10-Q 1 peak-20220331.htm 10-Q peak-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission file number 001-08895
Healthpeak Properties, Inc.
(Exact name of registrant as specified in its charter)
Maryland 33-0091377
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
5050 South Syracuse Street, Suite 800
Denver, CO 80237
(Address of principal executive offices) (Zip Code)
(720) 428-5050
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1.00 par valuePEAKNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
  Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No 
As of May 2, 2022, there were 539,557,153 shares of the registrant’s $1.00 par value common stock outstanding.


HEALTHPEAK PROPERTIES, INC.
INDEX

2

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

3

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

4

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

5

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

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

For the three months ended March 31, 2021:
 Common StockAdditional Paid-In CapitalCumulative Dividends In Excess Of EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders’ EquityTotal Noncontrolling InterestsTotal
Equity
Redeemable Noncontrolling Interests
 SharesAmount
January 1, 2021538,405 $538,405 $10,175,235 $(3,976,232)$(3,685)$6,733,723 $556,227 $7,289,950 $57,396 
Net income (loss)— — — 145,788 — 145,788 3,635 149,423 — 
Other comprehensive income (loss)— — — — 188 188 — 188 — 
Issuance of common stock, net879 879 208 — — 1,087 — 1,087 — 
Repurchase of common stock(398)(398)(11,767)— — (12,165)— (12,165)— 
Amortization of stock-based compensation— — 5,413 — — 5,413 — 5,413 — 
Common dividends ($0.30 per share)
— — — (164,118)— (164,118)— (164,118)— 
Distributions to noncontrolling interests— — — — — — (7,718)(7,718)(52)
Contributions from noncontrolling interests— — — — — — — — 148 
Adjustments to redemption value of redeemable noncontrolling interests — — (20,921)— — (20,921)— (20,921)20,921 
March 31, 2021538,886 $538,886 $10,148,168 $(3,994,562)$(3,497)$6,688,995 $552,144 $7,241,139 $78,413 
See accompanying Notes to the Unaudited Consolidated Financial Statements.
6

Healthpeak Properties, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Three Months Ended
March 31,
 20222021
Cash flows from operating activities:
Net income (loss)$75,343 $149,423 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of real estate, in-place lease, and other intangibles177,733 157,538 
Amortization of stock-based compensation4,721 4,364 
Amortization of deferred financing costs2,689 2,213 
Straight-line rents(11,158)(9,135)
Amortization of nonrefundable entrance fees and above/below market lease intangibles(24,725)(23,764)
Equity loss (income) from unconsolidated joint ventures(2,148)(1,008)
Distributions of earnings from unconsolidated joint ventures237 237 
Loss (gain) on sale of real estate under direct financing leases(22,693) 
Deferred income tax expense (benefit)(79)(1,148)
Impairments and loan loss reserves (recoveries), net132 3,242 
Loss (gain) on debt extinguishments 164,292 
Loss (gain) on sales of real estate, net(3,785)(259,662)
Loss (gain) upon change of control, net (1,042)
Casualty-related loss (recoveries), net 859 
Other non-cash items(1,593)(726)
Changes in:
Decrease (increase) in accounts receivable and other assets, net(4,144)11,567 
Increase (decrease) in accounts payable, accrued liabilities, and deferred revenue3,653 (74,524)
Net cash provided by (used in) operating activities194,183 122,726 
Cash flows from investing activities:
Acquisitions of real estate(134,067)(14,914)
Development, redevelopment, and other major improvements of real estate(178,285)(135,339)
Leasing costs, tenant improvements, and recurring capital expenditures(22,839)(20,710)
Proceeds from sales of real estate, net13,265 937,492 
Contributions to unconsolidated joint ventures(1,486)(5,924)
Distributions in excess of earnings from unconsolidated joint ventures3,875 10,825 
Proceeds from sales/principal repayments on loans receivable and direct financing leases75,435  
Investments in loans receivable and other(1,860)(3,704)
Net cash provided by (used in) investing activities(245,962)767,726 
Cash flows from financing activities:
Borrowings under bank line of credit and commercial paper3,732,668 3,437,200 
Repayments under bank line of credit and commercial paper(3,567,830)(2,528,640)
Repayments and repurchase of debt, excluding bank line of credit and commercial paper(1,270)(1,491,754)
Payments for debt extinguishment and deferred financing costs (158,011)
Issuance of common stock and exercise of options, net of offering costs(4)1,087 
Repurchase of common stock(11,352)(12,165)
Dividends paid on common stock(163,447)(164,118)
Distributions to and purchase of noncontrolling interests(7,509)(7,718)
Contributions from and issuance of noncontrolling interests233  
Net cash provided by (used in) financing activities(18,511)(924,119)
Net increase (decrease) in cash, cash equivalents and restricted cash(70,290)(33,667)
Cash, cash equivalents and restricted cash, beginning of period219,448 181,685 
Cash, cash equivalents and restricted cash, end of period$149,158 $148,018 
See accompanying Notes to the Unaudited Consolidated Financial Statements.
7

