Company Quick10K Filing
Quick10K
Welltower
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$76.08 405 $30,810
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-07-01 Officers
8-K 2019-05-20 Officers, Regulation FD, Exhibits
8-K 2019-04-30 Earnings, Exhibits
8-K 2019-04-30 Officers, Amend Bylaw, Shareholder Vote, Other Events, Exhibits
8-K 2019-02-15 Other Events, Exhibits
8-K 2019-02-12 Earnings, Exhibits
8-K 2019-02-07 Officers, Regulation FD, Exhibits
8-K 2019-01-30 Other Events
8-K 2019-01-22 Earnings, Regulation FD
8-K 2018-11-30 Officers, Amend Bylaw, Regulation FD, Exhibits
8-K 2018-10-30 Earnings, Exhibits
8-K 2018-08-16 Other Events, Exhibits
8-K 2018-08-03 Other Events, Exhibits
8-K 2018-07-27 Earnings, Exhibits
8-K 2018-07-26 M&A, Exhibits
8-K 2018-07-19 Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K 2018-06-21 Regulation FD, Exhibits
8-K 2018-05-21 Regulation FD, Exhibits
8-K 2018-05-18 Other Events, Exhibits
8-K 2018-05-07 Regulation FD, Exhibits
8-K 2018-04-25 Enter Agreement, Regulation FD, Exhibits
8-K 2018-04-10 Other Events, Exhibits
8-K 2018-03-20 Officers
8-K 2018-03-05 Other Events, Exhibits
8-K 2018-02-22 Earnings, Exhibits
CUK Carnival 37,890
INT World Fuel Services 1,990
SSTK Shutterstock 1,420
LXRX Lexicon Pharmaceuticals 731
XBIT Xbiotech 337
LQDA Liquidia Technologies 181
RIVE Riverview Financial 103
SHIP Seanergy Maritime 5
CLD Cloud Peak Energy 0
ATHN Athenahealth 0
WELL 2019-03-31
Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 5. Other Information
Item 6. Exhibits
EX-10.1 exhibit1011q19.htm
EX-31.1 exhibit3111q19.htm
EX-31.2 exhibit3121q19.htm
EX-32.1 exhibit3211q19.htm
EX-32.2 exhibit3221q19.htm

Welltower Earnings 2019-03-31

WELL 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Document
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
 
 
 
þ
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019
or
 
 
 
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                      
Commission file number: 1-8923
WELLTOWER INC.
 
(Exact name of registrant as specified in its charter
Delaware
 
34-1096634
(State or other jurisdiction
of Incorporation)
 
(IRS Employer
Identification No.)
 
 
 
4500 Dorr Street, Toledo, Ohio
 
43615
(Address of principal executive offices)
 
(Zip Code)
 
 
 
(419) 247-2800
(Registrant’s telephone number, including area code)  
 
 
 
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  þ  No  ¨
Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ  No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 Large accelerated filer
 þ
 Accelerated filer
¨
 Non-accelerated filer
¨
 Smaller reporting company
¨
Emerging growth company
¨
 
 
 
 
(Do not check if a smaller reporting company)
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No  þ
As of April 19, 2019, the registrant had 404,940,650 shares of common stock outstanding. 



TABLE OF CONTENTS
 
 
Page
PART I. FINANCIAL INFORMATION
 
 
 
Item 1. Financial Statements (Unaudited)
 
 
 
Consolidated Balance Sheets — March 31, 2019 and December 31, 2018
 
 
Consolidated Statements of Comprehensive Income — Three months ended March 31, 2019 and 2018
 
 
Consolidated Statements of Equity — Three months ended March 31, 2019 and 2018
 
 
Consolidated Statements of Cash Flows — Three months ended March 31, 2019 and 2018
 
 
Notes to Unaudited Consolidated Financial Statements
 
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk
 
 
Item 4. Controls and Procedures
 
 
PART II. OTHER INFORMATION
 
 
 
Item 1. Legal Proceedings
 
 
Item 1A. Risk Factors
 
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
 
Item 5. Other Information
 
 
Item 6. Exhibits
 
 
Signatures



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 
CONSOLIDATED BALANCE SHEETS
WELLTOWER INC. AND SUBSIDIARIES
(In thousands) 
 
