit risk of our managers in the same manner or to the same extent as our triple-net tenants. However,

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we rely on our managers’ personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage our senior living operations efficiently and effectively. We also rely on our managers to set appropriate resident fees and to otherwise operate our seniors housing communities in compliance with the terms of our management agreements and all applicable laws and regulations. Although we have various rights as the property owner under our management agreements, including various rights to terminate and exercise remedies under those agreements as provided therein, Atria’s or Sunrise’s failure, inability or unwillingness to satisfy its respective obligations under those agreements, to efficiently and effectively manage our properties or to provide timely and accurate accounting information with respect thereto could have a Material Adverse Effect on us. In addition, significant changes in Atria’s or Sunrise’s senior management or equity ownership or any adverse developments in their businesses and affairs or financial condition could have a Material Adverse Effect on us. See “Risk Factors—Risks Arising from Our Business—The properties managed by Atria and Sunrise account for a significant portion of our revenues and operating income; Adverse developments in Atria’s or Sunrise’s business and affairs or financial condition could have a Material Adverse Effect on us” and “—We have rights to terminate our management agreements with Atria and Sunrise in whole or with respect to specific properties under certain circumstances, and we may be unable to replace Atria or Sunrise if our management agreements are terminated or not renewed” included in Item 1A of this Annual Report on Form 10-K.
Our 34% ownership interest in Atria entitles us to certain rights and minority protections, as well as the right to appoint two of five members on the Atria board of directors.
Competition
We generally compete for investments in seniors housing and healthcare assets with publicly traded, private and non-listed healthcare REITs, real estate partnerships, healthcare providers, healthcare lenders and other investors, including developers, banks, insurance companies, pension funds, government-sponsored entities and private equity firms, some of whom may have greater financial resources and lower costs of capital than we do. Increased competition challenges our ability to identify and successfully capitalize on opportunities that meet our objectives, which is affected by, among other factors, the availability of suitable acquisition or investment targets, our ability to negotiate acceptable transaction terms and our access to and cost of capital. See “Risk Factors—Risks Arising from Our Business—Our pursuit of investments in and acquisitions of, or our development or redevelopment of, seniors housing and healthcare assets may be unsuccessful or fail to meet our expectations” included in Item 1A of this Annual Report on Form 10-K and “Note 10—Borrowing Arrangements” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Our tenants, operators and managers also compete on a local and regional basis with other healthcare operating companies that provide comparable services. Seniors housing community, skilled nursing facility and hospital operators compete to attract and retain residents and patients to our properties based on scope and quality of care, reputation and financial condition, price, location and physical appearance of the properties, services offered, qualified personnel, physician referrals and family preferences. With respect to MOBs, we and our third-party managers compete to attract and retain tenants based on many of the same factors, in addition to quality of the affiliated health system, physician preferences and proximity to hospital campuses. The ability of our tenants, operators and managers to compete successfully could be affected by private, federal and state reimbursement programs and other laws and regulations. See “Risk Factors—Risks Arising from Our Business—Our tenants, operators and managers may be adversely affected by healthcare regulation and enforcement” and “—Changes in the reimbursement rates or methods of payment from third-party payors, including the Medicare and Medicaid programs, could have a material adverse effect on certain of our tenants and operators and on us” included in Item 1A of this Annual Report on Form 10-K.
Employees
As of December 31, 2014, we had 479 employees, including 299 employees associated with our MOB operations reportable business segment, but excluding 1,261 employees at our Canadian seniors housing communities under the supervision and control of our independent managers. Although the applicable manager is responsible for hiring and maintaining the labor force at each of our Canadian seniors housing communities, we bear many of the costs and risks generally borne by employers, particularly with respect to those properties with unionized labor. None of our employees is subject to a collective bargaining agreement, other than those employees in the Canadian seniors housing communities managed by Sunrise or Atria. We believe that relations with our employees are positive. See “Risk Factors—Risks Arising from Our Business—Our operating assets expose us to various operational risks, liabilities and claims that could adversely affect our ability to generate revenues or increase our costs and could have a Material Adverse Effect on us” included in Item 1A of this Annual Report on Form 10-K.

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Insurance
We maintain or require in our lease, management and other agreements that our tenants, operators and managers maintain all applicable lines of insurance on our properties and their operations. We believe that the amount and scope of insurance coverage provided by our policies and the policies required to be maintained by our tenants, operators and managers are customary for similarly situated companies in our industry. Although we regularly monitor our tenants’, operators’ and managers’ compliance with their respective insurance requirements, we cannot assure you that they will maintain the required insurance coverages, and any failure, inability or unwillingness by our tenants, operators and managers to do so could have a Material Adverse Effect on us. We also cannot assure you that we will continue to require the same levels of insurance coverage under our lease, management and other agreements, that such insurance coverage will be available at a reasonable cost in the future or that the policies maintained will fully cover all losses related to our properties upon the occurrence of a catastrophic event, nor can we assure you of the future financial viability of the insurers.
We maintain the property insurance for all of our senior living operations, as well as the general and professional liability insurance for our seniors housing communities and related operations managed by Atria. However, Sunrise maintains the general and professional liability insurance for our seniors housing communities and related operations that it manages in accordance with the terms of our management agreements. Under our management agreements with Sunrise, we may elect, on an annual basis, whether we or Sunrise will bear responsibility for maintaining the required insurance coverage for the applicable properties, but the costs of such insurance are facility expenses paid from the revenues of those properties, regardless of who maintains the insurance.
Through our MOB operations, we provide engineering, construction and architectural services in connection with new development projects, and any design, construction or systems failures related to the properties we develop could result in substantial injury or damage to our clients or third parties. Any such injury or damage claims may arise in the ordinary course and may be asserted with respect to ongoing or completed projects. Although we maintain liability insurance to protect us against these claims, if any claim results in a loss, we cannot assure you that our policy limits would be adequate to cover the loss in full. If we sustain losses in excess of our insurance coverage, we may be required to pay the difference and we could lose our investment in, or experience reduced profits and cash flows from, the affected MOB, which could have a Material Adverse Effect on us.
For various reasons, including to reduce and manage costs, many healthcare companies utilize different organizational and corporate structures coupled with self-insurance trusts or captive programs that may provide less coverage than a traditional insurance policy. As a result, companies that self-insure could incur large funded and unfunded general and professional liability expenses, which could have a material adverse effect on their liquidity, financial condition and results of operations. The implementation of a trust or captive by any of our tenants, operators or managers could adversely affect such person’s ability to satisfy its obligations under, or otherwise comply with the terms of, its respective lease, management and other agreements with us, which could have a Material Adverse Effect on us. Likewise, if we decide to implement a captive or self-insurance program, any large funded and unfunded general and professional liability expenses that we incur could have a Material Adverse Effect on us.
Additional Information
We maintain a website at www.ventasreit.com. The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive textual reference only.
We make available, free of charge, through our website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. In addition, our Guidelines on Governance, our Global Code of Ethics and Business Conduct (including waivers from and amendments to that document) and the charters for each of our Audit and Compliance, Nominating and Corporate Governance and Executive Compensation Committees are available on our website, and we will mail copies of the foregoing documents to stockholders, free of charge, upon request to our Corporate Secretary at Ventas, Inc., 353 North Clark Street, Suite 3300, Chicago, Illinois 60654.

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GOVERNMENTAL REGULATION
Healthcare Regulation
Overview
For the year ended December 31, 2014, approximately 16% of our total revenues and 26% of our total NOI (in each case excluding amounts in discontinued operations) were attributable to skilled nursing and other facilities and hospitals in which our third-party tenants receive reimbursement for their services under governmental healthcare programs, such as Medicare and Medicaid. We are neither a participant in, nor a direct recipient of, any reimbursement under these programs with respect to those facilities.
Although the properties within our portfolio may be subject to varying levels of governmental scrutiny, we expect that the healthcare industry, in general, will continue to face increased regulation and pressure in the areas of fraud, waste and abuse, cost control, healthcare management and provision of services, among others. We also expect that efforts by third-party payors, such as the federal Medicare program, state Medicaid programs and private insurance carriers (including health maintenance organizations and other health plans), to impose greater discounts and more stringent cost controls upon operators (through changes in reimbursement rates and methodologies, discounted fee structures, the assumption by healthcare providers of all or a portion of the financial risk or otherwise) will intensify and continue. A significant expansion of applicable federal, state or local laws and regulations, existing or future healthcare reform measures, new interpretations of existing laws and regulations, changes in enforcement priorities, or significant limits on the scope of services reimbursed or reductions in reimbursement rates could have a material adverse effect on certain of our operators’ liquidity, financial condition and results of operations and, in turn, their ability to satisfy their contractual obligations, including making rental payments under and otherwise complying with the terms of our leases.
Licensure, Certification and CONs
In general, the operators of our skilled nursing facilities must be licensed on an annual or biannual basis and certified annually through various regulatory agencies that determine compliance with federal, state and local laws to participate in the Medicare and Medicaid programs. Legal requirements pertaining to such licensure and certification relate to the quality of nursing care provided by the operator, qualifications of the operator’s administrative personnel and nursing staff, adequacy of the physical plant and equipment and continuing compliance with laws and regulations governing the operation of skilled nursing facilities. The failure to maintain or renew any required license or regulatory approval or to correct serious deficiencies identified in a compliance survey could prevent an operator from continuing operations at a property, and a loss of licensure or certification could adversely affect a skilled nursing facility operator’s ability to receive payments from the Medicare and Medicaid programs, which, in turn, could adversely affect its ability to satisfy its contractual obligations, including making rental payments under and otherwise complying with the terms of our leases.
The operators of our hospitals must meet the applicable conditions of participation established by the U.S. Department of Health and Human Services (“HHS”) and comply with state and local laws and regulations in order to receive Medicare and Medicaid reimbursement. Such conditions relate to the type of hospital and its equipment, personnel and standard of medical care, and hospital operators must undergo periodic on-site licensure surveys, which generally are limited if the hospital is accredited by The Joint Commission (formerly the Joint Commission on Accreditation of Healthcare Organizations) or other recognized accreditation organizations. A loss of licensure or certification could adversely affect a hospital operator’s ability to receive payments from the Medicare and Medicaid programs, which, in turn, could adversely affect its ability to satisfy its contractual obligations, including making rental payments under and otherwise complying with the terms of our leases.
In addition, many of our skilled nursing facilities and hospitals are subject to state CON laws that require governmental approval prior to the development or expansion of healthcare facilities and services. The approval process in these states generally requires a facility to demonstrate the need for additional or expanded healthcare facilities or services. CONs, where applicable, are also sometimes necessary for changes in ownership or control of licensed facilities, addition of beds, investment in major capital equipment, introduction of new services or termination of services previously approved through the CON process. CON laws and regulations may restrict an operator’s ability to expand our properties and grow its business in certain circumstances, which could have an adverse effect on the operator’s revenues and, in turn, its ability to make rental payments under and otherwise comply with the terms of our leases. See “Risk Factors—Risks Arising from Our Business—If we must replace any of our tenants or operators, we might be unable to reposition the properties on as favorable terms, or at all, and we could be subject to delays, limitations and expenses, which could have a Material Adverse Effect on us” included in Part I, Item 1A of this Annual Report on Form 10-K.
Compared to skilled nursing facilities and hospitals, seniors housing communities are subject to relatively few, if any, federal regulations. Instead, to the extent they are regulated, such regulation consists primarily of state and local laws governing licensure, provision of services, staffing requirements and other operational matters, which vary greatly from one

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jurisdiction to another. Although recent growth in the U.S. seniors housing industry has attracted the attention of various federal agencies that believe more federal regulation of these properties is necessary, Congress thus far has deferred to state regulation of seniors housing communities. However, as a result of this growth and increased federal scrutiny, some states have revised and strengthened their regulation of seniors housing communities, and more states are expected to do the same in the future. Similarly, in Canada, seniors housing communities are currently generally subject to significantly less regulation than skilled nursing facilities and hospitals, and the regulation of such facilities is principally a matter of provincial and municipal jurisdiction. As a result, the regulatory regimes that apply to seniors housing communities vary depending on the province (and in certain circumstances, the city) in which a facility is located.  Recently, certain Canadian provinces have taken steps to implement regulatory measures that could result in enhanced regulation for seniors housing communities in such provinces.
Fraud and Abuse Enforcement
Federal and state laws and regulations prohibit a wide variety of fraud and abuse by healthcare providers who participate in, receive payments from or make or receive referrals for work in connection with government-funded healthcare programs, including Medicare and Medicaid. These federal laws include, among others:
The anti-kickback statute (Section 1128B(b) of the Social Security Act), which prohibits certain business practices and relationships, including the payment, receipt or solicitation of any remuneration, directly or indirectly, to induce a referral of any patient or service or item covered by a federal health care program, including Medicare, or a state health program, such as Medicaid;
The physician self-referral prohibition (Ethics in Patient Referrals Act of 1989, commonly referred to as the “Stark Law”), which prohibits referrals by physicians of Medicare or Medicaid patients to providers of a broad range of designated healthcare services with which the physicians (or their immediate family members) have ownership interests or certain other financial arrangements;
The False Claims Act, which prohibits any person from knowingly presenting false or fraudulent claims for payment by the federal government (including the Medicare and Medicaid programs);
The Civil Monetary Penalties Law, which authorizes HHS to impose civil penalties administratively for fraudulent acts; and
The Health Insurance Portability and Accountability Act of 1996 (commonly referred to as “HIPAA”), which among other things, protects the privacy and security of individually identifiable health information by limiting its use and disclosure.
Sanctions for violating these federal laws include criminal and civil penalties, such as punitive sanctions, damage assessments, monetary penalties, imprisonment, denial of Medicare and Medicaid payments, and exclusion from the Medicare and Medicaid programs. These laws also impose an affirmative duty on operators to ensure that they do not employ or contract with persons excluded from the Medicare and other governmental healthcare programs.
Many states have adopted or are considering legislative proposals similar to the federal anti-fraud and abuse laws, some of which extend beyond the Medicare and Medicaid programs, to prohibit the payment or receipt of remuneration for the referral of patients and physician self-referrals, regardless of whether the service was reimbursed by Medicare or Medicaid. Many states have also adopted or are considering legislative proposals to increase patient protections, such as minimum staffing levels, criminal background checks, and limiting the use and disclosure of patient specific health information. These state laws also impose criminal and civil penalties similar to the federal laws.
In the ordinary course of their business, the operators of our properties have been and are subject regularly to inquiries, investigations and audits by federal and state agencies that oversee applicable laws and regulations. Increased funding through recent federal and state legislation and the creation of a series of new healthcare crimes by HIPAA have led to a significant expansion in the number and scope of investigations and enforcement actions over the past several years. Private enforcement of healthcare fraud has also increased, due in large part to amendments to the civil False Claims Act in 1986 that were designed to encourage private individuals to sue on behalf of the government. These whistleblower suits by private individuals, known as qui tam suits, may be filed by almost anyone, including present and former patients or nurses and other employees.
As federal and state budget pressures persist, administrative agencies may continue to escalate their investigation and enforcement efforts to eliminate waste and control fraud and abuse in governmental healthcare programs. A violation of federal or state anti-fraud and abuse laws or regulations by an operator of our properties could have a material adverse effect on the operator’s liquidity, financial condition or results of operations, which could adversely affect its ability to satisfy its contractual obligations, including making rental payments under and otherwise complying with the terms of our leases.

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Reimbursement
In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, along with a reconciliation measure, the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”). The passage of the Affordable Care Act has resulted in comprehensive reform legislation that is expected to expand health care coverage to millions of currently uninsured people beginning in 2014. To help fund this expansion, the Affordable Care Act outlines certain reductions in Medicare reimbursement rates for various healthcare providers, including long-term acute care hospitals and skilled nursing facilities, as well as certain other changes to Medicare payment methodologies.
The Affordable Care Act, among other things, reduced the inflationary market basket increase included in standard federal payment rates for long-term acute care hospitals by 25 basis points in fiscal year 2010, 50 basis points in fiscal year 2011, 10 basis points in fiscal years 2012 and 2013, 30 basis points in fiscal year 2014, 20 basis points in fiscal years 2015 and 2016, and 75 basis points in fiscal years 2017 through 2019. In addition, under the Affordable Care Act, long-term acute care hospitals and skilled nursing facilities are subject to a rate adjustment to the annual market basket increase to reflect improvements in productivity. In July 2012, after considering the constitutionality of various provisions of the Affordable Care Act, the U.S. Supreme Court upheld the so-called individual mandate and, while it found the provisions expanding Medicaid eligibility unconstitutional, determined that the issue was appropriately remedied by circumscribing the Secretary of Health and Human Services’ enforcement authority, thus leaving the Medicaid expansion intact.
Healthcare is one of the largest industries in the United States and continues to attract a great deal of legislative interest and public attention. We cannot assure you that existing or future healthcare reform legislation or changes in the administration or implementation of governmental and non-governmental healthcare reimbursement programs will not have a material adverse effect on our operators’ liquidity, financial condition or results of operations, or on their ability to satisfy their obligations to us, which, in turn, could have a Material Adverse Effect on us.
In August 2011, President Obama and the U.S. Congress enacted the Budget Control Act of 2011 (the “Budget Control Act”) to increase the federal government’s borrowing authority (the so-called “debt ceiling”) and reduce the federal government’s projected operating deficit. Under the Budget Control Act, a 2% reduction in Medicare payments to long-term acute care hospitals and skilled nursing facilities (part of $1.2 trillion in automatic spending cuts commonly referred to as “sequestration”) was expected to take effect on February 1, 2013. Although delayed by the American Taxpayer Relief Act of 2012, this 2% reduction became effective on April 1, 2013. These measures or any future federal legislation relating to the debt ceiling or deficit reduction could have a material adverse effect on our operators’ liquidity, financial condition or results of operations and their ability to satisfy their obligations to us, which, in turn, could have a Material Adverse Effect on us.
In October 2014, President Obama signed into law The Improving Medicare Post-Acute Transformation Act of 2014 (the “IMPACT Act”), which standardizes patient assessments among post-acute care providers (home health providers, skilled nursing facilities, long-term care hospitals and rehabilitation providers) and is designed to to give Congress the data needed for major payment reforms, such as site-neutral and bundled payments, in the future. We have not yet determined the effect, if any, that the IMPACT Act may have on our operators or on us.
Medicare Reimbursement; Long-Term Acute Care Hospitals
The Balanced Budget Act of 1997 (“BBA”) mandated the creation of a prospective payment system for long-term acute care hospitals (“LTAC PPS”) for cost reporting periods commencing on or after October 1, 2002. LTAC PPS requires payment for a Medicare beneficiary at a predetermined, per discharge amount for each defined patient category (called “Long-Term Care—Diagnosis Related Groups” or “LTC-DRGs”), adjusted for differences in area wage levels. Updates to LTAC PPS payment rates are established by regulators and published annually for the long-term acute care hospital rate year, which coincides with annual updates to the LTC-DRG classification system and corresponds to the federal fiscal year (October 1 through September 30).
The Medicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L. No. 110-173) (the “Medicare Extension Act”) significantly expanded medical necessity reviews by the Centers for Medicare & Medicaid Services (“CMS”) by requiring long-term acute care hospitals to institute a patient review process to better assess patients upon admission and on a continuing basis for appropriateness of care. In addition, the Medicare Extension Act, among other things, provided the following long-term acute care hospital payment policy changes for a period of three years, all of which were extended for two additional years by the Affordable Care Act:
Prevention of the application of the “25-percent rule,” which limits payments from referring co-located hospitals, to freestanding and grandfathered long-term acute care hospitals;
Modification of the application of the 25-percent rule to certain urban and rural long-term acute care “hospitals-within-hospitals” and “satellite” facilities;

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Prevention of the application of the “very short stay outlier” policy; and
Prevention of any one-time adjustments to correct estimates used in implementing LTAC PPS.
Lastly, the Medicare Extension Act introduced a moratorium on new long-term acute care hospitals and beds for three years, which was subsequently extended by the Affordable Care Act and expired on December 29, 2012. In its May 2008 final rule, CMS delayed the extension of the 25-percent rule to freestanding and grandfathered long-term acute care hospitals and increased the patient percentage thresholds for certain urban and rural long-term acute care “hospitals-within-hospitals” and “satellite” facilities for three years, as mandated by the Medicare Extension Act, and set forth policies on implementing the moratorium on new long-term acute care hospitals and beds imposed by the Medicare Extension Act.
In its August 2009 final rule, CMS finalized policies to implement changes required by Section 124 of the Medicare Improvements for Patients & Providers Act of 2008 (Pub. L. No. 110-275), continuing reforms intended to improve the accuracy of Medicare payments for inpatient acute care through the severity-adjusted diagnosis-related group (MS-LTC-DRG) classification system for long-term acute care hospitals.
In its August 2012 final rule, CMS delayed the extension of the 25-percent rule to freestanding and grandfathered long-term acute care hospitals for another year until December 29, 2013.
On December 26, 2013, President Obama signed into law the Pathway for SGR Reform Act of 2013 (the “Pathway for SGR Reform Act”), which prevented a scheduled cut to the Medicare Part B physician fee schedules from taking effect on January 1, 2014. Also known as the “doc fix,” this reprieve from the Medicare payment cut was effective for a period of 90 days (until March 31, 2014), while Congress worked to find a permanent solution, and included several provisions impacting payments to long-term acute care hospitals. Among other things, the Pathway for SGR Reform Act established new patient criteria for long-term acute care hospitals to receive reimbursement for services to Medicare beneficiaries at the LTAC PPS rate, rather than the acute inpatient prospective payment system (“IPPS”) rate, and required CMS to establish a process for a long-term acute care hospital subject to the IPPS payment rate to re-qualify for payment under LTAC PPS. The Pathway for SGR Reform Act also delayed full implementation of the 25-percent rule for three years, through fiscal year 2017, and extended the current moratorium on establishing or increasing long-term acute care beds (with certain exceptions) through September 30, 2017.
On August 4, 2014, CMS released its final rule updating LTAC PPS for the 2015 fiscal year (October 1, 2014 through September 30, 2015). Under the final rule, the LTAC PPS standard federal payment rate will increase by 2.2% in fiscal year 2015, reflecting a 2.9% increase in the market basket index, less both a 0.5% productivity adjustment and a 0.2% adjustment mandated by the Affordable Care Act. After taking into account the last year of the three-year phase in of the permanent one-time budget neutrality adjustment (-1.3%), the LTAC PPS standard federal payment rate in fiscal year 2015 will increase under the final rule by slightly more than 1% over the rate for fiscal year 2014. In addition, the final rule provides for: the retroactive reinstatement and extension, for an additional four years, of the moratorium on the full implementation of the 25-percent rule to freestanding and grandfathered long-term acute care hospitals established under the Medicare, Medicaid and SCHIP Extension Act of 2007 and amended by subsequent legislation; and implementation of the moratorium on the establishment of new long-term acute care hospitals and satellite facilities and the moratorium on bed increases in long-term acute care hospitals under the Pathway for SGR Reform Act of 2013, as amended by the Protecting Access to Medicare Act of 2014, effective for the period beginning April 1, 2014 and ending September 30, 2017. CMS estimates that net payments to long-term acute care hospitals under the final rule will increase by approximately $62 million, or 1.1%, in fiscal year 2015 due to the update to the standard federal payment rate, changes to the area wage adjustment and expected changes to short-stay and high-cost outlier payments. However, after taking into account the reinstatement of the moratorium on the implementation of the 25-percent rule, the implementation of the moratoria on the development of new long-term acute care hospitals and satellite facilities and additional beds, and the impact of certain other policy changes, CMS estimates that net payments to long-term acute care hospitals under the final rule will increase by approximately $178 million in fiscal year 2015 relative to fiscal year 2014.
We regularly assess the financial implications of CMS’s rules and other federal legislation on the operators of our long-term acute care hospitals, but we cannot assure you that current rules or future updates to LTAC PPS, LTC-DRGs or Medicare reimbursement for long-term acute care hospitals will not materially adversely affect our operators, which, in turn, could have a Material Adverse Effect on us. See “Risk Factors—Risks Arising from Our Business—Changes in the reimbursement rates or methods of payment from third-party payors, including the Medicare and Medicaid programs, could have a material adverse effect on certain of our tenants and operators and on us” included in Item 1A of this Annual Report on Form 10-K.
Medicare Reimbursement; Skilled Nursing Facilities
The BBA also mandated the creation of a prospective payment system for skilled nursing facilities (“SNF PPS”) offering Part A covered services. Under SNF PPS, payment amounts are based upon classifications determined through assessments of individual Medicare patients in the skilled nursing facility, rather than on the facility’s reasonable costs. SNF PPS payments,

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which are made on a per diem basis for each resident, are generally intended to cover all inpatient services for Medicare patients, including routine nursing care, most capital-related costs associated with the inpatient stay and ancillary services, such as respiratory therapy, occupational and physical therapy, speech therapy and certain covered drugs.
In response to widespread healthcare industry concern about the reductions in payments under the BBA, the federal government enacted the Balanced Budget Refinement Act of 1999 (“BBRA”). The BBRA increased the per diem reimbursement rates for certain high acuity patients by 20% from April 1, 2000 until CMS refined the resource utilization groups (“RUGs”) used to determine the daily payment for beneficiaries in skilled nursing facilities in the 2006 fiscal year. The BBRA also imposed a two-year moratorium on the annual cap mandated by the BBA on physical, occupational and speech therapy services provided to a patient by outpatient rehabilitation therapy providers, including Part B covered therapy services in nursing facilities. Although extended multiple times by Congress, relief from the BBA therapy caps expired on December 31, 2009.
Under its final rule updating LTC-DRGs for the 2007 fiscal year, CMS reduced reimbursement of uncollectible Medicare coinsurance amounts for all beneficiaries (other than beneficiaries of both Medicare and Medicaid) from 100% to 70% for skilled nursing facility cost reporting periods beginning on or after October 1, 2005 and set forth various options for classifying and weighting patients transferred to a skilled nursing facility after a hospital stay less than the mean length of stay associated with that particular diagnosis-related group.
Under its final rule updating SNF PPS for the 2010 fiscal year, CMS recalibrated the case-mix indexes for RUGs used to determine the daily payment for beneficiaries in skilled nursing facilities and implemented the RUG-IV classification model for skilled nursing facilities for the 2011 fiscal year. However, the Affordable Care Act delayed the implementation of RUG-IV for one year, and CMS subsequently modified the implementation schedule in its notice updating SNF PPS for the 2011 fiscal year.
In its final rule updating the Medicare physician fee schedule for the 2012 calendar year, CMS set a $1,880 cap on physical therapy and speech-language pathology services and a separate $1,880 cap on occupational therapy services, including therapy provided in skilled nursing facilities, both without an exceptions process. However, in January 2013, the Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. No. 112-96) was enacted to lift the caps on therapy services and require a manual review process for those exceptions for which the beneficiary therapy services exceed $3,700 in a year. The Pathway for SGR Reform Act maintained the status quo for outpatient therapy services by extending the exceptions process for outpatient therapy caps through March 31, 2014.
On August 4, 2014, CMS released its final rule updating SNF PPS for the 2015 fiscal year (October 1, 2014 through September 30, 2015). Under the final rule, the SNF PPS standard federal payment rate will increase by 2.0% in fiscal year 2015, reflecting a 2.5% increase in the market basket index, less a 0.5% productivity adjustment mandated by the Affordable Care Act. CMS estimates that net payments to skilled nursing facilities as a result of the final rule will increase by approximately $750 million in fiscal year 2015.
We regularly assess the financial implications of CMS’s rules and other federal legislation on the operators of our skilled nursing facilities, but we cannot assure you that current rules or future updates to SNF PPS, therapy services or Medicare reimbursement for skilled nursing facilities will not materially adversely affect our operators, which, in turn, could have a Material Adverse Effect on us. See “Risk Factors—Risks Arising from Our Business—Changes in the reimbursement rates or methods of payment from third-party payors, including the Medicare and Medicaid programs, could have a material adverse effect on certain of our tenants and operators and on us” included in Item 1A of this Annual Report on Form 10-K.
Medicaid Reimbursement; Skilled Nursing Facilities
Approximately two-thirds of all skilled nursing facility residents are dependent on Medicaid. Medicaid reimbursement rates, however, typically are less than the amounts charged by the operators of our skilled nursing facilities. Although the federal government and the states share responsibility for financing Medicaid, states have a wide range of discretion, within certain federal guidelines, to determine eligibility and reimbursement methodology. In addition, federal legislation limits an operator’s ability to withdraw from the Medicaid program by restricting the eviction or transfer of Medicaid residents. As state budget pressures continue to escalate and in an effort to address actual or potential budget shortfalls, many state legislatures have enacted or proposed reductions to Medicaid expenditures by implementing “freezes” or cuts in Medicaid rates paid to providers, including hospitals and skilled nursing facilities, or by restricting eligibility and benefits.
In the Deficit Reduction Act of 2005 (Pub. L. No. 109 171), Congress made changes to the Medicaid program that were estimated to result in $10 billion in savings to the federal government over the five years following enactment of the legislation, primarily through the accounting practices some states use to calculate their matched payments and revising the qualifications for individuals who are eligible for Medicaid benefits. The changes made by CMS’s final rule updating SNF PPS for the 2006 fiscal year were also anticipated to reduce Medicaid payments to skilled nursing facility operators, and as part of the Tax Relief and Health Care Act of 2006 (Pub. L. No. 109-432), Congress reduced the ceiling on taxes that states may impose on healthcare

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providers and that would qualify for federal financial participation under Medicaid by 0.5%, from 6% to 5.5%, until October 1, 2011. However, it was anticipated that this reduction would have a negligible effect, impacting only those states with taxes in excess of 5.5%.
The American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5) (the “Recovery Act”), in contrast, temporarily increased federal payments to state Medicaid programs by $86.6 billion through, among other things, a 6.2% increase in the federal share of Medicaid expenditures across the board, with additional funds available depending on a state’s federal medical assistance percentage and unemployment rate. Though the Medicaid federal assistance payments were originally expected to expire on December 31, 2010, the President’s fiscal year 2011 budget extended those payments through June 30, 2011. The Recovery Act also requires states to promptly pay nursing facilities under their Medicaid program, and precludes states, as a condition of receiving the additional funding, from heightening their Medicaid eligibility requirements.
We expect more states to adopt significant Medicaid rate freezes or cuts or other program changes as their reimbursement methodologies continue to evolve. In addition, the U.S. government may revoke, reduce or stop approving “provider taxes” that have the effect of increasing Medicaid payments to the states. We cannot predict the impact that any such actions would have on our skilled nursing facility operators, nor can we assure you that payments under Medicaid are now or in the future will be sufficient to fully reimburse those operators for the cost of providing skilled nursing services. Severe and widespread Medicaid rate cuts or freezes could materially adversely affect our skilled nursing facility operators, which, in turn, could adversely affect their ability to satisfy their contractual obligations, including making rental payments under and otherwise complying with the terms of our leases.
Environmental Regulation
As an owner of real property, we are subject to various federal, state and local laws and regulations regarding environmental, health and safety matters. These laws and regulations address, among other things, asbestos, polychlorinated biphenyls, fuel oil management, wastewater discharges, air emissions, radioactive materials, medical wastes, and hazardous wastes, and, in certain cases, the costs of complying with these laws and regulations and the penalties for non-compliance can be substantial. With respect to our properties that are operated or managed by third parties, we may be held primarily or jointly and severally liable for costs relating to the investigation and clean-up of any property from which there is or has been an actual or threatened release of a regulated material and any other affected properties, regardless of whether we knew of or caused the release. Such costs typically are not limited by law or regulation and could exceed the property’s value. In addition, we may be liable for certain other costs, such as governmental fines and injuries to persons, property or natural resources, as a result of any such actual or threatened release. See “Risk Factors—Risks Arising from Our Business—We could incur substantial liabilities and costs if any of our properties are found to be contaminated with hazardous substances or we become involved in any environmental disputes” included in Item 1A of this Annual Report on Form 10-K.
Under the terms of our lease, management and other agreements, we generally have a right to indemnification by the tenants, operators and managers of our properties for any contamination caused by them. However, we cannot assure you that our tenants, operators and managers will have the financial capability or willingness to satisfy their respective indemnification obligations to us, and any failure, inability or unwillingness to do so may require us to satisfy the underlying environmental claims. See “Risk Factors—Risks Arising from Our Business—Our leases with Brookdale Senior Living and Kindred generate a meaningful portion of our revenues and operating income; Any failure, inability or unwillingness by Brookdale Senior Living or Kindred to satisfy its obligations under our agreements could have a Material Adverse Effect on us” included in Item 1A of this Annual Report on Form 10-K.
In general, we have also agreed to indemnify our tenants and operators against any environmental claims (including penalties and clean-up costs) resulting from any condition arising in, on or under, or relating to, the leased properties at any time before the applicable lease commencement date. With respect to our senior living operating portfolio, we have agreed to indemnify our managers against any environmental claims (including penalties and clean-up costs) resulting from any condition on those properties, unless the manager caused or contributed to that condition.
We did not make any material capital expenditures in connection with environmental, health, and safety laws, ordinances and regulations in 2014 and do not expect that we will be required to make any such material capital expenditures during 2015.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes certain U.S. federal income tax considerations that may be relevant to you as a holder of our stock. It is not tax advice, nor does it purport to address all aspects of U.S. federal income taxation that may be important to particular stockholders in light of their personal circumstances or to certain types of stockholders, such as insurance companies, tax-exempt organizations (except to the extent discussed below under “—Treatment of Tax-Exempt Stockholders”), financial institutions, pass-through entities (or investors in such entities) or broker-dealers, and non-U.S.

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individuals and entities (except to the extent discussed below under “—Special Tax Considerations for Non-U.S. Stockholders”), that may be subject to special rules.
The statements in this section are based on the Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury Regulations, Internal Revenue Service (“IRS”) rulings, and judicial decisions now in effect, all of which are subject to change or different interpretation, possibly with retroactive effect. The laws governing the U.S. federal income tax treatment of REITs and their stockholders are highly technical and complex, and this discussion is qualified in its entirety by the authorities listed above. We cannot assure you that new laws, interpretations of law or court decisions will not cause any statement herein to be inaccurate.
Federal Income Taxation of Ventas
We elected REIT status beginning with the year ended December 31, 1999. We believe that we have satisfied the requirements to qualify as a REIT for federal income tax purposes for all tax years starting in 1999, and we intend to continue to do so. By qualifying for taxation as a REIT, we generally are not subject to federal income tax on net income that we currently distribute to stockholders, which substantially eliminates the “double taxation” (i.e., taxation at both the corporate and stockholder levels) that results from investment in a C corporation (i.e., a corporation generally subject to full corporate-level tax).
Notwithstanding such qualification, we are subject to federal income tax on any undistributed taxable income, including undistributed net capital gains, at regular corporate rates. In addition, we are subject to a 4% excise tax if we do not satisfy specific REIT distribution requirements. See “—Requirements for Qualification as a REIT—Annual Distribution Requirements.” Under certain circumstances, we may be subject to the “alternative minimum tax” on our undistributed items of tax preference. If we have net income from the sale or other disposition of “foreclosure property” (as described below) held primarily for sale to customers in the ordinary course of business or certain other non-qualifying income from foreclosure property, we are subject to tax at the highest corporate rate on that income. See “—Requirements for Qualification as a REIT—Foreclosure Property.” In addition, if we have net income from “prohibited transactions” (which are, in general, certain sales or other dispositions of property (other than foreclosure property) held primarily for sale to customers in the ordinary course of business), that income is subject to a 100% tax.
We also may be subject to “Built-in Gains Tax” on any appreciated asset that we own or acquire that was previously owned by a C corporation. If we dispose of any such asset and recognize gain on the disposition during the ten-year period immediately after the asset was owned by a C corporation (either prior to our REIT election, or through stock acquisition or merger), then we generally are subject to regular corporate income tax on the gain equal to the lesser of the recognized gain at the time of disposition or the built-in gain in that asset as of the date it became a REIT asset.
If we fail to satisfy either of the gross income tests for qualification as a REIT (as discussed below), but maintain such qualification under the relief provisions of the Code, we will be subject to a 100% tax on the gross income attributable to the amount by which we failed the applicable test, multiplied by a fraction intended to reflect our profitability. In addition, if we violate one or more of the REIT asset tests (as discussed below), we may avoid a loss of our REIT status if we qualify under certain relief provisions and, among other things, pay a tax equal to the greater of $50,000 or the highest corporate tax rate multiplied by the net income generated by the non-qualifying asset during a specified period. If we fail to satisfy any requirement for REIT qualification, other than the gross income or assets tests mentioned above, but maintain such qualification by meeting certain other requirements, we may be subject to a $50,000 penalty for each failure. Finally, we will incur a 100% excise tax on the income derived from certain transactions with a taxable REIT subsidiary (including rental income derived from leasing properties to a taxable REIT subsidiary) that are not conducted on an arm’s-length basis.
See “—Requirements for Qualification as a REIT” below for other circumstances in which we may be required to pay federal taxes.
Requirements for Qualification as a REIT
To qualify as a REIT, we must meet the requirements discussed below relating to our organization, sources of income, nature of assets and distributions of income to our stockholders.
Organizational Requirements
The Code defines a REIT as a corporation, trust or association: (i) that is managed by one or more directors or trustees; (ii) the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest; (iii) that would be taxable as a domestic corporation but for Sections 856 through 859 of the Code; (iv) that is neither a financial institution nor an insurance company subject to certain provisions of the Code; (v) the beneficial ownership of which is held by 100 or more persons during at least 335 days of a taxable year of 12 months, or during a proportionate part of a shorter taxable

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year (the “100 Shareholder Rule”); (vi) not more than 50% in value of the outstanding stock of which is owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) during the last half of each taxable year (the “5/50 Rule”); (vii) that makes an election to be a REIT (or has made such election for a prior taxable year) and satisfies all relevant filing and other administrative requirements established by the IRS that must be met in order to elect and to maintain REIT status; (viii) that uses a calendar year for federal income tax purposes; and (ix) that meets certain other tests, described below, regarding the nature of its income and assets.
We believe, but cannot assure you, that we have satisfied and will continue to satisfy the organizational requirements for qualification as a REIT. Although our certificate of incorporation contains certain limits on the ownership of our stock that are intended to prevent us from failing the 5/50 Rule or the 100 Shareholder Rule, we cannot assure you as to the effectiveness of those limits.
To qualify as a REIT, a corporation also may not have (as of the end of the taxable year) any earnings and profits that were accumulated in periods before it elected REIT status or that are from acquired non-REIT corporations. We believe that we have not had any accumulated earnings and profits that are attributable to non-REIT periods or from acquired corporations that were not REITs, although the IRS is entitled to challenge that determination.
Gross Income Tests
We must satisfy two annual gross income requirements to qualify as a REIT:
At least 75% of our gross income (excluding gross income from prohibited transactions) for each taxable year must consist of defined types of income derived directly or indirectly from investments relating to real property or mortgages on real property (including pledges of equity interest in certain entities holding real property and also including “rents from real property” (as defined in the Code)) and, in certain circumstances, interest on certain types of temporary investment income; and
At least 95% of our gross income (excluding gross income from prohibited transactions) for each taxable year must be derived from such real property or temporary investments, dividends, interest and gain from the sale or disposition of stock or securities, or from any combination of the foregoing.
We believe, but cannot assure you, that we have been and will continue to be in compliance with these gross income tests. If we fail to satisfy one or both tests for any taxable year, we nevertheless may qualify as a REIT for that year if we qualify under certain relief provisions of the Code, in which case we would be subject to a 100% tax on the gross income attributable to the amount by which we failed the applicable test. If we fail to satisfy one or both tests and do not qualify under the relief provisions for any taxable year, we will not qualify as a REIT for that year, which would have a Material Adverse Effect on us.
Asset Tests
At the close of each quarter of our taxable year, we must satisfy the following tests relating to the nature of our assets:
At least 75% of the value of our total assets must be represented by cash or cash items (including certain receivables), government securities, “real estate assets” (including interests in real property and in mortgages on real property and shares in other qualifying REITs) or, in cases where we raise new capital through stock or long-term (i.e., having a maturity of at least five years) debt offerings, temporary investments in stock or debt instruments during the one-year period following our receipt of such capital (the “75% asset test”); and
Of the investments not meeting the requirements of the 75% asset test, the value of any single issuer’s debt and equity securities that we own (other than our equity interests in any entity classified as a partnership for federal income tax purposes, the stock or debt of a taxable REIT subsidiary or the stock or debt of a qualified REIT subsidiary or other disregarded entity subsidiary) may not exceed 5% of the value of our total assets (the “5% asset test”), and we may not own more than 10% of any single issuer’s outstanding voting securities (the “10% voting securities test”) or more than 10% of the value of any single issuer’s outstanding securities (the “10% value test”), subject to limited “safe harbor” exceptions.
In addition, no more than 25% of the value of our total assets can be represented by securities of taxable REIT subsidiaries (the “25% TRS test”).
We believe, but cannot assure you, that we have been and will continue to be in compliance with the asset tests described above. If we fail to satisfy one or more asset tests at the end of any quarter, we nevertheless may continue to qualify as a REIT if we satisfied all of the asset tests at the close of the preceding calendar quarter and the discrepancy between the value of our assets and the asset test requirements is due to changes in the market values and not caused in any part by our acquisition of non-qualifying assets.

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Furthermore, if we fail to satisfy any of the asset tests at the end of any calendar quarter without curing that failure within 30 days after quarter end, we would fail to qualify as a REIT unless we qualified under certain relief provisions enacted as part of the American Jobs Creation Act of 2004. Under one relief provision, we would continue to qualify as a REIT if our failure to satisfy the 5% asset test, the 10% voting securities test or the 10% value test is due to our ownership of assets having a total value not exceeding the lesser of 1% of our assets at the end of the relevant quarter or $10 million and we disposed of those assets (or otherwise met such asset tests) within six months after the end of the quarter in which the failure was identified. If we fail to satisfy any of the asset tests for a particular quarter but do not qualify under the relief provision described in the preceding sentence, then we would be deemed to have satisfied the relevant asset test if: (i) following identification of the failure, we filed a schedule containing a description of each asset that caused the failure; (ii) the failure was due to reasonable cause and not willful neglect; (iii) we disposed of the non-qualifying asset (or otherwise met the relevant asset test) within six months after the end of the quarter in which the failure was identified; and (iv) we paid a penalty tax equal to the greater of $50,000 or the highest corporate tax rate multiplied by the net income generated by the non-qualifying asset during the period beginning on the first date of the failure and ending on the date we disposed of the asset (or otherwise cured the asset test failure). We cannot predict whether in all circumstances we would be entitled to the benefit of these relief provisions, and if we fail to satisfy any of the asset tests and do not qualify for the relief provisions, we will lose our REIT status, which would have a Material Adverse Effect on us.
Foreclosure Property
The foreclosure property rules permit us (by our election) to foreclose or repossess properties without being disqualified as a REIT as a result of receiving income that does not qualify under the gross income tests. However, in such a case, we would be subject to a corporate tax on the net non-qualifying income from “foreclosure property,” and the after-tax amount would increase the dividends we would be required to distribute to stockholders. See “—Annual Distribution Requirements”. The corporate tax imposed on non-qualifying income would not apply to income that qualifies as “good REIT income,” such as a lease of qualified healthcare property to a taxable REIT subsidiary, where the taxable REIT subsidiary engages an “eligible independent contractor” to manage and operate the property.
Foreclosure property treatment will end on the first day on which we enter into a lease of the applicable property that will give rise to income that does not constitute “good REIT income” under Section 856(c)(3) of the Code, but will not end if the lease will give rise only to good REIT income. Foreclosure property treatment also will end if any construction takes place on the property (other than completion of a building or other improvement that was more than 10% complete before default became imminent). Foreclosure property treatment (other than for qualified healthcare property) is available for an initial period of three years and may, in certain circumstances, be extended for an additional three years. Foreclosure property treatment for qualified healthcare property is available for an initial period of two years and may, in certain circumstances, be extended for an additional four years.
Taxable REIT Subsidiaries
A taxable REIT subsidiary, or “TRS,” is a corporation subject to tax as a regular C corporation. Generally, a TRS can own assets that cannot be owned by a REIT directly and can perform tenant services (excluding the direct or indirect operation or management of a lodging or healthcare facility) that would otherwise disqualify the REIT’s rental income under the gross income tests. Notwithstanding general restrictions on related party rent, a REIT can lease healthcare properties to a TRS if the TRS does not manage or operate the properties and instead engages an eligible independent contractor to manage them. We are permitted to own up to 100% of a TRS, subject to the 25% TRS test, but the Code imposes certain limits on the ability of the TRS to deduct interest payments made to us. In addition, we are subject to a 100% penalty tax on any excess payments received by us or any excess expenses deducted by the TRS if the economic arrangements between the REIT, the REIT’s tenants and the TRS are not comparable to similar arrangements among unrelated parties.
Annual Distribution Requirements
In order to be taxed as a REIT, we are required to distribute dividends (other than capital gain dividends) to our stockholders in an amount at least equal to the sum of (i) 90% of our “REIT taxable income” (computed without regard to the dividends paid deduction and our net capital gain) and (ii) 90% of the net income (after tax), if any, from foreclosure property, minus the sum of certain items of non-cash income. These dividends must be paid in the taxable year to which they relate, but may be paid in the following taxable year if (i) they are declared in October, November or December, payable to stockholders of record on a specified date in one of those months and actually paid during January of such following year or (ii) they are declared before we timely file our tax return for such year and paid on or before the first regular dividend payment after such declaration, and we elect on our federal income tax return for the prior year to have a specified amount of the subsequent dividend treated as paid in the prior year. To the extent we do not distribute all of our net capital gain or at least 90%, but less than 100%, of our REIT taxable income, as adjusted, we will be subject to tax on the undistributed amount at regular capital gains and ordinary corporate tax rates, except to the extent of our net operating loss or capital loss carryforwards. If we pay any

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Built-in Gains Taxes, those taxes will be deductible in computing REIT taxable income. Moreover, if we fail to distribute during each calendar year (or, in the case of distributions with declaration and record dates falling in the last three months of the calendar year, by the end of January following such year) at least the sum of 85% of our REIT ordinary income for such year, 95% of our REIT capital gain net income for such year (other than long-term capital gain we elect to retain and treat as having been distributed to stockholders), and any undistributed taxable income from prior periods, we will be subject to a 4% nondeductible excise tax on the excess of such required distribution over the amounts actually distributed.
We believe, but cannot assure you, that we have satisfied the annual distribution requirements for the year of our initial REIT election and each subsequent year through the year ended December 31, 2014. Although we intend to satisfy the annual distribution requirements to continue to qualify as a REIT for the year ending December 31, 2015 and thereafter, economic, market, legal, tax or other considerations could limit our ability to meet those requirements.
We have net operating loss carryforwards that we may use to reduce our annual distribution requirements. See “Note 13—Income Taxes” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Failure to Continue to Qualify
If we fail to satisfy one or more requirements for REIT qualification, other than by violating a gross income or asset test for which relief is available under the circumstances described above, we would retain our REIT qualification if the failure is due to reasonable cause and not willful neglect and if we pay a penalty of $50,000 for each such failure. We cannot predict whether in all circumstances we would be entitled to the benefit of this relief provision.
If our election to be taxed as a REIT is revoked or terminated in any taxable year (e.g., due to a failure to meet the REIT qualification tests without qualifying for any applicable relief provisions), we would be subject to tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates (for all open tax years beginning with the year our REIT election is revoked or terminated), and we would not be required to make distributions to stockholders, nor would we be entitled to deduct any such distributions. All distributions to stockholders (to the extent of our current and accumulated earnings and profits) would be taxable as ordinary income, except to the extent such dividends are eligible for the qualified dividends rate generally available to non-corporate holders, and, subject to certain limitations, corporate stockholders would be eligible for the dividends received deduction. In addition, we would be prohibited from re-electing REIT status for the four taxable years following the year during which we ceased to qualify as a REIT, unless certain relief provisions of the Code applied. We cannot predict whether we would be entitled to such relief.
Federal Income Taxation of U.S. Stockholders
As used in this discussion, the term “U.S. Stockholder” refers to any beneficial owner of our stock that is, for U.S. federal income tax purposes, an individual who is a citizen or resident of the United States, a corporation created or organized in or under the laws of the United States, any state thereof or the District of Columbia, an estate the income of which must be included in gross income for U.S. federal income tax purposes regardless of its source, or a trust if (i) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have authority to control all substantial decisions of the trust or (ii) the trust has elected under applicable U.S. Treasury Regulations to retain its pre-August 20, 1996 classification as a U.S. person. If an entity treated as a partnership for U.S. federal income tax purposes holds our stock, the tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. Partners in partnerships holding our stock should consult their tax advisors. This section assumes the U.S. Stockholder holds our stock as a capital asset (that is, for investment).
Provided we qualify as a REIT, distributions made to our taxable U.S. Stockholders out of current or accumulated earnings and profits (and not designated as capital gain dividends) generally will be taxable to such U.S. Stockholders as ordinary income and will not be eligible for the qualified dividends rate generally available to non-corporate holders or for the dividends received deduction generally available to corporations. Distributions that are designated as capital gain dividends will be taxed as a long-term capital gain (to the extent such distributions do not exceed our actual net capital gain for the taxable year) without regard to the period for which the stockholder has held our stock. Distributions in excess of current and accumulated earnings and profits will not be taxable to a U.S. Stockholder to the extent they do not exceed the U.S. Stockholder’s adjusted basis of our stock (determined on a share-by-share basis), but rather will reduce the U.S. Stockholder’s adjusted basis of our stock. To the extent that distributions in excess of current and accumulated earnings and profits exceed the U.S. Stockholder’s adjusted basis of our stock, such distributions will be included in income as capital gains and taxable at a rate that will depend on the U.S. Stockholder’s holding period for our stock. Any distribution declared by us and payable to a stockholder of record on a specified date in October, November or December of any year will be treated as both paid by us and received by the stockholder on December 31 of that year, provided that we actually pay the distribution during January of the following calendar year.

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We may elect to treat all or a part of our undistributed net capital gain as if it had been distributed to our stockholders. If we so elect, our U.S. Stockholders would be required to include in their income as long-term capital gain their proportionate share of our undistributed net capital gain, as designated by us. Each U.S. Stockholder would be deemed to have paid its proportionate share of the income tax imposed on us with respect to such undistributed net capital gain, and this amount would be credited or refunded to the U.S. Stockholder. In addition, the U.S. Stockholder’s tax basis of our stock would be increased by its proportionate share of undistributed net capital gains included in its income, less its proportionate share of the income tax imposed on us with respect to such gains.
U.S. Stockholders may not include in their individual income tax returns any of our net operating losses or net capital losses. Instead, we may carry over those losses for potential offset against our future income, subject to certain limitations. Taxable distributions from us and gain from the disposition of our stock will not be treated as passive activity income, and, therefore, U.S. Stockholders generally will not be able to apply any “passive activity losses” (such as losses from certain types of limited partnerships in which the U.S. Stockholder is a limited partner) against such income. In addition, taxable distributions from us generally will be treated as investment income for purposes of the investment interest limitations.
We will notify stockholders after the close of our taxable year as to the portions of the distributions attributable to that year that constitute ordinary income, return of capital and capital gain. To the extent that a portion of the distribution is designated as a capital gain dividend, we will notify stockholders as to the portion that is a “20% rate gain distribution” and the portion that is an unrecaptured Section 1250 distribution. A 20% rate gain distribution is a capital gain distribution to U.S. Stockholders that are individuals, estates or trusts that is taxable at a maximum rate of 20%. An unrecaptured Section 1250 gain distribution is taxable to U.S. Stockholders that are individuals, estates or trusts at a maximum rate of 25%.
Taxation of U.S. Stockholders on the Disposition of Shares of Stock
In general, a U.S. Stockholder must treat any gain or loss realized upon a taxable disposition of our stock as long-term capital gain or loss if the U.S. Stockholder has held the stock for more than one year, and otherwise as short-term capital gain or loss. However, a U.S. Stockholder must treat any loss upon a sale or exchange of shares of our stock held for six months or less as a long-term capital loss to the extent of capital gain dividends and any other actual or deemed distributions from us which the U.S. Stockholder treats as long-term capital gain. All or a portion of any loss that a U.S. Stockholder realizes upon a taxable disposition of our stock may be disallowed if the U.S. Stockholder purchases other shares of our stock (or certain options to acquire our stock) within 30 days before or after the disposition.
Medicare Tax on Investment Income
Certain U.S. Stockholders who are individuals, estates or trusts and whose income exceeds certain thresholds are required to pay a 3.8% Medicare tax on dividends and certain other investment income, including capital gains from the sale or other disposition of our stock.
Treatment of Tax-Exempt Stockholders
Tax-exempt organizations, including qualified employee pension and profit sharing trusts and individual retirement accounts (collectively, “Exempt Organizations”), generally are exempt from U.S. federal income taxation but are subject to taxation on their unrelated business taxable income (“UBTI”). While many investments in real estate generate UBTI, a ruling published by the IRS states that dividend distributions by a REIT to an exempt employee pension trust do not constitute UBTI, provided that the shares of the REIT are not otherwise used in an unrelated trade or business of the exempt employee pension trust. Based on that ruling, and subject to the exceptions discussed below, amounts distributed by us to Exempt Organizations generally should not constitute UBTI. However, if an Exempt Organization finances its acquisition of our stock with debt, a portion of its income from us will constitute UBTI pursuant to the “debt-financed property” rules. Social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts and qualified group legal services plans that are exempt from taxation under paragraphs (7), (9), (17) and (20), respectively, of Section 501(c) of the Code are subject to different UBTI rules, which generally require them to characterize distributions from us as UBTI, and in certain circumstances, a pension trust that owns more than 10% of our stock is required to treat a percentage of the dividends from us as UBTI.
Special Tax Considerations for Non-U.S. Stockholders
As used herein, the term “Non-U.S. Stockholder” refers to any beneficial owner of our stock that is, for U.S. federal income tax purposes, a nonresident alien individual, foreign corporation, foreign estate or foreign trust, but does not include any foreign stockholder whose investment in our stock is “effectively connected” with the conduct of a trade or business in the United States. Such a foreign stockholder, in general, is subject to U.S. federal income tax with respect to its investment in our stock in the same manner as a U.S. Stockholder (subject to applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals). In addition, a foreign corporation receiving income that is treated as effectively connected with a U.S. trade or business also may be subject to an additional 30% “branch profits tax” on its

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effectively connected earnings and profits (subject to adjustments) unless an applicable tax treaty provides a lower rate or an exemption. Certain certification requirements must be satisfied in order for effectively connected income to be exempt from withholding.
Distributions to Non-U.S. Stockholders that are not attributable to gain from sales or exchanges by us of U.S. real property interests and are not designated by us as capital gain dividends (or deemed distributions of retained capital gains) are treated as dividends of ordinary income to the extent that they are made out of our current or accumulated earnings and profits. Such distributions ordinarily are subject to a withholding tax equal to 30% of the gross amount of the distribution unless an applicable tax treaty reduces or eliminates that tax. Distributions in excess of our current and accumulated earnings and profits are not taxable to a Non-U.S. Stockholder to the extent that such distributions do not exceed the Non-U.S. Stockholder’s adjusted basis of our stock (determined on a share-by-share basis), but rather reduce the Non-U.S. Stockholder’s adjusted basis of our stock. To the extent that distributions in excess of current and accumulated earnings and profits exceed the Non-U.S. Stockholder’s adjusted basis of our stock, such distributions will give rise to tax liability if the Non-U.S. Stockholder would otherwise be subject to tax on any gain from the sale or disposition of our stock, as described below.
We expect to withhold U.S. tax at the rate of 30% on the gross amount of any dividends, other than dividends treated as attributable to gain from sales or exchanges of U.S. real property interests and capital gain dividends, paid to a Non-U.S. Stockholder, unless (i) a lower treaty rate applies and the required IRS Form W-8BEN or IRS Form W-8BEN-E evidencing eligibility for that reduced rate is filed with us or the appropriate withholding agent or (ii) the Non-U.S. Stockholder files an IRS Form W-8ECI or a successor form with us or the appropriate withholding agent properly claiming that the distributions are effectively connected with the Non-U.S. Stockholder’s conduct of a U.S. trade or business.
For any year in which we qualify as a REIT, distributions to a Non-U.S. Stockholder that owns more than 5% of our shares at any time during the one-year period ending on the date of distribution and that are attributable to gain from sales or exchanges by us of U.S. real property interests will be taxed to the Non-U.S. Stockholder under the provisions of the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”) as if such gain were effectively connected with a U.S. business. Accordingly, a Non-U.S. Stockholder that owns more than 5% of our shares will be taxed at the normal capital gain rates applicable to a U.S. Stockholder (subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals) and would be required to file a U.S. federal income tax return. Distributions subject to FIRPTA also may be subject to a branch profits tax equal to 30% of its effectively connected earnings and profits (subject to adjustments) if the recipient is a corporate Non-U.S. Stockholder not entitled to treaty relief or exemption. Under FIRPTA, we are required to withhold 35% (which is higher than the maximum rate on long-term capital gains of non-corporate persons) of any distribution to a Non-U.S. Stockholder that owns more than 5% of our shares which is or could be designated as a capital gain dividend attributable to U.S. real property interests. Moreover, if we designate previously made distributions as capital gain dividends attributable to U.S. real property interests, subsequent distributions (up to the amount of such prior distributions) will be treated as capital gain dividends subject to FIRPTA withholding. This amount is creditable against the Non-U.S. Stockholder’s FIRPTA tax liability.
If a Non-U.S. Stockholder does not own more than 5% of our shares at any time during the one-year period ending on the date of a distribution, any capital gain distributions, to the extent attributable to sales or exchanges by us of U.S. real property interests, will not be considered to be effectively connected with a U.S. business, and the Non-U.S. Stockholder would not be required to file a U.S. federal income tax return solely as a result of receiving such a distribution. In that case, the distribution will be treated as an ordinary dividend to that Non-U.S. Stockholder and taxed as an ordinary dividend that is not a capital gain distribution (and subject to withholding), as described above. In addition, the branch profits tax will not apply to the distribution. Any capital gain distribution, to the extent not attributable to sales or exchanges by us of U.S. real property interests, generally will not be subject to U.S. federal income taxation (regardless of the amount of our shares owned by a Non-U.S. Stockholder). For so long as our stock continues to be regularly traded on an established securities market, the sale of such stock by any Non-U.S. Stockholder who is not a Five Percent Non-U.S. Stockholder (as defined below) generally will not be subject to U.S. federal income tax (unless the Non-U.S. Stockholder is a nonresident alien individual who was present in the United States for more than 182 days during the taxable year of the sale and certain other conditions apply, in which case such gain (net of certain sources within the U.S., if any) will be subject to a 30% tax on a gross basis). A “Five Percent Non-U.S. Stockholder” is a Non-U.S. Stockholder who, at some time during the five-year period preceding such sale or disposition, beneficially owned (including under certain attribution rules) more than 5% of the total fair market value of our stock (as outstanding from time to time).
In general, the sale or other taxable disposition of our stock by a Five Percent Non-U.S. Stockholder also will not be subject to U.S. federal income tax if we are a “domestically controlled REIT.” A REIT is a “domestically controlled REIT” if, at all times during the five-year period preceding the disposition in question, less than 50% in value of its shares is held directly or indirectly by Non-U.S. Stockholders. Because our common stock is publicly traded, we believe, but cannot assure you, that we currently qualify as a domestically controlled REIT, nor can we assure you that we will so qualify at any time in the future.

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If we do not constitute a domestically controlled REIT, a Five Percent Non-U.S. Stockholder generally will be taxed in the same manner as a U.S. Stockholder with respect to gain on the sale of our stock (subject to applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals).
A 30% withholding tax will currently be imposed on dividends paid on our stock and will be imposed on gross proceeds from a sale or redemption of our stock paid after December 31, 2016 to (i) foreign financial institutions including non-U.S. investment funds, unless they agree to collect and disclose to the IRS information regarding their direct and indirect U.S. account holders and (ii) certain other foreign entities, unless they certify certain information regarding their direct and indirect U.S. owners.  To avoid withholding, foreign financial institutions will need to (i) enter into agreements with the IRS that state that they will provide the IRS information, including the names, addresses and taxpayer identification numbers of direct and indirect U.S. account holders, comply with due diligence procedures with respect to the identification of U.S. accounts, report to the IRS certain information with respect to U.S. accounts maintained, agree to withhold tax on certain payments made to non-compliant foreign financial institutions or to account holders who fail to provide the required information, and determine certain other information as to their account holders, or (ii) in the event that an applicable intergovernmental agreement and implementing legislation are adopted, provide local revenue authorities with similar account holder information or otherwise comply with the terms of the intergovernmental agreement and implementing legislation. Other foreign entities will need to either provide the name, address, and taxpayer identification number of each substantial U.S. owner or certifications of no substantial U.S. ownership unless certain exceptions apply or agree to provide certain information to other revenue authorities for transmittal to the IRS.
Information Reporting Requirements and Backup Withholding
Information returns may be filed with the IRS and backup withholding (at a rate of 28%) may be collected in connection with distributions paid or required to be treated as paid during each calendar year and payments of the proceeds of a sale or other disposition of our stock by a stockholder, unless such stockholder is a corporation, non-U.S. person or comes within certain other exempt categories and, when required, demonstrates this fact or provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding and otherwise complies with the applicable requirements of the backup withholding rules. A stockholder who does not provide us with its correct taxpayer identification number also may be subject to penalties imposed by the IRS.
Backup withholding is not an additional tax. Rather, the U.S. federal income tax liability of persons subject to backup withholding will be offset by the amount of tax withheld. If backup withholding results in an overpayment of U.S. federal income taxes, a refund or credit may be obtained from the IRS, provided the required information is furnished timely thereto.
As a general matter, backup withholding and information reporting will not apply to a payment of the proceeds of a sale of our stock by or through a foreign office of a foreign broker. Information reporting (but not backup withholding) will apply, however, to a payment of the proceeds of a sale of our stock by a foreign office of a broker that is a U.S. person, a foreign partnership that engaged during certain periods in the conduct of a trade or business in the United States or more than 50% of whose capital or profit interests are owned during certain periods by U.S. persons, any foreign person that derives 50% or more of its gross income for certain periods from the conduct of a trade or business in the United States, or a “controlled foreign corporation” for U.S. tax purposes, unless the broker has documentary evidence in its records that the holder is a Non-U.S. Stockholder and certain other conditions are satisfied, or the stockholder otherwise establishes an exemption. Payment to or through a U.S. office of a broker of the proceeds of a sale of our stock is subject to both backup withholding and information reporting unless the stockholder certifies under penalties of perjury that the stockholder is a Non-U.S. Stockholder or otherwise establishes an exemption. A stockholder may obtain a refund of any amounts withheld under the backup withholding rules in excess of its U.S. federal income tax liability by timely filing the appropriate claim for a refund with the IRS.
Other Tax Consequences
State and Local Taxes
We and our stockholders may be subject to taxation by various states and localities, including those in which we or a stockholder transact business, own property or reside. State and local tax treatment may differ from the U.S. federal income tax treatment described above. Consequently, stockholders should consult their own tax advisers regarding the effect of state and local tax laws, in addition to federal, foreign and other tax laws, in connection with an investment in our stock.
Possible Legislative or Other Actions Affecting Tax Consequences
You should recognize that future legislative, judicial and administrative actions or decisions, which may be retroactive in effect, could adversely affect our federal income tax treatment or the tax consequences of an investment in shares of our stock. The rules dealing with U.S. federal income taxation are continually under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department, resulting in statutory changes as well as promulgation of new, or revisions to

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existing, regulations and revised interpretations of established concepts. We cannot predict the likelihood of passage of any new tax legislation or other provisions, either directly or indirectly, affecting us or our stockholders or the value of an investment in our stock.
ITEM 1A.    Risk Factors
This section discusses the most significant factors that affect our business, operations and financial condition. It does not describe all risks and uncertainties applicable to us, our industry or ownership of our securities. If any of the following risks, or any other risks and uncertainties that are not addressed below or that we have not yet identified, actually occur, we could be materially adversely affected and the value of our securities could decline.
We have grouped these risk factors into three general categories:
Risks arising from our business;
Risks arising from our capital structure; and
Risks arising from our status as a REIT.
Risks Arising from Our Business
The properties managed by Atria and Sunrise account for a significant portion of our revenues and operating income; Adverse developments in Atria’s or Sunrise’s business and affairs or financial condition could have a Material Adverse Effect on us.
As of December 31, 2014, Atria and Sunrise, collectively, managed 269 of our seniors housing communities pursuant to long-term management agreements. These properties represent a substantial portion of our portfolio, based on their gross book value, and account for a significant portion of our revenues and NOI. Although we have various rights as the property owner under our management agreements, we rely on Atria’s and Sunrise’s personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage our senior living operations efficiently and effectively. We also rely on Atria and Sunrise to set appropriate resident fees, to provide accurate property-level financial results for our properties in a timely manner and to otherwise operate our seniors housing communities in compliance with the terms of our management agreements and all applicable laws and regulations. For example, we depend on Atria’s and Sunrise’s ability to attract and retain skilled management personnel who are responsible for the day-to-day operations of our seniors housing communities. A shortage of nurses or other trained personnel or general inflationary pressures may force Atria or Sunrise to enhance its pay and benefits package to compete effectively for such personnel, but it may not be able to offset these added costs by increasing the rates charged to residents. Any increase in labor costs and other property operating expenses, any failure by Atria or Sunrise to attract and retain qualified personnel, or significant changes in Atria’s or Sunrise’s senior management or equity ownership could adversely affect the income we receive from our seniors housing communities and have a Material Adverse Effect on us.
Because Atria and Sunrise manage our properties in exchange for the receipt of a management fee from us, we are not directly exposed to the credit risk of our managers in the same manner or to the same extent as our triple-net tenants. However, any adverse developments in Atria’s or Sunrise’s business and affairs or financial condition could impair its ability to manage our properties efficiently and effectively and could have a Material Adverse Effect on us. If Atria or Sunrise experiences any significant financial, legal, accounting or regulatory difficulties due to a weak economy or otherwise, such difficulties could result in, among other adverse events, acceleration of its indebtedness, impairment of its continued access to capital, the enforcement of default remedies by its counterparties, or the commencement of insolvency proceedings by or against it under the U.S. Bankruptcy Code, any one or a combination of which indirectly could have a Material Adverse Effect on us.
Our leases with Brookdale Senior Living and Kindred account for a significant portion of our triple-net leased properties segment revenues and operating income; Any failure, inability or unwillingness by Brookdale Senior Living or Kindred to satisfy its obligations under our agreements could have a Material Adverse Effect on us.
The properties we lease to Brookdale Senior Living and Kindred account for a significant portion of our triple-net leased properties segment revenues and NOI, and because our leases with Brookdale Senior Living and the Kindred Master Leases are triple-net leases, we depend on Brookdale Senior Living and Kindred to pay all insurance, taxes, utilities and maintenance and repair expenses in connection with the leased properties. We cannot assure you that Brookdale Senior Living and Kindred will have sufficient assets, income and access to financing to enable them to satisfy their respective obligations to us, and any failure, inability or unwillingness by Brookdale Senior Living or Kindred to do so could have a Material Adverse Effect on us. In addition, any failure by Brookdale Senior Living or Kindred to effectively conduct its operations or to maintain and improve our properties could adversely affect its business reputation and its ability to attract and retain patients and residents in our

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properties, which could have a Material Adverse Effect on us. Brookdale Senior Living and Kindred have agreed to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with their respective businesses, and we cannot assure you that Brookdale Senior Living and Kindred will have sufficient assets, income, access to financing and insurance coverage to enable them to satisfy their respective indemnification obligations.
We face potential adverse consequences of bankruptcy or insolvency by our tenants, operators, borrowers, managers and other obligors.
We are exposed to the risk that our tenants, operators, borrowers, managers or other obligors may become bankrupt or insolvent. Although our lease, loan and management agreements give us the right to exercise certain remedies in the event of default on the obligations owing to us or upon the occurrence of certain insolvency events, federal laws afford certain rights to a party that has filed for bankruptcy or reorganization. For example, a debtor-lessee may reject our lease in a bankruptcy proceeding, in which case our claim against the debtor-lessee for unpaid and future rents would be limited by the statutory cap of the U.S. Bankruptcy Code. This statutory cap could be substantially less than the remaining rent actually owed under the lease, and any claim we have for unpaid rent might not be paid in full. In addition, a debtor-lessee may assert in a bankruptcy proceeding that our lease should be re-characterized as a financing agreement, in which case our rights and remedies as a lender, compared to a landlord, generally would be more limited. If a debtor-manager seeks bankruptcy protection, the automatic stay provisions of the U.S. Bankruptcy Code would preclude us from enforcing our remedies against the manager unless relief is first obtained from the court having jurisdiction over the bankruptcy case. In any of these events, we also may be required to fund certain expenses and obligations (e.g., real estate taxes, debt costs and maintenance expenses) to preserve the value of our properties, avoid the imposition of liens on our properties or transition our properties to a new tenant, operator or manager.
We have rights to terminate our management agreements with Atria and Sunrise in whole or with respect to specific properties under certain circumstances, and we may be unable to replace Atria or Sunrise if our management agreements are terminated or not renewed.
We are parties to long-term management agreements pursuant to which Atria and Sunrise, collectively, provided comprehensive property management and accounting services with respect to 269 of our seniors housing communities as of December 31, 2014. Most of our management agreements with Atria have terms expiring either July 31, 2024 or December 31, 2027, with successive automatic ten-year renewal periods, and our management agreements with Sunrise have terms ranging from 25 to 30 years (which commenced as early as 2004 and as recently as 2012). Our ability to terminate these long-term management agreements is limited to specific circumstances set forth in the agreements and may relate to all properties or a specific property or group of properties.
We may terminate any of our Atria management agreements upon the occurrence of an event of default by Atria in the performance of a material covenant or term thereof (including, in certain circumstances, the revocation of any license or certificate necessary for operation), subject in most cases to Atria’s right to cure such default, or upon the occurrence of certain insolvency events relating to Atria. In addition, we may terminate our management agreements with Atria based on the failure to achieve certain NOI targets or upon the payment of a fee.
Similarly, we may terminate any of our Sunrise management agreements upon the occurrence of an event of default by Sunrise in the performance of a material covenant or term thereof (including, in certain circumstances, the revocation of any license or certificate necessary for operation), subject in most cases to Sunrise’s right to cure such default, or upon the occurrence of certain insolvency events relating to Sunrise. We also may terminate most of our management agreements with Sunrise based on the failure to achieve certain NOI targets or to comply with certain expense control covenants, subject to certain rights of Sunrise to make cure payments to us, and upon the occurrence of certain other events or the existence of certain other conditions.
We continually monitor and assess our contractual rights and remedies under our management agreements with Atria and Sunrise. When determining whether to pursue any existing or future rights or remedies under those agreements, including termination rights, we consider numerous factors, including legal, contractual, regulatory, business and other relevant considerations. In the event that we exercise our rights to terminate the Atria or Sunrise management agreements for any reason or such agreements are not renewed upon expiration of their terms, we would attempt to reposition the affected properties with another manager. Although we believe that many qualified national and regional seniors housing operators would be interested in managing our seniors housing communities, we cannot assure you that we would be able to locate another suitable manager or, if we are successful in locating such a manager, that it would manage the properties effectively. Moreover, the transition to a replacement manager would require approval by the applicable regulatory authorities and, in most cases, the mortgage lenders for the properties, and we cannot assure you that such approvals would be granted on a timely basis, if at all. Any inability to replace, or a lengthy delay in replacing, Atria or Sunrise as the manager of our seniors housing

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communities following termination or non-renewal of the applicable management agreements could have a Material Adverse Effect on us.
If we must replace any of our tenants or operators, we might be unable to reposition the properties on as favorable terms, or at all, and we could be subject to delays, limitations and expenses, which could have a Material Adverse Effect on us.
We cannot predict whether our tenants will renew existing leases beyond their current term. If our leases with Brookdale Senior Living, the Kindred Master Leases or any of our other triple-net leases are not renewed, we would attempt to reposition those properties with another tenant or operator. In case of non-renewal, we generally have one year prior to expiration of the lease term to arrange for repositioning of the properties and our tenants are required to continue to perform all of their obligations (including the payment of all rental amounts) for the non-renewed assets until such expiration. However, following expiration of a lease term or if we exercise our right to replace a tenant or operator in default, rental payments on the related properties could decline or cease altogether while we reposition the properties with a suitable replacement tenant or operator. We also might not be successful in identifying suitable replacements or entering into leases or other arrangements with new tenants or operators on a timely basis or on terms as favorable to us as our current leases, if at all, and we may be required to fund certain expenses and obligations (e.g., real estate taxes, debt costs and maintenance expenses) to preserve the value of, and avoid the imposition of liens on, our properties while they are being repositioned. In addition, we may incur certain obligations and liabilities, including obligations to indemnify the replacement tenant or operator, which could have a Material Adverse Effect on us.
In the event of non-renewal or a tenant default, our ability to reposition our properties with a suitable replacement tenant or operator could be significantly delayed or limited by state licensing, receivership, CON or other laws, as well as by the Medicare and Medicaid change-of-ownership rules, and we could incur substantial additional expenses in connection with any licensing, receivership or change-of-ownership proceedings. Our ability to locate and attract suitable replacement tenants also could be impaired by the specialized healthcare uses or contractual restrictions on use of the properties, and we may be forced to spend substantial amounts to adapt the properties to other uses. Any such delays, limitations and expenses could adversely impact our ability to collect rent, obtain possession of leased properties or otherwise exercise remedies for tenant default and could have a Material Adverse Effect on us.
Moreover, in connection with certain of our properties, we have entered into intercreditor agreements with the tenants’ lenders or tri-party agreements with our lenders. Our ability to exercise remedies under the applicable leases or management agreements or to reposition the applicable properties may be significantly delayed or limited by the terms of the intercreditor agreement or tri-party agreement. Any such delay or limit on our rights and remedies could adversely affect our ability to mitigate our losses and could have a Material Adverse Effect on us.
Merger and acquisition activity or consolidation in the seniors housing and healthcare industries resulting in a change of control of, or a competitor’s investment in, one or more of our tenants, operators or managers could have a Material Adverse Effect on us.
The seniors housing and healthcare industries have recently experienced increased consolidation, including among owners of real estate and care providers. We compete with other healthcare REITs, healthcare providers, healthcare lenders, real estate partnerships, banks, insurance companies, private equity firms and other investors that pursue a variety of investments, which may include investments in our tenants, operators or managers. A competitor’s investment in one of our tenants, operators or managers could enable our competitor to influence that tenant’s, operator’s or manager’s business and strategy in a manner that impairs our relationship with the tenant, operator or manager or is otherwise adverse to our interests. Depending on our contractual agreements and the specific facts and circumstances, we may have the right to consent to, or otherwise exercise rights and remedies, including termination rights, on account of, a competitor’s investment in, a change of control of, or other transactions impacting a tenant, operator or manager. In deciding whether to exercise our rights and remedies, including termination rights, we assess numerous factors, including legal, contractual, regulatory, business and other relevant considerations. In addition, in connection with any change of control of a tenant, operator or manager, the tenant’s, operator’s or manager’s management team may change, which could lead to a change in the tenant’s, operator’s or manager’s strategy or adversely affect the business of the tenant, operator or manager, either of which could have a Material Adverse Effect on us.
Our pursuit of investments in and acquisitions of, or our development or redevelopment of, seniors housing and healthcare assets may be unsuccessful or fail to meet our expectations.
An important part of our business strategy is to continue to expand and diversify our portfolio through accretive acquisition, investment, development and redevelopment opportunities in domestic and international seniors housing and healthcare properties. Our execution of this strategy by successfully identifying, securing and consummating beneficial transactions is made more challenging by increased competition and can be affected by many factors, including our

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relationships with current and prospective clients, our ability to obtain debt and equity capital at costs comparable to or better than our competitors, and our ability to negotiate favorable terms with property owners seeking to sell and other contractual counterparties. Our competitors for these opportunities include other healthcare REITs, real estate partnerships, healthcare providers, healthcare lenders and other investors, including developers, banks, insurance companies, pension funds, government-sponsored entities and private equity firms, some of whom may have greater financial resources and lower costs of capital than we do. See “Business—Competition” included in Item 1 of this Annual Report on Form 10-K. If we are unsuccessful at identifying and capitalizing on investment, acquisition, development and redevelopment opportunities, our growth and profitability may be adversely affected.
Investments in and acquisitions of seniors housing and healthcare properties entail risks associated with real estate investments generally, including risks that the investment will not achieve expected returns, that the cost estimates for necessary property improvements will prove inaccurate or that the tenant, operator or manager will fail to meet performance expectations. Investments outside the United States raise legal, economic and market risks associated with doing business in foreign countries, such as currency exchange fluctuations, costly regulatory requirements and foreign tax risks. Domestic and international real estate development and redevelopment projects present additional risks, including construction delays or cost overruns that increase expenses, the inability to obtain required zoning, occupancy and other governmental approvals and permits on a timely basis, and the incurrence of significant costs prior to completion of the project. Furthermore, healthcare properties are often highly customized and the development or redevelopment of such properties may require costly tenant-specific improvements. As a result, we cannot assure you that we will achieve the economic benefit we expect from acquisition, investment, development and redevelopment opportunities.
Our significant acquisition and investment activity presents certain risks to our business and operations.
We have made and expect to continue to make significant acquisitions and investments as part of our overall business strategy. Our significant acquisition and investment activity presents certain risks to our business and operations, including, among other things, that:
We may be unable to successfully integrate the operations, personnel or systems of acquired companies, maintain consistent standards, controls, policies and procedures, or realize the anticipated benefits of acquisitions and other investments within the anticipated time frame or at all;
We may be unable to effectively monitor and manage our expanded portfolio of properties, retain key employees or attract highly qualified new employees;
Projections of estimated future revenues, costs savings or operating metrics that we develop during the due diligence and integration planning process might be inaccurate;
Our leverage could increase or our per share financial results could decline if we incur additional debt or issue equity securities to finance acquisitions and investments;
Acquisitions and other new investments could divert management’s attention from our existing assets;
The value of acquired assets or the market price of our common stock may decline; and
We may be unable to continue paying dividends at the current rate.
We cannot assure you that we will be able to integrate acquisitions and investments without encountering difficulties or that any such difficulties will not have a Material Adverse Effect on us.
If the liabilities we assume in connection with acquisitions are greater than expected, or if there are unknown liabilities, our business could be materially and adversely affected.
We may assume or incur liabilities in connection with our acquisitions, including, in some cases, contingent liabilities. As we integrate these acquisitions, we may learn additional information about the sellers, the properties, their operations and their liabilities that adversely affects us, such as:
Liabilities relating to the clean-up or remediation of undisclosed environmental conditions;
Unasserted claims of vendors or other persons dealing with the sellers;
Liabilities, claims and litigation, including indemnification obligations, whether or not incurred in the ordinary course of business, relating to periods prior to or following our acquisition;
Claims for indemnification by general partners, directors, officers and others indemnified by the sellers; and
Liabilities for taxes relating to periods prior to our acquisition.