Healthpeak Properties, Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 
NOTE 1.  Business
Overview
Healthpeak Properties, Inc., a Standard & Poor’s 500 company, is a Maryland corporation that is organized to qualify as a real estate investment trust (“REIT”) that, together with its consolidated entities (collectively, “Healthpeak” or the “Company”), invests primarily in real estate serving the healthcare industry in the United States (“U.S.”). Healthpeak® acquires, develops, leases, owns, and manages healthcare real estate. The Company’s diverse portfolio is comprised of investments in the following reportable healthcare segments: (i) life science; (ii) medical office; and (iii) continuing care retirement community (“CCRC”).
The Company’s corporate headquarters are in Denver, Colorado and it has additional offices in California, Tennessee, and Massachusetts.
Covid Update
The coronavirus (“Covid”) pandemic has caused significant disruption to individuals, governments, financial markets, and businesses, including the Company. The Company’s tenants, operators, and borrowers have experienced significant cost increases as a result of increased health and safety measures, staffing shortages, increased governmental regulation and compliance, vaccine mandates, and other operational changes necessitated either directly or indirectly by the Covid pandemic. The Company evaluated the impacts of Covid on its business thus far and incorporated information concerning the impact of Covid into its assessments of liquidity, impairments, and collectibility from tenants, residents, and borrowers as of March 31, 2022. The Company will continue to monitor such impacts and will adjust its estimates and assumptions based on the best available information.
NOTE 2.  Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Management is required to make estimates and assumptions in the preparation of financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from management’s estimates.
The consolidated financial statements include the accounts of Healthpeak Properties, Inc., its wholly-owned subsidiaries, joint ventures (“JVs”), and variable interest entities (“VIEs”) that it controls through voting rights or other means. Intercompany transactions and balances have been eliminated upon consolidation. All adjustments (consisting of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations, and cash flows have been included. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The accompanying unaudited interim financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the U.S. Securities and Exchange Commission (“SEC”).
Revision to Additional Paid-In Capital and Redeemable Noncontrolling Interests
During the third quarter of 2021, the Company identified and corrected immaterial errors in the classification and redemption value of redeemable noncontrolling interests of consolidated joint ventures in its life science segment. The Company corrected the classification of its redeemable noncontrolling interests and increased the balance to its estimated redemption value, with a corresponding decrease to additional paid-in capital (“APIC”) in accordance with Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity.
The increase in the unrealized value of the redeemable noncontrolling interests was largely attributable to rapidly rising rents and compressing capitalization rates in the market in which the entities operate, and was identified and corrected by management. The Company determined the impact of the adjustments to be immaterial, individually and in the aggregate, based on consideration of quantitative and qualitative factors. As such, these adjustments are reflected in this Quarterly Report on Form 10-Q for the three months ended March 31, 2021.
8