 
March 31, 2019 (Unaudited)
 
December 31, 2018 (Note)
Assets:  
 
 
 
 
Real estate investments:  
 
 
 
 
Real property owned:  
 
 
 
 
Land and land improvements  
 
$
3,238,679

 
$
3,205,091

Buildings and improvements  
 
28,047,658

 
28,019,502

Acquired lease intangibles  
 
1,539,363

 
1,581,159

Real property held for sale, net of accumulated depreciation  
 
330,327

 
590,271

Construction in progress  
 
253,478

 
194,365

Less accumulated depreciation and amortization  
 
(5,670,111
)
 
(5,499,958
)
Net real property owned  
 
27,739,394

 
28,090,430

Right of use assets, net
 
502,429

 

Real estate loans receivable, net of allowance  
 
351,085

 
330,339

Net real estate investments  
 
28,592,908

 
28,420,769

Other assets:  
 
 
 
 
Investments in unconsolidated entities  
 
484,265

 
482,914

Goodwill  
 
68,321

 
68,321

Cash and cash equivalents  
 
249,127

 
215,376

Restricted cash  
 
158,312

 
100,753

Straight-line rent receivable
 
395,621

 
367,093

Receivables and other assets  
 
688,782

 
686,846

Total other assets  
 
2,044,428

 
1,921,303

Total assets  
 
$
30,637,336

 
$
30,342,072

 
 
 
 
 
Liabilities and equity  
 
 
 
 
Liabilities:  
 
 
 
 
Unsecured credit facility and commercial paper
 
$
419,293

 
$
1,147,000

Senior unsecured notes  
 
9,632,013

 
9,603,299

Secured debt  
 
2,660,190

 
2,476,177

Lease liabilities
 
426,639

 
70,668

Accrued expenses and other liabilities  
 
1,000,825

 
1,034,283

Total liabilities  
 
14,138,960

 
14,331,427

Redeemable noncontrolling interests  
 
450,545

 
424,046

Equity:  
 
 
 
 
Preferred stock  
 

 
718,498

Common stock  
 
404,509

 
384,465

Capital in excess of par value  
 
19,654,137

 
18,424,368

Treasury stock  
 
(74,492
)
 
(68,499
)
Cumulative net income  
 
6,402,004

 
6,121,534

Cumulative dividends  
 
(11,163,317
)
 
(10,818,557
)
Accumulated other comprehensive income (loss)  
 
(144,618
)
 
(129,769
)
Other equity  
 
268

 
294

Total Welltower Inc. stockholders’ equity  
 
15,078,491

 
14,632,334

Noncontrolling interests  
 
969,340

 
954,265

Total equity  
 
16,047,831

 
15,586,599

Total liabilities and equity  
 
$
30,637,336

 
$
30,342,072

 
NOTE: The consolidated balance sheet at December 31, 2018 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.


3


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
WELLTOWER INC. AND SUBSIDIARIES
(In thousands, except per share data) 
 
 
Three Months Ended
 
 
March 31,
 
 
2019
 
2018
Revenues:
 
 
 
 
Resident fees and services
 
$
868,285

 
$
735,934

Rental income  
 
381,084

 
343,369

Interest income
 
15,119

 
14,648

Other income
 
7,757

 
3,014

Total revenues
 
1,272,245

 
1,096,965

 
 
 
 
 
Expenses:
 
 
 
 
Property operating expenses
 
670,807

 
556,465

Depreciation and amortization
 
243,932

 
228,201

Interest expense
 
145,232

 
122,775

General and administrative expenses
 
35,282

 
33,705

Loss (gain) on derivatives and financial instruments, net
 
(2,487
)
 
(7,173
)
Loss (gain) on extinguishment of debt, net
 
15,719

 
11,707

Provision for loan losses
 
18,690

 

Impairment of assets
 

 
28,185

Other expenses
 
8,756

 
3,712

Total expenses
 
1,135,931

 
977,577

 
 
 
 
 
Income (loss) from continuing operations before income taxes and other items
 
136,314

 
119,388

Income tax (expense) benefit
 
(2,222
)
 