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As a result, we cannot assure you that our past or future acquisitions will be successful or will not, in fact, harm our business. Among other things, if the liabilities we assume in connection with acquisitions are greater than expected, or if we discover obligations relating to the acquired properties or businesses of which we were not aware at the time of acquisition, our business and results of operations could be materially adversely affected.
We expect to incur substantial expenses related to our acquisition of HCT.
The HCT Acquisition was completed in January 2015. We may incur substantial expenses in connection with integrating HCT’s business, operations, networks, systems, technologies, policies and procedures with ours. While we expect to incur a certain level of integration expenses, factors beyond our control could affect the total amount or the timing of integration expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately. As a result, the integration expenses associated with the HCT Acquisition could, particularly in the near term, exceed any savings that we expect to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the integration of the businesses.
Our future results will suffer if we do not effectively manage our expanded portfolio and operations following the acquisition of HCT.
As a result of the HCT Acquisition, we have an expanded portfolio and operations and likely will continue to expand operations through additional acquisitions and other strategic transactions, some of which may involve complex challenges. Our future success will depend, in part, upon our ability to manage our expansion opportunities, integrate new operations into our existing business in an efficient and timely manner, successfully monitor our operations, costs, regulatory compliance and service quality, and maintain other necessary internal controls. It is possible that our expansion or acquisition opportunities will not be successful. It is also possible that we will not realize expected operating efficiencies, cost savings, revenue enhancements, synergies or other benefits.
Our investments are concentrated in seniors housing and healthcare real estate, making us more vulnerable economically to adverse changes in the real estate market and the seniors housing and healthcare industries than if our investments were diversified.
We invest primarily in seniors housing and healthcare properties and are constrained by the terms of our existing indebtedness from making investments outside those industries. This investment focus exposes us to greater economic risk than if our portfolio were to include real estate assets in other industries or assets unrelated to real estate.
The healthcare industry is highly regulated, and changes in government regulation and reimbursement can have material adverse consequences on its participants, some of which may be unintended. The healthcare industry is also highly competitive, and our operators and managers may encounter increased competition for residents and patients, including with respect to the scope and quality of care and services provided, reputation and financial condition, physical appearance of the properties, price and location. If our tenants, operators and managers are unable to successfully compete with other operators and managers by maintaining profitable occupancy and rate levels, their ability to meet their respective obligations to us may be materially adversely affected. We cannot assure you that future changes in government regulation will not adversely affect the healthcare industry, including our seniors housing and healthcare operations, tenants and operators, nor can we be certain that our tenants, operators and managers will achieve and maintain occupancy and rate levels that will enable them to satisfy their obligations to us. Any adverse changes in the regulation of the healthcare industry or the competitiveness of our tenants, operators and managers could have a more pronounced effect on us than if we had investments outside the seniors housing and healthcare industries.
Real estate investments are relatively illiquid, and our ability to quickly sell or exchange our properties in response to changes in economic or other conditions is limited. In the event we market any of our properties for sale, the value of those properties and our ability to sell at prices or on terms acceptable to us could be adversely affected by a downturn in the real estate industry or any economic weakness in the seniors housing and healthcare industries. In addition, transfers of healthcare properties may be subject to regulatory approvals that are not required for transfers of other types of commercial properties. We cannot assure you that we will recognize the full value of any property that we sell for liquidity or other reasons, and the inability to respond quickly to changes in the performance of our investments could adversely affect our business, results of operations and financial condition.
Our operating assets expose us to various operational risks, liabilities and claims that could adversely affect our ability to generate revenues or increase our costs and could have a Material Adverse Effect on us.
Our senior living and MOB operating assets expose us to various operational risks, liabilities and claims that could increase our costs or adversely affect our ability to generate revenues, thereby reducing our profitability. These operational

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risks include fluctuations in occupancy levels, the inability to achieve economic resident fees (including anticipated increases in those fees), increases in the cost of food, materials, energy, labor (as a result of unionization or otherwise) or other services, rent control regulations, national and regional economic conditions, the imposition of new or increased taxes, capital expenditure requirements, professional and general liability claims, and the availability and cost of professional and general liability insurance. Any one or a combination of these factors could result in operating deficiencies in our senior living operations or MOB operations reportable business segments, which could have a Material Adverse Effect on us.
Our ownership of properties outside the United States exposes us to different risks than those associated with our domestic properties.
Our current or future ownership of properties outside the United States subjects us to risks that may be different or greater than those we face with our domestic properties. These risks include, but are not limited to:
Challenges with respect to repatriation on foreign earnings and cash;
Foreign ownership restrictions with respect to operations in countries;
Regional or country-specific business cycles and economic instability;
Challenges of complying with a wide variety of foreign laws and regulations, including those relating to real estate, corporate governance, operations, taxes, employment and legal proceedings;
Differences in lending practices and the willingness of domestic or foreign lenders to provide financing; and
Failure to comply with applicable laws and regulations in the United States that affect foreign operations, including, but not limited to, the U.S. Foreign Corrupt Practices Act.
Increased construction in the markets in which our seniors housing communities and MOBs are located could adversely affect our future occupancy rates, operating margins and profitability.
Limited barriers to entry in the seniors housing and MOB industries could lead to the development of new seniors housing communities or MOBs that outpaces demand. If development outpaces demand for those assets in the markets in which our properties are located, those markets may become saturated and we could experience decreased occupancy, reduced operating margins and lower profitability.
We have now, and may have in the future, exposure to contingent rent escalators, which could hinder our growth and profitability.
We derive a significant portion of our revenues from leasing properties pursuant to long-term triple-net leases that generally provide for fixed rental rates, subject to annual escalations. In certain cases, the annual escalations are contingent upon the achievement of specified revenue parameters or based on changes in CPI, with caps and floors. If, as a result of weak economic conditions or other factors, the properties subject to these leases do not generate sufficient revenue to achieve the specified rent escalation parameters or CPI does not increase, our growth and profitability may be hindered. If strong economic conditions result in significant increases in CPI, but the escalations under our leases are capped, our growth and profitability also may be limited.
We own certain properties subject to ground lease, air rights or other restrictive agreements that limit our uses of the properties, restrict our ability to sell or otherwise transfer the properties and expose us to loss of the properties if such agreements are breached by us or terminated.
Our investments in MOBs and other properties may be made through leasehold interests in the land on which the buildings are located, leases of air rights for the space above the land on which the buildings are located, or other similar restrictive arrangements. Many of these ground lease, air rights and other restrictive agreements impose significant limitations on our uses of the subject properties, restrict our ability to sell or otherwise transfer our interests in the properties or restrict the leasing of the properties. These restrictions may limit our ability to timely sell or exchange the properties, impair the properties’ value or negatively impact our ability to find suitable tenants for the properties. In addition, we could lose our interests in the subject properties if the ground lease, air rights or other restrictive agreements are breached by us or terminated.
We may be unable to successfully foreclose on the collateral securing our loans and other investments, and even if we are successful in our foreclosure efforts, we may be unable to successfully sell any acquired equity interests or reposition any acquired properties, which could adversely affect our ability to recover our investments.
If a borrower defaults under mortgage or other secured loans for which we are the lender, we may attempt to foreclose on the collateral securing those loans, including by acquiring any pledged equity interests or acquiring title to the subject properties, to protect our investment. In response, the defaulting borrower may contest our enforcement of foreclosure or other

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available remedies, seek bankruptcy protection against our exercise of enforcement or other available remedies, or bring claims against us for lender liability. If a defaulting borrower seeks bankruptcy protection, the automatic stay provisions of the U.S. Bankruptcy Code would preclude us from enforcing foreclosure or other available remedies against the borrower unless relief is first obtained from the court with jurisdiction over the bankruptcy case. In addition, we may be subject to intercreditor or tri-party agreements that delay, impact, govern or limit our ability to foreclose on a lien securing a loan or otherwise delay or limit our pursuit of our rights and remedies. Any such delay or limit on our ability to pursue our rights or remedies could have a Material Adverse Effect on us.
Even if we successfully foreclose on the collateral securing our mortgage loans and other investments, costs related to enforcement of our remedies, high loan-to-value ratios or declines in the value of the collateral could prevent us from realizing the full amount of our secured loans, and we could be required to record a valuation allowance for such losses. Moreover, the collateral may include equity interests that we are unable to sell due to securities law restrictions or otherwise, or properties that we are unable to reposition with new tenants or operators on a timely basis, if at all, or without making improvements or repairs. Any delay or costs incurred in selling or repositioning acquired collateral could adversely affect our ability to recover our investments.
Some of our loan investments are subordinated to loans held by third parties.
Our mezzanine loan investments are subordinated to senior secured loans held by other investors that encumber the same real estate. If a senior secured loan is foreclosed, that foreclosure would extinguish our rights in the collateral for our mezzanine loan. In order to protect our economic interest in that collateral, we would need to be prepared, on an expedited basis, to advance funds to the senior lenders in order to cure defaults under the senior secured loans and prevent such a foreclosure. If a senior secured loan has matured or has been accelerated, then in order to protect our economic interest in the collateral, we would need to be prepared, on an expedited basis, to purchase or pay off that senior secured loan, which could require an infusion of fresh capital as large or larger than our initial investment. Our ability to sell or syndicate a mezzanine loan could be limited by transfer restrictions in the intercreditor agreement with the senior secured lenders. Our ability to negotiate modifications to the mezzanine loan documents with our borrowers could be limited by restrictions on modifications in the intercreditor agreement. Since mezzanine loans are typically secured by pledges of equity rather than direct liens on real estate, our mezzanine loan investments are more vulnerable than our mortgage loan investments to losses caused by competing creditor claims, unauthorized transfers, or bankruptcies.
Our tenants, operators and managers may be adversely affected by healthcare regulation and enforcement.
Regulation of the long-term healthcare industry generally has intensified over time both in the number and type of regulations and in the efforts to enforce those regulations. This is particularly true for large for-profit, multi-facility providers like Atria, Sunrise, Brookdale Senior Living and Kindred. Federal, state and local laws and regulations affecting the healthcare industry include those relating to, among other things, licensure, conduct of operations, ownership of facilities, addition of facilities and equipment, allowable costs, services, prices for services, qualified beneficiaries, quality of care, patient rights, fraudulent or abusive behavior, and financial and other arrangements that may be entered into by healthcare providers. In addition, changes in enforcement policies by federal and state governments have resulted in an increase in the number of inspections, citations of regulatory deficiencies and other regulatory sanctions, including terminations from the Medicare and Medicaid programs, bars on Medicare and Medicaid payments for new admissions, civil monetary penalties and even criminal penalties. See “Governmental Regulation—Healthcare Regulation” included in Item 1 of this Annual Report on Form 10-K. We are unable to predict the scope of future federal, state and local regulations and legislation, including the Medicare and Medicaid statutes and regulations, or the intensity of enforcement efforts with respect to such regulations and legislation, and any changes in the regulatory framework could have a material adverse effect on our tenants, operators and managers, which, in turn, could have a Material Adverse Effect on us.
If our tenants, operators and managers fail to comply with the extensive laws, regulations and other requirements applicable to their businesses and the operation of our properties, they could become ineligible to receive reimbursement from governmental and private third-party payor programs, face bans on admissions of new patients or residents, suffer civil or criminal penalties or be required to make significant changes to their operations. Our tenants, operators and managers also could face increased costs related to healthcare regulation, such as the Affordable Care Act, or be forced to expend considerable resources in responding to an investigation or other enforcement action under applicable laws or regulations. In such event, the results of operations and financial condition of our tenants, operators and managers and the results of operations of our properties operated or managed by those entities could be adversely affected, which, in turn, could have a Material Adverse Effect on us.

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Changes in the reimbursement rates or methods of payment from third-party payors, including the Medicare and Medicaid programs, could have a material adverse effect on certain of our tenants and operators and on us.
Certain of our tenants and operators rely on reimbursement from third-party payors, including the Medicare and Medicaid programs, for substantially all of their revenues. Federal and state legislators and regulators have adopted or proposed various cost-containment measures that would limit payments to healthcare providers, and budget crises and financial shortfalls have caused states to implement or consider Medicaid rate freezes or cuts. See “Governmental Regulation—Healthcare Regulation” included in Item 1 of this Annual Report on Form 10-K. Private third-party payors also have continued their efforts to control healthcare costs. We cannot assure you that our tenants and operators who currently depend on governmental or private payor reimbursement will be adequately reimbursed for the services they provide. Significant limits by governmental and private third-party payors on the scope of services reimbursed or on reimbursement rates and fees, whether from legislation, administrative actions or private payor efforts, could have a material adverse effect on the liquidity, financial condition and results of operations of certain of our tenants and operators, which could affect adversely their ability to comply with the terms of our leases and have a Material Adverse Effect on us.
The hospitals on or near whose campuses our MOBs are located and their affiliated health systems could fail to remain competitive or financially viable, which could adversely impact their ability to attract physicians and physician groups to our MOBs.
Our MOB operations depend on the competitiveness and financial viability of the hospitals on or near whose campuses our MOBs are located and their ability to attract physicians and other healthcare-related clients to our MOBs. The viability of these hospitals, in turn, depends on factors such as the quality and mix of healthcare services provided, competition for patients, physicians and physician groups, demographic trends in the surrounding community, market position and growth potential, as well as the ability of the affiliated health systems to provide economies of scale and access to capital. If a hospital on or near whose campus one of our MOBs is located fails or becomes unable to meet its financial obligations, and if an affiliated health system is unable to support that hospital, the hospital may be unable to compete successfully or could be forced to close or relocate, which could adversely impact its ability to attract physicians and other healthcare-related clients. Because we rely on proximity to and affiliations with hospitals to create leasing demand in our MOBs, a hospital’s inability to remain competitive or financially viable, or to attract physicians and physician groups, could materially adversely affect our MOB operations and have a Material Adverse Effect on us.
We may not be able to maintain or expand our relationships with our existing and future hospital and health system clients.
The success of our MOB operations depends, to a large extent, on our past, current and future relationships with hospitals and their affiliated health systems. We invest significant amounts of time in developing our relationships with both new and existing clients, and these relationships have helped us to secure acquisition and development opportunities, as well as other advisory, property management and hospital project management projects. If our relationships with hospitals and their affiliated health systems deteriorate, or if a conflict of interest or non-compete arrangement prevents us from expanding these relationships, our ability to secure new acquisition and development opportunities or other advisory, property management and hospital project management projects could be impaired and our professional reputation within the industry could be damaged.
Our development and redevelopment projects, including projects undertaken on a fee-for-service basis or through our joint ventures, may not yield anticipated returns.
We consider and, when appropriate, invest in various development and redevelopment projects. In deciding whether to make an investment in a particular project, we make certain assumptions regarding the expected future performance of the property. Our assumptions are subject to risks generally associated with development and redevelopment projects, including, among others, that:
We may be unable to obtain financing for the project on favorable terms or at all;
We may not complete the project on schedule or within budgeted amounts;
We may encounter delays in obtaining or fail to obtain all necessary zoning, land use, building, occupancy, environmental and other governmental permits and authorizations, or underestimate the costs necessary to develop or redevelop the property to market standards;
Construction or other delays may provide tenants or residents the right to terminate preconstruction leases or cause us to incur additional costs;
Volatility in the price of construction materials or labor may increase our project costs;

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In the case of our MOB developments, hospitals or health systems may maintain significant decision-making authority with respect to the development schedule;
Our builders may fail to perform or satisfy the expectations of our clients or prospective clients;
We may incorrectly forecast risks associated with development in new geographic regions;
Tenants may not lease space at the quantity or rental rate levels or on the schedule projected;
Demand for our project may decrease prior to completion, including due to competition from other developments; and
Lease rates and rents at newly developed or redeveloped properties may fluctuate based on factors beyond our control, including market and economic conditions.
In MOB development projects that we undertake on a fee-for-service basis, we generally construct properties for clients in exchange for a fixed fee, which creates additional risks such as the inability to pass on increased labor and construction material costs to our clients, development and construction delays that could give our counterparties the right to receive penalties from us, and bankruptcy or default by our contractors. We attempt to mitigate these risks by establishing certain limits on our obligations, shifting some of the risk to the general contractor or seeking other legal protections, but we cannot assure you that our mitigation efforts will be effective. In connection with these projects, we provide engineering, construction and architectural services, and any design, construction or systems failures related to the properties we develop could result in substantial injury or damage to clients or third parties. Any such injury or damage claims may arise in the ordinary course and may be asserted with respect to ongoing or completed projects. Although we maintain liability insurance to protect us against these claims, if any claim results in a loss, we cannot assure you that our policy limits would be adequate to cover the loss in full. If we sustain losses in excess of our insurance coverage, we may be required to fund the difference and could lose our investment in, or experience reduced profits and cash flows from, the affected MOB, which could have a Material Adverse Effect on us.
If any of the risks described above occur, our development and redevelopment projects, including projects undertaken on a fee-for-service basis or through our joint ventures, may not yield anticipated returns, which could have a Material Adverse Effect on us.
Our investments in joint ventures and unconsolidated entities could be adversely affected by our lack of sole decision-making authority, our reliance on our joint venture partners’ financial condition, any disputes that may arise between us and our joint venture partners, and our exposure to potential losses from the actions of our joint venture partners.
As of December 31, 2014, we owned 28 MOBs, 15 seniors housing communities, six skilled nursing facilities and one hospital through consolidated joint ventures, and we had ownership interests ranging between 5% and 25% in 17 MOBs, 20 seniors housing communities and 14 skilled nursing facilities through investments in unconsolidated entities. In addition, we had a 34% ownership interest in Atria as of December 31, 2014. These joint ventures and unconsolidated entities involve risks not present with respect to our wholly owned properties, including the following:
We may be unable to take actions that are opposed by our joint venture partners under arrangements that require us to share decision-making authority over major decisions affecting the ownership or operation of the joint venture and any property owned by the joint venture, such as the sale or financing of the property or the making of additional capital contributions for the benefit of the property;
For joint ventures in which we have a noncontrolling interest, our joint venture partners may take actions that we oppose;
Our ability to sell or transfer our interest in a joint venture to a third party may be restricted if we fail to obtain the prior consent of our joint venture partners;
Our joint venture partners may become bankrupt or fail to fund their share of required capital contributions, which could delay construction or development of a property or increase our financial commitment to the joint venture;
Our joint venture partners may have business interests or goals with respect to a property that conflict with our business interests and goals, including with respect to the timing, terms and strategies for investment, which could increase the likelihood of disputes regarding the ownership, management or disposition of the property;
Disagreements with our joint venture partners could result in litigation or arbitration that increases our expenses, distracts our officers and directors, and disrupts the day-to-day operations of the property, including by delaying important decisions until the dispute is resolved; and

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We may suffer losses as a result of actions taken by our joint venture partners with respect to our joint venture investments.
Events that adversely affect the ability of seniors and their families to afford daily resident fees at our seniors housing communities could cause our occupancy rates, resident fee revenues and results of operations to decline.
Assisted and independent living services generally are not reimbursable under government reimbursement programs, such as Medicare and Medicaid. Substantially all of the resident fee revenues generated by our senior living operations, therefore, are derived from private pay sources consisting of the income or assets of residents or their family members. In light of the significant expense associated with building new properties and staffing and other costs of providing services, typically only seniors with income or assets that meet or exceed the comparable region median can afford the daily resident and care fees at our seniors housing communities, and a weak economy, depressed housing market or changes in demographics could adversely affect their continued ability to do so. If the managers of our seniors housing communities are unable to attract and retain seniors that have sufficient income, assets or other resources to pay the fees associated with assisted and independent living services, the occupancy rates, resident fee revenues and results of operations of our senior living operations could decline, which, in turn, could have a Material Adverse Effect on us.
Termination of resident lease agreements in our seniors housing communities could adversely affect our revenues and earnings.
State regulations generally require assisted living communities to have a written lease agreement with each resident that permits the resident to terminate his or her lease for any reason on reasonable notice, unlike typical apartment lease agreements that have initial terms of one year or longer. Consistent with these regulations, the managers of our seniors housing communities generally enter into resident lease agreements that allow residents to terminate their lease agreements on 30 days’ notice. Due to these lease termination rights and the advanced age of the residents, the resident turnover rate in our seniors housing communities may be difficult to predict. If a large number of resident lease agreements terminate at or around the same time, and if the affected units remain unoccupied, our revenues and earnings could be adversely affected, which, in turn, could have a Material Adverse Effect on us.
The amount and scope of insurance coverage provided by our policies and policies maintained by our tenants, operators and managers may not adequately insure against losses.
We maintain or require in our lease, management and other agreements that our tenants, operators and managers maintain all applicable lines of insurance on our properties and their operations. Although we regularly review the amount and scope of insurance provided by our policies and required to be maintained by our tenants, operators and managers and believe the coverage provided to be customary for similarly situated companies in our industry, we cannot assure you that we or our tenants, operators and managers will continue to be able to maintain adequate levels of insurance. We also cannot assure you that we or our tenants, operators and managers will maintain the required coverages, that we will continue to require the same levels of insurance under our lease, management and other agreements, that such insurance will be available at a reasonable cost in the future or that the policies maintained will fully cover all losses on our properties upon the occurrence of a catastrophic event, nor can we make any guaranty as to the future financial viability of the insurers that underwrite our policies and the policies maintained by our tenants, operators and managers.
For various reasons, including to reduce and manage costs, many healthcare companies utilize different organizational and corporate structures coupled with self-insurance trusts or captive programs that may provide less insurance coverage than a traditional insurance policy. Companies that insure any part of their general and professional liability risks through their own captive limited purpose entities generally estimate the future cost of general and professional liability through actuarial studies that rely primarily on historical data. However, due to the rise in the number and severity of professional claims against healthcare providers, these actuarial studies may underestimate the future cost of claims, and reserves for future claims may not be adequate to cover the actual cost of those claims. As a result, the tenants and operators of our properties who self-insure could incur large funded and unfunded general and professional liability expenses, which could materially adversely affect their liquidity, financial condition and results of operations and, in turn, their ability to satisfy their obligations to us. If we or the managers of our senior living operations decide to implement a captive or self-insurance program, any large funded and unfunded general and professional liability expenses incurred could have a Material Adverse Effect on us.
Should an uninsured loss or a loss in excess of insured limits occur, we could incur substantial liability or lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenues from the property. Following the occurrence of such an event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property. We cannot assure you that material uninsured losses, or losses in excess of insurance proceeds, will not occur in the future.

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Significant legal actions or regulatory proceedings could subject us or our tenants, operators and managers to increased operating costs and substantial uninsured liabilities, which could materially adversely affect our or their liquidity, financial condition and results of operations.
From time to time, we may be subject to claims brought against us in lawsuits and other legal or regulatory proceedings arising out of our alleged actions or the alleged actions of our tenants, operators and managers for which such tenants, operators and managers may have agreed to indemnify, defend and hold us harmless. An unfavorable resolution of any such litigation or proceeding could materially adversely affect our or their liquidity, financial condition and results of operations and have a Material Adverse Effect on us.
In certain cases, we and our tenants, operators and managers may be subject to professional liability claims brought by plaintiffs’ attorneys seeking significant punitive damages and attorneys’ fees. Due to the historically high frequency and severity of professional liability claims against seniors housing and healthcare providers, the availability of professional liability insurance has decreased and the premiums on such insurance coverage remain costly. As a result, insurance protection against such claims may not be sufficient to cover all claims against us or our tenants, operators or managers, and may not be available at a reasonable cost. If we or our tenants, operators and managers are unable to maintain adequate insurance coverage or are required to pay punitive damages, we or they may be exposed to substantial liabilities.
The occurrence of cyber incidents could disrupt our operations, result in the loss of confidential information and/or damage our business relationships and reputation.
As our reliance on technology has increased, our business is subject to greater risk from cyber incidents, including attempts to gain unauthorized access to our or our managers’ systems to disrupt operations, corrupt data or steal confidential information, and other electronic security breaches.  While we and our managers have implemented measures to help mitigate these threats, such measures cannot guarantee that we will be successful in preventing a cyber incident.  The occurrence of a cyber incident could disrupt our operations, or the operations of our managers, compromise the confidential information of our employees or the residents in our seniors housing communities, and/or damage our business relationships and reputation.
Reductions in federal government spending, tax reform initiatives or other federal legislation to address the federal government’s projected operating deficit could have a material adverse effect on our operators’ liquidity, financial condition or results of operations.
President Obama and members of the U.S. Congress have approved or proposed various spending cuts and tax reform initiatives that have resulted or could result in changes (including substantial reductions in funding) to Medicare, Medicaid or Medicare Advantage Plans. Any such existing or future federal legislation relating to deficit reduction that reduces reimbursement payments to healthcare providers could have a material adverse effect on certain of our operators’ liquidity, financial condition or results of operations, which could adversely affect their ability to satisfy their obligations to us and could have a Material Adverse Effect on us.
Our operators may be sued under a federal whistleblower statute.
Our operators who engage in business with the federal government may be sued under a federal whistleblower statute designed to combat fraud and abuse in the healthcare industry. See “Governmental Regulation—Healthcare Regulation” included in Item 1 of this Annual Report on Form 10-K. These lawsuits can involve significant monetary damages and award bounties to private plaintiffs who successfully bring these suits. If any of these lawsuits were brought against our operators, such suits combined with increased operating costs and substantial uninsured liabilities could have a material adverse effect on our operators’ liquidity, financial condition and results of operations and on their ability to satisfy their obligations under our leases, which, in turn, could have a Material Adverse Effect on us.
We could incur substantial liabilities and costs if any of our properties are found to be contaminated with hazardous substances or we become involved in any environmental disputes.
Under federal and state environmental laws and regulations, a current or former owner of real property may be liable for costs related to the investigation, removal and remediation of hazardous or toxic substances or petroleum that are released from or are present at or under, or that are disposed of in connection with such property. Owners of real property may also face other environmental liabilities, including government fines and penalties imposed by regulatory authorities and damages for injuries to persons, property or natural resources. Environmental laws and regulations often impose liability without regard to whether the owner was aware of, or was responsible for, the presence, release or disposal of hazardous or toxic substances or petroleum. In certain circumstances, environmental liability may result from the activities of a current or former operator of the property. Although we generally have indemnification rights against the current operators of our properties for contamination caused by them, such indemnification may not adequately cover all environmental costs. See “Governmental Regulation—Environmental Regulation” included in Item 1 of this Annual Report on Form 10-K.

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Volatility or disruption in the capital markets could prevent our counterparties from satisfying their obligations to us.
Interest rate fluctuations, financial market volatility or credit market disruptions could limit the ability of our tenants, operators and managers to obtain capital to finance their businesses on acceptable terms, which could adversely affect their ability to satisfy their obligations to us. In addition, any difficulty in accessing capital or other financing sources experienced by our other counterparties, such as letters of credit issuers, insurance carriers, banking institutions, title companies and escrow agents, could prevent those counterparties from remaining viable entities or satisfying their obligations to us, which could have a Material Adverse Effect on us.
Our success depends, in part, on our ability to attract and retain talented employees, and the loss of any one of our key personnel could adversely impact our business.
The success of our business depends, in part, on the leadership and performance of our executive management team and key employees, and our ability to attract, retain and motivate talented employees could significantly impact our future performance. Competition for these individuals is intense, and we cannot assure you that we will retain our key officers and employees or that we will be able to attract and retain other highly qualified individuals in the future. Losing any one or more of these persons could have a Material Adverse Effect on us.
Failure to maintain effective internal control over financial reporting could harm our business, results of operations and financial condition.
Pursuant to the Sarbanes-Oxley Act of 2002, we are required to provide a report by management on internal control over financial reporting, including management’s assessment of the effectiveness of such control. Because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud, effective internal controls over financial reporting may not prevent or detect misstatement and can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If we fail to maintain the adequacy of our internal controls, including any failure to implement required new or improved controls as a result of changes to our business or otherwise, or if we experience difficulties in their implementation, our business, results of operations and financial condition could be materially adversely harmed and we could fail to meet our reporting obligations.
Economic and other conditions that negatively affect geographic locations to which a greater percentage of our NOI is attributed could adversely affect our financial results.
For the year ended December 31, 2014, approximately 37.7% of our total NOI (excluding amounts in discontinued operations) was derived from properties located in California (13.7%), Texas (8.0%), New York (6.8%), Illinois (4.7%), and Florida (4.5%). As a result, we are subject to increased exposure to adverse conditions affecting these regions, including downturns in the local economies or changes in local real estate conditions, increased construction and competition or decreased demand for our properties, regional climate events and changes in state-specific legislation, which could adversely affect our business and results of operations.
We may be adversely affected by fluctuations in currency exchange rates.
Our ownership of properties in Canada and the United Kingdom currently subjects us to fluctuations in the exchange rates between U.S. dollars and Canadian dollars or the British pound, which may, from time to time, impact our financial condition and results of operations. If we continue to expand our international presence through investments in, or acquisitions or development of, seniors housing or healthcare assets outside the United States, Canada or the United Kingdom, we may transact business in other foreign currencies. Although we may pursue hedging alternatives, including borrowing in local currencies, to protect against foreign currency fluctuations, we cannot assure you that such fluctuations will not have a Material Adverse Effect on us.
Risks Arising from Our Capital Structure
We may become more leveraged.
As of December 31, 2014, we had approximately $10.9 billion of outstanding indebtedness. The instruments governing our existing indebtedness permit us to incur substantial additional debt, including secured debt, and we may satisfy our capital and liquidity needs through additional borrowings. A high level of indebtedness would require us to dedicate a substantial portion of our cash flow from operations to the payment of debt service, thereby reducing the funds available to implement our business strategy and make distributions to stockholders. A high level of indebtedness could also have the following consequences:
Potential limits on our ability to adjust rapidly to changing market conditions and vulnerability in the event of a downturn in general economic conditions or in the real estate or healthcare industries;

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Potential impairment of our ability to obtain additional financing to execute on our business strategy; and
Potential downgrade in the rating of our debt securities by one or more rating agencies, which could have the effect of, among other things, limiting our access to capital and increasing our cost of borrowing.
In addition, from time to time, we mortgage certain of our properties to secure payment of indebtedness. If we are unable to meet our mortgage payments, then the encumbered properties could be foreclosed upon or transferred to the mortgagee with a resulting loss of income and asset value.
We are exposed to increases in interest rates, which could reduce our profitability and adversely impact our ability to refinance existing debt, sell assets or engage in acquisition, investment, development and redevelopment activity, and our decision to hedge against interest rate risk might not be effective.
We receive a significant portion of our revenues by leasing assets under long-term triple-net leases that generally provide for fixed rental rates subject to annual escalations, while certain of our debt obligations are floating rate obligations with interest and related payments that vary with the movement of LIBOR, Bankers’ Acceptance or other indexes. The generally fixed rate nature of a significant portion of our revenues and the variable rate nature of certain of our debt obligations create interest rate risk. Although our operating assets provide a partial hedge against interest rate fluctuations, if interest rates rise, the costs of our existing floating rate debt and any new debt that we incur would increase. These increased costs could reduce our profitability, impair our ability to meet our debt obligations, or increase the cost of financing our acquisition, investment, development and redevelopment activity. An increase in interest rates also could limit our ability to refinance existing debt upon maturity or cause us to pay higher rates upon refinancing, as well as decrease the amount that third parties are willing to pay for our assets, thereby limiting our ability to promptly reposition our portfolio in response to changes in economic or other conditions.
We may seek to manage our exposure to interest rate volatility with hedging arrangements that involve additional risks, including the risks that counterparties may fail to honor their obligations under these arrangements, that these arrangements may not be effective in reducing our exposure to interest rate changes, that the amount of income we earn from hedging transactions may be limited by federal tax provisions governing REITs, and that these arrangements may cause us to pay higher interest rates on our debt obligations than otherwise would be the case. Moreover, no amount of hedging activity can fully insulate us from the risks associated with changes in interest rates. Failure to hedge effectively against interest rate risk, if we choose to engage in such activities, could adversely affect our results of operations and financial condition.
Limitations on our ability to access capital could have an adverse effect on our ability to make required payments on our debt obligations, make distributions to our stockholders or make future investments necessary to implement our business strategy.
We cannot assure you that we will be able to raise the capital necessary to meet our debt service obligations, make distributions to our stockholders or make future investments necessary to implement our business strategy, if our cash flow from operations is insufficient to satisfy these needs, and the failure to do so could have a Material Adverse Effect on us. Although we believe that we have sufficient access to capital and other sources of funding to meet our expected liquidity needs, we cannot assure you that conditions in the capital markets will not deteriorate or that our access to capital and other sources of funding will not become constrained, which could adversely affect the availability and terms of future borrowings, renewals or refinancings and our results of operation and financial condition. If we cannot access capital at an acceptable cost or at all, we may be required to liquidate one or more investments in properties at times that may not permit us to maximize the return on those investments or that could result in adverse tax consequences to us.
As a public company, our access to debt and equity capital depends, in part, on the trading prices of our senior notes and common stock, which, in turn, depend upon market conditions that change from time to time, such as the market’s perception of our financial condition, our growth potential and our current and expected future earnings and cash distributions. Our failure to meet the market’s expectation with regard to future earnings and cash distributions or a significant downgrade in the ratings assigned to our long-term debt could impact our ability to access capital or increase our borrowing costs. We also rely on the financial institutions that are parties to our unsecured revolving credit facility. If these institutions become capital constrained, tighten their lending standards or become insolvent or if they experience excessive volumes of borrowing requests from other borrowers within a short period of time, they may be unable or unwilling to honor their funding commitments to us, which would adversely affect our ability to draw on our unsecured revolving credit facility and, over time, could negatively impact our ability to consummate acquisitions, repay indebtedness as it matures, fund capital expenditures or make distributions to our stockholders.

36


Covenants in the instruments governing our existing indebtedness limit our operational flexibility, and a covenant breach could materially adversely affect our operations.
The terms of the instruments governing our existing indebtedness require us to comply with certain customary financial and other covenants, such as maintaining debt service coverage, leverage ratios and minimum net worth requirements. Our continued ability to incur additional debt and to conduct business in general is subject to our compliance with these covenants, which limit our operational flexibility. Breaches of these covenants could result in defaults under the applicable debt instruments and could trigger defaults under any of our other indebtedness that is cross-defaulted against such instruments, even if we satisfy our payment obligations. Financial and other covenants that limit our operational flexibility, as well as defaults resulting from our breach of any of these covenants, could have a Material Adverse Effect on us.
Risks Arising from Our Status as a REIT
Loss of our status as a REIT would have significant adverse consequences for us and the value of our common stock.
If we lose our status as a REIT (currently or with respect to any tax years for which the statute of limitations has not expired), we will face serious tax consequences that will substantially reduce the funds available to satisfy our obligations, to implement our business strategy and to make distributions to our stockholders for each of the years involved because:
We would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to federal income tax at regular corporate rates;
We could be subject to the federal alternative minimum tax and increased state and local taxes; and
Unless we are entitled to relief under statutory provisions, we could not elect to be subject to tax as a REIT for four taxable years following the year during which we were disqualified.
In addition, in such event we would no longer be required to pay dividends to maintain REIT status, which could adversely affect the value of our common stock.
Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of factual matters and circumstances not entirely within our control, as well as new legislation, regulations, administrative interpretations or court decisions, may adversely affect our investors or our ability to remain qualified as a REIT for tax purposes. Although we believe that we currently qualify as a REIT, we cannot assure you that we will continue to qualify for all future periods.
The 90% distribution requirement will decrease our liquidity and may limit our ability to engage in otherwise beneficial transactions.
To comply with the 90% distribution requirement applicable to REITs and to avoid the nondeductible excise tax, we must make distributions to our stockholders. See “Certain U.S. Federal Income Tax Considerations—Requirements for Qualification as a REIT—Annual Distribution Requirements” included in Item 1 of this Annual Report on Form 10-K. Such distributions reduce the funds we have available to finance our investment, acquisition, development and redevelopment activity and may limit our ability to engage in transactions that are otherwise in the best interests of our stockholders.
Although we do not anticipate any inability to satisfy the REIT distribution requirement, from time to time, we may not have sufficient cash or other liquid assets to do so. For example, timing differences between the actual receipt of income and actual payment of deductible expenses, on the one hand, and the inclusion of that income and deduction of those expenses in arriving at our taxable income, on the other hand, or non-deductible expenses such as principal amortization or repayments or capital expenditures in excess of non-cash deductions may prevent us from having sufficient cash or liquid assets to satisfy the 90% distribution requirement.
In the event that timing differences occur or we decide to retain cash or to distribute such greater amount as may be necessary to avoid income and excise taxation, we may seek to borrow funds, issue additional equity securities, pay taxable stock dividends, distribute other property or securities or engage in a transaction intended to enable us to meet the REIT distribution requirements. Any of these actions may require us to raise additional capital to meet our obligations; however, see “—Risks Arising from Our Capital Structure—Limitations on our ability to access capital could have an adverse effect on our ability to make required payments on our debt obligations, make distributions to our stockholders or make future investments necessary to implement our business strategy.” The terms of the instruments governing our existing indebtedness restrict our ability to engage in certain of these transactions.

37


To preserve our qualification as a REIT, our certificate of incorporation contains ownership limits with respect to our capital stock that may delay, defer or prevent a change of control of our company.
To assist us in preserving our qualification as a REIT, our certificate of incorporation provides that if a person acquires beneficial ownership of more than 9.0% of our outstanding common stock or more than 9.9% of our outstanding preferred stock, the shares that are beneficially owned in excess of the applicable limit are considered “excess shares” and are automatically deemed transferred to a trust for the benefit of a charitable institution or other qualifying organization selected by our Board of Directors. The trust is entitled to all dividends with respect to the excess shares and the trustee may exercise all voting power over the excess shares. In addition, we have the right to purchase the excess shares for a price equal to the lesser of (i) the price per share in the transaction that created the excess shares or (ii) the market price on the day we purchase the shares, but if we do not purchase the excess shares, the trustee of the trust is required to transfer the shares at the direction of our Board of Directors. These ownership limits could delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or might otherwise be in the best interests of our stockholders.
ITEM 1B.    Unresolved Staff Comments
None.
ITEM 2.    Properties
Seniors Housing and Healthcare Properties
As of December 31, 2014, we owned more than 1,500 properties (including properties classified as held for sale), consisting of seniors housing communities, MOBs, skilled nursing and other facilities, and hospitals, and we had one new property under development. We believe that maintaining a balanced portfolio of high-quality assets diversified by investment type, geographic location, asset type, tenant/operator, revenue source and operating model makes us less susceptible to single-state regulatory or reimbursement changes, regional climate events and local economic downturns and diminishes the risk that any single factor or event could materially harm our business.
As of December 31, 2014, we had $2.3 billion aggregate principal amount of mortgage loan indebtedness outstanding, secured by 178 of our properties. Excluding those portions attributed to our joint venture and operating partners, our share of mortgage loan indebtedness outstanding was $2.2 billion.

38


The following table provides additional information regarding the geographic diversification of our portfolio of properties as of December 31, 2014 (including properties owned through investments in unconsolidated entities, but excluding properties classified as held for sale):
 
Seniors Housing
Communities
 
Skilled Nursing and Other
Facilities
 
MOBs
 
Hospitals
Geographic Location
Number of
Properties
 
Units
 
Number of Properties
 
Licensed
Beds
 
Number of Properties
 
Square Feet
 
Number of Properties
 
Licensed Beds
Alabama
7

 
435

 
2

 
329

 
4

 
468,887

 

 

Arizona
26

 
2,378

 
2

 
232

 
11

 
773,109

 
3

 
169

Arkansas
4

 
286

 
8

 
875

 

 

 

 

California
85

 
9,734

 
9

 
1,115

 
24

 
1,970,387

 
7

 
530

Colorado
19

 
1,742

 
4

 
460

 
12

 
828,693

 
1

 
68

Connecticut
14

 
1,626

 
4

 
432

 

 

 

 

District of Columbia

 

 

 

 
2

 
101,580

 

 

Florida
46

 
4,493

 
1

 
171

 
14

 
315,405

 
6

 
511

Georgia
12

 
1,217

 
5

 
620

 
14

 
1,152,857

 

 

Idaho
1

 
70

 
7

 
624

 

 

 

 

Illinois
17

 
2,606

 
1

 
82

 
30

 
1,109,898

 
4

 
430

Indiana
16

 
1,235

 
34

 
3,782

 
15

 
947,857

 
1

 
59

Kansas
12

 
724

 
4

 
325

 

 

 

 

Kentucky
10

 
910

 
29

 
3,273

 
4

 
172,977

 
2

 
424

Louisiana
1

 
58

 

 

 
4

 
343,223

 
1

 
168

Maine
6

 
879

 
8

 
654

 

 

 

 

Maryland
5

 
360

 
3

 
445

 
2

 
82,663

 

 

Massachusetts
20

 
2,176

 
42

 
4,882

 

 

 
2

 
109

Michigan
24

 
1,642

 
1

 
330

 
10

 
414,518

 

 

Minnesota
18

 
1,041

 
3

 
466

 
3

 
243,098

 

 

Mississippi
1

 
52

 

 

 
1

 
50,575

 

 

Missouri
1

 
87

 
12

 
1,086

 
19

 
1,053,579

 
2

 
227

Montana
2

 
189

 
2

 
276

 

 

 

 

Nebraska
1

 
135

 

 

 

 

 

 

Nevada
6

 
611

 
3

 
299

 
2

 
149,248

 
1

 
52

New Hampshire
1

 
125

 
3

 
502

 

 

 

 

New Jersey
14

 
1,241

 
1

 
153

 

 

 

 

New Mexico
4

 
482

 

 

 

 

 
1

 
61

New York
42

 
4,684

 
9

 
1,566

 
1

 
111,634

 

 

North Carolina
22

 
2,179

 
17

 
1,876

 
18

 
797,628

 
1

 
124

North Dakota
1

 
48

 

 

 

 

 

 

Ohio
26

 
1,753

 
20

 
2,624

 
28

 
1,221,020

 
1

 
50

Oklahoma
8

 
431

 

 

 

 

 
1

 
59

Oregon
24

 
2,528

 
14

 
1,112

 
1

 
105,375

 

 

Pennsylvania
32

 
2,351

 
7

 
934

 
7

 
565,562

 
2

 
115

Rhode Island
6

 
648

 
1

 
129

 

 

 

 

South Carolina
4

 
340

 
4

 
602

 
18

 
1,012,959

 

 

South Dakota
4

 
182

 
2

 
246

 

 

 

 

Tennessee
20

 
1,575

 
5

 
601

 
10

 
381,234

 
1

 
49

Texas
58

 
4,942

 
51

 
5,375

 
13

 
1,032,552

 
10

 
615

Utah
4

 
501

 
5

 
476

 

 

 

 

Vermont

 

 
1

 
144

 

 

 

 

Virginia
8

 
655

 
9

 
1,323

 
3

 
126,500

 

 

Washington
21

 
2,183

 
18

 
1,788

 
10

 
578,975

 

 

West Virginia
2

 
124

 
4

 
326

 

 

 

 

Wisconsin
68

 
2,932

 
17

 
1,968

 
12

 
482,093

 

 

Wyoming
2

 
168

 
4

 
371

 

 

 

 

Total U.S.
725

 
64,758

 
376

 
42,874

 
292

 
16,594,086

 
47

 
3,820

Canada
41

 
4,478

 

 

 

 

 

 

United Kingdom

 

 
3

 
121

 

 

 

 

Total
766

 
69,236

 
379

 
42,995

 
292

 
16,594,086

 
47

 
3,820


39


Corporate Offices
Our headquarters are located in Chicago, Illinois, and we have additional corporate offices in: Louisville, Kentucky; Plano, Texas; and Irvine, California. We lease all of our corporate offices.
ITEM 3.    Legal Proceedings
The information contained in “Note 16—Litigation” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K is incorporated by reference into this Item 3. Except as set forth therein, we are not a party to, nor is any of our property the subject of, any material pending legal proceedings.
In July 2014, we voluntarily contacted the SEC to advise it of the determination by our former registered public accounting firm, Ernst & Young LLP (“EY”), that it was not independent of us due solely to an inappropriate personal relationship between an EY partner, who until June 30, 2014 was the lead audit partner on our 2014 audit and quarterly review and was previously an audit engagement partner on our 2013 and 2012 audits, and an individual in a financial reporting oversight role at our company. We have cooperated with the SEC and intend to continue to do so with respect to its inquiries related to this matter. At this time, the matter is ongoing and we cannot reasonably assess its timing or outcome.
ITEM 4.    Mine Safety Disclosures
Not applicable.
PART II
ITEM 5.    Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock, par value $0.25 per share, is listed and traded on the New York Stock Exchange (the “NYSE”) under the symbol “VTR.” The following table sets forth, for the periods indicated, the high and low sales prices of our common stock as reported on the NYSE and the dividends declared per share.
 
Sales Price of
Common Stock
 
Dividends
Declared
 
High
 
Low
 
2013
 
 
 
 
 
First Quarter
$
73.20

 
$
64.68

 
$
0.67

Second Quarter
82.93

 
64.38

 
0.67

Third Quarter
72.16

 
58.86

 
0.67

Fourth Quarter
67.33

 
55.26

 
0.725

2014
 
 
 
 
 
First Quarter
$
63.67

 
$
56.79

 
$
0.725

Second Quarter
68.40

 
61.29

 
0.725

Third Quarter
66.04

 
60.70

 
0.725

Fourth Quarter
74.44

 
62.48

 
0.79

As of February 10, 2015, we had 330,809,789 shares of our common stock outstanding held by approximately 5,284 stockholders of record.
Dividends and Distributions
We pay regular quarterly dividends to holders of our common stock to comply with the provisions of the Code governing REITs. In connection with the HCT Acquisition, on January 5, 2015, our Board of Directors declared a prorated first quarter dividend on our common stock in the amount of $0.2107 per share, which was paid in cash on January 27, 2015 to stockholders of record on January 15, 2015. On February 13, 2015, our Board of Directors declared another prorated dividend on our common stock in the amount of $0.5793 per share, payable in cash on March 31, 2015 to stockholders of record on March 6, 2015. Together, these two prorated amounts equate to the first quarterly installment of our 2015 dividend of $0.79 per share.

40


We expect to distribute at least 100% of our taxable net income, after the use of any net operating loss carryforwards, to our stockholders for 2015. See “Certain U.S. Federal Income Tax Considerations—Requirements for Qualification as a REIT—Annual Distribution Requirements” included in Part I, Item 1 of this Annual Report on Form 10-K.
In general, our Board of Directors makes decisions regarding the nature, frequency and amount of our dividends on a quarterly basis. Because the Board considers many factors when making these decisions, including our present and future liquidity needs, our current and projected financial condition and results of operations and the performance and credit quality of our tenants, operators, borrowers and managers, we cannot assure you that we will maintain the practice of paying regular quarterly dividends to continue to qualify as a REIT. Please see “Cautionary Statements” and the risk factors included in Part I, Item 1A of this Annual Report on Form 10-K for a description of other factors that may affect our distribution policy.
Prior to its suspension in July 2014, our stockholders were entitled to reinvest all or a portion of any cash distribution on their shares of our common stock by participating in our Distribution Reinvestment and Stock Purchase Plan (“DRIP”), subject to the terms of the plan. See “Note 17—Permanent and Temporary Equity” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. We may determine whether or not to reinstate the DRIP at any time, in our sole discretion.
Director and Employee Stock Sales
Certain of our directors, executive officers and other employees have adopted and, from time to time in the future, may adopt non-discretionary, written trading plans that comply with Rule 10b5-1 under the Exchange Act, or otherwise monetize, gift or transfer their equity-based compensation. These transactions typically are conducted for estate, tax and financial planning purposes and are subject to compliance with our Amended and Restated Securities Trading Policy and Procedures (“Securities Trading Policy”), the minimum stock ownership requirements contained in our Guidelines on Governance and all applicable laws and regulations.
Our Securities Trading Policy expressly prohibits our directors, executive officers and employees from buying or selling derivatives with respect to our securities or other financial instruments that are designed to hedge or offset a decrease in the market value of our securities and from engaging in short sales with respect to our securities. In addition, our Securities Trading Policy prohibits our directors and executive officers from holding our securities in margin accounts or pledging our securities to secure loans without the prior approval of our Audit and Compliance Committee. Each of our executive officers has advised us that he or she is in compliance with the Securities Trading Policy and has not pledged any of our equity securities to secure margin or other loans.
Stock Repurchases
The table below summarizes repurchases of our common stock made during the quarter ended December 31, 2014:
 
Number of Shares
Repurchased (1)
 
Average Price
Per Share
October 1 through October 31

 
$

November 1 through November 30
988

 
$
61.50

December 1 through December 31
7,125

 
$
71.70

    
(1)
Repurchases represent shares withheld to pay taxes on the vesting of restricted stock granted to employees under our 2006 Incentive Plan or 2012 Incentive Plan or restricted stock units granted to employees under the Nationwide Health Properties, Inc. (“NHP”) 2005 Performance Incentive Plan and assumed by us in connection with our acquisition of NHP. The value of the shares withheld is the closing price of our common stock on the date the vesting or exercise occurred (or, if not a trading day, the immediately preceding trading day) or the fair market value of our common stock at the time of the exercise, as the case may be.
Unregistered Sales of Equity Securities
On November 14, 2014, we issued 92,993 shares of our common stock to Sarah M. Jensen as consideration for our acquisition of all of the outstanding shares of Jensen Construction Management, Inc. (“Jensen Construction”). In connection with the acquisition, we entered into waiver and release agreements with two Jensen Construction employees pursuant to which we issued 53,469 shares and 1,779 shares, respectively, of our common stock to those employees in exchange for, and in full satisfaction of, any right, interest, ownership or claim that they may have had with respect to any interest in, or securities or assets of, Jensen Construction. The shares of our common stock were issued in reliance on the exemption from registration provided by Section 4(2) of the Securities Act and Rule 506(b) promulgated thereunder. 

41


On December 1, 2014, NHP/PMB L.P. (“NHP/PMB”), a limited partnership in which we own a majority interest, issued 383,062 Class A limited partnership units (“OP Units”) in connection with the contribution of an MOB to NHP/PMB. At any time following the first anniversary of their issuance, the OP Units may be redeemed at the election of the holder for cash or, at our option, 0.7866 shares of our common stock per unit, subject to adjustment in certain circumstances. The OP Units were issued solely to “accredited investors” (as such term is defined in Rule 501 under the Securities Act) in reliance on the exemption from registration provided by Section 4(2) of the Securities Act.
Stock Performance Graph
The following performance graph compares the cumulative total return (including dividends) to the holders of our common stock from December 31, 2009 through December 31, 2014, with the cumulative total returns of the NYSE Composite Index, the FTSE NAREIT Composite REIT Index (the “Composite REIT Index”) and the S&P 500 Index over the same period. The comparison assumes $100 was invested on December 31, 2009 in our common stock and in each of the foregoing indexes and assumes reinvestment of dividends, as applicable. We have included the NYSE Composite Index in the performance graph because our common stock is listed on the NYSE, and we have included the S&P 500 Index because we are a member of the S&P 500. We have included the Composite REIT Index because we believe that it is most representative of the industries in which we compete, or otherwise provides a fair basis for comparison with us, and is therefore particularly relevant to an assessment of our performance. The figures in the table below are rounded to the nearest dollar.
 
12/31/2009
 
12/31/2010
 
12/31/2011
 
12/31/2012
 
12/31/2013
 
12/31/2014
Ventas
$100
 
$125.41
 
$137.67
 
$168.38
 
$155.51
 
$203.61
NYSE Composite Index
$100
 
$113.76
 
$109.70
 
$127.54
 
$161.21
 
$172.27
Composite REIT Index
$100
 
$127.56
 
$136.88
 
$163.89
 
$167.72
 
$213.39
S&P 500 Index
$100
 
$115.06
 
$117.48
 
$136.27
 
$180.39
 
$205.07



42


ITEM 6.    Selected Financial Data
You should read the following selected financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 of this Annual Report on Form 10-K and our Consolidated Financial Statements and the notes thereto included in Item 8 of this Annual Report on Form 10-K, as acquisitions, dispositions, changes in accounting policies and other items may impact the comparability of the financial data.
 
As of and For the Years Ended December 31,
 
2014
 
2013
 
2012
 
2011
 
2010
 
(Dollars in thousands, except per share data)
Operating Data
 
 
 
 
 
 
 
 
 
Rental income
$
1,433,995

 
$
1,327,383

 
$
1,180,731

 
$
795,214

 
$
518,616

Resident fees and services
1,552,951

 
1,406,005

 
1,227,124

 
865,800

 
445,157

Interest expense
376,842

 
334,909

 
288,717

 
224,344

 
170,133

Property-level operating expenses
1,195,098

 
1,109,632

 
966,422

 
645,082

 
314,985

General, administrative and professional fees
121,746

 
115,106

 
98,510

 
74,537

 
49,830

Income from continuing operations attributable to common stockholders, including real estate dispositions
473,661

 
489,788

 
308,814

 
362,900

 
212,284

Discontinued operations
2,106

 
(36,279
)
 
53,986

 
1,593

 
33,883

Net income attributable to common stockholders
475,767

 
453,509

 
362,800

 
364,493

 
246,167

Per Share Data
 
 
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders, including real estate dispositions:
 
 
 
 
 
 
 
 
 
Basic
$
1.61

 
$
1.67

 
$
1.06

 
$
1.59

 
$
1.35

Diluted
$
1.59

 
$
1.66

 
$
1.05

 
$
1.57

 
$
1.35

Net income attributable to common stockholders:
 
 
 
 
 
 
 
 
 
Basic
$
1.62

 
$
1.55

 
$
1.24

 
$
1.60

 
$
1.57

Diluted
$
1.60

 
$
1.54

 
$
1.23

 
$
1.58

 
$
1.56

Dividends declared per common share
$
2.965

 
$
2.735

 
$
2.48

 
$
2.30

 
$
2.14

Other Data
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities
$
1,254,845

 
$
1,194,755

 
$
992,816

 
$
773,197

 
$
447,622

Net cash used in investing activities
(2,055,040
)
 
(1,282,760
)
 
(2,169,689
)
 
(997,439
)
 
(301,920
)
Net cash provided by (used in) financing activities
758,057

 
114,996

 
1,198,914

 
248,282

 
(231,452
)
FFO (1)
1,273,680

 
1,208,458

 
1,024,567

 
824,851

 
421,506

Normalized FFO (1)
1,330,018

 
1,220,709

 
1,120,225

 
776,963

 
453,981

Balance Sheet Data
 
 
 
 
 
 
 
 
 
Real estate investments, at cost
$
23,010,945

 
$
21,403,592

 
$
19,745,607

 
$
17,830,262

 
$
6,747,699

Cash and cash equivalents
55,348

 
94,816

 
67,908

 
45,807

 
21,812

Total assets
21,226,171

 
19,731,494

 
18,980,000

 
17,271,910

 
5,758,021

Senior notes payable and other debt
10,888,092

 
9,364,992

 
8,413,646

 
6,429,116

 
2,900,044

_______________

(1)
We believe that net income, as defined by U.S. generally accepted accounting principles (“GAAP”), is the most appropriate earnings measurement. However, we consider Funds From Operations (“FFO”) and normalized FFO to be

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appropriate measures of operating performance of an equity REIT. In particular, we believe that normalized FFO is useful because it allows investors, analysts and our management to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by unanticipated items and other events such as transactions and litigation. In some cases, we provide information about identified non-cash components of FFO and normalized FFO because it allows investors, analysts and our management to assess the impact of those items on our financial statements.

We use the National Association of Real Estate Investment Trusts (“NAREIT”) definition of FFO. NAREIT defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of real estate property, including gain on re-measurement of equity method investments, and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. We define normalized FFO as FFO excluding the following income and expense items (which may be recurring in nature): (a) merger-related costs and expenses, including amortization of intangibles, transition and integration expenses, and deal costs and expenses, including expenses and recoveries relating to our acquisition lawsuits; (b) the impact of any expenses related to asset impairment and valuation allowances, 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 our debt; (c) the non-cash effect of income tax benefits or expenses and derivative transactions that have non-cash mark-to-market impacts on our Consolidated Statements of Income; (d) the impact of future acquisitions, divestitures (including pursuant to tenant options to purchase) and capital transactions; (e) the financial impact of contingent consideration, severance-related costs, charitable donations made to the Ventas Charitable Foundation, gains and losses for non-operational foreign currency hedge agreements and changes in the fair value of financial instruments; and (f) expenses related to the re-audit and re-review in 2014 of our historical financial statements and related matters.

FFO and normalized FFO presented in this Annual Report on Form 10-K, or otherwise disclosed by us, may not be comparable to FFO and normalized FFO presented by other real estate companies due to the fact that not all real estate companies use the same definitions. FFO and normalized FFO (or either measure adjusted for non-cash items) should not be considered as alternatives to net income (determined in accordance with GAAP) as indicators of our financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of our liquidity, nor are FFO and normalized FFO (or either measure adjusted for non-cash items) necessarily indicative of sufficient cash flow to fund all of our needs. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Funds From Operations and Normalized Funds from Operations” included in Item 7 of this Annual Report on Form 10-K for a reconciliation of FFO and normalized FFO to our GAAP earnings.
ITEM 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion provides information that management believes is relevant to an understanding and assessment of the consolidated financial condition and results of operations of Ventas, Inc. (together with its subsidiaries, unless otherwise indicated or except where the context otherwise requires, “we,” “us” or “our”). You should read this discussion in conjunction with our Consolidated Financial Statements and the notes thereto included in Item 8 of this Annual Report on Form 10-K, as it will help you understand:
Our company and the environment in which we operate;
Our 2014 highlights and other recent developments;
Our critical accounting policies and estimates;
Our results of operations for the last three years;
How we manage our assets and liabilities;
Our liquidity and capital resources;
Our cash flows; and
Our future contractual obligations.
Corporate and Operating Environment
We are a real estate investment trust (“REIT”) with a highly diversified portfolio of seniors housing and healthcare properties located throughout the United States, Canada and the United Kingdom. As of December 31, 2014, we owned more than 1,500 properties (including properties classified as held for sale), consisting of seniors housing communities, medical

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office buildings (“MOBs”), skilled nursing and other facilities, and hospitals, and we had one new property under development. We are an S&P 500 company and currently headquartered in Chicago, Illinois.
We primarily invest in seniors housing and healthcare properties through acquisitions and lease our properties to unaffiliated tenants or operate them through independent third-party managers. As of December 31, 2014, we leased a total of 922 properties (excluding MOBs and properties classified as held for sale) to various healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures, and we engaged independent operators, such as Atria Senior Living, Inc. (“Atria”) and Sunrise Senior Living, LLC (together with its subsidiaries, “Sunrise”), to manage 270 of our seniors housing communities (excluding properties classified as held for sale) for us pursuant to long-term management agreements. Our two largest tenants, Brookdale Senior Living Inc. (together with its subsidiaries, “Brookdale Senior Living”) and Kindred Healthcare, Inc. (together with its subsidiaries, “Kindred”), leased from us 160 properties (excluding six properties owned through investments in unconsolidated entities and one property managed by Brookdale Senior Living pursuant to a long-term management agreement) and 83 properties, respectively, as of December 31, 2014.
Through our Lillibridge Healthcare Services, Inc. (“Lillibridge”) subsidiary and our ownership interest in PMB Real Estate Services LLC (“PMBRES”), we also provide MOB management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. In addition, from time to time, we make secured and unsecured loans and other investments relating to seniors housing and healthcare operators or properties.
We conduct our operations through three reportable business segments: triple-net leased properties; senior living operations; and MOB operations. See “Note 20—Segment Information” of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
As of December 31, 2014, our consolidated portfolio included 100% ownership interests in 1,383 properties and controlling joint venture interests in 50 properties, and we had non-controlling ownership interests in 51 properties through investments in unconsolidated entities. Through Lillibridge and PMBRES, we provided management and leasing services to third parties with respect to 75 MOBs as of December 31, 2014.
We aim to enhance shareholder value by delivering consistent, superior total returns through a strategy of: (1) generating reliable and growing cash flows; (2) maintaining a balanced, diversified portfolio of high-quality assets; and (3) preserving our financial strength, flexibility and liquidity.
Our ability to access capital in a timely and cost-effective manner is critical to the success of our business strategy because it affects our ability to satisfy existing obligations, including the repayment of maturing indebtedness, and to make future investments. Factors such as general market conditions, interest rates, credit ratings on our securities, expectations of our potential future earnings and cash distributions, and the trading price of our common stock that are beyond our control and fluctuate over time all impact our access to and cost of external capital. For that reason, we generally attempt to match the long-term duration of our investments in real property with long-term financing through the issuance of shares of our common stock or the incurrence of long-term fixed rate debt. At December 31, 2014, 21.9% of our consolidated debt (excluding debt related to properties classified as held for sale) was variable rate debt.
2014 Highlights and Other Recent Developments
In 2014, we paid an annual cash dividend on our common stock of $2.965 per share.
During 2014, we made investments totaling approximately $2.4 billion in seniors housing and healthcare assets, including 29 seniors housing communities located in Canada that we acquired from Holiday Retirement (the “Holiday Canada Acquisition”), three high-quality private hospitals located in the United Kingdom and a $425.0 million secured mezzanine loan investment that has a blended annual interest rate of 8.1% and has contractual maturities ranging between 2016 and 2019.
In January 2015, we acquired publicly traded American Realty Capital Healthcare Trust, Inc. (“HCT”) in a stock and cash transaction (the “HCT Acquisition”), which added 152 properties (some of which are located on the same campus) to our portfolio. We funded the transaction through the issuance of approximately 28.4 million shares of our common stock, 1.1 million limited partnership units that are redeemable for shares of our common stock, cash and the assumption of debt.  
In 2015, we made other investments totaling approximately $320 million, including the acquisition of five triple-net leased properties in the United Kingdom and 12 skilled nursing facilities.
In April 2014, we issued and sold $700 million aggregate principal amount of senior notes with a weighted average interest rate of 2.75% and a weighted average maturity of seven years.

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In September 2014, we issued and sold CAD 650.0 million aggregate principal amount of senior notes, with an effective weighted average interest rate of 3.5% and a weighted average maturity of 6.9 years, on a private placement basis in Canada. We used the net proceeds from the sale to repay a portion of the CAD 791.0 million unsecured term loan we incurred initially to fund the Holiday Canada Acquisition.
In January 2015, we issued and sold $900 million aggregate principal amount of senior notes, with a weighted average interest rate of 3.8% and a weighted average maturity of 16.7 years, and we issued and sold CAD 250.0 million aggregate principal amount of senior notes, with an interest rate of 3.3% and a maturity of seven years, on a private placement basis in Canada.
Under our “at-the-market” equity offering program, during 2014 and 2015 we issued and sold a total of approximately 7.1 million shares of our common stock at a weighted average price of $75.18 per share for aggregate net proceeds (after sales agent commissions) of $528.1 million.
During 2014, we sold 22 properties for $118.2 million and received loans receivable repayments of $55.9 million.
In 2015, we sold 17 properties for $275.1 million, including $5.5 million of lease termination fees.
As of December 31, 2014, we had re-leased to Kindred, transitioned to new operators or sold 107 of the 108 licensed healthcare assets whose lease terms with Kindred were scheduled to expire on September 30, 2014, and we expect to sell the remaining asset during 2015. See “Triple-Net Lease Expirations.”
Critical Accounting Policies and Estimates
Our Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”). GAAP requires us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We base these estimates on our experience and assumptions we believe to be reasonable under the circumstances. However, if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, we may have applied a different accounting treatment, resulting in a different presentation of our financial statements. We periodically reevaluate our estimates and assumptions, and in the event they prove to be different from actual results, we make adjustments in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. We believe that the critical accounting policies described below, among others, affect our more significant estimates and judgments used in the preparation of our financial statements. For more information regarding our critical accounting policies, see “Note 2—Accounting Policies” of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Principles of Consolidation
The Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K include our accounts and the accounts of our wholly owned subsidiaries and the joint venture entities over which we exercise control. All intercompany transactions and balances have been eliminated in consolidation, and our net earnings are reduced by the portion of net earnings attributable to noncontrolling interests.
GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; and (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. We consolidate our investment in a VIE when we determine that we are its primary beneficiary. We may change our original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affects the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary.
We identify the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. We perform this analysis on an ongoing basis.

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As it relates to investments in joint ventures, GAAP may preclude consolidation by the sole general partner in certain circumstances based on the type of rights held by the limited partner(s). We assess limited partners’ rights and their impact on the presumption of control of the limited partnership by the sole general partner when an investor becomes the sole general partner, and we perform a reassessment when there is a change to the terms or in the exercisability of the rights of the limited partners, the sole general partner increases or decreases its ownership of limited partnership interests, or there is an increase or decrease in the number of outstanding limited partnership interests. We also apply this guidance to managing member interests in limited liability companies.
Business Combinations
We account for acquisitions using the acquisition method and allocate the cost of the businesses acquired among tangible and recognized intangible assets and liabilities based upon their estimated fair values as of the acquisition date. Recognized intangibles primarily include the value of in-place leases, acquired lease contracts, tenant and customer relationships, trade names/trademarks and goodwill. We do not amortize goodwill, which represents the excess of the purchase price paid over the fair value of the net assets of the acquired business and is included in other assets on our Consolidated Balance Sheets.
Our method for allocating the purchase price to acquired investments in real estate requires us to make subjective assessments for determining fair value of the assets acquired and liabilities assumed. This includes determining the value of the buildings, land and improvements, construction in progress, ground leases, tenant improvements, in-place leases, above and/or below market leases, purchase option intangible assets and/or liabilities, and any debt assumed. These estimates require significant judgment and in some cases involve complex calculations. These allocation assessments directly impact our results of operations, as amounts allocated to certain assets and liabilities have different depreciation or amortization lives. In addition, we amortize the value assigned to above and/or below market leases as a component of revenue, unlike in-place leases and other intangibles, which we include in depreciation and amortization in our Consolidated Statements of Income.
We estimate the fair value of buildings acquired on an as-if-vacant basis and depreciate the building value over the estimated remaining life of the building, not to exceed 35 years. We determine the allocated value of other fixed assets, such as site improvements and furniture, fixtures and equipment, based upon the replacement cost and depreciate such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. We determine the value of land either by considering the sales prices of similar properties in recent transactions or based on internal analysis of recently acquired and existing comparable properties within our portfolio. We generally determine the value of construction in progress based upon the replacement cost. However, for certain acquired properties that are part of a ground-up development, we determine fair value by using the same valuation approach as for all other properties and deducting the estimated cost to complete the development. During the remaining construction period, we capitalize interest expense until the development has reached substantial completion. Construction in progress, including capitalized interest, is not depreciated until the development has reached substantial completion.
The fair value of acquired lease-related intangibles, if any, reflects: (i) the estimated value of any above and/or below market leases, determined by discounting the difference between the estimated market rent and in-place lease rent; and (ii) the estimated value of in-place leases related to the cost to obtain tenants, including leasing commissions, and an estimated value of the absorption period to reflect the value of the rent and recovery costs foregone during a reasonable lease-up period as if the acquired space was vacant. We amortize any acquired lease-related intangibles to revenue or amortization expense over the remaining life of the associated lease plus any assumed bargain renewal periods. If a lease is terminated prior to its stated expiration or not renewed upon expiration, we recognize all unamortized lease-related intangibles associated with that lease in operations at that time.
We estimate the fair value of purchase option intangible assets and liabilities by discounting the difference between the applicable property’s acquisition date fair value and an estimate of its future option price. We do not amortize the resulting intangible asset or liability over the term of the lease, but rather adjust the recognized value of the asset or liability upon sale.
We estimate the fair value of tenant or other customer relationships acquired, if any, by considering the nature and extent of existing business relationships with the tenant or customer, growth prospects for developing new business with the tenant or customer, the tenant’s credit quality, expectations of lease renewals with the tenant, and the potential for significant, additional future leasing arrangements with the tenant, and we amortize that value over the expected life of the associated arrangements or leases, including the remaining terms of the related leases and any expected renewal periods. We estimate the fair value of trade names and trademarks using a royalty rate methodology and amortize that value over the estimated useful life of the trade name or trademark.
In connection with a business combination, we may assume rights and obligations under certain lease agreements pursuant to which we become the lessee of a given property. We assume the lease classification previously determined by the prior lessee absent a modification in the assumed lease agreement. We assess assumed operating leases, including ground

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leases, to determine whether the lease terms are favorable or unfavorable to us given current market conditions on the acquisition date. To the extent the lease terms are favorable or unfavorable relative to market conditions on the acquisition date, we recognize an intangible asset or liability, as applicable, at fair value and amortize that asset or liability (excluding purchase option intangibles) to interest or rental expense in our Consolidated Statements of Income over the applicable lease term. We include all lease-related intangible assets and liabilities within acquired lease intangibles and accounts payable and other liabilities, respectively, on our Consolidated Balance Sheets.
We determine the fair value of loans receivable acquired in connection with a business combination by discounting the estimated future cash flows using current interest rates at which similar loans on the same terms with the same length to maturity would be made to borrowers with similar credit ratings. We do not establish a valuation allowance at the acquisition date because the estimated future cash flows already reflect our judgment regarding their uncertainty. We recognize the difference between the acquisition date fair value and the total expected cash flows as interest income using an effective interest method over the life of the applicable loan. Subsequent to the acquisition date, we evaluate changes regarding the uncertainty of future cash flows and the need for a valuation allowance, as appropriate.
We estimate the fair value of noncontrolling interests assumed consistent with the manner in which we value all of the underlying assets and liabilities.
We base the initial carrying value of investments in unconsolidated entities on the fair value of the assets at the time we acquired the joint venture interest. We estimate fair values for our equity method investments based on discounted cash flow models that include all estimated cash inflows and outflows over a specified holding period and, where applicable, any estimated debt premiums or discounts. The capitalization rates, discount rates and credit spreads we use in these models are based upon assumptions that we believe to be within a reasonable range of current market rates for the respective investments.
We generally amortize any difference between our cost basis and the basis reflected at the joint venture level over the lives of the related assets and liabilities and include that amortization in our share of income or loss from unconsolidated entities. For earnings of equity method investments with pro rata distribution allocations, net income or loss is allocated between the partners in the joint venture based on their respective stated ownership percentages. In other instances, net income or loss is allocated between the partners in the joint venture based on the hypothetical liquidation at book value method.
We calculate the fair value of long-term debt by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which we approximate based on the rate at which we would expect to incur a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument.
Impairment of Long-Lived and Intangible Assets
We periodically evaluate our long-lived assets, primarily consisting of investments in real estate, for impairment indicators. If indicators of impairment are present, we evaluate the carrying value of the related real estate investments in relation to the future undiscounted cash flows of the underlying operations. In performing this evaluation, we consider market conditions and our current intentions with respect to holding or disposing of the asset. We adjust the net book value of leased properties and other long-lived assets to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. We recognize an impairment loss at the time we make any such determination.
If impairment indicators arise with respect to intangible assets with finite useful lives, we evaluate impairment by comparing the carrying amount of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset. If estimated future undiscounted net cash flows are less than the carrying amount of the asset, then we estimate the fair value of the asset and compare the estimated fair value to the intangible asset’s carrying value. We recognize any shortfall from carrying value as an impairment loss in the current period.
We evaluate our investments in unconsolidated entities for impairment at least annually, and whenever events or changes in circumstances indicate that the carrying value of our investment may exceed its fair value. If we determine that a decline in the fair value of our investment in an unconsolidated entity is other-than-temporary, and if such reduced fair value is below the carrying value, we record an impairment. The determination of the fair value of investments in unconsolidated entities involves significant judgment, and our estimates consider all available evidence, including, as appropriate, the present value of the expected future cash flows discounted at market rates, general economic conditions and trends and other relevant factors.
We test goodwill for impairment at least annually, and more frequently if indicators arise. We first assess qualitative factors, such as current macroeconomic conditions, state of the equity and capital markets and our overall financial and operating performance, to determine the likelihood that the fair value of a reporting unit is less than its carrying amount. If we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we proceed with the two-step approach to evaluating impairment. First, we estimate the fair value of the reporting unit and compare it to the

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reporting unit’s carrying value. If the carrying value exceeds fair value, we proceed with the second step, which requires us to assign the fair value of the reporting unit to all of the assets and liabilities of the reporting unit as if it had been acquired in a business combination at the date of the impairment test. The excess fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied value of goodwill and is used to determine the amount of impairment. We recognize an impairment loss to the extent the carrying value of goodwill exceeds the implied value in the current period.
Estimates of fair value used in our evaluation of goodwill, investments in real estate and intangible assets are based upon discounted future cash flow projections or other acceptable valuation techniques that are based, in turn, upon various estimates and assumptions, such as revenue and expense growth rates, capitalization rates, discount rates or other available market data. Our ability to accurately predict future operating results and cash flows and to estimate and allocate fair values impacts the timing and recognition of impairments. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our financial results.
Loans Receivable
We record loans receivable, other than those acquired in connection with a business combination, on our Consolidated Balance Sheets (either in secured loans receivable and investments, net or other assets, in the case of unsecured loans receivable) at the unpaid principal balance, net of any deferred origination fees, purchase discounts or premiums and valuation allowances. We amortize net deferred origination fees, which are comprised of loan fees collected from the borrower net of certain direct costs, and purchase discounts or premiums over the contractual life of the loan using the effective interest method and immediately recognize in income any unamortized balances if the loan is repaid before its contractual maturity.
We regularly evaluate the collectibility of loans receivable based on factors such as corporate and facility-level financial and operational reports, compliance with financial covenants set forth in the applicable loan agreement, the financial strength of the borrower and any guarantor, the payment history of the borrower and current economic conditions. If our evaluation of these factors indicates it is probable that we will be unable to collect all amounts due under the terms of the applicable loan agreement, we provide a reserve against the portion of the receivable that we estimate may not be collected.
Fair Value
Fair value is a market-based measurement, not an entity-specific measurement, and we determine fair value based on the assumptions that we expect market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within levels one and two of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within level three of the hierarchy).
Level one inputs utilize unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access. Level two inputs consist of inputs other than quoted prices included in level one that are directly or indirectly observable for the asset or liability. Level two inputs may include quoted prices for similar assets and liabilities in active markets and other inputs for the asset or liability that are observable at commonly quoted intervals, such as interest rates, foreign exchange rates and yield curves. Level three inputs are unobservable inputs for the asset or liability, which typically are based on our own assumptions, as there is little, if any, related market activity. If the determination of the fair value measurement is based on inputs from different levels of the hierarchy, the level within which the entire fair value measurement falls is the lowest level input that is significant to the fair value measurement in its entirety. If the volume and level of market activity for an asset or liability has decreased significantly relative to the normal market activity for such asset or liability (or similar assets or liabilities), then transactions or quoted prices may not accurately reflect fair value. In addition, if there is evidence that a transaction for an asset or liability is not orderly, little, if any, weight is placed on that transaction price as an indicator of fair value. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
Revenue Recognition
Triple-Net Leased Properties and MOB Operations
Certain of our triple-net leases and most of our MOB leases provide for periodic and determinable increases in base rent. We recognize base rental revenues under these leases on a straight-line basis over the applicable lease term when collectibility is reasonably assured. Recognizing rental income on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a straight-line rent receivable that is included in other assets on our Consolidated Balance Sheets.

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Certain of our leases provide for periodic increases in base rent only if certain revenue parameters or other substantive contingencies are met. We recognize the increased rental revenue under these leases as the related parameters or contingencies are met, rather than on a straight-line basis over the applicable lease term.
Senior Living Operations
We recognize resident fees and services, other than move-in fees, monthly as services are provided. We recognize move-in fees on a straight-line basis over the average resident stay. Our lease agreements with residents generally have terms of 12 to 18 months and are cancelable by the resident upon 30 days’ notice.
Other
We recognize interest income from loans and investments, including discounts and premiums, using the effective interest method when collectibility is reasonably assured. We apply the effective interest method on a loan-by-loan basis and recognize discounts and premiums as yield adjustments over the related loan term. We recognize interest income on an impaired loan to the extent our estimate of the fair value of the collateral is sufficient to support the balance of the loan, other receivables and all related accrued interest. When the balance of the loan, other receivables and all related accrued interest is equal to our estimate of the fair value of the collateral, we recognize interest income on a cash basis. We provide a reserve against an impaired loan to the extent our total investment in the loan exceeds our estimate of the fair value of the loan collateral.
We recognize income from rent, lease termination fees, development services, management advisory services, and all other income when all of the following criteria are met in accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin 104: (i) the applicable agreement has been fully executed and delivered; (ii) services have been rendered; (iii) the amount is fixed or determinable; and (iv) collectibility is reasonably assured.
Allowances
We assess the collectibility of our rent receivables, including straight-line rent receivables. We base our assessment of the collectibility of rent receivables (other than straight-line rent receivables) on several factors, including, among other things, payment history, the financial strength of the tenant and any guarantors, the value of the underlying collateral, if any, and current economic conditions. If our evaluation of these factors indicates it is probable that we will be unable to recover the full value of the receivable, we provide a reserve against the portion of the receivable that we estimate may not be recovered. We also base our assessment of the collectibility of straight-line rent receivables on several factors, including, among other things, the financial strength of the tenant and any guarantors, the historical operations and operating trends of the property, the historical payment pattern of the tenant and the type of property. If our evaluation of these factors indicates it is probable that we will be unable to receive the rent payments due in the future, we provide a reserve against the recognized straight-line rent receivable asset for the portion, up to its full value, that we estimate may not be recovered. If we change our assumptions or estimates regarding the collectibility of future rent payments required by a lease, we may adjust our reserve to increase or reduce the rental revenue recognized in the period we make such change in our assumptions or estimates.
Federal Income Tax
We have elected to be treated as a REIT under the applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), for every year beginning with the year ended December 31, 1999. Accordingly, we generally are not subject to federal income tax on net income that we distribute to our stockholders, provided that we continue to qualify as a REIT. However, with respect to certain of our subsidiaries that have elected to be treated as “taxable REIT subsidiaries,” we record income tax expense or benefit, as those entities are subject to federal income tax similar to regular corporations.
We account for deferred income taxes using the asset and liability method and recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our financial statements or tax returns. Under this method, we determine deferred tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Any increase or decrease in the deferred tax liability that results from a change in circumstances, and that causes us to change our judgment about expected future tax consequences of events, is included in the tax provision when such changes occur. Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards. A valuation allowance is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will not be realized. Any increase or decrease in the valuation allowance that results from a change in circumstances, and that causes us to change our judgment about the realizability of the related deferred tax asset, is included in the tax provision when such changes occur.
    

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Recently Issued or Adopted Accounting Standards
In 2014, the FASB issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which raises the threshold for disposals to qualify as discontinued operations. A discontinued operation is defined as: (1) a component of an entity or group of components that has been disposed of or classified as held for sale and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results; or (2) an acquired business that is classified as held for sale on the acquisition date. ASU 2014-08 also requires additional disclosures regarding discontinued operations, as well as material disposals that do not meet the definition of discontinued operations. The application of this guidance is prospective from the date of adoption and applies only to disposals (or new classifications to held for sale) that have not been reported as discontinued operations in our previously issued financial statements. We adopted ASU 2014-08 during the quarter ended March 31, 2014.
In 2014, the FASB also issued Accounting Standards Update 2014-09, Revenue From Contracts With Customers (“ASU 2014-09”), which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. ASU 2014-09 is effective for us beginning January 1, 2017. We are continuing to evaluate this guidance; however, we do not expect its adoption to have a significant impact on our consolidated financial statements, as a substantial portion of our revenue consists of rental income from leasing arrangements, which are specifically excluded from ASU 2014-09.
Results of Operations
As of December 31, 2014, we operated through three reportable business segments: triple-net leased properties; senior living operations and MOB operations. In our triple-net leased properties segment, we invest in seniors housing and healthcare properties throughout the United States and the United Kingdom and lease our properties to healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses. In our senior living operations segment, we invest in seniors housing communities throughout the United States and Canada and engage independent operators, such as Atria and Sunrise, to manage those communities. In our MOB operations segment, we primarily acquire, own, develop, lease, and manage MOBs. Information provided for “all other” includes income from loans and investments and other miscellaneous income and various corporate-level expenses not directly attributable to our three reportable business segments. Assets included in “all other” consist primarily of corporate assets, including cash, restricted cash, deferred financing costs, loans receivable and miscellaneous accounts receivable.

51


Years Ended December 31, 2014 and 2013
The table below shows our results of operations for the years ended December 31, 2014 and 2013 and the effect of changes in those results from period to period on our net income attributable to common stockholders.
 