These adjustments had no impact on the Consolidated Statements of Cash Flows, Consolidated Statements of Operations, or any per share amounts. The Company made changes (all amounts in thousands) to the Consolidated Statements of Equity and Redeemable Noncontrolling Interests to decrease APIC, total stockholders’ equity, and total equity as of March 31, 2021 by $75,543 with a corresponding increase to redeemable noncontrolling interests of $78,413 and a decrease to accounts payable, accrued liabilities, and other liabilities as of March 31, 2021 of $2,870 on the Consolidated Balance Sheet.
Government Grant Income
On March 27, 2020, the federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) to provide financial aid to individuals, businesses, and state and local governments. During the three months ended March 31, 2022 and 2021, the Company received government grants under the CARES Act primarily to cover increased expenses and lost revenue during the Covid pandemic. Grant income is recognized when there is reasonable assurance that the grant will be received and the Company will comply with all conditions attached to the grant. Additionally, grants are recognized over the periods in which the Company recognizes the increased expenses and lost revenue the grants are intended to defray. As of March 31, 2022, the amount of qualifying expenditures and lost revenue exceeded grant income recognized and the Company believes it has complied and will continue to comply with all grant conditions. In the event of non-compliance, all such amounts received are subject to recapture.
The following table summarizes information related to government grant income received and recognized by the Company (in thousands):
Three Months Ended
March 31,
20222021
Government grant income recorded in other income (expense), net$6,552 $1,310 
Government grant income recorded in equity income (loss) from unconsolidated joint ventures648 426 
Government grant income recorded in income (loss) from discontinued operations206 3,232 
Total government grants received$7,406 $4,968 
Discontinued Operations
Senior Housing Triple-Net and Senior Housing Operating Portfolio Dispositions
During 2020, the Company established and began executing a plan to dispose of its senior housing triple-net and Senior Housing Operating Property (“SHOP”) properties and concluded that the planned dispositions represented a strategic shift that had and will have a major effect on the Company’s operations and financial results. Therefore, senior housing triple-net and SHOP assets meeting the held for sale criteria are classified as discontinued operations in all periods presented herein. In September 2021, the Company successfully completed the disposition of the remaining senior housing triple-net and SHOP properties. See Note 4 for further information.
Recent Accounting Pronouncements
Adopted
Government Assistance. In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance (“ASU 2021-10”), which increases the transparency of government assistance including the disclosure of the types of assistance, an entity’s accounting for assistance, and the effect of the assistance on an entity’s financial statements. The adoption of ASU 2021-10 on January 1, 2022 did not have a material impact on the Company’s consolidated financial position, results of operations, cash flows, or disclosures.
Not Yet Adopted
Reference Rate Reform. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional guidance for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), which amends the scope of ASU 2020-04 to include derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The amendments in ASU 2020-04 and ASU 2021-01 were effective immediately and may be applied through December 31, 2022. The Company is evaluating whether the optional relief provided by ASU 2020-04 or ASU 2021-01 will be adopted but does not expect the adoption of these standards to have a material impact on its consolidated financial position, results of operations, cash flows, or disclosures.
9