(1,588
)
Income (loss) from unconsolidated entities
 
(9,199
)
 
(2,429
)
Gain (loss) on real estate dispositions, net
 
167,409

 
338,184

Income (loss) from continuing operations
 
292,302

 
453,555

 
 
 
 
 
Net income
 
292,302

 
453,555

Less: Preferred stock dividends
 

 
11,676

Less: Net income (loss) attributable to noncontrolling interests(1)
 
11,832

 
4,208

Net income (loss) attributable to common stockholders
 
$
280,470

 
$
437,671

 
 
 
 
 
Average number of common shares outstanding:
 
 
 
 
Basic
 
391,474

 
371,426

Diluted
 
393,452

 
373,257

 
 
 
 
 
Earnings per share:
 
 
 
 
Basic:
 
 
 
 
Income (loss) from continuing operations
 
$
0.75

 
$
1.22

Net income (loss) attributable to common stockholders
 
$
0.72

 
$
1.18

 
 
 
 
 
Diluted:
 
 
 
 
Income (loss) from continuing operations
 
$
0.74

 
$
1.22

Net income (loss) attributable to common stockholders
 
$
0.71

 
$
1.17

 
 
 
 
 
Dividends declared and paid per common share
 
$
0.87

 
$
0.87

 
(1) Includes amounts attributable to redeemable noncontrolling interests.


4


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
WELLTOWER INC. AND SUBSIDIARIES
(In thousands) 
 
 
Three Months Ended
 
 
March 31,
 
 
2019
 
2018
Net income
 
$
292,302

 
$
453,555

 
 
 
 
 
Other comprehensive income (loss):
 
 
 
 
Foreign currency translation gain (loss)
 
78,620

 
79,024

Derivative instruments gain (loss)
 
(87,682
)
 
(62,698
)
Total other comprehensive income (loss)
 
(9,062
)
 
16,326

 
 
 
 
 
Total comprehensive income (loss)
 
283,240

 
469,881

Less: Total comprehensive income (loss) attributable
to noncontrolling interests(1)
 
17,619

 
322

Total comprehensive income (loss) attributable to common stockholders
 
$
265,621

 
$
469,559

 
 
 
 
 
(1) Includes amounts attributable to redeemable noncontrolling interests.
 
 
 
 


5


CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)
WELLTOWER INC. AND SUBSIDIARIES
(In thousands) 
 
 
Three Months Ended March 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
Preferred
Stock
 
Common
Stock
 
Capital in
Excess of
Par Value
 
Treasury
Stock
 
Cumulative
Net Income
 
Cumulative
Dividends
 
Other
Comprehensive
Income (Loss)
 
Other
Equity
 
Noncontrolling
Interests
 
Total
Balances at beginning of period
 
$
718,498

 
$
384,465

 
$
18,424,368

 
$
(68,499
)
 
$
6,121,534

 
$
(10,818,557
)
 
$
(129,769
)
 
$
294

 
$
954,265

 
$
15,586,599

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Net income (loss)
 
 
 
 
 
 
 
 
 
280,470

 
 
 
 
 
 
 
10,785

 
291,255

Other comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
(14,849
)
 
 
 
5,787

 
(9,062
)
Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
282,193

Net change in noncontrolling interests
 
 
 
 
 
(8,845
)
 
 
 
 
 
 
 
 
 
 
 
(1,497
)
 
(10,342
)
Amounts related to stock incentive plans, net of forfeitures
 
 
 
120

 
7,420

 
(5,993
)
 
 
 
 
 
 
 
(26
)
 
 
 
1,521

Proceeds from issuance of common stock
 
 
 
7,212

 
525,408

 
 
 
 
 
 
 
 
 
 
 
 
 
532,620

Conversion of preferred stock
 
(718,498
)
 
12,712

 
705,786

 
 
 
 
 
 
 
 
 
 
 
 
 

Dividends paid:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Common stock dividends
 
 
 
 
 
 
 
 
 
 
 
(344,760
)
 
 
 
 
 
 
 
(344,760
)
Balances at end of period
 
$

 
$
404,509

 
$
19,654,137

 
$
(74,492
)
 