For the Year Ended
December 31,
 
Increase (Decrease) to Net Income
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Segment NOI:
 
 
 
 
 
 
 
Triple-Net Leased Properties
$
974,942

 
$
881,745

 
$
93,197

 
10.6
 %
Senior Living Operations
516,395

 
449,321

 
67,074

 
14.9

MOB Operations
310,513

 
300,921

 
9,592

 
3.2

All Other
57,439

 
59,471

 
(2,032
)
 
(3.4
)
Total segment NOI
1,859,289

 
1,691,458

 
167,831

 
9.9

Interest and other income
4,267

 
2,047

 
2,220

 
> 100

Interest expense
(376,842
)
 
(334,909
)
 
(41,933
)
 
(12.5
)
Depreciation and amortization
(826,911
)
 
(722,075
)
 
(104,836
)
 
(14.5
)
General, administrative and professional fees
(121,746
)
 
(115,106
)
 
(6,640
)
 
(5.8
)
Loss on extinguishment of debt, net
(5,564
)
 
(1,201
)
 
(4,363
)
 
( > 100 )

Merger-related expenses and deal costs
(45,051
)
 
(21,634
)
 
(23,417
)
 
( > 100 )

Other
(38,925
)
 
(18,732
)
 
(20,193
)
 
( > 100 )

Income before loss from unconsolidated entities, income taxes, discontinued operations, real estate dispositions and noncontrolling interest
448,517

 
479,848

 
(31,331
)
 
(6.5
)
Loss from unconsolidated entities
(139
)
 
(508
)
 
369

 
72.6

Income tax benefit
8,732

 
11,828

 
(3,096
)
 
(26.2
)
Income from continuing operations
457,110

 
491,168

 
(34,058
)
 
(6.9
)
Discontinued operations
2,106

 
(36,279
)
 
38,385

 
> 100

Gain on real estate dispositions
17,970

 

 
17,970

 
nm

Net income
477,186

 
454,889

 
22,297

 
4.9

Net income attributable to noncontrolling interest
1,419

 
1,380

 
(39
)
 
(2.8
)
Net income attributable to common stockholders
$
475,767

 
$
453,509

 
22,258

 
4.9

    
nm—not meaningful 
Segment NOI—Triple-Net Leased Properties
NOI for our triple-net leased properties reportable business segment equals the rental income and other services revenue earned from our triple-net assets. We incur no direct operating expenses for this segment.
The following table summarizes results of continuing operations in our triple-net leased properties reportable business segment:
 
For the Year Ended
December 31,
 
Increase (Decrease) to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Segment NOI—Triple-Net Leased Properties:
 
 
 
 
 
 
 
Rental income
$
970,377

 
$
877,276

 
$
93,101

 
10.6
%
Other services revenue
4,565

 
4,469

 
96

 
2.1

Segment NOI
$
974,942

 
$
881,745

 
93,197

 
10.6


52


Triple-net leased properties segment NOI increased in 2014 over the prior year primarily due to rent from the properties we acquired during 2014 and 2013, contractual escalations in rent pursuant to the terms of our leases, and increases in base and other rent under certain of our leases.
In our triple-net leased properties segment, our revenues generally consist of fixed rental amounts (subject to annual contractual escalations) received from our tenants in accordance with the applicable lease terms and do not vary based on the underlying operating performance of the properties. Therefore, while occupancy rates may affect the profitability of our tenants’ operations, they do not have a direct impact on our revenues or financial results. The following table sets forth average continuing occupancy rates related to the triple-net leased properties we owned at December 31, 2014 for the trailing 12 months ended September 30, 2014 (which is the most recent information available to us from our tenants) and average continuing occupancy rates related to the triple-net leased properties we owned at December 31, 2013 for the trailing 12 months ended September 30, 2013.
 
Number of Properties at December 31, 2014 (1)
 
Average Occupancy
for the Trailing 12 Months
Ended September 30,
2014 (1)
 
 
Number of Properties at December 31, 2013 (1)
 
Average Occupancy
for the Trailing 12 Months
Ended September 30,
2013 (1)
Seniors Housing Communities
439

 
88.3
%
 
 
412

 
87.1
%
Skilled Nursing Facilities
242

 
80.1

 
 
242

 
80.8

Hospitals
46

 
56.4

 
 
46

 
56.6

    
(1)
Excludes properties included in discontinued operations during 2014 and properties classified as held for sale as of December 31, 2014, non-stabilized properties, properties owned through investments in unconsolidated entities and certain properties for which we do not receive occupancy information. Also excludes properties acquired during the years ended December 31, 2014 and 2013, respectively, and properties that transitioned operators for which we do not have eight full quarters of results subsequent to the transition.
The following table compares results of continuing operations for our 829 same-store triple-net leased properties. Throughout this discussion, “same-store” refers to properties that we owned for the full period in both comparison periods.
 
For the Year Ended
December 31,
 
Increase (Decrease) to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Same-Store Segment NOI—Triple-Net Leased Properties:
 
 
 
 
 
 
 
Rental income
$
876,846

 
$
846,552

 
$
30,294

 
3.6
%
Other services revenue
4,565

 
4,469

 
96

 
2.1

Segment NOI
$
881,411

 
$
851,021

 
30,390

 
3.6

Segment NOI—Senior Living Operations
The following table summarizes results of continuing operations in our senior living operations reportable business segment:
 
For the Year Ended
December 31,
 
Increase (Decrease) to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Segment NOI—Senior Living Operations:
 
 
 
 
 
 
 
Total revenues
$
1,552,951

 
$
1,406,005

 
$
146,946

 
10.5
 %
Less:
 
 
 
 
 
 
 
Property-level operating expenses
(1,036,556
)
 
(956,684
)
 
(79,872
)
 
(8.3
)
Segment NOI
$
516,395

 
$
449,321

 
67,074

 
14.9

Revenues attributed to our senior living operations segment consist of resident fees and services, which include all amounts earned from residents at our seniors housing communities, such as rental fees related to resident leases, extended

53


health care fees and other ancillary service income. Our senior living operations segment revenues increased in 2014 over the prior year primarily due to the Holiday Canada Acquisition and other seniors housing communities we acquired during 2014 and 2013.
Property-level operating expenses related to our senior living operations segment include labor, food, utilities, marketing, management and other costs of operating the properties. Property-level operating expenses also increased year over year primarily due to the acquired properties described above.
The following table compares results of continuing operations for our 220 same-store senior living operating communities.
 
For the Year Ended
December 31,
 
Increase (Decrease) to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Same-Store Segment NOI—Senior Living Operations:
 
 
 
 
 
 
 
Total revenues
$
1,391,869

 
$
1,363,696

 
$
28,173

 
2.1
 %
Less:
 
 
 
 
 
 
 
Property-level operating expenses
(942,169
)
 
(929,968
)
 
(12,201
)
 
(1.3
)
Segment NOI
$
449,700

 
$
433,728

 
15,972

 
3.7

The following table sets forth average unit occupancy rates and the average monthly revenue per occupied room related to continuing operations in our senior living operations segment for the years ended December 31, 2014 and 2013:
 
Number of
Properties at
December 31,
 
Average Unit
Occupancy
for the Year
Ended
December 31,
 
Average Monthly Revenue Per Occupied Room for the Year
Ended
December 31,
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Total seniors housing communities
270

 
237

 
91.1
%
 
91.1
%
 
$
5,407

 
$
5,470

Same-store seniors housing communities
220

 
220

 
91.1

 
91.2

 
5,653

 
5,533

Segment NOI—MOB Operations
The following table summarizes results of continuing operations in our MOB operations reportable business segment:
 
For the Year Ended
December 31,
 
Increase (Decrease) to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Segment NOI—MOB Operations:
 
 
 
 
 
 
 
Rental income
$
463,618

 
$
450,107

 
$
13,511

 
3.0
 %
Medical office building services revenue
22,529

 
12,077

 
10,452

 
86.5

Total revenues
486,147

 
462,184

 
23,963

 
5.2

Less:
 
 
 
 
 
 
 
Property-level operating expenses
(158,542
)
 
(152,948
)
 
(5,594
)
 
(3.7
)
Medical office building services costs
(17,092
)
 
(8,315
)
 
(8,777
)
 
(105.6
)
Segment NOI
$
310,513

 
$
300,921

 
9,592

 
3.2

The increase in our MOB operations segment rental income in 2014 over the prior year is attributed primarily to the MOBs we acquired during 2014 and 2013 and slightly higher base rents. The increase in our MOB property-level operating expenses is due primarily to those acquired MOBs and increases in utilities, snow removal, payroll and insurance expenses, partially offset by decreases in operating costs resulting from expense controls.

54


Medical office building services revenue and costs both increased in 2014 over the prior year primarily due to increased construction activity during 2014 compared to 2013.
The following table compares results of continuing operations for our 295 same-store MOBs.
 
For the Year Ended
December 31,
 
Increase (Decrease) to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Same-Store Segment NOI—MOB Operations:
 
 
 
 
 
 
 
Rental income
$
440,463

 
$
435,494

 
$
4,969

 
1.1
 %
Less:
 
 
 
 
 
 
 
Property-level operating expenses
(150,282
)
 
(147,693
)
 
(2,589
)
 
(1.8
)
Segment NOI
$
290,181

 
$
287,801

 
2,380

 
0.8

The following table sets forth occupancy rates and the annualized average rent per occupied square foot related to continuing operations in our MOB operations segment at and for the years ended December 31, 2014 and 2013:
 
Number of
Properties at
December 31,
 
Occupancy at
December 31,
 
Annualized Average Rent Per Occupied Square Foot for the Year Ended Ended December 31,
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Total MOBs
309

 
307

 
90.1
%
 
90.2
%
 
$31
 
$29
Same-store MOBs
295

 
295

 
90.1

 
90.1

 
30
 
29
Segment NOI—All Other
All other NOI consists solely of income from loans and investments. Income from loans and investments decreased in 2014 over the prior year due primarily to final repayments and sales of portions of certain loans receivable throughout 2013.
Interest Expense
The $38.2 million increase in total interest expense, including interest allocated to discontinued operations of $1.7 million and $5.5 million for the years ended December 31, 2014 and 2013, respectively, is attributed primarily to $50.9 million of additional interest due to higher debt balances, partially offset by a $15.6 million reduction in interest due to lower effective interest rates, including the amortization of any fair value adjustments. Our effective interest rate was 3.7% for 2014, compared to 3.8% for 2013.
Depreciation and Amortization
Depreciation and amortization expense increased $104.8 million in 2014 primarily due to real estate acquisitions we made in 2013 and 2014.
General, Administrative and Professional Fees
General, administrative and professional fees increased $6.6 million in 2014 primarily due to our continued organizational growth.
Loss on Extinguishment of Debt, Net
The loss on extinguishment of debt, net in 2014 resulted primarily from various debt repayments. The loss on extinguishment of debt, net in 2013 resulted primarily from the write-off of unamortized deferred financing fees as a result of replacing our previous $2.0 billion unsecured revolving credit facility with a new $3.0 billion unsecured credit facility and the repayment of certain mortgage debt.
Merger-Related Expenses and Deal Costs
Merger-related expenses and deal costs in both years consist of transition, integration, deal and severance-related expenses primarily related to pending and consummated transactions required by GAAP to be expensed rather than capitalized into the asset value. The $23.4 million increase in merger-related expenses and deal costs in 2014 over the prior year is primarily due to increased 2014 investment activity.

55


Other
Other primarily includes building rent expense paid to lease certain of our senior living operating communities, as well as certain unreimbursable expenses related to our triple-net leased portfolio. For the year ended December 31, 2014, other also includes expenses related to the re-audit and re-review of our historical financial statements.
Income Tax Benefit
Income tax benefit for 2014 was due primarily to the income tax benefit of ordinary losses and restructuring related to certain taxable REIT subsidiaries (“TRS” or “TRS entities”). Income tax benefit for 2013 was due primarily to the release of valuation allowances against certain deferred tax assets of one of our TRS entities.
Discontinued Operations
Discontinued operations for 2014 reflects activity related to 17 properties, 12 of which were sold during 2014, resulting in a net gain of $1.2 million, and five of which were classified as held for sale as of December 31, 2014. Discontinued operations for 2013 reflects activity related to 39 properties, 22 of which were sold during 2013, resulting in a net gain of $3.6 million.
Gain on Real Estate Dispositions
The gain on real estate dispositions in 2014 resulted primarily from the sale of ten properties that are not classified as discontinued operations in accordance with ASU 2014-08, resulting in a net gain of $18.0 million. Gains on real estate dispositions in 2013 are classified in discontinued operations.
Net Income/Loss Attributable to Noncontrolling Interest
Net income attributable to noncontrolling interest for 2014 represents our partners’ joint venture interests in 51 properties. Net loss attributable to noncontrolling interest for 2013 represents our partners’ joint venture interests in 58 properties.

56


Years Ended December 31, 2013 and 2012
The table below shows our results of operations for the years ended December 31, 2013 and 2012 and the effect of changes in those results from period to period on our net income attributable to common stockholders.
 
For the Year Ended
December 31,
 
Increase (Decrease) to Net Income
 
2013
 
2012
 
$
 
%
 
(Dollars in thousands)
Segment NOI:
 
 
 
 
 
 
 
Triple-Net Leased Properties
$
881,745

 
$
824,320

 
$
57,425

 
7.0
 %
Senior Living Operations
449,321

 
386,102

 
63,219

 
16.4

MOB Operations
300,921

 
241,869

 
59,052

 
24.4

All Other
59,471

 
39,913

 
19,558

 
49.0

Total segment NOI
1,691,458

 
1,492,204

 
199,254

 
13.4

Interest and other income
2,047

 
1,106

 
941

 
85.1

Interest expense
(334,909
)
 
(288,717
)
 
(46,192
)
 
(16.0
)
Depreciation and amortization
(722,075
)
 
(714,967
)
 
(7,108
)
 
(1.0
)
General, administrative and professional fees
(115,106
)
 
(98,510
)
 
(16,596
)
 
(16.8
)
Loss on extinguishment of debt, net
(1,201
)
 
(37,640
)
 
36,439

 
96.8

Merger-related expenses and deal costs
(21,634
)
 
(63,183
)
 
41,549

 
65.8

Other
(18,732
)
 
(6,940
)
 
(11,792
)
 
( > 100 )

Income before (loss) income from unconsolidated entities, income taxes, discontinued operations and noncontrolling interest
479,848

 
283,353

 
196,495

 
69.3

(Loss) income from unconsolidated entities
(508
)
 
18,154

 
(18,662
)
 
( > 100 )

Income tax benefit
11,828

 
6,282

 
5,546

 
88.3

Income from continuing operations
491,168

 
307,789

 
183,379

 
59.6

Discontinued operations
(36,279
)
 
53,986

 
(90,265
)
 
( > 100 )

Net income
454,889

 
361,775

 
93,114

 
25.7

Net income (loss) attributable to noncontrolling interest, net of tax
1,380

 
(1,025
)
 
(2,405
)
 
( > 100 )

Net income attributable to common stockholders
$
453,509

 
$
362,800

 
95,519

 
26.3

Segment NOI—Triple-Net Leased Properties
The following table summarizes results of continuing operations in our triple-net leased properties reportable business segment:
 
For the Year Ended
December 31,
 
Increase (Decrease) to Segment NOI
 
2013
 
2012
 
$
 
%
 
(Dollars in thousands)
Segment NOI—Triple-Net Leased Properties:
 
 
 
 
 
 
 
Rental income
$
877,276

 
$
819,882

 
$
57,394

 
7.0
%
Other services revenue
4,469

 
4,438

 
31

 
0.7

Segment NOI
$
881,745

 
$
824,320

 
57,425

 
7.0

Triple-net leased properties segment NOI increased in 2013 over the prior year primarily due to contractual rent escalations pursuant to the terms of our leases, increases in base and other rent under certain of our existing triple-net leases and rent from the properties we acquired during 2013 and 2012.

57


The following table compares results of continuing operations for our 807 same-store triple-net leased properties.
 
For the Year Ended
December 31,
 
Increase (Decrease) to Segment NOI
 
2013
 
2012
 
$
 
%
 
(Dollars in thousands)
Same-Store Segment NOI—Triple-Net Leased Properties:
 
 
 
 
 
 
 
Rental income
$
823,380

 
$
806,267

 
$
17,113

 
2.1
%
Other services revenue
4,469

 
4,438

 
31

 
0.7

Segment NOI
$
827,849

 
$
810,705

 
17,144

 
2.1

Segment NOI—Senior Living Operations
The following table summarizes results of continuing operations in our senior living operations reportable business segment:
 
For the Year Ended
December 31,
 
Increase (Decrease) to Segment NOI
 
2013
 
2012
 
$
 
%
 
(Dollars in thousands)
Segment NOI—Senior Living Operations:
 
 
 
 
 
 
 
Total revenues
$
1,406,005

 
$
1,227,124

 
$
178,881

 
14.6
 %
Less:
 
 
 
 
 
 
 
Property-level operating expenses
(956,684
)
 
(841,022
)
 
(115,662
)
 
(13.8
)
Segment NOI
$
449,321

 
$
386,102

 
63,219

 
16.4

Our senior living operations segment revenues increased in 2013 over the prior year primarily due to the seniors housing communities we acquired during 2013 and 2012, including 16 seniors housing communities managed by Sunrise that we acquired in May 2012 (the “Sunrise-Managed 16 Communities”) and 25 seniors housing communities whose operations we transitioned to Atria at the time of closing, and higher average unit occupancy rates and higher average monthly revenue per occupied room in our communities.
Property-level operating expenses increased in 2013 over the prior year primarily due to the acquired properties described above, increases in salaries, taxes and insurance costs and higher management fees as a result of increased revenues.
The following table compares results of continuing operations for our 195 same-store senior living operating communities.
 
For the Year Ended
December 31,
 
Increase (Decrease) to Segment NOI
 
2013
 
2012
 
$
 
%
 
(Dollars in thousands)
Same-Store Segment NOI—Senior Living Operations:
 
 
 
 
 
 
 
Total revenues
$
1,215,185

 
$
1,158,422

 
$
56,763

 
4.9
 %
Less:
 
 
 
 
 
 
 
Property-level operating expenses
(830,076
)
 
(793,828
)
 
(36,248
)
 
(4.6
)
Segment NOI
$
385,109

 
$
364,594

 
20,515

 
5.6

Same-store senior living operations NOI increased in 2013 over the prior year primarily due to higher average unit occupancy rates and higher average monthly revenue per occupied room, partially offset by increases in salaries, taxes and insurance costs and higher management fees as a result of increased revenues.

58


The following table sets forth average unit occupancy rates and the average monthly revenue per occupied room related to continuing operations in our senior living operations segment for the years ended December 31, 2013 and 2012:
 
Number of
Properties at
December 31,
 
Average Unit
Occupancy for
the Year
Ended
December 31,
 
Average
Monthly Revenue Per Occupied Room for
the Year
Ended
December 31,
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Total seniors housing communities
237

 
220

 
91.1
%
 
89.8
%
 
$5,470
 
$5,349
Same-store seniors housing communities
195

 
195

 
91.3

 
90.0

 
5,557
 
5,356
Segment NOI—MOB Operations
The following table summarizes results of continuing operations in our MOB operations reportable business segment:
 
For the Year Ended
December 31,
 
Increase (Decrease) to Segment NOI
 
2013
 
2012
 
$
 
%
 
(Dollars in thousands)
Segment NOI—MOB Operations:
 
 
 
 
 
 
 
Rental income
$
450,107

 
$
360,849

 
$
89,258

 
24.7
 %
Medical office building services revenue
12,077

 
16,303

 
(4,226
)
 
(25.9
)
Total revenues
462,184

 
377,152

 
85,032

 
22.5

Less:
 
 
 
 
 
 
 
Property-level operating expenses
(152,948
)
 
(125,400
)
 
(27,548
)
 
(22.0
)
Medical office building services costs
(8,315
)
 
(9,883
)
 
1,568

 
15.9

Segment NOI
$
300,921

 
$
241,869

 
59,052

 
24.4

The increases in our MOB operations segment revenues and property-level operating expenses in 2013 over the prior year are primarily due to our acquisition of Cogdell Spencer Inc. (“Cogdell”) in April 2012, the August 2012 and March 2013 acquisitions of the controlling interests in 38 MOBs that we had previously accounted for as investments in unconsolidated entities and other MOBs we acquired during 2013 and 2012.
Medical office building services revenue and costs both decreased year over year primarily due to a reduction in construction activity during 2013 compared to 2012 and our acquisitions of the controlling interests in 38 MOBs that we had previously accounted for as investments in unconsolidated entities, which reduced our management fee revenue.
The following table compares results of continuing operations for our 184 same-store MOBs.
 
For the Year Ended
December 31,
 
Increase (Decrease)
to Segment NOI
 
2013
 
2012
 
$
 
%
 
(Dollars in thousands)
Same-Store Segment NOI—MOB Operations:
 
 
 
 
 
 
 
Rental income
$
257,085

 
$
256,684

 
$
401

 
0.2
%
Less:
 
 
 
 
 
 
 
Property-level operating expenses
(85,219
)
 
(86,890
)
 
1,671

 
1.9

Segment NOI
$
171,866

 
$
169,794

 
2,072

 
1.2

Same-store MOB operations NOI increased primarily due to lower expenses as a result of savings in contract cleaning, real estate taxes, repairs and maintenance, and management fees throughout 2013.

59


The following table sets forth occupancy rates and the annualized average rent per occupied square foot related to continuing operations in our MOB operations segment at and for the years ended December 31, 2013 and 2012:
 
Number of
Properties at
December 31,
 
Occupancy at
December 31,
 
Annualized Average Rent Per Occupied Square Foot for the Year Ended December 31,
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Total MOBs
309

 
298

 
90.2
%
 
90.5
%
 
$29
 
$29
Same-store MOBs
184

 
184

 
88.8

 
89.6

 
30
 
30
Segment NOI—All Other
All other NOI consists solely of income from loans and investments. Income from loans and investments increased in 2013 over the prior year due primarily to $446.0 million aggregate amount of secured loans and other investments we made in December 2012 and thereafter, which had a weighted average effective interest rate of 9.3% at issuance, partially offset by final repayments on and the sales of portions of certain loans receivable throughout 2013.
Interest Expense
The $38.4 million increase in total interest expense, including interest allocated to discontinued operations of $5.5 million and $13.3 million for the years ended December 31, 2013 and 2012, respectively, is attributed primarily to $55.3 million of additional interest due to higher debt balances, partially offset by a $14.8 million reduction in interest due to lower effective interest rates, including the amortization of any fair value adjustments. Our effective interest rate, excluding activity related to our capital leases in 2012, was 3.8% for 2013, as compared to 4.0% for 2012.
General, Administrative and Professional Fees
General, administrative and professional fees increased in 2013 primarily due to our continued organizational growth, as a result of the Cogdell acquisition and subsequent thereto.
Loss on Extinguishment of Debt, Net
The loss on extinguishment of debt, net in 2013 resulted primarily from the write-off of unamortized deferred financing fees as a result of replacing our previous $2.0 billion unsecured revolving credit facility with a new $3.0 billion unsecured credit facility and the repayment of certain mortgage debt. The loss on extinguishment of debt, net in 2012 resulted primarily from our redemption in March 2012 of all $200.0 million principal amount outstanding of our 6½% senior notes due 2016 and our redemption in May 2012 of all $225.0 million principal amount then outstanding of our 6¾% senior notes due 2017, partially offset by gains recognized on the repayment of certain mortgage debt.
Merger-Related Expenses and Deal Costs
Merger-related expenses and deal costs in both years consist of transition and integration expenses related to consummated transactions and deal costs required by GAAP to be expensed rather than capitalized into the asset value. The $41.5 million decrease in merger-related expenses and deal costs in 2013 over the prior year reflects lower transition and integration costs attributable to a decline in investment activity in 2013 compared to 2012.
Other
Other consists primarily of building rent expense paid to lease certain of our senior living operating communities. Certain of these leasing arrangements were acquired in late December 2012.
Loss/Income from Unconsolidated Entities
Loss/income from unconsolidated entities in 2013 and 2012 relates to our interests in joint ventures that we account for under the equity method of accounting. Income from unconsolidated entities for the year ended December 31, 2012 is attributed primarily to a gain of $16.6 million as a result of the re-measurement of equity interest upon our acquisition of the controlling interests (ranging from 80% to 95%) in 36 MOBs that we previously accounted for as investments in unconsolidated entities. Since the acquisition date, operations relating to these properties have been consolidated in our Consolidated Statements of Income. As of December 31, 2013, we had ownership interests ranging between 5% and 25% in joint ventures with respect to 18 MOBs, 20 seniors housing communities and 14 skilled nursing facilities, and we had a 34% ownership interest in Atria, which we acquired in late December 2012.

60


Income Tax Benefit
Income tax benefit for 2013 was due primarily to the release of valuation allowances against certain deferred tax assets of one of our TRS entities. Income tax benefit for 2012 was due primarily to the income tax benefit of ordinary losses related to our TRS entities, partially offset by a valuation allowance recorded against certain deferred tax assets of one of our other TRS entities.
Discontinued Operations
Discontinued operations for 2013 reflects activity related to 39 properties, 22 of which were sold during 2013, resulting in a net gain of $3.6 million. Discontinued operations for 2012 reflects activity related to 82 properties, 43 of which were sold during 2012, resulting in a net gain of $81.0 million.
Net Income/Loss Attributable to Noncontrolling Interest
Net income attributable to noncontrolling interest for 2013 represents our partners’ joint venture interests in 58 properties. Net loss attributable to noncontrolling interest for 2012 represents our partners’ joint venture interests in 57 properties.
Non-GAAP Financial Measures
We believe that net income, as defined by GAAP, is the most appropriate earnings measurement. However, we consider certain non-GAAP financial measures to be useful supplemental measures of our operating performance. A non-GAAP financial measure is a measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are not so excluded from or included in the most directly comparable measure calculated and presented in accordance with GAAP. Described below are the non-GAAP financial measures used by management to evaluate our operating performance and that we consider most useful to investors, together with reconciliations of these measures to the most directly comparable GAAP measures.
The non-GAAP financial measures we present in this Annual Report on Form 10-K may not be comparable to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. You should not consider these measures as alternatives to net income (determined in accordance with GAAP) as indicators of our financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of our liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. In order to facilitate a clear understanding of our consolidated historical operating results, you should examine these measures in conjunction with net income as presented in our Consolidated Financial Statements and other financial data included elsewhere in this Annual Report on Form 10-K.
Funds From Operations and Normalized Funds From Operations
Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. However, since real estate values historically have risen or fallen with market conditions, many industry investors deem presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For that reason, we consider Funds From Operations (“FFO”) and normalized FFO to be appropriate measures of operating performance of an equity REIT. In particular, we believe that normalized FFO is useful because it allows investors, analysts and our management to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by unanticipated items and other events such as transactions and litigation. In some cases, we provide information about identified non-cash components of FFO and normalized FFO because it allows investors, analysts and our management to assess the impact of those items on our financial results.
We use the National Association of Real Estate Investment Trusts (“NAREIT”) definition of FFO. NAREIT defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of real estate property, including gain on re-measurement of equity method investments, and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. We define normalized FFO as FFO excluding the following income and expense items (which may be recurring in nature): (a) merger-related costs and expenses, including amortization of intangibles, transition and integration expenses, and deal costs and expenses, including expenses and recoveries relating to our acquisition lawsuits; (b) the impact of any expenses related to asset impairment and valuation allowances, 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 our debt; (c) the non-cash effect of income tax benefits or expenses and derivative transactions that have non-cash mark-to-market impacts on our Consolidated Statements of Income; (d) the impact of future acquisitions, divestitures (including pursuant to tenant options to purchase) and

61


capital transactions; (e) the financial impact of contingent consideration, severance-related costs, charitable donations made to the Ventas Charitable Foundation, gains and losses for non-operational foreign currency hedge agreements and changes in the fair value of financial instruments; and (f) expenses related to the re-audit and re-review in 2014 of our historical financial statements and related matters.
The following table summarizes our FFO and normalized FFO for each of the five years ended December 31, 2014. Our normalized FFO for the year ended December 31, 2014 increased over the prior year due primarily to our 2014 and 2013 investments, net of capital costs, and same-store growth across our portfolio of properties, partially offset by higher general and administrative expenses and loan repayments since January 1, 2013.
 
For the Year Ended December 31,
 
2014
 
2013
 
2012
 
2011
 
2010
 
(In thousands)
Net income attributable to common stockholders
$
475,767

 
$
453,509

 
$
362,800

 
$
364,493

 
$
246,167

Adjustments:
 
 
 
 
 
 
 
 
 
Real estate depreciation and amortization
820,344

 
716,412

 
710,544

 
442,046

 
197,650

Real estate depreciation related to noncontrolling interest
(10,314
)
 
(10,512
)
 
(8,503
)
 
(3,471
)
 
(6,217
)
Real estate depreciation related to unconsolidated entities
5,792

 
6,543

 
7,516

 
6,552

 
2,367

Gain on re-measurement of equity interest upon acquisition, net

 
(1,241
)
 
(16,645
)
 

 

Gain on real estate dispositions
(17,970
)
 

 

 

 

Discontinued operations:
 
 
 
 
 
 
 
 
 
Gain on real estate dispositions
(1,494
)
 
(4,059
)
 
(80,952
)
 

 
(25,241
)
Depreciation on real estate assets
1,555

 
47,806

 
49,807

 
15,231

 
6,780

FFO
1,273,680

 
1,208,458

 
1,024,567

 
824,851

 
421,506

Adjustments:
 
 
 
 
 
 
 
 
 
Litigation proceeds, net

 

 

 
(202,259
)
 

Change in fair value of financial instruments
5,121

 
449

 
99

 
2,959

 

Income tax (benefit) expense
(9,431
)
 
(11,828
)
 
(6,286
)
 
(31,137
)
 
2,930

Loss on extinguishment of debt, net
5,013

 
1,048

 
37,640

 
27,604

 
9,791

Merger-related expenses, deal costs and re-audit costs
54,389

 
21,560

 
63,183

 
153,923

 
19,243

Amortization of other intangibles
1,246

 
1,022

 
1,022

 
1,022

 
511

Normalized FFO
$
1,330,018

 
$
1,220,709

 
$
1,120,225

 
$
776,963

 
$
453,981

    

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Adjusted EBITDA
We consider Adjusted EBITDA an important supplemental measure to net income because it provides another manner in which to evaluate our operating performance and serves as another indicator of our ability to service debt. We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization (including non-cash stock-based compensation expense), excluding gains or losses on extinguishment of debt, merger-related expenses and deal costs, expenses related to the re-audit and re-review of our historical financial statements, net gains on real estate activity and changes in the fair value of financial instruments (including amounts in discontinued operations). The following table sets forth a reconciliation of our Adjusted EBITDA to net income (including amounts in discontinued operations) for the years ended December 31, 2014, 2013 and 2012:
 
For the Year Ended December 31,
 
2014
 
2013
 
2012
 
(In thousands)
Net income
$
477,186

 
$
454,889

 
$
361,775

Adjustments:
 
 
 
 
 
Interest
378,556

 
340,381

 
302,031

Loss on extinguishment of debt, net
5,564

 
1,048

 
37,640

Taxes (including amounts in general, administrative and professional fees)
(4,770
)
 
(7,166
)
 
(2,627
)
Depreciation and amortization
828,466

 
769,881

 
764,774

Non-cash stock-based compensation expense
20,994

 
20,653

 
20,784

Merger-related expenses, deal costs and re-audit costs
53,847

 
21,634

 
63,183

Gain on real estate dispositions
(19,183
)
 
(3,617
)
 
(80,952
)
Changes in fair value of financial instruments
5,121

 
449

 
99

Gain on re-measurement of equity interest upon acquisition, net

 
(1,241
)
 
(16,645
)
Adjusted EBITDA
$
1,745,781

 
$
1,596,911

 
$
1,450,062

    

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NOI
We also consider NOI an important supplemental measure to net income because it enables investors, analysts and our management to assess our unlevered property-level operating results and to compare our operating results with the operating results of other real estate companies and between periods on a consistent basis. We define NOI as total revenues, less interest and other income, property-level operating expenses and medical office building services costs (including amounts in discontinued operations). Cash receipts may differ due to straight-line recognition of certain rental income and the application of other GAAP policies. The following table sets forth a reconciliation of our NOI to net income (including amounts in discontinued operations) for the years ended December 31, 2014, 2013 and 2012:
 
For the Year Ended December 31,
 
2014
 
2013
 
2012
 
(In thousands)
Net income
$
477,186

 
$
454,889

 
$
361,775

Adjustments:
 
 
 
 
 
Interest and other income
(5,017
)
 
(2,047
)
 
(6,158
)
Interest
378,556

 
340,381

 
302,031

Depreciation and amortization
828,466

 
769,881

 
764,774

General, administrative and professional fees
121,746

 
115,109

 
98,813

Loss on extinguishment of debt, net
5,564

 
1,048

 
37,640

Merger-related expenses and deal costs
45,051

 
21,634

 
63,183

Other
39,337

 
18,325

 
8,842

Loss (income) from unconsolidated entities
139

 
508

 
(18,154
)
Income tax benefit
(8,732
)
 
(11,828
)
 
(6,286
)
Gain on real estate dispositions
(19,183
)
 
(3,617
)
 
(80,952
)
NOI
1,863,113

 
1,704,283

 
1,525,508

Discontinued operations
(3,824
)
 
(12,825
)
 
(33,304
)
NOI (excluding amounts in discontinued operations)
$
1,859,289

 
$
1,691,458

 
$
1,492,204

Asset/Liability Management
Asset/liability management, a key element of enterprise risk management, is designed to support the achievement of our business strategy, while ensuring that we maintain appropriate and tolerable levels of market risk (primarily interest rate risk and foreign currency exchange risk) and credit risk. Effective management of these risks is a contributing factor to the absolute levels and variability of our FFO and net worth. The following discussion addresses our integrated management of assets and liabilities, including the use of derivative financial instruments.
Market Risk
Market risk related to changes in interest rates, such as LIBOR or prime rates, has a direct impact on borrowings under our unsecured revolving credit facility and our unsecured term loans, certain of our mortgage loans that are floating rate obligations, mortgage loans receivable that bear interest at floating rates and marketable debt securities. To mitigate these risks, we continuously monitor our level of floating rate debt with respect to total debt and other factors, including our expectations regarding current and future economic conditions.

64


The table below sets forth certain information with respect to our debt, excluding premiums, discounts and capital lease obligations.
 
As of December 31,
 
2014
 
2013
 
2012
 
(Dollars in thousands)
Balance:
 
 
 
 
 
Fixed rate:
 
 
 
 
 
Senior notes and other
$
6,677,875

 
$
5,418,543

 
$
4,079,643

Mortgage loans and other (1)
1,810,716

 
2,155,155

 
2,442,652

Variable rate:
 
 
 
 
 
Unsecured revolving credit facilities
919,099

 
376,343

 
540,727

Unsecured term loans
990,634

 
1,000,702

 
685,336

Mortgage loans and other
474,047

 
369,734

 
437,957

Total
$
10,872,371

 
$
9,320,477

 
$
8,186,315

Percent of total debt:
 
 
 
 
 
Fixed rate:
 
 
 
 
 
Senior notes and other
61.4
%
 
58.1
%
 
49.8
%
Mortgage loans and other (1)
16.6

 
23.1

 
29.8

Variable rate:
 
 
 
 
 
Unsecured revolving credit facilities
8.5

 
4.0

 
6.6

Unsecured term loans
9.1

 
10.7

 
8.4

Mortgage loans and other
4.4

 
4.1

 
5.4

Total
100.0
%
 
100.0
%
 
100.0
%
Weighted average interest rate at end of period:
 
 
 
 
 
Fixed rate:
 
 
 
 
 
Senior notes and other
3.5
%
 
3.7
%
 
4.0
%
Mortgage loans and other (1)
5.9

 
6.0

 
6.1

Variable rate:
 
 
 
 
 
Unsecured revolving credit facilities
1.4

 
1.2

 
1.5

Unsecured term loans
1.3

 
1.3

 
1.6

Mortgage loans and other
2.3

 
1.7

 
1.9

Total
3.5

 
3.8

 
4.1

    
(1)
Excludes mortgage debt of $43.5 million, $13.1 million and $23.2 million related to real estate assets classified as held for sale as of December 31, 2014, 2013 and 2012, respectively, which debt is included in accounts payable and other liabilities on our Consolidated Balance Sheets.
The variable rate debt in the table above reflects, in part, the effect of $153.6 million notional amount of interest rate swaps with a maturity of March 21, 2016 that effectively convert fixed rate debt to variable rate debt. In addition, the fixed rate debt in the table above reflects, in part, the effect of $59.0 million notional amount of interest rate swaps with maturities ranging from March 2, 2015 to April 1, 2019, in each case that effectively convert variable rate debt to fixed rate debt. The increase in our outstanding variable rate debt at December 31, 2014 compared to December 31, 2013 is attributable primarily to 2014 borrowings under our unsecured revolving credit facility. Pursuant to the terms of certain leases with one of our tenants, if interest rates increase on certain variable rate debt that we have totaling $80.0 million as of December 31, 2014, our tenant is required to pay us additional rent (on a dollar-for-dollar basis) in an amount equal to the increase in interest expense resulting from the increased interest rates. Therefore, the increase in interest expense related to this debt is equally offset by an increase in additional rent due to us from the tenant. Assuming no change in our variable rate debt outstanding as of December 31, 2014, if the weighted average interest rate related to our variable rate debt were to increase 100 basis points, interest expense for 2015 would increase by approximately $23.8 million, or $0.08 per diluted common share.

65


As of December 31, 2014 and 2013, our joint venture and operating partners’ aggregate share of total debt was $141.4 million and $174.5 million, respectively, with respect to certain properties we owned through consolidated joint ventures and an operating partnership. Total debt does not include our portion of debt related to investments in unconsolidated entities, which was $97.5 million and $89.3 million as of December 31, 2014 and 2013, respectively.
The fair value of our fixed and variable rate debt is based on current interest rates at which we could obtain similar borrowings. For fixed rate debt, interest rate fluctuations generally affect fair value, but not our earnings or cash flows. Therefore, interest rate risk does not significantly impact our fixed rate debt obligations 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 increased borrowing costs. Conversely, lower interest rates at the time of refinancing may reduce our overall borrowing costs.
To highlight the sensitivity of our fixed rate debt to changes in interest rates, the following summary shows the effects of a hypothetical instantaneous change of 100 basis points (“BPS”) in interest rates as of December 31, 2014 and 2013:
 
As of December 31,
 
2014
 
2013
 
(In thousands)
Gross book value
$
8,488,591

 
$
7,573,698

Fair value (1)
8,817,982

 
7,690,196

Fair value reflecting change in interest rates (1):
 
 
 
-100 BPS
9,256,492

 
8,069,013

+100 BPS
8,406,735

 
7,320,251

    
(1)
The change in fair value of our fixed rate debt from December 31, 2013 to December 31, 2014 was due primarily to 2014 senior note issuances, partially offset by mortgage loan repayments.
As of December 31, 2014 and 2013, the fair value of our secured and unsecured loans receivable, based on our estimates of currently prevailing rates for comparable loans, was $798.0 million and $395.7 million, respectively. See “Note 6—Loans Receivable and Investments” and “Note 11—Fair Values of Financial Instruments” of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
As a result of our Canadian and United Kingdom operations, we are subject to fluctuations in certain foreign currency exchange rates that may, from time to time, affect our financial condition and operating performance. Based solely on our results for the year ended December 31, 2014 (on a pro forma basis after giving effect to the Holiday Canada Acquisition, our 2014 Canadian senior note issuances, our U.K. hospital acquisition, and including the impact of existing hedging arrangements ), if the value of the U.S. dollar relative to the British pound and Canadian dollar were to increase or decrease by 10% compared to the average exchange rate during that year, our 2014 normalized FFO per share would have decreased or increased, as applicable, by less than $0.02 and $0.02 per share, respectively. We will continue to mitigate these risks through a layered approach to hedging looking out for the next year and continual assessment of our foreign operational capital structure. Nevertheless, we cannot assure you that any such fluctuations will not have an effect on our earnings.




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Concentration and Credit Risk
We use concentration ratios to identify, understand and evaluate the potential impact of economic downturns and other adverse events that may affect our asset types, geographic locations, business models, and tenants, operators and managers. We evaluate concentration risk in terms of investment mix and operations mix. Investment mix measures the percentage of our investments that is concentrated in a specific asset type or that is operated or managed by a particular tenant, operator or manager. Operations mix measures the percentage of our operating results that is attributed to a particular tenant, operator or manager, geographic location or business model. The following tables reflect our concentration risk as of the dates and for the periods presented:
 
As of
December 31,
 
2014
 
2013
Investment mix by asset type (1):
 
 
 
Seniors housing communities
65.5
%
 
64.2
%
MOBs
15.8

 
18.2

Skilled nursing and other facilities
13.1

 
13.6

Hospitals
2.1

 
2.3

Secured loans receivable and investments, net
3.5

 
1.7

Investment mix by tenant, operator and manager (1):
 
 
 
Atria
23.6
%
 
19.9
%
Sunrise
12.3

 
13.9

Brookdale Senior Living
10.2

 
9.7

Kindred
2.0

 
3.2

All other
51.9

 
53.3

    
(1)
Ratios are based on the gross book value of real estate investments (excluding assets classified as held for sale) as of each reporting date.

67


 
For the Year Ended
December 31,
 
2014
 
2013
 
2012
Operations mix by tenant and operator and business model:
 
 
 
 
 
Revenues (1):
 
 
 
 
 
Senior living operations
50.6
%
 
50.2
%
 
49.8
%
Kindred
6.2

 
8.1

 
10.3

Brookdale Senior Living (2)
5.5

 
5.6

 
6.3

All others
37.7

 
36.1

 
33.6

Adjusted EBITDA (3):
 
 
 
 
 
Senior living operations
28.4
%
 
27.1
%
 
26.0
%
Kindred
10.1

 
13.3

 
16.1

Brookdale Senior Living (2)
9.2

 
9.4

 
10.9

All others
52.3

 
50.2

 
47.0

NOI (4):
 
 
 
 
 
Senior living operations
27.8
%
 
26.6
%
 
25.9
%
Kindred
10.2

 
13.4

 
17.1

Brookdale Senior Living (2)
9.2

 
9.2

 
10.5

All others
52.8

 
50.8

 
46.5

Operations mix by geographic location (5):
 
 
 
 
 
California
15.0
%
 
14.5
%
 
14.1
%
New York
9.6

 
10.0

 
10.0

Texas
6.9

 
6.8

 
6.0

Illinois
4.5

 
4.7

 
5.0

Florida
4.0

 
4.1

 
4.1

All others
60.0

 
59.9

 
60.8


(1)
Total revenues include medical office building and other services revenue, revenue from loans and investments and interest and other income (excluding amounts in discontinued operations).
(2)
Excludes one seniors housing community included in senior living operations.
(3)
Includes amounts in discontinued operations.
(4)
Excludes amounts in discontinued operations.
(5)
Ratios are based on total revenues (excluding amounts in discontinued operations) for each period presented.
See “Non-GAAP Financial Measures” included elsewhere in this Annual Report on Form 10-K for additional disclosure and reconciliations of Adjusted EBITDA and NOI to our net income as computed in accordance with GAAP.
We derive a significant portion of our revenues by leasing assets under long-term triple-net leases in which the rental rate is generally fixed with annual escalators, subject to certain limitations. Some of our triple-net lease escalators are contingent upon the satisfaction of specified facility revenue parameters or based on increases in the Consumer Price Index (“CPI”), with caps, floors or collars. We also earn revenues directly from individual residents in our seniors housing communities that are managed by independent operators, such as Atria and Sunrise, and tenants in our MOBs. For the year ended December 31, 2014, 44.0% of our Adjusted EBITDA (including amounts in discontinued operations) was derived from our senior living operations and MOB operations, for which rental rates may fluctuate more frequently upon lease rollovers and renewals due to shorter term leases and changing economic or market conditions.
The concentration of our triple-net leased properties segment revenues and operating income that are attributed to Brookdale Senior Living and Kindred creates credit risk. If either Brookdale Senior Living or Kindred becomes unable or unwilling to satisfy its obligations to us, our financial condition and results of operations could be weakened and our ability to service our indebtedness and to make distributions to our stockholders could be limited. We cannot assure you that Brookdale Senior Living and Kindred will have sufficient assets, income and access to financing to enable them to satisfy their respective

68


obligations to us, and any failure, inability or unwillingness by Brookdale Senior Living or Kindred to do so could have a Material Adverse Effect on us. In addition, any failure, inability or unwillingness by Brookdale Senior Living or Kindred to effectively conduct its operations or to maintain and improve our properties could adversely affect its business reputation and its ability to attract and retain patients and residents in our properties, which could have an indirect Material Adverse Effect on us. See “Risk Factors—Risks Arising from Our Business—Our leases with Brookdale Senior Living and Kindred account for a significant portion of our triple-net leased properties segment revenues and operating income; Any failure, inability or unwillingness by Brookdale Senior Living or Kindred to satisfy its obligations under our agreements could have a Material Adverse Effect on us” included in Part I, Item 1A of this Annual Report on Form 10-K and “Note 3Concentration of Credit Risk” of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
We regularly monitor and assess any changes in the relative credit risk of our significant tenants, and in particular those tenants that have recourse obligations under our triple-net leases. The ratios and metrics we use to evaluate a significant tenant’s liquidity and creditworthiness depend on facts and circumstances specific to that tenant and the industry or industries in which it operates, including without limitation the tenant’s credit history and economic conditions related to the tenant, its operations and the markets in which the tenant operates, that may vary over time. Among other things, we may (i) review and analyze information regarding the real estate, seniors housing and healthcare industries generally, publicly available information regarding the significant tenant, and information required to be provided by the tenant under the terms of its lease agreements with us, (ii) examine monthly and/or quarterly financial statements of the significant tenant to the extent publicly available or otherwise provided under the terms of our lease agreements, and (iii) participate in periodic discussions and in-person meetings with representatives of the significant tenant.  Using this information, we calculate multiple financial ratios (which may, but do not necessarily, include net debt to EBITDAR or EBITDARM, fixed charge coverage and tangible net worth), after making certain adjustments based on our judgment, and assess other metrics we deem relevant to an understanding of the significant tenant’s credit risk.
Because Atria and Sunrise manage our properties in exchange for the receipt of a management fee from us, we are not directly exposed to the credit risk of our managers in the same manner or to the same extent as our triple-net tenants. However, we rely on our managers’ personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage our senior living operations efficiently and effectively. We also rely on our managers to set appropriate resident fees and to otherwise operate our seniors housing communities in compliance with the terms of our management agreements and all applicable laws and regulations. Although we have various rights as the property owner under our management agreements, including various rights to terminate and exercise remedies under the agreements as provided therein, Atria’s or Sunrise’s failure, inability or unwillingness to satisfy its respective obligations under those agreements, to efficiently and effectively manage our properties or to provide timely and accurate accounting information with respect thereto could have a Material Adverse Effect on us. In addition, significant changes in Atria’s or Sunrise’s senior management or equity ownership or any adverse developments in their businesses and affairs or financial condition could have a Material Adverse Effect on us. See “Risk Factors—Risks Arising from Our Business—The properties managed by Atria and Sunrise account for a significant portion of our revenues and operating income; Adverse developments in Atria’s or Sunrise’s business and affairs or financial condition could have a Material Adverse Effect on us” and “—We have rights to terminate our management agreements with Atria and Sunrise in whole or with respect to specific properties under certain circumstances, and we may be unable to replace Atria or Sunrise if our management agreements are terminated or not renewed” included in Part I, Item 1A of this Annual Report on Form 10-K.
In December 2012, we acquired a 34% ownership interest in Atria, which entitles us to certain rights and minority protections as well as the right to appoint two of five members on the Atria board of directors.
Triple-Net Lease Expirations
As our triple-net leases expire, we face the risk that our tenants may elect not to renew those leases and, in the event of non-renewal, we may be unable to reposition the applicable properties on a timely basis or on the same or better economic terms, if at all. Although the non-renewal of some or all of our triple-net leases could have a Material Adverse Effect on us, during the year ended December 31, 2014, none of our triple-net lease renewals or expirations without renewal had a material impact on our financial condition or results of operations for that period. See “Risk Factors—Risks Arising from Our Business—If we must replace any of our tenants or operators, we might be unable to reposition the properties on as favorable terms, or at all, and we could be subject to delays, limitations and expenses, which could have a Material Adverse Effect on us” included in Part I, Item IA of this Annual Report on Form 10-K.

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The following table summarizes our triple-net lease expirations currently scheduled to occur over the next ten years (excluding leases related to assets classified as held for sale as of December 31, 2014):
 
Number of
Properties
 
2014 Annual
Rental Income
 
% of 2014 Total
Triple-Net Leased Properties Segment Rental
Income
 
(Dollars in thousands)
2015
14

 
$
8,016

 
0.8
%
2016
13

 
8,023

 
0.8

2017
28

 
20,425

 
2.1

2018
37

 
59,088

 
6.1

2019
87

 
129,617

 
13.4

2020
140

 
123,390

 
12.7

2021
82

 
72,704

 
7.5

2022
51

 
58,893

 
6.1

2023
64

 
78,203

 
8.1

2024
45

 
27,880

 
2.9

As of December 31, 2014, we had re-leased to Kindred, transitioned to new operators or sold 107 of the 108 licensed healthcare assets whose lease terms with Kindred were scheduled to expire on September 30, 2014, and we expect to sell the remaining asset during 2015; however, this transaction remains subject to customary due diligence conditions, and we cannot assure you that we will be able to successfully complete the sale on a timely basis or at all.
Liquidity and Capital Resources
As of December 31, 2014, we had a total of $55.3 million of unrestricted cash and cash equivalents, operating cash and cash related to our senior living operations and MOB operations reportable business segments that is deposited and held in property-level accounts. Funds maintained in the property-level accounts are used primarily for the payment of property-level expenses, debt service payments and certain capital expenditures. As of December 31, 2014, we also had escrow deposits and restricted cash of $71.8 million and $1.1 billion of unused borrowing capacity available under our unsecured revolving credit facility.
During 2014, our principal sources of liquidity were cash flows from operations, borrowings under our unsecured revolving credit facility and CAD unsecured term loan, proceeds from the issuance of debt and equity securities, proceeds from asset sales and cash on hand.
For the next 12 months, our principal liquidity needs are to: (i) fund operating expenses; (ii) meet our debt service requirements; (iii) repay maturing mortgage and other debt, including $634.4 million of senior notes; (iv) fund capital expenditures; (v) fund acquisitions, investments and commitments, including development and redevelopment activities; and (vi) make distributions to our stockholders and unitholders, as required for us to continue to qualify as a REIT. In addition, we may elect to prepay outstanding indebtedness prior to maturity based on our analysis of various factors. We expect that these liquidity needs generally will be satisfied by a combination of the following: cash flows from operations, cash on hand, debt assumptions and financings (including secured financings), issuances of debt and equity securities, dispositions of assets (in whole or in part through joint venture arrangements with third parties) and borrowings under our unsecured revolving credit facility. However, an inability to access liquidity through multiple capital sources concurrently could have a Material Adverse Effect on us. See “Risk Factors—Risks Arising from Our Capital Structure—Limitations on our ability to access capital could have an adverse effect on our ability to make required payments on our debt obligations, make distributions to our stockholders or make future investments necessary to implement our business strategy” included in Part I, Item 1A of this Annual Report on Form 10-K.
In January 2015, we funded the HCT Acquisition through the issuance of approximately 28.4 million shares of our common stock and 1.1 million limited partnership units that are redeemable for shares of our common stock, the payment of approximately $11 million in cash (excluding cash in lieu of fractional shares) and the assumption or repayment of debt, net of HCT cash in hand.  
    

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Unsecured Credit Facility and Unsecured Term Loans
Our unsecured credit facility is comprised of a $2.0 billion revolving credit facility priced at LIBOR plus 1.0% as of December 31, 2014, and a $200.0 million four-year term loan and an $800.0 million five-year term loan, each priced at LIBOR plus 1.05% as of December 31, 2014. The revolving credit facility matures in January 2018, but may be extended, at our option subject to the satisfaction of certain conditions, for an additional period of one year. The $200.0 million and $800.0 million term loans mature in January 2018 and January 2019, respectively. The unsecured credit facility also includes an accordion feature that permits us to increase our aggregate borrowing capacity thereunder to up to $3.5 billion.
As of December 31, 2014, we had $919.1 million of borrowings outstanding, $13.3 million of letters of credit outstanding and $1.1 billion of unused borrowing capacity available under our unsecured revolving credit facility.
In July 2014, we entered into a new CAD 791.0 million unsecured term loan to initially fund the Holiday Canada Acquisition. The term loan was scheduled to mature on July 30, 2015, but in September 2014, we repaid CAD 660.0 million of borrowings principally with proceeds from the sale of unsecured senior notes issued by our wholly owned subsidiary, Ventas Canada Finance Limited, and in December 2014, we repaid in full all remaining amounts outstanding under the term loan.
The agreement governing our unsecured credit facility requires us to comply with various financial and other restrictive covenants. See “Note 10—Borrowing Arrangements” of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. We were in compliance with all of these covenants at December 31, 2014.
Senior Notes
As of December 31, 2014, we had $5.8 billion aggregate principal amount of senior notes issued by our subsidiary, Ventas Realty, Limited Partnership (“Ventas Realty”), and guaranteed by Ventas, Inc. outstanding as follows:
$400.0 million principal amount of 3.125% senior notes due 2015;
$550.0 million principal amount of 1.55% senior notes due 2016;
$300.0 million principal amount of 1.250% senior notes due 2017;
$700.0 million principal amount of 2.00% senior notes due 2018;
$600.0 million principal amount of 4.00% senior notes due 2019;
$500.0 million principal amount of 2.700% senior notes due 2020;
$700.0 million principal amount of 4.750% senior notes due 2021;
$600.0 million principal amount of 4.25% senior notes due 2022;
$500.0 million principal amount of 3.25% senior notes due 2022;
$400.0 million principal amount of 3.750% senior notes due 2024;
$258.8 million principal amount of 5.45% senior notes due 2043; and
$300.0 million principal amount of 5.70% senior notes due 2043.
With the exception of the senior notes due 2016, the senior notes due 2017, the senior notes due 2024, and the 5.70% senior notes due 2043, all of these senior notes were co-issued with Ventas Realty’s wholly owned subsidiary, Ventas Capital Corporation.
As of December 31, 2014, we had $309.8 million aggregate principal amount of senior notes of our subsidiary, Nationwide Health Properties, LLC (“NHP LLC”), as successor to NHP, outstanding as follows:
$234.4 million principal amount of 6% senior notes due 2015;
$52.4 million principal amount of 6.90% senior notes due 2037 (subject to earlier repayment at the option of the holder); and
$23.0 million principal amount of 6.59% senior notes due 2038 (subject to earlier repayment at the option of the holder).

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In addition, as of December 31, 2014, we had $559.3 million aggregate principal amount of senior notes of our wholly owned subsidiary, Ventas Canada Finance Limited, and guaranteed by Ventas, Inc. outstanding as follows:
$344.2 million (CAD 400.0 million) principal amount of 3.00% senior notes, series A due 2019; and
$215.1 million (CAD 250.0 million) principal amount of 4.125% senior notes, series B due 2024.
In January 2015, we issued and sold $600.0 million aggregate principal amount of 3.500% senior notes due 2025 at a public offering price equal to 99.663% of par, for total proceeds of $598.0 million before the underwriting discount and expenses, and $300.0 million aggregate principal amount of 4.375% senior notes due 2045 at a public offering price equal to 99.500% of par, for total proceeds of $298.5 million before the underwriting discount and expenses. The notes are guaranteed by Ventas, Inc.
Also in January 2015, our wholly owned subsidiary, Ventas Canada Finance Limited, issued and sold CAD 250.0 million aggregate principal amount of 3.30% senior notes, series C due 2022 at an offering price equal to 99.992% of par, for total proceeds of CAD 250.0 million before the agent fees and expenses. The notes are guaranteed by Ventas, Inc. and were offered on a private placement basis in Canada.
2014 Activity
In April 2014, we issued and sold $300.0 million aggregate principal amount of 1.250% senior notes due 2017 at a public offering price equal to 99.815% of par, for total proceeds of $299.4 million before the underwriting discount and expenses, and $400.0 million aggregate principal amount of 3.750% senior notes due 2024 at a public offering price equal to 99.304% of par, for total proceeds of $397.2 million before the underwriting discount and expenses.
In September 2014, our wholly owned subsidiary, Ventas Canada Finance Limited, issued and sold CAD 400.0 million aggregate principal amount of 3.00% senior notes, series A due 2019 at an offering price equal to 99.713% of par, for total proceeds of CAD 398.9 million before the agent fees and expenses, and CAD 250.0 million aggregate principal amount of 4.125% senior notes, series B due 2024 at an offering price equal to 99.601% of par, for total proceeds of CAD 249.0 million before the agent fees and expenses. The notes were offered on a private placement basis in Canada. We used the proceeds from the issuance to repay a portion of the CAD 791.0 million unsecured term loan.
2013 Activity
In February 2013, we repaid in full, at par, $270.0 million principal amount then outstanding of our 6.25% senior notes due 2013 upon maturity.
In March 2013, we issued and sold: $258.8 million aggregate principal amount of 5.45% senior notes due 2043 at a public offering price equal to par, for total proceeds of $258.8 million before the underwriting discounts and expenses; and $500.0 million aggregate principal amount of 2.700% senior notes due 2020 at a public offering price equal to 99.942% of par, for total proceeds of $499.7 million before the underwriting discount and expenses.
In September 2013, we issued and sold: $550.0 million aggregate principal amount of 1.55% senior notes due 2016 at a public offering price equal to 99.910% of par, for total proceeds of $549.5 million before the underwriting discount and expenses; and $300.0 million aggregate principal amount of 5.70% senior notes due 2043 at a public offering price equal to 99.628% of par, for total proceeds of $298.9 million before the underwriting discount and expenses.
2012 Activity
In February 2012, we issued and sold $600.0 million aggregate principal amount of 4.25% senior notes due 2022 at a public offering price equal to 99.214% of par, for total proceeds of $595.3 million before the underwriting discount and expenses.
In April 2012, we issued and sold $600.0 million aggregate principal amount of 4.00% senior notes due 2019 at a public offering price equal to 99.489% of par, for total proceeds of $596.9 million before the underwriting discount and expenses.
In August 2012, we initially issued and sold $275.0 million aggregate principal amount of 3.25% senior notes due 2022 (“2022 notes”) at a public offering price equal to 99.027% of par, for total proceeds of $272.3 million before the underwriting discount and expenses. In December 2012, we issued and sold an additional $225.0 million principal amount of 2022 notes at a public offering price equal to 98.509% of par, for total proceeds of $221.6 million before the underwriting discount and expenses.

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Also in December 2012, we issued and sold $700.0 million aggregate principal amount of 2.00% senior notes due 2018 at a public offering price equal to 99.739% of par, for total proceeds of $698.2 million before the underwriting discount and expenses.
During 2012, we repaid in full, at par, $155.4 million aggregate principal amount then outstanding of our 9% senior notes due 2012 and our 8.25% senior notes due 2012 upon maturity, and we redeemed: all $225.0 million principal amount then outstanding of our 6¾% senior notes due 2017 at a redemption price equal to 103.375% of par, plus accrued and unpaid interest to the redemption date; and all $200.0 million principal amount then outstanding of our 6½% senior notes due 2016 at a redemption price equal to 103.25% of par, plus accrued and unpaid interest to the redemption date, in each case pursuant to the terms of the applicable indenture governing the notes. As a result of these redemptions, we recognized a total loss on extinguishment of debt of $39.7 million.
We may, from time to time, seek to retire or purchase our outstanding senior notes for cash or in exchange for equity securities in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, prospects for future access to capital and other factors. The amounts involved may be material.
The indentures governing our outstanding senior notes require us to comply with various financial and other restrictive covenants. See “Note 10—Borrowing Arrangements” of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. We were in compliance with all of these covenants at December 31, 2014.
Mortgage Loan Obligations
As of December 31, 2014 and 2013, our consolidated aggregate principal amount of mortgage debt outstanding was $2.3 billion and $2.5 billion, respectively, of which our share was $2.2 billion and $2.4 billion, respectively.
During 2014, we assumed or originated mortgage debt of $246.8 million and repaid in full mortgage loans outstanding in the aggregate principal amount of $398.0 million. We recognized a net loss on extinguishment of debt of $2.3 million in connection with these repayments.
During 2013, we assumed or originated mortgage debt of $178.8 million in connection with our $1.8 billion of gross investments, and we repaid in full mortgage loans outstanding in the aggregate principal amount of $493.7 million. We recognized a net gain on extinguishment of debt of $0.5 million in connection with these repayments.
During 2012, we assumed $380.3 million of mortgage debt and repaid in full mortgage loans outstanding in the aggregate principal amount of $344.2 million. We recognized a gain on extinguishment of debt of $2.1 million in connection with these repayments.
See “Note 4Acquisitions of Real Estate Property” and “Note 10Borrowing Arrangements” of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Dividends
In order to continue to qualify as a REIT, we must make annual distributions to our stockholders of at least 90% of our REIT taxable income (excluding net capital gain). In 2014, our Board of Directors declared and we paid cash dividends on our common stock aggregating $2.965 per share, which exceeds 100% of our 2014 estimated taxable income after the use of any net operating loss carryforwards. We intend to pay dividends greater than 100% of our taxable income, after the use of any net operating loss carryforwards, for 2015. In connection with the HCT Acquisition, on January 5, 2015, our Board of Directors declared a prorated first quarter dividend on our common stock in the amount of $0.2107 per share, which was paid in cash on January 27, 2015 to stockholders of record on January 15, 2015. On February 13, 2015, our Board of Directors declared another prorated dividend on our common stock in the amount of $0.5793 per share, payable in cash on March 31, 2015 to stockholders of record on March 6, 2015. Together, these two prorated amounts equate to the first quarterly installment of our 2015 dividend of $0.79 per share.
We expect that our cash flows will exceed our REIT taxable income due to depreciation and other non-cash deductions in computing REIT taxable income and that we will be able to satisfy the 90% distribution requirement. However, from time to time, we may not have sufficient cash on hand or other liquid assets to meet this requirement or we may decide to retain cash or distribute such greater amount as may be necessary to avoid income and excise taxation. If we do not have sufficient cash on hand or other liquid assets to enable us to satisfy the 90% distribution requirement, or if we desire to retain cash, we may borrow funds, issue additional equity securities, pay taxable stock dividends, if possible, distribute other property or securities or engage in a transaction intended to enable us to meet the REIT distribution requirements or any combination of the

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foregoing. See “Certain U.S. Federal Income Tax Considerations—Requirements for Qualification as a REIT—Annual Distribution Requirements” included in Part I, Item 1 of this Annual Report on Form 10-K.
Capital Expenditures
The terms of our triple-net leases generally obligate our tenants to pay all capital expenditures necessary to maintain and improve our triple-net leased properties. However, from time to time, we may fund the capital expenditures for our triple-net leased properties through loans to the tenants or advances, which may increase the amount of rent payable with respect to the properties in certain cases. We expect to fund any capital expenditures for which we may become responsible upon expiration of our triple-net leases or in the event that our tenants are unable or unwilling to meet their obligations under those leases with cash flows from operations or through additional borrowings.
We also expect to fund capital expenditures related to our senior living operations and MOB operations reportable business segments with the cash flows from the properties or through additional borrowings. To the extent that unanticipated capital expenditure needs arise or significant borrowings are required, our liquidity may be affected adversely. Our ability to borrow additional funds may be restricted in certain circumstances by the terms of the instruments governing our outstanding indebtedness.
We are party to certain agreements that obligate us to develop seniors housing or healthcare properties funded through capital that we and, in certain circumstances, our joint venture partners provide. As of December 31, 2014, we had one new property under development pursuant to these agreements. Through December 31, 2014, we have funded $3.4 million of our estimated total commitment over the projected development period ($10.0 million to $11.0 million) toward these projects. In addition, from time to time, we engage in redevelopment projects with respect to our existing seniors housing communities to maximize the value, increase NOI, maintain a market-competitive position, achieve property stabilization or change the primary use of the property.
Equity Offerings and Related Events
In March 2013, we established an “at-the-market” (“ATM”) equity offering program through which we may sell from time to time up to an aggregate of $750 million of our common stock. During the year ended December 31, 2014, we issued and sold a total of 3,381,678 shares of common stock under the program for aggregate net proceeds of $242.3 million (all of which was received in the fourth quarter of 2014), after sales agent commissions of $3.7 million. As of December 31, 2014, approximately $360.4 million of our common stock remained available for sale under our ATM equity offering program. In January 2015, we issued and sold a total of 3,750,202 shares of common stock under the ATM program for aggregate net proceeds of $285.8 million, after sales agent commissions of $4.4 million.
During the year ended December 31, 2013, we issued and sold a total of 2,069,200 shares of common stock under the ATM program for aggregate net proceeds of $141.5 million, after sales agent commissions of $2.1 million.
In December 2012, through our acquisition of certain private equity funds, we acquired 3.7 million shares of our common stock that were held in treasury and subsequently canceled in February 2014. See “Note 4—Acquisitions of Real Estate Property.”
In June 2012, we completed the public offering and sale of 5,980,000 shares of our common stock for $342.5 million in aggregate proceeds.
In April 2012, we filed an automatic shelf registration statement on Form S-3 relating to the sale, from time to time, of an indeterminate amount of debt securities and related guarantees, common stock, preferred stock, depositary shares and warrants. This registration statement replaced our previous automatic shelf registration statement, which expired pursuant to the SEC’s rules.
Other
We received proceeds of $26.2 million and $6.1 million for the years ended December 31, 2014 and 2013, respectively, from the exercises of outstanding stock options. Future proceeds from the exercises of stock options will be affected primarily by the future trading price of our common stock and the number of options outstanding. The number of options outstanding increased to 2,460,628 as of December 31, 2014, from 2,258,763 as of December 31, 2013. The weighted average exercise price was $57.45 as of December 31, 2014.
We issued approximately 19,000 and 29,000 shares of common stock under our Distribution Reinvestment and Stock Purchase Plan (“DRIP”) for net proceeds of $1.2 million and $1.9 million for the years ended December 31, 2014 and 2013, respectively. The DRIP was suspended effective July 3, 2014. We may determine whether or not to reinstate the DRIP at any time, in our sole discretion.

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Cash Flows
The following table sets forth our sources and uses of cash flows for the years ended December 31, 2014 and 2013:
 
For the Year Ended
December 31,
 
Increase (Decrease)
to Cash
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Cash and cash equivalents at beginning of period
$
94,816

 
$
67,908

 
$
26,908

 
39.6
 %
Net cash provided by operating activities
1,254,845

 
1,194,755

 
60,090

 
5.0

Net cash used in investing activities
(2,055,040
)
 
(1,282,760
)
 
(772,280
)
 
(60.2
)
Net cash provided by financing activities
758,057

 
114,996

 
643,061

 
> 100

Effect of foreign currency translation on cash and cash equivalents
2,670

 
(83
)
 
2,753

 
> 100

Cash and cash equivalents at end of period
$
55,348

 
$
94,816

 
(39,468
)
 
(41.6
)
Cash Flows from Operating Activities
Cash flows from operating activities increased in 2014 over the prior year primarily due to our 2013 and 2014 investments, net of capital costs, and same-store growth across our portfolio of properties, partially offset by higher general and administrative expenses and merger-related expenses and deal costs, and expenses related to the re-audit and re-review in 2014 of our historical financial statements and related matters.
Cash Flows from Investing Activities
Cash used in investing activities during 2014 and 2013 consisted primarily of cash paid for our investments in real estate ($1.5 billion and $1.4 billion in 2014 and 2013, respectively), investments in loans receivable ($499.0 million and $38.0 million in 2014 and 2013, respectively), purchase of marketable securities ($96.7 million in 2014), capital expenditures ($87.5 million and $81.6 million in 2014 and 2013, respectively) and development project expenditures ($107.0 million and $95.7 million in 2014 and 2013, respectively). These uses were partially offset by proceeds from loans receivable ($73.6 million and $325.5 million in 2014 and 2013, respectively), proceeds from the sale or maturity of marketable debt securities ($21.7 million and $5.5 million in 2014 and 2013, respectively), and proceeds from real estate dispositions ($118.2 million and $35.6 million in 2014 and 2013, respectively).
Cash Flows from Financing Activities
Cash provided by financing activities during 2014 and 2013 consisted primarily of net borrowings under our unsecured revolving credit facility ($540.2 million in 2014), net proceeds from the issuance of debt ($2.0 billion and $2.8 billion in 2014 and 2013, respectively) and net proceeds from the issuance of common stock ($242.1 million and $141.3 million in 2014 and 2013, respectively). These cash inflows were partially offset by debt repayments ($1.2 billion and $1.8 billion in 2014 and 2013, respectively), cash distributions to common stockholders, unitholders and noncontrolling interest parties ($890.9 million and $816.4 million in 2014 and 2013, respectively), net payments made on our unsecured revolving credit facility ($164.0 million in 2013) and payments for deferred financing costs ($14.2 million and $31.3 million in 2014 and 2013, respectively).

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Contractual Obligations
The following table summarizes the effect that minimum debt (which includes principal and interest payments) and other material noncancelable commitments are expected to have on our cash flow in future periods as of December 31, 2014:
 
Total
 
Less than 1
year (4)
 
1 - 3 years (5)
 
3 - 5 years (6)
 
More than 5
years (7)
 
(In thousands)
Long-term debt obligations (1) (2) (3)
$
13,732,517

 
$
1,115,801

 
$
2,353,837

 
$
4,800,182

 
$
5,462,697

Operating obligations, including ground lease obligations
628,432

 
33,259

 
52,307

 
33,682

 
509,184

Total
$
14,360,949

 
$
1,149,060

 
$
2,406,144

 
$
4,833,864

 
$
5,971,881


(1)
Amounts represent contractual amounts due, including interest.
(2)
Interest on variable rate debt was based on forward rates obtained as of December 31, 2014.
(3)
Excludes $43.5 million of mortgage debt related to real estate assets classified as held for sale as of December 31, 2014 that is scheduled to mature between 2015 and 2018.
(4)
Includes $400.0 million outstanding principal amount of our 3.125% senior notes due 2015 and $234.4 million outstanding principal amount of our 6% senior notes due 2015.
(5)
Includes $550.0 million outstanding principal amount of our 1.55% senior notes due 2016 and $300.0 million outstanding principal amount of our 1.250% senior notes due 2017.
(6)
Includes $919.1 million of borrowings outstanding on our unsecured revolving credit facility, $700.0 million outstanding principal amount of our 2.00% senior notes due 2018, $200.0 million of borrowings under our unsecured term loan due 2018, $790.6 million of borrowings under our unsecured term loan due 2019, $600.0 million outstanding principal amount of our 4.00% senior notes due 2019 and $344.2 million outstanding principal amount of our 3.00% senior notes, series A due 2019.
(7)
Includes $3.5 billion aggregate principal amount outstanding of our senior notes maturing between 2020 and 2043. $52.4 million aggregate principal amount outstanding of our 6.90% senior notes due 2037 are subject to repurchase, at the option of the holders, on October 1 in each of 2017 and 2027, and $23.0 million aggregate principal amount outstanding of our 6.59% senior notes due 2038 are subject to repurchase, at the option of the holders, on July 7 in each of 2018, 2023 and 2028.
As of December 31, 2014, we had $25.4 million of unrecognized tax benefits that are excluded from the table above, as we are unable to make a reasonable reliable estimate of the period of cash settlement, if any, with the respective tax authority.
ITEM 7A.    Quantitative and Qualitative Disclosures About Market Risk
The information set forth in Item 7 of this Annual Report on Form 10-K under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Asset/Liability Management” is incorporated by reference into this Item 7A.


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ITEM 8.    Financial Statements and Supplementary Data
Ventas, Inc.
Index to Consolidated Financial Statements and Financial Statement Schedules


Consolidated Balance Sheets as of December 31, 2014 and 2013
Consolidated Statements of Income for the Years Ended December 31, 2014, 2013 and 2012
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2014, 2013 and 2012
Consolidated Statements of Equity for the Years Ended December 31, 2014, 2013 and 2012
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012
 
      Schedule II—Valuation and Qualifying Accounts
      Schedule IV—Mortgage Loans on Real Estate


77


MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of Ventas, Inc. (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s internal control over financial reporting based on the original framework (1992 framework) established in a report entitled Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management has determined that the Company’s internal control over financial reporting as of December 31, 2014 was effective.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2014 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report included herein.





78


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Stockholders and Board of Directors
Ventas, Inc.:
We have audited the accompanying consolidated balance sheets of Ventas, Inc. and subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2014. In connection with our audits of the consolidated financial statements, we also have audited the information in financial statement Schedules II, III and IV. These consolidated financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ventas, Inc. and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the financial statement Schedules II, III and IV when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
As discussed in Note 2 to the financial statements, the Company has changed its method of accounting for discontinued operations in 2014 due to the adoption of Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.
We have also audited, in accordance with the standards of the Public Company Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 13, 2015 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
/s/ KPMG LLP
February 13, 2015




79


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Stockholders and Board of Directors
Ventas, Inc.:
We have audited Ventas, Inc. and subsidiaries (the Company) internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on the Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Ventas Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of December 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2014, respectively, and our report dated February 13, 2015 expressed an unqualified opinion on those consolidated financial statements. Our report refers to a change in the method of accounting for discontinued operations.
/s/ KPMG LLP
Chicago, Illinois
February 13, 2015




80


VENTAS, INC.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2014 and 2013
(In thousands, except per share amounts)

 
2014
 
2013
 
(In thousands, except per
share amounts)
Assets
 
 
 
Real estate investments:
 
 
 
Land and improvements
$
1,956,128

 
$
1,855,968

Buildings and improvements
19,895,043

 
18,457,028

Construction in progress
120,123

 
80,415

Acquired lease intangibles
1,039,651

 
1,010,181

 
23,010,945

 
21,403,592

Accumulated depreciation and amortization
(4,025,386
)
 
(3,328,006
)
Net real estate property
18,985,559

 
18,075,586

Secured loans receivable and investments, net
829,756

 
376,229

Investments in unconsolidated entities
91,872

 
91,656

Net real estate investments
19,907,187

 
18,543,471

Cash and cash equivalents
55,348

 
94,816

Escrow deposits and restricted cash
71,771

 
84,657

Deferred financing costs, net
60,328

 
62,215

Other assets
1,131,537

 
946,335

Total assets
$
21,226,171

 
$
19,731,494

Liabilities and equity
 
 
 
Liabilities:
 
 
 
Senior notes payable and other debt
$
10,888,092

 
$
9,364,992

Accrued interest
62,097

 
54,349

Accounts payable and other liabilities
1,005,232

 
1,001,515

Deferred income taxes
344,337

 
250,167

Total liabilities
12,299,758

 
10,671,023

Redeemable OP unitholder and noncontrolling interests
172,016

 
156,660

Commitments and contingencies

 

Equity:
 
 
 
Ventas stockholders’ equity:
 
 
 
Preferred stock, $1.00 par value; 10,000 shares authorized, unissued

 

Common stock, $0.25 par value; 600,000 shares authorized, 298,478 and 297,901 shares issued at December 31, 2014 and 2013, respectively
74,656

 
74,488

Capital in excess of par value
10,119,306

 
10,078,592

Accumulated other comprehensive income
13,121

 
19,659

Retained earnings (deficit)
(1,526,388
)
 
(1,126,541
)
Treasury stock, 7 and 3,712 shares at December 31, 2014 and 2013, respectively
(511
)
 
(221,917
)
Total Ventas stockholders’ equity
8,680,184

 
8,824,281

Noncontrolling interest
74,213

 
79,530

Total equity
8,754,397

 
8,903,811

Total liabilities and equity
$
21,226,171

 
$
19,731,494

  See accompanying notes.

81


VENTAS, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 2014, 2013 and 2012
 
2014
 
2013
 
2012
 
(In thousands, except per share
amounts)
Revenues:
 
 
 
 
 
Rental income:
 
 
 
 
 
Triple-net leased
$
970,377

 
$
877,276

 
$
819,882

Medical office buildings
463,618

 
450,107

 
360,849

 
1,433,995

 
1,327,383

 
1,180,731

Resident fees and services
1,552,951

 
1,406,005

 
1,227,124

Medical office building and other services revenue
29,364

 
17,809

 
20,741

Income from loans and investments
55,169

 
58,208

 
39,913

Interest and other income
4,267

 
2,047

 
1,106

Total revenues
3,075,746

 
2,811,452

 
2,469,615

Expenses:
 
 
 
 
 
Interest
376,842

 
334,909

 
288,717

Depreciation and amortization
826,911

 
722,075

 
714,967

Property-level operating expenses:
 
 
 
 
 
Senior living
1,036,556

 
956,684

 
841,022

Medical office buildings
158,542

 
152,948

 
125,400

 
1,195,098

 
1,109,632

 
966,422

Medical office building services costs
17,092

 
8,315

 
9,883

General, administrative and professional fees
121,746

 
115,106

 
98,510

Loss on extinguishment of debt, net
5,564

 
1,201

 
37,640

Merger-related expenses and deal costs
45,051

 
21,634

 
63,183

Other
38,925

 
18,732

 
6,940

Total expenses
2,627,229

 
2,331,604

 
2,186,262

Income before (loss) income from unconsolidated entities, income taxes, discontinued operations, real estate dispositions and noncontrolling interest
448,517

 
479,848

 
283,353

(Loss) income from unconsolidated entities
(139
)
 
(508
)
 
18,154

Income tax benefit
8,732

 
11,828

 
6,282

Income from continuing operations
457,110

 
491,168

 
307,789

Discontinued operations
2,106

 
(36,279
)
 
53,986

Gain on real estate dispositions
17,970

 

 

Net income
477,186

 
454,889

 
361,775

Net income (loss) attributable to noncontrolling interest
1,419

 
1,380

 
(1,025
)
Net income attributable to common stockholders
$
475,767

 
$
453,509

 
$
362,800

Earnings per common share:
 
 
 
 
 
Basic:
 
 
 
 
 
Income from continuing operations attributable to common stockholders, including real estate dispositions
$
1.61

 
$
1.67

 
$
1.06

Discontinued operations
0.01

 
(0.12
)
 
0.18

Net income attributable to common stockholders
$
1.62

 
$
1.55

 
$
1.24

Diluted:
 
 
 
 
 
Income from continuing operations attributable to common stockholders, including real estate dispositions
$
1.59

 
$
1.66

 
$
1.05

Discontinued operations
0.01

 
(0.12
)
 
0.18

Net income attributable to common stockholders
$
1.60

 
$
1.54

 
$
1.23

Weighted average shares used in computing earnings per common share:
 
 
 
 
 
Basic
294,175

 
292,654

 
292,064

Diluted
296,677

 
295,110

 
294,488

  See accompanying notes.

82


VENTAS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31, 2014, 2013 and 2012
 
2014
 
2013
 
2012
 
(In thousands)
 
 
 
 
 
 
Net income
$
477,186

 
$
454,889

 
$
361,775

Other comprehensive (loss) income:
 
 
 
 
 
Foreign currency translation
(17,153
)
 
(5,422
)
 
2,375

Change in unrealized gain on marketable debt securities
7,001

 
(1,023
)
 
(1,296
)
Other
3,614

 
2,750

 
213

Total other comprehensive (loss) income
(6,538
)
 
(3,695
)
 
1,292

Comprehensive income
470,648

 
451,194

 
363,067

Comprehensive income (loss) attributable to noncontrolling interest
1,419

 
1,380

 
(1,025
)
Comprehensive income attributable to common stockholders
$
469,229

 
$
449,814

 
$
364,092

See accompanying notes.