NOTE 3.  Real Estate Transactions
2022 Real Estate Investment Acquisitions
67 Smith Place
In January 2022, the Company closed a life science acquisition in Cambridge, Massachusetts for $72 million.
Vista Sorrento Phase II
In January 2022, the Company closed a life science acquisition in San Diego, California for $24 million.
Webster MOB Portfolio
In March 2022, the Company acquired a portfolio of two medical office buildings (“MOBs”) in Houston, Texas for $43 million.
2021 Real Estate Investment Acquisitions
In 2021, the Company closed the following life science acquisitions: (i) eight acquisitions in Cambridge, Massachusetts for $498 million, (ii) one life science acquisition in San Diego, California for $20 million, and (iii) 12 acres of land for $128 million in South San Francisco, California.
Also during 2021, the Company closed the following MOB acquisitions: (i) one MOB in Nashville, Tennessee for $13 million, (ii) one MOB in Denver, Colorado for $38 million, (iii) a portfolio of 14 MOBs for $371 million (the “MOB Portfolio”), (iv) one MOB in Fort Lauderdale, Florida for $16 million; (v) one MOB in Wichita, Kansas for $50 million, (vi) three MOBs in Morristown, New Jersey for $155 million, (vii) two MOBs in Dallas, Texas for $60 million, (viii) one MOB in Seattle, Washington for $43 million, (ix) one MOB in New Orleans, Louisiana for $34 million, and (x) one MOB in Cambridge, Massachusetts for $55 million. In conjunction with the acquisition of the MOB Portfolio, the Company originated $142 million of secured mortgage debt.
Development Activities
The Company’s commitments, which are primarily related to development and redevelopment projects and tenant improvements, decreased by $52 million, to $418 million at March 31, 2022, when compared to December 31, 2021, primarily as a result of actual spend on existing projects in the first quarter of 2022.
NOTE 4.  Dispositions of Real Estate and Discontinued Operations
2022 Dispositions of Real Estate
In January 2022, the Company sold one life science facility in Salt Lake City, Utah for $14 million, resulting in a gain on sale of $4 million.
In April 2022, the Company sold one MOB in San Antonio, Texas for $13 million.
2021 Dispositions of Real Estate
Sunrise Senior Housing Portfolio
In January 2021, the Company sold a portfolio of 32 SHOP assets (the “Sunrise Senior Housing Portfolio”) for $664 million, resulting in an immaterial loss on sale, which is recognized in income (loss) from discontinued operations, and provided the buyer with: (i) financing of $410 million (see Note 6) and (ii) a commitment to finance up to $92 million of additional debt for capital expenditures. The commitment to finance additional debt for capital expenditures was subsequently reduced to $56 million in June 2021 and $47 million in February 2022, $0.4 million of which had been funded as of March 31, 2022 (see Note 6). Upon completion of the license transfer process in June 2021, the Company sold the two remaining Sunrise senior housing triple-net assets for $80 million, resulting in a gain on sale of $22 million, which is recognized in income (loss) from discontinued operations.
Brookdale Triple-Net Portfolio
In January 2021, the Company sold 24 senior housing assets in a triple-net lease with Brookdale Senior Living Inc. for $510 million, resulting in total gain on sale of $169 million, which is recognized in income (loss) from discontinued operations.
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Additional SHOP Portfolio
In January 2021, the Company sold a portfolio of 16 SHOP assets for $230 million, resulting in total gain on sale of $59 million, which is recognized in income (loss) from discontinued operations. The Company provided the buyer with financing of $150 million (see Note 6).
HRA Triple-Net Portfolio
In February 2021, the Company sold eight senior housing assets in a triple-net lease with Harbor Retirement Associates for $132 million, resulting in total gain on sale of $33 million, which is recognized in income (loss) from discontinued operations.
Oakmont SHOP Portfolio
In April 2021, the Company sold a portfolio of 12 SHOP assets for $564 million. In conjunction with the sale, mortgage debt held on two properties with a carrying value of $64 million was repaid and the remaining mortgage debt held on four properties with a carrying value of $107 million was assumed by the buyer. The transaction resulted in total gain on sale of $80 million, which is recognized in income (loss) from discontinued operations.
Discovery SHOP Portfolio
In April 2021, the Company sold a portfolio of 10 SHOP assets for $334 million, resulting in total gain on sale of $9 million, which is recognized in income (loss) from discontinued operations. Also included in this transaction was the sale of two mezzanine loans and two preferred equity investments for $21 million, resulting in no gain or loss on sale of the investments (collectively, the “Discovery SHOP Portfolio”).
Sonata SHOP Portfolio
In April 2021, the Company sold a portfolio of five SHOP assets for $64 million, resulting in total gain on sale of $3 million, which is recognized in income (loss) from discontinued operations.
SLC SHOP Portfolio
In May 2021, the Company sold seven SHOP assets for $113 million and repaid $70 million of mortgage debt that was held on six of the assets, resulting in total gain on sale of $1 million, which is recognized in income (loss) from discontinued operations.
Hoag Hospital
In May 2021, the Company sold one hospital for $226 million through the exercise of a purchase option by a tenant, resulting in gain on sale of $172 million.
2021 Other Dispositions
In addition to the portfolio and individual sales discussed above, during the year ended December 31, 2021, the Company sold the following: (i) 15 SHOP assets for $169 million, (ii) 7 senior housing triple-net assets for $24 million, and (iii) 10 MOBs and a portion of 1 MOB land parcel for $68 million, resulting in total gain on sales of $58 million ($39 million of which is recognized in income (loss) from discontinued operations). In conjunction with one of the SHOP asset sales, mortgage debt held on the property with a carrying value of $36 million was assumed by the buyer. Of these sales, one SHOP asset was sold during the three months ended March 31, 2021 for $5 million resulting in an immaterial gain on sale, which is recognized in income (loss) from discontinued operations.
Held for Sale and Discontinued Operations
During 2020, the Company established and began executing a plan to dispose of its senior housing triple-net and SHOP properties. As of December 31, 2020, the Company concluded that the planned dispositions represented a strategic shift that had and will have a major effect on the Company’s operations and financial results. Therefore, senior housing triple-net and SHOP assets meeting the held for sale criteria are classified as discontinued operations in all periods presented herein. In September 2021, the Company successfully completed the disposition of the remaining senior housing triple-net and SHOP properties.
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The following summarizes the assets and liabilities classified as held for sale or as discontinued operations at March 31, 2022 and December 31, 2021, which are included in assets held for sale and discontinued operations, net and liabilities related to assets held for sale and discontinued operations, net, respectively, on the Consolidated Balance Sheets (in thousands):
March 31,
2022
December 31,
2021
ASSETS
Accounts receivable, net of allowance of $4,146 and $4,138
$2,764 $2,446 
Cash and cash equivalents7,989 7,707 
Right-of-use asset, net23 26 
Other assets, net1,976 3,237 
Total assets of discontinued operations, net12,75213,416
Assets held for sale, net(1)
21,060 23,774 
Assets held for sale and discontinued operations, net$33,812 $37,190 
LIABILITIES
Lease liability$23 $26 
Accounts payable, accrued liabilities, and other liabilities14,072 14,843 
Deferred revenue139 92 
Total liabilities of discontinued operations, net14,234 14,961 
Liabilities related to assets held for sale, net(1)
84 95 
Liabilities related to assets held for sale and discontinued operations, net$14,318 $15,056 
_______________________________________
(1)As of March 31, 2022, primarily comprised of five MOBs with net real estate assets of $20 million and right-of-use asset, net of $1 million. As of December 31, 2021, primarily comprised of four MOBs and one life science facility with net real estate assets of $23 million and right-of-use asset, net of $1 million.