$
6,402,004

 
$
(11,163,317
)
 
$
(144,618
)
 
$
268

 
$
969,340

 
$
16,047,831

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
 
 
 
Capital in
 
 
 
 
 
 
 
Other
 
 
 
 
 
 
 
 
Preferred
 
Common
 
Excess of
 
Treasury
 
Cumulative
 
Cumulative
 
Comprehensive
 
Other
 
Noncontrolling
 
 
 
 
Stock
 
Stock
 
Par Value
 
Stock
 
Net Income
 
Dividends
 
Income (Loss)
 
Equity
 
Interests
 
Total
Balances at beginning of period
 
$
718,503

 
$
372,449

 
$
17,662,681

 
$
(64,559
)
 
$
5,316,580

 
$
(9,471,712
)
 
$
(111,465
)
 
$
670

 
$
502,305

 
$
14,925,452

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Net income (loss)
 
 
 
 
 
 
 
 
 
449,347

 
 
 
 
 
 
 
5,191

 
454,538

Other comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
20,212

 
 
 
(3,886
)
 
16,326

Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
470,864

Net change in noncontrolling interests
 
 
 
 
 
(13,157
)
 
 
 
 
 
 
 
 
 
 
 
(2,719
)
 
(15,876
)
Amounts related to stock incentive plans, net of forfeitures
 
 
 
150

 
11,085

 
(4,137
)
 
 
 
 
 
 
 
 
 
 
 
7,098

Proceeds from issuance of common stock
 
 
 
130

 
7,060

 
 
 
 
 
 
 
 
 
 
 
 
 
7,190

Conversion of preferred stock
 
(5
)
 
 
 
5

 
 
 
 
 
 
 
 
 
 
 
 
 

Dividends paid:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Common stock dividends
 
 
 
 
 
 
 
 
 
 
 
(323,726
)
 
 
 
 
 
 
 
(323,726
)
Preferred stock dividends
 
 
 
 
 
 
 
 
 
 
 
(11,676
)
 
 
 
 
 
 
 
(11,676
)
Balances at end of period
 
$
718,498

 
$
372,729

 
$
17,667,674

 
$
(68,696
)
 
$
5,765,927

 
$
(9,807,114
)
 
$
(91,253
)
 
$
670

 
$
500,891

 
$
15,059,326



6


CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
WELLTOWER INC. AND SUBSIDIARIES
(In thousands)
 
 
Three Months Ended
 
 
March 31,
 
 
2019
 
2018
Operating activities:  
 
 

 
 

Net income  
 
$
292,302

 
$
453,555

Adjustments to reconcile net income to net cash provided from (used in) operating activities:  
 
 
 
 
Depreciation and amortization  
 
243,932

 
228,201

Other amortization expenses  
 
5,878

 
4,171

Provision for loan losses
 
18,690

 

Impairment of assets  
 

 
28,185

Stock-based compensation expense  
 
7,529

 
11,557

Loss (gain) on derivatives and financial instruments, net  
 
(2,487
)
 
(7,173
)
Loss (gain) on extinguishment of debt, net  
 
15,719

 
11,707

Loss (income) from unconsolidated entities
 
9,199

 
2,429

Rental income less than (in excess of) cash received  
 
(26,956
)
 
(21,406
)
Amortization related to above (below) market leases, net  
 
114

 
718

Loss (gain) on real estate dispositions, net  
 
(167,409
)
 
(338,184
)
Increase (decrease) in accrued expenses and other liabilities  
 
(27,368
)
 
(10,707
)
Decrease (increase) in receivables and other assets  
 
(25,248
)
 
5,591

Net cash provided from (used in) operating activities  
 
343,895


368,644

 
 
 
 
 

Investing activities:  
 
 
 
 
Cash disbursed for acquisitions
 
(237,610
)
 
(405,609
)
Cash disbursed for capital improvements to existing properties
 
(56,935
)
 
(46,547
)
Cash disbursed for construction in progress
 
(55,391
)
 
(22,735
)
Capitalized interest  
 
(2,327
)
 
(2,336
)
Investment in real estate loans receivable  
 
(42,964
)
 