83



VENTAS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
For the Years Ended December 31, 2014, 2013 and 2012
 
Common
Stock Par
Value
 
Capital in
Excess of
Par Value
 
Accumulated
Other
Comprehensive
Income
 
Retained
Earnings
(Deficit)
 
Treasury
Stock
 
Total Ventas
Stockholders’
Equity
 
Non- controlling
Interest
 
Total Equity
 
(In thousands, except per share amounts)
Balance at January 1, 2012
$
72,240

 
$
9,593,583

 
$
22,062

 
$
(412,181
)
 
$
(747
)
 
$
9,274,957

 
$
80,987

 
$
9,355,944

Net income (loss)

 

 

 
362,800

 

 
362,800

 
(1,025
)
 
361,775

Other comprehensive loss

 

 
1,292

 

 

 
1,292

 

 
1,292

Acquisition-related activity

 
(8,571
)
 

 

 
(221,076
)
 
(229,647
)
 
(9,429
)
 
(239,076
)
Net change in noncontrolling interest

 

 

 

 

 

 
(5,194
)
 
(5,194
)
Dividends to common stockholders—$2.48 per share

 

 

 
(728,546
)
 

 
(728,546
)
 

 
(728,546
)
Issuance of common stock
1,495

 
340,974

 

 

 

 
342,469

 

 
342,469

Issuance of common stock for stock plans
128

 
22,126

 

 

 
2,841

 
25,095

 

 
25,095

Change in redeemable noncontrolling interest

 
(17,317
)
 

 

 

 
(17,317
)
 
4,896

 
(12,421
)
Adjust redeemable OP unitholder interests to current fair value

 
(19,819
)
 

 

 

 
(19,819
)
 

 
(19,819
)
Purchase of OP units
3

 
(1,651
)
 

 

 
324

 
(1,324
)
 

 
(1,324
)
Grant of restricted stock, net of forfeitures
38

 
11,637

 

 

 
(2,507
)
 
9,168

 

 
9,168

Balance at December 31, 2012
73,904

 
9,920,962

 
23,354

 
(777,927
)
 
(221,165
)
 
9,019,128

 
70,235

 
9,089,363

Net income (loss)

 

 

 
453,509

 

 
453,509

 
1,380

 
454,889

Other comprehensive income

 

 
(3,695
)
 

 

 
(3,695
)
 

 
(3,695
)
Acquisition-related activity

 
(762
)
 

 

 

 
(762
)
 
12,717

 
11,955

Net change in noncontrolling interest

 

 

 

 

 

 
(8,202
)
 
(8,202
)
Dividends to common stockholders—$2.735 per share

 

 

 
(802,123
)
 

 
(802,123
)
 

 
(802,123
)
Issuance of common stock
517

 
140,826

 

 

 

 
141,343

 

 
141,343

Issuance of common stock for stock plans
19

 
5,983

 

 

 
6,638

 
12,640

 

 
12,640

Change in redeemable noncontrolling interest

 
(13,751
)
 

 

 

 
(13,751
)
 
3,400

 
(10,351
)
Adjust redeemable OP unitholder interests to current fair value

 
8,683

 

 

 

 
8,683

 

 
8,683

Purchase of OP units

 
(579
)
 

 

 
502

 
(77
)
 

 
(77
)
Grant of restricted stock, net of forfeitures
48

 
17,230

 

 

 
(7,892
)
 
9,386

 

 
9,386

Balance at December 31, 2013
74,488

 
10,078,592

 
19,659

 
(1,126,541
)
 
(221,917
)
 
8,824,281

 
79,530

 
8,903,811

Net income

 

 

 
475,767

 

 
475,767

 
1,419

 
477,186

Other comprehensive loss

 

 
(6,538
)
 

 

 
(6,538
)
 

 
(6,538
)
Retirement of stock
(924
)
 
(220,152
)
 

 

 
221,076

 

 

 

Acquisition-related activity
37

 
10,141

 

 

 

 
10,178

 

 
10,178

Net change in noncontrolling interest

 
1,163

 

 

 

 
1,163

 
(8,662
)
 
(7,499
)
Dividends to common stockholders—$2.965 per share

 

 

 
(875,614
)
 

 
(875,614
)
 

 
(875,614
)
Issuance of common stock
845

 
241,262

 

 

 

 
242,107

 

 
242,107

Issuance of common stock for stock plans
173

 
29,266

 

 

 
3,858

 
33,297

 

 
33,297

Change in redeemable noncontrolling interest

 
(1,082
)
 

 

 

 
(1,082
)
 
1,926

 
844

Adjust redeemable OP unitholder interests to current fair value

 
(32,993
)
 

 

 

 
(32,993
)
 

 
(32,993
)
Purchase of OP units
1

 
(83
)
 

 

 

 
(82
)
 

 
(82
)
Grant of restricted stock, net of forfeitures
36

 
13,192

 

 

 
(3,528
)
 
9,700

 

 
9,700

Balance at December 31, 2014
$
74,656

 
$
10,119,306

 
$
13,121

 
$
(1,526,388
)
 
$
(511
)
 
$
8,680,184

 
$
74,213

 
$
8,754,397

   See accompanying notes.

84


VENTAS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2014, 2013 and 2012
 
2014
 
2013
 
2012
 
(In thousands)
Cash flows from operating activities:
 
 
 
 
 
Net income
$
477,186

 
$
454,889

 
$
361,775

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation and amortization (including amounts in discontinued operations)
828,467

 
769,881

 
764,775

Amortization of deferred revenue and lease intangibles, net
(18,871
)
 
(15,793
)
 
(17,118
)
Other non-cash amortization
(312
)
 
(16,745
)
 
(39,943
)
Stock-based compensation
20,994

 
20,653

 
20,784

Straight-lining of rental income, net
(38,687
)
 
(30,540
)
 
(24,042
)
Loss on extinguishment of debt, net
5,564

 
1,048

 
37,640

Gain on real estate dispositions (including amounts in discontinued operations)
(19,183
)
 
(3,617
)
 
(80,952
)
Gain on real estate loan investments
(1,455
)
 
(5,056
)
 
(5,230
)
Gain on sale of marketable securities

 
(856
)
 

Income tax benefit (including amounts in discontinued operations)
(9,431
)
 
(11,828
)
 
(6,286
)
Loss (income) from unconsolidated entities
139

 
1,748

 
(1,509
)
Gain on re-measurement of equity interest upon acquisition, net

 
(1,241
)
 
(16,645
)
Other
15,739

 
8,407

 
10,414

Changes in operating assets and liabilities:
 
 
 
 
 
Decrease (increase) in other assets
5,317

 
(690
)
 
3,756

Increase in accrued interest
7,958

 
6,806

 
9,969

(Decrease) increase in accounts payable and other liabilities
(18,580
)
 
17,689

 
(24,572
)
Net cash provided by operating activities
1,254,845

 
1,194,755

 
992,816

Cash flows from investing activities:
 
 
 
 
 
Net investment in real estate property
(1,468,286
)
 
(1,437,002
)
 
(1,453,065
)
Purchase of private investment funds

 

 
(276,419
)
Purchase of noncontrolling interest
(9,115
)
 
(14,331
)
 
(3,934
)
Investment in loans receivable and other
(498,992
)
 
(37,963
)
 
(452,558
)
Proceeds from real estate disposals
118,246

 
35,591

 
149,045

Proceeds from loans receivable
73,557

 
325,518

 
43,219

Purchase of marketable securities
(96,689
)
 

 

Proceeds from sale or maturity of marketable securities
21,689

 
5,493

 
37,500

Funds held in escrow for future development expenditures
4,590

 
19,458

 
(28,050
)
Development project expenditures
(106,988
)
 
(95,741
)
 
(114,002
)
Capital expenditures
(87,454
)
 
(81,614
)
 
(69,430
)
Other
(5,598
)
 
(2,169
)
 
(1,995
)
Net cash used in investing activities
(2,055,040
)
 
(1,282,760
)
 
(2,169,689
)
Cash flows from financing activities:
 
 
 
 
 
Net change in borrowings under credit facilities
540,203

 
(164,029
)
 
84,938

Proceeds from debt
2,007,707

 
2,767,546

 
2,710,405

Repayment of debt
(1,151,395
)
 
(1,792,492
)
 
(1,193,023
)
Payment of deferred financing costs
(14,220
)
 
(31,277
)
 
(23,770
)
Issuance of common stock, net
242,107

 
141,343

 
342,469

Cash distribution to common stockholders
(875,614
)
 
(802,123
)
 
(728,546
)
Cash distribution to redeemable OP unitholders
(5,762
)
 
(5,040
)
 
(4,446
)
Purchases of redeemable OP units
(503
)
 
(659
)
 
(4,601
)
Contributions from noncontrolling interest
491

 
2,395

 
38

Distributions to noncontrolling interest
(9,559
)
 
(9,286
)
 
(5,215
)
Other
24,602

 
8,618

 
20,665

Net cash provided by financing activities
758,057

 
114,996

 
1,198,914

Net (decrease) increase in cash and cash equivalents
(42,138
)
 
26,991

 
22,041

Effect of foreign currency translation on cash and cash equivalents
2,670

 
(83
)
 
60

Cash and cash equivalents at beginning of period
94,816

 
67,908

 
45,807

Cash and cash equivalents at end of period
$
55,348

 
$
94,816

 
$
67,908


85


VENTAS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
For the Years Ended December 31, 2014, 2013 and 2012
 
2014
 
2013
 
2012
 
(In thousands)
Supplemental disclosure of cash flow information:
 
 
 
 
 
Interest paid including swap payments and receipts
$
361,144

 
$
338,311

 
$
329,655

Supplemental schedule of non-cash activities:
 
 
 
 
 
Assets and liabilities assumed from acquisitions:
 
 
 
 
 
Real estate investments
$
370,741

 
$
223,955

 
$
582,694

Utilization of funds held for an Internal Revenue Code Section 1031 exchange

 

 
(134,003
)
Other assets acquired
15,280

 
6,635

 
77,730

Debt assumed
241,076

 
183,848

 
412,825

Other liabilities
24,039

 
29,868

 
70,391

Deferred income tax liability
110,728

 
5,181

 
4,299

Noncontrolling interests

 
11,693

 
34,580

Equity issued
10,178

 

 
4,326

Debt transferred on the sale of assets

 

 
14,535

See accompanying notes.

86

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1—Description of Business
Ventas, Inc. (together with its subsidiaries, unless otherwise indicated or except where the context otherwise requires, “we,” “us” or “our”), an S&P 500 company, is a real estate investment trust (“REIT”) with a highly diversified portfolio of seniors housing and healthcare properties located throughout the United States, Canada and the United Kingdom. As of December 31, 2014, we owned more than 1,500 properties (including properties classified as held for sale), consisting of seniors housing communities, medical office buildings (“MOBs”), skilled nursing and other facilities, and hospitals, and we had one property under development. Our company was originally founded in 1983 and is currently headquartered in Chicago, Illinois.
We primarily invest in seniors housing and healthcare properties through acquisitions and lease our properties to unaffiliated tenants or operate them through independent third-party managers. As of December 31, 2014, we leased a total of 922 properties (excluding MOBs and properties classified as held for sale) to various healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures, and we engaged independent operators, such as Atria Senior Living, Inc. (“Atria”) and Sunrise Senior Living, LLC (together with its subsidiaries, “Sunrise”), to manage 270 seniors housing communities for us pursuant to long-term management agreements. Our two largest tenants, Brookdale Senior Living Inc. (together with its subsidiaries, “Brookdale Senior Living”) and Kindred Healthcare, Inc. (together with its subsidiaries, “Kindred”) leased from us 160 properties (excluding six properties owned through investments in unconsolidated entities and one property managed by Brookdale Senior Living pursuant to a long-term management agreement) and 83 properties, respectively, as of December 31, 2014.
Through our Lillibridge Healthcare Services, Inc. (“Lillibridge”) subsidiary and our ownership interest in PMB Real Estate Services LLC (“PMBRES”), we also provide MOB management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. In addition, from time to time, we make secured and unsecured loans and other investments relating to seniors housing and healthcare operators or properties.
Note 2—Accounting Policies
Principles of Consolidation
The accompanying Consolidated Financial Statements include our accounts and the accounts of our wholly owned subsidiaries and the joint venture entities over which we exercise control. All intercompany transactions and balances have been eliminated in consolidation, and our net earnings are reduced by the portion of net earnings attributable to noncontrolling interests.
U.S. generally accepted accounting principles (“GAAP”) requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; and (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. We consolidate our investment in a VIE when we determine that we are its primary beneficiary. We may change our original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affects the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary.
We identify the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. We perform this analysis on an ongoing basis.
As it relates to investments in joint ventures, GAAP may preclude consolidation by the sole general partner in certain circumstances based on the type of rights held by the limited partner(s). We assess limited partners’ rights and their impact on the presumption of control of the limited partnership by the sole general partner when an investor becomes the sole general partner, and we reassess if there is a change to the terms or in the exercisability of the rights of the limited partners, the sole

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general partner increases or decreases its ownership of limited partnership interests, or there is an increase or decrease in the number of outstanding limited partnership interests. We also apply this guidance to managing member interests in limited liability companies.
Investments in Unconsolidated Entities
We report investments in unconsolidated entities over whose operating and financial policies we have the ability to exercise significant influence under the equity method of accounting. Under this method of accounting, our share of the investee’s earnings or losses is included in our Consolidated Statements of Income.
We base the initial carrying value of investments in unconsolidated entities on the fair value of the assets at the time we acquired the joint venture interest. We estimate fair values for our equity method investments based on discounted cash flow models that include all estimated cash inflows and outflows over a specified holding period and, where applicable, any estimated debt premiums or discounts. The capitalization rates, discount rates and credit spreads we use in these models are based upon assumptions that we believe to be within a reasonable range of current market rates for the respective investments.
We generally amortize any difference between our cost basis and the basis reflected at the joint venture level over the lives of the related assets and liabilities and include that amortization in our share of income or loss from unconsolidated entities. For earnings of equity method investments with pro rata distribution allocations, net income or loss is allocated between the partners in the joint venture based on their respective stated ownership percentages. In other instances, net income or loss is allocated between the partners in the joint venture based on the hypothetical liquidation at book value method (the “HLBV method”). Under the HLBV method, net income or loss is allocated between the partners based on the difference between each partner’s claim on the net assets of the joint venture at the end and beginning of the period, after taking into account contributions and distributions. Each partner’s share of the net assets of the joint venture is calculated as the amount that the partner would receive if the joint venture were to liquidate all of its assets at net book value and distribute the resulting cash to creditors and partners in accordance with their respective priorities. Under this method, in any given period, we could record more or less income than the joint venture has generated, than actual cash distributions received or than the amount we may receive in the event of an actual liquidation.
Redeemable OP Unitholder and Noncontrolling Interests
We own a majority interest in NHP/PMB L.P. (“NHP/PMB”), a limited partnership formed in 2008 to acquire properties from entities affiliated with Pacific Medical Buildings LLC. We consolidate NHP/PMB, as our wholly owned subsidiary is the general partner and exercises control of the partnership. As of December 31, 2014, third party investors owned 2,821,627 Class A limited partnership units in NHP/PMB (“OP Units”), which represented 29.6% of the total units then outstanding, and we owned 6,710,261 Class B limited partnership units in NHP/PMB, representing the remaining 70.4%. At any time following the first anniversary of the date of their issuance, the OP Units may be redeemed at the election of the holder for cash or, at our option, 0.7866 shares of our common stock per unit, subject to adjustment in certain circumstances. We are party by assumption to a registration rights agreement with the holders of the OP Units that requires us, subject to the terms and conditions and certain exceptions set forth therein, to file and maintain a registration statement relating to the issuance of shares of our common stock upon redemption of OP Units.
As redemption rights are outside of our control, the redeemable OP unitholder interests are classified outside of permanent equity on our Consolidated Balance Sheets. We reflect the redeemable OP unitholder interests at the greater of cost or fair value. As of December 31, 2014 and 2013, the fair value of the redeemable OP unitholder interests was $159.1 million and $111.6 million, respectively. We recognize changes in fair value through capital in excess of par value, net of cash distributions paid and purchases by us of any OP Units. Our diluted earnings per share (“EPS”) includes the effect of any potential shares outstanding from redemption of the OP Units.
Certain noncontrolling interests of other consolidated joint ventures were also classified as redeemable at December 31, 2014 and 2013. Accordingly, we record the carrying amount of these noncontrolling interests at the greater of their initial carrying amount (increased or decreased for the noncontrolling interest’s share of net income or loss and distributions) or the redemption value. Our joint venture partners have certain redemption rights with respect to their noncontrolling interests in these joint ventures that are outside of our control, and the redeemable noncontrolling interests are classified outside of permanent equity on our Consolidated Balance Sheets. We recognize changes in carrying value of redeemable noncontrolling interests through capital in excess of par value.
Noncontrolling Interests
Excluding the redeemable noncontrolling interests described above, we present the portion of any equity that we do not own in entities that we control (and thus consolidate) as noncontrolling interests and classify those interests as a component of

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consolidated equity, separate from total Ventas stockholders’ equity, on our Consolidated Balance Sheets. For consolidated joint ventures with pro rata distribution allocations, net income or loss is allocated between the joint venture partners based on their respective stated ownership percentages. In other instances, net income or loss is allocated between the joint venture partners based on the HLBV method. We account for purchases or sales of equity interests that do not result in a change of control as equity transactions, through capital in excess of par value. In addition, we include net income attributable to the noncontrolling interests in net income in our Consolidated Statements of Income.
Accounting Estimates
The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Business Combinations
We account for acquisitions using the acquisition method and allocate the cost of the businesses acquired among tangible and recognized intangible assets and liabilities based upon their estimated fair values as of the acquisition date. Recognized intangibles primarily include the value of in-place leases, acquired lease contracts, tenant and customer relationships, trade names/trademarks and goodwill. We do not amortize goodwill, which represents the excess of the purchase price paid over the fair value of the net assets of the acquired business and is included in other assets on our Consolidated Balance Sheets.
We estimate the fair value of buildings acquired on an as-if-vacant basis and depreciate the building value over the estimated remaining life of the building, generally not to exceed 35 years. We determine the allocated value of other fixed assets, such as site improvements and furniture, fixtures and equipment, based upon the replacement cost and depreciate such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. We determine the value of land either by considering the sales prices of similar properties in recent transactions or based on internal analyses of recently acquired and existing comparable properties within our portfolio. We generally determine the value of construction in progress based upon the replacement cost. However, for certain acquired properties that are part of a ground-up development, we determine fair value by using the same valuation approach as for all other properties and deducting the estimated cost to complete the development. During the remaining construction period, we capitalize interest expense until the development has reached substantial completion. Construction in progress, including capitalized interest, is not depreciated until the development has reached substantial completion.
The fair value of acquired lease-related intangibles, if any, reflects: (i) the estimated value of any above and/or below market leases, determined by discounting the difference between the estimated market rent and in-place lease rent; and (ii) the estimated value of in-place leases related to the cost to obtain tenants, including leasing commissions, and an estimated value of the absorption period to reflect the value of the rent and recovery costs foregone during a reasonable lease-up period as if the acquired space was vacant. We amortize any acquired lease-related intangibles to revenue or amortization expense over the remaining life of the associated lease plus any assumed bargain renewal periods. If a lease is terminated prior to its stated expiration or not renewed upon expiration, we recognize all unamortized amounts of lease-related intangibles associated with that lease in operations at that time.
We estimate the fair value of purchase option intangible assets and liabilities by discounting the difference between the applicable property’s acquisition date fair value and an estimate of its future option price. We do not amortize the resulting intangible asset or liability over the term of the lease, but rather adjust the recognized value of the asset or liability upon sale. Net real estate property for which we have recorded a tenant purchase option intangible liability (excluding properties classified as held for sale) was $354.1 million and $386.4 million at December 31, 2014 and 2013, respectively.
We estimate the fair value of tenant or other customer relationships acquired, if any, by considering the nature and extent of existing business relationships with the tenant or customer, growth prospects for developing new business with the tenant or customer, the tenant’s credit quality, expectations of lease renewals with the tenant, and the potential for significant, additional future leasing arrangements with the tenant, and we amortize that value over the expected life of the associated arrangements or leases, including the remaining terms of the related leases and any expected renewal periods. We estimate the fair value of trade names and trademarks using a royalty rate methodology and amortize that value over the estimated useful life of the trade name or trademark.
In connection with a business combination, we may assume rights and obligations under certain lease agreements pursuant to which we become the lessee of a given property. We assume the lease classification previously determined by the prior lessee absent a modification in the assumed lease agreement. We assess assumed operating leases, including ground leases, to determine whether the lease terms are favorable or unfavorable to us given current market conditions on the

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acquisition date. To the extent the lease terms are favorable or unfavorable to us relative to market conditions on the acquisition date, we recognize an intangible asset or liability at fair value and amortize that asset or liability to interest or rental expense in our Consolidated Statements of Income over the applicable lease term. We include all lease-related intangible assets and liabilities within acquired lease intangibles and accounts payable and other liabilities, respectively, on our Consolidated Balance Sheets.
We determine the fair value of loans receivable acquired in connection with a business combination by discounting the estimated future cash flows using current interest rates at which similar loans with the same terms and length to maturity would be made to borrowers with similar credit ratings. We do not establish a valuation allowance at the acquisition date because the estimated future cash flows already reflect our judgment regarding their uncertainty. We recognize the difference between the acquisition date fair value and the total expected cash flows as interest income using an effective interest method over the life of the applicable loan. Subsequent to the acquisition date, we evaluate changes regarding the uncertainty of future cash flows and the need for a valuation allowance, as appropriate.
We estimate the fair value of noncontrolling interests assumed consistent with the manner in which we value all of the underlying assets and liabilities.
We calculate the fair value of long-term debt by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which we approximate based on the rate at which we would expect to incur a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument.
Impairment of Long-Lived and Intangible Assets
We periodically evaluate our long-lived assets, primarily consisting of investments in real estate, for impairment indicators. If indicators of impairment are present, we evaluate the carrying value of the related real estate investments in relation to the future undiscounted cash flows of the underlying operations. In performing this evaluation, we consider market conditions and our current intentions with respect to holding or disposing of the asset. We adjust the net book value of leased properties and other long-lived assets to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. We recognize an impairment loss at the time we make any such determination.
If impairment indicators arise with respect to intangible assets with finite useful lives, we evaluate impairment by comparing the carrying amount of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset. If estimated future undiscounted net cash flows are less than the carrying amount of the asset, then we estimate the fair value of the asset and compare the estimated fair value to the intangible asset’s carrying value. We recognize any shortfall from carrying value as an impairment loss in the current period.
We evaluate our investments in unconsolidated entities for impairment at least annually, and whenever events or changes in circumstances indicate that the carrying value of our investment may exceed its fair value. If we determine that a decline in the fair value of our investment in an unconsolidated entity is other-than-temporary, and if such reduced fair value is below the carrying value, we record an impairment. The determination of the fair value of investments in unconsolidated entities involves significant judgment, and our estimates consider all available evidence, including, as appropriate, the present value of the expected future cash flows discounted at market rates, general economic conditions and trends and other relevant factors.
We test goodwill for impairment at least annually, and more frequently if indicators arise. We first assess qualitative factors, such as current macroeconomic conditions, state of the equity and capital markets and our overall financial and operating performance, to determine the likelihood that the fair value of a reporting unit is less than its carrying amount. If we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we proceed with the two-step approach to evaluating impairment. First, we estimate the fair value of the reporting unit and compare it to the reporting unit’s carrying value. If the carrying value exceeds fair value, we proceed with the second step, which requires us to assign the fair value of the reporting unit to all of the assets and liabilities of the reporting unit as if it had been acquired in a business combination at the date of the impairment test. The excess fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied value of goodwill and is used to determine the amount of impairment. We recognize an impairment loss to the extent the carrying value of goodwill exceeds the implied value in the current period.
Estimates of fair value used in our evaluation of goodwill, investments in real estate, investments in unconsolidated entities and intangible assets are based upon discounted future cash flow projections or other acceptable valuation techniques that are based, in turn, upon level three inputs, such as revenue and expense growth rates, capitalization rates, discount rates or other available market data. Our ability to accurately predict future operating results and cash flows and to estimate and allocate fair values impacts the timing and recognition of impairments. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our financial results.

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Assets Held for Sale and Discontinued Operations
We sell properties from time to time for various reasons, including favorable market conditions or the exercise of purchase options by tenants. We classify certain long-lived assets as held for sale once the criteria, as defined by GAAP, has been met. Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value minus cost to sell and are no longer depreciated.
In 2014, the FASB issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which raises the threshold for disposals to qualify as discontinued operations. A discontinued operation is defined as: (1) a component of an entity or group of components that has been disposed of or classified as held for sale and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results; or (2) an acquired business that is classified as held for sale on the acquisition date. ASU 2014-08 also requires additional disclosures regarding discontinued operations, as well as material disposals that do not meet the definition of discontinued operations. The application of this guidance is prospective from the date of adoption and applies only to disposals (or new classifications to held for sale) that have not been reported as discontinued operations in our previously issued financial statements. We adopted ASU 2014-08 during the quarter ended March 31, 2014.
The results of operations for assets meeting the definition of discontinued operations are reflected in our Consolidated Statements of Income as discontinued operations for all periods presented. We allocate estimated interest expense to discontinued operations based on property values and our weighted average interest rate or the property’s actual mortgage interest.
Loans Receivable
We record loans receivable, other than those acquired in connection with a business combination, on our Consolidated Balance Sheets (either in secured loans receivable and investments, net or other assets, in the case of unsecured loans receivable) at the unpaid principal balance, net of any deferred origination fees, purchase discounts or premiums and valuation allowances. We amortize net deferred origination fees, which are comprised of loan fees collected from the borrower net of certain direct costs, and purchase discounts or premiums over the contractual life of the loan using the effective interest method and immediately recognize in income any unamortized balances if the loan is repaid before its contractual maturity.
We regularly evaluate the collectibility of loans receivable based on factors such as corporate and facility-level financial and operational reports, compliance with financial covenants set forth in the applicable loan agreement, the financial strength of the borrower and any guarantor, the payment history of the borrower and current economic conditions. If our evaluation of these factors indicates it is probable that we will be unable to collect all amounts due under the terms of the applicable loan agreement, we provide a reserve against the portion of the receivable that we estimate may not be collected.
Cash Equivalents
Cash equivalents consist of highly liquid investments with a maturity date of three months or less when purchased. These investments are stated at cost, which approximates fair value.
Escrow Deposits and Restricted Cash
Escrow deposits consist of amounts held by us or our lenders to provide for future real estate tax and insurance expenditures and tenant improvements related to our properties and operations. Restricted cash represents amounts paid to us for security deposits and other similar purposes.
Deferred Financing Costs
We amortize deferred financing costs as a component of interest expense over the terms of the related borrowings using a method that approximates a level yield. Deferred financing costs, net of accumulated amortization, were approximately $60.3 million and $62.2 million at December 31, 2014 and 2013, respectively. Amortized costs of approximately $16.9 million, $13.5 million and $10.5 million were included in interest expense for the years ended December 31, 2014, 2013 and 2012, respectively.
Marketable Debt and Equity Securities
We record marketable debt and equity securities (other than our interests in government-sponsored pooled loan investments, which are classified as secured loans receivable and investments, net on our Consolidated Balance Sheets) as available-for-sale and classify them as a component of other assets on our Consolidated Balance Sheets. We record these securities at fair value and include unrealized gains and losses recorded in stockholders’ equity as a component of accumulated other comprehensive income on our Consolidated Balance Sheets. We report interest income, including discount or premium

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amortization, on marketable debt securities and gains or losses on securities sold, which are based on the specific identification method, in income from loans and investments in our Consolidated Statements of Income.
Derivative Instruments
We recognize all derivative instruments in other assets or accounts payable and other liabilities on our Consolidated Balance Sheets at fair value as of the reporting date. We recognize changes in the fair value of derivative instruments in other expenses in our Consolidated Statements of Income or accumulated other comprehensive income on our Consolidated Balance Sheets, depending on the intended use of the derivative and our designation of the instrument.
We do not use our derivative financial instruments, including interest rate caps, interest rate swaps and foreign currency forward contracts for trading or speculative purposes. Our foreign currency forward contracts and certain of our interest rate swaps (including the interest rate swap contracts of unconsolidated joint ventures) are designated as effectively hedging the variability of expected cash flows related to their underlying securities and, therefore, also are recorded on our Consolidated Balance Sheets at fair value, with changes in the fair value of these instruments recognized in accumulated other comprehensive income on our Consolidated Balance Sheets. We recognize our proportionate share of the change in fair value of swap contracts of our unconsolidated joint ventures in accumulated other comprehensive income on our Consolidated Balance Sheets. Certain of our other interest rate swaps and rate caps were not designated as having a hedging relationship with the underlying securities and therefore do not meet the criteria for hedge accounting under GAAP. Accordingly, these interest rate swaps are recorded on our Consolidated Balance Sheets at fair value, and we recognize changes in the fair value of these instruments in current earnings (in other expenses) in our Consolidated Statements of Income.
Fair Values of Financial Instruments
Fair value is a market-based measurement, not an entity-specific measurement, and we determine fair value based on the assumptions that we expect market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within levels one and two of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within level three of the hierarchy).
Level one inputs utilize unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access. Level two inputs are inputs other than quoted prices included in level one that are directly or indirectly observable for the asset or liability. Level two inputs may include quoted prices for similar assets and liabilities in active markets and other inputs for the asset or liability that are observable at commonly quoted intervals, such as interest rates, foreign exchange rates and yield curves. Level three inputs are unobservable inputs for the asset or liability, which typically are based on our own assumptions, because there is little, if any, related market activity. If the determination of the fair value measurement is based on inputs from different levels of the hierarchy, the level within which the entire fair value measurement falls is the lowest level input that is significant to the fair value measurement in its entirety. If the volume and level of market activity for an asset or liability has decreased significantly relative to the normal market activity for such asset or liability (or similar assets or liabilities), then transactions or quoted prices may not accurately reflect fair value. In addition, if there is evidence that a transaction for an asset or liability is not orderly, little, if any, weight is placed on that transaction price as an indicator of fair value. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
We use the following methods and assumptions in estimating the fair value of our financial instruments.
Cash and cash equivalents - The carrying amount of unrestricted cash and cash equivalents reported on our Consolidated Balance Sheets approximates fair value due to the short maturity of these instruments.
Loans receivable - We estimate the fair value of loans receivable using level two and level three inputs: we discount future cash flows using current interest rates at which similar loans with the same terms and length to maturity would be made to borrowers with similar credit ratings.
Marketable debt securities - We estimate the fair value of corporate bonds using level two inputs: we observe quoted prices for similar assets or liabilities in active markets that we have the ability to access. We estimate the fair value of certain government-sponsored pooled loan investments using level three inputs: we consider credit spreads, underlying asset performance and credit quality, default rates and any other applicable criteria.
Derivative instruments - With the assistance of a third party, we estimate the fair value of derivative instruments, including interest rate caps, interest rate swaps, and foreign currency forward contracts using level two inputs: for interest rate caps, we observe forward yield curves and other relevant information; for interest rate swaps, we

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observe alternative financing rates derived from market-based financing rates, forward yield curves and discount rates; and for foreign currency forward contracts, we estimate the future values of the two currency tranches using forward exchange rates that are based on traded forward points and calculate a present value of the net amount using a discount factor based on observable traded interest rates.
Senior notes payable and other debt - We estimate the fair value of senior notes payable and other debt using level two inputs: we discount the future cash flows using current interest rates at which we could obtain similar borrowings. For mortgage debt, we may estimate fair value using level three inputs.
Redeemable OP unitholder interests - We estimate the fair value of our redeemable OP unitholder interests using level one inputs: we base fair value on the closing price of our common stock, as OP Units may be redeemed at the election of the holder for cash or, at our option, 0.7866 shares of our common stock per unit, subject to adjustment in certain circumstances.
Revenue Recognition
Triple-Net Leased Properties and MOB Operations
Certain of our triple-net leases and most of our MOB leases provide for periodic and determinable increases in base rent. We recognize base rental revenues under these leases on a straight-line basis over the applicable lease term when collectability is reasonably assured. Recognizing rental income on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a straight-line rent receivable that is included in other assets on our Consolidated Balance Sheets. At December 31, 2014 and 2013, this cumulative excess totaled $188.0 million (net of allowances of $145.1 million) and $150.8 million (net of allowances of $101.4 million), respectively.
Certain of our leases provide for periodic increases in base rent only if certain revenue parameters or other substantive contingencies are met. We recognize the increased rental revenue under these leases as the related parameters or contingencies are met, rather than on a straight-line basis over the applicable lease term.
Senior Living Operations
We recognize resident fees and services, other than move-in fees, monthly as services are provided. We recognize move-in fees on a straight-line basis over the average resident stay. Our lease agreements with residents generally have terms of 12 to 18 months and are cancelable by the resident upon 30 days’ notice.
Other
We recognize interest income from loans and investments, including discounts and premiums, using the effective interest method when collectibility is reasonably assured. We apply the effective interest method on a loan-by-loan basis and recognize discounts and premiums as yield adjustments over the related loan term. We recognize interest income on an impaired loan to the extent our estimate of the fair value of the collateral is sufficient to support the balance of the loan, other receivables and all related accrued interest. When the balance of the loan, other receivables and all related accrued interest is equal to or less than our estimate of the fair value of the collateral, we recognize interest income on a cash basis. We provide a reserve against an impaired loan to the extent our total investment in the loan exceeds our estimate of the fair value of the loan collateral.
We recognize income from rent, lease termination fees, development services, management advisory services, and all other income when all of the following criteria are met in accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin 104: (i) the applicable agreement has been fully executed and delivered; (ii) services have been rendered; (iii) the amount is fixed or determinable; and (iv) collectibility is reasonably assured.
Allowances
We assess the collectibility of our rent receivables, including straight-line rent receivables. We base our assessment of the collectibility of rent receivables (other than straight-line rent receivables) on several factors, including, among other things, payment history, the financial strength of the tenant and any guarantors, the value of the underlying collateral, if any, and current economic conditions. If our evaluation of these factors indicates it is probable that we will be unable to recover the full value of the receivable, we provide a reserve against the portion of the receivable that we estimate may not be recovered. We also base our assessment of the collectibility of straight-line rent receivables on several factors, including, among other things, the financial strength of the tenant and any guarantors, the historical operations and operating trends of the property, the historical payment pattern of the tenant and the type of property. If our evaluation of these factors indicates it is probable that we will be unable to receive the rent payments due in the future, we provide a reserve against the recognized straight-line rent receivable asset for the portion, up to its full value, that we estimate may not be recovered. If we change our assumptions or

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estimates regarding the collectibility of future rent payments required by a lease, we may adjust our reserve to increase or reduce the rental revenue recognized in the period we make such change in our assumptions or estimates.
Stock-Based Compensation
We recognize share-based payments to employees and directors, including grants of stock options, included in General, administrative and professional fees in our Consolidated Statements of Income generally on a straight-line basis over the requisite service period based on the grant date fair value of the award.
Gain on Sale of Assets
We recognize sales of assets only upon the closing of the transaction with the purchaser. We record payments received from purchasers prior to closing as deposits and classify them as other assets on our Consolidated Balance Sheets. We recognize gains on assets sold using the full accrual method upon closing if the collectibility of the sales price is reasonably assured, we are not obligated to perform any significant activities after the sale to earn the profit, we have received adequate initial investment from the purchaser, and other profit recognition criteria have been satisfied. We may defer recognition of gains in whole or in part until: (i) the profit is determinable, meaning that the collectibility of the sales price is reasonably assured or the amount that will not be collectible can be estimated; and (ii) the earnings process is virtually complete, meaning that we are not obliged to perform any significant activities after the sale to earn the profit.
Federal Income Tax
We have elected to be treated as a REIT under the applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), for every year beginning with the year ended December 31, 1999. Accordingly, we generally are not subject to federal income tax on net income that we distribute to our stockholders, provided that we continue to qualify as a REIT. However, with respect to certain of our subsidiaries that have elected to be treated as “taxable REIT subsidiaries,” we record income tax expense or benefit, as those entities are subject to federal income tax similar to regular corporations.
We account for deferred income taxes using the asset and liability method and recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our financial statements or tax returns. Under this method, we determine deferred tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Any increase or decrease in the deferred tax liability that results from a change in circumstances, and that causes us to change our judgment about expected future tax consequences of events, is included in the tax provision when such changes occur. Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards. A valuation allowance is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will not be realized. Any increase or decrease in the valuation allowance that results from a change in circumstances, and that causes us to change our judgment about the realizability of the related deferred tax asset, is included in the tax provision when such changes occur.
Foreign Currency
Certain of our subsidiaries’ functional currencies are the local currencies of their respective foreign jurisdictions. We translate the results of operations of our foreign subsidiaries into U.S. dollars using average rates of exchange in effect during the period, and we translate balance sheet accounts using exchange rates in effect at the end of the period. We record resulting currency translation adjustments in accumulated other comprehensive income, a component of stockholders’ equity, on our Consolidated Balance Sheets, and we record foreign currency transaction gains and losses in our Consolidated Statements of Income.
Segment Reporting
As of December 31, 2014, 2013 and 2012, we operated through three reportable business segments: triple-net leased properties; senior living operations; and MOB operations. In our triple-net leased properties segment, we invest in seniors housing and healthcare properties throughout the United States and the United Kingdom and lease those properties to healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses. In our senior living operations segment, we invest in seniors housing communities throughout the United States and Canada and engage independent operators, such as Atria and Sunrise, to manage those communities. In our MOB operations segment, we primarily acquire, own, develop, lease, and manage MOBs throughout the United States. See “Note 20—Segment Information.”
    

94

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Operating Leases
We account for payments made pursuant to operating leases in our Consolidated Statements of Income based on actual rent paid, plus or minus a straight-line rent adjustment for leases that provide for periodic and determinable increases in base rent.
Recently Issued or Adopted Accounting Standards
In 2014, the FASB issued Accounting Standards Update 2014-09, Revenue From Contracts With Customers (“ASU 2014-09”), which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. ASU 2014-09 is effective for us beginning January 1, 2017. We are continuing to evaluate this guidance; however, we do not expect its adoption to have a significant impact on our consolidated financial statements, as a substantial portion of our revenue consists of rental income from leasing arrangements, which are specifically excluded from ASU 2014-09.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
Note 3—Concentration of Credit Risk
As of December 31, 2014, Atria, Sunrise, Brookdale Senior Living and Kindred managed or operated approximately 23.6%, 12.3%, 10.2% and 2.0%, respectively, of our real estate investments based on gross book value (excluding properties classified as held for sale as of December 31, 2014). Seniors housing communities constituted approximately 65.5% of our real estate investments based on gross book value (excluding properties classified as held for sale as of December 31, 2014), while MOBs, skilled nursing and other facilities, and hospitals collectively comprised the remaining 34.5% Our properties were located in 46 states, the District of Columbia, seven Canadian provinces and the United Kingdom as of December 31, 2014, with properties in one state (California) accounting for more than 10% of our total revenues and total net operating income (“NOI,” which is defined as total revenues, excluding interest and other income, less property-level operating expenses and medical office building services costs) (in each case excluding amounts in discontinued operations) for each of the years ended December 31, 2014, 2013 and 2012.
Triple-Net Leased Properties
For the years ended December 31, 2014, 2013 and 2012, approximately 5.5%, 5.6% and 6.3%, respectively, of our total revenues and 9.2%, 9.2% and 10.5%, respectively, of our total NOI (in each case excluding amounts in discontinued operations) were derived from our lease agreements with Brookdale Senior Living. For the same periods, approximately 6.2%, 8.1% and 10.3%, respectively, of our total revenues and 10.2%, 13.4% and 17.1%, respectively, of our total NOI (in each case excluding amounts in discontinued operations) were derived from our lease agreements with Kindred. Each of our leases with Brookdale Senior Living and Kindred is a triple-net lease that obligates the tenant to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures, and to comply with the terms of the mortgage financing documents, if any, affecting the properties. In addition, each of these leases has guaranty and cross-default provisions tied to other leases with the same tenant or its affiliates, as well as bundled lease renewals.
The properties we lease to Brookdale Senior Living and Kindred accounted for a significant portion of our triple-net leased properties segment revenues and NOI for the years ended December 31, 2014, 2013 and 2012. If either Brookdale Senior Living or Kindred becomes unable or unwilling to satisfy its obligations to us or to renew its leases with us upon expiration of the terms thereof, our financial condition and results of operations could decline and our ability to service our indebtedness and to make distributions to our stockholders could be impaired. We cannot assure you that Brookdale Senior Living and Kindred will have sufficient assets, income and access to financing to enable them to satisfy their respective obligations to us, and any failure, inability or unwillingness by Brookdale Senior Living or Kindred to do so could have a material adverse effect on our business, financial condition, results of operations and liquidity, our ability to service our indebtedness and other obligations and our ability to make distributions to our stockholders, as required for us to continue to qualify as a REIT (a “Material Adverse Effect”). We also cannot assure you that Brookdale Senior Living and Kindred will elect to renew their respective leases with us upon expiration of the leases or that we will be able to reposition any non-renewed properties on a timely basis or on the same or better economic terms, if at all.

95

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


In July 2014, Brookdale Senior Living completed its acquisition of Emeritus Corporation (“Emeritus”), which operates 15 of our triple-net leased properties. In connection with the transaction, we entered into favorable arrangements with Brookdale Senior Living and Emeritus regarding the terms of our existing leases.  The transaction and those arrangements have not had, nor do we expect them to have, a material impact on our financial condition or results of operations.
As of December 31, 2014, we had re-leased to Kindred, transitioned to new operators or sold 107 of the 108 licensed healthcare assets whose lease terms with Kindred were scheduled to expire on September 30, 2014.  We expect to sell the remaining asset during 2015; however, this transaction remains subject to customary due diligence conditions, and we cannot assure you that we will be able to successfully complete the sale on a timely basis or at all.
In December 2014, we entered into favorable agreements with Kindred to transition the operations of nine licensed healthcare assets, make modifications to the master leases governing 34 leased assets, and reimburse us for certain deferred capital expenditures at skilled nursing facilities previously transferred to new operators. In January 2015, Kindred paid us $37 million in connection with these agreements, which will be amortized over the remaining lease term for the 34 assets governed by the modified master leases. We own or have the rights to all licenses and CONs at the nine properties to be transitioned, and Kindred has extensive and detailed obligations to cooperate and ensure an orderly transition of the properties to another operator.
The following table sets forth the future contracted minimum rentals, excluding contingent rent escalations, but including straight-line rent adjustments where applicable, for all of our triple-net and MOB leases as of December 31, 2014 (excluding properties owned through investments in unconsolidated entities and properties classified as held for sale as of December 31, 2014):
 
Brookdale
Senior
Living
 
Kindred
 
Other
 
Total
 
(In thousands)
2015
$
182,472

 
$
189,183

 
$
944,348

 
$
1,316,003

2016
182,625

 
181,470

 
911,457

 
1,275,552

2017
183,115

 
185,082

 
861,983

 
1,230,180

2018
183,321

 
154,440

 
822,930

 
1,160,691

2019
173,397

 
140,593

 
791,043

 
1,105,033

Thereafter
203,335

 
585,303

 
4,760,264

 
5,548,902

Total
$
1,108,265

 
$
1,436,071

 
$
9,092,025

 
$
11,636,361

Senior Living Operations
As of December 31, 2014, Atria and Sunrise, collectively, provided comprehensive property management and accounting services with respect to 269 of our seniors housing communities, for which we pay annual management fees pursuant to long-term management agreements.
Because Atria and Sunrise manage our properties in exchange for the receipt of a management fee from us, we are not directly exposed to the credit risk of our managers in the same manner or to the same extent as our triple-net tenants. However, we rely on our managers’ personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage our senior living operations efficiently and effectively. We also rely on our managers to set appropriate resident fees and otherwise operate our seniors housing communities in compliance with the terms of our management agreements and all applicable laws and regulations. Although we have various rights as the property owner under our management agreements, including various rights to terminate and exercise remedies under the agreements as provided therein, Atria’s or Sunrise’s failure, inability or unwillingness to satisfy its respective obligations under those agreements, to efficiently and effectively manage our properties or to provide timely and accurate accounting information with respect thereto could have a Material Adverse Effect on us. In addition, significant changes in Atria’s or Sunrise’s senior management or equity ownership or any adverse developments in their businesses and affairs or financial condition could have a Material Adverse Effect on us.
Our 34% ownership interest in Atria entitles us to certain rights and minority protections, as well as the right to appoint two of five members on the Atria board of directors.
Brookdale Senior Living, Kindred, Atria and Sunrise Information
Each of Brookdale Senior Living and Kindred is subject to the reporting requirements of the SEC and is required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. The information related to Brookdale Senior Living and Kindred contained or referred to in this Annual Report on

96

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Form 10-K has been derived from SEC filings made by Brookdale Senior Living or Kindred, as the case may be, or other publicly available information, or was provided to us by Brookdale Senior Living or Kindred, and we have not verified this information through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you of its accuracy. We are providing this data for informational purposes only, and you are encouraged to obtain Brookdale Senior Living’s and Kindred’s publicly available filings, which can be found at the SEC’s website at www.sec.gov.
Neither Atria nor Sunrise is currently subject to the reporting requirements of the SEC. The information related to Atria and Sunrise contained or referred to in this Annual Report on Form 10-K has been derived from publicly available information or was provided to us by Atria or Sunrise, as the case may be, and we have not verified this information through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you of its accuracy.
Note 4—Acquisitions of Real Estate Property
The following summarizes our acquisition and development activities during 2014, 2013 and 2012. We invest in seniors housing and healthcare properties primarily to achieve an expected yield on our investment, to grow and diversify our portfolio and revenue base, and to reduce our dependence on any single tenant, operator or manager, geographic location, asset type, business model or revenue source.
2014 Acquisitions
Holiday Canada Acquisition
In August 2014, we acquired 29 seniors housing communities located in Canada from Holiday Retirement (the “Holiday Canada Acquisition”) for a purchase price of CAD 957.0 million. We also paid CAD 26.9 million in costs relating to the early repayment of debt at closing. We funded the Holiday Canada Acquisition initially through borrowings under a CAD 791.0 million unsecured term loan that we incurred in July 2014 (and subsequently repaid primarily through a private placement of senior notes in Canada) and the assumption of CAD 193.7 million of debt.
Other 2014 Acquisitions
During the year ended December 31, 2014, we also acquired three triple-net leased private hospitals (located in the United Kingdom), 26 triple-net leased seniors housing communities and four seniors housing communities that are being operated by independent third-party managers for aggregate consideration of approximately $812.0 million. We also paid $18.8 million in costs relating to the early repayment of debt at closing of the applicable transactions. In addition, we acquired a construction design, planning and consulting business to complement our MOB operations through the issuance of 148,241 shares of our common stock.
Completed Developments
During 2014, we completed the development of two MOBs and one seniors housing community, representing $41.2 million of net real estate property on our Consolidated Balance Sheets as of December 31, 2014.

97

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Estimated Fair Value
We are accounting for our 2014 acquisitions under the acquisition method in accordance with ASC Topic 805, Business Combinations (“ASC 805”), and have completed our initial accounting, which is subject to further adjustment. The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed in our 2014 real estate acquisitions, which we determined using level two and level three inputs:
 
Triple-Net Leased Properties
 
Senior Living Operations
 
Total
 
(In thousands)
Land and improvements
$
45,586

 
$
100,281

 
$
145,867

Buildings and improvements
546,849

 
1,081,207

 
1,628,056

Acquired lease intangibles
28,883

 
36,452

 
65,335

Other assets
227

 
12,387

 
12,614

Total assets acquired
621,545

 
1,230,327

 
1,851,872

Notes payable and other debt
12,927

 
228,150

 
241,077

Other liabilities

8,609

 
124,897

 
133,506

Total liabilities assumed
21,536

 
353,047

 
374,583

Net assets acquired
600,009

 
877,280

 
1,477,289

Cash acquired
227

 
8,704

 
8,931

Total cash used
$
599,782

 
$
868,576

 
$
1,468,358

Aggregate Revenue and NOI
For the year ended December 31, 2014, aggregate revenues and NOI derived from our 2014 real estate acquisitions (for our period of ownership) were $75.9 million and $41.5 million, respectively.
Transaction Costs
As of December 31, 2014, we had incurred a total of $26.2 million of acquisition-related costs related to our completed 2014 acquisitions, all of which were expensed as incurred and included in merger-related expenses and deal costs in our Consolidated Statements of Income for the applicable periods. For the year ended December 31, 2014, we expensed $23.8 million of these acquisition-related costs related to our completed 2014 acquisitions.
2013 Acquisitions
During the year ended December 31, 2013, we acquired 27 triple-net leased seniors housing communities, 24 seniors housing communities that are being operated by independent third-party managers (eight of which we previously leased pursuant to a capital lease) and 11 MOBs for aggregate consideration of approximately $1.8 billion.
Completed Developments
During the year ended December 31, 2013, we completed the development of two seniors housing communities, one MOB, and one hospital, representing $65.5 million of net real estate property on our Consolidated Balance Sheets as of December 31, 2013.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Estimated Fair Value
We accounted for our 2013 acquisitions under the acquisition method in accordance with ASC 805, and we have completed our accounting for these acquisitions. We accounted for the acquisition of the eight seniors housing communities that we previously leased pursuant to a capital lease in accordance with ASC Topic 840, Leases. The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed in our 2013 real estate acquisitions, which we determined using level two and level three inputs:
 
Triple-Net Leased Properties
 
Senior Living Operations (1)
 
MOB Operations
 
Total
 
(In thousands)
Land and improvements
$
51,419

 
$
45,566

 
$
3,923

 
$
100,908

Buildings and improvements
803,227

 
579,577

 
138,792

 
1,521,596

Acquired lease intangibles
8,945

 
16,920

 
10,362

 
36,227

Other assets
3,285

 
2,607

 
2,453

 
8,345

Total assets acquired
866,876

 
644,670

 
155,530

 
1,667,076

Notes payable and other debt
36,300

 
5,136

 

 
41,436

Other liabilities
11,423

 
12,285

 
6,510

 
30,218

Total liabilities assumed
47,723

 
17,421

 
6,510

 
71,654

Noncontrolling interest assumed
10,113

 

 
1,672

 
11,785

Net assets acquired
809,040

 
627,249

 
147,348

 
1,583,637

Cash acquired
753

 

 
1,397

 
2,150

Total cash used
$
808,287

 
$
627,249

 
$
145,951

 
$
1,581,487

________________
(1) Includes settlement of a $142.2 million capital lease obligation related to eight seniors housing communities.
2012 Acquisitions
Funds Acquisition
In December 2012, we acquired 100% of certain private equity funds previously managed by Lazard Frères Real Estate Investments LLC (“LFREI”) or its affiliates. The acquired funds primarily owned a 34% interest in Atria, which is recorded as an investment in unconsolidated entities on our Consolidated Balance Sheets, and approximately 3.7 million shares of our common stock. In conjunction with this acquisition, we also extinguished our obligation related to the “earnout,” a contingent performance-based payment arising out of our 2011 acquisition of the real estate assets of Atria Senior Living Group, Inc. (together with its affiliates, “ASLG”), for an additional $44 million. This amount represented the discounted net present value of the potential future payment, which was previously reflected on our Consolidated Balance Sheets as a liability.
Cogdell Acquisition
In April 2012, we acquired Cogdell Spencer Inc. (together with its subsidiaries, “Cogdell”), including its 71 real estate assets (including properties owned through joint ventures) and its MOB property management business, which had existing agreements with third parties to manage 44 MOBs, in an all-cash transaction. At closing, our investment in Cogdell, including our share of debt, was approximately $760 million and our joint venture partners’ share of net debt assumed was $36.3 million.
Pursuant to the terms and subject to the conditions set forth in the agreement and plan of merger dated as of December 24, 2011, at the effective time of the merger, (a) each outstanding share of Cogdell common stock, and each outstanding unit of limited partnership interest in Cogdell’s operating partnership, Cogdell Spencer LP, that was not owned by subsidiaries of Cogdell was converted into the right to receive $4.25 in cash, and (b) each outstanding share of Cogdell’s 8.500% Series A Cumulative Redeemable Perpetual Preferred Stock was converted into the right to receive an amount in cash equal to $25.00, plus accrued and unpaid dividends through the date of closing. We funded the Cogdell acquisition through the assumption of $203.8 million of existing Cogdell mortgage debt (inclusive of our joint venture partners’ share of $36.3 million) and borrowings under our unsecured revolving credit facility. Prior to the closing, Cogdell completed the sale of its design-build and development business to an unaffiliated third party.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Other 2012 Acquisitions
In May 2012, we acquired 16 seniors housing communities managed by Sunrise in an all-cash transaction. Sunrise continues to manage the acquired assets under existing long-term management agreements. During 2012, we also invested in 21 seniors housing communities, two skilled nursing facilities and 44 MOBs, including 36 MOBs that we had previously accounted for as investments in unconsolidated entities. See “Note 7—Investments in Unconsolidated Entities.”
Completed Developments
During 2012, we completed the development of three MOBs and two seniors housing communities, representing $116.9 million of net real estate property on our Consolidated Balance Sheets as of December 31, 2012.
Estimated Fair Value
We accounted for our 2012 acquisitions under the acquisition method in accordance with ASC 805, and we have completed our accounting for these acquisitions. The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed in our 2012 real estate acquisitions, which we determined using level two and level three inputs:
 
Triple-Net Leased Properties
 
Senior Living Operations
 
MOB Operations (1)
 
Total
 
(In thousands)
Land and improvements
$
21,881

 
$
60,662

 
$
112,504

 
$
195,047

Buildings and improvements
225,950

 
413,750

 
1,085,148

 
1,724,848

Construction in progress

 

 
25,579

 
25,579

Acquired lease intangibles
2,323

 
18,070

 
182,406

 
202,799

Other assets
1,519

 
832

 
43,747

 
46,098

Total assets acquired
251,673

 
493,314

 
1,449,384

 
2,194,371

Notes payable and other debt
57,219

 

 
355,606

 
412,825

Other liabilities
13,851

 
11,806

 
106,367

 
132,024

Total liabilities assumed
71,070

 
11,806

 
461,973

 
544,849

Noncontrolling interest assumed
7,292

 

 
30,361

 
37,653

Net assets acquired
173,311

 
481,508

 
957,050

 
1,611,869

Cash acquired
1,250

 

 
24,115

 
25,365

Total cash used
$
172,061

 
$
481,508

 
$
932,935

 
$
1,586,504

______________
(1) Includes the Cogdell acquisition.
HCT Acquisition
In January 2015, we acquired American Realty Capital Healthcare Trust, Inc. (“HCT”) in a stock and cash transaction, which added 152 properties (some of which are located on the same campus) to our portfolio.  At the effective time of the merger, each share of HCT common stock outstanding (other than shares held by us, HCT or our respective subsidiaries, which shares were cancelled) was converted into the right to receive either 0.1688 shares of our common stock (with cash paid in lieu of fractional shares) or $11.33 per share in cash, at the election of each HCT shareholder. Shares of HCT common stock for which a valid election was not made were converted into the stock consideration. We funded the transaction through the issuance of approximately 28.4 million shares of our common stock and 1.1 million limited partnership units that are redeemable for shares of our common stock and the payment of approximately $11 million in cash (excluding cash in lieu of fractional shares). In addition, we assumed $167 million of mortgage debt and repaid approximately $740 million of debt, net of HCT cash on hand.
For the year ended December 31, 2014, we incurred a total of $8.8 million of acquisition-related costs related to the HCT acquisition, all of which we expensed as incurred and included in merger-related expenses and deal costs on our Consolidated Statements of Income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Unaudited Pro Forma
The following table illustrates the effect on net income and earnings per share if we had consummated the HCT acquisition as of January 1, 2013.
 
For the Year Ended December 31, 2014
 
(In thousands, except per share amounts)
Revenues
$
3,369,214

Income from continuing operations attributable to common stockholders, including real estate dispositions
$
483,585

Earnings per common share:
 
Basic:
 
Income from continuing operations attributable to common stockholders, including real estate dispositions
$
1.50

Diluted:
 
Income from continuing operations attributable to common stockholders, including real estate dispositions
$
1.48

Weighted average shares used in computing earnings per common share:
 
Basic
322,590

Diluted
326,211

Acquisition-related costs related to the HCT acquisition are not expected to have a continuing impact and therefore have been excluded from these pro forma results. The pro forma results also do not include the impact of any synergies that may be achieved in the HCT acquisition, any lower costs of borrowing resulting from the acquisition or any strategies that management may consider in order to continue to efficiently manage our operations, nor do they give pro forma effect to any other acquisitions, dispositions or capital markets transactions that we completed during the periods presented. These pro forma results are not necessarily indicative of the operating results that would have been obtained had the HCT acquisition occurred at the beginning of the periods presented, nor are they necessarily indicative of future operating results.
Other 2015 Acquisitions
In 2015, we made other investments totaling approximately $320 million, including the acquisition of five triple-net leased properties in the United Kingdom and 12 skilled nursing facilities.
Note 5—Dispositions
2014 Activity
During the year ended December 31, 2014, we sold 16 triple-net leased properties, two seniors housing communities included in our seniors housing operations reportable business segment and four properties included in our MOB operations reportable business segment for aggregate consideration of $118.2 million. We recognized a net gain on the sales of these assets of $21.3 million, $1.5 million of which is reported within discontinued operations in our Consolidated Statements of Income.
2013 Activity
During 2013, we sold 19 triple-net leased properties, one seniors housing community included in our senior living operations reportable business segment and two properties included in our MOB operations reportable business segment for aggregate consideration of $35.1 million, including lease termination fees of $0.3 million. We recognized a net gain on the sales of these assets of $5.0 million, all of which is reported within discontinued operations in our Consolidated Statements of Income.
2012 Activity
During 2012, we sold 38 triple-net leased properties (ten of which were pursuant to the exercise of tenant purchase options) and five properties included in our MOB operations reportable business segment for aggregate consideration of $346.1 million, including fees of $5.0 million. We recognized a net gain on the sales of these assets of $85.5 million, all of which is reported within discontinued operations in our Consolidated Statements of Income. In June 2012, we declined to exercise our

101

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


renewal option on the operating leases (in which we were the tenant) related to two seniors housing communities we acquired as part of the ASLG acquisition that expired on June 30, 2012.
Discontinued Operations and Assets Held for Sale
We present separately, as discontinued operations in all periods presented, the results of operations for all real estate assets classified as held for sale as of December 31, 2014 and all real estate assets disposed of during the three-year period then ended that meet the criteria of discontinued operations.

The table below summarizes our real estate assets classified as held for sale as of December 31, 2014 and 2013, including the amounts reported within other assets and accounts payable and other liabilities on our Consolidated Balance Sheets.

 
 
December 31, 2014
 
December 31, 2013
 
 
Number of Properties Held for Sale (1)
 
Other Assets
 
Accounts Payable and Other Liabilities
 
Number of Properties Held for Sale (2)
 
Other Assets
 
Accounts Payable and Other Liabilities
 
 
(Dollars in thousands)
Triple-net leased properties
 
14

 
$
34,097

 
$
1,330

 
15

 
$
125,981

 
$
50,456

MOB operations (3)
 
36

 
176,366

 
48,895

 
4

 
29,359

 
14,044

Total
 
50

 
$
210,463

 
$
50,225

 
19

 
$
155,340

 
$
64,500

 
 
 
 
 
(1)
The operations for three triple-net leased properties and two MOBs are reported in discontinued operations in our Consolidated Statements of Income.
(2)
The operations for all properties listed are reported in discontinued operations in our Consolidated Statements of Income.
(3)
Includes 34 MOBs that are being marketed for sale and were classified as held for sale as of December 31, 2014. Aggregate NOI for this portfolio of assets was $11.9 million, $13.8 million, and $14.1 million for the years ended December 31, 2014, 2013, and 2012 respectively. The sale of these MOBs does not meet the criteria for reporting as discontinued operations.

We recognized impairments of $56.6 million, $51.5 million and $35.6 million for the years ended December 31, 2014, 2013 and 2012 respectively, which are recorded primarily as a component of depreciation and amortization. A portion of these impairments ($1.5 million, $39.7 million, and $13.9 million, respectively) was recorded in discontinued operations for the years ended December 31, 2014 and 2013. For both 2014 and 2013, our recorded impairments were primarily the result of a change in our intent to hold the impaired assets. In each case, we recognized an impairment in the periods in which our change in intent was made. In December 2014, we executed an agreement to sell four triple-net leased seniors housing assets for a sales price of $20.0 million. We recognized a $30.6 million impairment loss on these assets, as the assets’ carrying amount of $49.5 million exceeded the estimated fair value (less costs to sell) of $19.0 million.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Set forth below is a summary of our results of operations for properties within discontinued operations for the three years ended December 31, 2014, 2013 and 2012.
 
2014
 
2013
 
2012
 
(In thousands)
Revenues:
 
 
 
 
 
Rental income
$
4,331

 
$
14,060

 
$
34,840

Resident fees and services

 
759

 
6,435

Interest and other income
750

 

 
5,052

 
5,081

 
14,819

 
46,327

Expenses:
 
 
 
 
 
Interest
1,714

 
5,472

 
13,314

Depreciation and amortization
1,555

 
47,806

 
49,807

Property-level operating expenses
507

 
1,994

 
7,971

General, administrative and professional fees

 
3

 
303

Gain on extinguishment of debt, net

 
(153
)
 

Other
412

 
(407
)
 
1,902

 
4,188

 
54,715

 
73,297

Income (loss) before income taxes and gain on real estate dispositions
893

 
(39,896
)
 
(26,970
)
Income tax benefit

 

 
4

Gain on real estate dispositions
1,213

 
3,617

 
80,952

Discontinued operations
$
2,106

 
$
(36,279
)
 
$
53,986

Note 6—Loans Receivable and Investments
As of December 31, 2014 and 2013, we had $927.7 million and $414.8 million, respectively, of net loans receivable and investments relating to seniors housing and healthcare operators or properties. The following is a summary of our net loans receivable and investments as of December 31, 2014 and 2013, including amortized cost, fair value and unrealized gains (losses) on available-for-sale investments:
 
 
December 31, 2014
 
 
Carrying Amount
 
Amortized Cost
 
Fair Value
 
Unrealized Gain (Loss)
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
Secured mortgage loans and other
 
$
766,641

 
$
766,641

 
$
774,789

 
$

Government-sponsored pooled loan investments
 
63,115

 
61,377

 
63,115

 
1,738

Total investments reported as Secured loans receivable and investments, net
 
829,756

 
828,018

 
837,904

 
1,738

 
 
 
 
 
 
 
 
 
Unsecured loans receivable
 
21,862

 
21,862

 
23,164

 

Marketable securities
 
76,046

 
71,000

 
76,046

 
5,046

Total investments reported as Other assets
 
97,908

 
92,862

 
99,210

 
5,046

 
 
 
 
 
 
 
 
 
Total net loans receivable and investments
 
$
927,664

 
$
920,880

 
$
937,114

 
$
6,784


103

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


 
 
December 31, 2013
 
 
Carrying Amount
 
Amortized Cost
 
Fair Value
 
Unrealized Gain (Loss)
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
Secured mortgage loans and other
 
$
354,775

 
$
354,775

 
$
355,223

 
$

Government-sponsored pooled loan investments
 
21,454

 
21,671

 
21,454

 
(217
)
Total investments reported as Secured loans receivable and investments, net
 
376,229

 
376,446

 
376,677

 
(217
)
 
 
 
 
 
 
 
 
 
Unsecured loans receivable
 
38,542

 
38,542

 
40,473

 

Total investments reported as Other assets
 
38,542

 
38,542

 
40,473

 

 
 
 
 
 
 
 
 
 
Total net loans receivable and investments
 
$
414,771

 
$
414,988

 
$
417,150

 
$
(217
)
During the year ended December 31, 2014, we made a $425.0 million secured mezzanine loan investment that has a blended annual interest rate of 8.1% and has contractual maturities ranging between 2016 and 2019, and we purchased $71.0 million principal amount of senior unsecured corporate bonds, a $38.7 million interest in a government-sponsored pooled loan investment, and $21.7 million of marketable equity securities. During the year ended December 31, 2014, we sold all of our marketable equity securities for $22.3 million and recognized a gain of $0.6 million. Our investments in marketable debt securities and government-sponsored pooled loans are classified as available-for-sale, with contractual maturity dates in 2022 and 2023.

During the year ended December 31, 2014, we received aggregate proceeds of $55.9 million in final repayment of three secured and two unsecured loans receivable. We recognized aggregate gains of $5.2 million on the repayment of these loans receivable that are recorded in income from loans and investments in our Consolidated Statements of Income for the year ended December 31, 2014.
In 2013, we sold portions of a $375.0 million secured loan receivable to third parties in separate transactions, as evidenced by separate notes. As of December 31, 2014, our remaining investment in this loan receivable was $174.8 million, which bears interest at an all-in rate of 10.6% per annum. Under the terms of the loan agreement, we act as the administrative agent and will continue to receive the stated interest rate on our remaining loan receivable balance.
During 2013, we received aggregate proceeds of $102.3 million in final repayment of seven secured and three unsecured loans receivable and recognized aggregate gains of $5.1 million.
Note 7—Investments in Unconsolidated Entities
We report investments in unconsolidated entities over whose operating and financial policies we have the ability to exercise significant influence under the equity method of accounting. We are not required to consolidate these entities because our joint venture partners have significant participating rights, nor are these entities considered VIEs, as they are controlled by equity holders with sufficient capital. At December 31, 2014 and 2013, we had ownership interests (ranging from 5% to 25%) in joint ventures that owned 51 properties and 52 properties, respectively. We account for our interests in these joint ventures, as well as our 34% interest in Atria, under the equity method of accounting.
With the exception of our interest in Atria, we provide various services to each unconsolidated entity in exchange for fees and reimbursements. Total management fees earned in connection with these entities were $8.4 million, $7.0 million and $7.3 million for the years ended December 31, 2014, 2013 and 2012, respectively (which is included in Medical office building and other services revenue in our Consolidated Statements of Income).
In March 2013, we acquired two MOBs for aggregate consideration of approximately $55.6 million from a joint venture entity in which we have a 5% interest and that we account for as an equity method investment. In connection with this acquisition, we re-measured our previously held equity interest (associated with the acquired MOBs) and recognized a gain of $1.3 million, which is included in income from unconsolidated entities in our Consolidated Statements of Income. Since the acquisition, operations relating to these properties have been consolidated in our Consolidated Statements of Income.
In August 2012, we acquired 36 MOBs (plus one MOB that was being marketed for sale and has since been sold) from joint venture entities in which we had interests ranging between 5% and 20% and accounted for as equity method investments. We acquired these MOBs for approximately $350.0 million, including the assumption of $101.6 million in debt. In connection with this acquisition, we re-measured our previously held equity interests and recognized a net gain of $16.6 million, which is

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included in income from unconsolidated entities in our Consolidated Statements of Income. Since the acquisition, operations relating to these properties have been consolidated in our Consolidated Statements of Income.
Note 8—Intangibles
The following is a summary of our intangibles as of December 31, 2014 and 2013:
 
December 31, 2014
 
December 31, 2013
 
Balance
 
Remaining
Weighted Average
Amortization
Period in Years
 
Balance
 
Remaining
Weighted Average
Amortization
Period in Years
 
(Dollars in thousands)
Intangible assets:
 
 
 
 
 
 
 
Above market lease intangibles
$
210,573

 
8.2
 
$
214,353

 
8.4
In-place and other lease intangibles
829,078

 
23.9
 
795,829

 
24.1
Goodwill and other intangibles
489,384

 
7.9
 
489,346

 
8.6
Accumulated amortization
(549,026
)
 
 N/A
 
(458,919
)
 
 N/A
Net intangible assets
$
980,009

 
19.9
 
$
1,040,609

 
19.8
Intangible liabilities:
 
 
 
 
 
 
 
Below market lease intangibles
$
425,092

 
14.7
 
$
429,199

 
14.7
Other lease intangibles
32,103

 
26.1
 
32,103

 
24.8
Accumulated amortization
(158,480
)
 
 N/A
 
(119,549
)
 
 N/A
Purchase option intangibles
22,900

 
 N/A
 
29,294

 
 N/A
Net intangible liabilities
$
321,615

 
15.2
 
$
371,047

 
15.1
________
N/A—Not Applicable 
Above market lease intangibles and in-place and other lease intangibles are included in acquired lease intangibles within real estate investments on our Consolidated Balance Sheets. Goodwill and other intangibles (including non-compete agreements, trade names and trademarks) are included in other assets on our Consolidated Balance Sheets. Below market lease intangibles, other lease intangibles and purchase option intangibles are included in accounts payable and other liabilities on our Consolidated Balance Sheets. For the years ended December 31, 2014, 2013 and 2012, our net amortization expense related to these intangibles was $51.2 million, $65.2 million and $123.3 million, respectively. The estimated net amortization expense related to these intangibles for each of the next five years is as follows: 2015$58.8 million; 2016$29.1 million; 2017$16.2 million; 2018$10.0 million; and 2019$5.7 million.
Note 9—Other Assets
The following is a summary of our other assets as of December 31, 2014 and 2013:
 
2014
 
2013
 
(In thousands)
Straight-line rent receivables, net
$
187,969

 
$
150,829

Unsecured loans receivable, net
21,862

 
38,542

Goodwill and other intangibles, net
472,052

 
476,483

Assets held for sale
210,463

 
155,340

Marketable securities
76,046

 

Other
163,145

 
125,141

Total other assets
$
1,131,537

 
$
946,335


105

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Note 10—Borrowing Arrangements
The following is a summary of our senior notes payable and other debt as of December 31, 2014 and 2013:
 
2014
 
2013
 
(In thousands)
Unsecured revolving credit facility (1)
$
919,099

 
$
376,343

3.125% Senior Notes due 2015
400,000

 
400,000

6% Senior Notes due 2015
234,420

 
234,420

1.55% Senior Notes due 2016
550,000

 
550,000

1.250% Senior Notes due 2017
300,000

 

2.00% Senior Notes due 2018
700,000

 
700,000

Unsecured term loan due 2018 (2)
200,000

 
200,000

Unsecured term loan due 2019 (2)
790,634

 
800,702

4.00% Senior Notes due 2019
600,000

 
600,000

3.00% Senior Notes, Series A due 2019 (3)
344,204

 

2.700% Senior Notes due 2020
500,000

 
500,000

4.750% Senior Notes due 2021
700,000

 
700,000

4.25% Senior Notes due 2022
600,000

 
600,000

3.25% Senior Notes due 2022
500,000

 
500,000

3.750% Senior Notes due 2024
400,000

 

4.125% Senior Notes, Series B due 2024 (3)
215,128

 

6.90% Senior Notes due 2037
52,400

 
52,400

6.59% Senior Notes due 2038
22,973

 
22,973

5.45% Senior Notes due 2043
258,750

 
258,750

5.70% Senior Notes due 2043
300,000

 
300,000

Mortgage loans and other (4)
2,284,763

 
2,524,889

Total
10,872,371

 
9,320,477

Unamortized fair value adjustment
41,853

 
69,611

Unamortized discounts
(26,132
)
 
(25,096
)
Senior notes payable and other debt
$
10,888,092

 
$
9,364,992

_______
(1)
$164.1 million and $7.3 million of aggregate borrowings are denominated in Canadian dollars as of December 31, 2014 and 2013, respectively.
(2)
These amounts represent in aggregate the approximate $1.0 billion of unsecured term loan borrowings under our unsecured credit facility, of which $107.0 million of borrowings included in the 2019 tranche are denominated in Canadian dollar borrowings.
(3)
These senior notes are denominated in Canadian dollars.
(4)
2014 excludes $43.5 million of mortgage debt related to real estate assets classified as held for sale as of December 31, 2014 that is included in accounts payable and other liabilities on our Consolidated Balance Sheet. 2013 excludes $13.1 million of mortgage debt that is included in accounts payable and other liabilities on our Consolidated Balance Sheet.
Unsecured Credit Facility and Unsecured Term Loans
Our unsecured credit facility is comprised of a $2.0 billion revolving credit facility priced at LIBOR plus 1.0% as of December 31, 2014, and a $200.0 million four-year term loan and an $800.0 million five-year term loan, each priced at LIBOR plus 1.05% as of December 31, 2014. The revolving credit facility matures in January 2018, but may be extended, at our option subject to the satisfaction of certain conditions, for an additional period of one year. The $200.0 million and $800.0 million term loans mature in January 2018 and January 2019, respectively. The unsecured credit facility also includes an accordion feature that permits us to increase our aggregate borrowing capacity thereunder to up to $3.5 billion.

106

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Our unsecured credit facility imposes certain customary restrictions on us, including restrictions pertaining to: (i) liens; (ii) investments; (iii) the incurrence of additional indebtedness; (iv) mergers and dissolutions; (v) certain dividend, distribution and other payments; (vi) permitted businesses; (vii) transactions with affiliates; (viii) agreements limiting certain liens; and (ix) the maintenance of certain consolidated total leverage, secured debt leverage, unsecured debt leverage and fixed charge coverage ratios and minimum consolidated adjusted net worth, and contains customary events of default.
As of December 31, 2014, we had $919.1 million of borrowings outstanding, $13.3 million of letters of credit outstanding and $1.1 billion of unused borrowing capacity available under our unsecured revolving credit facility.
In July 2014, we entered into a new CAD 791.0 million unsecured term loan to initially fund the Holiday Canada Acquisition. The term loan was scheduled to mature on July 30, 2015, but in September 2014, we repaid CAD 660.0 million of the unsecured term loan principally with proceeds from the sale of unsecured senior notes issued by our wholly owned subsidiary, Ventas Canada Finance Limited, and in December 2014, we repaid in full the remaining borrowings outstanding under the term loan.
We recognized a loss on extinguishment of debt of $1.5 million for the year ended December 31, 2013 representing the write-off of unamortized deferred financing fees as a result of the replacement of our previous unsecured revolving credit facility.
Senior Notes
As of December 31, 2014, we had outstanding $5.8 billion aggregate principal amount of senior notes issued by our subsidiary, Ventas Realty, Limited Partnership (“Ventas Realty”) ($4.3 billion of which was co-issued by Ventas Realty’s wholly owned subsidiary, Ventas Capital Corporation), approximately $309.8 million aggregate principal amount of senior notes issued by Nationwide Health Properties, Inc. (“NHP”) and assumed by our subsidiary, Nationwide Health Properties, LLC (“NHP LLC”), as successor to NHP, in connection with our acquisition of NHP, and CAD 650.0 million aggregate principal amount of senior notes issued by our subsidiary, Ventas Canada Finance Limited. All of the senior notes issued by Ventas Realty and Ventas Canada Finance Limited are unconditionally guaranteed by Ventas, Inc.
In January 2015, Ventas Realty issued and sold $600.0 million aggregate principal amount of 3.500% senior notes due 2025 at a public offering price equal to 99.663% of par, for total proceeds of $598.0 million before the underwriting discount and expenses, and $300.0 million aggregate principal amount of 4.375% senior notes due 2045 at a public offering price equal to 99.500% of par, for total proceeds of $298.5 million before the underwriting discount and expenses.
Also in January 2015, Ventas Canada Finance Limited issued and sold CAD 250.0 million aggregate principal amount of 3.30% senior notes, series C due 2022 at an offering price equal to 99.992% of par, for total proceeds of CAD 250.0 million before the agent fees and expenses. The notes were offered on a private placement basis in Canada.
In September 2014, Ventas Canada Finance Limited issued and sold CAD 400.0 million aggregate principal amount of 3.00% senior notes, series A due 2019 at an offering price equal to 99.713% of par, for total proceeds of CAD 398.9 million before the agent fees and expenses, and CAD 250.0 million aggregate principal amount of 4.125% senior notes, series B due 2024 at an offering price equal to 99.601% of par, for total proceeds of CAD 249.0 million before the agent fees and expenses. The notes were offered on a private placement basis in Canada.
In April 2014, Ventas Realty issued and sold $300.0 million aggregate principal amount of 1.250% senior notes due 2017 at a public offering price equal to 99.815% of par, for total proceeds of $299.4 million before the underwriting discount and expenses, and $400.0 million aggregate principal amount of 3.750% senior notes due 2024 at a public offering price equal to 99.304% of par, for total proceeds of $397.2 million before the underwriting discount and expenses.
In September 2013, Ventas Realty issued and sold: $550.0 million aggregate principal amount of 1.55% senior notes due 2016 at a public offering price equal to 99.910% of par, for total proceeds of $549.5 million before the underwriting discount and expenses; and $300.0 million aggregate principal amount of 5.70% senior notes due 2043 at a public offering price equal to 99.628% of par, for total proceeds of $298.9 million before the underwriting discount and expenses.
In March 2013, Ventas Realty issued and sold: $258.8 million aggregate principal amount of 5.45% senior notes due 2043 at a public offering price equal to par, for total proceeds of $258.8 million before the underwriting discounts and expenses; and $500.0 million aggregate principal amount of 2.700% senior notes due 2020 at a public offering price equal to 99.942% of par, for total proceeds of $499.7 million before the underwriting discount and expenses.
In February 2013, we repaid in full, at par, $270.0 million principal amount then outstanding of our 6.25% senior notes due 2013 upon maturity.