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The results of discontinued operations during the three months ended March 31, 2022 and 2021, or through the disposal date of each asset or portfolio of assets if they have been sold during such periods, as applicable, are included in the consolidated results of operations for the three months ended March 31, 2022 and 2021. Summarized financial information for discontinued operations for the three months ended March 31, 2022 and 2021 are as follows (in thousands):
Three Months Ended
March 31,
20222021
Revenues:
Rental and related revenues$ $5,228 
Resident fees and services2,655 72,998 
Total revenues2,655 78,226 
Costs and expenses:
Interest expense 2,676 
Operating2,674 71,519 
Transaction costs 76 
Total costs and expenses2,674 74,271 
Other income (expense):
Gain (loss) on sales of real estate, net(71)259,662 
Other income (expense), net3 5,885 
Total other income (expense), net(68)265,547 
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures(87)269,502 
Income tax benefit (expense)340 821 
Equity income (loss) from unconsolidated joint ventures64 (315)
Income (loss) from discontinued operations$317 $270,008 
Impairments of Real Estate
During the three months ended March 31, 2022 and 2021, the Company did not recognize any impairment charges.
Other Losses
During the three months ended March 31, 2022, the Company recognized $14 million of expenses within other income (expense), net on the Consolidated Statements of Operations for tenant relocation and other costs associated with a planned MOB demolition.
NOTE 5.  Leases
Lease Income
The following table summarizes the Company’s lease income, excluding discontinued operations (in thousands):
Three Months Ended
March 31,
20222021
Fixed income from operating leases$287,292 $262,937 
Variable income from operating leases82,858 65,035 
Interest income from direct financing leases1,168 2,163 
Direct Financing Leases
2022 Direct Financing Lease Sale
During the first quarter of 2022, the Company sold its remaining hospital classified as a direct financing lease (“DFL”) for $68 million and recognized a gain on sale of $23 million, which is included in other income (expense), net.
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Net investment in DFLs consists of the following (in thousands):
 March 31,
2022
December 31,
2021
Present value of minimum lease payments receivable$ $1,220 
Present value of estimated residual value 44,706 
Less deferred selling profits (1,220)
Net investment in direct financing leases$ $44,706 
Direct Financing Lease Internal Ratings
At March 31, 2022, the Company had no properties classified as a DFL. At December 31, 2021, the Company had one hospital classified as a DFL with a carrying amount of $45 million and an internal rating of “performing”.
NOTE 6.  Loans Receivable
The following table summarizes the Company’s loans receivable (in thousands):
 March 31,
2022
December 31, 2021
Secured loans(1)
$388,746 $396,281 
Mezzanine and other26,252 25,529 
Unamortized discounts, fees, and costs(3,301)(4,186)
Reserve for loan losses(1,944)(1,813)
Loans receivable, net$409,753 $415,811 
_______________________________________
(1)At March 31, 2022, the Company had $49 million remaining of commitments to fund additional loans for senior housing redevelopment and capital expenditure projects. At December 31, 2021, the Company had $58 million remaining of commitments to fund additional loans for senior housing redevelopment and capital expenditure projects.
SHOP Seller Financing
In conjunction with the sale of 32 SHOP facilities in the Sunrise Senior Housing Portfolio for $664 million in January 2021 (see Note 4), the Company provided the buyer with initial financing of $410 million. The remainder of the sales price was received in cash at the time of sale. Additionally, the Company agreed to provide up to $92 million of additional financing for capital expenditures (up to 65% of the estimated cost of capital expenditures). The additional financing was subsequently reduced to $56 million in June 2021 and $47 million in February 2022 in conjunction with the principal repayments discussed below. Through March 31, 2022, $0.4 million of the additional financing had been funded. The initial and additional financing is secured by the buyer's equity ownership in each property.
In June 2021, the Company received principal repayments of $246 million on the initial financing provided in conjunction with the sale of the Sunrise Senior Housing Portfolio. Additionally, in February 2022, the Company received principal repayments of $8 million in conjunction with the disposition of the underlying collateral. As of March 31, 2022 and December 31, 2021, this secured loan had an outstanding balance of $157 million and $165 million, respectively.