(27,547
)
Principal collected on real estate loans receivable  
 
6,349

 
90,731

Other investments, net of payments  
 
(9,456
)
 
(49,279
)
Contributions to unconsolidated entities  
 
(26,854
)
 
(14,366
)
Distributions by unconsolidated entities  
 
19,724

 
14,880

Proceeds from (payments on) derivatives  
 

 
(8,324
)
Proceeds from sales of real property  
 
602,732

 
892,209

Net cash provided from (used in) investing activities  
 
197,268


421,077

 
 
 
 
 
Financing activities:  
 
 
 
 
Net increase (decrease) in unsecured credit facility and commercial paper
 
(727,707
)
 
146,000

Proceeds from issuance of senior unsecured notes
 
1,036,964

 

Payments to extinguish senior unsecured notes  
 
(1,050,000
)
 
(450,000
)
Net proceeds from the issuance of secured debt  
 
247,163

 
20,326

Payments on secured debt  
 
(128,113
)
 
(197,655
)
Net proceeds from the issuance of common stock  
 
533,543

 
7,214

Payments for deferred financing costs and prepayment penalties  
 
(19,566
)
 
(14,341
)
Contributions by noncontrolling interests(1)
 
27,860

 
5,734

Distributions to noncontrolling interests(1)
 
(21,830
)
 
(12,564
)
Cash distributions to stockholders  
 
(342,803
)
 
(335,508
)
Other financing activities
 
(7,716
)
 
(4,555
)
Net cash provided from (used in) financing activities  
 
(452,205
)

(835,349
)
Effect of foreign currency translation on cash, cash equivalents and restricted cash
 
2,352


444

Increase (decrease) in cash, cash equivalents and restricted cash  
 
91,310

 
(45,184
)
Cash, cash equivalents and restricted cash at beginning of period  
 
316,129


309,303

Cash, cash equivalents and restricted cash at end of period  
 
$
407,439

 
$
264,119

 
 
 
 
 
Supplemental cash flow information:
 
 
 
 
Interest paid
 
$
148,487

 
$
104,246

Income taxes paid (received), net
 
(250
)
 
(721
)
 
 
 
 
 
(1) Includes amounts attributable to redeemable noncontrolling interests.
 
 
 
 


7

WELLTOWER INC.
  NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


1. Business
 
Welltower Inc., an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The Company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience.  Welltower™, a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing and post-acute communities and outpatient medical properties.  
2. Accounting Policies and Related Matters
     Basis of Presentation
     The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (such as normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2019 are not necessarily an indication of the results that may be expected for the year ending December 31, 2019. For further information, refer to the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.
     New Accounting Standards     
We adopted Accounting Standards Update 2016-02, Leases (Topic 842) ("ASC 842") which requires lessees to recognize assets and liabilities on their consolidated balance sheet related to the rights and obligations created by most leases, while continuing to recognize expenses on their consolidated statement of comprehensive income over the lease term. We adopted ASC 842 as of January 1, 2019, using the modified retrospective approach and have elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, permits us to carry forward our prior conclusions for lease classification and initial direct costs on existing leases. We also made an accounting policy election to keep short-term leases less than twelve months off the balance sheet for all classes of underlying assets.
In July 2018, the FASB issued ASU 2018-11 "Leases (Topic 842): Targeted Improvements" that (1) simplifies transition requirements for both lessees and lessors by adding an option that permits entities to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented in its financial statements and (2) allows lessors to elect, as a practical expedient, to not separate lease and non-lease components in a contract, and instead to account for as a single lease component, if certain criteria are met. This practical expedient causes an entity to asses whether a contract is predominantly lease or service-based and recognize the entire contract under the relevant accounting guidance (i.e. predominantly lease-based would be accounted for under ASC 842 and predominantly service-based would be accounted for under ASU 2014-09, "Revenue from Contracts with Customers (ASC 606)"). For the year ended December 31, 2018, we recognized revenue for our Seniors Housing Operating resident agreements in accordance with the provisions of the prior lease guidance, ASC 840, "Leases." Upon adoption of ASC 842, we elected the lessor practical expedient described above and recognized revenue for our Seniors Housing Operating segment based upon the predominant component, the non-lease service component. Therefore, beginning on January 1, 2019, we accounted for these resident agreements under ASC 606. The timing and pattern of revenue recognition is substantially the same as that prior to adoption.
The FASB also issued ASU 2018-20 "Leases (Topic 842) - Narrow Improvements for Lessors," which provides lessors the ability to make an accounting policy election not to evaluate whether certain sales taxes and other similar taxes imposed by a governmental authority on a specific lease revenue-producing transaction are the primary obligation of the lessor as owner of the underlying leased asset. A lessor that makes this election will exclude these taxes from the measurement of lease revenue and the associated expense. Upon adoption of ASC 842, we utilized this practical expedient in instances in which real estate taxes are paid directly by our tenants to taxing authorities. For triple-net leasing arrangements in which the tenant remits payment for real estate taxes to us and we pay the taxing authority, we have included the associated revenue and expense in rental income and property operating expenses on the Consolidated Statements of Comprehensive Income. This reporting had no impact on our net income.
For leases in which the Company is the lessee, primarily consisting of ground leases and various office and equipment leases, we recognized upon adoption a right of use asset of $509,386,000 which included the present value of minimum leases payments, existing above and/or below market lease intangible values and existing straight-line rent liabilities