107

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


In December 2012, Ventas Realty issued and sold $700.0 million aggregate principal amount of 2.00% senior notes due 2018 at a public offering price equal to 99.739% of par, for total proceeds of $698.2 million before the underwriting discount and expenses.
In August 2012, Ventas Realty initially issued and sold $275.0 million aggregate principal amount of 3.25% senior notes due 2022 (the “2022 Notes”) at a public offering price equal to 99.027% of par, for total proceeds of $272.3 million before the underwriting discount and expenses. In December 2012, Ventas Realty issued and sold an additional $225.0 million principal amount of 2022 Notes at a public offering price equal to 98.509% of par, for total proceeds of $221.6 million before the underwriting discount and expenses.
In April 2012, Ventas Realty issued and sold $600.0 million aggregate principal amount of 4.00% senior notes due 2019 at a public offering price equal to 99.489% of par, for total proceeds of $596.9 million before the underwriting discount and expenses.
In February 2012, Ventas Realty issued and sold $600.0 million aggregate principal amount of 4.25% senior notes due 2022 at a public offering price equal to 99.214% of par, for total proceeds of $595.3 million before the underwriting discount and expenses.
During 2012, we repaid in full, at par, $155.4 million aggregate principal amount then outstanding of our 9% senior notes due 2012 and our 8.25% senior notes due 2012 upon maturity, and we redeemed: all $225.0 million principal amount then outstanding of our 6¾% senior notes due 2017 at a redemption price equal to 103.375% of par, plus accrued and unpaid interest to the redemption date; and all $200.0 million principal amount then outstanding of our 6½% senior notes due 2016 at a redemption price equal to 103.25% of par, plus accrued and unpaid interest to the redemption date, in each case pursuant to the terms of the applicable indenture governing the notes. As a result of these redemptions, we recognized a total loss on extinguishment of debt of $39.7 million.
Ventas Realty’s senior notes are part of our and Ventas Realty’s general unsecured obligations, ranking equal in right of payment with all of our and Ventas Realty’s existing and future senior obligations and ranking senior in right of payment to all of our and Ventas Realty’s existing and future subordinated indebtedness. However, Ventas Realty’s senior notes are effectively subordinated to our and Ventas Realty’s secured indebtedness, if any, to the extent of the value of the assets securing that indebtedness. Ventas Realty’s senior notes are also structurally subordinated to the preferred equity and indebtedness, whether secured or unsecured, of our subsidiaries (other than Ventas Realty and, with respect to those senior notes co-issued by Ventas Capital Corporation, Ventas Capital Corporation).
Ventas Canada Finance Limited’s senior notes are part of our and Ventas Canada Finance Limited’s general unsecured obligations, ranking equal in right of payment with all of Ventas Canada Finance Limited’s existing and future subordinated indebtedness. However, Ventas Canada Finance Limited’s senior notes are effectively subordinated to our and Ventas Canada Finance Limited’s secured indebtedness, if any, to the extent of the value of the assets securing that indebtedness. Ventas Canada Finance Limited’s senior notes are also structurally subordinated to the preferred equity and indebtedness, whether secured or unsecured, of our subsidiaries (other than Ventas Canada Finance Limited).
NHP LLC’s senior notes are part of NHP LLC’s general unsecured obligations, ranking equal in right of payment with all of NHP LLC’s existing and future senior obligations and ranking senior to all of NHP LLC’s existing and future subordinated indebtedness. However, NHP LLC’s senior notes are effectively subordinated to NHP LLC’s secured indebtedness, if any, to the extent of the value of the assets securing that indebtedness. NHP LLC’s senior notes are also structurally subordinated to the preferred equity and indebtedness, whether secured or unsecured, of its subsidiaries.
Ventas Realty, Ventas Canada Finance Limited and NHP LLC may redeem each series of their respective senior notes (other than NHP LLC’s 6.90% senior notes due 2037 and 6.59% senior notes due 2038), in whole at any time or in part from time to time, prior to maturity at the redemption prices set forth in the applicable indenture (which include, in many instances, a make-whole premium), plus, in each case, accrued and unpaid interest thereon to the redemption date.
NHP LLC’s 6.90% senior notes due 2037 are subject to repurchase at the option of the holders, at par, on October 1 in each of 2017 and 2027, and its 6.59% senior notes due 2038 are subject to repurchase at the option of the holders, at par, on July 7 in each of 2018, 2023 and 2028.
Mortgages
At December 31, 2014, we had 160 mortgage loans outstanding in the aggregate principal amount of $2.3 billion and secured by 178 of our properties. Of these loans, 143 loans in the aggregate principal amount of $1.8 billion bear interest at fixed rates ranging from 3.6% to 8.6% per annum, and 17 loans in the aggregate principal amount of $474.0 million bear

108

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


interest at variable rates ranging from 0.7% to 3.5% per annum as of December 31, 2014. At December 31, 2014, the weighted average annual rate on our fixed rate mortgage loans was 5.9%, and the weighted average annual rate on our variable rate mortgage loans was 2.3%. Our mortgage loans had a weighted average maturity of 5.6 years as of December 31, 2014.
During 2014, we assumed or originated mortgage debt of $246.8 million and repaid in full mortgage loans outstanding in the aggregate principal amount of $398.0 million, and recognized a net loss on extinguishment of debt of $2.3 million in connection with these repayments.
During 2013, we assumed or originated mortgage debt of $178.8 million and repaid in full mortgage loans outstanding in the aggregate principal amount of $493.7 million, and recognized a net gain on extinguishment of debt of $0.5 million in connection with these repayments.
During 2012, we assumed mortgage debt of $380.3 million and repaid in full mortgage loans outstanding in the aggregate principal amount of $344.2 million, and recognized a gain on extinguishment of debt of $2.1 million in connection with these repayments.
Scheduled Maturities of Borrowing Arrangements and Other Provisions
As of December 31, 2014, our indebtedness had the following maturities:
 
Principal Amount
Due at Maturity
 
Unsecured Revolving
Credit
Facility(1)
 
Scheduled Periodic
Amortization
 
Total Maturities
 
(In thousands)
2015 (2)
$
704,082

 
$

 
$
41,765

 
$
745,847

2016 (2)
861,817

 

 
37,913

 
899,730

2017 (2)
777,127

 

 
27,500

 
804,627

2018 (2)
1,075,209

 
919,099

 
21,585

 
2,015,893

2019
2,294,979

 

 
13,985

 
2,308,964

Thereafter (3)
3,952,366

 

 
144,944

 
4,097,310

Total maturities
$
9,665,580

 
$
919,099

 
$
287,692

 
$
10,872,371

    
(1)
At December 31, 2014, we had $55.3 million of unrestricted cash and cash equivalents, for $863.8 million of net borrowings outstanding under our unsecured revolving credit facility.
(2)
Excludes $43.5 million of mortgage debt related to real estate assets classified as held for sale as of December 31, 2014 that is scheduled to mature between 2015 and 2018.
(3)
Includes $52.4 million aggregate principal amount of 6.90% senior notes due 2037 that is subject to repurchase, at the option of the holders, on October 1 in each of 2017 and 2027, and $23.0 million aggregate principal amount of 6.59% senior notes due 2038 that is subject to repurchase, at the option of the holders, on July 7 in each of 2018, 2023 and 2028.
The instruments governing our outstanding indebtedness contain covenants that limit our ability and the ability of certain of our subsidiaries to, among other things: (i) incur debt; (ii) make certain dividends, distributions and investments; (iii) enter into certain transactions; and/or (iv) merge, consolidate or sell certain assets. Ventas Realty’s and Ventas Canada Finance Limited’s senior notes also require us and our subsidiaries to maintain total unencumbered assets of at least 150% of our unsecured debt. Our unsecured credit facility also requires us to maintain certain financial covenants pertaining to, among other things, our consolidated total leverage, secured debt, unsecured debt, fixed charge coverage and net worth.
As of December 31, 2014, we were in compliance with all of these covenants.
Derivatives and Hedging
In the normal course of our business, interest rate fluctuations affect future cash flows under our variable rate debt obligations, loans receivable and marketable debt securities and foreign currency exchange rate fluctuations affect our operating results. We follow established risk management policies and procedures, including the use of derivative instruments, to mitigate the impact of these risks.
For interest rate exposures, we use derivatives primarily to fix the rate on our variable rate debt and to manage our borrowing costs. We do not use derivative instruments for trading or speculative purposes, and we have a policy of entering

109

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


into contracts only with major financial institutions based upon their credit ratings and other factors. When considered together with the underlying exposure that the derivative is designed to hedge, we do not expect that the use of derivatives in this manner would have any material adverse effect on our future financial condition or results of operations.
As of December 31, 2014, our variable rate debt obligations of $2.4 billion reflect, in part, the effect of $153.6 million notional amount of interest rate swaps with a maturity of March 21, 2016 that effectively convert fixed rate debt to variable rate debt. As of December 31, 2014, our fixed rate debt obligations of $8.5 billion reflect, in part, the effect of $59.0 million notional amount of interest rate swaps with maturities ranging from March 2, 2015 to April 1, 2019, in each case that effectively convert variable rate debt to fixed rate debt.
Unamortized Fair Value Adjustment
As of December 31, 2014, the unamortized fair value adjustment related to the long-term debt we assumed in connection with various acquisitions was $41.9 million and will be recognized as effective yield adjustments over the remaining terms of the instruments. The estimated aggregate amortization of the fair value adjustment related to long-term debt (which is reflected as a reduction of interest expense) was $20.6 million for the year ended December 31, 2014 and for each of the next five years will be as follows: 2015$13.6 million; 2016$9.2 million; 2017$5.4 million; 2018$2.1 million; and 2019$1.5 million.
Note 11—Fair Values of Financial Instruments
As of December 31, 2014 and 2013, the carrying amounts and fair values of our financial instruments were as follows:
 
2014
 
2013
 
Carrying
Amount
 
Fair Value
 
Carrying
Amount
 
Fair Value
 
(In thousands)
Assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
55,348

 
$
55,348

 
$
94,816

 
$
94,816

Secured loans receivable, net
766,641

 
774,789

 
354,775

 
355,223

Unsecured loans receivable, net
21,862

 
23,164

 
38,542

 
40,473

Government-sponsored pooled loan investments
63,115

 
63,115

 
21,454

 
21,454

Marketable securities
76,046

 
76,046

 

 

Liabilities:
 
 
 
 
 
 
 
Senior notes payable and other debt, gross
10,872,371

 
11,197,131

 
9,320,477

 
9,405,259

Derivative instruments and other liabilities
2,743

 
2,743

 
11,230

 
11,230

Redeemable OP unitholder interests
159,134

 
159,134

 
111,607

 
111,607

Fair value estimates are subjective in nature and based upon several important assumptions, including estimates of future cash flows, risks, discount rates and relevant comparable market information associated with each financial instrument. The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts. Accordingly, the estimates presented above are not necessarily indicative of the amounts we would realize in a current market exchange.
Note 12—Stock-Based Compensation
Compensation Plans
We currently have: five plans under which outstanding options to purchase common stock, shares of restricted stock or restricted stock units have been, or may in the future be, granted to our officers, employees and non-employee directors (the 2000 Incentive Compensation Plan (Employee Plan), the 2004 Stock Plan for Directors, the 2006 Incentive Plan, the 2006 Stock Plan for Directors, and the 2012 Incentive Plan); one plan under which executive officers may receive common stock in lieu of compensation (the Executive Deferred Stock Compensation Plan); and one plan under which certain non-employee directors have received or may receive common stock in lieu of director fees (the Nonemployee Directors’ Deferred Stock Compensation Plan). These plans are referred to collectively as the “Plans.”
During the year ended December 31, 2014, we were permitted to issue shares and grant options, restricted stock and restricted stock units only under the Executive Deferred Stock Compensation Plan, the Nonemployee Directors’ Deferred Stock

110

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Compensation Plan and the 2012 Incentive Plan. The 2006 Incentive Plan and the 2006 Stock Plan for Directors (collectively, the “2006 Plans”) expired on December 31, 2012, and no additional grants were permitted under those Plans after that date.
The number of shares initially reserved for issuance and the number of shares available for future grants or issuance under these Plans as of December 31, 2014 were as follows:
Executive Deferred Stock Compensation Plan—500,000 shares were reserved initially for issuance to our executive officers in lieu of the payment of all or a portion of their salary, at their option, and 500,000 shares were available for future issuance as of December 31, 2014.
Nonemployee Directors’ Deferred Stock Compensation Plan—500,000 shares were reserved initially for issuance to nonemployee directors in lieu of the payment of all or a portion of their retainer and meeting fees, at their option, and 411,745 shares were available for future issuance as of December 31, 2014.
2012 Incentive Plan—8,836,614 shares (plus the number of shares or options outstanding under the 2006 Plans as of December 31, 2012 that were or are subsequently forfeited or expire unexercised) were reserved initially for grants or issuance to employees and non-employee directors, and 7,170,536 shares (plus the number of shares or options outstanding under the 2006 Plans as of December 31, 2014 that were or are subsequently forfeited or expire unexercised) were available for future issuance as of December 31, 2014.
Outstanding options issued under the Plans are exercisable at the market price on the date of grant, expire ten years from the date of grant, and vest or have vested over periods of two or three years. If provided in the applicable Plan or award agreement, the vesting of stock options may accelerate upon a change of control (as defined in the applicable Plan) of Ventas, Inc. and other specified events.
In connection with the NHP acquisition, we assumed certain outstanding options, shares of restricted stock and restricted stock units previously issued to NHP employees pursuant to the Nationwide Health Properties, Inc. 2005 Performance Incentive Plan, as amended (the “NHP Plan”). Any remaining outstanding awards continue to be subject to the terms and conditions of the NHP Plan and the applicable award agreements.
Stock Options
In determining the estimated fair value of our stock options as of the date of grant, we used the Black-Scholes option pricing model with the following assumptions:
 
2014
 
2013
 
2012
Risk-free interest rate
1.3 - 1.4%

 
0.59 - 0.63%

 
0.68 - 1.39%

Dividend yield
5.00
%
 
5.00
%
 
6.75
%
Volatility factors of the expected market price for our common stock
17.8 - 18.0%

 
24.2 - 31.7%

 
35.9 - 42.9%

Weighted average expected life of options
4.17 years

 
4.17 years

 
4.25 - 7.0 years

The following is a summary of stock option activity in 2014:
 
Shares
 
Range of Exercise
Prices
 
Weighted Average
Exercise Price
 
Weighted
Average
Remaining
Contractual
Life (years)
 
Intrinsic
Value
($000’s)
Outstanding as of December 31, 2013
2,258,763

 
$21.57- $73.20
 
$
51.59

 
 
 
 

Options granted
918,225

 
60.50 - 61.60
 
61.37

 
 
 
 

Options exercised
(634,299
)
 
21.57 - 70.34
 
41.26

 
 
 
 

Options forfeited
(82,061
)
 
55.39 - 73.20
 
65.10

 
 
 
 
Outstanding as of December 31, 2014
2,460,628

 
28.96 - 70.34
 
57.45

 
7.3
 
$
35,068

Exercisable as of December 31, 2014
1,670,864

 
$28.96 - $70.34
 
$
54.99

 
6.6
 
$
27,921

Compensation costs for all share-based awards are based on the grant date fair value and are recognized on a straight-line basis during the requisite service periods. Compensation costs related to stock options for the years ended December 31, 2014, 2013 and 2012 were $4.7 million, $4.5 million and $4.4 million, respectively. The total intrinsic value at the vesting date of options vested during the years ended December 31, 2014, 2013 and 2012 was $0.7 million, $3.0 million and $1.8 million, respectively.

111

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


A summary of the status of our nonvested stock options as of December 31, 2014 and changes during the year then ended follows:
 
Shares
 
Weighted Average
Grant Date Fair
Value
Nonvested at beginning of year
534,686

 
$
9.54

Granted
918,225

 
4.37

Vested
(594,751
)
 
7.30

Forfeited
(68,396
)
 
6.35

Nonvested at end of year
789,764

 
$
5.49

As of December 31, 2014, we had $1.5 million of total unrecognized compensation cost related to nonvested stock options granted under the Plans. We expect to recognize that cost over a weighted average period of 1.2 years. Aggregate proceeds received from options exercised under the Plans or the NHP Plan for the years ended December 31, 2014, 2013 and 2012 were $26.2 million, $7.2 million and $21.5 million, respectively. The total intrinsic value at exercise of options exercised during the years ended December 31, 2014, 2013 and 2012 was $19.3 million, $4.0 million and $14.7 million, respectively.
Restricted Stock and Restricted Stock Units
We recognize the fair value of shares of restricted stock and restricted stock units on the grant date of the award as stock-based compensation expense over the requisite service period, with charges to general and administrative expenses of approximately $16.2 million in 2014, $16.1 million in 2013 and $16.4 million in 2012. Restricted stock and restricted stock units generally vest over periods ranging from two to five years. If provided in the applicable Plan or award agreement, the vesting of restricted stock and restricted stock units may accelerate upon a change of control (as defined in the applicable Plan) of Ventas and other specified events.
A summary of the status of our nonvested restricted stock and restricted stock units as of December 31, 2014, and changes during the year ended December 31, 2014 follows:
 
Restricted
Stock
 
Weighted
Average
Grant Date
Fair Value
 
Restricted
Stock Units
 
Weighted
Average
Grant Date
Fair Value
Nonvested at December 31, 2013
509,116

 
$
56.66

 
7,516

 
$
60.80

Granted
207,182

 
61.60

 
9,076

 
57.28

Vested
(282,448
)
 
57.41

 
(5,155
)
 
59.10

Forfeited
(31,109
)
 
58.74

 
(45
)
 
53.74

Nonvested at December 31, 2014
402,741

 
$
58.51

 
11,392

 
$
58.79

As of December 31, 2014, we had $10.7 million of unrecognized compensation cost related to nonvested restricted stock and restricted stock units under the Plans. We expect to recognize that cost over a weighted average period of 1.6 years. The total fair value at the vesting date for restricted stock and restricted stock units that vested during the years ended December 31, 2014, 2013 and 2012 was $17.7 million, $16.9 million and $17.5 million, respectively.
Employee and Director Stock Purchase Plan
We have in effect an Employee and Director Stock Purchase Plan (“ESPP”) under which our employees and directors may purchase shares of our common stock at a discount. Pursuant to the terms of the ESPP, on each purchase date, participants may purchase shares of common stock at a price not less than 90% of the market price on that date (with respect to the employee tax-favored portion of the plan) and not less than 95% of the market price on that date (with respect to the additional employee and director portion of the plan). We initially reserved 2,500,000 shares for issuance under the ESPP. As of December 31, 2014, 69,395 shares had been purchased under the ESPP and 2,430,605 shares were available for future issuance.
Employee Benefit Plan
We maintain a 401(k) plan that allows eligible employees to defer compensation subject to certain limitations imposed by the Code. In 2014, we made contributions for each qualifying employee of up to 3.5% of his or her salary, subject to certain limitations. During 2014, 2013 and 2012, our aggregate contributions were approximately $1,136,000, $1,036,000 and $768,000, respectively.

112

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Note 13—Income Taxes
We have elected to be taxed as a REIT under the applicable provisions of the Code for every year beginning with the year ended December 31, 1999. We have also elected for certain of our subsidiaries to be treated as taxable REIT subsidiaries (“TRS” or “TRS entities”), which are subject to federal, state and foreign income taxes. All entities other than the TRS entities are collectively referred to as the “REIT” within this Note 13. Certain REIT entities are subject to foreign income tax.
Although we intend to continue to operate in a manner that will enable us to qualify as a REIT, such qualification depends upon our ability to meet, on a continuing basis, various distribution, stock ownership and other tests. During the years ended December 31, 2014, 2013 and 2012, our tax treatment of distributions per common share was as follows:
 
2014
 
2013
 
2012
Tax treatment of distributions:
 
 
 
 
 
Ordinary income
$
2.61271

 
$
2.65787

 
$
2.23124

Qualified ordinary income
0.10474

 
0.03718

 

Long-term capital gain
0.16224

 
0.03995

 
0.18884

Unrecaptured Section 1250 gain
0.08531

 

 
0.05992

Distribution reported for 1099-DIV purposes
$
2.96500

 
$
2.73500

 
$
2.48000

We believe we have met the annual REIT distribution requirement by payment of at least 90% of our estimated taxable income for 2014, 2013 and 2012. Our consolidated benefit for income taxes for the years ended December 31, 2014, 2013 and 2012 was as follows:
 
2014
 
2013
 
2012
 
(In thousands)
Current - Federal and state
$
878

 
$
2,684

 
$
1,208

Deferred - Federal and state
(5,110
)
 
(14,256
)
 
(6,789
)
Current - Foreign
327

 

 

Deferred - Foreign
(4,827
)
 
(256
)
 
(701
)
Total
$
(8,732
)
 
$
(11,828
)
 
$
(6,282
)
The income tax benefit for the year ended December 31, 2014 is due primarily to the income tax benefit of ordinary losses and restructuring related to certain TRS entities. The income tax benefit for the year ended December 31, 2013 primarily relates to the release of valuation allowances against certain deferred tax assets of our TRS entities.
Although the TRS entities have paid minimal cash federal income taxes for the year ended December 31, 2014, their federal income tax liabilities may increase in future years as we exhaust net operating loss (“NOL”) carryforwards and as our senior living operations reportable business segment grows. Such increases could be significant.
A reconciliation of income tax expense and benefit, which is computed by applying the federal corporate tax rate for the years ended December 31, 2014, 2013 and 2012, to the income tax benefit is as follows:
 
2014
 
2013
 
2012
 
(In thousands)
Tax at statutory rate on earnings from continuing operations before unconsolidated entities, noncontrolling interest and income taxes
$
156,981

 
$
167,947

 
$
99,174

State income taxes, net of federal benefit
(1,152
)
 
(1,857
)
 
(842
)
Increase in valuation allowance
23,122

 
7,145

 
33,577

Increase (decrease) in ASC 740 income tax liability
878

 
2,805

 
656

Tax at statutory rate on earnings not subject to federal income taxes
(185,290
)
 
(187,416
)
 
(138,687
)
Foreign rate differential and foreign taxes
3,230

 

 

Change in tax status of TRS
(7,380
)
 

 

Other differences
879

 
(452
)
 
(160
)
Income tax expense (benefit)
$
(8,732
)
 
$
(11,828
)
 
$
(6,282
)

113

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


The REIT made minimal state and foreign income tax payments and no Federal income tax payments for the years ended December 31, 2014, 2013 and 2012.
In connection with our acquisitions of Sunrise Senior Living Real Estate Investment Trust (“Sunrise REIT”) in 2007, and ASLG in 2011, and the Holiday Canada Acquisition in 2014, we established a beginning net deferred tax liability of $306.3 million, $44.6 million and $107.7 million, respectively, related to temporary differences between the financial reporting and tax bases of assets acquired and liabilities assumed (primarily property, intangible and related assets, net of NOL carryforwards). No net deferred tax asset or liability was recorded for the Lillibridge acquisition in 2010 or the acquisition of three triple-net leased private hospitals (located in the United Kingdom) in 2014.
Each TRS is a tax paying component for purposes of classifying deferred tax assets and liabilities. The tax effects of temporary differences and carryforwards (in addition to the REIT carryforwards) included in the net deferred tax liabilities at December 31, 2014, 2013 and 2012 are summarized as follows:
 
2014
 
2013
 
2012
 
(In thousands)
Property, primarily differences in depreciation and amortization, the tax basis of land assets and the treatment of interests and certain costs
$
(406,023
)
 
$
(309,775
)
 
$
(310,756
)
Operating loss and interest deduction carryforwards
398,859

 
377,645

 
366,590

Expense accruals and other
15,355

 
13,421

 
13,984

Valuation allowance
(352,528
)
 
(331,458
)
 
(326,837
)
Net deferred tax liabilities (1)
$
(344,337
)
 
$
(250,167
)
 
$
(257,019
)
    
(1)
Includes approximately $0 million, $0 million and $2.7 million, respectively, of deferred tax assets included in other assets on our Consolidated Balance Sheets.
Due to uncertainty regarding the realization of certain deferred tax assets, we have established valuation allowances, primarily in connection with the NOL carryforward related to the REIT.
A rollforward of valuation allowances, for the years ended December 31, 2014, 2013 and 2012, is as follows:
 
2014
 
2013
 
2012
 
(In thousands)
Beginning Balance
$
331,458

 
$
326,837

 
$
281,954

Additions:
 
 
 
 
 
Purchase accounting

 
613

 
3,987

Expenses
28,364

 
31,540

 
41,445

Subtractions:
 
 
 
 
 
Deductions
(2,344
)
 
(23,622
)
 
(3,611
)
Other activity (not resulting in expense or deduction)
(4,950
)
 
(3,910
)
 
3,062

Ending balance
$
352,528

 
$
331,458

 
$
326,837

Our net deferred tax liability increased $94.2 million during 2014 primarily due to $107.7 million of recorded deferred tax liability as a result of the Holiday Canada Acquisition. Our net deferred tax liability decreased $6.9 million during 2013 primarily due to the reversal of valuation allowances against deferred tax assets.
For the years ended December 31, 2014 and 2013, the net difference between tax bases and the reported amount of REIT assets and liabilities for federal income tax purposes was approximately $4.1 billion and $4.7 billion, respectively, less than the book bases of those assets and liabilities for financial reporting purposes.
We are subject to corporate level taxes for any asset dispositions during the ten-year period immediately after the assets were owned by a C corporation (either prior to our REIT election, through stock acquisition or merger) (“built-in gains tax”). The amount of income potentially subject to built-in gains tax is generally equal to the lesser of the excess of the fair value of the asset over its adjusted tax basis as of the date it became a REIT asset or the actual amount of gain. Some, but not all, future gains could be offset by available NOL carryforwards.

114

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Generally, we are subject to audit under the statute of limitations by the Internal Revenue Service (“IRS”) for the year ended December 31, 2011 and subsequent years and are subject to audit by state taxing authorities for the year ended December 31, 2010 and subsequent years. We are subject to audit by the Canada Revenue Agency (“CRA”) and provincial authorities with respect to entities acquired or formed in connection with our 2007 acquisition of Sunrise Senior Living Real Estate Investment Trust generally for periods subsequent to the acquisition. We are also subject to audit in Canada for periods subsequent to the acquisition, and certain prior periods, with respect to the entities acquired in connection with the Holiday Canada Acquisition.
At December 31, 2014, we had a combined NOL carryforward of $363.2 million related to the TRS entities and an NOL carryforward of $717.3 million related to the REIT. These amounts can be used to offset future taxable income (and/or taxable income for prior years if an audit determines that tax is owed), if any. The REIT will be entitled to utilize NOLs and tax credit carryforwards only to the extent that REIT taxable income exceeds our deduction for dividends paid. Lillibridge and ASLG NOL carryforwards are limited as to their utilization by Section 382 of the Code. The NOL carryforwards begin to expire in 2024 with respect to the TRS entities and in 2016 for the REIT.
As a result of our uncertainty regarding the use of existing REIT NOLs, we have not ascribed any net deferred tax benefit to REIT NOL carryforwards as of December 31, 2014 and 2013. The IRS may challenge our entitlement to these tax attributes during its review of the tax returns for the previous tax years. We believe we are entitled to these tax attributes but cannot assure you as to the outcome of these matters.
The following table summarizes the activity related to our unrecognized tax benefits:
 
2014
 
2013
 
(In thousands)
Balance as of January 1
$
21,906

 
$
19,466

Additions to tax positions related to the current year
4,507

 
3,901

Additions to tax positions related to prior years
126

 

Subtractions to tax positions related to prior years
(129
)
 
(513
)
Subtractions to tax positions related to settlements

 

Subtractions to tax positions as a result of the lapse of the statute of limitations
(964
)
 
(948
)
Balance as of December 31
$
25,446

 
$
21,906

Included in these unrecognized tax benefits of $25.4 million and $21.9 million at December 31, 2014 and 2013, respectively, were $23.9 million and $20.4 million of tax benefits at December 31, 2014 and 2013, respectively, that, if recognized, would reduce our annual effective tax rate. We accrued interest of $0.4 million related to the unrecognized tax benefits during 2014, but no penalties. We expect our unrecognized tax benefits to decrease by $1.0 million during 2015.
Note 14—Commitments and Contingencies
Certain Obligations, Liabilities and Litigation
We may be subject to various obligations, liabilities and litigation assumed in connection with or arising out of our acquisitions or otherwise arising in connection with our business, some of which may be indemnifiable by third parties. If these liabilities are greater than expected or were not known to us at the time of acquisition, if we are not entitled to indemnification, or if the responsible third party fails to indemnify us, such obligations, liabilities and litigation could have a Material Adverse Effect on us. In addition, in connection with the sale or leasing of our properties, we may incur various obligations and liabilities, including indemnification obligations to the buyer or tenant, relating to the operations of those properties, which could have a Material Adverse Effect on us.
Other
With respect to certain of our properties, we are subject to operating and ground lease obligations that generally require fixed monthly or annual rent payments and may include escalation clauses and renewal options. These leases have terms that expire during the next 86 years, excluding extension options. Our future minimum lease obligations under non-cancelable operating and ground leases as of December 31, 2014 were $33.3 million in 2015, $29.6 million in 2016, $22.7 million in 2017, $18.4 million in 2018, $15.3 million in 2019, and $509.2 million thereafter.

115

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Note 15—Earnings Per Share
The following table shows the amounts used in computing our basic and diluted earnings per common share:
 
For the Year Ended December 31,
 
2014
 
2013
 
2012
 
(In thousands, except per share amounts)
Numerator for basic and diluted earnings per share:
 
 
 
 
 
Income from continuing operations attributable to common stockholders
$
473,661

 
$
489,788

 
$
308,814

Discontinued operations
2,106

 
(36,279
)
 
53,986

Net income attributable to common stockholders
$
475,767

 
$
453,509

 
$
362,800

Denominator:
 
 
 
 
 
Denominator for basic earnings per share—weighted average shares
294,175

 
292,654

 
292,064

Effect of dilutive securities:
 
 
 
 
 
Stock options
495

 
534

 
496

Restricted stock awards
55

 
99

 
92

OP units
1,952

 
1,823

 
1,836

Denominator for diluted earnings per share—adjusted weighted average shares
296,677

 
295,110

 
294,488

Basic earnings per share:
 
 
 
 
 
Income from continuing operations attributable to common stockholders
$
1.61

 
$
1.67

 
$
1.06

Discontinued operations
0.01

 
(0.12
)
 
0.18

Net income attributable to common stockholders
$
1.62

 
$
1.55

 
$
1.24

Diluted earnings per share:
 
 
 
 
 
Income from continuing operations attributable to common stockholders
$
1.59

 
$
1.66

 
$
1.05

Discontinued operations
0.01

 
(0.12
)
 
0.18

Net income attributable to common stockholders
$
1.60

 
$
1.54

 
$
1.23

There were 479,291, 504,815 and 372,440 anti-dilutive options outstanding for the years ended December 31, 2014, 2013 and 2012, respectively.
Note 16—Litigation
Litigation Relating to the HCT Acquisition
In the weeks following the announcement on June 2, 2014 of our agreement to acquire HCT, a total of 13 putative class actions were filed by purported HCT stockholders challenging the transaction. Certain of the actions also purport to bring derivative claims on behalf of HCT. Among other things, the lawsuits allege that the directors of HCT breached their fiduciary duties by approving the transaction and that we and our subsidiaries, Stripe Sub, LLC and Stripe OP, LP, aided and abetted this purported breach of fiduciary duty. The complaints seek injunctive relief and damages.
Ten of these actions were filed in the Circuit Court for Baltimore City, Maryland and consolidated under the caption In re: American Realty Capital, Healthcare Trust, Inc. Shareholder & Derivative Litigation, Case No. 24-C-14-003534, two actions were filed in the Supreme Court of the State of New York, County of New York, and one action was filed in the United States District Court of Maryland.
On January 2, 2015, the parties to the consolidated state court action agreed to a memorandum of understanding regarding settlement of all claims asserted on behalf of each alleged class of HCT stockholders. In connection with the settlement contemplated by that memorandum of understanding, each action and all claims asserted therein will be dismissed, subject to approval by each applicable court. The proposed settlement terms require HCT to make certain additional disclosures related to the merger, which were set forth in HCT's Current Report on Form 8-K dated January 2, 2015. The memorandum of understanding further contemplates that the parties will enter into a stipulation of settlement, which will be subject to customary conditions, including confirmatory discovery and court approval following notice to HCT’s stockholders. If the parties enter into a stipulation of settlement, a hearing will be scheduled at which the court will consider the fairness, reasonableness and adequacy of the settlement. There can be no assurance that the parties will ultimately enter into a stipulation

116

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


of settlement, that the applicable court will approve any proposed settlement, or that any eventual settlement will be under the same terms as those contemplated by the memorandum of understanding.
On January 5, 2015, the parties to the federal action also agreed to a memorandum of understanding regarding settlement of all claims asserted on behalf of each alleged class of HCT stockholders. In connection with the settlement contemplated by that memorandum of understanding, each action and all claims asserted therein will be dismissed, subject to approval by each applicable court. The proposed settlement terms require HCT to make certain additional disclosures related to the merger,which were set forth in HCT's Current Report on Form 8-K dated January 5, 2015. The memorandum of understanding further contemplates that the parties will enter into a stipulation of settlement, which will be subject to customary conditions, including confirmatory discovery and court approval following notice to HCT’s stockholders. If the parties enter into a stipulation of settlement, a hearing will be scheduled at which the court will consider the fairness, reasonableness and adequacy of the settlement. There can be no assurance that the parties will ultimately enter into a stipulation of settlement, that the applicable court will approve any proposed settlement, or that any eventual settlement will be under the same terms as those contemplated by the memorandum of understanding.
We believe that each of these actions is without merit.
Proceedings against Tenants, Operators and Managers
From time to time, Brookdale Senior Living, Kindred, Atria, Sunrise and our other tenants, operators and managers are parties to certain legal actions, regulatory investigations and claims arising in the conduct of their business and operations. Even though we generally are not party to these proceedings, the unfavorable resolution of any such actions, investigations or claims could, individually or in the aggregate, materially adversely affect such tenants’, operators’ or managers’ liquidity, financial condition or results of operations and their ability to satisfy their respective obligations to us, which, in turn, could have a Material Adverse Effect on us.
Proceedings Indemnified and Defended by Third Parties
From time to time, we are party to certain legal actions, regulatory investigations and claims for which third parties are contractually obligated to indemnify, defend and hold us harmless. The tenants of our triple-net leased properties and, in some cases, their affiliates are required by the terms of their leases and other agreements with us to indemnify, defend and hold us harmless against certain actions, investigations and claims arising in the course of their business and related to the operations of our triple-net leased properties. In addition, third parties from whom we acquired certain of our assets and, in some cases, their affiliates are required by the terms of the related conveyance documents to indemnify, defend and hold us harmless against certain actions, investigations and claims related to the acquired assets and arising prior to our ownership or related to excluded assets and liabilities. In some cases, a portion of the purchase price consideration is held in escrow for a specified period of time as collateral for these indemnification obligations. We are presently being defended by certain tenants and other obligated third parties in these types of matters. We cannot assure you that our tenants, their affiliates or other obligated third parties will continue to defend us in these matters, that our tenants, their affiliates or other obligated third parties will have sufficient assets, income and access to financing to enable them to satisfy their defense and indemnification obligations to us or that any purchase price consideration held in escrow will be sufficient to satisfy claims for which we are entitled to indemnification. The unfavorable resolution of any such actions, investigations or claims could, individually or in the aggregate, materially adversely affect our tenants’ or other obligated third parties’ liquidity, financial condition or results of operations and their ability to satisfy their respective obligations to us, which, in turn, could have a Material Adverse Effect on us.
Proceedings Arising in Connection with Senior Living and MOB Operations; Other Litigation
From time to time, we are party to various legal actions, regulatory investigations and claims (some of which may not be insured and some of which may allege large damage amounts) arising in connection with our senior living and MOB operations or otherwise in the course of our business. In limited circumstances, the manager of the applicable seniors housing community or MOB may be contractually obligated to indemnify, defend and hold us harmless against such actions, investigations and claims. It is the opinion of management that, except as otherwise set forth in this Note 16, the disposition of any such actions, investigations and claims that are currently pending will not, individually or in the aggregate, have a Material Adverse Effect on us. However, regardless of their merits, we may be forced to expend significant financial resources to defend and resolve these matters. We are unable to predict the ultimate outcome of these actions, investigations and claims, and if management’s assessment of our liability with respect thereto is incorrect, such actions, investigations and claims could have a Material Adverse Effect on us.

117

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Note 17—Permanent and Temporary Equity
Capital Stock
In March 2013, we established an “at-the-market” (“ATM”) equity offering program through which we may sell from time to time up to an aggregate of $750 million of our common stock. For the year ended December 31, 2014, we issued and sold a total of 3,381,678 shares of common stock under the program for aggregate net proceeds of $242.3 million (all of which was received in the fourth quarter of 2014), after sales agent commissions of $3.7 million. As of December 31, 2014, approximately $360.4 million of our common stock remained available for sale under our ATM equity offering program.
In January 2015, we issued and sold an additional 3,750,202 shares of common stock under the ATM for aggregate net proceeds of $285.8 million, after sales agent commissions of $4.4 million.
For the year ended December 31, 2013, we issued and sold a total of 2,069,200 shares of common stock under the ATM program for aggregate net proceeds of $141.5 million, after sales agent commissions of $2.1 million.
In December 2012, through our acquisition of certain private equity funds, we acquired 3.7 million shares of our common stock that we subsequently canceled in February 2014. See “Note 4—Acquisitions of Real Estate Property.”
In June 2012, we completed the public offering and sale of 5,980,000 shares of our common stock for $342.5 million in aggregate proceeds.
Excess Share Provision
In order to preserve our ability to maintain REIT status, our Charter provides that if a person acquires beneficial ownership of more than 9% of our outstanding common stock or 9.9% of our outstanding preferred stock, the shares that are beneficially owned in excess of such limit are deemed to be excess shares. These shares are automatically deemed transferred to a trust for the benefit of a charitable institution or other qualifying organization selected by our Board of Directors. The trust is entitled to all dividends with respect to the shares and the trustee may exercise all voting power over the shares.
We have the right to buy the excess shares for a purchase price equal to the lesser of the price per share in the transaction that created the excess shares or the market price on the date we buy the shares, and we may defer payment of the purchase price for the excess shares for up to five years. If we do not purchase the excess shares, the trustee of the trust is required to transfer the excess shares at the direction of the Board of Directors. The owner of the excess shares is entitled to receive the lesser of the proceeds from the sale or the original purchase price for such excess shares, and any additional amounts are payable to the beneficiary of the trust.
Our Board of Directors is empowered to grant waivers from the excess share provisions of our Charter.
Distribution Reinvestment and Stock Purchase Plan
Prior to its suspension in July 2014, our Distribution Reinvestment and Stock Purchase Plan (“DRIP”) enabled existing stockholders to purchase shares of common stock by reinvesting all or a portion of the cash distribution on their shares of our common stock, subject to certain limits. Existing stockholders and new investors also could purchase shares of our common stock under the DRIP by making optional cash payments, subject to certain limits. In 2014, we offered a 1% discount on the purchase price of our common stock to shareholders who reinvested their dividends or made optional cash purchases through the DRIP. We may determine whether or not to reinstate the DRIP at any time at our sole discretion, and if so, the amount and availability of this discount will be at our discretion. The granting of a discount for one month or quarter, as applicable, will not insure the availability or amount of a discount in future periods, and each month or quarter, as applicable, we may lower or eliminate the discount without prior notice. In addition, we may change our determination as to whether common shares will be purchased by the plan administrator directly from us or in the open market without prior notice to investors.
Accumulated Other Comprehensive Income
The following is a summary of our accumulated other comprehensive income as of December 31, 2014 and 2013:
 
2014
 
2013
 
(In thousands)
Foreign currency translation
$
866

 
$
18,019

Unrealized gain (loss) on marketable securities
6,785

 
(216
)
Other
5,470

 
1,856

Total accumulated other comprehensive income
$
13,121

 
$
19,659


118

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Redeemable OP Unitholder and Noncontrolling Interest
The following is a rollforward of our redeemable OP unitholder interests and noncontrolling interests for 2014:
 
 
Redeemable OP Unitholder Interests
 
Redeemable Noncontrolling Interests
 
Total Redeemable OP Unitholder and Noncontrolling Interests
 
 
(In thousands)
Balance as of December 31, 2013
 
$
111,607

 
$
45,053

 
$
156,660

New issuances
 
20,643

 

 
20,643

Change in valuation
 
33,062

 
(4,020
)
 
29,042

Distributions and other
 
(5,757
)
 
(1,982
)
 
(7,739
)
Redemptions
 
(421
)
 
(26,169
)
 
(26,590
)
Balance as of December 31, 2014
 
$
159,134

 
$
12,882

 
$
172,016


Note 18—Related Party Transactions
We own an MOB located on the Sutter Medical Center-Castro Valley campus that is subject to a ground lease from Sutter Health and is 100% leased by Sutter Health pursuant to long-term triple-net leases. We received $2.2 million and $2.1 million of base rent from Sutter Health for this MOB in 2014 and 2013, respectively. In 2014, we acquired an interest in another MOB (through our investment in an unconsolidated joint venture entity) that is 100% leased by Sutter Health. Our unconsolidated joint venture entity received $0.8 million of base rent from Sutter Health for this MOB in 2014. Robert D. Reed, who was Senior Vice President and Chief Financial Officer of Sutter Health until his retirement on January 1, 2015, has served as a member of our Board of Directors since March 2008.
Upon consummation of the ASLG acquisition in May 2011, we entered into long-term management agreements with Atria to operate the acquired assets. During 2012, we paid Atria $33.9 million in management fees under our agreements. Matthew J. Lustig, a member of our Board of Directors since May 2011, served as Chairman of Atria until our acquisition of certain private equity funds on December 21, 2012 (see “Note 4—Acquisitions of Real Estate Property”) and is employed by affiliates of LFREI.


119

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Note 19—Quarterly Financial Information (Unaudited)
Summarized unaudited consolidated quarterly information for the years ended December 31, 2014 and 2013 is provided below.
 
For the Year Ended December 31, 2014
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
(In thousands, except per share amounts)
Revenues
$
741,470

 
$
751,254

 
$
779,035

 
$
803,987

Income from continuing operations attributable to common stockholders, including real estate dispositions
$
118,016

 
$
138,653

 
$
109,391

 
$
107,601

Discontinued operations
3,031

 
(255
)
 
(259
)
 
(411
)
Net income attributable to common stockholders
$
121,047

 
$
138,398

 
$
109,132

 
$
107,190

Earnings per share:
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders, including real estate dispositions
$
0.40

 
$
0.47

 
$
0.37

 
$
0.36

Discontinued operations
0.01

 
(0.00
)
 
(0.00
)
 
(0.00
)
Net income attributable to common stockholders
$
0.41

 
$
0.47

 
$
0.37

 
$
0.36

Diluted:
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders, including real estate dispositions
$
0.40

 
$
0.47

 
$
0.37

 
$
0.36

Discontinued operations
0.01

 
(0.00
)
 
(0.00
)
 
(0.00
)
Net income attributable to common stockholders
$
0.41

 
$
0.47

 
$
0.37

 
$
0.36

Dividends declared per share
$
0.725

 
$
0.725

 
$
0.725

 
$
0.79


120

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


 
For the Year Ended December 31, 2013
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
(In thousands, except per share amounts)
Revenues (1)
$
682,909

 
$
684,109

 
$
711,249

 
$
733,185

Income from continuing operations attributable to common stockholders (1)
$
120,624

 
$
133,139

 
$
127,470

 
$
108,555

Discontinued operations (1)
(8,431
)
 
(18,559
)
 
(9,174
)
 
(115
)
Net income attributable to common stockholders
$
112,193

 
$
114,580

 
$
118,296

 
$
108,440

Earnings per share:
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders
$
0.41

 
$
0.45

 
$
0.43

 
$
0.37

Discontinued operations
(0.03
)
 
(0.06
)
 
(0.03
)
 
(0.00
)
Net income attributable to common stockholders
$
0.38

 
$
0.39

 
$
0.40

 
$
0.37

Diluted:
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders
$
0.41

 
$
0.45

 
$
0.43

 
$
0.37

Discontinued operations
(0.03
)
 
(0.06
)
 
(0.03
)
 
(0.00
)
Net income attributable to common stockholders
$
0.38

 
$
0.39

 
$
0.40

 
$
0.37

Dividends declared per share
$
0.67

 
$
0.67

 
$
0.67

 
$
0.725

________________________
(1)
The amounts presented for the three months ended March 31, 2013, June 30, 2013, September 30, 2013 and December 31, 2013 differ from the amounts previously reported in our Annual Report on Form 10-K for the year ended December 31, 2013 as a result of properties previously included in discontinued operations as of December 31, 2013.
 
For the Three Months Ended
 
March 31,
2013
 
June 30,
2013
 
September 30,
2013
 
December 31,
2013
 
(In thousands, except per share amounts)
Revenues, previously reported in Form 10-K
$
682,509

 
$
683,764

 
$
710,924

 
$
732,856

Revenues, previously reported in discontinued operations in Form 10-K
400

 
345

 
325

 
329

Total revenues disclosed in Form 10-K
$
682,909

 
$
684,109

 
$
711,249

 
$
733,185

Income from continuing operations attributable to common stockholders, previously reported in Form 10-K
$
120,429

 
$
132,895

 
$
127,268

 
$
108,338

Income from continuing operations attributable to common stockholders, previously reported in discontinued operations in Form 10-K
195

 
244

 
202

 
217

Income from continuing operations attributable to common stockholders disclosed in Form 10-K
$
120,624

 
$
133,139

 
$
127,470

 
$
108,555

Discontinued operations, previously reported in Form 10-K
$
(8,236
)
 
$
(18,315
)
 
$
(8,972
)
 
$
102

Operations from properties previously reported in discontinued operations in Form 10-K
(195
)
 
(244
)
 
(202
)
 
(217
)
Discontinued operations disclosed in Form 10-K
$
(8,431
)
 
$
(18,559
)
 
$
(9,174
)
 
$
(115
)

121

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Note 20—Segment Information
As of December 31, 2014, 2013 and 2012 we operated through three reportable business segments: triple-net leased properties, senior living operations and MOB operations. Under our triple-net leased properties segment, we invest in seniors housing and healthcare properties throughout the United States and the United Kingdom and lease those properties to healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses. In our senior living operations segment, we invest in seniors housing communities throughout the United States and Canada and engage independent operators, such as Atria and Sunrise, to manage those communities. In our MOB operations segment, we primarily acquire, own, develop, lease, and manage MOBs throughout the United States. Information provided for “all other” includes income from loans and investments and other miscellaneous income and various corporate-level expenses not directly attributable to our three reportable business segments. Assets included in “all other” consist primarily of corporate assets, including cash, restricted cash, deferred financing costs, loans receivable and investments, and miscellaneous accounts receivable.
We evaluate performance of the combined properties in each reportable business segment based on segment profit, which we define as NOI adjusted for income/loss from unconsolidated entities. We define NOI as total revenues, less interest and other income, property-level operating expenses and medical office building services costs. We consider segment profit useful because it allows investors, analysts and our management to measure unlevered property-level operating results and to compare our operating results to the operating results of other real estate companies and between periods on a consistent basis. In order to facilitate a clear understanding of our historical consolidated historical operating results, segment profit should be examined in conjunction with net income as presented in our Consolidated Financial Statements and other financial data included elsewhere in this Annual Report on Form 10-K.
Interest expense, depreciation and amortization, general, administrative and professional fees, income tax expense, discontinued operations and other non-property specific revenues and expenses are not allocated to individual reportable business segments for purposes of assessing segment performance. There are no intersegment sales or transfers.

122

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Summary information by reportable business segment is as follows:
For the year ended December 31, 2014:
 
Triple-Net
Leased
Properties
 
Senior
Living
Operations
 
MOB
Operations
 
All
Other
 
Total
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
Rental income
$
970,377

 
$

 
$
463,618

 
$

 
$
1,433,995

Resident fees and services

 
1,552,951

 

 

 
1,552,951

Medical office building and other services revenue
4,565

 

 
22,529

 
2,270

 
29,364

Income from loans and investments

 

 

 
55,169

 
55,169

Interest and other income

 

 

 
4,267

 
4,267

Total revenues
$
974,942

 
$
1,552,951

 
$
486,147

 
$
61,706

 
$
3,075,746

Total revenues
$
974,942

 
$
1,552,951

 
$
486,147

 
$
61,706

 
$
3,075,746

Less:
 
 
 
 
 
 
 
 
 
Interest and other income

 

 

 
4,267

 
4,267

Property-level operating expenses

 
1,036,556

 
158,542

 

 
1,195,098

Medical office building services costs

 

 
17,092

 

 
17,092

Segment NOI
974,942

 
516,395

 
310,513

 
57,439

 
1,859,289

Income (loss) from unconsolidated entities
859

 
(658
)
 
398

 
(738
)
 
(139
)
Segment profit
$
975,801

 
$
515,737

 
$
310,911

 
$
56,701

 
1,859,150

Interest and other income
 

 
 

 
 

 
 
 
4,267

Interest expense
 

 
 

 
 

 
 

 
(376,842
)
Depreciation and amortization
 

 
 

 
 

 
 

 
(826,911
)
General, administrative and professional fees
 

 
 

 
 

 
 

 
(121,746
)
Loss on extinguishment of debt, net
 

 
 

 
 

 
 

 
(5,564
)
Merger-related expenses and deal costs
 

 
 

 
 

 
 

 
(45,051
)
Other
 

 
 

 
 

 
 

 
(38,925
)
Income tax benefit
 

 
 

 
 

 
 

 
8,732

Discontinued operations
 

 
 

 
 

 
 

 
2,106

Gain on real estate dispositions
 
 
 
 
 
 
 
 
17,970

Net income
 

 
 

 
 

 
 

 
$
477,186


123

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


For the year ended December 31, 2013:
 
Triple-Net
Leased
Properties
 
Senior
Living
Operations
 
MOB
Operations
 
All
Other
 
Total
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
Rental income
$
877,276

 
$

 
$
450,107

 
$

 
$
1,327,383

Resident fees and services

 
1,406,005

 

 

 
1,406,005

Medical office building and other services revenue
4,469

 

 
12,077

 
1,263

 
17,809

Income from loans and investments

 

 

 
58,208

 
58,208

Interest and other income

 

 

 
2,047

 
2,047

Total revenues
$
881,745

 
$
1,406,005

 
$
462,184

 
$
61,518

 
$
2,811,452

Total revenues
$
881,745

 
$
1,406,005

 
$
462,184

 
$
61,518

 
$
2,811,452

Less:
 
 
 
 
 
 
 
 
 
Interest and other income

 

 

 
2,047

 
2,047

Property-level operating expenses

 
956,684

 
152,948

 

 
1,109,632

Medical office building services costs

 

 
8,315

 

 
8,315

Segment NOI
881,745

 
449,321

 
300,921

 
59,471

 
1,691,458

Income (loss) from unconsolidated entities
475

 
(1,980
)
 
1,451

 
(454
)
 
(508
)
Segment profit
$
882,220

 
$
447,341

 
$
302,372

 
$
59,017

 
1,690,950

Interest and other income
 

 
 

 
 

 
 
 
2,047

Interest expense
 

 
 

 
 

 
 

 
(334,909
)
Depreciation and amortization
 

 
 

 
 

 
 

 
(722,075
)
General, administrative and professional fees
 

 
 

 
 

 
 

 
(115,106
)
Loss on extinguishment of debt, net
 

 
 

 
 

 
 

 
(1,201
)
Merger-related expenses and deal costs
 

 
 

 
 

 
 

 
(21,634
)
Other
 

 
 

 
 

 
 

 
(18,732
)
Income tax benefit
 

 
 

 
 

 
 

 
11,828

Discontinued operations
 

 
 

 
 

 
 

 
(36,279
)
Net income
 

 
 

 
 

 
 

 
$
454,889


124

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


For the year ended December 31, 2012:
 
Triple-Net
Leased
Properties
 
Senior
Living
Operations
 
MOB
Operations
 
All
Other
 
Total
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
Rental income
$
819,882

 
$

 
$
360,849

 
$

 
$
1,180,731

Resident fees and services

 
1,227,124

 

 

 
1,227,124

Medical office building and other services revenue
4,438

 

 
16,303

 

 
20,741

Income from loans and investments

 

 

 
39,913

 
39,913

Interest and other income

 

 

 
1,106

 
1,106

Total revenues
$
824,320

 
$
1,227,124

 
$
377,152

 
$
41,019

 
$
2,469,615

Total revenues
$
824,320

 
$
1,227,124

 
$
377,152

 
$
41,019

 
$
2,469,615

Less:
 
 
 
 
 
 
 
 
 
Interest and other income

 

 

 
1,106

 
1,106

Property-level operating expenses

 
841,022

 
125,400

 

 
966,422

Medical office building services costs

 

 
9,883

 

 
9,883

Segment NOI
824,320

 
386,102

 
241,869

 
39,913

 
1,492,204

Income (loss) from unconsolidated entities
1,313

 
(48
)
 
16,889

 

 
18,154

Segment profit
$
825,633

 
$
386,054

 
$
258,758

 
$
39,913

 
1,510,358

Interest and other income
 

 
 

 
 

 
 
 
1,106

Interest expense
 

 
 

 
 

 
 

 
(288,717
)
Depreciation and amortization
 

 
 

 
 

 
 

 
(714,967
)
General, administrative and professional fees
 

 
 

 
 

 
 

 
(98,510
)
Loss on extinguishment of debt, net
 
 
 
 
 
 
 
 
(37,640
)
Merger-related expenses and deal costs
 

 
 

 
 

 
 

 
(63,183
)
Other
 

 
 

 
 

 
 

 
(6,940
)
Income tax benefit
 

 
 

 
 

 
 

 
6,282

Discontinued operations
 

 
 

 
 

 
 

 
53,986

Net income
 

 
 

 
 

 
 

 
$
361,775

Assets by reportable business segment are as follows:
 
As of December 31,
 
2014
 
2013
 
(Dollars in thousands)
Assets:
 
 
 
 
 
 
 
Triple-net leased properties
$
9,176,159

 
43.2
%
 
$
8,919,360

 
45.2
%
Senior living operations
7,421,924

 
35.0

 
6,648,754

 
33.7

MOB operations
3,526,217

 
16.6

 
3,701,344

 
18.8

All other assets
1,101,871

 
5.2

 
462,036

 
2.3

Total assets
$
21,226,171

 
100.0
%
 
$
19,731,494

 
100.0
%

125

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Capital expenditures, including investments in real estate property and development project expenditures, by reportable business segment are as follows:
 
For the Year Ended December 31,
 
2014
 
2013
 
2012 (1)
 
(In thousands)
Capital expenditures:
 
 
 
 
 
Triple-net leased properties
$
647,870

 
$
847,945

 
$
139,680

Senior living operations
977,997

 
576,459

 
758,371

MOB operations
36,861

 
189,953

 
1,003,865

Total capital expenditures
$
1,662,728

 
$
1,614,357

 
$
1,901,916

 
 
(1)
Includes funds held in a Code Section 1031 exchange escrow account with a qualified intermediary as follows: triple-net leased – $58.1 million; senior living – $64.7 million; and MOB – $11.2 million.
Our portfolio of properties and mortgage loan and other investments are located in the United States, Canada and the United Kingdom. Revenues are attributed to an individual country based on the location of each property.
Geographic information regarding our operations is as follows:
 
For the Year Ended December 31,
 
2014
 
2013
 
2012
 
(In thousands)
Revenues:
 
 
 
 
 
United States
$
2,935,524

 
$
2,718,234

 
$
2,373,646

Canada
126,435

 
93,218

 
95,969

United Kingdom
13,787

 

 

Total revenues
$
3,075,746

 
$
2,811,452

 
$
2,469,615


 
As of December 31,
 
2014
 
2013
 
(In thousands)
Net real estate property:
 
 
 
United States
$
17,547,255

 
$
17,705,962

Canada
1,269,710

 
369,624

United Kingdom
168,594

 

Total net real estate property
$
18,985,559

 
$
18,075,586

Note 21—Condensed Consolidating Information
Ventas, Inc. has fully and unconditionally guaranteed the obligation to pay principal and interest with respect to the outstanding senior notes issued by our 100% owned subsidiary, Ventas Realty, including the senior notes that were jointly issued with Ventas Capital Corporation. Ventas Capital Corporation is a direct 100% owned subsidiary of Ventas Realty that has no assets or operations, but was formed in 2002 solely to facilitate offerings of senior notes by a limited partnership. None of our other subsidiaries (such subsidiaries, excluding Ventas Realty and Ventas Capital Corporation, the “Ventas Subsidiaries”) is obligated with respect to Ventas Realty’s outstanding senior notes.
Ventas, Inc. has also fully and unconditionally guaranteed the obligation to pay principal and interest with respect to the outstanding senior notes issued by our 100% owned subsidiary, Ventas Canada Finance Limited. None of our other subsidiaries is obligated with respect to Ventas Canada Finance Limited’s outstanding senior notes, all of which were issued on a private placement basis in Canada.

126

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


In connection with the NHP acquisition, our 100% owned subsidiary, NHP LLC, as successor to NHP, assumed the obligation to pay principal and interest with respect to the outstanding senior notes issued by NHP. Neither we nor any of our subsidiaries (other than NHP LLC) is obligated with respect to any of NHP LLC’s outstanding senior notes.
Under certain circumstances, contractual and legal restrictions, including those contained in the instruments governing our subsidiaries’ outstanding mortgage indebtedness, may restrict our ability to obtain cash from our subsidiaries for the purpose of meeting our debt service obligations, including our payment guarantees with respect to Ventas Realty’s and Ventas Canada Finance Limited’s senior notes. Certain of our real estate assets are also subject to mortgages.
The following summarizes our condensed consolidating information as of December 31, 2014 and 2013 and for the years ended December 31, 2014, 2013, and 2012:
CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2014
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Assets
 
 
 
 
 
 
 
 
 
Net real estate investments
$
5,515

 
$
355,803

 
$
19,545,869

 
$

 
$
19,907,187

Cash and cash equivalents
24,857

 

 
30,491

 

 
55,348

Escrow deposits and restricted cash
2,102

 
1,424

 
68,245

 

 
71,771

Deferred financing costs, net
759

 
50,669

 
8,900

 

 
60,328

Investment in and advances to affiliates
10,827,772

 
3,466,998

 

 
(14,294,770
)
 

Other assets
103,534

 
57,912

 
970,091

 

 
1,131,537

Total assets
$
10,964,539

 
$
3,932,806

 
$
20,623,596

 
$
(14,294,770
)
 
$
21,226,171

Liabilities and equity
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Senior notes payable and other debt
$

 
$
7,422,975

 
$
3,465,117

 
$

 
$
10,888,092

Intercompany loans
5,555,128

 
(5,586,891
)
 
31,763

 

 

Accrued interest

 
43,212

 
18,885

 

 
62,097

Accounts payable and other liabilities
105,037

 
83,158

 
817,037

 

 
1,005,232

Deferred income taxes
344,337

 

 

 

 
344,337

Total liabilities
6,004,502

 
1,962,454

 
4,332,802

 

 
12,299,758

Redeemable OP unitholder and noncontrolling interests

 

 
172,016

 

 
172,016

Total equity
4,960,037

 
1,970,352

 
16,118,778

 
(14,294,770
)
 
8,754,397

Total liabilities and equity
$
10,964,539

 
$
3,932,806

 
$
20,623,596

 
$
(14,294,770
)
 
$
21,226,171

    
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.


127

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2013
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Assets
 
 
 
 
 
 
 
 
 
Net real estate investments
$
7,009

 
$
374,590

 
$
18,161,872

 
$

 
$
18,543,471

Cash and cash equivalents
28,169

 

 
66,647

 

 
94,816

Escrow deposits and restricted cash
2,104

 
1,211

 
81,342

 

 
84,657

Deferred financing costs, net
758

 
54,022

 
7,435

 

 
62,215

Investment in and advances to affiliates
10,481,466

 
3,201,998

 

 
(13,683,464
)
 

Other assets
29,450

 
14,102

 
902,783

 

 
946,335

Total assets
$
10,548,956

 
$
3,645,923

 
$
19,220,079

 
$
(13,683,464
)
 
$
19,731,494

Liabilities and equity
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Senior notes payable and other debt
$

 
$
6,336,240

 
$
3,028,752

 
$

 
$
9,364,992

Intercompany loans
4,247,853

 
(4,682,119
)
 
434,266

 

 

Accrued interest

 
39,561

 
14,788

 

 
54,349

Accounts payable and other liabilities
94,495

 
28,152

 
878,868

 

 
1,001,515

Deferred income taxes
250,167

 

 

 

 
250,167

Total liabilities
4,592,515

 
1,721,834

 
4,356,674

 

 
10,671,023

Redeemable OP unitholder and noncontrolling interests

 

 
156,660

 

 
156,660

Total equity
5,956,441

 
1,924,089

 
14,706,745

 
(13,683,464
)
 
8,903,811

Total liabilities and equity
$
10,548,956

 
$
3,645,923

 
$
19,220,079

 
$
(13,683,464
)
 
$
19,731,494

    
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.










128

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the Year Ended December 31, 2014
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
Rental income
$
2,789

 
$
282,174

 
$
1,149,032

 
$

 
$
1,433,995

Resident fees and services

 

 
1,552,951

 

 
1,552,951

Medical office building and other services revenues

 

 
29,364

 

 
29,364

Income from loans and investments
3,052

 

 
52,117

 

 
55,169

Equity earnings in affiliates
480,273

 

 
281

 
(480,554
)
 

Interest and other income
3,314

 
26

 
927

 

 
4,267

Total revenues
489,428

 
282,200

 
2,784,672

 
(480,554
)
 
3,075,746

Expenses:
 
 
 
 
 
 
 
 
 
Interest
(18,209
)
 
197,704

 
197,347

 

 
376,842

Depreciation and amortization
5,860

 
32,736

 
788,315

 

 
826,911

Property-level operating expenses
1

 
481

 
1,194,616

 

 
1,195,098

Medical office building services costs

 

 
17,092

 

 
17,092

General, administrative and professional fees
3,910

 
20,569

 
97,267

 

 
121,746

(Gain) loss on extinguishment of debt, net
(3
)
 
3

 
5,564

 

 
5,564

Merger-related expenses and deal costs
27,841

 
2,110

 
15,100

 

 
45,051

Other
22,169

 
488

 
16,268

 

 
38,925

Total expenses
41,569

 
254,091

 
2,331,569

 

 
2,627,229

Income before income (loss) from unconsolidated entities, income taxes, discontinued operations, real estate dispositions and noncontrolling interest
447,859

 
28,109

 
453,103

 
(480,554
)
 
448,517

Income (loss) from unconsolidated entities

 
1,250

 
(1,389
)
 

 
(139
)
Income tax benefit (expense)
8,732

 

 

 

 
8,732

Income from continuing operations
456,591

 
29,359

 
451,714

 
(480,554
)
 
457,110

Discontinued operations
1,206

 
(1,198
)
 
2,098

 

 
2,106

Gain on real estate dispositions
17,970

 

 

 

 
17,970

Net income
475,767

 
28,161

 
453,812

 
(480,554
)
 
477,186

Net income attributable to noncontrolling interest

 

 
1,419

 

 
1,419

Net income attributable to common stockholders
$
475,767

 
$
28,161

 
$
452,393

 
$
(480,554
)
 
$
475,767

    
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.


129

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the Year Ended December 31, 2013
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
Rental income
$
2,486

 
$
278,288

 
$
1,046,609

 
$

 
$
1,327,383

Resident fees and services

 

 
1,406,005

 

 
1,406,005

Medical office building and other services revenues

 
(11
)
 
17,820

 

 
17,809

Income from loans and investments
1,262

 
908

 
56,038

 

 
58,208

Equity earnings in affiliates
449,678

 

 
800

 
(450,478
)
 

Interest and other income
2,963

 
26

 
(942
)
 

 
2,047

Total revenues
456,389

 
279,211

 
2,526,330

 
(450,478
)
 
2,811,452

Expenses:
 
 
 
 
 
 
 
 
 
Interest
(2,167
)
 
147,250

 
189,826

 

 
334,909

Depreciation and amortization
4,991

 
30,018

 
687,066

 

 
722,075

Property-level operating expenses

 
514

 
1,109,118

 

 
1,109,632

Medical office building services costs

 

 
8,315

 

 
8,315

General, administrative and professional fees
2,695

 
21,160

 
91,251

 

 
115,106

Loss (gain) on extinguishment of debt, net
3

 
1,510

 
(312
)
 

 
1,201

Merger-related expenses and deal costs
11,917

 

 
9,717

 

 
21,634

Other
884

 
44

 
17,804

 

 
18,732

Total expenses
18,323

 
200,496

 
2,112,785

 

 
2,331,604

Income before income (loss) from unconsolidated entities, income taxes, discontinued operations and noncontrolling interest

438,066

 
78,715

 
413,545

 
(450,478
)
 
479,848

Income (loss) from unconsolidated entities

 
673

 
(1,181
)
 

 
(508
)
Income tax benefit
11,828

 

 

 

 
11,828

Income from continuing operations
449,894

 
79,388

 
412,364

 
(450,478
)
 
491,168

Discontinued operations
3,615

 
605

 
(40,499
)
 

 
(36,279
)
Net income
453,509

 
79,993

 
371,865

 
(450,478
)
 
454,889

Net income attributable to noncontrolling interest

 

 
1,380

 

 
1,380

Net income attributable to common stockholders
$
453,509

 
$
79,993

 
$
370,485

 
$
(450,478
)
 
$
453,509

    
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.


130

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the Year Ended December 31, 2012
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
Rental income
$
2,538

 
$
273,524

 
$
904,669

 
$

 
$
1,180,731

Resident fees and services

 

 
1,227,124

 

 
1,227,124

Medical office building and other services revenues

 

 
20,741

 

 
20,741

Income from loans and investments
2,944

 
1,871

 
35,098

 

 
39,913

Equity earnings in affiliates
322,662

 

 
997

 
(323,659
)
 

Interest and other income
476

 
25

 
605

 

 
1,106

Total revenues
328,620

 
275,420

 
2,189,234

 
(323,659
)
 
2,469,615

Expenses:
 
 
 
 
 
 
 
 
 
Interest
(3,858
)
 
92,692

 
199,883

 

 
288,717

Depreciation and amortization
2,777

 
35,511

 
676,679

 

 
714,967

Property-level operating expenses

 
535

 
965,887

 

 
966,422

Medical office building services costs

 

 
9,883

 

 
9,883

General, administrative and professional fees
3,682

 
30,317

 
64,511

 

 
98,510

Loss (gain) on extinguishment of debt, net

 
39,737

 
(2,097
)
 

 
37,640

Merger-related expenses and deal costs
53,200

 

 
9,983

 

 
63,183

Other
79

 

 
6,861

 

 
6,940

Total expenses
55,880

 
198,792

 
1,931,590

 

 
2,186,262

Income before income (loss) from unconsolidated entities, income taxes, discontinued operations, and noncontrolling interest

272,740

 
76,628

 
257,644

 
(323,659
)
 
283,353

Income (loss) from unconsolidated entities

 
18,266

 
(112
)
 

 
18,154

Income tax benefit
6,282

 

 

 

 
6,282

Income from continuing operations
279,022

 
94,894

 
257,532

 
(323,659
)
 
307,789

Discontinued operations
83,778

 
4,897

 
(34,689
)
 

 
53,986

Net income
362,800

 
99,791

 
222,843

 
(323,659
)
 
361,775

Net loss attributable to noncontrolling interest

 

 
(1,025
)
 

 
(1,025
)
Net income attributable to common stockholders
$
362,800

 
$
99,791

 
$
223,868

 
$
(323,659
)
 
$
362,800

    
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.


131

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended December 31, 2014
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Net income
$
475,767

 
$
28,161

 
$
453,812

 
$
(480,554
)
 
$
477,186

Other comprehensive loss:
 
 
 
 
 
 
 
 
 
Foreign currency translation

 

 
(17,153
)
 

 
(17,153
)
Change in unrealized gain on marketable debt securities
7,001

 

 

 

 
7,001

Other

 

 
3,614

 

 
3,614

Total other comprehensive loss
7,001

 

 
(13,539
)
 

 
(6,538
)
Comprehensive income
482,768

 
28,161

 
440,273

 
(480,554
)
 
470,648

Comprehensive income attributable to noncontrolling interest

 

 
1,419

 

 
1,419

Comprehensive income attributable to common stockholders
$
482,768

 
$
28,161

 
$
438,854

 
$
(480,554
)
 
$
469,229

    
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.


CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended December 31, 2013

 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Net income
$
453,509

 
$
79,993

 
$
371,865

 
$
(450,478
)
 
$
454,889

Other comprehensive loss:
 
 
 
 
 
 
 
 
 
Foreign currency translation

 

 
(5,422
)
 

 
(5,422
)
Change in unrealized gain on marketable debt securities
(1,023
)
 

 

 

 
(1,023
)
Other

 

 
2,750

 

 
2,750

Total other comprehensive loss
(1,023
)
 

 
(2,672
)
 

 
(3,695
)
Comprehensive income
452,486

 
79,993

 
369,193

 
(450,478
)
 
451,194

Comprehensive loss attributable to noncontrolling interest

 

 
1,380

 

 
1,380

Comprehensive income attributable to common stockholders
$
452,486

 
$
79,993

 
$
367,813

 
$
(450,478
)
 
$
449,814

    
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.


132

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended December 31, 2012

 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Net income
$
362,800

 
$
99,791

 
$
222,843

 
$
(323,659
)
 
$
361,775

Other comprehensive (loss) income:
 
 
 
 
 
 
 
 
 
Foreign currency translation

 

 
2,375

 

 
2,375

Change in unrealized gain on marketable debt securities
(1,296
)
 

 

 

 
(1,296
)
Other

 

 
213

 

 
213

Total other comprehensive (loss) income
(1,296
)
 

 
2,588

 

 
1,292

Comprehensive income
361,504

 
99,791

 
225,431

 
(323,659
)
 
363,067

Comprehensive loss attributable to noncontrolling interest

 

 
(1,025
)
 

 
(1,025
)
Comprehensive income attributable to common stockholders
$
361,504

 
$
99,791

 
$
226,456

 
$
(323,659
)
 
$
364,092

    
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.



133

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2014
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Net cash (used in) provided by operating activities
$
(57,307
)
 
$
93,013

 
$
1,219,139

 
$

 
$
1,254,845

Net cash used in investing activities
(1,358,256
)
 
(7,725
)
 
(689,059
)
 

 
(2,055,040
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Net change in borrowings under credit facilities

 
386,000

 
154,203

 

 
540,203

Proceeds from debt

 
696,661

 
1,311,046

 

 
2,007,707

Repayment of debt

 

 
(1,151,395
)
 

 
(1,151,395
)
Net change in intercompany debt
1,344,782

 
(904,772
)
 
(440,010
)
 

 

Payment of deferred financing costs

 
(6,608
)
 
(7,612
)
 

 
(14,220
)
Issuance of common stock, net
242,107

 

 

 

 
242,107

Cash distribution from (to) affiliates
694,481

 
(256,574
)
 
(437,907
)
 

 

Cash distribution to common stockholders
(875,614
)
 

 

 

 
(875,614
)
Cash distribution to redeemable OP unitholders
(5,762
)
 

 

 

 
(5,762
)
Purchases of redeemable OP units
(503
)
 

 

 

 
(503
)
Contributions from noncontrolling interest

 

 
491

 

 
491

Distributions to noncontrolling interest

 

 
(9,559
)
 

 
(9,559
)
Other
24,597

 
5

 

 

 
24,602

Net cash provided by (used in) financing activities
1,424,088

 
(85,288
)
 
(580,743
)
 

 
758,057

Net increase (decrease) in cash and cash equivalents
8,525

 

 
(50,663
)
 

 
(42,138
)
Effect of foreign currency translation on cash and cash equivalents
(11,837
)
 

 
14,507

 

 
2,670

Cash and cash equivalents at beginning of period
28,169

 

 
66,647

 

 
94,816

Cash and cash equivalents at end of period
$
24,857

 
$

 
$
30,491

 
$

 
$
55,348

    
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.


134

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2013
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Net cash (used in) provided by operating activities
$
(1,362
)
 
$
129,023

 
$
1,067,094

 
$

 
$
1,194,755

Net cash (used in) provided by investing activities
(1,416,336
)
 
22,835

 
110,741

 

 
(1,282,760
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Net change in borrowings under revolving credit facility

 
(168,000
)
 
3,971

 

 
(164,029
)
Proceeds from debt

 
2,330,435

 
437,111

 

 
2,767,546

Repayment of debt

 
(400,000
)
 
(1,392,492
)
 

 
(1,792,492
)
Net change in intercompany debt
2,186,519

 
(1,890,234
)
 
(296,285
)
 

 

Payment of deferred financing costs

 
(29,586
)
 
(1,691
)
 

 
(31,277
)
Issuance of common stock, net
141,343

 

 

 

 
141,343

Cash distribution (to) from affiliates
(99,525
)
 
5,610

 
93,915

 

 

Cash distribution to common stockholders
(802,123
)
 

 

 

 
(802,123
)
Cash distribution to redeemable OP unitholders
(5,040
)
 

 

 

 
(5,040
)
Purchases of redeemable OP units
(659
)
 

 

 

 
(659
)
Contributions from noncontrolling interest

 

 
2,395

 

 
2,395

Distributions to noncontrolling interest

 

 
(9,286
)
 

 
(9,286
)
Other
8,618

 

 

 

 
8,618

Net cash provided by (used in) financing activities
1,429,133

 
(151,775
)
 
(1,162,362
)
 

 
114,996

Net increase in cash and cash equivalents
11,435

 
83

 
15,473

 

 
26,991

Effect of foreign currency translation on cash and cash equivalents

 
(83
)
 

 

 
(83
)
Cash and cash equivalents at beginning of period
16,734

 

 
51,174

 

 
67,908

Cash and cash equivalents at end of period
$
28,169

 
$

 
$
66,647

 
$

 
$
94,816

    
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.


135

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2012
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Net cash (used in) provided by operating activities
$
(761
)
 
$
193,544

 
$
800,033

 
$

 
$
992,816

Net cash used in investing activities
(1,364,125
)
 
(100
)
 
(805,464
)
 

 
(2,169,689
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Net change in borrowings under revolving credit facilities

 
92,000

 
(7,062
)
 

 
84,938

Proceeds from debt

 
2,364,360

 
346,045

 

 
2,710,405

Repayment of debt

 
(521,527
)
 
(671,496
)
 

 
(1,193,023
)
Net change in intercompany debt
2,151,815

 
(2,085,801
)
 
(66,014
)
 

 

Payment of deferred financing costs

 
(21,404
)
 
(2,366
)
 

 
(23,770
)
Issuance of common stock, net
342,469

 

 

 

 
342,469

Cash distribution (to) from affiliates
(398,071
)
 
(21,132
)
 
419,203

 

 

Cash distribution to common stockholders
(728,546
)
 

 

 

 
(728,546
)
Cash distribution to redeemable OP unitholders
(4,446
)
 

 

 

 
(4,446
)
Purchases of redeemable OP units
(4,601
)
 

 

 

 
(4,601
)
Contributions from noncontrolling interest

 

 
38

 

 
38

Distributions to noncontrolling interest

 

 
(5,215
)
 

 
(5,215
)
Other
20,665

 

 

 

 
20,665

Net cash provided by (used in) financing activities
1,379,285

 
(193,504
)
 
13,133

 

 
1,198,914

Net increase (decrease) in cash and cash equivalents
14,399

 
(60
)
 
7,702

 

 
22,041

Effect of foreign currency translation on cash and cash equivalents

 
60

 

 

 
60

Cash and cash equivalents at beginning of period
2,335

 

 
43,472

 

 
45,807

Cash and cash equivalents at end of period
$
16,734

 
$

 
$
51,174

 
$

 
$
67,908

    
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.