In conjunction with the sale of 16 additional SHOP facilities for $230 million in January 2021 (see Note 4), the Company provided the buyer with financing of $150 million. The remainder of the sales price was received in cash at the time of sale. The financing is secured by the buyer's equity ownership in each property.
During the first quarter of 2021, the Company reduced the consideration and reported gain on sales of real estate and recognized a mark-to-market discount of $16 million for certain transactions with seller financing. The Company’s discount is based on the difference between the stated interest rates (ranging from 3.50% to 4.50%) and corresponding prevailing market rates of approximately 5.25% as of the transaction dates. The discount is recognized as interest income over the term of the discounted loans (ranging from one to three years) using the effective interest rate method. During the three months ended March 31, 2022 and 2021, the Company recognized $1 million and $2 million, respectively, of non-cash interest income related to the amortization of its mark-to-market discounts.
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2021 Other Loans Receivable Transactions
The Company classifies a loan receivable as held for sale when management no longer has the intent or ability to hold the loan receivable for the foreseeable future or until maturity. If a loan receivable is classified as held for sale, previously recorded reserves for loan losses are reversed and the loan is reported at the lower of amortized cost or fair value. During the second quarter of 2021, two loans receivable with a total amortized cost of $64 million were classified as held for sale. Upon the transfer of these two loans to held for sale, the carrying value was decreased by $11 million to an estimated fair value of $53 million, $8 million of which was previously recognized as a reserve for loan losses. In 2021, the Company sold these two loans receivable previously classified as held for sale for their aggregate carrying value of $53 million.
These fair value estimates were made for each individual loan classified as held for sale and primarily relied on a market approach, utilizing comparable market transactions, forecasted sales prices, and negotiations with prospective buyers. These estimates are considered to be a Level 3 measurement within the fair value hierarchy, and are subject to inherent uncertainties.
Additionally, in April 2021, the Company sold two mezzanine loans as part of the Discovery SHOP Portfolio disposition (see Note 4), resulting in no gain or loss on sale of the mezzanine loans.
In May 2021, the Company received a $10 million principal repayment related to one of its secured loans. In September 2021, the Company received repayment of the remaining $15 million balance.
In July 2021, the Company received full repayment of the outstanding balance of an $8 million secured loan.
CCRC Resident Loans
For certain residents that qualify, CCRCs may offer to lend residents the necessary funds to satisfy the entrance fee requirements so that they are able to move into a community while still continuing the process of selling their previous home. The loans are due upon sale of the previous residence. At March 31, 2022 and December 31, 2021, the Company held $25 million and $24 million, respectively, of such notes receivable, which are included in mezzanine and other in the table above.
Loans Receivable Internal Ratings
In connection with the Company’s quarterly review process or upon the occurrence of a significant event, loans receivable are reviewed and assigned an internal rating of Performing, Watch List, or Workout. Loans that are deemed Performing meet all present contractual obligations, and collection and timing of all amounts owed is reasonably assured. Watch List Loans are defined as loans that do not meet the definition of Performing or Workout. Workout Loans are defined as loans in which the Company has determined, based on current information and events, that: (i) it is probable it will be unable to collect all amounts due according to the contractual terms of the agreement, (ii) the borrower is delinquent on making payments under the contractual terms of the agreement, and (iii) the Company has commenced action or anticipates pursuing action in the near term to seek recovery of its investment.
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The following table summarizes, by year of origination, the Company’s internal ratings for loans receivable, net of unamortized discounts, fees, and reserves for loan losses, as of March 31, 2022 (in thousands):
Investment TypeYear of OriginationTotal
20222021202020192018Prior
Secured loans
Risk rating:
Performing loans$ $301,796 $79,512 $2,199 $ $ $383,507 
Watch list loans       
Workout loans       
Total secured loans$ $301,796 $79,512 $2,199 $ $