8

WELLTOWER INC.
  NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

associated with such leases. We also recognized operating lease liabilities of $357,070,000. The standard did not materially impact our Consolidated Statements of Comprehensive Income or our Consolidated Statement of Cash Flows. See Note 6 for additional details.
The following ASUs have been issued but not yet adopted:
In 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"). This standard requires a new forward-looking “expected loss” model to be used for receivables, held-to-maturity debt, loans, and other instruments. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, and early adoption is permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact that the standard will have on our consolidated financial statements. 
3. Real Property Acquisitions and Development 
The total purchase price for all properties acquired has been allocated to the tangible and identifiable intangible assets, liabilities and noncontrolling interests based upon their relative fair values in accordance with our accounting policies. The results of operations for these acquisitions have been included in our consolidated results of operations since the date of acquisition and are a component of the appropriate segments. Transaction costs primarily represent costs incurred with acquisitions, including due diligence costs, fees for legal and valuation services and termination of pre-existing relationships computed based on the fair value of the assets acquired, lease termination fees and other acquisition-related costs. Transaction costs related to asset acquisitions are capitalized as a component of purchase price and all other non-capitalizable costs are reflected in other expenses on our Consolidated Statements of Comprehensive Income. Certain of our subsidiaries’ functional currencies are the local currencies of their respective countries.
The following is a summary of our real property investment activity by segment for the periods presented (in thousands):
 
Three Months Ended
 
March 31, 2019
 
March 31, 2018
 
Seniors Housing Operating
 
Triple-net
 
Outpatient
Medical
 
Totals
 
Seniors Housing Operating
 
Triple-net
 
Outpatient
Medical
 
Totals
Land and land improvements
$
6,831

 
$
7,427

 
$
29,304

 
$
43,562

 
$
35,193

 
$
1,691

 
$
7,369

 
$
44,253

Buildings and improvements
97,759

 
74,116

 
60,671

 
232,546

 
372,562

 
235

 
42,673

 
415,470

Acquired lease intangibles
4,945

 

 
10,202

 
15,147

 
48,805

 

 
5,852

 
54,657

Right of use assets, net

 

 
2,012

 
2,012

 

 

 

 

Receivables and other assets
264

 

 

 
264

 
265

 

 
1

 
266

Total assets acquired(1)
109,799

 
81,543

 
102,189

 
293,531

 
456,825

 
1,926

 
55,895

 
514,646

Secured debt
(43,209
)
 

 

 
(43,209
)
 
(89,973
)
 

 

 
(89,973
)
Lease liabilities

 

 
(961
)
 
(961
)
 

 

 

 

Accrued expenses and other liabilities  
(848
)
 

 
(1,952
)
 
(2,800
)
 
(12,808
)
 
(6
)
 
(632
)
 
(13,446
)
Total liabilities acquired
(44,057
)
 

 
(2,913
)
 
(46,970
)
 