136

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



VENTAS, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
December 31, 2014
(Dollars in Thousands)
Allowance Accounts
 
 
 
Additions
 
Deductions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31,
 
Balance at Beginning of Year
 
Charged to Earnings
 
Acquired Properties
 
Uncollectible Accounts Written-off
 
Disposed Properties
 
Balance at End of Year
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts
 
11,017

 
8,204

 

 
(4,272
)
 
(419
)
 
$
14,530

Straight-line rent receivable allowance
 
101,436

 
46,502

 

 
462

 
(3,253
)
 
$
145,147

 
 
112,453

 
54,706

 

 
(3,810
)
 
(3,672
)
 
159,677

 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts
 
10,960

 
6,071

 

 
(6,013
)
 
(1
)
 
$
11,017

Straight-line rent receivable allowance
 
59,731

 
42,940

 

 
(1,252
)
 
17

 
$
101,436

 
 
70,691

 
49,011

 

 
(7,265
)
 
16

 
112,453

 
 
 
 
 
 
 
 
 
 
 
 
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts
 
10,850

 
8,235

 

 
(7,739
)
 
(386
)
 
$
10,960

Straight-line rent receivable allowance
 
17,552

 
43,042

 

 
(636
)
 
(227
)
 
$
59,731

 
 
28,402

 
51,277

 

 
(8,375
)
 
(613
)
 
70,691

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


137



VENTAS, INC.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2014
(Dollars in Thousands)


 
For the Years Ended December 31,
 
2014
 
2013
 
2012
 
(In thousands)
Reconciliation of real estate:
 
 
 
 
 
Carrying cost:
 
 
 
 
 
Balance at beginning of period
$
20,393,411

 
$
18,763,903

 
$
17,029,404

Additions during period:
 
 
 
 
 
Acquisitions
1,769,790

 
1,623,648

 
1,889,592

Capital expenditures
189,711

 
183,929

 
184,675

Dispositions:
 
 
 
 
 
Sales and/or transfers to assets held for sale
(293,842
)
 
(155,184
)
 
(349,456
)
Foreign currency translation
(87,776
)
 
(22,885
)
 
9,688

Balance at end of period
$
21,971,294

 
$
20,393,411

 
$
18,763,903

 
 
 
 
 
 
Accumulated depreciation:
 
 
 
 
 
Balance at beginning of period
$
2,881,950

 
$
2,289,783

 
$
1,729,976

Additions during period:
 
 
 
 
 
Depreciation expense
725,485

 
674,141

 
620,076

Dispositions:
 
 
 
 
 
Sales and/or transfers to assets held for sale
(107,663
)
 
(78,061
)
 
(61,583
)
Foreign currency translation
(6,081
)
 
(3,913
)
 
1,314

Balance at end of period
$
3,493,691

 
$
2,881,950

 
$
2,289,783



138


VENTAS, INC.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2014
(Dollars in Thousands)

 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
KINDRED SKILLED NURSING FACILITIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Canyonwood Nursing and Rehab Center
Redding
CA

401

3,784


401

3,784

4,185

2,208

1,977

1989
1989
45 years
The Tunnell Center for Rehabilitation & Heathcare
San Francisco
CA

1,902

7,531


1,902

7,531

9,433

5,837

3,596

1967
1993
28 years
Lawton Healthcare Center
San Francisco
CA

943

514


943

514

1,457

496

961

1962
1996
20 years
Village Square Nursing and Rehabilitation Center
San Marcos
CA

766

3,507


766

3,507

4,273

1,838

2,435

1989
1993
42 years
Valley Gardens Health Care & Rehabilitation Center
Stockton
CA

516

3,405


516

3,405

3,921

2,059

1,862

1988
1988
29 years
Aurora Care Center
Aurora
CO

197

2,328


197

2,328

2,525

1,755

770

1962
1995
30 years
Windsor Rehabilitation and Healthcare Center
Windsor
CT

368

2,520


368

2,520

2,888

2,138

750

1965
1994
30 years
Lafayette Nursing and Rehab Center
Fayetteville
GA

598

6,623


598

6,623

7,221

6,410

811

1989
1995
20 years
Canyon West Health and Rehabilitation Center
Caldwell
ID

312

2,050


312

2,050

2,362

979

1,383

1974
1998
45 years
Mountain Valley Care & Rehabilitation Center
Kellogg
ID

68

1,280


68

1,280

1,348

1,304

44

1971
1984
25 years
Lewiston Rehabilitation & Care Center
Lewiston
ID

133

3,982


133

3,982

4,115

3,490

625

1964
1984
29 years
Aspen Park Healthcare
Moscow
ID

261

2,571


261

2,571

2,832

2,501

331

1955
1990
25 years
Nampa Care Center
Nampa
ID

252

2,810


252

2,810

3,062

2,700

362

1950
1983
25 years
Weiser Rehabilitation & Care Center
Weiser
ID

157

1,760


157

1,760

1,917

1,827

90

1963
1983
25 years
Wedgewood Healthcare Center
Clarksville
IN

119

5,115


119

5,115

5,234

3,477

1,757

1985
1995
35 years
Columbus Health and Rehabilitation Center
Columbus
IN

345

6,817


345

6,817

7,162

6,408

754

1966
1991
25 years
Harrison Health and Rehabilitation Centre
Corydon
IN

125

6,068


125

6,068

6,193

2,307

3,886

1998
1998
45 years
Valley View Health Care Center
Elkhart
IN

87

2,665


87

2,665

2,752

2,319

433

1985
1993
25 years
Wildwood Health Care Center
Indianapolis
IN

134

4,983


134

4,983

5,117

4,306

811

1988
1993
25 years
Windsor Estates Health & Rehab Center
Kokomo
IN

256

6,625


256

6,625

6,881

4,379

2,502

1962
1995
35 years
Rolling Hills Health Care Center
New Albany
IN

81

1,894


81

1,894

1,975

1,654

321

1984
1993
25 years
Southwood Health & Rehabilitation Center
Terre Haute
IN

90

2,868


90

2,868

2,958

2,491

467

1988
1993
25 years

139


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Maple Manor Health Care Center
Greenville
KY

59

3,187


59

3,187

3,246

2,621

625

1968
1990
30 years
Great Barrington Rehabilitation and Nursing Center
Great Barrington
MA

60

1,142


60

1,142

1,202

1,147

55

1967
1969
40 years
Hallmark Nursing and Rehabilitation Center
New Bedford
MA

202

2,694


202

2,694

2,896

2,535

361

1968
1982
26 years
Eagle Pond Rehabilitation and Living Center
South Dennis
MA

296

6,896


296

6,896

7,192

3,991

3,201

1985
1987
50 years
Harrington House Nursing and Rehabilitation Center
Walpole
MA

4

4,444


4

4,444

4,448

2,384

2,064

1991
1991
45 years
Parkview Acres Care and Rehabilitation Center
Dillon
MT

207

2,578


207

2,578

2,785

1,984

801

1965
1993
29 years
Park Place Health Care Center
Great Falls
MT

600

6,311


600

6,311

6,911

4,829

2,082

1963
1993
28 years
Rose Manor Healthcare Center
Durham
NC

200

3,527


200

3,527

3,727

3,167

560

1972
1991
26 years
Guardian Care of Elizabeth City
Elizabeth City
NC

71

561


71

561

632

632


1977
1982
20 years
Guardian Care of Henderson
Henderson
NC

206

1,997


206

1,997

2,203

1,530

673

1957
1993
29 years
Greenbriar Terrace Healthcare
Nashua
NH

776

6,011


776

6,011

6,787

5,587

1,200

1963
1990
25 years
Wasatch Care Center
Ogden
UT

373

597


373

597

970

603

367

1964
1990
25 years
St. George Care and Rehabilitation Center
St. George
UT

419

4,465


419

4,465

4,884

3,112

1,772

1976
1993
29 years
Nansemond Pointe Rehabilitation and Healthcare Center
Suffolk
VA

534

6,990


534

6,990

7,524

5,143

2,381

1963
1991
32 years
River Pointe Rehabilitation and Healthcare Center
Virginia Beach
VA

770

4,440


770

4,440

5,210

4,224

986

1953
1991
25 years
Bay Pointe Medical and Rehabilitation Center
Virginia Beach
VA

805

2,886

(380
)
425

2,886

3,311

2,159

1,152

1971
1993
29 years
Birchwood Terrace Healthcare
Burlington
VT

15

4,656


15

4,656

4,671

4,506

165

1965
1990
27 years
Arden Rehabilitation and Healthcare Center
Seattle
WA

1,111

4,013


1,111

4,013

5,124

3,081

2,043

1950
1993
28.5 years
Lakewood Healthcare Center
Tacoma
WA

504

3,511


504

3,511

4,015

2,268

1,747

1989
1989
45 years
Vancouver Health & Rehabilitation Center
Vancouver
WA

449

2,964


449

2,964

3,413

2,333

1,080

1970
1993
28 years
Mountain Towers Healthcare and Rehabilitation Center
Cheyenne
WY

342

3,468


342

3,468

3,810

2,608

1,202

1964
1992
29 years
South Central Wyoming Healthcare and Rehabilitation
Rawlins
WY

151

1,738


151

1,738

1,889

1,326

563

1955
1993
29 years
Wind River Healthcare and Rehabilitation Center
Riverton
WY

179

1,559


179

1,559

1,738

1,168

570

1967
1992
29 years
TOTAL KINDRED SKILLED NURSING FACILITIES
 
 

16,444

162,335

(380
)
16,064

162,335

178,399

125,821

52,578

 
 
 
NON-KINDRED SKILLED NURSING FACILITIES
 
 
 

 

 

 

 

 

 

 

 

 
 
 
Whitesburg Gardens Health Care Center
Huntsville
AL

534

4,216

328

534

4,544

5,078

4,025

1,053

1968
1991
25 years
Azalea Gardens of Mobile
Mobile
AL

5

2,981

319

8

3,297

3,305

2,426

879

1967
1992
29 years
Heartland
Benton
AR

650

13,540

18

650

13,558

14,208

1,581

12,627

1992
2011
35 years
Southern Trace
Bryant
AR

480

12,455


480

12,455

12,935

1,462

11,473

1989
2011
35 years

140


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Beverly Health Care Golflinks
Hot Springs
AR

500

11,311


500

11,311

11,811

1,387

10,424

1978
2011
35 years
Lake Village
Lake Village
AR

560

8,594

23

560

8,617

9,177

1,071

8,106

1998
2011
35 years
Belle View
Monticello
AR

260

9,542


260

9,542

9,802

1,121

8,681

1995
2011
35 years
River Chase
Morrilton
AR

240

9,476


240

9,476

9,716

1,111

8,605

1988
2011
35 years
Brookridge Cove
Morrilton
AR

410

11,069

4

410

11,073

11,483

1,323

10,160

1996
2011
35 years
River Ridge
Wynne
AR

290

10,763

1

290

10,764

11,054

1,251

9,803

1990
2011
35 years
Kachina Point Health Care and Rehabilitation Center
Sedona
AZ

364

4,179

197

364

4,376

4,740

3,214

1,526

1983
1984
45 years
Villa Campana Health Care Center
Tucson
AZ

533

2,201

395

533

2,596

3,129

1,584

1,545

1983
1993
35 years
Bay View Nursing and Rehabilitation Center
Alameda
CA

1,462

5,981

282

1,462

6,263

7,725

4,862

2,863

1967
1993
45 years
Chowchilla Convalescent Center
Chowchilla
CA

1,780

5,097


1,780

5,097

6,877

634

6,243

1965
2011
35 years
Driftwood Gilroy
Gilroy
CA

3,330

13,665


3,330

13,665

16,995

1,638

15,357

1968
2011
35 years
Orange Hills Convalescent Hospital
Orange
CA

960

20,968


960

20,968

21,928

2,369

19,559

1987
2011
35 years
Brighton Care Center
Brighton
CO

282

3,377

468

282

3,845

4,127

2,741

1,386

1969
1992
30 years
Cherry Hills Health Care Center
Englewood
CO

241

2,180

194

241

2,374

2,615

1,724

891

1960
1995
30 years
Malley Healthcare and Rehabilitation Center
Northglenn
CO

501

8,294

243

501

8,537

9,038

6,182

2,856

1971
1993
29 years
Parkway Pavilion Healthcare
Enfield
CT

337

3,607

203

337

3,810

4,147

3,077

1,070

1968
1994
28 years
The Crossings West Campus
New London
CT

202

2,363

129

202

2,492

2,694

1,877

817

1969
1994
28 years
The Crossings East Campus
New London
CT

401

2,776

263

401

3,039

3,440

2,371

1,069

1968
1992
29 years
Beverly Health - Ft. Pierce
Fort Pierce
FL

840

16,318


840

16,318

17,158

1,939

15,219

1960
2011
35 years
Willowwood Health & Rehab Center
Flowery Branch
GA

1,130

9,219


1,130

9,219

10,349

1,100

9,249

1970
2011
35 years
Specialty Care of Marietta
Marietta
GA

241

2,782

377

241

3,159

3,400

2,269

1,131

1968
1993
28.5 years
Savannah Rehabilitation & Nursing Center
Savannah
GA

213

2,772

345

213

3,117

3,330

2,192

1,138

1968
1993
28.5 years
Savannah Specialty Care Center
Savannah
GA

157

2,219

228

157

2,447

2,604

2,023

581

1972
1991
26 years
Boise Health and Rehabilitation Center
Boise
ID

256

3,593

281

256

3,874

4,130

1,677

2,453

1977
1998
45 years
Westbury
Lisle
IL

730

9,270


730

9,270

10,000

2,128

7,872

1990
2009
35 years
Meadowbrooke Rehab Centre & Suites
Anderson
IN

1,600

6,710


1,600

6,710

8,310

864

7,446

1967
2011
35 years
Chalet Village
Berne
IN

590

1,654


590

1,654

2,244

320

1,924

1986
2011
35 years
Meadowvale Health and Rehabilitation Center
Bluffton
IN

7

787

576

7

1,363

1,370

689

681

1962
1995
22 years
Bremen Health Care Center
Bremen
IN

109

3,354

548

109

3,902

4,011

2,256

1,755

1982
1996
45 years
Vermillion Convalescent Center
Clinton
IN

700

11,057


700

11,057

11,757

1,328

10,429

1971
2011
35 years
Willow Crossing Health & Rehab Center
Columbus
IN

880

4,963


880

4,963

5,843

672

5,171

1988
2011
35 years
Greenhill Manor
Fowler
IN

380

7,659


380

7,659

8,039

896

7,143

1973
2011
35 years

141


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Twin City Healthcare
Gas City
IN

350

3,012


350

3,012

3,362

433

2,929

1974
2011
35 years
Hanover Nursing Center
Hanover
IN

1,070

3,903


1,070

3,903

4,973

641

4,332

1975
2011
35 years
Bridgewater Center for Health & Rehab
Hartford City
IN

470

1,855


470

1,855

2,325

337

1,988

1988
2011
35 years
Oakbrook Village
Huntington
IN

600

1,950


600

1,950

2,550

303

2,247

1987
2011
35 years
Lakeview Manor
Indianapolis
IN

2,780

7,927


2,780

7,927

10,707

1,128

9,579

1968
2011
35 years
Wintersong Village
Knox
IN

420

2,019


420

2,019

2,439

291

2,148

1984
2011
35 years
Woodland Hills Care Center
Lawrenceburg
IN

340

3,757


340

3,757

4,097

571

3,526

1966
2011
35 years
Parkwood Health Care Center
Lebanon
IN

121

4,512

1,291

121

5,803

5,924

4,003

1,921

1977
1993
25 years
Whispering Pines
Monticello
IN

460

8,461


460

8,461

8,921

1,001

7,920

1988
2011
35 years
Muncie Health & Rehabilitation Center
Muncie
IN

108

4,202

1,259

170

5,399

5,569

3,786

1,783

1980
1993
25 years
Willow Bend Living Center
Muncie
IN

1,080

4,026


1,080

4,026

5,106

524

4,582

1976
2011
35 years
Liberty Village
Muncie
IN

1,520

7,542


1,520

7,542

9,062

931

8,131

2001
2011
35 years
Petersburg Health Care Center
Petersburg
IN

310

8,443


310

8,443

8,753

1,025

7,728

1970
2011
35 years
Persimmon Ridge Center
Portland
IN

400

9,597


400

9,597

9,997

1,163

8,834

1964
2011
35 years
Oakridge Convalescent Center
Richmond
IN

640

11,128


640

11,128

11,768

1,355

10,413

1975
2011
35 years
Royal Oaks Health Care and Rehabilitation Center
Terre Haute
IN

418

5,779

1,209

428

6,978

7,406

2,869

4,537

1995
1995
45 years
Westridge Healthcare Center
Terre Haute
IN

690

5,384


690

5,384

6,074

675

5,399

1965
2011
35 years
Washington Nursing Center
Washington
IN

220

10,054


220

10,054

10,274

1,240

9,034

1968
2011
35 years
Pine Knoll Rehabilitation Center
Winchester
IN

730

6,039


730

6,039

6,769

722

6,047

1986
2011
35 years
Belleville Health Care Center
Belleville
KS

590

4,170


590

4,170

4,760

558

4,202

1977
2011
35 years
Smokey Hill Rehab Center
Salina
KS

360

3,705


360

3,705

4,065

575

3,490

1981
2011
35 years
Westwood Manor
Topeka
KS

250

3,735


250

3,735

3,985

486

3,499

1973
2011
35 years
Infinia at Wichita
Wichita
KS

350

13,065


350

13,065

13,415

1,476

11,939

1965
2011
35 years
Jackson Manor
Annville
KY

131

4,442


131

4,442

4,573

1,036

3,537

1989
2006
35 years
Colonial Health & Rehabilitation Center
Bardstown
KY

38

2,829


38

2,829

2,867

660

2,207

1968
2006
35 years
Rosewood Health Care Center
Bowling Green
KY

248

5,371

496

248

5,867

6,115

4,434

1,681

1970
1990
30 years
Riverside Manor Healthcare Center
Calhoun
KY

103

2,119

184

103

2,303

2,406

1,772

634

1963
1990
30 years
Oakview Nursing and Rehabilitation Center
Calvert City
KY

124

2,882

1,005

124

3,887

4,011

2,459

1,552

1967
1990
30 years
Green Valley Health & Rehabilitation Center
Carrollton
KY

29

2,325


29

2,325

2,354

542

1,812

1978
2006
35 years
Summit Manor Health & Rehabilitation Center
Columbia
KY

38

12,510


38

12,510

12,548

2,919

9,629

1965
2006
35 years
Danville Centre for Health and Rehabilitation
Danville
KY

322

3,538

536

322

4,074

4,396

2,574

1,822

1962
1995
30 years
Woodland Terrace Health Care Facility
Elizabethtown
KY

216

1,795

315

216

2,110

2,326

1,938

388

1969
1982
26 years

142


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Glasgow Health & Rehabilitation Center
Glasgow
KY

21

2,997


21

2,997

3,018

699

2,319

1968
2006
35 years
Harrodsburg Health Care Center
Harrodsburg
KY

137

1,830

642

137

2,472

2,609

1,694

915

1974
1985
35 years
Professional Care Health & Rehabilitation Center
Hartford
KY

22

7,905


22

7,905

7,927

1,844

6,083

1967
2006
35 years
Hart County Health Center
Horse Cave
KY

68

6,059


68

6,059

6,127

1,414

4,713

1993
2006
35 years
Heritage Hall Health & Rehabilitation Center
Lawrenceburg
KY

38

3,920


38

3,920

3,958

915

3,043

1973
2006
35 years
Tanbark Health & Rehabilitation Center
Lexington
KY

868

6,061


868

6,061

6,929

1,414

5,515

1989
2006
35 years
Northfield Centre for Health and Rehabilitation
Louisville
KY

285

1,555

692

285

2,247

2,532

1,491

1,041

1969
1985
30 years
Jefferson Manor
Louisville
KY

2,169

4,075


2,169

4,075

6,244

951

5,293

1982
2006
35 years
Jefferson Place
Louisville
KY

1,307

9,175


1,307

9,175

10,482

2,141

8,341

1991
2006
35 years
Meadowview Health & Rehabilitation Center
Louisville
KY

317

4,666


317

4,666

4,983

1,089

3,894

1973
2006
35 years
Rockford Health & Rehabilitation Center
Louisville
KY

364

9,568


364

9,568

9,932

2,233

7,699

1975
2006
35 years
Summerfield Health & Rehabilitation Center
Louisville
KY

1,089

10,756


1,089

10,756

11,845

2,510

9,335

1979
2006
35 years
Hillcrest Health Care Center
Owensboro
KY

544

2,619

993

544

3,612

4,156

2,782

1,374

1963
1982
22 years
McCreary Health & Rehabilitation Center
Pine Knot
KY

73

2,443


73

2,443

2,516

570

1,946

1990
2006
35 years
North Hardin Health & Rehabilitation Center
Radcliff
KY

218

11,944


218

11,944

12,162

2,787

9,375

1986
2006
35 years
Monroe Health & Rehabilitation Center
Tompkinsville
KY

32

8,756


32

8,756

8,788

2,043

6,745

1969
2006
35 years
Fountain Circle Health and Rehabilitation
Winchester
KY

137

6,120

1,055

137

7,175

7,312

5,123

2,189

1967
1990
30 years
Colony House Nursing and Rehabilitation Center
Abington
MA

132

999

194

132

1,193

1,325

1,153

172

1965
1969
40 years
Wingate at Andover
Andover
MA

1,450

14,798


1,450

14,798

16,248

1,803

14,445

1992
2011
35 years
Blueberry Hill Skilled Nursing & Rehabilitation Center
Beverly
MA

129

4,290

571

129

4,861

4,990

3,462

1,528

1965
1968
40 years
Wingate at Brighton
Brighton
MA

1,070

7,383


1,070

7,383

8,453

1,026

7,427

1995
2011
35 years
Walden Rehabilitation and Nursing Center
Concord
MA

181

1,347

178

181

1,525

1,706

1,403

303

1969
1968
40 years
Sachem Skilled Nursing & Rehabilitation Center
East Bridgewater
MA

529

1,238

232

529

1,470

1,999

1,655

344

1968
1982
27 years
Chestnut Hill Rehab & Nursing
East Longmeadow
MA

3,050

5,392


3,050

5,392

8,442

806

7,636

1985
2011
35 years
Crawford Skilled Nursing and Rehabilitation Center
Fall River
MA

127

1,109

312

127

1,421

1,548

1,144

404

1968
1982
29 years
Franklin Skilled Nursing and Rehabilitation Center
Franklin
MA

156

757

158

156

915

1,071

815

256

1967
1969
40 years
Wingate at Haverhill
Haverhill
MA

810

9,288


810

9,288

10,098

1,238

8,860

1973
2011
35 years

143


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Skilled Care Center at Silver Lake
Kingston
MA

3,230

19,870


3,230

19,870

23,100

2,610

20,490

1992
2011
35 years
River Terrace Healthcare
Lancaster
MA

268

957

147

268

1,104

1,372

1,144

228

1969
1969
40 years
Wentworth Skilled Care Center
Lowell
MA

820

11,220


820

11,220

12,040

1,352

10,688

1966
2011
35 years
Bolton Manor Nursing and Rehabilitation Center
Marlborough
MA

222

2,431

228

222

2,659

2,881

2,247

634

1973
1984
34.5 years
The Eliot Healthcare Center
Natick
MA

249

1,328

230

249

1,558

1,807

1,452

355

1996
1982
31 years
Wingate at Needham
Needham Heights
MA

920

9,236


920

9,236

10,156

1,234

8,922

1996
2011
35 years
Brigham Manor Nursing and Rehabilitation Center
Newburyport
MA

126

1,708

134

126

1,842

1,968

1,665

303

1806
1982
27 years
Country Rehabilitation and Nursing Center
Newburyport
MA

199

3,004

378

199

3,382

3,581

2,965

616

1968
1982
27 years
Quincy Rehabilitation and Nursing Center
Quincy
MA

216

2,911

204

216

3,115

3,331

2,854

477

1965
1984
24 years
Wingate at Reading
Reading
MA

920

7,499


920

7,499

8,419

1,016

7,403

1988
2011
35 years
Den-Mar Rehabilitation and Nursing Center
Rockport
MA

23

1,560

187

23

1,747

1,770

1,547

223

1963
1985
30 years
Wingate at South Hadley
South Hadley
MA

1,870

15,572


1,870

15,572

17,442

1,864

15,578

1988
2011
35 years
Ring East
Springfield
MA

1,250

13,561


1,250

13,561

14,811

1,697

13,114

1987
2011
35 years
Blue Hills Alzheimer's Care Center
Stoughton
MA

511

1,026

175

511

1,201

1,712

1,425

287

1965
1982
28 years
Wingate at Sudbury
Sudbury
MA

1,540

8,100


1,540

8,100

9,640

1,158

8,482

1997
2011
35 years
Country Gardens Skilled Nursing & Rehabilitation Center
Swansea
MA

415

2,675

180

415

2,855

3,270

2,590

680

1969
1984
27 years
Brookside Rehabilitation and Nursing Center
Webster
MA

102

1,154

173

102

1,327

1,429

1,193

236

1967
1982
31 years
Newton and Wellesley Alzheimer Center
Wellesley
MA

297

3,250

172

297

3,422

3,719

2,970

749

1971
1984
30 years
Riverdale Gardens Rehab & Nursing
West Springfield
MA

2,140

6,997

107

2,140

7,104

9,244

1,178

8,066

1960
2011
35 years
Wingate at Wilbraham
Wilbraham
MA

4,070

10,777


4,070

10,777

14,847

1,411

13,436

1988
2011
35 years
Worcester Skilled Care Center
Worcester
MA

620

10,958


620

10,958

11,578

1,459

10,119

1970
2011
35 years
Cumberland Villa Nursing Center
Cumberland
MD

660

23,970


660

23,970

24,630

2,667

21,963

1968
2011
35 years
Colton Villa
Hagerstown
MD

1,550

16,973


1,550

16,973

18,523

2,011

16,512

1971
2011
35 years
Westminster Nursing & Convalescent Center
Westminster
MD

2,160

15,931


2,160

15,931

18,091

1,886

16,205

1973
2011
35 years
Augusta Rehabilitation Center
Augusta
ME

152

1,074

146

152

1,220

1,372

1,120

252

1968
1985
30 years
Eastside Rehabilitation and Living Center
Bangor
ME

316

1,349

134

316

1,483

1,799

1,354

445

1967
1985
30 years
Westgate Manor
Bangor
ME

287

2,718

151

287

2,869

3,156

2,607

549

1969
1985
31 years
Winship Green Nursing Center
Bath
ME

110

1,455

128

110

1,583

1,693

1,320

373

1974
1985
35 years
Brewer Rehabilitation and Living Center
Brewer
ME

228

2,737

304

228

3,041

3,269

2,407

862

1974
1985
33 years

144


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Kennebunk Nursing and Rehabilitation Center
Kennebunk
ME

99

1,898

161

99

2,059

2,158

1,601

557

1977
1985
35 years
Norway Rehabilitation & Living Center
Norway
ME

133

1,658

118

133

1,776

1,909

1,376

533

1972
1985
39 years
Brentwood Rehabilitation and Nursing Center
Yarmouth
ME

181

2,789

146

181

2,935

3,116

2,347

769

1945
1985
45 years
Autumn Woods Residential Health Care Facility
Warren
MI

1,495

26,015


1,495

26,015

27,510

2,292

25,218

2012
2012
35 years
Hopkins Healthcare
Hopkins
MN

4,470

21,409


4,470

21,409

25,879

2,442

23,437

1961
2011
35 years
Andrew Care Home
Minneapolis
MN

3,280

5,083

243

3,280

5,326

8,606

1,043

7,563

1941
2011
35 years
Golden Living Center - Rochester East
Rochester
MN

639

3,497


639

3,497

4,136

3,561

575

1967
1982
28 years
Ashland Healthcare
Ashland
MO

770

4,400


770

4,400

5,170

555

4,615

1993
2011
35 years
South Hampton Place
Columbia
MO

710

11,279


710

11,279

11,989

1,320

10,669

1994
2011
35 years
Dixon Nursing & Rehab
Dixon
MO

570

3,342


570

3,342

3,912

449

3,463

1989
2011
35 years
Current River Nursing
Doniphan
MO

450

7,703


450

7,703

8,153

992

7,161

1991
2011
35 years
Forsyth Care Center
Forsyth
MO

710

6,731


710

6,731

7,441

902

6,539

1993
2011
35 years
Maryville Health Care Center
Maryville
MO

630

5,825


630

5,825

6,455

790

5,665

1972
2011
35 years
Glenwood Healthcare
Seymour
MO

670

3,737


670

3,737

4,407

488

3,919

1990
2011
35 years
Silex Community Care
Silex
MO

730

2,689


730

2,689

3,419

387

3,032

1991
2011
35 years
Gravios Nursing Center
St. Louis
MO

1,560

10,582

301

1,560

10,883

12,443

1,394

11,049

1954
2011
35 years
Bellefontaine Gardens
St. Louis
MO

1,610

4,314


1,610

4,314

5,924

631

5,293

1988
2011
35 years
Strafford Care Center
Strafford
MO

1,670

8,251


1,670

8,251

9,921

980

8,941

1995
2011
35 years
Windsor Healthcare
Windsor
MO

510

3,345


510

3,345

3,855

449

3,406

1996
2011
35 years
Chapel Hill Rehabilitation and Healthcare Center
Chapel Hill
NC

347

3,029

450

347

3,479

3,826

2,478

1,348

1984
1993
28 years
Pettigrew Rehabilitation and Healthcare Center
Durham
NC

101

2,889

223

101

3,112

3,213

2,345

868

1969
1993
28 years
Rehabilitation and Health Center of Gastonia
Gastonia
NC

158

2,359

450

158

2,809

2,967

1,969

998

1968
1992
29 years
Lakewood Manor
Hendersonville
NC

1,610

7,759


1,610

7,759

9,369

1,039

8,330

1979
2011
35 years
Kinston Rehabilitation and Healthcare Center
Kinston
NC

186

3,038

502

186

3,540

3,726

2,342

1,384

1961
1993
29 years
Lincoln Nursing Center
Lincolnton
NC

39

3,309

197

39

3,506

3,545

2,746

799

1976
1986
35 years
Rehabilitation and Nursing Center of Monroe
Monroe
NC

185

2,654

368

185

3,022

3,207

2,187

1,020

1963
1993
28 years
Sunnybrook Healthcare and Rehabilitation Specialists
Raleigh
NC

187

3,409

360

187

3,769

3,956

3,244

712

1971
1991
25 years
Raleigh Rehabilitation & Healthcare Center
Raleigh
NC

316

5,470

581

316

6,051

6,367

5,182

1,185

1969
1991
25 years
Guardian Care of Roanoke Rapids
Roanoke Rapids
NC

339

4,132

550

339

4,682

5,021

3,898

1,123

1967
1991
25 years
Guardian Care of Rocky Mount
Rocky Mount
NC

240

1,732

302

240

2,034

2,274

1,573

701

1975
1997
25 years
Cypress Pointe Rehabilitation and Health Care Centre
Wilmington
NC

233

3,710

258

233

3,968

4,201

3,013

1,188

1966
1993
28.5 years

145


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Silas Creek Manor
Winston-Salem
NC

211

1,893

408

211

2,301

2,512

1,520

992

1966
1993
28.5 years
Guardian Care of Zebulon
Zebulon
NC

179

1,933

150

179

2,083

2,262

1,507

755

1973
1993
29 years
Dover Rehabilitation and Living Center
Dover
NH

355

3,797

217

355

4,014

4,369

3,840

529

1969
1990
25 years
Hanover Terrace Healthcare
Hanover
NH

326

1,825

252

326

2,077

2,403

1,415

988

1969
1993
29 years
Lopatcong Center
Phillipsburg
NJ

1,490

12,336


1,490

12,336

13,826

4,855

8,971

1982
2004
30 years
Las Vegas Healthcare and Rehabilitation Center
Las Vegas
NV

454

1,018

187

454

1,205

1,659

746

913

1940
1992
30 years
Torrey Pines Care Center
Las Vegas
NV

256

1,324

270

256

1,594

1,850

1,203

647

1971
1992
29 years
Hearthstone of Northern Nevada
Sparks
NV

1,400

9,365


1,400

9,365

10,765

1,210

9,555

1988
2011
35 years
Wingate at St. Francis
Beacon
NY

1,900

18,115


1,900

18,115

20,015

2,174

17,841

2002
2011
35 years
Garden Gate
Cheektowaga
NY

760

15,643

30

760

15,673

16,433

1,931

14,502

1979
2011
35 years
Brookhaven
East Patchogue
NY

1,100

25,840

30

1,100

25,870

26,970

2,897

24,073

1988
2011
35 years
Wingate at Dutchess
Fishkill
NY

1,300

19,685


1,300

19,685

20,985

2,338

18,647

1996
2011
35 years
Autumn View
Hamburg
NY

1,190

24,687

34

1,190

24,721

25,911

2,902

23,009

1983
2011
35 years
Wingate at Ulster
Highland
NY

1,500

18,223


1,500

18,223

19,723

2,083

17,640

1998
2011
35 years
North Gate
North Tonawanda
NY

1,010

14,801

40

1,010

14,841

15,851

1,870

13,981

1982
2011
35 years
Seneca
West Seneca
NY

1,400

13,491

5

1,400

13,496

14,896

1,654

13,242

1974
2011
35 years
Harris Hill
Williamsville
NY

1,240

33,574

33

1,240

33,607

34,847

3,744

31,103

1992
2011
35 years
Cambridge Health & Rehabilitation Center
Cambridge
OH

108

2,642

199

108

2,841

2,949

2,336

613

1975
1993
25 years
Winchester Place Nursing and Rehabilitation Center
Canal Winchester
OH

454

7,149

283

454

7,432

7,886

6,015

1,871

1974
1993
28 years
Chillicothe Nursing & Rehabilitation Center
Chillicothe
OH

128

3,481

313

128

3,794

3,922

3,114

808

1976
1985
34 years
Burlington House
Cincinnati
OH

918

5,087

3,010

918

8,097

9,015

1,752

7,263

1989
2004
35 years
Franklin Woods Nursing and Rehabilitation Center
Columbus
OH

190

4,712

202

190

4,914

5,104

2,890

2,214

1986
1992
38 years
Minerva Park Nursing and Rehabilitation Center
Columbus
OH

210

3,684

354

210

4,038

4,248

1,744

2,504

1973
1997
45 years
Regency Manor
Columbus
OH

606

16,424

401

606

16,825

17,431

11,275

6,156

1883
2004
35 years
Coshocton Health & Rehabilitation Center
Coshocton
OH

203

1,979

326

203

2,305

2,508

1,778

730

1974
1993
25 years
Olentangy Woods
Galion
OH

540

6,324

(1,463
)
540

4,861

5,401

611

4,790

1967
2011
35 years
Lebanon Country Manor
Lebanon
OH

105

3,617

140

105

3,757

3,862

2,565

1,297

1984
1986
43 years
Logan Health Care Center
Logan
OH

169

3,750

271

169

4,021

4,190

2,996

1,194

1979
1991
30 years
Marietta Convalescent Center
Marietta
OH

158

3,266

75

158

3,341

3,499

2,922

577

1972
1993
25 years
Pickerington Nursing & Rehabilitation Center
Pickerington
OH

312

4,382

349

312

4,731

5,043

2,754

2,289

1984
1992
37 years
Renaissance North
Warren
OH

1,100

8,196

(3,182
)
1,059

5,055

6,114

4,566

1,548

1967
2011
35 years
Country Glenn
Washington Court House
OH

490

13,460

(1,120
)
490

12,340

12,830

1,361

11,469

1984
2011
35 years

146


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Avamere Rehab of Coos Bay
Coos Bay
OR

1,920

3,394


1,920

3,394

5,314

464

4,850

1968
2011
35 years
Avamere Riverpark of Eugene
Eugene
OR

1,960

17,622


1,960

17,622

19,582

2,012

17,570

1988
2011
35 years
Avamere Rehab of Eugene
Eugene
OR

1,080

7,257


1,080

7,257

8,337

904

7,433

1966
2011
35 years
Avamere Rehab of Clackamas
Gladstone
OR

820

3,844


820

3,844

4,664

507

4,157

1961
2011
35 years
Avamere Rehab of Hillsboro
Hillsboro
OR

1,390

8,628


1,390

8,628

10,018

1,056

8,962

1973
2011
35 years
Avamere Rehab of Junction City
Junction City
OR

590

5,583


590

5,583

6,173

671

5,502

1966
2011
35 years
Avamere Rehab of King City
King City
OR

1,290

10,646


1,290

10,646

11,936

1,249

10,687

1975
2011
35 years
Avamere Rehab of Lebanon
Lebanon
OR

980

12,954


980

12,954

13,934

1,470

12,464

1974
2011
35 years
Medford Rehabilitation and Healthcare Center
Medford
OR

362

4,610

222

362

4,832

5,194

3,687

1,507

1961
1991
34 years
Newport Rehabilitation & Specialty Care Center
Newport
OR

380

3,420

813

380

4,233

4,613

488

4,125

1997
2011
35 years
Mountain View
Oregon City
OR

1,056

6,831


1,056

6,831

7,887

560

7,327

1977
2012
35 years
Avamere Crestview of Portland
Portland
OR

1,610

13,942


1,610

13,942

15,552

1,613

13,939

1964
2011
35 years
Sunnyside Care Center
Salem
OR

1,512

2,249

217

1,512

2,466

3,978

1,597

2,381

1981
1991
30 years
Avamere Twin Oaks of Sweet Home
Sweet Home
OR

290

4,536


290

4,536

4,826

541

4,285

1972
2011
35 years
Balanced Care at Bloomsburg
Bloomsburg
PA

621

1,371


621

1,371

1,992

320

1,672

1997
2006
35 years
The Belvedere
Chester
PA

822

7,203


822

7,203

8,025

2,823

5,202

1899
2004
30 years
Mountain View Nursing Home
Greensburg
PA

580

12,817

223

580

13,040

13,620

1,563

12,057

1971
2011
35 years
Pennsburg Manor
Pennsburg
PA

1,091

7,871


1,091

7,871

8,962

3,146

5,816

1982
2004
30 years
Chapel Manor
Philadelphia
PA

1,595

13,982

1,358

1,595

15,340

16,935

5,960

10,975

1948
2004
30 years
Wyomissing Nursing and Rehabilitation Center
Reading
PA

61

5,095

272

61

5,367

5,428

2,439

2,989

1966
1993
45 years
Wayne Center
Strafford
PA

662

6,872

850

662

7,722

8,384

3,168

5,216

1875
2004
30 years
Oak Hill Nursing and Rehabilitation Center
Pawtucket
RI

91

6,724

335

91

7,059

7,150

3,248

3,902

1966
1990
45 years
Epic- Bayview
Beaufort
SC

890

14,311


890

14,311

15,201

1,773

13,428

1970
2011
35 years
Dundee Nursing Home
Bennettsville
SC

320

8,693


320

8,693

9,013

1,076

7,937

1958
2011
35 years
Epic-Conway
Conway
SC

1,090

16,880


1,090

16,880

17,970

2,042

15,928

1975
2011
35 years
Mt. Pleasant Nursing Center
Mount Pleasant
SC

1,810

9,079


1,810

9,079

10,889

1,158

9,731

1977
2011
35 years
Firesteel
Mitchell
SD

690

15,360


690

15,360

16,050

1,824

14,226

1966
2011
35 years
Fountain Springs Healthcare Center
Rapid City
SD

940

28,647


940

28,647

29,587

3,078

26,509

1989
2011
35 years
Masters Health Care Center
Algood
TN

524

4,370

390

524

4,760

5,284

3,410

1,874

1981
1987
38 years
Brookewood Health Care Center
Decatur
TN

470

4,617


470

4,617

5,087

625

4,462

1981
2011
35 years
Tri-State Comp Care Center
Harrogate
TN

1,520

11,515


1,520

11,515

13,035

1,364

11,671

1990
2011
35 years
Madison Healthcare and Rehabilitation Center
Madison
TN

168

1,445

269

168

1,714

1,882

1,219

663

1968
1992
29 years
Primacy Healthcare and Rehabilitation Center
Memphis
TN

1,222

8,344

294

1,222

8,638

9,860

5,852

4,008

1980
1990
37 years

147


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Green Acres - Baytown
Baytown
TX

490

9,104


490

9,104

9,594

1,070

8,524

1970
2011
35 years
Allenbrook Healthcare
Baytown
TX

470

11,304


470

11,304

11,774

1,345

10,429

1975
2011
35 years
Summer Place Nursing and Rehab
Beaumont
TX

1,160

15,934


1,160

15,934

17,094

1,872

15,222

2009
2011
35 years
Green Acres - Center
Center
TX

200

5,446


200

5,446

5,646

714

4,932

1972
2011
35 years
Regency Nursing Home
Clarksville
TX

380

8,711


380

8,711

9,091

1,093

7,998

1989
2011
35 years
Park Manor - Conroe
Conroe
TX

1,310

22,318


1,310

22,318

23,628

2,463

21,165

2001
2011
35 years
Trisun Care Center Westwood
Corpus Christi
TX

440

8,624


440

8,624

9,064

1,038

8,026

1973
2011
35 years
Trisun Care Center River Ridge
Corpus Christi
TX

890

7,695


890

7,695

8,585

988

7,597

1994
2011
35 years
Heritage Oaks West
Corsicana
TX

510

15,806


510

15,806

16,316

1,848

14,468

1995
2011
35 years
Park Manor
DeSoto
TX

1,080

14,484


1,080

14,484

15,564

1,736

13,828

1987
2011
35 years
Hill Country Care
Dripping Springs
TX

740

3,973

16

756

3,973

4,729

521

4,208

1986
2011
35 years
Sandstone Ranch
El Paso
TX

1,580

8,396


1,580

8,396

9,976

1,492

8,484

2010
2011
35 years
Pecan Tree Rehab & Healthcare
Gainesville
TX

430

11,499


430

11,499

11,929

1,378

10,551

1990
2011
35 years
Pleasant Valley Health & Rehab
Garland
TX

1,040

9,383


1,040

9,383

10,423

1,198

9,225

2008
2011
35 years
Upshur Manor
Gilmer
TX

770

8,126


770

8,126

8,896

1,019

7,877

1990
2011
35 years
Beechnut Manor
Houston
TX

1,080

12,030


1,080

12,030

13,110

1,474

11,636

1982
2011
35 years
Park Manor - Cypress Station
Houston
TX

1,450

19,542


1,450

19,542

20,992

2,196

18,796

2003
2011
35 years
Park Manor of Westchase
Houston
TX

2,760

16,715


2,760

16,715

19,475

1,917

17,558

2005
2011
35 years
Park Manor - Cyfair
Houston
TX

1,720

14,717


1,720

14,717

16,437

1,697

14,740

1999
2011
35 years
Green Acres - Humble
Humble
TX

2,060

6,738


2,060

6,738

8,798

900

7,898

1972
2011
35 years
Park Manor - Humble
Humble
TX

1,650

17,257


1,650

17,257

18,907

1,968

16,939

2003
2011
35 years
Green Acres - Huntsville
Huntsville
TX

290

2,568


290

2,568

2,858

414

2,444

1968
2011
35 years
Legend Oaks Healthcare
Jacksonville
TX

760

9,639


760

9,639

10,399

1,184

9,215

2006
2011
35 years
Avalon Kirbyville
Kirbyville
TX

260

7,713


260

7,713

7,973

980

6,993

1987
2011
35 years
Millbrook Healthcare
Lancaster
TX

750

7,480


750

7,480

8,230

1,011

7,219

2008
2011
35 years
Nexion Health at Linden
Linden
TX

680

3,495


680

3,495

4,175

562

3,613

1968
2011
35 years
SWLTC Marshall Conroe
Marshall
TX

810

10,093


810

10,093

10,903

1,272

9,631

2008
2011
35 years
McKinney Healthcare & Rehab
McKinney
TX

1,450

10,345


1,450

10,345

11,795

1,297

10,498

2006
2011
35 years
Park Manor of McKinney
McKinney
TX

1,540

11,049

(2,345
)
1,540

8,704

10,244

1,116

9,128

1993
2011
35 years
Midland Nursing Center
Midland
TX

530

13,311


530

13,311

13,841

1,538

12,303

2008
2011
35 years
Park Manor of Quail Valley
Missouri City
TX

1,920

16,841


1,920

16,841

18,761

1,926

16,835

2005
2011
35 years
Nexion Health at Mt. Pleasant
Mount Pleasant
TX

520

5,050


520

5,050

5,570

735

4,835

1970
2011
35 years
The Meadows Nursing and Rehab
Orange
TX

380

10,777


380

10,777

11,157

1,321

9,836

2006
2011
35 years
Cypress Glen Nursing and Rehab
Port Arthur
TX

1,340

14,142


1,340

14,142

15,482

1,749

13,733

2000
2011
35 years
Cypress Glen East
Port Arthur
TX

490

10,663


490

10,663

11,153

1,293

9,860

1986
2011
35 years
Trisun Care Center Coastal Palms
Portland
TX

390

8,548


390

8,548

8,938

1,037

7,901

1998
2011
35 years

148


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Legend Oaks Healthcare San Angelo
San Angelo
TX

870

12,282


870

12,282

13,152

1,467

11,685

2006
2011
35 years
Parklane West
San Antonio
TX

770

10,242


770

10,242

11,012

1,283

9,729

1988
2011
35 years
San Pedro Manor
San Antonio
TX

740

11,498

(2,768
)
740

8,730

9,470

1,132

8,338

1986
2011
35 years
Nexion Health at Sherman
Sherman
TX

250

6,636


250

6,636

6,886

875

6,011

1971
2011
35 years
Avalon Trinity
Trinity
TX

330

9,413


330

9,413

9,743

1,156

8,587

1985
2011
35 years
Renfro Nursing Home
Waxahachie
TX

510

7,602


510

7,602

8,112

1,033

7,079

1976
2011
35 years
Avalon Wharton
Wharton
TX

270

5,107


270

5,107

5,377

729

4,648

1988
2011
35 years
Federal Heights Rehabilitation and Nursing Center
Salt Lake City
UT

201

2,322

247

201

2,569

2,770

1,939

831

1962
1992
29 years
Infinia at Granite Hills
Salt Lake City
UT

740

1,247

700

756

1,931

2,687

404

2,283

1972
2011
35 years
Crosslands Rehabilitation & Healthcare Center
Sandy
UT

334

4,300

275

334

4,575

4,909

2,666

2,243

1987
1992
40 years
Sleepy Hollow Manor
Annandale
VA

7,210

13,562


7,210

13,562

20,772

1,801

18,971

1963
2011
35 years
The Cedars Nursing Home
Charlottesville
VA

2,810

10,763


2,810

10,763

13,573

1,362

12,211

1964
2011
35 years
Emporia Manor
Emporia
VA

620

7,492

15

635

7,492

8,127

980

7,147

1971
2011
35 years
Harbour Pointe Medical and Rehabilitation Center
Norfolk
VA

427

4,441

1,033

427

5,474

5,901

3,698

2,203

1969
1993
28 years
Walnut Hill Convalescent Center
Petersburg
VA

930

11,597


930

11,597

12,527

1,378

11,149

1972
2011
35 years
Battlefield Park Convalescent Center
Petersburg
VA

1,010

12,489


1,010

12,489

13,499

1,467

12,032

1976
2011
35 years
Bellingham Health Care and Rehabilitation Services
Bellingham
WA

441

3,824

153

441

3,977

4,418

3,023

1,395

1972
1993
28.5 years
St. Francis of Bellingham
Bellingham
WA

1,740

23,581


1,740

23,581

25,321

2,598

22,723

1984
2011
35 years
Evergreen North Cascades
Bellingham
WA

1,220

7,554


1,220

7,554

8,774

1,029

7,745

1999
2011
35 years
Everett Rehabilitation & Care
Everett
WA

2,750

27,337


2,750

27,337

30,087

2,978

27,109

1995
2011
35 years
Northwest Continuum Care Center
Longview
WA

145

2,563

171

145

2,734

2,879

2,031

848

1955
1992
29 years
SunRise Care & Rehab Moses Lake
Moses Lake
WA

660

17,439


660

17,439

18,099

1,964

16,135

1972
2011
35 years
SunRise Care & Rehab Lake Ridge
Moses Lake
WA

660

8,866


660

8,866

9,526

1,046

8,480

1988
2011
35 years
Rainier Vista Care Center
Puyallup
WA

520

4,780

305

520

5,085

5,605

2,819

2,786

1986
1991
40 years
Queen Anne Healthcare
Seattle
WA

570

2,750

228

570

2,978

3,548

2,267

1,281

1970
1993
29 years
Richmond Beach Rehab
Seattle
WA

2,930

16,199

231

2,930

16,430

19,360

1,921

17,439

1993
2011
35 years
Avamere Olympic Rehab of Sequim
Sequim
WA

590

16,896


590

16,896

17,486

1,935

15,551

1974
2011
35 years
Shelton Nursing Home
Shelton
WA

510

8,570


510

8,570

9,080

1,013

8,067

1998
2011
35 years
Avamere Heritage Rehab of Tacoma
Tacoma
WA

1,760

4,616


1,760

4,616

6,376

635

5,741

1968
2011
35 years
Avamere Skilled Nursing Tacoma
Tacoma
WA

1,320

1,544

2,050

1,320

3,594

4,914

370

4,544

1972
2011
35 years
Cascade Park Care Center
Vancouver
WA

1,860

14,854


1,860

14,854

16,714

1,670

15,044

1991
2011
35 years
Eastview Medical and Rehabilitation Center
Antigo
WI

200

4,047

236

200

4,283

4,483

3,727

756

1962
1991
28 years

149


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Colony Oaks Care Center
Appleton
WI

353

3,571

280

353

3,851

4,204

2,994

1,210

1967
1993
29 years
Mount Carmel Medical and Rehabilitation Center
Burlington
WI

274

7,205

299

274

7,504

7,778

5,122

2,656

1971
1991
30 years
Chilton Health and Rehab
Chilton
WI

440

6,114


440

6,114

6,554

2,932

3,622

1963
2011
35 years
Florence Villa
Florence
WI

340

5,631


340

5,631

5,971

719

5,252

1970
2011
35 years
San Luis Medical and Rehabilitation Center
Green Bay
WI

259

5,299

224

259

5,523

5,782

4,582

1,200

1968
1996
25 years
Western Village
Green Bay
WI

1,310

4,882


1,310

4,882

6,192

716

5,476

1965
2011
35 years
Sheridan Medical Complex
Kenosha
WI

282

4,910

134

282

5,044

5,326

4,542

784

1964
1991
25 years
Woodstock Health and Rehabilitation Center
Kenosha
WI

562

7,424

331

562

7,755

8,317

7,096

1,221

1970
1991
25 years
North Ridge Medical and Rehabilitation Center
Manitowoc
WI

206

3,785

147

206

3,932

4,138

3,066

1,072

1964
1992
29 years
Vallhaven Care Center
Neenah
WI

337

5,125

368

337

5,493

5,830

4,201

1,629

1966
1993
28 years
Kennedy Park Medical & Rehabilitation Center
Schofield
WI

301

3,596

399

301

3,995

4,296

3,748

548

1966
1982
29 years
Greendale Health & Rehab
Sheboygan
WI

880

1,941


880

1,941

2,821

325

2,496

1967
2011
35 years
South Shore Manor
St. Francis
WI

630

2,300


630

2,300

2,930

309

2,621

1960
2011
35 years
Waukesha Springs (Westmoreland)
Waukesha
WI

1,380

16,205


1,380

16,205

17,585

2,072

15,513

1973
2011
35 years
Colonial Manor Medical and Rehabilitation Center
Wausau
WI

169

3,370

183

169

3,553

3,722

2,419

1,303

1964
1995
30 years
Wisconsin Dells Health & Rehab
Wisconsin Dells
WI

730

18,994


730

18,994

19,724

2,086

17,638

1972
2011
35 years
Logan Center
Logan
WV

300

12,959


300

12,959

13,259

1,426

11,833

1987
2011
35 years
Ravenswood Healthcare Center
Ravenswood
WV

320

12,710


320

12,710

13,030

1,402

11,628

1987
2011
35 years
Valley Center
South Charleston
WV

750

24,115


750

24,115

24,865

2,690

22,175

1987
2011
35 years
White Sulphur
White Sulphur Springs
WV

250

13,055


250

13,055

13,305

1,450

11,855

1987
2011
35 years
Sage View Care Center
Rock Springs
WY

287

2,392

158

287

2,550

2,837

1,903

934

1964
1993
30 years
TOTAL NON-KINDRED SKILLED NURSING FACILITIES
 
 

236,050

2,398,083

35,259

236,131

2,433,261

2,669,392

575,467

2,093,925

 
 
 
TOTAL FOR SKILLED NURSING FACILITIES
 
 

252,494

2,560,418

34,879

252,195

2,595,596

2,847,791

701,288

2,146,503

 
 
 
KINDRED HOSPITALS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kindred Hospital - Arizona - Phoenix
Phoenix
AZ

226

3,359


226

3,359

3,585

2,604

981

1980
1992
30 years
Kindred Hospital - Tucson
Tucson
AZ

130

3,091


130

3,091

3,221

2,827

394

1969
1994
25 years
Kindred Hospital - Brea
Brea
CA

3,144

2,611


3,144

2,611

5,755

1,258

4,497

1990
1995
40 years
Kindred Hospital - Ontario
Ontario
CA

523

2,988


523

2,988

3,511

2,759

752

1950
1994
25 years
Kindred Hospital - San Diego
San Diego
CA

670

11,764


670

11,764

12,434

10,940

1,494

1965
1994
25 years
Kindred Hospital - San Francisco Bay Area
San Leandro
CA

2,735

5,870


2,735

5,870

8,605

6,059

2,546

1962
1993
25 years

150


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Kindred Hospital - Westminster
Westminster
CA

727

7,384


727

7,384

8,111

7,549

562

1973
1993
20 years
Kindred Hospital - Denver
Denver
CO

896

6,367


896

6,367

7,263

6,664

599

1963
1994
20 years
Kindred Hospital - South Florida - Coral Gables
Coral Gables
FL

1,071

5,348


1,071

5,348

6,419

4,724

1,695

1956
1992
30 years
Kindred Hospital - South Florida Ft. Lauderdale
Fort Lauderdale
FL

1,758

14,080


1,758

14,080

15,838

13,282

2,556

N/A
1989
30 years
Kindred Hospital - North Florida
Green Cove Springs
FL

145

4,613


145

4,613

4,758

4,247

511

1956
1994
20 years
Kindred Hospital - South Florida - Hollywood
Hollywood
FL

605

5,229


605

5,229

5,834

5,220

614

1937
1995
20 years
Kindred Hospital - Bay Area St. Petersburg
St. Petersburg
FL

1,401

16,706


1,401

16,706

18,107

13,624

4,483

1968
1997
40 years
Kindred Hospital - Central Tampa
Tampa
FL

2,732

7,676


2,732

7,676

10,408

4,760

5,648

1970
1993
40 years
Kindred Hospital - Chicago (North Campus)
Chicago
IL

1,583

19,980


1,583

19,980

21,563

18,697

2,866

1949
1995
25 years
Kindred - Chicago - Lakeshore
Chicago
IL

1,513

9,525


1,513

9,525

11,038

9,381

1,657

1995
1976
20 years
Kindred Hospital - Chicago (Northlake Campus)
Northlake
IL

850

6,498


850

6,498

7,348

5,609

1,739

1960
1991
30 years
Kindred Hospital - Sycamore
Sycamore
IL

77

8,549


77

8,549

8,626

7,732

894

1949
1993
20 years
Kindred Hospital - Indianapolis
Indianapolis
IN

985

3,801


985

3,801

4,786

3,243

1,543

1955
1993
30 years
Kindred Hospital - Louisville
Louisville
KY

3,041

12,279


3,041

12,279

15,320

11,776

3,544

1964
1995
20 years
Kindred Hospital - New Orleans
New Orleans
LA

648

4,971


648

4,971

5,619

4,330

1,289

1968
1978
20 years
Kindred Hospital - Boston
Brighton
MA

1,551

9,796


1,551

9,796

11,347

9,003

2,344

1930
1994
25 years
Kindred Hospital - Boston North Shore
Peabody
MA

543

7,568


543

7,568

8,111

5,418

2,693

1974
1993
40 years
Kindred Hospital - Kansas City
Kansas City
MO

277

2,914


277

2,914

3,191

2,561

630

N/A
1992
30 years
Kindred Hospital - St. Louis
St. Louis
MO

1,126

2,087


1,126

2,087

3,213

1,830

1,383

1984
1991
40 years
Kindred Hospital - Greensboro
Greensboro
NC

1,010

7,586


1,010

7,586

8,596

7,490

1,106

1964
1994
20 years
Kindred Hospital - Albuquerque
Albuquerque
NM

11

4,253


11

4,253

4,264

2,713

1,551

1985
1993
40 years
Kindred Hospital - Las Vegas (Sahara)
Las Vegas
NV

1,110

2,177


1,110

2,177

3,287

1,299

1,988

1980
1994
40 years
Kindred Hospital - Oklahoma City
Oklahoma City
OK

293

5,607


293

5,607

5,900

4,368

1,532

1958
1993
30 years
Kindred Hospital - Pittsburgh
Oakdale
PA

662

12,854


662

12,854

13,516

9,398

4,118

1972
1996
40 years
Kindred Hospital - Philadelphia
Philadelphia
PA

135

5,223


135

5,223

5,358

3,072

2,286

N/A
1995
35 years
Kindred Hospital - Chattanooga
Chattanooga
TN

756

4,415


756

4,415

5,171

3,915

1,256

1975
1993
22 years
Kindred Hospital - Tarrant County (Fort Worth Southwest)
Fort Worth
TX

2,342

7,458


2,342

7,458

9,800

7,352

2,448

1987
1986
20 years
Kindred Hospital - Fort Worth
Fort Worth
TX

648

10,608


648

10,608

11,256

8,506

2,750

1960
1994
34 years
Kindred Hospital (Houston Northwest)
Houston
TX

1,699

6,788


1,699

6,788

8,487

5,238

3,249

1986
1985
40 years
Kindred Hospital - Houston
Houston
TX

33

7,062


33

7,062

7,095

6,575

520

N/A
1994
20 years
Kindred Hospital - Mansfield
Mansfield
TX

267

2,462


267

2,462

2,729

1,843

886

1983
1990
40 years

151


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Kindred Hospital - San Antonio
San Antonio
TX

249

11,413


249

11,413

11,662

8,445

3,217

1981
1993
30 years
TOTAL FOR KINDRED HOSPITALS
 
 

38,172

272,960


38,172

272,960

311,132

236,311

74,821

 
 
 
NON-KINDRED HOSPITALS
 
 
 

 

 

 

 

 

 

 

 

 
 
 
Southern Arizone Rehab
Tucson
AZ

770

25,589


770

25,589

26,359

2,673

23,686

1992
2011
35 years
HealthBridge Children's Hospital
Orange
CA

1,330

9,317


1,330

9,317

10,647

1,002

9,645

2000
2011
35 years
HealthSouth Rehabilitation Hospital
Tustin
CA

2,810

25,248


2,810

25,248

28,058

2,688

25,370

1991
2011
35 years
Gateway Rehabilitation Hospital at Florence
Florence
KY

3,600

4,924


3,600

4,924

8,524

1,149

7,375

2001
2006
35 years
University Hospitals Rehabilitation Hospital
Beachwood
OH

1,800

16,444


1,800

16,444

18,244

827

17,417

2013
2012
35 years
The Ranch/Touchstone
Conroe
TX

2,710

28,428

8,500

2,710

36,928

39,638

2,999

36,639

1992
2011
35 years
Highlands Regional Rehabilitation Hospital
El Paso
TX

1,900

23,616


1,900

23,616

25,516

5,510

20,006

1999
2006
35 years
Houston Children's Hospital
Houston
TX

1,800

15,770


1,800

15,770

17,570

1,676

15,894

1999
2011
35 years
Beacon Specialty Hospital
Spring
TX

960

6,498


960

6,498

7,458

708

6,750

1995
2011
35 years
TOTAL FOR NON-KINDRED HOSPITALS
 
 

17,680

155,834

8,500

17,680

164,334

182,014

19,232

162,782

 
 
 
TOTAL FOR HOSPITALS
 
 

55,852

428,794

8,500

55,852

437,294

493,146

255,543

237,603

 
 
 

152


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
BROOKDALE SENIORS HOUSING COMMUNITIES
 
 
 

 

 

 

 

 

 

 

 

 
 
 
Wellington Place at Muscle Shoals
Muscle Shoals
AL

340

4,017


340

4,017

4,357

511

3,846

1999
2011
35 years
Sterling House of Chandler
Chandler
AZ

2,000

6,538


2,000

6,538

8,538

784

7,754

1998
2011
35 years
Park Regency Premier Club
Chandler
AZ

2,260

19,338


2,260

19,338

21,598

2,531

19,067

1992
2011
35 years
The Springs of East Mesa
Mesa
AZ

2,747

24,918


2,747

24,918

27,665

8,902

18,763

1986
2005
35 years
Sterling House of Mesa
Mesa
AZ

655

6,998


655

6,998

7,653

2,475

5,178

1998
2005
35 years
Clare Bridge of Oro Valley
Oro Valley
AZ

666

6,169


666

6,169

6,835

2,182

4,653

1998
2005
35 years
Sterling House of Peoria
Peoria
AZ

598

4,872


598

4,872

5,470

1,723

3,747

1998
2005
35 years
Clare Bridge of Tempe
Tempe
AZ

611

4,066


611

4,066

4,677

1,438

3,239

1997
2005
35 years
Sterling House on East Speedway
Tucson
AZ

506

4,745


506

4,745

5,251

1,678

3,573

1998
2005
35 years
Emeritus at Fairwood Manor
Anaheim
CA

2,464

7,908


2,464

7,908

10,372

2,501

7,871

1977
2005
35 years
Woodside Terrace
Redwood City
CA

7,669

66,691


7,669

66,691

74,360

24,066

50,294

1988
2005
35 years
The Atrium
San Jose
CA

6,240

66,329

8,970

6,240

75,299

81,539

22,886

58,653

1987
2005
35 years
Brookdale Place
San Marcos
CA

4,288

36,204


4,288

36,204

40,492

13,159

27,333

1987
2005
35 years
Emeritus at Heritage Place
Tracy
CA

1,110

13,296


1,110

13,296

14,406

3,864

10,542

1986
2005
35 years
Ridge Point Assisted Living Inn
Boulder
CO

1,290

20,683


1,290

20,683

21,973

2,301

19,672

1985
2011
35 years
Wynwood of Colorado Springs
Colorado Springs
CO

715

9,279


715

9,279

9,994

3,282

6,712

1997
2005
35 years
Wynwood of Pueblo
Pueblo
CO
5,012

840

9,403


840

9,403

10,243

3,326

6,917

1997
2005
35 years
The Gables at Farmington
Farmington
CT

3,995

36,310


3,995

36,310

40,305

12,966

27,339

1984
2005
35 years
Emeritus at South Windsor
South Windsor
CT

2,187

12,682


2,187

12,682

14,869

3,937

10,932

1999
2004
35 years
Chatfield
West Hartford
CT

2,493

22,833

1,644

2,493

24,477

26,970

8,139

18,831

1989
2005
35 years
Emeritus at Bonita Springs
Bonita Springs
FL
9,029

1,540

10,783


1,540

10,783

12,323

3,756

8,567

1989
2005
35 years
Emeritus at Boynton Beach
Boynton Beach
FL
13,838

2,317

16,218


2,317

16,218

18,535

5,471

13,064

1999
2005
35 years
Emeritus at Deer Creek
Deerfield Beach
FL

1,399

9,791


1,399

9,791

11,190

3,649

7,541

1999
2005
35 years
Clare Bridge of Ft. Myers
Fort Myers
FL

1,510

7,862


1,510

7,862

9,372

871

8,501

1996
2011
35 years
Wellington Place at Ft Walton
Fort Walton Beach
FL

2,610

11,041


2,610

11,041

13,651

1,221

12,430

2000
2011
35 years
Sterling House of Merrimac
Jacksonville
FL

860

16,745


860

16,745

17,605

1,775

15,830

1997
2011
35 years
Clare Bridge of Jacksonville
Jacksonville
FL

1,300

9,659


1,300

9,659

10,959

1,054

9,905

1997
2011
35 years
Emeritus at Jensen Beach
Jensen Beach
FL
12,417

1,831

12,820


1,831

12,820

14,651

4,450

10,201

1999
2005
35 years
Sterling House of Ormond Beach
Ormond Beach
FL

1,660

9,738


1,660

9,738

11,398

1,071

10,327

1997
2011
35 years
Sterling House of Palm Coast
Palm Coast
FL

470

9,187


470

9,187

9,657

1,020

8,637

1997
2011
35 years
Sterling House of Pensacola
Pensacola
FL

633

6,087


633

6,087

6,720

2,153

4,567

1998
2005
35 years
Sterling House of Englewood (FL)
Rotonda West
FL

1,740

4,331


1,740

4,331

6,071

580

5,491

1997
2011
35 years
Clare Bridge of Tallahassee
Tallahassee
FL
4,451

667

6,168


667

6,168

6,835

2,182

4,653

1998
2005
35 years
Sterling House of Tavares
Tavares
FL

280

15,980


280

15,980

16,260

1,702

14,558

1997
2011
35 years

153


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Clare Bridge of West Melbourne
West Melbourne
FL
6,343

586

5,481


586

5,481

6,067

1,939

4,128

2000
2005
35 years
The Classic at West Palm Beach
West Palm Beach
FL
25,512

3,758

33,072


3,758

33,072

36,830

11,901

24,929

1990
2005
35 years
Clare Bridge Cottage of Winter Haven
Winter Haven
FL

232

3,006


232

3,006

3,238

1,063

2,175

1997
2005
35 years
Sterling House of Winter Haven
Winter Haven
FL

438

5,549


438

5,549

5,987

1,963

4,024

1997
2005
35 years
Wynwood of Twin Falls
Twin Falls
ID

703

6,153


703

6,153

6,856

2,176

4,680

1997
2005
35 years
The Hallmark
Chicago
IL

11,057

107,517

3,266

11,057

110,783

121,840

38,314

83,526

1990
2005
35 years
The Kenwood of Lake View
Chicago
IL

3,072

26,668


3,072

26,668

29,740

9,628

20,112

1950
2005
35 years
The Heritage
Des Plaines
IL
32,000

6,871

60,165


6,871

60,165

67,036

21,676

45,360

1993
2005
35 years
Devonshire of Hoffman Estates
Hoffman Estates
IL

3,886

44,130


3,886

44,130

48,016

15,025

32,991

1987
2005
35 years
The Devonshire
Lisle
IL
33,000

7,953

70,400


7,953

70,400

78,353

25,297

53,056

1990
2005
35 years
Seasons at Glenview
Northbrook
IL

1,988

39,762


1,988

39,762

41,750

12,671

29,079

1999
2004
35 years
Hawthorn Lakes
Vernon Hills
IL

4,439

35,044


4,439

35,044

39,483

12,956

26,527

1987
2005
35 years
The Willows
Vernon Hills
IL

1,147

10,041


1,147

10,041

11,188

3,618

7,570

1999
2005
35 years
Sterling House of Evansville
Evansville
IN
3,571

357

3,765


357

3,765

4,122

1,332

2,790

1998
2005
35 years
Berkshire of Castleton
Indianapolis
IN

1,280

11,515


1,280

11,515

12,795

4,122

8,673

1986
2005
35 years
Sterling House of Marion
Marion
IN

207

3,570


207

3,570

3,777

1,263

2,514

1998
2005
35 years
Sterling House of Portage
Portage
IN

128

3,649


128

3,649

3,777

1,291

2,486

1999
2005
35 years
Sterling House of Richmond
Richmond
IN

495

4,124


495

4,124

4,619

1,459

3,160

1998
2005
35 years
Sterling House of Derby
Derby
KS

440

4,422


440

4,422

4,862

502

4,360

1994
2011
35 years
Clare Bridge of Leawood
Leawood
KS
3,637

117

5,127


117

5,127

5,244

1,814

3,430

2000
2005
35 years
Sterling House of Salina II
Salina
KS

300

5,657


300

5,657

5,957

646

5,311

1996
2011
35 years
Clare Bridge Cottage of Topeka
Topeka
KS
4,870

370

6,825


370

6,825

7,195

2,414

4,781

2000
2005
35 years
Sterling House of Wellington
Wellington
KS

310

2,434


310

2,434

2,744

303

2,441

1994
2011
35 years
Emeritus at Farm Pond
Framingham
MA

5,819

33,361

1,894

5,819

35,255

41,074

9,852

31,222

1999
2004
35 years
Emeritus at Cape Cod (WhiteHall)
Hyannis
MA
6,372

1,277

9,063


1,277

9,063

10,340

2,594

7,746

1999
2005
35 years
River Bay Club
Quincy
MA

6,101

57,862


6,101

57,862

63,963

20,462

43,501

1986
2005
35 years
Woven Hearts of Davison
Davison
MI

160

3,189

2,543

160

5,732

5,892

717

5,175

1997
2011
35 years
Clare Bridge of Delta Charter
Delta Township
MI

730

11,471


730

11,471

12,201

1,246

10,955

1998
2011
35 years
Woven Hearts of Delta Charter
Delta Township
MI

820

3,313


820

3,313

4,133

505

3,628

1998
2011
35 years
Clare Bridge of Farmington Hills I
Farmington Hills
MI

580

10,497


580

10,497

11,077

1,283

9,794

1994
2011
35 years
Clare Bridge of Farmington Hills II
Farmington Hills
MI

700

10,246


700

10,246

10,946

1,300

9,646

1994
2011
35 years
Wynwood of Meridian Lansing II
Haslett
MI

1,340

6,134


1,340

6,134

7,474

756

6,718

1998
2011
35 years
Clare Bridge of Grand Blanc I
Holly
MI

450

12,373


450

12,373

12,823

1,350

11,473

1998
2011
35 years

154


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Wynwood of Grand Blanc II
Holly
MI

620

14,627


620

14,627

15,247

1,618

13,629

1998
2011
35 years
Wynwood of Northville
Northville
MI
7,161

407

6,068


407

6,068

6,475

2,146

4,329

1996
2005
35 years
Clare Bridge of Troy I
Troy
MI

630

17,178


630

17,178

17,808

1,848

15,960

1998
2011
35 years
Wynwood of Troy II
Troy
MI

950

12,503


950

12,503

13,453

1,451

12,002

1998
2011
35 years
Wynwood of Utica
Utica
MI

1,142

11,808


1,142

11,808

12,950

4,177

8,773

1996
2005
35 years
Clare Bridge of Utica
Utica
MI

700

8,657


700

8,657

9,357

1,004

8,353

1995
2011
35 years
Sterling House of Blaine
Blaine
MN

150

1,675


150

1,675

1,825

593

1,232

1997
2005
35 years
Clare Bridge of Eden Prairie
Eden Prairie
MN

301

6,228


301

6,228

6,529

2,203

4,326

1998
2005
35 years
Woven Hearts of Faribault
Faribault
MN

530

1,085


530

1,085

1,615

156

1,459

1997
2011
35 years
Sterling House of Inver Grove Heights
Inver Grove Heights
MN
2,825

253

2,655


253

2,655

2,908

939

1,969

1997
2005
35 years
Woven Hearts of Mankato
Mankato
MN

490

410


490

410

900

113

787

1996
2011
35 years
Edina Park Plaza
Minneapolis
MN
15,040

3,621

33,141

7,271

3,621

40,412

44,033

11,816

32,217

1998
2005
35 years
Clare Bridge of North Oaks
North Oaks
MN

1,057

8,296


1,057

8,296

9,353

2,934

6,419

1998
2005
35 years
Clare Bridge of Plymouth
Plymouth
MN

679

8,675


679

8,675

9,354

3,068

6,286

1998
2005
35 years
Woven Hearts of Sauk Rapids
Sauk Rapids
MN

480

3,178


480

3,178

3,658

369

3,289

1997
2011
35 years
Woven Hearts of Wilmar
Wilmar
MN

470

4,833


470

4,833

5,303

531

4,772

1997
2011
35 years
Woven Hearts of Winona
Winona
MN

800

1,390


800

1,390

2,190

312

1,878

1997
2011
35 years
The Solana West County
Ballwin
MO

3,100

35,074


3,100

35,074

38,174

470

37,704

2012
2014
35 years
Wellington Place of Greenville
Greenville
MS

600

1,522


600

1,522

2,122

258

1,864

1999
2011
35 years
Clare Bridge of Cary
Cary
NC

724

6,466


724

6,466

7,190

2,287

4,903

1997
2005
35 years
Sterling House of Hickory
Hickory
NC

330

10,981


330

10,981

11,311

1,196

10,115

1997
2011
35 years
Clare Bridge of Winston-Salem
Winston-Salem
NC

368

3,497


368

3,497

3,865

1,237

2,628

1997
2005
35 years
Brendenwood
Voorhees Township
NJ
17,770

3,158

29,909


3,158

29,909

33,067

10,580

22,487

1987
2005
35 years
Clare Bridge of Westampton
Westampton
NJ

881

4,741


881

4,741

5,622

1,677

3,945

1997
2005
35 years
Sterling House of Deptford
Woodbury
NJ

1,190

5,482


1,190

5,482

6,672

665

6,007

1998
2011
35 years
Ponce de Leon
Santa Fe
NM


28,178



28,178

28,178

9,697

18,481

1986
2005
35 years
Westwood Assisted Living
Sparks
NV

1,040

7,376


1,040

7,376

8,416

1,015

7,401

1991
2011
35 years
Westwood Active Retirement
Sparks
NV

1,520

9,280


1,520

9,280

10,800

1,353

9,447

1993
2011
35 years
Wynwood of Kenmore
Buffalo
NY
13,352

1,487

15,170


1,487

15,170

16,657

5,366

11,291

1995
2005
35 years
Villas of Sherman Brook
Clinton
NY

947

7,528


947

7,528

8,475

2,663

5,812

1991
2005
35 years
Wynwood of Liberty (Manlius)
Manlius
NY

890

28,237


890

28,237

29,127

3,010

26,117

1994
2011
35 years
Clare Bridge of Perinton
Pittsford
NY

611

4,066


611

4,066

4,677

1,438

3,239

1997
2005
35 years
The Gables at Brighton
Rochester
NY

1,131

9,498


1,131

9,498

10,629

3,457

7,172

1988
2005
35 years
Clare Bridge of Niskayuna
Schenectady
NY

1,021

8,333


1,021

8,333

9,354

2,947

6,407

1997
2005
35 years
Wynwood of Niskayuna
Schenectady
NY
16,758

1,884

16,103


1,884

16,103

17,987

5,696

12,291

1996
2005
35 years
Villas of Summerfield
Syracuse
NY

1,132

11,434


1,132

11,434

12,566

4,044

8,522

1991
2005
35 years
Clare Bridge of Williamsville
Williamsville
NY
6,903

839

3,841


839

3,841

4,680

1,359

3,321

1997
2005
35 years

155


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Sterling House of Alliance
Alliance
OH
2,263

392

6,283


392

6,283

6,675

2,222

4,453

1998
2005
35 years
Clare Bridge Cottage of Austintown
Austintown
OH

151

3,087


151

3,087

3,238

1,092

2,146

1999
2005
35 years
Sterling House of Barberton
Barberton
OH

440

10,884


440

10,884

11,324

1,186

10,138

1997
2011
35 years
Sterling House of Beaver Creek
Beavercreek
OH

587

5,381


587

5,381

5,968

1,903

4,065

1998
2005
35 years
Sterling House of Englewood (OH)
Clayton
OH

630

6,477


630

6,477

7,107

745

6,362

1997
2011
35 years
Emeritus at Lakeview
Columbus
OH

770

11,220


770

11,220

11,990

1,310

10,680

1998
2011
35 years
Sterling House of Westerville
Columbus
OH
1,857

267

3,600


267

3,600

3,867

1,274

2,593

1999
2005
35 years
Sterling House of Greenville
Greenville
OH

490

4,144


490

4,144

4,634

562

4,072

1997
2011
35 years
Sterling House of Lancaster
Lancaster
OH

460

4,662


460

4,662

5,122

564

4,558

1998
2011
35 years
Sterling House of Marion
Marion
OH

620

3,306


620

3,306

3,926

432

3,494

1998
2011
35 years
Emeritus at Camelot Place
Medina
OH

340

21,566


340

21,566

21,906

2,377

19,529

1995
2011
35 years
Emeritus at Medina
Medina
OH

1,110

24,700


1,110

24,700

25,810

2,685

23,125

2000
2011
35 years
Emeritus at Hillenvale
Mount Vernon
OH

1,100

12,493


1,100

12,493

13,593

1,443

12,150

2001
2011
35 years
Sterling House of Salem
Salem
OH

634

4,659


634

4,659

5,293

1,648

3,645

1998
2005
35 years
Sterling House of Springdale
Springdale
OH

1,140

9,134


1,140

9,134

10,274

1,011

9,263

1997
2011
35 years
Emeritus at North Hills
Zanesville
OH

1,560

11,067


1,560

11,067

12,627

1,322

11,305

1996
2011
35 years
Sterling House of Bartlesville
Bartlesville
OK

250

10,529


250

10,529

10,779

1,129

9,650

1997
2011
35 years
Sterling House of Bethany
Bethany
OK

390

1,499


390

1,499

1,889

213

1,676

1994
2011
35 years
Sterling House of Broken Arrow
Broken Arrow
OK

940

6,312

6,410

1,873

11,789

13,662

996

12,666

1996
2011
35 years
Forest Grove Residential Community
Forest Grove
OR

2,320

9,633


2,320

9,633

11,953

1,176

10,777

1994
2011
35 years
The Heritage at Mt. Hood
Gresham
OR

2,410

9,093


2,410

9,093

11,503

1,110

10,393

1988
2011
35 years
McMinnville Residential Estates
McMinnville
OR
1,771

1,230

7,561


1,230

7,561

8,791

1,025

7,766

1989
2011
35 years
Homewood Residence at Deane Hill
Knoxville
TN

1,150

15,705


1,150

15,705

16,855

1,844

15,011

2001
2011
35 years
Wellington Place at Newport
Newport
TN

820

4,046


820

4,046

4,866

518

4,348

2000
2011
35 years
Trinity Towers
Corpus Christi
TX

1,920

71,661


1,920

71,661

73,581

7,809

65,772

1985
2011
35 years
Sterling House of Denton
Denton
TX

1,750

6,712


1,750

6,712

8,462

753

7,709

1996
2011
35 years
Sterling House of Ennis
Ennis
TX

460

3,284


460

3,284

3,744

404

3,340

1996
2011
35 years
Broadway Plaza at Westover Hill
Fort Worth
TX

1,660

25,703


1,660

25,703

27,363

2,796

24,567

2001
2011
35 years
Hampton at Pinegate
Houston
TX

3,440

15,913


3,440

15,913

19,353

1,830

17,523

1998
2011
35 years
Hampton at Shadowlake
Houston
TX

2,520

13,770


2,520

13,770

16,290

1,615

14,675

1999
2011
35 years
Hampton at Spring Shadow
Houston
TX

1,250

15,760


1,250

15,760

17,010

1,754

15,256

1999
2011
35 years
Sterling House of Kerrville
Kerrville
TX

460

8,548


460

8,548

9,008

933

8,075

1997
2011
35 years
Sterling House of Lancaster
Lancaster
TX

410

1,478


410

1,478

1,888

230

1,658

1997
2011
35 years
Sterling House of Paris
Paris
TX

360

2,411


360

2,411

2,771

323

2,448

1996
2011
35 years
Hampton at Pearland
Pearland
TX

1,250

12,869


1,250

12,869

14,119

1,500

12,619

1998
2011
35 years
Sterling House of San Antonio
San Antonio
TX

1,400

10,051


1,400

10,051

11,451

1,115

10,336

1997
2011
35 years

156


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Sterling House of Temple
Temple
TX

330

5,081


330

5,081

5,411

599

4,812

1997
2011
35 years
Emeritus at Ridgewood Gardens
Salem
VA

1,900

16,219


1,900

16,219

18,119

5,238

12,881

1998
2011
35 years
Clare Bridge of Lynwood
Lynnwood
WA

1,219

9,573


1,219

9,573

10,792

3,386

7,406

1999
2005
35 years
Clare Bridge of Puyallup
Puyallup
WA
9,732

1,055

8,298


1,055

8,298

9,353

2,935

6,418

1998
2005
35 years
Columbia Edgewater
Richland
WA

960

23,270


960

23,270

24,230

2,613

21,617

1990
2011
35 years
Park Place
Spokane
WA

1,622

12,895


1,622

12,895

14,517

4,759

9,758

1915
2005
35 years
Crossings at Allenmore
Tacoma
WA

620

16,186


620

16,186

16,806

1,756

15,050

1997
2011
35 years
Union Park at Allenmore
Tacoma
WA

1,710

3,326


1,710

3,326

5,036

586

4,450

1988
2011
35 years
Crossings at Yakima
Yakima
WA

860

15,276


860

15,276

16,136

1,709

14,427

1998
2011
35 years
Sterling House of Fond du Lac
Fond du Lac
WI

196

1,603


196

1,603

1,799

567

1,232

2000
2005
35 years
Clare Bridge of Kenosha
Kenosha
WI

551

5,431

2,772

551

8,203

8,754

2,425

6,329

2000
2005
35 years
Woven Hearts of Kenosha
Kenosha
WI

630

1,694


630

1,694

2,324

220

2,104

1997
2011
35 years
Clare Bridge Cottage of La Crosse
La Crosse
WI

621

4,056

1,126

621

5,182

5,803

1,640

4,163

2004
2005
35 years
Sterling House of La Crosse
La Crosse
WI

644

5,831

2,637

644

8,468

9,112

2,544

6,568

1998
2005
35 years
Sterling House of Middleton
Middleton
WI

360

5,041


360

5,041

5,401

555

4,846

1997
2011
35 years
Woven Hearts of Neenah
Neenah
WI

340

1,030


340

1,030

1,370

151

1,219

1996
2011
35 years
Woven Hearts of Onalaska
Onalaska
WI

250

4,949


250

4,949

5,199

542

4,657

1995
2011
35 years
Woven Hearts of Oshkosh
Oshkosh
WI

160

1,904


160

1,904

2,064

241

1,823

1996
2011
35 years
Woven Hearts of Sun Prairie
Sun Prairie
WI

350

1,131


350

1,131

1,481

161

1,320

1994
2011
35 years
TOTAL FOR BROOKDALE SENIORS HOUSING COMMUNITIES
 
 
255,484

218,194

2,112,392

38,533

219,127

2,149,992

2,369,119

546,213

1,822,906

 
 
 
SUNRISE SENIORS HOUSING COMMUNITIES
 
 
 

 

 

 

 

 

 

 

 

 
 
 
Sunrise of Chandler
Chandler
AZ

4,344

14,455

246

4,439

14,606

19,045

1,423

17,622

2007
2012
35 years
Sunrise of Scottsdale
Scottsdale
AZ

2,229

27,575

466

2,255

28,015

30,270

6,570

23,700

2007
2007
35 years
Sunrise of River Road
Tucson
AZ

2,971

12,399

65

2,971

12,464

15,435

1,117

14,318

2008
2012
35 years
Sunrise of Lynn Valley
Vancouver
BC

11,759

37,424

(6,469
)
10,057

32,657

42,714

7,599

35,115

2002
2007
35 years
Sunrise of Vancouver
Vancouver
BC

6,649

31,937

445

6,663

32,368

39,031

7,992

31,039

2005
2007
35 years
Sunrise of Victoria
Victoria
BC

8,332

29,970

(4,863
)
7,144

26,295

33,439

6,261

27,178

2001
2007
35 years
Sunrise at La Costa
Carlsbad
CA

4,890

20,590

1,067

4,960

21,587

26,547

5,607

20,940

1999
2007
35 years
Sunrise of Carmichael
Carmichael
CA

1,269

14,598

210

1,269

14,808

16,077

1,368

14,709

2009
2012
35 years
Sunrise of Fair Oaks
Fair Oaks
CA
10,452

1,456

23,679

1,471

2,265

24,341

26,606

6,049

20,557

2001
2007
35 years
Sunrise of Mission Viejo
Mission Viejo
CA

3,802

24,560

1,036

3,827

25,571

29,398

6,346

23,052

1998
2007
35 years
Sunrise at Canyon Crest
Riverside
CA

5,486

19,658

1,023

5,530

20,637

26,167

5,186

20,981

2006
2007
35 years
Sunrise of Rocklin
Rocklin
CA

1,378

23,565

651

1,413

24,181

25,594

5,734

19,860

2007
2007
35 years
Sunrise of San Mateo
San Mateo
CA

2,682

35,335

1,255

2,686

36,586

39,272

8,570

30,702

1999
2007
35 years
Sunrise of Sunnyvale
Sunnyvale
CA

2,933

34,361

715

2,948

35,061

38,009

8,278

29,731

2000
2007
35 years
Sunrise at Sterling Canyon
Valencia
CA
16,495

3,868

29,293

3,811

3,966

33,006

36,972

8,289

28,683

1998
2007
35 years

157


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Sunrise of Westlake Village
Westlake Village
CA

4,935

30,722

842

5,006

31,493

36,499

7,406

29,093

2004
2007
35 years
Sunrise at Yorba Linda
Yorba Linda
CA

1,689

25,240

1,066

1,714

26,281

27,995

6,163

21,832

2002
2007
35 years
Sunrise at Cherry Creek
Denver
CO

1,621

28,370

836

1,703

29,124

30,827

7,027

23,800

2000
2007
35 years
Sunrise at Pinehurst
Denver
CO

1,417

30,885

1,457

1,431

32,328

33,759

8,040

25,719

1998
2007
35 years
Sunrise at Orchard
Littleton
CO
10,382

1,813

22,183

1,040

1,846

23,190

25,036

5,825

19,211

1997
2007
35 years
Sunrise of Westminster
Westminster
CO
7,432

2,649

16,243

1,020

2,686

17,226

19,912

4,299

15,613

2000
2007
35 years
Sunrise of Stamford
Stamford
CT

4,612

28,533

1,228

4,646

29,727

34,373

7,511

26,862

1999
2007
35 years
Sunrise of Jacksonville
Jacksonville
FL

2,390

17,671

39

2,405

17,695

20,100

1,674

18,426

2009
2012
35 years
Sunrise of Ivey Ridge
Alpharetta
GA
5,064

1,507

18,516

908

1,513

19,418

20,931

4,949

15,982

1998
2007
35 years
Sunrise of Huntcliff I
Atlanta
GA
30,197

4,232

66,161

13,563

4,226

79,730

83,956

17,802

66,154

1987
2007
35 years
Sunrise of Huntcliff II
Atlanta
GA
4,864

2,154

17,137

1,577

2,160

18,708

20,868

4,667

16,201

1998
2007
35 years
Sunrise at East Cobb
Marietta
GA
9,330

1,797

23,420

1,248

1,799

24,666

26,465

5,970

20,495

1997
2007
35 years
Sunrise of Barrington
Barrington
IL

859

15,085

248

859

15,333

16,192

1,442

14,750

2007
2012
35 years
Sunrise of Bloomingdale
Bloomingdale
IL

1,287

38,625

1,289

1,382

39,819

41,201

9,430

31,771

2000
2007
35 years
Sunrise of Buffalo Grove
Buffalo Grove
IL

2,154

28,021

824

2,251

28,748

30,999

7,076

23,923

1999
2007
35 years
Sunrise of Lincoln Park
Chicago
IL

3,485

26,687

534

3,504

27,202

30,706

6,304

24,402

2003
2007
35 years
Sunrise of Naperville
Naperville
IL

1,946

28,538

1,711

1,990

30,205

32,195

7,451

24,744

1999
2007
35 years
Sunrise of Palos Park
Palos Park
IL
18,651

2,363

42,205

893

2,369

43,092

45,461

10,271

35,190

2001
2007
35 years
Sunrise of Park Ridge
Park Ridge
IL

5,533

39,557

1,831

5,612

41,309

46,921

9,592

37,329

1998
2007
35 years
Sunrise of Willowbrook
Willowbrook
IL
18,515

1,454

60,738

1,934

2,047

62,079

64,126

13,030

51,096

2000
2007
35 years
Sunrise of Old Meridian
Carmel
IN

8,550

31,746

43

8,550

31,789

40,339

2,995

37,344

2009
2012
35 years
Sunrise of Leawood
Leawood
KS

651

16,401

317

719

16,650

17,369

1,426

15,943

2006
2012
35 years
Sunrise of Overland Park
Overland Park
KS

650

11,015

308

651

11,322

11,973

1,070

10,903

2007
2012
35 years
Sunrise of Baton Rouge
Baton Rouge
LA
7,972

1,212

23,547

1,160

1,253

24,666

25,919

5,889

20,030

2000
2007
35 years
Sunrise of Arlington
Arlington
MA
17,077

86

34,393

712

107

35,084

35,191

8,609

26,582

2001
2007
35 years
Sunrise of Norwood
Norwood
MA

2,230

30,968

1,509

2,269

32,438

34,707

7,666

27,041

1997
2007
35 years
Sunrise of Columbia
Columbia
MD

1,780

23,083

1,682

1,855

24,690

26,545

5,966

20,579

1996
2007
35 years
Sunrise of Rockville
Rockville
MD

1,039

39,216

990

1,066

40,179

41,245

9,238

32,007

1997
2007
35 years
Sunrise of Bloomfield
Bloomfield Hills
MI

3,736

27,657

1,296

3,742

28,947

32,689

6,887

25,802

2006
2007
35 years
Sunrise of Cascade
Grand Rapids
MI

1,273

21,782

112

1,284

21,883

23,167

1,980

21,187

2007
2012
35 years
Sunrise of Northville
Plymouth
MI

1,445

26,090

860

1,525

26,870

28,395

6,653

21,742

1999
2007
35 years
Sunrise of Rochester
Rochester
MI

2,774

38,666

1,003

2,778

39,665

42,443

9,427

33,016

1998
2007
35 years
Sunrise of Troy
Troy
MI

1,758

23,727

577

1,833

24,229

26,062

6,001

20,061

2001
2007
35 years
Sunrise of Edina
Edina
MN
8,809

3,181

24,224

2,287

3,212

26,480

29,692

6,481

23,211

1999
2007
35 years
Sunrise on Providence
Charlotte
NC

1,976

19,472

1,524

1,988

20,984

22,972

5,021

17,951

1999
2007
35 years
Sunrise at North Hills
Raleigh
NC

749

37,091

3,411

762

40,489

41,251

9,451

31,800

2000
2007
35 years
Sunrise of East Brunswick
East Brunswick
NJ

2,784

26,173

1,432

3,031

27,358

30,389

6,976

23,413

1999
2007
35 years

158


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Sunrise of Jackson
Jackson
NJ

4,009

15,029

174

4,014

15,198

19,212

1,497

17,715

2008
2012
35 years
Sunrise of Morris Plains
Morris Plains
NJ
18,473

1,492

32,052

1,471

1,517

33,498

35,015

7,906

27,109

1997
2007
35 years
Sunrise of Old Tappan
Old Tappan
NJ
17,156

2,985

36,795

1,446

3,033

38,193

41,226

9,028

32,198

1997
2007
35 years
Sunrise of Wall
Wall Township
NJ
9,443

1,053

19,101

627

1,063

19,718

20,781

4,973

15,808

1999
2007
35 years
Sunrise of Wayne
Wayne
NJ
13,627

1,288

24,990

1,360

1,352

26,286

27,638

6,372

21,266

1996
2007
35 years
Sunrise of Westfield
Westfield
NJ
18,058

5,057

23,803

1,457

5,117

25,200

30,317

6,173

24,144

1996
2007
35 years
Sunrise of Woodcliff Lake
Woodcliff Lake
NJ

3,493

30,801

984

3,537

31,741

35,278

7,853

27,425

2000
2007
35 years
Sunrise of North Lynbrook
Lynbrook
NY

4,622

38,087

1,396

4,700

39,405

44,105

9,917

34,188

1999
2007
35 years
Sunrise at Fleetwood
Mount Vernon
NY

4,381

28,434

1,776

4,400

30,191

34,591

7,439

27,152

1999
2007
35 years
Sunrise of New City
New City
NY

1,906

27,323

935

1,948

28,216

30,164

6,947

23,217

1999
2007
35 years
Sunrise of Smithtown
Smithtown
NY
12,727

2,853

25,621

1,509

3,038

26,945

29,983

7,123

22,860

1999
2007
35 years
Sunrise of Staten Island
Staten Island
NY

7,237

23,910

(21
)
7,284

23,842

31,126

7,462

23,664

2006
2007
35 years
Sunrise at Parma
Cleveland
OH

695

16,641

912

806

17,442

18,248

4,230

14,018

2000
2007
35 years
Sunrise of Cuyahoga Falls
Cuyahoga Falls
OH

626

10,239

778

631

11,012

11,643

2,795

8,848

2000
2007
35 years
Sunrise of Aurora
Aurora
ON

1,570

36,113

(4,750
)
1,349

31,584

32,933

7,459

25,474

2002
2007
35 years
Sunrise of Burlington
Burlington
ON

1,173

24,448

455

1,193

24,883

26,076

5,809

20,267

2001
2007
35 years
Sunrise of Unionville
Markham
ON

2,322

41,140

(5,300
)
2,038

36,124

38,162

8,417

29,745

2000
2007
35 years
Sunrise of Mississauga
Mississauga
ON

3,554

33,631

(4,412
)
3,080

29,693

32,773

6,915

25,858

2000
2007
35 years
Sunrise of Erin Mills
Mississauga
ON

1,957

27,020

(3,670
)
1,676

23,631

25,307

5,938

19,369

2007
2007
35 years
Sunrise of Oakville
Oakville
ON

2,753

37,489

641

2,756

38,127

40,883

8,779

32,104

2002
2007
35 years
Sunrise of Richmond Hill
Richmond Hill
ON

2,155

41,254

(5,486
)
1,850

36,073

37,923

8,266

29,657

2002
2007
35 years
Thorne Mill of Steeles
Vaughan
ON

2,563

57,513

(5,551
)
1,251

53,274

54,525

11,357

43,168

2003
2007
35 years
Sunrise of Windsor
Windsor
ON

1,813

20,882

587

1,836

21,446

23,282

5,087

18,195

2001
2007
35 years
Sunrise of Abington
Abington
PA
23,207

1,838

53,660

3,069

1,980

56,587

58,567

13,247

45,320

1997
2007
35 years
Sunrise of Blue Bell
Blue Bell
PA

1,765

23,920

1,877

1,814

25,748

27,562

6,427

21,135

2006
2007
35 years
Sunrise of Exton
Exton
PA

1,123

17,765

1,171

1,155

18,904

20,059

4,734

15,325

2000
2007
35 years
Sunrise of Haverford
Haverford
PA
7,281

941

25,872

1,419

962

27,270

28,232

6,481

21,751

1997
2007
35 years
Sunrise at Granite Run
Media
PA
11,206

1,272

31,781

1,739

1,341

33,451

34,792

7,800

26,992

1997
2007
35 years
Sunrise of Westtown
West Chester
PA

1,547

22,996

1,116

1,566

24,093

25,659

6,319

19,340

1999
2007
35 years
Sunrise of Lower Makefield
Yardley
PA

3,165

21,337

198

3,165

21,535

24,700

2,024

22,676

2008
2012
35 years
Sunrise of Hillcrest
Dallas
TX

2,616

27,680

444

2,626

28,114

30,740

6,801

23,939

2006
2007
35 years
Sunrise of Fort Worth
Fort Worth
TX

2,024

18,587

316

2,017

18,910

20,927

1,747

19,180

2007
2012
35 years
Sunrise of Frisco
Frisco
TX

2,523

14,547

108

2,535

14,643

17,178

1,224

15,954

2009
2012
35 years
Sunrise of Cinco Ranch
Katy
TX

2,512

21,600

333

2,538

21,907

24,445

2,003

22,442

2007
2012
35 years
Sunrise of Holladay
Holladay
UT

2,542

44,771

241

2,542

45,012

47,554

4,070

43,484

2008
2012
35 years
Sunrise of Sandy
Sandy
UT

2,576

22,987

(66
)
2,618

22,879

25,497

5,655

19,842

2007
2007
35 years
Sunrise of Alexandria
Alexandria
VA
5,185

88

14,811

1,312

171

16,040

16,211

4,374

11,837

1998
2007
35 years
Sunrise of Richmond
Richmond
VA

1,120

17,446

1,054

1,148

18,472

19,620

4,702

14,918

1999
2007
35 years

159


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Sunrise of Bon Air
Richmond
VA

2,047

22,079

293

2,032

22,387

24,419

2,089

22,330

2008
2012
35 years
Sunrise of Springfield
Springfield
VA
8,337

4,440

18,834

2,210

4,454

21,030

25,484

4,999

20,485

1997
2007
35 years
TOTAL FOR SUNRISE SENIORS HOUSING COMMUNITIES
 
 
309,940

245,515

2,532,176

58,592

244,300

2,591,983

2,836,283

576,492

2,259,791

 
 
 
ATRIA SENIORS HOUSING COMMUNITIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Arbour Lake
Calgary
AB

2,512

39,188


2,512

39,188

41,700

460

41,240

2003
2014
35 years
Canyon Meadows
Calgary
AB

1,617

30,803


1,617

30,803

32,420

371

32,049

1995
2014
35 years
Churchill Manor
Edmonton
AB

2,865

30,482


2,865

30,482

33,347

374

32,973

1999
2014
35 years
View at Lethbridge
Lethbridge
AB

2,503

24,770


2,503

24,770

27,273

325

26,948

2007
2014
35 years
Victoria Park
Red Deer
AB
9,952

1,188

22,554


1,188

22,554

23,742

298

23,444

1999
2014
35 years
Ironwood Estates
St. Albert
AB

3,639

22,519


3,639

22,519

26,158

295

25,863

1998
2014
35 years
Atria Regency
Mobile
AL

950

11,897

824

953

12,718

13,671

1,987

11,684

1996
2011
35 years
Atria Chandler Villas
Chandler
AZ
7,570

3,650

8,450

873

3,692

9,281

12,973

2,004

10,969

1988
2011
35 years
Atria Sierra Pointe
Scottsdale
AZ

10,930

65,372


10,930

65,372

76,302

887

75,415

2000
2014
35 years
Atria Campana Del Rio
Tucson
AZ

5,861

37,284

1,072

5,896

38,321

44,217

5,712

38,505

1964
2011
35 years
Atria Valley Manor
Tucson
AZ

1,709

60

288

1,709

348

2,057

148

1,909

1963
2011
35 years
Atria Bell Court Gardens
Tucson
AZ
18,170

3,010

30,969

537

3,016

31,500

34,516

4,190

30,326

1964
2011
35 years
Longlake Chateau
Nanaimo
BC
10,401

1,874

22,910


1,874

22,910

24,784

304

24,480

1990
2014
35 years
Prince George
Prince George
BC
10,239

2,066

22,761


2,066

22,761

24,827

305

24,522

2005
2014
35 years
The Victorian
Victoria
BC

3,419

16,351


3,419

16,351

19,770

230

19,540

1988
2014
35 years
Victorian at McKenzie
Victoria
BC

4,801

25,712


4,801

25,712

30,513

329

30,184

2003
2014
35 years
Atria Burlingame
Burlingame
CA
7,291

2,494

12,373

738

2,523

13,082

15,605

1,870

13,735

1977
2011
35 years
Atria Las Posas
Camarillo
CA

4,500

28,436

509

4,508

28,937

33,445

3,771

29,674

1997
2011
35 years
Atria Carmichael Oaks
Carmichael
CA
18,993

2,118

49,694

632

2,128

50,316

52,444

2,569

49,875

1992
2013
35 years
Atria El Camino Gardens
Carmichael
CA

6,930

32,318

1,660

6,971

33,937

40,908

4,608

36,300

1984
2011
35 years
Atria Covina
Covina
CA

170

4,131

388

184

4,505

4,689

825

3,864

1977
2011
35 years
Atria Daly City
Daly City
CA
7,425

3,090

13,448

632

3,090

14,080

17,170

1,939

15,231

1975
2011
35 years
Atria Covell Gardens
Davis
CA
18,788

2,163

39,657

7,159

2,272

46,707

48,979

5,970

43,009

1987
2011
35 years
Atria Encinitas
Encinitas
CA

5,880

9,212

721

5,891

9,922

15,813

1,563

14,250

1984
2011
35 years
Atria Escondido
Escondido
CA

1,196

7,155


1,196

7,155

8,351

179

8,172

2002
2014
35 years
Atria Grass Valley
Grass Valley
CA
11,840

1,965

28,414

181

1,983

28,577

30,560

1,583

28,977

2000
2013
35 years
Atria Golden Creek
Irvine
CA

6,900

23,544

671

6,921

24,194

31,115

3,548

27,567

1985
2011
35 years
Atria Woodbridge
Irvine
CA


5

1,173

9

1,169

1,178

148

1,030

1997
2012
35 years
Atria Lafayette
Lafayette
CA
19,942

5,679

56,922

83

5,686

56,998

62,684

2,804

59,880

2007
2013
35 years
Atria Del Sol
Mission Viejo
CA

3,500

12,458

3,579

3,502

16,035

19,537

1,769

17,768

1985
2011
35 years
Atria Tamalpais Creek
Novato
CA

5,812

24,703

417

5,827

25,105

30,932

3,329

27,603

1978
2011
35 years
Atria Pacific Palisades
Pacific Palisades
CA
7,348

4,458

17,064

863

4,461

17,924

22,385

4,715

17,670

2001
2007
35 years

160


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Atria Palm Desert
Palm Desert
CA

2,887

9,843

876

3,100

10,506

13,606

2,594

11,012

1988
2011
35 years
Atria Hacienda
Palm Desert
CA

6,680

85,900

1,770

6,805

87,545

94,350

10,535

83,815

1989
2011
35 years
Atria Paradise
Paradise
CA
5,245

2,265

28,262

346

2,309

28,564

30,873

1,459

29,414

1999
2013
35 years
Atria Del Rey
Rancho Cucamonga
CA

3,290

17,427

4,380

3,446

21,651

25,097

3,809

21,288

1987
2011
35 years
Atria Collwood
San Diego
CA

290

10,650

444

316

11,068

11,384

1,744

9,640

1976
2011
35 years
Atria Rancho Park
San Dimas
CA

4,066

14,306

946

4,556

14,762

19,318

2,492

16,826

1975
2011
35 years
Atria Chateau Gardens
San Jose
CA

39

487

379

39

866

905

459

446

1977
2011
35 years
Atria Willow Glen
San Jose
CA

8,521

43,168

1,824

8,526

44,987

53,513

4,774

48,739

1976
2011
35 years
Atria Chateau San Juan
San Juan Capistrano
CA

5,110

29,436

7,900

5,305

37,141

42,446

6,145

36,301

1985
2011
35 years
Atria Hillsdale
San Mateo
CA

5,240

15,956

1,036

5,251

16,981

22,232

2,332

19,900

1986
2011
35 years
Atria Bayside Landing
Stockton
CA


467

351


818

818

437

381

1998
2011
35 years
Atria Sunnyvale
Sunnyvale
CA

6,120

30,068

3,296

6,217

33,267

39,484

4,018

35,466

1977
2011
35 years
Atria Tarzana
Tarzana
CA

960

47,547

301

960

47,848

48,808

2,203

46,605

2008
2013
35 years
Atria Vintage Hills
Temecula
CA

4,674

44,341

817

4,713

45,119

49,832

2,488

47,344

2000
2013
35 years
Atria Grand Oaks
Thousand Oaks
CA
22,350

5,994

50,309

119

6,024

50,398

56,422

2,754

53,668

2002
2013
35 years
Atria Hillcrest
Thousand Oaks
CA

6,020

25,635

9,187

6,612

34,230

40,842

4,920

35,922

1987
2011
35 years
Atria Montego Heights
Walnut Creek
CA

6,910

15,797

11,189

6,910

26,986

33,896

2,808

31,088

1978
2011
35 years
Atria Valley View
Walnut Creek
CA
17,558

7,139

53,914

1,448

7,147

55,354

62,501

10,442

52,059

1977
2011
35 years
Atria Applewood
Lakewood
CO

3,656

48,657

108

3,656

48,765

52,421

2,830

49,591

2008
2013
35 years
Atria Inn at Lakewood
Lakewood
CO

6,281

50,095

1,047

6,311

51,112

57,423

6,104

51,319

1999
2011
35 years
Atria Vistas in Longmont
Longmont
CO

2,807

24,877

209

2,815

25,078

27,893

2,381

25,512

2009
2012
35 years
Atria Darien
Darien
CT
19,986

653

37,587

2,415

816

39,839

40,655

5,179

35,476

1997
2011
35 years
Atria Larson Place
Hamden
CT

1,850

16,098

919

1,873

16,994

18,867

2,518

16,349

1999
2011
35 years
Atria Greenridge Place
Rocky Hill
CT

2,170

32,553

1,234

2,367

33,590

35,957

4,227

31,730

1998
2011
35 years
Atria Stamford
Stamford
CT
37,188

1,200

62,432

3,304

1,373

65,563

66,936

8,365

58,571

1975
2011
35 years
Atria Stratford
Stratford
CT

3,210

27,865

919

3,210

28,784

31,994

3,985

28,009

1999
2011
35 years
Atria Crossroads Place
Waterford
CT

2,401

36,495

6,028

2,537

42,387

44,924

4,653

40,271

2000
2011
35 years
Atria Hamilton Heights
West Hartford
CT

3,120

14,674

1,712

3,151

16,355

19,506

2,836

16,670

1904
2011
35 years
Atria Windsor Woods
Hudson
FL

1,610

32,432

863

1,624

33,281

34,905

4,798

30,107

1988
2011
35 years
Atria Baypoint Village
Hudson
FL
15,912

2,083

28,841

3,801

2,139

32,586

34,725

4,773

29,952

1986
2011
35 years
Atria San Pablo
Jacksonville
FL
5,691

1,620

14,920

570

1,636

15,474

17,110

2,008

15,102

1999
2011
35 years
Atria at St. Joseph's
Jupiter
FL
16,361

5,520

30,720

225

5,543

30,922

36,465

1,646

34,819

2007
2013
35 years
Atria Meridian
Lake Worth
FL


10

755

12

753

765

136

629

1986
2012
35 years
Atria Heritage at Lake Forest
Sanford
FL

3,589

32,586

2,241

3,594

34,822

38,416

4,137

34,279

2002
2011
35 years
Atria Evergreen Woods
Spring Hill
FL

2,370

28,371

2,606

2,497

30,850

33,347

4,765

28,582

1981
2011
35 years
Atria North Point
Alpharetta
GA
42,431

4,830

78,318


4,830

78,318

83,148

1,824

81,324

2007
2014
35 years

161


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Atria Buckhead
Atlanta
GA

3,660

5,274

544

3,678

5,800

9,478

1,102

8,376

1996
2011
35 years
Atria Mableton
Austell
GA

1,911

18,879

97

1,912

18,975

20,887

1,108

19,779

2000
2013
35 years
Atria Johnson Ferry
Marietta
GA

990

6,453

212

990

6,665

7,655

1,037

6,618

1995
2011
35 years
Atria Tucker
Tucker
GA

1,103

20,679

127

1,103

20,806

21,909

1,197

20,712

2000
2013
35 years
Atria Glen Ellyn
Glen Ellyn
IL

2,455

34,064

1,597

2,475

35,641

38,116

8,633

29,483

2000
2007
35 years
Atria Newburgh
Newburgh
IN

1,150

22,880

401

1,150

23,281

24,431

2,965

21,466

1998
2011
35 years
Atria Hearthstone East
Topeka
KS

1,150

20,544

567

1,167

21,094

22,261

2,911

19,350

1998
2011
35 years
Atria Hearthstone West
Topeka
KS

1,230

28,379

1,209

1,230

29,588

30,818

4,295

26,523

1987
2011
35 years
Atria Highland Crossing
Covington
KY
11,062

1,677

14,393

905

1,687

15,288

16,975

2,526

14,449

1988
2011
35 years
Atria Summit Hills
Crestview Hills
KY
6,081

1,780

15,769

614

1,784

16,379

18,163

2,352

15,811

1998
2011
35 years
Atria Elizabethtown
Elizabethtown
KY

850

12,510

364

869

12,855

13,724

1,733

11,991

1996
2011
35 years
Atria St. Matthews
Louisville
KY
7,324

939

9,274

512

941

9,784

10,725

1,874

8,851

1998
2011
35 years
Atria Stony Brook
Louisville
KY

1,860

17,561

403

1,888

17,936

19,824

2,540

17,284

1999
2011
35 years
Atria Springdale
Louisville
KY

1,410

16,702

582

1,410

17,284

18,694

2,436

16,258

1999
2011
35 years
Atria Marland Place
Andover
MA

1,831

34,592

12,635

1,834

47,224

49,058

4,483

44,575

1996
2011
35 years
Atria Longmeadow Place
Burlington
MA

5,310

58,021

878

5,310

58,899

64,209

6,994

57,215

1998
2011
35 years
Atria Fairhaven (Alden)
Fairhaven
MA

1,100

16,093

511

1,100

16,604

17,704

2,127

15,577

1999
2011
35 years
Atria Woodbriar Place
Falmouth
MA
30,000

4,630


32,630

6,433

30,827

37,260

1,983

35,277

2013
2011
CIP
Atria Woodbriar
Falmouth
MA

1,970

43,693

6,422

1,974

50,111

52,085

5,203

46,882

1975
2011
35 years
Atria Draper Place
Hopedale
MA

1,140

17,794

968

1,154

18,748

19,902

2,416

17,486

1998
2011
35 years
Atria Merrimack Place
Newburyport
MA

2,774

40,645

931

2,801

41,549

44,350

4,933

39,417

2000
2011
35 years
Atria Marina Place
Quincy
MA

2,590

33,899

1,002

2,606

34,885

37,491

4,494

32,997

1999
2011
35 years
Riverheights Terrace
Brandon
MB
10,716

799

27,708


799

27,708

28,507

351

28,156

2001
2014
35 years
Amber Meadow
Winnipeg
MB

3,047

17,821


3,047

17,821

20,868

260

20,608

2000
2014
35 years
The Westhaven
Winnipeg
MB

871

23,162


871

23,162

24,033

302

23,731

1988
2014
35 years
Atria Manresa
Annapolis
MD

4,193

19,000

1,123

4,449

19,867

24,316

2,638

21,678

1920
2011
35 years
Atria Salisbury
Salisbury
MD

1,940

24,500

306

1,940

24,806

26,746

3,055

23,691

1995
2011
35 years
Atria Kennebunk
Kennebunk
ME

1,090

23,496

586

1,096

24,076

25,172

3,161

22,011

1998
2011
35 years
Atria Ann Arbor
Ann Arbor
MI

1,703

15,857

1,486

1,674

17,372

19,046

4,297

14,749

2001
2007
35 years
Atria Kinghaven
Riverview
MI
13,781

1,440

26,260

886

1,496

27,090

28,586

3,833

24,753

1987
2011
35 years
Atria Shorehaven
Sterling Heights
MI


8

610


618

618

90

528

1989
2012
35 years
Ste. Anne’s Court
Fredericton
NB

1,221

29,626


1,221

29,626

30,847

369

30,478

2002
2014
35 years
Chateau De Champlain
St. John
NB
10,065

796

24,577


796

24,577

25,373

320

25,053

2002
2014
35 years
Atria Merrywood
Charlotte
NC

1,678

36,892

1,653

1,678

38,545

40,223

5,397

34,826

1991
2011
35 years
Atria Southpoint
Durham
NC
16,936

2,130

25,920

87

2,130

26,007

28,137

1,531

26,606

2009
2013
35 years
Atria Oakridge
Raleigh
NC
15,708

1,482

28,838

139

1,512

28,947

30,459

1,713

28,746

2009
2013
35 years
Atria Cranford
Cranford
NJ
26,511

8,260

61,411

2,586

8,313

63,944

72,257

8,225

64,032

1993
2011
35 years
Atria Tinton Falls
Tinton Falls
NJ

6,580

13,258

845

6,593

14,090

20,683

2,377

18,306

1999
2011
35 years

162


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Atria Vista del Rio
Albuquerque
NM


36

641

27

650

677

102

575

1997
2012
35 years
Atria Sunlake
Las Vegas
NV

7

732

463

7

1,195

1,202

676

526

1998
2011
35 years
Atria Sutton
Las Vegas
NV


863

707

35

1,535

1,570

824

746

1998
2011
35 years
Atria Seville
Las Vegas
NV


796

632

11

1,417

1,428

727

701

1999
2011
35 years
Atria Summit Ridge
Reno
NV

4

407

249

4

656

660

377

283

1997
2011
35 years
Atria Shaker
Albany
NY
12,103

1,520

29,667

653

1,626

30,214

31,840

3,919

27,921

1997
2011
35 years
Atria Crossgate
Albany
NY

1,080

20,599

402

1,080

21,001

22,081

2,840

19,241

1980
2011
35 years
Atria Woodlands
Ardsley
NY
46,880

7,660

65,581

1,208

7,682

66,767

74,449

8,346

66,103

2005
2011
35 years
Atria Bay Shore
Bay Shore
NY
15,275

4,440

31,983

919

4,448

32,894

37,342

4,263

33,079

1900
2011
35 years
Atria Briarcliff Manor
Briarcliff Manor
NY

6,560

33,885

1,396

6,585

35,256

41,841

4,638

37,203

1997
2011
35 years
Atria Riverdale
Bronx
NY
21,612

1,020

24,149

6,664

1,035

30,798

31,833

3,733

28,100

1999
2011
35 years
Atria Delmar Place
Delmar
NY

1,201

24,850

242

1,204

25,089

26,293

869

25,424

2004
2013
35 years
Atria East Northport
East Northport
NY

9,960

34,467

10,973

9,960

45,440

55,400

4,715

50,685

1996
2011
35 years
Atria Glen Cove
Glen Cove
NY

2,035

25,190

759

2,049

25,935

27,984

6,450

21,534

1997
2011
35 years
Atria Great Neck
Great Neck
NY

3,390

54,051

1,033

3,390

55,084

58,474

6,521

51,953

1998
2011
35 years
Atria Cutter Mill
Great Neck
NY
34,937

2,750

47,919

1,411

2,756

49,324

52,080

6,022

46,058

1999
2011
35 years
Atria Huntington
Huntington Station
NY

8,190

1,169

1,342

8,207

2,494

10,701

1,012

9,689

1987
2011
35 years
Atria Hertlin House
Lake Ronkonkoma
NY

7,886

16,391

770

7,886

17,161

25,047

1,312

23,735

2002
2012
35 years
Atria Lynbrook
Lynbrook
NY

3,145

5,489

533

3,147

6,020

9,167

1,308

7,859

1996
2011
35 years
Atria Tanglewood
Lynbrook
NY
25,670

4,120

37,348

380

4,142

37,706

41,848

4,626

37,222

2005
2011
35 years
Atria 86th Street
New York
NY

80

73,685

3,903

167

77,501

77,668

9,878

67,790

1998
2011
35 years
Atria on the Hudson
Ossining
NY

8,123

63,089

2,285

8,141

65,356

73,497

8,733

64,764

1972
2011
35 years
Atria Penfield
Penfield
NY

620

22,036

417

622

22,451

23,073

2,977

20,096

1972
2011
35 years
Atria Plainview
Plainview
NY
13,430

2,480

16,060

820

2,630

16,730

19,360

2,361

16,999

2000
2011
35 years
Atria Rye Brook
Port Chester
NY
43,757

9,660

74,936

788

9,682

75,702

85,384

9,287

76,097

2004
2011
35 years
Atria Kew Gardens
Queens
NY
27,855

3,051

66,013

2,728

3,051

68,741

71,792

8,001

63,791

1999
2011
35 years
Atria Forest Hills
Queens
NY

2,050

16,680

494

2,050

17,174

19,224

2,376

16,848

2001
2011
35 years
Atria Greece
Rochester
NY

410

14,967

723

610

15,490

16,100

2,109

13,991

1970
2011
35 years
Atria on Roslyn Harbor
Roslyn
NY
65,000

12,909

72,720

987

12,965

73,651

86,616

8,879

77,737

2006
2011
35 years
Atria Guilderland
Slingerlands
NY

1,170

22,414

277

1,171

22,690

23,861

2,917

20,944

1950
2011
35 years
Atria South Setauket
South Setauket
NY

8,450

14,534

785

8,776

14,993

23,769

3,016

20,753

1967
2011
35 years
Atria Northgate Park
Cincinnati
OH



335


335

335

81

254

1985
2012
35 years
The Court at Brooklin
Brooklin
ON

2,515

35,602


2,515

35,602

38,117

424

37,693

2004
2014
35 years
Burlington Gardens
Burlington
ON

7,560

50,744


7,560

50,744

58,304

583

57,721

2008
2014
35 years
The Court at Rushdale
Hamilton
ON
15,881

1,799

34,633


1,799

34,633

36,432

415

36,017

2004
2014
35 years
Kingsdale Chateau
Kingston
ON
16,640

2,221

36,272


2,221

36,272

38,493

435

38,058

2000
2014
35 years
Crystal View Lodge
Nepean
ON

1,587

37,243


1,587

37,243

38,830

443

38,387

2000
2014
35 years

163


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
The Court at Barrhaven
Nepean
ON

1,778

33,922


1,778

33,922

35,700

409

35,291

2004
2014
35 years
Stamford Estates
Niagara Falls
ON
12,922

1,414

29,439


1,414

29,439

30,853

362

30,491

2005
2014
35 years
Sherbrooke Heights
Peterborough
ON
15,922

2,485

33,747


2,485

33,747

36,232

410

35,822

2001
2014
35 years
Anchor Pointe
St. Catharines
ON
15,034

8,214

24,056


8,214

24,056

32,270

332

31,938

2000
2014
35 years
The Court at Pringle Creek
Whitby
ON

2,965

39,206


2,965

39,206

42,171

472

41,699

2002
2014
35 years
Atria Bethlehem
Bethlehem
PA

2,479

22,870

360

2,479

23,230

25,709

3,300

22,409

1998
2011
35 years
Atria Center City
Philadelphia
PA
23,234

3,460

18,291

1,561

3,460

19,852

23,312

2,975

20,337

1964
2011
35 years
Atria Woodbridge Place
Phoenixville
PA

1,510

19,130

387

1,510

19,517

21,027

2,695

18,332

1996
2011
35 years
Atria South Hills
Pittsburgh
PA

880

10,884

283

895

11,152

12,047

1,820

10,227

1998
2011
35 years
La Residence Steger
Saint-Laurent
QC
6,355

1,995

10,926


1,995

10,926

12,921

178

12,743

1999
2014
35 years
Primrose Chateau
Saskatoon
QC
15,845

2,611

32,729


2,611

32,729

35,340

396

34,944

1996
2014
35 years
Atria Bay Spring Village
Barrington
RI

2,000

33,400

1,821

2,074

35,147

37,221

5,047

32,174

2000
2011
35 years
Atria Harborhill Place
East Greenwich
RI

2,089

21,702

651

2,113

22,329

24,442

2,921

21,521

1835
2011
35 years
Atria Lincoln Place
Lincoln
RI

1,440

12,686

465

1,464

13,127

14,591

2,034

12,557

2000
2011
35 years
Atria Aquidneck Place
Portsmouth
RI

2,810

31,623

402

2,810

32,025

34,835

3,825

31,010

1999
2011
35 years
Atria Forest Lake
Columbia
SC

670

13,946

488

680

14,424

15,104

1,887

13,217

1999
2011
35 years
Mulberry Estates
Moose Jaw
SK
15,909

2,173

31,791


2,173

31,791

33,964

391

33,573

2003
2014
35 years
Queen Victoria
Regina
SK

3,018

34,109


3,018

34,109

37,127

409

36,718

2000
2014
35 years
Atria Weston Place
Knoxville
TN
9,703

793

7,961

811

967

8,598

9,565

1,374

8,191

1993
2011
35 years
Atria Village at Arboretum
Austin
TX

8,280

61,764

289

8,292

62,041

70,333

4,573

65,760

2009
2012
35 years
Atria Collier Park
Beaumont
TX



520

2

518

520

133

387

1996
2012
35 years
Atria Carrollton
Carrollton
TX
7,189

360

20,465

815

364

21,276

21,640

2,824

18,816

1998
2011
35 years
Atria Grapevine
Grapevine
TX

2,070

23,104

254

2,070

23,358

25,428

3,055

22,373

1999
2011
35 years
Atria Westchase
Houston
TX

2,318

22,278

401

2,318

22,679

24,997

3,043

21,954

1999
2011
35 years
Atria Kingwood
Kingwood
TX

1,170

4,518

334

1,179

4,843

6,022

886

5,136

1998
2011
35 years
Atria at Hometown
North Richland Hills
TX

1,932

30,382

343

1,955

30,702

32,657

1,835

30,822

2007
2013
35 years
Atria Canyon Creek
Plano
TX

3,110

45,999

304

3,125

46,288

49,413

2,718

46,695

2009
2013
35 years
Atria Richardson
Richardson
TX

1,590

23,662

505

1,590

24,167

25,757

3,127

22,630

1998
2011
35 years
Atria Cypresswood
Spring
TX
9,175

880

9,192

336

880

9,528

10,408

1,371

9,037

1996
2011
35 years
Atria Sugar Land
Sugar Land
TX

970

17,542

532

971

18,073

19,044

2,359

16,685

1999
2011
35 years
Atria Copeland
Tyler
TX
9,945

1,879

17,901

410

1,881

18,309

20,190

2,520

17,670

1997
2011
35 years
Atria Willow Park
Tyler
TX

920

31,271

532

927

31,796

32,723

4,430

28,293

1985
2011
35 years
Atria Sandy
Sandy
UT

3,356

18,805

1,453

3,499

20,115

23,614

3,245

20,369

1986
2011
35 years
Atria Virginia Beach (Hilltop)
Virginia Beach
VA

1,749

33,004

411

1,749

33,415

35,164

4,446

30,718

1998
2011
35 years
Other Projects
 
 


1,938



1,938

1,938


1,938

CIP
CIP
CIP
TOTAL FOR ATRIA SENIORS HOUSING COMMUNITIES
 
 
959,138

520,385

4,710,535

233,570

527,898

4,936,592

5,464,490

498,245

4,966,245

 
 
 

164


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
OTHER SENIORS HOUSING COMMUNITIES
 
 
 

 

 

 

 

 

 

 

 

 
 
 
Elmcroft of Grayson Valley
Birmingham
AL

1,040

19,145

474

1,046

19,613

20,659

2,237

18,422

2000
2011
35 years
Elmcroft of Byrd Springs
Hunstville
AL

1,720

11,270

440

1,723

11,707

13,430

1,460

11,970

1999
2011
35 years
Elmcroft of Heritage Woods
Mobile
AL

1,020

10,241

458

1,020

10,699

11,719

1,349

10,370

2000
2011
35 years
Elmcroft of Halcyon
Montgomery
AL

220

5,476


220

5,476

5,696

1,278

4,418

1999
2006
35 years
Rosewood Manor (AL)
Scottsboro
AL

680

4,038


680

4,038

4,718

469

4,249

1998
2011
35 years
West Shores
Hot Springs
AR

1,326

10,904


1,326

10,904

12,230

3,009

9,221

1988
2005
35 years
Elmcroft of Maumelle
Maumelle
AR

1,252

7,601


1,252

7,601

8,853

1,774

7,079

1997
2006
35 years
Elmcroft of Mountain Home
Mountain Home
AR

204

8,971


204

8,971

9,175

2,093

7,082

1997
2006
35 years
Elmcroft of Sherwood
Sherwood
AR

1,320

5,693


1,320

5,693

7,013

1,328

5,685

1997
2006
35 years
Chandler Memory Care Community
Chandler
AZ

2,910


9,066

3,094

8,882

11,976

977

10,999

2011
2011
35 years
Cottonwood Village
Cottonwood
AZ

1,200

15,124


1,200

15,124

16,324

4,144

12,180

1986
2005
35 years
Silver Creek Inn Memory Care Community
Gilbert
AZ

890

5,918


890

5,918

6,808

532

6,276

2012
2012
35 years
Prestige Assisted Living at Green Valley
Green Valley
AZ

1,227

13,977


1,227

13,977

15,204

39

15,165

1998
2014
35 years
Prestige Assisted Living at Lake Havasu City
Lake Havasu
AZ

594

14,792


594

14,792

15,386

41

15,345

1999
2014
35 years
Arbor Rose
Mesa
AZ

1,100

11,880

2,434

1,100

14,314

15,414

2,179

13,235

1999
2011
35 years
The Stratford
Phoenix
AZ

1,931

33,576


1,931

33,576

35,507

93

35,414

2001
2014
35 years
Amber Creek Inn Memory Care
Scottsdale
AZ

2,310

6,322

(5,365
)
2,040

1,227

3,267


3,267

1986
2011
35 years
Prestige Assisted Living at Sierra Vista
Sierra Vista
AZ

295

13,224


295

13,224

13,519

37

13,482

1999
2014
35 years
Elmcroft of Tempe
Tempe
AZ

1,090

12,942

734

1,090

13,676

14,766

1,623

13,143

1999
2011
35 years
Elmcroft of River Centre
Tucson
AZ

1,940

5,195

405

1,940

5,600

7,540

806

6,734

1999
2011
35 years
Sierra Ridge Memory Care
Auburn
CA

681

6,071


681

6,071

6,752

49

6,703

2011
2014
35 years
Careage Banning
Banning
CA

2,970

16,037


2,970

16,037

19,007

1,982

17,025

2004
2011
35 years
Las Villas Del Carlsbad
Carlsbad
CA

1,760

30,469


1,760

30,469

32,229

7,110

25,119

1987
2006
35 years
Prestige Assisted Living at Chico
Chico
CA

1,069

14,929


1,069

14,929

15,998

42

15,956

1998
2014
35 years
Villa Bonita
Chula Vista
CA

1,610

9,169


1,610

9,169

10,779

1,202

9,577

1989
2011
35 years
The Meadows Senior Living
Elk Grove
CA

1,308

19,667


1,308

19,667

20,975

157

20,818

2003
2014
35 years
Las Villas Del Norte
Escondido
CA

2,791

32,632


2,791

32,632

35,423

7,614

27,809

1986
2006
35 years
Alder Bay Assisted Living
Eureka
CA

1,170

5,228

(70
)
1,170

5,158

6,328

670

5,658

1997
2011
35 years
Elmcroft of La Mesa
La Mesa
CA

2,431

6,101


2,431

6,101

8,532

1,424

7,108

1997
2006
35 years
Grossmont Gardens
La Mesa
CA

9,104

59,349


9,104

59,349

68,453

13,848

54,605

1964
2006
35 years
Palms, The
La Mirada
CA

2,700

43,919


2,700

43,919

46,619

1,836

44,783

1990
2013
35 years
Prestige Assisted Living at Lancaster
Lancaster
CA

718

10,459


718

10,459

11,177

29

11,148

1999
2014
35 years

165


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Prestige Assisted Living at Marysville
Marysville
CA

741

7,467


741

7,467

8,208

21

8,187

1999
2014
35 years
Mountview Retirement Residence
Montrose
CA

1,089

15,449


1,089

15,449

16,538

3,605

12,933

1974
2006
35 years
Redwood Retirement
Napa
CA

2,798

12,639


2,798

12,639

15,437

540

14,897

1986
2013
35 years
Prestige Assisted Living at Oroville
Oroville
CA

638

8,079


638

8,079

8,717

23

8,694

1999
2014
35 years
Villa de Palma
Placentia
CA

1,260

10,174


1,260

10,174

11,434

1,290

10,144

1982
2011
35 years
Valencia Commons
Rancho Cucamonga
CA

1,439

36,363


1,439

36,363

37,802

1,516

36,286

2002
2013
35 years
Mission Hills
Rancho Mirage
CA

6,800

3,637


6,800

3,637

10,437

752

9,685

1999
2011
35 years
Shasta Estates
Redding
CA

1,180

23,463


1,180

23,463

24,643

979

23,664

2009
2013
35 years
The Vistas
Redding
CA

1,290

22,033


1,290

22,033

23,323

2,487

20,836

2007
2011
35 years
Elmcroft of Point Loma
San Diego
CA

2,117

6,865


2,117

6,865

8,982

1,602

7,380

1999
2006
35 years
Regency of Evergreen Valley
San Jose
CA

2,700

7,994


2,700

7,994

10,694

1,229

9,465

1998
2011
35 years
Villa del Obispo
San Juan Capistrano
CA

2,660

9,560


2,660

9,560

12,220

1,191

11,029

1985
2011
35 years
Villa Santa Barbara
Santa Barbara
CA

1,219

12,426


1,219

12,426

13,645

3,419

10,226

1977
2005
35 years
Skyline Place Senior Living
Sonora
CA

1,815

28,472


1,815

28,472

30,287

229

30,058

1996
2014
35 years
Oak Terrace Memory Care
Soulsbyville
CA

1,146

5,275


1,146

5,275

6,421

44

6,377

1999
2014
35 years
Eagle Lake Village
Susanville
CA

1,165

6,719


1,165

6,719

7,884

551

7,333

2006
2012
35 years
Bonaventure, The
Ventura
CA

5,294

32,747


5,294

32,747

38,041

1,388

36,653

2005
2013
35 years
Prestige Assisted Living at Visalia
Visalia
CA

1,300

8,378


1,300

8,378

9,678

24

9,654

1998
2014
35 years
Vista Village
Vista
CA

1,630

5,640

61

1,630

5,701

7,331

816

6,515

1980
2011
35 years
Rancho Vista
Vista
CA

6,730

21,828


6,730

21,828

28,558

5,093

23,465

1982
2006
35 years
Westminster Terrace
Westminster
CA

1,700

11,514


1,700

11,514

13,214

1,321

11,893

2001
2011
35 years
Highland Trail
Broomfield
CO

2,511

26,431


2,511

26,431

28,942

1,110

27,832

2009
2013
35 years
Caley Ridge
Englewood
CO

1,157

13,133


1,157

13,133

14,290

1,077

13,213

1999
2012
35 years
Garden Square at Westlake
Greeley
CO

630

8,211


630

8,211

8,841

979

7,862

1998
2011
35 years
Garden Square of Greeley
Greeley
CO

330

2,735


330

2,735

3,065

339

2,726

1995
2011
35 years
Lakewood Estates
Lakewood
CO

1,306

21,137


1,306

21,137

22,443

884

21,559

1988
2013
35 years
Sugar Valley Estates
Loveland
CO

1,255

21,837


1,255

21,837

23,092

913

22,179

2009
2013
35 years
Devonshire Acres
Sterling
CO

950

13,569

(3,501
)
950

10,068

11,018

1,229

9,789

1979
2011
35 years
Gardenside Terrace
Branford
CT

7,000

31,518


7,000

31,518

38,518

3,561

34,957

1999
2011
35 years
Hearth at Tuxis Pond
Madison
CT

1,610

44,322


1,610

44,322

45,932

4,763

41,169

2002
2011
35 years
White Oaks
Manchester
CT

2,584

34,507


2,584

34,507

37,091

1,445

35,646

2007
2013
35 years
Hampton Manor Belleview
Belleview
FL

390

8,337


390

8,337

8,727

990

7,737

1988
2011
35 years
Sabal House
Cantonment
FL

430

5,902


430

5,902

6,332

682

5,650

1999
2011
35 years
Bristol Park of Coral Springs
Coral Springs
FL

3,280

11,877


3,280

11,877

15,157

1,455

13,702

1999
2011
35 years

166


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Stanley House
Defuniak Springs
FL

410

5,659


410

5,659

6,069

654

5,415

1999
2011
35 years
The Peninsula
Hollywood
FL

3,660

9,122


3,660

9,122

12,782

1,294

11,488

1972
2011
35 years
Elmcroft of Timberlin Parc
Jacksonville
FL

455

5,905


455

5,905

6,360

1,378

4,982

1998
2006
35 years
Forsyth House
Milton
FL

610

6,503


610

6,503

7,113

742

6,371

1999
2011
35 years
The Carlisle Naples
Naples
FL

8,406

78,091


8,406

78,091

86,497

8,393

78,104

N/A
2011
35 years
Naples ALZ Development
Naples
FL

2,983



2,983


2,983


2,983

CIP
2014
CIP
Hampton Manor at 24th Road
Ocala
FL

690

8,767


690

8,767

9,457

1,002

8,455

1996
2011
35 years
Hampton Manor at Deerwood
Ocala
FL

790

5,605


790

5,605

6,395

717

5,678

2005
2011
35 years
Las Palmas
Palm Coast
FL

984

30,009


984

30,009

30,993

1,250

29,743

2009
2013
35 years
Outlook Pointe at Pensacola
Pensacola
FL

2,230

2,362


2,230

2,362

4,592

451

4,141

1999
2011
35 years
Magnolia House
Quincy
FL

400

5,190


400

5,190

5,590

611

4,979

1999
2011
35 years
Outlook Pointe at Tallahassee
Tallahassee
FL

2,430

17,745


2,430

17,745

20,175

2,133

18,042

1999
2011
35 years
Magnolia Place
Tallahassee
FL

640

8,013


640

8,013

8,653

897

7,756

1999
2011
35 years
Bristol Park of Tamarac
Tamarac
FL

3,920

14,130


3,920

14,130

18,050

1,674

16,376

2000
2011
35 years
Elmcroft of Carrolwood
Tampa
FL

5,410

20,944

601

5,410

21,545

26,955

2,513

24,442

2001
2011
35 years
Augusta Gardens
Augusta
GA

530

10,262


530

10,262

10,792

1,201

9,591

1997
2011
35 years
Elmcroft of Mt. Zion
Jonesboro
GA

1,140

15,447

(16,587
)





2000
2011
35 years
Elmcroft of Milford Chase
Marietta
GA

3,350

7,431

(10,781
)





2000
2011
35 years
Elmcroft of Martinez
Martinez
GA

408

6,764


408

6,764

7,172

1,449

5,723

1997
2007
35 years
Elmcroft of Roswell
Roswell
GA

1,867

15,835


1,867

15,835

17,702


17,702

1997
2014
35 years
Crownpointe of Carmel
Carmel
IN

1,110

1,933


1,110

1,933

3,043

324

2,719

1998
2011
35 years
Azalea Hills
Floyds Knobs
IN

2,370

8,708


2,370

8,708

11,078

1,035

10,043

2008
2011
35 years
Georgetowne Place
Fort Wayne
IN

1,315

18,185


1,315

18,185

19,500

4,853

14,647

1987
2005
35 years
Crown Pointe Senior Living Community
Greensburg
IN

420

1,764


420

1,764

2,184

263

1,921

1999
2011
35 years
Summit West
Indianapolis
IN

1,240

7,922


1,240

7,922

9,162

992

8,170

1998
2011
35 years
The Harrison
Indianapolis
IN

1,200

5,740


1,200

5,740

6,940

1,664

5,276

1985
2005
35 years
Lakeview Commons Assisted Living
Monticello
IN

250

5,263


250

5,263

5,513

588

4,925

1999
2011
35 years
Elmcroft of Muncie
Muncie
IN

244

11,218


244

11,218

11,462

2,404

9,058

1998
2007
35 years
Wood Ridge
South Bend
IN

590

4,850

(35
)
590

4,815

5,405

598

4,807

1990
2011
35 years
Drury Place at Alvamar
Lawrence
KS

1,700

9,156

40

1,700

9,196

10,896

1,112

9,784

1995
2011
35 years
Drury Place at Salina
Salina
KS

1,300

1,738

26

1,302

1,762

3,064

348

2,716

1989
2011
35 years
Drury Place Retirement Apartments
Topeka
KS

390

6,217

29

390

6,246

6,636

743

5,893

1986
2011
35 years
Elmcroft of Florence
Florence
KY

1,535

21,826


1,535

21,826

23,361


23,361

2010
2014
35 years
Hartland Hills
Lexington
KY

1,468

23,929


1,468

23,929

25,397

1,000

24,397

2001
2013
35 years
Elmcroft of Mount Washington
Mount Washington
KY

758

12,048


758

12,048

12,806


12,806

2005
2014
35 years
Heritage Woods
Agawam
MA

1,249

4,625


1,249

4,625

5,874

1,990

3,884

1997
2004
30 years

167


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Wingate at Silver Lake
Kingston
MA

3,330

20,624


3,330

20,624

23,954

2,622

21,332

1996
2011
35 years
Devonshire Estates
Lenox
MA

1,832

31,124


1,832

31,124

32,956

1,301

31,655

1998
2013
35 years
Outlook Pointe at Hagerstown
Hagerstown
MD

2,010

1,293


2,010

1,293

3,303

316

2,987

1999
2011
35 years
Clover Healthcare
Auburn
ME

1,400

26,895


1,400

26,895

28,295

3,238

25,057

1982
2011
35 years
Gorham House
Gorham
ME

1,360

33,147

1,472

1,527

34,452

35,979

3,648

32,331

1990
2011
35 years
Kittery Estates
Kittery
ME

1,531

30,811


1,531

30,811

32,342

1,286

31,056

2009
2013
35 years
Woods at Canco
Portland
ME

1,441

45,578


1,441

45,578

47,019

1,898

45,121

2000
2013
35 years
Sentry Hill
York Harbor
ME

3,490

19,869


3,490

19,869

23,359

2,232

21,127

2000
2011
35 years
Elmcroft of Downriver
Brownstown Charter Township
MI

320

32,652

415

371

33,016

33,387

3,596

29,791

2000
2011
35 years
Independence Village of East Lansing
East Lansing
MI
7,025

1,956

18,122


1,956

18,122

20,078

1,393

18,685

1989
2012
35 years
Elmcroft of Kentwood
Kentwood
MI

510

13,976

499

510

14,475

14,985

1,804

13,181

2001
2011
35 years
Primrose Austin
Austin
MN

2,540

11,707


2,540

11,707

14,247

1,284

12,963

2002
2011
35 years
Primrose Duluth
Duluth
MN

6,190

8,296


6,190

8,296

14,486

1,045

13,441

2003
2011
35 years
Primrose Mankato
Mankato
MN

1,860

8,920


1,860

8,920

10,780

1,070

9,710

1999
2011
35 years
Rose Arbor
Maple Grove
MN

1,140

12,421


1,140

12,421

13,561

4,571

8,990

2000
2006
35 years
Wildflower Lodge
Maple Grove
MN

504

5,035


504

5,035

5,539

1,858

3,681

1981
2006
35 years
Lodge at White Bear
White Bear Lake
MN

732

24,999


732

24,999

25,731

1,041

24,690

2002
2013
35 years
Canyon Creek Inn Memory Care
Billings
MT

420

11,217

7

420

11,224

11,644

1,172

10,472

2011
2011
35 years
Springs at Missoula
Missoula
MT
16,318

1,975

34,390


1,975

34,390

36,365

2,546

33,819

2004
2012
35 years
Carillon ALF of Asheboro
Asheboro
NC

680

15,370


680

15,370

16,050

1,713

14,337

1998
2011
35 years
Elmcroft of Little Avenue
Charlotte
NC

250

5,077


250

5,077

5,327

1,185

4,142

1997
2006
35 years
Carillon ALF of Cramer Mountain
Cramerton
NC

530

18,225


530

18,225

18,755

2,050

16,705

1999
2011
35 years
Carillon ALF of Harrisburg
Harrisburg
NC

1,660

15,130


1,660

15,130

16,790

1,692

15,098

1997
2011
35 years
Carillon ALF of Hendersonville
Hendersonville
NC

2,210

7,372


2,210

7,372

9,582

937

8,645

2005
2011
35 years
Carillon ALF of Hillsborough
Hillsborough
NC

1,450

19,754


1,450

19,754

21,204

2,172

19,032

2005
2011
35 years
Willow Grove
Matthews
NC

763

27,544


763

27,544

28,307

1,146

27,161

2009
2013
35 years
Carillon ALF of Newton
Newton
NC

540

14,935


540

14,935

15,475

1,665

13,810

2000
2011
35 years
Independence Village of Olde Raleigh
Raleigh
NC
9,757

1,989

18,648


1,989

18,648

20,637

1,464

19,173

1991
2012
35 years
Elmcroft of Northridge
Raleigh
NC

184

3,592


184

3,592

3,776

838

2,938

1984
2006
35 years
Carillon ALF of Salisbury
Salisbury
NC

1,580

25,026


1,580

25,026

26,606

2,730

23,876

1999
2011
35 years
Carillon ALF of Shelby
Shelby
NC

660

15,471


660

15,471

16,131

1,730

14,401

2000
2011
35 years
Elmcroft of Southern Pines
Southern Pines
NC

1,196

10,766


1,196

10,766

11,962

1,461

10,501

1998
2010
35 years
Carillon ALF of Southport
Southport
NC

1,330

10,356


1,330

10,356

11,686

1,236

10,450

2005
2011
35 years
Primrose Bismarck
Bismarck
ND

1,210

9,768


1,210

9,768

10,978

1,108

9,870

1994
2011
35 years
Crown Pointe
Omaha
NE

1,316

11,950


1,316

11,950

13,266

3,311

9,955

1985
2005
35 years

168


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Birch Heights
Derry
NH

1,413

30,267


1,413

30,267

31,680

1,263

30,417

2009
2013
35 years
Brandywine at Brick
Brick
NJ

1,490

16,747


1,490

16,747

18,237

3,996

14,241

1999
2011
35 years
Bear Canyon Estates
Albuquerque
NM

1,879

36,223


1,879

36,223

38,102

1,512

36,590

1997
2013
35 years
Elmcroft of Quintessence
Albuquerque
NM

1,150

26,527

406

1,165

26,918

28,083

2,941

25,142

1998
2011
35 years
The Amberleigh
Buffalo
NY

3,498

19,097


3,498

19,097

22,595

5,471

17,124

1988
2005
35 years
Castle Gardens
Vestal
NY

1,830

20,312

2,230

1,885

22,487

24,372

2,912

21,460

1994
2011
35 years
Elmcroft of Lima
Lima
OH

490

3,368


490

3,368

3,858

786

3,072

1998
2006
35 years
Elmcroft of Ontario
Mansfield
OH

523

7,968


523

7,968

8,491

1,859

6,632

1998
2006
35 years
Elmcroft of Medina
Medina
OH

661

9,788


661

9,788

10,449

2,284

8,165

1999
2006
35 years
Elmcroft of Washington Township
Miamisburg
OH

1,235

12,611


1,235

12,611

13,846

2,943

10,903

1998
2006
35 years
Elmcroft of Sagamore Hills
Northfield
OH

980

12,604


980

12,604

13,584

2,941

10,643

2000
2006
35 years
Elmcroft of Lorain
Vermilion
OH

500

15,461

499

557

15,903

16,460

1,902

14,558

2000
2011
35 years
Elmcroft of Xenia
Xenia
OH

653

2,801


653

2,801

3,454

654

2,800

1999
2006
35 years
Arbor House of Mustang
Mustang
OK

372

3,587


372

3,587

3,959

240

3,719

1999
2012
35 years
Arbor House of Norman
Norman
OK

444

7,525


444

7,525

7,969

501

7,468

2000
2012
35 years
Arbor House Reminisce Center
Norman
OK

438

3,028


438

3,028

3,466

204

3,262

2004
2012
35 years
Arbor House of Midwest City
Oklahoma City
OK

544

9,133


544

9,133

9,677

608

9,069

2004
2012
35 years
Elmcroft of Quail Springs
Oklahoma City
OK

500

16,632

(17,132
)





1999
2011
35 years
Mansion at Waterford
Oklahoma City
OK

2,077

14,184


2,077

14,184

16,261

1,164

15,097

1999
2012
35 years
Meadowbrook Place
Baker City
OR

1,430

5,311


1,430

5,311

6,741

44

6,697

1965
2014
35 years
Edgewood Downs
Beaverton
OR

2,356

15,476


2,356

15,476

17,832

655

17,177

1977
2013
35 years
Avamere at Hillsboro
Hillsboro
OR

4,400

8,353

1,065

4,400

9,418

13,818

1,107

12,711

2000
2011
35 years
The Springs at Tanasbourne
Hillsboro
OR
35,354

4,689

55,035


4,689

55,035

59,724

3,431

56,293

2009
2013
35 years
Avamere court at Keizer
Keizer
OR

1,260

30,183


1,260

30,183

31,443

3,486

27,957

1970
2011
35 years
Keizer River ALZ Facility
Keizer
OR



7,382

922

6,460

7,382

53

7,329

2012
2012
35 years
The Stafford
Lake Oswego
OR

1,800

16,122


1,800

16,122

17,922

1,926

15,996

2008
2011
35 years
The Pearl at Kruse Way
Lake Oswego
OR

2,000

12,880


2,000

12,880

14,880

1,500

13,380

2005
2011
35 years
Avamere at Three Fountains
Medford
OR

2,340

33,187


2,340

33,187

35,527

3,787

31,740

1974
2011
35 years
The Springs at Clackamas Woods (ILF)
Milwaukie
OR
10,731

1,264

22,429


1,264

22,429

23,693

1,661

22,032

1999
2012
35 years
Clackamas Woods Assisted Living
Milwaukie
OR
5,741

681

12,077


681

12,077

12,758

894

11,864

1999
2012
35 years
Avamere at Newberg
Newberg
OR

1,320

4,664

383

1,320

5,047

6,367

654

5,713

1999
2011
35 years
Avamere Living at Berry Park
Oregon City
OR

1,910

4,249

2,147

1,910

6,396

8,306

674

7,632

1972
2011
35 years
McLoughlin Place Senior Living
Oregon City
OR

2,418

26,819


2,418

26,819

29,237

217

29,020

1997
2014
35 years
Avamere at Bethany
Portland
OR

3,150

16,740


3,150

16,740

19,890

1,973

17,917

2002
2011
35 years
Avamere at Sandy
Sandy
OR

1,000

7,309

226

1,000

7,535

8,535

931

7,604

1999
2011
35 years
Suzanne Elise ALF
Seaside
OR

1,940

4,027


1,940

4,027

5,967

652

5,315

1998
2011
35 years
Avamere at Sherwood
Sherwood
OR

1,010

7,051

203

1,010

7,254

8,264

906

7,358

2000
2011
35 years

169


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Chateau Gardens
Springfield
OR

1,550

4,197


1,550

4,197

5,747

483

5,264

1991
2011
35 years
Avamere at St Helens
St. Helens
OR

1,410

10,496

378

1,410

10,874

12,284

1,256

11,028

2000
2011
35 years
Flagstone Senior Living
The Dalles
OR

1,631

17,786


1,631

17,786

19,417

144

19,273

1991
2014
35 years
Elmcroft of Allison Park
Allison Park
PA

1,171

5,686


1,171

5,686

6,857

1,327

5,530

1986
2006
35 years
Elmcroft of Chippewa
Beaver Falls
PA

1,394

8,586


1,394

8,586

9,980

2,003

7,977

1998
2006
35 years
Elmcroft of Berwick
Berwick
PA

111

6,741


111

6,741

6,852

1,573

5,279

1998
2006
35 years
Outlook Pointe at Lakemont
Bridgeville
PA

1,660

12,624


1,660

12,624

14,284

1,552

12,732

1999
2011
35 years
Elmcroft of Dillsburg
Dillsburg
PA

432

7,797


432

7,797

8,229

1,819

6,410

1998
2006
35 years
Elmcroft of Altoona
Hollidaysburg
PA

331

4,729


331

4,729

5,060

1,104

3,956

1997
2006
35 years
Elmcroft of Lebanon
Lebanon
PA

240

7,336


240

7,336

7,576

1,712

5,864

1999
2006
35 years
Elmcroft of Lewisburg
Lewisburg
PA

232

5,666


232

5,666

5,898

1,322

4,576

1999
2006
35 years
Lehigh Commons
Macungie
PA

420

4,406

450

420

4,856

5,276

1,917

3,359

1997
2004
30 years
Elmcroft of Loyalsock
Montoursville
PA

413

3,412


413

3,412

3,825

796

3,029

1999
2006
35 years
Highgate at Paoli Pointe
Paoli
PA

1,151

9,079


1,151

9,079

10,230

3,461

6,769

1997
2004
30 years
Elmcroft of Mid Valley
Peckville
PA

619

11,662


619

11,662

12,281


12,281

1998
2014
35 years
Sanatoga Court
Pottstown
PA

360

3,233


360

3,233

3,593

1,300

2,293

1997
2004
30 years
Berkshire Commons
Reading
PA

470

4,301


470

4,301

4,771

1,727

3,044

1997
2004
30 years
Mifflin Court
Reading
PA

689

4,265

351

689

4,616

5,305

1,568

3,737

1997
2004
35 years
Elmcroft of Reading
Reading
PA

638

4,942


638

4,942

5,580

1,153

4,427

1998
2006
35 years
Elmcroft of Reedsville
Reedsville
PA

189

5,170


189

5,170

5,359

1,206

4,153

1998
2006
35 years
Elmcroft of Saxonburg
Saxonburg
PA

770

5,949


770

5,949

6,719

1,388

5,331

1994
2006
35 years
Elmcroft of Shippensburg
Shippensburg
PA

203

7,634


203

7,634

7,837

1,781

6,056

1999
2006
35 years
Elmcroft of State College
State College
PA

320

7,407


320

7,407

7,727

1,728

5,999

1997
2006
35 years
Outlook Pointe at York
York
PA

1,260

6,923


1,260

6,923

8,183

849

7,334

1999
2011
35 years
Forest Pines
Columbia
SC

1,058

27,471


1,058

27,471

28,529

1,145

27,384

1997
2013
35 years
Elmcroft of Florence SC
Florence
SC

108

7,620


108

7,620

7,728

1,778

5,950

1998
2006
35 years
Primrose Aberdeen
Aberdeen
SD

850

659


850

659

1,509

179

1,330

1991
2011
35 years
Primrose Place
Aberdeen
SD

310

3,242


310

3,242

3,552

385

3,167

2000
2011
35 years
Primrose Rapid City
Rapid City
SD

860

8,722


860

8,722

9,582

1,028

8,554

1997
2011
35 years
Primrose Sioux Falls
Sioux Falls
SD

2,180

12,936


2,180

12,936

15,116

1,544

13,572

2002
2011
35 years
Outlook Pointe of Bristol
Bristol
TN

470

16,006


470

16,006

16,476

1,769

14,707

1999
2011
35 years
Elmcroft of Hamilton Place
Chattanooga
TN

87

4,248


87

4,248

4,335

991

3,344

1998
2006
35 years
Elmcroft of Shallowford
Chattanooga
TN

580

7,568

455

582

8,021

8,603

1,097

7,506

1999
2011
35 years
Elmcroft of Hendersonville
Hendersonville
TN

600

5,304


600

5,304

5,904


5,904

1999
2014
35 years
Regency House
Hixson
TN

140

6,611


140

6,611

6,751

764

5,987

2000
2011
35 years
Elmcroft of Jackson
Jackson
TN

768

16,840


768

16,840

17,608


17,608

1998
2014
35 years
Outlook Pointe at Johnson City
Johnson City
TN

590

10,043


590

10,043

10,633

1,145

9,488

1999
2011
35 years
Elmcroft of Kingsport
Kingsport
TN

22

7,815


22

7,815

7,837

1,823

6,014

2000
2006
35 years
Elmcroft of Halls
Knoxville
TN

387

4,948


387

4,948

5,335


5,335

1998
2014
35 years

170


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Elmcroft of West Knoxville
Knoxville
TN

439

10,697


439

10,697

11,136

2,496

8,640

2000
2006
35 years
Elmcroft of Lebanon
Lebanon
TN

180

7,086


180

7,086

7,266

1,653

5,613

2000
2006
35 years
Elmcroft of Twin Hills
Madison
TN

860

8,208

(9,068
)





1999
2011
35 years
Elmcroft of Bartlett
Memphis
TN

570

25,552

343

570

25,895

26,465

2,860

23,605

1999
2011
35 years
Kennington Place
Memphis
TN

1,820

4,748

761

1,820

5,509

7,329

911

6,418

1989
2011
35 years
Glenmary Senior Manor
Memphis
TN

510

5,860

224

510

6,084

6,594

946

5,648

1964
2011
35 years
Outlook Pointe at Murfreesboro
Murfreesboro
TN

940

8,030


940

8,030

8,970

959

8,011

1999
2011
35 years
Elmcroft of Brentwood
Nashville
TN

960

22,020

603

960

22,623

23,583

2,610

20,973

1998
2011
35 years
Trenton Health Care Center
Trenton
TN

460

6,058


460

6,058

6,518

3,560

2,958

1974
2011
35 years
Elmcroft of Arlington
Arlington
TX

2,650

14,060

473

2,650

14,533

17,183

1,768

15,415

1998
2011
35 years
Meadowbrook ALZ
Arlington
TX

755

4,677

940

755

5,617

6,372

374

5,998

2012
2012
35 years
Elmcroft of Austin
Austin
TX

2,770

25,820

534

2,770

26,354

29,124

2,969

26,155

2000
2011
35 years
Elmcroft of Bedford
Bedford
TX

770

19,691

493

770

20,184

20,954

2,306

18,648

1999
2011
35 years
Highland Estates
Cedar Park
TX

1,679

28,943


1,679

28,943

30,622

1,210

29,412

2009
2013
35 years
Elmcroft of Rivershire
Conroe
TX

860

32,671

689

860

33,360

34,220

3,679

30,541

1997
2011
35 years
Heritage Oaks Retirement Village
Corsicana
TX

790

30,636


790

30,636

31,426

3,425

28,001

1996
2011
35 years
Flower Mound
Flower Mound
TX

900

5,512


900

5,512

6,412

646

5,766

1995
2011
35 years
Arbor House Granbury
Granbury
TX

390

8,186


390

8,186

8,576

544

8,032

2007
2012
35 years
Copperfield Estates
Houston
TX

1,216

21,135


1,216

21,135

22,351

883

21,468

2009
2013
35 years
Elmcroft of Braeswood
Houston
TX

3,970

15,919

626

3,970

16,545

20,515

1,979

18,536

1999
2011
35 years
Elmcroft of Cy-Fair
Houston
TX

1,580

21,801

419

1,593

22,207

23,800

2,501

21,299

1998
2011
35 years
Elmcroft of Irving
Irving
TX

1,620

18,755

455

1,620

19,210

20,830

2,208

18,622

1999
2011
35 years
Whitley Place
Keller
TX


5,100



5,100

5,100

1,008

4,092

1998
2008
35 years
Elmcroft of Lake Jackson
Lake Jackson
TX

710

14,765

417

710

15,182

15,892

1,777

14,115

1998
2011
35 years
Arbor House Lewisville
Lewisville
TX

824

10,308


824

10,308

11,132

688

10,444

2007
2012
35 years
Elmcroft of Vista Ridge
Lewisville
TX

6,280

10,548

654

6,303

11,179

17,482

1,442

16,040

1998
2011
35 years
Polo Park Estates
Midland
TX

765

29,447


765

29,447

30,212

1,225

28,987

1996
2013
35 years
Arbor Hills Memory Care Community
Plano
TX



6,733

1,014

5,719

6,733

284

6,449

2013
2011
35 years
Arbor House of Rockwall
Rockwall
TX

1,537

12,883


1,537

12,883

14,420

864

13,556

2009
2012
35 years
Elmcroft of Windcrest
San Antonio
TX

920

13,011

526

920

13,537

14,457

1,667

12,790

1999
2011
35 years
Paradise Springs
Spring
TX

1,488

24,556


1,488

24,556

26,044

1,027

25,017

2007
2013
35 years
Arbor House of Temple
Temple
TX

473

6,750


473

6,750

7,223

450

6,773

2008
2012
35 years
Elmcroft of Cottonwood
Temple
TX

630

17,515

405

630

17,920

18,550

2,045

16,505

1997
2011
35 years
Elmcroft of Mainland
Texas City
TX

520

14,849

504

520

15,353

15,873

1,786

14,087

1996
2011
35 years
Elmcroft of Victoria
Victoria
TX

440

13,040

425

440

13,465

13,905

1,573

12,332

1997
2011
35 years
Arbor House of Weatherford
Weatherford
TX

233

3,347


233

3,347

3,580

223

3,357

1994
2012
35 years
Elmcroft of Wharton
Wharton
TX

320

13,799

658

320

14,457

14,777

1,708

13,069

1996
2011
35 years
Mountain Ridge
South Ogden
UT
11,840

1,243

24,659


1,243

24,659

25,902

68

25,834

2001
2014
35 years

171


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Elmcroft of Chesterfield
Richmond
VA

829

6,534


829

6,534

7,363

1,525

5,838

1999
2006
35 years
Pheasant Ridge
Roanoke
VA

1,813

9,027


1,813

9,027

10,840

741

10,099

1999
2012
35 years
Cascade Valley Senior Living
Arlington
WA

1,413

6,294


1,413

6,294

7,707

180

7,527

1995
2014
35 years
Cooks Hill Manor
Centralia
WA

520

6,144


520

6,144

6,664

775

5,889

1993
2011
35 years
The Sequoia
Olympia
WA

1,490

13,724


1,490

13,724

15,214

1,615

13,599

1995
2011
35 years
Bishop Place Senior Living
Pullman
WA

1,780

33,608


1,780

33,608

35,388

34

35,354

1998
2014
35 years
Willow Gardens
Puyallup
WA

1,959

35,492


1,959

35,492

37,451

1,483

35,968

1996
2013
35 years
Birchview
Sedro-Woolley
WA

210

14,145


210

14,145

14,355

1,522

12,833

1996
2011
35 years
Discovery Memory care
Sequim
WA

320

10,544


320

10,544

10,864

1,193

9,671

1961
2011
35 years
The Academy Retirement Comm
Spokane
WA

650

3,741


650

3,741

4,391

571

3,820

1959
2011
35 years
The Village Retirement & Assisted Living
Tacoma
WA

2,200

5,938


2,200

5,938

8,138

928

7,210

1976
2011
35 years
Matthews of Appleton I
Appleton
WI

130

1,834

(41
)
130

1,793

1,923

225

1,698

1996
2011
35 years
Matthews of Appleton II
Appleton
WI

140

2,016

(49
)
140

1,967

2,107

245

1,862

1997
2011
35 years
Hunters Ridge
Beaver Dam
WI

260

2,380


260

2,380

2,640

289

2,351

1998
2011
35 years
Harbor House Beloit
Beloit
WI

150

4,356


150

4,356

4,506

483

4,023

1990
2011
35 years
Harbor House Clinton
Clinton
WI

290

4,390


290

4,390

4,680

487

4,193

1991
2011
35 years
Creekside
Cudahy
WI

760

1,693


760

1,693

2,453

224

2,229

2001
2011
35 years
Harmony of Denmark
Denmark
WI
1,112

220

2,228


220

2,228

2,448

274

2,174

1995
2011
35 years
Harbor House Eau Claire
Eau Claire
WI

210

6,259


210

6,259

6,469

677

5,792

1996
2011
35 years
Chapel Valley
Fitchburg
WI

450

2,372


450

2,372

2,822

292

2,530

1998
2011
35 years
Matthews of Milwaukee II
Fox Point
WI

1,810

943

37

1,820

970

2,790

165

2,625

1999
2011
35 years
Harmony of Brenwood Park
Franklin
WI
5,810

1,870

13,804


1,870

13,804

15,674

1,498

14,176

2003
2011
35 years
Laurel Oaks
Glendale
WI

2,390

43,587


2,390

43,587

45,977

4,821

41,156

1988
2011
35 years
Harmony of Green Bay
Green Bay
WI
2,896

640

5,008


640

5,008

5,648

587

5,061

1990
2011
35 years
Layton Terrace
Greenfield
WI
7,195

3,490

39,201


3,490

39,201

42,691

4,426

38,265

1999
2011
35 years
Matthews of Hartland
Hartland
WI

640

1,663

43

652

1,694

2,346

243

2,103

1985
2011
35 years
Matthews of Horicon
Horicon
WI

340

3,327

(95
)
345

3,227

3,572

433

3,139

2002
2011
35 years
Jefferson
Jefferson
WI

330

2,384


330

2,384

2,714

289

2,425

1997
2011
35 years
Harmony of Kenosha
Kenosha
WI
3,769

1,180

8,717


1,180

8,717

9,897

964

8,933

1999
2011
35 years
Harbor House Kenosha
Kenosha
WI

710

3,254

520

710

3,774

4,484

376

4,108

1996
2011
35 years
Harmony of Madison
Madison
WI
3,902

650

4,279


650

4,279

4,929

537

4,392

1998
2011
35 years
Harmony of Manitowoc
Manitowoc
WI
4,579

450

10,101


450

10,101

10,551

1,116

9,435

1997
2011
35 years
Harbor House Manitowoc
Manitowoc
WI

140

1,520


140

1,520

1,660

178

1,482

1997
2011
35 years
Harmony of McFarland
McFarland
WI
3,498

640

4,647


640

4,647

5,287

561

4,726

1998
2011
35 years
Adare II
Menasha
WI

110

537

20

110

557

667

84

583

1994
2011
35 years
Adare IV
Menasha
WI

110

537

5

110

542

652

80

572

1994
2011
35 years
Adare III
Menasha
WI

90

557

5

90

562

652

86

566

1993
2011
35 years
Adare I
Menasha
WI

90

557

5

90

562

652

82

570

1993
2011
35 years

172


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Riverview Village
Menomonee Falls
WI
5,545

2,170

11,758


2,170

11,758

13,928

1,291

12,637

2003
2011
35 years
The Arboretum
Menomonee Falls
WI
4,920

5,640

49,083

583

5,640

49,666

55,306

5,694

49,612

1989
2011
35 years
Matthews of Milwaukee I
Milwaukee
WI

1,800

935

119

1,800

1,054

2,854

164

2,690

1999
2011
35 years
Hart Park Square
Milwaukee
WI
6,600

1,900

21,628


1,900

21,628

23,528

2,458

21,070

2005
2011
35 years
Harbor House Monroe
Monroe
WI

490

4,964


490

4,964

5,454

559

4,895

1990
2011
35 years
Matthews of Neenah I
Neenah
WI

710

1,157

64

713

1,218

1,931

184

1,747

2006
2011
35 years
Matthews of Neenah II
Neenah
WI

720

2,339

(50
)
720

2,289

3,009

305

2,704

2007
2011
35 years
Matthews of Irish Road
Neenah
WI

320

1,036

87

320

1,123

1,443

172

1,271

2001
2011
35 years
Matthews of Oak Creek
Oak Creek
WI

800

2,167

(2
)
812

2,153

2,965

275

2,690

1997
2011
35 years
Wilkinson Woods of Oconomowoc
Oconomowoc
WI

1,100

12,436


1,100

12,436

13,536

1,395

12,141

1992
2011
35 years
Harbor House Oshkosh
Oshkosh
WI

190

949


190

949

1,139

146

993

1993
2011
35 years
Harmony of Racine
Racine
WI
9,173

590

11,726


590

11,726

12,316

1,271

11,045

1998
2011
35 years
Harmony of Commons of Racine
Racine
WI

630

11,245


630

11,245

11,875

1,231

10,644

2003
2011
35 years
Harmony of Sheboygan
Sheboygan
WI
8,488

810

17,908


810

17,908

18,718

1,952

16,766

1996
2011
35 years
Harbor House Sheboygan
Sheboygan
WI

1,060

6,208


1,060

6,208

7,268

684

6,584

1995
2011
35 years
Matthews of St. Francis I
St. Francis
WI

1,370

1,428

(113
)
1,389

1,296

2,685

198

2,487

2000
2011
35 years
Matthews of St. Francis II
St. Francis
WI

1,370

1,666

15

1,377

1,674

3,051

225

2,826

2000
2011
35 years
Howard Village of St. Francis
St. Francis
WI
5,040

2,320

17,232


2,320

17,232

19,552

2,004

17,548

2001
2011
35 years
Harmony of Stevens Point
Stevens Point
WI
7,746

790

10,081


790

10,081

10,871

1,133

9,738

2002
2011
35 years
Harmony Commons of Stevens Point
Stevens Point
WI

760

2,242


760

2,242

3,002

334

2,668

2005
2011
35 years
Harmony of Stoughton
Stoughton
WI
1,539

490

9,298


490

9,298

9,788

1,028

8,760

1997
2011
35 years
Harbor House Stoughton
Stoughton
WI

450

3,191


450

3,191

3,641

389

3,252

1992
2011
35 years
Harmony of Two Rivers
Two Rivers
WI
2,471

330

3,538


330

3,538

3,868

421

3,447

1998
2011
35 years
Matthews of Pewaukee
Waukesha
WI

1,180

4,124

206

1,197

4,313

5,510

564

4,946

2001
2011
35 years
Oak Hill Terrace
Waukesha
WI
4,975

2,040

40,298


2,040

40,298

42,338

4,561

37,777

1985
2011
35 years
Harmony of Terrace Court
Wausau
WI
6,894

430

5,037


430

5,037

5,467

583

4,884

1996
2011
35 years
Harmony of Terrace Commons
Wausau
WI

740

6,556


740

6,556

7,296

765

6,531

2000
2011
35 years
Harbor House Rib Mountain
Wausau
WI

350

3,413


350

3,413

3,763

389

3,374

1997
2011
35 years
Library Square
West Allis
WI
5,150

1,160

23,714


1,160

23,714

24,874

2,687

22,187

1996
2011
35 years
Harmony of Wisconsin Rapids
Wisconsin Rapids
WI
1,030

520

4,349


520

4,349

4,869

533

4,336

2000
2011
35 years
Matthews of Wrightstown
Wrightstown
WI

140

376

12

140

388

528

85

443

1999
2011
35 years
Outlook Pointe at Teays Valley
Hurricane
WV

1,950

14,489


1,950

14,489

16,439

1,594

14,845

1999
2011
35 years
Elmcroft of Martinsburg
Martinsburg
WV

248

8,320


248

8,320

8,568

1,941

6,627

1999
2006
35 years
Garden Square Assisted Living of Casper
Casper
WY

355

3,197


355

3,197

3,552

321

3,231

1996
2011
35 years
Whispering Chase
Cheyenne
WY

1,800

20,354


1,800

20,354

22,154

854

21,300

2008
2013
35 years

173


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
TOTAL FOR OTHER SENIORS HOUSING COMMUNITIES
 
 
199,098

427,854

4,125,784

(10,950
)
424,333

4,118,355

4,542,688

450,160

4,092,528

 
 