(102,781
)
 
(6
)
 
(632
)
 
(103,419
)
Noncontrolling interests
(7,895
)
 
(1,056
)
 

 
(8,951
)
 
(5,618
)
 

 

 
(5,618
)
Cash disbursed for acquisitions
57,847

 
80,487

 
99,276

 
237,610

 
348,426

 
1,920

 
55,263

 
405,609

Construction in progress additions
37,088

 
7,543

 
14,475

 
59,106

 
10,562

 
15,850

 
2,803

 
29,215

Less: Capitalized interest
(1,136
)
 
(390
)
 
(801
)
 
(2,327
)
 
(891
)
 
(847
)
 
(598
)
 
(2,336
)
Foreign currency translation
(1,332
)
 
(101
)
 

 
(1,433
)
 
(5,032
)
 

 

 
(5,032
)
Accruals(2)

 

 
45

 
45

 

 

 
888

 
888

Cash disbursed for construction in progress
34,620

 
7,052

 
13,719

 
55,391

 
4,639

 
15,003

 
3,093

 
22,735

Capital improvements to existing properties
43,300

 
3,768

 
9,867

 
56,935

 
31,325

 
2,351

 
12,871

 
46,547

Total cash invested in real property, net of cash acquired
$
135,767

 
$
91,307

 
$
122,862

 
$
349,936

 
$
384,390

 
$
19,274

 
$
71,227

 
$
474,891

(1) Excludes $517,000 and $4,105,000 of unrestricted and restricted cash acquired during the three months ended March 31, 2019 and 2018, respectively.
(2) Represents non-cash accruals for amounts to be paid in future periods for properties that converted, off-set by amounts paid in the current period.





9

WELLTOWER INC.
  NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Construction Activity 
The following is a summary of the construction projects that were placed into service and began generating revenues during the periods presented (in thousands):
 
 
Three Months Ended
 
 
March 31, 2019
 
March 31, 2018
Development projects:
 
 
 
 
Seniors Housing Operating
 
$

 
$
36,218

Triple-net
 

 
49,759

Total construction in progress conversions
 
$

 
$
85,977

 
4. Real Estate Intangibles 
The following is a summary of our real estate intangibles, excluding those classified as held for sale, as of the dates indicated (dollars in thousands):
 
 
March 31, 2019
 
December 31, 2018
Assets:
 
 
 
 
In place lease intangibles
 
$
1,430,342

 
$
1,410,725

Above market tenant leases
 
64,684

 
63,935

Below market ground leases (1)
 

 
64,513

Lease commissions
 
44,337

 
41,986

Gross historical cost
 
1,539,363

 
1,581,159

Accumulated amortization
 
(1,214,735
)
 
(1,197,336
)
Net book value
 
$
324,628

 
$
383,823

 
 
 
 
 
Weighted-average amortization period in years
 
10.1

 
16.0

 
 
 
 
 
Liabilities:
 
 
 
 
Below market tenant leases
 
$
82,981

 
$
81,676

Above market ground leases (1)
 

 
8,540

Gross historical cost
 
82,981

 
90,216

Accumulated amortization
 
(44,580
)
 
(44,266
)
Net book value
 
$
38,401

 
$
45,950

 
 
 
 
 
Weighted-average amortization period in years
 
8.7

 
14.7

 
(1) Effective on January 1, 2019 with the adoption of ASC 842, above and below market ground lease intangibles are reported within the right of use assets, net line on the Consolidated Balance Sheet.
The following is a summary of real estate intangible amortization for the periods presented (in thousands):
 
 
Three Months Ended March 31,
  
 
2019
 
2018
Rental income related to (above)/below market tenant leases, net
 
$
(155
)
 
$
(351
)
Amortization related to in place lease intangibles and lease commissions
 
(24,905
)
 
(32,261
)
 

10

WELLTOWER INC.
  NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The future estimated aggregate amortization of intangible assets and liabilities is as follows for the periods presented (in thousands):
 
 
Assets
 
Liabilities
2019
 
$
80,093

 
$
5,233

2020
 
60,916

 
6,506

2021
 
30,530

 
5,870

2022
 
24,734

 
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