 
TOTAL FOR SENIORS HOUSING COMMUNITIES
 
 
1,723,660

1,411,948

13,480,887

319,745

1,415,658

13,796,922

15,212,580

2,071,110

13,141,470

 
 
 
PERSONAL CARE AND OTHER FACILITIES
 
 
 

 

 

 

 

 

 

 

 

 
 
 
ResCare Tangram - Hacienda
Kingsbury
TX

31

841

84

78

878

956

692

264

N/A
1998
20 years
ResCare Tangram - Texas Hill Country School
Maxwell
TX

54

934

8

62

934

996

759

237

N/A
1998
20 years
ResCare Tangram - Chaparral
Maxwell
TX

82

552

150

82

702

784

465

319

N/A
1998
20 years
ResCare Tangram - Sierra Verde & Roca Vista
Maxwell
TX

20

910

56

20

966

986

748

238

N/A
1998
20 years
ResCare Tangram - 618 W. Hutchinson
San Marcos
TX

226

1,175

(480
)
126

795

921

646

275

N/A
1998
20 years
ResCare Tangram - Ranch
Seguin
TX

147

806

113

147

919

1,066

669

397

N/A
1998
20 years
ResCare Tangram - Mesquite
Seguin
TX

15

1,078

140

15

1,218

1,233

882

351

N/A
1998
20 years
ResCare Tangram - Loma Linda
Seguin
TX

40

220


40

220

260

179

81

N/A
1998
20 years
Spire Hull and East Riding Hospital
Anlaby
Hull

3,194

81,613


3,194

81,613

84,807

1,250

83,557

1986
2014
50 years
Spire Fylde Coast Hospital
Blackpool
Lan-cashire

2,446

28,896


2,446

28,896

31,342

449

30,893

1980
2014
50 years
Spire Clare Park Hospital
Farnham
Surrey

6,263

26,119


6,263

26,119

32,382

422

31,960

1980
2014
50 years
TOTAL FOR PERSONAL CARE FACILITIES
 
 

12,518

143,144

71

12,473

143,260

155,733

7,161

148,572

 
 
 

174


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
MEDICAL OFFICE BUILDINGS
 
 
 

 

 

 

 

 

 

 

 

 
 
 
St. Vincent's Medical Center East #46
Birmingham
AL


25,298

3,820


29,118

29,118

4,836

24,282

2005
2010
35 years
St. Vincent's Medical Center East #48
Birmingham
AL


12,698

391


13,089

13,089

2,356

10,733

1989
2010
35 years
St. Vincent's Medical Center East #52
Birmingham
AL


7,608

923


8,531

8,531

1,821

6,710

1985
2010
35 years
Crestwood Medical Pavilion
Huntsville
AL
4,553

625

16,178

76

625

16,254

16,879

2,040

14,839

1994
2011
35 years
Canyon Springs Medical Plaza
Gilbert
AZ
15,653


27,497

66


27,563

27,563

2,941

24,622

2007
2012
35 years
Mercy Gilbert Medical Plaza
Gilbert
AZ
7,779

720

11,277

273

720

11,550

12,270

1,701

10,569

2007
2011
35 years
Thunderbird Paseo Medical Plaza
Glendale
AZ


12,904

509


13,413

13,413

1,448

11,965

1997
2011
35 years
Thunderbird Paseo Medical Plaza II
Glendale
AZ


8,100

222


8,322

8,322

996

7,326

2001
2011
35 years
Desert Medical Pavilion
Mesa
AZ


32,768

11


32,779

32,779

1,895

30,884

2003
2013
35 years
Desert Samaritan Medical Building I
Mesa
AZ


11,923

445


12,368

12,368

1,300

11,068

1977
2011
35 years
Desert Samaritan Medical Building II
Mesa
AZ


7,395

44


7,439

7,439

895

6,544

1980
2011
35 years
Desert Samaritan Medical Building III
Mesa
AZ


13,665

657


14,322

14,322

1,572

12,750

1986
2011
35 years
Deer Valley Medical Office Building II
Phoenix
AZ
13,261


22,663

492

14

23,141

23,155

2,522

20,633

2002
2011
35 years
Deer Valley Medical Office Building III
Phoenix
AZ
10,931


19,521

21

12

19,530

19,542

2,123

17,419

2009
2011
35 years
Papago Medical Park
Phoenix
AZ


12,172

305


12,477

12,477

1,622

10,855

1989
2011
35 years
Burbank Medical Plaza
Burbank
CA

1,241

23,322

412

1,241

23,734

24,975

3,352

21,623

2004
2011
35 years
Burbank Medical Plaza II
Burbank
CA
35,606

491

45,641

156

491

45,797

46,288

5,258

41,030

2008
2011
35 years
Eden Medical Plaza
Castro Valley
CA

258

2,455

139

258

2,594

2,852

591

2,261

1998
2011
25 years
PMB Chula Vista
Chula Vista
CA
15,421

2,964

19,393

169

2,964

19,562

22,526

2,797

19,729

2001
2011
35 years
NorthBay Corporate Headquarters
Fairfield
CA


19,187



19,187

19,187

1,225

17,962

2008
2012
35 years
Gateway Medical Plaza
Fairfield
CA


12,872

24


12,896

12,896

820

12,076

1986
2012
35 years
Solano NorthBay Health Plaza
Fairfield
CA


8,880



8,880

8,880

562

8,318

1990
2012
35 years
NorthBay Healthcare MOB
Fairfield
CA


8,507

2,280


10,787

10,787

460

10,327

CIP
2013
CIP
Verdugo Hills Professional Bldg I
Glendale
CA

6,683

9,589

115

6,683

9,704

16,387

1,771

14,616

1972
2012
23 years
Verdugo Hills Professional Bldg II
Glendale
CA

4,464

3,731

179

4,464

3,910

8,374

962

7,412

1987
2012
19 years
St. Francis Lynwood Medical
Lynwood
CA

688

8,385

532

688

8,917

9,605

1,810

7,795

1993
2011
32 years
PMB Mission Hills
Mission Hills
CA

15,468

30,116

4,729

15,468

34,845

50,313

2,099

48,214

2012
2012
35 years
PDP Mission Viejo
Mission Viejo
CA
44,242

1,916

77,022

183

1,916

77,205

79,121

9,153

69,968

2007
2011
35 years

175


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
PDP Orange
Orange
CA
47,267

1,752

61,647

85

1,761

61,723

63,484

7,571

55,913

2008
2011
35 years
NHP/PMB Pasadena
Pasadena
CA

3,138

83,412

8,484

3,138

91,896

95,034

12,075

82,959

2009
2011
35 years
Western University of Health Sciences Medical Pavilion
Pomona
CA

91

31,523


91

31,523

31,614

3,525

28,089

2009
2011
35 years
Pomerado Outpatient Pavilion
Poway
CA

3,233

71,435

2,852

3,233

74,287

77,520

9,538

67,982

2007
2011
35 years
Sutter Medical Center
San Diego
CA


25,088

1,371


26,459

26,459

1,549

24,910

2012
2012
35 years
San Gabriel Valley Medical
San Gabriel
CA
8,881

914

5,510

186

914

5,696

6,610

1,142

5,468

2004
2011
35 years
Santa Clarita Valley Medical
Santa Clarita
CA
21,850

9,708

20,020

325

9,726

20,327

30,053

2,690

27,363

2005
2011
35 years
Kenneth E Watts Medical Plaza
Torrance
CA

262

6,945

749

291

7,665

7,956

1,564

6,392

1989
2011
23 years
Vaca Valley Health Plaza
Vacaville
CA


9,634



9,634

9,634

609

9,025

1988
2012
35 years
Potomac Medical Plaza
Aurora
CO

2,401

9,118

2,081

2,464

11,136

13,600

4,279

9,321

1986
2007
35 years
Briargate Medical Campus
Colorado Springs
CO

1,238

12,301

300

1,244

12,595

13,839

3,588

10,251

2002
2007
35 years
Printers Park Medical Plaza
Colorado Springs
CO

2,641

47,507

1,420

2,641

48,927

51,568

13,399

38,169

1999
2007
35 years
Green Valley Ranch MOB
Denver
CO
5,939


12,139

144

235

12,048

12,283

736

11,547

2007
2012
35 years
Community Physicians Pavilion
Lafayette
CO


10,436

1,330


11,766

11,766

2,043

9,723

2004
2010
35 years
Exempla Good Samaritan Medical Center
Lafayette
CO


4,393

5


4,398

4,398

134

4,264

2013
2013
35 years
Avista Two Medical Plaza
Louisville
CO


17,330

1,644


18,974

18,974

4,088

14,886

2003
2009
35 years
The Sierra Medical Building
Parker
CO
491

1,444

14,059

3,071

1,474

17,100

18,574

4,168

14,406

2009
2009
35 years
Crown Point Healthcare Plaza
Parker
CO

852

5,210


852

5,210

6,062

286

5,776

2008
2013
35 years
Lutheran Medical Office Building II
Wheat Ridge
CO


2,655

819


3,474

3,474

782

2,692

1976
2010
35 years
Lutheran Medical Office Building IV
Wheat Ridge
CO


7,266

883


8,149

8,149

1,455

6,694

1991
2010
35 years
Lutheran Medical Office Building III
Wheat Ridge
CO


11,947

11


11,958

11,958

2,177

9,781

2004
2010
35 years
DePaul Professional Office Building
Washington
DC


6,424

1,775


8,199

8,199

2,126

6,073

1987
2010
35 years
Providence Medical Office Building
Washington
DC


2,473

509


2,982

2,982

898

2,084

1975
2010
35 years
RTS Arcadia
Arcadia
FL

345

2,884


345

2,884

3,229

415

2,814

1993
2011
30 years
RTS Cape Coral
Cape Coral
FL

368

5,448


368

5,448

5,816

662

5,154

1984
2011
34 years
RTS Englewood
Englewood
FL

1,071

3,516


1,071

3,516

4,587

458

4,129

1992
2011
35 years
RTS Ft. Myers
Fort Myers
FL

1,153

4,127


1,153

4,127

5,280

601

4,679

1989
2011
31 years
RTS Key West
Key West
FL

486

4,380


486

4,380

4,866

474

4,392

1987
2011
35 years

176


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
JFK Medical Plaza
Lake Worth
FL

453

1,711

139

453

1,850

2,303

632

1,671

1999
2004
35 years
Palms West Building 6
Loxahatchee
FL

965

2,678

45

965

2,723

3,688

825

2,863

2000
2004
35 years
Aventura Heart & Health
Miami
FL
15,978


25,361

2,961


28,322

28,322

8,899

19,423

2006
2007
35 years
RTS Naples
Naples
FL

1,152

3,726


1,152

3,726

4,878

458

4,420

1999
2011
35 years
Woodlands Center for Specialized Med
Pensacola
FL
15,298

2,518

24,006

29

2,518

24,035

26,553

2,570

23,983

2009
2012
35 years
RTS Pt. Charlotte
Pt Charlotte
FL

966

4,581


966

4,581

5,547

591

4,956

1985
2011
34 years
RTS Sarasota
Sarasota
FL

1,914

3,889


1,914

3,889

5,803

529

5,274

1996
2011
35 years
University Medical Office Building
Tamarac
FL


6,690

132


6,822

6,822

2,020

4,802

2006
2007
35 years
RTS Venice
Venice
FL

1,536

4,104


1,536

4,104

5,640

537

5,103

1997
2011
35 years
Augusta Medical Plaza
Augusta
GA

594

4,847

422

594

5,269

5,863

1,159

4,704

1972
2011
25 years
Augusta Professional Building
Augusta
GA

687

6,057

458

691

6,511

7,202

1,499

5,703

1983
2011
27 years
Augusta POB I
Augusta
GA

233

7,894

502

233

8,396

8,629

2,176

6,453

1978
2012
14 years
Augusta POB II
Augusta
GA

735

13,717

1

735

13,718

14,453

2,569

11,884

1987
2012
23 years
Augusta POB III
Augusta
GA

535

3,857

144

535

4,001

4,536

865

3,671

1994
2012
22 years
Augusta POB IV
Augusta
GA

675

2,182

827

675

3,009

3,684

621

3,063

1995
2012
23 years
Cobb Physicians Center
Austell
GA

1,145

16,805

867

1,145

17,672

18,817

2,896

15,921

1992
2011
35 years
Columbia Medical Plaza
Evans
GA

268

1,497

131

268

1,628

1,896

482

1,414

1940
2011
23 years
Parkway Physicians Center
Ringgold
GA

476

10,017

366

476

10,383

10,859

1,601

9,258

2004
2011
35 years
Eastside Physicians Center
Snellville
GA

1,289

25,019

1,814

1,296

26,826

28,122

6,163

21,959

1994
2008
35 years
Eastside Physicians Plaza
Snellville
GA
6,533

294

12,948

(28
)
297

12,917

13,214

2,777

10,437

2003
2008
35 years
Good Shepherd Physician Office Building I
Barrington
IL

152

3,224

59

152

3,283

3,435

160

3,275

1979
2013
35 years
Good Shepherd Physician Office Building II
Barrington
IL

512

12,977

106

512

13,083

13,595

657

12,938

1996
2013
35 years
Trinity Hospital Physician Office Building
Chicago
IL

139

3,329

11

139

3,340

3,479

193

3,286

1971
2013
35 years
Physicians Plaza East
Decatur
IL


791

612


1,403

1,403

498

905

1976
2010
35 years
Physicians Plaza West
Decatur
IL


1,943

226


2,169

2,169

656

1,513

1987
2010
35 years
Kenwood Medical Center
Decatur
IL


3,900

39


3,939

3,939

1,156

2,783

1996
2010
35 years
304 W Hay Building
Decatur
IL


8,702

146


8,848

8,848

1,784

7,064

2002
2010
35 years
302 W Hay Building
Decatur
IL


3,467

122


3,589

3,589

990

2,599

1993
2010
35 years
ENTA
Decatur
IL


1,150



1,150

1,150

249

901

1996
2010
35 years
301 W Hay Building
Decatur
IL


640



640

640

192

448

1980
2010
35 years

177


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
South Shore Medical Building
Decatur
IL

902

129


902

129

1,031

119

912

1991
2010
35 years
SIU Family Practice
Decatur
IL


1,689

19


1,708

1,708

411

1,297

1997
2010
35 years
Corporate Health Services
Decatur
IL

934

1,386


934

1,386

2,320

368

1,952

1996
2010
35 years
Rock Springs Medical
Decatur
IL

399

495


399

495

894

140

754

1990
2010
35 years
575 W Hay Building
Decatur
IL

111

739


111

739

850

176

674

1984
2010
35 years
Good Samaritan Physician Office Building I
Downers Grove
IL

407

10,337

115

407

10,452

10,859

514

10,345

1976
2013
35 years
Good Samaritan Physician Office Building II
Downers Grove
IL

1,013

25,370

43

1,013

25,413

26,426

1,257

25,169

1995
2013
35 years
Eberle Medical Office Building ("Eberle MOB")
Elk Grove Village
IL


16,315

93


16,408

16,408

4,683

11,725

2005
2009
35 years
1425 Hunt Club Road MOB
Gurnee
IL

249

1,452

62

249

1,514

1,763

333

1,430

2005
2011
34 years
1445 Hunt Club Drive
Gurnee
IL

216

1,405

297

216

1,702

1,918

487

1,431

2002
2011
31 years
Gurnee Imaging Center
Gurnee
IL

82

2,731


82

2,731

2,813

353

2,460

2002
2011
35 years
Gurnee Center Club
Gurnee
IL

627

17,851


627

17,851

18,478

2,421

16,057

2001
2011
35 years
South Suburban Hospital Physician Office Building
Hazel Crest
IL

191

4,370

2

191

4,372

4,563

250

4,313

1989
2013
35 years
Doctors Office Building III ("DOB III")
Hoffman Estates
IL


24,550

66


24,616

24,616

6,115

18,501

2005
2009
35 years
755 Milwaukee MOB
Libertyville
IL

421

3,716

885

479

4,543

5,022

1,406

3,616

1990
2011
18 years
890 Professional MOB
Libertyville
IL

214

2,630

122

214

2,752

2,966

561

2,405

1980
2011
26 years
Libertyville Center Club
Libertyville
IL

1,020

17,176


1,020

17,176

18,196

2,394

15,802

1988
2011
35 years
Christ Medical Center Physician Office Building
Oak Lawn
IL

658

16,421

1

658

16,422

17,080

814

16,266

1986
2013
35 years
Round Lake ACC
Round Lake
IL

758

370

80

785

423

1,208

286

922

1984
2011
13 years
Vernon Hills Acute Care Center
Vernon Hills
IL

3,376

694

153

3,413

810

4,223

370

3,853

1986
2011
15 years
Wilbur S. Roby Building
Anderson
IN


2,653

562


3,215

3,215

777

2,438

1992
2010
35 years
Ambulatory Services Building
Anderson
IN


4,266

1,077


5,343

5,343

1,364

3,979

1995
2010
35 years
St. John's Medical Arts Building
Anderson
IN


2,281

422


2,703

2,703

685

2,018

1973
2010
35 years
Carmel I
Carmel
IN

466

5,954

38

466

5,992

6,458

820

5,638

1985
2012
30 years
Carmel II
Carmel
IN

455

5,976

71

455

6,047

6,502

779

5,723

1989
2012
33 years
Carmel III
Carmel
IN

422

6,194

53

422

6,247

6,669

696

5,973

2001
2012
35 years
Elkhart
Elkhart
IN
1,201

1,256

1,973


1,256

1,973

3,229

598

2,631

1994
2011
32 years
Harcourt Professional Office Building
Indianapolis
IN

519

28,951

783

519

29,734

30,253

3,707

26,546

1973
2012
28 years
Cardiac Professional Office Building
Indianapolis
IN

498

27,430

344

498

27,774

28,272

2,908

25,364

1995
2012
35 years

178


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Oncology Medical Office Building
Indianapolis
IN

470

5,703

152

470

5,855

6,325

735

5,590

2003
2012
35 years
St. Francis South Medical Office Building
Indianapolis
IN


20,649

469


21,118

21,118

1,333

19,785

1995
2013
35 years
Methodist Professional Center I
Indianapolis
IN

61

37,411

2,142

61

39,553

39,614

4,993

34,621

1985
2012
25 years
LaPorte
La Porte
IN
746

553

1,309


553

1,309

1,862

258

1,604

1997
2011
34 years
Mishawaka
Mishawaka
IN
3,440

3,787

5,543


3,787

5,543

9,330

1,746

7,584

1993
2011
35 years
South Bend
South Bend
IN
1,416

792

2,530


792

2,530

3,322

412

2,910

1996
2011
34 years
OLBH Same Day Surgery Center MOB
Ashland
KY

101

19,066

144

101

19,210

19,311

2,401

16,910

1997
2012
26 years
St. Elizabeth Covington
Covington
KY

345

12,790

(16
)
345

12,774

13,119

1,353

11,766

2009
2012
35 years
St. Elizabeth Florence MOB
Florence
KY

402

8,279

702

402

8,981

9,383

1,189

8,194

2005
2012
35 years
Jefferson Clinic
Louisville
KY


673

2,018


2,691

2,691

32

2,659

2013
2013
35 years
East Jefferson Medical Plaza
Metairie
LA

168

17,264

81

168

17,345

17,513

2,881

14,632

1996
2012
32 years
East Jefferson MOB
Metairie
LA

107

15,137

154

107

15,291

15,398

2,528

12,870

1985
2012
28 years
Lakeside POB I
Metairie
LA

3,334

4,974

1,979

3,334

6,953

10,287

1,510

8,777

1986
2011
22 years
Lakeside POB II
Metairie
LA

1,046

802

419

1,046

1,221

2,267

501

1,766

1980
2011
7 years
RTS Berlin
Berlin
MD


2,216



2,216

2,216

294

1,922

1994
2011
29 years
Charles O. Fisher Medical Building
Westminster
MD
11,298


13,795

1,290


15,085

15,085

3,989

11,096

2009
2009
35 years
Medical Specialties Building
Kalamazoo
MI


19,242

952


20,194

20,194

3,564

16,630

1989
2010
35 years
North Professional Building
Kalamazoo
MI


7,228

617


7,845

7,845

1,383

6,462

1983
2010
35 years
Borgess Navigation Center
Kalamazoo
MI


2,391



2,391

2,391

509

1,882

1976
2010
35 years
Borgess Health & Fitness Center
Kalamazoo
MI


11,959

170


12,129

12,129

2,555

9,574

1984
2010
35 years
Heart Center Building
Kalamazoo
MI


8,420

345


8,765

8,765

1,805

6,960

1980
2010
35 years
Medical Commons Building
Kalamazoo Township
MI


661

6


667

667

139

528

1979
2010
35 years
RTS Madison Heights
Madison Heights
MI

401

2,946


401

2,946

3,347

376

2,971

2002
2011
35 years
RTS Monroe
Monroe
MI

281

3,450


281

3,450

3,731

494

3,237

1997
2011
31 years
Pro Med Center Plainwell
Plainwell
MI


697



697

697

166

531

1991
2010
35 years
Pro Med Center Richland
Richland
MI

233

2,267

30

233

2,297

2,530

452

2,078

1996
2010
35 years
Cogdell Duluth MOB
Duluth
MN


33,406

(19
)

33,387

33,387

2,300

31,087

2012
2012
35 years
HealthPartners Medical & Dental Clinics
Sartell
MN

2,492

15,694

46

2,503

15,729

18,232

1,837

16,395

2010
2012
35 years
Arnold Urgent Care
Arnold
MO

1,058

556

82

1,097

599

1,696

282

1,414

1999
2011
35 years

179


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
DePaul Health Center North
Bridgeton
MO

996

10,045

472

996

10,517

11,513

1,788

9,725

1976
2012
21 years
DePaul Health Center South
Bridgeton
MO

910

12,169

358

910

12,527

13,437

1,652

11,785

1992
2012
30 years
St. Mary's Health Center MOB D
Clayton
MO

103

2,780

438

103

3,218

3,321

563

2,758

1984
2012
22 years
Fenton Urgent Care Center
Fenton
MO

183

2,714

137

183

2,851

3,034

559

2,475

2003
2011
35 years
St. Joseph Medical Building
Kansas City
MO

305

7,445

2,154

305

9,599

9,904

795

9,109

1988
2012
32 years
St. Joseph Medical Mall
Kansas City
MO

530

9,115

183

530

9,298

9,828

1,095

8,733

1995
2012
33 years
Carondelet Medical Building
Kansas City
MO

745

12,437

389

745

12,826

13,571

1,587

11,984

1979
2012
29 years
St. Joseph Hospital West Medical Office Building II
Lake Saint Louis
MO

524

3,229

142

524

3,371

3,895

460

3,435

2005
2012
35 years
St. Joseph O'Fallon Medical Office Building
O'Fallon
MO

940

5,556

9

940

5,565

6,505

592

5,913

1992
2012
35 years
St. Joseph Health Center Medical Building 1
St. Charles
MO

503

4,336

306

503

4,642

5,145

852

4,293

1987
2012
20 years
St. Joseph Health Center Medical Building 2
St. Charles
MO

369

2,963

85

369

3,048

3,417

461

2,956

1999
2012
32 years
Physicians Office Center
St. Louis
MO

1,445

13,825

278

1,445

14,103

15,548

2,833

12,715

2003
2011
35 years
12700 Southford Road Medical Plaza
St. Louis
MO

595

12,584

1,061

595

13,645

14,240

2,620

11,620

1993
2011
32 years
St Anthony's MOB A
St. Louis
MO

409

4,687

487

409

5,174

5,583

1,250

4,333

1975
2011
20 years
St Anthony's MOB B
St. Louis
MO

350

3,942

235

350

4,177

4,527

1,202

3,325

1980
2011
21 years
Lemay Urgent Care Center
St. Louis
MO

2,317

3,120

285

2,339

3,383

5,722

977

4,745

1983
2011
22 years
St. Mary's Health Center MOB B
St. Louis
MO

119

4,161

570

119

4,731

4,850

723

4,127

1979
2012
23 years
St. Mary's Health Center MOB C
St. Louis
MO

136

6,018

230

136

6,248

6,384

877

5,507

1969
2012
20 years
University Physicians - Grants Ferry
Flowood
MS
9,579

2,796

12,125

(13
)
2,796

12,112

14,908

1,410

13,498

2010
2012
35 years
Randolph
Charlotte
NC

6,370

2,929

332

6,370

3,261

9,631

1,839

7,792

1973
2012
4 years
Mallard Crossing I
Charlotte
NC

3,229

2,072

351

3,229

2,423

5,652

834

4,818

1997
2012
25 years
Medical Arts Building
Concord
NC

701

11,734

170

701

11,904

12,605

2,016

10,589

1997
2012
31 years
Gateway Medical Office Building
Concord
NC

1,100

9,904

284

1,100

10,188

11,288

1,590

9,698

2005
2012
35 years
Copperfield Medical Mall
Concord
NC

1,980

2,846

256

1,980

3,102

5,082

684

4,398

1989
2012
25 years
Weddington Internal & Pediatric Medicine
Concord
NC

574

688

4

574

692

1,266

171

1,095

2000
2012
27 years
Gaston Professional Center
Gastonia
NC

833

24,885

593

833

25,478

26,311

2,923

23,388

1997
2012
35 years
Harrisburg Family Physicians
Harrisburg
NC

679

1,646

5

679

1,651

2,330

212

2,118

1996
2012
35 years
Harrisburg Medical Mall
Harrisburg
NC

1,339

2,292

148

1,339

2,440

3,779

646

3,133

1997
2012
27 years
Northcross
Huntersville
NC

623

278

(1
)
623

277

900

153

747

1993
2012
22 years

180


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
REX Knightdale MOB & Wellness Center
Knightdale
NC


22,823



22,823

22,823

1,437

21,386

2009
2012
35 years
Alamance Regional Mebane Outpatient Ctr.
Mebane
NC
11,793

1,963

14,291

(9
)
1,963

14,282

16,245

2,197

14,048

2008
2012
35 years
Midland Medical Park
Midland
NC

1,221

847

19

1,221

866

2,087

303

1,784

1998
2012
25 years
East Rocky Mount Kidney Center
Rocky Mount
NC

803

998

(2
)
803

996

1,799

220

1,579

2000
2012
33 years
Rocky Mount Kidney Center
Rocky Mount
NC

479

1,297

39

479

1,336

1,815

285

1,530

1990
2012
25 years
Rocky Mount Medical Park
Rocky Mount
NC

2,552

7,779

292

2,577

8,046

10,623

1,238

9,385

1991
2012
30 years
English Road Medical Center
Rocky Mount
NC
4,519

1,321

3,747

4

1,321

3,751

5,072

717

4,355

2002
2012
35 years
Rowan Outpatient Surgery Center
Salisbury
NC

1,039

5,184

(5
)
1,039

5,179

6,218

633

5,585

2003
2012
35 years
Del E Webb Medical Plaza
Henderson
NV

1,028

16,993

844

1,028

17,837

18,865

2,786

16,079

1999
2011
35 years
The Terrace at South Meadows
Reno
NV
6,835

504

9,966

442

504

10,408

10,912

1,705

9,207

2004
2011
35 years
Central NY Medical Center
Syracuse
NY
24,500

1,786

26,101

1,219

1,786

27,320

29,106

3,459

25,647

1997
2012
33 years
Anderson Medical Arts Building I
Cincinnati
OH


9,632

1,617


11,249

11,249

3,352

7,897

1984
2007
35 years
Anderson Medical Arts Building II
Cincinnati
OH


15,123

2,247


17,370

17,370

4,772

12,598

2007
2007
35 years
Riverside North Medical Office Building
Columbus
OH
8,420

785

8,519

658

785

9,177

9,962

1,508

8,454

1962
2012
25 years
Riverside South Medical Office Building
Columbus
OH
6,311

586

7,298

526

586

7,824

8,410

1,067

7,343

1985
2012
27 years
340 East Town Medical Office Building
Columbus
OH
5,862

10

9,443

443

10

9,886

9,896

1,178

8,718

1984
2012
29 years
393 East Town Medical Office Building
Columbus
OH
3,288

61

4,760

43

61

4,803

4,864

733

4,131

1970
2012
20 years
141 South Sixth Medical Office Building
Columbus
OH
1,544

80

1,113

(1
)
80

1,112

1,192

268

924

1971
2012
14 years
Doctors West Medical Office Building
Columbus
OH
4,705

414

5,362

505

414

5,867

6,281

750

5,531

1998
2012
35 years
Eastside Health Center
Columbus
OH
4,399

956

3,472

(2
)
956

3,470

4,426

785

3,641

1977
2012
15 years
East Main Medical Office Building
Columbus
OH
5,226

440

4,771

47

440

4,818

5,258

532

4,726

2006
2012
35 years
Heart Center Medical Office Building
Columbus
OH

1,063

12,140

157

1,063

12,297

13,360

1,494

11,866

2004
2012
35 years
Wilkins Medical Office Building
Columbus
OH

123

18,062

26

123

18,088

18,211

1,766

16,445

2002
2012
35 years
Grady Medical Office Building
Delaware
OH
1,824

239

2,263

253

239

2,516

2,755

430

2,325

1991
2012
25 years
Dublin Northwest Medical Office Building
Dublin
OH
3,118

342

3,278

12

342

3,290

3,632

462

3,170

2001
2012
34 years
Preserve III Medical Office Building
Dublin
OH
9,684

2,449

7,025

(66
)
2,449

6,959

9,408

917

8,491

2006
2012
35 years
Zanesville Surgery Center
Zanesville
OH

172

9,403


172

9,403

9,575

1,145

8,430

2000
2011
35 years

181


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Dialysis Center
Zanesville
OH

534

855

28

534

883

1,417

284

1,133

1960
2011
21 years
Genesis Children's Center
Zanesville
OH

538

3,781


538

3,781

4,319

638

3,681

2006
2011
30 years
Medical Arts Building I
Zanesville
OH

429

2,405

115

436

2,513

2,949

599

2,350

1970
2011
20 years
Medical Arts Building II
Zanesville
OH

485

6,013

289

490

6,297

6,787

1,530

5,257

1995
2011
25 years
Medical Arts Building III
Zanesville
OH

94

1,248


94

1,248

1,342

289

1,053

1970
2011
25 years
Primecare Building
Zanesville
OH

130

1,344

79

130

1,423

1,553

383

1,170

1978
2011
20 years
Outpatient Rehabilitation Building
Zanesville
OH

82

1,541


82

1,541

1,623

281

1,342

1985
2011
28 years
Radiation Oncology Building
Zanesville
OH

105

1,201


105

1,201

1,306

257

1,049

1988
2011
25 years
Healthplex
Zanesville
OH

2,488

15,849

540

2,488

16,389

18,877

2,787

16,090

1990
2011
32 years
Physicians Pavilion
Zanesville
OH

422

6,297

292

422

6,589

7,011

1,396

5,615

1990
2011
25 years
Zanesville Northside Pharmacy
Zanesville
OH

42

635


42

635

677

120

557

1985
2011
28 years
Bethesda Campus MOB III
Zanesville
OH

188

1,137

116

193

1,248

1,441

242

1,199

1978
2011
25 years
Tuality 7th Avenue Medical Plaza
Hillsboro
OR
19,054

1,516

24,638

338

1,516

24,976

26,492

3,616

22,876

2003
2011
35 years
Professional Office Building I
Chester
PA


6,283

1,251


7,534

7,534

3,055

4,479

1978
2004
30 years
DCMH Medical Office Building
Drexel Hill
PA


10,424

1,213


11,637

11,637

4,897

6,740

1984
2004
30 years
Penn State University Outpatient Center
Hershey
PA
57,415


55,439



55,439

55,439

8,768

46,671

2008
2010
35 years
Lancaster Rehabilitation Hospital
Lancaster
PA

959

16,610

(16
)
959

16,594

17,553

1,824

15,729

2007
2012
35 years
Lancaster ASC MOB
Lancaster
PA
9,272

593

17,117

(4
)
593

17,113

17,706

2,112

15,594

2007
2012
35 years
St. Joseph Medical Office Building
Reading
PA


10,823

784


11,607

11,607

2,076

9,531

2006
2010
35 years
Doylestown Health & Wellness Center
Warrington
PA

4,452

17,383

286

4,497

17,624

22,121

2,426

19,695

2001
2012
34 years
Roper Medical Office Building
Charleston
SC
8,571

127

14,737

1,595

127

16,332

16,459

2,316

14,143

1990
2012
28 years
St. Francis Medical Plaza (Charleston)
Charleston
SC

447

3,946

298

447

4,244

4,691

679

4,012

2003
2012
35 years
Providence MOB I
Columbia
SC

225

4,274

79

225

4,353

4,578

1,056

3,522

1979
2012
18 years
Providence MOB II
Columbia
SC

122

1,834

12

122

1,846

1,968

457

1,511

1985
2012
18 years
Providence MOB III
Columbia
SC

766

4,406

221

766

4,627

5,393

832

4,561

1990
2012
23 years
One Medical Park
Columbia
SC

210

7,939

116

214

8,051

8,265

1,662

6,603

1984
2012
19 years
Three Medical Park
Columbia
SC

40

10,650

326

40

10,976

11,016

1,879

9,137

1988
2012
25 years
St. Francis Millennium Medical Office Building
Greenville
SC
15,358


13,062

10,495

30

23,527

23,557

6,124

17,433

2009
2009
35 years
200 Andrews
Greenville
SC

789

2,014

51

789

2,065

2,854

622

2,232

1994
2012
29 years

182


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
St. Francis CMOB
Greenville
SC

501

7,661

528

501

8,189

8,690

957

7,733

2001
2012
35 years
St. Francis Outpatient Surgery Center
Greenville
SC

1,007

16,538

(16
)
1,007

16,522

17,529

2,087

15,442

2001
2012
35 years
St. Francis Professional Medical Center
Greenville
SC

342

6,337

283

360

6,602

6,962

1,049

5,913

1984
2012
24 years
St. Francis Women's
Greenville
SC

322

4,877

70

322

4,947

5,269

1,078

4,191

1991
2012
24 years
St. Francis Medical Plaza (Greenville)
Greenville
SC

88

5,876

27

88

5,903

5,991

966

5,025

1998
2012
24 years
Irmo Professional MOB
Irmo
SC

1,726

5,414

64

1,726

5,478

7,204

1,070

6,134

2004
2011
35 years
River Hills Medical Plaza
Little River
SC

1,406

1,813

19

1,406

1,832

3,238

404

2,834

1999
2012
27 years
Mount Pleasant Medical Office Longpoint
Mount Pleasant
SC

670

4,455

72

670

4,527

5,197

976

4,221

2001
2012
34 years
Mary Black Westside Medical Office Bldg
Spartanburg
SC

291

5,057

81

291

5,138

5,429

819

4,610

1991
2012
31 years
Health Park Medical Office Building
Chattanooga
TN
6,421

2,305

8,949

26

2,305

8,975

11,280

1,099

10,181

2004
2012
35 years
Peerless Crossing Medical Center
Cleveland
TN
6,781

1,217

6,464

(7
)
1,217

6,457

7,674

752

6,922

2006
2012
35 years
Medical Center Physicians Tower
Jackson
TN
13,575

549

27,074

(7
)
549

27,067

27,616

3,222

24,394

2010
2012
35 years
Seton Medical Park Tower
Austin
TX

805

41,527

1,028

805

42,555

43,360

3,918

39,442

1968
2012
35 years
Seton Northwest Health Plaza
Austin
TX

444

22,632

1,299

444

23,931

24,375

2,411

21,964

1988
2012
35 years
Seton Southwest Health Plaza
Austin
TX

294

5,311

32

294

5,343

5,637

526

5,111

2004
2012
35 years
Seton Southwest Health Plaza II
Austin
TX

447

10,154

20

447

10,174

10,621

946

9,675

2009
2012
35 years
East Houston MOB, LLC
Houston
TX

356

2,877

(286
)
328

2,619

2,947

1,010

1,937

1982
2011
15 years
East Houston Medical Plaza
Houston
TX

671

426

275

671

701

1,372

413

959

1982
2011
11 years
Seton Williamson Medical Plaza
Round Rock
TX


15,074

428


15,502

15,502

3,155

12,347

2008
2010
35 years
251 Medical Center
Webster
TX

1,158

12,078

31

1,158

12,109

13,267

1,363

11,904

2006
2011
35 years
253 Medical Center
Webster
TX

1,181

11,862


1,181

11,862

13,043

1,279

11,764

2009
2011
35 years
MRMC MOB I
Mechanicsville
VA

1,669

7,024

307

1,669

7,331

9,000

1,373

7,627

1993
2012
31 years
Henrico MOB
Richmond
VA

968

6,189

263

968

6,452

7,420

1,385

6,035

1976
2011
25 years
St. Mary's MOB North (Floors 6 & 7)
Richmond
VA

227

2,961

196

227

3,157

3,384

641

2,743

1968
2012
22 years
Bonney Lake Medical Office Building
Bonney Lake
WA
10,943

5,176

14,375

156

5,176

14,531

19,707

1,806

17,901

2011
2012
35 years
Good Samaritan Medical Office Building
Puyallup
WA
14,320

781

30,368

(130
)
781

30,238

31,019

3,042

27,977

2011
2012
35 years
Holy Family Hospital Central MOB
Spokane
WA


19,085

230


19,315

19,315

1,239

18,076

2007
2012
35 years
Physician's Pavilion
Vancouver
WA

1,411

32,939

253

1,411

33,192

34,603

4,842

29,761

2001
2011
35 years

183


 
Location
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period
 
 
 
 
 
 
Property Name
City
State /
Province
Encumbrances
Land and
Improvements
Buildings and
Improvements
Costs
Capitalized
Subsequent
to Acquisition
Land and
Improvements
Buildings and
Improvements
Total
Accumulated
Depreciation
NBV
Year of
Construction
Year
Acquired
Life on
Which
Depreciation
in Income
Statement
is Computed
Administration Building
Vancouver
WA

296

7,856


296

7,856

8,152

1,090

7,062

1972
2011
35 years
Medical Center Physician's Building
Vancouver
WA

1,225

31,246

1,626

1,225

32,872

34,097

4,222

29,875

1980
2011
35 years
Memorial MOB
Vancouver
WA

663

12,626

215

690

12,814

13,504

1,777

11,727

1999
2011
35 years
Salmon Creek MOB
Vancouver
WA

1,325

9,238


1,325

9,238

10,563

1,267

9,296

1994
2011
35 years
Fisher's Landing MOB
Vancouver
WA

1,590

5,420


1,590

5,420

7,010

896

6,114

1995
2011
34 years
Columbia Medical Plaza
Vancouver
WA

281

5,266

131

281

5,397

5,678

788

4,890

1991
2011
35 years
Appleton Heart Institute
Appleton
WI


7,775

1


7,776

7,776

1,453

6,323

2003
2010
39 years
Appleton Medical Offices West
Appleton
WI


5,756

18


5,774

5,774

1,068

4,706

1989
2010
39 years
Appleton Medical Offices South
Appleton
WI


9,058

167


9,225

9,225

1,727

7,498

1983
2010
39 years
Brookfield Clinic
Brookfield
WI

2,638

4,093


2,638

4,093

6,731

697

6,034

1999
2011
35 years
Hartland Clinic
Hartland
WI

321

5,050


321

5,050

5,371

733

4,638

1994
2011
35 years
Theda Clark Medical Center Office Pavilion
Neenah
WI


7,080

96


7,176

7,176

1,267

5,909

1993
2010
39 years
Aylward Medical Building Condo Floors 3 & 4
Neenah
WI


4,462



4,462

4,462

807

3,655

2006
2010
39 years
New Berlin Clinic
New Berlin
WI

678

7,121


678

7,121

7,799

1,110

6,689

1999
2011
35 years
WestWood Health & Fitness
Pewaukee
WI

823

11,649


823

11,649

12,472

1,832

10,640

1997
2011
35 years
Watertown Clinic
Watertown
WI

166

3,234


166

3,234

3,400

453

2,947

2003
2011
35 years
Southside Clinic
Waukesha
WI

218

5,273


218

5,273

5,491

748

4,743

1997
2011
35 years
Rehabilitation Hospital
Waukesha
WI

372

15,636


372

15,636

16,008

1,943

14,065

2008
2011
35 years
TOTAL FOR MEDICAL OFFICE BUILDINGS
 
 
561,101

219,188

2,925,201

117,655

219,950

3,042,094

3,262,044

458,589

2,803,455

 
 
 
TOTAL FOR ALL PROPERTIES
 
 
$
2,284,761

$
1,952,000

$
19,538,444

$
480,850

$
1,956,128

$
20,015,166

$
21,971,294

$
3,493,691

$
18,477,603

 
 
 



184


VENTAS, INC.
SCHEDULE IV
REAL ESTATE MORTGAGE LOANS
December 31, 2014
(Dollars in Thousands)
 
Location
Number of RE Assets
Interest Rate
Fixed / Variable
Maturity Date
Monthly Debt Service
Face Value
Net Book Value
Prior Liens
 
 
First Mortgages
 
 
 
 
 
 
 
 
Florida
1
9.75%
F
12/31/2018
$
50

$
5,564

$
5,249

$

 
Washington
1
8.00%
F
8/1/2020
167

25,000

24,795


 
Washington
1
6.00%
F
7/5/2017
44

6,335

6,208


 
Multiple
27
8.93%
V
3/31/2017
577

83,107

83,107


 
California
11
9.42%
F
12/31/2017
1,627

179,495

174,790


 
Multiple
3
9.21%
V
6/30/2019
131

17,023

17,023


 
Texas
1
9.00%
F
12/1/2017
13

419



 
 
 
 
 
 
 
 
 
 
Second Mortgages
 
 
 
 
 
 
 
 
Multiple
9
10.50%
V
10/23/2019
45

5,000

4,959

*
 
 
 
 
 
 
 
 
 
 
Mezzanine Loans
 
 
 
 
 
 
 
 
Virginia
1
10.00%
F
12/10/2019
16

3,131

3,131


 
Multiple**
217
8.14%
F/V
12/9/2016
2,953

421,268

421,268

2,191,230

 
 
 
 
 
 
 
 
 
 
Construction Loans
 
 
 
 
 
 
 
 
Colorado
1
8.75%
V
2/6/2021
4

1,114

229


 
 
 
 
 
 
 
 
 
 
* The Second Mortgage loan is a $5 million participation in a second lien term loan with an aggregate commitment of $215 million
** The variable portion of this investment has a maturity date of 12/9/2016, with extension options to 12/9/2019.
 
Mortgage Loan Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
2013
2012
 
 
 
 
 
(in thousands)

 
Beginning Balance
 
$
335,656

$
622,139

$
206,050

 
 
Additions:
 
 
 
 
 
 
New Loans
 
451,269

3,500

440,000

 
 
Construction Draws
 

694

12,119

 
 
Total additions
 
 
451,269

4,194

452,119

 
 
 
 
 
 
 
 
 
 
Deductions:
 
 
 
 
 
 
 
Principal Repayments
(15,548
)
(75,738
)
(36,030
)
 
 
Conversions to Real Property
(18,310
)


 
 
Sales and Syndications
 
(5,611
)
(214,939
)

 
 
Total deductions
(39,469
)
(290,677
)
(36,030
)
 
 
 
 
 
 
 
 
 
Ending Balance
 
$
747,456

$
335,656

$
622,139

 
 
 
 
 
 
 
 

185




ITEM 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
ITEM 9A.    Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2014. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of December 31, 2014, at the reasonable assurance level.
Internal Control over Financial Reporting
The information set forth under “Management Report on Internal Control over Financial Reporting” and “Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting” included in Part II, Item 8 of this Annual Report on Form 10-K is incorporated by reference into this Item 9A.
Internal Control Changes
During the fourth quarter of 2014, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.    Other Information
Not applicable.

PART III
ITEM 10.    Directors, Executive Officers and Corporate Governance
The information required by this Item 10 is incorporated by reference to the material under the headings “Proposals Requiring Your Vote—Proposal 1: Election of Directors,” “Our Executive Officers,” “Securities Ownership—Section 16(a) Beneficial Ownership Reporting Compliance,” “Corporate Governance—Governance Policies” and “Audit and Compliance Committee” in our definitive Proxy Statement for the 2015 Annual Meeting of Stockholders, which we will file with the SEC not later than April 30, 2015.
ITEM 11.    Executive Compensation
The information required by this Item 11 is incorporated by reference to the material under the headings “Executive Compensation,” “Non-Employee Director Compensation” and “Executive Compensation Committee” in our definitive Proxy Statement for the 2015 Annual Meeting of Stockholders, which we will file with the SEC not later than April 30, 2015.
ITEM 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item 12 is incorporated by reference to the material under the headings “Equity Compensation Plan Information” and “Securities Ownership” in our definitive Proxy Statement for the 2015 Annual Meeting of Stockholders, which we will file with the SEC not later than April 30, 2015.
ITEM 13.    Certain Relationships and Related Transactions, and Director Independence
The information required by this Item 13 is incorporated by reference to the material under the headings “Corporate Governance—Transactions with Related Persons,” “Our Board of Directors—Director Independence,” “Audit and Compliance

186


Committee,” “Executive Compensation Committee” and “Nominating and Corporate Governance Committee” in our definitive Proxy Statement for the 2015 Annual Meeting of Stockholders, which we will file with the SEC not later than April 30, 2015.
ITEM 14.    Principal Accountant Fees and Services
The information required by this Item 14 is incorporated by reference to the material under the heading “Proposals Requiring Your Vote—Proposal 2: Ratification of the Selection of KPMG LLP as Our Independent Registered Public Accounting Firm for Fiscal Year 2015” in our definitive Proxy Statement for the 2015 Annual Meeting of Stockholders, which we will file with the SEC not later than April 30, 2015.




PART IV
ITEM 15.    Exhibits and Financial Statement Schedules
Financial Statements and Financial Statement Schedules
The following documents have been included in Part II, Item 8 of this Annual Report on Form 10-K:
 
Page
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2014 and 2013
Consolidated Statements of Income for the years ended December 31, 2014, 2013 and 2012
Consolidated Statements of Comprehensive Income for the years ended December 31, 2014, 2013 and 2012
Consolidated Statements of Equity for the years ended December 31, 2014, 2013 and 2012
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012
Notes to Consolidated Financial Statements
Consolidated Financial Statement Schedules
 
Schedule II — Valuation and Qualifying Accounts
Schedule III — Real Estate and Accumulated Depreciation
Schedule IV — Mortgage Loans on Real Estate
All other schedules have been omitted because they are inapplicable, not required or the information is included elsewhere in the Consolidated Financial Statements or notes thereto.

188


Exhibits

Exhibit
Number
 
Description of Document
 
Location of Document
2.1
 
Agreement and Plan of Merger dated as of June 1, 2014 by and among Ventas, Inc., Stripe Sub, LLC, Stripe OP, LP, American Realty Capital Healthcare Trust, Inc. and American Realty Capital Healthcare Trust Operating Partnership, L.P.
 
Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K, filed on June 5, 2014.
 
 
 
 
 
2.2
 
First Amendment to Agreement and Plan of Merger dated as of September 15, 2014 by and among Ventas, Inc., Stripe Sub, LLC, Stripe OP, LP, American Realty Capital Healthcare Trust, Inc. and American Realty Capital Healthcare Trust Operating Partnership, L.P.
 
Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K, filed on September 16, 2014.
 
 
 
 
 
3.1

Amended and Restated Certificate of Incorporation, as amended, of Ventas, Inc.

Incorporated by reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011.


 

 
3.2

Fourth Amended and Restated Bylaws, as amended, of Ventas, Inc.

Incorporated by reference to Exhibit 3.2 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011.


 

 
4.1

Specimen common stock certificate.

Incorporated by reference to Exhibit 4.1 to our Annual Report on Form 10-K for the year ended December 31, 2012.





4.2

Indenture dated as of September 19, 2006 by and among Ventas, Inc., Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuer(s), the Guarantors named therein, as Guarantors, and U.S. Bank National Association, as Trustee.


Incorporated by reference to Exhibit 4.9 to our Registration Statement on Form S-3, filed on April 7, 2006, File No. 333-133115.





4.3

Third Supplemental Indenture dated as of November 16, 2010 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 3.125% Senior Notes due 2015.

Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on November 18, 2010.





4.4

Fourth Supplemental Indenture dated as of May 17, 2011 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 4.750% Senior Notes due 2021.


Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on May 20, 2011.





4.5

Fifth Supplemental Indenture dated as of February 10, 2012 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 4.250% Senior Notes due 2022.


Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on February 14, 2012.





4.6

Sixth Supplemental Indenture dated as of April 17, 2012 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 4.000% Senior Notes due 2019.


Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on April 18, 2012.





4.7

Seventh Supplemental Indenture dated as of August 3, 2012 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 3.250% Senior Notes due 2022.


Incorporated by reference to Exhibit 4.1 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.






189


Exhibit
Number
 
Description of Document
 
Location of Document
4.8

Eighth Supplemental Indenture dated as of December 13, 2012 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 2.000% Senior Notes due 2018.


Incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K, filed on December 13, 2012.





4.9

Ninth Supplemental Indenture dated as of March 7, 2013 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 5.450% Senior Notes due 2043.


Incorporated by reference to Exhibit 4.2 to our Registration Statement on Form 8-A, filed on March 7, 2013.





4.10

Tenth Supplemental Indenture dated as of March 19, 2013 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 2.700% Senior Notes due 2020.


Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on March 19, 2013.





4.11

Indenture dated as of September 26, 2013 by and among Ventas, Inc., Ventas Realty, Limited Partnership, as Issuer, the Guarantors named therein, as Guarantors, and U.S. Bank National Association, as Trustee.


Incorporated by reference to Exhibit 4.7 to our Registration Statement on Form S-3, filed on April 2, 2012, File No. 333-180521.





4.12

First Supplemental Indenture dated as of September 26, 2013 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 1.550% Senior Notes due 2016.


Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on September 26, 2013.





4.13

Second Supplemental Indenture dated as of September 26, 2013 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 5.700% Senior Notes due 2043.


Incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K, filed on September 26, 2013.





4.14

Third Supplemental Indenture dated as of April 17, 2014 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 1.250% Senior Notes due 2017.

Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on April 17, 2014.





4.15

Fourth Supplemental Indenture dated as of April 17, 2014 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 3.750% Senior Notes due 2024.


Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on April 17, 2014.





4.16

Fifth Supplemental Indenture dated as of January 14, 2015 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 3.500% Senior Notes due 2025.


Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on January 14, 2015.





4.17

Sixth Supplemental Indenture dated as of January 14, 2015 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 4.375% Senior Notes due 2045.

Incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K, filed on January 14, 2015.





4.18

Indenture dated as of August 19, 1997 by and between Nationwide Health Properties, Inc. and The Bank of New York, as Trustee.

Incorporated by reference to Exhibit 4.1 to the Nationwide Health Properties, Inc. Registration Statement on Form S-3, filed on July 25, 1997, File No. 333-32135.






190


Exhibit
Number
 
Description of Document
 
Location of Document
4.19

Indenture dated as of January 13, 1999 by and between Nationwide Health Properties, Inc. and Chase Manhattan Bank and Trust Company, National Association, as Trustee.

Incorporated by reference to Exhibit 4.1 to the Nationwide Health Properties, Inc. Registration Statement on Form S-3, filed on January 15, 1999, File No. 333-70707.





4.20

First Supplemental Indenture dated as of May 18, 2005 by and between Nationwide Health Properties, Inc. and J.P. Morgan Trust Company, National Association, as Trustee.

Incorporated by reference to Exhibit 4.1 to the Nationwide Health Properties, Inc. Current Report on Form 8-K, filed on May 11, 2005, File No. 001-09028.





4.21

Indenture dated as September 24, 2014 by and among Ventas, Inc., Ventas Canadian Finance Limited, the Guarantors parties thereto from time to time and Computershare Trust Company of Canada, as Trustee.

Incorporated by reference to Exhibit 4.1 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.





4.22

First Supplemental Indenture dated as of September 24, 2014 by and among Ventas Canada Finance Limited, as Issuer, Ventas, Inc., as Guarantor, and Computershare Trust Company of Canada, as Trustee, relating to the 3.00% Senior Notes, Series A due 2019.

Incorporated by reference to Exhibit 4.2 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.





4.23

Second Supplemental Indenture dated as of September 24, 2014 by and among Ventas Canada Finance Limited, as Issuer, Ventas, Inc., as Guarantor, and Computershare Trust Company of Canada, as Trustee, relating to the 4.125% Senior Notes, Series B due 2024.

Incorporated by reference to Exhibit 4.3 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.





4.24

Third Supplemental Indenture dated as of January 13, 2015 by and among Ventas Canada Finance Limited, as Issuer, Ventas, Inc., as Guarantor, and Computershare Trust Company of Canada, as Trustee, relating to the 3.30% Senior Notes, Series C due 2022.

Filed herewith.





10.1

First Amended and Restated Agreement of Limited Partnership of Ventas Realty, Limited Partnership.

Incorporated by reference to Exhibit 3.5 to our Registration Statement on Form S-4, as amended, File No. 333-89312.





10.2

Amended and Restated Credit and Guaranty Agreement, dated as of December 9, 2013, among Ventas Realty, Limited Partnership, Ventas SSL Ontario II, Inc. and Ventas SSL Ontario III, Inc., as Borrowers, Ventas, Inc., as Guarantor, the Lenders identified therein, and Bank of America, N.A., as Administrative Agent, Swing Line Lender, L/C Issuer and Alternative Currency Fronting Lender.

Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on December 9, 2013.





10.3*

Ventas, Inc. 2004 Stock Plan for Directors, as amended.

Incorporated by reference to Exhibit 10.16.1 to our Annual Report on Form 10-K for the year ended December 31, 2004.





10.4.1*

Ventas, Inc. 2006 Incentive Plan, as amended.

Incorporated by reference to Exhibit 10.10.1 to our Annual Report on Form 10-K for the year ended December 31, 2008.





10.4.2*

Form of Stock Option Agreement—2006 Incentive Plan.

Incorporated by reference to Exhibit 10.15.2 to our Annual Report on Form 10-K for the year ended December 31, 2006.


 

 
10.4.3*

Form of Restricted Stock Agreement—2006 Incentive Plan.

Incorporated by reference to Exhibit 10.15.3 to our Annual Report on Form 10-K for the year ended December 31, 2006.





10.5.1*

Ventas, Inc. 2006 Stock Plan for Directors, as amended.

Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.

191


Exhibit
Number
 
Description of Document
 
Location of Document


 

 
10.5.2*

Form of Stock Option Agreement—2006 Stock Plan for Directors.

Incorporated by reference to Exhibit 10.11.2 to our Annual Report on Form 10-K for the year ended December 31, 2008.





10.5.3*

Form of Amendment to Stock Option Agreement—2006 Stock Plan for Directors.

Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.





10.5.4*

Form of Restricted Stock Unit Agreement—2006 Stock Plan for Directors.

Incorporated by reference to Exhibit 10.11.4 to our Annual Report on Form 10-K for the year ended December 31, 2008.





10.6.1*

Ventas, Inc. 2012 Incentive Plan.

Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on May 23, 2012.





10.6.2*

Form of Stock Option Agreement (Employees) under the Ventas, Inc. 2012 Incentive Plan.

Filed herewith.





10.6.3*

Form of Restricted Stock Agreement (Employees) under the Ventas, Inc. 2012 Incentive Plan.

Filed herewith.





10.6.4*

Form of Stock Option Agreement (Directors) under the Ventas, Inc. 2012 Incentive Plan.

Incorporated by reference to Exhibit 10.4 to our Registration Form on S-8, filed on August 7, 2012, File No. 333-183121.





10.6.5*

Form of Restricted Stock Agreement (Directors) under the Ventas, Inc. 2012 Incentive Plan.

Incorporated by reference to Exhibit 10.5 to our Registration Form on S-8, filed on August 7, 2012, File No. 333-183121.





10.6.6*

Form of Restricted Stock Unit Agreement (Directors) under the Ventas, Inc. 2012 Incentive Plan.

Incorporated by reference to Exhibit 10.6 to our Registration Form on S-8, filed on August 7, 2012, File No. 333-183121.





10.7.1*

Ventas Executive Deferred Stock Compensation Plan, as amended.

Incorporated by reference to Exhibit 10.12.1 to our Annual Report on Form 10-K for the year ended December 31, 2008.





10.7.2*

Deferral Election Form under the Ventas Executive Deferred Stock Compensation Plan.

Incorporated by reference to Exhibit 10.12.2 to our Annual Report on Form 10-K for the year ended December 31, 2008.

 
 

 
10.8.1*

Ventas Nonemployee Directors’ Deferred Stock Compensation Plan, as amended.

Incorporated by reference to Exhibit 10.13.1 to our Annual Report on Form 10-K for the year ended December 31, 2008.





10.8.2*

Deferral Election Form under the Ventas Nonemployee Directors’ Deferred Stock Compensation Plan.

Incorporated by reference to Exhibit 10.13.2 to our Annual Report on Form 10-K fir the year ended December 31, 2008.

 
 

 
10.9.1*

Nationwide Health Properties, Inc. 2005 Performance Incentive Plan.

Incorporated by reference to Appendix B to the Nationwide Health Properties, Inc. definitive Proxy Statement for the 2005 Annual Meeting, filed on March 24, 2005, File No. 001-09028.





10.9.2*

First Amendment to the Nationwide Health Properties, Inc. 2005 Performance Incentive Plan, dated October 28, 2008.

Incorporated by reference to Exhibit 10.1 to the Nationwide Health Properties, Inc. Current Report on Form 8-K, filed on November 3, 2008, File No. 001-09028.

 
 

 
10.10.1*

Nationwide Health Properties, Inc. Retirement Plan for Directors, as amended and restated on April 20, 2006.

Incorporated by reference to Exhibit 10.1 to the Nationwide Health Properties, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, File No. 001-09028.

 
 

 

192


Exhibit
Number
 
Description of Document
 
Location of Document
10.10.2*

Amendment to the Nationwide Health Properties, Inc. Retirement Plan for Directors, as amended and restated on April 20, 2006.

Incorporated by reference to Exhibit 10.9 to the Nationwide Health Properties, Inc. Current Report on Form 8-K, filed on November 3, 2008, File No. 001-09028.

 
 

 
10.11*

Second Amended and Restated Employment Agreement dated as of March 22, 2011 between Ventas, Inc. and Debra A. Cafaro.

Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on March 24, 2011.

 
 

 
10.12.1*

Employment Agreement dated as of July 31, 1998 between Ventas, Inc. and T. Richard Riney.

Incorporated by reference to Exhibit 10.15.2.1 to our Annual Report on Form 10-K for the year ended December 31, 2002.

 
 

 
10.12.2*

Amendment dated as of September 30, 1999 to Employment Agreement between Ventas, Inc. and T. Richard Riney.

Incorporated by reference to Exhibit 10.15.2.2 to our Annual Report on Form 10-K for the year ended December 31, 2002.





10.12.3*

Amendment dated as of March 19, 2007 to Employment Agreement between Ventas, Inc. and T. Richard Riney.

Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on March 23, 2007.





10.12.4*

Amendment dated as of December 31, 2008 to Employment Agreement between Ventas, Inc. and T. Richard Riney.

Incorporated by reference to Exhibit 10.15.4 to our Annual Report on Form 10-K for the year ended December 31, 2008.





10.12.5*

Amended and Restated Change-in-Control Severance Agreement dated as of March 22, 2011 between Ventas, Inc. and T. Richard Riney.

Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K, filed on March 24, 2011.

 
 

 
10.13*

Consulting Agreement dated December 31, 2014 between Ventas, Inc. and Richard A. Schweinhart.

Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on January 7, 2015.





10.14.1*

Employment Agreement dated as of September 18, 2002 between Ventas, Inc. and Raymond J. Lewis.

Incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2002.

 
 

 
10.14.2*

Amendment dated as of March 19, 2007 to Employment Agreement between Ventas, Inc. and Raymond J. Lewis.

Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K, filed on March 23, 2007.

 
 

 
10.14.3*

Amendment dated as of December 31, 2008 to Employment Agreement between Ventas, Inc. and Raymond J. Lewis.

Incorporated by reference to Exhibit 10.17.3 to our Annual Report on Form 10-K for the year ended December 31, 2008.





10.15*

Employment Agreement dated as of June 22, 2010 between Ventas, Inc. and Todd W. Lillibridge.

Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010.

 
 

 
10.16*

Employee Protection and Noncompetition Agreement dated as of October 21, 2013 between Ventas, Inc. and John D. Cobb.

Incorporated by reference to Exhibit 10.18 to our Annual Report on Form 10-K for the year ended December 31, 2013.





10.17.1*

Offer Letter dated September 16, 2014 from Ventas, Inc. to Robert F. Probst.

Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on September 29, 2014.





10.17.2*
 
Employee Protection and Noncompetition Agreement dated September 16, 2014 between Ventas, Inc. and Robert F. Probst.
 
Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K, filed on September 29, 2014.





10.18*

Ventas Employee and Director Stock Purchase Plan, as amended.

Incorporated by reference to Exhibit 10.18 to our Annual Report on Form 10-K for the year ended December 31, 2008.

 
 

 
12
 
Statement Regarding Computation of Ratios of Earnings to Fixed Charges.

Filed herewith.





21

Subsidiaries of Ventas, Inc.

Filed herewith.


 

 
23

Consent of KPMG LLP.

Filed herewith.






193


Exhibit
Number
 
Description of Document
 
Location of Document
31.1

Certification of Debra A. Cafaro, Chairman and Chief Executive Officer, pursuant to Rule 13a-14(a) under the Exchange Act.

Filed herewith.





31.2

Certification of Robert F. Probst, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) under the Exchange Act.

Filed herewith.





32.1

Certification of Debra A. Cafaro, Chairman and Chief Executive Officer, pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. 1350.

Filed herewith.





32.2

Certification of Robert F. Probst, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. 1350.

Filed herewith.





101

Interactive Data File.

Filed herewith.
________________________
* Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(b) of Form 10-K.

194


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: February 13, 2015

 
 
VENTAS, INC.
 
 
 
 
 
 
By:
/s/ DEBRA A. CAFARO
 
 
 
Debra A. Cafaro
Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature
Title
Date
 
 
 
/s/ DEBRA A. CAFARO
Chairman and Chief Executive Officer (Principal Executive Officer)
February 13, 2015
Debra A. Cafaro
 
 
 
 
 
/s/ ROBERT F. PROBST
Executive Vice President, Chief Financial Officer and Acting Chief Accounting Officer (Principal Financial and Accounting Officer)
February 13, 2015
Robert F. Probst
 
 
 
 
 
/s/ MELODY C. BARNES
Director
February 13, 2015
Melody C. Barnes
 
 
 
 
 
/s/ DOUGLAS CROCKER II
Director
February 13, 2015
Douglas Crocker II
 
 
 
 
 
/s/ RONALD G. GEARY
Director
February 13, 2015
Ronald G. Geary
 
 
 
 
 
/s/ JAY M. GELLERT
Director
February 13, 2015
Jay M. Gellert
 
 
 
 
 
/s/ RICHARD I. GILCHRIST
Director
February 13, 2015
Richard I. Gilchrist
 
 
 
 
 
/s/ MATTHEW J. LUSTIG
Director
February 13, 2015
Matthew J. Lustig
 
 
 
 
 
/s/ DOUGLAS M. PASQUALE
Director
February 13, 2015
Douglas M. Pasquale
 
 
 
 
 

195


Signature
Title
Date
/s/ ROBERT D. REED
Director
February 13, 2015
Robert D. Reed
 
 
 
 
 
/s/ GLENN J. RUFRANO
Director
February 13, 2015
Glenn J. Rufrano
 
 
 
 
 
/s/ JAMES D. SHELTON
Director
February 13, 2015
James D. Shelton
 
 
 
 
 
 
 
 





196


EXHIBIT INDEX
Exhibit
Number
 
Description of Document
 
Location of Document
2.1
 
Agreement and Plan of Merger dated as of June 1, 2014 by and among Ventas, Inc., Stripe Sub, LLC, Stripe OP, LP, American Realty Capital Healthcare Trust, Inc. and American Realty Capital Healthcare Trust Operating Partnership, L.P.
 
Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K, filed on June 5, 2014.
 
 
 
 
 
2.2
 
First Amendment to Agreement and Plan of Merger dated as of September 15, 2014 by and among Ventas, Inc., Stripe Sub, LLC, Stripe OP, LP, American Realty Capital Healthcare Trust, Inc. and American Realty Capital Healthcare Trust Operating Partnership, L.P.
 
Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K, filed on September 16, 2014.
 
 
 
 
 
3.1

Amended and Restated Certificate of Incorporation, as amended, of Ventas, Inc.

Incorporated by reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011.


 

 
3.2

Fourth Amended and Restated Bylaws, as amended, of Ventas, Inc.

Incorporated by reference to Exhibit 3.2 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011.


 

 
4.1

Specimen common stock certificate.

Incorporated by reference to Exhibit 4.1 to our Annual Report on Form 10-K for the year ended December 31, 2012.





4.2

Indenture dated as of September 19, 2006 by and among Ventas, Inc., Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuer(s), the Guarantors named therein, as Guarantors, and U.S. Bank National Association, as Trustee.

Incorporated by reference to Exhibit 4.9 to our Registration Statement on Form S-3, filed on April 7, 2006, File No. 333-133115.





4.3

Third Supplemental Indenture dated as of November 16, 2010 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 3.125% Senior Notes due 2015.

Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on November 18, 2010.





4.4

Fourth Supplemental Indenture dated as of May 17, 2011 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 4.750% Senior Notes due 2021.

Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on May 20, 2011.





4.5

Fifth Supplemental Indenture dated as of February 10, 2012 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 4.250% Senior Notes due 2022.

Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on February 14, 2012.





4.6

Sixth Supplemental Indenture dated as of April 17, 2012 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 4.000% Senior Notes due 2019.

Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on April 18, 2012.





4.7

Seventh Supplemental Indenture dated as of August 3, 2012 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 3.250% Senior Notes due 2022.

Incorporated by reference to Exhibit 4.1 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.






197


Exhibit
Number
 
Description of Document
 
Location of Document
4.8

Eighth Supplemental Indenture dated as of December 13, 2012 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 2.000% Senior Notes due 2018.

Incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K, filed on December 13, 2012.





4.9

Ninth Supplemental Indenture dated as of March 7, 2013 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 5.450% Senior Notes due 2043.

Incorporated by reference to Exhibit 4.2 to our Registration Statement on Form 8-A, filed on March 7, 2013.





4.10

Tenth Supplemental Indenture dated as of March 19, 2013 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 2.700% Senior Notes due 2020.

Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on March 19, 2013.





4.11

Indenture dated as of September 26, 2013 by and among Ventas, Inc., Ventas Realty, Limited Partnership, as Issuer, the Guarantors named therein, as Guarantors, and U.S. Bank National Association, as Trustee.

Incorporated by reference to Exhibit 4.7 to our Registration Statement on Form S-3, filed on April 2, 2012, File No. 333-180521.





4.12

First Supplemental Indenture dated as of September 26, 2013 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 1.550% Senior Notes due 2016.

Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on September 26, 2013.





4.13

Second Supplemental Indenture dated as of September 26, 2013 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 5.700% Senior Notes due 2043.

Incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K, filed on September 26, 2013.





4.14

Third Supplemental Indenture dated as of April 17, 2014 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 1.250% Senior Notes due 2017.

Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on April 17, 2014.





4.15

Fourth Supplemental Indenture dated as of April 17, 2014 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 3.750% Senior Notes due 2024.

Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on April 17, 2014.





4.16

Fifth Supplemental Indenture dated as of January 14, 2015 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 3.500% Senior Notes due 2025.

Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on January 14, 2015.





4.17

Sixth Supplemental Indenture dated as of January 14, 2015 by and among Ventas Realty, Limited Partnership, as Issuer, Ventas, Inc., as Guarantor, and U.S. Bank National Association, as Trustee, relating to the 4.375% Senior Notes due 2045.

Incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K, filed on January 14, 2015.





4.18

Indenture dated as of August 19, 1997 by and between Nationwide Health Properties, Inc. and The Bank of New York, as Trustee.

Incorporated by reference to Exhibit 4.1 to the Nationwide Health Properties, Inc. Registration Statement on Form S-3, filed on July 25, 1997, File No. 333-32135.






198


Exhibit
Number
 
Description of Document
 
Location of Document
4.19

Indenture dated as of January 13, 1999 by and between Nationwide Health Properties, Inc. and Chase Manhattan Bank and Trust Company, National Association, as Trustee.

Incorporated by reference to Exhibit 4.1 to the Nationwide Health Properties, Inc. Registration Statement on Form S-3, filed on January 15, 1999, File No. 333-70707.





4.20

First Supplemental Indenture dated as of May 18, 2005 by and between Nationwide Health Properties, Inc. and J.P. Morgan Trust Company, National Association, as Trustee.

Incorporated by reference to Exhibit 4.1 to the Nationwide Health Properties, Inc. Current Report on Form 8-K, filed on May 11, 2005, File No. 001-09028.





4.21

Indenture dated as September 24, 2014 by and among Ventas, Inc., Ventas Canadian Finance Limited, the Guarantors parties thereto from time to time and Computershare Trust Company of Canada, as Trustee.

Incorporated by reference to Exhibit 4.1 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.





4.22

First Supplemental Indenture dated as of September 24, 2014 by and among Ventas Canada Finance Limited, as Issuer, Ventas, Inc., as Guarantor, and Computershare Trust Company of Canada, as Trustee, relating to the 3.00% Senior Notes, Series A due 2019.

Incorporated by reference to Exhibit 4.2 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.





4.23

Second Supplemental Indenture dated as of September 24, 2014 by and among Ventas Canada Finance Limited, as Issuer, Ventas, Inc., as Guarantor, and Computershare Trust Company of Canada, as Trustee, relating to the 4.125% Senior Notes, Series B due 2024.

Incorporated by reference to Exhibit 4.3 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.





4.24

Third Supplemental Indenture dated as of January 13, 2015 by and among Ventas Canada Finance Limited, as Issuer, Ventas, Inc., as Guarantor, and Computershare Trust Company of Canada, as Trustee, relating to the 3.30% Senior Notes, Series C due 2022.

Filed herewith.





10.1

First Amended and Restated Agreement of Limited Partnership of Ventas Realty, Limited Partnership.

Incorporated by reference to Exhibit 3.5 to our Registration Statement on Form S-4, as amended, File No. 333-89312.





10.2

Amended and Restated Credit and Guaranty Agreement, dated as of December 9, 2013, among Ventas Realty, Limited Partnership, Ventas SSL Ontario II, Inc. and Ventas SSL Ontario III, Inc., as Borrowers, Ventas, Inc., as Guarantor, the Lenders identified therein, and Bank of America, N.A., as Administrative Agent, Swing Line Lender, L/C Issuer and Alternative Currency Fronting Lender.

Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on December 9, 2013.





10.3*

Ventas, Inc. 2004 Stock Plan for Directors, as amended.

Incorporated by reference to Exhibit 10.16.1 to our Annual Report on Form 10-K for the year ended December 31, 2004.





10.4.1*

Ventas, Inc. 2006 Incentive Plan, as amended.

Incorporated by reference to Exhibit 10.10.1 to our Annual Report on Form 10-K for the year ended December 31, 2008.





10.4.2*

Form of Stock Option Agreement—2006 Incentive Plan.

Incorporated by reference to Exhibit 10.15.2 to our Annual Report on Form 10-K for the year ended December 31, 2006.


 

 
10.4.3*

Form of Restricted Stock Agreement—2006 Incentive Plan.

Incorporated by reference to Exhibit 10.15.3 to our Annual Report on Form 10-K for the year ended December 31, 2006.

199


Exhibit
Number
 
Description of Document
 
Location of Document





10.5.1*

Ventas, Inc. 2006 Stock Plan for Directors, as amended.

Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.


 

 
10.5.2*

Form of Stock Option Agreement—2006 Stock Plan for Directors.

Incorporated by reference to Exhibit 10.11.2 to our Annual Report on Form 10-K for the year ended December 31, 2008.





10.5.3*

Form of Amendment to Stock Option Agreement—2006 Stock Plan for Directors.

Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.





10.5.4*

Form of Restricted Stock Unit Agreement—2006 Stock Plan for Directors.

Incorporated by reference to Exhibit 10.11.4 to our Annual Report on Form 10-K for the year ended December 31, 2008.





10.6.1*

Ventas, Inc. 2012 Incentive Plan.

Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on May 23, 2012.





10.6.2*

Form of Stock Option Agreement (Employees) under the Ventas, Inc. 2012 Incentive Plan.

Filed herewith.





10.6.3*

Form of Restricted Stock Agreement (Employees) under the Ventas, Inc. 2012 Incentive Plan.

Filed herewith.





10.6.4*

Form of Stock Option Agreement (Directors) under the Ventas, Inc. 2012 Incentive Plan.

Incorporated by reference to Exhibit 10.4 to our Registration Form on S-8, filed on August 7, 2012, File No. 333-183121.





10.6.5*

Form of Restricted Stock Agreement (Directors) under the Ventas, Inc. 2012 Incentive Plan.

Incorporated by reference to Exhibit 10.5 to our Registration Form on S-8, filed on August 7, 2012, File No. 333-183121.





10.6.6*

Form of Restricted Stock Unit Agreement (Directors) under the Ventas, Inc. 2012 Incentive Plan.

Incorporated by reference to Exhibit 10.6 to our Registration Form on S-8, filed on August 7, 2012, File No. 333-183121.





10.7.1*

Ventas Executive Deferred Stock Compensation Plan, as amended.

Incorporated by reference to Exhibit 10.12.1 to our Annual Report on Form 10-K for the year ended December 31, 2008.





10.7.2*

Deferral Election Form under the Ventas Executive Deferred Stock Compensation Plan.

Incorporated by reference to Exhibit 10.12.2 to our Annual Report on Form 10-K for the year ended December 31, 2008.

 
 

 
10.8.1*

Ventas Nonemployee Directors’ Deferred Stock Compensation Plan, as amended.

Incorporated by reference to Exhibit 10.13.1 to our Annual Report on Form 10-K for the year ended December 31, 2008.





10.8.2*

Deferral Election Form under the Ventas Nonemployee Directors’ Deferred Stock Compensation Plan.

Incorporated by reference to Exhibit 10.13.2 to our Annual Report on Form 10-K fir the year ended December 31, 2008.

 
 

 
10.9.1*

Nationwide Health Properties, Inc. 2005 Performance Incentive Plan.

Incorporated by reference to Appendix B to the Nationwide Health Properties, Inc. definitive Proxy Statement for the 2005 Annual Meeting, filed on March 24, 2005, File No. 001-09028.





10.9.2*

First Amendment to the Nationwide Health Properties, Inc. 2005 Performance Incentive Plan, dated October 28, 2008.

Incorporated by reference to Exhibit 10.1 to the Nationwide Health Properties, Inc. Current Report on Form 8-K, filed on November 3, 2008, File No. 001-09028.

 
 

 

200


Exhibit
Number
 
Description of Document
 
Location of Document
10.10.1*

Nationwide Health Properties, Inc. Retirement Plan for Directors, as amended and restated on April 20, 2006.

Incorporated by reference to Exhibit 10.1 to the Nationwide Health Properties, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, File No. 001-09028.

 
 

 
10.10.2*

Amendment to the Nationwide Health Properties, Inc. Retirement Plan for Directors, as amended and restated on April 20, 2006.

Incorporated by reference to Exhibit 10.9 to the Nationwide Health Properties, Inc. Current Report on Form 8-K, filed on November 3, 2008, File No. 001-09028.

 
 

 
10.11*

Second Amended and Restated Employment Agreement dated as of March 22, 2011 between Ventas, Inc. and Debra A. Cafaro.

Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on March 24, 2011.

 
 

 
10.12.1*

Employment Agreement dated as of July 31, 1998 between Ventas, Inc. and T. Richard Riney.

Incorporated by reference to Exhibit 10.15.2.1 to our Annual Report on Form 10-K for the year ended December 31, 2002.

 
 

 
10.12.2*

Amendment dated as of September 30, 1999 to Employment Agreement between Ventas, Inc. and T. Richard Riney.

Incorporated by reference to Exhibit 10.15.2.2 to our Annual Report on Form 10-K for the year ended December 31, 2002.





10.12.3*

Amendment dated as of March 19, 2007 to Employment Agreement between Ventas, Inc. and T. Richard Riney.

Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on March 23, 2007.





10.12.4*

Amendment dated as of December 31, 2008 to Employment Agreement between Ventas, Inc. and T. Richard Riney.

Incorporated by reference to Exhibit 10.15.4 to our Annual Report on Form 10-K for the year ended December 31, 2008.





10.12.5*

Amended and Restated Change-in-Control Severance Agreement dated as of March 22, 2011 between Ventas, Inc. and T. Richard Riney.

Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K, filed on March 24, 2011.

 
 

 
10.13*

Consulting Agreement dated December 31, 2014 between Ventas, Inc. and Richard A. Schweinhart.

Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on January 7, 2015.





10.14.1*

Employment Agreement dated as of September 18, 2002 between Ventas, Inc. and Raymond J. Lewis.

Incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2002.

 
 

 
10.14.2*

Amendment dated as of March 19, 2007 to Employment Agreement between Ventas, Inc. and Raymond J. Lewis.

Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K, filed on March 23, 2007.

 
 

 
10.14.3*

Amendment dated as of December 31, 2008 to Employment Agreement between Ventas, Inc. and Raymond J. Lewis.

Incorporated by reference to Exhibit 10.17.3 to our Annual Report on Form 10-K for the year ended December 31, 2008.





10.15*

Employment Agreement dated as of June 22, 2010 between Ventas, Inc. and Todd W. Lillibridge.

Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010.

 
 

 
10.16*

Employee Protection and Noncompetition Agreement dated as of October 21, 2013 between Ventas, Inc. and John D. Cobb.

Incorporated by reference to Exhibit 10.18 to our Annual Report on Form 10-K for the year ended December 31, 2013.





10.17.1*

Offer Letter dated September 16, 2014 from Ventas, Inc. to Robert F. Probst.

Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on September 29, 2014.





10.18*

Ventas Employee and Director Stock Purchase Plan, as amended.

Incorporated by reference to Exhibit 10.18 to our Annual Report on Form 10-K for the year ended December 31, 2008.

 
 

 
12
 
Statement Regarding Computation of Ratios of Earnings to Fixed Charges.

Filed herewith.






201


Exhibit
Number
 
Description of Document
 
Location of Document
21

Subsidiaries of Ventas, Inc.

Filed herewith.


 

 
23

Consent of KPMG LLP.

Filed herewith.





31.1

Certification of Debra A. Cafaro, Chairman and Chief Executive Officer, pursuant to Rule 13a-14(a) under the Exchange Act.

Filed herewith.





31.2

Certification of Robert F. Probst, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) under the Exchange Act.

Filed herewith.





32.1

Certification of Debra A. Cafaro, Chairman and Chief Executive Officer, pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. 1350.

Filed herewith.





32.2

Certification of Robert F. Probst, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. 1350.

Filed herewith.





101

Interactive Data File.

Filed herewith.
________________________
* Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(b) of Form 10-K.


202